NuScale Power Q3 2023 Earnings Call Transcript

Quartr
Provided by Quartr
November 8, 2023

There are 8 speakers on the call.

Operator

Good afternoon, and welcome to NuScale's Third Quarter 2023 Earnings Results Conference Call. Today's call is being recorded. All participants are in a listen only mode. After management's prepared remarks, there will be a question and answer session. A replay of today's Conference call will be available and accessible on NuScale's website at ir.nuscalepower.com.

Operator

The web replay will be available for 30 days following the earnings call. At this time, for opening remarks, I would like to turn the call over to Scott Kozak, Director of Investor Relations. Please go ahead, Mr. Kozak.

Speaker 1

Thanks, operator. Welcome to NuScale's Q3 2023 earnings results conference call. With us today are John Hopkins, President and Chief Executive Officer and Ramzi Hamady, NuScale's Chief Financial Officer. On today's call, NuScale will provide an update on our business, including our continued progress toward And conclude the call by discussing financial results and outlook. We will then open up the phone lines for questions.

Speaker 1

This afternoon, we posted a set of As reflected in the Safe Harbor on Slide 2, the information set forth in the presentation is discussed During the course of our remarks, the subsequent Q and A session includes forward looking statements, which reflect our current views of existing trends and are subject to a variety of risks and uncertainties. You can find a discussion of our risk factors, which could potentially contribute to such differences in our SEC filings on Form S-one and Form 10 Q. I'll now turn the call over to John Hopkins, NuScale's President and Chief Executive Officer. John?

Speaker 2

Thank you, Scott, and good afternoon, everyone. Our industry leading position in the SMR space continues to grow. Our pipeline is stronger than ever, and we are nearing a realization of commitment to deliver reliable clean energy at scale. We're looking forward to speaking with you about our announcement with Standard Power and we'll also provide an update on the decision to terminate work on the CFPP. A decade long partnership, which despite commercial challenges, achieved numerous successes that I will discuss later.

Speaker 2

Now to begin, as you'll see on Slide 3, we have invested more than $1,800,000,000 to build sustainable competitive advantages in technology, Regulatory approvals, supply chain and manufacturing readiness, all of which brings tremendous credibility to our business development pipeline. NuScale's advanced stage of development has derisked nuclear energy for our customers, while establishing a first mover leadership position That supports our near term commercialization efforts. Next on Slide 4, I'll provide an overview of our strategy. We are advancing our technology and supply chain readiness through comprehensive manufacturing trials and other measures. NuScale is focused on deploying our SMR modules and are poised to expand into new markets, applications and capabilities.

Speaker 2

Over the last year, we have taken important steps to commercialize our SMR technology. A key step We're forming a strategic partnership with IntraOne Energy, an independent energy transition platform backed by a highly capable team With significant energy and infrastructure experience. Importantly, IntraOne supports our vision for wide scale deployment of NuScale SMRs. Through this partnership, Enter 1 will develop, manage, own and operate a portfolio of energy plants powered by NuScale SMR Technology Approved by the U. S.

Speaker 2

Nuclear Regulatory Commission or NRC. As detailed on Slide 5, this relationship Enables a business model, which is transformational for new scale and is important to the success of our commercialization efforts. Let me take a moment to explain the structure of our industry and the profound impact of this relationship. Utilities, Industrials, Technology Companies, U. S.

Speaker 2

States and International Sovereigns are looking to support their 2,050 net zero commitments, Either by purchasing power or building non greenhouse gas emitting power plants. NuScale does not sell power And we're not in the business of building power plants. Rather, we are an original equipment designer of a U. S. NRC approved technology.

Speaker 2

We oversee the manufacture of the equipment that we design and provide that to our customer or a plant constructor. IntraOne serves as a project developer and brings together the total package consisting of our technology with their construction, Financing, operation and ownership. This is what many of our customers want and the level of interest in our technology has never been higher. As shown on Slide 6, on October 6, we were pleased to announce an early milestone in this business development relationship. Standard Power, a provider of infrastructure as a service to advanced data processing companies, in partnership with InterOne, Announced its plans to develop 2 NuScale Voyager 12 power plants that will together produce nearly 2 gigawatts of clean carbon free energy.

