Perma-Fix Environmental Services - Earnings Call - Q1 2016
May 17, 2016
Transcript
Speaker 0
Greetings and welcome to Perma Fix Environmental Services First Quarter twenty sixteen Conference Call. At this time, participants are in a listen only mode. A brief question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to turn the call over to your host, Mr.
David Waldman with Crescendo Communications. Thank you. You may begin.
Speaker 1
Thank you. Good morning, everyone, and welcome to Permafix Environmental Services first quarter twenty sixteen conference call. On the call with us this morning are Doctor. Lou Senifani, CEO and Ben Naccaratto, Chief Financial Officer. The company issued a press release this morning containing first quarter twenty sixteen financial results, which is also posted on the company's website.
If you have any questions after the call or would like any additional information about the company, please contact Crescendo Communications at (212) 671-1020. I'd also like to remind everyone that certain statements contained within this conference call may be deemed forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements on this conference call other than a statement of historical fact are forward looking statements that are subject to known and unknown risks, uncertainties and other factors, which could cause actual results and performance of the company to differ materially from such statements. These risks and uncertainties are detailed in the company's filings with The U. S.
Securities And Exchange Commission. The company makes no commitment to disclose any revisions to forward looking statements or any facts, events or circumstances after the date hereof that bear upon forward looking statements. I'd now like to turn the call over to Doctor. Lou Senifani. Please go ahead, Lou.
Speaker 2
Thank you, David, and welcome, everyone. Let me start by saying the company is now on track for one of the most transformative events in the company's history. And I'll talk about that, about this in a moment. But first, I'd like to discuss the weak results for the quarter. Although the numbers were weak, it was due in large part to timing and we expect a very strong second half of the year based on contracts and orders in hand.
As a result, we also anticipate another strong year in 2016. Regarding our results for the quarter, funding that came in late in the government budget had a short term negative impact on spending as the site contractors struggled to rebaseline the numbers. Essentially, required additional time to prioritize the increased spending. This delayed several large waste treatment shipments that were pushed out to later in the year. These delays occurred as expected along with other logistical delays by our customers that we did not expect.
Nevertheless, we've begun to receive some of these shipments which should boost our treatment sales beginning in the second quarter and even more so in the third and fourth. As I said, we are planning for a very strong second half of the year. In addition to our waste treatment business, which we anticipate will continue to grow in 2016, now I'd like to talk about a rather significant event. I'm very limited in what I can say, but I'm extremely pleased to report that ThermoFix has formed a team and been awarded an IDIQ contract by Department of Energy for up to $8,600,000 to demonstrate the treatment of high level waste by the end of the year. We believe this demonstration opens the door to a significant market opportunity much larger than our traditional high level waste market.
Turning now to the service segment, again we're very optimistic. Revenue decreased in the first quarter compared to the same period last year due to the completion of a large contract in December in the nuclear service area. But similar to our treatment segment, we've also had several new contracts that were slow to begin due to timing that impacted the first quarter. We're now seeing these projects ramp up and have received additional awards that are yet to begin. As an example, we were recently selected by the Navy as part of winning team on a $240,000,000 five year contract for environmental remediation at various naval installations.
We have not yet started the work on this project, but are optimistic we'll provide significant revenue in 2016. In addition, in February, we awarded a six month contract extension by Kemron where we will continue to provide radiological support services to Kemeron at the 10 acre Safety Light Corporation site in South Central South Center Township near Bloomsburg, Pennsylvania. We believe we were awarded these contracts due to our close working relationship with respective partners and the fact that we're uniquely qualified with over twenty years experience characterizing, remediating, surveying radioactive material impacted sites. These contracts along with others and several fairly significant that we cannot announce, highlight the opportunities we see going forward in our service segment. As a result, we expect solid growth in business.
Based on our current sales pipeline and proven visibility, we expect to increase see increase in our adjusted EBITDA over the $7,000,000 of adjusted EBITDA in 2015. As timing continues to be a concern, we plan to provide more detailed guidance on or before the next conference call. All of this does not factor in any of our opportunities related to the high activity waste streams. Turning now to the medical side of our business, our majority owned subsidiary Permafix Medical SA continues to advance the new process to produce TEC99M. We are considering a variety of options that will bolster the strength of this subsidiary, including both strategic and capital market options.
