Centrus Energy Corp. (LEU): Business Model Canvas [10-2024 Updated]

In an era where energy independence and sustainability are paramount, Centrus Energy Corp. (LEU) stands out with its innovative approach to uranium enrichment. This company leverages advanced technology and strategic partnerships to deliver reliable, cost-effective solutions for the nuclear energy sector. Explore how Centrus's well-structured business model positions it as a key player in the pursuit of clean energy and its commitment to supporting both domestic and international nuclear utilities.

Centrus Energy Corp. (LEU) - Business Model: Key Partnerships

Collaborations with the U.S. Department of Energy (DOE)

Centrus Energy Corp. has a significant partnership with the U.S. Department of Energy (DOE) centered around the HALEU Operation Contract. This contract is structured as a 50/50 cost-share agreement. The base contract value is approximately $150 million, with Phase 1 requiring around $30 million from both Centrus and the DOE to complete initial HALEU production operations. Phase 2 includes an expected contract value of approximately $90 million, contingent on Congressional appropriations .

Strategic alliances for HALEU production

Under the HALEU Operation Contract, Centrus is tasked with producing 900 kilograms of HALEU UF6 annually. The company began enrichment operations in October 2023 and made its first delivery of HALEU to the DOE in November 2023, marking a critical milestone in the partnership .

Contracts with uranium suppliers like TENEX and Orano

Centrus maintains strategic contracts with key uranium suppliers, including TENEX and Orano, which are crucial for securing the necessary uranium supply for enrichment processes. The company’s supply chain is designed to mitigate risks associated with uranium procurement, particularly given the geopolitical uncertainties that affect the global uranium market .

Partnerships with nuclear utilities for long-term supply agreements

Centrus has established long-term supply agreements with various nuclear utilities, which are essential for its revenue stream. As of September 30, 2024, the backlog for the LEU segment was approximately $2.8 billion, reflecting contracts for future SWU and uranium deliveries . These agreements have enabled Centrus to secure a stable customer base and predictable revenue, with sales primarily driven by long-term fixed-commitment contracts .

Partnership Type	Key Partners	Contract Value	Annual Production/Deliverables	Notes
U.S. Department of Energy Collaboration	DOE	$150 million (Base Contract)	900 kg of HALEU UF6	50/50 cost-share agreement, Phase 2 valued at ~$90 million .
Uranium Supply Contracts	TENEX, Orano	Not disclosed	Varies by contract	Critical for uranium procurement .
Nuclear Utility Supply Agreements	Various Nuclear Utilities	$2.8 billion (Backlog)	Future SWU and uranium deliveries	Long-term fixed-commitment contracts .

Centrus Energy Corp. (LEU) - Business Model: Key Activities

Enrichment of low-enriched uranium (LEU)

Centrus Energy Corp. specializes in the enrichment of uranium to produce low-enriched uranium (LEU), a critical component for nuclear fuel. For the three months ending September 30, 2024, the revenue from SWU (separative work units) was $34.8 million, reflecting a 14% decrease from $40.5 million in the same period in 2023. This decline was attributed to a 71% decrease in the volume of SWU sold, although there was a 194% increase in the average price of SWU sold.

Production and sale of natural uranium hexafluoride

The company also produces and sells natural uranium hexafluoride, which is essential for the enrichment process. In the nine months ending September 30, 2024, uranium revenue was reported at $29.9 million, down from $39.5 million in 2023, indicating a 24% decrease. This was primarily due to a 40% decrease in the volume of uranium sold, slightly mitigated by a 26% increase in the average price.

Research and development in advanced nuclear fuel technologies

Centrus is heavily invested in research and development (R&D) for advanced nuclear fuel technologies, focusing on high-assay low-enriched uranium (HALEU). The HALEU Operation Contract, awarded on November 10, 2022, has a base contract value of approximately $150 million, which includes two phases through 2024. The second phase anticipates production of 900 kilograms of HALEU UF6 per year, with an expected contract value of approximately $90 million.

