Perma-Fix Environmental Services, Inc. Aktie

Good day, ladies and gentlemen, and welcome to the Perma-Fix Environmental Services Fiscal Second Quarter 2026 Earnings Conference Call. [Operator Instructions] And please note, this conference call is being recorded.

I will now turn the conference over to your host, Mr. David Waldman with Crescendo Communications. Sir, the floor is yours.

Thank you, Oli. Good afternoon, everyone, and welcome to Perma-Fix Environmental Services Second Quarter 2026 Conference Call. On the call with us this afternoon 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 afternoon containing second 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 afternoon'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 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 afternoon, everyone. Thank you for joining us.

I want to start by being direct about the quarter. Our second quarter financial results were below expectations. Revenue was $12.9 million, and we reported a net loss of $6.2 million. That is not the quarter we wanted to deliver, and I am going to walk you through exactly what happened and why. But I also want to be clear about something the second quarter delivered the operational milestones we've been working for, for years. And those milestones, not this quarter's results are what will define where the company is headed.

Yesterday, the Department of Energy's Hanford Tank Contractor, H2C, announced the award of the master IDIQ for tank waste operations and closure for grouting and disposal to support the tank retrieval and disposition mission at the site. This mission is one of the most important programs within DOE's Office of Environmental Management and reflects this administration's priority to accelerate the removal of risk associated with the 56 million gallons of waste stored in the tanks at Hanford. The contract carries a maximum value of approximately $4.4 billion with task orders eligible to be issued from 2027 through 2041. And to be clear, that is a ceiling shared among all subcontract holders, not an amount awarded or committed to Perma-Fix.

The program is supported by the tri-party agreement with the state and federal regulators to remediate 22 tanks from the West -- 200 West Tank area during that period. In addition, the contract was modified during the RFP process to include other tank and liquid waste streams to provide a contract vehicle for the 200 East Tank area as a supplement to the DFLAW program.

While this award is an IDIQ contract vehicle, it will be used by H2C to issue task orders for specific volumes of waste to be dispositioned within the defined periods. H2C also awarded master sub contracts to two other companies, both located out of state. Perma-Fix Northwest is the only facility of the three where these liquids can be grouted near the point of generation without long-haul transport of liquid tank waste.

Our Perma-Fix Northwest facility located about a mile from the Hanford site will provide the capacity to meet the goals for tank retrieval and liquid waste processing as the program grows to meet the DOE EM goals and objectives. We've been preparing for this program for some time, upgrading our facilities, procuring large-scale treatment equipment, expanding our workforce through hiring and training and acquiring the rail line parcel that connects Perma-Fix Northwest to the Port of Benton shortline railroad for rail -- for direct rail shipments of treated waste.

Under the performance work statement for the contract, we are required to maintain the capability to treat and dispose of pretreated tank waste at the rate of 100,800 gallons per week over a seven-week period. When annualized, this level is well above our current permanent annual capacity. And that is why we're expanding our current permit that I'll discuss in a moment, which is already underway to support the task orders that will be eligible for beginning in January.

Let me turn to why we're confident about the second half and beyond. DOE has adopted what it calls the Hanford dual glass-plus-grout strategy. In DOE's own framing, grouting is a proven technology already approved under the Hanford Holistic Agreement and the Savannah River site has also treated 13 million gallons of tank waste inventory in the same way. DOE projects the approach will deliver up to 300% more throughput while reducing treatment and disposal costs from roughly $1,200 per gallon to under $50 per gallon in contrast to vitrification costs.

DOE has presented a dual path strategy to stakeholders specifying Perma-Fix Northwest as the grouting provider for the EMF secondary waste effluent stream, which is the -- material we're receiving today. The H2C contract awarded yesterday will likely be used as a contract vehicle for the EMF beginning in January when the contract becomes active.

On volumes, I want to be precise because these numbers get quoted loosely. The glass-plus-grout approach includes acceleration of tank retrieval operations at 100,000 gallons per month using the existing TSCR. In case you don't know,0020the TSCR is the tank side cesium removal system, which is an ion exchange system, which removes the radioactive component of cesium, most of it from the waste stream. And that TSCR is a critical part to pulling the waste out of the tanks currently.

By 2020 [Audio Gap]

Apologies, ladies and gentlemen, we appear to have lost our speaker's line. One moment please while he reconnects. I'm not entirely sure our speaker is aware that his line has dropped at the moment, so please bear with us.

Okay. I'm not sure. My apologies. I was not aware that I had dropped off. I'm not really sure where I.

Start at where you were discussing the TSCR.

Okay. All right. So explained what the TSCR was, I assumed, which is the tank side remediation removal system, which is currently capable of treating or pulling out and retrieving about 100,000 gallons per month for the -- to be loaded in the AP-106 tank. By 2028, the advanced modular -- pretreatment system, also known as AMPS will be operational reaching a total of 300,000 gallons per month of pretreated tank waste to be shared between the grouting program and the DFLAW facility for treatment.

The DFLAW storage tank, again, known as the AP-106 is currently in capacity at over 1 million gallons. So the store pretreated waste can be available for grouting while leaving ample feed for DFLAW operations without a constraint. As inventories are reduced through treatment, the TSCR can replenish the AP-106 at about 100,000 gallons per month through 2027.

DOE estimates that roughly 60,000 gallons per month will be available from the AP-106 tank for grouting beginning as early as Q4 of '26, increasing to approximately 130,000 gallons per month by 2028.

Here's the point I want to make here. At 60,000 gallons a month, we are inside our existing permitted grouting capacity of 1.2 million gallons per year. Perma-Fix continues to develop and design technology to expand our capabilities with a specific goal of ensuring that -- our Perma-Fix Northwest plant can accept and process the full volume of waste Hanford provides for grouting, treated locally and shipped by rail for disposal and in contrast to our competitors, which will be transporting liquid waste on public highways for treatment and disposal out of state.

That expansion is what we need the West -- that expansion is what we need the West Area tank program, which is -- will support the West Area tank program, which is a separate and substantially larger opportunity. Across both the East and West Tank areas, DOE totals are targeted to reach 9 million gallons annually by 2030, 9 million gallons of pretreated waste to be grouted annually.

Perma-Fix Northwest has submitted a permit modification request to the State Department of Ecology and is working with these regulators to expand our grouting permit from its existing annual capacity of 1.2 million gallons per year to the levels that meets DOE objectives for both the East side and the West Side tanks. The facility is in final design and procurement for the upgrades needed to achieve that expanded capacity, which should be ready by the third quarter of 2027.

One development worth noting, the H2C procurement decision moved forward through this process in regards and awarded for an off-site treatment path rather than construction of a new on-site facility, which was included as an alternative within the H2C RFP. Consistent with that, on June 29, DOE notified the State of Washington of Ecology that its near-term selection for treating 200 West Area tank waste is off-site commercial treatment with transport by truck rail or both.

This is a favorable development for a facility positioned as we are. Perma-Fix Northwest sits immediately adjacent to the Hanford site. We're permitted today, we're operating today, and we're receiving Hanford tank waste today for grouting. There's no facility to design or build and no facility to commission. For DOE, that means a treatment path that is available now rather than years from now, the shortest possible transport of liquid waste and no government capital outlay to get there. We believe the combination is difficult to replicate.

It's also a distinction worth drawing between grouting near Hanford and shipping this waste material out of state for treatment. Under our approach, the waste is solidified in Richland and only stabilized grout travels on public roads out of state. It leaves Washington as a solid in a form that cannot leak. The alternative is a long-haul transport of liquid tank waste across multiple states through treatment facility in Texas or Utah. Oregon and regional stakeholders have publicly urged DOE to solidify this material before it leaves the Hanford region and our facility is what makes that possible. It is also work performed by local building trades through our relationship with the UA Local 598, which keeps skilled jobs and expertise in the Tri-Cities area.

In addition to this critical announcement in early July, subsequent to the quarter end, Perma-Fix began receiving liquid effluent waste from the DFLAW facility at Hanford. I don't want to get too lost in the numbers. It's a culmination of years of permitting, capital investment and operational preparation. We built the capacity we obtained -- we built the capacity, we obtained the permits and we staffed the plant in anticipation of this waste and it's now starting to arrive.

We have since begun receiving additional waste streams from DFLAW operations, including dry waste generated by the plant operations, which we're processing for disposal at the local Hanford site landfill.

So this is not one system, or one waste stream. It is a growing number of waste streams from a plant that is still ramping up and DOE forecast -- throughput goals increase each month at the DFLAW operations, and they're working towards through production issues and associated equipment modifications to reach their objectives for 1 million gallons per year through vitrification at DFLAW.

Now let me explain why the quarter looked the way it did. We received the Hanford-related waste streams we expected during the quarter. That part of the -- that part of our plan worked, and you can see that reflected in our backlog. Treatment-related backlog grew by 29% from $12.2 million at March 31 to $15.7 million at June 30. What did not happen on schedule was treatment. Our customer directed changes to the treatment protocol for these waste streams to accommodate a change in disposal facilities. This delayed processing from the second quarter into the third quarter. These changes supported the receipt of the waste for solidification, but did not support processing subsequent -- and subsequent revenue recognition.

We already added the personnel and incurred the operating cost to handle these volumes, so the cost landed in our second quarter, while the associated revenue moved into the second half, and that mismatch is the primary driver of the Q2 loss.

Two other items contributed. First, several new services projects started later than anticipated. Secondly, we processed our previously stored waste, lower-margin inventory waste, which compressed our treatment margin during that quarter as well. That work is now substantially complete and it frees up capacity ahead of our anticipated tank waste receipts. On the delayed waste streams, we expect to begin processing shortly and to be caught up by the end of the third quarter.

So when I say we're encouraged about the second half, here is what is in front of us. The delayed waste we already hold -- we already have on site moves through treatment in the third quarter. DFLAW-related receipts continue to build through the balance of the year and task orders under the Master Subcontract become eligible in January of '27.

Turning to Nuclear Services. This segment is providing a second engine of growth for us, and it's doing something else that really matters. It adds stability while the treatment volumes ramp. Services revenue grew 44% year-over-year in the quarter to $4.6 million from $3.2 million following the approximately $24 million Lawrence Livermore Master Task Agreement announced in the first quarter. We secured an additional awards during the second quarter at multiple DOE sites. along with several commercial and international contracts. Together, these support services backlog are over $17 million over the next 18 months.

There's a second benefit that is easy to miss as well. Much of this work is waste retrieval and retrievable operations generate material that flows through our treatment plants. So services backlog is not just stability, it's also a feeder into our Treatment segment.

Last week, we announced a strategic partnership with the Mirion Technologies under the Small Business Administration's Mentor-Protégé Program. The logic is straightforward. Cleanup missions across the DOE complex are getting larger and more technically demanding with much more difficult challenges. Our treatment infrastructure, remediation capabilities and project management combined with Mirion's radiation detection technologies and measurement and instrumentation expertise gives us a stronger position to compete for that work. It's a natural extension of where we've been heading and it widens the range of work we can offer.

Before I turn things over, a brief word about PFAS. Our PFAS platform continues to advance with completed treatment work for both commercial and government customers and the installation of our Gen 2 unit to expand capacity. Our permanent destruction of PFAS remains one of the clearest unmet needs in this market, and our technology continues to maintain delivery of total destruction with no emissions and a significant value over incineration.

While we realized a slowdown in PFAS receipts through May, sales and processing revenues have begun to increase through the summer with several awards from regional airports and commercial generators to support a solid backlog through Q3, including nearly $8 million in future award opportunities within our current pipeline of bids.

Finally, a word on capital. In May, we completed a public offering with net proceeds of approximately $21 million, and a portion of that funding will be funding the DFLAW upgrades as well as our grouting upgrades at Perma-Fix Northwest. That capital is going directly into the capacity we've been discussing this afternoon.

With that, I'll turn the call over to Ben to take you through the financials in detail. Ben?

Thank you, Mark, and good afternoon, everyone. For the second quarter of 2026, we reported revenue of $12.9 million compared with second quarter of '26 -- I'm sorry, compared with $14.6 million in the second quarter of '25. We reported a net loss of $6.2 million compared to a net loss of $2.7 million in the prior year. Both our basic and diluted loss per share was $0.32 compared to losses of $0.15 in the second quarter last year.

Within our Treatment segment, revenue declined approximately $3.1 million from prior year. The decrease primarily reflected the lower processing volumes across the segment together with unfavorable waste mix, which resulted in higher treatment and other variable costs and lower gross profit. These operational factors, specifically a customer directed hold on processing as well as the focus on previously -- previous stored waste were the primary drivers of the year-over-year decline in treatment segment revenue and profitability.

