Q3 2024 Oklo Inc Earnings Call and Business Update
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Speaker Change: Good day, everyone and welcome to today's <unk> Q3, 24 financial results and webcast. At this time all participants are in a listen only mode.
Speaker Change: Later, you will have the opportunity to ask questions. During the question answer session.
Speaker Change: You May register to ask a question at any time by pressing star one on your telephone keypad, you might draw yourself from the queue by pressing star to today's call is being recorded I would now like to.
Speaker Change: Turn the call over to Sam Don Please go ahead.
Thank you operator, good day, everyone and welcome to <unk> 2024, third quarter company update and earnings call. Joining us today are Jay do it of course, co founder and Chief Executive Officer, and Craig Dumber, Chief Financial Officer, <unk> Q3 earnings were announced after market close today.
Speaker Change: You can find the shareholder letter and supplemental slides on the Investor Relations page of our web site.
Speaker Change: The information discussed during the course of our remarks and the subsequent Q&A session include forward looking statements, which reflect our current views of existing trends and are not subject to a variety of risks assumptions estimates uncertainties and other factors that could cause actual results to differ materially from such statements.
Speaker Change: You are urged to carefully read the forward looking statements language in our shareholder letter and supplemental slides.
Speaker Change: You can find a discussion of our risk factors, which could potentially contribute to such differences in our most recent filings with the SEC.
Speaker Change: <unk> assumes no obligation to update these statements whether as a result of new information future events or otherwise, except as required by law I'll now turn the time over to Jake away Oakland was co founder and Chief Executive Officer Jake.
Thanks, Sam and thank you all for joining us today.
Jake Away: We're excited to share our quarterly update and provide some insights into the progress that <unk> made over the last quarter.
Jake Away: <unk> was born largely out of the view that there's a significant opportunity for advanced nuclear technology. What we observed was an industry that had radically stagnated and there was a massive need to rethink about how a company can approach taking units new technologies to market.
Jake Away: Well, we started to take advantage of this opportunity and deliver our mission to provide clean reliable and affordable energy on a global scale.
And jumping up to the next slide on slide four the last quarter has seen big techniques substantial and comprehensive commitments to nuclear as their technology of choice to reliably and affordably power their AI ambitions the deals with existing nuclear facilities between Amazon and talent and Microsoft and constellation demonstrate the desire to have access to reliable power. These deals have played.
Jake Away: An important role in establishing a price for base load of low carbon electricity with some expected to be at or above $100 per megawatt hour, which supports our discussions with our current and future customers.
Jake Away: Small reactor deals announced by Google and Tyros in Amazon and ex energy also demonstrate that big Tech is willing to take long term bets on new nuclear technology to power their future operations.
Jake Away: <unk> signed a similar strategic partnership agreement with Equinix earlier. This year for 500 megawatts of power <unk> has also made a $25 million prepayment to the company for power, we believe that the Equinix deal and other small reactor deal serve as a useful roadmap for how Oakland tends to partner with data center customers in the future.
Jake Away: Going to slide five.
Speaker Change: Oh close differentiated for many of its conventional and advanced nuclear competitors, because our business model is to build own and operate our powerhouses and provide customers with it they want reliable low carbon electrons.
Speaker Change: This graphic from the department of Energy's advanced nuclear lift off report demonstrates the challenges in bringing large nuclear projects to market large projects with multibillion dollar price tags require risk and cost sharing across multiple stakeholders and customers, who don't want to necessarily take those risks reactor technology companies sell their partially complete reactor designs and require others too.
Speaker Change: Complete the design for that as well as fund and construct those assets.
Speaker Change: This technology is small and scalable, allowing us to build own and operate the plants in a sequence manner that is expected to reduce risk to all stakeholders. This value proposition resonates strongly with current and prospective customers.
Speaker Change: Important to note that this graphic doesn't mean that Oakland will be doing everything itself.
Speaker Change: Companies building relationships with key strategic partners across our value chain. So that we can bring our product to market our deal with Siemens energy is a good example of what our value chain partnerships can look like.
Speaker Change: Going to slide six the nuclear sector continues to receive strong support from all levels of government.
Speaker Change: This third quarter southern nuclear fuel sector received significant funding to construct the infrastructure required to supply high assay low enriched uranium or Haley and an increased pledge at cop 29, with 31 countries setting targets to triple nuclear energy capacity by 2050.
Speaker Change: On slide seven.
Speaker Change: We highlight our strategic approach our strategy is centered on three key pillars that we believe position us to change the way nuclear power is delivered to customers.
Speaker Change: We take a different approach across the business model.
Speaker Change: <unk> of the plant and technology, because we see these are key ways to unlock a huge amount of the potential nuclear has to offer.
Speaker Change: On the business model front, our model is designed to make it easy for customers to buy clean power at scale.
Couple that with the small reactor size that allows us to achieve greater capital efficiency as a company and to match customer demand incrementally, while offering resilient and redundant power solutions to our customers.
Speaker Change: And Thats, all coupled with our technology, which leverages centuries of combined experience for technology with economic and operational advantages. Thanks to the features of liquid cooling.
Speaker Change: On slide eight.
Speaker Change: We show, what we presented last quarter.
We laid our framework for how we plan to keep the market up to date on our progress largely at six major areas.
Speaker Change: Spanned reactor licensing progress project execution fuel fabrication and recycling customer pipeline development strategic partnerships for corporate and business development and financial updates.
So moving on to slide nine.
Speaker Change: We will show, where we made significant progress in the third quarter. We continued our NRC engagement for reactor licensing and secured key dealer agreements for project execution at the Idaho National Lab.
Speaker Change: Including environmental compliance permits from the department of energy.
Speaker Change: Our fuel fabrication efforts were bolstered by <unk> approval of the conceptual safety design report for our Aurora fuel fabrication facility on the customer side, we signed letters of intent with two major data centers for up to 750 megawatts of power.
Speaker Change: We also signed a letter of intent to acquire atomic alchemy for radioisotope reduction and financially we carefully managed cash burn and operating expenses to support sustainable growth.
Speaker Change: Going to slide 10.
Speaker Change: Regarding our regulatory and permitting progress we're targeting submit our combined license application with the Idaho project next year with several follow on applications within a year's timeframe.
Speaker Change: Streamline the licensing process, we are Frontloading NRC review through extensive pre application work aiming for a review timeline of about 24 months once submitted the.
Speaker Change: The advance act presents significant cost and time advantages for permitting and we are actively engaged with the NRC to optimize our timeline and maximize benefits as the act takes effect.
Speaker Change: This includes refining our initial application to facilitate maximum carryover from our 15 megawatt to 50 megawatt designs.
Speaker Change: Importantly, the advance act accelerates deployment when multiple assets are co located at one site, which aligns well with our strategy to support customers at a single site.
Speaker Change: As mentioned, we anticipate a 24 month review timeline with the NRC to get approval for our first site. During the application review period, we will also advance site preparation and likely initiate some construction activities in parallel we expect to bring our first reactor online in late 2027.
Speaker Change: On slide 11, we show the benefits from a regulatory perspective of our integrated build own operate business model.
Speaker Change: We believe that our business model and licensing strategy Leverages streamlined regulatory approach to achieve a combined license, allowing us to secure all necessary approvals to build and operate a commercial plant in one step.
Speaker Change: Unlike some others in the space and our peers out there who pursue separate construction and operating permits or design certifications and later combined license applications.
Speaker Change: We go directly to a combined license this approach aligns with our ownership model, where we build own and operate our powerhouses rather than selling partially complete designs or licenses.
Speaker Change: Additionally, the first combined license becomes a reference license for arcola, allowing us to submit subsequent licenses or <unk> with a focus only on changes from the original by keeping these differences minimal we gained significant efficiency, enabling faster licensing for each additional plants. This strategy not only simplifies the.
Speaker Change: Process, but accelerates our ability to deploy plants quickly and effectively.
Speaker Change: And moving to slide 12, we show our regulatory path and our permitting progress to recap accustomed combined license like we're pursuing offers distinct advantages when your business model is to build own and operate the power plants with this approach all regulatory reviews, including citing designed financial environmental operational and security requirements as well as state and.
Speaker Change: Local considerations are expected to be completed in a single 24 month comprehensive application once approved youre fully license to build and operate in contrast, other regulatory pathways and business models require multiple steps and more time to reach operational status for instance, a design certification only validate aspects of the design itself and still requires additional mulch.
Speaker Change: That multiyear reviews to achieve an operating license.
