Centrus Energy Corp. (LEU) Q2 2026 Earnings Report, Transcript and Summary

Good morning, ladies and gentlemen, and welcome to the Centrus Energy Q2 2026 Earnings Call. [Operator Instructions] This call is being recorded on Thursday, August 6, 2026. I would now like to turn the conference over to Neal Nagarajan, Head of Investor Relations. Please go ahead, sir.

Good morning. Welcome, and thank you to all of our callers as well as those listening to our webcast. Today's call will cover the results for the second quarter 2026 ended June 30. Today, we have Amir Vexler, President and Chief Executive Officer; and Todd Tinelli, Senior Vice President, Chief Financial Officer and Treasurer. This conference call follows our earnings news release issued yesterday. We have filed a report for the second quarter on Form 10-Q earlier today. 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. I would like to remind everyone that certain information we may discuss on this call today may be considered forward-looking information that involves risks and uncertainty, including assumptions about the future performance of Centrus. Our actual results may differ materially from those in our forward-looking statements. 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. The forward-looking information provided today is time-sensitive and accurate only as of today, August 6, 2026, unless otherwise noted. Please note that we report results using non-GAAP financial measures, which we believe provide investors with additional understanding of the company's financial performance as well as its strategic financial planning analysis and period-to-period comparability. A reconciliation to the most directly comparable GAAP measurements is included in the Financial Results section of our earnings release. 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. Thank you for your participation, and I'll now turn the call over to Amir. Amir?

