Q1 2024 Centrus Energy Corp Earnings Call

Operator: Greetings. Welcome to Centrus Energy's first quarter 2024 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn your conference over to your host, Dan Leistikow, Vice President, Corporate Communications. Thank you. You may begin

Beatings welcome to Centrists energy first quarter 'twenty 'twenty four earnings call. At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation.

Anyone should require operator assistance during the conference. Please press star zero on your telephone keypad. Please note. This conference is being recorded I will now turn your conference over to your host Dan Leistikow Vice President Corporate Communications. Thank you you may begin.

Dan Leistikow: Good morning. Thank you all for joining us. Today we'll cover the results for the first quarter of 2024, ended March 31st. Here today are Amir Vexler, President and Chief Executive Officer, and Kevin Harrill, our Chief Financial Officer. Before turning the call over to Amir Vexler, I'd like to welcome all of our callers, as well as those listening to our webcast. This conference call follows our earnings news release issued yesterday. We expect to file our report for the first quarter on Form 10-Q later today. All of our news releases and SEC filings, including our 10-K, 10-Qs, and 8-Ks, are available on our website.

Dan Leistikow: Good morning. Thank you all for joining us today will cover the results for the first quarter 2024 ended March 31 today, we have <unk>, President and Chief Executive Officer, and Kevin Harel, Our Chief Financial Officer before turning the call over to Amir of Exler I'd like to welcome all of our callers as well as those listening to our <unk>.

Dan Leistikow: Cast this.

Dan Leistikow: This conference call follows our earnings news release issued yesterday, we expect to file our report for the first quarter on Form 10-Q later today all of our news releases and SEC filings, including our 10-K 10, Qs and eight Ks are available on our website. A replay of this call will also be available later this morning on this interest website.

Dan Leistikow: A replay of this call will also be available later this morning on the Centrus website. I would like to remind everyone that certain information we may discuss on this call today may be considered forward-looking information that involves risk and uncertainty, including assumptions about the future performance of Centrus. Our actual results may differ materially from those in our forward-looking statement. Additional information concerning factors that could cause actual results to materially differ from those in our forward-looking statements is contained in our filings with the SEC, including our annual report on Form 10-K and quarterly reports on Form 10-Q.

Dan Leistikow: Finally, the forward-looking information provided today is time-sensitive and accurate only as of today, May 8, 2024, unless otherwise noted. This call is a property of Centrus Energy. Any transcription, redistribution, retransmission, or rebroadcast of the call in any form without the express written consent of Centrus is strictly prohibited. Thank you for your participation, and I'll now turn the call over to Amir Vexler.

Dan Leistikow: I would like to remind everyone that certain information we may discuss on this call today may be considered forward looking information that involves risk and uncertainty, including assumptions about the future performance of centers. Our actual results may differ materially from those in our forward looking statements additional information concerning factors that could cause actual results to materially.

Dan Leistikow: Really differ from those in our forward looking statements is contained in our filings with the SEC, including our annual report on Form 10-K, and quarterly reports on Form 10-Q.

Dan Leistikow: Finally, the forward looking information provided today is time sensitive and accurate only as of today may eight 2024, unless otherwise noted.

Dan Leistikow: This call is the property of central synergy any transcription redistribution retransmission or rebroadcast of the call in any form without the expressed written consent of centrists is strictly prohibited.

Dan Leistikow: Thank you for your participation and I'll now turn the call over to Amir are excellent.

Amir Vexler: Thank you, Dan, and thank you to everyone on the call today. In the first quarter, we achieved $43.7 million in total revenue, $4.3 million in gross profit, and a net loss of $6.1 million. As we have said many times before, the best way to look at our business is on an annual basis rather than quarterly because of the way our contracts are structured. Our LEU customers generally have long-term, multi-year contracts that commit them to pay for a given quantity of fuel each year. They decide which quarter to take delivery, which is when we book the revenue.

Amir: Thank you Dan and thank you to everyone on the call today in.

Amir: In the first quarter, we achieved $43 $7 million in total revenue $4 3 million in gross profit and a net loss of $6 1 million as.

Amir: As we have said many times before the best way to look at our business is on an annual basis, rather than quarterly because of the way our contracts are structured.

Amir: Our customers generally have long term multiyear contracts that commit them to pay for a given quantity of fuel each year.

Amir: They decide which quarter to take delivery.

Amir: Which is when we book the revenue.

Amir Vexler: Another factor is the market price of enrichment, which has varied significantly over the last several years, leading to contracts with different prices depending on when they are signed. So when we have a first quarter with fewer deliveries and lower priced contracts, we tend to make it up in the rest of the year. Having said that, the fact is...

Amir: Another factor is the market price of enrichment.

Amir: Which has varied significantly over the last several years, leading to contracts with different pricing depending on when they are signed.

Amir: So when we have a first quarter with fewer deliveries and lower priced contracts, we tend to make it up in the rest of the year.

Amir: Having said that the fact is this was incredibly productive quarter for centers a period in which we booked new sales achieved new milestones and production of high assay low enriched uranium applied for hundreds of millions of dollars in funding to advance those efforts and saw Congress approve a historic investment in uranium enrichment.

