CENTRUS ENERGY : Management's Discussion and Analysis of Financial Condition and Results of Operations (form 10-Q)

The following discussion should be read in conjunction with, and is qualified in
its entirety by reference to, the unaudited condensed 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 the COVID-19 pandemic, including emerging variants. See "Forward-Looking Statements" at the beginning of this Quarterly Report on Form 10-Q.

Overview

Centrus Energy Corp., a Delaware corporation, is a trusted supplier of nuclear
fuel 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 otherwise indicates.

Centrus operates two business segments: (a) low-enriched uranium ("LEU"), which
supplies various components of nuclear fuel to utilities 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
nuclear fuel to utilities operating 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 long-term sales contracts with major utilities
through 2030. We have secured cost-competitive supplies of SWU under long-term
contracts through the end of this decade to allow 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. Spot price indicators for SWU
have risen by approximately 59% since bottoming out in August 2018.

In October 2020, the U.S. Department of Commerce reached agreement with the
Russian Federation on an extension of the 1992 Russian Suspension Agreement, a
trade agreement which 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
shipments to the United States through 2028 to execute Centrus' long-term supply
agreement (the "TENEX Supply Contract") with the Russian government entity,
TENEX, Joint-Stock Company ("TENEX"). This outcome allows for sufficient quota
for Centrus to continue serving its utility customers.


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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 has as its goal the restoration of America's
domestic uranium enrichment capability, to play a critical role in meeting U.S.
national security and energy security requirements, in advancing America's
nonproliferation objectives, and in delivering 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 U.S. national security requirements since
the aging 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 U.S. national security missions.
Our AC100M centrifuge is currently the only deployment-ready U.S. uranium
enrichment technology in the U.S. that can meet these national security
requirements.

Centrus is uniquely positioned to lead the transition to a new nuclear fuel
component known as high-assay low-enriched uranium ("HALEU"), which is expected
to be required by the commercial and government sectors for a number of advanced
reactor and fuel designs currently under development. Centrus is the only
company with a license from the U.S. Nuclear Regulatory Commission ("NRC") to
enrich HALEU. While existing reactors typically operate on LEU with the
uranium-235 isotope concentration below 5%, HALEU has a uranium-235
concentration ranging from 5% to 20%, giving it several potential technical and
economic advantages. For example, the higher concentration of uranium-235 means
that reactors can be smaller and require less frequent refueling. Reactors can
also achieve higher "burnup" rates, meaning that a smaller volume of fuel will
be required overall and less waste will be produced. HALEU may also be used in
the future to fabricate next-generation fuel forms for the existing fleet of
reactors in the United States and around the world. These new HALEU-based fuels
could enhance the economics of nuclear reactors and their inherent safety
features while increasing the amount of electricity that can be generated at
existing reactors. HALEU fuel may also ultimately be used in new commercial and
government applications in the future, such as reactors for the U.S. military or
the U.S. space program.

In 2019, Centrus began work on a three-year, $115 million cost-share contract
(the "HALEU Contract") with the U.S. Department of Energy ("DOE") to deploy a
cascade of 16 of our AC100M centrifuges to demonstrate production of HALEU with
domestic technology. Despite the challenges of COVID-19, we have continued to
make progress under the HALEU Contract. In June 2021, Centrus announced that the
NRC approved the Company's license amendment request to enrich HALEU at the
Piketon, Ohio, enrichment facility (the "Piketon facility"). The Piketon
facility is currently the only U.S. facility licensed to enrich uranium up to
20% Uranium-235 (U-235). Centrus expects to begin demonstrating HALEU production
of modest quantities of HALEU in early 2022 at the Piketon facility. The HALEU
Contract term is through May 31, 2022.

At present, work under the HALEU Contract remains on schedule but we have been
experiencing increased delays from vendors and increased costs due to the
continuing effects of the COVID-19 pandemic. Additionally, COVID-19 related
supply chain difficulties may also affect DOE in its supply of equipment that it
is required to furnish under the contract. As a result, we currently estimate
that costs to complete the existing scope of the HALEU Contract have increased
approximately $8.8 million over the 2019 initial estimate. Additional COVID-19
related impacts, delays in DOE furnishing equipment, or changes to the existing
scope of the HALEU Contract could result in material further increases to our
estimate of the costs required to complete the demonstration cascade and produce
HALEU, as well as delay completion of the HALEU Contract. The Company does not
currently have a contractual obligation to perform work in excess of the 2019
initial cost estimate for the HALEU Contract and therefore, no additional costs
have been accrued as of June 30, 2021. We have informed DOE that we currently
estimate the cost to complete the demonstration cascade and produce HALEU has
increased from the 2019 initial cost estimate and we plan to seek additional
funding commitments from DOE for the additional costs. If the Company commits to
a plan to complete the demonstration cascade and produce HALEU and DOE does not
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commit to fully fund the additional costs, we may incur material additional costs or losses in future periods that could have an adverse impact on our financial condition and liquidity.

We believe our investment in the HALEU technology 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. At present, there are a
number of demonstration advanced reactors under development. 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
currently pursuing HALEU enrichment capability, we believe the Company could be
positioned to capitalize on a potential new market as the demand for HALEU-based
fuels increases in the mid- to late-2020s with the development of advanced
reactors. Further, 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 and
operated competitors could seek to enter the market and offer HALEU at more
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. Other foreign government-owned
entities which 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.
These potential market participants have indicated publicly that it would take 6
to 7 years to be able to produce HALEU.

The HALEU demonstration program is expected to be completed in early 2022, and
we have been working on developing options to sustain and expand our
demonstrated capability for the period following the conclusion of the program.
Our goal is to scale up the Piketon facility in modular fashion as demand for
HALEU grows in the commercial and government sectors, subject to the
availability of funding and/or contracts to purchase the HALEU.

