Q3 2020 Charah Solutions Inc Earnings Call
[music].
And the instructions will be given at that time, if you would like to ask a question I would now like to hand, the constant supernus to Brown, Vice President of legal Affairs, and corporate Secretary for Sharav solutions. Please go ahead.
Thank you operator, good morning, everyone. Thank you for joining US today. We appreciate your participation in our third quarter 2020 earnings call and look forward to sharing our prepared remarks and answering your question.
Hope that you have had a chance to review the press release, we issued yesterday after market close if not you can find the press release as well as a supplemental investor presentation. You may follow during our prepared remarks on the Investor section of our.
Our website at Www Dot shara dot com or IR dot <unk> dot com.
Joining me on today's call are Scott tool, President and Chief Executive Officer, and Roger Shannon, Chief Financial Officer and Treasurer.
Following their prepared remarks, we will conduct the customary question and answer session.
Before we begin I would like to remind you that our remarks regarding sharp solution include statements that are forward looking statements within the meaning of the private Securities Litigation Reform Act. These forward looking statements are subject to risks and uncertainties that could cause actual results to be materially different from those disclosed in our earnings press releases and conference.
Scott.
Those risks include among others matters that we have described in our earnings press release as well as in our filings with the Securities and Exchange Commission, including our quarterly reports on form 10-Q, and our annual report on form 10-K, we.
We disclaim any obligation to update these forward looking statements.
During this conference call, we will refer to certain non-GAAP financial measures, we provide reconciliations to the nearest applicable GAAP measure in our earnings press release and supplemental presentation.
Again, thank you for joining us today now I would like to turn over the call to Scott Sproule, our president and CEO Scott.
Scott.
Good morning, everyone.
It's great to have you join us for our earnings call today I'm happy.
For you to be speaking with you again in providing an update on our third quarter performance.
This morning, I'll briefly review, our third quarter accomplishments.
If I had an update on current business developments.
And update you on our pipeline opportunities.
I'll then transition the call to Roger for a review of our financial performance during the quarter and an update on our 2020 guidance.
We continue to see an acceleration of customer activity relative to the $75 billion coal ash market opportunity and have committed to strengthen our balance sheet reduce debt and maintain a laser focus on pursuing these growth opportunities and fully capitalizing on our industry leading reputation.
The team continues to perform well in a challenging cobot environment.
And we are pleased with our progress as we continue working to convert our pending bids pipeline of over four and a half billion dollars.
Revenue, making some exciting award announcements soon.
Our third quarter results were below expectations, primarily driven by low ash production, resulting from COVID-19 related decreases in energy demand.
And severe hurricane activity in the southeast.
We remain optimistic about the near term and long term prospects for SAR solutions as we continue to work with our major utility customers to meet their remediation and by product recycling requirements.
As highlighted in our press release, we continue to see significant increases in New award opportunities, resulting from our customers announced an expected remediation initiatives.
We now have over $1.2 billion in New awards, primarily driven by the extension of the X. long fleet wide nuclear maintenance and modification contract from July 2022.
August 2025.
We've outpaced last year's record for New awards, and we expect that significant New awards will advance our environmental solutions segment through the remainder of the year and into 2021.
Our customers continue to seek our environmentally friendly customized solutions to recycling and Remediating Polish.
Our ability to continue to provide essential daily operations and remediation services for our mission critical utility customers. During this period of high uncertainty and disruption caused by COVID-19 pandemic speaks to the safety operations plan and procedures, we have implemented the resiliency of our team and the essential nature of our service.
Yes.
We expect the growth in business opportunities to continue as utility companies increasingly develop and implement their plans to address the more than 1000 regulatory mandated surface empowerment closures in the United States.
The sustained ongoing level of activity in our business development has never been higher.
In addition to our $4.5 billion and pending proposals, we have an additional $11 billion in near term pipeline opportunities.
That we will bid over the next few years.
As we have discussed on previous calls states are becoming more prescriptive as to the means and methods of Aspen remediation.
Environmental Protection Agency continues working with several states to establish their own asset recycling permit programs.
Further the EPA continues to work on its regulatory requirements Beneficiation guidelines and Ash pond impairment closure deadlines.
Hey, good to see these movements as positive for storage solutions.
As the only full service provider of mission critical asset management operations, environmental remediation and compliance services maintenance and outage services and by product sales for utility industry. The company is ideally situated to partner with these utilities to deliver on their impairment closure requirements and needs.
In addition to the pipeline remediation projects. We are also increasing opportunities to provide creative solutions to utilities by expanding our environmental risk transfer services.
