Good afternoon and welcome to NuScale’s Third Quarter 2024 Earnings Results Conference Call. Today's call is being recorded. All participants are in a listen-only mode. After the management 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. 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.

Thank you, operator. Welcome to NuScale's third quarter 2024 earnings results conference call. With us today are John Hopkins, President and Chief Executive Officer; and Ramsey Hamady, Chief Financial Officer. On today's call, NuScale will provide an update on our business and discuss financial results. We will then open 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 statements on Slide 2, the information set forth in the presentation 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 Form 10-K and subsequent SEC filings. 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. For nearly two decades, energy demand in the United States has remained largely flat. However, in the past year, the growth trajectory has inflected with power demand forecasted to accelerate aggressively. While this demand outlook is supported by onshoring trends boosting domestic manufacturing, electrically powered transportation in heavy industry, the most important driver is data centers. Technology companies are racing to secure massive amounts of uninterrupted energy to operate complex data centers and power increasingly sophisticated artificial intelligence. The demand for carbon-free energy is accelerating. This urgent need is at the heart of what NuScale technology can bring to this market. I'd like to take this time to reinforce our view that powering the technology industry is an integral part of our future. As depicted on Slide 3, data ciders are seeking more computing power faster and more powerful processing and enriched artificial intelligence, all requiring far more energy, which they need 24/7 with five nines, that’s 99.999% reliability. According to a recent McKinsey analysis, the portion of domestic power output consumed by U.S. data centers, is expected to increase from 3% to 4% in 2023 to 11% to 12% in 2030. In other words, U.S. data center power consumption will rise from 25 gigawatts in 2024 to over 80 gigawatts by 2030, requiring an investment exceeding $500 billion. What's more, hyperscalers have made commitments to customers and shareholders for meeting their accelerating power demands with carbon-free energy. Intranuclear, and in particular, small module reactors or SMRs. Energy source is compact, clean and constant. Nuclear is the superior choice. Coal and natural gas power generators have obvious carbon emission challenges. In renewables like wind and solar are still intermittent. While renewables are undoubtedly important in our clean energy future, nuclear and specifically SMRs…

Thank you, John, and hello everyone. Our financial results are available in our filings, so my focus will be on explaining major line Items. These Slide 11 for third quarter results and relevant factors impacting our financial position. All figures following are for Q3 2024 unless I state otherwise. NuScale's overall cash position improved during the period ending the third quarter with cash, cash equivalents, and short-term investments of $161.7 million, $5.1 million of which is restricted and no debt. We're pleased with the progress we have made strengthening our balance sheet and reducing our operating expenses over the course of 2024. The company's cash position is higher now than it was in 2023, driven primarily by the careful and measured utilization of our ATM program as well as disciplined budgeting and cost optimization efforts. For the quarter ended September 30, 2024, NuScale reported a revenue of $0.5 million and net loss of $45.5 million. This includes a non cash expense of $7.2 million related to an increase in the fair value of warrants outstanding. During the same period in the prior year, the company reported revenue of $7 million and net loss of $58.3 million, which included non-cash income of $11.1 million related to our warrants. Operating expense was $41.2 million compared to $93.9 million in the year earlier period. The year-over-year reduction in operating expense of $52.7 million reflects the Company's actions to reduce costs and operate more efficiently. Separately, during the third quarter we reported an operating loss of $41 million. This compares to an operating loss of $92.9 million in the third quarter of 2023. Looking forward, NuScale will maintain our financial discipline and remain focused on managing liquidity and risk. We're committed to sustaining a prudent liquidity reserve. I will conclude my remarks with a brief view of our capitalization summary on Slide 12. Additional information may be found in our SEC Form 10-Q and earnings release. With that, I'd like to thank you again for joining today and for your continued support of NuScale. We'll take questions. Operator?

Thank you. [Operator Instructions] Your first question comes from the line of Eric Stine with Craig-Hallum. Your line is open.

Hi everyone. Thanks for taking the question tonight.

Sure.

