Perma-Fix Environmental Services, Inc. (PESI) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call reveals a mixed but overall positive sentiment. Despite increased SG&A costs and net losses, the company shows improvement in backlog, EBITDA, and international opportunities. The Q&A highlights strong project pipelines, potential revenue growth, and strategic expansions, particularly in waste treatment. Concerns exist around cash balance and DOE transparency, but optimistic guidance and strategic initiatives outweigh these. With a market cap not provided, the lack of specific financial guidance and reduced cash reserves are noted. However, the potential for significant backlog revenue and international growth suggests a positive stock movement.
Key Financial Performance
Full Year Revenue Revenue totaled approximately $61.7 million, reflecting a 4.3% increase year-over-year from $59.1 million in 2024. The increase was driven by stronger performance in the Treatment segment and improving waste volumes across several treatment facilities.
Treatment Segment Revenue Revenue increased by $10.1 million year-over-year, driven by higher waste volumes and improved pricing dynamics associated with the waste streams processed.
Services Segment Revenue Revenue declined by $7.6 million year-over-year due to the timing of project mobilizations and procurement cycles, including delays associated with the transition to the new administration and related policy adjustments.
Treatment Revenue Growth Increased approximately 29% year-over-year, driven by higher activity levels and stronger pricing dynamics associated with the waste streams processed.
Treatment Backlog Increased by approximately 51% year-over-year to approximately $1.9 million in revenue, reflecting increasing demand for specialized treatment capabilities.
International Revenue Revenue from foreign entities increased approximately 163% year-over-year to approximately $6.4 million, reflecting growing global demand for specialized waste treatment services.
Fourth Quarter Revenue Revenue was $15.7 million, a 6.9% increase year-over-year from $14.7 million in the fourth quarter of 2024. The increase was driven by a $2.6 million rise in the Treatment segment, offset by a $1.6 million decline in the Services segment.
Gross Profit (Fourth Quarter) Gross profit was $1.2 million, up from $594,000 in Q4 2024. The increase was driven by higher revenue in the Treatment segment, offset by higher labor and maintenance expenses.
Gross Profit (Full Year) Gross profit increased by $6 million year-over-year, primarily driven by higher revenue and improved margins in the Treatment segment, partially offset by increased fixed costs at the plants.
SG&A Costs (Fourth Quarter) SG&A costs were $4.2 million, up from $3.9 million in Q4 2024, due to higher marketing costs related to payroll and trade shows, as well as increased administrative expenses.
SG&A Costs (Full Year) SG&A costs were $16.4 million, up from $14.4 million in 2024, driven by higher payroll expenses in both marketing and administration, as well as increased trade show and legal expenses.
Net Loss (Fourth Quarter) Net loss was $5.7 million, compared to $3.5 million in Q4 2024. The current year results included a $2.7 million adjustment related to a long-term remediation cleanup.
Net Loss (Full Year) Net loss was $13.8 million, compared to $20 million in 2024. The 2025 results included a $2.7 million adjustment for remediation reserve, while 2024 included an $8.2 million income tax expense related to a valuation allowance.
EBITDA (Fourth Quarter) EBITDA loss was $2.7 million, compared to a loss of $3 million in Q4 2024.
EBITDA (Full Year) EBITDA loss was $9.7 million, compared to a loss of $13.8 million in 2024.
Cash Balance Cash on the balance sheet was $11.8 million at year-end 2025, compared to $29 million at year-end 2024.
Waste Treatment Backlog Backlog increased to $11.9 million at year-end 2025, compared to $7.9 million in 2024, reflecting higher demand for treatment services.
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Operating Highlights
PFAS Destruction Technology: Completed construction and installation of the new generation 2.0 PFAS Destruction System at Oak Ridge facility, increasing destruction capacity by up to 3x. Secured several field projects supporting PFAS remediation at regional airports.
International Revenue Growth: Revenue from foreign entities increased by 163% year-over-year to $6.4 million, reflecting growing global demand for specialized waste treatment services.
Treatment Segment Revenue: Increased by 29% year-over-year due to higher waste volumes, improved plant throughput, and stronger waste mix. Backlog increased by 51% to $1.9 million.
Perma-Fix Northwest Facility Expansion: Permit renewal tripled liquid processing capacity to 1.2 million gallons annually and authorized treatment of 175,000 tons of waste through macro encapsulation.
Hanford Cleanup Mission: Positioned to support DOE's Hanford cleanup mission with specialized treatment capabilities. Investments in automation, infrastructure, and workforce expansion to handle increased waste volumes.