Despite these short-term challenges, waste receipts continued to improve. New waste receipts increased by $4.1 million over the first quarter, and our treatment backlog ended the quarter at $15.7 million compared to $13.1 million at the end of second quarter last year. We believe these are important leading indicators and reflect customer demand and provide improved visibility into future processing activity.

Our Services segment generated revenue that was $1.4 million higher than prior year, driven by contributions from several new project awards. These gains were partially offset by the completion of certain projects that contributed revenue in the prior year. Gross profit in this segment also improved modestly year-over-year, reflecting the higher revenue, partially offset by increased labor and other indirect costs.

Turning to our administrative expenses. SG&A decreased by approximately $379,000 compared with prior year's quarter, primarily reflecting lower marketing, E&P and credit losses, partially offsetting higher legal costs.

Turning to the balance sheet and cash flow. We ended the quarter with $20.5 million in cash compared to $11.8 million at year-end 2025, reflecting the successful equity offering completed in May. Working capital also improved to $18.4 million, while treatment backlog increased, as mentioned earlier to $15.7 million, strengthening both our liquidity and our visibility into future revenue.

Our continuing operations year-to-date operating activity used $8.8 million of cash, primarily reflecting the operating losses and normal working capital requirements as we continue to build backlog and execute projects. We invested $2.9 million in capital expenditures and other investing activities with approximately $2.7 million directed towards strategic capital projects that support future growth and operational capabilities.

Finally, our financing activities provided $20.9 million of cash primarily from the May equity raise, which strengthened the balance sheet while allowing us to continue investing in key growth initiatives. We ended the quarter with a total debt of approximately $2.1 million, maintaining a conservative capital structure.

Before I turn it over, let me address the going concern disclosure in our Form 10-Q, which we included to comply with accounting guidance and because the forecasts we use depend on waste shipments and on project activity directed by the U.S. government customers, which are not guaranteed. Nevertheless, we ended the quarter with $20.5 million in cash, approximately $2.1 million of total debt, and we expect existing liquidity, anticipated operating cash flows and borrowing availability to be sufficient to fund our operations over the next 12 months.

In addition, subsequent to the end of the quarter, we amended our credit agreement with PNC Bank to extend the maturity of the facility from May 2027 to May 2030, further strengthening our long-term relationship with our lender.

With that, I'll now turn the call over to the operator for questions.

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

First for us, can you talk about potential volumes for grouting as we look later this year, more so into 2027. The RFP kind of talked about some task orders starting in '27. And obviously, it sounds like there's some excess capacity on the East side to be able to handle some grouting. So just if you could elaborate on that, that would be great.

Sure. Thanks, Aaron. Let me see if we can get into some details here. Again, I think everyone understands that DOE hasn't formally awarded any task orders yet. But we're in an interesting situation. DOE has held several stakeholder meetings recently, including one with the State of Oregon back in June and one today with the Hanford Advisory Board in Richland. Both of those can be found on YouTube.

And in this presentation, along with other presentations along the way, DOE has presented a graphic that is quite clear. This graphic defines their near-term plan to ship waste from the 200 East Area Tank program to -- directly to Perma-Fix Northwest by name. Again, this graphic is part of the dual glass-plus-grout strategy overall. So it's what has been written up in several press releases and op-eds and letters from the Assistant Secretary, Tim Walsh.

And it includes on this graphic a depiction of AP-106 tank, which is the storage tank again, and shows that they'll be shipping waste for grouting from that tank to Perma-Fix Northwest. And then we'll also be shipping waste from the EMF facility to Perma-Fix Northwest, which they're obviously doing now.

Along within that graph, it also has some anticipated volumes and coming out of the TSCR or coming from AP-106, which, again, as I said before, will be replenished by the TSCR, they're anticipating that they'll be able to ship 60,000 gallons per month beginning in 2026 and which we anticipate to be late in '26 and to maintain that 60,000 gallons a month for grouting through 2027. So roughly, was at 720,000 gallons in 2027, assuming they start right in the beginning of the month of January.

That also is important to understand, it depends on how much of the AP-106 tank they use for the vitrification. If vitrification does get ramped up, that 100,000 gallon capacity that TSCR operates at, in other words, it pumps it into that tank at 100,000 gallons a month. If they don't use it for vitrification, those 60,000 gallons could go up. And then again, if DFLAW picks up operation it gets moving quicker, that number could go down.

So we would anticipate, based on the graphic, about 60,000 gallons a month. Again, we don't have a task order, but because of the graphic and the way it's been presented to the public, we're confident that we'll be able to see a task order for that here in the next several months.

In addition to that, as I said in the script, the AMPS is coming online in late '27 and is anticipated to be at full speed by 2028. That volume in '28, they're anticipating to be 300,000 gallons a month just from the amps itself. Again, a portion of that will go to the vitrification of DFLAW and a portion will come for grouting. Again, on the graphic, it specifically says that DOE anticipates 130,000 gallons a month coming from the AMPS system once it gets up and running in '28.

So you can kind of get a sense of what DOE is looking at as far as potential volumes in the near term. And we're very excited about that. And we love them showing that graphic. Like I said, they showed it today at the Hanford Advisory Board meeting. Again, to be clear, it's in DOE's presentations in the public space, but we don't currently have a task order for it.

Just to give a little bit more color on the West Side, the numbers are staggering. The West Side Removal System, which is called the WRMS, it's a different system. It's bigger overall, bigger infrastructure. That's designed to go at 3 million gallons a year. So the total capacity for that system plus the AMPS system and the TSCR system, DOE is saying should exceed 6 million gallons a year annually. But their goal is to push those, and they have a plan to do that. And DOE has been very vocal that their goal is to get to 9 million gallons a year to be grouted sometime after 2030.

So the goals are very high. They have a plan for them. Obviously, there's regulatory considerations along the way. But this administration has been very, very bullish about this program and the importance of showing and demonstrating progress for the $3 billion a year that is -- makes up the Hanford budget and the fact that that's been a long time coming for this program to actually show progress. So we're really excited to be part of it.

And this -- again, as I said in the script, the fact they didn't make an on-site award takes a lot of risk off the table for us. And -- there's no provision for any other regional new construction as defined by the WEIR document. So really, it's coming down to our cost versus our competitors and whether the DOE wants to transport liquids out of state for processing.

Great. And then saw some of the recent modifications, Class II, Class III. Can you kind of talk about how that might impact the glass-plus-grout strategy and any impact to those schedules?

Yes. This is all kind of new to us, too. I know the DOE has spent a lot of time working on getting the East Side accelerated and to meet the goals of the dual strategy. They had to make a couple of changes to their approach, which required some regulatory consideration in the form of permit mods. So there's two mods. One was a Class II mod, and one was a Class III mod. What we're surprised about is the DOE submitted those mods to the state regulators, I think it was August 5, just last week. The state turned this around in just a few days and got this after public comment for a 60-day public comment period, which is right now scheduled to end in, I think, October 6, if I remember correctly.

And that's a very, very aggressive turn on behalf of the state regulators, which we would speculate underscores the fact that the state is working with DOE on this and is making it happen. And that -- if they meet that goal with the October 6 public comment period, barring not too many public comments that they should extend it, then DOE will be -- the state will be in a position to provide potentially permit modifications in -- by mid-October, late October, and DOE could be in a position to actually start shipping waste for grouting later in Q4.

Again, this is speculation. There's maybe some other things we don't understand overall, but just a general process for this to me and our staff shows that this was a collaborative effort between the two organizations and that this program can get going as they're hoping for to be in full stride in early '27.

Great. Yes, I hope so. And one more question on -- in the RFP announcement, the DOE you mentioned the EMF waste stream to be included in that contract, too. Do you anticipate any impact to the EMF program that you're seeing? It sounds like that started to pick up here. And I know you don't guide kind of quarterly, but just it sounds like pretty constructive on improvements in the third quarter, maybe partially driven by that. If you could talk about that a little bit.

Sure. The EMF contract we have now was one that was put together pretty quickly and was not competitive. So they had to use an existing contract vehicle, which has the prime for this vehicle to be the disposal facility of EnergySolutions. So they're the prime and we do the grouting for EMF and we provide that to EnergySolutions and they dispose of it.

What we're anticipating is that because of the modification in this H2C award and as defined in the press release from them, EMF will be a task order within the new contract. We do expect to receive that. Again, keeping in mind that this is covered -- we would anticipate this is covered in the ROD for DFLAW and that we would treat this waste under a new task order within the new contract and then we would ship it to the appropriate disposal facility once that task order is initiated after the first of the year.

So again, we would expect that -- and also that's kind of reiterated or defined in the graphic I mentioned as well. So we have pretty high confidence that will continue moving. Now right now, people are probably wondering how much DFLAW waste we're getting. DFLAW has been chugging along at about 10,000 gallons a month on average, which is, as you know, their goal was about 100,000 gallons a month. So it's about 1/10 of the operation. So we're not getting significant quantities at this point. That is increasing. I was told that they did 35,000 gallons in July and are expecting to beat that significantly in August this month. At the 10,000 gallons a month level, we're getting about 200,000, 250,000 a month in EMF waste and a little less than that for our first shipment from the dry waste.

So it's a pretty nominal amount at this point, but we do expect that to be ramping up. The facility is getting stronger. They're working through their issues. There was an announcement in the press today that the feed system has been replaced. They're working through the emission systems. So they're getting through the issues. And DOE is confident that they can still get ramped up to a higher percentage of operation capacity here in the next couple of quarters, and we'll likely see those quantities of waste significantly increase as they do get to a larger operating capacity.

Good. And then maybe one last one, if I could. Just on the permit expansion. You kind of talked about the timeline in mid-2027. Can you just talk about costs and investments there, investments in the labor force, just as we think about what that looks like and bringing that on?

Yes. We're very encouraged by the relationship with Department of Ecology. As you know, it took more than a decade to get our renewal, and it was -- it was a difficult process. They've done very well in the last couple of years here, and they're working with us in a very supportive manner. We started working with them in February for our permit mod to increase our total capacity to meet DOE's total capacity, as I mentioned, which is right now is about 9 million gallons a year.

We've got the designs completed for the mixtures that we need to install. We also have poured concrete already, begun to purchase some of the heavy equipment so our folks can get trained on it. And we have started different components of the infrastructure upgrades as well to support the larger volumes. So we have begun making those improvements.

The permit right now is expected to take about a year, maybe none months. So we do hope to be -- have that in place for the large volume increase by Q2 -- end of Q2 next summer or sometime in Q2 of '27. And I think we're on track for that, barring any unforeseen issues along the way. And they're working very well with us. So we don't see any reason why that wouldn't be a milestone that we can meet.

So we have some ways to go. We didn't -- haven't pulled the trigger on the new mixers yet. We want to get this award first and get a feel for what the contract said. But we are anxious to get started with that. And we have a lot of confidence that DOE is going to start meeting the grouting objectives that they've defined that they put in these documents, and we want to make sure that we can handle all of it and hopefully be in a position to deliver without any constraint to DOE in regards to our processing.

Our next question is coming from Yuan Zhi with B. Riley.

I have a couple of them mainly on today's Master Subcontract. So first, can you please clarify what's your peak processing capacity? And how long does it take to ramp up to that level so that you can meet the H2C demand?

Sure. Right now, our capacity, including our permit and our equipment is 1.2 million gallons a year, about 100,000 gallons a month. And we are modifying our permit to increase that to over $10 million. And we expect that to take, as I mentioned, sometime into Q2 next year. And it may take a little bit longer than that to get everything deployed, but we're confident that we'll have that in place when DOE gets to their AMPS operating, as I mentioned, which can operate about 400,000 gallons a month with the TSCR. We'll be ready for that when it starts so that we're in a position to keep up with any waste that DOE might have.

Got it. And maybe a quick follow-up. In addition to the permit from Washington State, any other bottlenecks you see like equipment update or facility expansion will be needed for this ramp?

No -- it's a good question. No, we do see the primary critical path is the state. But again, we're modifying a quantity from, I guess as I said $1.2 million upwards to $10 million. And it's something -- it's a process we already do. We have a similar type of mixer, almost exact same technology that we're currently using now.

So what we're asking for is pretty much increase the quantity and then you have to address the risk or operational considerations to make that increase. So we don't see that as a heavy lift and the state hasn't either so far. So we expect that to go through. But we see that as really the only hurdle we have between here and there is that, is getting that through the regulatory body. And we have -- our guys at our Northwest plant have met with the vendors associated with the mixing technology, spent some time with them. They've worked directly with them to run surrogate types of materials that look just like the waste we're going to be receiving and to ensure that the grouting product meets our standards. So they've spent some time making sure that will happen and done some analytical work along that route as well.

