CENTRUS ENERGY CORP.

~~CONDENSED~~ CONSOLIDATED BALANCE SHEETS ~~(Unaudited)~~

(Unaudited; in millions, except share and per share data)


	September 30, 2023		December 31, 2022
ASSETS
Current assets:
Cash and cash equivalents	$	183.3	$	179.9
Accounts receivable	9.4		38.1
Inventories	210.8		209.2
Deferred costs associated with deferred revenue	116.0		135.7
Other current assets	12.4		24.2
Total current assets	531.9		587.1
Property, plant and equipment, net of accumulated depreciation of $4.1 million as of September 30, 2023 and $3.6 million as of December 31, 2022	6.1		5.5
Deposits for financial assurance	32.3		32.3
Intangible assets, net	41.5		45.7
Deferred tax assets	29.1		26.8
Other long-term assets	3.8		8.1
Total assets	$	644.7	$	705.5

LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable and accrued liabilities	$	44.3	$	65.5
Payables under inventory purchase agreements	13.8		43.6
Inventories owed to customers and suppliers	0.4		60.8
Deferred revenue and advances from customers	272.7		273.2
Current debt	6.1		6.1
Total current liabilities	337.3		449.2
Long-term debt	89.6		95.7
Postretirement health and life benefit obligations	83.5		84.5
Pension benefit liabilities	42.2		43.6
Advances from customers	32.8		46.2
Long-term inventory loans	74.7		48.7
Other long-term liabilities	8.6		11.7
Total liabilities	668.7		779.6
Commitments and contingencies (Note 12)
Stockholders’ deficit:
Preferred stock, par value $1.00 per share, 20,000,000 shares authorized
Series A Participating Cumulative Preferred Stock, none issued	—		—
Series B Senior Preferred Stock, none issued	—		—
Class A Common Stock, par value $0.10 per share, 70,000,000 shares authorized, 14,807,255 and 13,919,646 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively	1.5		1.4
Class B Common Stock, par value $0.10 per share, 30,000,000 shares authorized, 719,200 shares issued and outstanding as of September 30, 2023 and December 31, 2022	0.1		0.1
Excess of capital over par value	180.2		158.1
Accumulated deficit	(205.8)		(233.9)
Accumulated other comprehensive income	—		0.2
Total stockholders’ deficit	(24.0)		(74.1)
Total liabilities and stockholders’ deficit	$	644.7	$	705.5

September 30,
2017 December 31,
2016
ASSETS
Current assets
Cash and cash equivalents $ 135.9
$ 260.7
Accounts receivable 14.2
19.9
Inventories 124.1
177.4
Deferred costs associated with deferred revenue 94.5
89.3
Other current assets 15.6
13.3
Total current assets 384.3
560.6
Property, plant and equipment, net 5.2
6.0
Deposits for surety bonds 29.6
29.5
Intangible assets, net 87.6
93.3
Other long-term assets 15.2
24.1
Total assets $ 521.9
$ 713.5

LIABILITIES AND STOCKHOLDERS’ DEFICIT

Current liabilities

Accounts payable and accrued liabilities $ 50.7
$ 46.4
Payables under SWU purchase agreements 17.3
59.6
Inventories owed to customers and suppliers 22.1
57.5
Deferred revenue 131.7
123.6
Decontamination and decommissioning obligations 16.6
38.6
Total current liabilities 238.4
325.7
Long-term debt 157.5
234.1
Postretirement health and life benefit obligations 170.0
171.3
Pension benefit liabilities 175.0
179.9
Other long-term liabilities 35.6
38.6
Total liabilities 776.5
949.6
Commitments and contingencies (Note 12)

Stockholders’ deficit
Preferred stock, par value $1.00 per share, 20,000,000 shares authorized
Series A Participating Cumulative Preferred Stock, none issued —
—
Series B Senior Preferred Stock, 7.5% cumulative, 104,574 shares issued and outstanding and an aggregate liquidation preference of $109.6 million as of September 30, 2017 4.6
—
Class A Common Stock, par value $0.10 per share, 70,000,000 shares authorized, 7,632,669 and 7,563,600 shares issued and outstanding as of September 30, 2017 and December 31, 2016 0.8
0.8
Class B Common Stock, par value $0.10 per share, 30,000,000 shares authorized, 1,406,082 and 1,436,400 shares issued and outstanding as of September 30, 2017 and December 31, 2016 0.1
0.1
Excess of capital over par value 59.8
59.5
Accumulated deficit (320.0 ) (296.7 )
Accumulated other comprehensive income, net of tax 0.1
0.2
Total stockholders’ deficit (254.6 ) (236.1 )
Total liabilities and stockholders’ deficit $ 521.9
$ 713.5

The accompanying notes are an integral part of these ~~condensed consolidated financial statements.~~

unaudited Consolidated Financial Statements.

CENTRUS ENERGY CORP.

~~CONDENSED~~ CONSOLIDATED STATEMENTS OF OPERATIONS ~~(Unaudited)~~ AND COMPREHENSIVE INCOME

(Unaudited; in millions, except share and per share data)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Revenue:
Separative work units	$	40.5	$	7.7	$	147.4	$	106.0
Uranium	—		12.5		39.5		17.4
Technical solutions	10.8		13.0		29.7		44.2
Total revenue	51.3		33.2		216.6		167.6
Cost of Sales:
Separative work units and uranium	30.4		18.9		126.1		59.8
Technical solutions	9.6		12.0		28.2		38.3
Total cost of sales	40.0		30.9		154.3		98.1
Gross profit	11.3		2.3		62.3		69.5
Advanced technology costs	3.3		5.4		10.8		10.0
Selling, general and administrative	9.3		8.6		27.4		24.4
Amortization of intangible assets	1.4		1.1		4.2		6.2

Special charges for workforce reductions	0.2		—		0.1		0.5
Operating income (loss)	(2.9)		(12.8)		19.8		28.4
Nonoperating components of net periodic benefit loss (income)	(0.6)		(4.4)		0.1		(11.1)
Interest expense	0.4		0.1		0.9		0.1
Investment income	(2.3)		(0.6)		(6.4)		(0.8)
Other income, net	(1.0)		—		(1.0)		—
Income (loss) before income taxes	0.6		(7.9)		26.2		40.2
Income tax expense (benefit)	(7.6)		(1.8)		(1.9)		9.3
Net income (loss) and comprehensive income (loss)	$	8.2	$	(6.1)	$	28.1	$	30.9




Net income (loss) per share:
Basic	$	0.53	$	(0.42)	$	1.86	$	2.12
Diluted	$	0.52	$	(0.42)	$	1.82	$	2.06
Average number of common shares outstanding (in thousands):
Basic	15,374		14,623		15,127		14,586
Diluted	15,626		14,623		15,415		14,974

Three Months Ended
September 30, Nine Months Ended
September 30,
2017 2016 2017 2016
Revenue:
Separative work units $ 43.5
$ 14.1
$ 82.2
$ 128.3
Uranium —
—
—
14.3
Contract services 6.8
7.3
19.3
32.2
Total revenue 50.3
21.4
101.5
174.8
Cost of Sales:
Separative work units and uranium 32.4
15.9
76.8
130.7
Contract services 6.3
7.6
19.9
24.9
Total cost of sales 38.7
23.5
96.7
155.6
Gross profit (loss) 11.6
(2.1 ) 4.8
19.2
Advanced technology license and decommissioning costs 4.5
21.9
15.0
38.6
Selling, general and administrative 11.0
10.7
33.1
34.6
Amortization of intangible assets 2.5
1.7
5.7
7.6
Special charges for workforce reductions and advisory costs 2.4
0.6
7.1
1.2
Gains on sales of assets (0.6 ) (0.3 ) (2.3 ) (1.0 )
Operating loss (8.2 ) (36.7 ) (53.8 ) (61.8 )
Gain on early extinguishment of debt —
—
(33.6 ) (16.7 )
Interest expense 0.7
4.7
4.3
14.8
Investment income (0.4 ) (0.1 ) (1.0 ) (0.5 )
Loss before income taxes (8.5 ) (41.3 ) (23.5 ) (59.4 )
Income tax benefit —
—
(0.2 ) (0.6 )
Net loss (8.5 ) (41.3 ) (23.3 ) (58.8 )
Preferred stock dividends - undeclared and cumulative 2.0
—
5.0
—
Net loss allocable to common stockholders $ (10.5 ) $ (41.3 ) $ (28.3 ) $ (58.8 )

Net loss per common share – basic and diluted $ (1.15 ) $ (4.54 ) $ (3.12 ) $ (6.46 )
Average number of common shares outstanding – basic and diluted (in thousands) 9,103
9,096
9,081
9,102

The accompanying notes are an integral part of these ~~condensed consolidated financial statements.~~unaudited Consolidated Financial Statements.

CENTRUS ENERGY CORP.

~~CONDENSED~~ CONSOLIDATED STATEMENTS OF ~~COMPREHENSIVE INCOME (LOSS)~~ ~~(Unaudited)~~CASH FLOWS

(Unaudited; in millions)


	Nine Months Ended September 30,
	2023		2022
OPERATING
Net income	$	28.1	$	30.9
Adjustments to reconcile net income to cash used in operating activities:
Depreciation and amortization	4.8		6.7
Accrued loss on long-term contract	(16.7)		(0.5)
Deferred tax assets	(2.3)		8.8

Equity related compensation	2.0		2.2
Revaluation of inventory borrowing	3.5		5.5

Other reconciling adjustments, net	(1.9)		—
Changes in operating assets and liabilities:
Accounts receivable	28.7		21.8
Inventories	23.0		(98.9)
Inventories owed to customers and suppliers	(60.4)		66.9
Other current assets	13.4		(16.6)
Accounts payable and other liabilities	(2.5)		(1.9)
Payables under inventory purchase agreements	(29.8)		(16.3)
Deferred revenue and advances from customers, net of deferred costs	3.7		(30.4)

Pension and postretirement benefit liabilities	(1.7)		(13.0)
Other changes, net	(0.7)		(0.3)
Cash used in operating activities	(8.8)		(35.1)

INVESTING
Capital expenditures	(1.1)		(0.6)
Cash used in investing activities	(1.1)		(0.6)

FINANCING
Proceeds from the issuance of common stock, net	23.2		—
Exercise of stock options	—		0.2


Withholding of shares to fund grantee tax obligations under stock-based compensation plan	(3.0)		(1.9)
Payment of interest classified as debt	(6.1)		(6.1)
Other	(0.2)		(0.3)
Cash provided by (used in) financing activities	13.9		(8.1)

Effect of exchange rate changes on cash, cash equivalents and restricted cash	(0.6)		—

Increase (decrease) in cash, cash equivalents and restricted cash	3.4		(43.8)
Cash, cash equivalents and restricted cash, beginning of period (Note 3)	212.4		196.8
Cash, cash equivalents and restricted cash, end of period (Note 3)	$	215.8	$	153.0

Non-cash activities:

Reclassification of stock-based compensation liability to equity	$	—	$	10.6
Adjustment of right to use lease assets from lease modification	$	4.2	$	—
Property, plant and equipment included in accounts payable and accrued liabilities	$	0.3	$	—

Three Months Ended
September 30, Nine Months Ended
September 30,
2017 2016 2017 2016
Net loss $ (8.5 ) $ (41.3 ) $ (23.3 ) $ (58.8 )
Other comprehensive loss, before tax (Note 13):
Amortization of prior service credits, net —
(0.1 ) (0.1 ) (0.2 )
Other comprehensive loss, before tax —
(0.1 ) (0.1 ) (0.2 )
Income tax benefit related to items of other comprehensive income —
—
—
—
Other comprehensive loss, net of tax benefit —
(0.1 ) (0.1 ) (0.2 )
Comprehensive loss $ (8.5 ) $ (41.4 ) $ (23.4 ) $ (59.0 )

The accompanying notes are an integral part of these ~~condensed consolidated financial statements.~~unaudited Consolidated Financial Statements.

CENTRUS ENERGY CORP.

~~CONDENSED~~ CONSOLIDATED STATEMENTS OF ~~CASH FLOWS~~ ~~(Unaudited)~~STOCKHOLDERS’ DEFICIT

(Unaudited; in ~~millions)~~millions, except per share data)


	Preferred Stock, Series B		Common Stock, Class A, Par Value $0.10 per Share		Common Stock, Class B, Par Value $0.10 per Share		Excess of Capital Over Par Value		Accumulated Deficit		Accumulated Other Comprehensive Income		Total
Balance at December 31, 2021	$	—	$	1.4	$	0.1	$	140.7	$	(284.6)	$	0.5	$	(141.9)
Net loss for the three months ended March 31, 2022	—		—		—		—		(0.4)		—		(0.4)

Options exercised	—		—		—		0.2		—		—		0.2
Reclassification of stock-based compensation liability to equity	—		—		—		10.6		—		—		10.6
Stock-based compensation shares withheld for employee taxes	—		—		—		(1.9)		—		—		(1.9)
Other comprehensive loss	—		—		—		—		—		(0.1)		(0.1)
Stock-based compensation	—		—		—		0.5		—		—		0.5
Balance at March 31, 2022	$	—	$	1.4	$	0.1	$	150.1	$	(285.0)	$	0.4	$	(133.0)

Net income for the three months ended June 30, 2022	—		—		—		—		37.4		—		37.4



Other comprehensive loss	—		—		—		—		—		(0.1)		(0.1)
Stock-based compensation	—		—		—		0.8		—		—		0.8
Balance at June 30, 2022	$	—	$	1.4	$	0.1	$	150.9	$	(247.6)	$	0.3	$	(94.9)

Net loss for the three months ended September 30, 2022	—		—		—		—		(6.1)		—		(6.1)
Other comprehensive loss	—		—		—		—		—		(0.1)		(0.1)
Stock-based compensation	—		—		—		0.8		—		—		0.8
Balance at September 30, 2022	$	—	$	1.4	$	0.1	$	151.7	$	(253.7)	$	0.2	$	(100.3)

Nine Months Ended
September 30,
2017 2016
Operating Activities
Net loss $ (23.3 ) $ (58.8 )
Adjustments to reconcile net loss to cash used in operating activities:
Depreciation and amortization 6.6
8.1
PIK interest on paid-in-kind toggle notes 1.2
9.7
Gain on early extinguishment of debt (33.6 ) (16.7 )
Gain on sales of assets (2.3 ) (1.0 )
Inventory valuation adjustments —
3.0
Changes in operating assets and liabilities:
Accounts receivable 14.5
18.4
Inventories, net 17.9
45.8
Payables under SWU purchase agreements (42.3 ) (68.9 )
Deferred revenue, net of deferred costs 2.9
5.8
Accounts payable and other liabilities (35.3 ) 2.2
Other, net (1.9 ) 0.5
Cash used in operating activities (95.6 ) (51.9 )

Investing Activities
Capital expenditures (0.3 ) (3.0 )
Proceeds from sales of assets 2.1
1.2
Deposits for surety bonds - net decrease —
0.3
Cash provided by (used in) investing activities 1.8
(1.5 )

Financing Activities
Payment of interest classified as debt (3.4 ) —
Repurchase of debt (27.6 ) (9.8 )
Cash used in financing activities (31.0 ) (9.8 )

Decrease in cash and cash equivalents (124.8 ) (63.2 )
Cash and cash equivalents at beginning of period 260.7
234.0
Cash and cash equivalents at end of period $ 135.9
$ 170.8

Supplemental cash flow information:
Interest paid in cash $ 4.2
$ 6.5
Non-cash activities:
Conversion of interest payable-in-kind to long-term debt $ 0.4
$ 3.4

The accompanying notes are an integral part of these ~~condensed consolidated financial statements.~~

unaudited Consolidated Financial Statements.

CENTRUS ENERGY CORP.

~~CONDENSED~~ CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT ~~(Unaudited)~~

(Unaudited; in millions, except per share data)


	Preferred Stock, Series B		Common Stock, Class A, Par Value $0.10 per Share		Common Stock, Class B, Par Value $0.10 per Share		Excess of Capital Over Par Value		Accumulated Deficit		Accumulated Other Comprehensive Income		Total

Balance at December 31, 2022	$	—	$	1.4	$	0.1	$	158.1	$	(233.9)	$	0.2	$	(74.1)
Net income for the three months ended March 31, 2023	—		—		—		—		7.2		—		7.2
Issuance of common stock	—		0.1		—		23.1		—		—		23.2


Stock-based compensation shares withheld for employee taxes	—		—		—		(1.9)		—		—		(1.9)
Other comprehensive loss	—		—		—		—		—		(0.1)		(0.1)
Stock-based compensation	—		—		—		1.2		—		—		1.2
Balance at March 31, 2023	$	—	$	1.5	$	0.1	$	180.5	$	(226.7)	$	0.1	$	(44.5)

Net income for the three months ended June 30, 2023	—		—		—		—		12.7		—		12.7


Stock-based compensation shares withheld for employee taxes	—		—		—		(1.1)		—		—		(1.1)

Stock-based compensation	—		—		—		0.4		—		—		0.4
Balance at June 30, 2023	$	—	$	1.5	$	0.1	$	179.8	$	(214.0)	$	0.1	$	(32.5)

Net income for the three months ended September 30, 2023	—		—		—		—		8.2		—		8.2

Other comprehensive loss	—		—		—		—		—		(0.1)		(0.1)
Stock-based compensation	—		—		—		0.4		—		—		0.4
Balance at September 30, 2023	$	—	$	1.5	$	0.1	$	180.2	$	(205.8)	$	—	$	(24.0)

Preferred Stock,
Series B

Common Stock,
Class A,
Par Value
$.10 per Share

Common Stock,
Class B,
Par Value
$.10 per Share

Excess of
Capital Over
Par Value
Accumulated Deficit
Accumulated
Other Comprehensive Income
Total

Balance at December 31, 2015 $ —
$ 0.8
$ 0.1
$ 59.0
$ (229.7 ) $ 4.1
$ (165.7 )
Net loss —
—
—
—
(58.8 ) —
(58.8 )
Other comprehensive loss, net of tax benefit (Note 13) —
—
—
—
—
(0.2 ) (0.2 )
Restricted stock units and stock options issued, net of amortization —
—
—
0.4
—
—
0.4
Balance at September 30, 2016 $ —
$ 0.8
$ 0.1
$ 59.4
$ (288.5 ) $ 3.9
$ (224.3 )

Balance at December 31, 2016 $ —
$ 0.8
$ 0.1
$ 59.5
$ (296.7 ) $ 0.2
$ (236.1 )
Net loss —
—
—
—
(23.3 ) —
(23.3 )
Issuance of preferred stock 4.6
—
—
—
—
—
4.6
Other comprehensive loss, net of tax benefit (Note 13) —
—
—
—
—
(0.1 ) (0.1 )
Restricted stock units and stock options issued, net of amortization —
—
—
0.3
—
—
0.3
Balance at September 30, 2017 $ 4.6
$ 0.8
$ 0.1
$ 59.8
$ (320.0 ) $ 0.1
$ (254.6 )

The accompanying notes are an integral part of these ~~condensed consolidated financial statements.~~unaudited Consolidated Financial Statements.

CENTRUS ENERGY CORP.

NOTES TO ~~CONDENSED~~ CONSOLIDATED FINANCIAL STATEMENTS ~~(Unaudited)~~

1. BASIS OF PRESENTATION

Basis of Presentation and Principles of Consolidation

The unaudited ~~condensed consolidated financial statements~~Consolidated Financial Statements of Centrus ~~Energy Corp. (“Centrus” or the~~(the “Company”), which include the accounts of the Company, its principal subsidiary, ~~United States Enrichment Corporation (“~~Enrichment Corp.”), and its other subsidiaries, as of September 30, ~~2017,~~2023, and for the three and nine months ended September 30, ~~2017~~2023, and ~~2016,~~2022, have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The ~~condensed consolidated balance sheet~~unaudited Consolidated Balance Sheet as of December 31, ~~2016,~~2022, was derived from audited ~~consolidated financial statements,~~Consolidated Financial Statements, but does not include all disclosures required by generally accepted accounting principles in the United States (“GAAP”). ~~The~~In the opinion of management, the unaudited ~~condensed consolidated financial statements~~Consolidated Financial Statements reflect all adjustments, ~~that are, in the opinion of management,~~including normal recurring adjustments, necessary for a fair statement of the financial results for the interim period. Certain information and notes normally included in financial statements prepared in accordance with GAAP have been omitted pursuant to such rules and regulations. All material intercompany transactions have been eliminated. The Company’s components of comprehensive income for the three and nine months ended September 30, 2023 and 2022, are insignificant.

Operating results for the three and nine months ended September 30, ~~2017,~~2023, are not necessarily indicative of the results that may be expected for the year ending December 31, ~~2017.~~2023. The unaudited ~~condensed consolidated financial statements~~Consolidated Financial Statements should be read in conjunction with the ~~consolidated financial statements~~Consolidated Financial Statements and related notes and Management's Discussion and Analysis of Financial Condition and Results of Operations included in the Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2022.

~~New~~Significant Accounting ~~Standards~~Policies

~~In May 2014,~~The accounting policies of the Company are set forth in Note 1, Summary of Significant Accounting Policies, of the Consolidated Financial ~~Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2014-09,~~ Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022. There has not been a material change to the Company’s accounting policies since that report, except as noted below.

Foreign Currency

The Company records foreign currency transaction gains and losses, realized and unrealized, and foreign exchange gains and losses due to re-measurement of monetary assets and liabilities that are not denominated in U.S. dollars in other income, net in the consolidated statements of operations.

2. REVENUE AND CONTRACTS WITH CUSTOMERS

Disaggregation of Revenue

The following table presents revenue from ~~Contracts with Customers (Topic 606). ASU 2014-09 introduces a new five-step revenue recognition model in which an entity should recognize revenue~~SWU and uranium sales disaggregated by geographical region based on the billing addresses of customers (in millions):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
United States	$	16.9	$	7.4	$	148.4	$	27.3
Foreign	23.6		12.8		38.5		96.1
Revenue - SWU and uranium	$	40.5	$	20.2	$	186.9	$	123.4

Refer to ~~depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange~~Note 13, Segment Information, for ~~those goods or services. ASU 2014-09 also requires disclosures sufficient to enable users to understand the nature, amount, timing, and uncertainty~~disaggregation of revenue by segment. SWU sales are made primarily to electric utility customers and ~~cash flows arising~~uranium sales are made primarily to other nuclear fuel related companies. Technical Solutions revenue resulted primarily from ~~contracts with customers, including qualitative~~services provided to the U.S. government and ~~quantitative disclosures about contracts with customers, significant judgments~~its contractors. SWU and uranium revenue is recognized at a point in time and Technical Solutions revenue is generally recognized over time based on direct costs incurred or the right to invoice method (in situations where the value transferred matches the Company’s billing rights) as the customer receives and consumes the benefits.

Accounts Receivable


	September 30, 2023		December 31, 2022
	(in millions)
Accounts receivable:
Billed	$	2.1	$	29.0
Unbilled *	7.3		9.1

Accounts receivable	$	9.4	$	38.1

* Billings under certain contracts in the Technical Solutions segment are invoiced based on approved provisional billing rates. Unbilled revenue represents the difference between actual costs incurred and invoiced amounts. The Company expects to invoice and collect the unbilled amounts after actual rates are submitted to the customer and approved. Unbilled revenue also includes unconditional rights to payment that are not yet billable under applicable contracts pending the compilation of supporting documentation.

Contract Liabilities

The following table presents changes in ~~judgments,~~contract liability balances (in millions):


	September 30, 2023		December 31, 2022		Year-To-Date Change
Accrued loss on HALEU Operation Contract:
Current - Accounts payable and accrued liabilities	$	3.3	$	20.0	$	(16.7)

Deferred revenue - current	$	242.5	$	258.4	$	(15.9)
Advances from customers - current	$	30.2	$	14.8	$	15.4
Advances from customers - noncurrent	$	32.8	$	46.2	$	(13.4)

Previously deferred sales and ~~assets~~advances from customers recognized ~~from the costs to obtain or fulfill a contract. The FASB has since issued amendments that clarify a number of specific issues as well as require additional disclosures. The~~in revenue recognition standard will become effective for the Company beginning with the first quarter of 2018. The Company has started an implementation process, including a review of customer contracts, to evaluate the effect this standard will have on its consolidated financial statementstotaled $23.6 million and related disclosures. The Company continues to assess the potential impacts of the new standard on its consolidated financial statements, including substantive new disclosures. The Company plans to select the modified retrospective transition method upon adoption effective January 1, 2018.