Grouting Program Development: DOE plans to treat up to 200 million gallons of waste by 2040, with Perma-Fix Northwest positioned to support this effort starting in 2026.
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Risk or Challenges
Timing of Government Programs: Delays in the timing of certain government programs affected activity levels during the year, impacting revenue and operational planning.
DFLAW Program Delays: The Department of Energy's (DOE) need to extend the DFLAW hot commissioning phase has caused delays in waste receipts, shifting expected revenues and impacting operational timelines.
Seasonal Weakness: Normal seasonal weaknesses in field activity during January and February have contributed to softer performance in the first quarter.
Stored Waste Processing: Efforts to process stored waste and prepare resources for increased activity have resulted in timing-related shifts in revenue recognition, impacting financial results.
Services Segment Revenue Decline: The Services segment experienced a decline in revenue due to lower project mobilizations and delays in procurement cycles, affecting overall financial performance.
Increased Costs: Higher labor, maintenance, marketing, and legal expenses have increased SG&A costs, impacting profitability.
Regulatory and Operational Dependencies: The pace of ramp-up for the DFLAW program and other DOE-related activities is dependent on DOE execution and site operating conditions, introducing uncertainty.
International Market Risks: While international markets present growth opportunities, they also carry risks related to project execution and market dynamics.
PFAS Technology Development: The development and commercialization of PFAS destruction technology require significant investment and carry risks related to adoption and competition.
Discontinued Operations Liability: An adjustment of $2.7 million to the remediation reserve for discontinued operations has negatively impacted financial results.
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Guidance & Outlook
Hanford Cleanup Mission: Perma-Fix is preparing for increased waste volumes as the Direct Feed Low-Activity Waste (DFLAW) program transitions into its operational phase. Waste is expected to be received through the DFLAW liquid waste treatment processes beginning in May 2025, with dry waste expected in April 2025. The DFLAW system is expected to ramp progressively through hot commissioning, reaching 40% capacity within 12-18 months and 80% capacity within three years.
Revenue Projections: Initial estimates regarding revenue potentials from the DFLAW program remain at about $1 million to $2 million per month beginning in Q2 2025 and ramping up through the year.
Grouting Program: The Department of Energy (DOE) plans to implement a grouting program to supplement the DFLAW program, aiming to treat up to 200 million gallons of waste by 2040. This program is expected to begin in 2026, with Perma-Fix Northwest positioned to support this effort.
PFAS Destruction Technology: Perma-Fix is advancing its PFAS destruction technology, with a new generation 2.0 system expected to increase destruction capacity by up to 3x. The company anticipates growing demand for this technology in both government and commercial markets.
International Growth: Perma-Fix sees expanding opportunities in international markets, particularly in Canada, with a growing pipeline of potential treatment projects.
Services Segment Opportunities: The company expects increased activity in nuclear services, decommissioning work, and government remediation programs, with over $30 million in new Services backlog and $40 million in new bids submitted in Q1 2025.
Long-Term Hanford Opportunity: The Hanford tank contractor issued an RFP for the retrieval of 22 tanks over the next 12 years, with Perma-Fix Northwest well-positioned to support this effort. This opportunity is expected to begin in January 2028.
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Shareholder Return Plan
The selected topic was not discussed during the call.
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Key Q&A
Q:Can you give us a better sense of what you're referring to regarding Q2 performance?
A:Mark Duff explained that Q2 performance is expected to improve due to several factors: a strong backlog of projects in the Services Group, new contract awards, mobilization of new projects, and sustainable waste streams. He also mentioned specific projects like the Northwest surface water waste treatment and DFLAW blowdown water treatment, which are expected to generate significant revenue.
Q:Can you comment about the grouting plans for the 200 East and 200 West areas at Hanford?
A:Mark Duff clarified that the 200 West area will focus on high-volume grouting due to the lack of infrastructure for DFLAW, with a $4 billion estimated value project. The 200 East area may also start grouting waste as a supplemental measure. Both initiatives present significant backlog opportunities for the company.
Q:In terms of PFAS volume and capacity, where are we headed?
A:Mark Duff stated that the new PFAS treatment system, delayed due to supply chain issues, is expected to start testing in late April or early May. Once operational, it will increase capacity to 3,000 gallons per day. The company aims to undercut incineration costs and is focusing on securing larger volumes of waste.
Q:Can you speak to the visibility into the DFLAW waste stream starting and its timeline?
