Q2 2023 Perma-Fix Environmental Services Inc Earnings Call
Greetings and welcome to the Perma fix second quarter 2023 earnings conference call.
At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation.
If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad. Please note. This conference is being recorded I will now turn the conference over to your host David Waldman Investor Relations.
You may begin.
Thank you Paul Good morning, everyone and welcome to Perma fix environmental services second quarter 2023 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.
<unk> second quarter 2023 financial results, which is also posted on the company's website and do you have any questions. After the call I would like any additional information about the company. Please contact Crescendo communications at Q1 26711020, I would also like to remind everyone that certain statements contained within this conference call maybe deemed forward looking.
Statements within the meaning of the private Securities Litigation Reform Act of 1995 and include certain non-GAAP financial measures. All statements on this conference call other than statements 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 state.
These risks and uncertainties are detailed in the Companys 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 <unk>.
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 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, everyone. I'm pleased to report that we are back on a solid growth trajectory and have returned to profitability. Following the impact of the COVID-19 pandemic.
Continue to realize improvements in our performance and are regaining the momentum we had prior to the pandemic.
As evidence of our turnaround we achieved a 28, 7% increase in revenue to $25 million for the second quarter of 'twenty three versus $19 five for the same period last year.
Importantly, we've also achieved sequential growth.
Revenue to.
24, 5% compared to the first quarter of 'twenty three.
Revenue increased both year over year and sequentially with our treatment services segment together the growth in revenue reflects the.
Aviation of several new projects one in the early part of 'twenty three.
Support the backlog in both segments and provide growth opportunities into 'twenty four.
Listen to our revenue growth gross profit increased by 20 by 56, 6% and gross margins increased from 14.82.
218%.
Within our services segment, we were recently awarded two new contracts that are expected to start in the third quarter of 'twenty three and we believe further will further expand our backlog. The combined value of these awards is estimated to be over $8 million for the next few years, but our front loaded over the next 18 months with opportunities for expansion along the way.
These awards include a task order project now from the U S. Army Corps of engineers in support of their facilities reduction program as well as little war as a team some contractor in support of the Los Alamos National Lab.
For Department of Energy both of these awards leverage our core competencies, including characterization remediation and disposition or houses or materials and waste management.
We also commenced work on awards granted earlier this year that have now begun to generate revenue and have helped to offset the prince denim a key projects.
We will begin to wind down in the fourth quarter. We also continued to develop new proposals and have realized significant increases in activity within both segments, including the U S. Navy. The U S Army Corps of engineers as well as several other activities.
The deal with sites and ongoing initiatives with our international and commercial clients.
Within our treatment segment, we witnessed an increase in volume with strong waste receipts during the second quarter, which provides us a solid backlog for our plants and improved visibility for the balance of 'twenty three.
This was a result of increased waste shipments from.
Do you we too are eat walk facility here in Oak ridge throughout the second quarter, along with steady sales from our industrial waste programs as well.
We expect to see a steady improvement in waste receipts and an increase in project work from existing contracts and new contracts and bids submitted in both segments that are still waiting waiting for award announcements.
At the same time, we're rapidly advancing several initiatives that we believe have the potential to significantly enhance our revenues and our long term backlog.
Got a few delays in award announcements these growth initiatives have remained on track with a 3 billion dollar D. We operations insight mission support contract referred to simply as the O S. M S.
Tied to the recent.
Portsmouth D N D Award.
And is due to be announced any day.
The I T D C contract tank contract closure excuse me the C D C tank closure contract.
Quite an unusual procurement cycle, including an award to our competitor with a later determination ruling that the awardee was ineligible for the competition due to noncompliance with the governments systems for award management requirements.
Lee referred to as the same dot Gov system as a result.
<unk> now has two primary options, which could include awarding a project to our team or Rebidding. The contract for a third time through a new procurement, we anticipate learning more about the D. We decision for this initiative in the third quarter of this year.
The JRC award and as for Italy is due to be announced in the third quarter of 2003 soon after the European.
Folks are complete their August holidays, and get back to work with.
Which we're anticipating to hear something in the September timeframe.
Receipt of this award will provide a foundation for long term growth within the European markets and opened several opportunities to support existing Howdy IQ contracts held by <unk> in the U K and strengthen our relationships for waste treatment in both Germany and Croatia.
Opportunities are expected to provide sustained receipts beginning in the next several quarters, providing a combined annual revenues our.
Estimated in the $10 million to $20 million range.
The desperate initiative or Tbi program also known as the low level waste Offsite disposition project and supported do you eat Hanford tank waste disposition mission continues to progress.
The middle of the art D&B permit from D. A way to the state of Washington regulators was completed in the second quarter and following their upcoming public comment.
Period and approval by the state will allow D. A way to begin to extract the 2000 gallons of waste from the tanks for the phase II grounding demonstration.
Dissipated to be later this year.
The Tbi program was recognized by D O as a potential supplement.
To the Vitrification mission to provide a solution for the 59 million gallons of tank waste stored on the Hanford site.
Perma fix to maintain these grabbing capabilities today, and our perfect northwest facility and.
Richland, which is permitted and outfitted to safely and completely go out up to 30000 gallons a month with the ability to expand that capacity to well over a million gallons annually, while dramatically reducing cost risk and schedule as.
As compared to the Vitrification program alone.
It is important to note that our perma fix northwest facility offers the local or regional option for grouting.
The only one the only option for regional or local grouting tank waste.
The other options to ship untreated waste out of state for grouting.
Suppose, though which is defined as the higher risk alternative and the recently approved environmental assessment and the recent where documents.
In the meantime, we've progressed over the past two quarters and our strategy to maximize the value of our waste stream offering in support of the department of Energy's Hanford closure mission.
