Perma Fix Environmental Services Inc (PESI) Q4 2021 Earnings Call Transcript

Good morning, ladies and gentlemen, and welcome to the Perma-Fix Environmental Services Year-End Conference Call. It's now my pleasure to turn the floor over to your host, David Waldman, Investor Relations. Sir, the floor is yours.

Thank you, and good morning, everyone, and welcome to Perma-Fix Environmental Services fourth quarter and year-end 2021 conference call. On the call with us this morning are Mark Duff, President and CEO; Dr. Lou Centofanti, Executive Vice President of Strategic Initiatives; and Ben Naccarato, Chief Financial Officer. The company issued a press release this morning containing fourth quarter and 2021 financial results, which is also posted on the company's website. If you have any questions after the call or would like any additional information about the company, please contact Crescendo Communications at (212) 671-1020. I'd also like to remind everyone that certain statements contained within this conference call may be deemed forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and include certain non-GAAP financial measures. All statements on this conference call, other than a statement of historical fact, are forward-looking statements that are subject to known and unknown risks and 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 in 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. Perma-Fix 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 and 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. Obviously, we're disappointed with our financial performance in 2021 with revenues down about 30% over 2020. However, we were able to secure a positive earnings per share of $0.07. Despite these results, 2021 was a very productive year operationally. We believe we built a solid foundation for growth in 2022, and we're confident the momentum we developed prior to COVID, which resulted in strong growth in revenues in 2019 and '20, will be achieved again through the coming year. The weakness in revenue growth we experienced in 2021 continued into January of this year as a result of the latest COVID variants. However, despite these challenges, the Treatment Segment revenues increased 9% for the year and approximately 57% for the fourth quarter of 2021 compared to the same period last year. Based on this uptick in revenue, which has continued trending up in 2022, we remain highly encouraged by the outlook of our Treatment Segment, which has seen increased waste opportunities and evidence of pent-up demand through March here in Q1. Within the Services Segment, revenue was $39 million in 2021, reflecting the significant impact of COVID-19, which resulted in delayed procurement actions and contract awards. Nevertheless, we were awarded several strategic and high-profile projects that are currently performing very well overall. As a result, our project backlog increased to approximately $66 million, which bodes well for our performance in 2022. While some of the new projects were delayed in Q4, they have all been mobilized now to full operation towards the end of this quarter. We've also been selected on several new IDIQ or multi-award task order contracts that include large funding ceilings and open new markets for us with approved federal budgets. These contracts provide us the ability to bid on task orders among a select group of companies with limited competition and the scope of work that gives us a good sense of the potential opportunities coming up. We anticipate the government will begin awarding related tasks within these IDIQs in Q2 and Q3. Additionally, we've been actively bidding on a number of new MNO type nuclear services projects within DOE as part of larger teams that will likely be announced later this year. Some of these projects are quite considerable in size and, if selected by DOE, will represent a substantial increase in sustainable revenue aligned with our core competence for many years. Although the federal government has been much slower than the commercial sector to resume normal operations, it's important to note that these delays in new project starts have resulted in a substantial backlog of both services and waste treatment projects to be procured in '22. In addition, the recently approved 2022 federal budget spending bill allocates $900 million in incremental funding increases over last year within the Department of Energy's Office of Environmental Management. We believe this additional funding will support increased waste treatment and other projects through 2022. Based on past year's experience, we often see a significant portion of this incremental funding going towards waste treatment, as the government doesn't like to perform large hiring campaigns with these surges in budgets. In addition to the 2022 budget, we anticipate meaningful carryover from 2021 that was not utilized due to the pandemic and impact on the different sites. As a result of these factors, it's clear to us that there's a solid federal budget and a significant backlog of demand that we expect to capitalize on going forward. Therefore, there's a good reason to believe that 2022 will see a significant improvement over '21. As I mentioned earlier, we're already starting to see signs of this improvement. In addition to our base business, we're very excited about opportunities related to the Test Bed Initiative, also known as the low-level waste off-site disposal project, in support of the DOE hand-for-tank disposition mission. The second phase of the demonstration will include extraction shipment and transportation of 2,000 gallons of tank waste to our Perma-Fix Northwest facility in Richmond, Washington. DOE officials have stated the shipment of this waste to our facility should occur by late summer 2022. In public comments, the DOE's manager for the Hanford site recently stated that he would certainly like to execute the Test Bed Initiative as early as we feasibly can. He went on to state that funds are now available for both installation and removal of the needed equipment. In similar comments, the Nuclear Waste Management for the Washington State Department of Ecology, as the regulator there, has also prioritized TBI. They've stated that once an application is sent their way, if they have to pull resources from another program, they will in order to process that application. TBI has certainly become a priority at both the federal and state levels in Washington. In addition, the recently enacted federal spending bill includes an additional $7 million specifically allocated for the Test Bed Initiative in 2022. This underscores the visibility and support for our solutions and technology, both by the DOE and by Congress. We remain confident that the demonstration will underscore the effectiveness of grounding as a supplement to the DOE's current vitrification strategy, which is based on the new DF law facility at Hanford, while our technology also provides substantial cost savings, immediate capacity, and a dramatic reduction in carbon emissions, which is a core aspect of DOE's current mission. It's also important to note that in 2021, despite the challenges, we took a number of steps to prepare for the future by enhancing our capabilities and our personnel. I'm especially proud of the fact that we were able to maintain our workforce despite industry-wide labor shortages. As a result, we have the ability to ramp up quickly to support large procurements we are bidding on as well as support ongoing projects in the field. We also completed numerous facility upgrades and technology deployments to support our expanded revenue streams within our Treatment Segment. This technology deployment includes the addition of our new vacuum thermal desorption system, which is currently in a hot start-up phase and will begin to treat waste in early April, likely next week, with a solid backlog of waste in inventory and strong market potential, both with the federal government as well as the oil and gas industry. To wrap up, we've built a solid foundation, and we're finally starting to see a return to normalization following the pandemic. The federal government has begun announcing new projects that have been on hold for quite a while, and we expect to benefit from the improved budgets and carryover spending from last year. Given the steps we took in 2021, we're in a great position to take advantage of the pent-up demand. We continue to invest in our capabilities and facilities and have built highly scalable infrastructure internally, and we've maintained a solid balance sheet with a cash balance of more than $4 million as of December 31, 2021. Even though 2021 was a challenging year, we see improvement in our project backlog with increasing waste treatments through March and have much better visibility on the second and third quarters. As a result, we look forward to resuming the momentum we had before the pandemic and are very encouraged by the outlook for 2022. On that, I'll turn the call over to Ben, who will discuss the financial results in more detail.

