Q1 2025 Perma-Fix Environmental Services Inc Earnings Call
Good morning, everyone and welcome to the Penn affect fiscal first quarter 'twenty 25 earnings conference call.
At this time all participants are in a listen only mode and the floor will be opened for questions. Following the presentation. If anyone should require operator assistance. During the conference. Please press star zero on your phone keypad. Please note. This conference is being recorded I will now turn the conference over to your house.
Speaker Change: David Waldman of Crescendo Communications, David the floor is yours.
Speaker Change: Thank you Jenny and good morning, everyone and welcome to Perma fix environmental services first quarter 2025 conference call on the call. This morning are Mark Duff, President and CEO, Dr. Lou Centofanti Executive Vice President of strategic initiatives, and then Naccarato Chief Financial Officer. The company issued a press release this morning containing first quarter 2025 financial.
Speaker Change: Our results, which is also posted on the Companys website. If you have any questions. After the call is like any additional information about the company. Please contact Crescendo communications at 2126, 70, 1100, I would also like to remind everyone that certain statements contained within this conference call maybe deemed forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995 and includes.
Speaker Change: Certain non-GAAP financial measures all statements on this conference call other than a statement of historical fact are forward looking statements that are subject to known and unknown risks uncertainties and other factors, which could cause actual results and performance of the company to differ materially from such statements. These risks and uncertainties are detailed in the Companys filings with the U S Securities and Exchange Commission as well as this morning's press release.
Speaker Change: The company makes no commitment to disclose any revisions to forward looking statements or any facts events or circumstances. After the date hereof that bear upon forward looking statements. In addition, today's discussion will include references to non-GAAP measures projects believes that such information provides an additional measure mentioned consistent with historical comparison of its performance a reconciliation of non-GAAP measures.
Speaker Change: 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: Alright, Thank you David and good morning, everyone. We ended the first quarter facing a number of temporary challenges largely related to delays in procurement and project that project activity tied to the federal administration transition. While these factors weighed on our revenue growth, we still delivered a modest year over year increase in revenue.
Mark Duff: Importantly, we exited the quarter with momentum and improving visibility across our key growth initiatives.
Mark Duff: Our treatment segment showed improvement in the first quarter. After a slow start waste receipts began to improve towards the end of the quarter contributing to a backlog that grew to more than $10 million a bike.
Mark Duff: By quarter end up approximately 30% from where we were in 2020 for revenue in the treatment segment increased modestly year over year, and we did achieve gross profit improvement supported by higher waste volumes reduce variable costs.
Mark Duff: Other efficiency initiatives.
Mark Duff: <unk> made targeted investments to support the receipt of new ways.
Mark Duff: Staffing training and facility readiness activities that we expect will translate into throughput gains.
Mark Duff: Our waste receipts and treatment production at our perfect northwest facility from Hanford have increased.
Mark Duff: Disposal occurring locally to onsite landfills.
Mark Duff: Within our services segment revenue was down slightly due to delays in federal procurement activity, particularly in early stage projects. However, gross margins improved significantly compared to prior year, reflecting proactive cost reduction initiatives and.
Mark Duff: An improved alignment of resources with our revenue backlog as we move forward. The team continues to focus on disciplined indoor.
Mark Duff: Indirect cost management, while maintaining the flexibility needed to support larger project opportunities expected later this year.
Mark Duff: R. P. Fast program continues to advance on multiple fronts. We received our first commercial shipments from the federal government with additional approvals pending.
Mark Duff: We've also made meaningful upgrades to the system, including the integration of chemical recycling, which is already reducing costs improving efficiencies on a per gallon processed.
Mark Duff: Our Gen two a.
Mark Duff: Unit remains on track for a Q4 deployment and should expand our processing capacity by at least three times.
Mark Duff: As more states adopt stricter regulations around PFS destruction.
Mark Duff: We see this business as a promising long term growth driver, we continue to develop strategic partnerships with large quantity generators and have aligned our technology with the PFS market segment that continues to highlight our technology is superior based on cost simplicity.
Mark Duff: Efficiency for the total destruction of P farce.
Mark Duff: We're also tracking legislative activity in more than a half dozen states, which is expected to drive demand for full scale vast destruction technology like ours. In addition, we're encouraged by the recent press release from the new EPA administrator as Eldon announcing that the Trump administration's position to ensure a P fast remediation and policy is a priority.
Mark Duff: Through the development of our agency lead for P fast and the continued assessment of effective and available treatment technologies for the industry to consider.
Mark Duff: We also remain optimistic about our role in supporting the U S Department of Energy's direct feed low activity waste or D. E F law program in Hanford.
Mark Duff: The project remains on schedule for August one start and we're fully prepared to support multiple waste streams as the operations ramp up this program part of the broader Hanford tank remediation mission has the potential to generate very significant high margin reoccurring revenue beginning in Q4 through the next decade at a minimum.
Mark Duff: On the international probably saw improved activity during the quarter with growing international waste receipts, we received approximately $7 million worth of waste antigen that we anticipated from Canada, Mexico, and Germany over the past two months with the remaining portion is scheduled for May and June. We also continue to pursue a robust pipeline of federal and commercial projects.
Mark Duff: These include previously discuss opportunities at West Valley, where transition activities are ongoing and will continue through the end of June.
Mark Duff: With initial operation is expected to begin in July while the BWXT team would be of XD led team finalizes its.
Mark Duff: Performance strategy with D O. We remain optimistic about our role in supporting this decade long program through revenue contributions.
Mark Duff: Revenue contribution are not expected to redefine for several more months.
Mark Duff: We continue to actively pursue some contracting opportunities under the D. O is integrated tank waste tanks disposition contract at Hanford, while he was still finalizing its broader tank waste remediation strategy.
Mark Duff: Well aligned with the technical requirements of this program have begun to participate meaningfully through increased waste receipts at our perma fix northwest facility beginning in March to support the tank closure mission.
