Earnings Call: Q2 2015

Aug 6, 2015

Greetings, and welcome to the Perma-Fix Environmental second 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. If anyone should require operator assistance during the conference, please push star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr. David Waldman of Crescendo Communications. Thank you, sir. You may begin. Thank you, and good morning, everyone, and welcome to Perma-Fix Environmental Services second quarter 2015 conference call. On the call with us this morning are Dr. Lou Centofanti, Chief Executive Officer, and Ben Naccarato, Chief Financial Officer. The company issued a press release this morning containing second 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 a statement of historical fact, are forward-looking statements that are subject to known and unknown risks, uncertainties, and other factors which could cause actual results and performance of the company to differ materially from such statements. These risks and uncertainties are detailed in the company's filings with the U.S. Securities and Exchange Commission. 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. Very pleased with the dramatic improvement in our results compared to prior year. I'd also add, far from satisfied given the vast landscape of opportunities we are seeing and our unique resources that we have at our disposal. Our business improved during the second quarter of 2015 with a revenue increase of 29% to $16.4 million versus second quarter of last year. Much of that growth occurred in the service segment, where revenue increased 61.5%. This growth indicates we're winning more work, and contract awards appear to be picking up. Within the treatment segment, revenue increased by 18% to $11.1 million versus same period last year. This was due to higher waste volumes. Due to the timing of shipments, however, some of the revenue we had expected in the second quarter was delayed and came in in the early part of the third quarter. Our sales pipeline continues to improve. We anticipate government spending to increase as we approach the government's year-end. We are off to a strong start in the third quarter and extremely encouraged by the outlook for the second half of 2015. As a footnote to that, especially on the treatment side, we were very pleased to see yesterday that the Senate approved the appointment of Monica Regalbuto as Assistant Secretary for the Department of Energy's Office of Environmental Management. We hope this position, which has been vacant for close to five years, will provide the leadership for DOE's environmental cleanup efforts. Moving on, we had substantial improvement in our margins, with gross profits increasing 159% and gross margin increasing to 24.7% compared to 12.3% for the same period last year. We achieved adjusted EBITDA of $2 million compared to a loss of $400,000 same period last year. We fell slightly short of our EBITDA target for the second quarter. This was due to the timing of the shipments that I had mentioned earlier. We remain confident in our prior guidance of $6 million-$7 million for the full year. As we have explained on previous calls, the last few years have been particularly challenging for the industry as government funding for nuclear waste cleanup was curtailed for various reasons. One of the major, again, was just the lack of leadership at the top of DOE's environmental cleanup and the agency. With the appointment of the new Assistant Secretary, we're somewhat excited that we think we'll see movement on some of our top priority projects. We continue to focus on diversifying our revenue into non-DOE areas. We believe this will continue to lead top-line growth together with our cost initiatives undertaken to streamline operations. We will continue to see improvement in our bottom line. I'm also pleased to report some new developments on our medical isotope side of our business. In early June, we reached an important milestone in terms of scaling up our prototype generator for commercial production by achieving or demonstrating a 4-curie level system. This was a major achievement within the industry. We not only exceeded industry requirements in many emerging markets but are now moving rapidly to demonstrate our superiority over traditional processes in North American European markets. Based on these results, we remain convinced that our process has the potential to reshape the global supply chain of Tc-99m in the U.S. and around the world. Following our earlier success at the 2-curie level, we have attracted significant interest from within the industry, further validating the significance of our process. Given our latest 4-curie level and near-term plans to scale up even further, we are moving forward aggressively with our plans to formalize additional partnerships, prepare for regulatory submission, and ultimately commence commercialization of the process. We finalized our agreement with Digirad, whereby Digirad invested $1 million in our subsidiary, Perma-Fix Medical, which is listed on the Warsaw Exchange. I would point out they invested a slight premium to current market, which is further illustration of the growing interest in our process from within the industry. As part of the agreement, Digirad also agreed to purchase quantities of Tc-99m for its nuclear imaging operations upon successful completion of development of the new Tc-99m resin. With all that is going on within the medical side, we've also