- Received Nuclear Regulatory Commission (NRC) authorization to
produce High-Assay Low-Enriched Uranium (HALEU)
- Expect to complete Phase I HALEU production by the end of
2023
- Signed Memorandum of Understanding with TerraPower to
accelerate HALEU production
- Net income of $12.7 million on
$98.4 million in revenue, compared to
net income of $37.4 million on
$99.1 million in revenue in Q2
2022
- Consolidated cash balance of $212.5
million as of June 30,
2023
BETHESDA, Md., Aug. 3, 2023
/PRNewswire/ -- Centrus Energy Corp. (NYSE American: LEU)
("Centrus" or the "Company") today reported second quarter 2023
results. The Company reported net income of $12.7 million for the three months ended
June 30, 2023, compared to net income
of $37.4 million for the three months
ended June 30, 2022. The net income
per common share in the three months ended June 30, 2023 was $0.84 (basic) and $0.83 (diluted).
"This quarter Centrus achieved a major milestone, receiving NRC
authorization to begin first-of-a-kind HALEU production." said
Centrus President and CEO Daniel B.
Poneman. "We are on track to complete our initial HALEU
production milestone by the end of the year. This will mark the
first new US-technology, US-owned enrichment facility to launch
operations since 1954. Meanwhile, bipartisan legislation to make a
billion-dollar investment in building new U.S. uranium enrichment
capacity is advancing in Congress. Momentum is building behind the
consensus that it is high time to revitalize America's nuclear
energy supply chain. Centrus is working hard to answer that
call."
Financial Results
Centrus generated total revenue of $98.4
million and $99.1 million in
the three months ended June 30, 2023
and 2022, respectively, a decrease of $0.7
million.
Revenue from the LEU segment was $87.6
million and $85.5 million in
the three months ended June 30, 2023
and 2022, respectively, an increase of $2.1
million. The increase was primarily due to the $39.5 million increase in uranium revenue for the
three months ended June 30, 2023,
partially offset by a $37.4 million
decrease in SWU revenue. The decrease in SWU revenue was due to a
decrease in the average price of SWU sold, partially offset by an
increase in the volume of SWU sold.
Revenue from the Technical Solutions segment was $10.8 million and $13.6
million in the three months ended June 30, 2023 and 2022, respectively, a decrease
of $2.8 million. The decrease was
primarily related to the transition from the HALEU Demonstration
Contract to the HALEU Operation Contract in late 2022. In the three
months ended June 30, 2023, the HALEU
Operation Contract generated $10.4
million in revenue, whereas the HALEU Demonstration Contract
generated $12.1 million in revenue
for the same period in 2022.
Cost of sales for the LEU segment was $60.8 million and $26.1
million in the three months ended June 30, 2023 and 2022, respectively, an increase
of $34.7 million. The increase was
primarily due to a $34.6 million
increase in uranium costs. SWU costs remained constant at
$26.2 million, reflecting a decrease
in the average unit cost of SWU sold, offset by an increase in the
volume of SWU sold.
Cost of sales for the Technical Solutions segment was
$9.6 million and $12.1 million in the three months ended
June 30, 2023 and 2022, respectively,
a decrease of $2.5 million. The
decrease was related to a reduction in costs of approximately
$10.0 million associated with the
HALEU Demonstration Contract signed in 2019 and $1.7 million associated with other contracts,
partially offset by $9.1 million of
costs incurred for the HALEU Operation Contract signed in 2022.
Gross profit for the Company was $28.0
million and $60.9 million in
the three months ended June 30, 2023
and 2022, respectively. The decrease for the three months ended
June 30, 2023 was due primarily to
the specific contract and pricing mix of SWU contracts and the
timing of their deliveries quarter over quarter. This was reflected
by a decrease in the average profit margin per SWU, partially
offset by an increase in the volume of SWU sold and an increase in
uranium gross profit.
HALEU Update
In June, Centrus announced that it had completed its NRC
operational readiness review for HALEU production and received NRC
approval to possess uranium at the Piketon, Ohio, site and to introduce uranium
into the cascade of centrifuges Centrus has constructed. This is a
critical milestone in advancing toward first-of-a-kind production
of HALEU and means that Centrus remains on track to begin
production by the end of 2023. This will be the first new
U.S.-owned, U.S.-technology enrichment plan to begin production in
70 years.
About Centrus Energy Corp.
