Q3 2023 Perma-Fix Environmental Services Inc Earnings Call
Good day and welcome to the Perma fix third quarter 2023 earnings conference call. At 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 from Investor Relations David Waldman.
The floor is yours.
Thank you and good morning, everyone welcome to Perma fix environmental services third 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 containing third quarter 2023.
Financial results, which is also posted on the company's website. If you have any questions. After the call or would like any additional information about the company. Please contact crescendo communications at 2126711020.
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 a statement of historical fact are forward looking statements that are subject to known and unknown risks uncertainties and other factors, which could cause an.
Actual results and performance of the company to differ materially from such statements. 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 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 and <unk>.
Today's discussion will include references to non-GAAP measures Perma fix believes that such information provides an additional measurement and consistent historical comparison of its performance a reconciliation of 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.
Another solid quarter as evidenced by an 18, 4% increase in revenue to $21 $9 million versus $18 5 million for the same period last year. In addition to our revenue growth gross profit increased by 42% and gross margin increased from $16 six to 28.
Our process and importantly, we achieved net income of 341000 in the EBITDA of approximately $1 2 million for the third quarter of 2023.
Growth in revenue reflects the commencement of several new projects granted earlier this year that support the backlog in both segments.
Provide growth opportunities into 'twenty 'twenty four we also improved productivity on certain projects.
That had previously been delayed from the lingering effects of COVID-19, our services project continue to meet or exceed expectations expected performance goals.
And margins due to strong leadership and.
And good client relations, while we we achieved solid year over year growth, we would've generated even strong results had it not been for temporary customer delays in our treatment and services segment. Unfortunately, this is not unusual in our business and contributed to a slight decline.
Sequential revenue versus the second quarter of 2023 however.
These projects have since commence and we believe will contribute to improved results for the fourth quarter of 'twenty, three and heading into 'twenty four.
Other awards are expected to generate significant revenue that would offset projects, which will wind down in the fourth quarter.
Within our services segment, we realized several new awards, including a $40 million five year contract with a joint venture or <unk>.
<unk> solutions LLC.
By the Buffalo District, with the Army Corps of engineers for environmental remediation at the Niagara Falls storage site the awards.
Our core competencies.
Including characterization remediation and disposition of hazardous material and waste management.
Looking ahead, we're benefiting from increased bidding opportunities within our services segment overall, including both the government and.
And the commercial sectors. These opportunities are included teaming that large deal with projects.
And procurements. In addition to several U S Army Corps of engineer cleanup initiatives U S Navy decommissioning projects.
Several international projects with sustainable revenue potential these.
These bids will further strengthen our backlog with awards anticipated throughout 2024.
Within our treatment segment, we experienced a steady improvement in waste receipts during the third quarter supporting our visibility and backlog for the next year. This included increased waste shipments from within the commercial sector, along with steady sales from our industrial waste programs.
We expect to see ongoing improvement in waste receipts and an increase in project work up from existing contracts new contracts and bids submitted in both segments that are still waiting for award.
We are continuing to implement our growth strategy throughout the third quarter and 2023, including several new opportunities in our target list.
The potential to significantly enhance our revenues and our long term backlog for next year within both segments. In addition, we continue to await some very large potential strategic awards by the Doa.
Some of these projects are quite considerable in size.
And a selected by D. We would represent significant.
Increases in sustainable revenue to align with our core competencies, we're hopeful that one or more of these projects will be awarded this quarter.
If we are successful will participate as a team member on these orange deal with procurements, which completely align with our strengths and our innovations and radio radiological protection and waste management.
Despite delays in award announcements of these growth initiatives remain on track, including the $3 billion operations insight mission support contract referred to as O S. M S.
As well as the joint Research Council or JRC project in Italy.
We anticipate both of these projects will be announced any day. In addition, we have several other smaller projects anticipated to be announced in the fourth quarter of 2023.
The JSC project will support our expansion program in Europe, including existing idea Q contracts held by perfect in the U K and the application of our treatment technologies in Germany, Croatia and other markets in Europe.
Opportunities will generate sustained receipts beginning in the next several quarters, providing a combined annual revenues estimated in the $10 million to $20 million range, which we expect will begin to be realized in late 'twenty four at.
At the same time.
The test bed initiative for T. B I also known as the low level waste Offsite disposition project continues to progress in support of the Hanford tank mission, although at a slower pace than anticipated over the last few months.
I'd initiative, which is based on grouting technology will continue to focus refocus a perfect as a means of saving tens of billions of dollars of taxpayer dollars as well as eliminating several carbon emission.
And reducing schedules for our Hanford clean.
Cleanup actions.
Grouting has been recognized as a preferred supplement to the current do you eat strategy for vitrification are through the direct feed low activity waste treatment plant, what we referred to as the D F law.
For the 59 million gallons of tank waste currently stored at Hanford.
The TBA program continues to move forward. Following this the middle of the Rd and D permit from the Doa to the state of Washington, regulators, which was done in the second quarter were continually we're currently awaiting the approval of the already have the permit from the Washington Department of ecology, which is the regulator.
It will allow <unk> to begin to extract 2000 gallons of waste from the tanks for the phase II grouting demonstration.
Given the ongoing delay by the state and review of the permit application. We expect an official reset of the schedule, which will include public comment on the permit followed by approval.
Extraction of the waste and treatment of 2000 gallons, which is expected to be in the second half of 'twenty for now.