We now have very good management and regulatory expertise that has been added and put in place and the feedback from within the industry from both distributors and end users has been very positive. We're in active discussions with a number of potential partners, distributors, customers and look forward to providing additional updates in the very near future. We will continue to make progress on the regulatory front as putting the company on a more solid footing from a capital market perspective. As I've said in the past, we believe we're in a position to be a major player in this $1,000,000,000 market as our process is lower cost and does not use weapons grade materials can be easily deployed in standard research and commercial reactors worldwide, thereby solving the global supply chain concerns for this critical isotope. To wrap up, we saw adjusted EBITDA nearly double in 2015.
For 2016, we anticipate continued growth in both our Treatment and Service segments. Although timing has had an impact in the first quarter and start of the second quarter, we anticipate a very strong second half of the year. I can say this confidently based on orders in hand. With our recent demonstration project, we will begin the treatment of high level waste could be a real game changer. We look forward to keeping you appraised of these developments as they unfold.
I'd like to now turn the call back over to Ben, who will go into more detail on the numbers, and I'll be back to answer questions at the conclusion of our formal remarks. Ben? Thank you, Lou. Starting with revenue. Our total revenue from continuing operations for the first quarter was $10,000,000 compared to last year's first quarter of $13,600,000 a decrease of $3,600,000 or 26.2%.
This decrease in revenue was the result of the shortfalls in both our operating and in both of our operating segments. Timing delays of waste shipments in the treatment segment resulted in both lower volume at our waste treatment facilities as well as a lower average price related to revenue mix. Revenue from the service segment was impacted by the completion of certain large contracts and the delay in the startup of the new projects. Turning to cost of goods sold, our total cost of sales was $10,000,000 in the first quarter compared to $12,100,000 in prior year. Our Treatment Segment cost of sales was down by $1,200,000 as a result of the lower volume of waste treated and the reduced fixed costs of $361,000 Cost of sales from the service segment were down $946,000 from prior year.
Reduced project revenue resulted in the lower related project expenses. Our gross profit for the quarter was $34,000 compared to $1,500,000 in 2015. Gross profit in our Treatment Segment decreased by $1,400,000 compared to prior year. Our facilities carry a relatively large fixed cost burden and the lower revenues such as we had in the first quarter failed to produce the incremental profit to cover these costs, thus the negative gross profit at our treatment facility. Similarly, low revenue in the service segment resulted in a minimal gross profit.
Our SG and A costs for the quarter were $3,100,000 up from $2,800,000 last year. We had increased marketing and bid and proposal type expenses, which offset a reduction in our administrative costs related to lower consulting and professional services. Our loss from continuing operations for the quarter before taxes was $3,800,000 compared to $2,000,000 last year. Included in these costs are costs of $438,000 and $395,000 related to our Medical Isotopes segment for Q1 twenty sixteen and 2015 respectively. Our loss applicable to common shareholders was $3,800,000 compared to last year's net loss of 2,100,000.0 Again, included in these losses are costs of $438,000 and $395,000 related to the Medical Isotope segment for Q1 twenty sixteen and 2015, respectively.
Our total loss per share for the quarter was $0.33 compared to $0.18 the loss of $0.18 in the prior year. Our adjusted EBITDA from continuing operations as defined in this morning's press release was a loss of $2,300,000 compared to a loss of $441,000 last year. Turning to the balance sheet, our cash was down $736,000 primarily from debt maintenance payments totaling 783,000 Our current receivables both billed and unbilled were down 2.6 as a result of lower revenue in the quarter. Our waste backlog was 4,900,000.0 compared to $4,700,000 at year end and $6,400,000 in March 2015. Our current debt, excluding our debt issuance costs was $1,800,000 down from six down $626,000 from year end and lower than prior year's first quarter by 1,900,000.0 Our total debt, again excluding debt issuance costs at quarter end were $9,200,000 $8.6 of which is from our P and C lender and $600,000 from our shareholder loan.
