Q3 2022 Perma-Fix Environmental Services Inc Earnings Call
[music].
Good morning, ladies and gentlemen.
Welcome to the Perma fix third quarter 2022 conference calls.
This time, all participants have been placed on a listen only mode and the floor will be opened for questions and comments after the presentation.
It is now my pleasure to turn the floor over to your host Mr. David Waldman, Sir the floor is yours.
Thank you and good morning, everyone and welcome to Perma fix environmental services third quarter 2022 conference call on the call with US. This morning are Mark Duff, President and CEO , Dr. Lou Centofanti Executive Vice President of strategic initiatives, and Ben Naccarato, Chief Financial Officer. The company issued a press release this morning containing third quarter 2010.
On to 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 2126, 70, 11020, I'd 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.
And Reform Act of 1995 and include certain non-GAAP financial measures all statements on this conference call other than statements circle back or forward looking statements and 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 in the company's filings with the U S.
Securities and Exchange Commission as well as this morning's press release the company makes no commitment to disclose any revisions to forward looking statements or any facts events or circumstances. After the date hereof that bear upon forward looking statements. In addition, today's discussion will include references to non-GAAP measures.
<unk> believes that such information provides an additional measurement and consistent historical comparison of its performance a reconciliation of the non-GAAP measures to the most directly comparable GAAP measures is available in today's news release on our website I'd now like to turn the call over to Mark Duff. Please go ahead Marc.
Alright, Thanks, David and good morning, we are very proud of our managers and staff there to work extremely hard the past few quarters to continue our journey to reach the growth we established before COVID-19 and position the company for the growth trajectory our shareholders expect specifically, we continue to realize improvements in our performance.
And then Mick impacts continue to subside, which was evidenced by our results over the last two quarters I'm pleased to report we achieved a 17% increase in revenue to $18 5 million for the third quarter 2022 versus a $15 8 million.
Core for the same period last year.
In addition to our revenue growth gross profit increased by 38%.
Margins increased from 14% to 17%.
First of all our services segment, we reached full operational status on several projects that have been delayed due to the impacts.
From the pandemic.
Which contribute to our revenue growth within our segment our services segment in the third quarter of 'twenty two as we stated previously the federal government agencies, including D. D D and the EPA have been slow to procure new task orders due to the pandemic. However, these projects have not gone away in fact, the federal government has begun announcing.
New projects.
It had been on hold as a result, we realized an increase of procurements in September of 'twenty two.
Which we believe will continue in the fourth quarter of 'twenty, two and Moreover, we're encouraged by the bidding pipeline with many of these contracts expected to be awarded over the next few quarters.
Typically we have over $100 million in defined opportunity is targeted to be released in the next few quarters that directly align with our core competencies and this is on top of the $39 million.
Funded nuclear services contracts already in place, which bodes well for the balance of this year and the following year.
There is significant pent up demand and we expect to benefit from improved budgets.
Carrier spending from last year as well.
Turning to our treatment segment, our revenue remained stable despite delays in waste shipments from certain customers at our Florida facility due to hurricane Dorian.
Excluding the onetime request for equitable adjustment under a government waste generator contracts in the third quarter of 'twenty. One our treatment segment revenue would have increased by approximately $1 3 million or 17% in the third quarter of 'twenty two.
Edition, we're seeing improvement in all our waste receipts overall, including our new clients in both the commercial and international waste markets, which has increased 46% overall to $9 1 million. In addition, our waste treatment backlog is approximately $7 1 million.
We're also seeing strong demand for waste treatment capacity as evidenced by a steady increase and request for proposals or rfps.
We received.
For bidding within the waste treatment segment.
With over 80.
As requested.
Excuse me for over.
<unk> over 80 bid request in the third quarter of 'twenty two alone compared to 60 in the first quarter of 'twenty two this past year.
This is a result of our efforts to broaden our client base into commercial utilities oil and gas industry as well as other industrial markets.
Another example is our new vacuum thermal desorption system.
Where we completed startup in Q2, we're now starting to see strong demand.
For the system services with receipts.
From several new clients, including government and commercial clients within the oil and gas industries.
At the same time, we remain highly encouraged by the outlook of the Testbed initiative or <unk> also known as the low level waste off site disposal project.
Support of the Hanford tank disposition mission.
