CENTRUS ENERGY CORP (LEU)·Q1 2025 Earnings Summary

Executive Summary

• Q1 2025 delivered a material beat vs consensus: revenue $73.1M vs $68.1M consensus and EPS $1.60 vs -$0.052 consensus, driven by higher SWU pricing/volume and shipment timing; non-recurring $11.8M gain on debt extinguishment further boosted EPS .*
• LEU segment strength (SWU price +46%, volume +49%) and a 48% reduction in SWU unit costs expanded gross margin to 45% (gross profit $32.9M) .
• Balance sheet strengthened: redemption of 8.25% Notes ($74.3M) and end-of-quarter cash and equivalents of $653.0M ($685.7M including restricted), positioning for potential DOE-funded expansion .
• Management reiterated no formal financial guidance; DOE funding decisions and continued Russian shipment authorizations are near-term catalysts per call commentary .
• Backlog of $3.8B (extends to 2040) underscores multi-year revenue visibility; contingent LEU sales commitments of ~$2.1B depend on securing public/private investment .

What Went Well and What Went Wrong

What Went Well

• LEU segment margin recovery: SWU price rose 46% and volumes 49% YoY; SWU unit cost fell 48%, lifting LEU gross profit to $31.2M (from $0.5M in Q1 2024) .
  Quote: “We achieved robust financial results in the first quarter 2025… $73.1 million in revenue, a gross profit of $32.9 million and an operating income of $20.5 million.”
• Cash/Capital structure: Fully redeemed 8.25% Notes ($74.3M) with an $11.8M gain; ended with $653.0M cash (or $685.7M including restricted) to fund growth readiness .
  Quote: “We used a part of [convertible note] proceeds to redeem all of our higher-yield 8.25% notes…”
• Operational continuity: “Our operations have not been impacted by tariffs,” and cumulative HALEU deliveries reached ~670 kg under DOE contract; Phase 2 extended to June 30, 2025 .

What Went Wrong

• Technical Solutions margin compression: Gross profit declined to $1.7M from $3.8M, largely due to DOE cylinder delays; fees on extended Phase 2 not yet recognized until definitized .
• Earnings benefited from non-operating items: $11.8M gain on debt extinguishment inflated bottom-line EPS in the quarter .
• Elevated inventories and “inventories owed” tied to in-transit Russian-origin material increased balance sheet complexity; CFO noted these movements are typically “just-in-time” and indicative of near-term deliveries .

Financial Results

Core P&L vs prior quarters

Notes:

• YoY: Revenue up 67% vs Q1 2024 ($43.7M) and EPS swung from -$0.38 to $1.60 .

Segment breakdown (Q1 2025)

• SWU price +46% and volume +49% YoY; SWU unit cost -48%, driving LEU margin expansion .
• Technical Solutions fee recognition delayed on extended Phase 2 until definitized .

KPIs and Balance Sheet Highlights (Q1 2025)

Results vs Wall Street Consensus (S&P Global)

Disclaimer: Values retrieved from S&P Global.*

Drivers:

• Shipment timing (Q4 deliveries pushed into Q1 due to Russian export licensing) and favorable contract mix; SWU price and volume increases; lower SWU unit costs; and $11.8M debt extinguishment gain .

Guidance Changes

Management reiterated they do not provide forward financial guidance; timing of DOE task orders and funding decisions remains a key external variable .

Earnings Call Themes & Trends

Management Commentary

• Strategic positioning: “We are the only company currently enriching uranium with U.S.-owned U.S. origin enrichment technology backed by an American supply chain empowered by American workers.”
• Tariffs: “Our operations have not been impacted by tariffs.”
• Funding outlook: “We are confident in our compelling investment case for the $3.4 billion in funding that Congress has provided to jumpstart domestic nuclear fuel production.”
• Readiness initiatives: Balance sheet strengthening (8.25% redemption), $60M supply-chain/manufacturing investment in Oak Ridge, continuous HALEU operations, and public advocacy to prioritize American-made technology .

Q&A Highlights

• DOE awards timing: Management referenced recent testimony indicating DOE plans to award ~$2.7B and sees momentum toward task orders .
• Russian export licenses: Shipments require specific authorizations; process currently not impeding commitments; communication to remain general rather than shipment-count updates .
• Inventory dynamics: Rise in inventories and inventories owed tied to high-value in-transit SWU/UF6 from Russia; often indicative of near-term deliveries; “just-in-time” logistics .
• Tariffs and supply chain: No observed impacts from tariffs; U.S.-domestic supply chain reduces tariff sensitivity vs European competitors .
• HALEU capacity timing: First full-scale HALEU cascade timeline unchanged (~42 months from funding); commissioning readiness work ongoing .

Estimates Context

• Consensus (S&P Global) for Q1 2025: Revenue $68.1M; EPS -$0.052; actual revenue $73.1M and EPS $1.60 imply significant upside on both lines .*
• Implications: Street models likely need to reflect stronger LEU margin realization from favorable contract mix, shipment timing (Q4→Q1), and lower SWU unit costs; non-recurring extinguishment gain should be normalized in forward EPS.*
• Disclosure: Centrus provides no formal forward guidance; estimates should incorporate DOE funding/option execution scenarios, Russian licensing/waiver cadence, and HALEU fee recognition upon definitization .*

Disclaimer: Values retrieved from S&P Global.*

Key Takeaways for Investors

• Q1 beat driven by SWU pricing/volume and lower unit costs; shipment timing pulled revenue/margins forward — watch for quarterly variability as management emphasizes annual view .
• Non-GAAP/one-time impact: $11.8M extinguishment gain elevated EPS; adjust models to exclude non-recurring items when assessing core run-rate .
• Balance sheet supports scale-up: High cash with converts outstanding and 8.25% Notes redeemed positions Centrus for DOE-linked expansion and supply chain investments .
• Policy catalysts: DOE awards (~$2.7B) and task orders under HALEU/LEU contracts are pivotal; IRA funding review noted but appropriations remain in place .
• Supply risk mitigants: Continued Russian shipment authorizations and waivers underpin near-term deliveries; domesticated supply chain reduces tariff exposure vs EU peers .
• Backlog durability: $3.8B backlog to 2040 and ~$2.1B contingent LEU commitments provide long-term visibility, contingent on public/private funding .
• Trading setup: Near-term stock reaction likely tied to DOE funding decisions, shipment cadence, and margin mix; medium-term thesis hinges on domestic enrichment capacity build, HALEU commercialization, and maintaining cost/pricing advantage .