Company Says It Expects Better Results Going Forward This Year
Jeremy L. Dillon
RW Monitor
5/9/2014
Although Perma-Fix Environmental Services had warned that its 2014 first quarter results would be down, it appears the company achieved even lower financial performance than anticipated, according to information released this week. Perma-Fix suffered a loss from continuing operations of $3.7 million, compared to the $2.9 million operating loss suffered in the same period in 2013, while revenue for the first quarter of 2014 was $10.5 million versus $19.8 million for the same period last year. “We were not expecting it to be as bad as it was, but it’s all starting to turn around rapidly,” Perma-Fix Chairman and CEO Lou Centofanti said during a call with investors. Perma-Fix’s Chief Financial Officer Ben Naccarato added during the call: “The revenue was a lot lower than we would expect and when Lou talks about a bounce back we hope that it’s going to be significant. To do $10 million in a quarter is very low, and as you know we have certain fixed costs we can’t overcome. … But we think with normal revenues getting back to the normal stream and the cost reductions we put in place, we can get back to the kind of margins we usually look at, especially on the treatment side, and the service side is showing improvements in their margins as well.”
Perma-Fix has experienced financial difficulties stretching back over much of last year, and the company warned in a filing with the Securities and Exchange Commission last month that its future could be at risk. But while the company is still suffering, Perma-Fix indicated this week that the second and third quarters would show improvement, with a possibility of positive earnings. Much of the improvement lies in potential Department of Energy contracts. “Improvements in the second quarter have been significant, and we expect further improvements in the third quarter, which is the government’s end of fiscal year,” Centofanti said. “In the past when budgets have been delayed, we have seen the DOE rush to spend its allocation before year end or risk reduce funding in subsequent years. This impact is most visible on the waste treatment side, but even the service side we are now seeing preliminary notifications on contract awards that were previously delayed.”
Centofanti also indicated that more contracts would be announced in the coming months. “As time progresses, you will continue to see a steady stream of new contracts coming out that we have been awarded,” Centofanti said. “We are bidding on a number of very sizable projects both domestically and internationally, and we look forward to announcing these contracts in the near future.”
Perma-Fix Wins New Work at Los Alamos
Two weeks ago, Perma-Fix announced that its subsidiary Perma-Fix Environmental Services UK received a contract worth $2.2 million to dispose of mercury streams from a site in Scotland. This week, Perma-Fix announced has been awarded a new task order with a maximum ceiling value of $1.2 million to provide waste treatment and disposal services in support of the Los Alamos National Laboratory. The task order calls for the processing of 50,000 to 100,000 gallons annually of radioactive liquid waste material. This task order stems from Perma-Fix’s involvement with Portage, Inc.’s winning proposal under a $250 million Master Task Order Agreement that called for the transportation, recycling, treatment and/or disposal for radioactive and hazardous wastes generated from clean-up and on-going operations at LANL.
Tc-99m Attracting Financing
Elsewhere within Perma-Fix, the company highlighted its progress in attracting financing for its technology to produce Technetium-99m (Tc-99m) from Molybdenum-99 (Mo-99). Perma-Fix formed the subsidiary Perma-Fix Medical Corporation in February as a means to attract financing to move the project through the regulation process. Centofanti said that interest is growing within the industry. “We have witnessed a growing interest in our technology from within the industry, and we are in active discussions with several major players in terms of developing strategic partnerships,” Centofanti said.
Movement with this subsidiary is starting to begin on the European side of the equation, according to the company’s most recent filing with the SEC. Perma-Fix intends to offer up to $3 million in common stock in the company in an effort to raise financing to get the technology through the regulatory licensing process. Previously, Perma-Fix Medical Corporation had reportedly entered into a financial deal in March to conduct a reverse takeover of a Polish firm. According to reports from Reuters, CEE Opportunity Partners Poland SA reached an agreement to purchase 100 percent of Perma-Fix Medical Corp. for 10 million Polish zlotys or approximately $3.3 million. Perma-Fix Environmental Services then reached a “conditional agreement” to purchase an 80 percent stake CEE Opportunity Partners Poland SA’s “share capital,” Reuters reported.
In its filing this week, Perma-Fix said, “We intend to have the Polish subsidiary, or its successor, subject to market and other conditions, to offer up to $3,000,000 of its Common Stock for sale in a private placement outside the United States pursuant to Regulation S under the Securities Act of 1933, as amended (“the Securities Act”) and to certain accredited investors in the United States pursuant to Rule 506 of Regulation D under the Securities Act.” The filing also stated, “The Polish subsidiary intends to use the proceeds, if any, of this private placement, to produce and market the technology relating to Tc-99m which we licensed to PFMedical and for general working capital needs. The Company may also offer, subject to market and other conditions and final approval of our Board of Directors, up to $3,000,000 in aggregate amount of our Common Stock for sale in a private placement to non-U.S. persons outside the United States pursuant to Regulation S under the Securities Act.”