Mark Duff: In addition, we are pursuing several other large scale D O N D. O D contract opportunities is expected to be awarded in 2025, including at sites such as Y 12 here in Oak Ridge, Lawrence Livermore National Labs, and Lawrence Berkeley.
Mark Duff: Nashville Lab in California.
Mark Duff: We're also awaiting the outcome of our U S. S X enterprise decommissioning bid, which remains a highly competitive opportunity with an award expected around mid year.
Mark Duff: As part of our long term strategy to diversify revenue we were expanding our presence internationally through strategic partnerships as it closed the Jersey, Italy project, where were submitted we just submitted our final permit documentation in Q4 of last year and remain on track to initiate treatment operations in late 'twenty six.
Mark Duff: Our international expansions.
Mark Duff: Our efforts include Europe, and Latin America, and continue to focus on engaging established generators of radioactive in hazardous waste that can benefit from our treatment capabilities.
Mark Duff: Internally, we continue to apply disciplined cost management, while maintaining flexibility to support incoming contract activities. Our nuclear services team is aligned.
Mark Duff: <unk> has a line of indirect expenses with near term.
Mark Duff: Backlog visibility.
Mark Duff: And the operational readiness steps, we took during the quarter are already contributing to an improved throughput at our key facilities.
Mark Duff: Looking ahead, we anticipate stronger performance in the second half of 2025, our outlook is supported by five key drivers, including our growth.
Mark Duff: Our growing waste treatment backlog improved visibility on federal procurement activities.
Mark Duff: <unk> of the <unk> program in hand for continued PFS technology, advancement and commercial traction and execution of large scale domestic and international opportunities, including the D. O N D D Awards, and our European partnerships with that I'll turn the call over to Ben Naccarato to walk through our financial results in more detail.
Mark Duff: Yeah.
Ben Naccarato: Thank you Mark.
Mark Duff: Starting with revenue our total revenue was from continuing operations for the first quarter was $13 9 million compared to last year's second quarter of $13 6 million, a slight increase from 392000 or two 2%.
Mark Duff: Revenue in the treatment segment increased by 477000 or five 5% compared to prior year as we saw an increase in our waste volumes received and processed offset by lower.
Mark Duff: Lower pricing, which is reflective of waste mix.
Mark Duff: Service segment revenue was down 175000 is new projects in 'twenty five.
Mark Duff: Mostly offset completed projects from Q1 of last year 'twenty four.
Mark Duff: Gross profit for the quarter was $6 57 to 657000 compared to gross loss last year of 620.
Mark Duff: In Q1 of 'twenty four treatment segment gross profit increased by 302000 compared to prior year based on higher revenue and lower variable costs related to waste mix and improved productivity.
Mark Duff: This increase was partially offset by higher fixed costs, which were predominantly from higher labor expenses as we ramp up for anticipated increases in production.
Mark Duff: In the service segment gross profit increased by 975000.
Mark Duff: Which is primarily impacted by lower variable costs.
Mark Duff: Due to the improved profitability of the projects performed in 'twenty five as compared to last year.
Mark Duff: Our SG&A costs for the quarter were $4 million, which is higher than prior year by 471.
Mark Duff: This was the result of higher labor costs, primarily at the executive level.
Mark Duff: Legal expenses and higher marketing expenses related to our user conference and other labor related expenses.
Mark Duff: Our net loss for the quarter was $3 6 million consistent with last year's loss of $3 6 million or.
Mark Duff: Our total basic and diluted loss per share for the quarter was <unk> 19, compared to a loss per share of <unk> 26 in the prior year.
Mark Duff: Our EBITDA from continuing operations for the quarter as we defined in this morning's press release was a negative $3 3 million compared to a negative $4 million last year.
Mark Duff: Turning to our balance sheet, our cash on the balance sheet with $25 7 million compared to $29 million at year end.
Mark Duff: Our net accounts receivable were lower by $2 3 million related to improved collection of outstanding receivables.
Mark Duff: Current liabilities were down were down approximately $1 2 million.
Mark Duff: Being decreased costs associated with product production timing of vendor payments and changes in our deferred revenue.
Mark Duff: Our waste backlog at the end of March was $10 2 million up from $7 9 million at year end.
Mark Duff: And consistent with $10 $6 million a year ago.
Mark Duff: Our total debt for the quarter at quarter end was $2 3 million most of which goes to the PNC bank.
Mark Duff: Finally, with our cash flow I'll summarize cash was used by continuing operating activities of $2 million cash.
Mark Duff: Cash used by discontinued operations 56.
Mark Duff: Cash used for investing in continuing operations was 571000.
Mark Duff: Of which 523 was related to capital and the remainder to permits and other investments.
Mark Duff: Our cash used for investing in disc ops was 15000.
Mark Duff: Our cash used in financing was 396000, consisting primarily of payments to our term capital loans of 157000 payments for finance leases of 71.
Mark Duff: And payments of 194000 relating to the public offering we completed in December of 'twenty four.
Mark Duff: Offset by some proceeds from option exercises of 41.
Mark Duff: With that I'll turn the call over to the operator for questions.
Mark Duff: Thank you very much at this time, we'll be conducting our question and answer.
Mark Duff: If you would like to ask a question. Please press star one on your keypad now.
Mark Duff: Time will indicate that your line is Nicky you May press star two if you would like to remove your question from Nicky.
Speaker Change: One using speaker equipment, it may be necessary to pick up your handset before you press the keys. Please poll.
Mark Duff: Poll for questions.
Mark Duff: Thank you. Your first question is coming from Howard barrels of Wellington Shields Howard Your line is live.
Speaker Change: Thank you.
Mark Duff: Hmm.
Mark Duff: Ben.
Mark Duff: First question.
Speaker Change: Talk about the 2026 federal budget and how this can impact you in 2025 and 2026.
