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What changed in CENTRUS ENERGY CORP's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of CENTRUS ENERGY CORP's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+493 added−408 removedSource: 10-K (2024-02-09) vs 10-K (2023-02-22)

Top changes in CENTRUS ENERGY CORP's 2023 10-K

493 paragraphs added · 408 removed · 326 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

94 edited+77 added−32 removed36 unchanged
Biggest changeAs of 2020, the production capacity for ROSATOM/TENEX was estimated by the WNA to be approxima tely 28 million SWU per ye ar. Imports of LEU and other uranium products produced in the Russian Federation are subject to restrictions as described below under — Russian Suspension Agreement .
Biggest changeImports of LEU and other uranium products produced in the Russian Federation are subject to restrictions as described below under — Russian Suspension Agreement ; • Urenco has reported installed capacity at its European and U.S. enrichment facilities of approximately 18 million SWU per year; • CNEIC has emerged as a significant producer primarily focused on supplying domestic requirements in China.
Under this law and the RSA, imports of Russian uranium products will peak in 2023 at 24% of the forecasted U.S. demand for enrichment and then begin to decline, reaching 15% by 2028. Despite the fact that overall limits will ramp down, the RSA, as amended in 2020, explicitly sets aside sufficient quota in 2021 through 2028 for Centrus.
Under this law and the RSA, imports of Russian uranium products peak in 2023 at 24% of the forecasted U.S. demand for enrichment and then begin to decline, reaching 15% by 2028. Despite the fact that overall limits will ramp down, the RSA, as amended in 2020, explicitly sets aside sufficient quota in 2021 through 2028 for Centrus.
The higher U 235 concentration offers a number of potential advantages, which may include better fuel utilization, improved performance, fewer refueling outages, simpler reactor designs, reduced waste volumes, and greater nonproliferation resistance. The lack of a domestic HALEU supply is widely viewed as a major obstacle to the successful commercialization of these new reactors.
The higher U 235 concentration offers a number of potential advantages, which may include better fuel utilization, improved performance, fewer refueling outages, simpler reactor designs, reduced waste volumes, and greater nonproliferation resistance. The lack of HALEU supply is widely viewed as a major obstacle to the successful commercialization of these new reactors.
Future commercial reactor designs may use uranium enriched up to 20% U 235 , or HALEU. 11 Fuel Fabrication. LEU is then converted to uranium oxide and formed into small ceramic pellets by fabricators. The pellets are loaded into metal tubes that form fuel assemblies, which are shipped to nuclear power plants.
Future commercial reactor designs may use uranium enriched up to 20% U 235 , or HALEU. Fuel Fabrication. LEU is then converted to uranium oxide and formed into small ceramic pellets by fabricators. The pellets are loaded into metal tubes that form fuel assemblies, which are shipped to nuclear power plants.
SWU pricing is determined by a formula using a combination of market-related price points and other factors. The LEU that we obtain from TENEX under the TENEX Supply Contract currently is subject to quotas and other restrictions under the RSA between the United States and the Russian Federation which governs exports of Russian uranium 12 products to the United States.
SWU pricing is determined by a formula using a combination of market-related price points and other factors. The LEU that we obtain from TENEX under the TENEX Supply Contract currently is subject to quotas and other restrictions under the RSA between the United States and the Russian Federation which governs exports of Russian uranium products to the United States.
With our private sector customers, we seek to leverage our domestic enrichment experience, as well as our engineering know-how and precision manufacturing facility to assist customers with a range of engineering, design and advanced manufacturing projects, including the production of fuel for next-generation nuclear reactors and the development of related facilities.
With our government and private sector customers, we seek to leverage our domestic enrichment experience, as well as our engineering know-how and precision manufacturing facility to assist customers with a range of engineering, design and advanced manufacturing projects, including the production of fuel for next-generation nuclear reactors and the development of related facilities.
Refer to Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations. 13 Government Contracting On October 31, 2019, we signed the cost-share HALEU Demonstration Contract with the DOE to deploy a cascade of centrifuges to demonstrate production of HALEU for advanced reactors.
Refer to Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations. Government Contracting On October 31, 2019, we signed the cost-share HALEU Demonstration Contract with the DOE to deploy a cascade of centrifuges to demonstrate production of HALEU for advanced reactors.
While in some cases customers purchase both the SWU and uranium components of LEU from us, utility customers typically provide the natural uranium to us as part of their enrichment contracts and in exchange we deliver LEU to these customers and charge for the SWU component.
While in some cases customers purchase both the SWU and uranium components of LEU from us, utility customers typically provide the natural uranium hexafluoride to us as part of their enrichment contracts and in exchange we deliver LEU to these customers and charge for the SWU component.
Technical Solutions Our Technical Solutions segment reflects our technical, manufacturing, engineering, and operations services offered to public and private sector customers, including the American Centrifuge engineering, procurement, construction, manufacturing, and operations services being performed under the HALEU Demonstration Contract and the HALEU Operation Contract.
Technical Solutions Our Technical Solutions segment reflects our technical, manufacturing, engineering, and operations services offered to public and private sector customers, including the American Centrifuge engineering, procurement, construction, manufacturing, and operations services being performed under the HALEU Operation Contract.
The amount of enrichment deemed to be contained in LEU under this formula is commonly referred to as its SWU component and the quantity of natural uranium deemed to be contained in LEU under this formula is referred to as its uranium or “feed” component.
The amount of enrichment deemed to be contained in LEU under this formula is commonly referred to as its SWU component and the quantity of natural uranium hexafluoride deemed to be contained in LEU under this formula is referred to as its uranium or “feed” component.
To date, no sanctions have been imposed or announced on TENEX or any other ROSATOM subsidiary involved in the TENEX Supply Contract, in respect to the work of ROSATOM or its subsidiaries in Iran.
To date, no sanctions have been imposed or announced on TENEX or any other Rosatom subsidiary involved in the TENEX Supply Contract, with respect to the work of Rosatom or its subsidiaries in Iran.
Human Capital Management Our employees in Maryland, Ohio, and Tennessee are dedicated to our corporate philosophy based in honesty, trust, and with the highest levels of integrity, safety and security.
Human Capital Management Our employees in Maryland, Ohio, and Tennessee are dedicated to our corporate philosophy based in honesty, trust, and the highest levels of integrity, safety and security.
Under the TENEX Supply Contract, we purchase SWU contained in LEU, and we deliver natural uranium to TENEX for the LEU’s uranium component. The TENEX Supply Contract extends through 2028. We typically pay for the SWU contained in the LEU and supply natural uranium to TENEX for the natural uranium component.
Under the TENEX Supply Contract, we purchase SWU contained in LEU, and we deliver natural uranium hexafluoride to TENEX for the LEU’s uranium component. The TENEX Supply Contract extends through 2028. We typically pay for the SWU contained in the LEU and supply natural uranium to TENEX for the natural uranium component.
While existing reactors typically operate on LEU with the U 235 isotope concentration below 5%, HALEU is further enriched so that the U 235 concentration is between 5% and 20%.
While existing reactors typically operate on LEU with the U 235 concentration below 5%, HALEU is further enriched so that the U 235 concentration is between 5% and 20%.
On November 30, 2022 the lease was further amended to ensure all D&D liabilities created under the new HALEU Operation Contract reside with the DOE.
On November 30, 2022 the lease was further amended to ensure all D&D liabilities created under the HALEU Operation Contract reside with the DOE.
The portion of the Company’s anticipated cost share under Phase 1 of the HALEU Operation Contract representing the Company’s share of projected program costs was recognized in Cost of Sales as an accrued loss in the fourth quarter ended December 31, 2022, and will be adjusted over the remaining contract term based on actual results and remaining program cost projections.
The portion of the Company’s anticipated cost share under Phase 1 of the HALEU Operation Contract representing the Company’s share of projected program costs was recognized in Cost of Sales as an accrued loss in the fourth quarter ended December 31, 2022, and was adjusted over the Phase 1 contract term based on actual results and remaining program cost projections.
SWU is a standard unit of measurement that represents the effort required to sort natural uranium between enriched uranium having a higher percentage of U 235 and depleted uranium having a lower percentage of U 235 . The SWU contained in LEU is calculated using an industry standard formula based on the physics of enrichment.
SWU is a standard unit of measurement that represents the effort required to separate natural uranium between enriched uranium, having a higher percentage of U 235 , and depleted uranium, having a lower percentage of U 235 . The SWU contained in LEU is calculated using an industry standard formula based on the physics of enrichment.
Our LEU segment provides most of the Company’s revenue and involves the sale of enriched uranium for nuclear fuel to customers which are primarily utilities that operate commercial nuclear power plants. The majority of these sales are for the enrichment component of LEU, which is measured in SWU.
Our LEU segment provides most of the Company’s revenue and involves the sale of enriched uranium, the fissile component of nuclear fuel, primarily to utilities that operate commercial nuclear power plants. The majority of these sales are for the enrichment component of LEU, which is measured in SWU.
We will disclose on the website any amendments to, or waivers from, the COBC that are required to be publicly disclosed. We also make available on our website or upon request, free of charge, our COBC, Board of Directors Governance Guidelines, and our Board committee charters. 21
We will disclose on the website any amendments to, or waivers from, the COBC that are required to be publicly disclosed. We also make available on our website or upon request, free of charge, our Board of Directors Governance Guidelines and our Board committee charters. 26
Nuclear power plants generate approximately 20% of U.S. electricity and 10% of the world’s electricity. Used Fuel Storage. After the nuclear fuel has been in a reactor for several years its efficiency is reduced and the assembly is removed from the reactor’s core.
Nuclear power plants generate approximately 18% of U.S. electricity and 10% of the world’s electricity. Used Fuel Storage. After the nuclear fuel has been in a reactor for several years its efficiency is reduced and the assembly is removed from the reactor’s core.
For example, in surveys conducted by the U.S. Nuclear Industry Council in 2020 and 2021, advanced reactor developers indicated that the number one issue that “keeps you up at night” was access to HALEU.
For example, in surveys of advanced reactor developers conducted by the U.S. Nuclear Industry Council in 2020 and 2021, respondents indicated that the number one issue that “keeps you up at night” was access to HALEU.
The four largest LEU suppliers comprise over 95% of mar ket share combined: • ROSATOM, a Russian government entity, which sells LEU through its wholly-owned subsidiary TENEX; • Urenco, a consortium of companies owned or controlled by the British and Dutch governments and two German utilities; • Orano, a company largely owned by the French government, and formerly part of the French government; and • CNEIC, a company owned by the Chinese government.
The four largest LEU suppliers comprise over 95% of mar ket share combined are as follows: • Rosatom, a Russian government entity, which sells LEU through its wholly-owned subsidiary TENEX; • Urenco, a consortium of companies owned or controlled by the British and Dutch governments and two German utilities; • CNEIC, a company owned by the Chinese government; and • Orano, a company largely owned by the French government, and formerly part of the French government.
Costs under the HALEU Demonstration Contract include program costs, including direct labor and materials and associated indirect costs that are classified as Cost of Sales , and an allocation of corporate costs supporting the program that are classified as Selling, General and Administrative Expenses .
Costs under the HALEU Demonstration Contract included program costs, including direct labor and materials and associated indirect costs that are classified as Cost of Sales , and an allocation of corporate costs supporting the program that are classified as Selling, General and Administrative Expenses .
A market-related price reset provision in our largest supply contract occurred in 2018 and took effect at the beginning of 2019 – when market prices for SWU were near historic lows – which has significantly lowered our cost of sales and contributed to improved margins.
A market-related price reset provision in the TENEX Supply Contract, which is our largest supply contract, occurred in 2018 and took effect at the beginning of 2019 – when market prices for SWU were near historic lows – which has significantly lowered our cost of sales and contributed to improved margins since 2019.
The USEC Privatization Act and the terms of our lease of the plants provide that DOE remains responsible for the D&D of the gaseous diffusion plants. Further, the DOE continued operations as well as cleanup activities, both during and subsequent, to our operations at the facilities. 17 We lease facilities and related personal property near Piketon from the DOE.
The USEC Privatization Act and the terms of our leases of the plants provide that DOE remains responsible for the D&D of the gaseous diffusion plants. Further, the DOE continued operations as well as cleanup activities, both during and subsequent, to our operations at the facilities. 21 We lease facilities and related personal property near Piketon from the DOE.
The used fuel is warm and radioactive and is kept in a deep pool of water for several years. Many utilities have elected to then move the used fuel into steel or concrete and steel casks for interim storage. LEU Segment Order Book Our Order Book extends to 2029.
The used fuel is warm and radioactive and is kept in a deep pool of water for several years. Many utilities have elected to then move the used fuel into steel or concrete and steel casks for interim storage. 13 LEU Segment Order Book Our Order Book extends to 2030.
Our global Order Book includes long-term sales contracts with major utilities through 2029. We have secured cost-competitive supplies of SWU under long-term contracts through the end of this decade to allow us to fill our existing customer orders and make new sales.
Our global Order Book includes long-term sales contracts with major utilities through 2030. We have secured cost-competitive supplies of SWU under long-term contracts through the end of this decade designed to allow us to fill our existing customer orders and make new sales.
Cutlip has been Senior Vice President, Field Operations since January 2018, was Vice President, Field Operations from May 2016 through December 2017, was Deputy Director of the American Centrifuge Project from January 2015 to May 2016, was Director, Centrifuge Manufacturing from April 2008 to December 2014, was Director, Program Management and Strategic Planning from December 2005 to April 2008, was Manager, Engineering from May 1999 to December 2005, and held positions in operations management and engineering at the Company and its predecessors since 1981.
Cutlip has been Senior Vice President, Field Operations since January 2018, was Vice President, Field Operations from May 2016 through December 2017, was Deputy Director of the American Centrifuge Project from January 2015 to May 2016, was Director, Centrifuge Manufacturing from April 2008 to December 2014, was Director, Program Management and Strategic Planning from December 2005 to April 2008, was Manager, Engineering from May 1999 to December 2005, and held positions in operations management and engineering at the Company and its predecessors since 1981. 24 John M.A.
Centrus also sells natural uranium (the raw material needed to produce LEU) and occasionally sells LEU with the natural uranium, uranium conversion, and SWU components combined into one sale. LEU is a critical component in the production of nuclear fuel for reactors that produce electricity.
Centrus also sells natural uranium hexafluoride (the raw material needed to produce LEU) and occasionally sells uranium concentrates, uranium conversion, or LEU with the natural uranium hexafluoride and SWU components combined into one sale. LEU is a critical component in the production of nuclear fuel for reactors that produce electricity.
Our Technical Solutions segment is dedicated to the restoration of America’s domestic uranium enrichment capability to play a critical role in meeting U.S. national security and energy security requirements and advancing America’s nonproliferation, energy, and climate objectives.
Our Technical Solutions segment is dedicated to the restoration of America’s domestic uranium enrichment capability in order for us to play a critical role in meeting U.S. national security and energy security requirements and advancing America’s nonproliferation, energy, and climate objectives.
Since it was not possible to begin HALEU production without the storage cylinders, it was not possible to complete the operational portion of the HALEU Demonstration Contract before the expiration date of the contract.
Since it was not possible to begin HALEU production without the 5B Cylinders, it was not possible to complete the operational portion of the HALEU Demonstration Contract before the expiration date of the contract.
There has been no interruption of work as Centrus and the United Steelworkers Local 689-5 union continue to meet to reach accord on a new collective bargaining agreement for the represented employees at the advanced technology facility near Piketon. 19 Information about our Executive Officers Executive officers are elected by and serve at the discretion of the Board of Directors.
There has been no interruption of work as Centrus and the United Steelworkers Local 689-5 union continue to meet to reach accord on a new collective bargaining agreement for the represented employees at the advanced technology facility in Piketon, Ohio. 23 Information about our Executive Officers Executive officers are elected by and serve at the discretion of the Board of Directors.
Services provided under the contract included constructing and assembling centrifuge machines and related infrastructure, and training and qualifying the workforce for operation of the facility.
Services provided under the contract included constructing and installing centrifuge machines and related infrastructure, and training and qualifying the workforce for operation of the facility.
Item 1. Business Overview Centrus Energy Corp., a Delaware corporation, is a trusted supplier of enriched uranium for nuclear fuel and services for the nuclear power industry, which provides a reliable source of carbon-free energy.
Item 1. Business Overview Centrus Energy Corp., a Delaware corporation, is a trusted supplier of nuclear fuel components and services for the nuclear power industry, which provides a reliable source of carbon-free energy.
Suppliers We have a diverse base of supply that includes: • existing inventory of LEU (refer to Note 4, Inventories , in the Consolidated Financial Statements in Part IV of this Annual Report), • mid-term and long-term contracts with enrichment producers, • purchases and loans from secondary sources, including fabricators and utility operators of nuclear power plants that have excess inventory, and • spot purchases of SWU, uranium, and LEU.
Suppliers We have a diverse base of supply that includes: • existing inventory of LEU (Refer to Part II, Item 8, Financial Statements and Supplemental Data: Note 4 , Inventories , in the Consolidated Financial Statements in Part IV of this Annual Report); • long-term contracts with enrichment producers; • purchases and loans from secondary sources, including fabricators and utility operators of nuclear power plants that have excess inventory; and • spot purchases of SWU, uranium, and LEU.
