Perma-fix Environmental Services ((PESI)) has held its Q1 earnings call. Read on for the main highlights of the call.
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The recent earnings call for Perma-fix Environmental Services presented a balanced sentiment, highlighting both positive developments and ongoing challenges. The company reported an increased backlog and improvements in gross profit, alongside advancements in their PFAS program. However, these positive notes were tempered by delays in federal procurement and higher SG&A costs, resulting in a consistent net loss and ongoing financial challenges.
Increased Waste Treatment Backlog
The company’s waste treatment backlog saw a significant increase, growing to more than $10 million by the end of the quarter, marking a 30% rise from 2024. This growth indicates a strong demand for Perma-fix’s services and a positive outlook for future revenues.
Improvement in Gross Profit
Perma-fix reported a substantial improvement in gross profit, achieving $657,000 for the quarter compared to a gross loss of $620,000 in the first quarter of 2024. This turnaround highlights the company’s successful efforts in enhancing operational efficiencies and cost management.
PFAS Program Progress
The PFAS program made notable progress, receiving its first commercial shipments from the federal government. The program also implemented upgrades to reduce costs and improve efficiencies, with the Generation 2 unit on track for deployment in Q4, expected to expand processing capacity by at least three times.
International Expansion
Perma-fix’s international activities improved, with $7 million worth of waste received from Canada, Mexico, and Germany over the past two months. This expansion underscores the company’s growing global footprint and potential for increased international revenue streams.
Positive Financial Indicators
The company experienced a slight increase in total revenue for the quarter, up by 2.2% year-over-year. Additionally, EBITDA from continuing operations improved from a negative $4 million to a negative $3.3 million, indicating a gradual recovery in financial performance.
Delays in Federal Procurement
Revenue in the Services segment faced a slight decline due to delays in federal procurement activity, particularly in early-stage projects. These delays have impacted the company’s ability to fully capitalize on its service offerings.
Higher SG&A Costs
SG&A costs for the quarter increased by $471,000 compared to the previous year, totaling $4 million. The rise in costs was attributed to higher labor expenses and legal fees, posing a challenge to the company’s cost management efforts.
Net Loss Consistent with Previous Year
The net loss for the quarter remained consistent at $3.6 million, mirroring the previous year’s loss. This consistency highlights the ongoing financial challenges faced by Perma-fix, despite improvements in other areas.
Forward-Looking Guidance
Looking ahead, Perma-fix remains optimistic about its future performance. The company anticipates stronger results in the latter half of 2025, driven by a modest increase in revenue and significant improvements in gross margins. The PFAS program’s advancements and international expansion are expected to contribute positively, while the company focuses on maintaining flexibility in cost management and supporting large project opportunities.
In summary, Perma-fix Environmental Services’ earnings call reflected a mix of positive developments and persistent challenges. While the company has made strides in increasing its backlog, improving gross profit, and advancing its PFAS program, it continues to face hurdles such as federal procurement delays and higher SG&A costs. The consistent net loss underscores the financial challenges that remain, but the forward-looking guidance offers a hopeful outlook for the future.