Business context and reporting period
NuScale Power Corporation’s unaudited Form 10-Q covers the quarter and six months ended June 30, 2023. The company is commercializing its NuScale Power Module small modular reactor technology; it has not yet generated meaningful commercial revenue. NuScale is majority owned by Fluor. Financial amounts below are in U.S. dollars; millions are used unless noted.
Comparability caveat: the 2022 six-month period includes NuScale LLC results before the May 2, 2022 merger with Spring Valley, which was accounted for as a reverse recapitalization.
Financial performance and position
| Metric | Q2 2023 | Q2 2022 | Six months 2023 | Six months 2022 |
|---|---|---|---|---|
| Revenue | $5.8m | $2.7m | $11.3m | $5.2m |
| Gross margin | $0.03m (0.5%) | $1.0m (36.7%) | $2.1m (18.8%) | $2.3m (43.3%) |
| Operating loss | $(56.1)m | $(52.7)m | $(111.6)m | $(96.5)m |
| Net loss | $(29.7)m | $(21.4)m | $(65.3)m | $(44.8)m |
| Net loss attributable to Class A common stockholders | $(9.5)m | $(2.6)m | $(20.5)m | $(2.6)m |
| Basic and diluted loss per Class A share | $(0.13) | $(0.06) | $(0.29) | $(0.06) |
Revenue growth was attributed to CFPP engineering, procurement and construction development work and nuclear consulting. Gross margin fell sharply as cost of sales nearly matched revenue in Q2. Sponsored cost share was $16.3m in Q2 and $34.2m for the six months, down from $25.2m and $45.7m, respectively, in 2022; this funding is shown below operating loss. The six-month change in warrant fair value contributed a $6.1m gain, and interest income was $5.9m.
R&D expense was $26.9m in Q2 and $54.5m for the six months, broadly flat year over year for the half. G&A rose to $16.3m in Q2 and $31.0m for the half, reflecting headcount, equity compensation, marketing, insurance and other public-company costs. Other expenses increased to $28.2m for the half, including higher commercialization staffing and equity compensation.
At June 30, 2023, cash and cash equivalents were $154.4m, down from $217.7m at year-end 2022; short-term investments were nil after a $50.0m investment sale. Restricted cash was $60.2m, backing $59.0m of letters of credit. Total assets were $309.5m, liabilities $85.3m, and stockholders’ equity $224.2m. The company reported no debt. Accumulated deficit was $202.6m.
Six-month operating cash use was $82.4m, versus $64.1m in 2022, driven in part by higher receivables and long-lead material spending. Investing activities provided $48.4m, mainly from the $50.0m short-term investment sale; financing provided $4.4m, mainly from option exercises. Cash, cash equivalents and restricted cash together totaled $214.6m at period-end; this cash-flow measure includes restricted cash.
Material changes, outlook and risks
- Management said available cash should fund required R&D and operating needs for the next 12 months at current expense levels. It also cautioned that losses and negative cash flow may grow as commercialization advances, additional funding may be needed, and customer-sourced income is uncertain. No specific revenue or earnings guidance was provided.
- The NRC’s final rule certifying NuScale’s 12-module, 50 MWe design became effective in February 2023. The NRC accepted the company’s application for review of its six-module, 77 MWe design on July 31, 2023; management expects review and approval to take about 24 months.
- The CFPP’s prior economic competitiveness test failed, but UAMPS confirmed on March 1, 2023 that sufficient participants would continue development. A further test is expected with the Class 2 project cost estimate, projected by year-end 2023. Participants may exit if the project exceeds the revised $89/MWh price target or subscription falls below 370 MWe.
- Under the development cost reimbursement agreement, the company estimated a maximum potential expense of $15.3m across the DCRA and a separate CFPP agreement if specified performance conditions are not met. Management considered payment reasonably possible but recorded no accrual. The $60.2m restricted-cash balance secures related letters of credit.
- A class-action lawsuit by purported former NuScale LLC members challenges merger-related operating-agreement amendments. On August 3, 2023, the court denied NuScale LLC’s motion to dismiss. The company said a loss was not probable and recorded no liability; the outcome remains uncertain.
- Fluor accounted for 82% of Q2 revenue and 78% of six-month revenue, creating customer concentration. Fluor-related expenses were $17.2m and amounts payable to Fluor were $11.8m at June 30.
- Management reported disclosure controls and procedures were effective as of June 30, 2023. The filing reported no material changes to the risk factors in the 2022 Form 10-K.
Important facts for investors to verify
- Progress and funding terms for CFPP, including the next economic competitiveness test, participant subscription and potential reimbursement exposure.
- Cash runway assumptions, operating cash burn, restricted-cash requirements, and whether expected DOE or customer funding is secured.
- Revenue concentration, related-party activity with Fluor, and the ability to convert development work into recurring commercial revenue with sustainable margins.
- NRC review timing and approval prospects for the 77 MWe design, alongside the commercialization schedule and required spending.
- Developments in the member lawsuit and the financial or operational effects of any adverse outcome.