Towards that end, we recently entered into an alliance with the local 598 pipe Fitters Union and the Tri cities to provide a labor.
Support for our routing offering for the tank program. We believe this partnership increases the value of our offering to the Doa through our labor availability.
And our labor stability for the Grouting program when it reaches an operational level, while providing a treatment option that can accelerate the reduction of the environmental liability in the region. We consider this as a big opportunity with a local 598 as the waste receipts increase on all of our Hanford waste programs like coding the default program, which.
It appears to be on track for late 2020 for startup of the vitrification plant.
It's worth noting that the deal flow facility achieved a major milestone last week when it successfully heated.
21, 100 degrees Fahrenheit and it's.
Testing phase.
The waste that will be produced from this therefore facility is estimated by idea would be to be over 8000 cubic meters annually and it will begin to be received at perma fix facilities. Upon hot startup of the plant as I said currently projected for late 2024 as.
As I've mentioned in the past the volume of this waste would more than double the production of all our plants combined on an annual basis.
Overall, we continue to see slower than usual procurement cycles and difficult isn't with government clients and getting projects awarded despite funding levels that remain unspent. However, the return of Workforces across the D O.
And other government agencies, we see optimism that these procurements will continue to increase in activity that we saw at levels prior to COVID-19.
Turning back to our financials for a moment EBITDA in the second quarter of 'twenty three improved to an income of $1 $5 million compared to a loss of <unk> 4 million for the same period last year. We also returned to profitability after climbing back from the pandemic over the past three years, we achieved a net income.
474000 in the second quarter of 'twenty, three compared to a net loss of $1 4 million in the second quarter of last year at the same time, we continue to invest in our capabilities and facilities. We have built a solid foundation for growth and a highly scalable infrastructure as we continue to increase revenues we expect.
Benefit from this predictable cash flows.
From our services segment.
The high incremental margins within our treatment segment.
So to wrap up we remain optimistic that 2023 were realized continued growth in both segments as we expand our market base and develop strategic teams to optimize win probabilities for upcoming procurements, while we continued to realize impacts due to labor shortages were heavily focused on increasing productivity and.
Reducing cost to maximize our margins our growth strategy includes also expensive or waste services in Europe .
And with commercial power generation generators as well, we believe that we will see a growth in receipts and both of these groups are in the next few quarters.
Overall, we remain confident in our ability to maintain the growth and stability, we experienced prior to the pandemic and we're encouraged by the market outlook, given our solid sales pipelines with.
With it with a number of important contracts expected to be awarded over the next few quarters.
On that note I'll now turn the call over to Ben who will discuss the financial results in more detail Ben.
Yes.
Thank you Mark.
I'll start with revenue our revenue our total revenue from continuing operations for the second quarter was $25 million compared to last year's second quarter of $19 five an increase of $5 5 million or 28, 7%.
The increase in revenue was attributable to both our operating segments as our treatment revenue was up $4 4 million in the service segment was up one one the.
The increase in the treatment segment was primarily volume related as all our facilities processed more waste and the increase in the service segment was driven by both increased project work.
Increased project work on our two large contracts.
Year to date through June 30th our 'twenty three revenue increased over prior year by $9 8 million or 27, 6% and again revenues up compared to prior year at both segments as with the quarter high volume set to waste treatment.
<unk> contributed to the increase in revenue.
In the service segment.
Two large projects have been in full production for the entire six months of 'twenty three well paid enough begin full production until close to the second quarter in 'twenty two.
Looking at gross profit for the quarter, we had $4 5 million compared to $2 nine in 'twenty two.
As with revenue both operating segments contributed to the improved total gross gross profit of $1 6 million from the treatment segment higher revenue drove the improvement.
Although there was an offset.
From the mix of waste for lower margin waste streams, as well as higher fixed costs at the plants.
Service segment gross profit improved as a result of <unk>.
Higher revenue as well as better margins realized on our project work.
Again for six months ended June 30th our gross profit was $7 5 million compared to $4 5 million in the prior year. This $3 million improvement was from both segments of the treatment segment revenue increased <unk>.
Increase was partially offset by the higher the impact of the higher fixed costs and the lower margin waste mix in.
In the service segment similar to the quarter increased revenue and improved margin realized on the project contributed to the higher gross profit.
Turning to SG&A, our costs for the quarter were $3 6 million, representing four teen 2% of revenue compared to $3 7 million in.
Or 18, 9% of revenue.
Our SG&A costs were lower due to lower due to lower audit fees and payroll related expenses and they were offset by higher expenses related to.
Stock options at higher outside service costs related to financing efforts.
For the six months ended June 30th our G&A sits at $7 million or 15, 6% of revenue compared to $7 1 million or 21% of revenue.
Last year again, lower audit fees were the main contributors to this small reduction.
And they were slightly offset by higher outside fees related to financing.
Our net income for the quarter was 474000 compared to last year's net loss of $1 4 million or.
For six months ended June 30th net income sits at 63000 compared to a net loss last year of $2 8 million.
And 'twenty two.
The basic earnings per share for the quarter is four <unk> compared to loss per share of <unk> 11.
In the prior year and the year to date basic income per share is at zero compared to losses last year of <unk> 21 per share.
EBITDA from continuing operations as we defined in this morning's press release.
At $1 5 million compared to a loss of 403.
Last year.
And EBITDA year to date stands at $1 7 million compared to a loss of $1 8 million and 22.
Turning to a few balance sheet items, our cash on the balance sheet was $4 8 million compared to $1 9 million at year end.
It reflects our positive cash from offer improved operations are.
Our current receivables and liabilities were up approximately $3 6 million and $3 2 million respectively.
As a result of increased operations and the timing of collections and payments.
Our waste backlog for the <unk>.
End of June was $8 9 million, which is close to the $9 2 million at year end and up.
