Centrus Energy Corp.

Greetings. Welcome to the Centers for Energy's fourth quarter year-end 2020 earnings call. At this time, all participants are in listen-only mode. A question-and-answer session will follow the formal presentation. If anyone today should require operator assistance during the conference, please press star-zero from your telephone keypad. Please note, this conference is being recorded. At this time, I'll turn the call over to Dan Lessico, Vice President, Corporate Communications. Mr. Lessico, you may now begin.

Good morning and thank you for joining us. Today's call will cover the results for Q4 and year-end 2020 and December 31st. Here today for the call are Dan Poneman, President and Chief Executive Officer, Philip Strawbridge, Senior Vice President, Chief Financial Officer, Chief Administrative Officer and Treasurer, and John Dorian, Controller and Chief Accounting Officer. Before turning the call over to Dan Poneman, 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 annual report on Form 10-K 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 Centris website. I would like to remind everyone that certain of the information that we may discuss on this call today may be considered forward-looking information that involves risk and uncertainty, including assumptions about the future performance of Centris. 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 is accurate only as of today, March 19, 2021, unless otherwise noted. This call is the property of Centris Energy. Any transcription, redistribution, retransmission, or rebroadcast of the call in any form without the express written consent of Centris is strictly prohibited. Thank you for your participation, and I will now turn the call over to Dan Pottenham.

Thank you, Dan, and thank you to everyone on the call today. I am pleased to report that in 2020, despite the incredible challenges brought on by the COVID-19 pandemic, Centris Energy returned to profitability. With total revenue growing to $247.2 million, we posted a net profit of $54.4 million. Driven by the rising value of our stock, we launched a public offering that raised about $25 million before expenses. We also completed a cash tender offer to retire approximately 60 million shares of Series B's senior preferred stock and did so at a 25% discount. creating more value for our Class A shareholders. These efforts have strengthened our balance sheet and benefited our shareholders as reflected in recent stock performance. There are a number of factors driving this success, but none of it could have been possible without the hard work and incredible talent of our employees. I'm so proud of each and every one of them and all that we have accomplished together. At this time a year ago, the country had just entered lockdown. We could not have known at the time that extensive teleworking, masking, and social distancing would be a part of our lives for so long. But everyone in the company has risen to the challenge. We have not only endured, we have gotten stronger. And I am convinced that the best is yet to come. We are, of course, quite fortunate that the COVID-19 pandemic does not affect our revenue in the way that it does for many direct-to-consumer businesses. Nearly all of our revenue comes from stable, long-term contracts with utilities and the U.S. government. The pandemic hasn't taken away our ability to make deliveries to our customers, and we expect to continue making those deliveries without interruption. But because the health and welfare of our employees and their families is our paramount concern, the pandemic has forced us to change the way we do our work. We have shifted as many employees as possible to telework, and taken aggressive steps to protect those who must continue their classified and technical work at our facilities in Tennessee and Ohio, building what will be a first of a kind advanced nuclear facility. Under the three-year $115 million was awarded by the U.S. Department of Energy in 2019, we are deploying a cascade of our AC100M centrifuges to demonstrate production of a next generation nuclear fuel called high assay low enriched uranium or HALU. Construction is well underway and the Nuclear Regulatory Commission is conducting a technical review of our license amendment request. Upon NRC license amendment approval and successful completion of the NRC's operational readiness review, Centris will have the nation's first NRC licensed HALU production facility and expects to begin production by early 2022. As our regular listeners and investors already know, the low-enriched uranium, or LEU, that is used in the existing fleet of reactors is enriched so that the concentration of the fissile isotope uranium-235 is little less than 5%. HALU is further enriched so that the U-235 concentration is between 5% and 20%. The higher concentration of U-235 in HALU allows for smaller fuel cores, better fuel utilization, reduced volumes of waste, and a variety of other advantages. Most of the next generation reactor designs that are now under development are expected to operate on HALU. In fact, of the 10 reactor designs that the Department of Energy selected for its multibillion-dollar advanced reactor demonstration program, Nine are designed to operate on HALU. The Department of Defense also has a program underway called Project Pele to build a prototype of a mobile military microreactor within the next three years. When they solicited applications for the program, one of the key requirements was that the reactor must operate on HALU. The same advantages that HALU can bring to next generation reactors also make it attractive to our current fleet of nuclear reactors. There are a number of next generation fuel designs in development that would require higher enrichment levels than today's fuels. This would allow the reactors to reduce the number of refueling outages and sell more power to the grid. While our initial production capacity next year will be modest, we can expand the facility in modular fashion. Subject to the availability of funding and or offtake contracts, centrists can deploy additional centrifuges in our facility to meet whatever level of production is required for commercial and or U.S. government purposes. Spot prices for enrichment measured in dollars per separate work unit or SWU have increased by almost 60% since reaching their lowest point in August 2018. As the price has continued to climb, more utilities have gone back into the market to secure their fuel supply for future years. So, we expect to have strong selling opportunities moving forward. In fact, from November through the end of January, our sales team had one of its most productive periods in recent years, securing new contracts and sales commitments valued over $100 million. That includes long-term sales through 2027. These new sales and others we made throughout 2020 have enabled Centris to maintain the value of our long-term order book at approximately $960 million, even as some of our oldest and highest priced contracts have rolled off. The other major development in our LEU segment last year was the resolution of the Russian Suspension Agreement, which is a trade agreement between the United States and Russia that places limits on the amount of Russian nuclear fuel that can be imported. As you may recall, the negotiations between the U.S. Department of Commerce and the Russian Federation over extending that trade agreement had cast considerable uncertainty over our largest supply contract because it was not clear how new import limits starting in 2021 might affect our ability to execute on our existing supply contract and make deliveries to our U.S. utility customers. The agreement reached in October and codified in legislation sets aside a portion of the annual import quota to be used for central supply contract, which runs through 2028. The amount set aside are sufficient for us to meet our strategic plan objectives and deliver on our sales commitments in the US market. This has removed a significant source of uncertainty for us and gives us access to reliable affordable supplies for many years as we work to reestablish our own domestic production. And now for more details on the year on financial results, I'll turn the call over to Philip.