X-Energy Q3 2026 Earnings Call Transcript

X-Energy (NASDAQ:XE) reported third-quarter financial results on Thursday. The transcript from the company’s third-quarter earnings call has been provided below.

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Summary

X-Energy Inc reported strong third-quarter 2026 results with total revenues and grant income of $66.3 million, up 118% year-over-year, driven by progress in engineering work under the Advanced Reactor Demonstration Program.

Strategic initiatives included receiving a construction permit from the NRC for Dow’s Project Longmont, a joint development agreement with AEP and Amazon, and progress in TRISO-X fuel manufacturing and the UK’s regulatory process.

The company maintains a strong balance sheet with $1.8 billion in cash and investments, and expects significant federal funding support of up to $2.15 billion, positioning it well for future growth and execution of its strategic objectives.

X-Energy highlighted the importance of early investments in supply chain development to support future projects and reduce deployment risks, emphasizing its advanced reactor technology’s potential for scalable deployment.

Management expressed confidence in regulatory processes and the bipartisan political support for nuclear energy, underscoring the company’s focus on meeting its milestones and commercial deployment goals.

Full Transcript

OPERATOR

Hello and welcome to the X-Energy third quarter 2026 earnings conference call. All participants are in a listen-only mode. After today’s prepared remarks, there will be a question-and-answer session. At that time I will provide instructions for those wishing to ask a question. Please note that this call is being recorded. I’ll now turn the call over to Patricia Hill, Director of Investor Relations for X-Energy. You may begin.

Patricia Hill (Director of Investor Relations)

Thank you and good morning, everyone. Welcome to X-Energy’s third quarter 2026 earnings call. This morning we released third quarter 2026 financial results and operational highlights for X-Energy Inc. You can find today’s presentation and our earnings press release available on the Investor Relations portion of X-Energy’s website at investors.x-energy.com. Our remarks today will include forward-looking statements which are based on assumptions as of today and are subject to significant risks and uncertainties. Actual results may differ materially from those set forth in the forward-looking statements. Our SEC filings, including our Quarterly Report on Form 10-Q, identify certain risk factors and cautionary statements that could cause the Company’s actual results to differ materially from those projected in our forward-looking statements.

We undertake no obligation to update any forward-looking statement except as required by law. During this call we also present non-GAAP financial measures. There are reconciliations of these measures included in our earnings press release and investor presentation posted on the Investor Relations portion of our website. Joining me today are Clay Sell, our Chief Executive Officer, and Daniel Gross, our Chief Financial Officer. On today’s call, Clay will open with a review of our recent highlights and operational updates followed by what we believe are our compelling and differentiating business factors.

Daniel will then review our financial performance for the third quarter in more detail before turning it back to Clay for closing remarks. We will then open the call up to Q&A. With that, I’ll now turn the call over to Clay.

Clay Sell (Chief Executive Officer)

Thanks, Patricia, and it’s good. Good morning to everyone. It’s good to be with you today. X-Energy had a great third quarter and the good news has continued even into this week. Before I turn to a rundown of the news and achievements from this quarter, let me remind you in the main how I think about our overall strategy. First, we have deep conviction that the world needs a lot of new nuclear power. That goes to our TAM. Second, we have to bring a technology to the market that is materially better, that is materially safer, that can be licensed by our regulators, that is significantly simpler, easier to build on a smaller footprint with high functionality, to provide electricity in a scalable manner, processing for industrial plants or even load-following capability. We have to have more attractive overall economics and a supply chain that is secure, available and ready.

We believe our reactor and fuel technology does all of these things. That goes to our tech. Along the way we must attract and build a team that can execute at a high level. That goes to the talent we attract and the culture we build. As you know, I believe we have the best team in the business here at X-Energy. That’s our team. Beyond the TAM, the tech and the team, we have to do two other things. We have to have two other things: the capital to get our products developed into the marketplace and the customers.

The Dows, the Amazons, the AEPs, the Centricas that have the expertise, the balance sheets and the corporate motivation to see projects through to fruition. And we have to have enough of those customers with big needs to build enough units to get really good at it. This is the process. This is where we develop the mastery through repetition to move from the first to more expensive plants, all the way down to lower cost, lower risk, shorter schedule plants that can be financed and deployed at scale.

And this process allows us to drive margins and profitability on the sale of our reactor technology, associated services and fuel for the expected life of the power plant. This is our strategy, this is our process. It is what we are focused on every day. And you will see with the announcements and progress since our last earnings call how each is retiring risk and moving us towards our greater business objective to reinvent nuclear power, to make it abundant, to make it easy to build, widely available and, quite frankly, boring and profitable.

