Q1 2021 Perma-Fix Environmental Services Inc Earnings Call
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[music].
Our system starting today's program Please press star zero.
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Good day, everyone and welcome to the Perma fix first quarter 2021 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 and answer session. You May Register to ask a question at any time by pressing the star one on your Touchtone phone.
I will be standing by should you need any assistance. Please note that this call may be recorded. It is now my pleasure to turn today's program over to David Waldman Investor Relations. Please go ahead.
Thank you Jasmine and good morning, everyone and welcome to Perma fix environmental services first quarter 2021 conference call on the call with US. This morning on Mark Duff, President and CEO, Dr. Lou Centofanti Executive Vice President of strategic initiatives, and Ben Naccarato, Chief Financial Officer income.
Company issued a press release this morning containing first quarter 2021 financial results, which is also posted on the company's website. If you have any questions. After the call or would like any additional information about the company. Please contact crescendo communications at 21267110 to zero in on.
Also like to remind everyone that certain statements contained within the 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 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 U S Securities Exchange Commission as well as this morning's press release the company makes no commitment to disclose any revisions to forward looking statements or any facts events or circumstances. After the date hereof that bear upon forward looking statements. In addition, today's.
Discussion will include references to non-GAAP measures Perma fix believes that such information provides an additional measurement and consistent historical comparison of its performance a reconciliation of non-GAAP measures to the most directly comparable GAAP measures is available on todays news release on our website now I'll turn the call over to Mark. Please go ahead Marc.
Alright, Thanks, David and good morning, as anticipated revenues in the first quarter were impacted by the ongoing effects from COVID-19, but I'd like to reiterate that we remain extremely encouraged by the long term prospects for the company.
Although certain segments of the economy are starting to see a rebound as the pandemic has begun to subside, we are still feeling the impact, especially within our government business specifically within our treatment segment shipments have been temporarily delayed as the government has been focused on getting people back to work, but it's important to know this business has not gone.
Gone away to the contrary, we expect to benefit from the governments fiscal 2020 carryover funds. In addition.
2021 allocations that have been pushed out and should help fund an acceleration of projects within the treatment segment as well as the services segment.
Within the services segment, we achieved modest growth in revenue despite delays throughout the industry.
Evaluating bids and proposals and awards of Procurements also due to the pandemic. Nevertheless, we have begun to see return to normalization overall clearly we're disappointed in the impacts. These delays have had on our business, but we've continued to aggressively identify.
And pursue opportunities that align with our core competencies, specifically and waste management and radiological remediation in fact.
As I've discussed in the past our bidding pipeline is more robust than ever.
When developing four to five simultaneous proposals at any given time throughout the first and second quarter by leveraging the technical and management talent that have joined our firm over the past two years. Our teams have been working around the clock on these bids and opportunities in the past, we havent had the resources to concurrently bid on this number.
In size of procurements.
Considering the tremendous upfront resources required to evaluate and submit bids of the scale as a result.
We have an unprecedented number of outstanding bids that have been submitted and are awaiting awards. These bids are collectively valued in the hundreds of millions of dollars as I mentioned on our last call. We are currently forecasting about $100 million new procurements.
<unk> core values over the next six months alone.
Based on existing.
Qs that we currently hold.
And have recently won.
We anticipated projects that we've been informed of on the horizon.
We have also performed exceptionally well on our current projects, which gives us the client references and track record to not only win many of these new awards will also begin bidding on much larger projects.
As an example, several large deals procurements, including.
<unk> closure and the integrated tank this physician contracts.
Both of India, we have been recently published.
Which include requirements for comprehensive waste treatment solutions as well as end state contracting model, which support innovations and technology applications for.
For success of our contracts.
Importantly, these large bids with values on the $1 billion include aggressive small business contract requirements, which plays well into our strength.
Small business and most of these contracts go for over 10 years and total duration.
Including the option years.
As most of our investors are aware perfect continues to support the department of energy and development of our supplemental technology and support a safe and compliant treatment.
Of low level waste from the 56 million gallons of tank waste located at the Hanford Reservation Lula.
On the level waste represents 90% of the inventory of the rayovac materials in those tanks in hand for the day.
Demonstration project is referred to as the test bed initiative or Tbi.
Although the debt name has been changed the number of times in recent months, we still refer to as the Tbi program. This program has slowed down over the past few years with a change of administrations and with shifting priorities within the department.
And more importantly, where most recently with the COVID-19 pandemic Congress is still interested in semi.
As demonstration project and the associated initiative.
And the programmers funded.
In the FY 2020, federal budget for $10 million to implement phase II of the project. We completed phase one of the project with the treatment and disposal three gallons of tank waste back in 2017.
