Good day, ladies and gentlemen, and welcome to the Permafix Environmental Services Fiscal Second Quarter 2026 Earnings Conference Call. At this time, all participants are placed on a listen-only mode, and a question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. 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, Ali. Good afternoon, everyone, and welcome to Permafix 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. Permafix 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 on 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 Tankways 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 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 Permafix. The program is supported by the Tri-Party Agreement with the state and federal regulators to remediate 22 tanks from the 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 DF Law 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 subcontracts to two other companies, both located out of state. Permafix 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 Permafix Northwest facility, located about a mile from the Hanford site, will provide 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 Permafix Northwest to the Port of Benton Short Line Railroad 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 permit 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 it 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. DWE 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. DWE has presented a dual path strategy to stakeholders specifying Permafix Northwest as the grounding 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 the 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 TISCR. In case you don't know, the TISCR is the Tankside Cesium Removal System, which is an ion exchange system which removes the radioactive component cesium, most of it from the waste stream. And that is a critical part to pulling the waste out of the tanks currently.

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.

Hello, I think we're back on.

Can you hear me? We have. Yes, sir. We can hear you loud and clear.

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

Mark, start at where you were discussing the TISCR.

Okay. All right. So explain what the TISCR was, I assume, which is the Tank Side Remuneration Removal System, which is currently – are capable of pulling out and retrieving about 100,000 gallons per month 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 stored pre-treated waste can be available for grouting while leaving ample feed for DF law 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 2026. Increasing to approximately 130,000 gallons per month by 2028. Here's a 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. PermFix continues to develop and design technology to expand our capabilities with the specific goal of ensuring that our PermFix Northwest plant can accept and process the full volume of waste Hamburg 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 Area Tank Program, which 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 rice to be grounded annually. Permafix Northwest has submitted a permit modification request to the State Department of Ecology and is working with these regulators to expand our grounding 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 A2C 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 29th, we notified the state of Washington 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 position as we are. Permafix 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. This is 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 to a 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 local UA-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, Permafix began receiving liquid effluent waste from the DF Law 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 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 DFO 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, one waste stream. It's a growing number of waste streams from a plant that's still ramping up, and we forecast through throughput goals increase each month at DFLAW operations, and they're working through production issues and associated equipment modifications to reach their objectives for a 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 our plan worked, and you can see that reflected in our backlog. Treatment-related backlog grew by 29% from 12.2 million in March of 31st to 15.7 million at June 30th. 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 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 previously stored waste Lower Margin Inventory Waste, which compressed our treatment margin during that quarter as well. That work is now substantially complete and a freeze-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 have on-site moves through treatment in the third quarter. DF Law related receipts continue to build through the balance of the year, and task orders under the master's 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 our 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 Group announced in the first quarter. We've secured 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 retrieval 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 Amerian Technologies under the Small Business Administration's Mentor-Protege Program. The logic is straightforward. Clean-up missions across the DV complex are getting larger and more technically demanding with much more difficult challenges. Our treatment infrastructure, remediation capabilities, and project management combined with Marion'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 this 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, award 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 EFLA upgrades, as well as our grounding upgrades at Permavix 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 the second quarter of 2026. I'm sorry, compared with $14.6 million in the second quarter of 2025. 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 32 cents compared to losses of 15 cents 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 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 continue 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 activities. 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, BMP, 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 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. We 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 growing 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 in 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 landlord. With that, I'll now turn the call over to the operator for questions.

Thank you. Ladies and gentlemen, at this time we will be conducting our question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question key. and you may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up the handset before pressing the star keys. Once again, that's star one for any questions or comments. Thank you. Our first question today is coming from Aaron Spichala with Craig Hallam. Your line is live.

Yeah, good afternoon, Mark and Ben. Thanks for taking the questions and hi, Lou, as well. 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 2027, 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, Erin. Let me see if I 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 directly to Permafix Northwest by name. Again, this graphic is part of the Thank you very much. and then we'll also be shipping waste from the EMF facility to Permarex Northwest, which they're obviously doing now. Along with the, 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, which we anticipate to be late in 2026, and to maintain that 60,000 gallons a month for grouting through 2027. So roughly, what is that, 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 doesn't 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, that 60,000 gallons could go up. And then again, if DF law picks up operations and gets moving quicker, that never 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 2028, they're anticipating to be 300,000 gallons a month just from the AMPS itself. Again, a portion of that will go to vitrification at DF Law, and a portion will come for grouting. Again, on the graphic, it specifically says that DO anticipates 130,000 gallons a month coming from the AMP system once it gets up and running in 2018. 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, 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 WARMS, 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 AMP system and the TISCR 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 their 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 makes up the Hanford budget and the fact that it's been a long time coming for this program to actually show progress. So We're really excited to be part of it. And 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 costs versus our competitors and whether the DOE wants to transport liquids are all out of state for processing.

Great. Thank you for the color on that. And then, you know, saw some of the recent modifications, you know, Class 2, Class 3. Can you kind of talk about how that might impact the glass plus grout strategy and any, you know, impact to those schedules?

Yeah, you know, 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 5th, just last week. The state turned those around in just a few days and got this out for public comment for a 60-day public comment period, which is right now scheduled to end on October 6th, if I remember correctly. And that's a very, very aggressive turn on behalf of the state regulators, which which we would speculate underscores the fact that the State is working with the UE on this and is making it happen. And if they meet that goal with the October 6th public comment period, barring not too many public comments that they should extend it, then the State would be in a position to provide potentially permit modifications 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.

