Perma-Fix Environmental Services, Inc.

Good day, everyone, and welcome to the Permafix fiscal 2022 year-end earnings 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 Waltman. Sir, the floor is yours.

Thank you, Matt. Good morning, everyone, and welcome to Permafix Environmental Services' fourth quarter year-end 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 fourth 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 factor, 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 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 call will include references to non-GAAP measures. Permafix 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, everyone. 2022 was a transformative year as we built a solid foundation for growth in the upcoming year, and we're finally seeing a return to normalization and the momentum we had prior to the pandemic. The weakness in revenue experience in 2022 was due to the lingering effect of the COVID-19 pandemic on delaying some of the projects in the services and the treatment segments. Nevertheless, we achieved a 58 percent increase in gross profit in the fourth quarter, which was due to improved profitability in the services projects compared to last year. In addition, total gross profit margins increased from roughly 7 to 12 percent. While 2022 was a challenging year, we believe we're back on the growth trajectory primarily due to the recent improvement we've seen in our treatment segment. Within our treatment segment, we've experienced a steady improvement in waste receipts. Specifically, our average receipts per quarter have steadily returned to pre-pandemic levels over the last nine months of the year. This is best reflected in our backlog, which was 9.2 million at year end, significantly higher than prior quarters. This was a result of increased waste shipments from DOE, as well as our efforts to broaden our client base into the commercial utility sector, as well as oil and gas and other industrial markets. It's important to note that the fourth quarter of 2022 was negatively impacted by challenges associated with labor issues and high attrition rates due to the Department of Energy hiring campaigns at several other sites which are near our facilities, as well as supply chain impacts from availability of waste processing materials such as grout mix. We also experienced severe weather impacts due to record low temperatures in the Tri-Cities area of Washington. However, these issues have begun to subside in the first quarter of 2022, excuse me, fourth quarter of 2023, with hiring at each location realizing stability compared to the last two quarters. In addition to the growth of our base business, we're rapidly advancing several initiatives that we believe have the potential to significantly enhance our revenues and our long-term backlog. For instance, We've realized two important steps forward with the Department of Energy in pursuit of our Hanford initiatives that hold significant potential growth for many years. These initiatives include the January 31st amendment of the Record of Decision, or ROD, for the final tank closure and waste management EIS that was originally developed in 2013. as well as an announcement this past Friday for the notice of availability for the waste incidental to reprocessing, what we call the WEIR report, which is in support of the test bed initiative demonstration, what we call TBI. First, I'll touch base on the first amendment. The amendment to the ROD for the direct feed low activity, which we'll refer to as the DF Law Facility, supports the secondary waste program also at the Hanford site, in Washington represents a sizable opportunity over the next decade. And while we can't provide too many specifics at this time, suffice to say that Permafix will provide the recommended treatment solutions for radioactive waste streams produced by the DF Law program once it gets operational. This waste is estimated by DOE to be over 8,000 cubic meters annually. It will begin to be received at Permafix facilities upon a hot startup of the plant currently projected to begin in the late 2024 timeframe. To put this in perspective, this volume of waste would more than double the production of all of our plants combined on an annual basis. And given the fixed cost nature of our business, this could result in very significant cash flows over that next 10-year period. The second step forward, as I mentioned, is the final waste incidental to reprocessing or WEIR document published this week by DOE, which states that the proposed TBI program would demonstrate a supplemental law treatment approach. The WEIR went on to state that based on the final evaluation, DOE determined that the pretreated and solidified waste from the tanks is incidental to reprocessing of spent nuclear fuel. It's not high-level waste. and is to be managed as low-level waste. This progress opens the door for DOE to work with the Washington State Department of Ecology, which is a regulator, to develop and approve the regulatory documents for shipment of the Phase II program. Phase II includes grouting disposal of 2,000 gallons of tank waste, currently anticipated to be shipped before the end of the year. These developments underscore the important role that Permafix will be playing and the long-term mission for Hanford closure in support of both the DF Law Venture Occasion Program as well as the Supplemental Tank Waste Treatment Program that will likely include commercial grouting. As discussed last quarter, the TBI initiative holds the potential to save tens of billions of dollars, taxpayer dollars, as well as eliminate significant carbon emissions and reduce schedules for Hanford cleanup. Permafix maintains these capabilities today at our Permafix Northwest facility which is permitted and outfitted to safely and compliantly grout up to 30,000 gallons a month with the ability to expand well over a million gallons annually while dramatically reducing costs compared to vitrification. Within the services segments, we've reached full operational status on several projects that have been delayed due to the impact of the pandemic. In addition, we've secured important new projects that we expect will begin in the second quarter of 2023. As the impacts from the pandemic continue to fade, the federal government has begun to announce new projects that have been on hold. These procurement cycles are moving forward to support the increased funding levels, which we anticipate will result in a number of additional opportunities to be awarded in the coming quarters. As a result, we have now over $200 million in defined procurement opportunities targeted to be released in the next few quarters. 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 if selected by DOE, would represent substantial increases in sustainable revenue to align with our core competencies. Some of these upcoming DOE project announcements include the $45 billion Hanford integrated tank disposition contract and the $3 billion operations and site mission support project, which are both likely to be awarded in the second quarter. If we are successful, we would participate as a team member on these large DOE procurements, both of which completely align with our strengths and innovations in radiological protection and waste management. We're also close to announcement of another project that we referred to in past calls through the Joint Research Council in Italy, which this project would support our expansion program in Europe and open the door for deployment of our treatment technologies in these rapidly growing markets in Europe. We've also received several strategic awards over the past few months, specifically associated with our soil sorter technology, including an announcement last week that our team was awarded the first abandoned uranium mine closure task order in support of the new EPA abandoned mine program. While this initial task order represents only about $1 million in revenue for 2023, we're anticipating rapid expansion of the program following deployment of our technology into the first site, which is located in the Northeast Arizona region. Awards have also been realized at several DOE locations that will support backlog generation in 2023. In addition, we're well positioned for several upcoming procurement initiatives for the U.S. Department of Engineers, Corps of Engineers, the U.S. Navy, and several other DOE site projects that are supposed to be secured in the next few quarters. As a result of these factors, it's clear to us that there is significant pent-up demand and that we expect the benefit from improved budgets and carryover spending from last year. As a result, we maintain an optimistic view that 2023 will see a significant improvement over 2022. As I mentioned earlier, we're already seeing signs of that improvement. Turning back to our financials for a moment, adjusted EBITDA for Q4 2022 improved to a loss of $1 million compared to a loss of 1.7 in the prior year, Q4 2021. Aside from our expectations of solid revenue growth having a positive impact on our EBITDA going forward, we continue to focus on a reduction of non-billable indirect operating costs as well as SG&A expenses. As a result, we anticipate a meaningful improvement in profitability and cash flow going forward. At the same time, we continue to invest in our capabilities and our 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 we've mentioned. As we continue to increase revenues, we expect to benefit from the predictable cash flows within our services segment and high incremental margins from our treatment segment. Overall, we remain confident in our ability to achieve the growth and stability we experienced prior to the pandemic, given our increasing backlog, our solid pipeline of nuclear services projects, and several potentially transformative events we've mentioned that could materialize over the next coming months and years. On that note, I'll now turn it over to Ben, who will discuss our financial results in a little more detail. Ben?

