Perma-Fix Environmental Services - Earnings Call - Q4 2017
March 14, 2018
Transcript
Speaker 0
Greetings and welcome to the Perma Fix Environmental Services Fourth Quarter twenty seventeen and Business Update Conference Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, David Waldman with Crescendo Communications.
Thank you. You may begin.
Speaker 1
Thank you. Good morning, everyone, and welcome to Perma Fix Environmental Services Fourth Quarter and Year End twenty seventeen Conference Call. On the call with us this morning are Mark Duff, CEO Doctor. Lou Centofanti, Executive Vice President of Strategic Initiatives and Ben Maccaratto, Chief Financial Officer. The company issued a press release this morning containing fourth quarter and twenty seventeen year end 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 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 or 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.
I'd now like to turn the call over to Mark Duff. Please go ahead,
Speaker 2
Thanks, David. 2017 was a transition year for the company as we implemented a number of important changes and achieved a number of very significant milestones this year. First, from a cash flow perspective, we achieved $2,400,000 of adjusted EBITDA for the year compared to just $535,000 for 2016. This improvement came primarily from our Treatment Segment. For the fourth quarter, waste receipts were up.
However, our Treatment Segment revenue recognition was affected by timing and the particular mix of waste we received. Importantly, backlog is growing heading into 2018, as evidenced by a 46% increase in backlog at the year end. At the same time, we're carefully managing expenses and continue to identify areas of cost savings. We're in the final stages of closure of our M and EC facility to be completed in Q1, which we believe will save an additional 4,000,000 to $5,000,000 fixed costs annually. That said, we still have a lot of work to do to meet our goals at Permafix.
As stated in 2017, we've undertaken a major initiative to revamp our bidding process with the Services segment to increase the number of targets within our core competencies as well as maximizing our win probabilities through advanced proposal production capabilities. The impact of these changes has taken longer than anticipated, which coupled with delays in awards from the federal government due to funding uncertainties has resulted in lower revenues in our Services segment. But we're making good progress with continued growth in Canada, including our Radiological Remediation Services, which has resulted in several wins in the past two quarters in Canada. In addition, we see a number of opportunities in the oil and gas markets in Western Pennsylvania that have allowed us to apply our unique capabilities and growing demand for the management of natural occurring radiological material waste, also known as norm waste. Within the norm markets, we're completing several new partnerships with firms in the area to expand our services within the region and to service more clients.
We have important procurements underway, and we're waiting for awards, which if selected, we should contribute that should contribute to our revenue to our Services segment within the next few quarters. In the Treatment Segment, we saw a 17% increase in revenue in 2017 versus 2016, but expect to do better this year. As I mentioned earlier, Wastes' seats were up in the fourth quarter as evidenced by our 46% increase in backlog at the year end, and we believe 2018 will be an improved year. But aside from growing our revenue, we also are diversifying our revenues, which should help mitigate some of the historic volatility we have experienced due to the fluctuations in the industry. In particular, we're excited about our expansion programs ongoing at each of our treatment facilities that should quickly broaden our market base for waste receipts beginning in 2018.
And I'll touch on a couple of those. Construction activities are underway at our Gainesville facility, Gainesville, Florida facility to accept and treat more commercial waste beginning in Q3 as well as expansion programs in the hazardous waste processing markets in the Southeast, particularly with recent wins in Northern Florida. At our DSSI facility in Eastern Tennessee, we're underway construction is underway with expansion activities to relocate our treatment capabilities that we had at our M and C facility right down the road, and currently anticipate completing those activities there in the first quarter. Anticipate completing closure activities in the
Speaker 3
first quarter.
Speaker 2
We're also excited about our recent partnership with Veolia Nuclear Solutions, which is providing its patented GeoMelt system that is being installed at our Permafix Northwest facility upon completion of construction, installation and startup testing of GeoMelt vitrification system will be used to treat waste drums containing sodium residual waste. The purpose of these initial tests is to define and verify performance parameters, and this performance data will be used to support permit mods at the Permafix facility to consider other radioactive and reactive waste streams for government and commercial applications. This vitrification capability will provide the capacity to treat non bulk sodium waste that have otherwise represented a waste stream with no path for disposition. This type of partnership with Veolia will provide an attractive niche market for Permafix to leverage our existing permitted facilities to deploy new technologies. We're also seeing a number of new international opportunities that should contribute to our growth, especially waste streams that are very difficult to treat.