That is our strategy at X-Energy. And again, it has been a quarter of substantial progress. TAM, tech, team, capital, customers. That’s what we’re talking about. So here’s the roadmap of the updates that I want to cover in today’s call. First, I’ll talk about our receipt of the construction permit from the NRC just this week for Dow’s Project Longmont. Secondly, I want to review our joint development agreement with AEP and Amazon. Third, I want to talk about our progress at our TRISO-X fuel company. Fourth, I want to go over our progress in the UK’s regulatory process. And finally, I want to talk about how we are de-risking deployment at our XTEC facility.

At X-Energy, we are doing exactly what we said we would do when we went public in April of this year. We’re meeting our announced milestones, advancing our engineering and manufacturing capabilities and converting the significant commercial interest in our technology into tangible project commitments, and we’re doing so from a position of financial strength supported by a strong balance sheet with $1.8 billion in cash and investments and significant expected federal funding support of up to $2.15 billion in total from the Department of Energy’s Advanced Reactor Demonstration Program.

With those highlights in mind, I’ll discuss what these developments mean in the context of our broader commercial strategy. So let’s go to the Dow construction permit. The Nuclear Regulatory Commission’s completion of its review and issuance of a construction permit to Longmont Energy, a subsidiary of Dow, for a project at Dow’s Seadrift manufacturing site on the Texas Gulf Coast, was a major, major event this week. It’s a significant achievement both for X-Energy and, we believe, for the commercialization of advanced nuclear technology in the United States.

This construction permit was issued over one month ahead of schedule and it marks the first NRC construction permit for a high-temperature gas-cooled reactor in nearly 60 years, the first ever pebble bed gas-cooled reactor approval and the first ever nuclear project designed to provide both industrial process heat and electricity for an industrial facility. Achieving this milestone reflects years of collaboration among Dow, the Department of Energy, the NRC and X-Energy, with X-Energy playing a central role in the process.

While Dow’s subsidiary Longmont Energy was the applicant and the recipient of the construction permit, X-Energy, our team led the reactor licensing work on their behalf, building on technical and regulatory engagement that began many years ago, before X-Energy was even selected for the Advanced Reactor Demonstration Program. One of the reasons we received the construction permit ahead of schedule is because we did those years of work alongside the NRC and our partners at Dow.

We worked proactively with the NRC to establish the technical and scientific basis for evaluating our reactor technology, addressing key questions and demonstrating the safety characteristics of our design. This experience underscores the importance of regulatory engagement as one of our core competencies in the advanced nuclear industry and why we were able to obtain the construction permit earlier than expected. Again, this is evidence of our extraordinary team.

Just as importantly, the permit provides a valuable proof point for all of our customers across our entire commercial pipeline. As we standardize our design and leverage technical information and analyses from earlier projects, we will identify new opportunities to improve the efficiency and repeatability of subsequent licensing efforts, including for our projects with Energy Northwest and AEP. We did it once and we plan to do it over and over again with greater speed and regulatory efficiency.

Now, while the construction permit is a significant milestone, investment and construction decisions still lie with our customer. We expect Dow to consider a preliminary investment decision in 2027 with full-scale nuclear construction following its final investment decision. Between now and then we’re finalizing and standardizing the design. We are maturing the supply chain for long-lead components and developing the operator license application.

A construction permit earns the right to build. Being ready before we build earns the right to build well and building well earns the right to build again. And we now have the customers, the projects and runway to build many plants well with an eye for reducing costs, reducing risk and shortening the schedule. In the meantime, we continue to advance engineering, procurement and development activities for Dow’s Longmont project. Let me give you an example.

SGL, one of our supply chain partners, has already taken delivery of nuclear-grade graphite billets and we are progressing procurement activities of key plant systems and components such as our recently announced first order for XE100 steam generator tubing from Alleima and Doosan Enerbility. This purchase order follows years of technical collaboration and reflects our approach to addressing manufacturing and supply chain risks early. Now I want to move on and discuss our commercial development and recently announced collaboration with American Electric Power and Amazon. On our last earnings call, I previewed our expectation to announce the next 1 gigawatt project in 2026 with a major investor-owned utility. We have now delivered on that announcement. In October, we announced a joint development agreement with AEP to advance plans for a 12-unit XE100 project in Sullivan County, Indiana.

The proposed project would provide approximately 960 megawatts of new generating capacity, delivering clean, reliable electricity to the regional grid. It also represents our second announced commercial deployment opportunity supported by Amazon. Building on our first collaboration with Energy Northwest in Washington State, AEP represents an important addition to our customer portfolio. As a major investor-owned utility with extensive experience developing and operating critical energy infrastructure, AEP brings capabilities that are essential to advancing projects of this scale.

