Executive Summary

Q4 2022 revenue declined 2.1% year-over-year to $16.8M, but gross profit rose 58% YoY to $2.0M as Services projects improved; adjusted EBITDA loss narrowed to $1.0M from $1.7M .
EPS was a loss of $0.13 vs. loss of $0.19 in Q4 2021; net loss to common narrowed to $1.7M vs. $2.5M YoY as operating losses improved despite labor, supply-chain, and weather headwinds that subsided entering Q1 2023 .
Treatment backlog increased to $9.2M at year-end (from $7.1M at Sep-2022), and DOE’s amended Record of Decision (DFLAW secondary waste) explicitly positions Perma-Fix Northwest for a sizable multi‑year opportunity; management framed potential annual revenues at $65–$75M when DFLAW runs at capacity (late-2024 start, ramp through 2025) .
Services secured new awards (EPA abandoned uranium mine program, DOE sites, Navy, commercial) to start in Q2 2023; management expects Q2 2023 profitability and improving cash flow on rising volumes and SG&A discipline .

What Went Well and What Went Wrong

What Went Well
- Services segment executed higher-margin projects, lifting Q4 gross profit to $2.0M vs. $1.3M YoY; total gross margin rose from ~7% to ~12% as projects reduced variable costs by ~19.8% .
- Strategic positioning: DOE’s amended ROD for DFLAW secondary waste includes Perma-Fix Northwest; management quantified potential $65–$75M annual revenue at full DFLAW capacity and highlighted a strong pipeline and backlog growth to $9.2M .
- New awards and bidding momentum: EPA abandoned uranium mines first task order (~$1M in 2023), multiple DOE/Navy/commercial starts in Q2 2023; international shipments and UK/Italy pipeline continue to expand .
What Went Wrong
- Treatment segment pricing/mix and fixed-cost burden compressed margins; Q4 Treatment revenue fell to $8.6M from $8.9M YoY, and Treatment gross profit declined due to lower average price and increased fixed costs .
- Operational headwinds in Q4: temporary skilled labor shortages (DOE hiring nearby), supply-chain constraints (e.g., grout mix), and severe weather in Washington Tri‑Cities impacted throughput .
- SG&A increased (quarter: $3.6M vs. $3.3M YoY) on payroll, trade shows, commissions, audit fees, stock comp, and medical costs no longer absorbed by the former Medical segment, sustaining operating losses in the quarter .

Financial Results

Sequential and YoY comparisons anchored to Q4 2022 results.

Metric	Q2 2022	Q3 2022	Q4 2022
Revenue ($USD Millions)	$19.5	$18.5	$16.8
Gross Profit ($USD Millions)	$2.9	$3.1	$2.0
Gross Margin (%)	14.9% (calc from $2.9/$19.5)	16.8% (calc from $3.1/$18.5)	12.1% (calc from $2.0/$16.8)
Net (Loss) Income to Common ($USD Millions)	$(1.4)	$0.7	$(1.7)
EPS (Basic)	$(0.11)	$0.05	$(0.13)
Adjusted EBITDA ($USD Millions)	N/A	N/A	$(1.045)
Versus Estimates (Revenue, EPS)	N/A	N/A	N/A (Consensus unavailable via S&P Global; daily limit exceeded)*

Metric	Q4 2021	Q4 2022
Revenue ($USD Millions)	$17.1	$16.8
Gross Profit ($USD Millions)	$1.3	$2.0
Gross Margin (%)	7.5% (calc from $1.3/$17.1)	12.1% (calc from $2.0/$16.8)
Operating (Loss) ($USD Millions)	$(2.226)	$(1.705)
Loss from Continuing Ops ($USD Millions)	$(2.372)	$(1.529)
Net (Loss) to Common ($USD Millions)	$(2.468)	$(1.693)
EPS (Basic/Diluted)	$(0.19)	$(0.13)
Adjusted EBITDA ($USD Millions)	$(1.731)	$(1.045)

Segment Breakdown (Q4 2021 vs. Q4 2022)

Segment	Q4 2021 Net Revenues ($USD Millions)	Q4 2022 Net Revenues ($USD Millions)	Q4 2021 Gross Profit ($USD Millions)	Q4 2022 Gross Profit ($USD Millions)
Treatment	$8.899	$8.609	$1.874	$1.075
Services	$8.217	$8.148	$(0.596)	$0.944

Selected KPIs and Balance Sheet

KPI	Q3 2022	Q4 2022
Treatment Backlog ($USD Millions)	$7.1	$9.2
Cash ($USD Millions)	$1.9	$1.866
Total Debt ($USD Millions)	$1.3	$1.0
Cash from Continuing Ops (FY) ($USD Millions)	N/A	$0.164

*Values retrieved from S&P Global were unavailable due to daily limit exceeded; consensus comparison not possible.

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Profitability (Company-level)	Q2 2023	None provided	“We certainly expect to be profitable in Q2”	Introduced qualitative outlook
Revenue Trend	2023	None provided	“Expectation for solid growth in revenue… improvement in profitability and cash flow”	Introduced qualitative outlook
Services Project Starts	Q2 2023	None provided	Important new projects expected to begin in Q2 2023 (EPA mines, Navy, DOE sites)	New starts timing
Treatment Segment Operations	2023	None provided	Labor/supply-chain/weather issues “have begun to subside in Q1 2023”	Operating conditions improved
DFLAW Secondary Waste	Late 2024–2025 ramp	None numeric	DOE ROD amendment includes PFNW; start-up late 2024, ramp through 2025	Strategic visibility, not formal guidance

No formal numeric guidance (revenue/margins/OpEx/tax) was provided.

