Earnings call transcript: Perma-Fix Q3 2025 beats EPS forecasts, stock surges

Perma-Fix Environmental Services (NASDAQ:PESI) reported its third-quarter 2025 earnings, surpassing EPS expectations and witnessing a significant pre-market stock surge. The company posted an EPS of -$0.10, outperforming the forecasted -$0.12, marking a 16.67% positive surprise. Revenue reached $17.45 million, exceeding expectations by 7.38%. Following the announcement, Perma-Fix's stock rose by 16.16% to $12.97 in pre-market trading.

Key Takeaways

• Perma-Fix exceeded EPS and revenue forecasts, boosting investor confidence.
• The stock surged by over 16% in pre-market trading.
• Significant improvements in gross margin and EBITDA were reported.
• The PFAS destruction initiative positions the company as a leader in sustainable waste management.
• Long-term growth is anticipated from DOE contracts and international shipments.

Company Performance

Perma-Fix demonstrated robust performance in Q3 2025, with revenue slightly down year-over-year but gross profit doubling. The company achieved a gross margin of 14.6%, up from 7.9% the previous year. Notably, the Treatment Segment saw a 45% increase in revenue, highlighting operational efficiency and strategic market positioning.

Financial Highlights

• Revenue: $17.45 million, surpassing the forecast of $16.25 million.
• Earnings per share: -$0.10, better than the forecasted -$0.12.
• Gross Profit: $2.6 million, doubled from last year.
• Gross Margin: 14.6%, up from 7.9%.
• Treatment Segment Revenue: $13.1 million, a 45% increase year-over-year.

Earnings vs. Forecast

Perma-Fix's actual EPS of -$0.10 exceeded the forecasted -$0.12 by 16.67%. The revenue of $17.45 million was 7.38% above expectations. This positive surprise reflects the company's operational improvements and strategic initiatives.

Market Reaction

Perma-Fix's stock surged by 16.16% to $12.97 in pre-market trading, reflecting investor optimism following the earnings beat. The stock's movement positions it closer to its 52-week high of $15.57, indicating strong market confidence in the company's future prospects.

Outlook & Guidance

Looking forward, Perma-Fix anticipates continued growth driven by DOE waste shipments expected in late 2025 or early 2026. The company projects substantial revenue opportunities from its PFAS destruction technology and international waste shipments, with a treatment backlog of $15.4 million.

Executive Commentary

Marc Duff, President and CEO, expressed satisfaction with the quarter's progress: "We're pleased to report another quarter of solid financial and operational progress." He highlighted the strategic importance of the DOE contract: "This designation establishes the opportunity for a multi-decade high-volume revenue for Perma-Fix."

Risks and Challenges

• Economic Uncertainty: Fluctuations in global markets could impact demand for waste treatment services.
• Regulatory Changes: Shifts in environmental regulations might affect operational costs and processes.
• Competitive Pressure: Increasing competition in the waste management sector could impact market share.
• Technological Advancements: The need to continuously innovate to maintain leadership in PFAS destruction.
• Supply Chain Disruptions: Potential delays in obtaining materials or equipment could hinder operations.

Q&A

The earnings call did not feature a specific Q&A section, but management addressed key areas such as operational efficiency and strategic growth initiatives.

Full transcript - Perma-Fix Environmental Svcs Inc (PESI) Q3 2025:

Conference Operator: Good morning, everyone, and welcome to the Perma-Fix Environmental Services Fiscal Third Quarter 2025 earnings conference call. At this time, all participants have been placed on a listen-only mode, and the floor will be open for questions following the presentation. If anyone should require operator assistance during the conference, please press star zero on your phone keypad. Please note this conference is being recorded. I will now turn the conference over to your host, David Waldman of Crescendo Communications. David, the floor is yours.

David Waldman, Investor Relations, Crescendo Communications: Thank you, Jenny. Good morning, everyone, and welcome to Perma-Fix Environmental Services Third Quarter 2025 conference call. On the call with us this morning are Marc Duff, President and CEO; Dr. Louis Centofanti, Executive Vice President of Strategic Initiatives; and Ben Naccarato, Chief Financial Officer. The company issued a press release this morning containing Third Quarter 2025 financial results, which is also posted on the company's website. If you have any questions after the call or would like any additional information about the company, please contact Crescendo Communications at 212-671-1020. I'd also like to remind everyone that certain statements contained within this conference call may be deemed forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and include certain non-GAAP financial measures.