made some major additions to our senior management team at Perma-Fix Medical. Steve Belcher has been appointed Chief Executive Officer of Perma-Fix Medical. Steve brings 19 years experience in the nuclear pharmacy sector. By way of background, Steve was one of the founders and principals and former Vice President of Triad Isotopes, which is the third largest nuclear pharmacy in the U.S. Steve has also served as an officer and principal architect of multiple ventures and was Chairman of the Board of the National Association of Nuclear Pharmacies. As you can imagine, his resume brings tremendous network and credibility from within the industry. John Climaco was also appointed Executive VP of Perma-Fix Medical. He is Co-founder and former President and former CEO of Axial Biotech, a molecular diagnostic company. John has served as a member of the Board of Directors of Digirad, InfuSystem Holdings, and is also a board member, of course, of Perma-Fix. As to wrap up, we're encouraged by the outlook for our business, given our growing sales pipeline within the service segment, our improving outlook within the treatment segment. Looking ahead, we anticipate a strong second half of 2015 and remain confident in our prior guidance. As I mentioned before, we continue to bid on a variety of large contracts and continue to believe we're in a good position to continue to win contracts. We appreciate the support from our investors and the dedication of our employees. At this point, I'd like to turn the call over to Ben, who will go over in more detail the numbers. Then I'll be back to answer questions at the conclusion of our formal remarks. Ben? Thank you, Lou. Starting with revenue, our total revenue from continuing operations for the second quarter was $16.4 million compared to last year's second quarter of $12.7 million, an increase of $3.7 million or 29.2%. Our treatment segment revenue improved by $1.7 million, primarily due to improved waste volume, while our services segment improved by $2 million as a result of improved project revenue compared to prior year. For the year to date, our revenues is greater than prior year by $6.8 million or 29.1%. Our cost of sales was $12.3 million in the second quarter compared to $11.1 million in prior year. At the treatment segment, our cost of sales actually decreased $319,000 or 4% compared to prior year. Despite the higher waste volume, our variable expenses were lower, primarily due to lower disposal expenses. In addition, we were also able to maintain our fixed costs despite the significant revenue increase. Our cost of sales for our service segment was up $1.5 million, basically related to the variable expenses that go along with the increased revenue. Our gross profit for the quarter is at $4.0 million or $4 million compared to the gross profit of $1.5 million in 2014, an increase of two and a half million. The gross profit at the treatment segment increased $2 million compared to prior year. The increased volume and the higher margin waste streams were the main contributors to this increase as we maintained stable fixed costs despite the increased workload. Gross profit at the service segment increased $465,000 as our current services segment, as it is today, improved by $950,000, was offset by lost gross profit from our engineering group, which we sold in July of 2014. Year to date, our gross profit at June 30th is higher than prior year by $3.9 million. Both segments have increased their revenue. They improved their profitability, they've lowered their fixed overhead costs, and all of this is contributing to the improvement. At the G&A level, our cost of sale, our SG&A costs were $2.9 million for the quarter compared to $3 million last year. Our labor costs are down, although there's an offset with higher consulting expenses. For the year, our G&A expenses stand at $5.8 million compared to $6.2 million last year. Similarly, lower labor costs have been offset by higher consulting expenses as we continue to focus on administrative cost efficiency. Our income from continuing operations before taxes for the quarter was $443,000, compared to a $2.3 million loss last year. Included in these results is $432,000 of expenses and $184,000 from medical isotope business for Q2 2015 and 2014, respectively. Our loss applicable to common shareholders was $154,000 compared to last year's net income of $11,000. This year's loss includes $281,000 of expenses, which represents our portion of the Perma-Fix Medical expenses, but it also includes $713,000 of expenses in our discontinued operations. A couple of unusual hits were in our discontinued operations is $150,000 asset impairment of our Perma-Fix Michigan property, which is non-cash, and a charge of approximately $201,000 in connection with our Georgia facility. Last year's income from discontinued operations also included an insurance settlement gain of $3.5 million related to our Georgia facility. Our earnings per share for continuing operations were $0.05, compared to last year's loss of $0.21. Our adjusted EBITDA from continuing operations, as we've defined in our morning press release, was $2 million, compared to a loss of $426,000 last year. For the year, our adjusted EBITDA is currently $1.6 million, compared to a year-to-date loss of $2.6 million, or a swing of $4.2 million to the good. On the balance sheet, our cash is down from year-end by $2.6 million, that's primarily related to operating cash needs related to first quarter losses. Our total receivables remain relatively flat, including unbilled. Our waste backlog stands at $5.7 million, compared to $9.2 million at year-end and $6.1 million a year ago. Our current debt is $3.7 million, which is consistent with year-end. Our total debt at the quarter end is $11.2 million, broken down as $9.5 million to our lender, PNC Bank, and $1.7 million for a shareholder loan and some miscellaneous loans of $35,000. Finally, our cash flow summary. Our cash used in continuing ops was $1.3 million. Our cash used by discontinued ops was $800,000. Cash used for investing was $282,000, of which $265,000 is cap spending. Our net financing cash flow used is $223,000. With that, I'll now turn the call over to the operator for questions. Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please push star one on your telephone keypad now. A confirmation tone will indicate your line is in the question queue. You may push star two if you would like to remove your question from the queue. For any participant using speaker equipment, it may be necessary to pick up your handset before pushing the star key. One moment while we poll for questions. Our first question comes from the line of Al Kaschalk with Wedbush Securities. Please go ahead with your question. Good morning, guys. Morning, Al. Ben, just a real housekeeping item here. I missed the backlog numbers. Could you repeat those, please? Yeah. $5.7 million is the June 30th backlog, $9.2 was the year-end number, $6.1 was June of 2014. What was it at three thirty-one? Let's see here. $6.4. Okay. The conversion here for the second half, and as we think about the EBITDA guidance and what you've done here to date, I think it's about a $5 million number to get to the midpoint. Is the majority of that going to be in the third quarter, or is it going to be relatively even across those two quarters? Well, as you know, it could be either, depending on timing. What we see coming right now, it's a little heavier weighted to third quarter, but not entirely. We think both quarters will be strong. You'll either see a very high EBITDA in third and a lower backlog, or a little lower, but then a backlog to support a fourth. Okay. I think Lou made a comment, or in the prepared remarks, there was commentary about a shipment that was received in July. It was deferred or delayed in Q2. Right. Are they planned or do you expect larger shipments? Well, not larger- What's the comfort level on this conversion there? Yeah, not larger, but just more shipments with the year-end budget spending and what we've seen with the DOE and their plans. Okay. That could arguably mean higher price point waste, therefore, the incremental margin. Correct. Yeah. Okay. Switching quickly over to the service side, you talked about some project wins. Lou, could you maybe talk about stripping away what happened on the engineering side? As you look at this business, I view this as more of a steady state business that puts off some cash flow. Could you help us understand, A, the nature of the wins, B, their duration, and the confidence level that there's still a fair amount of work to be awarded as we think about the next six months? Yeah. Our greatest success is in what's called health physics. We have a very strong technical group that provides health physics support for a variety of projects. That also leads us to actually lead some of those projects and be heavily involved in the cleanup. They also generate then, of course, waste. We've seen a very steady win on a lot of small projects. The business through the first half of the year has been a variety of small projects that it's even hard to talk about because of their size. We continue to see a variety of those kind of projects appearing, and many of them aren't even bid. They're pretty much sole source on the private side. We see that providing lots of singles for that group, providing base work. At the same time, we have several larger projects that are out there that we have a lot of confidence we're going to be on the winning teams, where, again, we offer some part, either technical services on health physics or the technical service on the waste side. As we sit today, again, the reason we've always been interested in them, they very much complement what we do on the waste treatment side. We've worked hard to try to leverage our facilities into those operations. As we move ahead here, we continue to focus on that, and that's been really sort of the bread and butter over the last two years with the delays and problems we've seen at DOE. With the new appointment here, we're hoping we see a little more leadership there and a little more strength in the programs at DOE, which should help us. We were quite excited about her appointment here yesterday. Okay. I don't know if that answered. That was a long answer, though. I'm not sure it answered. Did it answer your question? Well, I guess I want to stay focused on the commentary, though, I would suggest on the service side, that the larger contracts that you have been talking about still haven't converted over to awards. The wins that you did announce are a number of smaller projects, given what I believe is a renewed focus on bidding correctly or being awarded profitable contracts, that this should help the operating profile of the business. It helps the operating profile because it gives us much longer-term projects. The ones we're winning are one, two, and three-year