Perma-Fix Environmental Services, Inc. (PESI) Q3 2015 Earnings Report, Transcript and Summary

Greetings and welcome to the Perma-Fix Environmental Services’ Third Quarter 2015 Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host David Waldman of Crescendo Communications. Thank you, sir. You may begin.

Thank you. Good morning, everyone and welcome to Perma-Fix Environmental Services third quarter 2015 conference call. On the call with us this morning are Dr. Lou Centofanti, CEO; and Ben Naccarato, Chief Financial Officer. The company issued a press release this morning containing third quarter 2015 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. 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. 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. I'd now like to turn the call over to Dr. Lou Centofanti. Please go ahead, Lou.

Thank you, David and welcome everyone. We’ve achieved another quarter of profitability and remain on target to hit our guidance of $6 million to $7 million of adjusted EBITDA very pleased with how it is evolving with the business in the company. Now let me streamline and stabilize the business – our focus now is almost entirely on growth and we are encouraged by the outlook for both treatment and services. Turning first to the service segment, we’re happy to report revenue increased 53.4% compared with the same period last year. This growth indicates we’re winning more contract awards appears to be picking up. As an example, we were recently awarded a contract valued at approximately $1 million for demolition and decommissioning services at a technology development lab in Knoxville. This is an example of one of the smaller contracts we bid on and were awarded. Many of the smaller contracts we don't announce. But as I mentioned in the past, we’re also bidding on a variety of larger contracts that could have a significant impact on the business and hope to be able to talk about those more in the near future. Within the treatment segment, revenue declined to $10.9 million from $12.7 million for the same period last year. This does not reflect the weak third quarter of 2015, but rather an extraordinary one in 2014 as we received and processed waste from a project that required a rapid turnaround resulting in higher revenue in that one quarter. Nevertheless, our sales pipeline remains healthy as we head into 2016; the opportunities outside of DOE continue to be encouraging as we continue to focus on commercial, international that will help us diversify our revenue from DOE. I am pleased to report some very positive developments on the medical side as you know we recently announced completed another successful scale up of our process which confirmed our proprietary resin could withstand higher radiation levels up to six curies. We believe we’re now very close to overcoming nearly all technical hurdles related to the resin; we’ve received positive feedback from the industry, and are in active discussions with many of the key players. As previously announced we finalized our agreement with Digirad, whereas Digirad invested $1 million into our subsidiary Perma-Fix Medical, which is listed on the Warsaw Exchange. I would point out they invested at a significant premium to the current market price, which is further illustration of the growing interest in our process from within the industry and also that we do not believe the price in the Warsaw Exchange really represents the true value of the technology. As part of the agreement with Digirad, they will purchase agreed-upon quantities of Tc-99m for its nuclear imaging operations upon successful completion and development of the process. We are currently in discussions with a number of prominent companies involved in other areas of the supply chain for Tc-99. At the same time, our main goal now is really finalizing our strategy for the U.S. FDA and European Medical agencies and are now accelerating our testing for FDA requirements and we will provide further updates on this in the near future. So to wrap up, we remain very confident in our prior guidance for the full-year, and while we are pleased with the results we’re far from satisfied and we’ll continue to focus on growth opportunities in 2016 based on the sales pipeline within the service segment and opportunities within treatment. As we look ahead, it’s still early but when you look from, at our – from 2014 to projected 2015, we've seen our EBITDA and adjusted EBITDA grow approximately 100%. In 2016, we expect to see a 50% further growth in adjusted EBITDA on continued revenue growth in 2016. With that, I’d like to turn the call over to Ben who will go into more details on the numbers. Then I’ll be back to answer any questions at the conclusion of the formal remarks. Please go ahead Ben?

