CENTRUS ENERGY CORP Management’s Discussion and Analysis of Financial Condition and Results of Operations (Form 10-Q)

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The following discussion should be read in conjunction with, and is qualified in
its entirety by reference to, the 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
COVID -19 pandemic, including emerging variants, and 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," the "Company", "we" or
"us"), is a trusted supplier of nuclear fuel components and services for the
nuclear power 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 indicates otherwise.

Centrus operates two business segments: (a) low-enriched uranium ("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 provides most of the Company's revenue and involves the sale of
enriched uranium, the fissile component of nuclear fuel to customers, which are
primarily utilities that operate commercial nuclear power plants. The majority
of these sales are for the enrichment component of LEU, which is measured in
separative work units ("SWU"). Centrus also sells natural uranium (the raw
material needed to produce LEU) and occasionally sells LEU with the natural
uranium, uranium conversion, 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 provide LEU
from multiple sources, including our inventory, medium and long-term supply
contracts, and spot purchases. As a long-term supplier of LEU to our customers,
our objective is to provide value through the reliability and diversity of our
supply sources.

Our global order book includes spot, medium and long-term sales contracts with
major utilities and other customers to 2029. We have secured cost-competitive
supplies of SWU under medium and long-term contracts through the end of this
decade to help us to fill our existing customer orders and make new sales. A
market-related price reset provision in our largest supply contract took effect
at the beginning of 2019, when market prices for SWU were near historic lows,
which has significantly lowered our cost of sales and contributed to improved
margins.

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 steady rise, reaching $56 per SWU by December 31,
2021. In 2022, spot prices have risen substantially, reaching $87 per SWU by
June 30, 2022. This represents an increase of 55% since the beginning of the
year and 156% over the 2018 historic low. This sudden surge in the SWU spot
price 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 secure
and carbon-free energy.

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/or export
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controls against certain Russian organizations and/or individuals. While
sanctions imposed to date do not preclude imports of Russian uranium products,
it is possible that additional restrictions could arise in the future that would
affect our ability to purchase and re-sell Russian uranium enrichment, which
could have a negative material impact on our business. Further, sanctions could
be imposed that may impact our ability to transport, import, take delivery or
make payments related to the LEU we purchase.

Even if sanctions or other restrictions are not imposed, the current events in
Ukraine could impact our ability to make future sales. For example, customers
may be unwilling to accept material we purchase from TENEX. Further, since a
portion of the price paid under the supply contract is based on commodity
indices, the recent increases in market prices, as a result of the war in
Ukraine, will have a corresponding impact on our cost of sales.

When Russian supply is included, the uranium enrichment segment of the nuclear
fuel market is oversupplied, but without Russian supply, the global market would
be undersupplied for uranium enrichment. Changes in the supply-demand balance
and in the competitive landscape arising from the war in Ukraine may affect
pricing trends, change customer spending patterns, and create uncertainty in the
uranium market. To address these changes, we will continue to evaluate
opportunities to grow our business organically or through acquisitions and other
strategic transactions.

Our technical solutions segment is deploying uranium enrichment and other
capabilities necessary for production of advanced nuclear fuel to meet the
evolving needs of the global nuclear industry and the U.S. government, while
also leveraging our unique technical expertise, operational experience and
specialized facilities to expand and diversify our business beyond uranium
enrichment, offering new services to existing and new customers in complementary
markets.

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 security, 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.

The United States has not had a domestic uranium enrichment capability suitable
to meet ongoing and enduring U.S. national security requirements since the
Paducah Gaseous Diffusion Plant ("Paducah GDP") shut down in 2013. Longstanding
U.S. policy and binding nonproliferation agreements prohibit the use of
foreign-origin enrichment technology for certain U.S. national security
missions. Our AC100M centrifuge currently is the only deployment-ready U.S.
uranium enrichment technology in the United States that can meet these national
security requirements.

Centrus is working to pioneer U.S. production of high-assay, low-enriched
uranium ("HALEU"), enabling the deployment of a new generation of HALEU-fueled
reactors to meet the world's growing need for carbon-free power. HALEU is a
high-performance nuclear fuel component that is expected to be required by a
number of advanced reactor and fuel designs, which are now under development for
commercial and government uses. While existing reactors typically operate on LEU
with the uranium-235 isotope concentration below 5%, HALEU is further enriched
so that the uranium-235 concentration is between 5% and 20%. The higher U-235
concentration offers a number of potential advantages, which may include better
fuel utilization, improved performance, fewer refueling outages, simpler reactor
designs, reduced waste volumes, and greater nonproliferation resistance.

The lack of a domestic HALEU supply is widely viewed as a major obstacle to the
successful commercialization of these new reactors. For example, in surveys
conducted by the U.S. Nuclear Industry Council in 2021 and 2020, advanced
reactor developers indicated that the number one issue that "keeps you up at
night" was access to HALEU. As the only company with a license from the Nuclear
Regulatory Commission ("NRC") to enrich up to 20% uranium-235 assay HALEU,
Centrus is uniquely positioned to fill a critical gap in the supply chain and
facilitate the deployment of these promising next-generation reactors.

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Under a three-year cost-share contract with DOE that began in 2019 (the "HALEU
Contract"), Centrus has been constructing a cascade of sixteen AC100M
centrifuges in Piketon, Ohio to demonstrate HALEU production. The Company's goal
is to complete the demonstration and scale up production of HALEU and LEU,
meeting the needs of new and existing reactors as well as national security and
other U.S. government requirements for enriched uranium.