On May 28, 2021, the President submitted his proposed budget for government
fiscal year 2022, which runs from October 1, 2021, to September 30, 2022. The
budget proposal included approximately $33 million for the creation of a new
"HALEU availability" program as authorized by the Energy Act of 2020. The DOE's
Office of Nuclear Energy has listed the Energy Act of 2020 in the President's
budget to support the provision of HALEU as one of its key takeaways, stating:
"For advanced reactors to realize their full potential, most will require a fuel
that is not currently available at commercial scale. [The Department] is seeking
$33 million to initiate a new program to provide high-assay low-enriched uranium
(HALEU) for advanced reactor demonstration projects and future
commercialization. The new program, authorized by the Energy Act of 2020,
responds to congressional direction to ensure HALEU fuel is commercially
available when advanced reactors enter the marketplace."

As the DOE Office of Nuclear Energy further stated: "It is projected that more
than 40 metric tons of HALEU will be needed by 2030 with additional amounts
required each year to deploy a new fleet of advanced reactors and support the
Administration's net-zero emissions targets by 2050." In addition, the budget
proposal states that one of the goals of the HALEU availability program is to
"Continue to operate the 16-centrifuge cascade in Piketon to provide a limited
amount of HALEU while working on efforts to commercialize the technology."

While we are encouraged by the President's budget submission and the statements
made by DOE, as well as indications of strong bipartisan and stakeholder
support, it is not clear how much funding, if any, will be included in the final
U.S. government budget for 2022. Further, it is not clear what portion, if any,
of the final budget would be allocated to the demonstration cascade or other
Centrus projects. Finally, there is no assurance that sufficient government or
commercial funding or demand for material will be timely secured to permit the
continued operation or expansion of the demonstration cascade. If sufficient
funding or a contract for the output is not secured, we would need to terminate
operation of the demonstration cascade or continue to operate the cascade at
what may be a substantial loss with an adverse effect on our liquidity. Refer to
Operating Results - Technical Solutions below and Part I, Item 1A, Risk Factors,
in our Annual Report on Form 10-K for the year ended December 31, 2020 for
additional details, as updated in this report in Part II, Item 1A, Risk Factors.

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In late 2020, DOE announced ten awards under its Advanced Reactor Demonstration
Program ("ARDP") aimed at helping innovative, next-generation reactor designs to
overcome technical and financial obstacles to allow for commercialization. This
includes a commitment to support construction of two demonstration reactors over
the next seven years and awards to support continued development of eight other
reactor designs. Nine of the ten reactor designs chosen are expected to require
HALEU fuel.

Centrus has built formal and informal relationships with most of the ARDP
awardees and expects to be first to market with domestically-produced HALEU that
could be used to fuel these reactors. For example, on September 15, 2020,
Centrus made a joint announcement with TerraPower LLC ("TerraPower") that the
two companies plan to work together toward establishing commercial-scale
domestic HALEU production capabilities. Centrus also has worked under a series
of contracts with X Energy, LLC ("X-energy"), a pioneering advanced reactor and
advanced nuclear fuel company, to support X-energy's work to develop a facility
to fabricate HALEU into an advanced fuel called tristructural isotropic
("TRISO") fuel.

On October 13, 2020, DOE announced it had selected TerraPower and X-energy to
receive $160 million in initial funding under the new ARDP. While first-year
funding for the two companies totaled $160 million, DOE announced its intent
ultimately to provide a combined total of $3.2 billion over a seven year period
to help TerraPower and X-energy build their first reactors. The awards are
subject to annual appropriations by Congress and there can be no assurance that
the projects will be completed. We have preliminarily agreed to provide support
to each of these teams as part of our strategy to become the preferred fuel
provider to the next generation of advanced reactors. However, we do not have a
contract to fuel the reactors and there is no assurance that the reactor
projects will go forward or that TerraPower and X-energy will ultimately
purchase HALEU from Centrus to fuel the reactors.

On October 13, 2020, Centrus announced the signing of a memorandum of
understanding with Terrestrial Energy USA ("TEUSA") to secure fuel supply for a
future fleet of TEUSA's Integral Molten Salt Reactor ("IMSR") power plants. The
two companies will evaluate the logistical, regulatory, and transportation
requirements to establish fuel supply for IMSR power plants, which use LEU.
There can be no assurance that the Company and TEUSA will ultimately enter into
a contract on terms that will be acceptable.

With the specialized capabilities and workforce at our Technology and
Manufacturing Center in Oak Ridge, Tennessee, we are performing technical,
engineering and manufacturing services for a range of commercial and government
customers and actively working to secure new customers. Our experience
developing, licensing, manufacturing, and operating advanced nuclear components
and systems positions us to provide critical design, engineering, manufacturing,
and other services to a broad range of potential clients, including those
involving sensitive or classified technologies. This work includes design,
engineering, manufacturing, and licensing services support for advanced reactor
and fuel fabrication projects as well as D&D work.

The Company continues to review opportunities to improve its capital structure
and to enhance shareholder value. As a result, pursuant to a sales agreement
with its agents, the Company sold at the market price an aggregate of 1,238,637
shares of its Class A Common Stock in the six months ended June 30, 2021, for a
total of $28.7 million. After expenses and commissions paid to the agents, the
Company's proceeds total $27.6 million. Additionally, the Company recorded
direct costs of $0.4 million related to the issuance. The shares of Class A
Common Stock were issued pursuant to the Company's shelf registration statement
on Form S-3 (File No. 333-239242), which became effective on August 5, 2020, and
a prospectus supplement dated December 31, 2020, to the prospectus. In addition
and in connection with the entry into the amendment (the "Voting Agreement
Amendment") to its existing Voting and Nomination Agreement with Mr. Morris
Bawabeh, Kulayba LLC and M&D Bawabeh Foundation, Inc., the Company and Kulayba
LLC also entered into an Exchange Agreement, dated February 2, 2021 (the
"Exchange Agreement"), pursuant to which Kulayba LLC agreed to exchange (the
"Exchange") 3,873 shares of the Company's outstanding Series B Senior Preferred
Stock, par value $1.00 per share ("Preferred Stock"), representing a $5,000,198
liquidation preference (including accrued and unpaid dividends), for (i) 231,276
shares of the Company's Class A Common Stock, priced at the closing market price
of $21.62 on the date the Exchange Agreement was signed and (ii) a Centrus
Energy Corp. Warrant to Purchase Common Stock (the "Warrant"), exercisable for
250,000 shares of Common Stock at an exercise price of $21.62 per share, which
was
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the closing market price on the date the Exchange Agreement was signed, subject to certain customary adjustments pursuant to the terms of the Warrant. The Company retired the 3,873 shares of Preferred Stock received by the Company under the Exchange Agreement.