Phase two will include extraction shipment transportation of 2000 gallons of tank waste to a perfect northwest facility located.
And rich on Washington.
About 15 miles from the tanks with subsequent processing.
And disposal.
In a permitted landfill.
In Texas.
In regards to <unk>.
Status of the program do we continues to develop a.
R&D and day permit with Ardine permit as a research development and demonstration permit.
For a review of approval by the state of Washington Department of oncology to enable the implementation of phase two as we've stated in the past we're assuming.
Assuming we're successful on this project the project can be transformative overall to a perm effects.
Significantly.
We remain optimistic on the <unk> approval process will be completed.
In Q3 to receive shipment of the 2000 gallons around the first of the year in 2022 D. We in Congress have been supportive of the Tbi program as a supplemental option.
Two other alternatives that are also being considered.
Perfect. We will continue to work with <unk>.
And the regulators.
And our associated congressional delegate delegations to ensure common understanding that.
This technology.
On the value of this technology brings to the end.
The value of the technology overall in our supporting facilities and what they can provide to the department.
We remain optimistic.
The new body administration will recognize this value as well and see how it supports the overall Doa cleanup mission.
Recent events in the news.
Only accelerated pressure to begin treating these waste streams with a renewed sense of urgency and we believe our technology provides a very safe and cost effective solution for near term processing.
The Hanford tank waste.
We truly believe anticipate debt as.
As we come out of the COVID-19 pandemic, we are well positioned to aggressively grow.
Both sides of our business and we're already starting to see things pick up as we look at our pipeline in June and beyond we expect to be fully back on track by Q3.
And begin to resume strong organic growth moving forward again as we have in the past few years in the meantime, we've invested heavily on our capabilities on our facilities.
We have a highly scalable infrastructure, we have a first class team in place to take us to the next level in regards to our staff and resources.
Perfect continues to maintain our four treatment facilities, including our newest venture the environmental waste operations center or as we turn on the <unk> <unk>.
Okay to here in Oak Ridge, Tennessee.
We've just begun to generate revenue there and offer an expanded array of services to our clients for dismantlement of large equipment as well as the bulk bulk processing of very logical materials.
With our state of the art treatment plants, along with our bench of key technical staff. We believe we have the foundation for growth that can be realized in the next few quarters.
In terms of our facilities, it's worth emphasizing.
The significant turns on.
Intrinsic value of these plants.
I would it would be nearly impossible for any company to replicate our facilities and technologies, let alone get them permitted.
And if they could it would likely cost in excess of $50 million for each one of those plants and take years, if not decades to get permit.
And we now have four of these facilities strategically located around the country each with their own technologies and unique capabilities to support our overall client base.
I truly believe that the future is brighter than ever and we look forward to driving significant value.
For our shareholders.
And one final note I'd like to formally.
Welcome.
Kerry Dougan to our board of directors carriers, one of the nations Premier Environmental policy experts, having held senior roles in the government as well as in private in academic and nonprofit sectors just.
Just to highlight a few of.
Carries many accomplishments. She has previously served as deputy director for policy to then Vice President Biden and Obama Biden Whitehouse. She has held senior roles in department of energy as well as he also served as Biden campaign are pointing to.
To the buy in Santos climate change Unity task.
Task Force.
We will be providing a more detailed announcement with a full bio that encourage you.
To review in the press release later today.
I know carrier shares our enthusiasm for the work we're doing here at <unk> and we're really excited and looking forward on working closely with her.
Leveraging her unique relationships on all levels of government to advance our mission and.
In addressing some of the nation's most pressing environmental challenges, particularly associated with.
Radioactive ways.
On that note I'll now turn the call over to Ben who will discuss the financial results in more detail Ben.
Thank you Mark.
I'll start with revenue our total revenue from continuing operations for the first quarter was $23 1 million compared to last year's first quarter of $24 9 million, a decrease of $1 7 million or six 9%.
The decrease in the revenue was entirely as you mentioned mark due to the drop in our revenue in our treatment segment.
Totaling $2 1 million as we continued to see the delays in the waste shipments attributed to COVID-19 pandemic.
This decrease was offset slightly by a small increase in our revenue in the service segment of 341.
As our projects in California, Washington State and internationally in Canada continued to operate.
Seeding prior year's revenue.
Our cost of sales.
$20 8 million for the first quarter compared to $20 2 million last year, that's an increase of 557000 or two 7%.
Our costs. So goods sold were up modestly despite our drop in revenue and this is due to a shift in our revenue mix lower treatment revenue did result in lower regulatory in material and supply expenses.
So we had a shift in our revenue mix in our service segment, which resulted in higher subcontractor expenses and lower labor and travel.
Gross profit for the quarter was $2 4 million compared to $4 6 million in 2020.
