Q2 2025 Perma-Fix Environmental Services Inc Earnings Call
Good morning and welcome to the permafix fiscal second quarter 2025 earnings conference call.
At this time, all participants have been placed on a listen-only mode and the floor will be open for questions. Following the presentation. If anyone should require operator assistance during this conference, please press star zero on your phone keypad. Please note. This conference is being recorded. I will now turn the conference over to your host.
David Waldman of Crescendo Communications, David. The floor is yours.
Thank you, Jenny and good morning everyone. Welcome to Perma fix Environmental Services. Second quarter 2025 conference call on the call with us. This morning are marked up president and CEO Dr. Lucen aani, Executive Vice President of strategic initiatives and Ben nacarado. Chief Financial Officer. The company issued, a press release this morning. Containing second quarter, 2025 Financial results which is also posted on the company's website. If you have any questions after the call or like any additional information about the company, please contact, Crescendo Communications at 211267111020. I'd also like to remind everyone that certain statements contained. Within the conference call may be deemed forward-looking statements within the meeting of the private Securities, litigation Reform, Act of 1995, and include certain non-gaap Financial measures, all statements on this conference call. As, in a statement, of historical fact, or forward-looking statements that are subject to no non-owned risks, uncertainties, and other factors which could cause actual results and performance of the company to different materially from such statements. These risks and uncertainties are detailed in the company's filings with the US Securities and Exchange Commission.
As well as this morning's press release, the company makes no commitment to disclose any revisions to forward-looking statements or any facts, events, or circumstances after the date hereof that bear upon forward-looking statements. In addition to today's discussion, we'll include references to non-GAAP measures. Perma-Fix believes that such information provides an additional measurement consistent with our full comparison of its performance. A reconciliation of the non-GAAP measures to the most directly comparable GAAP measures will be provided.
Is available in today's news release and on our website. I'd now like to turn the call over to Mark Duff. Please go ahead Mark.
All right. Thank you, David, and good morning, everyone. We delivered sequential and year-over-year revenue growth in the second quarter, accompanied by a meaningful improvement in our gross margin. These results reflect continued progress on our operational initiatives, particularly within our Treatment segment, where revenue increased approximately 37% compared to the same period last year.
Resolved through Automation and process improvements that are already enhanced, enhancing our throughput, improving safety and reducing manual labor. We expect
To realize the full benefit of these enhancements in the second half of the year.
Importantly, we continue to realize stage shipments from Hanford, in support of the cleanup program, as well as the tank management Mission, which are estimated to, to be about, uh, $3 million, uh, of Revenue per month.
On a related. Note that the department of energy. Recently now announced the delay in the DF law facility startup from August 1st to as late as October 15th despite the short-term delay that program represents substantial new revenue streams for us. We remain encouraged by the long-term outlook for DF law and the substantial reoccurring, revenue and cash flow. It is expected to contribute once operational.
In our services segment project. Delays occurred earlier in the quarter, largely due to the federal, government and federal procurement timing, uh, impacting our results. However, field execution and cleanup. Uh, and Remediation work is Now tracking, uh, on schedule across key, doe and DVD sites,
Uh, we're also pleased to report that our team was rewarded a position on the Navy's. 240 million radmac 3 idiq contract during the quarter,
This award enforces, our core competencies and radiological, cleanup and positions us for a steady stream of potential tasks or opportunities in the coming quarters.
Uh We've also entered the 6-month period, uh a planning period for the West Valley, a project, as part of the B2 XT LED team where we expect to play a key role in long-term view, cleanup efforts while Revenue, recognition will be tied to D's approval of our final performance strategy. I expected later this year, we've reviewed this as a significant multi-year opportunity for our services business,
Returning now to pifas, we made strong progress, this quarter and multiple fronts. We expanded demonstration activities, with both our with both Fortune 500 companies and large government agencies. Uh and year-to date Pas, related sales have reached approximately 500 K representing about 30,000 gallons of material materials so far.
Uh, daily operations have resumed at our peras, a unit in Florida and construction is underway on our Gen 2 system in Oakridge Tennessee, which is designed to sort up to 3,000 gallons of production per day. While reducing the unit operating costs
The Gen 2 system also will also provide the potential to support mobile field deployment options. Uh, for use in landfills waste treatment plants and remote sites. We continue to be encouraged by the Technologies destruction performance and its scalability, uh, and the ability to reduce liability for our customers at a competitive price point.