Speaker Change: Yeah, Howard there's been a lot of press releases and announcements the last few days regards in regards to the Whitehouse.
Speaker Change: Proposed budget, obviously as they get through both markups, but.
Speaker Change: We kind of look at that as kind of the baselines and it was quite favorable.
Speaker Change: A significant portion of probably 60 plus percent of our revenue comes through.
Speaker Change: And the E. M program is a big portion of that segment and E. M budget was proposed.
Speaker Change: With only about a 300 million dollar reduction out of $8 5 billion.
Speaker Change: So we're very encouraged by that I'm not sure what where that three months 300 million is going to come out of yet we havent seen that detail most of it is going to be some of the smaller sites as 14 of them.
Speaker Change: And that will come out here in next few weeks, but most importantly on that we did specifically said the budget that there would be no reduction in Hanford.
Speaker Change: 26.
Speaker Change: And that there'll be a significant increase a.
Speaker Change: A dramatic increase on the NSA side of the house Thats the weapons production side of the house, where we also get a quite a bit of waste and opportunities.
Speaker Change: For us remediation projects that they clear out as they're upgrading their infrastructure and building new buildings.
Speaker Change: So theres opportunities there that'll be accelerated mostly on the service side, but also on wave. So we're very encouraged by the budget overall, we're holding our breath like everybody else. We didn't know really what was going to happen.
Speaker Change: We've talked to several people in D C on the Hill and <unk> headquarters in <unk>.
Speaker Change: The common theme was that this administration has a lot of respect for reindustrialization activities.
Speaker Change: Are the AAM program supports the sooner they clean up to more of the quicker. They can we industrialize some of the smaller communities, but along with that and the weapons program upgrades as well. So what we're all encouraged by when do we don't see any impact from that.
Speaker Change: Or any impact at this point to some of the bids that were up.
Speaker Change: They are in our pipeline for the next 18 months.
Speaker Change: So.
Speaker Change: In reference to answer are you receiving any waste from Hanford currently.
Speaker Change: Yes, we are Howard.
Speaker Change: As we mentioned our backlog looks much better about $10 million right now, which is a good place to be where we're also seeing significant increase in overall waste sales.
Speaker Change: But to answer your question, we're seeing a significant increase in Hanford at this point of about $2 million to $3 million a month.
Speaker Change: In waste coming from Ashford, which is dramatically more than we've seen in the past.
Speaker Change: At least for the last 10 years and.
Speaker Change: That's coming from the.
Speaker Change: The tank closure mission as well as the other a plateau with the whole plateau remediation contract, which is a non tank work that's going on out there as well so.
Speaker Change: At least 50% maybe closer to 100% increases in waste receipts.
Andrew: At our perfect northwest facility directly from Andrew.
Speaker Change: Marketing you're comfortable in discussing what kind of margins youre getting from a handshake.
Howard Barrels: No not at this point Howard I will say this is a pretty traditional margins.
Speaker Change: Sure.
Speaker Change: We're we're doing are focusing very much on keeping our costs down.
Speaker Change: Our new CFO, who started in January.
Speaker Change: He has spent a lot of time out there working with our team.
Speaker Change: Our other executives it's local out there.
Speaker Change: Our general manager too.
Speaker Change: Make sure that we've got the staff that we need to support this bigger backlog along with VF law starting soon as.
Speaker Change: Mentioned earlier I'm not sure how clear was what it comes down to is we had to hire a lot of people.
Speaker Change: To support this increased backlog in production.
Speaker Change: And it took several months to get people hired trained and actually productive.
Speaker Change: And this business it just takes a while to get people ready so.
Speaker Change: So we spent a lot on that last month.
Speaker Change: So you say March and part of February.
Speaker Change: They are rolling now beginning mid April.
Speaker Change: And getting very close to our our overall production goal is to make sure we're keeping up.
Speaker Change: And that's going to have a big impact on the rest of the year with these guys Rolling waster receiving from Hanford is very notable Howard that these are sustainable waste streams. So it's not one offs. We expect these waste to be continue to be treated.
Speaker Change: For several years and.
Speaker Change: Uh huh.
Speaker Change: Really developing more of a strategic partnership with the new takeaways contractor to provide them more innovation than we have in the past.
Speaker Change: And ways that they can reduce their costs, while maintaining our productivity.
Speaker Change: Our indirect costs.
Speaker Change: Is it a fair comment.
Speaker Change: Contract that exists today is a 10 year contract, but Chad.
Speaker Change: The.
Speaker Change: Transformation is going to start in August one 2025 for you, but it continues to 2016.
Speaker Change: When everything should be finished by that time can you comment about the additional X number of years is basically a 35 year time frame is it not.
Speaker Change: Yes, the contract with <unk>.
Speaker Change: With the HTC for the tank closure is 15 years and the other ones about 10, there's already several years into it so those will come back around eventually, but the overall baseline for the closure of Hanford.
Speaker Change: It continues to go up I think last.
Speaker Change: Some of that was published is.
Speaker Change: 400 to 600 billion.
Speaker Change: For the next 50 years or so so it continues to get more and more expensive.
Speaker Change: It's a it's going to take a lot more funding that level higher funding levels and they're getting now to reach those points to reach those goals.
And so it's somewhat uncertain they are making progress on the grouting.
Speaker Change: Some press releases last few days on that.
Speaker Change: Theyre positioning for.
Speaker Change: Deploying their strategy of how they're going to do grouting onsite, which as everyone knows that we're a big part of that and it will play out hopefully play a major role in that once its defined it still looks like it's going to be several years out I'm not sure exactly the timeline view, we really haven't shared that publicly.
Speaker Change: But they have to get through a couple of regulatory documents and some hurdles.
Speaker Change: Ill start putting the baseline together for for their commitments on the.
Speaker Change: Grouting program, which will cover the 'twenty two tanks that they have that routed in the next 15 years.
Speaker Change: That's all I have.
