Q2 2019 Earnings Call
Good day, ladies and gentlemen, and welcome to Perma fix environmental second quarter 2019 business update call. All lines have been placed on a listen only mode and the floor will be open for questions and comments following the presentation.
If you should require assistance throughout the conference. Please press star zero on your telephone keypad to reach a live operator.
At this time it is my pleasure to turn the floor over to your host David woman, Sir the floor is yours.
Thank you Kat good morning, everyone and welcome to Perma fix environmental services second quarter 2019 conference call on the call with US. This morning are Mark tough President and CEO Dr. Lu Centre Fante Executive Vice President of strategic initiatives, and Ben Naccarato, Chief Financial Officer. The company issued a press release. This morning containing second quarter 2019 financial results, which is also posted on the company's website. If you have any questions. After the call would like any additional information about the company. Please contact crescendo communications at two one to 671 102 zero I'd also like to remind everyone that certain statements contained within this conference call may be deemed forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995 and includes 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.
It's in 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 mornings press release the company makes no commitment to disclose any revisions to forward looking statements or any facts events or circumstances. After the date hereof that bear upon forward looking statements. In addition, todays discussion will include references to non-GAAP measures Perma fix believes that such information provides an additional measurement and consistent historical comparison of its performance a reconciliation of the non-GAAP measures to the most directly comparable GAAP measures is available in today's news release on our web site now like turn the call over to Mark Duff. Please go ahead Mark.
Great. Thanks, David I'm very pleased to report solid financial results for the quarter, our revenue increased 30%.
To 17.1 million and gross profit increased by 60% Oh, Yeah, we achieved adjusted EBITDA of a $1 million.
We generated a positive net income.
But more important we anticipate an even stronger second half of the year, turning first to the services segment revenue increased by 75%.
It was 7.70 million Oh this improvement reflects the.
The success of our business development initiatives, including a recent award of several things to contract my thing like core Oh, but to those 19 of these wins will.
Include remediation work in Canada, as well as several department of energy location drop you off that's very important to note that we did not recognize the full benefits of these contracts in the second quarter, which could add an incremental two or $3 million robbed beginning in the third quarter of my team.
I will aggressively are also bidding on additional contracts, which we believe will provide significant upside potential in 2019 as well as like a happy new year and potentially beyond that I think that's why 20 as well.
Within the treatment segment.
Revenue increased by 10% to 10.1 million due in part to our efforts to diversify revenue streams. While we're pleased to see both year over year and sequential revenue growth. We experienced some continued delays by certain customers, but most of these delays have largely been resolved.
To support improved third quarter inventory of backlog for waste processing.
Each of our facilities.
To support our ongoing growth initiatives within both treatment and the services segments. We recently announced the addition of three senior executive with significant experience in the nuclear environmental industries, I, specifically reported George Taylor as VP of voice services and business development sales, Chris Reno as director of nuclear services and business development.
And Brian would as director of commercial and utility business development be to use.
Individuals bring extensive relationships with government and business leaders as well as proven track records within their respective areas of expertise.
The addition of this new core waste management executives I will directly support our growth strategy focused on growth in commercial markets as well as a broader our nuclear services.
Application or a market based.
I'm also pleased to report we completed.
The closure of our Emoney Emoney, you see facility, which consolidates waste treatment.
[noise] capabilities within three remaining facilities.
Closure activities continued to create a drag on performance throughout the first three COVID-19, while also creating major distraction to our resource base as well as our management team.
As a result of the closure this facility received $5 million in cash previously held as collateral for this facility under our financial assurance policy.
At the same time I, we've undertaken steps to upgrade our facilities.
And deploying new technologies that we believe position us to support procurements within the Burberry.
As discussed previously the GML Vitrification unit at our conference book was facility has commenced commercial operations through a partnership with you only need a solution.
Where we recently completed our.
Our Milky event.
Increasing the frequency of that system on every now and this capability allows us to address large inventory of reactive ways currently.
And not stable stored at several government locations.
And provides us a substantial multi year backlog.
Oh.
From a new incremental waste.
Inventory of this waste stream is estimated to be in excess of $100 million.
Including large inventories ways.
At the Idaho.
As well as at Hanford.
At Oak Ridge.
This past month, we began treating grade while actively contaminated water our pockets, Florida facility and are receiving water treatment backlog inventories for both commercial and government clients, while the storage tank farm out remains under construction. Our initial operating results of the unit there have exceeded productivity expectations.