Thank you, Mark. Let's start with revenue. Our total revenue from continuing operations for the quarter was $16.8 million compared to last year's fourth quarter of $17.1, a decrease of $359,000, or 2.1%. The decrease was primarily due to a drop in our treatment segment revenue of about $290,000. Despite a good quarter on the waste receipt side, processing, as you mentioned, was impacted by supply chains, labor and inclement weather. Despite these delays, volume did have a positive impact on revenue, but there was an offset from lower average pricing, and that's not uncommon. It's just related to waste mix. In the service segment, revenue was down slightly by $69,000, and that's really just timing of onsite projects. For the year ended 2022, our revenue was 70.6 million compared to 72.2 million last year. In the treatment segment, revenue increased slightly by $366,000 due to higher waste volume and then offset by lower average pricing as with the quarter. On the service segment revenue, it was down by $2 million primarily from the slow start of the first quarter to two of our larger projects, but the productivity ramped up production in Q2 through Q4. On the gross profit side, gross profit for the quarter was $2 million compared to $1.3 million in 2021. The increase in gross profit of approximately $741,000 was from the services segment, which was a result of improved profitability of our current projects worked on, which included a 19.8 reduction in project-related variable costs. This improvement was offset by a reduction in gross profit from the treatment segment due to the processing delays we discussed previously, as well as an increase in fixed expenses at the plants related to labor and utilities. For the year ended 2022, the gross profit was $9.6 million compared to $6.8 million in 21. This improvement in gross profit came from the services segment where, again, the improved project profitability contributed $4.7 million in improved gross profit, and that was offset by a small decrease in the gross profit from lower revenue. This increase in gross profit The service segment was offset by the decrease in treatment segment, again, from lower revenue waste mix or lower margin mix of waste and the increased facility costs. Our total G&A for the quarter was 3.6 million compared to 3.3 million in the fourth quarter last year, and while SG&A for the full year was 14.7 million compared to 12.8 million in 2021. SG&A expenses for the quarter were higher as marketing expenses were up from increased payroll, trade show expenses, and commissions earned. Admin expenses for the quarter were higher from higher payroll benefits, audit fees, write-off of patents, and stock option compensation, as well as Permafix medical costs, which are no longer absorbed by our previous medical segments. Similar to the quarter, our G&A costs were up for the year in marketing from payroll and trade show and travel. Admin expenses were higher due to audit outside services and increased payroll costs no longer absorbed by the medical segment. Our net loss attributed to common shareholders for the quarter was 1.7 million compared to last year's net loss of 2.5 million. For the year ended 12-31, 2022, our net loss attributed to common shareholders was 3.8 million compared to net income of 835,000 in prior year. Our basic and diluted net loss per share for the quarter was 13 cents compared to loss of 19 cents in the prior year. Loss per share for the year ended December 31 was 29 cents per share compared to income of seven in the prior year. Adjusted EBITDA from continuing operations, as we defined in this morning's press release, was a loss of one million compared to a loss of 1.7 million last year. For the year ended 2022, adjusted EBITDA was a loss of 3.3 million compared to a loss of 4.4 million in 21. Turning to the balance sheet, our cash on the balance sheet was $1.9 million compared to $4.4 million at year end reflecting the losses for the year. Our accounts receivable were down $2 million reflecting improved collections primarily in the service segment. Our unbilled receivables were down $2.9 million reflecting increased billing in a large project that was nearing completion. Other assets were up $1.1 million, partially due to the employment retention credit of $2 million, which is still outstanding. Our current liabilities were down $3.2 million from payment of outstanding payables and the reduction in unearned revenue of approximately $767,000. As of December 2022, our treatment backlog sits at $9.2 million, up from $7.1 million, both at year-end 2021 and September of 2022. Our total debt for the quarter-end was $1 million, excluding debt issuance costs, which is mostly owed to PNC Bank. Finally, on the cash flow side, for 2022, our cash provided by continuing operations came in at $164,000, Cash used by discontinued operations was $717,000. Cash used for investing of continuing operations was $997,000, primarily capital-related. And cash used for financing was $921,000, representing payments and capital line of $502,000 and payments related to finance lease liabilities and other debt of approximately $419,000. With that, operator, I'll now turn the call over to questions.

Certainly. At this time, we'll be conducting a question and answer session. If you have any questions or comments, please press star 1 on your phone at this time. We do ask that while posing your question, please pick up your handset, if you're listening on speakerphone, to provide optimum sound quality. Once again, if you have any questions or comments, please press star 1 on your phone. Your first question is coming from Howard Browse from Wellington Shields. Your line is live.

Thank you. Mark, Ben, Lou, I hope you and your families are doing well.

Morning, Howard.

Morning. So first things first, for full disclosure, I need to say that I was the investment banker for your equity raise of 6.2 million September of 2021. And in addition, members of my immediate family own shares in Permafix. So let me get to a couple of important questions. The Department of Energy just published various comments relating to DF law. The record of decisions specifically mentions and only mentions Permafix Northwest as the facility to treat what seems to be enormous quantities of secondary waste. They talk about 8,300 cubic meters of solid and liquid waste annually, which if I converted that to liquid, which I have questions about, that's about 2.2 million gallons of liquid waste, 18 cubic meters of mid-level waste, and 332 cubic meters of mid-level waste. Because it's a combination of liquids and solids, can you give me a sense of what the annual revenues the Permasex could be starting if you're operational in 2025, as an example?