Speaker Change: Galatians earnings moving forward.
Speaker Change: Thank you I appreciate your support.
Speaker Change: Thank you very much.
Speaker Change: Next question is coming from China.
Speaker Change: Of Craig Hallum. Your line is live.
Speaker Change: Yeah, Good morning, Mark Penn and Lou Thanks for taking the questions.
Speaker Change: Maybe just on the grouting Mark you touched on most of what I wanted to cover but yeah could you just give an update on the kind of the recent news there.
Speaker Change: What kind of the near term priorities are and just maybe size, how you potentially see that opportunity for you in the coming years.
Speaker Change: Yeah.
Speaker Change: It's still unfolding and there's not a lot of communication from D. On this what I can say is that the OEM has my understanding is that the we have a commitment to.
Speaker Change: To inform the state through their Tri Party agreement of what their strategy is going to be by December 25.
Speaker Change: That's largely.
Speaker Change: Contingent on whether they want to.
Speaker Change: In informing us as to whether they want to build a facility on site.
Speaker Change: Use local regional.
Speaker Change: Routing capabilities that we offer or ship it out of state like they did on the Tbi.
Speaker Change: Or a combination of all that.
Speaker Change: And.
Speaker Change: We're still confident that they'll have a risk based our best value approach.
Speaker Change: To selecting that approach, but they are.
Speaker Change: Got it make that decision here in the next six to nine months or so.
Speaker Change: And.
Speaker Change: My speculation and this does conclude speculation that will likely have a couple of alternatives to make sure. There's some redundancy and backup for the program.
Speaker Change: But we do expect no matter, what because of our capability to having $100 million facility at right at the gate of Hanford that can do all of this routing that will play a major role in Tim kind of give you a sense of what it really means it's about right now for them to close. These 15 tanks excuse me 22 tanks in 15 years.
Speaker Change: They needed to process about 3 million gallons.
Speaker Change: Of waste a year.
Speaker Change: So it's already going to be getting behind if they don't get rolling soon 2000, fourteens or commitment with the Tri Party agreement.
Speaker Change: And they're making progress I understand evaluating alternatives and those types of things. So it is moving it still have a lot of a lot of data at this point are in regards to what their final decisions are and which direction to go on at this point, but we still.
Speaker Change: I remain very optimistic that we are playing a key role in it.
Speaker Change: Understood I appreciate the color there and then second on P fast great to see the commercial shipments from the government are starting you kind of talked about lower operating costs and higher margins can you just talk about how you see contribution from that second Gen unit as we move into <unk>.
Speaker Change: Year end and into next year, just kind of revenue margin assumptions and then you know just a little bit on your kind of rollout plans are.
Speaker Change: Is there enough backlog feedstock in the market just.
Speaker Change: Unpack that a little bit for us please.
Speaker Change: Sure. We're still Gen. One is we're constantly doing demonstrations and testing it in.
Speaker Change: Our reengineering some of the components to it to optimize them.
Speaker Change: A prototype really well.
Speaker Change: What is generating revenue we are planning right now.
Speaker Change: Pretty good that we'll we'll.
Speaker Change: We'll do about 300 K this quarter in revenue and approach and our 50000 gallons of treatment.
Speaker Change: This quarter based on our backlog and what we are.
Speaker Change: Some of the agreements we are signing.
Speaker Change: When the new system comes on we expect that number to be pretty close to a million dollars a month initially again with some some tuning.
Speaker Change: And with Gen. One also working so we'll have the new <unk>.
Speaker Change: New unit.
Speaker Change: The existing units so.
Speaker Change: It's going to start off pretty slow our goal has long been to design.
Speaker Change: The system to support a $5 million a.
Speaker Change: A quarter $20 million a year, but we're seeing really significant interest in our technology itself.
Speaker Change: Lu our founder is working very much on it very hard on our partnerships.
Speaker Change: With large companies that.
Speaker Change: Generate extremely high volumes in one consideration for field deployment in other words, a smaller unit, we're working with large.
Speaker Change: Commercial industry partners.
Speaker Change: To have a sustainable.
Speaker Change: On generation of G fast.
Speaker Change: And there is still not finding.
Speaker Change: We're still not finding or them a lot of destruction outlets outside of incineration. The thing I'm, probably most excited about <unk> as the engineering, we're doing we've got our destruction cost.
Speaker Change: Down around or below.
Speaker Change: Most of the incinerators so we're.
Speaker Change: We're very cost competitive if not the cheapest.
Speaker Change: And.
Speaker Change: The destruction levels are exceeding expectations and meeting expectations of all of our clients.
Speaker Change: And it's just a matter of getting more volume through the system getting these partnership signed.
Speaker Change: We're getting bigger backlogs and getting a new system developed lots of tours with our clients they want to see how it works and our operates and.
Speaker Change: Overall extreme optimism on all front with.
Speaker Change: Some other key people.
Speaker Change: Phd chemists and a number of other folks to bolster our capability.
Eldon: And and keep things moving I was very encouraged by this is eldon.
Speaker Change: Press release, if you haven't seen that yet it's very.
Eldon: Encouraging to see the EPA is putting an emphasis on it.
Eldon: Still believe that states are going to drive most of this but at least the Trump administration has recognized the importance of it and.
Eldon: I think once we get a little bit more data on our performance of our system will be able to get.
Eldon: The EPA and some of the Dod's folks to adopt this technology as one that is a preferable offer total destruction.
Speaker Change: Great. Thanks for the color on that and then just maybe on the on the services side of the house you kind of talked about a temporary suspension of mandates as the administration kind of changed over just where can you give an update of kind of where we are today with kind of that base business. It sounds like West Valley.
Eldon: We will get some more clarity here in the coming months.
Eldon: But are you still expecting progress on those Rfps, you know with with kind of the current government situation just.
Eldon: Just maybe talk about that a bit. Please yeah, we have been through the whole industry that we're in on the services side on the <unk> front has been.