Regarding efficiency and performance the use of totes and temporary storage tanks.
Increasing operational capacity sales will be a primary focus of our team in the next few quarters.
To broaden our market reach and provide a low cost alternative.
Not to waste generators for large quantity of water disposition.
So to wrap up we're starting to see the benefits over <unk> of our strategic initiatives over the past few years.
Including the expansion of our treatment capabilities, enhancing our marketing and sales program.
And broadening our market based.
War.
Our waste receipts.
However, the nuclear services segment has seen a rapid expansion I'm about.
That has generated strong backlog got well into 2020.
Through over $20 million No awards in the past three month alone.
This is not only supporting our bottom and topline financial goals, but broader client base and market base. Our two full service our radioactive waste management services offering and that alliance perma fix for a wider offering to some of the larger deal we procurements.
That are forthcoming in the next few quarters.
Heading into the second quarter or second half of the year.
We're extremely encouraged by the outlook for the business I have given our existing contracts and growing sales pipeline.
And on that note I'll turn the call over to Ben who will discuss the financial results.
In more detail Ben.
Thank you Mark.
I'll begin revenue our total revenue from continuing operations for the second quarter was 17.1 million.
Compared with the prior year revenue of 13.2 million.
Our services segment revenue increased by 3 million, a 75% increase over prior year.
As a result of our increased project work.
Which was awarded late in the first quarter and early in the second.
Our treatment segment revenue increased as well by 948000 or 10.4%.
As a result of.
Primarily improved pricing for the waste receive process and dispose.
For six months ending June Thirtyth, our total revenue is at 28.8 million compared to $25.8 million in the prior year.
Both our segments have increased compared to prior year with services segment, increasing by 14.7% as a gain as a result of the increased project work in the second quarter, while our treatment segment is up 10.5%, primarily due to higher average prices.
Our cost of sales is 13.9% or I'm skews excuse me our cost of sales was 13.9 million compared to 11.1 million in the prior year.
Costs in the treatment segment decreased by 156000 from prior year due to the decrease in closure expenses at our M&A see facility of about a million dollars. A decrease was offset by increased variable costs relating to higher revenue and waste mix.
Totaling 754000, and then in addition.
Fixed facility costs increased by about 140000.
Our service segment cost of sales increased by 2.9 million as a result of the increased revenue.
[noise], our gross profit for the quarter increased from $2 million in the second quarter of 2000 $18 million to $3.3 million in the second quarter of 19, an increase of 1.3 million or 60.1%.
Excluding the million dollar reduction in closure expenses at MDC, our gross profit increased by 178000 or 5.5%.
Gross profits were impacted by higher revenue in both segments, but offset by lower margin projects and waste streams.
Our year to date gross profit was 5.8 million compared to 5.4 million last year. This increase is the result of higher revenue and a reduction closure expenses at our M&A C.
Facility offset by higher fixed costs.
Our SGN eight for the quarter as was.
2.7 million.
Up slightly from 2.6 million last year, and Thats due to higher labor and property expense.
Similarly, the RG in a cost year to date were 5.6 million or 19.4% of revenue compared to 5.4 million or 21% in 18.
Again, higher payroll and property taxes accounted for this increase.
Our income from continuing operations net of taxes for the quarter was 373000 compared to net income of 788000 last year.
We had net income attributable to common shareholders of 289000 compared to last year's net income of 610000.
And we had net income per share for the quarter of two cents compared to net income per share of five cents in the prior year.
I do want to note that in the second quarter of 2018, the company recognized a 1.6 million dollar gain.
On the exchange offer of Yemeni C preferred shares preferred stock.
Which positively impacted the net income from continuing operations net of taxes and net income attributable to common shareholders and the earnings per share.
Our adjusted EBITDA from continuing operations for the quarter as we defined in this mornings press release was 1 million compared to 846 last year.
Turning to our balance sheet compared to year end.
Our cash balance at the end of the second quarter was 384000 down from 810000 at year end.
Our unbilled receivables increased by $3.1 million.
Due to increased project work in our service segment.
Other current assets increased by 4.6 million due to the reclassification of the 5 million finite risk sinking fund from long term assets to current.
This reflects the current nature of the 5 million of MDC collateral, which was collected on July 22nd.