~~In February 2016, the FASB issued ASU 2016-02,~~ ~~Leases (Topic 842),~~ which requires lessees to recognize a right-of-use asset and lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting expense recognition$59.7 million in the statement of operations. ASU 2016-02 will become effective for the Company beginning in the first quarter of 2019, with early adoption permitted, and is to be applied using a modified retrospective approach. The Company is evaluating the effect that the provisions of ASU 2016-02 will have on its consolidated financial statements.

~~In March 2016, the FASB issued ASU 2016-09,~~ ~~Stock Compensation - Improvements to Employee Share-Based Payment Accounting (Topic 718)~~. ASU 2016-09 simplifies several aspects of the accounting for share-based payment transactions, including income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. ASU 2016-09 became effective for the Company in the first quarter of 2017. Under ASU 2016-09, entities are permitted to make an accounting policy election to either estimate forfeitures on share-based payment awards, as previously required, or to recognize forfeitures as they occur. The Company has elected to recognize forfeitures as they occur. The adoption of ASU 2016-09 did not have a material impact on the Company’s consolidated financial statements.

~~In August 2016, the FASB issued ASU 2016-15,~~ ~~Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments~~. ASU 2016-15 addresses the presentation and classification of certain cash receipts and cash payments in the statement of cash flows. It is intended to reduce diversity in practice by providing guidance on eight specific cash flow issues. ASU 2016-15 will become effective for the Company beginning in the first quarter of 2018, with early adoption permitted, and is to be applied using a retrospective approach. The Company is evaluating the effect that the provisions of ASU 2016-15 will have on its consolidated financial statements.

~~In October 2016, the FASB issued ASU 2016-16,~~ ~~Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory,~~ requiring an entity to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. ASU 2016-16 will become effective for the Company beginning in the first quarter of 2018, with early adoption permitted. The Company is evaluating the effect that the provisions of ASU 2016-16 will have on its consolidated financial statements.

~~In November 2016, the FASB issued ASU 2016-18,~~ ~~Statement of Cash Flows (Topic 230): Restricted Cash~~. ASU 2016-18 requires that the statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. ASU 2016-18 is to be applied retrospectively for each period presented, and will become effective for the Company beginning in the first quarter of 2018, with early adoption permitted. The Company is evaluating the effect that the provisions of ASU 2016-18 will have on its consolidated financial statements.

~~In March 2017, the FASB issued ASU 2017-07,~~ ~~Compensation-Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost~~. ASU 2017-07 requires changes to the presentation of the components of net periodic benefit cost on the statement of operations by requiring service cost to be presented with other employee compensation costs and other components of net periodic benefit cost to be presented outside of any subtotal of operating income. ASU 2017-07 also stipulates that only the service cost component of net benefit cost is eligible for capitalization in assets. The guidance will become effective for the Company beginning in the first quarter of 2018, with early adoption permitted. The Company is evaluating the effect that the provisions of ASU 2017-07 will have on its consolidated financial statements.

~~2. SPECIAL CHARGES~~

~~Evolving Business Needs~~

~~Evolving business needs have resulted in workforce reductions since 2013. In~~ the nine months ended September 30, ~~2017, special charges included estimated employee termination benefits~~2023 and 2022, respectively.

LEU Segment

The SWU component of ~~$2.2 million, including $0.7 million~~LEU typically is bought and sold under contracts with deliveries over several years. The Company’s agreements for natural uranium hexafluoride and uranium concentrate sales generally are shorter-term, fixed-commitment contracts. The Company’s sales under contract in the ~~three~~Order Book extend to 2030. As of September 30, 2023 and December 31, 2022, the Order Book was approximately $1.0 billion. The Order Book represents the estimated aggregate dollar amount of revenue for future SWU and uranium deliveries under contract and includes approximately $306 million and $319 million of Deferred Revenue and Advances from Customers at September 30, 2023 and December 31, 2022, respectively.

Most of the Company’s customer contracts provide for fixed purchases of SWU during a given year. The Company’s Order Book is partially based on customers’ estimates of the timing and size of their fuel requirements and other assumptions that are subject to change. For example, depending on the terms of specific contracts, the customer may be able to increase or decrease the quantity delivered within an agreed range. The Company’s Order Book estimate also is based on the Company’s estimates of selling prices, which may be subject to change. For example, depending on the terms of specific contracts, prices may be adjusted based on escalation using a general inflation index, published SWU price indicators prevailing at the time of delivery, and other factors, all of which are variable. The Company uses external composite forecasts of future market prices and inflation rates in its pricing estimates.

Technical Solutions Segment

Revenue for the Technical Solutions segment, representing the Company’s technical, manufacturing, engineering, procurement, construction, and operations services offered to public and private sector customers, is recognized over the contractual period as services are rendered.

In 2019, the Company entered into a cost-share contract with the DOE, the HALEU Demonstration Contract, to deploy a cascade of centrifuges to demonstrate production of HALEU for advanced reactors. The DOE agreed to reimburse the Company for 80% of its costs incurred in performing the contract. The DOE modified the contract several times to increase the total contract funding to $173.0 million and to extend the period of performance to November 30, 2022. The impact to Cost of Sales in the nine months ended September 30, ~~2017. Centrus expects~~2023 and 2022, is $0 and $0.5 million, respectively, for previously accrued contract losses attributable to ~~make payments primarily~~work performed in the ~~fourth quarter~~periods. As of ~~2017 related~~September 30, 2023, a total of $19.6 million of previously accrued contract losses have been realized and the accrued contract loss balance included in Accounts Payable and Accrued Liabilities as of September 30, 2023 and December 31, 2022 is $0. The Company has recorded revenue up to the ~~$1.4~~funded amount of $173.0 million ~~balance payable at~~and received aggregate cash payments under the HALEU Demonstration Contract of $171.2 million through September 30, ~~2017.~~2023.

In 2022, DOE elected to move the ~~second quarter~~operational portion of ~~2016,~~the HALEU demonstration to a subsequent, competitively awarded contract that allows for a much longer period of operation than would have been possible under the original contract. On November 10, 2022, after a competitive solicitation, the DOE awarded the HALEU Operation Contract to the Company ~~commenced a project~~and work began on December 1, 2022. The base contract value is approximately $150 million in two phases through 2024. Phase 1 includes an approximately $30 million cost share contribution from Centrus matched by approximately $30 million from the DOE to ~~align~~complete construction of the cascade, begin operations and produce the initial 20 kilograms of HALEU UF6 by no later than December 31, 2023. On October 11, 2023, the Company announced that it began enrichment operations in Piketon, Ohio. On November 7, 2023, the Company announced that it made its ~~corporate structure~~first delivery of HALEU to the ~~scale~~DOE, completing Phase 1 by successfully demonstrating its HALEU production process.

Phase 2 of ~~its ongoing business~~the HALEU Operation Contract includes continued operations and maintenance, and production for a full year at an annual production rate of 900 kilograms of HALEU UF6. The DOE will own the HALEU produced from the demonstration cascade and Centrus will be compensated on a cost-plus-incentive-fee basis, with an expected Phase 2 contract value of approximately $90 million, subject to ~~update related information technology systems.~~Congressional appropriations. The HALEU Operation Contract also gives DOE options to pay for up to nine additional years of production from the cascade beyond the base contract; those options are at the DOE’s sole discretion and subject to the availability of Congressional appropriations.

Under the HALEU Operation Contract, DOE is obligated to provide the 5B cylinders necessary to collect the output of the cascade, but supply chain challenges have created difficulties for DOE in securing enough 5B cylinders for the entire year. Centrus’ delivery of the 900 kilograms is subject to the ability of DOE to provide the 5B cylinders on a timeline that allows for continuous production throughout the year. Centrus anticipates that any potential bottleneck in obtaining 5B cylinders will be temporary and that the supply chain for the 5B cylinders will ramp up over time now that HALEU production is under way.

To support the DOE in mitigating the risk of delayed delivery of 5B cylinders, the Company received technical direction from the DOE to procure compliant 5B cylinders and components while the contractual obligation to furnish compliant 5B cylinders under the HALEU Operation Contract continues to rest with the DOE. The Company ~~incurred advisory~~is also performing additional work on infrastructure and facility repairs under DOE’s technical direction. On September 28, 2023, the DOE modified the HALEU Operation Contract to incorporate additional scope, which are not subject to cost-share, for infrastructure and facility repairs, and costs associated with 5B cylinder refurbishment, for an estimated additional contract value of ~~$0.3~~$5.8 million. On October 19, 2023, the DOE provided additional funding of $5.5 million ~~and $0.8 million related~~for the additional scope under the HALEU Operation Contract.

The impact to ~~the reengineering project~~Cost of Sales in the three and nine months ended September 30, ~~2016, respectively.~~2023 is $5.4 million and $16.7 million, respectively, for previously accrued contract losses attributable to work performed in the period. As of September 30, 2023, a total of $18.0 million of previously accrued contract losses has been realized. At September 30, 2023 and December 31, 2022, the remaining accrued contract loss balance of$3.3 million and $20.0 million, respectively, is included in Accounts Payable and Accrued Liabilities. The HALEU Operation Contract is funded incrementally and the DOE currently is obligated for costs up to approximately $38.8 million of the $125.9 million estimated transaction price for Phase 1, Phase 2, and additional scope work. The Company ~~incurred advisory~~has received aggregate cash payments under the HALEU Operation Contract of $22.1 million through September 30, 2023.

The Company does not have a contractual obligation to perform work in excess of the funding provided by the DOE. If the DOE does not commit to additional costs above the existing funding, the Company may incur material additional costs or losses in future periods that could have an adverse impact on its financial condition and liquidity.

3. CASH, CASH EQUIVALENTS AND RESTRICTED CASH

The following table reconciles the Company’s cash, cash equivalents and restricted cash as presented on the Consolidated Balance Sheets to amounts on the Consolidated Statements of ~~$1.7~~Cash Flows (in millions):


	September 30, 2023		December 31, 2022
Cash and cash equivalents	$	183.3	$	179.9
Deposits for financial assurance - current (a)	0.2		0.2
Deposits for financial assurance - noncurrent	32.3		32.3
Total cash, cash equivalents and restricted cash	$	215.8	$	212.4

(a) Deposits for financial assurance - current is included within Other Current Assets in the Consolidated Balance Sheets.

The Company has $14.3 million denominated in euros as of September 30, 2023 and ~~$5.0~~recorded $0.6 million in transaction losses in the three and nine months ended September 30, ~~2017, respectively.~~2023.

~~Piketon Demonstration Facility~~

~~In September 2015, Centrus completed a successful three-year demonstration of its American Centrifuge technology at its facility in Piketon, Ohio.~~ The ~~demonstration effort was primarily funded by~~following table provides additional detail regarding the ~~U.S. government. As a result of reduced program funding, Centrus incurred a special charge in the third quarter of 2015~~Company’s deposits for ~~estimated employee termination benefits. Of the remaining $4.9 million liability as of September 30, 2017, $2.8 million is classified as current and included in~~ ~~Accounts Payable and Accrued Liabilities~~ ~~in the condensed consolidated balance sheet. The remaining $2.1 million is included in~~ ~~Other Long-Term Liabilities~~ ~~and is expected to be paid through 2019.~~

~~A summary of termination benefit activity and related liabilities follows~~financial assurance (in millions):


	September 30, 2023				December 31, 2022
	Current		Long-Term		Current		Long-Term
Collateral for Inventory Loans	$	—	$	29.8	$	—	$	29.8
Workers Compensation	—		2.4		—		2.4
Other	0.2		0.1		0.2		0.1
Total deposits for financial assurance	$	0.2	$	32.3	$	0.2	$	32.3

Liability
December 31,
2016
Nine Months Ended
September 30, 2017 Liability
September 30,
2017
Charges for Termination Benefits Paid/ Settled
Workforce reductions:
Evolving business needs $ 0.1
$ 2.2
$ (0.9 ) $ 1.4

Piketon demonstration facility 5.4
0.1
(0.6 ) 4.9

$ 5.5
$ 2.3
$ (1.5 ) $ 6.3

~~3. CONTRACT SERVICES AND ADVANCED TECHNOLOGY LICENSE AND DECOMMISSIONING COSTS~~

The ~~contract services segment includes~~ ~~Revenue~~ ~~and~~ ~~Cost of Sales~~Company has provided financial assurance to states in which it was previously self-insured for engineering and testing work Centrus performs on the American Centrifuge technology under a government contract with UT-Battelle, LLC (“UT-Battelle”), the operator of Oak Ridge National Laboratory (“ORNL”). The recently completed fixed priced contract between Centrus and UT-Battelle (the “2017 ORNL Contract”) was for the period from October 1, 2016, through September 30, 2017 and generated revenue of approximately $25 million. On October 26, 2017, the parties executed a new fixed priced contract for the period from October 1, 2017, through September 30, 2018, that is expected to generate total revenue of approximately $16 million upon completion of defined milestones. The ORNL contracts have been funded incrementally. Funding for the program is provided to UT-Battelle by the U.S. government which is currently operating under a continuing resolution.

The 2017 ORNL Contract provided for payments for monthly reports of deliverables of approximately $2.0 million per month and additional aggregate payments of $1.0 million based on completion of defined milestones.

The Company’s contract with UT-Battelle that ended September 30, 2016 (the “2016 ORNL Contract”), provided for payments for monthly reports of deliverables of approximately $2.7 million per month. The 2016 ORNL Contract, which was signed in March 2016, provided for payments for reports related to work performed since October 1, 2015. ~~Revenue~~ in the nine months ended September 30, 2016, includes $24.2 million for reports on work performed in the nine months ended September 30, 2016, and $8.1 million for March 2016 reports on work performed in the three months ended December 31, 2015. Expenses for contract work performed in the nine months ended September 30, 2016, are included in ~~Cost of Sales. Expenses for work performed in the three months ended December 31, 2015, before entering into the 2016 ORNL Contract, were included in~~ ~~Advanced Technology License and Decommissioning Costs~~ ~~in 2015.~~

~~American Centrifuge expenses that are outside of the Company’s contracts with UT-Battelle are included in~~ ~~Advanced Technology License and Decommissioning Costs,~~ including ongoing costs to maintain the demobilized Piketon facility and our licenses from the U.S. Nuclear Regulatory Commission (“NRC”) at that location. In the second quarter of 2016, the Company commenced the decontamination and decommissioning (“D&D”) of the Piketon facilityworkers’ compensation in accordance with each state’s requirements in the ~~requirements~~form of ~~NRC~~a surety bond or deposit that is fully cash collateralized by Centrus. Each surety bond or deposit is subject to reduction and/or cancellation, as each state determines the likely reduction of workers’ compensation obligations pertaining to the period of self-insurance. In March, May, and October 2022, the ~~U.S. Department of Energy (“DOE”). Refer to~~ Company entered into three inventory loans that each required a cash deposit into an escrow fund. See Note ~~12, Commitments and Contingencies~~4, ~~for additional details.~~Inventories.

4. ~~RECEIVABLES~~

September 30,
2017 December 31,
2016
(in millions)
Utility customers and other $ 9.1
$ 15.3
Contract services, primarily DOE 5.1
4.6
Accounts receivable $ 14.2
$ 19.9

Centrus formerly performed site services work under contracts with DOE at the former Portsmouth and Paducah gaseous diffusion plants. Overdue receivables from DOE of $14.2 million as of September 30, 2017, and $22.8 million as of December 31, 2016, are included in ~~Other Long-Term Assets~~ ~~based on the extended timeframe expected to resolve the Company’s claims for payment.~~

Centrus has unapplied payments from DOE that may be used, at DOE’s direction, (a) to pay for future services provided by the Company, or (b) to reduce outstanding receivables balances due from DOE. The balance of unapplied payments of $19.3 million as of September 30, 2017, and December 31, 2016, is included in ~~Other Long-Term Liabilities~~ ~~pending resolution of the long-term receivables from DOE described above.~~

5. INVENTORIES

Centrus holds uranium at licensed locations (e.g., fabricators) in the form of natural uranium hexafluoride and as the uranium component of ~~low enriched uranium (“LEU”).~~LEU in transit to meet book transfer requests by customers and suppliers. Centrus also holds ~~separative work units (“SWU”)~~SWU as the SWU component of LEU at licensed locations ~~(e.g., fabricators)~~or in transit to meet book transfer requests by ~~customers.~~customers and suppliers. Fabricators process LEU into fuel for use in nuclear reactors. Components of inventories ~~follow~~are as follows (in millions):


	September 30, 2023						December 31, 2022
	Current Assets		Current Liabilities (a)		Inventories, Net		Current Assets		Current Liabilities (a)		Inventories, Net
Separative work units	$	25.3	$	—	$	25.3	$	24.1	$	—	$	24.1
Uranium	185.5		0.4		185.1		185.1		60.8		124.3
Total	$	210.8	$	0.4	$	210.4	$	209.2	$	60.8	$	148.4

(a)This includes inventories owed to suppliers for advances of uranium.

Inventories are valued at the lower of cost or net realizable value.

September 30, 2017 December 31, 2016

Current
Assets

Current
Liabilities
(a)
Inventories, Net
Current
Assets

Current
Liabilities
(a)
Inventories, Net
Separative work units $ 73.7
$ 3.2
$ 70.5
$ 115.8
$ 15.2
$ 100.6
Uranium 50.2
18.9
31.3
61.4
42.3
19.1
Materials and supplies 0.2
—
0.2
0.2
—
0.2
$ 124.1
$ 22.1
$ 102.0
$ 177.4
$ 57.5
$ 119.9
The Company also may borrow SWU or uranium from customers or suppliers, in which case the Company will record the SWU and/or uranium and the related liability for the borrowing using a projected and forecasted purchase price over the borrowing period. In March 2023, the Company borrowed UF6 which was recorded to inventory at a value of $22.5 million. The inventory value was recorded based on the estimated fair market value of the inventory on the date of borrowing. The Company performs quarterly revaluations of the Long-Term Inventory Loans reflecting an updated projection of the timing and sources of inventory to be used for repayment. These revaluations were recorded to Cost of Sales and resulted in an increase to the related liability of $0.6 million and $3.5 million, for the three and nine months ended September 30, 2023, respectively, and $0 and $5.5 million for the three and nine months ended September 30, 2022, respectively. At September 30, 2023, the total liability of borrowed inventory was $84.6 million, of which $74.7 million was recorded in Long-Term Inventory Loans and $9.9 million was recorded in Accounts Payable and Accrued Liabilities. At December 31, 2022, the total liability of borrowed inventory was $58.6 million, of which $48.7 million was recorded in Long-Term Inventory Loans and $9.9 million was recorded in Accounts Payable and Accrued Liabilities.


~~(a)~~	~~Inventories owed to customers and suppliers, included in current liabilities, include SWU and uranium inventories owed to fabricators.~~

~~6. PROPERTY, PLANT AND EQUIPMENT~~

September 30,
2017 December 31,
2016
(in millions)
Property, plant and equipment, gross 6.9
6.8
Accumulated depreciation (1.7 ) (0.8 )
Property, plant and equipment, net $ 5.2
$ 6.0

7.5. INTANGIBLE ASSETS

Intangible assets originated from the Company’s reorganization and application of fresh start accounting as of the date the Company emerged from bankruptcy, September 30, 2014, and reflect the conditions at that time. The intangible asset related to the Company’s sales ~~order book~~Order Book is amortized as the ~~order book~~Order Book, existing at emergence, is reduced, principally as a result of deliveries to customers. The intangible asset related to customer relationships is amortized using the straight-line method over the estimated average useful life of 15 years. Amortization expense is presented below gross profit on the ~~condensed consolidated statements~~Consolidated Statements of ~~operations.~~Operations and Comprehensive Income. Intangible asset balances are as follows (in millions):


	September 30, 2023						December 31, 2022
	Gross Carrying Amount		Accumulated Amortization		Net Amount		Gross Carrying Amount		Accumulated Amortization		Net Amount
Sales order book	$	54.6	$	40.7	$	13.9	$	54.6	$	39.9	$	14.7
Customer relationships	68.9		41.3		27.6		68.9		37.9		31.0
Total	$	123.5	$	82.0	$	41.5	$	123.5	$	77.8	$	45.7

September 30, 2017 December 31, 2016

(in millions)
Gross Carrying Amount Accumulated Amortization Net Amount Gross Carrying Amount Accumulated Amortization Net Amount
Sales order book $ 54.6
$ 22.1
$ 32.5
$ 54.6
$ 19.9
$ 34.7
Customer relationships 68.9
13.8
55.1
68.9
10.3
58.6
Total $ 123.5
$ 35.9
$ 87.6
$ 123.5
$ 30.2
$ 93.3

8.6. DEBT

A summary of ~~long-term~~ debt is as follows (in millions):


		September 30, 2023				December 31, 2022
	Maturity	Current		Long-Term		Current		Long-Term
8.25% Notes:	Feb. 2027
Principal		$	—	$	74.3	$	—	$	74.3
Interest		6.1		15.3		6.1		21.4
Total		$	6.1	$	89.6	$	6.1	$	95.7

Maturity
September 30,
2017
December 31, 2016
8.25% Notes: Feb. 2027
Principal $ 74.3
$ —
Interest 58.1
—
8.25% Notes 132.4
—
8% PIK Toggle Notes
Sep. 2019^(a)
31.3
234.6
Subtotal 163.7
234.6
Less deferred issuance costs 0.1
0.5
Total debt 163.6
234.1
Less current portion 6.1
—
Long-term debt $ 157.5
$ 234.1

~~(a) Maturity can be extended to September 2024 upon the satisfaction of certain funding conditions described below.~~

~~Note Exchange~~

On February 14, 2017, pursuant to an exchange offer and consent solicitation, Centrus exchanged $204.9 million principal amount of the Company’s 8% paid-in-kind (“PIK”) toggle notes (the “8% PIK Toggle Notes”) for $74.3 million principal amount of 8.25% notes due February 2027 (the “8.25% Notes”), 104,574 shares of Series B Preferred Stock with a liquidation preference of $1,000 per share, and $27.6 million of cash. The exchange is accounted for as a troubled debt restructuring (a “TDR”) under Accounting Standards Codification Subtopic 470-60, ~~Debt-Troubled Debt Restructurings by Debtors~~. For an exchange classified as a TDR, if the future undiscounted cash flows of the newly issued debt and other consideration are less than the net carrying value of the original debt, a gain is recorded for the difference and the carrying value of the newly issued debt is adjusted to the future undiscounted cash flow amount and no future interest expense is recorded. All future interest payments on the newly issued debt reduce the carrying value. Accordingly, the Company recognizes the 8.25% Notes on the condensed consolidated balance sheet as the sum of the principal balance and all future interest payments. The Company recognized a gain of $33.6 million related to the note exchange for the quarter ended March 31, 2017, which is net of transaction costs of $9.0 million and previously deferred issuance costs related to the 8% PIK Toggle Notes of $0.4 million. Refer to ~~Note 13, Stockholders’ Equity~~ ~~for details related to the newly issued preferred stock.~~

~~8.25% Notes~~

Interest on the Company’s 8.25% Notes is payable semi-annually in arrears as of February 28 and August 31 based on a 360-day year consisting of twelve 30-day months. The 8.25% Notes ~~mature on February 28, 2027. As described above,~~were issued in connection with a troubled debt restructuring; therefore, all future interest payment obligations on the 8.25% Notes are included in the carrying value of the 8.25% Notes. As a result, ~~the Company’s reported interest expense will be less than its contractual~~ interest payments ~~throughout~~are reported as a reduction in the ~~term~~carrying value of the 8.25% ~~Notes.~~Notes and not as interest expense. As of September 30, ~~2017,~~2023 and December 31, 2022, $6.1 million of interest iswas recorded as current and classified as ~~Accounts Payable and Accrued Liabilities~~ Current Debt in the ~~condensed consolidated balance sheet.~~

~~The 8.25% Notes rank equally in right of payment with all of our existing~~Consolidated Balance Sheets. Additional terms and future unsubordinated indebtedness other than our Issuer Senior Debt and our Limited Secured Acquisition Debt (each as defined below). The 8.25% Notes rank senior in right of payment to all of our existing and future subordinated indebtedness and to certain limited secured acquisition indebtedness of the Company (the “Limited Secured Acquisition Debt”). The Limited Secured Acquisition Debt includes (i) any indebtedness, the proceeds of which are used to finance all or a portion of an acquisition or similar transaction if any lender’s lien is solely limited to the assets acquired in such a transaction and (ii) any indebtedness, the proceeds of which are used to finance all or a portion of the American Centrifuge project or another next generation enrichment technology if any lender’s lien is solely limited to such

~~assets,~~ ~~provided that~~ a lien securing the 8.25% Notes that is junior with respect to the lien securing such indebtedness, will be effected for the 8.25% Notes, which will be limited to the assets acquired with such Limited Secured Acquisition Debt.