Speaker 2

The facilities relocate in Ohio and Pennsylvania. These projects will power nearby data centers And represent a significant economic boost for their respective communities. We're delighted with this partnership As it will serve as a model to be considered by other data center operators as their customers increasingly demand that these facilities Reliable and resilient clean energy. NuScale's scope and supply for the Standard Power project will be provided 24 modules, to collectively produce nearly 2 gigawatts of clean energy for Standards Power's data centers. These projects will be located alongside existing power generation infrastructure with access to a skilled workforce, Accessible to navigable waterways and other site features favorable to realize reduced construction costs.

Speaker 2

The economics of the Voyager 12 generating facility are improved in comparison to the Voyager 6 facility from an economies of scale perspective. And while one of these early tasks will be to perform a cost investment for these projects, we are confident economics will be cost competitive I want to pause here and set the record straight on recent Many in our team, myself included, as well as Enter 1, I've worked in power and infrastructure development for decades. We've spoken with hundreds of potential customers. In each case, we spend time and resources vetting the individuals and organizations we speak with, including Standard Power and their stakeholders. We are delighted to have been selected as Standard Power's technology of choice.

Speaker 2

It's important for the investment community to understand that these projects are complex, involve many partners and significant capital investment. No customer, not UAMPS, not ROLPower, not Standard Power, no major utility, industrial or data center player, No customer walks in the door with a blank check and orders a nuclear power plant. That's just not the way this industry operates. These are multi year and multi $1,000,000,000 projects on which regional economies depend. Discussions among serious responsible parties are detailed, deliberated and staged in their progression.

Speaker 2

Well, this is the first collaboration resulted from our commercial partnership with EnterOne. We expect to replicate this delivery commercial model going forward. We are incredibly proud that the developers and customers are selecting NuScale Modules as their technology of choice to power their projects And meet their carbon free energy objectives. There is a growing demand for safe, reliable 20 fourseven And carbon free baseload energy, in this comprehensive and bespoke financing and development solution Can more effectively and more quickly address the full suite of customer needs, accelerating the realization of the tremendous opportunities With regard to Ropower, we are advancing into the next stage of development. FEED Phase 1 included more than 23 activities in a contract valued at almost $28,000,000 This laid a solid foundation for the next contract phase.

Speaker 2

As a result of FEED Phase 1 work, we received approval from the Romanian regulator The licensing basis document in support of the Real Power project, a key milestone that will facilitate the implementation Announced in May, including planned commitments from NuScale Strategic Partners, are expected to support procurement of long lead items And Phase 2 front end engineering design work in the near future. As proposed, Phase 2 FEED work will include site characterization In regulatory analysis and the development of site specific schedule and budget estimates for project execution. Speed Phase 2 and release of long lead materials position that project for final notice to proceed with planned deployment. Looking at the progress of NuScale's business development more broadly on Slide 7, the breadth and scale of our domestic and international pipeline is substantial. Potential customers are coming to NuScale because our SMR technology Remains the only one to have received design approval and certification from the U.

Speaker 2

S. Nuclear Regulatory Commission. We are ready for near term deployment and currently produce a new scale power modules, which provide customers with unmatched flexibility for a variety of applications. Our strategic partnership with IntraOne bridges the development camp and many customers who wanted to integrate SMRs in Their energy portfolio without developing a power plant project now have the means to do so. No one in the market offers this today, And our nearest competitors are many years behind us.

Speaker 2

And while we're certainly talking with traditional utilities, Our pipeline extends far beyond that. It's data centers, it's coal plant repurposing and ammonia production, And it's hydrogen production, steel producers and industrial heat. It's the communities across America that want clean energy and they want jobs. It's American allies around the world that seek the security of reliable green energy. The interest we have received is considerable And we are laser focused on converting those opportunities to cash generating contracts.

Speaker 2

In addition to advancing dialogue with U. S. Prospective U. S. Customers, we've also been talking to potential customers globally, including in France, Turkey, Morocco, Eastern Europe and the Far East.

