Q4 2023 NuScale Power Corp Earnings Call
Operator: Good afternoon, and welcome to Nuscale's fourth quarter and full year 2023 earnings results conference call. Today's call is being recorded, and all participants are in a listen only mode.
Good afternoon, and welcome to new skills fourth quarter and full year 'twenty twenty-three 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 during that.
Operator: After management's prepared remarks, there will be a question and answer session. If you would like to ask a question during that time, simply press the star followed by the number one on your telephone keypad. And if you would like to withdraw that 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 for 30 days following the earnings call. 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.
Time simply press Star followed by the number one on your telephone keypad and if you would like to withdraw that question again press Star one. Thank you a replay of today's conference call will be available and accessible on new skills website at IR Dot news scale power Dot com.
The web replay will be available for 30 days following the earnings call. 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. Thank you operator, welcome the new skills fourth quarter and full year 2023 earnings results Conference call.
Scott Kozak: Thank you, operator. Welcome to Nuscale's fourth quarter and full year 2023 earnings results conference call. With us today are John Hopkins, President and Chief Executive Officer, and Randy Hamady, Chief Financial Officer. On today's call, Nuscale will provide an update on its business and discuss financial results. We will then open the phone lines for questions.
With us today are John Hopkins, President and Chief Executive Officer, and Randy <unk>, Chief Financial Officer.
On todays call ill provide an update on the business and discuss financial results. We will then open the phone lines for questions.
Scott Kozak: This afternoon, we posted a set of supplemental slides on our investor relations website. As reflected in the safe harbor statements 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 four 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 10-K for our fiscal year 2023 and in our prior SEC filings. I'll now turn the call over to John Hopkins, Nuscale's President and Chief Executive Officer. John.
Afternoon, we posted a set of supplemental slides on our Investor Relations website, that's reflected in the safe Harbor statements on slide two the information set forth in the presentation and discussed during the course of our remarks and 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.
Finally, a discussion of our risk factors, which could potentially contribute to such differences in our SEC filings on Form 10-K for our fiscal year 2023 and in our prior SEC filings I will now turn the call over to John Hopkins, and scaled President and Chief Executive Officer John.
John L. Hopkins: Thank you, Scott, and good afternoon, everyone. First, I'd like to thank our shareholders for their continued support and belief in the future success of Nuscale. I also want to recognize our global strategic partners, who have invested significant time and capital into our advanced design, supply chain, and delivery capability. In addition, I'd like to express how incredibly proud I am of each and every Nuscale employee for their dedication, fortitude, and commitment to our values and mission. Together, I believe we have the capacity to improve and advance global power production to meet the future energy demands of our communities and businesses with clean, safe, and highly innovative small modular reactor nuclear technology. When Dr. Jose Reyes, Nuscale's founder and chief technology officer, started his pioneering work developing SMR technology, few could have anticipated the growth and demand for sustainable baseload, 24-7 carbon-free energy driven by power usage among data centers and AI, major industrial projects, Today, as seen on slide 3, we have invested more than $1.8 billion to develop the sole small-mod reactor, or SMR, nuclear technology approved by the U.S. Nuclear Regulatory Commission, or NRC. No other technology developer, as we know, even has a design certification application under review.
Thank you Scott and good afternoon, everyone first I'd like to thank our shareholders for their continued support and belief in the future success of new scale.
I also want to recognize our global strategic partners, who have invested significant time and capital into our advanced design supply chain and delivery capabilities.
In addition, I'd like to express how incredibly proud I am of each and every new scale employee for their dedication.
And commitment to our values and mission.
Together I believe we have the capacity to improve and advanced global power production to meet their future energy demands of our communities and businesses with clean safe and highly innovative small module reactor nuclear technology.
When Dr. Jose Reyes, new scales, founder and Chief Technology Officer started his pioneering work developing aftermarket technology you could have anticipated the growth in demand for sustainable Baseload 24, seven carbon free energy driven by power usage amongst datacenters in AI.
Major industrial projects transportation and utility customers.
Today as seen on slide three we have invested more than one 8 billion to develop the sole small module reactor or SLR nuclear technology approved by the U S nuclear regulatory commission oriented C.
No other technology developed brands, we know even has a design certification application under review.
John L. Hopkins: And this process requires several years and many hundreds of millions of dollars of investment. Looking ahead, our principal objective at Nuscale is to transition from R&D to the commercialization of our proprietary technology. In this effort, we have engaged with our commercial partner, Inter1 Energy, to build a diverse global pipeline and deploy Nuscale SMR-enabled plants worldwide. Additionally, with the investment and expertise of our strategic partners, we have de-risked the manufacturing supply chain while maintaining scope for localization of certain supplies. Moving to slide four, last year we made important progress on regulatory and manufacturing milestones. Let's start with regulatory.
And this would process requires several years and many hundreds of millions of dollars of investment.
Looking ahead, our principal objective that new scale is on transitioning from R&D to the commercialization of our proprietary technology.
In this effort, we have engaged with our commercial partner <unk> energy to build a diverse global pipeline and deploy new scale SLR enable plants worldwide.
Additionally, with the investment and expertise of our strategic partners, we have de risked the manufacturing supply chain, while maintaining scope for localization of certain supplies.
Moving to slide four for last year, we made important progress on regulatory and manufacturing milestones.
Let's start with the regulatory in July 2023, new scale standardization approval application.