Eldon: A.
Eldon: A trough in regards to a.
Eldon: Task order or project types of projects the big MMO companies that run these big sites are self performing more.
Eldon: And.
Eldon: There's been less things to bid on.
Eldon: But that has come full circle some of the larger small business requirements are driving more outsourcing. So we're starting to see.
Eldon: An increase.
Eldon: And projects that are $20 million to $40 million over a couple of years in size, which is our sweet spot.
Eldon: So we're bringing on a couple of those right now are due out here in next couple of weeks I've got a couple of working on as we speak also with the corps of engineers kind of the same thing. So we're starting to see a lot more activity. We went 18 months with very few.
Eldon: Projects over $10 million in value and.
Eldon: Now we're seeing a good pipeline so we see that continuing as far as West Valley is concerned we don't know what they are.
Eldon: Our final budget is going to be obviously have to go through some markups and it can move a number of different directions, we expect it to be around $100 million.
Eldon: For the year or next year.
Eldon: And we have a very specific scope that we're working with the client on our speed of XT on and.
Eldon: It will evolve through Q3, and Q4 and to be implemented.
Eldon: Q1, so we do have a path forward, where it's been more clear we know what people have to put involved and we know what people we have to find to support it and innovations we're bringing to the table. It's all starting to come much more clear, we're just unable to put a revenue.
Speaker Change: Go on it yet or are we really know what it means to us.
Eldon: But it's looking.
Speaker Change: Looking very good the other projects are coming up.
Speaker Change: Number of other bids coming out that.
Speaker Change: We're doing <unk> with off road with other companies.
Speaker Change: They would also be awarded in the next 12 months along with those.
Speaker Change: That's helpful. Thanks, and then maybe just last on Capex I think Ben you talked about I think 500 Grand in the quarter I'm. Just you know maybe outline some of the priorities there for the next handful of quarters areas of the business and just how you're thinking about capex for the rest of the year.
Ben Naccarato: Yes, Eric were looking like.
Speaker Change: Are we going to be in the $5 million to $6 million range and that's.
Ben Naccarato: Pretty much from our usual too.
Speaker Change: Two and a half of sustenance and then a reactor.
Speaker Change: Gen two reactors that would be in the three plus range. So that's kind of what we're looking at for this year I would think from a.
Speaker Change: From a cash flow standpoint, it'll trend.
Speaker Change: Probably upward in latter part of Q2 and Q3.
Speaker Change: And then sort of back down to the sort of average of $5 500, K a quarter after that.
Speaker Change: Perfect. Thanks for taking the questions I will turn it over thanks.
Speaker Change: Erin.
Erin: Thank you very much. Your next question is coming from Aaron Warrick of breakout.
Speaker Change: Aaron Your line is live.
Aaron Warrick: Hey, good morning, guys.
Speaker Change: Wanted to ask.
Speaker Change: I wanted to ask about.
Speaker Change: Some commentary that you had on the <unk>.
Speaker Change: Yes, really it's about the second half of the year being strong, but it sounds to me like.
The second quarter to be off to a good start as well.
Speaker Change: Is it getting to $18 million a month from handsets to comment about the start to the second quarter.
Speaker Change: Yes, the second quarter, we're still working through.
Speaker Change: Some production improvements it gets better every day as I mentioned, our <unk> is very focused on that we've got the team in place now the.
Speaker Change: The waste is coming in it's in backlog now, we just have to to get efficient and meet their production goals safely without any hiccups or any contamination issues and those kinds of things, so, but we're doing that and it's getting better.
Speaker Change: Daily base. So it is kind of ramping up it's pretty close to where we need to be.
Speaker Change: Notwithstanding any kind of surprises.
Speaker Change: So Q2 is looking much better we don't like to speculate specifically on it.
Speaker Change: But I can't say, it's going to be much better than Q1.
Speaker Change: And that.
Speaker Change: With those types of receipts along with the fact that one if I mentioned this at our our sales backlog or sales receipts. We have for Q2 is significantly higher than we've seen in quite a while so in other words, we have the backlog.
Speaker Change: But sales just halfway through the quarter are already above our quarterly goals for the quarter. So waste receipts is going very well.
Speaker Change: And all indications are if everything stays the same patents on right now for production, we should we should be very close to being profitable.
Speaker Change: In Q2.
Speaker Change: And like I said before it is sustainable these are waste streams that have been generated for years that will continue to regenerated.
Speaker Change: And as long as we are.
Speaker Change: And production goals and the client continues to generate them will should be in good shape through the year without sustainable.
Speaker Change: Backlog.
Speaker Change: Excellent.
Speaker Change: And so as this.
Speaker Change: This work coming from Hanford is this under the ITC like you've been subcontracted or what I guess, how are you what's that what's that fall under <unk>. It is exactly as mostly.
Speaker Change: Sure.
Speaker Change: Work.
Speaker Change: New waste streams, the new waste streams are from H C.
Speaker Change: See the Icd's <unk> contract yes.
Speaker Change: And some of them.
Speaker Change: We typically do about a million a month.
Speaker Change: Sometimes a little less and less a little more.
Speaker Change: From just general hand for waste receipts.
Speaker Change: As I mentioned this is a significant increase.
Speaker Change: Most of that increase is from the ITC.
Speaker Change: And the new contractors are in place.
Speaker Change: And you seem to indicate that the.
Speaker Change: Trump administration I know there was some concern.
Speaker Change: I had expressed among investors about.
Speaker Change: Or whether there will be cuts of the EPA and.
Speaker Change: Not a priority of DFAST not a priority with just in general cleaning up but it sounds to me like what Youre, saying is that there is a priority.
Speaker Change: In large part due to the fact that they want to.
Speaker Change: Cleanup sites to be able to.
Speaker Change: Reindustrialize the nation in.
Speaker Change: Other priorities. They have so is that is that accurate.
