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CE

CENTRUS ENERGY CORP (LEU)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 delivered revenue of $154.5M and diluted EPS of $1.59, with gross margin at 35% (up from 19% YoY). Results strongly beat Wall Street consensus on revenue ($130.6M*) and EPS ($0.81*), and EBITDA ($18.2M*), driven by favorable contract mix and lower SWU unit costs .
  • LEU segment gross profit rose to $50.7M on $125.7M revenue; Technical Solutions revenue increased to $28.8M, and Phase 2 HALEU delivery (900 kg) was completed; DOE exercised Phase 3 Option 1a through 6/30/2026 (≈$110M) .
  • Liquidity strengthened: cash rose to $833.0M; ~$114.0M net ATM proceeds in the quarter; backlog stands at $3.6B (LEU ~$2.7B; Technical Solutions ~$0.9B) extending to 2040 .
  • Stock-relevant catalysts: confirmed HALEU milestone, DOE Option 1a exercise, continued gross margin expansion, and large, multi-year backlog; near-term narrative still tied to impending DOE task orders/funding allocation and public-private financing progress .

What Went Well and What Went Wrong

What Went Well

  • Gross margin expansion to ~35% (from ~19% YoY) on improved contractual mix and lower unit costs; gross profit rose to $53.9M despite lower revenue .
  • Operational milestones: delivered 900 kg HALEU, transitioning into Phase 3 (Option 1a) with defined targets and an extension to 6/30/2026; “Centrus is proud to offer a publicly-traded, American source of enrichment” .
  • Balance sheet strength: cash $833.0M and ~$114.0M net ATM proceeds this quarter; management emphasized maximizing investment income and maintaining flexibility ahead of DOE decisions .

Management quotes:

  • “Centrus delivered another strong quarter of revenue and margins while successfully continuing our preparations ahead of our future enrichment build-out.” — CEO Amir Vexler .
  • “Gross margin improved to 35%, up from 19% in the prior year’s quarter.” — CFO Kevin Harrill .
  • “There is a strong consensus...that an additional enricher is required to bring new supply and new competition to the U.S. market.” — CEO Amir Vexler .

What Went Wrong

  • Total revenue declined 18% YoY (to $154.5M) as LEU volumes fell: SWU volumes -27% and no uranium sales in Q2; LEU revenue down 26% YoY (to $125.7M) .
  • Technical Solutions gross profit dipped slightly (-$0.3M YoY) as Phase 2 extended portions remained undefinitized (no fee yet), pressuring segment margins .
  • Continued geopolitical/trade risks around Russian LEU waivers and export licensing persist; management noted ongoing uncertainty despite current operations not being significantly impacted .

Financial Results

MetricQ2 2024Q1 2025Q2 2025
Revenue ($USD Millions)$189.0 $73.1 $154.5
Gross Profit ($USD Millions)$36.5 $32.9 $53.9
Operating Income ($USD Millions)$21.1 $20.5 $33.5
Net Income ($USD Millions)$30.6 $27.2 $28.9
Diluted EPS ($USD)$1.89 $1.60 $1.59

Segment breakdown

Segment MetricQ2 2024Q1 2025Q2 2025
LEU Revenue ($M)$169.6 $51.3 $125.7
Technical Solutions Revenue ($M)$19.4 $21.8 $28.8
LEU Gross Profit ($M)$33.0 $31.2 $50.7
Technical Solutions Gross Profit ($M)$3.5 $1.7 $3.2

KPIs and operating drivers

KPI/DriverQ2 2024Q1 2025Q2 2025
Gross Margin (%)19% —35%
Cash and Cash Equivalents ($M)—$653.0 $833.0
Cash, Cash Equivalents & Restricted ($M)—$685.7 $847.0
ATM Proceeds in Period ($M)—$25.2 ~$114.0
Backlog ($B)$3.7 $3.8 $3.6
LEU Backlog ($B)~$2.8 ~$2.8 ~$2.7
Technical Solutions Backlog ($B)~$0.9 ~$0.9 ~$0.9
HALEU Delivered (Phase 2, cumulative kg)—~670 kg (as of 3/31/25) 900 kg delivered (target achieved)
SWU Volume YoY——-27% YoY
Avg SWU Price YoY——+24% YoY
DOE Option 1a Target Cost/ Fee ($M)——$99.3 / $8.7

Guidance Changes

MetricPeriodPrevious GuidanceCurrent Guidance / UpdateChange
Financial Guidance (Revenue/EPS/Margins)FY/Q2 2025None providedNone providedMaintained (no guidance)
HALEU Production Contract (DOE)Phase 2 → Phase 3Phase 2 target: 900 kg by 6/30/2025 Option 1a exercised to 6/30/2026; target cost ≈$99.3M, fee ≈$8.7M; extension ≈$110M Extended
HALEU Production OptionsPhase 3 futureOptions for up to 8 additional yearsDOE retains discretion, subject to appropriations Maintained optionality