Amazon brings a long-term need for reliable electricity and a willingness to commit development capital toward creating new sources of generation and X-Energy brings the advanced reactor technology, the technical expertise and integrated fuel fabrication capability. Together, the three of us are committing resources to advance the development work needed to develop the project’s path forward, including site characterization, feasibility studies and preparation for a future NRC construction permit application.

Interestingly, this project would redevelop a former coal-fueled generation site and use existing infrastructure and the existing PJM grid connection. The relatively small footprint for our technology makes us uniquely attractive for former coal sites. It shows how the XE100’s compact modular design suits sites built for conventional thermal power and how it could support Indiana’s energy communities through new jobs, tax revenues, as utilities evaluate the retirement or replacement of aging power generation assets.

We believe this creates a unique additional opportunity for our technology. I’ll take this moment to provide a brief update on our first Amazon project with Energy Northwest in Central Washington. We’re advancing the initial phase of front-end engineering. We’re working with Fluor and the Cascade Nuclear Partners consortium. Now, that is a consortium composed of Kiewit, Black & Veatch and Akon, and they are progressing together. The plant design: Fluor is supporting the design of established systems within the nuclear island, while Cascade Nuclear Partners is advancing the conventional island design and coordinating requirements across the broader plant.

Together, these efforts are establishing the engineering foundation necessary to advance the project through subsequent development phases. From a big-picture standpoint, across our 144-reactor pipeline, we now have up to 40 XE100 reactors associated with identified project plans and development partnerships including Dow, Energy Northwest, AEP and Centrica. That growing portfolio gives us greater visibility into the potential progression from the early projects towards standardized, highly repeatable deployments. And everything that we do is geared towards scale to ensure that every lesson learned on our first project with Dow carries into the projects that follow.

That’s the long-term commercial opportunity we’re working to unlock. Now let me turn to our third topic, TRISO-X. We continue to make meaningful progress towards establishing the commercial fuel manufacturing capabilities necessary to support our reactor fleet and beyond. This again goes to our tech and its supply chain. At our Oak Ridge, Tennessee campus, vertical construction of TX1, our first commercial-scale fuel facility, was completed on schedule. The next phase includes interior construction, equipment installation and development of supporting production infrastructure.

This includes the construction of our graphite matrix outer facility which will support an essential step in the production of our TRISO-X fuel pebbles. For context, while our fuel pebbles contain the uranium that produces energy through fission, the surrounding pebble—excuse me. While our fuel pebbles contain the uranium that produces energy through fission, the surrounding pebble structure is composed primarily of graphite. This facility will prepare and blend the graphite materials necessary for pebble fabrication.

It’s an important part of establishing the integrated manufacturing process required for commercial production. Beyond TX1, we’re advancing design activities for TX2, our second planned commercial fuel facility, and TXL, our dedicated research and development center. Together, these are intended to support our transition to commercial production while providing the flexibility to refine processes, expand manufacturing capabilities and address future customer needs.

TRISO-X is unique in our industry. It is unique in our industry. It holds a 40-year Special Nuclear Material license from the NRC under Part 70, authorizing commercial manufacturing of fuel enriched up to 20% at our first two commercial facilities. This NRC license establishes a foundation for serving the commercial reactor market at scale and we believe distinguishes our business from other potential TRISO fuel manufacturers that operate solely under Department of Energy authorization for research, testing or other limited purposes.

Our NRC Part 70 license creates opportunities for us to leverage our manufacturing expertise and our flexible fuel design capabilities well beyond supplying our own XE100 fleet. Our strategy includes pursuing third-party fuel customers whose reactor technologies use coated particle fuel, including other developers of SMRs, microreactors and specialized nuclear applications. We believe our fuel will be one of the most cost-effective nuclear fuels on the market.

With our anticipated large-scale production and testing capabilities, TRISO-X’s campus is expected to deliver fuel capacity at scale for the growing Generation IV reactor market. Our fuel manufacturing methods are further differentiated by our 10-plus years of research and development supporting our patented methods that we expect to reduce waste, reduce cost and ensure higher fuel quality. In this way, TRISO-X represents both a critical component of our vertically integrated commercial strategy and a potentially distinct long-term source of recurring revenue.