The demonstration contract was originally set to expire on June 1, 2022.
However, the DOE experienced a COVID -19 related supply chain delay in obtaining
the HALEU storage cylinders it was supposed to provide under the contract. Since
it is not possible to begin HALEU production without the storage cylinders, it
was not possible to complete the operational portion of the HALEU demonstration
under the existing HALEU Contract. The HALEU Contract has been extended to
November 30, 2022, with authorization to work through August 31, 2022. Also, the
DOE elected to change the scope of the HALEU Contract and move the operational
portion of the demonstration to a new, competitively-awarded contract that would
provide for operations beyond the term of the existing HALEU Contract.

On June 28, 2022, the DOE released a request for proposals ("RFP") for the
completion and operation of the demonstration cascade. The RFP provides for a
50/50 cost share contract for the initial phase of the base contract to complete
the cascade and begin operations. The RFP envisions a second phase of the base
contract under a cost-plus-incentive-fee arrangement. Finally, the RFP includes
options to 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
award of a contract and the exercise of any options is subject to appropriation.
If a contract is awarded to the Company under the terms proposed by DOE in the
RFP, the cost share could have a material impact on the Company's liquidity
during the initial phase of the base contract although the degree of impact
cannot be estimated at this time. DOE has continued to fund the existing HALEU
contract and has incrementally increased funds with total funding to date of
$154.0 million.

Additional COVID -19-related impacts, delays in DOE's furnishing equipment, or
additional changes to the existing scope of the HALEU Contract could result in
further material increases to our estimate of the costs required to complete the
existing HALEU Contract, as well as delay completion of the contract. The
Company currently does not have a contractual obligation to perform work in
excess of the funding provided by DOE and, therefore, no additional loss has
been accrued as of June 30, 2022. If the DOE does not commit to additional
costs, above the existing funding, we may incur costs or losses in future
periods that, if material, could have an adverse impact on our financial
condition and liquidity.

The war in Ukraine has contributed to a significant increase in market prices
for enrichment and 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 offtake
commitments.

We believe our investments in our enrichment technology and the HALEU
demonstration 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. At present, there are a number of advanced reactors under
development that would use HALEU fuel. For example, of the ten advanced reactor
designs selected by the DOE for its Advanced Reactor Demonstration Program, nine
will require HALEU. In addition, the first non-light water reactor to have begun
active NRC-license review requires HALEU. The U.S. Department of Defense
recently awarded a contract to construct a prototype HALEU-fueled mobile
microreactor in the next three to four years as part of a program called
"Project Pele." The U.S. Air Force also announced plans to deploy a microreactor
at Eielson Air Force Base in Alaska that uses HALEU fuel. While the use of HALEU
is not an express requirement of the Air Force program, the vast majority of
microreactor designs are expected to need HALEU. In addition, the Defense
Advanced Research Projects Agency ("DARPA") is funding an effort called
Demonstration Rocket for Agile Cislunar Operations ("DRACO"), which aims to
demonstrate a HALEU-fueled nuclear thermal propulsion system that could
eventually support missions to the moon and Mars.
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Advanced nuclear reactors promise to provide an important source of reliable
carbon-free power. By investing in HALEU technology now, and as the only
American-based company with an NRC license currently pursuing HALEU enrichment
capability, we believe the Company is well positioned to capitalize on a
potential new market as the demand for HALEU-based fuels is expected to increase
in the mid- to late-2020s with the development of advanced reactors. However,
there are no guarantees about whether or when government or commercial demand
for HALEU will materialize, and there are a number of technical, regulatory, and
economic hurdles that must be overcome for these fuels and reactors to come to
the market. Also, foreign government-owned, government-operated, and other new
competitors could seek to enter the market and offer HALEU at competitive
prices. There is one known foreign government-owned source which currently has
the capability to produce HALEU, although this source is currently subject to
trade restrictions that limit the amount of material from this source which may
be imported into the United States with more restrictions potentially under
consideration. Other foreign government-owned entities that are not currently
subject to U.S. trade restrictions, however, may enter the market. One such
foreign-government owned entity has expressed an interest in and potential
capability for HALEU production but has not committed publicly to enter the
market to enrich above 10% uranium-235 enrichment assays. This entity has
indicated publicly that it would take six to seven years to be able to produce
HALEU.

We are also actively considering and expect to consider 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 or changes to
our capital structure. In connection with any such transaction, we may seek
additional debt or equity financing, contribute or dispose of assets, assume
additional indebtedness, or partner with other parties to consummate a
transaction.

COVID-19 Update

The Company has taken actions to protect its workforce and to maintain critical
operations during the COVID -19 pandemic. Travel, operational, and other
restrictions imposed by the U.S. and foreign governments may impact our ability
to make future sales and may impact the ability of our suppliers, including our
suppliers of low enriched uranium, to perform under their contracts. As of the
date of this filing, our LEU segment operations have not been materially
affected by the COVID -19 pandemic and we continue to work with our suppliers,
fabricators, and customers to monitor the situation closely, including with
respect to the impact of emerging variants. However, over the course of the
HALEU Contract, our technical solutions segment has been impacted by supply
chain disruptions and increased costs as a result of the pandemic.

