Release Date: August 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Perma-Fix Environmental Services Inc (PESI, Financial) is seeing improvement heading into the second half of 2024, with increasing revenues and productivity each month.
- The company is making progress on transformative initiatives, including large procurement opportunities with DOE, DOD, and EPA, which could significantly increase sustainable revenue for the next 5 to 10 years.
- Perma-Fix has achieved significant milestones by completing pivotal Department of Energy audits, essential for involvement in crucial projects like the cleanup efforts at Hanford and Oak Ridge Reservation.
- The company is advancing its PFAS technology, with the first commercial unit expected to be operational by Q4 2024, and has received PFAS liquid samples from over a dozen clients, including the federal government.
- Perma-Fix has a solid balance sheet with over $18.1 million in cash, providing sufficient resources to execute its growth strategy.
Negative Points
- Perma-Fix experienced a 44% decrease in total revenue in Q2 2024 compared to the previous year, primarily due to government delays and an equipment failure.
- The company reported a net loss of $4 million for the quarter, compared to a net income of $474,000 in the same quarter last year.
- An extended equipment failure at one of the facilities took nearly seven weeks to repair, impacting production and revenue.
- The services segment faced delays in the start-up of new projects and completion of two larger projects, leading to decreased revenue.
- The PFAS technology development incurred significant costs, with $600,000 to $700,000 spent in Q2 2024, impacting financial performance.
Q & A Highlights
Q: Can you provide details about the partnerships you have developed with PFAS?
A: Our partnering agreements are crucial for our PFAS strategy to quickly generate revenue and understand our technology's market fit. We have four types of agreements: with universities for grants and technology expansion, discussions with competitors for mutual benefits, collaborations with larger firms with extensive client bases, and partnerships with federal agencies to develop performance data for future larger volumes.
Q: Can you discuss the Hanford settlement agreement and its implications for Perma-Fix?
A: The Hanford settlement agreement involves operating both vitrification plants from 2025 through 2060, with Perma-Fix as a sole source for effluent handling. We provide rates to the TOC, currently WRPS, and expect to support the DFLAW effluent facility through 2060, as DOE has no other viable options for treatment.
Q: What is the status of the DFLAW facility and its impact on Perma-Fix?
A: DOE plans to complete hot commissioning of the DFLAW facility by August 2025. We anticipate initial waste generation during this process, with full operations expected to contribute $70-$80 million annually once both melters are operational. We are preparing our Richland plant to handle these volumes.
Q: Can you provide more details on the equipment failure and CapEx plans?
A: The RTO unit at our Florida facility failed, impacting revenue by $500,000-$700,000 in June. Repairs cost around $100,000. We plan to invest approximately $11 million in facility upgrades, including PFAS deployment and other systems, to support growth initiatives.
Q: What is the outlook for PFAS revenue and market potential?
A: We expect around $1 million in PFAS revenue for Q4 2024, with plans to increase throughput with a Gen 2 system by Q2 2025. The PFAS market shows strong demand, and we are considering licensing our technology post-2025 to address broader market needs.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
