Good day, ladies and gentlemen, and welcome to Perma-Fix Environmental second quarter 2019 business update call. All lines have been placed on a listen-only mode, and the floor will be open for questions and comments following the presentation. If you should require assistance throughout the conference, please press star zero on your telephone keypad to reach a live operator. At this time, it is my pleasure to turn the floor over to your host, David Waldman. Sir, the floor is yours.
Thank you, Kat. Good morning, everyone, and welcome to Perma-Fix Environmental Services second quarter 2019 conference call. On the call with us this morning 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 morning containing second quarter 2019 financial results, which is also posted on the company's website. If you have any questions after the call or would like any additional information about the company, please contact Crescendo Communications at 212-671-1020. I'd also like to remind everyone that certain statements contained within this conference call may be deemed forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and include certain non-GAAP financial measures.
All statements on this conference call, other than a statement of historical fact or forward-looking statements that are subject to known and unknown risks, uncertainties and other factors which could cause actual results and performance of the company to differ materially from such statements. These risks and uncertainties are detailed in the company's filings with the U.S. Securities and Exchange Commission, as well as this morning's press release. The company makes no commitment to disclose any revisions to forward-looking statements or any facts, events, or circumstances after the date hereof that bear upon forward-looking statements. In addition, today's discussion will include references to non-GAAP measures. Perma-Fix believes that such information provides an additional measurement and consistent historical comparison of its performance. A reconciliation of the non-GAAP measures to the most directly comparable GAAP measures is available in today's news release on our website.
Now I'd like to turn the call over to Mark Duff. Please go ahead, Mark.
Great. Thanks, David. I'm very pleased to report solid financial results for the quarter. Our revenue increased 30% to $17.1 million. Our gross profit increased by 60%. We achieved adjusted EBITDA of $1 million, and we generated a positive net income. More important, we anticipate an even stronger second half of the year. Turning first to the services segment, revenue increased by 75% to $7.0 million. This improvement reflects the success of our business development initiatives, including the recent award of several substantive contracts commencing in the second quarter of 2019. These wins will include remediation work in Canada, as well as several Department of Energy locations throughout the U.S.
It's very important to note that we did not recognize the full benefits of these contracts in the second quarter, which could add an incremental $2 million-$3 million of revenue beginning in the third quarter of 2019. We're presently also bidding on additional contracts, which we believe will provide significant upside potential, in 2019 as well, the second half of the year, and potentially beyond into 2020 as well. Within the treatment segment, revenue increased by 10% to $10.1 million due in part to our efforts to diversify our revenue streams. While we're pleased to see both year-over-year sequential revenue growth, we experienced some continued delays by certain customers, but most of these delays have largely been resolved, to support an improved third quarter inventory and backlog for waste processing at each of our facilities.
To support our ongoing growth initiatives within both the treatment and the service segments, we recently announced the addition of three senior executives with significant experience in the nuclear and environmental industries. Specifically, we appointed George Taylor as VP of Waste Services and Business Development and Sales, Chris Reno as Director of Nuclear Services and Business Development, and Brian Wood as Director of Commercial and Utility Business Development. Each of these individuals bring extensive relationships with government and business leaders, as well as proven track records within their respective areas of expertise. The addition of this new core waste management executives will directly support our growth strategy focused on growth in commercial markets, as well as a broader nuclear services application for our market base. I'm also pleased to report we've completed the closure of our M&EC facility, which consolidates waste treatment capabilities within the three remaining facilities.
Closure activities continued to create a drag on performance throughout the first few quarters of 2019, while also creating major distraction to our resource base as well as our management team. As a result of the closure of the facility, we received $5 million in cash previously held as collateral for the facility under our financial assurance policy. At the same time, we've undertaken steps to upgrade our facilities and deploy new technologies that we believe position us to support procurements within the Department of Energy. As discussed previously, the VML vitrification unit at our Perma-Fix Northwest facility has commenced commercial operations through our partnership with Veolia Nuclear Solutions, where we recently completed our 10th milking event and are increasing the frequency of that system on every melt.
