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 and 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 Hanford-related waste streams and other DOE emission objectives…

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 where 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…

[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 radiological 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 -- probably I should say, pipeline of opportunities we've submitted bids on, with -- squarely within our core competencies for radiological facility demolition and remediation as well as decontamination. So those looked 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…

Going back to grouting. It seems that the -- excuse my voice, the 200 East area where the waste treatment plant is, they have a plan to grout 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. It's a distance, a good distance from the actual DFLAW plant. So as determined they're going to basically commercially grout 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 grouting 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 local 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 waste going to DFLAW that's currently being pumped into staging tanks to go to DFLAW, they can start grouting 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 grouting 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 incinerators 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 our 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 timeline 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 blowdown water, 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 incineration 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, 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 punch list 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 waste 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 DSSI 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 process is for pulling the is for pulling the drones 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 it 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 mod will include ramping that up to an additional 3 million gallons on top of that. So worth a total of 4.2 million gallons total capacity for liquid treatment. That will cover all the waste streams we're talking about, plus the 3 million or 4 million in grouting 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 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 was some downtime associated with it, 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 650 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 gallons?

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 AFFF comes in 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 gallons, the CapEx to build that was roughly what? Or is roughly what? Since it's not up yet?

Yes. It's in the -- correct me if I'm wrong, Ben, 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 mobilizations 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 -- and 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 retrieval and grouting 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.