NuScale Power Corporation Price & Performance (SMR)

Welcome to NuScale's fourth quarter and full year twenty twenty four earnings results conference call. With us today are John Hopkins, President and Chief Executive Officer and Ramzi Hamady, Chief Financial Officer. On today's call, NuScale will provide an update on our business and discuss financial results. Will then open the phone lines for questions. This afternoon, we posted a set of supplemental slides on our Investor Relations website. As reflected in the Safe Harbor statements on Slide two, the information set forth in the presentation and discussed during the course of our remarks and the subsequent Q and A session includes forward looking statements reflect our current views of existing trends and are subject to a variety of risks and uncertainties. You can find a discussion of our risk factors which could potentially contribute to such differences in our Form 10 ks and subsequent SEC filings. I'll now turn the call over to John Hopkins, NuScale's President and Chief Executive Officer. John? Thank you, Scott, and good afternoon, everyone. Reflected on 2024, our journey has been dynamic and rewarding. And I'm delighted by our achievements. We have significantly bolstered our financial standing advanced the commercialization of our pioneering small modular aperture technology and laid the groundwork for sustainable long term value creation.

Shortly, Ramsey will provide insights into our financials. I'd like to start with key business updates. As illustrated on Slide three, we are witnessing good progress with Rural Power. As you may recall, Rural Power plans to develop a six module SMR power plant with a four sixty two megawatt of installed capacity. On the site of a decommissioned coal fired power plant indoor chest. NuScale is committed to supporting Romania's energy security and decarbonization initiatives. We are diligently progressing our responsibilities for Row Power Phase two front end engineering design This floor led FEED Phase II provides meaningful revenue and cash flow for NuScale. Moving on to Slide four, it's essential to emphasize that NuScale stands as the sole near term deployable SMR currently available. In contrast, other recently announced SMR projects in The U. S. Are focused on demonstration plants, Following construction, these demonstration plants will have to operate for a minimum of four years prior to the U. S. Nuclear Regulatory Commission, NRC, providing regulatory approval. Which is required for commercial operation. NuScale has committed over $2,000,000,000 to develop and license our unique SMR technology. Which has received design certification from the Nuclear Regulatory Commission. No other advanced reactor SMART design has submitted a standard design approval or SCA to the NRC at this point.

And these efforts remain years away from approval compared to our established timeline. [indiscernible] are primed for immediate commercial development. We're also making headway on a technology review of our upgraded SDA application with the NRC. Aiming to increase power output per module from previously NRC licensed 50 megawatt electric to 77 megawatt electric. This review is set to conclude by mid-twenty twenty five.

Our design upgrade is founded on the same rigorous safety principles and technical features already authenticated by the NRC in 2020. We believe that the 77 megawatt electric NuScale power module will cater to a broader spectrum of customers while enhancing economic efficiency. Now let's turn our attention to manufacturing. NuScale is clearly leading the industry in this critical element of commercialization. Our supply chain partner and strategic investor Doosan Interbility has continued to make progress advancing the first six new scale power modules. The only NRC approved SMRs in production More recently, this past quarter, in coordination with Doosan and our development partner IntraOne Energy, advanced discussions with prospective customers seeking 12 module configurations Let us prolong material items for an additional six modules. NuScale has 12 modules in production a testament to the confidence we have in our customer pipeline and our commitment to 2,030 delivery. We are advancing certain activities in manufacturing license to get ahead of potential bottlenecks and commercial deployable schedules. For example, global manufacturer Alima recently received an order to supply steam generator tubes for new scale small module reactors. On Slide five, there are images associated with our manufacturing progress. This includes the production of large forgings in the maturing of our control rod drive mechanism design.

Key lessons from our manufacturing readiness work are incorporated into design to save time during production work and support deployment shortening delivery schedules significantly. Coupled with our Inter One development partnership, NuScale's SMR technology is poised to move fixed exploding demand for clean energy across multiple sectors. As illustrated on Slide six, near term energy demand in The U. S. Is expected to grow at levels we haven't seen in decades. A recent IHS Energy forecast, a anticipates a six times increase in growth electricity demand in the next twenty years versus the growth of the prior twenty years. This significantly accelerated electricity consumption consumption in the coming decades will fundamentally change the landscape of power production. The projected growth spans various sectors in driven by the reshoring of manufacturing and electrification of many industries. Including oil and gas and chemicals. However, the primary driver is a 20 fourseven load required by artificial intelligence data centers.

