Perma-Fix Environmental Services - Earnings Call - Q1 2021

Transcript

Speaker 0

Good day everyone and welcome to the Perma Fix First Quarter twenty twenty one Conference Call. At this time all participants are in a listen only mode. Later you will have an opportunity to ask questions during the question and answer session. You may register to ask a question at any time by pressing the star and one on your touchtone phone. I will be standing by should you need any assistance.

Please note that this call may be recorded. It is now my pleasure to turn today's program over to David Waldman, Investor Relations. Please go ahead.

Speaker 1

Thank you, Jasmine. Good morning, everyone, and welcome to Permafix Environmental Services first quarter twenty twenty one conference call. On the call with us this morning are Mark Duff, President and CEO Doctor. Lou Senifani, Executive Vice President of Strategic Initiatives and Ben Naccaratto, Chief Financial Officer. The company issued a press release this morning containing first quarter twenty twenty one 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 the conference call may be deemed forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and include certain non GAAP financial measures. 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 as well as this morning's press release. 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. In addition, today's discussion will include references to non GAAP measures. Perma Fix believes that such information provides an additional measurement and consistent historical comparison of its performance. A reconciliation of the non GAAP measures to the most directly comparable GAAP measures is available in today's news release on our website.

Now I'd to turn the call over to Mark Duff. Please go ahead,

Speaker 2

All right. Thanks, David, and good morning. As anticipated, revenues in the first quarter were impacted by the ongoing effects of COVID-nineteen, but I'd like to reiterate that we remain extremely encouraged by the long term prospects for the company. Although certain segments of the economy have started to see a rebound as the pandemic has begun to subside, we are still feeling the impact, especially within our government business. Specifically, within our treatment segment, shipments have been temporarily delayed as the government has been focused on getting people back to work.

But it's important to note this business has not gone away. To the contrary, we expect to benefit from the government's fiscal twenty twenty carryover funds in addition to 2021 allocations that have been pushed out and should help fund an acceleration of projects within the Treatment Segment as well as the Services Segment. Within the Services Segment, we achieved modest growth in revenue despite delays throughout the industry in evaluating bids and proposals and awards of procurements also due to the pandemic. Nevertheless, we've begun to see return to normalization overall. Clearly, we're disappointed in the impacts these delays have had on our business, but we've continued to aggressively identify and pursue opportunities that align with our core competencies, specifically in waste management and radiological remediation.

In fact, as I've discussed in the past, our bidding pipeline is more robust than ever. We've been developing four to five simultaneous proposals at any given time throughout the first and second quarter by leveraging the technical and management talent that have joined our firm over the past two years. Our teams have been working around the clock on these bids and opportunities. The past, we haven't had the resources to concurrently bid on this number and size of procurements, considering the tremendous upfront resource required to evaluate and submit bids of this scale. As a result, we have an unprecedented number of outstanding bids that have been submitted in our waiting awards.

These bids are collectively valued in the hundreds of millions of dollars. As I mentioned on our last call, we are currently forecasting about $100,000,000 in new procurements and task order values over the next six months alone based on existing IDIQs that we currently hold and have recently won and anticipated projects that we've been informed of on the horizon. We have also performed exceptionally well on our current projects, which gives us the client references and track record to not only win many of these new awards, but also begin bidding on much larger projects. As an example, several large deal procurements, the Oak Ridge closure and the integrated tank disposition contract, both within DOE have been recently published, which include requirements for comprehensive waste treatment solutions, as well as end state contracting model, which support innovations and technology applications for success of the contracts. Importantly, these large bids with values in the billions include aggressive small business contracting requirements, which plays well into our strength as a small business.

And most of these contracts go for over ten years in total duration, including the option years. As most of our investors are aware, Perma Fix continues to support the Department of Energy in development of a supplemental technology in support of safe and compliant treatment of low level waste from the 56,000,000 gallons of tank waste located at the Hanford Reservation. Low level waste represents 90% of the inventory of the radioactive materials in those tanks at Hanford. The DOE demonstration project is referred to as the Test Bed Initiative, or TBI. Although that name has been changed a number of times in recent months, we still refer to it as the TBI program.

This program has slowed down over the past few years with the change in administrations and with shifting priorities within the department, and more importantly, most recently with the COVID-nineteen pandemic. Congress is still interested in this demonstration project and the associated initiative. And the program remains funded in the FY 2020 federal budget for $10,000,000 to implement phase two of the project. We completed phase one of the project with the treatment and disposal of three gallons of tank waste back in 2017. Phase two will include extraction, shipment, transportation of 2,000 gallons of tank waste to our Perma Fix Northwest facility located in Richland, Washington, about 15 miles from the tanks with subsequent processing and disposal in a permitted landfill in Texas.

