LEU - AMEX

Greetings, and welcome to the Centrus Energy Corp. Second Quarter 2025 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. I'd now like to turn the call over to your host, Mr. Neal Nagarajan, Head of Investor Relations for Centrus Energy Corp. Thank you. You may begin.

Good morning. Thank you all for joining us. Today's call will cover the results for the second quarter 2025 ended June 30. Today, we have Amir Vexler, President and Chief Executive Officer; and Kevin Harrill, Chief Financial Officer. Before turning the call over to Amir, I'd like to welcome all of our callers as well as those listening to our webcast. This conference call follows our earnings news release issued yesterday. We expect to file our report for the second quarter on Form 10-Q later today. All of our news releases and SEC filings, including our 10-K, 10-Qs, and 8-Ks are available on our website. A replay of this call will also be available later this morning on the Centrus website. I would like to remind everyone that certain information we may discuss on this call today may be considered forward-looking information that involves risks and uncertainty, including assumptions around the future performance of Centrus. Our actual results may differ materially from those in our forward-looking statements. Additional information concerning factors that could cause actual results to materially differ from those in our forward-looking statements is contained in our filings with the SEC, including our Annual Report on Form 10-K and quarterly reports on Form 10- Q. Finally, the forward-looking information provided today is time-sensitive and accurate only as of today, August 6, 2025, unless otherwise noted. This call is the property of Centrus Energy. Any transcription, redistribution, retransmission, or rebroadcast of the call in any form without the expressed written consent of Centrus is strictly prohibited. Thank you for your participation. And now I'll turn the call over to Amir.

Thank you, Neal, and thank you to everyone on the call today, both long-time listeners and a growing number of those joining us for the first time. In the second quarter, we again witnessed the continued rapid growth of the nuclear industry driven by both government actions and private industry investments, providing us with great confidence in the mounting and lasting need for nuclear fuel in both the United States as well as abroad. Simply put, on the road to energy dominance, nuclear energy is being unleashed and the critical fuel required to power this growth is at the center of this nuclear renaissance. Both the existing market for the commercial LEU and the future market for commercial HALEU continue to expand at robust rates, backed by public actions and an increase in private financing sources. Similarly, we are witnessing a potentially significant expansion in our already large national security addressable market with the growing number of announcements around potential micro and small modular reactor deployments on DOD sites. These military reactors would likely require the use of U.S. origin enrichment technology for which Centrus is the only commercially ready technology that can meet these demands. At a macro level, through the turmoil and uncertainty in global trade environment, we continue to receive shipments of enriched uranium and our operations have not been significantly impacted by macroeconomic events. Furthermore, as a reminder to our listeners, as we look to expanding our enrichment capacity, we manufacture our centrifuges in the United States by relying upon a secure, growing domestic manufacturing supply chain. Turning to our results. As many of you know, there can be a significant amount of variability quarter-to-quarter due to the nature of our business. Customers in the LEU segment, which currently generate the majority of our revenue, generally have multiyear contracts to take delivery of a given quantity at a given price each year. But these customers choose when to take the delivery within the year and do not always choose the same quarter every year. Revenues and margins fluctuate depending on how many deliveries happen to fall into a particular quarter and whether those deliveries come from higher-priced or lower-priced contracts. And as such, we believe our annual results are more indicative of our progress. We again achieved robust financial results in the second quarter, including $154.5 million in revenue, a gross profit of $53.9 million and an operating income of $33.5 million. Kevin will discuss the results and their respective drivers in more depth in a few minutes. We are currently awaiting the DOE's decision on how they plan to allocate the $3.4 billion appropriated to jumpstart domestic nuclear fuel production and how the awards will be structured. Given the administration's urgency and focus on energy dominance, we remain optimistic that a decision will be made soon. Consistent with this agenda, we believe that the only way to achieve nuclear energy dominance is to have a fully American technology and supply chain. We remain confident in our compelling investment case as the only publicly traded proven enricher that can meet commercial and national security needs, thereby maximizing the government's return on its investment. Our goal is to secure sufficient public and private capital to expand our enrichment capacity. As we await the DOE's decision, we continue to pursue our readiness initiatives to strengthen our investment case. First, we again grew our cash balance, ending the quarter with a healthy $833 million cash balance on our balance sheet. As we have previously noted, we will continue to look for ways to optimize our capital structure and strengthen our position ahead of government funding announcements to put Centrus in the best possible position once funding decisions have been made. Second, as announced in late November 2024, we launched a $60 million investment in our supply chain using Centrus' funds to lay the groundwork for the future large-scale deployment of our technology. To date, we have invested in facility readiness, procuring long lead items and completing engineering designs. We also continue to hire and expand our talented workforce to make sure we are ready to start once an award is made. Third, we continue to successfully operate our HALEU cascade at our Piketon, Ohio facility under our contract with the U.S. Department of Energy, delivering HALEU that the DOE urgently needs to help test the next generation of advanced reactors. Centrus achieved the 900-kilogram production milestone for Phase 2, and to date has produced close to a metric ton of HALEU for the department. In the quarter, the department also exercised an option to extend our contract through June 30, 2026. Our track record of successfully and safely meeting our targets on budget as well as to receive the department's option to extend the contract further validates our derisked technology. Our technology has been proven with nearly 3 million machine hours and can meet the full range of America's commercial and national security enrichment requirements, including, but not limited to, LEU, LEU+ and HALEU. Furthermore, there is little cost differential to deploy and operate any of those cascades. Fourth, as we continue to successfully engage with key stakeholders to articulate our value proposition, we are also seeing clear signals at both the federal and state level that governments are looking to accelerate the deployment of civil nuclear energy to meet the growing demand for stable electricity. We are also seeing an increase in the pace of private market investments in securing nuclear power to fuel their future growth. There is a strong consensus among customers as well as policymakers that there is a need for another enricher to bring new supply and new competition to the market that is otherwise dominated by foreign state-owned enterprises. Centrus is proud to offer the free market, a publicly traded American source of enrichment services for commercial and national security needs. With that, I will turn the call over to Kevin to walk through the numbers. Kevin?

