Q2 2022 Centrus Energy Corp Earnings Call

August 5, 2022

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Greetings and welcome to the Centros Energy Second Quarter 2022 earnings call. At this time, all participants are in a listen only mode. A brief question and answer session will begin. We'll follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Dan Lesakow, Vice President, Corporate Communications for Centros. Thank you, Dan. You may begin.

Good morning and thank you all for joining us. Today's call will cover the results for the second quarter of 2022 and June 30th. Today we have Dan Pondeman, President and Chief Executive Officer and Kevin Harrell, Controller and Chief Accounting Officer. Our Chief Financial Officer, Phil Obstrobridge, has scheduled in conflict that prevented him from being on today's call, but he'll be available for follow-up calls next week. Dan and Kevin will be taking questions following their prepared remarks.

Before turning the call over to Dan Toniman, I'd like to welcome all of our, all of our collars, as well as those listening to our webcast. This conference call follows our earnings news release issued yesterday. We expect to file our report for the second quarter of 2022 on form 10Q later today. All of our news releases and SEC filings, including our 10K, 10Qs and 8Ks, are available on our website. A replay of this call will also be available later this morning on the Center's website.

I would like to remind everyone that certain of the information we may discuss on this call today may be considered forward looking information that involves risk and uncertainty including assumptions about the future performance of centers our actual results make it for materially from those in our forward looking statements additional information concerning factors that could cause actual results to materially differ from those in our forward looking statements is contained in our filings with the SEC including our annual report on Form 10K and a new report on Form 10K you

and quarterly reports on Form 10Q. Finally, the forward-looking information provided today is not effective and accurate only as of today, August 5, 2022 unless otherwise known. This call is a property of centrist energy. Any transcription, redistribution, retransmission, or rebroadcast of the call in any form without the expressed written consent of centrist, Mr. Clee Perdue. Thank you for your participation and I'll now turn the call over to Dan Pondman.

Thank you, Dan.

And thank you to everyone on the call today. We are happy to report another strong and productive quarter for Centris, the number speak for themselves. $99.1 million in revenue. $60.9 million in gross profit. $37.4 million in net income. $37.4 million in net income.

We always remind listeners on these calls that a normal feature of our business is that revenues and margins vary widely, from quarter to quarter based on the timing of deliveries, and that is the annual performance that matters most. But I do think that it's fair to say that these numbers are another example of the continued resilience of our business, even in the face of challenges like the pandemic and the changes in the global nuclear fuel market brought about by Russia's invasion of Ukraine.

We are continuing to deliver the fuel our customers need and the results our investors expect.

I am enormously proud of our team for the work they are doing to navigate a sometimes difficult environment and to help our company grow for the long term.

Along those lines, our sales team has been putting up strong numbers. In the first two quarters of the year, we made deliveries of SWOOG, separate work units, and uranium, totaling about $103 million. In the last three quarters of the year, we made deliveries of SWOOG, dollars.

But we also secured new sales contracts and commitments worth about $135 million. As a result, the total value of our order book is increased over the course of the year and now stands around $1 billion.

As I said, the numbers can speak for themselves, but numbers alone don't tell the whole story.

The Ukraine invasion brought energy security issues into sharp focus. And while much of the discussion has been around natural gas, Russia is much more dominant when it comes to nuclear fuel with 46% of the world's uranium enrichment capacity.

It is an indispensable supplier of low-enriched uranium for existing reactors worldwide, and is currently the only source of high-assay low-enriched uranium or halu. The advanced reactor fuel that will be required for most of the next generation reactors now under development.

This has contributed to a dramatic rise in market prices for uranium enrichment and a new sense of urgency from policymakers as well as industry participants to support investments in new domestic capacity for both LEU and halo.

Centris is uniquely positioned to lead this effort. We have the only deployment-ready U.S. technology that is capable of meeting national security as well as commercial requirements. Our site is already licensed by the Nuclear Regulatory Commission for LEU production and is also the only site in the country that is licensed to produce LEU.

We have long-standing ties to utilities around the world and commercial relationships with many of the most innovative companies that are designing the advanced reactors of tomorrow.

The Halo and Richmond plant we have been building Ohio is expected to begin demonstrating a new Halo production next year.

