Q4 2019 Earnings Call
Good day, ladies and gentlemen, and welcome to the Perma fix environmental services fourth quarter in fiscal 2019 business update conference call. All lines have been placed in listen only mode and before we open for your questions and comments following the presentation.
At this time, it's my pleasure to turn the floor, but to your host for today Mr., David Waldman, Sir the floor is yours.
Thank you good morning, everyone and welcome to commence environmental services fourth quarter in 2019 conference call on the call. This morning, a marked off president and CEO Dr. loosened, a funny executive Vice President strategic initiatives and Ben Naccarato, Chief Financial Officer. The company issued a press release this morning containing fourth quarter 2018.
Financial results, which is also posted on the company's website. If you have any questions. After the call would like any additional information about the company. Please contact Crescendo communications that you want to 6711 theory choose Europe.
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 includes certain non-GAAP financial measures. All statements on this conference call. A then to Steven at historical fact are forward looking statements that are subject to known and unknown risks.
Certain cheese and other factors may cause actual results performance of the company could differ materially from such statements. These risks and uncertainties are detailed in the company's filings with the U.S. Securities Exchange Commission as all this mornings press release can be makes no commitment disclose any revisions to forward looking statements raised tax events or circumstances. After the date here rather err on forward looking statement.
In addition, today's discussion will include references to non-GAAP measures from it takes to either such information provides an additional measurement and consistent historical comparison of its performance a reconciliation of the non-GAAP measures. The most directly comparable GAAP measures is available in today's news release on our website now like turn the call over to Macduff. Please go ahead mark.
All right, Thanks, David and good morning to.
2019 was a success we're for Perfix, which can best be described as a year of solid execution resulted in the transformation of our company setting the stage to achieve even higher performance over the long term.
This transformation has been realized through the integration of our treatment segment with our services segment has positioned perfect survive unique offering for radioactive waste management to all our clients. This performance is reflected in nearly 50% increase in revenue for 2019 at the same time, we're staffing up to support our anticipated growth including a.
Sure enough strong industry leaders.
An additional technical talent.
We take a minute to recap some of the financial highlights from the fourth quarter relative to the same quarter in 2018, and later I Ben will discuss the financial results are in a little more detail overall revenue increased 80% the 22 million over the fourth quarter last year services segment revenue.
Increased 340% to nearly $12 million ours treatment segment revenue increased 13.5% lots of $10.3 million, a we generated an adjusted EBITDA of 1.7 million compared to a loss I wanted to 67 K for the same period last year and.
Lastly, we achieved net income attribute a common shareholders of 930000.
Dollars or eight cents per share for the fourth quarter up 2019 compared to a loss of 2.4 million.
We're also 20 cents a share for the same period last year.
Sharpening our focus within the services segment, we delivered growth from 13.3 million and 18 to 33.1 million and 19, which is an increase of 149%.
Increase for the year well. This accomplishment is very exciting to our management team and all employees at our company views. This is only the beginning base our sales pipeline backlog.
And our new client relationships over the past year over the past few years Upper mix management team is reconfigured the company around new growth strategy.
Establish a solid backlog of contracts that we believe will provide sustainability well increasing opportunities for new contracts end market expansion.
This multiyear process was delivered these results is also shaped our 2020 business plan in order to provide the optimal service isn't technologies to meet the needs of our clients in our overall waste management market.
The focus execution of this business strategy has resulted in strong financial and operational performance over the past two years, an expense is expected to continue into 2020.
More specifically both segments performed well in 19 crude contributing to US a year of strong organic growth with adjusted EBITDA increase of 162%, notably most of this increase came in the second half of the or last two quarters.
He is also important to note we achieved this performance despite a slow down and waste receipts within the treatment segment due to the government are continuing resolution and shorten work months.
Due to the shut down all the projects I in treatment plants around the holidays.
This temporary weakness in the treatment segment.
Not continue so far in 2020.
We expect improved performance in Q1, how we're also monitoring the potential impacts covert 19, which I'll discuss more in just a moment.
Meanwhile, we continue to identify new opportunities to reduce the cost schedule in safety risks that radioactive waste impose our clients through the application of new and innovative engineering and the use of technology and cost effective manner. I. Recent example, I use the startup of our newest facility.
Located outside Oak Ridge, Tennessee called the environmental waste operations Center or E walk or that you walk facility received its radioactive radiological materials license in February of this year to support receipt of Rewalk radiological contaminated equipment materials in ways for processing.
Packaging shipment I to permanent disposal facilities.
The new facility is highly synergistic with our offer with our existing operations and allows us to add new capabilities are in high demand among our customers, including the ability to handle on dismantle large components, such as turbines and other reactor equipment.
As well as the receiving demolition robl for handling prior to a final landfill disposal.
Specifically, you walk facilities configured to handle very large equipment or that will support size reduction and shipping directly landfills using our both rail access we have at the facility as well as trucking.
It isn't that you walk facility is located near the D., We Oak Ridge reservation, which is a has a cleanup mission expected to support a sustainable waste generation for many years [laughter]. This facility is ideally situated within a Jason real spur, making low cost transportation alternatives convenient inefficient.
While we're not yet able to.
Define the anticipated revenues are for you walk for 2020, we have submitted several bids already this important near term processing objectives.
Importantly, unlike our other facilities either walkie walk is not designed to treat hazardous or mix waste at this time and therefore, we believe we can ramp up our throughput.
In a very low cost and efficient manner with limited initial capital investment required.
In addition, and additional example of our ability to apply the newest technology to meet our needs of our customers waste management jobs is our purpose sort system. This latest technology will be applied to removing radioactive soils following deepwater operations and dredging applications. This is a strong backlog with them.
