Perma-Fix targets $1M–$2M monthly Hanford revenue in early 2026 amid record backlog and PFAS ramp

Earnings Call Insights: Perma-Fix Environmental Services, Inc. (PESI) Q3 2025

MANAGEMENT VIEW

* Mark Duff, President and CEO, stated that "revenue increased $17.5 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 rose to 14.6% from 7.9%, attributed to higher waste volumes and a favorable mix in Treatment operations. Duff emphasized, "gross margin also increased by 38% from Q2," highlighting operational progress and stronger mix.
* Duff shared, "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 '24... segment gross margin improved to 17.3% from 4.5%." Waste sales reached $14.6 million, up from $8.4 million in the prior year, and the Treatment backlog ended the quarter at $15.4 million versus $7.9 million a year ago.
* On the Hanford opportunity, Duff said, "Department of Energy's direct feed low activity wage facility... initiated hot commissioning in early October... Perma-Fix Northwest is the designated commercial treatment pathway for secondary waste streams generated during the vitrification operations... This designation establishes the opportunity for a multi-decade high-volume revenues."
* Regarding PFAS, Duff noted the first-generation system at the Florida facility "achieved complete destruction of PFAS compounds at a 10% to 20% cost advantage to incineration and with 0 air emissions," and highlighted a backlog of 20,000 gallons under contract with anticipated commitments for another 25,000 gallons.
* Construction of a second-generation PFAS unit near Oak Ridge is "nearing completion with commissioning expected in Q1 of 2026," designed to process 1,000 gallons per shift, scalable to 2,000.
* Ben Naccarato, CFO, stated, "total revenue for the quarter was $17.5 million, an increase of $642,000 or roughly 4% from the $16.8 million in the third quarter of '24... gross profit for the quarter improved to $2.6 million or 14.6% of revenue compared with $1.3 million in the same period last year." Naccarato added, "EBITDA from continuing operations was a loss of $1.5 million compared to a loss of $2.1 million in the prior year quarter... net loss for the quarter was $1.8 million compared with $9 million loss last year."

OUTLOOK

* Duff projected, regarding Hanford, "we're still confident or comfortable, I should say, that the original DOE estimate... of 8,000 cubic meters a year annually is still an applicable number." He elaborated, "we'd expect the $1 million to $2 million in revenue per month beginning sometime in early '26 in the January, February time frame."
* For PFAS, Duff forecasted, "projecting about $150,000 a month in revenue through this quarter with the potential of increasing that closer to $200,000 in Q2, a little bit later in '26, we expect to get closer to $500,000 a month in revenue."
* Construction on the Oak Ridge PFAS facility is expected to wrap up in Q1 2026 with ramping contributions anticipated thereafter.

FINANCIAL RESULTS

* Revenue for the quarter was $17.5 million, with the Treatment segment contributing $13.1 million. Gross profit was $2.6 million, and gross margin reached 14.6%. SG&A expenses rose to $4.1 million. Net loss for the quarter was $1.8 million, improved from $9 million in the prior year. Cash on hand at quarter-end was $16.4 million, with total debt at $1.9 million. Cash used from operations was $8.3 million, and investing activities used $2.7 million.
* The Services segment saw a revenue decline to $4.3 million, attributed to DOE and DoD project delays and slower award timing.

