Quarterly report pursuant to Section 13 or 15(d)

Operating Segments

v3.22.2.2
Operating Segments
 9 Months Ended
Sep. 30, 2022
Segment Reporting [Abstract]  
Operating Segments

11. Operating Segments

 

In accordance with ASC 280, “Segment Reporting”, the Company defines an operating segment as a business activity: (1) from which we may earn revenue and incur expenses; (2) whose operating results are regularly reviewed by the chief operating decision maker (“CODM”) to make decisions about resources to be allocated to the segment and assess its performance; and (3) for which discrete financial information is available.

 

Our reporting segments are defined as below:

 

TREATMENT SEGMENT, which includes:

 

  - nuclear, low-level radioactive, mixed waste (containing both hazardous and low-level radioactive constituents), hazardous and non-hazardous waste treatment, processing and disposal services primarily through four uniquely licensed and permitted treatment and storage facilities; and
  - R&D activities to identify, develop and implement innovative waste processing techniques for problematic waste streams.

 

SERVICES SEGMENT, which includes:

 

  - Technical services, which include:

 

    ○ professional radiological measurement and site survey of large government and commercial installations using advanced methods, technology and engineering;
    ○ integrated Occupational Safety and Health services including industrial hygiene (“IH”) assessments; hazardous materials surveys, e.g., exposure monitoring; lead and asbestos management/abatement oversight; indoor air quality evaluations; health risk and exposure assessments; health & safety plan/program development, compliance auditing and training services; and Occupational Safety and Health Administration (“OSHA”) citation assistance;
    ○ global technical services providing consulting, engineering, project management, waste management, environmental, and decontamination and decommissioning field, technical, and management personnel and services to commercial and government customers; and
    ○ on-site waste management services to commercial and governmental customers.

 

 

  - Nuclear services, which include:

 

    ○ technology-based services including engineering, decontamination and decommissioning (“D&D”), specialty services and construction, logistics, transportation, processing and disposal;
    ○ remediation of nuclear licensed and federal facilities and the remediation cleanup of nuclear legacy sites. Such services capability includes: project investigation; radiological engineering; partial and total plant D&D; facility decontamination, dismantling, demolition, and planning; site restoration; logistics; transportation; and emergency response; and

 

  - A company owned equipment calibration and maintenance laboratory that services, maintains, calibrates, and sources (i.e., rental) health physics, IH and customized nuclear, environmental, and occupational safety and health (“NEOSH”) instrumentation.

 

The Company’s segment also included the Medical Segment in 2021. As previously discussed, the Company made the strategic decision to cease all R&D activities under the Medical Segment and sold 100% of its interest in PFM Poland (which comprised the Medical Segment) in December 2021. The Company’s Medical Segment had not generated any revenue and was involved in the Company’s medical isotope production technology.

 

Our reporting segments exclude our corporate headquarters and our discontinued operations (see “Note 10 – Discontinued Operations”) which do not generate revenues.

 

The table below presents certain financial information of our operating segments for the three and nine months ended September 30, 2022 and 2021 (in thousands).

 

Segment Reporting for the Quarter Ended September 30, 2022

    Treatment     Services     Segments Total     Corporate (1)     Consolidated Total  
Revenue from external customers   $ 8,877     $ 9,595     $ 18,472 $     —      $ 18,472  
Intercompany revenues     28       16       44       —        —   
Gross profit     1,967       1,103       3,070       —        3,070  
Research and development     55       —        55       14       69  
Interest income     —       —        —        29       29  
Interest expense     (20 )     (2 )     (22 )     (25 )     (47 )
Interest expense-financing fees     —       —        —        (16 )     (16 )
Depreciation and amortization     387       87       474       23       497  
Segment income (loss) before income taxes     1,792       725       2,517       (1,514 )     1,003 (2)
Income tax expense     164       15       179       —        179  
Segment income (loss)     1,628       710       2,338       (1,514 )     824  
Expenditures for segment assets     149       39       188       1       189 (3)

 

Segment Reporting for the Nine Months Ended September 30, 2022

 