For the near term, our priorities are completing the fuel and R&D facilities, installing and commissioning equipment, qualifying production processes and establishing the manufacturing capacity necessary to support our first projects. Let’s move on. Looking abroad, September marked another important milestone for X-Energy’s international efforts. Our XE100 design was formally accepted into the United Kingdom’s Generic Design Assessment process. This begins a structured regulatory evaluation of our reactor technology by the UK’s nuclear and environmental regulators. They will evaluate the suitability of the design for potential deployment in the UK ahead of the site-specific approvals required for individual projects.

Importantly, this work builds on the substantial licensing progress we’ve already made in the United States, enabled by expanded collaboration between US and UK regulators that allows us to leverage our NRC-approved technical documentation and safety analyses in the UK’s assessment. We expect this innovative model to create opportunities for enhanced efficiency in licensing our technology in the UK and a template for licensing and deploying more efficiently in established nuclear markets around the world.

This project supports our broader partnership with Centrica through which we’re exploring the deployment of up to 6 GW of advanced nuclear capacity in the UK. It is also a credit to the expertise and technical proficiency of our licensing and engineering teams who are now advancing commercial licensing across two countries with two regulators, making us one of only a few developers worldwide with the design maturity required to reach this stage. As in the United States, our focus abroad is on combining regulatory preparation, commercial partnerships and supply chain development to create credible pathways towards deployment.

That brings me to another critical area of execution in the work we’re doing to reduce deployment risk. We are currently progressing through phased renovations of our X-Energy Technology Advancement Center. We call it XTEC. This is in Frederick, Maryland. It’s a 90,000-square-foot facility supporting advanced component development, fabrication, machining, integration and component testing. The pebble bed technology that we’re using is proven. Some of the components that we are putting in the plant are innovative and novel, and we are using this facility to have the ability to test those components at the XTEC before their use in a commercial reactor.

We’re making progress toward establishing the capabilities required to test several of the reactor’s most important systems, including our helium circulator and our fuel handling systems. We’re also establishing capabilities to fabricate and machine important components in the XE100’s reactor core and our team is already advancing graphite-related work at XTEC. I want to underscore what this facility is designed to accomplish. High-temperature gas-cooled reactors have a substantial technical and operating history and our design incorporates decades of learning from that experience.

We want to refine manufacturing processes and resolve practical engineering challenges before equipment reaches a commercial project site. In the simplest terms, we want to have done it at the XTEC before we do it in the field. That is how we reduce execution risk and that’s how we support the transition from developing a reactor design to delivering what we believe will be a best-in-class repeatable project product. As I’ve discussed today, we’ve delivered on the significant milestones that we established for 2026 when we went public in April. We told you in April what we were going to do and we’ve done it on time or earlier. These accomplishments reflect the breadth of the work underway across the company and we’re equally focused on what comes next. Our priorities include advancing site-specific engineering and procurement for Dow, progressing feasibility and site characterization activities with AEP, completing the design for our XE100 reactor and expanding testing and machining capabilities at XTEC.

At TRISO-X, the next phase is interior build-out and equipment installation at TX1 while advancing the facilities and capabilities needed to support our broader fuel manufacturing strategy. The key takeaway is that we have the financial resources—the capital. We have the commercial partnerships—the customers. We have the technical capabilities—that is the tech and the team—necessary to continue executing our current strategy. We’re building the foundation for a business designed not simply to deliver its first reactors, but to support the repeatable commercial deployment of advanced nuclear technology to meet the massive total addressable market that is before us. We look forward to rolling out our 2027 milestones in the near future, and with that, I’ll turn the call over to Daniel Gross, our CFO, to discuss our financial results for the quarter in more detail before I wrap up with a final comment and we go to questions.

Daniel Gross (Chief Financial Officer)

Thank you, Clay. Our results for the third quarter are fairly straightforward So I can keep this brief. In Q3 of 2026, total revenues and grant income were $66.3 million. That’s $51.5 million of services revenue, mostly Xe-100 design work under the Advanced Reactor Demonstration Program, plus $14.8 million of grant income tied to the Dow Demonstration Reactor. Total revenues and grant income were up 118% compared to Q3 of last year. These results were driven by more engineering work and progress on our projects under the ARDP program.

We are entitled for reimbursement of roughly half of this work and, as of December 30th of 2026, the Department of Energy has reimbursed $618 million to us under that program. Our total operating expenses in Q3 of 2026 were $169.9 million. This breaks down into direct costs of $93.6 million and SG&A of $76 million. When looking at our SG&A for the quarter, it’s important to recognize that $22 million of that expense was non-cash equity-based compensation, and our SG&A figures also include certain expenses associated with design and site preparation for our planned TX2 fuel facility. These costs are being expensed and not capitalized because the U.S. GAAP accounting treatment for the project’s current stage of development requires that treatment.

