[Centrus Energy] 2025 2Q Earning Forecast (written on July 2nd, 2025)

I forecasted Centrus Energy's 2Q 2025 earnings as follows:

2Q Revenue: $161.2~242.8 million (HALEU: $38.9M / LEU $122.3M~$203.9M)

2Q EPS: $3.22

The Earnings Release compared to the Market Consensus is as follows:

The 2Q earnings are beyond the market consensus but below my predictions.

My detailed analysis on the 2Q earnings would follow this post.

Before then, I would like to share my detailed analysis on the 2Q earnings forecast as below:

Why Centrus Energy's inventories owed to customers and suppliers are increased so big in 2025 1Q compared to 2024 4Q?

The sharp increase in Centrus Energy's "inventories owed to customers and suppliers" liability from 2024 Q4 to 2025 Q1 is primarily due to the timing and value of nuclear fuel shipments in transit. According to Centrus management during the Q1 2025 earnings call, a significant driver was the shipment and transport of inventory and end product (including both SWU and UF6) from Saint Petersburg, Russia, to the United States. When these high-value shipments are in transit, they are recorded as "inventories owed," which temporarily increases the liability on the balance sheet^[1].

This accounting treatment reflects the fact that, while the inventory is physically moving and not yet delivered to its final destination or customer, Centrus has a contractual obligation to either customers (for eventual delivery) or suppliers (pending receipt and ownership transfer). The timing of these large, valuable shipments can cause notable quarter-to-quarter fluctuations in this liability account^[1].

In summary, the big jump in "inventories owed to customers and suppliers" in Q1 2025 was mainly driven by the presence of high-value nuclear fuel shipments in transit at quarter-end, which is a normal but sometimes pronounced feature of Centrus's operating cycle^[1].

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1.      https://www.investing.com/news/transcripts/earnings-call-transcript-centrus-energy-q1-2025-beats-eps-forecast-stock-surges-93CH-4033101  

 

Financial Analysis of Centrus Energy's Inventory and Revenue Trends

Key Observations from 2025 Q1 Financial Statements

·       Inventories owed to customers/suppliers: Significant increase (indicating high-value shipments in transit)

·       Deferred revenue/advances: Minimal change (customer prepayments remained stable)

·       Inventories (balance sheet): Major increase (cash outflow for inventory buildup)

·       Cash flow impact:

o   Inventory increase → Cash outflow

o   Inventories owed increase → Cash inflow

This pattern represents a timing difference in operational cash flows not observed in 2022-2024 quarters, suggesting a unique event in Q1 2025.

Financial Implications

1. Operational Timing Event
The divergence indicates:

·       Centrus received inventory obligations (likely from suppliers or in-transit goods) without corresponding customer prepayments

·       Cash outflow occurred for inventory buildup, while cash inflow came from obligations tied to those inventories

·       This suggests a large-scale shipment event where inventory was acquired/moved but not yet delivered to customers

2. Impact on Next Quarter Sales
Based on historical patterns and accounting principles:

·       Increased inventories owed typically precedes revenue recognition in the following quarter

·       The Q1 inventory buildup and obligations signal significant pending deliveries for Q2

·       Expected Q2 outcomes:

o   ↑ Revenue recognition as shipments complete

o   ↓ Inventories owed (as obligations are fulfilled)

o   Potential ↑ Gross profit if sales prices exceed inventory costs

3. Historical Context (2022-2024)
Reviewing SEC filings and Centrus financial statements:

Year/Quarter	Inventories Owed Trend	Deferred Revenue Trend	Subsequent Quarter Revenue
2022 Q1-Q4	Moderate fluctuations	Stable	No significant correlation
2023 Q1-Q4	Minor quarterly changes	Consistent with sales	Normal seasonal patterns
2024 Q1-Q4	No major spikes	Gradual increases	Steady revenue growth
2025 Q1	Sharp increase	Unchanged	Expected Q2 revenue jump

Conclusion

This atypical Q1 2025 pattern signals:

1.      Short-term working capital impact from synchronized inventory movements

2.     Strong revenue pipeline for Q2 2025 as obligations convert to sales

3.     Non-recurring operational event rather than systemic financial change

The unchanged deferred revenue confirms this isn't driven by new customer prepayments, but rather by physical inventory movement timing. Historical data suggests this anomaly should resolve in Q2 with elevated revenue recognition as shipments complete.