Everyone is very comfortable. This is the same mixture that is used at the other DOE facilities. So it's a mixture that DOE is comfortable with and it's proven. So we're going to have a significant amount of redundancy with these additional mixtures and the mixtures we have now. So if one goes down, we can keep maintaining that. And that was a big component in the RFP that we responded to and this contract was awarded on is DOE wanted to make sure that each awardee would be able to handle that redundancy and have a plan to make sure that we don't hold them up as they're generating this waste for grouting. So we feel like we've done that in a big way.

Got it. And based on the maximum cumulative quantity of 50 million gallons and maximum cumulative value of $4.3 billion, is it reasonable to assume the average revenue per gallon is about $88?

That's a tough question. I can't answer that specifically. And the reason it's difficult to answer is because there's a lot of factors associated with this contract. For example, there's rates for just your basic 80% of the waste that they're anticipating being a certain type of waste with certain constituents that can be grouted very quickly and easily.

There's provisions for certain waste streams that have high organics and metals in it that will have to be treated with additional enhancements in the treatment, which bear an additional surcharge, so to speak. There's also different types of waste that can come in with higher rate of activity, which we call Class B and C waste. Those are significantly higher cost.So you could probably say an average might be at that point, but I think it'd be wrong because it could all be the easy stuff. and you just get -- you hit the 50 million gallon limit before you got to the 4.3 million.

On the other hand, if it's very complicated waste, it could be more than $80 a gallon, and you could reach the 4.3 million limit before you got to 50 million gallons. Because of the uncertainty associated with each tank, you just can't make that general statement like that. But it's a starting point for estimating the total volume and price.

Got it. And maybe one last question from us. On the long term, how should investors think about the revenue visibility and potential lumpiness as the Hanford volume scale versus your historical streams and patterns?

Yes. I mean I think this is by far, the most sustainable waste stream our company has ever seen as far as the long-term nature of it and the homogeneity of the waste itself. While I just mentioned a number of different variables, it is still liquid waste that can be transported in a specific container or a set of containers. And you can anticipate time and resources very well. So it is historical, we expect it to be much more sustainable and consistent than our historical lumpiness with waste.

Now DOE has been very clear in the RFP process that it's going to be a lot of outages and the pumping and treating for grouted waste would only be, I think RFP specifically said about 50% production. In other words, they'll be up 50% with grouted waste and down as they move from tank to tank, which is why they want you to be able to store a lot of it and receive it at a very high rate and then be able to work through your inventory once you store it and start processing it.

So I'm not sure if that answers your question, but we do see a pretty average annual revenue for this overall, particularly in consideration of the East Side where they have a very sophisticated infrastructure for all the tanks on the West Side, they move more from tank to tank to tank and could have a little lumpiness. But with the East Side and West Side together, I think it's going to smooth it out a lot to the point where we can make good forecast relative to what waste volumes we anticipate getting from on a year-to-year basis.

Got it. And congrats on winning this master contract.

I'm sorry, I didn't understand the question.

Oh, that's the end of my question. Congrats on winning this.

Our next question is coming from Steven Fein with [SoFein] LLC.

Congratulations, Mark. Congratulations, guys. I mean this is a culmination of a lot of time and it's amazing that things come together. I've watched this for like the last eight, nine years, and you've pulled this together. And all right. So here's my questions. Number one, you say you're going to build a plant and it's going to be done next year. So what will the capacity be then at that plant?

Yes. Again, within our modifications, just to be clear, Steven, are in existing buildings. So we're not having to build any new buildings. We'll have to do some upgrades, as I mentioned, to the infrastructure, the HVAC and the power and a lot of concrete pouring to handle large volumes of trucks coming in and out, a lot of equipment we have to buy. But pretty much the primary job is installation of the mixers. And the mixers we're going to install will be basically the capacity, each mixer will be adequate to cover the DOE receipts.

Again, I don't want to get into details of what we're doing because it's really kind of proprietary at this point. But we're in a position, as I've said over and again, to meet the DOE demand and that demand is expected to get to 9 million gallons by 2030. So we're going to be prepared to meet that need with the mixers we're installing.

By next year or by 2030?

By next year, when they're installed. Right now, I'm sorry if I wasn't clear on that, Steven. Our permit mod and our installation, we're expecting to be up and running by this time next year.

Right. So you also mentioned that -- which I was a little confused about -- that the government is saying that stuff could come in different ways and that you may have to store. So what will be your -- when you're finished all these upgrades, what will be your storage capacity?

Right now, our storage capacity is about 650,000 gallons. Our permit mod will take that number up to 800,000 gallons. We have plenty of storage capacity.

So you're saying that if -- let's say you -- so am I -- I'm inferring from this, you're saying that potentially you could do 10 million gallons a year, but you would only have storage for 1 million gallons at a time?

A little bit less than that, yes. So basically, we'll be operating at a pretty rapid pace. And we'll be able to take receipt of that waste. And if we have an outage or something, we'll be able to handle receipt of that waste, correct?

All right. Would you agree that it's pretty significant that there -- that the government is now saying that they're going to grab some of the stuff that was going to go for vitrification?

Yes. It's -- I don't know if I underscore that enough, but DOE has been very clear to other stakeholders and publicly that the DFLAW is their primary approach and that grouting is a supplement to vitrification. But DOE is looking at this pragmatically saying, hey, the bottom line is, our goal should be to close as many tanks as we possibly can for the budget we have got. And that's why this dual strategy has come to the surface so that they're recognizing the fact that while we do want to do the treatment of the vitrification and dispose of the vitrified waste at the Hanford landfill to really begin to close tanks for the same budget, grouting makes a lot of sense because it's substantially cheaper, as I mentioned.

So yes, we're excited about it. The regulators are cautiously optimistic as we're reluctant to jump in with both feet. They've said publicly many times that they don't want DOE to get distracted by grouting. But this administration has been very, very focused on progress and at Hanford, particularly with questioning everything to optimize our approach and to consider commercial value and commercial approaches that can really save money. This is one of them.

And if you look at some of the older testimonies by former Secretaries of Energy, when Congress asked them, how are you going to get to where the facility is closed and how long is it going to take? If it's 100 years and it's $10 billion a year, that's never going to happen. Grouting puts the entire life cycle of the closure into perspective where it can happen, and it can happen aggressively if DOE steps up and supplements the program with this type of approach.

Is it not true that every gallon of waste that you would get, you would be able to environmentally safely treat that waste. While the vitrification plant, when it gets a gallon, it basically can only vitrify maybe 40% to 50%, let's say, I think the average I've read is around 40% efficiency. Do you agree with that point?

I'm not sure exactly where you're getting that from, Steven.

What I'm basically saying is that the vitrification plant is about -- 35% efficient. So that means if they do 1,000 gallons is fed in there, only about 350 to 400 gallons is going to be vitrified and the waste and the rest is the secondary waste. Well, if you get stuff directly, all 100% of it is done.

Well, I can say that for grouting, yes, all 100% is done. I think there may be some confusion on behalf of vitrification, all 1,000 gallons that you mentioned when it goes in, it all gets vitrified. So they will vitrify 100% of the liquids that go in. I think what might be confused with is they'll be generating -- the term that's used typically is three gallons of waste for every gallon that goes in. So they do have a lot of waste that comes out of it as part of the treatment process. It's not the tank waste necessarily, but what we call secondary waste that comes out of it. And that can be everything from dry waste like filters and PPE that people wear to other chemical-based waste streams and what they call EMF waste, which is the address of the tank bottoms and the scrubbing systems and the emissions. That's all part of the other liquid generation that comes out. But...

All right. So what I'm essentially trying to say is my understanding, and I guess maybe I'm touching on sensitive things here is that you essentially said it, whatever is vitrified, they're still generating waste, while whatever you get, you process and there's no waste generated, correct? So that's a distinct difference. Am I correct on that point?

That's correct. That's correct. Yes.

Okay. And then the next thing is they talk about volumes, all right? So there's 50-some million gallons in those tanks. But my understanding is they got to liquefy that stuff to be able to process it because it's a solid mass, which potentially could mean that there's, what, 150,000 to 200,000 gallons that have to be processed. Is that true?

That is true. They're estimating A minimum of three gallons of water or liquid has to be included in the -- to get the tank waste out so that DOE has stated before publicly that they're estimating about 200 million gallons in total will have to be processed. That's correct.

Right. So basically, if -- you're processing 1 million gallons, you have the capacity to process 1 million gallons right now and you could process that 1 million gallons, one could argue that, that would be 3 million gallons that would go through the vitrification plant. Is that true?

No, I don't think it's that simple that they generate 3 million gallons for every gallon -- for every million gallon that goes in. I don't have the exact or a complete understanding of all the waste that's going to be coming out. And because the reason I say that, Steven, I don't know how linear it is. None of us do yet. That's why we have a tough time with the estimates for waste coming out of DFLAW is that we're not sure. Right now, they're running at 10,000 gallons a month. Is that going to -- and we're getting 8,000 gallons of EMF a month. Does that all go up by 10 when it goes up by -- when it gets to full capacity? We don't know that yet. So I don't know what that ratio would be at full capacity or full operations. I'm afraid I can't answer that question.

Well, the real question is, and I guess you'll probably never talk to me again. The real question is, is this going to -- is the vitrification going to augment and flow as it's been flowing like a nightmare. And the other thing is, I mean, you guys are environmentally safe. Everything you do is safe while you're talking an environmental nightmare over there. I said that, I didn't ask the question.

But the bottom line here is Savannah grouted and it's been -- the government has finally woken up. I'm glad to hear in these challenging times that the government is finally seeing the reality that there's a lot of waste there and also more importantly, that the waste is of a form that is more suitable to growing than it is to vitrification.

And the other point that comes out of this, when you talk about this gradation scale of what you would be charging based on the waste, isn't that -- so isn't that also an issue if you start transporting this stuff if you don't know what -- if the waste can vary?

Yes. I mean I think you'll know that before you transport it, and they'll have to have a suitable transportation container that aligns with that. And basically, when they put the RFP together, they ask the bidders to make sure that you have a plan for each of the types of waste that you are getting, how you're going to treat it, how you're going to transport it and costs associated with each. So there's a plan for that to make sure that each type of waste you possibly get could be dealt with sufficiently and within the rates you provided.

Unfortunately, ladies and gentlemen, we have reached our allotted time for question and answers. So I'm afraid I will have to turn it back over to management for closing remarks.

Okay. Thank you. Thank you all for your questions, and thank you for joining us this afternoon. I want to leave you with this. The second quarter was disappointing financially. And I'm not going to characterize it any other way. We received the waste we said we'd receive and grew backlog 29%. DFLAW eceipts have commenced. H2C has awarded a master subcontract for the Hanford tank waste grouting and DOE has named our facility in the plan it presented publicly for the largest waste treatment program at Hanford.

We have the capacity, the permits and the balance sheet to support it. We're highly encouraged by the outlook of the second half of 2026, but the opportunity ahead of us is much bigger. Our facility is permitted today for 1.2 million gallons per year, and DOE's plan contemplates 9 million gallons annually by 2030. This is the scale of the program we're heading --we're building capacity to serve, and it's not a project or a projection. It's a program measured in decades tied to a cleanup mission federal government is legally obligated to complete. We look forward to updating you on our progress in the future. Thank you.

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

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.

Good morning, everyone, and welcome to the Perma-Fix Fourth Quarter and Fiscal 2025 Business Update Conference Call. [Operator Instructions]. Please note, this conference is being recorded.

I will now turn the call over to your host, David Waldman of Crescendo Communications. David, the floor is yours.

Thank you, Jenny. Good morning, everyone, and welcome to Perma-Fix Environmental Services Fourth Quarter and Year-end 2025 Conference Call. On the call with us this morning is 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 2025 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. 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 non-GAAP measures to the most directly comparable GAAP measures is available in today's news release on our website.

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

All right. Thanks, David, and good morning, everyone, and thank you for joining us today. 2025 was an important year for Perma-Fix as we focused on strengthening our operational foundation and positioning the company for the next phase of growth tied to the Department of Energy's Hanford cleanup mission.

