Full Year 2020 Lightbridge Corp Earnings Call
Thank you for standing by and welcome to the Library Corporation business update in fiscal year 'twenty 'twenty Conference call. Please.
Please note that today's call is being recorded it is now my pleasure to introduce Matthew avid Nancy director of Investor Relations for Libraries Corporation. Please go ahead Sir.
Thank you Sarah and thanks to all of you for joining US today are the company's earnings press release was distributed after the market closed yesterday and can be viewed on the investor Relations page of the Lightbringer website at Www Dot L T grades dot com.
Joining us on the call today is Seth Gray Chief Executive Officer, along with Larry Goldman Chief Financial Officer, Sherry Hollaway accounting manager Andre Moshe Cox Executive Vice President for nuclear operations, and Jim <unk>, Vice President for nuclear program management.
I would like to remind our listeners that any statements on this call that are not historical facts are forward looking statements.
Today's presentation includes forward looking statements about the company's competitive position and product and service offerings.
During today's call words, such as expect anticipate believe and intend will be used in our discussion of goals or events in the future.
This presentation is based on current expectations and involve certain risks and uncertainties that may cause actual results to differ significantly from such estimates.
These and other risks are set forth in more detail in light <unk> filings with the Securities and Exchange Commission Lightbringer does not assume any obligation to update or revise any such forward looking statements, whether as a result of new developments or otherwise.
And with that I would like to turn the call over to our first speaker, Seth Gray Chief Executive Officer, Blake range Hello, Seth.
And Hello, and thank you very much Matt. Thank all of you for joining us.
Despite the challenges of the past year because of the COVID-19 pandemic.
I'm pleased to report that library is continuing to make progress on our fuel development initiatives, while taking steps to ensure that we have the necessary resources to dedicate to these efforts at the same time based on current industry developments 2021 could be a breakout year for advanced.
Nuclear technologies in fact, president bite into energy platform includes advanced nuclear as part of what he has referred to as critical clean energy technologies. The administration has recognized nuclear power as part of the transition away from fossil fuels.
Today Light bridge achieved a significant milestone as we secured our second funding award from the U S Department of energy.
Boucher from D O S gateway for accelerated innovation in nuclear or gain program to support development of light bridge fuel in collaboration with Pacific Northwest National Laboratory in Richland, Washington.
The scope of this project is to demonstrate light bridges nuclear fuel casting process using depleted uranium a key step in the manufacture of our fuel.
The total value of the project is approximately $664000 with three quarters of this amount funded by D O.
The next step will be to sign a free to agreement relating to the project from their light renewal work with Pacific Northwest National Laboratory on the process of casting depleted uranium zirconium ingots that will be submitted to a battery of testing and analysis. We expect the project will begin later in the <unk>.
First half of 2021.
This new gain voucher as part of our focus to partner more closely with the U S government.
Earlier this week, we announced our settlement agreement with Framatome that dissolves or envision joint venture in its entirety and terminate all agreements associated with the JV.
Under the terms of the agreement light purchase paid framatome approximately $4 $2 million per outstanding invoices for work performed and other expenses that were incurred by Framatome, which destroyed all documents and content related to light bridges intellectual property.
The settlement agreement allows light bridge to pursue the numerous emerging opportunities in the nuclear sector, such as our new gain voucher completely unencumbered by any constraints, while securing all our preexisting intellectual property rights without restrictions.
Importantly, we will avoid the significant multimillion dollar cost of ongoing arbitration proceedings in Switzerland, along with the litigation in Delaware that our attorneys expected to continue for at least another year.
By reaching this settlement, we are eliminating any uncertainty of the outcome of international arbitration I believe along with our board of directors that this settlement agreement is the best result for all sides.
Turning to our ongoing efforts at Idaho National Laboratory under our first funding voucher from Doa.
We are designing an experiment for testing our fuel samples in the advanced test reactor at Idaho National Lab.
Our initial understanding was that we would have full access to a government funded pressurized water reactor test loop in the advanced test reactor to generate sufficient data to support our lead test assembly testing and eliminate the need for lead test drive testing and a large commercial.
She'll reactor however, while the advanced test reactor has enough space for four of these loops, where fuel rods can be irradiated. The reactor currently has only one such loop that is shared with our experiments.
Which limits how much fuel rod material, we can get in the reactor and its duration in the reactor.
We understand that Idaho National lab would be willing to add up to all three additional loops at a cost of about $10 million to $15 million each.
We haven't determined such capital investment to be an unmanageable costs for light bridge.