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024)Previous Mentions (Q1 2025)Current Period (Q2 2025)Trend
DOE funding and task ordersIDIQ awards for HALEU/LEU; awaiting task orders Secretary signaled moving quickly; awaiting allocation Option 1a exercised; still awaiting broader task orders/allocation Progressing; near-term decision catalyst
Domestic enrichment readiness (48→96 cascades)42-month first cascade timeline kicked off with $60M Reaffirmed 42-month; expanded supply chain prep 48 cascades feasible within current footprint; balancing public/private funding Building capacity; execution readiness
HALEU operationsSteady production; 545 kg delivered to DOE ~670 kg delivered as of 3/31; cylinder bottleneck easing 900 kg delivered; Option 1a exercised to continue production Milestones achieved; operations continuing
Russian import waivers/licensing riskDOE waivers; Russian decree requires specific licenses Business continuing with shipment-specific licensing Operations not significantly impacted; persistent risk acknowledged Controlled but ongoing risk
Margin drivers/contract mixOpportunistic uranium spot sale in Q4; contract mix matters LEU margin boosted by mix; lower SWU unit costs Gross margin to 35%; mix and SWU pricing vs volume Favorable mix; variability expected
Macro demand (AI/data centers, state policy)Bipartisan support; large federal appropriations Strong political support; American supply chain emphasis AI/data centers, state initiatives cited as demand accelerators Strengthening demand narrative

Management Commentary

  • Strategy: Centrus positions as the only publicly traded, U.S.-owned enricher with an American supply chain, pursuing a public-private partnership to expand capacity while maintaining operational HALEU production .
  • Important quotes:
    • “Gross margin improved to 35%, up from 19% in the prior year’s quarter” — CFO Kevin Harrill .
    • “By successfully reaching our contractual production target, we have further confirmed our technology’s ability to operate as expected” — CEO Amir Vexler (on 900 kg HALEU) .
    • “There is a strong consensus...that an additional enricher is required to bring new supply and new competition to the U.S. market” — CEO Amir Vexler .
    • “We remain optimistic that a decision will be made soon” (DOE $3.4B allocation) — CEO Amir Vexler .

Q&A Highlights

  • Funding and balance sheet: Management emphasized strong liquidity ($833M cash) and readiness to bridge timing gaps between DOE allocation and deployment; ATM program is exhausted, evaluating next steps to maintain flexibility .
  • Capacity plans: Within current infrastructure, 48 cascades are targeted; doubling to 96 would require plant expansion; first cascade still anchored at ~42 months, with ongoing efforts to compress cycle times .
  • HALEU Phase 3 operations: “Business as usual” enrichment under Option 1a with contractually defined cost/fee targets and extension to 6/30/2026 .
  • Margin outlook: Strong quarter (~40% profit cited in discussion context) not a future run-rate; expect variability quarter-to-quarter but on-track with internal annual outlook (no formal guidance) .
  • Russian deliveries: Continuing under shipment-specific licenses; management keeps communications general and avoids shipment counts; just-in-time nature can temporarily lift inventory balances .

Estimates Context

  • Q2 2025 vs consensus: Revenue $154.5M vs $130.6M*; EPS $1.59 vs $0.81*; EBITDA $36.4M vs $18.2M* — broad-based beat versus Street .
  • Forward snapshot: Street looks for Q4 2025 revenue ~$147.0M* and EPS ~$1.39*; Q1 2026 revenue ~$81.3M* and EPS ~$0.51* — near-term estimates may drift higher post margin outperformance and contract updates (Option 1a) given improved gross margin trajectory and HALEU continuity .

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Strong margin execution: Contract mix and lower SWU unit costs drove a 35% gross margin; despite revenue variability, profitability profile is improving — a key driver for estimate revisions and valuation .
  • HALEU milestone and contract extension de-risk near-term operations: 900 kg delivered; DOE Option 1a exercised with defined targets through mid-2026, supporting continuity and backlog quality .
  • Balance sheet optionality: $833M cash and recent ATM proceeds underpin readiness to accelerate manufacturing and bridge DOE funding timing — reducing financing risk for capacity expansion .
  • Backlog depth and contingent commitments: $3.6B backlog with ~$2.7B in LEU and growing contingent sales commitments tied to potential Piketon expansion support multi-year revenue visibility .
  • Policy and demand tailwinds: Bipartisan support, AI/data-center power demand, and state-level nuclear initiatives are strengthening the narrative for domestic enrichment — a potential catalyst path as DOE task orders are issued .
  • Watch DOE task orders and funding allocation: The near-term stock driver remains federal awards and structure of task orders; Option 1b/longer-dated options provide upside optionality .
  • Near-term trading setup: Post-beat momentum and DOE option exercise are positives; monitor any headlines on Russian waiver/license shipments and potential variability in quarterly deliveries that can swing revenue/margins .

Appendix: Estimate Comparison (Q2 2025)

MetricConsensus*Actual
Revenue ($USD)$130.6M*$154.5M
EPS (Diluted) ($USD)$0.81*$1.59
EBITDA ($USD)$18.2M*$36.4M

Values retrieved from S&P Global.*