Perfect remained or maintains these granting capabilities today at our perma fix facility in.
And northwest or in the original Washington, which is permitted and outfitted to safely and comply all the ground up to 30000 gallons a month with the ability to expand the well over a million gallons annually, while dramatically reducing cost risk and schedule compared to vitrification alone. It's important to note that our perfect.
The first facility offers the only local or regional option for grouting tank waste versus other options to ship untreated waste out of state for grouting disposal, which is defined as a higher risk and the NIPA environmental assessment as well as the recent where documents.
Another critical component of the perfect growth strategy hinges on the startup of the D. F. La facility I'd mentioned in Hanford, which will provide verification services for about 40% of the tank waste volume on site.
In January 23, D. We signed a record of decision to treat the outflow waste streams from the D flow facility at our local perfect northwest facility for at least the first 10 years of the <unk> operations.
We remain optimistic about reports coming from DF law in regards to the startup of the melter.
And supporting systems, which continues to progress well several steps remain before startup Doa has announced has not announced further delays in commissioning, which is currently scheduled for late 'twenty to 'twenty four time frame.
The waste that would be produced at this facility, that's mainly by <unk> to be about 9000 cubic meters annually.
We expect that would begin to be received at the perma fix facility. Upon Hart Hot startup of the vitrification plant itself as I mentioned in the past the volume with this waste would more than double the production of all our plants combined on an annual basis in regards to our treatment facilities are Florida, and Washington plants have begun to realize.
The budgeted performance goal, we haven't seen since pre Covid times as labor and pricing impacts are beginning to.
Being in the rearview mirror at this point in time.
At our <unk> facility in Eastern Tennessee, we have been blended several expansion and upgrade activities that have been underway for the past few months, which we expect will result in a broader offering of our treatment capabilities beginning in the second half of 'twenty four.
Importantly, we continue to invest in our capabilities in our facilities, we have built a solid foundation of growth.
Holly scalable scalable infrastructure as we continue to increase revenues, we expect to benefit from the predictable cash flows of our services segment with high incremental margins within our treatment segment.
So to wrap up we remain optimistic that our that the remainder of 'twenty three 'twenty four will realize continued growth in both segments as we expand our market base and develop strategic teams to optimize win probabilities for ongoing procurements, we're heavily focused on increasing productivity and.
And reducing cost to maximize our margins along the way overall, we remain confident in our ability to maintain the growth and stability we experienced prior to the pandemic and we're highly encouraged by the near term market outlook for the business based on our growing backlog our sales pipeline a number of important contracts expected to be awarded over the next few quarters.
So on that note I'll turn the call over to Ben who will discuss the financial results in more detail Ben.
Thank you Mark.
Our total revenue from continuing operations for the third quarter was $21 9 million compared to last year's third quarter of $18 5 million.
An increase of $3 4 million or 18 four.
4%.
The improvement came and revenue from.
From both our segments as our treatment segment revenue improved by $1 9 million.
Primarily on higher waste volume, though at a lower average price.
And our service segment increased by $1 5 million based on the improved productivity at one of our current large project and additional revenue from new projects that started in the quarter.
Year to date through September 30, our revenues higher.
Higher year by $13 2 million or 24, 5% again. This improvement has come from both segments. The treatment segment revenue increased by $8 5 million, primarily on increased volume while our services segment revenue was up $4 7 million on increased project work.
Our gross profit for the quarter was up $4 5 million compared to three point was $4 5 million compared to $3 1 million in 2022, the improvement in gross profit of approximately $1 4 million.
Came from the services segment.
Where gross profit was up $2 million from both increased revenue as well as improved profitability on our projects offsetting this increase was a reduction in the treatment segment gross profit of 473000.
Due in part to revenue mix as well as increased fixed costs at our facility.
For the nine months ended September 30th our gross profit was $12 1 million <unk>.
Compared to $7 6 million in prior year.
Again, our gross profit improved in both segments as the service segment increased by $3 4 million on higher revenue and improved productivity in its projects, while the treatment segment increased by $1 1 million primarily on higher volume.
Our G&A costs for the quarter were $3 9 million, which is consistent with third quarter last year.
Increased costs for labor and legal fees were offset by savings in audit and other third party service providers.
For the nine months ended September 30th SG&A expenses were 11 million again in line with $11 million in the prior year and as with the quarter, our lower audit and outside service costs were.
Were offset by higher payroll expense.
Our net income for the quarter was 341000 compared to last year's net income of <unk>.
664000, however, I want to remind you that last years net income included the employee retention credit $2 1 million, which improve those areas.
For the nine months ended September 30, our net income was 404000 compared to a loss of $2 $1 billion in prior year.
Our income per share basic income per share was <unk> <unk> compared to income per share of <unk> <unk> last year.
Year to date basic income per share is at three <unk>.
Compared to a loss per share of <unk> 16 last year.
Adjusted EBITDA from continuing operations as we defined in this morning's press release.
Is that $1 2 million compared to a loss of 374000 last year.
Adjusted EBITDA year to date was $2 9 million compared to a loss of $2 2 million and 22.
Turning to the balance sheet, our cash on the balance sheet sits at about $2 million consistent with last year with year end of one nine our accounts receivable and Unbilled receivables were up $9 3 million due to increased revenue certain prepaid contract and the general timing of our.
Cash receipts.
Accounts payable accrued expenses and accrued disposal collectively.
