Charah Solutions, Inc.

Thank you, operator. Good morning, everyone, and thank you for joining us today.

We appreciate your participation in our third quarter 2020 earnings call and look forward to sharing our prepared remarks and answering your questions. We hope that you’ve had a chance to review the press release we issued yesterday after the market closed.

If not, you can find the press release as well as a supplemental investor presentation you may follow during our prepared remarks on the Investors section of our website at www.charah.com or ir.charah.com. Joining me on today’s call are Scott Sewell, President and Chief Executive Officer; and Roger Shannon, Chief Financial Officer and Treasurer.

Following their prepared remarks, we will conduct the customary question-and-answer session. Before we begin, I would like to remind you that our remarks regarding Charah Solutions include statements that are forward-looking statements within the meaning of the Private Securities Litigation Reform Act.

These forward-looking statements are subject to risks and uncertainties that could cause actual results to be materially different from those disclosed in our earnings press releases and conference calls. Those risks include, among others, matters that we have described in our earnings press release as well as in our filings with the Securities and Exchange Commission, including our quarterly reports on Form 10-Q and our Annual Reports on Form 10-K.

We disclaim any obligation to update these forward-looking statements. During this conference call, we will refer to certain non-GAAP financial measures.

We provide reconciliations to the nearest applicable GAAP measure in our earnings press release and supplemental presentation. Again, thank you for joining us today.

Now I would like to turn over the call to Scott Sewell, our President and CEO. Scott?

Good morning, everyone. It’s great to have you join us for our earnings call today.

I’m happy to be speaking with you again and providing an update on our third quarter performance. This morning, I’ll briefly review our third quarter accomplishments, provide an update on current business developments and update you on our pipeline opportunities.

I’ll then transition the call to Roger for a review of our financial performance during the quarter and an update on our 2020 guidance. We continue to see an acceleration of customer activity relative to the $75 billion coal ash market opportunity and have committed to strengthen our balance sheet, reduce debt and maintain a laser focus on pursuing these growth opportunities and fully capitalizing on our industry-leading reputation.

The team continues to perform well in this challenging COVID environment. And we are pleased with our progress as we continue working to convert our pending bids pipeline of over $4.5 billion.

We have to making some exciting award announcements soon. Our third quarter results were below expectations, primarily driven by low ash production resulting from COVID-19 related decreases in energy demand and severe hurricane activity in the Southeast.

We remain optimistic about the near-term and long-term prospects for Charah Solutions as we continue to work with our major utility customers to meet their remediation and byproduct recycling requirements. As highlighted in our press release, we continue to see significant increases in new award opportunities resulting from our customers announced and expected remediation initiatives.

We now have over $1.2 billion in new awards, primarily driven by the extension of the Exelon fleet-wide nuclear maintenance and modification contract from July 2022 to August 2025. We have outpaced last year’s record for new awards and we expect that significant new awards will advance in our Environmental Solutions segment through the remainder of the year and into 2021.

Our customers continue to seek our environmentally friendly customized solutions, through recycling and remediating coal ash. Our ability to continue to provide essential daily operations and remediation services for our mission critical utility customers during this period of high uncertainty and disruption caused by COVID-19 pandemic speaks to the safety, operations, plan, and procedures we have implemented, the resiliency of our team and the essential nature of our services.

We expect the growth in business opportunities to continue as utility companies increasingly develop and implement their plans to address more than 1,000 regulatory mandated surface impoundment closures in the United States. The sustained ongoing level of activity in our business development has never been higher.

In addition to our $4.5 billion in pending proposals, we have an additional $11 billion in near-term pipeline opportunities that we will bid over the next two years. As we’ve discussed on previous calls, states are becoming more prescriptive as to the means and methods of ash pond remediation, and the Environmental Protection Agency continues working with several states to establish their own ash recycling permit programs.

Further, the EPA continues to work on its regulatory requirements, beneficiation guidelines and ash pond impoundment closure deadlines. We continue to see these movements as positive for Charah Solutions.

As the only full-service provider of mission-critical ash management operations, environmental remediation and compliance services, maintenance and added services and by-product sales for the utility industry, the company is ideally situated to partner with these utilities to deliver on their impoundment closure requirements and needs. In addition to the pipeline or remediation projects, we are also increasing opportunities to provide creative solutions to utilities by expanding our environmental risk transfer services or ERT.

