Core Viewpoint - The nuclear energy sector, particularly small modular reactors (SMRs), is experiencing a resurgence, with NuScale Power positioned as a potential leader in this market due to its innovative technology and strategic projects [4][11]. Industry Overview - The Global X Uranium ETF has seen a recovery from a low of $5.97 in March 2020 to approximately $41, while uranium's spot price has increased from $30.82 to nearly $60, driven by low-carbon initiatives and rising demand [3][4]. - The demand for uranium has outstripped supply due to mine closures and geopolitical factors, leading to renewed interest in nuclear energy stocks [3][4]. Company Profile: NuScale Power - NuScale Power specializes in the development of small modular reactors (SMRs) that are compact and can be deployed in less-than-ideal locations for traditional reactors [6][7]. - The company has received Standard Design Approvals (SDAs) from the U.S. Nuclear Regulatory Commission for its SMR designs, indicating regulatory progress [7]. - NuScale's market cap is approximately $5 billion, with a current stock price around $18.68, reflecting significant volatility in its valuation [5][10]. Financial Performance and Projections - NuScale has not yet sold any SMRs but is generating revenue through front-end engineering and design (FEED) studies, particularly in Romania and for the Tennessee Valley Authority [8][9]. - Analysts project a compound annual growth rate (CAGR) of 98% in revenue from $37 million in 2024 to $289 million by 2027, driven by new projects and market demand [11]. - The nascent SMR market is expected to grow at a CAGR of 42.31% from 2024 to 2035, positioning NuScale favorably as a first mover [12]. Market Challenges and Future Outlook - Despite high valuations and near-term volatility, NuScale's stock could rebound as it advances its projects and secures more customers by 2026 [13]. - Current market conditions, including high Treasury yields and investor caution, are impacting speculative stocks like NuScale, but potential future developments could lead to a quick recovery [13].

Core Insights - NuScale Power has experienced a significant decline in stock performance, transitioning from outperforming the market to underperforming, particularly against the S&P 500 over one-year and three-year periods [3][8] - Despite the recent downturn, there remains potential for a price breakout due to increasing demand for clean energy and the company's asset-light business model [8] - The stock price has dropped over two-thirds since mid-October, influenced by reduced enthusiasm for AI data centers, disappointing quarterly earnings, and large shareholder Fluor's plans to sell its stake [9][10] Performance Comparison - Over the past year, NuScale shares have decreased by 32.8%, while the S&P 500 has increased by 11%, resulting in a difference of -43.8% [6] - Over the past three years, NuScale's return is 69%, compared to the S&P 500's 85.61%, leading to a difference of -16.6% [6] - Since the SPAC merger in May 2022, NuScale has seen an 87% return, slightly outperforming the S&P 500's 80% return by 7% [6] Market Sentiment - The initial enthusiasm for NuScale's potential in the small modular nuclear reactor market has waned, contributing to the stock's decline [7] - The company's involvement in a deal with the Tennessee Valley is not expected to generate significant revenue in the near term, further dampening investor sentiment [9] - The recent quarterly earnings release was poorly received, exacerbating the stock's downward trajectory [10]

Industry Overview - Nuclear energy is experiencing a renaissance due to rising electricity demands, government initiatives, and recognition of its safety and cleanliness [1] - The market for nuclear energy projects is seeing a resurgence, with start-ups capitalizing on this trend and their stock prices increasing [1] Company Analysis: NuScale Power - NuScale Power has developed a small modular reactor (SMR) that is the only one approved by the Nuclear Regulatory Commission (NRC) [4] - Each SMR can generate 77 megawatts of power, but none have been built yet, as utilities are still exploring potential uses [4] - The company has a market capitalization of approximately $7 billion and holds close to $1 billion in cash [6] - Despite having an approved reactor design, NuScale has not secured any contracts with utility providers and has never generated a profit [7] Company Analysis: Oklo - Oklo is focused on fast-reactor technology that uses recycled nuclear fuel, aiming for a more cost-effective and efficient process [5] - The company plans to vertically integrate its supply chain with its own nuclear recycling facility and a radioisotopes business, but its reactor designs are not approved by the NRC [5] - Oklo has a market capitalization of around $13 billion and has generated zero revenue since its inception [2][5] Investment Comparison - Between NuScale Power and Oklo, NuScale is considered a better investment due to its approved reactor design and stronger cash position [6] - Oklo's lack of an approved reactor design and higher market cap suggests it may take years to generate revenue, if at all [6] - Overall, while NuScale appears to be a better option, neither stock is recommended for a rational investor's portfolio [8]