The Company entered into this cost-share contract with the DOE as a critical first step on the road back to the commercial production of enriched uranium, which the Company had terminated in 2013 with the closure of the Paducah GDP. Under the HALEU Demonstration Contract, the Company manufactured and assembled 16 centrifuges for eventual site operations and HALEU production.
The Company entered into this cost-share contract with the DOE as a critical first step on the road back to the commercial production of enriched uranium, which the Company had terminated in 2013 with the closure of the Paducah GDP. Under the 2019 HALEU Demonstration Contract, the Company constructed and installed 16 centrifuges for eventual site operations and HALEU production.
We aim to continue to further diversify this base of supply and take advantage of opportunities to obtain additional short and long-term supplies of LEU. Currently, our largest suppliers of SWU are TENEX and the French government-owned company, Orano.
We aim to continue to further diversify this base of supply and take advantage of opportunities to obtain additional short and long-term supplies of LEU. Currently, our largest suppliers of SWU is TENEX followed by the French government-owned company, Orano.
We recognize and reward the performance of our employees in line with our pay-for-performance philosophy and provide a comprehensive suite of benefit options that enables our employees and their dependents to live healthy and productive lives. Safety in our workplaces is paramount.
We recognize and reward the performance of our employees in line with our pay-for-performance philosophy and provide a comprehensive suite of benefit options that are designed to enable our employees and their dependents to live healthy and productive lives. Safety in our workplaces is paramount.
Our LEU supply to foreign customers is exported under the terms of international agreements governing nuclear cooperation between the United States and the government of the country of destination or other entities, such as the EU or the IAEA.
Our LEU supply to foreign customers is exported under the terms of international agreements governing nuclear cooperation between the United States and the government of the country of destination or other entities, such as the EU or the International Atomic Energy Agency.
As of December 31, 2022, and December 31, 2021, our Order Book was approximately $1.0 billion.
As of December 31, 2023, and December 31, 2022, our Order Book was approximately $1.0 billion.
The Order Book is the estimated aggregate dollar amount of revenue for future SWU and uranium deliveries, and includes approximately $319 million of deferred revenue and advances from customers as of December 31, 2022, whereby customers have made advance payments to be applied against future deliveries. No orders in our Order Book are considered at risk related to customer operations.
The Order Book is the estimated aggregate dollar amount of revenue for future SWU and uranium deliveries, and includes approximately $0.3 billion of deferred revenue and advances from customers as of December 31, 2023, whereby customers have made advance payments to be applied against future deliveries. No orders in our Order Book are considered at risk related to customer operations.
We also have an agreement with Orano, the Orano Supply Agreement, for the long-term supply of SWU contained in LEU, commencing in 2023. Under the Orano Supply Agreement, we will purchase SWU contained in LEU received from Orano, and then deliver natural uranium to Orano for the natural uranium feed component of LEU.
We also have an agreement with Orano for the long-term supply of SWU contained in LEU, with deliveries that commenced in 2023. Under the Orano Supply Agreement, we purchase SWU contained in LEU received from Orano, and then deliver natural uranium to Orano for the natural uranium feed component of LEU.
The DOE modified the contract several times to increase the total contract funding to $168.7 million. The HALEU Demonstration Contract’s period of performance ended in November 2022.
The DOE modified the contract several times to increase the total contract funding to $173.0 million. The HALEU Demonstration Contract’s period of performance ended in November 2022.
Government for more than 40 years prior to the creation of the Company through privatization of the Government enterprise in 1998. As a result of such operation, there are contamination and other potential environmental liabilities associated with the U.S. Government’s prior operation of the plants.
The Portsmouth GDP and Paducah GDP were operated by agencies of the U.S. government for more than 40 years prior to the creation of the Company through privatization of the government enterprise in 1998. As a result of such operation, there are contamination and other potential environmental liabilities associated with the U.S. government’s prior operation of the plants.
The previously accrued loss on the HALEU Demonstration Contract was realized over the contract term. During the HALEU Demonstration Contract, the DOE experienced a COVID-19 related supply chain delay in obtaining the HALEU storage cylinders.
The previously accrued loss on the HALEU Demonstration Contract was realized over the contract term. During the HALEU Demonstration Contract, the DOE experienced a supply chain delay in obtaining HALEU 5B Cylinders.
As the only company with a license from the NRC to enrich up to 20% U 235 assay HALEU, Centrus is uniquely positioned to fill a critical gap in the supply chain and facilitate the deployment of these promising next-generation reactors.
As the only company with a license from the NRC actively enriching up to 20% U 235 assay HALEU and that is operating a small scaled HALEU production facility, Centrus is uniquely positioned to fill a critical gap in the supply chain and facilitate the deployment of these promising next-generation reactors.
Any quota adjustment or other change to the RSA could affect our ability to implement the TENEX Supply Contract through sales to customers who take delivery in the United States, which is our most significant market.
Any quota adjustment or other change to the RSA that reduces our quota allocations could affect our ability to implement the TENEX Supply Contract through sales to customers who take delivery in the United States, which is our most significant market. The 2023 adjustment, however, did not affect us.
For further details, refer to Part I, Item 1A , Risk Factors - Restrictions on imports or sales of SWU or uranium that we buy from our Russian supplier and our other sources of supply could adversely affect profitability and the viability of our business.
For further details, refer to Part I, Item 1A , Risk Factors - Restrictions on imports or sales of SWU or uranium that we buy from our Russian supplier and our other sources of supply could adversely affect profitability and the viability of our business. Ukraine War The war in Ukraine has escalated tensions between Russia and the international community.
Although the RSA quotas cover most of the LEU that we must order to fulfill our purchase obligations under the TENEX Supply Contract, we expect that a small portion of the Russian LEU that we order during the term of the TENEX Supply Contract will need to be delivered to customers that will use it in non-U.S. reactors.
Although the RSA quotas cover most of the LEU that we must order to fulfill our purchase obligations under the TENEX Supply Contract, we expect that a small portion of the Russian LEU that we order during the term of the TENEX Supply Contract will need to be delivered to customers that will use it in non-U.S. reactors. 14 The war in Ukraine has escalated tensions between Russia and the international community.
The pricing for the purchased SWU is determined by a formula that uses a combination of market-related price points and other factors, and is subject to certain floors and ceilings. Prices are payable in a combination of U.S. dollars and euros.
The pricing for the purchased SWU is determined by a formula that uses a combination of market-related price points and other factors, and is subject to certain floors and ceilings.
Each employee must read the COBC and sign a form stating that he or she has read, understands and agrees to comply with the COBC. A copy of the COBC is available on our website or upon request without charge.
The COBC states that we conduct our business in strict compliance with all applicable laws. Each employee must read the COBC and sign a form stating that he or she has read, understands and agrees to comply with the COBC. A copy of the COBC is available on our website or upon request without charge.
DOE Facilities We produced LEU thr ough 2001 at the former Portsmouth GDP in Piketon and through 2013 at the former Paducah GDP in Paducah, both of which facilities we had leased from the DOE. The Portsmouth GDP and Paducah GDP were operated by agencies of the U.S.
DOE Facilities We produced LEU thr ough 2001 at the former Portsmouth GDP in Piketon, Ohio and through 2013 at the former Paducah GDP in Paducah, Kentucky, both of which facilities we had leased from the DOE.
Government could decide to impose sanctions on Russian entities that may be involved in nuclear work in Iran, including ROSATOM or its subsidiaries. These sanctions could affect companies owned by ROSATOM, including TENEX, even if they are not doing work in Iran.
These waivers have expired or been terminated and, as a result, the U.S. government could decide to impose sanctions on Russian entities that may be involved in nuclear work in Iran, including Rosatom or its subsidiaries. These sanctions could affect companies owned by Rosatom, including TENEX, even if they are not doing work in Iran.
Donelson was Vice President, Marketing, Sales and Power from April 2011 through December 2017, Vice President, Marketing and Sales from December 2005 to April 2011, Director, North American and European Sales from June 2004 to December 2005, Director, North American Sales from August 2000 to June 2004 and Senior Sales Executive from July 1999 to August 2000. 20 Available Information Our website is www.centrusenergy.com.
Donelson was Vice President, Marketing, Sales and Power from April 2011 through December 2017, Vice President, Marketing and Sales from December 2005 to April 2011, Director, North American and European Sales from June 2004 to December 2005, Director, North American Sales from August 2000 to June 2004, and Senior Sales Executive from July 1999 to August 2000. Mr.
Currently, work is being performed under a services agreement with X-energy signed in August 2021 to provide services for detailed design of the TRISO fuel fabrication facility and various support services for establishing their TRISO Research and Development Center. X-energy is funded under the current DOE cooperative agreement titled ARDP.
Commercial Contracting In 2021, Centrus entered into a task order type services agreement with X-energy to provide services for detailed design of the TRISO fuel fabrication facility and various support services for establishing their TRISO Research and Development Center. X-energy is funded under the current DOE cooperative agreement titled ARDP.
Similarly, Centrus’ SWU purchases under our long-term contract with Orano reflect the lower market prices that prevailed in 2018, when Centrus signed the long-term contract with Orano.
The price reset occurred in 2018, reducing the cost for our purchases from 2019 through 2028. Similarly, Centrus’ SWU purchases under our long-term contract with Orano reflect the lower market prices that prevailed in 2018, when Centrus signed the long-term contract with Orano.
Additionally, the Company designed, procured, and installed most of the necessary support systems. Centrus is currently the only company with an NRC license to enrich uranium up to the 20% concentration that is contained in HALEU. Under the HALEU Demonstration Contract, the DOE agreed to reimburse the Company for 80% of its costs incurred in performing the contract.
Centrus currently is the only company with an NRC license to enrich uranium up to the 20% U-235 concentration that is contained in HALEU and is the only company known to us to produce HALEU outside of Russia. 16 Under the HALEU Demonstration Contract, the DOE agreed to reimburse the Company for 80% of its costs incurred in performing the contract.
For example, depending on the terms of specific contracts, the customer may be able to increase or decrease the quantity delivered within an agreed range. Our Order Book estimate is also based on our estimates of selling prices, which may be subject to change.
Our Order Book estimate is based partially on customers’ estimates of the timing and size of their fuel requirements and other assumptions that are subject to change. For example, depending on the terms of specific contracts, the customer may be able to increase or decrease the quantity delivered within an agreed range.
For example, depending on the terms of specific contracts, prices may be adjusted based on escalation using a general inflation index, published SWU price indicators prevailing at the time of delivery, and other factors, all of which are variable. We use external composite forecasts of future market prices and inflation rates in our pricing estimates.
Our Order Book estimate is also based on our estimates of selling prices, which may be subject to change. For example, depending on the terms of specific contracts, prices may be adjusted based on escalation using a general inflation index, published SWU price indicators prevailing at the time of delivery, and other factors, all of which are variable.
Waivers were granted to allow non-Iranian entities to continue to work on certain programs that, among other things, allowed affiliates of ROSATOM to continue work on nuclear projects in Iran. These waivers have expired or been terminated and, as a result, the U.S.
Waivers were granted to allow non-Iranian entities to continue to work on certain programs that, among other things, allowed affiliates of Rosatom to continue work on nuclear projects in Iran.
The RSA and the legislation provide for a revision of the quotas in 2023, 2029, and 2035 to take account of SWU demand forecasts that will be published by the WNA in the future.
The RSA and the legislation provide for a revision of the quotas in 2023, 2029, and 2035 to take account of SWU demand forecasts that will be published by the WNA in the future. Accordingly, in November 2023, the DOC calculated a small increase in the quota through 2024. The adjustment does not affect the quota allocated to Centrus.
For a discussion of the potential risks and uncertainties facing our business, see Part I, Item 1A, Risk Factors . 10 Low Enriched Uranium LEU consists of two components: SWU and natural uranium.
For further details, refer to Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations - Market Conditions and Outlook . For a discussion of the potential risks and uncertainties facing our business, see Part I, Item 1A, Risk Factors . Low Enriched Uranium LEU consists of two components: SWU and natural uranium hexafluoride.
The amounts of Russian uranium products that can be shipped to the United States are referred to as export limits in the RSA and import limits in the legislation, but from a practical perspective the terms have identical effect. 16 support the Company’s long-term strategic goals and to permit enriched uranium procured from TENEX during the remaining term of the TENEX Supply Contract to be imported to supply U.S. utilities, thereby securing a key part of the Company’s supply base for the benefit of its customers and providing the revenues needed by the Company to support its work on HALEU and other advanced technology projects in the United States.
The quotas provided for the TENEX Supply Contract are expected to be adequate to support the Company’s long-term strategic goals and to permit enriched uranium procured from TENEX during the remaining term of the TENEX Supply Contract to be imported to supply U.S. utilities, thereby securing a key part of the Company’s supply base for the benefit of its customers and providing the revenues needed by the Company to support its work on HALEU and other advanced technology projects in the United States. 1 The term “quota” is used herein for simplicity.
In our sales agreements for enriched uranium product, we sell both the SWU and uranium component of LEU. These contracts are generally shorter-term and for fixed-commitments. Uranium and Enrichment Uranium is a naturally occurring element and is mined from deposits located in Kazakhstan, Canada, Australia, and several other countries, including the United States.
Contracts where we sell both the SWU and natural uranium hexafluoride components of LEU to utilities or where we sell natural uranium hexafluoride to utilities and other nuclear fuel related companies are generally shorter-term, fixed-commitment contracts. 12 Uranium and Enrichment Uranium is a naturally occurring element and is mined from deposits located in Kazakhstan, Canada, Australia, and several other countries, including the United States.
Natural, or unenriched, uranium is removed from the earth in the form of ore and then crushed and concentrated. Conversion. U 3 O 8 is combined with fluorine gas to produce UF 6 , a solid at room temperature and a gas when heated. UF 6 is shipped to an enrichment plant. Enrichment.
U 3 O 8 is combined with fluorine gas to produce UF 6 , a solid at room temperature and a gas when heated. UF 6 is shipped to an enrichment plant. Enrichment.
Title to natural uranium provided by customers generally remains with the customer until Centrus delivers the LEU, at which time title to LEU is transferred to the customer, and Centrus takes title to the natural uranium. The following outlines the steps for converting natural uranium into LEU fuel, commonly known as the nuclear fuel cycle: Mining and Milling.
Title to natural uranium hexafluoride provided by customers generally remains with the customer until Centrus delivers the LEU, at which time title to the LEU is transferred to the customer, and Centrus takes title to the natural uranium hexafluoride.
Even if the RSA were terminated as a result of the “sunset” reviews, the quotas under the 2020 legislation would remain in place.
Even if the RSA were terminated as a result of the “sunset” reviews, the quotas under the 2020 legislation would remain in place. In April 2023, the DOC published a notice that this round of reviews concluded with determinations to keep the RSA in effect.
Our global market share of enrichment for the LEU market is less than 5%. Global LEU suppliers in our highly competitive industry compete on the basis of price and reliability of supply.
Competition and Foreign Trade It is estimated that the enrichment industry market for commercial nuclear reactors powered by LEU is currently about 50 million SWU per year. Our global market share of enrichment for the LEU market is less than 5%. Global LEU suppliers in our highly competitive industry compete on the basis of price and reliability of supply.
We procure LEU from other sources under short-term and long-term contracts and have inventories available that diversify our supply portfolio and provide flexibility to help us meet the needs of our customers. We also have agreements to borrow SWU that we can use to optimize our purchases and deliveries over time.
Prices are payable in a combination of U.S. dollars and euros. 15 We procure LEU from other sources under short-term and long-term contracts and have inventories available that diversify our supply portfolio and provide flexibility to help us meet the needs of our customers.
This entity has indicated publicly that it would take six to seven years to be able to produce HALEU. For further details, refer to Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations - Market Conditions and Outlook .
For further details, refer to Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations - Market Conditions and Outlook .
To ensure a diverse group of candidates is considered for each opening we enlist the services of a Human Resource Consulting firm that provides services and products related to AAPs and equal employment opportunity as required by the OFCCP. Our values motivate us to promote strong workplace practices with opportunities for development and training.
To ensure a diverse group of candidates is considered for each opening, we enlist the services of a Human Resource Consulting firm that provides services and products related to Affirmative Action Plans and equal employment opportunity as required by the U.S. Office of Federal Contract Compliance Programs.
Refer to Part I, Item 1A, Risk Factors , for a discussion of risks related to our Order Book.
We use external composite forecasts of future market prices and inflation rates in our pricing estimates. Refer to Part I, Item 1A, Risk Factors , for a discussion of risks related to our Order Book.
Beginning in September 2022, the DOC and the ITC, respectively, initiated two “sunset” reviews that will determine if the RSA should be maintained. These “sunset” reviews are required to be conducted every five years. This is the fifth round of “sunset reviews” of the RSA.
For additional information please refer to Part I, Item 1A - Risk Factors - War in Ukraine for additional detail on alternative LEU suppliers. Beginning in September 2022, the DOC and the ITC, respectively, initiated two “sunset” reviews that will determine if the RSA should be maintained. These “sunset” reviews are required to be conducted every five years.
Our Technical Solutions segment also is focused on repairing broken and vulnerable supply chains, providing clean energy jobs, and supporting the communities in which we operate. Our goal is to deliver major components of the next-generation nuclear fuels that will power the future of nuclear energy as it provides reliable carbon-free power around the world.
