STDN (STDN) Q2 2026 Earnings Report, Transcript and Summary

Good day, everyone. My name is Elizabeth, and I will be your conference operator today. At this time, I would like to welcome you to the Standard Nuclear Second Quarter 2026 Earnings Call. [Operator Instructions] Today's call is being recorded. At this time, I would like to turn the call over to Chris Koscielniak, Head of Investor Relations.

Thank you, operator, and good morning, everyone. Welcome to Standard Nuclear's Second Quarter 2026 Earnings Call, our first as a public company. July 16, our common stock began trading on the New York Stock Exchange under the ticker STDN. We are pleased to welcome our new shareholders and everyone joining us today. Yesterday, we issued our earnings press release reporting results for the 3 and 6 months ended June 30, 2026. And this morning, we filed our quarterly report on Form 10-Q with the SEC. The press release is available in the Investor Relations section of our website, and an investor presentation will be posted there following this call. Before we begin, please note that our remarks today will include forward-looking statements and are based on assumptions as of today and are subject to significant risks and uncertainties. Actual results may differ materially. Please refer to the risk factors described in our Form 10-Q and our SEC filings. We undertake no obligation to update forward-looking statements, except as required by law. During this call, we will refer to certain operating metrics, including funded backlog, total contract backlog, and qualified pipeline. Definitions of these metrics and important limitations on their use are included in yesterday's press release. With me today are Kurt Terrani, our President and Chief Executive Officer; and Kevin Harrill, our Chief Financial Officer. Kurt will open with an overview of the quarter's results and an update on our strategy, followed by Kevin, who will take you through the financial results, and then Kurt will close before we open the line for questions. With that, I'll turn the call over to Kurt.