A:Mark Duff mentioned that DOE has not been transparent about DFLAW operations, making it difficult to project waste volumes. However, blowdown water is expected to start in May, ramping up to 10,000 gallons a month initially. The company anticipates $1 million to $2 million in monthly revenue by mid-Q2.
Q:How are you thinking about international volumes and opportunities for 2026 and beyond?
A:Mark Duff highlighted ongoing projects in Canada, Mexico, Germany, and Italy. While 2025 revenue levels may be 25%-30% lower than last year, international waste volumes are expected to ramp up in Q4 and contribute significantly in 2027.
Q:How are you preparing to handle increased volumes at Hanford with the expanded capacity?
A:Mark Duff explained that the company has submitted a permit modification to increase liquid treatment capacity from 1.2 million to 4.2 million gallons annually. Investments to support this expansion will begin in the second half of the year.
Q:Can you talk about cash flow expectations and CapEx investments for 2026?
A:Ben Naccarato stated that the company is comfortable with its current balance sheet and will evaluate capital needs as opportunities arise. No specific cash flow or CapEx details were provided.
Q:Is the original PFAS unit operating commercially while the second unit is being built?
A:Mark Duff confirmed that the original PFAS unit is operational, treating about 650 gallons per day, four days a week. The second unit, costing $4-$5 million, will increase capacity to 3,000 gallons per day.
Q:What is the pricing range for PFAS treatment and the associated operating profit margin?
A:Mark Duff stated that pricing ranges from $10-$15 per gallon for larger volumes and over $30 per gallon for smaller quantities. Operating profit margins are targeted at 60%-70%, consistent with other waste treatment margins.
Q:Review of Unclear Management Responses
A:Management appeared to avoid giving a direct answer regarding the visibility into DFLAW waste stream operations and volumes. Mark Duff mentioned that DOE has not been transparent about the operations, making it difficult to project waste volumes and timelines accurately.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Canada market
DFLAW program
DOE program
Duff
Hanford site
Hanford tank
Hanford waste
Northwest facility
PFAS destruction
PFAS remediation
Perma Fix
RFP
Waste
activity level
advantage
airport
capability
compound
cycle
delay receipt
emission
facility upgrade
facility waste
gallon waste
grouting
investment automation
liquid
need
opportunity front
phase
processing
program remediation
project mobilization
rate
remediation effort
remediation program
shift
timing government
treatment activity
treatment demand
volume treatment
workforce
PESI Transcript
Perma-Fix Environmental Services, Inc. (PESI) Q4 2025 Earnings Call Transcript
Positive3-24
The earnings call reveals a mixed but overall positive sentiment. Despite increased SG&A costs and net losses, the company shows improvement in backlog, EBITDA, and international opportunities. The Q&A highlights strong project pipelines, potential revenue growth, and strategic expansions, particularly in waste treatment. Concerns exist around cash balance and DOE transparency, but optimistic guidance and strategic initiatives outweigh these. With a market cap not provided, the lack of specific financial guidance and reduced cash reserves are noted. However, the potential for significant backlog revenue and international growth suggests a positive stock movement.
Perma-Fix Environmental Services, Inc. (PESI) Q3 2025 Earnings Call Transcript
Unknown11-10
The earnings call summary presents a mixed outlook. Financial performance and shareholder returns show improvement, but the guidance lacks clarity, especially regarding margins and partnerships. Q&A insights reveal uncertainties in PFAS progress and waste treatment margins, balanced by strong backlog and potential contracts. No clear catalyst for a strong price movement is evident, leading to a neutral sentiment.
Perma-Fix Environmental Services, Inc. (PESI) Q2 2025 Earnings Call Transcript
Positive8-8
The earnings call highlights a significant improvement in gross profit and a reduced net loss, indicating better financial performance. The increase in waste backlog and the anticipated start of the Hanford project provide strong growth prospects. Despite challenges in the Services segment and regulatory delays, the company's strategic initiatives, such as the PFAS program and Gen II deployment, are promising. The Q&A session reflects confidence in overcoming operational hurdles. Overall, the positive financial trajectory and growth initiatives suggest a positive stock price movement.
Perma-Fix Environmental Services, Inc. (PESI) Q1 2025 Earnings Call Transcript
Unknown5-11
The earnings call presents a mixed picture: modest revenue growth and improved gross profit are overshadowed by consistent net losses and negative EBITDA. The Q&A reveals potential in waste receipts and PFAS technology, but management's vague responses on margins and project timelines raise concerns. The absence of a share repurchase program and international expansion risks further balance the outlook. Overall, the stock is likely to remain stable, with no strong catalysts for significant movement.
PESI Report
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