Thank you, Lou. Beginning with revenue our total revenue from continuing operations for the third quarter was $17.3 million compared to last year's third quarter of $16.9 million an increase of $404,000 or 2.4%. Revenue in our services segment improved by $2.2 million as a result of increased commercial work. This is mostly offset by the reduction in the Treatment segment of $1.8 million as waste received in the third quarter of 2014 had a short processing deadline, which resulted in more waste being processed in the quarter. When you look at year-to-date our revenue is greater than prior year by $7.2 million or 17.8% as both of our segments have increased compared to prior year. Turning to our cost of goods sold, total cost of sales was $12.4 million versus in the third quarter versus $11.3 million in the prior year. Our Treatment segment cost of sales decreased by $592,000 or 7.6% compared to prior year, while our fixed facility costs remained relatively constant, variable costs went down as a result of the lower revenue. In our Service segment our cost of sales were up $1.6 million as the variable costs related to the increased revenue - increased and our fixed overhead expenses were down slightly. Our gross profit for the quarter was $4.9 million compared to $5.6 million in 2014 a decrease of approximately 635,000. Gross profit in the Service segment increased by $612,000 compared to prior year as a result of the increased revenue. And of course the increase was offset by dropping the Treatment segment of $1.2 million as a result in the drop of revenue there. Again year-to-date our gross profit as of September 30, 2015 is higher than the prior year by $3.2 million or 44.6%. Both segments have achieved increased revenue while maintaining their fixed operating costs, which has contributed to the improvement in the gross profit and the gross margins. The total G&A for the year - total G&A for the quarter was $2.9 million compared to $2.7 million last year. Higher marketing costs primarily related to increased bidding activity is the main reason for this increase in the third quarter. Again when we look at year-to-date, our G&A expenses were $8.7 million compared to $8.9 million in the prior year. Lower payroll expense has been primarily offset by higher third-party consulting costs accounting for this variance. Our income from continuing operations for the quarter was $1.3 million compared to $2.4 million last year, and these results include $527,000 spending by our medical isotope and $229,000 in prior year. Net income attributable to common shareholders was $1.1 million compared to last year's net income of $1.9 million. Income from the quarter includes $364,000 - again, which represents our portion of the Perma-Fix Medical expenses. Our earnings per share from continuing operations was $0.12 a share compared to $0.20 per share last year and at the year-to-date level our earnings is currently at $0.01 per share, but this compares positively to the loss per share of $0.32 last year. Adjusted EBITDA from continuing operations for the quarter as defined in this morning's press release was $2.9 million compared to $3.8 million last year. Year-to-date adjusted EBITDA from continuing operations currently sits at $4.5 million compared to $1.2 million in 2014, an improvement of $3.3 million. On the balance sheet, compared to our year-end, cash is down $1.7 million primarily due to the operating cash requirements from losses incurred in the first quarter, but offset by positive cash generated in the second and third, and $1 million raised by our Perma-Fix Medical facility. Our total receivables including unbilled are down $1.3 million, mostly due to our improved billing of unbilled and improved collections. Our waste backlog is at $5 million compared to $9.2 million at the end of the year and $10.7 million a year ago. Current debt sits at $3.6 million compared to - consistent with the $3.7 million at year end and our total debt is down - its $8.9 million compared to $11.4 million at year end and it's made up of $7.5 million from our credit facility FD&C, our shareholder loan of $1.3 million, and miscellaneous loan of $29,000. Finally, I'll summarize our year-to-date cash flow as of September 30. Cash provided from continuing operations is $1.5 million, our cash used by discontinued operations is $1.2 million, cash used for investing is $291,000 of which $338,000 is actual capital spending, but we had some proceeds from equipment and the final escrow from our facility sale last year. Cash used for financing was $1.6 million of this $1.6 million this includes debt payments of approximately $2.6 million and that's offset by the equity raise at our Perma-Fix Medical facility of about $970,000. With that, I’ll now turn the call over to the operator for questions.

Thank you. We will now be conducting the question-and-answer session. [Operator Instructions] Thank you. Our first question comes from the line of Al Kaschalk with Wedbush. Please proceed with your question.

Hey, good morning guys.

Hi, Al.

Good morning, Al.

