Perma-Fix Environmental Services (PESI) Q4 2024 Earnings Call March 13, 2025 11:00 AM ET Company Participants David Waldman - Investor RelationsMark Duff - President & CEOBen Naccarato - CFO, Executive VP & SecretaryRoss Taylor - Partner and Portfolio ManagerBob Goodwin - Managing DirectorLouis Centofanti - Founder, Executive VP of Strategic Initiatives & Executive DirectorSteve Fine - Owner Conference Call Participants Aaron Spychalla - Research AnalystNone - Analyst Operator Greetings. Welcome to the Perm ...

Core Viewpoint - Perma-Fix Environmental Services, Inc. reported a significant decline in financial performance for the fourth quarter and full year of 2024, primarily due to project delays and lower waste volumes, but anticipates a return to growth and profitability in 2025 driven by improving waste volume receipts and strategic advancements in technology and services [2][3][7]. Financial Results - Fourth-quarter 2024 revenue was $14.7 million, down from $22.7 million in the same period of 2023, with a notable decrease in the Services Segment by approximately $6.6 million and in the Treatment Segment by approximately $1.4 million [3][4]. - Gross profit for the fourth quarter of 2024 was $594,000, a decrease from $4.3 million in the fourth quarter of 2023, with gross margin dropping to 14.7% from 21.3% [4][6]. - The operating loss for the fourth quarter of 2024 was approximately $3.6 million, compared to a loss of $9,000 in the fourth quarter of 2023 [5][10]. - The net loss for the fourth quarter of 2024 was approximately $3.5 million, contrasting with a net income of $81,000 in the fourth quarter of 2023, resulting in a loss per share of $0.22 [6][11]. - For the full year 2024, total revenue was $59.1 million, down from $89.7 million in 2023, attributed to various factors including poor weather and delays in government procurement [7][8]. - The gross profit for 2024 was $2,000, a significant decline from $16.4 million in 2023, with gross margins in both segments decreasing substantially [9][10]. - The net loss for 2024 was approximately $20.0 million, compared to a net income of $485,000 in 2023, leading to a loss per share of $1.33 [11][12]. Business Update - The company is experiencing improving waste volume receipts and backlog in early 2025, which is expected to support revenue growth [2]. - Waste treatment operations have ramped up in February 2025, with expanded shifts at key facilities to meet increasing demand [2]. - The company is advancing its Perma-FAS technology for PFAS destruction, with expectations to triple processing capacity and incorporate chemical recycling capabilities in the next-generation system [2]. - Perma-Fix has been awarded a role in the DOE's West Valley Demonstration Project, a 10-year initiative, and is pursuing new opportunities across multiple DOE and DOD sites [2]. - International expansion efforts, particularly in Italy, are on track, with waste treatment operations expected to begin in 2026 [2].

Core Insights - Perma-Fix Environmental Services, Inc. reported a significant decline in financial performance for the fourth quarter and full year of 2024, with total revenue dropping to $14.7 million in Q4 2024 from $22.7 million in Q4 2023, and annual revenue decreasing to $59.1 million from $89.7 million in 2023 [3][7][11] - The company is optimistic about a return to growth and profitability in 2025, driven by improving waste volume receipts, a solid backlog, and advancements in PFAS treatment and nuclear services [2][10] Financial Performance - Q4 2024 revenue was $14.7 million, down from $22.7 million in Q4 2023, with a notable decrease in the Services Segment by approximately $6.6 million and in the Treatment Segment by approximately $1.4 million [3][4] - Gross profit for Q4 2024 was $594,000, a decrease from $4.3 million in Q4 2023, with gross margin dropping to 14.7% from 21.3% [4][6] - The company reported an operating loss of approximately $3.6 million in Q4 2024 compared to a loss of $9,000 in Q4 2023, and a net loss of approximately $3.5 million compared to net income of $81,000 in the same period last year [5][6] Annual Results - For the full year 2024, revenue was $59.1 million, down from $89.7 million in 2023, attributed to various factors including poor weather, delays in government procurement, and significant investment in PFAS technology [7][8] - Gross profit for 2024 was $2,000, a sharp decline from $16.4 million in 2023, with gross margin decreasing to approximately (3.2)% from 15.8% [9][11] - The company experienced an operating loss of $15.7 million in 2024, compared to operating income of $756,000 in 2023, and a net loss of approximately $20.0 million compared to net income of $485,000 in 2023 [10][11] Strategic Outlook - The company is focusing on the development of its Perma-FAS technology for PFAS destruction, with expectations to triple processing capacity and incorporate chemical recycling capabilities [2] - Perma-Fix has been awarded a role in the DOE's West Valley Demonstration Project, which aligns with its expertise in radiological protection and waste management [2] - International expansion efforts, particularly in Italy, are on track, with waste treatment operations expected to commence in 2026 [2]

Core Viewpoint - Perma-Fix Environmental Services, Inc. will host a conference call on March 13, 2025, to discuss company updates and performance [1]. Company Overview - Perma-Fix Environmental Services, Inc. is a nuclear services company specializing in nuclear and mixed waste management services, including the management and treatment of radioactive waste for various sectors such as hospitals, research labs, and federal agencies [4]. - The company operates four nuclear waste treatment facilities and provides a range of services including project management, environmental restoration, and radiological protection [4]. Conference Call Details - The conference call will be led by key executives including the CEO, Executive Vice President of Strategic Initiatives, and Chief Financial Officer [2]. - Access to the call will be available via telephone and webcast, with a replay option provided for a limited time after the call [3].