Management of supply chains and logistics for uranium delivery

Effective supply chain management is crucial for Centrus, particularly due to the geopolitical landscape affecting uranium imports. As of September 30, 2024, the backlog in the LEU segment was approximately $2.8 billion, which includes medium- and long-term contracts with fixed commitments. This backlog is a significant indicator of future revenue potential.

Key Activity	Financial Data (2024)	Comments
Enrichment of LEU	$34.8 million (Q3 revenue)	14% decrease from Q3 2023; 71% decrease in volume sold
Sale of Natural Uranium Hexafluoride	$29.9 million (nine-month revenue)	24% decrease from 2023; 40% decrease in volume sold
HALEU R&D	$150 million (base contract value)	Includes production of 900 kg HALEU UF6 annually
Supply Chain Management	$2.8 billion (backlog)	Includes medium- and long-term contracts

Centrus Energy Corp. (LEU) - Business Model: Key Resources

Advanced gas centrifuge technology developed in the U.S.

Centrus Energy Corp. utilizes advanced gas centrifuge technology for uranium enrichment, a critical component in producing low-enriched uranium (LEU) for nuclear power generation. The company has invested significantly in this technology, particularly through its HALEU (High-Assay Low-Enriched Uranium) production initiatives.

Facilities at Piketon, Ohio for LEU and HALEU production

The Piketon facility is pivotal for Centrus's operations. As of September 30, 2024, the facility is operational and has initiated its HALEU production phase. The estimated contract value for Phase 2 of the HALEU Operation Contract is approximately $90 million, contingent on continued funding from the U.S. government.

Skilled workforce in nuclear engineering and operations

Centrus employs a highly skilled workforce, particularly in nuclear engineering and operational roles. This expertise is essential for maintaining the standards of safety and efficiency required in the nuclear energy sector. The company's workforce is also involved in advanced manufacturing projects and the deployment of next-generation fuels.

Strong inventory and contracts backlog valued at approximately $2.8 billion

As of September 30, 2024, Centrus’s backlog in the LEU segment is estimated at approximately $2.8 billion, reflecting medium to long-term contracts with fixed commitments. This backlog includes:

• Approximately $2.0 billion in contingent LEU sales commitments, subject to definitive agreements.
• Approximately $0.2 billion of deferred revenue and advances from customers.

The strong backlog not only provides financial stability but also positions Centrus for future growth in the nuclear fuel market.

Key Resource	Description	Value/Contract Size
Gas Centrifuge Technology	Advanced technology for uranium enrichment	Investment of over $150 million in HALEU initiatives
Piketon Facility	Operational facility for LEU and HALEU production	Phase 2 contract value of approximately $90 million
Workforce	Skilled nuclear engineering and operations personnel	Expertise critical for safety and efficiency
Contracts Backlog	Estimated aggregate dollar amount of future revenue	Approximately $2.8 billion

Centrus Energy Corp. (LEU) - Business Model: Value Propositions

Reliable supply of enriched uranium for nuclear reactors

Centrus Energy Corp. is a key supplier of low-enriched uranium (LEU) to commercial nuclear power plants. As of September 30, 2024, the company reported revenue from the LEU segment of $228.0 million, a 22% increase compared to $186.9 million in the same period of 2023. The backlog for LEU deliveries is approximately $2.8 billion as of September 30, 2024, reflecting a significant increase from $1.0 billion at the end of 2023. This backlog includes long-term contracts that ensure a consistent supply of enriched uranium, crucial for meeting the energy demands of customers while supporting nuclear power generation's reliability.

Advanced technology for cost-effective uranium enrichment

Centrus leverages advanced centrifuge technology to enhance the efficiency and cost-effectiveness of uranium enrichment. The company has transitioned to Phase 2 of its HALEU (High-Assay Low-Enriched Uranium) Operation Contract, which has resulted in a revenue increase of $12.7 million for the Technical Solutions segment. As of September 30, 2024, the average price of separative work units (SWU) sold increased by 194%, reflecting the higher costs associated with advanced enrichment technologies. This innovative approach positions Centrus favorably against competitors who may not have access to such advanced methods.