Sure, Howard. Yeah, you really can't do a real conversion of those quantities because a lot of that 8,300 cubic meters is debris or other solid waste like PPE or personal protective equipment. other things that get contaminated, those kinds of things. So it's difficult to do that. We looked at the various types of waste to be generated compared to what we do now. And as I've mentioned before in the script, it's about double our total input now for waste, all of our plants combined. But we do have, I do want to mention, we do have a contract with the tank contractor that that will likely be novated. And it's like it's an MSA, a Master Services Agreement type of contract. And it's got rates, and we've talked about rates. Applying our rates to the volumes of each individual waste stream looks to be about an annual revenue between $65 and $75 million a year. So it is a significant increase in revenue for that plant and the company overall. That $65 to $75 million could vary depending on how much of which waste stream changes along the way, and it could also vary depending on the rate of nucleolide content that was received. There's different charges for different types of levels of radioactivity and those types of things. But generally, when that plant is running, the EFLAL plant is running at full capacity, which is right now I understand the design capacity for the plant is to treat a million gallons a year. When it gets to that level, then I think we'll be able to expect over 8,000 cubic meters a year.

And basically this will be at your normalized treatment margins. Is that a correct statement?

Most generally, yeah. You know, there's some inflation, obviously, that's going to have to occur along the way. The natural gas prices in the Tri-Cities area have gone up dramatically compared to the rest of the country, and things like that, and labor issues. But, yeah, generally the margins will be what we make now on waste treatment as a whole.

Will you need to hire any additional personnel for this specific award?

Yeah, there will be. This will be expected, as I mentioned in the script. Right now, DOE is very casual, or I should say informal, about when the startup of the plant will occur. They're predicting at this point in time that it will be late 2024, and then it will get rolling through 2025. I would expect them to take a year, year and a half, to get to full capacity if everything went well. I'm sorry, what was your question, Howard? I'm already...

No, additional personnel.

Oh, additional personnel, yeah. So at full capacity, I would anticipate between 75 maybe and 100 people.

Additional.

Yeah, additional to current staff, correct.

What you're basically talking about, if I do some numbers, you're talking about earnings just in this contract fully deployed in, say, 2025, almost $3 in earnings. Does that sound about right?

I'm not qualified at this point to do that math. I haven't done that math, but it sounds like it might be about the right number generally.

Okay. Let me continue because the DOE has published probably 1,500 different pages of items. Let's talk about the TBI. What's interesting about the TBI, comment, 2,000 gallons, assuming that's done by the end of the year. They also mentioned that they have no desire, and this is in the document, Final Waste Incidental to Reprocessing Evaluation for the Testbed Initiative Demonstration. And this came out March 16th. And on pages 4-10, 20, 21, and 22, effectively they have said that they have no desire to do what you and I would look at as the third phase of 300,000 gallons. And this does imply that they're looking to go from the 2,000 gallons, assuming it's successful, right to full capacity. I'd like your comment about that.

Yes, we've had a number of meetings with DOE in the last few weeks about the overall TBI program and have asked before about that. And DOE's response has generally been the same as it's been, as I've described on prior phone calls, and that is that they have a roadmap that they refer to which integrates their strategy for tank cleanup. It includes, you know, it's largely based on the DF Law facility, which DOE has $14 billion invested in, and obviously decades of construction. Getting that plan up and running, and that's kind of the centerpiece of it. TBI and grouting certainly fits into that roadmap, as they refer to it. When it occurs is going to be dependent on when DF Law gets rolling, funding, how the DF Law facility works, other types of regulatory considerations and those types of things. In their response to whether they're going to go to 300,000 gallons versus right into a production level, I don't think DOE has made that decision yet, period. Whether they call it TBI or low-level waste off-site disposition, which is what they refer to congressionally, that remains to be seen. But the supplemental program for grouting certainly seems to be a and I've been told is a part of that overall roadmap. So to answer your question, Howard, whether it's 300,000 gallons as phase three of TBI or whether it's moving right into an operational phase, DOE has laid the groundwork so far from a regulatory perspective through the WEIR that you mentioned and also through the environmental assessment to support their NEPA requirements. Those have all been done. They have another hurdle to address, which is a smaller hurdle with the state of Washington for the RD&D permit, which is required to pump the waste out of the tank and ship to us. Once that's done, they can start going. And as you know, there's another method that they're pumping out now through what they call the TISCR. The TISCR is pumping waste. DOE has planned on pumping 800,000 gallons this calendar year. with that and putting it in storage for DF law. Once that gets full, I think there's an opportunity to also grout some of that. DOE has not agreed to that yet, but it depends on when DF law gets up and running. If it's just around the corner or if it's a good ways off, I'm sure there'll be opportunities to talk to DOE about that potential as well. To answer your question specifically, I don't think DOE's has given a lot of consideration to whether it's phase three of TBI or whether it's right in an operational phase.

On an operational phase, what kind of capacity could you use in, or excuse me, work on in terms of, say, 2025?

We could do 30,000 gallons a month tomorrow. Our permits and our facilities support that throughput. And We can expand that through a minor permit mod and some minor capital improvements up to a million. And with some additional mods, you can get that up to several million. But right now, about 300,000 gallons a year is what our current capacity is whenever DEU is ready to go.

And this is standard treatment margins again?

Yeah, that's correct.

And would you need additional...

people to process this? Up to 300,000 gallons would be about 25 people total to run that operation. A lot of that depends on how fast we're receiving the waste, whether we go to a second shift or a third shift, or whether it's over a longer period of time, which we're doing the one shift. That'll vary, but 15 to 25 people is probably a good estimate if we were running at full 30,000 gallons a month.

30,000 gallons a month. If you just did that, you're talking about 75 cents a share, give or take.

And if you're full capacity, you could be talking about... I certainly couldn't verify those numbers, Howard, but that sounds like potentially about right.

All right. Everybody's going to be wanting to talk to you lastly about ITDC. We're expecting a decision momentarily. Is that a correct statement?

DOE has been very difficult to pin down in regards to their schedule and the procurement. Right now, DOE has been consistently saying, I've been hearing, that It'll be sometime by the end of Q1, which obviously is only a week away. So I have to believe it's sometime in Q2 for both ITDC and the OSMS. OSMS, they have been more vocal about an award in the May timeframe, but the ITDC, I'm going to assume Howard is any day, but likely in Q2 before, at least in April timeframe.

The OSMS is Paducah Portsmouth, is that the one?

Yes, that's the DUFF 6 management contract and as well as Portsmouth-Veduca infrastructure contract together.

