Centrus Energy (US:LEU)2021-03-23 17:15Financial Data and Key Metrics Changes - In 2020, total revenue grew to $247.2 million, with a net profit of $54.4 million, marking a return to profitability despite the challenges posed by the COVID-19 pandemic [9][26] - Adjusted earnings per share (EPS) for the year was approximately $4.71, with Q4 adjusted EPS at $1.46 [26][27] - The company ended 2020 with a consolidated cash balance of $152 million, despite retiring approximately $60 million in Series B preferred stock [35][36] Business Line Data and Key Metrics Changes - Revenue from the Low Enriched Uranium (LEU) segment increased by $21.1 million in 2020 compared to 2019, with Q4 LEU revenue reaching $77.7 million, accounting for over 40% of the annual LEU revenue [27][29] - The Technical Solutions segment revenue increased by $16.4 million in 2020, reflecting ramped-up construction activities under the HALEU contract [31] - Cost of sales for the LEU segment decreased by $25.9 million, while Technical Solutions segment cost of sales decreased by $1.7 million compared to 2019 [30][31] Market Data and Key Metrics Changes - Spot prices for enrichment have increased by almost 60% since August 2018, leading to increased demand from utilities [21] - The company maintained a long-term order book valued at approximately $960 million, despite some older contracts rolling off [22] Company Strategy and Development Direction - Centrus aims to be the first to market with High Assay Low Enriched Uranium (HALEU) and is positioned to meet both civilian and defense requirements for enriched uranium [39][40] - The company is focused on reestablishing domestic uranium enrichment production, which has not occurred since 2013, and plans to expand production capacity in a modular fashion [54][55] - The resolution of the Russian Suspension Agreement has provided clarity and access to reliable supplies for the company, supporting its strategic objectives [24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the nuclear industry's role in providing reliable carbon-free electricity and highlighted bipartisan support for advanced nuclear reactors [37][38] - The company anticipates a balanced revenue outlook for 2021 and 2022, slightly higher than 2020, excluding the bankruptcy settlement [50] Other Important Information - The company completed a public offering that raised about $25 million before expenses, strengthening its balance sheet [9][10] - Management emphasized the importance of capital markets for future growth and potential investments in production capabilities [60][62] Q&A Session Summary Question: SWU pricing environment trends - Management noted a rising trend in SWU prices since August 2018, with increased market activity following the resolution of the Russian Suspension Agreement [46][47] Question: Expectations for 2021 versus 2020 - Management indicated expectations for slightly higher revenue in 2021 and 2022 compared to 2020, with margins remaining stable [50] Question: Centrus' role in reestablishing domestic production - Management confirmed Centrus' essential role in reestablishing domestic uranium enrichment and highlighted ongoing collaboration with the Department of Energy [53][54] Question: Use of favorable capital markets for additional capital - Management expressed openness to utilizing favorable capital markets for potential capital raises to support production reestablishment [60][62] Question: Opportunities for preferred repurchases or debt repayment - Management is continuously monitoring opportunities for preferred repurchases and debt repayment as part of their strategy to strengthen the balance sheet [65][66] Question: Advanced reactor market positioning - Management emphasized Centrus' integral role in the advanced reactor community, particularly in supplying HALEU to support new reactor designs [70][72]