Centrus Energy is a trusted supplier of nuclear fuel and
services for the nuclear power industry. Centrus provides value to
its utility customers through the reliability and diversity of its
supply sources – helping them meet the growing need for clean,
affordable, carbon-free electricity. Since 1998, the Company has
provided its utility customers with more than 1,750 reactor years
of fuel, which is equivalent to 7 billion tons of coal. With
world-class technical and engineering capabilities, Centrus is also
advancing the next generation of centrifuge technologies so that
America can restore its domestic uranium enrichment capability in
the future. Find out more at centrusenergy.com.
Forward-Looking Statements:
This news release contains "forward-looking statements" within
the meaning of Section 21E of the Securities Exchange Act of 1934,
as amended, and the Private Securities Litigation Reform Act of
1995. In this context, forward-looking statements mean statements
related to future events, which may impact our expected future
business and financial performance, and often contain words such as
"expects", "anticipates", "intends", "plans", "believes", "will",
"should", "could", "would" or "may" and other words of similar
meaning. These forward-looking statements are based on information
available to us as of the date of this news release and represent
management's current views and assumptions. Forward-looking
statements are not guarantees of future performance, events or
results and involve known and unknown risks, uncertainties and
other factors, which may be beyond our control.
For Centrus Energy Corp., particular risks and uncertainties
that could cause our actual future results to differ materially
from those expressed in our forward-looking statements include but
are not limited to the following which are, and will be,
exacerbated by any worsening of the global business and economic
environment as a result: risks related to the war in Ukraine and geopolitical conflicts and the
imposition of sanctions or other measures by the U.S. or foreign
governments, organizations (including the United Nations, the
European Union or other international organizations), or entities
(including private entities or persons), that could directly or
indirectly impact our ability to obtain, deliver, or sell low
enriched uranium ("LEU") or the Separative Work Units ("SWU") and
natural uranium hexafluoride components of LEU under our existing
supply contract with the Russian government-owned entity TENEX,
Joint-Stock Company ("TENEX") or make related payments or
deliveries of natural uranium; risks related to the refusal of
TENEX to deliver LEU to us if, among other reasons, TENEX is unable
to receive payments, or to receive the return of natural uranium
hexafluoride, as a result of any government, international or
corporate actions or directions or other reasons; risks related to
whether or when government funding or demand for high-assay
low-enriched uranium ("HALEU") for government or commercial uses
will materialize and at what level; risks and uncertainties
regarding funding for continuation and deployment of the American
Centrifuge technology; risks related to (i) our ability to perform
and absorb costs under our agreement with the U.S. Department of
Energy ("DOE") to deploy and operate a cascade of centrifuges to
demonstrate production of HALEU for advanced reactors (the "HALEU
Operation Contract"), (ii) our ability to obtain contracts and
funding to be able to continue operations and (iii) our ability to
obtain and/or perform under other agreements; risks that (i) we may
not obtain the full benefit of the HALEU Operation Contract and may
not be able or allowed to operate the HALEU enrichment facility to
produce HALEU after the completion of the HALEU Operation Contract
or (ii) the HALEU enrichment facility may not be available to us as
a future source of supply; risks related to our dependence on
others, such as TENEX, under our commercial supply agreement with
TENEX and a subsidiary of Orano Cycle ("Orano"), under deliveries
under our long-term commercial supply agreement with Orano and
other suppliers (including, but not limited to, transporters) who
provide us the goods and services we need to conduct our business;
risks related to natural and other disasters, including the
continued impact of the March 2011
earthquake and tsunami in Japan on
the nuclear industry and on our business, results of operations and
prospects; risks related to financial difficulties experienced by
customers or suppliers, including possible bankruptcies,
insolvencies, or any other situation, event or occurrence that
affect the ability of others to pay for our products or services in
a timely manner or at all; risks related to pandemics, endemics,
and other health crises; risks related to the impact and potential
extended duration of a supply/demand imbalance in the market for
LEU; risks related to our ability to sell or deliver the LEU we
procure pursuant to our purchase obligations under our supply
agreements and the impacts of sanctions or limitations on imports
of such LEU, including those imposed under the 1992 Russian
Suspension Agreement as amended, international trade legislation
and other international trade restrictions; risks related to
existing or new trade barriers and to contract terms that limit our
ability to procure LEU for, or deliver LEU to customers; risks
related to pricing trends and demand in the uranium and enrichment
markets and their impact on our profitability; risks related to the
movement and timing of customer orders; risks related to our
reliance on third-party suppliers and service providers to provide
essential products and services to us; risks related to the fact
that we face significant competition from major LEU producers who
may be less cost sensitive or are wholly or partially government
owned; risks that our ability to compete in foreign markets may be