On the medical side, Lou you gave us sort of the progress to date, what’s the next in the near-term next three months to six months sort of the commercial visibility or progress should we say to getting it the next couple of stuffs. The investments need to made, trials et cetera. Thanks

The main is we’re very focused today and there's a variety of smaller tests that will be required for FDA submittal in terms of very basic data that they will ask for, and so we are going through a variety of tests today with our FDA consultants in terms of what is needed and preparing really for what will be our first set down with the FDA, and probably the first of the year to go over our process or data and how it should be submitted and considered. So right now, it's basically continue to develop the data needed; and two, looking at ways to further focus the technology in terms of - for our commercial unit, but we’re really excited right now, we see a path forward with the data that has been very good and we’re very pleased with the results, so but that's our main internal goal right now is looking at data generation for what will be needed and a path forward with the regulatory agencies.

On this path forward is there further strategic partners or when do we take another step on that regard in terms of either announcements or is Digirad that partner and we are…?

Digirad was a general advisor on the industry in helping us focus the - we’re in discussions with a variety of potential partners and several of those would involve assisting us from the regulatory point of view. So I can't really say at this point when we will have more to say about that, but those discussions are very active right now going on.

Okay on the treatment side, I guess there’s a little – yes, we had a tough comp, still seems a little bit lower than maybe where things would like, what have you seen in terms of with the fiscal year end for the government, the September push. Why is backlog sort of where 5 million level as oppose to bit higher?

Well, Al the push probably wasn’t as aggressive as we've seen in the past, but the backlog has got sort of a different twist to it than what you normally see, we talked about and the fact we have given guidance is because we have some visibility on some way streams and projects, and our backlog is actually somewhat managed by our license right now. We’ve got a pretty good visibility for some things coming hopefully into next year, and because of our license, we have to manage when that comes in. So believe it or not, for once we’re actually telling you to hold on and then that's reflected in the lower backlog, but that just means we’re anticipating more sort of a flatter receipt schedule than we’ve usually had in the past where – as you know kind of fourth quarter, first-quarter falls right off the table. So we are not overly concerned, because we have some sort of commitments that will sort of make up for that lower backlog.

Okay that that gives you confidence on the 15 number and therefore given this timing and managing the process you're able to – for lack of better words slot for 50% growth in EBITDA for 2016. I assume the majority of that is because of this backlog or composition?

Yes, well, the service growth has a lot to do with it too, but yet that gives lot more confidence in our treatment numbers, which as you know, our treatment numbers is a probability of the service members to this kind of the revenue side growth.

Okay and then on just a broader comment Lou, a lot of the industrial companies are, I won’t say inconsistent but there is certainly some spotty growth and some more less constructive comments about waste streams. Despite the diversification efforts, are you seeing more opportunities or more customers delaying projects that the diversification process may not be as robust in the near-term.

Well, we’ve suffered over the last three, four years we are seeing – because of the problems with nuclear industry had both the DOE and then on the commercial side, so what I see is that there is a lot of pent-up demand, you can only avoid following the rules for so long and then you have to start moving wastes. So what we're seeing I think is we went through that back two, three years ago and we’re now pass that and the pent-up demand is there, and there's a lot of projects that are developing and there are a lot of opportunities. What we’re really seeing right now is a lot of new issues cropping up in the nuclear field that are requiring our efforts and technology and services. So we think we’ve seen that happened in the past and when that happened as they may talk about, we can delay this for a while, but it's usually about a year or two and then it catches up with the companies.

All right. Okay, very good. We’ll look forward to it.

Thanks, Al.

[Operator Instructions] Our next question comes from the line of Vernon McCreary with Stockbroker Club. Please proceed with your question.

Hello and thank you for letting me on the call. I’m quite new to the company, but I’m phoning from Toronto and wonder the questions we haven't encountered is the concern with chemotherapy with the isotopes at Chalk River being sort of stalled and stopped from time to time. I’m wondering if you could talk about how soon you can get to that market and what you think the size of the market might be?

