Standard Nuclear (STDN) Q3 2026 Earnings Call Transcript

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DATE

Thursday, Nov. 12, 2026

CALL PARTICIPANTS

• VP, Finance, Treasury and Investor Relations - Christopher Koscielniak
• President and Chief Executive Officer - Kurt Terrani
• Chief Financial Officer - Kevin Harrill

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TAKEAWAYS

• Total Contract Backlog -- $577.2 million, an increase from $241.5 million at the end of the second quarter, primarily due to the conversion of non-binding arrangements into executed contracts.
• Funded Backlog -- $119.6 million, nearly doubling from $61.9 million in the previous quarter, reflecting binding commitments with firm delivery obligations.
• Revenue -- $6 million, an increase from $900,000 in the prior year quarter, driven by commercial TRISO fuel deliveries and growth in development services.
• Net Loss -- $13.1 million, or $0.10 per share, compared to $3.2 million in the prior year quarter, resulting from higher operating expenses and share-based compensation following the initial public offering.
• GAAP Gross Margin -- 30%, a decrease from 67% in the second quarter, as the company increased production costs to complete the Radiant reactor core.
• Adjusted Gross Margin -- 40%, excluding $600,000 in share-based compensation, compared to an adjusted gross loss in the prior year period.
• Product Revenue -- $3.7 million, representing the majority of the top line for the second consecutive quarter, primarily from fuel deliveries for the Radiant core.
• Service Revenue -- $2.2 million, derived from fuel development contracts and projects for U.S. government agencies.
• Qualified Pipeline -- $844.7 million, down from $986.3 million at the end of June, as opportunities converted into executed contracts.
• Cash and Cash Equivalents -- $223.1 million at the end of September, with no debt, following the completion of the company's initial public offering in July.
• Purchase Options -- $443.5 million under executed contracts, representing customer options exercisable at their discretion.
• Capital Expenditures -- $32.2 million for the first nine months of 2026, focused on the build-out of production capacity in Tennessee and Idaho.
• Module Throughput Capacity -- 0.5 metric tons per year at the SN-0 facility, reflecting installed lines available for commercial production.
• Building Throughput Capacity -- 5.5 metric tons per year across the three company facilities, including the SN-TN and SN-ID buildings.
• Process Yield -- 63.3%, which remained unchanged from the second quarter of 2026.
• General and Administrative Expenses -- $15.5 million, up from $1.8 million in the prior year quarter, largely due to $9.5 million in share-based compensation.
• R&D Expense -- $1.4 million, primarily supporting process engineering and qualification work for the new production facilities.
• Remaining Performance Obligations -- $115.2 million, with approximately $41.4 million expected to be recognized as revenue over the next 12 months.
• Property and Equipment -- $46.8 million, net, an increase from $12.6 million at the end of 2025, driven by infrastructure investments.
• Antares Agreement -- 1 metric ton of uranium contained in HALEU TRISO fuel as a firm commitment, plus customer options for up to 7 additional metric tons through 2035.

SUMMARY

Standard Nuclear, Inc. (NYSE:STDN) reported an increase in its total contract backlog and finalized its first commercial core delivery in the third quarter. Management stated that demand for its TRISO fuel is being driven by three phases of nuclear development, including government microreactor programs, commercial deployments, and future small modular reactors. The company is completing construction on its production facilities in Tennessee and Idaho, with a target to receive operational authorization in February 2027.

• CEO Terrani stated that the company completed delivery of the Kaleidos core to Radiant, which recently received Department of Energy approval for its full-power operation safety analysis.
• The company executed a fuel supply agreement with Antares Nuclear, Inc. that includes a firm commitment for 1 metric ton of HALEU TRISO fuel and options for up to 7 additional metric tons.
• Management reported that the Richland joint venture with Framatome is prepared to begin production in 2027 with an initial annual capacity of 1 metric ton.
• Standard Nuclear delivered its first fuel kernels for NASA's Nuclear Thermal Propulsion program, which uses high-temperature materials for deep-space missions.
• The company acquired a 51,000-square-foot building in Oak Ridge for $5.5 million to expand its capacity for non-radiological operations such as 3D printing and machining.
• Terrani noted that the company is the only independent U.S. manufacturer of TRISO fuel working under both Department of Energy and Nuclear Regulatory Commission jurisdictions.

INDUSTRY GLOSSARY

• TRISO: Tri-structural isotropic particle fuel, consisting of a uranium ceramic kernel coated in layers of carbon and silicon carbide.
• HALEU: High-assay low-enriched uranium, containing between 5% and 20% Uranium-235.
• LEU+: Low-enriched uranium with an enrichment level between 5% and 10%.
• Project Janus: A Department of Defense program aimed at deploying microreactors on military installations.
• NTP: Nuclear Thermal Propulsion, a technology using nuclear reactions to heat propellant for space travel.
• RPO: Remaining performance obligations, representing the dollar value of contracted work that has not yet been performed.
• Hazard Category 2: A Department of Energy classification for nuclear facilities based on the potential for significant on-site consequences from a radioactive material release.
• NRC: The Nuclear Regulatory Commission, an independent agency of the U.S. government tasked with protecting public health and safety related to nuclear energy.
• DOE: The U.S. Department of Energy, a cabinet-level department concerned with United States' policies regarding energy and safety in handling nuclear material.

Full Conference Call Transcript

Operator: Hello, and welcome to the Standard Nuclear Third Quarter 2026 Earnings Conference Call. [Operator Instructions] Please note that this call is being recorded. I will now turn the call over to Chris Koscielniak, VP, Finance, Treasury and Investor Relations for Standard Nuclear. Please go ahead.

