Thank you, operator. Good morning, everyone, and welcome to Terrestrial Energy's second-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 those risks.

With that, I'll turn the call over to Simon.

Thank you, Tyler, and good morning, everyone. When we last spoke in May, I reported progress against the three-pillar framework of business plan execution that we set out in March guidance.

Today, I will do the same for the second quarter and then spend the greater part of my time on our business model and our recent update to unit economics. Brian then will follow with our financial results.

Over the past several months, we've been in front of investors more than at any point in the company's history, and that was deliberate. The nuclear tech sector is in a period of secular development.

It is still a young and expanding sector for portfolio allocation as the market recognizes the structural, long-term bull case for SMRs and nuclear energy supply. In this context, we're hearing a strong desire to understand the factors that differentiate nuclear plant designs, nuclear technology, regulatory and supply chain strategies, and business models.

We understand the importance of this to investors' analysis for nuclear tech stocks, and during this call we'll be discussing some of the unique factors that strongly position Terrestrial Energy. I will summarize the five nuclear plant design factors that differentiate the IMSR plant, talk further on our business model, and then our differentiated fuel supply strategy.

All this differentiation is in pursuit of one aim: the mission set by the company at its founding in 2013, to use nuclear innovation to solve the only problem worth solving with private capital, the affordability and capital efficiency of nuclear plants, and by extension, the cost of nuclear power, and solve that problem quickly and at scale. We are differentiated as everything we do, every decision we have made, points back to that founding problem statement in a clear and logically compelling way.

This goal is the first point of differentiation. First, let me now talk through second-quarter progress across the three pillars of business plan execution, referring to slides 4 and 5 of this quarter's investor update.

I will start with our engineering and regulatory programs. Project TETRA and Project TEFLA, our test reactor and fuel line pilot projects, both in partnership with the DOE, advanced in the quarter.

TETRA will support the data collection required for the NRC operating license application for the IMSR plant. Project TEFLA will develop the fuel production processes for IMSR fuel salt commercial supply.

On the regulatory side, on May 12, the NRC issued its safety evaluation report, approving our topical report on postulated initiating events methodology. This follows the previously issued safety evaluation report on IMSR principal design criteria, an early development and a point of differentiation.

As I described during our first-quarter earnings call, these approved NRC analyses form foundational elements of the IMSR plant's licensing basis and can be referenced in future applications without reevaluation. Our graphite irradiation testing continued at NRG Petten, one of the world's most powerful test reactors.

This work is essential for Terrestrial Energy's reactor materials qualification, licensing readiness, as well as supplier down-selection. Over the quarter, we adjusted our NRG testing program, adding further irradiation cycles, which is also evidenced in quarter-on-quarter variances with R&D expenditures.

Turning to the second pillar, supply chain development: procurement of fuel, components, and services continues for both the TETRA and TEFLA projects. This quarter, we announced an engineering service agreement with Zachry Nuclear, which supports the development of projects at the Texas A&M RELLIS site, and importantly, the site characterization and data collection work to assemble an NRC construction permit application for the planned commercial IMSR plant on that site.

Turning to the third pillar, our commercial pipeline of IMSR plant projects: In June, we signed ground lease and research agreements with Texas A&M for exclusive use of a 77-acre site at the RELLIS Campus. This development provides the path to complete site characterization work and environmental evaluations for the IMSR plants and other facilities on the Texas A&M site in advance of construction.

In May, we announced the relationship with Riot Platforms to supply electric power for data center operations. The parties' intention is to develop a best-in-class pairing of a small and modular reactor plant with a large data center, taking advantage of the competitive operating characteristics of the IMSR plant, notably its capacity to use natural gas as a bridge fuel, initially to deliver fast commercial operation and power supply, and then longer-term, as a backup after nuclear systems are in operation.

This arrangement will take advantage of a differentiating feature of the IMSR plant design, namely the ability for its non-nuclear thermal and electric facility to be customized. This is not possible with the balance-of-plant systems tied to light water reactors.

Our next step with Riot will be to down-select to a first site as part of a program targeting 4 gigawatts of IMSR plant generation in support of Riot data center operations. With the Riot Platform development, the indicative generating capacity of our pipeline of commercial projects grows to 7.8 gigawatts.