Approximately $2 $1 million, reflecting.
Increased costs associated with increased revenue and the timing of vendor payments.
Our unearned revenue was up.
Approximately $3 million compared to prior year due mostly to the certain prepaid contract.
As of September 30, our waste backlog and unearned revenue was $12 1 million significantly improved from the $9 2 million at.
At year end and $7 1 million in September of 'twenty two.
Our total debt at quarter end was $3 2 million, excluding debt issuance costs, which is owed primarily to PNC bank.
Finally on cash flow activity for 2023, our cash provided by continuing ops was 452000.
Our cash used in discontinued ops is 478000 and cash used for investing.
Of continuing operations was one 4 million for cap spending.
Cash provided from financing.
Was $1 9 million and that represents the net of our monthly payments to determine capital loans of 450000 payments related to finance lease and other debt of 310.
Proceeds received in the reload of our term loan in July of $2 5 million and receipts from other options and expenses of 150000.
With that operator, I'll turn the call over for questions.
Okay.
It is now open for questions. If you have any questions or comments. Please press star one on your phone at this time.
Posing a question can you. Please pickup your handset until this thing on a speaker phone to provide optimum sound quality. Please call just a few moments while we poll for questions.
Okay.
Your first question is coming from Howard Brows with Wellington Shields. Please pose your question your line is live.
Thank you.
Mark Ben Lu I hope.
You're all well and your family as well first of all and most important.
Thanks, Howard I appreciate that they are good.
Adherence.
So.
What I'd like to get a sense of or a better sense.
When you look at the contract.
You talked about Oss.
Yes.
Oh Asia, Italy.
What what does it all mean to promising.
Initially and over time.
And it will include.
What I believe is another contract coming from the EPA on uranium.
Let's begin with that please.
Yeah, Howard you know the way we look at it as the company.
She is really in a position to maintain pretty sustainable.
Foundation of revenue in the $90 million, a year $100 million a year range.
From gelling from winning projects repeatedly we may have some down quarters and small quarters, but just generally.
It's kind of our base load that we should be able to do.
The waste.
<unk> generated out there each year, along with winning a number of projects within our statistical.
Average.
Then we have.
Procurements and opportunities that will pull us above that.
And those opportunities you mentioned a couple of them OSA mask.
Which you know is in our procurement situations that we can't really talk too much about the numbers associated with it.
And the JRC same situation.
T D C. All of those are Orange will provide a plus up or a bump up in revenue in a significant way generous he's a little smaller.
40 to $50 $40 million to $50 million range, but opens up a couple of markets for us in a bigger way in Europe.
And.
So as far as as a dollar per share it's very difficult to.
To address that because we can't get into the financial components of it.
But they have they will have significant impacts on our revenue stability.
And equally as important and put us in a position where we can bid on other larger contracts with.
A qualification.
That is.
It is very valuable.
So we have a number of those waiting to hear on as you know.
Those three are the primary ones.
We have several other smaller ones that we're waiting to hear on.
Including.
Bids at the core of engineer Banyan uranium mines have all been extended.
The project that we have in Arizona.
Supposed to run out in August.
Extended through the end of this month or in early into November.
In the middle of November.
And it will shut down for the winter because of the altitude mine is that it will start back up in the spring.
He has informed us that.
There'll be additional mines procured over the winter to start in the spring as well. So they are finally, starting to get some traction on new procurements.
But we add to that list a long list of bids.
We're working on through the winter that will be likely awarded in the spring and summer of next year that are very large.
Mentioned some of these on here before those opportunities include the.
The enterprise, which we expect that the aircraft carrier that we expect out here in Q4 in late Q4 early Q1.
A large project at Y 12 West.
West Valley.
<unk> project, which is a $3 billion project, which we're getting on teams for several <unk> task orders through <unk>.
Contracts.
Several large waste contracts that were expecting to.
Be able to bid on.
To see the impacts again Q2 timeframe so.
Lots of we're very optimistic.
That.
Our our growth opportunities continue to come in.
We're not going to win everything, but we should win a statistical quantity that's good because the more of the command the better.
We have.
We revamped our our business development group and brought in some new people.
Theyre very high energy very well respected in the industry.
And are turning over a lot more rocks for us in regards to opportunities and a very logical world, including expansion into the commercial sector in a bigger way. So overall, we remain very optimistic about our future.
While this quarter was not what we wanted it to be overall, we did take a step back.
But we still have the same minimum.
And we expect to get back on that trajectory.
Near term so hope that answers your question.
So the <unk>.
I'm not sure how many gallons or anticipate right now my understanding is about 700000 gallons.
My understanding is from the Doe.
As noncompliant with the vitrification plant.
Is that a correct statement.
That is a correct statement.
There's been a couple of press releases about that just in the past two weeks.
Currently.
Statistical work exactly exactly as planned a pump.
The waste out of the tank.
And pump it into another tank.
And what appears to be the case as the other tank contaminated.
The.
The liquid after they pumped it in so.
And sampling the tank they've got the roughly 700000 gallons stored in.
It will not meet the waste acceptance criteria for DF law. So.
We have said that they are evaluating alternatives one of those alternatives that they've mentioned in our press release was there.
They would run out through <unk> again.
We are trying to which obviously would just tie that to square up for a while and cost money to redo it and we're proposing that the grout that waste.
And dispose it dispose of it.
<unk> has not made a decision on that yet.