Once treated at Permafix, we will return these wastes in a stable form for final disposal in the country of origin, but we're continuing where we're currently in the bidding process with initiatives in The United Kingdom, Mexico and Italy, in addition to our Canada business, which should be shipping waste to us at Perma Fix in the second quarter of this year. Finally, we're very excited about our new treatment opportunities that may arise out of our recent waste treatability project for the tank waste at Hanford, Washington. These opportunities could be transformative for the business, and Lucianafane will speak more about this project in a moment. He will also be talking about our medical subsidiary. So to wrap up, our growth initiatives within the waste treatment sector are beginning to realize positive impacts on our revenue and our adjusted EBITDA, as evidenced by our growth in adjusted EBITDA, which increased more than threefold from 2017 over 2016.
Our expansion plans ongoing at each of our facilities, coupled with our closure of MEC in Q1 and anticipated award of a few of our services bid in Q2, should help advance our market growth objectives in 2018. Based on our current pipeline, we remain confident that we will see both top and bottom line improvement in 2018 and believe we have set the stage for sustainable growth in our base business going forward along with additional projects that could significantly move the revenue needle and potentially transform the business when they materialize. I will now turn the call over to Lou Senofani. Lou?
Speaker 4
Thank you, Mark. As Mark alluded, we have successfully completed the first phase of demonstration project for tank waste at Hanford. The DOE recently announced that its Office of Environmental Management and Office of River Protection in Richland, Washington coordinated a shipment of approximately three gallons of low activity tank waste to Permafix Northwest. We subsequently treated and stabilized the waste from our facility for transportation and permanent disposal at the Waste Control Specialist Federal Waste Disposal Facility in Andrews, Texas. For those of you that have following the company for some time, participating in this project has been a long term vision and goal of our company.
This is the first time that the EM has commercially treated, stabilized and shipped low level waste derived from Hanford tank waste to off-site to the commercial facility for disposal. This effort in part completes the initial phase of a planned three phase DOEM test bed initiative study. The process utilized facility was developed to reduce the complexity costs for processing this waste stream based on our proven principles to treat the waste to meet disposal criteria. Now that we've completed the first phase of the demonstration, we are focusing our attention on the next phase of the test bed initiative, which requires a treatment of approximately 2,000 gallons. And finally, on one final note, we have shifted our strategy within our medical subsidiary.
Specifically, we are focusing our efforts around the new partnering strategy, which we believe will be much more cost effective and mitigate the need to raise capital near term at the subsidiary level. Raising capital now, as we have seen, would significantly dilute Permafix's interest in the subsidiary. But if we can hit certain milestones first, then raise capital, we believe we'll be able to do so much more under favorable terms. Happy to report since implementing this strategy, we're working with several groups, one in Canada, one in Italy and a third in Poland that we is presently working under our Polish grant. We've indicated willingness to fund development and regulatory costs in the respective markets.
This strategy will help mitigate our short term capital requirements while providing further validation, accelerating our path to commercialization in international markets and helping streamline the path for eventual approval in The U. S. The advantage of initially focusing our efforts in Europe and Canada is we believe there's a more streamlined, lower cost regulatory process. Once we hit certain milestones, we'll then turn our attention back to The U. S.
Where we believe we can pursue this market and negotiate a partnership for ourselves on much better terms. On that note, I'd like now turn the call over to Ben, who will discuss the financial results in more detail.
Speaker 5
Thank you, Lou. I'm going to begin with revenue. And our total revenue from continuing operations for the fourth quarter was $12,600,000 compared to last year's fourth quarter of 13,400,000.0 a decrease of $800,000 or 6%. Service segment was relatively comparable to prior year with revenue modestly down by $171,000 or 4%, while our Treatment segment revenue was down $692,000 or 7.3%. Our Treatment Segment's waste shipments were consistent with prior year, but both timing and the waste mix resulted in lower production while leaving more available in backlog for this year.
The drop in services revenue was project related when we compare projects completed with new projects won this year. For the year ended 2017, our revenue was $49,800,000 compared to $51,200,000 in 2016. Revenue from the Treatment Segment exceeded prior year by $5,500,000 as our waste receipts for the year increased by $6,900,000 over 2016. On the Services segment, revenue was down by $6,900,000 as a large contract concluded in late twenty sixteen and temporary delays in certain projects in 2017 resulted in lower revenue. Turning to our cost of goods sold.
Our total cost of sales was $10,800,000 in the fourth quarter compared to $10,000,000 in the prior year. That's an increase of $763,000 or 7.6%. Our Treatment Segment costs increased by $602,000 compared to prior year and this was due to $850,000 increase in our closure cost reserve at our M and EC facility as our disposal cost estimates increased as we are getting closer to completion. Our cost of sales in our service segment were up $161,000 and this is primarily from project related incremental expenses. On the gross profit line, for the quarter we were at $1,800,000 compared to $3,400,000 in 2016.
