Perma-Fix Environmental Services, Inc.

Good morning, everyone, and welcome to the Permafix Fiscal First Quarter 2025 Earnings Conference Call. At this time, all participants are in a listen-only mode, and the floor will be open for questions following the presentation. If anyone should require operator assistance during the conference, please press star zero on your phone keypad. Please note this conference is being recorded. I will now turn the conference over to your host, David Waldman of Crescendo Communications. David, the floor is yours.

Thank you, Jenny, and good morning, everyone. Welcome to Permafix Environmental Services' first quarter 2025 conference call. On the call 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 first quarter 2025 financial results, which is also posted online. 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 212-671-1030. 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 or 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. Carfix believes that such information provides an additional measurement on consistent historical comparison of its performance. A reconciliation of non-GAAP measures to the most directly comparable GAAP measures is available on 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. Thank you, David, and good morning, everyone. We ended the first quarter facing a number of temporary challenges, largely related to delays in procurement and and project activity tied to the federal administration transition. While these factors weighed on our revenue growth, we still delivered a modest year-over-year increase in revenue. More importantly, we exited the quarter with momentum and improving visibility across our key growth initiatives. Our treatment segment showed improvement in the first quarter. After a slow start, waste receipts began to improve toward the end of the quarter, contributing to a backlog that grew to more than $10 million by quarter end. up approximately 30 percent from where we were in 2024. Revenue in the treatment segment increased modestly year-over-year, and we did achieve gross profit improvement supported by higher waste volumes, reduced variable costs, and other efficiency initiatives. We also made targeted investments to support the receipt of new waste, including staffing, training, and facility readiness activities that we expect will translate into throughput gains. Our waste receipts and treatment production at our PermFix Northwest facility from Hanford have increased, with disposal occurring locally to on-site landfills. With our services segment, revenue was down slightly due to delays in federal procurement activity, particularly in early-stage projects. However, gross margins improved significantly compared to the prior year, reflecting proactive cost-reduction initiatives and improved alignment of resources with our revenue backlog. As we move forward, the team continues to to focus on disciplined indirect cost management while maintaining the flexibility needed to support larger project opportunities expected later this year. Our PFAS program continues to advance on multiple fronts. We received our first commercial shipments from the federal government with additional approvals pending. We've also made meaningful upgrades to the system, including the integration of chemical recycling, which is already reducing costs and improving efficiencies on a per gallon process. unit remains on track for Q4 deployment and should expand our processing capacity by at least three times. As more states adopt stricter regulations around PFAS destruction, we see this business as a promising long-term growth driver. We continue to develop strategic partnerships with large quantity generators and have aligned our technology with the PFAS market segment that continues to highlight our technology as superior based on cost, simplicity, and and efficiency for the total destruction of PFAS. We're also tracking legislative activity in more than a half dozen states, which is expected to drive demand for full-scale PFAS destruction technology like ours. In addition, we're encouraged by the recent press release from the new EPA Administrator, Zeldin, announcing that the Trump Administration's position to ensure PFAS remediation policy is a priority through the development of an agency lead for PFAS, and continued assessment of effective and available treatment technologies for the industry to consider. We also remain optimistic about our role in supporting the U.S. Department of Energy's Direct Feed Low Activity Waste, or DFLAW, program in Hanford. The project remains on schedule for an August 1 start, and we're fully prepared to support multiple waste streams as the operations ramp up. This program, part of the broader Hanford tank remediation mission, has the potential to generate very significant high-margin reoccurring revenue beginning in Q4 through the next decade at a minimum. On the international front, we saw improved activity during the quarter with growing international waste receipts. We received approximately $7 million worth of waste that we anticipated from Canada, Mexico, and Germany over the past two months, with the remaining portion scheduled for May and June. We also continue to pursue a robust pipeline of federal and commercial projects. These include previously discussed opportunities at West Valley, where transition activities are ongoing, and will continue through the end of June, with initial operations expected to begin in July. While the BWXT-led team finalizes its performance strategy with DOE, we remain optimistic about our role in supporting this decade-long program through revenue contributions, though revenue contributions are not expected to be defined for several more months. We continue to actively pursue subcontracting opportunities under the DOE's Integrated Tank Waste Tank disposition contract at Hanford, while DOE is still finalizing its broader tank waste remediation strategy, we remain well aligned with the technical requirements of this program and have begun to participate meaningfully through increased waste receipts at our Permafix Northwest facility beginning in March to support the tank closure mission. In addition, we're pursuing several other large-scale DOE and DOD contract opportunities expected to be awarded in 2025, including at sites such as Y-12, here in Oak Ridge, Lawrence Livermore National Labs, and Lawrence Berkeley National Lab in California. We're also awaiting the outcome of our USSX Enterprise decommissioning bid, which remains a highly competitive opportunity with an award expected around mid-year. As part of our long-term strategy to diversify revenue, we are expanding our presence internationally through strategic partnerships. This includes the JRC Italy project, where we just submitted our final permanent documentation in Q4 of last year, and remain on track to initiate treatment operations in late 26. Our broader international expansion efforts include Europe and Latin America and continue to focus on engaging established generators of radioactive and hazardous waste that can benefit from our treatment capabilities. Internally, we've continued to apply disciplined cost management while we're maintaining flexibility to support incoming contract activities. Our nuclear services team is aligned has aligned our indirect expenses with near-term backlog visibility, and the operational readiness steps we took during the quarter are already contributing to an improved throughput at our key facilities. Looking ahead, we anticipate stronger performance in the second half of 2025. Our outlook is supported by five key drivers, including our growing waste treatment backlog, improved visibility on federal procurement activities, the ramp-up of the DF Law program at Hanford, continued PFAS technology advancement and commercial traction, and execution of large-scale domestic and international opportunities, including the DOE and DOD awards and the European partnerships. With that, I'll turn the call over to Ben Naccarato to walk through our financial results in more detail. Ben.