Speaker Change: Which includes significant remaining regulatory work that needs to be done to obtain a license design certification also limits flexibility a challenge often sided and reviews of lessons learned from the Vogel experiences.
Speaker Change: This can lead to needing additional regulatory review in the form of standard design approvals or similar approaches.
Speaker Change: While the design certification.
Speaker Change: Can be useful if customers are willing to take that back end risk. It is entirely optional insurance, primarily as a risk management steps.
Speaker Change: It's important to emphasize that there's a significant difference then between obtaining a design certification and securing an operating license. We continue to make significant progress towards receiving a combined license and the advantage of this approach are increasingly being demonstrated by our customer pipeline development.
Speaker Change: Next on Slide 13, we will talk about our exciting advancement for our Idaho powerhouse the claim.
This slide highlights the multi step regulatory process required for siting approval with the department of energy at the Idaho National Laboratory for our plant there as you can see Doa permitting involved several distinct stages, including environmental analysis site preparation and various agreements for access and services I am pleased to report that we made substantial progress this quarter with two key milestones.
Speaker Change: First we finalized a memorandum of agreement with the department of energy, which grants us access to conduct site investigation. This is essential for carrying out assessments environmental surveys and geotechnical studies paving the way for smooth site preparation.
Speaker Change: Second we secured an environmental compliance permit confirming that there are no significant environmental impacts, allowing us to move forward with the characterization phase.
Speaker Change: These achievements are critical steps in our journey towards full siting approval and bring us closer to construction readiness for OKE with stress powerhouse that IL.
Speaker Change: Moving to slide 14, I'm also excited to share that the department of energy has approved <unk> conceptual safety design report for the Aurora fuel fabrication facility.
Speaker Change: This approval is a key regulatory step in deploying our fuel fabrication facility and advancing our goal to use recover nuclear material to fuel the first commercial rollout powerhouse with this milestone we're one step closer to realizing our fuel fabrication capabilities.
Speaker Change: With that I will pass it to Craig to share customer development updates.
Craig: Thank you Jake moving onto slide 15 similar.
Craig: Similar to statements, we made last quarter, we have seen a sizeable increase in customer interest since the consummation of the business combination and may of this year with all fee.
Craig: All of which is leading to an increase in customer pipeline.
Craig: Oklahoma continue to move forward with additional letters of intent with customers, including new non binding letters of intent with two major datacenter providers for up to 750 megawatts of power.
Craig: Due to commercial reasons in this instance, both counterparties consider our stage of activity to be commercially sensitive.
Craig: Have requested we withhold their names until a future point in time.
Craig: Moving on to slide 16.
Craig: As a reminder, at the time of the announcement of our merger with old fee. We noted that we had over 700 megawatts of business that had been signed to a combination of memorandum of understanding and letters of intent.
Craig: Since that time, we've made new announcements in the datacenter market sector with Equinix and Prometheus Hyperscale as well as an announcement with Diamondback energy in the oil and gas sector.
Craig: With the two LOI I mentioned earlier this takes our total level of signed agreements to two one gigawatts.
Craig: We are already working towards putting in place our first set of power purchase agreements.
Craig: While we are actively trading term sheets and Ppas is important to note that we are focused on commercial term quality over speed such that we have optimized pricing potentially linked to fuel price confirmed location given the impact on cost.
Craig: Partner with the right customer as we deliver first of a kind projects.
Craig: Assess the opportunity for investments in <unk>, either at the asset or corporate level.
Craig: Ensured access to other intangibles, such as access to their supply chains to support asset deployment.
Thank you for that Greg.
Moving to slide 17, we are very excited to announce that with the support of our board of directors, we have decided to fully incorporate atomic alchemy via an acquisition. The two companies have a long history together back in 2018, when atomic Alchemy was founded I provided due diligence support to venture capitalists to help them understand the potential for radioisotopes, we stayed in close touch.
Craig: With atomic alchemy over the years and formed a strategic partnership that we announced earlier this year focused on supporting technology and market sector advancements through our work we have realized that there are massive synergies between our technologies and overall business approach and believe we can achieve more traction our market and technical advancements at Potomac out can be more part of Oklahoma.
Craig: Before getting into the elements of the deal let me walk through some of the basics of what radioisotopes or.
Craig: So radio isotopes are radioactive elements they are vital materials with growing applications in cancer treatment diagnostic imaging space exploration industrial processes, and even advanced semiconductor manufacturing and fabrication. However, do use lacks a robust supply chain to support these critical resources Dominic alkermes developed proprietary reactor technologies.
Craig: Isotope production technologies to produce radioisotopes that can utilize unique nuclides sourced from nuclear fuel recycling processes for fast reactors and existing used nuclear materials.
Craig: It grows fast vision technology can generate electricity using recycled fuel, which can also produce valuable co products such as radioisotopes through the proposed acquisition of <unk> aims to integrate radioisotope production into its field recycling process, creating a complementary revenue stream and strengthening of the U S radioisotope supply chain.
The technology opportunity here has been validated through our work completed under the previously announced Mou between <unk> and tell me.
Craig: Moving to slide 18, atomic alchemy, as an innovative leader in radioisotopes.
Craig: Founded in 2018, and initially funded through Y Combinator atomic alchemy launched an innovative approach to radioisotope production to address global shortages and establish a reliable domestic supply chain for radio isotopes crucial to lifesaving treatments advanced industrial applications and National security.
Craig: The stomach alchemy has developed its proprietary Viper reactor technology, which aims to set new standards in efficiency scalability economics and operational simplicity for radioisotope production.
Craig: Tom Mcgough Gummy has achieved significant design engineering licensing and permitting milestones towards the initial deployment of its fiber reactor facilities.
Craig: So Mike Alchemy is also built an attractive supplier and customer pipeline to support commercialization of its operations and its products.
Craig: And led by our high quality engineering team based in Idaho Falls. The team is working in close collaboration with the Idaho National Laboratory and the department of energy.
Craig: On slide 19, we see that radio isotopes are becoming a national strategic priority for many nations.
Craig: Many countries are recognizing radioisotopes or a national strategic priority given their importance to medical defense aerospace and semiconductor sectors, China is targeting economic output from radioisotopes at $55 $7 billion by 2026 and is making strategic investments in the same way that they did with renewable energy technologies and rare Earth elements.
Craig: Additionally, the United Kingdom is also taking measures to ensure their domestic supply radioisotopes keep up with demand.
Speaker Change: With that I'll go ahead and hand, it off to Craig to talk more about the specific transaction.
Craig: Thank you Jake moving on to slide 'twenty There've been several multibillion dollar transaction in the biotech sector related to Radiopharmaceuticals demonstrating market demand for radio isotopes, which is the primary input to radiopharmaceuticals.
Speaker Change: Tomich alchemy, <unk> intend to become a premier supplier to this sector as other radio isotope production facilities reached the end of their useful life, resulting in reduced supply.
Moving on to slide 21 to provide some acquisition highlights.
Speaker Change: <unk> alchemy will create significant value for <unk> shareholders by enhancing the value of our technologies and serving as an attractive standalone radioisotope business.
Speaker Change: We view this as an extremely attractive bolt on acquisition at the right valuation.
We'll provide a unique enabler in springboard to enter the radioisotope business, which will be a co product of our fuel recycling process.
Speaker Change: Acquisition highlights include the following.
Speaker Change: Complementary technology.
Speaker Change: Radioisotope technology can significantly enhance the economics of nuclear fuel fabrication and recycling through co product sales of high margin radioisotopes.
Speaker Change: Massive market demand and managing supply.
Speaker Change: The radio isotope market is estimated to be in excess of $55 billion by 2026, which we believe could achieve rapid sector growth.
In addition, aging radioisotope facilities are causing acute shortages in supply for critical applications across many sectors.
Speaker Change: Third we see a diverse revenue opportunity <unk> reactors will generate radio isotopes as a valuable co product of its fuel recycling process.
Speaker Change: Allowing revenue from both of these co products and existing used fuel.
Speaker Change: Fourth growth opportunities joint ventures with customers on radioisotope applications, including Radiopharmaceuticals.
Speaker Change: And silicone doping for next generation semiconductor manufacturing.
Speaker Change: Finally, we believe this provides an attractive transaction structure.
$25 million acquisition will be funded with stock price based on <unk>. Most recent 20 day average closing price.
Speaker Change: All shares issued to atomic alchemy are subject to one to three year lockup with no early release mechanisms.
Speaker Change: Definitive agreements are expected to be signed in early December with a target close in early 2025.
Speaker Change: No material near term operating cost increase is expected for Oklahoma as a result of the acquisition.
