Centrus Energy (LEU) - 2024 Q4 - Annual Report

Filing Information General Information This section details Centrus Energy Corp.'s SEC filing general information, including incorporation, identification, address, NYSE American registered securities, and accelerated filer status Securities Registered on NYSE American | Title of each class | Trading Symbol | Name of each exchange on which registered | | :------------------ | :------------- | :---------------------------------------- | | Class A Common Stock, par value $0.10 per share | LEU | NYSE American | Filer Status | Large accelerated filer | ☐ | Smaller reporting company | ☐ | | :------------------ | :-- | :------------------------ | :-- | | Accelerated filer | ☒ | Emerging growth company | ☐ | | Non-accelerated filer | ☐ | | | - The aggregate market value of Common Stock held by non-affiliates as of June 30, 2024, was $614.2 million[3] Documents Incorporated by Reference Portions of the 2025 annual meeting proxy statement will be incorporated by reference into Part III of this Annual Report on Form 10-K - Portions of the definitive proxy statement for the 2025 annual meeting of shareholders will be incorporated by reference into Part III of this Annual Report on Form 10-K[5] TABLE OF CONTENTS Glossary of Certain Terms and Abbreviations This section defines key company entities, financial instruments, and industry-specific terms and abbreviations used throughout the report - The glossary defines key entities such as American Centrifuge Operating LLC (ACO), Centrus Energy Corp. (Centrus), and United States Enrichment Corporation (Enrichment Corp.)[9] - Important financial terms include '2.25% Convertible Notes' maturing November 2030 and '8.25% Notes' maturing February 2027[9] - Industry-specific terms like High Assay Low-Enriched Uranium (HALEU), Low-Enriched Uranium (LEU), and Separative Work Unit (SWU) are defined, along with various DOE contracts such as HALEU Production Contract and LEU Production Contract[10][11] FORWARD-LOOKING STATEMENTS CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING INFORMATION This section cautions that forward-looking statements in the Annual Report are not guarantees of future performance and involve inherent risks and uncertainties - Forward-looking statements are based on information available as of the report date and represent management's current views and assumptions[13] - These statements are not guarantees of future performance and involve known and unknown risks, uncertainties, and other factors beyond the company's control[13] - Readers are cautioned not to place undue reliance on these statements, and the Company does not undertake to publicly release revisions unless required by law[14] Specific Risks and Uncertainties This section outlines specific risks and uncertainties, including geopolitical, economic, operational, financial, and legal factors, that could materially impact Centrus's future results Risks Related to the War in Ukraine Risks from the war in Ukraine include geopolitical conflicts, sanctions, and bans impacting Centrus's ability to procure, deliver, or sell LEU from Russia - Geopolitical conflicts and sanctions (e.g., Import Ban Act, Russian Decree) could impact the ability to obtain, deliver, transport, or sell LEU or its components from Russia[16] - There is a risk of inability to secure additional U.S. government waivers from the Import Ban Act to continue importing Russian LEU[16] Risks Related to Economic and Industry Factors Economic and industry risks include TENEX's LEU delivery issues, supplier dependence, sales challenges, Chinese imports, and HALEU/LEU funding uncertainties - Risks include TENEX's refusal or inability to deliver LEU due to sanctions, payment issues, or export license problems[18] - Dependence on suppliers like TENEX and Orano, and the ability to sell procured LEU amidst import limitations (e.g., Import Ban Act, Russian Decree), pose significant risks[18] - Uncertainty exists regarding government funding and demand for HALEU or LEU for both government and commercial uses[18] Risks Related to Operational Factors Operational risks include intense competition, foreign market limitations, customer reliance, backlog uncertainties, and challenges in securing HALEU/LEU production funding and capacity expansion - Significant competition from major LEU producers, often government-owned and less cost-sensitive, poses a risk[20] - Revenue is largely dependent on a few major customers, and backlog is uncertain due to market conditions and lack of current production capability[20] - Risks include DOE not issuing task orders or providing adequate funding for HALEU/LEU Production Contracts, and the company's inability to secure financing or increase capacity in a timely manner[20] Risks Related to Financial Factors Financial risks include significant long-term liabilities, revenue fluctuations, market impact on liquidity, capital concentration, intangible asset valuation, and NOL carryforward utilization - Significant long-term liabilities, including 2.25% Convertible Notes (maturing 2030) and 8.25% Notes (maturing 2027), pose financial risks[22] - Revenue and operating results may fluctuate significantly quarter-to-quarter and year-to-year[22] - Risks related to the utilization of NOL carryforwards and Net Unrealized Built-in Losses (NUBILs) to offset future taxable income, and the effectiveness of the Rights Agreement to prevent an 'ownership change' under Section 382 of the Code[22] Risks Related to Legal and Compliance Factors Centrus faces legal and compliance risks from high regulation, policy changes, hazardous material liabilities, and foreign ownership restrictions that could impact share value - Actions by U.S., Russian, or other governments, including reviews or audits, could affect contractual obligations or supply sources[25] - Risks related to the impact of, or changes to, government regulation and policies or interpretation of laws, including by the SEC, DOE, DOC, and NRC[25] - Risks of accidents during transportation, handling, or processing of toxic, hazardous, or radioactive material, potentially leading to health risks, property damage, and claims against the Company[25] General Risk Factors General risks include cybersecurity incidents, challenges in retaining skilled personnel, and potential DOE agreement terminations or funding disruptions impacting contracts - Failures to protect classified or other sensitive information, or cybersecurity incidents, could result in significant liability, reputational damage, or termination of access to classified information[196][198] - The inability to attract and retain key personnel with unique skills and U.S. security clearances