Perma-Fix Environmental Services - Earnings Call - Q2 2021

Executive Summary

• Q2 2021 revenue fell to $16.1M, down 26.8% year over year, driven by Services segment delays and completion of a large project; Treatment segment was roughly flat. Adjusted EBITDA declined to a loss of $1.7M, and operating loss was $2.2M.
• Reported net income was $3.0M ($0.25 basic EPS), boosted by $5.4M PPP loan forgiveness; underlying operating results were weaker due to COVID-related procurement and shipment delays.
• Management indicated activity was picking up into Q3 and expressed confidence in an improved second half 2021, citing a robust bidding pipeline and the new Therma-Fix Gen3 system as catalysts.
• Near-term stock narrative likely centers on Services award timing (DOE/EPA/Navy), Treatment receipt normalization into fiscal Q3, and potential Hanford TBI progress; PPP-driven EPS is non-recurring and should be discounted in quality-of-earnings assessments.

What Went Well and What Went Wrong

• What Went Well

  • “We were able to report a net income of $3 million for the quarter. We have $7 million of cash on the balance sheet and have lowered our bank debt to under $1.5 million,” underscoring liquidity and deleveraging; PPP forgiveness materially aided the quarter.
  • New Therma-Fix Gen3 vacuum thermal desorption system launched in June 2021 with backlog and sales pipeline secured even before operations, indicating demand for expanded Treatment capabilities.
  • Management sees “activity pick up heading into the third quarter” with a robust bidding pipeline valued in “hundreds of millions of dollars,” supporting H2 recovery potential.

• What Went Wrong

  • Revenue dropped 26.8% YoY to $16.1M; Services revenue fell from $14.2M to $8.4M due to delayed awards and the completion of a large project, pressuring gross profit to $0.97M and leading to a $2.2M operating loss.
  • Adjusted EBITDA swung to a loss of $1.7M from $0.85M in Q2 2020, reflecting lower volumes and margin compression, especially in Services.
  • Government procurement cycles were “very slow” across DOE, Corps, and Navy, with delays attributed to COVID and administrative appointments, extending award timelines and project mobilization.

Transcript

Speaker 0

Good day, ladies and gentlemen, and welcome to the Permafix Second Quarter twenty twenty one Conference Call. All lines have been placed on a listen only mode and the floor will be open for questions and comments following the presentation. At this time, it is my pleasure to turn the floor over to your host, David Waldman, Investor Relations. Sir, the floor is yours.

Speaker 1

Thank you, Rishan, and good morning, everyone, and welcome to Perma Fix Environmental Services second 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 second 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) 671-1021.

I'd also like to remind everyone that certain statements contained within this 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 on today's news release on our website. I'd now like to

Speaker 2

turn the call over to Mark Duff. Please go ahead, All right. Thanks, David, good morning, everyone. During the 2021, we continued to experience the impact of COVID-nineteen pandemic as the federal government has been much slower than the commercial sector to resume normal operations. This was not unique to us, but has been experienced across the industry by most of our peers as well.

Nevertheless, we were able to report a net income of $3,000,000 for the quarter. We have $7,000,000 in cash on the balance sheet and have lowered our bank debt to under $1,500,000 Importantly, we've begun to see activity pick up heading into the third quarter and expect a solid second half of the year barring any further slowdowns related to the COVID-nineteen new strains. Not only do we see things pick up this year, but we also believe we're very well positioned for 2022 as there is a tremendous pent up demand in both our treatment and our services segments. Turning first to our services segments. We our bidding pipeline is more robust than ever.

As I mentioned last quarter, our teams have been working around the clock and we've been developing four or five simultaneous proposals at any given time. This is a direct reflection of the improvements we've made internally and specifically within our bidding organization. As a result, we're now bidding on a wide array of contracts collectively valued in the hundreds of millions of dollars. The fact is that we're not losing bids. The government procurement process has been delayed and these contracts will eventually get awarded.