Core Insights - Azincourt Energy Corp. has acquired an interest in Nuclea Energy Inc., a Canadian company focused on developing advanced small modular reactor (SMR) and micro-modular reactor (MMR) technologies for clean energy solutions [2][3] - This acquisition represents Azincourt's first direct involvement in the downstream nuclear technology sector, aligning with its uranium-focused clean energy strategy [3][4] - Nuclea Energy is advancing the Morpheus reactor, which is capable of generating 4 to 50 megawatts (MW) of clean electricity, and features inherent safety mechanisms [4][5] Company Overview - Azincourt Energy Corp. specializes in the acquisition, exploration, and development of uranium and alternative energy projects, with primary assets in Newfoundland and Saskatchewan [7] - Nuclea Energy Inc. is developing micro modular reactor systems that provide clean, safe, and continuous power, with its flagship Morpheus reactor being the only lead-cooled microreactor concept under development in North America [8][9] Technology and Market Potential - The Morpheus reactor integrates safety features such as passive cooling and low-pressure operation, making it suitable for off-grid and energy-intensive environments like mining operations and remote communities [5][9] - Nuclea is in discussions with Canadian Nuclear Laboratories to license additional microreactor technologies, which could expand its market reach in industrial heat and community electrification [6][9]

Group 1 - NuScale Power's shares fell by 6% while the S&P 500 and Nasdaq Composite rose by 0.9% and 0.6% respectively [1] - UBS analyst Jon Windham maintained a "Neutral" rating for NuScale but cut the price target from $38 to $20, indicating a significant reduction in expected upside [2] - Concerns over potential cash flow issues from a major project were cited as reasons for the price target reduction [2] Group 2 - The energy demands of artificial intelligence (AI) were initially expected to drive up energy needs, benefiting nuclear companies like NuScale [3] - Recent news revealed that Meta Platforms is negotiating to purchase energy-efficient chips from Alphabet, which may indicate a shift towards more energy-efficient models, potentially reducing demand for NuScale's offerings [4][5] - Investor sentiment appears to be affected by the perception that the industry may be moving towards energy-efficient solutions, leading to concerns about NuScale's future [5] Group 3 - The UBS analyst's note suggests that while NuScale may have potential, the current valuation is not justified due to numerous uncertainties [5] - Other investment recommendations have emerged, with analysts identifying ten stocks that are considered better investment opportunities than NuScale [6][7]

Industry Overview - Nuclear energy is increasingly recognized as a key resource for meeting the growing demand for clean electricity, providing consistent, carbon-free generation unlike solar and wind [2][3] - The nuclear industry is gaining momentum due to updated regulatory frameworks and advancements in microreactors and small modular reactors (SMRs), driven by rising clean energy needs from AI-driven data centers and electric vehicles [3][5] - The International Energy Agency (IEA) projects that energy supply from nuclear power will nearly double between 2020 and 2050, with global annual investment in nuclear power expected to surge from about $30 billion in 2010 to over $100 billion by 2030 [5] Investment Opportunities - Nuclear energy-related stocks, such as Dominion Energy, Ameren Corporation, and BWX Technologies, are becoming attractive investment options due to their ability to provide stable energy output [4][7] - Dominion Energy operates four nuclear power stations that supply nearly 40% of its total energy production, focusing on next-generation technologies like SMRs to support future expansion [8][9] - Ameren Corporation plans to add 1,500 MW of new nuclear generating capacity by 2045 and has received a license renewal to operate its existing Callaway Energy Center until October 2044 [11][12] Company Highlights - BWX Technologies provides a broad portfolio of nuclear components and services, including reactor systems for U.S. Navy submarines and support for nuclear R&D [14] - The acquisition of Kinectrics enhances BWXT's capabilities in lifecycle management for the nuclear industry and isotopes production for the radiopharmaceutical market [15] - BWXT secured a 10-year, $1.6 billion contract from the Department of Energy's National Nuclear Security Administration to support national security missions [16]