could adversely impact business operations and strategic planning[200] - Risks related to the DOE seeking to terminate or exercise remedies under agreements (e.g., 2002 DOE-USEC Agreement) or requiring adverse modifications, potentially impacting access to centrifuge technology or requiring reimbursements[202][203] PART I Item 1. Business Centrus Energy Corp. supplies nuclear fuel components and enrichment services through LEU and Technical Solutions segments, focusing on domestic HALEU production and managing supply chain risks Overview Centrus operates LEU and Technical Solutions segments, with SWU spot price reaching $195 per SWU, expanding HALEU production, exploring LEU enrichment, and securing DOE contracts and a $62.4 million clean energy tax credit - Centrus operates two business segments: LEU (supplies nuclear fuel components to commercial customers) and Technical Solutions (provides advanced uranium enrichment and technical services to government and private sector customers)[28] - The company began enrichment operations at its HALEU production facility in Piketon, Ohio, on October 11, 2023, and made its first delivery of HALEU to the DOE on November 7, 2023, completing Phase 1 of its contract[35] - Centrus was granted a $62.4 million clean energy manufacturing and recycling project credit allocation by the IRS on January 10, 2025, for re-equipping its Oak Ridge facility to manufacture centrifuge parts[44] Low Enriched Uranium (LEU) Segment The LEU segment, 79% of 2024 revenue, supplies SWU and uranium, holds a $2.8 billion backlog, but faces significant U.S. and Russian trade restrictions impacting TENEX and Orano supply - LEU segment accounted for approximately 79% of total revenue for the year ended December 31, 2024[49] LEU Segment Backlog (approx. in billions) | As of December 31, | 2024 (approx.) | 2023 (approx.) | | :----------------- | :------------- | :------------- | | LEU Backlog | $2.8 billion | $1.0 billion | - The Import Ban Act (enacted May 13, 2024) bans imports of LEU from Russia into the U.S. starting August 11, 2024, subject to DOE waivers. Centrus received waivers for 2024 and 2025 deliveries to U.S. customers and 2025 foreign customers, but 2026-2027 decisions are deferred[62] - The Russian Decree (passed November 14, 2024) rescinded TENEX's general license to export LEU to the U.S. through December 31, 2025, requiring specific export licenses for each shipment[64] - Centrus has a long-term supply agreement with Orano for SWU contained in LEU, with deliveries extending through 2030, offering flexibility in purchase volumes and market-related pricing[69] Technical Solutions Segment The Technical Solutions segment focuses on HALEU production for the U.S. government, completed Phase 1, transitioned to Phase 2 for 900 kilograms HALEU UF6 annually, holds a $0.9 billion backlog, and seeks new DOE contracts - The Technical Solutions segment is deploying uranium enrichment capacity for HALEU production and other advanced nuclear fuel capabilities under a contract with the DOE[32] - Centrus completed Phase 1 of the HALEU Operation Contract in November 2023 by demonstrating HALEU production and transitioned to Phase 2, which includes continued operations and maintenance for a full year at an annual production rate of 900 kilograms of HALEU UF6[76][77] Technical Solutions Segment Backlog (approx. in billions) | As of December 31, | 2024 (approx.) | 2023 (approx.) | | :----------------- | :------------- | :------------- | | Technical Solutions Backlog | $0.9 billion | $1.0 billion | - The DOE awarded ACO (Centrus's subsidiary) and other awardees Indefinite Delivery-Indefinite Quantity (IDIQ) contracts for HALEU deconversion, HALEU production, and LEU production, with a total aggregate funding of $3.4 billion[40][80] Competition and Foreign Trade The global enrichment market (50 million SWU/year) is highly competitive, dominated by government-owned entities, with Centrus holding less than 5% market share, facing significant Russian trade restrictions and supply uncertainties - The global enrichment market for commercial nuclear reactors is estimated at about 50 million SWU per year, with Centrus holding less than 5% market share[84] - Major LEU suppliers (Rosatom/TENEX, Urenco, CNEIC, Orano) are owned or controlled by foreign governments, potentially making business decisions based on political/economic policy rather than purely commercial considerations[85] - Imports of Russian LEU into the U.S. are subject to quotas under the Russian Suspension Agreement (RSA) through 2040, and further restricted by the Import Ban Act (effective August 11, 2024) and the Russian Decree (effective November 14, 2024), which bans exports without specific licenses[88][94] Human Capital Management Centrus prioritizes honesty, trust, safety, and security, focusing on attracting, developing, and retaining a skilled, diverse workforce for specialized nuclear enrichment roles - Centrus's corporate philosophy is based on honesty, trust, integrity, safety, and security, outlined in its Code of Business Conduct[101] - The company needs to hire and train skilled personnel for specialized roles in uranium enrichment, many requiring security clearances, and is committed to promoting employee health, welfare, and safety[102][103] Number of Employees by Location | Location | No. of Employees at December 31, 2024 | No. of Employees at December 31, 2023 | | :--------- | :------------------------------------ | :------------------------------------ | | Piketon, OH | 153 | 130 | | Oak Ridge, TN | 116 | 110 | | Bethesda, MD | 53 | 52 | | Total Employees | 322 | 292 | Information about our Executive Officers This section lists Centrus Energy Corp.'s executive officers as of February 7, 2025, including their ages, positions, and brief professional backgrounds Executive Officers as of February 7, 2025 | Name | Age | Position | | :---------------- | :-- | :-------------------------------------------------------------------------------- | | Amir V. Vexler | 52 | President and Chief Executive Officer | | Kevin J. Harrill | 48 | Senior Vice President, Chief Financial Officer, and Treasurer | | Shahram Ghasemian | 58 | Senior Vice President, General Counsel, Chief Compliance Officer and Corporate Secretary | | Larry B. Cutlip | 65 | Senior Vice President, Field Operations | | John M.A. Donelson | 60 | Senior Vice President and Chief Marketing Officer | | Neal K. Nagarajan | 39 | Senior Vice President, Head of Investor Relations | - Amir V. Vexler assumed the role of President and CEO on January 1, 2024, bringing extensive experience from the nuclear fuel industry, including leadership positions at Orano USA and Global Nuclear Fuel[109] - Kevin