Q1 2024 NuScale Power Corp Earnings Call
Yeah.
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 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 listen only mode. After management's prepared remarks, there will be a question and answer session. If.
Operator: If you would like to ask a question. During this time simply press star followed by the number one on your telephone keypad.
Operator: If you would like to withdraw your question Press Star one again.
Operator: A replay of today's conference call will be available and accessible on new skills website at IR Dot new scale power Dot com.
Operator: Web replay will be available for 30 days following the earnings call.
Operator: After management's prepared remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press the star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star 1 again. 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. 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.
Operator: At this time for opening remarks, I would like to turn the call over to Scott Kozak.
Scott Kozak: Director of Investor Relations. Please go ahead Mr Kozak.
Operator: Yeah.
Operator: Okay.
Scott Kozak: Thank you, Operator. Welcome to Nuscale's first quarter 2024 Earnings Results conference call. With us today are John Hopkins, President and Chief Executive Officer, and Ramsey 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. 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 was discussed during the course of our remarks, and the subsequent Q&A session included four forward-looking statements which reflect our current views of existing trends and are subject to a variety of risks and uncertainties.
Scott Kozak: Thank you operator welcome to these skills first quarter 2024 earnings results conference call with US today are John Hopkins, President and Chief Executive Officer, and Ramsey MD Chief Financial Officer.
Scott Kozak: On today's call new scale will provide an update on its 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.
Scott Kozak: Question on the Safe Harbor statements on slide two the information set forth in the presentation will discuss 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 find a discussion of our risk factors, which could potentially contribute to such debt.
Scott Kozak: Princes and our SEC filings on Form 10-K for our fiscal year 2023, and in our prior FCC filings.
Scott Kozak: You can find a discussion of our risk factors which could potentially contribute to such differences in our FCC filings on Form 10-K for our fiscal year 2023 and in our prior FCC filings. I'll now turn the call over to John Hopkins, Nuscale's President and Chief Executive Officer. John?
Scott Kozak: I'll now turn the call over to John Hopkins These scales, President and Chief Executive Officer John.
John L. Hopkins: Thank you, Scott, and good afternoon, everyone. As you all know, Nuscale was founded on the belief that nuclear power, a cleaner, safer, more reliable form of energy, is critical to meeting the increasing global demand for carbon-free power. Today, we are seeing this belief borne out in real time. As you'll see on slide three, the need for clean, reliable power is significant and growing, driven by the electrification of the transportation, building, technology, and industrial segments.
John L. Hopkins: Thank you Scott and good afternoon, everyone.
John L. Hopkins: As you all know new scale was founded on the belief that nuclear power it cleaner safer more reliable form of energy.
John L. Hopkins: Critical to meeting the increasing global demand for carbon free power.
John L. Hopkins: Today, we are seeing this belief borne out in real time.
John L. Hopkins: As you'll see on slide three the need for clean reliable power is significant and growing driven by the electrification of the transportation building technology and industrial segments.
John L. Hopkins: A recent five-year projection for U.S. electricity demand growth has doubled from forecasts provided just one year ago. Overall, peak demand in the U.S. is expected to grow at least 38 gigawatts over the next five years. When you consider that the country is on track to close half of its coal-fired generation capacity by 2026, the vulnerability of domestic grids to intermittency comes into greater focus, particularly when you consider that, in 2023, coal represented more than 16% of U.S. utility-scale electricity generation.
John L. Hopkins: The recent five year projections for U S. Electricity demand growth has doubled from forecast provided just one year ago.
John L. Hopkins: Overall peak demand in the U S is expected to grow at least 38 gigawatts over the next five years.
John L. Hopkins: When you consider that the country is on track to close half of its coal fired generation capacity by 2026.
John L. Hopkins: The vulnerability of domestic grid intermittency comes into greater focus.
John L. Hopkins: Particularly when you consider that in 2023 coal represented more than 16% of U S utility scale electricity generation.
John L. Hopkins: The U.S. has made historic investments in climate progress, and federal regulations in state policies have helped bend the projected greenhouse gas emissions curve further down. However, the country continues to lag behind the Paris Agreement targets to cut emissions by 50 to 52 percent below 2005 levels by 2030 and achieve net zero emissions by 2050.
John L. Hopkins: The U S. Just made historic investments in climate progress and federal regulations and state policies have helped build the projected greenhouse gas emissions curve further down.
John L. Hopkins: However, the country continues to lag behind Paris agreement targets, the credit missions by 50% to 52% below 2005 levels by 2030 and achieved net zero emissions by 2050.
John L. Hopkins: For example, in 2023, the U.S. added 32 gigawatts of zero-emissions electricity generation and storage. But as you can see in the chart, it still falls far short of the target addition of 46 to 79 gigawatts needed to keep pace with the country's Paris Agreement goal. Let me add another perspective.
John L. Hopkins: For example in 2023 the U S added 32, Gigawatts of zero emission electricity generation and storage that is.
John L. Hopkins: <unk> seen a chart still falls far short of the targeted addition of $46 79 Gigawatts.
John L. Hopkins: To keep pace with the country's Paris agreement goal.
John L. Hopkins: In March, I attended CIR Week, the flagship annual conference on the energy industry calendar, and the dominant theme was artificial intelligence and AI's insatiable appetite for electricity. Data center and AI-driven companies attended the event en masse, speaking on panels and seeking out meetings with utility executives, power developers, and power production technology companies, including Nuscale. Here are a few key takeaways from these discussions. First, Nuscale's SMR technology resonates so strongly with this group because our solution is scalable, reliable, near-term deployable, and aligns with their clean energy commitment.
John L. Hopkins: Let me add an additional perspective in March I attended Cera week.
John L. Hopkins: <unk> annual conference on the energy industry calendar and a dominant theme was artificial intelligence.
John L. Hopkins: Insatiable appetite for electricity.
John L. Hopkins: Data center and AI driven companies attended the event and mass speaking on panels and thinking out meetings with utility executives power developers and power production technology companies, including new scale.
John L. Hopkins: A few key takeaways from these discussions first new scales to ask Lamar technology registered the name so strongly with this group because our solution is scalable reliable near term deployable and aligns with their clean energy commitments.
