SOURCE: Perma-Fix Environmental Services, Inc.

Perma-Fix Environmental Services, Inc. Logo

August 22, 2016 07:00 ET

Perma-Fix Reports Financial Results and Provides Business Update for the Second Quarter of 2016

ATLANTA, GA--(Marketwired - August 22, 2016) - Perma-Fix Environmental Services, Inc. (NASDAQ: PESI) today announced results for the second quarter and six months ended June 30, 2016.

Dr. Louis F. Centofanti, Chief Executive Officer, stated, "As previously disclosed, we experienced growth in our Services Segment and achieved positive Adjusted EBITDA, despite continued delays of waste shipments within our Treatment Segment during the second quarter of 2016. Based on our current sales pipeline, we anticipate improvement in revenue and cash flow in the second half of 2016 as many of the waste shipments that were delayed remain on track for later this year. Nevertheless, due to timing issues and our revenue recognition model, we are revising our guidance, and now believe adjusted EBITDA for the full year should be approximately of $3 to $4 million."

"We are very pleased to report continued progress on an important demonstration project we are currently conducting with a significant customer related to the treatment of high level waste streams. We believe that if this project is successful, it could open the door to a new market opportunity."

"As discussed in our preliminary financial results reported on August 16, 2016, with the expiration of our lease at our M&EC facility located in Oak Ridge, Tennessee, scheduled for January 2018, we are proceeding to shut down this facility, which we anticipate will result in certain fixed costs savings. We believe that M&EC can reroute waste streams with minimal impact to our revenue or disruption to our customers. As a result of this decision, our second quarter financial results include certain non-cash tangible and intangible asset impairment losses and other charges as described below in connection with our M&EC subsidiary."

Financial Results

Revenue for the second quarter of 2016 was $14.8 million versus $16.4 million for the same period last year. Revenue for the Treatment Segment was $8.0 million compared to $11.1 million for the same period in 2015. Revenue from the Services Segment was $6.8 million versus $5.3 million for the same period in 2015.

Gross profit for the second quarter of 2016 was $1.8 million versus $4.0 million for the second quarter of 2015 primarily due to lower revenue in the Treatment Segment resulting from lower waste volume. Gross profit for the second quarter of 2016 also included a write-off of approximately $587,000 in prepaid fees in connection with the impairment of certain equipment at our M&EC facility which is expected to be shut down as discussed above. Gross profit decreased approximately $2.2 million and gross margin decreased to 12.3% from 24.7% for the same period last year primarily due to decreased revenue in the Treatment Segment and the impact of our fixed costs structure. Our gross profit and margin were also impacted by the $587,000 write-off as discussed above.

Operating loss for the second quarter of 2016 was $11.2 million versus an operating income of $613,000 for the second quarter of 2015. Operating loss for the second quarter of 2016 included non-cash tangible and intangible asset impairment charges of approximately $1.8 million and $8.3 million, respectively, resulting from the pending shut down of the Company's M&EC facility in Oak Ridge, Tennessee. Operating loss also included the $587,000 write-off in prepaid fees as discussed above. Net loss attributable to common stockholders for the second quarter of 2016 was $8.2 million or ($0.71) per share, versus net loss of $154,000 or ($0.01) per share, for the same period in 2015. Net loss attributable to common stockholders for the second quarter of 2016 included a tax benefit of approximately $3.2 million resulting from the impairment loss incurred on intangible assets for our M&EC facility.

The Company recorded Adjusted EBITDA of $824,000 from continuing operations during the quarter ended June 30, 2016, as compared to Adjusted EBITDA of $2.0 million for the same period of 2015. The Company defines EBITDA as earnings before interest, taxes, depreciation and amortization. Adjusted EBITDA is defined as EBITDA before research and development costs related to the Medical Isotope project, impairment charges on tangible and intangible assets and write-off of prepaid fees resulting from tangible asset impairment loss. Both EBITDA and Adjusted EBITDA are not measures of performance calculated in accordance with Generally Accepted Accounting Principles in the United States of America ("GAAP"), and should not be considered in isolation of, or as a substitute for, earnings as an indicator of operating performance or cash flows from operating activities as a measure of liquidity. The Company believes the presentation of EBITDA and Adjusted EBITDA is relevant and useful by enhancing the readers' ability to understand the Company's operating performance. The Company's management utilizes EBITDA and Adjusted EBITDA as a means to measure performance. The Company's measurements of EBITDA and Adjusted EBITDA may not be comparable to similar titled measures reported by other companies. The table below reconciles EBITDA and Adjusted EBITDA, both non-GAAP measures, to GAAP numbers for (loss) income from continuing operations for the three and six months ended June 30, 2016 and 2015.

