Q4 2020 Perma-Fix Environmental Services Inc Earnings Call
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Good day, everyone and welcome to today's Perma fix fourth quarter 2020 conference call. At this time all participants are in a listen only mode. Later, you will have an opportunity to ask questions. During the question answer session.
You May register to ask a question on anytime by pressing the star and one on you touched on phone. Please note. This call maybe recorded it is now my pleasure to turn today's program over to an Italian Rodman.
Thank you very much good afternoon, everyone and welcome to Perma fix environmental services fourth quarter 2020 conference call on the call with us on this.
After noon on Mark Duff, President and CEO, Dr. Luther Fancy executive Vice President of strategic initiatives on Ben Naccarato, Chief Financial Officer. The company issued a press release. This morning containing fourth quarter 2020 financial results, which is also posted on the company's website do you have any questions. After the call would like any additional information about the company.
Please contact Crescendo communications at 212671, 102 Euro I'll also like to remind everyone that certain statements contained within this conference call maybe deemed forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995 and include certain non-GAAP financial measures all statements on this conference call other than.
On a statement of historical fact are forward looking statements that are subject to known and unknown risks uncertainties and other factors, which could cause actual results and performance of the company to differ materially from such statements. These risks and uncertainties are detailed on the company's filings with the U S Securities on Exchange Commission as well as this morning's press release the company makes no commit.
And then to disclose any revisions to forward looking statements or any facts events or circumstances. After the date hereof and bear upon forward looking statements. In addition, today's discussion will include references to non-GAAP measures from our partner believes that such information provides an additional measurement and consistent historical comparison of its performance a reconciliation of the non-GAAP.
Measures to the most directly comparable GAAP measures is available in today's news release on our website I'd like to now I'll turn over the call to Mark Duff. Please go ahead Marc.
All right. Thanks, Natalia and good afternoon, we generated solid revenue growth and achieve profitability for 2020, despite the impacts of COVID-19 on our treatment segment.
These results show the strength in our nuclear services segment, and our ability to maintain fuel operations throughout the pandemic I'm very proud of the fact that perfect successfully implemented a revised COVID-19 safety plan, while continuing to meet.
The needs of our clients during a period of time in which they were largely working from their own home. In addition, we have also improved our approach to worker safety and health programs in our plants and field operations throughout 2020.
<unk> achieved an important milestone of over 400000 hours without an osha recordable incident.
This milestone is significant on our business assets.
Safety record reflects the focus and dedication of our team to ensure conscientious work performance.
The detail of which directly drives productivity in the field.
Turning to our results revenue increased 43, 5% over 2020 and achieved.
And adjusted EBITDA of approximately $5 4 million and net income attributable to common stockholders of approximately $2 9 million for the year. This was accomplished despite significant reductions in waste receipts associated with waste generator shutdowns on the last nine months.
As we enter 2021.
We're continuing to realize sustainable revenue in our services segment with race waste receipts, increasing particularly in March but will not likely get to normal levels until the June timeframe due to the slowdown of waste generation activities and procurement announcements.
Throughout the industry.
In general Perfect performance of 2020 continues to reflect the improvements that have been made and implemented regarding our personnel system personnel and our supporting systems and technology offering and our business development organization with total revenue for 2020 exceeding 105 million. This is the best year we.
Port It since 2012, which was a period in time that was enhanced by the Obama era stimulus program. Our 2020 EBITDA performance of over $5 4 million was our best since 2011, it's also worth noting we maintained SG&A costs.
Level pace of around $11 million, which is within 10 per cent of our three year rolling average demonstrating our ability to maintain our variable cost and performance in a down market.
Overall, perfect as bullish on our future based on the overwhelming volume of procurement, we've submitted throughout Q1 and into and through Q2 as anticipated.
Many of these procurements are directly aligned with our technologies and waste management solutions to provide us the opportunity to discriminate herself and remain competitive on both costing and management approaches.
With hundreds of millions of dollars in bids currently submitted within the last quarter and awaiting award we have a six month forecast of over 100 million in procurements and task orders to be bid through our existing IDI cues and anticipated projects on the horizons that we're just waiting for Rfps on.
We've been developing for a five proposal simultaneously throughout Q1 net leverage the new technical and management talent, that's joined our firm over the past few years to integrate leadership and enhanced approaches to solutions both in the field and in our plants. While all of these procurements are very competitive and we don't predict the win rate.
Type of action reflects a growing market and our capability to identify position and develop responses and proposals for these opportunities.
In regards to general market conditions, perfect remains optimistic in our future growth plans based on our visibility over the next four to six quarters. This optimism is supported by our primary client the department of energy.
And the direction, we are beginning to see regarding the waste management objectives and their policies are.
A few of these highlights in regards to the industry which include first.
