Nano Nuclear Energy Inc. Q4 FY2025 Earnings Call

Greetings, and welcome to the NANO Nuclear Fiscal Year 2025 Financial Results and Business Update Call. As a reminder, this conference is being recorded. It is now my pleasure to introduce Matthew Barry, Director of Investor Relations and Capital Markets.

Thank you, and good afternoon, everyone. Joining me on the call today are Jay Yu, NANO Nuclear's Founder, Chairman and President; our CEO, James Walker; and CFO, Jaisun Garcha. Please note that today's press release and slide presentation to accompany this webcast are available on our website. Before moving ahead, I'll quickly address forward-looking statements made on this call. Listeners should note that today's presentation will contain certain forward-looking statements about NANO Nuclear's future goals and potential milestones that are made under the safe harbor provisions of the applicable federal securities laws. Words such as aim, may, could, should, seek, project, expect, intend, plan, believe, anticipate, hope, estimate, goal, and variations of such words and similar expressions are intended to identify forward-looking statements. These statements are based upon many assumptions and estimates made by management, all of which are inherently subject to significant risks, uncertainties, and contingencies, many of which are beyond NANO's control. Many of these are shown on the slide you see here. You're cautioned that actual results, including, without limitation, the results of NANO's microreactor development activities, strategies and other operational plans, including the results of our regulatory acquisition and research and development initiatives, as well as future potential results of operations, operating metrics, addressable market and other matters about the future, which may be discussed may differ materially and adversely from those expressed or implied by the forward-looking statements. Factors that could cause actual results to differ materially include, but are not limited to, the risk factors and other disclosures contained in NANO's filings with the Securities and Exchange Commission, including the risk factors and other disclosures in our Form 10-K filed today and our other filings with the SEC, all of which are or will be accessible on the Investor Relations section of NANO's website as well as the SEC's website. You're encouraged to review these disclosures carefully. Except to the extent required by law, NANO assumes no obligation to update statements as circumstances change. With that, I'll turn the call over to Jay Yu, NANO's Founder, Chairman and President.

Thank you, Matt, and thank you to everyone joining the call today. I'll begin the call with a high-level overview of the major trends shaping the advanced nuclear market and then highlight the meaningful progress we made in 2025. NANO Nuclear has worked to position itself at the center of a global nuclear renaissance. This is driven by several durable long-term trends including growing demand for reliable baseload energy, climate mandates and energy independence and global support for nuclear energy. First, we are seeing a significant need for reliable baseload power to enable the rapid growth of AI data centers, industrial reshoring and broader electrification. AI data centers are projected to be a primary driver of the continued surge in electricity demand. For more than 2 decades, U.S. power demand grew below 1% per year. According to the recent Grid Strategies report, some estimates call for electricity usage to increase by 5% to 6% annually over the next 5 years, and data centers alone could account for more than half of that growth. Meeting this level of demand could require the U.S. power sector to plan and build new generation transmission capacity at more than 6 times the pace of recent years. Also, it is not just the scale of expected demand that's important, but the type of demand that’s coming online. The Grid Strategies report highlights that the next wave of demand is projected to run at load factors close to 96% compared to the system-wide average of about 60% today. Over the past year, several major tech leaders have taken concrete steps to secure dedicated nuclear capacity for their data centers, whether it's new Power Purchase Agreements at existing nuclear plants or collaborations with advanced reactor developers. These actions reflect a clear recognition that meeting future AI data centers' needs requires firm, always available power, a role nuclear is uniquely suited to fill. And equally as important, a lack of sufficient transmission infrastructure is expected to constrain the grid's capacity to meet forecasted power with even conservative growth estimates expected to require substantial grid expansion. All of this represents a fundamental shift that is placing an even greater emphasis on scalable and constant sources of baseload power that can operate independently from grid constraints. This is exactly where microreactors offer a compelling advantage. Second, energy sustainability, energy security, and climate-related mandates continue to increase demand for clean energy, requirements that intermittent sources alone cannot meet. As a result, there is a growing global commitment amongst nations, leading institutions and the world's largest energy users to triple nuclear capacity by 2050, solidifying growth in nuclear energy as a secular trend for the coming decades. Third, we continue to benefit from the unprecedented bipartisan policy support for nuclear energy in the United States and the growing global support. This is supporting the expansion of nuclear capacity while also accelerating development of advanced reactors like ours. The rapid progress we've made this year has been accelerated by these regulatory tailwinds, which continue to strengthen demand for advanced nuclear reactors. Fiscal year 2025 was a transformative year for NANO, marked by disciplined execution across several parts of our business.