Christopher Koscielniak: Thank you, operator, and good morning, everyone. Welcome to Standard Nuclear's Third Quarter 2026 Earnings Call. This morning, we issued our earnings press release reporting results for the 3 and 9 months ended September 30, 2026, and filed our quarterly report on Form 10-Q with the SEC. Our earnings release and investor presentation are available in the Investor Relations section of our website. Before we begin, please note that 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.

Additional information about factors that could cause actual results to differ materially is contained in the Risk Factors section of our Form 10-Q for the quarter ended September 30, 2026, filed this morning, and our other SEC filings available on our Investor Relations website at ir.standardnuclear.com and at sec.gov. We undertake no obligation to update forward-looking statements, except as required by law. During this call, we will refer to certain operating metrics, including funded backlog, total contract backlog, qualified pipeline, module throughput capacity, building throughput capacity and process yield. Definitions of these metrics and important limitations on their use are included in the key performance indicators section of our Form 10-Q.

We will also discuss certain non-GAAP financial measures, including adjusted gross margin, adjusted G&A expense and adjusted operating loss, each excluding all share-based compensation. These measures supplement our GAAP results. Definitions and reconciliations are available in this morning's earnings release on our Investor Relations website. With me today are Kurt Terrani, our President and Chief Executive Officer; and Kevin Harrill, our Chief Financial Officer. Kurt will open with the market, our strategy and operations. Kevin will take you through the financial results, and Kurt will close before we open the line for questions. With that, I'll turn the call over to Kurt.

Amir Terrani: Thank you, Chris, and thank you, everyone, for joining us. This is our second earnings call as a public company, so I will keep the background short. Standard Nuclear makes TRISO fuel, the coated particle fuel that many advanced reactor designs are built around. Each particle is a speck of uranium ceramic wrapped in layers of carbon and silicon carbide that hold the radioactive material inside at temperatures well beyond what conventional nuclear fuel can withstand. The Department of Energy calls it the most robust nuclear fuel on earth. That robustness is what lets the reactor be small, sited next to the customer it serves and safe without active cooling. The fuel technology is proven.

What is new is making it at commercial scale. And that is what we do. We are reactor-agnostic, and we do not compete with our customers. It's worth taking a minute to explain why this technology is proven because safety is the reason this market exists. In the Department of Energy's Advanced Gas Reactor program, which members of our team helped lead, roughly 300,000 TRISO fuel particles were extensively irradiated inside a test reactor at temperatures up to 1,300 degrees Celsius during the first irradiation campaign of that program, resulting in 0 particle failures. Afterwards, that same irradiated fuel was heated to, and held at 1,600 degrees Celsius.

The peak temperature of these reactors are designed never to exceed even in an accident. And they were held at that temperature for hundreds of hours, again, with 0 particle failures. Because the fuel itself contains the radioactivity under these extreme conditions, massive containment domes and extensive civil site works are unnecessary. This is why a TRISO field reactor can be small enough to build in a factory and safe enough to site right where the power is needed. Last quarter, we showed you a model. This quarter, we want to show you a market.

It is here, and it is arriving in 3 phases: microreactors and government programs, microreactors and commercial programs and small modular reactors in the next decade. We are built to supply all 3. All right. Let's talk about these 3 phases of TRISO demand and double-click on it. Let's start with the evidence: 6 advanced reactors have reached criticality in the United States this year, 4 of them by the July 4 target; 3 of these 6 run on TRISO fuel and every TRISO reactor needs the first core and then reloads for the life of the reactor. We work with many of these developers and 2 of those relationships are public.

Antares, which signed a fuel supply agreement with us in August, and Oklo, which signed a memorandum of understanding with us in April to explore supplying reprocessed uranium and transuranic materials recovered from used nuclear fuel as feedstock for our TRISO fuel, the same recycled fuel path ARPA-E selected us to develop. Our fuel is part of that evidence. In the third quarter, we completed delivery of Radiant's Kaleidos core, the first complete reactor core of commercially produced TRISO fuel supplied by an independent U.S. manufacturer. On October 29, Radiant announced that Department of Energy approved the safety analysis for the Kaleidos reactor to operate at full power, full temperature.

From here, DOE conduct a readiness review and Radiant then fuels the reactor at DOME, the facility at Idaho National Laboratory, and test it to full power. It is the same design and fuel intended for customer deployments. Feedstock is following the reactors. Congress directed the Department of Energy to seek to make 21 metric tons of HALEU available to advanced reactor developers, 9 entities have been named across 3 allocation rounds. Most of those allocations go to TRISO fuel designs, and that feedstock has to be fabricated into fuel form before those reactors can run.

We hold our own conditional allocation and we remain the first company to have both received Department of Energy authorization and physically taken delivery of HALEU for TRISO production. All right. Phase 1, we said it's going to be microreactors and government programs. Phase 1 is here today. It's here now. The government is funding microreactors and most of them run on TRISO. Project Janus, the Department of War's program run by the Army with the Defense Innovation Unit, puts microreactors on U.S. military installations. The Army has named 5 vendors and 5 initial installations with up to approximately $2.2 billion in milestone-based funding across fiscal years 2027 through 2031.

It expects the program to support more than 20 microreactors with the first operational unit targeted for September 2028. Four of the 5 awardees use TRISO field designs. Two of them, Radiant and Antares, are publicly our customers under binding fuel supply agreements. Radiant's Janus agreement covers up to 15 Kaleidos units by 2030, and Antares expects to begin deploying initial production units to military installations in 2028. The program funds the reactors, we supply the fuel and it becomes backlog as our customers contract it. On October 20, Radiant announced that the Navy selected Kaleidos for Naval Weapons Station Crane in Indiana under Janus. Our Antares agreement shows how program time lines become contract terms.