John L. Hopkins: In July 2023, Nuscale's standard design approval application for a 77 megawatt uprate design was accepted for review by the U.S. Nuclear Regulatory Commission. The NRC frequently reviews power upgrade applications similar to our moves from a 50 megawatt to a 77 megawatt design, and we expect the NRC's process to conclude within 24 months. There are no perceived challenges to the process or timeline.
77 megawatt upright design was accepted for review by the U S Nuclear regulatory Commission.
The NRC frequently reviews power up rate applications similar to our moves so about 50 megawatt towards 77 megawatt design.
And we expect the NRC process to conclude within 24 months.
There are no perceived challenges to the process or timeline.
John L. Hopkins: While the design is based on the same fundamental safety case and features approved by the NRC in 2020, we strongly believe the 77 megawatt Nuscale power module supports a wider range of customers. In addition, we have worked tirelessly to advance our manufacturing readiness. As you recall, we placed our first Longleaf material loader with Doosan interoperability in March of 2023. And last month, we visited Doosan at their world-class factory in Korea.
While the designers based on the same fundamental safety case and features approved by the NRC in 2020, we strongly believe the 77 megawatt new scale power module.
<unk> a wider range of customers.
In addition, we have worked tirelessly to advance our manufacturing readiness as Youll recall, we placed our first long lead material odor would do sun and in mobility in March 2023.
And last month, we visited you saw it at their World Class factory in Korea, There, we had the opportunity to witness the tremendous investment <unk> has made in advancing our production capabilities.
John L. Hopkins: There, we had the opportunity to witness the tremendous investment Doosan has made in advancing our production capability, including developing specialized technologies to manufacture forgings and other materials associated with the first Nuscale power module. The scale of their facilities is absolutely astounding, and we are grateful for their partnership. For all of us, it is thrilling to see Nuscale technology come to life.
Including developing specialized technologies to manufacturer forgings and other materials associated with our first new scale power modules.
The scale of their facilities is absolutely astounding and we are grateful for their partnership.
For all of US it is thrilling to see new scale technology come to life.
John L. Hopkins: Our Korean, Japanese, American, and other international supply chain relationships are true competitive advantages for Nuscale, even more so when you consider that many of these partners are also strategic investors. For over 10 years, Nuscale has been working directly and continuously with more than 23 uniquely capable suppliers to jointly progress our design for manufacturing readiness. These suppliers have provided unwavering support for our efforts, and as a result, Nuscale's supply chain is leading the industry in terms of manufacturing readiness.
Our Korean Japanese American and other international supply chain relationships are true competitive advantages for new scale.
Even more so when you consider that many of these partners are also strategic investors.
For over 10 years, <unk> has been working directly and continuously with more than 23 are uniquely capable suppliers to jointly progress our design for manufacturing readiness.
These suppliers have provided unwavering support of our efforts and as a result, new scale supply chain is leading the industry in terms of manufacturing readiness.
John L. Hopkins: In addition to these operational milestones, we have continued to deepen our customer relationships and expand our pipeline, as you see on slide five. First, I'll provide an update on Rural Power. In the near term, we are working to advance phase two of the front-end engineering design, or FEED, work. Nuscale will be providing engineering support services to Fluor Corporation in this effort. Row Power's partners, Nuclear Electric S.A. and Innova Power and Gas, are experienced plant owners and operators in the nuclear space. Additionally, both the Romanian and U.S. governments are highly engaged in the process.
In addition to these operational milestones we have continued to deepen our customer relationships and expand our pipeline as you see on slide five.
First I'll provide an update on our real power in the near term we are working to advance the phase III, the Friday and engineering design or feed work.
New scale, we providing engineering support services to Fluor Corporation in this effort.
ROE Power's partners nuclear electric assay in Nova power and gas our experienced plant owners and operators in the nuclear space.
Additionally, both the Romanian and U S governments are highly engaged in the process.
John L. Hopkins: As proposed, FEED Phase 2 work will include site characterization and regulatory analysis in the development of a site-specific schedule and budget estimates for project execution. While Nuscale contracted directly with Row Power to complete Feed Phase 1, Nuscale is serving as a subcontractor to Slur Corporation for Row Power's Feed Phase 2. Moving on to Standard Power, in October 2023, Standard Power announced their selection of Nuscale's SMR technology, along with their need for a one-stop-shop solution to develop and execute their project. As you recall, Standard Power is a provider of infrastructure as a service to advanced data processing companies. As part of their responsibility, Standard Power is currently working to line up the initial phase of financing towards two SMR plans.
As proposed feed phase two work will include site characterization and regulatory analysis and the development of a site specific schedule and budget estimates for project execution.
While new scale contracted directly with ROE power to complete these phase one new scale is serving as a subcontractor Fluor Corporation for ROE power feed phase II.
Moving to understand the power in October 2023 standard power announced their selection of new skills <unk> technology, along with their need for a one stop shop solutions develop and execute their projects.
As you recall, Dan and power is a provider of infrastructure as a service to advanced data processing companies.
As part of their responsibility standard power currently work in July and up the initial phase of financing towards two as some of our plants <unk>.
John L. Hopkins: Each will be powered by 12 Nuscale power modules producing nearly 2 gigawatts of energy at sites in Ohio and Pennsylvania. A project this size has a significant amount of detail to be confirmed and structured before the project begins construction, and those discussions are ongoing.
<unk> will be powered by 12, new scale power modules, producing nearly two gigawatts of energy at sites in Ohio and Pennsylvania.
A project. This size is a significant amount of detail that we confirmed in structured before a project begins construction.
And those discussions are ongoing.
