Good afternoon, and welcome to NuScale's Fourth Quarter and Full Year 2023 Earnings Results Conference Call. Today's call is being recorded. [Operator Instructions] A replay of today's conference call 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. At this time, for opening remarks, I would like to turn the call over to Scott Kozak, Director of Investor Relations. Please go ahead, Mr. Kozak.

Thank you, operator. Welcome to NuScale's fourth quarter and full year 2023 earnings results conference call. With us today are John Hopkins, President and Chief Executive Officer; and Ramsey Hamady, Chief Financial Officer. On today's call, NuScale will provide an update on its business and discuss financial results. We will then open the phone lines for questions. This afternoon, we posted a set of supplemental slides on our Investor Relations website. As reflected in the Safe harbor Statements on slide 2, the information set forth in the presentation we 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 10-K for our fiscal year 2023 and in our prior SEC filings. I'll now turn the call over to John Hopkins, NuScale's President and Chief Executive Officer. John?

Thank you, Scott, and good afternoon, everyone. First, I'd like to thank our shareholders for their continued support and belief in the future success of NuScale. I also want to recognize our global strategic partners who have invested significant time and capital into our advanced design, supply chain and delivery capabilities. In addition, I'd like to express how incredibly proud I am of each and every NuScale employee for their dedication, fortitude and commitment to our values and mission. Together, I believe we have the capacity to improve and advance global power production to meet the future energy demands of our communities and businesses with clean, safe and highly innovative small modular reactor nuclear technology. When Dr. Jose Reyes, NuScale's Founder and Chief Technology Officer started his pioneering work developing SMR technology, you could have anticipated the growth in demand for sustainable baseload 24/7 carbon-free energy driven by power usage amongst data centers and AI, major industrial projects, transportation and utility customers. Today, as seen on slide 3, we have invested more than $1.8 billion to develop the sole small modular reactor or SMR, nuclear technology approved by the U.S. Nuclear Regulatory Commission, or NRC. No other technology developer, as we know, even has a design certification application on review. Initial process requires several years in many hundreds of millions of dollars of investment. Looking ahead, our principal objective at NuScale is on transitioning from R&D to the commercialization of our proprietary technology. In this effort, we have engaged with our commercial partner, ENTRA1 Energy to build a diverse global pipeline and deploy NuScale SMR-enabled plants worldwide. Additionally, with the investment and expertise of our strategic partners, we have derisked the manufacturing supply chain while maintaining scope for localization of certain supplies. Moving to slide 4; last year, we made…

Thank you, John, and hello, everyone. Our financial results will be available in our filings. So my focus will be on explaining major line items, our cost cutting efforts and expectations. I'll start by discussing our fourth quarter results found on slide 10 then touch on 2023 full year. All figures following are for Q4 2023, unless I say otherwise. I will remind you that the NuScale revenue [ mile ] consist of 3 sources: first, the sale and delivery of NuScale Power Modules and other equipment we have developed. Second, licensing our technologies; and third, services. In the early stage of a project, we generate services revenue by supporting several development activities such as citing, licensing and front-end engineering and site design work and audit planning. Most of our revenue earned to-date is from services for our customers and the licensing of our technology. During 2024, we anticipate advancing existing customers and adding new committed customers for our business development pipeline, which will improve cash generation and revenue. During this discussion, please keep in mind our fourth quarter results were impacted by the mutual termination of the carbon-free power project or CFPP, announced by NuScale and the Utah Associated Municipal Power Systems, or UAMPS in early November. As part of this termination, a release of [indiscernible] was signed resulting in a payment of $49.8 million to CFPP. As I discuss our financial results, I'll highlight key items impacted by the termination of CFPP and detail our treatment of those items. Revenue for the fourth quarter was $4.6 million. Research and development costs during the period was $37.8 million slightly lower when compared to the same period in the prior year. However, this figure includes $11.4 million in additional expenses resulting from the termination of the CFPP-related development cost reimbursement…

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

I guess first one, Ramsey, on the cash balance of $125 million. How do you see that progressing in first quarter and for 2024? And maybe you could talk to us about what could cause that outlook to be better or worse than what your base case might be.

