Greetings and welcome to Centrus Energy Fourth Quarter Fiscal Year 2025 (sic) [2024] 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.

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 our 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-Ks, 10-Qs and 8-Ks 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'll now turn the call over to Amir.

Thank you, Neal. And thank you to everyone on the call today, both long-time listeners and the growing number of those joining us for the first time. I'd 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' 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 a DOE contract award for HALEU deconversion, won a DOE contract award for HALEU enrichment, continue to successfully enrich HALEU under the operations contract with DOE, signed long-term contingent LEU sales commitments and grew the company backlog to $3.7 billion through 2040 and delevered our balance sheet through strategic initiatives associated with our pension plan. This past quarter, we continued on this progress by winning a DOE contract award for HALEU 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 our first mover advantage and delivering to the Department of Energy a total of 545 kgs of HALEU to date in Phase II 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…

Thank you, Amir. Good morning, everyone. Centrus 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&A optimization efforts yielding identifiable cost reductions, 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 In 2024, we generated $442 million in revenue, an increase of $121.8 million compared to 2023, and generated $73.2 million in net income compared to $84.4 million last year. We reported a gross profit of $111.5 million compared to $112.1 million in the prior year. Our LEU business generated $349.9 million in revenue, an increase of $80.9 million compared to 2023, driven by our growth in uranium and SWU revenue. The growth in SWU revenue was a result of a higher average price of SWU sold, partially offset by lower volume sold. The growth in uranium revenue was driven by increases in both the volume and average price of uranium sold. Furthermore, rising uranium commodity prices contributed largely to the year-over-year margin improvement by over 10%. Our cost of sales in LEU increased from $163.9 million in 2023 to $256 million in 2024, due to an increase in average SWU and uranium cost. SWU costs increased primarily as a result of a 67% increase in the average unit cost of SWU sold. Of the $256 million cost of sales, 25% is attributable to the release of costs related to previously deferred sales which incorporate the higher SWU price at the time of the deferral. Excluding…

Thanks, Kevin. I'd like to close by taking a moment to discuss the new administration. There is 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. Nuclear has and continues to enjoy resounding bipartisan support. That said, the new administration, as seen through Secretary of Energy, Chris Wright's confirmation testimony appears to be particularly bullish about the need to restore American-owned production of enriched uranium. We've heard 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. We're also the only enricher that actually manufactures our centrifuges in the United States. In September, we held a briefing for policymakers on Capitol Hill and unveiled our domestic manufacturing supply chain, which includes 14 major suppliers, every one of them an American company employing American workers in at least 13 states. Our project presents the perfect opportunity for the president to deliver a major win in his efforts to restore American manufacturing and American energy independence. 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. We are excited by what is to come in 2025 and our continued evolution towards reclaiming America's rightful place in the enrichment market to service both the domestic market as well as for global customers. With that, we would like to open the lines to take questions. Operator?

Thank you. [Operator Instructions] Today's first question is coming from Rob Brown of Lake Street Capital. Please go ahead.

Good morning.

Morning, Rob.

Thank you. I just wanted to follow-up on the wins on the DOE contracts, the three contracts. Could you give us a sense of sort of the next steps in the task orders, and sort of what needs to, or how the decision making process goes to getting those task orders issued, and maybe a sense on the thinking on timing?

That's a good question, Rob. I honestly, I would not speculate on timing. I mean, we know that there is movement. Obviously awards have been given, so they're moving forward. Just I would not guess anything on timing. I think it would be too hazardous, to say that. But as I said, we are encouraged in that there is forward movement. And your first question was, if there's any other color we can add to what's been already announced. I believe, I'm paraphrasing.

Yes, just sort of the next steps that go into the process?

Yes. So the next steps would be specific task orders that the department would issue, to the awardees. And again, we really have no insight into those and the timing.

Okay. Thank you. And then you did talk about a $60 million investment, to get your jump-start things.. Can you give us color on kind of what goes into that, and where that puts you in terms of position, to really react to the task orders as they come through, if they come through?

Yes. So really all of these things are connected. We want to make sure that we hit the ground running as fast, fast and as hard as we can when those come out. So that allows us to do a lot of our prep work. And I would call that readiness, investment in our readiness. I don't know, Kevin, if you want to add anything else, but that sort of is the high level.

Yes, no, I think that's right. And the important element of what we're trying to accomplish. And we've talked about this to the public, is as we move forward with regards to deployment of our initial cascades, there is some additional time that's going to be required, associated with our supply chain, and standing that up for wide scale distribution and production. And so, this monies basically are being invested in order for us to start the process, and continue what we perceive as our first mover advantage in regards, to many of the things that we're trying to accomplish in, in bringing enrichment back to the United States, to a domestic owned company.

Great. Thank you. I'll turn it over.

Thank you. The next question is coming from Joseph Reagor of ROTH Capital Partners. Please go ahead.