So this drop in gross profit of approximately $2 3 million was the result of this revenue mix change, where we saw a 68% of our revenue come from the service segment compared to 62% last year.
The lower revenue in the treatment segment.
<unk> for <unk>.
71% of the drop in the gross profit.
Emphasizes the fixed cost burden debt our treatment plants have when revenue goes down.
In addition, we did see a change in the mix within the service segment, which accounted for the remainder of the gross profit drop.
Project work as we have.
<unk> discussed many times is generally more competitive and brings lower margins than the treatment segment.
We did see that evidenced in our drop in our gross margin from 18, 7% to 10, 2% this year.
Our G&A costs remained consistent at $3 2 million versus $2 9 million.
Last year.
A small increase of 277000.
Primarily relates to bid and proposal activity, where we used outside consultants and other internal labor to increase.
To increase the support for the heavy bid and proposal activity.
Our net loss attributable to common shareholders for the quarter was $1 1 million compared to last year's net income of $1 2 million.
As with the gross profit or waste shipment delays in our treatment segment had the biggest impact on this negative profitability swing on.
Our basic loss per share for the quarter was <unk> <unk> compared to an income per share of <unk> 10 last year.
Our adjusted EBITDA from continuing operations for the quarter as defined in this morning's press release was a loss of 522000 compared to income last year of $1 9 million.
Quickly turning to the balance sheet, our cash on the balance sheet was 713000 compared to $7 9 million. This is entirely due to timing.
Accounts receivable.
Seats of certain accounts receivable projects.
Our accounts receivable.
We're up 10 $5 million on again due to this timing issue with.
Receipts from two of our large contracts.
<unk>.
No on Bill our Unbilled revenues or receivables were down $5 2 million again due to timing of billing and also the reduction of revenue from the service segment compared to Q4.
Our current liabilities were approximately 520000.
And that is strict.
Strictly timing related our backlog at the end of March was six two.
Million down from $7 6 million at year end and down from eight 9 million.
In March of 2020.
Our total debt at the end of the quarter was $6 7 million. This excludes debt issuance costs of which $1 4 million is owed to P&C.
$5 $3 million is due to the PPP loans, we have which remains on forgiven.
And finally, our cash flow activity.
Our cash used by continuing operations was $6 5 million.
Our cash used by discontinued operations of 149000 or cash used for investing in continuing operations was 360000, most of which was cap spending.
And our cash used for financing was 223000, representing our monthly payments of our term loan.
106000 payments to our finance lease liabilities of 117000.
With that I'll now turn the call over for questions. Thank you.
At this time, if you would like to ask a question. Please press the star and one on your Touchtone phone.
Remove yourself from the queue at any time by pressing the pouchy once again that Istar and wanted to ask a question.
We will pause for a moment to allow questions to queue.
And we will take our first question from Howard Brown. Please go ahead.
Your line is open.
Thank you Charlie.
Mark and Lew I hope that all of you on your families on.
On the men and women of the organization on well and COVID-19 is that on.
Is that.
Realized.
It is.
We appreciate you calling on yes, everyone's doing well we have no.
COVID-19 cases in the company right now so we've got most of them behind us on many many folks from vaccinated at.
This point, so we're starting to feel like we're coming out of it as a company. Thanks Howard.
Really glad to hear that.
Hi.
Good.
Several press releases.
Particularly last week regarding the leaking tanks.
For.
Specifically is the CPI program.
The potential solution to that problem.
I'll address the timing question Howard D. We have communicated their plans their approach or any timing.
For addressing the newly discovered tank that.
That we know of the only information that's available is what we've seen and you probably have as well as well as other investors in the press.
What I can say is that the perfect technology, our facility, which is fully permitted.
And our approach for a low level of stabilization.
Coupled with the.
Supporting the retrieval and pretreatment systems that have already been designed and fabricated for the tanks.
Do represent a near term.
On safe option for removing and transforming transferring.
Disposing of that lower waste from Hanford tanks, specifically for the B 109 tank.
While we haven't seen all of the analytical data yet for this specific tank.
We have reviewed.
The data that's in the public domain and it does look favorable for this exact application in other words, our technology can treat the ways from this tank.
For disposal quickly and at a <unk>.
Significant cost savings.
To reduce.
The overall environmental risk and additional potential. In addition, the Tbi program that has been demonstrated also provides.
The opportunity to to open up space in the double shell tanks.
So that the adult day, who doesn't need to build another one so so overall it is a potential solution, but we have not specifically talked about it yet.
Tbi option.
<unk> implemented.
What kind of numbers when we're talking about particularly compared to the same thing.
<unk>.
<unk>.
I would just assume it doesn't open for many many years.
Yes.
