NuScale(SMR) - 2023 Q1 - Quarterly Report

Front Matter Glossary of Terms This section defines key terms and abbreviations like SMR, NPM, NRC, DOE, and Fluor, ensuring clarity for the reader - Key abbreviations defined include "SMR" for small modular reactor, "NPM" for NuScale Power Module™, and "NRC" for the U.S. Nuclear Regulatory Commission[14][16] - The report defines "Fluor" as Fluor Enterprises, Inc., a wholly owned subsidiary of Fluor Corporation, which is a key partner and majority owner of NuScale[11][37] Cautionary Note Regarding Forward-Looking Statements This section cautions investors that forward-looking statements regarding future performance and financial projections are subject to risks and uncertainties, with actual results potentially differing materially - Forward-looking statements cover areas such as financial performance, obtaining regulatory approvals for SMRs, end-customer adoption rates, and future capital requirements[22] - The company disclaims any obligation to update forward-looking statements and warns that actual results may differ materially due to various risks and uncertainties[21] Part I - Financial Information Financial Statements The unaudited condensed consolidated financial statements for Q1 2023 show increased revenue to $5.5 million but a wider net loss of $35.6 million, with total assets at $332.4 million and total liabilities at $85.7 million Condensed Consolidated Balance Sheet As of March 31, 2023, total assets decreased to $332.4 million from $348.6 million, while total liabilities increased to $85.7 million from $71.5 million Condensed Consolidated Balance Sheet Summary (in thousands) | Account | March 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $218,164 | $217,685 | | Short-term investments | $0 | $50,000 | | Total current assets | $246,460 | $284,415 | | Total assets | $332,390 | $348,635 | | Liabilities & Equity | | | | Total current liabilities | $51,691 | $38,557 | | Warrant liabilities | $30,457 | $29,349 | | Total liabilities | $85,659 | $71,548 | | Total Stockholders' Equity | $246,731 | $277,087 | Condensed Consolidated Statements of Operations For Q1 2023, revenue more than doubled to $5.5 million, but the loss from operations widened to $55.5 million, resulting in a net loss of $35.6 million compared to $23.4 million in Q1 2022 Condensed Consolidated Statements of Operations (in thousands) | Metric | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | Revenue | $5,505 | $2,445 | | Gross margin | $2,089 | $1,240 | | Loss from operations | ($55,472) | ($43,848) | | Net loss | ($35,610) | ($23,373) | | Loss Per Share (Basic & Diluted) | ($0.16) | N/A | Condensed Consolidated Statements of Cash Flows In Q1 2023, net cash used in operating activities increased to $43.1 million, while investing activities provided $49.6 million, leading to an $8.1 million overall increase in cash and equivalents Condensed Consolidated Statements of Cash Flows Summary (in thousands) | Cash Flow Activity | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | ($43,137) | ($33,151) | | Net cash provided by (used in) investing activities | $49,649 | ($1,187) | | Net cash provided by (used in) financing activities | $1,617 | ($73) | | Net increase (decrease) in cash | $8,129 | ($34,411) | Notes to the Unaudited Condensed Consolidated Financial Statements The notes detail accounting policies, including the May 2022 reverse recapitalization, warrant classification, revenue recognition from cost-sharing agreements, significant related-party transactions with Fluor, and commitments like the DCRA with CFPP LLC - The May 2022 merger with Spring Valley is accounted for as a reverse recapitalization, with NuScale LLC treated as the accounting acquirer[39] - The company receives sponsored cost-sharing funds from the DOE, USTDA, and CFPP, which totaled $17.9 million in Q1 2023, down from $20.6 million in Q1 2022[48][49] - Majority owner Fluor is a significant related party, accounting for 72.9% of total revenue for the three months ended March 31, 2023[99] - The company has a Development Cost Reimbursement Agreement (DCRA) with CFPP LLC, which required it to maintain a letter of credit collateralized by $34.2 million in restricted cash as of March 31, 2023[101][102] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the commercialization of SMR technology, including NRC certification, noting increased Q1 2023 revenue driven by the EPCDA for CFPP, but also higher operating expenses leading to a larger loss, while maintaining $218.2 million in cash and sufficient liquidity for the next twelve months Overview The company focuses on commercializing its 77 MWe SMR, achieving a key milestone with NRC certification on January 19, 2023, and anticipates continued operating losses until commercialization - NuScale's mission is to provide scalable advanced nuclear technology for electricity, heat, and clean water[105] - On January 19, 2023, the NRC published a final rule certifying NuScale's SMR design, which became effective 30 days later, marking a critical step toward commercialization[107] Results of Operations Q1 2023 revenue increased to $5.5 million from $2.4 million, primarily due to the EPCDA for CFPP, while general and administrative expenses and other expenses rose, and sponsored cost share from the DOE decreased by $8.1 million Results of Operations (in thousands) | Line Item | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | Revenue | $5,505 | $2,445 | | Gross margin | $2,089 | $1,240 | | Loss from operations | ($55,472) | ($43,848) | | Sponsored cost share | $17,873 | $20,577 | | Loss before income taxes | ($35,610) | ($23,373) | - The increase in revenue was mainly attributable to activities supporting the Engineering, Procurement, Construction Development Agreement (EPCDA) for the Carbon Free Power Project (CFPP)[113] - Sponsored cost share decreased primarily due to lower funding and a lower cost share percentage from the DOE in the current year[116] Liquidity and Capital Resources As of March 31, 2023, NuScale held $218.2 million in cash with no debt, anticipates continued operating losses, but believes current cash is sufficient for the next twelve months, while also maintaining credit support for CFPP LLC - The company held $218.2 million in cash and cash equivalents as of March 31, 2023, with no debt[119] - Management expects operating losses and negative cash flows to continue and potentially increase due to development and public company costs, but believes current cash is sufficient for the next 12 months[120][122] - Under an agreement with CFPP LLC, NuScale is required to maintain credit support, which includes $34.2 million in restricted cash as collateral for a letter of credit as of March 31, 2023[128] Quantitative and Qualitative Disclosures About Market Risk There have been no material changes to the company's market risk disclosures since its 2022 Annual Report on Form 10-K - There have been no material changes from the market risk disclosures in the Company's 2022 Annual Report Form 10-K[131] Controls and Procedures Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of March 31, 2023 - Based on an evaluation as of March 31, 2023, the principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were effective[132] Part II - Other Information Legal Proceedings The company is involved in legal proceedings, including a September 2022 lawsuit by former NuScale LLC members alleging breach of contract related to merger amendments, for which the company has filed a motion to dismiss and does not anticipate a probable loss - A lawsuit was filed on September 19, 2022, by former members of NuScale LLC claiming that amendments to the operating agreement in connection with the merger breached the agreement[136] - The company has filed a motion to dismiss the complaint and believes it is not probable that a loss will be incurred, so no liability has been recorded[136] Risk Factors There have been no material changes to the risk factors disclosed in the company's 2022 Annual Report on Form 10-K - There have been no material changes from the risk factors disclosed in the 2022 Annual Report on Form 10-K[137] Unregistered Sales of Equity Securities and Use of Proceeds This item is not applicable for the reporting period - Not applicable[138] Exhibits This section lists exhibits filed with the Form 10-Q, including corporate documents, warrant agreements, CFPP LLC amendments, and CEO/CFO certifications - Exhibits filed include certifications from the CEO and CFO, as well as agreements related to the Development Cost Reimbursement and Long Lead Material with CFPP LLC[139]