Q4 2024 Perma-Fix Environmental Services Inc Earnings Call
Greetings. Welcome to the Permafix Fourth Quarter and Fiscal 2024 Business Update 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.
Meaning of the private Securities Litigation Reform Act of 1995 and include certain non-GAAP financial measures. All statements on this conference call other than a statement of historical fact are forward looking statements that are subject to known and unknown risks uncertainties and other factors, which could cause actual results and performance of the company to differ materially from such statements. These risks and uncertainties.
Detailed in the company's filings with the U S Securities and Exchange Commission as well as this morning's press release the company makes no commitment to disclose any revisions to forward looking statements or any facts events or circumstances. After the date you Rob that bear upon forward looking statements. In addition, today's discussion will include references to non-GAAP measures fix believes that such information provides.
Speaker Change: 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.
Mark Duff: All right. Thank you David and good morning, everyone. As we close out 2024, we acknowledged that it was a challenging year, primarily due to ongoing yet temporary delays in project starts procurement cycles in waste receipts largely driven by the continuing resolution for the federal budget. These headwinds persisted into the fourth quarter, leaving two rare.
Mark Duff: These shortfalls. However, it's important to emphasize that these charges do not reflect our long term outlook towards this end I'm pleased to report that we're already seeing improvement in Q1, our waste treatment backlog has strengthened and we expect a meaningful increase from Q4 levels.
Mark Duff: Waste volumes are improving and we have added plant operating shifts acute facilities to meet rising demands. This progress combined with improving project visibility positions us for a return to growth and profitability in 2025, with particularly strong second half as key programs ramp up one of the most significant contributors.
Mark Duff: Sure.
Mark Duff: The growth is the direct feed low activity waste program also known as the of law at Hanford.
Mark Duff: Which remains on track to begin initial takeaways treatment operations. This summer.
Mark Duff: <unk> reaffirmed its legally binding milestone of August 1st.
One waste treatment activities are expected to commence which would mark a major milestone for the industry.
Mark Duff: Our perfect northwest facility is well positioned to support effluent treatment from efforts vitrification process.
Mark Duff: We've already initiated design and planning activities to ensure we can meet <unk>.
Mark Duff: Requirements as waste.
Mark Duff: Our buying scale up.
Mark Duff: The long term opportunity associated with this program projects.
Mark Duff: To support up to 8000 cubic meters annually with ramp ups expected in phases over the next two or three years. Additionally, we continue to pursue sub contracting opportunities under the integrated tank disposition contract at Hanford also known as the I T D C and multibillion dollar project with significant small business participation requirements.
Mark Duff: As D. We finalizes its broader tank waste remediation strategy, we believe perfect is well positioned to play a key role in supporting these efforts.
Mark Duff: We're also beginning to see the results of our expansion in the industrial waste market under the leadership of our perfect. Florida facility. This focus has included broadening our client base to larger government contracts for industrial hazardous materials and waste streams within the South East region that could benefit from our experienced a treatment and a disposition.
Mark Duff: On the government contracting side, while federal budget delays impacted.
Impact.
Mark Duff: Procurement cycles in Q4, we remained well positioned for upcoming D. We end EOD opportunities one of our most significant recent wins as our role in the West Valley demonstration project, a 10 year multibillion dollar contract, which began its transition in Q1. This project aligns with our expertise and radiological protection and waste management.
Mark Duff: We expect revenue contributions from this project to scale through 2025 as a project is further refine and work transitions transitions into.
Mark Duff: Execution.
Mark Duff: It is expected to be completed and be operational in early Q3.
Mark Duff: In addition, our U S. S X enterprise decommissioning procurer of bid submitted in January remains remains a highly competitive opportunity.
Mark Duff: And we anticipate a decision by mid year. We're also pursuing pipeline opportunity is anticipated to be awarded in 2025.
Mark Duff: D O Y 12 facility at Lawrence Livermore, and Lawrence Berkeley National Lab facilities.
Mark Duff: And other Vod sites, which we contribute to a robust multi year growth pipeline.
Mark Duff: Marlborough procurement cycles remain impacted by federal budget uncertainties, we remain optimistic about our positioning for these projects as funding stabilizes.
To navigate ongoing federal budget, uncertainties, we proactively implemented cost reduction measures within our nuclear services segment, but these actions are designed to align our expenses with our revenue backlog, while ensuring flexibility as procurement cycles stabilize.
Mark Duff: Uncertainty remains.
Mark Duff: While uncertainty remains in regards to the budget adjustment that may impact some of our larger deal. We would do with clients. We remain confident that these impacts will have limited effect on the D. O N E. D. F law effluent waste receipts due to the commitment for D. A way to maintain the Tri Party agreement schedule for this summer to begin operations operate.
Mark Duff: In addition.
Mark Duff: The likely adoption of a continuing resolution through the rest of this year by Congress.
Mark Duff: I think budgets are anticipated to remain steady at least through Q4 and limit the impact of war on waste receipts overall in 2025.
Mark Duff: As part of our long term strategy to diversify revenue, we continue expanding our presence in the international market with particular progress in Canada, Mexico and Europe. The JRC project remains.
Mark Duff: <unk> project, which is the one in Italy remains on track with final permit and program documents submitted in December to support treatment operations beginning in late 'twenty six.
Mark Duff: I'd like now to turn to our PFS destruction technology, which represents one of the most promising areas of growth for perma fix over the past four months up from a fast system is operated at a commercial scale successfully meeting performance expectations as we continue to optimize operations and refine the engineering parameters for the design.
Mark Duff: One of our larger system. We are now beginning to focus on the development of the second generation <unk> unit, which we expect will triple processing capacity and incorporate chemical recycling capabilities to improve overall efficiency.
Mark Duff: Currently scheduled for deployment in late Q3 unit. This unit will have the capacity to process nearly 2000 gallons of high concentration P fast liquids.
Mark Duff: Daily.
Mark Duff: Unlike many existing solutions that only concentrate P fast waste our purpose <unk> system permanently destroys these compounds in an economical and environmentally friendly manner are creating a clear differential from other approaches.
Mark Duff: <unk>, we're expanding our R&D efforts to develop the vast treatment solutions for contaminated soil and filter media with pilot scale demonstrations.
Speaker Change: For Q2.
Speaker Change: While we are highly optimistic about the long term potential of this technology, it's important to point out that our PFS initiatives have required substantial investment.
