PESI - Earnings call transcript Q1 2020 | Perma-Fix Environmental Services, Inc.

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Operator

Good day, ladies and gentlemen, and welcome to your Perma-Fix First Quarter 2020 Conference Call. [Operator Instructions]

At this time, it is my pleasure to turn the floor over to David Waldman, Investor Relations. Sir, the floor is yours.

David Waldman

Thank you, Christy. to Services' welcome Conference Quarter everyone, Call. morning, Perma-Fix First Environmental XXXX Good

with are of this and the President us On call Officer. Financial morning Ben Executive Lou Executive and Chief and CEO; Centofanti, Mark Vice Initiatives; President Strategic Naccarato, Vice Dr. President Duff,

company press morning release The containing financial XXXX website. quarter issued the is which company's a results, also this first posted on

at questions any please any have after XXX-XXXX. Communications additional contact about you or like the If would company, information the Crescendo (XXX) call

I'd statements are measures. as certain materially company circumstances results may actual any the press with cause this subject company forward-looking could The call and no on facts, are statements to the are detailed certain Private conference than risks, forward-looking U.S. meaning and Exchange also of everyone to company's contained differ statements that and statements. All in filings Securities of the These risks the Act as uncertainties Commission upon known to well disclose from performance like conference to be hereof and to fact remind and this revisions events XXXX statements within this release. statements commitment which non-GAAP other and Securities or that date after factors, any of statements. the makes unknown bear that a morning's financial within other or call forward-looking Litigation Reform uncertainties forward-looking include historical statement deemed of the such

of in release measurement GAAP will most measures of information that measures and discussion to reconciliation website. comparable the historical to on believes comparison is the such performance. A In measures. an include non-GAAP news available references its non-GAAP addition, today's our additional Perma-Fix directly consistent provides today's

to over go I'd Mark. Duff. call Please like to turn ahead, the Mark now

Mark Duff

All morning. David, right. and good Thanks,

period in our more last Services eightfold versus quarter reflecting segment, the same very We of the than performance first XXXX, increased which achieved a year. strong growth within

As achieved last versus than our and even a quarter revenue doubled first historically revenue a more double-digit XXXX, is quarter total same increase a fourth the in weak result, well period. of the the though period as sequential we year seasonally versus

for and a bidding segment robust opportunities with Our while significant remains sales Treatment to well. ongoing own hold with of we number Services the continue pipeline segment as the our

into a which a moment. plan despite significant beginning slowdown result, to EBITDA pandemic handle March we our this the quarter, felt to related and I'll COVID-XX impact As at we We end more achieved second revenue we have and believe COVID-XX in the the above the and due virus. a about just of the March in a talk on,

later, highlights But first, to to let in will financial and the me first results our quarter relative Ben of in from same XXXX, minute recap the some discuss detail. more take a financial the quarter

Overall, segment to increased XXX% $XX.X our million. revenue XXX% to increased revenue $XX.X million. Services

year. And Our million Treatment EBITDA segment period period per attributable of same $XX,XXX period loss We of compared lastly, or income flat a same net $XXX,XXX million a to share for million $X.XX the achieved stockholders share adjusted to we $X.X to compared for loss or for last million $X.X an generated compared first $X.X of the XXXX the of year. $X.XX quarter common same for last relatively year. of to was last the $X.X at

Perma-Fix. team adjustments and to management have necessary the make operations COVID-XX within the pandemic to precautions of the impact worked the tirelessly on ongoing staff implement Our and limit the

April our remain optimistic to to we and May. the ability beginning pandemic, get continue through impacts are about from the we in to the While see slowdown in

work-from-home many realize immediate being month to a policies. crews project projects beginning temporary on clients personnel at This of the but from April, our support late-March over or workforce several with activities time. continued the began segment decline in demobilization we reactivated to impact in in to application Services for projects. are of field same receipts Nuclear mid- along waste was resulted weeks This saw and layoffs maximum mobilization are Our as field continued has the through - next few of