Just last month, we were awarded a multimillion dollar service contract for the Trillium Systems Demolition Disposal Project, which is expected to be completed over the next eighteen months. We believe this contract is a good illustration of where things are heading and reflect our competitive edge as this specific procurement includes significant competition with several of our toughest competitors as well as larger firms all bidding against us. Although this particular contract is smaller than some of the other contracts we're bidding on, it does show that the market is starting to open and we expect more contracts to be announced and awarded in the coming weeks and months. It's also worth noting that some of the contracts we're bidding on, if we are successful, could be transformative to the company. Importantly, these larger site operations and cleanup procurements within Department of Energy are multibillion dollar awards and include substantial small business subcontracting requirements as a percentage of the revenue.

This plays into our strength as Perma Fix plans to remain a small business as defined by the government as under seven fifty employees for the foreseeable future. While we're working hard to secure teaming relationships on the proposal efforts, even if we're not successful on initial awards, there's still significant future opportunities for subcontracts with these primes on these projects within both of our segments. Turning to our Treatment Segment. We're beginning to realize increases in waste treatment activity both in bidding opportunities, receipts and plant production. As our Services Segment shipments have been delayed through most of Q2, but it's important to reiterate this business has not gone away.

In fact, the backlog of waste that must be treated continues to grow. Due to the diversification efforts of our sales team, we've been able to penetrate several new commercial markets and coupled with our typical government acceleration at the end of the fiscal year, which is Q3, we anticipate waste receipts rates closer to normal heading into September and into Q4. We also continue to expand our waste treatment offering. We recently completed design and began fabrication and construction of our new ThermoFix Gen three system, a third generation vacuum thermal desorption system. The ThermoFix Gen three unit offers a treatment solution for problematic waste streams while providing increased efficiency and productivity as well.

With our initial sales launch just a couple of months ago in June 2021 and even before the unit has commenced operations, we've already secured an existing on-site waste treatment backlog and inventory and a large sales pipeline, which underscores the demand for this capability in both the commercial and the government sectors. We're very excited about the system and anticipate steady receipt up through start up in the fourth quarter and well into the 2022 timeframe. Turning to the Testbed initiative, which we refer to as TBI, it's also referred to as the Low Level Waste Off-site Disposal Project. We continue to make progress and have received strong support from the Department of Energy in terms of providing a supplemental pathway for treatment of level waste from the 36,000,000 gallons of tank waste located at the Hanford Reservation. DOE recently notified the Washington State Department of Ecology that they are preparing an environmental assessment on the next phase of the testbed initiative.

The environmental assessment or EA process is one of the final steps required before we commence Phase two of the project, which will include extraction, shipment and transportation of 2,000 gallons of tank waste to our Perma Fix Northwest facility located in Richland, Washington. BOA officials have recently stated that shipment of this waste to our facility should occur prior to next summer. As recently reported in the local Hanford area newsrefer, the Tri City Herald, use of routing, which is the basis of our process to treat the Hanford tank waste, could save the taxpayer millions billions of dollars and speed the emptying of the tank waste from the leak prone underground storage tanks. As we've stated in the past, assuming we're successful, this project can be quite transformative to our company and will supplement the vitrification unit, which is currently under construction and testing at the DOE Hanford site. So to wrap up, while we're disappointed in our overall Q2 performance, we believe Permafix is well positioned for growth.

I'm especially proud of our business development efforts our team has initiated and completed, which highlights our ability to adapt to the changing market. During this period, we've also invested in our capabilities and our facilities and have built a highly scalable infrastructure with a first class team of folks to take us to the next level. Now with the return of normalization following the pandemic, we truly believe we're well positioned to aggressively grow both sides of the business and we're starting to see things pick up. As we look at our pipeline for the balance of this year and beyond, we expect to resume solid organic growth in the near term. I truly believe that the future is brighter than ever for Perma Fix, and we look forward to driving significant value for our shareholders.

On that, I'll now turn it over to Ben, who will discuss the financial results in more detail. Ben?

Speaker 3

Thank you, Mark. I'll start with revenue. And as mentioned earlier, the COVID pandemic really impacted our revenue in both segments as government sites haven't shipped the waste at their historic volumes and have been very slow to award or fund projects in the service segment. So as such, our total revenue for continuing operations for the second quarter was $16,100,000 compared to last year's second quarter of $22,000,000 a decrease of $5,900,000 or 26.8%. The decrease in the revenue is primarily due to the drop in the services segment and that totaled about $5,800,000 while our treatment segment was only marginally down from prior year about 134,000 The drop in the revenue in services was due to the completion of a large project whose revenue we've not been able to replace by another project or projects of equal value.