J. Harrill, Senior Vice President, CFO, and Treasurer since August 2023, is responsible for all financial functions and has over 25 years of experience across various industries[110] Available Information Centrus provides public access to SEC filings, corporate governance documents, and its Code of Business Conduct on its website and social media channels - Centrus makes its Annual Report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments available on its website (www.centrusenergy.com) and the SEC's website (www.sec.gov)[116](index=116&type=chunk) - The company's Code of Business Conduct, Board of Directors Governance Guidelines, and Board committee charters are also available on its website[117][118] Item 1A. Risk Factors This section details material risks to Centrus's financial condition and operations, including geopolitical, economic, operational, financial, legal, and general factors War in Ukraine Risks The war in Ukraine and related sanctions, including the Import Ban Act and Russian Decree, significantly threaten Centrus's Russian LEU procurement and sales - The Import Ban Act (May 13, 2024) bans Russian LEU imports into the U.S. from August 11, 2024, subject to DOE waivers. Centrus has received waivers for 2024-2025 but faces uncertainty for 2026-2027[128] - The Russian Decree (November 14, 2024) rescinded TENEX's general license to export LEU to the U.S. through 2025, requiring specific export licenses for each shipment, with no certainty of timely issuance or non-rescission[130] - Over half of Centrus's expected LEU deliveries to customers through 2027 were sourced under the TENEX Supply Contract, and alternative sources are insufficient to fully replace this supply[133] Economic and Industry Risks Centrus's performance is tied to the global nuclear industry, facing risks from supply chain disruptions, geopolitical conflicts, policy changes, regulatory actions, and commodity price volatility - Potential events affecting customers or suppliers include pandemics, armed conflicts, government actions, natural disasters, and regulatory changes, which could reduce customer purchases or disrupt supply chains[137] - The company is exposed to commodity price risk for SWU and uranium purchases, with prices impacted by import restrictions and availability[141] - Global health crises could disrupt supply chains and operations, increasing costs and impacting timely availability of products or components[139] Operational Risks Centrus faces operational risks from foreign supplier dependence (TENEX), intense competition, trade restrictions, and uncertainties in securing government contracts and funding for HALEU production expansion - Nearly all SWU and LEU for existing contracts are sourced from outside the U.S., primarily Russia (TENEX), making the company vulnerable to trade restrictions and sanctions[142] - Centrus faces significant competition from major LEU producers (Orano, Rosatom/TENEX, Urenco, CNEIC) that are wholly or substantially government-owned and may be less cost-sensitive[148] - The ability to operate and scale the HALEU enrichment facility after Phase 2 of the HALEU Operation Contract depends on securing additional U.S. government contracts and funding, which is not assured[159] Financial Risks Centrus faces financial risks from significant long-term debt (convertible notes), potential stock dilution, revenue fluctuations, intangible asset impairment, and limitations on NOL carryforward utilization - Centrus has significant long-term liabilities, including $402.5 million in 2.25% Convertible Notes (due 2030) and $89.6 million in 8.25% Notes (due 2027)[163][378] - The conditional conversion feature of the 2.25% Convertible Notes, if triggered, could require cash settlement, adversely affecting liquidity, or dilute ownership interests of stockholders[165][166] - The company's ability to utilize its NOL carryforwards to offset future taxable income may be limited by 'ownership changes' under Section 382 of the Code or insufficient future taxable income[177] Legal and Compliance Risks Centrus faces legal and compliance risks from high regulation, policy changes, hazardous material liabilities, and foreign ownership restrictions that could impact share value - Operations are highly regulated by the NRC, DOE, and state governments, with risks from changes in policies, regulatory interpretations, and potential civil penalties or operational cessation for violations[178][180] - Risks associated with the use, transportation, and disposal of toxic, hazardous, and radioactive materials, including potential liability for health risks, property damage, and D&D costs, which may not be fully indemnified by the DOE[184][186] - The company's certificate of incorporation includes foreign ownership restrictions, allowing the Board to take actions like suspending voting rights or redeeming/exchanging shares held by foreign persons if certain ownership thresholds are exceeded, potentially at a price lower than fair market value[194][195] General Risk Factors General risks include cybersecurity incidents, challenges in retaining skilled personnel, and potential DOE agreement terminations or funding disruptions impacting contracts - Failures to protect classified or other sensitive information, or cybersecurity incidents, could result in significant liability, reputational damage, or termination of access to classified information[196][198] - The inability to attract and retain key personnel with unique skills and U.S. security clearances could adversely impact business operations and strategic planning[200] - Risks related to the DOE seeking to terminate or exercise remedies under agreements (e.g., 2002 DOE-USEC Agreement) or requiring adverse modifications, potentially impacting access to centrifuge technology or requiring reimbursements[202][203] Item 1B. Unresolved Staff Comments This section confirms the absence of any unresolved staff comments - There are no unresolved staff comments[211] Item 1C. Cybersecurity Centrus integrates critical cybersecurity risk into enterprise management, aligns with NIST, conducts assessments, and reports to the Board, with no material impact expected - Centrus integrates cybersecurity risk evaluation into its enterprise risk management process and provides periodic reporting to the Board[213] - The company aligns with the National Institute of Standards and Technology Cybersecurity Framework and engages external experts for assessments[214] - As of the report date, no material effect on the company's business strategy, results of operations, or financial condition from cybersecurity threats is reasonably expected[215] Governance Centrus's cybersecurity governance involves a