In regards to status of the program, we continue to develop an R and D and D permit. R and D permit is a research development and demonstration permit for the review approval by the State of Washington Department of Ecology to enable the implementation of phase two. As we've stated in the past, we're assuming we're successful in this project, the project can be transformative overall to Perma Fix significantly. We remain optimistic that the RD and D approval process will be completed in Q3 to receive shipment of the 2,000 gallons around the first of the year in 2022. DOE and Congress have been supportive of the TBI program as a supplemental option to other alternatives that are also being considered.

Perfects will continue to work with DOE and the regulators and our associated congressional delegations to ensure common understanding of this technology, the value of this technology brings to the DOE and the value of the technology overall and our supporting facilities and what they can provide to the department. We remain optimistic that the new Biden administration will recognize this value as well and see how it supports the overall DOE cleanup mission. Recent events in the news have only accelerated the pressure to begin treating these waste streams with a renewed sense of urgency. We believe our technology provides a very safe and cost effective solution for near term processing of the Hanford tank waste. We truly believe and anticipate that as we come out of the COVID pandemic, we're well positioned to aggressively grow both sides of our business and we're already starting to see things pick up.

As we look at our pipeline in June and beyond, we expect to be fully back on track by Q3 and begin to resume strong organic growth moving forward again as we have the past few years. In the meantime, we've invested heavily in our capabilities and our facilities. We have a highly scalable infrastructure. We have a first class team in place to take us to the next level in regards to our staff and resources. Perfix continues to maintain our four treatment facilities, including our newest venture, the Environmental Waste Operations Center, or as we term it, the EWOC, located here in Oak Ridge, Tennessee.

We've just begun to generate revenue there and offer an expanded array of services to our clients for dismantlement of large equipment, as well as a bulk processing of radiological materials. With our state of the art treatment plants, along with our bench of key technical staff, we believe we have the foundation for growth that can be realized in the next few quarters. In terms of our facilities, it's worth emphasizing the significant intrinsic value of these plants. It would be nearly impossible for any company to replicate our facilities and technologies, let alone get them permitted. Even if they could, it would likely cost in excess of $50,000,000 for each one of those plants and take years, if not decades, to get permitted.

And we now have four of these facilities strategically located around the country, each with their own technologies and unique capabilities to support our overall client base. I truly believe that the future is brighter than ever, and we look forward to driving significant value for our shareholders. And one final note, I'd like to formally welcome Carrie Dugan to our Board of Directors. Carrie is one of the nation's premier environmental policy experts, having held senior roles in the government, as well as in private and academic and nonprofit sectors. Just to highlight a few of Carrie's many accomplishments, she's previously served as Deputy Director for Policy to then Vice President Biden in the Obama and Biden White House.

She's held senior roles in Department of Energy as well. She also served as a Biden campaign appointee to the Biden Sanders Climate Change Unity Task Force. We'll be providing a more detailed announcement with her full bio that I encourage you to review in the press release later today. I know Carrie shares our enthusiasm for the work we're doing here at Permafix, And we're really excited and looking forward to working closely with her and leveraging her unique relationships at all levels of government to advance our mission in addressing some of the nation's most pressing environmental challenges, particularly associated with our radioactive waste. On that note, I'll now turn the call over to Ben, who will discuss the financial results in more detail.

Ben?

Speaker 3

Thank you, Mark. I'll start with revenues. Our total revenue from continuing operations for the first quarter was $23,100,000 compared to last year's first quarter of $24,900,000 a decrease of $1,700,000 or 6.9%. The decrease in the revenue was entirely, as you mentioned, Mark, due to the drop in our revenue in our treatment segment, totaling $2,100,000 as we continued to see the delays in the waste shipments attributed to COVID-nineteen pandemic. This decrease was offset slightly by a small increase in our revenue in the service segment of $341,000 as our projects in California, Washington State and internationally in Canada continue to operate exceeding prior year's revenue.

Our cost of sales were $20,800,000 for the first quarter compared to $20,200,000 last year. That's an increase of $557,000 or 2.7%. Our costs sold goods sold were up modestly despite our drop in revenue and this is due to a shift in our revenue mix. Lower treatment revenue did result in lower regulatory and material and supply expenses, Though we had a shift in our revenue mix in our service segment, which resulted in higher subcontractor expenses and lower labor and travel. Gross profit for the quarter was $2,400,000 compared to $4,600,000 in 2020.