For the year to date June 30, our revenue is down $7,600,000 or 16.2%. And this drop in revenue comes from both segments as the service segment has been impacted again by the completion of certain projects and is down approximately $5,400,000 while the Treatment Segment has been impacted by the drop in volume of waste and is down $2,200,000 from last year. From a gross profit standpoint, the quarter was $966,000 compared to $3,300,000 in 2020. And the drop in the gross profit was approximately 2,300,000.0 up $2,300,000 was primarily from the Services segment where reduced project revenue impacted gross profit from both a volume and margin standpoint. Also lower volume of waste mix had a minimal impact on the treatment segment while the fixed costs at the plants were we able to keep that fairly constant.

For the six months ended June 30, gross profit was $3,300,000 compared to $7,900,000 in prior year. This drop in gross profit was impacted by the lower volume in both segments as well as reduced margins in the service segment projects. Our G and A costs for the quarter were $3,000,000 compared to $2,700,000 in the second quarter last year. This increase of $297,000 was primarily related to increased salaries and consulting expenses that supported the increased bid and proposal activity. For the six months ended June 30, G and A costs were $6,200,000 compared to $5,600,000 in the prior year.

And again, the biggest impact on this variance was the higher bid and proposal expense from labor costs and outside consultants. Our net income attributable to common shareholders for the quarter was $3,000,000 compared to last year's net income of 204,000 The main driver of this improvement was a gain on the extinguishment of debt related to the company's PPP loan, which totaled $5,400,000 and was forgiven in June 2021. Our basic income per share for the quarter was $0.25 compared to income per share of $02 in the prior year. Our year to date basic income per share was $0.16 compared to $0.12 in 2020. Our adjusted EBITDA from continuing operations for the quarter as defined in this morning's press release was a loss of $1,700,000 compared to income of 847,000 last year.

And this reflects the lower revenue in both segments impacted by the ongoing effects from the COVID pandemic. Turning to the balance sheet compared to year end 2020, our cash on the balance sheet was at $7,300,000 compared to $7,900,000 at the 2020. Our unbilled receivables were down $7,100,000 which reflects the reductions in revenue compared to Q4 in the service segment. Our current liabilities were down 8,800,000 as a result of the timing of our payments, a reduction in the activity in the service segment and the forgiveness of the PPP loan. And our backlog at the June was $6,700,000 which is down from $7,600,000 at year end and up slightly from $6,400,000 in June 2020.

And our total debt for the quarter quarter end was $1,300,000 which is primarily owed to PNC Bank, our credit facility. Finally, I'll talk about cash flow activity in 2021. Our cash provided by continuing operations was $803,000 Our cash used by discontinued operations is $315,000 Cash used for investing of continuing operations was $649,000 which is primarily cap spending. And our cash used for financing was $439,000 which represents our monthly payments on our term loan totaling about $219,000 and another $220,000 for finance lease and debt issuance costs. With that operator, I'll now turn the call over to questions.

Speaker 0

Okay. Ladies and gentlemen, we have reached the question and answer portion of the call. And our first question comes from Howard Brous. Howard, please state your question.

Speaker 4

Mark, Ben, first of all, I hope you and your families are well and protected from the COVID. Has anybody been affected by it?

Speaker 3

So far so good, Howard. Thanks for asking.

Speaker 2

Yes, we're We're good with the families, Howard.

Speaker 4

All right, good. Thank you. That's the most important thing. Let me first start with TBI, the filing. When do you expect that filing to the state?

Speaker 2

Right now, they're working on the the Weir permit, and I don't know exactly when that's supposed to go in, Howard. I know that they have scheduled a hearing for the EA based on draft comments, the comment period. That's supposed to happen in the next few months and then they'll submit the permit to the state. They're doing it in sequence as opposed to in parallel, which is something we're pushing them try to consider But doing both at the same all that should happen in the next three or four months and support getting to a point of beginning to do this extraction in the spring.

Speaker 4

Given that permit, what are the possibilities or probabilities that once you start extracting the 2,000 gallons, the spigot stays open?