Or ERP.
We recently announced that we are in negotiations with a public utility in Texas to deliver our unique ERP solution and we are successfully performing ERP project with a utility in the upper Midwest, We believe our ERP offerings deliver turnkey environmental solutions to utilities.
While providing attractive growth opportunities and returns for storage solutions.
We also remain optimistic about our byproduct sales opportunities.
Driven by expectations for greater infrastructure spend as we continue to expand the reach of our Multisource materials network and add new customers.
Our ability to continue to add new customers and New awards with our utility partners. During this uncertain time speaks to our team's resiliency and essential nature of our services.
Among the $4.5 billion of pending proposals.
We are in contract negotiation on several projects and expect to make official award announcements soon.
As we head into the winter season, with a potential for an uptick in COVID-19 activity.
Our highest priority remains the safety of our employees and customers, we remain committed to keeping our people safe addressing our customers' needs and growing the business. So our solutions provides essential services to regulated utilities that must continue operating to provide power to the country.
And we continue to believe we are well prepared to protect our staff and ensure the continuity of service to our customers. During this time.
I am very proud of the way we are partnering with our utility customers to maintain service safely and I want to thank again, our dedicated star solutions employees.
We're working every day to help our utility customers keep providing electricity.
Finally on behalf of the entire Saar solutions team.
I want to again express our sincere gratitude to.
Who all the first responders medical personnel and all others, who continue working tirelessly to address the consequences of this pandemic.
With that I'll turn it over to Roger who will discuss our third quarter financial results our outlook for 2020 in more detail and provide more clarity on our expectations and the current market environment.
Thanks, Scott I will continue with the review of our financial results and provide an update on our balance sheet liquidity and Twentytwenty outlook.
Revenue decreased $2.4 million or 2% for the three months ended September Thirtyth 2020.
$218.7 million as compared to $121.1 million for the three months ended September 32019.
Driven by a decrease in revenue from our byproduct sales and nuclear services components.
Gross profit decreased $1.8 million or 13.1% for the three months ended September Thirtyth 2000, $28 million to $12 million as compared to $13.9 million in the three months ended September Thirtyth 2019.
As a percentage of revenue gross profit was 10.1% for the three months ended September Thirtyth 2020, compared to 11.4% for the three months ended September Thirtyth 2019.
The decrease in Q3 2020 gross profit is due primarily to the decrease in byproduct sales as I'll discuss more in detail later.
Operating income increased by $1 million to $791000 in Q3 2020 versus.
Versus an operating loss of $237000 in Q3 2019.
The improvement in operating income is due primarily to a decrease in general and administrative expense.
The net loss attributable to show our solutions IEC increased to $900000 for three months ended September Thirtyth 2020.
$4.2 million.
As compared to $3.3 million for the three months ended September Thirtyth 2019.
The increase was primarily attributable to the decrease in gross profit and increases in impairment expense interest expense net and income tax expense, partially offset by lower general and administrative expenses.
We incurred an impairment expense of $6.4 million for the three months ended September Thirtyth 2020.
Due to the expiration of a purchase option liability that resulted in a noncash impairment charge related to the associated land asset.
The decrease in general and administrative expense was primarily attributable to the $7.1 million reversal.
The previously mentioned expired purchase option liability during the current period.
Cost savings from previous staff reductions cost cutting measures implemented in April 2020 in response to the COVID-19 pandemic.
And lower transaction costs in the current period related to the credit facility.
Q3, adjusted EBITDA of $8.1 million was up $2.5 million in the year ago period.
This improvement was due primarily to lower general and administrative expenses.
Now I'll discuss results in our reporting segment level.
In our environmental solutions segment revenue decreased $200000 or half a percent to $45.8 million compared to $46 million for the three months ended September Thirtyth 2019 primary.
Primarily driven by a decrease in by product sales.
The decrease in byproduct sales as compared to the third quarter of 2019 was a result of less ash available for sale.
Due to decreased production by our utility customers.
The COVID-19 pandemic has reduced energy demand across the us, resulting in less energy production by utilities.
Environmental solutions revenue for the quarter was also negatively affected by the severe hurricane activity in the southeast the.
Rarely took some customer generating stations offline and also reduced our work days for the quarter at a major remediation project due to excessive rain.
The decrease in revenues was mostly offset by new project work within our remediation and compliance services component.
Environmental solutions gross profit decreased $300000 or 4.5% to $6.5 million as compared to $6.8 million for the three months ended September Thirtyth 2019.