Speaker 2

For example, in October, NuScale was picked to participate in the next A fast track measure could result in a government contract within the next 10 months as part of a strategy to deliver operational SMRs by the mid-two thousand and thirty's. We're also continuing to establish NuScale Energy Exploration Centers or E2 Centers, both in the U. S. And abroad. To demonstrate and socialize the advanced safety and reliability of NuScale's SMR technology.

Speaker 2

Currently, we have established or planned E2 centers in the U. S, Romania and Korea. Moving on to Slide 8. I want to highlight a few additional updates in the context of our key 2023 milestones. In July, we announced that NuScale's standard design approval application was accepted for the review by the U.

Speaker 2

S. NRC. The NRC provided us with a schedule for an anticipated 24 month review process for obtaining approval For power upgrade to a 77 Megawatt NuScale Power Module, which will support the capacity needs of a wider range of customers. The design reflected in this application includes the same fundamental safety case and features approved by the intersea in 2020, which should expedite the review process. With regard to manufacturing, as you recall, We placed our 1st long lead material order with our partner Doosan and Inertibility in March.

Speaker 2

Doosan continues to produce forgings and materials associated with the manufacturing of the first NuScale power modules. And we are positioned to begin manufacturing our first modules later this year, when forgings will be assembled and machined To their final dimensions, we are not aware of another North American SMR vendor that has progressed to the manufacturing phase, And we are excited to continue leading the way for the industry. We are also tracking to our commercialization program advancement expectations, Completing 4 key milestones under our U. S. Department of Energy cost share award, including a plant protection system design And completion of the intermediate design for our reactor vessel internals.

Speaker 2

We continue to consistently deliver on our milestones in this area, Demonstrating our team's ability to effectively execute. The progress made here will benefit all of our future customers. Now on Slide 9, I will discuss NuScale and Utah Associated Municipal Power Systems or UAMS, mutual agreement to terminate the Carbon Free Power Project Or CFPP. Let me start by saying that CFPP unequivocally As it has been a tremendous success for NuScale. Through our work with UAMS in partnership with the U.

Speaker 2

S. Department of Energy, NuScale successfully developed a detailed Level 3 deployment schedule, prepared and submitted a limited work authorization, Prepared and ready for submission of combined operating license based on NuScale's SMR technology, of which approximately 50% of that application is generic, and we developed our input to a detailed and comprehensive Level 2 project cost estimate. During this time, we also completed the Voyager 6 standard plant design, submitted our standard design approval application for a 6 module plant With a power up rate and received NRC approval for a means to get to a site boundary emergency planning zone. Currently, we are in a fabrication phase of our first six modules. Through our participation with CFPP, NuScale successfully advanced our NuScale power modules to the point that utilities, governments and industrials We now rely on a proven small modular reactor technology that has regulatory approval, is in active production and is ready for commercial deployment.

Speaker 2

In NuScale's view, the project would have achieved the milestone related to project economic competitiveness. Despite elevated levels of inflation, rise in financing costs and supply chain disruptions that have impacted all infrastructure projects, Capital costs of CFPP have not increased between the Class III and the current Class II estimates when adjusted for inflation. I want to emphasize that point because not only have overall capital cost remained stable, the cost of NuScale's SMR technology, Which is just one component of the CFPP, have remained steady as well. Our ability to control costs Even in challenging economic conditions, it is a testament to the hard work of our engineering and supply chain teams NREC Partners at Fluor. CFPP targeted 80% subscription for the project by year end.

Speaker 2

On our last earnings call, we shared the 3 ways this target might be achieved. First, by existing CFPP participants increasing their current subscription levels 2nd, by UAMP's members who are not CFPP participants signing on to the project and third, By CFPP bringing in additional Western Public Power Utilities, Investor Owned Utilities and Data Center Operators and Industrial Customers. Despite significant efforts by both parties to advance the CFPB, it appeared unlikely that the project would have enough subscription to support deployment. Therefore, UAMS and NuScale mutually determined that ending the project was the most prudent decision for both parties. Importantly, we are working to ensure successful transfer of long lead materials for the next 6 NuScale power modules currently under development to be used by another customer.