Speaker Change: Impacting our financial results. However, we believe these efforts are critical to positioning profiles perfect as a leader in P vast destruction.
Speaker Change: On one final note I'm pleased to announce that perma fix has strengthened its execution its executive leadership team with the recent appointment of tour Eshelman as our Chief operating Officer effective January 23rd 2025, Troy brings extensive experience in nuclear and environmental services.
Speaker Change: And his leadership will be instrumental in optimizing our operations and executing our growth strategy.
Speaker Change: Looking ahead, we expect a return to growth and profitability in 2025, driven by a solid backlog improving project execution and key initiatives gaining momentum.
Again these several factors that support this outlook include.
Speaker Change: Strengthening our backlog and improved waste treatment volumes the ramp up of the <unk> program at Hanford expansion of our P fast treatment capabilities with the Gen. Two for fast deployment in late Q3, a key key contract wins, including West Valley, and multiple <unk> opportunities and ongoing cost.
Speaker Change: Disciplined to reduce our cost of goods sold ensuring flexibility in navigating federal procurement cycles as well.
Speaker Change: So to wrap up we're entering 2025 with the strong fundamentals and improving revenue trajectory.
Speaker Change: And major opportunities ahead, with our improving backlog expanding market presence and innovative technology solutions, we're confident in our ability to drive profitable growth and long term value for our shareholders.
With that I'll turn the call over to Ben Naccarato to discuss our financial results in more detail Ben.
Ben Naccarato: Thanks Mark.
Ben Naccarato: Starting with revenue our total revenue from continuing ops from the fourth quarter was $14 7 million compared to last year's fourth quarter.
Ben Naccarato: $22 7 million Thats, a decrease of $8 million or 35, 2%.
Ben Naccarato: Treatment segment was down $1 4 million, while the services segment was down six six.
In the treatment segment, the shortfall was attributed to lower volume.
Ben Naccarato: As well as lower average pricing of our waste.
Ben Naccarato: The reasons for the reasons for this impact varied from Hurricanes in Florida, lower margin waste mixed throughout the plants, our investment in <unk> and R&D.
Ben Naccarato: Efforts on our <unk> technology, as well as certain waste receipts and shipments that were rescheduled into 2025.
Ben Naccarato: Services segment revenue drop was.
Ben Naccarato: Consistent with the rest of the year, which was lack of large projects to replace the larger ones that were came to an end in 'twenty three.
Ben Naccarato: For the year ended 2024, our revenue was $59 1 million compared to $89 $7 million in 'twenty three.
Ben Naccarato: That drop of $30 6 million or 34, 1%.
Ben Naccarato: The drop in revenue at treatment was $8 5 million and services revenue was down $22 1 million.
Ben Naccarato: So again as with the quarter, both our reporting segments had substantial revenue decreases with the treatment segment revenue.
Ben Naccarato: Impacted by poor weather prolonged effects of the continuing resolution equipment maintenance issues, the R&D and the R&D and RFP fast technology.
Ben Naccarato: The services segment again continued to feel the effects of continuing resolution as many procurement awards expected to happen in the year were delayed or postponed.
Ben Naccarato: Turning to our gross profit.
Ben Naccarato: For fourth quarter, our gross profit was 594000 compared to $4 3 million in 2023.
Ben Naccarato: Gross profit in the treatment segment decreased by $1 9 million due to the lower revenue and higher labor and regulatory expenses at the plants. Our services segment gross profit was below prior year by $1 8 million to mostly to the lower revenue.
And also lower margin projects offset by lower fixed costs related to labor reductions.
Ben Naccarato: For the year ended 2020 for our gross profit was down $16 4 million both reporting segments gross profit were impacted by lower revenue as well as lower margin waste and projects are fixed costs were up at the plants, primarily from labor costs, but partially offset by lower costs.
Ben Naccarato: Service labor costs in the service segment.
Our G&A costs for the quarter were $3 9 million compared to 4 million.
Ben Naccarato: In the fourth quarter last year, while our G&A for the full year was $14 5 million compared to $15 million in 2023.
Ben Naccarato: G&A expenses for the quarter were down slightly from lower trade shows commit sales commissions incentives bank charges and travel.
Ben Naccarato: These overall lower costs were slightly offset by higher marketing.
Ben Naccarato: Salaries and other general expenses.
Similar to the quarter, our G&A costs were down for the year from lower sales related expenses incentive expenses legal fees up and offset by higher wages and general expenses.
Ben Naccarato: Our net loss for the quarter was $3 5 million compared to last year's net income of 81000.
Ben Naccarato: For the year ended December 31, 24, our net loss was $20 million compared to net income.
Ben Naccarato: 485000 in the prior year note that our 2024, netting net loss include.
Ben Naccarato: Included approximately $8 2 million of income tax expense related to our valuation full valuation allowance established against our U S deferred tax assets, which of course is noncash.
Our basic and diluted.
Ben Naccarato: Net loss per share for the quarter was 22.
Ben Naccarato: Compared to income per share last year of <unk>.
Ben Naccarato: Our loss per share for the year ended 12, 31 2004 was one three.
Ben Naccarato: <unk> 33 per share compared to income per share of <unk>.
Ben Naccarato: In 2023.
Speaker Change: Our EBITDA for the continuing operations in the quarter as we defined in this morning's press release.
Speaker Change: A loss of $3 million compared to income of 434000 last year and for the year ended 2024 EBITDA loss.
Speaker Change: Was $13 8 million compared to income of three three in 'twenty three.
Speaker Change: Turning to some balance sheet items compared to last year's.
Speaker Change: Our cash on the balance sheet sits at $29 million compared to $7 5 million.
Speaker Change: Year end 'twenty three.
Speaker Change: This increase of course is primarily from our net proceeds received from the equity raises in May and December of 'twenty four.
Speaker Change: Our receivables and Unbilled receivables collectively were down $1 6 million due to lower revenues in the service segment.
Speaker Change: Compared to last year.
Speaker Change: Offset by higher accounts receivable that are.
Speaker Change: Expect it to be have been are expected to be collected in 25.
Speaker Change: Our net property and equipment was up $2 1 million from cap spending which included the construction of RFP fast reactor.
Speaker Change: Intangibles and other assets were down $3 million, primarily due to the full valuation allowance established against the company's deferred tax assets.