The 8.25% Notes are subordinated in right of payment to certain indebtedness and obligations of the Company, as described in the 8.25% Notes Indenture (the “Issuer Senior Debt”), including (i) any indebtedness of the Company (inclusive of any indebtedness of Enrichment Corp.) under a future credit facility up to $50 million with a maximum net borrowing of $40 million after taking into account any minimum cash balance (unless a higher amount is approved with the consent of the holders of a majority of the aggregate principal amountconditions of the 8.25% Notes ~~then outstanding)~~are described in Note 8, ~~(ii) any revolving credit facility to finance inventory purchases and related working capital needs, and (iii) any indebtedness~~Debt, of the ~~Company to Enrichment Corp. under the secured intercompany notes.~~

The 8.25% Notes are guaranteed on a subordinated and limited basis by, and secured by substantially all of the assets of, Enrichment Corp. The Enrichment Corp. guarantee is a secured obligation and ranks equally in right of payment with all existing and future unsubordinated indebtedness of Enrichment Corp. (other than Designated Senior Claims (as defined below) and Limited Secured Acquisition Debt) and senior in right of payment to all existing and future subordinated indebtedness of Enrichment Corp. and Limited Secured Acquisition Debt. The Enrichment Corp. guarantee is subordinated in right of payment to certain obligations of, and claims against, Enrichment Corp. describedConsolidated Financial Statements in the ~~8.25% Notes Indenture (collectively, the “Designated Senior Claims”), including obligations and claims:~~

~~under a future credit facility up to $50 million with a maximum net borrowing of $40 million after taking into account any minimum cash balance;~~

~~under any revolving credit facility to finance inventory purchases and related working capital needs;~~

~~held by or~~Company’s Annual Report on Form 10-K for the ~~benefit of the Pension Benefit Guaranty Corporation (“PBGC”) pursuant to any settlement (including any required funding of pension plans); and~~year ended December 31, 2022.

~~under surety bonds or similar obligations held by or on behalf of the U.S. government pursuant to regulatory requirements.~~

The liens securing the Enrichment Corp. guarantee of the 8% PIK Toggle Notes and the 8.25% Notes are pari passu with each other, and are junior in priority with respect to the lien securing Limited Secured Acquisition Debt, which is limited to the assets acquired with such Limited Secured Acquisition Debt.

~~8% PIK Toggle Notes~~

Interest on the 8% PIK Toggle Notes is payable semi-annually in arrears on March 31 and September 30 based on a 360-day year consisting of twelve 30-day months. The principal amount is increased by any payment of interest in the form of PIK payments. The Company has the option to pay up to 5.5% per annum of interest due on the 8% PIK Toggle Notes in the form of PIK payments. For the semi-annual interest periods ended March 31, 2017, and September 30, 2017, the Company elected to pay interest in the form of PIK payments at 5.5% per annum.

Financing costs for the issuance of the 8% PIK Toggle Notes were deferred and are being amortized on a straight-line basis, which approximates the effective interest method, over the life of the 8% PIK Toggle Notes.

The 8% PIK Toggle Notes mature on September 30, 2019. However, the maturity date can be extended to September 30, 2024, upon the satisfaction of certain funding conditions described in the Indenture relating to the funding, under binding agreements, of (i) the American Centrifuge project or (ii) the implementation and deployment of a National Security Train Program utilizing American Centrifuge technology.

The 8% PIK Toggle Notes rank equally in right of payment with all existing and future unsubordinated indebtedness of the Company (other than the Issuer Senior Debt) and are senior in right of payment to all existing and future subordinated indebtedness of the Company. The 8% PIK Toggle Notes are subordinated in right of payment to the Issuer Senior Debt.

The 8% PIK Toggle Notes are guaranteed and secured on a subordinated, conditional, and limited basis by Enrichment Corp. Enrichment Corp. will be released from its guarantee without the consent of the holders of the 8% PIK Toggle Notes upon the occurrence of certain termination events (other than with respect to an unconditional interest claim), including (i) the involuntary termination by the PBGC of any of the qualified pension plans of the Company or Enrichment Corp., (ii) the cessation of funding prior to completion of our ongoing American Centrifuge test programs or (iii) both a decision by the Company to abandon American Centrifuge technology and either (1) the efforts by the Company to commercialize another next generation enrichment technology funded at least in part by new capital provided or to be provided by Enrichment Corp. have been terminated or are no longer being pursued or (2) the attainment of capital necessary to commercialize another next generation enrichment technology with respect to which the Company is involved which does not include new capital provided or to be provided by Enrichment Corp.

The Enrichment Corp. guarantee ranks equally in right of payment with all existing and future unsubordinated indebtedness of Enrichment Corp. (other than Designated Senior Claims and Limited Secured Acquisition Debt) and senior in right of payment to all existing and future subordinated indebtedness of Enrichment Corp. and Limited Secured Acquisition Debt. The Enrichment Corp. guarantee is subordinated in right of payment to Designated Senior Claims.

As explained above, the liens securing the Enrichment Corp. guarantee of the 8% PIK Toggle Notes and the 8.25% Notes are pari passu with each other, and are junior in priority with respect to the lien securing Limited Secured Acquisition Debt, which is limited to the assets acquired with such Limited Secured Acquisition Debt.

9.7. FAIR VALUE

Fair value is the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value of assets and liabilities, the following hierarchy is used in selecting inputs, with the highest priority given to Level 1, as these are the most transparent or reliable:

•Level 1 –assets include investments with quoted prices ~~for identical instruments~~ in active ~~markets.~~markets that the Company has the ability to liquidate as of the reporting date.

•Level 2 –assets include investments in U.S. government agency securities, corporate and municipal debt whose estimates are valued based on observable inputs, other than quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs are observable in active markets.prices.

•Level 3 –assets include investments with unobservable inputs, such as third-party valuations, ~~derived using one~~due to little or ~~more significant inputs that are not observable.~~no market activity.

Financial Instruments Recorded at Fair Value (in ~~Millions)~~millions):


	September 30, 2017								December 31, 2016									September 30, 2023								December 31, 2022
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total			Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets:																	Assets:
Cash and cash equivalents	$	135.9	$	—	$	—	$	135.9	$	260.7	$	—	$	—	$	260.7	Cash and cash equivalents	$	183.3	$	—	$	—	$	183.3	$	179.9	$	—	$	—	$	179.9
Deferred compensation asset (a)	1.3		—		—		1.3		1.1		—		—		1.1		Deferred compensation asset (a)	3.0		—		—		3.0		2.4		—		—		2.4

Liabilities:																	Liabilities:
Deferred compensation obligation (a)	1.3		—		—		1.3		1.1		—		—		1.1		Deferred compensation obligation (a)	$	3.0	$	—	$	—	$	3.0	$	2.4	$	—	$	—	$	2.4


~~(a)~~	The deferred compensation obligation represents the balance of deferred compensation plus net investment earnings. The deferred compensation plan is funded through a rabbi trust. Trust funds are invested in mutual funds for which unit prices are quoted in active markets and are classified within Level 1 of the valuation hierarchy.

(a) The deferred compensation obligation represents the balance of deferred compensation plus net investment earnings. The deferred compensation plan is funded through a rabbi trust. Trust funds are invested in mutual funds for which unit prices are quoted in active markets and are classified within Level 1 of the valuation hierarchy.

There were no transfers between Level 1, 2 or 3 during the periods presented.

Other Financial Instruments

As of September 30, ~~2017~~,2023, and December 31, ~~2016,~~2022, the ~~balance sheet~~Consolidated Balance Sheets carrying amounts for Accounts Receivable, Accounts Payable and Accrued Liabilities (excluding the deferred compensation obligation described above), and ~~payables~~Payables under ~~SWU purchase agreements~~Inventory Purchase Agreements approximate fair value because of ~~the~~their short-term ~~nature of the instruments.~~nature.

The carrying value and estimated fair value of long-term debt ~~follow~~were as follows (in millions):


	September 30, 2023					December 31, 2022
	Carrying Value			Estimated Fair Value (a)		Carrying Value			Estimated Fair Value (a)
8.25% Notes	$	95.7	(b)	$	71.0	$	101.8	(b)	$	68.8

September 30, 2017 December 31, 2016
Carrying Value
Estimated Fair Value ^(a)
Carrying Value
Estimated Fair Value ^(a)
8.25% Notes $ 138.5
^(b)
$ 59.7
-
-
8% PIK Toggle Notes 31.3
24.0
234.6
107.4

^(a) Based on ~~the most recent trading price~~bid/ask quotes as of or near the balance sheet date, which isare considered a Level 2 ~~input as of September 30, 2017, and a Level 1 input as of December 31, 2016,~~inputs based on the frequency of trading.


^(b)	The carrying value of the 8.25% Notes as of September 30, 2017, consists of the principal balance of $74.3 million and the sum of current and noncurrent interest payment obligations until maturity. Refer to ~~Note 8, Debt~~.

(b) The carrying value of the 8.25% Notes consists of the principal balance of $74.3 million and the sum of current and noncurrent interest payment obligations until maturity. Refer to Note 6, Debt.

~~10.~~

8. PENSION AND POSTRETIREMENT HEALTH AND LIFE BENEFITS

The Company provides retirement benefits to certain employees and retirees under two qualified defined benefit pension plans, one postretirement health and life benefit plan and two disqualified plans.

The components of net periodic benefit ~~cost (credit)~~costs (credits) for the defined benefit pension plans were as follows (in millions):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Service costs	$	0.7	$	0.7	$	2.2	$	2.0
Interest costs	6.9		4.7		20.8		14.3
Amortization of prior service costs (credits), net	—		(0.1)		(0.1)		(0.2)
Remeasurement gain	(0.9)		—		(0.9)		—
Expected return on plan assets (gains)	(7.7)		(8.9)		(23.2)		(26.7)
Net periodic benefit costs (credits)	$	(1.0)	$	(3.6)	$	(1.2)	$	(10.6)

Three Months Ended
September 30, Nine Months Ended
September 30,
2017 2016 2017 2016
Service costs $ 0.9
$ 1.0
$ 2.8
$ 2.9
Interest costs 8.0
8.9
24.1
26.6
Expected gains on plan assets (10.1 ) (10.6 ) (30.5 ) (31.6 )
Actuarial loss from remeasurement —
—
—
0.8
Net periodic benefit credit $ (1.2 ) $ (0.7 ) $ (3.6 ) $ (1.3 )

In the second quarter of 2016, the level of lump-sum payments under the non-qualified defined benefit pension plans resulted in the remeasurement of pension obligations under settlement accounting rules. The remeasurement resulted in a loss of $0.8 million included in ~~Selling, General and Administrative Expenses~~ in the second quarter of 2016. The loss includes the effect of a decrease in the discount rate used in the remeasurement of pension obligations from approximately 4.5% as of December 31, 2015, to approximately 3.7% as of June 30, 2016.

The components of net periodic benefit ~~cost~~costs for the postretirement health and life benefit ~~plans~~plan were as follows (in millions):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Interest costs	$	1.2	$	0.9	$	3.7	$	2.7

Amortization of prior service costs (credits), net	(0.1)		—		(0.1)		(0.1)
Net periodic benefit costs	$	1.1	$	0.9	$	3.6	$	2.6

The Company reports service costs for its defined benefit pension plans and its postretirement health and life benefit plans in Cost of Sales and Selling, General and Administrative Expenses. The remaining components of net periodic benefit (credits) costs are reported as Nonoperating Components of Net Periodic Benefit Loss (Income).

Three Months Ended
September 30, Nine Months Ended
September 30,
2017 2016 2017 2016
Interest costs $ 1.8
$ 2.1
$ 5.4
$ 6.1
Expected gains on plan assets —
(0.1 ) —
(0.2 )
Amortization of prior service credits, net —
(0.1 ) (0.1 ) (0.2 )
Net periodic benefit cost $ 1.8
$ 1.9
$ 5.3
$ 5.7
During the third quarter of 2023, the Company determined that it was probable that lump sum payouts for 2023 would be greater than the annual service and interest cost components of the annual net periodic benefit cost for one of its defined benefit pension plans, triggering a remeasurement. The Company’s defined benefit obligations for its pension plans was $527.3 million at December 31, 2022, of which $30.6 million related to this plan. The remeasurement resulted in a decrease in the benefit obligation and a corresponding net actuarial gain of $0.9 million for the three and nine months ended September 30, 2023. There were no pension plan remeasurements in the three and nine months ended September 30, 2022.

On October 12, 2023, the Company entered into an agreement with an insurer (“Insurer”) for one of its defined benefit plans to purchase a group annuity contract and transferred approximately $186.5 million of its pension plan obligations to the insurer. The purchase of the group annuity contract was funded directly by the assets of the pension plan of approximately $171.4 million. The purchase resulted in a transfer of benefit administrative responsibilities for approximately 1,400 beneficiaries effective December 1, 2023. The Company estimates that the income related to the pension settlement recognized in the fourth quarter will be approximately $15.1 million, dependent upon the final settlement and pricing of the annuity transaction. The settlement charge will be recognized in nonoperating components of net periodic benefit loss (income) in our consolidated statements of operations.

~~11.~~

9. INCOME TAXES

Centrus follows the asset and liability approach to account for deferred taxes. Deferred tax assets and liabilities are recognized for the anticipated future tax consequences of temporary differences between the balance sheet carrying amounts of assets and liabilities and their respective tax bases. A valuation allowance is provided if it is more likely than not that all, or some portion, of the deferred tax assets may not be realized. The ultimate realization of the net deferred tax assets is dependent upon generating sufficient taxable income in future years when deferred tax assets are recoverable or are expected to reverse.

Centrus evaluated both positive and negative evidence that was objectively verifiable to determine the amount of the federal valuation allowance that was required on Centrus’ federal deferred tax assets. Centrus has visibility on a significant portion of revenue in the LEU segment for 2023 through 2026, primarily from its long-term sales contracts. In the third quarter of 2023, Centrus released $7.7 million of the valuation allowance against federal net deferred taxes as a discrete item for the three months ended September 30, 2023. Centrus determined that the positive evidence of increased forecasted future income in the LEU segment based on existing sales Order Book and supply contracts along with commodity market forward pricing indicators, supported the release of the federal valuation allowance. However, due to lack of objectively verifiable information in later years, it was determined that forecasted future income was not sufficient to realize all the deferred tax assets. Therefore, Centrus recorded a partial release of its federal valuation allowance.

Going forward, Centrus will continue to evaluate both positive and negative evidence that would support any further changes to the remaining valuation allowances. Such evidence in its technical solutions segment may include signing new contracts which could have a significant impact on pre-tax income, follow on-work related to the HALEU program, or abandonment of the commercial deployment of the centrifuge technology. Such evidence in our LEU segment may include renewing SWU sales contracts with existing customers and/or signing new SWU sales or purchase contracts with significantly higher or lower margins than currently forecasted. Additional evidence in the LEU segment may include potential deferrals in the timing of deliveries requested by its customers, which would impact revenue recognition timing. The impact of these and other potential positive and negative events will be weighed and evaluated to determine if the valuation allowance should be increased or decreased in the future.

10. NET INCOME (LOSS) PER ~~COMMON~~ SHARE

Basic net income (loss) per ~~common~~ share is calculated by dividing net income (loss) ~~allocable to common stockholders~~ by the weighted average number of shares of common stock outstanding during the period. In calculating diluted net income (loss) per ~~common~~ share, the number of shares is increased by the weighted average number of potential common shares related to stock compensation ~~awards.~~awards including restricted stock, stock options, stock appreciation rights and notional stock units, and the warrant. No dilutive effect is recognized in a period in which a net loss has occurred.

The weighted average number of common and common equivalent shares used in the calculation of basic and diluted income (loss) per share are as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Numerator (in millions):
Net income (loss)	$	8.2	$	(6.1)	$	28.1	$	30.9




Denominator (in thousands):
Average common shares outstanding - basic	15,374		14,623		15,127		14,586
Potentially dilutive shares related to stock compensation awards and warrant	252		—		288		388
Average common shares outstanding - diluted	15,626		14,623		15,415		14,974

Net income (loss) per share (in dollars):
Basic	$	0.53	$	(0.42)	$	1.86	$	2.12
Diluted	$	0.52	$	(0.42)	$	1.82	$	2.06

Common stock equivalents excluded from the diluted calculation because they would have been antidilutive (in thousands)	—		401		1		—

11. STOCKHOLDERS’ EQUITY

Common Stock Issuance

Pursuant to a sales agreement with its agents, the Company sold, through its ATM offering at the market price, an aggregate of 722,568 shares of its Class A Common Stock in the three months ended March 31, 2023, for a total of $24.4 million. After expenses and commissions paid to the agents, the Company’s proceeds totaled $23.4 million. Additionally, the Company recorded direct costs of $0.2 million related to the issuance. The shares of Class A Common Stock were issued pursuant to the Company’s shelf registration statement on Form S-3 (File No. 333-239242), which became effective on August 5, 2020, and two prospectus supplements dated December 31, 2020 and December 5, 2022, respectively. The Company has used and/or intends to use the net proceeds from this offering for working capital and general corporate purposes including, but not limited to, capital expenditures, working capital, investment in technology development and deployment, repayment of indebtedness, potential acquisitions and other business opportunities. There were no sales of Class A Common Stock through the ATM offering in the three months ended September 30, 2023 or the nine months ended September 30, 2022.

Three Months Ended
September 30, Nine Months Ended
September 30,
2017 2016 2017 2016
Net loss allocable to common stockholders (in millions) $ (10.5 ) $ (41.3 ) $ (28.3 ) $ (58.8 )

Shares in thousands:
Average common shares outstanding - basic 9,103
9,096
9,081
9,102
Potentially dilutive shares related to stock options (a) —
—
—
—
Average common shares outstanding - diluted 9,103
9,096
9,081
9,102

Net loss per common share – basic and diluted $ (1.15 ) $ (4.54 ) $ (3.12 ) $ (6.46 )

(a) Common stock equivalents excluded from the diluted calculation as a result of a net loss in the period (in thousands) 13
14
60
7

Options outstanding and considered anti-dilutive as their exercise price exceeded the average share market price (in thousands) 327
375
30
490
2023 Shelf Registration

The Company filed a shelf registration statement on Form S-3 (Registration Statement No. 333-272984) with the SEC on June 28, 2023, which became effective on July 10, 2023. Pursuant to this shelf registration statement, the Company may offer and sell up to $200 million in securities, in aggregate. The Company retains broad discretion over the use of the net proceeds from the sale of the securities offered. Unless otherwise specified in any prospectus supplement, we currently intend to use the net proceeds from the sale of our securities offered under this prospectus for working capital and general corporate purposes including, but not limited to, capital expenditures, working capital, repayment of indebtedness, potential acquisitions and other business opportunities. Pending any specific application, we may initially invest funds in short-term marketable securities or apply them to the reduction of indebtedness.

Rights Agreement

On June 20, 2023, the Company entered into a Fifth Amendment to the Rights Agreement, which amends the Rights Agreement, dated as of April 6, 2016, by and among the Company, and Computershare Trust Company, N.A. and Computershare Inc., as rights agent, as amended by (i) the First Amendment to the Rights Agreement dated as of February 14, 2017, (ii) the Second Amendment to the Rights Agreement dated as of April 3, 2019, (iii) the Third Amendment to the Rights Agreement dated as of April 13, 2020, and (iv) the Fourth Amendment to the Rights Agreement dated as of June 16, 2021.

The Fifth Amendment to the Rights Agreement (i) increases the purchase price for each one one-thousandth (1/1000th) of a share of the Company’s Series A Participating Cumulative Preferred Stock, par value $1.00 per share, from $18.00 to $160.38; and (ii) extends the Final Expiration Date (as defined in the Rights Agreement) from June 30, 2023 to June 30, 2026.

The Fifth Amendment was not adopted as a result of, or in response to, any effort to acquire control of the Company. The Fifth Amendment has been adopted in order to preserve for the Company’s stockholders the long-term value of the Company’s net operating loss carry-forwards for United States federal income tax purposes and other tax benefits.

Awards under Executive Incentive Plan

Notional stock units are a component of the 2019 Executive Incentive Plan for participating executives for the three-year period ending December 31, 2021. The plan payouts were settled in Class A Common Stock in April 2021 and March 2022. In April 2020, notional stock units and SARs were granted to participating executives with a vesting period ending in April 2023.

These awards were initially determined to be likely settled in cash, and compensation cost for the notional stock units and SARs were re-measured each reporting period based on the trading price of the Company’s Class A Common Stock and the cumulative vested costs were accrued in Accounts Payable and Accrued Liabilities or Other Long-Term Liabilities. In February 2022, the Compensation, Nominating and Governance Committee of the Board determined that remaining notional stock units granted in 2019 and 2020 would be paid in shares of the Company’s Class A Common Stock. The related obligation of $10.6 million was reclassified from Accounts Payable and Accrued Liabilities to Excess of Capital over Par Value in the first quarter of 2022 based on the market share price at the time of the Board’s decision. In the first quarter of 2022, the Company withheld $1.9 million of shares that vested during the period for the purpose of funding the grantees’ tax withholding obligations under the terms of the stock-based compensation plan.

In March 2022, restricted stock was granted to participating executives with a vesting period ending in March 2025. In March 2023, restricted stock was granted to participating executives with a vesting period ending in March 2026. The March 2022 and 2023 awards are payable in shares of the Company’s Class A Common Stock subject to achieving a threshold level of cumulative net income over the vesting period. The grant-date fair value is included in Excess of Capital Over Par Value as the value is amortized over the vesting period.

The plan payouts for the 2020-2022 performance period were settled in Class A Common Stock in March and April 2023. In the first quarter of 2023, the Company withheld $1.9 million of shares that vested during the period for the purpose of funding the grantees’ tax withholding obligations under the terms of the stock-based compensation plan.

12. COMMITMENTS AND CONTINGENCIES

~~American Centrifuge~~Commitments under SWU Purchase Agreements

TENEX

The Russian government-owned entity TENEX is a major supplier of SWU to the Company. Under the 2011 TENEX Supply Contract, the Company purchases SWU contained in LEU received from TENEX, and the Company delivers natural uranium hexafluoride to TENEX for the LEU’s uranium component. The LEU that the Company obtains from TENEX is subject to quotas under the RSA and U.S. legislation adopted in 2020 and to other restrictions applicable to commercial Russian LEU. Further, the ability of the Company or TENEX to perform under the TENEX Supply Contract is subject to (i) sanctions or restrictions that might be imposed by Russia, the United States, or other countries as a result of the war in Ukraine, or otherwise, (ii) customers and other parties who may object to receiving or handling Russian LEU or SWU, or (iii) suppliers and service providers seeking to limit their involvement with business related to Russia.

The TENEX Supply Contract originally was signed with commitments through 2022, but was modified in 2015 to give the Company the right to reschedule certain quantities of SWU of the original commitments into the period 2023 and beyond, in return for the purchase of additional SWU in those years. The Company has exercised this right to reschedule in each year through December 31, 2022. As a result of exercising this right to reschedule, the Company has purchase commitments that could extend through 2028.

The TENEX Supply Contract provides that the Company must pay for all SWU in its minimum purchase obligation each year, even if it fails to submit orders for such SWU. In such a case, the Company would pay for the SWU, but have to take the unordered SWU in the following year.

Pricing terms for SWU under the TENEX Supply Contract are based on a combination of market-related price points and other factors. This formula was subject to an adjustment at the end of 2018 that reduced the unit costs of SWU under this contract in 2019 and for the duration of the contract.

Orano

In 2018, the Company entered into the Orano Supply Agreement with a French company, Orano Cycle, for the long-term supply of SWU contained in LEU. The Orano Supply Agreement subsequently was assigned by Orano Cycle to its affiliate, Orano CE. Under the amended Orano Supply Agreement, the supply of SWU runs through 2030. The Orano Supply Agreement provides significant flexibility to adjust purchase volumes, subject to annual minimums and maximums in fixed amounts that vary year by year. The pricing for the SWU purchased by the Company is determined by a formula that uses a combination of market-related price points and other factors and is subject to certain floors and ceilings.

