Q4 2024 Centrus Energy Corp Earnings Call

February 7, 2025

Greetings and welcome to Suntrust's energy fourth quarter fiscal year 2025 conference call. At this time all participants are on a listen only mode. A question and answer session will follow the formal presentation. If anyone requires operator assistance during the conference. Please.

Press Star Zero on your telephone keypad as a reminder, at this conference is being recorded.

It is now my pleasure to introduce your host Neil Nicaraguan head of Investor Relations. Thank you you may begin.

Neil Nicaraguan: Good morning. Thank you all for joining US today's call will cover the results for the fourth quarter 'twenty 'twenty four ended December 31.

Speaker Change: Today, we have a mirror of Exler, President and Chief Executive Officer, and Kevan Herold Chief Financial Officer.

Speaker Change: Before turning the call over to Amir I'd like to welcome all of our callers as well as all of those listening to our webcast. This conference call follows our earnings news release issued yesterday.

Speaker Change: We expect to file a report for the fourth quarter and full year on Form 10-K later today all of our news releases and SEC filings, including our 10-K's 10, Qs and eight Ks are available on our website.

Speaker Change: A replay of this call will also be available later this morning on the Sentras website I.

Speaker Change: I would like to remind everyone that certain information we may discuss on this call today may be considered forward looking information that involves risks and uncertainty including assumptions about the future performance of Sentras. Our actual results may differ materially from those in our forward looking statements.

Speaker Change: 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.

Speaker Change: Finally, the forward looking information provided today is time sensitive and accurate only as of today February seven 2025, unless otherwise noted this call is the property of centrists energy any transcription redistribution retransmission or rebroadcast of the <unk>.

Speaker Change: Call in any form without the expressed written consent of centers is strictly prohibited.

Amir: <unk> you for your participation and I'll now turn the call over to Amir.

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

Amir: Long time listeners and the growing number of bills joining us for the first time.

Speaker Change: I'd like to quickly welcome Neal to the team as our new head of Investor Relations, who brings a wealth of experience to this role and his hiring is another example of us continuing to build out our core function at a pivotal time.

Speaker Change: I would like to also thank Dan for his previous servicing the swell enforce continued support of Sensus. This corporate communications effort going forward.

Speaker Change: This is another Europe's success for central synergy as we made significant progress across all fronts and continued our efforts to restore America's ability to enrich uranium to meet the nation's energy and national security needs, while creating thousands of jobs in the process.

As previously announced this year, we already won a deal with contract award for Halo would be conversion.

Speaker Change: Wanted to deal with contract awards for Halo Englishman.

Speaker Change: Continued to successfully enrich halo onto the operations contract with the OE side.

Speaker Change: Signed long term contingent lease sales commitments and grew the company backlog to $3 7 billion to 2040, and Delever, our balance sheet through strategic initiatives associated with our pension plan.

Speaker Change: This past quarter. We continued on this progress by winning at the OE contract Award for <unk> enrichment.

Speaker Change: Further strengthening our capital position by issuing $402 5 million of convertible senior notes.

Speaker Change: Celebrating centrifuge manufacturing preparation, while de risking our American only supply chain to strengthen our first mover advantage and delivering to the department of energy a total of 545 K Gs of Halo to date in phase two of the operations contract.

Speaker Change: Outside of our accomplishment, we saw many industry dynamics continue to shift in our favor as I will discuss shortly but first let me dive into the quarter's and annual results.

Speaker Change: Starting with our annual results recall that the majority of our revenue is derived from the <unk> segment.

Speaker Change: Where customers generally have multiyear contracts to take delivery of a given quantity at a given price each year.

Speaker Change: As we have previously stated our customers choose which quarter to take their annual deliveries and don't choose the same quarter every year.

Speaker Change: For the full year 2024, we achieved $442 million in revenue.

Speaker Change: Gross profit of $111 5 million and an operating income of $48 million.

Speaker Change: We have continued to deliver strong revenue growth and solid margin and our Ela segment, even as we work through a number of trade actions.

Speaker Change: We have secured waivers from the U S Department of energy, allowing all of our planned imports in 2024 and 2025.

Speaker Change: We are working through the 2026 and 2027, the waiver process with the department.

Speaker Change: Meanwhile, in November the Russian government revoke the general license that our supplier tenex at for exporting material from Russia to the United States.

Speaker Change: Now require a specific license for each shipment.

Speaker Change: We have been informed that <unk> has received three specific licenses to date to export daily user satisfy our pending orders.

Speaker Change: We will use the majority of the silly, even satisfy pending orders to a single customer on a delayed basis.

Speaker Change: <unk> has informed us of its plan to seek additional export licenses to meet its delivery obligations under the tenex supply contract.

Speaker Change: Pending and future orders.

