Perma-Fix Environmental Services, Inc.

Good afternoon, ladies and gentlemen, and welcome to the Permafix Third Quarter 2021 Conference Call. At this time, all participants have been placed on a listen-only mode, and we will open the floor for your questions and comments after the presentation. 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 afternoon, everyone, and welcome to Permafix Environmental Services Third Quarter 2021 Conference Call. On the call with us this afternoon are Mark Duff, President and CEO of Dr. Lou Senefani, Executive Vice President of Strategic Initiatives, and Ben Naccarato, Chief Financial Officer. The company issued a press release this morning containing third quarter 2021 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 includes certain non-GAAP financial measures. All statements on this conference call, other than a statement of historical fact, are forward-looking statements that are subject to known and unknown risks, uncertainties, and other factors which 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, today's discussion will include references to non-GAAP measures. FernFix 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 afternoon. Despite the prolonged impact of the COVID-19 pandemic, I believe we're finally beginning to realize the momentum and stability that we saw in 2019 before the pandemic. As discussed previously, the federal government has been much slower than the commercial sector to resume normal operations. And this was not unique to us, but also has been experienced across our industry by most of our peers as well. Nevertheless, we've started to see an improvement in the business. During the past quarter, we saw a slight increase in our treatment segment revenues, which has continued to build heading into the fourth quarter. We've seen increasing waste treatment activity both in the commercial and the government clients. Importantly, we are realizing receipts from Hanford and utilities that resemble levels prior to COVID and bidding activity is also getting to levels also seen in 2019. It's clear to us there's a significant pent-up demand on waste treatment, and we hope to capitalize on heading into the new year with that pent-up demand. We felt the impact more heavily on our services segment this quarter, which has realized an extended hiatus in new contract awards. However, the government has begun to issue these awards, and we're starting to see increases in services revenue backlog to support the next 18 months. Specifically, we've won a number of service contracts adding to approximately $50 million in project backlog since the start of the third quarter alone. And these projects will begin to realize revenues starting in Q4 when field operations begin to mobilize, and we should see that growth really begin to pick up in Q1 once mobilizations are complete through this quarter. We're encouraged by the subcontracting goals that the Department of Energy has mandated for some of the larger procurements throughout the complex, including small business subcontracting requirements, which plays into our strengths. These goals include meaningful work with metrics that include over 20% of total revenue to be subcontracted, and these are great opportunities for us and will align with our core competencies. In addition to our growing pipeline, we've also secured numerous what we call IDIQ contracts or multi-award task order contracts, which is also termed as MATOCs. Generally, there are a limited number of companies that are selected for these contracts, and each one provides an opportunity to bid on task orders over the next five years. We don't typically announce these awards due to the fact that there is uncertain funding levels associated with them and there's no way to predict backlogs. However, the limited competition and the scope of works provide us a good sense of potential opportunity. Once the clients get back into the field, we'll begin to understand them better then. These are beginning to mount up now with nearly a dozen IDIQ awards that we've received in the past year, and some of these are fairly large, positioning Permafix for future opportunities beginning in 2022. For example, we recently were awarded four separate MATOCs and multi-award task order contracts with the U.S. Army Corps of Engineers. Each one of those MATOCs has a ceiling of $95 million and will support facility reduction programs at military bases in four separate regions of North America. So just an example of the types of MATOCs that we've been able to win over the past year, year and a half. At the same time, we continue to define and position ourselves for new procurements and market expansion opportunities with the U.S. Navy, with DOD and DOE. These opportunities include work scopes directly within our core competencies, and we'll support the opportunity to provide new solutions and the potential for long-term sustainable revenue within both treatment and services segments. We continue to maintain a solid balance sheet with cash on hand of more than $7.2 million as of September 30th. 2021, on October 4th, we announced a registered direct offering for gross proceeds of $6.2 million. As of September 30th, 2021, we received approximately $5.5 million of the gross proceeds from the offering and the remaining $700K coming in after the close of the quarter. We had approximately $10.8 million of borrowing capacity on our revolving credit facility with PNC, as of September 30th, 2021. As I mentioned, we believe we've weathered the worst of the storm due to the COVID-19 pandemic, and we're now coming out the other side. That said, I'd like to address why we decided to raise capital when we did. We didn't enter into this offering lightly, and both management and the board are very sensitive to dilution. We kept the offering small with a closed group of funds we believe are fundamental long-term investors, many of whom are current investors. and we believe the terms of the transaction were quite favorable for the company. We have no desire and no need to raise additional capital for the foreseeable future. In terms of use of proceeds, we see a number of very significant opportunities ahead, especially within the treatment segment. That would require some upgrades to our current facilities. This recent funding will allow us to accelerate these facility upgrades in support of potential new revenue streams from Hanford and other government sites that could be meaningful to our treatment segment program. The funding will also support deployment of new technologies and add to capacity of current technologies to support revenue increases as well. In particular, we're very excited about potential opportunities related to the test bed initiative, what we call TBI, also known as the Low-Level Waste Offsite Disposal Program or project. DOE has prepared and submitted their draft waste incidental to reprocessing evaluation, what they call the WEIR, for the TBI demonstration, which provides the regulatory coverage to ship the waste off-site off the Hanford Reservation for processing. The evaluation demonstrates that the pretreated and solidified waste will be incidental to reprocessing of spent nuclear fuel and therefore can be managed as low-level waste by DOE. The DOE has invited comments on the draft WEIR report during the 90-day comment period that's ongoing right now, and that'll wrap up again in 90 days from November 5th. The second phase of the demonstration will include extraction, shipment, and transportation of 2,000 gallons of tank waste to our Permafix Northwest facility in Richland, Washington, right next to the Hanford site. DOE officials have stated shipment of this waste to our facilities should occur by next summer if all continues on the current path in regards to the regulatory process, as I mentioned. Permafix is confident that this demonstration will underscore the effectiveness of grouting as a supplement to DOE's current vitrification strategy, while at the same time demonstrating the opportunity for substantial cost savings, increased an immediate capacity to treat large volumes of waste and dramatically reduce the carbon emissions footprint over the current approach. And this is important for a DOE's core mission. So to wrap up, COVID has begun to loosen its grip on nuclear services projects. As the federal government begins to mobilize back to the offices in both the DOE and the DOD, we expect to see increased spending on waste disposition through pent-up demand. While we would likely have seen better numbers in Q3, we do believe we are positioned for growth with a solid balance sheet. We continue to invest in our capabilities and our facilities and have built a highly scalable infrastructure to support that growth. As a result, we're very encouraged by the outlook of 2022. On that, I'll turn it over to Ben Naccarato, who will discuss the financial results in more detail. Ben?