NuScale Power Corporation Class A

Good afternoon and welcome to NuScale Power's second quarter 2022 earnings results conference call. Today's call is being recorded. All participants are in a listen-only mode. After management's prepared remarks, there will be a question and answer session. If you would like to ask a question on the telephone, please press star 1 on your telephone keypad. A replay of today's conference will be available and accessible on NuScale's website at ir.nuscalepower.com. The web replay will be available for 30 days following the earnings call. A telephone replay will also be available for seven days through a registration link also accessible on New Skills website. At this time for opening remarks, I would like to turn the call over to Diane Hughes, Vice President of Marketing and Communications.

Please go ahead, Ms. Hughes. Thank you.

Welcome to New Skills 2022 Second Quarter Earnings Results Conference Call. With us today are President and Chief Executive Officer John Hopkins and Chief Financial Officer Chris Colbert. Please note that although the merger with Spring Valley closed on May 2nd, this report and our 10-Q will cover the entire three and six months ended June 30th. The income statement includes only new scale expenses. We are not including Spring Valley's expenses prior to the merger and they had no expenses subsequently. We issued the earnings release earlier today, which can be found in the investor relations section of our website at ir.newscalepower.com. We will reference the release while conducting today's call. Before getting started, I'd like to refer you to our safe harbor disclaimer regarding forward-looking statements, which is included in the press release. During today's call, we'll be making forward-looking statements, which reflect our current views of existing trends and information. there is an inherent risk that actual results and experience could differ materially. You can find a discussion of our risk factors, which could potentially contribute to such differences in our S-1 and other filings with the SEC. Also during this call, we may discuss certain non-GAAP financial measures. Reconciliations of these amounts to the comparable GAAP measures are included in the earnings release and SEC filings. I'll now turn the call over to John Hopkins, NuScale's President and Chief Executive Officer,

John?