limited for various reasons; risks related to the fact that our
revenue is largely dependent on our largest customers; risks
related to our sales order book, including uncertainty concerning
customer actions under current contracts and in future contracting
due to market conditions, global events or other factors including
our lack of current production capability; risks related to
uncertainty regarding our ability to commercially deploy a
competitive enrichment technology; risks related to the potential
for demobilization or termination of our American Centrifuge work;
risks that we will not be able to timely complete the work that we
are obligated to perform; risks related to the government's
inability to satisfy its obligations under the HALEU Operation
Contract; risks related to our ability to perform fixed-price and
cost-share contracts such as the HALEU Operation Contract,
including the risk that costs that we must bear could be higher
than expected; risks related to our significant long-term
liabilities, including material unfunded defined benefit pension
plan obligations and postretirement health and life benefit
obligations; risks related to our 8.25% Notes maturing in
February 2027; risks of revenue and
operating results fluctuating significantly from quarter to
quarter, and in some cases, year to year; risks related to the
impact of financial market conditions on our business, liquidity,
prospects, pension assets and insurance facilities; risks related
to the Company's capital concentration; risks related to the value
of our intangible assets related to the sales order book and
customer relationships; risks related to the limited trading
markets in our securities; risks related to decisions made by our
Class B stockholders regarding their investment in the Company
based upon factors that are unrelated to the Company's performance;
risks that a small number of holders of our Class A Common Stock
(whose interests may not be aligned with other holders of our Class
A Common Stock), may exert significant influence over the direction
of the Company and may be motivated by interests that are not
aligned with the Company's other Class A stockholders; risks
related to (i) the use of our net operating losses ("NOLs")
carryforwards and net unrealized built-in losses ("NUBILs") to
offset future taxable income and the use of the Rights Agreement,
dated as of April 6, 2016, to prevent
an "ownership change" as defined in Section 382 of the Internal
Revenue Code of 1986, as amended (the "Code") and (ii) our ability
to generate taxable income to utilize all or a portion of the NOLs
prior to the expiration thereof and NUBILs; failures or security
breaches of our information technology systems; risks related to
our ability to attract and retain key personnel; risks related to
actions, including reviews, that may be taken by the U.S.
government, the Russian government, or other governments that could
affect our ability to perform under our contractual obligations or
the ability of our sources of supply to perform under their
contractual obligations to us; risks related to our ability to
perform and receive timely payment under our agreements with the
DOE or other government agencies, including risks and uncertainties
related to the ongoing funding by the government and potential
audits; risks related to changes or termination of our agreements
with the U.S. government or other counterparties, or the exercise
of contract remedies by such counterparties; risks related to the
competitive environment for our products and services; risks
related to changes in the nuclear energy industry; risks related to
the competitive bidding process associated with obtaining
contracts, including government contracts; risks that we will be
unable to obtain new business opportunities or achieve market
acceptance of our products and services or that products or
services provided by others will render our products or services
obsolete or noncompetitive; risks related to potential strategic
transactions that could be difficult to implement, that could
disrupt our business or that could change our business profile
significantly; risks related to the outcome of legal proceedings
and other contingencies (including lawsuits and government
investigations or audits); risks related to the impact of
government regulation and policies including by the DOE and the
U.S. Nuclear Regulatory Commission; risks of accidents during the
transportation, handling, or processing of toxic hazardous or
radioactive material that may pose a health risk to humans or
animals, cause property or environmental damage, or result in
precautionary evacuations, and lead to claims against the Company;
risks associated with claims and litigation arising from past
activities at sites we currently operate or past activities at
sites that we no longer operate, including the Paducah, Kentucky, and Portsmouth, Ohio, gaseous diffusion plants;
and other risks and uncertainties discussed in this news release
and in our filings with the SEC.
These factors may not constitute all factors that could cause
actual results to differ from those discussed in any
forward-looking statement. Accordingly, forward-looking statements
should not be relied upon as a predictor of actual results. Readers
are urged to carefully review and consider the various disclosures
made in this news release and in our filings with the SEC,
including our Annual Report on Form 10-K for the year ended
December 31, 2022, under Part II, Item 1A - "Risk Factors" in
our Quarterly Report on Form 10-Q for the quarter ended
June 30, 2023, and in our filings with the SEC that attempt to
advise interested parties of the risks and factors that may affect
our business. We do not undertake to update our forward-looking
statements to reflect events or circumstances that may arise after
the date of this news release, except as required by law.