The Tbi initiative, which is based on grouting technology will continue to be a focus of perfect moving forward as a means of saving tens of billions of dollars in taxpayer dollars as well as eliminating significant carbon emissions and reducing the schedules.
Hanford cleanup actions.
Routing has been recognized as a preferred supplement to the current deal with strategy based on that.
<unk> strategy, which is currently based on vitrification.
Tank waste at Hanford through their new facility called the direct feed low activity waste treatment plant or D of law.
Which continues to experience delays and startup.
Our Tbi program continues to move forward, albeit much slower than anticipated.
Quite continued pressure on D. We have from the U S General accounting office G O to make progress as stated in the report.
Recently published in the near term reduction of the tank waste inventory through grout and could accelerate tank closures I'd say, if the government tens of billions of dollars, while reducing the risk to the environment.
<unk>.
And we can do this or this grouting today with our existing capabilities. Moreover, the National Academy of Science continues to request a deal would expedite initiatives for grounding as well as the.
It stands now D. We stated in <unk>.
September industry conference in D C.
Their intentions to submit the <unk> permit to the state.
As currently planned within the next six months.
Of this government fiscal year or by the end of our first quarter. This some middle will trigger review and approval by the state of Washington.
And support shipment of the 2000 gallons.
As well.
Also we've seen a continued support by Congress, including a bill recently introduced by Senators Paul in Assam and September of this year to push deeper into making progress on grouting specifically.
Off site low level waste disposal program.
Perfect maintain these grabbing capabilities today at our perfect northwest facility.
Which is in Richland, Washington, REIT near Hanford and.
And as permitted and outfitted to safely in a completely treat up to 30000 gallons per month with the ability to expand to well over 1 billion gallons annually, while dramatically, reducing our cost compared to vitrification.
In addition to the Tbi initiative, our teams continue to work very hard on securing transformative opportunities.
And when that could lift perfect to a new level of revenue and income.
These opportunities include participation in large procurements are such as the $45 billion integrated tank disposition contract.
And the operations on site mission support contract value.
Over $3 billion.
Both of these opportunities our department of energy procurement that we are participating in as a team member however.
Both of these are completely aligned with our strengths and our innovations and radiological protection.
And in waste management.
We are well positioned for several additional upcoming procurements and initiatives as well.
With the U S Army Corps of engineers as well as the U S Navy ship decommissioning program.
Several other dealer sites.
That are going to procure the next few quarters.
Turning back to our financials for a moment, our adjusted EBITDA improved to a loss of 374000 compared to a loss of 798000 in Q3 of 21 last year. We believe we've weathered the worst of the storm due to COVID-19, and we expect improved activity from the federal government to procure new task orders as well.
Very soon.
To further enhance our competitive position.
And the market, we have made several adjustments to our budgets for the next year trimmed general and administrative costs and to lower our overall indirect costs. These adjustments will reduce our overall operating costs, while continuing to meet our ESG objectives and increase our competitive edge overall, we've witnessed.
Solid year over year revenue growth and saw a meaningful improvement in gross margins based on current backlog and have identified opportunities over the next several quarters.
We basically do I remain optimistic that we can achieve these growth goals and stability.
We've realized prior to the pandemic.
At the same time, we continue to invest in our capabilities and facilities, how we build the solid foundation of growth and a highly scalable infrastructure. As a result, we believe we're in a great position to take advantage of the pent up demand.
As we continue to increase revenues.
The benefit from the predicted cash flows.
Within our services segment and high incremental margins within our treatment segment.
Additionally, qualifying for the employee retention credit helped with offsetting some of the losses incurred from the pandemic as a result, we believe we are well positioned for the balance of 'twenty, two and we believe we're sufficiently capitalized to execute our business strategy in order to achieve profitability and positive cash flow in 'twenty three.
We believe this foundation, coupled with expansion of our treatment capabilities increased bidding opportunities and improved federal budgets will continue to support our ambitious growth objectives.
That note I will turn it over to Ben who will discuss the financial results in a little more detail Ben.
Thank you Mark.
I'll start with revenue.
Our from our continuing operations for the third quarter was $18 5 million compared to last year's 15.8 million, that's an increase of $2 7 million or 17%.
Revenue from in the revenue improvement came from the services segment.
With our two large projects finally being offer a fully operational.