In our maintenance and technical services segment revenue decreased $2.2 million or 2.9% to $72.9 billion as compared to $75.1 million for three months ended September Thirtyth 2019.
The decrease in revenue was primarily attributable to less nuclear maintenance outage work in the period as compared to last year.
Maintenance and technical services gross profit decreased $1.5 million or 21.4% to $5.6 million as compared to $7.1 million for the three months ended September Thirtyth 2019.
Primarily attributable to a decrease in gross profit from our fossil services offerings associated with our adoption of the new revenue recognition standard assay six of six.
Turning to our balance sheet and liquidity now.
For Q3, our operating cash flow was positive $1.7 million in Capex for the quarter was $1.4 million, resulting in free cash flow positive $300000.
At September Thirtyth of 2020, we had gross consolidated debt of $212.5 million.
The decrease in total debt during the third quarter is primarily due to debt principal payments on our term loans.
Our liquidity was approximately $38.9 million as of September Thirtyth 2020.
Nextel address our 2020 guidance update.
Though we have not experienced significant work stoppages at our onsite operations as a direct result of the COVID-19 pandemic due to the critical nature of our customers operations.
We believe that the COVID-19 pandemic has resulted in decreased energy demand across the U.S.
And therefore decreased ash production by our utility customers.
Although this work is under contract with our customers.
This decrease in Akt Ash production has resulted in both our byproduct sales activities and our daily sales operations volumes being lower than expected.
We were also affected by the unprecedented hurricane activity in the southeastern us during the third quarter.
The significant rainfall in the southeast us, resulting from the Hurricanes affected work activities at a large ash pond closure project as.
As well as ash production at several of our customer utility locations.
We continue to see the risk of lower ash production going forward as well as significant business disruptions beyond our control, creating a higher level of uncertainty.
For this reason we are adjusting 2020 guidance at this time based on our expectations of our backlog of business and executed contracts.
We are updating our 2020 guidance as follows.
We now expect revenues.
For 2020 $545 million and a net loss attributable to sharp solutions SEC $21 million.
We're projecting 2020 adjusted EBITDA of $33 million and free cash flow for the year at $20 million.
Included in our revised 2020 guidance is approximately $6 million of adjusted EBITDA, resulting from a gain associated with an ERP project.
We continue to believe that this gain will occur in the fourth quarter, but there is a risk that this transaction could slip into 2021.
This updated guidance continues to be based on our current expectations have no material worsening of the COVID-19 pandemic.
Specifically, including but not limited to no material customer work stoppages, new significant employee absences.
And no government mandated quarantines.
Any worsening of the COVID-19 pandemic could materially affect our 2020 outlook with.
With that I will turn the call back to Scott.
Thanks, Roger and closing, we anticipate our focus on balance sheet health and growth in contract awards will continue to position the company for long term success.
We remain committed to taking actions expected to preserve cash reserves reduced debt and enhance long term value, while positioning ourselves to take advantage of the expanding market opportunities.
Importantly, we are closely aligned with our utility partners environmental remediation and sustainability initiatives.
Which should provide sharp solutions with significant growth potential for many years to come.
Our activities during the third quarter demonstrate this positive momentum.
These successes in winning new awards, along with our enhanced liquidity and financial flexibility continue to expand our customers confidence in our ability to bring our full suite.
Of mission critical services to meet their specialized needs.
We believe we remain the environmental services partner of choice for the power generation industry.
Thank you again for your interest and participation and with that operator, let's begin the Q and a session.
Thank you Keith asked a question you will need to press star one on your telephone keypad again that is star one on your telephone Todd to withdraw your question press.
Founder hatched.
Your first question comes from Michael Hoffman from Stifel. Your line is open.
Hi, Scott Roger Hope everybody's well down there.
We are good morning, Michael Good morning, Roger.
When I think about the cadence of.
How the quarters will slow and I get you haven't given 21 guidance.
But are we looking at or has that already happened.
First two questions in there has that already happened or are we looking at leverage ratio on an LTM basis doesnt pick on pill.
So.
That Fourq you were 121, and then begin to gradually improve from there as we lap this.
Disruption.
Or is that already peaked.
Michael Thank you for the question. So great question. It Ed has already peaked.
Looking at the Kennedy.
Adjusted.
EBITDA and leverage ratio you can go back over.
The past several quarters into.
At year end 2019.
As you know we have been working closely with our bank group.
Including through the third amendment in March earlier this year.
The peak actually occurred in.
The spring quarter of this year. Since then it just kind of looking at the net leverage numbers it reduced to about 7.7 times at our June Thirtyth quarter.