Given these and other characteristics of the IMSR plant design, our commercial opportunities cover three large market verticals: data centers, industrial process heat, and the replacement of retiring coal plant capacity. I would like now to turn to our updates on unit economics and start with a brief recap of our business model, referring to slide 6 of this quarter's investor update.

Terrestrial Energy does not plan to build, own, or operate IMSR plants. We leave these activities to others with long-established and recognized industry capabilities in construction and operation.

In this respect, our business model is relatively conventional for a reactor developer. From this position, we can operate a capital-light business model, allocating capital efficiently to build high-margin businesses where we have a competitive and defendable advantage, and typically based on proprietary IP concentration and production capabilities.

With additional engineering work over the last 12 months and directed at projects such as TEFLA, we have updated and re-estimated our IMSR plant unit economics, and by extension, our serviceable addressable market. Our business is to manufacture and supply to operating plants IMSR core units, a major reactor component and designed to be replaced every 7 years over the plant's 56-year design life.

This implies the supply of 16 IMSR core units or cumulative revenues of approximately $1.6 billion. The IMSR core unit contains the foundational IP of our company, an innovation that unleashes the extraordinary industrial potential of molten salt reactor technology.

Our IMSR fuel salt supply business will capture proprietary expertise enabled now by TEFLA and other innovations. Both qualify as principal businesses because each combines concentrated proprietary IP with proprietary production capabilities.

On slide 6, you'll note that estimated cumulative lifetime revenues per unit are now $2.7 billion, up from $2.1 billion, with a blended gross profit margin of 33%, up from 22% in our prior model. Of those revenues, 79% occur following the construction of the plant and will be secured through long-dated supply contracts for the periodic replacement of the core units and regular fuel salt supply.

The dominant activity at 58% of total revenues is core unit supply, with fuel salt supply being 21%. These businesses will drive most of the value creation in our future business.

Our review of unit economics included a re-estimation of gross profit margins for the core unit and fuel supply businesses to 33% and 40% respectively, higher than the margins for pre-construction and construction services, and this further points to the dominance of these two principal businesses. We expect to announce developments in the coming quarters as we move forward with our programs to build these two important supply businesses with their production facilities.

Referring to slide 7, the updated unit revenue estimates have increased our serviceable addressable market to $2.3 trillion by 2050, up from $1.9 trillion, a $400 billion increase. This reflects the market that our plant design and supply businesses are built to serve at scale.

I want to spend a few moments on our fuel strategy and development of IMSR fuel salt supply. As in our view, this is one of the most differentiated and underappreciated parts of the IMSR plant story.

Referring to slide 8, conventional nuclear fuel production can be represented as a three-step process: first, the production of the isotopic form of the fuel, whether LEU, HALEU, or even plutonium; second, the production of the chemical form of the fuel, whether oxide, fluoride, or metallic forms; and third, the production of the physical form of the fuel, whether complex fuel pin reactor assemblies or complex TRISO fuel elements. Each of these three steps requires a physical and discrete plant that has to be built, licensed, and operated.

For many novel fuel forms today, this requires the construction and operation of three new plants, one for each step. In contrast to virtually all other SMRs in the nuclear tech sector today, whether those using Generation III or IV technologies, IMSR fuel salt production stops at step 2.

This is an important point of differentiation. As the IMSR is a molten salt reactor, a liquid-fueled reactor rather than a solid-fueled reactor, its fuel does not have a physical form factor, no step 3.

The reactor fuel feed to IMSR plants is in the form of powdered output from the chemical production process from step 2, which in our case involves the fluorinated form of uranium and the addition of fluoride carrier salts under a tightly compliant production process to create the IMSR fuel salt, a powder. This approach therefore avoids the very considerable risk, cost, and complexity of step 3 and further points to a strong, scalable, and relatively capital-light, inexpensive fuel supply chain to support IMSR plant operation at fleet scale.

I would like to draw attention again to the first step, the isotopic step, where we chose many years ago to use the long-established isotopic standard for civilian reactor fuel: LEU, enriched to less than 5%. This avoids the costs, uncertainties, and complexity of HALEU chosen by other Generation IV reactor developers, and the more complex and costly regulatory requirements that cascade sequentially into steps 2 and 3 of the fuel production process.