We plan to work with the government and industry to have these loops added without light bridge paying for them.
We believe we have strong arguments for the U S government to pay most of the cost for these new groups.
The.
<unk> of our fuel development efforts is to position light bridge fuel and our company as essential for the world to meet climate goals as such we have viewed the existing large pressurized water reactors as our initial market because these reactors represent a large market.
For which light bridge fuel could provide significant economic and safety benefits. There are approximately 400 reactors worldwide that average about 1000 megawatts of electricity generation each we.
We calculate this to produce with nuclear power all the clean energy that the world will need in 2015, which is the seminal year for climate change. According to the I P. C. C will take the equivalent of about an additional 20000 reactors generating about 1000 megawatts of electricity.
Each.
Realistically that is not going to happen.
At most we anticipate a net increase of 200 large reactors will be built by that with most of them deployed by China and Russia and.
And more difficult for light bridge to reach commercially.
While these large reactors present, a market opportunity for light bridge, one that we will continue to pursue.
It's clear that these reactors will not have a meaningful effect on climate change.
Instead, we are recognizing the emerging technology and small modular reactors or S. M. Ours that are now in development and licensing.
They have the potential collectively to generate massive amounts of power.
The versatility to deliver upon climate goals, we believe the light bridge fuel can provide S. M ours, all the benefits that our technology brings to large reactors, but with a more significant and meaningful economic case for deploying S M ours, including greater power up rates up to 30%.
Increase in power output per flight bridge fuel and added economic benefits from the safety enhancements that we would bring.
We expect lionbridge fuel to generate more power that will help decarbonize certain sectors by powering them with electricity and produce hydrogen for liquid non carbon fuels for use in hard to decarbonize sectors, such as aviation and shipping.
Our ongoing R&D initiatives are entirely compatible with light bridge fuel powering S M ours for multiple purposes.
You are already included in our existing patents and trade secrets.
We believe what we are seeing as part of an overall shift in focus in government and the private sector from large pressurized water reactors to S. M <unk> and advanced technologies. This shift in focus is at least partly driven by the need to prevent catastrophic climate change.
We understand that the Biogen administration will prioritize advanced nuclear technologies, including advanced fuels in SMS ours.
As part of its nuclear energy policy.
President Biden has brought the U S back into the Paris agreement on climate change with the goal that the U S electricity sector be carbon neutral by 2035, just 14 years from now.
We believe that powering S M ours with light bridge fuel can enhance the already strong case for S M ours and attract more private and government investment.
Recently, the U S and Russia.
Extended the new start treaty for an additional five years, the new start treaty will prevent an increase in the number of certain types of nuclear weapons in the U S and Russian arsenals.
We understand that the bite and administration, we will seek to use this opportunity to enter into negotiations with Russia, and perhaps China to reduce the number of weapons and eliminate plutonium from the weapons that would be dismantled, making it harder to replace the weapons in the future.
Well there would still be careful analysis ahead of us we believe that as her conium plutonium version of <unk> fuel could be an ideal solution and disposing of the plutonium from weapons using it to generate energy.
In addition.
The United Kingdom, and Japan have large quantities of separated reactor grade plutonium from reprocessing spent fuel from power reactors.
Both countries are interested in exploring how best to explore.
How'd, you dispose of that plutonium.
We believe our technology can be used for this purpose our patent portfolio includes zirconium plutonium fuel.
We will explore these opportunities over the coming months for potential government interest in funding support.
And with that I will turn the call over to Andrei moves Chicago Executive VP for nuclear operations, who will review, our near term research and development opportunities Andre.
Thank you Seth.
Seth mentioned this afternoon, we were informed by the U S Department of energy gain office that language was to be in there for a second gain voucher second gain voucher is was the Pacific Northwest National Laboratory or P&L.
The scope of this vouchers that demonstrates our fuel cash can process using depleted uranium 50 weight per Samsung.
Flow zirconium.
This is a key step in the fabrication process will fall fuel and it also feeds into our needs for fabrication of irradiation fuel samples in the advanced test reactor at the head of the National Laboratory.
We expect to begin the contracting phase of the project with C. N N L. A as soon as possible.
The timeline for this new project is approximately 12 months is expected to commence from the first half of this year with total project value was approximately 664000 U S dollars with three quarters from this amount funded by the U S Department of energy for the scope performed by P&L.
Work is also progressing well on our purest gain wallet share with the objective to design them their radiation test of the Lionbridge uranium zirconium fuel alloy as part of the game project with length of benefits from New U S government support for advanced nuclear technology.
