Good morning, and welcome to NuScale’s 2022 Third Quarter Earnings Results Conference Call. Today’s call is being recorded. All participants are in a listen-only mode. After managements’ prepared remarks, there will be a question-and-answer session. [Operator Instructions] A replay of today’s conference will be available and accessible on NuScale’s website at ir.nuscalepower.com. The web replay will be available for 30 days following the earnings call. A telephone replay will also be available for seven days through a registration link, also accessible on NuScale’s website. At this time for opening remarks, I would like to turn the call over to Diane Hughes, Vice President of Marketing and Communications. Please go ahead, Ms. Hughes.

Thank you. Welcome to NuScale’s 2022 third quarter earnings results conference call. We appreciate your interest in NuScale and thank you for joining. With us today we had John Hopkins, President and Chief Executive Officer; and Chris Colbert, Chief Financial Officer. On today’s call, John and Chris will provide an update on our business and discuss our results. We will then open up the phone lines for questions. We have posted a set of supplemental slides on our Investor Relations website. As reflective in the Safe Harbor on Slide 2, the information set forth in the presentation and discussed during the course of our remarks and the subsequent Q&A session includes forward-looking statements, which reflect our current views of existing trends and are subject to a variety of risks and uncertainties. You can find a discussion of our risk factors, which could potentially contribute to such differences in our SEC filings on Form S-1 and Form 10-Q. I’ll now turn the call over to John Hopkins, NuScales’ President and Chief Executive Officer. John?

Thank you, Diane, and good morning, everyone. I’m pleased to be speaking to you from Sharm el-Sheikh, Egypt at COP 27 where we’ve been participating in meetings and panels about the essential role that nuclear play in de-carbonizing our global energy ecosystem to help meet our carbon reduction targets by 2050. We discuss the use of SMR technology to provide critical carbon-free power to Ukraine. The discussion included announcement by the U.S. government commands a pilot project in Ukraine that will demonstrate the production of clean hydrogen ammonia using NuScales’ SMR technology carried out by a public private consortium from the U.S., Ukraine, Japan, and the Republic of Korea. This is another example how SMR technology can not only provide energy security, but also offers a diverse energy platform from which to de-carbonize multiple sectors and enable countries to address issues like long-term food security and energy scarcity. What this also underscores is that the level of excitement around nuclear has never been greater. Recent geopolitical developments have put a spotlight on a need for additional sources of clean and reliable energy. As a result, more governments, utilities, and businesses across the globe are looking to nuclear as a viable way to power the future. As an example, at the recent International Atomic Energy Agency, IAEA, Nuclear Power Ministerial Conference in Washington, D.C., leaders from the governments of Japan, Ghana and the U.S. announced the strategic collaboration to support the deployment of SMR technology in Ghana. As part of this agreement, the government of Japan has funded a feasibility study and supply chain survey for the potential deployment of a NuScale VOYGR SMR power plant in Ghana. This collaboration that’s the first of a kind on the African continent, a market we believe could be well served by our technology.…

Thank you, John, and hello, everyone. I’d like to begin by touching on our third quarter financial highlights. With the detailed information available in our filings, I will focus on the primary drivers of performance. In terms of top line results, we generated $3.2 million in revenue in the quarter compared to $0.3 million in the third quarter of 2021. The increase in performance was driven by activities in support of the engineering, procurement and construction development agreement for the Carbon Free Power Project, the additional consulting services around the nuclear technologies. Although trending positively, revenue remains a smaller part of our story at this stage. And our focus is on effectively managing our spend. Operating expense has and will continue to grow concurrent with efforts to ramp our commercialization plan. Higher professional fees associated with the standard plant design and an increased headcount to support our licensing efforts drove R&D expenses in the quarter, while an increase in G&A resulting from higher insurance and marketing expenses were partially offset by lower compensation costs. Investments in advertising and marketing are integral to building our brand recognition across the globe. Due to timing differences with our federal funding, the DOE cost share decreased slightly in the quarter. However, for the nine months ended period, DOE cost share was $13.6 million more compared to the same time period in 2021 as we continue to advance our research. All in, our net loss in the quarter was $22.5 million greater than the comparable loss in the third quarter of 2021. Looking at other uses of cash, CapEx was minimal and mostly comprised of software and computer hardware to support R&D, which is consistent with our asset light model. We continue to be well positioned to meet our near and longer term milestones. Our…

Thanks, Chris. As a pioneer in the SMR nuclear industry, we are incredibly proud to have the opportunity to originate, build a unique business model that will deliver carbon free base load energy and help provide clean energy at scale. We appreciate the strong interest from our investors and will continue diligently executing on our operational and financial milestones as we work to change the landscape of clean energy. Now, more than ever, the world needs more clean energy sources and we believe NuScale is prime to fulfill this need in a meaningful way. With that, we’ll turn to questions.

