Terrestrial Energy Q1 2026 Earnings Call - NRC Topical Report Approval Clears Licensing Pathway

Operator: Greetings. Welcome to Terrestrial Energy first quarter 2026 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star 0 on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to Tyler Gronbach, Vice President, Investor Relations and Public Relations. Thank you. You may begin.

Tyler Gronbach, Vice President, Investor Relations and Public Relations, Terrestrial Energy: Thank you, operator. Good morning, everyone, and welcome to Terrestrial Energy’s first quarter 2026 earnings conference call. I’m Tyler Gronbach, Vice President of Investor Relations and Public Relations. Joining me today are Simon Irish, Chief Executive Officer, and Brian Thrasher, Chief Financial Officer. Simon will begin with a review of our strategic and operational progress during the quarter, and Brian will follow with a discussion of our financial results. We will then open the call for questions. Before we begin, I’d like to remind you that we have posted the quarterly results, press release, and summary slides to the investor relations section of our website at terrestrialenergy.com. I’d also like to remind you that today’s discussion will include forward-looking statements about our business, operations, and financial outlook.

These statements are based on management’s current expectations and are subject to risks and uncertainties that could cause actual results to differ materially. We encourage you to review the risk factors described in our SEC filings for a more complete discussion of these risks. With that, I’ll turn the call over to Simon.

Simon Irish, Chief Executive Officer, Terrestrial Energy: Thank you, Tyler, good morning, everyone. When we last spoke in March, we outlined a three-pillar framework for assessing our progress and our commitment to disciplined execution against clear milestones. Today, I will report on first quarter progress against that framework. Brian will discuss our financial results. Before I turn to first quarter developments, let me briefly affirm the context in which we are operating. The generational shift in energy demand and policy that we described at year-end has only intensified in the months since. It is secular, long-term, and compelling. Electricity demand expectations continue to rise, driven by AI infrastructure, the reshoring of manufacturing capacity, and broader electrification. Energy security is again a dominant policy theme across advanced economies. Against this market backdrop, the IMSR plant is powerfully and competitively differentiated. Let me briefly remind you of just two of those differentiators.

First, size, affordability, and capital efficiency. At one-sixth the size of a conventional nuclear plant, the IMSR plant is right-sized for the growth market opportunity today. Its steam turbines operate at near 50% greater efficiency than those driven by a light water reactor. Its nuclear systems operate at low pressure and with high inherent safety. All are powerful competitive economic virtues that increase affordability and financeability, reduce risk, and secure strong social license for deployment. Second, our fuel strategy. I want to spend a few moments on this point. The IMSR plant uses standard nuclear fuel, uranium at standard enrichment, i.e, less than 5% U-235, which has become the world standard over many decades. This was a strategic choice that we made more than a decade ago, deliberately avoiding HALEU fuel use, i.e, fuel at enrichment levels of between 15% and 20% U-235.

The levels required by other Generation IV reactors in the advanced nuclear sector. In today’s HALEU enrichment-constrained industry, our decision has removed the considerable challenges, costs, and uncertainty of HALEU fuel supply at commercial scale. It also has the benefit of reducing regulatory complexity and cost, both for first plant and for fleet. This is relevant to our competitive positioning and to how we believe the market should evaluate deployment readiness in our sector. Companies that choose HALEU fuel for advanced reactors now face a considerable fuel supply, timeline, and infrastructure cost challenge, which we have resolved more than a decade ago. As I described in March, our three-pillar framework guides how we assess and report progress. The first pillar covers IMSR engineering and regulatory developments, including Project TETRA, our test reactor assembly, and Project TEFLA, our fuel line assembly.

