Release Date: February 24, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q: Can you offer an update on where Medical profitability was for the full year 2024 and how we should be thinking about the incremental EBITDA margins in medical from here? A: Yes. In 2023, we slightly turned positive and built upon that in 2024. The margins in the medical segment are at or slightly above the overall segment, contributing positively to both EBITDA and revenue. We expect similar growth in 2025.
Q: If GE Hitachi were to get some SMR orders from U.S. customers like Tennessee Valley Authority, would you be able to service that manufacturing work out of your facilities in Canada? A: Yes, we would be able to service that out of our Cambridge plant. The capacity expansion is designed to handle multiple projects, including reactor pressure vessels. We would fill the Canadian plant before considering expansion in the U.S.
Q: How are you thinking about tariff risk, both on the commercial nuclear side and the medical side? A: The tariff risk is concerning, especially for our medical business, as we export a significant amount to the U.S. The commercial power business is mostly self-contained in Canada, so the impact is less. We are monitoring the situation closely.
Q: How do you think about the possibility of expansion into hexafluoride conversion, whether organically or through acquisitions? A: We have the capability to do conversion and deconversion internally, but it would require additional plant capacity and a new process line. It's something we would consider standing up organically rather than acquiring.
Q: Can you provide an update on the process with the FDA regarding Tc-99 and the timeline for the 2026 contract season? A: We signed a second supply agreement with a major radiopharmaceutical chain in the U.S. We are perfecting our formulary and anticipate FDA approval this year, aiming for production contracts in 2026.
Q: What are the biggest contributors in dollars over the next five years, and how do you think about the variability around those medium-term drivers? A: In the near term, SMRs and nuclear medicine are key growth drivers. Medium-term growth will be driven by AUKUS and microreactors. Long-term, enrichment and large-scale commercial nuclear reactors will be significant contributors.
Q: Could you talk more about the BANR program and its relationship with Pele? A: BANR is a commercial derivative of Pele, designed for different power outputs. Pele is in the 1-5 megawatt class, while BANR is in the 15-20 megawatt class. Both programs share lessons and team members, and we are hopeful for positive commercial outcomes.
Q: What's the latest on the DRACO program, and are there any expected headwinds? A: The DRACO program has seen scope increases, particularly around testing, which adds new scope to our contract. This is business for us, and there are no issues currently.
Q: Can you provide details on the new Navy contract and its impact on margins? A: We don't expect a significant impact on margins from the new pricing agreement. We have been working through economic realities and are pleased with the contract, which reflects the current economic environment.
Q: How does the regulatory environment and potential full-year CR impact your operations? A: We are monitoring the situation, but our major programs are programs of record, which should mitigate the impact of a full-year CR. We have received authority to proceed on several projects, indicating business as usual.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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