[Operator Instructions] Your first question comes from the line of Marc Bianchi with Cowen. Your line is open.

Hey, thank you. I guess, Chris, just because you were mentioning this on IRA, perhaps we could talk about what that’s meant in terms of customer inquiry. I guess, you mentioned that utilities are taking their time, but curious if there’s other customers that have come in and started talking since the IRA was announced. Curious if you could quantify that to some degree and give us a better handle on when we would hear more about those types of conversations.

Sure. And John, maybe you want to start off and I’ll follow up after you.

So go ahead, Chris. He asked you the question. I’ll follow up.

Okay. All right. So, the Inflation Reduction Act provides the opportunity of maybe a 30% to 50% reduction in the cost of a NuScale plant, and that’s driven quite a bit of interest and inquiries from the U.S. sector as they get their arms around what it means for them in their individual circumstances. So the inquiries we’ve had have come from both the investor on utilities as well as other public sector or municipal power agency’s similar to what ERAM says and even regional electric cooperatives such as Dairyland Power. So we expect it’ll take a little bit of time for folks to digest how the IRA applies to their particular circumstances is they start figuring that into their deployment decisions going forward. But suffice to say, we’ve received a large number of inquiries both from all those on the side that are providing power as well as from state policy makers who’ve asked us to come in and talk about the technology and how IRA impacts, what they could see happening in their states. So with that, I would say, it’s very exciting opportunity that we see accelerating the deployment of advanced reactive technology, including NuScale in the United States, but it will take a little bit of time for folks to digest how that applies to them and more importantly, how do they move forward to implement projects that take advantage of these technologies and the IRA benefit. John?

Yes. Marc, I just want to follow-up and say, have any IRA come out. We’re getting, as Chris said, it’s significant interest as we’re seeing numerous potential power plants coming offline here within the next decade. Major utilities are now looking at the IRA as it says because it looks to phase out about 2032, so they’re looking to want to take advantage of these savings. So it could be up to 30% of cost. So that plus – what else I’m seeing here at COP27 with discussions about European taxonomy, et cetera. We’re seeing significant movement in terms of customers want to up their timeline sooner than later. Thank you.

Great. Thanks for that, John. I guess, on the – one of the milestones here is the second secured customer. Can you just remind us what criteria is involved in claiming success on a second secured customer? We see lots of MOUs and announcements that are moving the ball down the field, but I don’t know what that trigger is for kind of counting the customer as a secured customer.

Yes. Marc, what we’re looking at is, it’s kind – in fact, let’s take a country like Poland or KGHM – there we’re looking at what’s the regulatory framework, what is the funding, where’s the funding come from, where does the government support? And most importantly, once money start changing hands, we have a working agreement and it’s a multiple millions of dollars now to assist KGM in a variety of assisting site selection and other front end work. So once that money starts moving, we have a tendency to look at as a more secure customer. Same thing applies to Romania. And again, they’re – we have working agreements with them, so money’s exchange in hands, government supports there at the very senior levels. U.S. government supports there as I said. We did a supply chain. In fact, we got all our suppliers together here the last few weeks. So the momentum is greatly enhanced and moving forward.

Okay, great to hear. Maybe if I could just slip one more in, on the Department of Energy cost share appropriations, there’s a senate draft out there that seems to direct some funding away from NuScale. I’m just curious, what that outcome would mean and how we should think about that in the context of the free cash flow guidance that you guys have talked to through becoming free cash flow positive in 2024.

Yes. Let me start and I’ll turn it over to Chris. We – every year, we go through the senate appropriations bill and as Chris stated, this year we were $13 million more than last year. We’re working both sides of the hill right now on appropriations to against continue to secure then to ensure that this technology in our project at CFPP moves forward. So the feedback we’re getting on both side of hills has been very positive. So we’ll see what the end result is, but we’re working diligently on it like we do every year. Chris?