John L. Hopkins: In addition, our flexible business model means they will not need to own or operate a nuclear energy plant. Second, data center and AI companies are not like traditional nuclear energy customers. The sense of urgency and the pace at which they move are clear differentiators.
John L. Hopkins: In addition, our flexible business model means they will not need to own or operate nuclear energy plant.
John L. Hopkins: Second data center and AI companies are not like traditional nuclear energy customers the sense of urgency and the pace at which they move are clear differentiators.
John L. Hopkins: We are in advanced discussions with a number of these prospective customers, and several are considering commercial operation dates before the end of this decade. Third, and finally, while these companies are competitors commercially, many are collaborating on energy solutions because they recognize the scope and immediate nature of their common needs. As reflected on slide four, when you consider how the electricity needs of tech companies have evolved, the sense of urgency they're exhibiting is justified. Most traditional data centers built 10 years ago were energy consumers of 10 megawatts or less.
John L. Hopkins: We are in advanced discussions with a number of these perspective customers and several are considering commercial operation dates before the end of this decade.
John L. Hopkins: Third and finally, while these companies their competitors commercially many are collaborating on energy solutions, because they recognize the scope and immediate nature of their common need.
John L. Hopkins: As reflected on slide four when you consider how the electricity needs are tech companies have evolved the sense of urgency there activity is justified.
John L. Hopkins: Most traditional data centers built 10 years ago, where energy consumers of 10 megawatts or less.
John L. Hopkins: Today, it's not uncommon to see 100-megawatt data centers. There are data centers planned in the next three to five years that will approach 1,000 megawatts. The International Energy Agency estimates electricity demand from data centers globally could top 1000 terawatt hours by 2026, more than double 2022 levels. Data centers, AI, and cloud storage are 24-7 power consumers. They require an uninterrupted, reliable power supply.
John L. Hopkins: Today, it's not uncommon to see a 100 megawatt data centers. There are data centers planned in the next three to five years that will approach a 1000 megawatts.
John L. Hopkins: The International Energy agency estimates of electricity demand from data centers globally could top 1000, terawatt hours by 2026 more than double 2022 levels data centers, AI and cloud storage or 24, seven power consumers they require.
John L. Hopkins: An annual update reliable power supply.
John L. Hopkins: At Fairweek, an Amazon Web Services executive commented that the world adds a new data center every three days. This need was underscored by a new initiative between Google, Microsoft, and Nucor working together across the electricity ecosystem to develop new business models, and aggregate their demand for advanced clean electricity technology, including Advanced Nuclear. Initiatives like this will help bring first-of-its-kind commercial projects to the market. As you see in slide 5, nearly every leading hyperscaler has made major commitments to reduce carbon emissions.
John L. Hopkins: At Cerro week, and Amazon Web services Executive commented at the World as a new data center every three days.
John L. Hopkins: This need was underscored by a new initiative between Google, Microsoft and Nucor working together across electricity ecosystem develop new business models.
John L. Hopkins: Aggregate their demand for advanced clean electricity technologies, including advanced nuclear.
John L. Hopkins: Initiatives like this will help bring first of its kind commercial projects to the market.
John L. Hopkins: As you can see on slide five nearly every leading hyper scalar has made major commitments to reduce carbon emissions.
John L. Hopkins: Nuscale's technology has the ability to provide baseload decarbonized energy at scale and can help meet those sustainability objectives. We, in turn, see our sales funnel for prospective data center and AI customers expanding with significant inbound inquiries from tier one hyperscale computing providers. The most common sentiment we hear in meetings with hyperscalers, as well as data center operators like Standard Powers, is, "I need the power now. And how do I get it?"
John L. Hopkins: <unk> technology has the ability to provide base load decarbonize energy at scale and can help meet those sustainability objectives.
John L. Hopkins: We in turn Sierra sales vital for prospective data center, and AI customers expanding with significant inbound inquiries from tier one hyperscale computing providers.
John L. Hopkins: The most common sentiment we hear in meetings with Hyperscale as well as data center operators like standard powers.
John L. Hopkins: I need the power now and how do I get it.
John L. Hopkins: I want to emphasize that this is not a passing need. We already see another big energy consumer, quantum computing, on the horizon. Strain on the grid from AI-driven power demand is made even more acute due to strong growth in domestic manufacturing, as seen on slide 6, driven by domestic content requirements and on-going trends, as well as from the motion of private investment to the bipartisan investment law, the Chips and Science Act, and the Inflation Reduction Act. Investment commitments for American manufacturing now have exceeded $525 billion since 2021.
John L. Hopkins: I want to emphasize this is not a pass they need.
John L. Hopkins: Already see another big energy consumer quantum computing on the horizon.
John L. Hopkins: Strain on the grid from AI driven power demand is made even more acute due to strong growth in domestic manufacturing as seen on slide six.
John L. Hopkins: Driven by domestic content requirements, and onshoring trends as well as from the motion of private investment to the bipartisan investment law.
John L. Hopkins: Chimps and science at any inflation reduction at investment commitments for American manufacturing now since 2021 have exceeded $525 billion.
John L. Hopkins: As a result, as noted on slide 7, we continue to progress serious conversations with prospective industrial customers, including in the petrochemical industry, about identifying and incorporating clean energy options, in particular producing clean, high-temperature, high-pressure steam for process heat applications. Related to this interest in activities, we are honored that we added Dr. Dirk Schmidt to our Technical Advisory Board in April. Dr. Schmidt recently retired from Shell Corporation, where he served as their Chief Scientist and Chairman of the Shell Science Council.
John L. Hopkins: As a result are noted on slide seven we continue to progress serious conversations with prospective industrial customers, including in the petrochemical industry about identifying incorporating clean energy options.
John L. Hopkins: In particular, producing clean high temperature high pressure steam for processing applications.
John L. Hopkins: Related to this interest and activity.
John L. Hopkins: <unk> that we added Dr. Derek Smith to our technical Advisory Board in April Dr. Smith recently retired from Shell Corporation, where he served as their chief scientist and chairman of the shelf Science Council.
