PERMA FIX ENVIRONMENTAL SERVICES INC Q2 FY2026 earnings call

Key Operational Milestones

• Permafix Northwest was awarded a master subcontract under H2C (Department of Energy Hanford Tank Contractor) for the Tankways Operations and Closure Grouting and Disposal program, a $4.4 billion ceiling IDIQ contract with task orders to be issued 2027 through 2041, shared among all subcontract holders.
• Subsequent to quarter-end, Permafix began receiving liquid effluent waste and dry waste from Hanford's DF Law Facility, marking the culmination of years of permitting, capital investment, and preparation.
• A strategic partnership was formed with Amerian Technologies under the SBA Mentor-Protege Program to combine Permafix's remediation and treatment infrastructure with Amerian's radiation detection and instrumentation expertise to compete for larger clean-up contracts.
• A May 2026 public offering generated $21 million in net proceeds, which is funding capacity upgrades at Permafix Northwest and other growth initiatives. The company ended Q2 with $20.5 million in cash, $2.1 million in total debt, and extended its credit facility maturity to May 2030.

Hanford Program Strategic Position

• Permafix Northwest is the only in-region permitted and operational facility for grouting, located 1 mile from the Hanford site, eliminating the need for long-haul transport of liquid radioactive waste; treated waste is solidified before shipment, addressing regional stakeholder concerns and eliminating the need for new government capital construction.
• The DOE's Hanford Dual Glass Plus Grout strategy positions grouting as a lower-cost (under $50 per gallon vs ~$1,200 per gallon for vitrification), higher-throughput supplement to vitrification, with DOE publicly naming Permafix Northwest as the designated grouting provider for the EMF secondary waste stream.
• A permit modification request has been submitted to expand annual grouting capacity from the current 1.2 million gallons to support DOE's target of 9 million gallons of annual grouting by 2030. Final design and procurement for upgrades are underway, with expansion expected to be complete by Q3 2027.

Causes of Q2 2026 Underperformance

• Customer-directed changes to treatment protocols delayed revenue recognition from Q2 into the second half of 2026, while related operating costs were incurred in Q2, driving the $6.2 million net loss (32 cent basic/diluted loss per share, compared to a $2.7 million loss / 15 cent loss per share in Q2 2025).
• Additional contributors include delayed start for several new services projects, and processing of lower-margin stored legacy waste during the quarter, which is now substantially complete to free capacity for upcoming Hanford volumes.

PFAS Business Updates

• The Gen 2 PFAS destruction unit has been installed, with completed treatment work for commercial and government clients. PFAS sales and processing volumes have increased in summer 2026, with a current backlog supporting Q3 operations and $8 million in pending future award opportunities in the bid pipeline.

Permafix reported total Q2 2026 revenue of $12.9 million, down from $14.6 million in Q2 2025. 1. Treatment Segment: Revenue declined by approximately $3.1 million year-over-year, driven by lower processing volumes and unfavorable lower-margin waste mix. Treatment backlog grew 29% quarter-over-quarter to $15.7 million as of June 30, 2026, up from $12.2 million at the end of Q1 2026, and up from $13.1 million at the end of Q2 2025. This segment accounts for approximately 64.3% of total Q2 2026 revenue. 2. Nuclear Services Segment: Revenue grew 44% year-over-year to $4.6 million, up from $3.2 million in Q2 2025. The increase was driven by contributions from new project awards, partially offset by the completion of older projects. Gross profit improved modestly year-over-year, and the total services backlog stands at over $17 million to be delivered over the next 18 months. This segment accounts for approximately 35.7% of total Q2 2026 revenue.

• Delayed revenue from Q2 2026 is expected to be recognized in Q3 2026, with processing backlogs caught up by the end of the third quarter.
• 60,000 gallons per month of Hanford AP-106 tank waste is expected to be available for grouting as early as Q4 2026, rising to 130,000 gallons per month by 2028, once the AMPS pretreatment system is fully operational. 60,000 gallons per month is within Permafix's current permitted annual capacity.
• Permafix's capacity expansion to support up to 9 million gallons of annual grouting by 2030 remains on track for completion by the second half of 2027, with permit modification expected by mid-2027.
• DF Law Facility waste volumes are expected to increase gradually as the facility ramps up production through 2026 and 2027, supporting growing revenue for Permafix's treatment services.
• Management confirmed existing liquidity (cash, operating cash flows, and borrowing capacity) is sufficient to fund operations for the next 12 months.

• No task orders have been formally awarded under the new H2C master subcontract; volumes and timing are dependent on DOE planning, regulatory approvals, and DF Law Facility ramp-up, all of which are outside Permafix's direct control.
• The permit modification for capacity expansion is subject to regulatory review and a 60-day public comment period, and unforeseen regulatory delays could push back the expansion timeline.
• Revenue and profitability are heavily dependent on the timing and volume of waste shipments directed by U.S. government customers, which are not guaranteed, creating forecast uncertainty.
• Hanford waste composition can vary significantly by tank, which creates uncertainty around average treatment pricing and margins compared to rough estimates based on the overall contract ceiling and maximum volume.
• The long-term nature of the Hanford program means volumes will ramp gradually over multiple years, with potential lumpiness from tank-to-tank transition outages that can create near-term revenue variability.

Q: What volumes of grouting can Permafix expect in late 2026 and 2027, and how will the program scale beyond that?

A: DOE has publicly outlined a plan to ship 60,000 gallons per month (720,000 gallons annually in 2027) starting as early as Q4 2026, within Permafix's current permitted capacity. Volumes are expected to rise to 130,000 gallons per month by 2028 after the AMPS pretreatment system comes online, with a long-term target of 9 million gallons per year of grouting by 2030 across the full Hanford program. No formal task orders have been awarded yet, but management expects awards in the next several months.

Q: How have recent permit modifications impacted the Hanford program timeline?

A: DOE submitted required Class II and Class III permit modifications for the dual glass plus grout strategy in early August, and Washington state regulators approved a 60-day public comment period ending October 6, an aggressive timeline that indicates collaborative support for the program. If the timeline holds, permit modifications could be finalized by mid-to-late October, allowing shipments to begin as early as Q4 2026, with full operations in early 2027.

Q: What is Permafix's current and planned peak processing capacity, and what are the main bottlenecks to ramping up?

A: Current permitted capacity is 1.2 million gallons per year. Permafix has submitted a modification to expand to over 10 million gallons per year, with expansion work already underway (concrete poured, long-lead equipment ordered). The only meaningful bottleneck is regulatory approval of the permit modification, which management expects to complete by Q2 2027, in line with DOE's ramp-up timeline. No major technical or construction bottlenecks are expected, as the expansion uses the same proven grouting technology already in operation at the facility.

Q: Will Hanford revenue be less lumpy than Permafix's historical revenue streams?

A: The Hanford program is the most sustainable, consistent long-term waste stream Permafix has ever secured. While there will be some lumpiness from tank transition outages on the West Side, the combination of East and West Side programs will smooth annual revenue significantly, allowing for more reliable forecasting than historical business patterns.