Good afternoon, and welcome to NuScale's Second Quarter 2023 Earnings Results Conference Call. Today's call is being recorded. All participants are in a listen-only mode. After managements' prepared remarks, there will be a question-and-answer session. [Operator Instructions] A replay of today's conference call will be available and accessible on NuScale's website at ir.nuscalepower.com. The web replay will be available for 30 days following the earnings call. A telephone replay will also be available for seven days through a registration link, also accessible on NuScale's website. At this time, for opening remarks, I would like to turn the call over to Scott Kozak, Director of Investor Relations. Please go ahead, Mr. Kozak.

Thanks, operator. Welcome to NuScale's second quarter 2023 earnings results conference call. With us today are John Hopkins, President and Chief Executive Officer; and Ramsey Hamady, NuScale's, Chief Financial Officer. On today's call, NuScale will provide an update on our business and discuss financial results. We will then open up the phone lines for questions. This afternoon, we posted a set of supplemental slides on our Investor Relations website. As reflected in the Safe Harbor on Slide 2, the information set forth in the presentation and discussed during the course of our remarks and the subsequent Q&A session includes forward-looking statements, which reflect our current views of existing trends and are subject to a variety of risks and uncertainties. You can find a discussion of our risk factors, which could potentially contribute to such differences in our SEC filings on Form S-1 and Form 10-Q. I'll now turn the call over to John Hopkins, NuScale's President and Chief Executive Officer. John?

Thank you, Scott, and good afternoon, everyone. On today's call, I'll cover our continued progress towards commercializing NuScale's SMR. This includes our momentum with our two committed customers as well as our business development activities, including customer pipeline expansion. I'll also provide an update on our financial results and outlook. So before we dive in, I want to take a moment to discuss the leadership changes announced recently as we progress from being a research and development-focused company, through advancing our commercialization and project delivery efforts. This transition is supported by incorporating important new skill sets throughout the organization, continuing with the appointment of our new CFO, Robert Ramsey Hamady. As we announced earlier this week, Ramsey brings an extensive portfolio of financial experience, including on the public company side. This includes previously serving as CFO of the U.S. and Canadian-listed industrial technology company, Western Magnesium Corporation, and working as an investment banker for JPMorgan and Lehman Brothers. Ramsey's distinct experience will be a huge asset to NuScale as we seek to deploy our technology across the globe. Importantly, our balance sheet remains strong and we look forward to maintaining our solid financial position under Ramsey's guidance as we continue to grow as a clean technology leader. Ramsey is with me here on the call today, and before we take your questions, I'll turn it over to him for a few minutes to say hello and introduce himself. We also announced two additional appointments. Our own Executive Vice President of Business Development, Clayton Scott, has been elevated to the role of Chief Commercial Officer. Clayton's deep familiarity with the intricacies of our growing business pipeline, combined with his decades of global experience, make him the perfect person to take on its important role as it's a pivotal time of growth…

Thank you, John, and hello, everyone. I'm honored to be joining my first NuScale earnings call today and thrilled to be part of an exciting, trailblazing company like NuScale, especially as the business moves deeper into such a critical part of its journey, the commercialization of SMRs. I've been following the company closely, and it's clear to me that NuScale's technology has the ability to completely reshape the energy sector, help combat climate change and fulfill the absolutely critical need for clean energy. This work is so important, and I could not be happier to be a part of it. I look forward to getting to know you all better soon. I'll now pass the call back to John to answer your questions. Operator?

[Operator Instructions] Your first question comes from the line of Marc Bianchi with TD Cowen. Your line is open.

Hey, thank you. I guess I wanted to start with trying to understand a little bit more around sort of the cash flow scenarios as you're exiting this year and then into 2024. I think if you hit the guidance here, you'll have maybe $150 million to $200 million of cash on December 31. And then there's – John, you mentioned the scenario with CFPP. If that ends up not going forward, I wanted to just clarify how much cash could be going out the door there. And then on the Appropriations, if the Senate version ends up happening, maybe that's sort of a way to think about a low-end case. What would that mean on a year-over-year basis in terms of your cash flows? How much cash flow is coming in fiscal 2024 versus – or fiscal 2023 versus fiscal 2024?

Yes, Marc, as it relates to projected cash for 2023 and implication for 2024, we're not really providing any specific guidance at this time. However, as I mentioned, we're – about $260 million of net cash, including, we did set aside the reserve of $60 million. And we did also, as I mentioned before, filed a Form S-3 that provides us the flexibility, if needed. At this point in time, as it relates to ATM, we see no needs. But I'll say we worked the Hill really hard this year and on both sides of the aisle. And I was extremely impressed that the – both on the House and Senate, what has come through, and if it is, in fact, approved, I think we're in a pretty good stead going forward as it relates to fulfilling the grants from the government and keeping the required cash filling out our award that we received as well as the UAMPS award. So if you don't mind, I'll just leave it at that.

Okay. Well, I guess then on the – I guess, part of the sort of outlook for 2024 relies on the signing of these three more customers that you've kind of got as one of your action plans. Is there a point where if we get – here we are in August, and we haven't seen anything announced yet? Is there a point this year if you haven't announced anything that then it starts to risk 2024? Or is the cash flow just so variable that the timing isn't quite as important as just however the cadence of milestones is or something like that?