John L. Hopkins: I will add that Nuscale is continuing to innovate in novel ways. For example, we believe we have made great progress converting brine to an effective hydrogen carrier using clean energy from a Nuscale plant. In the near future, you'll see more news on the tests performed at Pacific Northwest National Laboratory that confirm our patent-pending approach. All our prospective customers value the numerous decisive advantages of Nuscale technology relative to large-scale nuclear and other energy sources, as well as compared to the largely unproven claims of newly emerging SMR technology developers.
John L. Hopkins: I will add that new scale is continuing to innovate and novel ways. For example, we believe we have made great progress converting Brian to an effective hydrogen carrier using clean energy from our new steel plant.
John L. Hopkins: In the near future, you'll see more news on the test the form that Pacific Northwest National Laboratory that confirm our patent pending approach.
John L. Hopkins: All our perspective customers value that numerous decisive advantages of <unk> technology relative to large scale nuclear and other energy sources as well as compared to the largely unproven claims of newly emerging <unk> technology developers.
John L. Hopkins: Nuscale enables process heat for industrial customers, providing a clean, safe, reliable base load source of energy with a small land footprint. Our small emergency planning zone allows us to co-locate with production facilities, which positions us very favorably when speaking with prospective customers.
John L. Hopkins: Can you just scale enables processes for industrial customers, providing a clean safe reliable baseload source of energy with a small land footprint are small emergency planning zone allows us to co locate with production facilities. This positions us very favorably when speaking with prospective customers.
John L. Hopkins: As featured on slide 8, the strategic partnership we formed with Inter1 Energy, an American independent energy producer and plant development owner with significant energy and infrastructure experience, enables Nuscale to bridge the power plant development plus ownership value. As seen on slides 9 and 10, with Doosan making significant steps towards production, our readiness is far more advanced than our SMR technology peers that have aspirations for U.S. Nuclear Regulatory Committee approval. And the gap continues to widen between Nuscale and our SMR competitors as we continue manufacturing our Nuscale power modules. It also highlights the degree to which we have de-risked our module.
John L. Hopkins: As featured on slide eight the strategic partnership we formed with <unk> energy and American independent energy producer and planned development owner with significant energy and infrastructure experience enables new scale to bridge the power plant development class ownership value.
John L. Hopkins: As seen on slides nine and 10 with <unk>, making significant steps towards production. Our readiness is far more advanced in RF Cmos technology peers that have aspirations for U S nuclear regulatory committee approval.
John L. Hopkins: And again continues to widen between new scale in our estimate our competitors as we continue manufacturing our new scale power module.
John L. Hopkins: It also highlights the degree to which we have de risked our modules.
John L. Hopkins: In April, Doosan and Earnability opened a dedicated steam generator tube bending shop, which included the installation of new state-of-the-art tube bending machines. Recent renovations also enabled the facility to perform tube bending for Nuscale Power modules, a key milestone in future development. I toured the Doosan facility last month in Tsinghua, and I am so impressed with all that Doosan has done to support forging and manufacturing Nuscale's power modules. We are also continuing to start new forgings and expect to have all of the forgings needed to support the first six upper reactor pressure vessels by the end of this year. I saw that the first seven large forgings for the upper reactor vessels, which we refer to as long lead materials, have made it to the forging and initial manufacturing phase.
John L. Hopkins: In April due saw an unknown ability opened a dedicated steam generator <unk> been in shop and includes the installation of new state of the art 2 billion machines.
John L. Hopkins: You said renovations also enabled the facility performed to bidding for new scaled power modules, a key milestone in future development.
John L. Hopkins: Turing to do sorts facility last month in Shanghai and I'm. So impressed with all that <unk> has done to support <unk> and manufacturing new scales power modules.
John L. Hopkins: We also are continuing to start new forgings and expect to have all of the <unk> needed to support the first six upper reactor pressor vessels by the end of this year.
John L. Hopkins: That the first seven large forging for upper reactor vessels, which we refer to as long lead materials have made it through the forging an initial manufacturing phase.
John L. Hopkins: Our reactor pressure vessels are now ready to enter the next fabrication phase. Our other strategic suppliers, like IHI of Japan and PARS Systems in the U.S., are also making preparations to accept customer-backed orders, which includes fabrication of prototypical Nuscale plant components.
John L. Hopkins: Our reactive pressure vessels are now ready to enter the next fabrication phase or.
John L. Hopkins: Our other strategic suppliers like IHI in Japan in par systems in the U S. We're also making preparations to accept customer backed orders. This includes fabrication of prototypical new scale plant components.
John L. Hopkins: We look forward to sharing more updates from our suppliers that demonstrate our readiness to deploy Nuscale-powered plants. On the regulatory side, Nuscale's standard design approval application for a 77-megawatt upright design was accepted for review by the U.S. Nuclear Regulatory Commission, or NRC, in July 2023. We expect the NRC's review process to conclude on or before July 2025.
Speaker Change: Look forward to sharing more updates from our suppliers that demonstrate our readiness to deploy new scale powered plants.
John L. Hopkins: On the regulatory side, new scale standard design approval application for a 77 megawatt upright design was accepted for review by the U S Nuclear regulatory commission or <unk> in July 2023.
John L. Hopkins: We expect the nrc's process to conclude on or before July of 2025.
John L. Hopkins: While the design is based on the same fundamental safety case and features approved by the NRC in 2020, we believe that the 77 megawatt Nuscale Power Module supports an even wider range of customers. Nuscale has deployed six E2 centers thus far, with four of these centers deployed at U.S. universities and two internationally. These energy exploration centers are the NRC-approved control rooms for Nuscale-powered plants. As seen on slide 11, we toured the E2 Center at Seoul National University with NEA Director General Bill Magwood.
John L. Hopkins: While the design is based on the same fundamental safety case and features approved by the NRC in 2020, we believe that the 77 megawatt new scale power module supports an even wider range of customers.
John L. Hopkins: New scale has deployed six <unk> centers, thus far with four of these centers deployed at U S universities and two internationally.
John L. Hopkins: These energy exploration centers or the NRC approved control rooms for new scale powered plants.
John L. Hopkins: As seen on slide 11, we toured the E. Two center at Seoul National University within EEA Director General Bill Magwood.
