Perma-Fix Environmental Services, Inc. ($PESI)

Good day, ladies and gentlemen, and welcome to the Perma-Fix Fiscal First Quarter 2026 Earnings Conference Call. [Operator Instructions] And please note, this conference is being recorded. I will now turn the conference over to your host, Mr. David Waldman, Investor Relations. Sir, the floor is yours.

Thank you, and good morning, everyone. Welcome to Perma-Fix Environmental Services First Quarter 2026 Conference Call. On the call with us this morning are Mark Duff, President and CEO; Dr. Louis Centofanti, Executive Vice President of Strategic Initiatives; and Ben Naccarato, Chief Financial Officer. The company issued a press release this morning containing first quarter 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 statements of historical fact are forward-looking statements that are subject to known and unknown risks, uncertainties, and other factors, which could cause actual results and performance of the company to differ materially from such statements. These risks and uncertainties are detailed in the company's filings with the U.S. Securities and Exchange Commission as well as this morning's press release. The company makes no commitment to disclose any revisions to forward-looking statements or any facts, events or circumstances after the date hereof that bear upon forward-looking statements. In addition, today's discussion will include references to non-GAAP measures. Perma-Fix believes such information provides an additional measurement and consistent historical comparison of its performance. A reconciliation of the non-GAAP measures to the most directly comparable GAAP measures is available in today's news release on our website. Now I'd like to turn the call over to Mark Duff. Please go ahead, Mark.