The second covers supply chain developments, and the third covers our commercial pipeline of IMSR plants. Let me walk through first quarter progress for each of these three. First, our engineering and regulatory pillar. Early in the quarter, we completed OTA contract with the DOE to advance Project TETRA, our test reactor assembly, and Project Tesla, our fuel line assembly. The projects support engineering and regulatory programs for IMSR plant commercial operation and the infrastructure development for IMSR plant fuel supply. Our graphite irradiation testing and supply activities are ongoing at NRG Petten, one of the world’s most powerful test reactors. This work is essential for reactor materials qualification, supply selection, and licensing readiness. Subsequent to quarter end, we achieved another foundational regulatory milestone with the Nuclear Regulatory Commission.

We completed final submissions to the NRC supporting our postulated initiating events methodology or PIE Topical Report. The NRC has subsequently approved that Topical Report issuing its Safety Evaluation Report. The details are in Tuesday’s press release. Let me underscore what this means. The Safety Evaluation Report establishes an important methodology for IMSR safety analysis. It forms part of the future licensing basis of the IMSR plant, as it can be referenced in future licensing applications without re-evaluation. The role of Topical Reports with associated Safety Evaluation Reports reduces the scope of subsequent regulatory reviews, improves predictability by resolving key safety analyses early, and increases confidence in the licensing pathway to commercial operations. It also enables repeated use of agreed safety frameworks for licensing of multiple IMSR plants, which is important as we look through first plant to establishing deployment efficiencies at fleet scale.

The PI safety evaluation report follows on from the NRC’s 2025 safety evaluation report for the IMSR’s Principal Design Criteria. Together, these two approved analyses establish foundational elements of the IMSR plant’s licensing basis. Our completion of this work reflects the depth and duration of our engineering engagement with the NRC. Turning to the second pillar, supply chain developments. Our relationships with industry nuclear suppliers remain in active execution, supporting the fabrication of reactor components and the development of fuel supply infrastructure. Over the quarter, we built our supply group for the execution of Project TETRA and Project Tesla. Turning to the third pillar, our commercial pipeline of IMSR plant projects. Following quarter end, we executed an MOU with Riot Platforms, creating the opportunity for a best-in-class pairing of data center and nuclear plant. The company’s plans to co-locate IMSR plants with Riot-developed data centers serving AI and high-performance compute applications.

The agreement covers multiple project opportunities across the U.S. and the use of natural gas as a bridge fuel to accelerate commercial power supply and enhance resilience during full plant operation. This relationship establishes a hyperscale data center commercial channel for IMSR plants. It further underscores the demand-side value of the IMSR plant design and our business model. It reflects exactly the kind of high-value industrial application the IMSR plant is designed to serve. Our commercial pipeline consists of approximately 10 IMSR plant projects. With the right relationship, this pipeline represents 7.8 gigawatts of indicative power capacity. The IMSR plant’s combination of affordability, capital efficiency, siting flexibility, customized supply make it well-suited to the growth opportunity today.

Over the quarter, we executed against clearly defined milestones, advancing across all three pillars of our business plan, always looking past the deployment of a single IMSR plant to a fleet operating the 2030s. I will now turn the call over to Brian Thrasher, our Chief Financial Officer, to review our financial results.

Brian Thrasher, Chief Financial Officer, Terrestrial Energy: Thank you, Simon, and good morning, everyone. First quarter results indicate a clean balance sheet, disciplined cash management, and continued investment in the engineering process and resources for commercial execution. Please note that year-over-year comparisons are unlikely to be informative this quarter, given the transformations in the business in 2025. We’re presenting results on a sequential quarter basis, which we believe to be a more relevant indicator of company performance. At quarter end, we held total cash and cash investments of CAD 289.9 million. This compares to CAD 297.8 million at year-end 2025. Cash burn for the quarter was CAD 7.9 million, an increase of CAD 1.8 million compared to the prior quarter, after consideration of one-time transaction costs associated with the 2025 merger. Two items drove the majority of this increase.

A first quarter 2026 payment of $600,000 for 2025 discretionary bonuses. Second, $1 million pay down of accounts payable for vendors offering extended credit terms. The remaining $200,000 increase of first quarter cash burn is attributable to higher sequential payments for research and development costs. We expect cash burn to increase throughout 2026 as we scale our organization and resources, material testing and qualification, supplier selection activities, and project-related work. This is a continuation of the ramp we began in fourth quarter last year following the completion of the merger transaction. I’ll now turn to operating expenses. Research and development expenses were up $1 million sequentially, driven by our fuel development and graphite testing programs.