Speaker Change: Our current liabilities were down $4 million.
Speaker Change: The timing of payments and decreased operating.
Speaker Change: As of December 24 as of December 2020 for our treatment backlog was $7 9 million, which is down from $10 7 million at the end of 'twenty three.
Speaker Change: Our total debt for the quarter is $2 5 million, excluding debt issuance costs and thats, mostly owed to our PNC bank.
Speaker Change: Our working capital sits at $28 2 million compared to $4 5 million last year.
Speaker Change: Finally, I'll summarize cash flow activity, our cash used by continuing operations was $14 1 million.
Speaker Change: Our cash used by discontinued operations was 597000.
Speaker Change: Our cash used for investing in continuing operations was $4 $1 million, primarily for cap spending and permits.
Speaker Change: Cash used for investing and discontinued operations was 51.
Speaker Change: Cash provided by financing was $41 million.
Speaker Change: This represents the proceeds from the two equity raises of $41 9 million risk.
Speaker Change: Receipts from options and warrant exercises of 292000.
Speaker Change: Less payments to our term in capital loans of 832000 and payments to our finance leases and other debt of 364000.
Speaker Change: With that I'll now turn the call over to the operator for questions.
Speaker Change: Thank you at this time, we will be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad.
Speaker Change: Confirmation tone will indicate your line is in the question queue. You May Press Star two if you would like to remove your question from the queue.
Speaker Change: For participants using speaker equipment that may be necessary to pick up your handset before pressing the star keys, one moment, please while we poll for questions.
Speaker Change: The first question today is coming from <unk> <unk> from Craig Hallum, Aaron Your line of lives.
Yeah, Hi, Mark and Ben Thanks for taking the questions.
Maybe first for me just on you know with the federal.
Speaker Change: Impact you kind of touched on it in the near term, but with the.
Speaker Change: The budget delays and potential.
Speaker Change: This weekend some progress there can you just kind of talk about how you see that impacting the near term if we see another CR.
Speaker Change: And then just some of these larger opportunities it sounds like West Valley on the services side can still move forward and also optimistic on Hanford.
Speaker Change: If you could elaborate on the federal picture that'd be great.
Eric: Sure Eric I appreciate your question.
Speaker Change: This is <unk>.
Speaker Change: Very complex.
Speaker Change: Answer, but let me start with the.
Speaker Change: The potential of a shutdown government shutdown right now just to kind of mix.
Speaker Change: Sure. It was aware of our position as it is.
Speaker Change: Shutdown and we have very limited impact to our perma fix if it's less than two weeks, which usually is.
Speaker Change: And that's because we have a good enough backlog, we have very little.
Speaker Change: Revenue associated on government sites are just some cleanup projects.
Speaker Change: It could have a limited duration.
Speaker Change: Of impact, but for the most part it's minor if there's more than two weeks, but it's still we still have very strong backlog for quarter.
Speaker Change: On the waste treatment side.
Speaker Change: And we might see some more impacts on procurements and those types of things if it's over a couple of weeks, but we generally feel like a shutdown would not have dramatic impact on us if it's as long as they usually are.
Speaker Change: As far as the CR goes.
Speaker Change: See ours are not good for us a lot of times.
Speaker Change: The government.
Speaker Change: Put things on hold and those types of things.
Speaker Change: One thing good about a CR and this situation is there is no budget cuts and the CR are not likely to be and there's a couple of plus ups here and there that we're expecting at several different sites, depending on which.
Speaker Change: Bill gets considered in the final on regards to.
Speaker Change: Funding of different sites and projects, but most of the projects. We're chasing on the services side are funded.
Speaker Change: And we just had our annual waste management conference. This past week in Arizona I met with many of our clients.
Speaker Change: <unk>.
Three are out of the five projects that we expected to see this summer.
Speaker Change: Our still move forward irrespective of the budget or the CR. So we expect limited impact still there was always some from <unk>, but we don't expect a lot.
Speaker Change: We do have some uncertainty associated with what 26 looks like.
Speaker Change: We are confident as I mentioned in the notes that the <unk> program.
Speaker Change: And the hand for closure program as a whole would see very little impact to our scope of work, although it will likely be some reductions in force across across the board as it will everywhere, but as far as the commitments that <unk> made in the Tri Party agreement, which is an agreement that we signed with the state in each.
Speaker Change: As a legally binding agreement and.
Speaker Change: And was mentioned at the Secretary of energy as Chris Rights.
Speaker Change: Senate hearings.
And you gave a commitment to maintain those milestones and strategy I do expect that to have a very limited impact.
Speaker Change: To the budget for 2006, so again thats speculation based on our discussions with <unk> and the contractors and Hanford.
But.
Speaker Change: Certain lines up with the overall priorities.
Our program.
Speaker Change: So overall, we don't.
Speaker Change: I have an idea again, what what those reductions might look like as far as the trickle down to projects.
Speaker Change: What do we do know is that from the meetings last week is that the deal we said in several different <unk>.
Speaker Change: Conferences and meetings publically that this administration, particularly in the environmental management side of the house and in the Se side of the house, which is the weapons program.
Speaker Change: Very much a bias towards execution.
Speaker Change: And doing things cheaper.
Speaker Change: <unk> commercialization, which is what we offer is a big part of that so we're excited about where it's going again.
Speaker Change: As you've seen on television of any times or maybe some disruption along the way, but right now we are.
Speaker Change: We are excited to see a bias towards execution, which is typically means waste generation.
Speaker Change: Does that get all your ray or Andrew.
Speaker Change: No. It does it does thanks, thanks for the color there Mark and then maybe second for me just on <unk> good to hear.
Speaker Change: And see kind of progress towards that legally obligated startup by buying <unk>.
Speaker Change: Can you just kind of talk about how you kind of see the potential start up there in phases, and just how you're preparing the business.
Speaker Change: They're at the Richland plant and what Youre doing kind of operationally to get ready.
Speaker Change: Sure right now.
Speaker Change: The idea of law facility is going through what they call an operational readiness review, which is a very stringent.
Speaker Change: View by.
Speaker Change: Engineering experts independent experts, most cases, where they come through and it just check absolutely everything.
Speaker Change: They've already been similar reviews already so this is not the first time, they're going through that but this is the final one.
Speaker Change: The operational readiness review will generate a list of findings.
Speaker Change: And once all of those findings are addressed.