So this drop in gross profit of approximately $2,300,000 was the result of this revenue mix change where we saw 68% of our revenue come from the service segment compared to 62% last year. The lower revenue in the treatment segment accounts for 71% of the drop in the gross profit, which emphasizes the fixed cost burden that our treatment plans have when revenue goes down. In addition, we did see a change in the mix within the service segment, which accounted for the remainder of the gross profit drop. Project work, as we've discussed many times, is generally more competitive and brings lower margins than the treatment segment and we did see that evidenced in our drop in our gross margin from 18.7% to 10.2% this year. Our G and A costs remained consistent, dollars 3,200,000.0 versus $2,900,000 last year.

This small increase of 277,000 primarily relates to bid and proposal activity where we used outside consultants and other internal labor to increase the support for the heavy bid and proposal activity. Our net loss attributable to common shareholders for the quarter was $1,100,000 compared to last year's net income of $1,200,000 As with the gross profit, our waste shipment delays in our treatment segment had the biggest impact on this negative profitability swing. Our basic loss per share for the quarter was $09 compared to an income per share of $0.10 last year. Our adjusted EBITDA from continuing operations for the quarter as defined in this morning's press release was a loss of $522,000 compared to income last year of 1,900,000.0 Quickly turning to the balance sheet, our cash on the balance sheet was 713,000 compared to 7,900,000.0. This is entirely due to timing of accounts receivable, receipts of certain accounts receivable projects.

Our accounts receivable were up $10,500,000 and again due to this timing issue with receipts from two of our large contracts. Our unbilled revenues or receivables were down $5,200,000 again due to timing of billing and also the reduction of revenue from the service segment compared to Q4. Our current liabilities were approximately $520,000 and that is strictly timing related. Our backlog at the March was 6,200,000.0 down from $7,600,000 at year end and down from $8,900,000 in March 2020. Our total debt at the end of the quarter was $6,700,000 This excludes debt issuance costs of which $1,400,000 is owed to P and C and $5,300,000 is due to the PPP loan we have which remains unforgiven.

And finally, our cash flow activity, our cash used by continuing operations was $6,500,000 Our cash used by discontinued operations, 149,000. Our cash used for investing in continuing operations was $360,000 most of which was cap spending. And our cash used for financing was $223,000 representing our monthly payments of our term loan of $106,000 and payments to our finance lease liabilities of $117,000 With that, I'll now turn the call over for questions. Thank you.

Speaker 0

And we will take our first question from Howard Browse. Please go ahead. Your line is open.

Speaker 4

Thank you kindly. Mark, Ben, Ru, I hope that all of you and your families and the men and women of the organization are well and COVID free. Is that hope realized?

Speaker 2

It is, Lou. Howard, we appreciate you calling in. Yeah, everyone's doing well. We have no COVID cases in the company right now, so we've got most of them behind us and many folks are vaccinated at this point. So we're starting to feel like we're coming out of it as a company.

Thanks, Howard.

Speaker 4

Really glad to hear that. There have been several press releases, particularly last week, regarding the leaking tanks at Hanford. Specifically, is the TBI program viewed as the potential solution to that problem?

Speaker 2

That is a timely question, Howard. DUE hasn't communicated their plans, their approach or any timing for addressing the newly discovered tank that we know of. The only information that's available is what we've seen and you probably have as well well as the other investors in the press. What I can say is that the Permafix technology, our facility, which is fully permitted and our approach for low level waste stabilization, coupled with the supporting retrieval and pretreatment systems that have already been designed and fabricated for the tanks, do represent near term and safe option for removing and transferring and disposing of that low waste from the Hanford tank, specifically for the B109 tank. While we haven't seen all of the analytical data yet for this specific tank, we have reviewed the data that's in the public domain, and it does look favorable for this exact application.

In other words, our technology can treat the waste from this tank for disposal quickly and at a significant cost savings to reduce the overall environmental risk and additional potential cost. In addition, the TBI program has been demonstrated also provides the opportunity to open up space in the double shell tanks so that the DOE doesn't need to build another one. Overall, it is a potential solution, but we have not specifically talked to DOE about it yet.

Speaker 4

The TBI option cost to implement, what kind of numbers are we talking about, particularly compared to, say, the vitrification, which plant, I just assume, doesn't open for many, many years?

Speaker 2

Yeah. To move forward with our technology as a solution, we would first need the support of DOE and the state of Washington to make that happen. If we were able to establish a partnership with them to support near term application, we estimate that the waste could be retrieved, pretreated to make low level waste, and that's done at the tank side during the extraction process. And then we could treat and stabilize the waste in the Richland plant and dispose of it in Texas. And that would take from the point of contract initiation, it would take probably twelve to eighteen months.