Speaker 2

It's difficult to speculate, Howard. We're certainly keeping that option open and we're able to support it staying open. We can do up to 300,000 gallons a year now with our capabilities and with our permit. So we're certainly promoting that. Do we need to decide to do that?

There's still some question as whether they're going to use the TISCER system, which is much more elaborate pumping and extraction system or the originally designed what we call pump on a stick that was designed just for TBI, which is And much if they use that TISCER system, it will go very quickly and pull out by five times as fast. So that certainly set this up for a more sustainable approach. I don't know if DOE has made those decisions internally yet, but certainly one could speculate that if you're treating tank waste successfully that they would continue to support that demonstration with greater volume. But it would be speculation to make that assumption.

Speaker 4

Okay, fair enough. Am I missing something, but is it fair to say that a good number of the mid level executives in the DOE have not been appointed and that's part of the problem of the lack of some of these large awards?

Speaker 2

Yes, it is a fair statement, Howard. I think, again, it's real difficult to understand what's holding some of these bids up. As we've mentioned in the last several conference calls, we have pretty sizable spreadsheet of bids that we submitted with significant award values and commitments for awards have been just continually delayed. One could speculate, and I would definitely believe, Howard, that your statement is true, is that because there is not an Assistant Secretary confirmed by the new administration that there is a tendency to wait for that to occur. And while they do have a good team of folks, they're carrying over from the old administration that are managing things, there's just it's a natural, I think, tendency to wait for the new person to arrive to make these big decisions.

So I would speculate across the board, Howard, that the lack or delays of getting the assistant secretaries in place in many these cases, it has an impact on the procurement process for sure.

Speaker 4

Would that be the same for the EPA with the Navajo bids?

Speaker 2

The Navajo, what you're speaking about is the abandoned uranium mine program. And that one is more of a mystery. I have to assume you're correct on that. I don't follow the EPA organizational chart as much as DOE, but I have to assume it's a similar situation. I know it was at one time it was funded.

I don't know if that's changed. It was funded. We all know It's a significant program that has a very significant future for us and for other participants. And we were initially informed that task orders would have been distributed months and months ago. So I don't know what's holding it up.

We had a difficult time finding information or getting information back from it. But I have to assume you're correct that it's largely because of administration changes.

Speaker 4

The settlement was $1,700,000,000 the EPA with the Navajo. So the contract we're talking about is about $220,000,000 if my memory serves me correctly. Does that sound about right?

Speaker 2

That sounds about that's basically the contract value for that IDIQ. That's correct.

Speaker 4

All right. What about, as an example, Moab, Lucky, Oak Ridge, the Navy bids, is that all the similar vein that we're still awaiting?

Speaker 2

That's correct, Howard. There's also though, even at lower levels, there's a lot of task orders in the 5,000,000 to $10,000,000 range that don't require that level of approval. And the procurement processes are just moving really slow across the country and all different organizations. We have task order bids, DOE, the Corps of Engineers, the Navy, all waiting for announcement of award and mobilization. It's really every level of procurements have been very lethargic the decision announcement process.

So it may not just be the administration issues. I think it's largely COVID related where it's just a lot of people working from home and the rush to get back out in the field is not there yet because our clients are not out in the field yet. It's really both. The larger ones are certainly administration dependent, but the smaller ones I think are just slow processes in the procurement cycles.

Speaker 4

Mark, Ben, wish you the best. Stay safe and good luck. Appreciate Thank you very

Speaker 2

your support, Howard. Appreciate it.

Speaker 5

Bye bye.

Speaker 0

Up next we have Ryan Hamilton. Ryan, please state your question.

Speaker 5

Good morning, everyone. Thank you for taking my questions.

Speaker 2

Ryan, good morning, Ryan.

Speaker 5

Could you you touched a little bit on your opening remarks, but could you walk us through the cadence of the quarter and maybe start with March and kind of just walk us through how March or how like May looked compared to April and so on. Kind of just walk us

Speaker 4

through that, if you don't mind.