Amir Vexler: This was an incredibly productive quarter for Centrus, a period in which we booked new sales, achieved new milestones in production of high-assay, low-enriched uranium, applied for hundreds of millions of dollars in funding to advance those efforts, and saw Congress. Last year, at our facility in Fiketon, Ohio, Centrus embarked on a first-of-a-kind production of high-assay, low-enriched In November, we announced the delivery of our first 20 kilograms of HALU under phase one of our competitively awarded contract with the U.S. Department of Energy.

Amir: Last year at our facility in <unk>, Ohio, Sentras embarked on a first of a kind production of high assay low enriched uranium or halo.

Amir: The advanced nuclear fuel component needed for the next generation of reactor.

Amir: In November we announced the delivery of our first 20 kilograms of Halo under phase one of our competitively awarded contract with the U S Department of energy.

Amir Vexler: As we discussed on our last earnings call, the amount of HALU we've been able to produce since that time has been limited as the department continues to experience difficulties in getting us enough HALU storage cylinders for the continuous production of HALU. However, we don't expect the interruptions in receiving the cylinders to have an adverse material financial impact on Centrus. Since we're continuing to meet our obligations under the contract, and the department is compensating us on a cost plus incentive fee basis,

Amir: As we discussed on our last earnings call the amount of Halo, we've been able to produce since that time has been limited as the department continues to experience difficulties in getting us enough here with storage cylinders for the continuous production of Halo.

Amir: We don't expect the interruptions and receiving the cylinders to have an adverse material financial impact on Suntrust.

Amir: Since we're continuing to meet our obligations under the contract and the department is compensating us on a cost plus incentive fee basis.

Amir Vexler: We continue to expect that the supply chain issues with the storage cylinders will be resolved sometime later this year and won't be an ongoing issue after that. We've been continuing to fill cylinders as we get them and make additional deliveries to the department. I am happy to announce that we have now reached about 135 kilograms of cumulative production. We are encouraged that President Biden also highlighted our successful HALU production in the recent...

Amir: We continue to expect that the supply chain issues with this storage cylinders will be resolved sometime later this year and won't be an ongoing issue after that.

Amir: We've been continuing to fill cylinders as we get them and make additional deliveries to the department.

Amir: I'm happy to announce that we have now reached about 135 kilograms of cumulative production.

Amir: We are encouraged that president bite and also highlighted our successful halo production and the recent speech.

Amir Vexler: The President also noted that the United States has depended on imported fuel for too long and expressed its commitment to making a multi-billion dollar investment to enrich uranium here in the U.S. Centrus is proud to be leading the effort to restore America's domestic uranium enrichment capacity at scale. We are the only American-owned U.S. technology enricher. We are the only enricher who manufactures our centrifuges in the United States. We rely on American workers and the U.S. Supply Chain.

Amir: The President also noted that the United States has defended on imported fuel for.

Amir: For too long.

Amir: And expressed this commitment to making a multibillion dollar investment to enrich uranium here in the U S.

Amir: Central is proud to be leading the effort to restore America's domestic uranium enrichment capacity at scale.

Amir: The only American owned U S technology and richer we are the only and richer where manufacturers are centrifuges in the United States, we rely on American workers.

Amir: In the U S supply chain.

Amir Vexler: Our Ohio plant is the only place in the Western world licensed for HALU production. It is one of just two sites in the United States that is licensed to produce low-enriched uranium for existing reactors, and the only one of those sites that is American-owned. We have barely scratched the surface of what's possible in pike.

Amir: Our Ohio plant is the only place in the Western World license for Halo production.

Amir: It is one of just two sites in the United States that is licensed to produce low enriched uranium for existing reactor reactors and the only one of those sites that is American owned.

Amir: We have barely scratched the surface of what's possible in <unk>.

Amir Vexler: Our facility is as large as the Pentagon, with room for thousands of centrifuges. In addition to supplying HALU for the next generation of reactors, we could also have an opportunity to produce and supply low-enriched uranium for the existing fleet of reactors. The LEU market is very large today. The enrichment component in the United States is worth about $2.4 billion annually at today's price. The accessible market internationally is currently about $1.9 billion per year.

Amir: Our facility is as large as the Pentagon with room for thousands of centrifuges. In addition to supplying Halo for the next generation of reactors. We also could have an opportunity to produce and supply low enriched uranium for the existing fleet of reactors.

Amir: The led market is very large to date the enrichment component in the United States is worth about $2 $4 billion annually at today's prices. The accessible market internationally is currently about $1 $9 billion per year. We are also uniquely positioned to meet U S National security needs.

Amir Vexler: We are also uniquely positioned to meet U.S. national security needs since those missions require the use of U.S.-origin enrichment technology, and we have the only U.S. enrichment technology that is deployment ready. To be clear, however, scaling up production of either HALU or LEU will require a robust public-private partnership. It will take a significant federal investment alongside private capital and commercial off-day contracts. Since every other enrichment plant in the world is state-owned and has been built on the backs of similar partnerships from their supporting governments, a robust federal investment is critical in leveling the playing field for an American producer. The good news is that we are taking steps towards building that kind of a parking lot.