So not a significant amount of time. Our estimate for doing all that for stabilization, transportation and permanent disposal in Texas would be in the range of about $200 a gallon. And that does not include the cost for retrieval or pretreatment. That's just for when we receive it until we get it into disposal in Texas. The press release mentioned that that tank, the B109 tank was approximately 123,000 gallons.

So you can do the math there. But as far as what the Vit Plant or the DF Law Plant costs are, in the past, that's been published, that it's in excess of $1,100 a gallon. So you can do the comparison. I'm not sure everything that's included in that number. If it's operation, if that's consideration of the construction costs or what really is included in that.

But as far as we're concerned, it's about $200 a gallon. And this approach, as I say, would provide a permanent solution and would provide a lot of value as far as a faster application and to avoid further environmental risk.

Speaker 4

So based on the numbers, which are quite obvious, why is the Department of Energy not moving forward with this alternative?

Speaker 2

Howard, I can't speak for DOE. There's a lot of complicated considerations in regards to Hanford as a whole. Obviously many, many that we're not sensitive to in the public or even in our business. So a lot of things are juggling, politics, funding, priorities, existing strategies. So I really can't answer why it's not moving forward as an alternative.

DOE is aware of our capability. They're very aware of TBI. It's funded through DOE. We have great relationships with the local office for DOE as well as headquarters. We talk to them frequently.

So they are aware of the technology, aware of what it can do. So we remain on standby and offered to support DOE when the timing is right to implement what our technology has to offer. And to supplement the current strategy with DF Law as well. So we obviously have tremendous confidence in the solution. We've demonstrated that it works in phase one through the TBI program.

And we've been doing this kind of work for thirty years, Howard, as you know. We just celebrated our thirtieth anniversary last month. And in addition, Howard, also, I know you know this too, is the National Academy of Sciences and other independent scientific groups have recognized grouting, which is the basic premise of our technology. They recognize it as a viable solution and an alternative or a supplement to vitrification as a whole. So we're hopeful that DOE will evaluate this as an alternative.

But right now, we haven't received any confirmation that they want to move on anything, particularly associated with this new tank leak that's been in the press.

Speaker 4

This is a new tank leak, but tanks have been leaking for years, as I understand it. Is that a correct statement? This is not just the last leak.

Speaker 2

That is my understanding, yes. This is not the first tank to leak, that's for sure. And they'll continue to leak. And so, yeah, this is not anything new. It's just another data point from what I understand.

Speaker 4

Mark, thank you. Ben, the most the best. Thank you again. Appreciate

Speaker 2

it, Howard.

Speaker 4

Thank you.

Speaker 0

We will take our next question from Ryan Hamilton. Please go ahead.

Speaker 5

Good morning, everyone.

Speaker 2

Good morning, Ryan.

Speaker 5

Could you touch a little bit on your backlog and maybe break out what services and treatment?

Speaker 2

Sure, Ryan. And Ben is located in Atlanta, we're not sitting next to each other. But for the most part, our services is just under $15,000,000 I believe Ben is where we're sitting right now overall, and closer to 7,000,000 the treatment segment. Is that right, Ben?

Speaker 3

Yeah, the number that I gave Ryan was just the treatment backlog, and Mark's right. The services backlog is about, about I think 14,000,015 million dollars range for services.

Speaker 5

And is it is your backlog pretty sticky as far as are those contracts cancelable or not? Kind of what are you seeing there?

Speaker 2

No, they're not really cancelable necessarily for services. They're finishing up projects. So in other words, we have a couple of projects in California that are ongoing, Canada, as well as many smaller projects around the country. And those are going continue to roll until they're done, until the projects are completed. So there'll be limited changes associated with those overall.

And that number shouldn't move much. It could always move some. We could finish some projects early. And sometimes the clients change the scope a little bit here and there. That could happen.

But for the most part, they're pretty solid. And we're pretty comfortable with those through Q2 and into Q3 as well.

Speaker 3

Sounds good. And I'll add that the treatment backlog is waste on hand. It's a true unearned number, so it's kind of we've already received the waste and it's awaiting processing.

Speaker 5

Okay. I know. Appreciate the color. Kind of along those lines to backlog completion and as business continues to expand and improve after COVID, are you seeing any other kind of constraints that may prohibit growth or get in the way of completion?

Speaker 2

No. The only thing, I guess I said, Ryan, it's one thing we didn't anticipate. We knew they weren't going to generate a lot of waste during COVID. Things just aren't happening. If you go to some of the sites or talk to the sites, there's still very limited visitor access on-site, let alone subcontractors.

So just not a lot happening. It's starting to pick up now. DOE's got a plan for getting to full operations through the summer. I'm not sure exactly the details associated with that. But what really has been a surprise is how many bids haven't been awarded.

