CENTRUS ENERGY CORP

Current report

General Risk Factors

Current report

We are integrating AI technologies into our operations, including through strategic partnerships, which may present business, compliance, regulatory and reputational risks.

Current report

We and our business partners are increasingly incorporating AI-driven software tools across various aspects of the Company's operations and business functions, including to streamline workflows and optimize key business processes. While we believe the adoption of AI-driven technologies will enhance our operational efficiency and competitive positioning, these technologies involve significant risks and uncertainties that may not yield corresponding benefits, and may exacerbate other risks. Flaws, biases, errors, misconfigurations or malfunctions in AI-driven systems could result in operational disruptions or could result in unintended, unexpected, or otherwise unforeseen adverse consequences, including data loss, corruption or the generation of outputs that appear correct but are inaccurate or misleading. Such failures could include potential breaches of contracts, security protocols, unauthorized disclosure of sensitive or classified information and noncompliance with applicable governmental and defense-related or third party requirements.

Current report

In addition, AI technologies could be improperly utilized by our employees or by personnel of our business partners, potentially leading to the unauthorized use or disclosure of confidential, proprietary or classified information or unintended, unexpected, or otherwise unforeseen adverse consequences, which could harm our reputation and expose us to significant legal, regulatory and contractual liability. AI also presents a new attack surface that cyber threat actors may exploit to scale and automate targeted cyberattacks. The regulatory environment governing AI technologies remains uncertain and developments in regulatory frameworks may adversely affect our ability to use AI technologies, subject us to enhanced governmental or regulatory scrutiny, litigation or enforcement actions or require us to make significant changes to our operations. Our reliance on business partners also subjects us to risks associated with each partner’s ability to comply with applicable legal and regulatory requirements and maintain the security and integrity of its systems.

Current report

If we fail to successfully integrate AI into our business processes or fail to keep pace with rapidly evolving AI technological developments, we may face competitive disadvantages or experience disruptions to our operations or other unintended, unexpected, or otherwise unforeseen adverse consequences. Any of the foregoing risks could have a material adverse effect on our business, reputation, financial condition, results of operations and prospects.

Previous report

Financial Risks

Previous report

We have significant long-term liabilities.

Previous report

We continue to have significant long-term liabilities, including the indebtedness under our 0% Convertible Notes and 2.25% Convertible Notes, which mature in August 2032 and November 2030, respectively.

Previous report

Our significant long-term liabilities (and other third-party financial obligations) could have important consequences, including:

Previous report

•making it more difficult for us to satisfy our obligations to lenders and other creditors, resulting in possible defaults on, and acceleration of, such indebtedness or breaches of such other commitments;

Previous report

•placing us at a competitive disadvantage by making us more vulnerable to react to adverse economic conditions or changes in the nuclear industry;

Previous report

•hindering our ability to obtain additional financing for future working capital and other general corporate requirements;

Previous report

•reducing our cash resources for payments of interest on our 2.25% Convertible Notes, thereby limiting our ability to fund our operations, capital expenditures, and future business opportunities; and

Previous report

•requiring us to repurchase all outstanding 2.25% Convertible Notes and 0% Convertible Notes at 100% of their outstanding principal amount (plus any accrued and unpaid interest thereon) upon the occurrence of a fundamental change (as defined in the indentures governing such notes). If certain fundamental changes referred to as make-whole fundamental changes occur, the conversion rate for such notes may be increased.

Previous report

The terms of the indentures governing our 2.25% Convertible Notes and 0% Convertible Notes do not restrict Centrus or any of its subsidiaries from incurring substantial additional indebtedness in the future. If we incur substantial additional indebtedness, however, the foregoing risks would intensify.

Previous report

Additional information concerning the 0% Convertible Notes and 2.25% Convertible Notes, including the terms and conditions, are described in Note 6, Debt, of the Consolidated Financial Statements in Part I in this Quarterly Report on Form 10-Q and Note 8, Debt, of the Consolidated Financial Statements in Part IV in our Annual Report on Form 10-K for the year ended December 31, 2024.