Assume for the moment that your group wins the ITDC contract, which we all hope to do, what does that mean to you other than 15 years and it's $45 billion? You're not doing $45 billion, but what could you be doing as a part of it? Indeed. Second question, so that is, if you lose because you're a small business, will you still participate?

Yeah, it's very difficult to answer the first question, Howard. As I've told many investors, this procurement is quite unusual in that it's so large and so complex. We did not require a baseline schedule or a baseline cost estimate, which means that there's very little costing provided and very little less detail on what each firm, each team member is doing specifically. So it's like a closure contract in that you will negotiate, the winner will negotiate task orders for all the components of scope during the transition period. At that time, you'll understand which pieces of scope specifically you're going to be contractually required to do, how many people are going to come with it, and that type of thing. None of that will be defined by any of the winners until after transition is off and running. So I really can't answer what the overall financial impact is. As a small business, as I mentioned as well in the past, there is a very significant small business set-aside requirement for the winner. It's a formula of overall revenue, but generally the small business set-aside goals average about $200 million annually for small business goals. That's a pretty significant amount, and we still remain a small business qualified to do that. So the second part of your question, if we were not selected, we would certainly be a very viable way for the winning team to meet their small business goals as well as provide the value proposition we provided to our team. And we're highly optimistic that if we don't win, we'll be able to attain a good portion of that work if it's not already accounted for by another team member.

And I'll get back into Q. Mark, best of luck. Thank you.

Okay. Thank you, Howard. Thank you. Your next question is coming from Aaron Warwick from Breakout Investors. Your line is live.

Hey, guys. Thanks for taking the call. I appreciate all of Howard's questions and your answers to those to give us more clarity. I wanted to talk about Hanford a little bit as well, but also wanted to look more near term and get some clarity. It sounds like the business has really turned a corner here after the pandemic. And just trying to get a sense of, do you expect to be profitable? in this fiscal year?

Yeah, Q1 looks a lot better than Q4 did, Aaron. I appreciate your question. And Q2 has a lot of things happening that are very exciting that are projected to be much better than Q1. And so we certainly expect to be profitable in Q2. Q1 is still a couple things we're waiting to see come in. Q2 is very exciting. We have the Ewok facility here in Oak Ridge that we've been carrying on lease for about three years now. It's finally starting to generate real revenue. We've got a big project we're doing there and several others pending. That has gotten rolling here in the last 10 days and will run at full capacity just about through Q2. In addition to that, as I mentioned in the notes, we've won a number of projects that are all getting rolling in Q2 as well. That includes the abandoned uranium mines, as well as some commercial contracts, a project in San Diego with the Navy, and two or three new projects with DOE at different sites, Los Alamos and Livermore. all are getting rolling in April. So Q2 looks really good, and our backlog will be increasing, and some of the headwinds I described before, which includes labor and supply chain issues, are really behind us. We've replaced a lot of people that have been on board now for three or four months that are trained, they're rolling, and we're pretty confident that Q2 will be well into profitable range moving forward.

Fantastic. That sounds good. So you mentioned the EPA, and I've noticed that they've been moving forward with a lot of different projects that have kind of been delayed because of COVID and other reasons. And the project that you mentioned, if I remember right, you said only probably a million dollars this year, but If I remember right, that's like an $80 million contract over three years. Is that accurate?

Yeah. You know, Aaron, I believe that IDIQ is a $225 million IDIQ. So there's three teams. We're with one of those teams providing waste management and radiological services, which is obviously what we do. And so it's really difficult to say. The last time we talked to EPA, which I've not talked to them myself, but our folks have, there's been about a dozen sites teed up by the characterization contractor to bid out. And they just haven't been through the procurement process. I don't know the size of those or timing or funding, but I know the ceiling is high. The intent by EPA is to get rolling on these things this year, and that's one reason why we're confident that with our technology and the soil sorting stuff, that it'll be very efficient and we'll be able to, once we get deployed in the field, we'll be able to keep it going. So right now we're only contractually signed up for that first task, but we're pretty confident that this thing's going to grow because the contamination and and the mission of this thing is so large.

Okay, and then on the international front, you didn't mention anything about that, but it sounded promising the last several conference calls. What's the status of that work?

Yeah, I mentioned the JRC. I think I stumbled through that part of the script, Aaron, but the JRC is the Italy contract that we're counting on and hopeful for. Yeah, I don't know if that's where I broke down or not, but The bottom line is we're expected to hear about the JRC bid any minute. And as I mentioned before, it's nearly a $50 million job, and it will be kind of the seed for our overall European strategy. But overall, to answer your question, we continue to get shipments from Germany. We're working with one right now to be shipped any day from Croatia and Slovenia, as well as the U.K. and Italy. So the more we're shipping, the better we're getting at it, the more efficient we're getting at it to deal with all the logistics and all the paperwork that goes with shipping radioactive material across the Atlantic. So it is going very well. The market is really exploding, and the marketing we've done has been very effective to the effect that we're getting the opportunity to bid on a lot of things, and hopefully we'll see TRC announcement soon, and then we'll start moving forward with the new plant in England, which will kind of be the centerpiece of our European approach.

Right. Okay, so for Hanford, a couple of things. First of all, I was pleasantly surprised to hear, at least if I understood it correctly, that even if your bidding conglomerate were to lose, and it sounds like there's only two conglomerates, But even if you were to lose, that you still may get some business because of that small business clause as part of the contract. Am I understanding that correct?

Yeah, that is speculation. And, you know, I don't know the landscape if we were to lose, who the winner is going to have on their team necessarily. So that's really just speculation. But, yes, there will be opportunities for that. Again, it's important to understand, as I've told investors, the ITDC is primarily labor-based. and the waste will be separate, and the waste will, for example, the DF law is part of that contract to operate the DF law, and the waste will come out separately as a separate subcontract and not through the ITDC to us. So the opportunity to do the waste, it's defined in the Rodd Amendment, which is slated to come our way once it gets operational. And then there's other opportunities for other waste that we'll likely get as well, and then there's other opportunities for labor and other small business opportunities along the way. So, yes, to answer your question, there will be opportunities as a small business, most likely, with the awardee.

Yeah, and you had mentioned up to $200 million. That was about my estimate as well. Obviously, not necessarily every year, but on an annualized basis. And I'm just wondering, that would go to small business. How many small businesses are there? There can't be that many small businesses that are doing what you do.