Thank you, Chris, and thank you, everyone, for joining us on our first earnings call as a public company. Let me start with what Standard Nuclear is. We make the fuel that most advanced reactors run on, that fuel is TRISO. And it is worth spending a moment on why it matters. TRISO is not a new idea. This coated particle fuel form was first developed in the 1960s and used across a number of commercial new power plants worldwide. Since 2002, the Department of Energy has put the latest generation of this fuel technology through the Advanced Gas Reactor Testing and Qualification Program. A rigorous testing and irradiation program that took the fuel to record burn-up and temperatures with essentially no fuel particle failures. After irradiation, the fuel was then safety tested by exposing it to temperatures far beyond anything a reactor accident would produce to ensure the release of radioactivity from the fuel stayed below safe levels. This is why the DOE calls TRISO the most robust nuclear fuel on earth. Each particle is a speck of uranium ceramic about the size of a poppy seed, wrapped in layers of carbon and silicon carbide. Those layers are the containment. Every particle is its own miniature pressure vessel, holding the radioactive material inside at temperatures well above anything the reactor will ever see. And it does that passively without the need for a pump, power, or operator to actively maintain the cooling on the fuel. This is what we mean by functional containment, and it is why a reactor running on TRISO can be small, sited close to the customer it serves, and safe without relying on active safety systems. What is new here is not the fuel. It is the ability to make it at commercial scale. This quarter, we shipped our first commercial fuel core load. We signed contracts on the back of it, and the demand behind those contracts moved toward us on every measure we track. The quarter tells the story through 5 themes. First, microreactor deployment is accelerating from pilots to programs with named sites and targeted dates. Second, we manufactured and shipped the first full core load of modern commercial TRISO fuel ever produced in this country. Third, we converted pipeline into contracts and contracts into funded backlog. Fourth, we scaled. Modular equipment is moving into both new sites now, putting capacity in place for up to 2.5 metric tons of annual throughput by year-end, subject to authorization. Fifth, we've broadened the platform: the Framatome joint venture, selection for negotiation under the Surplus Plutonium Program, and fuel transportation package development. Deployment creates fuel demand. Demand becomes contracts. Contracts become funded backlog. Backlog is matched with capacity. The platform work widens the base under install. Advanced nuclear is moving from pilots to scheduled deployments. 5 participants in the Department of Energy's reactor pilot program have now reached criticality, 4 of them by the program's July 4 target. And the demand signals are structural. Hyperscale data centers need firm, continuous power. The reindustrialization of the American grid is underway. Defense programs such as Project Janus are targeting reactor deployments at 9 Army installations as we speak. That's just the start before additional installations under the other branches to come on. And as I hope it is clear to you all, energy security is the national intent. For anyone less familiar with it, the Army's Project Janus is a Department of Defense awards program to put microreactors, that is small nuclear reactors, sited at military bases so that critical missions are run on reliable, around-the-clock power. Every reactor runs on fuel, and the advanced reactor fleet moving toward deployment will overwhelmingly run on TRISO. Project Janus has now announced its awardees. And Standard Nuclear is proud to be the fuel supplier to a number of the reactor developers under this program. We are not the direct awardee, our customers are. That is exactly the position we want to hold. For developers we supply, each awarded deployment creates a TRISO requirement on a defined schedule. We will not name specific customers or programs beyond what the government and our customers have made public. Let me be clear about where we are focused and when. Over the next 5 years, the demand that is real, funded, and scheduled is microreactors, starting with what is concentrated in government and defense and quickly followed by commercial behind the meter. This is where we are pointed today, and it is what our capacity is being built against. Small modular reactors also represent a substantial market, but they arrive later as those designs work through licensing and reach commercial viability towards the end of the decade. We are not waiting on that market to prove our model. Microreactors fund the business today, and the fuel development and customer relationships that come with them are exactly what SMR suppliers will need. The same design-frozen modules produce fuel for both. So nothing we build now has to be rebuilt later. Standard Nuclear is currently the only independent U.S. company producing TRISO fuel at scale for commercial customers. We are reactor agnostic. We do not compete with our customers. We feel that this quarter moved that position from a description to an actual demonstration. The developments this quarter and shortly after translated the market movement into Standard Nuclear execution. We delivered, we converted demand into contracts, and we scaled capacity. First, we delivered fuel. During the second quarter, we shipped our first commercial TRISO fuel, a 50-kilogram batch of HALEU TRISO to Radiant Industries for its Kaleidos demonstration microreactor. That fuel is now at the Department of Energy's DOE facility, Idaho National Laboratory. Shortly after quarter end, we delivered the balance, completing delivery of the full core load of TRISO fuel for Radiant's first microreactor. This is the first complete reactor core of commercially produced TRISO fuel supplied by an independent U.S. manufacturer. The core will support a full-power, full-temperature demonstration using fuel from our Oak Ridge production. Second, we converted it. Our commercial engine did what we built it to do, move opportunities from pipeline to contracts to funded and binding commitments. Total contract backlog grew from $91.3 million at March 31 to $241.5 million at June 30. Funded backlog, the portion under binding commitment with firm delivery obligations, grew from $8.2 million to $61.9 million over the same period. In August, we entered into a fuel supply agreement with Antares Nuclear, providing a firm commitment of 1 metric ton of TRISO fuel with a customer option for up to 7 additional metric tons over the next several years. Giving effect to that agreement, funded backlog approximately doubled from June 30 to $119.3 million. And total contract backlog reached $576.9 million, more than 6x the March 31 level. That is conversion. It's not churn, and Kevin will walk you through the movement between these categories. It is how market acceleration reaches our order book. Deployment dates and government program timelines turn fuel from a planning item into a firm requirement with a date attached to it. The customer relationships make that conversion tangible. The binding term sheet we signed with Radiant Industries in May became a definitive multi-tranche fuel supply agreement in August. Because the May term sheet was binding, those amounts were already reflected in our June 30 backlog. The August agreement formalized the relationship. Radiant is the customer whose first core we just completed, demonstrating the core-to-reload model. In announcing the agreement, Radiant described it as securing its planned deployments through the early 2030s. And its President called securing the fuel supply chain a strategic advantage to deploying at scale. That is the change we've been describing. Fuel availability has become a gating item for reactor deployment, and developers are prudently contracting years in advance. Separately, the fuel supply agreement with Antares Nuclear announced earlier this week carries a firm commitment of 1 metric ton with customer options extending as far as 2035. There are multiyear, multi-ton relationships with reactor developers moving toward deployment. And both of these customers are Project Janus awardees. That is what makes these 2 agreements the most important thing we did this quarter. It is the demand signal completing its full circuit. A federal program puts deployment dates on the calendar, awards a reactor developer, and the developer contracts with us for fuel. So a national program decision arrives in our backlog as a firm requirement with a date attached. What was the demand signal 2 quarters ago is a signed contract today. Third, we