The work in our industry, which can benefit from this technology over the next several years and our engineers and health physicist.
Our developing applications through the procurement process.
As the department of energy continues to release large site cleanup procurements purposes has been a successful and providing innovative solutions that discriminate or team within the waste management missions Oh, the scope of work within those procurements or.
This is particularly relevant I to ongoing procurements at Hanford Savannah River and Idaho that May include onsite services for waste management.
As well as a potential for providing waste treatment offsite using our proprietary technologies odd that represent significant value.
Okay, perfect says realized sustainable growth and several important nuclear services markets that you continue to generate backlog over the next several quarters, specifically, we've seen growth in supporting several national laboratories, including clean up missions, a directly associated with the revitalization initiatives and legacy contamination clay.
You know these labs include I've, Lawrence, Berkeley Lab, Lawrence Livermore, both in California, and Los Alamos as well in new Mexico, as well as the Canadian nuclear laboratories.
Oh in <unk>.
Our growth strategy has not only involving our services segment as we've continued to realize strategic progress.
Treatment segment as well for the full year, our treatment segment revenue increased 11% as we continue to identify new waste streams that require innovative and and that technologies.
To attain disposition, while leveraging our engineering team provide.
No value to our clients as an example, I in the past few quarters. He developed a solution to stabilize lithium hydroxide shield.
In Oak Ridge, the passive they are uranium traps off from Paducah and continue to treat radioactive waterfront sources throughout the country. Each of these waste streams have been result of our strategy to provide more comprehensive solutions to our clients in the disposition of their most complex waste problems. This is.
Division will support further growth with strong margins in concert with our services offerings.
As we approach the end of the first quarter points wanting we've been fortunate secured a several new contracts that will support a similar trajectory of growth through 2020, assuming the impact of the coven 19 is only temporary once a return to normalcy, we anticipate 2020 will be origine new opportunities within both.
With the treatment and services segment.
Which will further enhance our backlog and provides stability for the company.
Even though we have seen minor budget reductions in the President's budget for 2021 are our largest waste management client or less waste treatment client, which is the department of energy Environmental management Division a the impact of waste shipments I should only be limited Oh in 2020 with.
Minimal impacts the following year.
Our nuclear services segment had limited exposure to the E M budgets with India, we with less than 5% of revenues coming directly from EM in 19.
The majority of our nuclear services funding is two projects with India, we from the office of science and from the end into say.
Divisions to support.
Their infrastructure improvement missions.
And which should count or any impact that we see on the upside of house.
Well one final note as I mentioned earlier I'd like to discuss the potential impact related to the covert 19 pandemic.
It is our desire upon fix and our clients to maintain safe working environment, while maintaining while minimizing the impact to our operations within a nuclear facilities.
Within our <unk> nuclear services segment, we're beginning to realize suspension of several projects as office federal clients have halted onsite operations at government facilities and as a result of these impacts we will likely realize reductions in revenues for Q2.
The magnitude of these impacts will direct me directly dependent on the duration of the suspensions. However, the loss of revenue in both the waste treatment and the services projects will likely be recognized in Q3 in Q4. If these suspensions are lifted a later this spring.
Within our waste treatment segment, our treatment plants have seen.
Some impacts to shipments I to include some delays in waste from Q1 or the end of Q1.
You the last couple of weeks into Q2, but again.
These could increase.
Depending on that on the class shutdowns and other impacts as the realized going forward.
Today, our plane operations have not been impacted by the cobot 19 virus.
As we have not seen any cases of the virus amongst our staff. So production has been maintained so far our backlog within each plant was good right now with approximately two to three months of waste inventory for processing a within each plant. If we begin to realize changes that will materially impact.
Perfect will be sure to keep our investors and form.
Perfect says.
Directly benefited from government.
Stimulus packages in the past, it's premature to speculate I if that would be the case again this year, but we will continue to monitor every aspect of took over 19 that's evolving.
And to find ways to best response.
Most importantly, foreign fixes the safety driven organization with lots of experience in unusual environments. We're committed to the safety of our employees and will stay on top of the situation as it unfolds.
I'd like I'd also like to extend our best wishes to our shareholders and citizens.
Across the country that have impacted by the virus as Americans I I'm sure, we'll pull through this and emerge stronger as a nation.
So to wrap up 2019 was an exciting year for the company as we more closely aligned our nuclear services in waste treatment capabilities and we are realizing the benefits of our business development initiatives.
Hi, This is best illustrated by the fact that we've been awarded over $65 million new contracts since the beginning of 2019 at the same time I, we're advancing a number of significant opportunities.
The leverage our fixed waste treatment facilities.
<unk> innovative treatment options for a variety of nuclear waste streams that will broaden our market base.
Overall, we are extremely encouraged by the outlook for business, we continue to enhance our balance sheet.
And have a solid backlog that helps sustain us.
And the VAT of a temporary disruption.
On that note I'll now turn the call over to ban who will discuss in further detail the financial results then.
Thank you Mark I'm, starting with our revenue our total revenue from continuing operations for the fourth quarter was 22.1 million compared to last year's fourth quarter of 11.7 million, an increase of 10.4% 10.4 million or 88.1%.
Our services segment increased by 9 million compared to prior year as the company continue to operate on numerous projects both U.S. in Canada.
In the treatment segment, our revenue increased by one point threemillion in the quarter compared to prior year, primarily from improved pricing related to.
Six of waste we process.
For the year ended 2019, our revenue was 73.4 million compared 49.5 million in 2080.