Of this $1,600,000 shortfall, 850,000, as I mentioned, was due to the increased closure reserve at M and EC, while lower revenue and mix of waste treated and services offered accounted for the remainder of the shortfall. For the year ended 2017, our gross profit was $8,600,000 compared to $7,100,000 in 2016. Revenue mix again was the primary driver for the gross profit improvement for the year as we received more revenue from our higher margin Treatment Segment, which offset a decrease in our lower margin Service Segment revenue. 2017 and 2016 gross profit both included charges of $1,400,000 and $587,000 respectively related to the M and A closure. Our total G and A costs for the quarter were $2,800,000 compared to $2,600,000 last year.
That's an increase of $202,000 Lower legal expenses and public company expenses were offset by a bad debt expense settlement of $364,000 related to a government audit going back to 2014. For the year ended 2017, our G and A costs were higher by 377,000 due again to the bad debt expense booked in the year, which offset our lower payroll and public company expenses. Conversely, in 2016, we had a bad debt pickup of $364,000 which contributed to this variance. Our net income from continuing operations, net of taxes for the quarter was $340,000 compared to income of $218,000 last year. Net income attributable to common shareholders for the quarter was $260,000 compared to last year's net income of $226,000 These net income results for the quarter were impacted by a tax adjustment related to tax reform, which provided a pickup of $1,700,000 This positive tax adjustment was also included in our year to date losses for both continuing operations and attributable to common shareholders in addition to asset impairment charges and closure reserve adjustments related to our M and EC closure location and that totaled approximately 2,100,000.0 Our total income per share for the quarter was $02 compared to income per share of $02 in the prior year.
Our adjusted EBITDA from continuing operations for the quarter, as defined in this morning's press release, was $328,000 compared to $1,900,000 last year. And for the year ended 2017, our adjusted EBITDA was $2,400,000 compared to $575,000 in 2016. Turning to the balance sheet. Our cash balance improved by $900,000 as a result of the closure bond transition in our second quarter, which allowed the company to free up $5,900,000 of cash, which we used to secure alternative bonding and pay down our entire revolver balance, which was about $3,800,000 last year. Our accounts receivable collectively were down $977,000 and that was due to the timing of a large receivable at the 2016, which was collected early in 2017.
Our unbilled receivables, current and long term were up 1,600,000.0 again a timing related to unbilled in our treatment segment, which was billed early this year. Our other assets were up 946,000 related to a tax receivable related to tax reform of approximately 400,000 and other receivables related to our grant and some unclaimed property, which totaled about 463,000. Our intangibles and other assets were down $5,900,000 related to the cancellation of the closure policy at Perma Fix Northwest, which freed up the restricted cash. Our current liabilities were up $2,800,000 primarily due to the inclusion of the entire closure reserve at M and EC, which increased by $1,400,000 in 2017. Our waste backlog was $7,700,000 compared to $5,200,000 at the 2016.
Our long term liabilities were down $4,900,000 as a result of the full payoff of the revolver and the reclassification of our closure reserve at M and EC from long term to current. Our current debt, excluding debt is consistent with prior year, our total debt at year end was $4,000,000 which is entirely owed to our primary lender, PNC Bank. Our working capital was a negative $2,300,000 compared to a negative $2,100,000 at the 2016. The M and EC closure accrual in current is $2,800,000 and was $2,200,000 in
Speaker 2
2016 and 2017
Speaker 5
respectively. Finally, I'll summarize our cash flow activity in 2017. Our cash provided by continuing operations was 1,100,000.0 Our cash used by discontinued ops was $647,000 Our cash provided by investing activities was $5,400,000 which is net of $439,000 used for capital spending. Our proceeds from the sale of discontinued operations property was $69,000 and our cash used for financing was $5,000,000 which consisted of $1,200,000 payment on our term note and $3,800,000 pay down of our revolver. With that operator, I'll now open the call for questions.
Speaker 0
Thank you. At this time, we will be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue.
Okay. Our first question comes from the line of Tristan Barr from MTB Asset Management. Please proceed with your question.
Speaker 6
Good morning guys. I was wondering if you could go into some of the bidding opportunities that are out there on the service side. In particular, I believe there are two large contracts coming up for bid at Hanford at the end of the year.
Speaker 2
Yes. This is Mark. We have a hot list of bidding opportunities, 30 to 40 opportunities long. We have a number of four or five are going on at any given time. We are currently positioning to support those bids and we're I think BOEs announced that they're expecting draft RFPs out this summer.
