PermaFix Environmental Services Inc. Reports Operating Results (10-Q)
Permafix Environmental Services Inc. has a market cap of $86.2 million; its shares were traded at around $1.54 with a P/E ratio of 8.3 and P/S ratio of 0.9. PESI is in the portfolios of Jim Simons of Renaissance Technologies LLC, Steven Cohen of SAC Capital Advisors.
Highlight of Business Operations:The third quarter of 2010 reflected a revenue decrease of $1,446,000 or 5.4% to $25,088,000 from revenue of $26,534,000 for the same period of 2009. Within our Nuclear Segment, we generated revenue of $22,283,000 in the third quarter of 2010, a decrease of $1,235,000 or 5.3% from the corresponding period of 2009. Revenue generated from the subcontract awarded to our M&EC subsidiary by CH Plateau Remediation Company (“CHPRC”), for facility operations and waste management activities for the DOE Hanford Site, increased approximately $2,066,000 in the quarter primarily due to increased headcount under this subcontract. This subcontract has a base period from October 1, 2008 through September 30, 2013 and an option period from October 1, 2013 through September 30, 2018. Revenue from the remaining Nuclear Segment decreased $3,301,000 as a result of reduced volume and lower average priced waste. Our Industrial Segment generated $2,224,000 in revenue in the third quarter of 2010, as compared to $2,128,000 for the corresponding period of 2009, or 4.5% increase. The increase was primarily the result of higher revenue from used oil sales due to higher average price per gallon. Revenue from the Engineering Segment decreased $307,000 or 34.6% to $581,000 from $888,000 for the same period of 2009.
The third quarter 2010 gross profit decreased $4,398,000 or 60.5% from the corresponding period of 2009 primarily due to reduced revenue and revenue mix. The gross profit for the third quarter 2009 within our Nuclear Segment, included a reduction of approximately $787,000 in disposal/transportation costs resulting from a change in estimate related to accrued costs to dispose of legacy waste that were assumed as part of the acquisition of our PFNWR facility in June 2007.
SG&A for the third quarter of 2010 decreased by 0.7% to $3,876,000 from $3,903,000, in the corresponding period of 2009.
We had a net loss from continuing operations of $1,103,000 for the third quarter of 2010, as compared to net income of $2,634,000 for the third quarter of 2009.
Our working capital was $177,000 (which includes working capital of our discontinued operations) as of September 30, 2010, as compared to a working capital of $1,490,000 as of December 31, 2009. Our working capital was impacted by cash collection from the reduction in trade receivables and current unbilled used to pay our finite risk obligations and our revolver which are both classified as long term. Our working capital was also impacted by the increase in our current debt and accounts payable.
During October 2010, our Board of Directors authorized us to attempt to sell the Company s remaining Industrial Segment facilities and operations consisting of Perma-Fix of Ft. Lauderdale, Inc. (“PFFL”), Perma-Fix of Orlando, Inc. (“PFO”) and Perma-Fix of South Georgia, Inc. (“PFSG”) and to reclassify these operations as “discontinued operations.” For the year 2009 and first nine months of 2010 ending September 30, 2010, these remaining operations within our Industrial Segment accounted for $8,283,000 or 8.2% and $6,766,000 or 8.6%, respectively, of our consolidated net revenues. These three operating facilities had net loss of $450,000 and net loss of $1,246,000, for the year 2009 and the nine months ended September 30, 2010, respectively. We have entered into letters of intent to sell the stock or assets of PFFL and PFO. Both of the letters of intent are subject to numerous conditions, including, but not limited to, completion of due diligence by the buyer and negotiation and execution of definitive agreements. If the transaction relating to PFFL is completed, the letter of intent provides that the buyer will pay us $6,000,000, subject to certain adjustments. If the transaction relating to PFO is completed, the letter of intent provides that the buyer will pay us $2,000,000, subject to certain adjustments.
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