Speaker Change: We are in close communications with Tenex as well as our customers, whose orders may be impacted to mitigate any potential future disruptions or delays.

Speaker Change: Turning to our operations, let me first discuss three contract awards, we won under a competitive solicitation from the Doe.

Speaker Change: These are designed to jumpstart American production of both low enriched uranium or <unk> and high assay low enriched uranium or <unk>.

Speaker Change: In October we won contract awards for Halo enrichment and he will be conversion.

And then in December we want a contract award the early RFP, which will provide funding to restart American illegal enrichment, reducing U S dependence on foreign state owned sources of enriched uranium.

Speaker Change: As a reminder, these contracts were awarded US idea accused indefinite delivery indefinite quantity.

Speaker Change: Essentially meaning that we are eligible to compete for future task quarters under each contract. The next step in the process will be for the D O to issue task quarters under each contract the.

Speaker Change: The ultimate dollar value of our contracts and the scale of the expansion they could support will depend on what task orders for each we will compete and hopefully with these three contracts are in aggregate back by more than $3 $4 billion in congressional appropriations that were approved as part of the installation.

Speaker Change: <unk> acts in 2020 two.

Speaker Change: The bipartisan government funding Bill in March 2024.

Speaker Change: And together they represent the largest federal investment in domestic nuclear fuel production in decades.

Speaker Change: We made a strong case to the government to receive robust funding under these future task orders.

Speaker Change: <unk> is uniquely positioned to deliver our made in America solution that uses an American only supply chain and manufacturing to support American jobs.

We are the only American company with a proven enrichment technology and an NRC license to enrich uranium.

Speaker Change: Up to just under 20% for Halo.

Speaker Change: And one of two companies within our C licensed and rich Kelly.

Speaker Change: Restoring a truly domestic uranium enrichment capability will strengthen our energy security and our national security, while creating families supporting high tech jobs for American workers.

Speaker Change: The arguments for choosing Sentras is further strengthened by the fact that the federal government need are U S origin enrichment technology for National Security mission, and we have the only deployment ready technology capable of meeting those requirements.

Speaker Change: That's crucially important because commercial enrichment facilities music Warren enrichment technology cannot be used to support U S National Security mission.

Speaker Change: In fact in late 2020 for the National Nuclear Security administration or NSA.

Speaker Change: Issued a request for information for RFID.

Speaker Change: For an AC 100, centrifuge machine design deployment demonstration that the pipe in Ohio facility to support and then they say defense mission requirements for enriched uranium.

Speaker Change: We believe that our technology will put the U S. In a position to decouple itself from foreign influences and secure energy autonomy, while keeping American taxpayer money in the U S.

Speaker Change: <unk> offers a proven American technology, but with keep jobs in America to support both commercial and National security needs.

Speaker Change: We agree with what the U S. Government has said all along that this needs to be a public private partnership to be viable.

Speaker Change: European governments fund their state owned and Richards.

Speaker Change: Need our American government, who in turn back into American alternative.

Speaker Change: And we are ready to help support this push.

Speaker Change: As Kevin will discuss shortly we have begun to lay the groundwork ahead of task orders being issued.

Speaker Change: In the fourth quarter, we significantly strengthened our balance sheet by closing of over $400 million of convertible notes.

The small facilitated our ability to begin investing in our future.

Speaker Change: And then late November we announced an approximately $60 million of investment to resume centrifuge manufacturing activities and expand our manufacturing capacity at our <unk> facility.

Speaker Change: Over the next 18 months.

Speaker Change: This investment serves to Derisk central supply chain, while reinforcing our first mover advantage in domestic centrifuge production by kick starting the process ahead of government task orders being issued.

Speaker Change: Nuclear power already accounts for nearly 20% of 2023 U S electricity production.

Speaker Change: And all of the required enriched uranium for U S. Nuclear reactors currently comes from foreign state owned entities.

Speaker Change: There is a large existing addressable market for centers to penetrate.

With Congress's enriched uranium ban we know that the approximately 25% of enriched uranium that is currently imported from Russia will need to be replaced to starting in 2028.

Speaker Change: We continue to hear about mothballed reactors coming back online from Palisades in Michigan, and Duane Arnold in Iowa to most recently Santee Cooper's announcement that it is seeking buyers to complete the project at South Carolina V C Summer nuclear station.

Speaker Change: We also know that utilities are considering operating many of their existing reactor fleets to avoid potentially costly new builds over the near term.

Speaker Change: And then there is international opportunities. These include markets that continue to ramp up reactors or otherwise or considering nuclear energy such as in Europe and in Japan.

Speaker Change: Then there is additional opportunities that could further accelerate nuclear is growth in the second half of 2024, we've heard a number of Victor companies announcing historic and unprecedented investments in nuclear energy.

Speaker Change: We cannot just rest on the prospects of this large and growing energy market as well as nuclear growing share of the market.