Thank you, Mark. Starting with revenue, our total revenue from continuing operations for the first quarter was $13.9 million. compared to last year's quarter of 13.6 million, or a slight increase between 2,000 or 2.2%. Revenue in the treatment segment increased by 477,000, or 5.5%, compared to prior year, as we saw an increase in our waste volumes received and processed, offset by lower pricing, which is reflective of waste mix. In the service segment, revenue was down 175,000 as new projects in 25 mostly offset completed projects from Q1 of last year, 24. Gross profit for the quarter was 657,000 compared to gross loss last year of 620,000 in Q1 of 24. Treatment segments gross profit increased by 302,000 compared to prior year based on higher revenue and lower variable costs related to waste mix and improved productivity. This increase was partially offset by higher fixed costs, which were predominantly from higher labor expenses as we ramp up for anticipated increases in production. In the service segment, gross profit increased by $975,000, which was primarily impacted by lower variable costs due to the improved profitability of the project performed in 25 as compared to last year. Our SG&A costs for the quarter were $4 million, which is higher than prior year by $471,000. This was the result of higher labor costs, primarily at the executive level, higher legal expenses, and higher marketing expenses related to our user conference and other labor related expenses. Our net loss for the quarter was $3.6 million, consistent with last year's loss of $3.6 million. Our total basic and diluted loss per share for the quarter was 19 cents compared to a loss per share of 26 cents in the prior year. Our EBITDA from continuing operations for the quarter, as we defined in this morning's press release, was a negative 3.3 million compared to a negative 4 million last year. Turning to our balance sheet, our cash on the balance sheet was 25.7 million compared to 29 million at year end. Our net accounts receivable were lower by $2.3 million, related to improved collection of outstanding receivables. Our current liabilities were down approximately $1.2 million, reflecting decreased costs associated with production, timing of vendor payments, and changes in our deferred revenue. Our waste backlog at the end of March was $10.2 million, up from $7.9 million at year end, and consistent with $10.6 million a year ago. Our total debt for the quarter at quarter end was $2.3 million, most of which goes to PNC Bank. Finally, with our cash flow, I'll summarize. Cash was used by continuing operating activities of $2 million. Cash used by discontinued operations, $56,000. Cash used for investing in continuing operations was $571,000. of which 523 was related to capital and the remainder to permits and other investments. Our cash used for investing in disc ops was $15,000. Our cash used in financing was $396,000, consisting primarily of payments to our term and capital loans of $157,000, payments for finance leases of $71,000, and payments of $194,000 relating to the public offering we completed in December of 24. This is offset by some proceeds from option exercises of 41,000. With that, I'll turn the call over to the operator for questions.

Thank you very much. At this time, we'll be conducting our question and answer session. If you would like to ask a question, please press star 1 on your phone keypad now. A confirmation tone will indicate that your line is in the queue. You may press star 2 if you would like to remove your question from the queue. For anyone using speaker equipment, it may be necessary to pick up your handset before you press the keys. Please wait a moment whilst we poll for questions. Thank you. Your first question is coming from Howard Browse of Wellington Shields. Howard, your line is live.