Speaker Change: It is the.
Speaker Change: It's really hard to say what the EPA is really going to do in regards to leadership.
Speaker Change: What that press release stated was theyre going to have a lesion is the lead on agency lead on P. Fast I do on speculating I believe it'll likely.
Speaker Change: Push that down through the states or provide guidance to the states have some type of commonality for what states are doing.
Speaker Change: Some states are way out in front, particularly me.
Speaker Change: Michigan, and New Jersey, but a lot of other states are coming up quickly, Tennessee is in the process of promulgating a neat new Mexico did this a couple of weeks ago.
Speaker Change: And as those guys each each of those states are adopting policies.
We will start implementing them in certain forcing them. So.
Speaker Change: We're encouraged by that and it would be nice if if if EPA.
Speaker Change: Tpa promulgated some cleanup rags and cleanup standards.
Speaker Change: And I would anticipate that to happen.
Speaker Change: Next several quarters at least but it could end.
Speaker Change: That will really drive enforcement arm.
Speaker Change: And really drive the market a lot, but outside of that we're still getting as I mentioned in the script, we got our first federal government shipment.
Speaker Change: And that's a big deal for us.
Speaker Change: Several of the sites are starting to feel that pressure to get the people as Arthur site.
Speaker Change: But the other thing Thats, a big trigger in P fast.
Speaker Change: Is reporting that the more the more we see.
Speaker Change: Folks with us being forced or are required to report the amount of people. They have in other words, the sample and analyzed for it.
Speaker Change: The more we see the market really.
Speaker Change: Turning up and that's what's really increasing is that the drive to understand how much pre vas you got.
Speaker Change: And you're at your facility.
Speaker Change: And then to do something about it so we're starting to see that increase across the board.
Speaker Change: And to see more companies change out their existing fire suppression systems with.
Speaker Change: With newer systems that doesn't have that does not have <unk>.
Firefighting foam and.
Speaker Change: And that's also leading to.
Speaker Change: Larger inventories of AV P fast from the change outs.
Speaker Change: So overall the market is going well and again as I mentioned, we're very encouraged by how we're fitting into the competitive.
Speaker Change: Race here with or with the other technologies based on the simplicity of ours and how it can be adapted to different applications.
Speaker Change: Good.
Speaker Change: That's the Hanford I guess what.
Speaker Change: You said in the press release and that May have missed any other comments on it but you mentioned that the August 1st.
Speaker Change: There's still the goal there and the deadline, but I mean, what is it looking like from your perspective, I mean is that something that looks like it's actually going to happen.
Speaker Change: Something that you know even if it's slightly delayed would be minor like talking in terms of a month or two versus another year.
Speaker Change: Kind of your qualitative commentary there yeah, it's really hard to we're not privy to specific data, but what.
Speaker Change: What we do know is that the operational readiness review team has been there for quite some time.
Speaker Change: For you to work off findings.
Speaker Change: And Theres a lot of of integration of resources at Hanford.
Speaker Change: Supporting that progress, but the things that is very encouraging to us is that the support that's been recognized by the new Secretary of energy Chris right.
Speaker Change: He had some hearings yesterday.
Speaker Change: With the Senate.
Speaker Change: And specifically addressed.
Speaker Change: His optimism for the <unk> facility to get started and for him to be at the ribbon cutting.
Speaker Change: And that.
Speaker Change: It kind of demonstrates to us that.
Speaker Change: It is the visibility there and are.
Speaker Change: Are you seeing this as one of our higher priorities is to get that facility working and having it be successful.
Speaker Change: Do we hasnt change that date and Theres lots of opportunities, we have lots of public meetings and they continue to reiterate that they're on track for August one so it might delay some Erin I don't know where you think it happened in the last couple of months, but three months away from that.
Speaker Change: And they haven't had a significant issue that has been publicized I know the struggle with a couple of little things, but.
Speaker Change: A related off gas and some other things but they.
Speaker Change: We're working through it and the optimism within the department.
Speaker Change: We're spending time in D C or at that field office.
Speaker Change: Hi, so.
Speaker Change: We're optimistic that that will be very closed on August one and again just to clarify if it starts August one we won't see any waste for probably six or eight weeks, maybe six or so by the time, they get a package and characterize everything that we should see some receipts in Q4 early Q4.
Speaker Change: Four.
Speaker Change: And I think theres been part of the reason I ask is theirs.
Speaker Change: You know have been some headlines about.
Speaker Change: Some of the cuts at Hanford and so forth just like there has been across the board kind of some doge and other priorities of the new administration, but when you read the headlines there seems to be like.
Speaker Change: These are the type of employees that probably have little to do with the actual D. F. La facility. Some of them are administrative dealing with claims that people make it clear.
Speaker Change: Harm that's been done to them from what can the hanford. So it sounds like these cuts aren't really impacting.
Speaker Change: The progress there in <unk> that year.
Speaker Change: I would I would agree I think it's really with that Aaron.
Speaker Change: The oil cut.
Speaker Change: Have any numbers in regards to the federal staff reductions at <unk>.
Speaker Change: Hanford field office, but.
Speaker Change: I think it's pretty typical from most of the field offices as far as percentages.
Speaker Change: And I think you nailed it.
Speaker Change: The Hanford office has I believe six major contracts that they manage.
Speaker Change: And.
Speaker Change: I don't see this impacting.
Speaker Change: Backfill who's getting everything running along with the HTC and Atkins a number of other companies momentum.
Speaker Change: They are all very focused on.
Speaker Change: Getting this facility operating.
Speaker Change: I haven't heard any reductions from any of those organizations they sit in a nonpublic lease.
Speaker Change: Okay last one for me then about West Valley with what type of impact are you expecting in 2025 and win.
Speaker Change: I can't give you a number at this point Aaron I hope to hope we can do.
Aaron: Do a press release or I can address specific numbers in the next earnings call I just don't know.
