Q1 2023 Nuscale Power Corp Earnings Call
Operator 2: Good afternoon, welcome to NuScale's Q1 2023 Earnings Results Conference Call. Today's call is being recorded. All participants are in a listen-only mode. After management's prepared remarks, there will be a question and answer session. If you would like to ask a question at that time, simply press star followed by 1 on your telephone keypad. If you would like to withdraw your question, again, press star one. Thank you. A replay of today's conference call will be available and accessible on NuScale's website at ir.nuscalepower.com. The web replay will be available for 30 days following the earnings call. A telephone replay will also be available for seven days through a registration link, also accessible on NuScale's website. At this time, for opening remarks, I would like to turn the call over to Scott Kozak, Director of Investor Relations. Please go ahead, Mr. Kozak.
Come to new scales first quarter, 20th twenty-three earnings results Conference call.
Today's call is being recorded.
All participants RNA listen only mode off.
After management's prepared remarks, there will be a question and answer session.
If you would like to ask a question at that time simply press star followed by the number one on your telephone keypad you would like to withdraw your question again press Star one.
Thank you a replay of today's conference call will be available and accessible on new skills website.
I R dot new scaled power Dot com.
[noise] web replay will it be available for 30 days following the earnings call.
A telephone replay will also be available for seven days for registration link also accessible on new scales website.
At this time for opening remarks, I would like to turn the call over to Scott Kozak Director out was Investor Relations. Please go ahead Mister Kozak.
Scott Kozak: Thanks, operator. Welcome to NuScale's Q1 2023 earnings results conference call. With us today are John Hopkins, President and Chief Executive Officer, and Chris Colbert, Chief Financial Officer. On today's call, NuScale will provide an update of its business and discuss financial results. We will then open up the phone lines for questions. This afternoon, we posted a set of supplemental slides on our investor relations website. As reflected in the safe harbor on slide two, the information set forth in the presentation and discussed during the course of our remarks in the subsequent Q&A session includes forward-looking statements which reflect our current views of existing trends and are subject to a variety of risks and uncertainties. You can find a discussion of our risk factors, which could potentially contribute to such differences in our SEC filings on Form S-1 and Form 10-Q.
Thanks, operator, welcome to new scales first quarter of 2023 earnings results conference call with Us today, or John Hopkins, President and Chief Executive Officer, and Chris Goldberg, She financial Officer.
Today's call in you scale provide an update of its business and discuss financial results. We will then open up the phone lines for questions.
This afternoon, we posted a set of supplemental sides or Investor relations website as reflected in a safe harbors side to the information set forth in the presentation to discuss during the course of our remarks from the subsequent you in a session includes forward looking statements, which reflect our current views of existing trends and are subject to a variety of risks and uncertainties.
You can find the discussion of our risk factors, which could potentially contribute to such differences in our SEC filings in form S. One and Form 10-Q.
Scott Kozak: I'll now turn the call over to John Hopkins, NuScale's President and Chief Executive Officer. John?
I'll now turn the call over to John Hopkins, New skills, President and Chief Executive Officer John .
John Hopkins: Thank you, Scott. Good afternoon, everyone. I will discuss our recent progress across several operational and financial priorities. My colleague, NuScale CFO Chris Colbert, will provide a detailed update on our financial results and outlook. NuScale Power is growing and maturing as we continue to build momentum on our path towards commercialization. We are leading the charge as the only publicly traded pure-play company focused on zero-carbon baseload power generation and next-generation nuclear technology that supports the critical emerging trends in clean energy and in energy security. As highlighted on slide three, our market opportunity is fueled by dual drivers. First, the energy transition, as power generation must increasingly be sourced from carbon-free sources, including renewables and nuclear, rather than fossil fuels. Second, the growing market need for energy, which is massive and growing.
Thank you Scott and good afternoon, everyone.
I will discuss a reset progress across several operational and financial priorities.
Then my colleague Gil CFO , Chris Culver will provide a detailed update on our financial results and outlook.
Music it was growing and maturing as we continue to build momentum about our passwords commercialization.
We are leading the charge of the only publicly traded pure play company focused on zero carbon Baseload power generation.
The next generation of nuclear technology that supports the critical emerging trends in clean energy and energy security.
That's highlighted a slide three are market opportunity Hugh <unk> dual drivers first the energy transition.
Power generation must increasingly be sourced from carpet free sources, including renewables and nuclear rather than fossil fuels second the grocery market need for energy, which is massive and growing.