Thank you, Mark. I'll start with revenue. Our total revenue from continuing operations in the fourth quarter was $17.1 million compared with last year's fourth quarter of $28.3 million, a decrease of $11.2 million or 39.6%. The decrease was entirely due to the drop in revenues in the Services Segment of $14.4 million, resulting from delays in the start-up of three large projects for reasons related to COVID-19, government funding delays, and customer scheduling decisions. Offsetting this drop was an increase in our revenue in our Treatment Segment of $3.2 million as we did see increases over the prior year, but we continue to feel the effects of delays in shipments compared to the pre-pandemic levels. For the year ended 2021, revenue was $72.2 million compared to $105.4 million in 2020. As with the fourth quarter, the Services Segment was the main driver for this decrease as revenue dropped by $36.1 million or 47.9%. The segment encountered delays in project awards in the early part of the year, as well as the completion of a large contract in the latter part of the year. Again, as with the quarter, the Treatment Segment revenue was up due to a modest increase in waste receipts, though the delays in returning to work by our government employees kept the waste receipts below the pre-pandemic levels we're used to. Turning to our gross profit, our gross profit for the quarter was $1.3 million compared to $3.2 million in 2020. The drop in gross profit of $1.9 million came from the Services Segment due to the low revenues, as discussed. The drop in gross profit did have a partial offset with an increase in gross profit from the Treatment Segment of $1.9 million, again related to improved revenue. From the year-end 2021, gross profit was $6.8 million compared to $15.9 million in 2020. This drop was attributable to both segments, with lower revenue accounting for most of the variations and lower margin work in the Services Segment, while the profitability in the Treatment Segment did improve over the prior year. Our SG&A costs for the quarter were $3.3 million compared to $2.8 million in the fourth quarter of last year, while SG&A in the full year was $12.8 million compared to $11.8 million in 2020. In the quarter, the increase resulted from higher marketing expenses related to trade shows, general travel, and consulting and legal fees related to the sale of our medical subsidiary. For the year, there were higher bid and proposal expenses related to new projects, as well as increases in general employee expenses, legal fees, and other general and administrative expenses. Our net loss attributable to common shareholders for the quarter was $2.5 million compared to last year's net loss of $10,000. For the year ended December 31, 2021, net income attributable to common shareholders was $835,000 compared to income of $2.9 million in the prior year. Our basic loss per share for the quarter was $0.19 compared to breakeven in the prior year. Our income per share for the year ended December 31, 2021, was $0.07 per share compared to income last year of $0.24. Adjusted EBITDA from continuing operations for the quarter, as defined in this morning's press release, was a loss of $1.7 million compared to income of $709,000. For the year, our adjusted EBITDA was a loss of $4.8 million compared to income of $5.4 million in 2020. A few balance sheet items. For the year, cash balance was $4.4 million compared to $7.9 million at the end of 2020. Our current accounts receivable and unbilled were collectively down $3.7 million, reflecting the drop in revenue primarily in the Services Segment. Our current liabilities were down $7 million, reflecting decreased operations in the Services Segment, timing of payments, and the forgiveness of our current portion of our PPP loan, which was forgiven in 2021. Our waste backlog was $7.1 million in the treatment facilities compared to $7.6 million at year-end 2020. Our long-term liabilities were down $2.7 million, primarily from the forgiveness of the long-term portion of the PPP loan. Total debt for the year was $1.1 million, excluding debt issuance costs, with most of the $1.1 million due to our primary lender, PNC Bank. Our working capital was $4.1 million compared to $3.7 million at the end of 2020. Finally, our cash from operations, cash used from operating activity was $6.3 million. Cash used by our discontinued operations was $525,000. Cash used by investing activities was $1.6 million, primarily capital spending. Cash provided by financing was $4.9 million, consisting of the equity raise of $5.8 million, less our monthly term payments to the term loan of $427,000 and other net financing payments of $402,000. With that, I'll turn the call back to the operator for questions.