We recently announced that we are in negotiations with a public utility in Texas to deliver our unique ERT solution. And we’re successfully performing ERT project with a utility in the upper Midwest.

We believe our ERT offerings deliver turnkey environmental solutions to utilities, while providing attractive growth opportunities and returns for Charah Solutions. We also remain optimistic about our byproduct sales opportunities, driven by expectations for greater infrastructure spend.

As we continue to expand the reach of our MultiSource materials network and add new customers. Our ability to continue to add new customers and new awards with our utility partners during this uncertain time speaks to our team’s resiliency and essential natures of our services.

Among the $4.5 billion of pending proposals, we are in contract negotiation on several projects and expect to make official award announcements soon. As we head into the winter season with the potential for an uptick in COVID-19 activity, our highest priority remains the safety of our employees and customers.

We remain committed to keeping our people safe, addressing our customers’ needs and growing the business. Charah Solutions provides a central services to regulate a utilities that must continue operating to provide power to the country.

We continue to believe we are well-prepared to protect our staff and ensure that continuity of service to our customers during this time. I am very proud of the way we have partnered with our utility customers to maintain service safely.

And I want to thank again, our dedicated Charah Solutions employees who are working every day to help our utility customers keep providing electricity. Finally, on behalf of the entire Charah Solutions team, I want to again express our sincere gratitude to all the first responders, medical personnel, and all others who continue working tirelessly to address the consequences of this pandemic.

With that, I’ll turn it over to Roger, who will discuss our third quarter financial results, our outlook for 2020 in more detail, and provide more clarity on our expectations in the current market environment.

Thanks, Scott. I’ll continue with a review of our financial results and provide an update on our balance sheet, liquidity and 2020 outlook.

Revenue decreased $2.4 million or 2% for the three months ended September 30, 2020 to $118.7 million as compared to $121.1 million for the three months ended September 30, 2019, driven by a decrease in revenue from our byproduct sales and nuclear services components. Gross profit decreased $1.8 million or 13.1% for the three months ended September 30, 2020 to $12 million as compared to $13.9 million in the three months ended September 30, 2019.

As a percentage of revenue, gross profit was 10.1% for the three months ended September 30, 2020, compared to 11.4% for the three months ended September 30, 2019. The decrease in Q3 2020, gross profit is due primarily to the decrease in byproduct sales as I’ll discuss more in detail later.

Operating income increased by $1 million to $791,000 in Q3 2020 versus an operating loss of $237,000 in Q3 2019. The improvement in operating income is due primarily to a decrease in general and administrative expense.

The net loss attributable to Charah Solutions, Inc. increased $900,000 for the three months ended September 30, 2020 to $4.2 million as compared to $3.3 million for the three months ended September 30, 2019.

The increase was primarily attributable to the decrease in gross profit and increases in impairment expense, interest expense net and income tax expense, partially offset by lower general and administrative expenses. We incurred an impairment expense of $6.4 million for the three months ended September 30, 2020, due to the expiration of our purchase option liability that resulted in a non-cash impairment charge related to the associated land asset.

The decrease in general and administrative expense was primarily attributable to the $7.1 million reversal of the previously mentioned expired purchase option liability during the current period. Cost savings from previous staff reductions, cost cutting measures implemented in April, 2020 in response to the COVID-19 pandemic and lower transaction costs in the current period related to the credit facility.

Q3 adjusted EBITDA of $8.1 million was up $2.5 million in the year ago period. This improvement was due primarily to lower general and administrative expenses.

Now I’ll discuss results at our reporting segment level. In our Environmental Solutions segment, revenue decreased $200,000 or 0.5% to $45.8 million compared to $46 million for the three months ended September 30, 2019, primarily driven by a decrease in byproduct sales.

The decrease in byproduct sales has compared to the third quarter of 2019 was a result of less ash available for sale due to decrease production by our utility customers. The COVID-19 pandemic has reduced energy demand across the U.S.

resulting in less energy production by utilities. Environmental Solutions revenue for the quarter was also negatively affected by the severe hurricane activity in the Southeast that temporarily took some customer generating stations offline and also reduced our work days for the quarter at a major remediation project due to excessive rain.

The decrease in revenues was mostly offset by new project work within our remediation and compliance services component. Environmental Solutions gross profit decreased $300,000 or 4.5% to $6.5 million as compared to $6.8 million for the three months ended September 30, 2019.