To move forward with our technology as a solution.
First need.
To support a day and the state of Washington to.
To make that happen, if we were able to establish a partnership with them.
To support near term application.
Estimate that the waste can be retrieved.
Pre treated to make low level waste and we that's done at the <unk>.
Syed.
The extraction process and then we could treat and stabilize the waste in original plant.
On disposal of it in Texas and that would take from the point of contract initiation It will take probably two.
12 months to 18 months, so it's not a significant amount of time, our estimate for doing all after stabilization transportation and permanent disposal, Texas would be in the range of about $200 a gallon.
And that does not include.
The cost for retrieval pretreatment, that's just from when we receive it until we get it into disposal on Texas.
The press release.
<unk> mentioned that that tank to be 109 tank.
It was approximately 123000 gallons. So you can do the math there but as.
As far as what the plant or the <unk> plant costs are in the past that's been published.
But it's in excess of $1100 a gallon. So you can do the comparison I am not sure everything Thats included in that number.
Thats operation if that's consider of consideration of the construction costs are what really is included in that but as far as we're concerned it's about $200 a gallon and this approach.
As I said, we'll provide a permanent solution.
And as it would provide a lot of value as far as a faster application and food and void further environmental.
Risk.
So.
Just on the numbers, which are quite obvious why is the department of energy is not moving forward with this alternative.
However, I can't speak for <unk>, there is a lot of complicated considerations.
In regards to Hanford as a whole.
Obviously, many may that that we're not sensitive to the public or even in our business.
So a lot of things are juggling politics funding priorities existing strategies. So I really can't answer why its not moving forward as an alternative theory is aware of our capability that they are very aware of tbi. They fund it's funded through do we have great relationships with.
The local office for <unk> as well as headquarters we've talked on frequently so they are aware of the technology. We're aware of what it can do so.
We remain on standby and.
And have offered support deal we were on the timing is right to implement.
Our technology has to offer.
And to supplement the current strategy would be a floor as well so.
We have obviously have.
Tremendous confidence in the solution.
Demonstrated that works in phase one of the two the Tbi program.
And.
We've been doing is kind of work for 30 years Howard as you know.
We just celebrated <unk> anniversary last month.
In addition, how we're also on I know you know this too.
Academy of Sciences.
And other independent scientific groups.
Have recognized routing, which is the basic premise of our technology they've.
They recognize it as a viable solution.
And on alternative or a supplement to vitrification as a whole so.
We're hopeful that we will evaluate this as an alternative but right now we haven't received.
On your confirmation that they want to move on anything, particularly associated with this new tank leak that's been in the price.
This is a new frankly, coincidently, who for years as I understand it.
Is that a correct statement.
And Thats My last day as my understanding yes. This is not the first tanks. Louis that's for sure and they'll continue to leak and.
So yes. This is not anything new it's just another.
Data points from what I understand.
Mark Thank you and thanks, all the best Thank you again.
I appreciate it.
Thank you.
If you would like to ask a question. Please press the star on one on your Touchtone phone, we will take our next question from Ryan Hamilton. Please go ahead.
Good morning, everyone.
Good morning, Good morning, Ryan.
Could you could you touch a little bit on your your backlog and maybe breakout.
Services and treatment.
Sure Ryan and Ben Ben is located in Atlanta, So we're not sitting next to each other but for the most part our services is just under $15 million I believe Venezuela sitting right now overall on <unk>.
Closer to seven on the treatment segment is that right Ben.
Yes, the number that I gave.
Ryan was just the treatment backlog and marks right the services backlog is.
About.
Sure.
Yes about four.
I think $14 $15 million range.
Per services.
And is it is your backlog pretty sticky as far as those.
Those contracts cancel or not.
What are you what are you seeing there.
No theyre not theyre, not really cancel boneless daily per services.
There.
They're finishing up projects. So in other words, we have.
A couple of projects in California that are ongoing Canada as well as many smaller projects.
Around the country.
And those are going to continue to roll.
Until they until they are done for the projects are completed.
So there'll be limited.
Changes associated with those overall.
And that number shouldnt move much it can always move some we could finish some projects early.
And.
Sometimes the clients changed.
Change the scope a little bit here and there that could happen.
But for the most part they are pretty solid.
We're pretty comfortable with those through Q2 and into Q3 as well.
Sounds good and just that and I'll add debt the treatment backlog is waste on hand, it's a true on earned.
Number so it's kind of we've already received the waste and it's awaiting processing.
Okay I appreciate the color.
Kind of along those lines.
Backlog completion and as business continues to expand and improve after COVID-19 are you seeing any other kind of constraints that may prohibit growth.
And the way on completion.
No the only thing I guess I said Brian.