Our Technical Solutions segment also is focused on repairing broken and vulnerable supply chains, providing clean energy jobs, and supporting the communities in which we operate.
Revenue from our LEU segment is derived primarily from: • sales of the SWU component of LEU, • sales of both the SWU and natural uranium components of LEU, and • sales of natural uranium. Our LEU segment accounted for approximately 80% of our total revenue for the year ended December 31, 2022.
Revenue from our LEU segment is derived primarily from: • sales of the SWU component of LEU, • sales of natural uranium hexafluoride, uranium concentrates, or uranium conversion, and • sales of enriched uranium product that include both the natural uranium hexafluoride and SWU components of LEU.
Our customers are primarily domestic and international utilities that operate nuclear power plants. Our agreements with electric utilities are primarily medium- and long-term, fixed-commitment contracts. Under these contracts, customers are obligated to purchase a specified quantity of the SWU component of LEU from us.
Our LEU segment accounted for approximately 84% of our total revenue for the year ended December 31, 2023. The majority of our customers are domestic and international utilities that operate nuclear power plants. Our agreements with electric utilities are primarily medium-term and long-term, fixed-commitment contracts.
LEU also may be produced by down-blending government stockpiles of highly-enriched uranium. Governments control the timing and availability of highly-enriched uranium released for this purpose, and the release of this material to the market could impact market conditions.
Governments control the timing and availability of highly-enriched uranium released for this purpose, and the release of this material to the market could impact market conditions. Any additional LEU released into the market from down-blended highly-enriched uranium could exert downward pressure on prices for LEU. However, without Russian supply, the global market would be undersupplied for uranium enrichment.
All of our current competitors are owned or controlled, in whole or in part, by foreign governments, and operate enrichment technologies developed with the financial support of foreign governments. These competitors may make business decisions in both domestic and international markets that are influenced by political or economic policy considerations rather than exclusively by commercial considerations.
These competitors may make business decisions in both domestic and international markets that are influenced by political or economic policy considerations rather than exclusively by commercial considerations. LEU also may be produced by down-blending government stockpiles of highly-enriched uranium.
The amount of SWU we must purchase from TENEX under the TENEX Supply Contract exceeds our current Order Book and, therefore, we will need to make new sales to place all the Russian LEU we must order to meet our SWU purchase obligations to TENEX.
Centrus will need to make additional sales to place all the Russian LEU required to meet our SWU purchase obligations to TENEX.
Market prices for SWU fell substantially in the aftermath of the nuclear incident at Fukushima, Japan in 2011, bottoming out in 2018. Since 2018, SWU prices have steadily increased and, following the Russian invasion of Ukraine, have increased to levels consistent with those prior to the 2011 Fukushima incident.
We also have agreements to borrow SWU that we can use to optimize our purchases and deliveries over time. Market prices for SWU fell substantially in the aftermath of the nuclear incident at Fukushima, Japan in 2011, bottoming out in 2018.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeRisks related to financial factors primarily include: • significant long-term liabilities; • material unfunded defined benefit pension plans obligations and postretirement health and life benefit obligations; • our revenues and operating results may fluctuate significantly from quarter to quarter and year to year; • possible impairment loss related to our intangible assets; • Centrus is dependent on intercompany support from Enrichment Corp.; • limited trading volume for our securities and the market price of our securities is subject to volatility; • a small number of holders of our Class A Common Stock may exert significant influence over the direction of the Company; • a small number of Class A stockholders, who also have significant holdings of the Company’s 8.25% Notes, may be motivated by interests that are not aligned with the Company’s other Class A stockholders; and • limited ability to utilize our NOL carryforwards to offset future taxable income. 22 Risks related to general factors primarily include: • failures to protect classified or other sensitive information, or security breaches of IT systems could result in significant liability; • the inability to attract and retain key personnel; • the potential for the DOE to seek to terminate or exercise its remedies under the 2002 DOE-USEC Agreement and our other agreements with the DOE, or to require modifications to such agreements; • government reviews or audits can lead to withholding or delay of payments to us, non-receipt of award fees, legal actions, fines, penalties and liabilities, and other remedies against us; • our U.S.
Biggest changeRisks related to financial factors primarily include: • significant long-term liabilities; • material unfunded defined benefit pension plans obligations and postretirement health and life benefit obligations; • our revenues and operating results may fluctuate significantly from quarter to quarter and year to year; • possible impairment loss related to our intangible assets; • Centrus is dependent on intercompany support from Enrichment Corp.; • limited trading volume for our securities and the market price of our securities is subject to volatility; • a small number of holders of our Class A Common Stock may exert significant influence over the direction of the Company; 27 • a small number of Class A stockholders, who also have significant holdings of the Company’s 8.25% Notes, may be motivated by interests that are not aligned with the Company’s other Class A stockholders; and • limited ability to utilize our NOL carryforwards to offset future taxable income.
The lack of legal protection for suppliers could adversely affect our ability to compete for sales to meet the growing demand for LEU or SWU in these markets and our prospects for future revenue from such sales. Dependence on our largest customers could adversely affect us.
The lack of legal protection for suppliers could adversely affect our ability to compete for sales to meet the growing demand for LEU or SWU in these markets and our prospects for future revenue from such sales. Dependence on our largest customers or suppliers could adversely affect us.
If the DOE were to determine that the Price-Anderson Act did not apply, we would have to pay all or part of any damages awarded as a result of such claims, the cost to us, including legal fees, could adversely affect our results of operations and financial condition.
If the DOE were to determine that the Price-Anderson Act did not apply, we would have to pay all or part of any damages awarded as a result of such claims, and the cost to us, including legal fees, could adversely affect our results of operations and financial condition.
These remedies include terminating the 2002 DOE-USEC Agreement, revoking our access to the DOE’s centrifuge technology that is required for the success of the American Centrifuge project, the HALEU Operation Contract or other projects, requiring us to transfer certain rights in the American Centrifuge technology and facilities to the DOE, and to reimburse the DOE for certain costs associated with the American Centrifuge project.
These remedies include terminating the 2002 DOE-USEC Agreement, revoking our access to the DOE’s centrifuge technology that is required for the success of the American Centrifuge project, terminating the HALEU Operation Contract or other projects, requiring us to transfer certain rights in the American Centrifuge technology and facilities to the DOE, and requiring us to reimburse the DOE for certain costs associated with the American Centrifuge project.
However, if we redeem or exchange shares held by foreign persons or Contravening Persons and our Board in good faith determines that such person knew or should have known that its ownership would constitute a foreign ownership review event (other than shares for which our Board determined at the time of the person’s purchase that the ownership of, or exercise of rights with respect to, such shares did not at such time constitute an Adverse Regulatory Occurrence), the redemption price or exchange value is required to be the lesser of fair market value and the person’s purchase price for the shares redeemed or exchanged. • Form of payment: Cash, securities or a combination, valued by our Board in good faith. 35 • Notice: At least 30 days written notice of redemption is required; however, if we have deposited the cash or securities for the redemption or exchange in trust for the benefit of the relevant holders, we may redeem shares held by such holders on the same day that we provide notice.
However, if we redeem or exchange shares held by foreign persons or Contravening Persons and our Board in good faith determines that such person knew or should have known that its ownership would constitute a foreign ownership review event (other than shares for which our Board determined at the time of the person’s purchase that the ownership of, or exercise of rights with respect to, such shares did not at such time constitute an Adverse Regulatory Occurrence), the redemption price or exchange value is required to be the lesser of fair market value and the person’s purchase price for the shares redeemed or exchanged. • Form of payment: Cash, securities or a combination, valued by our Board in good faith. • Notice: At least 30 days written notice of redemption is required; however, if we have deposited the cash or securities for the redemption or exchange in trust for the benefit of the relevant holders, we may redeem shares held by such holders on the same day that we provide notice.
In addition, deterioration in our relationship with the U.S. agencies that are parties to these agreements could impair or impede our ability to successfully implement these agreements, which could adversely affect our business, financial condition or results of operations, or cash flows. 38 Our success depends on our ability to adapt to a rapidly changing competitive environment in the nuclear industry.
In addition, deterioration in our relationship with the U.S. agencies that are parties to these agreements could impair or impede our ability to successfully implement these agreements, which could adversely affect our business, financial condition or results of operations, or cash flows. Our success depends on our ability to adapt to a rapidly changing competitive environment in the nuclear industry.
Any of these actions could adversely impact our business and prospects. 37 Our U.S. Government contract work is regularly reviewed and audited by the U.S. Government and these reviews can lead to withholding or delay of payments to us, non-receipt of award fees, legal actions, fines, penalties and liabilities, and other remedies against us. Our U.S.
Any of these actions could adversely impact our business and prospects. Our U.S. government contract work is regularly reviewed and audited by the U.S. government and these reviews can lead to withholding or delay of payments to us, non-receipt of award fees, legal actions, fines, penalties and liabilities, and other remedies against us.
In an extreme case, the DOE could terminate our permit to access classified information resulting in the elimination of our ability to continue American Centrifuge work or performance of DOE contracts, including the HALEU Operation Contract. 36 The inability to attract and retain key personnel could have an adverse impact on our business.
In an extreme case, the DOE could terminate our permit to access classified information resulting in the elimination of our ability to continue American Centrifuge work or performance of DOE contracts, including the HALEU Operation Contract. The inability to attract and retain key personnel could have an adverse impact on our business.
This concentration of ownership may make it more difficult for other stockholders to effect substantial changes in the Company, may limit the ability of the Company to pass certain initiatives or other items that require stockholder approval, and may also have the effect of delaying, preventing, or expediting, as the case may be, a change in control of the Company. 32 A small number of Class A stockholders, who also have significant holdings of the Company’s 8.25% Notes, may be motivated by interests that are not aligned with the Company’s other Class A stockholders.
This concentration of ownership may make it more difficult for other stockholders to effect substantial changes in the Company, may limit the ability of the Company to pass certain initiatives or other items that require stockholder approval, and may also have the effect of delaying, preventing, or expediting, as the case may be, a change in control of the Company. 38 A small number of Class A stockholders, who also have significant holdings of the Company’s 8.25% Notes, may be motivated by interests that are not aligned with the Company’s other Class A stockholders.
Government contracts and subcontracts are subject to specific regulations such as the Federal Acquisition Regulation, among others, and also subject to audits, cost reviews, and investigations by the U.S. Government contracting oversight agencies.
Our U.S. government contracts and subcontracts are subject to specific regulations such as the Federal Acquisition Regulation, among others, and also subject to audits, cost reviews, and investigations by the U.S. government contracting oversight agencies.
The customer relationships intangible asset is amortized to expense using the straight-line method over the estimated average useful life of 15 years with 6 ¾ years of scheduled amortization remaining. The carrying values of the intangible assets are subject to impairment tests whenever adverse conditions or changes in circumstances indicate a possible impairment loss.
The customer relationships intangible asset is amortized to expense using the straight-line method over the estimated average useful life of 15 years with 5 ¾ years of scheduled amortization remaining. The carrying values of the intangible assets are subject to impairment tests whenever adverse conditions or changes in circumstances indicate a possible impairment loss.
If we are required to delease the facility where we are deploying the HALEU cascade under the HALEU Operation Contract and return it, along with the centrifuges and supporting equipment, to the DOE at the expirations of our contract, this would likely result in the termination of our NRC operating license and us laying off our Piketon workforce.
If we are required to delease the facility where we are deploying the HALEU cascade under the HALEU Operation Contract and return it, along with the centrifuges and supporting equipment, to the DOE at the expiration of our contract, this would likely result in the termination of our NRC operating license and us laying off our Piketon workforce.
A change in these underlying assumptions could cause the fair value of the intangible asset to be less than its respective carrying amount. 31 Centrus is dependent on intercompany support from Enrichment Corp. Substantially all of our revenue-generating operations are conducted at our subsidiary, Enrichment Corp.
A change in these underlying assumptions could cause the fair value of the intangible asset to be less than its respective carrying amount. 37 Centrus is dependent on intercompany support from Enrichment Corp. Substantially all of our revenue-generating operations are conducted at our subsidiary, Enrichment Corp.
Geopolitical events, including domestic or international reactions or responses to such events, as well as concerns about national security or other issues, also could lead to U.S. or foreign government or international actions that could disrupt our ability to purchase, import, sell, or make deliveries of LEU, SWU, or other uranium products, or even to continue to do business with one or more of our suppliers or their affiliates.
Geopolitical events, including domestic or international reactions or responses to such events, as well as concerns about national security or other issues, also could lead to U.S. or foreign government or international actions, or actions by the Russian government or TENEX, that could disrupt our ability to purchase, import, sell, or make deliveries of LEU, SWU, or other uranium products, or even to continue to do business with one or more of our suppliers or their affiliates.
However, our right to continue to operate the facility we are building after completion of Phase 2 of the HALEU Operation Contract depends on the award of one or more follow-on contracts by the U.S. Government, as well as continued funding for operation from the U.S. Government or other sources.
However, our right to continue to operate the facility after completion of Phase 2 of the HALEU Operation Contract depends on the award of one or more follow-on contracts by the U.S. government, as well as continued funding for operation from the U.S. government or other sources.
If we were to initiate such discussions in the future, we have no assurance that our customers would agree to revise existing contracts or would not require concessions, which could adversely affect the value of our Order Book and our business, results of operations and prospects. 28 Our ability to operate the HALEU enrichment facility we are deploying under the HALEU Operation Contract after the completion of the contract is dependent on our ability to secure additional contracts and funding from the U.S.
If we were to initiate such discussions in the future, we have no assurance that our customers would agree to revise existing contracts or would not require concessions, which could adversely affect the value of our Order Book and our business, results of operations and prospects. 34 Our ability to operate the HALEU enrichment facility we are deploying under the HALEU Operation Contract after the completion of the contract is dependent on our ability to secure additional contracts and funding from the U.S. government or other sources.
There is no assurance that such a license, waiver, or approval, if sought, would be granted. If a license, waiver, or approval were not granted, the Company would need to look to alternative sources of LEU to replace the LEU that it could not procure from TENEX.
There is no assurance that such a license, waiver, or approval, if sought, would be granted, or if granted, granted in a timely fashion. If a license, waiver, or approval were not granted, the Company would need to look to alternative sources of LEU to replace the LEU that it could not procure from TENEX.
The majority of the SWU and LEU that we use to fill existing contracts with customers is sourced from outside the United States, including from Russia under the TENEX Supply Agreement, and we expect these arrangements to continue into the future.
Nearly all of the SWU and LEU that we use to fill existing contracts with customers is sourced from outside the United States, including from Russia under the TENEX Supply Agreement, and we expect these arrangements to continue into the future.
While the DOE has provided indemnification pursuant to the Price-Anderson Act, there could be delays in obtaining reimbursement for costs from the DOE and the DOE may also determine that some or all costs are not reimbursable under the indemnification.
Even where the DOE has provided indemnification pursuant to the Price-Anderson Act, there could be delays in obtaining reimbursement for costs from the DOE and the DOE may also determine that some or all costs are not reimbursable under the indemnification.
Government or other funding to support the continued operation of the Piketon facility, and retain our NRC license, could have a material adverse effect on our business and financial condition along with our plans for future growth. 29 Our Technical Solutions segment conducts business under various types of contracts, including fixed-price and cost-share contracts, which subjects us to risks associated with cost overruns.
Failure to secure U.S. government or other funding to support the continued operation of the Piketon facility, and retain our NRC license, could have a material adverse effect on our business and financial condition along with our plans for future growth. 35 Our Technical Solutions segment conducts business under various types of contracts, including fixed-price and cost-share contracts, which subjects us to risks associated with cost overruns.
Our competitors have greater financial resources than we do. Foreign competitors enjoy financial and other support from their government owners, which may enable them to be less cost or profit-sensitive than we are. In addition, decisions by foreign competitors may be influenced by political and economic policy considerations rather than commercial considerations.
Foreign competitors enjoy financial and other support from their government owners, which may enable them to be less cost or profit-sensitive than we are. In addition, decisions by foreign competitors may be influenced by political and economic policy considerations rather than commercial considerations.
In this regard, global supply chains and the timely availability of products or product components sourced domestically or imported from other nations, including SWU contained in 25 LEU we purchase, could be materially disrupted by quarantines, slowdowns or shutdowns, border closings, and travel restrictions resulting from the global COVID-19 pandemic or other global pandemic or health crises.
In this regard, global supply chains and the timely availability of products or product components sourced domestically or imported from other nations, including SWU contained in LEU we purchase, could be materially disrupted by quarantines, slowdowns or shutdowns, border closings, and travel restrictions resulting from a global pandemic or health crisis.
Government and various foreign governments or governmental agencies control the export of nuclear materials from the United States. We are unable to supply fuel for foreign reactors unless there is an agreement for cooperation in force.
For example, agreements for cooperation between the U.S. government and various foreign governments or governmental agencies control the export of nuclear materials from the United States. We are unable to supply fuel for foreign reactors unless there is an agreement for cooperation in force.
The expanding sanctions imposed by the United States and foreign governments on goods, services, entities, and instrumentalities that could be needed for performance of the TENEX Supply Contract could have adverse effects on the TENEX Supply Contract, even if such sanctions are not directed at imports of Russian LEU or other trade in nuclear material with Russia.