Amir: Since those missions require the use of U S origin enrichment technology, and we have the only U S enrichment technology that is deployment ready.

Amir: To be clear scaling up production of either Halo or <unk> will require a robust public private partnership.

Amir: We'll take a significant federal investment alongside private capital and commercial offtake contracts.

Amir: Every other enrichment plant in the World is state owned and has been built on the backs of similar partnerships from their supporting government.

Amir: Our robust federal.

Amir: Federal investment is critical and leveling the playing field for an American producer.

Amir: The good news is that we are taking steps towards building that kind of a partnership.

Amir Vexler: In this quarter, Centrus submitted proposals to the Department of Energy in response to two RFPs, part of a program designed to stimulate halo production that's scaled by a government participant. We are looking forward to the department's decision later this year. The RFPs contemplate up to $3.5 billion in long-term awards, which would include the cost of mining and milling the uranium, converting it to uranium hexafluoride, enriching it, and deconverting it to different forms.

Amir: And this quarter Sentras submitted proposals to the department of energy in response to two Rfps.

Amir: Part of a program designed to stimulate halo production at scale by a government purchases. We're looking forward to the department's decision later this year.

Amir: <unk> contemplate up to $3 $5 billion in long term awards, which would include the cost of mining and milling the uranium converting it to uranium hexafluoride, enriching it and <unk> it to different forms.

Amir Vexler: The Department has about $700 million in initial funding as part of the Inflation Reduction Act, and in March, with overwhelming support from Republicans and Democrats, Congress passed and the President signed new legislation that provided an additional $2.7 billion to jumpstart domestic production of both LEU and HAVEN. We look forward to competing for this funding as soon as it becomes available and believe we are all well positioned to do so. The Appropriations Bill made the funding contingent upon either Congress or the President placing some additional restrictions on imports of Russian uranium, which Congress did on April 30. The ban will be effective 90 days after the president's signature, but it allows for a waiver process that runs to 2028 to allow time for new enrichment capacity to come online.

Amir: The department has about $700 million in initial funding as part of the inflation reduction inflation reduction Act.

Amir: And in March with overwhelming support from Republicans and Democrats Congress passed and the President signed legislation that provided an additional $2 $7 billion to jumpstart domestic production of both <unk> and <unk>.

Amir: We look forward to competing for this funding as soon as it becomes available and believe we are all well positioned to do so the appropriations Bill.

Amir: Made the funding contingent in bonds, either Congress or the president, placing some additional restriction on imports of Russian uranium, which Congress did on April 30th.

Amir: The ban will be effect of 90 days after the President's signature, but it allows for a waiver process that runs through 2028 to.

Amir: To allow time for new enrichment capacity to come online we are engaging with policymakers on how best to implement an efficient and predictable waiver process.

Amir Vexler: We are engaging with policymakers on how best to implement an efficient and predictable waiver process. Prompt approval of this waiver is critical not only to Centrus but the entire U.S. nuclear industry. We've talked about the public side of the public-private partnership. Now what about the private side?

Amir: <unk> approvals of this waiver is critical not only to centrists, but the entire U S nuclear industry.

Amir: Which talked about the public side of the public private partnership now what about the private side.

Amir Vexler: Here again, the private sector is stepping up. I am pleased to announce that over the last few months, Centrus has secured approximately $900 million in conditional sales commitments to support our effort to return to production of LEU. Subject to signing definitive contracts, these commitments are contingent upon Centrus securing sufficient public and private investment to build the LEU enrichment capacity. They reflect the resolve of our customer base to support a new American producer of LEU that can bring greater competition to the marketplace and reduce our industry's dependence on Russian nuclear fuel.

Amir: Here again, the private sector is stepping up.

Amir: I'm pleased to announce that over the last few months Sentras has secured approximately $900 million and conditional sales commitments to support our effort to return to production of <unk>.

Amir: Subject to signing definitive contracts. These commitments are contingent upon sentras, securing sufficient public and private investment to build the <unk> enrichment capacity. They reflect the resolve of our customer base to support a new American producer of Liu that can bring greater competition to the marketplace.

Amir: And reduce our industry dependence on Russian nuclear fuel.

Amir Vexler: And it shows that the private sector is ready to do its part as part of a national effort to restore America's nuclear fuel supply chain. Between HALU and LEU, we see a tremendous opportunity to address a large and critical market as the only publicly traded enrichment company and the only company in the United States to hold the necessary licenses to produce both HALU and LEU. With that, I'm going to turn things over to Kevin.

Amir: And it shows that the private sector is ready to do its part as part of a national effort to restore America's nuclear fuel supply chain.

Amir: Between Halo and <unk>, we see a tremendous opportunity to address a large and critical market is the only publicly traded enrichment company and the only company in the United States to hold necessary licenses to produce both halo and <unk>.

Amir: With that I'm going to turn things over to Kevin.

Kevin J. Harrill: Thank you, Amir. Good morning, everyone.

Kevin J. Harrill: Thank you Amir good morning, everyone. Our first quarter of 2024 results are in line with our internal projections for this quarter based on customer orders and deliveries.