Thank you. Mark, Ben, first question. Talk about the 2026 federal budget and how this can impact you in 2025 and 2026.

Yeah, Howard, there's been a lot of press releases and announcements the last few days in regards to the White House proposed budget. Obviously, it has to get through both markups, but that We kind of look at that as kind of the baseline, and it was quite favorable. We get a significant portion, probably 60-plus percent of our revenue comes somewhere through DOE, and the EM program is a big portion of that segment. And the EM budget was proposed with only about a $300 million reduction out of $8.5 billion. So we're very encouraged by that. I'm not sure where that $300 million is going to come out of yet. We haven't seen that detail. Most of it's going to be some of the smaller sites. There's 14 of them, and that will come out here in the next few weeks. But most importantly on that, it specifically said, the budget, that there would be no reduction in Hanford for 26, and that there would be a significant increase, a dramatic increase, on the NNSA side of the house. That's the weapons production side of the house, where we also get quite a bit of waste and opportunities for remediation projects that they clear out as they're upgrading their infrastructure and building new buildings. And so there's opportunities there that will be accelerated, mostly on the services side, but also on waste. So we're very encouraged by the budget overall. We were holding our breath. Like everybody else, we didn't know really what was going to happen. We've talked to several people in D.C., on the Hill and DOE headquarters, and the common theme was that this administration has a lot of respect for reindustrialization activities that the EM program supports. The sooner they clean up, the quicker they can reindustrialize some of the smaller communities. But along with that, the weapons program upgrades as well. So we're all encouraged by it. We don't see any impact from that or any impact at this point to some of the bids that are in our pipeline for the next 18 months.

So in reference to Hanford, are you receiving any waste from Hanford currently?

Yeah, we are, Howard. As we mentioned, our backlog looks much better, about $10 million right now, which is a good place to be. We're also seeing a significant increase in overall waste sales. But to answer your question, we're seeing a significant increase in Hanford at this point, of about $2 million to $3 million a month in waste coming from Hanford, which is dramatically more than we've seen in the past, at least for the last 10 years. And that's coming from the tank closure mission, as well as the other plateau, what they call plateau remediation contract, which is the non-tank work that's going on out there as well. So at least 50%, maybe closer to 100% increases in waste receipts at our Permafix Northwest facility directly from Hanford.

Mark, are you comfortable in discussing what kind of margins you're getting from Hanford?

Not at this point, Howard. I will say that they're pretty traditional margins, and we're focusing very much on keeping our costs down Our new COO, who started in January, has spent a lot of time out there working with our team and our other executive that's local out there and our general manager to make sure that we've got the staff that we need to support this bigger backlog along with DF Law starting soon. As I mentioned earlier, I'm not sure how clear it was, but what it comes down to is we had to hire a lot of people to support this increased backlog in production. and it took several months to get people hired, trained, and actually productive in this business. It just takes a while to get people ready. So we spent a lot on that last month, excuse me, March and part of February. They're rolling now, beginning of mid-April, and getting very close to our overall production goals to make sure we're keeping up, and that's going to have a big impact on the rest of the year with these guys rolling. The waste we're receiving from Hanford is very notable. However, these are sustainable waste streams, so it's not one-offs. We expect these wastes to continue to be treated for several years, and we're really developing more of a strategic partnership with the new tank waste contractor to provide more innovation than we have in the past. and ways that they can reduce their costs while we're maintaining our productivity and our indirect costs.

Is it a fair comment that the contract that exists today is a 10-year contract, but that the transformation of Hanford is going to start in August 1, 2025 for you, but it continues to 2062? when everything should be finished by that time. Can you comment about the additional X number of years? It's basically a 35-year contract, is it not?

Yeah, the contract with H2C for the tank closure is 15 years. The other one's about 10. They're already several years into it. So those will come back around eventually. But the overall baseline for the closure of Hanford, it continues to go up. I think the last estimate that was published is you know, $400 to $600 billion for the next 50 years or so. So it continues to get more and more expensive. It's going to take a lot more funding, higher funding levels than they're getting now to reach those points, to reach those goals. And so it's somewhat uncertain. They are making progress on the grouting. There's some press releases the last few days on that. And they're positioning for deploying their strategy of how they're going to do routing on-site, which, as everyone knows, we're a big part of that and will hopefully play a major role in that once it's defined. It still looks like it's going to be several years out. I'm not sure exactly the timeline. DOE really hasn't shared that publicly, but they have to get through a couple of regulatory documents and some hurdles, and they'll start putting the baseline together for their commitments on the – the grouting program, which will cover the 22 tanks that they have to have grouted in the next 15 years.