In our Maintenance and Technical Services segment, revenue decreased $2.2 million or 2.9% to $72.9 million as compared to $75.1 million for three months ended September 30, 2019. The decrease in revenue was primarily attributable to less nuclear maintenance outage work in the period as compared to last year.

Maintenance and Technical Services, gross profit decreased $1.5 million or 21.4% to $5.6 million as compared to $7.1 million for the three months ended September 30, 2019, primarily attributable to a decrease in gross profit from our fossil services offerings associated with our adoption of the new revenue recognition standard ASC 606. Turning to our balance sheet and liquidity now.

For Q3, our operating cash flow was positive $1.7 million and CapEx for the quarter was $1.4 million, resulting in free cash flow of positive $300,000. At September 30, 2020, we had gross consolidated debt of $212.5 million.

The decrease in total debt during third quarter is primarily due to debt principal payments on our term loans. Our liquidity was approximately $38.9 million as of September 30, 2020.

Next I’ll address our 2020 guidance update. Though, we have not experienced significant work stoppages at our onsite operations as a direct result of the COVID-19 pandemic due to the critical nature of our customer’s operations.

We believe that the COVID-19 pandemic has resulted in decrease energy demand across the U.S. and therefore decreased ash production by our utility customers.

Although, this work is under contract with our customers, this decrease in ash production has resulted in both our byproduct sales activities and our daily sales operations volumes being lower than expected. We were also affected by the unprecedented hurricane activity in the Southeastern U.S.

during the third quarter. The significant rainfall in the Southeast U.S.

resulting from the hurricanes affected work activities at a large ash pond closure project, as well as ash production at several of our customer utility locations. We continue to see the risk of lower ash production going forward, as well as significant business disruptions beyond our control, creating a higher level of uncertainty.

For this reason, we were adjusting 2020 guidance at this time, based on our expectations of our backlog of business and executed contracts. We were updating our 2020 guidance as follows.

We now expect revenues for 2020 of $545 million and a net loss attributable to Charah Solutions, Inc. of $21 million.

We’re projecting 2020 adjusted EBITDA of $33 million and free cash flow for the year of $20 million. Included in our revised 2020 guidance is approximately $6 million for adjusted EBITDA, resulting from a gain associated with an ERT project.

We continue to believe that this gain will occur in the fourth quarter, but there is a risk that this transaction could slip into 2021. This updated guidance continues to be based on our current expectations of no material worsening of the COVID-19 pandemic, specifically, including, but not limited to no material customer work stoppages, no significant employee absences and no government mandated quarantines.

Any worsening in the COVID-19 pandemic could materially affect our 2020 outlook. With that, I’ll turn the call back to Scott.

Thanks, Roger. In closing, we anticipate our focus on balance sheet health and growth in contract awards will continue to position the company for long-term success.

We remain committed to taking actions expected to preserve cash, reduced debt and enhance long-term value while positioning ourselves to take advantage of the expanding market opportunities. Importantly, we are closely aligned with our utility partners, environmental remediation and sustainability initiatives, which should provide Charah Solutions with significant growth potential for many years to come.

Our activities during the third quarter demonstrate this positive momentum. These successes in winning new awards, along with our enhanced liquidity and financial flexibility, continue to expand our customer’s confidence in our ability to bring our full suite of mission critical services to meet their specialized needs.

We believe we remain the environmental services partner of choice for the power generation industry. Thank you again for your interest and participation.

And with that, operator, let’s begin the Q&A session.

Thanks, Scott, Roger, hope everybody is well down there.

Good morning, Michael.

Good morning. Roger, when I think about the cadence of how the quarters will flow and I get you haven’t given 2021 guidance.

But are we looking at or has it already happened? So there’s two questions in there.

Has that already happened or are we looking at the leverage ratio on an LTM basis, doesn’t peak until. So is that 4Q or 1Q 2021 that peaks and then begins to gradually improve from there as we lap disruptions or is it already peaked.

No. Michael, thank you for the question.

It’s a great question. It has already peaked.

Looking at the – kind of the adjusted EBITDA and leverage ratio, you can go back over the past several quarters into year-end 2019. And as you know, we have been working closely with our bank group, including through the third amendment in March earlier this year.

The peak actually occurred in the spring quarter of this year. Since then, it’s just kind of looking at the net leverage numbers, it reduced to about 7.7 times at our June 30 quarter.

It’s at 6.8 times for the just ended September 30 quarter. And we’ve going down significantly and continually into Q4 and across 2021.

So since we don’t have the bank adjustment allowances, what’s the adjusted number based on the guidance. So if you hit the guidance of $33 million, what do we add to that to then calculate leverage?

Michael, I think, we’re projecting around 4.5.

Incrementally? So it would be 4.5 is the leverage or 4.5 automatically.

Its the leverage ratio at year end based on that.

Okay. Then Scott on a commentary about the reduced level of energy generation or electricity generation, are there specific States that we should pay attention to that this matters more to your model?

And in that question, is it because the actions taken by the state or is it by the contingent state who’s buying their power?

Yes. Good question, Michael.

As we view it, it’s been not really a regional thing necessarily, but more of a kind of across the board just a downward trend and demand. But I would say, if we’re focusing on an area or geographic region, the Southeast got hit pretty hard, and it was a kind of a combination of both the drop in demand from COVID, as well as just the cycle of hurricanes coming through there really taking a lot of the plants that we have offline.

And when you say Southeast, what States are in this, that list?

Well, I would point to, we’ve got significant operations in Louisiana, Arkansas, Texas, that area of the country is where we’ve seen some impacts this year, which we don’t necessarily fully foresee going into 2021.

Okay. Having grown up in the South had to call them the South, but splitting hairs.

And then with regards to the awards generation, I appreciate there’s the big nuclear in there, but the ERP awards number is up in 3Q too, I think, like $130 million, $140 million. So you’re sort of a running at about $375-ish million, I think.

And that means to beat next – last year’s goal, you’re expecting at least $200 million of awards in 4Q.

Yes. So I think, Michael, what we’re seeing if you think about the $1.2 billion number, I think we carved out and said $950 million that was nuclear of that, vast majority of that was – it was not all the Exelon extension, but a good component of it was the Exelon extension.

And then that leaves the remaining $280 million in the ES segment. And we do believe, we’ve got a lot, like we’ve spoken to several times, we have several pending proposals and contracts that we believe will, hopefully, notch the ES a number of over where the entire company number was last year.

So we’re extremely excited the enthusiasm we have for the Environmental Solutions segment of the business, it couldn’t be higher right now. I mean, that goes back to the $4.5 billion in pending work right now, as well as the $11 billion of future pipeline work that we see in the next couple of years to come.

So that’s really where we continue to try to put our focus and position the business, because you’re right. There’s – there can be some significant awards in our opinion in Q4 as well as early Q or early 2021.

Fair enough. And then, Roger, I know we haven’t gotten 2021 guidance, but directionally, are you spending more in capital in 2021, similar or less?

Just so we are at least in the right neighborhood on capital spending.

Yes. We will come back with more of an update on 2021.

It really is going to be driven by these new project awards and just kind of keep in mind that we have been able to strategically effectively utilize operating leases. We – as emerging growth company, we haven’t been yet required to adopt the new lease standard.

So we still are able to avail ourselves of operating leases, the lessor gets to keep the tax benefit of that and we get very attractive rates and get to finance in most cases, a 100% of the cost. So we kind of evaluate that based on a project by project basis.

I would say is maybe it’s a general statement probably roughly equivalent to where we are this year. But we’ll kind of continue to monitor that and be opportunistic as we decide between operating leases, capital leases and equipment financing.

All right. And last for me, I can’t remember whether you did or didn’t.

Did you all take advantage of any PPE loans? And if you did, will you get forgiveness on those?

We did not utilize any PPE loans.

Very good. Thank you so much.

Okay. Thanks, Michael.

Thank you.

Hey, guys. Thanks for taking my questions.

Hey, good morning, Michael.

Good morning, everybody. So I was just thinking with the revenue guide, implied sales down 14%, you guys kind of walk through a little bit what you’re seeing right now.

Is that mostly going to be – should I be thinking ES segment and how should we be thinking with these declines. Maybe give you a softer start to 2021, before we kind of ramp up through the year with some of these big awards you guys are starting to book and churn.

So just like help me with, like, how Q4 kind of ends off soft, because of the things you guys have laid out. But is that kind of bleed a little bit into this first quarter, and then we kind of kick off from there.

Yes. Michael, I’ll take that one.