Aside from the proposals for a U.S. ban on LEU imports from Russia, the expanding sanctions imposed by the United States and foreign governments on goods, services, entities, and instrumentalities that could be needed for performance of the TENEX Supply Contract could have adverse effects on the TENEX Supply Contract, even if such sanctions are not directed at imports of Russian LEU or other trade in nuclear material with Russia.
Any inability to award us a contract or subcontract, any delay in payment, or the termination of a contract or subcontract, in whole or in part, due to a lapse in funding or otherwise, could adversely affect our business, financial condition or results of operations, or cash flows. Changes to, or termination of, any agreements with the U.S.
Any inability to award us a contract or subcontract, any delay in payment, or the termination of a contract or subcontract, in whole or in part, due to a lapse in funding or otherwise, could adversely affect our business, financial condition or results of operations, or cash flows.
Risks related to economic and industry factors primarily include: • the financial difficulties experienced by, and operating conditions of, our customers and suppliers; • epidemics and other health related issues, including, but not limited to the COVID-19 pandemic; • the continued excess supply of LEU in the market; and • price volatility associated with the procurement of SWU and uranium.
Risks related to economic and industry factors primarily include: • the financial difficulties experienced by, and operating conditions of, our customers and suppliers; • epidemics and other health related issues, including, but not limited to the COVID-19 pandemic; and • price volatility associated with the procurement of SWU and uranium.
Moreover, our competitors may be better positioned to take advantage of improved market conditions and increase capacity to meet any future market expansion. 27 The ability to compete in certain foreign markets may be limited for legal, political, economic, or other reasons. Doing business in foreign markets poses additional risks and challenges. For example, agreements for cooperation between the U.S.
Moreover, our competitors may be better positioned to take advantage of improved market conditions and increase capacity to meet any future market expansion. The ability to compete in certain foreign markets may be limited for legal, political, economic, or other reasons. Doing business in foreign markets poses additional risks and challenges.
Purchases of LEU and SWU by customers in the EU are subject to a policy of the Euratom Supply Agency that seeks to limit foreign enriched uranium to no more than 20% of EU consumption per year. Similarly, China has a policy of using Chinese sources of LEU and SWU. Such policies limit our ability to sell in those countries.
Purchases of LEU and SWU by customers in the EU are subject to a policy of the Euratom Supply Agency that seeks to limit foreign enriched uranium to no more than 20% of EU consumption per year. Similarly, China has a policy of using Chinese sources of LEU and SWU.
As of December 31, 2022, based solely on amounts reported in Schedule 13D and 13G filings with the SEC, two stockholders with the largest holdings of our Class A Common Stock collectively own approximately 21% of our Class A Common Stock.
As of December 31, 2023, based solely on amounts reported in Schedule 13D and 13G filings with the SEC, two stockholders with the largest holdings of our Class A Common Stock collectively owned approximately 15% of our Class A Common Stock.
For example, a sanction on a Russian bank might prevent funds from being transferred to TENEX’s account from the U.S. bank to which we make payments.
For example, a sanction on a Russian bank might prevent funds from being transferred to TENEX’s account from the U.S. bank to which we make payments which could lead TENEX to suspend shipments.
Additional information concerning the 8.25% Notes including the terms and conditions of the 8.25% Notes are described in Note 8, Debt of the Consolidated Financial Statements. 30 The Company has material unfunded defined benefit pension plans obligations and postretirement health and life benefit obligations.
Additional information concerning the 8.25% Notes including the terms and conditions of the 8.25% Notes are described in Note 8, Debt , of the Consolidated Financial Statements in Part IV of this Annual Report. 36 The Company has material unfunded defined benefit pension plans obligations and postretirement health and life benefit obligations.
Government, including the NRC and the DOE as well as the States of Ohio and Tennessee; • our operations involve the use, transportation and disposal of toxic, hazardous and/or radioactive materials and could result in liability without regard to fault or negligence; and • our certificate of incorporation gives us certain rights with respect to equity securities held (beneficially or of record) by foreign persons.
Risks related to legal and compliance factors primarily include: • our operations are regulated by the U.S. government, including the NRC and the DOE as well as the States of Ohio and Tennessee; • our operations involve the use, transportation and disposal of toxic, hazardous and/or radioactive materials and could result in liability without regard to fault or negligence; and • our certificate of incorporation gives us certain rights with respect to equity securities held (beneficially or of record) by foreign persons.
However, if we are able to continue operating the facility, we would incur additional costs and liabilities associated with the facility.
On the other hand, if we are able to continue operating the facility, we would incur additional costs and liabilities associated with the facility.
Furthermore, because sanctions also limit the types of non-nuclear cargo that this transportation company can ship to and from Russia, the scope of its business in Russia has been curtailed and the number of ships it has dedicated to transportation to and from Russia has been reduced, making it more difficult for the Company to make timely deliveries of LEU.
Furthermore, because sanctions also limit the types of non-nuclear cargo that the ocean carrier can ship to and from Russia, its overall business in Russia has been curtailed, so this reduced the number of ships it uses for transportation to and from Russia, making it more difficult for us to make timely deliveries of LEU.
The occurrence of any one or more of the following events is a “foreign ownership review event” and triggers the board of directors’ right to take various actions under our certificate of incorporation: (1) the beneficial ownership by a foreign person of (a) 5% or more of the issued and outstanding shares of any class of our equity securities, (b) 5% or more in voting power of the issued and outstanding shares of all classes of our equity securities, or (c) less than 5% of the issued and outstanding shares of any class of our equity securities or less than 5% of the voting power of the issued and outstanding shares of all classes of our equity securities, if such foreign person is entitled to control the appointment and tenure of any of our management positions or any director; (2) the beneficial ownership of any shares of any class of our equity securities by or for the account of a foreign uranium enrichment provider or a foreign competitor (defined in our certificate of incorporation as a “Contravening Person”); or (3) any ownership of, or exercise of rights with respect to, shares of any class of our equity securities or other exercise or attempt to exercise control of us that is inconsistent with, or in violation of, any regulatory restrictions, or that could jeopardize the continued operations of our facilities (defined in our certificate of incorporation as an “Adverse Regulatory Occurrence”).
Foreign persons are defined in our certificate of incorporation to include, among others, an individual who is not a U.S. citizen, an entity that is organized under the laws of a non-U.S. jurisdiction and an entity that is controlled by individuals who are not U.S. citizens, or by entities that are organized under the laws of non-U.S. jurisdictions. 41 The occurrence of any one or more of the following events is a “foreign ownership review event” and triggers the board of directors’ right to take various actions under our certificate of incorporation: (1) the beneficial ownership by a foreign person of (a) 5% or more of the issued and outstanding shares of any class of our equity securities, (b) 5% or more in voting power of the issued and outstanding shares of all classes of our equity securities, or (c) less than 5% of the issued and outstanding shares of any class of our equity securities or less than 5% of the voting power of the issued and outstanding shares of all classes of our equity securities, if such foreign person is entitled to control the appointment and tenure of any of our management positions or any director; (2) the beneficial ownership of any shares of any class of our equity securities by or for the account of a foreign uranium enrichment provider or a foreign competitor (defined in our certificate of incorporation as a “Contravening Person”); or (3) any ownership of, or exercise of rights with respect to, shares of any class of our equity securities or other exercise or attempt to exercise control of us that is inconsistent with, or in violation of, any regulatory restrictions, or that could jeopardize the continued operations of our facilities (defined in our certificate of incorporation as an “Adverse Regulatory Occurrence”).
We may also incur additional costs related to reducing our workforce or closing the Piketon facility. Failure to secure U.S.
We may also incur additional costs related to reducing our workforce or closing the Piketon facility.
Government and those governments or agencies in emerging markets may restrict our ability to sell into such markets. Additionally, countries may impose other restrictions on the import or export of material or services related to our business.
Moreover, the lack of such agreements for cooperation between the U.S. government and those governments or agencies in emerging markets may restrict our ability to sell into such markets. Additionally, countries may impose other restrictions on the import or export of material or services related to our business.
The NRC could refuse to grant our license amendment to construct and operate a commercial plant if it determines that: (1) we are foreign owned, controlled, or dominated; (2) the issuance of the amendment would be inimical to the maintenance of a reliable and economic domestic source of enrichment; (3) the issuance of the amendment would be adverse to U.S. defense or security objectives; or (4) the issuance of the amendment is otherwise not consistent with applicable laws or regulations then in effect.
The NRC could refuse to grant our license amendment to construct and operate a commercial plant if it determines that: (1) we are foreign owned, controlled, or dominated; (2) the issuance of the amendment would be inimical to the maintenance of a reliable and economic domestic source of enrichment; (3) the issuance of the amendment would be adverse to U.S. defense or security objectives; or (4) the issuance of the amendment is otherwise not consistent with applicable laws or regulations then in effect. 39 The NRC has the authority to issue notices of violation for violations of the Atomic Energy Act, the NRC regulations and conditions of licenses, certificates of compliance, or orders.
If the contracting governmental agency, or the prime contractor, does not receive sufficient appropriations, it may terminate our contract or subcontract (in whole or in part) or reduce the scope of our contract or subcontract, or delay or reduce payment to us.
If the contracting governmental agency, or the prime contractor, does not receive sufficient appropriations for any reason, including due to a government shutdown, it may terminate our contract or subcontract (in whole or in part) or reduce the scope of our contract or subcontract, or delay or reduce payment to us.
Although the permit was issued, it is only valid until June 2023, meaning that, absent a renewal of the permit, the Company will need to find an alternative transportation company, which may be difficult and costly because of the limited number of qualified service providers.
Although the permit was issued and subsequently extended, it is only valid until early July 2024, meaning that, absent a renewal of the permit, we will need to find an alternative transportation company, which may be difficult and costly, or impossible, because of the limited number of qualified service providers.
(For further information refer to Part I, Item 1, Competition and Foreign Trade ). 26 Further, currently evolving international events, including the war in Ukraine, could result in new or additional sanctions or other U.S. or foreign government actions that could directly or indirectly limit or prevent our purchase, import, delivery and/or sale of material under our TENEX Supply Agreement.
Further, currently evolving international events, including the war in Ukraine, could result in new or additional sanctions or other U.S. or foreign government actions that could directly or indirectly limit or prevent our purchase, import, delivery and/or sale of material under our TENEX Supply Agreement.
Our operations involve the use, transportation and disposal of toxic, hazardous and/or radioactive materials and could result in liability without regard to fault or negligence. Our operations involve the use, transportation, and disposal of toxic, hazardous and/or radioactive materials. A release of these materials could pose a health risk to humans or animals.
Our operations involve the use, transportation, and disposal of toxic, hazardous and/or radioactive materials. A release of these materials could pose a health risk to humans or animals.
If an agreement with a country in which one or more of our customers is located were to lapse, terminate, or be amended, our sales or deliveries could be curtailed or terminated, adversely affecting our business, results of operations, and prospects. Moreover, the lack of such agreements for cooperation between the U.S.
If an agreement with a country in which one or more of our customers is located were to lapse, terminate, or be amended, our sales or deliveries could be curtailed or terminated, adversely affecting our business, results of operations, and prospects.
Additionally, we may be subject to litigation brought by private individuals on behalf of the U.S. Government under the Federal False Claims Act, which could include claims for treble damages. If we experience performance issues under any of our U.S. Government contracts and subcontracts, the U.S.
Additionally, we may be subject to litigation brought by private individuals on behalf of the U.S. government under the Federal False Claims Act, which could include claims for treble damages.
Finally, since the majority of our supply contracts include a market-based pricing component, the rapidly rising market prices due to the war in Ukraine and the associated sanctions could materially increase our cost of sales under our existing supply contracts, including but not limited to, the TENEX Supply Contract. 24 Economic and Industry Risks Our future prospects are tied directly to the nuclear energy industry worldwide.
Finally, since the majority of our supply contracts include a market-based pricing component, the rapidly rising market prices due to the war in Ukraine and the associated sanctions could materially increase our cost of sales under our existing supply contracts, including but not limited to, the TENEX Supply Contract.
Certain foreign markets lack a comprehensive nuclear liability law that protects suppliers by channeling liability for injury and property damage suffered by third persons from nuclear incidents at a nuclear facility to the facility’s operator.
Such policies limit our ability to sell in those countries. 33 Certain foreign markets lack a comprehensive nuclear liability law that protects suppliers by channeling liability for injury and property damage suffered by third persons from nuclear incidents at a nuclear facility to the facility’s operator.
Government, or deterioration in our relationship with the U.S. Government, could adversely affect results of operations. We are a party to a number of agreements and arrangements with the U.S. Government that are important to our business including our HALEU Operation Contract, the lease for the centrifuge facility near Piketon, and the 2002 DOE-USEC Agreement.
We are a party to a number of agreements and arrangements with the U.S. government that are important to our business including our HALEU Operation Contract, the lease for the centrifuge facility near Piketon, and the 2002 DOE-USEC Agreement. Termination, expiration, or modification of one or more of these or other agreements could adversely affect our business and prospects.
In 2022, our ten largest nuclear fuel customers represented approximately 75% of total revenue and our two largest customers represented approximately 28% of total revenue.
In 2023, our ten largest nuclear fuel customers represented approximately 79% of total revenue and our two largest customers represented approximately 32% of total revenue.
Penalties under the NRC regulations could include substantial fines, imposition of additional requirements, or withdrawal or suspension of licenses or certificates. Any penalties imposed on us could adversely affect our results 33 of operations and liquidity. The NRC also has the authority to issue new regulatory requirements or to change existing requirements.
The NRC has the authority to impose civil penalties or additional requirements and to order cessation of operations for violations of its regulations. Penalties under the NRC regulations could include substantial fines, imposition of additional requirements, or withdrawal or suspension of licenses or certificates. Any penalties imposed on us could adversely affect our results of operations and liquidity.
Phase 1 includes an approximately $30 million cost share contribution from Centrus matched by approximately $30 million from the DOE to finish construction, bring the cascade online, and demonstrate production of 20 kilograms of 19.75% enriched HALEU by December 31, 2023.
Phase 1 included an approximately $30 million cost share contribution from Centrus matched by approximately $30 million from the DOE to finish construction, bring the cascade online, and demonstrate production of 20 kilograms of 19.75% enriched HALEU by December 31, 2023. On October 11, 2023, the Company announced that it began enrichment operations in Piketon, Ohio.
If levels of foreign ownership set forth in our certificate of incorporation are exceeded, we have the right, among other things, to redeem or exchange common stock held by foreign persons, and in certain cases, the applicable redemption price or exchange value may be equal to the lower of fair market value or a foreign person’s purchase price.
If levels of foreign ownership set forth in our certificate of incorporation are exceeded, we have the right, among other things, to redeem or exchange common stock held by foreign persons, and in certain cases, the applicable redemption price or exchange value may be equal to the lower of fair market value or a foreign person’s purchase price. 28 War in Ukraine Risks The current war in Ukraine and related international sanctions and restrictions on trade could have a material adverse impact on our business, results of operations, and financial condition.
Our computer networks and other IT systems are designed to protect this information through the use of classified networks and other procedures. We routinely experience various cybersecurity threats, threats to our information technology infrastructure, unauthorized attempts to gain access to the Company’s sensitive information, and denial-of-service attacks, as do our customers, suppliers, subcontractors, and other business partners.
We routinely experience various cybersecurity incidents, including threats to our information technology infrastructure, unauthorized attempts to gain access to the Company’s sensitive information, and denial-of-service attacks, as do our customers, suppliers, subcontractors, and other business partners.
Accordingly, there are situations in which a foreign stockholder or Contravening Person could lose the right to vote its shares or in which we may redeem or exchange shares held by a foreign person or Contravening Person and in which such redemption or exchange could be at the lesser of fair market value and the person’s purchase price for the shares redeemed or exchanged, which could result in a significant loss for that person.
Accordingly, there are situations in which a foreign stockholder or Contravening Person could lose the right to vote its shares or in which we may redeem or exchange shares held by a foreign person or Contravening Person and in which such redemption or exchange could be at the lesser of fair market value and the person’s purchase price for the shares redeemed or exchanged, which could result in a significant loss for that person. 42 General Risk Factors Failures to protect classified or other sensitive information, or cybersecurity incidents could result in significant liability or otherwise have an adverse effect on our business.
The potential for the DOE to seek to terminate or exercise its remedies under the 2002 DOE-USEC Agreement and our other agreements with DOE, or to require modifications to such agreements that are adverse to our interests, may have adverse consequences on the Company.
The inability to retain appropriately qualified and experienced senior executives could negatively affect our operations, strategic planning, and performance. 43 The potential for the DOE to seek to terminate or exercise its remedies under the 2002 DOE-USEC Agreement and our other agreements with DOE, or to require modifications to such agreements that are adverse to our interests, may have adverse consequences on the Company.
A default and bankruptcy filing by one or more customers or suppliers, or events, such as those listed above which prevent or limit our ability to obtain or sell material or services, could have a material adverse effect on our business, financial position, results of operations, or cash flows.
A default and bankruptcy filing by one or more customers or suppliers, or events, such as those listed above which prevent or limit our ability to obtain or sell material or services, could have a material adverse effect on our business, financial position, results of operations, or cash flows. 31 Our business, financial and operating performance could be adversely affected by epidemics and other health related issues, including but not limited to the COVID-19 pandemic.