All right. Thank you, David, and good morning, everyone. Thank you for joining us today. As you saw in this morning's press release, the first quarter was a transitional period for Perma-Fix. While our financial results were weak, this was not unexpected. Many of the factors that impacted the quarter were consistent with what we discussed on our year-end call in March, including seasonal softness, lower waste receipts, the timing of achieving revenue milestones, and the deliberate steps we're taking to prepare our facilities, workforce, and infrastructure for higher activity levels beginning in the second quarter. Importantly, the first quarter should not be viewed in isolation. We used the quarter to position the company for the next phase of activity. This included the deliberate processing and reduction of existing waste inventories, particularly at our Perma-Fix Northwest facility, so we can maximize capacity ahead of anticipated Hanford-related waste receipts. In addition, we completed treatment of several lower-margin waste streams during the quarter, which further positions our facilities to improve mix and higher value activity as new receipts begin to ramp up. We also included -- we also continued investing in personnel, training, facility improvements, and operational readiness to support additional shifts and higher production expectations beginning in Q2. These activities impacted near-term financial performance, but we believe they were necessary to prepare Perma-Fix for what may be one of the most important growth opportunities in the company's history. The centerpiece of that opportunity remains Hanford. As we've discussed for some time, the DOE Hanford's cleanup mission represents one of the largest and most complex environmental remediation programs in the United States. Perma-Fix Northwest is located just outside the Hanford site, and we believe it's uniquely positioned to support multiple Hanford-related waste streams over the coming years. A key milestone in our preparation for this opportunity was the December 2025 renewal of the permit for our Perma-Fix Northwest facility, which significantly expands our permitted liquid mixed waste processing capacity to approximately 1.2 million gallons annually and authorizes treatment of up to 175,000 tons of waste through macro encapsulation. Combined with our investments in automation, facility upgrades and workforce expansion, this enhanced permit materially strengthen our ability to support increased volumes from Hanford and other DOE mission objectives as activities ramp up. We are now beginning to see the opportunity move from preparation towards execution. Our Perma-Fix Northwest facility began receiving ETF waste from Hanford in mid-April, which we believe can support sustainable revenues of more than $4 million per quarter as the waste stream continues. We're also working closely with DOE contractors on the anticipated start of the additional DFLAW-related dry waste and EMF effluent waste streams, which were delayed due to regulatory document extensions. Based on current activity, we believe Q2 represents an inflection point for the company with Perma-Fix Northwest on track to deliver stronger revenue contributions as Hanford-related waste receipts and other customer activities increase. While the exact timing and pace of these activities of these receipts remain dependent on DOE and contractor schedules, we remain highly encouraged by the directions of the activity and the role Perma-Fix can play in supporting the Hanford cleanup mission. In addition, DOE leadership continues to focus on advancing Hanford tank waste retrieval through grouting as a supplement path to DFLAW using available commercial treatment capacity. We believe this is highly significant for Perma-Fix because of the Perma-Fix Northwest provides additional local capacity near the Hanford site and is positioned to support DOE's tank waste treatment objectives over the next several years. Beyond the near-term ETF and DFLAW-related activities, we remain extremely focused on the broader grouting opportunities at Hanford. We believe Perma-Fix Northwest is exceptionally well-positioned for this opportunity given its proximity to the Hanford site, our expanded permitting profile, existing waste treatment capabilities, and investments we've made over the past several years to expand grouting capabilities to reach production levels of over 4 million gallons of tank waste received per year. This is why we're so bullish on Hanford. It's not simply one waste stream or one contract opportunity. It's a long duration remediation mission with multiple potential waste streams, multiple program phases and the potential to support recurring treatment demand over an extended period. While timing will always be subject to government program execution, appropriations and regulatory requirements, along with customer schedules, we believe the scale and duration of the opportunities are significant. We also recently completed several large proposal initiatives, including opportunities related to the Hanford tank grouting, large project services for the U.S. Army Corps of Engineers and DOE at Y-12 and a proposal revision to support the USS Enterprise aircraft carrier decommissioning project for the Navy. While these opportunities remain subject to award timing and customer decisions, they reflect the breadth of our pipeline and the alignment of our capabilities with large complex government remediation, decommissioning, and other waste missions. In addition to Hanford, we're also seeing renewed momentum in our Services Segment. During the quarter, we were awarded a 2-year master task agreement valued at approximately $24 million by the Lawrence Livermore National Security site for demolition and disposal of a building at the Lawrence Livermore Laboratory. This project mobilized and began supporting work in early April. It draws directly on our expertise in complex radiological and hazardous waste handling and facility decontamination, along with demolition and nuclear waste management. We view this award as an important validation of our nuclear services capabilities and our long-standing relationship with the Livermore Lab. More broadly, we've mobilized on several additional smaller projects that have the potential to grow through the summer, and we continue to see a meaningful pipeline of project opportunities across nuclear services for demolition remediation, decontamination, and other government-related field work. This is important because renewed Services Segment activities strengthens our broader Perma-Fix platform by leveraging our integrated capabilities across project execution, waste management, transportation, treatment and disposal. We also continue to make progress with our PFAS destruction platform. As we announced in March, we successfully completed a PFAS treatment project for Four Rivers Nuclear Partnership, the DOE contractor responsible for environmental cleanup activities at the Paducah Site. We received approximately 1,500 gallons of PFAS contaminated liquids and successfully treated the material using our patented-pending Perma-FAS destruction technology. This is an important precedent application for our technology supporting DOE cleanup activities and meeting the strict quality control programs as required by the department. PFAS contamination continues to represent one of the most significant environmental challenges facing both the government and commercial clients. Our approach is designed to permanently destroy PFAS compounds rather than simply transferring them to another medium. We believe this distinction is important as customers increasingly look for solutions that can reduce long-term environmental liabilities. During the quarter, PFAS receipts slowed, but activity resumed in May, supported by several new wins at regional airports and continued work through partnerships with generators and industry leaders focused on the destruction of PFAS liquids. We're also continuing the installation of our Gen 2.0 unit at our EWOC facility in Oak Ridge, which is designed to add approximately 2,000 gallons per shift of additional treatment capacity to support our existing operations. While construction experienced some supply chain and fabrication delays, assembly activities are moving forward and we expect the system to be -- to meaningfully expand our capacity once it's operational. Taken together, we believe PFAS represents a compelling long-term growth opportunity that complements our core nuclear and mixed waste treatment capabilities. We are still early in the commercialization curve, but the market need is real. Regulatory and customers' attention continues to increase, and we believe our destruction technology gives Perma-Fix a differentiated position. Stepping back, the broader message is straightforward. Q1 was difficult, but it was also preparatory for us. We're now beginning to see the transition we've been preparing for begin to materialize across the business. At Hanford, ETF waste receipts began in April and additional DFLAW-related streams are expected to follow. In Nuclear Services, the Livermore project has mobilized and our project pipeline is improving. In PFAS, we've demonstrated our technology in the field, secured additional opportunities, and continue to expand capacity. And at Perma-Fix Northwest, our expanded permit and the facility investment position that we made position us to support the long-term waste receipts and longer-term grouting opportunities. We believe Perma-Fix is at a clear inflection point. The investments we've made over the past several years in permits, people, infrastructure, automation, treatment capacity, and technology were all designed to prepare the company for the type of opportunity set now for developing -- that is developing in front of us. Although quarterly results may continue to vary based on the timing of customer shipments, government programs, and project mobilizations, we believe the company is increasingly well-positioned to deliver improved performance beginning in the second quarter through the balance of 2026 and over the long-term as these opportunities continue to scale up. With that, I'll turn it over to Ben to review the financial results in more detail. Ben?