According to a December 2024 U. S. Department of Energy report, data centers may triple their energy use in the next three years alone.

Under that forecast, data centers could account for as much as 12% of the nation's electricity consumption by 2028. The world's largest technology companies are driving this need.

Microsoft said it would spend approximately $80,000,000,000 in a 2025 fiscal year to build data centers for its booming artificial intelligence business. In addition, in December, Meta announced that it is seeking up to four gigawatts of new nukes of power to help meet the company's AI and sustainability objectives. And it's worth emphasizing that this is not about peaking demand.

Data centers have both high capacity demand and high energy demand. So the challenges is multifaceted. Significant new energy sources are needed both to produce enough power when usage is at its highest and to support sustained heavy levels of energy consumption over long duration. Yet as seen in Slide seven, the megawatts currently coming online in The U. S. Are mainly intermittent sources and short duration battery storage. Looking more closely at 2025, planned capacity additions for three major U. S. Grid operators Coupled with reality of additional fossil fuel retirements, it is clear where nuclear and SMARS in particular can be a major game changer. We see massive opportunity to provide baseload clean energy You cannot run a full time grid on part time power. And it's important to bear in mind that existing utilities are challenged to divert nuclear load from existing customers. In an area where more energy is necessary, to fortify The U. S. Electricity grid, power economic growth and VULSA America's global competitiveness the need for new nuclear is a reality. And entities throughout our economy are taking notice. As we've discussed in the past few slides, the demand for Niqular has never been more pronounced.

As viewed on Slide eight, NuScale NuScale seeing increased interest across the board from a variety of for different use cases. On the data center side, our commercialization partner EnterOne is leading discussions with America's leading hyperscalers at the most senior levels. And conversations are focused on powering AI These executives understand how attractive our site boundary emergency planning zone is enabling us to close to the end user. They also appreciate our off grid capabilities. Critically, given the speed which they need power, prospective customers recognize that NuScale is years ahead of other proposed SMR technologies. And they are attracted to Intrar One Energy's commercial model. Which is structured to provide financial flexibility and mitigate deployment risk. Notably, conversations with hyperscale was are also driving increased engagement from the utilities that currently power them. Importantly, Enter One provides utilities to commercial consumers with a solution to get SMR generated energy offtake without the need to capitalize own or operate a Nooten Energy power plant, Switching gears for a minute, even as we drive our commercial NuScale has not stopped innovating. As an example, our Chief Technology Officer and Co Founder, Doctor. Jose Reyes, recently published a white paper illustrating why NuScale is well positioned to benefit from the January 2025 Department of Treasury final regulations met to boost domestic production of clean hydrogen fuel through tax credits As noted on Slide nine, this credit is worth up to $3 per kilogram of hydrogen production for those that can qualify, for example, by using NuScale, For over a decade, that integrate a new scale plant with high temperature and high pressure steam electrolyzers.

With the end goal of decarbonizing this important sector.

Before I turn the call over to Ramsey, I want to touch on a few factors that we view as positive for NuScale. First, while Advanced Nuclear has long enjoyed bipartisan support we are pleased by the new administration's enthusiasm sense of urgency for new nuclear.

Recently, Confirmed Energy Secretary Chris Wright has a deep understanding of the nuclear sector. Committing that he wants to make it easier to research, invest and build small modular reactors. In addition, a few weeks ago, President Trump established the National Energy Dominance Council, led by Secretary of Interior Boroban. And Energy Secretary Wright Within a one hundred day timeframe, the Council advised on how best to improve processes for permitting, production, generation, transportation, export of all forms of American energy. This will also include actions that each agency can take to increase energy Importantly, the executive order specifically prioritizes bringing small mod reactors online. This effort is a strong step towards securing our energy future and ensuring The U. S. Has the resources to meet demands that AI will place on our grid. Second, as we've discussed at length, our competitive strengths Whether it's industrial electrification, process heat, or the rapidly escalating demand for the data economy, the reliable clean energy produced by NuScale's SMR technology plays a critical part in the energy solution of the future. Moreover, we are not burdened by the additional hurdles faced by non light water reactor SMR technologies. So called Generation four SMR technologies require high assay, low enriched uranium fuel or HALO, Today, there is no supply chain for HALU.