Up from $7 2 million a year ago in June of 'twenty two.
Our total debt at quarter end was 854000.
Which excludes debt issuance cost, which is primarily due to our lender PNC bank.
And finally.
Summarize some cash flow activity for the year cash flow from continuing operations provided.
Was $4 8 million cash used by discontinued operations was 336000 cash used in investing.
Continuing operations was $1 million and it's primarily capital spending.
Cash used in financing was 290000, which represents.
Our monthly payments on our term in capital loans of 273000.
Payments related finance leases and liabilities of 118000 and proceeds from option exercises of.
101000.
And then finally I'm pleased to report that on Monday July 31. This week, we amended our loan agreement, which among other things extended the maturity date of our credit facility for an additional three years or two may 15th 2027.
As part of this amendment, our lenders provided a new term loan of $2 5 million, which will further support the company's liquidity position and will be used for general working capital needs facility capital and maintenance.
Perma fix has now banked with P&C for over 25 years in this under and this extension underscores the strength of this relationship which is in <unk> and their through many highs and lows.
With that.
I will now turn the call over to the operator for questions.
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And while we pull for questions.
The first question today is coming from Howard Bruce from Wellington Shields Howard Your line is live.
Thank you.
First of all Mark Ben Lu I hope.
You and your families are well.
And things are good personally.
Thank you IRA.
Youre very welcome first of all congratulations to all three of you on.
What is a very good quarter.
Sure.
As a shareholder I'm, rather pleased with that.
Hum.
I've got a few questions that I want to focus on first.
Last quarter on the conference call you mentioned close near term opportunities.
India, Croatia, Mexico, Canada, UK, and Germany, you mentioned a couple of them on the call just before.
Have we lost any of those opportunities. That's the first question and secondly, if not.
When would you expect to see.
Some of those awards and could you talk about the total size.
What we're looking at there.
Sure how are no we have not lost any awards they have they've moved.
The U S government moved quite slowly.
Let's start with Croatia.
They have two procurements that we're supporting right now one for treatment of resins, which were likely going to move into an R&D phase.
Them on that which will be quite small initially.
An opportunity.
Technology proves successful to expand.
One of Croatia is around a $20 million a project that's due to be awarded.
In the September timeframe.
The second round of the RFP just came out here and this is due I think next week.
So that is still in play.
And we have a very and innovative offer for that that project and we remain optimistic about it.
So that would also impact Q4, if we were successful of the <unk> contract I mentioned, obviously has not been awarded yet.
But oh, we did have discussions with clients.
And they said as soon as they get back from vacation there.
There should be announcements. So that's again early September several other ones that are still brewing, particularly Germany.
We're working with a broker agency to support the decommissioning of about 12 reactors over there right now.
Moving forward rapidly.
We're hoping to be able to sort of supporting that waste treatment process.
The fourth quarter or Q1 timeframe, we do continue to get waste from.
The German.
Commercial are firms that we've been working with for quite some time now on a quarterly basis and then in the U K. We're also working on several initiatives initiatives. There again, we still have our agreement with Westinghouse that if we're successful in JRC and we will move forward with that new plant.
We also.
Not sure if we ever talked about it but we do have a couple of other IDI cues that we've won with the UK government.
For waste treatment and we continue to get task orders out from that to.
To treat the waste over here with the new plant in Springfield, with Westinghouse I will be able to treat over there I mean much much more competitive.
And that could that either Ikea continues to be active so lots going on over there. There's a couple of other initiatives that are going on as well in earlier stages.
But looking for real momentum in the next two quarters over there in big impacts.
For next year, particularly I didn't answer the last part of your question, we would anticipate a.
When all these things are clicking with a couple of these awards.
That we should be able to assume that $10 million to $20 million a year a revenue stream internationally.
We'll ramp up into next year year or two.
Okay. Thank you.
Let me continue lines, there's been a lot of discussion about the delay.
The dismantling of the aircraft carrier I hope I have the right one enterprise, which is docked in Washington State.
And in the process of dismantling the nuclear reactors they plan on encapsulating them and transferring them to of course Hanford.
Magical.
Can you discuss the opportunity there.
Sure Howard that's a big one for us if the enterprises the next.
Shipped slated for decommissioning.
We've just finished.
The final Easa's I believe has been signed last quarter and in the final EIF completion is the trigger to move in the procurement, we're expecting the draft RFP to be out.
In the fourth quarter early first quarter like October time frame.
That the aircraft carrier is actually sitting at the Norfolk Naval Shipyard in Virginia, I believe it's at the Huntington Ingalls.
<unk> facility there.
We are just completing our teaming dances for that that would go through and signatures for those agreements are waiting on the draft RFP.
It's estimated howard to be.
In the $800 billion to $1 billion 800 million of billion dollar total revenue I'm not sure what the final RFP is going to look like and how much risk we have to take out that'll dictate really of how close to 1 billion that project gets.
The other exciting thing that we're anticipating is that the RFP will include a 20% small business set aside the last several that have come out have included that are.
Small business set aside we're expecting this one too as well.
And that kind of gives you a sense of where were likely be.
In total revenue.
For a project like that.
That's.
Quite a large opportunity.
Bob.
Over the last several quarters, we've talked about uranium and the EPA.
Settlement with the Navajo Nation, where do we stand on that because I believe there was a contract win here and a half ago.
$220 million to a consortium that started with the Navajo Nation Company and you were involved perma fix was involved where do we stand on that please.
Yeah, I, probably should talk about that in the notes Howard because that's a really important project for US we did win a contract with a bang and reign in mind program through the EPA are with our prime as you said, there's a local Navajo firm.
And a few other teaming partners as well.
We mobilized into the Navajo nation.