Subject to the availability of funding and or off-take commitment, we can scale that facility up to whatever level of production the market requires, including both HALU and LEU for commercial as well as government and national security missions.

We're pleased that the Department of Energy has issued a request for proposals that is expected to fund the next stage of the HALO demonstration and potentially support years of operation and production beyond that.

This is a competitive solicitation and we are working hard to demonstrate our capabilities and make a strong case when we submit our bid later this month.

This is one part of a broader Halo availability program that has been established at the Department of Energy to promote the build-out of domestic Halo production infrastructure.

Congress provided $45 million in fiscal year 2022.

The administration has proposed $95 million for fiscal year 2023, which was increased to $100 million in the energy and water appropriations bill that recently passed the House.

while the Nuclear Energy Institute and others in the industry have embraced the proposal for annual funding of $300 million per year.

The draft text of the Inflation Reduction Act, recently announced by Senator Schumer and Senator Manchin, includes $700 million for Haley.

There have also been media reports that the administration is developing a proposal to make purchases of LEU and HALU as a way to jumpstart domestic production.

We cannot predict where the legislative process will land, but it is clear that the momentum behind restoring American leadership in uranium enrichment is real. And it is growing.

For more of the numbers, let me now turn things over to Kevin Harrell. Kevin?

Thank you, Dad. Good morning, everyone. As Dan mentioned, and as we regularly discuss on these calls, there's considerable variability in our Revenue and Margins throughout the year.

The first quarter of this year was relatively sub-dune, but in the second quarter with several LEU deliveries.

Our focus is not on what happens in any one quarter, but what happens over the course of a year, and how that compares to prior years.

Again, there are two factors at play here. Most of our revenue in the LEU business comes from multi-year sales contracts. We have with major utilities. We have with major utilities.

Under those contracts, customers typically have an annual purchase application, not a quarterly application.

The customer chooses which quarter to take their delivery and we book the revenue in that same quarter.

For example, in the first two quarters of the year, Central secured more than 135 million new sales contracts and commitments. The new sales contracts and commitments.

These sales include deliveries of SOU and Uranium from 2022 to 2026.

And those revenues will be recognized in whatever quarter and year they are delivered.

Secondly, the prices in our sales contract vary significantly based upon when they were signed.

Published price indicators for enrichment peaked around $165 per swoosh pre-Fukushima, declined to below $40 by late 2018, and then began a slow but steady rise to around $60 per swoosh prior to the Ukraine invasion.

Since then, published price indicators have risen to $87 per swoop in the spot market and above 130 in the long-term market.

We have contracts in our order book that were signed up and down that price code.

Our quarterly revenue will therefore vary depending on both delivery volume and whether those deliveries were on higher price contracts or lower price contracts.

For the three-month-end of June 30th, our total revenue was 99.1 billion.

In our LEU segment, the volume of smooth soil declines, but the average price of the deliveries increased compared to the same quarter in 2021. The volume of smooth soil declines,

This resulted in an overall increase in revenue before the segment.

At the same time, our Unicot the Sales Purse Group also declined.

resulting in a gross profit for the segment of $59.4 million for the quarter, compared to a gross profit of $18.2 million for the segment, in the same quarter in the prior year.

In our Center's technical solution segment, we generate a 13.6 million in revenue against cost-a-sales of 12.1 million.

This resulted in gross profit for the segment of $1.5 million.

Second revenues were 3.6 million lower than in the second quarter of 2021. But that was more than offset by a 6.2 million reduction in cost of sales for the segment. The second quarter of 2021 was 3.6 million lower than in the second quarter of 2021.

Combining the two segments, we earned a gross profit of $60.9 million for the quarter and net profit of $37.4 million.

As you may recall, in our annual 10K filing, we reported improvement of more than $100 million in the funding status of our Legacy Pension Plan over the course of 2021.

This cut are long-term pension liability from $124.4 million at 2020 year ends to just $23.1 million by the end of 2021.

That was primarily driven by the strong growth in our pension assets combined with the impact of a 43.5 million settlement. We secured last year with the US government that helped reduce our long-term liabilities of pension and post retirement health benefits.

Well, equity markets are down substantially this year.

Though the decline in petian assets have been partially offset by the decline in petian liability due to rising interest rates.