So we don't have those in our forecast, but we're certainly positioned very well for those based on where Lou mentioned that we were on the processing side should that scope of work be in those bids, which we anticipate it will. So yes, we are preparing for those. The other bids we're working on without getting into too much detail are supporting the Corps of Engineers. We have a number going out there. We have a number going out that are already out in Canada.
And we have several with second tier subcontracts with BOE sites as well.
Speaker 6
The plateau contract the last time around was quite sizable. And I know that the tank contract was as well. I assume that you guys feel that you're even better positioned this time around given both the Testbed initiative success and the recent partnership with Veolia?
Speaker 2
Yes. Again, we haven't seen the scope of work yet. We do feel like we're when we've already met with those with the primary firms that are bidding on those and we have more meetings scheduled. So to answer your question, yes, do feel like we're in a better position this time. We have a lot to offer And it's very strategic and timely where we are with the test bed initiatives.
So we do anticipate having very strong positions on those bids, but that is speculation at this point.
Speaker 6
Of course. That That was the only questions I had. Thanks guys.
Speaker 0
Our next question comes from the line of Joe Brown, a Private Investor. Please proceed with your question.
Speaker 3
Yes. I'm curious about your medical project. I wonder how you got you advanced it to a certain point when you had that partnership before. And I just wonder quantitatively how far have you gotten as far as proving it proving it to be feasible? In other words, is there some how far along are you and how at what level are you if you can put some kind of number or some kind of quantification on it?
Speaker 4
The progress was we have demonstrated in our labs that we could produce commercial quantities or acceptable
Speaker 5
by
Speaker 4
quantities of TEK99 for use in medical imaging. The problem we ran into when we got low on funds was that we really couldn't progress it any further than that and really use it in a demonstrated in a generator that was running in a medically approved under medically approved conditions. The advantage we're doing now with these partners is, they all operate, or have facilities that are approved for by FDA or the appropriate country. So what we expect to get out of that is a step forward and being able to demonstrate how many units the goal is how many units can we produce that could be used medically out of our system. So that's really the next step in our progress is to try to demonstrate what the numbers would be in using our system.
And we think at least from all the data we've seen in our labs that it should help us tell exactly what those numbers are, which we can then show to people, will increase confidence, we think,
Speaker 0
of
Speaker 4
both partners and funding.
Speaker 3
Are you running the test? Are you saying that you're go ahead.
Speaker 4
Yes. Your question probably would be is, are we running tests today? We are supporting these other groups that are running the tests.
Speaker 3
Yes. But I'm saying, are you running tests you mentioned it sounds like you're running tests in Italy, Poland and Canada. I mean, all three are there three different facilities running these tests, one in each different country? Or is that how does that work?
Speaker 4
Yes. The way it works is the they're being, as we said, run-in Poland with Polatom, who's been a long term partner with us. And that's being funded by a grant from the Polish government. We are presently working with a Canadian company that we've discussed in the past that's running tests in one of their labs using our resin technology. And the Italians, which we announced a month or so ago, are will be running tests in the very near future using our system and an upgrade of their existing reactor, which allows them to use our system.
We've got two going on today and one about to start. And we're about others that would consider using them. Yes. Go ahead.
Speaker 3
So how long do you think these tests will take? I'm I'm first of all, I'm curious. Are you putting are are they doing I mean, you're are you putting money into this some money? I I know they're they're probably absorbing most of the cost. I'm not sure.
But, you know, what how what are you putting into it? What are they getting out of it? What are they gonna get out of it if if the if the thing is is validated? And how long will it take for them to conclude their testing do you think to where you can? We
Speaker 4
have with all three very loose agreements at this point. They're running these tests at their costs. And if satisfactory, we would then negotiate with each of them some and again, it's undefined at this point, but some sort of licensing agreement that they could then use our technology in their appropriate market, which the example would be the Canadians. They would what we have tentatively agreed to is that if they're satisfied with our resin and it works and they think they could use it, then we will finalize a licensing agreement that allows them to use it in Canada. They do this with very at the front end, run it, see if it works, if it makes sense for your market and then let's work out an agreement.
Speaker 3
You don't know what the timeline for getting potential results are
Speaker 4
yet? No, all of them are different. They're all at different stages and there's different drivers in every case. It's fairly hard for me to give you any very little guidance at this point where something might be of value coming up.
Speaker 3
But it sounds as though like in Canada, for example, if it proves out, it sounds like they could jump right into using this.
Speaker 4
Well, they'd have to go through regulatory approval. So in every case, there's a regulatory barrier that would be the next step after we if they demonstrate that it makes sense.
Speaker 3
Okay. I had another question about well, you mentioned the oil and gas field. Fracking is a very hot expanding field. I'm just wondering what kind of potential do you see as far as cleaning up in the natural gas area? For example, if you're trying to get into that, what it seemed like I'm not sure exactly what you're doing there, but the field itself, net gas has a tremendous future.