Further, the governments of states and counties in which we operate have from
time to time issued orders imposing various restrictions, including prohibiting
holding gatherings and closing nonessential businesses. Some of these
restrictions remain in place and we continue to monitor and adjust as necessary.
The Company has issued a policy requiring vaccinations subject to medical,
religious, and other exemptions as required by law. In some cases, state laws or
collective bargaining agreements preclude us from fully implementing our
vaccination policy. The Company has also continued other measures designed to
protect its workforce such as expanded telework to protect its workforce, to
comply with government orders, and to maintain critical operations. We are
working closely with DOE and we are continuing to make progress while
implementing measures designed to protect our workforce. Further, the actions
taken by our suppliers and government regulatory agencies to protect their
workforces may impact our ability to obtain the necessary supplies and
governmental reviews and approvals to timely complete the HALEU project. We are
experiencing delays by our suppliers and increased costs from them as a result
of the impact of the COVID -19.

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, 2021, as updated by Part II,
Item 1A, Risk Factors, in this Quarterly Report on Form 10-Q.

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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 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 World Nuclear Association, as of June 2022, there were 55
reactors under construction worldwide, about a third of which are in China. The
United States, with 92 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 the United States, the industry has
been under pressure from lower cost natural gas resources, until recently as gas
prices have been rising, and the expansion of subsidized renewable energy.
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, there are active
efforts to develop, demonstrate, and deploy next generation reactors in the
United States, many of which are expected to require HALEU.

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. While ten reactors in Japan have restarted and more are
expected to restart, supply and demand dynamics for nuclear fuel continue to be
impacted. Due to the war in Ukraine, the European Union 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 U.S. Department of Commerce reached an agreement with the
Russian Federation on an extension of the 1992 Russian Suspension Agreement, 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
long-term supply (purchase) agreement (the "TENEX Supply Contract") with the
Russian government entity, TENEX, Joint-Stock Company ("TENEX"). This outcome
allowed for sufficient quota for Centrus to continue serving its utility
customers.

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 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, 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.

In response to the war in Ukraine, there have been proposals in U.S. Congress
and elsewhere to ban imports of uranium that could affect our ability to import
LEU in one or more years under the Russian Suspension Agreement but none of
these have been adopted as of the date of this filing.

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 and other services 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.

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Operating results

Our revenues, operating results, and cash flows can fluctuate significantly from
quarter to quarter and year to year. Our sales 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 2022-2027. Operating
results for the three and six months ended June 30, 2022, are not necessarily
indicative of the results that may be expected for the year ending December 31,
2022.

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 2022. Please see Forward Looking Statements at the beginning
of this Quarterly Report on Form 10-Q.

Our order book of sales under contract in the LEU segment extends to 2029. As of
June 30, 2022 and December 31, 2021, 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 June 30, 2022, whereby
customers have made advance payments to be applied against future deliveries. We
estimate that approximately 2% of our order book is at risk related to customer
operations. These medium and long-term contracts are subject to significant
risks and uncertainties, including existing import laws and restrictions under
current contracts such as, the Russian Suspension Agreement, 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 sanctions and other restrictions on trade with Russia or in
dealings with Russian persons and entities, in response to the evolving
situation regarding the war in Ukraine.

Our future operating results are subject to uncertainties that could positively or negatively affect results. Factors that could affect our results include 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 possibility of sanctions and other measures affecting the purchases of SWUs or uranium or of goods or services necessary to purchase these SWUs or uranium;

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

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

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

•Costs, future funding and demand for HALEU;

• Financial market conditions and other factors that may affect pension and employee benefit liabilities and the value of related assets;

•The outcome of legal proceedings and other contingencies;

•Potential use of cash for strategic or financial initiatives;

•Actions taken by customers, including actions that may affect existing contracts;

• Market, international trade and other conditions affecting Centrus’ customers and industry; and

•The duration and severity of the COVID -19 pandemic and its impact on our operations.

For further discussion of these uncertainties, refer to Part I, Item 1A, Risk
Factors, in our Annual Report on Form 10-K for the year ended December 31, 2021,
as updated by Part II, Item 1A, Risk Factors, in this Quarterly Report on Form
10-Q.
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Revenue

We have two segments to present: the LEU segment and the technical solutions segment.

Revenues from our LEU segment are primarily derived from the following:

• sales of the SWU component of LEU,

•sales of natural uranium, and

•sales of enriched uranium products which include both the natural uranium 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 Contract and a variety of other contracts with public and private sector
customers.

SWU and Uranium Sales

Revenue from our LEU segment accounted for approximately 86% and 77% of our
total revenue for the three and six months ended June 30, 2022, respectively.
The majority of our customers are domestic and international utilities that
operate nuclear power plants, with international sales constituting
approximately 50% of revenue from our LEU segment since 2020. 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 from us. Contracts where we sell both the
SWU and natural uranium component of LEU to utilities or where we sell natural
uranium to utilities and other nuclear fuel related companies are generally
shorter-term, fixed-commitment contracts.

Revenue is recognized at the time LEU or uranium is delivered under the terms of
our contracts. The timing of customer deliveries is affected by, among other
things, electricity markets, reactor operations, maintenance and refueling
outages, and customer inventories. Based on customers' individual needs, some
customers are building inventories and may choose to take deliveries under
annual purchase obligations later in the year or in subsequent years. Customer
payments for the SWU component of LEU averaged approximately $6.5 million per
order in the six months ended June 30, 2022. As a result, a relatively small
change in the timing of customer orders for LEU may cause significant
variability in our operating results year over year.

Utility customers, in general, have the option to make payment but defer receipt
of SWU and uranium products purchased from Centrus beyond the contractual sale
period, resulting in the deferral of costs and revenue recognition. Refer to
Note 2, Revenue and Contracts with Customers, in the Consolidated Financial
Statements for further details.