Kevin J. Harrill: Our first quarter of 2024 results are in line with our internal projections for this quarter based on customer orders. This quarter's results are also consistent with our first quarter's reporting over the past three years, which have included a smaller percentage of annual deliveries at lower margins. Additionally, the first quarter of 2023 included one higher margin delivery that did not repeat in the first quarter of 2024, although we expect a similar delivery later.

Kevin J. Harrill: This quarter's results are also consistent with the first quarter's reporting over the past three years, which has included a smaller percentage of annual deliveries at lower margins.

Kevin J. Harrill: Additionally, the first quarter of 2023 included one higher margin delivery that did not repeat in the first quarter of 2024, although we expect a similar delivery later in the year.

Kevin J. Harrill: For the first quarter of 2024, our LEU business generated $23.6 million in revenue, a decrease of $35.2 million compared to the same quarter of 2023, reflecting decreases in both the volume of Swoosold as well as the average price of Swoosold. Our cost of sales in LEU decreased from $34.9 million in the first quarter of 2023 to $23.1 million in 2024, again reflecting the decrease in sales volume, partially offset by an increase in the average unit cost of Seuss oil.

Kevin J. Harrill: For the first quarter of 2024, our <unk> business generated $23 6 million in revenue a decrease of $35 2 million compared to the same quarter in 2023, reflecting decreases in both the volume of Sue sold as well as the average price since we sold.

Kevin J. Harrill: Our cost of sales and <unk> decreased from $34 9 million in the first quarter of 2023 to $23 1 million in 2024.

Kevin J. Harrill: Again, reflecting the decrease in sales volume, partially offset by an increase in the average unit cost of <unk> sold.

Kevin J. Harrill: We ended the quarter with a modest LEU gross profit of $0.5 million, compared to $23.9 million in the first quarter of 2023. The decrease in the LEU gross profit was partially offset by a $4.7 million improvement in the gross margin from our technical solution segment compared to the first quarter of 2023. On a consolidated basis, our gross profit was $4.3 million, a decrease from $23 million in the same quarter last year. In technical solutions, we generated revenue for the first quarter of $20.1 million with a cost of sales of $16.3 million.

Kevin J. Harrill: We ended the quarter with modest Mou gross profit <unk> 5 million compared to $23 9 million in the first quarter of 2023.

Kevin J. Harrill: The decrease in the <unk> gross profit was partially offset by a $4 $7 million improvement in the gross margin from our technical solutions segment.

Kevin J. Harrill: Compared to the first quarter of 2023.

Kevin J. Harrill: That compares to revenue of $8.1 million against cost of sales of $9.0 million in the same quarter last year. As Amir noted earlier, we have transitioned to phase two of the HALU operation contract and, with that, transitioned to a cost-plus-incentive model, which has improved the profitability of that sector. We ended the quarter with a cash balance of $209.3 million and an additional $32.6 million in restricted cash, for a total of $241.9 million of cash and restricted cash. Our strong cash position continues to enable us to manage our operational obligations and make strategic investments in our future. With that, let me turn things back over to Amir.

Kevin J. Harrill: On a consolidated basis, our gross profit was $4 $3 million a decrease from $23 million in the same quarter last year.

Kevin J. Harrill: In technical solutions, we generated revenue for the first quarter of $21 million with cost of sales of $16 3 million.

Kevin J. Harrill: That compares to revenue of $8 1 billion against cost of sales of $9.0 million in the same quarter last year.

Kevin J. Harrill: As Amir noted earlier, we have transitioned to phase two of the Haynesville operation contract with that transition to a cost plus incentive fee model, which improved has improved the profitability of that segment.

Kevin J. Harrill: We ended the quarter with a cash balance of $209 3 million and an additional $32 6 million in restricted cash for a total of $241 9 million of cash and restricted cash.

Kevin J. Harrill: Our strong cash position continued to enable us to manage our operational obligations and make strategic investments in our future.

EMEA: With that let me turn things back over to EMEA.

Amir Vexler: Thank you. Before we get to your questions, I want to offer a bit of context about the environment we are in. I've spent more than 25 years in the nuclear fuel industry, and I've never seen the market change as dramatically as it is changing now. As industry and policymakers come to terms with new technological and geopolitical realities and race to catch up, the COVID pandemic offered a stark warning about the importance of supply chains.

EMEA: Thank you before we get to your questions I want to offer a bit of a context about the environment. We're in.

EMEA: I've spent more than 25 years in the nuclear fuel industry I've never seen the market change as dramatically as it is changing now as the industry and policymakers come to term with a new technological and geopolitical realities and race to catch up.

EMEA: Cover pandemic offer the stark warning about the importance of supply chain, Ukraine invasion sparked concerns over Russia's dominance in the nuclear fuel market, causing market prices for enrichment that tripled.

Amir Vexler: The Ukraine invasion sparked concerns over Russia's dominance in the nuclear fuel market, causing market prices for enrichment to triple. Meanwhile, a whole new generation of reactors is coming to the market. Many of them will require HALU and will use it for a lot more than just electricity. They have the potential to provide high-temperature heat for industrial processes like making cement or steel or desalinating water. Google and Microsoft are exploring deploying these new reactors to provide 24-7 power to the vast new data centers that will be needed for AI systems. And next year, the U.S. military will test a prototype of a halo-fueled microreactor to meet the needs of our troops and military bases.

