00:02 Greetings and welcome to Centrus Energy’s Fourth Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. [Operator Instructions] As a reminder, this conference is being recorded. 00:24 I would now like to turn the call over to Dan Leistikow, Vice President, Corporate Communications. Thank you. You may begin.

00:33 Good morning. Thank you all for joining us. Today’s call will cover the results for the fourth quarter and full-year of 2021 ended December 31. Today we have Dan Poneman, President and Chief Executive Officer; Philip Strawbridge, Senior Vice President, Chief Financial Officer, Chief Administrative Officer and Treasurer; and Kevin Harrill, Controller and Chief Accounting Officer. 00:53 Before turning the call over to Dan Poneman, I like to welcome all of our callers, as well as those listening to our webcast. This conference call follows our earnings news release issued yesterday afternoon. We expect to file our report for the year ending December 31, 2021 and the fourth quarter of 2021 on Form 10-K later today. 01:15 All of our news releases and SEC filings, including our 10-K, 10-Qs, and 8-Ks are available on our website. A replay of this call will also be available later this morning on the Centrus website. 01:26 I’d like to remind everyone that certain of the information we may discuss on this call today may be considered forward-looking information that involves risk and uncertainty, including assumptions about the future performance of Centrus. Our actual results may differ materially from those in our forward-looking statements. 01:41 Additional information concerning factors that could cause actual results to materially differ from those in our forward-looking statements is contained in our filings with the SEC, including our annual report on Form 10-K, and quarterly reports on Form 10-Q. 01:55 Finally, the forward-looking information provided today is time-sensitive and accurate only as of today, March 11, 2022, unless otherwise noted. This call is the property of Centrus Energy. Any transcription, redistribution, retransmission or rebroadcast of the call in any form without the expressed written consent of Centrus is strictly prohibited. 02:16 Thank you for your participation. And I’ll now turn the call over to Dan Poneman.

02:22 Thank you, Dan. And thank you to everyone on the call today. I am pleased to report that Centrus Energy had a robust fourth quarter, which helped contribute to a record year in 2021 with annual revenue growth of 21% and $175 million in net income. 02:40 Our financial condition is stronger now than it has been in years. Even as we reduced our pension debt by more than $100 million and spent more than $40 million to retire the preferred shares, we still managed to increase our cash balance to $193.8 million at year-end. 03:00 In 2021, we completed a series of transactions totaling $43.3 million to repurchase and retire all remaining Series B Senior Preferred Shares at a discount. Wiping out the preferred shares, which were accruing deferred dividends, much like a debt instrument, represents a critical milestone in strengthening our balance sheet. 03:23 Furthermore, we reduced our net pension liabilities by more than $100 million since the beginning of 2021. As of December 31, 2021 the long-term net liability was down to $23.1 million. As our funded status has improved, we have been taking responsible steps with our pension manager to shift to a more conservative asset allocation to reduce our exposure to market volatility and to help protect the gains we have made. 03:52 A key piece of our success story is our LEU segment, where we saw a 64% increase in our sales volume for uranium enrichment. That increase reflects the volume of deliveries we made in 2021, compared to the previous year. But we've also had a great dealer success in making new long-term sales that will bring us revenue streams in the years to come. 04:16 Even after all the deliveries we made in 2021 that came out of your order book,…

10:32 Thank you, Dan. Good morning everyone. As Dan mentioned, 2021 was a record year for Centrus with a particularly strong fourth quarter. Our annual revenue increased to 298.3 million, which includes a $43.5 million settlement that we secured with the U.S. Government, during the third quarter that helped us reduce our long-term liabilities for pension and post-retirement health benefits. 10:56 Even excluding that settlement, as well as the settlement received in 2020 as per the bankruptcy – customers’ bankruptcy, we achieved revenue growth of 18% in our LEU segment and 21% in our technical solutions segment. 11:10 In our LEU segment, SWU revenue increased 8% in 2021, over 2020. Recall that SWU revenue in 2020 included a $32.6 million customer settlement of a supply contract that was subject to the customer's bankruptcy proceeding. 11:29 Excluding the one-time settlement of 32.6 in 2020, SWU revenue increased an impressive 36% in 2021 over 2020. Our cost of sales were 183 million in 2021, compared to 149.6 million in the prior year. 11:46 The biggest driver in that number was a 64% increase in our sales volume for uranium enrichment, which is dominated or denominated in SWU’s. It also reflects an increase in the amount of work that we performed under the HALEU contract and other contracts. 12:03 Overall, we achieved a gross profit of 114.5 million in 2021, a 17% increase year-over-year. Our net profit was even higher, 175 million for the year. That's in part because in addition to the strong sales and the good margins, we also achieved growth in the value of our pension assets. 12:24 We also recognized 39.1 million, primarily as a result of releasing a portion of our valuation allowance related to our deferred tax assets. Our cumulated federal net operating losses from prior years…

14:27 Thank you, Philip. Let me just take a moment to recap, because I think the numbers speak from themselves. Gross profit, up 17%; revenue, up 21%; cash balance, up 25%; SWU sales volume, up 64%; and net income, up 222%. We have a proven technology, a one of a kind NRC license for HALEU production, an order book of almost $1 billion. 14:58 Plenty of opportunities to win new sales in a rising market and an exceptionally talented workforce and dedicated workforce ready to take on the future. I am proud of what our team has accomplished so far, but firmly believe that the best is yet to come. 15:14 And with that, operator, we would be happy to entertain questions.

15:19 Thank you. [Operator Instructions] Our first question comes from the line of Rob Brown with Lake Street Capital. Please proceed with your questions.

16:01 Hi, good morning.