Service segment revenue increased by 19.8 million or 149.4% as again our projects one in the first half of 29 team began to produce revenue in the second half.
Our treatment segment revenue increased over prior year by 4.1 million or 11.3%.
As the result of the higher average pricing, resulting from our mix or waste mix.
Our cost of goods sold for the order was 17.4 million compared to 10.5 million in.
First quarter prior year, an increase of 6.9 million or 66.5%.
Our treatment segment cost of sales, increasing 73000 compared to primary.
Prior year, primarily due to a million dollar reduction in our closure expenses I mean, you see.
Which closed in the second quarter of 2019.
As I might have said increase they decreased 773000.
Cost of sales from our service segment increased 7.7 billion as a result of the significant increase in revenue compared to prior year fourth quarter.
Our gross profit for the quarter was 4.7 million compared to one point Threemillion 2018.
Treatment segment gross profit increased 2 million due to the improved waste mix and the elimination of the closure expenses at our now close them any facility.
Our service segment gross profit improved by 1.4 million, primarily as a result of increased volume of project work.
For the year ended 2019 gross profit was 15.6 million compared to 8.5 million in 28.
The treatment segment earned 5.1 million or gross profit than the prior year, primarily due to higher revenue and lower closure related expenses that M&A.
The service segment gross profit increased by 2.1 million, primarily from the higher volume of project work [noise].
Total SGN eight cost for the quarter were 3.3 million compared to 2.7 last year, an increase of approximately 634000 higher employee related expenses for wages incentives and outside consulting.
And also higher bad debt expense were offset by lower commission and legal costs.
For the year ended 2019, SGN, a costs were 11.9 million compared to 10.7 million in the prior year.
As with the quarter employee wages and incentive expense were up.
Travel consulting audit fees and bad debt and these were partly offset by lower commissions legal expenses.
Relocation of office expenses.
Our research and development expenses for the quarter were down 555000 add 620000 for the year, respectively. As the company wrote down certain assets its medical segment in the fourth quarter of 28 team.
Our income from continuing operations net of taxes for the quarter was 1 million compared to a loss of 2.4 million last year.
Included in last year's loss was 1 million of additional closure reserve recorded at M&A C.
Continuing operating expenses at MDC of 308000, and the write off certain medical assets.
Assets in the medical segment a 465000.
Net income from continuing operations net of taxes for the year ended 12, 31, 19 was 2.7 million compared to a net loss last year.
1.1 million.
Our net income attributable to common shareholders for the quarter was 930000 compared to last years net loss of 2.4 million.
For the year ended 12, 31 19, our net income attributable to common shareholders was 2.3 million compared to a loss of 1.4 million in the prior year.
Our total income per share for the quarter was eight cents compared to a loss of 20 cents in prior year and our income per share for the year ended December 31st 19.
Was 19 cents a share compared to a loss per share of 12 cents in the prior year.
Adjusted EBITDA from continuing.
Continuing operations for the quarter was as defined in this mornings press release was 1.7 million compared to a negative hundred 67000 last year and for the year ended 2019, our adjusted EBITDA was 5.2 million compared to 2 million last year.
Some balance sheet items compared to find the end of 2018, our current receivables and Unbilled receivables collectively were up 10.3 million primarily from increased.
Revenue in the service segment.
We had an operating lease right of use assets of 2.5 million, which represented the present value of our operating leases as result of implementing HFC 42 this year.
Our intangibles and other assets were down 4.6 million, representing the release of five point.
5 million of restricted cash previously held as collateral under our closure policy.
Tied to the closure of our Emoney see facility.
Our current liabilities were up 3.6 million, primarily due to increased operations in service segment.
Waste backlog was 8.5 million compared to 11.1 million at the end of 2018.
Our long term liabilities were 2.4 million.
Primarily up primarily from the inclusion of our long term operating lease liability, which again relates to the implementation of assay, a 42 of which 2.3 million represented the present value of our operating lease liability.
Current debt.
Including capital leases and excluding debt discount in debt issuance costs was 2 million with 427000 due to our primary lender PNC bank.
Total debt at year end was 5.2 million, including capital leases, excluding debt issuance and that discounts with 2.2 million of that due to our primary lender PNC Bank 2 million due on the loan from a private lender received in May 2019 and 900.
37000 from other debt.
Our working capital was 26000, a 6.8 million dollar improvement from the working capital deficit at the end of 18.
6.8.
And finally I'll.
If some cash flow information, our cash used by continuing operations.
Was 4 million our cash used by discontinued operations was 660000.
Cash used for investing.
Was 1.5.
Most was for capital spending.
Proceeds provided from discontinued.
Was.
21000, which was primarily from the sale of certain discontinued operations property.
Cash provided by financing was 992000, which represents our monthly payments to our term loan of 824000 net payments to the revolver of 318000.
2 million, representing the no received from a private lender that of payments made and 133000 from option exercises.
With that operator, I'll now turn the call over to question.
Thank you ladies and gentlemen, if you did have a question or comment it a star one on your telephone keypad at this time.
Easing or speaker phone, we ask that well pose your question you pick up your handset to provide the best sound quality again star one for any questions or comments at this time.
Well go first to Bill Nasgovitz at Heartland Advisors.
Good morning gang congratulations on a good year.
Hi, Thanks, nice to see a profit.
So could you talk a little bit of you mentioned $65 million worth of new orders. This year could you maybe I missed this I came on late <unk> or backlog is in a treatment in service.
Oh, Yeah, Bill that's 65 million represents the wins, we got a 90 in 19 that are pretty much rolling from 19 into 2020.
That does not include some of the.