projects, whereas the bigger ones are three to five to 10-year projects. We, of course, like the larger ones because they provide a base that we can really plan ahead on. We have a variety of those out there, and we're pretty confident we'll see some wins here in the very near future on the bigger ones. The bread and butter over the last six, eight months have been all the singles we've been getting. Okay. What does near-term mean? Near-term is the next two months. Okay. All right. That's good. How's that? I'll just. Yeah. No. Well, let's see an award within that time frame. Well, I'm sure folks will hold you accountable for that, but let's hopefully that converts. Right. Real quick on the Medical side. Good progress here. Glad to see the funding. Are we still correct in that, A, what's now your ownership as a result of this investment? What does your ownership percentage go to? 60. 60% now. 60.5. Okay. The funding, you're not funding any cash into this. It's now fully funded, or there would be some type of either another investment or some type of equity as it relates to the need for cash here? Yeah, we're keeping the companies separate. Yes. Okay. Lou. All funds are for medical means. Okay. Then, Lou, what are the next milestones here, whether they be technical, getting from 4-6 curie? Or what's the timeframe here? Over the next several months, our next goal is to demonstrate a slightly larger system, probably, like you had just said, about a 6 curie, and that's the system we really want to focus on. The next step, several technical steps are very much focused on demonstrating that, and then developing a base of data around that system that will readily compete both in the European and North American markets. Okay. That's a very critical step for us, and we're pretty fairly confident that after the 4 curie test, we were fairly confident we can design such a system at this point. From a technical standpoint or medical standpoint, could you help me at least the 4-6 timeframe or get to a size that's a larger system? Probably over the next two to three months. We've already started tests to demonstrate it. We'll build up a base of data and then should be able to demonstrate it over the next several months. Okay. Thank you very much and good luck. Appreciate it. All right. Thank you. Bye. Thank you. Ladies and gentlemen, as a reminder, if you would like to ask a question, please push star one on your telephone keypad now. One moment while we pull for more questions. Our next question comes from the line of Robert Manning, a private investor. Please go ahead with your question. Could you help us quantify the size of the Tc-99 opportunity and a little more about the steps to get there? I understand the world market for Tc-99 generators is something like $500 million in the U.S. and $1 billion worldwide, and that it's dependent on bomb-grade uranium for virtually the entire amount of that. Are my numbers correct, and what % of that market could switch to our technology if we can prove it works? Well, you've done a good job with the market in terms of its size. We're confident that we can focus on a very large fraction of that. A 6 curie system, and that's why we focused on the 6 curie. We think we can eventually even go to larger units. Whether you send a client two or three of these units or today, with the 6 curie unit, we're very confident we can go after somewhere between 40%-60% of the existing market. A little more in Europe and a little less in the U.S. Today they use much larger generators. Again, I think it's mostly the nuclear pharmacies are driven by price, and if you can provide them two units that are cost competitive with one unit, they would go with, I believe, the cheaper route. We think in the end, we have a market we can focus on where our unit would be extremely competitive at 6 curies. Does that mean that 40%-60%, that we could see $400 million-$600 million worth of Tc-99 generators using our technology down the road, say, five years? No. The potential here is mind-boggling. You see it in the whole discussion with the Iranian operation and what the U.S. government has done with Iran and their interest in focusing the Iran systems away from uranium onto some of these non-uranium systems. We see a tremendous pressure coming right now from the government to try to get people-- one, number one, and it's coming and it's going to happen, is one, getting people off highly enriched uranium, especially with the closing of the North American reactor in Canada. Then two is the government's slowly cutting off everyone from highly enriched uranium and forcing them into non-uranium, or at least low enriched initially, routes. We see a mind-boggling opportunity there. It is a great opportunity for us. We think we've got a technology that's as good as anything out there that we see today. Mm-hmm. We're not trying to quantify mind-boggling. A 40%-60% of $1 billion is $400 million-$600 million. That to me is mind-boggling. Is that what we're talking about as an opportunity? That's what you're talking about. As we get down the road, we get very little value for this technology today and the value of this company. Everyone on this call knows how to calculate what things are worth, and all you need to look and do is, you got a technology that could totally disrupt that whole market and become the centerpiece of what everybody's doing. Yes, the $500 million in revenue would translate into a very dramatic