John L. Hopkins: This E2 center models operations for 12-module Nuscale-powered plants. Among the first Nuscale has achieved, the U.S. Inner Sea has approved three operators in a 12-unit control room. For the first time since the event at Three Mile Island, the Inner Sea also approved control room operations without a train-shift technical advisor.
John L. Hopkins: This <unk> center models operations were 12 modular new scaled powered plants among.
John L. Hopkins: Among the first new scale has achieved the U S. Intercity has approved three operators and a 12 unit control room.
John L. Hopkins: The first time since the advent of three mile Island. The NRC also approved control room operations without a trained shift technical adviser.
John L. Hopkins: The U.S. State Department announced that A2Centers will be deployed in Ghana, and we are in discussions to deploy several more. Akin to Apple computers deployed to schools, this makes training on a Nuscale E2 center the standard for advanced nuclear worldwide. Next, I'll update you on the Row Power Project. In late March, the U.S.
John L. Hopkins: The U S State Department announced an <unk> center will be deployed in Ghana, and we are in discussions to deploy several more.
John L. Hopkins: Apple computers deployed to schools. This makes training on our new scale <unk> centered the standard for advanced nuclear worldwide.
John L. Hopkins: Next I'll update you on the road power project.
John L. Hopkins: Ambassador to Romania Kathleen Kavlik visited Roe Power's Dorchester site. She reiterated America's commitment to deploying a Nuscale SMR in Romania and underlined that the Rural Power Project was an important element of the U.S.-Romania strategic partnership. Planning continues for raw power projects phase two front-end engineering design work, while commercial and government stakeholders work to finalize terms. While Nuscale contracted directly with Row Power to complete Feed Phase 1, as planned, Nuscale will serve as a subcontractor to Fluor for Row Power's Feed Phase 2.
John L. Hopkins: In late March U S Ambassador to Romania, gasoline Cadillac visited ROE powers door chest site.
John L. Hopkins: Our Catholic reiterated Americas commitment to deploying a new scale as tomorrow in Romania, and underscored at the <unk> power project was an important element of the U S. Romania strategic partnership.
John L. Hopkins: Planning continues to rub power projects Phase two front end engineering design work, while commercial and government stakeholders work to finalize terms.
John L. Hopkins: While new scale contracted directly with ROE power to complete feed phase one as planned new scale of serve as a sub contracted your floor for ROE powers feed phase II.
John L. Hopkins: In late April, the President of Romania and a Romanian delegation toured NUSAN's Interbilities Manufacturing Facility and saw the Nuscale Power Module components being manufactured there. Before I conclude, I want to reiterate that nuclear energy is such a valuable commodity in the context of the global energy transition because it's a sustainable solution that operates reliably, a pairing that does not exist with other current energy solutions. Whether it's industrial electrification, process heat, or the rapidly increasing demand of the data economy, Nuscale's SMR technology is part of the solution, given our ability to produce clean, reliable energy, reach customers, and help them achieve their sustainability goals.
John L. Hopkins: In late April the President of Romania, and our Romanian delegation toured new signs and abilities manufacturer at Sally.
John L. Hopkins: The new scale power module components are being manufactured there.
John L. Hopkins: Before I conclude I want to reiterate that nuclear energy et cetera, a valuable commodity in the context of the global energy transition because it's sustainable solution to execute reliably a pairing of does not exist with other current energy solutions.
John L. Hopkins: Whether it's industrial electrification processes for the rapidly escalating demand of the data economy, new scales <unk> technology as part of the solution given our ability to produce clean reliable energy reach customers and help them achieve their sustainability goals.
John L. Hopkins: We maintain competitive advantages in technology, safety, manufacturing readiness, siting, and regulatory success and expect to play an integral role in helping a wide range of customers meet their 24-7 energy needs while reinforcing and expanding the power grid. Now I'll turn it over to Ramsey to provide our financial update. Ramsey? Thank you, John.
John L. Hopkins: We maintain competitive advantages in technology safety manufacturing readiness, siting and regulatory success and expect to play an integral role in helping a wide range of customers meet their 24, seven energy needs, while reinforcing and expanding the power grid.
Ramsey: Now I'll turn 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 filings, so my focus will be on explaining major line items. I will discuss our first quarter results, found on slide 12, and relevant factors impacting our financial position. All figures following are for Q1 2024 unless I state otherwise.
Ramsey: Thank you John and Hello, everyone.
Robert Ramsey Hamady: Our financial results will be available in our filings. So my focus will be on explaining major line items.
Robert Ramsey Hamady: I will discuss our first quarter results found on slide 12, and relevant factors impacting our financial position.
Robert Ramsey Hamady: I guess following up for Q1, 2024, unless I state otherwise.
Robert Ramsey Hamady: I'll begin with Nuscale's improved financial position. In January, the company implemented a series of strategic initiatives to better align our resources with Nuscale's primary objective of transitioning toward commercialization and revenue-producing commercial contracts. These actions further Nuscale's long-term financial stability by generating approximately $50 to $60 million in annualized savings, starting in the second quarter of this year. Nuscale's overall cash position improved during the period, ending in the first quarter with cash in equivalents of $137.1 million, $5.1 of which is restricted, and no debt.
Speaker Change: I'll begin with new skills improved financial position.
Robert Ramsey Hamady: This compares to the end of the fourth quarter of 2023, when the company had cash equivalents of $125.4 million, $5.1 of which was restricted, and no debt. Nuscale also reported revenue of $1.4 million and a net loss of $48.1 million for the three-month period ending March 31st. This compares to revenue of $5.5 million and a loss of $35.6 million for the same period of 2023. The higher net loss reported in the current quarter is driven by a one-time $3.2 million charge associated with cost-reducing efforts related to our transition from an R&D-based company to commercial operations, and also a $9 million non-cash adjustment to the fair value of our warrants driven by the increase in our share price.
Robert Ramsey Hamady: In January the company implemented a series of strategic initiatives to better align our resources with new sales primary objective.
Robert Ramsey Hamady: Transitioning towards commercialization and revenue producing commercial contracts.
Robert Ramsey Hamady: These actions further new sales long term financial stability by generating approximately $50 million to $60 million annualized savings starting in the second quarter of this year.
