Centrus Energy (LEU) - 2025 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - For the full year 2025, the company achieved revenue of $448.7 million, a gross profit of $117.5 million, and a net income of $77.8 million, marking a $6.7 million or 1.5% increase in revenue compared to 2024 [7][16] - The LEU segment generated $346.2 million in 2025, relatively flat compared to $349.9 million in 2024, while uranium revenue decreased by 54% year-over-year to $55.6 million [16][17] - SWU revenue increased by 21% year-over-year, amounting to $51.9 million, driven by a 23% increase in the volume of SWU sold [17] - The technical solutions segment delivered $102.5 million in 2025, an increase of 11% over 2024 levels [17] Business Line Data and Key Metrics Changes - The LEU segment's gross profit increased by 19% to $111.5 million in 2025, primarily due to an increase in SWU sales volume and margin [17] - The technical solutions segment's gross profit decreased by 66% to $6 million due to increased costs under the HALEU Operations Contract [18] Market Data and Key Metrics Changes - Near-term domestic LEU demand is projected to increase by approximately 6.5 million SWUs due to Russia exiting the market and additional demand from reactor restarts and upgrades [9] - The LEU pricing curve has experienced a 24% compound annual growth rate from 2019 to 2025, indicating a constrained market and pent-up demand [9] Company Strategy and Development Direction - The company is focused on building both LEU and HALEU capacity to meet future enrichment needs, positioning itself as a key player in the market [24] - The company aims to capitalize on its first-mover advantage in the HALEU market and is actively pursuing additional low-cost capital sources [10][22] - The company plans to have HALEU production online before the end of the decade, producing 12 metric tons of HALEU per year thereafter [21] Management's Comments on Operating Environment and Future Outlook - Management highlighted the importance of execution and continuous improvement in reducing unit costs and lead times as they build out capacity [28][29] - The company anticipates increasing demand for LEU and HALEU, driven by U.S. energy security initiatives and the need for advanced reactors [24][52] Other Important Information - The total company backlog stood at $3.8 billion as of December 31, 2025, with the LEU segment backlog approximately $2.9 billion [19] - The company ended the year with an unrestricted cash balance of approximately $2 billion, providing flexibility for future investments [20] Q&A Session Summary Question: Timeline for improving the 42-month forecast - Management emphasized the importance of execution and continuous improvement to reduce lead times and costs, with dedicated resources working on this [28][29] Question: Commercialization timeline for LEU - Management indicated that they are progressing towards fulfilling commitments and turning contingent sales into firm contracts [34] Question: CapEx guidance for 2026 - Management noted that the initial year of CapEx guidance includes long lead procurement and engineering work, and future years will see more linear spending [40][42] Question: Achieving nth-of-a-kind costs - Management clarified that nth-of-a-kind costs will be achieved before reaching 3 million SWUs, indicating efficient scaling [46][47] Question: Government discussions on Russian imports - Management reported strong demand stacking up towards the end of the decade but noted no specific updates from the government regarding import policies [51][52] Question: Contract dynamics for long-term supply arrangements - Management acknowledged the impact of shipping delays on guidance but expressed confidence in the supply side and potential upside from market improvements [57] Question: Milestones to de-risk the timeline - Management highlighted the importance of supply chain configuration and partnerships to ensure timely production and meet demand [60][63] Question: HALEU production target and sourcing strategy - Management confirmed that the HALEU production target is designed to stimulate market demand and that they are actively seeking commitments from customers [67][68]