    Treatment     Services     Segments Total     Corporate (1)     Consolidated Total  
Revenue from external customers   $ 24,749     $ 29,093     $ 53,842       $  —     $ 53,842  
Intercompany revenues     28       43       71       —       —  
Gross profit     4,168       3,422       7,590       —       7,590  
Research and development     179       23       202       43       245  
Interest income     —       —       —       69       69  
Interest expense     (53 )     —       (53 )     (70 )     (123 )
Interest expense-financing fees     —       —       —       (44 )     (44 )
Depreciation and amortization     1,139       244       1,383       50       1,433  
Segment income (loss) before income taxes     1,675       1,524       3,199       (5,028 )     (1,829 )(2)
Income tax benefit     (91 )     (56 )     (147 )     —       (147 )
Segment income (loss)     1,766       1,580       3,346       (5,028 )     (1,682 )
Expenditures for segment assets     819       127       946       1       947 (3)

 

 

Segment Reporting for the Quarter Ended September 30, 2021

 

    Treatment     Services     Medical     Segments Total      Corporate (1)     Consolidated Total  
Revenue from external customers   $ 8,893     $ 6,904       —     $ 15,797     $ —     $ 15,797  
Intercompany revenues     220       5       —       225       —       —    
Gross profit (negative gross profit)     2,487       (263 )     —       2,224       —       2,224  
Research and development     52       18       162       232       11       243  
Interest income      —       —       —       —       2       2  
Interest expense     (51 )     (1 )     —       (52 )     (25 )     (77 )
Interest expense-financing fees      —       —       —       —       (11 )     (11 )
Depreciation and amortization     319       85       —       404       5       409  
Segment income (loss) before income taxes     1,317       (984 )     (162 )     171       (1,626 )     (1,455 )
Income tax expense (benefit)     1       —       —       1       (2,837 )     (2,836 )(4)
Segment income (loss)     1,316       (984 )     (162 )     170       1,211       1,381  
Expenditures for segment assets     482       —       —       482       —       482 (6)

 

Segment Reporting for the Nine Months Ended September 30, 2021

 

    Treatment     Services     Medical     Segments Total     Corporate (1)     Consolidated Total  
Revenue from external customers   $ 24,094     $ 30,981       —     $ 55,075     $ —       $ 55,075  
Intercompany revenues     1,199       44       —       1,243       —        —   
Gross profit     4,845       701       —       5,546       —        5,546  
Research and development     142       50       311       503       35       538  
Interest income     —       —       —       —       23       23  
Interest expense     (88 )     (9 )     —       (97 )     (112 )     (209 )
Interest expense-financing fees     —       —       —       —       (28 )     (28 )
Depreciation and amortization     939       255       —       1,194       14       1,208  
Segment income (loss) before income taxes     1,669       (1,721 )     (311 )     (363 )     987 (5)     624  
Income tax (benefit) expense     (13 )     10       —       (3 )     (2,837 )     (2,840 )(4)
Segment income (loss)     1,682       (1,731 )     (311 )     (360 )     3,824       3,464  
Expenditures for segment assets     1,109       14       —       1,123       9       1,132 (6)

 

(1) Amounts reflect the activity for corporate headquarters not included in the segment information.

 

(2) Includes approximately $1,975,000 recorded as other income under the Employee Retention Credit program under the CARES Act, as amended (see “Note 13 – Employee Retention Credit (“ERC”) below for a discussion of this expected refund amount).

 

(3) Net of financed amount of $0 and $114,000 for the three and nine months ended September 30, 2022, respectively.

 

(4) Includes tax benefit recorded in amount of approximately $2,351,000 resulting from release of valuation allowance on the Company’s deferred tax assets.

 

(5) Includes approximately $5,381,000 of “Gain on extinguishment of debt” recorded in connection with the Company’s Paycheck Protection Program (“PPP”) Loan which was forgiven by the U.S. Small Business Administration effective June 15, 2021.

 

(6) Net of financed amount of $271,000 and $348,000 for the three and nine months ended September 30, 2021, respectively.