It’s kind of going to Michael Hoffman’s question earlier, the sales on the byproduct sales side are really kind of driven by energy demand, ash production and the availability of ash that we have to sell. So if you think about that from the byproduct sales sub-segment, that’s probably, we’re guessing maybe a little bit software going into Q1.

But our [indiscernible] division is independent of that. And that ramp in 2021 is going to be dependent on the timing of awards and the timing of the ramp associated with those awards.

So I would go too early to tell at this time, but we are very confident at 2021 and the growth in that year and years after.

That makes sense. And when I speak about that byproduct sales is down 20% or so.

And your remediation, I believe that would be that business was odd significantly. I would assume, would be like positive for your mix, but am I missing something there when I figure like the gross margin in ES or if byproduct sales a higher margin business?

Yes. I think, at least for the movements that we’re seeing this quarter, it’s really just kind of a mix thing.

But theoretically, the way that we’ve modeled that in the past should hold true going forward. But I would say right now it’s just really more of a mixed issue.

It’s on the mix, so byproduct, okay. And then just when we think of 2021…

To clarify that, yes, I mean, when I’m saying mix – I’m saying that the byproduct sales is typically a higher margin than the ES side. So we see that drop off be a little margin compression there.

Okay. Okay.

That makes sense. Okay.

That’s right. Okay, perfect.

And then I just think of 2021, just like, based on the bookings. I mean, it’s more, I know you’re not talking about 2021 yet.

The, like, just with what you guys – when I look at it at 1.2 and how much comes from maintenance services, is it fair to say, your revenue growth between the two businesses or your revenue growth is going to be higher in MTS or is it – you can’t conclude that.

No, Michael. I think it’s – and I think we tried to highlight this and kind of qualify it in the press release.

That new award and that extension and that growth on a nuclear side is really in the out years. So it shouldn’t have much impact on the modeling that you have right now, that extension was from 2022 to 2025.

So as you think about 2021, your normal cadence of evaluating the business, there shouldn’t be much change at all there.

Michael, this is Roger. Keep in mind that the – on the nuclear side, it is very predictable, in terms of the number of outages per year.

Last year, there were 10. This year, we had 12.

You recall that we performed a majority of those 8 in the spring outage season. So we’re in the process of going through the four fall outages now, next year you have the schedule is for 12 and then flipped back to 10 the following year 2022.

So that cadence is a bit more predictable, but as you know, the gross margins are lower on that business.

Yes. And I will just say that extension was a great testament to our outage teams and our abilities to perform work over the last several years for our customers.

And especially during the challenge this year of COVID and they’ve performed fantastically. So it was a great testament for that, but as we continue to focus the business and look towards where the true growth drivers are, really the growth and where we’re positioning our focus is on the E&S side, just for all the reasons we’ve talked about as far as pending bids and feature pipeline.

That makes sense. And Roger, you said, there’s 12 this year and next year should be actually equal to that, right, 12, 12 again.

That’s right.

But you could say, okay, perfect. Thanks guys.

And then I’m just curious of what your comments were about the ramp up or what we’re hoping to see the ramp up on the ES side. I mean, you guys are going to view positive free cash flow this year.

I think the number is $20 million, you kind of offered up, Michael’s question – Michael Hoffman’s question about the CapEx. As you guys ramp up on projects, is that a cash use on working capital.

I know you’re not guiding for cash flow right now. I guess I’m just trying to think of, how the swings work in the – as you guys ramp up, does that require certain cash used on the working capital side?

I think it really goes the short answer. No.

It’s not a cash use. And I’ll kind of go back to as Roger and I have tried to continue to transform the business to be more focused on the balance sheet, be more focused on working capital and really drive value and put ourselves in a position to take advantage of these projects.

And we’ve changed the way that we provide proposals to our customers and make sure that, when we’re working through the proposal process and evaluating our projects. We’re making sure that we’re putting ourselves in a position that’s always at least cash neutral, but more importantly, making sure that we’re cash positive from day one.

So we’re not using that working capital. Roger, do you want to add to that.

Exactly, right. Okay.

We’ve talked about in the past, we’re disciplined approach, I think, reduced to the bid process and that really accomplishes a lot of that it’s important that we be cash positive and that’s what we are working to achieve. And that’s kind of what our bids reflect.

And I think you’ll see that work out in the numbers in future years as we bring work on and start performing.

Okay. And just, I mean, you guys have record number of orders book last year.

You’re kind of on target for another record this year. But your sales were kind of down slightly in 2020.

So I guess I’m just trying to square these amazing booking orders with, when we see this conversion to the P&L. I mean, as revenue growth next year, is it out like, is up ES of 20%, 30% next year.

Or is it just the timing of – sometimes these orders are booked over a longer period of time? Just when does this massive inflection happen since you guys had record orders kind of last year, and this year you’re on pace to another really strong year?

Yes. So I think you’re right.

And thank you for that. We are – we had a record bookings last year and very hopeful that we exceed that this year.

But as you – do you see that, as you said, kind of transfer to the P&L, 2021 is what we’re going to start to really see that growth. And to your point on duration, we’ve also to Roger’s point on being disciplined and not being in working to de-risk the business and make sure that we’ve got longer term, more predictable opportunities and projects and contracts inside of our wheelhouse here.

We’re not seeing spikes right in our growth. It’s a very progressed and deliberate plane as these projects ramp and grow and contribute 2021.

So we’ll see that growth starting here in 2021, we’re seeing a little bit of it now just kind of offset by COVID related stuff, but as we roll through 2021 and beyond, we’ll see all those new awards layer on top of each other for many years, right. And then we’re talking about projects that are five to 10 to 15 years in nature.

And as those stack on top of each other, it’ll be a very nice long-term predictable revenue stream for us.

Just to add one comment and we alluded to it, some in our press release. It pertains to the decrease in ash production from the lower demand, energy demand.

On the other side of that, we’re not seeing a decrease [indiscernible] and an increase in the market demand or spec flash or for things like green concrete replacement of Portland cement. And this decrease in ash production is actually exacerbating the supply demand imbalance between the available spec fly ash to be used and the opportunity.

So we’ve been really focused on developing and accelerating our MP618 ash beneficiation opportunities that has accelerated over the course of the last few months. We’re very close to being able to announce one, but as we look at, particularly, the Western U.S., where there is not one hand, much, much less supply, but on the other hand, an increase in demand given the environmental friendly aspects of that recycling.

We see a tremendous opportunity to kind of accelerate deployments. And they kind of go hand in hand with remediation opportunities as well.

So we can go in and remediate and impoundment and then recycle that ash using our MP618 proprietary technology to meet that market demand. So that’s something that we really have – that won’t factor into 2021, just given the lead time, but we are kind of accelerating those efforts and we’ll work to take advantage of that supply-demand imbalance.

Fair enough. And I remember before you had to talk about with the conversion, these are larger projects, a little bit more complex, and you guys clearly converted some of it for sure.

I’m curious if that off in the contracts, have you found – you guys to trying to get more sustainable de-risking the business. I mean is there more competition?

Is the bidding terms harder for somebody or tighter than normal for some of these projects? And who exactly are you guys kind of bumping into?

Do you see a waste management or Jacobs or a Bechtel, or is it more smaller private contractors? I’m just curious to kind of help us understand how the bidding environment has really played out over the last 12 months or so, and who you’re really kind of bumping into for some of this nice pipeline.

Sure. I think the biggest difference we’ve seen over the last several years is just the bid cycle, the duration associated with it.

What is to take a couple months to go from RFP to contract signing is now taking six months to nine months to a year in some cases. So that’s really the – to the biggest extent, the change that we see.

When we look at the competitive landscape, I think so we haven’t really seen pressure from some of those larger E&C type companies that you just mentioned. We continue to have at least and again, there’s no pure competitor to Charah with the same suite of services that we have.

But if you look at each of our service offerings independently, on the remediation and compliance side, very, very fragmented geographically across the country. We see a lot of the same players in geographic regions, byproduct sales side.

There are some very large natural – national competitors that we see across the country. And then on our maintenance and modification work, it’s similar to byproduct sales.

There’s a select few that have that offering. And we see them coast to coast as well, but really, really, different by business segment.

But when you talk about the ESI and it’s really more fragmented.

And if I could just ask I mean, I don’t know if this is right, Scott, is there a CCR deadline at the end of this month? Is that something we should keep an eye on and with the election time, I know it’s more driven by at the state level.

I’m just curious with the CCR, if that – if this is the case, a CCR deadline, and this month with the elections, you kind of mentioned that you guys see some big orders. Is that something that could make some of these order conversion, maybe slip from Q4 into the first quarter of next year, just as we only have like a month and a half to go, and we’re all kind of trying to sort out, but after last week.

