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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.