Our financial performance over time can be affected significantly by changes in
prices for SWU and natural uranium. Market prices for SWU and uranium
significantly 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 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 newer sales reflect the low prices prevalent in recent years,
certain older contracts included in our order book have sales prices that 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. Without Russian
supply it is estimated that demand for enrichment for reactors outside of Russia
would far exceed supply, which potentially threatens the viability of
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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 or government sources to come on
line.

The following chart summarizes long-term and spot SWU price indicators, and a
spot price indicator for natural uranium hexafluoride ("UF6"), as published by
TradeTech, LLC in Nuclear Market Review:

SWU and Uranium Market Price Indicators*[[Image Removed: leu-20220630_g1.jpg]]

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

Our contracts with customers are denominated primarily in U.S. dollars, and
although revenue has not been materially affected by changes in the foreign
exchange rate of the U.S. dollar, we may have a competitive price advantage or
disadvantage obtaining new contracts in a competitive bidding process depending
upon the weakness or strength of the U.S. dollar. On occasion, we will accept
payment in euros for spot sales that may be subject to short-term 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, nominally commencing in 2023, with prices payable in a
combination of U.S. dollars and euros, but with a contract-defined exchange
rate.

On occasion, we will accept payment for SWU in the form of natural uranium.
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 at contract
inception, or as the quantity of natural uranium is finalized, if variable.

The cost of SWU and natural uranium sales is based on the quantity of SWU and natural uranium sold and delivered during the period and on unit storage costs. Inventory unit costs are determined using the average cost

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method. Changes in purchase costs have an effect on inventory costs and cost of
sales. Cost of sales includes costs for inventory management at off-site
licensed locations. Cost of sales also includes certain legacy costs related to
former employees of the Portsmouth GDP and Paducah GDP.

Technical solutions

Our technical solutions segment reflects our technical, manufacturing,
engineering, and operations services offered to public and private sector
customers, including the American Centrifuge engineering, procurement,
construction, manufacturing, and operations services being performed under the
HALEU Contract. With our government and private sector customers, we seek to
leverage our domestic enrichment technology and experience, engineering
know-how, and precision manufacturing facility to assist customers with a 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 invest in advanced technology because of the
potential for future growth into new areas of business for the Company, while
also preserving our unique workforce at our Technology and Manufacturing Center
in Oak Ridge, Tennessee, and our production facility near Piketon, Ohio.

Public markets

On October 31, 2019, we signed the three-year cost-share HALEU Contract with DOE
to deploy a cascade of centrifuges to demonstrate production of HALEU for
advanced reactors. The three-year program has been under way since May 31, 2019,
when the Company and DOE signed an interim HALEU letter agreement that allowed
work to begin while the full contract was being finalized. The Company entered
into this cost-share contract with DOE as a critical first step on the road back
to the commercial production of enriched uranium, which the Company had
terminated in 2013 with the closure of the Paducah GDP. The existing HALEU
Contract was originally expected to result in the Company having constructed
centrifuges using the AC100M technology and enable the systems to enrich uranium
to the 20% concentration in the uranium-235 isotope that is required by many of
the advanced reactor concepts now under development. Centrus is the only company
with an NRC license to enrich HALEU.

Commercial contracting

Since March of 2018, Centrus has provided design, technical, and resource
support for X-energy related to its Tri-Structural Isotropic ("TRISO") fuel
manufacturing process. Currently, work is being performed under a services
agreement with X-energy signed in August 2021 to provide services for detailed
design of the TRISO fuel fabrication facility and various support services for
establishing their TRISO Research and Development Center. X-energy is funded
under the current DOE cooperative agreement titled Advanced Reactor
Demonstration Program ("ARDP"). At our discretion, the task orders under the new
agreement may include in-kind contributions that we are not currently, but, may
provide in the future.

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Operating results

Segment information

The following tables present the items in the accompanying Consolidated Statements of Income and Comprehensive Income that are classified by segment (amounts in millions of dollars):

Three Months Ended June 30, 2022 Compared with Three Months Ended June 30, 2021

                                                Three Months Ended June 30,
                                                  2022                  2021              $ Change              % Change
LEU segment
Revenue:
SWU revenue                                $          85.5          $     45.2          $     40.3                      89  %
Uranium revenue                                          -                   -                   -                        n/a
Total                                                 85.5                45.2                40.3                      89  %
Cost of sales                                         26.1                27.0                (0.9)                     (3) %
Gross profit                               $          59.4          $     18.2          $     41.2                     226  %

Technical solutions segment
Revenue                                    $          13.6          $     17.2          $     (3.6)                    (21) %
Cost of sales                                         12.1                18.3                (6.2)                    (34) %
Gross profit (loss)                        $           1.5          $     (1.1)         $      2.6                     236  %

Total
Revenue                                    $          99.1          $     62.4          $     36.7                      59  %
Cost of sales                                         38.2                45.3                (7.1)                    (16) %
Gross profit                               $          60.9          $     17.1          $     43.8                     256  %



Revenue

Revenue from the LEU segment was $85.5 million and $45.2 million in the three
months ended June 30, 2022 and 2021, respectively, an increase of $40.3 million
(or 89%). The increase is due to a 136% increase in the average price of SWU,
partially offset by a 20% decrease in the volume of SWU sold for the three
months ended June 30, 2022, largely due to the variability in timing of utility
customer orders and related contracts.

Revenues from uranium sales were $0 within three months June 30, 2022 and 2021.