Thanks, Mark, and good morning. For the first quarter, we reported revenue of $11.1 million, that's down from $13.9 million in prior year, a decrease of $2.8 million year-over-year. The decline was primarily driven by lower volumes and timing of processing activity as we focused on working through existing waste inventory and encountered delays in reaching certain key revenue milestones. Looking at the segments. In the Treatment Segment, revenue was down about $1.3 million compared to last year. This was mainly due to lower volumes and a less favorable waste mix, which more than offset some of the modest pricing improvements. In the Service Segment, revenue decreased about $1.5 million year-over-year, and this was largely due to fewer large projects contributing to revenue compared to prior year, partially offset by contributions from new smaller projects. From a profitability standpoint, gross profit declined $3.5 million compared to prior year. This reflects the impact of the lower revenue and the higher variable costs in the Treatment Segment and higher fixed plant costs as we prepare for higher volume expected in the upcoming months. Project mix and lower revenue in the Service Segment also negatively impacted our gross profit. Our SG&A expenses were $4.3 million, up about $284,000 year-over-year, primarily due to higher labor expense, outside services, and marketing-related costs. Turning to earnings. EBITDA from continuing operations was a loss of $7 million compared to a loss of $3.3 million last year. Our net loss was $7.5 million versus $3.6 million loss in prior year, a loss per share of $0.40 compared to $0.19 last year. On the balance sheet, cash ended the quarter at $6.7 million and working capital was $5.9 million, both down from prior year levels, reflecting operating cash usage and capital spending during the quarter. Our treatment backlog ended the quarter at $12.2 million, up slightly from $11.9 million at year-end and up from the $10.2 million we saw at the -- in the first quarter in 2025. From a cash flow perspective, cash used from operations was $3.6 million. Investing activities used approximately $964,000, primarily for capital spending and permitting-related intangible assets. And our financing activities used approximately $227,000, mainly related to scheduled debt and lease payments. With that, operator, I will now turn the call over for questions.

[Operator Instructions] Our first question today is coming from Aaron Spychalla with Craig-Hallum.

Yes. Maybe first for me, on Hanford, can you just kind of give an update on kind of the incremental waste streams that you're seeing? You talked about ETF and maybe $4 million a quarter. It sounds like last call, there was some talk of $1 million or $2 million a month. And so I just want to make sure we have those kind of incremental opportunities kind of straight as we look for DFLAW to start up.

Sure, Aaron. There's 4 primary waste streams that we're receiving at Hanford right now. There's a lot of other ones, they're smaller, but -- and a few that are beginning to be showing up here this quarter. But the ETF is the big one. It's been showing up or being received, as I mentioned, by the middle of April. We're getting regular shipments from them as scheduled. And it is between $1 million to $1.5 million a month in revenue as expected, and it's going very well so far and is expected to go through at least through Q3 and into Q4 at a minimum, where they usually have an outage when it gets too cold. That is going very well. No expectations for any impacts from that. The EMF waste was the -- as you probably remember from the press releases, was the blowdown waste from DFLAW. That was scheduled to complete its supplemental analysis process, which is a regulatory process on May 24 -- April 24. They extended that comment period for that NEPA process for 30 days to May 24. We met with DOE last week at senior management levels. They said we expect to receive the first shipment in later June. And that will run at about $300,000 a month for -- during high commissioning. And once we get to operational phases, that will increase by 4x and will be anticipated to be received at those levels at a minimum through the operational period, which we're anticipating to be in the fall in regards to DFLAW. We also have the dry waste that we're beginning to actually start to communicate with them on. They've been storing them for a bit. We are working with them on receipts. We're still not sure what kind of revenue that's going to generate. I would say, just an estimate, that it's about $100,000 a month, maybe more, a little bit more than that. We don't know the total volumes that they're generating at this point because they stockpile. We don't know how much they -- how linear it is to say that they're generating so much dry waste based on production levels versus just in hot commissioning. That should start here in mid-May. And then we have the TRU waste that we've been getting from the on-site contractor for many years. We are increasing capacity there in an effort to get to double throughput. And we have our top management team out there as we speak, working with them, adding additional shifts and capacity. We should began training additional personnel in March and April to be able to expand that. So we see that increasing again in -- by this past mid-April. So all 4 of those, actually it's 5, are underway and they're rolling. And we do expect these numbers to increase once the DFLAW gets to operational phases, and that will be, hopefully, in the next quarter or 2.