valuation for that technology. Mm-hmm. We're not going to sell all these generators ourselves. As I understand, this means somebody's going to sell $500 million worth of Tc-99 generators. We're not going to sell them ourselves, I presume. I guess there's a lot of ways to get our value for this. I know some of it's maybe license it. We obviously don't get the whole, say, half a billion dollars of revenue here. On the other hand, we own and have the key technology. Regardless of whether we license it or get somebody else to make the stuff for us or what, we ought to get a pretty good share of that $500 million, shouldn't we? How do I quantify that? Well, we should, and it's really the reason we've brought on a person like Steve Belcher. There are a variety of paths forward here that we need to carefully think through and keep all options open. In our planning, we've been careful to work with all the existing players because the easiest path is do we have a major partner that already has a distribution system and everything else. Along those lines, we can't depend on that. We have to look at developing a system where, as one of our options, we will go it alone and sell the units and go after all that revenue. Yeah. Mm-hmm. We have multiple paths to market here right now. We're exploring and looking at and keeping all avenues open. One of the paths is that we do what you said is possible, is we move forward on our own to market the generators, and then sell also auxiliary services that go along with them. Now, there's obviously a lot you don't know right now, and then there's stuff you know that you can't tell us, but what would a knowledgeable observer of this industry say would be the range in license fees that you would get if you decided to do that? I got no idea if it's 5% or 25% or anything else. Obviously you can't be too specific, but just what would a knowledgeable observer of this industry say would be the range? Well, again, you have multiple paths and multiple opportunities, it's real hard to say. 15% is not unusual depending on what you're really doing and what part of it you're looking at. Okay. That's really proprietary, it's dramatic. This is not something you have to give away for 2% margins. No. I would think. We're not going to do that, no. Yeah. Now, steps from here to there, in response to an earlier question, you talked about you're going to go to six curies, and I guess even though you'll be pushing it ahead to improve that seems to be good enough to go ahead and compile the data to get FDA approval. What can you tell us about that path? At what point do we begin to accumulate the data? At what point do we have enough to file whatever is the equivalent? I know it's not called a new drug application in this area. What path to filing, and then how long does the FDA have to work on it? I understand they've been sitting on the NorthStar thing for two years. Yeah, we see a little difference between ours and NorthStar. They have a very complicated system at the client level, which raises issues with the FDA. Our system would be practically identical to an existing unit. Basically, you pour saline in the top and out the bottom comes Tc-99. Extreme simplicity, and we worked hard to keep it that way. We see that part as being a little lower risk to us than what is happening with NorthStar. This has taken a little longer than when we initially got into this as novices and without leadership like Steve Belcher. I was predicting FDA submittal a little sooner than we've been able to pull that off. I think with his guidance, we've now been much harder at developing background data and going into FDA with a very solid case. Right now, we're very focused on getting to a six curie. Number two, and then developing the background data. Will we be able to do that and have something that you can at least show FDA by the end of the year? Possible, but unlikely, as it's now going. In three months, we could have a six curie unit, we'll have to go through several months of testing on that unit. It'll be sometime after the first of the year. Yeah. It's not unreasonable. It sounds like by mid-2016, we've got an FDA submittal, and then how long for them to decide? Our feeling is, we have, again, several options we could take with them. Depending on which one, the shortest and most efficient could be three quarters of a year to about a year and a half. Depending on what route we go. About a year, give or take, about a year after that. And that's- Once we apply for the FDA, I think the application to the FDA is a major milestone. We've gotten lots of attention with the announcements on the four curie unit, and when we're able to talk about a six curie unit, it'll even attract more, and to me, the big event really is FDA submittal. Mm-hmm. Well, bigger is FDA approval, I guess, but FDA submittal is pretty big. Yeah. Yeah. You're right. Exactly. Yeah. Yeah. Okay. Then from then on, FDA approval, you don't then open the door the next day, and you're selling 50% of the market. What happens? You sign up with a major partner, then you contract with somebody to manufacture the stuff, and we sell it. How long does it take to get from FDA approval to this big revenues? Well, the day we apply, we'll be very focused on the next step, which is exactly all the above what you said. Yeah. There's three or four ways we could go, we've already mapped those all out. Okay. That's great. Yeah. Yeah. Hey, thank you very much for