Well, we see a fairly dramatic market is I wish I could tell you we’ll be available by the time Chalk River closes, but from a realistic point of view, don't see that being possible because you probably going to see Chalk River dropping off either next year or under the best scenario in 2018. So now I think to what we see is that in the interim the industry has done a variety of things to have backups. So you'll see a supply now with respect to ours is that we’re really looking at a – that’s probably being realistic, getting the FDA sometime next year and then a year after that with a commercial product. And Canada would be an ideal market for us, because it is a very diffused market and we see some advantages there. But over the next – and the market size is immense, selling what the product we would be selling you are talking about several hundred million dollar market in Europe, in the U.S. when you look at it very simplistically from just – if we only sold Tc-99, so we’re very excited about our technology. I think we could play a major role. Our technology just brings with it sort of ideal conditions from a big picture point of view and that's the real advantage we have. And now we just need to fill in all the little details, but try to get it approved through the regulatory agencies and then figure out how to distribute it, but we are really excited about the technology.

And I just ask can add-on them.

Sure.

You mentioned that if you just produce the basic item market might be a few hundred million. Do you have plans to do something like a value add-on or market in a way with those quite a larger revenue stream?

Well, the advantage of this technology that I’ve always seen is that it’s a disruptive technology and it could totally change how the industry behaves and what it does. So that is very possible and so the market itself around the world is a $6 billion market with over half of that in North America. So it is a dramatic market with a variety of services could be added on in time. So yes, it's tremendous opportunity and today it’s the heart of diagnostic medicine and without it, it be a fairly dramatic effect on diagnostics and also on the Chemo side and other sides of the business. So…

What’s your R&D size on this project?

Well, we are a small company and it's almost embarrassing to tell you because when I tell people in the medical field what they are spending they find it hard to believe the progress we've made with what we have. Yes, we are spending today about a half a million a quarter and I could tell you that everyone else for competing with the spending tens of millions of dollars, but we've made tremendous progress on what we have and our spending will increase in 2016, it’s going to go up as we get into some of the more highly medical requirements.

So if you had more money you could spend it on the R&D field?

We could accelerate our development in growth if we had more funds, yes.

Thank you for this.

Our next question comes from the line of Sam Rebotsky with SER Asset Management. Please proceed with your question.

Good morning Lou.

Sam, how are you?

Okay. Now the Perma-Fix Medical, the Polish company. I believe it’s been trading and holding for close to two years. Could you sort of give the metrics of what the high and low the prices traded at and what price did you read has paid for their interests? And is there any thoughts about listing this company in the U.S., we think that we get a better valuation if we did that?

First, the answer to your last question is we are very interested in listing it into the U.S., we think we would have a better valuation. The stock is traded on for approximately $10, it's been higher and it’s been little lower. I think the Digirad price was about $14 and fact that we would not sell stock today and it is kind of prices on the open market. So we think it's not being anywhere near truly valued.

So does it make sense I'm not sure whether to listed on the bulletin board or do you want to wait for NASDAQ or what is our thoughts on a timeframe to start trading the stock as you make more progress in getting the products forward and get some kind of approvals they would be more interest I would think in creating a greater value for this company which would then increase the value of Perma-Fix if there is a realistic price?

We’ve looked at all the various options and one is an up listing on to the bigger were stock exchanged which would dramatically improve the liquidity and the ability of the investors to buy it in Europe. And then we’ve reviewed all the various options for U.S. I probably say by the end of next year about 12 months we would be clear on where we are going from an option point of view with the stock and the company.

Okay, so at this point that you wouldn't be listing in the U.S. for at least another year or presumably you would up list it first in Warsaw even though you feel there is a greater valuation – might you if you got some approvals would that encourage you to do something sooner or is that what you're waiting on?

Well, there is a variety of things we are waiting on. We are reviewing all of them and all the various options and we have a variety of strategic partners that would be interested in working with us one way or another. So really the change in listing or bringing back to the U.S. would also depends on how we work with those various strategic partners.

Okay.