First question is coming from Howard Brous with Wellington Shields.

In listening to your comments, Mark, basically, what you're telling us is with the budget in place and the bids out there, you expect a very good second quarter and onwards. Is that a fair comment to sum up your comments?

It is, Howard. March was a good month for us. We're seeing things get back to normal, as I said. A couple of things I didn't say was that the federal government employees themselves are making their way back to their offices throughout the country, particularly in D.C., which will likely increase efficiency in the procurement process, and also make them a little bit more accessible to discuss upcoming opportunities and solve some technical problems. The other part of it is if you look at our waste treatment bidding, we maintain many metrics on bidding, which is a direct reflection of sales and how our sales folks are performing. We added a couple of new salespeople over the year, and they're just now starting to really get some traction. We've seen our number of bids go up from basically waste treatment from about 15 in December of '21 to 28 in March, which is a pretty linear and gradual increase over those four months. That's a pretty good increase. Q1 is always our slowest month on waste receipts and sales. So I view that as very encouraging for where things are going on the treatment side. Some of that's attributable to our new technology, particularly the VTD technology, but a lot of other things are coming in as well. One last point, too, is that DOE has gone through several major procurements in the last year, particularly the Hanford Plateau and the Idaho cleanup project as well as the significant one here in Oak Ridge. All those have gone through a transition, which had some form of impact in Q1, meaning they weren't shipping waste because they were changing procedures and negotiating new contracts. Those are all over now, and we're starting to see a good backlog of task orders for waste treatment, particularly in Q2 and Q3. It does look promising at this point.