Any sanctions or measures directed at trade in LEU from Russia or the parties involved in such trade or otherwise could interfere with, or prevent, performance under the TENEX Supply Contract.
Although none of these proposals have been adopted as of the date of this filing, any sanctions or measures directed at trade in LEU from Russia or the parties involved in such trade or otherwise could interfere with, or prevent, performance under the TENEX Supply Contract.
In the event that the COVID-19 pandemic prevents our employees or our contractors from working in-person at our site or, our suppliers are unable to provide goods and services on the schedule we anticipated, the impacts on our schedule and costs could be material.
In the event that a health crisis prevents our employees or our contractors from working in-person at our site or, our suppliers are unable to provide goods and services on the schedule we anticipated, the impacts on our schedule and costs could be material. Our business is exposed to price volatility associated with the procurement of SWU and uranium.
Refer to Note 16, Commitments and Contingencies — Legal Matters , of our Consolidated Financial Statements in Part IV of this Annual Report for further details. 34 In our contracts, we seek to protect ourselves from liability, including at locations where the Price-Anderson Act indemnification does not apply, such as at the locations where we receive or hold enriched and natural uranium, or deliver such material to customers, during transportation between such locations, or the facilities where such material is processed or used, but there is no assurance that such contractual limitations on liability will be effective in all cases.
In our contracts with any party where there is a risk of nuclear liability, we seek to include clauses that limit our liability as one measure to protect ourselves, including at locations where the Price-Anderson Act indemnification does not apply, such as at the commercial facilities where we receive or hold enriched and natural uranium, or deliver such material to customers, during transportation between such locations, or at the commercial facilities where such material is processed or used, but there is no assurance that such contractual limitations on liability will be effective in all cases.
Our goal is to be in a position to begin production and scale up the facility in modular fashion as demand for HALEU grows in the commercial and/or government sectors.
Our goal is to continue production and modularly scale up the facility by matching production capacity with demand as demand for HALEU grows in the commercial and/or government sectors.
Accordingly, the situation at this time is unpredictable and therefore there is no assurance that future developments would not have a material adverse effect on the Company’s procurement, payment, delivery, or sale of LEU by the Company.
Accordingly, the situation at this time is evolving and, therefore, there is no assurance that future developments would not have a material adverse effect on the Company’s procurement, payment, delivery, or sale of LEU, or business viability. 30 Economic and Industry Risks Our future prospects are tied directly to the nuclear energy industry worldwide.
A company that provides transportation services to the Company under the TENEX Supply Contract interpreted the sanction as applying to transportation of Russian LEU for the Company, and the Canadian company informed the Company that it could not load Russian LEU until it received a permit from the Canadian government.
A company that provides transportation services to us under the TENEX Supply Contract contracted with an ocean carrier subject to these Canadian sanctions, and could not load Russian LEU until it received a permit from the Canadian government.
Changes in senior management could create uncertainty among our employees, customers, suppliers, and other third parties with which we do business. The inability to retain appropriately qualified and experienced senior executives could negatively affect our operations, strategic planning, and performance.
Changes in senior management could create uncertainty among our employees, customers, suppliers, and other third parties with which we do business.
If measures were taken to limit the import of Russian LEU or to prohibit or limit dealings with Russian entities, including, but not limited to, TENEX or the ROSATOM, the Company could seek a license, waiver, or other approval from the government imposing such measures to ensure that the Company could continue to fulfill its purchase and sales obligations using LEU delivered under the TENEX Supply Contract.
We do not know what actions TENEX might take in response to sanctions, but if it refused to make future deliveries, such refusal would likely affect our ability to meet our delivery obligations to our customers and would have a material adverse effect on the Company. 29 If measures are taken to limit the import of Russian LEU or to prohibit or limit dealings with Russian entities, including, but not limited to, TENEX or the Rosatom, the Company could seek a license, waiver, or other approval from the government imposing such measures to ensure that the Company could continue to fulfill its purchase and sales obligations using LEU delivered under the TENEX Supply Contract.
Government funding and government appropriations, which may not be made on a timely basis or at all, and could have an adverse effect on our business. Current and future U.S. Government contracts and subcontracts, including our HALEU Operation Contract, are dependent on government funding, which are generally subject to Congressional appropriations.
Termination of a contract or subcontract could adversely affect our ability to secure future contracts, and could adversely affect our business, financial condition, results of operations, and cash flows. 44 Our U.S. government contracts and subcontracts are dependent on continued U.S. government funding and government appropriations, which may not be made on a timely basis or at all, and could have an adverse effect on our business.
Centrus and Enrichment Corp. have been named as defendants in lawsuits alleging damages resulting from releases at the facilities we leased in the past at the Portsmouth GDP, and the centrifuge facilities we still lease near Piketon.
In addition, the Price-Anderson Act indemnification does not cover loss or damage due to a nuclear incident to property located on the leased facilities. 40 Centrus and Enrichment Corp. have been named as defendants in lawsuits alleging damages resulting from releases at the facilities we leased in the past at the Portsmouth GDP, and the centrifuge facilities we still lease near Piketon.
Congress and elsewhere to ban imports of uranium which could affect our ability to import LEU in one or more years under the TENEX Supply Contract but none of these have been adopted as of the date of this filing.
As noted above, for example, there are proposals in the U.S. Congress and elsewhere to ban imports of uranium which could affect our ability to import LEU in one or more years under the TENEX Supply Contract.
Our ability to perform under these federal contracts and subcontracts is dependent upon sufficient funding for, and timely payment by, the entities with which we have contracted.
Current and future U.S. government contracts and subcontracts, including our HALEU Operation Contract, are dependent on government funding, which are generally subject to Congressional appropriations or continued government operations. Our ability to perform under these federal contracts and subcontracts is dependent upon sufficient funding for, and timely payment by, the entities with which we have contracted.
We face significant competition from major producers who may be less cost sensitive or may be favored due to support from foreign governments. We compete with major producers of LEU, all of which are wholly or substantially owned by governments: Orano (France), Rosatom/TENEX (Russia), Urenco (the Netherlands, the United Kingdom and two German utilities), and CNEIC (China).
We compete with major producers of LEU, all of which are wholly or substantially owned by governments: Orano (France), Rosatom/TENEX (Russia), Urenco (the Netherlands, the United Kingdom and two German utilities), and CNEIC (China). Our competitors have greater financial resources than we do.
Changes to the regulatory requirements also could adversely affect our results of operations and financial condition. In addition, certain of our operations are subject to DOE regulation or contractual requirements. Our technology and manufacturing facility in Oak Ridge is also regulated by the State of Tennessee under the NRC’s Agreement State Program as well as applicable state laws.
Our technology and manufacturing facility in Oak Ridge is also regulated by the State of Tennessee under the NRC’s Agreement State Program as well as applicable state laws. Our operations at the facility near Piketon also are subject to regulation by various agencies of the Ohio state government.
The prices we are charged under some supply agreements are determined by formulas that may not be aligned with the prevailing market prices at the time we enter into contracts with customers. As a result, the sales prices in our contracts may not cover our purchase costs, or those purchase costs may limit our ability to secure profitable sales.
We may not achieve the anticipated benefits from supply agreements we enter into. The prices we are charged under some supply agreements are determined by formulas that may not be aligned with the prevailing market prices at the time we enter into contracts with customers.
The costs of defending against a claim arising out of a nuclear incident or precautionary evacuation, and any damages awarded as a result of such a claim, could adversely affect our results of operations and financial condition. Our certificate of incorporation gives us certain rights with respect to equity securities held (beneficially or of record) by foreign persons.
The costs of defending against a claim arising out of a nuclear incident or precautionary evacuation, and any damages awarded as a result of such a claim, could be very high and, even if indemnified, could adversely affect our results of operations and financial condition.
We do not know what actions TENEX might take if it could not receive payments in Russia, but if it refused to make future deliveries, such action could affect our ability to meet our delivery obligations to our customers. 23 Further, sanctions by the United States, Russia, or other countries may directly or indirectly impact performance of the TENEX Supply Contract and our ability to transport, import, take delivery or make payments related to the LEU we purchase.
Further, sanctions by the United States, Russia, or other countries on goods and services needed to make imports may directly or indirectly impact performance of the TENEX Supply Contract and our ability to transport, import, take delivery or make payments related to the LEU we purchase.
Those service providers may not perform on time, with the desired quality, or at all, for a variety of reasons, many of which are outside our control. An interruption of deliveries from our suppliers or the provision of essential services by third parties, could adversely impact our business, results of operations, and prospects.
We also rely on third parties to provide essential services to the Company, such as the storage and management of inventory, transportation, and radiation protection. Those service providers may not perform on time, with the desired quality, or at all, for a variety of reasons, many of which are outside our control.
Our operations at the facility near Piketon also are subject to regulation by various agencies of the Ohio state government. These state and federal agencies may have the authority to impose civil penalties and additional requirements, which could adversely affect our results of operations.
These state and federal agencies may have the authority to impose civil penalties and additional requirements, which could adversely affect our results of operations. Further, changes in federal, state or local government policies and priorities can impact our operations and the nuclear industry.
Further, changes in federal, state or local government policies and priorities can impact our operations and the nuclear industry. This includes changes in interpretations of regulatory requirements, increased inspection or enforcement activities, changes in budgetary priorities, changes in tax laws and regulations and other actions or in-actions governments can take.
This includes changes in interpretations of regulatory requirements, increased inspection or enforcement activities, changes in budgetary priorities, changes in tax laws and regulations and other actions or in-actions governments can take. Our operations involve the use, transportation and disposal of toxic, hazardous and/or radioactive materials and could result in liability without regard to fault or negligence.
Government and has negatively affected the U.S. and global economies, disrupted supply chains, and has resulted in significant travel, transport, and other restrictions. The COVID-19 outbreak disrupted the supply chains and day-to-day operations of the Company, our suppliers, our contractors, and our customers, which could materially adversely affect our operations.
The global outbreak of COVID-19 was declared a pandemic by the World Health Organization and a national emergency by the U.S. government, and negatively affected the U.S. and global economies, disrupted supply chains, and resulted in significant travel, transport, and other restrictions.
Further, impacts of COVID-19 infections and other COVID-19 pandemic related impacts on our management and workforce, or our suppliers, contractors, or customers, could adversely impact our business. While we have taken steps to protect our workforce and carry on operations, we may not be able to mitigate all of the potential impacts.
Further, impacts of such health crises on our management and workforce, or our suppliers, contractors, or customers, could adversely impact our business and we may be unable to mitigate such impacts.
We may be unable to sell all of the LEU we are required to purchase under supply agreements for prices that cover our costs, which could adversely affect profitability and the viability of our business. We may not achieve the anticipated benefits from supply agreements we enter into.
Our inability to meet our purchase or sales obligations, or to earn revenues from U.S. and international sales, would cause us to incur significant financial losses, in addition to impeding or preventing us from fulfilling our existing contracts, or winning new contracts, and could adversely affect our profitability and the viability of our business. 32 We may be unable to sell all of the LEU we are required to purchase under supply agreements for prices that cover our costs, which could adversely affect profitability and the viability of our business.
General Risk Factors Failures to protect classified or other sensitive information, or security breaches of IT systems could result in significant liability or otherwise have an adverse effect on our business. Our business requires us to use and protect classified, sensitive, and other protected information as well as business proprietary information and intellectual property (collectively, “sensitive information”).
Our business requires us to use and protect classified, sensitive, and other protected information as well as business proprietary information and intellectual property (collectively, “sensitive information”). Our computer networks and other IT systems are designed to protect this information through the use of classified networks and other procedures.
We are dependent on purchases from our suppliers and other sources to meet our obligations to customers and rely on third parties to provide essential services. We are currently dependent on purchases from suppliers to meet our obligations to customers, including purchases from the Russian government entity, TENEX.
As a result, the sales prices in our contracts may not cover our purchase costs, or those purchase costs may limit our ability to secure profitable sales. We are dependent on purchases from our suppliers and other sources to meet our obligations to customers and rely on third parties to provide essential services.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe industrial buildings encompass more than 14 acres under roof and were built to contain uranium enrichment operations using centrifuge technology. Our Oak Ridge, Tennessee and Piketon, Ohio facilities support our Technical Solutions segment. We also have a short-term lease for a small area of office space in Washington, D.C which is used by our corporate function.
Biggest changeThe industrial buildings encompass more than 14 acres under roof and were built to contain uranium enrichment operations using centrifuge technology. Our Oak Ridge, Tennessee and Piketon, Ohio facilities support our Technical Solutions segment. We also have a short-term lease for a small area of office space in Washington, D.C. which is used by one of our corporate functions.
We maintain our facilities in good operating condition and believe they are adequate for our present needs and the foreseeable future.
We maintain our facilities in good operating condition and believe they are adequate for our present needs and the foreseeable future. 46

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe occurrence of any one or more of the following events is a “foreign ownership review event” and triggers the board of directors’ right to take various actions under our certificate of incorporation: (1) the beneficial ownership by a foreign person of (a) 5% or more of the issued and outstanding shares of any class of our equity securities, (b) 5% or more in voting power of the issued and outstanding shares of all classes of our equity securities, or (c) less than 5% of the issued and outstanding shares of any class of our equity securities or less than 5% of the voting power of the issued and outstanding shares of all classes of our equity securities, if such foreign person is entitled to control the appointment and tenure of any of our management positions or any director; (2) the beneficial ownership of any shares of any class of our equity securities by or for the account of a foreign uranium enrichment provider or a foreign competitor (referred to as “contravening persons”); or (3) any ownership of, or exercise of rights with respect to, shares of any class of our equity securities or other exercise or attempt to exercise control of us that is inconsistent with, or in violation of, any regulatory restrictions, or that could jeopardize the continued operations of our facilities (an “adverse regulatory occurrence”).
Biggest changeForeign persons are defined in our certificate of incorporation to include, among others, an individual who is not a U.S. citizen, an entity that is organized under the laws of a non-U.S. jurisdiction, and an entity that is controlled by individuals who are not U.S. citizens or by entities that are organized under the laws of non-U.S. jurisdictions. 49 The occurrence of any one or more of the following events is a “foreign ownership review event” and triggers the board of directors’ right to take various actions under our certificate of incorporation: (1) the beneficial ownership by a foreign person of (a) 5% or more of the issued and outstanding shares of any class of our equity securities, (b) 5% or more in voting power of the issued and outstanding shares of all classes of our equity securities, or (c) less than 5% of the issued and outstanding shares of any class of our equity securities or less than 5% of the voting power of the issued and outstanding shares of all classes of our equity securities, if such foreign person is entitled to control the appointment and tenure of any of our management positions or any director; (2) the beneficial ownership of any shares of any class of our equity securities by or for the account of a foreign uranium enrichment provider or a foreign competitor (referred to as “contravening persons”); or (3) any ownership of, or exercise of rights with respect to, shares of any class of our equity securities or other exercise or attempt to exercise control of us that is inconsistent with, or in violation of, any regulatory restrictions, or that could jeopardize the continued operations of our facilities (an “adverse regulatory occurrence”).
These rights include requesting 41 information from holders (or proposed holders) of our securities, refusing to permit the transfer of securities by such holders, suspending or limiting voting rights of such holders, redeeming or exchanging shares of our stock owned by such holders on terms set forth in our certificate of incorporation, and taking other actions that we deem necessary or appropriate to ensure compliance with the foreign ownership restrictions.
These rights include requesting information from holders (or proposed holders) of our securities, refusing to permit the transfer of securities by such holders, suspending or limiting voting rights of such holders, redeeming or exchanging shares of our stock owned by such holders on terms set forth in our certificate of incorporation, and taking other actions that we deem necessary or appropriate to ensure compliance with the foreign ownership restrictions.
No cash dividends were paid in 2022 or 2021, and we have no intention to pay cash dividends in the foreseeable future. The indenture governing our 8.25% Notes, subject to certain exceptions, places certain restrictions on the ability of Enrichment Corp. to transfer cash and other assets to us.
No cash dividends were paid in 2023 or 2022, and we have no intention to pay cash dividends in the foreseeable future. The indenture governing our 8.25% Notes, subject to certain exceptions, places certain restrictions on the ability of Enrichment Corp. to transfer cash and other assets to us.
The graph reflects the investment of $100 on December 31, 2017 in Class A Common Stock, the S&P 500 Index and the S&P A&D Index, and reflects the reinvestment of dividends. The stock price performance included in the graph below is not indicative of future stock performance.
The graph reflects the investment of $100 on December 31, 2018, in Class A Common Stock, the S&P 500 Index and the S&P A&D Index, and reflects the reinvestment of dividends. The stock price performance included in the graph below is not indicative of future stock performance.
Additionally, the Company has reserved 1,900,000 shares of Class A Common Stock under its management incentive plan, of which 522,608 shares were available for future awards as of December 31, 2022, including 120,000 shares associated with awards which terminated or were cancelled without being exercised. The Class A Common Stock trades on the NYSE American LLC under the symbol “LEU”.
Additionally, the Company has reserved 1,900,000 shares of Class A Common Stock under its management incentive plan, of which 561,704 shares were available for future awards as of December 31, 2023, including 120,000 shares associated with awards which terminated or were cancelled without being exercised. The Class A Common Stock trades on the NYSE American LLC under the symbol “LEU”.