Thank you, Amir. Good morning, everyone. We're pleased to report another quarter of strong financial performance, fueled by solid execution across our operations and enhanced gross margins. This reflects continued discipline in cost management and the successful delivery of key contractual commitments. Total revenue for the second quarter was $154.5 million, a decrease of $34.5 million compared to the same quarter last year. Despite the revenue decrease, gross margin improved to 35%, up from 19% in the prior year's quarter, reflecting our focus on operational efficiency and a favorable shift in contractual mix. Total gross profit for the second quarter was $53.9 million compared to $36.5 million in the same quarter last year. Turning to the bottom line. Net income for the second quarter was $28.9 million compared to $30.6 million in the same quarter last year. We also generated $114.7 million in net proceeds under our ATM program during the quarter. As of June 30, our cash and cash equivalents stood at $833 million, underscoring our strong liquidity and balance sheet discipline. This elevated cash position continues to generate considerable investment income, particularly in today's high rate environment. In Q2, investment income reached $8 million, tripling the prior year reported amount. The income meaningfully contributed to our bottom line and reflects our commitment to maximizing returns on idle capital while maintaining flexibility for future growth opportunities Our LEU business generated $125.7 million in revenue, which was a decrease of $43.9 million compared to the same quarter last year. The decrease in revenue for the second quarter was primarily driven by a reduction in SWU sales volume as well as the absence of any sales from uranium during the period. LEU cost of sales for the second quarter was $75 million, a 45% decrease from $136.6 million in the same quarter last year. The decrease was primarily driven by a 27% reduction in SWU sales volume for the quarter. Customers typically operate under multiyear contracts with annual purchase commitments rather than quarterly obligations. As a result, quarterly sales volumes can vary significantly year-over-year depending on the timing of deliveries even when annual volumes remain stable. For the 6 months ended June 30, overall SWU sales volume is relatively on par with the prior year. Despite the lower volume in Q2, gross profit increased to $50.7 million, up from $33 million in the prior quarter. Variability in revenue and gross profit within our LEU business reflects the influence of market pricing at the time contracts are signed, coupled with the cost basis of inventory at the point of delivery. In our Technical Solutions segment, revenue for the second quarter totaled $28.8 million compared to $19.4 million in the same quarter last year. Revenue increased by $9.4 million or 48%, primarily due to LEU feedstock and cylinder costs incurred to complete our contractual delivery under our HALEU operation contract Phase 2. Cost of sales for the second quarter of 2025 was $25.6 million, an increase of $9.7 million or 61% compared to the same quarter in the prior year. Cost of sales increased in line with revenues. Gross profit for the Technical Solutions segment was $3.2 million in the second quarter, a decrease of $0.3 million compared to the prior year's quarter. As previously disclosed, due to the delay in completing Phase 2 of the HALEU operation contract, the Department of Energy extended the Phase 2 performance period to June 30, 2025, effective November '24. However, the fee for the Phase 2 extension has not yet been definitized and is currently under negotiation with the Department of Energy. As Amir mentioned earlier, in June 2025, we announced that we had successfully achieved the Phase 2 production target under the HALEU operation contract, contractually delivering 900 kilograms of HALEU UF6. The DOE amended the HALEU operation contract and exercised the first option period of Phase 3, which extended the contract through June 30, 2026. The amendment also sets a target cost and fee for the first option period at approximately $99.3 million and $8.7 million, respectively. DOE has the ability to exercise additional optional periods for up to 8 additional years of production. As of June 30, 2025, our total company backlog stood at approximately $3.6 billion, extending through 2040. The LEU segment backlog was approximately $2.7 billion, which includes $0.6 billion in future SWU and uranium deliveries, primarily under medium- and long-term contracts with fixed commitments and $2.1 billion in contingent LEU sales commitments tied to the potential construction of LEU production capacity at our Piketon, Ohio facility. We have now entered into definitive agreements for $1.7 billion of the $2.1 billion in contingent LEU sales commitments. The remaining contingent commitments are subject to our ability to secure significant public and private investment to support the development of LEU production capacity. Furthermore, this July, we secured an additional $0.1 billion in LEU contingent sales commitments under a definitive agreement. This brings our total contingent LEU sales commitments to $2.2 billion with $1.8 billion being under definitive agreements. Our Technical Solutions segment backlog was approximately $0.9 billion and includes funded amounts, unfunded amounts, and unexercised options. The unexercised options pertain to the HALEU operation contract and represent potential future work subject to DOE direction and funding availability. In addition, the company has continued to pursue initiatives aimed at strengthening its capital structure, enhancing financial flexibility to support both near-term operations and long-term growth objectives. As noted earlier, in the second quarter of 2025, our ATM program generated an additional $114.7 million in net proceeds. These proceeds, along with gross margin contributions resulted in an ending cash balance of $847 million as of June 30, 2025, which includes $14 million of restricted cash. The company's continued strong cash position furthers to support the execution of near-term contractual obligation and enable strategic investments in our long-term future. As previously announced, this includes a planned investment of approximately $60 million for manufacturing readiness at our Piketon, Ohio plant, laying the foundation for a potential large-scale expansion of uranium enrichment capabilities. These achievements build on the momentum established in 2024 and the first quarter of 2025 as we continue to successfully operate our HALEU cascade under the contract with the Department of Energy. At the same time, we are actively pursuing investments in our manufacturing capabilities while awaiting the DOE's decision on the allocation of $3.4 billion appropriated to jumpstart domestic nuclear fuel production. This quarter's accomplishments and initiatives have further strengthened Centrus' position to execute its long-term strategy of securing sufficient public and private funding. The goal is to deploy our advanced technology at scale and help restore America's domestic uranium enrichment capability. With that, let me turn things back over to Amir.