Thank you, Neal, and thank you to everyone on the call today. We reported strong financial and operational results for the second quarter of 2026 that were boosted by tailwind growth across all of our major addressable markets, existing and growing commercial LEU, national security and HALEU. These developments continue to underscore the growing imbalance in uranium enrichment supply and demand and are reflected in the continued growth in published LEU pricing. And by signing the DOE's enrichment award, we have unlocked substantial nondilutive, non-debt funding to advance our commercial centrifuge build-out program. The funding helps derisk our build-out and advances our progress to first-of-a-kind costs while creating meaningful jobs across this nation. Let me first walk through the demand side of that equation. We are witnessing strong demand tailwinds in our primary market, global commercial LEU to support baseline electricity growth for existing and proven Gen 2 and Gen 3 reactor designs. In the U.S., the NRC recently proposed multiple regulatory changes and amendments that have the potential to further stimulate the industry's growth. If finalized, these changes could expedite new nuclear capacity coming online while lowering development costs for operators. Furthermore, the newly released American nuclear supply chain loan program seeks to help finance and accelerate the deployment of new large-scale nuclear reactors across the United States. Meanwhile, power upgrades and restarts of existing nuclear facilities continue to drive more nuclear energy coming online and subsequent LEU demand. International LEU demand is concurrently set to increase across a number of regions. In Europe, Sweden and the Netherlands, are focused on making new nuclear developments possible, while Belgium is looking at ways to restart shuttered reactors. And in Asia, we see multiple areas of growth. In April, for example, TEPCO brought back online the 1,300-megawatt Kashiwazaki reactor. Turning to the government market. We continue to see growing demand signals for enriched uranium across various departments as agencies explore avenues to add nuclear power to their energy generation plans. And in the national security market, we continue to work with the NNSA on its intent to sole source certain enrichment activities from Centrus. Recall that Centrus is the only viable production-ready technology that can meet national security needs. Combined, these are strong signs of potential growth in the size and duration of the government market. We are simultaneously seeing signs of growth in the HALEU market, where 3 of 4 reactor designs that reach criticality ahead of DOE's 4th of July deadline are fueled by HALEU. We also believe that potential Department of War funding could help further reduce their timelines. As a reminder, HALEU represents an incremental growth opportunity for Centrus and is a source of potential near-term capital from prepayments. Because the centrifuge is multifunctional, any funding, whether related to LEU, national security or HALEU advances Centrus through first-of-a-kind costs. Now let's shift to our financial results for the quarter. As many of you know, there can be a significant amount of variability quarter-to-quarter due to the nature of our business. And as such, we believe our annual results are more indicative of progress made in our LEU and CTS businesses. In the second quarter, we achieved $176.1 million in revenue, a gross profit of $49.9 million, operating income of $10.4 million, net income of $16.8 million and diluted earnings per share of $0.77. Adjusted net income and adjusted diluted earnings per share were $38.7 million and $1.77 per share, respectively. Turning to our commercial backlog. We are starting to see strong order momentum from the demand signals I referenced earlier, coupled with our build-out progress. We grew our backlog to $4.5 billion that extends through 2040. This is comprised of $3.7 billion in our LEU segment and $0.8 billion in our Technical Solutions segment. The LEU segment backlog is broken down between $0.7 billion of broker-dealer backlog and $3 billion in contingent LEU and HALEU enrichment sales. Todd will discuss our results in more detail. Operationally, we have made meaningful progress throughout the quarter as we remain focused on restoring America's ability to enrich uranium at scale, including the signing of our U.S. Department of Energy $900 million task order that we received earlier this year. The award will support deployment of large-scale production capacity as part of our multibillion-dollar LEU and HALEU capacity expansion. This marks another significant milestone in our expansion as we pivot from a technology demonstration contract to a new larger contract that supports commercial scale production. We're proud to have completed all HALEU production requirements under our existing demonstration contract with the DOE 2 weeks ahead of schedule. Since we've begun our HALEU operations contract, we have contractually produced nearly 2 metric tons of HALEU UF6 for the government. While the first new capacity from this transition is expected to come online by 2029, in the interim, we're looking -- we're working with the DOE on agreements to enable the company to privately operate the existing 16-centrifuge HALEU cascade on a commercial basis. With the past quarter funds as well as cash generated from our existing broker business and strong cash balance, we have now met the financing contingency for our more than $3 billion of customer contracts for the purchase of LEU and HALEU. Another key milestone in derisking and advancing our ongoing multibillion-dollar expansion. Another meaningful achievement for Centrus this quarter was the signing of a letter of intent with Oklo for Centrus to supply HALEU to power up to 5 Aurora powerhouses for multiple years starting in 2029. We are now signing and locking in HALEU fuel commitments from offtakers. And more recently, we announced an offtake contract for HALEU with X-energy. This marks an important step towards ensuring reliable HALEU supply for next-generation reactors and validates our first-mover advantage in the HALEU market. Our HALEU offtake commitments generally include prepayment to Centrus, which will be further negotiated in a future definitive agreement. These prepayments are another source of nondilutive, non-debt funding for our expansion and is a structure we intend to utilize in future HALEU offtake contracts. We also continue to make progress with our supply chain partners, including locking in large commitments to help insulate us from price fluctuations and stabilize costs. We have finalized contracts with approximately 75% of the suppliers we have identified as critical. We also continue to evaluate M&A opportunities in our supply chain that align with our long-term growth strategy and create value for our shareholders. In the second quarter, we made meaningful progress in our workforce additions in both Piketon and Oak Ridge. Finally, I'm also proud that in July, Centrus was invited to join the S&P SmallCap 600 Index, reflecting our role in advancing U.S. energy security and strengthening America's nuclear fuel supply chain. Now moving on to guidance. We are reaffirming our 2026 annual guidance for total company revenue of $450 million to $500 million, total capital spend in the range of $350 million to $500 million, finalizing contracts with 100% of the partners we deem critical, a release of a certified for construction package and at least 100 net new employees hired at our Oak Ridge facility. Simultaneously, given the quarter's progress, we are raising our 2026 annual guidance for Piketon workforce additions from over 100 net new employees to over 175 net new employees. And finally, we are excited to announce that we plan to have our first centrifuge completed at our Oak Ridge facility sometime in 2026, an important accomplishment and milestone that demonstrates that our supply chain has come together. I will now turn the call over to Todd and return with some final thoughts and comments. Todd?