<unk>.
We're hopeful they'll they'll see the value in that and disposing of it.
Closing of that waste, while theyre able to pump while other tank weighs out.
But at any rate situation does not impact that.
The the.
The Dia floor as I understand it there's plenty of time for them to pump another 700000 gallon before via floor needs. It.
So.
There is an opportunity hopefully for D O two to consider an alternative other than a rerun it.
At this point.
You mentioned the garage that basically.
Okay, roughly a 10 year contract.
Where else to the department of Energy go if it's not not just 10 years, but it's just not a generationally long contract.
Collectively 56 million gallons high level low level waste be treated and even if you did a treatment with tbi.
You're still talking a million gallons.
The Zip plant a year, which means two two and a half million gallons that you treat.
Are they going to build another facility.
Perma fix or is this basically my belief is this N T D generationally long contracts.
They are generally long contracts the Bottomline theory has not.
Developed where does not planned on developing.
The children capabilities, they need to handle the effluent.
Comes out of <unk> law. So therefore, they are there.
There are positioned there our plan has been for.
In the last 10 or 15 years to commercially treat.
The effluent that comes out of the floor.
As opposed to building on site driven capabilities.
Fortunately.
There is very limited in fact is really no other alternatives in the Richmond area.
Our our hanford other than our perma fix has the capabilities to provide so that's why it was mentioned in the rod.
Would use a perfect northwest to support that backlog as I mentioned, which is about 8000 cubic meters a year or so.
Pretty sizable amount of waste is all different types not just routing. It's all different types of processing different materials that will come out of that plant and we remain optimistic that they're on track for a late 2004. He may have seen our press release.
I think it was just yesterday that they did turn on their <unk>.
And then your latest campaign the milk.
They've also got.
Two different.
Two different tranches of liquid of glass, so to 'twenty 100 degrees and everything seems to be working as designed so there are continued to make progress they haven't.
Announced any change any slips.
<unk> schedule.
So again, we're still anticipating hopefully they'll have radioactive waste going through there in the late 2004 timeframe.
Let me come back to deal flow in a moment.
Orange Uranic waste.
Is basically another step in terms of what I call a generational long contract.
Without specific numbers, because I don't think you'll have them, but what could the total transuranic waste D coming out of hands.
Basically.
It doesn't mean.
Alright, Savannah river or others, they're already trained very trained trans uranic waste.
So is there a sense global sense over one timeframe and.
Dollar amount or is that not achieved yet.
Yes.
And for in my understanding the trends of our race program programmatically heifers pretty close to the tail end of the transuranic shipments to the waste isolation pilot plant in New Mexico, right now, Idaho, and Savannah River in Los Alamos are all shipping a lot our hanford is scheduled to begin.
Later, this decade and our right now.
Perma fix provides the primary means of packaging transuranic waste and processing it for web so what we're doing right now and it's one of our largest waste streams.
Is supporting the plateau contract are they ship us.
Different types of transuranic waste, we have a very.
<unk> advanced system too.
Repackage that waste put it into.
Standard waste boxes to minimize the volume we segregate the lull of waste out such only trains around waste goes.
It goes back to do.
At the end for it in a store it until it's our turn to ship to wet.
That represents roughly about $1 million a month in revenue.
And maybe a little bit more than that some some months that number is increasing.
So it is a good sustainable backlog for us, but there is additional quantity of tru waste at.
Hanford, it's a higher level of radioactivity noteworthy.
There are hard Gram quantities, that's all to be done.
And Theres, a Tri party agreement milestone for that I don't know the total value of that is somewhere between I don't know maybe $50 million range, the 100 million range.
It requires removal.
In a certain time period.
Is slipping a little bit here and there due to priorities and funding.
That will eventually come to us and most likely we don't have a contract for it yet, but we certainly had many meetings about it we'd anticipate getting that but overall transuranic program nationwide as a very strategic for perma fix others, there's transuranic waste sprue upping Schenectady, but we've recently.
Under contract, we haven't talked a lot about it.
<unk> in the tent to award.
But we're going through.
Different.
Technical approaches.
But a $10 million contract I'll start with it's not dramatic, but it's important but the other big one that's T. R U S.
As West Valley, that's the one that's coming out right now so our strengths and capabilities at <unk>.
At at Northwest will help our positioning to be in a good team and provides a value to that team for westfalia. So to your program is a big deal for us in the future we haven't talked a lot about in the past.
Yes.
Mark you broke up.
Hello.
Hello.
Hello.
Yes, I don't know how it works out.
No.
Sure.
Yes, we're here.
Okay.
Last but not least.
When I'm looking at.
T F law Vitrification plant T G I.
I consider those although.
We just talked about.
The ethanol.
Basically it's 56 million gallons is that a fair statement that these are generationally long contracts.
After 10 years, they have no other place to go we're not going to build a plant and a daily build a plan to cross $1 billion with government we understand that.
But as we get closer and closer day by day.
Sand comment that now.
Notwithstanding.
Any.
Further delays, but we're still talking about fourth quarter 2025.
Right.
<unk> vacation plans and possibly at the same time.
Crowding.
Tbi and the maximum ability.
With D S log prices basically a million gallons.
Waste a year, which the notes to be two two and a half million dollars.
Okay.
Waste to you is that a fair comment.
We believe that.
A fair comment.
Howard I think.
The investments we've made locally in the Hanford area.