Thank you, Jay. I'll first outline why microreactors offer a compelling value proposition relative to both traditional nuclear and larger small modular reactors currently in development. Traditional nuclear reactors are typically gigawatt-scale projects, while most SMR designs range anywhere from 70 to 350 megawatt electric in size. Because of the smaller size of our KRONOS MMR, we believe a larger portion of our reactor components can be manufactured and assembled in a factory and shipped to the site. Factory production and fabrication will allow us to standardize components, capture learning benefits much earlier, and reduce the amount of on-site construction that has historically led to delays and cost overruns in traditional nuclear projects. Modularity is a second major advantage. Our design allows customers to scale capacity incrementally to match their ramp-up plans, and this approach can reduce upfront capital requirements for large projects and allow construction efficiencies to improve with every unit delivered. Third, passive safety features and the use of advanced fuels support the ability to co-locate at customer sites, allowing us to provide off-grid or behind-the-meter power. This is important as grid integration is becoming a significant constraint facing large energy users. Interconnection queues can be years long. Transmission upgrades are costly, and many high-load customers simply cannot wait for new lines to be built. By placing one or more of our microreactors directly adjacent to a customer site, we can eliminate much of that bottleneck. When you combine these factors, we believe microreactors represent the most practical solution for meeting the growing need for clean, reliable baseload power, particularly in locations where grid constraints are significant, while also providing increased opportunities to benefit from economies of scale. This is precisely why we are seeing strong interest from data centers, industrial facilities, and military stakeholders for our KRONOS MMR.

Thank you, James. I'll now provide a summary of our fiscal 2025 financial performance. We finished the year with a strong balance sheet supported by multiple successful capital raises at progressively higher valuations. Our overall cash position substantially increased during the year, ending the period with cash and cash equivalents of $203.3 million, an approximately $175 million increase from the end of fiscal 2024. The year-over-year increase was mainly driven by net proceeds from several successful equity capital raises. After our fiscal year-end, our cash position increased to approximately $580 million following an October 2025 private placement. We view our strong cash position and proven ability to raise funding at scale as a meaningful differentiator. With current cash on hand and our access to the public capital markets, we are well-positioned to accelerate the licensing and commercialization of the KRONOS MMR while maintaining the flexibility to expand our vertical integration through disciplined M&A and potential strategic partnerships.

This is James. So what I would say is that actually, the drilling completed on schedule and on time. So that was good. That gave us the geotechnical data we needed to go into the construction permit. That was really the missing component. We're in a bit of an odd situation with the reactor companies that our engineering is way ahead of the licensing. And usually, it's the other way around, that people get prepped for submissions and then they allow for the engineering to catch up. But effectively, this puts us in a position where we are on track to submit that construction permit application to the NRC in Q1 next year. And that is on track, and that is looking like it's going to go ahead. So I'd say the big one is to get the application into them sooner, get as much detailing as you can and then work obviously very closely with them throughout the whole process to get it expedited and completed. On the reactor itself, we acknowledge that there are certain components that are very unlikely for us to be able to produce internally. Those components include things like nuclear-grade graphite or an N-stamped fabrication facility to produce reactor vessels. These components are so specialized that if you were to try and internally produce them, you would probably spend in the order of 10 years getting yourself to a level where you are qualified to produce those materials. Our focus is primarily on producing as much as we can internally, while also forging partnerships for specialized components. What we see as a unique opportunity is being involved in the conversion side of things, as we've recognized that there is an underserved need for uranium hexafluoride production, which is produced through conversion. We believe that by strategic involvement in this area, we can help to alleviate some bottlenecks and create additional revenue streams even before our reactor systems are in operation.

Our first question is from Jeff Grampp with Northland Capital Markets.

I'll start first at the U of I site. Good to hear that you are still on track for the permit application in Q1 of next year. Can you walk us through the timeline when that gets filed? How long do you think that will take to get through the NRC? And is there any work you can do to accelerate that timeline while that's getting through the NRC process?

What I would say is that the drilling completed on schedule and on time. So that was good. That gave us the geotechnical data we needed to go into the construction permit. We're on track to submit that construction permit application to the NRC in Q1 next year. With regards to the turnaround from the NRC, one good reference is Kairos, which took about 15-month turnaround. However, due to less scrutiny involved in our application as it uses more conventional technology, we expect to turn around in a much shorter timeframe, potentially within the same calendar year. With regards to vertical integration strategy, we are focused on internal capabilities and also pursuing partnerships for specialized components. Historically, we’ve observed that certain critical components are better secured through external expertise rather than developing them internally.

Thanks for providing good color in the presentation. Can you give us a little bit more insight into the steps for the Canadian licensing and what you're planning for 2026?

Absolutely. Canada is an extremely interesting prospect. Once we finalize our selection of a site, we move quickly into the legal and due diligence process needed for the Canadian Nuclear Safety Commission. We expect that announcement in the first half of next year. This will allow us to move into Phase 2 of the licensing process, bypassing Phase 1 due to prior progress. Expect government support in terms of incentives as we navigate these milestones. The AFWERX program is particularly important because U.S. military bases have a mandate for self-sufficiency in power generation. Our microreactors meet those needs and provide a sustainable solution for military applications. After this Phase 1, we can explore full deployment opportunities for military bases.

Could you elaborate on the potential for state delegation over nuclear activities by the NRC and if you're looking at any specific states?

Yes, states can be delegated authority over licensing certain nuclear facilities. This is particularly relevant for chemical plants associated with the nuclear fuel cycle. Illinois is an example of a state where we see potential for streamlining processes and expediting licensing timelines.

I want to thank everyone again for joining us on tonight's call. The interest and enthusiasm of our investors and market participants are important to us, and we're very grateful for the support we've received. We look forward to providing additional updates to you in the future. Have a great evening.

This concludes today's conference. You may disconnect your lines at this time. We thank you again for your participation.