It's at 6.8 times for the just ended.
September 30 quarter, and we've guided going down significantly and continually into Q4 and across 2021.
So we don't have.
The bank.
Adjusted net allowance and what what's the adjusted number based on the guidance. So can you hit the guidance of 33, what do we add to that then calculate.
Leverage.
Mike, but I think we're projecting around 4.5.
Incrementally so it would be 4.5 is the leverage or 4.5 automatic one times is the leverage ratio at year end based on that.
Okay.
Then Scott on a.
Commentary about the reduced level of that energy generation electricity generation are there specific states that we should pay attention to that this matters more to your model and.
And in that question is it because the actions taken by the state or is it by the contingent state who is buying their power.
Yes, good question Michael.
Yes, as we as we view it.
It's Ben.
Not really a regional thing necessarily.
But but more of a kind of across the board the downward trend.
Trend in demand.
But I would say if we're if we're focusing on.
An area.
Or geographic region the southeast.
Got hit.
Pretty hard and it was a kind of a combination of both the.
Drop in demand from from coated.
As well as just the cycle of Hurricanes coming through there really.
Taking a lot of the.
Until we have all the while offline.
And when you say southeast.
What state furnace that Butler.
Well I would point to you know we've got significant operations in.
Louisiana, Arkansas.
Texas, you know that that area of the country as is where we've seen some impacts this year, which we don't necessarily fully foresee going into 21.
Okay.
Haven't caught in the south had a call them the south but.
Okay splitting hairs.
[music].
And then.
With regards to the awards generation I appreciate theres, the big nuclear in there, but but the ERP awards number.
As up in Threeq here too I think like 100 340 million, so you're sort of at running at about 370, Fiveish I think and that means the next last year's goal here.
We are expecting at least 200 million of awards and for Q.
Okay.
Yes, I think.
Michael or seeing if you think about it though the $1.2 billion number I think we carved out of the 950 that was.
New killer.
Of that vast majority that was it was not all the excellent extension, but a good component of that was the excellent extension.
And that that leaves the remaining.
$280 million in that in the EPS segment.
And we do believe.
We've got a lot like weve spoken to several times.
We have several.
Pending proposals and contracts that we believe will hopeful.
Hopefully not the EPS number up over where the entire company number was.
Last year so we're.
Were extremely excited these doozy EPS and we have for the environmental solutions segment of business couldn't be higher right now I mean that goes back to the foreign out $1 billion in pending work right now as well as the the 11 billion.
Of future pipeline work that we see in the next couple of years to come So that's really where we continue to.
Try to put our focus and positioned the business because you're right there's going to be some significant awards in our opinion and in Q4 as well as early Q early 21.
Fair enough and then Roger I know, we haven't gotten 21 guidance, but directionally I mean are you spending more on capital and 21.
Similar or less so we are at least in the right neighborhood on capital spending.
Yes, we will we will come back with more of an update on 2021.
It really is going to be driven by.
These new project Awards, and you just kind of keep in mind that.
We have.
Been able to do.
Strategically effectively utilize operating leases, we as an emerging growth company, we havent been yet required to adopt the new leased.
Police standard so we still are able to to avail ourselves of operating leases.
The less or gets to keep the tax benefit that we get very attractive rates and get to finance in most cases, 100% of the call.
So.
We kind of evaluate that based on a project by project basis.
You know I would say is maybe it's a general statement, probably roughly equivalent to where we are this year.
But we will continue to monitor that and be opportunistic as we decide between operating leases capital leases and equipment financing.
All right and last for me I can't remember anything good or good. Good you all take advantage of any pp loans and if you did.
Well you get forgiveness on those.
We did not.
Utilizing npls.
Very good. Thank you so much thanks, Michael Thank you.
Your next question comes from Michael Feniger from Bank of America. Your line is open.
Hey, guys. Thanks for taking my questions and good morning, Michael.
Good morning, everybody.
I was just thinking with the revenue guide.
Hi, this sales down 14% you guys kind of walk through a little bit what you're seeing right now is that mostly going to be so I'd be thinking yes segment.
And how should we be thinking.
With these declines maybe give you a softer start to 2021 before we kind of ramp up through the year with some of these Big Awards you guys are starting to book and turn so just like help me with like how Q4 kind of soft note.
Things you guys have laid out but that that kind of bleed a little bit in the first quarter and then we kind of take off from there.
Yeah, Michael ill take that one.
[music].
So this kind of go into.
Michael Hoffman's question earlier.
The sales on the byproduct sales that are really driven by.
Energy demand and production.