X will importantly, realized company. to company confirm our very This ability the that supported within date has the fact waste More households within within or we're to replenish COVID-XX the Perma-Fix have to pleased limit to the for of impact the cases for not these to has treatment any quarter. our our a treatment employees operations as sufficient with months. third inventory able optimistic waste to past continue slowdown and resume shipments been address backlog strong our plants June backlog to in Perma-Fix remain that few We position

the While as well from was the Perma-Fix note defined, securing plants this is Bank eligible recall successful risk million the as to amount yet the staff avoid to layoffs COVID-XX and we Due as all virus vulnerability Protection the funds $X.X furloughs in potential Paycheck that through allowed important force, the employees. to it in employees realize be PPP. understand PNC COVID-XX and impact Perma-Fix a to future under Program, result a pandemic. in the These with impacts of for of one promissory to are the and of have by already our should a the associated the the and completely reduction projects, illness impacts

to focus in our sharpen realize as month. million continue this backlog, Nuclear expect we within revenue funded We Services with segment our continue $XX.X to which to nearly

months. upcoming next also to bids position in and Perma-Fix await for submitted totaling We to of million announcements over the $XX continue awarded procurements few be

to announce we the coming addition, contract DOE in closure facility expect Hanford months the as at tank the the for well. In winning team the

has manner. been highlighted this which of system, deployed new newest our in risks the application is just to in start-up to that the a as cost, the San and recent use radioactive our most present and reduce technology example clients identify safety yesterday, Meanwhile, waste to release Diego we in The of of opportunities schedule continue engineering the cost-effective Perma-Sort technology, innovative through press the week. we

system initial This the latest quality highest based of radiation advanced of coupled applied performance testing the soils with for will detection technology the software The - radioactive dredging expectations operations be segregation the technologies has to radioactive remediation. provide on possible applications segregation and dewater far latest technology following exceeded applications. to or the solar

Our growth strategy we our involved in segment Services as well. our as continue has not realize only progress strategic Treatment to segment

met was mid-March expectations the our the due virus. shipments which a Treatment few points, Most in For percentage revenue due quarter, our the the primarily to slowdown delayed of segment within to remain an shipments anticipated maintain XXXX, receipts commercial from summer sector. including increase into should the should of push QX. for the a waste in we And - we will solid through backlog

secure approach anticipate enhance Once quarter, by the normalcy, a new trajectory As which point the we provide will new to of we mid-quarter to through end backlog contracts assuming our the XXXX, second May. stability return a that of that the we set subside Services the for within will segment both similar been fortunate segment, XXXX COVID-XX support opportunities, the bring and further begins will Treatment we growth and continue for the pandemic to we've company.

And is Perma-Fix we're experience and on of organization a top though, environments. unusual importantly, the lot hazardous we'll employees, and in associated Most our safety with with of stay of situation committed a to the COVID-XX. safety-driven

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

Ben Naccarato

Thanks Mark.

increased revenue million, $XX.X operations million revenue driven our $XX.X from Services the compared where to prior with $XX.X the segment The XXXX, year million the quarter I'll quarter total start and continuing XXXX the an XXX.X%. was first revenue, increase of in to in million increase by by of of first XXX.X%. was of first the quarter in of an increase $X.X

of into and main Project drivers of the improved in revenue. were wins XXXX after this second or the XXXX continued quarter

decreased quarter our shipments Our in revenue by or Treatment X.X% delays revenue. due impacted in segment of to first XXXX, late the received $XXX,XXX waste which

$XX.X large variable the Our million which of increase from approximately sales in to Services sales of our as expenses increased up million, project cost a increased prior a cost of The majority $XX.X $X.X year of were result increase relates was activity. million. segment, this of

Our the costs facility resulted from that closed. of now segment, closure Service is about were sold offset fixed the up segment lower in fixed Treatment M&EC goods which cost lower the which in $XXX,XXX, sales the cost the also of

$X.X Our of for or or was $X.X of profit of revenue gross the quarter first gross quarter XX.X% million revenue. million year compared profit to XX.X% prior

profit the improved gross Our up the million the also and due to in Service $X.X revenue segment increase project. profitability of was the in

revenue approximately down Our mostly Treatment waste decreased also margin profit $XXX,XXX was mix. a to lower and gross due segment

payroll expenses. marketing were the year. were Our quarter and million, were last $X.X $X.X SG&A care with costs in million line costs Increased by lower offset which health for

to share net compared of compared $X.X of in the of Our taxes last for release, the per as the shareholders loss million income in prior attributable million share quarter per of year this to of net compared net morning's our for continuing had $X.XX the to a $XXX,XXX. last common operations was quarter loss EBITDA We million net We of year. press income operations a income to quarter, compared adjusted from year. And for $X.XX $XX,XXX defined loss was from net last year's had to $X.X $X.X $XXX,XXX. continuing

up quarter sheet, compared which of December few was from When the Turning the balance balance cash to XXXX a balance at million, at our year-end. the $XXX,XXX XXst items. was sheet to end $X.X

cumulatively receivable down approximately reflecting $XXX,XXX, unbilled Our accounts collections. were receivable and improved

other Our expenses - to $XXX,XXX long in reclassification assets were approximately current. receivable certain term a increase our from to and prepaid current the assets current tax up due of