At this time last year, they were just beginning to ramp up.
In the treatment segment revenue was flat with prior year, However last years.
Third quarter included a one time.
First for equitable adjustment or RBA.
Totaling $1 3 million when you exclude that it provides for a $1 3 million increase year over year.
In the treatment segment as well so we saw growth there as well.
Year to date through September 30th revenues below prior year by $1 2 million or two 2%.
This drop in revenue comes from the services segment.
Sure.
Revenue was down $1 9 million versus last year and.
Call. The first couple of quarters of this year were down due to the delays in the two large projects and that was the main reason for the shortfall.
Our gross profit for.
For the quarter was $3 1 million compared to $2 2 million in 2021.
This improvement.
Came this improvement which totals about 846000 came from 1 million $1 $4 million improvement in the services segment.
Resulting from both increased revenue and increased profitability on the projects compared to last year.
Offsetting this was a reduction in treatment segments gross profit of 520. However.
If you exclude the impact of the <unk> I mentioned earlier treatment segment gross profit.
Improved year over year by about 766000.
For nine months ended September 30, gross profit was $7 6 million compared to $5 5 million last year.
As with the quarter this increase came.
From the services segment with improved margin from projects.
Offset slightly by lower gross profit in the treatment segment and again due to the impact of the RGA has with the quarter. If you exclude the treatment segment showed an improvement of about 609000.
Total G&A SG&A for the quarter was $3 9 million compared to $3 3 million in the third quarter last year.
This increase of 581000 relates primarily to increased payroll travel.
The fees and stock compensation.
For the nine months ended September 30, SG&A expenses were at <unk> 11.
Million compared to $9 $6 million in prior year.
Higher costs in marketing and payroll and benefits fees stock compensation and other general office costs were the main drivers.
Our net income attributable to common shareholders for the quarter was $664000 compared to last year's net income of $1 4 million.
Included in this year's net income is the retention employee retention credit Mark mentioned earlier of $2 million and included labs included in last year's was a tax benefit adjustment of $2 4 million related to the release of a tax valuation allowance.
Our total basic income per share for the quarter was five <unk> compared to income per share of <unk> 11 and prior year.
And our year to date basic loss per share at this point is <unk> 16 compared to income per share of <unk> 27 in 2021.
Our adjusted EBITDA from continuing operations for the quarter as defined in this morning's press release was a loss of 374000 compared to a loss last year of 798000.
Adjusted EBITDA year to date stands at $2 2 million compared to a loss of three last year.
Turning to the balance sheet, our cash on the balance sheet was $1 9 million compared to $4 4 million at year end, reflecting the current year's losses capital spending in that maintenance.
Our waste backlog at the end of September was $7 1 million, which is consistent with $7 1 million at the end of the year at $7 $1 million in September of 2021.
Our total debt at quarter end was $1 $3 million, excluding debt issuance costs, which is primarily owed to PNC bank.
Next I'll summarize our cash flow activity.
For the year, our cash used by continuing operations was 334000 or cash use by desktops is $559000.
Cash used for investing in continuing operations was 922000.
And that's primarily capital spending.
And finally cash used for financing was 694000, representing our monthly payments on the term loan and capital line of 375000 and payments related to finance lease liabilities and other debt of 297000.
With that operator, I'll now turn the call over to questions.
Thank you ladies and gentlemen, the floor is now open for questions. If you have any questions or comments. Please press star one on your phone at this time, we ask that posing your question. Please pickup your handset listing on speaker phone to provide optimum sand quality. Please hold while we pull for <unk>.
<unk>.
Thank you.
First question is coming from Howard <unk> with Wellington Shields, Sir Please go ahead.
Just a few questions Mark Ben Lu I hope everybody is well with.
The family and with the firm.
Okay.
Anything new with the EPA contract pushing out of the house.
Okay.
Yes, what you're referring to Oh, good morning, Howard it's good to hear from you.
The EPA.
Patrick you are referring to is the abandoned uranium mine contract.
And it was the IDI cues, there's basically three bidders.
We submitted.
Want to say.
In Q2.
And we were told when we submitted that was going to be a rapid turn on announcements and startup. It was a fully funded project and we've heard nothing from the EPA.
And.
I wish I had a better answer for you is as falling into one of those many contracts that we've been on.