Thank you, Diane, and good afternoon, everyone. We're excited to be reporting second quarter results in inaugural quarterly report as a publicly traded company. I will cover our accomplishments, both in terms of business development and in spreading our message about nuclear energy's compelling role in a clean energy transition. I will also highlight recent business developments in the context of our five key near-term strategic objectives. Then my colleague, NuScale CFO Chris Colbert, will provide a detailed update on our financial results and reaffirm our outlook. We are enthusiastic about the future of nuclear power and specifically the role NuScale will play in that future. We reached an important milestone on May 2nd when we closed our merger with Spring Valley Acquisition Corp., becoming the first next-generation nuclear energy technology company to enlist our shares in the U.S. markets. As the first publicly traded SMR technology provider, we have even more opportunities and venues to make our case for nuclear, especially modern small-scale nuclear as a safe, clean, and economic source of cost-effective 100% carbon-free baseload power. We believe NuScale is a pure play on a critical emerging trends in clean energy, specifically zero-carbon baseload and next-generation nuclear technology. We appreciate the strong interest from investors. We intend to keep working aggressively to meet our operational and financial milestones, build our business, and change the landscape of clean energy. Now, more than ever, the world needs more clean energy sources, and we believe Newskill is primed to fulfill this need in a disproportionate way. With the tripling of natural gas prices in some areas and a rising threat to energy security around the world, the need is even more urgent for reliable, clean electricity produced from nuclear. Just let me give you some examples. Faced with a fragile electrical grid and the prospect of summertime blackouts, California agreed to earmark hundreds of millions of dollars to buy power from fossil fuel plants that are scheduled to shut down as soon as next year. Tesla is telling its customers in ERCOT, the Texas grid operator, to charge their cars only at night. Russia has reduced natural gas flowing to Europe in a Nordstrom 1 pipeline down to 20% of capacity. And Japan is facing brutal heat waves without efficient energy to meet demand. Renewables such as solar and wind are important to our energy future, but they're not the whole story. Every day more people are realizing the necessity of nuclear power. To combat climate change, we must replace greenhouse gas intensive fossil fuels with emissions-free energy. Nuclear is the only baseload solution. NuScale's SMR can deliver baseload power and load follow, better supporting grids that are reliant on intermittent solar and wind generation. Now I will discuss our Q2 accomplishments, and what we foresee for the months ahead. The best way to do this is to use the context of our five key strategic objectives for 2022, which we shared on our June business update call. As a reminder, our five-year near-term objectives are, one, we intend to secure our next committed customer by year-end. Two, we intend to issue long lead material specifications for the nuclear reactor pressure vessel. Three, we intend to complete the reactor building design. Four, we intend to submit a standard design approval application to the U.S. Nuclear Regulatory Commission for the Voyager 6 module power plant that UAMP's plans deploy. Five, we intend to complete our standard plan design, which I'll also refer to as SPD throughout my remarks. Now let's look at the progress we made in Q2 towards each of these goals. First, we continue to build a potential customer pipeline. The progress is solid at our anchor customer UAMPs in the US, and we continue to strengthen our six relationships around the world. Moreover, we have 18 signed and active MOUs in 11 countries and nine strategic relationships, some of which I'll discuss in a moment. Customer opportunities in a pipeline are now at over 100, and we are happy with the level of discussions we are having across the board. Looking overseas, we have highly concerted efforts in Romania. On June 26, the U.S. government committed $14 million towards a front-end engineering design study in Romania that could lead to the deployment of our Voyager 6 nuclear power plant. This eight-month effort, which is expected to cost $28 million in total, will include contributions from Romania S&E Nuclear Electrica and other industry participants. The project will provide the Romanians with key site-specific data needed for the deployment of our power plant, such as cost, construction schedule, and licensing details. On May 23, the United States announced it would provide Romania with a new-scale small-module reactor, SMR, simulator for Romania to establish an E2 center at the University of Politecnica in Bucharest. The E2 center will further Romania's goals of becoming a leader in secure and safe SMR deployment in an SMR educational and training hub in the region. This project is already underway. We are working with the university on planning, coordination, and infrastructure needs. We're also currently working to organize a supplier day event in September to further support our efforts in Romania. During the quarter, we also made great progress in Poland. On July 8th, our Polish partner KGHM, a leading copper and silver mining conglomerate and large industrial energy user, submitted to their regulators an application to assess NuScale's technology. Meanwhile, our proposal for the full scope of work has been issued to KGHM and is now under review. In early August, we expect to receive the tender offer and statement of commencement for the licensing work and start negotiations on the full scope. To support the licensing process, KGHM intends to provide Polish regulators with updated licensing and safety reports by the end of October. To remain on track with this goal to choose a potential site for the end of the current year. All in all, we are pleased with our progress towards securing that second committed customer by year end. Second is the long-lead material specification for the reactor pressure vessel, one of the major components to the new scale power module, which was completed in May. In addition to supporting our ability to place long-lead material orders, this also represents early completion of another milestone in the DOE development program. In addition to material specs, We have initiated certain pre-manufacturing activities to ensure that we can support client manufacturing schedules. We executed the upper RPV forging die purchase with Doosan in April of 2022 