Centrus Energy Corp. (LEU) Earnings

Management highlights

- Market Demand Trends - Strong demand tailwinds across all three core addressable markets: commercial LEU, national security, and HALU. A growing global supply-demand imbalance for uranium enrichment has supported steady increases in published LEU pricing. - U.S. regulatory proposals and the new American Nuclear Supply Chain Loan Program are expected to expedite new nuclear capacity development and lower operator costs, while global new nuclear development and restarts of shuttered reactors are driving rising international LEU demand. - The national security market shows growing demand, with Centaurus noted as the only production-ready U.S. supplier capable of meeting NNSA requirements. Three of four advanced reactors that reached criticality ahead of the DOE deadline use HALU fuel, creating strong incremental growth opportunity for the company. - Key Operational Milestones - Received a $900 million DOE Enrichment Award task order to support large-scale commercial production capacity expansion, transitioning from technology demonstration to commercial-scale development. Completed all existing DOE HALU demonstration production requirements two weeks ahead of schedule, producing nearly two metric tons of HALU UF6 for the government. - Secured non-dilutive, non-debt funding from the DOE award and prepayments from HALU off-take contracts, meeting all financing contingencies for over $3 billion in signed LEU and HALU customer contracts. The company ended Q2 with $1.9 billion in unrestricted cash and is fully funded for near-term capital requirements. - Signed a letter of intent for HALU supply to Oklo for up to five Aurora powerhouses starting 2029, and a definitive HALU off-take contract with X-Energy, cementing the company's first-mover advantage in the HALU market. Most HALU agreements include prepayments to fund expansion. - Finalized contracts with approximately 75% of identified critical supply chain partners, locking in large commitments to insulate against price fluctuations and stabilize costs. Continues to evaluate aligned M&A opportunities in the supply chain. - Increased workforce hiring across Piketon and Oak Ridge facilities, and was added to the S&P Small Cap 600 Index in July 2026. First centrifuge completion at the Oak Ridge manufacturing facility is expected in 2026.

Guidance

- Management reaffirms the full year 2026 guidance for total company revenue of $450 million to $500 million, and total capital spend of $350 million to $500 million. It also reaffirms guidance to finalize contracts with 100% of critical supply chain partners, release a certified for construction package, and hire at least 100 net new employees at the Oak Ridge facility. - Management raised 2026 guidance for net new hires at the Piketon facility from over 100 to over 175, reflecting accelerated build-out momentum. - Management confirmed that the target for first new commercial production capacity at Piketon remains 2029, with ongoing internal efforts to potentially compress timelines though no formal acceleration is announced. No guidance beyond 2026 is provided at this time.

Segment performance

1. LEU Segment: Generated $153.4 million in Q2 2026, a 22% year-over-year increase. This segment makes up 87.1% of total Q2 2026 revenue. Cost of sales for the segment was $101.8 million, a 36% year-over-year increase driven by higher uranium sales volumes. The segment's total backlog is $3.7 billion, of which $3 billion is contingent LEU and HALU enrichment sales and $0.7 billion is broker-dealer backlog. SWU revenue decreased by $25.7 million year-over-year due to a 23% volume drop, partially offset by a 3% average price increase. The company recorded $53.4 million in uranium sales within this segment in Q2. 2. Technical Solutions Segment: Generated $22.7 million in Q2 2026, a 21% (or $6.1 million) year-over-year decrease, primarily driven by a $5.9 million revenue drop from the HALU operations contract. This segment makes up 12.9% of total Q2 2026 revenue. Cost of sales for the segment was $24.4 million, a 5% (or $1.2 million) year-over-year decrease, also attributed to the HALU operations contract wind-down. The segment's total backlog is $0.8 billion.

Risks & headwinds

- The company's business has inherent quarter-to-quarter revenue variability, and annual results are a more reliable indicator of long-term progress. - Global uranium enrichment supply-demand tightness is expected to persist through the near and medium term, but unforeseen new capacity additions or slower-than-expected demand growth could impact pricing and order momentum. - The commercial production expansion is a first-of-a-kind project in the U.S., and execution risks related to supply chain delivery, manufacturing ramp, and hiring could impact timelines and costs. Further cost escalation from raw materials or energy could pressure margins, even as the company has locked in most critical supplier contracts to mitigate this risk.

Analyst Q&A

• Q: What is the expected delivery cadence for the X-Energy HALU contract, and can volumes come from the DOE demonstration cascade being converted to commercial use? /

  A: Management confirmed the X-Energy agreement is a definitive contract that further establishes Centaurus as the leading HALU supplier, and notes the agreement includes prepayments that support non-dilutive expansion funding. Management declined to provide specific details on delivery timing or source volumes due to confidentiality requirements.

• Q: With the Russian import ban less than 18 months away, have you seen changes in customer buying behavior, and how is this impacting pricing and demand? /

  A: Management stated market tightness is already visible, with strong growing customer interest in SWU contracts, and customers are increasingly turning to new domestic entrants like Centaurus. LEU pricing has seen a strong run-up, and the imbalance of growing demand with no near-term new supply additions continues to favor sellers, aligning with prior market outlooks.

• Q: What are the key similarities and differences between the recent Oklo LOI and X-Energy definitive HALU contract? /

  A: Both agreements show the SMR/advanced reactor market is maturing, with customers now able to make firm binding fuel commitments, and both include the prepayment structure Centaurus prefers for non-dilutive expansion funding. The Oklo agreement is a non-binding letter of intent that sets general terms ahead of finalizing a definitive contract, while the X-Energy agreement is already a finalized binding contract. Both reinforce Centaurus's position as the leading go-to HALU supplier.

• Q: What progress are you making on lead time reduction for your expansion project, alongside cost savings? /

  A: Management noted lead time reduction is a top priority, as the existing supply gap creates tangible rewards for bringing new capacity online faster, and commercial customers are demanding accelerated delivery timelines. Ongoing collaboration with Palantir, EPC partners, and critical suppliers focuses on both cost reduction and lead time compression, to bring the first production online as soon as possible.

• Q: Have you seen more urgency for long-term LEU contracting from traditional utilities now that all financial contingencies are met? /

  A: Management confirmed that removing financial contingencies has reduced counterparty risk, leading to increased interest from utilities, many of which were previously in a wait-and-see mode. Near-term utility demand is mostly covered ahead of the Russian import ban, so most current discussions are for delivery when Centaurus's new capacity comes online post-2028, and order growth will continue to be lumpy as discussions progress at different paces for different customers.