Robert Ramsey Hamady: <unk> overall cash position improved during the period and in the first quarter with cash and equivalents of $137 1 million $5, one of which is restricted and no debt.
Robert Ramsey Hamady: This compares to at the end of the fourth quarter of 2023, when the company had cash equivalents of $125 4 million $5, one of which was restricted and no debt.
Robert Ramsey Hamady: <unk> also reported revenue of $1 4 million and net loss of $48 1 million for the three month period ending March 31st.
Robert Ramsey Hamady: This compares to revenue of $5 $5 million that loss of $35 6 million for the same period in 2023.
Robert Ramsey Hamady: Higher net loss reported in the current quarter is driven by a onetime $3 2 million charge associated with cost reduction efforts related to our transition from an R&D based company to commercial operations and also in $9 million noncash adjustment to the fair value of our warrants driven by the increase in our share price.
Robert Ramsey Hamady: Looking forward, Nuscale will maintain its financial discipline and prudently sustain a conservative liquidity reserve. I conclude my remarks with a brief view of our capitalization summary on slide 13. Additional information may be found in our SEC Form 10-Q, and our earnings release may be available prior to this call. With that, I'd like to thank you again for joining us today and for your continued support of Nuscale. Operator?
Robert Ramsey Hamady: Looking forward <unk> will maintain our financial discipline and prudently sustained conservative liquidity reserve.
Robert Ramsey Hamady: I conclude my remarks with a brief view of our capitalization summary on slide 13.
Robert Ramsey Hamady: Additional information may be found in our SEC Form 10-Q and earnings release made available prior to this call.
Robert Ramsey Hamady: With that I'd like to thank you again for joining today.
Speaker Change: Continued support at the scale, we will now take questions operator.
Robert Ramsey Hamady: Okay.
Operator: Thank you. The floor is now open for questions. If you have dialed in and would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star 1 again. If you are called upon to ask your question and are listening via loud speaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. Again, press star 1 to join the queue. Your first question comes from the line of George Gianiricas with Canaccord Genuity. Please go ahead.
Speaker Change: Thank you the floor is now open for questions. If you have dialed in and then we'd like to ask a question. Please press star one on your telephone keypad to raise your hand and join the queue. If he would like to withdraw your question simply press Star one again.
Operator: If you are called upon to ask your question and they are listening via loud speaker on your device. Please pickup your handset and ensure that your phone is not on mute when asking your question.
Operator: Again press star one to join the queue.
George Gianarikas: Your first question comes from the line of George <unk> with Canaccord Genuity. Please go ahead.
George Gianiricas: Hi, good evening, everyone, and thank you for taking my question. Thank you.
George Gianarikas: Hi, good evening, everyone and thank you for taking my questions.
George Gianarikas: Thank you Scott.
George Gianiricas: So you articulated a lot of momentum in your discussions with some of the hyperscale data center companies, and I'm curious as to when you see that momentum translating, and materializing into orders. I mean, it seems like it's close, but any guidance there would be much appreciated. Yeah, Joe.
George Gianiricas: Yes.
George Gianarikas: So you articulated a lot of momentum in your discussions with some of the Hyperscale data center companies and I'm curious as to you know.
George Gianiricas: When you see that momentum translating materializing into orders I mean, it seems like it's close but any guidance there would be much appreciated. Thank you.
John L. Hopkins: Yeah, George. John Hopkins here. You know, it wasn't that long ago when I commented that we saw a lot of activity with utilities related to coal plant refurbishment. And then last year, we saw a lot of activity and discussions around hydrogen production, process, heat, and ammonia. However, what I see this time in conversations with Tier 1 and others as it relates to AI and data centers. It's not rhetoric. They have a demand, and they have an immediate need. And it just continues to perpetuate itself.
Joe: Yes, George John Hopkins here just.
John L. Hopkins: You know it wasn't that long ago. When I commented that we saw a lot of activity with utilities related to coal plant refurbishment and then last year, we saw a lot of activity and discussions around hydrogen production processes pneumonia. However.
John L. Hopkins: However, what I see this time.
John L. Hopkins: In conversations with these these tier one than others as it relates to AI and data centers, it's not rhetoric.
John L. Hopkins: They have a demand and they have an immediate demand.
John L. Hopkins: It just continues to perpetuate and it's not that the coal plants have gone away or the hydrogen production. This is compounded by the additional requirements.
John L. Hopkins: And it's not that coal plants have gone away or hydrogen production. This is compounded by the additional requirement for these data centers and AI. And we have NDAs in place, and we put these NDAs in place very quickly because everybody's kicking tires now and wants to see who can deliver first. And as I mentioned, we have – I was just in Duson, and I was stunned to see the advancement of seeing seven of our 4Gs coming offline. They're even doing tube bending, and they're doing our helical coil steam generators. They're actually scaled up and are currently being tested.
John L. Hopkins: These datacenters and AI and we have N D. As a place that we put these N D. As a place very quickly because everybody's kicking tires now and wants to see who can deliver <unk>.
John L. Hopkins: And as I mentioned, we have a I was just in.
John L. Hopkins: <unk> I was stunned to see the advancement of seeing seven of our forgings coming offline, they're even doing to bear named bending and they are doing.
John L. Hopkins: Helical coil steam generators, they're actually scaled up and testing currently and these things are invaluable to us because if somebody wants to move quickly I could probably say over a year the schedule because we already have these long lead items in here so.
John L. Hopkins: And these things are invaluable to us because if somebody wants to move quickly, I could probably shave over a year off the schedule because we already have these long lead ions in hand. I think the difference in your question is that there's a lot of pressure now coming on when I see utilities from data centers and from AI companies saying, we need to meet the demand now, and if you can't deal with it, we'll have to go somewhere else.
John L. Hopkins: Think the difference to your question is that there's a lot of pressure now coming on what I see utilities from data centers and from AI company.
John L. Hopkins: We need to meet the demand now and if you can't deal with it we will have to go somewhere else and so on CN.