The nuclear industry in general, and the nuclear fuel industry in particular, is
in a period of significant change, which continues to affect the competitive
landscape. In the years following the 2011 Fukushima accident in Japan, the
published market prices for uranium enrichment declined more than 75% through
mid-2018. While the monthly price indicators have since increased, the uranium
enrichment segment of the nuclear fuel market remains oversupplied and faces
uncertainty about future demand for nuclear power generation. Changes in the
competitive landscape affect pricing trends, change customer spending patterns,
and create uncertainty. To address these changes, we have taken steps to adjust
our cost structure; we may seek further adjustments to our cost structure and
operations and evaluate opportunities to grow our business organically or
through acquisitions and other strategic transactions.

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

On March 11, 2020, the World Health Organization declared COVID-19 a global
pandemic and recommended containment and mitigation measures worldwide. The
Company has taken actions to protect its workforce and to maintain critical
operations. 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 are
working with our suppliers, fabricators, and customers to monitor the situation
closely, including with respect to the impact of emerging variants. However, 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. Many of these
restrictions remain in place and we continue to monitor and adjust as necessary.
As a result, the Company has instituted measures such as expanded telework to
protect our 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 to protect our workforce. Not all
work, however, can be performed remotely. 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 anticipate increased costs from them as a result of the impact
of the COVID-19 pandemic on their operations. Refer to the HALEU Contract
discussion above in Overview for additional details.

We are working closely with DOE and we are continuing to make progress while
implementing measures to protect our workforce. To date, there has been minimal
impact to our financial results; however, we cannot reasonably estimate the
length or severity of this pandemic, or the extent to which the disruption may
materially impact our consolidated financial position, consolidated results of
operations, and consolidated cash flows in fiscal 2021 at this time.

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, 2020, as updated by Part II,
Item 1A, Risk Factors, in this report.

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Operating Results

Our revenues, operating results, and cash flows can fluctuate significantly from
quarter to quarter and year to year. Operating results for the three and six
months ended June 30, 2021, are not necessarily indicative of the results that
may be expected for the year ending December 31, 2021.

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 2021-2022. In 2020, we benefited from the one-time collection from a
customer of $32.6 million in settlement of a supply contract that was subject to
the customer's bankruptcy proceeding. Based on our current order book and under
current market conditions, we anticipate fiscal year 2021 and fiscal year 2022
revenues in the LEU segment to be slightly higher than 2020 and gross margins to
be similar to 2020, excluding the one-time claim recovery. Please see Forward
Looking Statements at the beginning of this Quarterly Report. With respect to
our technical solutions segment, work under the HALEU Contract currently remains
on schedule but we have been experiencing increased delays from vendors and
increased costs due to the continuing COVID pandemic. We are working with DOE to
minimize the impacts and to obtain funding for these additional costs.
Additional funding commitments from DOE and a contract amendment will be
required to complete the project. Refer to Overview above for additional
details.

Our order book of sales under contract in the LEU segment extends to 2030. As of
June 30, 2021, the order book was approximately $1 billion. The order book
represents the estimated aggregate dollar amount of revenue for future SWU and
uranium deliveries under contract which includes approximately $321 million of
Deferred Revenue and Advances from Customers. We estimate that approximately 2%
of our order book is at risk related to customer operations. Due to the nature
of the long term contracts and our order book, we have visibility of a
significant portion of our anticipated revenue for 2021 and 2022 in the LEU
segment. However, these long term contracts are subject to significant risks and
uncertainties, including potential import laws and restrictions, including under
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. For further discussion of these risks and
uncertainties, refer to Part I, Item 1A, Risk Factors, in our Annual Report on
Form 10-K for the year ended December 31, 2020.

Our future operating results are subject to a number of uncertainties that could
affect results either positively or negatively. Among the factors that could
affect our results are the following:
•Additional purchases or sales of SWU and uranium;
•Conditions in the LEU and energy markets, including pricing, demand,
operations, government restrictions on imports, exports or investments, and
regulations of our business and activities and those of our customers,
suppliers, contractors, and subcontractors;
•Timing of customer orders, related 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
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 might affect existing
contracts;
•Market, international trade and other conditions impacting Centrus' customers
and the industry; and
•The length 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, 2020,
as updated by Part II, Item 1A, Risk Factors, in this report.

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Revenue

We have two reportable segments: the LEU segment and the technical solutions
segment.
Revenue from our LEU segment is derived primarily from the following:
•sales of the SWU component of LEU;
•sales of both the SWU and uranium components of LEU; and
•sales of natural uranium.

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 77% of our total
revenue in 2020. The majority of our customers are domestic and international
utilities that operate nuclear power plants, with international sales
constituting approximately one-third of revenue from our LEU segment in recent
years. 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 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.

Centrus recognizes revenue 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 average roughly $5 million to $10 million
per order. As a result, a relatively small change in the timing of customer
orders for LEU may cause significant variability in our operating results.

Utility customers in general have the option to 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 unaudited condensed consolidated financial
statements for further details.

Our financial performance over time can be affected significantly by changes in
prices for SWU and uranium. Since 2011, market prices for SWU and uranium
significantly declined until mid-2018, when they began to trend upward. 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 market prices
prevalent in recent years, a few older contracts included in our order book have
sales prices that are significantly above current market prices.


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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-20210630_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 denominated in U.S. dollars.

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

Cost of sales for SWU and uranium is based on the amount of SWU and uranium sold
and delivered during the period and unit inventory costs. Unit inventory costs
are determined using the average cost method. Changes in purchase costs have an
effect on inventory costs and cost of sales over current and future periods.
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.

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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 private sector customers, we seek to leverage our
domestic enrichment 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.