General and Administrative expenses were up CAD 4.6 million sequentially, primarily reflecting headcount and stock-based compensation as we build out the public company team. The fourth quarter of 2025 also included a credit of approximately CAD 2.7 million from legal and accounting expenses that were capitalized in conjunction with the merger accounting. Turning to our capitalization table, issued and outstanding shares were up modestly at approximately 100,000 shares from stock option exercises during the quarter. Share count is effectively unchanged from year-end 2025. In summary, our balance sheet is straightforward, clean and tight. Cash and short-term investments make up the vast majority of our assets. Liabilities are limited. We have modest current liabilities and lease obligations and no debt. The company continues to hold a strong capital position to execute against the milestone that Simon has outlined. That concludes our prepared remarks.

Operator, please open the line for questions.

Operator: Thank you. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Please ask 1 question and 1 follow-up question. Our first question is from Derek Soderberg with Cantor Fitzgerald. Please proceed.

Derek Soderberg, Analyst, Cantor Fitzgerald: Yeah. Hey, guys. Thanks for taking the questions. Simon, I appreciate the color on the SALEU and HALEU dynamic. You know that distinction certainly makes sense as a differentiator, to other Generation IV reactors, you know, at the feedstock level. The next step is taking that and deconverting it and fabricating it into molten salt, right? I’m curious if you can walk us through the TEFLA pilot plant timeline, when you expect commercial scale fuel production there to be online, maybe relative to the first plant deployment. You know, is fuel fabrication sort of the binding constraint to the deployment schedule here?

Simon Irish, Chief Executive Officer, Terrestrial Energy: Good morning, Derek. Thanks for the question. Good question. In terms of our entire fuel supply program, we have been providing sort of more detail on exactly how we’re going to achieve fleet level supply of HALEU fuel. The end reactor feed is IMSR fuel salt. HALEU is the enriched material that comes out of an enrichment plant. It’s the first link of the supply chain. The reason we emphasize that, the HALEU, simply talk about HALEU, to the degree that we do at the moment, is because, you know, without it, there’s no supply chain because it’s the first link. HALEU is extremely important. We have in our Westinghouse press release indicated what the next link is, which is to your point about deconversion.

The next link is deconverting to the chemical form we need, which is uranium tetrafluoride. Deconversion and conversion from uranium into fluorides, that chemistry is very much part of the whole nuclear supply chain. The deconversion that we need, though, from Hex, which comes out in the enrichment plant, is the deconversion of uranium of enriched uranium at fluoride level. We need to the end product, the end chemical form is uranium tetrafluoride. The physical form for reactor feed is IMSR fuel salt. There are additional steps to come up with the physical form, but one point, Derek, on the physical form.

The physical form is not this extraordinary detailed reactor assembly, which is nuclear fuel as we’ve known it today. That, you know, fuel bundle. The form we don’t have a physical form in that context. Manufacturing is simply a chemical production process to create a final fuel form, which is the IMSR fuel salt, which is in a fluoride. It’s a fluoride chemistry, it’s a fluoride form to the precise requirements from a purity perspective to make it licensed reactor feed for a licensed plant. There are additional steps. Those additional steps are the steps that we will be developing in Project TEFLA at the pilot level.

This is why Project TEFLA is important and so important to one of the key elements of our business plan. We’re not looking to build and operate, but nonetheless, we are looking to be principal in fuel supply and to be principal in IMSR Core-unit supply as well. With respect to how we go about as a business-Establishing ourselves as a principal in fuel supply production, the final step of the process where we think there’s an opportunity for us to add considerable value, particularly from an IP perspective. That final step of the process is Project TEFLA.