This new capability allows us to address large inventory of reactive waste currently in stable storage at several government locations, and provides us a substantial multiyear backlog, from a new, incremental waste stream. The inventory of this waste stream is estimated to be in excess of $100 million, including large inventories of waste at Idaho, as well as at Hanford and Oak Ridge. This past month, we began treating radioactively contaminated water at our Perma-Fix Florida facility and are receiving water treatment backlog inventories from both commercial and government clients. While the storage tank farm remains under construction, our initial operating results of the unit there have exceeded productivity expectations regarding efficiency and performance through use of totes and temporary storage tanks.
Increasing operational capacity and sales will be a primary focus of our team in the next few quarters to broaden our market reach and provide a low-cost alternative to waste generators for large quantity water disposition. To wrap up, we're starting to see the benefits of our strategic initiatives over the past few years, including the expansion of our treatment capabilities, enhancement of our marketing sales program, and broadening our market base for our waste receipts. However, the nuclear services segment has seen rapid expansion on the amount that has generated strong backlog well into 2020 through over $20 million new awards in the past three months alone. This is not only supporting our bottom-line and top-line financial goals, but broadens our client base and market base to full service, our radioactive waste management services offering.
That aligns Perma-Fix for a wider offering to some of the larger DOE procurements that are forthcoming in the next few quarters. Heading into the second quarter, or excuse me, the second half of the year, we're extremely encouraged by the outlook for the business given our existing contracts and growing sales pipeline. On that note, I'll turn the call over to Ben Naccarato, who will discuss the financial results in more detail. Ben?
Thank you, Mark. I'll move to revenue. Our total revenue from continuing operations for the second quarter was $17.1 million, compared with prior year revenue of $13.2 million. Our services segment revenue increased by $3 million, a 75% increase over prior year as a result of our increased project work, which was awarded late in the first quarter and early in the second. Our treatment segment revenue increased as well by $948,000 or 10.4% as a result of primarily improved pricing for the waste received, processed, and disposed. For six months ending June 30th, our total revenue is at $28.8 million, compared to $25.8 million in the prior year.
Both our segments have increased compared to prior year, with services segment increasing by 14.7%, again, as a result of the increased project work in the second quarter, while our treatment segment is up 10.5%, primarily due to higher average prices. Our cost of sales is 13.9%, or excuse me, our cost of sales was $13.9 million compared to $11.1 million in the prior year. Cost in the treatment segment decreased by $156,000 from prior year due to the decrease in closure expenses at our M&EC facility of about $1 million. The decrease was offset by increased variable costs relating to higher revenue and waste mix, totaling $754,000. In addition, fixed facility costs increased by $140,000. Our service segment cost of sales increased by $2.9 million as a result of the increased revenue.
Our gross profit for the quarter increased from $2 million in the second quarter of 2018 to $3.3 million in the second quarter of 2019, an increase of $1.3 million or 60.1%. Excluding the million-dollar reduction in closure expenses at M&EC, our gross profit increased by $178,000 or 5.5%. Gross profits were impacted by higher revenue in both segments, but offset by lower margin projects and waste streams. Our year-to-date gross profit was $5.8 million compared to $5.4 million last year. This increase is the result of higher revenue and a reduction in closure expenses at our M&EC facility, offset by higher fixed costs. Our SG&A for the quarter was $2.7 million, up slightly from $2.6 million last year, and that's due to higher labor and property expenses. Similarly, our G&A costs year to date were $5.6 million or 19.4% of revenue, compared to $5.4 million or 21% in 2018.
Again, higher payroll and property taxes accounted for this increase. Our income from continuing operations net of taxes for the quarter was $373,000, compared to net income of $788,000 last year. We had net income attributable to common shareholders of $289,000, compared to last year's net income of $610,000, and we had net income per share for the quarter of $0.02, compared to net income per share of $0.05 in the prior year. I do want to note that in the second quarter of 2018, the company recognized a $1.6 million gain on the exchange offer of the M&EC preferred shares, preferred stock, which positively impacted the net income from continuing operations net of taxes, the net income attributable to common shareholders, and the earnings per share.