Revenue from the technical solutions segment was $13.6 million and $17.2 million
in the three months ended June 30, 2022 and 2021, respectively, a decrease of
$3.6 million (or 21%). The decrease in revenue in the three months ended June
30, 2022, was primarily related to a $2.9 million decrease in revenue generated
by the HALEU Contract and a $1.0 million decrease in revenue generated by the
X-energy contract.

Cost of Sales

Cost of sales for the LEU segment was $26.1 million and $27.0 million in the
three months ended June 30, 2022 and 2021, respectively, a decrease of $0.9
million (or 3%). The decrease largely reflects decreases in the volume of SWU
sold and in the average SWU unit cost. The volume of SWU sold decreased 20% for
the three months ended June 30, 2022, and the average SWU unit cost decreased
5%. Cost of sales for the three months ended June 30, 2022, included $5.5
million for the revaluation of obligations for SWU borrowed in 2018-2022.
                                       30
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Cost of sales for the technical solutions segment was $12.1 million and $18.3
million in the three months ended June 30, 2022 and 2021, respectively, a
decrease of $6.2 million (or 34%). The decrease of $6.2 million in the three
months ended June 30, 2022, is related to a reduction in costs of approximately
$5.6 million associated with the HALEU Contract and a reduction in costs of
approximately $1.0 million associated with the X-energy contract, partially
offset by new contract work of approximately $0.4 million. For details on HALEU
Contract accounting, refer to "Technical Solutions - Government Contracting"
above.

Gross Profit (Loss)

Gross profit for the LEU segment was $59.4 million and $18.2 million in the
three months ended June 30, 2022 and 2021, respectively, an increase of $41.2
million (or 226%). The $41.2 million increase in gross profit in the three
months ended June 30, 2022, was due primarily to an increase in the average
profit margin per SWU, which was partially offset by a decrease in SWU sales
volume.

Gross profit for the technical solutions segment was $1.5 million compared to a
gross loss of $1.1 million in the three months ended June 30, 2022 and 2021,
respectively, an increase of $2.6 million (or 236%). The $2.6 million increase
in gross profit in the three months ended June 30, 2022 was primarily related to
a $2.7 million increase in the gross profit generated from the HALEU Contract.
The increase related to the HALEU Contract is primarily attributable to the
Company's costs under the HALEU Contract being fully recoverable in the current
year as the Company had contributed its contractually required cost share as of
December 31, 2021.


Semester completed June 30, 2022 Compared to the half-years closed June 30, 2021

                                     Six Months Ended June 30,
                                         2022                 2021        $ Change       % Change
LEU segment
Revenue:
SWU revenue                   $        98.3                 $  83.3      $    15.0           18  %
Uranium revenue                         4.9                       -            4.9             n/a
Total                                 103.2                    83.3           19.9           24  %
Cost of sales                          40.9                    52.4          (11.5)         (22) %
Gross profit                  $        62.3                 $  30.9      $    31.4          102  %

Technical solutions segment
Revenue                       $        31.2                 $  34.7      $    (3.5)         (10) %
Cost of sales                          26.3                    36.8          (10.5)         (29) %
Gross profit (Loss)           $         4.9                 $  (2.1)     $     7.0          333  %

Total
Revenue                       $       134.4                 $ 118.0      $    16.4           14  %
Cost of sales                          67.2                    89.2          (22.0)         (25) %
Gross profit                  $        67.2                 $  28.8      $    38.4          133  %



Revenue

Revenue from the LEU segment was $103.2 million and $83.3 million in the six
months ended June 30, 2022 and 2021, respectively, an increase of $19.9 million
(or 24%). The increase is due to a 47% increase in the average price of SWU,
partially offset by a 20% decrease in the volume of SWU sold in the six months
ended June 30,
                                       31
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2022, largely due to variability in the timing of utility customer orders and the particular contracts under which SWUs were sold during the periods.

Revenues from uranium sales were $4.9 million and $0 within six months June 30, 2022 and 2021, respectively.

Revenue from the technical solutions segment was $31.2 million and $34.7 million
in the six months ended June 30, 2022 and 2021, respectively, a decrease of $3.5
million (or 10%). The $3.5 million decrease in revenue in the six months ended
June 30, 2022, was primarily related to a $6.6 million decrease in revenue from
the HALEU Contract and a $1.7 million decrease in revenue from X-energy,
partially offset by a $4.4 million increase in revenue generated from other
contracts that started during the second half of 2021.
Cost of Sales

Cost of sales for the LEU segment was $40.9 million and $52.4 million in the six
months ended June 30, 2022 and 2021, respectively, a decrease of $11.5 million
(or 22%). The decrease largely reflects decreases in the volume of SWU sold and
in the average SWU unit cost. The volume of SWU sold decreased 20% for the six
months ended June 30, 2022 and the average SWU unit cost decreased 11%. Cost of
sales for the six months ended June 30, 2022 included $5.5 million for the
revaluation of obligations for SWU borrowed in 2018-2022.

Cost of sales for the technical solutions segment was $26.3 million and $36.8
million in the six months ended June 30, 2022 and 2021, respectively, a decrease
of $10.5 million (or 29%). The decrease of $10.5 million in the six months ended
June 30, 2022, is related to a reduction in costs of approximately $13.5 million
associated with the HALEU Contract and a reduction in costs of approximately
$2.1 million associated with the X-energy contract, partially offset by a $5.6
million increase in costs related to other contracts. The remaining decrease is
related to costs incurred by new contract work of approximately $0.5 million.
For details on HALEU Contract accounting, refer to "Technical Solutions -
Government Contracting" above.

