Perma-Fix Environmental Services(US:PESI)2022-05-05 18:55Revenue Performance - Revenue decreased by $7,218,000 or 31.2% to $15,915,000 for the three months ended March 31, 2022, compared to $23,133,000 for the same period in 2021[105]. - Services Segment revenue decreased by approximately $7,202,000 or 46.1%, primarily due to delays in new project activities caused by COVID-19[111]. - Treatment Segment revenue decreased slightly by $16,000 or 0.2%, with government waste revenue increasing by approximately $1,050,000 or 23.9% due to higher waste volume[111]. - During the three months ended March 31, 2022, revenue from government clients represented approximately $14,158,000 or 89.0% of total revenue, compared to $20,157,000 or 87.1% in the same period of 2021[137]. Profitability and Expenses - Gross profit decreased by $720,000 or 30.6%, while Selling, General, and Administrative expenses increased by $217,000 or 6.8% for the three months ended March 31, 2022[105]. - Cost of goods sold decreased by $6,498,000 or 31.3% for the quarter ended March 31, 2022, compared to the same period in 2021, primarily due to lower revenue in the Services Segment[112]. - Gross profit for the quarter ended March 31, 2022, decreased by $720,000 or 30.6%, with the Treatment Segment gross margin dropping to 8.5% from 12.3%[113]. - SG&A expenses increased by $217,000 for the three months ended March 31, 2022, with total SG&A expenses representing 21.5% of revenue[114]. - R&D expenses decreased by $54,000 to $96,000 for the three months ended March 31, 2022, primarily due to the sale of PF Poland[116]. - Interest expense decreased by approximately $32,000 in Q1 2022 due to a declining term loan balance and the forgiveness of a PPP loan[117]. - Income tax benefit for continuing operations was approximately $673,000 for Q1 2022, compared to $17,000 for the same period in 2021, with an effective tax rate of 35.0%[118]. - Inflationary pressures have led to increased operating costs, which may further reduce profitability[144]. Cash Flow and Working Capital - Cash provided by operating activities of continuing operations was $148,000, while cash used in investing activities totaled $321,000 for the first three months of 2022[121]. - Working capital decreased to $2,341,000 at March 31, 2022, from $4,060,000 at December 31, 2021, primarily due to operational impacts from COVID-19[125]. - The company has approximately $2,722,000 in unpaid receivables and unbilled costs due from CNL as a result of work performed under a terminated TOA[140]. Future Outlook and Strategic Initiatives - The company expects gradual improvement in waste receipts as customers ease COVID-19 restrictions, although delays may persist[100]. - The company is experiencing a large increase in proposal requests within its Treatment Segment, indicating potential future revenue growth[100]. - The company continues to assess the need to reduce operating costs, which may include curtailing capital expenditures and eliminating non-essential expenditures[101]. - The company budgeted approximately $2,000,000 for capital expenditures in 2022, primarily for Treatment and Services Segments[127]. - A joint venture was signed with Springfields Fuels Limited to develop a nuclear waste-materials treatment facility in the UK, with the company holding a 45% interest[128]. - The deployment of a new waste processing unit, delayed due to supply chain challenges, is expected to commence in the second quarter of 2022[142]. - The company signed a term sheet to partner with Springfields Fuels Limited to develop a nuclear waste-materials treatment facility in the UK[143]. Financial Position and Liabilities - The company had borrowing availability under its revolving credit facility of approximately $4,544,000 as of March 31, 2022[101]. - As of March 31, 2022, the total amount of standby letters of credit outstanding was approximately $3,020,000, and the total amount of bonds outstanding was approximately $51,295,000[134]. - As of March 31, 2022, total accrued environmental remediation liabilities were $876,000, with $621,000 recorded as current[148]. - The company expects to meet its quarterly financial covenant requirements for the next twelve months under its Loan Agreement[133]. - The company was not required to perform testing of the FCCR requirement in the first quarter of 2022 due to an amendment in the Loan Agreement[133]. Operational Challenges - The company is closely monitoring customer payment performance, with expectations that accounts receivable collections will not be materially impacted due to COVID-19[102]. - The company experienced delays in revenue generation due to supply chain interruptions affecting the delivery of necessary equipment[142].