There were no unregistered sales of equity securities by the Company during the years ended December 31, 2022. 40 Stock Performance Graph The following graph shows a comparison of cumulative total returns for an investment in the Class A Common Stock of Centrus, the S&P 500 Index, and the S&P Aerospace and Defense (A&D) Index.
There were no other unregistered sales of equity securities by the Company during the years ended December 31, 2023, 2022, or 2021. 48 Stock Performance Graph The following graph shows a comparison of cumulative total returns for an investment in the Class A Common Stock of Centrus, the S&P 500 Index, and the S&P Aerospace and Defense (A&D) Index.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The Company’s certificate of incorporation authorizes 100,000,000 shares of common stock, consisting of 70,000,000 shares of Class A Common Stock and 30,000,000 shares of Class B Common Stock, As of February 7, 2023, the Company has issued 14,638,846 shares of Common Stock, consisting of 13,919,646 shares of Class A Common Stock and 719,200 shares of Class B Common Stock.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The Company’s certificate of incorporation authorizes 100,000,000 shares of common stock, consisting of 70,000,000 shares of Class A Common Stock and 30,000,000 shares of Class B Common Stock, As of February 1, 2024, the Company has issued 15,675,634 shares of Common Stock, consisting of 14,956,434 shares of Class A Common Stock and 719,200 shares of Class B Common Stock.
As of February 7, 2023, there were approximately 833 holders of record and approximately 19,547 beneficial owners of the Company’s Class A Common Stock. As of February 7, 2023, there were two holders of record of the Company’s Class B Common Stock.
As of February 1, 2024, there were approximately 727 holders of record and approximately 23,771 beneficial owners of the Company’s Class A Common Stock. As of February 1, 2024, there were two holders of record of the Company’s Class B Common Stock.
This could act as a constraint on our ability to pay dividends on our Class A Common Stock.
This could act as a constraint on our ability to pay dividends on our Class A Common Stock. On February 2, 2021, the Company offered and sold to Kulayba LLC the Warrant to purchase 250,000 shares of Class A Common Stock, exercisable immediately at an exercise price of $21.62 per share.
Removed
Foreign persons are defined in our certificate of incorporation to include, among others, an individual who is not a U.S. citizen, an entity that is organized under the laws of a non-U.S. jurisdiction, and an entity that is controlled by individuals who are not U.S. citizens or by entities that are organized under the laws of non-U.S. jurisdictions.
Added
On December 29, 2022, the Company amended and restated the Warrant to extend the term to February 5, 2024 (as so amended and restated, the New Warrant).
Added
On December 18, 2023, the Company issued 149,179 net shares of Class A Common Stock in connection with the cashless exercise by Kulayba LLC of the New Warrant for 250,000 shares of Class A Common Stock at an exercise price of $21.62.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeExcluding the settlement with DOE, gross profit from the Technical Solutions segment decreased by $10.7 million (or 535%), mainly due to a $21.3 million decrease in gross profit generated for the accrued loss related to Phase 1 of the HALEU Operation Contract, partially offset by a $10.1 million increase in gross profit generated from the HALEU Demonstration Contract. 56 Non-Segment Information The following tables present elements of the accompanying consolidated statements of operations that are not categorized by segment (dollar amounts in millions): Year Ended December 31, 2022 Compared with Year Ended December 31, 2021 Year Ended December 31, 2022 2021 $ Change % Change Gross profit $ 117.9 $ 114.5 $ 3.4 3 % Advanced technology costs 14.8 2.1 12.7 605 % Selling, general and administrative 33.9 36.0 (2.1) (6) % Amortization of intangible assets 9.0 8.1 0.9 11 % Special charges for workforce reductions 0.5 — 0.5 n/a Operating income 59.7 68.3 (8.6) (13) % Nonoperating components of net periodic benefit income (6.6) (67.6) 61.0 90 % Interest expense 0.5 0.1 0.4 400 % Investment income (2.0) (0.1) (1.9) (1,900) % Income before income taxes 67.8 135.9 (68.1) (50) % Income tax expense (benefit) 15.6 (39.1) 54.7 140 % Net income $ 52.2 $ 175.0 $ (122.8) (70) % Advanced Technology Costs Advanced technology costs were $14.8 million and $2.1 million for the year ended December 31, 2022 and 2021, respectively, an increase of $12.7 million (or 605%).
Biggest changeThe change was attributable to an increase in gross profit generated from the HALEU Operation Contract and other contracts of $26.0 million and $1.5 million, respectively, partially offset by a $7.8 million decrease in gross profit generated from the HALEU Demonstration Contract. 65 Non-Segment Information The following table presents elements of the accompanying Consolidated Statements of Operations that are not categorized by segment (dollar amounts in millions): Year Ended December 31, 2023 Compared with Year Ended December 31, 2022 Year Ended December 31, 2023 2022 $ Change % Change Gross profit $ 112.1 $ 117.9 $ (5.8) (5) % Advanced technology costs 14.2 14.8 (0.6) (4) % Selling, general and administrative 35.6 33.9 1.7 5 % Amortization of intangible assets 6.3 9.0 (2.7) (30) % Special charges for workforce reductions 3.6 0.5 3.1 620 % Operating income 52.4 59.7 (7.3) (12) % Nonoperating components of net periodic benefit income (23.2) (6.6) (16.6) (252) % Interest expense 1.3 0.5 0.8 160 % Investment income (8.7) (2.0) (6.7) (335) % Other income, net (1.5) — (1.5) n/a Income before income taxes 84.5 67.8 16.7 25 % Income tax expense 0.1 15.6 (15.5) (99) % Net income $ 84.4 $ 52.2 $ 32.2 62 % Amortization of Intangible Assets Amortization of intangible assets was $6.3 million and $9.0 million for the year ended December 31, 2023 and 2022, respectively, a decrease of $2.7 million (or 30%).
Our agreements with electric utilities are primarily medium and long-term fixed-commitment contracts under which our customers are obligated to purchase a specified quantity of the SWU component of LEU from us.
Our agreements with electric utilities are primarily medium-term and long-term fixed-commitment contracts under which our customers are obligated to purchase a specified quantity of the SWU component of LEU from us.
For the year ended December 31, 2022, income tax expense consists of federal tax of $14.9 million, permanent differences of $3.5 million, and state income tax expense of $0.7 million.
For the year ended December 31, 2022, income tax expense consists of federal income tax of $14.9 million, permanent differences of $3.5 million, and state income tax expense of $0.7 million.
In our Technical Solutions segment, the majority of our contractual commitments were entered into as a result of contracts we have with our U.S. Government customers. The U.S.
In our Technical Solutions segment, the majority of our contractual commitments were entered into as a result of contracts we have with our U.S. government customers.
Government generally would be required to pay us for any costs we incur relative to these commitments if they were to terminate the related contracts “for convenience” under the FAR, subject to available funding. This also would be true in cases where we perform subcontract work for a prime contractor under a U.S. Government contract.
The U.S. government generally would be required to pay us for any costs we incur relative to these commitments if they were to terminate the related contracts “for convenience” under the FAR, subject to available funding. This also would be true in cases where we perform subcontract work for a prime contractor under a U.S. government contract.
The following chart summarizes long-term and spot SWU price indicators, and a spot price indicator for UF 6 , as published by TradeTech, LLC in Nuclear Market Review : SWU and Uranium Market Price Indicators* * Source: Nuclear Market Review , a TradeTech publication, www.uranium.info Our contracts with customers are denominated primarily in U.S. dollars, and, although revenue has not been materially affected by changes in the foreign exchange rate of the U.S. dollar, we may have a competitive price advantage or disadvantage obtaining new contracts in a competitive bidding process depending upon the weakness or strength of the U.S. dollar.
The following chart summarizes long-term and spot SWU price indicators, and a spot price indicator for UF 6 , as published by TradeTech, LLC in Nuclear Market Review : SWU and Uranium Market Price Indicators* * Source: Nuclear Market Review , a TradeTech publication, www.uranium.info 58 Our contracts with customers are denominated primarily in U.S. dollars, and, although revenue has not been materially affected by changes in the foreign exchange rate of the U.S. dollar, we may have a competitive price advantage or disadvantage obtaining new contracts in a competitive bidding process depending upon the weakness or strength of the U.S. dollar.
Additional terms and conditions of the 8.25% Notes are described in Note 8, Debt, of the Consolidated Financial Statements in Part IV of this Annual Report. 63 2021 Tender Offer On October 20, 2021, the Company announced the commencement of a tender offer to purchase all of its outstanding Series B Senior Preferred Stock, par value $1.00 per share (the “Series B Senior Preferred Stock”), at a price of $1,145.20 per Series B Senior Preferred Stock (inclusive of any rights to accrued but unpaid dividends), to the sellers in cash, less any applicable withholding taxes (the “Offer”).
Additional terms and conditions of the 8.25% Notes are described in Note 8, Debt, of the Consolidated Financial Statements in Part IV of this Annual Report. 2021 Tender Offer On October 20, 2021, the Company announced the commencement of a tender offer to purchase all of its outstanding Series B Senior Preferred Stock, par value $1.00 per share (the “Series B Senior Preferred Stock”), at a price of $1,145.20 per share (inclusive of any rights to accrued but unpaid dividends), to the sellers in cash, less any applicable withholding taxes (the “Offer”).
For uranium not under contract, the estimated selling price is based primarily on published price indicators at the balance sheet date. Intangible assets originated from our reorganization and application of fresh start accounting as of September 30, 2014. The intangible assets represented the fair value adjustment to the assets and liabilities for our LEU segment.
For uranium not under contract, the estimated selling price is based primarily on published price indicators at the balance sheet date. 60 Intangible assets originated from our reorganization and application of fresh start accounting as of September 30, 2014. The intangible assets represented the fair value adjustment to the assets and liabilities for our LEU segment.
The termination for convenience language also may be included in contracts with foreign, state and local governments. We also have contracts with customers that do not include termination for convenience provisions, including contracts with commercial customers. In our LEU segment, we have long-term inventory purchase agreements with TENEX and Orano that extend to 2028 and 2030, respectively.
The termination for convenience language also may be included in contracts with foreign, state and local governments. We also have contracts with customers that do not include termination for convenience provisions, including contracts with commercial customers. 74 In our LEU segment, we have long-term inventory purchase agreements with TENEX and Orano that extend to 2028 and 2030, respectively.
As a result of these regulations, the standalone selling price of products or services in the Company’s contracts with the U.S. Government are 50 typically equal to the selling price stated in the contract. The Company does not contemplate future modifications, including unexercised options until they become legally enforceable.
As a result of these regulations, the standalone selling price of products or services in the Company’s contracts with the U.S. government are typically equal to the selling price stated in the contract. The Company does not contemplate future modifications, including unexercised options until they become legally enforceable.
The Company recognizes revenue over time as it performs on these contracts because of the continuous transfer of control to the customer. The Company determines the transaction price for each contract based on the consideration it expects to receive for the products or services being provided under the contract.
The Company recognizes revenue over time as it performs on these contracts because of the continuous transfer of control to the customer. 59 The Company determines the transaction price for each contract based on the consideration it expects to receive for the products or services being provided under the contract.
Market prices for SWU and uranium significantly declined from 2011 until mid-2018, when they began to trend upward. More recently, market uncertainty in the wake of the Russian invasion of Ukraine has driven SWU and uranium prices sharply higher.
Market prices for SWU and uranium hexafluoride significantly declined from 2011 until mid-2018, when they began to trend upward. More recently, market uncertainty in the wake of the Russian invasion of Ukraine has driven SWU and uranium hexafluoride prices sharply higher.
Conversely, total estimated costs may decrease if the estimated total costs to complete the contract increase. As a significant change in one or more estimates could affect the profitability of the Company’s contracts, the Company reviews and updates its contract-related estimates regularly.
Conversely, total estimated costs may increase if the estimated total costs to complete the contract increase. As a significant change in one or more estimates could affect the profitability of the Company’s contracts, the Company reviews and updates its contract-related estimates regularly.
Revenue from the sale of SWU under such contracts is recognized at the time LEU is delivered and is based on the fair value of the natural uranium at contract inception, or as the quantity of natural uranium is finalized, if variable.
Revenue from the sale of SWU under such contracts is recognized at the time LEU is delivered and is based on the fair value of the natural uranium hexafluoride at contract inception, or as the quantity of natural uranium hexafluoride is finalized, if variable.
Operating Results Our revenues, operating results, and cash flows can fluctuate significantly from quarter to quarter and year to year. Our Order Book in the LEU segment consists primarily of long-term, fixed commitment contracts, and we have visibility on a significant portion of our revenue for 2023-2026.
Operating Results Our revenues, operating results, and cash flows can fluctuate significantly from quarter to quarter and year to year. Our Order Book in the LEU segment consists primarily of long-term, fixed commitment contracts, and we have visibility on a significant portion of our revenue for 2024-2026.
Refer to Note 2, Revenue and Contracts with Customers, in the Consolidated Financial Statements in Part IV of this Annual Report for further details. 48 Our financial performance over time can be affected significantly by changes in prices for SWU and natural uranium.
Refer to Note 2, Revenue and Contracts with Customers, in the Consolidated Financial Statements in Part IV of this Annual Report for further details. Our financial performance over time can be affected significantly by changes in prices for SWU and natural uranium hexafluoride.
Components of retirement benefit expense/income other than service cost are presented in our consolidated statement of operations as Nonoperating Components of Net Periodic Benefit Income . These components consist primarily of the return on plan assets, offset by interest cost as the discounted present value of benefit obligations nears payment.
Components of retirement benefit expense/income other than service cost are presented in our Consolidated Statements of Operations as Nonoperating Components of Net Periodic Benefit Income . These components consist primarily of the return on plan assets, offset by interest cost as the discounted present value of benefit obligations nears payment.
Changes in actuarial assumptions could impact the measurement of benefit obligations and benefit costs, as follows: • The expected return on benefit plan assets is approximately 6.8% for 2023. The expected return is based on historical returns and expectations of future returns for the composition of the plans’ equity and debt securities.
Changes in actuarial assumptions could impact the measurement of benefit obligations and benefit costs, as follows: • The expected return on benefit plan assets is approximately 6.8% for 2024. The expected return is based on historical returns and expectations of future returns for the composition of the plans’ equity and debt securities.
However, the net impact of any changes in the expected return on benefit plan assets on the final benefit cost recognized for fiscal year 2023 would be $0 since the actual return on assets would effectively be reflected at December 31, 2023, under our mark-to-market accounting methodology. 52 • The present value of pension obligations is calculated by discounting long-term obligations using a market interest rate.
However, the net impact of any changes in the expected return on benefit plan assets on the final benefit cost recognized for fiscal year 2024 would be $0 since the actual return on assets would effectively be reflected at December 31, 2024, under our mark-to-market accounting methodology. • The present value of pension obligations is calculated by discounting long-term obligations using a market interest rate.
Cost of sales for SWU and natural uranium is based on the amount of SWU and natural uranium sold and delivered during the period and unit inventory costs. Unit inventory costs are determined using the average cost method. Changes in purchase costs have an effect on inventory costs and cost of sales.
Cost of sales for SWU and uranium is based on the amount of SWU and uranium hexafluoride sold and delivered during the period and unit inventory costs. Unit inventory costs are determined using the average cost method. Changes in purchase costs have an effect on inventory costs and cost of sales.
This discount rate is the estimated rate at which the benefit obligations could be effectively settled on the measurement date and is based on yields of high quality fixed income investments whose cash flows match the timing and amount of expected benefit payments of the plan. Discount rates of approximately 5.5% were used as of December 31, 2022.
This discount rate is the estimated rate at which the benefit obligations could be effectively settled on the measurement date and is based on yields of high quality fixed income investments whose cash flows match the timing and amount of expected benefit payments of the plan. Discount rates of approximately 5.2% were used as of December 31, 2023.
For the year ended December 31, 2022, nonoperating components of net periodic benefit income consists primarily of ($164.1) million related to the increase in discount rates, offset by a loss of $137.0 million on plan assets and $20.5 million of additional costs which include interest costs amortized during the year.
For the year ended December 31, 2022, nonoperating components of net periodic benefit income consist primarily of ($164.1) million related to an increase in discount rates, offset by a loss of $137.0 million on plan assets and $20.5 million of additional costs which include interest costs amortized during the year.
The state income tax expense for the year ended December 31, 2022 and 2021, pr imarily relates to an accrual for a current unrecognized tax benefit offset by the reversal of a previously accrued unrecognized tax benefit.
The state income tax expense for the year ended December 31, 2023 and 2022, pr imarily relates to an accrual for a current unrecognized tax benefit offset by the reversal of a previously accrued unrecognized tax benefit.
Off-Balance Sheet Arrangements Other than our SWU purchase commitments and the license agreement with the DOE relating to the American Centrifuge technology, there were no material off-balance sheet arrangements at December 31, 2022.
Off-Balance Sheet Arrangements Other than our SWU purchase commitments and the license agreement with the DOE relating to the American Centrifuge technology, there were no material off-balance sheet arrangements at December 31, 2023.