That's all I have. Mark, congratulations on moving forward.

Thank you. Thank you, Howard. Appreciate your support.

Thank you very much. And our next question is coming from Aaron Spichella of Craig Hallam. Aaron, your line is live.

Yeah, good morning, Mark, Ben, and Lou. Thanks for taking the questions. Maybe just on the grouting, Mark, you touched on most of what I wanted to cover. But, yeah, could you just give an update on kind of the recent news there, what kind of the near-term priorities are, and just maybe size how you potentially see that opportunity for you in the coming years?

Yeah, you know, it's still unfolding, and there's not a lot of communication from DOE on this. What I can say is that DOE has – my understanding is that DOE has a commitment – to inform the state through their tri-party agreement of what their strategy is going to be by December of 25. And that's largely contingent on whether they want to, informing the state as to whether they want to build a facility on-site, use local, regional grounding capabilities like we offer, or ship it out of state like they did on the TBI initiative. or a combination of all that. And we're still confident that they'll have a risk-based best value approach to selecting that approach. But they've got to make that decision here in the next six to nine months or so. And my speculation, and it's just complete speculation, they'll likely have a couple of alternatives to make sure there's some redundancy and backup for the program. But we do expect, no matter what, because of our capability and having a $100 million facility right at the gate of Hanford that can do all this routing, that will play a major role. And to kind of give you a sense of what it really means, it's about, right now, for them to close these 15 tanks, excuse me, 22 tanks in 15 years, they need to process about 3 million gallons of waste a year. So... It's already going to be getting behind if they don't get rolling soon. 2040 is their commitment with the tri-party agreement, and they're making progress, I understand, evaluating alternatives and those types of things. It is moving. I still have a lot of data at this point, Aaron, in regards to what their final decisions are and which direction they're going at this point, but we still remain very optimistic that we play a key role in it.

Understood. I appreciate the color there. And then You know, second on PFAS, you know, great to see the commercial shipments from the government starting. You kind of talked about lower operating costs and higher margins. Can you just talk about how you see contribution from that, you know, second gen unit as we move into year end and into next year, just kind of revenue, you know, margin assumptions, and then, you know, just a little bit on your kind of rollout plans. Are you... Is there enough, you know, backlog, feedstock in the market? Just, you know, unpack that a little bit for us, please.

Sure. We're still, you know, Gen 1 is we're constantly doing demonstrations and testing it and reengineering some of the components to it to optimize them. You know, it's a prototype, really. What is generating revenue? We are planning right now. It looks pretty good that we'll We'll do about $300,000 this quarter in revenue and approach 50,000 gallons of treatment this quarter based on our backlog and some of the agreements we're signing. When the new system comes on, we expect that number to be pretty close to $1 million a month initially, again, with some tuning, and with Gen 1 also working. So we'll have the new unit and the existing unit. It's going to start off pretty slow. Our goal has long been to design the system to support $5 million a quarter, $20 million a year. But we're seeing really significant interest in our technology itself. Lou, our founder, is working very hard on partnerships with large companies that generate extremely high volumes and want consideration for field deployment, in other words, a smaller unit. We're working with large commercial industry partners that have a sustainable generation of PFAS, and they're still not finding, we're still not finding, or them, a lot of destruction outlets outside of incineration. And the thing I'm probably most excited about in regards to PFAS is the engineering we're doing we've got our destruction costs down around or below most of the incinerators. So we're very cost competitive, if not the cheapest, and the destruction levels are exceeding expectations and meeting expectations of all of our clients. And it's just a matter of getting more volume through the system, getting these partnerships signed so that we're getting bigger backlogs. and getting the new system developed. We're doing lots of tours with our clients. They want to see how it works and how it operates. And overall, there's extreme optimism on the whole front. We've hired some other key people, a PhD chemist and a number of other folks, to bolster our capability and keep things moving. I was very encouraged by the Zeldin press release. If you haven't seen that yet, it's very encouraging to see that EPA is putting an emphasis on it. I do still believe the states are going to drive most of this, but at least the Trump administration has recognized the importance of it. And I think once we get a little bit more data on our performance of our system, we'll be able to get the EPA and some of the DOD folks to adopt this technology as one that is preferable for total destruction.