That also comes into play on all of this. Doing a NASDAQ listing today is we’re not sure that's quite right but probably by the end of the year it could be – it could make a lot of sense there are other less significant markets in the U.S. we could listed on, but we’re not quite sure what that would bring us. So in the cost and effort you know that probably be the same as doing in NASDAQ listing. So right now our thoughts is to give a little more time maybe move ahead with the Warsaw and well that's going to through then almost preparing the same documents that would be required for the NASDAQ. So, we’ve looked it like say we've laid out the password for every possibility right now.

Okay, now as far as the Nuclear and the other contract business, what type of bids do you have out there? Is there a dollar amount do you have more bids out there then before your backlog doesn't seems to be moving up but do you have more bids. Is there any more money that the government is going to be putting out or do we – or we waiting on something from the government.

Well, I think as we sit today you’ve seen our numbers on services are growing significantly especially in the commercial side of our business and we’re seeing more opportunities than we've ever seen and in the schedule for bidding over the next two years, three years on the DOE side is going to be pretty significant for large contracts, very large contracts now there we would have in most of those cases we would be on a team or subcontracted to a team. So, but we've got a lot of bids out in fact our opportunity list is big as it's ever been. I am pretty confident we’re going to win some significant projects and I see the bid opportunity just continues to increase and really it’s increasing on the small to medium, which is always been our bread and butter. So like I said earlier on a earlier question is there's been a lot of projects somewhat delayed, commercial side we actually see pressure building for people to do things and we see a lot of new opportunities.

So, Lou I don't think to understand is it that somebody need a goose whether is money to be put in the system for they allocate and commit the project, is it the federal government requiring companies to do things is that the federal government doing things. Is there additional money in a budget that's required to sort of get it off to really grow?

All the above, we’re seeing actually all the above we got the commercial side, there is pressure on a variety of major industrial companies in the mining business and the gas business there is the fracking produces a tremendous amount waste and it's causing issues and opportunities for us. In the commercial side and in the government side we’re seeing lots of work and remember that the problem we have is none of these things when they do, we have to bid on contracts, our clients don’t like us talking about them and don't like us announcing things. So we’re a little hamstrung in sometimes telling you until after the long after the fact on what's going on. So but as we sit today we are seeing international, we’re seeing commercial and we’re having we think good success on being on good teams and teams that are – that should win.

All right, Lou. Hopefully you could get these contracts and start reporting the numbers.

I hate that sort of dance on your question.

Yes.

Somewhat limited and how I can talk about what's really going on with our clients as business.

Right. Thanks, good luck.

Thank you.

[Operator Instructions] Our next question comes from the line of Justin Putnam with Talanta Investment Group. Please proceed with your question.

Good morning. My first question is what are your expectations to the isotope R&D expenses going forward? I think you said you were only about a half-million right now, what you are expecting that to grow?

Yes, we think that numbers going to go up. We’re working those numbers today but you could probably expect about 50% increase just without anything else dramatic happening. We’re sort of little bit reactive to the circumstances where were at with the planning as a rule right now and you could probably use a 50% increase on that starting in the year.

Okay. And then my second question Lou, I guess it is for you and you kind of dance around this a lot as well. But I was just curious to know if there are any - so the FDA process approval is always got a big step in your medical isotope program. But are there any other revenue opportunities maybe outside of the U.S. prior to that – [accreditation].

With the medical project?

Yes.

Any country that requires governmental approval and most of them will require, actually most of them will look to the FDA as the leader. So that once you have FDA then it becomes semi-automatic in some of the smaller countries. Now the medical isotope has led us to a variety of other opportunities that we’re chasing. So in one way it probably will pay off in the development of our technology base. So we’re seeing that, they are bringing to us a variety of other issues especially with our resin technologies that could see revenue much sooner than we'd ever seen with medical. So as we sit today, we’ve actually been excited about the how it is leading us to other opportunities in technology both on the wayside and on the use of our resin technologies.

Okay. So, for example will that Digirad deal, they agreed to purchase certain quantity of this isotope. Is that correct? Is that’s still dependent on FDA approval?

Absolutely, yes they can’t use it without that approval. So, all those things are really subject to us being able to get through the FDA.

I mean it’s close to how much they would agree?