Total operating expenses were up 139% compared to Q3 of 2025. There were three primary drivers: more work under the Advanced Reactor Demonstration Program, more people and contractors doing that work, and the equity-based compensation I alluded to previously, which was a non-cash expense. Below the operating line, interest income was $19.7 million and benefited from optimization of how we invest our cash and reserves. Turning to cash flow, net cash used in operating activities was $51.2 million in the quarter, up from $30.8 million in Q3 of 2025, and that also reflects the higher activity under the Advanced Reactor Demonstration Program, corporate headcount, contractors, and prepayments to vendors on long-lead materials, as well as preliminary work on our TX2 facility, which was expensed as SG&A. Investing activities used $49.9 million in Q3, and a lot of this was from rolling cash into debt instruments as other debt instruments matured. As well as for CapEx, we spent $71.8 million on capital expenditures for construction projects, including TX1, for which the Department of Energy reimbursed us, sorry, $27.8 million in cash during the quarter.

We get a lot of questions related to ARDP and the 50/50 cost share. So let me remind you that our reimbursements for CapEx and OpEx are never exactly half of what we spent during the quarter, and this is for two reasons. First, we spend the money, then we invoice, then we get paid. So keep in mind that we’re affected by the timing of cash payments versus cash receipts, inflows versus outflows. Second, the cost share of the Xe-100 design work and TX1.

So while we track ARDP-eligible costs separately from ineligible costs, we report them together in our financials. And so our financial statements include amounts of CapEx and OpEx associated with other projects that are not eligible for ARDP cost sharing. Now I’d like to briefly walk you through our capital structure and balance sheet. We ended September with $1.8 billion in cash and investments. That’s $1 billion of cash and cash equivalents, $514 million of short-term investments, and $247 million of long-term investments. And we continue to invest this money conservatively, prioritizing capital preservation, liquidity, and credit quality. At the end of Q3 we had no debt outstanding, so that leaves X-Energy in a well-capitalized position, and we will continue to exercise disciplined cash management.

Our robust liquidity supports the execution of our near-term milestones and the advancement of our strategic objectives and growth strategy. And with that I’ll turn it back over to Clay.

Clay Sell (Chief Executive Officer)

Thank you, Daniel. Great report. Before we open the call for questions, I want to recognize an important leadership transition at TRISO-X. As I previously told you, Joel Dueling, the President of TRISO-X, plans to retire — it happens eventually to all of us — from his full-time role to devote more time to his health, his family, and his personal priorities. I’m hugely grateful for Joel’s leadership, his commitment to our mission, and the foundation he’s helped establish.

And I’m very pleased that Joel will remain with X-Energy as a part-time employee in a senior advisor role to me and the company. Our search for his successor is progressing, and we’re engaging with highly qualified candidates who bring significant manufacturing and operational experience. As you know, we have an incredible team, and we’re excited to build on that track record. I expect to provide an update in the coming months on the next President of TRISO-X. As we close, I want to return to the theme I began with today. The opportunity ahead of us is substantial — that’s the TAM. What matters is our ability to turn that opportunity into tangible commercial results. That is about the tech, the team, the capital, and the customers.

We’re demonstrating that we can support customers through the regulatory process. We’re advancing manufacturing, engineering, and supply chain readiness. We’re building commercial fuel production capacity. We are supported by a strong balance sheet, and we’re attracting a growing and increasingly diverse portfolio of customers. We have the right formula. Our focus remains on the work ahead — executing against our milestones, reducing risk, and preparing for commercial deployment. We’re heads down and encouraged by the progress we’re making, and we’re confident in the opportunity before us. Thank you for your continued interest and support of X-Energy. And with that we’ll now go to questions.

OPERATOR

Thank you. We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press star-one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press the star button again. Please stand by while we poll for questions. And your first question for today is from Mark Bianchi with TD Cowen. Please go ahead.

Mark Bianchi (Analyst)

Hey, thanks very much, and congrats on all the progress since the last call. So you now have the construction permit, or the project has a construction permit for Dow, and you mentioned preliminary FID in ’27. Maybe talk to us a little bit more, to the extent you can, about what needs to happen to get to preliminary FID. And then as we think about the milestones that you’ll put up for, you know, in the slides when we get to 4Q looking out to 2027, would preliminary FID be the milestone for the Dow project, or are there some other things you would also put on that list?

Clay Sell (Chief Executive Officer)

Thanks, Mark, for the question. You know, one of the most important assets that we have is our relationship with Dow. The opportunity to build a first project with an industrial giant of their capability that has a long history of building and successfully building large, complex mega-projects is a huge, huge benefit to X-Energy. And they have a proprietary and formalized gated decision process by which they determine that an appropriate amount of engineering has been done, that the cost targets are being met, that the O&M assumptions have been validated.