John Hopkins: According to a recent McKinsey study, demand for electricity is expected to triple by 2050 as the world shifts away from fossil fuels towards electrification. The resulting need for new low carbon and zero carbon generation will be unprecedented. McKinsey estimates that this energy transition could require an additional 400 to 800 gigawatts of new nuclear capacity, about 10% to 20% of the future global electricity demand, to meet the need for dispatchable power by 2050. NuScale is preparing to help solve this need. We have numerous competitive advantages and are years ahead of our competitors in the small modular or SMR industry. Not only are we the only SMR design certified by the U.S. Nuclear Regulatory Commission, or NRC, but we are also cost competitive, have an established manufacturing and fuel supply infrastructure, and are poised to begin manufacturing our NuScale Power Modules later this year.
According to a recent Mckenzie study demand for electricity is expected to triple by 2050 is the world's shift away from fossil fuels George electrification.
The resulting need for new low carb. It is zero carpet generation will be unprecedented.
Mckinsey estimates with this energy transition could require an additional 400 to 800 gigawatts of new nuclear capacity.
About 10% to 20% of a future global electricity demand to meet the need for the special power by 2050.
<unk> is preparing to help solve this need.
We have numerous competitive advantages that are years ahead of our competitors and a small modular or S. M R industry.
Not only are we the only got some art design certified by the U S nuclear regulatory commission or NRC.
But we are also cost competitive having established manufacturing and fuel supply infrastructure.
He used to begin manufacturing a nuclear power modules later this year.
John Hopkins: On slide four, we highlight the five 2023 company objectives that we detailed on our previous earnings call. We made important progress on all five objectives during Q1 and are confident we will achieve those goals this year as we demonstrate our continued advancement towards commercialization. I will provide a business development update, starting with our two committed customers, and then I'll highlight a few developments in our customers' pipeline. As you can see on slide five, for the Carbon Free Power Project, or CFPP, we executed an order for long lead materials and have transitioned to the NuScale Power Module fabrication process, which I'll speak about in greater detail in a few minutes.
Applied for.
Highlight the 520 twenty-three company objective so we detailed on a previous earnings call.
We made important progress at all five objectives during the first quarter.
Confident we will <unk> this year as we demonstrate our continued advancement towards commercialization.
Next I will provide a business development update starting with our two permitted customers and then I'll highlight a few developments and our customers pipeline.
As you can see a slide five for the carpet free power project or C. A P. P y.
Executed in order for long lead materials and have transition to the new scale power module fabrication process.
Could you speak about in greater detail in a few minutes.
John Hopkins: In addition, NuScale is working with our CFPP customer, Utah Associated Municipal Power Systems, or UAMPS, to finalize the combined license application, or COLA, which is on track to be submitted in early 2024. The COLA is both a construction permit and operating license used to emphasize Part 52 as a single-step licensing process versus the older two-step Part 50. We are also developing a Class 2 cost estimate for this project. As we have discussed, NuScale and UAMPS are targeting 80% subscription for the CFPP by year-end 2023. We are working closely with UAMPS on securing additional subscriptions and believe this can be generated through a combination of existing CFPP participants increasing their subscription levels, UAMPS members who are not currently CFPP participants signing on to the project, and additional western public power entities, investor-owned utilities, and industrials.
In addition, you scale is working with R. C. A P P customer, Utah associated Missouri Municipal power systems are you as.
You finalize that combine license application or Cola.
Is on track can be submitted in early 2024.
The Cola is both a construction permit and operating license used emphasized card 52.
Single stab licensing process versus the older two-step part 50.
We're also developing a class to cost estimate for this project.
As we have discussed new scale anywhere so targeting 80% a subscription.
P P by your in 2023.
We are working closely with your way of social security additional subscriptions I believe this can be generated through a combination of existing C. F. D. P participants increasing their subscription levels.
<unk> members, who are not currently C. F. P. P participants signing onto the project and additional western public power you'd entities investor owned utilities and industrials.
John Hopkins: UAMPS members and other public power entities in the western US are facing the rapid retirement of coal plants and the expense and the challenge of accessing natural gas. These issues highlight their need to add capacity and dispatchable load growth to complement renewable resources. The facts on the ground will be reflected in integrated resource plans. On slide six, with our second committed customer, Romania's RoPower, we are proceeding with phase I, front-end engineering and design, or FEED work. Activities completed during the first phase of the FEED work will define the major site and site-specific inputs for our VOYGR-6 power plant, which will be deployed on the site of a decommissioned coal-fired power plant. We are already in discussions on the next phase of the project and have begun engagement with local suppliers.
You have some members and other public power entities in the Western U S or face in a rapid retirement of cold class and the experienced in the challenge of accessing natural gas.
These issues I like their need to add capacity and dispatch Willow Grove to compliment renewable resources.