Q&A

* Howard Brous, Wellington Shields: Asked about the impact of the government shutdown. Duff responded that impact was "very minimal" on waste treatment, though some shipments were delayed. "We expect it to start rolling again right after the shutdown is over... We have a real solid backlog, best backlog we've had in years."
* Brous: Inquired about the Hanford grouting program. Duff confirmed, "The grouting program shouldn't be" affected by the shutdown and detailed DOE's focus on expediting tank closure.
* Brous: Asked about expected Hanford waste volumes and timing. Duff said, "We'd expect the $1 million to $2 million in revenue per month beginning sometime in early '26."
* Brous: On PFAS, Duff projected revenue ramp to $500,000 per month by end of 2026 with the new system.
* Aaron Spychalla, Craig-Hallum: Asked about backlog confidence and international shipments. Duff detailed ongoing shipments from Canada and Germany, and momentum in government, commercial, and international markets.
* Spychalla: On Services performance, Duff stated several $30 million jobs are being bid and expects to "sustain where we are right now for several more quarters."
* Spychalla: On CapEx, Ben Naccarato stated, "through the end of the year... another $2 million or so," and expects a trend toward $2 million to $3 million a year in 2026.
* Aaron Warwick, Breakout Investors: Asked about West Valley, Duff said expectations remain but timelines have shifted late into 2026 or 2027 for significant ramp.
* Warwick: On Hanford, Duff reiterated confidence in uninterrupted operations due to the melter process.
* Warwick: On PFAS partnerships, Duff noted existing engagements and that broader commercialization awaits the second-generation system's operational proof.
* Anthony Harpel: Asked about rare earth mining waste. Duff discussed potential applications for Perma-Fix's soil sorting technology and ongoing bids, with revenue possible in the summer if successful.
* Steven Fein: Asked about Hanford's ramp. Duff confirmed 1 million gallon annual capacity is the target within three years, with Perma-Fix prepared to grout 400,000 gallons now and up to 1.1 million with a new permit.

SENTIMENT ANALYSIS

* Analysts expressed cautious optimism, with repeated questions focused on revenue timing, backlog strength, and project delays, indicating concern about execution risks and government funding cycles.
* Management maintained a confident and constructive tone during prepared remarks and Q&A, reinforcing recurring themes of operational progress and strategic positioning. Duff frequently indicated, "we're very confident" and "we expect," but also acknowledged timing uncertainties and project delays.
* Compared to the previous quarter, analyst tone remained neutral to slightly positive, but with more probing on project timelines and the pace of revenue realization. Management's confidence level was steady, with slightly more detailed forward guidance.

QUARTER-OVER-QUARTER COMPARISON

* The company reported improved gross margins and a higher backlog versus the prior quarter, with the Treatment segment continuing to drive growth.
* Guidance was more specific on Hanford ($1M–$2M monthly revenue) and PFAS revenue ramp, compared to broader outlooks last quarter.
* Strategic focus shifted toward scaling PFAS commercialization and maximizing Hanford opportunities, while Services segment challenges persisted due to project delays.
* Analyst questions evolved to focus more on the timing of revenue recognition and backlog conversion, reflecting ongoing concerns about federal procurement cycles and project execution.
* Management tone remained confident; however, the level of detail provided on growth drivers and timelines increased.

RISKS AND CONCERNS

* Management highlighted DOE and DoD project delays affecting the Services segment, slower award timing, and government shutdown-related shipment pauses.
* Duff acknowledged, "PFAS... is moving a lot slower than we'd originally anticipated," but maintained expectations for acceleration as new capacity comes online.
* CapEx requirements for PFAS and Hanford expansion present ongoing funding and execution risks, though management indicated expenditures would align with realized backlog and revenue.
* Analysts raised questions around Hanford ramp timing, West Valley delays, and the pace of PFAS commercialization, signaling concerns about timely project execution and customer adoption.

FINAL TAKEAWAY

Perma-Fix Environmental Services delivered another quarter of margin expansion and backlog growth, driven by strong performance in its Treatment segment and advancing PFAS and Hanford initiatives. Management signaled confidence in capturing substantial recurring revenue from Hanford beginning in early 2026 and outlined a clear path to scaling PFAS operations, despite current delays. While Services segment challenges and federal funding variability remain ongoing risks, the company enters the fourth quarter with record backlog, expanding capabilities, and a robust pipeline of government and commercial opportunities.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/pesi/earnings/transcripts]

MORE ON PERMA-FIX ENVIRONMENTAL SERVICES

* Perma-Fix Environmental Services, Inc. (PESI) Q3 2025 Earnings Call Transcript [https://seekingalpha.com/article/4841376-perma-fix-environmental-services-inc-pesi-q3-2025-earnings-call-transcript]
* Perma-Fix: Hanford And Other Catalysts Near [https://seekingalpha.com/article/4820878-permafix-hanford-and-other-catatlysts-near]
* Seeking Alpha’s Quant Rating on Perma-Fix Environmental Services [https://seekingalpha.com/symbol/PESI/ratings/quant-ratings]
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