Milestones Under the 2002 DOE-USEC Agreement

The ~~Company~~Company’s predecessor, USEC Inc., and DOE signed ~~an agreement~~the 2002 DOE-USEC Agreement dated June 17, 2002, ~~as amended (the “2002 DOE-USEC Agreement”),~~ pursuant to which the parties made long-term commitments directed at resolving issues related to the stability and security of the domestic uranium enrichment industry. DOE consented to the assumption by Centrus of the 2002 DOE-USEC Agreement and other agreements between the Company and DOE subject to an express reservation of all rights, remedies and defenses by DOE and Centrus under those agreements as part of the Company’s Chapter 11 bankruptcy process. The 2002 DOE-USEC Agreement requires Centrus to develop, demonstrate and deploy advanced enrichment technology in accordance with milestones, including the deployment of a commercial American Centrifuge Plant, and provides for remedies in the event of a failure to meet a milestone under certain ~~circumstances.~~

DOE has specific remedies under the 2002 DOE-USEC Agreement if Centrus fails to meet a milestone that would adversely impact its ability to begin commercial operations of the American Centrifuge Plant on schedule, and such delay was within Centrus’ control or was due to its fault or negligence or if Centrus abandons or constructively abandons the commercial deployment of an advanced enrichment technology. These remedies includecircumstances, including terminating the 2002 DOE-USEC Agreement, revoking Centrus’ access to DOE’s centrifuge technology that is required for the success of the Company’s ongoing work with the American Centrifuge ~~project,~~technology, requiring Centrus to transfer certain rights in the American Centrifuge technology and facilities to DOE, and requiring Centrus to reimburse DOE for certain costs associated with the American Centrifuge ~~project.~~

technology. The 2002 DOE-USEC Agreement provides that if a delaying event beyond the control and without the fault or negligence of Centrus occurs that could affect Centrus’ ability to meet anthe American Centrifuge Plant ~~milestone,~~milestones under the 2002 DOE-USEC Agreement, DOE and ~~Centrus~~the Company will jointly meet to discuss in good faith possible adjustments to the milestones as appropriate to accommodate the delaying event. ~~The Company notified DOE that it had not met the June~~In 2014, ~~milestone within the time period provided due to events beyond its control and without the fault or negligence of the Company. The assumption of~~ the 2002 DOE-USEC Agreement ~~provided for under~~and other agreements between the ~~Plan~~Company and DOE were assumed by Centrus subject to an express reservation of ~~Reorganization did not affect the ability of either party to assert~~ all rights, remedies and defenses under the agreement and all such rights, remedies and defenses are specifically preserved and all time limits tolled expressly including all rights, remedies and defenses and time limits relating to any missed milestones.by DOE and ~~Centrus~~the Company under those agreements. DOE and the Company have agreed that all rights, remedies and defenses of the parties with respect to any missed milestones ~~since March 5, 2014, including the June 2014 and November 2014 milestones,~~ and all other matters under the 2002 DOE-USEC Agreement ~~continued~~continue to be preserved, and that the time limits for each party to respond to any missed milestones continue to be tolled.

~~Piketon Facility Costs~~Legal Matters

From time to time, the Company is involved in various pending legal proceedings, including the pending legal proceedings described below.

In 1993, USEC-Government entered into a lease for the Paducah and ~~D&D Obligations~~

~~Effective October 1, 2015,~~Portsmouth GDPs with the ~~U.S. government discontinued funding~~DOE. As part of that lease, DOE and USEC-Government also entered into a Power MOU regarding power purchase agreements between DOE and the providers of power to the GDPs. Under the Power MOU, DOE and USEC-Government agreed upon the allocation of rights and liabilities under the power purchase agreements. In 1998, USEC-Government was privatized and became Enrichment Corp., now a principal subsidiary of the ~~American Centrifuge demonstration cascade at Piketon. Funding~~Company. Pursuant to legislation authorizing the privatization, the lease for ~~American Centrifuge is now limited~~the GDPs, which included the Power MOU as an Appendix, was transferred to ~~research~~Enrichment Corp., and ~~development work at~~Enrichment Corp. was given the Company’s facilities in Oak Ridge, Tennessee. As a result of reduced program funding, Centrus incurred a special charge in the third quarter of 2015 for estimated employee termination benefits, and began reductions in force. Referright to ~~Note 2, Special Charges~~, for details. Centrus began to incur expenditures in the second quarter of 2016 associated with the D&D of the Piketon facility in accordance with the requirements of the NRC and DOE. Centrus leases the Piketon facilitypurchase power from DOE. AtThe Paducah GDP was shut down in 2013 and deleased by Enrichment Corp. in 2014. On August 4, 2021, DOE informally informed Enrichment Corp. that the ~~conclusion of~~Joppa power plant, which had supplied power to the ~~lease on June 30, 2019, without mutual agreement between Centrus and DOE regarding other possible uses for the facility, Centrus is obligated~~Paducah GDP, was planned to ~~return the facility~~undergo D&D. According to DOE, ~~in a condition that meets NRC requirements and in~~ the ~~same condition as the facility was in when it was leased~~power purchase agreement with Electric Energy Inc. requires DOE to Centrus (other than due to normal wear and tear). Centrus must remove all Company-owned capital improvements at the Piketon facility, unless otherwise consented to by DOE, by the conclusion of the lease term. The D&D work is expected to extend through 2017 and be substantially completed by year-end. As of September 30, 2017, Centrus has accrued $16.6 million on the balance sheet as ~~Decontamination and Decommissioning Obligations~~pay for ~~the estimated fair value of the remaining costs to complete the D&D work.~~

Centrus is required to provide financial assurance to the NRC and DOE for D&D costs under a regulatorily-prescribed methodology that includes potential contingent costs and reserves. As of September 30, 2017, Centrus has provided financial assurance to the NRC and DOE in the form of surety bonds that are fully cash collateralized by Centrus for $29.6 million. Centrus expects to receive cash when surety bonds are reduced and/or cancelled as the Company fulfills its D&D and lease obligations.

Centrus has received state economic incentives in exchange for commitments by the Company to make investments in capital improvements and employee training. Should the commitments under the incentive agreements not be met, the Company may be required to repay a portion of the ~~state incentives.~~

~~13. STOCKHOLDERS’ EQUITY~~

~~Series B Preferred Stock~~

~~On February 14, 2017, Centrus issued 104,574 shares of Series B Preferred Stock as part~~D&D costs of the ~~securities exchange described in~~ ~~Note 8, Debt. The issuance~~Joppa power plant, and DOE has asserted that a portion of the ~~Series B Preferred Stock was~~DOE liability is the responsibility of Enrichment Corp. under the Power MOU in the amount of approximately $9.6 million. The Company is assessing DOE’s assertions including whether all or a ~~non-cash financing transaction.~~portion of any such potential liability had been previously settled. The ~~Series B Preferred Stock~~Company has ~~a par value of $1.00 per share and a liquidation preference of $1,000 per share (the “Liquidation Preference”). The Series B Preferred Stock is recorded~~not formed an opinion on the ~~condensed consolidated balance sheet~~merits of DOE’s claim nor is it able to estimate its potential liability, if any, for such claim and no expense or liability has been accrued.

On May 26, 2019, the Company, Enrichment Corp., and six other DOE contractors who have operated facilities at ~~fair value less transaction costs, or $4.6 million as of September 30, 2017.~~

~~Holders of~~ the ~~Series B Preferred Stock are entitled to cumulative dividends of 7.5% per annum of~~Portsmouth GDP in Piketon, Ohio (including, in the Liquidation Preference. Centrus is obligated to pay cash dividends on the Series B Preferred Stock in an amount equal to the Liquidation Preference to the extent that dividends are declared by the Board and:


~~(a)~~	~~its pension plans and Enrichment Corp.’s pension plans are at least 90% funded on a variable rate premium calculation in the current plan year;~~


~~(b)~~	~~its net income calculated in accordance with GAAP (excluding the effect of pension remeasurement) for the immediately preceding fiscal quarter exceeds $7.5 million;~~


~~(c)~~	its free cash flow (defined as the sum of cash provided by (used in) operating activities and cash provided by (used in) investing activities) for the immediately preceding four fiscal quarters exceeds $35 million;


~~(d)~~	the balance of cash and cash equivalents calculated in accordance with GAAP on the last day of the immediately preceding quarter would exceed $150 million after pro forma application of the dividend payment; and


~~(e)~~	~~dividends may be legally paid under Delaware law.~~

Centrus has not met these criteria for the periods from issuance through September 30, 2017, and has not declared, accrued or paid dividends on the Series B Preferred Stock as of September 30, 2017. Dividends on the Series B Preferred Stock are cumulative to the extent not paid at any quarter-end, whether or not declared and whether or not there are assetscase of the Company, ~~legally available~~the American Centrifuge Plant site located on premises currently leased from DOE) were named as defendants in a class action complaint filed by Ursula McGlone, Jason McGlone, Julia Dunham, and K.D. and C.D., minor children by and through their parent and natural guardian Julia Dunham (collectively, the “McGlone Plaintiffs”) in the U.S. District Court in the Southern District of Ohio, Eastern Division. The complaint seeks damages for alleged off-site contamination allegedly resulting from activities on the ~~payment~~Portsmouth GDP site. The McGlone Plaintiffs are seeking to represent a class of ~~such dividends in whole~~(i) all current or ~~in part. As of September 30, 2017, the Series B Preferred Stock has an aggregate liquidation preference of $109.6 million, including accumulated dividends of $5.0 million.~~

~~Outstanding shares~~former residents within a seven-mile radius of the ~~Series B Senior Preferred Stock are redeemable~~Portsmouth GDP site and (ii) all students and their parents at the ~~Company’s option,~~Zahn’s Corner Middle School from 1993-present. Since its initial filing, the complaint has been amended four times, the latest of which was filed on March 18, 2021. Likewise, based on motions brought by the Company, Enrichment Corp. and the other DOE contractors, the court has dismissed ten of the fifteen claims and dismissed claims brought on behalf of the minor children. As such, the case continues in ~~whole or~~the discovery stage of litigation. The Company and Enrichment Corp. believe that its operations at the Portsmouth GDP site were fully in ~~part, for an amount~~compliance with the NRC’s regulations. Further, the Company and Enrichment Corp. believe that any such liability should be indemnified by DOE under the Price-Anderson Act. The Company and Enrichment Corp. have provided notifications to DOE required to invoke indemnification under the Price-Anderson Act and other contractual provisions.

On June 8, 2022, the Company, Enrichment Corp., and six other DOE contractors who operated facilities at the Portsmouth GDP were named as defendants in a complaint filed by Brad Allen Lykins, as administrator of ~~cash equal~~the estate of Braden Aaron Lee Lykins in the U.S. District Court in the Southern District of Ohio, Eastern Division (“Lykins Complaint”). In March 2021, Brayden Lykins, who was thirteen years old, passed away from leukemia. The complaint alleges that the defendants released radiation into the environment in violation of the Price-Anderson Act causing Lykins’ death and seeks monetary damages. On August 30, 2022, the Company, Enrichment Corp., and the other defendants filed their answer to the ~~Liquidation Preference, plus an amount equal~~Lykins Compliant. The Company and Enrichment Corp. believe that their operations at the Portsmouth GDP site were fully in compliance with the NRC’s regulations. Further, the Company and Enrichment Corp. believe that any such liability should be indemnified by DOE under the Price-Anderson Act. The Company and Enrichment Corp. have provided notifications to DOE required to invoke indemnification under the Price-Anderson Act and other contractual provisions.

On March 8, 2023, the Company, Enrichment Corp., and six other DOE contractors who operated facilities at the Portsmouth GDP were named as defendants in a complaint filed by Christian C. Rose in the U.S. District Court in the Southern District of Ohio, Eastern Division (“Rose Complaint”). The Rose Complaint alleges that the defendants released radiation into the environment in violation of the Price-Anderson Act causing injuries and death and seeks monetary damages. On May 15, 2023, the Company, Enrichment Corp. and the other defendants filed their answers to the ~~accrued~~Rose Complaint. The Company and ~~unpaid dividends, if~~Enrichment Corp. believe that their operations at the Portsmouth GDP site were fully in compliance with the NRC’s regulations. Further, the Company and Enrichment Corp. believe that any ~~whether or not declared, through date of redemption.~~

~~Rights Agreement~~

~~On April 6, 2016 (the “Effective Date”),~~such liability should be indemnified by DOE under the ~~Company’s Board of Directors (the “Board”) adopted a Section 382 Rights Agreement (the “Rights Agreement”).~~Price-Anderson Act. The ~~Board adopted~~Company and Enrichment Corp. have provided notifications to the ~~Rights Agreement in an effort~~DOE required to ~~protect shareholder value by, among other things, attempting to protect against a possible limitation on~~invoke indemnification under the ~~Company’s ability to use its net operating loss carryforwards~~Price-Anderson Act and other ~~tax benefits,~~contractual provisions.

Centrus is subject to various legal proceedings and claims, either asserted or unasserted, which may be used to reduce potential future income tax obligations. As reported on the Company’s Annual Report on Form 10-K for the year ended December 31, 2016, the Company had federal net operating losses of $725.8 million as of December 31, 2016, that currently expire through 2036.

In connection with the adoption of the Rights Agreement, the Board declared a dividend of one preferred-share-purchase-right for each share of the Company’s Class A Common Stock and Class B Common Stock outstanding as of the Effective Date. The rights initially trade together with the common stock and are not exercisable. In the absence of further action by the Board, the rights would generally become exercisable and allow a holder to acquire shares of a new series of the Company’s preferred stock if any person or group acquires 4.99% or more of the outstanding shares of the Company’s common stock, or if a person or group that already owns 4.99% or more of the

Company’s Class A Common Stock acquires additional shares representing 0.5% or more of the outstanding shares of the Company’s Class A Common Stock. The rights beneficially owned by the acquirer would become null and void, resulting in significant dilutionarise in the ~~ownership interest~~ordinary course of ~~such acquirer.~~

~~The Board may exempt~~business. While the outcome of these claims cannot be predicted with certainty, other than the above, Centrus does not believe that the outcome of any ~~acquisition~~ of ~~the Company’s common stock from the provisions of the Rights Agreement if it determines that doing so would not jeopardize or endanger the Company’s use of its tax assets or is otherwise~~these legal matters, individually and in the ~~best interests~~aggregate, will have a material adverse effect on its cash flows, results of ~~the Company. The Board also has the ability to amend~~operations, or ~~terminate the Rights Agreement prior to a triggering event.~~consolidated financial condition.

Effective on February 14, 2017, in connection with the settlement and completion of the exchange offer and consent solicitation, the Company amended the Rights Agreement solely to exclude acquisitions of the Series B Preferred Stock issued as part of the exchange offer and consent solicitation from the definition of “Common Shares.”

The Company’s stockholders approved the Rights Agreement at the 2017 annual meeting of stockholders on May 31, 2017. Unless earlier terminated in accordance with the Rights Agreement, the rights issued under the Rights Agreement expire on April 6, 2019.

~~Stock-Based Compensation~~

~~A summary of stock-based compensation costs follows (in millions):~~

Three Months Ended
September 30, Nine Months Ended
September 30,
2017 2016 2017 2016

Total stock-based compensation costs:
Restricted stock units $ —
$ —
$ —
$ 0.1
Stock options 0.1
0.1
0.3
0.3
Expense included in selling, general and administrative expense $ 0.1
$ 0.1
$ 0.3
$ 0.4

Total recognized tax benefit $ —
$ —
$ —
$ —

As of September 30, 2017, there was $0.5 million of unrecognized compensation cost related to unvested stock-based payments granted, of which $0.4 million relates to stock options and $0.1 million relates to unvested restricted stock units. That cost is expected to be recognized over a weighted-average period of 1.2 years.

Stock-based compensation cost is measured at the grant date, based on the fair value of the award, and is recognized on a straight-line basis over the requisite service period. Stock options vest and become exercisable in equal annual installments over a three- or four-year period and expire 10 years from the date of grant.

~~Assumptions used in the Black-Scholes option pricing model to value option grants follow. There were no option grants in the nine months ended September 30, 2017.~~



	~~Nine Months Ended~~ ~~September 30, 2016~~
~~Risk-free interest rate~~	~~1.9%~~
~~Expected volatility~~	~~75%~~
~~Expected option life (years)~~	6
~~Weighted-average grant date fair value~~	~~$1.77~~
~~Options granted (in thousands)~~	15

A total of 30,000 restricted stock units were issued to non-employee, independent members of the Board of Directors in the nine months ended September 30, 2017, including 5,000 restricted stock units in the three months ended September 30, 2017. The restricted stock units vest on the earlier of May 31, 2018, or the date of the 2018 Annual Meeting, absent a defined event that would accelerate vesting. Settlement of restricted stock units is made in shares of Class A Common Stock only upon the director’s retirement or other end of service.

~~Shares Outstanding~~

A total of 38,751 shares of Class A Common Stock were issued in settlement of vested restricted stock units to three former members of the Board of Directors following the end of their service on May 31, 2017.

Shares of Class B Common Stock that are sold in the market are converted to shares of Class A Common Stock. In the nine months ended September 30, 2017, a total of 30,318 shares of Class B Common Stock were sold in the market and converted to shares of Class A Common Stock as of September 30, 2017.

~~Changes in the number of shares outstanding follow:~~

Preferred Stock,
Series B

Common Stock,
Class A

Common Stock,
Class B

Balance at December 31, 2015 —
7,563,600
1,436,400
Balance at September 30, 2016 —
7,563,600
1,436,400

Balance at December 31, 2016 —
7,563,600
1,436,400
Issuance of Preferred Stock 104,574
—
—
Issuance of Class A Common Stock —
38,751
—
Conversion of Common Stock from Class B to Class A —
30,318
(30,318 )
Balance at September 30, 2017 104,574
7,632,669
1,406,082

~~Accumulated Other Comprehensive Income (Loss)~~

The sole component of accumulated other comprehensive income (loss) (“AOCI”) relates to activity in the accounting for pension and postretirement health and life benefit plans. Amortization of prior service credits is reclassified from AOCI and included in the computation of net periodic benefit cost as detailed in ~~Note 10, Pension and Post-Retirement Health and Life Benefits~~.

~~14.~~13. SEGMENT INFORMATION

Centrus has two reportable segments: the LEU segment with two components, SWU and uranium, and the contract services segment. The LEU segment includes sales of the SWU component of LEU, sales of both the SWU and uranium components of LEU, and sales of uranium. The contract services segment includes revenue and cost of sales for work that Centrus performs under a fixed-price agreement as a contractor to UT-Battelle. The contract services segment also includes limited services provided by Centrus to DOE and its contractors at the Piketon facility. Gross profit is ~~Centrus’~~the Company’s measure for segment reporting. There were no intersegment sales in the periods presented. ~~For~~Refer to Note 2, Revenue and Contracts with Customers, for additional details on revenue for each segment. The following table presents the Company’s segment ~~refer to Item 2,~~ ~~Management’s Discussion~~information (in millions):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Revenue
LEU segment:
Separative work units	$	40.5	$	7.7	$	147.4	$	106.0
Uranium	—		12.5		39.5		17.4
Total	40.5		20.2		186.9		123.4
Technical Solutions segment	10.8		13.0		29.7		44.2
Total revenue	$	51.3	$	33.2	$	216.6	$	167.6

Segment Gross Profit
LEU segment	$	10.1	$	1.3	$	60.8	$	63.6
Technical Solutions segment	1.2		1.0		1.5		5.9
Gross profit	$	11.3	$	2.3	$	62.3	$	69.5

Revenue from Major Customers (10% or More of Total Revenue)

In the three months ended September 30, 2023, three customers in the LEU segment individually represented $14.9 million, $12.5 million, and ~~Analysis~~$8.7 million of ~~Financial Condition~~revenue. In the nine months ended September 30, 2023, two customers in the LEU segment individually represented $54.1 million and ~~Results~~$47.8 million of ~~Operations~~.revenue. One customer in the Technical Solutions segment individually represented $10.7 million and $29.4 million of revenue in the three and nine months ended September 30, 2023, respectively.

In the three months ended September 30, 2022, two customers in the LEU segment individually represented $12.6 million and $7.3 million of revenue. In the nine months ended September 30, 2022, two customers in the LEU segment individually represented $44.9 million and $19.2 million of revenue. One customer in the Technical Solutions segment individually represented $11.7 million and $35.7 million of revenue in the three and nine months ended September 30, 2022, respectively.

Three Months Ended
September 30, Nine Months Ended
September 30,
2017 2016 2017 2016
(in millions)
Revenue
LEU segment:
Separative work units $ 43.5
$ 14.1
$ 82.2
$ 128.3
Uranium —
—
—
14.3
43.5
14.1
82.2
142.6
Contract services segment 6.8
7.3
19.3
32.2
Revenue $ 50.3
$ 21.4
$ 101.5
$ 174.8

Segment Gross Profit (Loss)

LEU segment $ 11.1
$ (1.8 ) $ 5.4
$ 11.9
Contract services segment 0.5
(0.3 ) (0.6 ) 7.3
Gross profit (loss) $ 11.6
$ (2.1 ) $ 4.8

$ 19.2

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with, and is qualified in its entirety by reference to, the ~~condensed consolidated financial statements~~unaudited Consolidated Financial Statements and related notes appearing elsewhere in this report.

This discussion contains forward-looking statements that involve risks and uncertainties. Actual results could differ significantly from the results discussed in the forward-looking statements particularly in light of the economic, social, and market uncertainty created by, among other things, the war in Ukraine. See “Forward-Looking Statements” at the beginning of this Quarterly Report on Form 10-Q.

Overview

Centrus Energy Corp., a Delaware corporation (“~~Centrus” or~~Centrus,” the “Company”, “we” or “us”), is a trusted supplier of ~~low-enriched uranium (“LEU”)~~nuclear fuel components and services for ~~commercial~~the nuclear power ~~plants.~~industry, which provides a reliable source of carbon free energy. References to “Centrus”, the “Company”, “our”, or “we” include Centrus Energy Corp. and its wholly owned subsidiaries as well as the predecessor to Centrus, unless the context ~~otherwise indicates.~~ indicates otherwise.

Centrus operates two business segments: (a) LEU, which supplies various components of nuclear fuel to commercial customers from our global network of suppliers, and (b) Technical Solutions, which provides advanced engineering, design, and manufacturing services to government and private sector customers and is deploying uranium enrichment and other capabilities necessary for production of advanced nuclear fuel to power existing and next-generation reactors around the world.

Our LEU segment currently provides most of the Company’s revenue and involves the sale of enriched uranium, the fissile component of nuclear fuel primarily to utilities that operate commercial nuclear power plants. The majority of these sales are for the enrichment component of LEU, which is measured in SWU. Centrus also sells natural uranium (the raw material needed to produce LEU) and occasionally sells uranium concentrates, uranium conversion or LEU with the natural uranium hexafluoride and SWU components combined into one sale.

LEU is a critical component in the production of nuclear fuel for reactors that produce electricity. We supply LEU and its components to both domestic and international utilities for use in nuclear reactors worldwide. We ~~are a leader in the development of advanced uranium enrichment technology~~provide LEU from multiple sources, including our inventory, medium and ~~are performing research~~long-term supply contracts, and ~~demonstration work to support U.S. energy and national security through our contract with UT-Battelle, LLC (“UT-Battelle”), the operator of Oak Ridge National Laboratory (“ORNL”).~~

spot purchases. As a long-term supplier of LEU to our customers, our ~~goal~~objective is to provide value through the reliability and diversity of our supply sources. ~~We provide LEU from multiple sources including our inventory, long-~~

Published spot price indicators for SWU reached historic highs in April 2009 at $163 per SWU. In the years following the 2011 Fukushima accident in Japan, spot prices declined more than 75%,bottoming out in August 2018 at $34 per SWU. This was followed by a slow and ~~mid-term~~steady rise, reaching $56 per SWU by December 31, 2021. In 2022, spot prices increased substantially, reaching $110 per SWU by December 31, 2022. In 2023, spot prices continue to increase, reaching $138 on September 30, 2023. This represents an increase of 25% since the beginning of the year and 306% over the 2018 historic low. This surge in the SWU spot price beginning in 2022 has been driven by uncertainty created as a result of Russia’s invasion of Ukraine, coupled with growing interest in nuclear power as a source of reliable carbon-free energy.