While we rely on the industry's common isotopic form for our fuel, we've been working with Westinghouse on supply of the required chemical form: enriched uranium tetrafluoride. With this arrangement, Terrestrial Energy has one plant to build: a plant to complete step 2, with a production process now catalyzed by TEFLA, our fuel pilot project in partnership with the DOE and supported by Westinghouse supply.

We are heavily differentiated with this fuel supply strategy. In addition to our fuel supply differentiator, unmatched in the nuclear tech sector of advanced reactors, we have five foundational nuclear plant and reactor technology differentiators, referring now to slide 10.

First, our plant is small and right-sized at 390 megawatt electric, with a market opportunity for financeable and near and co-located power generation. The IMSR plant is 1/6 the size of a conventional nuclear plant.

Next, the IMSR plant's nuclear systems operate with a high energy density, enabling the design to capture the benefits of modular construction that are not possible with other Generation IV reactor technologies. This facilitates the powerful efficiencies of factory production of modular components for swift on-site assembly.

However, our differentiation does not stop here. Referring now to slide 11, the heart of our plant is a nuclear technology that offers a triple operating advantage, critical for economic performance and capital efficiency that we seek to deliver.

IMSR plants supply thermal energy at a best-in-class temperature of 585 degrees Celsius, its nuclear systems operate at low pressure, and with a high level of inherent safety that can only be delivered using molten salt reactor technology. These are powerful economic virtues that must not be ignored.

This triple operating advantage differentiates our reactor technology in the nuclear tech sector. Together, these five factors are what allow us to achieve our mission and bring to the market the most capital-efficient plant in the SMR sector, and with our fuel supply strategy, to do it quickly and at scale, as shown on slide 12.

To close, in March, we set guidance for the year and across the three pillars of business plan execution. We're pleased with our progress this quarter against our benchmark.

We have observed high sector and factor volatility in equity markets over recent months. However, our experiences are that the structural bull market for nuclear power with SMR innovations is solid, secular, and is growing.

Against this demand, we'll be deploying the most capital-efficient plant in the SMR sector today. We recognize that the road ahead is one of program execution and traveled through the development of competitive skills and capabilities.

Referring now to slide 14, during the quarter, we continued to expand our organization. On the 29th of July, we announced the addition of Pam Cowan as Executive Vice President of Engineering.

Pam joined us with more than 35 years' experience in the commercial nuclear sector, including senior leadership positions at Westinghouse and Holtec. Concurrently, Kathy McCarthy joined our Board of Directors.

Kathy has a career in major projects and nuclear technology development at Idaho National Lab, Oak Ridge National Lab, and other world-leading national labs. Most recently, she was Associate Lab Director of Fusion and Fission Energy at Oak Ridge, and currently she is responsible for the overall management of the United States' participation in ITER, the 27-nation international and benchmark fusion reactor project in France.

We're pleased to be reporting this progress over the quarter and to be providing these updates. With that, I will turn the call over to Brian Thrasher, our Chief Financial Officer, to review our financial results.

Thank you, Simon, and good morning, everyone. Turning to the financials, and consistent with last quarter, I will present on a sequential basis comparing to the first quarter of 2026, as this comparison is more informative given the transformation in the business in 2025.

The theme this quarter continues to be disciplined spend aligned to our programs and a clean balance sheet. As summarized on slide 16, at quarter-end, we have total cash, cash equivalents, and short and long-term investments of $283.4 million.

This compares to $289.9 million at the end of the first quarter. Cash burn for the quarter was $6.4 million or approximately $2.2 million per month.

This compares to cash burn of $7.9 million for the first quarter of 2026, approximately $2.6 million per month. The decline largely reflects a shift in the timing of some testing activities, and I will provide additional color during my update.

Looking ahead, we expect our cash burn will increase during the second half of the year. Our agreement with Texas A&M for the RELLIS land leases has allowed us to work on the final stages of site analysis and characterization work, and that spend is now underway.