Repeat the statements Baidu officials that are suggested carryover funds from the government from 2020 are beginning to become evident in the deal with facilities in the form of new projects that require fast responsive.
Sponsors and innovative solutions to address some of the larger challenges within the waste management groups.
This activity has resulted in an increased number of proposals both for nuclear services and in the waste management waste treatment side of the house.
Second several large deal, we procurements, including Oakridge closure and the integrated think disposition contract, which was formerly known as the tank closure contract, which have been recently published from.
Forbid include requirements for comprehensive waste treatment solutions.
As well as end state contracting models, which support innovation technology applications out.
To achieve success. In addition, these large bids with values in the billions include aggressive aggressive small business subcontract on requirements for what they call meaningful work, which is defined as project oriented.
<unk> work as opposed to staff augmentation types of support this plays well into perfect offering to provide value oriented solutions. We remain a small business, we will remain a small business for the foreseeable future as well.
And third continued progress at Hanford regarding contracting decisions and opportunities to leverage our advanced capabilities to solve large scale waste management problems.
This includes our Testbed initiative.
Or tbi, which continues to offer a supplemental alternative to doa to assist in the large waste tank disposition project at Hanford.
As we stated in the past few quarters perfect has built a very strong team of waste management and health physics professionals.
Along with staff that are dedicated to growth and innovation for our clients. This is evident by our most recent project which was.
Which addressed a release a very logical source with any research hospital in Seattle, where perma fix provided a complete recovery and relief solution Baxter.
Back to the public Inc.
To our clients.
We're expanding this experience and associated strength of other opportunities that we're currently bidding right now and have a great reference This foundation.
Supporting referenced we will continue to generate opportunities on our industry and provide unique solutions to our clients as well as.
As we pull out of this unprecedented pandemic.
Completing another solid quarter, while increasing revenue over 2019, and teeing up 2021 with positive momentum underscores the strength of our company.
Our ability to adjust our vision to meet market needs and changes on.
That note I'll turn it over to Ben who will discuss our financial results in a little more detail Ben.
Thank you Mark.
Beginning with revenue our total revenue from continuing operations for the fourth quarter was $28 3 million compared to last year's fourth quarter of $22 1 million, that's an increase of $6 2 million or 28, 4%.
The increase as you said was led by our services segment.
Where revenue increased by $10 $8 million over the prior year as the company continued to operate on numerous projects in both the U S and Canada.
The increase was offset by a drop in our treatment segment revenue of $4 6 million as waste receipts at our treatment plants continued to be impacted by the COVID-19 pandemic.
For the year ended 2020, our revenue was $105 4 million compared to $73 5 million in 2019 as with the fourth quarter. The services segment was the main driver.
Of this increase as revenue increased $42 2 million or 127, 5%.
Despite the ongoing Covid pandemic our projects did continue to operate during most of the year generating increased revenue, which offset the drop in our treatment segment of $10 3 million.
Following a strong start to 2020, the impact of Covid significantly impacted our waste receipts throughout both the second through the fourth quarters, resulting in a year over year drop in revenue of approximately 25%.
Turning to cost so cost of goods sold or cost of sales was $25 2 million in the fourth quarter compared to $17 4 million in the prior year, an increase of $7 $7 million on 44, 3%.
The significant increase in project work in the service segment resulted in increased payroll travel and subcontractor expense head count increased approximately 15% over the prior year, while per DM days paid increased by approximately 82%.
Firstly, the treatment segment lowered costs and transportation disposal on and material and supplies related to processing approximately 31% less volume in the quarter.
Year to date, the cost of sales was $89 5 million compared to $57 8 million in 2019, an increase of $31 7 million or 54, 7%.
As with the quarter increased project work resulted in higher payroll related costs.
Sure.
22% increase in head count of 121% increase in per Diem days paid over $15 million in subcontractor expenses and over $4 million in materials and disposal expenses.
Treatment segment processed, 22% less volume, which resulted in lower transportation disposal on labor expenses.
Our gross profit for the quarter was $3 2 million compared to $4 7 million in 2019.
The drop off on.
Gross profit of approximately $1 5 million was the result of a change in the revenue mix is 80% of the quarter's revenue was from the service segment compared to 53% in prior year.
Project work in the services group is generally more competitive and brings lower margins in the treatment segment.
For the year ended 2020 gross profit was $15 9 million compared to $15 6 million in 2019 again, despite the large increase in total revenue the.
Mix was 71% services.
Work in 2020 compared to only 45% in 2019, which resulted in a small increase in gross profit, but a drop in gross margin from 21% to 50.
Our SG&A costs were $2 8 million compared to $3 3 million in the fourth quarter last year, while G&A costs for the full year were $11 8 million compared to $11 9 million in 2019.
Lower travel and trade show expenses.
