Second-quarter profits rose sharply at nuclear-fuel broker Centrus Energy, Bethesda, Md., as Russia’s war against Ukraine made uranium more expensive and spooked some buyers into locking in the current price, the company’s CEO said Friday.
“There’s an advantage to buying sooner if it’s going to be cheaper,” Daniel Poneman, Centrus’ CEO, said Friday during a conference call with investors. “Because of all of the uncertainty in the supply scenarios, there’s just a pure, frankly, straight energy security aspect to this [and] people are trying to lock in long-term supplies.”
Overall for the second quarter of 2022, Centrus posted net earnings of just under $37.5 million, or $2.51 a share, up from about $11 million, or $79 cents a share a year ago. Company revenue increased almost 60% to roughly $99 million from about $62.5 million a year ago.
Driving the increase nearly singlehandedly was Separative Work Unit revenue in Centrus’ Low-Enriched Uranium segment, the company wrote its latest earnings press release. Second-quarter revenue for this flagship segment, which represents uranium fuel sold to utilities, was roughly $85.5 million, about 90% higher than the $45 million recorded in the year-ago quarter.
In a presentation to investors, Centrus wrote that the Russian invasion of Ukraine in February caused a “dramatic rise in market prices for uranium enrichment.” Much of the uranium Centrus brokers to its customers comes from overseas, including from Russia.
Also in the low-Enriched Uranium segment, there was no quarterly Uranium revenue, which represents sales of natural uranium to traders and utilities. The company also had no Uranium revenue in the second quarter of 2021.
In the Technical Services segment, quarterly revenue fell about 20% to some $13.5 million from just over $17 million in the 2021 quarter. The segment is responsible for enrichment-technology development, including the cascade of AC100M centrifuges built at DOE’s Portsmouth Site near Piketon, Ohio, to make high assay low enriched uranium (HALEU) for DOE’s Office of Science.
On Monday, bids were to be due for a potentially three-year contract to operate a 16-machine, HALEU-capable AC100 enrichment cascade Centrus built at DOE’s Portsmouth Site near Piketon, Ohio, under a sole-source, 80-20 contract awarded in 2019 and now worth about $140 million.
The winner of the cascade completion contract that DOE officially opened to all offerors in June would be on the hook to finish Centrus’ cascade and use it to produce 900 kilograms of HALEU, which by mass would contain 19.75% of the Uranium 235 isotope. That is the uppermost boundary of what is considered low-enriched uranium.
Under an extension awarded this year, Centrus has until November to bring the Portsmouth cascade to the brink of operations. The winding down of the current contract was mostly behind the decrease in revenue in the Technical Services segment, Centrus said.
Centrus’ AC100 technology was one of two core technologies the National Nuclear Security Administration was considering using as the basis of a new domestic uranium enrichment plant that could be ready by the 2050s or so to produce uranium for use in nuclear weapons programs.