Thank you, Amir, and good morning to everyone on today's call. Let me walk you through our results. Our results were in line with our internal projections and reflected not only the typical quarter-over-quarter shift in contractual mix, but also the beginning of the spend for our manufacturing program. As noted, I will be presenting financials on a quarterly and trailing 12-month basis. Total revenue for the second quarter was $176.1 million, an increase of $21.6 million or 14% versus the same period last year. TTM revenue was $473.9 million. The LEU segment generated $153.4 million in the second quarter, a 22% increase versus the previous period last year. SWU revenue in the quarter decreased by $25.7 million due to a 23% decrease in volume of SWU sold, partially offset by a 3% increase in the average price of SWU sold. Centrus also had $53.4 million of uranium sales in Q2. The Technical Solutions segment delivered revenue of $22.7 million in the second quarter, a $6.1 million or 21% decrease over the previous period due primarily to a $5.9 million decrease in revenue from the HALEU operations contract. Centrus generated gross profit of $49.9 million and $112.1 million for the second quarter in TTM, respectively, compared to a gross profit of $53.9 million in Q2 2025. The LEU segment's second quarter cost of sales of $101.8 million increased year-over-year by 36% or $26.8 million, driven by an increase in uranium sales in Q2 2026. Uranium costs increased as a result of increase in the volume of uranium sales. SWU costs decreased 23% as a result of lower SWU volumes, partially offset by a 13% increase in the average cost of SWU sold versus Q2 2025. The Technical Solutions cost of sales of $24.4 million decreased $1.2 million or 5% from Q2 2025, primarily attributed to the HALEU operations contract. The company generated net income of $16.8 million and $38.7 million of adjusted net income in the second quarter compared to net income of $28.9 million and adjusted net income of $34.5 million, respectively, in Q2 2025. On a fully diluted basis, this equates to second quarter 2026 earnings per share of $0.77 per unit and an adjusted earnings per share of $1.77, respectively, compared to $1.59 and $1.90, respectively, for Q2 2025. On a trailing 12-month basis, Centrus generated net income of $48.5 million and adjusted net income of $92 million, respectively. The second quarter net income decrease was primarily attributed to a $12.8 million increase in SG&A costs, driven by an increase in stock compensation costs and a $7.5 million increase in advanced technology costs in Q2 2026. This was partially offset by an $8.3 million increase in investment net income for Q2 2026. Second quarter adjusted net income includes $10.6 million of gross expenses in our advanced technology costs and $17.7 million in stock compensation costs, which combined and tax adjusted equals $21.9 million. The advanced technology costs include short-term noncapitalized costs related to the expansion of our operations in Piketon and Oak Ridge that cannot be capitalized as they are associated with manufacturer readiness and security training ahead of the build-out. Please refer to the financial results section of our earnings release issued yesterday for a reconciliation of net income and adjusted net income. Going forward, we continue to expect to have a certain level of these types of expenses flow through our income statement as we continue our pre-preparations. Centrus backlog across both segments grew to $4.5 billion at the end of the second quarter and extends out to 2040. The growth was driven by an approximate $600 million increase in LEU and HALEU enrichment sales in the LEU segment. Of the approximate $3 billion in the segment's enrichment backlog, $2.4 billion are under definitive agreements. Turning to our capitalization and capital spend. As a reminder, non-CapEx is attributed to cost and investments such as prepayments to supplier or our growth costs associated with our manufacturing and pre-preparations. In the second quarter, we had a total capital spend of $82.2 million with $71.6 million coming from CapEx and $10.6 million classified as non-CapEx and comprised of the aforementioned advanced technology cost. Going forward, we continue to expect the pace of our CapEx and non-CapEx spend to accelerate throughout the year. We finished the second quarter with $1.9 billion in unrestricted cash using our ATM opportunistically to acquire proceeds of only $53.9 million. Importantly, all financial contingencies in our contingent LEU enrichment backlog have now been removed. We continue to feel confident in our existing cash balance, and we believe we are sufficiently funded to meet our near-term capital requirements. As Amir noted, our progress to date have allowed us to raise our 2026 annual guidance for workforce additions in Piketon, Ohio to 175 plus, up from 100 plus. We are simultaneously reaffirming the rest of our financial and operational guidance for fiscal year 2026. And finally, we are excited to share that we expect our first centrifuge to be completed in Oak Ridge in 2026, an important milestone in our build-out. With that, I will turn the call back to Amir. Amir?

Thank you, Todd. I am proud of the great progress we made during the second quarter across our operations and strategic partners. So in summary, we are seeing strong demand signals across all 3 of our addressable markets, commercial LEU, national security and HALEU. This increased demand, coupled with the progress we have made in our centrifuge manufacturing program has led to increased momentum in our order book backlog. Importantly, the strong demand signals in commercial LEU have led to a very constructive pricing environment. Long-term LEU pricing continued its steady ascent year-to-date, while spot pricing remains at the high set last year. With market tightness anticipated for at least the near and midterm due to constrained supply, while demand continues to grow, Centrus is well positioned to benefit as a proven enricher. Looking ahead, we will continue to focus on our mission of restoring America's nuclear fuel supply chain and are encouraged by the continued strong trends in the broader macro environment that are supporting global nuclear power development. Finally, we are excited to host our first Investor Day in December at our American Centrifuge plant in Piketon, Ohio. We look forward to sharing more about our strategy, growth opportunities and long-term outlook at the event. With that, I will turn the call over to the operator for questions. Operator?