Support for U.S. energy independence through domestic production

Centrus is committed to enhancing U.S. energy independence by producing enriched uranium domestically. The company has received approximately $262 million in disbursements for operations, with around $203 million allocated to payments for LEU inventory deliveries. The recent Import Ban Act, which restricts the import of LEU from Russia, has created an opportunity for Centrus to fill the supply gap and bolster domestic production capabilities, potentially reducing reliance on foreign sources of enriched uranium.

Commitment to environmental sustainability via carbon-free energy

Centrus Energy Corp. positions itself as a leader in providing carbon-free energy solutions through its nuclear fuel supply chain. The company’s operations contribute to the generation of electricity with minimal carbon emissions, aligning with global sustainability goals. The demand for nuclear energy is expected to grow, particularly in the context of efforts to combat climate change and reduce greenhouse gas emissions. As of September 30, 2024, the spot price for SWU reached $180, representing a significant increase and reflecting the growing interest in nuclear energy as a reliable and sustainable power source.

Category	Q3 2024 Revenue	Q3 2023 Revenue	Change (%)
LEU Segment	$228.0 million	$186.9 million	+22%
Technical Solutions Segment	$62.4 million	$29.7 million	+110%
Total Revenue	$290.4 million	$216.6 million	+34%

Centrus Energy Corp. (LEU) - Business Model: Customer Relationships

Long-term contracts with utility companies

Centrus Energy Corp. engages primarily in long-term contracts with utility companies for the supply of low-enriched uranium (LEU). These contracts are essential for ensuring a stable revenue stream. For the nine months ended September 30, 2024, revenue from the LEU segment was approximately $228.0 million, a 22% increase from $186.9 million in the same period of 2023. This revenue is driven largely by sales of the separative work units (SWU), which accounted for $198.1 million, up from $147.4 million the previous year.

Flexible payment options for customers

Centrus offers flexible payment options that allow utility customers to defer receipt of SWU and uranium products beyond the contractual sale period. This flexibility is crucial for maintaining customer relationships and can enhance customer satisfaction. As of September 30, 2024, the backlog for the LEU segment was approximately $2.8 billion, which includes deferred revenue and advances from customers amounting to $0.2 billion.

Dedicated customer support and service for technical solutions

The company provides dedicated customer support for its Technical Solutions segment, which offers advanced engineering and manufacturing services. The revenue for the Technical Solutions segment was $62.4 million for the nine months ended September 30, 2024, compared to $29.7 million for the same period in 2023, reflecting a growth of 110%. This increase is largely due to the HALEU Operation Contract, which has a significant component of customer engagement and service.

Engagement with stakeholders in the nuclear energy sector

Centrus actively engages with stakeholders in the nuclear energy sector, including government entities and private sector customers. The company has a strategic focus on maintaining relationships that support its operational goals and enhance its market position. The HALEU Operation Contract, with a base value of approximately $150 million, exemplifies this engagement, as it includes options for up to nine additional years of production.

Customer Engagement Aspect	Details	Financial Impact
Long-term Contracts	Contracts with utility companies for SWU sales	$198.1 million in SWU revenue for 2024
Flexible Payment Options	Ability to defer receipt of products	$2.8 billion backlog including deferred revenue
Dedicated Customer Support	Technical Solutions support services	$62.4 million revenue for Technical Solutions in 2024
Stakeholder Engagement	Partnerships with government and private sector	HALEU Operation Contract valued at $150 million

Centrus Energy Corp. (LEU) - Business Model: Channels

Direct sales to nuclear utility companies

Centrus Energy Corp. primarily engages in direct sales to nuclear utility companies, which constitute a significant portion of its revenue. In the nine months ended September 30, 2024, revenue from the LEU segment was $228.0 million, with SWU revenue accounting for $198.1 million, reflecting a 34% increase year-over-year. The company sells enriched uranium and its components directly to both domestic and international utility customers, with approximately 44% of its LEU revenue derived from international sales.