It's one thing we Didnt anticipate we knew they were going to generate a lot of waste during COVID-19 things just aren't happening. If you go to some of the side to talk on the sites is still very limited.
Visitor access on site level on subcontractors. So there's just not a lot happening it's starting to pick up now.
<unk> got a plan for getting to full operations through.
Through the summer I am not sure exactly the details associated with that but what really has been a surprise is how many bids haven't been awarded and Thats, what we really counted on more awards more task orders.
To be awarded now, but since we're not on the field. They don't want to mobilize the field isn't they're not there so.
That's continued to be pushed out other piled up they haven't been cancelled haven't been awarded in most cases, a few little ones here and there that have been but for the most part the bulk of these of these procurements are all waiting for the government and commercial organizations to make announcements.
It's got to start happening soon and I'm, hoping before the next call.
Three months that we've got.
A number that we've been able to announce some wins and some backlog by the July timeframe.
That's great could you could you touch a little bit as far as what youre seeing in the bidding environment are there are there larger numbers of bidders is it being driven by price or or what you guys can actually complete and a certain time could you could you kind of touch on that just a little.
Yes, Ryan it's a good question.
On the services side typically.
Four or five bidders on most of these they're all different there's different teaming relationships of different skill requirements.
We'd been on several that have less than that some that have more so.
So it's all over the place on the service on house as far as costing.
On the waste treatment side of the house, we have seen.
Slight reduction in cost.
In other words, we that'd be more aggressive as very little waste out there.
Don't have a lot of competition, there or does it really only two other alternatives.
Typically to go directly and disposal.
So we've seen a little pressure there, but only on a few waste streams overall.
Still some way streams out there that have no place to go except to us and we offer unique solutions for those.
And we've maintained our pricing on that pretty flat overall.
The competition is pretty much the same I do think.
To our competitors, we've been able to get more bids out as I mentioned, we have umbro machine for producing as proposals and integrating our technical staff from projects into the proposed development process. So I'm really proud of our team we worked around the clock as Ive mentioned too.
Weekends and nights for months getting these bids put out they're just now starting to slow down on the next couple of weeks, but we expect task orders to start coming in through a variety of IQ contracts in.
In the next few weeks as well, which are much smaller but faster turn quicker starts so that will support our summer and hopefully support the.
Back to normal part of it as well so.
This is a little bit of difference and costing that not a significant amount overall.
Great.
COVID-19 aside are there any other any other issues regarding winning new business is there any kind of competitive disadvantage that you are seeing I mean, I wouldn't think there, but just on an ask.
No nothing that really speak of Orion.
Overall.
I can't I can't say, there's any any real change one thing too right. It's difficult to address that question because we haven't seen the awards yet.
Like as I mentioned, we've done a lot of bidding.
But we haven't seen a lot of awards, so statistically I can't say.
How we've done or Howard who else is doing relative to addressing your question certainly by the next call. We'll have a good sense of how to answer that.
That's for sure.
Starting to see.
Proceeds from all your hard work.
The team so.
I guess I just have one more could you maybe touch a little on the international business, what youre seeing as far as volumes there.
Yes.
I think I, probably mentioned that last quarter, we're really excited about the international opportunities we received.
Our first shipment.
First early large shipment from Europe.
In January and we have more coming behind it there's been some.
Vacation processes that are required for that type of work.
To verify procedures and provide QA.
On <unk> in regards to what we're doing.
And that's all been worked out once that's all done then the gates kind of open. So we expect to start seeing a couple of million a year.
As a baseline.
Shipment from particularly or specifically from Europe.
And we also expect to see some from Mexico and continued.
Shipments from Canada, So we.
See that market opening up for us we have.
Our our incinerators are very unique often richland and they can handle.
And provide a really high value.
Waste treatment services to Europe, and it's not as crazy as expensive as you might think to ship. It there. So it works pretty well and once we start doing more and more I think that Europe is going to see that hey, it's cheaper to ship it over there treat it.
And then you have to send what you treat back.
As.
Including the residue and everything that has to go back over there, but it's on a stable form that they can store very cheaply.
And as volume reduced up to 90% or more so it's.
There's a lot of value on it and I think we'll start seeing that happen more and more with European clients as well once the word gets around that this is a viable option.
Sounds good I appreciate you taking the time to answer my questions Alright, Thanks, Brian.
Once again that is star and wanted to ask a question we will take our next question from.
Chuck Dickinson. Please go ahead.
Hi, good morning, guys.
Could you also.
Clarify for me Ive written down here you said.
Intrinsic value of the plants I guess, that's for treatment facilities now with the Ewok you thought.
Because it would be very difficult to replace will be something like $50 million. Each on average is that correct.
Yes, Chuck that's a really difficult.