This is consistent with the guidance we gave in the first quarter: cash burn would increase through calendar 2026 as we scale testing programs, project activities, and expand our organizational capabilities. I'll now turn to operating expenses.

Research and development expenses were down approximately $1.1 million quarter-on-quarter. This is related to timing and scope variances on some key tests, notably the addition of three graphite irradiation cycles at the NRG Petten test reactor.

We have also elected to build a greater irradiation and materials knowledge base in-house, which further contributed to the decreased spending sequentially. General and administrative expenses were up approximately $700,000 quarter-on-quarter.

The majority of this increase was from stock-based compensation, which increased by $500,000. These increases were driven by headcount growth as we scale organizational capacity to support our programs.

Turning to our capitalization table, as shown on slide 17, the issued and outstanding share count was unchanged during the second quarter of 2026. The fully diluted share count increased modestly by approximately 300,000 shares in the quarter due to stock option grants I previously mentioned.

In summary, cash, cash equivalents, and cash investments make up the vast majority of our assets. We have modest current liabilities and lease obligations, combined with no debt.

Our balance sheet remains simple and clean. With that, operator, please open the line for questions.

Hey, good morning, guys. Simon, I wanted to spend a minute here on the change in the economics, the increase there.

I know you covered it a bit in the prepared remarks, but I want to make sure I understood that. Is that more of a function of, I guess shall we say, fine-tuning some of the estimates?

Has anything fundamentally changed about the approach, your scope, or any other details we should be aware of to better contextualize that? Thanks.

A good question, Jeff. From a business model perspective, nothing has changed.

It is an iteration in our estimates of unit economics. The catalyst here has been the engineering work that we've undertaken over the last 18 months, and in particular the engineering work that's going into TEFLA, which is the fuel line pilot.

Perhaps that's the catalyst and the trigger for us to reissue the entire set of unit economics. It's also an opportunity for us to talk further about our principal businesses and why we believe that they are attractive businesses and will provide the drivers of value creation going forward.

Got it. Appreciate those details.

For my follow-up, on the DOE projects, TETRA and TEFLA, can you cover what kind of would be the near-medium-term milestones to just track progress towards any potential, I guess, initiation of construction activities or anything else we should be keeping an eye out for?

Yes. We haven't provided sort of further guidance on exactly what those future milestones are, but other than to say that we are continuing to execute basically on both projects.

Both projects continue to be very important for us, not least because of the support of the DOE in project execution. TETRA deals with some of the data collection activities that we need to complete to support the license application, and TEFLA, as I mentioned earlier, is the opportunity for us at pilot scale to define precisely the fuel production processes that we will be looking to scale up into the commercial plant for IMSR fuel salt supply.

We haven't provided details on exactly what milestones, precisely when to expect those on TETRA and TEFLA, simply to say that those projects continue to be very much the focus of attention our end, important projects, and we're working on continuing to execute on them.

Understood. We'll stay tuned.

Thanks, Simon.

Thank you.

Hey, guys. Thanks very much for taking my question.

Wanted to ask you about the use of natural gas as a bridge fuel. Can you tell us how long you expect your plants to be using nat gas as a bridge fuel, and what do the unit economics of your plants look like during that interim period?

Yes. Alex, very this is this is I think you're talking to things I think is very interesting characteristic of our plant.

We can use natural gas in the back end because the back end of our plant sits outside, we believe to sit outside the nuclear regulatory envelope. You can do this with certain Gen Generation IV systems.

In terms of in terms of the use of natural gas, I will I've given guidance previously on what a typical SMR project would look like, which is 5 plus 5 years. We would expect to be able to, in that first 5 years, to put into production commercial operation the back end of our plant where the steam systems will be driven by natural gas combustion.

Now the this is would be a capital-efficient way of doing it. It wouldn't be a combined cycle plant.

That would be in operation a very efficient way of using natural gas. This would be a capital-efficient way of doing it, namely you'll be using all the the capex you'll be deploying, the systems you'll be deploying would be dual-purpose systems.

They can be driven by natural gas and they can be driven by thermal energy, energy from from nuclear systems. You'll see If you're simply using natural gas to create steam, you'll see the type of thermal efficiencies you get with a coal plant.

