Perma-Fix Environmental Services on Nov. 10 indicated it is moving ahead with testing of technology for treating low-activity radioactive waste from the Department of Energy’s Hanford Site, while acknowledging funding challenges facing its medical isotope program.
The Atlanta-based based nuclear services and waste management specialist offered the update in a 10-Q filing with the U.S. Securities and Exchange Commission, published the same day as Perma-Fix’s latest earnings report.
For the third quarter of 2017, Perma-Fix reported a $1.1 million drop in revenue, while its operating and net losses both snuck up by hundreds of thousands of dollars.
Quarterly revenue fell from $12.9 million in 2016 to $11.8 million this year, as revenue in Perma-Fix’s services business was more than halved from $5.3 million to $2.4 million. The business offers waste treatment, processing, and disposal at four (soon to be three) locations.
The revenue reduction was connected to a large commercial project that wrapped up last December and the months-long delay in a government nuclear services project, according to a Perma-Fix press release. A company spokesman said the identities of both clients were not yet being released.
Perma-Fix’s treatment business, which provides services ranging from on-site waste management to industrial hygiene, drove revenue up 22 percent, from $7.6 million in third-quarter 2016 to $9.4 million in the three months ended Sept. 30, 2017. The improvement derived from increased waste volume and a waste mix that boosted the average price for treatment.
“We made significant progress across both segments by strengthening our offerings, expanding our market share, and laying the foundation for growth in our services segment through new initiatives that will leverage our core competencies,” CEO Mark Duff said in the company’s earnings call, citing more services prior to shipments and deployment of other companies’ technologies at Perma-Fix treatment sites.
Perma-Fix’s third business branch, its medical segment, consists of research and development on a new “neutron capture” technology for producing the isotope technetium-99m used in medical imaging. The operation has to date not produced any revenue, and R&D funding was cut from $342,000 in third-quarter 2016 to $197,000 for the corresponding period of 2017.
Management continues to pursue the capital needed to sustain research and development, according to the 10-Q: “We anticipate that our Medical Segment R&D activities will be limited until it obtains the necessary capital through obtaining its own credit facility or additional equity raise. If the Medical Segment is unable to raise the necessary capital, the Medical Segment could be required to further reduce or delay or eliminate its R&D program.”
The company is in “active discussions” with a number of potential partners, Duff said.
The CEO touted Perma-Fix’s future opportunities, and said details should be forthcoming: “We are pursuing a variety of initiatives related to new waste streams, and look forward to discussing these opportunities at the appropriate times in future earnings calls in 2018 as these projects come to fruition.”
Duff acknowledged investor interest in the company’s Test Bed Initiative, in which Perma-Fix technology is being evaluated for disposal of low-activity radioactive waste from the Hanford Site in Washington state. However, he said the Department of Energy has requested that it handle public inquiries on the program.
In October, 3 gallons of low-activity tank waste from Hanford were transported for treatment at a nearby Perma-Fix facility in the city of Richland. This was the first-ever off-site shipment of waste from the former plutonium production plant; the solidified material will eventually be sent for disposal at Waste Control Specialists’ storage site in West Texas.
Successful use of the Perma-Fix treatment technology could pave the way for larger test runs and potentially its application in processing some portion of the 56 million gallons of chemical and radioactive waste stored at Hanford. Ninety percent of that material is estimated to be low-activity waste.
In a section of the 10-Q addressing stock options for a consultant working on the Test Bed Initiative, Perma-Fix laid out a schedule for the test runs: treatment and disposal of 3 gallons of waste by Jan. 27 of next year; treatment and disposal of 2,000 gallons by Jan. 27, 2019, and treatment and disposal of 50,000 gallons by the same date of 2021.
The ultimate goal is “obtaining a long-term commercial contract relating to the treatment, storage and disposal of waste,” the 10-Q says.
Perma-Fix has faced a series of earnings losses in recent quarters, but executives pointed to the company’s upside in their conference call. Duff noted that Perma-Fix’s earnings before interest, taxes, depreciation, and amortization rose from $152,000 in third-quarter 2016 to $654,000 in the most recent quarter, on the back of the improved treatment business.
Still, “We’re obviously disappointed with the revenue from our services segment,” the CEO said. “Strengthening this segment is critical to maintaining our sustainable growth and will be the focus of our management team, and specifically myself, to leverage our technologies and relationships from the treatment segment to grow the services segment.”
Perma-Fix’s operating loss rose from $1.4 million in third-quarter 2016 to $1.9 million in the latest earnings period. The third-quarter operating loss encompassed a roughly $672,000 non-cash tangible asset impairment charge connected to the Materials and Energy Corp. facility in Tennessee, along with $550,000 in additional costs for the treatment site’s shutdown by Jan. 21, 2018. Closure is expected to save the company $4 million to $5 million per year, according to Duff.
Net loss attributable to common attributed to common stockholders for the quarter increased from $1.6 million, $0.13 per share, in 2016 to $2 million, $0.17 per share, this year.
Given the company’s business opportunities, including 45 contract bids submitted through the third quarter, “we anticipate continued improvement in both revenue and profitability heading into the fourth quarter and the new year,” Duff said.