It includes a firm commitment of 1 metric ton of HALEU TRISO fuel with customer options for up to 7 additional metric tons exercisable in 1 ton increments by end of 2027 before the first Janus unit is scheduled to operate. Those options remain at customers' discretion. Government programs run on schedules and federal funding, and they arrive before the commercial market does. They let us build capacity against contracted demand, and they let our customers qualify their fuel with us years before commercial deployments. Phase 2, microreactors and commercial programs. Phase 2 is forming right behind it, microreactors and commercial programs. Developers have announced commercial agreements and partnerships outside any government program. And investors are backing it.

By public reports, TRISO fuel reactor developers have raised about $1.7 billion of private capital this year. The point is not any one deal; the point is that demand is real and broadening. The NRC is clearing the road. On October 22, it finalized a rule that lets developers with Department of Energy or defense department authorization use that work to expedite commercial licensing. We target reviews of about 18 months for a first-of-a-kind application and about 12 months after that, every reactor that makes that move needs fuel, and we are well positioned to supply that demand across our various production sites in Tennessee, Idaho and Washington. This is also where independence matters.

The other TRISO fuel efforts we see today are largely built to supply their own reactors. We are reactor-agnostic with industrial-scale TRISO manufacturing in place today. So a developer whose reactor is not ours has a supplier in us. Now let's talk about the last phase, Phase 3, small modular reactors. Phase 3 is the TRISO fuel small modular reactors of next decade, backed by hyperscale data center operators and industrial customers and targeting operations in the early 2030s. They sit inside a much larger nuclear build-out. National policy targets 400 gigawatts of U.S. nuclear capacity by 2050, roughly 4x today's fleet.

And by our count of public announcements, hyperscale data center operators have contracted about 9 gigawatts of existing nuclear capacity and committed to roughly 6 gigawatts of new development. Not all of that will run on TRISO, but every TRISO design in it needs a fuel supplier. We do not have to rebuild for it. The same design, frozen modules, that make microreactor fuel today make SMR fuel tomorrow. And SMR customers will need the NRC-licensed supply that starts at Richland in 2027. Here's how those signals reached our numbers. Total contract backlog was $577.2 million at the end of September, up from $241.5 million at the end of June and funded backlog nearly doubled to $119.6 million.

First, why that demand comes to us? DOE operations today and NRC-licensed production beginning in 2027, that's our model. Every reactor in all 3 of these phases we talked about needs fuel and fuel is the gate. Our regulatory position is a strategic advantage. We are the only TRISO producer in the country working under both Department of Energy and NRC jurisdictions. And we can produce under both. SN-0, that's our existing operations today, produces today under DOE authorization. SN-TN and SN-ID are built and equipped and the final document of safety analysis for SN-TN is submitted for review, with SN-IDs to follow shortly on the same template.

And DOE authorization is targeted for February 2027 once we receive operational readiness review approval. Prior to that date, we are able to run natural uranium through our modules. So we expect to be able to start HALEU TRISO production once we receive that final approval. On the NRC side, the Richland site in Washington has its license, Framatome Part 70 license, which the NRC amended in July to authorize TRISO fabrication at enrichments just under 10 weight percent Uranium-235. Our joint venture is in full swing. The design established, the long-lead equipment is ordered for delivery around the end of the year and production begins in 2027.

Also, you may have heard that Urenco USA in New Mexico successfully completed the production of its first product cylinder of LEU+. Guess what? That material is produced for Standard Nuclear, and we plan to receive it at our joint venture site in Richland and use it as feedstock to produce fuel for our upcoming customers that use LEU+. So again, we operate in Tennessee and Idaho under the Department of Energy jurisdiction, and Washington under NRC jurisdiction. And over time, we have the option to transition our Tennessee and Idaho sites to also go under NRC jurisdiction.

But the key takeaway is that we have mature processes and engagements with both of these federal entities, and they both have reviewed our processes thoroughly and have issued approvals and authorizations at various stages for us to conduct our fuel production operations. For a new entrant, the road is still long. As our prospectus sets out, licensing, construction and qualification takes 7 to 10 years before the first kilogram comes off the line. And the only new TRISO fuel facility license issued today took nearly 4 years on its own. The NRC is working to shorten its reviews, and that will help, but it does not shorten construction and qualification. All right. Let's talk about the joint venture strategy.

The joint venture is strategy. It's not a side project. Standard Nuclear Framatome LLC was formed in September 2025. We hold 2/3, Framatome holds 1/3, and it exists to manufacture TRISO and TRISO-based fuel forms at Framatome's Richland site. We bring the technology and modular equipment. Framatome brings an NRC-licensed site and decades of fuel manufacturing experience. Initial capacity is approximately 1 metric ton annually. Our S-1 describes the site as capable of scaling to as much as 20 metric tons over time. That capacity is incremental to our wholly owned facilities. The strategy is speed to access.

The NRC approved TRISO fabrication at Richland less than 2 years after the license amendment request was submitted, far faster than a greenfield license. And the commercial customers of Phases 2 and 3 will need fuel from an NRC-licensed facility. The joint venture gives us that facility, and it is licensed today. Now let's talk about why is it that our customers stay. Fuel is not a commodity in this industry, at least for some time. Every reactor design has its own specification: kernel size, enrichment, coating layers, the fuel form that the particles are packed into and the qualification data the regulator will require. Those specifications are set early in the reactor development years before the first core.