Government Contracting

On October 31, 2019, we signed the 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. 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 in Piketon, Ohio. 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 HALEU Contract, once fully implemented, is expected to
result in the Company having demonstrated the capability 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.

Under the HALEU Contract, DOE agreed to reimburse the Company for 80% of its
costs incurred in performing the contract, up to a maximum of $115 million. The
Company's cost share is the corresponding 20% and any costs the Company elects
to incur above these amounts. Costs under the HALEU Contract include program
costs, including internal labor, third-party services and materials and
associated indirect costs that are classified as Cost of Sales, and an
allocation of corporate costs supporting the program that are classified as
Selling, General and Administrative Expenses. Services to be provided over the
three-year contract include constructing and assembling centrifuge machines and
related infrastructure in a cascade formation and production of a small quantity
of HALEU. When estimates of total costs for such an integrated,
construction-type contract exceed estimates of total revenue to be earned, a
provision for the remaining loss on the contract is recorded to Cost of Sales in
the period the loss is determined. Our corporate costs supporting the program
are recognized as expense as incurred over the duration of the contract term. In
2019, the portion of our anticipated cost share under the HALEU Contract
representing our share of projected program costs was recognized in Cost of
Sales as an accrued loss of $18.3 million. The accrued loss on the contract is
being adjusted over the remaining contract term based on actual results,
remaining program cost projections and the Company's anticipated cost-share.
Cost of Sales in the six months ended June 30, 2021 and 2020, benefited by $4.6
million and $5.3 million, respectively, for previously accrued contract losses
attributable to work performed in the periods. As of June 30, 2021, a total of
$15.2 million of previously accrued contract losses have been realized and the
accrued contract loss balance included in Accounts Payable and Accrued
Liabilities was $3.1 million. Our HALEU Contract expires May 31, 2022 and
although we believe demand for HALEU will emerge over the next several years
thereafter, 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.


                                       31
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At present, work under the HALEU Contract remains on schedule but we have been
experiencing increased delays from vendors and increased costs due to the
continuing effects of the COVID-19 pandemic. Additionally, COVID-19 related
supply chain difficulties may also affect DOE in its supply of equipment that it
is required to furnish under the contract. As a result, we currently estimate
that costs to complete the existing scope of the HALEU Contract have increased
approximately $8.8 million over the 2019 initial estimate. Additional COVID-19
related impacts, delays in DOE furnishing equipment, or changes to the existing
scope of the HALEU Contract could result in material further increases to our
estimate of the costs required to complete the demonstration cascade and produce
HALEU, as well as delay completion of the HALEU Contract. The Company does not
currently have a contractual obligation to perform work in excess of the 2019
initial cost estimate for the HALEU Contract and therefore, no additional costs
have been accrued as of June 30, 2021. We have informed DOE that we currently
estimate the cost to complete the demonstration cascade and produce HALEU has
increased from the 2019 initial cost estimate and we plan to seek additional
funding commitments from DOE for the additional costs. If the Company commits to
a plan to complete the demonstration cascade and produce HALEU and DOE does not
commit to fully fund the additional costs, we may incur material additional
costs or losses in future periods that could have an adverse impact on our
financial condition and liquidity.

Commercial Contracting

In March 2018, we entered into an initial services agreement with X-energy to
provide technical and resource support for conceptual design of its TRISO fuel
manufacturing process. In November 2018, we entered into a second services
agreement with X-energy to proceed with preliminary design of the TRISO
facility. Under both agreements, which were funded by two separate cooperative
agreement awards by DOE, we provide X-energy with non-cash in-kind contributions
pursuant to X-energy's obligations under those agreements. In November 2020, the
parties extended the period of performance through August 2021.

Under the X-energy agreements, Centrus performs services pursuant to separate
task orders issued and provide for time-and-materials based pricing. The
cumulative task orders issued through October 2020 provided for payments to us
of $13.7 million and in-kind contributions provided by us of $7.5 million. Under
the current agreement, effective November 2020, the cumulative value of the
additional task orders issued provides for payments to us of $6.8 million and
in-kind contributions to be provided by us of $3.0 million.

In addition, we have entered into other contracts for engineering, design, and advanced manufacturing services with other commercial entities.

Prior Site Services Work

We formerly performed sites services work under contracts with DOE and its
contractors at the former Portsmouth GDP and Paducah GDP. The Company and DOE
have yet to fully settle the Company's claims for reimbursements for certain
pension and postretirement benefits costs related to past contract work
performed at the Portsmouth GDP and Paducah GDP. There is the potential to
recognize additional income for this work pending the outcome of legal
proceedings related to the Company's claims for payment and the potential
release of previously established valuation allowances on receivables. Refer to
Note 11, Commitments and Contingencies - Legal Matters, of our condensed
consolidated financial statements in Part I of this report for additional
information.

                                       32
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Results of Operations

Segment Information

The following tables present elements of the accompanying unaudited condensed
consolidated statements of operations that are categorized by segment (dollar
amounts in millions):

                                      Three Months Ended June 30,
                                            2021                    2020       $ Change      % Change
LEU segment
Revenue:
SWU revenue                   $          45.2                     $ 58.6      $  (13.4)         (23) %
Uranium revenue                             -                        4.8          (4.8)           -  %
Total                                    45.2                       63.4         (18.2)         (29) %
Cost of sales                            27.0                       18.9          (8.1)         (43) %
Gross profit                  $          18.2                     $ 44.5      $  (26.3)

Technical solutions segment
Revenue                       $          17.2                     $ 12.3      $    4.9           40  %
Cost of sales                            18.3                       13.0          (5.3)         (41) %
Gross (loss)                  $          (1.1)                    $ (0.7)     $   (0.4)

Total
Revenue                       $          62.4                     $ 75.7      $  (13.3)         (18) %
Cost of sales                            45.3                       31.9         (13.4)         (42) %
Gross profit                  $          17.1                     $ 43.8      $  (26.7)