I'd be happy to do that. I think from management perspective, there are 3 main cogwheels [indiscernible] on cash, one is revenue, one is cost savings, one is capital markets. I feel that we're entering 2024 with very solid footing in terms of our visibility to revenue generating business. We started the year with a tremendous cost cutting effort, which I think really align our -- optimized our sources more efficiently towards a commercialization process that we're embarking on. And finally, we have capital markets available to us, as disclosed, we have an ATM facility, that's something that we use very sparingly. And I think that really just a focus on revenue generation and expense reduction, prudent liquidity management is management's approach to 2024. And I think that [indiscernible] very good position towards ending the year.

Okay. Could you perhaps put some numbers around it, just so we can maybe understand the boundary of outcomes?

Sure, Marc. I haven't -- we've had this discussion before in the analyst community, where we have not provided guidance on numbers. And I think that as NuScale goes towards commercialization and starts to build a stable portfolio of revenue producing contracts, those items and those ideas of forecasting, [ passing ] revenue numbers will become a little bit more -- will become a little bit more clear as we progress the business. So Marc, we haven't provided guidance for a reason, right? We're looking at a handful of contracts this year and they will be pretty lumpy contracts. So until we get those, we will be in place and understand the timing of deliveries. So we're not going to give any guidance on numbers.

Got it. Okay. You mentioned the flexibility on capital raise at the ATM. Have you done anything here so far this year? I mean the stock has had quite a run here in the last couple of weeks.

We will disclose in the 2023 financial the use of the ATM over 2023. I don't disclose what I've done in the current quarter. But I think it's pretty evident from our stock [indiscernible] management [indiscernible] ATM with the utmost of care for our cash flows and our comments as well for our shareholders.

Okay, great. Maybe just one more if I could on just ENTRA1 Standard Power. Anything to update on that opportunity? And then if there isn't, maybe you could help us frame when we might expect an update there?

John, can I take that question? John?

I get it. I was on mute. I'm sorry. No Marc, [indiscernible] call in October, Standard Power, announced that they selected NuScale as the technology of choice. We've been in discussions on a regular basis with them. It's a complicated process. They're looking at 2 facilities and with about 2 gigawatts of carbon-free energy from us in a site in Ohio and a site in Pennsylvania. We've been in regular discussions as ENTRA1 progressing us along. So hopefully, here in the near-term that we'll be able to say something, but we'll definitely keep you noticed as the thing proceeds. It's very much still in play.

[Operator Instructions] Your next question comes from the line of Leanne Hayden from Canaccord Genuity.

Just to start, I was curious to know how confident you guys are in your ability to scale manufacturing, just given that this is a pretty new technology, you're not very integrated, just how confident are you that you can move from design to manufacturing?

We're very -- one thing we've done is a lot of monies -- with the $1.8 billion that's been invested in NuScale a lot of that monies was derisked in our module and actually scaling up and modeling to where a lot of it is off the shelf. And as we mentioned before, our fuel comes from traditional conventional fuel. Also from a supply chain, we continue to build out, but I was just with -- this is John Hopkins with the CEO of Doosan, as I mentioned during the script, that they made significant progress anticipating in the future of modules because as you know, our model is predicated not just to a one-off project, these are fungible assets. We're going to build them in a factory and ship them. And so right now, we're pretty confident we'll keep up the demand as it comes in. But we're also very cognizant. We're not going to overextend our capacity to execute, which is very key. So with our strategic partners -- and the beauty of these strategic partners in Japan and Korea, in the U.S., not only the suppliers or OEMs, but they're also investors. So they've taken a holistic view, not looking at a one-off, which affords us very competitive rates from that because the way we operate is that these suppliers recognize they have to be commercially viable. It is not a given that work will come that way. So I was just with the CEO of Doosan, my team were just out in Japan, and we stay in regular contact, and we continue to build our supply chain out, both locally within the U.S. and international.

Okay, got it. Great. When can we expect an additional project announcement? And in your opinion, if you have any visibility, what are the likely markets that we should expect that announcement and like whether it's international or data center related or its coal to nuclear reprocessing or chemical production, what do you expect to see?

