X-Energy (XE) Q3 2026 Earnings Call Transcript

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DATE

Thu, Nov 12, 2026

CALL PARTICIPANTS

• Director of Investor Relations - Patricia Gil
• Chief Executive Officer - Clay Sell
• Chief Financial Officer - Daniel Gross

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TAKEAWAYS

• Total Revenues and Grant Income -- $66.3 million, representing a 118% increase compared to $30.4 million in the third quarter of 2025.
• Services Revenue -- $51.5 million, reflecting engineering work performed under the Advanced Reactor Demonstration Program for the Xe-100 reactor design.
• Grant Income -- $14.8 million, associated with the demonstration reactor project conducted with Dow.
• Total Liquidity -- $1.8 billion, consisting of $1 billion in cash and cash equivalents, $514 million in short-term investments, and $247 million in long-term investments.
• Total Operating Expenses -- $169.9 million, an increase of 139% driven by higher activity under the ARDP, expanded headcount, and $22 million in non-cash equity-based compensation.
• Direct Costs -- $93.6 million, up from $38.8 million in the prior year due to higher spending on materials and subcontractor services.
• DOE ARDP Total Support -- $2.15 billion, with the company having received $618 million in total reimbursements from the Department of Energy as of Sept. 30, 2026.
• Interest Income -- $19.7 million, benefiting from the optimization of cash and reserve investment strategies.
• Net Cash Used in Operating Activities -- $51.2 million, up from $30.8 million last year, reflecting increased project execution and prepayments for long-lead materials.
• Capital Expenditures -- $71.8 million, focused on the construction of the TX-1 fuel fabrication facility and other infrastructure projects.
• DOE CapEx Reimbursement -- $27.8 million, received in cash during the quarter for eligible construction costs.
• Project Pipeline -- 144 reactors, with 40 reactors currently linked to identified project plans or development partnerships with Dow, Energy Northwest, AEP, and Centrica.
• AEP Joint Development Capacity -- 960 megawatts, planned as a 12-unit Xe-100 project at a brownfield coal site in Sullivan County, Indiana.
• TX-1 Production Capacity -- 700,000 fuel pebbles annually, which is equivalent to 5 metric tons of uranium and capable of fueling up to 11 reactors.
• XTAC Facility Size -- 90,000 square feet, utilized for testing helium circulators, fuel handling systems, and reactor core components.
• Construction Permit Review Duration -- 17 months, representing the time from initial docketing to issuance for the Dow project, which was completed one month ahead of schedule.
• Special Nuclear Material License -- 40 years, granted by the NRC for the commercial manufacturing of fuel enriched up to 20%.
• U.K. Deployment Potential -- 6 gigawatts, being explored through a partnership with Centrica following acceptance into the Generic Design Assessment process.
• Employee Headcount -- 889 employees, supporting expanded reactor design and manufacturing operations.
• Operating License Review Timeline -- 18 months, representing the expected duration of the NRC review prior to project commissioning in the early 2030s.

SUMMARY

X-Energy, Inc. (NASDAQ:XE) transitioned toward the commercialization phase of its advanced nuclear technology during the third quarter, headlined by the receipt of an NRC construction permit for the Long Mott project in Seadrift, Texas. Management reported a significant expansion of the commercial pipeline through a joint development agreement with American Electric Power and Amazon to develop a 960 megawatt project in Indiana. The company confirmed that vertical construction of the TX-1 fuel facility is complete, with operations moving into interior buildout and equipment installation. Total liquidity remained at $1.8 billion with zero debt, providing the capital necessary to support engineering milestones and long-lead material procurement for its reactor fleet. The company continues to leverage federal support through the Advanced Reactor Demonstration Program, which has provided over $600 million in cumulative reimbursements to date.

• Management reported that Dow expects to consider a preliminary investment decision in 2027 following the completion of engineering and cost target validations.
• CEO Sell stated, "We want to have done it at the XTAC before we do it in the field," regarding the use of the technology advancement center to reduce execution risk.
• The company initiated procurement for long-lead components, including steam generator tubing from Alleima and steel forgings from Doosan Enerbility.
• The U.K. Generic Design Assessment is expected to take approximately three years, building on documentation and safety analyses already reviewed by the U.S. NRC.
• Management reported that supply chain development is the primary factor influencing project schedules, while regulatory pathways are currently well managed.
• The TRISO-X campus is being developed as a vertically integrated fuel supply source that could also serve third-party customers using coated particle fuel.
• CFO Gross noted that $22 million of SG&A expenses were attributed to non-cash equity-based compensation, which impacted the quarterly operating loss.