Speaker Change: Sufficiently for the team.
Speaker Change: And then they will move towards startup.
And we.
Speaker Change: We expect that again to be on track <unk> said.
Meets in several cases has said that it is on track. So there's no reason to believe not it is not.
Speaker Change: We haven't heard any feedback about the or are and what their findings might be looking like as they come up.
Speaker Change: Most likely will be towards the end when its completed which will be in the next several months.
Speaker Change: So it seems to be on track and.
Speaker Change: D. We had mentioned again in these conference this past week.
Speaker Change: Among our highest priorities are to keep Hanford are moving forward with the investments they've made there over the long term so.
Speaker Change: As far as how it's phased in.
Speaker Change: There is no official documents says we're going to be getting a certain amount of waste on a certain date.
Speaker Change: From talking to the engineers and formerly they are expecting it to start to begin at like a 40%.
Speaker Change: Of its design capacity in.
Speaker Change: It may be a little bit more maybe less our expected to be a little less than that but it'll start off a little bit slow.
Speaker Change: And then they have three years legally to ramp up to full capacity or their intention is to ramp up much faster than that they have about 1 million gallons of backlog, which is one full year of full operations.
If they're running at full capacity at all time.
Speaker Change: So we've got the backlog in a tank ready to go.
Speaker Change: And we would expect it to go faster than overall.
Speaker Change: We're not sure how much of each way through we will be receiving in regards to quantity and value in those kinds of things, but we do expect it to start receiving waste.
Speaker Change: In.
Speaker Change: Mid Q3.
Speaker Change: Certainly.
Sometime in August September.
Speaker Change: So it seems to be on track and moving forward overall.
Speaker Change: And again, what happens between now and the end of the year.
Speaker Change: So a lot of of <unk>.
Speaker Change: Waiting to see how it works out but it seems to go on track.
Speaker Change: Understood and then and then maybe just an update on investments at the plant.
Speaker Change: From an operations and kind of equipment standpoint.
Speaker Change: So we are upgrading our plant in several different ways with new equipment on the radiation protection side of the house.
Speaker Change: We're putting in some <unk>.
Speaker Change: Currently in final design phases for the upgrades, we need to make to address some of the different waste streams.
Speaker Change: Particularly with liquids.
Speaker Change: And.
Speaker Change: We've hired a number of people.
Speaker Change: To assist with that to make sure we've got the personnel in place.
Speaker Change: To the REO handled as well and finishes upgrades so.
Speaker Change: We have not spent a lot of capital at this point.
Speaker Change: But we will be here through the next.
Speaker Change: 12 months.
Speaker Change: And as we see what types of waste streams, we're going to be getting and how much of each and we do have the capacity to handle a good bit.
What we expect to receive at least when it starts up so we don't see an impact for this summer as.
Speaker Change: As far as what we have our capacity is now.
We can go to multiple shifts if we need to to address it and we don't see that as being an issue.
Speaker Change: For the waste streams, we initially anticipate receiving so.
Speaker Change: We are making progress and you had some again brought the resource is all we need to start implementing.
Speaker Change: Alright, Thanks for that and then maybe last for me on <unk> can.
Speaker Change: Can you just kind of talk about what the costs have been kind of thus far how you see those trending in 2025 and <unk>.
Speaker Change: Just kind of how that growth shapes up for this year and into 2026 as you develop that second generation unit in.
Speaker Change: I know you've talked a little bit about potential partnerships. So if you can maybe just elaborate there. Please.
Ben Naccarato: I'll, let Ben address our cost.
Speaker Change: Then.
Speaker Change: And where we're heading in the next couple of quarters, and then I can talk about where we are the partnerships and a little more detail on that venue and address the cost yes. So in 'twenty four we probably use about $3 million.
Which translates from a $2 million of cash for cap for the reactor and about $1 million and change for R&D.
Speaker Change: Projections are much higher for 25 with Gen. Two.
Speaker Change: We forecast around $5 million, which will include both the R&D and in cap spending.
Speaker Change: So that's kind of the financial impact of where it's going and are pushed back to mark on production.
Speaker Change: As far as production goes we do continue to operate.
Speaker Change: It's important to understand that while its commercially viable it is generating revenue.
Speaker Change: Our operating slowly.
Every year is Lou <unk>.
Speaker Change: <unk> continues to remind me it is continuing to be an R&D program. Our every batch we're taking extensive.
Speaker Change: Okay.
Speaker Change: Extensive analytical sample analysis on and so we understand the performance.
Speaker Change: We're also having to define the parameters for the wide variations of <unk> itself different concentrations, but more importantly, all different types of other constituents in the waste of receiving liquid waste we're receiving.
Speaker Change: So we continue to upgrade our facility.
Speaker Change: <unk>.
Speaker Change: We are now.
Speaker Change: Partner on now, helping us with improving our design.
Speaker Change: And the back end of our Gen. One systems operating what we call. The distillation unit that same company is helping us with the.
Speaker Change: Final design of our Gen two as well so.
Speaker Change: We are receiving lots and lots of samples from different companies partners potential partners.
Speaker Change: And working through those.
Speaker Change: We're particularly excited about our large volume generators.
Speaker Change: That will have sustainable waste streams, we're working through through their samples now with Gen. One with all kind of focus on Gen. Two again as I mentioned being running in Q3 to be able to handle a large quantity of waste and keep up with significant backlog. So.
Speaker Change: We do continue moving forward on an everyday on it and.
Speaker Change: As I mentioned, we are generating revenue is not a <unk>.
Dramatic at this point, because it's so methodical and there's so much data.
Speaker Change: Associated with the analytical side of the house and reports in our reporting on how we're performing but we are making significant progress.
Speaker Change: Yes.
Speaker Change: Gaining new clients all the time, we expect to be getting waste here in the near term from that as.
Speaker Change: As well as.
Speaker Change: <unk> gotten samples from <unk> as well.
Speaker Change: Sure.
Speaker Change: About a dozen different maybe 15.
Speaker Change: Large companies on the commercial side, along with some smaller ones. So.
Speaker Change: We continue to move forward with the program.
Speaker Change: Objective of getting to a more operational state in the next quarter.
Speaker Change: Alright, thanks for the color I'll turn it over.
Hey, Thanks, Darrin Darrin.
Speaker Change: Thank you. The next question will be from Ross Taylor from IRS investments Ross Your line is nice.