[Operator Instructions] The first question comes from Jon Windham with UBS Financial.

This is David Choe on for Jon Windham. Congrats on the progress this quarter. Just really quickly on the X-energy partnership. Could you just give us a sense of the cadence of any deliveries you expect to make? I know X-energy is planning to bring their first facility on kind of in the first half of '28. And then do you expect any of those volumes to come from the demonstration cascade that you're converting to commercial offtake?

Yes. Great questions. Thank you very much. Let's start with the X-energy question. So as you pointed out, we announced a very exciting agreement this morning. I'd like to just in generally frame it up as another great evidence and another data point to show that Centrus is quickly becoming a trailblazer and the go-to for HALEU. We're proud to be able to support some of the new development as far as the advanced reactors are concerned. And as you know, we have already a strong order book of LEU as well. I would like to remind you that the other exciting thing here is that these HALEU agreements include a prepayment as well, which is significantly helpful to us. Now to your specific question, unfortunately, I cannot provide too many details around deliveries and other specific terms under the contract. We are unable to provide that. But as I said, all in all, just as a general statement, it's exciting. It's definitive, which is very important, and we're looking forward to filling it.

The next question comes from Bill Peterson with JPMorgan.

I guess given that we're less than 18 months from the Russian import ban going into effect, have you seen any changes in buyer behavior? How should we think about any potential changes in financials, including your inventory or working capital, assuming customers prefer to prebuy. I mean, all this assumes there's no further waivers, but just kind of get a sense for how customers are -- if they're willing to sign at current level, market level for SWU or just of any change of customer behavior that you're seeing?

Bill, thank you for the question. So since you gave me a free hand in answering that question, let me give you general thoughts as to what we're seeing that probably cannot get into a lot of details around discussions we're having with customers. But you may have heard me say this before that we do see sort of tightness on the supply side towards the end of the decade. I do believe we're starting to see some of that. We're seeing strong momentum as far as customer interest generally in buying SWUs and turning specifically to Centrus for that as the newcomer and the new entrant into the market. So we're seeing very strong order momentum. And as I mentioned on the earnings call, the LEU pricing has had a very strong run-up until this point, which is very helpful to our business and further reinforces the investment that we're preparing to make here. So all in all, I think it's in line with past discussions that we were having as to where we see the market going and with all the added demand side to the equation and not a whole lot added to the supply side of the equation, at least not in the next year or 2, we're seeing that momentum play in favor of the sellers.

The next question comes from Eric Stine with Craig-Hallum Capital.

This is Luke on for Eric. So on the cost savings front, obviously, the partnership with Palantir is already proving to be extremely valuable. But can you just give us an idea of what the picture for further cost savings might look like throughout the life of your expansion project just in terms of comparable magnitude to what you've been able to achieve thus far since you're still just in early stages here, if there's any cost areas in particular that you're focusing on now?

And again, thank you for that question. You're actually pointing out to an area that is right at top of our priority list as we launch the project, as we commence manufacturing, as we start committing to commercial deliveries and to delivery of our centrifuges. It is extremely important, as I mentioned on the last couple of earnings calls, and I'll reiterate it here that we, in parallel, unlock efficiencies, cost savings and cost out efforts. We talked a little bit about our efforts together with Palantir, with some of our EPC partners. We have a lot of supply chain efforts that are aimed at yielding exactly what we're talking about here. The fact that we're able to lock in larger order books, the fact that we now have more clarity into customer base about the ordering allows us to make more leverage buys and realize savings on the supply side of our build. The other thing that I'll mention is in addition to utilizing and expecting supplier savings, we're also launching in parallel a lot of efforts internally to ensure that the manufacturing facilities that we're setting up and the processes that we're setting up have things like lean and things that utilize and maximize efficiencies. All of that will result in no doubt in cost savings. In terms of being able to give you details as to what it is numerically and what we're targeting, that's not something that we've talked about on this phone call, but I'll reiterate again that being able to lock in long-term agreements, large orders due to some of the clarity that I talked about results in significant cost savings.

