Nuclear cleanup and waste treatment provider Perma-Fix Environmental Services on Wednesday reported a net loss of $13.99 million for 2016, but said the fourth quarter signaled a rebound in the business.
The loss was a steep dive from a $1.9 million net loss in 2015. Net loss attributed to common stockholders also plunged from $1.1 million to $13.4 million on a year-over-year basis.
The Atlanta-based company’s overall revenue fell from $62.4 million in 2015 to $51.2 million last year, and from $15.1 million to $13.5 million in their respective fourth quarters.
Revenue was down in both of Perma-Fix’s main business branches: the company’s treatment segment brought in $9.4 million for the quarter and $32.3 million for the year, dropping respectively from $9.6 million and $41.3 million; quarterly and full-year revenue for the services branch landed at $4 million and $18.9 million, compared to $5.5 million and $21.1 million for 2015.
Perma-Fix’s still-developing medical isotope production business continues to produce no revenue, losing $1.5 million in 2016. However, that was better than the $2.1 million loss in the prior year.
Net loss per common share slid sharply from $0.09 in full-year 2015 to $1.15 last year, but fourth-quarter income per share ticked up from $0.01 to $0.02. The company earned $110,000 in net income for the quarter ended Dec. 31, well above a $292,000 loss in the same period of 2015.
Other numbers were strong as well, executives said.
“We’re very pleased to report solid fourth-quarter results. I believe we’re back on track with positive and improving cash flow, in fact we came in ahead of guidance with $1.9 million in adjusted EBITDA versus a forecast of about $1 million,” CEO Lou Centofanti said during the company’s earnings conference call. “These results are a significant departure from what we saw in the first nine months of ’16.”
As he did in Perma-Fix’s previous call with analysts in November, Centofanti noted that a large number of shipments of waste for treatment were delayed throughout 2016, delaying revenue because the company bills its clients upon receiving the material. This problem, along with constrained federal spending, plagued the entire industry, but shipments picked up after the November election, the CEO said.
Perma-Fix hopes to move into new waste streams to produce additional revenue going forward, executives said without elaborating. A company spokesman did not respond to a request Thursday for additional detail.
There is additional cause for optimism, Perma-Fix executives said, highlighting the Trump administration’s proposal to boost spending for Department of Energy legacy nuclear cleanup by over $500 million in fiscal 2018, to $6.5 billion. New Energy Secretary Rick Perry and the Trump transition team have also emphasized employing the commercial sector to accelerate cleanup at DOE sites, which would “obviously be a huge win for us,” Centofanti said.
Perma-Fix contracts with both the federal government and industry for a range of services including nuclear decontamination and decommissioning, waste management, and radiological remediation. Its contracts have included a treatment and disposal subcontract for cleanup of the Hanford Site Central Plateau in Washington state; various projects under the U.S. Army Corps of Engineers’ Formerly Utilized Sites Remedial Action Program; and treatability studies and other work at DOE’s West Valley Demonstration Project in upstate New York.
Management anticipates possible contract awards in the second and third quarters of 2017, Executive Vice President Mark Duff said. The company has about 15 outstanding bids, primarily for government work, and is putting together another five to six procurement offers each week. These generally range from $500,000 to $10 million in value, he added.
A 30 percent “win rate” is reasonable, according to Centofanti.
During the question-and-answer with analysts, he said the company was under “fairly strict orders” not to discuss its high-level waste program. While Centofanti did not discuss the matter further, that appeared to refer to a 2016-2017 test program for processing radioactive waste now stored at the Hanford Site. If the tests of Perma-Fix’s processing system prove successful, Centofanti said in November the company could in 2018 seek a contract to treat some portion of the up to 56 million gallons of waste that would otherwise be converted into a glass form at the Waste Treatment Plant being built at Hanford.
The company also stands to save $4 million to $5 million annually with the planned January 2018 closure of its Perma-Fix Materials & Energy Corp. mixed low-level waste treatment facility in Oak Ridge, Tenn.
Meanwhile, Perma-Fix continues to look for a private investor to fund its isotope business, which would produce Technetium-99m, an isotope used in medical diagnostic imaging. The company hopes to provide an update in the near future, Centofanti said.
In closing, Centofanti said the company anticipates “very significant opportunities” in its treatment and service businesses this year.
“On the treatment side we continue to look forward to moving into variety of new waste streams which we discussed earlier, it represents fairly sizeable opportunities,” he said. “On the service side … we’re bidding in some very large contracts and look forward to providing additional updates in the future. Taking into account the high fixed cost nature of the business and the steps we’ve taken to drive top line growth from managing expenses, we expect to report — dramatically improve profitability in ’17.”