Core Viewpoint - Perma-Fix Environmental Services has made significant advancements in its proprietary PFAS treatment technology, demonstrating its effectiveness and economic viability in treating PFAS-contaminated waste [1][7]. Technology and Operations - The company initiated commercial full-scale treatment with its 1,000-gallon PFAS Destruction Reactor in Q4 2024, achieving exceptional results in PFAS destruction after several months of operation [1][2]. - The technology effectively processes and eliminates various carbon-fluorine chains at operationally efficient temperatures, validated through extensive testing and full-scale operations [2]. - Perma-Fix is advancing the development of a second-generation treatment unit projected to be three times the capacity of the current system, enhancing throughput and revenue potential [6]. Market Demand and Strategic Partnerships - Growing demand for effective PFAS destruction treatment is being driven by increased regulatory focus on PFAS contamination, positioning Perma-Fix to serve a diverse customer base, including landfill owners and industrial facilities [3][4]. - The company is engaged in discussions with waste generators and disposal firms to establish strategic partnerships, expected to generate a steady flow of concentrated PFAS waste [3]. Cost-Effectiveness and Operational Efficiency - The system's ability to process high concentrations of PFAS waste efficiently offers significant cost savings compared to traditional methods like incineration [4]. - Perma-Fix is also focusing on refining its technology to improve operational efficiency and recycle treatment reagents, enhancing its competitive edge in the market [7]. Research and Development - In addition to its high concentration liquids treatment system, the company is accelerating research to apply its technology for treating granular activated carbon and contaminated soils, addressing the growing need for remediation services [5].

Core Insights - Perma-Fix Environmental Services, Inc. appointed Troy Eshleman as Chief Operating Officer effective January 23, 2025, bringing over 34 years of experience in radioactive waste management and hazardous materials logistics [1][2] Company Overview - Perma-Fix Environmental Services is a nuclear services company specializing in environmental remediation and mixed waste management, providing services to hospitals, research labs, federal agencies, and the commercial nuclear industry [4] Leadership and Experience - Troy Eshleman previously held leadership roles, including President of Oakleaf Environmental, where he provided operational support for hazardous waste companies, and spent 27 years at EnergySolutions, managing nuclear decommissioning and waste processing projects [2][3] - Eshleman's educational background includes a Bachelor of Science in Civil Engineering Technology and graduate studies in Chemical Engineering [2] Strategic Goals - The company anticipates a transformative year in 2025, with Eshleman's leadership expected to drive operational improvements and accelerate growth across its Services and Treatment Segments [3]

Core Insights - Edge Total Intelligence Inc. has appointed Christopher Leichtweis to its Industry Advisory Council, enhancing its team of industry experts to drive innovation and operational excellence [2][21] - Leichtweis brings extensive experience from the Architecture, Engineering, and Construction (AEC) sectors, as well as from his role in the motorsports industry, which will aid in expanding edgeTI's market presence [21][23] Company Overview - Edge Total Intelligence Inc. specializes in real-time Digital Twin software that facilitates and secures AI adoption [2] - The company aims to improve operational efficiency and decision-making through its edgeCore™ platform, which integrates various software applications and data sources [23] Advisory Council Composition - Christopher Leichtweis is the fourth advisor to join the Industry Advisory Council, which includes other notable advisors such as David Kris, Michael Ostrum, and Timothy Faulkner [20] - The council's goal is to promote the adoption of Digital Twins and safeguard AI solutions across various industries [20] Leichtweis's Background - Leichtweis is the founder and CEO of AERO B Motorsports and has a history of leading successful ventures in engineering, environmental, and software sectors [3][7] - He previously served as CEO of North Wind Group, which had a budgeted annual revenue of over $600 million in 2022 and achieved more than 1000% organic growth during his tenure [15] Strategic Vision - Leichtweis expressed his commitment to data-driven decision-making and aims to leverage his experience with edgeTI's solutions to enhance market share in the AEC sector and beyond [16] - The company plans to announce additional advisors to further strengthen its advisory council [16]