Speaker 2

Yes, Ryan. March and April were and we talked about this several quarters ago and we had kind of a fiery discussion, I want to say, in Q3 and Q4 last year. So we expected Q2 to be a tough quarter for a number of reasons. Number one, we had targeted and defined an unusually large quantity of large procurements like the Moab procurement and a number of others that were going to require some investment and positioning that we felt we had a real offering that was going be very competitive. And we did get that and we got a number of others.

As far as the cadence on the services segment, we saw the project in Seattle, which was very good to us for two years, ramped down a significant ramp up in proposal efforts, which took significant investment through Q2 and the lack of awards of outstanding bids that we've already submitted. So all that together showed we demonstrated a drop in revenue in the services side of the house and we were not able to replace quickly enough that Seattle project that was generating significant revenue for us. So we're anticipating we'll win our share of these awards. And as soon as these things are awarded, we'll be back in action to replace the Seattle project. The one we did win with the Princeton Plasma Physics Lab, we'll start to do that.

It's ramping up quickly. We have a number of others that are smaller and we have a couple of others that we're expecting to hear about any day. And we still expect those to start impacting our end of our Q3. On the treatment side of the house, as far as your term cadence goes, We did start seeing things pick up. They've ramped up a little bit every month.

We had a couple of very sizable receipts bump from June into July and August That lowered us a little bit towards the June. We're starting to see our backlog creep up. More importantly, we're seeing a lot of opportunities to bid on waste receipts. And as I mentioned before, we're getting some backlog and inventory for our new system in Florida, the BTD. So all those things together and knowing where our clients are going with backlog to move before the end of the fiscal year, we're anticipating looking at a better Q3 than we did Q2 on the waste receipt side of the house particularly.

So we're seeing some things pick up. We're very our sales team is very busy now. You asked about kind of the contrast. In March, we weren't flying anywhere. Our clients weren't meeting with us because they had restrictions on visitors.

Now our entire sales team, when I look down the hallway, all the offices are dark and they're out in the field meeting with folks, going to conferences, meeting with commercial clients, doing presentations, all that kind of stuff. So it's a lot different energy than it was just in March and that's ramped up through the quarter and provides kind of the energy and optimism we have for where the waste treatment side is going. It's kind of a long winded answer, Ryan.

Speaker 5

No, that's great. And I appreciate the color. You touched on backlog. Could you break out what you have between treatment and services currently?

Speaker 2

Well, I think I'll let Ben jump in. I think Ben mentioned a $6,700,000 backlog at the June. I believe, Ben, that was just for treatment, if I remember correctly and with our services it's a little bit more than that. You want to address that Ben?

Speaker 3

Yes. 6,700,000.0 was the treatment backlog. Services is in around the 30,000,000 to $32,000,000 range at the end the quarter.

Speaker 5

That's funded. No, I'm sorry, what was that?

Speaker 3

That's funded backlog. We track various looks at backlog in the service segment because there's projects with high that you may have one, but it's not funded and there's some that are high probability. What kind of the surest thing is the funded backlog and that was at about the 30 to 35 range.

Speaker 5

Perfect. You touched on SG and A being up a little bit on wages and a couple of other things. As you assuming that COVID kind of drags out a little longer here, are there any other big ticket items that you could kind of extract out of SG and A? Is there any cost at all?

Speaker 3

Yes, we're pretty lean on G and A. There's always some, you can depending on urgency. But we're a smaller public company and certain costs just don't go away. And that's why we're so dependent on and the needle moves so quickly on revenue shifts. Again, there is always certain costs and we're always looking at them on a regular basis.

But if you look at the history of our G and A number, good and bad years, it's always kind of been in a certain range.

Speaker 5

Got you. And kind of along those lines as far as increasing wages, are you on your bidding activity, are you increasing price?

Speaker 2

That's a good question, Ryan. It's pretty flat on the services side of the house. It is very competitive as our competitors are quite hungry as well. If you listen to some of the other earnings calls from the big boys that we team with, as well as some of the smaller private companies, everyone's waiting for the same bids, waiting for things to be awarded and projects are being completed, deal. Everyone's really going through the same similar cycles.

So there is more of a tendency to reduce your fee and your margins. But wages are pretty consistent and we're not seeing that change dramatically year over year overall. And that's really when it's important to have a technology that can cut costs, which we have got several that are in our procurement. So we're hopeful we'll be able to show greater value on some of our bids.