Gross profit (loss)

Gross profit for the LEU segment was $62.3 million and $30.9 million in the six
months ended June 30, 2022 and 2021, respectively, an increase of $31.4 million
(or 102%). The increase in gross profit was due primarily to an increase in the
average profit margin per SWU, which was partially offset by a decrease in SWU
sales volume.

Gross profit for the technical solutions segment was $4.9 million compared to a
gross loss of $2.1 million in the six months ended June 30, 2022 and 2021,
respectively, an increase of $7.0 million (or 333%). The $7.0 million increase
in gross profit in the six months ended June 30, 2022 is related to a $6.9
million increase in the gross profit generated from the HALEU Contract which
included a $1.6 million rent credit for the Piketon Facility. The remaining $0.1
million net increase in the gross margin is attributable to the Company's other
contracts. The increase related to the HALEU Contract is primarily attributable
to the Company's costs under the HALEU Contract being fully recoverable in the
current year as the Company had contributed its contractually required cost
share as of December 31, 2021.

                                       32
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Non-segment information

The following tables show the items in the accompanying Consolidated Statements of Income and Comprehensive Income that are not classified by segment (amounts in millions of dollars):

Three Months Ended June 30, 2022 Compared with Three Months Ended June 30, 2021
                                                       Three Months Ended June 30,
                                                          2022                 2021             $ Change             % Change
Gross profit                                       $          60.9          $   17.1          $    43.8                     256  %
Advanced technology costs                                      3.5               0.2                3.3                    1650  %
Selling, general and administrative                            8.3               7.8                0.5                       6  %
Amortization of intangible assets                              4.0               1.6                2.4                     150  %
Special charges for workforce reductions                       0.5                 -                0.5                        n/a
Operating income                                              44.6               7.5               37.1                     495  %
Nonoperating components of net periodic benefit
income                                                        (3.4)             (4.3)               0.9                     (21) %
Investment income                                             (0.2)                -               (0.2)                       n/a
Income before income taxes                                    48.2              11.8               36.4                     308  %
Income tax expense                                            10.8               0.2               10.6                    5300  %
Net income                                         $          37.4          $   11.6          $    25.8                     222  %




Advanced Technology Costs

Advanced technology costs were $3.5 million and $0.2 million in the three months
ended June 30, 2022 and 2021, respectively, an increase of $3.3 million (or
1650%). Advanced technology costs consist of American Centrifuge work and
related expenses that are outside of our customer contracts in the technical
solutions segment, including costs for work at the Piketon facility prior to the
commencement of the HALEU Contract work in June 2019 and costs to continue work
on our advanced technology. The increase in the three months ended June 30, 2022
is primarily related to the focus on efforts to improve our technology.

Amortization of intangible assets

Amortization of intangible assets was $4.0 million and $1.6 million in the three
months ended June 30, 2022 and 2021, respectively, an increase of $2.4 million
(or 150%). Amortization expense for the intangible asset related to the
September 2014 sales order book is a function of SWU sales volume under that
order book, and amortization expense for the intangible asset related to
customer relationships is amortized on a straight-line basis.

                                       33
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Non-operating components of net periodic benefit expenditure (revenue)

Nonoperating components of net periodic benefit expense (income) netted to
income of $3.4 million and $4.3 million in the three months ended June 30, 2022
and 2021, respectively, a decrease of $0.9 million (or 21%).
Nonoperating components of net periodic benefit expense (income) consist
primarily of the expected return on plan assets, 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.

Income Tax Expense

Income tax expense was $10.8 million and $0.2 million in the three months ended
June 30, 2022 and 2021, respectively, an increase of $10.6 million (or 5300%).
Income tax expense in all periods resulted from applying the annual effective
tax rate to year-to-date income from continuing operations adjusted for discrete
items; however, the company had minimal income tax expense for the three months
ended June 30, 2021 as it was in a full federal valuation allowance. The Company
had released a portion of its federal valuation allowance at the end of 2021
which has enabled it to use its deferred tax assets for the income from
continuing operations in the current period. For more information about the
valuation allowance, see Note 13, Income Taxes, in our Consolidated Financial
Statements on Form 10-K for the year ended December 31, 2021. Based on Centrus'
analysis, there was no change to the tax valuation allowance during the first or
second quarters of 2022.

Net Income

Net income was $37.4 million and $11.6 million in the three months ended June
30, 2022 and 2021, respectively, an increase of $25.8 million (or 222%). The
$25.8 million increase in net income for the three months ended June 30, 2022
was primarily attributable to a $41.2 million increase in gross profit from the
LEU segment, partially offset by a $10.6 million increase in income tax expense.

Semester completed June 30, 2022 Compared to the half-years closed June 30, 2021

                                                        Six Months Ended June 30,
                                                         2022                 2021             $ Change             % Change
Gross profit                                       $         67.2          $   28.8          $    38.4                     133  %
Advanced technology costs                                     4.6               0.7                3.9                     557  %
Selling, general and administrative                          15.8              16.0               (0.2)                     (1) %
Amortization of intangible assets                             5.1               3.7                1.4                      38  %
Special charges for workforce reductions                      0.5                 -                0.5                        n/a
Operating income                                             41.2               8.4               32.8                     390  %
Nonoperating components of net periodic benefit
income                                                       (6.7)             (8.6)               1.9                     (22) %

Investment income                                            (0.2)                -               (0.2)                       n/a
Income before income taxes                                   48.1              17.0               31.1                     183  %
Income tax expense                                           11.1               0.3               10.8                    3600  %
Net income                                         $         37.0          $   16.7          $    20.3                     122  %



Advanced Technology Costs

Advanced technology costs were $4.6 million and $0.7 million in the six months
ended June 30, 2022 and 2021, respectively, an increase of $3.9 million (or
557%). Advanced technology costs consist of American Centrifuge work and related
expenses that are outside of our customer contracts in the technical solutions
segment, including costs for work at the Piketon facility prior to the
commencement of the HALEU Contract work in June 2019 and
                                       34
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costs to continue working on our advanced technology. The increase in the six months ended June 30, 2022is mainly related to the focus on efforts to improve our technology.