Finally, I'll summarize our cash flow activity in the first quarter. Our cash provided by continuing operations was $251,000 Our cash used by discontinued operations was $184,000 Cash used in investing was $24,000 of which 9,000 is for capital spending and cash for financing was $719,000 Finally, I'm going to address our notification of late filing of our Form 10 Q. Our covenant in our credit facility requires the company to maintain a fixed charge ratio of 1.15 to one to remain in compliance. We failed to achieve this in the first quarter due in part to the aforementioned delays impacting our top line revenue. We're in discussions to receive a waiver from our lender for this breach.
Unfortunately, our bank was unable to finalize the waiver prior to the filing deadline requiring us to file the extension. We do expect to receive this waiver prior to the end of the extension period, at which time we would file our 10 Q. Additionally, our amendment to our loan agreement signed March 2436 significantly reduced our monthly loan payments, which will help in maintaining this covenant in the future. With that, operator, I'll now open the call to questions.
Speaker 0
Thank you. At this time, we'll be conducting a question and answer session. Our first question comes from Anish Bal with MHB Capital. Please proceed with your question.
Speaker 3
Thank you and good morning. Just two quick questions. One is with regard to your bookings. You talked about some slippages. Were you able to actually book those contracts?
And if you so, can you disclose that number?
Speaker 2
Well, they're waste shipments and, they vary. It's a number of different shipments. And in total, probably the slippage, the unexpected slippage was probably in the 2,000,000 to $3,000,000 range. And again, it's timing, it's facilities telling us that it's coming, but struggling with transportation issues, type issues like that. So easily $3,000,000 but again it could have been more, could have been less.
Speaker 3
Okay. And then can you elaborate more on that high level contract you talked about, Lou, you mentioned in the opening remarks, please? Maybe talk about the timing and when the fruition of that contract could come to be realized? Yes,
Speaker 2
contract is to actually demonstrate treating high level waste to and it's really to treat commercial quantities at a fairly small amount, but to demonstrate the process we would go through and to lay out the course. Our part would be not real significant, maybe a million and a half of the contract to actually carry out the treatment. The variety of it is more laying out the rules, the laws and how we would do it. So, and to actually treat and have waste in the ground by the
Speaker 3
end of the year. When does that treatment begin? Was it beginning in Q2 or Q3?
Speaker 2
It's already started. Yes, started immediately. Now the treatment, again, this is much of a logistical exercise and laying out all the details, the laws, the rules and how it's going be done. So that part has already begun.
Speaker 3
And just last question then is that, so you started already and then you will not know if you're successful because of logistics and other third parties till the end of the year. Is that what I just heard you say?
Speaker 2
Well, we will we're pretty confident we'll be successful. This looks like a we've as for those of you that followed me know, we've been proposing this almost for ten years. So we have a very defined course that's laid out we think is we're very confident will work. And like I said, we yeah.
Speaker 3
Well, good luck. Thank you.
Speaker 2
Thank you.
Speaker 0
Next question comes from Robert Manning, a Private Investor. Please proceed with your question.
Speaker 4
Hi. Just any other detail you might feel free to give us on this contract. I think you mentioned that the total amount of the contract was $600,000 and then it sounds like 1,000,002 million dollars is our part for treatment. Are we a sub to somebody else? What can you tell us about the part of this $8,600,000 that's not for treatment?
Is that go to us for planning or whatever you're free to tell us about that, I'd be interested in.
Speaker 2
Yeah, it's we're part of the prime and the prime contract. We would most of it goes to the paperwork that's required to do what we're about to do, the layout and to fill in all the details and demonstration. Our main part is the treatment of it. And finally it will also then be disposed of in a disposal facility. So we're part of the prime guess that's Bob, it's a partnership LLC type arrangement.
That was your question. Yes, for the prime contract. So it flows all through our all the money will flow through the prime contract, but it's as we're part of it, but we won't recognize those parts that are not ours.
Speaker 4
Okay. So what we would recognize of this is a range of 1,000,000 to $2,000,000
Speaker 2
Yes, correct.
Speaker 4
Okay, good. Now you said this has already started. Does that mean we're already treating waste or we've got the paperwork rolling?
Speaker 2
Yes, you've got to really do studies and lay out the plan on how it's going work.
Speaker 4
But the idea is that we would actually be treating waste by the end of the year. Is that do I understand that correctly?
Speaker 2
Correct. Yes.
Speaker 3
Okay. Or will
Speaker 2
that be agreed by the end of the year? Mhmm.