Service the timing up were the payments. Our million, current activity liabilities and reflecting in of segment increased approximately vendor $X.X

the was from million Our end the year. X.X down from backlog million, quarter slightly little the of of $X.X a was million of but year-end first which last waste at at $X.X approximately at quarter end the the up

debt million $XXX,XXX to to Our million Bank, discounts the debt PNC $X.X total $X.X owed with was million the private of shareholder to $X.X and lender excluding other loan issuance our quarter, our debt, end at leases. and finance owed

lease provided of $XXX,XXX; provided of payments $X.X payments our other of operations continuing the million; We our for operations term by cash revolver about in flow by $XXX,XXX; activity financing discontinued cash for to investing activities of loan used of of our represents cash for financing used of $XX,XXX cash to and disc and cash ops $XXX,XXX; $XXX,XXX; first used Talking investing $XXX,XXX; $XXX,XXX, $XX,XXX. payments the continuing quarter. cash of monthly loan net of which in payments shareholder of had to ops

with our we would that capital $XX X facility, revolver spending increased years facility additional our our Under XXXX. million like capacity from have Bank for extended million, and began to in May credit left capacity we report increased years. million. we the loan $XX Bank we I Finally, credit to million PNC with per This And from teaming for and is as relationship that X our happy XXXX, $X year. $X $X.X our million another PNC approximately term at with we're PNC extends continue to to through

the operator I call the that, turn for questions. With to will over

Operator

Brous Instructions] with first question Shields. [Operator Wellington from The Howard

Howard Brous

Gentlemen, like first you congratulate go and the on Mark, over to and happy through do, a hear off-line, of very you've also some I items that's what out, I'll in all, everyone kept if to Ben, terms to after safe like And I'd to is you. David, hopefully okay, would of both I quarter. personal. the Q of want arrange business that's just amenable that superb that to if

Mark Duff

Sure, Howard.

Howard Brous

there been dispute the a that. of contract? Appreciate resolution on Has Bechtel-Plateau-Aecom right. All a

Mark Duff

protest. they they want the more that, to and Amentum Howard. know were that X I don't moving DOE has, team to maybe had And weeks say yes, that subsequently there than but Bechtel made forward. I denied award ruled have the protest. ago, denying the lot is the the Yes, a GAO

Howard Brous

Aecom of contract, TBI, Plateau going were to that if comment a that understanding, fair though Is comment? just reference. on because say win even there's they fair a likelihood a bidder to they're Plateau historical that it the won high my contract Is the a not the

Mark Duff

week would to really that, could various but as Yes. heard I it's you DOE look and, one award. to to bidders, speculation. the really say the but But the August. I that, comment to the it - what's be closure, certainly, anywhere at happen has now, Right can't speculate because tank they announce on when they're Howard hard of three going a be the from going on it history to think reports are would certainly

think time. it happen any it announce anytime. can I They So could

Howard Brous

- which Is secondly, correct you're X.X of that both treatment. there And are No. at I about statement, Energy's Department That's vitrification, is items understand that contract? basically they late. it that's grout, understanding, talk One one. the to both budget. a correct in of the which least those is that X years reviewing statement? the a is, the And TBI Is budget, in that that. basically my surround are

Mark Duff

Howard. the tank about - the to to I'm tank is operate it the available. not Primarily, which defined sure the side becomes closure of vitrification which The alternative. the is well for for house of in work when contract the the tank the is in as TBI an part, of component waste the contract, treatment flaw the and of in scope addresses That provide Test the farms that, Bed is mentioned, well. as which a treatment, supplemental is scope waste Initiative, TBI you scope, of

Howard Brous

or to about the a a discussion on Moving assume. do expect award, Navajo had When you resolution we contract. an I

Mark Duff

the months been should feedback contract, it's no from based at on Yes. Howard, we projections an that. all have be It That ago. again, one, EPA, on That could EPA day. any awarded have

know seen a I assume of announcements has virus So during I up. that haven't big the don't - held lot made what I shutdowns.

that assume it'd awarded But probably would this waiting be some for I I it's approvals. sometime. So anticipate summer

Howard Brous

June, My it's the understanding, in virus. the was the EPA government going been should May, of but months a basically ago, couple back it have and contacting

Mark Duff

That's right. That's right.