When ventures that we've been and pretty much as one joint venture. So that that's just we're prime minister Raitt pretty much Oh Patsy alone. So you can add you can add another five to 10 million in 2020 on top of that so that represents the project backlog, we've got going into 2020, we're already starting.
You know to one that through the first quarter.
And ER and hope to add to that in the next two quarters as additional field projects are awarded so we we submitted a significant amount more.
This year or are there were waiting to hear on projects to be awarded so I think right now we're probably have about 40 million in and projects that we're waiting to hear on.
That represents our service backlog on.
On the waste treatment backlog, it's it's about 10 million overall as I said, it's about two to three months of backlog, if we receive no more waste receipts.
As a result of the virus issue.
So we're feeling pretty good for a couple of months.
With with nothing more received.
And certainly hope that it's not going to extend much more beyond that.
And.
Feel really fortunate to have the kind of backlog right now.
[laughter] they'll just let me ill just let me clarify real quick and 8.5 at the end of the year marks 10 million in treatment. He talked about is kind of where we are today.
Okay. That's great answered this service a year ago.
Backlog was only at around 20 million I can't remember.
Yeah, probably lower isn't always a lot less.
Right.
Yeah, I was less than 20 is less than 15 I think.
Yeah, I would say 12 or 13 bill.
Okay, and then you've got a service backlog today of 49 is that what do you heard.
Uh huh coming into the year, yes, I mean, you into the year about that amount.
Okay.
So could you Mark you also mentioned.
Trying to broaden the.
You know the service.
Sector, what what type of deals are you working on <unk>.
Just broadly speaking in terms of brought into business.
Yeah, the to the two specific ones I'm, most excited about which I mentioned very briefly was he walked you walk facilities.
Provides a real unique service here locally you know bridge for high volume transfer of waste.
And that's just getting along just got a license in February our waiting to hear on a couple of beds before we really get it up and running at full speed that that has a real potential.
To be transformative force bill the that the.
Also water I mentioned I talked about that like two years ago, you might remember.
We had several bids out for that and then.
He got real quiet because we lost a couple of other then would then we actually want a few and that's really starting to kick up now we're going to be doing some operations in San Diego and some to support them dredging, it's going on there finding.
Some radioactive soils.
And we'll be separating those and that that has a real potential to grow.
Over the next couple of years and be very sustainable revenue stream for so we're excited about that we're also excited about these big deal we bid that we talk about every quarter.
But weve been able to hire some really good waste engineers that are very seasoned at solving complex problems and what we're being able to do is to find solutions for each one of the.
Sites in association with their waste management challenges.
And in and get on teams.
With a larger companies the tier one companies have to provide specific solutions to them onto the overall project. So those are exciting for US you know it's much like the 10 closure job.
Not quite as large as that is for us but.
Certainly transformative them could add you know some good chunks of sustainable revenue for over 10 year contracts.
So to me I'm sorry. Thanks.
Go ahead, Mark when you say.
Large or big deal he contracts, what what size or you, possibly talking a piece of the these are the largest deal we haven't Otay procurements you know the lots of in river in Idaho, I think Savannah River is into 20 billion range for 10 years and and Idaho's into 10.
Those big large tenure contracts that we won't prime will be a us a critical subcontractor or a team partner on so on a much much smaller.
Level.
5% to 10% or something less.
Probably a little bit less depending on the project.
But still you know when talking to numbers that big significant.
Yes, okay. Thank you very much congratulations.
All right. Thanks Bill.
Once again it was star one for any questions or comments, all moved ex Tavi Fisher along cast advisors.
Hi, good morning, Thanks for taking my questions.
Hi, Good morning Army, we've seen some significant growth in the GE any side, how sticky if that is that sort of yearend bonuses or is this that your 3.3 about three and a new norm.
I think the yearend bonuses or is it pretty healthy chunk of that year over year you have.
Got it cost of living increases as well, but we we saw some offset cost so I was probably the incentives.
Some of the employees are going to.
Get a well deserved bonus this year.
I know on a certain amount of normal run rate basis. Excluding this crisis endemic.
All right way to think about DNA is back on their career, we said, let's say you know sustainably over three.
Over 3% or million.
For the quarters.
The quarter yet.
I think you I think it'll be coming down as revenue goes up.
Our target is to try to be in the.
10% to 12% range.
For the year.
So a.
Little bit less than probably three is a good starting point, though.
And then just a second question I don't have we don't have the segment details here yet, but can you just you know and this is more of a general question.
In the in the past and I'd say years ago services business had some issues in terms of getting underwater on contracts.
And he I believe that the press release that promotion for somebody who is running the services business back in 2011.
I'm, just trying to get a sense.
Your estimate I mean this business the sort of this business makes profit on how good you estimated project in how good your managed the project.
Just the numbers of estimators and project managers you have now.
Compare how many of them, where we're running the business also in 2011, we have these issues how do we make sure that these project managers and estimators.
Project profit not just project revenue.
Any color you can provide around that.
Helpful. Thank you.
Yeah, we we we have oh completely well now complete do we have several people the from 2000 them from the FCC group.
There are very seasoned and experienced a project estimate or is it and.
We do have a lot of new ones as well that are supporting the teams that we have a team of folks it develop proposal.
Not just project estimate or is that result in a project being successful its its implementation hi, its contract terms.
Its leadership of the project, it's changed conditions in client reasonable unless there's a lot of things that go into it certainly estimating as one of them.
But we've we've implemented different Q a program that we had back then.
So we have very stringent our called Green team reviews of our costs before we send the men Oh, we have risk committees that look at the different risk each project takes on.
Unlike 2011.