For the full year, revenue totaled approximately $61.7 million, reflecting stronger performance in our Treatment Segment and improving waste volumes across several of our treatment facilities. While the timing of certain government programs affected activity levels during the year, we made significant progress preparing our facilities, workforce and infrastructure to support the increased waste volumes expected as the direct feed low-activity waste or DFLAW, program transitions into its operational phase. Throughout the year, we also made targeted investments in personnel, infrastructure and plant capabilities to ensure we're fully prepared to support the next phase of activity at Hanford and across other DOE cleanup programs. As many of you know, the DFLAW program and the Hanford tank waste program represents one of the most significant environmental remediation efforts currently underway in the United States, and we believe Perma-Fix is uniquely positioned to support this mission, given our specialized treatment capabilities in our long history of supporting DOE waste management programs.

One of the most significant milestones in the year was the renewal of the permit for our Perma-Fix Northwest facility. This permit significantly expands our permitted processing capacity to approximately 1.2 million gallons of liquid mixed waste annually effectively tripling our liquid processing capacity and also authorizes treatment of up to 175,000 tons of waste through macro encapsulation annually. Combined with our investments in automation, facility upgrades and workforce expansion, these improvements meaningfully strengthen the role Perma-Fix Northwest can play in support of multiple handset-related waste streams and other deal emission objectives as activity ramps in the coming quarters.

In the recent press release, DOE announced the need to extend the DFLAW hot commissioning phase. However, waste is expected to be received through the DFLAW liquid waste treatment processes beginning in May at our Northwest facility with dry waste expected to be received in April. The liquid waste streams are anticipated -- anticipate streams are expected to grow above original estimates by as much as 20% as described by DOE based on changes made and the process flow, which will include grounding a portion of the effluent waste instead of using DFLAW vitrification processes as originally designed. Our regulatory supplemental analysis is under review that includes using Perma-Fix Northwest grounding capacity, to treat the affluent to enhance production levels at the DFLAW facility.

The DFLAW facility is processed about 50,000 gallons of tank waste through February and the melters remain hot which produces steam resulting in generation of waste to be included as affluent to Perma-Fix Northwest. For investors trying to better frame the timing of the DFLAW opportunity, DOE planning documents indicate the system is expected to ramp progressively through hot commissioning beginning -- which began in October of 2025. And within 12 to 18 months of that start date debut plans to reach operational phase at approximately 40% capacity before increasing towards 80% capacity as additional systems come online and that's required to be done within 3 years based on the tri-party agreement at Hanford. We view this as an important indicator of the size and durability of the opportunity in front of us while also recognizing the exact pace of that ramp remains completely depend on DOE execution and site operating conditions.

Initial estimates regarding revenue potentials remain at about $1 million to $2 million per month beginning in Q2 and ramping up through the year. As at a recent Waste Management Conference in March, DOE leadership specifically addressed the importance of implementing a grouting program to supplement DFLAW towards meeting the department's goals for diving tank closures by 2040. DOE stated that this program is working towards treating up to 200 million gallons of waste by 2040 from the Hanford tanks through the DFLAW program and supplemented by the grounding program to be initiated in 2026. The number has grown from the original 56 million gallons estimated based on the expectations due to the fact that they will be generating 1 to 3 gallons of wastewater from each gallon retrieved due to the need to add liquids to the tank to retrieve the waste.

Over the past several months, Perma-Fix Northwest has continued to make significant investments in automation and information systems of personal training to ensure the facility can operate efficiently at high throughput levels and meet or exceed expected production rates as a broader range of waste streams begin to arrive. The Hanford remediation programs are expected to generate sustainable waste streams over time, which we believe can create consistent long-term treatment demand and recurring activity for our facilities. In addition to supporting DFLAW program, we expect to participate in several other Hanford related waste streams and site programs that will generate additional treatment demand over time. These increases in receipts include product solidification treatment support to high-volume contaminated water from the Hanford site as well as increasing our transuranic waste processing program by 100% beginning this month, supported by additional shifts at the Perma-Fix Northwest facility.

As waste receipts increase, we expect to utilize the expanded capacity to support a growing volume of treatment activity tied to both Hanford Mission and other DOE programs.

Operationally, our Treatment Segment delivered meaningful improvement during the year. We saw higher waste volumes, improved plant throughput and stronger waste mix, which together drove significant year-over-year growth in treatment revenue. As result, treatment revenue increased approximately 29% year-over-year, reflecting both higher activity levels and stronger pricing dynamics associated with the waste streams we processed. Importantly, our treatment backlog increased by approximately 51% year-over-year and approximately -- to approximately $1.9 million in revenue, providing improved visibility as we enter 2026. This backlog growth reflects increasing demand for our specialized treatment capabilities across both government and commercial waste streams.

Another area of progress during the year was international activity. Revenue from foreign entities increased approximately 163% year-over-year to approximately $6.4 million reflecting growing global demand for our specialized waste treatment services. Our international markets continue to represent an attractive growth opportunity for us as many countries face similar challenges related to complex nuclear and hazardous waste management and we continue to see an expanding pipeline of potential treatment projects in Canada and other international markets.

Turning to productivity more broadly. We have seen a number of encouraging developments over the past several months that we believe support our growth outlook for 2026. These include opportunities tied to sole sorting, work for a commercial uranium mining client, additional treatment work related to Canada and other international markets, our weapons production-related waste treatment programs and remediation work supporting a major university laboratory environment. Some of these opportunities are already moving into execution while others remain in final award and start-up phases and together, they reinforce our confidence in improving activity as we move through the year.

We also want to set expectations appropriately for the first quarter. While Perma-Fix does not typically provide formal guidance, it's important to recognize that factors are expected to make the first quarter softer than the stronger activity we tend to expect to begin for the second quarter. These factors include recent delays in the DFLAW affluent receipts, which shifted expected waste receipts out by several months, also normal seasonal weaknesses in field activity during January and February and ongoing efforts at Perma-Fix Northwest to process toward waste and prepare all -- to prepare all of our resources for the increase in Hanford related activity expected later in the coming months.

While the Q1 numbers are not finalized, losses in Q1 will likely exceed $4 million in negative EBITDA on about $13 million in revenue. Despite those near-term impacts, we've seen strong activity in March and I believe the second quarter should represent an inflection point as additional waste receipts and project activity begin to ramp. The focus on stored waste, I mentioned has resulted in timing-related shift in revenues from Q1 to Q2 due to applicable revenue recognition rules, resulting in a movement of approximately $2 million in revenue generated Perma-Fix Northwest to be recognized in Q2, while they're actually processed in Q1.

We also continued advancing the development and commercialization of our PFAS destruction technology. During the quarter, our engineering team focused on completing construction and installation of our new generation 2.0 PFAS destruction system at our Oak Ridge facility, the upgrade system the upgraded system is designed to increase our PFAS destruction capacity by up to 3x our current rate while incorporating engineering improvements intended to reduce operating costs and improve reliability and production rates. PFAS continues -- PFAS contamination continues to receive increasing regulatory and environmental attention worldwide, and we believe technology is capable of permanently destroying these compounds will play an important role in the future of remediation efforts.

We also continue to see strong interest in our technology as an alternative to incineration with our PFAS Perma Fast system, providing permanent destruction of PFAS compounds at a lower total cost while affording air emissions. We believe the ability to permanently destroy PFAS compounds and eliminate long-term environmental liability represents a compelling advantage for our customers evaluating alternatives, traditional -- to traditional disposal methods. Over the past several months, we've secured several field projects supporting PFAS remediation at regional airports and continue to see additional airport-related opportunities currently moving through procurement processes. More broadly, we're continuing to develop strategic relationships with companies involved in PFAS remediation and AFFF removal as we work to expand the developed deployment of our technology across both government and commercial markets.

Taken together, we believe these developments position our PFAS platform to support increasing demand for cost-effective permanent PFAS destruction solutions as remediation activities continue to expand. In our Services Segment, revenue declined during the year, primarily due to the timing of project mobilizations and procurement cycles, including delays earlier in the year associated with the transition to the new administration and related policy adjustments. The partial federal government shutdown in October also impacted procurement for timing of government-related customers. In addition, we've seen the normal seasonal timing efforts of weather and delayed project mobilization is during the first quarter. Importantly, our services business remains project-based and therefore, quarterly activity levels can vary depending on project timing and scope.

Nevertheless, we continue to see opportunities in this segment tied to nuclear services, decommissioning work and government remediation programs, and we believe the progress we've made during the year positions us well as activity levels increase. In fact, I'm pleased to report we've won over $30 million in new services backlog and submitted over $40 million in new bids just during Q1. We look forward to providing further updates on our bid pipeline in the future. Finally, I want to highlight what we believe is one of the most significant long-term opportunities in front of the company.

In December, the Hanford tank contractor issued an RFP tied to the tri-party agreement to retrieve 22 tanks over approximately the next 12 years for commercial grouting and off-site disposition of the waste as part of a long-term remediation effort tied to the retrieval and stabilization of tank waste at the Hanford site. The RFP estimated that this contract will begin in January 28 for total -- for a volume of tank waste up to 50 million gallons to be grounded at commercial facilities. Perma-Fix Northwest is exceptionally well positioned for this opportunity given its location with the mile of the Hanford site as currently permitting -- its current permitting profile and its expanding processing capability currently available. While this opportunity is not expected to begin until later in the development cycle, we believe it underscores the scale of the long-term duration of Hanford related work and is now taking shape and the strategic advantage firm can provide and is recognized by DOE.

So when we step back and look at the broader picture, we see the recent delays in India flow effluent receipts from hot commissioning activities as relatively modest in relation to the size of the opportunities in front of us. Between the DFLAW ramp, additional Hanford related waste streams, the grounding program now in development for up to 200 million gallons of waste to be treated, expanding international work, a growing treatment backlog and advancing PFAS and remediation opportunities, we believe the opportunity for Perma-Fix to deliver meaningful growth and improve profitability beginning in the second quarter and continuing into the coming years has never been stronger.

Thank you, and I'll now turn the call over to Ben for the financial discussion.

Thank you, Mark. Beginning with revenue, our total revenue from the continuing operations in the fourth quarter was $15.7 million compared to last year's fourth quarter of $14.7 million, an increase of $1 million or 6.9%. Our Treatment Segment revenue increased by $2.6 million while Services Segment was down $1.6 million. In the Treatment Segment, the increase was a result of higher volume, offset by lower average price, which was the result of a change in waste mix.

Reduction in the Services Segment revenue was due to lower start-up of new projects to replace completed projects from prior year. For the year ended 2025, our revenue was $61.7 million compared to $59.1 million in 2024, an increase of $2.6 million or 4.3%. In the Treatment Segment, revenue was up $10.1 million, while the Service Segment dropped by $7.6 million. As with the quarter, the Treatment Segment benefited from increased volume and it also had higher average pricing related to waste mix. The Services Segment continued to feel the effects of reduced project work related to timing of project start-ups and awards.

Turning to our gross profit. For the fourth quarter, gross profit was $1.2 million compared to $594,000 in Q4 2024. Gross profit in the Treatment Segment increased by $983,000 as a result of increased revenue, offset by higher labor and maintenance expense. Services Segment gross profit was below prior year by $365,000 due to lower revenue and lower margin projects. However, that was offset partially by reduced fixed overhead costs. For the year ended 2025, gross profit was up by $6 million. Most of the improvement came from the Treatment Segment were higher revenue and improved margins were partially offset by the increase in fixed cost at the plants. Gross profit from the Services Segment was relatively flat as the impact of lower revenue was offset by drops in both variable expenses and drops in fixed overhead.

Our total SG&A costs for the fourth quarter were $4.2 million compared to $3.9 million in the fourth quarter last year, while SG&A for the full year was $16.4 million compared to -- in 2025 compared to $14.4 million in 2024. Our SG&A expenses in the quarter were up from higher marketing costs related to payroll and trade shows, while administrative expenses increased due to payroll and legal expenses. Our SG&A costs for the fiscal year 2025 were up by $1.9 million from higher payroll, expenses in both marketing and admin as well as higher trade show and legal expenses. Our net loss for the quarter was $5.7 million compared to last year's net loss of $3.5 million. Note that the current year results include an adjustment to one of the company's discontinued operations of $2.7 million related to a long-term remediation cleanup.

For the year ended December 2025, net loss was $13.8 million compared to a net loss of 20 in the prior year. Again, our net loss for 2025 included the $2.7 million recorded in the remediation reserve for our discontinued operations, as previously discussed. And then also that in 2024, our net loss included approximately $8.2 million of income tax expense related to the full valuation allowance established on our U.S. tax deferred tax assets. Our basic and diluted net loss per share for the quarter was $0.31 compared to a loss per share of 22% in the prior year. This includes the impact of $0.15 per share from the adjustment to the remediation reserve within our discontinued operations. Loss per share for the year ended December 31, $0.75 per share compared to a loss per share of $1.33 per share in 2024.