When Russian supply ~~contracts and spot purchases. Our long-term objective~~ is ~~to resume commercial~~included, the uranium enrichment ~~production and we are exploring alternative approaches to that end.~~

~~We have a contract with UT-Battelle to conduct research and development~~segment of ~~our advanced centrifuge technology for~~ the ~~U.S. government. We believe that this technology could play a critical role in meeting our national and energy security needs and achieving our nation’s non-proliferation objectives.~~

~~The nuclear industry in general, and the~~global nuclear fuel ~~industry~~market is oversupplied. But without Russian supply, the global market for uranium enrichment would be undersupplied. Changes in ~~particular, is in a period of significant change, which could significantly transform~~ the competitive landscape Centrus faces. The nuclear fuel cycle industry remains oversupplied, creating downward pressures on commodity pricing, with uncertainty regarding the timing of industry expansion globally. Nuclear generators in some parts of the world, including the U.S., are under pressure from changes in electricity demandsupply-demand balance and ~~the effects of new, lower cost sources of electricity generation in their markets. Changes~~ in the competitive landscape arising from the war in Ukraine may ~~adversely~~continue to affect pricing trends, change customer spending patterns, and create uncertainty in the uranium market. At the same time, there remains uncertainty about future demand for ~~fuel, and financial conditions, and otherwise create uncertainty. These changes may affect the company’s existing contracts and its ability to obtain new contracts.~~nuclear power generation. To address these changes and uncertainties, we ~~may seek~~will continue to ~~adjust our cost structure and operations and~~ evaluate opportunities to grow our business organically or through acquisitions and other strategic transactions.

Our Technical Solutions segment is dedicated to the restoration of America’s domestic uranium enrichment capability to play a critical role in meeting U.S. national security and energy security requirements and advancing America’s nonproliferation, energy, and climate objectives. Our Technical Solutions segment also is focused on repairing broken and vulnerable supply chains, providing clean energy jobs, and supporting the communities in which we operate. Our goal is to deliver major components of the next-generation nuclear fuels that will power the future of nuclear energy as it provides reliable carbon-free power around the world.

Under the HALEU Demonstration Contract, Centrus completed construction of a cascade of sixteen AC100M centrifuges in Piketon, Ohio, for the DOE to demonstrate HALEU production. The HALEU Demonstration Contract was originally set to expire on June 1, 2022. However, the DOE extended the HALEU Demonstration Contract to November 30, 2022 with closeout activities to be completed this year. Due to challenges the DOE experienced in providing withdrawal cylinders as government furnished equipment, the DOE elected to change the scope of the HALEU Demonstration Contract and moved the operational portion of the demonstration to a new, competitively awarded contract that provides for operations beyond the term of the HALEU Demonstration Contract. DOE incrementally funded the HALEU Demonstration Contract with total funding to date of $173.0 million.

On November 10, 2022, after a competitive solicitation, the DOE awarded the HALEU Operation Contract to the Company and work began on December 1, 2022. The base contract value is approximately $150 million in two phases through 2024. Phase 1 includes an approximately $30 million cost share contribution from Centrus matched by approximately $30 million from the DOE to complete construction of the cascade, begin operations and produce the initial 20 kilograms of HALEU UF6 by no later than December 31, 2023.

Phase 2 of the contract includes continued operations and maintenance, and production for a full year at an annual production rate of 900 kilograms of HALEU UF6. The DOE will own the HALEU produced from the demonstration cascade and Centrus will be compensated on a cost-plus-incentive-fee basis, with an expected Phase 2 contract value of approximately $90 million, subject to Congressional appropriations. The HALEU Operation Contract also gives DOE options to pay for up to nine additional years of production from the cascade beyond the base contract; those options are at the DOE’s sole discretion and subject to the availability of Congressional appropriations. Concurrently, pursuant to an amendment to our lease for the Piketon facility, the DOE assumed all D&D liabilities arising out of the HALEU Operation Contract.

To support the DOE in mitigating the risk of delayed delivery of 5B cylinders, the Company received technical direction from the DOE to procure compliant 5B cylinders and components while the contractual obligation to furnish compliant 5B cylinders under the HALEU Operation Contract continues to rest with the DOE. The Company is also performing additional work on infrastructure and facility repairs under DOE’s technical direction. On September 28, 2023, the DOE modified the HALEU Operation Contract to incorporate additional scope for infrastructure and facility repairs, and costs associated with 5B cylinder refurbishment, for an estimated additional contract value of $5.8 million. On October 19, 2023, the DOE provided additional funding of $5.5 million for the additional scope under the HALEU Operation Contract. DOE is funding the contract incrementally with total funding to date of $38.8 million. The Company’s goal is to ultimately scale up production of HALEU, to meet the needs of new and existing reactors as well as national security and other U.S. government requirements for enriched uranium, subject to funding and/or off-take commitments.

On February 9, 2023, the Company announced that construction and initial testing of the demonstration cascade and most of the support systems were complete. On June 12, 2023, following the completion of its operational readiness reviews, the NRC issued a letter authorizing the Company to introduce uranium hexafluoride into the HALEU cascade of centrifuges. This is a critical milestone in advancing toward the production of HALEU and the final NRC approval required before starting enrichment operations. During the third quarter of 2023, the Company completed construction of the remaining support systems, including a fissile materials storage area, for HALEU storage. On September 6, 2023, the Company announced that it was conducting final system tests and other preparations so that production of HALEU could begin. On September 21, 2023, the NRC granted final approval for the company to produce the quantity of HALEU required by Phase 1 of the contract. On October 11, 2023, the Company announced that it began enrichment operations in Piketon, Ohio. On November 7, 2023, the Company announced that it made its first delivery of HALEU to the DOE, completing Phase 1 by successfully demonstrating its HALEU production process.

The DOE is contemplating awarding additional contracts to ensure availability of HALEU for the ARDP and for the advanced reactor market in general, and received a $700 million congressional appropriation from the Inflation Reduction Act as a first step in establishing a domestic supply chain for HALEU. On June 5, 2023, the DOE issued two draft requests for proposals (“RFPs”) seeking public comment, the first focusing on production of HALEU and the second focusing on deconversion of HALEU into different forms used to fabricate fuels needed by various advanced reactor developers. Centrus submitted comments in response to the draft RFPs to ensure the RFP promotes deployment of HALEU capacity to meet U.S. commercial and government needs for HALEU produced with U.S. technology. The Company expects to submit a bid once a final RFP is issued, with the goal of expanding HALEU production capability at the Piketon facility, subject to availability of funding and/or off-take commitments. At the present, it is not clear whether DOE will adopt the Company’s RFP comments.

The war in Ukraine has contributed to a significant increase in market prices for enrichment and (along with proposals to limit imports of LEU from Russia) prompted calls for public and private investment in new, domestic uranium enrichment capacity not only for HALEU production but also for LEU production to support the existing fleet of reactors. As a result, Centrus is exploring the opportunity to deploy LEU enrichment alongside HALEU enrichment to meet a range of commercial and U.S. government requirements, which would bring cost synergies while increasing revenue opportunities. Our ability to deploy LEU and/or HALEU enrichment, and the timing, sequencing, and scale of those capabilities, is subject to the availability of funding and/or off-take commitments.

The Energy Act of 2020, which was signed into law in December 2020, requires the DOE to establish a program to support the availability of HALEU for civilian domestic research, development, demonstration, and commercial use. The Energy Act also reauthorized DOE nuclear energy research, development, demonstration, and commercial application activities, including advanced fuel, research and development for advanced reactors, used fuel technologies, and integration of nuclear energy systems for both existing plants and advanced nuclear concepts. It also authorized the funding of an ARDP which was launched by the DOE in May 2020. There are a number of advanced reactors under development that would use HALEU. Nine of the ten advanced reactor designs selected by the DOE for its ARDP will require HALEU. Various agencies of the U.S. government, including the U.S. Department of Defense, the Defense Advanced Research Projects Agency, and the DOE are building microreactors which demonstrates the focus on both the development of microreactors and HALEU. We believe our investments in advanced enrichment technology and our progress in demonstrating HALEU production will position the Company to meet the needs of government and commercial customers in the future as they deploy advanced reactors and next generation fuels and also offers potential cost synergies for a return to LEU production.

We are also actively considering and expect to consider potential strategic transactions from time to time, ~~in the future, potential strategic transactions,~~ which could involve, without limitation, acquisitions and/or dispositions of businesses or assets, joint ventures or investments in businesses, products or ~~technologies.~~technologies or changes to our capital structure. For further discussion, refer to Liquidity and Capital Resources in this Quarterly Report on Form 10-Q.

Market Conditions and Outlook

The global nuclear industry outlook has begun to improve after many years of decline or stagnation. The development of advanced small and large-scale reactors, innovative advanced fuel types, and the commitment of nations to begin deploying nuclear power or to increase the share of nuclear power in their nations has created optimism in the market. Part of the momentum has resulted from efforts to lower greenhouse gas emissions to combat climate change and improve health and safety.

According to the WNA, as of September 2023, there were 60 reactors under construction worldwide, about a third of which are in China. The United States, with over 90 operating reactors, remains the world’s largest market for nuclear fuel. The nuclear industry in the United States, Japan, and Europe faces headwinds as well as opportunities. In ~~connection~~the United States, the industry has been under pressure from the expansion of subsidized renewable energy as well as relatively low-cost natural gas resources in recent years, although natural gas prices in the U.S. electricity sector tripled between 2020 and 2022 according to data from the EIA. Twelve U.S. reactors have prematurely shut down in the past ten years and others could shut down in the next few years. At the same time, one large reactor is currently under construction, and the DOE recently released a report outlining a pathway to deployment of approximately 200 gigawatts of additional capacity by 2050 which would triple the nuclear energy capacity in the United States.

The IEA projects that global nuclear energy generation will grow substantially in the next three decades. In the IEA’s 2023 World Energy Outlook, nuclear generation is forecasted to grow by 25 percent by 2030 and 45 percent by 2040 under the “Stated Policies” scenario. In the “Net Zero Emissions by 2050” scenario, nuclear generation would grow by 47 percent by 2030 and more than double by 2040.

As a consequence of the March 2011 earthquake and tsunami in Japan, over 60 reactors in Japan and Germany were taken offline, and other countries curtailed or slowed their construction of new reactors or accelerated the retirement of existing plants. Eleven reactors in Japan have restarted, additional reactors are expected to restart through 2024, and more of Japan’s reactors are expected to restart in subsequent years. Due to the war in Ukraine, the EU is encouraging its member countries to reconsider the planned early retirement of existing plants in order to reduce reliance on Russian gas imports.

In October 2020, the DOC reached an agreement with the Russian Federation on an extension of the RSA, a trade agreement that allows for Russian-origin nuclear fuel to be exported to the United States in limited quantities. The two parties agreed to extend the agreement through 2040 and to set aside a significant portion of the quota for Centrus’ shipments to the United States through 2028 to perform under our TENEX Supply Contract. This outcome allowed for sufficient quota for Centrus to continue serving its utility customers and support its investments in building new capacity. Use of this quota is subject to compliance with limitations under the RSA. These limitations include a requirement that we return natural uranium to TENEX for the LEU we receive under the TENEX Supply Contract at approximately the same time that we deliver the LEU to our customers. Our ability to meet this requirement depends on the capacity or willingness of the facilities where natural uranium is supplied to us by customers, to allow us to deliver this natural uranium to TENEX. We were recently notified by one facility that it will no longer receive natural uranium for TENEX. As a result, we will need to rely to a greater extent on deliveries at other processors or explore other options in order to comply with the RSA’s natural uranium delivery requirement.

On July 13, 2023, the Company and TerraPower, LLC (“TerraPower”) entered into a memorandum of understanding (“MOU”) to expand their collaboration aimed at establishing commercial-scale, domestic production capabilities for HALEU to fuel the Natrium TM reactor that TerraPower is building in Wyoming. Under this MOU, the Company and TerraPower will collaborate to ensure the Natrium demonstration reactor has access to HALEU at the milestones necessary to meet the project's 2030 operation date. Subject to a definitive agreement to be negotiated, Centrus will work toward scaling up production capacity with additional centrifuge cascades to meet TerraPower's fuel requirements.

On August 28, 2023, the Company and Oklo Inc. (“Oklo”) announced a new MOU to support the deployment of Oklo’s advanced fission powerhouses and advanced nuclear fuel production in Southern Ohio subject to a definitive agreement to be negotiated. Oklo and Centrus plan to enter into a broad range of collaboration programs supporting the development and operation of Oklo’s Aurora powerhouses, including supply of HALEU produced by Centrus at the Piketon, Ohio facility. Centrus also intends to buy clean, reliable, and affordable energy from Oklo’s planned Ohio plants to power its HALEU production facility.

The war in Ukraine has escalated tensions between Russia and the international community. As a result, the United States and other countries have imposed, and may continue imposing, additional sanctions and export controls against certain Russian products, services, organizations and/or individuals. While sanctions imposed to date do not preclude the import of Russian uranium products into the United States, it is possible that additional restrictions could be added in the future that would affect our ability to purchase and re-sell Russian uranium enrichment, or implement the TENEX Supply Contract, which could have a negative material impact on our business. Further, sanctions by the United States, Russia or other countries may impact our ability and cost to transport, export, import, take delivery, or make payments related to the LEU we purchase and may require us to increase purchases from non-Russian sources to the extent available. For example, due to restrictions imposed by Canada on the ability of Canadian persons and entities to provide ocean transportation services to Russia, a permit is required for our shipper, a Canadian company, to transport the LEU that we procure under the TENEX Supply Contract to the United States. A Canadian permit issued to our shipper was recently extended to July 2024, but for so long as the sanctions remain in place, the shipper will require further extensions for us to continue to use the shipper for imports of this LEU beyond July 2024.

In response to the war in Ukraine, there have been proposals in the U.S. Congress and elsewhere to ban imports of uranium products that could cut off or reduce our ability to import LEU in one or more years under the TENEX Supply Contract. None of these proposals have been adopted as of the date of this filing, but in a recent fact sheet on the need for the U.S. Congress to provide additional funding for domestic initiatives, including $2.2 billion for U.S. enrichment capacity, the White House stated that a long-term ban on enriched uranium imports from the Russian Federation into the United States is needed for this funding to be successful.

The proposals represent a significant risk to our business because the TENEX Supply Contract is the major source of supply that the Company relies upon today to meet its delivery obligations and to earn the revenues needed to fund our advanced technology work. We are following these proposals closely and taking steps where possible to request changes that would improve prospects of securing a waiver if sanctions are imposed. However, given that our ability to secure a timely waiver is not assured under any circumstances, we believe these proposals could pose a risk of significant harm to our business if enacted.

The expanding sanctions imposed by the United States and foreign governments on the mechanisms used to make payments to Russia and to obtain services including transportation have increased the risk that implementation of the TENEX Supply Contract may be disrupted in the future.Accordingly, we continue to monitor the situation closely and assess the potential impact of any new sanctions and how the impact on the Company might be mitigated.

For further discussion of these risks and uncertainties, refer to Part I, Item 1A, Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2022.

Operating Results

Our revenues, operating results, and cash flows can fluctuate significantly from quarter to quarter and year to year.Our Order Book in the LEU segment consists primarily of long-term, fixed commitment contracts, and we have visibility on a significant portion of our revenue for 2023-2027.

Given the current uncertainty and disruption in the market, due to, among other things, the war in Ukraine, we are no longer providing guidance on our results of operations for 2023.Please see Forward Looking Statements at the beginning of this Quarterly Report on Form 10-Q.

Our Order Book in the LEU segment extends to 2030. As of September 30, 2023 and December 31, 2022, our Order Book was approximately $1.0 billion. The Order Book is the estimated aggregate dollar amount of revenue for future SWU and uranium deliveries, and includes approximately $0.3 billion of deferred revenue and advances from customers as of September 30, 2023, whereby customers have made advance payments to be applied against future deliveries. No orders in our Order Book are considered at risk related to customer operations. However, these medium and long-term contracts are subject to significant risks and uncertainties, including existing import laws and restrictions such ~~transaction, we~~as the RSA, which limits imports of Russian uranium products into the United States and applies to our sales using material procured under the TENEX Supply Contract, as well as the potential for additional sanctions and other restrictions affecting the Company or its suppliers, in response to the evolving situation regarding the war in Ukraine.

Our future operating results are subject to uncertainties that could affect results either positively or negatively. Among the factors that could affect our results are the following:

•Armed conflicts, including the war in Ukraine, government actions and other events or third-party actions that disrupt supply chains, production, transportation, payments, and importation of nuclear materials or other critical supplies or services;

•The potential for sanctions and other measures affecting the importation, sales or purchases of SWU or uranium or goods or services required for the sale, purchase, transportation or delivery of such SWU or uranium;

•The availability and terms of additional purchases or sales of SWU and uranium;

•Conditions in the LEU and energy markets, including pricing, demand, operations, government restrictions on imports, exports or investments, and regulations of our business and activities and those of our customers, suppliers, contractors, and subcontractors;

•Timing of customer orders, related deliveries, and purchases of LEU or LEU components;

•Costs of and future funding and demand for HALEU;

•Financial market conditions and other factors that may ~~seek additional debt~~affect pension and benefit liabilities and the value of related assets;

•The outcome of legal proceedings and other contingencies;

•Potential use of cash for strategic or ~~equity financing, contribute~~financial initiatives;

•Actions taken by customers and suppliers, including actions that might affect existing contracts;

•The government’s inability to satisfy its obligations, including supplying government furnished equipment under its agreements with the Company or ~~dispose~~processing security clearances due to a shutdown or other reasons; and

•Market, international trade, and other conditions impacting Centrus’ customers and the industry.

For further discussion of ~~assets, assume additional indebtedness, or partner with other parties~~these uncertainties, refer to ~~consummate a transaction.~~Part I, Item 1A, Risk Factors, in our Annual Report on Form 10-K for the year ended December 31, 2022.

Revenue

~~Business Segments~~

~~Centrus has~~We have two reportable segments: the LEU segment ~~with two components, separative work units (“SWU”) and uranium,~~ and the ~~contract services~~Technical Solutions segment.

~~LEU Segment~~

~~Revenue from Sales of SWU and Uranium~~

~~The LEU segment is currently our primary business focus.~~ Revenue from our LEU segment is derived primarily ~~from:~~from the following:

•sales of the SWU component of LEU,

~~sales of both the SWU and uranium components of LEU, and~~

•sales of natural ~~uranium.~~uranium hexafluoride, uranium concentrates or uranium conversion, and

•sales of enriched uranium product that include both the natural uranium hexafluoride and SWU components of LEU.

Our Technical Solutions segment reflects our technical, manufacturing, engineering, and operations services offered to public and private sector customers, including engineering and testing activities as well as technical and resource support currently being performed by the Company. This includes the HALEU Operation Contract and other contracts with public and private sector customers.

SWU and Uranium Sales

Revenue ~~for~~from our LEU segment accounted for approximately ~~88%~~79% and 86% of our total revenue ~~in 2016.~~for the three and nine months ended September 30, 2023, respectively. The majority of our customers are domestic and international utilities that operate nuclear power plants, with international sales constituting approximately ~~25-40%~~42% of revenue from our LEU segment ~~in recent years.~~since 2021. Our agreements with electric utilities are primarily medium and long-term fixed-commitment contracts under which our customers are obligated to purchase a specified quantity of the SWU component of LEU ~~(or~~from us. Contracts where we sell both the SWU and natural uranium hexafluoride components of ~~LEU) from us. Our agreements for~~LEU to utilities or where we sell natural uranium ~~sales~~hexafluoride to utilities and other nuclear fuel related companies are generally shorter-term, fixed-commitment contracts.

Our revenues, operating results and cash flows can fluctuate significantly from quarter to quarter and year to year. Revenue is recognized at the time LEU or uranium is delivered under the terms of our contracts. The timing of Individual customer demand is affected by, among other things, electricity markets, reactor operations, maintenance and refueling outages, and customer inventories. In the current market environment, some customers are building inventories and may choose to take deliveries under annual purchase obligations later in the year. Customer paymentsorders for the SWU component of LEU ~~average roughly $10-15~~fulfilled in the nine months ended September 30, 2023 averaged approximately $6.4 million per order. As a result, a relatively small ~~change~~shift in the timing of customer orders for LEU may cause significant variability in our operating ~~results.~~results year over year.

Utility customers, in general, have the option to make payment but defer ~~physical~~ receipt of ~~LEU or~~SWU and uranium products purchased from Centrus beyond the contractual sale ~~period. In such cases, title~~period, resulting in the deferral of costs and revenue recognition. Refer to ~~LEU or uranium is transferred to the customer~~Note 2, Revenue and ~~a performance obligation for Centrus is created and a receivable is recorded. Cash is collected for the receivable under normal credit terms. The performance obligation is represented as~~ ~~Deferred Revenue~~ ~~on the balance sheet and the customer-titled product is classified as~~ ~~Deferred Costs Associated~~Contracts with ~~Deferred Revenue~~. Risk of loss remains with Centrus until physical delivery occurs. The recognition of revenue and related cost of sales occurs at the time physical delivery occurs and risk of loss transfers to the customer. The timing of physical delivery, subject to notice period requirements, is at the optionCustomers, of the ~~customer. Deferred revenue and deferred cost activity in the nine months ended September 30, 2017, follows:~~Consolidated Financial Statements for further details.

(in millions) Deferred Revenue Deferred Cost Gross Profit Deferred or (Recognized) Margin

Balance at December 31, 2016 $ 123.6
$ 89.3
$ 34.3
28%
Deferred sales in the period 66.4
44.9
21.5
32%
Previously deferred sales recognized in the period (58.3 ) (39.7 ) (18.6 ) 32%
Balance at September 30, 2017 $ 131.7
$ 94.5
$ 37.2
28%

Our financial performance over time can be affected significantly ~~affected~~ by changes in prices for SWU and ~~uranium. Since 2011, market~~natural uranium hexafluoride. Market prices for SWU and uranium ~~have~~ significantly ~~declined.~~ declined from 2011 until mid-2018, when they began to trend upward. More recently, market uncertainty in the wake of the Russian invasion of Ukraine has driven SWU and uranium prices sharply higher.Since our sales ~~order book~~Order Book includes contracts awarded to us in previous years, the average SWU price billed to customers typically lags ~~behind~~ published price indicators by several years. While some sales reflect the low prices prevalent in recent years, ~~which means~~certain older contracts included in our sales Order Book have prices that ~~average prices under contract today exceed~~are significantly above current market prices.

Recent proposals to severely limit or cut off supply of LEU from Russia have drawn attention to the potential for significant tightening of supplies in the market.Russian enrichment plants represent 46% of the world’s capacity, and Russian capacity significantly exceeds its domestic needs. According to data from the WNA, the annual enrichment requirements of reactors worldwide outside of Russia vastly exceeds the available supply of non-Russian enrichment, which potentially threatens the viability of some reactors, including those in the United States.While inventories and increased production at non-Russian plants may mitigate the shortfall, these options would not fully replace Russian supply. Deployment of new capacity ultimately could replace Russian enrichment but this capacity will take a number of years and significant funding from private and/or government sources to come online.

The following chart summarizes long-term and spot SWU price indicators, and a spot price indicator for UF6, as published by TradeTech, LLC in Nuclear Market Review, is an indication of base-year prices under new long-term enrichment contracts in our primary markets. The following chart summarizes TradeTech’s long-term and spot SWU price indicators, the long-term price for uranium hexafluoride (“UF6”), as calculated by Centrus using indicators published in ~~Nuclear Market Review, and TradeTech’s spot price indicator for UF6:~~:

SWU and Uranium Market Price ~~Indicators~~Indicators*

* Source: Nuclear Market Review, a TradeTech publication, www.uranium.info

Our contracts with customers ~~and suppliers~~ are denominated primarily in U.S. dollars, and, although revenue has not been ~~directly~~materially affected by changes in the foreign exchange rate of the U.S. dollar, we may have a competitive price advantage or disadvantage in obtaining new contracts in a competitive bidding process depending upon the weakness or strength of the U.S. dollar. Under a customer contract that commenced deliveries in 2023, payments are denominated in euros and may be subject to exchange rate risk. Costs of our primary competitors are denominated in other currencies. Our contracts with suppliers are primarily denominated in U.S. dollars. We have a SWU supply agreement, commencing in 2023, with prices payable in a combination of U.S. dollars and euros, but with a contract-defined exchange rate.