We have a lot fewer fixed price contracts most of our contracts right now our tnsm a from a percentage basis of a 50 million dollar revenue stream.
It's it's less than 20% will be fixed unit rate or fixed price, which obviously have various degrees of risk associated so 80% of our our services group is PNM, which has a much lower risk level. So should we do have some smaller fixed price contracts with D or those just Iraq.
So your other projects that have not been affected by the virus and a continued to be ongoing and military bases.
And so they're running very well I, just kinda give you a sense abhi overall.
We do a project reviews every month and we have 12 or 13 services projects.
And our executive Vice President, England, Bartow aspire and his team spent a lot of time going through each project.
We're generally.
At proposed margins on 12 of the 13 projects and as we May have one or two project. It slipped below the margin that we bid and the rest are pretty close to being right on so overall I'm real proud of ever services group and how they have been tracking a margins and to your point, how we're estimating as margins in the proposal so.
It's I think it's a strong point for the company.
You can have a bad project anytime I was saying, we're never going to have one.
Because they are complex and you can miss things here and there, but I think our Q a program and are estimating is in very strong.
What's the sort of average or normal duration of the services project is it in the months or years.
<unk> if they range dramatically we're doing some small projects. It de facilities that are three or 400, okay that are literally in the field three or four weeks.
We have several right now that we're doing their 18 months in duration, no and 20 to 30 million.
And then we have one that.
Can be several years on top in addition to that so they really range, but between three months in 18 months general.
By the way Mark and well just so you got last year in 28 team just based on your segment breakout about 80% of your services projects are PNM, but this year year to date.
Services CNN.
Just one Q3, Q 70, 660, 57%. So we're seeing a growth in fixed price work on the services side and that's what's really driving my question is it's it's.
Changing from that historical norm of 80% down 57%.
So yes, there's some gray areas in there I mean.
For example fixed rate contracts.
Don't have the same risk that fixed price contracts do when we have a number of those that are in the fixed price category, but they're not they're not fixed price or fixed rates, which means you are quantities can vary and you don't carry the same risk but.
We are we've done a pretty good job income manage that risk and meeting our goals on the proposals are.
Hi, Thanks for taking my question.
Sure.
Well go next to Sam Rebotsky, I see our asset management.
Good morning, Mark in Ben It was nice, meaning you in New York and now I'm happy to see that the profitability going forward and hopefully.
No one the Corona get street now you could be consistently profitable.
My question relative to the February 28, the press release could you talk about how much you're spending and what your expansion is and what kind of sales this can produce and that cost et cetera.
So I'm not sure I understand your question on February 28 press release.
Said due to you announced a low level it Brady at radioactive waste processing increase in addition about highly specialized facility located no grinch. So your expand you, making it an expansion at Oak Ridge, what are you spending what how much more revenue to produce and when do you expect that.
To be complete.
Okay I understand it let me now, saying, yes, he walked facility.
Is we're right now is.
In a very low capital requirement project.
We have a.
At least to buy arrangement.
And so we've kind of.
Moved into that direction very very slowly.
But we are are we are committed to this facility, making a work in a basically.
The the overall revenues associated with what we can bring through that is not.
Defined yet because we have so many bids were waiting here on a I think as just a golden My mind. If we can do 10 million a year out there I in coming years that would be a good goal for it.
But it could go up from there depending on the role it plays and the Oak Ridge reservation itself.
And right now its requires live live very limited capital investment and we've got our license or Red rock materialize to get Rolling I went to make a number of improvements to be able to to handle the waste streams, we just bid on it.
And we'll make those improvements here next couple of months. So it's really it just depends on on some of the procurements that are coming out of deal we here locally.
And whether there's an opportunity to process the waste a two to ship it out west so.
It's still early early still in the planning and.
Development stages at this point.
And with the EUR 65 million backlog and the other 40 million.
It seems you have the ability to be profitable once the corona is straightened out.
No on a quarter to quarter basis.
It is that appear.
That based on the amount of revenue you could put through your facility you could be profitable on a quarter to quarter basis.
Sam It really depends on how long it goes but yes. We're hope we're hoping for that you know we if if it's a four week impacts to our six week impact you know beginning last week or so then yes, I think we'll be fine.
And we May have you may have a dip in Q2, but we'll make up for in Q3 kind of thing.
And we feel like we positioned ourselves.
In regards to planning.
On a projects and in our treatment plants to withstand.
The four to six weeks without too much problem. If it goes much beyond two months it will have more ranpak like it will on every body.
As I say beyond two months I mean, there are still is the view, we facilities are shut down or not not operating.
Again, we can make it two or three months with backlog on our treatment plant.
And our projects are working from home at this point.
And keeping projects moving forward, so that when we can get back into field.
We can hit the ground running a you know upon release.
Okay do we attribute the backlog increased backlog to better bidding process more more more jobs available.
Fact that we're better able to do what has to be done and.
Do we see more or what kind of John how many more or is the you know.
The deal we is there more jobs, they're putting out what is the what would you attribute the increased backlog and how much more do we expected to increase going forward.
Oh, it's tough to predict how is going to increase going forward, Sam but a couple of couple of the number one it what I feel the mentioned was obvious question was that we are.
Being much more thoughtful on what we bid which also takes the risk out of of Oh contract overruns and those kinds of things that obvious question regards a fixed price. So we were very focused on bidding projects that we have core competencies in which is our radiological component and waste management and.
Making sure we have the staff they can do the jobs that were bidding and doing well so.
So that that's been put in a position that so the ones. We're bidding we have high when probabilities.
And we can do the job with high confidence and minimal risk in the it's visible answer your question.