There's demand all over the world. We have a ton of it. I just wonder what's your potential revenue there?
Speaker 2
Joe, to answer your first part of the question, we have a very strong expertise in the radiation protection field and we're applying that to particularly the Marcellus Shale natural gas markets up there in much of Pennsylvania, West Virginia and Ohio. Basically what we're doing is we're being the waste management experts and mine protection experts. We're providing solutions to companies for management of their naturally occurring radioactive material, we call NORM, which is generated basically when you frac, you inject very large amounts of water, somewhere between 2,000,020 gallons of water into the well and then you pull it back out and you have to treat that water before you can dispose of it. And when you treat it, you basically generate a concentration of that NOR material. And that's where we come in to assist in managing and compliance efforts, radiation detection, those types of things.
That's where the market is. So we're working with several different companies up there. We're getting ready to sign an agreement with a new one. We have 20 master services agreements now in place with natural gas clients, some of the big five in Pennsylvania. Right now, our revenues probably are in the 400 to $500,000 range a year.
So it's pretty small, just consulting here and there. If some of these agreements go through, then we'll have a much bigger equity stake in some of the operations and hope to grow that through 2018.
Speaker 3
Is that I mean, they've been fracking for a long time. Is that they've obviously had to treat this water. Are there new regulations covering that which they're stepping up their efforts or is it Yes. It is changing.
Speaker 2
It is changing all the time. And basically, they're moving largely from settling ponds, which are very difficult to get permitted now and the states are requiring remediation to more of the water treatment systems, are very aggressively and quickly filter out, so to speak, or treat the water for reuse and disposal. So yes, things are changing all the time, and it is obviously a very growing industry for Western Pennsylvania.
Speaker 3
Okay. I also finally had a question about the tank waste. You did the, what is it, the three gallon demonstration and now you're moving into thousands of gallons. So I don't know, you started that yet? And how long do you think that test will take to complete?
Speaker 2
Well, did we put out a nice press release in December, I believe it was, or November that we did treat the three gallons that was disposed of at WCS in Texas. And we're working with DOE to move to the next level, as Lou mentioned, which is 2,000 gallons. That's basically that next stage is simply defined in an agreement or proposal we have into DOE. Things could change along the way for it to be a lot more or delay it or accelerate it. So we're working with DOE on that right now, and we're generating a final report to DOE in regards to the results of those tests.
But they're all positive obviously because we were able to meet the requirements for disposal in Texas. We are moving forward with it.
Speaker 3
So are they funding that? I mean that experiment?
Speaker 2
Yeah. DOE is DOE is funding it through their policy. It's
Speaker 3
not costing you any money?
Speaker 2
No. It's it's not what happens. It's a contract we have with the Department of Energy.
Speaker 3
Okay. So all right, that's basically all my questions. You're almost done with the first quarter. So you must have a pretty good idea that this will be a strong quarter. I mean, we're almost at the March here.
I don't know what I guess you made some general forecast. I was just wondering the way things are going. Yes,
Speaker 2
we're still in the process of evaluating where rates are for the quarter. So we're not ready to make a claim at this point, but things are looking well.
Speaker 3
You're optimistic.
Speaker 5
Of course.
Speaker 3
Well, mean, yes. Okay. All right. That's all I had to say. Thank you.
Our
Speaker 0
next question comes from the line of Bill Chapman, a private investor. Please proceed with your question.
Speaker 7
About four months ago, I read an article that the Department of Energy still had a considerable number of positions that weren't filled yet. They were empty desks. With this rumor, speculation that Rick Perry is going to go to the Veterans Department, Is DOE better staffed right now? And if he does make a move, will that hamper the progress that you guys are trying to make for Phase two on the testing at Hanford?
Speaker 2
Bill, this is Mark. There's some speculation there. We saw that in The Wall Street Journal this morning, which was we were taken aback by as well because there's been a lot of communication in headquarters in the last several months in regards to our testbed initiative. They are closed apparently to confirming an Assistant Secretary. And we think that once that happens, we'll have a significantly increased focus on these types of initiatives.
I know there'll be hundreds of things that the new nominee will have to address. This will be one of them, and we hope that we can get some time with the nominee to accelerate some things with the CVI. But yes, to answer your question, there's been a lot new people confirmed. Things are moving forward. Certainly, if Rick Perry left, there could be an impact, but things are really more visible at the kind of the mid level or lower levels at this point.
So I anticipate that to slow anything down.
Speaker 6
Okay. Thank you.
Speaker 0
Our next question comes from the line of Stephen Fine, a Private Investor. Please proceed with your question.