The facts and the ground will be reflected in the integrated resource plans.
Five six with our second committed customer Romania's real power.
We are proceeding with phase one Friday in engineering and design or feed work.
Activities completed during the first phase of the <unk> will define the major site site specific inputs, where I've ordered your six power plant.
Which will be deployed on the site of decommissioning coal fired power plant.
We are already in discussions on the next phase of the project begun engagement with local suppliers.
John Hopkins: In addition to that work, the Romanian nuclear regulator, CNCAN, provided authorization to NuScale for safety-related design work to begin. On slide seven, I'll spotlight our robust customer pipeline and provide a few highlights. Let's start in Poland. As you may recall, in 2022, NuScale signed a task order with KGHM, a global leader in copper and silver production, to deploy the first SMR in Poland. In April, KGHM applied to the Ministry of Climate and Environment for what is called a fundamental decision to build an SMR in Poland. A grant by the ministry will underscore Poland's support for SMRs and paves the way for critical next steps in deployment, such as location selection and construction permitting. Moving now to Indonesia, in March, the U.S. Trade and Development Agency, or USTDA, awarded a grant to Indonesia Power for technical assistance in developing the country's first SMR.
In addition to that work the Romanian nuclear regulator.
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Provided authorization to <unk> for safety related design work to begin.
Now at five seven L spotlight, our best customer pipeline.
Provide a few highlights.
Let's start in Poland. As you may recall in 2022, new skills side, the task order with K G. H U a global leader in <unk> silver production to.
To deploy the first SLR in Poland.
In April K G. H M apply to the ministry of climate environment.
Called a fundamental decision to build an SLR empowered.
Okay granted by the Ministry will underscore polling support for <unk>.
Pays away for critical next steps in deployment, such as location selection and construction permitting.
Moving out to Indonesia in March the U S trade and development agency are you a C D a.
What are the grant to Indonesia power for technical assistance and develop any countries first S. M R.
John Hopkins: Indonesia Power had already selected NuScale's technology, now with the USTDA's assistance, next steps include a site selection plan, power plant and interconnection system design, preliminary environmental and social impact assessment, risk assessment, cost estimate, and regulatory review. President Biden's Partnership for Global Infrastructure and Investment support countries like Indonesia seeking reliable, zero-carbon baseload power. I also want to highlight the memorandum of understanding that we have signed recently with two partners in Korea, Doosan Enerbility and the Export-Import Bank of Korea. Not only will this strengthen our collaboration with these groups, it also supports NuScale SMR deployment as we work together in areas such as marketing, technical support, and development of a global supply chain. Looking at the pipeline more broadly on slide eight, we are pleased and confident with the breadth and scale of our opportunities.
Indonesia power had already selected new skills technology.
Now in the U S. T D. A's assistance next steps include excite selection plan.
Your plan and interconnection system design <unk>.
<unk>, environmental and social impact assessment risk assessment.
Assessment and regulatory review.
President <unk> partnership for global infrastructure investment support countries like Indonesia C can reliable zero carbon baseload power.
Finally, I also want to highlight memorandum of understanding that we assign recently with two partners in Korea.
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Not only will strengthen our collaboration these groups. It also supports new scale with some of our deployment as we work together in areas such as marketing technical support and development of a global supply chain.
Looking at the pipeline more broadly slight age, we're pleased and confident with the breadth and scale of opportunities in the U S were seeking a notable pick up an interest will potential customers or the bed.
John Hopkins: In the US, we're seeking a notable pickup in interest from potential customers as they better understand the impact of the Inflation Reduction Act, repurposing coal plants and the production of hydrogen are of particular interest. Conversations are at various stages with investor-owned utilities, municipal utilities, tech companies with data centers to support, as well as groups involved in carbon capture initiatives. In addition, major industrial companies are looking to take advantage of the IRA as they seek 24/7 clean, reliable energy and process heat for various applications. In terms of potential customer interest, the size of the pie is growing and diversifying. This is really a continuation of a trend we have been seeing as new potential customers engage and existing relationships gain further traction. There's a lot of interest in providing color on these customer conversations.
Better understand the impact of the inflation reduction Act <unk>.
Re purpose in coal plants in a production of hydrogen are of particular interest.
Conversations are at various stages of Investor owned utilities municipal utilities company.
Companies with data centers to support as well as groups involved in carbon capture initiatives.
In addition, major industrial companies, you're looking to take advantage of the I R. A as they take 24, seven clean reliable energy and processed heat for various applications.
In terms of potential customer interest the size of the pie is drawing and diversified.
This is really a continuation to retrain, we haven't seen as new potential customers engage in existing relationships game for an attraction.