Which occurred as a result of the Covid pandemic and bad debt expenses were down which offset increases in payroll and health insurance benefits.
Our net loss attributable to common shareholders for the quarter was 10000 compared to last year's net income of 930 for the year ended 2020.
December 31, 2020, net income attributed to common shareholders was $2 9 million.
Compared to income of $2 3 million in the prior year.
Our basic income per share for the quarter was zero compared to prior year and our income per share for the year ended December 31, 2020 was 24, a share compared to <unk> 19 cents in the prior year.
Adjusted EBITDA from continuing operations as we defined in this morning's press release was 709000 compared to $1 7 million last year.
And for the yen for the full year adjusted EBITDA was $5 4 million compared to $5 2 million in 2019.
Yes.
Turning to the balance sheet, our cash was $7 9 million compared to 390000 at the end of 2019, our current receivables accounts receivable and Unbilled collectively were up $3 million, reflecting the increase in revenue primarily from the service segment.
Current liabilities were up $7 9 million, reflecting the increased operations in the service segment timing of payments in the current portion of our PPP loan, which was not forgiven at year end.
Our waste backlog was $7 6 million compared to $8 5 million at year end 2019.
Our long term liabilities were up $1 $3 million compared are primarily from the inclusion of the long term portion of the PPP loan, which is yet to be forgiven.
Our current debt.
Excluding debt issuance costs was $3 6 million with 427000 due to our primary lender PNC bank.
Under the term loan and $3 1 million due to P&C for the PPP loan.
Total debt for the year end was $6 8 million, excluding debt issuance costs with one 5 million due to our primary lender PNC.
And the terms for the term loan and $5 $3 million per the PPP loan our working capital was $3 7 million compared to 26000 at year end 2019.
Finally, I'll summarize cash flow activity.
Cash provided by continuing operations was $7 9 million cash.
Cash used by discontinued operations was 499000 cash used by investing activities was $1 7 million most of which was capital.
Pending.
Proceeds provided by discontinued operations was 118000, which is primarily for the receipt of loan payments related to the sale of our former Michigan property.
Cash provided for financing was $1 9 million consisting of the PPP loan of $5 3 million less our monthly term loan payments.
420000 are net payments to the revolver of 321000.
Our net payments to or to pay off a shareholder loan totaling $2 million and then other lease and financing costs of 800 per payments of $800000.
With that operator, I will now turn the call over to questions.
At this time, if you would like to ask a question. Please press star and one on you touched on phones, you may remove yourself from the queue at any time by pressing the pound once again that star one to ask a question.
And we will take our first question from Howard Boris Your line is open.
First of all let me congratulate you on achieving $100 million on revenue.
Mark Lubin.
On.
In.
Spite of Covid and everything else. So first congratulations and also been congratulations on joining the board of directors of Pro Genesis Hydro Genesis excuse me.
On.
So first of all and hopefully everybody in the family as well and everyone in the firm and the Covid issues.
No. It's good to hear from you know everybody is good we have zero Covid cases in the company right now which wasn't the case several months ago, but we are to zero in many many folks are getting vaccinated. So we're hoping to stay on top of that trend.
Congratulations Mark I'm glad to hear that that's critically important.
In your announcement today and I just wanted to address one issue.
And I am quoting from announced Moreover, we are rapidly advancing several initiatives within the treatment segment that we believe have the potential to significantly enhance our revenues, while establishing increased market share in large backlog for waste processing can.
Can you be a little bit more granular in terms of that comment.
Sure Howard, Yes, we're always we always have initiatives going on each one of our plans to upgrade and add new capability.
That would.
Expand our our inventories and our market share. So we have one on opportunity going on at each one of our facilities now we have a new program in Florida, putting in what we call a vacuum thermal desorption.
That will significantly increase our capability to take specific kinds of waste that they are.
Coming from D. A.
With limited competition.
That should be up and running by the end of the year at latest more like end of Q3.
And that's running very well on very very rapidly.
Continuing on the complete our construction program at DSI is going to give us more storage capacity and allow us to expand our classified waste.
Program.
Of which we have a good backlog that we have not received yet because we have done on the space.
In a classified area.
And then and then we also have expansion going on at our <unk> facility. Some upgrades going along with that for several procurements that we have out there waiting here on.
We have some minor modifications going on up in Richland. So altogether, you know I think that we could see.
On expansion.
To start realizing revenue in late Q3, and Q4, but really tee up 2022 four increased <unk>.
Receipt.
Along with those access to new technologies. We're also looking at we're also seeing.
Increased activity on the international front with several new waste streams being teed up for shipment.
And the next quarter or so we should start seeing some of that by the end of Q2 and getting some real sustainable waste stream internationally. So we're excited about the waste treatment side of the house. It has taken a beating as you know it.
It hasn't come back as fast as we'd hoped but we are seeing just in the last two or three weeks a significant.