Contacts:
Investors: Dan Leistikow at
LeistikowD@centrusenergy.com
Media: Lindsey Geisler at
GeislerLR@centrusenergy.com
CENTRUS ENERGY
CORP
CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(Unaudited; in
millions, except share and per share data)
|
|
|
Three Months
Ended
June
30,
|
|
Six Months
Ended
June
30,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Revenue:
|
|
|
|
|
|
|
|
Separative work
units
|
$
48.1
|
|
$
85.5
|
|
$
106.9
|
|
$
98.3
|
Uranium
|
39.5
|
|
—
|
|
39.5
|
|
4.9
|
Technical
solutions
|
10.8
|
|
13.6
|
|
18.9
|
|
31.2
|
Total
revenue
|
98.4
|
|
99.1
|
|
165.3
|
|
134.4
|
Cost of
Sales:
|
|
|
|
|
|
|
|
Separative work units
and uranium
|
60.8
|
|
26.1
|
|
95.7
|
|
40.9
|
Technical
solutions
|
9.6
|
|
12.1
|
|
18.6
|
|
26.3
|
Total cost of
sales
|
70.4
|
|
38.2
|
|
114.3
|
|
67.2
|
Gross profit
|
28.0
|
|
60.9
|
|
51.0
|
|
67.2
|
Advanced technology
costs
|
4.1
|
|
3.5
|
|
7.5
|
|
4.6
|
Selling, general and
administrative
|
7.8
|
|
8.3
|
|
18.1
|
|
15.8
|
Amortization of
intangible assets
|
1.7
|
|
4.0
|
|
2.8
|
|
5.1
|
Special charges for
workforce reductions
|
—
|
|
0.5
|
|
(0.1)
|
|
0.5
|
Operating
income
|
14.4
|
|
44.6
|
|
22.7
|
|
41.2
|
Nonoperating
components of net periodic benefit loss (income)
|
0.4
|
|
(3.4)
|
|
0.7
|
|
(6.7)
|
Interest
expense
|
0.2
|
|
—
|
|
0.5
|
|
—
|
Investment
income
|
(2.2)
|
|
(0.2)
|
|
(4.1)
|
|
(0.2)
|
Income before income
taxes
|
16.0
|
|
48.2
|
|
25.6
|
|
48.1
|
Income tax
expense
|
3.3
|
|
10.8
|
|
5.7
|
|
11.1
|
Net income and
comprehensive income
|
12.7
|
|
37.4
|
|
19.9
|
|
37.0
|
|
|
|
|
|
|
|
|
Net income per
share:
|
|
|
|
|
|
|
|
Basic
|
$
0.84
|
|
$
2.56
|
|
$
1.33
|
|
$
2.54
|
Diluted
|
$
0.83
|
|
$
2.51
|
|
$
1.30
|
|
$
2.48
|
Average number of
common shares outstanding (in thousands):
|
|
|
|
|
|
|
|
Basic
|
15,161
|
|
14,587
|
|
15,002
|
|
14,567
|
Diluted
|
15,369
|
|
14,876
|
|
15,306
|
|
14,903
|
CENTRUS ENERGY
CORP
CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Unaudited; in
millions)
|
|
|
Six Months
Ended
June
30,
|
|
2023
|
|
2022
|
OPERATING
|
|
|
|
Net income
|
$
19.9
|
|
$
37.0
|
Adjustments to
reconcile net income to cash used in operating
activities:
|
|
|
|
Depreciation and
amortization
|
3.2
|
|
5.4
|
Accrued loss on
long-term contract
|
(11.3)
|
|
(0.5)
|
Deferred tax
assets
|
5.3
|
|
10.6
|
Equity related
compensation
|
1.6
|
|
1.4
|
Revaluation of
inventory borrowing
|
2.9
|
|
5.5
|
Changes in operating
assets and liabilities:
|
|
|
|
Accounts
receivable
|
29.2
|
|
5.1
|
Inventories
|
(54.8)
|
|
(10.7)
|
Inventories owed to
customers and suppliers
|
12.0
|
|
(8.1)
|
Other current
assets
|
15.2
|
|
(15.1)
|
Accounts payable and
other liabilities
|
(2.1)
|
|
(8.0)
|
Payables under
inventory purchase agreements
|
(9.8)
|
|
(37.9)
|
Deferred revenue and
advances from customers, net of deferred costs
|
5.3
|
|
(30.6)
|
Pension and
postretirement benefit liabilities
|
(1.2)
|
|
(10.0)
|
Other, net
|
(0.2)
|
|
(0.3)
|
Cash provided by (used
in) operating activities
|
15.2
|
|
(56.2)
|
|
|
|
|
INVESTING
|
|
|
|
Capital
expenditures
|
(0.7)
|
|
(0.5)
|
Cash used in investing
activities
|
(0.7)
|
|
(0.5)
|
|
|
|
|
FINANCING
|
|
|
|
Proceeds from the
issuance of common stock, net
|
23.2
|
|
—
|
Exercise of stock
options
|
—
|
|
0.2
|
Withholding of shares
to fund grantee tax obligations under stock-based compensation
plan
|
(1.9)
|
|
—
|
