Good day, and welcome to the Perma-Fix third quarter 2023 earnings conference call. [Operator Instructions] It is now my pleasure to turn the floor over to your host from Investor Relations, David Waldman. The floor is yours..

Thank you, and good morning, everyone. Welcome to Perma-Fix Environmental Services third quarter 2023 conference call. On the call with us this morning are Mark Duff, President and CEO; Dr. Louis Centofanti, Executive Vice President of Strategic Initiatives; and Ben Naccarato, Chief Financial Officer.

The company issued a press release this morning containing third quarter 2023 financial results, which is also posted on the company's website. If you have any questions after the call, or would like any additional information about the company, please contact Crescendo Communications at (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 is 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 US Securities and Exchange Commission, as well as this morning's press release.

Company makes no commitment to disclose any revisions to forward-looking statements, or any facts, events, or circumstances after the date hereof that bear upon forward-looking statements. In addition, today's discussion will include reference 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. We achieved another solid quarter as evidenced by an 18.4% increase in revenue to $21.9 million versus $18.5 million for the same period last year. And addition to our revenue growth, gross profit increased by 48.2%, and gross margin increased from 16.6% to 20.8%.

Importantly, we achieved net income of $341,000, and EBITDA of approximately $1.2 million for the third quarter of 2023. The growth in revenue reflects the commencement of several new projects grand earlier this year, that support the backlog in both segments, and provide growth opportunities into 2024.

We also improved productivity on certain projects, that had previously been delayed from the lingering effects of COVID-19. Our services in project continued to meet or exceed expectation, expected performance goals, and margins, due to strong leadership and good client relations.

While we've achieved solid year-over-year growth, we would have generated even strong results had it not been for temporary customer delays, and in our treatment and services segment. Unfortunately, this is not unusual for our business, and contributed to a slight decline in our sequential revenue, versus the second quarter of 2023.

However, these projects have since commenced, and we believe will contribute to improved results for the fourth quarter of '23, and heading into '24. These and other awards are expected to generate significant revenue that will offset projects, which will wind down in the fourth quarter.

Within the services segment, we realized several new awards, including a $40 million five-year contract with our joint venture, Enviro-Fix Solutions, LLC, by the Buffalo District of the Army Corps of Engineers for environmental remediation at the Niagara Falls storage site.

The awards leverage our core competencies, including characterization, remediation, and disposition of hazardous material, and waste management. Looking ahead, we're benefiting from increased bidding opportunities within our services segment overall, including both the government and commercial sectors.

These opportunities include teaming of large DOE projects, and procurements, in addition to several US Army Corps of Engineers cleanup initiatives, US Navy decommissioning projects, and several international projects with sustainable revenue potential. These bids will further strengthen our backlog with awards anticipated throughout 2024.

Within our treatment segment, we experienced a steady improvement in waste receipts during the third quarter, supporting our visibility and backlog for the next year. This included increased waste shipments from within the commercial sector, along with steady sales from our industrial waste programs.

We expect to see ongoing improvement in waste receipts, and an increase in project work from existing contracts, new contracts, and bids submitted in both segments, that are still waiting for award.

We have continued to implement our growth strategy throughout the third quarter in 2023, including several new opportunities in our target list, that have the potential to significantly enhance our revenues, and our long-term backlog for next year within both segments.

In addition, we continue to await, some very large potential strategic awards by the DOE. Some of these projects are quite considerable in size, and selected by DOE would represent significant increases in sustainable revenue, to align with our core competencies. We're hopeful that one or more of these projects will be awarded this quarter.

If we are successful, we'll participate as a team member on these large DOE procurements, which completely align with our strengths and innovations, in radiological protection and waste management.

This book, despite delays in award announcements, these growth initiatives remain on track, including the $3 billion operations, and safe mission support contract referred to as OSMS, as well as a Joint Research Council or JRC project in Italy. We anticipate both of these projects will be announced any day.

In addition, we have several other smaller projects anticipate be announced in the fourth quarter of 2023. The DOC project will support our expansion program in Europe, including existing IDIQ contracts held by Perma-Fix in the UK, and the application of our treatment technologies in Germany, Croatia, and other markets in Europe.

These opportunities will generate sustained receipts, beginning in the next several quarters, providing a combined annual revenues estimated in the $10 million to $20 million range, which we expect will begin to be realized in late '24.

At the same time, the Test Bed Initiative or TBI also known as the low-level waste, also disposition project, continues to progress in support of the Hanford tank mission, although at a slower pace and anticipated over the last few months.

The TBI initiative, which is based on grouting technology, will continue to re-focus Perma-Fix, as a means of saving tens of billions of dollars of taxpayer dollars, as well as eliminating several carbon emission, and reducing schedules for Hanford cleanup actions.

Grouting has been recognized as a preferred supplement to the current DOE strategy, for vitrification through the direct feed low activity waste treatment plant, what we refer to as the DFLAW, for the 59 million gallons of tank waste, currently stored at Hanford.

The TBI program continues to move forward, following the submittal of the RD&D permit from the DOE, to the state of Washington regulators, which was done in the second quarter.

We're continually -- we're currently awaiting the approval of the RD&D permit from the Washington Department of Ecology, which is the regulator, which will allow DOE to begin to extract 2000 gallons of waste from the tanks for the Phase 2 grouting demonstration.

Given the ongoing delay by the state, and review of the permit application, we expect an official reset of the schedule, which will include public comment on the permit, followed by approval, extraction of the waste, and treatment of 2000 gallons, which is expected to be in the second half of '24.

Now, Perma-Fix remain or maintains these grouting capabilities today at our Perma-Fix facility in Northwest or in Richland, Washington, which is permitted and outfitted to safely, and compliantly grout up to 30,000 gallons a month, with the ability to expand to well over 1 million gallons annually, while dramatically reducing cost risk and schedule compared to vitrification alone.

It's important to note that our Perma-Fix Northwest facility offers the only local or regional option for grouting tank waste, versus other options to ship untreated waste out of state for grouting disposal. Which is defined as a higher risk in the deeper environmental assessment, as well as the recent weird documents.

Another critical component of the Perma-Fix growth strategy hinges on the startup of the DFLAW facility I've mentioned and Hanford, which will provide vitrification services for about 40% of the tank waste volume on site.

In January '23, DOE we signed a record decision to treat the effluent waste streams from the DFLAW facility at our local Perma-Fix Northwest facility, for at least the first 10 years of the DFLAW operations.

We remain optimistic about reports coming from DFLAW, in regards to the startup of the melters, and supporting systems, which continues to progress, while several steps remain before start-up DOE has announced -- has not announced further delays in commissioning, which is currently scheduled for the late 2024 timeframe.

The waste that would be produced at this facility just mainly by DOE to be about 9,000 cubic meters annually. We expect that would begin to be received at the Perma-Fix facility, upon our hot startup of the vitrification plant itself.

As I've mentioned in the past, the volume of this waste, and more than double the production of all our plants combined on an annual basis.

In regards to our treatment facilities, our Florida and Washington plants have begun to realize the budgeted performance goals, we haven't seen since pre-COVID times as labor and pricing impacts are beginning to be in the rearview mirror at this point in time.

At our DSSI facility in Eastern Tennessee, we have been planted several expansion and upgrade activities, that have been underway for the past few months, which we expect will result in a broader offering of our treatment capabilities, beginning in the second half of '24. Importantly, we continue to invest in our capabilities in our facilities.

We've built a solid foundation of growth and highly scalable infrastructure, as we continue to increase revenues. We expect to benefit from the predictable cash flows of our services segment, with high incremental margins within our treatment segment.

So to wrap up, we remain optimistic that the remainder of '23 and '24 will realize continued growth in both segments, as we expand our market base, and develop strategic teams to optimize win probabilities of four ongoing procurements. We're heavily focused on increasing productivity, and reducing costs to maximize our margins along the way.

Overall, we remain confident in our ability to maintain the growth, and stability we experienced prior to the pandemic, and we're highly encouraged by the near term market outlook for the business based on our growing backlog, our sales pipeline, a number of important contracts, expected to be awarded over the next few quarters.

So on that note, I'll turn the call over to Ben, who will discuss the financial results in more detail.

Ben?.

Thank you, Mark. Our total revenue from continuing operations for the third quarter was $21.9 million compared to last year's third quarter of $18.5 million, an increase of $3.4 million or 18.4%.

The improvement came in revenues, from both our segments, as our treatment segment revenue improved by $1.9 million, primarily on higher waste volumes, though at a lower average price.

And our services segment increased by $1.5 million, based on improved productivity, at one of our current large projects, and additional revenue from new projects that started in the quarter. Year to date through September 30, our revenues higher than prior year by $13.2 million or 24.5%. Again, this improvement has come from both segments.

The treatment segment revenue increased by $8.5 million, primarily on increased volume, while our services segment revenue was up $4.7 million on increased project work. Our gross profit for the quarter was up $4.5 million compared to three point -- was 4.5 million compared to $3.1 million in 2022.

The improvement in gross profit of approximately $1.4 million, came from the services segment, where gross profit was up $2 million from both increased revenue as well as improved profitability on our projects.

Offsetting this increase was a reduction in the treatment segment, gross profit of $473,000 due in part to revenue mix as well as increased fixed costs at our facilities. For the nine months ended September 30, our gross profit was $12.1 million compared to $7.6 million in the prior year.

Again, our gross profit improved in both segments, as the service segment increased by $3.4 million on higher revenue, and improved profit productivity in its projects, while the treatment segment increased by $1.1 million, primarily on higher volume. Our G&A costs for the quarter were $3.9 million, which is consistent with third quarter last year.

Increased costs for labor and legal fees were offset by savings in audit and other third party service providers. For the nine months ended September 30, SG&A expenses were $11 million, again in line with $11 million in the prior year. And as with the quarter, our lower audit and outside service costs were offset by higher payroll expense.

Our net income for the quarter was $341,000 compared to last year's net income of $664,000. However, I want to remind you that last year's net income included employee retention credits, $2.1 billion, which approved those earnings. For the nine months ended September 30, our net income was $404,000 compared to a loss of $2.1 billion prior year.

Our income per share, basic and comp per share was $0.03 compared to income per share of $0.05 last year. Year to date, basic income per share is at $0.03 compared to a loss per share of $0.16 last year. Adjusted EBITDA from continuing operations as we defined in this morning's press release is at $1.2 million compared to a loss of $374,000 last year.

Adjusted EBITDA year to date was $2.9 million compared to a loss of $2.2 million in '22. Turning to the balance sheet, our cash on the balance sheet sits at about $2 million, consistent with last -- with year-end of $1.9 million.

Our accounts receivable and unbilled receivables were up $9.3 million, due to increased revenue, certain prepaid contract, and the general timing of our cash receipts.

Accounts payable, accrued expenses and accrued disposal collectively were up approximately $2.1 million, reflecting increased costs, associated with increased revenue and the timing of vendors payments. Our unearned revenue was up approximately $3 million compared to prior year, due mostly to the certain prepaid contracts.

As of September 30, our waste backlog and unearned revenue was $12.1 million, significantly improved from the $9.2 million at year-end, and $7.1 million in September of '22. Our total debt at quarter end was $3.2 million, excluding debt issuance costs, which is owed primarily to PNC Bank.

Finally, on cash flow activity for 2023, our cash provided by continuing ops was $452,000. Our cash used in discontinued ops is $478,000. Cash used for investing of continuing operations was $1.4 million for cap spending.

Cash provided from financing was $1.9 million, and that represents the net of our monthly payments, to determine capital loans of $450,000. Payments related to finance, lease and other debt of $310,000. Proceeds received in the reload of our term loan in July of $2.5 million, and receipts from other options and expenses of $150,000.

With that, operator, I'll turn the call over for questions..

Certainly the floor is now open for questions. [Operator Instructions] Your first question is coming from Howard Brous with Wellington Shields..

Thank you, Mark, Ben, Lou. I hope you all well and your family as well. First of all, and most important..

Thanks, Howard, and appreciate that, they are good.

So, what I'd like to get a sense of or a better sense of, when you look at the contract, you talked about OSAS. for Croatia, Italy, what is it all mean to Perma-Fix initially and over time and include what I believe is another contract coming from the EPA on uranium.

So let's begin with that, please?.

Yes, Howard, the way we look at it is the company is really in a position to maintain a pretty sustainable foundation of revenue in the $90 million a year, $100 million a year range from generally from winning projects repeatedly.

We may have some down quarters as my quarters, but just generally, that's kind of our baseload, that we should be able to do with the waste that's generated out there each year, along with winning a number of projects within our statistical average. Then we have procurements and opportunities that that would pull us above that.

And those opportunities you mentioned a couple of OSMS, which you know is in a procurement situation that we can't really talk too much about the numbers associated with it in the JRC, same situation in ITBC, all those are funded would provide a plus up or a bump up in revenue in a significant way.

Our geography is a little smaller in US in the $40 million to $50 million range of it opens up a couple of markets for us in a bigger way in Europe. And so as far as a dollar per share, it's very difficult to address that because we can't get into the financial components of it, but they'll have significant impacts on our [all] revenue stability.

And equally as important put us in a position where we can bid on other larger contracts with as a qualification that is very valuable. So, we have a number of those working to hereon.

As you know, those three are the primary ones, we have several other smaller ones that we're waiting to hear on, including bids at the core engineer, banning uranium mines have all been extended project. The project that we have in Arizona was supposed to run out in August.

It got extended through the end of this month and early into November, but in the middle of November, and that will shut down for the winter because of the altitude, the mine is at and we'll start back up in the spring. The EPA has informed us that there will be additional mines procured over the winter to start in the spring as well.

So, they are finally starting to get some traction on new procurements. But we add to that a list, a long list of bids that we're working on through the winter that will be likely awarded in the spring and summer of next year, that are very large. We've mentioned some of these on here before those opportunities include in the enterprise.

Which we expect out the aircraft carrier that we expect out here in Q4 and late Q4, early Q1, a large project at [Y-12] West Valley DOE project, which is a $3 billion project, which we're getting on teams for several IDIQ task orders to DOE contracts and several large waste contracts that we're expecting to be able to bid on, to see the impacts again, Q2 timeframe.

So, lots of, we're very optimistic that our growth opportunities continue to come in. We're not going to win everything, but we should win a statistical quantity. That's good because of the more of the command the better.

We have revamped our business development group and brought in new people, there very high energy, very well respected in the industry and are turning over a lot more rocks for us in regards to opportunities in the radiological world, including expansion into the commercial sector in a bigger way.

So overall, we do remain very optimistic about our future. While this quarter was not, what we wanted it to be overall, we did take a step back, but we still have the same momentum and we expect to get back on that trajectory in the near term. So, hope that answered your question..

So, the [tisker] and I'm not sure how many gallons are in [tisker] right now, my understanding is about 700,000 gallons, my understanding is from the DOE is that volume is noncompliant for the vitrification plant.

Is that a correct statement?.

That is a correct statement. How is there's been a couple of press releases is about that just in the past two weeks apparently, statistical worked exactly as planned. They pump the waste out of the tank and pump it into another tank. And what appears to be the case is the other tank contaminated, though the liquid after other pumped it in.

So, I've been sampling the tank, they've got the roughly 700,000 gallon stored in, it will not meet the waste acceptance criteria for DFLAW. So, do we have said that they're evaluating alternatives.

One of those alternatives that they mentioned in their press release was that they would run it through [tisker] again, we are trying to -- which obviously would just tie the [tisker] up for a while and cost money to redo it. We're proposing that the grout that waste and disposal of it.

DOE has not made a decision on that yet, and we're hopeful they'll see the value in that in disposing of that waste. While they're able to pump other tank waste out. But at any rate, the situation does not impacted the DFLAW, as I understand it, there's plenty of time for them to pump another 700,000 gallon before DFLAW needs it.

So, there is an opportunity here, hopefully for DOE to consider another alternative other than the rerun it at this point..

You mentioned the rod, that basically, it is a roughly a 10-year contract, where else to the Department of Energy go. If it's not just 10 years, but is just not a generationally long contract. You've got collectively 56 million gallons, high level, low level waste to be treated.

And even if you did it treatment with TBI, you're still talking 1 million gallons for the vit plant a year, which means 2 million, 2.5 million gallons that you treat. Are they going to build another facility to mimic Perma-Fix or is this basically, my belief is this NTVR are generationally long contract..

They are generally long contracts, the bottom line DOE has not developer does not plan on developing the tubing capabilities, they need to handle the effluent that comes out of DFLAW.

So, their position, their plan has been for the last 10 or 15 years to commercially treat the effluent that comes out of the DFLAW, as opposed to building on-site treatment capabilities. Fortunately, there is very limited.

In fact, there's really no other alternatives in the Richland area and the Hanford, other than what Perma-Fix has the capabilities to provide. So, that's why it was mentioned in the rod, that DOE would use Perma-Fix Northwest to support that backlog, as I mentioned, which is about 8,000 cubic meters a year.

So, a pretty sizable amount of waste is all different types of not just grouting. It's all different types of processing, different materials that would come out of that plant. And we remain optimistic that they're on track for a late '24, you may have seen a press release.

I think it was just yesterday that they did turn on their melters and then the latest campaign, the melt -- Yes, the melter got two different tranches of liquid glass. So, up to 2100 degrees and everything seems to be working as designed. So, they are continue to make progress. They haven't announced any slips in schedule.

So again, we're still anticipating hopefully that they'll have radioactive waste going through there in the late 24 timeframe..

Let me come back to DFLAW in a moment, transuranic waste is basically another step in terms of a what I call a generationally long contract without specific numbers because I don't think you have them, but what could the total transuranic waste the coming out of hand for? Because basically the other main, whether it's Savannah River or others, they're already transuranic waste.

Is there a sense a global sense over one timeframe and potential dollar amount or is that not achieved yet?.

Yes, I mean, Hanford and mine saying that trend to reverse program programmatically, Hanford is pretty close to the tail end of the transuranic shipments to the Waste Isolation Pilot Plant in the Mexico, right now.

Right..

Idaho in Savannah River and Los Alamos are all shipping a lot, Hanford is scheduled to begin later this decade and are right now, Perma-Fix provides the primary means of packaging, transuranic waste and processing for web. So, what we're doing right now, and it's one of our largest waste streams supporting the plateau contractor.

They ship us different types of transuranic waste we have a very advanced system to repackage that waste, put it into single waste boxes to minimize the volume. We segregate the low-level waste outage, only trends around waste goes.

It goes back to DOE at Hanford and they store until it's our turn to ship to WIPP that, represents roughly about $1 million a month in revenue and maybe a little bit more than that some months that number is increasing. So, it's a good sustainable backlog for us, but there is additional quantity of TRU waste at Hanford.

That's a higher level of radioactivity noteworthy as there are higher grand quantities. That's all to be done. And there's a tri-party agreement milestone for that. I don't know the total value of that somewhere between, I don't know, maybe 50 million range to 200 million range, that requires removal in a certain time period.

That is slipping a little bit here and there due to priorities and funding that all is will eventually come to us. And most likely, we don't have a contract for yet, but I wish I had many meetings about it. We'd anticipate getting that. But the overall transuranic program nationwide is very strategic for Perma-Fix.

How this transuranic waste? It's proved up in Schenectady that we recently won a contract. We haven't talked a lot about a deal. Do we announced in the [10th] award, but we're going through different technical approaches, and that's about $10 million contract to start with is not dramatic, but it's important.

But the other big one that's TRU is West Valley. That's the one that's coming out right now. So, our strengths and capabilities at Northwest will help our positioning to be in a good team and provides a value to that team for [West Valley]. So, two new program is a big deal for us in the future. We haven't talked a lot about it in the past….

Mark, you broke up? Hello? hello?.

Yes, we're here..

Okay. Last, but not least, what I'm looking at DFLAW, vitrification plant, TBI, I consider those, although we just talked about the DFLAW, basically the 56 million gallons. Is it a fair statement that these are generationally long contracts after 10 years, they have no other place to go.

They're not going to build a plant and ideally builds a plant it costs $1 billion, this government, we understand that.

But as we get closer and closer day by day, is it a fair comment that notwithstanding any further delays, but we're still talking about fourth quarter, 2025 for DFLAW vitrification plant and possibly at the same time, grouting TBI and the maximum ability for DFLAW to process is basically 1 million gallons of waste a year, which for notes to be [$2 million, $2.5 million] earlier.

Ways to you, was that a fair comment?.

We believe that's the fair comment, Howard.

I think the investments we've made locally in the Hanford area, the capabilities we've built up the quality of our team in the recent agreements with the local labor unions have all positioned us to be a very high value alternative for DOE to provide exactly described, which is processing via flow waste, the grouting and other waste on site and put Perma-Fix Northwest in a position, where it's the best value alternative for the overall Hanford mission..

So, last comment, then there are a couple of people who have asked various questions about 2025, is DFLAW, the vit plant is operational for the full year.

People have talked about basic earnings just from that project of roughly $3 a share, whether it's 2.50 or 3.25, but you still feel comfortable assuming that the DFLAW does start full stream in 2025 or sometime a little bit before.

Is that still a fair comment?.

Yes, Howard, and this has come up on a couple of calls. And I guess our best way to handle it is to kind of give you an overview of what we are considering because this is so substantial to our regular business and game changing when it occurs.

What I can give you is that from the metrics we've seen in the rod, we'd be looking at $60 million to $70 million of additional revenue a year. We'll be looking, we believe, our incremental range, which we openly advertise at about 25% variable cost or 75% margin is consistent for this waste stream.

The big wildcard is the capital and fixed expenses that would go into growing the company to support this kind of number. And we've talked about 100 FTEs. We've talked about capital in the $5 million to $10 million range. We've talked about other expenses, which we typically consider fixed in nature, utilities, insurance, maintenance, et cetera.

That's probably another $10 million to $15 million of cost. So a lot of that, if you show all that together, you get some pretty significant dollars income probably in the $18 million to $25 million range. EBITDA in the $22 million to $30 million range. ROIs, 200% payback real quick couple of years that might have best.

So, all that I'll say that it's reasonable to think with all other things that could happen in between that $2 to $3 range is certainly very achievable..

That's all I have. Mark, Ben. Thank you, Lou..

Your next question is coming from Brian Russo with Sidoti..

Yes, hi. Good morning..

Good Morning, Brian..

Hey, just real quickly on the quarter, you mentioned temporary customer project delays in the third quarter, which aren't uncommon likely get pushed in the fourth quarter.

So, any way to quantify what revenue is being pushed, what amount of revenues being pushed to the right?.

It's difficult to define the quantity of those. Basically what happened was we had a couple of projects that were paused and REAs renegotiated and we'll be able to make up for some of that. And we'll see some of that in the fourth quarter. But I can't because I can't give you a total amount of revenue that we'll see push into it.

I do expect to see pretty similar quarter in Q4 that we've seen here, which is going to typically takes a step backwards in Q3. But we do have a couple of new projects that are starting up in Q4 as well, that will assist in getting a little better, but we look at it pretty flat overall moving forward through Q4.

Ben, anything else you want to add to that?.

No, I think I think that's fair. Q4 is always that impacted by holidays and those things. So, there's a lot, again, a lot of moving parts, but we do expect a lot of the, what we missed in the third to move into fourth and for and beyond..

Okay. Got it. Great. And then just on the segment margins, it seems fairly low relative to what normalized margins are is it's just a function of the lower revenue and the higher fixed cost kind of dynamic..

Well, there was, it's higher on the service side because of the improved productivity, it was lower on the treatment side.

And that was a -- that's a revenue or a waste mix issue, a little higher this time around than usual because we had a good-sized number of what we call direct ship waste streams that we don't even touch at the plants and they go and we just broke room. So to speak, and that brought the margin down, but we expect it to normalize going forward..

Okay, great. And then just on the on the RD&D permit delays from the DOD permit delays from the Washington State of Ecology. Any insight there? Is it just more procedural or are there any read-throughs? Are they taking an extended period of time to review, which I thought might have been more of a formality.

Just wanted to get any insight there?.

Yes, we have no idea, Brian. The bottom line is that this is not a big permit. They ask some questions several months ago of DOD, we answered them before I heard and they weren't big questions.

So it's really difficult to understand, why this would take so long, but it certainly has taken a lot longer than everyone anticipated for the state to turn this thing around for 2000 gallons, it certainly would not appear to be that big of an effort, but we have no insight whatsoever as to why..

Okay.

And then just any update on the ITTC contract and the options that the DOE has either rebidding the procurement again or any other scenarios?.

Sure..

A contract and the options that the DOE has either rebidding the procurement again or any other scenarios?.

Yes, that's extremely complicated procurement, unprecedented in nature in regards to what has happened, if there's not a lot more information than what's publicly available and regards status of it, other than to say that the deal we did come out with a final proposal revision request, each of the teams provided a response, the Atkins team did a file a protest in regard to that final proposal revision requests.

That's at the -- I believe it's a [JO now and JOS], I believe they're going to make a decision.

But before February, what those options would be are very difficult to speculate on other than to say that, one could still assume that the options are to award two, the Adkins team or to go out for rebid and I'm sure that with the submittal of that proposal, now there's a revision there's probably an alternative to award again to [BBXT].

So, in other words, anybody can win, so nobody lost anything yet. [Now] one's one any and it's really wrapped around the axle and protest space. So, I wish I could give you some speculation, Brian, but we've got no idea on this one.

And there's a lot that the public, including us is, does not know about the legal situation and what they know, what the data is or what the evidence is.

So, it's just the you sit back and wait, there's really not much else we can do at this point, right?.

Yes. know that, that's helpful. And then just to clarify on the DFLAW, how to start and ramp up. If hypothetically, if there's a hot startup in late 2024, you won't be at full production or DFLAW won't be at full production for all of 2025.

There's it's more like full year, 12 months of production, would be more like 2026? Correct?.

That's probably a good thing. And I don't know, when both melters are operating, but one could assume your statement is correct that any plant, the stress of like that it's not going to be 100% productive initially.

So, one would assume your statement is correct, that they will start up with one melter [this will] melter at a time and it'll be a while before the all three shifts or hit on all cylinders and that they're maximizing their design basis [for 100 for a million] gallons a year.

So, I would assume it would be 26 before you start to see that effluent come out at that rate..

Okay, great.

And one last question, if you don't mind, just I'm sorry if I missed this, but what was it? What was the services backlog as of September?.

It's in the $22 million range..

Okay, great. Thank you very much..

Thanks, Brian..

Next question is coming from Ross Taylor with ARS Investment Partners..

Yes. Gentlemen, I kind of want to dig into, what I think is the real important issue here, which is we spend a lot of time on minutia about contracts, but let’s talk about revenues and where we’re going just a bit ago, you indicated that you should be able to do $90 million to $100 million kind of a base load.

You did '21 or so this last quarter, you're talking about this next quarter being roughly the same.

My math tells me that you're operating 80%, 90% of base load on those two numbers, why don't we are what's going to take to get to the fourth quarter get to that 23 million, 25 million, you need to have to kind of keep your baseload where you want it to be?.

Yes, I was really speaking more annually, Ross, on that. So, we had a rough Q1 that pulled us down a good bit, but our goal is to [hover] a minimum around the [20, 23, 25] range every quarter. And that's where our sweet spot is. And profitability being below that gets very difficult based on our fixed costs.

So that's typically where we need to be to maximize our EBITDA is a $23 million to $25 million minimum each quarter..

Okay.

So, and do you can you get there? Do you see you talked about stuff being pushed to the right and the like, do you, can you get there in this current quarter end? Or is that something we're going to need to wait?.

As, I think we're looking at our forecast the next quarters, I said we should be equally as good as this quarter, but a little better. We do have several projects starting up and it's difficult to predict, what the revenues and margins will look like as you roll through the quarter on new projects.

But right now, it looks very promising to see a quarter at least as good as this quarter. And particularly in regards to revenue. So, we're optimistic that we will continue to see that come back. The trajectory we had last couple of quarters as well and finish up in the $90 million or close to $90 million range for the year.

But we were like, when I mentioned that, like goal of $90 million fully annualized on a quarterly basis, so beginning in about 22, 23 is that we got to be to really be healthy as, we dipped a little bit below that this quarter because of those delays?.

Yes, yes. Now in looking at it, it's been a while since we've seen you guys announce a win, you had started the year around talking about what we could be getting out at Hanford and the vit. And that obviously caused a lot of excitement in the name.

And since then, we've kind of been stuck waiting for the Italy operation for some other Hanford stuff for things happening, how you've talked about the ability to get you think you can get some new wins or get some this decided in this current quarter, how comfortable are you that your ability to kind of push next year towards the extra business to be able to produce $20, million, $30 million or more kind of out of this non-core load that we just were talking about..

We are also what's really asking about is our growth strategy.

And I was mentioning the list of opportunities that we're bidding on these next two quarters this quarter and next quarter are a significant chunk that, we haven't seen this many big opportunities that we're really well positioned for with high win probabilities that would that could be literally be awarded by next summer.

So with that in mind, I feel very good about where we're heading and we're very optimistic about it. The way we've retooled our ability to bid these things, gives us additional confidence. The JRC, we're very confident on -- we're very confident that we'll know in the next week or two, I have been saying it since last December, very aware of that.

But it is -- it's got to move forward, because it's got the remediation contract has been selected, and is ready to mobilize, and are just waiting for us to be awarded, so we can get going. I was over there last week, I was actually there Monday, Tuesday this week, and everything is on track.

I can make an announcement here in the next few weeks, so I will wait for that to occur there. Once that happens, as I mentioned before it opens up a lot of opportunity in Europe, and it kind of -- begins implementation of our overall European strategy.

As far as OSMS, that one has very significant revenue implications for us, because we have such a big piece of scope, defined from the overall contract. Again, several bidders that it's got to be considered there.

The competition is a lot bigger, and I just can't speculate on when that's going to be award, other than to say, the DOE asked for an 18-day, it was extension into November, from the end of October. So when they asked for extension, it's basically asking you to maintain your costing, without change for another 18 days.

