Perma-Fix Environmental Services Q2 Earnings Call Highlights

Perma-Fix Environmental Services NASDAQ: PESI reported second-quarter results that fell below management’s expectations, as delayed processing of Hanford-related waste pushed associated revenue into the second half of the year. Revenue for the quarter was $12.9 million, down from $14.6 million a year earlier, while the company recorded a net loss of $6.2 million, or $0.32 per share. That compared with a net loss of $2.7 million, or $0.15 per share, in the prior-year quarter.

Processing Delays Weighed on Treatment Results Chief Financial Officer Ben Naccarato said treatment-segment revenue declined by about $3.1 million from the prior year, reflecting lower processing volumes, an unfavorable waste mix, higher variable costs and lower gross profit. According to Duff, the company received the Hanford-related waste streams it expected during the quarter, but a customer-directed change to treatment protocols delayed processing. The revisions were made to accommodate a change in disposal facilities, allowing Perma-Fix to receive waste for solidification but delaying processing and revenue recognition. The company had already added personnel and incurred operating expenses to handle the expected waste volumes, creating a mismatch between second-quarter costs and revenue expected later in the year. Duff said Perma-Fix expects to begin processing the delayed waste shortly and to be caught up by the end of the third quarter. Several new services projects also began later than anticipated, while the company processed lower-margin stored waste inventory that compressed treatment margins. Duff said that work is now substantially complete and has freed capacity ahead of anticipated tank-waste receipts. Despite the lower treatment revenue, new waste receipts increased by $4.1 million from the first quarter. Treatment backlog rose 29% sequentially to $15.7 million at June 30, from $12.2 million at March 31. Naccarato said the backlog represented an indicator of customer demand and future processing activity.

Hanford Subcontract Creates Long-Term Opportunity Management focused much of the call on a newly announced master subcontract related to tank-waste operations and closure work at the U.S. Department of Energy’s Hanford site. Hanford Tank Contractor H2C awarded master subcontracts to Perma-Fix Northwest and two other companies for grouting and disposal work supporti...