Internationally we've received over 7 million in Waist receipts during the past few quarters and continue to see strong interest from Camp from customers in Canada.
I Germany. Mexico and Italy are 50 million euro contract with the European Union and Italy is progressing through the permitting and preparation phase and we remain on track to initiate treatment operations, uh, in 2026.
Across the organization, we remain focused on discipline cost management and target targeted. Uh margin Improvement initiatives uh which have continued uh to be implemented uh throughout Q3 as well.
These programs are already contributing to improved productivity and are expected to support stronger. EV performance in the second half.
In addition to our Revenue, generating activities, we're pursuing several large-scale Federal and Commercial procurement opportunities, including bids, with the US Army Corp of Engineers uh and doe National Laboratories combine these opportunities. Represent more than 200 million dollars in potential contract. Value with award decisions, expected during the first half of 26,
Companywide are waste, backlog, currently stands at approximately 13.2 million.
Uh, providing strong visibility into the second half, treatment volumes and services activities.
We're also encouraged by evolving, A Pas policy, and Regulatory developments in both the federal and the state levels, which continue to support demand for comprehensive destructive Technologies like ours.
With growing treatment volumes renewed activity in our services segment and Commercial Traction in Pas along with a healthy pipeline of domestic and international opportunities. We Believe perfect as well, positioned to deliver improved Financial results in the second half of 25 and build long-term momentum heading into 26 with that. I'll now turn over the call to Ben narado to walk through our financial results in more detail. Been
That's an increase of 600,000 or 4.3%.
Our Revenue in the treatment segment increased by 3.1 million over the prior year or 36.6% as the waste volumes increased as it, our average price of waste, which is um, usually impacted by waste mix.
Our treatment segment began the quarter with um backlog of 10 million and had waste receipts and related revenues in excess of 14 million.
during the quarter, which contributed to the improved revenue and the strong backlog entering the third quarter,
the increase in Revenue was offset by a decrease in Revenue at our services segment of 2.5 million.
Project delays and completion of large projects in the prior year, were the main drivers of this shortfall.
Moving to gross profit for the quarter. Our gross profit was 1.5 million compared to a negative - 1.3 million in Q2 of 24. That's an improvement of 2.8 million, the revenue increase and lower variable costs, um, of the waste treated, had a positive impact on gross profit of totaling about 3.4 million, which was partially offset by increased fixed costs at the plants.
Of 683,000 the increased fixed costs. Were primarily labor related due to increases in waste receipts.
In the service segment, gross profit was relatively flat with prior year, increasing by 90,000 as the impact of lower variable costs. And fixed expenses was offset by the impact, on gross profit of lower Revenue.
The lower variable costs were the result of improved profitability of the projects performed this year, while our lower fixed costs were the result of reductions to our indirect labor
Turning to SG&A, our SG&A cost for the quarter was $4.1 million compared to the prior year total of $3.5 million.
The increase is evenly split between marketing and admin.
Our marketing expense were higher, from higher B, Business Development, against expenses related, to POS and project bidding.
In addition, certain Personnel, um, formerly focused on operations are being deployed in a business development role supporting POS DF law and our International opportunities.
On the admin side, the addition of a of our coo and the related travel and benefits with that position, had the greatest impact on our increased cost.
Net loss, for the quarter was 2.7 million, as compared to Prior years. Net loss of 4 million
our total basic and diluted earnings per share are loss per share for the quarter was
15 cents compared to a loss per share of 27 cents in the prior year.
Ava from continuing Ops. For the quarter was, as defined in this morning's press release was a -2.3 million compared to negative ibida 4.6 Million last year.
Turning to some balance sheet items, our cash on the balance sheet at quarter end, was 22.6 Million.
Our waste backlog at the end of June was 13.2 million, which is up from 7.9 million at the end of last year and higher than June 30th a year ago, um, with where it was 8.7 at the time.
Our total debt for the quarter at quarter end is $2 million, excluding debt issuance costs, most of which is owed to our...
primary lender PNC Bank.