Speaker Change: Thank you I'd like to follow up on some of what Aaron was asking you guys about first you talked about the idea of needing about $5 million additional to build out the gen. Two P fast what do.
Do you see the economics being on Gen. Two P. Fast you were talking about.
Speaker Change: Number of gallons you'd be able to deal with it.
Speaker Change: On a dollar if I'm going to model this.
What kind of money.
Speaker Change: What do you what do you see getting a gallon what kind of.
Speaker Change: Our operating margin.
Speaker Change: Yet on that.
Speaker Change: Per gallon basis.
Speaker Change: Yes. Thanks for the question Ross, Yes, our goal and our design of Gen. Two has been to ensure that we can easily.
Speaker Change: Defy our our revenue at about $5 million a quarter.
And so again, we're still.
Going through different scenarios.
Speaker Change: Whether we have one reactor to reactors and how fast it can go.
Speaker Change: Go multiple shifts.
Speaker Change: Types of things, but our goal to answer your question is to get the $5 million in revenue a quarter as a baseline.
Speaker Change: And again like the rest of our waste treatment programs. Our goal is to be able to maintain the similar type of 70% margin incrementally about fixed as.
Speaker Change: As we do with some of our other waste streams. So that's generally where we are.
Speaker Change: The money that Ben talked about will be for.
Speaker Change: Fabrication of that new system as well as installation installation is quite expensive as well with the power requirements and the.
Speaker Change: Permitting and facility upgrades, we need to do to install it.
Speaker Change: And Thats, all I expect it to be.
Speaker Change: <unk> as we've said by by end of Q3.
Okay, and Thats, all in that $5 million cash burn or cash investment you are expecting in the piece that project through this calendar year.
Speaker Change: That's correct.
At the same time, we are spending money on.
Speaker Change: Other things as well for example.
Gen one.
Speaker Change: The upgrades, we actually call. It Gen. One five to Gen. One.
Speaker Change: We are working with XI company.
Speaker Change: To make it better it will be operating as well so it's not like assistant R&D unit once we make the upgrades to that the summer. It will continue operating at about 650 gallons a day.
And.
Speaker Change: Luminous team.
Speaker Change: Which is a substantial team of Phd chemists continue to work on the soils.
Speaker Change: Gak Phil.
Speaker Change: Filtration media.
Speaker Change: To continue moving the ball forward with with those applications and design for <unk>.
Speaker Change: Unit.
Speaker Change: That we can fabricate sometime in 'twenty six.
Speaker Change: So are you going to as you move forward.
Speaker Change: For our market.
Speaker Change: And one is basically.
Speaker Change: Or is that.
Speaker Change: As much as it takes to get to adjourn to the operational to meet the demands we need.
Speaker Change: I've said on these calls and investor meetings that Gen. One is up and operating its run 100 miles an hour you know where it's going great.
Speaker Change: Would be one thing thats been determined as the technology works very well.
Speaker Change: But there are so many engineering parameters that go into this in regards to the chemistry.
Speaker Change: And the heating processes and the pressure.
Speaker Change: How long we cook versus what are you how low do you want to get in concentrations.
Speaker Change: All the analytical requirements go along with this a lot of variables and so yes to answer your question. Our goal is to learn from this gen. One.
Speaker Change: But we are we.
Speaker Change: We are getting near to the end of the R&D portion of that.
Speaker Change: Where we should be able to get two more <unk>.
Speaker Change: Sustainable throughput here.
Speaker Change: Here in the next few months once we can document and verify the performance based on analytical so.
Speaker Change: To answer your question.
Speaker Change: Always kind of see as being.
Speaker Change: Being a test unit.
Speaker Change: That will try new things on but we are improving it all the time as well.
Speaker Change: And we do see it being a contributor to revenue.
Speaker Change: In the in a bigger way beginning at.
Beginning in the second half of the year.
Speaker Change: With regard to Hanford, you talked about the idea that you.
You got to have a million gallon a year kind of full rate run rate added lawn you think you start about 40% of that.
Speaker Change: It would be around 33 34000 gallon.
Speaker Change: Bob.
Speaker Change: Yes.
Speaker Change: You're running at the rates you would.
Speaker Change: And then on DSO at year end is that.
Speaker Change: On its own to get the.
Speaker Change: The company to cash flow breakeven free cash flow breakeven.
Speaker Change: Yeah, Let me make sure I understand it.
Speaker Change: As.
A common misunderstanding.
Speaker Change: The waste youre going to be getting from the floor is not all liquid.
In fact, it's probably less than 25 years, so there's a lot of solids.
Speaker Change: Other things besides the liquid program.
Speaker Change: It typically referred to as Brian.
Speaker Change: And but to answer your question.
Speaker Change: As far as getting cash positive, we do expect to be very close to cash positive once it starts rolling.
Speaker Change: We haven't budgeted 40% in other words, we budgeted much less of that than what we've assumed much less than that to get started.
So if we can if we can get 40%.
Speaker Change: <unk>.
Speaker Change: Sure.
Speaker Change: The 8000 cubic meters a year.
Speaker Change: As far as an annualized <unk>.
Speaker Change: Throughput will be doing great. So.
Speaker Change: We've assumed internally theres going to be a little lower than that and we should be fine with that we're also starting to get other waste streams and larger volumes from Hanford right now they are starting to increase.
From other programs at Hanford.
Speaker Change: As I mentioned, the new contract contracted that took over the.
Speaker Change: <unk> contract is.
Speaker Change: Working very closely with us to to increase our role there.
Speaker Change: And so between that and the a flaw.
Speaker Change: We're very confident we should be cash positive by the end of Q3.
Speaker Change: Okay and.
Speaker Change: So when we are looking at that do you need any capex anything else.
Speaker Change: <unk>.
Speaker Change: And where it needs to be too.
Speaker Change: They pushed it program.
Speaker Change: Operator.
Ross: Ross This is Ben I think the answer to that is at this time after the raise we did in that includes upgrades at Hanford.
Ross: In that number so at this time to note that would be announced.
Ross: You ask a philosophical question generally when companies have like a core business and you have I can look at.
Ross: Yes.
Ross: A core business and a bunch of call options hanging on it.
Ross: Yes.
Ross: The grouting, you've got you mentioned the day.
Ross: The enterprises.
