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 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 third quarter 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 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. 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. 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. Our revenue increased $17.5 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, PFAS 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, higher throughput 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. Automation, digital scheduling and plant 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…

Please wait a little while we reconnect to our speakers. Apologies for the technical issue there. We'll reconnect them very shortly. Appreciate your patience everybody, we're just reconnecting Mark. 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 us 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 it from there.

All right, give me 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 decision designation, DOE 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 and anticipated commitments for another 25,000 gallons expected before year-end, keeping the unit fully utilized through early 2026. Construction of our second-generation PFAS unit near Oak Ridge, 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 DoD project delays and slower award timing, which paused some procurements and project activities. We also continued collaboration with BWXT on the DOE's West Valley end state contract, where…

Thank you, Mark. 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, 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 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 margin. 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 -- our 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 assets. 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.

Mark, Ben, a 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 sites and facilities to halt shipments of waste that 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 shutdown is 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 we work with them, 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 our backlog that we described. We have a real solid backlog, best backlog we've had in years. And so we should be good for a while. And in fact, we hope that the pent-up demand really starts 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 grouting program at Hanford is effectively not going to be affected. Is that a correct comment?

The grouting program shouldn't be. There's 2 components to the grouting 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 tri-party agreement milestone. And we're expecting an RFP on that, which won't be in place for a couple of years as they build that extraction system on those tanks. However, DOE and this administration is continuing to explore other expedited grouting options that will supplement DFLAW and the objectives associated with the East Tank Farm where DFLAW is located. So no specific details on that other than that 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 there's more to come on that, not any really good solid details that have been made public, but DOE certainly is interested in grouting unlike before as a supplement to DFLAW.

So with DFLAW operating, can I ask the question -- will I ask it 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 to -- 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 site, whatever is going to happen with it. It also is required for transport. All that is going on now. They have to package it 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 did hear that they got the second melter rolling. So they've been through that. So to answer your question, we're still confident or comfortable, I should say, that the original DOE estimate, which they put in the rod of 8,000 cubic meters a year annually is still an applicable number. There's no indication to realize or to think otherwise. And if you -- 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 to answer your question, $1 million to $2 million a month beginning in early '26 is what we're focused on and seeing that ramp up through 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. Right now, we're projecting about $150,000 a month in revenue through this quarter with the potential of increasing that closer to $200,000 in Q2, a little bit later in '26, 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 EBITDA in the second quarter next year. And where we really see ourselves lining in the PFAS market, which is largely led by Louis Centofanti 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 portable, 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.

Thanks, Howard.

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 line's live. Aaron, can you hear us?

I can. 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, the highest in some time. Can you just maybe talk about confidence in 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 significant quantities of waste, as I mentioned in the last couple of quarters, Aaron, from Mexico and Canada. Mexico is largely done for the time being, but 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 also have our eyes 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 it last quarter, where DOE, both the headquarters and the site office and the contractors are realizing that the value of shipping some of their waste that are on site to us now that they used to treat on site at government facilities is providing value to them. So we're starting to see more waste receipts from H2C, the tank waste contractor as well as other programs on site from the other contractors. So we're starting 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 to carry us into the summer at least. We always see a little bit of a slowdown in receipts in Q1, somewhat because of the weather and field activity slowdown. 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, one is in Niagara, one is at Harshaw 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 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 and 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 of next year or a little bit later. And then we start to ramp up to support this 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 communications 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, Perma-FAS system at Oak Ridge to wrap up here in the next couple of months. And that CapEx will slow down, at least for the time being, as we get those units rolling and focus more on revenue generation. We will start looking at that downsized unit 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 grouting and some of the other waste streams we're receiving from them. So Ben, you might be able 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, we'll 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 right out of the chute 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 exactly what's 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. '26 will be somewhat flat. '27 is when to start really moving dirt and generating waste as they implement their baseline objectives, which is remediation and some demolition and cleaning out several large waste tanks as well as moving their legacy waste off-site. Once they start moving those waste and it shows up in the baseline, then our expectations will be realized. So we still expect to attain that revenue goal, but it may just be later in '26 before it really ramps up to the levels that we were hoping for initially. And then we see it being sustainable after that.