And that's what we really counted on, more awards, more task orders to be awarded now. But since they're not in the field, they don't want to mobilize to the field yet since they're not there. So that's continued to be pushed out. They're piled up. They haven't been canceled.

They haven't been awarded in most cases. A few little ones here and there that have been. But for the most part, the bulk of these procurements are all waiting for the government and commercial organizations to make announcements. That's got to start happening soon. And I'm hoping before the next call in three months that we've got a number that we've been able to announce some wins and some backlog by July timeframe.

Speaker 5

Sure. That's great. Could you touch a little bit as far as what you're seeing in the bidding environment? Are there larger numbers of bidders? Is it being driven by price or what you guys can actually complete at a certain time?

Could you kind of touch on that just a little?

Speaker 2

Yes, Ryan. That's a good question. On the services side, four or five bidders on most of these. They're all different. There's different teaming relationships with different skill requirements.

We've been on several that have less than that, some that have more. So it's all over the place on the service side of house. As far as costing, on the waste treatment side of the house, we have seen a slight reduction in cost. In other words, we've to be more aggressive. Very little waste out there.

We don't have a lot of competition there. There's really only two other alternatives. And that's typically to go directly in disposal. So we've seen a little pressure there, but only on a few waste streams overall. There's still some waste streams out there that have no place to go except to us, and we offer unique solutions for those.

And we've maintained our pricing on that pretty flat overall. So yes, the competition is pretty much the same. I do think, compared to our competitors, we've been able to get more bids out. As I mentioned, we have a real machine for producing these proposals and integrating our technical staff from projects into the proposal development process. So I'm really proud of our team.

We work around the clock, as I mentioned too, weekends and nights for months, getting these bids put out. They're just now starting to slow down the next couple of weeks, but we expect task orders to start coming in through our IDIQ contracts in the next few weeks as well, which are much smaller but faster turn and quicker starts. So that will support our summer and hopefully support the getting back to normal part of it as well. Just a little bit of difference in costing, not a significant amount overall.

Speaker 5

That's great. COVID aside, are there any other issues regarding winning new business? Is there any kind of competitive disadvantage that you're seeing? I mean, wouldn't think that, but I just thought I'd ask.

Speaker 2

No, nothing to really speak of, Ryan. I can't say there's any real change. You know, one thing too, Ryan, it's difficult to address that question because we haven't seen the awards yet. Like I mentioned, we've done a lot of bidding, but we haven't seen a lot of awards. So statistically, I can't say how we've done or how everyone else is doing relative to addressing your question.

Certainly by the next call, we'll have a good sense of how to answer that, that's for sure.

Speaker 5

I'm excited to see the proceeds from all your hard work and the team. I guess I just have one more. Could you maybe touch a little on the international business, what you're seeing as far as volumes there?

Speaker 2

Yes. I think I probably mentioned that last quarter. We're really excited about the international opportunities. We received our first shipment well, actually, our first virtually large shipment from Europe in January. And we have more coming behind it.

There's been some verification processes that are required for that type of work to verify procedures and provide QA or QCO in regards to what we're doing. And that's all been worked out. Once that's all done, then the gates kind of open. So we expect to start seeing a couple million a year as a baseline shipment from particularly specifically from Europe. And we also expect to see some from Mexico and continued shipments from Canada.

So we see that market opening up for us. We have our incinerators are very unique up in Richland, and they can handle and provide really high value waste treatment services to Europe. And it's not as crazy as expensive as you might think to ship it there. So it works pretty well. And once we start doing more and more, I think that Europe is going to see that, hey, it's cheaper to ship it over there, treat it.

And then you have to send what you treat back a including the residue and everything that has to go back over there. But it's in a stable form that they can store very cheaply. And it's volume reduced up to 90% or more. So there's a lot of value in it. And I think we'll start seeing that happen more and more with European clients as well once word gets around that this is a viable option.

Speaker 5

Sounds good. I appreciate you taking the time to answer my questions.

Speaker 2

All right. Thanks, Ryan.

Speaker 0

We will take our next question from Chuck Dickinson. Please go ahead.

Speaker 6

Hi, good morning guys. Could you also clarify for me? I've written down here you said the intrinsic value of the plants, like I said, it's four treatment facilities now with the Ewok. You thought because it'd be very difficult to replace, would be something like $50,000,000 each on average. Is that correct?

Speaker 2

Yes, Chuck. That's a really difficult estimate. It's really difficult to estimate the value of those assets. We wanted to highlight that in this call that it provides the foundation of our future and keeps us somewhat stable having those assets. It's nearly impossible to replace these plants, and it's very difficult to put a real specific asset value on each plant and the permits that go with the plant.