Thanks, Kevin. I'd like to close by reminding our investors and listeners of the imperative need to both reduce our dependence on foreign nations and to inject more competition into the market to provide customers with more alternatives. This is especially important given recent announcements from both the public and private sectors on their respective goals for near- term nuclear deployment. The public and private markets are arguably more aligned today than they ever have been. At the federal level, the administration's May executive orders clearly served a strong tailwinds for an already robust and growing nuclear market. These included reducing the time to market required to deploy both large and small modular reactors as well as raising the bar and setting a goal of quadrupling nuclear output by 2050. We also expect to see an increase in demand for nuclear assets as a direct result of the administration's identification of artificial intelligence as a national security imperative. The President recently unveiled a $70 billion AI and energy plan, which will likely require nuclear power. More recently, the House passed the GENIUS Act to regulate stablecoins. As many know, stablecoins and cryptocurrency mining require a vast amount of computational power. These are but some of the examples that are driving an ever-growing need for safe, reliable nuclear energy and therefore, a domestic source of nuclear fuel, and Centrus stands ready to meet this demand. The push to expand nuclear isn't just coming at the federal level. In New York, Governor Hochul directed the state's power authority to build their first new nuclear plant in decades. In Wisconsin, Governor Evers signed legislation to begin identifying sites for new reactors. And in Texas, Governor Abbott signed legislation establishing a $350 million fund to support nuclear construction projects. These mandates further underscore the need for resilient domestic fuel supply chain. Finally, we are seeing private industry stepping in and making strong commitments to as well as putting hard dollars behind nuclear investments. Announcements and agreements like Amazon and Talen Energy's 1.9-gigawatt long-term power purchase agreement, Microsoft's Three Mile Island agreement, Meta's 20-year agreement to buy nuclear power from Constellation Energy, and Westinghouse's commitment to build 10 large reactors in the U.S., demonstrate that the barriers that previously impeded nuclear assets deployments are being broken. Furthermore, they underscore how private financing can serve as a bridge in the funding gap, representing an exciting new avenue to access private capital that previously did not exist. In short, our addressable market for domestic commercial LEU and HALEU continues to grow. Our addressable national security market is potentially growing, and we are now seeing private markets stepping in with creative solutions to secure their access to nuclear power, something that could be consequential for Centrus as part of our public-private partnership plan. It is an exciting time in the nuclear industry, and Centrus is positioned to meet the market's, the nation's and our taxpayers' need with a proven technology and a domestic supply chain. I would like to close by thanking our growing list of investors, analysts, and listeners, without whom none of this would be possible. We look forward to updating you on our progress on our next earnings call. With that, we are happy to take questions. Operator?

[Operator Instructions] Our first question comes from the line of Ryan Pfingst with B. Riley Securities.

B. Riley Securities, Inc., Research Division The first one is, do you expect to see federal programs stemming from May's executive orders that would be incremental to the DOE's enrichment awards that you were selected for last year that could help fund or otherwise support your capacity expansion?

Thank you for that. We really don't have any information. I will say that the executive orders, as you pointed out, are a strong, strong support for what we do, not only for the industry, but specifically for nuclear fuel. So although I don't know if there's anything incremental that is in play, we don't have any information on that. But just the fact that these orders were out there are providing huge support for what we do.

B. Riley Securities, Inc., Research Division And then for the $60 million investment in centrifuge manufacturing activities and supply chain readiness that you mentioned. Curious how that's progressing? And when might we see that show up in earnest in the financial statements?

I'll answer the first part of your question, and I'll let Kevin maybe answer the second part of the question. So things are going well. As you know, we have kicked off this effort towards the end of last year. I'm really glad that we did. We are going through the process of ordering long lead items, making sure that we fine-tune in our cycle times, as required, all in preparation of a large centrifuge build. And so we're also going through first article manufacturing as part of it as well. All in all, it's progressing well. The team is reporting regularly on it. And I will let Kevin answer the question around where and when it may show up.

Yes. And as a reminder, this was an 18-month initiative that we announced late last year. So it's actually running through our financials today through our CapEx as well as increases associated with advanced technology costs. There are other aspects that we are working associated with building up the workforce in anticipation of the larger build. And so we also have some costs that are actually running through other avenues within our financial statements today. But as noted, we do see this as an 18-month project. So we'll continue to have variability in costs in all of the 3 categories that I just outlined.

Our next question comes from the line of Rob Brown with Lake Street Capital Markets.

Lake Street Capital Markets, LLC, Research Division Congratulations on the progress. I wondered if you make a little more color on the -- I think there's some new commitments for the LEU contingent backlog of $100 million. What's sort of the opportunity there in terms of additional customer commitments? And $1.8 billion backlog is pretty good. But how do those -- what's the opportunity for additional commitments as you kind of ramp in your LEU production?

Let me give you a general answer on this. Obviously, as in the past, all these agreements cover on the nondisclosures. We're not really revealing it. And I don't think you're asking about the identity of any specific utility. So obviously, that's not anything we have disclosed before, and we're not going to disclose that. But to your question, these agreements are important to us as we size up our plant, as we build out our capability to enrich, customer commitments are crucial. As you pointed out correctly, we've added some, and we are continually working with other customers to continue growing that backlog. I'm not sure there's anything else I could add to it other than just reemphasizing again that, that is a business imperative for us.

Lake Street Capital Markets, LLC, Research Division And then on the HALEU Phase 3 extension, do you expect to continue producing sort of the same rate of fiscal production there until some DOE decisions are made? Or how do you sort of see that fitting in with the DOE kind of next step?

Yes. So we -- to answer your first question, yes, we -- it's business as usual. As far as enrichment goes, the plant is operating. We're enriching at a certain rate. We'll continue to enrich at that rate. I hope I answered your question. Please let me know if I haven't.

Our next question comes from the line of Joseph Reagor with ROTH Capital Partners.

ROTH Capital Partners, LLC, Research Division So just some questions on the balance sheet and just kind of general thoughts. The balance sheet is pretty robust at this point. Is there any opportunity for you guys to start moving forward with, say, a smaller build-out of a low-enriched facility using your existing funds and maybe whatever is left on the ATM while you wait for the government to make a decision or in the event that the government decides to appropriate less funds than necessary to you guys or less than you expect?

Good question. What you described is exactly the sort of things that we're continually evaluating based on Department of Energy's decision, based on our conversations with our customers. I can't really point one way or the other, but these are the things that we evaluate regularly. The $60 million readiness that we have kicked off is obviously -- has been done with ensuring that we can execute quickly and rapidly should a decision like that be made. So apologies that I can't give you a more specific answer. I would just repeat again that you're asking exactly the same things that we are continually evaluating.