And to Cove, Arizona for the actual first Rebating ready to mine remediation project through that very large program, which is funded well over $1 billion right.
Right now and we are in the process of finishing clean.
Cleaning up that site.
A quick turn I want to say a couple of months.
So we've been out there for you a few weeks I was out there last week with our executive Vice President and our technical folks to tour.
With EPA and they're very excited about how our soil sorting technology is working its cleaning up to very very low levels.
Radio activity.
And meeting expectations.
We are anticipating although not final, but that project that project will continue to expand.
And the system, we have in place out there in the middle of nowhere in Arizona.
We will continue to operate beyond that project can move right into the next one.
We're working with EPA to make that happen right now so that project is going very well it generates about a $1 million a month.
Our portion.
And the project itself is a very well operated and with our teaming partners.
And a very efficient so EPA was quite supportive im pleased with the project to date and more to come on that as that continues to expand.
Let me address the Ikea I T D.
<unk> contract.
There's currently an appeal.
Existing lenders that theory, and that's the first question and the second part of it is.
Assuming that.
So I think it's simply that BWXT.
Once the contract.
Is it a sad comment there's a light high likelihood that Atkins gets that award after the appeal period is over with.
That's awesome.
Yeah. The appeal as you say, we're in an appeal period right now I'm not sure. The exact date Howard It was a 60 day period and my <unk>.
Collection was that would take us to like end of next week kind of thing so in that range.
And then D O.
We will have you will move forward with this.
It is in process.
And then as the.
The judge said in the ruling there's only there's a risk.
We have two options to either award to make an award to the other team and again, there's only two teams.
Or move forward with a new procurement.
I can't speculate on that.
Build or any direction. They might go it's really difficult to understand it's been very very quiet.
While the while they're waiting for the appeal period to be over.
But it is the third time that it would be the third time, if they go through a procurement process.
There is some.
Urgency associated with what's happening at the site over the next couple of years.
With the <unk> coming online and the tank program really changing.
So we'd like to be optimistic about it but we really have no Intel and not really no.
Understanding of what they are always going to do at this point hopefully, we'll learn something in the September timeframe.
Let me get to the last probably the most important question.
So the smelters work, so I don't think verification plan.
The 'twenty 100 degrees.
That then leads to the likelihood of it plans starting in end of Q3 two.
2024 is that a correct comment based on what you're hearing from the.
For people.
Generally yes Howard.
The Melter has the first smelters to motor they understand and they're quite complex piece of equipment. The first one did operate as plan from what we read and that.
They're moving forward with the other testing of the other systems associated with that.
Which obviously is a very large complicated facility.
They're making good progress <unk> continues to report.
And their press releases as they click over milestones.
That they are on track for the second half of 'twenty four.
Basically your way and the things are going well.
So there is.
And increasing optimism about their schedule about the facility coming online.
Getting that melter operational.
A big deal and a big accomplishment by.
<unk> and the other contractors along with the OE. So.
Obviously were really big fans of that bid plant.
And.
I hope to be able to provide.
Support through our new arrangement or agreement with them.
Within the Rod.
And right now.
We would expect to be hot testing with.
With real waste in at the end of 'twenty four.
Based on our full operational can you confirm again.
Right.
On that basis.
2025, we still could be looking at.
Yes in this one area roughly $3 in earnings.
Yes, I really can't address the earnings at this point, there's a lot of there's a lot of variables in this.
Calculation.
It seems like a reasonable Ah <unk>.
Estimate.
But it depends on the mix of waste that we receive the quantities of each type.
And that type of thing I would expect that their estimate is eight 300 cubic meters a year.
And that would assume.
Full capacity, both melter running full blast.
For a 12 month period.
Which will likely take a year.
Year or two to get to that kind of level.
But I do expect us to ramp up to the point, where we can we can definitely tune.
Those numbers are.
Get an understanding of how much capital we have to invest in it which we anticipate to be quite limited at this point.
But it seems like a reasonable estimate.
Overall.
Sure.
Alright, Thank you I'll, let other people ask questions Alex I'll come back if I have additional okay. Thank you Howard and congratulations Mark then Lew great quarter.
Thank you.
Thank you once again, if you have any questions. Please press star one on your phone to enter the Q&A queue that is star one if you wish to ask a question. The next question is coming from Brian Russo from Sidoti Brian Your line is live.
Yes, hi, good morning.
Just to follow up on the <unk> floor facility out there.
Outside of the second melter.
And the temperature testing are there any other major milestones that we should be.
Monitoring.
To me for the <unk> to maintain.
Second half of 2020 for Rockstar.
Yeah, there's a number of Brian I don't have a hesitant in front of me, but it.
Sort of any facility like this there's a lot of safety systems.
The readiness reviews other other milestones like that that will occur.
As they.
You know get closer to next next summer.
So I would expect that other military we tested here in the near term.
And then they'll start going through their operational readiness milestones and checklist and those types of things and report on those most likely.
They are successful.
And I can get I can get to those to you.
They should be on their website.
Several of them and there are some agreements in place with the regulators.
And the dose in regards to.
What those milestones are and.
We can track that along the way so they are available.
Does it have to pull multiple web site.
Okay, Great and just just remind me on the Washington State ecology permit for the 2000 gallons.
Is that in the is there a public comment period that that we're currently involved in.
And.
And how soon after.
That permit is granted to the Doe.
<unk> 2000 gallons be shipped.
Yes, the permit the permit is for that.
The gifts D O easy ability.
<unk> or approval to extract the waste from the tanks.
They came out with.
Questions for D. We I don't want to say this past Tuesday said two days ago.
In his questions. They had some sort of technical questions in regards to how the way it is going to be extracted and what's it going to do with equipment. After is extracted and that kind of stuff.
And said that with.
When do we provide the response to this question that they'll go out for public comment.