Ultimately, the actual aerial assumptions established at the beginning of the year show a continued improvement in our pension status, which is 16 million remaining of non-current pension liability.

We are in a strong financial position going forward with a cash balance of $136.9 million, which includes $21.3 million of restricted cash for financial assurance, as of the end of the quarter, and a long-term order both valued at $1 billion as of June 30th.

With that, let me turn things back over to Dan.

Thank you Kevin.

Before we get to your questions, let me just take a step back to talk about the broader landscape and the changes in the world and our industry that we have witnessed in recent months.

There is no doubt that the Ukraine invasion has upended expectations in the global nuclear fuel market and caused government as well as industry leaders to refocus on their vulnerable supply chains.

Since the end of the year, spot prices for school have increased more than 50% and long-term prices have doubled.

That means we have opportunities to make new sales at much higher prices than we could have just a few months ago.

The realization that prices are rapidly increasing has also prompted a number of utilities to accelerate their contracting activity as they work to secure long-term fuel supplies before prices go up still further.

At the same time, the overall outlook for nuclear is stronger than it has been in years. More and more countries are embracing the need for nuclear energy as a pathway to reduce carbon emissions and to provide greater energy security, particularly as prices for natural gas are spiking.

Natural gas prices in the United States have roughly doubled from a year ago. Whole-sale natural gas prices for advanced deliveries in the Netherlands, which is often used as the benchmark for pricing in the European Union, searched for more than 210 euros for megawatt hour in late July . That's more than 10 times the average price between 2010 and 2020.

Governments in Europe have either doubled down on the nuclear program, reverse decisions to retire plants, or revive long-dormant plants to require new reactors. Even the German government is reconsidering its earlier decision to shut down their remaining three nuclear power plants by the end of this year.

Last month, the European Union agreed to include nuclear power in its green taxonomy, a pivotal decision that could promote wider deployment of nuclear energy throughout Europe as a vital tool in the fight against climate change.

In California, Governor Newsom recently announced that the state will consider delaying the shutdown of the Diablo Canyon Nuclear Power Plant, which generates more carbon-free electricity than all of the utility-scale wind and solar the state has added in the last five years.

Wyoming, a state that gets around 80% of electricity from coal, now has plans to replace one of its retiring coal-fired plants.

with first of a kind, Hayloo Fueled, sodium fast reactor, designed by tarot power and backed by bill gates.

The International Energy Agency's Net Zero scenario requires a doubling of the global nuclear sleep by 2050.

from 450 gigawatts installed today to 812 gigawatts installed by mid-century.

Achieving that growth will be challenging, but with effective leadership and strong public-private partnerships, it is doable. Indeed, given the scale and the urgency of the global challenge to prevent catastrophic climate change, failure is not an option. The momentum behind maintaining existing reactors and building new ones is gaining steam around the world, and Centres is committed to providing an assured source of fuel to support those reactors for decades to come. And with that, we'll now turn to your questions.

Operator. Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the questioning queue. You may press star two if you would like to remove your question and within the queue. We ask that you allow yourself to one question and one follow up.

before re-cuing to join the question queue. For part one moment please we'll we pull for questions.

Our first question comes from the line of Rob Brown with Lake Street Capital. Please proceed with your question.

Good morning. Good morning, Rob.

I just want to fall in your comment about the new sales activity. How much is this who price in driving that and sort of what's the pipeline of activity that still get to convert or is a lot pulled forward? And how is that sort of the rest of the activity out there?

well i think uh... rob you have to kind of look in the uh... broad sweep of history you know when uh...

As we experienced from 2011 to August 2018, prices going down, just put yourself in the shoes of the seal buyer, you know, why buy today if it will be cheaper tomorrow. And so now that you see the curve having kinked and now moving up, there is really two things, you know, number one, and it related obviously, number one, there's an advantage of buying sooner over it's going to be cheaper, right? And then secondly, because of all the uncertainty in the supply scenarios, there's just a pure frankly.

How does your sort of view on when these pieces need to start to fall in place and how long it takes to get this supply online once the decision starts to get made?