Speaker 2

NuScale has established our industry leading position in large part based on our work With the CFPP, despite not reaching the subscription levels required for this phase of the project continued toward deployment, CFPP was a tremendous success for our business, and I couldn't be prouder of our team and their accomplishments. We remain bullish on the future and our agreement with IntraOne and StataPower does not even scratch the surface, so to speak, of demand we see around the world. Looking ahead, we believe our partnership with Intermount de risks future projects for many of the commercial challenges we experience within CFPP. And we look forward to committing our efforts and resources to a productive new business development opportunities such as Standard Power. In summary, our competitive position is stronger than ever.

Speaker 2

Our continued world class technology and IP, operational and regulatory excellence, DeepNuclear Experience, a highly capable partner and a derisk supplier ecosystem, will continue to support our ability to generate long term value for Now, I'll hand it over to Ramzi to provide our financial update. Ramzi?

Speaker 3

Thank you, John, and hello, everyone. Our financial results will be available in our filings, so my focus will be on explaining major line items, Our cost cutting efforts and the basis of presentation of our Q3 financials. All figures following refer to NuScale's Q3 2023 results, unless I say otherwise. First, as recently announced, NuScale and UAMPS have agreed to terminate the CSPP. While this occurred subsequent to the September 30 close, our Q3 financials have been presented to account for the significant events.

Speaker 3

As I discuss our financial results, I'll highlight key items impacted by the termination of CSPP and discuss our treatment of those items. NuScale generates cash and revenue from 3 sources: the sale and delivery of NuScale Power Modules, or NPMs, And other equipment we have developed, licensing of our technology and services. Most of our revenue received to date is from licensing of our technology and services for our customers. In the early phases of project development, NuScale generates revenue by supporting a number of project development activities such as As seen on Slide 10, Revenue for the Q3 of 2023 was $7,000,000 Research and development costs during the Q3 of $63,700,000 Increased compared to the same period in the prior year due to NuScale incurring a $35,400,000 additional expense resulting from the anticipated termination of the DICRA agreement. Otherwise, Q3 research and development costs will have decreased $6,100,000 from the same period in the prior year, Consistent with our plan to shift financial resources to sales and commercialization as we pivot from our R and D phase.

Speaker 3

Loss for the quarter of 58,300,000 Was larger than for the same period in the prior year due to the DICRA charge, partially offset by lower compensation costs And an unrealized gain on the value of our warrants. NuScale ended the 3rd quarter with cash of $197,000,000 and no debt. Approximately $79,000,000 of that is restricted cash, used as collateral for our letters of credit and $118,000,000 unrestricted cash. Investors will notice CFPP liability of $34,500,000 recorded on our balance sheet, which reflects our estimate of amounts owed to CFPP in relation to net development costs at September 30. A more nuanced note is in the 2nd quarter asset, long term contract work in process It's now identified as long lead material work in process to better reflect the nature of the asset in anticipation of the termination of the contract.

Speaker 3

We believe that the restricted cash under our letter of credit is in excess of our anticipated termination and demobilization expenses, And the unwinding of CFPP will have a net positive impact on unrestricted cash. We expect that our 4th quarter financials We'll reflect the final disposition of amounts paid to U Amps as part of closing out CFPP and remaining cash released to the company from our letters of credit. During the 9 months period ending September 30, our operating cash flow was negative 110,000,000 Management remains committed to conserving cash, reducing research and development expenses and administrative overhead and focusing on sales and revenue generating activities. During our Q4 earnings call, we expect to detail our work agreement with Standard Power as well as provide 2024 financial guidance. Apart from our ATM facility, where we realized proceeds of $7,900,000 from share sales, we are not currently considering any other public offering for debt financing.

Speaker 3

As we work diligently to advance through the development stages of our current contracts and secure new ones, we will maintain our financial discipline And selectively consider capital raising to sustain a conservative liquidity reserve. It is well established that there is an urgent need for advanced clean energy solutions That can help meet climate goals while bolstering energy security. NuScale is well positioned to meet this need through the sale and licensing of our power plants and supplying NPMs And other equipment services in connection with these sales. We are pleased with our progress and the steps we are taking towards program commercialization, especially relative to competition. With that, I'd like to thank you again for joining today and for your continued support of NuScale.