And move towards approval.
So that public comment has not happened yet I would speculate that it will be 30 days.
And who would likely be.
Probably a month from now before we'd see anything.
Because you always got to respond to this question that you have to address and everything else.
And then we would be once.
Once that approvals completed deal we could start extracting.
Waste.
The.
Early fourth quarter I'll once it's extracted it won't take long to two to treat it and once they finish that demonstration than do you eat in a position to move towards.
On an operational phase.
Which we're hoping will be sometime in 'twenty four.
Period so.
Again.
There is not a data or a specific approach associated with the operational phase.
It's really the we will tell you they have a roadmap.
That includes going operational phases with the.
With the <unk> program and that's really what we're focused on is that obviously 2000 gallons is pretty pretty small its a demonstration.
And we're looking forward to the operational phase.
Where we really begin to.
Treat large volumes and make real progress on tank closure.
So we're again, we're expecting that sometime in late 2004.
Okay, Great and will the Richland facility need of Mod to do the operational phase which could be.
The million gallons.
We're set to go with 330000 gallons a month with our current permit and current facilities.
We would have to do.
A minor mod.
And I think to go from 300000 gallons.
<unk> thousand two to a $1 million.
And would not expect a problem doing that.
And again minor capital improvements to get there as well.
But that would not be a significant delay in getting that in place to make that jump up if D. We got to this quantities.
Okay, Great and then on what's the services backlog you mentioned the treatment backlog when I say services was.
Mark to Mark.
$30 million on your last call, just wondering where that stands with the $8 million.
New awards in the press release.
Yeah, Hey, Brian .
Some of that AIDS not in there I don't have a current number or your quarter end number was 22, six and net <unk>.
Included about four of VA, so probably another probably about $26 million to $27 million New award.
Okay, Great and then just on on the margins in each segment and obviously significant improvements year over year.
Are you close to what would be considered normalized.
22, 7% of treatment is normalize maybe a couple of hundred basis points higher to that based on the.
The $100 million of.
Annual run rate revenue and services, which was 16, 6% is that at or near them.
The normalized margins, yes, I think.
The services.
Treatment.
Is.
Probably on the lower end for a reason.
The new revenue that we're receiving at our new plant is going to be a little bit lower margin than sort.
Sort of our core three plants.
So that probably brought the number down a little bit.
When we when we get into that.
Sweet spot of $100 million a year.
Our regular mix waste I would've expected a little bit higher but.
The work we do at the new facility is a little less like the mixed waste treatment.
So I think it's a good number and we could see it go up with a little better performance at our other plants.
Okay.
Okay, Great and then lastly, just on the mix of that $100 million.
It is kind of are you looking for maybe 60 40.
Offices.
Treatment, yet, yes, that's kind of the general 60, 40, maybe even.
50, 545, because of the new facility, depending on how it does.
Alright, great. Thank you very much.
Thanks, Brian .
Thank you. The next question is coming from Ross Taylor from <unk> investment Partners Ross Your line is live.
Thank you just a couple quick things one the D S law.
Situations opportunity is in no way really impacted by the uncertain nature of the.
Other contract.
That's a good question Ross.
<unk> operation is tied to.
A tri Party agreement.
Between.
The regulator and EPA.
It is completely different hours not tied to that procurement.
So do we have.
An obligation to get up and running I want to say, there's a couple of slips because of Covid I want to say that the milestone is I'm going to say August of 'twenty, five I believe where there is potential for fines and penalties after that point.
So do you always try not to get anywhere close to that again, it's slipped from December of 'twenty three.
Because of Covid.
And.
As a very important milestone of daily reports to Congress on and to the regulators on a regular basis. So it's nowhere is that tied to our procurement at all.
And so that's why you're confident that this is all about getting the melting was up and operating and once they're up and operating it they're going to push this through they've been working on this for decades and so that's why we're confident that that income you Hello.
Whether it's $3 or around $3 on a run rate basis, that's that's where that comes from second Italy and I noticed some of the choice of words you used in Italy made me feel that you would be more surprised not to get the contract and if you've got the contract is more linked correct.
You know I hate to speculate on anything.
You can do with procurements Ross because <unk>.
Crazy things can happen.
We've been optimistic for quite some time.
The reason we're optimistic Ross is the way that works in Europe is the down select so this procurements.
Procurements are going on for 10 years.
And it started out with six or seven bidders maybe nine.
And it gets down to two.
So your optimism goes up as you go down.
And we feel like.
We're in a good position a really good position with our team.
And.
I can't say that we've won or that we're more optimistic than we were before but just that we remain optimistic.
We should hear in early September .
Okay, well, we look forward to hearing that.
Talking about Europe . It would appear you have a lot of opportunities there.
Laughing should come on you if you win the Italian jobs, along with better place you has your relationship with them to build out a facility in the UK to treat in the interim you going to treat in the U S. Any business that you get from that.
But the Big Croatia, Germany also.
Exactly exactly and that's what we've been doing now is we've been shipping over from from Europe to our northwest facility.
Two the incinerator units, we have in northwest, which are very well suited for this kind of work and it's a little different with with the.
Our country, our waste treatment, because you have to commit to giving all of the residual back too.
Two the host country.
And our our incinerator units.
Called <unk> are designed to do just that so we can.
Very high quality.
Yes.
Take the residual.
And package, it and ship it back to them and they get the stabilization.
Value out of that as well as the significant size reduction value of about 90% overall.
For long term storage over there so it works well.
It's obviously higher transportation costs.
What we've cut out if we had the same facility in the UK as planned.
So what what happens with margins, if you're able to move this business from trading and in the U S to treating in the UK, how big and boost our margins with Etsy.
Margin percentage will likely be lower.
At every nuclear facility over there.