On occasion, ~~Centrus~~we will accept payment for SWU in the form of ~~uranium.~~natural uranium hexafluoride. Revenue from the sale of SWU under such contracts is recognized at the time LEU is delivered and is based on the fair value of the natural uranium ~~received in exchange for~~hexafluoride at contract inception, or as the ~~SWU.~~quantity of natural uranium hexafluoride is finalized, if variable.

~~Cost of Sales for SWU and Uranium~~

Cost of sales for SWU and uranium is based on the amount of SWU and uranium sold and delivered during the period and unit inventory costs. Unit inventory costs are determined using the ~~monthly moving~~ average cost method. Changes in purchase costs have an effect on inventory costs and cost of ~~sales over current and future periods.~~sales. Cost of sales includes costs for inventory management at off-site licensed ~~locations. Cost of sales~~locations and also includes certain legacy costs related to former employees of the Portsmouth GDP and Paducah ~~gaseous diffusion plants. Actuarial gains~~GDP.

Technical Solutions

Our Technical Solutions segment reflects our technical, manufacturing, engineering, and ~~losses related~~operations services offered to ~~the retiree benefit plans are recognized immediately in the statements of operations when plan obligations are remeasured at year-end or when lump-sum payments reach certain levels.~~

~~Contract Services Segment~~

~~The contract services segment includes revenue~~public and ~~cost of sales for~~private sector customers, including the American Centrifuge ~~work~~engineering, procurement, construction, manufacturing, and operations services being performed under the HALEU Operation Contract. With our government and private sector customers, we ~~perform as~~seek to leverage our domestic enrichment technology and experience, engineering know-how, and precision manufacturing facility to assist customers with a ~~contractor~~range of engineering, design, and advanced manufacturing projects, including the production of fuel for next-generation nuclear reactors and the development of related facilities. We continue to UT-Battelle. Direct costs incurred in performing the contract work are consistent with the funding levels. Centrus records an unbilled receivable and revenue based on the progress towards the achievement of monthly deliverables. Monthly reports and invoices affirming the achievement of monthly deliverables are submitted shortly following each month. The achievement of monthly deliverables has resulted in revenue consistent with the funding levels. The contract services segment also includes limited services provided by Centrus to the U.S. Department of Energy (“DOE”) and its contractors at the Piketon facility.

~~American Centrifuge~~

~~The Company has a long record as a global leader~~invest in advanced technology manufacturing and engineering. Our manufacturing, engineering and testing facilities and our highly-trained workforce are deeply engaged in advancing the next generation of uranium enrichment technology. We are exploring a number of options for returning to domestic production in the future.

~~In September 2015, Centrus completed a successful three-year demonstration~~because of the ~~existing American Centrifuge technology~~potential for future growth into new areas of business for the Company, while also preserving our unique workforce at ~~its facility in Piketon, Ohio, with 120 machines linked together in a cascade to simulate industrial operating conditions. Since then~~ our ~~government contracts with UT-Battelle have provided for continued engineering~~Technology and ~~testing work on the American Centrifuge technology at the Company’s facilities~~Manufacturing Center in Oak Ridge, Tennessee. Our recently completed contract with UT-Battelle (the “2017 ORNL Contract”) was for the period from October 1, 2016, through September 30, 2017, and generated revenue of approximately $25 million. On October 26, 2017, the parties executed a new fixed priced contract for the period from October 1, 2017, through September 30, 2018, that is expected to generate total revenue of approximately $16 million upon completion of defined milestones. The ORNL contracts have been funded incrementally. Funding for the program is provided to UT-Battelle by the U.S. government which is currently operating under a continuing resolution.

~~American Centrifuge expenses that are outside of our contracts with UT-Battelle are included in~~ ~~Advanced Technology License and Decommissioning Costs, including ongoing costs to maintain the demobilized Piketon facility~~Tennessee, and our ~~NRC licenses at that location. In the second quarter of 2016, the Company commenced with the decontamination and decommissioning (“D&D”) of the~~production facility near Piketon, ~~facility in accordance with the requirements of the NRC and DOE. For additional details on costs, schedule and accrued liabilities related to the D&D of the Piketon facility, refer to~~ ~~Results of Operations~~ ~~below and~~ ~~American Centrifuge - Piketon Facility Costs and D&D Obligations~~ in ~~Note 12, Commitments and Contingencies,~~ ~~of the condensed consolidated financial statements.~~

~~Site Services Work and Related Receivables~~

We formerly performed work under contracts with DOE and its contractors to maintain and prepare the former Portsmouth Gaseous Diffusion Plant (the “Portsmouth GDP”) for D&D. In September 2011, our contracts for maintaining the Portsmouth facilities and performing services for DOE at Portsmouth expired and we completed the transition of facilities to DOE’s D&D contractor for the Portsmouth site. Additionally, we provided limited services to DOE and its contractors at the Paducah Gaseous Diffusion Plant (the “Paducah GDP”) until the leased portions of the Paducah GDP were returned to DOE on October 21, 2014.

There is the potential for additional revenue to be recognized, based on the outcome of DOE reviews and audits, as the result of the release of previously established receivable related reserves. However, uncertainty exists because contract billing periods since June 2002 have not been finalized with DOE, and we have not yet recognized this additional revenue. Certain receivables from DOE are included in other long-term assets based on the extended timeframe expected to resolve claims for payment. Additional details are provided in ~~Note 4, Receivables~~ ~~to the condensed consolidated financial statements.~~

~~2017 Outlook~~

We anticipate SWU and uranium revenue in 2017 in a range of $175 million to $200 million, reflecting an expected decline in SWU and uranium volumes delivered compared to 2016. We anticipate total revenue in a range of $200 million to $225 million. Our revenues continue to be most heavily weighted to the fourth quarter, and we expect more than one-half of our annual revenue in the fourth quarter of 2017, compared to 44% in the fourth quarter of 2016. We expect to end 2017 with a cash and cash equivalents balance in a range of $150 million to $175 million.

Our financial guidance is subject to a number of assumptions and uncertainties that could affect results either positively or negatively. Variations from our expectations could cause differences between our guidance and our ultimate results. Among the factors that could affect our results are:

~~Additional short-term purchases or sales of SWU and uranium;~~

~~Timing of customer orders, related deliveries, and purchases of LEU or components;~~

~~The outcome of legal proceedings and other contingencies;~~

~~Potential use of cash for strategic initiatives;~~

~~Actions taken by our customers, including actions that might affect our existing contracts, as a result of market and other conditions impacting our customers and the industry; and~~

~~Additional costs for decontamination and decommissioning of the Company’s facility in~~ Ohio.

Results of Operations

Segment Information

The following tables present elements of the accompanying ~~condensed consolidated statements~~Consolidated Statements of ~~operations~~Operations and Comprehensive Income that are categorized by segment (dollar amounts in millions):

Three Months Ended
September 30,
2017 2016 $ Change % Change
LEU segment
Revenue:
SWU revenue $ 43.5
$ 14.1
$ 29.4
209 %
Uranium revenue —
—
—
–
Total 43.5
14.1
29.4
209 %
Cost of sales 32.4
15.9
(16.5 ) (104 )%
Gross profit (loss) $ 11.1
$ (1.8 ) $ 12.9
717 %

Contract services segment

Revenue $ 6.8
$ 7.3
$ (0.5 ) (7 )%
Cost of sales 6.3
7.6
1.3
17 %
Gross profit (loss) $ 0.5
$ (0.3 ) $ 0.8
267 %

Total

Revenue $ 50.3
$ 21.4
$ 28.9
135 %
Cost of sales 38.7
23.5
(15.2 ) (65 )%
Gross profit (loss) $ 11.6
$ (2.1 ) $ 13.7
652 %
Three Months Ended September 30, 2023 Compared with Three Months Ended September 30, 2022


	Three Months Ended September 30,
	2023		2022		$ Change		% Change
LEU segment
Revenue:
SWU revenue	$	40.5	$	7.7	$	32.8	426	%
Uranium revenue	—		12.5		(12.5)		(100)	%
Total	40.5		20.2		20.3		100	%
Cost of sales	30.4		18.9		11.5		61	%
Gross profit	$	10.1	$	1.3	$	8.8	677	%

Technical Solutions segment
Revenue	$	10.8	$	13.0	$	(2.2)	(17)	%
Cost of sales	9.6		12.0		(2.4)		(20)	%
Gross profit	$	1.2	$	1.0	$	0.2	20	%

Total
Revenue	$	51.3	$	33.2	$	18.1	55	%
Cost of sales	40.0		30.9		9.1		29	%
Gross profit	$	11.3	$	2.3	$	9.0	391	%

Nine Months Ended
September 30,
2017 2016 $ Change % Change
LEU segment
Revenue:
SWU revenue $ 82.2
$ 128.3
$ (46.1 ) (36 )%
Uranium revenue —
14.3
(14.3 ) (100 )%
Total 82.2
142.6
(60.4 ) (42 )%
Cost of sales 76.8
130.7
53.9
41 %
Gross profit $ 5.4
$ 11.9
$ (6.5 ) (55 )%

Contract services segment

Revenue $ 19.3
$ 32.2
$ (12.9 ) (40 )%
Cost of sales 19.9
24.9
5.0
20 %
Gross profit (loss) $ (0.6 ) $ 7.3
$ (7.9 ) (108 )%

Total

Revenue $ 101.5
$ 174.8
$ (73.3 ) (42 )%
Cost of sales 96.7
155.6
58.9
38 %
Gross profit $ 4.8
$ 19.2
$ (14.4 ) (75 )%

Revenue

Revenue from the LEU segment ~~increased $29.4~~was $40.5 million ~~(or 209%) in the three months~~ and ~~declined $60.4~~$20.2 million (or 42%) in the nine months ended September 30, 2017, compared to the corresponding periods in 2016. The volume of SWU sales increased 178% in the three-month period and declined 30% in the nine-month period. We expect more than one-half of our annual revenue in the fourth quarter of 2017. We expect SWU volumes delivered will decline in 2017 compared to 2016. Refer to ~~2017 Outlook~~ ~~above. The average price billed to customers~~ for sales of SWU increased 11% in the three-month period and declined 8% in the nine-month period, reflecting the particular contracts under which SWU were sold during the periods. We expect the average SWU price for sales during the full year 2017 will be approximately 3% lower than in 2016.

~~Revenue from the contract services segment declined $0.5 million (or 7%) in~~ the three months ended September 30, ~~2017, compared~~2023 and 2022, respectively, an increase of $20.3 million (or 100%). The increase was due to the ~~corresponding period~~$32.8 million increase in ~~2016, reflecting~~SWU revenue, partially offset by the ~~reduced scope of contract work~~$12.5 million decrease in uranium revenue for ~~American Centrifuge technology services in~~ the ~~current period. Revenue from the contract services segment declined $12.9 million (or 40%) in the nine~~three months ended September 30, ~~2017, compared to the corresponding period~~2023. The increase in ~~2016,~~SWU revenue was due to ~~the reduced scope of work and the timing of revenue recognition~~a 326% increase in the ~~prior period. As~~volume of SWU sold and a ~~result of the contract signed with UT-Battelle in March 2016, revenue~~25% increase in the ~~nine~~average price of SWU sold.

Revenue from the Technical Solutions segment was $10.8 million and $13.0 million for the three months ended September 30, ~~2016, included $24.2~~2023 and 2022, respectively, a decrease of $2.2 million ~~for work~~(or 17%). The decrease was primarily related to the transition from the HALEU Demonstration Contract to the HALEU Operation Contract in late 2022. For the ~~nine~~three months ended September 30, ~~2016, as well as $8.1~~2023, the HALEU Operation Contract generated $8.9 million in revenue. The HALEU Demonstration Contract generated $1.3 million in revenue for ~~March 2016 reports on work performed~~the three months ended September 30, 2023, compared to $11.7 million in revenue for the ~~fourth quarter of 2015.~~same period in 2022.

Cost of Sales

Cost of sales for the LEU segment ~~increased $16.5~~was $30.4 million ~~(or 104%) in~~and $18.9 million for the three months ended September 30, 2023 and ~~declined $53.9~~2022, respectively, an increase of $11.5 million (or ~~41%~~61%). The increase was due to a $23.9 million increase in SWU costs, partially offset by a $12.4 million decrease in uranium costs. The increase in SWU costs reflected a 326% increase in the volume of SWU sold and a 13% increase in the average unit cost of SWU sold. Cost of sales for the three months ended September 30, 2023 included $0.6 million for the revaluation of inventory loans.

Cost of sales for the Technical Solutions segment was $9.6 million and $12.0 million for the three months ended September 30, 2023 and 2022, respectively, a decrease of $2.4 million (or 20%). The decrease was related to a decrease of $10.8 million of costs associated with the HALEU Demonstration Contract and a decrease in costs of approximately $1.0 million associated with other contracts, partially offset by $9.4 million of costs incurred for the HALEU Operation Contract. For details on HALEU Demonstration Contract and HALEU Operation Contract accounting, refer to Technical Solutions Segment above.

Gross Profit

Gross profit for the LEU segment was $10.1 million and $1.3 million for the three months ended September 30, 2023 and 2022, respectively, an increase of $8.8 million (or 677%). The increase for the three months ended September 30, 2023 was due primarily to the specific contract and pricing mix of SWU contracts and the timing of their deliveries quarter over quarter. This was reflected by an increase in the volume of SWU sold and an increase in the average profit margin per SWU.

Gross profit for the Technical Solutions segment was $1.2 million and $1.0 million for the three months ended September 30, 2023 and 2022, respectively, an increase of $0.2 million (or 20%). The increase was attributable to the transition of work performed under the HALEU Demonstration Contract to the HALEU Operation Contract in late 2022.

Nine Months Ended September 30, 2023 Compared with Nine Months Ended September 30, 2022


	Nine Months Ended September 30,
	2023		2022		$ Change		% Change
LEU segment
Revenue:
SWU revenue	$	147.4	$	106.0	$	41.4	39	%
Uranium revenue	39.5		17.4		22.1		127	%
Total	186.9		123.4		63.5		51	%
Cost of sales	126.1		59.8		66.3		111	%
Gross profit	$	60.8	$	63.6	$	(2.8)	(4)	%

Technical Solutions segment
Revenue	$	29.7	$	44.2	$	(14.5)	(33)	%
Cost of sales	28.2		38.3		(10.1)		(26)	%
Gross profit	$	1.5	$	5.9	$	(4.4)	(75)	%

Total
Revenue	$	216.6	$	167.6	$	49.0	29	%
Cost of sales	154.3		98.1		56.2		57	%
Gross profit	$	62.3	$	69.5	$	(7.2)	(10)	%

Revenue

Revenue from the LEU segment was $186.9 million and $123.4 million for the nine months ended September 30, ~~2017, compared to the corresponding periods in 2016, primarily~~2023 and 2022, respectively, an increase of $63.5 million (or 51%). The increase was due to ~~the changes~~a $41.4 million increase in SWU ~~sales volumes noted above~~revenue and ~~declines~~a $22.1 million increase in uranium revenue. The SWU revenue increase was primarily related to a 123% increase in the volume of SWU sold, partially offset by a 38% decrease in the average ~~cost~~price of ~~sales per SWU.~~SWU sold.

~~Cost of sales is affected by sales volumes, unit costs of inventory,~~Revenue from the Technical Solutions segment was $29.7 million and ~~direct charges to cost of sales such as inventory valuation adjustments and legacy costs related to former GDP employees and other residual costs related to the Paducah GDP. Refer to~~ ~~Impact of Legacy Costs~~ ~~below~~.

~~Our inventories are valued at the lower of cost or net realizable value. Valuation adjustments~~$44.2 million for ~~our uranium inventory to reflect declines in uranium market price indicators totaled $3.0 million in~~ the nine months ended September 30, ~~2016, including $2.3~~2023 and 2022, respectively, a decrease of $14.5 million (or 33%). The decrease was primarily related to the transition from the HALEU Demonstration Contract to the HALEU Operation Contract in late 2022. For the nine months ended September 30, 2023, the HALEU Operation Contract generated $27.0 million of revenue. The HALEU Demonstration Contract generated $1.6 million in ~~third quarter~~revenue for the nine months ended September 30, 2023 compared to $35.7 million in revenue for the same period in 2022. The remaining decrease was attributable to a decrease in revenue generated by other contracts.

Cost of ~~2016.~~Sales

Cost of sales for the ~~contract services~~LEU segment ~~declined $1.3~~was $126.1 million ~~(or 17%) in the three months~~ and ~~$5.0~~$59.8 million ~~(or 20%) in~~for the nine months ended September 30, ~~2017, compared to the corresponding periods in 2016, due to the reduced scope of contract work.~~

~~Gross Profit~~

~~We realized a gross profit of $11.6 million in the three months ended September 30, 2017,~~2023 and 2022, respectively, an increase of ~~$13.7~~$66.3 million ~~compared~~(or 111%). The increase was due to ~~the gross loss of $2.1~~a $47.6 million increase in SWU costs and a $18.7 million increase in uranium costs. The SWU cost increase was primarily related to a 123% increase in the ~~corresponding period in 2016. We realized an increase in gross profit~~volume of ~~$12.9 million for the LEU segment primarily due to increases~~SWU sold, partially offset by a 6% decrease in the average ~~SWU~~unit cost of SWU. Cost of sales ~~price and SWU sales volume, and a decline in the average SWU cost.~~

~~We realized a gross profit of $4.8 million in~~for the nine months ended September 30, ~~2017, a decline of $14.4~~2023 and 2022, included $3.5 million ~~compared to the gross profit of $19.2~~and $5.5 million, ~~in the corresponding period in 2016. We realized a decline in gross profit of $6.5 million~~respectively, for the ~~LEU segment primarily due to the decline in the average SWU~~revaluation of inventory loans.

Cost of sales ~~price and the decline in SWU sales volume~~ for the ~~nine months compared to the prior period, partially offset by a decline in the average SWU cost.~~

~~We realized a decline in gross profit of $7.9~~Technical Solutions segment was $28.2 million and $38.3 million for ~~the contract services segment in~~ the nine months ended September 30, ~~2017, compared~~2023 and 2022, respectively, a decrease of $10.1 million (or 26%). The decrease was related to a reduction in costs of approximately $28.6 million associated with the ~~corresponding period~~HALEU Demonstration Contract and a reduction in ~~2016. Revenue~~costs of approximately $9.2 million related to other contracts, partially offset by $27.7 million of costs incurred for the ~~contract services~~HALEU Operation Contract. For details on HALEU Demonstration Contract and HALEU Operation Contract accounting, refer to “Technical Solutions Segment” above.

Gross Profit

Gross profit for the LEU segment inwas $60.8 million and $63.6 million for the nine months ended September 30, ~~2016, included~~2023 and 2022, respectively, a ~~billing~~decrease of $2.8 million (or 4%). The decrease for ~~March 2016 reports on work performed in the fourth quarter of 2015. Related expenses were included in~~ ~~Advanced Technology License and Decommissioning Costs~~ ~~in 2015 as they were incurred before a contract was in place. We realized a gross loss of $0.6 million for the contract services segment in~~ the nine months ended September 30, ~~2017,~~2023 was due primarily to ~~costs incurred which are not fully recoverable from~~ the ~~revenue under the~~specific contract ~~with UT-Battelle.~~

~~Impact~~and pricing mix of ~~Legacy Costs~~

~~The Company ceased uranium enrichment at the Portsmouth GDP in 2001~~SWU contracts and the ~~Paducah GDP~~timing of their deliveries quarter over the period. This was reflected by a decrease in ~~2013. Included~~the average profit margin per SWU, partially offset by an increase in ~~cost~~the volume of ~~sales are costs related to benefits for former GDP employees~~SWU sold and ~~other residual costs related to the Paducah GDP. These legacy costs are distinct from the Company’s current costs of acquiring SWU and~~an increase in uranium ~~for sale. The following table presents the impact of legacy costs on~~ gross profit.

Gross profit for the ~~LEU~~Technical Solutions segment ~~(dollar amounts~~was $1.5 million and $5.9 million for the nine months ended September 30, 2023 and 2022, respectively, a decrease of $4.4 million (or 75%). The decrease was attributable to the transition of work performed under the HALEU Demonstration Contract to the HALEU Operation Contract in ~~millions):~~

Nine Months Ended
September 30,
2017 2016
LEU segment (GAAP)
Gross profit $ 5.4
$ 11.9
Gross margin 6.6 % 8.3 %

Legacy costs included in cost of sales:
Pension and postretirement health and life benefits $ 2.2
$ 3.2
Disability obligations and other 0.4
3.9
Legacy costs $ 2.6
$ 7.1

LEU segment excluding legacy costs (non-GAAP)
Gross profit excluding legacy costs $ 8.0
$ 19.0
Gross margin excluding legacy costs 9.7 % 13.3 %

~~We believe~~late 2022. In 2022, the ~~non-GAAP financial measures above, when considered together with the corresponding GAAP measures and the reconciliation above, can provide additional understanding~~HALEU Demonstration Contract transitioned to invoicing of all costs whereas most of the ~~Company’s financial performance and underlying profitability. Management uses~~invoicing under the ~~non-GAAP financial measures to provide investors with~~HALEU Operation Contract reflected a ~~more complete understanding of the Company’s historical results and trends.~~50% cost-share.

These non-GAAP financial measures are used in addition to and in conjunction with results presented in accordance with our GAAP results. The non-GAAP financial measures should be viewed in addition to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. The non-GAAP financial measures used by the Company may be calculated differently from, and therefore may not be comparable to, non-GAAP financial measures used by other companies.

Non-Segment Information

The following tables present elements of the accompanying ~~condensed consolidated statements~~Consolidated Statements of ~~operations~~Operations and Comprehensive Income that are not categorized by segment (dollar amounts in millions):

Three Months Ended
September 30,
2017 2016 $ Change % Change
Gross profit (loss) $ 11.6
$ (2.1 ) $ 13.7
652 %
Advanced technology license and decommissioning costs 4.5
21.9
17.4
79 %
Selling, general and administrative 11.0
10.7
(0.3 ) (3 )%
Amortization of intangible assets 2.5
1.7
(0.8 ) (47 )%
Special charges for workforce reductions and advisory costs 2.4
0.6
(1.8 ) (300 )%
Gains on sales of assets (0.6 ) (0.3 ) 0.3
100 %
Operating loss (8.2 ) (36.7 ) 28.5
78 %
Interest expense 0.7
4.7
4.0
85 %
Investment income (0.4 ) (0.1 ) 0.3
300 %
Loss before income taxes (8.5 ) (41.3 ) 32.8
79 %
Income tax benefit —
—
—
–
Net loss (8.5 ) (41.3 ) 32.8
79 %
Preferred stock dividends - undeclared and cumulative 2.0
—
2.0
–
Net loss allocable to common stockholders $ (10.5 ) $ (41.3 ) $ 30.8
75 %
Three Months Ended September 30, 2023 Compared with Three Months Ended September 30, 2022


	Three Months Ended September 30,
	2023		2022		$ Change		% Change
Gross profit	$	11.3	$	2.3	$	9.0	391	%
Advanced technology costs	3.3		5.4		(2.1)		(39)	%
Selling, general and administrative	9.3		8.6		0.7		8	%
Amortization of intangible assets	1.4		1.1		0.3		27	%

Special charges for workforce reductions	0.2		—		0.2		n/a
Operating loss	(2.9)		(12.8)		9.9		77	%
Nonoperating components of net periodic benefit income	(0.6)		(4.4)		3.8		86	%
Interest expense	0.4		0.1		0.3		300	%
Investment income	(2.3)		(0.6)		(1.7)		(283)	%
Other income, net	(1.0)		—		(1.0)		n/a
Income (loss) before income taxes	0.6		(7.9)		8.5		108	%
Income tax benefit	(7.6)		(1.8)		(5.8)		(322)	%
Net income (loss) and comprehensive income (loss)	$	8.2	$	(6.1)	$	14.3	234	%

Nine Months Ended
September 30,
2017 2016 $ Change % Change
Gross profit $ 4.8
$ 19.2
$ (14.4 ) (75 )%
Advanced technology license and decommissioning costs 15.0
38.6
23.6
61 %
Selling, general and administrative 33.1
34.6
1.5
4 %
Amortization of intangible assets 5.7
7.6
1.9
25 %
Special charges for workforce reductions and advisory costs 7.1
1.2
(5.9 ) (492 )%
Gains on sales of assets (2.3 ) (1.0 ) 1.3
130 %
Operating loss (53.8 ) (61.8 ) 8.0
13 %
Gain on early extinguishment of debt (33.6 ) (16.7 ) 16.9
101 %
Interest expense 4.3
14.8
10.5
71 %
Investment income (1.0 ) (0.5 ) 0.5
100 %
Loss before income taxes (23.5 ) (59.4 ) 35.9
60 %
Income tax benefit (0.2 ) (0.6 ) (0.4 ) (67 )%
Net loss (23.3 ) (58.8 ) 35.5
60 %
Preferred stock dividends - undeclared and cumulative 5.0
—
5.0
–
Net loss allocable to common stockholders $ (28.3 ) $ (58.8 ) $ 30.5
52 %

Advanced Technology ~~License and Decommissioning~~ Costs

Advanced technology ~~license~~costs were $3.3 million and ~~decommissioning~~$5.4 million for the three months ended September 30, 2023 and 2022, respectively, a decrease of $2.1 million (or 39%). Advanced technology costs consist of American Centrifuge work and related expenses that are outside of our customer contracts ~~with UT-Battelle,~~in the Technical Solutions segment, including ~~ongoing costs~~bid and proposal activities and work to ~~maintain the demobilized Piketon facility~~improve our centrifuge technology.