As we built up.
The quality of our team.
And the recent.
Agreements with the local labor unions.
I have all positioned us to be.
A very high value alternative for <unk> to provide exactly what you just described which is processing would be a floor ways. The grouting.
Other waste on site.
And.
Put put firm fixed northwest in a position.
Where it's the best value alternative.
For the overall hand permission.
The last comment then.
There are a couple of people who have asked.
Various questions about 2025.
Is D have Florida plant is operational.
For the full year people have talked about basic earnings just from that project, a roughly $3 a share whether its $2 50 or three in a quarter, but you still feel comfortable.
Assuming that <unk> does stocked full screen in 2025, or sometimes a little bit before is that still a fair comment.
Yes, Howard and this has come up on a couple of calls and I guess, the best way to handle it is to kind of give you an overview of what we are considering because this is so.
Substantial to our regular business and game changing when it occurs what I can give you is that.
From the metrics, we've seen in the Rod.
We'd be looking at $60 million to $70 million of additional revenue a year.
Be looking we believe our incremental range, which we openly advertised at about 25% variable costs or 75% margin.
Is consistent for this waste stream.
The big wildcard is the capital and fixed expenses that would go into growing the company to support this kind of number and we've talked about 100 Ftes we've.
We've talked about capital in the $5 million to $10 million range.
We've talked about other expenses, which we typically consider fixed in nature utilities insurance.
Maintenance et cetera, that's probably another $10 million to $15 million of cost so a lot of that.
Shovel, all that together you get some pretty significant dollars income probably in the $18 million to $25 million range EBITDA in the 22% to $30 million range.
<unk>, 200% payback real quick couple of million dollars a couple of years that may have that.
All of that I'll.
I will say that it's reasonable to think.
With all other things that could happen in between that two to $3 range is certainly very very achievable.
That's all I have.
Mark Thanks, Eric Thank you Lou.
Okay.
Your next question is coming from Brian Russo with Sidoti. Please pose your question your line of sight.
Yeah, Hi, good morning.
Good morning, Good morning, Brian.
Just real quickly on on the quarter, you mentioned temporary customer project delays.
In the third quarter, which arent on comment likely get pushed in the fourth quarter is there any way to quantify.
What revenue is being pushed.
Revenues being pushed to the right.
It's difficult to define.
The.
The quantity of those basically what happened was we had a couple of projects that were paused.
And.
<unk> renegotiated.
And.
We will be able to make up for some of that.
And we will see some of that in the fourth quarter, but I can't because I can't give you a <unk>.
Total amount of revenue that we will see push into it I do expect to see pretty similar quarter in Q4 that we've seen here.
Typically it takes a step backwards in Q3.
But we do have a couple of other new projects that are starting up.
In Q4, as well that will assist.
And getting a little better.
But.
We look at it pretty flat overall moving forward through Q4, Venezuela, unless you want to add to that.
No I think I think that's fair Q4 is always.
Impacted by holidays.
And those things. So there is again a lot of moving parts.
But we do expect a lot of what.
While we missed in the third to move into the quarter.
And beyond.
Okay got it great and then just on the segment margins it seems fairly low.
Relative to.
Two what normalized margins or is it just a function of the lower revenue and higher fixed costs kind of dynamic.
There was.
It's higher on the service side because of the.
Improved productivity.
It was lower on the treatment side and that was a.
That's a revenue or a waste mix issue.
A little higher this time around than usual because we had.
We had a good size number of what we call direct ship.
Waste streams that we don't even touch at the plants and they go.
And we just broker.
Broker so to speak and that brought the margin down, but we expect it to normalize.
Going forward.
Okay, Great and then just on the.
The D and D permit delays.
From the Dod permit delays from the Washington State of ecology.
He insight there is it just more procedural or are there any read throughs are they taking an extended period of time to review.
Which I saw it might've been more of a formality.
What does it get you any insight there.
Yes, we have no idea, Brian the bottom line.
This is not a big permit.
They asked some questions several months ago, a D O D. We answered them before I heard in.
They weren't big questions. So it's really.
Difficult to understand why this would take so long.
Yes.
It certainly has taken a lot longer than everyone anticipated for the state to turn this thing around for.
For 2000 gallons.
Certainly would not appear to be that big of an effort but.
We have no insight whatsoever as to why.
Okay, and then just any update on the Itt's.
ITT, she sure contracted and the options that did.
Has either.
Rebidding the procurement again.
Or any other scenarios.
Yeah, that's extremely complicated.
Procurement unprecedented in nature in regards to.
What has happened.
If there's not a lot more information than what's publicly available in regards to the status of it other than to say that.
The D O.
Did come out with a final proposal revision request each of the teams provided a response.
The Atkins team did file a protest.
In regards to that final proposal revision request.
At the I believe it's a J O now.
G O us believe that.
They're going to make a decision before February.
Those options would be very difficult to speculate on other than to say that.
One could still assume that the options are to award.
Two.
The Atkins team.
Or to go out for rebid.
I'm sure.
So middle of that proposal now.
Revision.
There is probably an alternative to award again the BWXT. So in other words anybody could win so nobody lost anything yet no one's one any.
And.
It's really wrapped around the axle.
Protest space, So I wish I could give you some.
Some speculation Brian, but we've got no idea on this one and there's a lot that the public including US does not know about the legal situation.
And what the what the.
What the data is or what the evidence is so it's just.