All statements on this conference call, other than a statement of historical fact, are forward-looking statements that are subject to known and unknown risks, uncertainties, and other factors which could cause actual results and performance of the company to differ materially from such statements. These risks and uncertainties are detailed in the company's filings with the U.S. Securities and Exchange Commission, as well as this morning's press release. The company makes no commitment to disclose any revisions to forward-looking statements or any facts, events, or circumstances after the date hereof that bear upon forward-looking statements. In addition, today's discussion will include references to non-GAAP measures. Perma-Fix believes that such information provides an additional measurement consistent with historical comparison of its performance. A reconciliation of the non-GAAP measures to the most directly comparable GAAP measures is available in today's news release on our website.

I'd now like to turn the call over to Marc Duff. Please go ahead, Marc.

Marc Duff, President and CEO, Perma-Fix Environmental Services: All right. Thanks, David. Good morning, everyone, and thank you for joining us today. We're pleased to report another quarter of solid financial and operational progress for Perma-Fix. Revenue increased to $16.5 million, compared to $16.8 million in the same period last year, while gross profit more than doubled to $2.6 million, up from $1.3 million a year ago. Gross margin expanded to 14.6% from 7.9%, driven primarily by higher waste volumes and a more favorable mix within our treatment operations, partially offset by increased fixed cost. Gross margin also increased by 38% from Q2, reflecting continued operational progress and a stronger overall mix. We also achieved a meaningful improvement in EBITDA versus the prior quarter, reflecting stronger throughput and continued execution discipline. Overall, these results demonstrate consistent progress in margin expansion, backlog growth, and positioning Perma-Fix for long-term sustainable growth across our treatment, PFAS, and nuclear services programs.

Our treatment segment continued to deliver strong performance. Segment revenue increased 45% year over year to $13.1 million, up from $9.1 million in Q3 of 2024, while segment gross margin improved to 17.3% from 4.5%. The improvement was driven up by higher waste volumes, higher throughput at our plants, and solid execution across both commercial and DOE projects. Waste sales totaled $14.6 million, up from $8.4 million in the same period last year, a 74% increase. Our treatment backlog ended the quarter at $15.4 million, up from $7.9 million a year ago, providing a strong visibility through year-end and into 2026. Automation, digital scheduling, and plant optimization initiatives are all improving productivity and throughput while maintaining safety performance overall. We're now realizing the full benefit of these investments, contributing to higher throughput and sequential margin improvement.

We also continue to support international waste shipments, which remain on schedule and are expected to continue into the first half of 2026, adding backlog stability and revenue diversity. We continue to process waste streams from Europe and North America and are evaluating new shipment requests tied to upcoming 2026 European Union programs. During the Hanford, this is one of the most significant and long-term growth opportunities in our company's history. The Department of Energy's Direct Feed Low-Activity Waste facility, also known as DFLAW, initiated hot commissioning in early October ahead of the October 15th triparty agreement milestone. Melter I is now converting tank waste into stable glass, marking a major milestone in DOE's environmental cleanup mission. Under DOE's record decision for the Hanford DFLAW program, Perma-Fix Northwest is the designated commercial treatment pathway for secondary waste streams generated during the vitrification operations.

These include processed liquids and solid residues that require off-site treatment at licensed facilities. This designation establishes the opportunity for a multi-decade high-volume revenue for Perma-Fix as DFLAW meets the objectives for the cleanup of Hanford over the next several decades. We expect to begin receiving effluent waste shipments from DFLAW later in Q4 or early Q1 of 2026, following DOE's initial production phase and associated waste characterization. Although DOE's triparty agreement allows up to three years to reach design capacity for throughput, internal DOE goals indicate an earlier ramp-up, and Perma-Fix Northwest is fully prepared to meet that. Earlier this year, we completed the union transition under our UA Local 598 agreement in the Tri-Cities region for our Perma-Fix Northwest plant. This has improved labor stability, increased hiring efficiency, and allows multi-shift operations to meet DOE throughput requirements while maintaining excellent safety performance.

Taken together, the record decision designation, DOE progress, facility upgrades, and a workforce stability position puts Perma-Fix in a position as a critical commercial link in the DOE's waste treatment chain, a role that provides long-term recurring revenue as DOE's cleanup mission advances. Our PFAS destruction initiative continues to advance both technically and commercially. At our Florida facility, the first-generation Perma-Fast system operated reliably through the quarter, achieving complete destruction of PFAS compounds at a 10-20% cost advantage to incineration and with zero air emissions. System performance improved month over month following Q3 upgrades and increased throughput.

Conference Operator: Please wait a moment whilst we reconnect our speaker. Apologies for the technical issue there. We'll reconnect them very shortly. We appreciate your patience, everybody. We're just reconnecting.

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