Nonoperating Components of Net Periodic Benefit Income

Nonoperating components of net periodic benefit income was $0.6 million and ~~our NRC licenses at that location. Costs declined $17.4~~$4.4 million ~~(or 79%) in~~for the three months ended September 30, ~~2017,~~2023 and 2022, respectively, a decrease of $3.8 million (or 86%). Nonoperating components of net periodic benefit income consist primarily of the expected return on plan assets and the remeasurement related to lump sum payouts, partially offset by interest cost as the discounted present value of benefit obligations nears payment, as described in Note 8, Pension and Postretirement Health and Life Benefits of the Consolidated Financial Statements.

Investment Income

Investment income was $2.3 million and $0.6 million for the three months ended September 30, 2023 and 2022, respectively, an increase of $1.7 million (or 283%). The Company’s investment income represents interest earned on operating cash, which is primarily held in money market accounts. The increase was due primarily to an increase in interest rates.

Income Tax Benefit

Income tax benefit was $7.6 million and $1.8 million for the three months ended September 30, 2023 and 2022, respectively, an increase of $5.8 million (or 322%). Income tax benefit in all periods resulted from applying the annual effective tax rate to the quarterly income from continuing operations adjusted for discrete items. In addition, a decrease to the federal tax valuation allowance of $7.7 million was recorded during the three months ended September 30, 2023. For the three months ended September 30, 2022, there was no change to the tax valuation allowance. For more information about the valuation allowance, see Note 9, Income Taxes, of the Consolidated Financial Statements and Note 13, Income Taxes, in our Consolidated Financial Statements on Form 10-K for the year ended December 31, 2022.

Net Income (Loss) and Comprehensive Income (Loss)

Net income was $8.2 million compared to ~~the corresponding period in 2016. The prior period included~~ a ~~$15.0~~net loss of $6.1 million ~~charge to increase the accrued D&D liability~~ for the ~~Piketon demonstration facility based on updated cost estimates. Costs declined $23.6~~three months ended September 30, 2023 and 2022, respectively, a change of $14.3 million (or ~~61%~~234%). The change of $14.3 million was primarily attributable to a $8.8 million increase in gross profit from the LEU segment, a $5.8 million increase in income tax benefit, and a $0.2 million increase in gross profit from the Technical Solutions segment, partially offset by a $3.8 million decrease in nonoperating components of net periodic benefit income.

Nine Months Ended September 30, 2023 Compared with Nine Months Ended September 30, 2022


	Nine Months Ended September 30,
	2023		2022		$ Change		% Change
Gross profit	$	62.3	$	69.5	$	(7.2)	(10)	%
Advanced technology costs	10.8		10.0		0.8		8	%
Selling, general and administrative	27.4		24.4		3.0		12	%
Amortization of intangible assets	4.2		6.2		(2.0)		(32)	%

Special charges for workforce reductions	0.1		0.5		(0.4)		(80)	%
Operating income	19.8		28.4		(8.6)		(30)	%
Nonoperating components of net periodic benefit loss (income)	0.1		(11.1)		11.2		101	%
Interest expense	0.9		0.1		0.8		800	%
Investment income	(6.4)		(0.8)		(5.6)		(700)	%
Other income, net	(1.0)		—		(1.0)		n/a
Income before income taxes	26.2		40.2		(14.0)		(35)	%
Income tax expense (benefit)	(1.9)		9.3		(11.2)		(120)	%
Net income and comprehensive income	$	28.1	$	30.9	$	(2.8)	(9)	%

Selling, General and Administrative

Selling, general and administrative costs were $27.4 million and $24.4 million for the nine months ended September 30, 2023 and 2022, respectively, an increase of $3.0 million (or 12%). This increase was due primarily to an increase in employee-related expenses, including equity related compensation.

Amortization of Intangible Assets

Amortization of intangible assets was $4.2 million and $6.2 million in the nine months ended September 30, ~~2017, compared to the corresponding period in 2016, due to the $15.0 million increase in the D&D liability in the prior period~~2023 and ~~demobilization costs incurred in early 2016 in preparation for the D&D~~2022, respectively, a decrease of ~~the Piketon facility. D&D costs commenced in the second quarter of 2016 and are charged against the D&D liability. For additional details on the D&D of the Piketon facility, refer to~~ ~~American Centrifuge - Piketon Facility Costs and D&D Obligations~~ in ~~Note 12, Commitments and Contingencies,~~ ~~of the condensed consolidated financial statements.~~

~~Selling, General and Administrative~~

~~Selling, general and administrative (“SG&A”) expenses increased $0.3~~$2.0 million (or 3%32%) in the three months and declined $1.5 million (or 4%) in the nine months ended September 30, 2017, compared to the corresponding periods in 2016. Consulting costs declined $0.3 million in the three-month period and $1.4 million in the nine-month period. Compensation and benefit costs were flat in the three-month period and declined $0.3 million in the nine-month period ended September 30, 2017, including the effect of an $0.8 million loss in the prior period related to the remeasurement of pension obligations.

~~Amortization of Intangible Assets~~

. Amortization expense for the intangible asset related to the September 2014 ~~sales order book~~Order Book is a function of SWU sales volume under that ~~order book, which increased in the three-month period~~Order Book, and ~~declined in the nine months ended September 30, 2017, compared to the corresponding periods in 2016. Amortization~~amortization expense for the intangible asset related to customer relationships is amortized on a straight-line basis.

~~Special Charges~~Nonoperating Components of Net Periodic Benefit Loss (Income)

Nonoperating components of net periodic benefit loss (income) netted to a loss of $0.1 million and income of ($11.1) million for ~~Workforce Reductions and Advisory Costs~~

~~Special charges in~~ the nine months ended September 30, ~~2017, included estimated employee termination benefits~~2023 and 2022, respectively, a change of ~~$2.3~~$11.2 million ~~including $0.7 million in~~(or 101%). Nonoperating components of net periodic benefit loss (income) consist primarily of the ~~third quarter, less $0.2 million for unvested employee departures. Advisory costs~~expected return on plan assets and the remeasurement related to lump sum payouts, partially offset by interest cost as the ~~Company’s project to align its corporate structure to the scale~~discounted present value of its ongoing business operations and to update related information technology were $1.7 million and $5.0 million in the three and nine months ended September 30, 2017, respectively, compared to $0.3 million and $0.8 million in the corresponding periods of 2016.

~~Gain on Early Extinguishment of Debt~~

In the first quarter of 2017, the Company recognized a gain of $33.6 million related to the exchange of securities and cash on February 14, 2017, which is net of transaction costs of $9.0 million and previously deferred issuance costs related to the 8% PIK Toggle Notes of $0.4 million. Refer to ~~Note 8, Debt~~ ~~of the condensed consolidated financial statements.~~

In June 2016, we repurchased 8% PIK Toggle Notes having an aggregate principal and accrued interest balance of $26.6 million for cash payments of $9.8 million. The gain on the early extinguishment of the notes was $16.7 million, net of commissions and unamortized deferred issuance costs totaling $0.1 million.

~~Interest Expense~~

Interest expense declined $4.0 million (or 85%) in the three months and $10.5 million (or 71%) in the nine months ended September 30, 2017, compared to the corresponding periods in 2016, due to the early extinguishment of 87% of the outstanding principal amount of the 8% PIK Toggle Notes on February 14, 2017. No interest expense is recognized on the new 8.25% Notesbenefit obligations nears payment, as described in Note 8, ~~Debt~~, Pension and Postretirement Health and Life Benefits, of the ~~condensed consolidated financial statements.~~Consolidated Financial Statements.

Investment Income ~~Tax Benefit~~

~~The~~Investment income ~~tax benefit~~ was ~~$0 in the three months~~$6.4 million and ~~$0.2~~$0.8 million in the nine months ended September 30, ~~2017.~~2023 and 2022, respectively, an increase of $5.6 million (or 700%). The Company’s investment income represents interest earned on operating cash, which is primarily held in money market accounts. The increase was due primarily to an increase in interest rates.

Income Tax Expense (Benefit)

Income tax benefit was ~~$0 in the three months~~$1.9 million and ~~$0.6~~income tax expense was $9.3 million in the nine months ended September 30, ~~2016. The~~2023 and 2022, respectively, a decrease to the income tax expense of $11.2 million (or 120%). Income tax benefit ~~in both nine-month periods resulted from discrete items~~ for ~~reversals of previously accrued amounts associated with liabilities for unrecognized benefits.~~

~~Net Loss~~

~~Our net loss was $8.5 million in~~ the ~~three~~nine months ended September 30, ~~2017, compared~~2023 resulted from applying the annual effective tax rate to year-to-date income from continuing operations adjusted for discrete items, and a ~~net loss~~decrease of ~~$41.3~~$7.7 million into the ~~three~~federal tax valuation allowance. Income tax expense for the nine months ended September 30, ~~2016. The favorable variance of $32.8 million~~2022 resulted from applying the annual effective tax rate to year-to-date income from continuing operations adjusted for discrete items. There was ~~primarily~~no change to the ~~result~~tax valuation allowance during the nine months ended September 30, 2022. For more information about the valuation allowance, see Note 9, Income Taxes, of the ~~$13.7~~Consolidated Financial Statements and Note 13, Income Taxes, in our Consolidated Financial Statements on Form 10-K for the year ended December 31, 2022.

Net Income and Comprehensive Income

Net income was $28.1 million ~~improvement in gross profit, $15.0 million of accrued D&D costs in the prior period,~~ and ~~the $4.0 million decline in interest expense.~~

~~Our net loss was $23.3~~$30.9 million in the nine months ended September 30, ~~2017, compared~~2023 and 2022, respectively, a decrease of $2.8 million (or 9%). The decrease was primarily attributable to a decrease in nonoperating components of net ~~loss~~periodic benefit income of ~~$58.8~~$11.2 million, a decrease in gross profit of $4.4 million in the ~~nine months ended September 30, 2016. The favorable variance of $35.5~~Technical Solutions segment and $2.8 million ~~was primarily~~in the ~~result of the $23.6 million decline in advanced technology license and decommissioning costs, including D&D cost accruals, the $16.9~~LEU segment, partially offset by a $11.2 million increase in ~~gains on the early extinguishment of debt,~~income tax benefit and ~~the $10.5 million decline in interest expense, partially offset by the $14.4 million decline in gross profit and the $5.9~~a $5.6 million increase in ~~special charges.~~investment income.

~~Preferred Stock Dividends - Undeclared and Cumulative~~

Holders of the Series B Preferred Stock are entitled to cumulative dividends of 7.5% per annum of the aggregate liquidation preference at origination of $104.6 million. We did not meet the criteria for a dividend payment obligation for the quarter ended September 30, 2017, and we have not declared or paid dividends on the Series B Preferred Stock since issuance on February 14, 2017. Dividends on the Series B Preferred Stock are cumulative to the extent not paid at any quarter-end, whether or not declared and whether or not there are assets of the Company legally available for the payment of such dividends in whole or in part.

Liquidity and Capital Resources

~~We ended~~As of September 30, 2023, the ~~third quarter of 2017 with~~Company had a consolidated cash and cash equivalents balance of ~~$135.9~~$183.3 million. ~~We anticipate~~In addition, there was $29.8 million of restricted cash related to three inventory loans, which required a cash deposit into an escrow fund. See Note 3, Cash, Cash Equivalents, and Restricted Cash of the Consolidated Financial Statements. The Company anticipates having adequate liquidity to support our business operations for at least the next 12 months from the date of this ~~report.~~Quarterly Report. Our view of liquidity is dependent on, among other things, conditions affecting our operations, including market, international trade restrictions, sanctions and other conditions, the level of expenditures and government funding for our services contracts and the ~~American Centrifuge program.~~timing of customer payments. Liquidity requirements for our existing operations are affected primarily by the timing and amount of customer sales and our inventory purchases.

~~We believe our sales order book~~The Company believes its Order Book in our LEU segment is a source of stability for our liquidity position. ~~Centrus’ sales order book extends for more than a decade.~~ ~~Although, based on current~~Subject to market conditions, we see ~~limited~~the potential for growing uncommitted demand for LEU ~~for~~during the ~~remainder of this decade before an anticipated rise in uncommitted~~next few years with accelerated open demand in ~~the 2020s, we continue to seek~~2025 and ~~make additional~~beyond.

Cash resources and net sales ~~including sales for delivery during that time period.~~

Substantially all revenue-generating operations of the Company are conducted at the subsidiary level. Centrus’ principal source of funding for American Centrifuge activities is provided: (i) under the contract with UT-Battelle, the operator of ORNL; and (ii)proceeds from Centrus’ wholly owned subsidiary United States Enrichment Corporation (“Enrichment Corp.”) to Centrus and its 100% indirectly owned subsidiary American Centrifuge Operating, LLC pursuant to two secured intercompany financing notes. The financing obtained from Enrichment Corp. funds American Centrifuge activities pending receipt of payments related to work performed under the contract with UT-Battelle, American Centrifugeour LEU segment fund technology costs that are outside of our customer contracts in the ~~scope of work under the contract with UT-Battelle, including D&D costs and ongoing costs to maintain the Piketon facility and our NRC licenses at that location,~~Technical Solutions segment and general corporate expenses, including cash interest payments on our debt. We believe our investment in advanced U.S. uranium enrichment technology will position the Company to meet the needs of our customers as they deploy advanced reactors and next generation fuels. We signed the three-year HALEU Demonstration Contract with DOE in October 2019. Under the HALEU Demonstration Contract, the Company contributed its required contribution through November 30, 2021. The program began May 31, 2019, when Centrus and DOE signed a preliminary letter agreement that allowed work to begin while the full contract was being finalized. Our cost-share HALEU Demonstration Contract period of performance ended in November 2022.

~~Capital expenditures are expected to be insignificant~~On November 10, 2022, the Company was awarded the HALEU Operation Contract. The HALEU Operation Contract provides for ~~at least the next 12 months.~~

~~In September 2015, Centrus completed~~ a ~~successful three-year demonstration~~50/50 cost share contract for Phase 1 of the American Centrifuge technology at its facility in Piketon, Ohio. U.S. government funding for American Centrifuge is now limited to research and development work at our facilities in Oak Ridge, Tennessee. As a result of reduced program funding, workforce reductions commenced in the fourth quarter of 2015 and we expect to make payments of $4.9 million for remaining workforce reductions through 2019.

Centrus began to incur expenditures in the second quarter of 2016 associated with the D&D of the Piketon facility in accordance with the requirements of the NRC and DOE. In the nine months ended September 30, 2017, D&D costs of $22.1 million were charged against the accrued D&D liability. The D&D work is expected to be substantially completed by year-end. As of September 30, 2017, we have accrued $16.6 million for the estimated fair value of the remaining costsbase contract to complete the ~~D&D work.~~

~~Centrus has previously provided financial assurance~~cascade, begin operations and complete the initial, small quantity demonstration HALEU. Phase 2 includes continued operations and maintenance on a cost-plus-incentive-fee basis. Finally, the HALEU Operation Contract includes options for the government to unilaterally extend performance for up to an additional nine years comprised of three options of three years each, also on a cost-plus-incentive-fee basis. The Company’s goal is to modularly scale up the facility as demand for HALEU grows in the commercial and government sectors, subject to the ~~NRC and DOE for D&D and lease turnover costs in~~availability of funding and/or contracts to purchase the ~~form~~output of surety bonds of approximately $16 million and $13 million, respectively, which are fully cash collateralized by Centrus. Centrus expects to receive cash when surety bonds are reduced and/or cancelled asthe plant.

Although the Company ~~fulfills its D&D~~believes demand for HALEU will emerge over the next several years, there are no guarantees about whether or when government or commercial demand for HALEU will materialize, and ~~lease obligations.~~there are a number of technical, regulatory, and economic hurdles that must be overcome for these fuels and reactors that will use these fuels to come to the market. For further discussion, refer to Part I, Item 1A, Risk Factors, in our Annual Report on Form 10-K for the year ended December 31, 2022.

~~In the event that~~If funding by the U.S. ~~government~~Government of gas centrifuge technology is ~~further~~ reduced or discontinued, or we are not awarded a future DOE contract to continue to operate the ~~American Centrifuge project may be subject to further demobilization, costs, delays and termination. Any~~cascade, such actions may have a material adverse impact on our ability to deploy the American Centrifuge technology and on our liquidity.

Capital expenditures of approximately $1.0 million are anticipated over the next 12 months.

On October 12, 2023, the Company entered into an agreement with an insurer (“Insurer”) for one of its defined benefit plans to purchase a group annuity contract and transferred approximately $186.5 million of its pension plan obligations to the insurer. The ~~change~~purchase of the group annuity contract was funded directly by the assets of the pension plan of approximately $171.4 million. The purchase resulted in ~~cash~~a transfer of benefit administrative responsibilities for approximately 1,400 beneficiaries effective December 1, 2023. The Company estimates that the income related to the pension settlement recognized in the fourth quarter will be approximately $15.1 million, dependent upon the final settlement and ~~cash equivalents from~~pricing of the annuity transaction. The settlement charge will be recognized in nonoperating components of net periodic benefit loss (income) in our ~~condensed~~ consolidated statements of ~~cash flows are as follows on a summarized basis (in millions):~~operations.

Nine Months Ended
September 30,
2017 2016
Cash used in operating activities $ (95.6 ) $ (51.9 )
Cash provided by (used in) investing activities 1.8
(1.5 )
Cash used in financing activities (31.0 ) (9.8 )
Decrease in cash and cash equivalents $ (124.8 ) $ (63.2 )

~~Operating Activities~~

The net reduction of $42.3 million in the SWU purchase payables balance, due to the timing of purchase deliveries, was a significant use of cash in the nine months ended September 30, 2017. Other major uses of cash were corporate costs including benefits funding and costs for D&D of the American Centrifuge demonstration cascade. Sources of cash included the monetization of inventory as inventories declined $17.9 million in the nine-month period and receivables from utility customers declined $6.2 million.

In the corresponding period in 2016, the net reduction of $68.9 million in the SWU purchase payables balance, due to the timing of purchase deliveries, was a significant use of cash. Other major uses of cash were corporate costs including benefits funding and costs for D&D of the American Centrifuge demonstration cascade. Sources of cash included the monetization of inventory as inventories declined $45.8 million in the nine-month period and receivables from utility customers declined $18.4 million.

~~Investing Activities~~

~~Capital expenditures were $0.3 million in the nine months ended September 30, 2017, and $3.0 million in the corresponding period of 2016.~~

~~Financing Activities~~

In February 2017, Centrus exchanged $204.9 million principal amount of the Company’s 8% paid-in-kind (“PIK”) toggle notes (“8% PIK Toggle Notes”) for $74.3 million principal amount of 8.25% notes maturing in February 2027 (the “8.25% Notes”), 104,574 shares of Series B Preferred Stock and $27.6 million of cash. Refer to ~~Note 8, Debt~~ ~~of the condensed consolidated financial statements.~~

~~In June 2016, Centrus repurchased 8% PIK Toggle Notes having an aggregate principal balance of $26.1 million and accrued interest payable balance of $0.5 million for cash payments of $9.8 million.~~

~~Working Capital~~

September 30,
2017
December 31,
2016
(in millions)
Cash and cash equivalents $ 135.9
$ 260.7
Accounts receivable 14.2
19.9
Inventories, net 102.0
119.9
Other current assets and liabilities, net (106.2 ) (165.6 )
Working capital $ 145.9
$ 234.9

~~Capital Structure and Financial Resources~~

On February 14, 2017, pursuant to an exchange offer and consent solicitation, we exchanged $204.9 million principal amount of our 8% PIK Toggle Notes for $74.3 million principal amount of the 8.25% Notes, 104,574 shares of Series B Preferred Stock with liquidation preference of $1,000 per share, and $27.6 million of cash. Following the exchange offer, $29.6 million principal amount of 8% PIK Toggle Notes remained outstanding. The Company recognized a gain related to the note exchange of $33.6 million in the first quarter of 2017, which is net of transaction costs of $9.0 million and previously deferred issuance costs related to the 8% PIK Toggle Notes of $0.4 million.

Interest on the 8.25% Notes is payable semi-annually in arrears as of February 28 and August 31 based on a 360-day year consisting of twelve 30-day months. The 8.25% Notes are guaranteed on a subordinated and limited basis by, and secured by substantially all assets of, Enrichment Corp. Additional terms and conditions of the 8.25% Notes and the Enrichment Corp. guarantee are described in ~~Note 8, Debt~~ ~~of the condensed consolidated financial statements.~~

The principal amount of the 8% PIK Toggle Notes is increased by any payment of interest in the form of PIK payments. The Company has the option to pay up to 5.5% per annum of interest due on the 8% PIK Toggle Notes in the form of PIK payments. For the semi-annual interest periods ended March 31, 2017, and September 30, 2017, the Company elected to pay interest in the form of cash payments at 2.5% per annum and PIK payments at 5.5% per annum. The principal amount of the 8% PIK Toggle Notes was $31.3 million as of September 30, 2017. The 8%

PIK Toggle Notes are guaranteed and secured on a subordinated, conditional, and limited basis by Enrichment Corp. Enrichment Corp. will be released from its guarantee without the consent of the holders of the 8% PIK Toggle Notes upon the occurrence of certain termination events (other than with respect to an unconditional interest claim). Additional terms and conditions of the 8% PIK Toggle Notes and the Enrichment Corp. guarantee are described in ~~Note 8, Debt~~ ~~of the condensed consolidated financial statements.~~

~~Holders of the Series B Preferred Stock are entitled to cumulative dividends of 7.5% per annum of the Liquidation Preference.~~ We are obligated to pay cash dividends on our Series B Preferred Stock to the extent that: our pension plans and Enrichment Corp.’s pension plans are at least 90% funded on a variable rate premium calculation in the current plan year; our net income calculated in accordance with generally accepted accounting principles in the United States (“GAAP”) (excluding the effect of pension remeasurement) for the immediately preceding fiscal quarter exceeds $7.5 million; our free cash flow (defined as the sum of cash provided by (used in) operating activities and cash provided by (used in) investing activities) for the immediately preceding four fiscal quarters exceeds $35 million; the balance of cash and cash equivalents calculated in accordance with GAAP on the last day of the immediately preceding quarter would exceed $150 million after pro forma application of the dividend payment; and dividends may be legally paid under Delaware law. Centrus has not met these criteria for the periods from issuance through September 30, 2017, and has not declared, accrued or paid dividends on the Series B Preferred Stock as of September 30, 2017.

~~The nuclear industry in general, and the nuclear fuel industry in particular, are in a period of significant change. We are~~also actively considering and expect to consider potential strategic transactions from time to time, ~~in the future, potential strategic transactions,~~ which at any given time may be in various stages of ~~discussions,~~discussion, diligence, or ~~negotiation~~negotiation. These could involve, without limitation, acquisitions and/or dispositions of businesses or assets, joint ventures or investments in businesses, products or technologies, or changes to our capital structure. In connection with ~~respect to a number of potential acquisitions. If we pursue opportunities that require capital, we believe~~any such transaction, we would seek to satisfy these needs through a combination of working capital, cash generated from operations, or additional debt or equity financing.

