Perma-Fix Environmental Services, Inc. 2026 Q2 Earnings Call

Thank you, Ollie. Good afternoon, everyone, and welcome to Perma-Fix Environmental Services second quarter 2026 conference call. On the call with us this afternoon are Mark Duff, President and CEO, Dr. Lou Centofanti, Executive Vice President of Strategic Initiatives, and Ben Naccarato, Chief Financial Officer. The company issued a press release this afternoon containing second quarter 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 would 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 statements 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 afternoon'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 and consistent 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 would now like to turn the call over to Mark Duff. Please go ahead, Mark. All right.

Thanks, David, and good afternoon, everyone. Thank you for joining us. I want to start by being direct about the quarter. Our second quarter financial results were below expectations. Revenue was at $12.9 million, and we reported a net loss of $6.2 million. That is not the quarter we wanted to deliver, and I am going to walk you through exactly what happened and why. I also want to be clear about something. The second quarter delivered the operational milestones we have been working for years. Those milestones, not this quarter's results, are what will define where the company is headed. Yesterday, the Department of Energy's Hanford Tank Contractor, H2C, announced the award of the master IDIQ for tank waste operations and closure for grouting and disposal to support the tank retrieval and disposition mission at the site.

This mission is one of the most important programs within DOE's Office of Environmental Management and reflects this administration's priority to accelerate the removal of risk associated with the 56 million gallons of waste stored in the tanks at Hanford. The contract carries a maximum value of approximately $4.4 billion, with task orders eligible to be issued from 2027 through 2041. To be clear, that is a ceiling shared among all subcontract holders, not an amount awarded or committed to Perma-Fix. The program is supported by the Tri-Party Agreement with the state and federal regulators to remediate 22 tanks from the 200 West Tank area during that period. In addition, the contract was modified during the RFP process to include other tank and liquid waste streams to provide a contract vehicle for the 200 East Tank area as a supplement to the DFLAW program.

While this award is an IDIQ contract vehicle, it will be used by H2C to issue task orders for specific volumes of waste to be dispositioned within the defined periods. H2C also awarded master subcontracts to two other companies, both located out of state. Perma-Fix Northwest is the only facility of the three where these liquids can be grouted near the point of generation without long-haul transport of liquid tank waste. Our Perma-Fix Northwest facility, located about 1 mile from the Hanford site, will provide capacity to meet the goals for tank retrieval and liquid waste processing as the program grows to meet the DOE EM goals and objectives.

We have been preparing for this program for some time, upgrading our facilities, procuring large-scale treatment equipment, expanding our workforce through hiring and training, and acquiring the rail line parcel that connects Perma-Fix Northwest to the Port of Benton Short Line Railroad for direct rail shipments of treated waste. Under the performance work statement for the contract, we are required to maintain the capability to treat and dispose of pre-treated tank waste at the rate of 100,800 gallons per week over a 7-week period. When annualized, this level is well above our current permanent annual capacity, and that is why we are expanding our current permit that I will discuss in a moment, which is already underway, to support the task orders that will be eligible for it beginning in January. Let me turn to why we are confident about the second half and beyond.

DOE has adopted what it calls the Hanford dual glass-plus-grout strategy. In DOE's own framing, grouting is a proven technology already approved under the Hanford Holistic Agreement, and the Savannah River Site has also treated 13 million gallons of tank waste inventory in the same way. DOE projects the approach will deliver up to 300% more throughput while reducing treatment and disposal costs from roughly $1,200 per gallon to under $50 per gallon, in contrast to vitrification costs. DOE has presented the dual path strategy to stakeholders specifying Perma-Fix Northwest as the grouting provider for the EMF secondary waste effluent stream, which is the material we're receiving today. The H2C contract awarded yesterday will likely be used as the contract vehicle for the EMF beginning in January when the contract becomes active. On volumes, I want to be precise because these numbers get quoted loosely.

The glass-plus-grout approach includes acceleration of tank retrieval operations at 100,000 gallons per month using the existing TSCR. In case you don't know, the TSCR is the Tank-Side Cesium Removal system, which is an ion exchange system which removes the radioactive component of cesium, most of it from the waste stream. That TSCR is a critical part to pulling the waste out of the tanks currently.

Hello, I think we're back on. Can you hear me? We have.

Yes, sir. Okay. I'm not sure.