Availability asked that we have.
The sell so if you think about that in a byproduct sales sub segment.
Probably we're guessing maybe a little bit softer going into Q1.
But our RMC EPS division is independent of that.
And that ramp in 21 is going to.
Depending on the timing of awards, and then and the timing of the ramp associated with those awards.
So I would.
Still too early to tell at this time.
We are very confident 21, and and the growth in that year and years after.
That makes sense and why not.
I actually thought that by product sales was down 20% of sale and your remediation I think that would be that business was off significantly I would assume that would be a positive for your mix, but am I missing something there I feel like the gross margin and yes.
Byproduct sales.
A higher margin business.
Yes, I think I think at least for.
The movements that we're seeing this quarter, it's really just kind of a mix thing.
But.
Radically the way the.
We've modeled that in the past should hold through going forward, but I would say right now, it's just really really more of a mix issue.
It turned on mix so byproduct okay.
Okay, and then just when we think of 2021.
Clarify that.
I mean at what I'm, saying mix wish him say the byproduct sales as typically a higher margin than the.
Yes.
So we see that pop up a little margin compression there.
Okay. Okay that makes that much okay, let's say, okay, perfect and then I just think of 2021, just based on the bookings I mean, it's more.
I know you're not talking about 2021, yet like just with what you guys are looking at 1.2 and how much comes from.
Maintenance services is it fair to say like your revenue growth.
Between the two business your revenue growth is going to be higher and enthusiasts or if it.
Can't conclude that.
No Michael I think its and I think we tried to highlight this in kind of qualify it.
In the in the press release.
That.
That new award at extension that growth.
Regular side is really in the out years so.
Shouldnt have much impact on the modeling that you you have right now that extension was from 22 to 25.
So as you think about 2021.
In your normal cadence of.
Evaluating the business there shouldn't be much change at all there. So yes, Michael it's Roger you keep in mind that.
The on the nuclear side is.
Very predictable.
In terms of the number of outages per year last year. There were 10. This year. We had 12, you'll recall that we performed the majority of those eight in the spring outage season, so were.
In the process of going through the four fall outages now.
Next year.
Schedule is 12, and then flipped back to 10 model year 2022.
So thats you know that that cadence is a bit more predictable, but as you know the gross margins are lower on that business.
And I would just say that that extension was a.
Great Testament to our outage teams and our abilities to perform.
Perform work over the last several years for.
Our customers in Spain.
Especially during the challenges here of Covidien they.
Perform fantastically, so the great Testament to that but.
We continue to.
Because the business and look.
Towards where the the true growth drivers are.
Relating to growth.
Where we're positioning our focus is on the DNS side just for all the reasons, we've talked about as far as pending bids in future pipeline.
That makes sense and Roger you said it you know there's 12 this year next year should be actually equal to that right 12 12 again.
That's right, but you could say okay perfect. Thanks, guys and then.
Just curious what your comments were about the the ramp up or what we're hoping to see the ramp up on on the EPS side. I mean, you guys are going to view positive free cash flow. This year I think the numbers 20 million you kind of offered Michael's question.
Softens question about about the Capex.
You guys ramp up on on projects is that a cash use on working capital.
And I know you're not guiding free cash right now I guess I'm just trying to think of.
How the swings work in the asset as you guys ramp up does that require certain cash used on the on the working capital side.
Yes, I think it really goes.
Short answer no.
Not a cash use.
And I'll kind of go back to those as Roger and I have.
Trying to continue to transform the business to.
Be more focused on the balance sheet be more focused on working capital and really drive value.
And put ourselves in a position to take advantage of these projects and we we've changed the way that we.
Provide for both proposals to our customers and make sure that.
When we're working through the proposal process in evaluating our projects.
We're making sure that we're putting ourselves in a position thats.
You know.
Always at least.
Cash neutral, but more importantly, making sure that were cash positive from day. One so we're not using that that working capital Roger do you want to add exactly right.
So we've talked about in the past.
We are disciplined approach of things, which were reduced to the bid process and thats that really encompasses a lot of that that it's important.
That we be cash.
Cash positive business Thats, what we are working to achieve and that there is kind of what our bids reflect.
Thank you I think you'll see that work out in the numbers in future years, as we bring work on and start performing.
Okay and just I.
I mean, you guys have record number of orders booked last year kind of on target for another record this year, but your sales were on it.
Down slightly in 2020 so.
I guess I'm, just trying to square the meeting booking orders with.
When we see this conversion to that to that.
And now I mean is revenue growth next year is it out like India up EPS of 20.
