 |
|||||||||||||||||||||
| |||||||||||||||||||||
|
Dr. Louis Centofanti, president and founder of Perma-Fix, outlines the company's strategy for continued long-term growth in the industrial wastewater treatment market and its plans to tap the huge potentialof the nuclear mixed waste market.
A. Perma-Fix Environmental Services, Inc. is a national environmental services company, providing unique mixed waste and industrial management services. The industrial services segment provides hazardous and non-hazardous waste treatment services for a diverse group of customers including Fortune 500 Companies, numerous federal, state and local agencies and thousands of smaller clients. The nuclear services segment provides radioactive and mixed waste treatment services to hospitals, research laboratories, institutions, nuclear utilities, and numerous federal agencies including the Departments' of Energy and Defense. The Company operates nine major waste treatment facilities across the country. It also offers environmental engineering and consulting services to both markets.
2. Describe your Industrial Services Division. A. The Industrial Services Division provides waste treatment services for a diverse group of customers including Fortune 500 Companies, thousands of small industrial generators, utilities, hospitals, research institutions, and numerous Federal, State and local agencies including the Department of Defense ("DOD"). The Division provides unique treatment, recycling and disposal of industrial and hazardous waste at its seven RCRA permitted treatment facilities and nine service centers located throughout the Midwest and Southeast. Major facilities include:
3. What is the market like for the industrial services you provide? A. Based on the Farkas Berkowitz Marketing Study, the industrial waste management market (hazardous and non-hazardous waste) is estimated at $40 billion with approximately $13 billion allocated to treatment services. The market is regional in nature as commercial waste generators do not want to incur the cost of transporting waste in excess of 200 to 300 miles. The industrial waste market is highly regulated with few, if any, new or significantly modified hazardous waste permits and licenses granted by state or federal governments. In the unusual event that a new hazardous waste permit is awarded, the process typically encompasses 3-5 years. In general, industrial waste is considered to be a mature but fragmented market.
4. What is your marketing strategy for the industrial segment? A. We maintain a staff of local salespeople at each facility, who call on potential customers. Most of our marketing efforts in this area are local. Our strategy is to dominate the geographic area surrounding each of our facilities. We presently dominate the lower southeast U.S. and will continue to grow via upgrades to existing facilities and tuck-in acquisition in the Southeast and Midwest.
5. Describe your Nuclear Services Division A. The Nuclear Services Division provides radioactive, hazardous and mixed waste services to hospitals, research laboratories, institutions, nuclear utilities and numerous Federal agencies including the Departments of Energy and Defense. The Division has developed the most advanced treatment technologies available in the industry. The Division operates three RCRA permitted, radioactive licensed treatment facilities, providing treatment and disposal of radioactive, hazardous and mixed wastes. It also provides on site treatment services, analytical services, and consulting services. Services at the mixed waste facilities include:
6. What about the nuclear waste market and your role in it? A. Unlike the industrial waste market, the mixed waste market (waste containing both hazardous waste and low level radioactive waste) is national in scope. The U.S. Department of Energy ("DOE") is the largest generator of mixed waste. Due to the high cost to treat mixed waste, transportation expense is not a limiting factor. The largest component of the mixed waste market was generated by the DOE in conjunction with nuclear weapons production. The DOE has estimated the cost to treat its mixed waste at a minimum of $7 billion. Estimates to treat new mixed waste generated annually by the DOE and commercial organizations currently stand at more than $150 million per year. The current DOE fiscal budget is $6 billion, of which it is believed that the majority will be spent on the cleanup, maintenance and oversight of existing DOE facilities. In June 1998, six "Broad Spectrum Contracts" were issued to serve as the first and currently, the only, procurement mechanism to treat mixed waste generated by federal government agencies including the DOE. As an example of the magnitude of the market, DOE has estimated that $1.2 billion (400,000 drums at an average treatment cost of $3,000) of low-level mixed waste will be generated at the DOE's Oak Ridge, Tennessee facility. To accelerate cleanup efforts at the DOE Oak Ridge, Tennessee Facility, Tennessee has recently obtained consent decrees requiring the DOE to treat and dispose of targeted levels of mixed waste annually. DOE engaged Bechtel-Jacobs Company, LLC ("Bechtel-Jacobs"), who operates the K-25 facility to oversee the treatment and disposal of mixed waste at the DOE Oak Ridge, Tennessee Facility. We believe our proprietary on-site Perma-Fix® treatment processes are ideally suited to cleaning up a large percentage of the radioactive wastes stored at U.S. weapons facilities, and that we therefore have a strong competitive advantage in this market.