None of our competitors are day-to-day competitors, which are WCS and Energy Solutions and those types of firms, which are private companies. None of those guys are small business. So you're absolutely right. It was a very limited... small business competition with waste treatment capability. There's a few. There's a couple here in Oak Ridge. There's really not any necessarily in the Hanford area to speak of at this point. But it's also very broad scopes. There's other things to do. But as far as what we do, there's very limited small business competition in this space.

Okay, thank you. So speaking of the larger competitors, Some of them were mentioned in the final WEIR for the TBI that you talked about earlier, and that I think caught some people by surprise that you were the only one that was mentioned in the one for secondary wage. But can you explain what the reasoning is behind that?

Yeah, I'm glad you asked that, Aaron, because I did get a couple questions about that this week. And what it comes down to is the WEIR references the environmental assessment that was done for NEPA. So the environmental assessment, the goal of that document is to evaluate alternatives for treatment of that tank waste and treatment disposal. So the EA looks at every alternative available that's feasible, and it looks at the competition, which includes WCS and Energy Solutions and us. So what we refer to is who was evaluated in the EA. And if you look at the EA, there's a number of different evaluations done based on risk, from transportation to safety to environmental hazards and those kinds of things. We were the lowest risk approach because we're the only ones that are adjacent to the site. The other solutions would have to require transportation of untreated radioactive liquid to at least 600 miles energy solutions and farther to WCS. So obviously the Permafix approach, having a facility permitted right next door, is the preferred solution. But it did include what was defined in the evaluation for NEPA in the WEIR document. That's why it's in there.

So how would they transport that waste? to the Permafix Northwest facility?

It'll be in totes and on the back of a large flatbed, most likely, and they'll bring over several totes, you know, a day when they're at full capacity.

Yeah, seems like that would be rather dangerous to go all the way to Texas. Yeah, exactly. Okay. And then I guess the final thing for me would be on the secondary waste that you had mentioned earlier. It's really impressive to hear that revenue number. It's about twice my estimates, so also then twice the earnings per share that Howard had talked about. I guess just to make sure I understand and everyone else understands, I guess this is because of the incremental margins that you would have given your fixed cost structure. Is that accurate? you have such higher margins because it's the incremental. It's not just, you know, what your current margins are.

Yeah, I think Howard's back of the envelope number, this has been, Aaron, and I think his back of the envelope number is reasonable given, you know, our incremental margins. And then, as Mark mentioned, there would be some additional fixed costs against that number. But I think, you know, just again, back of the envelope, it's pretty reasonable given those volumes.

Well, thank you, guys. You've done a great job navigating through COVID. It seems glad to hear the business is starting to turn the corner there and going to be profitable and then obviously potentially lucrative stuff here at Hanford. So congratulations, guys. Thank you.

Thanks, Aaron. We appreciate it.

Thank you. Your next question is coming from Anthony Harple. Your line is live.

Hi, guys. Good morning. Thanks for holding the call. I have a number of questions, many of which are clarification related, just given there's so many moving parts. Maybe to start out with, for the TBI program, can you please clarify what price per gallon you would realistically expect to get paid?

Well, we don't want to get too deep, Anthony, first of all, good morning, into costing this thing. But generally, our established rates that we have in our MSAs are in the low $40 a gallon range for the actual treatment. That's the actual routing. So if a container of waste shows up on our dock, in other words, we're not paying for transportation, and we just have to grout it, it's $40 to $45. And again, that can change based on rate of nucleides and the different types of waste received, but that's generally a good number. In TBI space, if DOE subcontracts to us to deliver those totes I mentioned of waste to our dock, they would likely subcontract us to grout and dispose of the waste. And if that's the case, and we have to pay for transportation and disposal at an offsite landfill, then that price would be closer to $100 a gallon. So we typically use $100 a gallon for the TBI as an alternative to include treatment and disposal at a Texas landfill at the WCS. So that's where those numbers come from.

So do those same rates apply to treating the supplemental low activity waste from Hanford's tanks outside of the TBI program? I assume they're the same.

No, they don't. It's a good question. They are different. And the reason they're different is important to us and important to the exclusivity of our program. And that is because of the grievance with the state. This waste is secondary waste coming off of vitrification, which is what is defined with the state as the preferred treatment alternative. So what that means is after the secondary waste comes off a DF law, we can put that waste in the local Hanford landfill. So it won't go down the highway to Texas Zero and Energy Solutions in most cases. There may be some exceptions. it will likely mostly or largely go back onto the Hanford site into their gigantic, beautiful new landfill. It's designed just for this type of waste, so it won't go very far away.

Well, to be clear, I'm referring to the primary waste, the supplemental low-activity waste you're doing in TBI. I'm saying once the TBI program is behind us and if this moves into the operational stage of treating the primary waste, supplemental low-activity waste, or would the rates that you would be getting paid be the same rates per gallon that you would be getting paid in the TBI program for that primary waste?

I'm a little confused. So there's two different waste streams. There's one, the secondary waste coming off ZF Law. That's the one that goes back on site. And then TBI, which is, as you said, supplemental, that's the TBI. So that's all... supplemental, and that would be the $100.

Okay. Okay. So can you clarify whether the DOE has officially made a decision to grout secondary wastes that are generated by vitrification of the tank's low activity waste, or whether this remains a proposal rather than an official decision?

The Rodd Amendment is quite a formal document, and it defines DOE's decision on how to disposition the waste coming off of DF law. You know, it goes through a lot of pain and suffering through the DOE to get those Rodd Amendments approved and supplemental analysis and that type of thing. It's a pretty formal decision in my mind. You know, it will, yeah, to answer your question, yeah. From my perspective, the Rodd Amendment is very formal, and it's their intent to send the secondary waste from DF law for commercial treatment, off-site treatment.

Okay. Okay. Can you please clarify whether the DOE has awarded the tank offsite secondary waste treatment business to you all, to waste control specialists, or to neither of you yet?

They have not made any awards yet, and we would not expect them to do that until the plant gets operating or very close to operating in the hot capacity. What they'll do on this, Anthony, most likely, and there's some speculation here, is each of the entities we've mentioned have contracts with the tank operating contractor, which at this point in time is WRPS. So WRPS is there, notwithstanding who wins the ITDC. Whoever wins the ITDC obviously will get this contract. We have MSA with them with established rates. that will likely be renegotiated along the way. And when the time comes for them to generate this waste from DF Law, they'll put out a task order. It may be competitive. It may not be. I don't know. But they'll put out a task order. In the case of this one, since there's only one company named in the rod, it will likely just be a task order. We'll put in a price. They'll negotiate with us, and then we'll go. So we have a contract in place. They'll put task orders in. in place as waste is generated, and that's the contractual approach. That has not occurred yet, and like I said, won't likely occur until the airflow is operated.