Amortization of intangible assets

Amortization of intangible assets was $5.1 million and $3.7 million in the six
months ended June 30, 2022 and 2021, respectively, an increase of $1.4 million
(or 38%). Amortization expense for the intangible asset related to the September
2014 sales order book is a function of SWU sales volume under that order book,
and amortization expense for the intangible asset related to customer
relationships is amortized on a straight-line basis.

Non-operating components of net periodic benefit expenditure (revenue)

Nonoperating components of net periodic benefit expense (income) netted to
income of $6.7 million and $8.6 million for the six months ended June 30, 2022
and 2021, respectively, a decrease of $1.9 million, or (22%). Nonoperating
components of net periodic benefit expense (income) consist primarily of the
expected return on plan assets, 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.

income tax expense

Income tax expense was $11.1 million and $0.3 million in the six months ended
June 30, 2022 and 2021, respectively, an increase of $10.8 million (or 3600%).
Income tax expense in all periods resulted from applying the annual effective
tax rate to year-to-date income from continuing operations adjusted for discrete
items; however, the company had minimal income tax expense for the six months
ended June 30, 2021 as it was in a full federal valuation allowance. The Company
had released a portion of its federal valuation allowance at the end of 2021
which has enabled it to use its deferred tax assets for the income from
continuing operations in the current period. For more information about the
valuation allowance, see Note 13, Income Taxes, in our Consolidated Financial
Statements on Form 10-K for the year ended December 31, 2021. Based on Centrus'
analysis, there was no change to the tax valuation allowance during the first or
second quarters of 2022.

Net Income

Net income was $37.0 million and $16.7 million in the six months ended June 30,
2022 and 2021, respectively, an increase of $20.3 million (or 122%). The $20.3
million increase in net income for the six months ended June 30, 2022 was
primarily attributable to increases in gross profit of $31.4 million in the LEU
segment and a $7.0 million in the Technical Solutions segment, partially offset
by a $10.8 million increase in income tax expense discussed above.

                                       35
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Net earnings per share

See Note 9, Net earnings per share, to the consolidated financial statements.

The Company measures Net Income and Net Income per Share both on a GAAP basis
and on an adjusted basis to exclude deemed dividends allocable to retired
preferred stock shares ("Adjusted Net Income" and "Adjusted Net Income per
Share"). We believe Adjusted Net Income and Adjusted Net Income per Share, which
are non-GAAP financial measures, provide investors with additional understanding
of the Company's financial performance as well as its strategic financial
planning analysis and period-to-period comparability. These metrics are useful
to investors because they reflect how management evaluates the Company's ongoing
operating performance from period-to-period after removing certain transactions
and activities that affect comparability of the metrics and are not reflective
of the Company's core operations.

                                                              Three Months Ended                      Six Months Ended
                                                                    June 30,                               June 30,
                                                             2022               2021                2022                 2021
Numerator (in millions):
Net income                                               $     37.4          $  11.6          $     37.0              $  16.7
Less: Preferred stock dividends - undeclared and
cumulative                                                        -              0.7                   -                  1.4
Less: Distributed earnings allocable to retired
preferred shares                                                  -                -                   -                  6.6
Net income allocable to common stockholders              $     37.4          $  10.9          $     37.0              $   8.7

Plus: Distributed earnings allocable to retired
preferred shares                                         $        -          $     -          $        -              $   6.6

Adjusted net earnings, including distributed earnings attributable to withdrawn preferred shares (non-GAAP) $37.4

          $  10.9          $     37.0              $  15.3

Denominator (in thousands) (a):
Average common shares outstanding - basic                    14,587           13,443              14,567               13,132
Average common shares outstanding - diluted                  14,876           13,743              14,903               13,452

Net income per share (in dollars):
Basic                                                    $     2.56          $  0.81          $     2.54              $  0.66
Diluted                                                  $     2.51          $  0.79          $     2.48              $  0.65

Plus: Effect of distributed earnings allocable to
retired preferred shares, per common share (in dollars):
Basic                                                    $        -          $     -          $        -              $  0.51
Diluted                                                  $        -          $     -          $        -              $  0.49

Adjusted Net Income per Share (Non-GAAP) (in dollars):
Basic                                                    $     2.56          $  0.81          $     2.54              $  1.17
Diluted                                                  $     2.51          $  0.79          $     2.48              $  1.14

(a) For further details on the average number of shares outstanding, refer to Note 9, Net earnings per share of the consolidated financial statements.




                                       36
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Cash and capital resources

We ended the second quarter of 2022, with a consolidated cash balance of $115.6
million. We anticipate having adequate liquidity to support our business
operations for at least the next 12 months from the date of this Quarterly
Report. Our view of liquidity is dependent on, among other things, conditions
affecting our operations, including market, international trade restrictions,
COVID -19 and other conditions, the level of expenditures and government funding
for our services contracts and the 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 in our LEU segment is a source of stability for
our liquidity position. Subject to market conditions, we see the potential for
growing uncommitted demand for LEU during the next few years with accelerated
open demand in 2025 and beyond.