Unofficial numbers Ross <unk>.
500 abandon uranium mines in the country from what EPA has told US 250 of those are funded.
Sure.
Or slated for remediation.
As it is.
At least $1 billion of funding at close probably closer to 2 billion identified for this but the contract that we have with our with our teaming partners.
$225 million of IV IQ So there's two other bidders.
Contingencies or excuse me two other consortiums of companies.
Uh huh.
Can can bid on the task orders.
And the value Thats 225.
Which is just about I don't want to say two years left on it.
And.
Is that kind of gives you a sense of the near term revenue we're talking about.
As between between those three companies.
Their intention is to get rolling in the field, there's enough work to go around for everybody I am sure. They will split it up and make sure people stay in the field to keep going because there's these mines are everywhere.
They're painful deal with them.
Difficult work very difficult a very remote very hard obviously dry difficult conditions.
So once you are out there with a team of people you don't want to keep moving in and out you want to keep going so thats our hope there.
And you see this whole program.
Celebrate and visibility in funding and procurement wise I get get more task orders out so we can keep going.
Okay and same idea you guys are currently finishing up a job with the Navy in Virginia.
I think actually right next door to the enterprise.
All correctly.
And the Navy has obviously the enterprise, but it also has a number of other ships that need to be.
Decommissioned in that.
What's what would we be thinking not just we got obviously upcoming soon the enterprise you wanted to on that is that kind of the same setup with all of these other opportunities that maybe hasn't should we see more than just the enterprise led out.
This year yeah.
Yeah.
The.
There are there's another building that we're bidding on right now is due here next week I think at the Norfolk Naval Shipyard right next to the ship that were decommissioning.
So there are some other ones. The other projects are coming out which reflect a new era with the navy where they used to just self perform all of this work now they're outsourcing it <unk>.
Commercially.
And.
That really opens up the market for companies like ours, but to answer your question the Nimitz.
Anticipated to be one year behind the enterprise.
And the Geo per report out I want to say in 'twenty one.
It says that there's 48 ships.
To be decommissioned by the Navy in the next five years I think we've kind of lost a couple of years because of Covid.
Of those 48 ships I believe there's about a dozen nuclear ones.
So they have a list.
And.
I Havent seen the other names below the enterprise and the Nimitz.
And then there is also an aircraft carrier about the same size as far as.
Difficult to goes.
And.
We expect the Nimitz to come out right. After the enterprise gets awarded.
Okay.
Congratulations it looks to me like what you're really talking about is there's so much opportunity here, we're just sitting on a cloth or the calendar function.
Every day that goes by we're a day closer to the tremendous earnings power you are talking about being unlocked its not really a question of if it's just a question of can we be patient enough to.
During the next year or so.
That's exactly right Ross, it's been a world waiting game Covid has thrown a big wrenches I've mentioned 100 times or in the into the procurement process and there's a lot of waiting for procurements everything is funded or at least not everything about it but the significant funding out there is a significant unspent funding out there way more than than ever.
<unk>.
We anticipate that to continue in.
The missions are all very well defined they just got to keep moving with the goodness procurements out.
Okay, well youre doing a great job. The company has it seems I has really turned the corner and I congratulate you and your team on that.
Great. Thanks, Ross I appreciate your support.
Take care.
Thank you. The next question is coming from Aaron Warrick from breakout investors are in your line of life.
Hey, guys I appreciate you, taking my call and wanted to piggyback on what Ross said on the congratulations future certainly looks bright I wanted to also follow up on something you talked about just to just to make it clear because there's been a lot of confusion I think.
Among the Investor community.
I just wanted to reiterate it sounds like regardless of what happens with.
The <unk> decision as it relates to <unk>.
Obligation to get the vitrification plant up and running and therefore at some point getting that secondary waste.
Do you guys is that is that accurate.
That's a true statement absolutely.
Mexico has the job right.
Right now.
As a separate contract to get it up.
Through hot testing.
And then they turn it over.
To the ICD see winter.
Or something like.
Like that.
<unk>.
That's the current approach that could change.
And they can change tweak it or add more time to back door or something like that but.
Mid 'twenty four time frame.
The newspaper, but one would assume that you would have a contract or onboard to support that turnover once that plant is hot.
Right. That's what I was thank you do that.
So it seems likely they will get this resolved without it.
The bidding process, but even if they do to date.
On that timeline for August 2025, and the absolute latest yes.
Yes.
Okay. Good.
Sticking with Hanford.
I attended a public meeting and it was in late May and maybe early June .
All of the entities involved the government entities involved with with the handset project.
That's quite surprising.
I had always gotten the impression that.
Okay.
Aaron I think we lost you.
Like that was going to be part of their solution.
This change as well and im assuming that positive.
I am sorry, Aaron we lost a big chunk of your question there could you.
Just a couple of sentences could you repeat that.
Oh, yes, sorry about that yeah. So at this.
Conference. This public meeting the department of oncology seem to have changed there to where they are extremely positive.
Okay.
Have you seen that change in position from them and I assume.
I've received that positively.
Yes, you broke up again, I'm afraid and but I think what you're asking is how has the.
State of Washington that evolved in regards to.
Yes.
Routing, yes, yes.
They have come around they had some dissension.
Past years.
But we've had some.
Really good meetings with ecology I think.
And this is just speculation on my part as.
When you look start looking at budgets and Timeframes and reality in regards to how long it's going to take the cleanup Hanford.
The numbers now or are between 400 600 billion.
Aspect as defined in some different reports.
That's something has to be.
Done to address that budget requirement in that timeframe, but thats associated with I think the ecologies.
Come round that while vitrification still as their preferred approach.
For.
Treatment of the grounding has to be in that mix.
They've embraced that we've the meetings, we've had with them have been very supportive.