Speaker 5

Excellent. And kind of along those lines, far as bidding activity goes, you've touched a little bit on it. Could you maybe go into maybe the size of the job that you're seeing that you're putting out bids on, number of bidders? Kind of just walk us through that just a little bit more, what the bidding activity looks like?

Speaker 2

Broad question, Ryan. But in general, we've got the large bids like the Moab one that's been talked about. That's a ten to fifteen year contract and Lucky has ten years as well, which is a site in Ohio. And those are big bids with lots of competitors. So it's difficult to really plan on those because they can go many different directions.

Most of our other projects are between 5,000,000 and $10,000,000 task orders. We've got probably 10,000,000 of those we're waiting here on. And then we have a couple between 20,000,000 and $50,000,000 that we're also pretty optimistic about. And we are pursuing a couple of new markets, particularly with the Navy and their ship program and revitalization program at a Norfolk Naval Shipyard in Virginia, where we're taking our expertise that we've developed in the DOE market for decontamination, decommissioning and applying it to the Navy and their programs for decommissioning as well. So we're optimistic about that number of bids there.

And as I mentioned, lots of smaller task force here and there through some of the IDIQs that we have. We've also bid a number of IDIQs. We're waiting here on maybe seven or eight IDIQs, which are pretty much a license to bid and there'll be more bids once those are awarded. We're optimistic that we're going to win five or six of those and know that they're well funded. But again, it's just real slow.

They got to award the IDIQs and then start running task orders through them and we're waiting like everybody else, waiting for that to happen.

Speaker 5

And as we continue to wait for awards to be, I guess, handed out, at what point do these facilities just overfill? I mean, is there at some point, I would imagine they can no longer delay and it becomes almost a crisis. Is that a right assessment?

Speaker 2

Yes. Know what you're speaking about is more the operational waste streams that we get, and there is a certain amount of that that does occur. Of the projects I'm speaking of are cleanup projects. So you can kick that can down the road on cleanup, and it doesn't necessarily achieve the scenario you just mentioned. So those projects will remain.

But usually these projects are holding up something else. In other words, if you've a contaminated building, you want to get rid of it because you want to put something else there or So meet a there is a driver typically, and that's what we're hoping we'll start getting into place here in the next couple of quarters.

Speaker 5

Okay. Thanks a lot for your time guys. I appreciate it.

Speaker 2

Thanks,

Speaker 5

Brian.

Speaker 0

Next we have Steven Steven Fine, please state your question.

Speaker 2

Are you guys? Morning,

Speaker 6

Good to hear everyone's okay.

Speaker 2

Multi award task order contract. And it's basically what the government does is they'll award to somewhere between three and ten contractors. And what the value of that is, Stephen, is when they make those awards, then they don't have to shoot up full RFPs for every project. They basically prequalify you on your experience, on your financials, your capability and all that, and they just send out a scope of work and a price sheet and they can do task orders very quickly for a predefined or prequalified group of bidders or companies. So it's a way to accelerate contracts that have lots of different task orders to go through them or projects to go through them in the next five years kind of a thing.

So it's a you don't when you win a contract like that in IVIQ, you don't win any value. So we don't take the value on it. But you are in a position with reduced competition and reduced investment for when the task orders come out. You can bid quickly, they award quickly and it doesn't it's not a big investment.

Speaker 6

All right. The $5,000,000 that was forgiven, was that money used up or is that money there or was it used up?

Speaker 3

Well, it's part of it wasn't a timing thing. We got it last year. We got it in April 2020 and we're at 7.3 now. So it just was all part of the bank account.

Speaker 6

So there's actually cash there or is this just an accounting thing?

Speaker 3

No, no. Cash balance on the balance sheet is a cash balance, yes.

Speaker 4

All right.

Speaker 6

And while I have you then, when you mentioned there's a $30,000,000 backlog for service, is that supposedly going to be multi quarter business or just the next quarter or this quarter?

Speaker 3

Yes, that is all our projects at the point in time. And therefore some contracts might be they may run over a year, a year and a half, others may be short burn. So that really doesn't give you an indication of Yes,

Speaker 6

that doesn't give you an idea. All right. And then the other question is when you were talking about your cost of goods, you mentioned that in there is cost related to bidding. How much is that?