Speaker Change: We know what our scope is as I mentioned, what we don't know Erin is.
Speaker Change: Based on the funding profile.
As to whether what were providing is funded.
In 2006 or is it pushed out a little bit I would I would expect it to be in 'twenty six but there is still an uncertainty as to how it all fits together within our funding profile.
Speaker Change: Theres something.
Speaker Change: Two or three major projects that are funded for that facility.
Speaker Change: They are performance based.
Speaker Change: And.
Speaker Change: I don't know if.
Speaker Change: Even come out with their understanding of how it's going to be funded across each one of those projects. So just not able to address that at this point.
Speaker Change: But it sounds like there won't be much if any contribution in 'twenty five and then so that'd be more of a 'twenty.
Speaker Change: We are anticipating yes. It is.
Speaker Change: Not material overall, more planning and documents and in 2006, where it kicks off.
Speaker Change: Okay. Thank you guys appreciate it.
Eric: Thanks, Eric.
Speaker Change: Thank you very much and your next question is coming from Stephen Fine of say fine LLC.
Speaker Change: Your line is now.
Stephen Fine: Good day guys.
Speaker Change: <unk>.
Speaker Change: Hi.
Speaker Change: I'm happy to hear from me, Mark but anyway.
Speaker Change: These have to hear from you.
Speaker Change: Number one I want to applaud you on your presentation I think.
Speaker Change: Your approach your positiveness as his desk.
Speaker Change: Yes Fabulous.
Speaker Change: Number one all right. My first question is on the financials of this goes to.
Speaker Change: Finance.
Speaker Change: Was the 340.
Speaker Change: And in interest about.
Speaker Change: Steve.
Speaker Change: We raised the money in in.
Speaker Change: December so we've got a pretty big backlog of cash.
Speaker Change: And it's in an investment account.
Speaker Change: So that was reading it wrong, so that was a positive cash flow, yes, that's right.
Speaker Change: Hi.
Speaker Change: Okay Alright.
Speaker Change: Number one when you mention mark.
Speaker Change: That somehow.
Speaker Change: The.
Speaker Change: <unk> program has they got up to 3 million gallons.
Speaker Change: My understanding is.
Speaker Change: Is that you got about a 35, 40% efficiency rate, there, which means that if they get up to 3 million gallons theres going to be 2 million gallons of waste.
Speaker Change: So how are you going to handle it.
Steven: Yes, I think there's some confusion there Steven.
Speaker Change: This two different programs.
Speaker Change: No dear floor and grouting.
And between those two.
Speaker Change: And there are holistic agreement with the state and federal regulators.
Speaker Change: Agree that that would address 80% of the tanks, 20% being high level. So the floor is designed.
Speaker Change: To operate at 1 million gallons a year.
Speaker Change: For vitrification.
Speaker Change: And.
Speaker Change: The Grouting program.
Speaker Change: To meet the.
Speaker Change: 2040 <unk> goal.
Speaker Change: Estimated to be about 3 million gallons a year out of the tanks for grouting.
Speaker Change: So it's not to be a floor components, it's the grounding appointed 3 million gallons.
Speaker Change: It's unlikely that the floor would be at 1 million gallons a year.
Speaker Change: Reduction rate for first for many for several quarters at least.
Get perfection in their system and everything else, but the.
Speaker Change: The system that they've designed Stephen for the extraction.
Speaker Change: And pre treatment of the waste for grouting at the West tank farms versus the East tank farm. The East tank farm is if all the west is for grouting.
That system is designed.
Speaker Change: To do two five to 3 million gallons a year extraction from the tanks.
Speaker Change: So.
Speaker Change: We would have to ramp up we.
Speaker Change: We've made presentations to do that.
Speaker Change: With our designed very specifically.
Speaker Change: Could do 3 million gallons a year, we'll have to get.
Speaker Change: Our permit Mod, which is not a heavy lift right now I think it's 400000 gallons with increase at 3 million gallons, we have existing facilities.
Speaker Change: And the conceptual design.
Speaker Change: And the equipment to do that so if that was to be turned on and we're very comfortable at that rate.
Speaker Change: And I would make the capital investments so very quickly to make sure we're there.
Speaker Change: Thank you.
Speaker Change: Notice that.
Speaker Change: There are other.
Speaker Change: Catheters that are getting together in the game can you comment on that.
Speaker Change: Yes.
Speaker Change: Like any government agency.
Speaker Change: <unk>.
Speaker Change: Goal is to make sure they have redundant backups and competitiveness when they're talking about this.
Speaker Change: This level of of revenue, particularly.
Speaker Change: From a note from a safety perspective, they don't want to shut down because they're one plant shuts down which is why they've been very focused on the tbi to include.
Speaker Change: Our two competitors out of state.
Speaker Change: And that they represent.
Speaker Change: Capable facilities there are other states. So there's some additional risk to be considered in transportation.
Speaker Change: But they can they can do this work they have the same ramp up.
Speaker Change: Requirements that we would have to modify the permits most likely in and build facilities and those kinds of things.
Speaker Change: So we're all kind of there.
Speaker Change: I see them as being outlets.
Speaker Change: However, at the end of the day I do expect.
Speaker Change: Perma fix northwest to get.
Speaker Change: A significant portion at least half of that waste because we're local.
Speaker Change: <unk>.
Speaker Change: We've committed to a union agreement for Unionizing, our facility when it starts.
Speaker Change: And with the local building trades and.
Speaker Change: We're part of the community and keeping jobs local.
Speaker Change: But also.
Speaker Change: The transportation risk because the value there will be transporting by rail as you know because we'll treat it locally.
Speaker Change: And ship it down to those sites that I mentioned.
Speaker Change: For disposal.
Speaker Change: It's a different model.
Speaker Change: But I do expect.
Speaker Change: We're going to have to face some competition is good.
Speaker Change: Probability that a portion of that grounding would would not go to us.