Finally, I'll summarize our cash flow for 25. Our cash used by continuing operations is 3.8 million.
Cash used by discontinued operations is 222,000.
Cash used for investing in continuing operations was 1.5 million most of which relates to Capital spending and the remainder um on permits and other Investments.
Our cash used for investing for disc Ops is 16,000.
cash used for in financing was 626,000, uh, of which
Approximately 313 relates to monthly payments on the term and Capital Loans.
Uh, Finance leases of 148,000.
and payments of 194,000 related to uh our public offering completed in December of 2024 and this is offset by small increase in um option expenses of 49,000
With that, I will now turn the call over to the operator for questions.
Conducting our question and answer session. If you would like to ask a question, please press star 1 on your phone keypad. Now, a confirmation tone will indicate that your line is in the queue. You may press star 2. If you would like to remove your question from the queue for, any participants using speaker equipment, it might be necessary to pick up your handsets before you press the keys. Please wait a moment whilst we Poll for questions.
Thank you. Our first question is coming from Aaron's pitchell of Craig Halen.
Aaron, your line is live.
Yeah, good morning, Mark and Ben. Thanks for for taking the questions. Um, you know, first on the treatment side of things, you you kind of talked about some challenges improvements that have been made. Can you just, you know, give a little bit more detail on there and, you know, maybe how how you think about the margin pickup uh, in the back half and just just maybe how you're thinking about overall um kind of treatment in the back half of the year.
Yeah, uh, I appreciate that question. We, we started receiving, I think I mentioned this. The last core recall that we sort of receiving a, uh, sizable waist stream from
The Hanford, operation side of the house. Not, not the the tank closure but the the um,
Uh, actually comes through train closure, but it's more associated with operations of the tank Farms themselves.
Uh, in, uh, This Way stream, uh, includes some solidification.
Process that I had to occur. Uh, and um, we're having a hard difficult time, uh, with the, the process to, uh, because it was labor intensive. Uh, it was going very slow, uh, and we implemented some some equipment, uh, and did the training it would and got the permit, uh, the permits aligned with it, uh, as well as the alignment with the, uh,
Uh, the folks that will take the waste from us on, on the Hanford site, to make sure that everything was worked properly and the performance of the treatment, uh, was adequate. So that took several months, we didn't expect it to take. If ever remember last quarter, we talked about the fact that we had to hire a lot of people, uh, and it took a while to get them trained in place. So, what that will happen. And then uh, then we had problems with putting it up production but that has all been resolved, uh, in about halfway through the quarter. Uh, and we really started getting our feet under us in June, uh, and meeting our performance goals. Uh, so now that waist stream, uh, it should be sustainable through 27 at minimum,
Uh and uh it's it's it's really a core competency for the type of work we do at our Northwest plant. Uh, all the other way streams are are going well. Uh, and uh the Northwest facility uh is becoming a real anchor for us as expected uh, in support of upcoming projects at uh at Hanford as well. But also uh many other clients around the country and internationally uh as as we continue to expand the operations there.
All right, thanks for the caller there and then, you know, on Hanford I thought the the wording in the release on as late as October 15th. You know, if maybe just talk about it. Sounds like you know, confidence that that could start up before then and um, you alluded to it, but just, you know, preparations being made at the Northwest facility to to handle those volumes as they start up.
Yeah, you know, the the uh, delay uh, was was someone was unexpected to us. Uh, because it, it it was so close to the
Anticipated start date but it's not really unexpected that they would have a delay and these types of things. But um, that we heard that there was
A number of items are working through. That's been that have been publicized, uh, by the independent groups that are make sure they're ready. Uh, and that they were finding nitrogen oxide uh and some of the off gas uh systems that they had. They had to deal with uh, and address those concerns uh, and um uh, we've been told, uh, in a formerly that, that that's what they're working on right now.
Now it shouldn't be the entire period. Uh, they give themselves some buffer, uh, let's largely speculation. They're not really discussing, uh, What, uh, what their timeline really is. Uh, but I know do is not going to want to do multiple delays. So we're pretty confident that, that they should be done, well, within that period. Uh, and then get rolling. Once they once they get rolling, then, uh, they'll, you know that they'll enter the, uh, hot commissioning period. That's where they introduce actual tank waste.