7. What is unique about the Perma-Fix® Process? A. Our process differs from those of our competitors in that it is not only a proven technology, but it is far simpler, and as a result, less expensive and safer to use. For example, two of the technologies we compete against are vitrification and molten metal baths. Both of these technologies require extremely high temperatures and critical, controlled conditions. Developed specifically to treat mixed nuclear wastes, these technologies do not have established track records with respect to safety and efficiency. They are also very expensive - the typical vitrification unit costs approximately $50 million. Vitrification requires that waste be heated to extremely high temperatures, then mixed with glass to make a molten glass mixture. This process requires very strict, controlled conditions. The design and construction of the unit becomes very critical. It is also a very expensive process, because of all the safety features that must be built in to prevent injury to workers and technological failures that could lead to toxic emissions or spills. The Perma-Fix® Process, by contrast, is simple. We take a drum of waste, add chemicals, mix them together and let the mixture sit at room temperature, under ambient conditions, until it has reacted. There are no dangerously high temperatures and no emissions. It is a very forgiving process - if we make a mistake, we just go back and mix in more chemicals. The Perma-Fix Process is a batch process, so we have total control at all times. Because it employs a relatively safe technology, with little need for complicated safety features, it is far less expensive. The technology is proven. In short, the Perma-Fix® Process addresses the two primary concerns of our customers better than any existing competing technologies. Those issues are safety and cost. The Perma-Fix® Process is a safer, less expensive, technology with a proven track record.
8. What is your strategy for breaking into the nuclear waste treatment market? A. Perma-Fix's strategy for capturing the nuclear waste treatment market involves the use of proprietary technologies at our facilities that are permitted and licensed to accept the waste. The company presently has 18 years experience treating these materials and has now put in place new assets that will dramatically expand our role. These include:
9. Do you have any other nuclear waste clean up bids out? A. Although our primary focus in nuclear is the use of our facilities for treating waste, we have continued to explore on-site treatments at the customers sites. We presently have an active on-site service group that continues to submit bids to Departments' Energy and Defense.
10. Is the U.S. Government your only potential customer for nuclear mixed waste treatment services? A. The DOE and DOD are the largest potential clients for nuclear services. Our present customer base in nuclear is diverse and includes the commercial sector (hospitals, research laboratories and institutions), nuclear utilities and government agencies.
11. You mentioned an engineering and consulting group? Where does this fit into the picture? A. We employ a tremendous number of highly trained, degreed people who provide the technical and permit expertise to the company. Operating from offices in St. Louis, Missouri, they provide air, groundwater and other environmental consulting services to our clients in the environmental area.
A. The Company's strategy is to treat industrial and mixed waste streams generated by commercial institutions and the federal government. The Company plans to enhance its position as one of the leading providers of industrial and mixed waste treatment services. Key elements of the Company's strategy include:
13. How would you describe you current and future financial picture? A. We were profitable in 1999. In 2000 we put in place the assets and personnel needed to expand the nuclear division. These up front costs and the disruption of the Gainesville, Florida facility due to the construction have adversely affected earnings for 2000 and the beginning of 2001. The assets put into place are now beginning to perform and we expect to see continued dramatic growth and improving EBIDTA and profits. We expect revenues in 2001 to reach $80 million and have summarized below our performance:
*year ended December 31, 1998 **Six months ended June 30, 2001
|
|||||||||||||||||||||