Increasing shipments.
And notice.
Notice of shipments.
RFP activity is proposal activities.
It gives us a lot of optimism that we can be back to normal on waste receipts by the end of Q2.
Can you find.
Better.
Net financial opportunities rather than the general opportunities.
In terms of potential revenue and let's let's talk about third and fourth quarter and importantly, 2022.
Therefore, the quarters can be tough to predict maybe a million or two.
Three and no revenue impact on this year, but we're hoping between five and 10 million in additional revenue.
For 2022.
Base.
Along with a lot of other.
The positive trends, we're seeing on different existing capabilities like our water system are starting to receive some water now it.
Took forever to get that whole program rolling but it's going good now and were.
We're doing good on the water receipt side and processing side.
So between the V T D and the classified waste and you work I don't think $10 million is a big stretch to assume for 2022.
And thats without any of the day.
Opportunities that we've talked about in the past Greg That's correct. That's just net new waste receipts.
Last but not least but still in the same vein you've heard nothing because I've heard nothing on the Navajo issue.
Have you.
We have heard nothing.
Yes.
Other than that.
And we're supposed to be sort of thing task orders in any day kind of a thing so nothing about new task orders yet.
Again, congratulations to yourself and the team on a $100 million on revenue and that's all I have for the moment. Thank you alright. Thanks I appreciate it.
Once again, thank you Barak to ask a question. Please press star and one we will take our next question from Chuck Dickerson. Your line is open.
Dickinson that is thank you for taking my question here I wondered if you could talk.
In a little more detail or give a framework on how youre looking at translating or the opportunities to translate service work into additional treatment opportunities. I mean are we talking here about you go and you do some service work and you discover that there is treatable waste.
It's sort of a byproduct of the service you perform that happened to come about or is it or alternatively, a situation, where the customers say deal or whoever is.
Let's say they are so satisfied with the service work that you perform and if it's done reliably.
Then they come back to you and say by the way. We also have some treatment work, we'd like to give to you as well so how do you see that.
Net translation unfolding from service into waste treatment opportunities.
We do have several bids on several jobs I should say that have included extensive nuclear services work in the field.
That has resulted in shipment of waste to ourselves to process.
On the job up in Harvard Harborview Hospital for example.
We did the remediation packs away ship it to our our facility in Richland, Washington, and processed it and got rid of everything we're full service cut out a lot of inefficiencies it worked really well other projects.
We'll typically do the remediation and the waste may or may not require treatment in other words, if it doesn't require treatment. It can be shipped directly to <unk> disposal in a landfill. That's normally the larger volume of the waste. We have that's the case, but we are bidding on several jobs right now that does include some treatment.
And some processing.
If there's any way we can share.
Ship, something like large components of our facilities and do the dismantlement off site, we will do that it doesn't always afford that on opportunity.
But to answer your question most of the time, it's one or the other either doing the waste treatment, where we're doing the.
<unk> services and in the field, if youre doing the services they need.
Because services types of jobs Youre typically shipping the waste direct to disposal and it doesn't it doesn't have the opportunity for the treatment.
Overall.
But what we do what we do is where the real discriminator. It comes in for our company because we have the waste management people. The professionals engineers that we put on the services projects that are able to manage the ways to minimize treatment is necessary in the packaging optimized packaging. So that you can go directly to <unk>.
Poland and save money.
Okay great.
The other question I had was do you have a sense of what percent of your workforce in the field that has been vaccinated already for Covid and as that.
Sort of the key item to look at or is it more you have to look at vaccination.
Across all of your client base as well maybe I'll. This is academic come the end of May or June did you say things are expected to start ramping up there. So maybe maybe it's not a question that's really that important but just kind of a curiosity as to what percentage is already vaccinated.
Okay.
It would be just guessing so that we have not pulled but we do plan on pulling at some point just to see what percentage, we're talking about but we have not done that yet.
East, Tennessee here, where we have about a third of the company.
It's running around at 20% as a population.
And so I have no idea or where our folks are I don't know on my office here.
Much higher than that.
We have about 40 folks on our office.
On an administrative side of the house, but as far as the plant's got I'd just be guessing I have no idea I'm afraid.
Okay, but the waste receipts that you're starting to see trend up although not back to a normalized level, but starting to trend up a little bit in this month that may have some correlation I would guess to people being vaccinated.
That's correct I would've guessed I would assume that as well.
Okay. Thank you.
Thanks.
Yeah.
It appears we have no further questions at this time.
Alright.
I'd like to thank everyone for participating on our fourth quarter conference call as I mentioned earlier, we remain bullish on the outlook for the full year. We appreciate the continued support of our shareholders and look forward to providing further updates as developments unfold. Thank you.
This does conclude today's program. Thank you for your participation you may disconnect at any day.
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