EMEA: Meanwhile, a whole new generation of reactors is coming to market. Many of them will require a halo and we'll use them for a lot more than just electricity.

EMEA: They have the potential to provide high temperature heath for industrial processes, like making cement or steel or desalinating water <unk>.

EMEA: <unk> and Microsoft are exploring deploying these new reactors to provide 24 seven power the vast new data to the vascular data centers that will be needed for AI systems.

EMEA: And next year the U S military will test the prototype of our Haywood fueled micro reactor to meet the needs of our troops and military basis.

Amir Vexler: Recognizing the surging need for clean energy, last year the United States joined with two dozen countries on four continents in a pledge to triple nuclear energy generation by 2050 and joined a subsequent declaration with our closest allies in committing to support new enrichment capacity needed to meet this goal. As a company and as a country, we have a once-in-a-generation opportunity to reclaim American leadership in uranium enrichment. It was a mistake for the United States to cede this market to others. It is time for us to get back in the game.

EMEA: Recognizing the surging need for clean energy last year in the United States joined with two dozen countries on four continents and the pledge.

EMEA: To Triple nuclear energy generation by 2050 and joined a subsequent declaration with our closest allies and committing to support new enrichment capacity needed to meet this goal.

EMEA: As a company and as a country, we have a once in a generation opportunity to reclaim American leadership in uranium enrichment.

EMEA: Wasn't a mistake for United States to seed this market to others.

Amir Vexler: But we can't do it without you. So, let me close by expressing my gratitude to our investors who are supporting us on this journey. We expect to accomplish great things together. With that, we're happy to take your questions, Operator.

EMEA: Time for us to get back in the game, but we can do it without you. So let me close by expressing my gratitude to our investors who are supporting us on this journey, we expect to accomplish great things together with that we're happy to take your questions operator.

Operator: Thank you. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question is from Rob Brown.

Speaker Change: Thank you.

Speaker Change: I'd like to ask a question. Please press star one on your telephone keypad.

Speaker Change: Tone will indicate your line is in the question queue.

Speaker Change: May press Star two if he would like to remove your question from the queue and for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys.

Speaker Change: Our first question is from Rob Brown with Lake Street Capital. Please proceed.

Robert Duncan Brown: Hi, good morning.

Robert Duncan Brown: Robert, could you put a little more color on the $900 million in LEU kind of contingent commitment and what that entails and sort of what that means for market share?

Robert Duncan Brown: I wondered if you wanted to go a little more color on the.

Robert Duncan Brown: $900 million of Alere.

Robert Duncan Brown: You kind of contingent commitment and what that entails.

Robert Duncan Brown: What that means for that for the market.

Robert Duncan Brown: Okay.

Amir Vexler: Well, good morning, Rob. I'm actually glad you posed that as your first question. I think that's probably one of the most important things in our discussion today.

Speaker Change: Well good morning.

Robert Duncan Brown: I'm actually glad you below that as your first question I think thats, probably one of the most important things in our discussion today.

Amir Vexler: This is a. It's different from past orders, obviously, and in the way it's different from it, this is actually meant for production at our facility in Piketon. So these are LEU; this is material that will be produced by us. Now, obviously, as we said, it's contingent, contingent on several factors, and probably the biggest factor is, as we have been preparing everybody in the past, we are seeking a public-private partnership, and it's contingent upon an actual realization of that and the build of the facility.

Robert Duncan Brown: This is a.

Robert Duncan Brown: It's different from past orders obviously.

Robert Duncan Brown: The way it is different from that this is actually meant for production.

Robert Duncan Brown: In our facility in <unk>. So these these are.

Amir Vexler: This is material that will be produced by US now obviously as we said it's contingent contingent on several factors and probably the biggest factor is as we have been prepping everybody in the past we are seeking a public private partnership.

Amir Vexler: And it's contingent upon.

Amir Vexler: Actual material inflation of that and to build a debt facility. So the way to read this correctly is that the market and the commercial utilities are.

Amir Vexler: So the way to read this correctly is that the market and the commercial utilities are really seeking, fairly aggressively, another competitor in the market, and they're looking to Centrus to be that competitor. And so we do view it as a huge step forward, very positive news, and a very good indicator from the market to accomplish what we're set to do here, become a producer.

Amir Vexler: Really seeking.

Amir Vexler: Fairly aggressively another competitor in the market.

Amir Vexler: And they're looking.

Amir Vexler: King to centers to be that competitor.

Amir Vexler: And so we do view it as a huge step forward.

Amir Vexler: Positive news.

Amir Vexler: Good indicator from the market to accomplish really what we're set to do here become a producer.

Amir Vexler: Yes.

Amir Vexler: I hope you got something to eat with us. Yep, exactly. That was perfect. Thank you. The second question is really about the HALU incentive, the $2.7 billion, and I know there are some moving pieces here, but how do you see that playing out when that gets the Russian ban? Does that then start to move forward through a separate RFP process, or how do the steps kind of play out at this point?

Okay got it thank you.

Speaker Change: Yes, exactly perfect. Thank you.