Under a Fuel Development Agreement or an FDA, the customer funds the development of its specific fuel form with us. We develop it, characterize it and generate the qualification data on our own equipment in our process. The reactor is then designed around the fuel that we make. Once the developer has built a qualification data package with us, changing suppliers means redeveloping and requalifying its fuel. That is what makes the relationship durable. And our contracts back it with nonrefundable deposits, milestone payments and in certain cases, off-ramp payments if a customer cancels early. This quarter showed progression is not a one-off. At the end of June, we had field development agreements with 8 commercial reactor developers.

In the third quarter, 2 of them, Radiant and Antares, moved to fuel supply agreements. The others are earlier on the same path and how fast they move depends on their qualification progress, financing and deployment schedules and not on a sales calendar of ours. Each stage shows up in a metric we report. Qualified pipeline is fuel we have vetted but not yet contracted. A Fuel Development Agreement is the first contract where the customer pays us to develop and qualify its fuel form. A memorandum or nonbinding term sheet is unfunded backlog and a fuel supply agreement puts firm quantities into funded backlog and additional quantities into purchase options.

Our government development work, such as the NASA program is funded program work that builds new capability and is not part of this commercial path. Execution in the quarter. Being positioned is one thing. We are executing. On deliveries, we completed the balance of Radiant Kaleidos core in the third quarter following the initial 50-kilogram shift in June. On contracts, we converted the Radiant binding term sheet into a definitive fuel supply agreement in August for multiple metric tons of fuel through 2031, and we entered into Antares fuel supply agreement I described. On capacity, construction is substantially complete at SN-TN and SN-ID. All the long-lead module equipment from both sides is on hand.

At SN-TN, installation of most of the long-lead modules is complete and installation continues. SN-ID is next. The Department of Energy has approved the preliminary document safety analysis for both sites. On November 6, we submitted the final document safety analysis for SN-TN. SN-ID is to follow shortly on the same template. Two steps remain: DOE's review of the safety analysis and a readiness review. We target authorization to operate at both sites in February 2027. Our Form 10-Q reports 2 capacity metrics, so you can track this. Module throughput capacity, meaning installed lines available for commercial production was 0.5 metric tons per year at the end of September, all at SN-0.

Building throughput capacity, meaning what our construction buildings can hold when fully populated with modules, was 5.5 metric tons per year, SN-0 plus 2.5 metric tons for each of the SN-TN and SN-ID buildings. The modules we have purchased and are installing give each new site up to 1 metric ton per year at start. As the sites are authorized and modules are installed, module capacity steps up towards building capacity and each site can grow to its 2.5 metric tons by adding modules. Process yield was 63.3% at the end of September, unchanged from the second quarter. Our new facilities are designed to improve it, and we will report at each quarter as they come online.

On the platform, our transportation package designs continue through the NRC's Part 71 process with target approvals in the fourth quarter of 2028 and first quarter of 2029 as reported in Form 10-Q. Our Oak Ridge campus keeps growing. In July, we bought 100 Europia Avenue, 5.45 acres, with an approximately 51,000 square foot building for $5.5 million in cash. It gives us the room for non-radiological operations and brings our Oak Ridge holdings to more than 50 acres. And in July, the Department of Energy named Tennessee and Idaho, the 2 states where we operate, among the finalists to host its Nuclear Lifecycle Innovation campuses. New fuel lines, space and recycled feedstock. Our fuels also go to space.

We fabricate fuel for NASA's Nuclear Thermal Propulsion program under our contract with Battelle Energy Alliance, the operator of Idaho National Laboratory. And we delivered our first fuel kernels in the third quarter with further deliveries scheduled. Nuclear Thermal Propulsion relies on fuel engineered to withstand extreme cold temperatures while transferring heat directly to a hydrogen propellant. These engines can make long duration and deep space missions possible, and they depend on advanced fuels and high-temperature materials as the critical path to flight. We see the program as a foundational piece of our space nuclear fuel line alongside our terrestrial TRISO business, and we are supporting additional space reactor developers' programs and initiatives.

Recycled material is the next frontier for the same expertise. ARPA-E is funding approximately $7 million of our work to develop TRISO fuel made from recycled transuranic material, including plutonium. That builds the same fabrication capability to Surplus Plutonium Utilization Program needs, where DOE selected us in the second quarter for advanced negotiations. Together, they extend the feedstock our fuel can be made from beyond high-assay low-enriched uranium. Kevin will now show you what all of this looks like in our numbers. Kevin, please?

Kevin Harrill: Thank you, Kurt, and good morning, everyone. Before the numbers, one piece of context. Our IPO closed on July 17. So this is the first quarter that shows the post-IPO company in the balance sheet, the share count and the interest income. I'll spend most of my time on 3 things: revenue growth, gross margin and how equity compensation shows up in our operating expenses. On that last point, this quarter, we added non-GAAP measures that exclude share-based compensation, both the awards granted with the IPO and other awards. Share-based compensation is a noncash expense, and it is large this quarter because of the IPO grants.

So we believe these measures help you see the operating performance of the business alongside our GAAP results. GAAP results remain our primary measures, and the reconciliations are in our release and Form 10-Q. Revenue of $6 million was up from $4.7 million in the second quarter and from $900,000 in the prior year quarter. Product revenue was $3.7 million, primarily from deliveries of TRISO fuel under one fuel supply agreement, including the balance of the Radiant core. Service revenue was $2.2 million from fuel development contracts and government projects. Product revenue was the majority of the top line for a second consecutive quarter. Now let's turn to gross margin.