So I got to believe that's going to come out in the next week or so. So we see these things coming. It's been very frustrating for us, not understanding how to plan for them.

But in the meantime, you know, the point is that we're pursuing very, very aggressively other bids and opportunities of the same magnitude, and the same impact, and we're getting on good teams, and providing innovation into the proposals that are needed to win.

So I do feel like we'll -- we're going to getting companies nailed down, the next six months, and we'll see those revenues go the direction that we're talking to our investors about. To answer your question, Ross..

Honestly, kind of because I'm really trying to wrestle with the idea of, you know, we've been kind of you've been stuck in, then I understand you can't control this.

I'm trying to get understand that -- if we get Italy, what does that open up? Because that opens up Europe, that probably opens up Croatia, and some other opportunities you've talked about in the past.

If Italy comes to pass before the end of the year, could we see $20 million out of Europe next year?.

It's not necessarily contingent on the GRC -- the JRC, it has a big impact in that. We have some agreements for building a plant in England with Westing house, and because so much time has gone by, we'll need to revisit that right now, again, met with him last week. That's all still in place.

And what it does is, it provides the backlog for that plant, and the ability to move forward with it, which would be able to service all of Europe. And not to answer your question, that's going to take several years to build that plan.

However, what we have worked several additional deals with clients in Europe, to begin shipping to us irrespective of that plant being there, in anticipation of it coming eventually.

But the waste backlog in Germany, in Croatia, in the UK, are all such that they have to start moving those waste in the near term, and are not in a position to wait for that plant.

So we anticipate seeing our backlog of international waste grow from where it is right now, in the $2 million to $3 million a year range, closer to an annualized receipt in the $7 million to $10 million range by the end of '24.

So again, Croatia is a big piece -- excuse me, JRC is a big piece of that, but not all contingent on that, and in talking to the German clients, we have there now tens of thousands of drums and storage over there, that have to be moved, as a facilities have reached their capacity, and regulatory drivers have forced them to move those waste.

And where we are the only successful organization that's has been able to take this waste stream in the US, and return other residues back successfully. So we remain optimistic on that, and really feel that. But by the end of '24, the annualized, we should be close to $10 million a year in revenues from Europe..

Okay.

And then as we obviously, we just are kind of waiting for the dough on these other issues, when you -- with that kind of -- what do you think as a base load that kind of you've talked about profitability, does Europe come in at company average profitability?.

Correct. Yes, it does. So our treatment, our costs that we provide for our pricing we provide for the European market, is pretty close to what we provide here. And then you tack on the transportation costs, but that's pretty much only options available, for most of those folks over there..

Okay. I'll let someone come in and ask obviously the soon -- it's outside of your control.

But obviously, I think you can you can tell from today's action, investors are getting frustrated, and we'd love to see some tangible signs of victory between here and the end of the year, to remind us, because it strikes me, as from what you're saying, this is a calendar play.

2025 should be a pretty powerful year, earnings wise, as you ramp up everything that's going, and you have a chance to have it be hugely powerful. You picked up an enterprise win and some other factors. So thank you very much..

You bet, Ross. We're very sensitive to what you're saying to. You know, it's very frustrating us. We are the department, and most of our government agencies, typically make announcements on Thursdays.

Every Thursday, because why will we all look at and say, oh, my gosh, another week's gone by, and you know, these bids continue to be out there waiting for announcement. And but all we can do is keep our heads down, and keep fighting for new opportunities.

And I'm very proud of what we've come up with, and direction we're heading in, with those new opportunities that keep those irons in the fire. So, I appreciate your support..

Yes. Thank you, sir. You take care, keep looking at it..

Thanks, Ross..

Your next question is coming from William Miller..

Yes. My question really is, I think all of our stockholders understand that we'd be billionaires, if writing RFPs and I mean, demand generated a bottom line, but they don't.

So what I'd like to know is at the end of last quarter, how many RFPs or bids did you have out, of those who were out, how many were awarded, and have those awarded, how many did you win? You constantly talk about our statistical win percentage, but we the stockholders just hear about stuff.

So how many bids you got outstanding, how many did you win last quarter? How many do you lose, let us determine whether you've got a future or not?.

Well, we've I don't have the numbers in front of me, but I can tell you that we have about $700 million in potential rev total contract values outstanding. And last quarter Q3, we actually had a good quarter.

We had we're pretty -- I don't have the statistic exactly, but we had wins for Niagara Falls, Santa Susana, a couple of commercial clients, [Boning Randy Minds] and Ion Beam, Los Alamos and this fruit job, I would estimate that would be in the 30% to 40% range of the number of bids we submitted. So there's two ways to provide an answer to you.

One is what is the percentage of revenue potential that you won, and what is the percentage of number of bids that you bid. And our goal is typically to get to a 40% win rate on the number of bids that we submit, because sometime you submit a much smaller, and sometimes there's a couple of big ones.

When you do it the other way, it's not necessarily a value -- a statistic versus how many bids you submitted for semi wins. So we view a 40% win rate, as it's kind of industry standard in this business.

And we typically close between 20% and 40%, sometimes it depends on as to what was the government, or wherever the client is as announced, so which was they haven't. So it's difficult to show -- to answer your question, without a lot of caveats and data.

So but we do track that, and we can tried to provide a little bit more information on the next call, in regards to your question..

And your next question is coming from Steve Fein..

Can you hear me? Because I'm on a speaker.

Can you hear me?.

We can hear you..

Okay. I got a question for Rob. One on the -- I have a lot of questions.

But on the depreciation and amortization, why was that so dramatically up? I mean, I'm looking at here that for '23, depreciation and amortization was 2124 versus 1433, why is that so significantly up?.

Yes, Steve, that was a unique situation with our new facility in Oak Ridge. The depreciation we're talking about, isn't your typical capital depreciation. It's the closure related, and there's some closure costs, and the way closure costs work, it's called ARO, in accounting lingo, and goes in as an asset against the liability.

And we just needed to ramp up, accelerate the closure number on the balance sheet. You would see an offsetting asset number..

So that's just the -- it's operating.

It's just though a one-time deal?.

Correct. Yes, it will slow down..

I do have a bunch of questions. When I -- I have not heard about this contaminated waste that's come out of the -- that's in the [tisker].

So my question there is, Mark, the fact that it's contaminated, does that change the classification of it?.

It's just a little bit more contamination of a specific time kind is not within the design basis of the DFLAW..

What -- can I ask what the contamination was? Is it something that's hard for DOE to handle, or something that they could put again through the [tisker]..

They can put it again through [tisker]. I've tried to reduce it -- I believe it's a radio isotope. It's high. I thought it was cesium, but I'd have to check the press release, but contaminant from within the tank that they put it in, after they ran through the [tisker]..

But if they would redo it, would they not have tank problems?.

They have to put it in a different tank. So what….

Yes, okay. All right, fine. When Howard was initially asking, about how long -- and this is how long, let's say, Hanford would be, if they did the vitrification and Perma-Fix got the secondary ways.

Is it not true that they passed to liquefy the waste, so the actual waste is not 59 million gallons, it's probably closer to hundreds of millions of gallons because of the liquification. And that's why we take so long..

That's absolutely correct. It's believed to be about 1 to 3, 1 to 2.5 to 3, for every gallon that you have in the tank, you're able to add a couple of gallons of water to get it out, because most of that tank waste itself is either dry, or [intricacies] it will require a slurry to get it out. So you have to add some to remove it..

I'm going to move over to Europe.

So you succeed in Europe, is it what the people be provided by Westinghouse, if you created a plant?.

Yes, it would be our technology Westinghouse's facility and license. So -- it's a joint venture of Westing. .

And is that 50%, 50%?.

It's 55%, 45%..

Okay, allright. So do you know but the -- but to me, the real main thing here is, you're joining with somebody, who is a big player and that's a fabulous.

With regard to the comments we talked about, okay, the vitrification plant goes on, and then there's a secondary waste, and then the secondary waste comes to per the rod -- in part of the rod in January you mentioned, and then an additional you're really only player. In that rod, it states that the way you treat it, would go back to Hanford.

So my question is, as there have been work done, that way that secondary waste could go back and be buried in Hanford..

For the DFLAW, that's the value the Perma-Fix buyers of Perma-Fix brings to DOE is that waste, it will be disposed of at the Hanford landfill, as opposed to anywhere else, which makes non-regional treatment capabilities, a lot less attractive, that the ship out of state have retreated, and ship it back into state for disposal.

That adds the value of the -- of being local is that the DOE has a disposal cell there for this waste….

Yes, excuse me. My real question was, can it be disposed in Hanford if you get the secondary waste..

The secondary waste has to be disposed of Handford, and for as long as it meets the….

All right.

I just wanted to -- Okay, I did -- I think all my questions were answered, but I've been assiduously listened to you guys, since then somewhere I think in 2016, and I remember when you came on Mark, there was a period somewhere in '18 or '19, where you kept saying or getting there, we're going to move towards $100 million and then you achieved it.

And I remember the stock moved.

And so when I look at history, when I look back at history, having been a like I always say, I was a positive chemical manufacturers, so I do understand what you encounter, but I do take your statements so positively that, you know today because I've learned to listen to you, when you're always been very transparent that when you say that there will be that you do see the possibility that there will be this space and $90 million to $100 million.

And that is so critical because that covers your overhead and so forth, and gives you breathing room. And then all these other things I look at, as you know, hey, the potential is just so great and you know, my strategy when I was in business was, to have a base business, pay for my business, and just keep pushing.

And then what happens is, something happens that, you know, something happens that's just changed the status quo, and that's the reality. And so I guess what I'm trying to say, as I look at this very positively, you're clearly diversifying, you're clearly bidding more.

And at the same time, you're saying that you do see a vision that you could get to a solid base, which is the key that you're paying your bills, and then when some of these other circumstances occur, then you know, here we go.

So I, yes, again, I commend you guys and yes, I think the it's hard, it's world hard, but you're taking big leaps and that's all. So anyway, thank you..

Thank you, Steve. Appreciate it..

Unfortunately, that's all the questions we have time for today. I would now like to turn the floor over to Mark Duff for any closing remarks..

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

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