Well, they are one of the largest consumers in the U.S. I don't remember the exact number - yes later, there is no limit on what they can - what they could purchase. But they are the largest consumer of Tc99 in the U.S. In fact they’ve just bought another distribution system for that now almost will make them a very significant much larger significant user. So I don't remember the number but they are a very large consumer.

To know them and….

Our production limit…

Yes, I mean you’re right. Exactly it’s more our production limit that would limit the availability. So if we can produce that they will buy it.

Okay. And then last question on that. So they currently own 5.4%. Is that correct?

Correct.

The Perma-Fix Medical and you own 60.5%. Is that correct?

Correct.

And then the remainder is just public close?

Correct, yes. Several funds in Poland and the small public float.

Okay. All right, great. Thank you for taking my question.

Our next question comes from the line of Bill Chapman with Morgan Stanley. Please proceed with your question.

Lou, Ben, good morning.

Hi, Bill.

Hi, Bill.

Hello. Let me ask on the plants that are producing the Tc-99 and there are also in the business of selling generators. I believe like Australia or South Africa if I remember correctly. How do we approach them on using the resin?

We are talking to pretty much all of them and it would be for a variety – they all see some value in what we are doing and so there's been a variety of discussions with everyone, it sort of goes to what their goals are, what they're looking at, how they want to grow and so there's a variety of approaches each of these companies have taken in terms of our discussions and so – but we see opportunities right now with everyone in fact the – we are somewhat drowning in opportunities what makes the best sense. So as we look at the industry today, we are really excited about our position where we are and how we can help several of these people really grow their business. And it’s everything from using their generators, putting our resin in it to developing a new generator that would be used in selective markets that they can't compete in today.

Okay. Let’s see you are going to them, they are using high rich uranium or low rich I presume and as you can offer a much lower cost…

Much lower cost, a simpler production way, the uranium systems require a highly centralized production distribution system or as our technology could be done in a more distributed diffuse production distribution system. So you make the whole chain more reliable, you make the whole chain closer to the users. So there’s some tremendous advantages that we could offer, that our technology would offer.

Okay. Well, thank you very much.

Thank you, Bill.

Our next question comes from the line of Michael Potter with Monarch Capital Group. Please proceed with your question.

Hi, guys. Quick question on something you discussed earlier was that our license or the license that we have in some way it did not enable us to bring in some waste from the government this year that we have to wait for the next year. Can you give us a little bit more detail on that?

Yes, really all our facilities have limits on the license, you can only have so much enriched uranium, plutonium or certain radioactive isotopes and so when our clients, especially DOE has large quantities of certain materials that have the limiting isotopes then we just have to plan the arrival and we can only have so much on site, so we have to bring the waste in treat it, then get it out the door, so we can except more. So this is a – it’s a common limit we've had. Today, we do a lot of very high activity materials and very specialized materials plutonium, do a lot of transuranic waste all of those have some significant limits on how much you could have on site. And so we have to manage it in and out to avoid having problems with our license.

But even though we are limited on what we could have on our site, don't we still have the work order? Or they not issuing the work order until we are able to accept delivery?

No, we have the work order, but we can accept the way is correct.

So we have the work order, so one that be in your backlog?

No.

No, Michael our backlog has always been sort of unearned revenue number, its waste on-site that has been received but not yet treated.

I see.

You need to remember that we work off of our contracts are open-ended and so that they will give us a work order under that contract and say we have this much. But until we receive it there is no guarantees that they will actually send it. Now they said we got 100 grams of this material and can you start taking it and we said we’ll take it over the next five months. So it works that way but you can’t recognize that because there is still limits in the contract that they could change in any time they want.

Well, that’s always the case, right? It’s always been historical.

That’s always the case. Correct, yes.

In some cases it’s - the customer must get it done. So we have little more confidence that they won’t book funding versus other time.

Right, but we are still working with record.

Yes but record that the backlog is truly an unearned number.

Okay. Can you give us a sense of how large a piece of businesses this is that should be coming in the beginning of year?