Speaker 6
Good morning, gentlemen. My first question is on your EBITDA. How much of that in the $2,400,000 consists of the add back from what you spent on Medical Plus, maybe I'm reading this wrong, under $1,700,000 tax thing?
Speaker 8
Well,
Speaker 5
EBITDA is exclusive of tax. It does Yes, have in earnings release, we do reconcile it from the income. So you'll see the usual characters of depreciation, interest and tax. And then the one sort of unusual or why we call it adjusted is the medical, which is about 194,000 and the closure costs at M and EC of $850,000
Speaker 6
was indeed the medical for the year, how much was the medical?
Speaker 5
1,100,000.0.
Speaker 6
Yeah. And that's what I didn't understand because, I mean, I've only been a stockholder since sometime last year, but there was a statement that the year before you did about 2,000,000 and that was going to be significantly cut back. But I mean, you're still over $1,000,000 So then the next question is, is that going to go down?
Speaker 5
Yes. Think you probably if you're only recent shareholder, the reduction started about 2017. So we anticipate significantly lower costs until we find financing for that project.
Speaker 6
All right, fine. My second question is when some, I don't know if it was Lou, when you were talking about the, when you started talking about the medical isotope, I thought I heard Lou say, the better approach is for us to go with these foreign folks because we're giving up too much relative to if we go with other investors. Does that imply that you've spoken to venture capitalist firms and they want too much?
Speaker 4
The idea there was that we wanted to limit what we spend and we saw this as a very good way to not have to raise money. I mean we've talked to a variety of folks about financing it. And it's in very early stage. So yes, the money would be very expensive
Speaker 8
in
Speaker 4
terms of where Yes. So by getting a little further down the road, could make financing easier and cheaper.
Speaker 6
But no one's answering the question on timelines on that. I mean, so you cannot can you quantify that when we're going to see some dollars from this or when this is going to be really talking one year, five years, whatever?
Speaker 4
No, no. And at the place we are today, it's even it's less clear because we're not in control of how they operate and what they do. So at this point, it's very hard to see, what a timeline would be. In fact, I think it's it's gonna be honestly impossible to to give you any kind of realistic numbers.
Speaker 6
Okay. Alright. Well, I'll I'll I'll let that go. I just, you know, so we could be sitting here five years from now with the same story?
Speaker 4
I I don't think the board would let us sit here five years from now and have the same story.
Speaker 6
Alright. Let's let let shift gears. The Veolia thing, whatever that involves, if that works out in Hamburg, is that something that can be moved to other plants? In other words, that you can set up the processing capability in other plants?
Speaker 2
Well, yes, the Veolia deal with the GeoMelt, you would likely not want to do that. But you could, to answer your question, we could move it to other plants. I think the important thing here, Steve, is the process that we're implementing, which is leveraging our very valuable permitted space from new technologies. For example, you could transport waste to Richland that would may otherwise not be financially attractive to put it in another facility, although you're better off to transporting it. However, if there
Speaker 5
was a situation where we wanted to put
Speaker 2
it someplace as we would, we're pursuing similar types of deals like that right now with other technologies to leverage for this kind of partnerships.
Speaker 6
All right. So then the question is then the logical question is presuming you evolved into the subsequent phases of the deal at Hanford, does the existence of the Veolia then impact on your capacity of the thing to handle Hanford if you got off Hanford?
Speaker 2
Okay, that's a great question. No, not at all. It's a different building, different call it the parking lot. There's plenty of space. No impact whatsoever on the old TBI and tank waste processing at all.
Speaker 6
Okay. Am I also correct, I read this somewhere, that if you do get Phase II, you get $15,000,000 for Phase II, all of it not being yours?
Speaker 2
Yes. I think the contract I think that's the contract ceiling. That's not necessarily what's if it's funded, it
Speaker 5
can be funded up to that.
Speaker 2
But that's basically when Uniti puts the contract in place, they put a funding level of $15,000,000 on it and then now they're going through different stages up to that level. But that is the level of approval for the contract vehicle itself.
Speaker 6
Up to Phase two?
Speaker 2
Correct.
Speaker 6
Beyond Phase three, then you start negotiating.
Speaker 3
All
Speaker 6
right. I guess, Mark, I do commend you. I mean, clearly, you guys have you're trying to offset the impact, I guess, the dilatory impacts of government into diversifying other areas, I think that's fabulous. But I guess the issue is and and, you know, and and I understand the the bidding process is, you know, do we have, you know, do do we have some sense here? I mean, you know, you're down from last year.