scale. Construction is substantially completed at our 2 new production facilities, SN-TN in Oak Ridge, Tennessee, and SN-ID facility in Idaho. The facilities are identical, each starting at up to 1 metric ton of TRISO fuel production per year and designed to scale to 2.5 metric tons each for a combined capacity of up to 5 metric tons per year. The Department of Energy has approved the preliminary documented safety analysis for both sites, commissioning of the manufacturing modules is underway, and we are targeting authorization to operate both facilities in the fourth quarter. The modular manufacturing equipment is on-site and moving into both buildings now. Subject to receiving authorization, SN-TN and SN-ID will join SN-Z, our original Oak Ridge line that's producing the fuel today, to put capacity in place for up to 2.5 metric tons of annual throughput by year-end, up to 0.5 metric ton at SN-Z and up to 1 metric ton initially at each new site. SN-TN and SN-ID are replicable by design. This quarter's process engineering and authorization work creates a template for repeated builds. Our standard facility is designed to come online in approximately 11 months. And our long-term plan scales from the half metric ton we operate today, approaching up to 40 metric tons of annual capacity by the end of the decade, sized to the demand we can contract in today's theoretical market. For scale in a base case, roughly 7 gigawatts electric of cumulative rises deployments by 2035 would require well over 100 metric tons annually. In a market where demand is arriving at metric ton and incumbent supply is measured in kilograms, an approximately 11-month capacity cycle is a strategic advantage. In July, we also acquired land and an existing acreage building for $5.5 million in cash, as disclosed in our Form 10-Q. Our Oak Ridge holdings now total approximately 57 acres, providing space for future design-frozen modules. Now to manufacturing performance. Process yield was 63.3% at the end of June, as reported in our Form 10-Q. The number measures speed, not waste. Material that does not make it through on the first pass is returned to the front of the line and reused. So we are not losing HALEU feedstock. We're taking another pass at it, and we expect the number to rise as the new facilities ramp. At the coating step, where each kernel gets the carbon and silicon carbide layers I described earlier, we ran 95% to 97%. Process yield is a number that will move as we scale. Coating is already where we want it. Here's why that matters. Yield is a cost lever. Every point of improvement means more sellable fuel from the same labor, the same utilities, and the same equipment, and that flows straight to gross margin. We earned 67% gross margin in this quarter at 63.3% yield. As yield improves and as the new facilities spread fixed costs across more output, that is the direction margin moves. Beyond our wholly owned facilities, several initiatives broaden the platform across regulatory pathways, feedstock, logistics. First, the U.S. Nuclear Regulatory Commission approved the license amendment for Framatome's Richland, Washington facility, raising its license enrichment limit to just under 10 weight percent uranium-235, and authorizing TRISO particle fuel fabrication. That clears the regulatory path for our joint venture to begin production at Richland in 2027, with initial capacity of approximately 1 metric ton annually and ability to expand to 2. This capacity would be incremental to our wholly owned sites. Our Tennessee and Idaho facilities are advancing towards authorization under established Department of Energy framework through our Other Transaction Agreement. Our DOE fuel authorization was granted under the Fuel Line Pilot Program, where the Department of Energy selected us as the first company accepted into the program. And SN-TN and SN-ID are progressing through the same established framework towards authorization in the fourth quarter. Our relationship with Framatome is a second independent pathway, production at Richland under Framatome's NRC license, a route we secured through the amendment in under 2 years. 2 regulators, 2 frameworks, 1 company able to deliver under either. A new entrant would likely face a historically 7- to 9-year path through this licensing, construction, and qualification process before its first kilogram. We hold an operating DOE authorization today with an NRC license route alongside it. That diversification mitigates the impact from any 1 regulatory process or policy shift to constrain our ability to deliver. And it positions us to be able to serve government, defense, and commercial customers all in parallel. Second, the Department of Energy selected Standard Nuclear for advanced contract negotiations under the Surplus Plutonium Program. This selection positions us to fabricate plutonium-based TRISO as an independent supplier if the demand for this fuel form materializes. Selection for negotiation does not cost to the contract award, but it validates that the TRISO silicon carbon architecture is a potential pathway to convert a national liability in plutonium into useful fuel and extends our feedstock beyond uranium. We also have entered into a memorandum of understanding with Oklo that establishes a pathway for fabricating fuel from recycled material, completing the feedstock arc from uranium to surplus plutonium to recycled fuel as those streams mature. Also, our continued strategic partnership with SHINE Technologies is intended to support that recycled material pathway as its planned recycling capabilities develop. Third, our R&D work extends to packages used to transport and store HALEU feedstock and TRISO fuel, with our designs progressing through the NRC's Part 71 process. Fuel must be transportable to be able to be delivered. Developing that pathway supports contract schedules and creates the potential for an adjacent revenue stream as the industry scales. And our fuel technology reaches beyond the grid. NASA's Space Nuclear Propulsion program selected Standard Nuclear on a nuclear thermal propulsion contract extension. Space is not in our forecast, but it represents long-term optionality from capabilities we already possess. Before I put the quarter in market context, let me take head-on the fuel supply chain question we get most often. Our position is very straightforward. We are reactor agnostic and feedstock agnostic. Under the Department of Energy's HALEU Availability Program, material is allocated to project developers who then engage a fabricator. This past December, we became the first company to receive the Department of Energy authorization and physically take delivery of HALEU feedstock for TRISO production. Material allotted by DOE to Radiant and processed by us in Oak Ridge into a full core load for Radiant's first reactor start. That is not a pilot. That is the fuel line working end-to-end. Standard Nuclear also holds its own conditional allocation under the same program awarded in the second round in August 2025. 9 entities have now been named across allocation rounds. And several of them are our customers or prospective customers. Every 1 of them needs a fuel fabricator. All right. Now let's put the quarter in market context. Total contract backlog and qualified pipeline together represent approximately $1.3 billion, roughly 40% of our estimated $3.2 billion serviceable addressable market through the end of the decade. Qualified pipeline is not backlog, but together, the categories show the scale of commercial engagement. The comparison also understates the full duration of our commercial relationships, which include customer options extending to 2030 and beyond. Our model moves customers from development agreements to deposits, reserving production capacity to long-term fuel supply agreements. Each first core can see a recurring refueling relationship. And this quarter's conversion into binding fuel agreements shows the model working. Radiant has said publicly that each Kaleidos microreactor runs up to 5 years before refueling across a 20-year operating profile. On their numbers, every unit deployed is a first core followed by roughly 3 reloads. And they have announced a commercial agreement with Equinix for 20 units alongside their selection for Buckley Space Force Base. Those are their things to update, not ours, but they show why we treat a first core as the start of the relationship rather than an individual sale. In summary, the July IPO gave us a balance sheet to press this advantage that we have. Our new facilities were already fully funded, and an approximately $137.7 million of net proceeds gives us flexibility to add capacity ahead of demand, strengthen the supply chain, and convert backlog into recurring production revenue. With that, let me hand it to Kevin to take you through the numbers. Kevin, please.