John L. Hopkins: And so, I'm seeing, you know, the utilities now – we had the Inflation Reduction Act, and we had the others that I talked about, but I've never seen any movement as fast as what I'm seeing currently right now. So, we're pretty bullish on the market. This is exactly what I feel – and I can't – we needed a burning platform. I think this is going to be what propels this industry to really take off.
John L. Hopkins: Utilities now we had the inflection inflation reduction act and we had.
John L. Hopkins: The others.
John L. Hopkins: Talked about but I've never seen any movement as fast as what Im seeing currently right now so we're pretty bullish on the market. This is exactly what I feel and I kept we needed a burning platform. I think this is going to be with promulgate this industry to really take off.
Speaker Change: Thank you for that.
John L. Hopkins: And maybe just as a follow-up. As a follow-up, are there any implications? to you of the restrictions on Russian uranium imports? Thank you. No, there is none at all. Our chief technology officer, Dr. Jose Reyes, back in the year 2000 made a cautious decision to stay as an advanced light water reactor, predominantly because that's what nuclear regulators all over the world do. They know light water. And so we're typically what we call conventional fuel, less than 5% of the rinse, and our fuel is actually manufactured by Framatone here in the United States. So fuel is not an issue.
John L. Hopkins: And then just as a follow up.
John L. Hopkins: As a follow up are there any implications to.
John L. Hopkins: To you of the restrictions on Russian uranium courts. Thank you know there is not at all.
John L. Hopkins: Our Chief Technology Officer, Dr. Jose radius back in the year 2000, and made a conscious decision to stay as an advanced light water reactor.
John L. Hopkins: Because that's what the nuclear regulators all over the world knew they know whitewater.
John L. Hopkins: And so we're typically what we call conventional fuel less than 5% of ranch and our fuel is actually manufactured by Framatome here in the United States.
John L. Hopkins: So fuel is not an issue for us.
George Gianiricas: Thank you so much. I'll hop back in.
Speaker Change: Thank you so much I'll hop back in queue.
Operator: Again, if you would like to ask a question, press star 1 on your telephone keypad. Your next question comes from the line of Mark Bianchi with TD Cowan. Please go ahead.
George Gianiricas: Again, if you would like to ask a question press Star one on your telephone Keypad. Your next question comes from the line of Marc Bianchi with TD Cowen. Please go ahead.
Marc Gregory Bianchi: Hey, thanks. John, I want to follow up on that last discussion about data center demand. You mentioned there were several that wanted to have commercial operations before the end of the decade. How many do you think could be awarded to the industry? Because I'm curious about how meaningful this would be. And I know you probably don't want to get into, you know, saying how many you could get, but just what are the real prospects that are out there? Is it like two or three? Is it 10? Help us understand how much that could be.
Marc Gregory Bianchi: Hey, thanks.
Marc Gregory Bianchi: John I wanted to follow up on that last discussion about the.
Marc Gregory Bianchi: About the data center demand.
Marc Gregory Bianchi: You mentioned there were several that wanted to have commercial operation before the end of the decade.
Marc Gregory Bianchi: How many do you think could be awarded to the industry. So I'm curious of how meaningful this would be and I know you probably don't want to get into it.
Marc Gregory Bianchi: How many you could get.
Marc Gregory Bianchi: What are the real prospects that are out there or is it like two or three as it can help us understand how much that could be.
John L. Hopkins: I think what comes down to, Mark, and thank you for the question, is the capacity to execute. One thing we don't want to do is overextend our capacity to execute. So what I'm looking for right now in our model, you know, is pretty simple. We will take first-of-a-kind risks and provide us with long-term PPAs. And that's what we're asking for.
John: I think what it comes down to you Mark and thank you for the question. It's the capacity to execute one thing we don't want to do is over extender, our capacity to execute so what im looking for right now in our model.
John L. Hopkins: It's pretty simple.
John L. Hopkins: We will take first of a kind risks provide us long term.
John L. Hopkins: Our ppas and that's what we're asking for it so right now we've got six modules coming out of line.
John L. Hopkins: So, right now, we've got six modules coming offline. Doosan says they could fabricate 20 modules in an annual time frame, and they're actually gearing up, as I said before. And what I like the fact that on these, what I call fungible assets, I can move these modules.
John L. Hopkins: <unk> says they could fabricate 20 modules and an annual timeframe and Theyre actually gearing up as we said before so and what I like the fact on these these what I call a fungible assets I can move these modules were building in our factory. So as you remember our model is predicated not to do one off projects that have one or two yes.
John L. Hopkins: We're building in a factory. So, as you remember, our model's predicated not to do one-off projects but have one or two, and we can locate or relocate these from the factory. You know, as we're building in a factory, you're doing the commercial work in the field simultaneously, so we can move pretty quickly. So, for me right now, I'm not greedy. Just give me one plant; one plant to start.
John L. Hopkins: You can locate or relocate these from the factory.
John L. Hopkins: You know as we're as we're building in a factory you're doing the commercial work in the field simultaneously. So we can move pretty quickly so.
John L. Hopkins: For me right now I'm not greedy just give me one plant one planned to start.
John L. Hopkins: And I'm telling you, you probably hear it. This is the first time I've really seen activity moving. People ask me where Standard Power is. They're still there.
John L. Hopkins: And I'm, telling you I've never you probably hear it.
John L. Hopkins: This is the first time I've really seen activity move you know people ask me about where whereas.
John L. Hopkins: Standard power there is still there.
John L. Hopkins: These are large and complicated financial transactions that just take time to finalize. But Standard Power has not gone away. And again, others like Amazon and Google, you read the announcement with Nucor and Google and Microsoft teaming together. I was recently at a conference, and I heard one of the senior executives say, in the market, we're competition. Commercially, we're competitors. However, when it comes to energy, we're collaborated because we all have a standard need. And they're looking to move, where time is of the essence.
John L. Hopkins: Our large and complicated financial transactions that just take time to finalize but.
John L. Hopkins: Santa Clara has not gone away.
John L. Hopkins: And again, the others like the Amazon and Google you read the announcement.
John L. Hopkins: Nucor and Google and Microsoft came in together.
John L. Hopkins: I was recently at a conference.
John L. Hopkins: One of the senior executives say you know.