This fuel is not commercially available and production efforts are impeded by national security concerns. Given global diplomatic efforts from that proliferation in the absence of substantive recent investment, many experts believe HALEU Technologies could be a decade, if not more, away from commercialization. Lastly, I cannot end without emphasizing the for the technological and safety benefits of NuScale's SMR, Potentially customers understand and appreciate what sets NuScale NuScale. Including our partnership with InterOne Energy.

I'm proud of where we are and I'm looking forward to updating you on our progress over the course of 2025. Now over to Ramzi for the financial update. Thank you, John.

And hello, everyone. Our financial results are available in our filings. So my focus will be on explaining major line items. As seen on Slide 10, I'll start by discussing our financial results. All figures following are for Q4 twenty twenty four unless I state otherwise. NuScale's cash position grew substantially during the period ending the fourth quarter with cash cash equivalents and short term investments, of $446,700,000 compared to 125,400,000.0 at the end of twenty twenty three. NuScale's significantly improved liquidity position provides a strong foundation for continued development and our push towards commercialization of our industry leading NRC approved technology. In Q4 twenty twenty four, [indiscernible] Triggering conversions among bondholders which generate proceeds of 205,300,000.0 in the quarter. Or total cash proceeds of $227,700,000 since issuance. In addition to buttressing our balance sheet, the elimination of warrants greatly reduces earnings volatility by eliminating the non cash impact of those derivative liabilities on our income statement, NuScale's cash position at the year end 2024 provides the company with significant resources, and time to achieve our goals. We will utilize these resources to support commercialization activities such as further development of our supply chain, and bolstering manufacturing preparedness, [indiscernible] related to the production of our first 12 modules.

We will also continue to nurture and mature our research development efforts support the next generation of new skill innovation. For the fourth quarter ended December 31, 2024, NuScale reported revenue of $34,200,000 dollars and a net loss of $180,300,000 Revenue in the quarter was driven by payments for activities in support of Roper's development of their power plants. And the loss includes a non cash expense of $170,000,000 related to the increase in fair value awards. During the same period of the prior year, the company reported revenue of $4,600,000 and net loss of $56,400,000 which included non cash income of $6,500,000 related to our warrants For the full year 2024, NuScale's revenue was $37,000,000 and net loss was $348,400,000 with $223,000,000 of that loss relating to Cang treatment once again within the fair value of warrants. Q4 twenty twenty four operating expenses were $43,000,000 compared to $71,800,000 in the year earlier period.

The year over year reduction in quarterly operating expense of $28,800,000 reflects management efforts to reduce costs, and operate more efficiently as we transition from an R and D focused organization to one focused on commercialization. Furthermore, on average, quarterly operating expenses decreased from 69,900,000.0 in 2023 to $42,700,000 in 2024, generating an annualized savings of more than $108,600,000 That decrease in burn rate is significant. And has a meaningful impact on cash balance rate. During the fourth quarter of twenty twenty four, we also reduced our operating loss to $11,900,000 compared to an operating loss of 71,100,000.0 in the fourth quarter of twenty twenty three. Looking ahead, eScale is well positioned to accelerate growth in 2025. With module production commercialization with Enter One Advanced.

We have built a strong foundation for growth a powerful global supply chain and strong competitive position. I will conclude my remarks a brief overview of our capitalization table [indiscernible] With that, I'd like to thank you again for joining today. And for continued support of NuScale. We'll now take questions. [indiscernible] Thank you. And once again, that is We'll go first to George Genarikas, Canaccord Genuity.