Thank you, Kurt, and good morning, everyone. As this is our first earnings call, I'll spend a moment on how to read our financial statements, then walk through the quarter, the balance sheet, and the backlog metrics that we believe are the best leading indicators of this business. First, the framing. The results we reported yesterday and the Form 10-Q we filed this morning are for the 3 and 6 months ended June 30, 2026. Our IPO priced on July 15 and closed on July 17 after quarter end. That means the June 30 balance sheet reflects the company's financial position before the offering. Share counts are adjusted for the split but exclude the 10 million shares issued in the IPO. I will bridge you to the post-IPO capital structure in a moment. Now for the quarter. Revenue was $4.7 million compared to $0.6 million in the prior year period, an approximately eightfold increase. The composition matters more than the multiple. $3.1 million of that was product revenue from deliveries of TRISO fuel under a fuel supply agreement, including our first commercial delivery with the balance of $1.6 million in service revenue from fuel development contracts and projects with U.S. government agencies. This is the quarter product revenue arrived, and it arrived from fuel sales, the recurring scalable part of our model. Cost of revenue was $1.6 million, up from $1.2 million, reflecting the scale-up of production operations as we qualified processes and manufactured our first commercial core. Gross profit was $3.2 million for the quarter and approximately 67% gross margin. That is the model working as designed, and we expect strong gross margins to be a durable feature of this business as volume scales. The drivers underneath them are structural, not onetime, converting the most valuable material in our process right the first time, an in-line recycle loop that returns material rather than discarding it, and fixed cost absorption that improves as each module fills. General and administrative expense was $5.5 million compared to $1.0 million in the prior year period. I want to be direct about what this is. It's the build-out of the internal infrastructure required to operate as a public company. This spans finance, accounting, legal, and compliance capabilities, together with nonrecurring costs of the IPO and public company readiness. Of the $4.5 million increase, $1.6 million was share-based compensation, $1.5 million was third-party consulting fees related to the public company transition, and finally, $1.4 million was payroll and related benefits. These costs were incurred substantially in advance of the revenue our new facilities are expected to generate. We made a deliberate choice to stand this infrastructure up on day 1. The right people, the right contracts, and the right vendors. Sized for the business we are building rather than the business we are today. That work is largely done. This quarter sets the baseline for that infrastructure, and we do not expect the cost of running it to increase substantially from here as production scales because it was built to scale with the business. This quarter, we reported research and development expense of $2.0 million. The largest focus was the process engineering and qualification work required to bring SN-TN and SN-ID into commercial production, including licensing, and authorization deliverables under our Other Transaction Agreement, or OTA, with the Department of Energy. During the quarter, that work supported DOE approval of the preliminary documented safety analysis for both facilities and the start of final documented safety analysis preparation at each site. This engineering investment supports the replicable facility model Kurt described earlier. A portion of R&D also supports fuel container development to transport and storage infrastructure behind every fuel contract we sign. Bringing it together, loss from operations was $4.3 million, compared to $1.6 million in the prior year period, with the increase driven by G&A and R&D investments I just described, partially offset by the $4.1 million increase in revenue. Net loss was $3.4 million, or $0.12 per share, compared to $1.6 million, or $0.06 per share, in the prior year quarter. Sequentially, and I think this is the more informative comparison, net loss narrowed from $7.7 million in the first quarter to $3.4 million in the second, primarily reflecting our first commercial product revenue. Briefly on the 6-month view. Revenue was $5.3 million versus $0.9 million in the prior year period. Gross loss was $1.2 million, reflecting first quarter process qualification and scale-up costs incurred before commercial deliveries began. Net loss was $11.1 million, or $0.40 per share, versus $9.9 million, or $0.35 per share, in the prior year. The year-over-year comparison includes an $8.3 million favorable change in other income as the prior year period carried nonoperating charges that did not recur. So let's turn to the balance sheet. We ended the quarter with $102.2 million of cash and cash equivalents, up from $63.1 million at year-end 2025 with no debt outstanding. I'd also point you to deferred revenue, which grew from $1.1 million at year-end to $4.0 million at June 30. That line is our commercial deposit model at work. Seeking to have customers pay to reserve production capacity and queue position ahead of delivery. That structure matters. Customer deposits and milestone payments fund our capacity build with customer cash rather than stockholders' equity, and we intend to keep structuring our fuel sales agreements that way. For the 6 months, cash used in operating activities was $10.9 million. Cash used in investing activities was $17.8 million, which was largely driven by $17.4 million of capital expenditures as we build out production capacity. And finally, financing activities provided $67.9 million, which reflected the private financing that was completed in January this year. Now the bridge to today. The IPO of 10 million shares of Class A stock at $15 per share generated net proceeds of approximately $137.7 million after underwriting discounts, commissions, and offering expenses. On a pro forma basis, that brings cash to approximately $240 million on a debt-free balance sheet. I want to underscore the sequencing here. The $102.2 million we held at quarter end had already fully funded construction and commissioning of the Tennessee and Idaho facilities. The IPO was opportunistic. We accessed the public markets from a position of strength at a moment when demand for a secure domestic nuclear fuel supply chain has never been great, and the proceeds give us flexibility to move faster than our existing plan. One more piece of the bridge because it matters for your models. The June 30 balance sheet shows the preconversion share count roughly 28 million common shares, and that is also the weighted average behind our reported per share figures. As Note 14 lays out in our Form 10-Q, we had approximately 132.7 million shares of Class A common stock outstanding and 11.6 million shares of Class B common stock outstanding going into the IPO immediately before the offering, which included the conversion of 116.1 million shares of preferred stock into Class A common stock. With the 10 million shares we issued, the go-forward count is approximately 154.3 million, use that number as your denominator from here. Finally, the metrics I would ask you to watch. As Kurt said, this quarter demonstrates conversion. Total contract backlog was $241.5 million at June 30, consisting of $61.9 million of funded backlog and $156.5 million of purchase options under executed contracts and $23.1 million of unfunded backlog. Giving effect to the August fuel supply agreement with Antares, funded backlog increased approximately 93% from June 30 to $118.3 million. Purchase options increased to $443.5 million, unfunded backlog declined to $14.1 million, and total contract backlog reached $576.9 million. Funded backlog represents binding commitments with firm delivery obligations, net of revenue recognized. Purchase options are at the customer's sole discretion and are not reflected in our financial statements until exercise. Qualified pipeline is not included in backlog, and the story of the peer is transition. Pipeline converted into funded backlog and purchase options as agreements were executed. Total contract backlog more than doubled over the period, and qualified pipeline stands at approximately $696.3 million as of today. That movement between those categories is conversion, not lost demand. And it's exactly the progression our commercial model is designed to produce. We intend to report the conversion of qualified pipeline into contracted backlog each quarter, so investors can track that progression over time. Before I hand it back over to Kurt, let me pull the financial themes together because these are the same themes that Kurt opened with. We are capital efficient. Our facilities were fully funded before we came to the public markets. We add capacity in modular increments on an approximately 11-month cycle. We just added land and a building for $5.5 million in cash, and we hold approximately $240 million of pro forma cash with no debt. Our supply chain is fundamentally derisked, customers source and own their feedstock under our toll model. We carry no commodity exposure, and material is already flowing through the line. We are bringing customers in and converting them. Pipeline into contracts, contracts into funded backlog at every stage this quarter. And we are doing it with strong gross margins, 67% this quarter, and we expect strong margins to be durable as volumes scale because the drivers underneath them, first pass conversion, the recycle loop, and fixed cost absorption, are structural features of the model rather than artifacts of the quarter. We are not providing financial guidance today. What we will give you are dated operational milestones, authorization to operate SN-TN and SN-ID targeted for the fourth quarter of 2026, and the start of production at Richland through our Framatome joint venture in 2027. With that, I'll turn it back to Kurt for closing.