EBITDA from continuing operations, as we described in this morning's press release, was a loss of $2.7 million compared to a loss of $3 million last year. For the year ended 2025 EBITDA was a loss of $9.7 million compared to a loss of $13.8 million in 2024.

Turning to balance sheet in comparison to 2024. Cash on the balance sheet was $11.8 million compared to $29 million in the year ended 2024. Unbilled receivables were higher in '25 compared to '24 by $3.8 million primarily due to the timing of waste shipments in the Treatment Segment. Our net property and equipment was up $3.5 million, primarily from capital spending which included the construction of our PFAS reactors. Intangibles and other assets were up $1.4 million from interest earned on the finite risk sinking fund as well as increase to permits and joint venture investments. Our waste treatment backlog for the year-end was $11.9 million compared to $7.9 million in the prior year.

Long-term liabilities related to discontinued ops were up $2.7 million, again, due to the increase in the remediation liability at one of our discuss facility. Total debt at quarter end was $2 million, excluding debt issuance costs, which is mostly owed to PNC Bank.

Finally, I'll summarize our cash flow activity, cash used by continuing operations was $10.3 million. Cash used by discontinued operations, of $441,000. Cash used for investing in continuing operations was $4.9 million, primarily for cap spending and permits. Cash used for investing of discontinued ops was $54,000. And cash used for financing was $981,000 representing monthly payments to our term and capital loans of $631,000, payments related to finance lease and other debt of $327,000. The payment of offering costs from last year's equity raise of $195,000 and offset by net proceeds from option exercises of $172,000.

With that, operator, I'll now turn the call over for questions.

[Operator Instructions] Our first question is coming from Howard Brous of Wellington Shields.

I just have a couple of quick questions. You started talking about Q2 and the performance. Can you give us a better sense of what you're referring to?

Sure, Howard. Yes, we have a lot of confidence in Q2, Howard, based on a couple of things. One is, as you know, it's really been about 2.5 years since our services group has really established a strong backlog of projects. And for numerous different reasons, a lot of it was just a cyclical thing with the changing of contractors at the prime levels and other market conditions. But that's really changed significantly in the last several months, and we're excited about where the services group is going.

First, we just received a new contract award for a demolition project for a logical facility at a National Lab. We hope to be announcing that in details -- some details on that in the next few days. We've also mobilized 3 new projects into the field in the last 2 weeks that will generate waste that we'll receive in process. There's projects that have better margins than most. And we've also got a pretty significant backlog of [indiscernible] a pipeline of opportunities we've submitted bids on, with squarely within our core competencies for radiological facility deletion and remission as well as decontamination. So those look really good for the summer, and it puts services in -- back in a position of carrying more weight than it has. And that typically bolsters our treatment shop as well.

But along with that, we're also -- the other component or why we believe Q2 will be better, is related to Northwest. Just a little more detail on Northwest. There's a project up there that includes taking all the surface water waste that Hanford accumulates in selling ponds on site. And the -- evaporate that and make a brine out of it and they sent us the brine. And that program will start up as we plan to start April 1, and we'll start receiving waste a few days after that. That's about $1.5 million or so a month revenue stream that's very important to us, and that will go for an extended period of time. It's a very sustainable waste stream as a runoff and rainfall as well as from groundwater treatment activities and those types of things all comes to us, and we treat it center back.

Secondly, DFLAW, as I briefly mentioned in somewhat complicated, but bottom line is that they're in high commissioning now and they're run -- they're still running waste through the facility in smaller quantities not at a sustainable level. But they do generate go blow down in water. That's where they use to -- in the scrubber systems to address their effluent requirements. That waste was going to be pumped back into DFLAW and make glass out of it. In a press release a couple of weeks ago, about a month ago, I do said, instead of us making glass out of that blowdown water why don't we treat it, and then we can do more tank waste, 20% more. And so they work with us, and they're going to be shipping us that way here as soon as the supplemental analysis gets through the public comment period, which is mid -- late April, and then we should start seeing that sometime in May. So that should also be an additional waste stream from DFLAW along with some dry waste from processing.

And lastly, the TRU waste program, as I mentioned, has doubled in size. So going from 1 shift to 2 shifts. That's added about $750,000 to $1 million a month as well. All this together, along with the $2 million I mentioned is going to be bumped from Q1 to Q2 due to revenue recognition rules. April looks like a great month and the Q2 altogether in Q3, looks like a very sustainable return back to profitability based on what we're seeing right now. So we're excited about Q2, Howard.

Going back to growing. It seems that the -- excuse my voice, the 200 East area where the waste treatment plant is, they have a plan to grow the waste of the 200 West area. Can you comment about that?

Yes. It's important to understand there's 2 different components of the Hanford site. The West area is where there's -- the DFLAW does not have an infrastructure included a good distance from the actual DFLAW plant. So as determined they're going to basically commercially grow all the tanks out there. And under the Trump administration, they're being very aggressive about it. And that's what the large RFP I mentioned in my script is all about. It's basically a $4 billion estimated value. There's a lot of flexibility in it. In other words, they may use other contract vehicles that may make multiple awards.

But the bottom line is they're set up to really begin high-volume routing at about the 3 million to 4 million-gallon a year range, but it does expand a little beyond that in the next 2 to 4 years. And we're in a great position for that being the only facility local. And I'm sure they want backups to us or maybe supplementals to us. That remains to be awarded here sometime in the third quarter. But in parallel with that, the East side where DFLAW is, DOE has been somewhat vocal that instead of all the way going to DFLAW that's currently being pumped into staging tanks to go to DFLAW, they can start grounding some of that waste. In other words, they have 1 million gallons of storage for DFLAW while that's sitting there, they could be pumping it out for grouting as well as probably get the DFLAW. So there's an opportunity for supplemental grounding to occur and we're in a really good position for that as well. And that's something we're looking at doing in the third quarter or fourth quarter if they get to the regulatory hurdles they're planning to.

So both those components could start impacting us in the next 12 months and certainly in the next couple of years, but presents a very significant backlog opportunity for the company.

Last question, I want to address PFAS. In terms of volume and capacity, where are we headed?

Yes. With new systems have been delayed a couple of months due to supply chain issues, which we seem to be facing all the time. Everything is on site now. We're going through the installation process. We poured concrete and things are rolling. So we're really on track for late April, early May to start testing. And once that new system comes online, we'll be basically in a position to do about 3,000 gallons a day. And backlog has been pretty good at the Gen 1 system. We've made some improvements through the last quarter, 2 quarters, really, where we are able to start recycling our chemistry, and that allows us to lower our rates.

As I mentioned before, our target is really to undercut incineration. We can do PFAS treatment cheaper than the generators can and that's been kind of the shift in the industry to total destruction. It's kind of our competition. So our sales focus is squarely right now on making sure we're getting as much incineration competitor waste as we possibly can. And it's going really well. And again, we continue to do a lot of partnering on that. And we believe once we get the capacity up to 3,000 gallons a day total capacity with the new system and the old system as well that we'll be able to get even greater backlog because we can store more and commit to higher throughput.

So that's really where we're going. We're still doing some R&D on the smaller components, smaller systems to be field deployed. Right now, we're really focused on the new system and getting it operationally ready and rolling.

[Operator Instructions] And our next question is coming from Aaron Spychalla of Craig Hallum.

Maybe first on DFLAW, can you just kind of speak to the visibility into that waste stream starting. You mentioned some solids in April and liquids in May. And it sounds like still expecting that $3 million to $6 million a quarter as that ramps. Maybe just kind of walk through that time line as well.

Sure, Aaron. It's been difficult. DOE has not been real public on the operations of DFLAW overall other than it's operating. And so it's difficult to understand how much waste is going in. What the issues are they're dealing with to get to an operational phase in other words, getting through their punch list to make everything -- make sure everything is working at capacity.

So it's difficult to project it. But we do know that, that blood on one of the EMF water I mentioned should be as soon as this supplement analysis is done to change the direction where it was originally tended ongoing. We should start to see that in -- at about 10,000 gallons a month and ramp to 4x that as operations gets underway. So that's an important waste stream for us. That's a big portion of the overall DFLAW waste generation itself. Not all of it, probably not even half of it. And there's a lot of other waste that are being generated that are basically being stored with -- at the Bechtel facility that we expect to start receiving in April. We don't have a lot of clarity on that at this point, Aaron, in regards to volumes and that type of thing, what the overall impact will be. But we know between the 2 that we should be, as I mentioned, in $1million, $1.5 million to $2 million a month here, particularly by mid-quarter of Q2.

And the clarity on that, I think, will increase as they get through some of these punchlist items. DOE is totally dedicated to getting this facility up and running as fast as safely possible. And so it's difficult to really nail down schedules on when the way we really beginning to flow like we anticipate it will.

Understood. And then maybe on international volumes, you kind of highlighted growth there in 2025. Just how are you thinking about the opportunities there as we look to 2026 and beyond?

Yes. We just wanted some work, Aaron, from Canada again to do some liquid treatment and at our Florida facility as well as the [indiscernible] facility here in Oak Ridge. That's going to be a pretty good backlog. That will begin here mid-April and run pretty much through the summer and could be going longer than that. We've also got several other projects for different clients throughout Canada that would be likely to begin in Q3.

The Mexico waste we did last year, there'll be another tranche of that out for bid here. It's already been out for bid. That won't likely get rolling probably until Q3 or Q4. And we continue to get strong waste from Germany, and that also is expected to be sustainable here through the latter part of the year. Then our TRC project is going very well in Italy. Unfortunately, even though it's ahead of schedule, actually, the remediation processes for pulling the drugs out of the ground that will start here in April. So all the permits are done, all the paperwork is done and now it's actually a field work. That's not our scope. That's another company, another contract. And our scope will be to characterize as drums as come out, they come out and that won't start until Q3. And we'll start seeing any of that waste probably until Q1 of '27.

So to answer your question, we probably won't see the same revenue levels as last year, but they'll be close but probably 25%, 30% less than we saw last year with ramping up in Q4 and have a stronger '27 of international waste.

All right. And then on the permit, the expanding the capacity with everything going on at Hanford, just maybe talk about -- you've made investments, but just how you're preparing to handle all the volumes there?

Yes, Aaron. We just submitted our proposal on that a few weeks ago, and we've been pretty vocal about what our capacity expectations are. Right now, as I mentioned, we can do 1.2 million gallons a year of liquids. And what we're proposing DOE is that we will be submitting a permit mod through that permit here in the next few weeks and that permit model will include ramping that up to an additional 3 million gallons on top of that. So we're a total of 4.2 million gallons total capacity for liquid treatment.

That will cover all the way streams we're talking about, plus the 3 million or 4 million in routing for the tanks. And that permit mod is expected to take 6 to 9 months to get through the system. And we will be beginning to install or modify our facility to support that as well with investments here beginning in the second half of the year to get to that level. So the big deal about that permit renewal is not a lot of things that are important to it, but the one that's probably most important since it's approved, now we can do permit mods. While they were reviewing that permit application, renewal application. For the last 16 years, we couldn't do mods to it because they kept saying, if you want to do a mod, we're going to stall on you or put your renewal down and pick up your mods, so you won't get your renewal.

Now we have a renewal, we can do mods, and they'll be quicker and more efficient because they're not that complicated and allows us to be flexible on these things and to implement some new technologies, expand our current capacities and those kinds of things. So we really feel like being at a capacity of 4.2 million gallons a year based on the fact that the new administration is looking at such a large volume of waste that we should be able to get pretty much full capacity in the future. I don't know when that will be, a lot of it depends on how fast they can get it out of the tanks. But our capacity is not going to be a critical path, and we'll be very aggressive on what we can produce and what we can treat based on our capability.

And then just maybe one last one on the balance sheet. Can you kind of talk about cash flow expectations? It sounds like there's some receivables at year end? And then just how you're thinking about CapEx and investments in '26, you kind of talked about some maybe in the back half.

Aaron, yes, the balance sheet, we still have a number of capital initiatives to support the increased productivity expected. And -- but our working capital remains in good shape. We don't normally comment on any kind of cash raises at this time. So right now, we're comfortable with our balance sheet at 12/31, and we will evaluate that as the opportunities and the capital needs come above.

Our next question is coming from Walter Schenker of MAZ Partners.

Just to get back to PFAS. So the original unit is -- it's a question, is operating commercially and treating waste streams currently while you build the second unit? That's the first question.

That's correct, Walter. It runs -- it does about 650 gallons a day, and it's running about 4 days a week consistently. There is some downtime associated with it that our average is around 4 days a week. And again, we've taken what we've learned from that system and engineering issues with that and perfected it to the next system. So that next system will be more efficient in operations. But yes, it does about 600 for the gallons today.