Cash resources and net sales proceeds from our LEU segment fund technology costs
that are outside of our customer contracts in the 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 Contract with
DOE in October 2019. Under the HALEU Contract, the Company contributed its
required contribution through November 30, 2021. The program has been under way
since May 31, 2019, when Centrus and DOE signed a preliminary letter agreement
that allowed work to begin while the full contract was being finalized.

The Company entered into this cost-share contract with DOE as a critical first
step on the road back to the commercial production of enriched uranium, which
the Company had terminated in 2013 with the closure of the Paducah GDP. HALEU is
expected to be required by many of the advanced reactor designs now under
development, including nine out of the ten reactor designs that were selected in
2020 for the ARDP. Our HALEU Contract expires in November 2022, and although we
believe 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 there are a number of technical, regulatory, and economic
hurdles that must be overcome for these fuels and reactors to come to the
market. If we are able to win a contract from DOE to operate the cascade, our
goal is to modularly scale up the facility as demand for HALEU grows in the
commercial and government sectors, subject to the availability of funding and/or
contracts to purchase the output of the plant. 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, 2021, as updated by Part II, Item 1A, Risk Factors, in this
Quarterly Report on Form 10-Q.

On June 28, 2022, the DOE released an RFP for the completion and operation of
the demonstration cascade. If a contract is awarded to the Company under the
terms proposed by DOE, the cost share could have a material impact on the
Company's liquidity during Phase I of the base contract but the degree of impact
cannot be estimated at this time. In the event that funding by the U.S.
government for research, development and demonstration of gas centrifuge
technology is reduced or discontinued, or we are not awarded a DOE contract to
operate the cascade we are now constructing under the HALEU Contract, 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 planned for the next 12 months.

We are actively considering, and expect to consider from time to time in the
future, potential strategic transactions, which at any given time may be in
various stages of discussions, diligence, or negotiation. If we pursue
opportunities that require capital, we believe we would seek to satisfy these
needs through a combination of working capital, cash generated from operations
or additional debt or equity financing.
                                       37
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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):
                                                                        Six Months Ended June 30,
                                                                       2022                   2021
Cash provided by (used in) operating activities                  $        (56.2)         $        2.9
Cash used in investing activities                                          (0.5)                 (0.7)
Cash provided by (used in) financing activities                            (3.2)                 21.8
Increase (decrease) in cash, cash equivalents and restricted
cash                                                             $        (59.9)         $       24.0



Operating Activities

In the six months ended June 30, 2022, net cash used in operating activities was
$56.2 million. The net decrease was due to an increase in payments made to
suppliers, as reflected by the decrease in payables under inventory purchase
agreements of $37.9 million and an increase in inventories of $10.7 million.
Cash used in operations was also impacted by a decrease in cash collected from
customers, which resulted from the timing of customer shipments and related
contract terms, partially reflected in the net decrease in deferred revenue and
advances from customers, net of deferred costs, of $30.6 million.

In the six months ended June 30, 2021, net cash used in operating activities was
$2.9 million. The increase in inventories of $11.1 million reflects a
significant use of cash. The net decrease in cash year-over-year is also the
result of a net reduction of $7.8 million in deferred revenue and advances from
customers which reflects revenue recognized in the current period related to
payments received in advance in a prior period. Uses of cash are also reflected
in the decrease in pension and postretirement benefit liabilities of $14.8
million. The net income of $16.7 million in the six months ended June 30, 2021,
net of non-cash expenses, the $10.6 million decrease in accounts receivable, and
the increase in payables under inventory purchase agreements of $7.8 million
reflect sources of cash.
Investing Activities

Capital expenditures were $0.5 million and $0.7 million within six months
June 30, 2022 and 2021, respectively.

Fundraising activities

In both the six months ended June 30, 2022 and 2021, payments of $3.1 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 (the "8.25% Notes") maturing in February 2027. In the six
months ended June 30, 2021, net cash provided by financing activities also
included net proceeds of $27.2 million raised from the issuance of common stock
pursuant to a Registration Statement on Form S-3.

                                       38
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Working capital

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

                                                                  June 30,             December 31,
                                                                    2022                   2021
Cash and cash equivalents                                      $      115.6          $       193.8
Accounts receivable                                                    24.0                   29.1
Inventories, net                                                      120.8                   82.7
Current debt                                                           (6.1)                  (6.1)

Deferred revenue and customer advances, net of deferred charges

                                                                (129.5)                (159.8)
Other current assets and liabilities, net                              (1.9)                 (67.1)
Working capital                                                $      122.9          $        72.6



We are managing our working capital to seek to improve the long-term value of
our LEU 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 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 our
8.25% Notes. We continually evaluate alternatives to manage our capital
structure, and may opportunistically repurchase, exchange, or redeem Company
securities from time to time.

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, 2021.

Commitments under SWU’s long-term purchase contracts

Refer to Note 11, Commitments and contingencies, to the consolidated financial statements for further information.

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, Tennessee, with a view to deploying a commercial enrichment facility over
the long term once market conditions recover.

Off-balance sheet arrangements

In addition to our commitments to purchase SWU and the license agreement with DOE
regarding the American Centrifuge technology, there were no significant off-balance sheet arrangements June 30, 2022.

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Estimates of critical accounting policies

There have been no material changes in 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, 2021.

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