Speaker Change: Stability is build off of customers.

Speaker Change: To date, we have secured a cumulative total of approximately $2 billion in customer contingent lease sales commitments to support deployment of our new <unk> production capacity in fact that.

Speaker Change: This is a clear sign from utilities that they need to secure more supply and that the market demands more competition. So.

Speaker Change: They are turning to central synergy.

Speaker Change: We are very excited about our company's future prospects and look forward to building on our momentum.

Speaker Change: We have begun laying the groundwork ahead of the government's anticipated task quarters for which we plan to compete and look forward to sharing more with you.

Speaker Change: On upcoming calls with that I will turn the call over to Kevin to walk through the numbers.

Kevin: Thank you Amir good morning, everyone.

Kevin: <unk> reported another exceptional year of accomplishments exhibited by our year over year increase to revenue of nearly 40%.

Kevin: In addition, the company has undertaken several initiatives to improve its balance sheet and capital structure, including reducing the majority of our pension obligations significant capital raises in the debt and equity markets strengthening our cash position.

Kevin: G&A optimization efforts, yielding identifiable cost reductions investment in our manufacturing capabilities to accelerate our time to deployment for our own plant production.

Kevin: And finally, leveraging investment tax credit opportunities to partially fund these efforts.

Kevin: In 2024, we generated $442 million in revenue an increase of $121 8 million compared to 2023 and generated $73 2 million and net income compared to $84 4 million last year.

Kevin: We reported a gross profit of $111 5 million compared to $112 1 million in the prior year.

Kevin: Our <unk> business generated $349 $9 million in revenue an increase of $80 9 million compared to 2023, driven by our growth in uranium and through revenue.

Kevin: The growth in <unk> revenue was a result of a higher average price of SKU sold partially offset by lower volume sold.

Kevin: The growth in uranium revenue was driven by increases in both the volume and average price of uranium sold.

Kevin: Furthermore, rising uranium commodity prices contributed largely to the year over year margin improvement by over 10%.

Kevin: Our cost of sales and <unk> increased from $163 9 million in 2000 $23 million to $256 million in 2024 due to an increase in average sue in uranium costs.

Kevin: <unk> costs increased primarily as a result of a 67% increase in the average unit cost of <unk> sold.

Kevin: Of the 256 million cost of sales, 25% is attributable to the release of costs related to previously deferred sales, which incorporate the higher swap price at the time of the deferral.

Kevin: Excluding the impact of these deferred sales deliveries the average unit cost of <unk> sold would have only increased 27%.

Kevin: As I mentioned the reason for the increase in uranium sales also drove similar increases in uranium costs.

Kevin: We ended the year with a gross profit of $93 $9 million in our <unk> segment compared to $105 1 billion in 2023.

Kevin: Our technical solutions segment also generated $17 6 million in gross profit, which was an improvement of $10 6 million over the prior year.

Kevin: As previously noted on a consolidated basis, our gross profit was $111 5 million compared to a gross profit of $112 1 million in prior year technical solutions generated $92 1 million in revenue an increase of $40 9 million compared to 2023.

Kevin: In our reported $74 5 million in cost of sales an increase of $30 3 million compared to the prior year.

Kevin: Our results on a year over year basis reflect the transition of the Halo operation contracts from phase, one which was a cost share arrangement to phase two which is a cost plus incentive fee arrangement.

Kevin: Our total company backlog was $3 7 billion as of yearend and extends to 2040.

Kevin: Our <unk> segment backlog was approximately $2 8 billion and includes <unk> 8 billion of future swoop in uranium deliveries, primarily under medium and long term contracts with fixed commitments and $2 billion in contingent <unk> sales commitments in support of potential construction of LNG production capacity at <unk> in Ohio facility.

Kevin: During the first quarter, we entered into definitive agreements for <unk> 8 billion of the total $2 billion in contingent value sales commitments. The contingent <unk> sales commitments continue to depend on our ability to secure substantial public and private investment.

Kevin: Our technical solutions segment backlog was approximately <unk> 9 billion and includes funded amounts unfunded amounts and unexercised options.

Kevin: Unexercised options relate to the Companys Halo operation contract.

Speaker Change: As Amir noted in the fourth quarter, we issued $402 5 million of 225% convertible senior notes for total net proceeds of $388 7 million.

Speaker Change: The proceeds from the offering deliver adding liquidity to execute our strategic plans, including our announcement for a $60 million investment for the resumption of centrifuge manufacturing activities and expansion of manufacturing capacity at our Oak Ridge, Tennessee facility that we announced in November 2024.

Speaker Change: We will also consider other strategic uses of these funds, including the possible retirement of our higher interest notes bearing eight 5% coupon, which have a principal value of $74 3 million.