Speaker 3

We'll now take questions. Operator?

Operator

Thank you. And your first question comes from the line of Marc Bianchi from TD Cohen. Your line is open.

Speaker 4

Hey, thank you. Maybe Ramsey to start With you because you were just talking about some of these items related to the U Amps project and the Development cost reimbursable agreement. Of the $79,000,000 of restricted cash, how much would you anticipate Going back into unrestricted cash and my understanding from this previously was that you would be taking ownership of some Long lead items and some other things from CFPP, but then you would sell those to another project. Does that need to happen to really get to that net cash balance to the unrestricted cash.

Speaker 3

Mark, this is Ramsey. It's great to hear from you. And thank you very much for that question. We've been working very hard to come to a release agreement between ourselves and UAMS in relation to CFPP. As you'll note, we've had $79,200,000 of restricted cash on our balance sheet, Approximately $77,600,000 in real credit commitment, the rest related to fees for the LC.

Speaker 3

We expect now As a condition of the release agreement, we will make a payment to UAMPS of 49,800,000 That covers costs related to the coal development, EPC, long lead materials. We also anticipate We will open a new letter of credit in the amount of $5,100,000 $5,000,000 effective credit commitment. Therefore, of the $79,200,000 we expect that we'll have about $24,300,000 released as cash. Mark, we anticipate that there will be some demobilization costs and other costs which we may realize most likely actually quarter 1 Towards the end of quarter 4, but the near term impact is $24,300,000 release of cash.

Speaker 4

Got it. And of that $49,800,000 is there any netting of that if you're able to sell long lead items into Row Power or something like that or What's the dynamic there?

Speaker 3

We're still working with CFPP and DOE, and I think it's a bit early for us to comment. But our intent most certainly is to take these long lead materials that we and CFPP and the DOE have invested a lot of money in And employ them as they're meant to be employed into a new project.

Speaker 4

Yes. Okay, great. Another one on cash. So you reiterated guidance for cash use this year, which could imply that The cash consumption in 4th quarter at least at the midpoint would be similar to what you did in 3rd. I'm sure you're not ready to talk about 24 in terms of cash use, but maybe if we just think about this run rate right now, if you consumed $18,000,000 in the Q3, excluding these Items with UHIMS that we were just talking about and talking about sort of the go forward business, what would The cash flow profile look like?

Speaker 4

Should it be getting better? Or should it be getting worse? And under what circumstances?

Speaker 3

Sure. Let me answer that in 2 ways. I think for Q4, as we're heading in, and I'll use a round number here, The real number is 197, but if we're heading in with about $200,000,000 as at the end of September 30, We believe that we should take in about $50,000,000 worth of cash from customers from work that we do. We imagine that we will spend about $50,000,000 and about $50,000,000 will be consumed within that $49,000,000 payment, the $49,800,000 payment I mentioned in relation to the release agreement. So we think 4th quarter In relation to 2024, I want to be clear on something.

Speaker 3

NuScale has A lot of toggles that we're able to employ to manage our cash flow. This isn't just a fixed expense business. There's variable expense and there's a lot of discretionary spending. We spend more as we have contracts and we pull in our spending As contracts either get pushed out or delayed or whether we want to focus more on discretionary spend or non discretionary spend. So I think that just as a general comment, Mark, and really important here is we feel we're in a very good cash position.

Speaker 3

I want to reiterate something I mentioned in the earlier comments. We're not out in a position To raise cash and we're not out right now with a public offering, we'll selectively look at it. We're being prudent about our use of capital And we understand that preserving value for investors is our utmost priority. So we feel we're in a very good position.

Speaker 4

Okay. That's helpful. The other one I had is related to Standard Power and Enter 1. This seems like A great opportunity, but a lot of investors have mentioned that these two entities are very unknown. And When you go to their websites, there's not a whole lot there.