your time. I'm sorry to take so much of it, but thank you. Thank you. Ladies and gentlemen, once again, as a reminder, if you would like to ask a question over the phone, please push star one on your telephone keypad now. One more moment while we pull for more questions. Our next question comes from the line of Justin Bottman with Polanta Investment Group. Please go ahead with your question. Ben, I just have a quick housekeeping question, and I apologize if you've already addressed this, but what were the research and development costs related to the medical isotope project for this quarter? $432,000 was the total cost, and of course, at our ownership level, we incurred $281,000 of that. Just by comparison. Yeah. In the first quarter, that was around $400,000, your portion? First quarter, it was $395. Yeah. Going forward, how do you expect that to play out? That's probably about where we're going to be. We're probably about the same on the research and technical side, but with the new management, a lot more administrative kind of business development type expenses. I would say probably through the rest of the year, this quarter is probably a good indication. Your portion, about $300,000 or a little less than that? Yeah. Okay. Perfect. Great. Thank you very much. Thank you. Our next question comes from the line of Bill Chapman with Morgan Stanley. Please go ahead with your question. Hello, Ben. Good morning, guys. Hey, Bill. Ben. I was curious on the hot cell. Have you guys had that delivered, and is it installed? We're still working on it. Okay. We're very close to finalizing it and moving. They're working on actually, as I may have told you, that we're buying a used hot cell, and we're going through now the regulatory hurdles to move that hot cell to our facility, and that will help us significantly in terms of our work, of course, having our own unit. Right now, all our tests are being done with outside contractors, so outside facilities. This will allow us, at our research operation, to actually run our own tests on the Tc-99, dramatically more efficient and speed up the process. Okay. I was going to ask you, too, on what you have over $20 million in your sinking fund. Is there any way you could tap into that slightly to help fund the Perma-Fix Medical if it had more needs for capital to keep your ownership up? The quick answer is no, Bill. Okay. That $20 million is used to secure $43 million of bonding that we require for our facilities. Even if we were to reduce the number of facilities, that number contractually would stay. The 43 might come down, but the 20 wouldn't. Right now, that's pretty much a restricted cash. Okay. Yeah, let me ask you one more question. You mentioned you had generated substantial interest in your field for the resin. Are you also getting interest from people that aren't in the business on producing the generators? Well, we're seeing interest through the whole chain from people who today actually irradiate and make the uranium, to people who are users like Digirad. We're, I guess to put it slightly, almost overwhelmed by the interest right now in working with us. We see a lot of interest through the whole chain. Okay. Including generator distributors and even people throughout the chain. We've become recognized in the industry. Okay. You still anticipate, let's say, a generator manufacturer, that this will be a substantially lower cost alternative for them? Do you still anticipate that to be true? Oh, yeah. I would just have to explain to you how the system works today. You irradiate uranium with the present system, with that, you get a dramatic increase in radiation that you must deal with. Uranium system produces extreme radiation. You need very sophisticated hot cells to process it. You produce waste that has no home, that costs a fortune. With our system, you're irradiating natural moly, which itself becomes highly radioactive, but does not produce the byproducts and the radiation associated with those byproducts. You get a much simpler system to work with, requiring much simpler equipment, much simpler handling costs. Then the second is, it's a very decentralized system. You could produce at almost any research reactor. There's not a need to make it in Australia and then how to figure out how you're going to get that to the U.S. With a material that has an extremely short half-life, where logistics becomes just the ultimate nightmare. We see dramatic savings throughout the whole chain using our technology. That's why we're so confident here. No matter what other system we have to compete with, the cost savings are dramatic throughout the whole production distribution chain. We're very confident on our costs, our ability to do this competitively. Okay, good. Thank you very much, guys. All right. Mm-hmm. Thank you. Ladies and gentlemen, we have no further questions at this time. I would like to turn the floor back over to management for closing remarks. Once again, I'd like to thank everyone participating in the second quarter conference call. Heading into the third quarter and balance of 2015, we expect to continue revenue growth and strong cash flow. We continue to pursue a variety of large contracts and aggressively moving ahead with our Tc-99 process. We have been participating in a growing number of investor conferences and keep you informed by press releases, where we'll be presenting and our progress in continuing to grow the company. Thank you all very much.