20, 30% next year or is it just the timing of some 90 the orders are blocked over a longer period of time just.
When when did the math inflection happen since you guys had record orders kind of last year and this year you're on pace to another another really strong year.
Yes, I think.
You're right and thank you for that we are we at a record bookings last year in a very very hopeful that we.
We exceed that.
This year.
But as you do you see that as you said okay.
Transfer to the to the piano.
21 is where we're going to start to really see that.
Growth.
And to your point on duration, we've also been to Roger.
On being disciplined and not being.
In working to.
De risk the business and make sure that we've got.
Longer term more predictable.
Opportunities and projects and contracts inside inside of our.
Wheelhouse here.
We're not we're not seeing spikes right in our growth it's a very.
Yes.
Progressed.
And deliver a plane as these projects ramp and grow it contributed 21, so we'll see that growth.
Starting here in 21, we are seeing a little bit of it now just kind of offset by cobot related stuff, but as we roll through 21 and beyond we'll see all those new awards layer on top of each other for for many years right and they were talking about projects that are.
Five to 10 to 15 years in nature and as those.
Stack on top each other will be a very nice long term predictable.
Revenue stream for us.
That's helpful and horrifying.
Just to add one comment and we alluded to it some.
Some in our press release.
And it pertains to.
[music].
The decrease in cash production from the lower demand energy.
Energy demand.
On the other side of that we're we're not seeing a decrease registry and an increase in the market demand for spec fly ash for.
Things like Green time.
Green concrete roof.
Replacement important summit and does this decrease in ash production is is actually exacerbating the supply demand imbalance, but.
Between the available spect flash to be used and the opportunity so.
We've been really focused on.
Developing and accelerating our MP 618 hash beneficiation opportunities that has.
Accelerated over the course of the last few months and we're we're very close to be able to announce one but as we look at you, particularly the western us where there is no.
On one hand, much much less supply, but on the other hand, an increase in demand given that the environmental friendly aspects of that recycling, we see a tremendous opportunity to kind of accelerate.
Deployments in the kind of go hand in hand with remediation opportunities as well. So we can go in remediating in pounds and then.
Recycle that ash using our MP 618 proprietary technology to to meet that market demand. So that's something that we really have that won't factor into 2021, just given the lead time, but but we are accelerating.
Accelerating those efforts and will work to take advantage of that so.
Supply demand imbalance.
Fair enough and I remember before you as a talk about with the conversion. These are larger projects a little bit more complex.
And.
And you guys clearly converted some of that for sure I am curious if that also means the contracts have you found.
You guys are trying to get more sustainable de risking the business I mean.
Is there more competition in the bidding terms harder for some of them are tighter than normal for some of these projects.
Who exactly are you guys kind of bumping into do you see a waste management or Jacobs or bactel or is it more smaller private contractors Im just curious you kind of help us understand how the bidding environment has really.
Played out over the last 12, 12 months or so and who you are really kind of bumping into for some of these.
That's nice pipeline.
Sure.
I think the.
The biggest difference we have seen over the last several years is just the.
The bid cycle.
Duration associated with it.
What you should take a couple of months to go from.
RFP to contract signing is now taking.
Six to nine months, Tim that to a year in some cases, so that's really the the.
The biggest extends the change that we see.
When we look at the competitive landscape.
I think so we haven't really seen pressure from some of those larger even see that companies that you just you just mentioned.
We continue to have.
At least and again, there's no pure.
Pure competitor Charlotte the same.
Suite of services that we have but if you look at each of our service offerings independently.
No mediation compliance side, very very fragmented geographically across the country, we see a lot of the same players and in geographic regions.
Byproduct sales, citing are there there are some.
Very large natural.
National.
Competitors that we see across the country.
Then on our maintenance and modification work, it's similar to buy products sales are there was a select few.
That have that offering and we see them coast to coast as well, but really really.
Different by business segment, but when you talk about the EPS side, and it's really more fragmented.
Okay.
And if I could just after I mean I don't know if this is right Scott is there CCR deadline at the end of this month.
Is that something we should keep an eye on and with the election.
Khan I know, it's more driven by the state level I'm, just curious with the CCR if that if this is the case the CCR deadline and this month.
The elections, you kind of mentioned that you guys see some big orders is that something that could make some of these order conversion maybe slip from Q4 in Q into the first quarter of next year. Just as you know, we only have like a month and a half to go and we're all kind of trying to sort out but after after last week.
So I think I'll take the first one first question relative to the November deadline.
And that's that's really technical so we don't see any.