The offsetting reduction of this 5 million is evident in the drop of the intangibles and other assets of approximately 4.5 million.
Our operating right of use assets totaled 2.7 million, representing the present value of our operating leases as a result of the implementation of new lease accounting guidelines assay a 42.
Our total current liabilities increased by 974000, reflecting an increase in accounts payable and other operating.
Liabilities.
But offset by a drop in our unearned revenue.
Our off our backlog of waste for the at the end of the quarter was approximately 9.4 million.
Which was down from 11.1 at year end.
But up from 7.4 million at the end of the second quarter last year.
Our total debt at the end of the quarter was $5.1 million and this excludes debt issuance of debt discount of which 2.1 million was due to PNC Bank 2.5 million was to our shareholder loan.
Which we borrowed in April two nine of 2019 and 500000 for other equipment loans.
Our working capital was a negative 480, a considerable improvement from year end 2018, when it was a negative $6.8 billion.
This improvement was the result of the reclassification of the finite risk funds and the reduction of our monthly term loan payment PNC bank from 102000 per month to 35000 per month.
Finally, I'll summarize cash flow from.
The second quarter.
Cash used in continuing operations was 863000.
Again I'd like to note that this included it.
Approximately 1.3 million of spending related to the MPC closure, when we exclude the MDC spending cash from continuing operations would have been a positive 452000.
Cash used in discontinued operations was 334000.
Cash used in investing.
In continuing operations was 280000.
Cash provided by investing activities from discontinued operations was 44000.
And cash provided from financing activities was $1.2 million.
And this is represented by the two and a half million dollars shareholder loan.
And 120000 end equipment financing offset by payments of 610000 to our term loan and 639000 to our revolver.
So with that operator, I'll turn the call over to questions.
Thank you the floor is now open for questions. If you do have a question you May press star one on your telephone keypad at this time. If your question has been answered you can remove yourself from the queue by pressing one.
Please be mindful of other people asking questions limit it to two questions. Thank you again star one please hold while we poll for questions.
And our first question comes from David Newton from Heartland Advisors go ahead David.
Yes. This is bill nasgovitz at Heartland, So congratulations on that.
But a nice improvement that's fantastic isn't that they have a profit for the quarter.
Great. Thanks.
Great quarter appreciate it.
Well could you be a little bit more specific these are three it sounds like.
Pretty.
Significant hires here could you talk a little bit more in terms of.
What they might be involved in and the and the markets that you're targeting.
In terms of.
Their expertise in.
Their focus.
Sure Bill we would each one of these guys come from a different area in our business. The most of knew each other it's or we had relationships with them, but the first one is taking over for the overall sales shops, so used to be coming from.
Transportation company the transports.
A radioactive waste so very familiar with the industry a long time leader.
A very very bright guy from Rice University.
And he's got a good grasp on programmatic sales and marketing the other guy Chris Reno is.
[noise] has been with.
Our competitors are for a long time I retired brought back out of retirement the lead proposals.
And the lead large initiatives bard larger bids for us.
Where we have a couple of it myself and couple of other guys to do that so it allows us to do more.
Management.
And better quality coals, and then third Guy I'm really excited about Brian what.
It comes out from a T.V.A.
And most of his career span and the commercial or power utility a world, which we don't do a lot of and most of the folks that are in our industry would tell you.
That the commercial.
Decommissioning.
Market.
It's starting to heat up how with 100 reactors in the country right now and they're they're taking down a couple of year or at least moving in that direction.
He is he's going to be big has already been a big help and us getting on teams in finding out how we can.
Be a value added partner offer commercial demolition and commercial waste management. So.
Impacts already to the company.
And you know we needed a little bit ahead space.
In our revenue generation or at our margins so we could afford.
To to staff up this way and.
Fortunately, we have with these new wins, we've got a little more comfort now we can we can bring on senior guy like this and be able to have sustainable margins.
How big could that letter market be that commercial power utility market decommissioning.
You know these reactors are going.
Two are being awarded for probably between 600 $800 million for each project.
Through the contract current contracting approach.
And in the 100 of them you over the next three years so.
That's just kind of the the decommissioning cut of it there's a lot of other.
Operational opportunities, particularly.
In water.
Most of these reactors generate some water and and along the way even outside of the commission does an operation.
And at the market, we want to be at.
Okay. Thank you I'll get back in the queue.
Okay. Thank you Bill.
Thanks Bill.