The next question comes from Mark Shooter with William Blair.

Again on the Oklo and X-energy supply agreements. I understand you guys are limited on what you can disclose, but maybe a comparison may help bring out some context for us. If you look at the 2 HALEU contracts you recently signed with Oklo and X-energy today, can you highlight anything where they may be the same or differ maybe in size, timing, milestone structure? Is one further along, more definitive? Do you either have take-or-pay commitments?

Yes. So as you know, I'm fairly limited in the details that I can provide just because there are nondisclosure agreements, and we just typically not in the habit of revealing details of commercial agreements. However, there are a lot of similarities. And I was mentioning on the last couple of calls that we are starting to see a much greater ability from our customer base to actually commit to legally binding agreements, a definitive agreement, and that's what you saw with the X-energy agreement that we've announced, and that's what we're marching towards with Oklo as well. I do want to explain a little bit of the LOI dynamic versus a contract. The LOI is a step that precedes a definitive contract. This is an agreement over general terms as we see them. And once we get to that point, we're very close to finalizing contractual terms and conditions. So the similarities that we're seeing is you're seeing now some of these OEMs being able to commit and put fuel as a priority in their purchasing strategy. And we're seeing a maturing of the SMR market. And probably the most important thing I want to convey on this call is that we now are leading the pack, and we are the HALEU supplier. We now are the go-to for HALEU supplies. And as you know, we kind of view HALEU as a bonus. LEU is the sure business, the sure thing in the market. We've been focusing on that very strongly. HALEU has been really a big bonus for us. And I talked a lot about just generally the economies of scale. So we naturally are trying to not only get the HALEU but also get the LEU feed, which is extremely important to us for economies of scale. The third similarity that we're seeing is prepayments. We're seeing the willingness, the ability and our sort of strong preference for a prepayment, which adds significantly to the nondilutive capital that we're able to invest.

The next question comes from Vikram Bagri with Citigroup.

It's Ted on for Vik. I just wanted to come back to the guidance. And could you just maybe remind us what's driving the bookings there? The release had mentioned the potential roll-off of funding for the operations contract. So just wanted to understand where that may sit within the revenue guidance range.

Yes. So if you -- just a reminder, we -- on our revenue guidance, we increased it last quarter. One of the things that I just want to remind is our business has variability from quarter-to-quarter. So it's always wise. That's why we are talking about our earnings also in the trailing 12 months. We're not providing quarter-over-quarter guidance. However, we're maintaining our guidance for the year. We feel that along with our strong order book and the market maturing that we are able to maintain our guidance at the current sense for revenue and also CapEx. But additionally, another strong item is that we've increased our headcount around the Piketon facility, which shows our continued momentum and our build-out at Piketon.

I'd like to add to what Todd is saying. Just a very exciting announcement for us that obviously, we're communicating and transmitting here is that the first centrifuge is going to be completed in our Oak Ridge facility sometime in 2026 as we announced. Again, this is in line with the investment that we're making, the project planning that we have, and this is probably one of the most exciting steps towards realization and commencement of enrichment in Piketon.

Got it. And then one further question. Just in terms of the increase to the backlog quarter-over-quarter, are you able to just talk about what led to that increase in terms of the signing of the DOE awards contribute to that? Or are some of the more recent awards within there? And how do you actually define the backlog? Does it include any LOIs?

So unfortunately, I won't be able to get into a lot of details, but I will tell you this does not include the DOE. These are all commercial agreements. The increase in backlog has to do with commercial agreements. I cannot really go into any more detail than that.

The next question comes from Rob Brown with Lake Street Capital Markets.

Congratulations on all the strong progress. Just want to talk a little bit more about the offtake agreements. Maybe just sort of big picture, what's your thinking on the amount of your future capacity that you hope to have in terms of offtake agreements signed up? This, I guess, is a HALEU specific question. But how much of capacity do you hope to have offtake agreements signed for?