The EWOC is not a $50,000,000 plan at this point. We're going through a special lease to own arrangement with the former owner. We do have it permitted for radioactive materials processing and are pursuing other permits to give us more flexibility to support Oak Ridge in mercury processing specifically. So it's not really at a $50,000,000 replacement value yet compared to the other ones. The other ones are super robust with lots of different technologies and permits that let you do different types of things and give you the flexibility you need.

And the systems are all there. E walk is not quite that level yet as the other three.

Speaker 6

So maybe rather than the dollar amount, it's more an academic exercise or an exercise in theory to say what? That the time to take to build the plant, to get it permitted and approved, to have the patents and the technologies and technical personnel to do it, maybe just as important that how long it would take to do that is such a significant barrier to entry that you're talking about five to ten years to even consider getting into this business. It's really just a message saying, Hey, this is a really difficult business to get into and it's probably not going to happen.

Speaker 2

That's exactly the message, Chuck, is the barrier to entry is very, very high, and it bodes well for the future of the company.

Speaker 6

Okay. The allocation rollover from 2020 to 2021, the fiscal year of the government ends in September, so we're about three quarters of the way through 2021. Would that money, if it doesn't come into 2022, given what's going on with COVID, although you're starting, you say, to see things picking up maybe by June, certainly in the summer, it looks better. Could that money from 2020 that does not roll in or if it does not roll into fiscal twenty twenty one, could it roll into fiscal twenty twenty two? And likewise, could any unspent money allocated for 2021 roll into 2022?

Speaker 2

Yeah, that's a great question. Chuck. Yes, you can typically, and I'm not an expert in this by any means, but certainly the department can allocate their unspent money from 2020 through the rest of this year. Now, what happens with the backlog or the excess in 'twenty one? I assume it works the same way.

Once they pass a budget, and assuming they don't go into continuing resolution, complicates everything, they can spend that in 'twenty one as well. But yes, waste is backing up. For example, we're seeing very few shipments from the plateau contract in Hanford. And again, they're going through that transition up there. That's slowed down tremendously.

And there's continued delays in Hanford shipments expected until another couple months at least. And so that's hurt us. That's all backing up. And they'll make those shipments. We're confident they'll try to catch up for what they've missed.

And if they do that, they'll start shipping significantly. And we'll add double shifts if we need to, to keep up in third and fourth quarter. So we're kind of hoping for that. We haven't committed to it, and I can't commit to it either. But we're hopeful that once they start shipping again in Hanford, like they usually do, that we'll catch up along the way.

Speaker 6

Yeah, so as an investor, should I be focusing on the $7,000,000 of treatment backlog or should I be focusing more on the sort of unstated backlog that's out there that's not in hand necessarily but that's been pushed to the right, I guess, if you want

Speaker 2

That's use that

difficult for me to answer, Chuck. But I would say that the $7,000,000 of backlog will keep us working and keep revenue going and generating and EBITDA generating through the quarter. It ensures us that we've got revenue coming in at this point in time. We're typically about we look about three months ahead overall. So for that $7,000,000 of backlog, we should be burning through that in the next three months is what I'm saying.

And yes, so if I was an investor looking at this kind of thing, I'd be trying to understand what the future is looking like in regards to waste generating and is the government getting back to work in the field to generate these waste that we process.

Speaker 6

Okay. Last question. You stated or Ben stated that the PPP loan remains unforgiven. Are you still in the process of trying to get that forgiven?

Speaker 3

We are. Our entire application for forgiveness was completed in October. You know, as many of you know, they advertised ninety days to get the forgiveness done and we've heard nothing. We make attempts to find out information. The banks have seen a lot of smaller $2,000,000 loans get forgiven.

Very few of the larger ones, although I have been hearing lately a few bigger ones are starting to move. It may just be a matter of they were more focused on doling out the new dollars and less on the forgiveness. We're optimistic in the next three to six months it'll happen.

Speaker 6

Okay. Thank you.

Speaker 0

Jim, are you there? Your line is open.

Speaker 7

Hi, guys. Jim Godfrey. How are you doing today?

Speaker 2

We're doing good, Jim.

Speaker 7

Good. Hey, really excited for the additional color that you've provided today. Looking forward to the press releases you referred to later on today regarding our new board member, that's certainly welcome, to say the least. It sounds like it makes a lot of sense from many perspectives and and as a really solid professional to add to the board. So that's wonderful.