Speaker Change: We are extremely excited about what <unk> and atomic alchemy can achieve together.
Speaker Change: Pushing innovation on numerous fronts and what we see is a very synergistic transaction.
Speaker Change: It is clear that this acquisition will create significant value for <unk> shareholders.
Speaker Change: Moving now to slide 22, I would like to talk about lockup and earn out triggers.
<unk> met all triggering events, we mentioned at our last quarterly call.
Speaker Change: We would like to take a minute to review.
Speaker Change: The first material that is that the 180 day lockup restriction.
Speaker Change: Some of our investors was released on November five 2020 for providing them the opportunity to sell their shares in the open market.
Speaker Change: These investors were too early stage venture capital investors, who previously found out our board their holdings totaled approximately $13 5 million shares.
Speaker Change: The second material a bit is that the time and price base lockup restrictions.
Which apply to the <unk> sponsor and the <unk> insiders have all expired as of November 13th 2024.
Speaker Change: Approximately 41 3 million shares are subject to the time and price based lockup restrictions.
As we can see in the table, 40% of the shares were unlocked when <unk> share price closed at $12 for 20 days out of 60 trading days.
Speaker Change: 30% of the shares were unlocked when the share price closed above $14 20 out of 60 days and.
And 30% of lock at the $16 trigger for 20 out of 60 days.
Speaker Change: Lastly, as part of the business combination existing <unk> investors and employees at the time of close with shares and vested stock options were offer approximately $15 million in earn out shares.
These earn outs were also subject to price triggers.
Speaker Change: As we can see in the table, 50% of the shares were triggered when the <unk> share price closed above $12 for 'twenty 60 trading days.
Speaker Change: Roughly 33% of the shares were triggered when the share price closed above $14 20 out of 60 days roughly 17% triggered at the $16 trigger price for 20 out of 60 days.
Our two co founders have elected to forfeit 300000 of their earn out shares which may be issued as an equivalent number of restricted stock units to certain employees pursuant to our 2024 equity incentive plan.
Speaker Change: Moving to the table at the right, we can see the changes to our overall capitalization.
Speaker Change: We ended the second quarter with approximately $67 2 million shares in our tradable float.
The release of the 180 day lockup restrictions added $13 5 million shares to the tradable float on November five 2024.
Speaker Change: Unlock sponsor and <unk> insider shares added 41 3 million shares to the tradable float.
Speaker Change: Earn out shares added $14 7 million shares to the tradable float.
Speaker Change: Lockup exploration to enter its earn out shares for.
Speaker Change: Alcohol is tradable float and total capitalization to a little under 137 million shares.
Speaker Change: Moving on to slide 23 to provide a financial executive summary.
Speaker Change: Year to date <unk> cash used in operations sits at $24 9 million made up of a net loss of $63 4 million, partially offset by $38 5 million in non cash impacts.
Speaker Change: Year to date operating loss of $37 4 million included a one time fair market value adjustment of $7 $8 million related to earn out shares payable to <unk> staff.
Vested options at the end of deal closure.
Speaker Change: At the end of the third quarter cash and marketable securities were $288 5 billion, primarily driven by the $276 million in proceeds net of fees received at deal closure.
Speaker Change: Our full year 2020 for operating loss.
Speaker Change: Is still expected to be in line with our prior guidance of $40 million to $50 million that was noted in our Super 8-K filings.
Speaker Change: Moving on to Slide 24 post the filing of our 10-Q for third quarter. We are looking forward to several upcoming investor events to close out the year, including event in Scottsdale, New Orleans, and New York as well as several virtual events.
Speaker Change: Finally to close <unk>.
Speaker Change: We believe there are six factors that make <unk>, such a compelling investment proposition.
Speaker Change: First technology inside that is based on our proven fast reactor approach that we look to deploy at scale to reduce complexity cost and time to delivery.
Speaker Change: Second an attractive business model that is customer oriented and enables recurring revenue and profits.
Speaker Change: Third so pure economics that look to deliver power and very competitive level <unk> cost of energy.
Speaker Change: Fourth a diverse and growing customer base with interest across six market sectors.
Fifth streamline approach to regulatory approval underpinned by our combined licensing application process that leverages years of experience in our work with the NRC.
Speaker Change: And finally, a well capitalized balance sheet that positions us well for the implementation of our business strategy.
Speaker Change: In the last year it feels like the World has moved from one nuclear to why not nuclear to nuclear now.
Speaker Change: We believe the six points I noted that leave Oakland well position for the world of nuclear now.
Speaker Change: That I would like to thank you for your time, Jake and I will now open up the call for questions.
Speaker Change: Thank you and at this time, if you would like to ask a question. Please press star one on your telephone keypad, you may remove yourself from the queue at any time by pressing star two we ask that you. Please limit yourself to one question and one follow up question and once again that is star one to ask a question.
Speaker Change: We'll take our first question from Ryan <unk> with B Riley. Please go ahead.
Speaker Change: Hey, guys. Thanks for taking my questions.
Speaker Change: I guess for my first one.
Speaker Change: The announcements from.
Speaker Change: The Tech Giants recently led to an increased customer interest in <unk>.
Speaker Change: Is it may be accelerating certain customer discussions and when might we see.
The first contract conversion from from an LOI to PPA, Okay couple in there but.
Speaker Change: Got it.
Speaker Change: Yeah. Thank you it's a great question.
Speaker Change: By the way.
Speaker Change: It has accelerated I think we've seen a steady pace of acceleration.
Speaker Change: The city of rate of acceleration.
Speaker Change: Really for some time, we kind of set the market here with the announcements with the partnership we have with Equinix.
Speaker Change: For 500 megawatts that included $25 million prepayment back in the spring.
Speaker Change: And we've seen just progression continue and with the announcements from either.
Speaker Change: The Microsoft constellation deal now than the Google in Cairo deal.
Speaker Change: The AWS ex energy deal Theres, just this pace of increase that's happening in our rate of increase there.
Speaker Change: It was changing the tone towards though is getting more and more towards recognizing that power is one of the biggest bottlenecks on data center deployment and some of the things nuclear, especially what we're offering in terms of the business model and our sizing and our siting flexibility accordingly opens up significant capabilities and flexibility for data center development as they think about what their scale and their.
Speaker Change: Our plan for CLR.
Speaker Change: I think additionally, when we look at one of the indicators for what's expected here Theres a lot of eye popping numbers about power demand, but we're seeing and supported by.
Speaker Change: What the semiconductor producers are making is kind of maybe a leading indicator right. They see this enough to invest and produce and.
Speaker Change: To support kind of where these power scales up are moving too. So it's a pretty exciting kind of I mean, just an insanely exciting time to be really Frank I don't think theres really been a dynamic like this in the world of electric.
Speaker Change: Power generation since the advent of electricity so.
Speaker Change: We see that definitely definitely occurring that said.
Speaker Change: Everything as a result of that creates a lot of valuable dynamics to build long lasting strategic partnerships with between us and our customers and we're seeing that growing and evolving.
Speaker Change: And as a result of that our acceleration to sign Ppas like that's not it's not as relevant to do that and in terms of a pace to do so like rushing to do so as it is to build the right partnerships and the right framework for those folks and find the right ones to move forward with not to mention that as this is going I think we're getting more clarity on what the actual <unk>.
Speaker Change: Market pricing is for nuclear power clear signals as Greg was talking about the presentation.
Speaker Change: As you know for $100 or more a megawatt hour.
We expect that to continue and sustain itself going forward. So you know for US we are intentionally making sure we build the best partnerships, we can with the best partners to drive that forward.
Speaker Change: Rather than rushing right into Ppas, just given all the other dynamics in terms of deployment as well as developing those partnerships for more potential value add to the whole business as we can so I don't know Craig if you want to add anything given some of the dynamics around that but that's kind of how we see some of those dynamics evolving.
Speaker Change: Jack I think you nailed it.
Speaker Change: And the one thing I'll, just add as like we announced yesterday.
Speaker Change: We announced those those agreements and this partnership agreements people want to move quickly and I mean, theres a lot of exciting things happening so.
Speaker Change: I think one of the things, we really see as good validation of kind of our differentiated approaches are with our business model kind of our time to market advantages all of those things are lining up to support some of those act.
Speaker Change: Activities to be more constructive to near term power deployment, which which is also pretty exciting thing to see coming together.
Speaker Change: Okay.
Speaker Change: It's great that the datacenter customers in our order book, but it's also we're still glad that we've got diversity in our order book across a number of other market sectors as well.