Yes. Thank you for the question. I think a few calls back, I was mentioning that really our strategy is depending on what our solid order book looks like, that would sort of determine the proportion of LEU versus HALEU that we're building. At this point, based on what we're locking in, we're not really changing the proportions of what we're building out. We are going to be building both. We have the flexibility to build both. Depending on the customers that step forward and are making firm commitments, that's what we're going to be building. And obviously, we're going to be looking for solid commitments for as long of a term contract as possible. And we kind of transmitted exactly those points to the market last year. And I'm happy to say that it's been kind of progressing exactly on how we transmitted it last year as well.

The next question comes from Ryan Pfingst with B. Riley Securities.

Maybe a follow-up on your work with Palantir and efficiencies more broadly. You discussed efforts in one of the previous responses on the cost side. But could you give more detail on progress you're looking to make on lead time reduction?

Ryan, thank you for that question. So you are correct. I think lead time is extremely important as an opportunity as well as cost out. The reason is we're backing into commercial agreements. And quite frankly, the commercial agreements are demanding even faster timelines. There is a gap in the market in terms of supply, as I mentioned to one of the earlier questions. So there is really a tangible and real reward to where we can come to market with enrichment capacity as soon as possible. So part of our work with Palantir, part of the work that we have with our EPC providers and other partners, meaning the large suppliers that I referenced earlier. I mean all of these critical suppliers, we have ongoing efforts and sort of projects that we kicked off, where we look at both lead times and we looked at cost out because lead times really translate into enhanced revenue and being able to realize revenue much earlier, much sooner. So we're focused on that. I hope I was able to answer your question with sufficient detail. I'm not sure that I can go into any more detail than that.

The next question comes from Nick Amicucci with Evercore.

I'm going to kind of focus back on the guidance too. Just as we think about the CapEx ramp through the back half of the year and the completion of the centrifuge. How should we think about kind of the cadence of the balance of the spend through the end of the year? And then as we kind of think about into 2027, where that CapEx number kind of filters out?

Thanks, Nick. Well, first I'll say is this project will continue to ramp up. We're not going to provide guidance just at this point for -- beyond 2026. But you -- as I mentioned, you see that we maintained our guidance for 2026 around the CapEx, you saw the most recent quarter in which we spent through either prepayments, capitalized labor or preorders. This project will continue to move forward. I think one of the items that I'll also point to that shows additional momentum is the increased headcount at Piketon. And what we believe is that accelerated spend and moving forward with our project in addition to increased customer demand and backlog allow us to move at a cadence that will meet our customer demands for their deliveries in the future period.

Nick, this is Amir. I just wanted to add something to what Todd was saying. It may be somewhat tangential to your question around cadence, but I mentioned it earlier and I just want to emphasize it again. So we did announce, and we're very excited about this that the first centrifuge is going to be completed this year. The intent, obviously, is here, we're building a manufacturing facility, which is a first of a kind in the United States to actually manufacture one of the most complex things humans have ever invented, which is the centrifuge. It is an impressive facility. We have top people, top engineers, top suppliers working on it. And we are excited at the fact that we're doing something that has never been done before. And it's coming together. The first centrifuge is the first concrete sign and proof of it. And obviously, the intention is that there is going to be a cadence of production that is fully synchronized with how we are supposed to deliver the product past the end of the decade. So although I cannot obviously give you guidance, as Todd said, in terms of numbers, but definitely look at it that way.

The next question comes from Jeff Grampp with Northland Capital Markets.

Maybe to build on the last topic. On the hiring front, you guys continue to make obviously positive progress on accelerating the hiring goals at Piketon. Can you touch on like the potential, I guess, derisking or accelerating of timelines to first cascade given the hiring acceleration? Are those correlated at all? Or can you touch on any other benefits to the business or timeline with the accelerated hiring?

Yes. So this kind of goes to the earlier question that I had, maybe 2, 3 questions ago, where I talked about not only cost savings, but improving lead times. And being able to improve lead times is tangible real benefit to the company in terms of our ability to get on the market quicker. So a lot of our efforts are associated with going faster and taking cost out. Some of the acceleration in adding the workforce that you referenced and as we've talked about in our guidance is directly related to that. Overall, I view that as a positive sign. I view that as something that is meant to absolutely ensure that we are delivering on our commercial commitments and potentially do better than that. But obviously, nothing new to announce at this point.