That have just slowed dramatically from.
Virtually for lethargic.
<unk> processes within the government.
So no indication plus or minus or anything about that about that whole procurement, but we are it's not canceled still happening it's.
Its just stuck in the procurement process and frame.
Can you you mentioned possible contracts with the department of Defense in particular, the Navy can you give us more.
Granularity as to what kind of shifts how big the contracts or how long they last.
Yes.
A lot going on right there right now that they've been slow to define specific shifts with one exception that is the enterprise the.
The enterprise, which most people have heard of as large aircraft carrier that they are going to have commercially be commissioned.
And <unk>.
<unk> laid that out.
Great detail in their elas or environmental impact statement, including their procurement approach. So we know that's coming out.
Meeting with team members right now.
In great detail.
And we're anticipating a draw.
Raft RFP sometime.
Sometime in the early summer probably a request for information maybe between now and then.
And then a final RFP with within about a year.
It does.
Project is.
<unk> is valued at about $650 million I would anticipate that <unk> will be well over $1 billion with everything included.
There's going to be a good bit of competition, but.
As you know.
We are in this business in a big way doing one of the few.
Current.
Radioactive of rheological contaminated.
Decommissioning projects right now at normal.
That project is going well with good relationships with the client we're making margin.
And we're very well positioned for being a key team member on the enterprise when it comes out next year.
As I mentioned I think.
A few calls ago the.
The Navy has announced in a report.
I believe it is a J I'll report actually.
We have 48 ships coming out for decommissioning in next four or five years 12 of those are nuclear they.
They have not defined what's coming up next.
And outside of the enterprise. So we'll have more detail for you, but I think the navy still working through the priorities on which ship is going to come out next.
Let me address the tank disposition.
Contract.
My understanding is to be released at $45 billion contract a first quarter of 2023.
Is that a fair comment.
That is a fair comment how it works.
And talking to you.
And.
And also in our recent.
Conference.
Two a few minutes ago in September .
We said that they're shooting for.
Haven't done by the end of the year.
It may be close so we expect that late December early January .
If I can be facetious at the end of this year as opposed to another year. It is thats correct.
We've been we've been waiting and getting older.
And also my understanding about the vitrification plant and doing some interesting investigation. This is going to be fueled by diesel fuel to the tune of six seven or eight railcars everyday isn't that an EPA issue.
C B.
Basically.
Fuel oil being a dirty fuel.
It is their design basis to heat and power those vitrification units with diesel.
It's been.
Designed from the beginning.
So is it is an issue. So I was just going to get much more expensive.
So significant.
Carbon emission issue there is all types of other consideration associated with that.
That's one part of our or the selling point for grouting as it is almost zero carbon emissions.
And there's no heating even involved.
So there's a lot of advantages associated with that.
That are really important.
Jordan.
Build a $15 billion facility they want to see it operate their position has been very.
Local that they want they don't want anything to distract them to get it operational right now it is being delayed again and we're optimistic that that based on the J O push as well as the National Academy of Sciences push.
And recently as I mentioned in the notes recently.
Congressional push with the senators.
Drafting a bill.
To push it.
Eventually do you always going to going to make it a priority to supplement the <unk> facility with a grounding program.
And the Congress is going to want to start seeing progress as well.
We could certainly.
Start the closure of some of the tanks.
Ken right now.
In parallel with the <unk> startup process.
We're putting a lot of pressure on for this work and our congressional delegations.
And everything we possibly can to get there.
That visibility there and hopefully.
We will be shipping the tbi waste and then fall following that quickly.
Operational mode to start closing tanks.
For discussion purposes, let's assume the contract is let out.
Our first quarter.
There is a.
30 day hiatus, where the.
Ah contract can be appealed is that a correct statement.
Yeah, it's not exactly 30 days I think is a 10 day.
A protest period or something like that 10 days after debrief. So it depends on when you get your debrief and it gets that works but.
Certainly not an expert on that part but to answer your question. There is a deep period.
And a protest period for that to transpire.
If theres no protest and you begin transition so one could assume that it'll be several months before.
Before transition could be started if there's no protest.
And then all bets are off if there is a protest in regards to how long it might take.
To secure the contract can start transition.
So, yes, we would expect that to happen.
In Q1 and probably into Q2.
