Perma-Fix Environmental Services(US:PESI)2024-05-09 18:42Revenue Performance - Revenue for Q1 2024 decreased by approximately $6,490,000 or 32.3% to $13,617,000 compared to $20,107,000 in Q1 2023[105] - Services Segment revenue fell by $5,605,000 or 53.3% to $4,908,000 from $10,513,000, while Treatment Segment revenue decreased by $885,000 or 9.2% to $8,709,000 from $9,594,000[105][112] - Revenue from government clients in the Treatment Segment decreased primarily due to lower waste volumes and delays in waste shipments attributed to poor weather and federal budget issues[112] - Revenue from government clients represented approximately $10,143,000 or 74.5% of total revenue for the three months ended March 31, 2024, compared to $17,247,000 or 85.8% in the same period of 2023[138] Financial Losses - Gross loss for Q1 2024 was approximately $620,000, a decrease of $3,629,000 or 120.6% compared to a gross profit of $3,009,000 in Q1 2023[105] - The company incurred a loss from continuing operations of $3,458,000 in Q1 2024, compared to a loss of $318,000 in Q1 2023[110] Expenses and Costs - SG&A expenses increased by $58,000 or 1.7% for Q1 2024 compared to Q1 2023, reflecting ongoing operational costs[105] - Cost of goods sold decreased by $2,861,000 or 16.7% for the quarter ended March 31, 2024, compared to the same quarter in 2023, with total revenue of $14,237,000 in 2024 versus $17,098,000 in 2023[113] - Gross profit decreased by $3,629,000 for the quarter ended March 31, 2024, resulting in a gross margin of (0.6)% compared to 13.0% in 2023, primarily due to lower revenue and the completion of high-margin projects[114] - SG&A expenses increased by $58,000 to $3,544,000 for the three months ended March 31, 2024, driven by higher administrative and Treatment Segment expenses[115] - R&D expenses rose by approximately $197,000 in Q1 2024, mainly due to costs associated with PFAS technology development[116] Cash Flow and Working Capital - Cash used in operating activities totaled $4,432,000 for continuing operations in Q1 2024, with cash on hand of approximately $2,374,000[122] - Working capital decreased to $255,000 as of March 31, 2024, from $4,613,000 at the end of 2023, primarily due to reduced cash and revenue declines[125] Investments and Future Expectations - Accelerated investments in R&D for new PFAS treatment technology impacted financial performance, with expectations for positive effects beginning in the second half of 2024[102][104] - The company expects to generate increased revenue under a multi-year contract valued at approximately EUR 50 million starting in 2026, related to radioactive waste treatment in Italy[104] - The company is positioned for large procurements from the U.S. Department of Energy and U.S. Navy, with plans for broader waste treatment capabilities[104] - The company expects to install additional units for PFAS treatment at each existing treatment plant in 2025 following the first operational unit[140] Regulatory and Environmental Liabilities - The company is subject to rigorous federal, state, and local regulations, which may result in fines or remediation costs[141] - Total accrued environmental remediation liabilities as of March 31, 2024, were $800,000, a decrease of approximately $45,000 from the previous balance[144] - As of March 31, 2024, $16,000 of the total accrued environmental liabilities was recorded as current[144] Debt and Interest - Interest income increased by approximately $47,000 in Q1 2024, attributed to higher interest from a sinking fund and a money market account[118] - Interest expense increased by approximately $63,000 in Q1 2024, primarily due to interest on a $2,500,000 term loan[119] - The company is required to maintain a daily minimum borrowing availability of $2,250,000 under the revolving credit through June 29, 2024, increasing to $3,000,000 starting June 30, 2024[136] Backlog and Receivables - Waste treatment backlog increased to approximately $10,580,000 as of March 31, 2024, up by approximately $1,878,000 from $8,702,000 on December 31, 2023[103] - As of March 31, 2024, PF Canada had approximately $1,612,000 in outstanding receivables due from CNL, expected to be settled by the end of 2024[139] Operational Impact - The company performed services related to waste generated by government clients, which could have a material adverse impact on operations if contracts are terminated or funding is reduced[138] - The company has successfully completed pilot plant testing on a new process for the destruction of PFAS, with plans to be operational by the end of 2024[140]