We sit back and wait there's really not much else. We can do at this point right.
Yeah, No that's that's all.
Helpful and then just.
Just to clarify.
On the floor.
Hot start and ramp up hypothetically, if theres a hot start up in late 2024, you won't be at full production or <unk> won't be at full production for all of 2025.
It's more like full year.
12 months of production would be more like 2026 correct.
That's probably a good thing I don't know when both multi resort will be operating.
One could assume your statement is correct that.
Any plans to start something like that it's not going to be 100% productive.
Initially so one would assume your statement is correct that they will start off with one melter are at least one melter at a time.
And it'll be a while before they can all three shifts or hit on all cylinders and that they're maximizing the design basis for 104 1 million gallons a year. So I would assume it would be 26 before you start to see that effluent come out at that rate.
Okay, Great and one last question if you don't mind just I'm.
Sorry, if I missed this but what was the what was the services backlog as of September.
Yes.
It's in the $22 million range.
Okay, great. Thank you very much.
Alright, Thanks, Brian.
Your next question is coming from Ross Taylor with <unk> investment partners. Please ask your question your line of sight.
Yeah Jonathan.
I kind of wanted to dig into.
I think it's important issues here, which is we spend a lot of time in minutiae about contracts, but let's talk about revenues and where we're going just a bit ago. You indicated that you should be able to do $90 million to $100 million is kind of a baseline you did 21.
So this last quarter you were talking about this next quarter being roughly the same my math tells me that you're operating.
Now 80, 90% of base load on those two numbers.
Why don't we know what's going to take to get to.
Fourth quarter, you get to that $23 25 million you need to add to kind of keep your baseload, whether you want it to be.
Yes.
I was really speaking more annually Ross on that so again, we had a rough Q1.
Pulled us down a good bit.
But our goal is to try to hover at a minimum.
23 to 25 range every quarter, and that's where our sweet spot is on profitability anything below that it gets very difficult based on our our fixed cost.
So.
That's typically where we need to be.
To maximize our EBITDA is the $23 million to $25 million minimum.
Each quarter.
Okay. So and you can you get there do you see you talked about stuff being pushed to the right and the like do you can you get there in this current quarter, we're in or is that something where.
We're going to have to wait.
No I think I think we're looking at our forecast.
The next quarter as I said will should be equally as good as this quarter, but a little better we do have several projects starting up and it's difficult to predict what the revenues and margins will look like as you roll through the quarter on new projects, but right now it looks very promising.
C a quarter at least as good as this quarter.
Particularly in regards to revenue. So we are optimistic that we will continue to see that come back to the trajectory we had.
Last couple of quarters as well.
And finish out.
The $90 million or close to $90 million range for the year, but we were looking what I mentioned that that goal of $90 million is really annualize on a quarterly basis. So getting above 22 to 'twenty three is what we got to be.
To really be healthy as you know, we dipped a little bit below that this quarter because of those delays.
Yes.
Yeah, now and looking at it it's been a while since we've seen you guys announce a win.
You had started the year around talking about what we could be getting out of Hanford and the vet.
And that obviously caused a lot of excitement in the name and since then we've kind of been stuck waiting for.
The Italy operation for some other hanford stopped for things happening.
How you've talked about the ability to get you think you can get some new wins. So again some of these decided in this current quarter.
Yes.
How comfortable are you that.
Your ability to kind of push next year to with the extra business to be able to produce.
20, $30 million or more kind of out of.
This noncolor load that we just were talking about.
Yes.
What you're really asking about is our growth strategy and and.
As I was mentioning the.
The list of opportunities.
That we're bidding on.
These next two quarters this quarter next quarter or are a significant chunk that we haven't seen this many big opportunities that we're really well positioned for with high win probabilities.
That would.
Literally be awarded by next summer so with that in mind I feel very good about where we're heading and we're very optimistic about it the way we've retooled our ability to bid these things.
It gives us additional confidence.
No. The JRC, we're very confident on we're very confident that that will know in the next week or two of you I've been saying that since last December.
Or that.
It is.
Got to move forward because it's got the remediation contractor has been selected and is ready to mobilize and are just waiting for us to be awarded so we can get going.
I was over there last week I was actually there Monday Tuesday this week.
And.
Everything is on track to make an announcement here in the next few weeks. So we're waiting for that to occur there once that happens as I've mentioned before it opens up a lot of opportunity in Europe.
And.
At the beginning of the implementation of our overall European strategy as far as the OSA mask.
That one has a very significant revenue implications for us because we are such a big piece of scope.
Defined from the from the overall contract again several bidders.
It's got it's got to be considered there the competition is a lot bigger.
And I just can't speculate on when that's going to be awarded other than to say the D. We asked for.
An 18 day.
<unk> extension.
To November.
The end of October.
They asked for extensions basically asking you to maintain your costing out without change for another 18 days. So I've got to believe that's going to come out in the next week or so so we see these things coming it's been very frustrating for us not understanding how to plan for them, but in the meantime, you know the point is that we are pursuing very.
Very aggressively other.
Bids and opportunities of the same magnitude.
And the same impact.
And we're getting a good teams.
<unk>.
Providing innovation into the proposals that are needed to win so I do feel like we're going to get a couple of these nailed down in the next six months.
And we'll see those revenues go the direction of that.
There were a.
Talking to our investors about.
To answer your question.
Okay.
Honestly.
Kind of.
