NUSCALE POWER Corp

Previous wording

The following discussion and analysis of the financial condition and results of operations of NuScale Power Corporation (“NuScale Corp”) should be read together with our 2023 Annual Report on Form 10-K and with the financial statements included in this Quarterly Report on Form 10-Q. This discussion may contain forward-looking statements based upon current expectations that involve risks and uncertainties. Our actual results may differ materially from those projected in these forward-looking statements as a result of various factors. Unless the context otherwise requires, references in this section to “NuScale,” “us,” “our,” “we” or “the Company” refer to NuScale Corp, together with its consolidated subsidiaries.

Current wording

The following discussion and analysis of the financial condition and results of operations of NuScale Power Corporation should be read together with our financial statements as of and for the years ended December 31, 2023 and 2022 and our unaudited interim condensed consolidated financial statements as of and for the three and six months ended June 30, 2024 and 2023, together with related notes thereto. This discussion may contain forward-looking statements based upon current expectations that involve risks and uncertainties. Our actual results may differ materially from those projected in these forward-looking statements as a result of various factors. As used herein, “NuScale,” “the Company,” “us,” “our” or “we” refer to NuScale Power Corporation, together with its consolidated subsidiaries.

Previous wording

Since our founding in 2007, we have made significant progress towards commercializing the first SMR in the United States. In 2017, we submitted our Design Certification Application (“DCA”) to the U.S. Nuclear Regulatory Commission (“NRC”). On August 28, 2020, the NRC issued its Final Safety Evaluation Report, representing the NRC’s completion of its technical review. On September 11, 2020, the NRC issued its Standard Design Approval (“SDA”) of our NPM and scalable plant design. With this phase of NuScale’s DCA now complete, customers may proceed with plans to develop NuScale power plants with the understanding that the NRC has approved the safety aspects of the NPM and plant design. We expect our operating losses and negative operating cash flow to grow until the commercialization of the NPM. On January 19, 2023, the NRC published in the Federal Register a final rule that certifies NuScale’s SMR design for use in the United States, which became effective 30 days after publication.

Current wording

Since our founding in 2007, we have made significant progress towards commercializing the first SMR in the United States. In 2017, we submitted our Design Certification Application (“DCA”) to the U.S. Nuclear Regulatory Commission (“NRC”). On August 28, 2020, the NRC issued its Final Safety Evaluation Report, representing the NRC’s completion of its technical review. On September 11, 2020, the NRC issued its Standard Design Approval (“SDA”) of our NPM and scalable plant design. With this phase of NuScale’s DCA now complete, customers may proceed with plans to develop NuScale power plants with the understanding that the NRC has approved the safety aspects of the NPM and plant design. We expect the Company will continue to experience operating losses and negative operating cash flow until the commercialization of the NPM. On January 19, 2023, the NRC published in the Federal Register a final rule that certifies NuScale’s SMR design for use in the United States, which became effective 30 days after publication.

Previous wording

In January 2023, the Company submitted a SDA Application and the associated licensing topical reports to the NRC for a NuScale’s 6-unit 77 MWe NPM design. Once approved, customers in the United States will be able to reference the certified design and SDA for expedited construction and operating licensing of NuScale’s SMR pursuant to 10 CFR Part 52. On July 31, 2023, the NRC formally announced that it has accepted the Company’s SDA Application for formal review. Based on the NRC’s published schedule for SDA Application review, we expect the NRC will complete its review and SDA approval will be received by July 31, 2025.

Current wording

In January 2023, the Company submitted a SDA Application and the associated licensing topical reports to the NRC for NuScale’s 6-unit 77 MWe NPM design. Once approved, customers in the United States will be able to reference the certified design and SDA for expedited construction and operating licensing of NuScale’s SMR pursuant to 10 CFR Part 52. On July 31, 2023, the NRC formally announced that it has accepted the Company’s SDA Application for formal review. Based on the NRC’s published schedule for SDA Application review, we expect the NRC will complete its review and SDA approval will be received by July 31, 2025.