                                        Six Months Ended June 30,
                                            2021                 2020        $ Change      % Change
   LEU segment
   Revenue:
   SWU revenue                   $        83.3                 $  89.3      $   (6.0)          (7) %
   Uranium revenue                           -                     4.8          (4.8)           -  %
   Total                                  83.3                    94.1         (10.8)         (11) %
   Cost of sales                          52.4                    32.2         (20.2)         (63) %
   Gross profit                  $        30.9                 $  61.9      $  (31.0)

Technical solutions segment

   Revenue                       $        34.7                 $  26.6      $    8.1           30  %
   Cost of sales                          36.8                    25.1         (11.7)         (47) %
   Gross profit (loss)           $        (2.1)                $   1.5      $   (3.6)

   Total
   Revenue                       $       118.0                 $ 120.7      $   (2.7)          (2) %
   Cost of sales                          89.2                    57.3         (31.9)         (56) %
   Gross profit                  $        28.8                 $  63.4      $  (34.6)




                                       33

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Revenue

Revenue from the LEU segment decreased $18.2 million (or 29%) in the three
months and $10.8 million (or 11%) in the six months ended June 30, 2021,
compared to the corresponding periods in 2020. SWU revenue in 2020 included a
one-time payment of $32.4 million collected from a customer as part of the
customer's bankruptcy proceeding. Excluding this one-time payment in 2020,
revenue from the sales of SWU increased $19.0 million in the three months and
$26.4 million in the six months ended June 30, 2021. The volume of SWU sold
increased 106% for the six-month period ended June 30, 2021 and the average SWU
price decreased 29%, largely due to the variability in timing of utility
customer orders and the particular contracts under which SWU were sold during
the periods. There were no uranium sales in the six months ended June 30, 2021,
compared to $4.8 million in the corresponding period in 2020.

Revenue from the technical solutions segment increased $4.9 million (or 40%) in
the three months and $8.1 million (or 30%) in the six months ended June 30,
2021, compared to the corresponding periods in 2020, due to increased work
performed under the HALEU and X-energy contracts. Revenue in the prior period
included work performed under a contract with UT-Battelle LLC.

Cost of Sales

Cost of sales for the LEU segment increased $8.1 million (or 43%) in the three
months and $20.2 million (or 63%) in the six months ended June 30, 2021,
compared to the corresponding periods in 2020, largely reflecting increases in
SWU sales volume partially offset by decreases in the average SWU unit cost. The
volume of SWU sold increased 157% for the three-month period and the average SWU
unit cost decreased 23%. The volume of SWU sold increased 106% for the six-month
period and the average SWU unit cost decreased 6%. Cost of sales in the first
quarter of 2021 included $15.9 million of previously deferred costs from
Deferred Costs Associated with Deferred Revenue that reflected higher inventory
costs from 2017-2018. Cost of sales also includes legacy costs related to former
employees of the Portsmouth and Paducah Gaseous Diffusion Plants of $1.4 million
in the six months ended June 30, 2021 compared to $1.7 million in the
corresponding period in 2020. Excluding legacy costs and previously deferred
sales, the average unit cost of sales for SWU decreased 20% in the six months
ended June 30, 2021, compared to the corresponding period in 2020.

Cost of sales for the technical solutions segment increased $5.3 million (or
41%) in the three months and $11.7 million (or 47%) in the six months ended June
30, 2021, compared to the corresponding periods in 2020, largely reflecting the
increase in contract work performed. Cost of sales benefited by $4.6 million in
the current six-month period and $5.3 million in the prior six-month period for
previously accrued contract losses attributable to work performed under the
HALEU Contract. For details on HALEU Contract accounting, refer to "Technical
Solutions - Government Contracting" above.

Gross Profit

We realized a gross profit of $17.1 million in the three months and $28.8
million in the six months ended June 30, 2021, compared to a gross profit of
$43.8 million and $63.4 million in the corresponding periods in 2020. Gross
profit in the three and six months ended June 30, 2020, included $32.4 million
collected from a customer in settlement of a supply contract that was rejected
as part of the customer's bankruptcy proceeding. Excluding these proceeds from
the 2020 periods, gross profit increased $5.7 million in the three-month period
and decreased $2.2 million in the six-month period.

Our LEU segment realized a gross profit of $18.2 million in the three months and
$30.9 million in the six months ended June 30, 2021, compared to a gross profit
of $44.5 million and $61.9 million in the corresponding periods in 2020.
Excluding the recovery on bankruptcy court claims of $32.4 million in the prior
periods, the gross profit for SWU sales increased $6.1 million in the
three-month period and $1.4 million in the six-month period due primarily to
increases in SWU sales volume and decreases in the average SWU unit cost,
partially offset by decreases in the average SWU sales price.
                                       34
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For the technical solutions segment, we realized a gross loss of $1.1 million in
the three months and $2.1 million in the six months ended June 30, 2021 compared
to a gross loss of $0.7 million and a gross profit of $1.5 million for the
corresponding periods in 2020. The gross profit in the prior six-month period
was primarily attributable to the UT-Battelle LLC contract awarded in February
2020. The Company began this scope of work in 2019, and associated costs were
recognized in both 2019 and the first half of 2020 when the work was completed.

Non-Segment Information

The following tables present elements of the accompanying unaudited condensed
consolidated statements of operations that are not categorized by segment
(dollar amounts in millions):

                                                         Three Months Ended June 30,
                                                            2021                 2020            $ Change             % Change
Gross profit                                         $          17.1              43.8          $  (26.7)                    61  %
Advanced technology costs                                        0.2               0.7               0.5                     71  %
Selling, general and administrative                              7.8              10.4               2.6                     25  %
Amortization of intangible assets                                1.6               1.7               0.1                      6  %
Other (income) expense, net                                        -                 -                 -                      -  %
Operating income                                                 7.5              31.0             (23.5)                    76  %
Nonoperating components of net periodic benefit
expense (income)                                                (4.3)             (2.2)              2.1                     95  %
Interest expense                                                   -                 -                 -                      -  %
Investment income                                                  -                 -                 -                      -  %
Income before income taxes                                      11.8              33.2             (21.4)                    64  %
Income tax expense (benefit)                                     0.2              (0.5)             (0.7)                     -  %
Net income                                           $          11.6          $   33.7             (22.1)                    66  %



