Executives with radioactive waste management specialist Perma-Fix Environmental Services on Friday acknowledged rough earnings numbers for the latest quarter and entirety of 2016. But they said the outlook is improving, particularly with an opportunity to treat large amounts of waste at the Department of Energy’s Hanford Site in Washington state.
“We’ve been very disappointed with what has happened to our ongoing business both in the quarter and the year,” Perma-Fix CEO Louis Centofanti said in an earnings conference call. “Looking back, at the start of the year we had orders that indicated that we were in store for a very good year. What we have seen, though, has been a large number of shipments [of waste for treatment] that were delayed and unanticipated spending constraints at the federal level.”
This situation was widespread throughout the industry, Centofanti said. “Even though budgets were not reduced, work programs were put on hold until after the election.”
Perma-Fix reported a $1.4 million operating loss for the third quarter of 2016, a steep drop from $1.5 million in income for the same period last year. The Atlanta-based company chalked up a $1.6 million net loss attributable to common stockholders, or $0.13 per share, compared with income of $1.1 million, and $0.09 per share, a year ago.
Third-quarter revenue fell from $17.3 million in 2015 to $12.9 million for the three months ending Sept. 30 this year.
Perma-Fix has faced ugly numbers all year, with net revenue dropping from $47.3 million in the first nine month of 2015 to $37.8 million over that period of 2016. Income from operations is down from $315,000 last year to a loss of $16.2 million this year.
The “trying year” forced Perma-Fix to return to its lenders for waivers, which were approved, Centofanti said.
Perma-Fix offers a host of nuclear services for the public and private sectors, including decontamination, decommissioning, and demolition; treatment of low-level and mixed waste; and facility management and operations. It has been a subcontractor to CH2M Hill for the Plateau Remediation Contract at the Hanford Site, along with providing waste management services for DOE’s Lawrence Berkeley National Laboratory in California and the Waste Valley Demonstration Project in upstate New York.
Management believes it has moved past most of the unanticipated events that hurt the company this year, and has a strong outlook for the fourth quarter and into 2017, the CEO said. Waste shipments for treatment are beginning to move, and improvement should continue through the end of the year, according to Centofanti.
The company hopes in a matter of days to conduct a treatment demonstration for less than 5 gallons of waste from Hanford, which is now home to 56 million gallons of radioactive and chemical waste produced during Cold War-era plutonium production for U.S. nuclear weapons. This would be the company’s first foray into treatment of high-level waste, which management described as a more-than $1 billion opportunity.
“I can’t emphasize enough the revenue potential from this project, which could eclipse anything we’ve done in that past,” Centofanti said.
The demonstration is expected to be completed this year. Should it go well, Perma-Fix would follow in 2017 with a much larger demonstration involving 2,000 gallons of waste. The ultimate aim would be to secure a contract in 2018.
The treatment process would be aimed at Hanford waste that is less suitable for undergoing vitrification, the process that would be employed at the massive Waste Treatment Plant being built by Bechtel at the DOE site.
Centofanti and other executives on the call did not discuss details of the technology, or how much Hanford waste it might ultimately treat.
Perma-Fix said it is also moving ahead with closure of its M&EC facility in Oak Ridge, Tenn., which was designed for treatment of low-level and mixed low-level waste. Closing the plant should save the company $1 million to $2 million annually, according to the Perma-Fix earnings release.
Within the company’s three business segments, the Services branch was a bright spot in the quarter, bringing in $5.3 million in revenue and $360,000 in profit. However, both figures are still down year over year from revenue of $6.4 million and $507,000 in profit.
The Treatment segment pulled in $7.6 million in revenue but recorded a loss of $125,000; that compares with $10.9 in revenue in 2015 and profit of $2.7 million.
The Medical segment lost $527,000 in the most recent quarter, up from $342,000 last year. It is not yet producing revenue. Perma-Fix also anticipates selling $10 million worth of shares in Perma-Fix Medical Corp. (PFMC), a subsidiary of Perma-Fix Medical, which has developed a proprietary method for production of the medical isotope technetium-99m. The purchase, at a price of $8 per share, would give a private investor 48.6 percent of voting securities in PFMC.