Speaker Change: The issuance of the convertible notes follows the progress made in 2024 on further derisking, our balance sheet by reducing our pension plan obligations by approximately $280 million.

Speaker Change: As of the end of the year, we have $26 million remaining in these pension plan obligations with a funding level in excess of 118%.

Speaker Change: This will have ongoing savings realized through elimination of substantial recurring annual costs associated with the plan's administration asset management fees.

Speaker Change: Tori requirements as well as the funding shortfall at the beginning of the year for which the company was ultimately responsible.

Speaker Change: Our continued positive operating results coupled with the successful close of the convertible debt transaction and the reduction of our pension plan obligations contributed to an ending unrestricted cash balance of $671 4 million.

Speaker Change: Maintaining and growing our strong cash position continues to be a key in facilitating execution of our near term contractual obligations as well as strategic investments in our long term future.

Speaker Change: The company is also engaged in exploring opportunities for investment tax credits to this end center submitted an application in October 2024 for a clean energy manufacturing and recycling project credits.

Speaker Change: In January of 'twenty, five we received notification that we were approved for our request for $62 4 million in credit allocations for the manufacturing facility in Oak Ridge predicated on meeting certain requirements, including future investment ineligible property.

Speaker Change: All of the announced initiatives and investments are part of a broad strategy to continue to optimize our cost structure adequately manage our risks and better position ourselves to execute on our vision to restore America's ability to enrich uranium at scale.

Speaker Change: With that let me turn things back over to Amir.

Amir: Thanks, Kevin.

Amir: I'd like to close by taking a moment to discuss the new administration.

Amir: There was a long record of bipartisan support when it comes to nuclear power and last year. Both parties came together to approve a historic investment in domestic nuclear fuel production.

Amir: Nuclear has and continues to enjoy a resounding bipartisan support.

Speaker Change: That said the new administration as seen from the Secretary of energy, Chris Wright's confirmation testimony appears to be particularly bullish about the need to restore American owned production of enriched uranium.

Speaker Change: We've heard the incoming official talk about protecting and growing American jobs to support economic growth. We've heard about the importance of energy security and we've heard about the importance of national security.

Speaker Change: We are also the only and Richard that actually manufacturers, our centrifuges in the United States.

Speaker Change: In September we held the briefing for policymakers on Capitol Hill, and unveiled our domestic manufacturing supply chain, which includes 14 major suppliers.

Speaker Change: Every one of them, an American company, employing American workers and at least 13 states.

Speaker Change: Our project presents a perfect opportunity for the president to deliver a major win in his efforts to restore American manufacturing and American energy independence.

Speaker Change: As I've previously noted this is a once in a generation opportunity to reclaim U S leadership, and our nation cannot afford to squander it.

Speaker Change: We are excited by what is to come in 2025, and our continued evolution towards claiming America's rightful place in the enrichment market to service, both the domestic market as well as for our global customers.

Speaker Change: With that we would like to open the lines to take questions operator.

Speaker Change: Thank you the floor is now open for questions. If he would like to ask a question. Please press star one on your telephone keypad at this time a confirmation tone will indicate your line is in the question queue. You May Press Star two if you would like to withdraw your question from the queue for participants using speaker equipment, it may be necessary to pick up the handset.

Speaker Change: Pressing the star keys.

Speaker Change: We do ask that you please limit yourself to one question and one follow up.

Speaker Change: Again that is star one to register a question at this time today's first question is coming from Rob Brown of Lake Street Capital. Please go ahead.

Rob Brown: Good morning.

Speaker Change: Yeah.

Speaker Change: Just wanted to wonder Rob how are you.

Neil Nicaraguan: Thank you I just wanted to follow up on the Windsor.

Speaker Change: Wins on the <unk>.

PV contracts three contracts could you give us a sense of sort of the next step in the task orders and sort of what needs to or how does the decision making process goes to getting those task orders issued and maybe I said that.

Speaker Change: Thinking on timing.

Speaker Change: That's a good question Rob.

Honestly I would not speculate on timing I mean, we know that there is movement, obviously awards have been given.

Speaker Change: So theyre moving forward.

Speaker Change: Just.

Speaker Change: I would not yes.

Speaker Change: On timing I think it will be two hazard to say that but as I said, we are encouraged and there was forward movement.

Speaker Change: And your first question was if there is any any other color we can add to what's been already announced I believe I'm paraphrasing.

Speaker Change: Yes, just sort of the next steps.

Speaker Change: Into the process.

Speaker Change: Yes. So the next steps would be specific task quarters that the department would issue.

Speaker Change: The award these and again, we really have no insight into those and the timing.

Speaker Change: Okay. Thank you and then and then you did talk about a $60 million investment to get your.

Speaker Change: Jumpstart.

Speaker Change: Color on kind of what goes into that and where that puts you in terms of our position to to really react to the task orders as they come through if the competitor.