Speaker 4

If you try to Google them, it doesn't appear that there's a lot of reference out there that at least We can find as outsiders. So investors are wondering how capable they are of really Getting these projects across the finish line. So maybe you could share a little bit more to the extent you're able to about who these counterparties are and why they should be viewed

Speaker 3

Mark, I want to maybe go back to some of the comments that John made earlier In a sense that as a management team, we spend a lot of time vetting potential clients. We spend a lot of time vetting EnterOne as a development partner. This is what we do for a living. And we feel strongly that the business model that EnterOne has developed has been a great enabler. That business model has resonated with customers, utilities, industrials and others It's resulted in a very significant pipeline for us.

Speaker 3

Standard Power, we've been speaking to for over a year. We've vetted them well and we feel that Ceramic Power is a great customer for us. And we know that the sites that they're developing are real sites and we've We vetted those as well. I think it's unfortunate that we can't release too much information to the market at this stage, but we expect to in the very near term.

Speaker 5

Yes, Mark, this is John. We have been in discussion with Standard Power for quite some time. It's just coincidentally that The IntraOne also knew those same players and engaged in the process and Standard Power immediately gravitated to the model Potentially, they're offering. So the discussions are going on right now in the development of the Phase. Arguably, you could say, Should the announcement had been made back in October 6, but what the announcement said essentially that that Stand Up Power, the customer elected and chose NuScale's technology as a technology of choice going forward.

Speaker 5

So we're in the process right now With IntraOne, Stand Up Power and developing that deal and hopefully in the near term, as Ramzi mentioned, we'll be able to bring forth more data to the market.

Operator

And your next question comes from the line of Ryan Finkst from B. Riley. Your line is open.

Speaker 6

Hey, thanks for taking my questions guys.

Speaker 3

So I

Speaker 6

was just wondering, when do you expect to A project cost estimate for the Standard Power projects, is that a near term phenomenon or Even before we get there, could you give a very early stage estimate of the project costs that we're looking at for those 2?

Speaker 3

Ryan, this is Ramsey. Again, thank you for joining us. Thank you for the questions. It's still a little bit early for us to comment on the structure and the nature The contract with Standard Power, it's something that we're actively working with. I would mention here that really The customer is Enter 1 in this relationship.

Speaker 3

And Clayton Scott, I think we have our Chief Commercial Officer on the line. You may be better positioned to comment on what we have coming down the line just from a timing perspective.

Speaker 7

Thanks, Ramzi. Yes, I'm on. So thank you, Ramzi, and thank you for the question. Yes, as everybody stated, No, those discussions and those contractual alignments are still being worked. We're in a 90 day period to Put those definitive agreements together, so it will be sometime early in the first Q1 where we will have a more firm vision on this.

Speaker 7

If we We're in a position to be able to release something sooner, then that's something we'll certainly address. But right now, I don't think it's we're in a place to Kind of outline where those are going to lie. But I will say directionally, it's in a much better direction than what we've

Speaker 3

Ryan, again, this is Ramsey. Yes. I want to remind our analysts and our investor community, Ceramic Power and Enter 1 announced NuScale As their technology provider of choice. And that was a great announcement for us. And we know that there have been doubts in the market.

Speaker 3

And we can't we look forward to dispelling those doubts. We're working very hard to get agreements in place where We can show revenue coming. We can show the structure of the agreements and we can push forward. I mean, it's beat up our stock price and we understand that. And let me assure you that management is working very, very hard to come forward with more information as we're able to, To support the deal that we have.

Speaker 6

Got it. That's helpful. And then turning To CFPP, obviously, the learnings are very positive, helped the development process for NuScale going forward. But can you talk about the key headwinds a little bit more between the subscription model And the site and maybe some others that ultimately didn't lead to that project getting built that you don't expect to face in subsequent projects from here.

Speaker 5

I'm sorry, this is John. If you look at the tenure of that project over the years, A lot of great successes came from that project. NuScale was able to get through the rigor of the Nuclear Regulatory Commission. We put together a standard plan design. We've got our COLA submission that was going in January and probably 60% to 70% of that construction operation license agreement can be moved to another customer.