Let me address the main topic that everyone is thinking about, which is the TBI contract. The primary contract, lasting 15 years and worth $45 billion, was awarded to BWXT, but they lost it. My understanding, and please correct me if I’m mistaken, is that we will see a resolution sometime in October of this year. Is that accurate? Can you provide more details on that?

Yes. The DOE did pull back that award. They took several years to completely redo the procurement to include the operation of DF Law, which added a significant amount of scope to the procurement. The anticipated funding is $45 billion over 15 years. We did participate in that procurement, which will include not only the tank operations again but also a startup in operations of DF Law. So right now, to answer your question, they are anticipating an award in what is our Q4, and they seem to be on track for that. They had oral discussions last month or earlier this month, I should say, and they're on their way. Hopefully, they stick to that schedule. That will be important to us and all the other bidders as well. It's an exciting procurement, an exciting contract.

It's also my understanding that BWXT is rebidding on the contract, and there is one other bid of which is whomever your prime is. Is that correct? Is that my correct understanding?

Yes, I really can't talk about procurement or intelligence on the procurement because it's so sensitive at this point, Howard. Yes.

Okay. So let's talk about the TCR tank size, a CZM removal. They've done about 1 million gallons, and they put them in cleats. Is that correct? And is there an opportunity for Perma-Fix to treat that waste?

Well, we'd like to think so. DOE is very aware of our capability. I don't want to speak for DOE regarding their strategy, but my understanding is that they are going to continue to run the TSCA, which has been quite successful for DOE and will continue until they get a backlog so they can run that 1 million gallons or so through the new DF Law facility when it gets fired up, which is currently scheduled for December of '23. So another 18 months or so. We're hopeful that they'll look at that waste and say, let's keep that TSCA rolling and treat it with the TBI technology, the grounding technology we've discussed. But that has not been the position that DOE has addressed yet. We're hopeful they'll see the value in getting that waste off-site and demonstrating TBI at an operational level.

Last question on the TBI. For discussion purposes, you do the 2,000 gallons. It's successful. When do you have the opportunity to treat the 300,000, 400,000, or 500,000 gallons? Is this a 2023 event?

That's a challenging question because many factors could influence the transition from 2,000 gallons to operational status in Phase 3, which is currently estimated to involve between 300,000 and 500,000 gallons. We have some flexibility in our approach based on the feedback we're receiving from their regulatory documents right now. Therefore, it's difficult to provide a definitive timeline, but in a worst-case scenario, we anticipate that could happen in early 2023.

My last question. The nuclear facility joint venture with Westinghouse in England, can you give us a little bit more details as to when you'll be in operation? What kind of capacity and volumes? Margins?

Yes. We can't provide too much information because that is tied to a procurement we've been working on for quite some time. There's a contingent component to that. We're fully committed and currently in the planning stages. Because it's tied to a procurement, I really can't talk about that too much. We're anticipating irrespective of that procurement, just based on the market in Europe, that facility should be able to do between $10 million and $20 million a year in revenue, and it's totally speculative. But we're really deploying technology that we've used for about 20 years and is very, very successful and productive and efficient to support the markets in Europe and Asia. Those markets are very large with enormous quantities of waste and storage that currently have no place to go. This technology has about a 90% reduction in size or volume, allowing us to treat that waste, stabilize it, and put it back. We're going to hand it back to them with a much smaller footprint and much less environmental risk. We have a great relationship with Westinghouse, and we're working on the design as we speak. Hopefully, if all goes well, our seed procurement is awarded. Irrespective, I'm pretty confident that within 18 months to 2 years, we will be able to treat waste in England.

The next question is coming from Aaron Warwick with Breakout Investors.

As you noted, disappointing results, which I think we all expected based on the situation, but really happy to hear about the future outlook. The only thing I wanted to talk about or ask about in addition to what Howard asked was about other international opportunities. You've mentioned some of those before. I'm just wondering what the status is there. Specifically, you mentioned Germany and Italy in addition to the U.K. and a big influx of interest you noted on the last call. What's the status of those right now?