Speaker Change: Just to be.
Speaker Change: Realistic about it but we're still hopeful to get all of it we're still pushing to get all of it but it's something to be considered.
Speaker Change: Well I read an article which I commented on to you guys.
Speaker Change: As they say.
Speaker Change: The government came out with a podcast with talks about how they're shipping this low radiation.
Speaker Change: Some other people well number one that.
Speaker Change: Implicitly acknowledges what you guys have been saying all along that it's low radiation number two they talk the story about transporting this across the country.
Speaker Change: Not going to be a danger, because it's low radiation, but theyre missing the whole point, because we're talking about.
Speaker Change: Low <unk>.
Speaker Change: Mix low rod hazardous waste so the danger in shipping is not radiation, it's the hazardous waste and so well.
Speaker Change: When that gets publicized that was that in my mind will be the major saying to her.
Speaker Change: <unk> costs.
Speaker Change: Following this in as a scientist who the Hell knows what happened in those containers with the hazardous waste I mean trunk of a car in a high end. This summer is 300 degrees, so who knows.
Speaker Change: That's all it does is the firm's year reality and yes, because this thing ever got big you probably need backup.
Speaker Change: The other thought that comes in here and Theyre going to build a graph playing out there and.
Speaker Change: I would hope that.
Speaker Change: You guys somehow get connected with someone bigger and you build the ground plan or get that and then keep the thing going because there's no way even with building a grab plant.
Speaker Change: <unk>.
Speaker Change: That not using you does not make sense, particularly when you talk about the liquefy ing of the of the tank waste, which then moves it up to 100 or $200 million.
Speaker Change: Okay Thats my comments there I think you are in great shape I can thank you.
Speaker Change: Yeah.
Speaker Change: It's great to hear alright.
Speaker Change:
Speaker Change: On the Okay. The next question is what's your CLO CLO doing.
Speaker Change: Well it is very very slow.
Speaker Change: He is very focused the he's responsible for overseeing all of it.
Speaker Change: The components of the company that generate revenue so.
Speaker Change: So the treatment plants as well as the projects.
Speaker Change: And not as involved in sales and.
Speaker Change: Some of the engineering components necessarily.
Speaker Change: But very focused on on the production.
Speaker Change: On both sides both segments, He's got 27 years operating plants.
Speaker Change: So a lot of it with our competitors.
Speaker Change: Very very astute.
Speaker Change: Our operational efficiency.
Speaker Change: And so right now is his number one priority our production at the plants.
Speaker Change: Very very focused very good leader a chemical engineer.
Speaker Change: And.
Speaker Change: Highly respected and doing a great job as an impact to the company.
Speaker Change: And four months has been overwhelming and if you talk to anybody in our company I don't think anyone would disagree that it's been a huge impact.
Speaker Change: To us overall and.
Speaker Change: He brings an industry network that is really important as well and has it had a great impact on productivity already.
Speaker Change: Wonderful.
Speaker Change: Are you guys implementing anything with AI or AI going to impact you in any way.
Speaker Change: No I'd say not realize a table.
Speaker Change: Yes, we are beginning some initiatives very.
Speaker Change: Very limited mostly to do with research.
Speaker Change: And.
Speaker Change: Sales and proposal development types of things.
Speaker Change: We do see ourselves expanding too.
Speaker Change: Waste treatment protocols and.
Speaker Change: Those types of things in the future, but we are starting to pretty slow.
Speaker Change: And.
Speaker Change: But we do have initiatives ongoing as we speak to do that.
Speaker Change: I think it's fabulous that the D. I mean I've been following you guys. Since 2016 and this is the first time that they've had a deal.
Speaker Change: Volatility is actually a scientist and engineer is knows the industry is very positive with nuclear and if youre pushing nuclear which has to be push because we were behind the rest of the world Secondly, AI requires nuclear and nuclear waste has to follow so that's great Hi finally.
Speaker Change: Finally, my question is lumpy fast.
Speaker Change: Ironically I read an article today that the Gates Foundation is yes. They are basically shutting down by 2045 and Theyre going to go direct in feed and one thing that came out in the article was agricultural that they can't plan on lands.
Speaker Change: And my understanding is that you know.
Speaker Change: I understand this is down the road, but as I'm reading about eight Pops I mean basically the fertilizer. That's on on these plants that came from water treatment as deep bumps and a lot of farms that shutdown. So.
Speaker Change: All I'm, saying here is the.
Speaker Change: Key parts, which everyone has to understand it's.
Speaker Change: A separate industry looks like in theory, you could become another company that has nothing to do with nuclear and that to me is what's so exciting and then.
Speaker Change: The potential of it so anyway I've said enough.
Speaker Change: You know.
Speaker Change: Yeah, I've watched you guys emerge I understand it as someone that scientific and.
Speaker Change: Keep on going it's all going to work out for the positive.
Speaker Change: <unk>.
Speaker Change: We got to keep that base that's all thank you.
Sue: Thanks Sue.
Mark: Thank you very much for all that appears to be the end of our question and answer session I will now hand back over to Mark.
Sue: For any closing comments.
Sue: Thank you as we move further into 2025, we remain focused on executing against a clear set of strategic priorities.
Sue: Spanning our backlog advancing our paphos enhancement programs and maintaining a disciplined operational and cost alignment across all the organization. The investments we've made in the first quarter combined with the momentum we're seeing across our treatment operations our federal pipeline.
Sue: Our international channels position us for a stronger second half, while we continue to navigate a timing related challenges around the federal procurement system. We're encouraged by the pace of the progress across our core initiatives and confident in our ability to drive long term value for our shareholders. So thank you for your continued support and we look forward to updating you as.
Sue: Our progress continues in the coming quarters. Thank you.
Sue: Thank you very much.
Sue: Through the end of the conference call. We thank you for your participation you may disconnect your phone lines at this time.
Sue: Yes.