Our adjusted EBITDA from continuing operations for the quarter, as we defined in this morning's press release, was $1 million compared to $846 last year. Turning to our balance sheet compared to year-end, our cash balance at the end of the second quarter was $384,000, down from $810,000 at year-end. Our unbilled receivables increased by $3.1 million due to increased project work in our service segment. Other current assets increased by $4.6 million due to the reclassification of the $5 million finite-risk sinking fund from long-term assets to current. This reflects the current nature of the $5 million of M&EC collateral, which was collected on July 22nd. The offsetting reduction of this $5 million is evident in the drop of the intangibles and other assets of approximately $4.5 million.
Our operating right-of-use assets total $2.7 million, representing the present value of our operating leases as a result of the implementation of new lease accounting guidelines, ASC 842. Our total current liabilities increased by $974,000, reflecting an increase in accounts payable and other operating liabilities, but offset by a drop in our unearned revenue. Our backlog of waste at the end of the quarter was approximately $9.4 million, which was down from $11.1 million at year-end, but up from $7.4 million at the end of the second quarter last year.
Our total debt at the end of the quarter was $5.1 million, and this excludes debt issuance and debt discounts, of which $2.1 million was due to PNC Bank, $2.5 million was to our shareholder loan, which we borrowed in April of 2019, and $500,000 for other equipment loans. Our working capital was a negative $480, a considerable improvement from year-end 2018, when it was a negative $6.8 million. This improvement was the result of the reclassification of the finite-risk fund and the reduction of our monthly term loan payment to PNC Bank from $102,000 per month to $35,000 per month. Finally, I'll summarize cash flow from the second quarter. Cash used in the continuing operations was $863,000.
Again, I'd like to note that this included approximately $1.3 million of spending related to the M&EC closure. When we exclude the M&EC spending, cash from continuing operations would've been a positive $452,000. Cash used in discontinued operations was $334,000. Cash used in investing in continuing operations was $280,000. Cash provided by investing activities from discontinued operations was $44,000. Cash provided from financing activities was $1.2 million, and this is represented by the two and a half million shareholder loan and the $120,000 in equipment financing, offset by payments of $610,000 to our term loan and $639,000 to our revolver. With that, operator, I'll turn the call over to questions.
Thank you. The floor is now open for questions. If you do have a question, you may press star one on your telephone keypad at this time. If your question has been answered, you can remove yourself from the queue by pressing one. Please be mindful of other people asking questions and limit it to two questions. Thank you. Again, it's star one. Please hold while we pull for questions. Our first question comes from David Newton from Heartland Advisors. Go ahead, David.
Yes, this is Bill Nasgovitz at Heartland. Congratulations on a nice improvement. That's fantastic, isn't it, to have a profit for the quarter?
Great. Thanks, Bill. It was a big quarter. Appreciate it.
Well, could you be a little bit more specific? These are three, it sounds like, pretty significant hires here. Could you talk a little bit more in terms of what they might be involved in in the markets that you're targeting, in terms of their expertise and their focus?
Sure, Bill. Each one of these guys come from a different area in our business, but most of them knew each other, or we had relationships with them. The first one is taking over for the overall sales shop, so he's a VP coming from a transportation company that transports radioactive waste, so very familiar with the industry, a longtime leader, a very bright guy from Rice University. He's got a good grasp on programmatic sales and marketing. The other guy, Chris Reno, has been with our competitors for a long time, and retired, going back out of retirement to lead proposals and lead large initiatives, larger bids for us, where myself and a couple of the other guys used to do that.
It allows us to do more management and better quality pulls. The third guy I'm really excited about, Brian Wood, comes from TVA, and most of his career spent in the commercial or power utility world, which we don't do a lot of. Most of the folks that are in our industry will tell you that the commercial decommissioning market is starting to heat up with 100 reactors in the country right now, and they're taking down a couple a year or at least moving in that direction. He's already been a big help in us getting on teams and finding how we can be a value-added partner for commercial demolition and commercial waste management. Impacts already to the company. We needed a little bit of head space in our revenue generation and our margins so we could afford to staff up this way.
Fortunately, with these new wins, we've got a little more comfort now that we can bring on senior guys like this, and be able to have sustainable margins.
How big could that latter market be, that commercial power utility market decommissioning?