John L. Hopkins: We'll keep our investors and partners updated on this progress, while we are moving full speed ahead with other opportunities in our business development pipeline. We remind our investors that given the scope and impact of these projects, discussions are detailed, deliberated, and staged in their progression, looking at the demand environment more broadly. The need for clean, reliable power is far outpacing new supply coming online. As you see on slide six, electrification of the transportation, building, technology, and industrial sectors is contributing to a so-called land grab as the electric power industry prepares for a tripling of U.S. demand by 2050. This comes into even greater focus when you consider that the U.S. is on track to close half of its coal-fired generation capacity by 2026, just 15 years after it reached its peak in 2011. The retirement of such baseload power, largely replaced by renewables, is making grids increasingly vulnerable to interruption.
We will keep our investors and partners updated on this progress.
While we are moving full speed ahead with other opportunities in our business development pipeline, we remind our investors that given the scope and impact of these projects discussions of detailed deliberated and staged in their progression.
Looking at the demand environment more broadly the need for clean reliable power is far outpacing new supply coming online.
As you'll see on slide six electrification of the transportation building technology and industrial segments is contributing to a so called land grab.
As the electric power industry prepares for a triplet of U S demand by 2050.
This comes into even greater focus when you consider that the U S is on track to close half of its coal fired generation capacity by 2026, just 15 years. After it reached its peak in 2011.
The retirement of such Baseload power largely replaced by renewables are making grids increasingly vulnerable to intermittency reinforcing.
John L. Hopkins: Reinforcing and expanding the power grid remains an important opportunity for Nuscale. Drilling down deeper, I'd like to spotlight a fast-emerging opportunity in the technology sector. Simply put, each tech company in the world is investing heavily in hyperscale data processing infrastructure. Furthermore, these planned data centers are enormous energy consumers.
Reinforcing and expanding the power grid remains an important opportunity for new scale.
Drilling down deeper I'd like to spotlight, a fast emerging opportunity in the technology sector.
Simply put each tech company in the World is investing heavily in hyper scaled data processing infrastructure.
Furthermore, these planned datacenters are enormous energy consumers.
John L. Hopkins: Securing access to green, 24-7 reliable power is critical for them to get site permitting and fulfill their clean energy commitment. As you see on slide 7, Datacent electricity consumption is expected to triple between 2020 and 2030, which is astonishing. That increase alone is equivalent to the electricity used by 40 million U.S. homes in a year, or almost a third of all the homes in America.
Security and access the Green 20 quarter, Kevin reliable power is critical for them to get site permitting and fulfill their clean energy commitments.
As Youll see on slide seven data center electricity consumption is expected to triple between 2020, and 2030, which is astonishing.
That increase a little and is equivalent to <unk>.
<unk> used by 40 million U S homes in a year.
A third of the total homes in America.
John L. Hopkins: Nuscale is in discussions with major data center operators today, and we see firsthand the significant interest in this group for dedicated, reliable, clean power solutions. Despite the growing demand, many potential customers are not necessarily interested in owning or operating their own nuclear power plant. That's where our partnership with Intra1 comes from. Enter one will serve as a project developer and bring together the total package of our Nuscale technology with their capabilities for construction, financing, operation, and ownership. This one-stop shop solution has opened the door for customers considering SMRs in their energy portfolio.
New scale is in discussions with major data center operators today.
See firsthand with significant interest from this group for dedicated reliable clean power solutions.
Despite the growing demand many potential customers are not necessarily interested in owning and operating their own nuclear power plants.
That's where our partnership with <unk> one comes in.
Andrew one will serve as a project developer and bring together the total package of our new scale technology with their capabilities of construction financing operation and ownership.
This one stop shop solution has opened the aperture for customers, considering <unk> and their energy portfolios.
John L. Hopkins: Early conversations are very encouraging, and we believe this partnership has changed the commercial trajectory. Next, I will discuss our prospects with industry, including a specific emphasis on using process heat to produce commercial-scale clean chemical production, which you see on slide 8. Nuscale enjoys numerous decisive advantages relative to both SMR technology competitors, as well as other energy sources, related to safety, siting, off-grid capabilities, and capacity factors, and more.
Conversations are very encouraging and.
And we believe this partnership has changed the commercial trajectory at this scale.
Next I will discuss our prospects with industrial companies, including a specific emphasis on using processes to produce commercial scale clean chemical production would.
What you see on slide eight.
New scale enjoys numerous decisive advantages relative to both <unk> technology competitors as well as other energy sources related to safety.
In off grid capabilities and capacity factors and more.
John L. Hopkins: Continuing on slide 9, Nuscale enables clean chemical production, providing a safe, clean, reliable baseload source of energy with a very small landfill. Our emergency planning zone allows us to co-locate with production facilities. This positions us very favorably when speaking with respective customers. We are currently engaged in eight separate funded projects related to Nuscale integrated energy for chemical production. In fact, next week, Dr. Reyes will be speaking at the World Petrochemical Conference in Houston.
Continuing on slide nine new scale enables clean chemical production, providing a safe clean reliable baseload source of energy with a very small land footprint.
Our emergency planning zone allows us to co locate with production facilities.
This positions us very favorably with speaking with respective customers.
We are currently engaged in eight separate funded projects related to new scale integrated energy systems for chemical production.
In fact next week, Dr. Reis will be speaking at the World Petrochemical conference in Houston.