Thank you and the next question comes from Steve Levenson from Big Rock Research go ahead, Steve.
Thank you good morning, everybody.
Morning <unk>.
You mentioned sustainable margins there I'm just curious about the potential for margin expansion is there something you can do with costs or is it really dependent more on volume.
How was this a different answer depending on which area. We're talking now in the a and the waste treatment world.
You know we are we do better margin with volume because we pay down our bail for fixed cost per hour for keeping our Brazil facility comply and operating.
So the more ways to get depending on the type of ways. You know the more opportunity do you have for expanding margins over a certain amount no each month.
On the services side.
It's typically give bid on a project one at a time.
And that's a more sustainable I should say more level margin.
I know, it's because as they see competitive on each project.
So with that I'll be more flat, but what it does do is that margin.
Would would have less impact what do we would have less fixed cost. So each one of those projects after we win.
Because it's not a.
It's not a linear increase in that Jay Benet.
As you add projects it.
You add 10 projects and maybe not increase you know any more than you added five so.
I hope that answers your question Steve.
Yes.
Okay.
Hello.
Yeah, I think we I like where we might have lost Steve.
Okay.
I'll now hand back one moment.
Yes, there's a pretty bad lightning storm here in Port Hope, Canada, So, Ontario, So you might lose me have been dropped off a couple of times as well.
Okay.
And our next question comes from David Newton from Heartland again, one moment.
Yes, Bill Nasgovitz again here just a.
You mentioned, Canada as a this has been an initiative now for a year or so.
Can you talk about the progress in more detail in terms of the progress there and the opportunity and then lastly.
In terms of these contracts some are fixed price I assume what the what's the ratio fixed versus variable and how do we control how do you control the the risk of.
Cost overruns and.
Mis bidding some of these contracts. Thank you sure Yeah, Canada I can't talk a lot about Canada.
We have agreements with with our clients so that the all in all all press releases and information about the projects will come through them.
But I can say that we're doing some remediation.
In Canada.
For some residential houses Oh in Ontario, either on a fixed unit rate contracts. So there is a there is some risk out fixed rate isn't quite as bad as fixed price because we have a lot of different pay items and.
Kind of spread your risk across all eight items now that got the contract is little slower starting than we had hoped.
We'd hope to be in the field and working.
In early May and now we're just getting rolling last couple of weeks, so as far as our our statements. We just went through red their little slower getting rolling and we'll see more revenue in the third and fourth quarter as opposed to the second the third from these projects at all sustainable long term contracts with lots of opportunities for additional task can be added and they're up there. They are working very well. So far we have good client relations in the few work has been very successful.
As far as how we manage it and our risk.
We only have right now.
A couple I'd say less than 5 million in fixed price contracts.
In the field.
And the remaining backlog and revenue was 2020 5 million I would say for the year, our our fixed unit rate and PNM. So the ones that are fixed price. We have been very senior guys on them to have done a lot of fixed price in the past.
We we put we win or contracts with.
Adequate contingency and very formal risk analysis process. So we understand the risks.
And mitigate those risks.
In a line.
Funding cost obviously, we budget.
For those risks so.
So far we've done very well on those and we've met our expectation that each one of our fixed price test so far.
All right. Thank you.
Thanks Bill.
Again, ladies and gentlemen to get into the queue. It is star one.
And our next question comes from.
I'm, sorry, one moment.
Robert Brown go ahead Robert.
Yes.
I have two questions.
First of all.
Under their proposed government budget.
How much how much are they.
[laughter] allocating for at Hanford filling in for cleanup.
Based on the new federal budget Yep Yep.
But to your budget.
And then the second thing I wanted to ask about is.
The phase two TV I.
Yeah, there's at least a little confused different areas, where they were they saying that this could take six to nine months for for the deal he and and stayed in Washington to work out the terms.
And.
How is that coming and you can see when do you see it.
A presentation done yet.
There was a good quarter just Robert the first one the other hampered budget.
Have any numbers in front of me, but I know that the E. M budget was the total OEM why was that.
Call about 7.2 billion, which is pretty flat from last year.
And I know the Hanford budget was pretty close to where it was last year as well.
So not a lot of not a lot of change or maybe a couple of points here and there but.
It's pretty close.
So the <unk> waste, we are receiving from Hanford has been present pretty flat as well.
For our Richland facility and the other work that were doing out there.
As far as the high goes.