Amir Vexler: And then second question is really on the <unk>.

Amir Vexler: Incentive.

Amir Vexler: $1 billion and I know, there's some moving pieces here, but but how do you see that playing out when that gets the Russian ban.

Amir Vexler: Then start to move forward through a separate RFP process or how the steps kind of think of it.

Amir Vexler: This point.

Amir Vexler: Yeah, so I think we kind of prepped the investment community for that earlier as well. We've, you know, it's been communicated that in order for the 2.7 billion, 2.7 billion federal investment to be unlocked. The ban on Russia has to be put in place, which it was. And so that really unlocks a significant amount of funding, which is going to flow through the DOE to the industry, and Centrus is very well positioned to be a major player in this.

Speaker Change: Yes so.

Amir Vexler: I think we kind of prep.

Amir Vexler: <unk> community for that earlier as well.

Amir Vexler: Bleeds.

Amir Vexler: It's been communicated that in order for that $2 7 billion $2 7 billion in federal investment to be unlocked.

Amir Vexler: The.

Amir Vexler: The ban on Russia has to be put in place, which it was and so that really unlocks a significant amount of funding, which is going to flow through the dose to.

Amir Vexler: To the industry and centrist is very well positioned to be to be a major player. In this as you know the intent for the $2 7 billion in funding is to stand up a supply chain for fuel that reliable supply chain here for fuel supply chain that we've seeded to others predominantly to Russia.

Amir Vexler: As you know, the intent of the $2.7 billion in funding is to stand up a supply chain for fuel, a reliable supply chain here for fuel, a supply chain that we've ceded to others, predominantly to Russia. And with our successful demonstration in October, where we demonstrated our ability to enrich, as I said, I think that positions us extremely well in this competition for the $2.7 billion. Now, how it's going to be divided and in what manner, nobody really knows at this point. It would be a DOE decision.

Amir Vexler: And with our successful demonstration in October where we demonstrated our ability to enrich.

Amir Vexler: I think that positions us extremely well.

Amir Vexler: And this competition for them.

Amir Vexler: $2 7 billion now how it's going to be divided.

Amir Vexler: And what manner nobody really at this point knows it.

Amir Vexler: The decision.

Robert Duncan Brown: Got it. Thank you. I'll turn it over to you.

Speaker Change: Got it thank you I'll turn it over.

Operator: Our next question is from Alex Rygiel with B Riley Securities. Please proceed. Thank you and good morning.

Amir Vexler: Yes.

Amir Vexler: Our next question is from Alex <unk> with B Riley Securities. Please proceed.

Alexander John Rygiel: Thank you and good morning, gentlemen. Exciting times here, a lot going on for sure. First question: as it relates to the enrichment ban or uranium importation ban, any early insight into the waiver process and the timeline there? Sort of who's applying for the waivers, or you or your customers, and how urgent is the need for these waivers?

Alexander John Rygiel: Thank you and good morning, gentlemen, and exciting times here lot going out for sure.

Alexander John Rygiel: First question here.

Alexander John Rygiel: As it relates to the enrichment.

Alexander John Rygiel: Uranium ban importation Ben.

Alexander John Rygiel: Any early insight into the wafer process in that timeline there.

Alexander John Rygiel: Who is applying for the waivers are you or your customers and how is that need for these waivers.

Alexander John Rygiel: Well.

Alexander John Rygiel: Yeah.

Amir Vexler: You know, the Tenex supply contract is our largest source of supply of low-enriched uranium that we deliver to customers. We've been very clear in our filings that an immediate cutoff absent a waiver would have a material adverse effect on our business and financials. Not only to us, I mean it would be extremely disruptive to the entire U.S. nuclear industry, and this is the reason why there is a provision for a waiver.

Alexander John Rygiel: The <unk> supply contract is our largest source of supply of low enriched uranium that we deliver to the customers. We've been very clear in our filings that an immediate cutoff absent a waiver would have a material adverse effect on our business and financials.

Amir Vexler: Not only to us I mean, it would be extremely disruptive to the entire U S. Nuclear industry and this is the reason why there is a provision for a waiver for.

Amir Vexler: For the past few months, we have been providing input and working with industry groups and providing input to the right stakeholders as to how the process should be and how it should work. We obviously have, you know, all the intentions to apply for a waiver at the first opportunity. And really, the bottom line here is that we believe that the case for waivers is very strong and in the national interest. So to answer your question, yes, we've been preparing. We're going to make use of this process, and it is extremely important, not only to Centrus but to

Amir Vexler: For the past few months.

Amir Vexler: We have been providing input and working with industry groups and providing input to the to the REIT stakeholders as to how the process should be and how it should work.

Amir Vexler: Obviously have.

Amir Vexler: All the intention to apply for a waiver at the first opportunity and really the bottom line here is that we believe that the case for four waivers is very strong and in the national interest so.

Amir Vexler: To answer your question, Yes, we have been preparing we are going to make use of this process and it is extremely important not only to centers, but to the to the industry here in the U S.

Alexander John Rygiel: Thank you. And then as it relates to your current production here regarding HALU. Is the DOE supplying you with a consistent stream of cylinders yet? If not, kind of... About what time of the year do you anticipate that the supply of cylinders will meet your production? Right, right?