And that is a late 2024 event? Correct. Okay. And so if you all were to treat the secondary wastes that are that are generated by vitrification of the the hamper tanks low activity waste um i i may have completely misunderstood your comments but were you implying based on the revenue numbers you had mentioned earlier that you would realistically expect to get paid around $7,800 a cubic meter? Am I getting that math right, or did I misunderstand?

Yeah, I don't even have a calculator in front of me here, Anthony, but generally for 8,300 cubic meters, we're estimating roughly $70 million annually in revenue. Okay.

And regarding the ITDC, so are you saying, Mark, that the scope of it as it relates to PERMAfix only includes services, not treatment?

I really can't talk about the procurement at all because it's such a sensitive situation at this point in time. The scope, the RFP is public information and includes managing the facilities and waste management, which would include disposition of the tank waste to close tanks. So it would be a component of scope within that overall contract.

That's about all I can say about the procurement. So if I'm hearing you right, then we're talking about a $45 billion contract over 10 years, and it is a possibility that Permafix could generate services business from that contract as well as treatment business from that contract. Possible. Is that a fair statement?

Yes.

Okay. It's possible. It's possible for both, services and treatment. Correct. Okay. And then last question, can you please give us an update, Mark, on the status of renewing your Northwest Facilities Dangerous Waste Regulation Permit?

Yeah, that permit has been in the renewal process for 12 years. And we continue to work with the state and provide updates to the permit. Right now, boy, I think we're still another year off before we can see anything finalized. But it doesn't keep us from Operating what we're, you know, we're doing what we're doing. What it does keep us from doing until we get to the final one renewed is new technologies like the GML system that we've got in place. We were able to run that through a treatability study for a year or so. But until we get the formal renewal, we can't do something new like that. So it is impacting us from that sense. But the state is going through the process as they have the last 12 years. And we're hoping to have it completed in about a year, if I remember correctly.

It doesn't preclude you from treating the waste that we've been discussing through any of these other initiatives?

No, which is demonstrated by the TBI stuff that we've already done. And we do grouting all the time now, you know, similar processes. And so we would not expect that. that permit renewal issue or delay to have any impact on everything we're talking about here.

Okay. Thank you. Appreciate it. All right. Thank you. Thank you. Your next question is coming from Ross Taylor from ARS Investment Partners. Your line is live. Thank you.

We'll shift off of Hanford for a bit. And I'd like to talk to you about a couple things. One, what you're looking at with things such as uranium mines and how long do you think that ends up working out, what kind of opportunities that have. Generally, what other kinds of opportunities are you seeing of that sort around the country that are starting to be freed up? And then I'd like to ask you to talk about what you see happening with regard to the Navy. The Navy has a lot of ships, more nuclear-capable ships look like they're going to be coming offline again this year. They're building up what looks like a fairly interesting fleet of mothball nuclear vessels that they need to deactivate. And where do we stand with the ability to kind of push those major contracts forward?

Sure, Ross. Yeah, the EPA program for abandoning random mines, it's been a while since I've looked at that information, but I want to say there's like 180... the abandoned uranium mines that are within this program. It received a good slug of funding about five years ago when these IDIQ bids came out. We were awarded a contract with our prime, who's a Native American firm, and local to the area in the Navajo region there in northeast Arizona. And this is the first one. So there's a contract that they've hired across, I believe it's Tetra Tech, that their job has been highly funded, and most of the funding has been, I think they actually spent all their funding, where they're going around doing the characterization and surveying and developing the scope for each one of those mines. As I mentioned before, I believe they have 12 or 18 done. And next step after Tetra Tech does that is they turn over the information to the EPA. EPA puts together a procurement between these three bidders, these three awardees, and they go. So we won the first one of those, and they're very remote locations, some more remote than others, and they will be off and running and hopefully start making awards subsequent to the first one through the summer. Some are very large, some are smaller. This is a smaller one. But we're hopeful that once we get going, our systems will be in place and they can keep operating once they're in the field because mobilization is so expensive on these types of things. So it's very difficult to tell you what type of funding this year looks like because they've had funding for years and years and it's all been stifled because of procurement. I don't know if procurement is going to get things rolling this year or not or if it's going to be next year, but the projects remain. The objectives remain. There's a lot of politics behind them, and they seem to be off and running. Like I said, our kickoff meeting for the first one with EPA is actually next week. So we'll have more information on that by the next earnings call. As far as the Navy goes, the Navy has really got stifled, too. We reported a couple years ago on this call that that the GAO and may put a report together. They're going to decommission 48 ships. I think 12 of those are going to be nuclear, and they're all going to be done in four years. Well, nothing happened in about 18 months to two years until about the first week and second week in March. They had an industry day, the Navy did, excuse me, in the Navy headquarters in D.C., and went over the plans for the Enterprise to be the next vessel. They're going to decommission. We're expecting an RFP, I believe it's this summer, and that'll be the next one coming. So teams are forming on that. We're working with several companies to define the right team based on the fact we've got some good project calls from the ship we're doing now. It's going very well, and we're hopeful to get on the winning team for that. I would anticipate it to be quite a while before that's awarded. Probably a year or so, and then I think the Navy will be off and running with that business model. I know the Nimitz aircraft carriers also close behind the Enterprise, and there's a few others that names escape me at the moment that will be on the list as well. So we're hoping with this Enterprise initiative that it'll be kind of the beginning of this market getting rolling, and hopefully we can get on the right team.

And right now these vessels are just sitting idle?

Like for the Enterprise, my understanding is the Enterprise is sitting at HII, I don't know the angles, in Norfolk, and they're maintaining it. You know it has eight reactors on it. So it's a big job and a complex one to make it go away. So, yes, it's sitting in the harbor there or shipyard there in Norfolk.

nothing can go wrong with that you talk about the competitive environment it looks like in a lot of places you're operating you have a very limited number of competitors and it would seem to me that one of the risks the government runs into in here is that it needs to make sure that it can t continues to have competitive options so therefore one would expect to see some spreading of business my words not yours How do you see that environment, and is that a not incorrect read that given the limited number of people who can do what you do that basically over time everyone needs to win some?