As usual, we can't get in and a lot of detail what I can say.
As you know the deal we uphold their permit back as they announced in early June .
And wanted to have a strategy will change our strategy to focus on what their call what they call. The unique order for 35 our revision.
And what that means to US is the work we will continue with the funding we have to do what we have to do on PPI, which in our case specific the perma fix.
Is a demonstration of the mix or.
That we'll use to.
Activities are ongoing.
Even though the we pulled the permit back.
And what you read about the laser six nine months, what that what that's referring to his view is position is that CPI is by no means a dead or stop.
But they pulled their their permit application back from the state.
For six to nine months.
To to pursue the revision of this view order.
And once that order is.
Revised and implemented than D., we will reevaluate whether they want to submit that permit back or if the reveal depending how the revision is applied it may have an impact as well so.
Now Thats why do we said 60 miles nine month gap until they re submit that to the state.
At some point.
And our next question comes from Stephen Fine go ahead Steven.
Good morning, gentlemen, how are you.
Good morning, Susan.
Good.
My first question is.
Ben when you're when you're talking about.
The 1.2 million last year from the.
Yes, the adjustment of the preferred stock so realistically can that be factored out. So then if you factor that out I mean doesn't that improve the picture you know of gross profit or profit this year versus last year.
Yes, Steve its $1.6 million and it's not gross profit because it was sort of below the.
DNA line, if you look at the income statement, but absolutely and that was the reason for for discussing it is.
Last year, we probably were in a loss position.
When you exclude the 1.6, which was really just.
Paper adjustment it was non cash so.
Yes, so absolutely.
Thank you.
Relative to.
The the.
This quarter.
The second quarter and the increase in the.
In this service how much of the.
How much of the $17 million in contracts that you signed were in the actual.
Treatment sales.
On the 17 million. So those are all in nuclear services.
Yes, and services I'm, sorry, I meant in Serbia that your services went up. So you had said that you were in the last call. You had said you were signing $17 million in contracts in services. So how much of that was in the sales for treatment in the second quarter.
I think I don't have the exact amount Steve but it is a small amount I would say I would put it in probably out of 7 million.
Maybe about five.
Five ish, we had to sort of first quarter was pre the $17 million and that was about $1.8 million of revenue.
That was sort of ongoing all are projects that we are doing so I would say about the difference or the four or $5 million.
Okay. So when you when you say there is a 9.4 million backlog does that and was that treatment or does that include this too.
That's just treatment.
So you have a 9.4 million. So so you are saying so you have about okay. I think you just said that so you've got $9.4 million backlog in treatment and then you had at least 12 million in service, So Thats, where you get the 21 million.
Correct.
Well no 2020, but what what 21 million are you talking about Steve well okay.
I for one man.
I think Mark Mark May have noted 20 million.
But.
No there has been some other work come in as well in the second quarter on top of the 17. So you are right.
We've got about a 20, you got about close to 20 in services backlog and about nine in in your senior treatment segment, So you're telling me that with the.
27 million that you've already done to the second quarter in theory Youre not as theory realistically you're in the high Fiftys.
Sales this year.
Well, yes, that's assuming it's all processed in the same in the same in the year, but yes.
Okay.
Because I would like to see you get up into the Sixtys and really make a.
You know and move forward.
All right. Thank you.
Nice quarter congratulations thank you.
Thank you Steve.
And our next question comes from Robert Manning Go ahead Robert.
I'm sorry, My question was asked and answered thank you.
Thank you releasing it.
Again, ladies and gentlemen that star one to ask a question and our next question comes from Todd Hellman from Huntington Bank go ahead Todd.
Hi, Good morning, Thank you for your time.
Wanted to.
Talk a little bit about the capital expenditures for the quarter.
I apologize if I missed that no.
Well you all were speaking and then also.
Capital expenditures going forward and how those might be financed.
Yes capital for the quarter.
Was.
Proximately.
For the quarter was only about 90 k.
For the year to date, we're at about 312.
There is there are we as you know we were sort of waiting on.
The.
The financing related to the closure money the $5 million.
So we sort of had a halt on cap spending so we are going to ramp up.
In the.
In the foreseeable future.
The main the main.
Priority is going to be the expansion of our facility in in Kingston, Tennessee.
Which is construction related.
And we will likely be financed through operating.
In capital.
And and then there is other equipment related.
That we.
Primarily expect finance again through through.
