With the Department of Energy still unable to provide needed storage containers, Centrus Energy will not be able to deliver 900 kilograms of high-assay, low-enriched uranium to the U.S. government this year, the company said Friday.
The company can make the material, Chief Executive Officer Amir Vexler said Friday on an earnings call with investors and media, but it cannot store the amount of high assay low-enriched uranium (HALEU) DOE has ordered.
That is owing to ongoing supply chain issues that continue to prevent DOE from providing specialized containers to store and transport the HALEU. Under a contract awarded in 2022 and with options worth up to $1 billion over 10 years, Centrus made a 20-kilogram test batch of HALEU in October at its new cascade, built in a leased DOE space at the Portsmouth Site near Piketon, Ohio.
The base period of Centrus’ HALEU operations contract has two phases. The first called for the pilot batch of uranium. The second phase calls for Centrus to enrich another 900 kilograms of HALEU and deliver it to DOE by November, something the company said this week it cannot do with DOE-furnished equipment. The contract’s third phase includes a trio of three-year options, each of which calls for delivery of 900 kg more of HALEU.
Vexler, who took over as chief executive from Daniel Poneman in January, said Friday that the company would not meet its phase two obligations through no fault of its own. The company’s HALEU cascade in Piketon, Ohio, is ready to scale up production, but a lack of 5B cylinders from DOE will hinder its output.
“The delivery of the 900 kilograms has really been conditioned on their [DOE’s] ability to deliver those cylinders to us in the timeframe that allows for continuous production in phase two,” Vexler said Feb. 9 during the company’s 2023 earnings call. “During the period when the 5Bs are insufficient, the company will not be able to produce the HALEU that we’re discussing here. But we will be able to continue operations of the cascade and perform preventive maintenance and other regulatory compliance activities.”
“The centrifuges will continue to operate but the quantity of HALEU we are able to withdraw from the cascade in phase two is limited by the number of cylinders the department can provide and will be less than 900 kilograms,” he added.
Vexler said the supply of cylinders should be remedied by the end of 2024, but delays are inevitable at this point. Centrus has discussed the delays with the cylinders for more than a year, blaming them on the COVID-19 pandemic.
“We anticipate that the delay in obtaining the cylinder is really a temporary issue,” Vexler said. “But as mentioned earlier, we will no longer be able to achieve 900 kilograms. We really don’t expect an economic impact here.”
Despite the difficulties in the HALEU program, annual revenue was up at the company for 2023, rising to $320.2 million from $293.8 million in 2022, the highest in eight years, according to an earnings report published Thursday after financial markets closed. Revenue for the quarter ended Dec. 31 were down to $103.6 million from $126.2 million in the same period last year.
Annual revenue growth was mainly driven by a 14% increase in the company’s Low-Enriched Uranium business segment, Vexler said. The segment combines sales of uranium fuel, or separative work units, and natural uranium. Centrus makes most of its money in this segment by brokering uranium fuel, much of it Russian-made, to U.S. utilities.
Centrus’ net income for 2023 was $84.4 million, up from $50.7 million in 2022. For the final quarter of last year, net income came in at $56.3 million, more than double the $19.8 million Centrus brought in during the same period in 2022.
Revenue from the flagship Low-Enriched Uranium segment was $269 million for the year ended December 31, 2023, an increase of $33.4 million compared with $235.6 million in 2022. For the final quarter of 2023, the segment brought in $21.3 million, a slight decrease from $22 million a year-ago quarter.
The Low-Enriched Uranium segment posted an annual gross profit, essentially a measure of pure sales margin that excludes operating costs, of $105.1 million, down from about $130.6 million in 2022. For the quarter, gross profit was $44.3 million down from $67 million a year ago.
Annual revenue from the Technical Solutions segment, where Centrus book keeps its enrichment technology business, was $51.2 million, down about $7 million from $58.2 million in 2022.
The drop in Technical Solutions revenue was driven by the trailing off of work performed under the 2019 HALEU demonstration contract and others, Centrus said. This was partially offset by increased work under the HALEU operation contract signed in November 2022, the company said.
The demonstration contract provided money for Centrus to build the cascade it is now operating under the second contract.
For the quarter ended Dec. 31, the Technical Solutions pulled in $21.5 million of revenue, compared with $14 million in the same period last year.
Annual gross profit for Technical Solutions was $7 million in 2023, up from a loss of about $12.7 million in 2022. For the fourth quarter, gross profit was $5.5 million, up from a year ago when the segment lost $18.6 million.
Vexler has been on the job for a matter of weeks. Longtime Centrus chief Daniel Poneman had led the company since March 2015, overseeing its return to profitability after a bankruptcy restructuring and the abandonment of domestic enrichment. He stepped down in early January.