The change in cash, cash equivalents and restricted cash from our Consolidated Statements of Cash Flows are as follows on a summarized basis (in millions):


	Nine Months Ended September 30,
	2023		2022
Cash used in operating activities	$	(8.8)	$	(35.1)
Cash used in investing activities	(1.1)		(0.6)
Cash provided by (used in) financing activities	13.9		(8.1)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(0.6)		—
Increase (decrease) in cash, cash equivalents and restricted cash	$	3.4	$	(43.8)

Operating Activities

For the nine months ended September 30, 2023, net cash used in operating activities was $8.8 million. The net decrease was primarily due to approximately $251.0 million of disbursements for operations, of which approximately $200.0 million relates to payments for LEU inventory deliveries and cash outflows for the Technical Solutions segment, with the remaining disbursements including corporate administration, benefits claims, and advanced technology costs. These cash outflows were partially offset by approximately $242.0 million in cash collected from customers, investment income, and reimbursements for postretirement health and life benefits paid by the Company.

In the nine months ended September 30, 2022, net cash used in operating activities was $35.1 million. The net decrease was due to an increase in payments made to suppliers of approximately $24.0 million as well as a decrease in cash collected from customers of approximately $24.0 million, which resulted from the timing of customer shipments and related contract terms. This remaining difference was primarily related to a reduction in disbursements from prior year for our Technical Solutions segment.

Investing Activities

Capital expenditures were $1.1 million and $0.6 million for the nine months ended September 30, 2023 and 2022, respectively.

Financing Activities

For the nine months ended September 30, 2023, cash of $23.2 million was provided from the net proceeds related to the issuance of 722,568 shares of Class A Common Stock under an ATM offering. For both the nine months ended September 30, 2023 and 2022, payments of $6.1 million of interest classified as debt are classified as a financing activity. Refer to Note 6, Debt, of the Consolidated Financial Statements regarding the accounting for the 8.25% Notes maturing in February 2027.

Working Capital

The following table summarizes the Company’s working capital (in millions):


	September 30, 2023		December 31, 2022
Cash and cash equivalents	$	183.3	$	179.9
Accounts receivable	9.4		38.1
Inventories, net	210.4		148.4
Current debt	(6.1)		(6.1)
Deferred revenue and advances from customers, net of deferred costs	(156.7)		(137.5)
Other current assets and liabilities, net	(45.7)		(84.9)
Working capital	$	194.6	$	137.9

We are managing our working capital to seek to improve the long-term value of our LEU ~~business~~and Technical Solutions businesses and are planning to continue funding the Company’s qualified pension plans ~~in the ordinary course~~ because we believe ~~that is~~these uses of working capital are in the best interest of all stakeholders. We expect that any other uses of working capital will be undertaken in light of these strategic priorities and will be based on the Company’s determination as to the relative strength of its operating performance and prospects, financial position, and expected liquidity requirements. In addition, we expect that any such other uses of working capital will be subject to compliance with contractual restrictions to which the Company and its subsidiaries are subject, including the terms and conditions of ~~their debt securities and credit facilities. The Company~~our 8.25% Notes. We continually ~~evaluates~~evaluate alternatives to manage our capital structure, and may opportunistically repurchase, exchange, or redeem Company securities.

Common Stock Issuance

The Company sold an aggregate of 722,568 shares of its Class A Common Stock at the market price for a total of $24.4 million during the nine months ended September 30, 2023. After expenses and commissions paid to the agents, the Company’s proceeds totaled $23.4 million. Additionally, the Company recorded direct costs of $0.2 million related to the issuance. The shares of Class A Common Stock were issued pursuant to the Company’s shelf registration statement on Form S-3 (File No. 333-239242), which became effective on August 5, 2020, and two prospectus supplements dated December 31, 2020 and December 5, 2022, respectively. The Company has used and/or intends to use the net proceeds from this offering for working capital and general corporate purposes including, but not limited to, capital expenditures, investment in technology development and deployment, repayment of indebtedness, potential acquisitions and other business opportunities. There were no sales of Class A Common Stock through the ATM offering in the nine months ended September 30, 2022.

2023 Shelf Registration

The Company filed a shelf registration statement on Form S-3 (Registration Statement No. 333-272984) with the SEC on June 28, 2023, which became effective on July 10, 2023. Pursuant to this shelf registration statement, the Company may offer and sell up to $200 million in securities, in aggregate. The Company retains broad discretion over the use of the net proceeds from ~~time~~the sale of the securities offered. Unless otherwise specified in any prospectus supplement, we currently intend to ~~time.~~use the net proceeds from the sale of our securities offered under this prospectus for working capital and general corporate purposes including, but not limited to, capital expenditures, working capital, repayment of indebtedness, potential acquisitions and other business opportunities. Pending any specific application, we may initially invest funds in short-term marketable securities or apply them to the reduction of indebtedness.

Rights Agreement

Capital Structure and Financial Resources

Interest on the 8.25% Notes is payable semi-annually in arrears as of February 28 and August 31 based on a 360-day year consisting of twelve 30-day months. The 8.25% Notes are guaranteed on a subordinated and limited basis by, and secured by substantially all assets of, Enrichment Corp. The 8.25% Notes mature on February 28, 2027. Additional terms and conditions of the 8.25% Notes are described in Note 6, Debt, of the Consolidated Financial Statements and Note 8, Debt, of the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.

Contractual Commitments

There have been no material changes to our contractual commitments from those discussed in our Annual Report on Form 10-K for the year ended December 31, 2022.

DOE Technology License

We have a non-exclusive license in DOE inventions that pertain to enriching uranium using gas centrifuge technology. The license agreement with DOE provides for annual royalty payments based on a varying percentage (1% up to 2%) of our annual revenues from sales of the SWU component of LEU produced by us using DOE centrifuge technology. There is a minimum annual royalty payment of $100,000 and the maximum cumulative royalty over the life of the license is $100 million. There is currently no commercial enrichment facility producing LEU using DOE centrifuge technology. We are continuing to advance our U.S. centrifuge technology that has evolved from DOE inventions at specialized facilities in Oak Ridge with a view to deploying a commercial enrichment facility over the long term once market conditions recover.

Off-Balance Sheet Arrangements

Other than ~~outstanding letters of credit and surety bonds,~~ our SWU purchase commitments and the license agreement with DOE relating to the American Centrifuge technology, there were no material off-balance sheet arrangements at September 30, 2023.

Critical Accounting Policies Estimates

There have been no significant changes to the critical accounting estimates disclosed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, ~~2016, there were~~2022.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There have been no material ~~off-balance sheet arrangements at September 30, 2017, or~~changes to our market risks from those discussed in our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2022.

~~New Accounting Standards Not Yet Implemented~~

~~Reference is made to~~ ~~New Accounting Standards~~ in ~~Note 1, Basis of Presentation,~~ ~~of the condensed consolidated financial statements for information on new accounting standards.~~

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Centrus maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed by Centrus in reports it files or submits under the Securities Exchange Act of 1934, as amended, (the “Exchange Act”) is recorded, processed, summarized and reported ~~on a timely basis~~in the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to management, including the Chief Executive Officer and the Chief Financial Officer, as appropriate to allow for timely decisions regarding required disclosures.

~~As previously disclosed in~~ ~~Part II, Item 9A, Controls and Procedures~~ of our Annual Report on Form 10-K for the year ended December 31, 2016, management identified a material weakness in the Company’s internal control over financial reporting. Because of this material weakness, our Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were not effective as of December 31, 2016.

As of September 30, ~~2017,~~2023, the end of the period covered by this ~~report,~~Quarterly Report, our management performed an evaluation, under the supervision and with the participation of the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the ~~Securities~~ Exchange Act). Based on this evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that the Company’s disclosure controls and procedures were ~~not effective due to the previously identified material weakness in internal control over financial reporting, which continued to exist as of September 30, 2017.~~effective.

Notwithstanding the material weakness described below, our management concluded that the condensed consolidated financial statements included in this report fairly present, in all material respects, our financial position, results of operations and cash flows as of the dates, and for the periods presented, in accordance with GAAP.

~~Efforts to Address Material Weakness~~

The Company has made, and expects to continue to make, progress in improving internal control over accounting for our D&D obligation. Management has enhanced its review process of D&D costs incurred and projected costs remaining to complete the D&D work and has formalized applicable procedures as remedial controls and has begun related controls testing. The material weakness will not be considered remediated until the remedial controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively. We expect that the remediation of this material weakness will be completed by the end of 2017.

Changes in Internal Control Over Financial Reporting

During the quarter ended September 30, 2017, the Company implemented a new enterprise resource planning (ERP) system in which a significant portion of our business transactions originate and are processed and recorded. The implementation included the outsourcing of payroll functions. As a result of the ERP system implementation, we modified certain existing controls as well as implemented new controls to adapt to changes in our processes. We concluded, as part of our evaluation described in the above paragraphs, that the implementation of the ERP system has not materially affected our internal control over financial reporting. Other than the ERP system implementation and steps taken to work towards the remediation of the material weakness identified above, thereThere were no changes in our internal control over financial reporting during the quarter ended September 30, ~~2017,~~2023, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II

Item 1. Legal Proceedings

~~There have been no material changes~~Refer to ~~the~~Note 12, Commitments and Contingencies — Legal ~~Proceedings set forth under~~Matters, of our Consolidated Financial Statements in Part I ~~Item 3,~~ ~~Legal Proceedings,~~ ~~in our Annual Report on Form 10-K for the year ended December 31, 2016.~~of this Quarterly Report.

Centrus is subject to various legal proceedings and claims, either asserted or unasserted, which arise in the ordinary course of business. While the outcome of these claims cannot be predicted with certainty, we do not believe that the outcome of any of these legal matters, individually and in the aggregate, will have a material adverse effect on our cash flows, results of operations or consolidated financial condition.

Item 1A. Risk Factors

There have been no material changes to the Risk Factors described in Part I, Item 1A, Risk Factors, in our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2022.

Item 5. Other Information

None of our directors or executive officers adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement (as defined in Item 408(c) of Regulation S-K) during the period covered by this Quarterly Report.

Item 6. Exhibits


Exhibit No.			Description
10.1			Modification 4 to Agreement, dated September 28, 2023, by and between American Centrifuge Operating, LLC and the U.S. Department of Energy. (a)

~~31.1~~10.2			Modification 5 to Agreement, dated October 1 9 , 2023, by and between American Centrifuge Operating, LLC and the U.S. Department of Energy. (a)

10.3			Letter agreement, dated April 28, 2023, by and between Joint Stock Company “TENEX” and United States Enrichment Corporation (certain information has been omitted because the identified confidential portions (i) are not material and (ii) would be competitively harmful if publicly disclosed). (a)



31.1			Certification of the Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) ~~under the Securities Exchange Act of 1934, as amended.~~. (a)

31.2			Certification of the Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) ~~under the Securities Exchange Act of 1934, as amended~~. (a).

32.1			Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350. (a)

101			~~Condensed consolidated financial statements~~Unaudited Consolidated Financial Statements from the Quarterly Report on Form 10-Q for the quarter ended September 30, ~~2017,~~2023, filed in interactive data file ~~(XBRL) format.~~(formatted as Inline XBRL).

104			Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

(a)Filed herewith.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



				Centrus Energy Corp.

November 8, 2023					/s/ Kevin J. Harrill
~~Date:~~		~~November 14, 2017~~	~~By:~~	~~/s/ Stephen S. Greene~~	Kevin J. Harrill
				~~Stephen S. Greene~~
	Senior Vice President, Chief Financial Officer, and Treasurer
			(Duly Authorized Officer and Principal Financial Officer)



Delaware			52-2107911
(State of incorporation)			(I.R.S. Employer Identification No.)


Title of Each Class	Trading Symbol	Name of Each Exchange on Which Registered
Class A Common Stock, par value $0.10 per share	LEU	NYSE American

		~~Page~~
				Page
			PART I – FINANCIAL INFORMATION

Item 1.			Financial Statements (Unaudited):
			~~Condensed~~ Consolidated Balance Sheets at September 30, ~~2017~~2023 and December 31, ~~2016~~2022	49
			~~Condensed~~ Consolidated Statements of Operations and Comprehensive Income for the Three and Nine Months Ended September 30, ~~2017~~2023 and ~~2016~~2022	510
			~~Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Nine Months Ended September 30, 2017 and 2016~~	6
	~~Condensed~~ Consolidated Statements of Cash Flows for the Nine Months Ended September 30, ~~2017~~2023 and ~~2016~~2022	711
			~~Condensed~~ Consolidated Statements of Stockholders’ Deficit for the Three and Nine Months Ended ~~September~~Sept ember 30, ~~2017~~2023 and ~~2016~~2022	812
			Notes to ~~Condensed~~ Consolidated Financial Statements	914
Item 2.			Management's Discussion and Analysis of Financial Condition and Results of Operations	2529
	~~Liquidity and Capital Resources~~	35
Item 4.3.			Quantitative and Qualitative Disclosures About Market Risk	51
Item 4.			Controls and Procedures	3951

			PART II – OTHER INFORMATION
Item 1.			Legal Proceedings	~~Legal Proceedings~~52
Item 1A.			Risk Factors	4052
Item ~~1A.~~5.			~~Risk Factors~~Other Information	4052
Item 6.			Exhibits	~~Exhibits~~53	40
Signatures				4154


Centrus Energy Corp. and Related Entities
Board			Centrus Energy Corp.’s Board of Directors
Centrus			Centrus Energy Corp.
Enrichment Corp.			United States Enrichment Corporation
Oak Ridge			Technology and Manufacturing Center in Oak Ridge, Tennessee
Paducah GDP			Paducah Gaseous Diffusion Plant, an enrichment plant in Paducah, Kentucky formerly operated by Enrichment Corp.
Piketon			Centrifuge production facility in Piketon, Ohio
Portsmouth GDP			Portsmouth Gaseous Diffusion Plant, an enrichment plant near Portsmouth, Ohio, formerly operated by Enrichment Corp.
USEC-Government			Enrichment Corp. prior to July 28, 1998, when it was a wholly-owned government corporation

Other Terms and Abbreviations
2002 DOE-USEC Agreement			June 17, 2002 agreement between Centrus (then known as USEC Inc.) and the DOE
8.25% Notes			8.25% Notes maturing February 2027
Annual Meeting			The Company’s annual meeting of shareholders
ARDP			DOE’s Advanced Reactor Demonstration Program
ATM			At-the-Market
Class A Common Stock			Centrus’ Class A common stock, $0.10 par value per share
Class B Common Stock			Centrus’ Class B common stock, $0.10 par value per share
Common Stock			Class A Common Stock and Class B Common Stock
D&D			Decontamination & Decommissioning
DOC			U.S. Department of Commerce
DOE			U.S. Department of Energy
EIA			U.S. Energy Information Administration
EU			European Union
Exchange Act			Securities Exchange Act of 1934, as amended
Exchange Agreement			Exchange Agreement entered into by the Company and Kulayba LLC, dated February 2, 2021
GAAP			Generally Accepted Accounting Principles in the United States
HALEU			High Assay Low-Enriched Uranium
HALEU Demonstration Contract			Three-year, $115 million cost-share contract with DOE signed in 2019 by Centrus’ subsidiary, American Centrifuge Operating, LLC, and concluded in November 2022
HALEU Operation Contract			HALEU production contract with DOE signed in 2022
IEA			International Energy Agency
IRC			Internal Revenue Code of 1986
IT			Information Technology
ITC			U.S. International Trade Commission
LEU			Low-Enriched Uranium; term is also used to refer to the Centrus Energy Corp. business segment which supplies commercial customers with various components of nuclear fuel
MB Group			Mr. Morris Bawabeh, Kulayba LLC and M&D Bawabeh Foundation, Inc.
Natural Uranium Hexafluoride			UF6 component of LEU; Unenriched uranium hexafluoride used as feed material to produce HALEU
NOL			Net Operating Loss


NRC			U.S. Nuclear Regulatory Commission
NUBIL			Net unrealized built-in loss
Orano			Orano Cycle
Orano Supply Agreement			Long-term supply of SWU contained in LEU, signed by United States Enrichment Corporation with Orano in 2018
Order Book			LEU Segment order book of sales under contract
Power MOU			Memorandum of understanding between the DOE and USEC-Government
Price-Anderson Act			Price-Anderson Nuclear Industries Indemnity Act (Section 170 of the U.S. Atomic Energy Act of 1954, as amended)
Rights Agreement			Section 382 Rights Agreement, dated as of April 6, 2016, by and among the Company and Computershare Trust Company, N.A. and Computershare Inc., as rights agent
RSA			1992 Russian Suspension Agreement, as amended
SARs			Stock appreciation rights
SEC			U.S. Securities & Exchange Commission
SWU			Separative work unit
Technical Solutions			The Centrus Energy Corp. business segment which offers technical, manufacturing, engineering, procurement, construction, and operations services to public and private sector customers, i.e. ACO
TENEX			Russian government-owned entity TENEX, Joint-Stock Company
TENEX Supply Contract			Long-term supply of SWU contained in LEU, signed by United States Enrichment Corporation with TENEX in 2011
TRISO			Tri-Structural Isotropic fuel
U235			Uranium-235 isotope
UF6			Uranium hexafluoride
Voting Agreement Amendment			The Company’s amendment to its existing Voting and Nomination Agreement with the MB Group
Voting Rights Agreement			The Company’s agreement with the MB Group entered into in December 2022
Warrant			Warrant to purchase common stock of Centrus Energy Corp., held by Kulayba LLC and dated February 2, 2021
New Warrant			Amended Warrant to extend the terms of the Warrant held by Kulayba LLC
WNA			World Nuclear Association



ý☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



o☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



	September 30, 2017			December 31, 2016
ASSETS
Current assets
Cash and cash equivalents	$	135.9		$	260.7
Accounts receivable	14.2			19.9
Inventories	124.1			177.4
Deferred costs associated with deferred revenue	94.5			89.3
Other current assets	15.6			13.3
Total current assets	384.3			560.6
Property, plant and equipment, net	5.2			6.0
Deposits for surety bonds	29.6			29.5
Intangible assets, net	87.6			93.3
Other long-term assets	15.2			24.1
Total assets	$	521.9		$	713.5

LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities
Accounts payable and accrued liabilities	$	50.7		$	46.4
Payables under SWU purchase agreements	17.3			59.6
Inventories owed to customers and suppliers	22.1			57.5
Deferred revenue	131.7			123.6
Decontamination and decommissioning obligations	16.6			38.6
Total current liabilities	238.4			325.7
Long-term debt	157.5			234.1
Postretirement health and life benefit obligations	170.0			171.3
Pension benefit liabilities	175.0			179.9
Other long-term liabilities	35.6			38.6
Total liabilities	776.5			949.6
Commitments and contingencies (Note 12)
Stockholders’ deficit
Preferred stock, par value $1.00 per share, 20,000,000 shares authorized
Series A Participating Cumulative Preferred Stock, none issued	—			—
Series B Senior Preferred Stock, 7.5% cumulative, 104,574 shares issued and outstanding and an aggregate liquidation preference of $109.6 million as of September 30, 2017	4.6			—
Class A Common Stock, par value $0.10 per share, 70,000,000 shares authorized, 7,632,669 and 7,563,600 shares issued and outstanding as of September 30, 2017 and December 31, 2016	0.8			0.8
Class B Common Stock, par value $0.10 per share, 30,000,000 shares authorized, 1,406,082 and 1,436,400 shares issued and outstanding as of September 30, 2017 and December 31, 2016	0.1			0.1
Excess of capital over par value	59.8			59.5
Accumulated deficit	(320.0		)	(296.7		)
Accumulated other comprehensive income, net of tax	0.1			0.2
Total stockholders’ deficit	(254.6		)	(236.1		)
Total liabilities and stockholders’ deficit	$	521.9		$	713.5



	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
Revenue:
Separative work units	$	43.5		$	14.1		$	82.2		$	128.3
Uranium	—			—			—			14.3
Contract services	6.8			7.3			19.3			32.2
Total revenue	50.3			21.4			101.5			174.8
Cost of Sales:
Separative work units and uranium	32.4			15.9			76.8			130.7
Contract services	6.3			7.6			19.9			24.9
Total cost of sales	38.7			23.5			96.7			155.6
Gross profit (loss)	11.6			(2.1		)	4.8			19.2
Advanced technology license and decommissioning costs	4.5			21.9			15.0			38.6
Selling, general and administrative	11.0			10.7			33.1			34.6
Amortization of intangible assets	2.5			1.7			5.7			7.6
Special charges for workforce reductions and advisory costs	2.4			0.6			7.1			1.2
Gains on sales of assets	(0.6		)	(0.3		)	(2.3		)	(1.0		)
Operating loss	(8.2		)	(36.7		)	(53.8		)	(61.8		)
Gain on early extinguishment of debt	—			—			(33.6		)	(16.7		)
Interest expense	0.7			4.7			4.3			14.8
Investment income	(0.4		)	(0.1		)	(1.0		)	(0.5		)
Loss before income taxes	(8.5		)	(41.3		)	(23.5		)	(59.4		)
Income tax benefit	—			—			(0.2		)	(0.6		)
Net loss	(8.5		)	(41.3		)	(23.3		)	(58.8		)
Preferred stock dividends - undeclared and cumulative	2.0			—			5.0			—
Net loss allocable to common stockholders	$	(10.5	)	$	(41.3	)	$	(28.3	)	$	(58.8	)

Net loss per common share – basic and diluted	$	(1.15	)	$	(4.54	)	$	(3.12	)	$	(6.46	)
Average number of common shares outstanding – basic and diluted (in thousands)	9,103			9,096			9,081			9,102



	Preferred Stock, Series B		Common Stock, Class A, Par Value $.10 per Share		Common Stock, Class B, Par Value $.10 per Share		Excess of Capital Over Par Value		Accumulated Deficit			Accumulated Other Comprehensive Income			Total

Balance at December 31, 2015	$	—	$	0.8	$	0.1	$	59.0	$	(229.7	)	$	4.1		$	(165.7	)
Net loss	—		—		—		—		(58.8		)	—			(58.8		)
Other comprehensive loss, net of tax benefit (Note 13)	—		—		—		—		—			(0.2		)	(0.2		)
Restricted stock units and stock options issued, net of amortization	—		—		—		0.4		—			—			0.4
Balance at September 30, 2016	$	—	$	0.8	$	0.1	$	59.4	$	(288.5	)	$	3.9		$	(224.3	)

Balance at December 31, 2016	$	—	$	0.8	$	0.1	$	59.5	$	(296.7	)	$	0.2		$	(236.1	)
Net loss	—		—		—		—		(23.3		)	—			(23.3		)
Issuance of preferred stock	4.6		—		—		—		—			—			4.6
Other comprehensive loss, net of tax benefit (Note 13)	—		—		—		—		—			(0.1		)	(0.1		)
Restricted stock units and stock options issued, net of amortization	—		—		—		0.3		—			—			0.3
Balance at September 30, 2017	$	4.6	$	0.8	$	0.1	$	59.8	$	(320.0	)	$	0.1		$	(254.6	)



	Liability December 31, 2016		Nine Months Ended September 30, 2017					Liability September 30, 2017
	Liability December 31, 2016		Charges for Termination Benefits		Paid/ Settled			Liability September 30, 2017
Workforce reductions:
Evolving business needs	$	0.1	$	2.2	$	(0.9	)	$	1.4
Piketon demonstration facility	5.4		0.1		(0.6		)	4.9
	$	5.5	$	2.3	$	(1.5	)	$	6.3



	Preferred Stock, Series B	Common Stock, Class A	Common Stock, Class B

Balance at December 31, 2015	—	7,563,600	1,436,400
Balance at September 30, 2016	—	7,563,600	1,436,400

Balance at December 31, 2016	—	7,563,600	1,436,400
Issuance of Preferred Stock	104,574	—	—
Issuance of Class A Common Stock	—	38,751	—
Conversion of Common Stock from Class B to Class A	—	30,318	(30,318	)
Balance at September 30, 2017	104,574	7,632,669	1,406,082



(in millions)	Deferred Revenue			Deferred Cost			Gross Profit Deferred or (Recognized)			Margin

Balance at December 31, 2016	$	123.6		$	89.3		$	34.3		28%
Deferred sales in the period	66.4			44.9			21.5			32%
Previously deferred sales recognized in the period	(58.3		)	(39.7		)	(18.6		)	32%
Balance at September 30, 2017	$	131.7		$	94.5		$	37.2		28%