Long-term contracts facilitated through RFPs

Centrus relies heavily on long-term contracts, which are often established through a formal Request for Proposals (RFP) process. The company has a backlog of approximately $2.8 billion in the LEU segment, which extends to 2040. The contracts typically involve fixed commitments for the purchase of SWU and uranium, ensuring a stable revenue stream. For instance, individual customer orders for the SWU component of LEU averaged around $9.0 million per order in the nine months ended September 30, 2024.

Participation in industry conferences and trade shows

Centrus actively participates in industry conferences and trade shows to enhance its visibility and promote its offerings. These events serve as platforms for networking with potential clients and stakeholders in the nuclear energy sector. This engagement is crucial given the competitive landscape and the need for Centrus to showcase its advanced technology and capabilities in uranium enrichment. The company’s participation in these events helps to foster relationships that can lead to new contracts and collaborations.

Strategic marketing to highlight advancements in nuclear technology

The company employs strategic marketing initiatives to emphasize its advancements in nuclear technology, particularly its work on the HALEU Operation Contract. In September 2024, Centrus reported a backlog in its Technical Solutions segment of approximately $0.9 billion, reflecting its commitment to innovative solutions in nuclear fuel. The HALEU Operation Contract, valued at approximately $150 million, showcases Centrus's capabilities in producing high-assay low-enriched uranium (HALEU). This contract involves both cost-share and cost-plus-incentive-fee arrangements, highlighting the company's ability to secure significant government contracts through its marketing efforts.

Channel	Description	Financial Impact
Direct Sales	Sales to nuclear utility companies	$228.0 million in LEU segment revenue (2024)
Long-term Contracts	Contracts established through RFPs	$2.8 billion backlog in LEU segment
Industry Conferences	Participation to enhance visibility	Facilitates new contracts and collaborations
Strategic Marketing	Promoting advancements in nuclear technology	$150 million HALEU Operation Contract value

Centrus Energy Corp. (LEU) - Business Model: Customer Segments

Domestic and international nuclear utilities

Centrus Energy Corp. primarily serves domestic and international nuclear utilities, which are critical customers for its enriched uranium and separative work units (SWU). The revenue from the LEU segment was $228.0 million for the nine months ended September 30, 2024, a 22% increase from $186.9 million during the same period in 2023. Specifically, SWU revenue increased by 34% to $198.1 million, while uranium revenue decreased by 24% to $29.9 million.

Government agencies focused on energy security

Centrus collaborates with government agencies that emphasize energy security, particularly in light of recent geopolitical tensions impacting energy supply chains. The HALEU Operation Contract, which began in November 2022, is a significant contract with the U.S. Department of Energy (DOE) aimed at producing high-assay low-enriched uranium (HALEU). The backlog in the Technical Solutions segment, which includes government contracts, is approximately $0.9 billion as of September 30, 2024.

Research institutions developing advanced reactors

Research institutions focused on developing advanced reactors represent another vital customer segment for Centrus. The company aims to support these institutions with advanced engineering and manufacturing services. The Technical Solutions segment reported revenue of $62.4 million for the nine months ended September 30, 2024, up from $29.7 million in 2023, reflecting a 110% increase attributed to contracts related to advanced nuclear technology.

Commercial entities involved in nuclear fuel supply

Commercial entities engaged in nuclear fuel supply are also key customers of Centrus. The company has established medium- and long-term contracts with various utilities, which are essential for stable revenue generation. For instance, individual customer orders for the SWU component averaged approximately $9.0 million per order during the nine months ended September 30, 2024.

Customer Segment	Revenue (9M 2024)	Revenue (9M 2023)	Change (%)
Domestic and International Nuclear Utilities	$228.0 million	$186.9 million	22%
Government Agencies	$0.9 billion (backlog)	N/A	N/A
Research Institutions	$62.4 million	$29.7 million	110%
Commercial Entities	Average order $9.0 million	N/A	N/A

Centrus Energy Corp. (LEU) - Business Model: Cost Structure

High operational costs associated with uranium enrichment

The operational costs for Centrus Energy Corp. in the uranium enrichment segment are significant. For the nine months ended September 30, 2024, the cost of sales for the LEU segment was $189.3 million, which reflects a 50% increase from $126.1 million in the same period in 2023. This increase was driven by a 75% rise in the average unit cost of Separative Work Units (SWU) sold, along with a 2% increase in the volume sold.