16:02 Good morning, Rob.

16:03 I have questions on the new – the contract change with the DOE on the HALEU project, how is that different, I guess ultimately, if they're running over three years or a longer period of time in terms of the contract size compared to what you have or what's the kind of difference if you know it at this point?

16:24 Well, the principal difference, Rob is because of the events that I mentioned in my opening remarks. Three-year contract is over on the calendar June 2022. And because cylinders were not there, what we had initially anticipated doing in the original contract as drafted, as executed what to finish up the standing up of these demonstration machines and then actually running them for a little while to produce some actual 19.75% product. And you can't do that if you don't have these cylinders to take the gas that comes off the [indiscernible] and so they've just, sort of timed out so to speak. 17:15 And therefore, that aspect was taken out of the scope of this contract and put into the scope of a new contract that they intend to negotiate and have put out this notice that they are going to accept proposals to do. So that's one key difference that the actual – that last step that we would have been ready to do, we simply couldn't do it because during these COVID supply chain challenges prevented them from producing the cylinders that we were going to put that gas into, but the other thing is, as I also indicated in my opening remarks, now they're talking about sustaining that, we were only going to do that for just a little while. 18:03 And now they're talking about doing it for potentially much longer under their pre-solicitation notice which you have seen, I'm sure. And that's a good thing because it's always two things. Number one, it's always used to keep running, you use machines once they're up and running. It's – you might as well sort of get the benefit out of it and that leads to the second point, which is – actually could produce a meaningful amount of highly enriched, I'm sorry, High-Assay, Low-Enriched Uranium over a longer period of time. 18:31 And there are of course much larger requirements that we hope will be supported by building out further on a much larger program that we also expect to see coming our way, but those are two reasons why actually moving to the second contract could be a very useful thing.

18:55 Great. Thank you. And then a follow-up just on the – on kind of the Russian exposure and the supply for TENEX, I know it's a meaningful produce, but how is that, sort of, you know how do you mitigate that risk in the near-term and what are your sort of thoughts on some of the risk mitigation that you can do?

19:16 Well, even before this crisis, it's inherent in our business that we are always looking to diversify our sources, the supply from reading our SEC filings, of course, we have major supply arrangements with Orano, the French enricher. We have other arrangements besides and we are continually refreshing and updating that, obviously more recently with the events in Ukraine, we have doubled down on those efforts and continued to look at ways to move things around and we have people who are very good at, it’s a very diversified market with lots of pockets of different parts of the fuel components and so forth. And we're just continuing to do that as much as we can. 20:08 The other thing of course, we have done is, as you've seen over many quarters to continue to strengthen the balance sheet, including building up good cushion of cash. So, if there are disruptions that are requiring more cash or whatever to achieve the kind of diversification and mitigation that we need to, we have some of that as well. 20:33 So, we're just in a continual mode of continuing to diversify and find alternatives, but obviously the longer a disruption would go on, the more challenging that would become because, as, again, I'm sure you know, Russia accounts, and I said this in my opening remarks, 46% of world capacity and it's not like oil where you can just start pumping, it's not like a genie that you have a massive amount of enrichment pop-out onto the market when you rub a bottle or clap your hands. 21:08 So, it's a challenge not only for Centrus, it's a challenge for U.S utilities, it's a challenge for the whole industry. If 46%, it’s just common sense of world enrichment capacity is removed from the global market, there's just not enough enrichment left to power the existing fleet of world reactors worldwide. So, it's – we are a small part of a very large puzzle.

21:36 Great. Thank you for all the info. Turn it over.

21:39 Yeah.

21:42 Thank you. Our next questions come from the line of Joseph Reagor with ROTH Capital. Please proceed with your questions.

21:49 Hey, Dan and team. Thanks for taking the questions.

21:53Hey, Joe.

21:54 Okay. So, kind of following on the last question, I know you guys don't talk in specific numbers for legal reasons and other reasons, but if we think about this hypothetically, if Russia, let's say represents x amount of uranium supply this year, the efforts you've taken, what percent of that, whatever that x number is, do you think you could mitigate like over let's call it a six-month period?

22:27 Yes. Joe, I'm pretty sure that that gets to a little detail that and I’ll defer to Philip. I don't think we can get into that kind of detail on this call, but perhaps, Philip has any other insight.

22:44 Yes, I'll just say this. As Dan said in his comments and we said before, we do have a diversified supply capability that's not to say that there won't be an impact, but we think that we have the capability in the near-term. It all depends on how long it is Joe.

23:03 Okay. And then, maybe a different question. Obviously, the utilities are aware of this issue as well. Have you guys seen any indication that the utilities are interested in taking higher percentage than the expectation for the year divided by four early this year because there – because they're trying to build a domestic stockpile? I know you can't give specifics, but have you seen anything that indicates that?

23:37 Well, I would just say this. We have always remained and we are today in regular communication with our customers, about their needs and timing deliveries. There sometimes are discussions about moving things around, not only in this crisis frankly, but in other situations as well. Right now, there's a particular focus on it, but we're working with them to meet their needs, but I'm not in a position here to today to, sort of get very precise about quantities or timelines, etcetera.

24:11 Okay. I'll hop back in the queue.

24:17 Thank you. There are no further questions at this time. I would like to turn the call back over to Dan Leistikow for any closing comments.

24:27 Thank you, operator. This will conclude our investor call for the fourth quarter of 2021. As always, I want to thank our listeners online and our investors who called in. And we look forward to speaking with you again in the future.

24:41 Thank you. This does conclude today's teleconference. We appreciate your participation. You may disconnect your lines at this time. Have a great weekend.