Really an exciting program, Aaron, for us over there. Right now, we're getting our second shipment from Germany, which will continue to go to Northwest. We have two other waste streams that we're getting from two different countries in Europe. I can't really talk about where at this point. We're working through some permitting that has to happen with NRC to import and export those wastes. To answer your question, we have a spreadsheet with about 10 or 12 very specific waste streams that we're anticipating in the next 18 months. These waste streams range between 500,000 and 20 million and will be procured and awarded, again, over the next 18 months. We're seeing a lot of action with that. It's a bit of a challenge due to transportation, which is one reason we're moving this thing to England, but that's minimal compared to the cost of treatment. Shipping costs have doubled for a typical shipping set that would take you from 60,000 to 100,000 for a $1 million shipment. But as you said, the market is going very well, as there are not many treatment opportunities commercially available for that waste in Europe. As you probably know, they're ramping down some reactors in Germany. Storage costs are extremely high and getting higher. When you look at the cost-benefit curve, it’s becoming much more feasible economically to treat that waste than to simply store it and pay the high costs. As long as that keeps trending, we're pretty excited about it. Westinghouse knows the market very well and is fabricating fuel at the facility where we will be putting this facility in England. They have strong contracts as well. So we're excited about where things are going.

Good. And I think I know the answer, but just to clarify, when you say the 500,000 to 20 million, I think you're talking for a project, right, not in total of those locations?

That's correct, per project.

A final question regarding the backlog. I believe you mentioned it's $66 million. How do you define backlog? Also, how long do you anticipate it will take to work through that?

Yes. Backlog is defined for the Services Segment as work that's under contract and funded contracts. So there's a very high degree of confidence. They range from 6 months to 18 months from now. Most were awarded in August and September. The longest would be 18 months. The majority of that will be this year, although a few million may bump into next year. But it all depends on change orders and how we can accelerate the projects. I've toured the two biggest ones up in Princeton and the ship at the Norfolk Naval Shipyard in the last two days with Daniel Labarta, who's our Executive Vice President for Services. Both projects are going extremely well. One is way ahead of schedule, while one is right on. We have great teams, and the client is very happy. Our margins are looking really good, and we're pleased with how those projects are proceeding, hoping we can accelerate to get most of that revenue this year.

The next question is coming from Ross Taylor with ARS Investment Partners.

Could you give us a little bit more color? You mentioned the ship down in Norfolk, but with that last call on the couple of calls, you've talked about the substantial opportunity you're looking at coming out of the Navy. With 40 to 50 vessels being decommissioned over the next 5 years, it looks like the Navy wants to accelerate decommissioning vessels this year above what they were projecting a year ago. So could you give us color on both the opportunity and the potential flow of business out of that segment of the company?

That's a great question, Ross. That's why we were in Norfolk the last three days. The bottom line, as you may have seen, is the funding and acceleration of some of the work. The Navy was not clear on what's next. I think the number was nine ships to be procured in the next 18 months. One or two of those are nuclear. But as far as procurement, it’s challenging to identify when it will come out. The Navy is dealing with many other priorities due to the current situation in the country. Increased costs are dramatic at the shipyard, taking into account fabrication and ship maintenance. They're juggling that procurement strategy and weren't able to provide a lot of detail, but I can't tell you exactly what's happening. We do know there are nine ships coming, and one or two will likely be nuclear, in which we'll participate. There are a couple of other facilities at the shipyard likely to be procured in FY ’22 for the government. We have a strong team on the ground there, and there are not many other commercial contractors on-site. We're confident that with our subcontracts, we’ll have a good shot at the forthcoming work. However, it’s challenging to forecast that in the next two quarters, but by the end of Q2, we should have a better schedule of what's coming up.

And can you talk about what the potential value per ship is? I know every ship has its unique characteristics and the like. So I wouldn't think there's anything like a typical ship, but can you suggest what kind of revenue opportunity we're looking at?

Yes, it’s really difficult. I'd be speculating to answer that question, but I can tell you what I do know. The ship we're handling now, which is a sizable tender, took care of a lot of subs and is in the $40 million to $50 million range, likely one of the smallest jobs. They have two aircraft carriers there, the Nimitz and the Enterprise, and those will likely exceed $1 billion each in the near future. There are many intermediate ships ranging from $50 million to $200 million each. It all depends on contamination levels, as we perform decontamination and removal before dispositioning the ships. Generally, I think most of these will fall between $50 million and $300 million.