Previous wording

The Company currently has only one “Class 1” customer: RoPower Nuclear S.A. (“RoPower”), which is a joint venture established by S.N. Nuclearelectrica S.A. (“Nuclearelectrica”) and Nova Power & Gas S.A. In November 2023, we entered into the Release Agreement with CFPP LLC, the Company’s first customer, pursuant to which the Company agreed to terminate the DCRA, as amended, and our LLM Agreement. CFPP LLC was receiving funding for approximately 79% of its qualified project costs, including the long-lead materials, under a cooperative agreement with the DOE. Under the Release Agreement, we agreed to repay CFPP LLC’s Net Development Costs. Upon final settlement of the LLM Agreement, and once DOE is compensated for its investment in the LLM (stemming from DOE’s funding under its cost share agreement with CFPP LLC), NuScale will obtain all rights and obligations associated with the LLM.

Current wording

The Company currently has only one “Class 1” customer: RoPower Nuclear S.A. (“RoPower”), which is a joint venture established by S.N. Nuclearelectrica S.A. (“Nuclearelectrica”) and Nova Power & Gas S.A. In November 2023, we entered into the Release Agreement with CFPP LLC, the Company’s first customer, pursuant to which the Company agreed to terminate the Development Cost Reimbursement Agreement (“DCRA”), as amended, and our Long Lead Material Reimbursement Agreement (“LLM Agreement”). CFPP LLC was receiving funding for approximately 79% of its qualified project costs, including the long-lead materials (“LLM”), under a cooperative agreement with the Department of Energy (“DOE”). Under the Release Agreement, we agreed to repay CFPP LLC’s Net Development Costs. Upon final settlement of the LLM Agreement, and once DOE is compensated for its investment in the LLM (stemming from DOE’s funding under its cost share agreement with CFPP LLC), NuScale will obtain all rights and obligations associated with the LLM.

Previous wording

For the three months ended March 31, 2023, amounts totaling $1.9 million were reclassified out of Other expenses and into R&D expenses to conform to the current year presentation.

Current wording

For the six months ended June 30, 2023, amounts totaling $1.9 million were reclassified out of Other expenses and into R&D expenses to conform to the current year presentation.

Previous wording

Sponsored cost share decreased by $14.5 million as a result of the loss of the contract with CFPP LLC and decreased DOE funding in the current year.

Current wording

Sponsored cost share decreased as a result of the loss of the contract with CFPP LLC and decreased DOE funding in the current year.

Previous wording

The change resulted from a significant increase in the Company’s warrant price since year end.

Current wording

The change resulted from a significant increase in the Company’s warrant price during the six months ended June 30, 2024.

Previous wording

On August 9, 2023, NuScale entered into a Sales Agreement with Cowen and Company, LLC, B. Riley Securities, Inc. and Canaccord Genuity LLC as sales agents under which the Company may offer and sell shares of the Company’s Class A common stock, having an aggregate sales price of up to $150.0 million from time to time through the sales agents (“ATM Program”). During the three months ended March 31, 2024, the Company issued and sold 8,498,930 shares of Class A common stock at a weighted average price of $5.02 per share, generating gross and net proceeds of $42.7 million and $41.6 million, respectively, the difference of which makes up the sales commissions paid. As of March 31, 2024, we have 9,763,692 shares of Class A common stock authorized and available under the ATM program at an aggregate sales price of up to $97.0 million.

Current wording

During the three and six months ended June 30, 2024, the Company issued and sold shares of Class A common stock in the amount of 4,198,064 and 12,696,994, respectively, at a weighted average price of $7.58 and $5.87 per share, respectively. During the three months ended June 30, 2024, the ATM Program generated gross and net proceeds of $31.8 million and $31.0 million, respectively, while for the six months ended June 30, 2024 the ATM Program generated gross and net proceeds of $74.5 million and $72.6 million, respectively. As of June 30, 2024, we have 5,565,628 shares of Class A common stock authorized and available under the ATM Program at an aggregate sales price of up to $65.1 million.