There's a lot of interest in providing color on each customer conversations.
John Hopkins: Turning to slide nine, I'll talk through considerations that are resonating most prominently. This includes modularity beyond construction, meaning that NuScale Power Modules are modular in fabrication and in operation. Once installed, our multi-module plants can produce reliable, clean electricity for the grid while allocating one or more modules to economically produce hydrogen or provide process heat for an assortment of industrial applications. This is a competitive differentiator for NuScale, especially when combined with shorter and staggered refueling outages between modules that further enable a high facility capacity factor. The result is a highly reliable and flexible source of carbon-free energy. Other attributes prominent in customer conversations are NuScale's black start and island mode capabilities. As a reminder, black start refers to the ability to start the plant up from cold conditions without external grid connections, a first of a kind in the nuclear industry.
So turning to slide nine I'll talk to considerations that have resonated most probably.
This includes modularity beyond construction.
And that new scale power modules modular fabrication in an operation.
Once installed are multi modular plants can produce reliable claim that you received for the grid while allocating.
Al Qaeda in one or more modules economically produce hydrogen or provide processes for an assortment of industrial applications.
This is a competitive differentiator for new scale.
Especially when combined with shorter and staggered refueling outages between modules that further enable high facility capacity factor.
The result is a highly reliable and flexible source of carbon free energy.
Another attribute prominent in customer conversations are new skills, black sorry, an island load capabilities.
Minder Blackstock refers to the ability to start to plan out some cold conditions without external grid connections a first of the kinds the nuclear industry.
John Hopkins: Island mode is the ability for a single NuScale Power Module to supply all the electrical needs of a VOYGR power plant and support a dedicated facility, like a data center in the event of the loss of the grid. Industrial companies who are seeking uninterrupted energy are also keen on our island mode capabilities. One additional top-of-mind attribute is the NRC's approval of our methodology for determining the Emergency Planning Zone, or EPZ, the NuScale VOYGR SMR power plants. The NRC approval enables that, in most instances, an EPZ that only extends to a site's boundary will be necessary for NuScale's VOYGR power plants, as opposed to the 10-mile radius Emergency Planning Zone used by every existing US nuclear power plant. NuScale is the only design that has an NRC-approved methodology that supports this capability.
I live mode is the ability for a single is Gil cower module to fly all the electrical needs of a.
Voyager Powerplant can support a dedicated facility like a data center in the event of the loss of the grid.
Industrial companies.
Seeking uninterrupted energy were also keen on our island load capabilities.
What additional top of the main attribute is the inner seal of approval of our methodology for determining the emergency planning so.
P C.
New scaled Voyager S M R power plants.
Theater C approval enables that in most instances and a T. C that only extends to excites boundary will be necessary for new skills void your power plants.
As opposed to the 10 mile radius emergency planning. So you just buy every existing U S nuclear power plant.
New scale is the only decide that as an interim C approved methodology that supports this capability.
John Hopkins: This enhances the ability for NuScale SMR plants to be sited near process heat users or at a retired coal power plant sites where population densities may be higher. We can also utilize the retired coal plant's infrastructure, including transmission lines, and retain and employ a similar local workforce. Customers value NuScale's technology advantages. We appreciate the regulatory path we have chosen and recognize our multi-year head start in licensing. Our shift to manufacturing and custom delivery are other key differentiators compared with SMR competitors that are a much earlier point in their regulatory and commercialization development. On slide 10, we summarize other Q1 operational highlights. In March, the NRC began the technical review of NuScale's updated Standard Design Approval, or SDA, application.
Enhances the ability for new skill that some of our plans <unk> near processes users or had a retired co powerplant sites, where population densities maybe higher.
We can also utilize the retired coal plants infrastructure, including transmission lines and retain and employ a similar local workforce.
Customers value new skills technology advantages.
Date, the regulatory path, we have chosen and recognize your multiyear headstart and licensing.
Are shifted manufacturer accustomed delivery.
Other key differentiators compared with S. M. Our competitors, they're very much earlier point in a regulatory and commercialization development.
I'd fly can we summarize or the first quarter operational highlights.
<unk> the NRC began a technical review of your skills updated standard design approval or S. D application.
John Hopkins: This review is a process by which we can attain NRC approval for a power upgrade to a 77 MW module that will support the capacity needs for a wider range of customers, as well as improve facility economics. The design reflected in this application includes the same fundamental safety case and features approved by the NRC in 2020. The NRC will issue a review schedule once they docket the application. With our track record of regulatory approvals at the NRC, we are familiar with their process, and we expect to see the SDA application accepted for review this year. Now let's discuss customer material delivery. Back in March, we announced that we'd placed our first long-lead material order with our partner Doosan Enerbility. They will produce forgings and materials essential in the manufacturing of the first NuScale Power Modules. Since that announcement, Doosan commenced forging production.
This review is a process, but which we can obtain unsc approval for a power Uprate Ray 77 megawatt module that will support the capacities for a wider range of customers as well as approved facility economics.
The design reflected in this application includes the same fundamental safety case and features approved by the NRC in 2020.
You are a civil issue of abuse schedule once they dock at the application.
With our track record of regulatory approvals at theater see we're familiar with their process can we expect the C. D. S. D application accepted for review this year.
Yeah, let's discuss customer material delivery.
March we announced that we place our first lovely material order with our partner do son and her ability.
They will produce for jeans and materials essential in the manufacturing the first used your power modules.
That's sad announcement Tucson commenced forging production.
John Hopkins: Later this year, the manufacturing process begins where the forgings are welded and fabricated to their final dimensions. These are the first fabricated materials for the modules that we delivered to the CFPP plant. We are not aware of another North American SMR vendor that has progressed their technology to the manufacturing phase. I am pleased to report that the Orion Registrar issued NuScale a highly regarded ISO 9001:2015 certification. This certification is an international standard that recognizes our quality management standards and controls are scalable and repeatable across the globe, further validating NuScale's technology to customers internationally. We're off to a great start in 2023. We have a significant opportunity in front of us as we continue to build momentum, grow our business, and deliver on our commitments to our customers.
Later this year the manufacturing process begins with a <unk> or well fabricated to their final dimensions. These.
These are the first fabricated materials to the modules that'd be delivered to the C. A P P plant.
We are not aware of another north American estimate Bender. It has progressed their technology to the manufacturing phase.
In addition, I am pleased to report that your Ryan Registrar issued new scale, but highly regarded Iceland 9001 2015 certification.
This certification as an international standard that recognizes our quality management standards and controls are scalable and repeatable across the globe.
Further validated new skills technology to customers internationally.
February we're off to a great started 2023, we have a significant opportunity in front of us as we continue to build low mirror <unk> and deliver on our commitment to our customers.
John Hopkins: Now I'll hand it over to Chris to provide our financial update for the quarter.
Now hand, it over to Chris gigabyte or financial update for the quarter.
Chris Colbert: Thank you, John. Hello, everyone. Our financial results are available in our press release and filings. My focus will be on NuScale's performance drivers. I'll start by discussing our Q1 results found on slide 11. All figures following refer to NuScale's Q1 2023 results, unless I state otherwise. NuScale ended the quarter with a cash balance of approximately $252 million. Consistent with past quarters, our primary use of cash is related to operating expenses as we continue our pivot into production and commercialization. Operating expenses were elevated in the quarter due to compensation costs associated with a growing headcount and minor shifts in project schedules. While the shifts impact quarterly results, they are not meaningful for our overall project timelines. CapEx was minimal. Again, primarily consists of software and computer hardware to support R&D, consistent with our asset-light model.
Thank you John and Hello, everyone.
Our financial results are available in our press release in filings. So my focus will be a new skills performance drivers.
I'll start by discussing our first quarter results fallen slide 11.
All figures follow you refer to new scales first quarter 2023 results unless I stayed otherwise.
New scale ended the quarter with a cash balance of approximately $252 million <unk>.
Consistent with past quarters are primary use of cash is related to operating expenses as we continue I'll put it into production and commercialization.
Operating expenses were elevated in the quarter due to compensation costs associated with a growing headcount.
Minor shifts and projects schedules.
While the shifts impact quarterly results, they're not meaningful for overall project timelines.
Capex was minimal and again, primarily consists of software and computer hardware.
Port R&D.
Consistent with our asset light model.
Chris Colbert: Partially offsetting expenses in CapEx was the cost share earned from various federal agencies and revenue. As previously stated, the DOE's fiscal year 2023 appropriations available for NuScale were lower than anticipated. Consistent with our DOE award agreement, we requested an amount for the fiscal year 2024 appropriation that would make up for the shortfall in fiscal year 2023. This funding is critical to support our continued participation in the CFPP. The DOE appropriations process is ongoing, but I can relay that our outreach to Capitol Hill is proactive and extensive. NuScale continues to receive strong bipartisan and bicameral support, as well as backing from the Biden administration. We expect fiscal 2024 DOE cost share to be determined in the latter half of the year. Revenue remains limited, as expected, given the company's current phase of development. At this stage, we mainly generate revenue by providing consulting services to customers.