Operator

Sam Instructions] with [Operator Asset SER Management. Rebotsky next move we'll to And

Sam Rebotsky

as and you could the backlog deferral you far what of for Congratulations, going - not did Yes. quarter forward is indicate and the sort is? And Mark clear, what Ben, the could safe. being current - as the it's we from backlog,

Mark Duff

And had solid they treatment of kind - this will backlog - the good beginning the actually, We we mentioned Services. I - Yes. through in $XX point now. Sam. to services But in year have did, waste that are that it side. at the it We year mobilize as the evolves side, mentioned, million we on that for on contracts

to rolling. speak California a that as will of get people traveling we have Seattle lot We and that

of well rolling is we're June Ben, else the pretty you So backlog anything there add pretty to start we'll this work of be to for in that rest million confident off that and $XX to want year. that?

Sam Rebotsky

the what quarter into The did current the the $XX deferral from quarter? defer from million, March we

Mark Duff

projects has tough all to document were Sam, a projects, to That's on hard asking, and you're of there's a that really were the of to new and from home. is that's line, development couple the that themselves. the of in for COVID us March April define reasons. along work actually. training been impact What were define. surprisingly Because And lot One and occur allowed what is a our really enough, some projects, projects scheduled and start-up lot and to of things through May, of

chew there pretty to year. we be are. up that this rolling that's So what some to safe mods now, change an necessary contract notices here as COVID. say we'll right don't know But yet or close of June impact get where in be what the we and that pretty $XX delays is that it's if impacts, will There but we million could or

Sam Rebotsky

have how were how layoffs? on and many And many employees do we

Mark Duff

We reductions demobilized XX and the the the that been were from the back. U.S., The have we have those - or in in XX - been been projects all U.S. in recalled furloughs March under about brought have all the XX that - had XXX March in company. or in Canada, in employees or another have just

Sam Rebotsky

repay to is do that? loan repay Or not status? Okay. it the of loan? we we from repay is the deduct Do it? do that it? Or the bank, And have What status as as or the far what we

Ben Naccarato

period, take asked you period we costs, Sam, those After to and and interest, that other have you some that company, number amount X%. cumulative costs And pay you've loan them, a loan or X-month to the and used then forgiveness. the approximately government. a utilities the and loan a that whole all no there's forgiveness with then over include the which of loan, the at of you the rent and by for on loan the expenses. if forgiveness lease it's you the rules employees X-month that's apply loan, pay could of becomes it with prepayment if X-year up, penalties as have Anything entire for totals left

in So We're the still that's period. of X-month that kind rules.

to brought - been that So we it have loan. back are pay using from employees who the our

Sam Rebotsky

judgment at range Okay. of might a sort do premature have what is this That point? forgive? a we we or - it of Or

Ben Naccarato

It's new well. premature people be because, projects as bring to ramping we're and on Mark more said, on list bringing people the of need again, back may up, a as there

Sam Rebotsky

second the far whether know we as high to the do revenue And profitable? enough will be as quarter, be

Mark Duff

for will, speculation we're of can't be anything, point, June are more things if some No if facilities. will June, that it at if bottom the the now our good what receipts get see back that and the this - the is at business quarter. we tell don't I backlog we then keep speculating of risk, they into May moving impact as And Sam. really point we this, We're this way right the the still but receipt. on pretty at DOE being sites third see June, is in line But have move into X will that

Florida the and working that they're moving, a little we're their facility But slowing for operating our June. a and hoping bit. projects is good inventory Our are through down fact

Sam Rebotsky

and profitable. that and best Mark good and profitable. to luck, be doing ability these make the all more Perma-Fix difficult under backlog Good - that sounds let's and a Ben, decent Well, Good everybody, it's we're right, you're safe circumstances, we as it stay luck. nice very have

Operator

move Levenson Research. Rock Big we'll next, with Steve And to

Stephen Levenson

us tell out Or back? And a to business it on seems because more it deferred, just much is the business. national the lost think that of how right you business? is moves that might little bit a something that you be the can to than when One Canada is items. was of here, come Being Two shutdown Canadian Canadian timing?

Mark Duff

still now, with We bit uncertainty associated U.S. the lost. And there's Canada a is have our haven't not Labs for National up little client it's just as - contract more just place. the It a remobilization. there. out perspective, a Right communication to Canadian the from We in worked compared details

answer in costs, that. any scope We reduction impacts might like regards So be. reduction to we what impacts can't of or anticipate something of don't yet the

We what from know we the slide expect to this everything at out to right. point

Stephen Levenson

that it's something though providing is Okay. like even the covers, anything Are U.S.? they that Or CARES? CARES outside

Mark Duff

CARES Ben. does go ahead, not - cover

Ben Naccarato

does their individuals, we've most and more up seen individuals, focused the CARES of programs people, there does. not the and the Yes. the Act have not that way CARES cover, on paying companies not

Stephen Levenson

Got it.