Speaker Change: So really all of these things are connected we want to make sure that we hit the ground running as fast and as hard as we can win when bills come out so that allows us to do a lot of our prep work.

Speaker Change: And.

We call that readiness investment and our readiness.

Speaker Change: I don't know, Kevin if you want to add anything else, but that's sort of the high level, yes, no I think thats right and the important element of what we're trying to accomplish and we've talked about this to the public as you know.

Speaker Change: As we move forward with regards to deployment of our initial cascade, but there is some additional time, that's going to be recall required associated with our supply chain.

Speaker Change: And standing that up for watsco.

Speaker Change: Distribution and production and so this money.

Speaker Change: Basically arent being invested.

Speaker Change: In order for us to start the processing and continue what we perceive as our first mover advantage in regards to to many of many of the things that we're trying to accomplish and bringing enrichment back to the United States to a domestic company.

Speaker Change: Great. Thank you I'll turn it over.

Speaker Change: Thank you. The next question is coming from Joseph <unk> of Roth Capital Partners. Please go ahead.

Hey, guys. Thanks for taking my questions.

Speaker Change: Good morning, gentlemen, good.

Speaker Change: Morning.

Speaker Change: First thing.

Speaker Change: The 10 X wins, obviously, congrats on getting some positive news there.

Speaker Change: I know youre actually give specific numbers around it but in the overall context of things.

Speaker Change: Three.

Speaker Change: Specific licenses out of is it 50 101000 like order of magnitude, even if it's an arm wave.

Speaker Change: Rather than a specific number.

Speaker Change: Yes, we can't get into those types of details Joe what we are and have disclosed.

Speaker Change: As part of our reporting is that the.

Speaker Change: The Russian decree that came down the pike and late last year.

Speaker Change: Specifically put a pause for 10 X the provider.

Speaker Change: In regards to their ability to provide distribution of the enriched uranium outside of.

Russia.

Speaker Change: Exporting into the United States and so we have seen good traction with regards to several of our individual.

Speaker Change: Deliveries and shipments.

Speaker Change: Those.

Speaker Change: It was crafted under the Russian decree are on a case by case basis on a shipment by shipment basis. So.

Speaker Change: Right now like I said, we've seen positive traction over our first three shipments, but we can't speak and speculate on what's going to transpire in the future.

Speaker Change: Okay.

Speaker Change: Fair enough I had to ask and then second question Yeah.

Speaker Change: On the uranium sales in Q4, they were abnormally high. This is usually this is like Taylor uranium right, but did you guys sell any uranium inventory that drove that $73 million of revenue in reaction to what occurred in November.

Speaker Change: Or is this just taking advantage of the opportunity in the market.

Speaker Change: This is taking advantage of an opportunity and market. Obviously you have six is at historic levels.

Speaker Change: Upwards of $300 a kilogram. So this was a perfect opportunity, where we were able to get them matched up with our counterparty.

Speaker Change: And reflect and recognize our keys spot sale for us in that December timeframe that helped buoy the results of the annual cycle.

Speaker Change: Okay, I'll turn it over and jump back in queue.

Speaker Change: Thanks, Joe.

Speaker Change: Thank you. The next question is coming from Brian Thanks, with B Riley Securities. Please go ahead.

Hey, guys. Thanks for taking my questions.

Speaker Change: First regarding the $60 million investment made in November.

Speaker Change: We announced in November is it fair to say that that officially kick starts a 42 month timeline, you've spoken about to bring on the first commercial cascade.

Speaker Change: Yes that is an accurate characterization.

Speaker Change: Got it thanks, Kevin.

Speaker Change: And then maybe just following up.

Speaker Change: The last question for fourth quarter results.

Speaker Change:

Speaker Change: Strength was driven by the price of slow in uranium prices.

Speaker Change: Just wondering was there anything else there that drove that strength.

Speaker Change: We could see in 2025, I know you don't give guidance, but could you maybe talk about your expectations for 2025, maybe directionally compared to 2024.

Brian Thanks: Yes, as you noted, Brian we don't provide earnings guidance.

Brian Thanks: So it's a little difficult to go into the details as to whether certain transactions will be replicated in future periods.

Brian Thanks: What I can say is we definitely are very after opportunistic, especially on the uranium side and so when you look at our financial statements and our balance sheet.

Brian Thanks: We do still have a sizable amount of inventory left.

Brian Thanks: And specifically that which is helpful for us as it relates to monetizing some of the transactions in a rising market on the <unk> side.

Brian Thanks: As really being in a position to sell those for.

Brian Thanks: From a spot sale perspective, so I think we'll continue to evaluate the economic climate in the commodity pricing and if opportunities come up I still think we do have obviously dry power on the balance sheet that we have reflected but couldn't go into any more details on that.