       
       
   Three Months Ended   Six Months Ended  
   June 30,   June 30,  
(In thousands)  2016   2015   2016   2015  
(loss) Income from continuing operations  $(8,134 ) $407   $(11,980 ) $(1,606 )
                      
                      
Adjustments:                     
 Depreciation & amortization   912    943    1,796    1,909  
 Interest income   (31 )  (11 )  (47 )  (20 )
 Interest expense   108    140    276    267  
 Interest expense - financing fees   29    56    85    115  
 Income tax (benefit) expense   (3,167 )  36    (3,130 )  71  
                      
EBITDA   (10,283 )  1,571    (13,000 )  736  
                      
Research and development costs related to                     
Medical Isotope project   416    432    854    827  
Impairment loss on tangible assets   1,816        1,816      
Impairment loss on intangible assets   8,288        8,288      
Write-off of prepaid fees resulting from impairment                     
loss on tangible asset   587        587      
                      
Adjusted EBITDA  $824   $2,003   $(1,455 ) $1,563  
                      
                 

The tables below present certain unaudited financial information for the business segments, excluding allocation of corporate expenses and research and development costs related to our Medical Isotope project:

       
       
   Three Months Ended   Six Months Ended  
   June 30, 2016   June 30, 2016  
   (Unaudited)   (Unaudited)  
(In thousands)  Treatment   Services  Medical   Treatment   Services  Medical  
Net revenues  $7,985   $6,824  $   $15,189   $9,658  $  
Gross profit   582    1,234       444    1,406     
Segment (loss) profit   (7,390 )  1,046   (416 )  (8,675 )  322   (854 )
                       
                       
       
       
   Three Months Ended   Six Months Ended  
   June 30, 2015   June 30, 2015  
   (Unaudited)   (Unaudited)  
(In thousands)  Treatment  Services  Medical   Treatment  Services   Medical  
Net revenues  $11,087  $5,267  $   $20,836  $9,119   $  
Gross profit   3,335   697       4,570   940      
Segment profit (loss)   2,258   60   (432 )  2,443   (241 )  (827 )
                             
                      

The Company failed to meet its quarterly fixed charge coverage ratio in the second quarter of 2016. The Company's inability to meet its quarterly fixed charge coverage ratio in the second quarter of 2016 was primarily due to delays in receipt of certain waste shipment which have been rescheduled for later this year. Based on discussions with the Company's lender, the Company expects to receive a waiver from its lender for this non-compliance. In the event that the Company is unable to secure this waiver, the Company would be required to reclassify the long-term portion of its bank debt, in the amount of approximately $9.4 million as of June 30, 2016 as included in Long-term liabilities on the Company's balance sheet as reported below to Current liabilities, which would result in the Company's working capital being adjusted to approximately a negative $7.4 million. Under our credit facility, as amended, our failure to meet any of the financial covenants contained in the credit facility, unless waived by our lender, could result in our lender declaring our credit facility in default allowing them to immediately require the repayment of all outstanding debt under the credit facility and terminate all commitments to extend further credit. Our lender has not declared our credit facility in default, and, as provided above, based on discussions with our lender, we expect our lender to waive our failure to meet our quarterly fixed charge coverage ratio for the second quarter of 2016.

Based on our discussion with the Company's lender, the Company also expects to receive a revision in the methodology to be used in calculating our fixed charge coverage ratio which we believe will enable us to meet our fixed charge coverage ratio requirement for the remaining quarters of 2016.