I ask because I'm really trying to wrestle with the idea.
We've been you've been stuck and I understand you can't control. This I'm trying to get an understanding that if we get if.
We get Italy.
What does that open up because that opens up Europe that probably opens up Croatia and some other opportunities you've talked about in the past.
Yes, Yes, Italy comes to pass before the end of the year could we see $20 million out of Europe next year.
It's not necessarily contingent on the <unk> piece.
It has a big impact and that we have some agreements for building a plant in England with Westinghouse.
And.
Because so much time has gone by we will need to revisit that right now again met with them last week, that's all still in place.
And what it does is provides the backlog.
That plant.
And the ability to move forward with it which would be able to service all of Europe.
Answer your question, that's going to take several years to build that plant.
However, we have work several additional.
Deals with clients in Europe to begin shipping to us.
Irrespective of that plant being there in anticipation of becoming eventually but the waste backlog in Germany in Croatia, and the UK are all such that they have to start moving those ways in the near term and not.
The position to wait for that plant.
We anticipate seeing our backlog of international waste grow from where it is right now.
$2 million to $3 million a year range.
Closer to an annualized receipt.
In the $7 million to $10 million range by the end of 'twenty four.
So again <unk> is a big piece or excuse me, Jeff sees a big piece of that but it's not all contingent on that.
And in talking to the German clients, we have.
Tens of thousands of drums and storage over there that have to be moved.
As.
Our facilities have reached their capacity.
Regulatory drivers forced them to to move those waste and.
Where are the only.
One is the successful organization has been able to take those waves treat them in the U S and return the rest of it is back.
Successfully so.
We remain optimistic on that and really feel that.
By the end of 'twenty four ish annualized we should be close to $10 million a year in revenues from Europe.
Okay, and then and then as we've obviously, we just kind of waiting for Godot on these other issues.
Yeah.
With that kind of what do you think.
As a baseload that kind of you've talked about the profitability does Europe come in at company average profitability.
Correct.
Yes. It does so our treatment are cost that we provide for.
Or a pricing will provide for the European market is pretty close to what we provide here.
And then you tack on the transportation cost.
Sure.
But.
That's pretty much the only options available for most of those folks over there.
Okay, Okay, I'll, let someone come in and ask obviously it's.
Outside of your control, but obviously I think you can you can tell from today's action investors are getting.
<unk> are getting frustrated and we'd love to see some some tangible signs of a victory between here and the end of the year.
I ask because it strikes me. It's this is from what you are saying this is a calendar play 'twenty.
25 should be.
Pretty powerful year earnings wise as you ramp up everything that's going and you have a chance to have that be hugely powerful if you pick up an enterprise win and some other factors. So thank you very much you bet Ross and we're very sensitive to what you are saying to you know its very frustrating to us.
The department and most of our government agencies typically make announcements on Thursdays every Thursday goodbye.
Look each other and say Oh my gosh another weeks go by.
And.
These bids continued to.
To be out there waiting for announcements.
But all we can do is keep our heads down and keep fighting for new opportunities and are very proud of what we've come up with and direction, we're heading and with those new opportunities.
Keep keep those irons in the fires appreciate your support.
Thank you, Sir you take care and keep working at it.
Thanks Ross.
Okay.
Your next question is coming from William.
Please post your question your line is live.
Yeah.
My question really is.
Okay.
All of our stockholders understand that we'd be billionaires of writing rfps.
Ram generated a bottom line, but they don't.
So what I'd like to know what's at the end of last quarter, how many rfps or bids did you have out of those who are out how many were awarded and of those awarded how many did you win.
Constantly talk about our statistical win percentage, but we the stockholders just hear about.
Tom.
So how many bids you got outstanding how many did you win last quarter, how many do you lose.
Let us determine whether you got a future or not.
Well, we've I don't have those numbers in front of me, but I can tell you that we have about.
$700 million.
Potential Rev total contract values.
Standing.
And.
Last quarter Q3, we actually had a good quarter.
We had.
Ah.
Well I don't have that statistic exactly but we had wins for Niagara Falls standards as Anna.
A couple of commercial clients.
Randy mindset.
And ion beam.
Los Alamos and the sprue job.
I would estimate that that would be in the 30% to 40% range of the number of bids we submitted so there's two ways.
To provide an answer to you. One is what is the percentage of revenue potential that you won and what is the percentage of number of bids that you bid.
<unk>.
Our goal is typically.
To get to a 40% win rate on the number of bids.
That we submit.
Sometimes you submit a bunch of small ones as long as a couple of big ones.
When you do it the other way, it's not necessarily a.
Value statistics versus how many bids submitted for semi who wins.
We view a 40% win rate is.
And kind of industry standard in this business.
And.
We typically.
Close to that between 20 and 40% sometimes it depends on.
To which once the government wherever the client is of announced and which ones. They haven't so it's difficult to show.
To answer your question.
Without a lot of caveats and data so.
But we do track that and we can try to provide a little bit more information on the next call in regards to.
Your question.
And your next question is coming from Stephens. Please pose your question your line is nice.
Hi, guys how is everybody.
Thanks Steven.
Can you hear me because I'm on a speaker can.
Can you hear me, we can hear you.
We can hear me okay.
Hi, all doing I got a question for Rob.
On the <unk>.
I have a lot of questions, but on the depreciation and more and more digitization why was that so dramatically up.
