Executive Summary / Key Takeaways

• Pivotal Domestic Enricher: Centrus Energy (LEU) stands as America's sole domestic, proven, and licensed enricher of advanced nuclear fuels, uniquely positioned to re-establish U.S. leadership in a critical global market amid a burgeoning nuclear renaissance.
• Proprietary Centrifuge Technology: The company's American Centrifuge technology, backed by over 3.5 million machine hours of successful operation, offers superior efficiency and performance, enabling the production of LEU, LEU+, and HALEU with minimal cost differential, forming a significant competitive moat.
• Strong Financial Position & Strategic Investments: Centrus reported robust Q2 2025 net income of $28.9 million on $154.5 million in revenue, with a consolidated cash balance of $833.0 million. Strategic moves include redeeming higher-yield debt, completing an ATM offering, and a $60 million investment in manufacturing readiness to accelerate future capacity expansion.
• Government & Commercial Tailwinds: The company is a key beneficiary of over $3.4 billion in congressional appropriations for domestic nuclear fuel production and growing demand from advanced reactors, SMRs, and even big tech companies seeking reliable, carbon-free power for AI and data centers.
• Backlog and Growth Potential: Centrus boasts a total backlog of $3.6 billion extending to 2040, including $2.2 billion in contingent LEU sales commitments, signaling strong customer confidence and future revenue streams contingent on securing public and private investment for capacity build-out.

The Dawn of a Nuclear Renaissance: Centrus's Strategic Imperative

The global energy landscape is undergoing a profound transformation, with nuclear power emerging as a critical pillar for energy security, decarbonization, and the insatiable demands of an AI-driven future. At the heart of this renaissance is Centrus Energy, a company uniquely positioned to reclaim America's leadership in uranium enrichment. Its journey, rooted in government operations and privatized in 1998, has culminated in its current strategic imperative: to leverage proprietary American technology and public-private partnerships to meet escalating national security and commercial energy needs.

Centrus's core business is bifurcated into two segments: Low-Enriched Uranium (LEU) and Technical Solutions. The LEU segment supplies nuclear fuel components, primarily Separative Work Units (SWU), to commercial utilities globally. The Technical Solutions segment focuses on advanced uranium enrichment, particularly High-Assay Low-Enriched Uranium (HALEU) for advanced reactors and U.S. government requirements, alongside specialized manufacturing and engineering services. This dual focus allows Centrus to address both the immediate needs of the existing reactor fleet and the future demands of next-generation nuclear technologies.

The American Centrifuge: A Technological Moat

Central to Centrus's investment thesis is its proprietary American Centrifuge technology. This advanced gas centrifuge system is not merely a component of its business; it is the foundational strength that differentiates Centrus in a market historically dominated by foreign, state-owned enterprises. The technology has been rigorously proven with nearly 3 million machine hours of successful operation during previous testing and technology demonstrations. This extensive operational history underscores its reliability and de-risked nature.

The tangible benefits of the American Centrifuge technology are significant. It can meet the full range of America's commercial and national security enrichment requirements, including LEU, LEU+, and HALEU, with little cost differential to deploy and operate any of these cascades. This versatility is a critical advantage, allowing Centrus to adapt its production to evolving market demands without significant retooling or investment. Furthermore, the company's centrifuge design is uniquely able to meet national security needs, a capability that foreign-owned enrichment facilities cannot provide. The ability to manufacture these centrifuges in the United States, relying on a secure, growing domestic manufacturing supply chain across numerous states, further enhances its strategic value and reduces exposure to geopolitical and tariff-related disruptions that could impact foreign competitors.

Industry Tailwinds: AI, Energy Security, and Policy Support

The market backdrop for Centrus is exceptionally favorable. The global nuclear industry is experiencing a resurgence, with 69 reactors under construction worldwide as of June 2025, half of which are in China. The International Energy Agency (IEA) projects global nuclear energy generation to grow by 18% by 2030 and 47% by 2040 under its Stated Policies scenario, and to more than double by 2040 under the Net Zero Emissions by 2050 scenario. This growth is driven by a confluence of factors, including the imperative for energy security, climate change mitigation, and the burgeoning electricity demands of artificial intelligence and data centers.

The U.S. administration has identified AI as a national security imperative, unveiling a $70 billion AI and energy plan that will likely necessitate nuclear power. Major tech companies are already making historic investments, with Meta Platforms (META) striking a 20-year deal to buy nuclear power from Constellation Energy (CEG), and Amazon (AMZN) committing $500 million to deploy X-energy's HALEU-fueled reactors. These private sector commitments, alongside significant government support, underscore the mounting and lasting need for nuclear fuel. Congress has appropriated over $3.4 billion to jumpstart U.S. nuclear fuel production, including $700 million specifically for HALEU from the Inflation Reduction Act. This federal investment, coupled with the U.S. ban on Russian LEU imports by 2028, creates a compelling market opportunity for Centrus to replace approximately 25% of enriched uranium currently sourced from Russia.

Operational Excellence and Financial Fortitude

Centrus's recent financial performance reflects its strategic positioning and operational effectiveness within this dynamic market. The company reported a net income of $28.9 million on $154.5 million in revenue for the second quarter of 2025, compared to $30.6 million on $189.0 million in revenue in Q2 2024. For the six months ended June 30, 2025, net income was $56.1 million on $227.6 million in revenue, a significant increase from $24.5 million on $232.7 million in revenue in the prior year period. This improvement was primarily attributable to a $46.0 million increase in gross profit, an $11.8 million gain on the extinguishment of long-term debt, and a $10.1 million increase in investment income, partially offset by higher nonoperating benefit expense, income tax, and interest expense.

LEU Segment: Steady Revenue, Strong Margins

The LEU segment, which typically generates the majority of Centrus's revenue, experienced a 26% decrease in Q2 2025 revenue to $125.7 million, primarily due to a reduction in uranium sales volume and a 27% decrease in SWU sales volume. However, this was partially offset by a 24% increase in the average price of SWU sold. Despite the lower volume, gross profit for the LEU segment surged by 54% to $50.7 million in Q2 2025, and by an impressive 144% to $81.9 million for the first half of 2025. This strong margin performance is a testament to the favorable composition of contracts and the cost basis of inventory at the point of delivery, reflecting the company's ability to capitalize on market pricing trends. The company's backlog for the LEU segment stands at approximately $2.7 billion as of June 30, 2025, extending to 2040, including $2.2 billion in contingent LEU sales commitments, with $1.8 billion already under definitive agreements.

Technical Solutions: HALEU Production and Government Contracts

The Technical Solutions segment demonstrated robust revenue growth, increasing by 48% to $28.8 million in Q2 2025 and by 28% to $50.6 million for the first half of 2025. This growth was primarily driven by a $9.1 million increase in revenue from the HALEU Operation Contract in Q2 2025. Centrus achieved a significant operational milestone by successfully delivering 900 kilograms of HALEU to the Department of Energy by June 25, 2025, completing Phase 2 of the HALEU Operation Contract on time. The DOE further extended the contract through June 30, 2026, by exercising Option 1a of Phase 3, valued at approximately $110.0 million. This continuous production and contract extension validate Centrus's de-risked technology and its ability to meet critical national needs. The segment's backlog is approximately $0.9 billion, extending through 2034, including funded and unfunded amounts related to the HALEU Operation Contract.

Strengthening the Balance Sheet for Growth

Centrus has proactively strengthened its financial position to support its ambitious growth strategy. As of June 30, 2025, the company held a consolidated cash and cash equivalents balance of $833.0 million. This strong liquidity position is generating considerable investment income, which reached $8.0 million in Q2 2025, tripling the prior year's amount.

Strategic financial moves include the redemption of all $74.3 million of its higher-yield 8.25% Notes in March 2025, resulting in an $11.8 million gain on extinguishment. The company also completed an At-The-Market (ATM) offering, generating $140.1 million in net proceeds in the first half of 2025.

To accelerate its manufacturing capabilities, Centrus announced a $60 million investment over 18 months in November 2024 to resume centrifuge manufacturing activities and expand capacity at its Oak Ridge, Tennessee facility. This investment is a "jump start" for the 42-month timeline to bring the first commercial cascade online, contingent on government funding. Furthermore, Centrus secured a $62.4 million 48C clean energy credit allocation for its Oak Ridge facility in January 2025, which it expects to monetize for cash. These initiatives underscore Centrus's commitment to self-funding readiness while awaiting substantial government allocations.

Competitive Landscape: America's Unique Position

Centrus operates in a highly specialized and strategically vital market, facing competition from global players and unique domestic advantages. The uranium enrichment segment of the global nuclear fuel market is oversupplied when Russian capacity is included but significantly undersupplied without it, creating a critical need for new, non-Russian supply.

Against Global Giants: Scale vs. Technology

Centrus faces significant competition from major LEU producers, many of whom are wholly or partially government-owned foreign entities. Key competitors include Cameco Corporation , Uranium Energy Corp. , Energy Fuels Inc. , and Denison Mines Corp. .

• Cameco (CCJ): As a leading global uranium producer with diversified operations, Cameco boasts a larger scale, which typically translates to stronger cash flow generation and potentially more stable profitability. Its gross profit margin for 2024 was 34%, with a net profit margin of 5%. Centrus's gross profit margin (TTM) is 36.05%, with a net profit margin (TTM) of 23.99%, suggesting strong profitability in its specialized segments. While Cameco leads in overall market positioning due to its extensive global presence and mining assets, Centrus's American Centrifuge technology offers significantly greater efficiency in enrichment processes, appealing to customers prioritizing technological innovation and energy security.
• Uranium Energy Corp. (UEC) & Energy Fuels Inc. (UUUU): These companies primarily focus on uranium mining and processing. While they may have an edge in cost-effective mining operations and broader revenue streams from diversification (Energy Fuels into rare earths), Centrus's enrichment services offer notably higher technological capabilities, providing superior precision and scalability for fuel fabrication. Centrus's gross profit margin of 36.05% (TTM) compares favorably to UEC's 17% and UUUU's 28% (2024 annual), highlighting its value-added services.
• Denison Mines Corp. (DML): Denison's exploration-heavy approach contrasts with Centrus's operational enrichment focus. While Denison may have advantages in raw material cost leadership, Centrus's technology offers faster processing and better performance in high-demand scenarios, providing a unique value proposition for utilities requiring reliable fuel supplies.

Centrus's competitive advantage lies in its technological differentiation and its unique U.S.-centric position. While it may lag some competitors in sheer operational scale or diversification, its focus on advanced, efficient enrichment technology allows it to capture specialized, high-value contracts.

The Domestic Advantage: Licenses, Supply Chain, and National Security

Centrus is uniquely positioned as the only company with an American technology, American workforce, and American supply chain that enriches uranium today. It is one of only two NRC licensees for LEU production and the only NRC licensee for HALEU production. This regulatory moat is substantial, as obtaining such licenses takes years and tens of millions of dollars, creating a significant barrier to entry for new players.

Furthermore, Centrus is the only enricher that manufactures its centrifuges in the United States, utilizing a growing network of American suppliers. This contrasts sharply with European competitors whose supply chains are 100% foreign-based, making them vulnerable to geopolitical disruptions and tariffs. The federal government's requirement for U.S.-origin enrichment technology for national security missions further solidifies Centrus's indispensable role, as commercial facilities using foreign technology cannot support these critical defense needs.

Barriers to Entry and Indirect Pressures

The uranium enrichment industry is characterized by extremely high capital requirements, stringent regulatory hurdles, and the need for deep technological expertise. These barriers protect Centrus's market position by limiting the emergence of new direct competitors. However, indirect competition from alternative energy solutions, such as solar, wind, and advanced battery storage, could impact the long-term demand for nuclear fuel if these alternatives offer significantly lower costs or easier implementation. Centrus mitigates this by emphasizing nuclear's reliability and carbon-free nature, which are increasingly valued by utilities and tech giants alike.

Outlook and the Path Forward: A Public-Private Partnership

Centrus's outlook is one of cautious optimism, underpinned by strong market tailwinds and a clear strategic roadmap. The company is actively pursuing a public-private partnership model to scale its enrichment capabilities, leveraging the $3.4 billion in congressional appropriations alongside private capital and customer commitments. The goal is to deploy LEU enrichment alongside HALEU production at its Piketon, Ohio facility, creating cost synergies and expanding revenue opportunities.

Management anticipates continued rapid growth in the nuclear industry, driven by government actions and private investments. The company's technology is deployment-ready, and its $60 million investment in manufacturing readiness is designed to accelerate the 42-month timeline for bringing the first cascade online once government task orders are issued. Centrus expects to receive tangible task orders from the government over the next six to twelve months to continue this trajectory. The exercise of Option 1a for the HALEU Operation Contract through June 30, 2026, with a target cost of $99.3 million and a fee of $8.7 million, provides concrete near-term revenue and operational stability.

While Centrus does not provide specific quantitative financial guidance, management expects margin levels to remain within the range seen over the past few years, with annual results being more indicative of progress. The company's growing backlog, including the recently secured $0.1 billion in contingent LEU sales commitments in July 2025, reflects strong customer appetite for new American supply and competition.

Key Risks on the Horizon

Despite the promising outlook, Centrus faces several pertinent risks. Geopolitical conflicts, particularly the war in Ukraine, pose ongoing challenges to the TENEX Supply Contract. While Centrus has secured waivers for 2024 and 2025 Russian LEU imports and TENEX has obtained specific export licenses for pending orders, the long-term certainty of Russian supply remains a concern, especially for 2026 and 2027 waivers. The company's reliance on TENEX for over half of its expected LEU deliveries through 2027 highlights this vulnerability.

Furthermore, the timely allocation of DOE funds and the issuance of major task orders under the IDIQ contracts are critical. Delays or insufficient funding could impact Centrus's ability to deploy its American Centrifuge technology at scale. The Executive Order 14154, pausing federal funding distribution, introduces uncertainty regarding the timing and outcome of these allocations. Increased LEU imports from China and potential new tariffs on critical minerals or shipping could also impact costs and competitive positioning.

Conclusion

Centrus Energy stands at a pivotal juncture, uniquely positioned to capitalize on the burgeoning nuclear renaissance. Its investment thesis is deeply rooted in its proprietary American Centrifuge technology, which offers unparalleled efficiency and versatility in producing both LEU and HALEU. This technological leadership, combined with a robust balance sheet and strategic investments in manufacturing readiness, positions Centrus as the indispensable domestic solution for America's energy and national security needs.

The company's strong financial performance, evidenced by significant gross profit growth and a healthy cash balance, reflects its operational effectiveness and ability to navigate market dynamics. With a substantial backlog and strong customer commitments, Centrus is poised for significant growth, contingent on the timely execution of public-private partnerships. While geopolitical risks and funding uncertainties remain, Centrus's unique competitive advantages—its proven technology, domestic supply chain, and regulatory licenses—provide a compelling narrative for investors seeking exposure to the re-industrialization of America's nuclear fuel cycle. The confluence of government policy, private sector demand, and technological superiority underscores Centrus's critical role in powering America's future.