And then on Hanford, if I heard you correctly, there's no noticeable difference or slowdown there because of the government shutdown? And is that -- is it sort of the expectation or the understanding that that's funded enough that no matter how long the shutdown would go on, that's -- they're going to be continuing there with the cleanup at this pace?

Yes. That is expected, Dave (sic) [ Aaron ], I would have said that about a couple of other programs a couple of months ago, if you had to ask me as well, that did shut down or slow down. The reason I'm so confident that DFLAW won't -- and 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 melters 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. I'm 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 had 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 or license on that versus operating ourselves. We really have to get a little further down the road on the engineering side 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 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 key. We're working with those companies now treating their waste, but larger volumes remain out there, and they've toured 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 taking longer to move forward. But yes, some of it is the 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 the system operating notwithstanding any of the problems. So we expect to be generating pretty good revenue by sometime in March.

Our next question is coming from Anthony Harpel of -- who's a private investor.

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 earth's 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 we're 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, is 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 earth -- there's some talking in the background -- mining. Specifically, Anthony, in regards to our soil sorter. So our soil sorter has always been applied to remediation activities where we're trying to separate radioactively contaminated soils from non-radioactive contaminated soils. 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 doing mining, as they're moving dirt, defining which components should be separated 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 application and actually deploy an application for the soil sorting process as a means of concentrating the tailings or the source term as it comes out of the mine or out of the processing unit to provide a sorting application, which will provide significant efficiency in segregating the valuable minerals from the nonvaluable minerals. So we are working that. I haven't spent a lot of time talking about thorium specifically, but we have on other rare earth mines. We met 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. We're waiting here on. It's a small bid, 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 believes it will, we could start seeing some revenue from that in the summer. And -- but we have other irons in the fire. 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 if -- I don't know -- I don't want to mention any other companies, but there are other companies that have sorting units that aren't as advanced as ours from 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 other ones that could, but 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 would you -- how are you thinking about potentially monetizing it? And is 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 [ Steven 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. So I don't know how official that is, but I know that we're 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 the system right now to tell you how fast it can get to, I'm afraid.

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 at a presumed 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. That 1,000 gallons is 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 that they 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 vitrification, am I correct, is somewhere between 30% to 40%. So that means that they're only going to be actually vitrifying 300,000 to 400,000 of that input of 1 million gallons.

No, I don't think you're correct on that, Steve. I'm talking about a one-for-one for every gallon that comes out of that tank, 800,000 gallon tank and goes into the DFLAW unit, that counts as 1 gallon of waste. Not to be confused with what's being pulled out of the tank initially where 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 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 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 cubic ]. all 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 treat ability at Hanford. So 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, let's clarify that, is 400,000 gallons we can grout -- of liquid we can grout a year, okay? Once we get a new permit in place, which we expect to be in place that's renewal of our old permit, we expect that to be placed on January 1 right thereabout, then we'll have the capacity to go to 1.1 million right away. So basically, 100,000 gallons a month beginning in January. We have the capacity to do that. We don't expect DFLAW to come anywhere close to that as far as reaching that potential. Grouting 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 and get to that, but we won't have to do that for a couple of years. But to answer your question, we have -- 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 expecting to be able to handle at a minimum 40% to 50% of full capacity and we 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 were awarded. But yes, we will -- we have the facility under roof. We'll 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. In the West side, that's the RFP I mentioned we're expecting before the end of the year. They'll be looking for commercial quotes from anyone interested, and we will have some competition on that. But keep in mind -- we're the only one's local that have that...

Exactly. And you're not -- you're talking regular waste. All right. 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, you reach capacity with this new plant you're building in Oak Ridge and the 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?

Yes. No, there's -- right now, we're building this unit in Oak Ridge with a 1,000-gallon reactor on it. But an infrastructure, in other words, waste storage and processing capacity to bolt on another 1,000-gallon reactor. So for minimal cost, basically the cost of the reactor. So the infrastructure is in place -- so this one we'll be able to go 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 then 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 look at that not from the standpoint that you're operating them because wouldn't 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 giving away secrets 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 too, if you have any want to add to that, Louis?

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, the last 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 [indiscernible].

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 cleanouts 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 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 done with a client. So no better what he has on fluorinated, our system is versatile enough to pretty much take care of anything.

Thank you very much. Well, we appear 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 that is to convert backlog efficiently, scale our PFAS commercialization and execute on DOE 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 DOE and DOE engagements 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.