Ross: Essentially macrolide, we've got Europe, we've got PFS, you've got a lot of these kind of color around it.
Ross: Annually.
Ross: We'd like to see a company operated core business at breakeven or better. So it basically covers the cost of being public.
Speaker Change: Public company you guys have struggled with what needs to be done to get that.
Ross: Core business.
Ross: It doesn't.
Ross: Capital out of the company, but instead.
Ross: Basically you can keep the company added capital.
Ross: Constant capital level or quite honestly is there a thought at some point that you monetize that.
Ross: Other call option assay, which is funded.
Ross: We put people on the spot.
Yes, Ross this is.
Ross: This has driven the manager doing crazy as that.
Speaker Change: All of these wonderful initiatives and it was all based on.
Speaker Change: Somewhat a breakeven base business and Thats, what youre talking about.
Speaker Change: As I've mentioned before that base business really for us is $80 million a year $20 million of quarterly revenue.
Speaker Change: And it's been a shock to us that we haven't been able to maintain that.
Speaker Change: I don't think as an industry as industry trend certainly from the conference. We had last week no one else does either it's just.
Speaker Change: Procurements have been delayed waste receipts were delayed for a period of time they are starting to pick back up.
Speaker Change: Somewhat has to do with leadership in Washington changing.
Speaker Change: And just a slowness in.
From people working from home frankly.
Mark Duff: Mark Best opinion, but the Bottomline is that.
Mark Duff: Return to work has been very refreshing all our federal clients are all back in the office for the first time in four years.
Mark Duff: And we have a lot more optimism, but the bottom line is that we have struggled again were running around $60 million revenue eight is where we got to be we know that we're doing everything we can to cut our costs, while doing ever you cannot grow.
Mark Duff: And that which is obviously a difficult challenge.
Mark Duff: But we're seeing improvements.
Mark Duff: On the waste receipts on the services side is.
Mark Duff: There was optimism, but it's slow and as I mentioned, we've cut a significant amount of G&A out of our services group until we can get.
Mark Duff: That revenue backlog built back up.
Mark Duff: So it doesn't drain us.
Mark Duff: And.
We're hopeful that we can get back to that $20 million a quarter in revenue beginning second half of the year.
Mark Duff: We're very focused on your exact comp concept that you just brought up.
Mark Duff: And we.
Mark Duff: We put a lot of emphasis in time and the management team to <unk>.
Mark Duff: Get that revenue back up to $20 million and if we can get our costs low enough, where we can at least be breakeven until these things start taking off that we've discussed.
That will obviously be a huge step because it would remove the need.
Mark Duff: Right right.
Mark Duff: Pretty dilutive financings.
Mark Duff: Obviously.
Yes, I think that's been an area of great prestige.
Mark Duff: Normalizing the year Youre seeing some positive trends summarizing your outlook into this year you are seeing some positive trends in your core business that you think could help.
Mark Duff: Probably about that revenue line, whether it gets to the 20th quarter, you need or not.
No question, but it should be getting better as we push forward at the same time, you see moving at the end of the year.
Mark Duff: Our fourth quarter, we should be seeing.
Mark Duff: <unk> two <unk> in the marketplace operating it.
Mark Duff: <unk> talked.
Mark Duff: <unk> talked about and at the same time also.
Mark Duff: <unk> operating.
Mark Duff: Yes.
Mark Duff: Introductory level the initial levels.
Mark Duff: Ramping so thats, what youre seeing is that all of that comes together by the end of this year you expect it to be.
Mark Duff: Not yet producing earnings producing free cash flow was lower than 2006 should be.
Mark Duff: Year that see some huge wins.
Mark Duff: That's right that's right.
Mark Duff: It wasn't long ago, we did have our base model 'twenty three we did pretty good we did $45 million was about $4 million in EBITDA.
Mark Duff: So we know what it feels like.
Mark Duff: And we didn't expect this to happen but.
Mark Duff: Certainly what we saw for 'twenty four.
Speaker Change: As you know Ross, we predicted 24 to be kind of a rebuilding year.
Speaker Change: But we do expect at least a breakeven through the year these growth initiatives.
Issues.
Okay, well you got a lot on your plate.
Speaker Change: Yes.
Speaker Change: The Japanese thing goes to get 80%.
Speaker Change: Alright, Thanks, Ross take care.
Speaker Change: Thank you and once again Thats star one if you wish to ask a question on today's call and the next question will be from Bob Goodwin from Larkspur capital Bob Your line is nice.
Speaker Change: Alright.
Speaker Change: It's Bob Goodbye.
Speaker Change: Arch for advise you guys I guess 20 years ago, So we know quite well.
Speaker Change: The question I have as it relates to <unk> SaaS and <unk>.
Speaker Change: When the EPA put.
Speaker Change: The AG chemicals on there.
Speaker Change: List.
Speaker Change: We did a little bit more work.
Speaker Change: Yeah.
Speaker Change: Work from their engineers, we're viewing.
Speaker Change: Various technologies to eliminate.
Hum.
These forever chemicals.
Speaker Change: Hey, so a comment was they loved the throughput turnaround time and they loved the low temperature.
Speaker Change: And we're heavily involved with geothermal so we're talking to all of the service providers to that Ed.
Speaker Change: I think your biggest market is correct.
Speaker Change: Followed by fertilizer that's created by.
Speaker Change: Waste treatment plants.
Speaker Change: Articles recently about.
Speaker Change: However, chemicals, causing problems.
Speaker Change: And the other thing is we create a mobile unit.
Speaker Change: Yes.
Speaker Change: We have looked at that Bob as far as the mobile unit goes.
Speaker Change: And we believe that right now, it's not that big of units a little bigger than a skid mounted support but not that much.
Speaker Change: We could do a mobile unit, we need we need to work out a couple of issues with our distillation.
Speaker Change: A portion of it when it comes out as effluent.
Speaker Change: And.
Speaker Change: But it's certainly something that.
Speaker Change: Thats not farfetched, if we look at our competitors, particularly a supercritical water oxidation.
Amongst <unk> unit takes enormous amounts of power and energy ours doesn't as you mentioned, we can be supported by a mobile generator.
Speaker Change: But that's certainly in the plans Lou do you have any you want to add to that.
Speaker Change: Yes.
Speaker Change: Hey, Bob Good hearing from you Hey, How're you doing.
Yes, no we are.
Speaker Change: When we get to some of the media, especially like soils.