Core Insights - November experienced a significant correction in the advanced nuclear energy sector, particularly affecting small modular reactor (SMR) and microreactor companies, which saw substantial stock price declines [1][3] - Industry leaders Oklo Inc., NuScale Power Corp., and Nano Nuclear Energy Inc. have lost over a third of their valuations within weeks, with NuScale Power declining approximately 55%, Oklo by about 39%, and Nano Nuclear Energy by around 37% [2][3] Market Dynamics - The sell-off followed a previous surge fueled by hype around the demand for carbon-free power from AI data centers, but the market began reassessing the risks associated with long-term nuclear investments [3] - The correction highlights the speculative nature of investing in nuclear stocks, despite supportive global energy policies and AI demand [3] Company-Specific Challenges - All three companies are in the pre-commercialization phase, resulting in minimal to no operating revenue, making them vulnerable to market sentiment shifts [4] - The commercial deployment of their technologies is still years away, leading to high cash burn rates and ongoing operating losses, which challenge investor patience [4] - The broader correction in tech and AI-related stocks in November, driven by valuation concerns, also impacted advanced nuclear infrastructure investments [4]

Core Insights - Centrus Energy Corp. plays a crucial role in the U.S. uranium enrichment capacity and is positioned to support advanced nuclear technology development in the country [1] Company Overview - Centrus Energy Corp. is identified as a key enabler for the U.S. ambitions in uranium enrichment, which is essential for the growth of advanced nuclear technologies [1]

Core Insights - Centrus Energy Corp. plays a crucial role in the U.S. uranium enrichment capacity and is positioned to support advanced nuclear technology development in the country [1] Company Overview - Centrus Energy Corp. is identified as a key enabler for the U.S. ambitions in uranium enrichment, which is essential for the growth of advanced nuclear technologies [1]

Financial Data and Key Metrics Changes - Revenue increased to $14.4 billion, representing pro forma growth of 4% year-over-year [9] - Adjusted EBITDA reached $1.1 billion, an increase of 5% year-over-year [9] - Adjusted diluted earnings per share rose to $2.22, up 11% [9] - Free cash flow was $516 million, supporting debt reduction objectives and bringing net leverage to 3.2 times [9][26] Business Line Data and Key Metrics Changes - Digital solutions generated revenues of $1.5 billion for the quarter and $5.5 billion for the year, representing 11% and 7% growth respectively [24] - Global engineering solutions generated revenues of $2.4 billion for the quarter and $8.9 billion for the year, representing 9% and 2% growth respectively [25] Market Data and Key Metrics Changes - The company submitted $35 billion in bids, achieving a full-year book-to-bill ratio of 1.2 times and a quarterly book-to-bill ratio of 1.6 times [10] - Backlog grew 5%, reaching over $47 billion, with $20 billion in proposals awaiting awards [10] Company Strategy and Development Direction - Amentum aims to integrate and deliver end-to-end advanced engineering and technology solutions across key markets including defense, nuclear energy, intelligence, and space [5][6] - The company is focusing on core growth areas such as RDT&E, intelligence operations, and environmental remediation, while also targeting accelerating growth markets like space systems and technologies, critical digital infrastructure, and global nuclear energy [15][16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to adapt to changing government priorities and maintain operational resilience [13][14] - The outlook for fiscal year 2026 includes expected revenues in the range of $13.95-$14.3 billion, with adjusted EBITDA projected between $1.1 billion and $1.14 billion [28][29] Other Important Information - The company has exited all transition service agreements and is on track to deliver at least $60 million in net run rate synergies by the end of fiscal year 2026 [8] - Amentum's diverse portfolio, with 20% of revenue tied to commercial and international work, provides insulation from sector volatility [14] Q&A Session Summary Question: Can you discuss the level of timing or one-time margin and cash flow dynamics in the quarter? - Management noted that additional working days generated around $20 million in cash, which should be normalized moving into FY26 [35] Question: Can you provide an update on the multi-year margin progression and synergy targets? - The long-term goal is to achieve 8.5%-9% margins by FY28, with expected margin expansion of 20 basis points in FY26 [38][42] Question: How do you view the timing and magnitude of potential divestitures? - Management is currently excited about the entire portfolio and will evaluate non-core assets during strategic planning [50] Question: Can you elaborate on the nuclear opportunities and their impact on margins? - The nuclear energy market represents about 17% of the business today, with strong margins expected from both front-end and back-end nuclear work [76] Question: What is the expected impact of the government shutdown on FY26? - Management anticipates a 1% impact from reduced spending in Q1 due to the government shutdown, but remains confident in the underlying business trajectory [84]