ROTH Capital Partners, LLC, Research Division And then on the ATM, can you remind us what's remaining on your current ATM?

So there's nothing remaining on the ATM. We have exhausted what was currently out there. And certainly, I think the follow-up question, I assume, will be what are we evaluating at a go-forward perspective. And I think what I would tell you is, we're very encouraged by the progress within the market, and we're evaluating what's next steps. We can't directly comment on any potential transactions. But I would say we're definitely doing what is necessary to maintain our financial flexibility and be in a position to execute on our strategy as we look forward to potential DOE announcements.

Our next question comes from the line of Vikram Bagri with Citi. Vikram Bagri Citigroup Inc., Research Division I wanted to follow up on the last question. It sounds like you're strengthening the balance sheet ahead of government funding enough that whatever the IDIQ capital is and whatever the capital required for 96 cascades is, you can fill the gap using your own balance sheet. I was wondering if you can highlight what the target amount of capital is on the balance sheet that you want over the next 3, 6 months or 1 year. What's the sort of like the target cash and balance sheet if there is a target?

Yes, that's a great question. Unfortunately, we don't get into details as it relates to what the costs are from a capital build perspective for a lot of reasons, including just the aspect that it's highly sensitive from a business proprietary perspective. But what I would say is, we do have a fulsome business strategy that we have outlined with a variety of sensitivity analyses as it relates to what we need from the government to build out using a public-private partnership. And you mentioned the 96 cascades. It's important to note that what we have right now from an infrastructure perspective is we can build out 48. We would need to expand in order to double that. So our main focus is to build out the existing building and marry both public and private funds in order to facilitate a positive return for investors. And so we're balancing what we will ultimately need based upon the incoming funds coming from the government through a variety of potential opportunities. Was that helpful, Vikram? Vikram Bagri Citigroup Inc., Research Division Yes, that's very helpful. As a follow-up, 2 quarters of pretty meaningful beat on the results. I appreciate the comment about timing of SWU sales and pricing impacting earnings. We have different contracts with different customers. I appreciate that full year view provides a more holistic picture of profitability. Can you share directionally where the profitability of the entire portfolio as a whole is currently? I saw the pricing increased 24% year-on-year. Cost is down 8%. As we stand today, when you look at the portfolio, the SWU portfolio, the backlog that you have, what's the sort of the profitability of those contracts given current pricing?

Yes. So what we've spoken about in the past is that much of the backlog that we have ranges from when the SWU market from a commodity pricing perspective was low as well as at its highest point. And we are now at a point in time where we sell into a higher market with our customers, but we also have impacts as it relates to our cost structure. What I would say is, as you noted, we did have a very strong quarter with profit at approximately 40%. So I think what this demonstrates is that we continue to realize good margins within this market. But I wouldn't say that should be interpreted as an indication of future margin realization. We do not provide earnings guidance or disclose the mix of the contracts, so I can't get into details on what future quarters or even future years will look like. But I will tell you, it is reasonable to expect margin levels to remain within the range we've seen over the past few years. But from a quarterly perspective, you will see variability, but we are on target with regards to our own internal annual outlook. And obviously, we don't disclose that with not providing future guidance, but we are on track with regards to our own internal projections.

Our next question comes from the line of Sameer Joshi with H.C. Wainwright.

H.C. Wainwright & Co, LLC, Research Division Congrats on the good progress. Many of the questions have been addressed, but just a few questions. In the first 2 quarters, there have been no uranium sales. And of course, we understand it depends on timing of customers when they put their orders. But should we expect the next 2 quarters to show some level of uranium sales to come on par annual levels that you have seen in the past?

Yes. Thanks for the question. Again, unfortunately, we don't provide any guidance or details on individual shipments, whether it's SWU or uranium. But what I would say and reiterate my previous point is, from an overall perspective, as it relates to our revenue, we believe that we're on track with our internal projections. So I couldn't -- but I couldn't get into any specifics as it relates to any uranium sales and when we would be able to or desire to execute those as it relates to the remaining inventory that we have on hand for UF6.

H.C. Wainwright & Co, LLC, Research Division So coming to the HALEU operations contract, you have sort of visibility, of course, for the next year, but also the Option 1b could give you another 2 years. It falls in this -- around $263 million, so around $80 million to $90 million annual run rate. This year, it might be over $100 million. Is there expectation of that contract increasing and for you to increasing your HALEU processing capabilities? And is there any CapEx planned or anticipated for that in future years?