Board-level Cyber Risk Committee overseeing policies and a management committee managing threats and incident response - The Board's Cyber Risk Committee oversees cybersecurity policies, procedures, and plans, including security, confidentiality, availability, recoverability, integrity, and disaster/incident response programs[217] - Management's Cybersecurity Risk Committee, comprised of senior management, assesses and manages material cybersecurity risks, provides updates, and maintains an incident response plan[218] Item 2. Properties Centrus maintains corporate headquarters in Bethesda, Maryland, a 440,000 square foot manufacturing facility in Oak Ridge, and leased space in Piketon, all adequate for current needs - Corporate headquarters are located in Bethesda, Maryland, with 24,000 square feet of leased office space through October 2027[220] - The company owns a 440,000 square foot manufacturing facility in Oak Ridge, Tennessee, and leases industrial buildings and 110,000 square feet of office space from the DOE in Piketon, Ohio[220] - Oak Ridge and Piketon facilities primarily support the Technical Solutions segment and are considered adequate for present and foreseeable needs[220] Item 3. Legal Proceedings This section directs readers to Note 17, Commitments and Contingencies — Legal Matters, for details on legal proceedings - For details on legal proceedings, refer to Note 17, Commitments and Contingencies — Legal Matters, in the Consolidated Financial Statements[221] Item 4. Mine Safety Disclosures This section confirms that mine safety disclosures are not applicable to Centrus Energy Corp - Mine Safety Disclosures are not applicable[222] PART II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities This section details Centrus's common equity, including 16,045,916 Class A and 719,200 Class B shares outstanding, dividend policy, $402.5 million convertible notes issuance, and foreign ownership restrictions - As of January 31, 2025, there were 16,045,916 shares of Class A Common Stock and 719,200 shares of Class B Common Stock outstanding[3][225] - The Class A Common Stock trades on the NYSE American LLC under the symbol 'LEU'[226] - No cash dividends were paid in 2024 or 2023, and the company has no intention to pay cash dividends in the foreseeable future, partly due to restrictions from the 8.25% Notes indenture[227] - On November 7, 2024, Centrus issued $402.5 million aggregate principal amount of 2.25% Convertible Notes due 2030 in a private placement[228] - The company's certificate of incorporation includes foreign ownership restrictions that allow the Board to take actions, such as refusing transfers or redeeming shares, if foreign ownership thresholds are exceeded[234] Item 6. [Reserved] This item is reserved and contains no information - This item is reserved and contains no information[236] Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations This section analyzes Centrus's 2024 financial performance, market conditions, and operational strategies, highlighting revenue growth, geopolitical impacts, liquidity, debt, tax credits, and accounting policies Overview Centrus operates LEU and Technical Solutions segments, with SWU spot price reaching $195 per SWU, expanding HALEU production, exploring LEU enrichment, and navigating Russian supply risks - The SWU spot price reached $195 per SWU by December 31, 2024, a 26% increase since the beginning of the year and 474% over the 2018 low, driven by the war in Ukraine and growing interest in nuclear power[242] - Centrus completed Phase 1 of the HALEU Operation Contract in November 2023 and transitioned to Phase 2, with DOE increasing Phase 2 contract value to $129.0 million and extending performance to June 30, 2025[245] - Centrus was awarded IDIQ contracts for HALEU deconversion, HALEU production, and LEU production, with an aggregate funding of $3.4 billion, partly through the Inflation Reduction Act (IRA)[246] - The company announced resumption of centrifuge manufacturing and expansion of capacity at its Oak Ridge facility, investing an additional $60.0 million to support potential large-scale uranium enrichment in Piketon, Ohio[248] Market Conditions and Outlook The global nuclear industry outlook is improving, with IEA projecting substantial growth, but faces significant challenges from geopolitical tensions and Russian LEU supply uncertainties - The global nuclear industry outlook is improving, with approximately 65 reactors under construction worldwide as of January 2025, and the U.S. DOE outlining a pathway to triple nuclear energy capacity by 2050[259][260] - IEA projects global nuclear energy generation to grow by 18% by 2030 and 47% by 2040 under 'Stated Policies' scenario, and more than double by 2040 under 'Net Zero Emissions by 2050' scenario[262] - The war in Ukraine, Import Ban Act, and Russian Decree have escalated tensions and imposed restrictions, impacting Centrus's ability to purchase, transport, and sell Russian uranium enrichment, which accounts for well over half of its expected LEU deliveries through 2027[266][268] - Centrus has entered into MOUs with TerraPower, LLC and Oklo Inc. to collaborate on establishing commercial-scale domestic HALEU production and potentially supply clean energy to its Piketon facility[265] Operating Results Centrus's total revenue increased 38% to $442.0 million in 2024, driven by LEU and Technical Solutions segments, while net income decreased 13% to $73.2 million due to various factors Total Revenue and Gross Profit (in millions) | Metric | Year Ended Dec 31, 2024 | Year Ended Dec 31, 2023 | $ Change | % Change | | :------- | :---------------------- | :---------------------- | :------- | :-------- | | Revenue | $442.0 | $320.2 | $121.8 | 38 % | | Gross profit | $111.5 | $112.1 | $(0.6) | (1)% | Net Income (in millions) | Metric | Year Ended Dec 31, 2024 | Year Ended Dec 31, 2023 | $ Change | % Change | | :------- | :---------------------- | :---------------------- | :------- | :-------- | | Net income | $73.2 | $84.4 | $(11.2) | (13)% | - The company has visibility on a significant portion of its revenue for 2025-2027, primarily from long-term sales contracts, but this is subject to material adverse impacts from the Import Ban Act and the Russian Decree[274] Segment Information In 2024, LEU segment revenue increased 30% to $349.9 million but gross profit decreased 11%, while Technical Solutions revenue surged 80% to $92.1 million with gross profit up 151% due to contract transition LEU Segment Performance (in millions) | Metric | Year Ended Dec 31, 2024 | Year Ended Dec 31, 2023 | $ Change | % Change | | :------- | :---------------------- | :---------------------- | :------- | :-------- | | Revenue | $349.9 | $269.0 | $80.9 | 30 % | | Cost of sales | $256.0 | $163.9 | $92.1 | 56 % | | Gross profit | $93.9 | $105.1 | $(11.2) | (11)% | Technical Solutions Segment Performance (in millions) | Metric | Year Ended Dec 31, 2024 | Year Ended Dec 31, 2023 | $ Change | % Change | | :------- | :---------------------- | :---------------------- | :------- | :-------- | | Revenue | $92.1 | $51.2 | $40.9 | 80 % | | Cost of sales | $74.5 | $44.2 | $30.3 | 69 % | | Gross profit | $17.6 | $7.0 | $10.6 | 151 % | - LEU segment uranium revenue increased by 70% due to a 50% increase in average price and a 13% increase in volume sold. SWU revenue increased by 19% due to a 24% increase in average price, partially offset by a 4% decrease in volume[315] - Technical Solutions revenue increased by $41.3 million primarily due to the transition from Phase 1 (cost-share) to Phase 2 (cost-plus-incentive-fee) of the HALEU Operation Contract in late 2023[316] Non-Segment Information Non-segment expenses include $17.2 million in advanced technology, $36.2 million in SG&A, and $9.8 million in amortization, with net income per share (basic) at $4.49 in 2024 Non-Segment Financials (in millions) | Metric | Year Ended Dec 31, 2024 | Year Ended Dec 31, 2023 | $ Change | % Change | | :------------------------------------------ | :---------------------- | :---------------------- | :------- | :-------- | | Advanced technology costs | $17.2 | $14.2 | $3.0 | 21 % | | Selling, general and administrative | $36.2 | $35.6 | $0.6 | 2 % | | Amortization of intangible assets | $9.8 | $6.3 | $3.5 | 56 % | | Nonoperating components of net periodic benefit income | $(14.7) | $(23.2) | $8.5 | 37 % | | Investment income | $(12.9) | $(8.7) | $(4.2) | (48)% | | Net income | $73.2 | $84.4 | $(11.2) | (13)% | Net Income Per Share (in dollars) | Metric | Year Ended Dec 31, 2024 | Year Ended Dec 31, 2023 | | :-------------------------------- | :---------------------- | :---------------------- | | Basic | $4.49 | $5.55 | | Diluted | $4.47 | $5.44 | - The decrease in nonoperating components of net periodic benefit income was primarily due to pension plan remeasurements driven by annuitization and other investment income/gains, partially offset by interest costs[325] Liquidity and Capital Resources Centrus reported $671.4 million in cash, anticipates adequate liquidity, issued $402.5 million in convertible notes, received a $62.4 million tax credit, and projects $25.1 million in capital expenditures Cash and Cash Equivalents (in millions) | Metric | December 31, 2024 | December 31, 2023 | | :---------------------- | :---------------- | :---------------- | | Cash and cash equivalents | $671.4 | $201.2 | | Restricted cash | $29.8 | $32.4 | | Total | $701.2 | $233.6 | - The company issued $402.5 million in 2.25% Convertible Notes in November 2024, with net proceeds of $388.7 million, for general working capital and corporate purposes[356][361] - Centrus received a $62.4 million clean energy manufacturing and recycling project credit allocation from the IRS, which it expects to monetize by transferring to unrelated taxpayers for cash[345][346] Cash Flow Summary (in millions) | Metric | Year Ended Dec 31, 2024 | Year Ended Dec 31, 2023 | | :-------------------------- | :---------------------- | :---------------------- | | Cash provided by operating activities | $37.0 | $9.1 | | Cash used in investing activities | $(4.1) | $(1.6) | | Cash provided by financing activities | $437.1 | $13.9 | | Increase in cash, cash equivalents and restricted cash | $470.2 | $21.4 | Item 7A. Quantitative and Qualitative Disclosures about Market Risk Centrus avoids derivatives for market risk, has minimal interest rate risk due to fixed debt, manages inflation through contract pricing, and has low foreign currency and commodity price risks - Centrus does not use derivative financial instruments for speculative trading or hedging market risk[377] - Interest rate risk is low because interest rates on existing long-term debt (2.25% Convertible Notes and 8.25% Notes) are fixed[378] - Inflation risk is generally anticipated and managed through contract pricing, with Technical Solutions contracts typically including cost escalations and LEU contracts incorporating shipping/handling cost escalations[380] - Foreign currency exchange rate risk is not material, as contracts are primarily denominated in U.S. dollars, despite some euro-denominated payments[381] - Commodity price risk for SWU and uranium is considered not material due to natural hedging in purchase arrangements, which often use fixed and market-related pricing formulas[382] Item 8. Financial Statements and Supplementary Data This section indicates that Consolidated Financial Statements, notes, and auditor reports are in Part IV, Item 15 of this Annual Report - Consolidated Financial Statements, related notes, and reports of independent registered public accounting firms are set forth in Part IV, Item 15 of this Annual Report[383] Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure This section confirms no changes in or disagreements with accountants regarding accounting and financial disclosure - There were no changes in and disagreements with accountants on accounting and financial disclosure[384] Item 9A. Controls and Procedures Centrus's management, with CEO and CFO oversight, concluded disclosure controls and internal control over financial reporting were effective as of December 31, 2024, affirmed by Deloitte & Touche LLP - As of December 31, 2024, Centrus's disclosure controls and procedures were evaluated and concluded to be effective[386] - Management concluded that the internal control over financial reporting was effective as of December 31, 2024, based on the COSO framework[388] - The effectiveness of internal control over financial reporting was audited by Deloitte & Touche LLP, who issued an unqualified opinion[389] Item 9B. Other Information This section confirms no Rule 10b5-1 or non-Rule 10b5-1 trading arrangements were adopted or terminated by directors or executive officers in Q4 2024 - No directors or executive officers adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement during the fourth quarter of 2024[391] Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections This section confirms no disclosures regarding foreign jurisdictions that prevent inspections - There are no disclosures regarding foreign jurisdictions that prevent inspections[392] PART III Item 10. Directors, Executive Officers and Corporate Governance This section incorporates 2025 Proxy Statement information on directors, executive officers, and corporate governance, highlighting Centrus's Code of Business Conduct and trading policies - Information