PERMA FIX ENVIRONMENTAL SERVICES INC Q4 FY2024 earnings call

• Challenges in 2024 included project start delays, procurement cycles, and waste receipts due to federal budget issues, but Q1 2025 shows improvement with strengthened waste treatment backlog and increasing waste volumes.
• DF Law at Hanford is on track to begin initial tank waste treatment operations in summer 2025, with DOE reaffirming a legally binding milestone of August 1st. The Perma-Fix Northwest facility is prepared to support effluent treatment.
• Won DOE's West Valley demonstration project, a ten-year multibillion-dollar contract starting transition in Q1 2025, with revenue expected to scale through 2025.
• PFAS destruction technology: PermaFAST system operated at commercial scale, with Gen 2 unit scheduled for deployment in late Q3 2025 to triple processing capacity and include chemical recycling.
• Expanding international presence, particularly in Canada, Mexico, and Europe, with the JRC project in Italy on track for treatment operations in late 2026.
• Appointed Troy Echeman as Chief Operating Officer effective January 23, 2025.

For the fourth quarter, total revenue from continuing operations was $14.7 million, down from $22.7 million in the prior year. The Treatment segment was down $1.4 million, and the Services segment was down $6.6 million. For the year ended 2024, total revenue was $59.1 million, down from $89.7 million in 2023. The Treatment segment revenue dropped by $8.5 million, and Services revenue by $22.1 million. The Treatment segment was impacted by poor weather, continuing resolution effects, equipment maintenance, and PFAS R&D. The Services segment was affected by procurement delays from the continuing resolution.

• Expect return to growth and profitability in 2025, driven by strengthening backlog, improving waste treatment volumes, ramp-up of DF Law program at Hanford, Gen 2 PermaFAST deployment in late Q3 2025, key contract wins, and cost discipline.
• Anticipate a strong second half of 2025 as key programs ramp up.
• Confident in positioning for federal projects as funding stabilizes, despite ongoing procurement uncertainties.

• Federal budget uncertainties and continuing resolutions impacting procurement cycles and revenue.
• Risks associated with significant investment in PFAS initiatives affecting financial results.
• Potential delays or issues with regulatory approvals and project milestones.

Q: How does federal budget uncertainty impact near-term operations and larger opportunities like West Valley and Hanford?

A: Mark Duff stated a shutdown of less than two weeks would have limited impact, but a CR has limited impact with no budget cuts expected in some areas, and most services projects are funded. DOE's bias towards execution is positive for Perma-Fix.

Q: Can you elaborate on the phasing and preparation for DF Law startup at Hanford?

A: The DFLOP facility is undergoing an operational readiness review. It's expected to start receiving waste in mid-Q3 2025, starting at a portion of design capacity and ramping up over three years.

Q: What are the costs associated with PFAS initiatives and their trend in 2025?

A: Ben Naccarato said 2024 costs were ~$3 million, with 2025 projections around $5 million including Gen 2 R&D and cap spending. Gen 1 is being upgraded, and Gen 2 is scheduled for Q3 2025 deployment.

Q: How does Hanford contribute to cash flow breakeven, and what capex is needed?

A: Mark Duff and Ben Naccarato indicated that with DF Law and other Hanford programs, they expect to be cash positive by end of Q3 2025, with no additional capex needed at present as included in recent raises.

Q: Can PFAS technology be made mobile, and what are market opportunities?

A: Louis Centofanti mentioned mobile units are possible, especially for soil treatment, and there are opportunities in fracking, fertilizers from water treatment plants, and biosolids with environmentally benign reagents.