I'll give you an answer. And Kevin, chime in if there's anything you want to add. Obviously, the answer is, we are working to the contract with the Department of Energy. We really don't have any insights beyond what's been publicly announced. I will remind you, though, that we are the only Western HALEU producer of virgin HALEU right now. The Department of Energy is set to provide HALEU to the OEMs, the advanced reactors. So that is HALEU that's needed. Unfortunately, I don't have any information on what's been publicly communicated. No further insights into what other exercises there could be. But again, like I said, reiterating HALEU, Centrus is the only one that enriches HALEU right now, and it is needed.

H.C. Wainwright & Co, LLC, Research Division Maybe I can squeeze in one more on the LEU, LEU, expansion. I think you just mentioned, or Kevin did, the 48 cascade possibility in your current footprint right now. Do we have any estimate on the CapEx required to expand the facility and then deploy the cascades to get to 96? And is there a time line for that, that you are targeting?

Yes. So as mentioned earlier, we don't provide information as it relates to our CapEx numbers. What we have publicly announced throughout the past few years is that the first cascade will take 42 months, the second cascade will take 6 months, and the third and each successive cascade will take 2-month increments. We are currently working, especially through our manufacturing readiness initiative, to focus in on the potential of pulling those timelines in. However, as of today, that is what we've established. And with regards to the project initiative we announced last year, we've been getting ahead of many of the long lead items that we needed to establish, building up our workforce as well as establishing key critical tooling components that will enable us to maintain and manage our facility at what we expect from a baseline perspective and potentially evaluate what we can do from an acceleration vantage point. So I think all of those are good points of what we're trying to accomplish, but I couldn't get into any more details as it relates to cost or timeline outside of that, but I think that frames it very well. Was that helpful?

H.C. Wainwright & Co, LLC, Research Division Yes. So just a clarification or maybe just to get some insight. The first cascade of 42 months, is that mainly capital constrained? Or is it mainly technology or resource constrained? How should we look at that? How quickly can we pull it in if you get $1 billion additional dollars?

We are manufacturing the centrifuges ourselves, as you know, in Oak Ridge, Tennessee. We have a supply chain that is tapped into providing materials and subcomponents to this. To your question, what paces that 42 months is, obviously, in any manufacturing cycle, there's cycle times that are associated with manufacturing each component and assembly, and that really is what's spacing it. I won't get into any specifics what specifically is spacing it. Just a general comment, costs and things of that nature, if we get into a lot of details, there -- it's information that we guard very, very tightly due to competitive nature. However, just so I can give you an answer, it really has to do with manufacturing and our ability to manufacture within the cycle times and improve those cycle times, as Kevin alluded, in general, just stating that we're exploring opportunities that are out there. So sorry, I could not give you a very specific answer, but I believe I kind of answered the general theme of where you were going with this, Sameer.

[Operator Instructions] Our next question comes from the line of Eric Stine with Craig-Hallum Capital Group.

Craig-Hallum Capital Group LLC, Research Division So most of the relevant questions have been asked, but maybe just high level, just on kind of the overall enrichment backdrop. Obviously, centrifuges is the established, more mature technology, but have seen a number of announcements on gas diffusion, laser enrichment. So I mean, maybe your thoughts on kind of the role that each has to play, maybe how you expect -- well, this is asking about the IDIQ, but how you expect things to kind of shake out going forward by technology?

Good question, very relevant to our times, particularly in trying to understand the competitive landscape. As in past practice and in policy, we typically do not talk about any company specifically or any technology specifically. A lot of these technologies are classified, and we really don't have access to them as much as others don't have access to our technology. But in very general terms, I think it's important for the investors and the listeners to understand that, there's really only 3 Western enrichers right now that are enriching uranium and Centrus is one of them, and all 3 of them are centrifuge enrichment technology. It took us decades and billions of dollars to get to where we are. We have successfully completed a -- or in the midst of completing a demonstration program with the Department of Energy, that is a monumental task that was achieved over many years. And so, as to where do I see other technologies, I just looking at public information, they're not at that stage. And so we remain to feel confident that the world will have to continue to rely on centrifuge enrichment for the foreseeable future.

Our next question comes from the line of Lawson Winder with Bank of America.

BofA Securities, Research Division Nice quarter. If I could, I'd like to follow back up on some of the commentary and discussion around the contracting. And so as per your LEU backlog or the contingent LEU sales, contract book appears to have remained relatively stable since later last year. What we're hearing from other nuclear fuel participants, are that utilities today are focused primarily on securing enrichment? And so we've been kind of anticipating a bit of a pickup in enrichment contracting activity. And so given the stability and the expectation that it might have grown, do you see any hesitation from the utilities today on either pricing or contract duration? And then looking at it from another way, is there any scope to take a different approach to the contingent sales and for example, structure these as traditional commodity offtake? So rather than just setting them up as contingent sales, getting payment from customers upfront to help fund construction and then in turn, deliver those SWU in the future?