John L. Hopkins: We are the only nuclear company to have received an invitation, which reflects our leadership amongst this customer group. Given rising demand for power and the tax credits available for advanced nuclear in the IRA, we anticipate adoption of our technology to accelerate. We continue to have constructive, highly positive, and ongoing dialogues with major utilities, industrial, and technology companies, as well as local and national governments in the U.S. and globally. In summary, we have significant opportunities in front of us as we continue to build momentum, grow our business, and deliver on our commitment, and we are well positioned to capitalize on these opportunities in the year ahead. Now, I'll hand it over to Ramsey to provide our financial update. Ramsey?
We are the only nuclear company to have received an invitation and reflects our leadership amongst this customer group.
Given rising demand for power and a tax credits available for advanced nuclear and the IRA we anticipated adoption of our technology to accelerate.
We continue to have constructive highly positive and ongoing dialogues with major utilities, industrial and technology companies as well as local and national governments in the U S and globally.
In summary, we have significant opportunities in front of us as we continue to build momentum broad business and deliver on our commitments and we are well positioned to capitalize in the year ahead.
Now I'll hand, it over to Ramzi to provide our financial update Ramsey.
Robert Ramsey Hamady: Thank you, John, and hello, everyone. Our financial results will be available in our filing. So my focus will be on explaining major line items, our cost-cutting efforts, and expectations. I'll start by discussing our fourth quarter results found on slide 10, then touch on 2023 full year. All figures following are for Q4 2023 unless I state otherwise.
Thank you John and Hello, everyone.
Our financial results will be available in our filings. So my focus will be on explaining major line items or cost cutting efforts and expectations.
I'll start by discussing our fourth quarter results found on slide 10.
And then touch on 2023 full year.
All figures following that for Q4 2023, unless I state otherwise.
Robert Ramsey Hamady: I'll remind you that the Nuscale revenue model consists of three sources. First, the sale and delivery of Nuscale Power Modules and other equipment we have developed. Second, licensing our technology, and third, services. In the early phase of a project, we generate services revenue by supporting several development activities, such as siting, licensing, front-end engineering, and site-specific design work, and project planning.
I'll remind you that the new scale revenue all consistent with resources.
The sale and delivery of these Gulf power modules.
We have developed.
Second licensing our technologies.
Third services.
And the early stages of a project, we generate services revenue by supporting several development activities such as <unk> licensing.
Licensing and front end engineering and design work and project planning.
Robert Ramsey Hamady: Most of our revenue earned to date is from services for our customers and the licensing of our technology. During 2024, we anticipate advancing existing customers and adding new committed customers to our business development pipeline, which will improve cash generation and revenue. During this discussion, please keep in mind our fourth core result was impacted by the mutual termination of the Carbon Free Power Project, or CFPP, announced by Nuscale and the Utah Associated Municipal Power Systems, or UAMPS, in early November. As part of this termination, a release agreement was signed, resulting in a payment of $49.8 million to CFPP. As I discuss our financial results, I'll highlight key items impacted by the termination of CFPP and detail our treatment of those items. Revenue for the fourth quarter was $4.6 million.
Most of our revenue today is from services for our customers and the licensing of our technology.
Turning to slide 24, we anticipate advancing existing customers and adding new customers to our business development pipeline, which will improve cash generation and revenue.
During this discussion please keep in mind, our fourth quarter results were impacted by the mutual termination of the carbon free power project or CFPB.
I'll now spend the scale and the Utah associated municipal power systems or UAS in early November.
As part of this termination and release agreement was signed resulting in a payment of $49 8 million to CFPB.
As I discuss our financial results I will highlight key items impacted by the termination of CFPB and detail our treatment of those items.
Revenue for the fourth quarter was $4 6 million.
Robert Ramsey Hamady: Research and development costs during the period were $37.8, slightly lower when compared to the same period in the prior year. However, this figure includes $11.4 million in additional expenses resulting from the termination of the CFPP-related Development Cost Reimbursement Agreement, or DACRA. Otherwise, fourth quarter research and development costs would have decreased $11.6 million from the same period in the prior year, consistent with our plan to shift financial resources to commercialization, as we pivot from our R&D phase, launched for the quarter at $56.4 million. However, it was larger than for the same period in the prior year due to the CFPP-related DACRA charge, partially offset by lower professional fees, fund our payment to you under the release agreement. Nuscale ended the fourth quarter with cash of $125.4 million and no deaths.
Research and development costs during the period was 37 8 million.
Slightly lower when compared to the same period in the prior year.
However, this figure includes $11 4 million in additional expenses, resulting from the termination of the CFPB and related development cost reimbursement agreements our background.
Otherwise fourth quarter research and development costs decreased 11 6 million from the same period in the prior year.
Consistent with our claim financial resources to commercialization.
As we pivot from our R&D phase.
Loss for the quarter of $56 4 million was larger than for the same period in the prior year due to the CFPB related charge, partially offset by lower professional fees.
Following our payments you asked under the release agreement.
Do you still ended the fourth quarter with cash of $125 4 million.
And no debt.
Robert Ramsey Hamady: Approximately $5.1 million of that is restricted cash, of which $5 million is earmarked for demobilization costs related to CFPB. As we discussed on the third quarter earnings call, the restricted cash under our layer of credit was in excess of our anticipated termination and demobilization expenses for full year 2023. We anticipated a negative cash flow from operations range of $102 to $142 million.
Approximately $5 1 million of that is restricted cash of which $5 million.
Mark for demobilization costs related to the CFPB.
As we discussed on the third quarter earnings call the restricted cash under our line of credit was in excess of our anticipate termination and T mobilization expenses.
For full year 2020.
We anticipated a negative cash flows from operations range of $102 million to $142 million.