I mean, I'm looking at here that for 23 depreciation and amortization.
Sensitization was 2124 versus $1 43, three why why is that so significantly up.
Yes, Steve that was a unique situation with our new facility in Oak Ridge.
The depreciation we're talking about isn't.
Your typical capital depreciation is the closure closure related.
There is some closure costs in the way closure costs work, it's called <unk> in accounting Lingo.
Right. It goes in as an asset against the liability and we just needed to ramp up accelerate the closure number on the balance sheet.
<unk> you would see an offsetting asset number yes.
So that's that.
It's operating it's just us.
Yes.
One time deal.
Correct, Yeah, it'll it'll slow down.
Oh hi.
I do have a bunch of questions.
I know I have not heard about this contaminated.
Waste that's come out of the that's in the Pittsburgh So.
My question there is mark.
The fact that its contaminated does that change the classification of it.
No doubt about that.
It's just it just has a little bit more contamination of the specific kind that is not within.
The design basis of the DF law.
So can I ask what the contamination was is it something that is hard for <unk> to handle or is something that they could but again through the <unk>.
They can put it again through the <unk>.
I can try and reduce that I believe it's a radioisotope it's tie it up thought it was cesium.
But I got to check the press release, but.
And it leaves the contaminant contaminant from within the tank that they've put it in after they ran through the <unk>.
But if they if they would redo it would they not had tank problems.
They'd have to put in a different tank so it wasn't contained.
Yeah, Yeah, Okay, I thought alright.
When Howard was initially asking about how long this is.
How long, let's say Hanford would be if they if they did da Vinci vacation and pardon me. Thank Scott secondary waste is it not true that they passed a linked qualify the waste. So the actual waste is not <unk> nine.
Gallons, it's probably.
Closer to us hundreds of millions of gallons because of the liquidation and that's why we take so long.
That's absolutely correct.
It is believed to be about 1% to three.
One two and a half to three and so for every gallon that you you have in the tank you are having to add a couple of gallons of water to get it out.
Because most of the tank waste itself is either dry or.
And that gets them to see that's going to require a slurry to get it out. So you have to add add some to remove it.
That's correct going I'm going to move over to Europe.
If you succeed in Europe.
It is.
Is what the people be provided by Westinghouse.
<unk> created a plant.
Yes, it would be our technology westinghouse's facility in license.
We have a joint venture with.
It's a joint venture with Westinghouse.
And is that 50 50.
It's <unk>.
$55 45.
Okay Alright.
Got it.
To me the real main thing here is.
You are joining with somebody who is a big player and that's that's fabulous that's right.
Alright.
As regard to with regard to the comments when we talked about okay.
Vitrification plant goes on and then there's the secondary waste and then the secondary waste cum SKU per the rod in.
Part of the Rod in January you mentioned and then an additionally, youre youre really only player.
In that Rod.
<unk> that.
The way you treat it would go back to Hanford. So my question is.
As they are bidding work done that that weight that secondary waste could go that can be buried hampered.
For the <unk> law.
The value of that perfect. One of the buyers are perfect brings to.
As.
That waste and it will be disposed of at the Hanford landfill as opposed to anywhere else, which makes non regional treatment capabilities a lot less attractive they'd have to ship out of out of state haven't treated and ship it back into state for disposal.
That adds the value of the <unk>.
Of of being local.
Is that do we have a disposal sell there for this waste.
So we're not happy.
Mike Excuse me my real question was.
Can it be disposed in Hanford, if you get the secondary ways.
Secondary waste that has to be disposed of an answer as long as it meets the WAC.
Right.
Okay Alright.
All right.
I just wanted to okay.
I think all my questions were answered but I.
<unk> been essentially listen to you guys.
Somewhere I think in 2016.
And I remember when you came on Mark there was a period somewhere in 18 or 19, where you kept saying.
We're getting there where we're going to move towards $100 million and then.
You achieved it and I remember the stock moved.
And.
So when I look at history, when I look back in history, and having been a like I always say I was a hazardous chemical manufacturers.
Dan what you encounter.
I do take your statements sell positively that.
Ill.
Because I've learned to listen to you when you're you have always been very transparent that when you say that there'll be.
That you do see the possibility that there will be the space and 990 million to $100 million and that is so critical because that then covers your overhead itself fourth and gives you breathing room.
And then all these other things.
I look at is hey.
<unk>.
The potential was just so great.
And.
My my strategy when I was in business was to have a base business that paid for my business and just keep pushing and then what happens is something happens that you.
If something happens that's just changed the status quo and that's the reality and so I guess, what I'm trying to say as I look at this very positively.
Youre clearly diversifying youre clearly.
Bidding more.
At the same time, you are saying that you do see a V.
And that you could get to.
Our solid base, which is the key that you are paying your bills and then when one of these other.
Circumstances occur then.
Here, we go so I.
Yeah, again I E.
I commend you guys and.
Yeah, I think the.
It's Tom.
The world's Hearts.
Yeah.
You are taking big leaps.
And Thats all so anyway. Thank you.
Alright, Thank you Sue.
Unfortunately, that's all the questions. We have time for today I would now like to turn the floor over to Mark for any closing remarks.
Okay. 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 and we appreciate the continued support of our shareholders and look forward to providing further updates as developments unfold. Thank you everyone.
Thank you. This does conclude today's conference call. You may disconnect. Your phone lines at this time and have a wonderful day. Thank you for your participation.