Great. Thanks for the color on that. And then, Just maybe on the services side of the house, you kind of talked about a temporary suspension of mandates as the administration kind of changed over. Can you give an update of kind of where we are today with kind of that base business? It sounds like West Valley. We'll get some more clarity here in the coming months. Um, but you know, are you still expecting progress on those RFPs, you know, with, with kind of the current government situation? Um, just maybe talk about that a bit, please.

Yeah. You know, we have been through the whole industry that we're in on the services side on the DOE front has been in a, uh, a trough in regards to, uh, task order or project types of projects. You know, the big M and O companies that run these big sites are self-performing more, uh, and, um, There's been less things to bid on. But that has come full circle. Some of the larger small business requirements are driving more outsourcing. So we're starting to see an increase in projects that are $20 million to $40 million over a couple years in size, which is our sweet spot. So we're bidding on a couple of those, writing that are due out here in the next couple of weeks. We've got a couple we're working on as we speak. Also with the Corps of Engineers, kind of the same thing. So we're starting to see a lot more activity. We went 18 months with very few projects over $10 million in value, and now we're seeing a good pipeline. So we see that continuing. As far as West Valley is concerned, we don't know what their final budget is going to be. Obviously, it has to go through some markups, and it could move in a number of different directions. We expect it to be around $100 million for the year, for next year. And we have a very specific scope that we're working with the client on, with BWXT on, and it will evolve through Q3 and Q4 and to be implemented in Q1. So we do have a path forward. It's been more clear. We know what people we have to put involved in. We know what people we have to find to support it and what innovations we're bringing to the table. It's all starting to come much more clear. We're just not able to put a revenue goal on it yet or really know what it means to us financially. But it's looking very good. The other projects are coming up. You know, there's a number of other bids coming out that we're doing teaming dances with other companies that would also be awarded in the next 12 months along with those.

That's helpful. Thanks. And then maybe just last on CapEx, I think, Ben, you talked about, I think, $500,000 in the quarter. Just, you know, maybe outline some of the priorities there for the next handful of quarters, areas of the business, and just how you're thinking about CapEx for the rest of the year.

Yeah, Aaron, we're looking like probably going to be in the $5 million to $6 million range, and that's pretty much from, you know, our usual two to two and a half of sustenance, and then a reactor, second Gen 2 reactor that would be in the three-plus range. So that's kind of what we're looking at for this year. I would think from a cash flow standpoint, it'll trend probably upward in the latter part of Q2 and Q3, and then sort of back down to the sort of average of 500K a quarter after that.

Perfect. Thanks for taking the questions. I'll turn it over. Thanks, Aaron.

Thank you very much. Your next question is coming from Aaron Warwick of Breakout Investors. Aaron your line is live.

Hey, good morning, guys. I wanted to ask about some commentary that you had in the press release about the second half of the year being strong, but it sounds to me like the second quarter could be off to a good start as well if you're getting $2 million to $3 million a month from Hanford. Could you comment about the start to the second quarter?

Yeah, in the second quarter, we're still working through some production projects It gets better every day. As I mentioned, our COO is very focused on that. We've got the team in place now. The waste is coming in. It's in backlog. Now we just have to get efficient and meet the production goals safely without any hiccups or any contamination issues and this type of thing. But we're doing that, and it's getting better on a daily basis. So it's kind of ramping up. It's pretty close to where we need it to be, notwithstanding any kind of surprises. So Q2 is looking much better. We don't like to speculate specifically on it, but I can say it's going to be much better than Q1. And that with those types of receipts, along with the fact that, I don't know if I mentioned this, that our sales backlog or sales receipts we have for Q2 is significantly higher than we've seen in quite a while. So in other words, we have the backlog, but sales just halfway through the quarter are are already above our quarterly goals for the quarter. So waste receipts are going very well, and all indications are if everything stays in the same path it's on right now for production, we should be very close to being profitable in Q2. And like I said before, it is sustainable. These are waste streams that have been generated for years that will continue to be generated, and as long as we're mean of production goals, and the client continues to generate them, we should be in good shape, you know, through the year with that sustainable backlog.

Excellent. And so is this work coming from Hanford? Is this under the ITDC, like you're being subcontracted, or what, I guess, how are you, what's that fall under?

Yeah, exactly. It's mostly subcontracting. The new waste streams are from H2C, the ITDC contract. We typically do about a million a month, sometimes a little less, sometimes a little more, from just general Hanford waste receipts. As I mentioned, this is a significant increase. Most of that increase is from the ITDC and the new contractors in place.

