Perma-Fix Environmental Services, Inc.

Good morning, ladies and gentlemen, and welcome to the Permafix third quarter 2022 conference call. At this time, all participants have been placed on a listen-only mode, and the floor will be open for questions and comments after the presentation. It is now my pleasure to turn the floor over to your host, Mr. David Waldman. Sir, the floor is yours.

Thank you, and good morning, everyone. Welcome to Permafix Environmental Services third quarter 2022 conference call. On the call with us this morning are Mark Duff, President and CEO, 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 2022 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 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, today's discussion will include references to non-GAAP measures. Permafix believes that such information provides an additional measurement and consistent historical comparison of its performance. reconciliation of the non-GAAP measures to the most directly comparable GAAP measures 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 are very proud of our managers and staff that have worked extremely hard the past few quarters to continue our journey to reach the growth we established before COVID and position the company for the growth trajectory our shareholders expect. Specifically, we continue to realize improvements in our performance As the pandemic impacts continue to subside, which was evidenced by our results over the last two quarters, I'm pleased to report we achieved a 17% increase in revenue to $18.5 million for the third quarter of 2022 versus a $15.8 million quarter for the same period last year. In addition to our revenue growth, gross profits increased by 38%, and gross margins increased from 14% to 17%. Turning first to our services segment, we reached full operational status on several projects that have been delayed due to the impact from the pandemic, which contributed to our revenue growth within our services segment in the third quarter of 2022. As we stated previously, the federal government agencies, including DOE, DOD, and the EPA, have been slow to procure new task orders due to the pandemic. However, these projects have not gone away. In fact, the federal government has begun announcing new projects that have been on hold. As a result, we realized an increase in procurement since September of 22, which we believe will continue in the fourth quarter of 22. And moreover, we're encouraged by the bidding pipeline, with many of these contracts expected to be awarded over the next few quarters. Specifically, we have over $100 million in defined opportunities targeted to be released in the next few quarters that directly align with our core competencies. This is on top of the $39 million in funded nuclear services contracts already in place, which bodes well for the balance of this year and the following year. There is significant pent-up demand, and we expect to benefit from improved budgets and carrier spending from the last year as well. Turning to our treatment segment, our revenue remained stable despite delays in waste shipments from certain customers at our Florida facility due to Hurricane Ian, excluding the one-time request for equitable adjustment under a government waste generator contract in the third quarter of 21, our treatment segment revenue would have increased by approximately 1.3 million or 17% in the third quarter of 22. In addition, we're seeing improvement in all our waste receipts overall, including our new clients in both the commercial and international waste markets, which has increased 46% overall to 9.1 million. In addition, our waste treatment backlog is approximately 7.1 million. We're also seeing strong demand for waste treatment capacity as evidenced by a steady increase in requests for proposals or RFPs received for bidding within the waste treatment segment. With over 80 bids requested, excuse me, we received over 80 bid requests in the third quarter of 22 alone compared to 60 in the first quarter of 22 this past year. This is a result of our efforts to broaden our client base in the commercial utilities, the oil and gas industry, as well as other industrial markets. Another example is our new vacuum thermal desorption system, where we completed startup in Q2. We're now starting to see strong demand for this system and services with receipts from several new clients, including government and commercial clients within the oil and gas industries. At the same time, we remain highly encouraged by the outlook of the Testbed Initiative, or TBI, also known as the Low-Level Waste Offsite Disposal Project, in support of the DOE Hanford tank disposition mission. The TBI initiative, which is based on grouting technology, will continue to be a focus of Permafix moving forward as a means of saving tens of billions of dollars in taxpayer dollars, as well as eliminating significant carbon emissions and reducing the schedules for Hanford cleanup actions. Grouting has been recognized as a preferred supplement to the current DOE strategy, which is currently based on vitrification of tank waste at Hanford through their new facility called the Direct Feed Low Activity Waste Treatment Plant, or DFLAW, which continues to experience delays in its startup. Our TBI program continues to move forward, albeit much slower than anticipated, despite continued pressure on DOE from the U.S. General Accounting Office, GAO, to make progress. As stated in the GAO report, recently published, 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. We can do this grouting today with our existing capabilities. Moreover, the National Academy of Science continues to request the DOE to expedite initiatives for grouting as well. As it stands now, DOE stated in a September industry conference in D.C. that their intentions to submit the RD&D permit to the state is currently planned within the next six months of this government fiscal year or by the end of our first quarter. This submittal will trigger review and approval by the state of Washington and support shipment of the 2,000 gallons as well. Also, we've seen continued support by Congress, including a bill recently introduced by Senators Paul and Hassan in September of this year to push DOE into making progress on grouting, and specifically the off-site low-level waste disposal program. Permafix maintains these grouting capabilities today at our Permafix Northwest facility, which is in Richmond, Washington, right near Hanford, and is permitted and outfitted to safely and compliantly treat up to 30,000 gallons per month, with the ability to expand to well over a million gallons annually, while dramatically reducing the cost compared to vitrification. In addition to the TBI initiative, our teams continue to work very hard on securing transformative opportunities and wins that could lift Permafix to a new level of revenue and income. These opportunities include participation in large procurements, such as the $45 billion integrated tank disposition contract and the operations and site mission support contract valued over $3 billion. Both of these opportunities are Department of Energy procurements that we are participating in as a team member. However, both of these are completely aligned with our strengths and our innovations in radiologic protection and in waste management. We are well positioned for several additional upcoming procurements and initiatives as well with the U.S. Army Corps of Engineers as well as the U.S. Navy Ship Decommissioning Program and several other DOE sites that are going to be procured in the next few quarters. Turning back to our financials for a moment, just as EBITDA improved to a loss of $374,000 compared to a loss of $798,000 in Q3 of 2021 last year, we believe we've weathered the worst of the storm due to COVID-19, and we expect improved activity from the federal government to procure new task orders as well very soon. To further enhance our competitive position in the market, we've made several adjustments to our budgets for the next year to trim general and administrative costs and to lower our overall indirect costs. These adjustments will reduce our overall operating costs while continuing to meet our ESG objectives and increase our competitive edge. Overall, we've witnessed a solid year-over-year revenue growth and saw a meaningful improvement in gross margins based on current backlog and have identified opportunities over the next several quarters that we basically remain optimistic that we can achieve these growth goals and stability that we've realized prior to the pandemic. At the same time, we continue to invest in our capabilities and facilities. We've built a solid foundation of 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. And as we continue to increase revenues, we expect to benefit from the predicted cash flows within our services segment and high incremental margins within our treatment segment. Additionally, qualifying for the employee retention credit helped with offsetting some of the losses incurred from the pandemic. As a result, we believe we're well positioned for the balance of $22 million and we believe we're sufficiently capitalized to execute our business strategy in order to achieve profitability and positive cash flow in 23. We believe this foundation, coupled with expansion of our treatment capabilities, increased bidding opportunities, and improved federal budgets, will continue to support our ambitious growth objectives. On that note, I'll turn it over to Ben, who will discuss the financial results in a little more detail. Ben?