So they have a formal process through which they go through that, and then they take their decisions in their proprietary procurement process. They take those gated decisions to the board. And so we’re working closely with them. We have a good view as to when that will happen, you know, over the course of ’27. But that will be a key milestone for the project, and we’ll provide further guidance, or Dow will provide further guidance as appropriate, you know, in the months ahead.

Mark Bianchi (Analyst)

Okay, thanks for that, Clay, and then I guess just on the question. Yeah, yeah, it sounds like, I guess, whatever preceding items to the preliminary FID really are on Dow’s side, and that’s a bit, you know, up to their process. I don’t know if that—would you agree with that feedback?

Clay Sell (Chief Executive Officer)

It is their process, to be sure, and it is fed by both inputs from their side and inputs from our side, which will shape exactly when and how that decision is made.

Mark Bianchi (Analyst)

Right, okay. And then on the AEP announcement, I’m curious—there’s a comment in there about the capital protections and financial safeguards provided by Amazon and X-Energy. Could you talk about, you know, what that involves and how the risk sharing might be allocated between X-Energy and Amazon? I mean, I’m sure there’s lots of stuff that wouldn’t be proper to discuss in a public domain, but just to the extent you could give us a little more color on it would be helpful.

Clay Sell (Chief Executive Officer)

Well, we’ve defined the early scope of the project—feasibility, preparation of the construction permit, community engagement, and the outline of what the commercial arrangement would be between Amazon and AEP. So it is a defined early scope that will develop all of the information that is necessary for AEP and the parties involved to make the next steps through the process. So I think, again, we benefit from working with very sophisticated parties that have a structured, proprietary process to move through the decision-making channels.

And we’re, you know, we’re thrilled that AEP has selected us to move forward at the Sullivan County site, which is a fantastic site for Xe-100 reactors and represents, you know, a really extraordinary opportunity. To the best of my knowledge, there is no investor-owned utility in the United States that has certainly chosen an SMR or an advanced technology like ours to proceed forward with the project. And it’s the early stage, but you can’t get to the second stage unless you start with the first stage.

And I think we are in a uniquely advantaged position, you know, in that regard.

Mark Bianchi (Analyst)

Okay, thanks, Clay. I’ll turn it back.

OPERATOR

And your next question comes from the line of Joseph Osha. We’re at Guggenheim Securities. Please go ahead.

Joseph Osha (Analyst)

Thanks, and good morning. Thanks for taking my question. Just following up a little bit on the previous one. Obviously the Dow FID is important, but in your materials you also talk about procuring long lead time materials as part of that process of getting ready to build. Can you talk about some of the key challenges there and things we should be looking for?

Clay Sell (Chief Executive Officer)

Well, thanks for the question, Joe. Part of our strategy is we are planning to get to scale and to get to scale relatively quickly. And that means that we have to make early investments to ensure that the supply chain for graphite, for steel forgings, for enriched material, for steam generator tubes—that those materials are available in the capacity that we need when we need it. And so we’ve chosen to make some early investments to secure capacity and to buy early material with the full expectation that when our customers reach their investment decisions they will take over those obligations on a go-forward basis.

So why are we doing that? We are doing that to accelerate the development of our supply chain so we and our customers will have confidence that it’s there when they need it. So you’ve seen, over the course of the last several months, we’ve announced the securing of capacity at Doosan Enerbility for our large steel components. You’ve seen us announce capacity reservations and material from Toyo Tanso and SGL for graphite. We recently announced an early procurement of material for steam generator tubes from Alleima.

So all of these strategies are really to support the development of our supply chain and ensuring that it is available for our customers when they need it. And I think it’s a smart and appropriate and limited use of our capital and balance sheet to support our long-term goals. Yeah, the work is already in development. You know we previously guided that, you know, we expect that first project to be online in the early 2030s. So we are planning for, you know, we expect the operating license review period to be about 18 months. That will conclude just before we load fuel and begin the startup and commissioning process. So we have an ample period of time to do the work to prepare that operating license. And probably you can kind of think in terms of us filing it with the NRC probably about two years before the project goes into commissioning.

So we’re well ahead of where we need to be. And we kind of highlight that on page four of the deck that we submitted today.

OPERATOR

And your next question comes from the line of David Arcaro with Morgan Stanley. Please go ahead.

David Arcaro (Analyst)

Okay, thanks so much. Good morning. Congratulations on all the operational milestones that you’ve achieved over the past quarter. I did… Let’s see, I wanted to ask maybe more broadly, following the midterm elections, do you see any changes to overall levels of support for nuclear and fuel production maybe at the federal level post-election?

