BETHESDA, Md. - Centrus Energy (NYSE:LEU) Corp. (NYSE American: LEU) and Korea Hydro & Nuclear Power (KHNP) have announced a contingent supply commitment that could bolster the construction of new uranium enrichment capacity at the American Centrifuge Plant in Piketon, Ohio. This agreement, which covers a decade-long supply of Low-Enriched Uranium (LEU) to fuel Korea's reactors, is part of Centrus' efforts to secure $1.8 billion in sales commitments to support the expansion of its operations.
The commitments from KHNP and other customers are contingent upon finalizing definitive agreements and attracting significant public and private investment necessary for building the new capacity. Centrus' President and CEO, Amir Vexler, emphasized the importance of this commitment as a step toward a public-private partnership aimed at re-establishing a large-scale, U.S.-owned uranium enrichment capability.
KHNP's President and CEO, Whang Jooho, expressed support for the partnership, highlighting the potential benefits of new production from Centrus for the global nuclear fuel market, such as increased stability, supply diversity, and price competition.
Centrus has been working under contract with the U.S. Department of Energy and has already deployed a cascade of 16 advanced centrifuges at the Piketon facility. As of late 2023, the plant began producing High-Assay, Low-Enriched Uranium (HALEU), marking the first U.S.-owned, U.S.-technology uranium enrichment plant to start production in 70 years.
Expansion plans for the plant include scaling up with additional centrifuges to produce LEU for current reactors and HALEU for advanced reactors, contingent on obtaining sufficient funding and purchase agreements. This initiative is aligned with federal efforts to jump-start domestic production of LEU and HALEU, with Congress providing over $3.4 billion for this purpose.
Centrus Energy, a trusted nuclear fuel supplier since 1998, has supplied more than 1,750 reactor years of fuel, equivalent to avoiding 7 billion tons of coal emissions. The company is also advancing centrifuge technologies to restore domestic uranium enrichment capabilities.
This news is based on a press release statement, and it reflects the company's current plans, which are subject to risks and uncertainties that could cause actual future results to differ materially from those projected.
In other recent news, Centrus Energy Corp. has been granted a partial waiver from the U.S. Department of Energy (DOE), allowing it to import low enriched uranium (LEU) from Russia for deliveries already committed to its U.S. customers for the years 2024 and 2025. This follows the enactment of the Prohibiting Russian Imports Act, which bans imports of LEU from Russia starting from August 11, 2024. The DOE has deferred its decision regarding Centrus Energy's waiver request for 2026 and 2027.
Centrus Energy Corp. reported mixed first-quarter 2024 financial results, with total revenue of $43.7 million, a gross profit of $4.3 million, and a net loss of $6.1 million. In recent company developments, Centrus Energy's stockholders approved executive compensation and the election of seven directors in its annual meeting.
The U.S. Energy Department is seeking to purchase enriched uranium from domestic suppliers, which could benefit Centrus Energy Corp. The company has shown interest in participating in this initiative, aiming to reduce reliance on Russian imports and strengthen the American nuclear fuel supply chain. Centrus Energy Corp. is also actively pursuing funding to boost production of High Assay Low-Enriched Uranium (HALEU), a special uranium fuel planned for use in next-generation nuclear reactors in the United States. Despite security concerns raised by scientists about HALEU, the Biden administration supports its development through the Inflation Reduction Act.
InvestingPro Insights
In light of the recent supply commitment between Centrus Energy Corp. (NYSE American: LEU) and Korea Hydro & Nuclear Power, investors are closely monitoring the company's financial health and market performance. According to InvestingPro data, Centrus Energy has shown significant revenue growth over the last twelve months as of Q2 2024, with a 19.37% increase. This growth is further underscored by an impressive quarterly revenue growth of 92.07% in Q2 2024. The company's gross profit margin stands at 26.29%, indicating a healthy difference between the cost of goods sold and revenue.
When it comes to operational efficiency, Centrus Energy has an operating income margin of 21.67%, reflecting the company's ability to convert revenue into operating income effectively. However, it's worth noting that the stock has experienced a downward trend in its price total return over various time frames, including a -33.25% year-to-date return as of late 2024.
InvestingPro Tips suggest that analysts have revised their earnings estimates downwards for the upcoming period, which may be a point of concern for potential investors. Furthermore, the valuation implies a poor free cash flow yield, signaling that the company's share price might not be supported by the cash being generated. On the brighter side, Centrus Energy is expected to be profitable this year, and its liquid assets exceed short-term obligations, indicating a strong liquidity position.
For investors seeking a more in-depth analysis, there are additional InvestingPro Tips available at https://www.investing.com/pro/LEU. These tips could provide valuable insights into Centrus Energy's financial outlook and help investors make more informed decisions.
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