Speaker Change: Yes, I appreciate that guys and then just for my second one can you give your high level thoughts on.
Speaker Change: How the changing political landscape might affect nuclear and close opportunities specifically.
Speaker Change: I think the broad just nuclear competitive landscape.
Speaker Change: Yes, nuclear obviously enjoys.
Speaker Change: Pretty nice bipartisan support, but just with the change in administration are there any additional benefits or changes that you might expect to see.
Speaker Change: Yes, I think we see.
Speaker Change: I mean, I think there's it's been pretty clear the support has been bipartisan like you said between whether it was going to be a Trump administration or Harriss administration, and a Democrat or Republican Congress and I think what we've seen is levels of support on the nuclear side continue to ramp up across the board from frankly, one administration to the next to the next.
I think we see a lot of focus on continued roles of regulatory modernization going forward.
Speaker Change: Which I think will be particularly enabling for more and faster new nuclear I also think you're going to see some evolution, obviously it depends on a number of factors but.
Speaker Change: Different support mechanisms on hand, given the nuclear has a lot of bipartisan support I think any modifications or developments that happened with like the inflation reduction act or different structures like that out there I think youre going to see that support continued for nuclear that said.
Speaker Change: It depends on what happens right, but when you read the news it's possible that there's maybe a reduction in some of those benefits to non nuclear sources of generation.
So.
Speaker Change: And that will kind of shift some of those I think implications and dynamics accordingly.
Speaker Change: The other part of this I think is I think we see some interesting dynamics on the kind of gas power generation side and I actually think there's a lot of opportunity in the gas nuclear combo.
Speaker Change: That'll be in play for data centers, so sort of the gas bridging to nuclear so I think there's some interesting opportunities that will continue to emerge there.
Speaker Change: But at the end of the day like.
Speaker Change: We see a lot of constructive Mr. Nuclear policy as a whole here, probably with a heavy focus on regulatory as well as amplifying and accelerating the levels of support that we've seen already in place.
Speaker Change: Thanks, guys I'll turn it back.
Speaker Change: Thank you we'll next take our next question from Vikram <unk> with Citi. Please go ahead.
Speaker Change: Hi, good afternoon.
Speaker Change: Thanks for the total review of developments at the company I have two questions one of them and Don Mckenna.
Speaker Change: All Clos.
Speaker Change: You talk about the response from hyper scaler regarding the size of reactors.
Speaker Change: And you've got flags GDP the size 200 megawatts and hire date RV that process and do you do you see an opportunity to expand the pipeline meaningfully once you have a number.
Speaker Change: More details in a design ready for larger reactor.
Speaker Change: Yeah, I think just on the size part.
Speaker Change: I think it's okay. So it's kind of an interesting strategic advantage given our sizing I think the way to think about this is while there's eye-popping big numbers in terms of like Oh data campus data center campuses being multi hundred megawatt and I think we're gonna see convergence more and more into the multi hundred megawatt date.
Speaker Change: Data Center campus size, you got to think about how these things are built which is quite modular and the data hauls that are building up these things, but we're finding talking to a number of different customers in a number of different architectures as a size range that matches quite well with what we're offering we're.
We're seeing more of it offering and matching the 50 megawatt size that's 10th how we're.
Speaker Change: We're thinking about that driving a lot of the growth here, but that's important because when you think about these data center campuses as they build out it's nice to be able to build out incrementally with them as these things scale up and out from a power generation side.
Speaker Change: And then additionally that allows us to say multiple units to offer the right kind of reliability and resilience.
Speaker Change: Ultimately quite critical especially in the wake of.
Speaker Change: Different dynamics following sort of a FERC ruling other implications that may exist at the sort of local and state level energy market regulatory paradigms, which may heavily incentivize like really significantly incentivize near term deployment and more of an island mode behind the meter obviously, a lot of that's evolving still but that said having multiple.
Speaker Change: Reactors reduces single shaft risk in our deployment strategy allows us to build up in parallel without having to overhang all that sort of a bunch of fixed capital to accommodate that growing into it. So our sizing is actually quite well suited for that and if you look at the announcements that have been in this space they've been largely constructive for newbuild of plants in this kind of size range nice thing than it is.
Speaker Change: Of course, our business model differentiation, which is super important making it easier for folks to buy what we're offering that said we also see like.
Speaker Change: To your point there are some opportunities for getting bigger and that's always been part of our roadmap.
Speaker Change: Counterintuitively, we don't see that there are the same economy of scale drivers that you see in light water reactors pressurized system technologies. So there are some often cost optimized.
Speaker Change: At certain size I shouldn't say cost optima, there are some cost thresholds at which above which you turned transition into becoming marginally more expensive due to the bespoke and nonrecurring engineering cost of larger and larger plants. The same things that plagued large scale mega projects.
Speaker Change: We see a sweet spot there that's going to be north of 100 megawatts, probably so that will kind of follow but we see a lot of traction hence what we've talked about and announced is heavily focused on the 50 and support for 15 as well with respect to the sizing so we see quite a bit of.
I think constructive miss on that size and the full in power solution. We're offering could you got to think about the full power solution not just the per reactor power basis, and Thats, what we see on a plant level being quite constructive.
Speaker Change: Thank you very helpful.
Speaker Change: And then moving onto it don't make I was wondering how big this business could be.
Speaker Change: And I realize I'm jumping the gun here, but you setup a reactive formula linked to feel recycling that we should think about longer term based on.
Speaker Change: It will be close with number of installations you have and then in the near term you said, an independent revenue stream at amico participating before fully complementary purity recycling grow to offload that you highlighted.
Speaker Change: And then on the same topic if data is.
Speaker Change: When do you think we'll see some partnerships of pipe manga, Florida is being built on atomic site. Thank you.
Yeah, no. Thank you for asking that as Vic and digging into that I think.
Speaker Change: This is an exciting one you know the kind of a bit more I guess is a little bit born out of the long term familiarity we've had with the business and honestly supporting a lot of.
Venture capital investors looking at the business and wanting to talk to me about it and having done similar support for a number of.
Speaker Change: Medical radioisotope companies, just kind of at the different levels of.
Speaker Change: Maturity and development, it's a space I have long been excited and interested in.
Obviously, we're super pumped about kind of the core vision of Oklahoma, It's hard not to get motivated by a technology that can truly be a terminal energy and climate solution set but we saw a lot of constructive in this the more time, we spent with I'm sorry, a lot of a lot of complementary to us. The more time, we spent with atomic alchemy to some of the things we're doing with respect to expanding our fuel supply chains.
Speaker Change: The ability to monetize the co products from recycling and not have to develop those sales channels and leverage some of their technologies to actually separate those into Sellable products is great. We don't have to do that then so theres a natural harmony. There that then just as what sort of in many ways set the hook here to be pretty intrigued, but what we see as additional opportunities is because of what's happening broadly in the <unk>.
<unk> space.
Speaker Change: I think the recent announcements that we highlighted from just just in the last week or two.
Speaker Change: About China, and making this a geopolitical priority and.
Speaker Change: Extract basically projecting 55 plus billion dollar impact in 2026 to their economy for this gives you a sense that theres, a massive geopolitical and therefore economic implications of the radioisotope space and we are woefully under serving this domestically in the U S. As a reliance has been significantly based on Russia to date, so there's a whole.
Speaker Change: Asian going on here and you see this manifest obviously the radiopharmaceutical side you have a lot of activity there, including some exciting M&A activity. That's happened in the last few years around very promising treatments coupled out within also activity we've seen from our peers in the space, whether it be terrapower or BWXT seeing these as opportunities to grow into.
Speaker Change: It's a big it's a big market space now for those of you who follow minerals and pricing of commodities this year.
Speaker Change: That could be kind of opaque, but it is some of the most fun pricing to look at because you see some of these elements of these isotopes fetch market pricing of.
Speaker Change: Billions of dollars per Gram.
Speaker Change: We obviously don't produce that many grams.
Speaker Change: Even a gram of some of these things, but it's clear the high value piece. So it's pretty exciting what that looks like now what's important to also highlight is there opportunities for sort of.
Speaker Change: You know radio isotope production that we saw with atomic alchemy will be talking more about but just a little like post closure.
Speaker Change: The transaction should that all occur.
Speaker Change: The sum of those pieces, though are pretty interesting from.
Speaker Change: I would say like opportunities to bring in.