Investment in technology and facility upgrades

Centrus has made substantial investments in technology and facility upgrades to enhance production capabilities. Advanced technology costs reached $13.9 million for the nine months ended September 30, 2024, a 29% increase from $10.8 million in the same period in 2023. This investment is primarily directed towards the American Centrifuge project and enhancing manufacturing capabilities.

Expenses related to compliance with regulatory standards

Compliance costs are another critical aspect of Centrus's cost structure. These costs are integrated into various operational expenses, including selling, general, and administrative expenses, which totaled $25.7 million for the nine months ended September 30, 2024, slightly down from $27.5 million in the prior year. The company also incurs costs associated with maintaining licenses and adhering to safety regulations necessary for uranium enrichment operations.

Costs of raw materials and supply chain management

The cost of raw materials, particularly uranium hexafluoride, is a significant component of Centrus's cost structure. As of September 30, 2024, inventories included $187.5 million of uranium. The company continuously evaluates its supply chain to manage costs effectively, with approximately $203 million in payments made for LEU inventory deliveries during the nine months ended September 30, 2024.

Cost Component	Amount (in millions)	Change from 2023 (%)
Cost of Sales (LEU Segment)	$189.3	+50%
Advanced Technology Costs	$13.9	+29%
Selling, General, and Administrative Expenses	$25.7	-7%
Uranium Inventory	$187.5	N/A
Payments for LEU Inventory Deliveries	$203.0	N/A

Centrus Energy Corp. (LEU) - Business Model: Revenue Streams

Sales of separative work units (SWU) for LEU

The revenue generated from the sale of separative work units (SWU) is a primary revenue stream for Centrus Energy Corp. In the nine months ended September 30, 2024, the SWU revenue amounted to $198.1 million, reflecting an increase of 34% compared to $147.4 million for the same period in 2023. This increase was attributed to a 33% rise in the average price of SWU sold, alongside a 2% increase in the volume sold.

Revenue from contracts for HALEU production

The HALEU (High-Assay Low-Enriched Uranium) production contracts have become a significant source of revenue. For the nine months ended September 30, 2024, revenue from the Technical Solutions segment, which includes HALEU contracts, reached $62.4 million, a dramatic increase of 110% compared to $29.7 million in the previous year. The transition from Phase 1 to Phase 2 of the HALEU Operation Contract contributed approximately $33.1 million to this revenue.

Sales of natural uranium hexafluoride and enriched uranium products

Centrus also generates revenue through the sale of natural uranium hexafluoride (UF6) and enriched uranium products. In the nine months ended September 30, 2024, uranium revenue totaled $29.9 million, down from $39.5 million in 2023. This decline was primarily due to a 40% decrease in the volume of uranium sold, although it was partially offset by a 26% increase in the average price.

Technical services provided to government and private sector clients

The Technical Solutions segment also offers a variety of technical services to both government and private sector clients. Revenue from this segment for the nine months ended September 30, 2024, was $62.4 million, compared to $29.7 million in the prior year, marking an increase of 110%. This revenue is primarily driven by engineering, procurement, and construction services.

Revenue Stream	2024 Revenue (in millions)	2023 Revenue (in millions)	Change (%)
SWU Sales	$198.1	$147.4	34%
HALEU Contracts	$62.4	$29.7	110%
Uranium Sales	$29.9	$39.5	(24%)
Technical Services	$62.4	$29.7	110%

Article updated on 8 Nov 2024

Resources:

1. Centrus Energy Corp. (LEU) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Centrus Energy Corp. (LEU)' financial performance, including balance sheets, income statements, and cash flow statements.
2. SEC Filings – View Centrus Energy Corp. (LEU)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.