Hey, so I know, I mean this, I know this happened recently but just curious your thoughts on the FERC rejection of Talen in the Amazon Data Center. And obviously it would seem to me that it proves out the need for SMRs, incremental power, baseload zero emissions, et cetera. Just curious, I mean again, I know it's early, right, it just happened. But is that something that you expect to drive in further interest from your pipeline and new customers?

Yes, I think that FERC, it was quick and it was, I don't think it's over with the, FERC obviously wants to have electrons on the grid versus behind the meter. So it's still to pan out. I think it's too early in the process really to comment other than the fact I don't believe personally that it's going to be a hold up going forward in the market.

Got it. Is it a, I mean, because SMRs would be incremental power, to me that was the biggest thing, right. That part of the reason this was rejected, at least for now is because it would be taking electrons from someone who – someone else rather than incremental power at the site of use?

Yes, that's what I read. But I really don't know beyond what you read.

Okay.

The rationale behind it, so I'm sure we'll soon – things will occur within near-term, we'll have a better understanding.

Okay, fair enough. I guess, second one for me, just good to hear on the up rate progress or the expectation that it's on track for mid-2025. I mean, maybe just remind me what the importance of that for Part 52 approval when there is ENTRA1 or someone else goes through that process? And just curious also I know you've got a big pipeline. Are there customers who are kind of waiting on that up rate approval before moving forward?

Yes, I was with the NRC. We're in regular communications with them as you can imagine, frequently. I have what's called drop-ins who we visit with commissioners. In this particular case I also met with the Chairman Hanson and to your point, we are on schedule. We're hoping to get through the technical aspects here soon and but we're still on schedule to meet the NRC schedule of middle 2025, which we're looking about digitally timeframe, if not sooner. The importance of it is that as we went through the NRC process, as you recall, we submitted our designer certification application for 12 modules at 50 megawatts electric. And having gone through the process, through the NRC licensing of scaling up and modeling became to the realization that, that same machine could essentially, and we were conservative could push outwards towards 80 megawatts electric. And we felt the economics better supported 80 and also our customers were asking about an additional up to the 80 megawatts per unit. If you look what's happening today in the data centers now we were originally thinking on coal plant refurbishment. A lot of companies were asking for six modules. Today it's 12 modules and at a 12 module plant at 77 megawatts electric you're pushing pretty much a gigawatt size plant that's scalable. So this is very attractive to the customers we're in discussions with today.

Hey Eric, this is Ramsey. Just to add on, you mentioned as we work with large data center and tech companies and we're working with ENTRA1 Energy as they progress in their discussions with the large tech companies, and I haven't seen – I haven't heard feedback from them that anyone has delayed or feel a sort of reticence to progress discussions based on the upgrade, we're so far through the process. So it was a two-year process. We're looking down now around the last six or seven months. And you have to remember, out there in the market today, people are signing PPAs and making announcements with technologies that are nowhere near the stage of development that we are, and not downplay progress that those companies have made, and we're always hopeful and supportive of our peers. But our technology is much more further advanced and we're seeing people dive into PPAs with really just very theoretical designs at this point.

Yes. Okay. Thanks a lot.

The next question comes from Marc Bianchi with TD Cowen. Your line is open.

I guess, Ramsey, you just mentioned those other announcements. I was curious, was NuScale involved in some of those discussions? And were there any aspects of the way those arrangements were put together that are maybe, I don't know, not part of how you guys would want to have your business model put together. I'm just kind of curious your reaction to the details of those announcements?

Marc, look, I think those announcements are pretty varied. They go from Amazon making investment into [indiscernible] energy to Google signing. I think something resembling a PPA with Cyrus Power. So there's a pretty wide breadth of what's out there in the market. Again, as I said just now, to Eric, what we're doing is we're working with ENTRA1 as they progress those discussions. I haven't been – I don't have a relative comparison point between discussions that is progressing with their companies and these other groups. I do think that they're into model provides a different sort of comparison. So, Clayton are you on the line?