Well, I mean it’s spread out I mean we have several contracts I mean we have several commitments with some of the DOE sites where they have to move specially like Hanford, they have requirements they have to move with certain amount of material under their new rules with DOE in that state that pretty much guarantees we are going to get $5 million or $10 million a year on them. So but that's the kind of thing what we see, we have - they have requirements and we’re the only option and they'll be sending us that amount over the next year. So that gives us a pretty strong we usually don't have that kind of commitment. It’s a nice study number.

I think the best way to answer Michael is we rarely have a commitment that can't be pulled off the table and this one though it still can put more pressure on the generator to get that out and have $5 million to $10 million, so it's almost like we rarely have anything guaranteed and we sort of have a pretty good comfort level for $5 million to $10 million.

Okay. And I'm assuming that is the main factor because you guys confidence in the guidance for 2016 of 50% increase in adjusted EBITDA?

Well that was reducing a lot of opportunity, yes I - that's one and that’s great to have but it’s really the amount of opportunities we’re seeing on the commercial and on the international and on the – and then it on the governmental side is looking very positive right now. So we see a lot of opportunities.

Okay. There is a recent article on the Wall Street Journal few days ago within the past week on the issues that DOE is having managing the sites and a lot of the waste been built up and their budget issues over the past three years and all that kind of good stuff that we’ve known for a long, long time. Can you - you want to add any comment to that Lou?

Well, it’s in my old speech I mean there is so much waste out there especially in DOE. Specially at Department of Defense, specially at the commercial sites, the core of engineers I mean it just I could go on and on and then and so you know that there was a lot of discussion in that article a lot about what’s going on in California, the international labs and we’re in the middle of that right now with our service group. We are running the health physics work out there and so we are in the middle of all that and that just goes back to what we see is we have on our service side probably the premier group for health physics and managing the radiation control at sites. So that group is really blossoming right now and with it there is coming a lot of work, so in it’s leadership work, they are highly technical, fitting well with our treatment group and we are seeing that all bloom right now. So it’s a good place to be where we are and we just see that there is a need in the nuclear industry for more leadership and more technical approach and people are coming to us for that.

Okay. All right guys. I’ll get back in the queue. Thanks.

Thanks.

Our next question is a follow-up question from Sam Rebotsky with SER. Please proceed with your question.

Yes, one question I didn’t ask as far as the Polish company, how many shares are outstanding. You said that’s trading around $10 and Digirad say at $14, we owned 60%. What is the total number of shares outstanding that are tradable?

Approximately 1.3 million shares.

So 1.3 million shares, okay, so that’s a valuation of 13 million plus for that, okay. Is it helpful to have that information more readily available in the financial data that we put out?

Well, since it’s totally consolidated it’s somewhat shows up, but not in terms of the value on our balance sheet.

Yes, generally they are a subsidiary of our company. So we’re really our financial data represents Perma-Fix and that include – the value of that is presumably in our stock price and in our valuation.

Well at this point in time the 13 million plus valuation and if you're successful in accomplishing what you are trying to do this would have a greater valuation. Then is reflected in Perma-Fix, you reflect book value and not the market valuation. All right, hopefully you're successful sooner than later. Okay, thank you.

Okay.

Our next question comes from the line of Bill Nasgovitz with Heartland. Please proceed with your question.

Good morning.

Good morning Bill.

Lou, what was your estimate of EBITDA for this year?

$6 million to $7 million.

Okay, thank you. End of Q&A

We have no further questions at this time. I’d now like to turn the floor back over to management for closing comments.

Once again like to thank everyone for participating in our conference call with another quarter under our belt of sustained profitability I can say confidently we’ve turned the corner. We are now on track to hit our guidance of $6 million to $7 million and encouraged by our prospects heading into the New Year. We are pursuing several large contracts in the service segment which we hope to announce soon and see a growing number of opportunities within treatment. We are very excited about our medical subsidiary based on the interest we received from the industry and are now finalizing plans for the FDA and look forward to providing you update. Thank you all for participating and look forward to the next call. Thank you.