Sign in

You're signed outSign in or to get full access.

WR

WESTWATER RESOURCES, INC. (WWR)·Q1 2018 Earnings Summary

Executive Summary

  • Q1 2018 showed no revenue and a swing to a net loss of $3.42M ($0.12 loss per share) versus a $1.85M net gain ($0.09 EPS) in Q1 2017, driven primarily by the absence of last year’s $4.42M one-time gain and $0.76M acquisition costs in the current period .
  • Liquidity runway extended: management expects existing cash plus ATM/CSPA facilities to fund operations through June 30, 2019; cash was $1.64M at March 31, 2018 and working capital $1.2M, down from $4.05M cash and $3.9M working capital at year-end .
  • Strategic pivot advancing: Alabama Graphite acquisition closed April 23, 2018; Coosa graphite plan de-risked with purchased feedstock, pilot plant targeted for 1H 2019, initial products (PMG in 2020, DEXDG in 2021) before CSPG in 2023; production furnace targeted end of 2020; mine deferred to 2026 .
  • Potential catalysts: favorable Texas Supreme Court decision resolving a decade-long dispute (Kingsville Dome), and continued news flow from graphite/lithium development and reclamation milestones .

What Went Well and What Went Wrong

What Went Well

  • Closed Alabama Graphite acquisition, accelerating battery materials strategy; management emphasized de-risking via proven purification tech and purchased feedstock, advancing revenue to 2020 and full-year positive cash flow to 2021 .
  • Liquidity facilities intact and no long-term debt; CFO reiterated funding capacity and runway through mid-2019 via ATM and CSPA .
  • Legal overhang removed: Texas Supreme Court ruling in URI’s favor on Kingsville Dome standards, enabling future operations and reclamation progress .
    “Let’s be frank, with this combination of talent, our balance sheet, our projects we’re clearly undervalued” (CEO) .

What Went Wrong

  • No revenue and higher operating cash burn: net cash used in operations rose to $3.70M vs $3.29M a year ago, primarily due to $0.76M Alabama Graphite acquisition costs .
  • Net loss vs prior-year profit: $3.42M loss vs $1.85M gain in Q1 2017, mainly due to absence of last year’s $4.42M gain on Churchrock/Crownpoint sale and higher G&A/loss on securities .
  • Working capital decline: fell to $1.2M from $3.9M at year-end, reflecting acquisition-related uses, loans to Alabama Graphite ($0.6M), and lower Laramide securities fair value ($0.8M) .

Financial Results

Income Statement Comparison

MetricQ1 2017Q1 2018
Revenues ($USD Millions)$0.00 $0.00
Net Income ($USD Millions)$1.845 $(3.419)
Diluted EPS ($USD)$0.09 $(0.12)

Cash Flow Comparison

MetricQ1 2017Q1 2018
Net Cash Used in Operations ($USD Millions)$(3.287) $(3.696)

Balance Sheet Highlights

MetricDec 31, 2017Mar 31, 2018
Cash and Equivalents ($USD Millions)$4.054 $1.637
Restricted Cash ($USD Millions)$3.668 $3.668
Working Capital ($USD Millions)$3.9 $1.2

Segment Breakdown (Operating Expense and Loss from Operations)

MetricQ1 2017Q1 2018
Mineral Property Expenses – Uranium ($USD Millions)$0.648 $0.774
Mineral Property Expenses – Lithium ($USD Millions)$0.121 $0.008
Loss from Operations – Corporate ($USD Millions)$(1.313) $(2.109)
Loss from Operations – Uranium ($USD Millions)$(1.173) $(1.393)
Loss from Operations – Lithium ($USD Millions)$(0.121) $(0.008)

KPIs

KPIQ1 2017Q1 2018
Acquisition Related Costs ($USD Millions)$0.00 $0.755
Average Weighted Shares (Millions)21.602 27.968
ARO Current Portion ($USD Millions)$1.078 $0.936
Cash Balance ($USD Millions)$9.882 (incl. restricted) $5.305 (incl. restricted)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Liquidity runwayThrough mid-2019Funded through 2018 Funded through June 30, 2019 Raised/Extended
Coosa Graphite – Revenues start2020Revenues in 2020 Revenues in 2020 Maintained
Coosa Graphite – Positive full-year cash flow2021Positive cash flow in 2021 Positive cash flow in 2021 Maintained
Coosa Pilot Plant2019Pilot in 2019 Target 1H 2019 (1Q–2Q) Clarified timing
Production Furnace2020Q4 2020 End of 2020 Maintained
Coosa Mine Start20262026 2026 Maintained
External CapEx for processingProject build~$30–35M incl. pilot ~$42M incl. R&D & pilot; full-scale ~$35M Raised