Previous wording

Subsequent to March 31, 2024, the Company issued and sold 1,761,256 shares of Class A common stock for the gross and net proceeds of $9.6 million and $9.4 million, respectively.

Current wording

Subsequent to June 30, 2024, the Company issued and sold 1,420,391 shares of Class A common stock under the ATM Program for the gross and net proceeds of $18,858 and $18,386, respectively.

Previous wording

Since NuScale’s inception, we have incurred significant operating losses andhavean accumulated deficit of $257.0 million, with negative operating cash flows. As of March 31, 2024, we had cash and cash equivalents of $132.0 million and restricted cash of$5.1 million with no debt, while using$33.5 million of cash in operations. Historically, our primary sources of cash included investment capital, DOE and other government sponsored cost share agreements to support the advancement of the Company’s SMR technology both domestically and abroad. As we transition from a focus on research and development to commercialization of our technology, the Company is focusing on revenue producing commercial contracts. These factors combined with the execution of the Release Agreement with CFPP LLC have impacted our cash flow from operations during the periodand on our forecasted cash flow from operations during the remainder of the 2024 fiscal year.

Current wording

Since NuScale’s inception, we have incurred significant operating losses and have an accumulated deficit of $284.6 million, with negative operating cash flows. As of June 30, 2024, we had cash and cash equivalents of $130.9 million and restricted cash of $5.1 million with no debt. Historically, our primary sources of cash included investment capital, DOE and other government sponsored cost share agreements to support the advancement of the Company’s SMR technology both domestically and abroad. As we transition from a focus on research and development to commercialization of our technology, the Company is focusing on commercial contracts that generate revenue. These factors combined with the execution of the Release Agreement with CFPP LLC have impacted our cash flow from operations during the periodand our forecasted cash flow from operations during the remainder of the 2024 fiscal year. While we believe we have sufficient funds to reach commercialization of our NPM, certain costs are not reasonably estimable at this time, and we may require additional funding, which may not be available on terms acceptable to us or at all. Our projections anticipate certain customer-sourced income that is not assured and DOE funds which are subject to Congressional appropriations and dependent on the President signing it into law.

Previous wording

In January 2024, management implemented cost reduction measures which included a workforce reduction of 154 full-time employees. Management is currently in active negotiations with potential customers to secure revenue producing contracts. Should the execution of customer contracts or capital raising activities be delayed, management plans to implement a phased cost reduction program, within our control, to reduce cash outflows, as needed. As a result of these plans, we believe we will have sufficient funds available to cover required R&D activities and operating cash needs for the next twelve months. Further, management plans to prudently manage its expenses and cash reserves into the future, recognizing the need to secure additional customer commitments to support long-term operations. For additional information regarding these risk factors, see the Company’s 2023 Annual Report on Form 10-K.

Current wording

As a result of the cost-cutting plans implemented by management, the utilization of our ATM Program and the execution of a customer contract subsequent to June 30, 2024, we believe we will have sufficient funds available to cover required R&D activities and operating cash needs for the next twelve months. Further, management plans to prudently manage its expenses and cash reserves into the future, including beyond the next twelve months, recognizing the need to secure additional customer commitments to support long-term operations. For additional information regarding these risk factors, see the Company’s 2023 Form 10-K.

Previous wording

Comparison of Cash Flows for the Three Months Ended March 31, 2024 and 2023

Current wording

Comparison of Cash Flows for the Six Months Ended June 30, 2024 and 2023

Previous wording

The following table sets forth the primary sources and uses of cash, cash equivalents and restricted cash for the periods presented below:

Current wording

The following table sets forth the primary sources and uses of cash and cash equivalents for the periods presented below: