Good afternoon, ladies and gentlemen, and welcome to the Perma-Fix Environmental Services Second Quarter 2022 Conference Call. . It is now my pleasure to turn the floor over to your host, David Waldman, Investor Relations. Sir, the floor is yours..

Thank you. Good morning, everyone, and welcome to Perma-Fix Environmental Services Second Quarter 2022 Conference Call. On the call with us this morning are Mark Duff, President and CEO; and Dr. Lou Centofanti, Executive Vice President of Strategic Initiatives; and Ben Naccarato, Chief Financial Officer.

The company issued a press release this morning containing first quarter 2022 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 (212) 671-1020.

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 include certain non-GAAP financial measures.

All statements on this conference call other than a statement of historical fact are forward-looking statements that are subject to known and unknown risks, uncertainties and other factors, which could cause actual results and performance of the company to differ materially from such statements.

These risks and uncertainties are detailed in the company's filings with the U.S. Securities and Exchange Commission as well as this morning's press release. The company makes no commitment to disclose any revisions to forward-looking statements or any facts, events or circumstances after the date hereof that bear upon forward-looking statements.

In addition to today's discussion, we'll include references to non-GAAP measures. Perma-Fix believes that such information provides an additional measurement and consistent historical comparison of its performance.

A reconciliation of the non-GAAP measures to the most directly comparable GAAP measures is available in today's news release on our website. I'd now like to turn the call over to Mark Duff. Please go ahead, Mark..

All right. Thanks, David, and good morning. I believe we were finally starting to realize improvements in our performance as evidenced by our results this quarter. I can't understate enough the challenges we've had to overcome.

Government agencies including DOE and DOD and EPA have been quite lethargic in distribution of task orders and they are existing IDIQ contracts, in a bit slow in the procurement process still, due to the impacts of the pandemic.

On July 25 of this year, just a few weeks ago, the GAO released a report with recommendations for the Department of Energy, Office of Environmental Management and the NSA the National Security Administration to improve their management of excess carryover balances.

At the end of FY ‘21 GAO found that EM carried over around $3.2 billion equivalent to around 42% of their funds appropriated in fiscal year '21. NSA carried over by 11 billion, equivalent to 62% of its appropriate funds.

These statistics underscored the fact that the government has not been moving funds into projects AS planned was directly result in delays and field projects, and specifically waste disposition activities.

Permafix is well positioned to remain competitive when these task scores begin to make it through the procurement cycle through our existing portfolio of IDIQs. With DOE as well as DOD, and other federal agencies.

And despite these challenges, please report we achieved a 20.5% increase in revenue from $19.5 million for the second quarter of '22 versus $16.1 million for the same period last year. Importantly, we saw growth in each of our segments, both sequentially, and year-over-years.

In addition to our revenue growth, gross profit nearly tripled and gross margins increased from 6% to 15%. Turning first to our services segment, we were able to reach full operational status on several projects that have been delayed due to the impact of the pandemic in March of 22.

We began to see increases in activity as the pandemic impacts began to subside, which continued into the second quarter. As a result, revenue increased approximately 31% to $11.1 million in the second quarter of '22 versus the same period last year. We saw a similar increase in sequential growth of 31% compared to the first quarter of '22.

We are hopeful the federal government will be awarding additional projects in the third and fourth quarters. However, we are realistic that the DOE and DOD have been slow to award new projects. While we remain well positioned to competitive there is a risk.

The government could continue to carry over large projects and their budgets, which could potentially have an impact on firms like Permafix. Nevertheless, our ability to provide innovative solutions for both waste management and radiological contamination.

We've been fortunate to be able to secure formal teaming arrangements with large tier 1 prime firms on large bids -- strategic bids within the DOE market. Assuming we're successful on some of these. Some of these projects are quite material or business contributing meaningful recurring revenues and cashflow over multiyear contracts.

We're also seeing increased activity on the commercial and international fronts. Last month, we were awarded a 4 year framework contract workup worth up to GBP 41 million across 3 suppliers for the treatment and conditioning of radioactive waste in the U.K.

This award represents an expanding market in Europe for our services and defined the lack of treatment availability and options to stabilize radioactive waste for long term storage and disposal.

Turning to our treatment segment revenue increased by roughly 9% for the second quarter of '22 as compared to the same period last year, primarily due to higher volume waste. Sequentially, our treatment segment revenue increased 12% over the first quarter of '22. In addition, we're seeing improvements in our waste receipts, which increased 54%.

So we had a 54% increase in our waste receipts through the quarter. Given how we recognize revenue on a percentage of completion basis, this is a good leading indicator for the second half of the year. In addition, treatment backlog increased to $7.2 million compared to just $6.1 million at the end of the first quarter of '22.

We continue to expand our waste treatment offering to the commercial sector in utility markets, which has broadened our market base and resulted in several new shipments that will likely be sustainable for several years.

As an example, our new vacuum thermal desorption system or VTD, for sure or versus a treatment solution for problematic waste streams while providing increased efficiency and productivity as well.

Specifically, this technology enables us to extract organic contaminants from soil-like materials, sludges and non-debris mixed waste streams, and we're realizing really strong interest in this system with receipts from several new clients, including both government and commercial sectors, along with the oil and gas industry.

As I mentioned in our last call, the recent enacted FY '22 federal spending bill included $7 million in additional funds specifically allocated for the test bed initiative, also referred to as the TBI. Also in that funding bill is referred to as the low-level waste off-site disposal program, which is called LLWOD.

This funding line item underscores the continued visibility and recognition within the U.S. Congress for commercial grouting to supplement the current direct feed low-activity waste program or what we refer to as DF law. A law providing significant cost and schedule reductions to support the Hanford mission.

The second phase of the TBI project, which includes extraction, shipment and transportation of 2,000 gallons of waste to our -- Permafix Northwest facility located in Richmond, Washington. Continues to move forward with the NRC approval of DOE's waste incidental to reprocessing port.

That's basically the NRC approved the weird document that was the next step of the program. This opens the door for DOE to submit the RD&D permit and ship the 2,000 gallons hopefully before the end of this year, assuming they submit the report soon.

Also, we've seen continued support by Congress and local stakeholders associated with the grouting technology at a low cost and safe supplemental program to the ongoing BFL facility. In fact, just last week, the U.S.

GAO published a report in which they stated grouting of hand for tank waste could reduce certain risk by treating supplemental low-activity waste defined as what we cover to as law, which makes up over 90% of the overall tank inventory at Hanford.

Even with the operation of the new DFLAW facility, which is currently scheduled to begin in December 23, this facility would only address about 60% of the whole -- the entire law inventory when it's running at full capacity.

That leaves nearly 20 million gallons remaining to be addressed within the tank farms at Hanford without a treatment alternative defined for.

As stated by the GAO in this report, the near-term reduction of the tank waste inventory through grouting could accelerate tank closures and save the government tens of billions of dollars while reducing the risk to the environment beginning today.

Permafix maintains these capabilities for grouting in our North -- Northwest facility, which is already permitted and now fitted to safety and component grout up to 30,000 gallons per month with the ability to expand to well over 1 million gallons annually while dramatically reducing costs compared to the alternative vitrification process.

In terms of hiring, and stability of our workforce, we've recently begun to realize impacts from the availability of trained technicians and labor that have been common during these unusual economic times.

While we've been successful in minimizing these impacts to date, we do recognize the potential impacts to productivity in both our segments as the market continues to tighten in the coming months. Turning back to our financials for a moment. Despite the turnaround, I am obviously disappointed we didn't deliver a positive EBITDA for Q2.

However, we believe that we're well positioned to continue our market expansion program. Adjusted EBITDA improved to a loss of $403,000 compared to a loss of $1.7 million in Q2 of '21 and a loss of $1.4 million in Q1 of '22. As I stated in the past, the federal government has been much slower than the commercial sector to resume normal operations.

However, these projects have not gone away. We believe we -- whether the worst of the storm for COVID-19, and we expect improved activity from federal government to procure the new task orders in the future. So to wrap up, we've witnessed solid year-over-year revenue growth in both our segments and saw a meaningful improvement in our gross margins.

The federal government has begun announcing new projects that have been on hold and we expect to benefit from those improved budgets and carryover spending from the last year. We have projects ramping up and are bidding on increasing number of projects in our Services segment.

Within the Treatment segment, both our waste receipts and backlog are improving. All this well for the second half of the year in our performance goals. At the same time, we continue to invest in our capabilities and facilities. We've built a solid foundation for growth and a highly scalable infrastructure.

As a result, we believe we're in a great position to take advantage of the pent-up demand that's out there. And as we continue to increase revenues, we expect to benefit from the predictable cash flows of our Services segment and high incremental margins within our Treatment segment.

On that, I'll now turn it over to Ben, who will discuss the financial results in more detail, Ben..

Thanks, Mark. I'll start with revenue. From our continuing operations in the second quarter, as you said, was $19.5 million compared to last year's second quarter of $16.1 million, an increase of $3.4 million or 20.5%.

The revenue improvement came from both our operating segments as treatment was up $687,000, primarily based on increased volume, while the Service segment increased by $2.6 million, primarily from increased project work on 2 large contracts that had not started at this time last year.

Year-to-date through June 30, our revenue is sitting lower than prior year by about $3.9 million or 9.9%. This drop in the revenue from the service -- comes from the Services segment as revenue was down $4.6 million from last year year-to-date.

Lower revenue in the first quarter due to the delays in the project start-up of the 2 large contracts is the main contributor for this shortfall. Our gross profit for the quarter was $2.9 million compared to $966,000 last year.

The improvement in the gross profit of approximately $1.9 million was primarily from increased revenue and project margin in the Services segment, while the Treatment segment increased modestly from higher revenue. For 6 months ended June 30, our gross profit is at $4.5 million compared to $3.3 million in the last year.

Again, this increase is entirely from the Services segment where the improvement in the margins on the projects we're doing has more than offset the impact of decreased revenue and the higher fixed costs. On the G&A side, cost of SG&A costs were $3.7 million compared to $3 million in the second quarter last year.

The increase of $687,000 was primarily related to increased payroll, travel, audit fees and stock compensation. For the 6 months ended June 30, SG&A was $7.1 million compared to $6.2 million in the prior year.

And just like the quarter, the biggest impact of this variance was higher payroll and travel, higher audit fees, higher stock option compensations and higher outside service costs. Our net loss attributable to common shareholders for the quarter was $1.4 million compared to last year's net income of $3 million.

However, of note, the second quarter of 2021 included a gain on the extinguishment of debt related to our -- to the company's PPP loan totaling $5.4 million, which was forgiven in June of 2021. Excluding this gain, the loss in the quarter compared to prior year was reduced or improved by $1 million.

Total basic loss per share for the quarter was $0.11 compared to income per share of $0.25 last year. And year-to-date basic loss per share is at $0.21 compared to income per share of 16% in 2021.

Our adjusted EBITDA from continuing operations for the quarter, as defined in this morning's press release was a loss of $403,000 compared to a loss of $1.7 million last year. And on the year-to-date basis, adjusted EBITDA stands at $1.8 million compared to $2.2 million in 2021.

Cash on the balance sheet was $163,000 compared to $4.4 million at the end of 2021, reflecting the losses of the year, capital spending and then maintenance. Our current liabilities are down $3.4 million as a result of timing and vendor payments.

Our waste backlog at the of 2022 was $7.2 million compared to $7.1 million at year end and up from $6.7 million last year. Our total debt at the end of the quarter was $1.4 million excluding debt issuance costs which is primarily owed to our PMC Bank.

Finally, I'll discuss cash flow activity, cash used for the year, cash used by continuing operations was $2.7 million. Cash used by our discontinued operations is $367,000. Cash used for investing in continuing operations, which is primarily capital spending is $733,000.

Cash used for financing was $444,000, and that's represented by monthly payments to our term loan of $222,000 and payments to finance-related lease liabilities and other debt of $222,000. With that, operator, I'll turn the call over to questions..

Your first question is coming from Howard Brous of Wellington Shields..

First of all, congratulations, Mark, Ben, won on a better quarter and on a significantly better visibility. On your announcement of earnings, and I'm quoting supported our ability to join teams in longer, excuse me, larger strategic bids. That's one.

And secondly, on Page 15 of your deck, you talk about participation in several teaming arrangements for large DOE procurements, including integrated tank disposition contract, which is a Hanford contract.

Can you be a little bit more specific as to the opportunities that you see both in Hanford and other?.

Well, thanks for the kind words, Howard. I appreciate your support. ITDC is a $45 billion contract for management of the tank farms at Hanford as well as the start-up of DFLAW a few years down the road.

That procurement -- while it's in procurement space, and we're waiting to hear on it, there's obviously a lot of sensitivities to it in regards to our team, which I can't disclose until after the announcement.

But I can tell you this is the department has been staying with their current schedule, and they update it frequently that they'll be making announcement in late September, early October. There were two bidders, were one or two bidders. We're -- we basically support our core competencies on the contract.

And I would like to think we least have a 50-50 chance based on the fact there's only two bidders that we know of. Obviously, that's not an official statement. So that, again, is coming up quickly. Hopefully, by the call on Q3, we will have an announcement on that. The other big bid that we've been supporting is the OSM's six contract on that.

That's operations of the depleted uranium hexafluoride facilities at both Ports the Kentucky, Portsmouth, Ohio and Paducah, Kentucky. That's a $3 billion contract. Again, we're on a team for that, providing again similar services. And that's a little bit more competition on that.

That won't be announced likely for a year, and those bids just went in a few days ago. We're bidding a number of other ones that are not quite as large. There's no billions involved, but strategic that we're positioning for within DOE.

We are starting to see a nice little backlog of task orders come in – RFPs come in from the core of engineers through our facility reduction contracts that I've talked about in the past. Those are fine starting moving. None of those bids have been submitted yet. They've been coming out for several weeks.

The due dates keep getting pushed, which gets back to the earlier statements I made in regards to the procurement process has taken a long time. So we're optimistic on those big ones that we'll hopefully get some information here about some awards in the next several quarters..

All right. Let's talk about grounding. You had mentioned grouting in your comments -- opening comments. Obviously, the GAO report, they talk about grouting. The Senate Cummins talk about grouting, NRC talks about grouting, the scientists all talk about grouting. So -- we know that grouting is acceptable.

Grouting is a savings of anywhere depending on which comment you read of $20 billion to $40 billion over the life of it. Talk with me about the opportunities in grouting besides the 2,000 gallons, and others..

Yes, Howard, the -- it is very encouraging to see all those agencies you mentioned and a few also there made comments that have supported and encouraged DOE, in fact, recommend a highly recommended DOE that they expeditiously pursue grouting.

DOE has made DEO officials, both the headquarters and at Hanford have all commented that they're very much in support of the TBI program that they believe -- that there's merit in this approach -- and we'll say repeatedly that they're moving forward with TBI. Having said that, they are in complete control.

They control or the documents that have to be developed, which includes the final wear, the NEPA document, the EA and the RD&D report more permit. And so these bulls are all squarely in the DOE's court. If DOE wants to move forward with grouting, they can.

And they have a strategy of pushing and working hard on a Dow facility and getting it running without distraction. And they've been vocal about that.

But to answer your question specifically, DOE has the ability to ship -- start shipping us for grouting, the waste that's generated from the TSCR system, which right now sits at approximately 300,000 gallons. That wasted in the tank. It's low-level waste. It's been declared low-level waste by several entities.

We can receive that waste starting tomorrow at 30,000 gallons a month and DOE's position, which has just recently been published in one of the industry newsletters that their choice is to accumulate that TSCR waste on a continual basis until they have enough for operation of the DFLAW facility, which is about 1 million gallons.

So that's the decision on that. They can start shipping to us as soon as they want to. And obviously, the 2,000 gallons will come first as a next level phase. But when DOE decided they want to do that, they can. So our position has been clear, Howard.

And that is we'll continue to make sure DOE and our congressional delegations that are involved here all understand the value of grouting and what it means to the department. And right now, that decision is squarely in the department's purview to make that decision.

And the cost savings that we've talked about a lot, which is about 10x less the reduced carbon footprint from emissions and the schedule reduction and the risk of the environment, all considerations that we're hopeful the DOE will recognize the value in shipping some of that TSCR waste was in the near term..

It's my understanding that they're going to accumulate the million gallons, but they also have money in this budget to treat TSCR waste.

Is that a correct statement?.

They have... Right now, there's $10 million from the 2020 budget and $7 million from the 2022 budget. And my understanding from the services committee this past year or a few weeks ago, asked DOE if they want -- if they needed more.

So there's at least $17 million allocated for low-level ways to off side disposition program or OTBI, that's available right now. So yes, one could certainly say there's $17 million available for support for treatment of the TSCR waste at this time..

And that's nothing to do with the 2023 fiscal budget -- that's....

That's already approved..

Let me go one more question. You talked about the EPA opening up, which is the Navajo Nation contract. You were one of the winners. Have you started processing anything on that first contract? And secondly, have you heard anything about an additional potential contract availability..

We've heard nothing about the next contract, but we have received the first task order RFP for the first mine, which took a long time to get to the procurement cycle, there's lots of questions and went back and forth a bunch of times.

That proposal has been submitted and it does include soil sorting, which is the technology we've been using for quite a while. And that will represent the first mine to be reclamated through that program, and hopefully, it will be the beginning of many. But we're still waiting to hear the announcement on that.

We really had anticipated on hearing on that before this call, but we can safely say that we'll hear any day on that first task order -- on the award of the first task order..

Again, congratulations on the better quarter and congratulations on the better visibility -- that's all I have..

Our next question is coming from David Wright of Henry Investment Trust..

Has work started on the USS McKee project?.

Yes, David, that has. That project started in beginning of Q1. And it went through an extraordinarily long transition phase due to the fact that there was a lot of training requirements required of the workforce that was brand new. This is the first time this type of work has been commercialized at the naval ship yards.

So the workforce had to go through a number of different training regimens to do the work. That's all been done. They've been through all the initial characterization and got to full operations in mid-July.

So it's been running through that 3- or 4-month transition period and mobilization period, we've got the equipment mobilizes and all that kind of thing, and they're off and running and generating good revenue now beginning in mid-July..

Okay. So that's just very recent. Is it too soon to tell if your original cost estimate and the result in profitability from that job are going to hold up given, I guess, it is fixed pricing given that the cost of everything is up..

It is too early to tell. We do have a number of changes that we're talking in the Navy about. So it's definitely too early to tell how it's performing. It started off really good and then a few changes occurred. We're just working on the Navy right now to get those changes approved..

Okay. And then, Mark, my other question is, kind of, a pretty high altitude one. Historically, is the DOE contracting process always this long? Or does the length of it fluctuated as administrations change..

It does change with administration. What I will say, David is that DOE has done pretty well on the -- on several of the big contracts, particularly tank closure, for example, it was delayed 3 years because it was protested, Y-12 here at Oak Ridge. It's going through the same type of delays.

But once the RFE gets submitted, they typically do pretty well. But there is a lot of longer delays based on this protest and those types of issues that we've seen in recent decades where the real bottleneck is coming is on the next level down from the Tier 1, so the task order contracts.

And that's the reason why there is such a large carryover from each of the sites is because the primes are just not doing sub-contracts.

And that it's just directly related to slower procurement, less field work because a lot of people are working from home within the government and the slower procurement cycles across the board, not just DOE, DoD as well as well as EPA every government agency.

And you don't hear much about it, it's so frustrating is companies like ours, and we keep in touch with all of our competitors, we all go through the same thing. We're waiting for sub-contracts to come out and knowing that these budgets are just piling up and progress in the field is not happening. So there's not much we can do besides the wait..

Okay. Well, I appreciate the summary on that. Congratulations on your continued progress..

Our next question is coming from Anthony Harpel, he is a private investor..

Can you give us a sense of what capacity utilization rates have looked like on the treatment side of your business, where you expect them to go in the back half of the year, given what looks like a market improvement in waste receipts and if you are expecting higher fixed cost absorption in the second half, what should we expect in terms of gross margin flow through?.

Yes. We are seeing, as we mentioned, in several different ways, a nice increase in backlog in receipts. We beat our goal this quarter by about 10%. Our goal was pretty high. And that's somewhat continuing. It was a little slow over the 4th of July week, but it's generally continuing on a similar trajectory for receipts.

And as far as productivity goes, we've got a team of folks at each of our sites, and they're working full time, we're chugging away. So it's difficult to address productivity because we have so many different types of waste streams. Some are really small, some are large, and I can't put a number on it to say like we're 60% of productivity.

But we could add a lot more -- work lot more over time and increase that if the receipts came in. So having said that, I'd probably say we're probably -- if I had to put a guess out there, 50% to 60% of our total capacity.

And as I mentioned about the labor -- we are starting to see some headwinds at the Northwest plant, specifically as the Hanford site, which is an enormous site, 10,000 people hired -- they went on a present hiring campaign with all some folks. We had to replace them.

We've been able to replace them, but they're a little bit less productive as far as throughput goes, and we don't -- not sure what that impact is going to be. We think we have a handle on it and we'll be okay. But there is a sensitivity there that I thought was worth mentioning.

And we'll get through that as our employees get more productive and we add in addition to those. So we do see it increasing or getting better. And as I mentioned before, when the government starts to spend their backlog or their carryover that almost certainly generates more waste from projects and provides more opportunity.

We know about a lot of those opportunities. Others we don't know about it will just show up. But the fact that we do know about a lot and we haven't targeted for the next several quarters, we do expect to see kind of a continued growth in the future..

Our next question is coming from Tuck Dickinson, who is a private investor..

One point of, sort of, ongoing frustration. I suppose, and I am sure you feel it too is we've been hearing about TBI Phase II and Navajo Nation. I have various questions on the conference call. It seems like for about 3 years now.

And then in this release this morning, there's the comment made that hopefully, we see TBI Phase II start to track before the end of the year, whereas in the last conference call, you were saying the end of the third quarter. So it just seems to be, again, going on for three years, continually push back much is in the same way.

The whole vitrification cycle has been pushed back for years and years and years. So that's just a comment. I have two questions. One, you're almost out of cash on the balance sheet, but you have a clean balance sheet otherwise with very little debt.

Can you speak to what your debt capacity is? And I'd also note that you burned through almost over $5 million of PPP money and $6 million -- close to $6 million of an offering in October, cash is gone.

And I know you funded receivables sequentially in the last quarter, but what is your debt capacity? And what is the ongoing strategy for raising funds to pay for the market when it starts to pick up?.

Before I'll let Ben answer the debt capacity in a second. But just we share your concern on the TBI. It's equally frustrating to see the endorsements by the National Academy of Sciences and the GAO and through the FFRDC that we mentioned last quarter and numerous other agencies as Howard Brous has just mentioned.

We're just hopeful the DOE will revisit their strategy and see the value in moving forward with this. That's really where it lies. We have significant support from our congressional delegations -- we just don't know what else to do. We briefed numerous times. They're very aware of what the capability is.

It's just all about their overall strategy for those tanks. And hopefully, that will begin to loosen up, and we won't be using the word hopefully anymore. But with that, I'll turn it over to Ben to address the rest of your question..

Yes. And of course, cash is always the most visible thing on the balance sheet and the indicator of our success. We -- the recent past quarters have certainly had an impact. But our working capital remains positive. There is a point in time and our availability on our revolver remains healthy.

It's in over $4.5 million almost $5 million and our debt is low, as you mentioned. So if you look at the cash flow, and you'll see it when you -- when we file. A big chunk of that was paying down vendors, and that is a timing issue. We've got certain receivables outstanding. So cash, kind of, fluctuates given the time.

Of course, it has everybody's attention at all times, and we are constantly forecasting out. And of course, with the low debt load, we have financing options available to us if we need them. And we're obviously in communicate those opportunities at all times to make sure we stay liquid. But very good observation..

As regards to treatment revenues, I mean, there's something for everybody like in your commentary, I think, today, on the positive side, the carryover spending, the backlog is up a little bit, waste receipts are up a little bit. But it just feels like treatment revenues cannot get out from behind the 8 ball.

And my question is, is there any chance that the government has really sort of adopting a new strategy that would, sort of, leave a steady run rate of treatment revenues, say, just either side of $10 million a quarter, that it never really ramps up, excluding Hanford, obviously, which will be a big boost of ego.

I mean just the base revenues seem to run down in that $8 million, $9 million range sort of best case recently, maybe you get up to $10 million, but it's just a feeling that that thing just doesn't move.

What's your sense on that? And I know you mentioned about there is some potential risk here in terms of when the government actually starts to spend money even though it looks like they really need to spend the money, that doesn't necessarily translate into a projection of when they -- when and if they start doing it or if they may change strategy..

Yes. We share your concern, Doug, in regards to that instability and quarterly revenue and just a projection that you can -- that's sustainable. And we're looking at that for several years, and we put together a strategy to -- for waste sales to do everything we can to avoid that risk from -- particularly from DOE.

And that's been a direct result of our international expansion. We've expanded into commercial industry. We're getting a nice steady stream of commercial waste now. We've gotten well over $1 million in international waste in the last 18 months, which was all new. It's very high margin. Everybody is happy with it.

We've been able to treat it and send it back to their original countries for long-term storage. It's significantly like 90% reduction in volume. And we're getting waste from other commercial industries like the oil and gas industry and the pharmaceutical industries there are material amounts of receipts.

So our goal has been to expand beyond that the general reliance on DOE particularly to get those other waste streams rolling to be able to put the technologies and in place that are -- provide value to these commercial clients over what they're originally doing. And it's been working. So COVID has had an impact on it.

It's very difficult to say, hey, the last 2 or 3 years, this is what's happened because everything has been upended in regards to productivity across the board. But our goal is to do exactly what we just said and that is to get to $10 million a quarter and then go up from there.

And I think with all this new market expansion, particularly international and commercial that we can get there and not rely so much on the lumpiness of the federal government. And I'll just add to that, that if we get 10 per quarter, we're going to do just fine.

The problems of the past 1.5 years have been because it's been running more like half of that. And so this past quarter was the first quarter in probably 2 years that we saw a number up that high. I think it was up about $9.5 million, and that's a real positive sign...

Thank you -- our next question is coming from Ross Taylor with ARS Investment Partners. Many of my questions have actually already been answered, and I would like to join the congratulations, and thanks for the diversification efforts you're making.

Can you give us an idea when you think and when you see yourself able to get to that kind of $10 million a quarter on a run rate sustainable... Well, thanks for the kind words, Ross. Yes, the bottom line is it's really difficult to project that. But -- so it would be total speculation to say when we'll get to the $10 million.

It's certainly, as we said, at $9.5 million in sales receipts last quarter, we're starting to see, as I mentioned, the last several quarters, our RFPs that we're getting for waste treatment continue to keep the same trajectory and they're going up every quarter and that we had a really good June overall in our fees and receipts.

With a little bit of slowdown in the first week of July and getting back on track here now for the latter part of July, we'd hope that we'd be at that same level this quarter and the next, which are typically our 2 best quarters. So I think we're on track, but I can't commit to when we're going to actually get to the $10 million overall.

As long as we see these receipts coming in, we'll catch up on the productivity side shortly thereafter..

So basically, the pieces are in place to get there. And it's just -- and it doesn't take a lot to push you over the top on that. You're pretty close. So we shouldn't be surprised that you could achieve that as we roll into coming quarters..

If everything -- if the procurement cycle and the backlog spending would get back to normal, we're pretty confident that we should be able to get in there -- to get to that level in the next several quarters..

Okay.

And what do you think the magic thinking is on the idea of waiting to help to get 1 million gallons?.

Right now -- as I've said before, they're trying to get this very, very complicated plant started. They're putting all the resources on this plant, this DFLAW plant. They're trying to keep -- to make sure the regulators are on board with them and the regulators are supportive.

It's an extremely complicated plant, one of the most complicated plants that DOE has had in many, many years. And so they're putting all their focus on that and making sure that it gets done, I don't know when they're going to start to recognize. Hey, this can be done in parallel without a distraction.

I met with some people this week I was at Hanford all week, just got back last night and the TSCR, which is a hugely successful program. It's pulling waste out of the tanks providing initial treatment to strip out the , and it's a very low level, low activity water.

And once that 1 million gallons gets reached, and going to be faced with a decision of do we shut the TSCR down or keep it going. And as a pivot point that one would think that you want to keep it operating and begin to shift the way off site. I don't know when that's going to be because it's up and down all the time.

And I don't know what their plans are. But one would think that the opportunity to start treating waste off-site and disposing of it and actually closing tanks would be something that DOE would view as a big accomplishment, in addition to getting the DFO plant operational.

And we've always said that we've always viewed TBI as a supplement to DFLAW because we know the investment that the government has put into that plant, but they can certainly start moving some waste off-site tomorrow if they wanted to..

Okay. So this is casing that just -- it's a bureaucratic situation as opposed to -- there's no technical reasons why they need to hold off. It's just -- this is out of the out. Yes. Okay.

Can you go into a little bit more depth in the opportunities coming in the balance of the year with regard to ship decommissioning?.

Yes.

The ships decommissioning is not -- as far as the other -- I mentioned before and there's a GAO report that came out just 48 ships to be decommissioned in the next 48 months or something like -- I think there's numbers about 25% of those were nuclear -- right now, there's no -- there's limited movement on what those ships are, which ones they are and how they're going to be procured.

And I can't tell you which ones the next. I was told very informally that Sam Rayburn was next in line. We know that the limits and the enterprise aircraft carriers are in the '25 time frame, 26 be procured in '24, but we really -- we have very little clarity on which ships are coming when and what's going to happen next.

So I don't know if it's a matter of funding or just lack of an intel or like there's no planning or just not advertised, but I can't -- I'm afraid I can't give you any details that I know on specifics on what's coming next. But they're certainly stacked up within the Navy to happen in the next 4 years..

Okay. Now you've got a labor force now in Norfolk that you trained up that are getting up to speed and the like. Does the Navy appreciate that in this, kind of environment, the most inefficient thing to do is to let you lose that labor force through the lack of words..

I sure hope so, Ross. But we're trying to make sure they know that so that we can just move on to the next ship. That is absolutely our goal. That's why performance on this ship is so important. It's a very complicated project.

It basically clean out about 140 rooms that are contaminated and some tanks while you're there in the hustle of bustle of Norfolk naval shipyard. And we're rolling. We're not behind schedule and things are at least by much that we know of. And it seems to be going pretty well, relationship-wise.

So as long as we continue operations without anything -- any hiccups, we're confident that the government will understand, hey, here's a proven group of people that have been trained and demonstrated performance. So hopefully, that will continue..

I do have to say that if I ever start to think government actually understands how to do things, I just have to listen to one of your calls, remind me that I shouldn't smoke opium at work or exactly. Okay. That's really bad. I think that you guys -- you're executing as well as you can.

I appreciate the fact that you brought in the reach of the company more into commercial because in the end, you have a capability, it makes sense to use it.

And if it turns out that down the road somewhere, you've got enough commercial business that the government business ends up being something that you pick up when you feel like that would be a wonderful situation..

Our next question is coming from Ryan Hamilton with Morgan Dempsey Capital Management..

I would also like to echo the congratulations on the diversification and the progress being made.

My -- most of my questions have been answered, but the one that I'm curious on, I think I asked this almost every quarter, could you walk us through what you're seeing as far as bidding activity goes, number of your competitors that are bidding the size of the projects and just the overall number and how it compares to maybe the last couple of years?.

Yes. That's a lot of data, Ryan. But let me take a stab at it. We have both segments track separately on the Treatment segment. As I mentioned earlier, our number of RFPs every month continues to go up from January.

I think, I addressed the specific number on last call, but it continues to go up and the value of those bids is going up as well and -- which has resulted in what I just mentioned, the $9.5 million receipts last quarter. So it's a direct result of that. And so we're encouraged by that.

As far as -- it's very, very difficult to track and define RFPs that are coming up on the waste treatment side because they're typically a very quick request for quotes that you provide and you always know what's coming until they've already generated it.

So we don't track that in the same way we're doing the service on the services side, when you have projects and typically complex request for proposals, RFPs that are coming out, you can track those.

And we have, right now, literally about $500 million in opportunities in the services side between task orders and projects that we know are coming out from all government agencies that were either provided initial responses to or they are scheduled to come out. So we're very optimistic about those.

And -- that's by far at $500 some million more than we've ever had on our hot list to come out. And again, that's about 2 quarter's projection, so $500 million over the next 2 -- maybe 2 to 3 quarters that we expect to come out.

So really good backlog on opportunities on the services side, on the treatment side, it's difficult to define, but we do see that continued optimism due to just due to the fact that it's wrapped up procurement, we're just not seeing the RFPs end up in our office as fast as we'd like..

No, that's great.

And what are you seeing as far as the number of companies bidding in addition with you on a lot of these contracts?.

It really varies depending on the complexity of the work. On the highly complex radiological work is very few -- two to three which has been very encouraging. We like the super complicated, complex type of work because we have the team of health physicists that are really top of the industry and recognized as being so.

So those guys are certified to help physics that nuclear engineers that know how to put together approaches that reduce risk, and it's not just low cost, knock something down and take it away. So those are the ones that will have a higher win probability on and lower competition.

On some of the other ones we're doing for the core of engineers, which is a removal of buildings, but not quite as complex, we'll have as many as 6 or 8 competitors. That's been pretty stable number overall.

And on the waste treatment side of the house, we typically have 1 or 2 competitors that have a different offering or a different solution, not necessarily treatment, either a disposal or something else. And so it's much less competition on the treatment side of the house..

Okay. Great.

And a lot of the activity that you're bidding on these projects, are you -- are most of them cost plus? Or are they fixed as far as what you're going to recapture?.

We have bid -- if you look back at our history, most of our contracts in the last -- up until this past year have been T&M cost reimbursable. Most of the ones on our hot list, and I mentioned the $500 million, I'd probably say the majority are going to be fixed price task or types of work.

We do have, as I mentioned, there's two large ones with Howard's question in the beginning for tank closure and for the operations of the six plants. Those are certainly cost reimbursable with some fixed unit rates, the cost plus in other words, with fixed unit rates on some components of it.

And so some of the larger ones will be cost plus in T&M and some of the small to midsized ones will be fixed price. So it really ranges, but we're seeing pretty much a mixture of all of it..

Well, I appreciate the color and keep up the good work..

Our next question is coming from Michael Prouting of 10K Capital..

Yes. I appreciate the call and all the detail that you've been able to share with us. One question I had for investors who are less familiar with government contracting. And I don't want to put you on a record here as being critical of people or an agency that you need to keep on your side.

But for investors less familiar with government contracting, I wonder if you could just sketch for a couple of things. One is the -- I guess, the level of decision-makers within the DOE that need to be making decisions? Like is it multiple levels? Or just try to characterize that better for us.

And then secondly, I'm just curious, if you put yourself in the shoes of those people at one or multiple levels, just from their perspective, what may be delaying whatever decisions they need to make. Is it information that they're lacking -- is it the fact that engineers need to like dot all the highs and crossovers Ts add-in from item.

Is it career caution? Is it that people are retiring and being replaced? Or is that they're just too busy with other projects? Or maybe if you can just characterize both of those issues..

Yes. Mike, it's really difficult to address the procurement cycle and why it's taking so long in these things. The -- I think it's a combination of everything you said, including working from home, including employees retiring and hiring new people and those types of things. And just the fact that it's backed up.

COVID had a big impact, the first year, particularly, it just hasn't loosened up since then. So I can't really put my finger on 1 or 2 things. Government -- if you ask a government official, they'd probably tell you that it's the prime first-tier contractors that aren't putting out task orders either on the DOE side, particularly.

On DoD, which they'll typically come out with task words from the government. -- that they're scattered around. I don't know -- I really don't know what all the reasons are. And you're right, I do have to be sensitive to being critical of our clients because that's never -- there's any value in that.

So hopefully, these comments will be taken out of context along the way here. But I don't think many folks would argue that across the industry that the procurement cycle has just been much slower than we're used to in the last several years as compared to prior years. I do have to believe it’s all legacy impact from COVID to answer your question..

Appreciate the color..

There appear to be no further questions in the queue.

Do you have any closing comments you'd like to finish with?.

I'd just would like to thank everyone for participating in our second quarter conference call. We'll remain extremely confident on the outlook of our business, and we appreciate the continued support of our shareholders and look forward to providing further updates and developments as they unfold through the quarter. Thank you..

Thank you, ladies and gentlemen. This does conclude today's conference call. You may disconnect your lines at this time, and have a wonderful day. Thank you for your participation..