Yes, Ramsey. I'm here. So the ENTRA1 discussions with the tech companies are different in flavor. So all I can say is that they're still continuing and progressing. And we're obviously in a different place as far as our technology and where we are. So we're having, I would say, concrete discussions but different than what's been announced.

Marc, this is John, but let me add to that. And again, it bears out what we've been saying now for a few years. It's having these alphas, I'd call them or Tier 1s looking at nuclear in the way that they are, it's great for our industry. And the announcements they made, that's an option. A lot of it gets into what we're hearing is they need near-term deployability, but they're also looking at future states. So to me, those announcements just validates the fact that these large-scale companies are, in fact, looking at nuclear as a solution to what they're looking for future state and also near term. So we're in discussions with the same companies.

Okay. Great. The other thing that I noticed, which is there was a $20 million customer deposit announced in the quarter here when I look at the cash flow statement. Was that – is that related to RoPower? Or is there another customer involved there?

Marc, so that's in relation to RoPower and just our progress on the project with them. As I look at that, there's no first-time revenue. So revenue recognition is a different item. But as you know in our cash flow statement, there's a $20 million deposit. And what I think it points to is the fact that we're progressing in pre-engineering services and technology licensing, we're progressing towards deployment of our SMR modules, which is really the prize for us.

Yes, indeed, it is. The other one I had was just on the FEED study with RoPower. So we got that document, and it looks like kind of the time line there would have you with a Class III estimate in June of 2025, if I've kind of worked it out properly. Is that – should we be expecting any kind of an update around that time? Will we see – will we get any kind of indication of how the cost is looking for the project? Is that a milestone where I think back to the experience with UAMPS, the costs were changing and that ended up being something that got a lot of attention. Is there going to be some kind of an update related to that with this project? Or is it an entirely different process?

Well, it's a different process, Marc. I'm sorry. It's a different process. I was on the phone today with the CEO of SNN. And on CFPP, as you recall, those customers have the opportunity to opt in and opt out from a subscription. That's not in play here. We will keep you involved. We – right now, as I said, we are the subcontractor to Fluor Corporation, who's a prime. The FEED process is about a 12- to 14-month duration, at which time that Fluor and us were looking at developing the estimates to a Class III and also helping RoPower on the regulatory front. And then the final investment decision will be made in about a year's time frame from today. But yes, we will keep you appraised as we move forward.

Yes. All right thanks guys. I’ll turn it back.

Thanks, Marc.

The next question comes from Leanne Hayden with Canaccord Genuity. Your line is open.

Good evening everyone and thanks so much for taking my question. Just the first one from me. Given higher enrichment fuel momentum, government incentives and the recent hyperscaler commitments and the fuel that they intend to use, I'm wondering about your module fuel flexibility, i.e., could you use LEU+ or HALEU fuel to drive higher power output per module?

Great question. I'll have Clayton, who came out of 40 years of Framato. Clayton?

Yes. So we could use a higher blend to extend. However, where we're sitting today in our enrichment, we're comfortable to deliver a 21- to 24-month cycle. At this point in time, we don't necessarily see where we would want to go any higher based on the current design that we have certified. So we don't expect for this particular SMR design to go into the higher enrichments that you typically see in the Gen 4s with the higher levels of HALEU.

Understood. Just following up on that, do you think if you were to increase the uranium-235 enrichment in your fuel that it would have any impact in your passive safety mechanism and smaller EPZ?

Somewhat, but I think the limits that we've certified and projected we're maintaining that EPZ, and we're trying to – we don't want to exceed those boundaries. And again, it doesn't really make sense for our design based on current PWR and fuel supply that we're using to really go there. It's just – at this point in time, it's – the way we're certified, the way we're established, it fits our parameters. So – could you do it technically? Yes, but it has impacts on the overall design that we don't think are beneficial for our particular plant, the way we have it certified today and the way we anticipate using it in the market.