Core Viewpoint - Perma-Fix Environmental Services, Inc. has announced a public offering of 2,200,000 shares of common stock at a price of $10.00 per share, expecting gross proceeds of approximately $22 million before expenses [1][2]. Group 1: Offering Details - The offering includes a 30-day option for the underwriter to purchase up to 330,000 additional shares at the public offering price [1]. - The expected closing date for the offering is around December 19, 2024, pending customary closing conditions [1]. Group 2: Use of Proceeds - The net proceeds from the offering will be allocated to: - Continued research and development for the patent-pending Perma-FAS process aimed at PFAS destruction and the installation of a second-generation commercial treatment unit [2]. - Ongoing capital expenditures and maintenance costs for facilities [2]. - General corporate and working capital purposes [2]. Group 3: Underwriters and Advisors - Craig-Hallum is serving as the sole managing underwriter for the offering, while Wellington Shields is acting as the financial advisor [3]. Group 4: Company Overview - Perma-Fix is a leading provider of nuclear and mixed waste management services, including management and treatment of radioactive waste for various federal agencies and the commercial nuclear industry [6]. - The company operates four nuclear waste treatment facilities and offers a range of services including project management, environmental restoration, and radiological protection [6].

Core Viewpoint - Perma-Fix Environmental Services, Inc. has initiated an underwritten public offering of its common stock, with the offering subject to market conditions and no assurance on completion or terms [1][4]. Group 1: Offering Details - The net proceeds from the offering will be allocated to continued R&D and business development for the patent-pending Perma-FAS process aimed at PFAS destruction, installation of a second-generation Perma-FAS commercial treatment unit, ongoing facility capital expenditures, maintenance costs, and general corporate purposes [2]. - Craig-Hallum is the sole managing underwriter for the proposed offering [3]. Group 2: Company Overview - Perma-Fix is a leading provider of nuclear and mixed waste management services, offering management and treatment of radioactive and mixed waste for various sectors including hospitals, research labs, federal agencies, and the commercial nuclear industry [6]. - The company operates four nuclear waste treatment facilities and provides a range of services including project management, environmental restoration, decontamination, and radiological protection [6].

Financial Data and Key Metrics Changes - The company reported revenue of $16.8 million for Q3 2024, a decrease of $5.1 million or 23.2% compared to $21.9 million in Q3 2023 [26][28] - Gross profit for the quarter was $1.3 million, down from $4.5 million in the same quarter last year [28] - The net loss from continuing operations was $8.8 million, compared to a net income of $246,000 in the previous year [30] - Total basic loss per share was approximately $0.57, compared to a basic income per share of $0.03 last year [31] Business Segment Data and Key Metrics Changes - In the Treatment segment, revenue decreased by $1.7 million due to lower volume and average price, impacted by reduced waste receipts and operational disruptions [27] - The Services segment revenue fell by $3.4 million, primarily due to the completion of two large projects replaced by smaller ones [26][28] - Gross profit in the Treatment segment dropped by $1.1 million, while the Services segment saw a decrease of $2.1 million [28] Market Data and Key Metrics Changes - The company anticipates receiving several larger waste streams from international sources, including Canada, Mexico, and Germany, expected to generate nearly $7 million in revenue [16] - The company is progressing with a €50 million contract in Italy, with remediation activities expected to start in late 2025 or early 2026 [17] Company Strategy and Development Direction - The company is focused on penetrating the PFAS market, with significant investments in PFAS technology deployment totaling $930,000 for the quarter and $1.6 million year-to-date [13] - The company aims to enhance operational capabilities through the acquisition of the Environmental Waste Operations Center, which will allow for higher productivity and larger waste volumes [15] - The company is pursuing new government and commercial opportunities, targeting several new procurements expected to bring in over $100 million in annual revenues by 2025 [23] Management's Comments on Operating Environment and Future Outlook - Management noted that while market softness has been experienced, trends are beginning to improve, and they are optimistic about revenue generation and productivity improvements [25] - The company is confident in its ability to handle increased capacity as the Hanford facility ramps up operations in 2025 [59] - Management expressed optimism regarding the new administration's focus on commercialization of waste treatment, which aligns with the company's offerings [68] Other Important Information - The company has a treatment backlog of $7.8 million as of September 30, 2024, down from $8.7 million at the end of December 2023 [33] - The company is positioned to receive DFLAW affluent based on anticipated volumes, with expansion programs being designed to support full-scale operations [22] Q&A Session Summary Question: Can you discuss the transformative opportunities for 2025 and 2026? - Management projected revenues from PFAS in 2025 to be in the $3 million to $5 million range, assuming operational optimization and additional units [36] Question: How is the company preparing for the near-term challenges in Q4 and 2025? - Management indicated that Q4 is showing improvement in waste receipts and operational stability, with a good backlog at all plants [53] Question: What is the status of the partnerships related to PFAS treatment? - Management is exploring partnerships with firms that have developed concentrators for PFAS, aiming to treat high concentration PFAS waste [75] Question: What are the prospects for the Hanford facility and grouting opportunities? - Management noted that the DFLAW facility is designed to treat about 1 million gallons a year, and there are plans for a grouting program for the West area tank farms [90] Question: What is the reasoning behind the write-off of the deferred tax asset? - Management did not provide a detailed response to this question during the call [93]