Speaker 5

We get 4 genes that are ongoing currently with our partner in Doosan, our key supplier, those are fungible assets. They can We're in discussions with DOE and the owner currently about moving those assets to another customer. So if you look at what I'd call Sun cost, most of The achievements are going to benefit our next customer. There is some direct site specific engineering, Obviously, that won't. But in the totality of it, that was really minimal.

Speaker 5

There's a site characterization and there's Putting up fencing and doing some volcanic geological assessments for seismic, but the majority will move elsewhere.

Speaker 3

Maybe to further articulate on this, one of the reasons or the reason That we mutually decided to terminate CFPP was subscriptions and Both Upscale and UAMS and the DOE have worked very hard to keep this project moving along. And ultimately, subscriptions are something that were Not in our control. I think in future projects, we learn from CFPP. We learn from some of the hurdles. We learned from some of the development risks that come along with that.

Speaker 3

And I really think that the model that we have now with EnteraOne where we step away from the development role and focus on what this business is designed to do, which is sell NuScale Power Modules, License the technology and sales services associated with those. As long as we focus on that, I think we can steer clear of some of the pitfalls That we had previously.

Speaker 5

Yes. A lot of the issues we face at CFPP are really unique to CFPP, Such as the issue of subscription, the customer had made it very clear that they had to achieve 80% of their total For this project to move forward and with all the hard work that went into it, it was just not achievable. So looking at ongoing costs, we mutually determined It's probably the best thing to where collectively we move on. It's the old Dakota Indian, once you're on a dead horse, You dismount quickly and move on to others and that's where we are here. So I'm very proud of the cost Accomplishments over the years that we've had with that customer and that project and that business is business.

Speaker 3

And just to buttress John's earlier point, we anticipate half Approximately of the cost that we incurred, the development that incurred is generic development That moves with us to other projects that informs our future business. We really made a lot of great accomplishments with CFPB. I think everyone's really very proud. Despite the fact that we didn't get to the finish line, I think we're all very proud of where we got and what it means for the business overall.

Speaker 5

I think what's Critically important is if you look at the dynamics in the industry right now, the market trends continue. We do have another customer in Romania, Ropower. I've been in discussions with their CEO in this weekend and that project continues to progress. They're keenly interested And continue will be with NuScale as the technology of choice for that project. We continue to get great support from our government.

Speaker 5

So all the indicators, the industrials that we talked before, Jose Reyes, Doctor. Reyes is in 17 to 20 industrials have approached us for different areas of either be it hydrogen or ammonia or Process heat, so we're not seeing any slowdown in the market.

Speaker 7

We're not

Speaker 5

seeing anybody off From this project, we're reallocating resources. So we just got to get our next couple of customers in the door and get some firm contracts.

Speaker 7

I think, John, just to add around the demand profile, the exciting thing around standard power in the data centers is that the demand profile It's extremely different. It's very robust. The need for reliable available power is extremely important and the demand value For what they need in order to provide their into the market space of AI It's far different. So we anticipate that that profile and that need is a much different experience than what we're seeing with the subscription model of

Speaker 6

Thank you, Clay. Got it. That all makes a lot of sense and thank you for all that detail. If I can just sneak one last one in. John, you started to talk about it a little bit.

Speaker 6

But if I'm thinking about the customer pipeline In the near term, maybe what geographic regions or customer types do you think have the best shot of converting into Committed customers from the pipeline today.

Speaker 5

Yes. I still believe with particularly with Our coal plant refurbishment requirements within this country and you know how many coal plants are forecasted to come on offline just by 2,030, It's still a very good model. Our ability from a scalability where we can offer 4.6 up to 9 24 Megawatts, That whole coal refurbishment, overseas, it's still pretty much the same, heavily driven by energy security needs, Particularly Central and Eastern Europe. One thing we are doing with the limited resources is the vetting of the Tunies, it's pretty important to get into the Class 1. And that's heavily oriented to what's the regulatory framework and where is the funding coming from.