Gross profit was $1.8 million, a gross margin of approximately 30% compared to 67% last quarter. Excluding the $600,000 of share-based compensation and cost of revenue from both IPO awards and other awards, adjusted gross profit was $2.4 million and adjusted gross margin, a non-GAAP measure, was approximately 40%. Cost of revenue was $4.2 million, up $2.6 million from the second quarter as we ran SN-0 at a commercial production rate for the whole quarter to complete the Radiant core. Most of that increase was people. Production, labor and payroll, including overhead labor that supports production added $1.5 million. Subcontract and consulting support added about $900,000.

Production supplies, facility and insurance costs added another $700,000 and share-based compensation added about $100,000. Lower depreciation and lower travel partly offset those increases. Depreciation included a $500,000 adjustment for depreciation recognized in prior periods on equipment at our Tennessee and Idaho facilities. Neither the second quarter nor the third is the run rate in these first periods of commercial production. Our manufacturing economics depend on process yield, material recovery through our in-line recycle loop and fixed cost absorption as production volume increases. We will report the cost lines each quarter so you can assess our progress. Moving on to general and administrative expenses. We reported $15.5 million compared to $5.5 million in the second quarter.

Of that, $9.5 million was share-based compensation, of which $7.7 million came from awards granted in connection with the IPO. Excluding that $9.5 million, adjusted general and administrative expense, a non-GAAP measure, was approximately $6 million. As our second quarter 10-Q disclosed, we granted those awards in connection with the IPO, and this is the first quarter that carries their expense. That expense will continue over the awards' remaining vesting periods, and we will report it separately so you can distinguish it from operating performance. The public company infrastructure is in place, and our focus now is discipline on additional overhead. Research and development expense was $1.4 million for the quarter compared to $2 million in the second quarter.

This is the process engineering and qualification work to bring SN-TN and SN-ID into commercial production, including the licensing and authorization deliverables under our agreement with the Department of Energy and the engineering of our fuel transport containers. It covers only the costs that are not capitalized into the facilities and equipment. It is the engineering behind the replicable facility model, and it is spending ahead of the production revenue those facilities are expected to generate. Now moving on to loss from operations. For the quarter, we reported $15.1 million. Adjusted operating loss, excluding all share-based compensation, was $4.8 million. Interest income was $2 million, reflecting income earned on our cash balances.

Net loss was $13.1 million or $0.10 per share on weighted average shares of approximately 134.9 million, which mostly reflect the post-IPO capital structure. For the 9 months, revenue was $11.3 million, up from $1.8 million in the comparable prior year period. Gross profit was $0.6 million and non-GAAP adjusted gross profit, excluding all share-based compensation, was $2.1 million. Net loss was $24.2 million or $0.38 per share. Cash and cash equivalents were $223.1 million at September 30, and we have no debt. Deferred revenue, including the noncurrent portion, was $6.7 million, up from $4 million at June 30.

That line largely reflects customer deposits and milestone payments received ahead of performance under our commercial contracts, which is the commercial deposit model Kurt described earlier. Property and equipment net was $46.8 million, up from $12.6 million at the end of the year. That increase reflects the continued build-out of the modular equipment and facility infrastructure needed for production. For the 9 months, cash used in operating activities was $16.6 million. Cash used in investing activities was $33.6 million, including $32.2 million of capital expenditures for the build-out of production capacity and $1.4 million contributed to the joint venture.

Financing provided $210.2 million, including $137.4 million of net IPO proceeds as well as $70 million private financing, which was completed in January of this year. Finally, the metrics I would ask you to watch. Total contract backlog was $577.2 million at September 30. That consists of $119.6 million of funded backlog, $443.5 million of purchase options under executed contracts and $14.1 million of unfunded backlog. At June 30, those figures were $241.5 million, $61.9 million, $156.5 million and $23.1 million, respectively. Funded backlog represents binding commitments with firm delivery obligations, net of revenue recognized. Purchase options are at the customer's sole discretion and are not in our financial statements until exercised.

Unfunded backlog is nonbinding arrangements and has declined because those arrangements became executed contracts. That is the progression we said last quarter, we will report to you every quarter. Here is the first data point. Between March 31 and September 30, funded backlog went from $8.2 million to $119.6 million and unfunded backlog went from $83.1 million to $14.1 million. One more figure for visibility. Our Form 10-Q reports $115.2 million of remaining performance obligations at September 30, of which we expect to recognize about $41.4 million over the next 12 months. Remaining performance obligations are the GAAP measure of contracted revenue still to be recognized and they exclude unexercised options.

Qualified pipeline was $844.7 million at September 30 compared to $986.3 million at June 30. The $141.6 million decrease reflects conversion of pipeline into executed contracts, and the pipeline rebuilt from approximately $696 million in late August. Now let me connect our numbers to the market Kurt described because I want you to see why we are confident the opportunity through 2030 is there. We do not give financial guidance, so this is about the market, not a forecast. First, the demand is real, and it is arriving in all 3 phases Kurt walked through, government and microreactors now, commercial and microreactors behind them and small modular reactors in the next decade.

The independent study commissioned for our IPO puts TRISO fuel demand from advanced reactors at about 26 metric tons a year by 2030 and about 116 metric tons a year by 2035. Second, we can serve it. SN-0 produces today. SN-TN and SN-ID start at up to 1 metric ton per year each, once authorized, and are designed for 2.5 metric tons each. Richland is licensed and begins production in 2027 through our joint venture, and we can add capacity quickly. We can replicate a facility in about 11 months, and our long-term plan calls for up to 40 metric tons of capacity by the end of the decade. Third, we are already capturing that demand.