INDUSTRY GLOSSARY

• Xe-100: The company's proprietary 80-megawatt electric modular high-temperature gas-cooled reactor design.
• TRISO-X: A patented nuclear fuel technology consisting of coated uranium particles encased in graphite pebbles.
• ARDP: The U.S. Department of Energy's Advanced Reactor Demonstration Program, which provides cost-sharing funds for nuclear technology.
• NRC: The Nuclear Regulatory Commission, the federal agency responsible for licensing and safety of nuclear power in the United States.
• GDA: The Generic Design Assessment, a regulatory evaluation process for new reactor designs in the United Kingdom.
• XTAC: The X-energy Technology Advancement Center, a facility used for component fabrication and testing in Frederick, Maryland.
• HALEU: High-assay low-enriched uranium, a type of nuclear fuel enriched between 5% and 20% with uranium-235.
• HTGR: High-temperature gas-cooled reactor, a generation IV reactor design that uses helium as a coolant and graphite as a moderator.
• PJM: A regional transmission organization that coordinates the movement of wholesale electricity in parts of the eastern United States.

Full Conference Call Transcript

Operator: Hello, and welcome to the X-Energy Third Quarter 2026 Earnings Conference Call. [Operator Instructions] Please note that this call is being recorded. I'll now turn the call over to Patricia Gil, Director of Investor Relations for X-Energy. You may begin.

Patricia Gil: Thank you, and good morning, everyone. Welcome to X-Energy's Third Quarter 2026 Earnings Call. This morning, we released third 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.

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 earnings press release and 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 sectors. Daniel will then review our financial performance for the third 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'll now turn the call over to Clay.

J. Sell: Thanks, Patricia, and it's good -- Good morning to everyone. It's good to be with you today. X-Energy had a great third quarter, and the good news has continued even into this week. Before I turn to a rundown of the news and achievements from this quarter, let me remind you in the main how I think about our overall strategy. First, we have deep conviction that the world needs a lot of new nuclear power that goes to our TAM.

Second, we have to bring the technology to the market that is materially better, that is materially safer, that can be licensed by our regulators, that is significantly simpler, easier to build on a smaller footprint with high functionality to provide electricity in a scalable manner, processing for industrial plants or even load following capability. We have to have more attractive overall economics and a supply chain that is secure, available and ready. We believe our reactor and fuel technology does all of these things that goes to our tech. Along the way, we must attract and build a team that can execute at a high level. That goes to the talent we attract and the culture we build.

As you know, I believe we have the best team in the business here at X-Energy. That's our team. Beyond the TAM, the tech and the team, we have to do 2 other things -- we have to have 2 other things; the capital to get our products developed into the marketplace and the customers, the Dows, the Amazons, the AEPs, the Centricas that have the expertise, the balance sheets and the corporate motivation to see projects through to fruition. And we have to have enough of those customers with big needs to build enough units to get really good at. This is the process.

This is where we develop the mastery through repetition, to move from the first, more expensive plants all the way down to lower cost lower risk, shorter scheduled plants that can be financed and deployed at scale. And this process allows us to drive margins and profitability on the sale of our reactor technology, associated services and fuel for the expected life of the power plant. This is our strategy. This is our process. It is what we are focused on every day.

And you will see with the announcements and progress since our last earnings call how each is retiring risk and move us towards our greater business objective, to reinvent nuclear power, to make it abundant, to make it easy to build, widely available and quite frankly, boring and profitable. That is our strategy at X-Energy. And again, it has been a quarter of substantial progress. TAM, tech, team, capital, customers, that's what we're talking about. So here's the road map of the updates that I want to cover in today's call. First, I'll talk about our receipt of the construction permit from the NRC just this week for Dow's project, Long Mott.

Secondly, I want to review our joint development agreement with AEP and Amazon. Third, I want to talk about our progress at our TRISO-X fuel company. Fourth, I want to go over our progress in the U.K.'s regulatory process. And finally, I want to talk about how we are de-risking deployment at our XTAC facility at X-Energy. We are doing exactly what we said we would do when we went public in April of this year. We're meeting our announced milestones, advancing our engineering and manufacturing capabilities and converting the significant commercial interest in our technology into tangible project commitments.

And we're doing so from a position of financial strength, supported by a strong balance sheet with $1.8 billion in cash and investments and significant expected federal funding support of up to $2.15 billion in total from the Department of Energy's Advanced Reactor Demonstration Program. With those highlights in mind, I'll discuss what these developments mean in the context of our broader commercial strategy. So let's go to the Dow construction permit. The Nuclear Regulatory Commission's completion of its review and issuance of a construction permit to Long Mott Energy, a subsidiary of Dow for our project at Dow Seadrift manufacturing site on the Texas Gulf Coast was a major, major event this week.