Speaker 5

So the lack of activity I'll be at COP28. I'm looking forward to it. I've been

Speaker 2

to the last

Speaker 5

three And I think it's going to be interesting just to hear because you're going to hear a lot more about nuclear coming out of COP 28, I feel, Advanced Nuclear.

Speaker 6

Awesome. Thank you, guys. I'll turn it back.

Operator

Your next question comes from the line of Shahriar Pourreza from Guggenheim Partners. Your line is open.

Speaker 6

Hey, guys. It's actually James for Shahriar. Thanks for taking the question. Just had a quick follow-up.

Speaker 3

I would just want to come back to

Speaker 6

some of Randy's comments on showing more detail. Can you give us any more color on what I expect to be able to provide with regards to guidance on the 4Q call, will it be revenue and expense at points or will it just be cash from ops like we saw this year? Thanks.

Speaker 3

Yes. I'm sorry. I didn't hear that very well.

Speaker 6

So the you had indicated that you will be able to give some more guidance on the 4Q call. I guess, can you just give us any more color on what you I expect to be able to provide, is it just another year of cash from ops? Is it revenue and expense data points? Just how are you thinking about updating us with the next cycle?

Speaker 3

I think there's 2 points on this. I know that I have engaged our analyst community with more qualitative feedback than hard forecasts. I think at the early stage, the development of our business, We rely on a handful of major contracts as we get moving. I think because of the Variability in start timings, the work that's involved in early stage, it is A bit difficult to stick to a prediction on future earnings or future revenue. That being said, I'd like to engage that for 2024.

Speaker 3

I think on the Q4 call, we'll look to do that. My preference has been really to focus on cash because I think that accounting treatment for some of the work that we do skews the numbers a little bit. And that's why you'll notice that as I discussed, I think, with Mark Bianchi's question, as I discussed what Q4 looks like, I really focused on cash, and I think that's what's important for us now. Cash management, conservative cash management, being responsible to our investors And bringing cash in from contracts. And so it's likely I'll stick with a strong cash view as I engage the analyst community, but I'd like to help people build out And build a proper GAAP revenue model as well.

Speaker 3

So we'll be doing both, but my focus really is on the cash management and cash flow.

Speaker 6

Got it. Thanks, guys.

Speaker 3

Yes. Thank you.

Operator

Thank you. And that is all the time we do have today for Q and A. I will now turn the call back over to NuScale's CEO, John Hopkins for final comments. John?

Speaker 5

Yes. Thank you, operator. Again, as we stated before, NuScale, we believe, is Well positioned and we are a first mover in the SMR space. We are poised to commercialize and deliver Clean energy at scale and our technology is essential to powering a global energy transition, and we believe we are at the forefront of that effort, And we will work to deliver safe, scalable and reliable carbon free nuclear power going forward. So I do appreciate everybody's time.

Speaker 5

Thank you.

Operator

Thank you. And this does conclude today's conference call. You may now disconnect. Have a great day.

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Key Takeaways

  • NuScale formed a strategic partnership with IntraOne Energy and Standard Power to develop two 12-module Voyager SMR plants in Ohio and Pennsylvania, together generating nearly 2 GW of carbon-free power for data center customers.
  • NuScale and Utah Associated Municipal Power Systems mutually agreed to terminate the Carbon Free Power Project due to insufficient customer subscriptions, with about half of the development work and long-lead materials transferable to new projects.
  • The company’s global business development pipeline remains strong, with active projects in Romania (RoPower), engagements in France, Turkey, Morocco, Eastern Europe and the Far East, and plans to open Energy Exploration (E2) centers in the U.S., Romania and Korea.
  • NuScale is advancing its manufacturing and regulatory milestones: over $1.8 billion invested in technology readiness, Doosan forging orders in production, and a U.S. NRC review under way for a 77 MW power-module upgrade.
  • In Q3, NuScale reported $7 million in revenue, R&D expenses of $63.7 million (including a $35.4 million termination charge), a net loss of $58.3 million, and ended the quarter with $197 million in cash and no debt, while expecting to release about $24 million of restricted cash.
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Earnings Conference Call
NuScale Power Q3 2023
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