Estimate, it's really difficult to estimate the value of those assets.
We wanted to highlight that in this call that it provides the foundation of our future and keeps us.
On what stable having those assets.
It's.
Nearly impossible to replace these plants.
And.
It's very difficult to put a real specific asset value on each plant and the permits that go with the plant. The ewok is not a $50 million plan at this point.
We're going through a special lease to own arrangement with a former owner we do have a permitted offer radar to materials processing.
And are pursuing other permits to give us more flexibility to support Oak ridge in Mercury processing specifically.
But so it's not really at a $50 million replacement value yet compared to the other ones. The other ones are super robust with lots of different technologies.
And.
Permits that let you do that.
Types of things I can give you the flexibility you need.
And in the systems are all there.
You walk is not quite to that level, yet as the other three.
So maybe maybe rather than.
The dollar amount.
It's more on academic.
Exercise on exercising theory to say what that time to take to build the plant to get it permitted and approved to have the patents and the technologies and technical personnel to do it.
Maybe just as important debt how long it would take to do that is such a significant barrier to entry that youre talking about five day five to 10 years to even.
Consider getting into this business. So it's really just a message, saying hey, this is a really difficult business to get into on its probably not going to happen.
That's exactly the message Chuck is the barrier to entry is very very high.
<unk>.
It bodes well for the future of the company.
Okay.
Allocation.
Rollover from 2020 to 2021 and the fiscal year. The government ends in September. So we're about three quarters of the way through 2021 would that money if it doesn't come into 2022, given what's going on with COVID-19, Although youre, starting when you say to see things picking up maybe by June certainly in the summer it looks it looks better.
Could that money from 2020 that does not roll in or if it does not roll into fiscal 2021 couldn't roll into fiscal 'twenty, two and likewise could any unspent money allocated per 2021.
Roll into 2000 to 2022, but yes, that's a great. That's a good question Chuck Yes, you can typically and I am not expert on this by any means but certainly.
The department can allocate their unspent money from 2023.
Through the rest of this year.
Now what happens with.
The backlog or the excess in 'twenty one.
I assume it works the same way once they pass on budget and assuming they don't go into continuing resolution, which comprehends everything.
They can spend that in 'twenty, one as well.
But yes.
Waste is backing up for example, we're assuming very few shipments.
From the plateau contract at Hanford.
And again theyre going through that transition up there that's slowed down tremendously.
And there is continued delays in hanford shipments expected until.
Another couple of months at least.
And so that's hurt us that's all backing up and they'll make those shipments were confident they will try to catch up from what they've missed.
And if they do that they will start shipping on a significantly and will add double shifts if we need to to keep up and.
And third and fourth quarter. So we're kind of hoping for that I am committed to it.
And I can't commit to it either.
We're hopeful that <unk>.
Once they start shipping again and handford like you usually do that will catch up along the way.
So as an investor should should I be focusing on the $7 million a treatment backlog or should I be focusing more on the sort of on standard backlog. That's out there that's not in hand necessarily but thats been pushed to the.
To the right I guess Q1 expression.
It's difficult for me to answer checked, but I would say that.
$7 million of backlog will keep us working and keep revenue go on to generating an.
On EBIT generating through the quarter.
Its insurer insurers that we've got revenue coming in.
At this point in time, we're typically about.
When we look about three months ahead overall, so for that $7 million backlog that we should be burning through that in the next three months to what I'm, saying.
Yes, so if I was on investor looking on this kind of thing I would be trying to understand what the what the future is looking like in regards to waste generating and as the government getting back to work in the field to.
To generate these waste that we that we process.
Okay last question you standard or been stated that the PPP loans remains unforgiven are you still on the process of trying to get that forgiving.
We are with that.
Our entire application for forgiveness was completed in October.
As many of you know they advertised 90 days to get that forgiveness done and we've heard nothing we make attempts to find out information the banks or the.
On the banks have seen a lot of <unk>.
Smaller $2 million loans get forgiven.
Very few of the larger ones, although I have been hearing lately a few bigger ones are starting to move so it may just be on.
Matter of they were more focused on tolling.
Building out the new.
Dollars and less on the forgiveness, but we're.
Mystic in the next three to six months that will happen.
Okay. Thank you.
Once again that is star and wanted to ask a question, we will pause for a moment to allow questions to queue.
Yes.
Jim are you there your line is open.
Yes, Hi, guys, Jim Godfrey how are you doing today.
Doing good Jim.
Good day.
Really excited from the additional color that you've provided a day.
Looking forward to the press release as you refer to later on the day regarding a new board member there certainly.
Welcome to <unk> it sounds like it makes a lot of sense from.
Many perspectives and that's a really solid solid professional to add to the board. So that's wonderful.
