Cameco Corporation Q2 FY2025 earnings call

• Nuclear Market Momentum: Increased interest in nuclear, with Cameco positioned as key in global energy security.
• Disciplined Marketing: Layering long-term contracts for uranium and conversion to protect from weak markets.
• Financial Discipline: Strong balance sheet and cash flow for strategic investments.
• Westinghouse Performance: USD 170 million revenue increase tied to Czech Republic project indicates growth opportunities.
• Uranium Production Challenges: Maintenance at Key Lake affected production; need for ground freezing, labor, and equipment commissioning to meet 18 million pound goal.
• JV Inkai: On track for 8.3 million pounds production, shipments in second half 2025, but faces risks like sulfuric acid availability and supply chain.
• Fuel Services: Production on track for 13–14 million kgU combined.
• Senior Management Changes: Grant Isaac to be President and COO, Heidi Shockey to be CFO, effective September 1.

Uranium Operations: Second quarter 2025 saw lower uranium production at Key Lake mill due to planned maintenance, resulting in higher unit cost of sales. Expected 18 million pounds from McArthur River/Key Lake and Cigar Lake each this year. Westinghouse: Adjusted EBITDA share expected between USD 525 million and USD 580 million, driven by a USD 170 million increase in second quarter revenue tied to the Czech Republic reactor project. Fuel Services: Annual production outlook for UF6 conversion, UO2 conversion, and heavy water reactor fuel bundles remains on track for 13–14 million kgU of combined fuel services products.

• Westinghouse: Adjusted EBITDA share expected between USD 525 million and USD 580 million.
• Uranium: Expect McArthur River/Key Lake and Cigar Lake to each produce 18 million pounds this year.
• Fuel Services: Production outlook for 13–14 million kgU combined.

• Geopolitical and trade uncertainty.
• Supply chain risks for JV Inkai in Kazakhstan (sulfuric acid availability, supply chain).
• Mining risks for uranium operations (ground freezing, labor, equipment).
• Wildfire impacts on employees, contractors, and operations.

Q: A question about Westinghouse. Since the acquisition, obviously, the outlook for nuclear globally has improved considerably. Yet your 5-year CAGR guidance for the business hasn't changed at 6% to 10%. Can you give us some color on why that is? And is it just a function of that most of the -- is it more of a timing issue where you expect most of the upside from new business to show up after that 5-year mark? Or is there anything else we should think about in that? And I do recognize it excludes the windfall IP settlements from the Koreans. But just curious on how to think about that growth range in the context of all these positive announcements on nuclear.

A: Orest, this is Tim. Thanks for the question. It's a great question. And I'm going to pass it over to Grant in a minute. Grant sits on the Board. He's one of our directors on the Westinghouse Board. So he's deep into that subject. But before I do, just if you'll allow me, I just want to make a statement on -- last night, we got some news from one of the communities up north. We've been fighting forest fires up there. It seems perpetually since May. They just keep coming and coming. And there's an ongoing wildfire situation and evacuation that we heard about last night yesterday at the Northern Village of Pinehouse. Pinehouse is a community we're very close to. We had to -- unfortunately, they had to evacuate the community last night and our good friend, Mayor Mike Natomagan and everyone living up there, we're thinking of you today. At Cameco, we've been fortunate that our sites have remained safe during the wildfire season, though many of our employees, contractors and partners have indeed been impacted, and we're certainly always mindful of the challenges they face and continue to face. And I just want to say, to our workers who are helping in those communities, thank you for the work that you're doing, and we're thinking of everyone up north. And hopefully, we get a lot of rain pretty soon. So I just want to start with that, Orest, sorry to interrupt. And Grant, I'm going to turn it over to you on the Westinghouse question. Grant E. Isaac: Yes. Thank you, Tim. Orest, you actually did a great job answering your own question. When you think about Westinghouse, there is no doubt that whether it's the core of the business that's responding to reactors being restarted, reactors going through subsequent license renewal and all the exciting business that is generated for Westinghouse because of that, then there's the energy systems piece and the Dukovany units, really the first indication of that strong prospect for Westinghouse's technology, either directly through the AP1000 or through the Korean offering, really playing a critical part in growing nuclear power, it's all very exciting. But when you think about our forward guidance, it's done on the basis of that conservative approach that Cameco always uses. And what I mean there is a lot of projects looking at new builds in energy systems have not yet hit FID. And that for us is a critical moment for starting to build it into the business plan. So whether it's the 6 reactors in Poland or the 2 in Bulgaria or Slovenia's evaluation or the 10 announced for the United States or the evaluation of gigawatt scale reactors in Canada, which could be up to as many as 14, depending on which assessment you look at, none of those have hit FID yet, and therefore, they're not in the forward plan. Once they're in the forward plan, we would start to, I would say, significantly have increases to that outlook. They're just not there yet. And even some of them, as they start to hit FID, would be outside that 5-year look. So there is a wall of business that's building for Westinghouse, but from a very conservative point of view, we don't include it until things are at final investment decision. And if we did, there would be a really silly upside growth rate that just, I think, would be irresponsible for us to do. We continue to be very happy. And in fact, maybe the final comment I would make on Westinghouse, the only part of the business that's underperforming the acquisition case is the part of the business that would have been doing decommissioning on reactors that are shutting down. So we are delighted that, that part of the business has effectively been all rolled up because nobody is even considering doing that anymore. So thank you for your question, Orest.