It plays a very big role in us perfecting and industrializing the processes that will need to be put in place to create that final fuel form, which is the IMSR fuel salt, the final reactivity that goes into the reactor.

Derek Soderberg, Analyst, Cantor Fitzgerald: Got it. Really appreciate the color on that. With the PIE Topical Report, you know, approved by the NRC, what sort of are the next regulatory submissions we should be watching out for?

Simon Irish, Chief Executive Officer, Terrestrial Energy: Yeah

Derek Soderberg, Analyst, Cantor Fitzgerald: As you guys prepare for, you know.

Simon Irish, Chief Executive Officer, Terrestrial Energy: Yeah

Derek Soderberg, Analyst, Cantor Fitzgerald: site licensing and construction?

Simon Irish, Chief Executive Officer, Terrestrial Energy: Well, thanks, Derek. In terms of regulatory preparedness, I would say there are two great branches of this for anyone in the market today. The first one is preparing for operating license because, you know, making the case that your nuclear systems are compliant with nuclear safety standards. The other great branch is the construction permit where you have, you know, the opportunity to sign off on all the large environmental requirements and start the process of constructing the plant. I think everyone in our space is working on both construction permits, getting a lot of attention construction permits. They don’t say much at all about the safety of nuclear systems. The safety of nuclear systems is associated with your preparedness to submit an operating license.

That preparedness can be established clearly from a milestone perspective with how you’re getting on with your Topical Report submissions. A Topical Report submission in a allows you to discharge an element of safety analysis that will ultimately go into that final operating license. We’re pleased to report in 2025 and pleased to report very recently the progress we’re making with submitting Topical Reports to the NRC, engaging with staff and the NRC on a timely basis, responding with the issuance of the approval of the Topical Report and the issuance of the Safety Evaluation Report. It’s those elements, Topical Reports where the safety analysis has been approved, you know, that approved methodology which is valuable and puts you in a increasingly confident position to submit the operating license.

It’s the operating license that allows you to operate a nuclear plant for a commercial purpose. The construction permit just allows you to, you know, move your EPC guys onto the site. It’s the operating license that is the end game.

Operator: Our next question is from George Gianarikas with Canaccord Genuity. Please proceed.

George Gianarikas, Analyst, Canaccord Genuity: Hey, good morning, everyone. Thank you for taking my question. I’d like to continue on the fuel thread. Have you explored the use of LEU+ in your reactor design? Thanks.

Simon Irish, Chief Executive Officer, Terrestrial Energy: Yeah. We, I mean, this is going back a bit, George, when we sort of made our decision 10 years ago to use standard nuclear fuel. LEU+ could potentially have some technical benefits that may manifest in commercial benefits as well. If it becomes readily available and easily available, we will, you know, we will look at this quite carefully. You know, our analysis would be that from a commercial perspective, it would be, I think sort of quite a marginal development. Definitely we’ll look at it if it becomes broadly available.

George Gianarikas, Analyst, Canaccord Genuity: Thank you. The design is flexible enough such that I would assume that you could feed it-

Simon Irish, Chief Executive Officer, Terrestrial Energy: Oh, yes.

George Gianarikas, Analyst, Canaccord Genuity: into the reactor.

Simon Irish, Chief Executive Officer, Terrestrial Energy: I mean, George, from a design perspective, our design, you could view us as the diesel engine of nuclear reactor systems. It can take a massive array of fuel without that long and extremely expensive regulatory requirement, which is qualifying a physical fuel form. We don’t use a physical fuel, we use liquid fuel. You know, at the one end you can very easily and comfortably use, you know, LEU, enriched to no more than 5%, which we are at the moment. That’s a very secure place to start. At the other end we could be, if market circumstances and policy circumstances dictate, you know, we could be, you know, very active in using spent nuclear fuel, plutonium, thorium, and all these other exotic fuels that are floating around.