Some things that the contract is awarded.
Would you either winning or losing in terms of your team.
<unk> business in terms of revenue.
One could assume that if it's awarded around the first of the year.
That.
Whoever wins would start generating revenue in the probably the June timeframe, maybe may in regards to transition.
And.
I can't remember.
However, I believe it is 120 day transition.
And then your full bore after that so.
Q3 really be seen in the revenue.
For the winning team if there is no excuse me if there is no.
Protest.
Alright.
Let me.
Back away and come back after the other questions are asked thank you. Let me just if I could Howard let me just expand on ITV C a little bit.
John .
Our investors to know that.
Our growth plans, our infrastructure, our budgets and expectations are all <unk>.
Have all been developed irrespective of that award for the tanks, while that award obviously be.
Extremely transformative to us.
We are not awarded that.
We do have our plan set up.
Assuming we haven't so in other words all of our marketing initiatives all of our other growth initiatives are all moving along so we're hopeful that that irrespective of when we're going to be seeing the growth that we saw in.
Prior to the pandemic.
We've been very intentional on that.
And we're very optimistic about that.
Overall so.
We are selected Theres only two bidders.
And but I just want folks to know that we are well positioned if we don't continue with that growth strategy.
And.
We're making every effort to make that happen as well so let me ask Ken to add on to this discussion.
Assuming your team loses.
Is there not a significant number of pieces of the business that you will get over time.
Even if your team loses as it sounds.
Exactly exactly right exactly right Howard specifically for example, the <unk> facility, which is which will be operated by this contract. So when the deal flow facilities up and running it will transition from construction over operations.
ITD see contracts will will fire it up and operate it.
And it'll generate when its full capacity.
Several million gallons of waste a year or different types of waste one of those is about 1 million gallons a year.
Effluent liquid that we would likely be the ones that treat again, we don't have a contract signed however, it's it's a low level waste water.
And that's what we do.
They're just off site.
No one could speculate we would be treating that waste and there'll be other waste as well from ITC that we anticipate to be treating.
Discuss those opportunities with.
Incumbent contractor now.
So yes to answer your question.
We expect a significant amount of work from that operations as well as the other operations that are ongoing.
For the incumbent tank contractor whoever wins, the new one irrespective of whether we were awarded or not.
Alright, Thank you I'll get back in line. Thank you alright, that's good luck. Thank.
Thank you Mark Dan Loeb. Thank you.
Thanks Howard.
Okay.
Once again, if there are any remaining questions or comments. Please press star one on your phone at this time.
Our next question is coming from Ross Taylor with Ari's investment partners. Please go ahead.
Thank you.
Gentlemen, I'd like to go over a number of kind of initiatives. When you talk about obviously the tank project tampered is a huge.
<unk> for the company.
But I'd like to come back to that in a moment before that talk about the various others scale wise you got youre initiating in Europe , you've got the Navy you've got these other projects.
Dollar wise.
Not asking you to tell me how many dollars you seen each but kind of an order of magnitude how important are these others relative to each other and relative to handsets.
Yeah Ross.
I'm glad you asked that because I didn't want people to have a perspective of Hanford hampered has a high visibility and a very quick impact we do have a number of other initiatives that.
Our following in line with that for example.
We've just submitted a bid.
Italy.
That will be between $40 million to $50 million.
And you put 40 50 million euros over a seven year period waiting to hear on that.
Should be announced in the next several months.
And we will provide good solid backlog with good margins.
And really leverage our plant plants here in the U S as well as the potential as we mentioned before with Westinghouse in the UK.
And.
Open to some markets in Europe , as well that will come directly from that.
We have the enterprise I mentioned, which I'm.
I'm, just speculating Ross, but that would probably be about $100 million.
Of opportunity for us out of that $1 billion.
And.
Very sustainable workload as ISS.
We expect.
The enterprise to be decommissioned from 2025 to 2029, so basically four or five years beginning of 'twenty five so.
That process is going.
And they are moving forward with that.
<unk>.
Just be something that would be awarded in the near term.
Other bid we put in for <unk>.
Refer to the Oss.
That's also an ongoing procurements, we can't provide any.
Details.
But.
We are providing a significant waste management solution to that.
And that would.
At almost as much revenue as the tank closure would and that one is as I mentioned ongoing in procurement right now, but should be awarded next summer or next Q3 timeframe.
