Perma-Fix Environmental Services on Tuesday announced a steep acceleration in both operating and net loss for the first quarter of 2016.
Net loss attributable to common stockholders rose from $2.1 million ($0.18 per share) in first-quarter 2015 to $3.8 million ($0.33 per share) this year, while the operating loss jumped from $1.8 million to $3.6 million.
The trouble straddled both business segments of the Atlanta-based nuclear services and waste management specialist, the company said. Overall revenue was down 26.2%, from $13.6 million to $10 million, year over year; that encompassed a fall from $9.7 million to $7.2 million in the treatment segment and a revenue drop from $3.9 million to $2.8 million for the services segment.
“The decrease in revenue was the result of the shortfalls … in both of our operating segments,” Perma-Fix Chief Financial Officer Ben Naccarato said during the company’s earnings conference call. “Timing delays of waste shipments in the treatment segment resulted in both lower volume at our waste treatment facilities, as well as the lower average price related to revenue mix. Revenue from the services segment was impacted by the completion of certain large contracts and the delay in the start-up of the new projects.”
Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) landed at a loss of $2.3 million, compared to a $441,000 loss in the same quarter of 2015.
However, executives expressed optimism about the rest of the year. Perma-Fix anticipates a surge in waste treatment sales starting in the current quarter and through 2016, CEO Lou Centofanti said. The business offers various services for government and private entities, including treatment of low-level radioactive waste. Earnings results should strengthen in the last half of 2016 to provide a strong year overall, he said.
Perma-Fix is also part of a team that has received a maximum $8.6 million indefinite-delivery, indefinite-quantity contract from the Department of Energy to demonstrate high-level waste treatment in 2016. Of that amount, $1 million to $2 million will go to Perma-Fix to conduct the actually treatment, which is already underway, executives said. “We believe this demonstration opens the door to a significant market opportunity, much larger than our traditional-level waste market,” Centofanti said.
The demonstration would involve about 50 gallons of waste, of a potential market covering 50 million to 100 million gallons of high-level waste, Centofanti said. He specifically cited material in storage at the DOE’s Hanford Site in Washington state and Savannah River Site in South Carolina.
“We have the technologies and experience after all these years of treating radioactive waste and also we have the facilities that are extremely capable and licensed and permitted that could do it,” Centofanti said. “So, you have a very unique combination of technology, expertise, experience, and facilities that don’t exist [in] other places.”
He was similarly upbeat about the nuclear services business, which offers decontamination, decommissioning, and demolition for nuclear and radiological facilities, as well as environmental remediation. While first-quarter revenue was down due to completion of a large project in December, as well as other projects that were slow to develop, that is turning around, according to Centofanti. He cited Perma-Fix’s participation in a team that has received a $240 million five-year deal for environmental cleanup at a number of U.S. Navy sites.
Perma-Fix anticipates its full-year adjusted EBITDA to exceed the $7 million from 2015, Centofanti said. If it can hit that mark, the company should turn a profit in 2016, he added.
The company’s majority-owned subsidiary, Perma-Fix Medical S.A., is making progress in development of a new method of manufacturing the medical isotope technetium-99, according to the CEO. Research and development costs associated with Perma-Fix’s medical isotope project were up to $438,000 in first-quarter 2016 from $395,000 in the same period of 2015.” We’re in active discussions with a number of potential partners, distributors, customers, and look forward to providing additional updates in the very near future,” Centofanti said.
Management is studying whether to have Perma-Fix Medical go public on the NASDAQ in 2016, he confirmed.