Well, it would take quite a fine part of not to cater to predict the timing of action in the US Congress on the one hand. On the other hand, you know, I read news reports this morning, very promising ones about this mentioned Schumer legislation possibly passing over the weekend, indications I have seen Rob and you know.

the last person to speak on behalf of.

the Congress, but I think Speaker Pelosi would bring folks back promptly to have this addressed. We've seen a lot of support, anticipatory support, on the House side. So our hope is that very, very soon indeed you would have a fully inactive bill that the president would sign in just a very short while from now. And as I mentioned in my remarks, that's really a game changer, right, because it's got $700 million.

in it for Halo and that's exactly the kind of market signal that we've been looking for. It's both a market signal but also it's a very significant investment, right? So, Beyond that, there's the normal appropriations process which is always complex, but especially so in an election year. We've been very encouraged to see the administration which...

More than doubled its request for the coming fiscal year compared to last one and then the house Smart was even higher the administration was less at ninety five million dollars than the house put in a hundred million dollars and Industry writ large including the new parentry institute have been actually earning three hundred million dollars all with the same frankly You and mind up. It's really time to get off the dime. We're making a significant

huge investments really in these advanced reactors that X Energy and TerraPower are building under the Advanced Reactor Development Program. And it's absolutely imperative that they got a fuel supply. And so I think it's quite logical, but it's also gratifying to see that people have sort of recognized that. And so I do expect you're going to see a continuing effort, Rob, in the Congress and the appropriation cycle is what it is, whether we'll see another continuing revolution and...

I really can't give a year by year on it, but any additional color as far as how that breaks down across the six years is it roughly even, is it back half weighted, is it front half weighted? Is it roughly even, is it back half weighted, is it front half weighted?

Yeah, Joe, I don't think we really go into that kind of thing in public disclosure space. So I think we just kind of do the global numbers and then they will roll out in the successive quarters as they roll out.

Okay.

Second thing,

On the Halo contract that you're competing for, can you kind of give us a little background on what the space looks like as far as the other competition? You know, you guys are the only ones with a Halo license right now. So, you know, like is this really an open competition or is it more a matter of the government has to say it is and, you know, you guys are really the only, you know, party in town.

Well, Joe, it's hard enough to speak on my own behalf and I'm sure I'm not going to speak on behalf of other companies. But the second part of your question, it's a real competition. The department's been out there, they had an industry day, it's real. And we're taking it very, very seriously indeed. These RFIs, if you've had any exposure to them, are extraordinarily detailed and work-intensive things they're about.

I think it would make you proud as an American to see the hard work that goes into even preparing the RFI itself. And so to be responsive to very thoughtfully and thoroughly prepared RFI is a massive undertaking and we're taking very seriously. We feel good about our capabilities, we feel good about what we bring to the table but we are taking nothing for granted and we're focused on it's like a laser beam.

Thank you. As a reminder, ladies and gentlemen, if you would like to ask a question, please press star one on your telephone keypad.

There appear to be no further questions at this time. I'd like to turn the floor back over to management for closing comments.

Thank you, operator. This will conclude our investor call for the second quarter of 2022. As always, I want to extend the thank you to our listeners online and investors who called in. We look forward to speaking with you again with the squad.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation and have a wonderful day.

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It is now my pleasure to introduce your host, Dan Lesakow, Vice President Corporate Communications for Centres. Thank you, Dan. You may begin.

Good morning and thank you all for joining us. Today's call will cover the results for the second quarter of 2022 and June 30th. Today we have Dan Poneman, President and Chief Executive Officer, and Kevin Harrell, Controller and Chief Accounting Officer. Our Chief Financial Officer, Philip Strawbridge, had a scheduling conflict that prevented him from being on today's call, but he'll be available for follow-up calls next week.

Dan and Kevin will be taking questions following their prepared remarks.

Before turning the call over to Dan Pondeman, I'd like to welcome all of our collars, as well as those listening to our webcast. This conference call follows our earnings news release issued yesterday. We expect to file our report for the second quarter of 2022 on Form 10Q later today. All of our news releases and SEC filings, including our 10K, 10Qs and 8Ks, are available on our website. A replay of this call will also be available later this morning on the Center's Web site.

Finally, the forward-looking information provided today is not an accurate only as of today, August 5, 2022, unless otherwise not.

