Business News

Perma-Fix Announces Results for the Third Quarter of Fiscal 2008

Thursday 06. November 2008 - Perma-Fix Environmental Services, Inc. (NASDAQ:PESI) today announced results for the third quarter ended September 30, 2008.

Dr. Louis F. Centofanti, Chairman and Chief Executive Officer, stated, “Although budgetary constraints within the Department of Energy (DOE) continued to impact our Nuclear Segment, this has been one of the most positive and dramatic quarters in our company’s history. We are pleased to report that on October 1, 2008 we commenced work on the on-site remediation contract in Hanford, Washington. In connection with the project, we expect to generate annual revenue of approximately $40 million to $50 million from on- site and off-site services over the next five years, with the opportunity to extend the contract for an additional five years.”

Dr. Centofanti continued, “After careful consideration, we recently made the decision to retain our Ft. Lauderdale, South Georgia and Orlando Industrial Segment facilities as they are regionalized in the Southeast and are expected to be relatively self sufficient with positive cash flow, while allowing for the continued focus on our growing Nuclear Segment. In connection with this strategy shift, we have removed these facilities from ‘discontinued operations,’ where they had been classified since the second quarter of 2007, and reclassified them back into ‘continuing operations.’ As a result, we have taken a charge of $486,000 in the third quarter related to the depreciation of the facilities that went unrecorded during the time they were in discontinued operations.”

Dr. Centofanti concluded, “As previously disclosed, we received our draft permit from the U.S. Environmental Protection Agency (EPA) for the treatment of radioactive polychlorinated biphenyls (PCBs). We are awaiting approval of our final permit, which has taken longer than anticipated; however, we believe we have successfully met all the necessary requirements and remain optimistic that the permit will be issued by the end of 2008. Upon issuance, this permit will open up a new market for Perma-Fix for thermal destruction of commercial and government PCB wastes. In addition, this permit will facilitate DOE’s planned shut down of its TSCA Incinerator, slated for closure in mid 2009, thus allowing Perma-Fix to fill the void for treatment of DOE PCB liquid wastes.”

Financial Results

Revenue for the third quarter of 2008 was $16.0 million, versus $16.3 million for the same period last year. Revenue for the Nuclear Segment decreased to $12.5 million versus $13.2 million for the same period last year. Revenue for the Industrial Segment increased to $2.6 million versus $2.5 million for the same period last year. Revenue from the Engineering Segment increased to $846,000 versus $629,000 for the same period last year. Operating loss for the third quarter was $97,000 versus operating loss of $65,000 for the same period last year. Operating loss for the third quarter of 2008 included a charge of $486,000 ($356,000 recorded in cost of goods sold and $130,000 recorded in selling general and administrative expenses) related to the depreciation of the Industrial Segment facilities that went unrecorded during the time they were in discontinued operations. Operating loss for the third quarter of 2008 also included an asset impairment recovery of $507,000 related to Perma-Fix of Orlando, Inc. Net loss applicable to common stockholders for the third quarter of 2008 was $341,000, or $0.01 per share, versus net loss of $2.0 million or $0.04 per share, for the same period last year. Net loss applicable to common stockholders included a loss from discontinued operations, net of taxes, of $159,000 for the third quarter of 2008, compared to $1.5 million for the third quarter of 2007.

The company had EBITDA of $975,000 during the quarter ended September 30, 2008, as compared to EBITDA of approximately $1.0 million for the same period of 2007. The company defines EBITDA as earnings before interest, taxes, depreciation and amortization. EBITDA is not a measure of performance calculated in accordance with accounting principles generally accepted in the United States (“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 is relevant and useful by enhancing the readers’ ability to understand the company’s operating performance. The company’s management utilizes EBITDA as a means to measure performance. The company’s measurements of EBITDA may not be comparable to similar titled measures reported by other companies. Due to the unique transactions that have resulted from bringing the Industrial Segment back into Continuing Operations, like the Asset Impairment Recovery and the “catch-up” of depreciation, the company recognizes that the EBITDA is an “adjusted EBITDA” and understands these differences when measuring performance. The table below reconciles EBITDA, a non-GAAP measure, to net income for the three and nine months ended September 30, 2008 and 2007.