John L. Hopkins: In the market where competition commercially where competitors. However, when it comes to energy where collaborated because we all have a standard need.
John L. Hopkins: And they're looking to move or time is of the essence.
Marc Gregory Bianchi: Right, right. Okay. I guess there are two others for me. One...
John L. Hopkins: Right right Okay.
Marc Gregory Bianchi: Yes.
Marc Gregory Bianchi: Just two others for me one.
Marc Gregory Bianchi: In the quarterly filings for the last few quarters, there's been a sales and marketing agreement. I think it started out as about 20 million bucks a few quarters ago, and it's been amortized lower as time goes on. Is that the agreement with Entra 1? And if not, is there some expectation for some sort of award to occur because of this agreement? And if an award doesn't occur, do you get the money back or something like that?
Marc Gregory Bianchi: In the in our quarterly filings for the last few quarters.
Marc Gregory Bianchi: It's been a sales and marketing agreement I think it started out as about 20 million Bucks a few quarters ago and it's been amortized lower as time goes on is that the agreement with ultra one.
Marc Gregory Bianchi: And if not.
Marc Gregory Bianchi: Is there some expectation for some sort of an award to occur because of this agreement and if an award doesn't occur.
John L. Hopkins: Maybe you could just talk about what's going on here.
Marc Gregory Bianchi: To get the money back or something like that maybe you could just talk about what's going on there.
John L. Hopkins: Yeah, I don't know if I'm at liberty to really say where that money went other than it was for development purposes. And again, this is, as I said, these are complicated transactions, and I will say our partner, IntraOne, you know, they're in discussions with the top five tier banks. I mean, I'm in discussions with them as well, and what they're looking for are bankable projects. You know, as I commented before, they don't necessarily want to just go and finance a nuclear power plant.
Speaker Change: Yes, I don't know if I'm at Liberty to really say, where that money went out as it is for development purposes.
John L. Hopkins: And again this is a as I said these are complicated transactions.
John L. Hopkins: I will say our partner intra one there.
John L. Hopkins: They are in discussions with a top five tier banks, I mean, I'm in discussions with them as well.
John L. Hopkins: What they're looking for is bankable projects.
John L. Hopkins: These banks are looking for assets under management. So they're looking at what IntraOne brings is the overarching infrastructure of not just nuclear, but it could be LNG, hydrogen, ammonia, etc. So, you know, we're assisting in some development costs and making this market happen. And I'm glad we did it because I'm starting to finally see, hopefully, this is going to come to fruition.
John L. Hopkins: I commented before they don't necessarily want to just go and finance a nuclear power plant. These banks are looking for assets under management. So theyre looking at what <unk> brings is the overarching infrastructure not just nuclear but it could be LNG hydrogen ammonia et cetera.
John L. Hopkins: So you know we're assisting in some development cost in making this market happen and and I'm glad we did it because I'm starting to finally see.
John L. Hopkins: Hopefully this is going to come to fruition.
Marc Gregory Bianchi: Okay, great. And then the last one, yeah, sorry, go ahead John. No, I'm sorry. I interrupted. Sorry.
John L. Hopkins: Okay.
Marc Gregory Bianchi: And then the last yeah. Sorry go ahead, John go ahead, Multipoint, no I'm, sorry, I interrupted sorry.
Marc Gregory Bianchi: I was just going to ask one for Ramsey on cash. So the Q has a $33 million cash use. And you talked about in the slides here of the $50 to $60 million of annualized savings that will happen in the second quarter. So that's like $13 million a quarter of savings. Should the implication then be that the cash use in the second quarter and beyond should be in that ballpark of $20 million?
John: I was just to ask one for Ramsey on cash so.
Marc Gregory Bianchi: The Q has a $33 million cash use and you.
Marc Gregory Bianchi: <unk> talked about in the slides here of the $50 million to $60 million of annualized savings that will happen in the second quarter. So yeah. That's like 13 million Bucks a quarter of savings should be application then be that like the cash flows in second quarter and beyond should be in that ballpark of 20 million Bucks.
Robert Ramsey Hamady: So, Mark, when we announced our cost savings plan in January, we did mention a savings of $50 to $60 million on an annualized basis. Our cash from operations for this quarter was, I think, about negative $33 and a half million dollars. I anticipate that our cash burn on an ongoing basis will be sub $10 million. We took a number of one-time charges during the first quarter, so I think you're about in the ballpark if you're thinking 20 or the low 20s as a quarterly cash burn rate just based on where we stand today.
Marc Gregory Bianchi: So mark when we announced the.
Robert Ramsey Hamady: Our cost savings plan in January.
Robert Ramsey Hamady: We did we did mention a savings of $50 million to $60 million on annualized basis, our cash from operations for this quarter.
Robert Ramsey Hamady: I think that negative three three and a half million dollars.
Robert Ramsey Hamady: I anticipate that our cash burn on ongoing basis will be sub $10 million. We took a number of kind of one time charges during the first quarter.
Robert Ramsey Hamady: So I think you're about in the ballpark.
Robert Ramsey Hamady: If you're thinking 'twenty or low twenty's as our quarterly cash burn rate.
Robert Ramsey Hamady: Just based on where we stand today.
Marc Gregory Bianchi: Okay, and to confirm that, that doesn't contemplate any further ATM sales. I know you could do those, but the numbers we're talking about here, that's before any benefit from ATMs.
Mark: Okay and to confirm that that doesn't contemplate any further ATM sales I know you you could do those but the numbers we're talking about here that's before any benefit from ATM.
Robert Ramsey Hamady: I'm talking about cash flow for operations. So, yeah. Got it. Yeah. Great. Absolutely. Thanks very much.
Marc Gregory Bianchi: I'm talking about cash flow from operations.
Speaker Change: Yeah got it.
Speaker Change: Absolutely thanks, very much I'll turn it back.
Marc Gregory Bianchi: Thanks very much. I'll turn it back.
Operator: Your next question comes from the line of Ryan Pfingst with B. Reilly. Please go ahead.
Marc Gregory Bianchi: Your next question comes from the line of Ryan <unk> with B Riley. Please go ahead.
Ryan James Pfingst: Hey, good evening guys. For row power, guys, understanding that the timing for row power is out of your control, can you just remind us what the final steps are to finalize terms for the phase 2 feed work?