Robert Ramsey Hamady: Excluding expense from the CFPP termination, a one-time event, we'll have ended the year with negative cash flow from operations of $133.5 million. Including the CFPP termination, we ended the year with negative cash flow from operations of $183.3 million. Looking ahead to 2024, Nuscale is well positioned for its next phase of growth as we commercialize our technology, which includes near-term deployment and manufacturing. We have built a strong foundation, including world-class research and development and a powerful global supply chain, to support the advancement of our strategic and operational objectives in 2024 and beyond. In January, we executed a proactive plan to better position our company commercially, financially, and strategically. This included current production in our cost space, which will generate substantial annualized savings and create additional financial and commercial flexibility this year, as we work diligently to advance through the development stages of our current contracts and secure new ones.
Excluding expense from CFPB termination of one time events, who have ended the year with I guess cash flow from operations of $133 5 million.
And clearly with the CFPB termination, we ended the year with negative cash flow from operations of $183 3 million.
Looking ahead to 2024, new scales well positioned for our next phase of growth as we commercialize our technology, which includes near term deployments in manufacturing.
We have built a strong foundation, including World Class research and development and <unk>.
<unk> global supply chain.
To support the advancement of our strategic and operational objectives in 2024 and beyond.
In January we executed a proactive plan to better position our company commercially financially and strategically.
This included our print production and our cost space, which will generate substantial annualized savings and create additional financial and commercial flexibility this year.
As we work diligently to advance through development stages of our current contracts and secure new ones.
Robert Ramsey Hamady: We will maintain our financial and may selectively consider capital raising to sustain a conservative liquidity reserve. Before we go to Q&A, I want to note that Nuscale filed an 8K aftermarket close today, which includes our earnings release, balance sheet, and income statement. Our 10K will be filed Friday. With that, I'd like to thank you again for joining us today and for continued support of Nuscale. We'll take questions now. Operator?
We'll maintain our financial discipline and may selectively consider capital raising to sustain a conservative liquidity reserves.
Before we go to Q&A I want to note that these scale filed an 8-K after market close today, which includes our earnings release balance sheets and income statements.
Our 10-K will be filed Friday.
With that I'd like to thank you again for joining today and for your continued support of any scale.
Take questions now operator.
Operator: Thank you. As a reminder, if you would like to ask a question, please press star followed by the number one on your telephone keypad. Your first question comes from the line of Mark Bianchi from TD Cowen. Please go ahead. Okay, thanks. I guess the first one, Ramsey, on the cash balance, $125 million.
Thank you as a reminder, if you would like to ask a question. Please press star followed by the number one on your telephone keypad.
Your first question comes from the line of Marc Bianchi from TD Cowen. Please go ahead.
Hey, thanks.
I guess first one ramsey on a cash balance of $125 million.
Robert Ramsey Hamady: How do you see that progressing in the first quarter and for 2024? And maybe you could talk to us about, you know, what could cause that outlook to be better or worse than what your base case might be. I'd be happy to. I think management first, there are three main toggles when we focus on cash. One is revenues, one is cost savings, and one is capital markets.
How do you see that progressing in first quarter and for 2024, and maybe you could talk to us about.
What could cause that that outlook to be better or worse than what your base case might be.
Okay.
Happy to do that.
I think from management's perspective.
Three main toggles lets focus on cash.
Revenues.
Cost savings capital markets.
Robert Ramsey Hamady: I feel like we're entering 2024. It's very solid, but I think there's a visibility to revenue-generating business. We started the year with a tremendous cost-cutting effort, which I think really aligned or optimized our resources more efficiently towards the commercialization process that we're embarking on. And finally, we have capital markets available to us, as disclosed. We have an ATM facility. It's something that we use very spar
I feel like we're entering 2024 very solid footing.
Our visibility to revenue in Germany business.
We started the year with tremendous cost cutting effort.
I think really aligning optimize our resources more efficiently towards the commercialization process.
Adam.
And finally, we have capital markets available to us.
As disclosed we we have an ATM facility.
Suddenly that we used very sparingly and.
Robert Ramsey Hamady: And I think that really just to focus on revenue generation and expense reduction, prudent liquidity management is management's approach to 2024, and I think that's a very good position for the end of the year. Okay, could you perhaps put some numbers around it just so we can maybe understand the boundary of outcomes? Sure, Mark. You know, I haven't, and I know that we've had this discussion before in the analyst community where we have not provided guidance on numbers. I think that as Nuscale goes towards commercialization and starts to build a stable portfolio of revenue-producing contracts, those items and those ideas of forecasting cash and revenue numbers will become a little bit more... Yeah, we'll become a little bit more clear as we progress the business. So, we haven't provided guidance for a reason, right? You know, we're looking at a handful of contracts this year, and they'll be pretty lumpy contracts.
I think that really just a focus on revenue generation.
Production.
Liquidity management has.
This management's approach to 2024.
That's a very good position towards the end here.
Okay.
Could you, perhaps put some numbers around it just so we can maybe understand the boundary of.
Of outcomes.
Sure.
I haven't.
We've had this discussion with bolt ons in the analyst community.
We have not.
The final.
Numbers.
And that as you scale goes towards commercialization and starts to build a stable portfolio of revenue producing contracts those items and those ideas forecasting cautions that these numbers will be Tom a little bit.
More.
Yes.
Talk a little bit more clear.
The rest of the business. So we haven't provided guidance for a reason right now we're looking at a handful of contracts this year.
And there'll be plenty of lumpy contracts.
Robert Ramsey Hamady: So, until we get those moving in place and understand the timing of deliveries, we're not going to give any guidance on numbers. You mentioned the flexibility of capital raising at the ATM. Have you done anything here so far this year?
