Looking to rebound from a disappointing first quarter, Perma-Fix Environmental Services is moving forward with a suite of cost-cutting measures that could include employee layoffs. Perma-Fix President and CEO Louis F. Centofanti outlined the plan in a message to employees late last week, obtained by WC Monitor. "The current environment has impacted our customers and has resulted in a short term impact on both our revenue early in the year and potentially on our projected revenue. In anticipation of continued uncertainty, we are implementing several cost cutting initiatives some of which are simply good business practices while others are preemptive until our financial performance is assured," Centofanti wrote, adding, "The Perma-Fix management team is devoted to our family of employees and is taking every action to minimize the impact on our employees but regrettably we must also consider a small reduction in our force at this time." In a statement yesterday in response to questions about the cost-cutting plan, Perma-Fix Chief Operating Officer James Blankenhorn suggested that the integration of recently acquired Safety and Ecology Corporation will be the primary driver for any layoffs. “Layoffs, if there are any, are related to right-sizing the organization as part of finalizing integration and are consistent with sound business practices and positioning Perma-Fix for the future,” Blankenhorn said. “Right-sizing the organization is just one option being considered in a suite of sound cost-cutting initiatives aimed at improving and sustaining the company’s financial status.”
Among the other cost-cutting measures Perma-Fix plans to implement is a freeze on hiring, salaries and capital spending, as well as a suspension of matching contributions to employees’ 401(k) programs. In addition, bonus and incentive programs will continue to be suspended "pending an external compensation review and will be based on the financial performance of the company at the end of the year," Centofanti wrote. He also said that such cost-cutting measures are likely to remain in effect through the end of 2012. The message wasn’t all doom-and-gloom for Perma-Fix employees, though. "On a positive note, our projections for new business opportunities is very good and we look forward to lifting a number of the cost restrictions and being in a position to increase staffing in the near future," Centofanti wrote.
Perma-Fix’s new cost-cutting plan comes after reporting disappointing financial results for the first quarter of 2012 due, in part, to the drag from the company’s acquisition of Safety & Ecology Corp. in 2010. In his statement yesterday, Blankenhorn said: "While we continue to make progress, the economic recovery in the United States has been slow and our industry has responded accordingly. Perma-Fix continues to execute the multi-faceted elements of its strategy for growth which includes investing in key business enablers, establishment and implementation of tools and process to analyze our markets and develop both tactical and strategic capture plans, expansion of our markets to diversify our customer base, continuous improvement of our technologies and services and closely controlling costs and implementing the kinds of business practices and fiscal responsibility expected of a company our size. This is a continuous process that includes strong leadership, appropriate checks and balances, organizational right-sizing and management controls."