That captures it well, John. It’s a process, right? So there’s a President’s Budget request, there’s a house mark, a senate mark. And then there’s a conference, and this has been goes on every year. And so we’ll need to see what comes out of that process. But if you look at it historically, you see is that typically – it takes some time for it to work through. We’ve been successful or at least have been appropriate at the levels that we’ve expected in the past. Now that’s not a predictor of the future. But right now, we’re working both with the Department of Energy and with the various committees to make sure they understand what it is we’re looking to achieve and that it’s appropriately funded going forward. So I’ll leave it at that.

Okay. Thanks, Chris. I guess I’ve had a couple other questions come in as we’ve been on the phone here. Can you talk to the opportunity from the Ukraine announcement here with on hydrogen, I guess what’s the timeline for that to potentially convert into a project for you? And I know it mentions using solid oxide electrolysis, which my understanding is that’s still a more of an emerging technology for hydrogen electrolysis. Is there some technology achievement that needs to occur on the electrolysis side that is a gating factor in moving this project forward?

Yes. I will say I was extremely proud. I was on a stage with a Special Presidential Envoy for Climate Kerry and the Ukraine Energy Minister Halushchenko when he announced this clean fuels SMR pilot project. It’s not only just for hydrogen, but it’s also for ammonia and Secretary Kerry mentioned specifically about what it’s going to take from an infrastructure rebuild and at the U.S. and other countries want to stand behind. And particularly on the energy side, I thought what was really important when they announced that particular project for ammonia and hydrogen, many of NuScale’s key suppliers from the U.S., Japan, and Korea are all engaged in this project. So it’s in the early stage and we’re going to sit down and start having discussions how this works. But on a solid oxide, it may be a little further ahead than you believes and I’ll just going to have to leave it at that.

Okay. I’ll stick to the nuclear technology on this.

Yes, but it was interesting being that stage. It was a crowded room. And then they also – if you remember, he announced the another project called Project Phoenix. And essentially this is to escalate the transition of Europe coal fire plants to SMRs. And the key for this is retaining local jobs. Now, this is not dissimilar from what we’re doing in Romania, in Poland, as well as what we’re going to be doing in the United States. Coal refurbishment is going to be huge opportunity globally for the advanced nuclear community.

Super. Maybe last one, just on the on the warrants, is there any color you can provide on plans around redemption or how you’re thinking about updating the market on that? Is there anything that you’re looking for or just general color that you can provide?

I’ll turn that one over to Chris. Chris, please.

Yes. So we’re aware of the situation and the triggers that have been met on that. And again, it really comes down to a conversation within the company we think is best given all the other particulars around our capitalization going forward. But we’ll continue to monitor it. And we’ll continue to evaluate the opportunity that presents both in terms of perhaps exercising those redemption rates or letting a mistake. What I will note is that in the Q3 you’ll notice that there was about $27 million with capital raised as a result of folks exercising warrants and options, which really was not expected. So there is some benefit in terms of letting those stay there because people at least in the third quarter, exercised some of those and provided additional capital to the company that quite honestly, we had not been projecting that or planning on it, but it’s there and it’s a positive thing to have.

Okay. Great. Thanks so much for the answers. I’ll turn it back.

[Operator Instructions] At this time, there are no further questions. I’d now like to turn the call back over to John Hopkins for closing remarks.

Thank you, operator. Greatly appreciative for everybody attending in the questions as well. I got a couple more days here at COP 27. I got two more presentations, and I’ll say this, I was at COP 26 and I mentioned last quarter. I felt we had a seat at the table. I can tell you the interest where NuScale has six speaking opportunities here at COP 27. And it’s been a lot of interest driven heavily by obviously climate disruption, but also energy security. Also, a lot of discussion as we stated earlier about hydrogen production and how do you get it, how do you get it to scale your fertilizers like Romania. Also, another key component that has been discussed here is the fact that NuScale via the NRC now has emergency site boundary at the – essentially the fence line of the plant. This is the first industry and there’s no other nuclear power plant in the world. So if you think about what we’re talking about on coal refurbishment as these power plants come offline, population density has increased and there’s a significant cost to be able to say that we can do it at site boundary. So with that, I’d like to say thank you very much. We appreciate it until next time.

This concludes today’s conference call. You may now disconnect.