Hi, everyone. Thank you for taking my questions. Maybe if you could just go into a little bit of detail around any potential bottlenecks you're seeing in putting pen to paper and signing an agreement with a large data center company in The U. S. Yes, this is John. I don't know necessarily as say bottlenecks as it is. Just the complexity of putting these projects together, As we stated, NuScale is the provider of power modules. Enter One will be the owner. We're in discussions with operators in discussions with other contractors willing to build and we continue to build out our supply chain. So it's and we're also in discussions obviously with those funding mechanisms who want to participate in this. So it's not necessarily bottleneck as I said George, it is just the complexity of putting the deals together. But I will say, as I commented, we've just ordered an additional six modules though we're very confident that we're getting closer to landing and or close to some of these deals.

Clearly. Thank you. And maybe just as one follow-up, Ramsey, can you give us a little more detail around the parameters or conditions meant that allowed you to recognize the revenue in the fourth quarter? Thank you. Sure, George. I think, yes, there's two components of the contract. One was delivery of services and the other was our work in advancing towards delivery of service or delivery of an item. So we encountered revenue recognition in the form of two contracts. They based along both those lines. One was in relation to licensing some technology and one was in relation to doing some subcontract around the EPC work. Up is Mark Bianchi, TD Cowen. Hey, guys. This is Juste Juan Abaracino for Mark here. So you guys mentioned, yes, the Doosan forging of the 12 reactors I'd imagine six of those are intended for the Romania plant.

And these additional six those aren't yet booked by another unannounced customers, right?

I think if I'm kind of getting this correctly, you're trying to really use that to front load more of the long lead sort of items to try and compress the operation timeline of a plant for a potential customer? Is that right?

Yes. What we're doing is we feel in discussions we're having with prospective customers currently. And you're right, these long lead items if you're not in order or placed orders by now, it's years away. To manufacture. So we're feeling very confident that emplace these additional six And by the way, for those first six, it's really a first mover. We're progressing very well with Row Power as we've commented before. We're in the front end engineering and design. Things progressing well. They go for their further final investment decision fourth quarter of twenty twenty five, And as I stated before, but we're also in discussion with other customers that are looking also to be near term deployable.

Esteban, if I can find one item that you mentioned So NuScale is not manufacturing reactors we are manufacturing long lead materials in relation to 12 D NuScale power modules, just to make the distinction that these are the long lead materials which we're manufacturing. And you're right, they are for 12 modules today And to clarify, they're not for a particular customer. Therefore, the first customer that says we want to buy these modules we believe it in our best interest, our customers' best interest. To engage on the forgings for an additional six in addition to the six that we already had in production and just push forward with these 12 long lead materials long lead materials in relation to 12 modules.

Got it. Got it. Thank you for that. Yes. Then my other one is so the revenue from the Rhopewe FEED study, is that expected to stay around this level until the study is complete? Later in the year? Or should we expect a deferring cadence throughout the year?

I think there's some front loading to the revenue Esteban.

But we'll continue to see revenue in relation to some of the subcontract work on EPC I'm fairly careful about providing guidance on future revenues We tend not to do that yet.

Perfect. And if I can just squeeze one more. So on The U. S, the $800,000,000 grant that's out there for Gen three reactors, You guys had a competitor that announced a few weeks ago a task force to try and push for the award. Is NuScale working for something similar to get that grant or any other developments that you guys can touch upon?

Yes, this is John. We're trying to get trying to ascertain in fact, I've got meetings this week with the Department of Energy to get more clarity around that particular award. So as it looks right now, we're not we're not real sure if we want to participate at this point or not. I'll ask Clayton. Clayton has been close to this. He's our commercial officer. You have anything to add on that particular award?

No, we're as you said, we're evaluating it. I think we're cautious. We're not quite sure where that's going to land and how it's going to be distributed, but we're looking at it and we're in discussions EnforOne and some of our offtake partners to determine whether we want to pursue that specifically.

Perfect. Thank you guys so much. The next question is Ryan Fink with B. Riley.

Hey guys, thanks for taking my questions. As a follow-up to one of the first questions, just for your conversations with data center or other customers, you just walk us through some of the items that you and Enter One need to work through with prospective customers before being in a position to announce a project?

Yes, it's predominantly around the negotiation and finalization of long term power purchase agreements The Inter One model and the reason these customers appreciate this model is because as they stated, during the call that, Enter One they will look to build own transfer or build, own operate. We probably will not operate or sell. We'll utilize a company like AEP or someone else, but [indiscernible] The power purchase agreements are what we're in discussions about right now.