to prepare for the start of manufacturing. We also completed physical testing of the steam generator tube installation, demonstrating progress on our manufacturing readiness. We have completed negotiations with PAR Systems on term sheet for manufacturing procurement of the reactor building crane. In late July, we announced an agreement with National Technical Systems to establish an equipment qualification test chamber, which will allow us to qualify components that meet U.S. Nuclear Regulatory Commission and plant-specific requirements. The initial FXM-19 trial forging was completed this July And an additional 4G manufacturing trial is currently underway. We also completed pressure sensor proof-of-concept testing. The key takeaway from all of this activity is that NuScale is extensively focused on readiness by actively engaging with our manufacturing partners and completing fabrication tests for first-of-a-kind components. I would go so far as to contend that no other Western SMR developer is better prepared to start planned construction than new scale. Moving along to our third objective, we completed some key elements of reactor building design. We issued the Revision Zero Reactor Building Structural Design on July 1st, and another milestone in completion for our DOE development program. Fourth, we made progress on critical activities that support the Standard Design Approval Application, or SDAA. This included delivery of reactor building crane design inputs, completion of reactor building seismic inputs for fuels analysis, and emergency car cooling system valve design deliverables. We also submitted revision three of a method by which the emergency planning zone size will be established. Testing support of the SDAA is ongoing at the NuScale Integral System Test Facility in Oregon. I want to underscore an important facet of our test efforts. The fact that NuScale has reached test mode shows that our efforts are real and they are moving quickly toward manufacturing and commercialization. This is a huge differentiator via the other advanced technology providers. Finally, the SPD is well underway with completion still projected for year end. By completing the SPD in advance of any construction activities, our customers can be confident that we have thought through the challenges of deploying all aspects of a new-scale plant. Completing this SPD at our expense saves our customers money that they can then allocate for site-specific design changes, as opposed to helping foot the bill for the design of a plant. We are pleased with our progress on these near-term objectives. Furthermore, we attained important accomplishments outside of these five priorities. Let me elaborate. Most importantly, we formed the new Voyager Service and Delivery Business Unit, or VSD. This unit will be comprised of services, supply chain, and client management functions. The VSD will help us to more effectively deliver our Voyager plans and services, which in turn will help our customers more easily operate and maintain a Voyager plant. This unit is a key step in our maturization from an R&D organization to a product services and delivery enterprise. The VSD will be led by Tom Mundy, who previously served as Chief Commercial Officer, Managing Director for the United Kingdom and Europe, and the Vice President of Program Management. Prior to joining NuScale, Tom served as founding CEO and President of Exelon Nuclear Partners, LLC. the operating and services arm of a well-established nuclear generating company. I believe Tom's skill and expertise will lead VSD to a great success. During Q2, we also made some significant progress in partnerships. Most importantly is the license agreement with our partner, Paragon, which will enable widespread use of our NRC-approved Highly Integrated Protection System, or HIPS, platform. Paragon is a great partner for us. For over 30 years, they have provided the nuclear sector with established technology solutions, such as instrumentation and control systems, sophisticated and repair programs. The HIPS platform is the latest iteration of this track record of success. The HIPS platform is an efficient, cost-effective, and cyber-secure reactor protection solution. We developed the HIPS platform with Paragon's Rock Creek Innovation subsidiary. which develops safety-critical applications. Our objective is to make the HIPPS technology available to the entire nuclear power industry. Enhancing the safety of all nuclear plants improves public perception of nuclear power, thus supporting our own marketing efforts. We also announced a collaboration with Lightbridge Fuel, an advanced nuclear fuel technology company. The DOE awarded MIT $800,000 to study the use of accident tolerant fuels in our SMR. By studying and simulating the usage and safety performance of their fuel, we have the potential to improve the safety profile of nuclear energy even further beyond the substantial improvements offered by our SMR design. Now, let's move to the latest regulatory developments. Two weeks ago, the NRC voted unanimously to approve the design certification of our SMR. The vote represents the final NRC approval of our design. We are the only SMR vendor to submit an application for design approval and the only SMR design approval so far by the NRC. We anticipated this approval in large part because the NRC had already issued a standard design approval for our 50 megawatt design back in 2020. Once an SDA is issued, the final rule is overwhelmingly likely to be awarded. To avoid confusion, keep in mind that our fourth near-term objective, the SDAA completion, refers to our newer 77 megawatt six module design. Beyond this development, which applies directly to us, the general support for nuclear continues to grow. For example, at this year's G7 Global Infrastructure Partnership Summit, President Biden reaffirmed our country's pledge to combat climate change in part by supporting our SMR deployment in Romania. This is a key demonstration of the White House partnership for global infrastructure and investment and a major accomplishment for our business. Furthermore, in Europe, member countries are advancing to reduce greenhouse gas emissions based on their nation's energy portfolios and infrastructure. We applaud the EU latest decision to rightfully include nuclear technologies as a form of green investment under the EU taxonomy. The Europeans are starting to realize that nuclear is critical to their future. In fact, and somewhat surprisingly, given their stated stance on nuclear, Germany recently decided not to retire the remaining three nuclear power plants due to the dire need for this clean source of power. Now, I'd like to turn the call over to Chris Colbert,