Partially offsetting expenses in Capex <unk> earn from various federal agencies and revenue.
As previously stated the deal is fiscal year 2023 appropriations available for new scale lower than anticipated.
Consistent with our Daily Award agreement.
<unk> the amount for the fiscal year 2024 appropriation that would make up for the shortfall in fiscal year 2023.
This funding is critical to support our continued participation and the C. I P. P.
The daily Appropriations process is ongoing but I can relate that our outreach to Capitol Hill is proactive inexpensive.
New scale continues to receive strong bipartisan and bicameral support as well as backing from the Bible administration.
We expect physical 2024 daily Kos share to be determined in the latter half of the year.
Revenue remains limited as expected given the company's current phase of development.
At this stage, mainly generate revenue by providing consulting services to customers.
Chris Colbert: As we pivot to manufacturing our modules, NuScale will receive payments from customers for equipment orders. As mentioned on our last call, the shifting of schedules within the CFPP will push out revenue and cost to later periods. With that said, our first customer delivery schedule remains unchanged. Essentially, we were able to obtain more favorable payment terms and schedules from our suppliers, which was passed through to the CFPP, thereby shifting out the CFPP spending profile. I would add that these types of shifts are normal, expected, and can go in either direction. In fact, we saw a pull forward in revenue recognition from our RoPower project in Q1 due to increased activities. Before concluding, I want to reiterate that we continue to forecast cash flow from operations guidance in a range of -$102 million to -$142 million for the full year.
As we pivot to manufacturing or modules, new scale will receive payments from customers for equipment orders.
As mentioned on our last call the shipping of schedules within the C. I P. P. R push out revenue and cost later periods.
That said, our first customer delivery schedule remains unchanged.
Essentially we were able to obtain more favorable payment terms schedules from your suppliers, which was pass through to the C. A P. P.
By shifting out the C. A P P spending profile.
I would add that these types of shifts in normal expected and can go in either direction.
In fact, we saw pull forward and revenue recognition from a row power project.
First quarter due to increased activities.
Before concluding I want to reiterate that we continue to forecast cash flow from operations guidance and a range of negative 102 million two negative $142 million for the full year.
Chris Colbert: 2023 is poised to be a year of progress and development for NuScale as we transition to manufacturing and customer delivery. We remain laser-focused on serving our existing customers while advancing our growing pipeline. More importantly, we remain positive about the financial health of the company. We continue to be well-positioned to navigate in a dynamic environment, meet our near and longer-term milestones, and create value over time. With that, I'd like to thank you again for joining us today and for your continued support of NuScale. We'll now take questions. Operator?
2023 is poised to be a year of progress and development for new scale.
Transition to manufacture new customer delivery.
We remain laser focused on serving our existing customers, while advancing are growing pipeline.
More importantly, we remain positive about the financial health of the company <unk>.
He continued to be well positioned to navigate in a dynamic environment meet are near and longer term milestones and create value over time.
With that I'd like to thank you again for joining us today.
He'd support of new scale will.
Will now take questions.
<unk>.
Operator 2: Your first question is from the line of Shar Pourreza with Guggenheim Partners. Your line is open.
Your first question is from the line of sharp <unk> Guggenheim Partners. Your line is open.
James: Hey, guys. Good afternoon. It's actually James for Shar. John, you had hit a little bit on it in your prepared remarks, but can we get a little more color on how the conversations are progressing with some of those entities to hit that committed subscription level, the CFPP?
Hey, guys. Good afternoon, it's actually James for sharp.
John you and hit a little bit on it and your prepared remarks, but can we get a little more color on how the conversations are progressing with some of those entities to hit that submitted subscription level.
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John Hopkins: Yeah, actually, Shar, thanks for the question. It's going quite well. What we're looking at is members that can up their subscription from what they currently have. We're in discussions also with certain industrials that don't necessarily want to own a nuclear asset, but they certainly want the 24/7 clean energy that will be awarded from our CFPP project. We continue to work with the customer, and so far, the progress is looking pretty good.
Yeah actually sharp thanks for the question is going quite well you know what what we're looking at is members that can up their subscription from what they currently have.
We're in discussions also with specific certain industrials that don't necessarily want an older <unk> nuclear asset that they certainly want to 24 seven.
Clean energy.
But.
Awarded from or from our C. A P. P project so.
Tend to work with the customer and so far the progress is looking pretty good.
James: Okay. Do you expect to, I guess, update the Street on new commitments as they happen? More broadly, I guess, what kind of visibility will we have on the process as it ramps up?
Alright, and do you expect to update the street, a new thing happen or more broadly what kind of disability will be half on the process of the branch.