Speaker Change: It took sales before having some like for example, our fullscale recycling facilities operating in even before them, having some of their other facilities operating there are some some near term opportunities accordingly, but we're pretty eager to be digging into and exploring that are part of what we see is compelling about potential revenue stream acceleration. So that's kind of how we see some of those pieces of that I don't know Craig if you want to add.
Jake Away: Anything but captures a few of these things yeah. Jake I think the word I would use a standalone ophthalmic Oct move got near term and potentially long term standalone capabilities to produce isotopes.
Speaker Change: And the other thing that I think are quite complementary it's actually one of the things that got me excited about Oakland, what I've joined a couple a year and a half ago.
Speaker Change: We've always taken a.
Speaker Change: Customer oriented approach around.
Speaker Change: Building selling power to customers because that's what they want and I think what excites me about atomic alchemy.
Speaker Change: The near term production capability. We may have means that will have near term market access and as the markets are developing for these <unk>. So I think we're at the early stages for that now with atomic alchemy, we can be part of that near term market development and then as our recycling business comes online and we'll have additional supply will be that much better.
Speaker Change: <unk>.
Thank you.
Speaker Change: Thank you and we'll take our next question from Jeffrey Campbell with Seaport Research Partners. Please go ahead.
Speaker Change: Hi, Jake very good call really enjoying it.
I'll ask a question as well I was wondering if I'll call has the ability to recycle nuclear waste at pennies on the dollar will provide any margin uplift are advantaged.
Speaker Change: And its various radioisotope applications.
Speaker Change: Okay.
Speaker Change: Yeah, I think I've, given answer kind of a round some of that in.
Speaker Change: Definitely trying to feel free to jump in too, but I mean, I think what we see is the.
Speaker Change: The way that Theres some opportunities on how this these are complementary aspects of the business is when you think about what recycling is you have multiple I would call it sort of product streams right and products include services to some degree here and what I'm going to say, but from the recycling part of the perspective on the business you have the ability to take and use fuel and then when you recycle that you're breaking it into different.
Speaker Change: <unk>.
Speaker Change: Those are largely the fission products the byproducts division themselves.
Speaker Change: The trains ran X mixed up with some uranium those are things like Emory seem Newtonian plutonium curious so on and so forth that are at the bottom of the periodic table to the right and then just pure uranium we see opportunities for sales of all of those products. The trains ran at uranium in uranium parts of what we use direct fuel in our systems.
Speaker Change: There'll be some unused uranium that could be potentially sold into the market and then on the vision product side, while a lot of those are frankly, a waste stream. There are some high value radioisotopes in that and that's what sort of what some of the initial partnership dynamics that formed between us and atomic alchemy that ultimately led to this is how to then pull those separate them package them and put them in the right sales channels.
Speaker Change: And some of the revenue some of the some of the revenue potential for that is quite significant for the recycling facility as well as then the benefits of actually consolidating the waste and all the things that come from reducing in size and all those other factors that recycling gives you. So that opens up a number of revenue streams and we see the co product sales is a pretty significant one.
Speaker Change: Because that market is pretty clear right radioisotopes are bought and sold around the market today.
Speaker Change: So pretty clear one to be able to to take advantage of if we weren't otherwise just be throwing this stuff away.
Speaker Change: So that definitely will contribute and add additional revenue streams.
Speaker Change: And look there's you know as we get more and more into the recycling story the business as we grow what we'll be talking more and more about is all the different revenue knobs that may exist to turn and sort of what that does will just further help reduce the cost of those facilities. If you will that are ultimately borne by us on the fuel side. So yes, there is potential to further reduce costs. So that's kind of my roundabout way of answering.
Speaker Change: On that Gary I don't if you want to get into anything more than that if theres anything youre curious to dig deeper on.
Speaker Change: Well the other thing I would just like about the recycling business and that's why we use the word co product byproduct as it's going to produce things that we're going to be glad to have it and monetize.
Speaker Change: Co product, whereas like when I was telling to asphalt for BP in Europe that was definitely selling a byproduct like what are we going to do with it. So I think there's huge margin upside as we get recycling up and running and I think now that once our deal is complete I think we'll find all sorts of additional synergy between Oklahoma, Oklahoma Atomic alchemy.
Speaker Change: Okay, Great no that was very helpful. Jack.
Speaker Change: <unk> added excellent color on the Cola license process.
To clarify do you view each subsequent Aurora application.
Speaker Change: Making the same 24 months as the first or could it be quicker and if so.
Speaker Change: How quick and also do you think once the first powerhouses that been approved there will be possible to apply for multiple colors simultaneously.
Speaker Change: Yeah actually so to answer your question.
Speaker Change: In reverse order, we can actually have multiple applications and review all at the same time, they don't have to wait for the first one in fact, we anticipate having multiple.
Speaker Change: Multiple applications that follow in relatively short order after our first one and then before that first one is issued that's a really important strategy that we have to be able to scale up elements scale up deployment across the business. So in other words just to summarize that we don't need the first one to be approved before we submit additional ones and there is some.
Speaker Change: Timing benefit of having a staggered parallel review going on for those subsequent applications that said the real benefit to get to the first part of your question is on the subsequent applications. This is one of those features that's embedded in the regulations thats really exciting that was actually kind of envisioned for this model of repeatable deployment that were.
Speaker Change: Maybe you're going to be one of the first ones to actually fully take advantage of it.
Speaker Change: It's this reference license subsequent license dynamic in other words your first plant.
Speaker Change: You get a license for it becomes you referenced combined license your second third fourth everything beyond that can become the subsequent license that references that actual reference first license.
Speaker Change: And the NRC just in the last few months issued a white paper outlining subsequent high volume deployment pathways, leveraging this approach where they projected being able to get the total review times for those subsequent licenses down to seven months. So from time to submit the time to approval in as little as seven months I mean, that's that's a game changer not.
Speaker Change: Just in nuclear but that's faster permitting for pretty much anything on energy in many ways.
Speaker Change: And I, you know I I, that's pretty damn exciting frankly, so and that's what we've been building towards we'd heard numbers that range in those levels, but it was really exciting to actually see some clear things come out in terms of how that can be achieved again, I mean, theres aspirational dynamics to that and that's not what we're going to realize on our second wave of applications necessarily but I think we expect significant acceleration.
Speaker Change: And that second wave and maybe even hitting to those numbers by the time, we find kind of hit the stride later in that second wave into the third wave and what I mean by waves as like submitting applications. After we've largely gotten that first one either approved or approved and the ones that kind of come after that so we see some acceleration benefits pretty quickly and then some significant acceleration benefits down the road.
Speaker Change: Yeah.
Speaker Change: No that's really great and that helps too.
Speaker Change: This massive back-load LOI is that you have.
Speaker Change: I feel more tangible so I appreciate that thank you.
Speaker Change: Thank you. Our next question comes from Max Hopkins from Tls CLSA.
Speaker Change: CLSA.
Speaker Change: Hey, guys.
Speaker Change: Many of my questions have already been asked but.
Speaker Change: On the construction side of things.
Speaker Change: Two there.
Speaker Change: What's the timeline for I guess groundbreaking on Idaho.
Speaker Change: Obviously that was announced last week or two weeks before.
And then with that are there specific.
Speaker Change: Sightings.
Speaker Change: I guess issues for.
Speaker Change: Earthquakes water.
Speaker Change: Accessibility and everything.
Speaker Change:
Speaker Change: And all the fact youre looking for that could potentially.
Speaker Change: Change how your site things.
Speaker Change: Yeah.
Speaker Change: I mean generally speaking you know it depends a little bit on.
Speaker Change: Various elements on the specifics from a regulatory review plan and all those other details, but you know we anticipate that there's opportunities to break ground as soon as 2026 for that Idaho plant. It depends on a couple of factors.
Speaker Change: We will have to optimize to for all the various reasons you need to do that from a project in asset management optimization perspective, but that's when we would expect to be able to do that.
Speaker Change: Generally speaking one.
Speaker Change: The important thing is you know given how we're approaching the plant and the nature of how you consider what's sort of in the safety envelope and what's not and things like that.
Speaker Change: There are elements that allow you to do a lot of parallel development and construction.
Speaker Change: While the licenses under review within the right scope in bounds of course, but that's something that we can use to deploy things accordingly.
Speaker Change: The other dynamic.
Speaker Change: In terms of like where we're at in Idaho as you know we outlined this in the slides, but yeah theres a lot of steps to kind of progress this into full build out because this is an doughy land, which is great because it's well understood land, we have access to it and we get feel with it right as part of I mean, not with it but we get fuel there as well.
Speaker Change: It's part of what we got in 2019 with a slight use permit as well as the the fuel award.