to cover our financial results. Chris? Thank you, John, and good afternoon, everyone.

I will discuss our second quarter financial performance, update you on our strong capital structure and financial position, then wrap up with reaffirming our outlook for the balance of 2022. You can find all the detailed figures and numbers in our earnings release, so I will focus on the primary drivers of performance. All the figures I referred to will be for the second quarter of 2022, unless I note otherwise. As Diane noted at the start of the call, this earnings release in our 10-Q will report new-scale results for the entire three and six months ended June 30th. Note that our income statement includes only new-scale expenses. We are not including Spring Valley expenses prior to the merger, and they have no expenses subsequently. Since revenue is still small, our focus is on effectively applying our operating expense budget. As you would expect, with funding in place in May, OPEX grew versus Q1 as we ramped our commercialization plan. R&D expenses increased due to higher professional fees associated with the standard plan design. We also increased headcount to support our licensing team. The increase in G&A resulted from new hires across the organization, partially offset by lower accounting and finance fees. We spent more on sales and marketing as we built our sales teams and incurred travel expenses as our team worked to secure contracts around the world. The DOE cost share increased as we incurred higher qualifying costs. Having covered that, we did generate revenue in the quarter, and it was somewhat higher than the first quarter. The better top line was due to higher procurement and construction activities supporting UAMs, which is cost shared with DOE, more customer early works agreements launching, and more consulting services. All in, our loss in Q2 was a couple million less than the loss in Q1. Looking at other uses of cash, CapEx was minimal, consistent with our asset-light model. CapEx was mostly for software and computer hardware to support R&D. Looking ahead, we are well-funded to meet our financial projections over the next several years. Our $351 million in cash and no debt gives us substantial financial flexibility and years of runway. Let me move now to considerations around our share count. Not surprisingly, there is some confusion, which is a natural result of the complexity associated with our transition to being publicly traded. The slide deck accompanying this call includes a breakout of the share count and how it is determined. Let me walk you through some of the key calculations. At quarter end, there are over 42 million shares of Class A common stock outstanding and over 178 million shares of Class A common stock issuable upon the exchange of new scale LLC Class B units. The Class A common stock represents the equity raised during the merger with Spring Valley Acquisition Corp. It is comprised of 14.4 million shares from Spring Valley Class A shareholders 3.9 million shares from Spring Valley founders, and 23.7 million shares from pipe shareholders. The new scale LLC Class B units represent the legacy shareholders of new scale power. These legacy Class B units are exchangeable into Class A shares. In the coming quarters, we expect that shareholders not subject to lockups will elect to exchange their Class B units to Class A shares. There are also more than 35 million shares of Class A common stock issuable upon the exercise of outstanding stock options and warrants, and 1.6 million shares subject to earn out. Outstanding stock options total 14.7 million, public warrants comprise 11.5 million, and private placement warrants amount to 8.9 million. All warrants are eligible to be exercised over the next five years at a strike price of $11.50. Given that the market value of NuScale common shares has trended nicely above the strike price level, we have assumed the full exercise of all warrants and related earnouts in our calculation of fully diluted shares. So adding it up on a fully diluted basis, we have 257.2 million shares. If any of you need further color on the share count, please reach out to our IR team. We are happy to walk through the calculations in more detail. We understand the level of complexity around the multiple transactions and want to ensure that everyone following us fully understands how we arrive at our ownership structure. Finally, a quick reminder, we are reaffirming our projections for 2022. This is the same outlook for a shared in December of last year and blessed again in early June on our business update call. We are confident in our business plan and happy to see progress as anticipated. Let me turn the call back to John to conclude. John?