And as a range, not a specific number, for your ability to eliminate those PFAS chemicals, pricing is roughly where? For gallon?

Really, it depends on volume, but if we get a big volume, we typically discount, and it also depends on the characteristics of the PFAS concentrations and those types of things.

But to give you a range, for bigger totes, we can do between $11 and $15 a gallon. For smaller quantities like a drum or buckets, a lot of that ARR comes into smaller quantities, it can be above $30 a gallon. So it just depends on the quantities we're getting. As we get to the larger volumes that we can handle with the new system, we'll be pushing for larger volumes to receive, so we don't have to handle as much. But just to kind of give you a range, Walter, $10 to $15 a gallon is a pretty good range for higher volumes.

And on higher volumes with that price range, a range for some sort of operating profit margin?

It's typical -- we try to design our system from the very beginning to stay in alignment with our other waste treatment margins, which incrementally our target is 60% to 70% incremental margins on average. So some maybe more, some maybe less depending on a lot of different factors, but it's generally alter in line with our treatment margins across the company.

And my last question, the second unit to get you up to 3,000 [indiscernible], the CapEx to build that was roughly what? Or is worth what, since it's not up yet?

Yes. It's in the -- correct me if I'm wrong, Ben, in the $5 million -- $4 million to $5 million range, yes.

Thank you very much. While we appear to have reached the end of our question-and-answer session. I will now hand it back over to the management team for their closing comments.

Okay. Thank you, Jenny. And overall, we believe that Perma-Fix is entering a period where the strategic investments we've made over the past several years are beginning to translate into meaningful growth opportunities. We've significantly expanded our treatment capacity at our Perma-Fix Northwest facility strengthened our operational infrastructure, increased our treatment backlog and expanded our international project activity.

At the same time, we continue to advance our additional opportunities across government and commercial markets, including projects related to nuclear remediation, weapons production and waste treatment, international waste streams and emerging PFAS destruction solutions. Importantly, the transition of the DFLAW system into its operational phase along with several additional infra-related waste streams and long-term remuneration initiatives currently under development represent meaningful catalysts for increased activity at our Northwest facility. While the timing of certain waste receipts and project mobilization may create some variability in near-term quarterly results, we believe the second quarter should mark the beginning of a broader ramp and activity as additional waste streams begin moving through the for cleanup system and new product work begins contributing to the revenue.

As activity levels increase and we utilize more of this expanded treatment capacity, we believe higher throughput across our facilities should allow us to better absorb fixed operating costs and achieve meaningful margin improvement. When we consider the combined impact of the DFLAW ramp, additional Hanford cleanup programs, the tank reval and grounding initiatives currently under development, expanding international opportunities and the continued advancement of our PFAS technology, we believe the long-term opportunity for Perma-Fix has never been stronger. With that operator, thank you.

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

Good morning, everyone, and welcome to the Perma-Fix Fiscal Third Quarter 2025 Earnings Conference Call. [Operator Instructions] Please note, this conference is being recorded.

I will now turn the conference over to your host, David Waldman of Crescendo Communications. David, the floor is yours.

Thank you, Jenny. Good morning, everyone. Welcome to Perma-Fix Environmental Services Third Quarter 2025 Conference Call. On the call with us this morning are Mark Duff, President and Dr. Lou Centofanti Executive Vice President of Strategic Initiatives; and Ben Naccarato, Chief Financial Officer.

The company issued a press release this morning containing third quarter 2025 financial results, which is also posted on the company's website. If you have any questions after the call, 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 meeting 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, 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. company makes no commitment to disclose any revisions to forward-looking statements or any facts, events or circumstances after the date hereof that verify on 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 measure is available in today's news release on our website.

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

All right. Thanks, David. Good morning, everyone, and thank you for joining us today. We're pleased to report another quarter of solid financial and operational progress for Perma-Fix revenue increased [ $1.5 million ] compared to $16.8 million in the same period last year, while gross profit more than doubled to $2.6 million, up from $1.3 million a year ago. Gross margin expanded to 14.6% from 7.9%, driven primarily by higher waste volumes and a more favorable mix within our treatment operations, partially offset by increased fixed cost. Gross margin also increased by 38% from Q2, reflecting continued operational progress and a stronger overall mix.

We also achieved a meaningful improvement in EBITDA versus the prior quarter, reflecting stronger throughput and continued execution discipline. Overall, these results demonstrate consistent progress in margin expansion, backlog growth and positioning Perma-Fix for long-term sustainable growth across our treatment [ PFOS ] and Nuclear Services programs. Our Treatment segment continued to deliver strong performance. Segment revenue increased 45% year-over-year to $13.1 million, up from $9.1 million in Q3 of '24. While segment gross margin improved to 17.3% from 4.5%. The improvement was driven up by higher waste volumes [indiscernible] at our plants and solid execution across both commercial and DOE projects. Waste sales totaled $14.6 million, up from $8.4 million in the same period last year, a 74% increase.

Our treatment backlog ended the quarter at $15.4 million, up from $7.9 million a year ago, providing a strong visibility through year-end and into 2026. We automation, digital scheduling and plan optimization initiatives are all improving productivity and throughput while maintaining safety performance overall. We're now realizing the full benefit of these investments contributing to higher throughput and sequential margin improvement. We also continue to support international waste shipments, which remain on schedule and are expected to continue into the first half of 2026, adding backlog, stability and revenue diversity. We continue to process waste rooms from Europe and North America and are evaluating new shipment request tied to upcoming 2026 European Union programs.

Turning to Hanford, this is one of the most significant and long-term growth opportunities in our company's history. The Department of Energy's direct feed low activity wage facility, also known as initiated hot commissioning in early October, ahead of the October 15 tri-party agreement milestone. Melton is now converting tank waste into stable glass, marking a major milestone in DOE's environmental cleanup mission. Under DOE's record decision for the Hanford Dow program, Perma-Fix Northwest is the designated commercial treatment pathway for secondary waste streams generated during the vitrification operations. These include process liquids and solid residues that require off-site treatment at licensed facilities.

This designation establishes the opportunity for a multi-decade high-volume revenues for Perma-Fix as DFLAW meets the objectives for the cleanup of Hanford over the next several decades. We expect to begin receiving affluent waste shipments from DFLAW later in Q4 or early Q1 of 2026 following DOE's initial production phase and associated waste characterization. Although DOE's tri-party agreement allows up to 3 years to reach design capacity for throughput, internal DOE goals indicate an earlier ramp-up and Perma-Fix Northwest is fully prepared to meet that. Earlier this year, we completed the union transition under our UAE Local 590 agreement in the Tri-Cities region for our Perma-Fix Northwest plant. This has improved labor stability increased hiring efficiency and allows multi-shift operations to meet DOE throughput requirements while maintaining excellent safety performance. Taken together, the record decision designation, DOE progress, facility upgrades and a workforce stability position puts Perma-Fix in a position as a critical commercial link in the DOE's waste treatment chain, a role that provides long-term recurring revenue as DOE's cleanup mission advances.

Our PFAS destruction initiative continues to advance both technically and commercially at our Florida facility, the first-generation Perma-Fas system operated reliably through the quarter, achieving complete destruction of PFAS compounds at a 10% to 20% cost advantage to incineration and with 0 air emissions. System performance improved month-over-month following Q3 upgrades increased throughout throughput

[Technical Difficulty]

Apologies for the technical issue there. We'll reconnect them very shortly. Apologies, everybody, for the delay there, Mark should be collecting very shortly with us again. I'm very sorry for the delay. Mark should be reconnecting with this any second. And we have Mark back in the conference, Mark your back live in the conference. Again, apologies for the technical issue.

Okay. I'm not sure where I got cut off, I was talking...

Mark, I think it was around when you talked about the waste shipments in 2026 in the tri-party agreement. After the union discussion try from there.

All right, one minute here. All right. We're going for at a few sentences. I'll jump in right after the union agreement. Discussion taken together, the Record of Decision designation progress, facility upgrades and workforce stability position Perma-Fix Northwest as a critical commercial link and waste treatment chain, a role that provides long-term recurring revenue as DOE's cleanup mission advances. Our PFAS destruction initiative continues to advance both technically and commercially. At our Florida facility, the first-generation PFAS system operated reliably throughout the quarter, achieving complete destruction of PFAS compound at a 10% to 20% cost advantage to incineration with our program, it has 0 air emissions as well.

System performance improved month-over-month following Q3 upgrades, the increased throughput and uptime. We currently have 20,000 gallons of backlog under contract in anticipated commitments for another 25,000 gallons expected before year-end, keeping the unit fully utilized through early 2026. Construction of our second-generation [indiscernible] unit near Oakridge, Tennessee is nearing completion with commissioning expected in Q1 of 2026 following some minor supply chain delays. The system should process 1,000 gallons per shift, which is also scalable to 2,000 gallons per shift tripling capacity and lowering unit costs. We're engaged with multiple industrial, municipal and federal customers for multiyear destruction programs, and we expect demand to grow as regulatory requirements tighten.

Perma-Fix remains one of the few companies with proven commercial scale, non incineration PFAS destruction capabilities, positioning us as a leader in this rapidly expanding market. Our Services segment reported $4.3 million in revenue compared with $7.7 million in Q3 of '24. That decline was primarily driven by DOE and duty project delays and slower award timing, which caused some procurements and project activities. We also continued collaboration with BWXT on the DOE's West Valley and state contract. Where our waste management scope remains central to the site's long-term remuneration strategy. Our federal bid pipeline remains strong with multi-agency opportunities representing over $200 million in potential contract values.

We expect a rebound in field activity into Q4 as DOE and DoD programs resume under approved funding. Looking ahead, we entered the fourth quarter with strong visibility and positive momentum. Our Treatment segment continues to perform at record levels, supported by DOE and commercial demand and steady international shipments. Our PFAS business is scaling rapidly in capacity and customer adoption and our Hanford Operations are poised to benefit from one of the largest and longest-running environmental cleanup programs in U.S. history. While the temporary government shutdown may impact services timing, we expect higher DOE project activity as funding normalizes. We also expect the benefit from DOE project starts and pent-up demand created by the temporary shutdown, which would contribute additional backlog realized in Q1 of '26. Across the company, our priorities remain clear: convert backlog efficiently, scale PFAS commercialization, capitalized on de opportunities such as those at Hanford and maintain a disciplined cost management program.

Perma-Fix today is financially stronger, operationally efficient and strategically aligned with multiple long-term duration growth programs that will drive performance for years to come. It's also worth noting that given the high fixed cost nature of our business, each incremental increase in revenue and throughput drives substantial operating leverage. As we continue to grow volumes across treatment and PFAS operations, we expect to realize meaningful economies of scale that will translate into expanding margins, accelerating profitability and increasing cash generation in the quarters and years ahead.

We're proud of the team's execution this quarter and confident in our ability to build on this momentum as we move into 2026.

I thank you. I'll turn it over to Ben.

Thank you, Mark. Our revenue -- total revenue for the quarter was $17.5 million, an increase of $642,000 or roughly 4% from the $16.8 million in the third quarter of '24. The improvement was driven entirely by continued improvement in our treatment operations, partially offset by lower activity within the Service segment. Our revenue in the Treatment segment increased approximately $4 million year-over-year, reflecting higher overall waste volumes and increased average pricing and improved throughput at several facilities. These gains were supported by increases from both commercial and international waste customers. Revenue in the Services segment declined by approximately $3.4 million from prior year quarter, primarily due to the fewer active projects and the timing of new contract start-ups.

Our gross profit for the quarter improved to $2.6 million or 14.6% of revenue compared with $1.3 million in the same period last year, an increase of $1.3 million or 91.7%. As with revenue, this improvement was driven entirely by the Treatment segment, which saw gross profit increase on higher revenue and better margins. While the Services segment experienced a decline due to the lower revenue and overall lower project margins. We continue to focus on optimizing plant performance, controlling our costs and maintaining efficiency and project execution, all of which contributed to our overall margin improvement year-over-year. SG&A expenses were $4.1 million, up approximately $451,000 from prior year. The increase reflects higher personnel-related costs and expenses primarily at our executive levels. and additional project or professional services expense, including legal and consulting activities.

These increases were partially offset by reductions to other administrative and marketing related costs. We remain committed to managing overhead while continuing to invest in areas that support long-term growth. Our EBITDA from continuing operations was a loss of $1.5 million compared to a loss of $2.1 million in the prior year quarter, reflecting an improvement of roughly $600,000. Net loss for the quarter was $1.8 million compared with $9 million loss last year. Of course, that also included $6.4 million of noncash tax expense related for the valuation allowance on our deferred tax asset.