Yes. And I just will make one more point that when you think about the Piketon versus Oak Ridge headcount, as Amir said, we're setting up a kind of a first-of-a-kind facility in the United States to manufacture enrichment, that's where we're manufacturing the centrifuges, which are then shipped to be installed and stood up in Piketon. So all of these items are connected, where the supply chain, the lead times, the quicker that we can stand up the manufacturing and produce those centrifuges, they are be able to be shipped to Piketon. And currently, there is a lot of work that's being done at Piketon to be prepared for those centrifuges to be received and installed so we can begin enrichment. I hope many of you are able to attend the Investor Day in December in which we will actually be able to see the facility and understand it in a greater detail.

The next question comes from Joseph Reagor with ROTH Capital Partners.

A lot of my questions have already been touched on, but just kind of trying to put a bow on everything you guys just said. Is it still the expectation that commercial production would commence somewhere around late 2029 at Piketon? Or is that timeline potentially moving forward?

I would remove the adjective late and just say in 2029, that is our goal, absolutely. Are we -- to use your words, to put a bow on it, we are exploring opportunities and working hard to ensure that we can potentially compress timelines, but there is nothing to announce and no commitments at this point.

The next question comes from Sameer Joshi with H.C. Wainwright.

Could you talk about the SWU price dynamics here? I think if I heard right, the prices went up 3% during the quarter, whereas the costs went up 30%. What are the drivers for the costs growing up?

This is one of my favorite questions to talk about. Reason is that it really kind of summarizes the market in one number that everybody can look at. And obviously, opinions may differ, but it comes down to really basic economics. SWU prices have been escalating and have -- are still escalating due to the simple fact that you have demand that is outstripping supply. And more importantly, this is 2026, we still have 2, 3 more years or so until there is capacity that's going to start to come online from numerous projects that have been announced. And so I still think that my personal view is there is going to be -- continue to be constrained. We're going to continue to see some of the dynamics of being a seller's market, so to speak. So the simple answer is there has been no new capacity added. And not a day goes by, we're not hearing of more new reactors, operates, decommission reactors coming back online, new plants for new reactors. All of these require fuel. All of these require more fuel than they required before. Capacity remains the same. That's what you're seeing in the prices. And as I said, in the near term, I don't see that dynamic changing a whole lot.

Amir, can you also comment on what is driving the costs up concurrently? Because I would imagine it's mostly energy costs, but there are some other costs that are also clearly going up.

Well, the costs relate to a mix of our SWU and uranium costs. Obviously, each -- we can't comment on specific cost of each deal, but the inventory cost is a contractual mix and how we account for the inventory on the books. But again, we're seeing strong SWU prices. Our margins are coming in line with our expectations, and we continue to see market demand that will maintain those SWU prices.

The next question comes from Drew Scott with Needham & Co.

Can you guys talk about pricing structures in your offtake agreements that you guys are pursuing? Are you guys using the fixed price structures? Or are you guys indexing to some type of pricing? And if you think the market is tightening, how much offtake are you wanting to sign today?

Yes. I mean, currently, we can't comment on our pricing. I'm assuming you're talking around all offtake arrangements on the pricing. I just want to make sure I understand your question, Drew.

Yes.

Okay. Yes. We can't comment on the specific pricing of our contracts. Unfortunately, we have NDAs. I think one of the most important areas that will -- you see, and I think Amir mentioned this several times during the call is, these are the new contracts, and we also met financial -- our financial contingencies on our backlog is that they're definitive. And obviously, we passed our first-of-a-kind cost in our -- what we would call our initial build-out. And so the more offtake that we sign results in further economies of scale, and we're continuing to meet all of our customer demands. As you see, the HALEU market has matured quite nicely over the last 6 months, and we continue to be there to be the first HALEU provider in the market.

The next question comes from Christopher Souther with Truist.

Congrats on the progress, both in Piketon and Tennessee and with some of these customers. Maybe you can give us an update just on how discussions are going with utilities for LEU on potential long-term contracts now that we've met financial contingencies. How should we think about the cadence for incremental orders between now and 2029? It's great to see some of these SMR developers that are dependent on HALEU being proactive. But curious if you have a sense or target on the visibility we could continue to build between now and 2029. And if you're seeing more urgency for contracting from some of the traditional utility customers as well, given the pricing trends?