So we have.
About a half a dozen other jobs that were putting together right now and then.
$10 million to $20 million range. Some we've already submitted some we're working on right now with clients directly.
We are making.
Inroads on the commercial decommissioning side as well, which is a big opening market for US which is just beginning to start so I can't speculate on what the values might look like in the next several quarters.
But a lot of other other opportunities that are coming along he is going to be kind of flat for a while but <unk> is picking up.
The Corps of Engineers I'll also ask for big jobs coming out of Buffalo District.
Those range from.
From 10 million to $150 million so.
Lot of other good jobs coming that are directly aligned with radiological waste management, which is not a lot of players involved in that so we should win our share of those.
We're optimistic that that will have a good backlog outside of Hanford.
Can you walk me right to my next question, which is the competitive environment when Youre looking at things like the enterprise are you looking.
And Hanford you wanted to.
How many legitimate competitors are there for what you would be doing for example in the enterprise how many of the players are out there and also do you think the Navy.
They've got a lot of ships sitting around at this stage there.
Decommission a fair number of ships as you've mentioned before including nuclear ships.
How many.
Do you think could or do they intend to be decommissioning on a run rate you said, 25% to 29 for the enterprise.
Doubt that would be the only nuclear ship they'd be decommissioning in that period, so looking at the competitive environment and it capabilities.
How how competitive business I mean are you competing against one or two other firms are you competing against 35 other firms that compete in their space.
Yeah right right now.
The <unk> report a defined about a dozen ships in the next five years 48 months and it was that was that was written a year ago I think it was.
So the clock is ticking on that so there's a good backlog overall besides the enterprise.
Sam Rayburn, it's coming I got the sub and there is a couple of other that they've mentioned are in the queue.
Art procured yet but to answer your question specifically.
There's two other primary firms that have done the two other ships that have been procured.
There are in this space however.
Arms that have done.
Nuclear decommissioning in the past, we will be entering the market.
We've met with several of them.
There's a number of what they call ship breakers.
That are in this market, who do non radiological ships most of the time and scrap scrap them.
They've done a number of aircraft carriers in the past.
Down in Texas, and the ship breakers of have done the ships for dollar each.
And made good money off of scrap so there's a lot of competitors out there however to answer your question specifically.
There's a lot to a rate logical ship in regards to how you do it and decontamination.
Nuclear waste rheological considerations training in all kinds of other things.
And facilities that might be required as well so that limits. The overall market significantly so to answer your question.
And this total speculation Ross, we don't know since we haven't been through no one's been through this big big procurement like this yet, but we would anticipate 3% to five teams.
Putting bids together on this.
It will be it is anticipated raws to be fixed price task.
And so not everyone's going to have the stomach for 1 billion.
Fixed price decommissioning projects, so I'm sure that that will limit some folks as well.
It was going to want to.
Dampen the risk overall.
Would you be limited to playing with only one team in this process are your skill set the new capabilities unique enough.
You might find more than one team wanting you on it.
Typically it doesn't work to be on multiple teams, particularly if you have an innovation.
Or.
Skilled workforce and a project description.
Like we do in this situation.
Youre so intimately involved in the development of the bid.
And as so much proprietary information relative to costing and technical approaches and that type of thing.
It is very self not I won't say never but very seldom do we see some won't be.
Core non exclusive.
And so it would not anticipate that to be the situation.
Okay, and so you said basically if you look at it.
There could be 12 ships in the next five years, including enterprise.
You're likely looking at the fact that there'll be more than enough business in this area for everything.
I would certainly anticipate that.
There's a start up here that has to start becoming very obvious that we haven't seen a lot of yet.
I don't know, if it's COVID-19 issue or priority issue within DMD.
But.
Once it gets rolling.
Then youll start to see them moving ships out for commercial decommissioning.
Quickly so yes to answer your question I do think though could you target.
Little bit more about how you see Europe coming together, it's obviously in a new area of initiative for you guys. It seems.
Seems to be a pretty interesting one.
You've talked about Italy, but can you talk about the competitive environment, who is doing what you guys doing.
In Europe right now.
How big.
Powerful to that market decrease.
It's still unfolding at this point I will say the U K specifically is.
Really start to.
To move radiological waste out of storage.
