Perma-Fix Environmental Services, Inc. (PESI) Q1 2026 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call reveals mixed signals. While there are promising opportunities in international markets, PFAS technology, and the Hanford project, the company faces challenges with increased net loss and reduced cash. The Q&A highlights uncertainties in grouting operations and regulatory timelines, while the enterprise contract remains unresolved. Despite these, the DFLAW program and international contracts offer growth potential. Overall, the sentiment is neutral due to balanced positive opportunities and negative financial health indicators.
Key Financial Performance
Revenue $11.1 million, down from $13.9 million in prior year, a decrease of $2.8 million year-over-year. The decline was primarily driven by lower volumes and timing of processing activity as the company focused on working through existing waste inventory and encountered delays in reaching certain key revenue milestones.
Treatment Segment Revenue Down $1.3 million compared to last year. This was mainly due to lower volumes and a less favorable waste mix, which more than offset some of the modest pricing improvements.
Service Segment Revenue Decreased $1.5 million year-over-year, largely due to fewer large projects contributing to revenue compared to prior year, partially offset by contributions from new smaller projects.
Gross Profit Declined $3.5 million compared to prior year. This reflects the impact of the lower revenue, higher variable costs in the Treatment Segment, and higher fixed plant costs as the company prepared for higher volume expected in the upcoming months. Project mix and lower revenue in the Service Segment also negatively impacted gross profit.
SG&A Expenses $4.3 million, up about $284,000 year-over-year, primarily due to higher labor expense, outside services, and marketing-related costs.
EBITDA from Continuing Operations Loss of $7 million compared to a loss of $3.3 million last year. The increase in loss reflects the impact of lower revenue and higher costs.
Net Loss $7.5 million versus $3.6 million loss in prior year, a loss per share of $0.40 compared to $0.19 last year.
Cash Ended the quarter at $6.7 million, down from prior year levels, reflecting operating cash usage and capital spending during the quarter.
Working Capital $5.9 million, down from prior year levels, reflecting operating cash usage and capital spending during the quarter.
Treatment Backlog Ended the quarter at $12.2 million, up slightly from $11.9 million at year-end and up from $10.2 million in the first quarter of 2025.
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Operating Highlights
PFAS Destruction Technology: Successfully completed a PFAS treatment project for Four Rivers Nuclear Partnership, treating 1,500 gallons of PFAS-contaminated liquids. Continued installation of Gen 2.0 unit at EWOC facility to expand treatment capacity by 2,000 gallons per shift.
Hanford Cleanup Mission: Perma-Fix Northwest began receiving ETF waste from Hanford in mid-April, expected to generate sustainable revenues of over $4 million per quarter. Expanded permit allows processing of 1.2 million gallons of liquid mixed waste annually and treatment of up to 175,000 tons of waste.
Lawrence Livermore National Security Site Project: Awarded a 2-year master task agreement valued at approximately $24 million for demolition and disposal at Lawrence Livermore Laboratory.
Facility and Workforce Preparation: Invested in personnel, training, facility improvements, and operational readiness to support higher production expectations starting Q2.
Treatment Backlog: Increased treatment backlog to $12.2 million, up from $11.9 million at year-end 2025.
Hanford Tank Grouting Opportunities: Positioned to support DOE's tank waste treatment objectives with expanded grouting capabilities for over 4 million gallons of tank waste annually.
USS Enterprise Decommissioning Project: Submitted proposal revision to support the decommissioning project for the Navy, reflecting alignment with large government remediation projects.
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Risk or Challenges
Seasonal Softness and Lower Waste Receipts: The company experienced seasonal softness and lower waste receipts, which negatively impacted financial results for the first quarter of 2026.
Timing of Revenue Milestones: Delays in achieving key revenue milestones affected financial performance.
Regulatory Document Extensions: Delays in regulatory document approvals impacted the start of certain waste streams, such as DFLAW-related dry waste and EMF effluent waste streams.
Supply Chain and Fabrication Delays: Supply chain and fabrication delays affected the installation of the Gen 2.0 PFAS treatment unit, delaying capacity expansion.
Higher Variable and Fixed Costs: Higher variable costs in the Treatment Segment and increased fixed plant costs due to preparation for higher volumes negatively impacted gross profit.
Lower Volumes and Unfavorable Waste Mix: Lower volumes and a less favorable waste mix in the Treatment Segment reduced revenue and profitability.
Fewer Large Projects in Service Segment: The Service Segment experienced a decline in revenue due to fewer large projects contributing compared to the prior year.
Dependence on Government Program Execution: The timing and pace of waste receipts and project mobilizations are dependent on government program execution, appropriations, and regulatory requirements, creating uncertainty.
Cash Flow and Working Capital Challenges: Operating cash usage and capital spending reduced cash and working capital levels, potentially impacting financial flexibility.
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Guidance & Outlook
Revenue Projections: Perma-Fix Northwest facility began receiving ETF waste from Hanford in mid-April, expected to support sustainable revenues of more than $4 million per quarter as the waste stream continues.
Growth Expectations: Q2 2026 is expected to be an inflection point with stronger revenue contributions as Hanford-related waste receipts and other customer activities increase. The company anticipates improved performance through the balance of 2026 and over the long term.
Market Trends and Opportunities: DOE Hanford cleanup mission represents a significant long-term opportunity with multiple waste streams and program phases. Perma-Fix Northwest is positioned to support DOE's tank waste treatment objectives over the next several years, including grouting opportunities for over 4 million gallons of tank waste annually.