                                                          Six Months Ended June 30,
                                                           2021                 2020            $ Change             % Change
Gross profit                                         $         28.8              63.4          $  (34.6)                    55  %
Advanced technology costs                                       0.7               1.6               0.9                     56  %
Selling, general and administrative                            16.0              18.9               2.9                     15  %
Amortization of intangible assets                               3.7               3.1              (0.6)                   (19) %
Other (income) expense, net                                       -              (0.1)             (0.1)                  (100) %
Operating income                                                8.4              39.9             (31.5)                    79  %
Nonoperating components of net periodic benefit
expense (income)                                               (8.6)             (4.4)              4.2                     95  %
Interest expense                                                  -               0.1               0.1                    100  %
Investment income                                                 -              (0.4)             (0.4)                  (100) %
Income before income taxes                                     17.0              44.6             (27.6)                    62  %
Income tax expense (benefit)                                    0.3              (0.4)             (0.7)                     -  %
Net income                                           $         16.7          $   45.0             (28.3)                    63  %




                                       35

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Advanced Technology Costs

Advanced technology costs consist of American Centrifuge expenses that are
outside of our customer contracts in the technical solutions segment. Costs
declined $0.5 million (or 71%) in the three months and $0.9 million (or 56%) in
the six months ended June 30, 2021, compared to the corresponding periods in
2020.

Selling, General and Administrative

Selling, general and administrative ("SG&A") expenses decreased $2.6 million (or
25%) in the three months ended June 30, 2021, compared to the corresponding
period in 2020. Consulting costs decreased $2.6 million and salaries and
benefits decreased $0.4 million. Incentive compensation expense increased $0.2
million and other SG&A expenses increased by a net $0.2 million.

SG&A expenses decreased $2.9 million (or 15%) in the six months ended June 30,
2021, compared to the corresponding period in 2020. Consulting costs decreased
$3.6 million and salaries and benefits decreased $0.6 million. Incentive
compensation expense increased $1.4 million, primarily related to a
remeasurement of obligations under long-term incentive plans which are based on
our stock price. Other SG&A expenses decreased by a net $0.1 million.

Amortization of Intangible Assets

Amortization of intangible assets decreased $0.1 million (or 6%) in the three
months and increased $0.6 million (or 19%) in the six months ended June 30,
2021, compared to the corresponding periods in 2020. 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.

Nonoperating Components of Net Periodic Benefit Expense (Income)

Nonoperating components of net periodic benefit expense (income) netted to
income of $4.3 million and $8.6 million for the three and six months ended June
30, 2021, compared to income of $2.2 million and $4.4 million in the
corresponding periods in 2020. 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. Interest cost declined in 2021 as a result of lower market interest
rates.

Income Tax Expense (Benefit)

The income tax expense was $0.2 million in the three months ended June 30, 2021,
and the income tax benefit was $(0.5) million in the three months ended June 30,
2020. The income tax expense was $0.3 million in the six months ended June 30,
2021 and the income tax benefit was $(0.4) million in the six months ended June
30, 2020.

The 2021 income tax expense resulted from applying the annual effective tax rate
to year-to-date income from continuing operations adjusted for discrete items.
In the second quarter of 2020, Centrus released the tax valuation allowance on
its state deferred income taxes for its LEU segment, most of which was recorded
as a discrete item and resulted in an income tax benefit of $0.8 million. This
income tax benefit was offset by an income tax expense of $0.3 million in its
quarterly provision primarily for a current year unrecognized tax benefit.


                                       36
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Centrus continues to maintain a valuation allowance against its federal and
certain state net deferred tax assets through June 30, 2021. However, we believe
it is reasonably possible that sufficient positive evidence may become available
to conclude that some or a significant portion of the federal valuation
allowance will no longer be needed and may be released within the next 12
months. Although Centrus achieved a three-year cumulative income position during
the second quarter of 2021, the Company determined that a valuation allowance is
still necessary due to a relatively low level of cumulative pre-tax income
during this period and significant net operating loss carryforwards. Centrus
will continue to monitor future financial performance to determine whether such
performance is both sustained and significant enough to support a reversal of
all or a portion of the valuation allowance. The exact timing and amount of the
valuation allowance release are dependent upon the actual level of profitability
that is achieved as well as other positive and negative evidence. Additional
information about the valuation allowance is provided in Note 14, Income Taxes,
of the consolidated financial statements in the Company's Annual Report on Form
10-K for the year ended December 31, 2020.

Net Income

We generated a net income of $11.6 million in the three months and $16.7 million
in the six months ended June 30, 2021, compared to net income of $33.7 million
and $45.0 million in the corresponding periods in the prior year. Gross profit
in the prior year periods included the $32.4 million recovery on bankruptcy
court claims. The current year periods benefited from lower SG&A expenses and
increases in nonoperating components of net periodic benefit income.

Net Income per Share

The Company measures Net Income per Share both on a GAAP basis and adjusted to
exclude deemed dividends allocable to retired preferred stock shares ("Adjusted
Net Income per Share"). We believe Adjusted Net Income per Share, a non-GAAP
financial measure, provides investors with additional understanding of the
Company's financial performance and period-to-period comparability.

On February 2, 2021, the Company completed the exchange of 3,873 shares of its
outstanding Preferred Stock, for (i) 231,276 shares of its Class A Common Stock,
and (ii) the Warrant to purchase 250,000 shares of Class A Common Stock at an
exercise price of $21.62 per share, for an aggregate valuation of approximately
$7.5 million. (Refer below to Liquidity and Capital Resources for details.) The
carrying value on the Balance Sheet was $1.00 per share par value. The aggregate
liquidation preference, including accrued but unpaid dividends, was $1,291.04
per share as of December 31, 2020.

The aggregate valuation of approximately $7.5 million, less accrued but unpaid
dividends attributable to the acquired and retired Series B preferred shares, is
considered for purposes of Net Income per Share to be a deemed dividend to the
extent it exceeds the carrying value on the Balance Sheet, or $6.6 million.