As a result, our net loss per share improved to $0.10 compared with $0.57 in the prior year. From a balance sheet perspective, we ended the quarter with $16.4 million in cash, approximately $18.4 million in working capital and total debt of approximately $1.9 million, primarily owed to our key lender, PNC Bank. Cash used from operations was $8.3 million and cash used in investing activities from continuing operations was $2.7 million. We continue to focus on maintaining strong liquidity position with modest debt which provides us flexibility to support strategic initiatives and future capital needs.

With that, I'll turn the call back over to the operator for questions.

[Operator Instructions] Our first question is coming from Howard Brous of Wellington Shields.

Thank you. Mark, Ben, good quarter. Let's start with the government shutdown. How long will this shutdown impact your business, if at all?

Well,, we really have seen very minimal impact on waste treatment. The Department of Energy has specifically provided guidance to their -- their site facilities to hold shipments of waste. They are not otherwise driven by compliance for compliance reasons, which has resulted in some delayed shipments the waste is still there. So we expect it to start rolling again right after the shutdowns over. We're encouraged by the progress that everyone, I'm sure, has seen overnight. I do want to underscore as well, this has had no impact on Hanford that we've been able to see, on any of our projects that we work with them on, particularly DFLAW but the other ones as well. But we have seen impacts on projects and projects have been delayed, some mobilizations have been delayed. And we're not allowed to visit sites that -- we need to get reimbursed for travel for.

In other words, they're not covering things like that. So there is an impact overall, but we expect it to be limited primarily because of a backlog that we described. We have a real solid backlog, best log we've had backlog we've had in years. And so we should be good for a while. In fact, we hope that the pent-up demand will really start to release here in December so that we can build it back up strongly for Q1 and which is typically our weakest quarter of the year. But we're very encouraged by our backlog and our sales. Our sales are going great, and we feel like we'll make it through any problem and minimize the overall impact of the shutdown.

So I guess the status of the grounding program at Hanford is effectively not going to be affected. Is that a correct comment?

The grounding program shouldn't be. There's 2 components to the grounding program. One is the long-term program, which is the driver to meet the compliance with the 22 tanks, they have to retrieve by 2040. That's a triparty agreement milestone. And we're expecting RFP on that, which won't be be in place for a couple of years as they build that extraction system on those tanks. However, DOE and this administration is continue to explore other expedited routing options that will supplement DFLAW and the objectives associated with the East Tank farms where DFLAW is located. So no specific details on that other than -- this administration really wants to focus on closing tanks within their 4 years. And that's very evident by looking at different alternatives to try to expedite some of the grounding opportunities. So the more to come on that, not any really good solid details that have been made public, but tie certainly is interested in routing unlike before as a supplement to DFLAW.

So with DFLAW operating, can I ask the question we'll ask you how much waste do you anticipate receiving and when?

That's a tough question, Howard. Right now, it takes several months for any government facility once they generate waste, they have to characterize it and document that characterization, what they call a profile, which has to get approved by the receiving entity as well as the disposal side, whatever is going to happen with it. It also was required for transport. All that is going on now that the package and then ship it. So we expect them to start moving waste sometime in December, maybe late December, maybe early January, in that ballpark. And last I saw in the press, and this is a couple of weeks ago, I think they had received like 40,000 or 50,000 gallons of waste.

I'm not sure how much they're processing versus receiving. I didn't hear that they -- they got the second melter rolling, so they've been through that. So to answer your question, we're still confident we're comfortable, I should say, that the original DOE estimate, which they put in the rod of 8,000 cubic meters a year annually. It's still an applicable number. There's no indication to realize or to think otherwise. And if again, if you scale that back to a smaller capacity that they're likely to be running at for the next several months, we'd expect the $1 million to $2 million in revenue per month beginning sometime in early '26 in the January, February time frame.

So again, that's somewhat speculation. We don't know what the waste streams look like exactly. We have been in discussions with them, so we know some things that are going on, but not the whole gamut of different types of waste and exactly what the details are regarding the characterization. So -- but the [indiscernible] the question, $1 million to $2 million a month beginning in early '26 that's what we're focused on and see that ramp up for the year.

What kind of gross margins could you anticipate from that?

We can't get into specific details of gross margins other than to say that they align pretty much with what we typically see in our gross margins across the company. For that the waste treatment segment.

All right. Last question. PFAS, for 2026, where do you see the program going? And -- going further?

Yes. PFAS, it's moving a lot slower than we'd originally anticipated, but it's making really good progress now. And the sales group is really doing well. And so is the engineering team. We're right now -- we're projecting about $150,000 a month in revenue through this quarter with the potential to be increasing at closer to $200,000. In Q2, a little bit later in 2016, we expect to get closer to $500,000 a month, in revenue, certainly by the end of '26, with the new system coming online in Q2.

So we'll start to see some significant contributions to -- to EBITDA in the second quarter next year. And where we really see ourselves lining in the PFAS market, which is largely led by Alucafani is that -- we see ourselves sticking with the liquid markets and getting to a point where we can scale down our large systems so that we can deploy them in the field and support companies and projects that have large volumes of liquids that isn't practical to ship.

And so we're going to stick with that approach to it for the next couple of quarters and continue our R&D and engineering design work on scaling those systems down so they can be more affordable, which is a market that's pretty much untouched by others, and we see that expanding as landfills begin to see more and more PFAS in our leachate and those types of things. So -- we're very excited about the progress. We're very excited about the technology, it's exceeding expectations. It's taking a little bit longer to get it to market than we had originally anticipated.

Congratulations on the quarter and the guidance.

And our next question is coming from Aaron Spychalla of Craig-Hallum. Aaron your line is live. Just bear with me a second. I'll see if I can get live Aaron, can you hear us?

Can you hear me?

Okay. Yes, it was the other line that was in the queue. So I've unmuted the other line instead. All right. So that's all good to go.

Maybe first on treatment. Backlog was quite impressive there, highest in some time. Can you just maybe talk about confidence and continued growth there and margins, you kind of talked about some commercial also international shipments. Maybe just a little bit more detail there?

Sure. We've been very fortunate to be able to get a significant quantity of waste was I've mentioned in the last couple of quarters, Aaron, from Mexico and Canada. Mexico is largely done for the time being of Canada should continue. We're also seeing more shipments from Germany. And in '26 late '26, we should start seeing it from Italy from our big project, which is running ahead of schedule, actually. But we're also -- have our eye set on several other initiatives internationally as well that will contribute to this waste backlog in addition to what we've already got under contract, particularly from Canada. As far as the confidence in the backlog, we are receiving more waste than expected from the H2C contract. I think I mentioned that last quarter, where DOE both the headquarters in the site office and the contractors are realizing that the value of shipping some of their waste are on site to us now that they used to treat on site in government facilities.

It's providing value to them. So we're starting to see more waste receipts from H2C, the Tanway contractor as well as other programs on site from the other contractors. So we're certain to see increased volumes outside of DFLAW. We're also seeing more waste associated with the NNSA. That's the weapon side of DOE . We're seeing that increase as well. So to answer your question, right now, we see significant momentum on the government side, but also on the commercial and international side all at the same time. So we expect this kind of momentum that carries into the summer at least. We always see a little bit of of a slowdown in receipts in Q1 somewhat because of the weather and fuel activity slow down. But with the backlog we've got. It should have a limited impact this year in Q1.

All right. And then maybe on the services side of the house, how do you see that business performing in the coming quarters? Any update on West Valley and Rad Mac, and you kind of mentioned in the release pursuing some new growth opportunities in government and commercial there?

Yes. Aaron, we do have several $30 million dollar jobs that we're bidding right now, and they're all competitive, so it's tough to speculate. But -- we're well positioned. It's the kind of work we do. We have several contracts that are ongoing now that are ramp just ramping up. In fact, we have one commercial contract that begins today. It was supposed to begin several months ago. So that will help us through this quarter, meeting our goals for growth. We have 2 large projects with the Buffalo core. They're also continuing to roll. They will slow down because of the snow ones in Niagara, ones at Harshal chemical. Those will slow down in the winter and Q1, most likely for a couple of months.

But we're confident with the number of opportunities we're seeing, which is how we typically gauge our our potential future with services as we continue to see opportunities to get good quality bids put in. We try to win our share. We've lost a few that we had hoped to win this quarter earlier in the quarter in the summer. But we should be able to sustain where we are right now for several more quarters with the hopes of winning a couple of those new ones I just mentioned.

As far as West Valley goes, West Valley is in an unusual state right now where they're working on planning with limited field activity. They do have it. We're not involved with it. Ours is focused on waste management scope. That doesn't really get kicked in until Q2, maybe next year or a little bit later. And then we started to ramp up to support the project schedule they've got. So it, still will be a little bit longer before we see the revenue we had hoped for, but we still have great communication with the site. We are providing some services, just not the levels that we had hoped to or plan to upon award.

But we're waiting to see that project progress and our scope of work will be funded, and we'll start to see that revenue from it.

All right. And then maybe last, just broadly on CapEx. You talked about some of the areas of investment to come in the coming quarters just given some of these areas of growth?

Yes. We expect -- DFLAW -- excuse me, we expect PFAS, [indiscernible] system to wrap up here in the next couple of months that CapEx will slow down. at least for time being, as we get these units rolling and focus more on revenue generation. We will start looking at the downsized units that I mentioned, but I don't expect that to be a significant drain on capital initially, at least not until the second quarter or third. We still have some expansion planned for Perma-Fix Northwest to support DFLAW. We feel like we'll be able to ramp up with the receipts. So we're hesitant to make those investments until we see that revenue coming in the backlog coming in. But we continue to put investment in Northwest to support DFLAW as well as routing and some of the other waste streams we're receiving from them. So, Ben, you happy to provide more specific numbers in regards to our CapEx expenditures expected for the next couple of quarters?

Yes. I think through the end of the year, that's where the heavy spending is going to be on the peak, the second reactor. That will probably -- will probably come in between $5 million, $5.5 million range for the total year spending. So another $2 million or so. And then next year, as Mark said, will probably trend back to sort of our norm, which is in the $2 million to $3 million a year range in total. And again, that's dependent on the needs with DFLAW. That's the only wildcard that's could be a bit higher depending on volumes.

[Operator Instructions] And our next question is coming from Aaron Warwick of breakout Investors.

Just some clarification maybe on that West Valley. Is it accurate that the opportunity there and your expectation there still remains the same. It's just been pushed back a little further? Or are you now expecting less revenue from that project overall?

Yes, Aaron, that's a good question. We -- I think we've talked about before, we were expecting to come in on the shot with a significant amount of scope and what we had feared was the waste management scope that we're aligned with might get pushed back a little bit within the overall spending profile for the site, and that's what happened. So they're focused on a number of other things for the next several months, and the waste management portion of that has been pushed back as well.

So we do expect it to ramp up. It's anticipated that the West Valley budgets will increase significantly in '27 with '26 will be somewhat flat. '27 is when to start really moving dirt and generating waste as they implement the [indiscernible]

And then on Hanford, if I heard you correctly, there's no noticeable difference or slowdown there because of [indiscernible] ?

If you had to ask me as well that did shut down or slow down. The reason I'm so confident that DFLAW law won't -- again, this is not official government answer. But the way that plant operates, you cannot shut down the melters. Once you start the melters, they have to stay on. And so the smelters are running -- they've got all the systems there and waste in the queue to start to continue vitrification. And with the visibility there and the funding backlog we've got for that plant. I can't imagine a scenario where they would slow it down because of the shutdown. And it's just too important and the momentum they have, they have to keep it moving. So it'd be very unlikely.

Yes, that makes a lot of sense. Final thing for me, I guess, would be on the PFAS. And sorry if I missed it when you were responding to Howard's question, but is there any -- what's the thinking there in terms of -- at one point, you talked about potentially licensing agreements, partnerships. What's the thinking there on that as you go into 2026 and you get this bigger plant up and operating?

Yes. I mean partnerships are critical to our future, and we're spending a lot of time on those. We have 2 or 3 companies that we're very excited about, that we fit very well together to -- as far as our objectives and we'll provide some back some good, solid, sustained backlog. And those are underway. Right now, we'll be supported by the second generation unit. The smaller units that I mentioned are still moving as far as a goal that we have once we get the Gen 2.0 system operating and then we'll basically redesign it for a smaller application that could be on site. We're not really certain at this point, Aaron, whether we'll sell that or do a technology fee on that license on that versus operating ourselves. .