This call is a property of Centris Energy. Any transcription, redistribution, retransmission, or rebroadcast of the call in any form without the expressed written consent of Centris is strictly prohibited. Thank you for your participation and I'll now turn the call over to Dan Poneman.

Thank you, Dan.

And thank you to everyone on the call today. We are happy to report another strong and productive quarter for Centres, the numbers speak for themselves. 99.1 million dollars in revenue. 60.9 million dollars in gross profit, and 37.4 million dollars in net income. And 37.4 million dollars in net income.

We always remind listeners on these calls that a normal feature of our business is that revenues and margins vary widely from quarter to quarter based on the timing of deliveries and that is the annual performance that matters most. But I do think that it's fair to say that these numbers are another example of the continued resilience of our business even in the face of challenges like the pandemic and the changes in the global nuclear fuel market brought about by Russia's invasion of Ukraine.

We are continuing to deliver the fuel our customers need and the results our investors expect. I am enormously proud of our team for the work they are doing to navigate a sometimes difficult environment and to help our company grow with long term. The

Along those lines, our sales team has been putting up strong numbers. In the first two quarters of the year, we made deliveries of SWOOG, separate work units, and uranium, and totaling about $103 million.

But we also secured new sales contracts and commitments worth about $135 million. As a result, the total value of our order book has increased over the course of the year and now stands around $1 billion.

As I said, the numbers can speak for themselves, but numbers alone don't tell the whole story.

It is an indispensable supplier of low-enriched uranium for existing reactors worldwide and is currently the only source of high-ansay low-enriched uranium or HALU, the advanced reactor fuel that will be required for most of the next generation reactors now under development.

This is contributed to a dramatic rise in market prices, the Iranian enrichment, and a new sense of urgency from policymakers as well as industry participants to support investments in new domestic capacity for both LEU and HALF. Centres is uniquely positioned to leave this effort. We have the only deployment ready US technology that is capable of meeting national security as well as commercial requirements. And as well as commercial requirements.

Our site is already licensed by the Nuclear Regulatory Commission for L.A.U. production and it's also the only site in the country that is licensed to produce payload.

We have long-standing ties to utilities around the world and commercial relationships with many of the most innovative companies that are designing the advanced reactors of tomorrow.

The halo enrichment plant we have been building in Ohio is expected to begin demonstrating halo production next year.

Subject to the availability of funding and or optic commitment, we can scale that facility up to whatever level of production the market requires, including both Halo and LEU for commercial as well as government and national security missions.

This is a competitive solicitation and we are working hard to demonstrate our capabilities and make a strong case when we submit our bid later this month.

This is one part of a broader Halo availability program that has been established at the Department of Energy to promote the build-out of domestic Halo production infrastructure.

Congress provided $45 million in fiscal year 2022.

The administration has proposed $95 million for fiscal year 2023, which was increased to $100 million in the energy and water appropriations bill that recently passed the House.

While the nuclear energy institute and others in the industry have embraced the proposal for annual funding of $300 million per year.

The draft text of the Inflation Recruit Reduction Act recently announced by Senator Schumer at Senator Masha, including $700 million for Hayley.

There have also been media reports that the administration has developed a proposal to make purchases of LEU and Halo as a way to jumpstart domestic production. The

We cannot predict where the legislative process will land, but it is clear that the momentum behind restoring American leadership in uranium enrichment is real. And it is growing.

For more than numbers, let me now turn things over to Kevin Herald.

Thank you, Dad. Good morning, everyone. As Dan mentioned, and as we regularly discuss on these calls, there's considerable variability in our Revenue and Margins throughout the year.

The first quarter of this year was relatively subdued, but in the second quarter we had several LEU deliveries. The first quarter of this year was relatively subdued, but in the second quarter we had

Our focus is not on what happens in any one quarter, but what happens over the course of a year, and how that compares to prior years.

Again, there are two factors at play here. Most of our revenue in the LAU business comes from multi-year sales contracts. We have with major utilities. We have with major utilities.

Under those contracts, customers typically have an annual purchase obligation, not a quarterly obligation.

The customer chooses which quarter to take their delivery and we book the revenue in that same quarter.

For example, in the first two quarters of the year, Central secured more than 135 million and new sales contracts and commitments. And new sales contracts and commitments.