Until we get those moving in place and I understand the timing.
Absolutely.
Robert Ramsey Hamady: I mean, the stock has had quite a run here in the last couple of weeks. We will disclose in 2023 the financial use of the ATM over 2023. I don't disclose what I've done in the current quarter, but I think it's pretty evident from our stock move that the management has treated the ATM with the utmost of care, you know, for our cash flow requirements as well as for our shareholders. Okay, great. Maybe just one more, if I could, on just Entra1, Standard Power, anything to update on that opportunity?
But we're not going to give any guidance on numbers.
Got it okay.
You mentioned the flexibility on capital raised with the ATM have you done anything.
Here so far this year I mean, the stock has had quite a run here in the last couple of weeks.
We will disclose in the.
2020, and potential use of the ATM over 2020 three I don't disclose what I've done in the current quarter, but I think it's pretty evident from our stocking.
John L. Hopkins: And then, you know, if there isn't, maybe you could help us frame when we might expect an update there. John, I'll take that question. John, and Forum.
Operator: Let's wrap it up. And with that, I will conclude this public commentmusic conference. I know that we're considering a post-session agenda this afternoon because possibly not everyone will be available, so I would love to know what's on everyone's mind as we go through today's meeting. So if all hearing aids are interested, any taps into that video and watch our Q&A, the pre-session is available here on YouTube. Thank you all very much for joining us to talk about disability and case management. Yesterday or today, the so-called Common Sense.
Management will stay the ATM with the utmost of care.
For Barack.
Our cash requirements as well as five shareholders.
Okay, Great maybe just one more if I could on.
Just enter one standard power anything to update on that on that opportunity and then there isn't maybe you could help us frame when we might expect an update there.
Operator: They've outlined the important elements of a good conversation that they are going to have in common, and there certainly may be different things that they want us to focus on right now. But I get it. I was on mute.
Jonathan I'll take that question.
Yeah.
John.
My apologies.
Got it I was on mute I'm, sorry, no borrowing.
John L. Hopkins: I'm sorry. No, Mark. And if you call in October, Standard Power announced that they selected Nuscale as the technology of choice. We've been in discussions on a regular basis with them. It's a complicated process.
If you recall in October standard power announced that.
They selected new scale is the technology.
G of choice, we've been in discussions on a regular basis with them, it's a complicated process.
John L. Hopkins: They're looking at two facilities with about two gigawatts of carbon-free energy from us at a site in Ohio and a site in Pennsylvania. We've been in regular discussions as IntraWine progresses. So hopefully, here in the nearer term, we'll be able to say something, but we'll definitely keep you updated as this thing progresses. It's very much still in play. Okay, thank you. I'll turn it back.
Looking at two facilities and we go out two gigawatts of carbon free energy from us at a site in Ohio.
In Pennsylvania.
We've been in regular discussions those extra one progressing along so hopefully here in the nearer term that we'll be able to say something but we will definitely keep you noticed is the sale proceeds.
Very much still in play.
Okay. Thank you I'll turn it back.
Operator: As a reminder, if you would like to ask a question, please press star 1. Your next question comes from the line of Leanne Hayden from Canaccord Genuity. Please go ahead. Hi, everyone.
As a reminder, if you'd like to ask a question. Please press star. One. Your next question comes from the line of Lyanne Hayden from Canaccord Genuity. Please go ahead.
Hi, everyone. Thanks, so much for taking my questions.
Leanne Hayden: Thanks so much for taking my questions. Just to start, I was curious to know how confident you guys are in your ability to scale manufacturing. You know, just given that this is a pretty new technology, you're not very integrated. How confident are you that you can move from design to manufacturing?
Just to start I was curious to know how confident you guys are in your ability to scale manufacturing.
Given that this is opening new technology, Youre, not Brian Hey, Great Ed.
Just how confident are you that you can move from design to manufacturing.
John L. Hopkins: We're very, you know, we're, one thing we've done is a lot of monies with the 1.8 billion dollars that's been invested in Nuscale, a lot of that monies was de-risking our module and actually scaling up and modeling to where a lot of it's off the shelf and as we mentioned before our fuel comes from, traditional conventional fuel. Also from a supply chain we continue to build out but I was just with this is John Hopkins with the CEO of Doosan as I mentioned during the script that they made significant progress anticipating the future of modules because as you know our model is predicated not just do a one-off project it's these are fungible assets we're going to build them in a factory and ship them and so right now we're pretty confident we'll keep up the demand as it comes in but we're also very cognizant we're not going to overextend our capacity to execute which is very key so you know with our strategic partners and the beauty of these strategic partners in Japan and Korea in the US not only the suppliers or OEMs but they're also investors So, they're taking a holistic view, not looking at a one-off, which affords us very competitive rates from them, because the way we operate is that these suppliers, recognize they have to be commercially viable. It's just not viable.
We're very we're one thing we've done is.
A lot of bodies with the one $8 billion has been invested a new scale.
A lot of that money was de risking our module and <unk>.
Actually scaling up and modeling to where a lot of it's off the shelf and as we've mentioned before our fuel comes from.
Traditional conventional fuel also from a supply chain, we continue to build out but I was just with this is John Hopkins with the CEO of <unk> as I mentioned during the script.
They've made significant progress and anticipate in the future.
Modules because as you know our model is predicated not just do a one off project.
These are fungible assets, we're going to build them in a factory and ship them and so right now we're pretty confident we'll keep up the demand as it comes in.