We're seeing a revitalization occur within particularly within the department of energy and with the idea is well aware.
Both entities are our removing facilities in legacy risks associated with contaminant facilities. So they can build new infrastructure, so I see that continuing.
And it all this d., we decide the entity we sites.
And when they do that infrastructure upgrade they generate ways.
And provide opportunity to to do the projects in the field.
So both support our our core competencies and I expect that to at least be flat if not increase again through the year I do thinking that might be a blip from the virus here. After the next month or two but I do expect to see a surge following that as waste begins we generated again.
And operations get back to normal.
And further our we beating out or competition to wouldn't these jobs wouldn't be weren't doing it before or are there is more or less competition for the jobs.
I can clearly stated.
The competition levels have been somewhat flat. So is typically the same same numbers we've seen in the past two years I think we're doing a better job of bidding.
And preparing for.
For the bids before they come out.
And and tying in some technology where possible to.
Costs on the waste management styles, particularly.
So thank you it was very nice to meet you in person would Ben and.
You're doing a good job and hopefully we can write up quarter to quarter consistency of earnings and sales that <unk>.
That's not beyond our control good luck.
All right. Thanks, Dan I appreciate it.
Well go next to Investor Stephen Fine.
Good day guys.
Good morning, Sam gradually.
Yeah.
Congratulations on great.
Presuming.
Presuming.
We didn't add this go on a virus thing in front of us would it be reasonable that say that you know things were all smoother than you did have disruptions that.
You know 100 million this year would not be out of the question based on your backlogs and so forth.
That is that as of safe assumption, Steven and you know we projected the same type performance, we had for last two quarters.
To flow right through the year.
With the backlog, we have and then and we're hoping that we could win a few more additional projects on top of that this even growth higher than that but yes. We that was the trajectory we're on.
Okay when I when I look this morning at your.
The numbers that came out the one thing I saw on your balance sheet is that you know even though your current assets Rob your cash was down but you had a tremendous amount of receivables at the end the year, which why would expect.
Can I ask the question that during the first quarter has that smoothed out of a bit. So that you. You know you do have more cash on hand.
It has Sam our excuse me.
We the.
Of particular contract had some work to be done, which weve is resolved and that was what sort of elevated at the end of the year, but yes, that's our cash will be improved from.
<unk>.
From a year, okay, I should be fine that thank you all right, let's talk about the walk thing or am I don't understand that this is a separate facility that you rented.
That is correct, we have at least to buy on it.
And.
It's a facility that was.
Previously operated at the.
East, Tennessee Technology Park.
By another company.
In and kind of been.
Quiet it hadnt hadn't been used in many years that we saw some value in.
Essentially a deploying some some new capabilities.
Okay, great. So.
Does the existence of that facility relative to the bids out put you in a unique position.
It does Steve.
Okay.
You've given us some ideas.
You know I know you know after falling you guys for two years.
Particularly you Mark I know you don't do things are less.
There's opportunities so I'm, just going to make the presumption that.
You see some business.
Yeah, I, let let's go through the big Gallup that.
You know, we we've been talking about this I'm talking about the tank closure. So you know I I understand whats gone out there there's some contracts on appeal, but my understanding is that with the tank closure that perma fix is part of a consortium in its bedding is.
Is that correct.
That is correct soon.
Okay. So the question I have is a you know when we when we think about the tank closure. It at all these Ben you know that you guys with trait. So the real question as the question I have is presuming.
At some time that that is.
The bid is awarded.
Do you guys are you guys up partner that worried you would get.
Revenue brought in irrespective of whether you know you were treating and around facility.
Yes, Steve you know, it's an ongoing procurements as I have to be careful about what we say about but let me just see this we we are critical subcontractor to answer your question. So we're on a team.
With with teaming agreements and all other agreements supporting that to provide value to that team.
In operations and operation space.
And we are part of the solution.
For what is proposed in that that procurement.
For treating sick treating waste as well so.
I just I'll leave it at that is is if you know we're waiting to hear on it.
And we're sensitive to are teaming partners need to keep do keep keep that quite until its announce it.
This point.
But I know how to mention to the if we were not successful on this procurement that we would still remain very optimistic that if we don't win that we will still be apart of the treatments solution.
For the hand for tanks irrespective of who was awarded.
Well I you know I think that the you know that you guys should be congratulated because clearly what you've done is you have diversified the business.
An amazing way in the last year and clearly you now without what's going on right now in the world.
You know you there does seem like your runs battered and moving ahead did and so forth, but you know I've always felt that.
The stuff out at half or like the time closure and so forth should be died by scheme on the cake and even if you've got it you know your attitude should they it's ice cream and you complete on the diversification, but you guys, though the one thing I'm observing is you never know where things are going so.
I congratulate you on diversifying.
All right.
[music].
Okay, let's talk about the Corona virus.
You know.
Obviously, you mentioned that Mark and I, and it's realistic, but I guess my real question as.
Because you know in.
I mean, my Seventys and I've never seen anything.
Sorry, I believe we lost connection Mr. fine well move next to Investor Jim Brown.
Hello, Good afternoon can you hear me.
Hey, Jim.
Oh, Okay, I just had a couple of questions.
First of all [noise].
With the things that the government is doing right now.
Is there you know indicated interest rates have been going is there any chance for you to refinance some of your debt.
To save money on interest costs.
We will we do look at that we were close communications with our credit facility and and other opportunities. So that is we do.
We work closely with our audit committee as well so there is that kind of an opportunity.
Okay and.
Good thing it sounds like well, who are almost done with the first quarter.