John Hopkins: No, we'll continue to update as it goes forward. Like I said. Excuse me. I got a chest cold here. No, we'll continue to update, obviously, as we continue to progress.
No. It will continue to update as it as it goes forward and like I said we're.
Excuse me.
Excuse me.
Let's go over here.
[noise] no will continue to update obviously cause we continue to progress.
James: Okay, perfect. Thanks, guys.
Okay perfect. Thanks.
Operator 2: Again, if you would like to ask a question, please press star followed by the number one on your telephone keypad. Your next question comes from the line of Marc Bianchi with TD Cowen. Your line is open.
Again, if you would like to ask a question. Please press star followed by the number one on your telephone keypad.
Your next question comes from the line of Marc Bianchi with Katie Cowan Your line is open.
Marc Bianchi: Hey, thank you. I guess, I think it was Chris mentioned some of the vendors working with you on CFPP to sort of adjust the timelines there a little bit to align with their timeline. I guess, does that help from the vendors also potentially lower the cost estimate below the $89 per megawatt hour? That was the latest update.
Okay. Thank you.
I guess.
I think it was Chris mentioned some of the vendor the vendors working with you on C. F. P P to.
Sort of adjust the timelines are a little bit to to align with with their their timeline I guess.
Is does that does that help from the vendors also potentially lower the cost estimate below the $89 per megawatt hour that was the latest update.
John Hopkins: Hey, Marc, this is John. In fact, 2 weeks ago, I was in both Japan and Korea speaking with our strategic partners, and what we continue to talk about is any ways they and we collectively can continue to drive costs down. As you know, with inflation and interest rates being what they are, these suppliers have taken a very holistic view. They're not looking at this as a one-off project. Their intent is to continue to drive competitiveness as much as possible. In Korea, I got to tell you, the fact that we're actually pouring steel and in the process of delivering or going to be delivering our first forging, their Doosan Enerbility is extremely excited. We're excited about it. Same thing goes across the board with Samsung C&T.
Hey, Margaret is John in fact, two weeks ago I was in both Japan, and Korea speaking with our strategic partners and we continue to talk about is any ways. They and we collectively can continue to drive costs down you know.
You know with inflation and interest rates me what they are do these these suppliers I've taken a very holistic could you they're not looking at it just as a one off project.
So you know their intent is to continue to drive.
Uhm competitiveness as much as possible and.
In Korea, I Gotta tell Ya the.
The fact that we're actually pouring steel and in the process of delivering are going to be delivering our first forging their <unk> abilities extreme excited we're excited about it.
And.
Same thing goes across the board with Samsung C. T February we made with I understand that you know cause the schedule is crucial to the success of our project. So they're willing to sharpen your pencils as much as I can.
Chris Colbert: Everybody we meet with understands that cost to schedule is crucial to the success of our project. They're willing to sharpen their pencils as much as they can.
Marc Bianchi: Okay. Maybe more broadly on costs, if I look at some of the stuff that's in the budget for UAMPS and CFPP project, there's like a $9 billion number that they have for the cost estimate for that. I don't know how representative that might be of a first-of-a-kind cost, maybe you could talk about sort of where you see overnight first-of-a-kind cost and how many copies you need to deliver to get that down to whatever your Nth of a kind target is going to be.
Okay, maybe more broadly on costs.
I look at some of the stuff that's in the budget for for you absence. He F. P. P project, there's like a 9 billion dollar number that they have for for the cost estimate for that and you know I.
I don't know how representative that might be of of first of a kind cost.
Maybe you could talk about sort of where you see overnight first of a kind cost and how many how many copies you need to deliver to get that down to whatever you're into the time target just gonna be.
John Hopkins: Collectively, Marc, we're just now entering into the Class 2 estimate. Working with Fluor Corporation plus our suppliers, as I stated earlier, every effort's being to drive that cost as low as possible. We're starting to see on the supply side, things are starting to free up a little bit. With inflation and with the interest rates we're faced with, we will continue to focus on. Right now, we feel very comfortable at that $89 MWh, and hopefully we'll be able to, as we go through the Class 2 estimate, reduce it further down. Chris, do you have anything to add?
Yeah collectively Mark you know, we're just now entering into the the class to estimate.
So working for a corporation plus our suppliers as I stated earlier every effort speed and to drive that cost as low as possible. You know, we're starting to see in a supply side things are starting to free up a little bit, but you know with inflation with the interest rates are faceless, we will continue to focus on.
Right now we feel very comfortable with at 89 dollar megawatt hour and hopefully we'll be able to actually go through the class to estimate reduce it further down.
<unk>.
Mmm.