Speaker Change: It will be in mobile system, so on the liquid side.
Speaker Change: It can easily be put into.
Speaker Change: In mobile operation as we now envision it.
Speaker Change: And that will all depend on the market and how much clients have in.
What what it makes sense, but the soils win.
Speaker Change: Definitely will be a mobile unit.
Speaker Change: Yes.
Speaker Change: What it will do it at our facilities will be able to do it at our facility.
Speaker Change: In the long run the better approach is go to the site treat the soil.
And leave it there.
Speaker Change: Perfect, that's exactly right and the geothermal data centers knee gobs amount of power.
Speaker Change: So the best I can do is put a data center next to the geothermal site.
Speaker Change: In your case you've got.
Speaker Change: Crack water and after the announcement a lot of the crack orders then put it into.
Speaker Change: 55 gallon drums on site.
Speaker Change: Because of the forever chemicals contained therein.
Speaker Change: And.
Speaker Change: Yes.
Speaker Change: Tracking operation doesn't last that long.
So that's why for automobile unit the extent you have it could.
Speaker Change: Could recycle at water.
Speaker Change: Yes.
Speaker Change: Our thoughts and when we look at that is when we've got clients that have stuff in drums is it better to go to their site or is it better to take it to a fixed facility.
Speaker Change: It will all depend on volumes very large volumes.
Speaker Change: It probably would be better to moving unit there.
Our system can easily be put on a mobile unit.
Speaker Change: When it's really getting to the second generation so that as we sit today.
Speaker Change: We're seeing a lot of.
Speaker Change: Smaller volumes coming from a lot of different clients.
Speaker Change: And.
Speaker Change: That's growing fairly dramatically as we sit here, we've had great experience with clients looking at our system and saying Wow that's.
Speaker Change: That's the way to go.
Speaker Change: Have you talked to the water treatment plants.
Speaker Change: Recurrent fertilizer.
Yes, we have been involved with <unk>.
Speaker Change: Biosolids, we've looked at it we can treat file solids.
Speaker Change: And.
Speaker Change: That's a little more complicated I think this is soil systems at this stage.
Speaker Change: The really what we see is the simplest approach to adapt our technology to so the biosolids.
Speaker Change: The advantage we have is our reagents are all environmentally benign.
Speaker Change: So if you treat whatever you are treating.
Speaker Change: Back on the ground.
Speaker Change: It should not be a problem with our reagents, so theyre not environmentally hazardous.
Speaker Change: One of the comments, so dot com just to reiterate what I got from one of the Big service providers.
Speaker Change: As.
Speaker Change: If used incineration you can create other problems.
Speaker Change: They didn't like it.
Speaker Change: Then the throughput was the other thing.
Well I think.
Speaker Change: The wastewater treatment.
Speaker Change: <unk> creates fertilizer I think those are two huge opportunity for you.
Speaker Change: We agree.
Speaker Change: Yes.
Speaker Change: We're doing a lot of work on.
Speaker Change: Not only using a mobile unit, but also the thoughts of trying to do in <unk> treatment.
Speaker Change: But that again is.
Speaker Change: Is much further down the road.
Speaker Change: Yes.
Speaker Change: That's the logistical financial analysis in terms of where is it better to do it.
Speaker Change: So well.
Speaker Change: I applaud your word on this.
Speaker Change: Well of all the technologies, we've ever developed I've never seen one that has such broad potential applications.
Speaker Change: So many markets so we're drowning in opportunity.
Speaker Change: Alright. Thanks.
Speaker Change: Cracking given what Trump wants to do.
Speaker Change: Going to only increase.
Speaker Change: Yes.
Speaker Change: So.
You guys are in a really good position.
Speaker Change: If you have any stuff you could send outs periodically keep me at all look I might be able to help you with someone contacts.
Speaker Change: Sure will.
Speaker Change: Bob break.
Speaker Change: Thank you.
Speaker Change: Yes.
Thank you. The next question is coming from Ron Richard <unk>, a private investor Ron Your line of lives.
Hi.
Speaker Change: I saw an article that came out yesterday.
Speaker Change: Planning large scale grouting at Hanford.
Speaker Change: Managers at the Hanford site in Washington State are talking with commercial providers on where the garage should.
Speaker Change: It should be done locally.
Speaker Change: And then it would make a decision by the end of the year I was wondering if you have any comment on that article.
Ron: Well Ron yes.
So this morning.
Ron: And.
Ron: <unk> had a an industry day.
Ron: In February.
In Richland right near the Hanford facility, followed by a tour of the facility.
Ron: There are four five participants.
Ron: An industry day, and then each participant had an opportunity to.
Ron: Address the number of questions and a private session presentation as well as present.
Ron: You are positioning we presented ours.
Ron: As the only existing facility.
Ron: That could support this.
Ron: We were able to address the fact that.
Ron: We could reach a 3 million gallon a year grouting capability.
Ron: Within 24 months of notice to proceed in other words right now we can do 400000 gallons. A day are we up to 400000 gallons a year with current capacity and current permits.
Ron: Modify our permit.
Ron: Add some additional capacity for storage and that type of thing which would take.
Ron: About 24 months.
Ron: So.
Ron: <unk> is moving forward with the Grouting program.
Ron: As we've mentioned in prior calls.
Ron: They are committed to doing.
Ron: 92 tanks.
Ron: To treat those tanks and grout them.
Ron: Commercially and dispose of them off site and how all of those 22 tanks done by 2040.
Ron: 2040, <unk> seems like a long ways away, but 15 years when you look at 3 million gallons a year.
Ron: It's a lot of a lot of capacity, we still feel like we're the strongest candidate the alternatives are to build a facility on site.
Speaker Change: Which deal is estimated to be.
Speaker Change: And one hundreds of millions of dollars and take quite a long time to get through the permitting as well as the construction.
Speaker Change: By the federal government.
Speaker Change: And the other alternatives is to shift the untrue.
Speaker Change: <unk> waste out of state.
Speaker Change: To Texas, and Utah, So again, we still feel very strongly that our basic base.
Speaker Change: Based on this administrations.
Speaker Change: Common sense.
Speaker Change: Approach to <unk>.
Speaker Change: Execution of projects.
Speaker Change: That.
Speaker Change: Our existing facility right outside the gate of Hannaford will be the optimal one to move forward with.