Yes. I'm just jotting down. It's a 2-part question. So let me address the first part of your question around the steady backlog and the momentum around the backlog. I think I cannot speak for the utilities, obviously. They have their own strategy around securing supply chain. Getting LEU is critical to powering reactors, and I mean, they have entire departments of people that are tasked with ensuring that they can get the right deals and that can secure long-term deals as well. It is my strong belief based on discussions and what we're seeing that the customers do want to see more competition in the market. These deals take a while to negotiate. I would not conclude anything based on it appearing to be a steady state at a certain point in time. We're in constant discussions. And as I mentioned earlier to the first question, I think it was, this is an imperative for us. And so competition is critical. And as the -- as TENEX, as the Russians sort of exit the market at the end of the decade, I think utilities understand that in order for the market to continue to thrive, they have to have more competitors in the market. And so to your second question around the contingent nature of the sales and if there's other ways to contract, we're exploring that all the time. We are utilizing every possible option we have to make sure that we answer the call for the customers. At the end of the day, I believe we have a common goal. We are a new entrant, and the customer is looking for more competition. So I don't know that I can say beyond that, but you are raising good questions beyond which I cannot provide details. But we're exploring every type of mechanism to make the customers feel comfortable and for us to get what we need to get into the market.

Our next question comes from the line of Nick Amicucci with Evercore ISI.

Evercore ISI Institutional Equities, Research Division Just wanted to touch upon one kind of big one that Amir kind of alluded to before. So with the Russian contract kind of culminating over the next couple of years and only 3 Western enrichers that are currently enriching. I mean, how should we be thinking about -- how should the investors kind of be thinking about -- obviously, the demand is there from the nuclear side and the nuclear fuel side. How should we be thinking about filling that gap and where that capacity come online just given that it is a 42-month kind of lead time before once we get the allocation that you guys will be really up and running in earnest?

Yes. Good question, Nick. I think what you're alluding to is, if I paraphrase your question, please tell me if I don't do a good job paraphrasing it, is you're saying there may be a time gap in there where there may be insufficient Western capacity to backfill sort of the Russians pulling out of the market. If that is the question, we obviously are working as hard as we can and working with the customers, with the utilities to get everything we can to come online as quickly as possible. And we talked about it many times, LEU is a market that's here, that's now, that's the market that we're pursuing. HALEU is -- we're positioning ourselves for HALEU as well, but we all realize that there is going to be an issue in terms of LEU capacity the years that you mentioned. I don't know if I can add anything else to it other than, we're working very hard through this public-private partnership that we've identified. I think the Department of Energy understands that there's going to be a gap as well. I think Congress understood that as well. And there's a general realization that there is going to be an issue. And we hope to be a big part of the solution, maybe not for the earlier years or -- but definitely be part of the solution.

Evercore ISI Institutional Equities, Research Division And then if I can try and pry on kind of the balance sheet a little bit more and just kind of ask the question, I guess, a little bit differently. So with $833 million in cash on hand, how -- I guess, we're waiting for the actual allocation number, but then presumably, that starts the clock. And then there's inevitably a lag from the government between actual allocation and then deployment of cash. So I guess, how far can that $833 million of cash kind of take you guys given that you still have the brokerage business to run?

How far -- sorry, just to clarify, how far it can take us with regards to meeting our obligations for financial deployments.

Evercore ISI Institutional Equities, Research Division Before you really need to -- before you're in need of the deployment of the capital. So the difference between the allocation of the DOE funds and the deployment of the DOE funds, given that -- if you're able to start, presumably once you get the allocation, how far -- I mean, how much runway do you have before the allocation becomes necessary -- sorry, the deployment becomes necessary?

Yes. It's a difficult question to answer because there's a lot of variables that are still on the table, specifically associated with what comes down from the DOE. So it would be hard to speculate on how long it would last us as it relates to capital deployment, which I think is your question. I think it -- what I would say is, it's a fairly robust number. And if you look at some of our competitors, and I know many of the folks on this call have heard us mention a competitor in Europe who has announced that they're expanding roughly 2.5 million SWU for the equivalent of USD 2 billion, roughly, I think it's a little bit less than that, but I think that gives you a sense of $833 million, putting us in a positive position as it relates to being able to not only sustain but grow our business once we receive the allocation from the government. Was that helpful? I know I didn't answer it directly, but I think I did it in a way that gives you a sense of what that money can do for us on a go-forward basis when we actually get an announcement from the Department of Energy.