Q: No, that's super helpful. Appreciate that, Heidi. And then just second question, and I'll pass it on, is there's clearly a lot of activity in the new nuclear development space. You talked through a number of them geographically. And I think it's well appreciated, you guys don't want to sort of front-run and put it into your numbers without seeing dirt being moved and FID and so forth and so on. Can you give us a sense, though, of whether it's region by region or specific areas where there's been more advanced development, kind of what the gating factors are to some of this activity materializing into projects that you would consider putting into your official guidance? And I think in the past, you've talked a little bit around timing for some of the potential ones in Poland, Bulgaria. I think another one was talked about in Slovakia just recently, but maybe a little bit more color around kind of the cadence and what developments you're expecting here in terms of those getting to the finish line.

A: Yes, Brian, it's Tim. It's almost overwhelming to some extent, the number of different countries and companies and industries that are today talking about nuclear. And I think we're drawn in many different directions as we try to get to those countries and companies. I mean, just generally, and I'll let Grant speak about what Westinghouse is looking at because that's a different movie, but I mean the U.K., France, Hungary, Czech, China, India, Canada, big player, U.S., we were just down, Grant and I, were down 2 weeks ago in Pittsburgh with the President of the United States and the Secretary of Energy and talking about new nuclear. He signed 4 executive orders calling for a quadrupling of nuclear power in the United States, 400 units by 2050. He wants 10 AP1000s started by 2030, a bit of a monumental task that we're going to try and undertake. And then you can go Egypt, Turkey and the countries, the 3 you mentioned, I think of companies, Google, Amazon, Microsoft, Meta, AWS, it's a load, for sure. So lots of interest in nuclear, lots of projects moving forward and Westinghouse is right in the thick of it. Grant, I don't know if you want to add anything. Grant E. Isaac: Yes. Brian, I think you were right in identifying that some markets just feel more traditional, and they seem to have a bit of an advantage. So for example, what's going on in Central and Eastern Europe, this is a part of the world that has actually always been very familiar with nuclear. It's a part of the world that never stopped building nuclear. It's just they were building Russian reactors and now are looking for an alternative to the Russian reactors. But that means that there's almost a bit of an advantage for those markets because you've got state-owned utilities with strong state support, and that's the classic model for building nuclear. So watch Poland. I think Bulgaria is really eager, too. They had the second announcement, but I think they're really eager to get to FID before Poland. So watch that space closely. And watch Slovenia. They just have that inherent advantage of that strong state orientation and strong state focus on supporting the grid. Other markets are really starting to evolve new models. In the United States, watch for things like multi-utility, multi-investor, multi- customer fleet models as opposed to the one utility that steps out and says, "We're going to do it. We're going to build gigawatt scale. We always do it in a 2-pack. So it's a pretty big undertaking. And we're going to do it on the back of our rate base," for example. So new models are being worked out in some of the new markets. That's taking, I would say, a little bit of time. It's not diminishing the enthusiasm in any way, but it's taking a little bit of time. And then ultimately, when you start to add up these numbers and you get to dozens of planned gigawatt scale reactors between what Westinghouse and the Koreans can do, one of the questions that often gets asked is, can we do it? And you didn't ask it, but if you had a third question, I'm pretty sure that that's where you were going to go. So I just want to preempt it a little bit just to say, yes, we can. The key to new build in the West and in the regions like Central and Eastern Europe is standardization and sequencing. And what we see over and over again is utilities looking at what is the right sequence, looking at a reactor that's already designed, already licensed, already been built, they can go and they can look at it, they can see it operating. And this commitment to standardization and sequencing will be the key to a successful launch of gigawatt scale new build, and everybody fortunately seems to be united on capturing those 2 key components.