Operational Changes: Investments in automation, facility upgrades, and workforce expansion are expected to enhance capacity and support increased volumes from Hanford and other DOE mission objectives.
PFAS Treatment Growth: The company is expanding its PFAS destruction platform, with additional treatment capacity expected from the Gen 2.0 unit at the EWOC facility. PFAS represents a long-term growth opportunity, with increasing regulatory and customer attention.
Service Segment Momentum: Renewed momentum in the Services Segment, including a $24 million demolition and disposal project at Lawrence Livermore Laboratory, with additional smaller projects expected to grow through the summer.
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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 provide an update on the incremental waste streams at Hanford, including ETF and DFLAW?
A:Mark Duff explained that there are four primary waste streams at Hanford: ETF, EMF, dry waste, and TRU waste. ETF is generating $1 million to $1.5 million per month in revenue and is expected to continue through Q3 and Q4. EMF waste is anticipated to generate $300,000 per month during high commissioning, increasing fourfold during operational phases. Dry waste is estimated to generate $100,000 per month, though volumes are uncertain. TRU waste capacity is being doubled with additional shifts and personnel training.
Q:Is the DFLAW opportunity still expected to generate $70 million-plus in revenue?
A:Mark Duff confirmed that DOE's estimate of $70 million-plus remains unchanged. EMF waste and other waste streams are generating more than anticipated. DOE is optimistic about DFLAW's performance despite some operational challenges, and Hanford remains a high priority for the administration.
Q:Can you provide an update on the grouting opportunities and their potential size?
A:Mark Duff discussed two grouting programs: the West side program, targeting 22 tanks by 2040 with a $4 billion contract, and the East side program, which is supplemental to DFLAW. The West side is expected to start receiving waste in January 2028, with a capacity of 3 million gallons per year, potentially expandable to 6 million. The East side may begin grouting 300,000 gallons within 12 months, pending regulatory approvals.
Q:What is the status of the enterprise contract and its potential size?
A:Mark Duff stated that the enterprise contract, valued between $500 million and $800 million, is under re-evaluation after a protest. Proposals were resubmitted in April, and an award is expected in June. Perma-Fix is a subcontractor with significant scope, contributing to decontamination and decommissioning efforts.
Q:What are the expected incremental margins for upcoming opportunities?
A:Mark Duff explained that margins at the Richland facility are designed to meet established targets. Services have lower margins, but aggressive bidding is applied where risks are low. Overall, margins for new technologies and waste treatment programs are expected to align with historical targets.
Q:What is the timeline and volume expectation for grouting on the East and West sides?
A:For the East side, 300,000 gallons may be grouted within 12 months, depending on DFLAW's progress. The West side aims for 3 million gallons per year starting January 2028, with potential expansion to 6 million gallons.
Q:What is the status of the European contracts and other international opportunities?
A:Mark Duff reported progress on a large Italian contract, with remediation of drums starting in April. Shipments to Perma-Fix Northwest are expected by Q1 2027, generating $6 million to $7 million annually. Waste is also being received from Mexico, Germany, and Canada.
Q:What is the company's involvement in rare earth refining and mining?
A:Perma-Fix is using soil sorting technology to segregate radioactive components at mining sites, concentrating source material and reducing waste. This is the company's first contract in the mining industry, with potential for broader applications.
Q:What is the status of PFAS-related opportunities?
A:Perma-Fix is working on replacing PFAS firefighting foam at airports, including a recent win in Arizona. The company is also collaborating with multiple partners to address PFAS contamination, though federal regulations are still pending.
Q:How has the energy situation impacted Perma-Fix?
A:Mark Duff highlighted opportunities in DOE's reindustrialization efforts, including accelerated cleanup at sites like Portsmouth, which is preparing for a 10-gigawatt natural gas facility. These initiatives are driving increased waste management needs.
Q:Review of Unclear Management Responses
A:Management avoided providing specific details on the efficiency improvements of the DFLAW process, the exact impact of the energy situation on Hanford's operations, and the potential revenue from the enterprise contract. Additionally, they did not clarify the timeline for federal PFAS regulations or the exact capacity expansion plans for grouting operations.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
DOE Hanford
DOE contractor
ETF waste
Hanford DOE
Hanford cleanup
Hanford site
Hanford tank
Hanford waste
Lawrence Livermore
Northwest facility
Nuclear
PFAS liquid
Services Segment
activity receipt
automation
capability
capacity Hanford
capacity Perma
cleanup activity
cleanup mission
decommissioning
decontamination
demolition
destruction technology
duration
government program
grouting opportunity
inflection point
investment year
milestone
mission addition
objective
opportunity Hanford
platform
preparation
proposal
shift
term opportunity
timing customer
treatment capacity
PESI Transcript
Perma-Fix Environmental Services, Inc. (PESI) Q1 2026 Earnings Call Transcript
Unknown5-7
The earnings call reveals mixed signals. While there are promising opportunities in international markets, PFAS technology, and the Hanford project, the company faces challenges with increased net loss and reduced cash. The Q&A highlights uncertainties in grouting operations and regulatory timelines, while the enterprise contract remains unresolved. Despite these, the DFLAW program and international contracts offer growth potential. Overall, the sentiment is neutral due to balanced positive opportunities and negative financial health indicators.
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.
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