These reactors are going to being awarded for probably between $600 million and $800 million for each project, through the current contract we approach. There's 100 of them, over the next 30 years. That's just the decommissioning cut of it. There's a lot of other operational opportunities, particularly in water. Most of these reactors generate some water, and along the way, even outside of decommissioning, just in operation, and that's the market we want to be in.
Yeah. Thank you. I'll get back in the queue.
Okay. Thank you, Bill.
Thanks, Bill.
Thank you. The next question comes from Steve Levinson from Big Rock Research. Go ahead, Steve.
Thank you. Good morning, everybody.
Morning.
Good morning.
You mentioned sustainable margins there. I'm just curious about potential for margin expansion. Is there something you can do with costs or is it really dependent more on volume?
Well, it's a different answer depending on which area we're talking. In the waste treatment world, we do better on margin with volume because we pay off our fixed costs for keeping our facility compliant and operating. The more waste you get, depending on the type of waste, the more opportunity you have for expanding margins over a certain amount, each month. On the services side, it's typically you bid on a project one at a time, and that's a more sustainable, or I should say more level margin, because it's basically competitive on each project. That'll be more flat. What it does do is that margin would have less impact. We would have less fixed costs on each one of those projects, after we win, because it's not a linear increase in G&A as you add projects.
You add 10 projects and maybe not increase any more than if you added five. I hope that answers your question, Steve. Dan? Hello?
Yeah, I think we might have lost Steve.
Okay.
I'll dial him back one moment.
There's a pretty bad lightning storm here, in Port Hope, Canada, Ontario, so you might lose me. I've been dropped off a couple times as well.
Our next question comes from David Newton from Heartland again. One moment.
Yes. Bill Maskowitz again here. Just, you mentioned Canada as this has been an initiative now for a year or so. Can you talk about in more detail in terms of the progress there and the opportunity? Lastly, in terms of these contracts, some are fixed price, I assume. What's the ratio fixed versus variable, and how do you control the risk of cost overruns and misbidding some of these contracts? Thank you.
Sure. Canada, I can't talk a whole lot about Canada because we have agreements with our clients that all press releases and information about the projects will come through them. I can say that we're doing some remediation in Canada for some residential houses in Ontario, on a fixed unit rate contract. There is some risk. Fixed unit rate isn't quite as bad as fixed price because we have a lot of different pay items, and you can kind of spread your risk across all the pay items. The contract is a little slower starting than we had hoped. We had hoped to be in the field and working in early May, and we're just getting rolling the last couple of weeks.
As our statements we just went through read, they're a little slower getting rolling, and we'll see more revenue in the third and fourth quarter, as opposed to second and third, from these projects. They're all sustainable long-term contracts with lots of opportunities for additional tasks to be added, and they're working very well so far. We have good client relations, and the field workers are very successful. As far as how we manage it and our risk, we only have right now a couple, I'd say less than $5 million in fixed price contracts in the field. The remaining backlog on revenue, which is $20 million-$25 million, I would say, for the year, are fixed unit rate and T&M. The ones that are fixed price, we have very senior guys on them, have done a lot of fixed price in the past.
We win our contracts with adequate contingency and a very formal risk analysis process, so we understand the risks and mitigate those risks and align funding or cost, obviously budget, for those risks. So far, we've done very well on those. We've met our expectations on each one of our fixed price tags so far.
All right, thank you.
Thanks, Bill.
Again, ladies and gentlemen, to get into the queue, it is star one. Our next question comes from I'm sorry, one moment. Robert Brown. Go ahead, Robert.
Yeah. I have two questions. First of all, under the proposed government budget, how much are they allocating for the Hanford cleanup? Based on the new federal budget, the two-year budget. The second thing I want to ask you about is the phase II TBI. I was a little confused. When they're saying that this would take six to nine months for the DOE and the State of Washington to work out the terms, how is that coming, and when do you see a resolution on that?
Those are good questions, Robert. The first one, on the Hanford budget, I don't have any numbers in front of me, but I know that the EM budget was, the total EM wide was, if I recall, about $7.2 billion, which is pretty flat from last year. I know the Hanford budget was pretty close to where it was last year as well. Not a lot of change or maybe a couple of points here and there, but it's pretty close. The waste we're receiving from Hanford has been pretty flat as well for our Richland facility and the work that we're doing out there.
