X-Energy, Inc. Class A Common Stock 2026 Q2 Earnings Call

You may now begin. Thank you, and good morning, everyone.

Welcome to X-Energy's second quarter 2026 earnings call. This morning, we released second quarter 2026 financial results and operational highlights for X-Energy, Inc. You can find today's presentation and our earnings press release available on the investor relations portion of X-Energy's website at investors.x-energy.com. Our remarks today will include forward-looking statements which are based on assumptions as of today and are subject to significant risks and uncertainties. Actual results may differ materially from those set forth in the forward-looking statements. Our SEC filings, including our quarterly report on Form 10-Q, identify certain risk factors and cautionary statements that could cause the company's actual results to differ materially from those projected in our forward-looking statements made this morning. We undertake no obligation to update any forward-looking statement, except as required by law. During this call, we also present non-GAAP financial measures.

There are reconciliations of these measures included in our investor presentation, posted on the investor relations portion of our website. Joining me today are Clay Sell, our Chief Executive Officer, and Daniel Gross, our Chief Financial Officer. On today's call, Clay will open with a review of our recent highlights and operational updates, followed by what we believe are our compelling and differentiating business factors. Daniel will then review our financial performance for the second quarter in more detail before turning it back to Clay for closing remarks. We will then open the call up to Q&A. With that, I will now turn the call over to Clay.

Thank you, Patricia. Welcome, all. Good morning. It is great to be with you today. What an extraordinary time to be in the business of bringing new power technologies to the market. Based on third-party estimates, global electricity demand is expected to increase more than 75% by 2050. About a third of that growth is predicted to take place in our key markets, the U.S., the U.K., and Canada. It is estimated that the market just for SMRs could be 158 gigawatts by 2050. That is a $2.3 trillion revenue potential. At X-Energy, we have the opportunity to play a significant role in what will likely be the greatest build-out of power and electrical generation since the dawn of the electricity age.

We have a transformative, next-generation technology and a great team of people that will allow us to reinvent and simplify the way nuclear power is built and expand the functions it can serve now and in the future. We are benefiting from a tremendous level of support and help along the way, from our early partnership with the U.S. Department of Energy to our first announced customers in Dow, Amazon, Energy Northwest, and the U.K. utility, Centrica. It will take us several years to fully unlock the scale of this business opportunity, but we want you to continue that journey with us today as we hit the news highlights and update you on our ARDP contract, supply chain agreements, developments at our TRISO-X fuel business, how we are using AI inside X-energy, project milestones, licensing achievements, new customer agreements, and our financial performance in the second quarter.

We have a big agenda with a lot of news, so let's get to it. I will ask you to please turn to slide 3. Oh, we are already there. I want to start with financing updates on our partnership with Dow and the Department of Energy. You may recall that in 2021, X-energy was competitively awarded, and to date has been allocated approximately $1.1 billion under the Advanced Reactor Demonstration Program, a 50/50 public-private partnership to deliver our first commercial power plant with Dow in Seadrift, Texas. This DOE grant award is our largest source of revenue at our current stage of development. Yesterday, the Department of Energy formally notified X-energy that our ARDP cooperative agreement will receive up to an additional $1 billion.

This funding will be subject to the same 50/50 cost share requirements as the original award and is expected to be obligated to the award as part of the normal contractual process with the department. So overall, that would increase DOE's cost share contribution to the ARDP up to $2.115 billion. Our project with Dow is important, not only because it is our initial deployment, but because of the unmatched versatility for nuclear energy that it represents. When completed, our Xe-100s are expected to provide both electricity and high-temperature industrial steam for Dow's operation, demonstrating the range of applications our technology can address. It is, of course, expected to be the first grid-scale advanced nuclear reactor deployed to serve an industrial site in North America. Okay, let's move to news updates on what we have done to strengthen our supply chain.