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2017, Q4 2017)Current Period (Q1 2018)Trend
Battery materials demand (EV/storage)EV/storage demand growth and capacity additions; China/UK policies Emphasis on transportation/storage demand; large battery capacity additions and graphite’s central role Stable, reinforced
Project de-risking (Coosa)Move to proven purification, purchased feedstock; staged PMG→DEXDG→CSPG; mine deferred Reiterated de-risking, U.S. purification, staged rollout; clarified timelines and capex Continued execution clarity
Regulatory/critical mineralsExecutive Order listing graphite/lithium/uranium as critical Affirmation of critical minerals and supply chain accountability; environmental sustainability emphasis Supportive backdrop
Funding/liquidityDebt-free; funded through 2018 via ATM/CSPA Cash/working capital update; funded through mid-2019 Improved runway
Legal/regulatory outcomesN/ATexas Supreme Court ruling favorable to URI (Kingsville Dome) Overhang resolved
Uranium market stanceLow prices; long-term growth, optionality on low-cost assets “Still strategic focus,” optionality maintained; skepticism on tariffs; 3–5 year normalization view Neutral, long-dated optionality

Management Commentary

  • “2018 continues to be another important and pivotal year... We completed our acquisition of Alabama Graphite... and optimizing that business plan” (CEO) .
  • “Our cash and liquid assets as of the end of the quarter was $1.6 million... most importantly, at March 31 we have no long-term debt” (CFO) .
  • “Processing begins on purchased feedstock... pilot plant is expected to start operations in 2019... full-scale processing on our first furnace starts in 2020... Positive cash flow for the year is expected in 2021” (CEO) .
  • “We have received unquestioned support [from Alabama state officials]... incentives to operate in Alabama will be the subject of negotiations” (CEO) .
  • “Using older processes... operating here in the United States where our environmental legislation is robust... makes those processes sound” (VP, Operations) .

Q&A Highlights

  • Government and local support for Alabama: management cited meetings with state officials, Alabama Power, and ongoing negotiations for incentives (land or rate structures) .
  • Cash burn and runway: affirmed roughly $1.0–$1.2M per month usage and funding through mid-2019; Alabama Graphite integration expected to be efficient within current structure .
  • Pilot plant timeline and capacity: targeted 1H 2019 start, produce ~2 tons total at 30–100 kg/hour for scale-up to 5,000–7,000 tpy furnace .
  • Feedstock sourcing: initial refining will use international graphite concentrates (e.g., Madagascar, Brazil) to de-risk; mine deferred to 2026 .
  • Uranium stance: opposed to tariffs; expects market stabilization in 3–5 years; maintains optionality with low-cost assets .

Estimates Context

  • Wall Street consensus via S&P Global was unavailable for WWR’s Q1 2018 EPS and revenue in our session; as a result, we cannot provide a formal vs-consensus comparison at this time. Values retrieved from S&P Global were unavailable due to access limits.
  • Given the company had no revenue in both Q1 2018 and Q1 2017, and reported a $(0.12) diluted EPS loss in Q1 2018 versus $0.09 EPS gain in Q1 2017, sell-side models (if any) would likely have focused on cash runway and project milestones rather than near-term revenue/EPS .

Key Takeaways for Investors

  • Execution path for graphite is clearer: near-term revenue in 2020 and positive full-year cash flow in 2021, with staged product roll-out reducing technical risk; monitor 1H 2019 pilot plant start and 2020 furnace commissioning milestones for de-risking and re-rating potential .
  • Liquidity extended to mid-2019 via ATM/CSPA; the company remains debt-free; watch capital market windows and any equity usage relative to Exchange Cap constraints as milestones approach .
  • Legal resolution in Texas removes a decade-long overhang and supports reclamation progress and potential future operations; this should modestly improve risk perception .
  • Short-term trading: headline catalysts likely tied to Alabama incentives, pilot plant contracting, and customer qualification progress (NDAs/LOIs maintained); positive updates can drive sentiment, while capex raises could pressure shares near-term .
  • Medium-term thesis: optionality across graphite, lithium, and uranium in a critical-minerals policy backdrop; with purchased feedstock strategy, time-to-market reduces permitting risk—evaluate cost competitiveness and ESG narrative to potential OEM/customer demand .
  • Risk factors: continued cash burn (~$1–$1.2M/month), working capital compression, dependence on external financing, project execution timelines, and commodity price volatility; monitor quarterly cash flow and working capital trends .
  • Estimate posture: with no operating revenue, near-term consensus is likely sparse/uninformative; investor focus should remain on milestone execution, funding cadence, and qualification progress; revisit vs-consensus once S&P access is available and revenue milestones approach .