I understand, you know, what's going on, and the government is in is in a mess. But, you know, do you know, do you have, know, do you have, let's say, of a of let's say, 80% correlation of an idea of where, you know, where you could be sales wise and revenues wise this year? Or is it we're going be sitting here at the end of next year and we'll be in the same situation again?
Speaker 2
Yes, Stephen. Yes, I mean, what we've done is we very methodically have come up with a number of initiatives, as we've talked about in the script part, that address market expansion for us. It's very difficult to project your revenues in this business because basically you're dependent on people shipping to you. So you can get all the contracts you want, if they don't ship it to you, you don't make any revenue. So the best way to reduce volatility is to diversify and broaden what you can receive, what you can treat and the services side, you get broad as you can to make sure you find as many opportunities you can.
So all I can say is that we've gone very strategically through three construction projects at three of our sites to add new capabilities and broaden the amount of revenue we can potentially make and the receipt that we can accept to reduce that risk and increase our revenue and profitability. So we haven't had I've only been here one years, point almost two years. We haven't had a lot of construction going on in our facilities in many years, but there's a lot of activity going on. And these construction jobs and projects are done and we have these new capabilities. We're highly optimistic that we'll be increasing our market share in regards to our competition and providing a lot more value on the commercial side, which we don't do a lot of right now.
And when we finish this deal with Veolia and our treating of sodium, that will be the only sodium treatment capability in the country. And there's a lot of sodium out there. So there's a lot of opportunity associated with that. Again, we can't predict what the government's going do and what they're going to fund, how much waste they're going to ship. But what we are doing is reducing our risk by increasing the amount of capabilities we have.
Speaker 6
In the Florida facility where you say you're constructing this hazardous, other hazardous type of capability, would the same paradigm apply there wherein you would shift stuff into there?
Speaker 2
Yes, it is. In Florida, don't want get into too much detail until we launch our marketing campaign on the capability because we don't there are sensitivities to it. Hopefully in the next call, next quarter and I hope that we will in the next quarter, we'll get into detail on those capabilities. Yes, that facility is very focused on two initiatives. One, the hazardous waste market and becoming stronger and increasing our revenue there.
We've seen dramatic increases over the last two quarters in hazardous waste. And then on the RAD side of the equation, dramatic increasing dramatic focus increasing the focus on the commercial side. So taking a lot more waste on the commercial side and we have very high hopes that by July timeframe, we'll be increasing the amount of commercial waste we get down there.
Speaker 6
All right. And then relative to so you say there's three initiatives going on in your plans you know, construct equipment to enable you to do different things, is fiber. So is that correct? There were I heard three? That's correct.
One of these So that's one of these
Speaker 3
that the
Speaker 6
So that's being internally financed, the construction of all that?
Speaker 5
Mostly, yes.
Speaker 6
And how much is that?
Speaker 5
Small amount external right now is about 300 or $400,000 Okay.
Speaker 6
All right. Right. Well, you're moving forward. Look, I understand how slow this is and, you know, it's very esoteric stuff. And, you know, clearly, I'm a supporter as I've, you know, said to you guys.
You know, I just think you're in a very nice spot. And I just hope I I would just like the world to see, to know more about what you're about and your uniqueness. That's all. And it get actualized in its proper perspective. Anyway, you for your time.
Speaker 2
Well, thank you, Steve. And just to point out, do have a new website and we're really starting to take it very seriously. So we're trying to put a lot of press releases on there for things that are changing and upgrades. So hopefully, can get that word out too.
Speaker 6
Yes. And by the way, that on your website, I I think I wrote into to your investment people, but on the website, that investor presentation that you have in there was wonderful. I mean, it it encapsulates the company in a wonderful way with, you know, the people and the capabilities and what you can do. And, you know, I I I, you know, I I just I I guess if I were you know, I am an investor. But I guess if I'm an investor, you know, the thing that, you know, the bottom line is, you know, you look at, alright, where are going?
What's your earnings gonna be? What are you gonna generate? You know? When am I gonna get stockholder things? And and the faster that you guys can get to that point to somehow, even in a very generic fashion, give more information like that, I think the more it'll benefit you.
That's all. Anyway, thank you very much, and, we look forward to I look forward to a great 18, and a good 19. Thank you. Bye bye.
Speaker 0
Our next question comes from the line of Chuck Dickinson, a Private Investor. Please proceed with your question.
Speaker 8
All right. Good morning. You had mentioned that it's difficult to project the revenues and yet if you go back and look at the quarterly revenue trend, I mean you have to go back many, many quarters to find a revenue figure that isn't in that roughly 12,000,000 to $13,000,000 range on a quarterly basis. And this encompasses just about everything in terms of delays from the government, new bids that you put out, sequestration. I mean, I think you have to go back.