Conference Call

Perma-Fix will host a conference call at 11:00 a.m. ET on Monday, August 22, 2016. The call will be available on the Company's website at www.perma-fix.com, or by calling (877) 407-0778 for U.S. callers, or +1 201-689-8565 for international callers. The conference call will be led by Dr. Louis F. Centofanti, Chairman and Chief Executive Officer, Ben Naccarato, Vice President and Chief Financial Officer, and Mark Duff, Executive Vice President, of Perma-Fix Environmental Services, Inc.

A webcast will also be archived on the Company's website and a telephone replay of the call will be available approximately one hour following the call, through midnight August 29, and can be accessed by calling: (877) 481-4010 (U.S. callers) or +1 (919) 882-2331 (international callers) and entering conference ID: 10081.

About Perma-Fix Environmental Services

Perma-Fix Environmental Services, Inc. is a nuclear services company and leading provider of nuclear and mixed waste management services. The Company's nuclear waste services include management and treatment of radioactive and mixed waste for hospitals, research labs and institutions, federal agencies, including the Department of Energy ("DOE"), the Department of Defense ("DOD"), and the commercial nuclear industry. The Company's nuclear services group provides project management, waste management, environmental restoration, decontamination and decommissioning, and radiological protection, safety and industrial hygiene capability to our clients. The Company operates four nuclear waste treatment facilities and provides nuclear services at DOE, DOD, and commercial facilities, nationwide.

Please visit us on the World Wide Web at http://www.perma-fix.com.

This press release contains "forward-looking statements" which are based largely on the Company's expectations and are subject to various business risks and uncertainties, certain of which are beyond the Company's control. Forward-looking statements generally are identifiable by use of the words such as "believe", "expects", "intends", "anticipate", "plans to", "estimates", "projects", and similar expressions. Forward-looking statements include, but are not limited to: anticipate improvement in revenue and cash flow in the second half of 2016; receipt of certain large waste treatment shipments later this year; anticipate adjusted EBITDA of $3 to $4 million for the full year; fixed costs savings from M&EC facility shut down; financial results of our M&EC subsidiary; receipt of waiver from our lender as a result of failure to meet a certain financial covenant during the second quarter of 2016; meeting fixed charge coverage ratio requirement for remaining quarters of 2016; and the effect of failure to obtain the waiver from our lender. These forward-looking statements are intended to qualify for the safe harbors from liability established by the Private Securities Litigation Reform Act of 1995. While the Company believes the expectations reflected in this news release are reasonable, it can give no assurance such expectations will prove to be correct. There are a variety of factors which could cause future outcomes to differ materially from those described in this release, including, without limitation, future economic conditions; industry conditions; competitive pressures; our ability to apply and market our new technologies; the government or such other party to a contract granted to us fails to abide by or comply with the contract or to deliver waste as anticipated under the contract; that Congress fails to provides continuing funding for the DOD's and DOE's remediation projects; ability to obtain new foreign and domestic remediation contracts; inability to meet financial covenants; and the "Risk Factors" discussed in, and the additional factors referred to under "Special Note Regarding Forward-Looking Statements" of, our 2015 Form 10-K and Forms 10-Q for quarters ended March 31, 2016 and June 30, 2016. 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.

Please visit us on the World Wide Web at http://www.perma-fix.com.

FINANCIAL TABLES FOLLOW

PERMA-FIX ENVIRONMENTAL SERVICES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)

   Three Months Ended   Six Months Ended  
   June 30,   June 30,  
(Amounts in Thousands, Except for Per Share Amounts)  2016   2015   2016   2015  
                  
Net revenues  $14,809   $16,354   $24,847   $29,955  
Cost of goods sold   12,993    12,322    22,997    24,445  
 Gross profit   1,816    4,032    1,850    5,510  
                      
Selling, general and administrative expenses   2,375    2,930    5,431    5,776  
Research and development   554    489    1,128    918  
(Gain) loss on disposal of property and equipment   (1 )      4      
Impairment loss on tangible assets   1,816        1,816      
Impairment loss on intangible assets   8,288        8,288      
 (Loss) income from operations   (11,216 )  613    (14,817 )  (1,184 )
                      