Speaker Change: Okay, alright, thanks for the color on that.
Mark Duff: You bet. Thank you Ron.
Mark Duff: Thank you and the next question is coming from Stephen Fine from so final LLC Steven Your line is live.
Stephen Fine: Hi, guys how are you.
Speaker Change: Good morning, Steve.
Mark Duff: Hi.
Mark Duff: One point is.
On the.
Mark Duff: The other tanks or they would put it into containers when what's the expectation of when that would happen.
Speaker Change: Yes, I'm talking in Hanford.
Speaker Change: Yes, that's a difficult question, Steve right now it looks like a couple of years to get through some regulatory documents from NEPA documents those kinds of things but.
Speaker Change: Again under this new contract is looking to accelerate that.
Speaker Change: Right now they haven't published.
Speaker Change: An updated schedule in regards to grouting. The last time. It was published was Hanford systems 10 document, which.
Speaker Change: Had a January 26 data in it.
Speaker Change: There's no way, they're going to meet that.
Speaker Change: But.
Speaker Change: The next couple of years, there is opportunity to begin this.
Speaker Change: And if it started out slowly could happen quickly.
Speaker Change: And it could get rolling quickly, but there is some regulatory requirements. They have to do we have to get through.
Speaker Change: And.
Speaker Change: Some discussions with some negotiations with the regulators as well regardless of permitting.
Speaker Change: But.
Speaker Change: Now I would estimate that there'll be loading of these totes.
Speaker Change: From the disc or the new <unk>, what they call they call the warms the RM.
Speaker Change: And that's just a larger scale.
Speaker Change: System to remove the technetium.
Speaker Change: And strontium.
Speaker Change: Cesium.
Speaker Change: So that they can transport it safely.
Speaker Change: And.
Speaker Change: That will take.
A couple of years as well, so we wouldn't expect them to be transporting much.
Speaker Change: Along this line before.
Speaker Change: 27.
Speaker Change: The with the dilution of the tanks at Hanford I mean, we're talking 100 million to 200 million gallons that has to be processed versus the 56 million gallons that are there.
Speaker Change: That's a real difficult calculations, Steve every tank is it going to be different but generally yes, it's going to take two to three gallons of liquid to get every gallon out.
Speaker Change: The tanks.
Speaker Change: So generally.
Speaker Change: That's right.
Speaker Change: If you look at it that way.
Speaker Change: Again, just off a couple of 150 million gallons of actual way so we'll have to be treated between.
The <unk> program.
Speaker Change: And the Grouting program and the high level waste program. So.
Yes. It takes a couple of gallons to get every gallon out.
Speaker Change: So where I'm going with that is that presuming that say it took her make the 10 years to build a grouting plan out there that still need you.
Because theres so much.
Speaker Change: Yes. My my last question is on <unk>, which is very very exciting now <unk>.
Speaker Change: Let me make the analogy I mean, obviously I've been sitting here in 2016 watching the paradigm that vitrification versus.
Speaker Change: Grouting, if you will.
Speaker Change: The <unk>.
Speaker Change: Does not have that the that it's an additive thing in other words it adds to the the present situation.
Okay.
Speaker Change: It's not an opposition to the existing.
Speaker Change: The way they do it now it's totally new.
Speaker Change: Is it being accepted that way by your competitors.
Speaker Change: I'm not sure your question, Steve as far as well.
Speaker Change: My question is.
Speaker Change: Are your competitors excepting the P pause as totally novel totally additive and something that would enhance their op.
Speaker Change: Their operations as opposed to it being a threat.
Speaker Change: We're seeing.
Our competitors are not our normal competitors. If you look at some of the companies that are starting up with technologies.
Speaker Change: They are either adopting supercritical water oxidation, which has been around a long time.
Speaker Change: Or there is something new that they're developing.
There are companies who've never heard off.
Speaker Change: And.
Speaker Change: So we're not seeing.
Speaker Change: The typical competitors, we have was energy solutions or WCS.
Speaker Change: And radioactive waste management business.
Speaker Change: Spending a lot of money on us.
Speaker Change: You do see clean harbors with her incinerator.
Speaker Change: And a few.
Speaker Change: Similar to that but.
Speaker Change: But we're not seeing people looking at a really large swath of economical.
Speaker Change: High volume.
Speaker Change: Our ability to to treat high concentration ways now.
Speaker Change: You will see you are seeing is.
Speaker Change: Several firms.
Speaker Change: Building systems that can concentrate.
Speaker Change: Beef us in liquids.
Speaker Change: Which is important because thats not something we don't do so in other words.
Speaker Change: That comes out of a landfill that might generate a 100000 gallons a day of water coming off the leachate.
Speaker Change: PFS constant there are contaminated.
Speaker Change: What they are they have capabilities of doing is considering that 100000 gallons to 1000 gallons.
Speaker Change: A matter of a day it doesn't destroy it those are the clients that we're chasing right now are the companies that are doing the concentration who treat large quantities of water, but they are generating.
Speaker Change: Theoretically 1000 gallons a.
Speaker Change: Good day.
Speaker Change: Concentrate.
US liquids that we could sustain.
Speaker Change: A sustainably treat for them on a regular basis.
Speaker Change: So.
Read it.
Speaker Change: I'm sorry.
Speaker Change: Yes, after we treated.
Speaker Change: And where does it go.
Speaker Change: Yes.
Speaker Change: Beauty is an industrial wastewater.
Speaker Change: So it's not a hazardous waste.
Speaker Change: And it can be disposed of or depot injected or central landfill.
Speaker Change: Thank you.
Speaker Change: Thanks.
Speaker Change: Thank you.
There are no other questions in queue at this time I would now like to hand, the call back to the Perma fix management team for closing remarks, okay. Thank you. Thanks.
Speaker Change: As we move forward in 2025, we remain focused on executing our strategic initiatives.
Speaker Change: Driving our operational efficiencies and expanding our market presence and the improvement in our backlog. The continued ramp up of critical projects and the advancements of our PFS technology position us well for the long term success that were planned.
Speaker Change: Despite broader budget uncertainties, we are confident that our core business remains resilient and well aligned with <unk> priorities and we appreciate the support of our shareholders and look forward to providing further updates on our progress throughout the year. Thank you for joining us today.
Speaker Change: Thank you. This does conclude today's conference you may disconnect. Your lines at this time. Thank you for your participation.