Yeah, I hope so. You know, one more question. In the RFP announcement, you know, the DOE mentioned the EMS waste stream to be included in that contract too. Do you anticipate any, you know, impact to the EMS 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, you know, 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 non-competitive. So they had to use an existing contract vehicle, which has the prime for this vehicle to be the disposal facility energy solution. So they're the prime. And we do the grouting for EMF, and we provide that to Energy Solutions and they dispose of it. What we're anticipating is that because of the modification in this H2C award, and it's 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 DF law. and that we would treat this waste under just a new task order within the new contract and that 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, I know people are probably wondering how much DF law waste we're getting. DF law has been chugging along at about Mark Duff, Louis Francis Centofanti, Benio Annaldo Naccarato, Richard Grondin, Troy Eshleman, Pam Ittah, Alex, Gil, Helen Binosa We're getting about 200, 250K in 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 Dewey's confident that they can still get ramped up to a higher percentage of operation capacity here in the next couple quarters. 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?

Yeah, we're very encouraged by the relationship with the Department of Ecology. As you know, it took more than a decade to get our renewal and 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 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. I've begun to purchase some of the heavy equipment so our folks can get trained on it. And I've 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 nine months. But 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 haven't pulled the trigger on the new mixers yet. We wanted 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 routing objectives that I'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.

Great. Thank you for taking the questions. I'll turn it over.

Thanks, Aaron.

Thank you. Our next question is coming from Yuan Xi with B. Reilly. Your line is live.

Thank you for taking our questions. 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... 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 at 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 ways that DOE might have.

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-up?

No, that's a good question. No, we do see the primary critical path is the state. But again, we're modifying a quantity from 1.2 million upwards to 10. And 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 risks 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 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 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's very comfortable. This is the same mixture that is used at the other DOE facilities, so it's a mixture that a 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 that 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 we 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 grounding. 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 to 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 I'd be wrong because it could all be the easy stuff. and you would just get, you'd 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 volume. and Price.

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

Yeah, 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 set of containers. And you can anticipate time and resources very well. So it is very 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, there'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 I answered 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 forecasts relative to what waste volumes we anticipate getting on a year-to-year basis.

Got it. And congrats on winning this master contract.

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

That's my question. Congrats on winning this master contract.

Oh, congratulations. Thank you. Thank you very much. Appreciate that, Humangi.

Thank you. Our next question is coming from Stephen Fine with So Fine LLC. Your line is live.

Congratulations, guys. Congratulations, Mark. Congratulations, guys. I mean, you know, this is the culmination of, you know, a lot of time. It's amazing that things, you know, come together. I've watched this for like the last eight, nine years and you've pulled us together.

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?

Yeah, again, it's within our modifications, just to be clear, Stephen, are in existing buildings. So we're not having to build any new buildings. will 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 their 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 mixtures we're installing. By next year or by 2030? By 2030. When they're installed, right now, I'm sorry if I wasn't clear on that, Stephen, our permit mod and our installation, we're expecting to be up and running by this time next year.

All 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. So we'll have plenty of storage capacity.

So you're saying that if, let's say you, 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 one million gallons at a time?

A little bit less than that, yeah. So basically, we'll be operating at a pretty rapid pace. Okay, that's great. 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. All right. Would you agree that it's pretty significant that the government is now saying that they're going to grout some of the stuff that was going to go for vitrification?

I don't know if I underscored that enough, but DOE has been very clear to other stakeholders and publicly that the DF law 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've 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 vitrification and dispose of the vitrified waste at the Hanford landfill to really begin to close tanks for the same budget, This grouting makes a lot of sense because it's substantially cheaper, as I mentioned. We're excited about it. The regulators are cautiously optimistic. We're reluctant to jump in with both feet. They've said publicly many times that they don't want you 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 it's going to take. It's 100 years and it's $10 billion a year. It'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 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, Steve.

What I'm basically saying is that the vitrification plan is about 35% efficient. So that means if 1,000 gallons is fed in there, only about 350 to 400 gallons is going to be vitrified, and the rest is a 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. 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 they 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 addresses the tank bottoms and scrubbing systems and emissions. That's all part of the other liquid generation that comes out.

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? 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, you know, they talk about volumes. All right? So there's 50-some million gallons in those tanks. But my understanding is they've 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 truth?

That is true. They're estimating a minimum of three gallons of water or liquid has to be included 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 A million gallons. You have the capacity to process a million gallons right now, and you can process that million gallons. One could argue that that would be three million gallons that would go through the vitrification plant. Is that true?

No, I don't think it's that simple that they generate three million gallons for every gallon, for every million gallons that goes in. I don't have the exact or a complete understanding of all the waste that's going to be coming out. Because the reason I say that, Steve, is 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, and we're getting 8,000 gallons of EMF a month. Does that all go up by 10 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 the vitrification going to augment and flow as it's been flowing like a nightmare? and, you know, the other thing is, I mean, you guys are environmentally safe. Everything you do is safe while, you know, you're talking an environmental nightmare over there. I said that. I didn't ask the question. But the bottom line here is, you know, Savannah grouted and, you know, it's been, you know, the government has finally woken up. I'm glad to hear, you know, in these challenging times that, you know, 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 grouting than it is to bifurcation. And, you know, the other point that comes out of this, when you talk about this Redation Scale of what you would be charging based on the waste. Isn't that also an issue if you start transporting this stuff, if you don't know if the waste can vary?

Yeah, 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 asked 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 provide it.

Thank you. Unfortunately, ladies and gentlemen, we have reached our allotted time for questions 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 in any other way. We received the waste we said we'd receive, grew backlog 29%. DFL receipts have commenced. HUC has awarded a master's of contract for the Hanford Tank Waste Grouting, and DOE has named our facility and 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 for 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 building 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.