Well, let me just say, this time last year, we talked -- it was all about coal refurbishment working with utilities that they quickly became more process-oriented where industrials are looking at clean energy for process heat or hydrogen ammonia. And now there's the big push on energy consumption for data centers and AI. Where I think near term, we could come from is the project we mentioned in RoPower. I'm hopeful that in April, we pretty much -- the Fluor is the prime on this with the subcontractors. Fluor is operated under a limited notice to proceed. We're in the final negotiations of our limited notice to proceed as well as our technology licensing agreement. So, the timeline right now, hopefully, is by early April, we'll be doing a signing ceremony to kick off this project. So that one could be first out of shoot or again, as I said before, I don't want to set an early expectation but our project with Standard Power still continues to proceed. So -- and then I will say I've never seen anything like it, this whole data center AI with some of the Tier 1 alphas in that industry, they need energy. And we're in discussions with not only Tier 1 but others. So timing is everything, but we're just seeing the market continue to build.

Okay. All right. Great. And then just last one for me. How should we be thinking about OpEx moving forward, especially given the recent headcount reduction?

If you think of the headcount reduction when we did, we went from predominantly research and development over the years, which get us to the Nuclear Regulatory Commission licensing process and also helped us not only helped us, but allowed us to do all the modeling and the scaling up of our equipment. Now we're going into the commercialization and deployment, which some of it requires different skillsets. So what we are assured of and what our customers have asked us -- do you have the capacity to execute, and that's what the bottom line is. So we didn't -- we're not in a position that we're not -- we don't have those people to execute these initial projects. So I'm pretty secure we're not going to have a problem in that area.

John, I may add to that idea is that as we went through this cost reduction exercise, what we did also was rightsize some of the general administrative costs within the company. And I think what you'll see is that as we start to generate revenues we'll have less of that SG&A overhead and looking at a high rate of profitability. That's really what we're going for with that type of idea. And when we mentioned the [rate] reduction forces, John had said that we've maintained, I think, the core DNA of the intellectual capacity of the company. That was a very well-calibrated, very well planned transaction. And so our OpEx, even today remains very low. I think we remain very nimble in our ability to scale as revenues come up, manage our margin and really have a [indiscernible] cash.

Your next question comes from the line of Ryan Pfingst from B. Riley Securities.

The first one, it looks like nuclear has been getting a lot of federal support in the news lately between the Atomic Energy Advancement Act and budget requests not only for '24, but for '25. Can you talk about how some of those initiatives that you've seen could impact NuScale and potential customers in the U.S?

Absolutely. In fact, great question. We have both my COO and my General Counsel were on [ the Hill ] this week. There's a bill advancing Congress that would allocate about $800 million through a competitive cost share award but not more than 2 SMR deployments in the U.S. Also an additional $100 million for SMR manufacturing that can be deployed no later than 2030. We're anticipating if it hasn't already been approved to be approved. So the U.S. government stays very strong behind this industry. And we also still continue to have very strong advocacy for the Department of State on international markets.

Got it. That's helpful. And that kind of leads into my second question internationally. Last week, FuelCell Energy talked about its participation in a private public partnership related to ammonia production in Ukraine, where NuScale is expected to potentially supply the SMR. I think the project was announced over a year ago, but their comments made it seem like its progressing. Is there anything to share from NuScale's end on that one?

Yes. That came about during COP27 at Sharm el-Sheikh Egypt if you recall, I was on stage, it's John Hopkins with Secretary Kerry, and he announced that the U.S. is going to assist Ukraine in deploying an American technology NuScale for the ammonia hydrogen production, nominally ammonia. And we're still in discussions. Unfortunately, until the situation hits to the point that we can actually execute and the bombs stops falling, but we are still in negotiations with that consortium. It's amazing because you can well imagine the power requirements that's going to be required in the Ukraine at such a time that when where we're allowed to get in. So does that help?

We have no further questions in our queue at this time. I will now turn the call back over to John Hopkins for closing remarks.

Yes. Thank you very much. I just believe NuScale is still very well-positioned as the first mover in the SMR space, and we're poised to commercialize and deliver clean energy at scale. Nuclear technology, we believe, is absolutely essential to powering the global energy transition. We also strongly believe we continue to be at the forefront of that effort with our work to deliver safe, scalable and reliable carbon-free nuclear power. And I want to thank everybody on the call today and more to come. Thank you very much.

This concludes today's conference call. Thank you for your participation and you may now disconnect.