But they do represent substantial opportunity for you, and they effectively need to get done?

They do. If you've ever been to Norfolk Naval Shipyard, which is a fascinating site, you'll see the dry docks and all the docks where they maintain our fleets for the Navy. They’re running out of space, so they need to move the contaminated ships, freeing up space for the new fleet and for refurbishing and building new vessels. This business fits seamlessly into DOE decontamination and is well-suited for us. Our team is thrilled to be there and truly enjoying the work.

Okay. Good. That's it for me and good luck putting more backlog into the system by the next quarter. I think that would be great to hear.

Thanks, Ross.

Up next, we have Ryan Hamilton with Morgan Dempsey Capital Management.

I guess I'll jump in real quick. You touched on bidding activity in March. Can you provide comments about what you're seeing in terms of the size of those contracts? And maybe what you're bidding at? Additionally, how many competitors are participating in that process?

Yes. That's a difficult question, Ryan, concerning size. They vary from small contracts worth 50,000 to 100,000 to a couple of million. We’re placing bids with DOE that are even more than that. I can't provide the total value of the 28 bids I mentioned from March, as there are surcharges and other things that complicate those predictions. Typically, we compete against two or three others, four bidders. Unitek is one, Energy Solutions, WCS, and Veolia. Each of these companies offers different treatment alternatives or direct disposal. We don't win everything, particularly with cheaper alternatives. If you can directly dispose of waste, we seldom win that, and we typically don’t bid those contracts. We focus instead on those that require technology to dispose of them, where we generate profit. Therefore, it’s more of an indicator of the activity in our clients, evaluating spending and focusing on waste removal that hasn't occurred during the pandemic. So, next time we conduct our call, I’ll provide numbers regarding those.

Sure. Looking back over the last couple of years, how does that bidding activity look? Is it out of the norm? Is it something you expect? Could you touch on its historical context?

In general, for Q1, that's much higher than normal. I'd speculate that it's probably double the typical. We typically have 2 to 5 bids a week, so 20 a month would be standard. Having 28 in March was a really good month.

That's great. I might have missed it. Are you planning to send all overseas business to the new facility when it’s completed? Is that the plan? Or is there something else in mind?

No. You're talking about the Westinghouse facility, right? Yes. The Westinghouse facility we’re teaming on will cater to European-Asian clients. It won't compete with U.S. markets. That’s pertinent, as arrangement with Westinghouse identifies that U.S. markets will be better served here without sending treatment overseas.

I'm sorry, I may have misworded. I'm asking if all overseas projects will shift there while everything U.S. stays here?

Yes, that’s the case. Most of what we’ll do, about 75% to 80% of it, will go to that Westinghouse facility.

Up next, we have a private investor.

Yes, I have two questions. First of all, there's a public document contract worth about $95 million, and it has your name on it. I presume you're one of the competitors. Can you clarify that? Can you talk about that? Are you still competing for it? Or have you… just give us a little color on it?

Sure, John. I'm very hesitant to discuss our participation in IDIQ or MATOC contracts. MATOCs are multi-award task order contracts. It's a number of awardees, with a ceiling on these MATOCs coming from the core of engineers. These ceilings reflect limits that allow contracting officers to run task orders without having to rebid them. We're successful in winning five MATOCs in the last quarter, one for each region. So we're the only company to achieve winning in every region. Each contract is worth $95 million, allowing them to start running task orders through those MATOCs to the awardees. Task Orders allow quick bids to be submitted and awarded, as awardees are already prequalified. We've done or supported two of these in Northeast and South, typically doing $3 million to $5 million a year. We're optimistic that they'll start rolling on those contracts now that the federal budget has passed. By mid-summer, we should see some of the task orders under our belt.

Okay. The other question I had is you compete in a field with a lot of different companies, and you're relatively small in size. You have limited leverage. But I'm reflecting on a merger with one of your competitors. How much more competitive could you be if you merged with someone who could provide more resources?