The other with either from National Laboratory, we are exploring the application of either from National laboratories fusion accelerated stages. They paced fast methodology to this experiment as a means of reducing the time and cost to achieve high burnup in the fuel material.
Although the COVID-19 pandemic has disrupted the normal flow working from many American companies Lionbridge, Idaho National Laboratory maintain frequent communication to minimize the adverse impacts on our project.
We anticipate a several month delay in the completion of the experiment design, but we do not expect the delay in the insertion.
And the radiation testing of the samples.
We believe demonstrating success of this initial project will position us well to six two other do you are you funding opportunities and additional government support which can further accelerate the development of advanced fuel technology.
In parallel with our efforts under the gain voucher, we expect to produce sample coupons for the in the reactor experiments.
Goal is to have these sample coupons available for insertion in the advanced test reactor as soon as in point to point to three and a couple of years from now after its planned maintenance outages completed.
The second gain Voucher award, we have just announced we will support this objective.
The actual experiment insertion day and is subject to the final duration of the outage they will ability of facing positions from the reactor and the added promotional laboratory spread commitments with taste.
Once the required fuel burn up is achieved them the reactor with lump informed force the radiation determination of the coupons, which will provide data on the appropriate just from the fuel material.
Separately, we plan to demonstrate this year when the fracturing processes for the three low wherein for uranium zirconium fuel technology.
He was in certain small modular reactors or asked them ours by producing several S tomorrow lengths prototype fuel rods surrogate materials.
We'll provide further updates on this effort in the coming months as we make progress.
Uh huh.
As we look ahead the UAE in the U S. National Labs have demonstrated significant progress in the area of accelerating fuel qualification, including developing methods to perform irradiation, that's more quickly than ever before and then the development and the use of advanced modeling and simulation capabilities, which enable.
[noise] faster validation of advanced technologies, we believe both areas can be beneficial to accelerate in the demonstration of languages fuel technologies and will continue to work toward the end.
With that I'm, turning it back to yourself.
Thank you very much Andre and with that I will turn the call over to Larry Goldman Chief Financial Officer to summarize the company's financial results Larry.
Thank you Seth and good afternoon, everyone.
Further information regarding our fiscal year 2020 financial results and disclosures please refer to our earnings release.
At the close of market yesterday.
Our form 10-K that we will file with the SEC later today.
The company maintained a strong working capital position at December 31, 2020.
As of December 31, 2020, we had 21 $5 million of cash and cash equivalents.
<unk> million at December 31, 2019.
We had working capital of $17 1 million at December 31, 2020, as compared to $18 1 million at December 31 2019.
No debt financing.
Total assets was 21 8 million and total liabilities were $4 6 million at December 31, 2020.
Total cash used in operating activities increased by approximately $1 9 million for the fiscal year 2020 compared to fiscal year 2019 price.
Merrill Lynch due to an increase in G&A expenses relating to arbitration matter offset by a decrease in our R&D expenses as we no longer conduct our R&D activities and inflation as we did in 2019.
As we transitioned our R&D work to the U S National Labs in 2020.
Cash used in investing activities increased by approximately $3 $6 million for the year ended December 31, 2020, compared to 2019 due to us terminating our equity contribution into the inpatient joint venture in 2019.
Cash provided by financing activities increased by approximately $8 6 million to $12 4 million.
2020, compared to three 8 million from fiscal 2019.
The increase was primarily due to an increase in net net proceeds from the issuance of our common stock which resulted from the sale.
Of approximately three 3 million shares of common stock for net.
Proceeds of $12 3 million per the year ended December 31 2020.
Before I hand, the call over to share with all the way our accounting manager I'd like to add net.
And as a result of certain triggering events regarding our intangible asset patent costs that we recorded an impairment loss provision on the total carrying value of our patent costs.
Impairment loss and patent write off was $1 2 million recorded in the fourth quarter of 2020.
There was no patent impairment loss provision in 2019.
Due to the COVID-19 pandemic, we took the necessary steps in fiscal year 2020 to reduce our corporate overhead expense.
And we anticipate preserving our cash runway into calendar year 2022.
As noted we received the gain voucher from the day today, and we will continue to strive to obtain additional funding and the future price.
I recall, a furthering our fuel development and the most cost efficient manner for our shareholders to support our future financing requirements with respect to our nuclear fuel development.
I will now turn the call over to Sherri haul away our accounting manager.
Over our P&L financial information for fiscal 2020.
Thank you Larry net.
Net loss for the fiscal year, 2020 was $14 $4 million compared to $10 7 million for fiscal year 2019.