Again, our supply chain goals are delivered for early projects, de-risk and accelerate our ability to scale the business. The availability of HALEU fuel is a current commercial constraint. We have been executing on a strategy to retire that risk for our customers and our businesses for many years. The U.S. Department of Energy and the U.K. government, as a result of our efforts and advocacy, are financially supporting the construction of new HALEU production facilities, and those incentive contracts have now been awarded and facility expansions are underway. For our first core loads at Dow, we have secured existing material, about 7.6 metric tons, from the Department of Energy. Over the last week, we have executed long-term agreements for HALEU enrichment services with both Centrus Energy Corp and General Atomics.

Under the contracts, firm delivery commitments will grow through a phased approach to scale HALEU production in line with our expected commercial pipeline. Including our HALEU allocation from the Department of Energy, we now have firm agreements to support the fuel needs for the initial and replacement core loads of our announced Xe-100 projects and beyond. Those agreements give us further certainty around the fuel supply required for our pipeline and are a meaningful step toward diversifying supply, increasing our competitive advantage, and significantly reducing HALEU supply risk for our commercial pipeline. Now, let me move to another aspect of our supply chain, nuclear-grade graphite used inside our reactor core. Through an agreement we recently announced with SGL Carbon, we are working to expand SGL's production capacity for medium grain graphite.

We will invest up to $8 million in milestone-based payments to support new facilities and equipment upgrades at SGL's facility in Chedde, France. Full execution of this agreement would double SGL's manufacturing capacity for medium grain graphite by 2030, enabling the facility to produce graphite billets for up to eight new Xe-100 reactors per year. All these supply chain agreements are part of our strategy to allocate a portion of our IPO proceeds to secure capacity on behalf of our customers, to incentivize early investments for our supply chain partners, to increase our competitive moat, and reduce schedule risk for our early projects. As part of our plan, these contractual obligations are expected to be transferred ultimately to our customers. It has been a lot of good progress for our commercial and supply chain team this quarter. Let me now turn to slides 4 and then 5.

I would like to move to the latest developments of our TRISO-X fuel business. Our vertically integrated fuel fabrication business gives us greater control of an important piece of the reactor supply chain and will create recurring revenue opportunities for the company. in February of this year, we received our Part 70 commercial license from the Nuclear Regulatory Commission for an initial 40-year term. That was the first new commercial fuel fabrication facilities licensed by the NRC in over 50 years. Our first fabrication plant, which we call TX-1, and as you see in this picture, is being constructed with a 50/50 cost share with the U.S. Department of Energy and also received a competitively selected award for up to $148 million in federal tax credits, helping to overall reduce the project risk.

In addition, we appreciate the recent $11 million economic development grant from the state of Tennessee, which will be utilized to support the continued development of our potential second commercial fuel facility, which we call TX-2, and will also support the development of our dedicated research and development center, which we call TXL. All of these located on our campus in Oak Ridge. Our TX-2 facility is also covered under NRC's Part 70 license and is currently in the design phase. This facility is anticipated to produce four times the capacity of TX-1, and once completed, this campus is expected to establish one of the world's largest commercial-scale advanced nuclear fuel fabrication sites with the capacity to produce enough TRISO-X fuel to support approximately 55 of X-Energy's Xe-100 reactors. TX-1, TXL, and the future TX-2 will form the core of our fuel fabrication and technology development campus in Tennessee.

As part of that growth plan, we acquired 70 acres of adjacent land in July. This purchase brings the site's total footprint to approximately 180 acres, allowing for continued expansion covered under our Part 70 license, and it provides additional space for utility corridors, equipment staging, fuel storage, and long-term expansion. This week, we announced an extension to our cooperative research and development agreement with the Department of Energy's Oak Ridge National Laboratory. This agreement expands nearly a decade's worth of joint research, technology transfer, and process development that has enabled TRISO-X to get ready to manufacture at commercial scale. We have achieved significant process improvements that we expect will continue to reduce the cost of TRISO fuel. Let me give you an example. In our pilot plant, we have consistently achieved greater than 95% for first prep pass process yield on our kernel conversion process for TRISO fuel.