Perma-Fix Environmental Services on Tuesday reported a 112.3% increase in revenue for the first quarter of 2020, even as the COVID-19 pandemic began to bite into its business.
Sales rose from $11.7 million in the first quarter of 2019 to $24.9 million in the three-month period ending March 31 of this year, according to a press release from the Atlanta-based waste treatment provider.
Quarterly Services revenue skyrocketed 748% on a year-over-year basis, from $1.8 million in 2019 to $15.3 million in 2020. Management attributed the boost to a number of contracts and task orders the company won beginning in early 2019, “resulting from the success of our implemented strategic plan in winning contract bids.”
Revenue in Perma-Fix’s Treatment business drooped slightly, from $9.9 million in first-quarter 2019 to $9.6 million this year. That was largely due to lower waste volumes for treatment, according to the press release.
In total, the latest numbers were good for $1.2 million in first-quarter net income, or $0.10 per share, a significant improvement from a net loss of $672,000, $0.06 per share, in 2019.
Perma-Fix operates three facilities for treatment of low-level and other radioactive waste types, in Florida, Tennessee, and Washington. It provides a broad swath of other environmental services, including remediation and decommissioning of nuclear facilities.
Like many companies, Perma-Fix felt the impact of the COVID-19 health crisis toward the end of the first quarter, as projects were suspended and the number of waste shipments dropped.
“Our Nuclear Services segment began demobilization activities in mid- to late-March and saw a decline in waste receipts from clients at the same time. This resulted in immediate temporary layoffs of workforce for many project personnel along with maximum application of work-from-home policies,” President and CEO Mark Duff said during the company’s quarterly earnings call Tuesday. “This impact was continued – or has continued through the month of April, but we are beginning to realize mobilization on several projects over the next few weeks as field crews are being reactivated to support our field projects.”
Perma-Fix employs nearly 350 people. Roughly 50 U.S. workers were temporarily furloughed in March, but have been recalled after Perma-Fix secured a $5.7 million bank loan under the Paycheck Protection Program component of the federal CARES Act that allowed it to pay those personnel. The employees all worked in the Nuclear Services business – Duff indicated 50 workers had been demobilized in Seattle, but a Perma-Fix spokesman later Tuesday said the company could not discuss further details of its contracts.
Perma-Fix has taken over cleanup of a University of Washington hospital research facility in Seattle that was contaminated by a cesium-137 spill during International Isotopes’ May 2019 removal of a blood irradiator under contract to the National Nuclear Security Administration.
Another 10 to 15 Perma-Fix workers were furloughed in Canada and have not to date been brought back.
No employees are known to have contracted COVID-19, according to the Tuesday release.
A significant amount of Perma-Fix’s project work can be performed remotely, Duff said. New projects duing the quarter required document preparation, training, and other activities that had already been planned from March to May, he said.
A backlog of waste also ensured the three waste treatment plants stayed open, according to Duff, though there was less work for the Florida operation. Shipments are hoped to restart in June to bolster third-quarter earnings.
The company’s Nuclear Services backlog for the quarter was over $55 million, with up to $30 million in bids outstanding.
Responding to a question from a financial analyst, Duff said he could not forecast whether Perma-Fix would stay in the black for the second quarter.
“As we approach the mid-quarter point for the second quarter, we’ve been fortunate that we continue to secure new contracts that will support a similar growth trajectory through 2020, assuming the COVID-19 pandemic begins to subside by the end of May,” he said.
Hanford Test Bed Initiative
Perma-Fix was the Department of Energy’s contractor for a three-phase trial for an alternative means for processing some of the low-activity radioactive waste stored at the Hanford Site in Washington state.
Roughly 56 million gallons of radioactive and chemical waste is held in underground tanks, the byproduct of decades of plutonium production at Hanford for the U.S. nuclear arsenal. About 90% of that is believed to be low-activity waste, more than can be handled by the under-construction Waste Treatment Plant that will convert the material into a glass form for disposal.
The Test Bed Initiative involved using a concrete-like grout to immobilize the waste at Perma-Fix’s facility in Richland, Wash., near Hanford. It would then be shipped for disposal at the Waste Control Specialists’ facility in Andrews County, Texas.
A first phase involving 3 gallons was completed in December 2017, and planning for a second phase involving 2,000 gallons started in July 2018.
The Energy Department’s Office of Environmental Management spent roughly $4.8 million on the program from fiscal 2016 to 2018, then suspended the Test Bed Initiative last July, the Government Accountability Office said in a report this week.”Specifically, EM withdrew the permit for phase 2 of the Test Bed Initiative, citing a May 2019 letter from [the Washington state Department of] Ecology as the reason for suspending the project,” according to a footnote in the report. However, in a response letter, Ecology noted that nothing in the original letter mentioned the initiative, and in fact Ecology had been moving forward to process the Test Bed Initiative permit to meet EM timelines.”
House and Senate Appropriations committees backed spending up to $10 million on the project for the curent fiscal 2020, the GAO noted.
During the conference call, Duff appeared to suggest the Test Bed Initiative might live on under the new Hanford Tank Closure Contract, which the Energy Department on Thursday said had been awarded to a joint venture led by BWX Technologies.
“Primarily, the scope of work for the tank closure contract is to operate the tank farms and to provide tank waste for … the treatment side of the house when it becomes available,” Duff told one analyst. “The TBI component of that, which is well defined in the scope, which is a Test Bed Initiative, addresses supplemental waste treatment, of which the TBI is an alternative. That is in the scope of the contract, as you mentioned, as well.”
Perma-Fix did not respond by deadline to a request for clarification on Duff’s comments. BWXT deferred comment on the tank contract to the Energy Department, which also did not respond by deadline.
Perma-Sort
On Monday, Perma-Fix also announced that it had secured two contracts worth $3.7 million from the Department of Defense for use of its Perma-Sort radiological material segregation technology.
The mobile system is a “customized, conveyor-based radiological assay system designed to provide 100% characterization of material,” according to a company press release. Its sorting mechanism would lower the amount of contaminated soils that would have to be disposed of in a radioactive waste landfill, reducing costs for clients.
The Pentagon contracts involve separation of more than 100,000 tons of soil, debris, and dredged materials in San Diego, starting this week. The work is expected to be completed by the middle of this year.
“We cannot discuss the project in detail, however, regarding the Perma-Sort process, we are characterizing and sorting soils to include managing the contaminated material as determined by the system which will likely go to direct disposal, and the non-contaminated material can be used as fill or returned by the client,” company spokesman David Waldman said by email Thursday.
Duff said the company, for now, would focus on operating the system rather than selling the technology to third-party operators.