With the desire to.
Stabilize it and destroy it for disposal.
Very few treatment plant in treatment opportunities treatment capabilities.
In Europe , as a whole and.
If there is there's a few here and there.
They have that capability, but they are booked.
So thats why its opened up to us so much as to have.
Our capabilities over here, that's permitted that we could.
And we built an infrastructure, which has been a big investment for us to ship over here processed and shipped back quarters, a lot of permitting a lot of logistics.
Capabilities and partners.
And we've proven that we can do it efficiently.
And safely and completely.
So.
As as reactors coming offline.
As a cleanup initiatives start moving forward.
That we're starting to see that grow.
And it's taken us awhile to get our capabilities.
Capabilities out there so that potential clients know, who we are and what our capabilities are we've made those investments which has supported our growth.
This year I think we'll close the books, probably around $2 million in international shipments, but thats going up significantly for next year, particularly if we win the other job, but even notwithstanding that.
When.
If we are selected we do expect that number to go up by at least twice maybe three times so.
It's really starting to move based on where Europe is.
In their cleanup process, which is way way behind the U S by probably 20 years behind the U S. Maybe 25.
Interesting for them to be behind on an environmental issue, yes. It is.
Listening to all of this talk I'm really struck by the fact that you're talking about a lot of long term program. It's a lot of four year five year type programs programs that are going to evolve to.
To be <unk>.
AIDS or along though quite honestly, obviously hanford has the potential to be almost a perpetuity type.
Scenario.
Are we really waiting for something like canceled the fall before we see consolidation in the industry.
I don't have a good answer for that Ross overall, I think there's a few consolidation moves that are occurring here and there but not much.
And.
One reason to do.
Demonstrating this is just.
My opinion.
They are spreading some of the wealth around further awards. If you look at the awards that have been made.
And the.
The players that are involved I think D. C is important too.
And sure there is a number of competitors each one of the big boys that are bidding on these big jobs have something different to offer.
In regards to keep people and infrastructure and innovations in cultures and those kinds of things I think the we want to maintain that and obviously, we don't have any control over over the overall market in regards to M&A and that type of thing but.
As long as it keeps spreading around here and there I think that there'll be four or five big players maybe six.
That.
Our well positioned to play in the market.
And maintain the.
The bench that you need to have to win these big jobs.
I don't see it changing a lot.
At the big level at the smaller like our level.
There has been some consolidation movement in regards to waste.
And I think that.
That will continue.
In the future with healthy companies.
I know when approached you guys.
Well, we can't talk about that specifically, but we're always for sale. We are we're a public company.
Our focus has been.
<unk> on.
Getting our EBIT back up into positive numbers after the Covid impacts if you look at our our 19 'twenty numbers, we grew by 50% revenue year for two years and we were looking really good for us.
The remaining years, and then Covid Covid had a big impact on us. So we're just now getting a feedback under as we're expecting 23.
Look a lot better and to get back on that track.
And then I think it will be more attractive.
Certainly it's no secret that.
$100 million.
Market cap company has.
A difficult time.
With making the EBITDA, we would have.
Relative to being larger or being private or being a bolt onto somebody else. So.
But our focus clearly is just on.
Getting our EBIT back positive again.
And it does seem pushed to anyone who knows me knows I take no comment.
From the asset unless otherwise Tonight.
I think what I'm hearing you say is that you guys that really the core business having been derailed.
The train is being put back on the tracks and willing in the neck.
Yeah, we should have visibility just from really.
Powerful top and bottom lines and free cash flow drivers that they might not be generating free cash flow by the end of 'twenty.
Green, but we should have a really good view on the power they are going to produce as we move into 'twenty four and beyond.
I think that's a safe statement Ross, Okay, and then I think you guys are at.
It's been tough for you guys are doing a great job and I think we're kind of sitting here with the market.
His focus.
Staring at its toes and not looking out very far but it strikes me as you look out much.
Much on the horizon at all.
Nine months, you're going to see a totally different.
The company that you see today.
I hope so.
Yes, definitely well keep up the good work keep up the thing you've done a great job opening up opportunities that weren't there before and it looks like pretty much you should be able to do nicely given the setup I see thank you. Thank you. Thank.
Thank you.
Thank you.
Thank you. Our next question is coming from Bill Moscowitz with Heartland Advisors. Please go ahead.