Earnings Call Themes & Trends

Topic	Previous Mentions (Q2/Q3 2022)	Current Period (Q4 2022)	Trend
DFLAW Secondary Waste (DOE Hanford)	Emphasis on grouting supplement; GAO/NAS support; PFNW permitted for 30k gallons/month	DOE ROD amendment includes PFNW; potential $65–$75M annual revenue at full capacity; late‑2024 start, ramp in 2025	Visibility improving; scale clarified
TBI (Test Bed Initiative)	Funding identified ($17M cumulative); awaiting RD&D permit; Phase 2 2,000 gallons	DOE WIR final clarifies low level waste classification; Phase 2 shipment targeted late 2023; pricing $40–$45/gal for grouting-only, ~$100/gal incl. disposal	Regulatory progress; execution pending
Labor & Supply Chain	Tight labor, DOE hiring pulling talent; improving receipts and backlog	Q4 hit by labor attrition, supply materials, severe weather; issues stabilizing in Q1 2023	Headwinds easing
Services Pipeline	Q3: ~$100M defined opportunities; backlog $39M funded contracts	“Over $200M” of defined procurement opportunities; multiple Q2 2023 starts (EPA mines, Navy, DOE)	Pipeline expanding; award timing near-term
SG&A Discipline	Intent to trim indirect and SG&A to improve EBITDA	Continuing focus; anticipate meaningful EBITDA and cash flow improvement	Ongoing cost focus
International Expansion	UK framework; rising EU shipments; Italy JRC bid €40–50M over 7 years (Q3)	Awaiting JRC award; continued shipments from Germany, Croatia, Slovenia, UK, Italy; UK plant vision	Building presence
Navy Decommissioning	USS McKee project ramp; Enterprise RFP expected; ~12 nuclear ships in pipeline (Q3)	Enterprise industry day; team formation underway; expect RFP summer; multi-year revenue opportunity	Opportunity firming
ERC Program	$2.0M income recorded in 2022 aiding results (press release)	Balance sheet references ERC receivable in “Other assets”	Cash collection pending

Management Commentary

“We have achieved a 58% increase in gross profit in the fourth quarter… total gross profit margins increased from roughly 7% to 12%.”
“Our backlog at year-end was $9.2 million, significantly higher than prior quarters.”
“We were included by DOE in the amended Record of Decision for the DFLAW secondary waste program… represents a sizable opportunity over the next decade.”
“We have… secured important new projects that we expect will begin in the second quarter of 2023.”
“Adjusted EBITDA for Q4 2022 improved to a loss of $1 million compared to a loss of $1.7 million… we anticipate a meaningful improvement in profitability and cash flow going forward.”

Q&A Highlights

Hanford DFLAW economics: management’s back-of-the-envelope revenue potential “between $65 million and $75 million a year” at full capacity; staffing needs +70–100 personnel at peak .
TBI pricing: $40–$45/gal for grouting-only at PFNW dock; ~$100/gal when including transport/disposal (e.g., to Texas), with current capacity 30k gal/month (~300k gal/year) expandable with permit mods .
Profitability trajectory: “We certainly expect to be profitable in Q2” with multiple project starts and stabilized labor/supply chain .
Award timing: ITDC and OSMS decisions expected in Q2; small-business set-aside implies PESI can participate even if consortium is not selected .
Balance sheet: year-end cash $1.9M; total debt ~$1.0M (mostly PNC); cash from continuing ops in 2022 of $0.164M; treatment backlog $9.2M .

Estimates Context

Wall Street consensus estimates (S&P Global) for Q4 2022 revenue and EPS were unavailable due to exceeded daily request limits; direct comparison versus consensus is not possible at this time. Values retrieved from S&P Global were unavailable.

Key Takeaways for Investors

Near-term inflection: Q2 2023 profitability expected as Services projects commence and operational headwinds subside; watch for EPA/Navy/DOE project starts as catalysts .
Strategic upside: DOE’s ROD for DFLAW secondary waste positions PFNW for meaningful, multi‑year volumes; management indicates potential $65–$75M annual revenue at full capacity post start-up (late 2024 into 2025) .
Mix shift supports margins: Services margin improvements drove Q4 gross profit growth despite lower Treatment pricing/mix; sustained execution in Services is levered to EBITDA recovery .
Backlog and pipeline breadth: Treatment backlog rose to $9.2M; Services pipeline >$200M with defined procurements in upcoming quarters—award timing is a key stock driver .
TBI optionality: Regulatory milestones (WIR, EA) and clarified pricing provide pathway for incremental revenue and margin; Phase 2 2,000-gallon shipment targeted late 2023 .
Monitor cost discipline: SG&A remains elevated; continued reductions paired with volume ramp are critical for sustained cash flow improvement .
Risk factors: Award slippage, DOE schedule changes, labor availability, and supply-chain volatility can impact timing/throughput; management indicates stabilization entering 2023 .

References: Q4 2022 8‑K press release and exhibits ; Q4 2022 earnings call transcript –; Q3 2022 transcript –; Q2 2022 transcript –.

PERMA FIX ENVIRONMENTAL SERVICES INC (PESI)·Q4 2022 Earnings Summary