Yes. So I think I’ll take the first one, first question relative to the November deadline.

And that’s really technical, so we don’t see any impact to any of the work that we’re talking about, or we’ve spoken about on these calls associated with that. It’s really a technical allowance to allow the utilities to provide an alternative demonstration for their online service impoundments.

So it’s kind of a two-step process where they can kind of alter make some calculations and alter their – the liners that they’re offering. And that’s only, I think if you can go online and read a lot of comments about it, but it really affects a very small sub segment of the overall universe of ponds that need to be remediated.

So that’s something that should not impact nor do we believe will impact any of the stuff that we’re talking about right now. And then as it relates to the election, or any kind of changes in regulations, we’ve traditionally stated and this is definitely my beliefs that right now, we really don’t see any risks from stroke of the pen, regardless of what happened last week or what happens four years from now.

We think that the path is set very strongly for our industry, definitely at the federal level. And I think a lot of our regulated utilities are marching down that path very quickly for multiple reasons.

And where they – we’re here to support them. And I think it also points back to, I think, where our focus is and what we see on the environmental solution side is that these changes at the state level, where they’re going in and really mandating means and methods to our customers as to how they should remediate or more impactful than anything happening at the federal level.

So short answer, we don’t see any impact that we don’t build anything into that, into our feature outlook or anything like that. We’re very confident of where we sit right now.

Got it. And just lastly, I think Roger, you guys did a lot of work on the balance sheet and your credit side.

Can you just remind me, is there a big challenge and maturity, anything do you – when the next big due date that we have to keep an eye on for?

No, there’s not. It’s just normal scheduled amortizations going forward.

So we did the – as you point out did the heavy lifting at the beginning of this year, made significant debt repayments, in the fall of last year, continuing to pay down debt on a scheduled basis. And we just talked about previous question.

You will see a significant decrease in our leverage ratios going into year-end and across next year.

All right, bye guys. Thank you so much for handling all my questions and stay safe.

Sure thing, Michael. Thank you.

Hi, Scott, Roger. This is Peter Lynch speaking for my colleague, Roger – Robert.

So congratulations on from 77 to 68 to 45 and leverage. And then you just said the lower next year, that’s impressive.

And did you want a power contract for another nuclear power company other than Exelon and is that going to be revenue item in 2022 or 2021? Or what was the size of that?

Is that just one look at the power plant? And was it equal to the 2018 Exelon has there was a price plant.

Yes. Peter, good morning, and thanks for the comments there.

Much appreciated. But as it relates to the nuclear work, we talk about the $950 million addition, we announced last earlier in the quarter, the additional customer that we had.

We haven’t given a value on that contract or announced that a customer, but if you think about it, really no impact to 2020, it’ll have a little bit of impact in 2021, but even more impact in 2022.

Is it a larger plant than the – is it significantly larger plant, the other 18 that, it’s just one plant when nuclear plant.

Yes, that’s correct. So and not the size of the entire suite, that we have associated with Exelon, but it’s a significant facility all to itself.

And I always get the numbers wrong though. MP618, would you hope to have one of those contracts in the next 90 days or once a – when would that happen then it’s takes a year to build or something.

Yes, well, you nailed it, Peter. It’s a – you get the numbers in the right order.

MP618, but we do expect to have an order in hand here very quickly. We already have a letter intents, et cetera, assigned with it.

We’re working on the financing right now. And the Roger’s comment earlier, we’re very excited about it and expected hopefully to start here in the beginning of 2021, but it will not have any impact on 2021.

It would have impacts on 2022.

And Peter, we’ve identified a number of kind of follow-on opportunities. As we look at it’s not just this one is that demand supply imbalance that, that I was talking about.

We see a number of geographies and opportunities. So our plan is to continue to move quickly after that next one.

And just, did you hope to have other – before you finish [indiscernible] year to get the first one on. Would you hope to have other contracts before the first one is done, I mean…

Peter that’s absolutely our hope and strategy. We have not quantified that yet, yes.

Those are finance – the project finance, so they’re not – there’s no cash from – and you share the profits with the utility.

Each one will be different depending on the competitive or the kind of market focus in that area. But yes, there are options we would be providing some sort of a revenue stream or an offset of costs back to the utility.

It’s one of the great reductions in the place in Portland cement and concrete. It’s like the – one of the great all time savings in CO2 for the country.

Definitely. That’s how we see it.

Yes.