Thanks, Chris. Before we go to Q&A, I want to leave you with a few observations to reinforce why I'm so confident on our future. First, demand for clean, safe nuclear power is building all over the world. Our industry-leading technology will enable us to supply the world with the carbon-free baseload power it needs to fight climate change. The industry has increasingly recognized that a NuScale's next-generation nuclear technology is safer, more versatile, and more cost-efficient than ever. Our level of safety far exceeds the already high standards of currently operating plants, which uses decades-old technology. And finally, we are making great progress on our five near-term goals, which are securing additional committed customers, issuing long-lead material specifications, completing the reactor building design, completing our standard plan designs, and advancing our standard design approval application with the NRC. We are highly confident we can achieve these goals by year end. With that, we'll turn to questions. Operator, we're ready to begin the question and answer portion of the call, please.

Thank you.

If you would like to ask a question on the phone lines today, you can press star 1 on your telephone keypad. Once again, everyone, that is star one to ask a question. We'll take our first question from Mark Bianchi with Katwin.

Hey, thank you. I guess starting with maybe for Chris, you've got the revenue outlook that you're reaffirming here for the year. I'm curious how we should be thinking about cash use in the third and the fourth quarter Should that be something that's sort of shrinking closer towards a break-even level or maybe any help on where cash balance is expected to end the year?

Yeah, so in our projections we did in December of last year, we showed a use, I think, of $155 million of free cash flow this year. And so we're still tracking that. So when you look at what we had in hand, plus what we had for the first half of the year, you should be able to come to a cash number at the end of the year. We didn't break that out separately and project it, but I believe you can derive it from the information I just cited. Mark?

Yep. No, that's super helpful. Thanks. I'm curious, you know, with the most recent announcement here in the industry with Dow and X Energy, which I thought was kind of interesting, how do prospects like that look for new scale investments? are there industrial applications that you're discussing with customers, you know, that could be something that happens this year in terms of an announcement, or are those sort of further afield for you?

Yeah, Mark, just John. First, I applaud Xenergy in that, you know, we don't want to be a monopoly. We don't want to see other technologies advance. Dow is a – in fact, I was at the – the conference in Houston, and during a discussion with the Dow CEO, commented that they were looking at SMRs potentially for process heat, which we believe is sweet for us as well. I mean, as you know, New Scale doesn't have to be tied to a grid for safety purposes, as proven to the NRC. So at the end of the day, having companies like Dow and others who are looking at process heat perhaps hydrogen or ammonia production, we can be right next to the end user. So companies like Dow, I think, are pretty forward-thinking and looking, and they've been doing this for quite some time. It wasn't just out of the blue. So the answer is absolutely we have abilities to have others similar to Dow utilize our technology.

Okay, great. Maybe just one more on the UAMPs and questions. carbon-free power project. I think there's some cost estimates that Floor's working through there. Can you maybe talk to the next milestones associated with that and how investors should think about, I've gotten the question a few times, like what's the possibility of costs coming in higher than expected and kind of risking the project viability? I'm just curious for what you guys can share on that.

Yeah, Mark, John again. I was actually at a project review a couple weeks ago, which was with the UAMS management team from CFPP. Flora attended. Also, we had a Japanese manufacturer. We went through the numbers. You know, as anything, there is some escalation in commodities, which is across industry. However, you know, having suppliers such as the Dussons and the Samsungs of the world as also minority shareholders, they're willing to really sharpen the pencil. So they all, our supply chain anticipates, you know, there will be some increases, but at the end of the day, you know, we've all got to ensure that this project's successful. So the meeting went well. There were a lot of pluses in terms of what was announced and things that are getting done on that project. So I feel, again, as I said, you know, with gas prices where they are, you know, around $8 million per BTU, I feel pretty comfortable we're going to come at a target price that's going to be, well received by the customer.

And what's the timing on sort of the next update on that? Is that something we should be looking to Floor for an announcement, or would that come from you guys?

No, that would come from Floor. They're in the process of finalizing their Class 3. As you know, there's five classifications of estimating, so they'll be working towards their Class 2 up to Class 1. So I suspect here within the next month or so there should be an announcement coming out from the customer.

Super. Thanks so much. I'll turn it back.