Speaker 4
Yeah. Now, and will it all be done by the end of the year or we just get started? And I'm sort of wondering in line with
Speaker 2
the earlier question, when do we find out if we yep. When do
Speaker 4
we find out if they agree that we have succeeded?
Speaker 2
By the end of the year.
Speaker 3
Uh-huh.
Speaker 2
So we should be complete by then. It's a we should easily be able to do this by the end of the year.
Speaker 4
Yes. Now we are usually a subcontractor. Is this our being sort of co prime contractors, is that new and unusual for us?
Speaker 2
Not for smaller contracts like this. We're usually a sub to primes when it's $50,000,000 or greater. So in general, in this case with smaller contracts, we usually prime them. It's more contract management size. It's usually a limit for us than the type of project.
Speaker 4
Now it says this does go ahead and becomes much larger. Would we be a sub to somebody else or would we continue in this prime role?
Speaker 2
We would continue as the prime. Thank you.
Speaker 0
Our next question comes from Evan Greenberg with Legends Capital Funds. Please proceed with your question.
Speaker 2
Yeah, what makes this waste unique And, you know, how large is the opportunity after this treatment, on the waste loop? The, what makes it unique is it's high level waste. When you read the paper about that nobody knows, you know, we can't do anything with anything on the nuclear side, it only pertains to high level waste. And and and the inventory that's easily treated throughout DOE today is somewhere between 50 and a 100,000,000 gallons at the various sites. So, we'll be treating about 50 gallons.
Speaker 3
Okay. All right. Thanks a lot.
Speaker 0
Our next question comes from Al Scans with American Capital Partners. Please proceed with your question.
Speaker 2
Yeah gentlemen, good morning. Ben, are we going to have to pay any kind of a fee to get this waiver from the bank? In the past we have. It's been somewhat minimal. As of right now they've not informed us of any, but it's always our history with them has been a minimal fee in the 10,000 to $20,000 range.
Okay. Lou, without getting too technical, what gives you confidence that our approach will succeed where so many others have failed? Well, in simple terms, I mean, think the answer is from a chemistry point of view, we're very optimistic that what we're doing. And, you know, part of the answer is that what we're doing is really treating a very large if this works, we'll be able to treat a very large fraction very simply of high level waste. There will still be a small fraction that probably would need some very unique treatment that with time we could develop.
What our first proposal is, is to treat the very simple portion of it, which is maybe 80% of the volumes. So that's why we're very confident. We're looking at a material that from a chemistry point of view is in one way very simple to treat. And they'll continue to be a small fraction that will need very specialized treatment. Why do you think probably do, it's just we haven't focused on that part yet.
Speaker 3
Okay. But why do you
Speaker 2
think it's eluded so many others? We have some really there's two parts to this. We have the technologies and experience after all these years of treating radioactive waste. And also we have facilities that are extremely capable and licensed and permitted that could do it. So you have a very unique combination of technology, expertise, experience and facilities that don't exist other places.
Okay. Would it be safe to say that you spent a good part of your career the last ten to fifteen years working on this effort? You've heard me talk about it over the years, and, it's sort of been my dream and it's the biggest step we've been able to take. It's I'm under limits on what I can say. I understand.
I probably have gone too far already. But it's the size and the importance of this contract from a legal point of view made it necessary that we say something, at least say something about it. So you can tell in my hesitancy I'm walking a fine line here. I understand. I understand.
Okay. Good luck, Lou, to you and your Yes, thank you. I heard me have fallen off the wire, but that's from a legal point of view and an information point of view, our attorneys thought it was essential something to be said. I understand. Thank you.
Our
Speaker 0
next question comes from Doug Dyer, a private investor. Please proceed with your question.
Speaker 2
Morning, was about about three or four weeks ago, Hanford reported more leaks. And what I'd like to know is, does this cause a sense of urgency on the part of the Department of Energy to move forward quicker? And is this waste that leaked, is it the high level waste that you're referring to? You know, there's been a series of events throughout DOE facilities, not only at Hanford but at other sites where there's high level waste. And there's tremendous concern, you've got the tanks at Hanford that are leaking, you've got concerns about the progress that's being made.