Uh, to the plant.
uh, and um,
Take between the 2 phases. Uh, but, uh, it seems like they're on track, you know, to be in operational phase before the end of the calendar year, uh, and get rolling.
Uh,
did that address your question Aaron? I'm not sure if I hit all the points.
Yeah, no, it, it does. I mean, maybe just, you know, preparations at Hanford to be able to, to handle everything. You feel comfortable there, you know, Investments, that, that you've made and things like that. Yeah, we've we've completed our permanent preliminary design of the systems. We need to have in place, uh, for uh, receipt of that waste. So we're ready to go. Uh, we will continue to make investments a capital Investments uh as of the DF law gets rolling into larger quantities. In other words, we will duplicate the the systems we've got and add staff accordingly. Uh, but we're ready to go now uh, to release the operational period. Uh, and um, it it's still difficult for due to really nail down the different types of waste. We're going to be getting, uh, you know, they, they provide estimates along the way on the total quantities that they're expecting, but there's about a dozen different ways streams. And we're not sure how much of each 1, uh, that we'll be receiving. So uh, we really got to see.
See how things go during commissioning, uh, and early startup to, uh, to really just know how we need to expand. Uh, so we don't we don't uh, over expand the support the uh, the full operation.
Okay, that makes sense. Um, and then, you know, on the services side of things, you talked a little bit about West Valley in the in the planning period. A little bit on radmac. Just, you know, how, how are you seeing that Services segment here in the next couple quarters, is, does West Valley kind of more of an early, you know, 2026 uh, startup in in your eyes or maybe, just some, some color. There would be helpful. Yeah, Services, uh, Services had a, a negative impact on our performance. Uh, this quarter particularly, uh, as I mentioned in the notes, the, uh,
There was some delays in in uh, field getting into the field, uh, and some glaze of procurements. Uh, both. Those are largely attributable to, uh, the change in administration, uh, and um, a lot of retirees, a lot of retirements, uh, and uncertainty in the, the federal government's procurement shops. Uh, they're working through those things. Uh, I understand it's very common within, uh, the dod as well as doe with the changes that have been made, uh, the administration, the Trump Administration is pushing very hard on both those agencies to streamline procurements, uh, and make them more efficient. We're starting to see some of that already.
uh, but overall, the answer to the question specifically we we see that picking up on the uh,
Uh, on both both the uh uh uh, service aside in in in this quarter and next quarter uh particularly in regards to uh several projects that are just now getting rolling. Uh and uh some procurements that we just submitted bids on uh at the at the end of a Q2 and begin to Q3. So, uh, West Valley is is is moving a little slower, a lot slower than we thought it would. We thought we'd be working by now, but the way it's it's it goes with these types of contract. Again, it's a, it's a
Is it end State contracts? Or what? That means is you you put together a strategy. I'd be very detailed strategy for the next 10 years and what you're going to get done.
Uh, and then you line up your costs with that, uh, to stay within a funding level and then the department of the Department of energy approves that. And we're in that strategy stage for pulling the strategy together for the next 10 years, uh, with, you know, we're in involved in the, in the waste management portion of that.
Uh, and then do we have to approve that within the funding that they've got? So that's where that process is now. So it that that finishes up here around the first of the year. Uh and then uh, we're anticipating to be implementing that strategy beginning in q1. So it just depends on you know if there's changes to our our approach uh or funding. Uh that's moved 1 way or another could impact that. So that's why we're hesitant to really make a a real forecast on the revenue, we're going to get from what
Valley at this point but we're still remain very optimistic. Our scope is is very uh,
important uh and 1 of the primary goals uh for the site in the next several years. So we're optimistic that we'll be playing a critical role in there, but it just hasn't been nailed down yet.
um,
overall.
All right. Uh, thanks for the caller and taking the questions. I will turn it over.
Okay, thanks Aaron.
Thank you very much.
Our next question is coming from Howard browse of Wellington Shields, Howard. Your line is live.
True 2026.