I sort of like to think that, Ross, that not only the government but even the primes have that same perspective. You know, if one company gets all the work, it's not going to be – you want a competitive market. And DOE certainly understands that. I think they consider that. I don't know how they consider it in these big proposal initiatives, but I do believe that's the case and that everyone is sensitive to the comment you just made and understands the importance of spreading it around as well. So, yes, I think that's an objective.

Oh, in areas where perhaps the other side, the other group won, there might be some unbiased or some potential tilt to the idea of keeping your consortium and your team in the game. Otherwise, you risk losing the capability entirely.

Yeah. I just don't understand how that's going to all play out with this award because it is so large. But we certainly have a long-term mission in the Richland area up there. And a very unique capability that other folks don't have. So I would expect, no matter what happens, I would expect to be a player on the waste treatment side of the house for the long term with that contractor.

Yeah. And just a quick comment, and obviously you've mentioned some of the rail transport. Obviously everyone knows about what went on in Ohio, but I thought it was interesting. There's a lawsuit by a Native American contractor nation against the Burlington Northern Santa Fe for an oil train derailment a number of years ago, I think it was back in 2015, that just after that trial started, Burlington Northern Santa Fe derailed another train on that nation's property or land. So I thought it does highlight the fact that anytime you put anything on a train and haul it someplace, bad things can happen, which obviously increases the risk of and the cost of the project. Otherwise, I think it sounds like what you're saying that a lot of this, I noticed the tenses that you're using, a lot of the tenses you're using are not what might call hopeful tenses, but expected tenses that you see this happening. And you see, this is really like the game, you know, it's not the game might change. It's the game has changed and it is changing. And that those pieces are already moving. The rocks are already sliding. Is that a correct read?

Well, you know, Ross, we have to be careful as a public company to only speculate on these things. So there is risk, obviously. We all know that going into this. But what Permafix has tried to do in the last seven years particularly is to get as many big irons in the fire as we possibly can with the hope that a couple of them will win. And the one thing I am very confident about is the rod that came out that everyone has commented on is what could be viewed to a large degree as a commitment by DOE to ship us that waste. There is a risk that plant has to get up and running and operate, but that's a pretty big commitment they made. to commercialize through local capabilities that secondary waste from DF law. So we're more optimistic than usual. Obviously, ITDC and OSMS are procurements. They can go either way, and we could be really lucky or not lucky, but we feel like we've got enough other things going on that we'll continue to see the growth we had before COVID irrespective of those wins. And hopefully those wins really transform us if we can get a couple.

Great. Yeah, it sounds like they should be transformational. And I would think you probably have reason to be more optimistic than you just sounded. But thank you very much.

Thank you. Thank you. Your next question is coming from Stephen Fine from Fine LLC. Your line is live.

Good afternoon. How are you guys?

Hello, Steven. Good afternoon.

I have a scripted comment, but I got two questions prior to it. Number one, you mentioned there were labor problems. Are they being rectified or rectified?

Yeah, what comes down to, Steve, particularly at Hanford, but also at Oak Ridge, DOE has seen, as every manufacturing entity really has seen, a big gap in labor and particularly with the union folks. And they've been hiring hundreds and in some cases thousands of people. And we've lost a number of folks at both Hanford facility and Oak Ridge facility to the large DOE facilities. You know, they have a little better benefits. We pay pretty similar, but there's some advantages and disadvantages between each of the firms. But with the big pull from those hiring initiatives, we did lose a lot of folks, particularly a lot of folks at Hanford. And that all happened in Q4. It started early in Q4 and got worse in the first two weeks of December. And it really impacted productivity at Hanford. between the holidays. We've hired since then. We hired in December very quickly. We're able to find folks. They did require a lot of training, but they've been there since. And our general managers were all here in Oak Ridge this week for an off-site. They all reported that labor has not been an issue through the month of March particularly in most of February and that we've got the labor part behind us, labor issues behind us.

All right, my next question before I read what I wrote. In the write-up, it says there was $1.2 million written off from the medical. Where does that all – you know, I understand what that was from, but how did that impact the financials? I mean, so what is that? Is that $1.2 million less or –

Yeah, Steve, that was all last year, 2021. And net-net, it was zero because it was within the entity. So our medical segment, it was basically writing off money we'd invested into the medical segment. So Permafix Environmental takes the loss, but medical gets a gain from the write-off. And so it's a wash in consolidations.