Below we present Net Income Per Share and Adjusted Net Income per Share. The
non-GAAP financial measure is used in addition to and in conjunction with
results presented in accordance with our GAAP results. The non-GAAP financial
measure should be viewed in addition to, and not as a substitute for, or
superior to, the financial measure calculated in accordance with GAAP. The
non-GAAP financial measure used by the Company may be calculated differently
from, and therefore may not be comparable to, non-GAAP financial measures used
by other companies.
                                       37
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                                                                                                    Six Months Ended
                                                         Three Months Ended June 30,                    June 30,
                                                            2021              2020               2021                2020
Numerator (in millions):
Net income                                              $    11.6          $  33.7          $    16.7             $  45.0
Less: Preferred stock dividends - undeclared and
cumulative                                                    0.7              2.0                1.4                 4.0
Less: Distributed earnings allocable to retired
preferred shares                                                -                -                6.6                   -
Net income allocable to common stockholders             $    10.9          $  31.7          $     8.7                   41.0

Adjusted net income, including distributed earnings allocable to retired preferred shares (Non-GAAP) $ 10.9 $ 31.7 $ 15.3

$  41.0

Denominator (in thousands) (a):
Average common shares outstanding - basic                  13,443            9,675             13,132               9,647
Average common shares outstanding - diluted                13,743            9,927             13,452               9,882

Net income per share (in dollars):

  Basic                                                 $    0.81          $  3.28          $    0.66             $  4.25
  Diluted                                               $    0.79          $  3.19          $    0.65             $  4.15

Adjusted Net Income per Share (Non-GAAP) (in dollars):
Basic                                                   $    0.81          $  3.28          $    1.17             $  4.25
Diluted                                                 $    0.79          $  3.19          $    1.14             $  4.15

(a) For details related to average shares outstanding, refer to Note 9, Net Income Per Share of the unaudited condensed consolidated financial statements.

                                       38
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Liquidity and Capital Resources

We ended the second quarter of 2021 with a consolidated cash balance of $176.0
million. We anticipate having adequate liquidity to support our business
operations for at least the next 12 months from the date of this 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 to deploy a cascade of centrifuges to demonstrate production
of HALEU for advanced reactors. Under the agreement, the Company is contributing
a portion of the program costs. 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.

Under the HALEU Contract, DOE agreed to reimburse the Company for 80% of its
costs incurred in performing the contract, up to a maximum of $115 million. The
Company's cost share is the corresponding 20% and any costs the Company elects
to incur above these amounts. The HALEU Contract is incrementally funded and DOE
is currently obligated for costs up to approximately $113.4 million of the $115
million. The Company has received aggregate cash payments of $86.5 million
through June 30, 2021.

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
HALEU Contract, once fully implemented, is expected to result in the Company
having the first NRC-licensed HALEU production facility in the United States and
will have demonstrated the ability to enrich uranium to a 20% concentration of
the U-235 isotope. 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. HALEU may also be used in
advanced nuclear fuels under development for the existing fleet of reactors. In
addition to commercial demand, HALEU may be needed for advanced reactor designs
that are now under development for the U.S. Department of Defense. Our HALEU
Contract expires in June 2022 and although we believe demand for HALEU will
emerge in the mid to late 2020s, 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. Since the HALEU demonstration
program is expected to be completed in early 2022, we are focused on developing
options to sustain and expand our demonstrated capability for the period
immediately following the conclusion of the program. Our goal is to scale up the
facility in modular fashion 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. At this time, however, there is no assurance
that sufficient government or commercial funding or demand for material will be
timely secured to permit the continued operation or expansion of the
demonstration cascade. If funding or a contract for the output are not secured,
we would need to terminate operation of the demonstration cascade or continue to
operate the cascade at a loss with an adverse effect on our liquidity. 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, 2020, as updated in this report in
Part II, Item 1A, Risk Factors.


                                       39
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We lease facilities and related personal property in Piketon, Ohio, from DOE. In
connection with the HALEU Contract, DOE and Centrus renewed the lease agreement
in 2019 and extended the lease term through May 31, 2022. Any facilities or
equipment constructed or installed under contract with DOE will be owned by DOE,
may be returned to DOE in an "as is" condition at the end of the lease term, and
DOE would be responsible for its D&D. If we determine the equipment and
facilities may benefit Centrus after completion of the HALEU Contract, we have
the option to extend the facility lease and ownership of the equipment will be
transferred to us, subject to mutual agreement regarding D&D and other issues.

In the event that funding by the U.S. government for research, development and
demonstration of gas centrifuge technology is reduced or discontinued, 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 million are anticipated over the next 12 months.

The change in cash, cash equivalents and restricted cash from our unaudited
condensed consolidated statements of cash flows are as follows on a summarized
basis (in millions):
                                                                       Six Months Ended June 30,
                                                                      2021                  2020
Cash provided by (used in) operating activities                  $        2.9          $       (8.4)
Cash (used in) investing activities                                      (0.7)                 (0.1)
Cash provided by (used in) financing activities                          21.8                  (2.9)
Increase (decrease) in cash, cash equivalents and restricted
cash                                                             $       24.0          $      (11.4)



Operating Activities

In the six months ended June 30, 2021, net cash provided by 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 SWU purchase agreements of $7.8 million reflect
sources of cash.
In the six months ended June 30, 2020, net cash used in operating activities was
$8.4 million. The net reduction of $19.3 million in deferred revenue and
advances from customers reflects revenue recognized in the current period
related to payments received in advance in a prior period. Uses of cash are
reflected in the decrease in pension and postretirement benefit liabilities of
$16.6 million and the increase in accounts receivable of $10.1 million. The uses
of cash were partially offset by net income of $45.0 million in the six-month
period, net of non-cash expenses, including the $32.4 million in income on
recovery of bankruptcy court claims.

Investing Activities

Capital expenditures were $0.7 million and $0.1 million in the six months ended June 30, 2021, and 2020, respectively.