Total contract backlog and qualified pipeline together were approximately $1.4 billion at September 30, roughly 44% of our estimated $3.2 billion serviceable addressable market through 2030. And 2 of our fuel development customers converted to fuel supply agreements this quarter, 6 more are under contract with us to develop their TRISO fuel. Qualified pipeline is not included in total contract backlog, and the market estimate is inclusive of both, not incremental. This is why we are confident the opportunity through 2030 is there. Finally, we ended the quarter with $223.1 million of cash with no debt, and the new facilities were funded before the IPO.

Instead of guidance, we give you dated operational milestones: authorization to operate at SN-TN and SN-ID targeted for February '27 and the start of production at Richland through the joint venture in 2027. We will report against them every quarter, including when one moves, and we have the balance sheet to fund the work to reach them. With that, let me turn it back over to Kurt.

Amir Terrani: Thank you, Kevin. Let me leave you with the 3 things I would want you to take from this call. The TRISO market is no longer a thesis. Multiple TRISO-based reactors reached criticality. The core we delivered this summer is going into a reactor that now has DOE approval of its safety analysis to operate at full power and demand is building in government programs, commercial programs and next TRISO fuel small modular reactors. Our customers are converting. Two of the 8 reactor developers we had under fuel development agreements at the end of June moved to fuel supply agreements this quarter, and the other 6 are still in development.

Each one is a source of additional backlog and pipeline as they progress. And the numbers show it. Total contract backlog reached $577.2 million and the pipeline we filled right behind it. And our fabrication expertise already reaches beyond today's reactors: NASA's Nuclear Thermal Propulsion program in space, and recycled and plutonium-bearing feedstock through ARPA-E and Department of Energy's Surplus Plutonium Utilization program. We see more opportunities like them. Contracts are signed, the buildings are built, the modules are being installed and the fuel is being delivered. We are the only company in the United States with industrial-scale TRISO manufacturing facilities that we can produce under both Department of Energy and the Nuclear Regulatory Commission.

That is a first-mover advantage, and we intend to keep it. Advanced nuclear is no longer a question of if; it is a question of how fast, and the answer to how fast is fuel. Standard Nuclear exists to make sure fuel is never the reason the industry waits. Thank you to our many employees and their hard work, and thank you all for joining us today. Operator, please open the line for questions.

Operator: [Operator Instructions] Our first question comes from Brian Lee from Goldman Sachs.

Tyler Bisset: This is Tyler Bisset on for Brian. First, on the qualified pipeline, it looks like it increased by about $150 million since your August call. So is there anything you guys can discuss on whether this was one or several customers? Was this related to any specific government programs? Did this include any new customers? Any incremental details on this would be great.

Kevin Harrill: Yes. Thanks for the question, Tyler. Yes, the increase does come from a number of customers, not just one. As you know, we don't publicly disclose any customers outside of what we've done previously, which is our Antares and Radiant customers. But what I would tell you, and I think this is pretty important to note, is that those 2 customers that we have announced are only 2 out of the 8 arrangements that we currently have with fuel development customers that are ultimately going to be converting to fuel supply agreements as we move forward. And so what it really shows is 2 things, which I think is critical.

Our pipeline is converting into contracts and the demand we see is across government and commercial microreactors and advanced SMRs. We spoke about this in our comments earlier, but we do really see this across 3 phases: government microreactors, commercial microreactors and finally, SMRs. And so what's important to note is that since March 31, 2026, our total contract backlog and qualified pipeline have more than doubled from $664.3 million to just under $1.5 billion. And that represents approximately 44% of our $3.2 billion addressable market.

So what's critical is, and we'll continue to report these as KPIs every quarter, is that we continue to see accretive additional demand across all lines of demand signals that we've seen in the future across the 3 phases that I mentioned before.

Tyler Bisset: Super helpful. And then you guys discussed that you are now targeting a February '27 startup for your Tennessee and Idaho facilities. I believe in August, you were targeting this to occur by the end of the year. So are you seeing any delays in regards to getting these sites operational? And then are there any implications to any of your customer contracts based on the updated timing?

Amir Terrani: Yes. I appreciate the question, Tyler. We projected, based on our plans, at end of Q4 '26. Now we're targeting February. Really, what it tells you is that the hard part is done. We mentioned in our remarks this morning that we have submitted the documented safety analysis for the SN-TN facility. And shortly, we're submitting the documented safety analysis for SN-ID. That is the ultimate licensing document. So that's a key regulatory milestone. And since that's been submitted and it's undergoing Department of Energy review, that positions us for an early next year operational readiness review by the Department of Energy, which is really the last stage of the process.

In the background and in parallel, what we've communicated to you was the construction was done. That's still the case, obviously. And we've completed all of our long-lead procurements. Our module installations are maturing and ongoing and going to be ready in anticipation of that operational readiness review early next year. All this really goes to show that, again, we can deploy these Hazard Category 2 facilities at incredibly fast time lines. And I think we're going to be well positioned to support our customers in 2027 and support their mission, be it the government or commercial. We find ourselves well positioned to support the volumes that we intend to manufacture next year.

Operator: Our next question comes from Mark Shooter from William Blair.

Mark Shooter: Kurt and Kevin, can you hear me?

Amir Terrani: You bet.