New Accounting Standards Reference is made to New Accounting Standards in Note 1, Summary of Significant Accounting Policies, of the Consolidated Financial Statements in Part IV of this Annual Report for information on new accounting standards. 65
New Accounting Standards Reference is made to New Accounting Standards in Note 1, Summary of Significant Accounting Policies, of the Consolidated Financial Statements in Part IV of this Annual Report for information on new accounting standards. 75
Further, sanctions by the United States, Russia or other countries may impact our ability and cost to transport, export, import, take delivery, or make payments related to the LEU we purchase, or make timely deliveries to our customers, and may require us to increase purchases from non-Russian sources to the extent available.
Further, sanctions by the United States, Russia or other countries may impact our ability and cost to transport, export, import, take delivery, or make payments related to the LEU we purchase and may require us to increase purchases from non-Russian sources to the extent available.
Given the current uncertainty and disruption in the market, due to among other things, the war in Ukraine, we are no longer providing guidance on our results of operations for 2023. Please see Forward Looking Statements at the beginning of this Annual Report on Form 10-K. Our Order Book in the LEU segment extends to 2029.
Given the current uncertainty and disruption in the market, due to among other things, the war in Ukraine, we are no longer providing guidance on our results of operations for 2024. Please see Forward Looking Statements at the beginning of this Annual Report on Form 10-K. Our Order Book in the LEU segment extends to 2030.
Under the HALEU Demonstration Contract, Centrus was engaged by the DOE to construct a cascade of sixteen AC100M centrifuges in Piketon to demonstrate HALEU production.
Under the HALEU Demonstration Contract, Centrus was engaged by the DOE to construct a cascade of 16 AC100M centrifuges in Piketon to demonstrate HALEU production.
Our view of liquidity is dependent on, among other things, conditions affecting our operations, including market, international trade restrictions, COVID-19 and other conditions, the level of expenditures and government funding for our services contracts, and the timing of customer payments.
Our view of liquidity is dependent on, among other things, conditions affecting our operations, including market, international trade restrictions, sanctions and other conditions, the level of expenditures and government funding for our services contracts, and the timing of customer payments.
Our Technical Solutions segment reflects our technical, manufacturing, engineering, and operations services offered to public and private sector customers, including engineering and testing activities as well as technical and resource support currently being performed by the Company. This includes the HALEU Demonstration Contract, the HALEU Operation Contract, and a variety of other contracts with public and private sector customers.
Our Technical Solutions segment reflects our technical, manufacturing, engineering, and operations services offered to public and private sector customers, including engineering and testing activities as well as technical and resource support currently being performed by the Company. This includes the HALEU Operation Contract and other contracts with public and private sector customers.
Deployment of new capacity ultimately could replace Russian enrichment but this capacity will take a number of years and significant funding from private or government sources to come on line.
Deployment of new capacity ultimately could replace Russian enrichment but this capacity will take a number of years and significant funding from private or government sources to come online.
We believe our investments in our enrichment technology and the HALEU demonstration will position the Company to meet the needs of government and commercial customers in the future as they deploy advanced reactors and next generation fuels, and also offer potential cost synergies for a return to LEU production.
We believe our investments in advanced enrichment technology and our progress in demonstrating HALEU production will position the Company to meet the needs of government and commercial customers in the future as they deploy advanced reactors and next generation fuels and also offers potential cost synergies for a return to LEU production.
Liquidity requirements for our existing operations are affected primarily by the timing and amount of customer sales and our inventory purchases. The Company believes our Order Book in our LEU segment is a source of stability for our liquidity position.
Liquidity requirements for our existing operations are affected primarily by the timing and amount of customer sales and our inventory purchases. We believe our Order Book in our LEU segment is a source of stability for our liquidity position.
As of December 31, 2022 and December 31, 2021, our Order Book was approximately $1.0 billion.
As of December 31, 2023 and December 31, 2022, our Order Book was approximately $1.0 billion.
The change in cash, cash equivalents and restricted cash from our Consolidated Statements of Cash Flows are as follows on a summarized basis (in millions): Year Ended December 31, 2022 2021 Cash provided by operating activities $ 20.6 $ 50.0 Cash used in investing activities (0.7) (1.2) Cash used in financing activities (4.3) (9.9) Increase in cash, cash equivalents and restricted cash $ 15.6 $ 38.9 Operating Activities During 2022, net cash provided by operating activities was $20.6 million.
The change in cash, cash equivalents and restricted cash from our Consolidated Statements of Cash Flows are as follows on a summarized basis (in millions): Year Ended December 31, 2023 2022 Cash provided by operating activities $ 9.1 $ 20.6 Cash used in investing activities (1.6) (0.7) Cash provided by (used in) financing activities 13.9 (4.3) Increase in cash, cash equivalents and restricted cash $ 21.4 $ 15.6 Operating Activities During 2023, net cash provided by operating activities was $9.1 million.
We have a SWU supply agreement, nominally commencing in 2023, with prices payable in a combination of U.S. dollars and euros, but with a contract-defined exchange rate. On occasion, we will accept payment for SWU in the form of natural uranium.
We have a SWU supply agreement that commenced in 2023, with prices payable in a combination of U.S. dollars and euros, but with a contract-defined exchange rate. On occasion, we will accept payment for SWU in the form of natural uranium hexafluoride.
Actual results could differ significantly from the results discussed in the forward-looking statements particularly in light of the economic, social and market uncertainty created by, among other things, the COVID-19 pandemic, including emerging variants, and the war in Ukraine. See “Forward-Looking Statements” at the beginning of this Annual Report on Form 10-K.
Actual results could differ significantly from the results discussed in the forward-looking statements particularly in light of the economic, social and market uncertainty created by, among other things, the war in Ukraine. See “Forward-Looking Statements” at the beginning of this Annual Report on Form 10-K.
The Order Book is the estimated aggregate dollar amount of revenue for future SWU and uranium deliveries, and includes approximately $319 million of deferred revenue and advances from customers as of December 31, 2022, whereby customers have made advance payments to be applied against future deliveries. No orders in our Order Book are considered at risk related to customer operations.
The Order Book is the estimated aggregate dollar amount of revenue for future SWU and uranium deliveries, and includes approximately $0.3 billion of deferred revenue and advances from customers as of December 31, 2023, whereby customers have made advance payments to be applied against future deliveries. No orders in our Order Book are considered at risk related to customer operations.
Refer to Note 16, Commitments and Contingencies, of the Consolidated Financial Statements in Part IV of this Annual Report for additional information. In addition, Centrus has entered into multiple inventory loans that we expect to repay from 2023 through 2025. Refer to Note 4, Inventories, of the Consolidated Financial Statements in Part IV of this Annual Report for additional information.
Refer to Note 17, Commitments and Contingencies, of the Consolidated Financial Statements in Part IV of this Annual Report for additional information. In addition, Centrus has entered into multiple inventory loans that we expect to repay from 2024 through 2026. Refer to Note 4, Inventories, of the Consolidated Financial Statements in Part IV of this Annual Report for additional information.
Ten reactors in Japan have restarted and an additional seven are expected to restart in 2023; more of Japan’s reactors are expected to restart in subsequent years. Due to the war in Ukraine, the EU is encouraging its member countries to reconsider the planned early retirement of existing plants in order to reduce reliance on Russian gas imports.
Eleven reactors in Japan have restarted and additional reactors are expected to restart through 2024; more of Japan’s reactors are expected to restart in subsequent years. Due to the war in Ukraine, the EU is encouraging its member countries to reconsider the planned early retirement of existing plants in order to reduce reliance on Russian gas imports.
Contracts where we sell both the SWU and natural uranium component of LEU to utilities or where we sell natural uranium to utilities and other nuclear fuel related companies are generally shorter-term, fixed-commitment contracts. Individual customer orders for the SWU component of LEU fulfilled in 2022 averaged approximately $10 million per order.
Contracts where we sell both the SWU and natural uranium hexafluoride components of LEU to utilities or where we sell natural uranium hexafluoride to utilities and other nuclear fuel related companies are generally shorter-term, fixed-commitment contracts. Individual customer orders for the SWU component of LEU fulfilled in 2023 averaged approximately $7.1 million per order.
Accordingly, we continue to monitor the situation closely and assess the potential impact of any new sanctions and how the impact on the Company might be mitigated.
Given all the foregoing, we continue to monitor the situation closely and assess the potential impact of any new sanctions and how the impact on the Company might be mitigated.
A one-half percentage point decrease in the expected return on plan assets would increase annual pension costs by $2.3 million in 2023.
A one-half percentage point decrease in the expected return on plan assets would increase annual pension costs by $1.3 million in 2024.
A one-half percentage point reduction in the discount rate would increase the valuation of pension benefit obligations by $21.7 million and postretirement health and life benefit obligations by $3.7 million, and the resulting changes in the valuations would decrease the aggregate service cost and interest cost components of annual pension costs and postretirement health and life benefit costs by $1.4 million and $0.3 million, respectively. • The healthcare costs trend rates are 7% projected in 2023 reducing to a final trend rate of 5% by 2031.
A one-half percentage point reduction in the discount rate would increase the valuation of pension benefit obligations by $13.0 million and postretirement health and life benefit obligations by $3.7 million, and the resulting changes in the valuations would decrease the aggregate service cost and interest cost components of annual pension costs and postretirement health and life benefit costs by $0.9 million and $0.3 million, respectively. • The healthcare costs trend rates are 7% projected in 2024 reducing to a final trend rate of 5% by 2032.
The expanding sanctions imposed by the United States and foreign governments on the mechanisms used to make payments to Russia and to obtain services including transportation and other services have increased the risk that implementation of the TENEX Supply Contract may be disrupted in the future.
In addition to limitations targeted specifically at imports of LEU, the expanding sanctions imposed by the United States and foreign governments on the mechanisms used to make payments to Russia and to obtain services including transportation and other services have increased the risk that implementation of the TENEX Supply Contract may be disrupted in the future.
Recent proposals to severely limit or cut off supply of LEU from Russia have drawn attention to the potential for significant tightening of supplies in the market. Russian enrichment plants represent 46% of the world’s capacity, and Russian capacity significantly exceeds its domestic needs.
Recent proposals, including proposed U.S. legislation, to severely limit or cut off supply of LEU from Russia have drawn attention to the potential for significant tightening of supplies in the market. Russian enrichment plants represent 44% of the world’s capacity, and Russian capacity significantly exceeds its domestic needs.
We have omitted discussion of 2020 results where it would be redundant to the discussion previously included in Item 7 of our 2021 Annual Report on Form 10-K, filed with the SEC on March 11, 2022.
We have omitted discussion of 2021 results where it would be redundant to the discussion previously included in Item 7 of our 2022 Annual Report on Form 10-K, filed with the SEC on February 22, 2023.
While sanctions imposed to date do not preclude the import of Russian uranium products into the United States, it is possible that additional restrictions could be added in the future that would affect our ability to purchase and resell Russian uranium 46 enrichment, which could have a negative material impact on our business.
While sanctions imposed to date do not preclude the import of Russian uranium products into the United States, it is possible that additional restrictions could be added in the future that would affect our ability to purchase and re-sell Russian uranium enrichment, or implement the TENEX Supply Contract, which could have a negative material impact on our business.
In 2021, Centrus evaluated both positive and negative evidence that was objectively verifiable to determine the amount of the federal valuation allowance that was required on Centrus’ federal deferred tax assets. As discussed in Operating Results, Centrus has visibility on a significant portion of revenue in the LEU segment through 2026, 53 primarily from its long-term sales contracts.
The Company evaluated both positive and negative evidence that was objectively verifiable to determine the amount of the federal valuation allowance that was required on Centrus’ federal deferred tax assets. Centrus has visibility on a significant portion of revenue in the LEU segment for 2023 through 2026, primarily from its long-term sales contracts.
SWU and Uranium Sales Revenue from our LEU segment accounted for approximately 80% of our total revenue for the year ended December 31, 2022. The majority of our customers are domestic and international utilities that operate nuclear power plants, with international sales constituting approximately 50% of revenue from our LEU segment since 2020.
SWU and Uranium Sales Revenue from our LEU segment accounted for approximately 84% of our total revenue for the year ended December 31, 2023. The majority of our customers are domestic and international utilities that operate nuclear power plants, with international sales constituting approximately 40% of revenue from our LEU segment since 2021.
The customer relationships intangible asset is amortized using the straight-line method over the estimated average useful life of 15 years, with 6 ¾ years of scheduled amortization remaining. The aggregate net balance of identifiable intangible assets was $45.7 million as of December 31, 2022.
The customer relationships intangible asset is amortized using the straight-line method over the estimated average useful life of 15 years, with 5 ¾ years of scheduled amortization remaining. The aggregate net balance of identifiable intangible assets was $39.4 million as of December 31, 2023.
Among the factors that could affect our results are the following: • Armed conflicts, including the war in Ukraine, government actions and other events or third-party actions that disrupt supply chains, production, transportation, payments, and importation of nuclear materials or other critical supplies or services; • The potential for sanctions and other measures affecting purchases of LEU, SWU or uranium, or goods or services required for the purchase or delivery of such LEU, SWU or uranium; • The availability and terms of additional purchases or sales of LEU, SWU and uranium; • Conditions in the LEU and energy markets, including pricing, demand, operations, government restrictions on imports, exports or investments, and regulations of our business and activities and those of our customers, suppliers, contractors, and subcontractors; 47 • Timing of customer orders, related deliveries, and purchases of LEU or its components; • Costs, future funding, and demand for HALEU; • Financial market conditions and other factors that may affect pension and benefit liabilities and the value of related assets; • The outcome of legal proceedings and other contingencies; • Potential use of cash for strategic or financial initiatives; • Actions taken by customers and suppliers, including actions that might affect existing contracts; • Market, international trade, and other conditions impacting Centrus’ customers and the industry; and • The length and severity of the COVID-19 pandemic and its impact on our operations.
Among the factors that could affect our results are the following: • Armed conflicts, including the war in Ukraine, government actions and other events or third-party actions that disrupt supply chains, production, transportation, payments, and importation of nuclear materials or other critical supplies or services; • The potential for sanctions and other measures affecting the importation, sales or purchases of SWU or uranium or goods or services required for the purchase or delivery of such SWU or uranium; 56 • The availability and terms of additional purchases or sales of SWU and uranium; • Conditions in the LEU and energy markets, including pricing, demand, operations, government restrictions on imports, exports or investments, and regulations of our business and activities and those of our customers, suppliers, contractors, and subcontractors; • Timing of customer orders, related deliveries, and purchases of LEU or LEU components; • Costs of and future funding and demand for HALEU; • Financial market conditions and other factors that may affect pension and benefit liabilities and the value of related assets; • The outcome of legal proceedings and other contingencies; • Potential use of cash for strategic or financial initiatives; • Actions taken by customers and suppliers, including actions that might affect existing contracts; • The government’s inability to satisfy its obligations, including supplying government furnished equipment under its agreements with the Company or processing security clearances due to a shutdown or other reasons; and • Market, international trade, and other conditions impacting Centrus’ customers and the industry.
Government for research, development and demonstration of gas centrifuge technology is reduced or discontinued, or we are not awarded a future DOE contract to continue to operate the cascade, such actions may have a material adverse impact on our ability to deploy the American Centrifuge technology and on our liquidity.
If funding of gas centrifuge technology by the U.S. government is reduced or discontinued, or we are not awarded a future DOE contract to continue to operate the cascade, such actions may have a material adverse impact on our ability to deploy the American Centrifuge technology and on our liquidity.
In connection with any such transaction, we may seek additional debt or equity financing, contribute or dispose of assets, assume additional indebtedness, or partner with other parties to consummate a transaction. Refer to Part I, Item 1, Business , for additional information.
In connection with any such transaction, we may seek additional debt or equity financing, contribute or dispose of assets, assume additional indebtedness, or partner with other parties to consummate a transaction.
The two parties agreed to extend the agreement through 2040 and to set aside a significant portion of the annual quota for Centrus’ shipments to the United States through 2028 to execute our long-term TENEX Supply Contract with TENEX. This outcome allows for sufficient quota for Centrus to continue serving its utility customers.
The two parties agreed to extend the agreement through 2040 and to set aside a significant portion of the annual quota for Centrus’ shipments to the United States through 2028 to execute our long-term TENEX Supply Contract with TENEX.
For the year ended December 31, 2022, the net actuarial loss reflected unfavorable investment returns relative to the expected return assumption, partially offset by an increase in interest rates from approximately 2.8% to 5.5%.
For the year ended December 31, 2022, the net actuarial loss reflected unfavorable investment returns relative to the expected return assumption, partially offset by an increase in interest rates from approximately 2.8% to 5.5%, favorable investment returns relative to the expected return assumption, and healthcare claims assumption, partially offset by changes in mortality, healthcare costs trend assumptions, and claims experience.
Therefore, Centrus recorded a $40.7 million partial release of its federal valuation allowance in the fourth quarter of 2021. In 2022, an analysis of the positive and negative evidence was performed to determine if a further change to the federal valuation allowance was necessary.
Therefore, Centrus recorded a $40.7 million partial release of its federal valuation allowance in the fourth quarter of 2021. Based on an analysis of the positive and negative evidence, it was determined that no change to the federal valuation allowance was necessary in 2022.
The decrease was primarily driven by a decrease in nonoperating components of net periodic benefit income of $61.0 million and an increase of income tax expense of $54.7 million, partially offset by an increase in gross profit of $3.4 million. 58 Net Income per Share Refer to Note 14, Net Income per Common Share, of the Consolidated Financial Statements in Part IV of this Annual Report.