Actually, Marc, what we're seeing and I commented before about, we're seeing a lot of activity. In fact, Clayton Scott right now is with a major utility in discussions. And a lot of this has been prompted by what we talked before. People are starting to come to realization of the impact of the Inflation Reduction Act, and they need to be in construction by 2032. So we're seeing a lot of activity customer-wise, both on the major utilities. But also I commented on, we're seeing – this market dynamics continues just to change in the fact that a year ago, I would not have anticipated what I call the industrials, which are, as I mentioned in my report, oil and gas, chemicals, large data centers, all trying to look at how to decarbonize themselves. And what we're finding is that with the emergency planning zone that we have, if you think of large industrials, typically, they're not in close proximity to a nuclear plant because if a nuclear plant would have tripped, they don't want to have business interruption occur to their facilities. However, with an emergency planning zone with – at that – the fence line, and then also not needing to be connected to the grid. And also another big area of interest is the fact that we're air dry cool. So the amounts of water, typically 14,000 to 20,000 acre feet, we're in the 400 to 600. We're gleaning a lot of interest. Here's the third leg of the stool, as I commented before. Many of these customers, they need 24/7 reliable clean energy, but they don't necessarily want to own a nuclear asset. So if we can come up with the model, which we're working on currently, have been able to help finance to do wraparound these customers, where the customers will provide us long-term power purchase agreements. And also in some instances, even the willingness to help us develop the cost, this is going to open the aperture significantly. And I'm hopeful in the coming quarters, we're going to be able to roll out exactly what I'm talking about. So we would have the ability to go in, in let's say, Baytown or Geismar, Louisiana, we have multiple industrials that share a fence line. If we could go off there, an energy solution, to provide them the energy requirements if it's for process heat or for hydrogen, ammonia, whatever it is, and where they share the fence line, provide those customers with what they need, and that is moving forward. So I'm pretty bullish that we're going to meet our three, if not more, customers by the end of this year.

Okay. That's great. I wanted to ask a couple more just on CFPP and RoPower. So as it relates to CFPP, we've got this 80% subscription level and the Class 2 cost estimate that both need to be sort of achieved by year-end. Can you talk to us if there's any more color around how those are going? And then what sort of time line should we be looking for to be getting updates on that? Is this something that would all be sort of coming together in December, January, kind of like it did this past year? Or could we be getting some nuggets before then?

Marc, we continue to make progress on CFPP. We – as I commented, they just submitted a Limited Work Authorization to the NRC review just a little early. This will authorize the early start constructions. As it relates to subscriptions, we are working with UAMPS because they are targeting 80% subscription for CFPP by 2023. And as I mentioned before, we believe there's three ways you can get it. Now the existing CFPP participants could increase their subscription levels. We believe they're undersubscribed currently. We can sign UAMPS members that are not participating. And as I mentioned before, there's a lot of discussions we're having right now with Western public utilities that are based in rapid coal retirement or they're looking at the expense of accessing natural gas. So we're working with them. And as it stands right now, things could change, but we see that they will continue to be our first customer where they will get the subscription. We believe the funding will come through, and we're working digitally to make that happen. From a timing perspective, we're watching it very closely. We have weekly conversations with our customer at UAMPS. So we're informing each other. We're trying to speak to each other. This is a near-term deployable project. And our time lines haven't changed. We're still looking at the 2029 COD, 2030 DOD time frame, which I believe is the only project in this country that's going to make that time line.

Okay. Great. And then just one more on RoPower. So I think its Phase 1 FEED is sort of the – it seems to me maybe that's the next piece to get updated. When should we be expecting an update there? And what sort of information – type of information would be revealed at that time?

Actually, I talked with the customer today, the CEO of Nuclearelectrica, Cosmin Ghita, in Washington, D.C. today in discussions. But you're right, we're in the late stages of completing the first FEED, and we're in advanced discussions on Phase 2. And as you know, Phase 2 consists of the preparatory work for contracting construction. And we've – we have begun engagement with the local suppliers. So we should be coming out here near term, I'd say, over the next couple of months on progress as it relates to completion of Phase 1 and going into Phase 2. But right now, the customer is very bullish. I commented before also that the U.S. government is in with RoPower or with Romania. We're seeing monies hopefully coming in from Japan, Korea, UAE to the tune of $275 million, and that's to advance the deployment of the SMR in Romania and for the funding for the second phase. And talking with the CEO, one of our Koreans has signed a term sheet for $75 million, and other monies looks to become the UXM – USXM is supporting this. And also, the DFC is supporting this. Finally, as you know, former OPIC, now the DFC, had a nuclear moratorium, which they've dropped. So there seems to be a lot of focus right now on ensuring that, that Romanian project continues to go forward. It's important to our country, and it's important to the Romanians. I'll be over there in September meeting with the Romanian Prime Minister and Energy Minister, and again, to talk about the progress of the project.

Great. Okay. Thanks John. I'll turn it back.

Marc. Thank you, buddy.

That is all the time we have today. I'd like to turn the call back to CEO, John Hopkins, for closing remarks.

Thank you, operator. As mentioned, we believe NuScale is well positioned as a first mover in the SMR space and poised to commercialize and deliver clean energy at scale. Nuclear technology, we believe, is essential to powering the global energy transition, and we are in the forefront of that effort with our work to deliver safe, scalable and reliable carbon-free nuclear power. We are pleased, as I stated, with our progress in 2023 across all fronts. And I look forward to what we will accomplish together throughout the remainder of the year. But I'd like to thank all of you for your interest in NuScale and participating on our call today. And we hope, as I stated, to see many of you at our Analyst Day in New York on October 6. Thank you, operator.

This concludes today's conference call. You may now disconnect.