Amir Vexler: Thank you and then as it relates to.

Amir Vexler: Your current production here <unk>.

Alexander John Rygiel: Is the Doa supplying you with a consistent stream of cylinders yet.

Alexander John Rygiel: Kind of.

Alexander John Rygiel: About what time of the year do you anticipate that the supply cylinders will meet your.

Alexander John Rygiel: Your production.

Speaker Change: Right right.

Amir Vexler: So it's a situation that we monitor, and we report the progress on these calls as well. And so Centrus anticipates that the delays in obtaining the 5V cylinders will be temporary. We have a line of sight to when the cylinders should be more consistently available, and really, we expect the problem to be fully resolved this fall. So again, it's a temporary issue. Now that the supply chain is picking up, we fully expect it to be resolved this fall.

Speaker Change: So it's a situation that we that we monitor and we reported progress on.

Amir Vexler: On these calls as well and so centrist anticipates that the delays in obtaining the <unk>. Soon there is this temporary we have a line of sight to win the cylinders should be more consistently available and really we expect the problem to be fully resolved. This fall.

Amir Vexler: So again, it's a temporary issue.

Amir Vexler: Now that the supply chain is picking up.

Amir Vexler: We fully expect it to be resolved this fall.

Speaker Change: Thank you.

Operator: Our next question is from Joseph Reagor, with Ross MKM. Please proceed.

Amir Vexler: Our next question is from Joseph Reagor with Roth.

Speaker Change: Please proceed.

Joseph George Reagor: Hey AmeriTEAM, thanks for taking the questions. So kind of following on the question about, you know, the waivers. You guys have said that it would have an adverse effect, but, you know, from. So, from a standpoint of like, you know, investors kind of fully understanding that, hypothetically, if there was any period of time during which you had to deliver without a waiver, would that mean that the contracts would be canceled, or would it mean that you would have to buy in the open market, or would it be a combination thereof?

Joseph George Reagor: Okay, alright, thanks for taking the questions.

Joseph George Reagor: So kind of following on the question about.

Joseph George Reagor: The waivers.

Joseph George Reagor: You guys have said that they would have an adverse effect but from.

Joseph George Reagor: Adam.

Joseph George Reagor: Standpoint of like investors kind of fully understanding that.

Joseph George Reagor: Hypothetically if there was any period of time during which you had to deliver without a waiver would that mean that the contract will be cancelled or would it mean that you would have to buy in the open market or would it be a combination thereof.

Amir Vexler: Well, first, before I dive into answering the question, I just want to make something really clear just in case folks are not following the news, is that the ban has not been implemented yet. I mean, it's in front of the president for signature. I mean, we do expect that to happen. It's a technicality, but it's not really in place yet. So just that's one point.

Speaker Change: Well first before I dive into answering the question I just want to make something really clear just in case folks who are not following the news.

Amir Vexler: Is that the ban has not been implemented.

Amir Vexler: Before I mean, it's in front of the president for signature I mean, we do expect that to happen and just.

Amir Vexler: It's a technicality, but it's not really in place yet.

Amir Vexler: So just that's one point.

Amir Vexler: In terms of how our contracts are structured and what recourse we have, we really are working on, and have been working on contingency plans, even beyond the waiver. There are things that we've been working together with our customers, with our suppliers. I will not get into a lot of details that reflect our contractual T's and C's, but we are working on contingencies beyond that. I mean, this is really our job as a leadership team.

Amir Vexler: In terms of how our stock how our contracts are structured and what recourse we have.

Amir Vexler: We really are working on.

Amir Vexler: And have been working on contingency plans, even beyond the waiver.

Amir Vexler: There is things that we've been working together with our customers with our suppliers.

Amir Vexler: We will not get into a lot of details that reflect our contractual Ts and CS but.

Amir Vexler: We are working on contingencies beyond that I mean, this is really our job as the leadership team here.

Amir Vexler: Okay.

Joseph George Reagor: OK. Fair enough, and then... beyond that, would, or have you guys seen any uptick in requests for deliveries from your customers because they don't want to deal with the complications? You know, let's say it gets signed soon, and the 90-day starts. When that's over, they don't want to have a window where it's complicated. So have you seen any uptick in the last few weeks in them saying, yeah, we want to take our delivery before this becomes an issue?

Speaker Change: Fair enough and then.

Amir Vexler: Beyond that wood.

Amir Vexler: Hum.

Joseph George Reagor: Have you guys seen any uptick in.

Joseph George Reagor: Request for deliveries from your customers because they don't want to deal with the complication.

Joseph George Reagor: What I'd say could fine tune in the 90 day starts when thats over they don't want to have like a window, where it's complicated. So have you seen any uptick in the last few weeks and I'm, saying, yes, we want to take our delivery report before this becomes an issue.

Amir Vexler: No, we have not seen that in the time period that you quoted. Okay.

Speaker Change: No we have not seen that in the time period that you quoted.

Amir Vexler: Okay.