Payment of interest
classified as debt
|
(3.1)
|
|
(3.1)
|
Other
|
(0.1)
|
|
(0.3)
|
Cash provided by (used
in) financing activities
|
18.1
|
|
(3.2)
|
|
|
|
|
Increase (decrease) in
cash, cash equivalents and restricted cash
|
32.6
|
|
(59.9)
|
Cash, cash equivalents
and restricted cash, beginning of period
|
212.4
|
|
196.8
|
Cash, cash equivalents
and restricted cash, end of period
|
$
245.0
|
|
$
136.9
|
|
|
|
|
Non-cash
activities:
|
|
|
|
Reclassification of
stock-based compensation liability to equity
|
$
—
|
|
$
10.6
|
Adjustment of right to
use lease assets from lease modification
|
$
4.2
|
|
$
—
|
Property, plant and
equipment included in accounts payable and accrued
liabilities
|
$
—
|
|
$
0.2
|
Equity issuance costs
included in accounts payable and accrued liabilities
|
$
0.1
|
|
$
—
|
Shares withheld for
employee taxes
|
$
1.1
|
|
$
1.9
|
CENTRUS ENERGY
CORP
CONSOLIDATED BALANCE
SHEETS
(Unaudited; in
millions, except share and per share data)
|
|
|
June
30,
2023
|
|
December
31,
2022
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
212.5
|
|
$
179.9
|
Accounts
receivable
|
9.0
|
|
38.1
|
Inventories
|
288.6
|
|
209.2
|
Deferred costs
associated with deferred revenue
|
137.0
|
|
135.7
|
Other current
assets
|
9.0
|
|
24.2
|
Total current
assets
|
656.1
|
|
587.1
|
Property, plant and
equipment, net of accumulated depreciation of $3.9 million as of
June 30, 2023
and $3.6 million as of December 31,
2022
|
5.7
|
|
5.5
|
Deposits for financial
assurance
|
32.3
|
|
32.3
|
Intangible assets,
net
|
42.9
|
|
45.7
|
Deferred tax
assets
|
21.5
|
|
26.8
|
Other long-term
assets
|
3.5
|
|
8.1
|
Total assets
|
$
762.0
|
|
$
705.5
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' DEFICIT
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts payable and
accrued liabilities
|
$
50.9
|
|
$
65.5
|
Payables under
inventory purchase agreements
|
33.8
|
|
43.6
|
Inventories owed to
customers and suppliers
|
72.8
|
|
60.8
|
Deferred revenue and
advances from customers
|
295.3
|
|
273.2
|
Current
debt
|
6.1
|
|
6.1
|
Total current
liabilities
|
458.9
|
|
449.2
|
Long-term
debt
|
92.6
|
|
95.7
|
Postretirement health
and life benefit obligations
|
83.8
|
|
84.5
|
Pension benefit
liabilities
|
43.3
|
|
43.6
|
Advances from
customers
|
32.8
|
|
46.2
|
Long-term inventory
loans
|
74.1
|
|
48.7
|
Other long-term
liabilities
|
9.0
|
|
11.7
|
Total
liabilities
|
794.5
|
|
779.6
|
|
|
|
|
Stockholders'
deficit:
|
|
|
|
Preferred stock, par
value $1.00 per share, 20,000,000 shares authorized
|
|
|
|
Series A Participating
Cumulative Preferred Stock, none issued
|
—
|
|
—
|
Series B Senior
Preferred Stock, none issued
|
—
|
|
—
|
Class A Common Stock,
par value $0.10 per share, 70,000,000 shares authorized,
14,806,438
and 13,919,646 shares issued and outstanding
as of June 30, 2023 and December 31, 2022,
respectively
|
1.5
|
|
1.4
|
Class B Common Stock,
par value $0.10 per share, 30,000,000 shares authorized, 719,200
shares
issued and outstanding as of June 30, 2023 and
December 31, 2022
|
0.1
|
|
0.1
|
Excess of capital over
par value
|
179.8
|
|
158.1
|
Accumulated
deficit
|
(214.0)
|
|
(233.9)
|
Accumulated other
comprehensive income
|
0.1
|
|
0.2
|
Total stockholders'
deficit
|
(32.5)
|
|
(74.1)
|
Total liabilities and
stockholders' deficit
|
$
762.0
|
|
$
705.5
|
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SOURCE Centrus Energy Corp.