Working capital, but potentially would look at financing opportunities depending on needs.
Great. Thank you for taking my call.
Okay.
And our next question is from Steve Levenson go ahead.
Thank you sorry about dropping off before it was on the global.
At any rate what I was asking about the Florida projects when the trial you start how long does it take.
Assuming everything goes as planned to get up to your your target leverage.
Im sorry, sorry, Steve our target what.
Margins.
On margin.
While it's still question Steve.
You know right now as I mentioned in the nodes.
We are doing a little better than.
The design productivity was.
For processing radioactive water.
Which.
Generates a much better margins than anticipated and is much more efficient cloud going to allow us to lower our lower hour.
Fixed unit rate that we charge for that that right now the things going on pretty fast it's not running 24 7000 running one shift we have some backlog in general how much.
But though we were bidding a lot of water right now on several different fronts.
And our our.
Yes that will be running full capacity.
With a couple of more wins in the next quarter or two.
Depending on how we do on these bids.
Frank when you start up a new facility like this we're competing against a couple of other companies on the water.
We have to feel our way through what it's going to take to win.
Hi, and refine our.
Our.
Our cost estimates as well as refined our operating margins.
And how much it costs to run the facility so.
I would say over the next two months next two quarters, we will we'll we'll get those numbers nailed down pretty well and get a a client base.
That's.
It's pretty stable.
Got it thank you.
Next one is on the soil separation until us about progress on that I'm, sorry, if I missed it if somebody yes.
No we haven't talked about that in a while Steve. We did we were unsuccessful on a couple of bid on those but we have a couple more and right now some dredging.
In San Diego and a couple other projects in California, our northern California.
So we're still waiting to hear on those.
And I wish I could tell you we've got a couple of wins that we're working on but we're still waiting to hear from clients going a lot longer than anticipated. So we have lost a couple of little color, we're still waiting to hear on a boat.
Got it thanks last one is.
I know, there's some reluctance to talk about hampered or you actually subject to a non disclosure agreement or confidentiality agreements that.
For limits, what you can say.
We are on on several fronts not only you know on the GCC, which are the 10 closure contract with an open procurement right now so.
Inappropriate to discuss that.
But the.
The TV I initiative.
The deal we initiative that Oh, we're a player in.
And.
Spectrally.
I'll try to limit our discussion on TV API.
And led to you we talk about that asset.
There there are initiatives.
Got it thanks very much good to see the progress being made.
Understood.
And our next question comes from Chuck Dickinson go ahead Chuck.
Good morning, guys, a nice quarter.
I have a question on.
You know the thrust of the strategy here overall, if you have a budget it looks flattish as you say overall, although you don't have all the details and I'm not sure. If some of some of that still needs to be worked out a congressionally and.
In committees or not and also sort of flattish in Hanford. It seems you have two directions that you're looking at here you want to get a bigger piece of the same pie.
That is increase your market share for what's already out there without sacrificing margins of course, and then also develop some new business a bacon new I guess would be the way to look at it maybe that's some of the things that you're doing a commercially can you give sort of a feel.
In terms of both of those avenues, where how much effort, you're putting in both sides and.
What the potential you see is for both growing market share in the existing market and also the new business opportunities.
Well Chuck you.
Completely the scroll described our strategy, which is as you just said to us to increase our market share on what we can do now and then to add.
Capabilities to what we can do now.
No our goal has been.
For two years now and we are very focused on.
On getting to $100 million in revenue and we kind of saw.
That growth.
Coming to the last two years that $50 million.
To to have a 60 40 split on on that.
That but.
That ratio, which was basically 40 million in service the six demand ways.
I think it's going to be more as we're getting closer to it.
I'm more 50, 50 on 50 million Beach.
And well, which would basically to answer your question.
Our focus on new dramatic increases in the services sector.
While you're increasing.
The waste treatment by 2020, 5%.
And I think thats the way its going.
Weve, but we're very very excited about our services segment.
And as Mike.
30 years of doing some testing several times a once you win a couple of projects.
And get a few clients that are very happy with their performance.
Theres a lot of momentum from that.
And we've seen that.
Then the last couple of months.
And we'll have some new projects hopefully we can report next couple of quarters and that will be resolved that momentum and those references and.
You are bringing on new people strong people that have.
Relationships.
And all that build on each other when you see a companies really surge in this industry. That's typically what comes from is that momentum.