Couple of things.
Maybe even taking it a step further than you already have up at Hanford.
There has been of course, the overwhelming news Lilly less amplified, but I think equally important and wanted to get your color on April 27.
The office of environmental management put out the release, the Hanford move a step closer to tank waste treatment and to that extent talking.
Certainly above.
C on a platform isn't that really necessary of wherever you get toward large volume deliveries. This at least this phase of the construction is finally completed and how does that.
Affect your your vision as far as volume potential going forward, if things come in either direction.
Well, it's a great Chris Great question Jim.
Mentioned in.
These the talk and then I think I think I mentioned it in the follow up question from Howard.
About.
The whole extraction process and the.
The fact that we are we're really talking about treating low level waste, but when they pump it out of the tank it's actually.
Pretty high.
It's a much hotter than usual and requires.
Treatment.
When it comes out of the tank to remove the COVID-19 from the waves from the liquids that are coming out.
That's the what we call the pre treatment and that is actually done by what you referred to as <unk>, which we referred to as the <unk>, which is the tank side cesium removal system. So that is a critical component to have that system fabricated as I mentioned in the script and.
And up and running and it is they are using a similar system in Savannah River as well it works very well, it's a great design.
And it's a great system the use of that system.
Really tees up.
The ability of on.
Of the perma fix treatment approach.
To be able to handle this way so in other words, you put your put that system into a tank and the waste that comes out of it is suitable for shipping over to our facility to treat.
And send it to Texas so.
A critical component that hasnt been there yet.
And but.
It's the volume that it can pump can treat.
And the ability for that to support our treatment program is one step closer to large volume transfer of waste at two <unk>.
Either to <unk> or to the <unk> plant as well.
And.
It provides doughy with those alternatives. So it's important step forward to get that that fabricated and installed and running.
Right and then to the extent that.
You just mentioned the two ways, we can gain share there's really nobody else right now permitted in claims approved if everything continues to obtain final permitting to treat the waste, we're really kind of in a unique situation here arent really about the only option that is really ready to go right now.
The decision being made to start treating some of those waste on larger scale provided we continue on with the successful demonstrations with EMEA.
Yes.
The only options outside of the plant in other words. The <unk> facility is the current strategy for <unk> and we stay on behind them on that so that that process has to be up and running.
In December of 'twenty three.
We are a supplement to that.
That plant will run from what I understand it about 1 million gallons a year.
We can do do that right away as well and expand to several million gallons a year.
So we would supplement that.
In case that doesn't operate on schedule or.
Views it is important to do that.
To increase the volume of waste, there retrieving and processing.
We're right there for that so.
We'd like to say that we are.
Supplementing their current strategy.
For the 2023 timeframe, but for this tank my understanding is this tank would not go to the floor the infrastructure in place to send there again I have verified that just from talking to friends on site.
That would make it even more of a prime candidate for a potential off site treatment because of the infrastructure to go to the floor for the where that tank is actually located is not in place at this point so.
It would be a great option to send it to us or do we saw that as a viable option.
Great Great and so we've also and we haven't touched on it yet.
We have this.
Interesting joint venture with Veolia and this new deal net vitrification system.
I guess on where we're awaiting final permitting now and how does that affect things as far as the overall offerings that we're able to offer is that facility and also.
Are you seeing expanded opportunities with xeon over perhaps add additional <unk> facilities in our other facilities as we move forward.
Yes, <unk> again doesn't wont address the tank waste at all zoom out with Veolia is a great rate.
And ship, we're waiting for the permit through the state.
Our general manager and our executive VP for waste operations are working at very hard with the state.
And to get that through.
Basically it starts out as a treat ability study, which we've completed with the way we have already run through there and trying to get debt that permitted. So we can start receiving more waste.
From Pacific specifically from Idaho on a certain way. So we are waiting for that to happen. We are hopeful that they can happen before the end of the year. It has been delayed it's difficult to get permits through the state. It takes a long time.
<unk>.
Sure.
Working with them on a regular basis meeting with a monthly to try to push that through we've talked to would be only by other locations to other processes that one is the closest to the permitting side in other words.
We've since it's at our site, where we have a permit we've been able to treat a good bit of waste through it but we're kind of we're pretty much stuck until we get that approval from the state.
To be able to move forward.
Sure sure but of course, you wouldn't on win.
Through all of this great process, unless you had some reasonable assurance that you'd be able to get into growth still though that's right. Just on pure Bureau credit credit process and you're working through is that correct.
That's correct Yep, Yeah right. Good good now I mean.
Turning to <unk>.
Couple of other things here and I don't want to take up all the time on your call, but one of them is another thing that hasn't come up in board of directors decided to not continue with the end effector poison pill and I'm just wondering.