It's a significant achievement both for X-Energy, and we believe for the commercialization of advanced nuclear technology in the United States. This construction permit was issued over 1 month ahead of schedule, and it marks the first NRC construction permit for a high-temperature gas-cooled reactor in nearly 60 years, the first ever pebble-bed gas reactor approval and the first ever nuclear project designed to provide both industrial process heat and electricity for an industrial facility. Achieving this milestone reflects years of collaboration among Dow, the Department of Energy, the NRC and X-Energy, with X-Energy playing a central role in the process.

While Dow's subsidiary, Long Mott Energy, was the applicant and the recipient of the construction permit, X-Energy, our team, led the reactor licensing work on their behalf, building on technical and regulatory engagement that began many years ago before X-Energy was even selected for the Advanced Reactor Demonstration program. One of the reasons we received the construction permit ahead of schedule is because we did those years of work alongside the NRC and our partners at Dow. We worked proactively with the NRC to establish the technical and scientific basis for evaluating our reactor technology, addressing key questions and demonstrating the safety characteristics of our design.

This experience underscores the importance of regulatory engagement as one of our core competencies in the advanced nuclear industry and why we were able to obtain the construction permit earlier than expected. Again, this is evidence of our extraordinary team. Just as importantly, the permit provides a valuable proof point for all of our customers across our entire commercial pipeline. As we standardize our design and leverage technical information and analysis from earlier projects, we will identify new opportunities to improve the efficiency and repeatability of subsequent licensing efforts, including for our projects with Energy Northwest and AEP. We did it once and we plan to do it over and over again with greater speed and regulatory efficiency.

Now while the construction permit is a significant milestone, investment and construction decisions still lie with our customer. We expect Dow to consider a preliminary investment decision in 2027, with full-scale nuclear construction following its final investment decision. Between now and then, we're finalizing and standardizing the design, we are maturing the supply chain for long lead components and developing the operator license application. A construction permit earns the right to build, being ready before we build earns the right to build well, and building well earns the right to build again, and we now have the customers, the projects and runway to build many plants well with an eye for reducing costs, reducing risk and shortening the schedule.

In the meantime, we continue to advance engineering, procurement and development activities for Dow's Long Mott project. Let me give you an example. SGL, one of our supply chain partners has already taken delivery of nuclear grade graphite billets, and we are progressing procurement activities of key plant systems and components such as our recently announced first order for Xe-100 steam generator tubing from Alleima and Doosan Enerbility. This purchase order follows years of technical collaboration and reflects our approach to addressing manufacturing and supply chain risk early. Now I want to move on and discuss our commercial development and recently announced collaboration with American Electric Power and Amazon.

On our last earnings call, I previewed our expectation to announce the next 1 gigawatt project in 2026 with a major investor-owned utility. We have now delivered on that announcement. In October, we announced a joint development agreement with AEP to advance plans for a 12-unit Xe-100 project in Sullivan County, Indiana. The proposed project would provide approximately 960 megawatts of new generating capacity, delivering clean, reliable electricity to the regional grid. It also represents our second announced commercial deployment opportunity supported by Amazon, building on our first collaboration with Energy Northwest and Washington state. AEP represents an important addition to our customer portfolio.

As a major investor-owned utility with extensive experience developing and operating critical energy infrastructure, AEP brings capabilities that are essential to advancing projects of this scale. Amazon brings a long-term need for reliable electricity and the willingness to commit development capital toward creating new sources of generation, and X-Energy brings the advanced reactor technology, the technical expertise and integrated fuel fabrication capability. Together, the 3 of us are committing resources to advance the development work needed to develop the project's path forward, including site characterization, feasibility studies and preparation for future NRC construction permit application. Interestingly, this project would redevelop a former coal-fueled generation site and use existing infrastructure and the existing PJM grid connection.

The relatively small footprint for our technology makes us uniquely attractive for former coal sites. It shows how the Xe-100's compact modular design suits sites built for conventional thermal power and how it could support Indiana's energy communities through new jobs and tax revenues. As utilities evaluate the retirement or replacement of aging power generation assets, we believe this creates a unique additional opportunity for our technology. I'll take this moment to provide a brief update on our first Amazon project with Energy Northwest and Central Washington. We're advancing the initial phase of front-end engineering. We're working with Fluor and the Cascade Nuclear Partners consortium. Now, that is a consortium composed of Kiewit, Black & Veatch and Aecon.

And they are progressing together the plant design. Fluor is supporting the design of established systems within the nuclear island, while Cascade Nuclear Partners is advancing the conventional island design and coordinating requirements across the broader plant. Together, these efforts are establishing the engineering foundation necessary to advance the project through subsequent development phases. From a big picture standpoint, across our 144-reactor pipeline, we now have up to 40 Xe-100 reactors associated with identified project plans and development partnerships, including Dow, Energy Northwest, AEP and Centrica. That growing portfolio gives us greater visibility into the potential progression from the early projects towards standardized, highly repeatable deployments.