Any impact to any of the work that we're talking about are we spoke about on these calls associated with that it's a it's really a technical allowance to allow the utilities to provide an alternative demonstration for.
Other online surface impoundments, so it's kind of a two step process, where they can.
Alter make some calculations and alter their share of the liners that they're they're offering and thats only and I think if you can go online and read a lot of comments about it but it really affects they bought very small sub segment of the overall universe of.
Ponds that need to be remediated. So that's something that should not impact nor do we believe will impact any of the stuff that we're talking about right now.
Yeah.
And then as it relates to the.
The election.
Or any kind of changes in regulation.
We've.
We've traditionally stated and this is definitely a.
I believe that.
You know right now.
We really don't see any risk from stroke of the pen.
Regardless of.
What happened last week or what happens four years from now we think that the path is set.
Very strongly for.
For our industry definitely at the federal level.
And I think a lot of our regulated utilities are marching down that path very quickly for multiple reasons.
And where that we're here to support them.
And I think it also points back to I think where our focus is and what we see on the environmental solutions side as.
That these these changes at the state level, where.
Where they're going in and really mandating means and methods to our customers as to how they should or mediate.
Or more impactful than anything happening at the federal level. So.
The short answer we don't we don't see any impact and we don't build any anything.
Into that into our our future outlook or anything like that we're very confident where we sit right now.
Got it and just lastly, I think Roger you guys did a lot of work on the balance sheet.
And your credit side can you just remind me is there is there a big concert maturity any anything do you.
When the.
The next.
Yes, they do gate that you have to keep an eye out for.
No theres not its just normal scheduled amortization going forward. So we did the.
You point out do the heavy lifting to beginning of this year.
Made significant debt repayments.
The fall of last year, continuing to pay down debt on a scheduled basis.
And we just talked about.
Previous question, you'll see a significant decrease in our leverage ratios going into year end and across next year.
All right all right guys. Thank you so much for <unk>.
Handling on all my questions.
Okay.
Sure thing my leg.
Your next question comes from Robert Sounds from Cinelli investments Your line is open.
Hi, Scott.
Scott Roger this is.
Peter Lynch for my.
My colleague Roger.
For Robert So congratulations on.
I'm from seven seven to fix.
Okay.
On leverage and as you just said.
The lower next year.
That's that's impressive.
Did you want to.
You want a power contract our number.
Nuclear power company other than that Swann.
Is that going to be revenue item 22, or 21 or.
What was the size of that.
That's just one.
Okay power plant was it up.
Hello.
Yes, well has there was a large plant.
Yes, Peter good morning, and thanks for the comments there much appreciated.
But as it relates to the nuclear work, we talked about the 950 million.
Addition.
We announced.
Last earlier in the quarter to the additional customer that we had.
We haven't given a value on that.
Contract or announce that.
Customer, but if you think about it.
Really no impact to 2020, it'll have a little bit of impact in 2001.
But even more impact and 22.
There's a larger plants.
The significantly larger plant the other 18.
Just one plant one nuclear plant.
That's correct so again not.
Not the size of the entire suite that we have associated with the with Exxon, but it's a significant facility also halted itself.
And that.
I always get the numbers long the.
MP 618.
Would you hope to have.
One of those contracts in the next.
90 days are ones.
One win that and then its Chris here to build it so.
Yes, well you nailed it Peter its of it you get the numbers in the right order that the 618, but.
But we do expect to have an order in hand here very quickly we already have.
Letter intense et cetera signed with it we're working on the financing.
Right now.
Roger's comment earlier, we're very excited about it.
Unexpected.
Hopefully to start here in the beginning of 21, but it will not have any impact on 21, it would have impacts on 22.
And theater we've identified.
A number of.
Kind of follow on opportunities news is we look at that it's not just this one is that demand supply imbalance that that I was talking about we see you a number of geographies not opportunities. So our plan is to continue to move quickly.
After that next one.
And just with your hope to have other before you finish.
We'll take it from here to the person on what your hope have other contracts.
Before the first ones Don.
That's right.
Peter that's absolutely our hope and strategy.
We have not quantified.
Yes, those are financed.
The project finance, so they're not.
[music].
There's no interest.
Can you share the profits with Italy.
Kelly.
Each each one will be different depending on the.
Competitive or the kind of market focus in that area, but he asked there are options.
You know we would be providing some.
Some sort of a revenue stream more to offset.
Of.
Costs back to the utility.
That's one of the great reduction within reach.
Replacing Portland cement and concrete pick up.
Great all time third quarter.
The country.
That's how we see it yes.
And then you talked about this.