These sales include deliveries of SOU and Uranium from 2022 to 2026.

And those revenues will be recognized in whatever quarter and year they are delivered.

Secondly, the prices in our sales contracts vary significantly based upon when they were signed.

Published price indicators for enrichment pete around $165 per swoo proof pre-fibishima declined to below $40 by late 2018 and then began a slow but steady rise to around $60 per swoo prior to their Ukraine invasion.

Since then, published price indicators have risen to $87 per swoop in the spot market and above 130 in the long-term market.

We have contracts in our order book that were signed up and down that price code.

Our quarterly revenue will therefore vary depending on both delivery volume and whether those deliveries were on higher price contracts or lower price contracts.

For the three months ended June 30th, our total revenue was $99.1 million.

In our LEU segment, the volume of smooth soil declines, but the average price of the deliveries increased compared to the same quarter in 2021. The volume of smooth soil declines,

This resulted in an overall increase in revenue for the segment.

At the same time, our Unicot the Sales Persts would also decline.

resulting in a gross profit for the segment of 59.4 million for the quarter in the prior year.

In our Centris Technical Solutions segment, we generated $13.6 million in revenue against the sales of $12.1 million.

This resultating gross proc for the segment of $1.5 million.

Second revenues were 3.6 million lower than in the second quarter of 2021. But that was more than offset by a 6.2 million reduction in cost and sales for the second.

Combining the two segments, we earned a gross profit of $60.9 million for the quarter and net profit of $37.4 million.

As you may recall, in our annual 10K filing, we reported improvement of more than $100 million in the funding status of our Legacy Pension Plan over the course of 2021.

This cut our long-term pension liability from $124.4 million at 2020 year-end to just $23.1 billion by the end of 2021.

That was primarily driven by the strong growth in our pension assets, combined with the impact of a 43.5 million settlement, we secured last year with the U.S. government that helped reduce our long-term liabilities of pension and post-retirement health benefits.

Well, equity markets are down substantially this year.

though the decline in pension assets have been partially offset by a decline in pension liability due to rising interest rates.

Ultimately, the actual aerial assumptions established at the beginning of the year show a continued improvement in our pension status, which is 16 million remaining of non-current pension liability.

We are in a strong financial position going forward with a cash balance of 136.9 million, which includes 21.3 million of restricted cash for financial assurance, as at the end of the quarter, and a long-term order book value of 1 billion has of 2.30 million.

With that, let me turn days back over to Dan.

that. Let me turn things back over to them. Thank you, Kevin.

Before we get to your questions, let me just take a step back to talk about the broader landscape and the changes in the world and our industry that we have witnessed in recent months.

There is no doubt that the Ukraine invasion has upended expectations in the global nuclear market and caused government as well as industry leaders to refocus on their vulnerable supply chains.

Since the end of the year, spot prices for school have increased more than 50% and long-term prices have doubled.

That means we have opportunities to make new sales at much higher prices than we could have just a few months ago.

The realization that prices are rapidly increasing is also prompted a number of utility to accelerate their contracting activity as they work to secure long-term fuel supplies before prices go up so further.

Natural gas prices in the United States have roughly doubled from a year ago. Wholesale natural gas prices for advanced deliveries in the Netherlands, which is often used as the benchmark for pricing in the European Union, surged to more than 210 euros per megawatt hour in late July . That's more than 10 times the average price between 2010 and 2020.

And Wyoming, a state that gets around 80% of electricity from coal, now has plans to replace one of its retiring coal-fired plants.

with first of a kind, Hayloo-Fueled sodium fast reactor designed by tarot power and backed by bill gates. The International Energy Agency's Net Zero scenario requires a doubling of the global nuclear fleet by 2050, from 450 gigawatts installed today to 812 gigawatts installed by mid-century.

Achieving that growth will be challenging, but with the effective leadership and strong public-private partnerships, it is doable. Indeed, given the scale and the urgency of the global challenge to prevent catastrophic climate change, failure is not an option. The momentum behind maintaining existing reactors and building new ones is gaining steam around the world, and Centris is committed to providing an assured source of fuel to support those reactors for decades to come. And with that, we'll now turn to your questions.