And also just I think more importantly there's we've made advances in how to treat this in a much simpler way that could help, dramatically help DOE's efforts with the various projects they're doing. So it's a real complement to where they want to go. So I think we just a combination of things has convinced them the advances in technology, advances in our expertise and the way this might fit into their overall program for dealing with high level waste. I think this is just a whole combination of events that have occurred across the whole complex, Hanford just being one of them. There's also a major effort at Savannah River to treat high level waste.
So there's very significant volumes of this material that our technologies and our expertise could play a major role in. All right. Thank you, Lou. Our
Speaker 0
next question comes from Sam Revonsky with SER Asset Management. Please proceed with your question.
Speaker 2
Yes. Good morning, Lou. As far did I understand you say that you're only going to treat 50 gallons out of 50,000,000 to 100,000,000 gallons potential? Yes. You got to start small.
Okay. So graded on a scale. Okay. Did did and as far as what were are we able to name the person we're working with, or is that we're unable to? Okay.
Yeah. Now recently now one further thing. This type of thing that they're gonna test us, is this something that Curion has been doing in Japan? If we demonstrate our abilities, we could do what Curion has been demonstrating? No.
This is totally different, from what's going on there with Curion and at Fukushima. They're they're they're they're doing just simple separation of isotopes, in water. Is a much more significant, broader project. So this is more complicated than what they are doing? It's different.
Different? From our point of view, it's actually, to be honest with you, we think it's fairly simple, but, no one else does. Okay. Now is the money that's coming for this, there was a recent bill either that was passed Congress in the last week or two with, I don't know, remember how many billions involved. Is this relative to what just came out of Congress?
No. No. This was money already, allocated in the past budget. Okay. So recently, is there there were some, I think, some significant bills for cleanup and waste.
Is there any monies that we're going to be able to bid for or get on the you know, the I don't think it's been signed by the President yet, but I think it came out of Congress in the last couple of weeks, multibillion dollars for We were very pleased with the funding in Congress for all our various projects. It did increase the markup on the cleanup program and has allocated it in a little bit more to make us happy. So in terms of all the work we're doing across the board, we see we were pleased with the more pleased with the budget than it has been. But this has nothing to do with Congress, what we're doing Okay. So there's going to be more contracts for us to bid on.
Are you able to quantify the number of contracts or a dollar value on contracts that We're you might bid seeing tremendous activity right now. Again, it's that unfortunately many of our contracts we can't discuss. And we have several significant the service group is ramping up very nicely and it's extremely busy. And we're seeing a variety of new opportunities on the service side. And we in fact, in terms of where we're going is I'm hoping here in the very near future we'll be adding some fairly high level staff that will come in with tremendous expertise in these areas and hopefully you'll see that in the next couple of weeks, some announcements on that.
We see great opportunity here and so we're, like I say, business our seems to be ramping very nicely. Timing is not quite what we like because you see the results. They never can seem to ship it to us when we would like it. But the wayside is ramping up and service businesses is we see a very rich environment right now for bids and opportunities. Okay.
You indicate that you anticipate increase in adjusted EBITDA for the full year 2016 compared to 2015. Do you expect to be profitable for 2016? Or what's your thoughts there? Or are you going to It's our thought is that we would be. If we hit the higher EBITDAs like we expect, we we would be profitable.
Okay. Great. Alright. Good luck, Lou. Hopefully, you show them how it how it's supposed to be done.
We're heading that way. Thank you, Sam. Our
Speaker 0
next question is from John Gruber with Gruber Macbain. Please proceed with your question.
Speaker 2
Yeah, Lou. I'm a little confused. Your portion of this contract's, you know, 1518%, 20%, something like that. In future contract, is that the what is the other guy doing? Is there a lot of planning and stuff?
Like in future contracts, when you're really doing a lot of waste, will you be getting 75% of the contract? Or so what's the other guy doing to get all to get all the The first contract is skewed towards planning and laying out the rules, the laws and how it would work. So it's very much skewed to paperwork. So we have several consultants in there that are Okay. So my question then is what kind of revenue, if things go right with the first contract, could you get in 'seventeen on this contract?
The contract would then go to more treatment and disposal which would be almost fiftyfifty. Fiftyfifty treatment. And you would get how much? 20,000,000? 40,000,000?
Dollars 3,000,000? What could if things go right, what could it be? It's hard to project the price. Our present price, you know, as we look at this though, prices would be somewhere in the $50 gallon range Mhmm. For treatment.