As far as TBI goes, as usual, we can't get into a lot of detail, but I can say that as you know, the DOE pulled their permit back, as they announced in early June, and wanted to have a strategy or change their strategy to focus on what they call DOE Order 435.1 revision. What that means to us is that we'll continue with the funding we have to do what we have to do on TBI, which in our case, specific to Perma-Fix, is a demonstration of the mixer that we'll use to support the waste processing, as well as the other firms that are in the TBI group company. The other companies will work to perfect the waste extraction system. Those activities are ongoing even though DOE pulled their permit back.
What you read about the delays of 6 to 9 months, what that's referring to is DOE's position is that TBI is by no means dead or stopped. They pulled their permit application back from the state for 6 to 9 months to pursue the revision of this DOE Order. Once that order is revised and implemented, DOE will reevaluate whether they want to submit that permit back, or if depending on how the revision is applied, it may have an impact as well. That's why DOE said it's a 6 to 9-month gap until they resubmit that to the state at some point.
Our next question comes from Steven Fine. Go ahead, Steven.
Good morning, gentlemen. How are you?
Good morning, Steve.
Good. My first question is, Ben Naccarato, when you're talking about the $1.2 million last year from the adjustment of the preferred stock. Realistically, can that be factored out? If you factor that out, doesn't that improve the picture of gross profit or profit this year versus last year?
Yeah, Steve, it's $1.6 million, and it's not gross profit because it was sort of below the G&A line, if you look at the income statement. Absolutely, that was the reason for discussing it. Last year, we probably were in a loss position, when you exclude the $1.6, which was really just a paper adjustment. It was non-cash. Yeah. Absolutely.
Thank you. Relative to this quarter, the second quarter, and the increase in the service, how much of the $17 million in contracts that you signed were in the actual treatment sales?
Of the $17 million, Steve, those were all in nuclear services?
Yeah, I mean in services. I'm sorry, I meant in services. Your services went up. In the last call, you had said you were signing $17 million in contracts in services. How much of that was in the sales for treatment in the second quarter?
I-
Yeah, I don't have the exact amount, Steve, it is a small amount. I would put it in probably out of $7 million, maybe about $5-ish. We had our first quarter was pre the $17 million, that was about $1.8 million of revenue. That was sort of ongoing smaller projects that we are doing. I would say about the difference or the $4 or $5 million.
Okay. When you say there's a $9.4 million backlog, was that treatment or does that include this too?
That's just treatment.
You have a $9.4 million Okay, I think you just said that. You got $9.4 million backlog in treatment, and then you have at least $12 million in service. That's where you get the $21 million.
Correct.
Okay
what $21 million are you talking about, Steve?
Well, okay.
No, I think Mark may have noted $20 million.
Yes.
There's been some other work come in as well in the second quarter on top of the 17.
Right
you got about close to $20 in services backlog and about $9 in your treatment segment.
You're telling me that with the $27 million that you've already done through the second quarter, in theory, you're, not in theory, realistically, you're in the high $50s for sales this year?
Well, yeah, that's assuming it's all processed in the year, but yes.
Okay. All right, because, I'd like to see you get up into the 60s and really make a move forward. All right. Thank you. Nice quarter. Congratulations. Thank you.
Thank you, Steve.
Our next question comes from Robert Manning. Go ahead, Robert.
Oh, I'm sorry. My question was asked, answered. Thank you.
Thank you. Releasing you. Ladies and gentlemen, it's star one to ask a question, and our next question comes from Todd Hellman from Huntington Bank. Go ahead, Todd.
Hi, good morning. Thank you for your time. Wanted to talk a little bit about the capital expenditures for the quarter. I apologize if I missed that note, while you all were speaking. Also, capital expenditures going forward and how those might be financed.
Yeah, capital for the quarter was approximately $80. For the quarter was only about $90K. For the year to date, we're at about $312. As you know, we were sort of waiting on the financing related to the closure money, the $5 million. We sort of had a halt on cap spending. We are going to ramp up in the foreseeable future. The main priority is going to be the expansion of our facility in Kingston, Tennessee, which is construction related and will likely be financed through operating capital. There's other equipment related that we primarily expect to finance again through working capital, but potentially would look at financing opportunities depending on needs.