You wouldn't see the thermal efficiencies you'll get with a combined cycle plant. Nonetheless, it is it is a capital-efficient way of of of building a dual-fuel back end to our plant, dual fuel namely nuclear systems and natural gas systems.

We would anticipate because the that back end of that plant would consist of standard industrial equipment, being able to bring power online commercially within 5 years. We believe that's deeply relevant to many, particularly in the AI data center sector, where you you hear the, the you hear the requirements their end, speed to power, namely what is super of super importance to them is get access to power quickly, and they're not for the moment price sensitive.

Over the long run, I expect they'll be deeply price sensitive, but perhaps not in in the short run. This allows us to to for a data center operator and others in the industrial world as well, it's not just data centers, this allows us to say, we're able to deliver your requirement tactically in the near term, which is power, and we're also able to deliver what you need strategically in the 2030s in the long run, okay, where you have clean, firm, cost-competitive nuclear power, and that's the advantage of this dual-fuel approach.

That's really helpful. Thanks.

Then, I appreciated the description of the various stages of the nuclear fuel supply chain. Can you just kind of summarize for us a little bit: is the takeaway there that your design can run on fuel that is commercially available today, or are you depending on some new fuel that's going to come online in the future?

Firstly, the neutronic form of it is commercially available today, that's step 1. Step 2, we require a chemical form of our fuel which is uranium tetrafluoride.

Now fluorination as a chemical process, both conversion, deconversion, has been baked into the nuclear supply chain for decades and decades. The difference here is that we require uranium tetrafluoride whether uranium is enriched to 5%.

Uranium tetrafluoride typically exists in nuclear fuel supply chain the other side of the enrichment process, namely the tetrafluoride is using natural uranium. Nonetheless, fluorination, as a chemical process, is very well understood.

We're working with Westinghouse on uranium tetrafluoride supply, and that's the piece that we need to work on from the supply chain perspective. It's, I think, a much, much smaller, much, much more straightforward step compared to the various steps need to be brought to the table if you're using HALEU and using HALEU in the physical fuel form, namely metallic uranium used in physical reactor assemblies or TRISO fuel.

We think it's a much, much more simpler process. It requires just one plant, namely a plant which will produce uranium tetrafluoride enriched to less than 5%, and our product from that plant will be the IMSR fuel salt, where we'll be taking uranium tetrafluoride enriched to no more than 5% and adding carrier salts, which are standard industrial chemicals, in fluoride form as well.

Naturally, because it's producing a nuclear regulated product, fuel, that production process would have a very tight set of production requirements and would be regulated as such.

That's really helpful. Thank you very much.

Thanks, Alex.

Hi. This is Drew Nordquist calling for Derek.

Congrats on the quarter, and thank you, guys, for taking our questions. Just now that the PDC and PIE are approved, what are the additional topical reports that are going to be needed?

Then, just one of you guys can provide an update on where you are at with fuel qualification?

Fuel qualification. Drew, a good question, and firstly, with respect to the two topical reports, yes, we've completed two of them: last year, the principal design criteria, and this year it was postulated initiating events.

In March, we gave guidance on three topical reports this year, guidance that we would be submitting the topical reports to the NRC. Clearly, with the postulated initiating event methodology, we have achieved one of those three.

We still expect to be submitting the full three. You can expect from the company over the coming quarters this year to be submitting at least two further topical reports.

Drew, could you repeat the second question, please? Oh,

I was just wondering if you could provide a update on where you are at with fuel qualification.

Fuel qualification. Fuel qualification is different with a liquid-fueled reactor system.

Fuel qualification typically is a long pole in the regulatory tent for solid fuel reactors because you have to prove the performance of that fuel pin in all operating conditions in the reactor core. It's notoriously long and complex for solid fuel reactor systems.

That's not the case for us. Fuel qualification for us is to demonstrate that we understand all the thermochemical characteristics of our salt, namely we can present to the NRC what the specific heat capacity is of the salt, and those characteristics allow us to define the heat transport properties of the fuel.

A different process, I would argue a more straightforward process than the very complicated process associated with fuel qualification for physical fuel. Recall that fuel qualification of physical fuel, when you're talking about the performance of that cladding for physical fuel, that's the first containment boundary.