And it does seem like it is making there.
We're making progress and embracing that as part of the solution.
Well I'm, certainly not going to argue with that but I would point out that.
As it relates to electrification being their preferred.
Process, They did mentioned that specifically that.
Vitrification for onsite disposal is necessary, but they seem to be pleased with the fact that the <unk> would be taking the waste out of the state. So I think you know I'm not going to say.
David Faber Tbi more than <unk>.
Nitrification, but they seem to be totally okay with that now and I wonder how much of that perhaps has nothing to do with that at all but it seems like another party that sort of come on board is obviously you have this partnership now with the Labor Union. So I mean.
It seems to be that ever.
As government entities are now onboard the tbi is that is that your sense as well.
Absolutely and Thats, a good way to state it across the board, including D. O D always had a tough time accepting as well the NHS, meaning you went to help a lot.
I think the congressional delegations have been very supportive.
They have started.
Two question to you is to how there.
Planning to use grouting as a supplement to vitrification.
And requesting to be accountable for and recent congressional draft congressional language.
The house and Senate, there's been language that address that as well.
I think overall that everyone's kind of planning on it more there has been press releases recently that grouting has been part of the budget discussions.
And they seem to be heavily opposed to shipping any untreated waste out of hand, but I can go into that territory.
Is there any way even for them to get the waste out of Hanford and not go through any of those territories to the others that were listed.
And that final document.
Yes.
You're exactly right. The documents are all defined three different options.
And energy solutions and WCS could both treat.
This waste at their facilities in Utah, and Texas, respectively.
And so there's always been options, but at this point in time to answer your question. They would have to truck it out theres not rail access onsite, so you'd have to truck it.
Do it with a lot of shipments.
And a lot of shipments on the highways.
Versus.
The.
We're approaching we're providing alternate we're providing logistic to ground it locally.
And then rail.
<unk> solidified stabilized a waste for disposal.
In a lot less transportation a lot less risk in the we're in the EAA both have defined.
That approach a local approach to this as being the least risk approach now where the <unk> or.
Or consider those in there.
Final strategy or not remains to be seen.
But those are options that they could consider I would have to believe that with the reduced risk.
Doing it locally as defined in the VA as well as the transportation risk.
And the less number of shipments.
And all the other things that are associated with doing it locally.
You have to believe that the.
Treating it at.
At our facility would be the best value overall to the government.
Okay.
Okay. Thank you final one for me then is just as it relates to Italy the JRC.
Trying to track some of that and get a better idea of what's going on.
Are you able to talk about any of their reactors.
Would be part of that contract.
The JSC job is just a very specific quantity of drums of ways that are currently buried.
The <unk> facility in <unk>, Italy. So, it's just 6100 drums of a very specific ways form.
And that job.
It is only for the.
The waste located at the JRC sites. So it can be more than just the 61 on the drums.
Open ended.
That's the base scope, which we value and the <unk> 45.
Range.
Theres no other reactors or anything that's going to flow through there necessarily whereas as currently defined flow through there they could open it up for other.
Facilities or other opportunities to ship weighs out of Italy, but right now thats the base scope, that's pretty much it.
Great I appreciate your time guys. Thanks for these explanations.
Thanks Aaron.
Thank you. The next question is coming from Alan Denzer, Alan is a private investor your line of life.
Hey, Mark congratulations.
Thank you Alan.
Dan did it and hopefully there is a profitable progression ahead, let me just ask you about next.
Foreseeable future regarding the possibility of a government shutdown, which seems to be a more of a probability or.
Possibility at this point.
How would that affect the company and what are you doing.
To prepare for its possibility.
Yes governments events typically haven't had a significant impact on us.
It could slow down some waste shipments.
And.
But most of the work that we do is referred to as essential.
It comes through the doughy budgets.
So CR would be.
A little bit of a threat because as you know is the Crs.
There are some restrictions on new projects.
The government has to choose a lot of about 20% of their budget.
I didn't give it during a CR to allocated for.
Maintaining safety and that kind of thing.
So.
<unk> has more of an impact on procurements and those kinds of things government shutdown haven't had a big impact on us in the past.
Typically our waste streams are coming they're funded.
There is a safety component to it that you need to keep moving with it as opposed to store.
And.
The only real threat to me to answer your question or to my view.
Is that some procurements may get may get delayed.
And new projects might get delayed.
But.
Existing ones should be sustainable for the most part.
Alright. Thank you so much keep on doing what youre doing.
Great. Thanks, Alan I appreciate it.
Thank you and the next question is coming from Stephen Fine from so fine LLC Steven Your line is less.
Congratulations guys on your.
Your quarter.
Okay.
Can you hear me yes.
Yes, we can see alright.
Alright, Thank you Im sorry.
And speakers.
You mentioned you mentioned.
New.
Agreement with the Labor Union.
Do you expect the labor Union too.
Provide any political support.
Your efforts in Hamburg.
There's an obvious political in connection with.
Our union like that 598 Scott.
Very large group of constituents in the central Washington area of a beautiful facility with <unk>.
Enormous training.
Capacity and they're very politically connected.
There is a certain amount of.
Ability to access.
Different figures and managers in the area. We certainly have not entered into this agreement with that is our focus we sincerely entered into agreement because.
We really believe that.
The provision of labor.
With the training facility they've got.
The tradition they have.
For providing safe workers.
Would give us the stability, we need to ebb and flow with these large <unk>.
Waste contracts, so while there may be some political advantages to that particularly associated with this administration.
Our objective really was.
To be able to provide us stability as.
The grouting starts as well as some of the <unk> work, that's also going to be coming up and making sure that we've got the people we need.
And in a small town.
50000.
Make sure we've got the people that we need to meet the obligations are going to have.
Okay Alright.
With my next question because you did mention.