And everything that we do is geared towards scale to ensure that every lesson learned on our first project with Dow carries into the projects that follow. That's the long-term commercial opportunity we're working to unlock. Now let me turn to our third topic, TRISO-X. We continue to make meaningful progress towards establishing the commercial fuel manufacturing capabilities necessary to support our reactor fleet and beyond. This, again, goes to our tech and its supply chain. At our Oak Ridge, Tennessee, campus, vertical construction of TX-1, our first commercial scale fuel facility, was completed on schedule. The next phase includes interior construction, equipment installation and development of supporting production infrastructure.

This includes the construction of our graphite matrix powder facility which will support an essential step in the production of our TRISO-X fuel pebbles. For context, while our fuel pebbles contain uranium that produces energy through fission, the surrounding pebble structure is composed primarily of graphite. This facility will prepare and blend the graphite materials necessary for pebble fabrication. It's an important part of establishing the integrated manufacturing process required for commercial production. Beyond TX-1, we're advancing design activities for TX-2, our second planned commercial fuel facility and, TX-L, our dedicated research and development center.

Together, these are intended to support our transition to commercial production while providing the flexibility to refine processes, expand manufacturing capabilities and address future customer needs. TRISO-X is unique in our industry. It is unique in our industry. It holds a 40-year special nuclear material license from the NRC under Part 70, authorizing commercial manufacturing of fuel enriched up to 20% at our first 2 commercial facilities. This NRC license establishes a foundation for serving the commercial reactor market at scale, and we believe distinguishes our business from other potential TRISO fuel manufacturers that operates solely under Department of Energy Authorization for research, testing or other limited purposes.

Our NRC Part 70 license creates opportunities for us to leverage our manufacturing expertise and our flexible fuel design capabilities well beyond supplying our own Xe-100 fleet. Our strategy includes pursuing third-party fuel customers whose reactor technologies use coated particle fuel, including other developers of SMRs, microreactors and specialized nuclear applications. We believe our fuel will be one of the most cost-effective nuclear fuels on the market. With our anticipated large-scale production and testing capabilities, TRISO-X's campus is expected to deliver fuel capacity at scale for the growing Generation IV reactor market.

Our fuel manufacturing methods are further differentiated by our 10-plus years of research and development, supporting our patented methods that we expect to reduce waste, reduce cost and ensure higher fuel quality. In this way, TRISO-X represents both a critical component of our vertically integrated commercial strategy and a potentially distinct long-term source of recurring revenue. For the near term, our priorities are completing the fuel and R&D facilities, installing and commissioning equipment, qualifying production processes and establishing the manufacturing capacity necessary to support our first projects. Let's move on. Looking abroad, September marked another important milestone for X-Energy's international efforts. Our Xe-100 design was formally accepted into the United Kingdom's Generic Design Assessment process.

This begins a structured regulatory evaluation of our reactor technology by the U.K.'s nuclear and environmental regulators. They will evaluate the suitability of the design for potential deployment in the U.K. ahead of the site-specific approvals required for individual projects. Importantly, this work builds on the substantial licensing progress we've already made in the United States, enabled by expanded collaboration between U.S. and U.K. regulators that allows us to leverage our NRC approved technical documentation and safety analyses in the U.K.'s assessment. We expect this innovative model to create opportunities for enhanced efficiency and licensing our technology in the U.K. and a template for licensing and deploying more efficiently in established nuclear markets around the world.

This project supports our broader partnership with Centrica through which we're exploring the deployment of up to 6 gigawatts of advanced nuclear capacity in the U.K. It is also a credit to the expertise and technical proficiency of our licensing and engineering teams who are now advancing commercial licensing across 2 countries with 2 regulators making us one of only a few developers worldwide with the design maturity required to reach this stage. As in the United States, our focus abroad is on combining regulatory preparation, commercial partnerships and supply chain development to create credible pathways towards deployment. That brings me to another critical area of execution and the work we're doing to reduce deployment risk.

We are currently progressing through phased renovations of our X-Energy Technology Advancement Center. We call it XTAC. This is in Frederick, Maryland. It's a 90,000 square foot facility supporting advanced component development, fabrication, machining, integration and component testing. The pebble-bed technology that we're using is proven. Some of the components that we are putting in the plant are innovative and novel and we are using this facility to have the ability to test those components at the XTAC before their use in a commercial reactor. We're making progress toward establishing the capabilities required to test several of the reactor's most important systems, including our helium circulator and our fuel handling systems.

We're also establishing capabilities to fabricate and machine important components in the Xe-100 reactor core, and our team is already advancing graphite related work at XTAC. I want to underscore what this facility is designed to accomplish. High temperature gas cooled reactors have a substantial technical and operating history and our design incorporates decades of learning from that experience. We want to refine manufacturing processes and resolve practical engineering challenges before equipment reaches a commercial project site. In the simplest terms, we want to have done it at the XTAC before we do it in the field.