Clay Sell (Chief Executive Officer)

Honestly, no. Our industry has been one of the rare, unique bipartisan issues in Washington for almost the last eight years. And it’s been really extraordinary, and we anticipate that that will continue going forward. We’ve already had, you know, we’ve continued to have discussions with both sides of the aisle. It’s always been our practice. You know, I’m in the energy business. My interest is long-term durable policy support, and so we’ve always worked to maintain the strong bipartisan support.

We benefited from it. I think it’ll be an asset for us going forward. And so the Republican-controlled Congress and the administration has been great. The Biden administration in the previous term was great for nuclear. And we anticipate we’ll continue to see strong support across the board going forward. I mean, we’re really in a fortunate position, but quite frankly, it’s earned and it’s deserved because there is broad recognition of the role that nuclear can play in national security, in energy security, and in addressing the needs for climate change.

So whatever your motivation is, sometimes they come from different sides or different corners, but they all get to the same answer, which is the United States and the world needs a massive deployment of new nuclear power to meet our national interests. And so I think we’re going to continue to be in a strong position.

David Arcaro (Analyst)

Yeah, makes sense. Okay, thanks so much. And then I was wondering, maybe on the NRC side of things, you know, you got the construction permit here for the Dow project ahead of schedule. I’m curious if you could talk about is that replicable now for future projects? Could it be even faster? Kind of what’s the aspiration for the next one that you would submit?

Clay Sell (Chief Executive Officer)

Yes and yes, a tremendous amount of the work. Because remember, David, the nuclear island, the reactor and the nuclear steam supply system, that is where all of our safety-related systems exist. That package will be the same for our first and our subsequent plants. All of the engineering and safety analysis that was required to get that approved for the Dow project will be replicable for Energy Northwest, for AEP, and on and on. We do anticipate that this process—it took us 17 months from the time it was docketed until it was issued—we anticipate that that will go down substantially for each subsequent application. The unofficial guidance, the unofficial guidance that we’ve heard, that the NRC has provided to us, is that their goal, their objective, is to get it to something in the range of 6 to 12 months.

So I’ve told you, I’ve told others for many months now, that the regulatory framework, the regulatory risk, can be well managed and the regulatory pathway is not on the critical path for any of our projects. I’ll say that again: regulatory approval is not on the critical path for any of our projects. It really relates more to the supply chain, which is why we are making early investments in the supply chain, because that’s the best opportunity to reduce schedule on our future projects.

David Arcaro (Analyst)

Great. Makes a lot of sense. Thank you.

OPERATOR

Thank you. And your next question comes from the line of Jeremy Tonette with JPMorgan. Please go ahead.

Jeremy Tonette (Analyst)

Hi, good morning.

Clay Sell (Chief Executive Officer)

Hi, Jeremy.

Jeremy Tonette (Analyst)

Just wanted to come back to this announcement with AEP and Amazon here, and if I look across AEP’s footprint, there’s a lot of coal plant retirements. It’s a large footprint, and I imagine there’s other overlap with Amazon. How much could this serve as a template for future announcements? Is there anything that we should be thinking about there?

Clay Sell (Chief Executive Officer)

I would love for you to think about it. I’m not in a position to preview future announcements, but neither will I argue with the conclusion or the deduction that you’ve made.

Jeremy Tonette (Analyst)

Got it. That’s my only question. Thank you very much. Appreciate it.

Clay Sell (Chief Executive Officer)

Thanks, Jeremy.

OPERATOR

And your next question comes from the line of Nate Pendleton with Texas Capital. Please go ahead.

Nate Pendleton (Analyst)

Good morning and congrats on the continued progress. Maybe can you walk us through the non-nuclear test program at Frederick? What have the tests at XTAC shown so far? Maybe how is testing of key components sequenced against design finalization in Dow’s 2027 investment decision?

Clay Sell (Chief Executive Officer)

So we have done some—we’re doing initial testing now on graphite components and some of our less material but nonetheless important components. The activity at Frederick at the XTAC facility is not a significant input to Dow’s next investment decision. You can really think about this facility as a place—it’s not whether things work, it’s the process that we will use to install them. It’s an opportunity to validate our manufacturing processes, to validate our long-term O&M assumptions.

And so that’s really the work that will go on at Frederick. The main thing that we will do is, over the course of the next couple of years, we will bring to operation our helium test loop. So this will be a helium test loop where we will exercise and validate all of our mechanical systems that operate in the helium environment. There aren’t very many mechanical systems that operate in the helium environment. You can really think as basically three: our fuel handling system, our helium circulator system, and our control rods and our control rod drive mechanisms.