Thank you, Kevin. This quarter reinforced our model. First commercial fuel, a full core, and funded backlog growing from $8.2 million at March 31 to $119.3 million, giving effect to the August agreement. SN-TN and SN-ID are moving towards up to 2.5 metric tons of annual throughput by year-end, subject to authorization. Richland production expected to begin in 2027, while we look to the plutonium program and Part 71 container work to broaden the platform. The United States government is doing something that has not done in 2 generations. It is deliberately catalyzing a new nuclear industry with programs, schedules, and money behind it. Project Janus targets reactor deployments across 9 Army installations starting in 2027. And that's just the start. Look for additional Navy and Air Force bases to benefit from more reactor deployments. It is a deployment program with dates, not a study, and its announced awards include a number of reactor developers we supply. That is the demand side. On the supply side, Standard Nuclear is the only independent U.S. company producing TRISO at industrial scale for commercial customers, delivering fuel to our customers today, not in some aspirational future date. First mover is not a slogan in this business. It compounds. Every fuel development agreement, every fuel form developed and characterized to a unique customer specification, and every delivered core builds the customer relationship, making the next expansion cheaper. The supply chain behind that delivery is already stood up. We were the first company to both receive DOE authorization and physically take delivery of HALEU feedstock. Our customers source and own the feedstock under our toll manufacturing model. So we carry no commodity exposure, and our remaining inputs are standard industrial materials. No part of our model waits on a supply chain that does not yet exist. Our capital efficiency is equally important. We were gross margin positive in our very first quarter of commercial deliveries. With facilities fully funded before the IPO, an 11-month modular build cycle, and roughly $240 million of cash and no debt. The contracts are signed, capacity is going into the buildings. Deliveries are happening today. Advanced nuclear is no longer a question of if, there's a question of how fast, and the answer to how fast is fuel. Standard Nuclear exists to make sure fuel is never the reason the industry waits. Thank you to our employees, and thank you all for joining us today. Operator, please open the line for questions.