Brian Thanks: Great I appreciate it I'll turn it back.

Brian Thanks: Okay.

Speaker Change: Thanks, again, ladies and gentlemen that is star one for any additional questions. The next question is a follow up coming from Joseph <unk> of Roth Capital. Please go ahead.

Speaker Change: Hey, guys I just had one more.

Speaker Change: I noticed in the release and talk about the investment tax credit.

Speaker Change: And that if you guys spend of 200 and something though you can get 60 something million back.

Speaker Change: What does it take to trigger all of that and then.

Speaker Change: And over what period of time, and then how would that work from an accounting standpoint.

Speaker Change: Yes, so from a timing perspective, we would have to put this in a few conditions, but ultimately the timeframe.

Speaker Change: Which we could capture costs that we'd be able to realize our approximately four years.

Speaker Change: And this is all stipulated within the 48 cap C legislation or I should say the IRC.

Speaker Change: Which basically touches upon that you need to meet certain conditions within a two year timeframe and then put the.

Speaker Change: And then put the property into.

Speaker Change: Into its useful life.

Speaker Change: Thereafter.

Speaker Change: And the period of time in which we can actually bear cost is of the subsequent two years thereafter, the initial two year timeframe and so when you look at how we'll be able to realize this and monetize this we can actually go out and what's been established by the government as a marketplace that we can sell into and monetize. These so these won't be necessarily subordinate to.

Speaker Change: The Nols.

Speaker Change: And when you look at what we're trying to accomplish on a global basis.

Speaker Change: This will support the initial investment that we have that starts that 42 month clock, obviously conditional upon the funding that will come out of the government that will continue the process of incremental investment that we'll be able to to go about on our own.

Joe: And did I cover all your questions, Joe or is it a divestment.

Speaker Change: I think that covers.

Just of it.

Speaker Change: And then.

Speaker Change: If I could just one follow up to the previous caller's question about the 42 months.

Speaker Change: When would you guys need the task assignment to be given by in order to maintain the 42 month timeframe now that you've kind of started the clock.

Speaker Change: Let me just maybe clarify what Kevin said and Kevin Please step in and.

Speaker Change: Clarifying that clarification is needed.

Speaker Change: We are making an investment to improve cycle time to get a jumpstart on the process, which we have sufficient confidence in and that is forthcoming.

Speaker Change: I will officially stick to the 42 months and I would not make any more aggressive assumptions then that just just from a conservative standpoint.

Speaker Change: Obviously, we want the process to start as quickly as possible and that's one of the start.

Speaker Change: When the clock starts again.

Speaker Change: Again, we're doing a lot of work and we're spending money to make sure that we improve cycle time, and we position ourselves in the best possible spot.

Speaker Change: But officially.

Speaker Change: To make the assumption of 42 months at this point.

Speaker Change: Not assume anything more aggressive than that.

Speaker Change: Okay.

Speaker Change: Alright.

Speaker Change: Yes, I was just going to add to that.

Speaker Change: With our November announcement, we start the process of as I mentioned earlier in the call Derisking the supply chain, putting us in a position where we start to to equip the facility in Oak Ridge at a level, that's going to enable us to be in a state where we can operate at higher production levels, but all of this will be predicated on government.

Speaker Change: So the $60 million of jumpstart for us to start this but we would be looking for some sort of tangible task orders from the government over the next six to 12 months to enable us to basically have the baton handed off to.

Speaker Change: So as it relates to government funding to allow us to continue that trajectory that we've announced on the 42 month side.

Speaker Change: Okay.

Speaker Change: Okay, I think that clarifies it was little confusing before.

Speaker Change: Sorry about that.

Brian Thanks: Well, Brian the online and listen.

Speaker Change: Yeah.

Speaker Change: Thank you, ladies and gentlemen at this time I would like to turn the floor back over to Mr. <unk> for closing comments.

Donna: Thank you Donna This concludes our investor call for the fourth quarter and year end 2024, I'd like to thank all of our listeners at the analysts who called in and we look forward to speaking with you again next quarter.

Donna: Thank you ladies and gentlemen. This concludes today's event you may disconnect your lines or log off the webcast at this time and enjoy the rest of your day.

Donna: Okay.

Donna: [music].

Donna: Okay.

Donna: [music].

Donna: Yes.

Donna: [music].

Donna: Okay.

Speaker Change: Greetings and welcome to Suntrust Energy fourth quarter fiscal year 2025 conference call. At this time, all participants are in a listen only mode.

Donna: <unk> and answer session will follow the formal presentation.

If anyone requires operator assistance during the conference. Please press Star zero on your telephone keypad as a reminder, this conference is being recorded.

It is now my pleasure to introduce your host Neil <unk> head of Investor Relations. Thank you you may begin.

Speaker Change: Good morning. Thank you all for joining US today's call will cover the results for the fourth quarter 2024 ended December 31.