Okay. Understood. And then, I mean, just kind of stepping back broadly, you've kind of talked over the years, I think, DFLAW potentially $70 million-plus of kind of revenue. And, I think lately, it's been $3 million to $6 million a quarter of that ramp. So is that -- it kind of sounds like in the fall, that sort of a time line? And is that opportunity still largely how you're thinking about it?

It is. It's DOE's estimate. They haven't come off that estimate. In fact, several managers we've talked to have said that they're generating more filters than expected. The EMF waste I mentioned, was significantly more than anticipated. There's a lot of other waste streams also to be addressed, which we don't have any clarity on at this point. They are -- I would -- as I said, we just met with DOE last week. DFLAW was operational last week. It is -- it comes up and shuts down as they test each melter out. We're still having problems with -- I understand with the feed system or emission systems and tweaking those, getting them to design spec, design performance levels. But they're working through it. I think the important thing, Aaron, is DOE is very dedicated to the success of that project, and they're more and more optimistic like every time we talk to them about its ability to perform, and they're working through the kinks and are optimistic that it will be up and running soon at a higher level than it has been so far. And so a lot of upside there. And the other important talking point on that, Aaron, is that DOE places Hanford among their highest priorities for this administration. And it's very evident by the attention that the DOE headquarters gives to the site. They were out there last week. We had a chance to meet with them. And the local officials are all very action-oriented. They're plowing through hurdles and very focused on increasing the amount of tank closures they can have during this administration. And so they're getting creative on any way they can possibly begin to show retrievable tanks during this administration and as fast as they possibly can within compliance and safety standards. So we're encouraged by that and very optimistic that, like I said, with this EMF hurdle that we had, they work through it and keep things moving. And while may be delayed here and there, they are very sustainable waste streams, and we're very, very well-positioned with our facility there.

And then maybe just on the commitments from the DOE and just focus on increasing tank closures. On grouting, you've kind of talked in the past about that maybe being like a $40 million-plus opportunity for you. But I see the kind of commentary on potential supplemental volumes from DFLAW. And it sounds like maybe a little more kind of support of kind of treating that waste in state versus shipping out of state and, again, kind of treating more kind of sooner rather than later. So can you just kind of broadly kind of give us an update there? Is that kind of size still somewhat reasonable? Or just maybe an update there would be great.

Yes. As you know, there's really 2 grouting programs. One is the West side grouting program, which has been part of the tri-party agreement where DOE and the other parties, the regulators, agreed to do 22 tanks by 2040. And that's moved forward with the design and installation of the infrastructure systems there on the West side. And the procurement that we responded to, as I mentioned in the last call, was a $4 billion contract for grouting about 50 million gallons of that waste over that period of time. That RFP specifically said to be ready, the requirements were that the bidders need to be ready to start receiving waste on the West side in January of '28, so about 18 months from now. And we're ready to go on that right now. And we proposed in our proposal that we would do a contract mod -- or excuse me, a permit mod and install some additional equipment and infrastructure to be able to provide over 4 million gallons a year capacity to support that objective. So that's on track. We should see here an award announcement, hopefully, before the next earnings call in July. And that we're -- based on our discussions with DOE, we remain extremely optimistic that we have the lowest risk, best value approach. We've focused on the fact that we have a local union representation at our plant and offer something that no one else can offer right now, which is the ability to grout locally and ship by rail out of state for commercial disposal. So that is very much a preferred transportation alternative rather than shipping very large quantities of untreated radioactive liquids out of state, which is done all the time. But what -- and we do it, too. So it's not like it's unheard of, but these are very large quantities, and we're confident that DOE will recognize that we offer a lower risk approach by grouting locally and transporting by rail. The other component of grouting, to answer your question, was the East side. So basically, the East side is what feeds DFLAW. DOE is working towards ways to consider grouting on the East side. I don't want to speak for DOE on where they are on that process, but they are working to make sure that they're closing tanks as fast as possible. Again, with DFLAW as the cornerstone of their strategy, grouting is supplemental to that. And -- but they do have a tank full of about 1 million gallons, 800,000 gallons of pre-treated waste that will go to DFLAW that they could potentially begin to grout. And I know they're looking into that. We're hopeful that in the next 6 to 12 months, they'll be able to work out the -- with the regulators, a way to begin grouting that as a supplement to DFLAW so they can begin to close more tanks under this administration. So those 2 components together are making progress. Hopefully, we'll see something sooner than later, like this year on grouting, but there is a complicated regulatory framework they have to work through to be able to do that on the East side. I know they're spending a lot of time and resources to focus on that.