Joseph George Reagor: and then a completely different topic. I saw that the U.K. government is giving approximately 200 million pounds to Eurenco to build a HALU facility in the U.K. One, do you think that has any impact on you guys, given it's an ally? Or is it also potentially positive, given that they're giving them money? And then, you know, you mentioned the size of your facility. If you guys went completely towards producing LEU, how much could you guys produce from that facility?

Amir Vexler: And then completely different topic.

Amir Vexler:

Amir Vexler: I saw that the U K government's giving approximately 200 million pounds, two rinko to build the Hayward facility.

Joseph George Reagor: Yes.

Joseph George Reagor: In the U K.

Joseph George Reagor: One <unk>.

Joseph George Reagor: Do you think that has any impact on you guys given it's an ally.

Joseph George Reagor: Or is it also potentially a positive given that they're giving them money.

Joseph George Reagor: And then you mentioned the size of your facility.

Joseph George Reagor: You guys went completely towards producing early you how much could you guys produced from that facility.

Joseph George Reagor: if you don't.

Joseph George Reagor: If you built it out.

Amir Vexler: OK, multi-part question. Let me answer the first one relating to the announcement this morning. So yeah, here we have our competitors, our state-owned. And further reinforcement of that is it's a sole source award by the UK government to one of our competitors. Now, what are the implications for Centrus?

Speaker Change: Okay Multipart question, let me answer the first one relating to the announcement. This morning. So yes here, we have a our competitors are state owned and further reinforcement of that is a sole source award by the UK government to one of our competitors.

Amir Vexler: Now what are the implications too.

Amir Vexler: Implications to Sentras, well number one I would like to point out that we're already enriching Halo we are.

Amir Vexler: Well, number one, I'd like to point out that we're already enriching HALU. We are far ahead of folks that are just stepping into this now. So we're talking about licensing, designing, installing, and building.

Amir Vexler: Far ahead of.

Amir Vexler: Folks that are just stepping into this now so we're talking about licensing designing installing building.

Amir Vexler: We're much farther along that path now to me the way I read.

Amir Vexler: We're much farther along that path now. Now, to me, the way I read the cards here is that you have a government that's stepping in and putting hundreds of millions of dollars into the HALU market. I think this is a positive sign that there is a strong belief, even beyond the commercial community up to the government of the UK, that advanced reactors are a reality. Advanced reactors will require HALU, and this is not just a phantom need. So, to me, this is a very positive signal. As I said, I believe we are ahead of the competition because we are enriching HALU. Beyond that, I'm not sure there's anything else I would comment on.

Amir Vexler: The cards here is that you have a government stepping in and putting hundreds of millions of dollars into the Halo market. I think this is a positive sign that.

Amir Vexler: There is a strong belief.

Amir Vexler: Then just beyond the commercial community up to the government of the U K debt.

Amir Vexler: Advanced reactors are a reality of the advanced reactors will require halo and this is not just the Phantom need. So to me. This is a very positive signal as I said, we are believe we're ahead of the competition because worry enriching halo.

Amir Vexler: <unk>.

Amir Vexler: Beyond that I'm not sure if there's anything else so with comments.

Amir Vexler: Oh, and the second part about LEU capacity.

Amir Vexler: And the second part about <unk> capacity.

Joseph George Reagor: Thank you for reminding me of the second part of the question; I was trying to remember. So if you're thinking about our building and how large it is, we really are estimating at 3.5 million SWU in the existing building and the existing license. So that's quite a bit.

Speaker Change: Yes, so thank.

Speaker Change: Thank you for reminding me the second part of the question.

Speaker Change: I can remember.

Joseph George Reagor: If youre thinking of our building and how large it is.

Joseph George Reagor: Really our estimating at $3 5 million SKU in the existing building and the existing license so that's quite a bit.

Amir Vexler: And that's on an annual basis, $3.5 million? Correct. Okay. All right. Thanks. I'll turn it over to you. Thank you, Joe.

Joseph George Reagor: And that's on an annual basis $3 $5 million.

Joseph George Reagor: Correct.

Speaker Change: Okay, Alright, thanks, I'll turn it over.

Speaker Change: Thank you Joe.

Amir Vexler: Sure.

Operator: As a reminder, it is star one on your telephone keypad. If you would like to ask a question, we will pause for a brief moment to see if there are any further questions. There are no further questions at this time. I would like to turn the conference back over to Dan for closing remarks.

Amir Vexler: As a reminder, this star one on your telephone keypad, if he would like to ask a question, we'll pause for a brief moment to see if there's any further questions.

Dan Leistikow: Thank you, operator. This will conclude our investor call for the first quarter of 2024. As always, I want to extend a thank you to our listeners online and our investors who called in. We look forward to speaking with you again next quarter. Thank you.

Dan Leistikow: There are no further questions at this time I would like to turn the conference back over to Dan for closing remarks.

Operator: Thank you.

Dan Leistikow: Later, this will conclude our investor call for the first quarter of 2024 as always I want to extend a thank you to our listeners online and our investors who called in and we look forward to speaking with you again next quarter.

Operator: Thank you. This will conclude today's conference. You may disconnect your lines at this time, and thank you for your participation.

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Dan Leistikow: Thank you. This will conclude today's conference you may disconnect. Your lines at this time and thank you for your participation.

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