I think I went back a couple of years, but I think you have to go back several years to find a quarterly number that doesn't fall in that 12,000,000 to $13,000,000 range. So I would say revenues are really not that difficult to project. You're kind of stuck. You've done the work beyond that, obviously, below that line to set yourself up for some, wonderful leverage. But on the top line, I I I I guess, I I see that you're doing things that I would want you to do.
You're you're working to hit some singles here with projects and you also have a couple of home run opportunities. So I just encourage that sort of approach. Think that's the right way to go to build a base business, make that grow sustainably, obviously, and then hope that one of these transformative events takes place. The second comment I would make with regard to the iZotope partners and, you know, the potential frustration that now that they're involved, a lot of that's in their hands. We don't know what their timeline is.
Well, there is a timeline requirement in terms of Tech 99 availability that's going to be incumbent upon these partners that they're not going be able to ignore. So while you can't project the timeline for what they're going to do, how quickly they're going to move, it's gonna be incumbent upon them to actually, come up with some tech 99 given, given the shutdown of some of these reactors, principally the one in in Canada. The one question that I have has to do with regard to budgeting. A budget has not yet been sent, been set, but I think we're now out of the continuing resolution phase. And the earlier indication, I think, I don't know, six months, nine months ago was that the budget was going to be hopefully or look like it might be favorable toward DOE spending, DOD spending on nuclear waste and other cleanup.
That all has to take place. But it does seem like that ball has been moved down the field a little bit in terms of the budgeting process. Can you give any color to how you see that taking shape? Are you hearing anything out of Washington? Do you think that when they actually set the budget that you're in line as an industry for a budgetary increase or not?
And has any of the personnel change that's taking place in terms of people occupying new positions there within the industry that you had mentioned on the political side going to advance that ball as well?
Speaker 2
Yes, Chuck. Well, hopefully, we are reporting to you in the next couple of quarters with a home run completed. So hopefully, will be able to move that needle on the revenue a little bit more. To answer your question regards to the federal budgets and our alignment with them, under continued resolution, as you know, a federal project or a federal site like a deforeign energy site or a core engineer site is restricted from starting new projects. So they're basically not supposed to do any new line item projects unless they're specifically identified in the budget and approved by Congress.
So that limitation alone keeps a lot of projects that would generate waste from happening. So when a budget is actually passed, new projects can begin. And I follow my project, I'm talking about clean up projects that generate waste that we would treat, that definitely lines up with our ability to receive and handle more waste. And to answer your question, the DOE budget on each version of it, I want to say, don't quote me, but I think it was 5% to 10% increases over previous years. And so if one of those does happen or gets approved, we do anticipate an increased impact to our waste treatment on the Department of Energy side.
But more importantly, even on the Corps of Engineers side, we have numerous proposals that have been in place for months, almost a year, waiting for budget approval for them to make awards. That doesn't mean we're going to win, but doesn't mean you can't even tell if you're going to lose until they make those announcements and they won't make those announcements till the budget's final. So it does have a big impact on us as most federal contractors when you don't have a budget approved.
Speaker 8
Right. So it sounds like you have a log jam or things that are preventing you from moving forward that just kind of you can almost feel are ready to go, but you just need the next step to take place. So that's on the one side of it. Then the other side of it is going to be not relying solely on that, but looking to increase market share within whatever increase, hopefully there is an increase, whatever increase there is. I assume that's the goal as well.
Speaker 2
Correct. Absolutely.
Speaker 8
Okay. All right. Well, happy to see that the EBITDA is still adjusted EBITDA is still positive. Keep that going.
Speaker 2
All right. Thanks, Jeff.
Speaker 0
Ladies and gentlemen, we have reached the end of the question and answer session. I would now like to turn the call back over to Mark Duff for closing remarks.
Speaker 2
Okay. I'd like to thank everyone for participating on our fourth quarter and year end conference call. As I mentioned earlier, we've achieved $2,400,000 in adjusted EBITDA for the year ending December 3137 versus $575,000 for 2016. We are excited about being able to report a positive net income and 2% per share earnings and look forward to that continued performance through 2018, and we see 2018 being another year of continued growth and improved profitability. Importantly, we are making strides to improve our bidding organization within the Services segment and we continue to diversify revenue within our Treatment segment and we see a number of very exciting growth opportunities such as the treatment of norm waste in the Western Pennsylvania and new treatment processes in Florida and our GMO facility in Northwest.
So along with several new international opportunities as well. And above all, also we're excited about the potential opportunities that may arise from the Hampton Tanks project. We appreciate everyone's continued support and look forward to providing additional updates in the near future. Thank you very much.
Speaker 0
This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.