And then you talked about this, there’s a supply shortage in the West and demand in the West. Is that you find the West is Texas or is that California, or where the hell is the West I think.

Good question. Similar to Mr.

Hoffman’s question early on what where’s the South. But really that – really the when we speak of the West, there’s a significant deficit I’d say, and basically Utah, West, primarily the – when we say West, we mean West Coast, California is extremely deficient.

And then you look at kind of Arizona and Nevada having some potentially equal deficits here. So we move forward.

So that’s definitely Colorado as well. So Texas, we consider Texas, Texas kind of all to its own, but any – I’d say anything West of Texas, we considered the West and really focused on the West Coast.

And the remediation opportunities in the West as well for, I mean, this $4.5 billion that you’re bidding on it, or any of those in the West of the all in the South, Southeast, Midwest.

We have a few out there in the West, but primarily when we think about remediation, we think about remediation in the Atlantic Coast, the Southeast and the Midwest more kind of call it East of the Mississippi.

But don’t they have – they don’t have ash ponds in the West or and then you was called out there.

They have some out there, Peter, but if you look at the landscape, but they’re predominantly here in the Southeast and kind of Atlantic Coast, and really the ones with the high priority are down here in the South where they’re closer to ground water everything else. That’s really what’s driving the priority level of remediation.

Whether if I’ve been at that for Congress was when the biggest power plant the world, where do they do it all their ash?

Can you say that again, Peter, sorry?

The four corners plant in the West, that’s one of the biggest power plants in the world. What do they do it all their ash there?

They have a pond. Does that generate ash?

So they’ve got several ways that they manage their ash. I don’t – I would just say that they – that there’s – there could potentially be opportunities that for customers like them or others out in the West.

And how big is your NOL, is that a pause, when you started making money, you don’t have to pay taxes for one time.

Yes. It’s I get you the current number.

I mean we’re adding a bit to it this year. I think we around, I don’t know $15 million to $20 million area.

Okay. The next $15 million to $20 million and make you pay zero.

That would offset. That would offset $40 million to $50 million of income, of net income or taxable income.

And the – so the new – is there a potential for more nuclear wins after the unnamed, somebody who wanted there are other ones out there you over the next couple years, you might be able to win on the hours. So capital light, it’s not a great margin, but it’s capital light, and it’s very predictable.

Yes. It’s definitely capital light, definitely low margin.

But as far as growth, there may be opportunities to pick up new work here and there as the opportunities present themselves. But again, as we’ve continued to stress the real growth is on the ES side, whether it be a remediation work or byproduct sales work, that’s really where we see the growth drivers.

If you can get some kind of citation or positive performance from Exelon and some other people didn’t do so well in this difficult environment. So do you think that would be a nice advertisement for come to trial?

Yes. It’s our performance of our teams and the confidence of our customers by giving us extensions is definitely a good advertisement force.

Is nuclear power plant have no CO2, very little cost. And if you could win more of those, should you take when you’re not going to turn down more nuclear power outages, you could – you can bring some, you’ll take a minute.

That’s right. No, we definitely not turn down good work.

Okay, okay. Well, that’s a well done.

We look forward to before the 2021 and 2022 and 2023.

So the way, Peter, thank you so much. Thanks for the support.

Thank you, Peter.

Hey Michael.

Just two quickies. The award number I can still use as a rule of thumb divide by six, and kind of just add that incrementally each years by six.

This is the way to sort of…

Yes.

Okay. And then because of the disruption on the fly ash, is that helping to unit price?

Are you getting any unit price leverage there?

Let me back up for the second question, I guess we’ll make sure we’re – we talked about dividing by six. We’re talking about the ES work, correct.

Yes, like 583 divided by 6, map that out, and if you did 600 this year divided that by six and map that out. And if it did it again, so you can see this sort of $100 million a year kind of compounding.

Yes, yes.

Yes, okay. And then are we seeing any unit price upside because byproduct the shortage of product and there’s demand, but shortage.

And so you’re getting better unit price.

We are seeing that regionally, yes. There are some places that there’s a little over supply, but definitely in the areas of under supply, we are seeing prices increase.

Very good. Thanks.

Thanks, Michael.

Thank you, Michael.

Great. Thank you.

Thank you, operator. And again, thanks everyone for joining us today.

We look forward to updating you on our progress during our next earnings call. We’ll end the call there.

Thank you.

Thank you.