Hi guys, thanks for taking the questions.

Morning, Joe.

Good morning. So first thing on the TENEX wins. Obviously congrats on getting some positive news there. I know you're not going to give specific numbers around it, but in the overall context of things, three specific licenses out of, is it 50, 100, 1,000, like order of magnitude, even if it's an arm wave rather than a specific number?

Yes, we can't get into those types of details, Joe. What we are and have disclosed, as a part of our reporting is that the Russian decree that came down the pike in late last year, specifically put a pause for TENEX, the provider, in regards to their ability to provide distribution, of the enriched uranium outside of Russia exporting into the United States. And so, we have seen good traction with regards to several of our individual deliveries and shipments. But those, as it was crafted under the Russian decree, are on a case-by-case basis, on a shipment-by-shipment basis. So 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.

Okay. Fair enough. I had to ask. Then, second question. Yes. On the uranium sales in Q4, they were abnormally high. This is - usually this is like tail uranium rate, but did you guys sell any uranium inventory that drove that $73 million of revenue, in reaction to what occurred in November, or is this just taking advantage of an opportunity in the market?

This is taking advantage of an opportunity in market. Obviously, UF6 is at historic levels, upwards of $300 a kilogram. So this was a perfect opportunity, where we were able to get matched up with our counterparty, and reflect and recognize a key spot sale for us in that December time frame that, helped to the results of the annual cycle.

Okay. I'll turn it over and jump back in the queue.

Thanks, Joe.

Thank you. The next question is coming from Ryan Pfingst of B. Riley Securities. Please go ahead.

Hi guys, thanks for taking my questions. First, regarding the $60 million investment made in November, or announced in November, is it fair to say that that officially kick starts the 42-month timeline you've spoken about, to bring on the first commercial cascade?

Yes, that is an accurate characterization.

Got it. Thank you, Kevin. And then maybe just following up on the last question - for fourth quarter results, strength was driven by the price of SWU in uranium prices. And just wondering, was there anything else there that drove that strength that 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?

Yes. No. As you noted, Ryan, we don't provide earnings guidance, so it's a little difficult to go into the details as - to whether transactions will be replicated in future periods. What I can say is, we definitely are very opportunistic, especially on the uranium side. And so, when you look at our financial statements and our balance sheet, we do still have a sizable amount of inventory left. And specifically that, which is helpful for us as it relates to monetizing some of the transactions in a rising market, on the UF6 side is really being in a position, to sell those from a spot sale perspective. So I think, we'll continue to evaluate the economic climate, and 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 than that.

Great. Appreciate it. I'll turn it back.

Thanks, Ryan.

[Operator Instructions] The next question is a follow up coming from Joseph Reagor of ROTH Capital. Please go ahead.

Hi guys, just had one more. I noticed in the release some talk about an investment tax credit, and that if you guys spend a $200 some million get $60 some million back, what does it take to trigger all that? And then and over like what period of time. And then how would that work from an accounting standpoint?

Yes. So from a timing perspective, we would have to put this, and there's a few conditions, but ultimately the time frame in, which we could capture costs that we'd be able to realize are approximately four years. And this is all stipulated within the [48C] legislation, or I should say the IRC, which basically touches upon that you need to meet certain conditions within a two-year time frame. And then put the property into its useful life thereafter. And the period of time in, which we can actually bear cost is at a 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, is a marketplace that we can sell into and monetize these. So these won't be necessarily subordinate to the NOLs. And when you look at what we're trying to accomplish on a global basis, 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 go about on our own. And did I cover all your questions, Joe, or did I miss anything?

I think that covers the gist of it. And then, if I could just one follow-up to the previous caller's question about the 42 months. When would you guys need the task assignment to be given by in order to maintain the 42-month time frame now that you've kind of started the clock?

Let me just maybe clarify what Kevin said. And Kevin, please step in and clarify my clarification if needed. We are making an investment, to improve cycle time to get a jump start on the process, which we have sufficient confidence in that it's forthcoming. I will officially stick to the 42 months, and I would not make any more aggressive assumptions than that. Just from a conservative standpoint, obviously we want the process to start, as quickly as possible and that's when the start - that's when the clock starts. Now 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. But officially, let's make the assumption of 42 months at this point, and let's not assume anything more aggressive than that.

Okay. Just - yes, I was just going to add to that, 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 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 monies. So the $60 million is a jump start 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 us, as it relates to government funding, to allow us to continue that trajectory that we've announced, on the 42-month side.

Okay. I think that clarifies it. It was a little confusing before. Thanks guys.

Yes, sorry about that.

May I hope Brian's still online, and listening to this.

Thank you. Ladies and gentlemen, at this time, I would like to turn the floor back over to Mr. Nagarajan for closing comments.

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, and the analysts who called in, and we look forward to speaking with you again next quarter.

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.