Great. Thank you for taking my call.
Okay.
Our next question is from Steve Levinson. Go ahead.
Thank you. Sorry about dropping off before. I was on a mobile. At any rate, what I was asking was about the Florida projects. From the time you start, how long does it take, assuming everything goes as planned, to get up to your target margins?
I'm sorry, Steve, our target what?
Margins.
Oh, margin. Wow, that's a tough question, Steve. Right now, as I mentioned in the notes, we are doing a little better than the design productivity was for processing radioactive water. Which generates much better margins than anticipated and is much more efficient and going to allow us to lower our fixed unit rate that we charge for that. Right now, the thing is running pretty fast. It's not running 24/7. It's only running on one shift. We have some backlog. I can't remember off the top of my head how much. We're bidding a lot of water right now on several different fronts. I would guess that we'll be running full capacity with a couple of more wins in the next quarter or two, depending on how we do on these bids.
To be frank, when you start up a new facility like this, we're competing against a couple other companies on the water. We have to feel our way through what it's going to take to win and refine our cost estimates as well as refine our operating margins and how much it costs to run the facility. I would say over the next two quarters, we'll get those numbers nailed down pretty well, and get a client base that's pretty stable.
Got it. Thank you. Next one is on the soil separation. Can you tell us about the progress on that? I'm sorry if I missed it, if somebody asked before.
No, we haven't talked about that in a while, Steve. We were unsuccessful on a couple of bids on those. We have a couple more in right now, some dredging in San Diego, and a couple other projects in Northern California. We're still waiting to hear on those. I wish I could tell you we've got a couple of wins that we're working on, but we're still waiting to hear from clients. They're going a lot longer than anticipated. We have lost a couple, but we're still waiting to hear on a couple of them.
Got it. Thanks. Last one is, I know there's some reluctance to talk about Hanford. Are you actually subject to a non-disclosure agreement or confidentiality agreement that sort of limits what you can say?
We are on several fronts, not only on the TCT, which is a tank closure contract, which is an open procurement right now, so it would be inappropriate to discuss that. The TBI initiative is a DOE initiative that we're a player in. We respectfully try to limit our discussion on TBI, and let DOE talk about that, since it's their initiative.
Got it. Thanks very much. Good to see the progress being made.
Thanks, Steve.
Our next question comes from Chuck Dickinson. Go ahead, Chuck.
Good morning, guys. Nice quarter. I have a question on the thrust of the strategy here overall. If you have a budget that looks flattish, as you say, overall, although you don't have all the details, and I'm not sure if some of that still needs to be worked out congressionally and in committees or not, and also sort of flattish in Hanford. It seems you have two directions that you're looking at here. You want to get a bigger piece of the same pie, that is, increase your market share for what's already out there without sacrificing margins, of course, and then also develop some new business, bake a new pie, I guess would be the way to look at it. Maybe that's some of the things that you're doing commercially. Can you give sort of a feel in terms of both of those avenues?
How much effort are you putting into both sides and what the potential you see is for both growing market share in the existing market and also the new business opportunities?
Well, Chuck, you completely described our strategy, which is, as you just said, to increase our market share on what we can do now and then to add capabilities to what we can do now. Our goal has been for two years now, we're very focused on getting to $100 million in revenue, and we kind of saw that growth coming from the last two years of $50 million to have a 60/40 split on the ratio, which was basically $40 million in service and $60 million in waste. I think it's going to be more as we're getting closer to it, more 50/50, $50 million each. Which would basically, to answer your question, focus on the dramatic increases in the services sector while increasing the waste treatment by 20%-25%. I think that's the way it's going.
We're very excited about our services segment. As Mike, 30 years of doing this has seen several times, once you win a couple projects and get a few clients that are very happy with your performance, there's a lot of momentum from that. We've seen that in the last couple of months. We'll have some new projects hopefully we can report next couple quarters that will be a result of that momentum and those references. Bringing on new people, strong people that have relationships, and all that builds on each other. When you see companies really surge in this industry, that's typically what it comes from, that momentum, and bringing on new talent that can help you grow.
