Business Context and Reporting Period
NuScale Power Corporation filed this unaudited Form 10-Q for the three months ended March 31, 2023. The company is commercializing its NuScale Power Module small modular reactor; it expects meaningful revenue only as commercialization advances. NuScale LLC is consolidated in an Up-C structure, with legacy holders’ economic interest reported as noncontrolling interests. The NRC’s final design-certification rule became effective in February 2023.
Financial Results and Liquidity
Amounts below are in millions of dollars unless stated otherwise.
| Metric | Q1 2023 | Q1 2022 |
|---|---|---|
| Revenue | $5.5 | $2.4 |
| Gross margin | $2.1; approximately 38% of revenue | $1.2; approximately 51% of revenue |
| Operating loss | $(55.5) | $(43.8) |
| Net loss | $(35.6) | $(23.4) |
| Net loss attributable to Class A stockholders / loss per share | $(11.0) / $(0.16) | Not presented on a comparable basis |
| Cash used in operating activities | $(43.1) | $(33.2) |
Revenue increased 125% year over year, principally from CFPP EPCDA work and nuclear consulting. Operating expenses rose, including R&D of $25.7 million (up from $24.4 million), G&A of $14.7 million (up from $10.5 million), and other expenses of $17.2 million (up from $10.2 million). Sponsored cost share was $17.9 million versus $20.6 million; DOE cost share declined, partly offset by other agreements. Interest income was $3.1 million, primarily on certificates of deposit.
At March 31, cash and cash equivalents were $218.2 million, with no debt. Short-term investments were zero, versus $50.0 million at year-end, following maturity and sale of certificates of deposit. Restricted cash was $34.2 million, primarily collateral for a CFPP-related letter of credit. Current assets were $246.5 million and current liabilities $51.7 million. Operating cash use increased, which management attributed mainly to higher receivables. Cash, cash equivalents and restricted cash totaled $252.3 million, up $8.1 million during the quarter, including $49.6 million of net investing inflows.
Material Changes, Outlook and Risks
- Management expects operating losses and negative operating cash flow to increase as product development, commercialization and public-company costs rise. It believes available resources are sufficient for operating and R&D needs for the next 12 months, but says additional funding may be needed in future years.
- Customer-sourced income is not assured, and DOE funding depends on Congressional appropriations. The filing says federal debt-ceiling and appropriations discussions could materially affect cash projections.
- The CFPP economic competitiveness test failed against the $58/MWh target, but UAMPS reported on March 1 that sufficient project participants chose to continue development. A subsequent test is expected with the Class 2 project cost estimate. Under the development cost reimbursement agreement, NuScale’s maximum potential reimbursement at the current stage was $81 million; net development costs incurred by UAMPS were $29.8 million. The related letter of credit was $33.5 million at quarter-end and increased to $44.2 million on April 17, 2023.
- NuScale entered a $54.6 million long-lead materials subcontract for CFPP. At quarter-end, $14.2 million was recorded as long-term contract work in process. After quarter-end, the company billed CFPP LLC $22.3 million upon reaching contract milestones.
- Fluor accounted for 72.9% of Q1 revenue. NuScale incurred $8.7 million of Fluor-related expenses and owed Fluor $9.2 million at quarter-end; Fluor owed NuScale $6.1 million.
- The company is party to litigation brought by purported former NuScale LLC members concerning merger-related operating agreement amendments. Management does not consider a loss probable and recorded no liability; the ultimate outcome is uncertain. Management reported no material changes to the risk factors in the 2022 Form 10-K.
- Warrant liabilities were $30.5 million and are remeasured at fair value, so changes may affect reported results. The quarter included a $1.1 million warrant-liability fair-value expense.
Most Important Facts to Verify
- Progress and economics of CFPP, including the next competitiveness test, participant commitment, project cost estimate, and any reimbursement exposure.
- Cash burn, restricted-cash requirements, DOE appropriations and customer receipts against management’s stated 12-month liquidity outlook.
- Revenue concentration and related-party activity with Fluor, alongside the pace of growth in commercial revenue.
- Whether the reported expense increases and falling gross-margin percentage persist as commercialization spending scales.
- Developments in the former-member litigation and any changes in warrant fair value or potential dilution.