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Financing Activities

In the six months ended June 30, 2021, net cash provided by financing activities
include net proceeds of $27.2 million raised from the issuance of common stock
pursuant to a Registration Statement on Form S-3. Refer below to Common Stock
Issuance. In both the six months ended June 30, 2021 and 2020, payments of $3.1
million of interest classified as debt are classified as a financing activity.
Refer to Note 6, Debt, of the unaudited condensed consolidated financial
statements regarding the accounting for the 8.25% notes (the "8.25% Notes")
maturing in February 2027.

Working Capital

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

                                                                  June 30,             December 31,
                                                                    2021                   2020
Cash and cash equivalents                                      $      176.0          $       152.0
Accounts receivable                                                    19.0                   29.6
Inventories, net                                                       86.2                   59.9
Current debt                                                           (6.1)                  (6.1)

Deferred revenue and advances from customers, net of deferred costs

                                                                (138.8)                (131.3)
Other current assets and liabilities, net                             (60.5)                 (64.1)
Working capital                                                $       75.8          $        40.0



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 debt
securities and credit facilities. We continually evaluate alternatives to manage
our capital structure, and may opportunistically repurchase, exchange or redeem
Company securities from time to time.

Common Stock Issuance

Pursuant to a sales agreement with its agents, the Company sold at the market
price an aggregate of 1,238,637 shares of its Class A Common Stock in the six
months ended June 30, 2021, for a total of $28.7 million. After expenses and
commissions paid to the agents the Company's proceeds total $27.6 million.
Additionally, the Company recorded direct costs of $0.4 million related to the
issuance. The shares of Class A Common Stock were issued pursuant to the
Company's shelf registration statement on Form S-3 (File No. 333-239242), which
became effective on August 5, 2020, and a prospectus supplement dated December
31, 2020 to the prospectus, dated August 5, 2020. The Company currently intends
to use the net proceeds from this offering for general working capital purposes,
to invest in technology development and to repay outstanding debt or retire
shares of its Series B Senior Preferred Stock.

As previously disclosed in our Current Report on Form 8-K filed February 5,
2021, on February 2, 2021, the Company entered into an amendment to its existing
Voting and Nomination Agreement with Mr. Morris Bawabeh, Kulayba LLC and M&D
Bawabeh Foundation, Inc. (collectively, the "MB Group") and an Exchange
Agreement (as described below) whereby the MB Group agreed to support
management's recommendation on certain matters at the Company's 2021 annual
meeting of stockholders (the "Annual Meeting") and Kulayba LLC agreed to
exchange shares of Preferred Stock for shares of Class A Common Stock and a
warrant to acquire additional shares of Class A Common Stock. Pursuant to the
First Amendment to the Voting and Nomination Agreement, the MB Group agreed to
cause all shares of Class A Common Stock owned of record or beneficially owned
by the MB Group at the
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Annual Meeting to be voted in favor of (i) an amendment to extend the length of
the term of the Company's Section 382 Rights Agreement dated as of April 6,
2016, as amended to date, for two years from June 30, 2021, to June 30, 2023,
and (ii) an increase of shares of Class A Common Stock reserved for delivery
under the Company's 2014 Equity Incentive Plan, as amended to date, of an
additional 700,000 shares of Class A Common Stock.

In connection with the entry into the Voting Agreement Amendment, the Company
and Kulayba LLC also entered into the Exchange Agreement, pursuant to which
Kulayba LLC agreed to the Exchange, representing a $5,000,198 liquidation
preference (including accrued and unpaid dividends), for (i) 231,276 shares of
Class A Common Stock priced at the closing market price of $21.62 on the date
the Exchange Agreement was signed and (ii) the Warrant, exercisable for 250,000
shares of Class A Common Stock at an exercise price of $21.62 per share, which
was the closing market price on the date the Exchange Agreement was signed,
subject to certain customary adjustments pursuant to the terms of the Warrant.
The Warrant is exercisable by Kulayba LLC for a period commencing on the closing
date of the Exchange and ending, unless sooner terminated as provided in the
Warrant, on the first to occur of: (a) the second anniversary of the closing
date of the Exchange or (b) the last business day immediately prior to the
consummation of a Fundamental Transaction (as defined in the Warrant) which
results in the shareholders of the Company immediately prior to such Fundamental
Transaction owning less than 50% of the voting equity of the surviving entity
immediately after the consummation of the Fundamental Transaction. The Company
retired the 3,873 shares of Preferred Stock received by the Company under the
Exchange Agreement.

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 unaudited condensed consolidated financial
statements and Note 9, Debt, of the consolidated financial statements in the
Company's Annual Report on Form 10-K for the year ended December 31, 2020.

Holders of the Series B Preferred Stock are entitled to cumulative dividends of
7.5% per annum of the liquidation preference at origination of $104.6 million.
We are obligated to pay cash dividends on our Series B Preferred Stock to the
extent certain criteria are met and dividends are declared by the Board of
Directors. We have not met these criteria for the periods from issuance through
June 30, 2021, and have not declared, accrued or paid dividends on the Series B
Preferred Stock as of June 30, 2021. Additional terms and conditions of the
Series B Preferred Stock, including the criteria that must be met for the
payment of dividends, are described in Note 16, Stockholders' Equity, of the
consolidated financial statements of the Company's Annual Report on Form 10-K
for the year ended December 31, 2020.

The nuclear industry in general, and the nuclear fuel industry in particular,
are in a period of significant change. 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.

Commitments under Long-Term SWU Purchase Agreements

The Company purchases SWU contained in LEU from Russia supplied to us under a
long-term agreement, as amended, signed in 2011 with the Russian government
owned entity TENEX. Under a 2018 agreement, the Company will purchase SWU
contained in LEU from the French government owned company, Orano. Refer to Note
11, Commitments and Contingencies, of the unaudited condensed consolidated
financial statements for additional information.


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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

Other than outstanding surety bonds, our SWU purchase commitments and the
license agreement with DOE relating to the American Centrifuge technology, there
were no material off-balance sheet arrangements at June 30, 2021 or December 31,
2020.

New Accounting Standards

Reference is made to New Accounting Standards in Note 1, Basis of Presentation,
of the unaudited condensed consolidated financial statements for information on
new accounting standards.

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