As a reminder, everyone, that is star one to ask a question. We'll take our next question from Shara Peruzza with Guggenheim Partners.

Hey, guys. How are you doing? Good. Thank you.

Hey, guys. Just another topical item just around the Inflation Reduction Act. Just curious, is there any sort of benefits that we should be thinking about to SMRs and U-scale in general, or do you guys kind of view it for your internal planning purposes as neutral, just trying to get a bit of a sense at the potential implications there?

That's a great question. As you can well imagine, we're all around this as well as others, and Chris, it's probably better served for you to answer. You've been closer to it than anybody. Yeah, so...

This includes the chief financial officer role as I manage our government relations. And there's been a lot of discussion about the Inflation Reduction Act. One, it was a big surprise to everybody. Two, it's taken a while for people to get their heads around it. Three, our general assessment is that it does provide benefits for customers who would invest in clean energy technology above and beyond what they currently enjoy. and you know we think that our customers would you know indeed benefit from that but we have asked our customers you know what it specifically means to them because there are a number of um you know requirements um other call outs and factors that come into play so we're kind of waiting to hear you know one see a pass on friday we hope and second to hear from our customers how that factors into them and how we can make sure that we get the greatest benefit that act for them in terms of how we structure our contracts and deliver the project. But generally speaking, it certainly, we think, should be a positive task. We defer to our customers to help us interpret the benefit there. But if it does have that benefit, we would expect to see that flow into our really customer action as we go forward in the year as they evaluate and rethink about what they may do investment-wise in clean energy. Got it. So no concerns, I guess, internally around sort of the fact that it's, you know, I guess trying to incent other technologies as well under the legislation as soon as it passes.

No, we don't see that, Mark.

Yeah. And in particular, Mark, there's one section that goes in, specifically it was a concern of Senator Manchin's was to make sure that it was a technology neutral. And so for... technology is going into construction after 2024. I think it is. It's really measured based upon what they output in terms of carbon dioxide. And, uh, you know, and we don't even met in the production, um, of megawatt hours, carbon dioxide. So we're in this equal footing with your wind and solar. Got it. Okay. Appreciate that. And then I think he sort of touched a little bit around some of the pressure points from an LCOE perspective, perspective on UAMs. Um, But just maybe on the business itself, are you seeing any areas of maybe above plan drags on cash at this point?

So you want me to take that one, John?

Yeah, please.

Yeah. So, you know, in reaffirming our outlook for 2022, that includes what we saw for use of cash. And, you know, we monitored very tightly where our spend is. but we haven't yet seen any negative impact in terms of an increased drag on cash for 2022. You know, that said, we'll be continuing to monitor it. But most of our, you know, spending is in costs for labor, for employees and staff, and then for labor that's provided by our contractors, such as Floor and Sergeant Lundy. And, you know, as we see, you know, perhaps some labor pressures flowing through there, we may see some of that come through. But as of now, we're still tracking to what we projected at the end of last year in terms of cash usage for what we need to get done.

Yeah, Mark, and as you know, cash is king for us, so being a good steward of that cash is critically important. All our vendors who submit their invoices to us go through a rigorous process to prove competitiveness, so we feel pretty comfortable right now.

Okay, got it. And then just lastly, the process obviously with Romania appears to be I guess one of the more advanced next to UAMPS. You've got the MOU, your building simulator. I guess just what's next in the process? What should we be looking for out timing?

Yeah, this is John Hopkins. I was in Romania about three weeks ago. I met with their prime minister and their energy minister, and they, again, indicated the importance of this project to the country of Romania for, you know, predominantly energy security as well as climate disruption. But the next process is the – Scheduled towards the end of August, the CEO of Nuclear Electrica is coming with his team to Corvallis. We're going to sit down, and then from there they'll go out to the project and they'll sit down with us to go through the project sequencing and scheduling. They're excited to move this as soon as they can. Another good plus on this is we know their regulators are in communications with the Nuclear Regulatory Commission. Having gone through the rigor of that NRC, They don't want to have to reinvent the wheel. They will, in fact, put their solvent stamp as Somalmania, that they're more than willing to utilize data from the NRC, which is very important.