Based on what you said it sounds is still and and obviously you have a good him let it it sounds as though the it at least in Q1, we're gonna beat last year again right.
I mean, it's something I think when it first call yeah, well, we're doing we're gonna be last year with Q1, we expect to see pretty similar trajectory as we've said for from Q3 and four last year into 2020.
Okay.
Alright, and then the other thing is.
You talked about hiring.
And so we've got this I know you were in the process hiring people.
So now we've got this labor singling, but.
Are you what are your <unk> as he laid anybody shifting people around or did you put a hiatus on hiring or exactly what are you doing this with the hiring.
Oh, that's a good question Jim we.
The point is the the prior talk discussion was we've hired about a 150 people through the year and along with that 150 people, we were able to hire a lot of.
Really strong leadership.
Technical talent that made the impact to the company and really have transformed the company.
When you when projects like that and get that kind of backlog you can you could attract people that have an impact on the company and it really snowball and that's really the point of that.
But along the way as their services.
Manager frequency says we've also had some some some change of staff as well and.
Would you need good company would would do along the way we're focused leaving you replace them and you.
You are you set your standard is very high as far as the.
Virus impacts we'd be mobilized.
Several most of our projects.
At the we sites that are that are slowing down we have several projects in California, and the bay area that are in locked down so basically everyone's working remotely.
Fortunately most of those projects have not been mobilized.
For field activities, yeah, there in the process of mobilizing so we just push the hiring of the.
Field workforce out a little bit.
We do have a couple of projects in Seattle, and Canada that have.
Mobilize that were in the field.
And Weve down we've we've made the adjustments for the.
The labor part of that along the way too to support by doing some training initially.
And what could eventually lead to a temporary.
Layoff.
For some of the people.
And for others there'll be there'll be other work and reports that have to be done too that will fill the gap until they can remobilize. It in the field. So to answer your question, we have not done.
Significant number yet of layoffs.
And we have been able to take care of our staff a along the way if this drags on a much more past mid April and we may have to do do some along the way, but we have not today.
He has a are you talking about working remotely, but <unk> is there a.
Decent opportunity for shifting people around I mean, some there against if your operation.
I'm sure not affected are very minimally affected.
So I mean is there an opportunity as you shift people around into areas that aren't affected.
We have done that Jim actually and we've been able to shift some of the folks on the Seattle project to our treatment plant in Hanford.
We've also shifted several other people.
From different projects.
To support proposal development, a in and the other other a surgeon who had along the way this month.
That will work for awhile.
And we hope it will work until this is died down and we can remobilize and then we'll have much less impact on the company overall.
Okay and I had a question did not do you have any.
That is.
Maybe in pending or just perspective additional Jay these the pipeline and some maybe some things you're potentially looking out for a JV there's somebody.
Hi, Good adventure, yeah, it didn't get any given times and we have a hot list of bids that were chasing a different various stages of when they'll come out I know we may have a project that's due out in a year and there were addressing a source of salt request.
And and doing a teaming dance at that point. So we probably have at any given time 30 bids that were we have that are going to occur in the next 12 to 18 months <unk>.
And we look at each one of those projects to determine what the optimal teaming relationship would be.
In some cases.
Jvs worked well in different types of profit sharing you share our best interest and success and those types of things in and you can combine your qualifications based on the procurement rags.
So we have two area those a long way as well.
Within those bids Atlas.
I was thinking more of like in a long term more or less permanent relationship like you had business companies that Brad.
Some new technology to you in.
Neil you put it all to work and money good plans I'm, just thinking more of a yeah.
The longer term type of relationship Yeah. We <unk>, we do have several there's very similar to your speaking of the Veolia relationship for the right amount process and yeah. We are looking at a couple more similar types of deployments like that or you know that we can't really get into this point, but we are that works so well.
And with a mutually beneficial to both companies as well to our clients, particularly do we.
That we are looking to doing that a couple more times.
To address specific waste management challenges.
But we should we should be able announce something hope would buy in this year, along the way along that line.
Thank you, ladies and gentlemen, we ask that you. Please limit your questions and interests of time and getting to everyone. We will move next to Robert meeting.
Hi, My question also was about the tank project.
And for can you answered a lot of it.
I'm wondering if there's anything going on in a way of developing the capability to handle that way stuff or is everything kind of in bands waiting for this next contract award the prime contract I recall, a year ago I think it was $9 million was in the budget, which I understood was just sort of <unk>.
Further proves the concept and I don't know if there's anything you can tell us about that or not but it's there is I'd love to hear it.
Sure Robert Yeah, what you're referring to is the test bed initiative program. The TV I program, we talk about a lot yeah in India, We stated publicly.
That they intend to move forward with the $10 million that Congress appropriate for the next phase of the TV I project and intend to do that this calendar year.
Indeed, we right now just as a status is evaluating.
How best to proceed with the regulatory some metals that go along with that and along with the approvals for the next phase.
And then next phase would be.
Referred to as the 2000 gallons phase where they were pulled 2000 gallons out of a tank.
We would process it at our northwest facility.
And ER and ship it to WCS and Texas for disposals that the we as move forward that last time, we heard from them on the in that regards we're kind of at the back end of that there's a lot of people that are involved in that as well.
So we don't always have the most current information, but right now that that's what do you is stated publicly that they do intend to use that 10 million that that that Congress appropriated for this calendar year.
So if I understand your answer tenure and does not include drawing out that 2000 gallons to 10 million is basically preparing to do that and then another decision has to be made to go ahead and actually process. The 2000 gallons batched wouldn't be it when that correctly.
Robert It could be used for that depending on timing yeah. It would it would cover removal of that waste equipments been.