That is how we reduce execution risk, and that's how we support the transition from developing a reactor design to delivering what we believe will be a best-in-class repeatable project -- product. As I've discussed today, we've delivered on the significant milestones that we established for 2026 when we went public in April. We told you in April what we were going to do, and we've done it on time or earlier. These accomplishments reflect the breadth of the work underway across the company, and we're equally focused on what comes next.

Our priorities include advancing site-specific engineering and procurement for Dow, progressing feasibility and site characterization activities with AEP, completing the design for our Xe-100 reactor and expanding testing and machining capabilities at XTAC. At TRISO-X, the next phase is interior build-out and equipment installation at TX-1 while advancing the facilities and capabilities needed to support our broader fuel manufacturing strategy. The key takeaway is that we have the financial resources, the capital, we have the commercial partnerships, the customers, we have the technical capabilities, that is the tech and the team, necessary to continue executing our current strategy.

We're building the foundation for a business designed, not simply to deliver its first reactors but to support the repeatable commercial deployment of advanced nuclear technology to meet the massive total addressable market that is before us. We look forward to rolling out our 2027 milestones in the near future. And with that, I'll turn the call over to Daniel Gross, our CFO, to discuss our financial results for the quarter in more detail before I wrap up with a final comment, and we go to questions. Daniel?

Daniel Gross: Thank you, Clay. Our results for the third quarter are fairly straightforward, so I can keep this brief. In Q3 of 2026, total revenues and grant income were $66.3 million, that's $51.5 million of services revenue, mostly Xe-100 design work under the Advanced Reactor Demonstration Program, plus $14.8 million of grant income tied to the Dow demonstration reactor. Total revenues and grant income were up 118% compared to Q3 of last year. These results were driven by more engineering work and progress on our projects. Under the ARDP program, we are entitled for reimbursement of roughly half of this work.

And as of December (Sic) [September] 30, 2026, the Department of Energy has reimbursed $618 million to us under that program. Our total operating expenses in Q3 of 2026 were $169.9 million. This breaks down into direct costs of $93.6 million and SG&A of $76 million. When looking at our SG&A for the quarter, it's important to recognize that $22 million of that expense was noncash equity-based compensation. And our SG&A figures also include certain expenses associated with design and site preparation for our planned TX-2 fuel facility. These costs are being expensed and not capitalized because the U.S. GAAP accounting treatment for the project's current stage of development requires that treatment.

Total operating expenses were up 139% compared to Q3 of 2025. There were 3 primary drivers: more work under the Advanced Reactor Demonstration Program, more people and contractors doing that work and the equity-based compensation I alluded to previously, which was a noncash expense. Below the operating line, interest income was $19.7 million and benefited from optimization of how we invest our cash and reserves. Turning to cash flow.

Net cash used in operating activities was $51.2 million in the quarter, up from $30.8 million in Q3 of 2025, and that also reflects the higher activity under the Advanced Reactor Demonstration Program, corporate headcount contractors and prepayments to vendors on long-lead materials as well as preliminary work on our TX-2 facility, which was expensed as SG&A. Investing activities used $49.9 million in Q3, and a lot of this was from rolling cash into debt instruments as other debt instruments matured as well as for CapEx. We spent $71.8 million on capital expenditures for construction projects, including TX-1, for which the Department of Energy reimbursed us $27.8 million in cash during the quarter.

We get a lot of questions related to ARDP and the 50-50 cost share. So let me remind you that our reimbursements for CapEx and OpEx are never exactly half of what we spent during the quarter. And this is for 2 reasons. First, we spend the money, then we invoice, then we get paid. So keep in mind that we're affected by the timing of cash payments versus cash receipts, inflows versus outflows. Second, the cost share of the Xe-100 design work and TX-1. So while we track ARDP eligible costs separately from ineligible costs, we report them together in our financials.

And so our financial statements include amounts of CapEx and OpEx associated with other projects that are not eligible for ARDP cost sharing. Now I'd like to briefly walk you through our capital structure and balance sheet. We ended September with $1.8 billion in cash and investments, that's $1 billion of cash and cash equivalents, $514 million of short-term investments and $247 million of long-term investments, and we continue to invest this money conservatively, prioritizing capital preservation, liquidity and credit quality. At the end of Q3, we had no debt outstanding. So that leaves X-Energy in a well-capitalized position, and we will continue to exercise disciplined cash management.

Our robust liquidity supports the execution of our near-term milestones and the advancement of our strategic objectives and growth strategy. And with that, I'll turn it back over to Clay.