Perfect. I appreciate it, guys. By the way, it's Sharon for Mark. Thank you so much. Appreciate it.

Thank you, sir.

As a reminder, everyone, that is star one to ask a question. We'll take a follow-up question from Mark Bianchi with Cowan.

Hey, thanks. Maybe a couple other points that were updated in this quarter. So you have the Lightbridge announcement there. How does that compare to some of these other fuels that we've heard, like Triso, that's out there? How is it different? What is it looking to do that might be similar or different? And then is the thought that If successful, you could drop this fuel into your existing reactor design, or would there need to be, you know, a lot of change to how the reactors put together?

You know, I've asked Dr. Jose Reyes that same question, and, you know, we don't need accident-tolerant fuels because of our safety design basis. This design, it's not required. However, we are working with him, and maybe future state and years to come, there could be an opportunity to use accident-tolerant fuels. So, but nothing near term. Chris, do you have anything to add?

It does really represent an opportunity for us to improve upon potentially the performance of our design, and as well as providing added benefit in terms of the accident tolerance aspect, which does figure into some way in the EU taxonomy. So it could be helpful in both those areas, but it's not required for what we're currently doing. And we see it as being truly a benefit if it comes out the way that we think it would.

Gotcha. Okay. And then the other one was just on the Paragon agreement. My understanding was not part of the business plan that you had put together and presented, so it would be incremental. One, I guess, correct me if that understanding is wrong. And then the next part of the question is, what is the addressable market there for you? How big of a revenue and cash flow contributor could this become?

Yeah, Mark, this is John. You know, we worked with Rock Creek for many years that was acquired by Paragon in development of the HIPS program, and we've entered into an agreement, a revenue sharing agreement with Paragon. However, I don't know necessarily that in terms of, you know, near term that revenue is being derived is going to be really material. But it's just, you know, one that it's a pretty innovative process. And having gone through it, we talked with Paragon, and we felt that it should be opened up to the marketplace and not just limited to NuScale alone.

In terms of the stressful market, Mark, you know, it really could be used for retrofitted existing reactors if they wanted to replace their analog systems. And any new reactive design coming through, if they wanted to take advantage of it, could use it. And it has a... benefit of being approved by the NRC in terms of as a safety platform. So that has great attraction to people. So really, you know, whatever we're not able to, even though John doesn't want to be monopolist, whatever we don't monopolize in the market out there potentially could be these systems providing the safety function for those other designs that do get in the market.

And is it something that would be sold as a service more likely than sort of a one-and-done equipment or sort of application sale?

Yeah, it's tied to revenues that they gain off the sale of what they embed in the overall product.

Okay, super. Thanks so much, guys. I'll turn it back. Just to remind everyone, that is star one to ask a question. All right, and at this time, there are no further questions.

I'd now like to turn the call back over to John Hopkins for any additional or closing remarks.

Well, thank you, Operator, and thanks to all for you participating in our call today. Before we conclude, again, I'll turn it back over to Diane, who will discuss upcoming investor events at which we will be present, and we're looking forward to our next earnings call. Thank you very much. Diane?

Thanks, John. We currently have three investor conference appearances scheduled for August and September. Please note attendance at these conferences is by invitation only for clients of each respective firm. So interested investors, please contact your respective sales representative to register and schedule one-on-one meetings with us. Tomorrow, August 11th, we'll participate in the Raymond James Aspen Energy Summit in Aspen, Colorado. In mid-September, we plan to present at the UBS Global Energy Transition Conference in London. On September 14th, we'll present at the Virtual Energy and Utilities Access Day in hosted by the New York Stock Exchange. With that, we will conclude today's call. Oh, actually, we will make a press announcement soon to share more specifics around our planned investor conference appearances. With that, we will conclude today's call.

Thank you for your participation. You may now disconnect. Thank you, and that does conclude today's presentation. Thank you for your participation. You may now disconnect.