The increase was primarily driven by an increase in nonoperating components of net periodic benefit income of $16.6 million, a decrease in income tax expense of $15.5 million, and an increase in investment income of $6.7 million, partially offset by a decrease in gross profit of $5.8 million. 67 Net Income per Share Refer to Note 15, Net Income per Common Share, of the Consolidated Financial Statements in Part IV of this Annual Report.
For details on HALEU Operation and Demonstration Contract accounting, refer to Technical Solutions - Government Contracting above. Gross Profit The Company recognized a gross profit of $117.9 million and in $114.5 million for the year ended December 31, 2022 and 2021, respectively, an improvement of $3.4 million (or 3%).
For details on HALEU Operation and Demonstration Contract accounting, refer to Technical Solutions - Government Contracting above. Gross Profit The Company recognized a gross profit of $112.1 million and $117.9 million for the year ended December 31, 2023 and 2022, respectively, a decrease of $5.8 million (or 5%).
In 2022, spot prices continued to increase substantially, reaching $110 per SWU by December 31, 2022. This represents an increase of 96% since the beginning of the year and 224% over the 2018 historic low.
In 2023, spot prices continued to increase, reaching $155 per SWU by December 31, 2023. This represents an increase of 41% since the beginning of the year and 356% over the 2018 historic low.
Three Months Ended December 31, Year Ended December 31, 2022 2021 2020 2022 2021 2020 Numerator (in millions): Net income $ 21.3 $ 116.2 $ 16.4 $ 52.2 $ 175.0 $ 54.4 Less: Distributed earnings allocable to warrant modification 1.5 — — 1.5 — — Less: Preferred stock dividends - undeclared and cumulative — — 0.8 — 2.1 6.7 Less: Distributed earnings allocable to retired preferred shares — 31.0 41.9 — 37.6 41.9 Net income (loss) allocable to common stockholders $ 19.8 $ 85.2 $ (26.3) $ 50.7 $ 135.3 $ 5.8 Plus: Distributed earnings allocable to warrant modification $ 1.5 $ — $ — $ 1.5 $ — $ — Plus: Distributed earnings allocable to retired preferred shares — 31.0 41.9 — 37.6 41.9 Adjusted net income, including distributed earnings allocable to retired preferred shares (Non-GAAP) $ 21.3 $ 116.2 $ 15.6 $ 52.2 $ 172.9 $ 47.7 Denominator (in thousands) (a): Average common shares outstanding - basic 14,648 13,873 10,322 14,601 13,493 9,825 Average common shares outstanding - diluted (b) 15,029 14,278 10,322 14,988 13,879 10,123 Net Income (Loss) per Share (in dollars): Basic $ 1.35 $ 6.14 $ (2.55) $ 3.47 $ 10.03 $ 0.59 Diluted $ 1.32 $ 5.97 $ (2.55) $ 3.38 $ 9.75 $ 0.57 Plus: Effect of distributed earnings allocable to retired preferred shares and warrant modification, per common share (in dollars): Basic $ 0.10 $ 2.24 $ 4.06 $ 0.11 $ 2.78 $ 4.26 Diluted $ 0.10 $ 2.17 $ 4.01 $ 0.10 $ 2.71 $ 4.14 Adjusted Net Income per Share (Non-GAAP) (in dollars): Basic $ 1.45 $ 8.38 $ 1.51 $ 3.58 $ 12.81 $ 4.85 Diluted $ 1.42 $ 8.14 $ 1.46 $ 3.48 $ 12.46 $ 4.71 (a) For details related to average shares outstanding, refer to Note 14 , Net Income Per Common Share, of the Consolidated Financial Statements.
Three Months Ended December 31, Year Ended December 31, 2023 2022 2021 2023 2022 2021 Numerator (in millions): Net income $ 56.3 $ 21.3 $ 116.2 $ 84.4 $ 52.2 $ 175.0 Less: Distributed earnings allocable to warrant modification — 1.5 — — 1.5 — Less: Preferred stock dividends - undeclared and cumulative — — — — — 2.1 Less: Distributed earnings allocable to retired preferred shares — — 31.0 — — 37.6 Net income allocable to common stockholders $ 56.3 $ 19.8 $ 85.2 $ 84.4 $ 50.7 $ 135.3 Plus: Distributed earnings allocable to warrant modification $ — $ 1.5 $ — $ — $ 1.5 $ — Plus: Distributed earnings allocable to retired preferred shares — — 31.0 — — 37.6 Adjusted net income, including distributed earnings allocable to retired preferred shares and warrant modification (Non-GAAP) $ 56.3 $ 21.3 $ 116.2 $ 84.4 $ 52.2 $ 172.9 Denominator (in thousands) (a): Average common shares outstanding - basic 15,461 14,648 13,873 15,212 14,601 13,493 Average common shares outstanding - diluted 15,732 15,029 14,278 15,501 14,988 13,879 Net Income per Share (in dollars): Basic $ 3.64 $ 1.35 $ 6.14 $ 5.55 $ 3.47 $ 10.03 Diluted $ 3.58 $ 1.32 $ 5.97 $ 5.44 $ 3.38 $ 9.75 Plus: Effect of distributed earnings allocable to retired preferred shares and warrant modification, per common share (in dollars): Basic $ — $ 0.10 $ 2.24 $ — $ 0.11 $ 2.78 Diluted $ — $ 0.10 $ 2.17 $ — $ 0.10 $ 2.71 Adjusted Net Income per Share (Non-GAAP) (in dollars): Basic $ 3.64 $ 1.45 $ 8.38 $ 5.55 $ 3.58 $ 12.81 Diluted $ 3.58 $ 1.42 $ 8.14 $ 5.44 $ 3.48 $ 12.46 (a) For details related to average shares outstanding, refer to Note 15 , Net Income Per Common Share, of the Consolidated Financial Statements in Part IV of this Annual Report. 68 Liquidity and Capital Resources As of December 31, 2023, the Company had a consolidated cash balance of $201.2 million.
The HALEU Operation Contract provides for a 50/50 cost share contract for Phase 1 of the base contract to complete the cascade, begin operations and complete the initial, small quantity demonstration HALEU. Phase 2 includes continued operations and maintenance on a cost-plus-incentive-fee basis.
We were awarded the HALEU Operation Contract in November 2022 which provided for a 50/50 cost share for Phase 1 of the base contract to complete the cascade, begin operations and complete the initial, small quantity of demonstration HALEU. The Company completed Phase 1 in November 2023. Phase 2 includes continued operations and maintenance on a cost-plus-incentive-fee basis.
Centrus has obligations related to our 8.25% Notes that mature in February 2027, as discussed above. We are also obligated to make payments under operating leases that expire at various dates through 2027. Refer to Note 9, Leases , of the Consolidated Financial Statements in Part IV of this Annual Report for further information.
We are also obligated to make payments under operating leases that expire at various dates through 2027. Refer to Note 9, Leases , of the Consolidated Financial Statements in Part IV of this Annual Report for further information.
Published spot price indicators for SWU reached historic highs in April 2009 at $163 per SWU. In the years following the 2011 Fukushima accident in Japan, spot prices declined more than 75%, bottoming out in August 2018 at $34 per SWU. This was followed by a slow and steady rise, reaching $56 per SWU by December 31, 2021.
In the years following the 2011 Fukushima accident in Japan, spot prices declined more than 75%, bottoming out in August 2018 at $34 per SWU. This was followed by a slow and steady rise, reaching $56 per SWU by December 31, 2021. In 2022, spot prices increased substantially, reaching $110 per SWU by December 31, 2022.
On November 23, 2021, the Company announced the results of the tender offer and the related Consent Solicitation to amend the certificate of designation of the Series B Senior Preferred Stock (the “Series B Preferred Amendment”). 36,867 shares of the Series B Senior Preferred Stock were properly tendered and not properly withdrawn in the Offer, and corresponding consents have been delivered in the Consent Solicitation.
The aggregate liquidation preference per Series B Senior Preferred Stock (including accrued but unpaid dividends) was $1,347.29 as of September 30, 2021. 73 On November 23, 2021, the Company announced the results of the tender offer and the related Consent Solicitation to amend the certificate of designation of the Series B Senior Preferred Stock (the “Series B Preferred Amendment”). 36,867 shares of the Series B Senior Preferred Stock were properly tendered and not properly withdrawn in the Offer, and corresponding consents have been delivered in the Consent Solicitation.
Changes in the competitive landscape affect pricing trends, change customer spending patterns, and create uncertainty. To address these changes, we have taken steps to adjust our cost structure; we may seek further adjustments to our cost structure and operations and evaluate opportunities to grow our business organically or through acquisitions and other strategic transactions.
To address these changes, we have taken steps to adjust our cost structure; we may seek further adjustments to our cost structure and operations and evaluate opportunities to grow our business organically or through acquisitions and other strategic transactions.
The carrying amount of a long-lived asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset.
The carrying amount of a long-lived asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. An impairment loss is measured as the amount by which the carrying amount of a long-lived asset, or asset group exceeds its fair value.
The Company intends to use the net proceeds from the sale of its common stock offered under this prospectus supplement for working capital and general corporate purposes including, but not limited to, capital expenditures, working capital, repayment of indebtedness, potential acquisitions and other business opportunities.
Unless otherwise specified in any prospectus supplement, we currently intend to use the net proceeds from the sale of our securities offered under this prospectus for working capital and general corporate purposes including, but not limited to, capital expenditures, working capital, repayment of indebtedness, potential acquisitions and other business opportunities.
Additionally, in 2021, the Company recorded direct costs of $0.3 million related to the issuance. The shares of Class A Common Stock were issued pursuant to the Company’s shelf registration statement on Form S-3 (File No. 333-239242), which became effective on August 5, 2020, and a prospectus supplement dated December 31, 2020, to the prospectus.
The shares of Class A Common Stock were issued pursuant to the Company’s shelf registration statement on Form S-3 (File No. 333-239242), which became effective on August 5, 2020, and two prospectus supplements dated December 31, 2020 and December 5, 2022, respectively.
Pending any specific application, the Company may initially invest funds in short-term marketable securities or apply them to the reduction of indebtedness. The Company has not sold any shares under this ATM offering.
Pending any specific application, we may initially invest funds in short-term marketable securities or apply them to the reduction of indebtedness.
Revenue We have two reportable segments: the LEU segment and the Technical Solutions segment. Revenue from our LEU segment is derived primarily from: • sales of the SWU component of LEU; • sales of natural uranium; and • sales of enriched uranium product that include both the natural uranium and SWU components of LEU.
Revenue from our LEU segment is derived primarily from: • sales of the SWU component of LEU; • sales of natural uranium hexafluoride, uranium concentrates or uranium conversion; and • sales of enriched uranium product that include both the natural uranium hexafluoride and SWU components of LEU.
For the year ended December 31, 2020, the net actuarial loss reflected a decline in market interest rates from approximately 3.3% to 2.5%, partially offset by favorable investment returns relative to the expected return assumption and changes in mortality and healthcare claim assumptions.
For the year ended December 31, 2023, the net actuarial gain reflected favorable investment returns relative to the expected return assumption, partially offset by a decrease in interest rates from approximately 5.5% to 5.2%.
See Note 3 , Cash, Cash Equivalents, Restricted Cash of the Consolidated Financial Statements in Part IV of this Annual Report. The Company anticipates having adequate liquidity to support our business operations for at least the next 12 months from the date of this report.
The Company anticipates having adequate liquidity to support our business operations for at least the next 12 months from the date of this Annual Report.
The HALEU Demonstration Contract was originally set to expire on June 1, 2022; however, it was extended through November 30, 2022. The DOE elected to change the scope of the HALEU Demonstration Contract and moved the operational portion of the demonstration to a new, competitively-awarded contract that would provide for operations beyond the term of the existing HALEU Demonstration Contract.
The DOE elected to change the scope of the HALEU Demonstration Contract and moved the operational portion of the demonstration to a new, competitively-awarded contract that would provide for operations beyond the term of the existing HALEU Demonstration Contract.
The ultimate realization of deferred tax assets is dependent upon generating sufficient taxable income in future years when deferred tax assets are recoverable or are expected to reverse.
In assessing the realization of deferred tax assets, we determine whether it is more likely than not that the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon generating sufficient taxable income in future years when deferred tax assets are recoverable or are expected to reverse.
Segment Information The following tables present elements of the accompanying Consolidated Statements of Operations that are categorized by segment (dollar amounts in millions): Year Ended December 31, 2022 Compared with Year Ended December 31, 2021 Year Ended December 31, 2022 2021 $ Change % Change LEU segment Revenue: SWU revenue $ 196.2 $ 163.3 $ 32.9 20 % Uranium revenue 39.4 22.8 16.6 73 % Total 235.6 186.1 49.5 27 % Cost of sales 105.0 113.1 (8.1) (7) % Gross profit $ 130.6 $ 73.0 $ 57.6 79 % Technical Solutions segment Revenue $ 58.2 $ 112.2 $ (54.0) (48) % Cost of sales 70.9 70.7 0.2 — % Gross profit (loss) $ (12.7) $ 41.5 $ (54.2) (131) % Total Revenue $ 293.8 $ 298.3 $ (4.5) (2) % Cost of sales 175.9 183.8 (7.9) (4) % Gross profit $ 117.9 $ 114.5 $ 3.4 3 % Revenue Revenue from the LEU segment was $235.6 million and $186.1 million for the year ended December 31, 2022 and 2021, respectively, an increase of $49.5 million (or 27%).
Segment Information The following table presents elements of the accompanying Consolidated Statements of Operations that are categorized by segment (dollar amounts in millions): Year Ended December 31, 2023 Compared with Year Ended December 31, 2022 Year Ended December 31, 2023 2022 $ Change % Change LEU segment Revenue: SWU revenue $ 208.2 $ 196.2 $ 12.0 6 % Uranium revenue 60.8 39.4 21.4 54 % Total 269.0 235.6 33.4 14 % Cost of sales 163.9 105.0 58.9 56 % Gross profit $ 105.1 $ 130.6 $ (25.5) (20) % Technical Solutions segment Revenue $ 51.2 $ 58.2 $ (7.0) (12) % Cost of sales 44.2 70.9 (26.7) (38) % Gross profit (loss) $ 7.0 $ (12.7) $ 19.7 155 % Total Revenue $ 320.2 $ 293.8 $ 26.4 9 % Cost of sales 208.1 175.9 32.2 18 % Gross profit $ 112.1 $ 117.9 $ (5.8) (5) % 64 Revenue Revenue from the LEU segment was $269.0 million and $235.6 million for the year ended December 31, 2023 and 2022, respectively, an increase of $33.4 million (or 14%).
Common Stock Issuance The Company sold at the market price an aggregate of 99,090 shares and 1,516,467 shares of its Class A Common Stock for a total of $3.8 million and $44.2 million in 2022 and 2021, respectively. After expenses and commissions paid to the agents in 2022 and 2021, the Company’s proceeds total $3.6 million and $42.4 million, respectively.
Common Stock Issuance Pursuant to a sales agreement with its agents, the Company sold through at the market offerings an aggregate of 722,568 shares, 99,090 shares, and 1,516,467 shares of its Class A Common Stock for a total of $24.4 million, $3.8 million, and $44.2 million in 2023, 2022, and 2021, respectively.
In the IEA’s 2022 World Energy Outlook , nuclear generation is forecasted to grow by 25 percent by 2030 and 46 percent by 2040 under the “Stated Policies” scenario. In the “Net Zero Emissions by 2050” scenario, nuclear generation would grow by 46 percent by 2030 and more than double by 2040.
In the IEA’s 2023 World Energy Outlook , nuclear generation is forecasted to grow by 25 percent by 2030 and 45 percent by 2040 under the “Stated Policies” scenario.
For further discussion, refer to Part I, Item 1A, Risk Factors . If funding by the U.S.
For further discussion, refer to Part I, Item 1A, Risk Factors .
If we pursue opportunities that require capital, we believe we would seek to satisfy these needs through a combination of working capital, cash generated from operations or additional debt or equity financing.
In connection with any such transaction, we would seek to satisfy these needs through a combination of working capital, cash generated from operations or additional debt or equity financing.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

2 edited+1 added−0 removed12 unchanged
Biggest changeAs of December 31, 2022, we have $101.8 million of debt related to our 8.25% Notes, with a fair value of approximately $68.8 million. The terms of our 8.25% Notes do not generally allow investors to demand we pay off these obligations prior to maturity. Therefore, we do not have significant exposure to interest rate risk on our 8.25% Notes.
Biggest changeAs of December 31, 2023, we have $95.7 million of debt related to our 8.25% Notes, with a fair value of approximately $71.7 million. The terms of our 8.25% Notes do not generally allow investors to demand we pay off these obligations prior to maturity. Therefore, we do not have significant exposure to interest rate risk on our 8.25% Notes.
As such, the Company believes any changes in the prices of SWU and uranium do not create material market risk as the Company has a natural hedge in its purchase arrangements. 66
As such, the Company believes any changes in the prices of SWU and uranium do not create material market risk as the Company has a natural hedge in its purchase arrangements. 76
Added
We have one customer contract that commenced deliveries in 2023 and extends to 2026 where payments are denominated in euros that may be subject to exchange rate risk.

Other LEU 10-K year-over-year comparisons