Primarily due to these factors.
Total R&D expenses were <unk> 9 million in fiscal year 2020 compared to $2 seven.
In fiscal year 2019.
This decrease was primarily due to transitioning our R&D work from our joint venture to developing our new field development strategy.
Now working with the U S National Labs.
R&D expenses consist primarily of employee compensation and related fringe benefits and other allocable costs related to the research and development of our fuel.
G&A expenses for the year ended December 31 2020.
Were $8 $3 million compared to $5 8 million for the year ended December 31 2019.
Primarily due to an increase in professional fees of approximately one 7 million due to the legal fees incurred related to the arbitration and a net increase in employee compensation and employee benefits of approximately $1 $2 million.
These increases were offset by a decrease in travel promotional and various administrative expenses of approximately $24 million, partially due to COVID-19.
On February 11, 2021, the company entered into a settlement agreement with our former JV partner and inflation and agreed to pay approximately $4.2 million and legal settlement costs.
These amounts were recorded in operating expenses as legal settlement costs for the year ended December 31st 2020.
There was a net other operating gain of $1 million for the year ended December 31, 2020 <unk>.
Compared to a two 6 million net operating loss for the year ended December 31st 2019.
This $2 7 million change was due to a net decrease in the equity loss from the envision joint venture $2 $6 million and an increase in grant income from the gain voucher of approximately <unk> 1 million for the year ended.
December 31st 2020.
Now over to you Sir.
Well, thank you very much Sherry and with that we'll go onto the question and answer session.
Thank you to everyone, who has submitted questions and I'll turn it over to Matt <unk>, our director of Investor Relations Matt.
Thank you Seth our first question.
What brought about the shift in focus from the existing fleet of reactors to small modular reactors, which are still on the drawing board.
And then as a follow up why would testing lightweight fuel without any operational history in a totally new breed of light water reactor.
Module reactor being easier regulation gauntlet than testing in the history rich existing fleet of reactors.
Okay.
Well first let me assure you that we're not abandoning the existing light water reactors in our strategy. They continue to be an important target market for us, but we see opportunities relating to government and the private sector shifting resources to the small modular reactors that <unk> the <unk>.
Work, we are doing now is applicable for fuel for large reactors and for the shorter length versions of fuels for SM ours, while regulatory issues continue to be a significant gauntlet as as is mentioned in the question.
In our long term planning.
There were other important hurdles that we need to overcome before focusing on regulatory licensing we.
We believe we can benefit from D. O S focus on S. M ours and other advanced reactor designs in order to accelerate our shorter term development requirements, including in reactor testing and fabrication processes also the nuclear regulatory commission is engaged with advanced reactor developers to St.
Mine and modernize the regulatory requirements for these designs, it's under what's called part 53 of the Nrc's regulations.
These include the exploration of the accelerated fuels qualification initiative.
That's something you'll hear.
About again from like bridge, many times I'm sure the accelerated fuels qualification initiative, which led it leverages computational techniques in conjunction with more traditional in reactor qualification programs. We believe the accelerated fuels qualification initiative will be applicable to licensing.
Our fuel.
We believe that focusing early on advanced reactor developments, specifically, the lightwater reactor small modular reactors.
With that we can make faster progress towards ultimately addressing both S M. Our designs as well as existing large light water reactors.
To you Matt.
Our next question.
With White bridge now, adding a focus on small modular reactors and with the joint venture settlement complete will light bridge now seek partnerships with other companies.
Well, we're focusing on per firming, performing well under our work with the U S government and its national laboratories.
And on expanding our cooperation with the government.
Light bridge continues to be open to collaboration with potential partners in the advanced reactor in SME areas as well as the more traditional light water reactor fuel vendors.
We're beginning to reach out to certain firms regarding our promising new fuel technologies back to you Matt.
Hey, Matt.
Might be on mute.
Sorry about that.
The next question is regarding the second gain Voucher award.
Can you provide any color on timelines and how this award differs from your current work at Idaho National Lab.
Yeah, Yeah happy to do that but we'll turn it over to Jim for enough Who's really been running this issue for library Jen Congratulations Jim to the to the whole team today and over to you.
Alright, Thank you Seth and it really was a team effort to get to this award so thanks to everybody that pitched in.
As Andre mentioned, our second gain voucher is with.
P N and our Pacific Northwest National Laboratory.
PNM now is uniquely qualified and that they have capabilities for high temperature vacuum melting and casting of of our fuel alloy, which is a 50 50 50 weight alloy of zirconium and uranium.