Great. Appreciate it. And then on services, I heard enterprise, it sounds like that might be back in play. Can you just kind of remind folks on the timing and potential size of that? And then just kind of second on that, you kind of highlighted the more services opportunities you see kind of the more opportunities potentially for the rest of the business. Can you just elaborate on that a little bit more, please?

Sure. We're pretty excited about the enterprise. Just to kind of give you a little background. It was awarded last May to a company that we were not a subcontractor to. There was a protest. The protest went through the winter. And in the March time frame, it was determined that the protest should be upheld and that the Navy needed to come back out with their RFP in consideration of the corrective actions associated with that protest. And it did and what they call a Final Proposal Revision or they call PFR, and there was a turnaround on that. These proposals were resubmitted April 24, and the Navy is anticipating an award sometime in June. So again, it was documented there's 3 bidders on that. And we're very excited about our team and our position with that. We are a subcontractor to one of the team, the primes, but have very significant scope. And it's directly squarely in our core competency for decontamination, decommissioning of a ship, and using our health business expertise along with our waste management folks to provide support to that team. So hopefully, we'll be talking about an award there again in this competition, but we'll hopefully hear an announcement here before the end of this quarter.

Great. And then just one last one, if I could sneak it in. Just on margins with all these opportunities and kind of incremental volumes set to start later this year and into next year, just how do you think about incremental margins as some of these opportunities come on and especially up in the Richland plant?

Yes. Our Richland facility is -- everything we do there is designed in regards to how we bid and how we price to maintain our margin targets that we've had for quite some time, which we've talked to investors about in the past. I can't get into the numbers now on the call, but they're within the margin targets we maintain regularly. And we expect those to continue. On the services side of the house, it's a much less margin, much lower incremental margin overall on our bids. We have gotten aggressive recently on some of them and -- where the risk would allow us to. We don't take undue risks on things like fixed price tasks, but -- or projects, but on cost plus, which are lower risk, we can be more aggressive. And -- but all I can say in regards to margin overall, to answer your question, Aaron, is that the technology that we've been deploying, both for PFAS as well as Hanford and our other sites are all within or very close to the target margins we have for the rest of our waste treatment program.

[Operator Instructions] Our next question is coming from Howard Brous with Wellington Shields.

In terms of the time frame for grouting and the volumes, can you be a little bit more specific in both?

Sure, Howard. So for the East side, I think that if we had to speculate, and this is speculation, Howard, is that if we were able to secure 300,000 gallons in the next 12 months, we'd be pretty excited about that. And that's kind of our target. DOE hasn't given us a number, but we know what they're looking at doing. It also depends on DFLAW. DFLAW gets up and running quickly and they ramp up production, they'll be draining that storage tank a lot faster. But right now, the storage tank is kind of remaining idle, and they want to start feeding it again with pre-treated waste. And there's an opportunity for them to grout some of that existing storage. So if we -- again, 300,000 by the end of the year would be a great target for us. Again, I don't -- I'm not speaking for DOE on this, but just an estimate for where we hope to see. On the West side, we really are not certain of what kind of ramp-up DOE is considering relative to the requirement for January of '28 and getting started on grouting. We do know that the design capacity for the West side extraction system is right around 3 million gallons a year. And it may be expandable. I know that DOE leadership has said in several public hearings and meetings that their goal is to exceed 3 million a year and get closer to 6 million. And that's possible through a couple of different approaches that would include more from the East side and West side. But right now, 3 million is kind of the target goal for what they plan to grout on an annual basis sometime after January '28, which would likely be a year or so after that. So our goal has always been to make sure we get at least half of it and provide DOE with a best possible cost and lowest risk, as I mentioned, opportunity to make sure we get half and become a long-term sustainable waste stream for us and someone that DOE can rely on to provide a significant portion of the production they need to close those tanks.

Just one more, the enterprise. Can you give us some details as to how meaningful this will be when it starts and how long it will take revenue...

Yes, I can't talk about the procurement at all, Howard, but I can say that the government estimate for the project was between $500 million and $800 million. And there was a requirement. I believe it was 4 years, to have it done in 4 years, Howard and -- may have been 4 to 5 years, but I think it was 4 years, it was supposed to be done. And the Navy is going to be intimately involved in it, to oversee what's going on. It's going to be done on a commercial site, which is very unusual for the Navy to do that, for a nuclear ship they do it for non-nuclears all the time. And then that ship will go to scrap. So it has to be decontaminated and then torn apart for scraps. So there's quite a bit of decontamination to be done. There's 8 reactors on the ship, and that's where we come in. We were the primary small business on the team, and there was a significant small business requirement in the contract or in the RFP. And so we expect to be able to grow that. We can't get into how much it would mean for us initially until the award is made, Howard, but it's between 20% and 30%, is the small business goals for that, I believe, in the RFP.