Good morning. How are they? Haven't really given us a lot of detail. Uh,
for the ramp up but what we've been told informally uh in uh in meetings and and it's part of the overall program is
Again, they'll do the commissioning. Now, once operations start, as I mentioned, will be in Q4 operations has been informally defined as uh, about 40% production capacity. Uh, so uh, if you remember the design capacity is a million gallons a year, uh and at a million gallons a year, they anticipate generating 8000 Q 8,000, cubic meters of waste. Uh and um,
They're looking at the weight streams that we're, they're talking about here. We're estimating that to be in the 70 to 80 million dollar range, uh, for the 8000 M. So, if you do the math and are running at 40% capacity, you know, in, uh, later in Q4 we could anticipate, uh, once once they get to that point, uh, you know, 2 to 3 million dollars of Revenue a month, uh, and, uh, they'll, they'll be ramping up, you know, as fast as they can. Uh, it's safe as safe as they can, uh, over the next 18 months, uh, after, you know, operations begin, uh, to try to get through, you know, the 7 or 80% uh, operational capacity uh, on their way up to full capacity. So,
Well sir, I think we're anticipating again. Uh again not knowing all the volumes of the different types of waste will receive again this to to summarize, 2, 3 million uh, in Revenue, uh, upon operational, phase startup, uh, and then ramp up from there, over the next 18 months through 26.
That's all I had. Thank you very much. Best of luck. Thank you. Bye.
You're very much.
Just a reminder if there are any remaining questions, you can still join the key by pressing star 1 on your phone keypad.
Our next question is coming from Aaron Warwick of breakout investors, Aaron your line is live.
Good morning, gentlemen, uh, just a question on the Navy contract or idiq. I should say.
Uh, did you give us, uh, an idea about the size of it and, and, uh, how many different entities there are that are available to bid on those and just kind of what your expectations are there.
Sure, Aaron. I'm glad you asked that, you know, it these idiq are are very difficult to nail down. Uh we have a lot of idea cues you know, don't see a whole lot of action. We we just submitted a
A very sizable job with doe through 1 of their ID, IQs that we hasn't seen in action in quite a while.
This Navy idq for the radmac 3 is a very active contract. And if you do the research, if you just type in, you know, Googling it uh it's been it runs out of funding and it's it's that much used in other words, they they pump a lot of funding through this uh, historically
Uh, and so it's 240 million and they have 6 total Awards. Uh, 3 large business uh and 3 small business and again we're a small business uh and uh, small businesses, get the bid on all the large business, uh, task orders but not, not vice versa. It's it's uh they can't been on a small 1, the biggest Camp been on the small ones. So to answer your question um we we already got our first task order to work on it right now to do here in a couple of weeks.
Uh, and uh, they don't give a forecast or anything like that. We don't know how it lines up with funding, uh, but it's basically to
Uh, do radiological remediation, mostly in the California coast, uh uh initially in in Southern California, San Diego area. Uh and then also we're anticipating a number of projects in the Bay area as well. Uh, where there's been long-term, uh, radiological issues. So to answer your question, uh, it it is, it's competitive each task score is competitive. We're very comfortable. With the 3, small businesses will be competing with for some of the smaller tasks.
Uh, we we know very well, uh, and uh, the type of work that is done within this contract is exactly what we are. Are, are strongest, uh, core competencies are aligned with. We have some technologies in these areas. Uh, and uh, but again it is the our competitive uh and um
Uh, it's a real difficult to really Define how much revenue we can anticipate, you know, on an annual basis.
Thank you guys.
Thank you.
Very much. Well, we appear to have reached the end of our question and answer session. I will now turn it back over to the management for their closing comments.
All our operations.
Uh, and converting large services in federal bid opportunities.
Uh the operational Investments we've made earlier in the year. Combined with the progress we're seeing at Perfect's Northwest within the Pas program and across our doe segments and engagements. Uh, they all position us to deliver stronger results in the coming quarters.
While timing, uh, around certain federal procurement processes remains a variable our backlog, our field execution, and our pipeline visibility, continue to improve. So in summary, we remain confident in our ability to deliver a stronger financial performance. In the back, half of the Year supported by the progress. We've already achieved. We appreciate your continued support and look forward to updating you again. Next quarter on our progress. Thank you.
We thank you for your participation.