Perma-Fix Environmental Services(PESI) - 2024 Q4 - Annual Report

Revenue Performance - Overall revenue decreased by $30,618,000 or 34.1% to$ 59,117,000 for the twelve months ended December 31, 2024, from $89,735,000 for the corresponding period of 2023[139] - Treatment Segment revenue decreased by$ 8,524,000 or 19.6% to $34,953,000, while Services Segment revenue decreased by$ 22,094,000 or 47.8% to $24,164,000[139] - Total gross profit for the twelve months ended December 31, 2024, decreased by$ 16,367,000 or 100.0% due to decreased revenue generated in both segments[139] - Gross profit for the year ended December 31, 2024, was $16,367,000 lower than 2023, with a gross margin decrease from 18.2% to 0.0%[151] - The Services Segment gross margin decreased from 20.5% to 4.6% due to lower margin projects following the completion of two high-margin projects in late 2023[151] - The Treatment Segment backlog decreased to approximately$ 7,859,000 in 2024 from $8,702,000 in 2023[158] - The company reported that approximately$ 40,551,000, or 68.6%, of total revenue in 2024 was generated from federal government contracts, down from $68,595,000, or 76.4%, in 2023[200] Financial Position and Cash Flow - Cash used in operating activities of continuing operations was$ (14,146,000) in 2024, compared to $7,069,000 in 2023[163] - Working capital improved to$ 28,283,000 in 2024 from $4,613,000 in 2023, primarily due to cash from stock sales[165] - Cash provided by financing activities totaled$ 40,955,000 in 2024, mainly from common stock sales[169] - The company expects to meet its quarterly financial covenant requirements for the next twelve months[173] - Future cash flow assumptions may be impacted by economic slowdowns, inability to scale operations, and significant declines in share price, potentially leading to asset impairment charges[194] - The company has no impairment charges related to its Treatment reporting unit as of October 1 for both 2023 and 2024[192] - The company is preparing for cash flow requirements and ensuring sufficient liquidity for operations over the next twelve months[207] Expenses and Cost Management - Cost of goods sold decreased by $14,251,000 for the year ended December 31, 2024, compared to the year ended December 31, 2023[150] - SG&A expenses decreased by$ 484,000 to $14,491,000 in 2024, representing 24.5% of revenue, compared to$ 14,975,000 in 2023, which was 16.7% of revenue[152] - R&D expenses increased by $611,000 in 2024, primarily due to costs associated with new PFAS technology[153] - The company is committed to reducing operating costs and non-essential expenditures[207] Financing Activities - The company completed two public equity raises, selling an aggregate of 4,581,282 shares of Common Stock in May 2024 and December 2024[140] - The company raised approximately$ 20,000,000 from the sale of 2,051,282 shares of Common Stock at $9.75 per share, with net proceeds used for R&D and business development[176] - The company incurred costs of approximately$ 1,544,000 related to the stock offering, resulting in net cash proceeds of approximately $18,456,000[178] - In December 2024, the company sold 2,200,000 shares of Common Stock at$ 10.00 per share, raising total gross proceeds of $25,300,000, including an over-allotment option[179] - The company paid approximately$ 1,771,000 in fees to the underwriter for the December offering, which represented 7.00% of the gross proceeds[181] - The company paid a total of $37,500 in fees related to the Loan Agreement amendments, which will be amortized as interest expense[171] Contracts and Projects - A contract for the cleanup operations at the West Valley Development Project was awarded, with a maximum value of up to$ 3 billion over a 10-year ordering period[141] - Revenue from the multi-year contract for the treatment of radioactive waste in Italy is expected to increase starting in 2026 when waste treatment phases begin[141] - The company has completed the fabrication and startup of its first full-scale commercial Perma-FAS system for PFAS destruction, successfully processing approximately 6,000 gallons of AFFF liquids[202] - The company anticipates deploying a second-generation unit of its PFAS technology in Q3 2025, aiming for revenue generation in Q4 2025[203] - The company is positioned for opportunities in Germany and aims to successfully bid on international contracts[207] Regulatory and Compliance Issues - The company is focused on compliance with environmental regulations and managing potential violations[209] - The company faces increased competitive pressures and the need to maintain required permits and approvals[209] - The company is addressing risks related to the non-acceptance of new technology and the expansion of service offerings[209] - Accrued closure costs represent estimated environmental liabilities, with costs calculated based on site-specific evaluations and regulatory requirements[195] Strategic Outlook - The company anticipates improvement in operational results in 2025 due to ongoing initiatives and project transitions[141] - The company anticipates improvements in its base business and operational results by 2025[207] - The company is focused on advancing its PFAS technology, which is expected to exceed current treatment options available[207] - The company is addressing potential reductions in government funding and changes in federal budgeting priorities[207] - The company faces uncertainties regarding future federal government budget decisions, which could negatively impact financial results and contract performance[201] - The company regularly reviews deferred tax assets to assess their potential realization, which could materially impact results if assumptions change[197]