20% to 30% of which number?

Well, the government estimate, all I can say is between $500 million and $800 million.

Our next question is coming from Bernard [indiscernible], who is a private investor.

I actually asked you in a specific way, at the Gabelli meeting, this particular avenue today, I'll ask it in a more general sense, but Perm-Fix seems to be -- to me, to be uniquely permitted to process the radiological material that will be generated by rare earth refining. And I just want to ask you, am I just kind of going off in the wrong direction on that? Or is that something the company has explored or is thinking about? And thank you for response.

Sure. Yes. I mentioned that, I think it was the last quarter, maybe the quarter before that, that we were participating on a procurement for mining, including rare earths and uranium. And we were able to secure that contract. It was -- it's our first contract of that nature where we're actually sorting through our soil sorting technology for product as opposed to defined waste. That project is going into the field here, I believe, next month in June with our soil sorter technology. We're very excited about it. I can't -- it's a confidential client. I really can't talk about who it is or what it is, but it is in the mining industry, and we're very excited about the opportunity to use the source order in the mining industry itself. It's a large company with lots of other mines. So this is an important precedent for us, and we're hoping we can parlay this into a more broader application in the mining industry.

I appreciate that. And I would just encourage, to the extent you can as you go forward, to shine a little bit of light on that. I think it would do a lot of good.

Our next question is coming from Steve Fein with [ So Fein ] LLC.

My first question is, what has been the -- how have you been impacted by the energy situation of the world?

It's a very interesting question, Steve. Where we've been impacted? I don't know if the investors on the call here have followed DOE a lot in regards to their reindustrialization mission. But they've been hugely successful in reindustrialization at 3 of their primary properties, the Paducah site in Kentucky, the Portsmouth site in Ohio here in Oak Ridge. And what they've done is, really, reignited the nuclear market itself from fuel fabrication to all types of different energy SMRs and other energy-related initiatives for those sites. We've worked pretty hard to try to get involved in that at this point. It's in early stages as DOE loans have gone out at about $900 million to 3 different companies. But also in the fuel fabrication and other components of the industry, we've been able to provide some support in due diligence of the properties as well as in waste management. But the one we're particularly excited about is up at Portsmouth. And Portsmouth had a huge press release a few weeks ago that their -- the SoftBank has worked with DOE headquarters and Commerce Department as well for a big initiative up there to implement a 10-gigawatt natural gas capability to support one of the -- what they say is the world's largest data center there at the Portsmouth site. We fortunately have a contract there. Now we're working with them on accelerating some of the cleanup there that's growing very well for us and it just got started here a couple of weeks ago. And we're very excited about that. So to answer your question, most of the energy reindustrialization part of it that we've been able to support is in DOE-related types of initiatives. And -- but we are seeing good growth there and acceleration at those sites, all the sites, as they prepare the properties for transition to commercial activities from the DOE activities. And we're seeing opportunities for accelerated waste management needs and getting the waste off-site, particularly some difficult waste and accelerated closure for those as well.

Okay. My understanding is that the vitrification plant or DFLAW, whatever that process in Hanford uses diesel. Is that still using diesel?

I believe it is, Steve.

So isn't that -- doesn't that -- we hear the stories about how every -- how they're getting impacted on the West Coast. Doesn't that impact the story there relative to the efficacy of the process there?

Well, I can't speak to that, Steve. I can say that the plant has been in design and construction for over 27 years. So I think they kind of made the investment in that facility the way it is. So I wouldn't expect that to change any. They are expanding its capacity to get up to the 2 million gallons a year level for production. But I don't know if they have any thoughts at all on alternative energy sources for heating those melters.

All right. So when you say they're getting up to -- they're moving to getting up to 2 million, what type of efficiency would that be? In other words, like would that be 35%, 40%? Would they be increasing their efficiency from the historical efficiencies of vitrification, which is in the 30% to 40% range, 40% range?

I'm afraid, Steve, I just don't know enough about DFLAW to be able to answer that question.

All right. What does EMF mean?

The acronyms, it's been -- we've talked about the acronym so many times. It's an effluent -- but basically what it is, is the blowdown water for the emissions program. So it basically is scrubber water. And the acronym itself, I don't know if Ben or Karen, you know off the top of your head, you can help me with that. Ben, you got it?

Effluent Management Facility. Yes. Effluent Management Facility.

So the EMF is a facility that receives the blowdown water from DFLAW and we get -- and then they concentrate and we get it from them.

Got it. Got it. Okay. So that's -- okay. So that's -- so anything you've got from DFLAW would come from EMF or that's just one type?

That's one waste stream, correct.

Okay. All right. And when -- what I don't follow is if they're still in transition in -- out there, then why wouldn't they be giving you the tanks that are sitting there because they can always make up more tanks and it would be at least something in progress.

Yes. Steve, it's the way the government works is they make -- they define plans far ahead of time, and they get through a lot of regulatory processes and agreements and public hearings to nail down their plans. And when they want to change something, it takes a while to make changes in general. So they are making changes. Along the way, as I mentioned, with the supplemental analysis for EMF where they decided, "Hey, instead of putting the EMF back into the melters and making glass out of it, wouldn't it be better to ship it off for grouting and be able to increase the throughput of the plants?" That's a change. So those types of things, they have to run through those considerations including public comment, and it just takes a while. So as far as tanks go, right now, they're focused on getting the systems up and getting them operational. And there'll be other changes along the way, I'm sure, as they define efficiency opportunities.

All right. So on the -- what is it, the West side, that's where there's no piping? Is that right? That's the West side, right?

Correct.

Okay. So presuming you were awarded that contract, am I correct that the time lines between award and starting would be they have to set up structure there to be able to pull out of the tanks? And then at this -- is that the -- what the time is about between the awarding and then starting processing that they don't have an infrastructure to handle the tanks?

That's correct. They're building infrastructure as we speak, Steve.

And is that -- and are we talking a similar separation process that's being done on the East side with the East Side tanks where they're separating low from high? So is that what the anticipation is there?

That's part of the design, exactly right. They -- it's called -- right now, they have -- they called it the TSCR. The TSCR is doing that separation, as you mentioned, through ion exchange, and they'll have a much more bigger, larger, more robust system on the West side. But they're building one on the East side too, in parallel, to supplement TSCR.

Okay. Which could be beneficial for you if they have more?

Yes, that's right. That's right.

Okay. All right. So then from your standpoint, after you win, how long is it going to take you to scale up your capacity?

We will -- we have committed to have our capacity -- if we receive an award in July, we have already -- I'm glad you asked this, I left this point out. We've already started working with the state to modify our permit. We already had several meetings with them. It's going very well. We've already completed our design for the most part for installation of our new grouting equipment that we'll be purchasing. And we'll have that in place up and running. We've committed to DOE to have that 3 million -- or 4.2 million gallons of capacity within 18 months. So we basically are committed to October 27 to be able to do 4.2 million gallons of waste once we receive -- or assuming that we receive an award in July.

And that 4.2 million is, what? Everything or just the West side?

That would be our total capacity. And that -- we may increase that as well. That's just kind of where we're targeting right now. And it would be for whatever waste DOE wants to send us, liquid waste.

All right. Fine. Fine. This month, has there been an improvement in April?

We have seen an improvement -- yes.

In other words, we're reporting through March. So are you seeing a change in April? Or are we still looking forward?

We've seen improvement in April. I can't get into details as far as April numbers go, but we are seeing improvement, particularly with the ETF waste being received and working on some of the other waste we've got. We see a significant increase in our forecast for the next 2 months that puts us in a position to -- that we will see a significant improvement over Q1 for sure.

Okay. Good. What's going on with the European stuff? Just...

The very big contract we have is going very well. They started remediation of drums in April. And it's going a little slower than they thought once they start pulling drums out of the ground. Those are the drums they'll be sending to us to vitrify -- or excuse me, to burn at our Northwest plant. And we continue to see -- receive waste from Mexico and Germany as well as Canada. But the big contract in Italy is rolling. And it was significantly ahead of schedule. It's probably back close to original schedule now because as they're pulling drums out of ground, that it's going a little slower than they thought. Again, that's not our scope. Our scope is to take the drums they pull out of the ground, characterize them, and then ship them over to Northwest and treat them. That -- it looks like it's still on track for Q1 of '27 for the first shipment. And then once those begin, it will be in the range of $6 million to $7 million a year of sustainable waste streams.

All right. When -- changing the subject again. You've mentioned mining, which that's the first I really -- well, I've heard of that. But -- so, I'm very aware of what's going on with rare earths and stuff like that. So what do you actually -- can you -- what do you actually pull out of it when you do it? Are you just cleaning the waste? Or are you actually pulling out something of value?

