Uranium broker and enrichment-technology developer Centrus Energy Corp., Bethesda, Md., took a hit on the bottom line for 2022, though its core operations reported good health and revenue was nearly level year-over-year.
Centrus’ net income fell 70% to about $52 million for 2022, according to the company’s Wednesday 10-K filing with the Securities & Exchange Commission.
It was a tough comparison with 2021, when Centrus’ core operations made a little more money, the bottom line benefitted from a one-time tax benefit of almost $40 million and the company did not have to take a one-time charge on a new DOE contract.
Company-wide operating income, which excludes things such as income taxes and the devaluing of assets due to wear and tear, was nearly $60 million in 2022, about $8 million less than in 2021.
Operating income from 2022 includes a roughly $23-billion charge the company took in the fourth quarter to account for its share of a new uranium enrichment contract finalized in November with the Department of Energy. The deal includes options that could see Centrus producing high assay low enriched uranium (HALEU) for DOE for 10 years.
On a per-share basis, 2022 net income was $0.10, down from $2.71 a share in 2021, the company reported. Centrus retired a tranche of preferred shares in 2021.
For the year, Centrus’ total revenue fell roughly $4.5 million, to nearly $294 million from just over $298 million in 2021, after the company wrapped up an old contract with the Department of Energy to build a new HALEU cascade at the agency’s Portsmouth site near Piketon, Ohio, and started work on the follow-on contract to operate the machines.
Overall revenue dropped in 2022 even after a bump in fourth quarter revenue, to roughly $126 million from $89 million a year ago. The comparison again was difficult, as revenue in 2021 included a one-time benefit of about $40 million related to a pension settlement with DOE.
Yearly revenue at Centrus’ bedrock Separate Work Units business, representing uranium fuel sold to U.S. utilities, rose nearly $33 million year-over-year to more than $196 million. Revenue from sales of natural uranium also rose for 2022, climbing to almost $35.5 million from just under $23 million in 2022.
Technical Solutions revenue, money brought in by DOE-sponsored enrichment technology development, dropped by nearly half in 2022 to just over $48 million. Technical Solutions was where Centrus booked the 2021 pension-settlement benefit.
In November, DOE awarded Centrus a contract, worth up to $1 billion over 10 years, to operate the 16-machine HALEU cascade the company built at Portsmouth.
The contract has a roughly two-year base, worth $150 million, that runs through December 2024 and is split into two phases. The first phase of the contract, the only phase with a cost-share, calls for Centrus to produce a 20 kilograms test batch of DOE-approved HALEU by Dec. 31, 2023. The company booked its entire share of the base period’s phase one costs in the fourth quarter, resulting in a roughly $23-million charge in 2022.
The second phase of the contract’s base calls for Centrus to produce by December 2024 900 kilograms of HALEU, which is 19.75% uranium-235 by mass: just below the threshold of what is internationally considered highly enriched uranium. DOE wants the fuel to help with research and development of new nuclear power reactors.
The contract has a trio of three-year options after that. Centrus would have to annually produce 900 kilograms of HALEU in each of those option periods, with the potential to earn a larger fee for producing more and the danger of earning a smaller fee for producing less.
Centrus’ experience building the new HALEU cascade is also a bug-shake for a potential future application of the company’s AC100M centrifuge technology for national defense. If Centrus can produce an all-domestic version of these centrifuges, which the cascade in Portsmouth is not, the machines could be used to refine uranium for nuclear weapons and Navy warships and submarines.