I know you probably have fielded many inc.
<unk> concerns when we use the line.
Poison pill without really just kind of on olive branch from the board.
Shouldn't be read into it too much we're not shopping the business or anything like that but just wanted to give you the platform to tend to talk about that a little bit in <unk> and <unk>.
Really.
We're making great efforts to unlock the hidden value. That's here and this is kind of an olive branch again to extend that effort is that fair to say.
Well Jimmy.
Shouldn't read too much into it either but I will say this is that the poison pill was justified by the board based on the conditions of the company at the time.
And there's a lot of factors that went into that and a lot of considerations a lot of thought that went into that.
Those conditions have changed.
Yes.
At least several of them have to the point, where the board looked at the need for the poison pill and recognize the fact that because as conditions change there was no longer justifiable.
And that they could.
Not renew it.
And I guess.
That's pretty much what happened with that.
Sure sure.
And I'll just finish up on two final.
Final point.
One you talked about the tremendous quality of the group of professionals that you've assembled to complement who is already there over the last two years and I know that on your website. There are several job openings, you're really confident here as far as your ability to attract and build this org.
On the Asian, with engineers, and physicists and some really deep highly talented and.
On the industry experienced professionals, where do you see that growing EBITDA came to assume that we basically have the right mix on the professional within the organization now and going forward. We have just a huge amount of capacity without really having to invest.
<unk> on in terms of Capex in all of our facilities are ready to go on the capacity is astronomical the brainpower is astronomical and given the bidding.
Currently involved with cancer really come out and say that guidance on it by 2022, and Thats going to Mark a new paradigm and permanent Brooks and that our growth is going to continue the range proponents are in place and we should be flowing a lot of promise range of the bottom line is the volume.
<unk> get to this next the paradigm of volume for the company on an overall is extremely exciting.
From a embrace that and share those thoughts and maybe just kind of offer any other color that you might for what I just shared.
Yes, Jim.
As an investor myself.
The market.
I've spent a lot of time myself looking at stocks and things on the thing that I think that everyone always looks at as the leadership team and if you've got a strong leadership team you'll be able to get through the rough times in and chart a vision for the future that is exciting and represents growth and growth of your stock and that's really been on what our focus is.
Ben the last three years is to is to attain that type of talent integrate these guys and women into the.
The management team.
And.
Really chart out the innovation lineup with where the market is going what types of waste can we generate what type of field projects are going to come up.
In our mind.
Largely got the radio illogical strength to in other words all of our projects for the most part have the Rad component. So we built an expertise around that range component to do.
Final releases, what we call pre release of.
License terminations for radiological facilities.
And we really look at ourselves as a leader in that we've done almost 100 now most companies have done very few as far as projects that have been released back to the public or back to private domain.
And we've really focused on that because we see that happening constantly and those types of project conclusions.
Coming more and more necessary and we're bidding on two or three jobs right now the emphasize.
Closure.
And so that's what we've been focused on have built our team around it.
We've grown very well around it is really sad Sans me and the management team that this COVID-19 thing.
As puts us a clamp on as our momentum.
And I have made.
Difficult. These two quarters, particularly as projects have ended and new ones haven't started.
We lost on momentum for a bit, but we're really confident that's going to come back we'll see looking at the project list that are out there that our clients have that we've talked to them about there's plenty on the horizon. Once these task orders started coming through our IDI cues.
We will see that that momentum come back with the management team that we've got so yeah, we're real excited about that.
Didn't have that management team I wouldn't have nearly the confidence I do that though we're going to get there on <unk>.
<unk> sectors.
Being able to be.
Flexible and resilient to get through this pickup that we're in right now.
Great.
Moving to you provided today is as wonderful market I can't say, no, but especially I know you shared I think from the first day.
Kind of a couple of hundred Bucks, a gallon potential at Hanford and and the ability to if things go our way.
Several million gallons annually, so youre really creating.
Creating a vision for the company that currently is on $100 billion in sales call it that.
It's many hundreds of millions of dollars in sales potential as we look into the future with margins that are dynamically better than what we've ever experienced so there's such a tremendous vision then.
Thank you enough for sharing that vision and I wish you. The best as you continue to execute and move towards those long term objectives and thank you for your time.
Great. Thanks, Jim.
You bet.
It appears we have no further questions at this time I will now turn the program back over to our presenters for any closing remarks.
Alright. Thank you guys I would like to thank everyone for participating in our first quarter conference call as mentioned earlier, we remain extremely bullish on the outlook for the full year. We appreciate the continued support of our shareholders and look forward to further updates.
As developments unfold. Thank you.
This does conclude today's program. Thank you for your participation you Robert.
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Yeah.
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