We're also very cognizant, we're not been over extend our capacity to execute which is very key so.
With our strategic partners and the beauty of these strategic partners with Japan, and Korea, and the U S. Not already suppliers are Oems, but they are also investors.
So they are taking a holistic view not looking at a one off which affords us very competitive rates from that because the.
We operate is that these these suppliers.
Recognize they have to be commercially viable. It is just not a viable there just given that work will come that way. So I was just with the CEO of <unk> and my team or just out in Japan, and we stay in regular contact and we continue to build our supply chain both locally within the U S Endo International.
John L. Hopkins: It's just not a given that work will come that way. So I was just with the CEO of Doosan. My team was just out in Japan, and we stay in regular contact, and we continue to build our supply chain out, both locally within the U.S. and internationally. Okay.
Okay got it great. Thank you for that.
Leanne Hayden: Great. Thank you for that. When can we expect an additional project announcement? And, in your opinion, if you have any visibility, what are the likely markets that we should expect that announcement in, whether it's international or data center related, or it's coal to nuclear reprocessing or chemical production. What do you expect to see?
When can we expect an additional project announcement and in your opinion.
If you have any visibility why are the likely markets that we should expect that announcement and like whether it's Andrew.
International our datacenter related or it's called nuclear reprocessing chemical production, what do you expect to see.
John L. Hopkins: Well, let me just say, you know, this time last year when we talked, it was all about coal refurbishment, working with utilities, and it quickly became more process-oriented, where industrials are looking at clean energy for process feed or hydrogen ammonia. And now there's a big push on energy consumption for data centers and AI. Where I think we could come from in the near term is the project we mentioned in row power.
Well, let me let me just say this time last year when we talked it was all about coal refurbishment working with utilities that are quickly.
Hey, more process oriented where industrial is theyre looking at.
Clean energy for processes or hydrogen pneumonia.
Now there is the big push on energy consumption for data centers.
Hi.
I think near term we could come from is the project, we mentioned an ROE power.
John L. Hopkins: I'm hopeful that in April, we pretty much floor the prime on this with a subcontractor floor operated under a limited notice to proceed. We're, we're in the final negotiations of our limited notice to proceed as well as our technology license and agreement. So the timeline right now is by early April. We'll be doing a signing ceremony to kick off this project. So that 1 could be 1st out of shoot or again, as I said before.
I'm hopeful that in April we pretty much Florida is the prime on this where the subcontractor.
Florida is operated under a limited notice to proceed.
We're in the final negotiations of our limited notice to proceed as well as our <unk> technology licensing agreement. So the timeline right now hopefully is by early April.
So doing a signing ceremony to kick off this project. So that one could be first out of the chute or again as I said before I don't want to say that early expectation, but.
John L. Hopkins: I don't want to set an early expectation, but our project with standard power still continues to proceed. So. And then I will say, I've never seen anything like it.
Our project with standard power still continues to proceed so.
And I will say I've never seen anything like it this whole data center AI with some of the tier one alphas.
John L. Hopkins: This whole data center with some of the tier 1 alphas in that industry. They need energy, and we're in discussions with not only tier 1, but others. So, timing is everything, but we're just seeing the market continue to build. Okay. All right. Great. Then just last one from me.
That industry.
Need energy and we're in discussions with not only tier one but others.
So timing is everything but we're just seeing the market continue to build.
Okay, Alright, great and then just last one from me how should we be thinking about opex moving forward, especially given the recent head count reduction.
Leanne Hayden: How should we be thinking about OpEx moving forward, especially given the recent headcount reduction? If you think of the headcount reduction, what we did, we went from predominantly research and development over the years, which got us through the Nuclear Regulatory Commission licensing process and also helped us, not only helped us, but allowed us to do all the modeling and the scaling up of our equipment. Now we're going into commercialization and deployment, which some of it requires different skill sets. So what we are assured of and what our customers have asked us, do you have the capacity to execute? That's where the bottom line is. So we didn't, we're not in a position to, we don't have those people to execute these initial projects.
If you think of the head count reduction of what we did we went from predominantly research and development over the years, which got us through the nuclear regulatory commission licensing process.
And also helped us not only helped us that allowed us to do all the modeling and the scaling up of our equipment now we're going into the commercialization and deployment with some of it requires different skill set so what we are assured of and what our customers have asked US do you have the capacity to execute and that's what the bottom line is so.
We didn't we're not in a position that we're not we don't have those people to execute these initial projects. So I am pretty secure we're not kind of a problem in that area.
John L. Hopkins: So I'm pretty secure we're not going to have a problem in that area. John, I may add to that. The idea is that as we went through this cost reduction exercise, what, you know, what we really did also was kind of side some of the general administrative costs within the company. I think what you'll see is that as we start to generate revenues, we'll have left of that SGMA overhead and be looking at a higher rate of profitability. That's really what we're going for with that type of idea. And when we mentioned the risk reduction forces, John said that we've maintained, I think, the core DNA of the intellectual capacity of the company. That was a very well calibrated, very well planned action.
Hey, Jonathan I may add to that the idea is that as we went through this cost reduction exercise.
What we really do.
It also does kind of bright side some of the general administrative costs within the company.
I think what Youll see is that as we start to generate revenues.
SG&A overhead.
And looking at a high rate of profitability, that's really what we're going forward with that type of idea.
We mentioned the rest of the reduction in force as Jonathan said, we've maintained I think the core DNA of the intellectual capacity of the company that was a very well calibrated very well planned action.