J. Sell: Thank you, Daniel. Great report. Before we open the call for questions, I want to recognize an important leadership transition at TRISO-X. As I've previously told you, Joel Duling, the President of TRISO-X, plans to retire, it happens eventually to all of us, from his full-time role to devote more time to his health, his family and his personal priorities. I'm hugely grateful for Joel's leadership, his commitment to our mission and the foundation he has helped establish. And I'm very pleased that Joel will remain with X-Energy as a part-time employee in a senior advisory role to me and the company.

Our search for his successor is progressing, and we're engaging with highly qualified candidates who bring significant manufacturing and operational experience. As you know, we have an incredible team, and we're excited to build on that track record. I expect to provide an update in the coming months on the next President of TRISO-X. As we close, I want to return to the theme I began with today. The opportunity ahead of us is substantial. That's the TAM. What matters is our ability to turn that opportunity into tangible commercial results, that is about the tech, the team, the capital and the customers.

We're demonstrating that we can support customers through the regulatory process, we're advancing manufacturing, engineering and supply chain readiness. We're building commercial fuel production capacity. We are supported by a strong balance sheet and we're attracting a growing and increasingly diverse portfolio customers. We have the right formula. Our focus remains on the work ahead. executing against our milestones, reducing risk and preparing for commercial deployment. We're heads down and encouraged by the progress we're making and we're confident in the opportunity before us. Thank you for your continued interest and support of X-Energy. And with that, we'll now go to questions.

Operator: [Operator Instructions] And your first question for today is from Marc Bianchi with TD Cowen.

Marc Bianchi: Congrats on all the progress since the last call. So you now have the construction permit or the project has a construction permit for Dow. And you mentioned preliminary FID in '27. Maybe talk to us a little bit more to the extent you can about what needs to happen to get to preliminary FID? And then as we think about the milestones that you'll put up for in the slides when we get to 4Q, looking out to 2027, will preliminary FID be the milestone for the Dow project? Or are there some other things you would also put on that list?

J. Sell: Thanks, Marc, for the question. One of the most important assets that we have is our relationship with Dow. The opportunity to build a first project with an industrial giant of their capability that has a long history of building and successfully building large complex megaprojects is a huge, huge benefit to X-Energy. And they have a proprietary and formalized gated decision process by which they determine that an appropriate amount of engineering has been done, that the cost targets are being met, that the O&M assumptions have been validated. So they have a formal process through which they go through that.

And then they take their decisions in their proprietary procurement process that take those gated decisions to the Board. And so we're working closely with them. We have a good view as to when that will happen in -- over the course of '27, but that will be a key milestone for the project, and we'll provide further guidance -- or Dow will provide further guidance as appropriate in the months ahead.

Marc Bianchi: Okay. And then I guess...

J. Sell: Did that answer your question?

Marc Bianchi: Yes. Yes. I mean, it sounds like, I guess, whatever preceding items to the preliminary FID really are on Dow's side, and that's a bit up to their process. I don't know if that -- would you agree with that feedback?

J. Sell: It is their process, to be sure. And it is fed by both inputs from their side and inputs from our side, which will shape exactly when and how that decision is made.

Marc Bianchi: Right. Okay. And then on the AEP announcement, I'm curious, there's a comment in there about the capital protections and financial safeguards provided by Amazon and X-Energy. Could you talk about what that involves and how the risk sharing might be allocated between X-Energy and Amazon? I mean, I'm sure there's lots of stuff that wouldn't be proper to discuss in a public domain, but just to the extent you could give us a little more color on it would be helpful.

J. Sell: Well, we've defined the early scope of the project. feasibility, preparation of the construction permit, our community engagement and the outline of what the commercial arrangement would be between Amazon and AEP. So it is a defined early scope that will develop all of the information that is necessary for AEP and the parties involved to make the next steps through the process. So I think, again, we benefit from working with very sophisticated parties that have a structured proprietary process to move through the decision-making channels. And we're thrilled. We're thrilled that AEP has selected us to move forward at the Sullivan County site, which is a fantastic site for Xe-100 reactors and represents a really extraordinary opportunity.

To the best of my knowledge, there is no investor-owned utility in the United States that has certainly chosen an SMR for an advanced technology like ours to proceed forward with the project. And it's the early stage, but you can't get to the second stage unless you start with the first stage. And I think we are in a unique advantaged position in that regard.

Operator: And your next question comes from the line of Joseph Osha with Guggenheim Securities.

Joseph Osha: Just following up a little bit on the previous one. Obviously, the Dow FID is important. But in your materials, you also talked about procuring long lead time materials as part of that process of getting ready to build. Can you talk about some of the key challenges there and things we should be looking for?

J. Sell: Well, thanks for the question, Joe. Part of our strategy is we are playing to get to scale and to get to scale relatively quickly. And that means that we have to make early investments to ensure that the supply chain for graphite, for steel forgings, for enriched material, for steam generator tubes that those materials are available in the capacity that we need when we need it. And so we've chosen to make some early investments to secure capacity and to buy early material with the full expectation that when our customers reach their investment decisions, they will take over those obligations on a go-forward basis. So why are we doing that?