Okay, thanks. All right, I'm going to read a statement. You know, I've lived and slept with your company, and, you know, hopefully this will be informational. I just wanted to applaud the progress and actions of Permafix. In that vein, I would like to express my thought on today's unique potential of Permafix. In 2006, I was introduced to Permafix, and I asked to do due diligence on the company. Among my three degrees, I am an engineer and an MBA. I was a hazardous chemical manufacturer for many years. I was a government contractor, but also a business and science consultant who throughout my career assimilated various technical businesses and opportunities in either commercialized or analyzed and reported. Immediately surveying PermFix, I realized there are four plants at the time in 2016 were essentially non-duplicable. because of the plant, people, radiation permits, and unique ability to handle low-mix radiation waste. The infrastructure and its capabilities cannot be understated in its uniqueness and value. Since 2016, I have watched how Permafix has moved to diversify in a multitude of areas beyond those at Hanford. Clearly, Permafix is capable of being a 150 million-dollar-plus company without Hanford. With treatment and service segments, this lends to a wide array of possibilities. Immediately when I started studying the Hanford Reservation, and particularly the vitrication plant being built, I frankly was aghast. Over 30 years, not one gallon had been treated from the 66 million gallons of mixed nuclear waste sitting in 170 tanks. In 2022, there was $1.5 billion spent on maintaining the waste in the tank and building the default plan to treat low-level waste. I immediately understood that 90% of the waste in the tank was low radioactive waste and more suitable for treatment by immobilizing and then solidifying with concrete. This has been done in Savannah for decades. Since 1992, Permafix has treated millions of gallons of mixed radioactive waste by immobilizing and solidifying with an appropriate concrete. I thus immediately questioned the test bed initiative and its purpose. It just seemed there could be a quicker path for treatment by Permafix. The waste in the tanks becomes even larger, as it must be liquefied before treatment. So arguably, there can be two to four times more waste to treat. Various sources, the GAO, NRS, and NAS, have stated it will take, in any treatment way, 60 to 70 years to treat the tank waste. A study completed by GAO last summer states immobilizing and solidifying the concrete will save tens of billions of dollars. The National Academy of Science recently states that immobilizing and then solidifying with concrete at an offsite facility and burying offsite would push treatment forward 10 years, thereby taking pressure from leaky tanks space, and facilitating movement towards building a plant to treat the high-level waste. It will also ensure preservation of groundwater and hamper. For over a year, this existed in the tank farm, a system called the tank-side cesium removal unit, the TISCR. The TISCR separates high and low waste. After three phases of filtering the product, remaining is a watery, mixed, hazardous, and low radiation product. Radiation is no more than one would experience in a medical test. That is ready for treatment. The TISCR can do 7,200 gallons per day, and thus there is over 300 gallons sitting in a feed tank today. The nature of this product has been generally not vitrified. Last summer, I was exposed to non-cost studies of vitrification versus growling. the name used for that, and grouting is the name used for the concrete process, but I underscore a misnomer because it is confounded with just covering waste with concrete and not immobilizing as Permafix would do. These studies were completed in the summer of 2021 by Laura Cree, who works for Washington River Protection Systems, the Hanford tank plant contractor in charge of maintaining the tank waste. Ms. Crewe chose to use a million gallon samples for each mode of treatment. For growling, I will use, all waste was treated and there was no secondary waste. No heat is used. There is no diesel, copious amounts of water or hazardous chemical. The process is environmentally clean. The data Ms. Crewe used was supplied by Savannah, which as stated, they had been grouting for years. Grouting is one-tenth the cost of vitrifying. Savannah has one reactor, so it has been argued that their hazardous waste is more homogeneous, while at Hanford, there were a number of reactors and thus a multitude of hazardous waste to treat. Permafix has stated that it can or has treated the hazardous waste listed in the 170 tanks. Dr. Jim Conto, who has a PhD in geochemistry and is well-known nationally, states there should be no issue in treating the multitude of hazardous waste. For the vitrification, one million gallon model, about 340,000 gallons. So that's only one-third was vitrified. And the other two-thirds was secondary waste that has to be treated in ways other than vitrification. Data was supplied relevant from Hanford contractors building the vitrification plant. With vitrification, it requires 2,000 degrees Fahrenheit, 3 million gallons of diesel fuel, which throws off over 20,000 metric tons of CO2, 2 million gallons of water, which mainly is contaminated and becomes secondary waste, 151 truckloads of hazardous chemicals, the amount of energy used would energize 15,000 homes. There was a statement that vitrification could cause 36 high consequent hazards. The model used assumes a 70% efficiency, but vitrification plants typically have efficiencies around 40%, and this should take longer, be more expensive, and possibly worsen the vitrification output. Permafix can treat now 300,000 gallons per year, which is equivalent to 1 million gallons of inputted waste into the vitrification plant, as maybe one-third will be vitrified. Permafix has related they can scale up to 3 million treated gallons per year. This is equivalent to 9 million gallons of waste inputted into the vitrification plant. And note, the vitrification plant would create 6 million gallons of secondary waste. Governor Inslee of Washington State was interviewed in August 22 by the New York Times. The governor touted how he was early in calling for climate change. The legislature of Washington State has advocated concern regarding CO2 and environmental responsibility. Recently, our government has stated that any government contractor doing over $7 million a year must be responsible in its environmental profile. Relative to the above concerns for environmental restraint, one can question how the political ecosystem of Washington State promotes the vitrification plants. The political ecosystem of Hanford is vitrified. in its focus that the tank waste needs to be vitrified. There seems to be no issue that secondary waste would be treated by Permafix, which in my mind is oxymoronic to opposition to Permafix immobilizing and solidifying waste with concrete directly. As a problem solver, I do not understand why Permafix cannot start treating the waste in the Tisker now as the vitrification continues to be built. Then there would be two systems treating waste and help get the waste treated faster, provide backup. The Hanford Reservation is in an earthquake zone, and we know climate change is real. There needs to be an urgency because with a black swan event, this will negate no treatment of the waste. In January 2023, DOE published a new ROD, Rules of Decision, how the waste would be treated with vitrification. This is a plan that the ROD last published in 2013. It was quite a compliment to Permafix's unique ability that DOE proposed 2.2 million gallons of secondary waste would be treated by Permafix Northwest. And there was product that would go to a Midwestern plant of Permafix II. The rod is framed so the treated secondary waste has come back to Hanford and buried there. This is an important nuance, implying the nearness of permatex plants. And someone asked the question, by the way, in the rod, it distinctly says nothing will be shipped other than by truck. And two, implying the treatment prowess of permatex. The rod is also very interesting with the section on acetonitrile. This is a potential hazard created in the vitrification plant, which under certain heated conditions can create cyanide gas. All the acetonitrile would come direct to Permafix.

Hey, Stephen, this is Mark. I think we're going to probably have to wrap up. Can you conclude on that, Stephen, before we move forward?

Excuse me?

We're going to need to move on, I'm afraid. Are you close to the end, or do you have a conclusion you can wrap up?

I have two more paragraphs.

Okay.

Finally, there has been a tank maintenance contract for the tank farm sitting out there for award. It is for 10 years and $45 billion. Permasic is part of the two consortiums bidding. If Permasic's consortium wins, Permasic would have people on the ground at the tank farm, irrespective of any treatment at their Northwest plant. The contract encompasses maintaining the tanks, waste and running the vitrification plant. In any case, Permafix will treat waste. That is the given. And of course, it will be a significant impact to the financials of Permafix. Over the last year, I have commented to DOE, Ecology, and EPA of Washington State. I had comments by court order included in the files of the consent decree. And my comments are publicly included in the National Academy study on low-level waste at Hanford. In this vein, I urge you to speak from to your congressional representatives in order to start treating waste at the Hanford Tank Farm. There is no reason that Permafix should not be treating waste right now. I'm done.

All right, thanks. We appreciate your passion on this topic, Stephen, and your support. I do have to say that the statements that were made by Stephen were Stephen's alone and don't necessarily reflect all the views and opinions of PESI. as a company. But we appreciate your support, Stephen. Okay. I'd like to thank everyone for participating in the fourth quarter and year-end conference call. We remain extremely confident in the outlook for the business. We appreciate the continued support of our shareholders, and we look forward to providing further updates as developments unfold this quarter. Thank you very much.

Thank you, everyone. This concludes today's event. You may disconnect at this time and have a wonderful day. Thank you for your participation.