Perma-fix Environmental Services ((PESI)) has held its Q3 earnings call. Read on for the main highlights of the call.
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The recent earnings call for Perma-fix Environmental Services showcased a mixed sentiment, highlighting strong performance in the Treatment segment and significant advancements in PFAS and Hanford operations. However, challenges in the Services segment and the impacts of a government shutdown were also notable. Despite these setbacks, the company remains well-positioned for future growth, supported by a strong backlog and operational improvements.
Strong Revenue and Gross Profit Growth
Perma-fix Environmental Services reported a notable increase in revenue, reaching $17.5 million compared to $16.8 million in the same period last year. Gross profit more than doubled, climbing to $2.6 million from $1.3 million, with the gross margin expanding to 14.6% from 7.9%. This growth was primarily driven by higher waste volumes and a favorable mix within the Treatment operations.
Treatment Segment Performance
The Treatment segment demonstrated remarkable growth, with revenue increasing by 45% year-over-year to $13.1 million. The segment’s gross margin improved significantly to 17.3% from 4.5%. Waste sales saw a substantial rise, totaling $14.6 million, up 74% from $8.4 million, indicating strong demand and operational efficiency.
Hanford DFLAW Program Progress
Perma-Fix Northwest is playing a crucial role in the Department of Energy’s waste treatment chain, particularly with the Hanford DFLAW program. The company is positioned to benefit from expected multi-decade high-volume revenues from these operations, underscoring its strategic importance in the DOE’s initiatives.
Advancement in PFAS Destruction Initiative
The company’s first-generation PFAS system has operated reliably, achieving complete destruction of PFAS compounds with a cost advantage over incineration and zero air emissions. A second-generation PFAS unit near Oak Ridge, Tennessee, is nearing completion, marking significant progress in this critical environmental initiative.
Strong Backlog and International Shipments
The Treatment backlog ended at $15.4 million, a significant increase from $7.9 million. The company continues to support international waste shipments, with expectations of continued activity into the first half of 2026, bolstering future revenue streams.
Services Segment Revenue Decline
The Services segment faced challenges, with revenue declining to $4.3 million from $7.7 million in Q3 of ’24. This decline was primarily due to delays in DOE and DoD projects and slower award timing, impacting the segment’s overall performance.
Impact of Government Shutdown
The temporary government shutdown posed potential impacts on service timing. However, the company anticipates increased DOE project activity as funding normalizes, which should mitigate some of the adverse effects experienced.
Increased SG&A Expenses
SG&A expenses rose to $4.1 million, up approximately $451,000 from the prior year. This increase was attributed to higher personnel-related costs and professional services expenses, reflecting the company’s investment in its workforce and operational capabilities.
Slow Progress in PFAS Market
The PFAS market is progressing slower than initially anticipated, with significant contributions to EBITDA expected in the second quarter of next year. This slower pace highlights challenges in market adoption but also underscores the potential for future growth.
Forward-Looking Guidance
Looking ahead, Perma-fix Environmental Services expects continued growth, supported by its robust backlog and operational efficiencies. The company is particularly optimistic about its prospects with the Department of Energy’s Hanford project and ongoing PFAS initiatives. Despite challenges in the Services segment, the company remains confident in its strategic positioning and future opportunities.
In summary, the earnings call for Perma-fix Environmental Services reflected a generally positive outlook, with strong performance in the Treatment segment and significant advancements in key initiatives. While challenges remain, particularly in the Services segment, the company’s robust backlog and strategic initiatives position it well for future growth. Investors and stakeholders will be keenly watching how these developments unfold in the coming quarters.