We're finding ourselves in that position right now, and so it's a real exciting time for us internally. Morale is very good, and the company has a buzz about it. We're making the investments we've needed to make for a long time on all kinds of things, management systems and those types of things, as well as technology. I hope that answers your question. I kind of rambled on a little bit.
Yeah. No, it does. It certainly seems like you could be at an inflection point for the business. I don't want to say you're there, but seeing that revenue pop sequentially and year-over-year would give the first glimmer of hope, the first green shoot, that maybe you are at an inflection point. My other question, second question, has to do with joint venture opportunities. You've been reasonably successful in that so far. Is that something that you're going to continue to focus on? What is the degree of effort and emphasis on that, whether it be a joint venture with someone else that would involve subcontract work or having them use some of your facility and technological capability?
I assume you're speaking about the GML. Yeah, the GML was a great example. It was a very good relationship with Veolia, I think one of the best I've had ever, and where the partnership was very meaningful all the way through initial designs and startup and through marketing. To answer your question, we do hope to have a couple more of those. We're talking to other folks now that address specific applications for upcoming bids for things like mercury treatment in Oak Ridge. We're trying to tie them to specific waste streams and specific challenges, most of them the DOE, that address waste streams with very limited treatment capability now, so we can easily define the potential return on investment and the technology that needs to be in place. We do have a couple more in line. They're not in the near term.
They're probably a year or two away before anything can be really announced. We certainly see that model as a win-win for us and our partners and frankly, the government to be able to treat waste that may not otherwise be able to be treated.
Oh, one other thing, I'm sorry. You had mentioned, my phone had cut out earlier, that you had not gotten the full benefit of the new contracts realized in Q2, and then you had mentioned a number of an incremental $2 million-$3 million. Was that throughout the remainder of 2019 or in the third quarter of 2019?
We expect that to be in the third quarter for the most part. We hope that it would bleed into the fourth quarter as well for expansion.
Okay. Thank you.
Thank you.
Our last question comes from Steven Fine. Go ahead, Steven.
I think the question was answered, but I just would like to expand a little bit. On the partnerships, partnering with other people for bids, is that something that you've introduced, Mark, or was that something that the company has done historically? What I mean is partnering in bids.
Yeah. We call it typically teaming. Yes, it's historically done in most of the services projects within Department of Energy and DOD, and actually just about all of them require very broad array of disciplines and technical capabilities, most of which every firm doesn't have. Even the large firms like Fluor and Jacobs will have a need for niches, they'll partner or team with other companies. We do the same to reduce our risk, for example. A good example is some of the projects we've won in California, we'll team with small businesses in the region that have the equipment, for example, or a niche or a relationship that is necessary for a specific project. We'll pretty much always will do that. There's a couple exceptions, but for the most part, we'll be teaming with local companies.
Thank you. The second question is, which I like, you keep talking about this $100 million goal. Do you have a timeline goal for that? Let's say two years, three years, one year?
Well, I get yelled at for speculating too much, Steven, on these kinds of things, so I try not to do too much of that. We certainly would hope in the next two or three years we'll be able to reach that goal.
All right. My one final question, and I guess this displays my lack of financial acumen. $1 million-$5 million, Ben, physically the cash came in, correct?
Correct. Yeah.
Okay. The cash is being used or is the cash physically being used, like for example, for plant improvements and stuff like that, or new stuff in the plants?
Bit of both. As you know, the closure was very expensive, and so we have some bills to pay with it related to the closure. There is additional, obviously, and that money, along with positive income that we are certainly planning to earn over the next six months, will go towards capital improvements.
Okay. Thank you.
At this time, I would like to turn the call back over to management. Thank you.
Okay. Thank you, Megan. All right. I'd like to thank everyone for participating on our second quarter conference call. As I mentioned earlier, we are pleased with our Q2 results and more importantly, the positive impacts from our strategy improvements that will continue to provide sustainable growth while expanding our offering over the next several years. We are confident that our best is yet to come. Thank you.
Thank you. This does conclude today's conference. We thank you for your participation. You may disconnect your lines at this time, and have a wonderful day.