Got it. Thanks, John. And then can you just remind us what the next steps are for the Rope Power project and what milestones we should be looking for in 2025? As I said, we are a subcontractor to Fluor Corporation.

I'm in discussions. In fact, I'm meeting with the CEO of, Nuclelectrica in two weeks at Sierra at the Energy Conference in Houston. So right now, we take the lead from Florida and we continue to to support them in this project in the Romanian government. Moving this thing forward. So what we know right now, all indications are that and as what we see, it's progressing well. We'll wait after this fourth quarter twenty twenty five The government will determine or Nuclear Electrical will determine if they're going to go forward with the final phase, which is the major production of the plant itself.

Understood. Thanks for that. And next up is Eric Stine, Craig Hallum.

Hi, John. Hi, Ramsey. So maybe just on the upgrade, I mean, obviously, it sounds like quite confident and you've stuck with that mid-twenty twenty five date for some time. Just wondering, can you detail detail kind of the steps that are left or is it just getting through the process? And then I'm just wondering, you mentioned the pipeline and clearly a strong testament in your confidence there with the more modules along lead time. Materials, I mean, our customers waiting for this? Is this something that with that in hand that potentially speeds up the process of securing that first customer, how should we think about that?

Yes, actually the power up rate to 77 is progressing. Well. We're pretty much have completed all the technical requirements for the NRC. Now it's a matter of just going through process administratively. I am, myself and a few others, we're meeting with the NRC this week, including mostly with the commissioners, but also with the with David Wright, who is also the the Chairman of the NRC. [indiscernible] we're this close. I mean, I'm hopeful that we're ahead of schedule, we're on schedule. And once we get finalization of that 77 megawatt, we're off to the races. And like right now, we're near term deployable. We could be building currently. That's why we've ordered these long lead items in anticipation of On the pipeline, Clayton, do you have anything to add? No, I think the key issue is that having these LLMs in order certainly helps us expedite the first project in getting into the pipe. So we're trying to focus on on early deployment and expedition of the project. So this will certainly help us in that first first 12 module plant. Got it. Very helpful. And then maybe last one, just you mentioned obviously this huge demand for nuclear power.

But there's also balancing that with taking that power from existing off takers. So are you seeing any change to the view of traditional nuclear and restart plants that are out there? I mean, we all know the handful of names that are out there, but whether it's additional plants that maybe have been mothballed for longer or expansions. I mean, is there anything out there that would indicate that that has the potential to help this or do you really view that this is SMRs and SMRs alone that can really add to this?

Yes.

I don't know how many plants that could actually restart. We've heard of the ones, 3 Mile Island, etcetera. I really do believe it's the small modular reactor play going forward. Because I just don't know of many that could actually do a typical large gigawatt size restart. All right. Thank you. Clayton, do you have another view of that? I mean, you're close to it. No, I think you're correct. I mean, there really is not any there's not that many more plants that can come out of the restart program And clearly, they're looking at extensions of some of the units, but that's still taking time.

But yes, I mean, we're at a point now where additional plants are going to have to be put on the grid. And based on when we look at technologies, clearly the SMRs I think are going to be a strong component of that mix and we're ready to do that and support it. [indiscernible] look forward to being first out of the gates and get there.

And we comment about Doosan free In fact, we just had meetings with them this week, but we're also in discussions with other suppliers, strategic suppliers that we've we've noted earlier IHI out of Japan, Doosan, GS Energy, and we continue to build out that. We announced Almeda that we're in other areas other than just forging. So these things are complex and that supply chain and those strategic partners are critical for our success. And we continue to build upon that.

Okay. Thank you.

And that does conclude our question and answer session. I would like to hand the call back to New Skills CEO, John Hopkins for any additional or closing remarks. Yes. Thank you, operator.

We truly are a first mover in this space. We're poised to commercialize and deliver clean energy of scale. We believe new scale technology is essential in meeting world's energy needs again, as I stated before, we are the leader poised to deliver safe, NuScale and reliable carbon free power. And we want to thank you for your interest in NuScale and looking forward to future calls. Thank you. Operator?

Thank you, sir. Once again, that does conclude today's conference.