I think the other answer is we – that fuel is readily available. I mean Framatone is manufacturing of fuel in Richmond, and we don't see – unlike high-assay or HALEU fuel that still has to be manufactured, has to go through the licensing process. Fuel is not an issue for us because the 440 reactors around the world where advanced or light water reactors are using similar fuel.

Understood. Got it. Thank you both so much. I’ll jump back in queue.

You bet.

The next question comes from Max Hopkins with CLSA. Your line is open.

Hello guys? Can you hear me?

Yes.

Great. So I have a question, I don't know if you can provide clarity, but on this Department of Energy $800 million light water reactor program. Is that – obviously, there's the developers, the EPCs, the power plant. To bring that forward, do you guys need to sign a deal and then bid? Or can you attract a deal and then with the Department of Energy put together the team? How is that looking?

No, you have to put together – it's a cost share program. So whomever our partner is, a utility or an industrial, we would, in fact, put that team together, and it would be a competitive process. Clayton, you're chasing that. Anything to add?

No. I mean it's – to your point, it's putting a team together and submitting an application to which DOE will review all the different applicants and decide based on a lot of different parameters, how they want to perceive whether that's a single funded project or a dual-funded project. But yes, it's a combination of application combinations of different partners and different projects that they'll evaluate overall.

Okay. Thank you. And then one more, if you don't mind. Obviously, there's all the data centers talking about needing the power now and SMRs are years away at this point. Doesn't that lend itself to natural gas development right now? Is that fair to say?

It could. I don't see natural gas going anywhere. And – but if you look at the commitments that these Tier 1 AIs have made in decarbonization, looking at 2030 or 2040, it's tough to deal with when you're dealing with natural gas, but natural gas is an option.

Thank you.

The next question comes from Ryan Pfingst with B. Riley Securities. Your line is open.

Hey guys. Thanks for taking my questions. The first one, with the uprate approval expected in the middle of next year, can you just remind us, is that specifically for the six module design? And if it is, what's your expectation for getting approval for the 12 module design in terms of NRC-related costs or time lines there, given you already have the work done with the six?

Clayton.

Yes. So there's elements that are related to six, but there's also elements within the upgrade that apply to 12. And basically, when we do our first 12 module site, independent of the upgrade because the upgrade is more specific around the module, we'll do a site-specific license based on a 12 module site and whatever site parameters we have to evaluate.

Got it. And then, John, in the prepared remarks, you talked about it a little bit with the change of administration and nuclear has garnered really strong bipartisan support. But do you see kind of stronger support from a Trump administration and new programs given the Republican sweep that you might not have seen from the last administration?

It's really too early to say. I think if Vice President Harris administration had got in, we would have seen probably more regulations. I think with President Trump, we'll see trying to curtail and have less regulations. I do happen to know that having had a conversation with him previously in his last year, he was very pro-nuclear. And I'll leave it at that. If you think about what we constantly hear, it's about competition with state-owned enterprises in the international market. And for that to happen, we get – we have to have American technologies deployed and operational. So we're very hopeful. We'll see who this current President puts around him, which I think is absolutely key. And – but we're very – I'm hopeful that the answer is going to be absolutely. We will see an acceleration in advanced nuclear.

Thanks for taking my questions.

You bet.

This concludes the question-and-answer session. I'll turn the call to CEO, John Hopkins, for closing remarks.

Yes. Thank you, operator. As we've been talking, nuclear technology is poised to play a critical role in powering the global clean energy transition. We've already discussed numerous examples of technology companies with data centers to support moving decisively to secure, reliable carbon-free nuclear energy. And in this environment, we do truly believe NuScale is well positioned to commercialize our technology. Our SMR, as we said, has been certified by the U.S. Nuclear Regulatory Commission. We maintain industry-leading manufacturing readiness. And along with our global partner, ENTRA1, we are executing on a robust project development pipeline and we're very pleased with our progress and look forward to reaching our goals. And with that, I'd like to thank everybody on the call who has the interest in NuScale and participating today. Thank you.

This concludes today's conference call. Thank you for joining. You may now disconnect.