Oh, and bringing on new talent that can help to grow.
And so what we're finding ourselves in that position right now and so is it really exciting time for us internally.
Morale is very good and.
The company has a buzz about it we're making the investments we've needed to make for a long time.
On all kinds of things management systems, and those things as well as technology.
So while helping answers the question I kind of leveled off a little bit.
Yeah, No no. It does I mean, it certainly seems like you could be at an inflection point for the business I don't want to say you're there.
But seeing that revenue pop.
Sequentially and year over year would give the first glimmer of hope in first green shoot maybe or you are at an inflection point and my other question second question has to do with joint venture opportunities you've been.
Reason was successful in that so so far.
Is that something that you're going to continue to focus on and what is the degree of effort and emphasis on on that whether it be.
A joint venture with someone else or that were involved you know subcontractor work or having them use some of your.
Facility and technological capability.
Are you speaking about the gym Geo melt.
And yes, the deal Mel I was it was a great example is a very good relationship with Veolia I think one of the best I've had ever and.
Where the partnership was a very meaningful way through initial designs and start up into marketing.
And so.
I think your question, we do hope to have a couple of more those were talking to other folks now to address.
Specific applications for upcoming bids for things like Mercury treatment in Oak Ridge, how we're trying to tie them to specific waste streams and specific challenges mostly within the deal we.
That.
Address waste streams with very limited.
Treatment capability now so we can easily to find the potential return on investment.
And the technology it needs to be in place. So we do have a couple more in line or if they're not in the near term. The bombing you know a year or two away before you know anything can be really announced but.
We certainly see that model as a win win for both us and our partners and end to end and frankly the government.
To be able to treat waste that may not otherwise be able to be true.
So one other thing I'm sorry, you had mentioned my phone cut out earlier that you had not gotten the full benefit of the new contracts realized in Q2, and then you had mentioned a number of an incremental two to 3 million was that.
Throughout the remainder of 2019 or in the third quarter of 2019.
We expect that to be in the third quarter for the most part and we hope that will bleed into the fourth quarter as well through expansion.
Okay. Thank you.
Thank you.
And our last question comes from Stephen Fine go ahead Steven.
I think the question was answered, but I just would like to expand a little bit on the partnerships.
Partnering with other people for bids is that really.
Is that is that something that you introduce mark or was that something that the company has done historically.
You know what is partnering in bids.
Yes, as far as people would call. It typically teaming yes, it historically done and most of the.
Services projects within Department of energy and do D. and active just about all of them.
Require very broad array of.
Disciplines and technical capabilities most of which.
Every affirmed doesn't have even a large firms like floor and Jacobs, who will have a need for niches, so they'll partner or team with other companies when we do the same.
To reduce our risk for example, and that is a good example is.
Some of the projects, we want to California.
It will team with a small businesses.
In the region that have heavy equipment for example, or a niche where a relationship that is necessary for specific projects. So we're pretty much always we'll do that there's a couple exceptions, but for the most part will be paying local companies.
Thank you.
Second question is you know you keep.
You know, which I like you keep talking about this $100 million goal. So do you have a.
Do you have that a timeline goal for that let's say two years three years one year.
Well I I get build out for speculating too much stealing these kinds of things I try not to do too much of that but we certainly would hope the next two or three years, we'll be able to reach that goal.
All right and the wine My one final question and I guess this displays by lack of financial acumen.
One to 5 million.
Ben.
Physically the cash came in correct.
Correct.
Yes, okay. So the cash is being used or was it. It is the cash physically being used like for example for plant improvements and stuff like that or new stuff in the plants.
Bid of both.
As you know the.
The closure was very expensive and so we have some bills to pay with it related to the closure but.
There is additional obviously and that money along with.
Income positive income that we are certainly planning to.
Earn over the next six months.
We'll go towards capital improvement.
Okay. Thank you.
At this time I would like to turn the call back over to management. Thank you.
Okay.
Thank you me.
Alright, I'd like to thank everyone for participating.
Our second quarter conference call as I mentioned earlier, we are pleased with our Q2 results and more importantly, the positive impact from our strategy improvements that will continue to improve provide sustainable growth, while expanding our offering over the next several years. So we are confident that our best is yet to come. Thank you.
Thank you. This does conclude today's conference. We thank you for your participation you may disconnect. Your lines at this time and have a wonderful day one moment.
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