We are doing that to accelerate the development of our supply chain so we and our customers will have confidence that it's there when they need it. So you've seen over the course of the last several months, we've announced the securing of capacity at Doosan Enerbility for our large steel components. You've seen us announce capacity reservations and material from Toyo Tanso and SGL for graphite. We recently announced an early procurement of material for our steam generator tubes from Alleima. So all of these strategies are really to support the development of our supply chain and ensuring that it is available for our customers when they need it.

And I think it's a smart and appropriate and limited use of our capital and balance sheet to support our long-term goals.

Joseph Osha: Yes. And just a quick follow-up. I know we're out into the future here, but we've got no FID in hand, we start building, what would be the timing of when you go back to the NRC for an operating permit? Does that process take maybe a year or so. Just talk a little about what that looks like as we get closer to operations.

J. Sell: Yes. The work is already in development. What we previously guided that the -- we expect the -- that first project to be online in the early 2030s. So we are planning for -- we expect the operating license review period to be about 18 months. That will conclude just before we load fuel and begin the start-up and commissioning process. So we have an ample period of time to do the work to prepare that operating license and probably you can kind of think in terms of us filing it with NRC probably about 2 years before the project goes into commissioning. So we're well ahead where we need to be.

And we kind of highlight that in our -- on Page 4 of the deck that we submitted today.

Operator: And your next question comes from the line of David Arcaro with Morgan Stanley.

David Arcaro: Okay. Congratulations on all the operational milestones that you've achieved over the past quarter. I did -- let's see, I wanted to ask maybe more broadly, following the midterm elections, do you see any changes to the overall levels of support for nuclear and fuel production maybe at the federal level post election?

J. Sell: Honestly, no. Our industry is -- has been one of the rare, unique bipartisan issues in Washington for almost the last 8 years. And it's been really extraordinary, and we anticipate that, that will continue going forward. We've already had -- we've continued to have discussions with both sides of the aisle. It's always been our practice. I'm in the energy business. My interest is long-term durable policy support. And so we've always worked to maintain the strong bipartisan support. We benefited from it. I think it will be an asset for us going forward. And so the Republican-controlled Congress and the administration has been great.

The Biden administration in the previous term was great for nuclear, and we anticipate we'll continue to see strong support across the board going forward. I mean, we're really in a fortunate position. But quite frankly, it's earned, and it's deserved because there is broad recognition of the role that nuclear can play in national security, in energy security and in addressing the needs for climate change. So whatever your motivation is, sometimes they come from different sides or different corners, but they all get to the same answer, which is the United States and the world needs a massive deployment of new nuclear power to meet our national interest.

And so I think we're going to continue to be in a strong position.

David Arcaro: Yes. Makes sense. Okay. And then I was wondering, maybe on the NRC side of things, you got the construction permit here for the Dow project ahead of schedule. Curious if you could talk about is that replicable now for future projects? Could it be even faster? Kind of what's the -- that what's the aspiration for the next one that you would submit?

J. Sell: Yes and yes. A tremendous amount of the work. I mean because -- remember, David, like our -- the nuclear island, the reactor and the nuclear steam supply system, that is where all of our safety-related systems exist. And that package will be the same for our first and our subsequent plants. And so all of the engineering and safety analysis that was required to get that approved for the Dow project will be replicable for Energy Northwest, for AEP and on and on. So we do anticipate that this process, it took us 17 months from the time it was docketed until it was issued. We anticipate that, that will go down substantially for each subsequent application.

The unofficial guidance that we've heard from the NRC has provided to us is that their goal, their objective is to get it to something in the range of 6 to 12 months. So I've told you, I've told others for many months now that the regulatory framework, the regulatory risk can be well managed. And the regulatory pathway is not on the critical path for any of our projects. I'll say that again. Regulatory approval is not on the critical path for any of our projects. It really relates more to the supply chain, which is why we are making early investments in the supply chain because that's the best opportunity to reduce schedule on our future projects.

Operator: And your next question comes from the line of Jeremy Tonet with JPMorgan.

Jeremy Tonet: Just wanted to come back to this announcement with AEP and Amazon here. And if I look across AEP's footprint, there is a lot of coal plant retirements. It's a large footprint. And I imagine there's other overlap with Amazon. How much could this serve as a template for future announcements? Is there anything that we should be thinking about there?

J. Sell: I would love for you to think about it. I'm not in a position to preview future announcements, but neither will I argue with the conclusion or the deduction that you've made.

Operator: And your next question comes from the line of Nate Pendleton with Texas Capital.

Nathaniel Pendleton: Congrats on the continued progress. Maybe can you walk us through the non-nuclear test program at Frederick? What have the tests at XTAC shown so far? And maybe how is testing of key components sequenced against design finalization and Dow's 2027 investment decision?

