Perma-Fix Environmental Services (PESI) Q2 2024 earnings summary

Executive summary

• Q2 2024 results were negatively impacted by government delays in waste shipments, project awards, and an extended equipment failure at a key facility, but these issues are considered temporary and are already subsiding.

• Major service projects were completed in March, and replacement revenue was delayed due to industry-wide government funding and procurement slowdowns.

• Management expects business improvements in the second half of 2024 as equipment returns to service, backlog and bidding activity increase, and new initiatives are implemented.

• Recent completion of two critical DOE audits positions the company for key Hanford and Oak Ridge cleanup programs.

• New international contracts in Canada, Mexico, and Italy (~$5M) and progress on PFAS treatment technology are expected to diversify and grow revenue.

Financial highlights

• Q2 2024 revenue was $14.0M, down 44% from $25M in Q2 2023; both Treatment and Services segments were impacted by delays and equipment failure.

• Gross loss was $1.3M in Q2 2024 compared to gross profit of $4.5M in Q2 2023, mainly due to lower waste volumes and high fixed costs.

• Net loss for Q2 2024 was $4M, or $(0.27) per share, versus net income of $474K, or $0.04 per share, in Q2 2023.

• EBITDA from continuing operations was negative $4.6M, compared to positive $1.5M in Q2 2023.

• Cash and restricted cash at June 30, 2024, totaled $18.1M, up from $7.5M at year-end, primarily due to an equity raise.

Outlook and guidance

• Management anticipates revenue and earnings improvement in the second half of 2024, with full impact of initiatives expected in 2025.

• Equipment repairs and backlog processing are expected to support revenue recovery in H2 2024.

• PFAS commercial unit expected to be operational in Q4 2024, with initial revenue guidance of ~$1M for Q4 and $10–20M annually from Gen 2 units in 2025–2026.

• Large DOE, DoD, and EPA procurement opportunities could provide substantial, sustainable revenue for 5–10 years.

• International growth expected from JRC Italy shipment in late 2025 and new contracts in Canada and Mexico.