Speaker Change: That said, we got a follow up obviously, the regulatory protocols about that facility to get the site ready to go and then also the NRC regulatory requirements that are part of the ultimate license to build the plant and turn it on commercially to operate.
Speaker Change: That's what all of these things are kind of progressing forward.
Speaker Change: Generally speaking you know just to go back to that these sites are extremely well characterized because this is on the Idaho National Laboratory.
Speaker Change: We're not far down the road frankly from where there's already an operating reactor to operating test reactors in where <unk> operated before so all of this land is well characterized and that's one of the reasons. We like it. So you know obviously there is still work to do to fully get into build and everything else, but that continues at pace and we're pretty thrilled by the progress made so far.
Speaker Change: And know that there's some inherent risk mitigation just by working with the government on already well characterized and understood land.
Speaker Change: Thank you and then I guess a follow up to that.
Speaker Change: In some senses.
Speaker Change: These announcements from our competitors.
Speaker Change: Thermal neutron versus SaaS, you guys fast neutron reactors are you guys seeing slower progress.
Speaker Change: Or I guess customer questioning given.
Speaker Change: You guys as fast neutron.
Speaker Change: And then the potential I guess.
Speaker Change: For more proliferation from from that technology is that is that a concern for clients.
And there might be no essentially dangerous from that sense that it gives us not you know I mean this is one of the beautiful things about fast neutron technology.
Speaker Change: This is so okay, let's just kind of run through.
Speaker Change: Kind of a quick history and some of these pieces right.
Speaker Change: Initially fast neutron reactors were envisioned for their significant potential on fuel efficiency right. So let me try and reactors just because what happens right as neutral airborne going fast revision. They just are so you slimmed down and flow neutron reactors to make them easier to catch so you need less fuel to run, but you can't get that much energy under the fuel because of the slow neutrons are far easier to intercept to buy.
Speaker Change: The byproducts division itself like vision.
Speaker Change: Vision product like these fission products as well as other materials in the reactor and everything else. They also aren't very good at fidgeting very many isotopes really only a few facade of isotopes. So you'll get a lot less energy and you're a lot more susceptible to significant challenges on the fuel side.
Speaker Change: In terms of the ability to run for longer and be able to even recycle you cannot do that.
Speaker Change: And a slow neutron reactor no fast reactor you don't so those nutrients down you need more fuel, but you have the benefit now of allowing for much better material selections that are cheaper that are better that are just more resilient.
Speaker Change: There you have the ability to also be relatively impervious to these kinds of vision products as.
Speaker Change: As well as being able to actually vision a lot more of the actinide. So you can actually recycle fuel and comprehensively get a lot more energy out right. So just to use one metric. If you look at today's reactors are most low neutron reactors the amount of energy to get out of the Iranian they pull out of the ground right because you have to enrich it and you lose some your name on the side as you and Richard by the time you account for all of that you're only extracting.
Speaker Change: 1% or less of the overall energy content of what comes out of the ground with a fast reactor you can actually extract you know you can get at more than 90% of that energy content. So that translates to massive long term fuel savings and economic efficiencies as well as just deconstructing yourself on fuel availability.
But on the safety side. There is also an important aspect to your fast neutrons are tightly <unk>, coupled systems and what that translates to our systems that are quite robust and quite stabilizing when you design them in a way that takes advantage of those features this has been done before and it's one of the only thing that's really the only technology that in the U S is actually demonstrated these capabilities and a comprehensive safety manner from a proliferation.
Speaker Change: <unk> look no commercial fuels ever been used or plant fuel has been used from our perspective for proliferation fast neutrons are actually far better consuming things like plutonium and <unk> and thermal neutron reactors. So there's no inherent proliferation sort of challenges unique to fast reactors versus other things.
Speaker Change: From our I look at it the real I mean, just from what the physics are the reality is they're actually quite quite anti proliferative and that's one of the nice things about recycling as we can do that you can only do with a fast reactor, which is actually keep all the trains ran X that includes plutonium mixed up commingled, and therefore really really not usable in any direct way. So that then when you.
Speaker Change: You can put it in a reactor and just burn it like that without having to go through additional steps to further refine it and purify pure plutonium, which is what you need to do to be able to use any kind of recycling and a thermal reactor and even then you get limits on what you can do so that's me rambling for quite a while but the reality is.
Speaker Change: Technologically it's actually.
Speaker Change: You know as we see it pretty competitive at least I mean, frankly, just a superior solution in many ways with a deep history of maturity behind it.
Speaker Change: And that's why we see the you know the.
Speaker Change: The multi just like we have a versatile customer diverse customer order book that we've obviously talked about announced 'twenty 100 megawatts to date, so a lot of exciting things happening there with good validation on that front.
Speaker Change: But look there's a lot of different features that different types of technologies and approaches offer.
Speaker Change: And we think the market here is massive so there's probably going to be multiple winners, but the nice thing. We have is we are the only technology. That's actually that's a non light water technology thats demonstrated out some of these characteristics and capabilities and it's the only technology. That's in many ways actually proven out some some operational histories that have outperformed light water reactors operationally speaking in terms of capacity factor and available.
Speaker Change: <unk> factor.
Speaker Change: All these other kind of exploration concepts of a lot more work to do to kind of get there and so we see a lot of value in that piece not to mention we're trying to build this not just for like optimizing where we're at in a couple of years in terms of you know Oh build some plants and that's great look this is a technology that's fundamentally been demonstrated and proven on the fast react and recycling side that can tap into known harvestable right resources.
Speaker Change: Metals on the planet and power the entire planet's energy needs for billions of years.
Speaker Change: Are we yes, that's going to take a lot of work and a lot of things to actually get there, but we know the physics is on our side.
Easy to get excited by that and feel pretty good about that and that's part of why we like this approach.
Speaker Change: Awesome. Thank you very much detail clears.
Speaker Change: There's a lot of things up I think for for many of us.
Speaker Change: Great.
Speaker Change: Thank you we'll next go to Greg <unk> with Tuohy Brothers. Please go ahead.
Good afternoon, thanks for taking the questions and congratulations on the very positive announcements.
Speaker Change: Hmm.
My first question, if I understand correctly also.
Speaker Change: Ultimately.
Speaker Change: Looking into the late part of this decade early 2000, <unk> steel recycling is going to ultimately need.
Some potentially sizable external capital raise.
Speaker Change: That effort.
Speaker Change: Do you see the atomic.
Speaker Change: No acquisition co mingling.
Speaker Change: Helping to increase perspective, low risk project for NASS for such an undertaking.
Speaker Change: Yeah, I'll, just start with a little bit Greg feel free to chime in I mean, so what we see as you know recycling is first of all just we see this as a big catalysts and enabler for growth and for margin enhancement. It's not a thing we have to do do exist. It's just something that look if we can reduce our fuel costs by over nine.
Speaker Change: Per cent or so that's pretty compelling.
Speaker Change: Not to mention that add additional revenue streams and pieces like that but you know as we structured kind of when we you know the transaction the destock going through with LTE and how we thought about the capital retained from that and everything else focuses on getting through you know are our first plant built and beyond knowing that then the recycling part of the story, we really didn't try to capture.
Speaker Change: Either in the valuation part of it or really in the core elements of that because youre not going to see some of those benefits still bit later, so we think that is a lot of upside.
Speaker Change: That remains there to be I'll say potentially tapped into.
Speaker Change: And accordingly, as that matures and comes together, yes, there may be opportunities, where we go back to market to support what that looks like but that's going to be largely supported by the additional growth accordingly that comes from that.
Speaker Change: Part of why we see there are some synergies with for example, atomic alchemy is helping to prove out and verify some of those radioisotopes sales channels. Accordingly, so that there's some off take examples.
Speaker Change: That can be used to sort of support the economic case of why we would do that and then the according value add that we think can be made accordingly. So that's how I think we think about some of those dynamics.
Speaker Change: I don't know, Greg if you want to add anything on that front, but that's kind of how I see it.
Greg Tuohy: I think the only thing I'd add I look at the recycling business as having three sources of value what is the value. It brings to reduce steel cost to us or we may potentially be able to extract Brent by <unk>.
Greg Tuohy: Storing the spent fuel that needs to be recycling and last but certainly not least is the co product production of the isotopes and I think as we have a better view on what.
Greg Tuohy: Buildup of that recycling business looks like following all the work that we're doing with the Doa I think it'll be.
Greg Tuohy: We've always said that that would be a separate fund raising event for the company, but I think we'll have a lot of sources of value to pointed that hopefully should give us a lot of optionality around the fund raising.