And you seem to indicate that the Trump administration, I know there was some concern I heard expressed among investors about whether there would be cuts to the EPA and not a priority of PFAS and not a priority with just in general cleaning up. But it sounds to me like what you're saying is that there is a priority in large part due to the fact that they want to clean up these sites to be able to re-industrialize the nation and other priorities they have. So is that accurate?

It is. It's really hard to say what the EPA is really going to do in regards to leadership. What that press release stated was they're going to have an agency lead on PFAS. I do I'm speculating, I believe they'll likely push that down through the states or provide guidance to the states to have some type of commonality for what states are doing. Some states are way out in front, particularly Michigan and New Jersey, but a lot of other states are coming up quickly. Tennessee is in the process of promulgating, and New Mexico did this a couple weeks ago. And as those guys, each of the states, start adopting policies, they'll start implementing them and start enforcing them. So We're encouraged by that. It would be nice if EPA promulgated some cleanup regs and cleanup standards. And I wouldn't anticipate that to happen in the next several quarters at least, but it could. And that will really drive an enforcement arm and really drive the market a lot. But outside of that, we're still getting, as I mentioned in the script, we got our first federal government shipment. and that's a big deal for us in that several of the sites are starting to feel that pressure to get their PFAS off their site. But the other thing that's a big trigger in PFAS is reporting. The more we see folks with PFAS being forced or required to report the amount of PFAS they have, in other words, sample and analyze for it, the more we see the market really turning up. And that's what's really increasing is the drive to understand how much PFAS you got at your facility and then to do something about it. So we're starting to see that increase across the board. We're starting to see more companies change out their existing fire suppression systems with newer systems that does not have PFAS firefighting foam, and that's also leading to larger inventories of PFAS from the change-outs. So overall, the market's going well, and again, as I mentioned, we're very encouraged by how we're fitting into the competitive race here with the other technologies based on the simplicity of ours and how it can be adapted to different applications.

Good, good. Back to Hanford, I guess, what you said in the press release, and I may have missed any other comments on it, but you mentioned that the August 1st is still the goal there and the deadline. But, I mean, what is it looking like from your perspective? I mean, is that something that looks like it's actually going to happen? Is it something that even if it's slightly delayed, would be a minor, like talking in terms of a month or two versus another year? What's kind of your qualitative commentary there?

Yeah, it's really hard. We're not privy to specific data, but what we do know is that the Operational Readiness Review team has been there for quite some time. They continue to work off findings, and there's a lot of integration of resources at Hanford supporting that progress. But the thing that is very encouraging to us is that support has been recognized by the new Secretary of Energy, Chris Wright. He had some hearings yesterday with the Senate and specifically addressed his optimism for the DF Law Facility to get started and for him to be at the ribbon cutting. And that kind of demonstrates to us that The visibility is there, and DOE is seeing this as one of their higher priorities, is to get that facility working and having it be successful. So DOE hasn't changed that date, and there's lots of opportunities. They have lots of public meetings, and they continue to reiterate that they're on track for August 1. So it might delay some, Aaron. I don't know. We don't know anything that happened in the last couple months, but, you know, they're three months away from that, and they haven't had a significant issue that has been publicized. I know they're struggling with a couple little things related to off-gas and some other things, but they're working through it, and the optimism within the department, spending time in D.C. or at the field office, is very high. So we're optimistic that it will be very close to August 1. Again, just to clarify, if it starts August 1, we won't see any waste for probably six or eight weeks, maybe six weeks. So by the time they get a package and characterize everything, we should see some receipts in Q4, early Q4.

And, you know, I think there's been part of the reason I ask is there's been some headlines about some cuts at Hanford and so forth, just like there has been across the board, kind of from Doge and other priorities of the new administration. But when you read beyond the headlines, it seems to be like. you know these are the type of employees that probably have little to do with the actual df law facility some of them are administrative or you know dealing with claims that people make for uh harm that's been done to them from working at hanford so it it sounds like these cuts aren't really impacting the the progress there in df laws that you're i would i would agree with that aaron the uh

I don't have any numbers in regards to the federal staff reductions at the Hanford field office, but I think it's pretty typical from most of the field offices as far as percentages. And I think you nailed it. The Hanford office has, I believe, six major contracts that they manage, and I don't see this impacting Vectel, who's getting everything running, along with H2C and Atkins and a number of other companies, Amentum. And they're all very focused on getting this facility operating. And I haven't heard any reductions from any of those organizations. They're not public, at least.