Ryan James Pfingst: Hey, good evening guys.
Speaker Change: For Hydro power Hey, guys.
Ryan James Pfingst: Standing that the timing Perrot power is out of your control can you just remind us what the final steps are there to finalize terms for the phase two feed work.
John L. Hopkins: Yeah, Ryan. In fact, we had an update this morning with our RealPower client, and as I commented, I was with the president of Romania two weeks ago when he toured the Doosan facility. We completed working with Flora Corporation on feed phase one. We're now entering into the LNTP, or the Limited Notice to Proceed, feed phase two, where Nuscale is a subcontractor to Flora Corporation. And their vote was to have occurred on April 17th with the shareholders of Row Power.
Ryan James Pfingst: Yes, Ryan it's in fact I, just we had an update this morning with a real power client and as I commented I was with the president of Romania, two weeks ago in Romania. When he toured the Tucson facility.
John L. Hopkins: Completed working with <unk> Corporation, a feed phase one.
John L. Hopkins: We're now entering into the L. N T P or the limited notice to proceed feed phase two where new scale as a subcontractor to <unk> Corporation.
John L. Hopkins: However, for whatever reason, we don't know. Also, we were told it has nothing to do with Nuscale Technology or the contractors. It's politically driven in a year of elections that they postponed the date the shareholders voted to June or July. And we were told as of this morning that that's still progressing. It's not a financial issue, and all we know is that the vote has been abstained or delayed until the June or July timeframe. So that's the extent of what they've told us.
John L. Hopkins: And their vote was to have occurred in April 17th with the shareholders of ROE power. However, whatever reason and we don't know although we were told it has nothing to do with new scale technology or the contractors as politically driven in a in a year of elections.
John L. Hopkins: They postpone the date.
John L. Hopkins: The shareholders voted to June July.
John L. Hopkins: We were told this morning that that's still progressing it's not a financial issue it's.
John L. Hopkins: All we know is that the vote has been obtained or delayed until June July timeframe. So that's the extent of what they've told us.
John L. Hopkins: Okay, the limited to proceed phase is, you know, as I said, floor is, we're a subcontractor to floor, the duration of that is about one year before they move into the final notice.
John L. Hopkins: Okay.
John L. Hopkins: To proceed phase as you know as I said, Florida is whereas sub contract with Florida. The duration of that is about a one year duration before they move into the final notice.
John L. Hopkins: To proceed.
Ryan James Pfingst: Do you need anything else? Got it. Yep, sure does. Thanks, John. And then just one more. I'm wondering if you have any update on the two SMR appropriations programs that we spoke about a little bit on the last call.
John L. Hopkins: Does that help got it yes sure does thanks, John and then.
Ryan James Pfingst: Just one more I'm wondering if you had any update on that.
Ryan James Pfingst: As Tamara appropriations programs that we spoke about a little bit on the last call.
John L. Hopkins: Yeah, it's still on. We're waiting for the request to come out. It's, you know, the initial is for 800 million dollars. In our discussions with the government, you know, that award will probably go on to the next administration. But then there's another award, for $100 million, that we're waiting on manufacturing and supply chain not only for about $100 million but, what we were told, the turnaround on that contract is 90 days. So we're still waiting and Hopefully, it'll come to the fore, at least that $100 million we'll know here pretty soon. That's all we're told. It is an election year, Mike. Yeah,
Speaker Change: Yeah, it's still we're waiting for the request to come out.
John L. Hopkins: Initial for $800 million.
John L. Hopkins: In our discussions with government.
John L. Hopkins: That award will probably be gone through to the next administration, but then there's another award for.
John L. Hopkins: For $100 million that were waiting on manufacturing and supply chain of not only about $100 million in what we were told a turnaround from that on that time on that contract is 90 days. So we're still waiting.
John L. Hopkins: Hopefully it will come to the force or at least that $100 million, we'll know here pretty soon.
John L. Hopkins: Cold.
John L. Hopkins: It is an election year behind you.
Ryan James Pfingst: I appreciate that, Keller; I'll turn it back, thanks.
Mike: Yeah understood I appreciate that color I'll turn it back thanks.
Operator: We have reached the allotted time for questions. I will now turn the call over to Nuscale CEO, John Hopkins, for closing remarks.
Ryan James Pfingst: We have reached the allotted time for questions I will now turn the call over to new scale CEO, John Hopkins for closing remarks.
John L. Hopkins: Yes, thank you, operator. As we stated before, Nuscale is the only SMR design certified by the U.S. Nuclear Regulatory Commission. We, along with our strategic partner, Intra1, have built, we believe, a very robust business development pipeline. Nuscale has industry-leading manufacturing readiness and is well-positioned to commercialize and deliver clean energy at scale. Nuclear technology is essential to powering the global energy transition, and we believe we are at the forefront of that effort with our work to deliver safe, scalable, and reliable carbon-free nuclear power.
John L. Hopkins: Yes, thank you operator.
John L. Hopkins: As we stated before new scale is the only of smart design certified by the U S. Nuclear regulatory Commission, we along with our strategic partner <unk> have built we believe a very robust business development pipeline.
John L. Hopkins: New scale has industry, leading manufacturing readiness and is well positioned to commercialize and deliver clean energy at scale.
John L. Hopkins: Nuclear technology is essential to power in the global energy transition and we believe we are at the forefront of that effort with our work to deliver safe scalable and reliable carbon free nuclear power.
John L. Hopkins: I believe we're off to a good start in 2024 with progress on all fronts, and I look forward to what we will accomplish together throughout the remainder of the year. I'd like to thank everybody for their interest in Nuscale and for participating on the call today. Operator? Thank you. This concludes today's conference call. You may now disconnect.
Speaker Change: I believe we're off to a good start in 2024 with progress in all fronts and I look forward and I look forward to what we will accomplish together throughout the remainder of the year I would like to thank everybody for their interest in new scale and for participating on the call today operator.
Speaker Change: Thank you. This concludes today's conference call you may now disconnect.
Operator: ???
John L. Hopkins: [music].
Operator: Okay.
Operator: [music].