Greg Tuohy: Including potentially project financing.
Great.
Greg Tuohy: And my second question.
Greg Tuohy: This is John.
For the three parter.
Greg Tuohy: So across data centers oil and gas industry military.
Speaker Change: How do you think about the mix of your first five weeks and powerhouses do you intentionally walks to diversify your mix versus concentrating with any single industry or counterparty that may be paying a higher PPA price point today.
Speaker Change: And finally, how do you see the mix over the first five or 10 deployments roughly in your mind today across the 15 versus 50 megawatt applications.
Speaker Change: Yeah, I'll start and just say I think the diversification is is a valuable thing to have.
Speaker Change: I think theres three macro trends right that are catching all of this excitement about new just new nuclear build an AI and data centers clearly dominates that but you know even before that there was actually I think a couple of major macro trends that we're kind of carrying the day two so all of these and they are all constructive to each other and complementary but broad efforts on energy.
Transition you see people talk about needing two to three times more electric power.
Speaker Change: Power generating capacity just to support electrification as we strive for that across transit in domestic use and all these other things.
Speaker Change: So that's one big driver of course I think another drive is is what we're seeing happening on the Reindustrialization perspective, there's a lot of factors that I think have dictated where we saw electric usage and demand therefore kind of be relatively low growth for for a couple of decades in the U S. But one contributing factor there was the sort of <unk>.
Speaker Change: Offshoring of a lot of manufacturing capacity in the jobs are associated with that as we see increasing dynamics to drive that back into the country. They meet in your factories need Baseload power they need 20 for southern power and across across all the different verticals ranging from semiconductors to.
Speaker Change: You know paper mills oil and gas production all of these different industrial use cases, and so that's another big driver as we see that occurring kind of supportive of this as well.
Speaker Change: And we see that being something that's going to continue and we think from various market perspective, those are giant markets as well in some cases, they aren't moving as fast as data centers and I would argue that in some cases some of those are a little bit more.
Speaker Change: Are better.
Speaker Change: Say, the 15 megawatt solution better suits, a number of those not all of them into the mix. That's why we see the need for both of those words, we see in the data center side a lot more pull on the 50 megawatt piece, but yeah. We think it's pretty important to kind of support those things, but we also recognize that data centers are going to be moving faster and so some of the near term deployments are likely to be sort of more data center focused but from from <unk>.
Speaker Change: Eloping relationships and developing business partnerships.
Speaker Change: We see a lot of support on the on the sort of the diversified deployment by customer models and that's why we've we've tried to do that and we'll continue to build that up accordingly.
Speaker Change: Thank you.
Speaker Change: Thank you we'll take our next question from Ivan <unk> with Tigress Financial partners. Please go ahead.
Speaker Change: Hi, Thank you for taking my question and congratulations on the great progress and the acquisition announcement today, so focusing on the opportunity for getting into other industries and maybe is there opportunities for like co R&D development partnerships and in that case, what do you feel your value proposition would be to working.
Speaker Change: With some of the companies in biotech or pharmaceutical or semiconductors.
Speaker Change: Yes, I think I do.
Speaker Change: I think that's a possibility.
Speaker Change: I think one of the things, we see is enabling areas our ability to.
Speaker Change: I'll share some of the kind of capabilities, we have to help accelerate the stomach alchemy and then similarly, what they bring to the table to help accelerate on their side.
Speaker Change: To ultimately be able to scale into these markets and deliver which opens the door for a lot of different things I think right now we're seeing on the value chain on the radiopharmaceutical side a lot of focus on the potential of these radiopharmaceuticals. We're so early in the game on this and they've been so severely supply constrained that you know the more.
Speaker Change: There's this kind of I.
Speaker Change: I would say Paul on the market.
Speaker Change: Continues to grow and accelerate as more and more of these drugs kind of hit the market Youre just going to be a big pull up on the supplies. That's I think one of the things we really like about the atomic how can we play is a diversified approach on radio isotopes actually to not just to focus on sort of the big name getters like lutetium actinium or Molly like we're looking at a number of different.
Speaker Change: Isotopes that they can be well produced to supply to and as you open the door for even more of those youre going to just see more pharmaceutical development because right now one of the big constraints, even on R&D is the lack of availability. So so I think we see a lot of that comes from that and then the strategic partnerships that come accordingly from a totally different pool of folks because of what you can supply here, which I think is neat and you hit on one point on there.
Speaker Change: The semiconductor side and this is something that still is really exciting to me because it's kind of it's pretty significantly underappreciated, but if some of the benefits that.
Speaker Change: Neutral transportation doping can do for silicon doping for semiconductors in many ways. It is one of the gold standards with respect to taking silicon ingots and dumping them up for just better semiconductor fabrication and manufacturing and reactors are the best way to do that.
Speaker Change: So when we think about state of the art.
Speaker Change: Kind of best high quality semiconductors, or really I should say silicon input into semiconductors.
Speaker Change: This is a pretty this is a pretty interesting opportunity space. There. So yeah. I think there are some dynamics that are out there and this gets back.
Speaker Change: Quickly kind of you know there is a question I feel like I didn't answer very well before but where do we see pipeline announcements and all these other things you know as we get through the transaction I think you'll see we'll see we'll see how those develop and how that continues to develop as well and I think there'll be some some off take developments that occur over the course of the next year.
Speaker Change: So with with the atomic alchemy off to extremes.
Speaker Change: Hey, Chris.
'twenty really saw some significant investment from disk, Bristol Myer, Novartis and Lilly into this area.
Right and I think what we see is as we as it continues to mature and develop youre going to see.
Speaker Change: I think the maturation of it to the point, where you can really attractively attract some of those partners in the right way.
Speaker Change: To be even more constructively engaged I know just from the diligent side of providing sort of being a reference point for atomic alchemy, and some others in the space before.
Speaker Change: Talking to some folks from the big.
No Big pharma companies, who are looking around and watching this space, but I think waiting for a couple more pieces to come in before they start to sort of jumped the partner, but it feels like it's largely just a function of sort of.
Speaker Change: Development of inevitability, which brings them to the table, which is part of what planted the seed that this could make a lot of sense to help accelerate into those opportunities potentially.
Speaker Change: Well it looks very exciting congratulations again.
Speaker Change: Thank you.
Speaker Change: Thank you and we'll take our last question from Pavel <unk> with Raymond James. Please go ahead.
Speaker Change: Thanks for taking the question.
Speaker Change: Let me go back to one of the earlier points about the App.
Speaker Change: FMR competitive landscape given the sheer number of new entrants in the space do you find that prospective customers are <unk>.
Speaker Change: Getting confused or bewildered just by the scope of offerings that are out there and trying to differentiate between them.
Speaker Change: I think at times I think what we've seen those a lot of these folks are a lot.
Speaker Change: A lot of the customer sat here are getting pretty savvy on the different opportunities and we're talking to one of the groups I think yes.
Speaker Change: And there's a mix there's a spectrum you're right and I think at the end of the day. There is there's some I'll call. It frothiness in the space and I think that's a good indicator of innovation.
Speaker Change: A good reflection of that but look I think this is where we see differentiation from a numbers perspective has been to our advantage and how we've seen validation of that from a customer side. I think you know we were one of the first out right and we were the first out with the datacenter deal with Equinix.
Speaker Change: So like months before everything else that kind of reflects some of that validation point and for US we really like that approach in that model because this keeps versatility and flexibility with our partners because of the Colo model and who they serve so we don't you can you can imagine that sometimes hyperscale theres no. They have a lot of leverage in a dynamic and might want to lock ins and things that prohibit your ability to be flexible.
Speaker Change: That's you know.
Speaker Change: That's there's ways that you can then find more versatile partners and that's one of the things we really liked about what we have with Equinix and then the others, we've announced and talked about that said.
<unk>.
Speaker Change: We see like.
Speaker Change: I think what we see is that some of the signals that we think are pretty powerful that've been purpose built for how we started the company and grown the company are built around the ability to.
Speaker Change: Positioning ourselves to be one of the early movers and largely make the solution for the potential customers easy.
Speaker Change: Not needing to have a bunch of complicated.
Partners and teams and dynamics that our customers have to be involved with and pushed a lot of the work on them. All these other factors that just make deployment more challenging that we bring that in house, we do that in house, it's more work for us, but it makes it easier for our customers and that's what I think a business should trying to do it.
Speaker Change: Make their products.
Speaker Change: It's funny when you have people that want to buy your product you make it so hard to sell they can't buy it. It's so hard to buy it it's hard for them to buy it feels like there's a lot of room for just easy disruption there.