Okay.

The other operating only sell question you out about a that is something and you that device. Is product yourself? third something as new line parties? Or your see bring might is Perma-Sort as to

Mark Duff

interesting That's Steve. a very question,

RAD more for opportunity as We as that as in time, with that for it being operate that. been that. - see us because only run a see it project But better see but this ourselves, At it and exploring engineers doing more we we discriminator of us. alternative. we point as radiation to have the well and we considering we required we have our training it actual the of as are it, work And the see - asked are that an a operating future, technicians in

Stephen Levenson

commercial or Okay. is the And sensors intellectual the both? it are property in the more the off-the-shelf items? is sensors the in software? device in Or Or

Mark Duff

off the are sensors software. the It is in shelf. The definitely

Operator

Fisher to Long move Cast with next Avi Advisers. we'll [Operator Instructions] And

Avram Fisher

you to or that's - to the work change the you do able on for questions. on mobilize Curious demobilizations? the handled. how I - get who contracts? and orders have those as pay quick safe. keeping had you quarter Nice are In Or X everyone and demobilize, mobilizations just

in demobilize future, to have paid I'm curious you that. about for? that's later how If the

Mark Duff

this Yes. contract. typically, COVID, Thank On in on of order. not Avi. to ones But all you're a did likely contracts, change Sure, it California, negotiations. we depends It want some will Generally, the actually is contract be a I on something if particularly don't you. of our because demobilizing like demobilize. change. speculate

hadn't in mobilized. So we words, already other

But the we XX where notice for demobilized likely schedule example, limited sliding our little a project with be impact will So out costs. bit. additional Seattle There's we're on change those there people, just a those. associated

Avram Fisher

it. Got

share orders you'll customer. Likely of So from at it. change worst get case, some a

Mark Duff

Correct.

Avram Fisher

about PPE And - can then your any that I'm to getting safe? and you you having issues getting keep are bit. about talk Curious a curious people equipment if

Mark Duff

and good not of but all. stockpiles question, that It we corporate at see a what all of any have had in make initially, have It's use level of No, or had for to good We happening, about is above what we they centralized a out plants the need. really that a projects rigor Yes. all we've problems turns when sensitivity And were company. Avi, started inventory our sure level that of too. nervous most COVID. at what you this we

applications other can lot respirator and we which of scuba do types other of and words, a reusable be breathing cleaned. air supplied In are of lot of a types and applications,

use So NXXs. as like we don't many the

have And so and those, stockpiles use we we of some, we but PPE have the from any impact whatsoever shortages. had not do

Avram Fisher

there you've need you So utilization, adjustments a changes the keep more to spread are of the people once other expectations and And more or, people trailers rooms, get will out, site, stuff changing mobilize more that contract? that? margin on like making to you of on little a because make been have sort

Mark Duff

no. Avi, enough, Interesting

We haven't seen that yet.

what we're that happens contamination. dealing so with is Just radiological

Hanford So for of at most anyhow. facility, working Richland time dressed they're our they're or the guys example, the when out

of impact have the because little facilities, We COVID. very there's plants. in spacing treatment may some So in

temperature and a very detailed includes are well things. readings very They're we've in types facility when for of implemented the And like each of things out not distancing out walking and those and in you you're you're plants. when each social and - have We project. that when in plan it and rigorous going in safety

productivity, impacted our working not words, plant, you're at generally significantly when other is the plants. So at on our in or projects

Operator

further no questions are there appears it today. And

closing remarks. turn I'll to So any for over back management it

Mark Duff

participating thank Great. call. first conference in Thank I'd everyone for quarter our to you. like

and quarter development accelerated earlier, in mentioned first the business sales our by participating. our current I you reflects strong outlook the backlog, business on past the for again highly based for and our thank two year. the of XXXX strategic of activity our over this encouraged performance And success we're bidding years. the initiatives I As pipeline,

Operator

And conclude teleconference. We that does participation. your today's appreciate

lines and this great time day. at have your disconnect a may You

David Waldman	IR
Mark Duff	President & CEO
Ben Naccarato	EVP & CFO
Lou Centofanti	EVP, Strategic Initiatives
Howard Brous	Wellington Shields
Sam Rebotsky	SER Asset Management
Stephen Levenson	Big Rock Research
Avram Fisher	Long Cast Advisers

Perma-Fix Environmental Services (PESI) 13 May 202020 Q1 Earnings call transcript