And what's your capacity for this kind of stuff per year? It it's, very high. We could And that's what now gallons? What what's very high? I don't know what why you're high.
You know? Give us a little bit help here. We could do those kind of volumes, yes. With minor adjustments, we could do those kind of volumes. With minor adjustments, okay.
Thank you.
Speaker 0
Our next question comes from Anthony Marchese, a private investor. Please proceed with your question.
Speaker 5
Hey Lou. For you with respect to listen, first of all, congratulations on this contract. Given the fact that the vast majority of the shareholders do not listen to this conference call and you've not made anything public until this day, do you think it would be appropriate to issue some type of press release talking about this? And I realize that you can't name the other parties, but I think given the fact that you're discussing it on a conference call, I just think it would benefit 90 I 9% of the
Speaker 2
really didn't argue about delaying our call because my hope was there there may be an announcement coming out by DOE, which has not happened. So at this point, it's very hard for me to issue a press release.
Speaker 5
Then how would the again, I'm just going to I'm not trying to be difficult, but how do you expect that the vast majority of your shareholders again, I don't know how many people are on this call, but
Speaker 2
I have
Speaker 3
to believe that
Speaker 5
90 plus percent of your shareholders would be interested in this. And I think that in spite of the fact that the DOE has not made an announcement, the fact that you're even talking about it on this call, I would assume, means that your attorneys have said that it's okay to talk about it, which again, if it's a again, I'm not trying to be difficult, Lou. All I'm saying is if it's a transformative event, the vast majority of shareholders are not on this call. I just think you owe it to and it's a good thing, so it's not a negative thing. I just think you owe it to the vast majority of shareholders to at least make them aware of it.
Otherwise, how would you expect them to be aware of it given the fact that it's material to the future of the company?
Speaker 2
Well, it's something I've struggled with. And, like I say, I'm walking a tight rope with agreement signed.
Speaker 5
So to even mention the contract would be do you believe that to even mention it, you can do it in an eight ks? Certainly, if you, for whatever reason, have a prohibition against putting out a formal press release, you can certainly do it in an I just think that the fact that you're saying that it's a transformative event again, just the last again, I'm not trying to be argumentative, trust me. The fact that it's a transformative event for the company, in your own words, I think deserves either an eight ks or some type of press release. Again, doesn't have to mention your partner, which I'm sure you're restricted against talking about. I just think that personally, I just think that it's important that the remainder of your shareholders know about it.
That's all. But anyway, congratulations and Well, I think
Speaker 2
appreciate comment.
Speaker 5
All right. Thanks. Thanks.
Speaker 0
Our next question comes from Bill Chapman with Morgan Stanley. Please proceed with your question.
Speaker 6
Hello, Ben, good morning.
Speaker 2
Good morning, Bill.
Speaker 6
Lisa, I was curious on the Permafix Medical, that article that was in the paper that the company is trying to go public here in The U. S. By year end. Have you guys hired an investment banking firm that would help facilitate the IPO?
Speaker 2
We're presently interviewing investment bankers. Yes.
Speaker 6
Okay. So
Speaker 2
we've been discussing with several and we're negotiating with several. Okay.
Speaker 6
And you're anticipating NASDAQ. Did I hear that right? Did I read that right?
Speaker 2
That was our thought, yes.
Speaker 6
Okay.
Speaker 2
And of course, I'll let you know the way of the market and everything else. So that's we're looking at all we're continuing to look at all options there in terms of continuing the funding of the medical division.
Speaker 6
What are your other avenues then if you could address that please?
Speaker 2
Well, I mean they're all of the above. You've got strategics, you've got private money, you've got all sorts of options that were going down at the same time.
Speaker 6
Okay. If the IPO route doesn't work, do you have you mentioned a few others, do you feel confident you'll be able to raise money through private investors or strategics?
Speaker 2
Well, we feel confident in the end we'll be able to do something. Hate to give you the definitive answer here on what the various options. We're keeping all open and we're going down many paths and it's a major effort right now. So we are able then to get to a point where we have a commercial product.
Speaker 6
Okay. And are you looking to upgrade exchanges in Poland? Would that be also accomplished?