Speaker Change: It's not easy, but disruption to make that easier and that's what we focused on so I think the business model is a key differentiator our size and our approach and technology are key Differentiators, we don't have long R&D requirements and we don't have these massive supply chain requirement challenges like nuclear graphite supply chain and some of those pieces, we all share nuclear fuel supply chain challenges, but theres a lot of work obviously, that's moving that forward.
Speaker Change: That said and we and we can diversify into recycling because we're fast reactor which is awesome.
Speaker Change: Meaning diversifying fuel sourcing.
Speaker Change: That said, we also have the progress points of date right. I mean, we're the first of the non light water company to formally engaged in the Nrc's pre application processes back in 2016.
Speaker Change: We've had a lot of regulatory traction there. We're the only company that has a slight use permit for commercial plan at a national lab.
Speaker Change: And we're the only company that has fuel secured for an advanced reactor.
Speaker Change: Part of that partnership you know as part of a partnership with the National Lab and department of energy as well. So it's all of those are pretty great position to have that we've been building for a long time. So that we can we can be well suited to take advantage of the opportunity I can't sit here and say Oh, we knew the timing was all going to line up exactly like this.
Speaker Change: You know I wish we could have slipped even sooner than we need.
Now for example, but but but I think we've long felt that the physics of energy make what's happening in terms of the recognition of nuclear envision inevitable. It just happens to be accelerating at a really good time, where we're really well positioned and one of the leaders of the pack with respect to that so.
Speaker Change: So I think those things have been pretty constructive for differentiation for us that said.
Speaker Change: There's still some confusion at times about licensing and about readiness to market and all these other factors.
Speaker Change: And the differences between different steps on a on a on a Y on the permitting process. The permitting journey I should say you know ranging from things like construction permits for test reactors or construction permits for commercial reactors are designed certifications or combined licenses and all of that so so I think theres still some room for obviously continued education.
Speaker Change: Across the board and that's one area, where we see that being pretty clear, but thats, where our model is very advantageous as we go straight to the license that actually gets you to commercial operations.
Speaker Change: Growth from that and have the repeat ability from that accordingly.
Appreciate the color on all that let me answer a follow up on.
The recent politics can you just remind.
Speaker Change: EMEA economics.
The indicative economics of your.
Speaker Change: Projects that you spelled out more than a year ago was there any assumption for either ITC or PTC for nuclear.
Speaker Change: Are the models, we put out do not include those directly in their I don't know.
Speaker Change: If you want to add any commentary on that but it was always viewed it as upside I think we did have some level of cost of energy metrics in our last <unk> update.
Speaker Change: Investor Day presentation.
Speaker Change: So at a range of $90 to $40 and.
Speaker Change: The 40 did include the benefit of ITC, but we've always viewed that as not a requirement to generate an appropriate return.
Speaker Change: Got it thank you very much.
Speaker Change: Thank you and now I'd like to turn the call back over to Sam Dawn <unk> director of Investor Relations to present, a couple of retail investor questions.
Sam Dawn: Thanks Andre.
Sam Dawn: Yes, we've had a number of inbound retail investors' questions I'd like to just ask a couple here. The first one is when can we expect are going to produce a physical plant and if the timeline solely dependent on legislative changes.
Sam Dawn: Yeah.
Speaker Change: So no not dependent on legislative changes, we'd see legislative changes as possibly being consolidated and conducive to this but I think we.
Speaker Change: We see a lot of legislative activity, probably going to be more geared for the for the following units to be you know.
Speaker Change: More I guess more constructive for acceleration on those units just given all of the other factors that kind of dictate the time frame for that first plant, but we're targeting beginning the initial operations of that plant in late 2027.
Speaker Change: Great.
Speaker Change: <unk> will you explain the mode <unk> building out to protect against other competitors and why <unk> is poised to power an increasingly large share of the nuclear powered AI market.
Okay.
Speaker Change: Yeah.
Speaker Change: We see this manifest in a couple of ways, but it's pretty comprehensive throughout the business right. One is the business model, where we're selling power.
Speaker Change: And that kind of the conventional model that then allows us to consolidate the deployment partnerships through us where we bring in partners like Siemens of the world like that's interested in the world and others to help actually deliver.
Speaker Change: The plants and therefore the power.
Speaker Change: Additionally, we see value and the size, we have which gives us flexibility to offer kind of.
Speaker Change: Dundon.
Dundon: And frankly shaft redundancy.
Dundon: More plants, and just wanted to power, especially industrial assets that want high reliability power.
Dundon: And the size allows us to target the markets from a slightly different angle, which we think is pretty important.
Dundon: And then from the technology side, it sounds kind of funny, but building up a very mature technology base and optimizing that for operations and deploy ability.
Dundon: Not necessarily for you know a lot of fundamental R&D requirements to go forward from that or to deliver that gives us some advantages on that front, because we design on the technology side and accordingly to costa into supply chain capabilities that exist today that help us negate some of the significant supply chain investment requirements that otherwise exist for for for some <unk>.
Design choices that one could make them. So we've tried to avoid those.
Dundon: And accordingly that gives us some supply chain scalability.
Dundon: That's faster frankly, and less volume limited.
Dundon:
Dundon: I think that's a differentiated factor right, we don't need to build like a factory to build a bunch of reactors to get out and that's I think arguably that's constraining because you need all the capital to put in the factory and then you're inevitably going to have to retool the factory because it's pretty hard to get it right before you actually start doing it and youre going to need capital to do that and youre going to be bandwidth limited and even even more capital scale that capacity.
Instead, we try to leverage existing supply chains existing suppliers and manufacturing capabilities to actually get the supply chain is able to use those supply chain. So that we're not as constrained that means our unit costs are probably going to be a bit higher than they would be if we fully internalized it but that's okay. For now we can clearly have support to pass those along and be.
Dundon: I'll be quite competitive and then in time, if we decide theres things that make sense to internalize for margin control or improvements or whatever then we can take those approaches, but we'll be in a different position with cash flows in terms of what that looks like.
To finance that kind of growth. So right now I think we're we're pretty excited about what those positions look like but I think another thing is just really our capital efficiency.
Dundon: The numbers, we spent this last quarter.
Dundon: Quite a bit less than what you often see in the nuclear industry and that's the reflection of a cost conscious culture that reflects what I just talked about our focus on being able to be efficient in getting out the door and leveraging what's been done before and that's that's very much something that is the manifestation of kind of the culture. We built from the beginning and important for us to kind of continue to maintain.
As we grow obviously, you know as we grow we'll spend more money and nothing has happened as you do that but starting.
Dundon: Starting with that base is a great place to be rather than starting at a really high cash burn position, which is all too often kind of what the incentives are in nuclear to do before your shipping anything in fact way before your shipping anything so that gives us some advantages in that sense. So across a lot of pronged those things are pretty helpful. For us and then I think the other really major one is the timing advantages that we have.
Dundon: Given that we're the only company with the timing and the material they have and if they use permit on the fuels, having fuel security and we're doing all of those factors just gives us a massive advantage in getting to market in terms of being an early mover and then having the opportunity to scale and learn across our fleet accordingly on that sense and with our business model since we take some of the owner operational.
Dundon: We take that sooner operational risk off the table you don't have a lot of customers, saying, okay were interested but we want to wait and see a couple of years of operation from your first plan.
People are like okay, well, you're preventing power great. We're comfortable to do that and then we can accelerate the lessons learned accordingly to our fleet as we grow in scale. So it gives us a lot of benefits that way.
Speaker Change: Thank you I'd now like to turn the conference back over to Jake for any closing remarks.
Jake Away: Awesome well. Thank you all for joining us today and I appreciate the attention and engagement is always I think it is a particularly exciting time in nuclear.
Jake Away: Especially in the last month.
Jake Away: Month, and a half with all the activity in the space. We see all these announcements that are being made as extraordinarily constructive and validating of the opportunity that nuclear is well positioned to meet which is the opportunity to provide abundant affordable reliable and clean energy.
Jake Away: And I think we're pretty excited that nuclear about the position we have in the market to do that validated by our customer partnerships and our general attraction to the appointment so.
Jake Away: I look forward to keeping all updated in the next quarter and I appreciate the time again.
Speaker Change: Thank you and ladies and gentlemen that does conclude today's program. We thank you for your participation you may now disconnect.
Speaker Change: Thanks to object.
Speaker Change: Likewise, well then well then everyone.
Speaker Change: [music] Goodbye.