Neal Nagarajan; Senior Vice President, Head of Investor Relations; Centrus Energy Corp

Amir Vexler; President, Chief Executive Officer, Director; Centrus Energy Corp

Kevin Harrill; Chief Financial Officer, Senior Vice President, Treasurer; Centrus Energy Corp

Robert Brown; Analyst; Lake Street Capital Markets

Greetings and welcome to Centrus Energy fourth quarter, fiscal year 2025 conference call.

(Operator Instructions). As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Neal Nagarajan, head of Investor Relations. Thank you. You may begin.

Neal Nagarajan

Good morning, thank you all for joining us. Today's call will cover the results for the fourth quarter 2024 ended December 31. Today we have Amir Vexler, President and Chief Executive Officer; and Kevin Harrill, Chief Financial Officer.

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. 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-Q's and 8-K's are available on our website.

A replay of this call will also be available later this morning on the Centrus website. I would like to remind everyone that certain information we may discuss on this call today may be considered forward-looking information that involves risks and uncertainty, including assumptions about the future performance of Centrus.

Our actual results may differ materially from those in our forward-looking statements. 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.

Finally, the forward-looking information provided today is time sensitive and accurate only as of today, February 7, 2025 unless otherwise noted this call is the property of Centrus Energy. Any transcription redistribution, retransmission or rebroadcast of the call in any form without the expressed written consent of Centrus is strictly prohibited. Thank you for your participation and I will now turn the call over to Amir.

Amir Vexler

Thank you Neil and thank you to everyone on the call today. Both longtime listeners and the growing number of those joining us for the first time. I would like to quickly welcome Neal to the team as our new head of investor relations. Neal 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 his continued support of Centrus's corporate communications effort going forward. This is another year of success for Centrus energy 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 DOE contract award for HALEU Deconversion. Want a deal we contract award for HALEU investment. Continue to successfully enrich Halo under the operations contract with the elite. Signed long-term contingent LEU sales commitments and grew the company backlog to $3.7 billion through 2040 delivered our balance sheet through strategic initiatives associated with our pension plan.

This past quarter, we continued on this progress by winning at the week contract award for LEU enrichment. Further strengthening our capital position by issuing $402.5 million of convertible senior notes accelerating centrifuge manufacturing preparation while derisking our American only supply chain to strengthen our first mover advantage and delivering to the Department of Energy a total of 545 kgs of HALEU to date in phase 2 of the operations contract.

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 quarters and annual results. Starting with our annual results, recall that the majority of our revenue is derived from the LEU segment where customers generally have multiyear contracts to take delivery of a given quantity at a given price each year.

As we have previously stated, our customers choose which quarter to take their annual deliveries and don't choose the same quarter every year. For the full year 2024 we achieved $442 million in revenue, a gross profit of $111.5 million and an operating income of $48 million.

We have continued to deliver strong revenue growth and solid margin our LEU segment. Even as we work through a number of trade actions. We have secured waivers from the US Department of Energy allowing all of our planned imports in 2024 and 2025.

We are working through the 2026 and 2027 waiver process with the department. Meanwhile, in November, the Russian government revoked the general license that our supplier TENEX had for exporting material from Russia to the United States and now require a specific license for each shipment.

We have been informed that TENEX has received three specific licenses to date to export to satisfy our pending orders. We will use the majority of this value to satisfy pending orders to a single customer on a delayed basis.

TENEX has informed us of its plan to seek additional export licenses to meet its delivery obligations under the TENEX supply contract for our pending and future orders. 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.

Turning to our operations. Let me first discuss three contract awards we won under a competitive solicitation from the DOE. These are designed to jumpstart American production of both low enriched uranium or LEU and high assay, low enriched uranium or HALEU.

In October, we won contract awards for HALEU enrichment and HALEU Deconversion. And then in December, we won a contract award the [LEFP] which will provide funding to restart American LEU enrichment, reducing us dependence on foreign state-owned sources of enriched uranium.

As a reminder, these contracts were awarded as [Idiqs] in definite delivery and definite quantity. Essentially, meaning that we are eligible to compete for future task orders under each contract. The next step in the process will be for the DOE to issue task orders under each contract.

The ultimate dollar value of our contract and the scale of the expansion they could support will depend on what task orders for each we will compete and hopefully win. These three contracts are in aggregate backed by more than $3.4 billion in congressional appropriations that were approved as part of the Inflation Reduction Act in 2022. And the bipartisan government funding bill in March 2024.

Taken 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. Centrus is uniquely positioned to deliver a made in America solution that uses an American only supply chain manufacturing to support American jobs.

We are the only American company with a proven enrichment technology and an [NRC] license to enrich uranium up to just under 20% for HALEU and one of two companies with an [NRC] license to enrich LEU restoring a truly domestic uranium enrichment capability will strengthen our energy security and our national security while creating family supporting high tech jobs for American workers.

The argument for choosing Centrus is further strengthened by the fact that the federal government needs a US origin enrichment technology for national security mission, and we have the only deployment ready technology capable of meeting those requirements. That's crucially important because commercial enrichment facilities using foreign enrichment technology cannot be used to support us national security mission.

In fact, in late 2024 the National Nuclear Security Administration or an NNSA issued a request for information or RFI for an ACO 100 centrifuge machine design deployment demonstration at the Piketon Ohio facility to support an NNSA defense mission requirements for enriched uranium.

We believe that our technology will put the US in a position to decouple itself from foreign influences and secure energy autonomy while keeping American taxpayer money in the US. [Vrus] offers a proven American technology that would keep jobs in America to support both commercial and national security needs.

We agree with what the US government has said all along that this needs to be a public, private partnership to be viable. European governments fund their state-owned enriches. We need our American government to in turn back an American alternative.

And we are ready to help support this push as Kevin will discuss shortly, we have begun to lay the groundwork ahead of task orders being issued. In the fourth quarter, we significantly strengthened our balance sheet by closing of over 400 million of convertible notes. This move facilitated our ability to begin investing in our future.

And in late November, we announced an approximately $60 million investment to resume centrifuge manufacturing activities and expand our manufacturing capacity at our Oak Ridge facility over the next 18 months. this investment serves to derisk the supply chain while reinforcing our first mover advantage in domestic centrifuge production by kickstarting the process ahead of government task orders being issued.

Nuclear power already accounts for nearly 20% of 2023 US electricity production and all of the required enriched uranium for US Nuclear reactors currently comes from foreign state-owned entities. There is a large existing addressable market for Centrus 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 starting in 2028.

We continue to hear about mocked old reactors coming back online from Palisade in Michigan and Wayne Arnold in Iowa to most recently [Santi Cooper's] announcement that it is seeking buyers to complete the project at South Carolina's [V Cser] Nuclear Station.

We also know that utilities are considering upgrading many of their existing reactor fleets to avoid potentially costly new builds over the near term. And then there is international opportunities. These include markets that continue to ramp up reactors or otherwise are considering nuclear energy such as in Europe and in Japan.

Then there's additional opportunities that could further accelerate nuclear's growth. In the second half of 2024 we heard a number of big tech companies announcing historic and unprecedented investments in nuclear energy. But we cannot just rest on the prospect of this large and growing energy market as well as nuclear growing share of the market. Credibility is built off of customers to date we have secured a cumulative total of approximately $2 billion in customer contingent LEU sales commitments to support deployment of our new LEU production capacity in Piketon.

This is a clear sign from utilities that they need to secure more supply and that the market demands more competition. So, they are turning to Centrus energy. We are very excited about our company's future prospects and look forward to building on our momentum.

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 on upcoming calls. With that, I will turn the call over to Kevin to walk through the numbers.