A couple of the things that, you know, maybe even taking it a step further than you already have up at Hanford. There's been, of course, the overwhelming news of the leak less amplified, but I think equally important and wanted to get your color on April 27, the Office of Environmental Management put out their release that Hanford moves a step closer to tank waste treatment. And to that extent, they're talking certainly about the TSCR platform. Isn't that really necessary if we're ever to get to large volume deliveries? Least this phase of that construction is finally completed?

And how does that affect your vision as far as volume's potential going forward if things come in our direction?

Speaker 2

Well, that's a great question, Jim. I mentioned in the talk, and I think I mentioned it in the follow-up question from Howard, about the whole extraction process and the fact that we're really talking about treating low level waste, so when they pump it out of the tank, it's actually pretty hot. It's much hotter than usual and requires treatment when it comes out of the tank to remove the cesium niobene from the waste, from the liquids that are coming out. And that's what we call the pretreatment. And that is actually done by what you refer to as a TSCR, which we refer to as the TISCER, which is the tank side Cesium removal system.

So that is a critical component to have that system fabricated, as I mentioned in the script, and up and running, and it is. They're using a similar system in Savannah River as well. It works very well. It's a great design and it's a great system. The use of that system really tees up the ability of the Permafix treatment approach to be able to handle this waste.

In other words, you put that system into a tank and the waste that comes out of it is suitable for shipping over to our facility to treat and then send it to Texas. So that's a critical component that hasn't been there yet. But the volume that it can pump, it can treat, and the ability for that to support our treatment program is one step closer to large volume transfer of waste either to Permafix or to the DFLaw plant as well. And provide the DOE with those alternatives. So it's an important step forward to get that fabricated, installed, and running.

Speaker 7

Right. And then, you know, to the extent that you just mentioned the two ways it can get shipped, there's really nobody else right now permitted in place, approved if everything continues to obtain final permitting to treat the waste. We're we're really kind of in a unique situation here. Aren't we really about the only option that's really ready to go right now? Should the decision be made to start treating some of this waste in larger scale, provided we continue on with the successful demonstrations with the TVI?

Speaker 2

Yeah. I mean, we are the only option outside of the plant. In other words, the DF Law Facility is the current strategy for DOE, and we stand behind them on that. So that process is to be up and running in December '3. We're a supplement to that.

That plant will run, from what I understand, at about 1,000,000 gallons a year. We can do that right away as well and expand to several million gallons a year. So we would supplement that in case that doesn't operate on schedule or DOE views it as important to do to increase the volume of waste they're retrieving and processing, we're right there for that. So we'd like to say that we're supplementing their current strategy for the 2023 timeframe. But for this tank, my understanding is this tank would not go to the D.

F. Law. The infrastructure is not in place to send it there. Again, haven't verified that just from talking to friends on-site. So that would make it even more of a prime candidate for a potential off-site treatment because infrastructure to go to DFLAW for where that tank is actually located is not in place at this point.

So it would be a great option to send it to us if DOE saw that as a viable option.

Speaker 7

Great. Great. And so, you know, we've also and we haven't touched on it yet. We have this interesting joint venture with Veolia and this new geometric certification system that we've I guess we're we're awaiting final permitting now. And and how does that affect things as far as the overall offerings that we're able to offer at that facility?

And also, do you see expanded opportunities with Veolia to perhaps add additional GeoMet facilities in our other facilities as we move forward.

Speaker 2

Yeah, the GeoMet, know, again, doesn't won't address the tank waste at all. GeoMet with Veolia has a great relationship. We're waiting for the permit to the state. Our general manager and our executive VP for waste operations are working that very hard with the state and to get that through. And that basically starts out as a treatability study, which we've completed with the waste we've already run through there and try to get that permitted so we can start receiving more waste from specifically from Idaho, the sodium waste.

So we are waiting for that to happen. We're hopeful that that can happen before the end of the year. It has been delayed. It's difficult to get permits through the state. It takes a long time.

And we're working with them on a regular basis, meeting with them monthly to try to push that through. We have talked to Veolia about other locations, other processes. That one's the closest to the permitting side. In other words, since it's at our site where we have a permit, we've been able to treat a good bit of waste through it. But we're kind of we're pretty much stuck until we get that approval from the state to be

Speaker 7

able to move forward. Sure, sure. But of course, you wouldn't have went through all this great process unless you had some reasonable assurance that you'd be able to get it approved. It's still the That's right. Just a bureau bureaucratic process that you're working through.

Is that fair? Correct. Yep. Yeah. Right.

Right. Good. Good. Now, I mean, turning to a couple of other things here, and I don't wanna take up all the time on your call. But one of them is, another thing that hasn't come up, the board of directors decided to not continue with, in effect, our poison pill.