[Operator Instructions] Our first question comes from Rinny Singh with Bank of America.

Congrats on the first quarter. I think, first, I think you've highlighted that the backlog -- the funded backlog has grown substantially to $119 million. Could you help us think about the cadence of the revenue recognition for the backlog and how it works with the fuel delivery? And are there any meaningful manufacturing or contractual milestones that would accelerate this progress?

Yes. Thanks, Rinny. Thanks for the call and thanks for the question. Yes, on the revenue recognition, so as because you're well aware of, we have 2 main segments of the business that we lean into, fuel development as well as fuel supply or offtake agreements. So on the fuel development agreements, we manage our revenue recognition. And obviously, this is the lesser portion of the rent that we reflect on our financial statements here and go forward. And that on a percentage of completion basis. So as we work through performing and determining the specs for our individual customers, that's going to be recognized proportionately throughout the time frame in which we're helping their recipe. For the fuel supply agreement or the offtake arrangements, those are generally recognized from a revenue perspective upon delivery. But each contract is a little different than the other. So we do have opportunities to be in a position to recognize revenue as they're going to be in work in process, but it is going to be unique to the individual contract. But those are the -- those are going to be the 2 foundational elements of how we're going to recognize revenue on those components.

Okay. Makes sense. And then if I could ask about -- I think, Kurt, you talked about the 40 MTU of annual capacity by the end of the decade. And I just want to guess dig into how you guys are thinking about proactively building for this demand versus going in response to contracted demand and how you think that shifts over this time frame through the decade as there's a potential to ramp up past that 40 MTU.

Yes. I appreciate your question. I think one of the themes that we've hit on everywhere is that we're not going to build it and hope they will come. I think one of the things that you see is that how effective our commercial engine has been in seeing opportunities, recognizing and converting them. The 40 MTU is our estimate based on what we foresee as the serviceable addressable market that's out there. If the deployments show up, that we're going to be better to respond. What we're seeing right now is that demand signal from the government programs, we're seeing on the back of that, the demand that our customers are getting or commercial applications, say, behind the meter and elsewhere. The 40 is not a commitment from our part. Again, we're going to receive the contracts, we're going to receive the commitment. And it's really our ability to respond to the demand rapidly. Is that month time cycle that we're talking about where we can deploy incremental metric ton capacity to spot the demand. So we're going to use that agility to be responsive to the market. If the demand materializes below 40 or above 40, we're going to be well prepared to respond on to it and capture it.

Our next question comes from Brian Lee with Goldman Sachs.

This is Tyler Bisset on for Brian. I appreciate the additional color for the next milestones for SN-TN and SN-ID. It sounds like you're on track to commence operations in 4Q of this year. So curious, how quickly could these facilities ramp to the 1 MTU capacity? And how are you thinking about the potential timing of expanding the capacity of these 2 facilities towards that total 5 MTU capacity as it relates to your current backlog and pipeline? And then just a quick follow-up on that. It looks like you submitted your engagement plan for your SN-TN facility to transition from a DOE license to an NRC license. So can you provide any color on the potential timeline of achieving that NRC approval for that site?

Yes. Thank you for your question, Tyler. Yes. As you know, the facilities are construction complete. The modules are being commissioned inside the facilities, and we're going through the additional steps of the authorization process at SN-TN and SN-ID. As you recall, we've built the facilities. It's an envelope with all the structure, the utilities to support operation of additional modules. And we've got -- if you come and look on the floor, there's empty space that says, hey, additional module for this process, that process to be able to bring the capacities to their full potential of 2.5 metric tons each per facility. That requires us to trigger procurement of additional modules. And again, given the developments that we're seeing and as we continue to build our backlog, that gives us the signal to go ahead and proceed and do that. That's all within the timelines that we've identified and again, our ability to bring those on in a matter of months if we see the demand. As far as our engagement with NRC, yes, you're correct. We started an engagement with the Nuclear Regulatory Commission early this year. This builds on the memorandum of understanding between NRC and Department of Energy, allowing and facilitating a transition from the Department of Energy to NRC. This is really an option that we are exploring, but we are positioning ourselves well, and we are putting in the work. And again, we're very fortunate to also be beneficiaries of the work that NRC staff are putting in to take some of the early steps -- and it will allow and will facilitate a transition from the DOE to NRC jurisdiction if and when we choose to do so. So we are engaged with the regulatory commission, the regulatory commission, and we have the option of transitioning from the Department of Energy jurisdiction to NRC if and when we choose to do so.

Appreciate all the color. And congrats on that fuel supply agreement with Antares. It sounds like the option for the additional 7 MTUs could be secured by the end of 2027. So curious if you can provide any details on the considerations being done between now and then. Is that just based on the commercial success for Antares? Or are there other considerations? I guess, what could give you confidence that you could secure the entirety of the 8 MTU?

Yes. That's a fantastic question, Tyler. I think we've talked about specifically in our disclosures that I think 2027 is the earliest time frame. We do anticipate that there is going to be a fair amount of that agreement, especially the options that we're going to be able to be in a position for them to exercise through the end of 2030. But I think it is going to be the demand signals that are currently coming from certainly programs like Project Janus. And so we do believe that there -- those -- that's certainly going to be things that we're going to be planning towards, especially with our ramp-up from an expansion perspective. So I would say that, that certainly is something that we're working towards as it relates to how we're focusing in on our overall organization and what we're going to build out in a capacity for.

Our next question comes from Mark Shooter with William Blair.

Congrats again on the supply agreement, the strong backlog conversion. Kevin, thinking through the implications of Project Janus a bit, the minimum target for 20 reactor deployments, we calculate that at about 11 metric tons of TRISO demand. And your supply agreements for just Radiant and Antares, which are half of the Project Janus TRISO users, that gets to around that number. So should we read that Janus targets are just really conservative? Or do you think that -- are your customers seeing near-term demand outside of Janus as well?

Yes, Mark, really a fantastic question. And I think -- I mean, I'll just say, like if you ask my impression, we're just at the start of Janus. The project has launched the first 9 installations, all at Army bases. I would expect additional installations from other branches. So we -- again, we see -- we're just seeing the start of Janus. Janus is going to be -- continue to grow and the demand is going to grow. And it really is coming at a fantastic time in that folks like Radiant, folks like Antares, they're coming on the heel of demonstrations and reactors being shipped and cores and whatnot. So they've proven their technology. Now you have this phenomenal anchor in the Department of Defense award, the government customer that's now saying, all right, folks, let's go ahead and put these systems to work. And on the heel of that, our customers are gaining and realizing a lot of commercial opportunities for behind the meter. So you can see just from these 2 entities, the fuel that they're coming in and again, very prudently securing early on. And we expect them to continue to secure additional fuel for their commercial partnerships, their commercial projects. And again, additional entities that are going to be serving the government and the commercial sector that we're continuing to talk to, and we're well positioned. And again, that's our mission to support and fuel them to make sure all these folks can deliver on the promise of their reactors and energy source.