[noise] coverage on [laughter]. Thanks.
Chris Colbert: No, I think you covered it, John. Thanks.
Marc Bianchi: Chris, the Q1 cash from operations was a $43 million use. I know you've got the guidance out there of $100 to 140 million use for the year, but just curious, is there any thoughts on, besides the DOE money coming in later this year, potentially big things that could move cash up or down? Do you see it more likely at the high end or the low end of the guidance ranges, given how Q1 shaped up?
Chris.
The first first quarter free or cash from operations was 43 million dollar use.
You've got the guidance out there of 100 to 140 use for the year, but just curious is there any.
Any thoughts on you know besides a G. L E money coming in later this year potentially big big things that could move cash up or down in D. C. It more likely at you know the high end or the low end of the guidance range is given how first quarter shaped up.
Chris Colbert: Yeah, really in terms of the guidance that we gave for a range that was driven primarily by the variability in the DOE funding that could come to us from the fiscal year 2024 appropriation, which would come in Q4. Everything else we're seeing is probably some shifting between quarters. Overall, the cash flows and the schedule we have are still pretty good, so that the overall guidance we have of that range of $102 to 142 million cash use is still operative for us. There's no reason for us at this point to change that. Rest assured that if information comes to light where we can either solidify or need to update, we will certainly do that. As of right now, we're still comfortable with that range.
Yeah. So you know really in terms of the guidance. We gave her a range that was driven primarily by the variability in the Dear we funding that could come to us from the physical.
24, appropriation, which would come in in the last quarter of the year. So you know everything else were saying is probably some shipping between quarters.
Overall, the cash flows in the schedule. We have are are still pretty good so that the overall guidance, we handle that range of 100 and 242 million.
<unk> still operative for us.
And there's no reason for us at this point to to change that but.
Rest assured that if.
Information comes to light, where we can either solidify or need to update you know, we will certainly do that but as of right now or crystal comfortable with that range.
Marc Bianchi: Okay, great. I just got one more, and I don't know what you guys can say on it. Fluor the other day on their call had mentioned kind of in discussions or working with their strategic investor to kind of get their position down to their minority target, I think, by the end of the year, which seems like a pretty aggressive timeline. I would suspect that you guys might be involved in some of those conversations with investors. If there's any color you're able to add on that, it would be appreciated.
Okay, Great I, just got one more and I don't know what you guys can say on it but you know floor. The other day on their call had mentioned.
Kind of discussions or working with your strategic investor to kind of get their position down to their minority target I think by the end of the year, which it seems like a pretty aggressive timeline, but I would suspect it.
Guys might be involved in some of those conversations with investors. So if there's any color you're able to add on that it would be appreciated.
John Hopkins: Yeah, Marc, I don't know. With our NDAs in place and what Fluor's doing in their transaction, there's really not much we can say, actually.
Yeah, Mark I don't I don't know, it's R and D as in place and.
<unk> doing in a transaction, there's really not much we can say actually.
Marc Bianchi: Okay, fair enough. I'll turn it back. Thank you.
Okay Fair enough I'll turn it back thank you.
Operator 2: That concludes our Q&A session. I will now turn the call back to Mr. John Hopkins for closing remarks.
That concludes our Q&A session I will now turn the call back to Mister John Hopkins Foreclosing remarks.
John Hopkins: Thank you, operator. Again, with the only SMR design certified by the U.S. Nuclear Regulatory Commission, with two secured customers and a robust business development pipeline, NuScale is well positioned to commercialize and deliver clean energy at scale. Nuclear technology is essential to powering the global energy transition, and we are at the forefront of that effort with our ability to deliver safe, scalable, and reliable carbon-free nuclear power. As I stated earlier, we're off to a good start in 2023 with progress on all fronts, and I look forward to what we can accomplish together throughout the remainder of the year. Again, I'd like to thank all of you for your interest in NuScale and for participating in our call today. Thank you.
Thank you operator.
Yeah, and with the only SNR design certified by the U S Nuclear regulatory Commission.
With two secured customers in a robust business development pipeline to.
<unk> is well positioned commercialized and deliver clean energy F scale.
Nuclear technology is essential to power in the global energy transition and we are at the forefront of that effort with our ability to deliver safe scalable and reliable carbon free nuclear power.
As I stated earlier, we're off to a good starting 20th three with progress in all fries.
And I look forward to what we can accomplish together throughout the remainder of the year again I'd like to thank all of you for your interest in you scale. It for participate in our call today. Thank you.
Operator 2: Ladies and gentlemen, this concludes today's conference call. You may now disconnect.
Ladies and gentlemen. This concludes today's conference call you may now disconnect.
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