Previous report

The conditional conversion feature of our 0% Convertible Notes and 2.25% Convertible Notes, if triggered, may adversely affect our financial condition and operating results.

Previous report

We completed an offering of $805.0 million in aggregate principal amount of 0% Convertible Notes due 2032 in August 2025. We also completed an offering of $402.5 million in aggregate principal amount of 2.25% Convertible Notes due 2030 in November 2024. In the event the conditional conversion features of our 0% Convertible Notes or 2.25% Convertible Notes are triggered, holders of the notes will be entitled to convert them at any time during specified periods at their option. If one or more holders elect to convert their notes, we would be required to settle a portion or all of our conversion obligation through the payment of cash, which could adversely affect our liquidity. In addition, even if holders do not elect to convert their notes, we would be required under applicable accounting rules to reclassify all or a portion of the outstanding principal of the notes as a current rather than long-term liability, which would result in a material reduction of our net working capital.

Previous report

Conversion of our 0% Convertible Notes or 2.25% Convertible Notes may dilute the ownership interest of our stockholders or may otherwise depress the price of our common stock.

Previous report

The conversion of some or all of our 0% Convertible Notes or 2.25% Convertible Notes may dilute the ownership interests of our stockholders. Upon conversion of the notes, we will pay cash up to the aggregate principal amount of the notes to be converted, and cash, shares of our Common Stock or a combination of cash and shares of our Common Stock, at the Company's election, in respect of the remainder. If we elect to settle our conversion obligation in a combination of cash and shares of our Common Stock, any sales in the public market of our Common Stock issuable upon such conversion could adversely affect prevailing market prices of our common stock. In addition, the existence of the notes may encourage short selling by market participants that engage in hedging or arbitrage activity, and anticipated conversion of the notes into shares of our Common Stock could depress the price of our Common Stock.

Previous report

Certain provisions in the indentures governing the 0% Convertible Notes and 2.25% Convertible Notes may delay or prevent an otherwise beneficial takeover attempt of us.

Previous report

Certain provisions in the indentures governing the 0% Convertible Notes and the 2.25% Convertible Notes may make it more difficult or expensive for a third party to acquire us. For example, the indentures governing the 0% Convertible Notes and the 2.25% Convertible Notes require us to repurchase the notes for cash upon the occurrence of a fundamental change (as defined in the respective indentures) and, in certain circumstances, to increase the conversion rate for a holder who converts their 0% Convertible Notes or 2.25% Convertible Notes in connection with a make-whole fundamental change (as defined in the respective indentures). A takeover of the Company may trigger the requirement that we repurchase the 0% Convertible Notes or 2.25% Convertible Notes and/or increase the conversion rate, which could make it more costly for a potential acquirer to engage in such a takeover. Such additional costs may have the effect of delaying or preventing a takeover of the Company that would otherwise be beneficial to investors.

Previous report

Our ability to make scheduled payments of the principal of, to pay interest on, or to refinance our indebtedness, including our 0% Convertible Notes or 2.25% Convertible Notes, depends on our future performance, which is subject to economic, financial, competitive and other factors beyond our control. In addition, holders of the 0% Convertible Notes and/or 2.25% Convertible Notes will have the right to require us to repurchase their notes for cash upon the occurrence of certain fundamental changes. Upon conversion of the notes, we will be required to make cash payments in respect of the notes being converted. Our business may not continue to generate cash flow from operations in the future sufficient to service our debt. If we are unable to generate such cash flow, we may be required to adopt one or more alternatives, such as selling assets, restructuring debt, incurring more debt or obtaining additional equity capital on terms that may be onerous or highly dilutive. Our ability to refinance our indebtedness will depend on the capital markets and our financial condition at such time. We may not be able to engage in any of these activities or engage in these activities on desirable terms, which could result in a default on our debt obligations or negatively affect our liquidity position.