That's a tough question, John. Much depends on who you’re merging with and the terms. We focus on our niche in rad and waste management. We possess strong capabilities that many big firms lack. We have six certified health physicists among our personnel—most big firms lack that. They’re critical to our services group. Although we could benefit from being part of a bigger firm, we focus on recovering from 2020. Our goal is to reach $200 million in the next 3 or 4 years, which we view as a sweet spot for shareholder returns.

Yes. If memory serves, you recently had a poison pill from a couple of years back, but you removed it. Can you clarify that?

We did remove it. The poison pill was implemented by our Board because both the Board and management team felt strongly that our future is significantly brighter than our stock price. We wanted to ensure we could protect ourselves from takeover situations while working towards achieving revenue and profitability levels.

You don't have anything currently in place to prevent a bid for your company?

No, that's correct. We do not.

Next, we have a private investor.

Two questions. The press release references certain revenue contracts with nonstandard terms and conditions and notes your accounts receivable builder is over 100 days. Do you see a risk of write-offs in accounts receivable upcoming or additional reserves?

Yes, Howard. We look closely at all our receivables. There's one contract, particularly, with slow progress due to a customer change order that has contributed to the outstanding receivables. We’re pretty comfortable with our AR at the moment and don’t foresee any material write-offs.

Are the contracts that weren’t evaluated mostly behind you? Or do you still have unresolved contracts?

Yes, those issues are behind us. This was an internal control issue, primarily an aggregate problem solved in June when we achieved a market cap. Now that we’ve got our infrastructure and labor intact, we’re in good shape. Their impact was minor and will not change our financials significantly.

Up next, we have a private investor.

Okay. Regarding the Canada deal mentioned last year, how is that coming along? Are you collecting on it? Is that what's ballooning your accounts receivable?

Yes. That’s moving along. We're negotiating with the customer to resolve it. The contract is effectively over now. It’s mostly related to documentation and discussions. The work is complete, but the paperwork is frequently the biggest holdup. Thus, the current amount in accounts receivable.

All right. Going back to Mark, let's discuss the TBI. I’ve heard this for five years, and where are we? The last I knew is an environmental study was pending. How’s that coming along?

Yes. The DOE currently leads it. They must conduct an Environmental Assessment under NEPA, including public comment, which has to be finalized. They also need to complete a Waste Incidental Reprocessing Report, covering them regarding high-level waste not being shipped off-site. They must finish these reports and secure a state permit. They're drafting the documents and addressing public comments made months ago. When completed, they'll apply for that permit in the coming months. Recent conversations mentioned they prioritize it to have something finalized this summer.

In reading documentation, particularly around the Northwest Energy Alliance, they argue the vitrification plant is dysfunctional and could create double the waste. How could you not be taken more seriously regarding supporting this?

Our approach has always been to work with DOE's strategy. They face bigger challenges that require patience. We've shared our technology benefits and efficiencies multiple times. We're hopeful they realize how we complement the current vitrification strategy.

Mark, let me say you should consider running for political office. That was a great answer. Last two questions. If it's true that iodine and technetium are generated by the vitrification process, can you treat that?

We can treat the waste exiting the TSCR. The TSCR separates iodine and cesium from the liquid in the tanks. We handle that waste regularly without issue.

You're on that $45 billion contract, bidding as part of a consortium, correct?

Yes, we're participating in that procurement.

It's been tough. Many nights, I listen to the news and shake my head. It’s hard to fathom, but you’re here providing hope. I'm proud of you guys, and I believe better times are ahead.

We appreciate your support, Steve. COVID has been a real hurdle, as have all the challenges. Thank you.

I'd like to turn the floor back to management for closing remarks.

Thank you, John. I'd like to thank everyone for participating in our fourth quarter and year-end conference call. As we said, we remain extremely confident in our outlook for the business in 2022 and look forward to talking again next quarter. Thank you.

Thank you, ladies and gentlemen. This does conclude today's conference call. You may disconnect your phone lines at this time, and have a wonderful day. Thank you for your participation.