Good. Last one for me, then, about West Valley. What type of impact are you expecting in 2025 and when?

You know, I can't give you a number at this point, Aaron. I hope we can do a press release where I can address specific numbers in the next earnings call. I just don't know. We know what our scope is, as I mentioned. What we don't know, Aaron, is based on the funding profile as to whether what we're providing is funded in 26 or is it pushed out a little bit. I would expect it to be in 26, but there's still an uncertainty as to how it all fits together within the funding profile. There's two or three major projects that are funded for that facility and that are performance-based. And I don't know if DOE has even come out with their understanding of how it's going to be funded across each one of those projects. So just not able to address that at this point.

But it sounds like there won't be much of any contribution in 2025 then. So that would be more of a 2026 opportunity.

We're anticipating, yes. It's not material overall. More planning and documents, and then 2026 is where it kicks off.

Okay. Hey, thank you guys. I appreciate it.

Thanks, Aaron.

Thank you very much. And your next question is coming from Stephen Fine of So Fine LLC. Your line is live.

Good day, guys. Hi. You don't sound happy to hear from me, Mark. But anyway. I'm always happy to hear from you, Steve. Oh, I'm kidding. I'm kidding. Number one, I want to applaud you on your presentation. I think, you know, your approach, your positiveness is just fabulous. And so that's number one. All right. My first question is on the financial. So this goes to finance. What was the $340,000? an interest about?

You know, we raised the money in December, so we've got a pretty big backlog of cash, and it's in an investment account.

Okay, so I'm reading it wrong, so that was a positive cash flow thing.

Yeah, that's right.

Okay, all right, good. Okay, all right. All right, number one, when... You mentioned, Mark, that somehow the DEAF law program has to get up to 3 million gallons. Well, my understanding is that you've got about a 35%, 40% efficiency rate there, which means that if they get up to 3 million gallons, there's going to be 2 million gallons of waste. So how are you going to handle it?

Yeah, I think there's some confusion there, Stephen. There's two different programs, as you know, DF law and grouting. And between those two, DOE, in their holistic agreement with the state and the federal regulators, agreed that that would address 80% of the tanks, the other 20% being high level. So DF law is designed to operate at a million gallons a year, for vitrification. And the grouting program to meet the 2040 goal is estimated to be about 3 million gallons a year out of the tanks for grouting. So it's not the DF law components, it's the grouting components, 3 million gallons. So it's unlikely that the DF law would be at a million gallons a year production rate for several quarters, at least, to get perfection in their system and everything else. But the system that they've designed, Stephen, for the extraction and pretreatment of the waste for grouting at the West Tank Farms versus the East Tank Farms. The East Tank Farms' idea for all the West is for grouting. That system is designed... to do 2.5 to 3 million gallons a year extraction from the tanks. So we would have to ramp up. We've made presentations to DOE with our design, very specifically. We could do 3 million gallons a year. We'll have to get a permit mod, which is not a heavy lift. Right now, I think it's 400,000 gallons. We'd have to increase that to 3 million gallons. We have existing facilities. and the conceptual design and equipment to do that. So if that was to be turned on, we're very comfortable at that rate and would make the capital investments very quickly to make sure we're there. Thank you.

You noted that there are other competitors that are getting or that are in the game. Can you comment on that?

Yeah, you know, like any government agency, the department's goal is to make sure they have redundant backups and competitiveness when they're talking about this level of revenue, particularly. From a safety perspective, they don't want to shut down because their one plant shuts down, which is why they've been very focused on this TBI to include our two competitors out of state and they represent capable facilities. They are out of state, so there's some additional risk to be considered in transportation, but they can do this work. They have the same ramp-up requirements that we would have. We'd have to modify their permits most likely and build facilities and those kinds of things. So we're all kind of there. So I see them as being outlets. However, at the end of the day, I do expect... Permafix Northwest to get a significant portion, at least half, of that waste because we're local. And we've committed to a union agreement for unionizing our facility when that starts and with the local building trades. And we're part of the community in keeping the jobs local. But also, it reduces the transportation risk. There's a value there. We'll be transporting by rail, as you know, because we'll treat it locally and ship it down to those sites that I mentioned for disposal. So it's a different model. But I do expect, you know, we're going to have to face some competition. And there's a probability that a portion of that grouting would not go to us, just to be clear.

