I am not familiar with these names; I’ll have a look.
New ideas are definitely welcome. Feel free to share them either in the comments section or the Substack chat. It would be great if you could also include a one-sentence elevator pitch explaining why you find the ideas interesting.
Where do management state their p/gallon for effluent and supplemental LAW. I love this thesis but have a few things scratching at it.
1st being the contradiction of managements investor deck with $34m EBITDA at the $120m mark for the treatment segment. At $67m sales currently then + the estimated $70m Sales estimated from effluent gets $137 which using a 32% EBITDA margin accounting for operating leverage gets you to $44m EBITDA which is about 3-4x EBITDA for 2026 which is just effluent but more like 5x with the -10m in EBITDA from current operations. Does that seem right. So about 5x 2026 then you have optionality for supplemental LAW from Hanford going into 2026-2027?
Pricing estimates for the effluent treatment and supplemental LAW volumes were provided in the Mar'23 conference call - see the quote below. Also note that the supplemental LAW pricing estimate is confirmed by the cost of grouting per gallon at another decommissioned nuclear site, Savannah River (estimated at $153/gallon in 2021 and $200 in 2023).
"But generally, our established rates that we have in our MSAs are in the low $40 a gallon range for the actual treatment, that's the actual grouting. So if a container of waste shows up on our dock, in other words, we're not paying for transportation. And we just have to grout it. It's $40 to $45.
[...]
So we typically use $100 a gallon for the TBI as an alternative to include treatment and disposal at a Texas landfill, at the WCS."
Assuming 70%-75% gross margins and additional labor/SG&A costs of $20m-$25m (as outlined by management), I arrive at $25m-$30m in EBITDA from the effluent opportunity. Adding $0m-$5m in normalized EBITDA from the core business, I arrive at c. $30m-$35m in EBITDA which is fairly close to management's estimate. As you say, revenues from the supplemental LAW opportunity would come on top.
Thank for the clarity. very helpful! When do you expect any supplemental LAW to come on top if it ever does. I hope things swing into motion for at least DFLAW by this year.
Have you ever taken a look at $ZEPP (chinese market) or
LON:ASC (uk online retailer)
Also, as a reader if we come across interesting ideas/opportunities do you want us to drop them in the comment section?
I am not familiar with these names; I’ll have a look.
New ideas are definitely welcome. Feel free to share them either in the comments section or the Substack chat. It would be great if you could also include a one-sentence elevator pitch explaining why you find the ideas interesting.
Excellent update! PESI is my largest position, bought after your write up.
Thoughts on this delay on USDOE's decision on where to grout the waste? Grouting will only commence at the end of 2025. https://www.hanford.gov/c.cfm/media/attachments.cfm/DOE/State_of_Washington,_federal_agencies_finalize_agreement_on_future_of_tank_waste_cleanup_at_Hanford_Site.pdf
Where do management state their p/gallon for effluent and supplemental LAW. I love this thesis but have a few things scratching at it.
1st being the contradiction of managements investor deck with $34m EBITDA at the $120m mark for the treatment segment. At $67m sales currently then + the estimated $70m Sales estimated from effluent gets $137 which using a 32% EBITDA margin accounting for operating leverage gets you to $44m EBITDA which is about 3-4x EBITDA for 2026 which is just effluent but more like 5x with the -10m in EBITDA from current operations. Does that seem right. So about 5x 2026 then you have optionality for supplemental LAW from Hanford going into 2026-2027?
Pricing estimates for the effluent treatment and supplemental LAW volumes were provided in the Mar'23 conference call - see the quote below. Also note that the supplemental LAW pricing estimate is confirmed by the cost of grouting per gallon at another decommissioned nuclear site, Savannah River (estimated at $153/gallon in 2021 and $200 in 2023).
"But generally, our established rates that we have in our MSAs are in the low $40 a gallon range for the actual treatment, that's the actual grouting. So if a container of waste shows up on our dock, in other words, we're not paying for transportation. And we just have to grout it. It's $40 to $45.
[...]
So we typically use $100 a gallon for the TBI as an alternative to include treatment and disposal at a Texas landfill, at the WCS."
Assuming 70%-75% gross margins and additional labor/SG&A costs of $20m-$25m (as outlined by management), I arrive at $25m-$30m in EBITDA from the effluent opportunity. Adding $0m-$5m in normalized EBITDA from the core business, I arrive at c. $30m-$35m in EBITDA which is fairly close to management's estimate. As you say, revenues from the supplemental LAW opportunity would come on top.
Thank for the clarity. very helpful! When do you expect any supplemental LAW to come on top if it ever does. I hope things swing into motion for at least DFLAW by this year.