J. Sell: So we have done some -- we're doing initial testing now on graphite components and some of our less material, but nonetheless important components. The activity at Frederick at the XTAC facility is not a significant input to Dow's next investment decision. You can really think about this facility as a place -- it's not whether things work. It's the process that we will use to install them. It's an opportunity to validate our manufacturing processes to validate our long-term O&M assumptions. And so that's really the work that will go on at Frederick. The main thing that we will do is, over the course of the next couple of years, we will bring to operation our helium test loop.

So this will be a helium test loop where we will exercise and validate all of our mechanical systems that operate in the helium environment. And there aren't very many mechanical systems that operate in the helium environment. You can really think as basically 3; our fuel handling system, our helium circulator system and our control rods and our control rod drive mechanisms. So we will test those components in the helium environment, just to assure again, it goes to how we install them, how we do O&M on them over the course of the life of the plant.

That's really -- that's the best picture I can provide to you as to the data, the type of data we'll be collecting out of our XTAC facility. Great question.

Nathaniel Pendleton: Got it. And perhaps, can you talk about your irradiation campaign at the ATR since I believe it should be nearing completion at this point. What has the team learned? And how do those results line up with what you're expecting?

J. Sell: I don't think -- I don't have any news to report to you on that. You're right. We're still -- it's a very, very exciting campaign that we're going. I'll tell you, we've been -- the interim results that we have obtained, have met all of our expectations, but we'll complete the campaign, we'll do the full assessment and we'll provide an appropriate report thereafter. But yes, it's nothing like having your own fuel under irradiation at the Advanced Test Reactor in Idaho and seeing it perform to expectations. It's kind of like watching your child play sports, seeing them succeed. It's very, very satisfying part of our campaign.

Operator: And your next question comes from the line of Seth Basham with Wedbush Securities.

Seth Basham: Back to the Dow project, you mentioned that you're still completing the design for the Xe-100 reactor. Is this a prerequisite for preliminary FID by Dow?

J. Sell: To complete the design?

Seth Basham: Correct.

J. Sell: Is that your question?

Seth Basham: No, it's not.

J. Sell: No. We will have -- no, no, we'll have the design complete before we start construction. But there are still -- we're still in the final design process, the manufacturing drawings, detailed construction plans, we're still in that phase and that will not be completed before Dow takes its preliminary investment decision. It will be completed before we start construction.

Seth Basham: Got it. That's helpful. I mean just given the history of the industry with cost overruns with Darlington being the most recent example from engineering-related problems. How should we think about the level of engineering that's necessary before Dow gives FID? Are we talking Class III or something even more detailed?

J. Sell: Well, I love this question. And I have to acknowledge my bias, Seth. I've been around this industry. I've been a participant and an observer of it for 30 years. And there's a reason when I came back to this industry that I joined X-Energy with their Generation 4 technology. Like I have a strong bias. It is my view that the future belongs to advanced technologies, that have a meltdown-proof design that have intrinsic safety that have a simpler design with fewer components with less steel, with less concrete. And the reason I believe that is because I think we have to make these plants easier to build.

Now we also have to avoid other mistakes that have been made in our industry in the past, like starting construction before you have it completely designed. And so we observe closely everything that is happening in our sector. And it does not intimidate us. It validates the choices that we've made when we see challenges across the sector because we set out at the beginning to bring a technology to the marketplace that could address the #1 risk that has held nuclear power plants back, and that is the inability to deliver these projects on time and on budget due to the increasing complexity of these designs. So we've simplified. We've learned the lessons.

We'll get the engineering and design work done before we start construction. We'll give -- we'll have an acceptable cost target. Our objective, our belief is that whatever Dow and [ X-En ] or Dow publishes as the initial cost in the initial schedule that we will be in a confident position to meet that. I think once we do that, when we do that, the world will beat a path to our door. And even in addition to the back order projects that we have already, many more will come. So that's the game. That's the game for us.

And we are intensely, intensely focused on succeeding on that front and avoiding the mistakes that have been made in the past. So you've hit on something that I'm quite passionate about. It's what X-Energy is staking its reputation on, and we intend to exceed and succeed on our first project.

Operator: And that concludes our question-and-answer session. I would like to hand it back to Clay Sell for closing remarks.

J. Sell: Well, thank you, everyone, for joining us today. We look forward to sharing additional updates next quarter as we continue to execute against our near-term milestones and show you how we are continuing to position the company to be a leader in the nuclear industry. I really appreciate your time. I appreciate your questions. It's 9:01, and we're happy to close the day on right on schedule. Thank you.

Operator: Thank you, presenters. And ladies and gentlemen, this concludes today's conference call. Thank you all for joining. You may now disconnect.

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