realistic about it but we're still hopeful to get all of it we're still pushing to get all of it but it's something to be considered well i read an article which i commented on to you guys that uh you know as they uh they they uh the government came out with a podcast which talks about you know how they're shipping this low radiation thing to some other people well number one that you know, implicitly acknowledges what you guys have been saying all along, that it's low radiation. All right, number two, they talk the story about transporting this across the country, and it's not going to be a danger because it's low radiation, but they're missing the whole point because we're talking about mixed low-rad hazardous waste. So the danger in shipping is not radiation, it's the hazardous waste. And so when that gets publicized, that in my mind will be the major thing, you know, to help you because, you know, as following this and as a scientist, who the hell knows what could happen in those containers with the hazardous waste. I mean, a trunk of a car in the summer is 300 degrees. So who knows? So it's... You know, that to me all it does is it affirms your reality. And, yes, because if this thing ever got big, you probably need backup. The other thought that comes in here is they're going to build a grout plant out there. And I would hope that, you know, you guys somehow get connected with someone bigger and you build the grout plant or, you know, get that and then keep the thing going because there's no way even with building a grout plant, And, you know, not using you does not make sense, particularly when you talk about the liquefying of the tank waste, which then moves it up to, what, 100, 200 million. Okay. That's my comments there. I think you're in great shape. I commend you. You know, it's great to hear. All right. What's... The next question is, what's your new COO doing?

He's very focused. He's responsible for overseeing all the components of the company that generate revenue. Each of the treatment plants as well as the projects. He's not as involved in sales and some of the engineering components necessarily, but very focused on on the production on both sides, both segments. He's got 27 years operating plants, a lot of it with our competitors. Very, very astute on operational efficiency. And so right now, his number one priority are production at the plants. And he's very, very focused. He's a very good leader, a chemical engineer. highly respected, and doing a great job. His impact to the company in four months has been overwhelming. And if you talk to anybody in our company, I don't think anyone would disagree that it's been a huge impact to us overall. And he brings an industry network that's really important as well and has had a great impact on productivity already. Wonderful.

Are you guys implementing anything with AI, or is AI going to impact you in any way? No, I'm saying positively.

Yeah, we are beginning some initiatives, very limited, mostly to do with research and sales and proposal development types of things. We do see ourselves expanding to waste treatment protocols and those types of things in the future, but we're starting pretty slow, but we do have initiatives ongoing as we speak to do that.

I think it's fabulous that the – I mean, I've been following you guys since 16, and this is the first time that they've had a DOE head who is actually a scientist, an engineer, as knows the industry, is very positive in nuclear. And if you're pushing nuclear, which has to be pushed because we're behind the rest of the world, and secondly, AI requires nuclear, then nuclear waste has to follow. So that's great. All right, finally, my question is on PFAS. Ironically, I read an article today that the Gates Foundation is just, they're basically shutting down by 2045 PFAS. and they're going to, you know, just go direct and feed. And one thing that came out in the article was agricultural, that they can't plant on lands. And my understanding is that, you know, I mean, I understand this is down the road, but, you know, as I'm reading about peapots, I mean, basically the fertilizer that's on these plants that came from water treatment has peapots in it, and a lot of farms have shut down. So, you know, all I'm saying here is the you know, this PFAS, which everyone has to understand, it's just a separate industry. It's like, in theory, you could become another company that has nothing to do with nuclear. And that, that to me is what's so exciting. And then, you know, the potential of it. So anyway, I've said enough, um, you know, uh, I, you know, I've watched you guys emerge. I understand it as, as someone that's scientific and, uh, You know, keep on going. It's all going to work out for the positive. And, you know, we've got to keep the faith. That's all. Thank you. All right.

Thanks, Steve.

Thank you very much. Well, that appears to be the end of our question and answer session. I will now hand back over to Mark for any closing comments.

Okay. Thank you. As we move further into 2025, we remain focused on executing against a clear set of strategic priorities. expanding our backlog, advancing our PFAS and Hanford programs, and maintaining a disciplined operational and cost alignment across all the organization. The investments we've made in the first quarter, combined with the momentum we're seeing across our treatment operations, our federal pipeline, and our international channels, position us for a stronger second half. While we continue to navigate timing-related challenges around the federal procurement system, we're encouraged by the pace of the progress across our core initiatives and confident and our ability to drive long-term value for our shareholders. So thank you for your continued support, and we look forward to updating you as our progress continues in the coming quarters. Thank you.

Thank you very much. That appears to be the end of the conference call. We thank you for your participation. You may disconnect your phone lines at this time. Have a wonderful day.