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PF

PERMA FIX ENVIRONMENTAL SERVICES INC (PESI)·Q1 2024 Earnings Summary

Executive Summary

  • Q1 2024 was materially weak due to temporary headwinds and deliberate R&D investment: revenue fell to $13.6M, gross profit was -$0.62M, net loss was $3.6M, and EPS was -$0.26; EBITDA from continuing ops was -$4.0M .
  • Management reaffirmed that disruptions are largely behind them, expects improving Q2 and a strong H2, and aims to return to and surpass its $25M per-quarter revenue base goal; preliminary 8-K had guided to ~-$3.5M net loss (actual -$3.6M) and stated Q2 should not see significant continued impact .
  • Strategic catalysts highlighted: legally binding Hanford settlement advancing DFLAW effluent treatment and commercial grouting (DFLAW hot commissioning no later than Aug 2025), PFAS Perma-FAS commercialization targeted for Q4 2024 with $1–$2M initial 2024 revenue and high-margin potential, and TSCA vacuum thermal desorption (VTD) program expected to add ~$10M incremental annual revenue starting Q4 2024 .
  • No S&P Global consensus estimates could be retrieved for Q1 2024; consequently, beat/miss vs Street is unavailable. Coverage appears limited for this micro-cap, so focus is on trajectory and contract milestones .

What Went Well and What Went Wrong

What Went Well

  • Awarded selection to participate in DOE’s 10-year small business IDIQ (ceiling $2B) for nationwide D&D, expanding long-term Services pipeline; seven new Services projects mobilizing in May support increased revenues in H2 2024 .
  • PFAS “Perma-FAS” pilot achieved 99.9999% destruction; commercial 1,000-gallon unit selected for fabrication (ProcessBarron) and targeted to accept waste by Q4 2024; initial 2024 PFAS revenue expected at $1–$2M with strong margin potential .
  • Treatment segment backlog improved to $10.6M at March-end (vs $8.7M Dec and $9.4M Mar-2023), supporting increased shipments in Q2 and H2 2024 .

What Went Wrong

  • Sequential revenue decline and margin compression: Q1 revenue $13.6M vs Q4 2023 $22.7M; gross profit swung to -$0.62M due to lower volume and lower-margin mix; EBITDA -$4.0M; EPS -$0.26 .
  • Multiple operational headwinds: weather closures for a week at two facilities, customer delays under the US federal Continuing Resolution, and outages across three primary treatment facilities in March (~$1.5M impact) .
  • Services revenue fell $5.6M YoY as two large projects completed in Q4 2023 were not replaced quickly due to delayed mobilizations until late April; Treatment revenue decreased $0.885M YoY on lower volume and pricing mix .

Financial Results

Consolidated Performance vs Prior Periods

MetricQ3 2023Q4 2023Q1 2024Q1 2023
Revenue ($USD Millions)$21.9 $22.7 $13.6 $20.1
Gross Profit ($USD Millions)$4.5 $4.3 -$0.62 $3.0
Net Income ($USD Millions)$0.341 $0.081 -$3.6 -$0.411
EPS ($USD)$0.03 $0.01 -$0.26 -$0.03
EBITDA ($USD Millions)$1.2 $0.434 -$4.0 $0.171

Segment Dynamics (Q1 2024 YoY change)

SegmentQ1 2024 Change vs Q1 2023 ($USD Millions)
Treatment Revenue Change-$0.885
Services Revenue Change-$5.6
Total Revenue Change-$6.5

KPIs and Balance Sheet

KPIMar 2023Dec 2023Mar 2024
Waste Backlog ($USD Millions)$9.4 $8.7 $10.6
Cash and Equivalents ($USD Millions)n/a$7.5 $2.4
Total Debt ($USD Millions)n/a$2.9 $2.7
G&A Expense ($USD Millions)n/an/a$3.5
Cash used by continuing ops ($USD Millions)n/an/a$4.4 (Q1 2024)

Estimates vs Actual (Q1 2024)

MetricActualS&P Global Consensus
Revenue ($USD Millions)$13.6 Unavailable (no data retrieved)
EPS ($USD)-$0.26 Unavailable (no data retrieved)

Note: S&P Global consensus estimates were unavailable for PESI for Q1 2024 based on our attempted retrieval; therefore, beat/miss vs Street cannot be determined .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Base revenue per quarter goalH2 2024+Aim to reach ~$25M/quarter (ongoing target) Reaffirm intent to regain momentum and surpass $25M/quarter Maintained
PFAS Perma-FAS revenue (initial)FY 2024~$2M estimate (introduced Q4 2023) ~$1–$2M estimate; Q4 start-up targeted Lowered (range tightened)
TSCA VTD incremental annual revenueStarting Q4 2024Not previously quantified~$10M incremental annual revenue starting in Q4 New
DFLAW hot commissioning timelineStart-upLate 2024 expected (prior) No later than Aug 2025 per Hanford Settlement Agreement; could be earlier Delayed
Q2 impact from Q1 disruptionsQ2 2024Not provided“Second quarter will not include significant continued impact” Positive update