Robert Ramsey Hamady: And so, you know, our APEX, even today, remains very low. I think we remain very nimble in our ability to scale as revenues come in, manage our margin, and really have a view toward cash. OK. That makes sense. That's all for me.
Our opex.
Even today remains very low and I think we remain very nimble and we're going to scale as revenues come up manage our margin really haven't geared towards cash.
Okay.
That makes sense that's all for me. Thank you guys. Thank.
Leanne Hayden: Thank you, guys. Thank you. Your next question comes from the line of Ryan Pfingst from B Riley Securities. Please go ahead.
Thank you. Thank you.
Your next question comes from the line of Ryan <unk> from B Riley Securities. Please go ahead.
Ryan James Pfingst: Hey, guys, thanks for taking my questions. First one looks like nuclear has been getting a lot of federal support in the news lately, between The Atomic Energy Advancement Act and budget requests, not only for 24 but for 25. Can you talk about how some of those initiatives that you've seen could impact Nuscale and potential customers in the U.S.? Absolutely. In fact, great question.
Hey, guys. Thanks for taking my questions the first.
First one it looks it looks like nuclear has been getting a lot of federal support and the news lately between.
Tommy Energy Advancement Act and budget request not only for 'twenty four but for 25 can you talk about how.
Some of those initiatives that you are seeing could impact new scale and potential customers in the U S.
Absolutely in fact, a great question.
John L. Hopkins: We have both my CLO and my General Counsel were on the Hill this week. There's a bill advancing in Congress that would allocate about $800 million to a competitive cost share award for not more than two SMR deployments in the U.S., and also an additional $100 million for SMR manufacturing that can be deployed no later than 2030. We're anticipating approval if it hasn't already been approved. So, the U.S. government stays very strong behind this industry. And we also still continue to have very strong advocacy for the Department of State in international markets.
We have both my COO and my General Counsel.
On the Hill. This week there is a bill advancing in Congress that would allocate about $800 million.
Competitive cost share award for not more than two <unk> deployments in the U S. Also in additional hydro.
For <unk> manufacturing that can be deployed no later than 2030.
Anticipating if it hasnt already been approved to be approved so the U S government stays very strong behind this industry.
And we also still continue to have very strong advocacy for the department of state on international markets.
John L. Hopkins: Got it. That's helpful, and that kind of leads into my second question internationally. Last week, Fuel Cell Energy talked about its participation in a private-public partnership related to ammonia production in Ukraine, where Nuscale is expected to potentially supply the SMRs. I think the project was announced over a year ago, but their comments made it seem like it's progressing. Is there anything to share from Nuscale's end on that one? Yeah, that came about during COP 27 at Sharm El Sheikh, Egypt, if you recall.
Okay.
Got it.
That's helpful and that kind of leads into my second question internationally.
Last week fuel cell energy you talked about its participation in a private public partnership related to ammonia production in Ukraine.
Our new scale are expected to potentially supply.
So I think the project was announced over a year ago, but their comments made it seem like it's progressing is there anything to share.
From new scales.
One.
Yes that came about.
During.
2007.
Ed Schreiber Shake Egypt, if you call I was on stage is John Hopkins with.
John L. Hopkins: I was on stage, it's John Hopkins, with Secretary Kerry, and he announced that the U.S. is going to assist Ukraine in deploying American technology, Nuscale, for ammonia hydrogen production, predominantly ammonia, and we're still in discussion. So, you know, unfortunately, until the situation gets to the point that we can actually execute and the bombs stop falling, but we are still in negotiations with that consortium. It's amazing because you can well imagine the power requirements that will be required in the Ukraine at such a time as when we're allowed to get in. Does that help? Yep, it makes sense.
Secretary Carey and he announced that the U S is going to assist you kept for Ukraine and deploy to an American technology, new scale for the ammonia hydrogen production dominantly ammonia, Ken we're in still in discussions Unfortunately until the situation.
To your point, we could actually execute in the bond stopped falling but we are still in negotiations with that consortium.
It's amazing because you can well imagine.
The power requirements, that's going to be required in the Ukraine et cetera time that where we're allowed to get add so.
Does that help.
Yeah makes sense I appreciate that color I'll turn it back thanks guys.
Ryan James Pfingst: I appreciate that, Colin. I'll turn it back. We have no further questions in our queue at this time. I will now turn the call back over to John Hopkins for closing remarks. Yeah, thank you very much. I just believe Nuscale is still very well positioned as a first mover in the SMR space, and we're poised to commercialize and deliver clean energy at scale. Nuclear technology, we believe, is absolutely essential to powering the global energy transition. We also strongly believe we continue to be at the forefront of that effort with our work to deliver safe, scalable, and reliable carbon-free nuclear power.
We have no further questions in our queue at this time I will now turn the call back over to John Hopkins for closing remarks.
Yes, thank you very much.
I just believe the scale is still very well positioned as a first mover in the SLR space and we're poised to commercialize and deliver clean energy at scale.
Nuclear technology, we believe is absolutely essential to power in the global energy transition and we also strongly believe we continue to be at the forefront of that effort.
Our work to deliver safe scalable and reliable carbon free nuclear power.
John L. Hopkins: And I want to thank everybody on the call today and for many more to come. Thank you very much. This concludes today's conference call. Thank you for your participation, and you may now disconnect. This concludes today's conference call. Thank you for your participation, and you may now disconnect. This concludes today's conference call. Thank you for your participation, and you may now disconnect.
I want to thank everybody on the call today and.
More to come thank you very much.
This concludes today's conference call. Thank you for your participation and you may now disconnect.
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Okay.
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