Speaker Change: Today, we have <unk>, President and Chief Executive Officer, and Kevan Herold, Chief Financial Officer.

Speaker Change: Before turning the call over to Amir I'd like to welcome all of our callers as well as all of those listening to our webcast.

Speaker Change: This conference call follows our earnings news release issued yesterday.

Speaker Change: Replay of this call will also be available later this morning on the <unk> website I.

Speaker Change: I would like to remind everyone that certain information we may discuss on this call today may be considered forward looking information that involves risks and uncertainty including assumptions about the future performance of centers. Our actual results may differ materially from those in our forward looking statements.

Speaker Change: Finally, the forward looking information provided today is time sensitive and accurate only as of today February seven 2025, unless otherwise noted.

This call is the property of Sentras energy any transcription redistribution retransmission or rebroadcast of the call in any form without the expressed written consent of centers is strictly prohibited.

Speaker Change: You for your participation and I will now turn the call over to Amir.

Speaker Change: Thank you Neil and thank you to everyone on the call today.

Speaker Change: Longtime listeners and the growing number of those joining us for the first time.

Speaker Change: I'd like to quickly welcome Neal to the team as our new head of Investor Relations and he brings a wealth of experience to this role and his hiring is another example of us continuing to build out our core function at a pivotal time.

I would like to also thank Dan for his previous service in this role and for its continued support of <unk> corporate communications effort going forward.

Speaker Change: As previously announced this year, we already won a deal with contract award for Hayward the conversion.

One of the Doe contract awards for Halo enrichment.

Speaker Change: Continued to successfully enrich halo onto the operations contract with the OE.

Speaker Change: Signed long term contingent lease sales commitments and grew the company backlog to $3 7 billion to 2040 and de Levered, our balance sheet through strategic initiatives associated with our pension plan.

Speaker Change: This past quarter. We continued on this progress by winning a Doe contract award for <unk> enrichment further strengthening our capital position by issuing $402 5 million of convertible senior notes accelerating centrifuge manufacturing preparation, while de risking our American only supply chain to strengthen.

Speaker Change: Our first mover advantage.

Speaker Change: And delivering to the department of energy a total of.

Speaker Change: 545, kgs of Halo to date in phase two of the operations contract.

Speaker Change: Outside of our accomplishment, we saw many industry dynamics continue to shift in our favor as I will discuss shortly but first let me dive into the quarter's and annual results.

Speaker Change: Starting with our annual results recall that the majority of our revenue is derived from the <unk> segment.

Speaker Change: Customers generally have multiyear contracts to take delivery of a given quantity at a given price each year.

Speaker Change: As we have previously stated our customers choose which quarter to take their annual deliveries and don't choose the same quarter every year.

Speaker Change: For the full year 2024, we achieved $442 million in revenue.

Speaker Change: A gross profit of $111 5 million and an operating income of $48 million.

Speaker Change: We have continued to deliver strong revenue growth and solid margin in our <unk> segment, even as we work through a number of trade actions.

Speaker Change: We have secured waivers from the U S Department of energy, allowing all of our planned imports in 2024 and 2025.

Speaker Change: We are working through the 2026 and 2027 waiver process with the department.

Speaker Change: Meanwhile, in November the Russian government revoke the general license that our supplier tenex at for exporting material from Russia to the United States.

Now require a specific license for each shipment.

We have been informed that Dennis has received three specific licenses to date to export Elliott to satisfy our pending orders.

Speaker Change: We will use the majority of the silly, even satisfy pending orders to a single customer on a delayed basis.

Speaker Change: <unk> has informed us of its plan to seek additional export licenses to meet its delivery obligations under the <unk> supply contract.

Speaker Change: Pending and future orders.

Speaker Change: We are in close communications with <unk> as well as our customers, whose orders may be impacted to mitigate any potential future disruptions or delays.

Speaker Change: Turning to our operations, let me first discuss three contract awards, we won under a competitive solicitation from the Doe.

Speaker Change: These are designed to jumpstart American production of both low enriched uranium or <unk> and high assay low enriched uranium or behavior.

Speaker Change: In October we won contract awards for Halo enrichment and he will be conversion.

Speaker Change: And then in December we want a contract award the early RFP, which will provide funding to restart American <unk> enrichment, reducing U S dependence on foreign state owned sources of enriched uranium.

Speaker Change: As a reminder, these contracts were awarded us <unk> indefinite delivery indefinite quantity.

Speaker Change: Essentially meaning that we are eligible to compete for future task quarters under each contract. The next step in the process will be for the Doe to issue task quarters under each contract.

Speaker Change: Ultimate dollar value of our contracts and the scale of the expansion they could support.

