Uranium Energy (UEC) - 2023 Q1 - Quarterly Report

PART I – FINANCIAL INFORMATION Item 1. Financial Statements Unaudited financial statements reflect significant balance sheet expansion and new revenue streams from recent acquisitions Condensed Consolidated Balance Sheets Total assets and liabilities increased substantially due to acquisitions, boosting stockholders' equity Condensed Consolidated Balance Sheets Highlights (in thousands) | Account | Oct 31, 2022 | July 31, 2022 | | :--- | :--- | :--- | | Total Current Assets | $54,895 | $102,191 | | Mineral Rights and Properties | $558,366 | $181,948 | | Total Assets | $695,487 | $354,247 | | Total Current Liabilities | $17,608 | $8,498 | | Deferred Tax Liabilities | $68,826 | $536 | | Total Liabilities | $114,048 | $27,338 | | Total Equity | $581,439 | $326,909 | - The significant increase in Mineral Rights and Properties from $181.9 million to $558.4 million reflects the impact of the UEX and Roughrider acquisitions[12] Consolidated Statements of Operations and Comprehensive Loss The company reported significant new revenue and gross profit but incurred a net loss due to operating and other expenses Statement of Operations Summary (in thousands, except per share data) | Metric | Three Months Ended Oct 31, 2022 | Three Months Ended Oct 31, 2021 | | :--- | :--- | :--- | | Sales and Service Revenue | $57,292 | $- | | Gross Profit | $13,858 | $- | | Income (Loss) from Operations | $3,593 | $(4,872) | | Net Loss for the Period | $(3,756) | $(2,074) | | Total Comprehensive Loss | $(14,524) | $(1,931) | | Net Loss Per Share (Basic & Diluted) | $(0.01) | $(0.01) | Consolidated Statements of Cash Flows Operating activities generated positive cash flow, while investing activities for acquisitions led to a net cash decrease Cash Flow Summary (in thousands) | Activity | Three Months Ended Oct 31, 2022 | Three Months Ended Oct 31, 2021 | | :--- | :--- | :--- | | Net Cash Provided By (Used In) Operating Activities | $36,531 | $(12,283) | | Net Cash Provided By Financing Activities | $27,864 | $63,918 | | Net Cash (Used In) Provided By Investing Activities | $(75,783) | $358 | | Net Change in Cash, Cash Equivalents and Restricted Cash | $(11,388) | $51,993 | Notes to the Condensed Consolidated Financial Statements Notes detail the accounting for major acquisitions, uranium inventory commitments, and capital stock activities - The company acquired all issued and outstanding shares of UEX Corporation on August 19, 2022, issuing 48.5 million shares for a total consideration valued at $192.7 million[32][37] - On October 14, 2022, the company acquired the Roughrider uranium project from a subsidiary of Rio Tinto plc for a total consideration of $146.2 million[38][39] - During the quarter, the company issued 5,218,890 shares under its 2021 ATM Offering for net cash proceeds of $21.7 million[62] Uranium Inventory Purchase Commitments (as of Oct 31, 2022) | Fiscal Year | Pounds | Total Purchase Price (in thousands) | | :--- | :--- | :--- | | 2023 | 1,505,000 | $53,134 | | 2024 | 895,000 | $38,913 | | 2025 | 600,000 | $23,120 | | 2026 | 100,000 | $3,620 | | Total | 3,100,000 | $118,787 | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses its hub-and-spoke strategy, recent acquisitions, and operational results amid improving uranium market fundamentals - The company's strategy is centered on a "hub-and-spoke" model, using its Hobson and Irigaray processing facilities as central hubs for satellite ISR mines[85] - Recent strategic acquisitions of UEX Corporation and the Roughrider Project provide a critical mass of assets in Canada's Athabasca Basin[86][87] - Management notes improving uranium market fundamentals, citing a structural deficit and geopolitical factors shifting focus towards security of supply[90] Quarterly Results Summary (in thousands) | Metric | Q1 FY2023 (Oct 31, 2022) | Q1 FY2022 (Oct 31, 2021) | | :--- | :--- | :--- | | Sales and service revenue | $57,292 | $- | | Gross profit | $13,858 | $- | | Net income (loss) | $(3,756) | $(2,074) | | Basic and diluted income (loss) per share | $(0.01) | $(0.01) | Results of Operations The company generated its first significant revenue from uranium sales, though higher operating costs contributed to a net loss - Mineral property expenditures increased to $4.1 million from $1.7 million YoY, primarily due to increased exploration and production readiness costs[100] - General and administrative expenses rose to $5.7 million from $3.1 million YoY, driven by higher costs following recent acquisitions[102][103] Sales and Cost of Sales (in thousands) | Item | Three Months Ended Oct 31, 2022 | | :--- | :--- | | Sales of purchased uranium inventory | $57,209 | | Revenue from toll processing services | $83 | | Total sales and service revenue | $57,292 | | Cost of purchased uranium inventory | $(43,365) | | Cost of toll processing services | $(69) | | Total cost of sales and services | $(43,434) | | Gross Profit | $13,858 | Liquidity and Capital Resources Working capital decreased, and the company continues to rely on equity financing to fund its capital-intensive operations - The company has a history of operating losses, with an accumulated deficit of $290.1 million as of October 31, 2022[114] - Subsequent to the quarter end, the company received an additional $13.5 million from its ATM offerings and $25.2 million from the sale of uranium inventory[112][139] Liquidity Position (in thousands) | Metric | Oct 31, 2022 | July 31, 2022 | | :--- | :--- | :--- | | Cash and cash equivalents | $20,965 | $32,536 | | Working capital | $37,287 | $93,693 | Item 3. Quantitative and Qualitative Disclosures About Market Risk The company refers to its most recent Annual Report on Form 10-K for disclosures regarding market risk - For disclosures about market risk, the company directs readers to Item 7A in its Annual Report on Form 10-K for Fiscal 2022[141] Item 4. Controls and Procedures Management concluded that the company's disclosure controls and internal controls over financial reporting were effective - The Principal Executive Officer and Principal Financial Officer concluded that the company's disclosure controls and procedures were effective as of the end of the period[142] - No material changes to the company's internal control over financial reporting occurred during the fiscal quarter ended October 31, 2022[144] PART II – OTHER INFORMATION Item 1. Legal Proceedings The company is involved in legal disputes concerning project permits in Texas and concession extensions in Paraguay - An ongoing legal appeal challenges permits for the Goliad Project, which the company believes is without merit[148] - The company is in a dispute with Paraguay's mining regulator over the extension of concessions for the Yuty and Alto Parana Projects[150] Item 1A. Risk Factors Key risks include a limited operating history, reliance on external financing, and uncertainties in mineral exploration - The company has a limited financial history, a significant accumulated deficit ($290.1 million), and has historically relied on equity financing[153][156] - The company has not established proven or probable reserves for any of its projects, presenting greater uncertainty regarding economic viability[166][167] - The Physical Uranium Initiative Program is subject to risks including price fluctuations, counterparty default, and storage facility risks[174][176][181] - The uranium and titanium industries are subject to stringent and changing environmental laws and regulations[186][189] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company issued unregistered securities primarily for the UEX and Roughrider acquisitions under specific exemptions - Key unregistered issuances during the quarter included 48.5 million shares for the UEX Acquisition and 17.8 million shares for the Roughrider Acquisition[224][225] Item 4. Mine Safety Disclosures The company's in-situ recovery mines were not subject to MSHA regulation during the reporting period - For the quarter ended October 31, 2022, the company's ISR Mines were not subject to regulation by the Mine Safety and Health Administration (MSHA)[227]