Mark Shooter: Congrats on the progress this quarter. You spoke a lot about Project Janus, and we appreciate that. But I think that investors are looking at Project Janus microreactors to start going in, in '27 and '28. But we understand there's a lot of testing required to first achieve criticality and then even more testing to deliver power. So how do you look at TRISO demand during these testing phases across the different reactor companies? And how does that translate into your TRISO backlog prior to these reactors being online and delivering power and operating?

Amir Terrani: Yes, Mark, fantastic question. I mean let me just first open by saying, yes, building nuclear reactors is full contact sport. You don't just go and do it and all of a sudden, it works. So yes, there's a lot of development and testing. But let's reflect kind of what's been done just in '26. We've had numerous criticalities that were achieved, a lot of them by TRISO-based reactors. As we mentioned, Radiant is gearing up to do a full power test, which is really remarkable for the technology that they're bringing that directly supports Janus' microreactor program. Yes, there is licensing and technology demonstration that our customers have to do as a part of the Janus program.

That's why they're targeting 2028. Again, talking to them and seeing them, they're incredibly hard at work, but more importantly, are making incredible progress, and they're leveraging the milestones they achieved, the key milestones they're achieving in 2026: DOE approvals for their cores, criticality test and so on. More importantly, they're not going to -- they cannot afford to wait. And frankly speaking, the Department of War and the Janus program cannot afford to wait for that development to be complete before the fuel is ordered. This is why we already have those fuel orders in hand. That's why a majority of our existing FSAs goes to support the Janus program's demand, and we expect that to continue.

On the heel of that, again, all these things kind of build on each other. We expect to see and are receiving commercial microreactor fuel demand for behind-the-meter applications. So in summary, there's work to be done by our customers, but they're sharp enough and the department is intelligent enough to know that the fuel orders are one of the first things that you do. And so they're in our pipeline, and we're going to make sure that the fuel supply is not the reason those programs are going to be slowed down or have issues.

Mark Shooter: That's very helpful. And just as a follow-up, how do you feel about the progress and availability of HALEU this quarter? I mean I also heard you mention something of Urenco, I believe, on the call with LEU+. And any color on that would be helpful as well.

Amir Terrani: For sure, for sure. So HALEU, as you all know, the Department of Energy's HALEU Availability Program, we said it this morning, has provided multiple tens of metric tons. And a lot of it for the advanced reactors, a lot of it going to our customers. Project Janus, I'll tell you, I feel very confident about. That's a government agency with their own substantial allotment. So yes, they're working with the Department of Energy on the mechanics of transportation and getting it to us as a fuel fabricator, but availability is going to be quite robust.

Down the line, for the commercial applications, again, we're really, really pleased to see all the private and public investment that's gone into the enrichment service providers. And we see a commercial supply of HALEU coming down the line. So all these reactor developers don't have to rely only on the government source. But there's 2 other sources that are also providing the feedstock that Standard Nuclear as a fuel fabricator needs to process into usable fuel form. One of those you've mentioned, yes, Urenco said they were going to make LEU+. By the way, that's just under 10%, like 9.9%. They announced that they produced the first 30B cylinder of 9.9 plus.

Some of our customers, as you may know, are using those assays. Not everybody is using HALEU. Sometimes that's the reactor design. Sometimes it's the reality of they choose to go the commercial route and not rely on the DOE supply. So that feedstock -- additional feedstock, that gives us confidence that, hey, the feedstock is going to be available for us to serve our customers. And then last is, if I can tie in the ARPA-E program, we've been talking about the transuranic and plutonium and the Surplus Plutonium Utilization Program, this ARPA-E award is really awesome. They are funding us.

And we're partnering with companies like SHINE Technologies, a company that's specifically going after recycling used nuclear fuel to extract this transuranic and get that plutonium. Well, guess what? That transuranic and plutonium, when blended with natural uranium, it's a substitute for HALEU. So it should give everybody a lot of confidence that, hey, the government is providing HALEU, not just for the government mission, but also for some of these early reactors. The enrichment service providers, multiple of them with good backing from public and private are bringing commercial HALEU online. But wait, in the meantime, there's a lot of customers that can easily access LEU+ by a provider located in the United States.

And then last of it is that there's these transuranic supplies that could come in and be an additional feedstock. So I hope that gives you enough color as far as how we feel about feedstock availability and don't see it as a bottleneck right now.

Operator: Our next question comes from Drew Scott from Needham & Co.

Drew Scott: Great quarter. When you think about the advanced reactor companies, is your backlog and pipeline mostly associated with the initial reactors? Or does it account for multiple reactor builds per customer for the advanced reactor cohort? And is your backlog mostly initial reactor initial loadings or does it account for multiple deployments for your customers?

Kevin Harrill: Yes. Thank you for your question, Drew. I would say it's all of the above, to give a very short answer. We're in a very unique position with what we look at over the next 5 years, and we talk about our serviceable addressable market at about $3.2 billion, of which we have about $1.4 billion of total contract backlog and pipeline. And so that is made up of a myriad of types and colors of deliveries, which will include the initial reactors for the microreactor community, the reloads as well are going to be embedded in there.

We've talked about multiyear contracts like the Antares, which is up to 8 metric tons through 2035 with the possibility or permissibility, I should say, to accelerate that into 2030 and prior, based upon how the demand moves quickly through. And so I think what we're looking at is, in our pipeline and our backlog, a lot of opportunity across the board for all types of deliveries for both the initial reloads, the reloads, and what I would say also is the opportunity coming in 2030 for SMRs as well. We do have that baked within our pipeline because those are conversations we're having with customers.

I would reaffirm that we also have 8 field development agreements, and so a lot of those and what we're capturing within our pipeline directly correlates with what those demand signals are for the next 5 years. And that's really the essence of why there's so many elements of that baked into our existing backlog and demand.