There's a supply shortage in the west demand.
In the west is that.
On the west, Texas, or or is that California, or whether how is your west.
Good question similar to Mr. Offsets question early on what Where's the south.
But really that really that when we speak of the west.
There is a significant deficit I'd say in.
Basically.
Utah West primarily the when we say west we mean West Coast, California is extremely efficient.
And then you look at kind of Arizona, and Nevada, having some some some potentially equal.
Deficits here as we move forward, so that's definitely call in Colorado as well so.
Texas, We consider Texas, Texas kind, all too its own but any I'd say anything west of Texas, we consider sort of the west and really focus on the west coast.
Are there other remediation opportunities.
The west as well for this.
This point half billion.
You are bidding on or any of those.
In the West and we all know this.
South southeast. Meanwhile, we have we have.
A few out there.
In the west, but primarily we think about remediation, we think about remediation in the in the Atlantic coast, the southeast and the Midwest more kind of.
Call It east of the Mississippi.
Okay, then will have asked was less.
During this call out there.
They they have some out there.
Peter but if you look at the landscape there.
Predominantly here in the.
In the southeast.
In the end kind of Atlantic coast, and really the ones of the high priority are down here in the south where were they are closer to groundwater everything else, that's really what's driving the priority level of remediation.
But one other thing I thought that for Congress was.
And the biggest power plant the world, where they do it all Vera.
Can.
And you said again Peter sorry.
The four corners plant than the.
In the west where.
That's one of the biggest power plants.
What were they grew at all they asked there.
Upon.
Does that generate cash.
So they have got several ways that they.
They managed dress I don't.
I would just say that a.
That there's there could potentially be opportunities for customers like like them or others out in the west.
How big how big is your answer well set up.
Paused when you start making money.
Okay taxes go on time.
Yes, it's.
So that gets you.
Current number I mean, we're adding.
A bit to it this year I think you know I think we around not on a 15 to 20 million area.
Okay.
So next time you make your pace.
So that would offset.
That would offset $40 million to $50 million of income.
Net income or taxable income.
No.
And the.
So the the.
The new.
Is there a potential for.
More nuclear wins after the.
Yes, I mean.
Something you wanted there are other ones out there.
Over the next couple of years of my Bill went up on the hours. So.
Yeah, there's trapped capital light.
But.
It's not a great margin, but capital light and it's very predictable.
Yes, it's.
It's definitely capital light definitely low margin.
As far as growth there may be opportunities to pick up.
New work here and there as a as the opportunities present themselves.
But again as we continue to stress the real growth.
As on the EPS.
EPS side, whether it be.
Remediation work or by product sales work, that's that's really where we see the growth drivers.
But then you get some clarification or.
Positive performance from echelon.
Some other people can do so well.
Overall environment so.
Do you think that would be a nice.
Retirement for converts.
It it it if it fits our performance of our teams and.
And the confidence of our customers by giving us.
Pensions is definitely.
Good.
It hasn't worse.
Its nuclear power plants have no steal too.
Very little cost.
When people when more of those.
We take the money and you're you're not going to turn down.
Wonderful power outages.
You could you could bring something to take.
That's right now.
We definitely have turned down good work.
Okay.
Okay. That's.
Well, Doug look what quarter.
For the 21 and tried to imply very.
I said, we Peter Thank you so much thanks for the support thank you Peter.
And your last question comes from Michael Hoffman from Stifel. Your line is open.
Mike.
Michael Your line is open.
Just to quickly.
The award number I can still use as a rule of thumb divide by six.
Kind of just add that incrementally each year by six.
So I guess sort of okay, and then because of the disruption on the fly ash is that helping front unit price are you getting any unit price leverage there.
But.
Backup for the second question I guess, we'll make sure. We're we talk about dividing by six were talking about.
The EPS work, Yeah, maybe three divided by six map it out and we did 600 this year divided that by spectrum map that out and if it did it again.
So you can see this sort of a 100 million a year kind of compounding, yes, yes, yes.
And then.
Are we seeing any unit price upside because byproduct.
The shortage about product and that theres demand, but shortage, so you're getting better unit price, we are seeing that regionally yes.
There there are some places that theres.
Yes, a little oversupply, but definitely in the areas of under supply we are seeing.
Prices increased very good. Thanks, Thanks, Mike Thank you Mike.
There are no further questions I'll turn the call back over to the presenters.
Great. Thank you. Thank you operator, and again, thanks, everyone for joining us today.
Look forward to updating you on our on our progress during our next earnings call.
On the call there. Thank you.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.
[noise].