Jeremy L. Dillon
RW Monitor
5/15/2015
Despite an operating loss of $1.8 million for the first quarter of 2015, Perma-Fix Environmental Services expressed confidence late last week that it would obtain positive earnings for the full year. Perma-Fix Chairman and CEO Lou Centofanti warned last month that the company expected 2015 to experience some revenue “lumps,” but late last week, Centofanti went as far as to positively revise the earnings expectations for 2015. “This is shaping up to be a very good year,” Centoafanti said during the first quarter earnings call. “We currently expect adjusted EBITDA of $6 million to $7 million with positive earnings for the full year. And in fact, we feel this guidance is somewhat conservative and that we could achieve these numbers without any large project wins in the service segment. If we do secure some big wins in the service segment that could definitely be upside. As I’ve mentioned in the past we are currently bidding on some very large contracts that we believe we’re in a strong position to win.”
Perma-Fix, though suffered an operating loss of $1.8 million in the first quarter, which was better than the $3.5 million operating loss in the first quarter of 2014. Revenue for the quarter was $13.6 million, compared to $10.5 million in the same period of 2014, and gross profit was $1.5 million, compared to $94,000 in 2014. Centofanti blamed some of the poor results on the normal slow period during the winter. “As is typical in our industry, the first quarter of 2015 was a seasonally slow period, but we are pleased to report that we experienced a significant improvement over the comparable period last year,” Centofanti said in a statement
Medical Isotopes Subsidiary Nearing License Application Submittals
Centofanti indicated that Perma-Fix Medical, Perma-Fix’s subsidiary that is trying to advance the company’s technology to produce molybdenum-99, is moving toward a Federal Drug Administration application submittal by the end of the year. He said that financing for the subsidiary is in order, and the main focus now is on finding strategic partners in the medical isotope industry. “From this point on, most of our focus is on strategic partners at this stage,” Centofanti said. “We’re in pretty good shape from a cash point of view in terms of where we need to go and what we need to do when you factor in the cash we have raised and the grant from the Polish government. So between the two of them, it puts us in a good position for the remainder of the year to get to our goals here. So we have no plans for any other financing at this point.” He did say, though, that the financing picture may change when the company gets closer to the end of the FDA approval process.
Perma-Fix feels confident that its Mo-99 production technology is well positioned to take advantage of the impending medical isotope industry void. With Canada set to stop government spending in 2016 on the National Research Universal (NRU) reactor, one of the world’s largest suppliers of molybdenum-99 and technetium-99m, the medical isotope industry is expecting a shortage in the market in the coming years. NRU’s anticipated shutdown has led to a slew of startups looking to fill the lucrative medical isotope void—eight-to-nine companies have already sent the Nuclear Regulatory Commission letters of intent to submit construction authorization licenses for a potential Mo-99 production facility.
NorthStar Is Only Real Competition, Centofanti Says
Centofanti, though, said late last week that only one company of these eight to nine presents any competition to Perma-Fix in the marketplace. “We really only see NorthStar as a, you might say a real competitor,” Centofanti said in response to an investor’s question on possible competitors. He added, “They’re the furthest along. We think our system is much simpler and will be more cost-effective and more acceptable to the present chain. When you look at the others, there’s no one who has made much progress, and most of them require a tremendous amount of money. There are people out there that are proposing to build new nuclear reactors in the United States to supply, so you can imagine how much money that’s going to cost and how long it will take, and if they could even ever do it.”
NorthStar Medical Radioisotopes announced last week the successful first production-scale test run of Mo-99 from its system at the University of Missouri Research Reactor (MURR) in Columbia, Mo. Following the test run at the reactor, NorthStar then shipped the material to its Madison, Wis., facility, marking another milestone for the company’s production process. The United States, through the National Nuclear Security Administration, has instituted a cost-sharing agreement with NorthStar and SHINE Medical to help jump start the domestic production of Mo-99. Both companies expect to begin production sometime near the end of 2016 or early 2017, depending on how quickly they can navigate the regulatory process. Other companies like Northwest Medical Isotopes and Coquí RadioPharmaceuticals are also in the process of submitting regulatory applications for their production processes.