Operator: Our next question comes from Rinny Singh from Bank of America.

Rinny Singh: I think first, just on the gross margin, Kevin, I know you said that Q2, Q3 don't really represent the normalized gross margin. But as production ramps, can you help us understand the relative contributions from things like process yields recovery and then the fixed cost absorption? And then how should we think about when those efficiencies begin to show up?

Kevin Harrill: Yes. I appreciate the question, Rinny. Yes. So what we reported for this quarter was a 30% gross margin on approximately $6 million in total revenue. When we adjusted for share-based compensation and cost of revenue, we're up 40%. As a reminder, last quarter, we were roughly 67%. And the key differential between the 2 quarters is that in quarter 3, we ran our production levels at the full capabilities that would support a 2.5 metric ton capacity and production outlay.

And we obviously won't give forward-looking guidance, but what I would tell you is when we're looking at opportunities for fixed cost absorption, improvement on yields, economies of scale as well as opportunities with regards to automation, the timing of that is really the stand of our facilities that Kurt talked about earlier. So as we've already disclosed, we submitted the DSA for Tennessee. We anticipate shortly to submit the DSA for our Idaho facility. As a reminder, both of those currently have the initial capabilities of up to 1 metric ton. As we expand the modular equipment, we can get those up to 2.5 and on a gross level, be approximately 5 metric tons.

And the answer to your question is really, as we stand those up, that's where we're going to immediately glean the benefits of the fixed cost absorption in addition to the benefits of the automation to how we structured our facilities to be up from an optimal perspective in order to reduce our cost and increase our capacity. And so the yield component, I think we're going to continue to improve upon over the coming years, but it's going to be when we stand up our production in those new facilities and start running through additional capacity from our backlog.

Rinny Singh: That makes sense. And I think just to follow up on that part, how do you think about the timing for the additional module expansion, so going from the 1 MTU to the 2.5 MTU? And is that -- kind of what, I guess, would drive those? Would that be more firm customer commitments? Or is it kind of -- do you want to see more operational utilization milestones at the 1 MTU first?

Kevin Harrill: Yes. What I would say is it's twofold. I would say, number one, our -- and we've disclosed this and talked about this in our S-1 in public forums. Our anticipation, that is in the short term, we're going to scale up to 8 metric tons with the anticipation of hitting 40 metric tons by the end of the decade. And so what that means is those 2 facilities that we have in Idaho and Tennessee that are scalable up to 2.5 metric tons are critical within our ability and capabilities to meet the demand and the market signals that we've seen out there coming in 2028. We do have the capability of being very flexible and adjusting for that.

Some of that equipment is long-lead equipment that we will have to procure earlier on in the process. But I think it's somewhat of a gray answer that we see the demand, we're building it out, we're ready from a supply chain perspective, although we can theoretically pull back if needed, but we don't anticipate that to be the case.

Operator: And our final question comes from Chris Dendrinos from RBC Capital.

Christopher Dendrinos: I guess really just kind of one question for me, and it more has to do with just the potential conversion timing for the qualified pipe. And I guess the question is, how much lead time do you all generally need to get from a customer, call it, converting to an order to producing TRISO? And then as we kind of think about the different phases, and it sounded like you mentioned that, that pipeline kind of covers across all 3 phases, how should we think about the timing of each of those phases and when you start to kind of see, I guess, things getting converted to orders for each of those buckets?

Amir Terrani: Yes. I appreciate the question. I'll give you some color on that. I think we talked about the way we interact with our customers. And now we have -- it's really proven that, over and over again, this is how the engagement worked out. It starts out with the fuel development agreements, the FDAs, which -- they really are enduring and really sticky. The customer comes in, they bring their specific requirements on their fuel, their specific specification. We go ahead and work with the customer to refine it. We then go ahead and tune our processes using our existing modules to manufacture fuel to meet the customer's specification. We provide them that data. That data is not a nice-to-have.

That's really essential for their development and licensing activities. After that FDA, then the customer is really well positioned, and we are well positioned to give a customer an accurate number based on the details of their specification at an accurate price. And then the customer is really well positioned to go ahead and get into the next phases. Sometimes it's a commercial deposit, sometimes it's the fuel sales agreements where they come in and, in a firm fashion, commit to offtake a certain quantity of fuel from us. And you've seen in some of the examples that we have, there's always -- often those customers, they also give us deposits as options for expansion.

So maybe the best thing to say is reflect on a couple of examples where we've had to kind of give you an idea of these time lines because at the end of the day, it really depends on the customer, as we said, it depends on their plans, their financing and their overall technology development as they transition through these phases. But let's start with Radiant. Radiant is a good example. We engaged with Radiant in early 2025 to do a Fuel Development Agreement. In the summer, they started reserving our fuel line with commercial deposits, and we executed our first FSA with them in fall of 2025.

And since then, we've expanded that FSA substantially as they are securing now multiple cores for the future activities. If you look at Antares, it's the same thing. Same thing. The Fuel Development Agreement was completed, and then they came in and transitioned that into a Fuel Sales Agreement with a substantial ability to expand that demand through the options that they purchased from us. So these -- I hope these examples give you some color. You see these are happening quite fast in under a year. Ultimately, we rely on the customer to get their financing, get their projects ready, and we're going to be on standby to support them.

Operator: That concludes our question-and-answer session. Thank you for joining the Standard Nuclear Third Quarter 2026 Earnings Call. A replay will be available on the Investor Relations section of the company's website. You may now disconnect.

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