Perma-Fix (PESI) Q2 2025: Waste Backlog Jumps 67%, Locking in Second Half Visibility
Perma-Fix’s Q2 showed a decisive inflection in waste backlog, up 67% year-over-year, underpinning improved second half revenue visibility despite segmental volatility. Treatment segment automation and process gains are set to lift margins, while federal project delays in Services are expected to ease as procurement cycles normalize. PFAS technology traction, international contracts, and a $200M+ federal pipeline signal a multi-year growth runway as the company pivots from operational remediation to scalable, recurring revenue streams.
Summary
- Backlog Surge Secures Near-Term Revenue: Waste backlog expansion provides strong volume visibility into late 2025.
- PFAS and International Momentum: Commercial PFAS wins and EU contracts diversify future growth levers.
- Margin Recovery Anchored in Automation: Treatment segment process upgrades drive margin upside in the second half.
Performance Analysis
Perma-Fix delivered sequential and year-over-year revenue growth in Q2, with total revenue reaching $14.6 million, up 4.3% from the prior year. The treatment segment, waste processing and disposal operations, was the standout, posting a 37% revenue increase as waste receipts doubled to 14 million pounds. This surge was driven by Hanford-related shipments and improved throughput following the resolution of technical bottlenecks via automation and process improvements.
The services segment, field remediation and cleanup projects, lagged, with revenue down $2.5 million due to federal procurement delays and project timing. Despite this, gross profit rebounded sharply to $1.5 million from a loss last year, reflecting operational leverage and lower variable costs. SG&A rose to $4.1 million, split between increased PFAS business development and new leadership hires. Net loss narrowed to $2.7 million, while cash ended at $22.6 million, and total debt remained manageable at $2 million. The quarter closed with a 13.2 million waste backlog, up from $7.9 million at year-end, providing improved revenue visibility.
- Treatment Segment Margin Turnaround: Automation and process fixes resolved early quarter constraints, setting up margin expansion in H2.
- Services Segment Drag: Federal project delays and procurement cycles weighed on revenue, but execution is now back on track for key DOE and DOD sites.
- SG&A Investment: PFAS commercialization and international bids drove higher marketing and admin spend, positioning for future growth.
International waste receipts and PFAS pilot deployments add further diversification, while backlog and pipeline strength offset near-term service volatility.
Executive Commentary
"We delivered a sequential and -over-year revenue growth in the second quarter accompanied by a meaningful improvement in our gross margin. These results reflect continued progress on our operational initiatives, particularly within our treatment segment, where revenue increased approximately 37 percent compared to the same period last year."
Mark Duff, President and Chief Executive Officer
"Our treatment segment began the quarter with backlog of $10 million and had waste receipts and related revenues in excess of $14 million during the quarter, which contributed to the improved revenue and the strong backlog entering the third quarter."
Ben Nakarado, Chief Financial Officer
Strategic Positioning
1. Treatment Segment: Automation and Capacity Expansion
Technical challenges in the treatment segment were addressed through automation and process upgrades, enabling higher throughput, improved safety, and lower manual labor costs. The Hanford waste stream, a recurring, multi-year opportunity, is now stabilized and expected to deliver $2–3 million in monthly revenue as the Department of Energy’s (DOE) DF Law Facility ramps up later in 2025. The Northwest facility is becoming a strategic anchor, supporting both Hanford and broader domestic and international demand.
2. PFAS Technology: Commercialization and Scale
PFAS, per- and polyfluoroalkyl substances, destruction technology, is gaining commercial traction, with year-to-date sales of $500,000 and expanded demonstrations with Fortune 500 and government clients. The Gen 2 system, under construction in Oak Ridge, will support up to 3,000 gallons per day and enable mobile deployment, opening new market verticals like landfills and remote sites. Regulatory momentum at federal and state levels is expected to catalyze further adoption.
3. Federal Services: Contract Pipeline and Execution
Services segment performance is rebounding as project delays tied to federal procurement cycles abate. The $240 million Navy RADMAC III IDIQ contract win positions Perma-Fix for steady radiological remediation task orders, while the West Valley DOE project, now in a planning phase, is a multi-year, high-value opportunity. The company is bidding on over $200 million in new federal and commercial contracts, with award decisions expected in early 2026.
4. International Expansion: EU and Cross-Border Waste Streams
International waste receipts exceeded $7 million over the past two quarters, with growing demand from Canada, Germany, Mexico, and Italy. The €50 million EU contract in Italy is advancing through permitting, with treatment operations slated for 2026, providing a long-term growth lever and geographic diversification.
Key Considerations
This quarter’s results mark a transition from operational firefighting to strategic execution, with backlog, automation, and new contract wins creating a platform for margin recovery and growth. Investors should weigh the following:
Key Considerations:
- Backlog-Driven Visibility: The 13.2 million waste backlog supports revenue certainty through late 2025, reducing near-term dependence on new awards.
- PFAS and Regulatory Tailwinds: Active PFAS pilots and evolving regulations position Perma-Fix to capture outsized share in a nascent but expanding market.
- Federal Contract Pipeline: Over $200 million in bids, including Army Corps and DOE labs, could materially alter revenue mix and scale if awarded.
- International Growth: EU and cross-border contracts diversify risk and offer multi-year recurring revenue potential.
- Margin Leverage from Automation: Process improvements in treatment are already yielding gross margin gains, with further upside as volumes ramp.
Risks
Federal procurement delays and administrative turnover remain a source of execution risk for the Services segment. The timing and composition of Hanford and DF Law waste streams are uncertain, impacting capacity planning and capital allocation. PFAS commercialization is still in early stages, and regulatory momentum, while favorable, is not guaranteed to translate into rapid revenue growth. International contracts are subject to permitting and geopolitical risk.
Forward Outlook
For Q3 and Q4 2025, Perma-Fix expects:
- Full benefit from treatment automation and higher Hanford volumes to drive margin expansion.
- Services segment to recover as delayed federal projects commence and new task orders are awarded.
For full-year 2025, management maintained a constructive outlook, citing:
- Backlog and pipeline support for improved financial results in the second half.
- DF Law Facility ramp and PFAS commercialization as key growth catalysts for 2026.
Management highlighted:
- Ongoing cost discipline and targeted margin improvement programs.
- Visibility into $200 million plus of federal and commercial bids with award decisions in early 2026.
Takeaways
Perma-Fix’s Q2 marks a strategic pivot from operational remediation to backlog-driven growth, with automation and new contract wins setting up margin recovery and multi-year expansion.
- Waste Backlog as Revenue Anchor: The 67% YoY backlog increase materially de-risks the second half and sets the stage for 2026 growth.
- PFAS and International Expansion: Early PFAS wins and EU contracts diversify growth while supporting a shift toward recurring, scalable revenue.
- Federal Pipeline as a Wildcard: Over $200 million in pending bids could structurally alter the business mix and scale if conversion rates hold.
Conclusion
Perma-Fix enters the second half with backlog-fueled visibility, automation-driven margin upside, and a robust pipeline across PFAS, federal, and international markets. Execution on contract conversion and operational scale will determine the pace and durability of the growth inflection.
Industry Read-Through
Perma-Fix’s backlog-driven model and PFAS technology traction reflect broader trends in hazardous waste management: federal procurement cycles remain a gating factor for services players, while automation is key to margin recovery. The company’s PFAS commercialization progress and international contract wins highlight rising regulatory and cross-border demand for advanced waste destruction solutions. Competitors in environmental services and remediation should watch for accelerated PFAS adoption, increased automation investment, and the impact of federal pipeline conversion on industry structure and pricing power.