Operator? Thank you. We will now be conducting a question-and-answer session. If you would like to ask a question, please press star-1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star-2 if you would like to remove your question from the queue. We ask that you limit yourself to one question and one follow-up. Because you made the decision to cancel the question, we ask that you left the question in the Q & A box under the SaveScore button where it was reported earlier at the time that you made the decision to cancel. drip

before recueing to join the question queue. For part, one moment please while we poll for questions.

Our first question comes from the line of Rob Brown with Lake Street, Capitol. Please proceed with your question.

Good morning. Morning Rob.

I just want to fall in your comment about the new sales activity. How much is the SwooPricing driving that and sort of what's the pipeline of activity that's still yet to convert or is a lot pulled forward? How's the rest of the activity out there?

well i think uh... rob you have to kind of look in the uh... broad sweep of history you know when uh...

as we experienced from 2011 to August 2018, prices going down, just put yourself in the shoes of a fuel buyer, why buy today if it will be cheaper tomorrow, and so now that you see the curve having kinked and now moving up, there's really two things. Number one, and related obviously, number one, there's an advantage to buying sooner if it's gonna be cheaper, right? And then secondly, because of all of the uncertainty in the supply scenario, there's just a pure franklies.

How is your sort of view on when these pieces need to start to fall in place and how long it takes to get this supply online once decisions start to get made? Well it would take quite a fine prognosticator to predict the timing of actions of the US Congress on the one hand. On the other hand, I read news reports this morning, very promising ones about this Manchin-Schumer legislation possibly passing over the weekend, indications I have seen, Rob.

How is your sort of view on when these pieces need to start to fall in place and how long it takes to get the supply online once decisions start to get made? Well, it would take quite a fine prognosticator to predict the timing of actions of the US Congress on the one hand. On the other hand, I read news reports this morning, very promising ones, about this Manchin-Schumer legislation possibly passing over the weekend, indications I have seen, Rob, and the last person to speak on behalf of.

the Congress, but I think Speaker Pelosi would bring folks back promptly to have this addressed. We've seen a lot of support, anticipatory support on the House side, so our hope is that very, very soon indeed you would have a fully enacted bill that the President would sign in just a very short while from now. And as I've mentioned in my remarks, that's really a game changer, right, because it's got $700 million in it for Halo, and that's exactly the kind of market signal.

that we've been looking for. It's both a market signal but also it's a very significant investment, right? Beyond that, there's the normal appropriations process which is always complex, but especially so in an election year. We've been very encouraged to see the administration which

More than doubled its request for the coming fiscal year compared to last one and then the house Smart was even higher the administration was less at ninety five million dollars than the house put in a hundred million dollars and Industry writ large including the nuclear energy Institute have been actually urging three hundred million dollars all with the same frankly You and mind up. It's really time to get off the dime. We're making significant

realize you can't give us a year by year on it, but any additional color as far as how that breaks down across the six years? Is it roughly even? Is it back half weighted? Is it front half weighted?

Yeah, Joe, I don't think we really go into that kind of thing in public disclosure space. So I think we just kind of do the global numbers and then they will roll out in the successive orders as they roll out.

Okay.

Second thing, uh...

Well, Joe, it's hard enough to speak on my own behalf and I'm sure I'm not going to speak on behalf of other companies. But the second part of your question, it's a real competition. I mean, the department's been out there, they had an industry day, it's real. And we're taking it very, very seriously indeed. These RFIs, if you have any exposure to them, are extraordinarily...

detailed and work intensive things. They are, I think it would make you proud as an American to see the hard work that goes into even preparing the RFI itself. And so to be responsive to a very thoughtfully and thoroughly prepared RFI is a massive undertaking. And we're taking it very seriously. We feel good about our capabilities. We feel good about what we bring to the table, but we are taking nothing for granted. And we're focused on it's like a laser beam.

Thank you. As a reminder, ladies and gentlemen, if you would like to ask a question, please press star one on your telephone keypad. Please press star one on your telephone keypad.

There appear to be no further questions at this time. I would like to turn the floor back over to management for closing comments.

Thank you, operator. This will conclude our investor call for the second quarter of 2022. As always, I want to extend a thank you to our listeners online and investors who called in. We look forward to speaking with you again next quarter.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation and have a wonderful day.

Q2 2022 Centrus Energy Corp Earnings Call

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