Yes, good morning, Mark congratulations on profitability.
Thank you Bill it's good to hear from you.
And also increased sales I might've missed the backlog in treatment backlog of $7 $1 million in service is how much.
39.
<unk> 39.
And what was it in the second quarter.
48, 48 right Ben.
You can look up real quick.
Yes, it was 48.
So.
With all of this RFP.
Action.
Putting potential how come our backlog is not growing on the service side.
Well.
We look at our last couple of quarters Bill.
And.
In regards to services, we have submitted I don't have the numbers in front of me of dozens of purples and.
There's a few that we submitted that were not necessarily.
Radiological waste for example, just decommissioning job or demo jobs that were not squarely in our core competencies and notwithstanding those we haven't lost much we've submitted a bunch of bid I wanted to say.
We have.
Almost $400 million in bids that we've submitted in the last year.
It's maybe closer to $500 million now some of them are skewed by the Hanford.
Take out the big Hanford jobs, and it's I'd say, it's probably about 100, I'm estimating $100 million and projects.
In our core competencies.
Not been awarded and that's what's that's what it's been difficult we haven't.
We haven't.
One were lost.
Projects in Q3.
And with the exception of the May talks I mentioned.
And so we're waiting on a lot of procurements, we awarded that's why our backlog Hasnt moved.
Okay.
We haven't been able to have our press release go ahead go ahead, okay well.
So possibly.
Could be tremendous upside here.
These contracts every ever left is that a fair statement.
Either either left or once we've already submit that awarded yes, so either led by Rfps or award Okay fantastic.
So Ben I'll also alluded to.
Cutting costs and your focus on profitability EBITDA and all that good stuff. So.
Whats the goal how much.
What do you expect to cut.
The coming year.
This year.
Okay.
Well.
How much we should get into we're going to be careful because there's the competitive.
Well, let's let's let's put it this way.
Let's just put it this way so roughly for the quarter you did we did $9 million in service and we did $9 million in treatment roughly round numbers is that a level that we can continue to make money on it going forward.
We have to we have to grow.
Goal is to get to $10 million in revenue in the waste treatment segment.
A total of.
$60 million in revenue for annually for services of $100 million is there a sweet spot when we make good money $100 million, we did before.
But to answer your question and reductions of SG&A reductions, we have we have a very well defined plan, let me just say it.
It's to reduce.
Several million dollars in SG&A cost.
Through 'twenty.
And that will put us in a position where even if we don't grow bill to $100 million.
Will it will see our EBIT to get quickly into the positive.
Range.
Okay and Thats.
By the end of 'twenty, three Youre talking a couple million dollars SG&A costs.
Correct is that what I heard you say okay. Good.
Alright.
So do you think that.
When do you expect service to get back up to <unk>.
$15 million a quarter.
Well our goal is to make sure were there by the end of the year.
Which is $25 million a quarter by the end of 'twenty three but.
It's difficult to say because it gets back to that by the end of 'twenty two into 'twenty.
No.
We expect to be tracking.
$25 million a quarter by the end of 'twenty three so without.
But again to answer your question it depends on the reward of of your first question is when are they going to start awarding these pits and like I said, we've got all these bids outstanding that are already been submitted.
Several have said that they plan on awarding for the end of calendar year and again this is not the hanford with the other ones.
So if we are.
Our successful on a few just a few of those where there with.
With $30 $39 million in backlog.
We'll really pretty much run through the year, then we need the $20 million in awards.
For revenue in 'twenty two.
Which we just win our share and they make the announcements we should be there.
Okay.
Alright, well congratulations on a movement in the right direction and certainly all shareholders are.
I think just to see sustained profitability.
It's been a long long road, yes, we appreciate your patience okay. Thank you.
Okay.
Yeah.
Thank you.
Sir there appear to be no further questions in queue. So I'll hand back for any closing comments you wish to finish right.
Alright, Thank you I'd like to thank everyone for participating in our third quarter conference call. We remain extremely confident in the outlook of our business. We appreciate the continued support of our shareholders and we look forward to further updates and developments as they unfold for the next quarter. So thank you.
Thank you ladies and gentlemen, this does conclude today's conference call. You may disconnect. Your lines at this time and have a wonderful day. Thank you for your participation.