Speaker 3

That would be in the G and A, not the bidding.

Speaker 6

Yes. So

Speaker 3

We were about $300,000 over from prior year.

Speaker 6

And

Speaker 3

a large chunk of that is twofold. One, as Mark mentioned a few times, the bidding activity was pretty intense. And so we had to bring in help contract outside And contract then the other piece of that and it kind of goes back to an earlier question about managing our G and A, many times we'll bring in costs related that would be billable in other times and that increases the G and A number because you use them on a bid and proposal project. So when a new project comes in they move into cost of goods sold and are tied to revenue. And that kind of is another way that it manages your G and A costs.

Speaker 6

Got it. Okay. So is it I guess I'll direct this to Mark. I mean, understanding everything that's going on, is it do you think it's feasible that will equal last year, this year, I mean, $100,000,000

Speaker 2

Steve, I don't believe $100,000,000 is attainable this year based on just based on what's happening with COVID right now in Q3. If you would have asked me last quarter, I probably would have felt a little bit more optimistic about it. But DOE is kind of doing all the wait and see on where things are with getting back in the field to a certain degree. Having said all that, I think we can get real close to a fourth quarter that would represent $100,000,000 burns. In other words, 25,000,000 in that So I think it's a pain in the sand.

Yes, if they get some things awarded and we're on With the winning end of

Speaker 6

regard to COVID, are you requiring your people to get vaccinated?

Speaker 2

I was wondering if we get that question, Steve, it took a while to get to that question. We are not at this point, but we are on that path. We're heading in that direction and we're waiting for a couple of things to happen. Right now, we just did a survey internally and we're in about the mid-70s percent vaccinated, which is pretty far above the national average. We have about fifteen percent of our staff that have in that survey have said that they intend to get vaccinated.

So I feel confident that we can be in the mid-80s percentage vaccinated in the next couple of weeks based on that survey. Having said that, so I'm pretty comfortable there. We don't have a lot of cases overall in the company, but we do in the areas that we live in. But having said all that, if the government goes to a mandate, we'll likely follow those mandates. Right now, you've probably heard the Biden administration Yes.

Talk about if the government has it for their government contractors, I can't say for certain that we would implement it right away, but I certainly think it's highly likely we will.

Speaker 6

I thought I heard that the military was being they were required in the military to be. But I mean wherever you are, for lack of a better word, politically, I and with all that's going on and you've got enough troubles with the business and so forth, certainly one would not throw into the pot. One would think the possibility that somebody unvaccinated could impact your crippled operation at this point. I'm very strong on that being essential. All right.

You have business out in, what was it, transuranic, was that it that you would get from CHM2 out in Hanford. Is that true? That's tested.

Speaker 2

Do you get this from Yes.

Speaker 6

Is that is are you getting that back or what?

Speaker 2

No. What happened was is the King's contractors out there on that plateau contract in Hanford, is enormous contract as you know. And the administration has changed in headquarters, new headquarters and they determined they need to make some adjustments to the way they ship waste, which is not a big adjustment, but it does require some permit changes. These permit changes have been ongoing and for shipping and those are expected to be in place in the next month or two. And once those are done, then they'll start to resume shipping again for the transuranic.

And that's been a very big impact to us overall to get that program back in place. And we're optimistic that that will be in place in September timeframe, maybe October and get back to normal as those shipments.

Speaker 6

Just as a, I guess, for lack of a better word, a sarcastic comment, I note that the new contract winner for that, that you all see a gen you know, includes people from Aecon who, you know, at least from my read have been obstructed to you in the past. Know, I'm again, I'm being, you know, if I'm out of line, I'm out of line. All right. With regard to the TBI, why all of a sudden, I mean, you did the three gallons, you didn't have to do an environmental study before the three gallons? I mean why was it something that they wanted an environmental study for the 2,000 gallons?

Speaker 2

I'm trying to recall. Was there an EA for the three gallons? Do you remember?

Speaker 6

No. The DOE determined they didn't need it for that size project. It was not required for the three gallons.