And and just wondering, you know, I know you probably have fielded many, you know, investors' concerns that we just don't like poison pills. Was that really just kind of an olive branch from the board? It shouldn't be read into it too much. We're not shopping the business or anything like that. But just wanted to give you the platform to kinda talk about that a little bit, and and you're really making great efforts to unlock the hidden value that's here.

And this is kind of an olive branch again to extend that effort. Is that fair to say?

Speaker 2

Well, Jim, yeah, wouldn't read too much into it either. But I will say this, is that the poison pill was justified by the Board based on the conditions of the company at the time. And there's that went into that and a lot of considerations, a lot of thought that went into that. Those conditions have changed. And at least several of them have to the point where the Board looked at the need for the poison pill and recognized the fact that because his condition has changed, it was no longer justifiable, and that they could not renew it.

And I think that's pretty much what happened with that.

Speaker 7

Sure, sure. And I'll just finish up with two quick final points. One, you talked about the tremendous quality of the group of professionals that you've assembled to complement who was already there over the last two years. And I note on your website, there's several job openings. You're really confident here as far as your ability to attract and build this organization with engineers and physicists and some really deep, highly talented and industry experienced professionals.

Where do you see that going? You tend to see that we basically have the right mix of professionals in the organization now. And going forward, don't we have just a huge amount of capacity without really having to invest a whole heck of a lot in terms of CapEx in all of our facilities? They're ready to go and the capacity is astronomical. The brain power is astronomical.

And given the bidding that you're currently involved with, can't you really come out and say that, gosh darn it, by 2022, that's gonna mark a new paradigm in in Perma Fix and that our our growth is gonna continue, The right components are in place, and we should be flowing a lot of profits right to the bottom line as these volumes get to this next paradigm of volumes for the company. And overall, it's it's extremely exciting. Do you kind of embrace that and and share those thoughts and maybe just kind of offer any other color that you might for what I just shared?

Speaker 2

Yeah, Jim. You know, as as an investor myself in in the market and I've spent a lot of time myself looking at stocks and things. And the thing that I think that everyone always looks at is the leadership team. And if you've got a strong leadership team, you'll be able to get through the rough times and chart a vision for the future that is exciting and represents growth and growth of your stock. And that's really been what our focus has been the last three years is to attain that type of talent, integrate these guys and women into the management team, and really chart out the innovation to align up with where the market is going, what types of waste are be generated, what type of field projects are going to come up.

In our mind, that's largely got the radiological string to it. In other words, all of our projects for the most part have the RAD component. So we built an expertise around that RAD component to do final releases, what we call free release of and license terminations for radiological facilities. And we really look at ourselves as a leader in that. We've done almost 100 now.

Most companies have done very few as far as projects that have been released back to the public or back to private domain. And we really focus on that because we see that happening constantly. And those types of project conclusions are becoming more and more necessary. And we're bidding on two or three jobs right now that emphasize project closure. So that's what we've been focused on, have built our team around it.

We've grown very well around it. It saddens me and the management team that this COVID thing has put such a clamp on us, our momentum and have made it difficult these two quarters, particularly as projects have ended and new ones haven't started, that we lost that momentum for a bit. But we're really confident it's going to come back. We see looking at the project lists that are out there that our clients have that we talk to them about, there's plenty on the horizon. Once these task orders started coming through our IDIQs, we'll see that momentum come back with the management team that we've got.

So yes, we're really excited about that. If we didn't have that management team, wouldn't have nearly the confidence, I do, that we're going to get there on both sectors being able to be flexible and resilient to get through this hiccup that we're in right now.

Speaker 7

Great. You know, the guidance that you provided today is wonderful, Mark. And I can't thank you enough. But especially, you know, you you shared, I think, the first time, you know, kind of a couple $100 a gallon potential at Hanford and and the ability to, if things go our way, treat several million gallons annually. So you're really creating a vision for the company that currently is at $100,000,000 in sales, call it.

There's many hundreds of millions of dollars in sales potential as we look into the future with margins that are astronomically better than what we've ever experienced. So that's such a tremendous vision. I can't thank you enough for sharing that vision. And I wish you the best of success as you continue to execute and move towards those long term objectives. And thank you for your time.

Speaker 2

Great. Thanks, Jim. You bet.

Speaker 0

It appears we have no further questions at this time. I will now turn the program back to our presenters for any closing remarks.

Speaker 2

All right. Thank you, Jesper. I'd like to thank everyone for participating in our first quarter conference call. As mentioned earlier, we remain extremely bullish on the outlook for the full year. We appreciate the continued support of our shareholders and look forward to further updates as developments unfold.

Thank you.

Speaker 0

This does conclude today's program. Thank you for your participation. You may disconnect