Our process focuses on -- it's very simple, Steve, it focuses on segregation of radioactive components. So we can load a load of soil into our system, which is a large conveyor system, goes into a hopper and goes down on the conveyor belt at a very rapid pace, like 200 yards an hour, moves up the conveyor belt, and our detection technologies can separate the radiological components from the soil or debris at a very rapid and very accurate pace, so that you can concentrate the radioactive component or in remediation situation, you remove the good soil so you don't have -- you can reduce your waste volumes. In the mining application, you're segregating your radioactive component for processing and reducing your waste component and concentrating your source. So that's generally what we do.

And that's unprecedented?

It's not unprecedented, but the technology we have is advanced, and we don't know of anyone else that can do this the way we're doing it. And it's largely a software application with the detection systems. And we have a very skilled couple of teams that run this unit very efficiently and inexpensively relatively. And so it's very high value. We haven't seen anybody else competing with us. There's other soil sorters out there, but not with the similar type of software technology and detection systems that we've got.

My understanding of rare earth is that the real challenge there is the ability to refine. So what you're doing is before they start refining?

Right. We're at the mine site, concentrating the source material that they're looking for. I guess, because your -- so this is just radioactive components at this point.

Right. So your success makes the refining easier in that sense, right?

Right. More efficient.

In theory.

Yes.

All right. Turning to PFAS. What's happening with the arrangement you made with that non-PFAS fire company in Atlanta that provides non-PFAS product?

Right. We're working with them on several change-outs right now, along with several other companies. And that's where we're seeing a lot of our larger revenue streams coming in, as I mentioned, with airports, where we're proposing on several airports. We've just recently won one in Arizona. But we're working with several different companies, that's one of them, to replace the PFAS firefighting foam out of the airports and putting in new stuff, new foam that doesn't have PFAS in it. So that's one of our more exciting programs we're doing right now contributing to our backlog.

Right. So that -- I don't think -- at least I, from earnings call, didn't understand this until someone told me. But basically, your -- am I correct that your connection with this company that, basically, their fire systems are they have huge tanks. They're replacing huge tanks of the foam. Is that correct?

That's correct.

Okay. Good. All right. And then the last question regarding PFAS is the fact that the President EPA stopped the total ability of companies to use -- to have to deal with their PFAS situation. How does that impact you?

Yes. It hasn't helped, but what has helped is the states are promulgating their own policies and rules and several states have taken steps in that direction. I think we believe there's a dozen of them. And it would be optimal if this administration would promulgate some policies and designate as a hazardous waste like under CERCLA or something like that, that would require accountability for managing their PFAS on site and reporting on it and being enforced. That hasn't happened yet. We do think it will happen eventually, and we'll be ready when it does because that will change the whole market overnight. But right now, it's being driven largely by states and best management practices relative to liabilities, people getting contaminated PFAS and industry recognizing the importance of removing PFAS from the facilities.

All right. Well, keep on trucking. It's the number of opportunities I've never seen here.

Ladies and gentlemen, as we have reached the end of our Q&A session, I would like to turn the call back over to management for any closing remarks.

All right. Thank you, operator, and thank you to everyone who joined us today on the call. I want to close by reinforcing the main message from this morning's call. While the first quarter was challenging, we view it as a transitional period that helped position Perma-Fix for a stronger activity beginning in the second quarter. We took deliberate steps to reduce existing waste inventories, prepare our facilities for higher waste receipts, complete lower-margin work, and invest in the personnel, training and infrastructure needed to support the opportunities that are now developing across the business. More importantly, we believe the Hanford opportunity is beginning to move from preparation towards execution. ETF waste receipts have started. We continue to work with DOE contractors. In addition, for additional DFLAW waste -- related waste streams and our Perma-Fix Northwest facility is well-positioned to support multiple Hanford-related programs over time. At the same time, we're seeing renewed momentum in nuclear services, including the mobilization of our $24 million Livermore contract and continued progress with PFAS destruction, including our new wins and installation of our Gen 2.0 system. Taken together, we believe Perma-Fix is entering a strong phase. The investments we've made over the past several years in permitting, technology, people, facilities, and customer relationships were designed to prepare us for this opportunity set. While timing may vary quarter-to-quarter, we believe the direction of the business has improved materially, and we're increasingly confident in our ability to improve performance beginning in Q2 through the balance of 2026 and over the longer term as these opportunities begin to scale. We appreciate the continued support of our shareholders, our employees, customers, and partners, and we look forward to updating you on our progress in the coming quarters. Thank you.

Thank you. Ladies and gentlemen, this does conclude today's call, and you may disconnect your lines at this time, and we thank you for your participation.