Speaker Change: Will depend on what task orders for each we will compete and hopefully win. These three contracts are in aggregate back by more than $3 $4 billion in congressional appropriations that were approved as part of the installation reduction Act in 2022, and the bipartisan government funding Bill in March 2000.

Speaker Change: 24.

Speaker Change: Together they represent the largest federal investment in domestic nuclear fuel production in decades.

We made a strong case to the government to receive robust funding under these future task orders.

Speaker Change: <unk> is uniquely positioned to deliver our made in America solution that uses an American only supply chain and manufacturing to support American jobs.

Speaker Change: We are the only American company with a proven enrichment technology and an NRC license to enrich uranium up to just under 20% for Halo and.

Speaker Change: And one of two companies within our C licensed and rich.

Speaker Change: The arguments for choosing Sentras is further strengthened by the fact that the federal government needs are U S origin enrichment technology for National Security mission, and we have the only deployment ready technology capable of meeting those requirements.

Speaker Change: That is crucially important because commercial enrichment facilities using more enrichment technology cannot be used to support U S National Security mission.

Speaker Change: In fact in late 2020 for the National Nuclear Security administration or an NSA.

Speaker Change: Issued a request for information for RFID.

Speaker Change: And AC 100, centrifuge machine design deployment demonstration the bikes in Ohio facility to support and NSA defense mission requirements for enriched uranium.

Speaker Change: <unk> offers a proven American technology, but with keep jobs in America to support both commercial and National security needs.

Speaker Change: We agree with what the U S. Government has said all along that this needs to be a public private partnership to be viable.

Speaker Change: European governments fund their state on Richards.

Speaker Change: Our American government, who in turn back and American alternative.

Speaker Change: And we are ready to help support this push.

Speaker Change: As Kevin will discuss shortly we have begun to lay the groundwork ahead of task orders being issued.

Speaker Change: In the fourth quarter, we significantly strengthened our balance sheet by closing of over $400 million of convertible notes.

Speaker Change: This moved facilitated our ability to begin investing in our future.

Speaker Change: And in late November, we announced an approximately $60 million of investment to resume centrifuge manufacturing activities and expand our manufacturing capacity at our <unk> facility.

Speaker Change: Over the next 18 months.

Speaker Change: This investment serves to de risks interest as supply chain, while reinforcing our first mover advantage in domestic centrifuge production that kick starting the process ahead of government task quarters being issued.

Speaker Change: Nuclear power already accounts for nearly 20% of 2023 U S electricity production.

Speaker Change: And all of the required enriched uranium for U S. Nuclear reactors currently comes from foreign state owned entities.

Speaker Change: There was a large existing addressable market for centers to penetrate.

Speaker Change: With Congress's enriched uranium ban we know that the approximately 25% of enriched uranium that is currently imported from Russia will need to be replaced starting in 2028.

Speaker Change: We also know that utilities are considering upgrading many of their existing reactor fleets to avoid potentially foster new builds over the near term.

Speaker Change: And then there is international opportunities. These include markets that continue to ramp up reactors or otherwise or considering nuclear energy such as in Europe, and then Japan.

Speaker Change: Then there is additional opportunities that could further accelerate nuclear is growth in the second half of 2024, we've heard a number of big Tech companies announcing historic and unprecedented investments in nuclear energy.

Speaker Change: But we cannot just rest on the prospects of this large and growing energy market as well as nuclear growing share of the market.

Speaker Change: Stability is build off of customers.

Speaker Change: This is a clear sign from utilities that they need to secure more supply and that the market demands more competition. So.

Speaker Change: They are turning to central synergy.

Speaker Change: We are very excited about our company's future prospects and look forward to building on our momentum.

Speaker Change: We have begun laying the groundwork ahead of the government's anticipated task orders for which we plan to compete and look forward to sharing more with you on.

Speaker Change: On upcoming calls with that I will turn the call over to Kevin to walk through the numbers.

Kevin: Thank you Amir good morning, everyone.

Kevin: <unk> reported another exceptional year of accomplishments exhibited by a year over year increase to revenue of nearly 40%.

In addition, the company has undertaken several initiatives to improve its balance sheet and capital structure, including reducing the majority of our pension obligations significant capital raises in the debt and equity markets strengthening our cash position SG.

Kevin: SG&A optimization efforts, yielding identifiable cost reductions.

Kevin: Investment in our manufacturing capabilities to accelerate our time to deployment for our own plant production and finally, leveraging investment tax credit opportunities to partially fund these efforts.

Kevin: In 2024, we generated $442 million in revenue an increase of $121 8 million compared to 2023.

Kevin: We generated $73 2 million and net income compared to $84 4 million last year.

Kevin: We reported a gross profit of $111 5 million compared to $112 1 million in the prior year.

Kevin: Our <unk> business generated $349 9 million in revenue an increase of $80 9 million compared to 2023, driven by our growth in uranium and through revenue.