Evercore ISI Institutional Equities, Research Division We'll say it's close enough for government work, Kevin.

Excellent. Thank you.

Our next question comes from the line of Jed Dorsheimer with William Blair.

William Blair & Company L.L.C., Research Division Congratulations on a fantastic quarter, guys. I guess, yes, Amir, and maybe, Kevin, too, just sort of a higher level structural. A lot of the questions have been asked around capital. But I'm wondering, if we look at what the Department of Defense did with MP Materials and setting a market structure in terms of pricing of neodymium. It seems like the government -- the Department of Energy understands the challenges with HALEU quite well, but it hasn't necessarily trickled over to LEU. So I'm just wondering, do you see that is kind of the pathway forward in terms of government intervention to setting a floor on the market or a structure that's similar? I'm curious your thoughts on that.

Interesting question, Jed. I do not really wish to go into speculating too far as to how and in what matter the Department of Energy or the government in general will impact the market. I honestly have no insight into this. It would be interesting to watch how things unfold with the awards. And I'll remind you that they have substantial awards to make, not only LEU, but also HALEU, there's national security and there's the deconversion. So I think you're asking a very relevant question is whether this size of awards will sort of be enough to sway and influence the market. Honestly, I do not know. It will depend how the agreements, contracts will be structured and how they will flow down to the award recipients. But nonetheless, a good question to keep in mind and keep an eye on.

Our next question comes from the line of Stephen Gengaro with Stifel.

Stifel, Nicolaus & Company, Incorporated, Research Division Just one for me. Outside of sort of the expectations on the centrifuge side over time, are there any other areas of the supply chain that interest you over time?

I guess, I'm trying to understand the question, Stephen, a little more holistically. Obviously, the supply chain --

Stifel, Nicolaus & Company, Incorporated, Research Division Yes. So when we think about the life from mining through [ FuelFab ], are there any other pieces outside of what you're currently focused on, on the centrifuge technology side that you think would be additive or strategically important for Centrus to be involved in?

Yes. Now I understand your question. So the -- our focus right now, and we're very laser-focused on reindustrializing and commercializing our centrifuge technology. And as you know, where we kick started our readiness, as we mentioned numerous times, could vertical integration using my words be helpful? I would not want to speculate or say anything at this point. I can see just in general terms, not speaking for Centrus, but -- I mean, there's obviously advantages in certain level of vertical integration and the efficiency that it brings. So I'm not really revealing or announcing anything here. But I do want to say that we're always evaluating opportunities, we're always evaluating possibilities on how to become more efficient, more cost efficient, more competitive, but our goal and primary mission right now is the enrichment. But nonetheless, good question.

Our next question comes from the line of Jeff Grampp with Northland Capital Markets.

Northland Capital Markets, Research Division I want to go back to the Phase 3 HALEU contract that you guys are currently underway with. Given that the volume targets, I believe, are fairly consistent with levels that you guys have already kind of proven out or demonstrated, what would you say are kind of the main goals or objectives of Phase 3 relative to what you demonstrated in Phase 2?

Okay. So I'm assuming you are talking about the HALEU contract. The goals are to continue producing at our rates and fulfilling the stated deliveries and the production rates that we've committed to. And we're well positioned to do that.

Northland Capital Markets, Research Division Okay. Just to peel that onion back a little bit more. Would you say, I guess, the objective is to continue to demonstrate the, I guess, consistency or longevity to produce at these levels? Or is there anything that's particularly, I guess, different in any meaningful way relative to the operations of the past year or so?

I see what you mean. So just from my perspective, it is termed as a demo program, and we're very thankful and grateful for the opportunity to be engaged in a long-term demonstration. As you know, we have been already demonstrating and continuously enriching for over 1.5 years now. And as we stated publicly before, the performance of our machines have been meeting our expectations as designed. It is a bit awkward because the material that is used during this demo program is actually useful and it's going to be used for useful purposes. So it's sort of like a dual-use program. We will continue learning as much as we can out of that demonstration. And as I mentioned earlier, the equipment and the centrifuges, everything runs as designed and as we expect them to -- within the parameters we expect them to. So we will continue the production.

Ladies and gentlemen, that concludes our question-and-answer session. I'll turn the floor back to Mr. Nagarajan for any final comments.

Thank you, operator. This will conclude our investor call for the second quarter of 2025. As always, I want to extend a thank you to our listeners online and our analysts who called in. We look forward to speaking with you again next quarter.