Engineered designed and fabricated.
And to remove the waste and it could be used.
To draw that 2000 gallons out of the of the tank for our processing.
Mhm and again and we just don't really know, we're just holding our breath and at some point I'll say go ahead, but we don't have much idea when that will be.
Yeah, we're just not that well informed as to where there isn't a process overall Robert this point in regards to the regulatory status, particularly we know where things are in the technology and equipment fabrication and that type of thing but.
Well, we are as a company ray for it and it's really do you is a decision as to programmatically, how it all fits together.
With the always objectives.
Well move next to Investor Chuck Dickinson.
Hi, Good morning, guys with regard to the.
Good morning, with regard to the TV I just since I was just asked follow up on that there were couple articles.
And the recent pass it seemed to indicate that the regulators from the state of Washington itself may be more amenable to the idea of reclassification of that waste or is that it was my reading of that correct or am I off based on that.
You know Junkers when a lot of discussion about what you're referring to is the reclassification based on on deepwater for 35 I.
I'm afraid I just cannot answer we're how that's lining up with.
The TV I initiative at this point.
And that because some of so much as happened over the last several months. So we have we're not really aware of of where it's all lines up outfits together just one.
Okay. Okay on the accounts receivable I assume.
Looking at the allowance for doubtful accounts as you know I went up from year ago, but of course, that's because the accounts receivable jumped a lot which is a good thing.
But given that most of your.
Businesses with the government I assume those receivables are pretty darn money. Good and you had indicated on the previous conference call. I think that you have the ability usually to turn those fairly quickly. So you answered. The generally you answered the question that yes, the cash levels are going to come up as those get turned and that's been been happening but.
Can we feel pretty.
Pretty close to 100% secure on those receivables accepting the allowance for doubtful accounts.
Yeah, I think you allow us to fold theres always.
The exception, but we do have a very low.
That ray generally speaking and.
And we do have sort of a formula based.
At that allowance so the higher you're a are is it does kind of move up and that correct itself when.
Collection, they're made so yes.
Okay. What is your remaining a couple more but just bullet points and I'll drop out what is your remaining total availability under the revolver and other credit lines.
End of the year was about 8.7 million.
Is there any intent to start tapping knows or is that a wait and see sort of thing depending on.
Projects and other financing that you might.
Look at Oh, or how the covert 19 develops in other words that money.
Reasonably assured of being there should the situation developed where.
Lets say this cobot 19 extends longer than anticipated.
Right well that that is all supported by our receivables so it would either be.
Mobility or cash.
So generally speaking, yes, that's not anything that that that is a.
That's a good number to be starting with going into this.
If the this colby.
Issue and you're not anticipating taking any of it down not of for any reason at this point Nonetheless kind of a double edged sword you take it down you start incurring interest expense.
But if you you don't want to be in a situation where something happens a you know you don't have maximum financial flexibility.
Having plenty of cash on the balance sheet. So there's no anticipation to tap that at this point.
Yes, it's generally for our working capital needs right now correct.
Okay.
The last question I have has to do again with us.
Coated 19, it sounds like you're in a little bit more.
Secure position as regards having some waste treatment backlog as you said that to carry it through there for two to three months.
Have you in place already or.
Are you going to consider sort of a plan b, where if this does extend beyond two to three not through three months or if it goes away and then makes a reappearance in the fall or winter is flu viruses tend to do.
Have you do you have a plan b in place to to deal with that with such things not only is as regards maybe downsizing staffing levels from projects to project. If it gets delayed but also trying to flange up your revenue stream. So that you know you don't hit a situation where everything gets a seized up at once both on the tree.
And the services side, so that you have at least some stream our revenues even in a worst case scenario.
Yeah, that's a really good question Chuck.
And believe me our board is very sensitive to the answer to that question overall book, but I will say this is were.
We're meeting daily as a management team too late to the revising and and add detailed to our plan our plan.
Is for basically three phases.
Two four and six month impact.
And what we would do.
I would react to a to protect ourselves and minimize the impact not only financially, but also from a safety perspective.
You know have nuclear facilities.
It's important to concern as well and what the cost our stay in compliance and those types of things.
So yes. The answer question, we do we are planning that way.
And making sure that we have a methodical approach to each one of those phases.
To minimize the impact and make sure that were are still viable and an operating as much as we can like you said to keep revenue going as much as possible and reduce the impact to the employees as well so.
It changes, it's amazing how difficult disadvantages changes every morning.
And every afternoon. It seems like every six hours, there's new information as new considerations, our clients being the federal government in many cases are making decision as you know.
Associated with their plants do you is is shutting some plants down others that are not do d. is not should that either point any of the sites were working on.
So it does that it just changes so much it's difficult due planning but.
That's what requires enormous amount of communication.
And let alone hours to stay on top of the but I do believe we have good plan a place that we can protect the company through the worst case scenario.
Well move next to Investor Howard Linda.
Operator, it's been over an hour so I'll hold my questions for the next call.
Oh good quarter. Thank you very much.
Thanks, Eric.
Thank you and with no other questions holding I'll turn the conference back to management for any additional or closing comments.
Great. Thank you Jess I.
I would like to thank everyone for participating on our fourth quarter and yearend conference call.
As I mentioned earlier, our strong performance in the fourth quarter and 2019, a reflects the success of horse strategic and business development initiatives over the past two years.
And based on our current sales pipeline.
And accelerating a bidding activity in backlog were highly encouraged.
By the outlook for the business in 2020 as a whole with that thank you all for joining.
Ladies and gentlemen that will conclude today's call. We thank you for your participation you may disconnect at this time and have a great day.
[music].