That's great. We're excited about Project Janus as well. I was just wondering if you could share some of your opinions or your latest views on the competitive landscape for TRISO. Kurt, you mentioned the capital efficiency and how that gives you optionality. So strategically, as you are thinking about the capacity build, how do you balance the 2 poles of either building strictly to demand or building ahead of demand at lower cost to beat competitors to market?

Yes, Mark. I mean I'll tell you, we don't spend much time on our competitors. We wish them well. I'd tell you that -- I'll tell you as where we sit today, we are operating the only industrial-scale commercial TRISO fabrication facility in the country right now. We're under the DOE authorization pathway in Tennessee and Idaho, and we have an NRC licensing pathway through our JV with Framatome. We've delivered a full core to a customer. The other folks in the market are still working on R&D and have aspirations for commercial deployment with a lot of gates ahead of them. So the question is not when someone catches up. The question is who is fueling reactors between now and when someone is supposed to catch up. And right now, that's us. So we're not waiting on the end of the decade. We are executing against the substantial contracts that we have, and we've already started delivering. Because of this position, I mean, you can imagine we continue to benefit from incredible visibility into our customers' demand and also their customers get a government customer. Remember, we built a business where we don't compete with our customers. When we say we are a reactor agnostic, fuel vendor, that really makes us unique. So that partnership and the trust that we have with the reactor customers and the end users of those reactors continues to give us really good visibility. And I think that's what gives us the confidence to be able to see what's coming down the pipeline and really tune our capacity to respond to that.

Our next question comes from Nick Amicucci from Evercore.

Kurt, Kevin, can you hear me?

Yes.

All right. Great. It still has the little mute icon bottom left, so I wasn't sure. I just wanted to kind of piggyback on Mark's question there on Project Janus, too. Just kind of given what we've seen from the release and kind of the customers or the awardees disclosed, I mean, obviously, Radiant seems -- is in the wheelhouse for you guys. But Antares looks like it was a BWXT fabricated fuel. So just if we could have some clarity, like understanding that that's the Mark Zero and kind of the prototype, but then the contract agreement announced this morning and as we think about the deployments in Project Janus, will that be -- will the actual deployments be Mark 1 or -- and will that be on leveraging your TRISO? Or just if we could contextualize that, that would be great.

Yes. No, Nick, I'm going to be very careful not to speak on behalf of our customers. Our customers are engaging in technology development, reactor deployments, and their technologies are continuing to evolve as it's been deployed rapidly. The -- if you recall our business, the customer comes to us, they give us a fuel specification. And again, giving our incredibly flexible and robust manufacturing platform, we can manufacture the fuel for -- to the customers' requirements and spec. Now this is -- you saw the announcement this morning, we're thrilled and very proud to be able to support Antares as well as Radiant and ultimately, the Project Janus, the customer, in this case, Antares, they've provided their fuel specification to us. We've done a lot of work with them in the past. They have confidence in our ability, and they've seen them be manufacturing fuel to their requirements. And frankly speaking, again, they see the incredible cost efficiencies that they get to realize by working with Standard Nuclear. So we are -- we have the contract from the firm commitment. We are, again, able to support them, Radiant, and again, others in this space that need TRISO fuel. They need it on time, they need it to meet their requirements, and they need it to be cost efficient.

Got it. That makes sense. And Kevin, if I could, just as we kind of think about the refuelings, so obviously, like with Kaleidos, every 5 years. So you have about 3 refuelings. Just how do we think about the contract structure associated with those? Are those refuelings kind of contracted upfront with -- for each core? Or are those negotiated separately at the time of refueling just as we think about kind of the pricing dynamics and potential out years?

Yes. Thanks, Nick. We can't get into the specifics of the actual contract as we have not disclosed that, so that there is some business sensitivity surrounding that. But what I would tell you is that in these initial days, specifically with the bases that Project Janus is earmarking and is leaning on companies like Radiant and Antares to basically supply for a microreactor and where the vehicle for the fueling, we see in the next 5 years that many of them will be the first reactors that are being deployed. And ultimately, we're developing and solidifying a long-term contract with these companies to fuel the next reactors that the new reactors as well as refuel the existing reactors. So I think from a timing perspective, we see that as going to be being completed over the next 5 to 10 years, depending on the deployment of the actual underlying units. So couldn't exactly get into specifics as to when the refuel cycle would be because that's going to be contingent upon when the first delivery is going to be of the reactor when it's into commerciality at the individual basis.

Our next question comes from Stephen Gengaro with Stifel.

Two questions for me. The first, the order flow and the robust backlog conversion that you've highlighted on the call, just at a high level, is that supportive of sort of the expectations you've already laid out sort of during the IPO roadshows? Is it better? Is it worse? Can you just give us any context and what the backlog conversion means relative to sort of the expectations that have been out there.