Excellent question. Thank you for that. I stated numerous times on our earlier calls that we were greatly appreciative and focused on the LEU market. That provides a strong foundation for our offtake backlog. These are solid commitments that are needed by reactors that are operating every day and will continue operating for decades. So they obviously are at the top of our list. The dynamics there is -- you pointed out correctly. The fact that we now have essentially no required contingency there that we have met across the threshold, that makes us a much lower risk start-up and a much lower risk enricher on the market. And I would expect that, that would give us a lot more play with utility. We are seeing generally more interest and inward look by utilities towards sort of the few enrichment providers that are in the market now. And I am sensing that there is a lot of focus on the new entrant to make sure that there is a -- so there is competition in the market. And we're getting a lot of advantages by being the new entrant and somebody that makes that investment and now represents a much lower risk than we would have, say, a few years ago. So all in all, the dynamics is unfolding in our favor, and we are in constant engagement with utilities that are looking to fulfill their LEU needs for years to come. I will add, and I said this before as well, that some of these discussions don't result in the linear sort of numbers that you can track quarter-to-quarter. They're lumpy and how they're being delivered. Some of these discussions take longer. Some of them take less time. But all in all, we continue to make that a priority from a commercial standpoint, the existing reactors and the existing LEU needs here in the United States and abroad.

Okay. So maybe just kind of following up there, like as far as contracts timing, understanding there's stuff that we won't necessarily see kind of in the interim, but is kind of 2028, 2029 kind of big circle dates for contracting from some of those? Or could we see some of that earlier?

Sure. I want to make sure I understand your question. So your question is, is there an opportunity to have delivery in 2028 like earlier than we announced.

No. As far as like longer-term contracts, are they kind of in a bit of a wait and see for some of that for incremental stuff beyond your current backlog? Or is there kind of upside to the backlog between now and 2029 materially?

Right, right. Yes. So I hope I'm answering your question. If I don't, please course correct me on that. The buying patterns of the utilities are very different from utility to utility. The larger utilities and the smaller ones have different strategies as to when they go to market. Some of them have different tolerance for risk or interest in incumbent versus new entrants. And as I said, the fact that we are now delivering centrifuge or we're going to be demonstrating that we're delivering, installing and we also have no financial contingencies. I believe that there is going to be a lot more interest from utilities that are in a wait-and-see mode, and there's quite a few of them there. Fully expect that.

Yes. One thing I'll add is that, obviously, the market anticipated the Russian ban and a lot of the market in the near term, utilities have secured their position. So discussions with the utilities and the RFPs are for the future periods and future periods when we plan to have capacity online. But I would just remind you that we have a strong broker business that has supported Centrus' cash flows over the past few years and continues to support Centrus cash flows, and we stand ready to meet any customer requests that may come in, in the near term.

The next question comes from Joseph Osha with Guggenheim Securities.

This is Peyton on for Joe. I guess just stepping back from the quarter here, as you transition the HALEU cascade from cost reimbursable DOE work to commercial operations, what is the fully ramped earnings power of the combined LEU and HALEU business look like? And if you could say a couple of things about what needs to go right over the next 18 to 24 months to get there, that would be great.

Yes. We don't provide any additional guidance on that. Obviously, the transition of the demo cascades to the commercial is demonstrating our ability to operate these cascades, our ability to produce HALEU that's out in the market. We're excited to be able to continue those cascades and provide commercial HALEU. Obviously, these require LEU feedstock. This will develop over time. But currently, we can't provide any additional guidance on this.

Yes. I'd like to add something to what Todd is saying, although not directly related to your question. And as you said, there's very limited amount that we can provide in terms of guidance here. But when you think about the intent of the demo cascade, it was really to demonstrate our technology and to derisk the technology. And what a great story where we are transitioning these demo cascade equipment right into commercial operations. I mean there's a lot to be read and concluded here as far as the demonstration of our technology, the capability of our technology and the high expectations that we have set for it to operate in the field. So I mean, all in all, we see this as very positive progress and development.

Thank you. There are no further questions at this time. I will now transfer the conference over to Neal Nagarajan, Head of Investor Relations. Please go ahead, sir.

Thank you, operator. This will conclude our investor call for the second quarter of 2026. As always, I want to extend a thank you to our listeners and our analysts online and those who called in. We look forward to speaking with you again next quarter and sharing more information on our upcoming Investor Day.

Thank you. Ladies and gentlemen, this concludes the conference call for today. Thank you for your participation. You may now disconnect.