So we will test those components in the helium environment just to assure—again, it goes to how we install them, how we do O&M on them over the course of the life of the plant. That’s really the best picture I can provide to you as to the type of data we’ll be collecting out of our XTAC facility. Great question.

Nate Pendleton (Analyst)

Got it. Thanks for that, Clay. And perhaps can you talk about your irradiation campaign at the ATR, since I believe it should be nearing completion at this point? What has the team learned and how do those results line up with what you’re expecting?

Clay Sell (Chief Executive Officer)

I don’t think—I don’t have any news to report to you on that. You’re right, we’re still… It’s a very, very exciting campaign that we’re going. I’ll tell you, the interim results that we have obtained have met all of our expectations. But we’ll complete the campaign, we’ll do the full assessment, and we’ll provide an appropriate report thereafter. But yeah, it’s nothing like having your own fuel under irradiation at the Advanced Test Reactor in Idaho and seeing it perform to expectations. It’s kind of like watching your child play sports—seeing them succeed. It’s a very, very satisfying part of our campaign.

Nate Pendleton (Analyst)

That’s great. Thanks for all that detail and congrats again.

OPERATOR

All right, thank you. And your next question comes from the line of Seth Basham with Wedbush Securities. Please go ahead.

Seth Basham (Analyst at Wedbush Securities)

Thanks a lot. Good morning, and thanks for taking my question. Back to the Dow project, you mentioned that you’re still completing the design for the XE100 reactor. Is this a prerequisite for preliminary FID by Dow to complete the design?

Clay Sell (Chief Executive Officer)

Correct. Is that your question? No. We will have—no, no, we’ll have the design complete before we start construction. But there are still, you know, we’re still in the final design process: the manufacturing drawings, detailed construction plans. We’re still in that phase. And that will not be completed before Dow takes its preliminary investment decision. It will be completed before we start construction.

Seth Basham (Analyst at Wedbush Securities)

Got it. That’s helpful. I mean, just given the history of the industry with cost overruns, with Darlington being the most recent example from engineering-related problems, how should we think about the level of engineering that’s necessary before Dow gives FID? Are we talking Class 3 or something even more detailed?

Clay Sell (Chief Executive Officer)

Well, I love this question, and I have to acknowledge my bias, Seth. I’ve been around this industry—I’ve been a participant and an observer of it—for 30 years. And there is a reason when I came back to this industry that I joined X-Energy with their Generation 4 technology. Like I have a strong bias. It is my view that the future belongs to advanced technologies that have a meltdown-proof design, that have intrinsic safety, that have a simpler design with fewer components, with less steel, with less concrete.

And the reason I believe that is because I think we have to make these plants easier to build now. We also have to avoid other mistakes that have been made in our industry in the past, like starting construction before you have it completely designed. And so, you know, we observe closely everything that is happening in our sector, and it does not intimidate us. It validates the choices that we’ve made when we see challenges across the sector, because we set out at the beginning to bring a technology to the marketplace that could address the number one risk that has held nuclear power plants back, and that is the inability to deliver these projects on time and on budget due to the increasing complexity of these designs.

So we’ve simplified, we’ve learned the lessons. We’ll get the engineering and design work done before we start construction. We’ll have an acceptable cost target. Our objective, our belief, is that whatever Dow and X-Energy publish as the initial cost and the initial schedule, we will be in a confident position to meet that. I think once we do that—when we do that—the world will beat a path to our door. And even in addition to the backlog of projects that we have already, many more will come. So that’s the game. That’s the game for us, and we are intensely, intensely focused on succeeding on that front and avoiding the mistakes that have been made in the past. So you’ve hit on something that I’m quite passionate about. It’s what X-Energy is staking its reputation on, and we intend to exceed and succeed on our first project.

Seth Basham (Analyst at Wedbush Securities)

Great insight. Thank you so much.

OPERATOR

Thank you. And that concludes our question and answer session. I would like to hand it back to Clay Sell for closing remarks.

Clay Sell (Chief Executive Officer)

Well, thank you everyone for joining us today. We look forward to sharing additional updates next quarter as we continue to execute against our near-term milestones and show you how we are continuing to position the company to be a leader in the nuclear industry. I really appreciate your time. I appreciate your questions. It’s 9:01, and we’re happy to close it down right on schedule. Thank you.

OPERATOR

Thank you, presenters, and ladies and gentlemen, this concludes today’s conference call. Thank you all for joining. You may now disconnect.

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