Fuel qualification is about proving the performance of that containment boundary. We don't have that fuel qualification requirement, it's a very different process, not so well understood because we're talking about a liquid fuel.

The qualification process is largely ensuring that we collect all the data in a compliant way to demonstrate to the regulator that we understand the heat transport properties of our fuel.

Thank you for the color, Simon.

Yeah. Thank you.

Good morning, and thank you for taking my questions. Simon, I wanted to ask a little bit about your MOU with Riot.

This seems like a really exciting customer. I was wondering if there was maybe more color or more detail you might be able to share with us.

For example, have you been discussing with them potential initial sites and timeline for development of those sites? Has there been work done on the evaluation of subsidies or government support, low-cost financing for your first units?

Do you have any color on how those units are likely to be financed, other than through government support?

Yes. We have given guidance on our relationship with Riot in the form of that the parties at this point are doing some preliminary site characterization work.

The intention would be a grant to down-select to a target candidate first site. We haven't disclosed what that site is, and probably at this point in time, I wouldn't want to give any further guidance.

Probably that would include on timelines as well. In terms of how this type of project is going to be financed, clearly there would be state interest in financing this type of project, and I think that's true, very much true at the federal level as well.

In terms of the broad mechanisms of capital formation around this type of project, the capital formation in my view is not going to be associated with a classic project finance. These are highly strategic projects for everyone who's going to be involved.

They're obviously very strategic for us because our project with Riot represents a project which is sort of the first 1, 2, 3, 4, 5 for Terrestrial Energy. It's a very important project.

That's also very true for Riot as well. Success with their first project with us provides a pathway for Riot to that 4 gigawatts, highly strategic 4 gigawatts in the 2030s.

That's true also for the supplier. Success with the first project is going to be highly strategic for the suppliers.

It's going to be true for the constructor as well, and it's going to be true for the operator. I see capital formation associated with these projects, particularly with respect to equity capital formation, associated with the participation in the consortium.

We are part of that consortium, okay, but we're not looking to build and operate the plant. Capital formation for these first plants is going to be associated with the strategic value that they represent to everyone who's going to be involved.

Do recall that the strategic values associated with our pursuit of an opportunity in a serviceable addressable market which is running past $2 trillion. Getting it right with plants 1, 2, 3, 4, 5 That's table stakes into a massive market for SMR deployment in the 2030s.

That is going to be the mechanism, in my opinion, for capital formation. It's going to be supported, and I think vigorously, it's going to be supported by various agencies and policy initiatives at the federal government level.

I think they're aware of what some of them are. It's also going to be supported at the state level as well.

That's how I see the financing developing with these projects.

Thank you for that. If I could revisit the IMSR fuel salt supply approach: the conventional approach is three steps, three plants; the way that you're going to approach things for your fuel, two steps, one plant.

Can you maybe unpack the economics a little bit for us? Do you have potentially line of sight on maybe better than 50% lower costs on an energetically similar fuel type versus conventional plants?

We've given guidance on total revenues for that fuel business, and we've given guidance that 40% gross profit margin, which is middle of the park. We don't want to stretch this point too much.

We think that 40% is very reasonable when you're looking across the market and you say, what are the typical gross profit margins on fuel supply? Certainly, the whole fuel supply process our end consists of far fewer steps, fewer plants associated with the fuel supply business that you typically see with solid fuel reactors.

From a cost perspective to the customer, the owner-operator of the nuclear plant, it's going to be a tremendous advantage, because per gigawatt-year, from the schematic representation on that slide, our fuel is going to be significantly less expensive than the fuel you'd have from solid fuel reactors, particularly from Generation IV systems where you have to, from a standing start, you have to set up potentially three new plants. That's going to be costly, and it's going to be represented in the price of the fuel.

Understood. Understood.

Congratulations on the progress. We look forward to your success.

Thank you, Craig.

Thank you for joining us today and for your interest in the company. We set clear expectations earlier in the year, and we continue to meet them.

We have a small modular reactor plant design of exceptional potential, and we look forward to demonstrating progress milestone by milestone through 2026 and beyond. Thank you.