Other income (expense):                     
Interest income   31    11    47    20  
Interest expense   (108 )  (140 )  (276 )  (267 )
Interest expense-financing fees   (29 )  (56 )  (85 )  (115 )
Foreign currency gain               (4 )
Other   21    15    21    15  
(Loss) income from continuing operations before taxes   (11,301 )  443    (15,110 )  (1,535 )
Income tax (benefit) expense   (3,167 )  36    (3,130 )  71  
(Loss) income from continuing operations, net of taxes   (8,134 )  407    (11,980 )  (1,606 )
                      
Loss from discontinued operations, net of taxes   (264 )  (713 )  (431 )  (936 )
 Net loss   (8,398 )  (306 )  (12,411 )  (2,542 )
                      
Net loss attributable to non-controlling interest   (164 )  (152 )  (337 )  (324 )
                      
Net loss attributable to Perma-Fix EnvironmentalServices, Inc. common stockholders  $
(8,234
) $
(154
) $
(12,074
) $
(2,218
)
                      
Net (loss) income per common share attributable to Perma-Fix                     
Environmental Services, Inc. stockholders - basic and diluted:                    
Continuing operations  $(.69 ) $.05   $(1.00 ) $(.11 )
Discontinued operations   (.02 )  (.06 )  (.04 )  (.08 )
 Net loss per common share  $(.71 ) $(.01 ) $(1.04 ) $(.19 )
                      
Number of common shares used in computing net income (loss) per share:                     
Basic   11,574    11,505    11,566    11,496  
Diluted   11,574    11,536    11,566    11,496  
                      
The accompanying notes are an integral part of these consolidated financial statements.  
   
PERMA-FIX ENVIRONMENTAL SERVICES, INC. 
CONSOLIDATED BALANCE SHEET 
       
  June 30,  December 31, 
  2016  2015 
  (Unaudited)  (Audited) 
(Amounts in Thousands, Except for Share and Per Share Amounts)      
         
ASSETS        
Current assets:        
 Cash and equivalents $379  $1,534 
 
Account receivable, net of allowance for doubtful accounts of $1,122 and $1,474, respectively  10,213   9,673 
 Unbilled receivables  3,956   4,569 
 Other current assets  2,695   4,306 
 Assets of discontinued operations included in current assets, net of allowance        
 for doubtful accounts of $0 for each period presented  85   34 
  Total current assets  17,328   20,116 
         
Net property and equipment  18,268   19,993 
Property and equipment of discontinued operations, net of accumulated depreciation of $10 for each period presented  81   531 
Intangibles and other assets  33,196   42,273 
Other assets related to discontinued operations  303    
  Total assets $69,176  $82,913 
         
LIABILITIES AND STOCKHOLDERS' EQUITY        
Current liabilities $14,832  $16,619 
Current liabilities related to discontinued operations  521   531 
  Total current liabilities  15,353   17,150 
         
Long-term liabilities  19,386   18,997 
Long-term liabilities related to discontinued operations  1,002   1,064 
  Total liabilities  35,741   37,211 
Commitments and Contingencies        
Series B Preferred Stock of subsidiary, $1.00 par value; 1,467,396 shares authorized, 1,284,730 shares issued and outstanding, liquidation value $1.00 per share plus accrued and unpaid dividends of $899 and $867, respectively  
 1,285
   
 1,285
 
Stockholders' equity:        
 Preferred Stock, $.001 par value; 2,000,000 shares authorized, no shares issued and outstanding      
 Common Stock, $.001 par value; 30,000,000 shares authorized, 11,581,973 and 11,551,232 shares issued, respectively; 11,574,331 and 11,543,590 shares outstanding, respectively  
11
   
 11
 
 Additional paid-in capital  105,717   105,556 
 Accumulated deficit  (72,882)  (60,808)
 Accumulated other comprehensive loss  (134)  (117)
 Less Common Stock in treasury at cost: 7,642 shares  (88)  (88)
  Total Perma-Fix Environmental Services, Inc. stockholders' equity  32,624   44,554 
 Non-controlling interest  (474)  (137)
   Total stockholders' equity  32,150   44,417 
         
  Total liabilities and stockholders' equity $69,176  $82,913 
           

Contact Information

  • Contacts:
    David K. Waldman
    US Investor Relations
    Crescendo Communications, LLC
    (212) 671-1021

    Herbert Strauss
    European Investor Relations
    herbert@eu-ir.com
    +43 316 296 316