Speaker 2

It was a finding of no significant impact because it was so small. That's right, yes.

Speaker 6

Okay. Well, just find and these are my statements, okay. So I just find this whole situation, the deeper I get in, insane. I mean, was a in May, was a Gary Peterson and Bob Ferguson came out with an article in the paper out in Tri City paper. And in there, they point out that the present vitrification plant is dysfunctional, that it will create a gallon of waste for every gallon that they treat.

And so, with the escalating costs and so forth, if that's so, the whole thing is just insane and absolutely makes no sense. And it's just and then we're witnessing with all with the fact, we're witnessing the effects of climate change, which has to which one reasonable person would think would continue, where are they going to find money to pay extra money that's obviously cost that's escalated there. Think what is it two years ago, they said it went up to about 400 or 500,000,000 or $1,000,000,000 And with all the money that's been pumped in the economy, I guess it will be more expensive. So the whole thing is the whole thing to me is just it just doesn't make sense. It's insane.

It's just insane that what you can offer I mean, the process from what I understand, the process has been proven at Savanna. The science is proven. It just seems to me maybe, again, being cynical that people do not want you to succeed. But I made my comments. There was a clearly, the world out there wants certification, whether it's real or not.

My last question, which I didn't understand, is you spoke about a TISCAR system versus what is that the AVANTECH system? What is it there? What's the TISCAR?

Speaker 2

Yes. You're Thanks Steve for pointing that out. Didn't mention TISCO, that's an acronym that I'm sure very few people know about it. It's the Tankside Season Removal System, which is a very well engineered system that DOE and its contractors have developed to remove tank waste quickly and efficiently and take out some of the higher level radionuclides of cesium and iodine out of the process stream. In other words, as the waste is rising through the system, it will remove it through time exchange system.

So what that does is takes out some of the re nucleoside so that we can call this low level waste and send it to us to treat it. That system, which is very, very similar to the one at Sand River that you just mentioned is operating very well, is in development and testing at Hanford now. And that system could be used to extract tank waste very quickly and efficiently once it's gone through the readiness process and demonstration process. Or we could put the system in that was designed for this application just for us. Either way, we'll take the 2,000 gallons however we can get it.

But the TISGR system, which is the one we're developing now, would be very efficient and would demonstrate how it works and could be used very efficiently and provide the opportunity to keep the waste coming after they do the demonstration.

Speaker 6

So my readings were so this is this tester system, you have stuff the AdventTech is by that is this next to the tank?

Speaker 2

Yes.

Speaker 6

So how does this I mean, I've read that they actually approved the Adventec system and there were even articles subsequent to that where supposedly they purchased huge containers where they were going to store the waste into the containers and then it would go for treatment. So is that the same thing we're talking about?

Speaker 2

That's the same thing we're talking about, yes.

Speaker 6

Yes, yes. Okay. All right. All right. Well, I the thing, I guess, look, I think you guys your attitude is great.

I you couldn't ask for, you know, it's a tough area, and I applaud the effort and everything. But this TBI thing disturbs me because number one, even if you looked at this as a support function for the big plan, which as I understand is not going to be even big enough to handle everything. A smart businessman would have a backup. And the way this is moved, the way this is structured after all this time, this to me reminds me of how long it took you to get the three gallons and we're talking next summer and why next summer. I mean, why can't this why can't there be a lower urgency?

But again, that's my thought process. My hope is with all this other stuff you're doing that you'll become a $200,000,000 company by the 2022 or thereabout. And if something like this happens, it happens and so forth. But again, look, it's tough times. I applaud you guys.

I most importantly applaud your attitude. I think your attitude is fabulous. You're looking ahead. You're going through tough times and just keep it

Speaker 2

up

Speaker 6

because the old story is the people win when you're there in the end who don't give up. Thank you all.

Speaker 2

Thank you, Steve. Appreciate the kind words.

Speaker 0

There are no further questions at this time. Ladies and gentlemen, this does conclude today's Q and A. I would now like to turn the call over to management for any closing remarks.

Speaker 2

All right. Thank you very much. As we said, we remain extremely bullish on the outlook for business and believe we're extremely well positioned for growth. We appreciate the continued support of our shareholders and look forward to providing further updates as developments unfold.