Our system could very, very comfortably accommodate all these other nuclear fuels. The reason we haven’t gone there is because we think the problem to solve is not a fuel, is not sort of, you know, to use these funky fuels. We think the problem to solve is affordability and cost. We’re keeping it simple at the front end, focused on what matters commercially, which is the affordability of a nuclear plant, its capital efficiency, and the cost of power. That has driven our, you know, so far our commercial focus to just using what we call standard-assay LEU. We do recognize tremendous potential in using spent nuclear fuel, plutonium, thorium, and all the other exotic fuels that, you know, are, you know, occasionally advocated in the market.

George Gianarikas, Analyst, Canaccord Genuity: Thank you. Maybe just last question from me is just your thoughts on Part 57. There appeared to be just some inklings of detail there. Any potential leverage you could have in terms of using it to accelerate your pathway? Thank you.

Simon Irish, Chief Executive Officer, Terrestrial Energy: Well, yes, I mean, Part 57, I believe that’s for, that’s for microreactors, George. Our regulatory team has not forwarded as a relevant regulatory development, you know, for Terrestrial Energy, but I believe it’s more focused on microreactors.

George Gianarikas, Analyst, Canaccord Genuity: Oh, there-

Simon Irish, Chief Executive Officer, Terrestrial Energy: Is that correct?

George Gianarikas, Analyst, Canaccord Genuity: I think that’s right, but I think there are bits related to waste that may be leverageable. Just sort of curious. ’Cause we’re trying to figure out exactly what it means and how leverageable it is to other companies outside the microreactor space.

Simon Irish, Chief Executive Officer, Terrestrial Energy: Yeah, George, I’m happy to go offline and have a discussion on that after I’ve sort of consulted with our regulatory team. The one that we are sort of focused on is Part 53, because that is a possibility, a practical possibility of a different licensing pathway for us both to first plants and also to fleet.

George Gianarikas, Analyst, Canaccord Genuity: Thank you so much.

Simon Irish, Chief Executive Officer, Terrestrial Energy: Yeah. Thank you.

Operator: We now have a follow-up from Derek Soderberg with Cantor Fitzgerald. Please proceed.

Derek Soderberg, Analyst, Cantor Fitzgerald: Yeah, thanks for letting me back in here. Just a couple more. First regarding the executed OTA agreements with the DOE, is that gonna help you guys at all with capital expenditures for the TETRA and Tesla programs over the next, you know, year or so?

Simon Irish, Chief Executive Officer, Terrestrial Energy: Well, Derek, I think sort of perhaps indirectly, because, you know, capital likes regulatory clarity to achieve, you know, project goals. That OTA authority, that OTA contract with the Department of Energy provides that regulatory clarity that we need to get TETRA and Tesla done. Yes, it’s, it does help from a capital perspective in that regard.

Derek Soderberg, Analyst, Cantor Fitzgerald: Got it. Got it. My final one, just on your pipeline of 10 projects. I think in the past you guys have talked about potentially declaring, I think, 1-3 additional projects this year.

Simon Irish, Chief Executive Officer, Terrestrial Energy: Yeah.

Derek Soderberg, Analyst, Cantor Fitzgerald: You’ve got the right MOU now announced. Are you still tracking towards additional site or partner disclosures this year? Thanks.

Simon Irish, Chief Executive Officer, Terrestrial Energy: Yes. I mean, we reiterate the guidance we issued in March with 1-3 additional projects. Obviously tracking against that is it was clearly the right announcement from a couple of weeks back.

Derek Soderberg, Analyst, Cantor Fitzgerald: Perfect. Thanks.

Operator: With no further questions, I would like to hand the conference back over to Simon for closing remarks.

Simon Irish, Chief Executive Officer, Terrestrial Energy: Thank you. Thank you for joining us today and your interest in the company. We set expectations for the year ahead last quarter, and we’re pleased with the progress this quarter against that benchmark. The work ahead of us is all about execution. We look forward to demonstrating that milestone by milestone through 2026 and beyond. Thank you.

Operator: Thank you. This will conclude today’s conference. You may disconnect your lines at this time, and thank you for your participation.