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2023)Previous Mentions (Q4 2023)Current Period (Q1 2024)Trend
Hanford DFLAW effluent treatmentDFLAW late-2024 start; PF NW facility named in DOE ROD; ~9,000 m³/yr waste; more than double plant output Hot commissioning in 2025; PF NW positioned; DOE Systems Rev 10 endorses commercial grouting Legally binding Settlement: DFLAW hot commissioning no later than Aug 2025; PF NW to process effluent for initial 10 years; waste > double current annual production Timing slipped; strategic positioning strengthened
Grouting strategy (commercial)Systems Rev 10: half tanks to commercial grouting; PF NW local solution DOE recognizes grouting as preferred supplement; capacity expansion plans DOE commits to west tank farm grouting off-site; target to increase PF NW capacity from 300k to ~3M gallons/year Scaling up; clearer plan
PFAS Perma-FASBench-scale success; patents pending; 2024 revenue ~ $2M Advancing design; independent validation; 2024 ~ $2M; high margin Pilot achieved 6-nines destruction; first 1,000-gal unit in Q4; initial 2024 $1–$2M; ProcessBarron selected; strong demand Execution milestone; commercialization imminent
International expansion (EU/UK/Germany)JRC Ispra award; pipeline across Europe; expected late-2024 ramp Sustained receipts >$10M annually starting late-2024/2025; UK facility JV with Westinghouse JRC 7-year €50M progressing; initial shipments late Q4 2025; Germany/Mexico/Canada opportunities; 2025 >$10M combined revenue estimated Building pipeline; timelines clearer
TSCA VTD at Floridan/a (not highlighted)RD&D and permitting discussions broader; Hanford Systems Rev 10 TSCA vacuum thermal desorption system tested with EPA; pending verification; backlog could add ~$10M annual revenue starting Q4 New regulatory-driven revenue stream
Macro/government funding/CRCR delays impacted awards/start-ups; typical seasonal factors 2024 DOE budget +9% YoY; optimism for H2 CR in March caused delays; normalization expected; seven Services projects mobilizing in May Near-term headwinds fading

Management Commentary

  • “We remain confident in getting back to and surpassing our business-based goal of $25 million in revenue per quarter.”
  • “Our process achieved PFAS destruction levels of 6 9s or 99.9999%... we expect to begin generating revenue from this process in Q4… initial estimate for revenues in '24 is approximately $1 million to $2 million.”
  • “Acknowledgment of successful [TSCA VTD] testing by the EPA… will provide a basis… We estimate this backlog… to generate approximately $10 million in incremental annual revenue beginning in Q4.”
  • “Under the [Hanford] Settlement Agreement, DOE states that the DFLAW hot commissioning program will be completed no later than August of 2025… the volume of this waste will be more than double the current production of all of our plants combined.”

Q&A Highlights

  • Hanford Settlement Agreement is legally binding among DOE, EPA, and Washington regulators; DFLAW effluent treatment is expected to be a long-lived program with limited competitive alternatives given PF NW’s proximity and permitting .
  • West tank farm to be grouted while east tanks vitrified; multi-decade volumes could approach tens of millions of gallons; throughput realities suggest extended timelines and sustained revenue streams .
  • Germany/Central Europe decommissioning presents multi-year opportunities; initial revenue ramp projected late 2024 with potential $5–$6M annually, growing with UK plant commissioning .
  • PFAS market landscape: alternatives like incineration and deep well injection face regulatory/technical limits; Perma-Fix pursuing partnerships, potential licensing, and demos with DOE/DOD; patents pending across US/EU .

Estimates Context

  • S&P Global consensus estimates for PESI’s Q1 2024 revenue and EPS were unavailable at the time of review; thus we cannot assess an earnings beat/miss vs Street. Given limited micro-cap coverage, investors should anchor on operational milestones (Hanford, PFAS commercialization, TSCA VTD) and H2 trajectory rather than near-term consensus-driven setups .

Key Takeaways for Investors

  • Q1 print reflects transient operational and budgetary headwinds plus deliberate R&D; management indicates normalization into Q2 and a stronger H2 with seven Services projects mobilizing in May .
  • Hanford is the multi-decade anchor: DFLAW hot commissioning no later than Aug 2025 and commercial grouting capacity expansion position PF NW for sustained revenue with advantaged local permitting/logistics .
  • PFAS Perma-FAS commercialization is a potential new high-margin leg: first unit targeted by Q4 2024 with $1–$2M initial revenue and broader 2025 ramp; EPA’s regulatory posture is a structural tailwind .
  • TSCA VTD program at Florida could add ~$10M incremental annual revenue starting in Q4 2024—an underappreciated catalyst tied to regulatory validation .
  • Backlog improved to $10.6M by March despite Q1 weakness, supporting H2 visibility; cash fell to $2.4M, highlighting near-term liquidity monitoring until large programs activate .
  • Without available Street estimates, trade the milestones: ProcessBarron fabrication/commissioning updates, EPA TSCA verification, DOE IDIQ tasking flow, DFLAW schedule adherence, and European contract conversion .
  • Narrative turning point likely coincides with PFAS unit start-up and TSCA VTD revenue recognition in Q4, with Hanford execution the medium-term thesis driver into 2025 .