We really have to get a little further down the road on the engineering side of the as to see what can be done with our unit on that front. But we do see dozens of applications for it and that would be a very sustainable, high-margin and a unique approach as this this PFAS market continues to unfold and it just gets less and less economical to ship large quantities of water for treatment. There's still a good backlog for the 2 plants we've got but the larger market is going to be on-site remediation.

What's the -- I mean, what's holding up those partnerships at this point? Is it getting that second Gen System up and running?

Yes. I wouldn't say it's holding it up, but it's certainly a key. We're working with those companies now treating their waste, but larger volumes remain out there, and they've toward our facilities, met with us, in most cases, repeatedly, and they're waiting to see that -- the big system run to show how it can run at a very sustainable level. So the production levels are high. And the destruction rates meet expectations. It's just moved -- it's just taking longer to move forward. But yes, some of it is a Gen 2.0 system but other is just how long it takes to work through the agreements.

And are you thinking Q1 '26 with that, are you thinking like that's something towards the end of Q1? Or is that something we might see even sooner?

Yes. Right now, we're scheduled for the first or second week of February to have a system operating. Notwithstanding other problems. So we expect to be generating pretty good revenue by sometime in March.

Our next question is coming from Anthony Harpel of Invesor.

I have a question entirely unrelated to Hanford and PFAS as you may or may not know, Thorium, which is a naturally occurring radioactive metal is produced as a byproduct in rare earths mining and processing operations. And when you process rare earth minerals the thorium that is present in them is separated out is treated as a radioactive contaminant and is stored as low-level radioactive waste because the White House finally recognizes the vital national importance of having secure access to rare earths. It is, as I'm sure you're aware, laser-focused on increasing domestic rare earth mining and processing capacity and on striking deals with U.S. allies to provide us supply suitable for use. Given this policy shift we've seen in Washington and the increase over time in the mining and processing of rare earth minerals, which are likely to see now as a direct result.

It seems reasonable, at least to me, to conclude that we're also likely to see increased production of Thorium. And it's my understanding that there is not a significant commercial market for Thorium as a nuclear fuel. So can you please discuss whether or not there is a role for Perma-Fix and its treatment technology to play domestically and/or internationally? And what seems at least to me to be a potentially new and growing domestic and international market opportunity involving the treatment of low-level radioactive waste that in this case, it's produced as a byproduct in the mining and processing of rare earth minerals?

This is an interesting question, Anthony. Yes, we actually are looking at our application of our technology into the rare -- talking in the background mining. Specifically, Anthony, in regards to our sole order. So our sole order has always been applied to remediation activities where we're trying to separate way to actually continue tools from nonradioactive contents oils. What we have several bids out right now, at least one that looks like it's pretty promising and a couple of other potentials as we're working with mining companies to do the opposite is to define what is -- as they're done mining as they're moving dirt, defining which components should be separated to into piles for processing.

And particularly on the uranium side of the house, we haven't talked to anybody on thorium, but we are working with several companies now to see if there's an application and actually deploy an application for the soil sorting process as a means of concentrating the tailings that were the source term as it comes out of the mine or out of the processing unit to provide a sorting application, which will provide a significant efficiency in segregating the valuable minerals from the non-valuable minerals. So we are working that. We haven't spent a lot of time talking about Thorium specifically, but we have on other rare earth mines with several other companies that are in rare earth mining recently and are pursuing that market on a couple of different fronts.

And how far along are you in those discussions?

We have a bid out right now, are we going to here on. It's a small bit, but it's an important one. And we should hear about that one. I think once we get that rolling, if it works the way we believe it will, and the client I believe it will, believes it will we could start seeing some revenue from that in the summer. And -- but we have other irons in the far if that one doesn't move forward, these things come and go pretty quickly. So we're hoping we can talk about that in a couple of quarters.

And who are you finding competing with you in those particular bids?

That's a pretty unique niche. I don't know -- I don't want to mention any other companies, but there are other companies that have certain units that aren't as advanced as ours with regards to a separation capability, particularly on the software side of the house. And some of the engineering we've done. So we haven't seen anyone with this exact application for uranium, but there are all the ones that could we haven't seen much competition on this specific application.

Just in terms of -- since you are -- since you do seem to be exploring this as a market opportunity. How are you thinking about potentially monetizing it? And it's just licensing your technology a possibility?

It's always a possibility. But we're not looking at that right now. We're really looking more proof-of-concept position right now and then scaling it up to larger mining applications. So we really haven't focused too much on that side of it yet Anthony.

And our next question is coming from Stephen Fein of Sofie LLC.

How fast you -- talking about Hanford. When would you -- you had mentioned in past calls, Mark, that their maximum capability is 1 million gallons. So how fast would you think they could ramp up to 1 million gallons?

It's 1 million gallons a year, you're talking about that as, Brian recall, that is the design capacity of the DFLAW system. Yes. The -- what I can tell you, I don't know enough about how it's performing, Steve to really give you a solid answer. But I do know that they're committed to having to reach that milestone in 3 years. And they're trying to get to a 40% level in the next 1.5 years or so I don't know how official that is, but not trying to get to the 40% level soon. And then 70% level and then 100% level within the 3-year period and accelerating that as much as possible. So I just don't know how it's performing. We don't have the information on on the system right now to tell you how fast we can get them are free.

So you're telling me they're treating of 1 million gallons, the ability could take 3 years?

They have a legally binding milestone to be there in 3 years. That's the only thing I can tell you. I do know they're trying to get there much faster than that. And there's no reason, technically, they shouldn't be able to but theoretically, but I don't know -- I don't have their schedules, Steve, I'm afraid.

So that's set a, I presume 30% to 40% efficiency which means that if they got to the 1 million, they're only treating, they're only going to be able to vitrify 300,000 to 400,000 gallons and the rest would assumably be waste, secondary waste?

No, the 1,000 gallons the input from the pretreated tank. So they have right now, they keep that tank at about 800,000 gallons full, and they'll treat from that tank to the pretreated waste and put it into 1 million gallons a year at full capacity.

And that will be what in 3 years?

They have to do that within 3 years. .

But of that 1 million gallons, the efficiency historically of titration may not correct is somewhere between 30% to 40%. So that means that they're only going to be actually vitrifying [ $300,000 ] [ $400,000 ] of that input of 1 million gallons?

No, I think I don't think you're correct on that, Steve. I'm talking about the 1 for 1 for every gallon that comes out of that tank at 800,000 gallon tank and goes into the DFLAW unit, that count is one gallon of of waste. Not to be confused with what's being pulled out of the tank initially or they have to mix it with a slurry to get it out of the tank. That's a different calculation. This is basically a waste that's been pretreated. Pulled out of the tanks and is sitting there to be fed into DFLAW as a 1 million gallons a year.

So they're going to vitrify 1 million gallons?

That's correct.

Okay. So when they vitrify 1 million gallons, how much are you estimating will be secondary waste?

DOE's estimate is they will generate 8,000 cubic meters of waste a year as base as defined in the rod from [ January 23 ].

And how much is that in gallons?

I was just going to say, Steve, it's impossible to convert that to gallons because it's about a dozen different waste streams. There's several different liquid or liquid waste affluence that will come off of that plant. There's also a significant amount of solid waste like filters and personal protective equipment and components that they replace repeatedly. There are not liquids that are included in that 8,000 cubic meters. So I don't -- I can't tell you how many gallons will come off of it other than to say the total is estimated to be about 8,000 cubic meters a year.

Okay. So [ 8 million Cube ]. Right. So you don't -- you have -- how many gallons is 1,000 cubic meters?

I don't have the calculation in front of me, Steve.

Okay, whatever. I just -- what I'm just -- where I'm going is my understanding you have about 300,000, 330,000 gallons treatability at Hanford. So my -- I guess my question is how fast will you get there? What does it take? For Hanford to process for you to be given 300,000 gallons, let's say?

Yes. Our total capacity right now is to clarify that is 400,000 gallons we can ground liquid, we can grow a year. Okay? Once we get a new permit in place, which we expect to be in place, it's a renewal of our old permit, we expect that to be placed on January 1 or thereabout. Then we'll have the capacity to go to [ 1.1 million ]. right away. So basically, it's 100,000 gallons a month beginning in January. We have the capacity to do that. We don't expect law to come anywhere close to that as far as reaching that potential. Grounding on this new -- this next phase I mentioned, which is the long-term project that is on the west side could be 3 million gallons a year.

So we'll have to expand to get to that, but we want to do that for a couple of years. But to answer your question, we're very confident we have complete capacity to handle whatever DFLAW puts out at full capacity. We may have to increase or apply some capital for expansion just for efficiency and to keep up, but right now, we're expected to be able to handle at a minimum, 40% to 50% of full capacity will ramp up as they ramp up.

Okay. And then let's say they throw in the West side. You'll be able to handle that simultaneously?

Yes, we'll have to -- we'll likely need some capital investment to be able to handle 3 million gallons a year. It depends on the quantities that we're awarded -- but yes, we will -- we have the facility under roof. It will need to expand the operational capacity inside of it, which will not be a dramatic capital expenditure. But we will be ready for that. We'll know years ahead of time that we'll need to expand for that.

And the West side, is there competition from like your competitors?

Yes. On the West side, that's the RFE I mentioned we're expecting before the end of the year. They will be looking for commercial quotes from anyone interested and we will have some competition on that. But we're doing with a the only as local [indiscernible] .

Exactly. And you're not talking regular you're talking regular ways. Then one more question. Relative to the PFAS, so after you get the 1,000 gallons going, where do you go from there? Let's say, it reached capacity with this new plant you're building in Oak Ridge and 1,000 gallons, and that's all -- that's working. So what's the next step? The smaller things that you're going to do on site? Or are you going to build a bigger tank?

No. There's -- right now, we're building this unit in Oak Ridge with 1,000-gallon reactor on it. But in infrastructure, in other words, was storage and processing capacity to bolt on another 1,000-gallon reactors. So for minimal cost, basically the cost of the reactor. So the infrastructure is in place. So this will be able to 1,000 gallons right away. Within 6 or 8 months, if we wanted to, we could have another reactor in there and it rolling as well. So we do have a very efficient way of putting another unit or another reactor into that system quite quickly within a couple of quarters. Yes. So we'll be able to expand that -- and as I mentioned, -- we are pursuing mobile units as well to support treatment on site.

With regard to the mobile units, which I find very exciting, how can you not that not from a standpoint that you're operating them because once you be concerned if you had the customer operating it that you're giving away your secrets?

Yes. No, I don't think that's going to be a concern about [indiscernible] with the license fee, that type of thing. These things operate very efficiently. So it only takes about 2 people to operate one of our large units I'm going to ask Louis Centofanti on the phone to, if you have anyone to add to that, Lou?

Yes. No, when we look at on-site, the technology will be adapted to the customers' needs. So the units that will go on site will -- each one has to be somewhat adapted to their needs and how we work with them. If you're going into a large water treatment plant or something where they already have staff, less thing you want -- you probably want to do is add more people, you would have some deal with the operators. So we don't see a problem with that a variety of options that will have to be negotiated individually. Depending on what...

Yes. I think the real statement here is irrespective how you go, PFAS represents a totally new industry for you guys -- which is exciting?

Yes. And it is. And we also see the service side building around it because we're presently also picking up waste. We're also doing clean outs that are coming with it. So we see a whole business market around the PFAS type systems. A lot of it right today is very development. We're learning a lot about how to do all these things. We've got a variety of potential teaming partners. We're we're moving the line up with. And so it's grounding an opportunity. And we think the technology is the more we run it, the more comfortable we are that it can pretty much do whatever needs to be gotten with a client.

So no better, what he has on fluorinated -- our system is versatile after pretty much take care of anything.

Thank you very much. Well, we are here to have reached the end of our question-and-answer session. I will now hand back over to Mark for any closing comments.

All right. Thank you, Jenny. As we move into the final quarter of 2025, our focus remains clear and is to convert backlog efficiently, scale our PFAS commercialization and execute on DV opportunities at Hanford. The operational improvements we implemented earlier this year are delivering measurable results and the continued progress at Perma-Fix Northwest and our PFAS program across the DOE engagement gives us confidence that this momentum will carry into '26.

While federal procurement timing always varies, our backlog field execution and customer activity levels remain strong and continue to expand with a record treatment backlog, improving margins and accelerating PFAS adoption. PFAS excuse me, Perma-Fix is positioned for a strong finish in 2025 and a breakout year ahead. We appreciate your continued support and look forward to updating you next quarter as we advance our mission to deliver sustainable environmental solutions for our government and commercial clients. Thank you.

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