In this experiment or this demonstration will be using a depleted uranium source sought to minimize on the.
The radiological cost of the experiment so.
It's a demonstration using the depleted uranium over the net of the casting process.
We expect this to start as soon as we can finish the contracting craze and will jump on that just as soon as possible with the lab.
And we expect that this will be about a 12 month project starting sometime in the first half of this year.
With in regard to how this compares to our our initial gain voucher with with INO, the Idaho National Lab.
That initial project was for the design of an experiment to to irradiate or our fuel material, an acute and a coupon sample.
And the progress progressing progressing well on that we're just about.
To complete the conceptual design and move into the detailed design phase.
And it is expected to wrap up sometime around the end of the third quarter of this year and how these two projects relate to each other is that they dovetail with the fabrication of the book.
Fuel coupons samples themselves. So we will use this similar casting and extrusion process that we're demonstrating with P&L as we made coupons samples for irradiation in the advanced test reactor at all or no.
Hum.
I'll turn it turn it back over to Matt for additional questions.
Thank you.
We've had actually a number of questions related to nuclear fuel recycling, especially related to the use of recycled plutonium.
Can you elaborate on this.
Yeah Yeah.
As I mentioned that is an area that we are starting to focus on and reach out to government done and from the answer I'll turn that over to you Andre.
Thank you Seth.
We believe that lionbridge fuel can be recycled using existing reprocessing technologists.
As well as new advanced technologies that have been developed jointly by the U S National laboratories, including a technology called Pyro processing.
However, today in the United States Reprocessing Theres not been performed.
U S nuclear power plants, and stabbed by relying on dry cask storage.
On site so.
Once the fuel.
He is removed from the reactor they put it in the dry cask storage facility.
Whereas the reactors.
Kate and store there for for many many years once they get out of.
<unk> spent fuel pool side of wet storage.
Ultimately the U S Department of energy on the U S laws is responsible for taken.
Those are our spent fuel assemblies from dry cask storage facilities.
From each of U S nuclear power plants and.
Basically a store in there or disposing of that spent fuel and a permanent fashion, but so far.
As you know a yucca mountain was selected.
Facility of four <unk>.
Permanent storage.
Around them to some funding issues and right now it's been put on hold.
Lionbridge has a labor issue has the potential to dispose of recycled plutonium as well as plutonium from.
Dismantled.
Nuclear weapons of weapons stockpiles.
Eliminate them.
Such plutonium material, while producing energy.
In addition to Repower and the vast amount of unused energy that is.
Embedded in the plutonium material.
This would offer the additional benefit of a prediction.
The weapons proliferation concerns inherent with sites ship with plenty of material.
We believe that the high burnup nature of all fuel makes.
It makes up a good candidate flow.
We're incorporating from 'twenty them as well as minimizing proliferation concerns.
So with that I'll turn it back to you mats for any additional questions.
Thank you Andre.
Our last question Kim.
Can you comment on the proposed change in European Union taxonomy, and how it might affect the light bridge and nuclear in general.
You know the fact that someone's asking that question shows that what's happening in Europe is affecting investors in America, and other places or European investor, who might be calling into our <unk>.
Following an American call.
Purpose of the proposed European taxonomy is just steer investment into low carbon projects.
I think it's essential that the European taxonomy treat nuclear as the sustainable carbon free energy source that is anything less would make it even more difficult to achieve climate goals other regions and countries, sometimes model their approaches and what the European Union does euro.
<unk> failing to treat nuclear as being sustainable would end up hurting nuclear inside and outside Europe.
Some investors looking for sustainable investments would turn away from nuclear tuck sodomy does not treat it as being sustainable.
At the nuclear Energy Institute and elsewhere light bridges, joining efforts to help position nuclear as being essential for countries to achieve climate goals and reach out to people who can have influence on these issues in Europe.
Fortunately in the last few days. According to news reports, seven EU member states, including Poland and France.
Signed a letter to the European Commission, stating that nuclear should be on a level floating with other low carbon technologies.
I believe Germany is leading the effort against nuclear.
Fortunately I think it's looking more likely that Germany's position won't prevail.
And.
If that's the last question, Matt I will say.
Thank you to everybody who has participated on today's call. Thank you also for the library team listening in.
Good day, showing the results of your work on the gain voucher, we look forward to providing additional updates in the near future in the meantime, we can be reached at IR and L. T Bridge Dot com stay safe and well goodbye.
Okay.
Ladies and gentlemen, this concludes today's conference call. Thank you for your participation you may now disconnect.
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And our clients.
Great.
Gross margin.
Yes.
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