concerning directors, executive officers, and corporate governance is incorporated by reference from the 2025 Proxy Statement[395] - Centrus has a Code of Business Conduct that applies to employees and directors, requiring strict compliance with applicable laws[396] - The company also has Securities Trading and Confidentiality Policies and Procedures to promote compliance with insider trading laws[397] Item 11. Executive Compensation This section incorporates executive and director compensation information by reference from the 2025 Proxy Statement - Information concerning executive and director compensation is incorporated by reference from the 2025 Proxy Statement[398] Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters This section incorporates security ownership and equity compensation plan information by reference from the 2025 Proxy Statement - Information concerning security ownership of certain beneficial owners and management is incorporated by reference from the 2025 Proxy Statement[399] - Information concerning common stock issuable under the 2014 Equity Incentive Plan is incorporated by reference from the 2025 Proxy Statement[400] Item 13. Certain Relationships and Related Transactions, and Director Independence This section incorporates information on certain relationships, related transactions, and director independence by reference from the 2025 Proxy Statement - Information concerning certain relationships and related transactions, and director independence is incorporated by reference from the 2025 Proxy Statement[401] Item 14. Principal Accounting Fees and Services This section incorporates principal accounting fees and services information by reference from the 2025 Proxy Statement - Information concerning principal accounting fees and services is incorporated by reference from the 2025 Proxy Statement[402] PART IV Item 15. Exhibits and Financial Statement Schedules This section confirms Consolidated Financial Statements are included, no schedules are required, and incorporates the Exhibit Index listing all filed exhibits - Consolidated Financial Statements are included in this Annual Report[404] - No financial statement schedules are required to be filed[405] - The Exhibit Index, listing all filed or incorporated exhibits, is incorporated by reference[406] Item 16. Form 10-K Summary This section confirms the absence of a Form 10-K Summary in this report - There is no Form 10-K Summary[407] Exhibit Index This section lists all exhibits filed or incorporated by reference in the Annual Report on Form 10-K, including agreements, certificates, and policies - The Exhibit Index lists various documents, including sales agreements, certificates of incorporation, bylaws, indentures for notes, rights agreements, lease agreements, supply contracts, and executive compensation plans[411][412][413][414][415][416][417][418][419] Signatures This section contains the required signatures for the Annual Report on Form 10-K from the CEO, CFO, and Board of Directors, certifying the report as of February 7, 2025 - The report is signed by Amir V. Vexler, President and Chief Executive Officer, and Kevin J. Harrill, Senior Vice President, Chief Financial Officer, and Treasurer, along with the Board of Directors[423] - Signatures certify the report pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934[421] Consolidated Financial Statements This section presents Centrus Energy Corp.'s audited consolidated financial statements, including auditor reports, balance sheets, income statements, cash flows, equity, and detailed notes Reports of Independent Registered Public Accounting Firms This section includes audit opinions from Deloitte & Touche LLP and PricewaterhouseCoopers LLP, with Deloitte providing an unqualified opinion on 2024 financials and internal controls - Deloitte & Touche LLP issued an unqualified opinion on the consolidated financial statements and the effectiveness of internal control over financial reporting as of December 31, 2024[427][428][437][438] - The valuation allowance related to federal deferred tax assets was identified as a critical audit matter due to significant management judgment in estimating future taxable income[432][433] - PricewaterhouseCoopers LLP provided an opinion on the consolidated financial statements for the year ended December 31, 2022, affirming fair presentation[446] Consolidated Balance Sheets The Consolidated Balance Sheets detail Centrus's financial position as of December 31, 2024, showing significant increases in cash and long-term debt, and decreases in inventories Consolidated Balance Sheet Highlights (in millions) | Metric | December 31, 2024 | December 31, 2023 | | :------------------------------------------ | :---------------- | :---------------- | | Cash and cash equivalents | $671.4 | $201.2 | | Total current assets | $1,015.2 | $685.4 | | Total assets | $1,093.4 | $796.2 | | Total current liabilities | $346.8 | $471.1 | | Long-term debt | $472.5 | $89.6 | | Total liabilities | $932.0 | $763.9 | | Total stockholders' equity | $161.4 | $32.3 | - Cash and cash equivalents increased significantly from $201.2 million in 2023 to $671.4 million in 2024[452] - Long-term debt increased from $89.6 million in 2023 to $472.5 million in 2024, primarily due to the issuance of 2.25% Convertible Notes[452] Consolidated Statements of Operations and Comprehensive Income The Consolidated Statements of Operations show total revenue increased to $442.0 million in 2024, while net income decreased to $73.2 million, with stable gross profit Consolidated Statements of Operations Highlights (in millions) | Metric | Year Ended Dec 31, 2024 | Year Ended Dec 31, 2023 | Year Ended Dec 31, 2022 | | :------------------------------------------ | :---------------------- | :---------------------- | :---------------------- | | Total revenue | $442.0 | $320.2 | $293.8 | | Total cost of sales | $330.5 | $208.1 | $175.9 | | Gross profit | $111.5 | $112.1 | $117.9 | | Operating income | $48.0 | $52.4 | $59.7 | | Nonoperating components of net periodic benefit income | $(14.7) | $(23.2) | $(6.6) | | Net income and comprehensive income | $73.2 | $84.4 | $52.2 | - Total revenue increased by 38% from $320.2 million in 2023 to $442.0 million in 2024[453] - Net income decreased by 13% from $84.4 million in 2023 to $73.2 million in 2024[453] Consolidated Statements of Cash Flows The Consolidated Statements of Cash Flows show cash provided by operating activities increased to $37.0 million in 2024, and financing activities provided $437.1 million, primarily from convertible notes Consolidated Statements of Cash Flows Highlights (in millions) | Activity | Year Ended Dec 31, 2024 | Year Ended Dec 31, 2023 | Year Ended Dec 31, 2022 | | :------------------------------------------ | :---------------------- | :---------------------- | :---------------------- | | Cash provided by operating activities | $37.0 | $9.1 | $20.6 | | Cash used in investing activities | $(4.1) | $(1.6) | $(0.7) | | Cash provided by financing activities | $437.1 | $13.9 | $(4.3) | | Increase in cash, cash equivalents and restricted cash | $470.2 | $21.4 | $15.6 | - Net cash provided by operating activities increased to $37.0 million in 2024, primarily from cash collections offset by disbursements for operations and LEU inventory[353][455] - Cash provided by financing activities in 2024 was $437.1 million, largely due to $388.7 million from the issuance of 2.25% Convertible Senior Notes and $54.7 million from common stock issuance[356][357][455] Consolidated Statements of Stockholders' Equity (Deficit) The Consolidated Statements of Stockholders' Equity show total equity significantly increased to $161.4 million in 2024, driven by net income and common stock issuances Consolidated Statements of Stockholders' Equity Highlights (in millions) | Metric | December 31, 2024 | December 31, 2023 | December 31, 2022 | | :------------------------------------------ | :---------------- | :---------------- | :---------------- | | Total stockholders' equity | $161.4 | $32.3 | $(74.1) | | Net income | $73.2 | $84.4 | $52.2 | | Issuance of common stock | $55.2 | $23.2 | $4.0 | | Accumulated deficit | $(76.3) | $(149.5) | $(233.9) | - Total stockholders' equity increased from $32.3 million in 2023 to $161.4 million in 2024[458] - Issuance of common stock contributed $55.2 million in 2024, $23.2 million in 2023, and $4.0 million in 2022 to equity[458] Notes to Consolidated Financial Statements This section provides detailed explanations for financial statement figures, covering accounting policies, revenue, cash, inventory, assets, debt, leases, benefits, taxes, and equity 1. Summary of Significant Accounting Policies This note outlines Centrus's significant accounting policies, including basis of presentation, estimates, cash, inventories, assets, debt, revenue recognition, supply risks, and new accounting standards - Consolidated Financial Statements are prepared in conformity with U.S. GAAP, requiring management to make significant estimates and assumptions[460][461] - LEU and Technical Solutions segments have distinct revenue recognition policies: LEU revenue is recognized when customers obtain control of products, while Technical Solutions revenue is generally recognized over time based on costs incurred or billing rights[484][489] - The company faces significant supply risk concentrations, particularly from the TENEX Supply Contract, exacerbated by the Import Ban Act and Russian Decree, which could materially impact its business[475][478] - Recently adopted ASU 2023-07 (Segment Reporting) and future ASU 2023-09 (Income Taxes) and ASU 2024-03 (Expense Disaggregation) are being evaluated for their impact on financial statements[506][507][508] 2. Revenue and Contracts with Customers This note details Centrus's revenue recognition by segment, region, and customer type, including updates on the HALEU Operation Contract and $0.8 billion in remaining performance obligations SWU and Uranium Revenue by Geographical Region (in millions) | Region | Year Ended Dec 31, 2024 | Year Ended Dec 31, 2023 | Year Ended Dec 31, 2022 | | :----------- | :---------------------- | :---------------------- | :---------------------- | | United States | $161.3 | $230.4 | $96.1 | | Japan | $117.2 | $23.6 | $61.6 | | Netherlands | $42.4 | — | — | | Other Foreign | $29.0 | $14.9 | $39.6 | | Total Foreign | $188.6 | $38.6 | $139.5 | | Total Revenue | $349.9 | $269.0 | $235.6 | - Revenue for the LEU segment is primarily from sales of SWU and uranium components, recognized when the customer obtains control, often at nuclear fuel fabricators[485] - The HALEU Operation Contract transitioned to Phase 2 (cost-plus-incentive-fee) in late 2023, with DOE increasing funding to $129.0 million and extending the period of performance to June 30, 2025[517][518] Remaining Performance Obligations (in billions) | Segment | December 31, 2024 | December 31, 2023 | | :---------------- | :---------------- | :---------------- | | Total | $0.8 | $1.0 | | LEU segment | $0.7 | $1.0 | | Technical Solutions | $0.028 | $0.077 | 3. Cash, Cash Equivalents and Restricted Cash This note details Centrus's cash, cash equivalents, and restricted cash, totaling $704.0 million as of December 31, 2024, including $29.8 million held as collateral Cash, Cash Equivalents and Restricted Cash (in millions) | Metric | December 31, 2024 | December 31, 2023 | | :------------------------------------------ | :---------------- | :---------------- | | Cash and cash equivalents | $671.4 | $201.2 | | Deposits for financial assurance - current | $30.0 | $0.2 | | Deposits for financial assurance - noncurrent | $2.6 | $32.4 | | Total cash, cash equivalents and restricted cash | $704.0 | $233.8 | - As of December 31, 2024, $29.8 million was held as collateral for inventory loans[528] - The company recorded $0.2 million in foreign currency transaction gains for the year ended December 31, 2024[527] 4. Inventories This note details Centrus's inventories, primarily SWU and uranium, valued at the lower of cost or NRV, totaling $145.4 million as of December 31, 2024 Components of Inventories (Net in millions) | Component | December 31, 2024 (Net) | December 31, 2023 (Net) | | :---------------- | :---------------------- | :---------------------- | | Separative work units | $2.5 | $21.9 | | Uranium | $142.9 | $200.2 | | Total | $145.4 | $222.1 | - Inventories are valued at the lower of cost or NRV, with costs determined using the average cost method[531] - Revaluations of long-term inventory loans resulted in an increase to the related liability of $2.1 million in 2024, $7.4 million in 2023, and $7.9 million in 2022, recorded to Cost of Sales[533] 5. Property, Plant and Equipment, Net This note summarizes Centrus's property, plant, and equipment, net, valued at $9.4 million as of December 31, 2024, with $1.0 million in depreciation expense for 2024 Property, Plant and Equipment, Net (in millions) | Category | December 31, 2024 | December 31, 2023 | | :-------------------------------- | :---------------- | :---------------- | | Property, plant and equipment, gross | $14.7 | $11.3 | | Accumulated depreciation | $(5.3) | $(4.3) | | Property, plant and equipment, net | $9.4 | $7.0 | - Depreciation expense was $1.0 million in 2024, $0.7 million in 2023, and $0.6 million in 2022[536] 6. Intangible Assets, Net This note details Centrus's intangible assets, totaling $29.6 million as of December 31, 2024, primarily from sales backlog and customer relationships, amortized over their useful lives Intangible Assets, Net (Net in millions) | Category | December 31, 2024 (Net) | December 31, 2023 (Net) | | :------------------ | :---------------------- | :---------------------- | | Backlog | $7.8 | $13.0 | | Customer relationships | $21.8 | $26.4 | | Total | $29.6 | $39.4 | - The intangible asset related to customer relationships is amortized using the straight-line method over an estimated average useful life of 15 years, with 4.75 years of scheduled amortization remaining[468][537] Estimated Amortization Expense for Intangible Assets (in millions) | Year | Amount | | :--- | :----- | | 2025 | $8.4 | | 2026 | $7.2 | | 2027 | $6.0 | | 2028 | $4.6 | | 2029 | $3.4 | | Total | $29.6 | 7. Accounts Payable and Accrued Liabilities This note details Centrus's accounts payable and accrued liabilities, totaling $38.8 million as of December 31, 2024, including compensation, postretirement benefits, and accrued interest Accounts Payable and Accrued Liabilities (in millions) | Component | December 31, 2024 | December 31, 2023 | | :------------------------------------------ | :---------------- | :---------------- | | Trade payables | $5.8 | $6.1 | | Compensation and employee benefits | $19.9 | $21.1 | | Postretirement health and life benefit obligations - current | $9.5 | $10.1 | | Accrued interest on 2.25% Convertible Notes | $1.3 | — | | Total | $38.8 | $41.9 | - Total accounts payable and accrued liabilities decreased by $3.1 million (7.4%) from 2023 to 2024[538] 8. Debt This note details Centrus's debt, including $402.5 million in 2.25% Convertible Notes (due 2030) and $74.3 million in 8.25% Notes (due 2027), with future principal payments totaling $476.8 million Future Principal Payments for Long-Term Debt (in millions) | Year | Amount | | :--- | :----- | | 2025 | $— | | 2026 | $— | | 2027 | $74.3 | | 2028 | $— | | 2029 | $— | | Thereafter | $402.5 | | Total | $476.8 | - On November 7, 2024, Centrus issued $402.5 million aggregate principal amount of 2.25% Convertible Notes due November 1, 2030, with an initial conversion price of approximately $97.50 per share[541][542] - The 8.25% Notes mature on February 28, 2027, and are guaranteed on a subordinated and limited basis by, and secured by substantially all assets of, Enrichment Corp[548][553] - The indenture governing the 8.25% Notes restricts Enrichment Corp.'s ability to transfer cash and assets to Centrus, potentially constraining dividend payments or funding other commitments[551] 9. Leases This note describes Centrus's operating leases, primarily with the DOE for its Piketon facility, with $0.8 million in lease expense for 2024 and D&D liabilities transferred to the DOE - Centrus leases facilities and related personal property near Piketon, Ohio, from the DOE under an operating lease, which was extended until December 31, 2025[557] - An amendment in November 2022 provided that facilities and equipment constructed under contract with the DOE would be owned by the DOE and returned 'as is,' with the DOE responsible for D&D liabilities arising from the HALEU Operation Contract[557] Operating Lease Assets and Liabilities (in millions) | Metric | December 31, 2024 | December 31, 2023 | | :-------------------- | :---------------- | :---------------- | | Lease assets | $1.6 | $2.7 | | Current lease liabilities | $1.4 | $1.4 | | Noncurrent lease liabilities | $1.2 | $2.6 | | Total lease liabilities | $2.6 | $4.0 | - Lease expense for operating leases totaled $0.8 million in 2024, a credit of $0.1 million in 2023, and expense of $0.7 million in 2022[556] 10. Fair Value This note defines fair value measurement and presents financial instruments, including $671.4 million in cash (Level 1) and $478.6 million in long-term debt (Level 2) as of December 31, 2024 - Fair value is defined as the price received from selling an asset or paid to transfer a liability in an orderly transaction, using a three-level hierarchy (Level 1 for quoted prices in active markets, Level 2 for observable inputs other than quoted prices, Level 3 for unobservable inputs)[563] Financial Instruments Recorded at Fair Value (Total in millions) | Instrument | December 31, 2024 (Total) | December 31, 2023 (Total) | | :------------------------------------------ | :------------------------ | :------------------------ | | Cash and cash equivalents (Level 1) | $671.4 | $201.2 | | Deferred compensation asset (Level 1) | $0.4 | $3.3 | | Deferred compensation obligation (Level 1) | $0.4 | $3.3 | Long-Term Debt Carrying Value and Estimated Fair Value (in millions) | Debt Type | December 31, 2024 (Carrying Value) | December 31, 2024 (Estimated Fair Value) | | :------------------------ | :--------------------------------- | :--------------------------------------- | | 8.25% Notes | $89.6 | $73.6 | | 2.25% Convertible Notes | $389.0 | $403.8 | 11. Pension and Postretirement Health and Life Benefits This note details Centrus's pension and postretirement plans, including the transfer of $234.0 million in pension obligations, a $16.8 million actuarial gain, and an improved funded status to a $0.4 million surplus in 2024 Funded Status of Benefit Plans (in millions) | Metric | Defined Benefit Pension Plans (2024) | Defined Benefit Pension Plans (2023) | Postretirement Health and Life Benefit Plans (2024) | Postretirement Health and Life Benefit Plans (2023) | | :-------------------------------- | :----------------------------------- | :----------------------------------- | :-------------------------------------------------- | :-------------------------------------------------- | | Obligations at end of period | $30.6 | $308.2 | $84.1 | $91.3 | | Fair value of plan assets at end of period | $31.0 | $290.5 | $— | $— | | Funded (Unfunded) status at end of period | $0.4 | $(17.7) | $(84.1) | $(91.3) | - In May 2024, Centrus transferred approximately $234.0 million of pension plan obligations to a second insurer, funded by $224.0 million of plan assets, transferring administrative responsibilities for over 1,000 beneficiaries[348][575] - These events, along with other lump sum payouts, triggered remeasurements resulting in a net actuarial gain of $16.8 million in 2024[350][577] Estimated Future Benefit Plan Payments (in millions) | Year | Defined Benefit Pension Plans | Postretirement Health and Life Benefit Plans | | :--- | :---------------------------- | :------------------------------------------- | | 2025 | $2.3 | $9.6 | | 2026 | $2.7 | $9.1 | | 2027 | $1.9 | $8.4 | | 2028 | $1.8 | $7.9 | | 2029 | $2.3 | $7.4 | | 2030 to 2034 | $11.0 | $30.2 | 12. Severance Plan This note describes Centrus's Exec