I think it's fairly consistent with what we communicated as a part of as we went through that process and we went on roadshows and explained the theory of the case for Standard, it was really mainly focused on ensuring that we solidified customers from a fuel development perspective, that we got in sticky with them by establishing their fuel specs and being fuel agnostic and having a very capital-efficient model. And then moving that from a field development arrangement for really that to be a qualified pipeline and seeing that matriculate through the funnel that we see it go into purchase options under executed agreements as well as funded backlog. So when you look at how we've evolved since Q1, we've seen our total contract backlog go from $91 million to June 30 to be $241.5 million. And then as of today, $576.9 million. So that is certainly exactly as we expected. I think it's showing and especially the Project Janus and the United States federal government and Department were anchoring this demand is very promising, but it's exactly what we anticipated, and we're very pleased as we looked at what the total addressable market was over the next 4 years that we've already made a sizable dent in that to the tune of about 40% through contracts through establishing conversations, negotiations with additional customers that we anticipate to continue to mature in the next 6 to 12 months. So I think this is exactly what we talked about in the roadshow, and I think this will be a continued catalyst that we see in the coming quarters, and we'll continue to report on how we're able to convert our conversations, negotiations with our key customers and put them into really consummated agreements that will support us as we build out our infrastructure to deliver to those customers.

And then just a follow-up. And I think Kurt had mentioned at the beginning of the call, the yield and the gross margin. And I understand the gross margin is going to jump around just based on revenue mix, et cetera. But is there a way we should think about kind of where that yield should go as you ramp up and kind of what that means for the gross margin profile?

Yes, we are working day in, day out to increase our yield. As we said, that's a very, very important lever that directly affects our margin. Higher yield, higher margins, simple as that. And that's -- as a part of our serial manufacturing process, we told you we've got some steps with some of the critical steps like where we coat uranium with the coating layers of TRISO, we already have exceptional yields there. So there are other steps that we're focused on. We're doing the engineering and technology development to push those yields higher, too, and that's going to directly result in higher margins. But remember, we are -- we want to be an enabler in this market, right? So our story has been that we're going to continue offering lower and lower prices to our customers over the years because when we realize these savings, we're going to pass it on to our customers. Our intent has been to maintain these healthy margins that we have. And as we increase higher yield, higher operational efficiency, cost savings due to scale, we're going to pass all that to our customers because we want their business to proliferate and expand into -- starting with the government, commercial behind the meter, and ultimately, grid and a variety of other applications.

Our last question comes from Chris Dendrinos with RBC.

Yes. Great. Maybe I wanted to dive in a bit into these the R&D efforts here and maybe specifically the shipping transportation opportunity. I think you mentioned you're progressing through Part 71. I guess how do you think about the timing of getting that, I guess, approval in place? And then are there other gating factors as far as the industry goes to being able to start transportation?

Yes, yes, fantastic question. And transportation is a key part, delivering the fuel, making and then packaging and bringing it to a customer. There are packages available today, but frankly speaking, they are inefficient in the amount of material at the enrichments that our customers use, that's the HALEU material that they can transport. We are pursuing development licenses what we consider highly efficient packages or transportation of this type of fuel to our customers. We are doing that under Part 71 with Nuclear Regulatory Commission. We've started the engagement with NRC this year, and we expect to own the resulting licenses for these packages. A lot of work right now is on the development and progression of the SAR, safety analysis report. And again, we've got target dates to get in front of the NRC staff and do all the initial testing that they require under Part 71. Ultimately, we expect these packages, these 2 packages can be available in the 2028 and 2029 time frame. In the meantime, there is less efficient packages that are available like we've used to deliver fuel to our existing customers. But -- we want to make this, again, a lot more seamless and a lot more cost effective for the plant to receive their fuel.

Got it. And maybe just separately, as I look at the backlog in the pipe today, I guess, maybe the backlog, it's obviously heavily skewed towards companies supporting government programs, Janus Program, [indiscernible], but I think you mentioned that Radiant and Equinix have an agreement as well. And so what is the kind of progression here? Or I guess as you talk to these customers, how are they thinking about bridging from a DOE license to an NRC license to being able to start commercial deployments? And how do you guys factor that into, I guess, the cadence of the build out.

Yes. I mean, again, we're seeing everything we wanted to see. Aside from the government anchored customer, it's we're delighted to see that these -- the customers that we're talking about today have commercial customers. There's a lot of companies we're not talking about right now, but we're not naming them, that we're discussing it and they're going after purely commercial projects. So the commercial projects are real. Now just like we talked about our licensing platform, where -- we have facilities on the Department of Energy jurisdiction. We have facilities under NRC. And we have the ability, and we've started the process to give ourselves the optionality to transition some facilities if you choose to from the DOE to NRC authorization. Those reactor companies benefit from the same exact memorandum of understanding and agreement between the Department of Energy and NRC. So they're enjoying also the improvements and the efficiencies that have been realized in the last 1.5 years or so in the regulatory process. And so I think really, those commercial deployment is going to be gated by commercial factors and the ability for the seat developers to deliver those reactors to those commercial sites. And will be on standby to support them and make sure when the reactor gets its nod to turn on, it has the fuel that it needs to run on.

That concludes our question-and-answer session. Thank you for joining the Standard Nuclear Second Quarter 2026 Earnings Call. A replay will be available on the Investor Relations section of the company's website. You may now disconnect.