Your presentation initially that you're experiencing labor shortages, so am I correct that.
That would help the late labor any labor shortage problem out in ham for being connected with that Union.
Absolutely that's exactly right and we are having strong growth struggling.
I think the old town is because theres just not that many people hampers hired a lot of people.
And taken a lot of people from us because there are benefits packages is better and more competitive in regards to compensation.
And then we are commercial so we have to compete with people they don't have to.
And.
It's a different environment.
We have been able to replace people.
But.
The numbers, we're talking the levels of the numbers, we're talking about for these two projects the Dia flaw in the Tbi type.
Type of work.
Talking a couple of hundred people at Max.
And boy, having the $5 98.
Working with US gives us confidence that we can meet to meet those obligations.
How are you dealing with.
This is it labor shortage is consistent.
Nationally and internationally, how are you dealing with that.
Yes, we've had we've had a few issues at the other two plants.
But not quite to the extent we are at Hanford, we have had some issues with folks just like everybody else in the country is having with with labor.
And we've been able to find folks.
We've had to increase our rates our salaries.
And the margins a little bit because of that.
And or rates will catch up to it in regards to what we charge.
But we've been able to find people were almost fully staffed and we maybe have 5% to 10% avail.
Availability of our openings at the labor level at each site, but hanford far and away it's been the biggest impact because of the.
Amber facility are versus their original facility because the hanford the ones at Oak Ridge.
To a lesser degree than the ones in Gainesville.
How are you.
Less so.
We've been able to deal with it but it has had an impact and we've been fortunate to be able to manage it.
As of your productivity been impacted by climate change.
Our productivity has not been impacted by climate change at all that I can think of our productivity has been impacted only really by the labor issues, we just discussed but not.
Bye bye.
By the heat.
That I'm aware of.
Okay.
If you were to build a plant.
In Great Britain with Westinghouse how long would you expect it would take to build that plant.
Right now we're estimating that we've been working on design with Westinghouse in a very slow.
Yes.
Progression, because we're waiting to hear about this.
Award.
But.
With where we are right now on permitting and design.
We're looking at best at about 18 months from the award date.
Two to 24 months and probably someplace in between.
Current schedule was 18 months to answer your question.
With regard to Hanford and the opening of the Vitrification plant.
With day would the secondary ways, Jeff come to you or would you have to be permitted.
Or whatever.
We are permitted for now while we can accept that now we have a contract with.
The department for this type of waste through an IV IQ that we use for most of the sites.
So rates have been provided.
And they would when.
When they generate the waste or near generating the waste.
Most likely Andrew.
Enter into a task order.
With us.
A task or RFP will respond to it and then they'll ship it.
That's typically the way it works.
With regard to the 2000 gallon.
And test there was a mention of a public comment period.
Why would there be a public comment period, if money has been legislated.
And basically what I've read it's basically said this is this should happen.
Yes.
Public comment period is for the <unk> permit.
The state has to consider.
And.
That's for extraction of the waste so.
I believe it's I'm not sure if it's driven by record what it's driven by but there is already in the permit that's required.
<unk> to get permission to extract the waste.
And.
I'm not sure or address your question or not Steven Yeah, Yeah.
I guess I am confused because.
This has been going on.
Chinese there.
You did the first part.
And.
I guess, yes.
The issue here is.
You know that.
This should be up more.
It seemed to me it would be more direct.
That's correct.
Why why should there be a discussion now.
With money legislated.
Sacha and all the time that's gone by.
Yes.
Part of the process I'm not sure exactly what the regulatory drivers are for that.
Alright, and the last question is with regard to.
The ride in January I mean, the rod clear lease.
Spirit that rod clearly states that or infers, one would infer from that that does not want to transport waste.
Long distances and therefore.
You are.
You won't hear you.
By that for that but in addition, there.
There were two other things one.
They stated that all waste would be in.
And small only small containers drums totes and further it was stated that the secondary waste would come back to hamper.
I guess I'm somewhat confused.
Yeah.
I don't know, where maybe I'm confusing the discussions that how can there be a conversation.
With any other.
Suppliers were in Ms.
Material would have to be shipped longer distances or not makes sense in small quantities.
Yes, I think you're getting a little confused the dia floor plant.
As addressed in the Rod.
As you said it was just for treatment and disposal.
Locally at Perma fix and largely for that because as you said in August disposed of on site at Hanford at their waste sell at Hanford. So it would not make any of sensus ship anything out of state and then bring it back for disposal at their facility.
What we were referring to what I was referring to in regards to alternatives was the environmental assessment for for Tbi for grouting.
So for grouting, because it's not getting disposed of in state.
Had alternatives again.
The increase was the risk when you leave the state for the grouting part of it.
That's where the alternatives come out alright.
Alright.
And again, yes, I guess I was was not clear, but I guess I guess.
What hits me, yes, they put out a rod and they underscore that hey, we want to.
Not travel along.
Our long distance.
We want to only ship small containers how these these other.
Other Matt other manufacturers were in.
Ah represent long distances to get delays to them and.
I would imagine.
Form a chemical manufacturer.
Shipping in small containers.
Absolutely.
Be very expensive and make no sense.
Anyway.
So I anticipate that the <unk> waste will go anywhere besides to us regionally or locally Wow I'm talking yes, okay, all right well. Thank you.
Congratulations on a great quarter. Thank you.
Thank you there are no other questions at this time I will now turn the call back to the management team for closing remarks.
Thank you I'd like to thank everyone for participating in our second quarter conference call.
As I said, we remain extremely confident in the outlook for the business. We appreciate the continued support of our shareholders and we look forward to providing further updates as developments unfold. Thank you.
Sure.
Thank you. This does conclude today's conference you may disconnect. Your lines at this time. Thank you for your participation.