Speaker 2
Well, we've looked at that and explored that. That is an option. Although I hate to rate things, it's probably a lot lower on our option scale right now than doing something more even with the other options.
Speaker 6
Okay. Is the market value on that exchange in Poland still around 12,000,000 to $14,000,000 S. Dollars?
Speaker 2
Close, yes. It vacillates a little.
Speaker 5
It's
Speaker 2
moved up over the last month or so and it's back in that range.
Speaker 6
Okay. Well, seems like a bizarre evaluation for the technology you guys have.
Speaker 2
Yes. Very much so and that's why we're looking at various other exchanges and options.
Speaker 6
Okay. All right. Thank you very much.
Speaker 0
Okay. Thank you. Our next question comes from Monish Bal with MHP Capital. Please proceed with your question.
Speaker 3
Lou, I just had two more quick follow ups. One was the drop in services revenue. I would thought that'd be more stable given the fact that's recurring in nature. Was there any reason why it dropped so much? Was it all tied to the treatment?
Speaker 2
No, no. The service side, we have contracts that come and go. So in general, it is more stable. And but the first quarter was sort of the perfect storm. Everything seemed to go haywire for us in the first quarter and we ended a fairly significant contract in the first quarter.
Now we have several that we see picking that slack up that we won. But in the first quarter, it didn't occur. It was so there was timing issues that were negative on both on the waste side and on the service side. The service now is picked up pretty significantly as we sit here. So that's already occurred.
Speaker 3
Okay. And then I don't want to keep on beating this red dead horse. With regard to how you're going to disclose the progress on this contract, are you going to give us updates on a quarterly basis or is there something you can do in between as far as how contract is progressing?
Speaker 2
No, I think we can continue to update. It's hard for me just to do a press release. That's all.
Speaker 3
Sure. Okay. No problem. Okay. Thank you so much.
Appreciate
Speaker 2
it. Okay.
Speaker 0
Our next question comes from Sam Rebotsky with SER Asset Management. Please proceed with your question.
Speaker 2
Yes. Hi, Lou. Just a follow-up. I think Seeking Alpha will transcribe the conference call, which will publicize the announcement. But also to the extent that you file an eight ks of the conference call, that achieves the same thing of notifying the public of, the information that's presented here.
And that could be basically very once the information is transcribed, that notifies everybody what's going on. Just a suggestion. Okay, Sam. Thank you.
Speaker 0
Our next question comes from Bill Chapman with Morgan Stanley. Please proceed with your question.
Speaker 6
Guys, one more question. The process that you came up with to treat the high level waste, is that patented?
Speaker 2
No, we never process. Processes in general are hard to So it's really the barriers to entry there are the proprietary, the permits, licenses and expertise. It's one thing to say you can do something else that's actually done it.
Speaker 6
In
Speaker 2
general we don't patent processes. A difficult to defend.
Speaker 6
Okay. Well, thank you. And one last question. This process, is this a lower cost process versus the process they use in Japan?
Speaker 2
Well, remember, Japan is not treating high level waste. They're treating high activity waste like we treat every day. So what they're doing in Japan is just taking water and removing cesium strontium. We can do that every day. So the what we're doing is taking you know, this is this is totally different than than Japan.
Okay. We can do the Japan stuff every day.
Speaker 6
Well, didn't the company, the company doing that work, didn't a private equity company invest in that company at a substantial premium that's doing this work in Japan?
Speaker 2
Yes. Very much so. And it was just sold to Veolia for an extreme premium. So
Speaker 6
Well, it makes us wonder what we're worth, Anne, if you've got something that just a thought here. So thank you for telling me that.
Speaker 2
Yeah. No. It's a tremendous difference in valuation.
Speaker 6
Yes, exactly. Thank you very much.
Speaker 0
There are no further questions. At this time, I'd like to turn the call back to management for any closing comments.
Speaker 2
Once again, thank everyone for participating first quarter call. We have improved visibility primarily as it relates to the government spending, anticipated solid growth in treatment and services in 'sixteen and we're pursuing several large contracts in the service segment which we hope to announce in the near future. We see a growing number of opportunities treatment segment including our recent demonstration project for high level waste with a very significant opportunity for Perma Fix. I'd like to thank you all for continued support and look forward to providing additional updates. Thank you.