Perma-Fix Environmental Services (PESI) Q3 2026 earnings review
Perma-Fix waste backlog hits a record, but losses widen
Perma-Fix, a nuclear and hazardous waste treatment provider, rebuilt its order backlog and grew revenue from the second quarter while its core plants still lost money. Total revenue rose 39% from the previous quarter to $18 million as the nuclear services division returned to profit, and waste treatment backlog climbed 25% to $20 million. Even so, customer testing delays at the Hanford nuclear site and plant upgrade downtime pushed the waste treatment division into a gross loss.
| Revenue | $17.9M +2.8% from a year ago (+39% from Q2) |
|---|---|
| Treatment backlog | $19.6M +25% from Q2 (+27% from a year ago) |
| Operating loss | $3.7M $1.9M loss a year ago |
| Gen 2.0 PFAS unit plan | Delayed Operations now H1 2027 vs Q1 2026 prior |
⚖️ Verdict: ⚪ Neutral
The story is unchanged because incoming waste shipments from the Department of Energy's Hanford plant are finally arriving, but the company has not yet turned them into profit or stopped its cash burn. The Hanford facility is now sending both liquid and dry waste, and August price increases are entering the backlog. The bad news: nine-month operating losses reached $18 million, cash fell by $6 million during the quarter, and management kept its warning about substantial doubt over continuing as a going concern.
The question now is whether Perma-Fix can process its record waste backlog fast enough to cover fixed plant costs before liquidity tightens further. Either the completed September plant upgrades allow profitable fourth-quarter processing, or government shipment delays keep the treatment plants below break-even. Fourth-quarter treatment gross margin and year-end cash will settle it.
🐂 Bull Case
Waste Treatment Backlog Reaches Record $19.6 Million
Perma-Fix treats radioactive and hazardous waste at four US plants. Unprocessed waste waiting at those plants — its treatment backlog — grew by $3.9 million from last quarter to $19.6 million, up 27.3% from a year ago by our math. Chief executive Mark Duff said "price increases we began implementing in August are also starting to be reflected in new backlog".
The Direct-Feed Low-Activity Waste (DFLAW) plant, a US Department of Energy facility at the Hanford nuclear site in Washington state, now sends both liquid and dry waste to the company's nearby plant. Perma-Fix is also upgrading that facility "to expand our grouting capacity to support that work" under a shared contract ceiling of $4.4 billion through 2041.
What to watch: fourth-quarter Treatment revenue against the $19.6 million backlog. With plant upgrades finished in September, a step-up in quarterly revenue above last year's $13.1 million third-quarter level would prove the company can turn stored waste into cash.
Nuclear Services Returns to Operating Profit
The Services division, which handles on-site nuclear clean-up, demolition and building removal for government and commercial clients, grew sales 46.2% from a year ago to $6.3 million. New contract wins since the start of the year drove the rebound after federal project delays hurt the division last year.
Higher revenue and more profitable projects lifted the division's gross margin to 12.2%, up from 6.7% a year ago and 3.2% last quarter. That increase turned a year-ago division operating loss of $457,000 into an operating profit of $201,000 before corporate overhead.
What to watch: Services revenue and gross margin in the fourth quarter. Holding quarterly revenue near $6 million with a double-digit gross margin would show that newer contracts like the Lawrence Livermore lab demolition can carry their own costs.
🐻 Bear Case
Plant Downtime Pushed Treatment Into Gross Loss
"Our third quarter results reflect meaningful improvement over the first half of the year," chief executive Mark Duff said. Compared with a year ago, however, total gross margin fell by 11.6 percentage points to 3.1%, because the cost of goods sold — the direct cost of running the plants and field crews — rose from 85.3% of sales to 96.9% by our math.
- Treatment revenue: $11.6 million, down 11.5% from a year ago
- Treatment gross margin: minus 1.9%, down from positive 17.3% a year ago
- Consolidated operating loss: $3.7 million, nearly double the $1.9 million loss a year ago
Two stoppages caused the drop. At Hanford, "customer-directed changes in treatment protocols on a Hanford-related waste stream" held up full processing until September. Perma-Fix also paused work "to upgrade the thermal treatment systems at our Florida and Kingston facilities", leaving fixed plant costs without enough revenue to cover them.
What to watch: Treatment gross margin in the fourth quarter. Because both the Hanford testing and the thermal upgrades finished in September, a fourth-quarter gross margin below the double-digit levels of 2025 would show that fixed plant costs have risen permanently.
Cash Burn Keeps Going Concern Warning Active
Perma-Fix warned in its quarterly filing that "recurring operating losses and negative operating cash flows continue to raise substantial doubt about our ability to continue as a going concern". Although the nuclear waste group raised money by selling new shares in May 2026 and extended its PNC bank credit line to May 2030, nine-month operating losses reached $17.7 million.
Total cash on the balance sheet dropped by $5.8 million during the third quarter to $14.7 million, while net property and equipment rose by $5.7 million over the first nine months as the company paid for plant upgrades. Perma-Fix ended September with $19.9 million in total liquidity, including $5.5 million of borrowing room.
The company could not remove the warning because its recovery depends on the "timing and volume of government-directed waste shipments and project activity, which remain subject to factors outside our control". What to watch: total cash and credit availability at year-end. Another quarterly cash drop of $5 million would use up the remaining credit room.
Second-Generation Chemical Destruction Unit Slips Again
Perma-Fix destroys per- and polyfluoroalkyl substances (PFAS), long-lasting industrial chemicals found in firefighting foam, using a chemical reactor rather than an incinerator. Management originally planned to commission its larger second-generation unit — designed to triple processing capacity — in the first quarter of 2026.
Duff said the Gen 2.0 unit is now "expected to begin commissioning in the fourth quarter of 2026, with operations anticipated to commence during the first half of 2027". Because large industrial partners have waited to see the bigger unit run before signing contracts, the delay pushes commercial revenue into next year.
What to watch: confirmation on the fourth-quarter call that the Gen 2.0 unit has started commercial operation. Another slip beyond the first half of 2027 would delay the revenue needed to cover the new reactor's capital cost.
👓 Other Themes
Florida Foam Ban Supports Chemical Destruction Demand
The State of Florida passed a law this year "phasing out PFAS-containing firefighting foam", with limited exceptions. Perma-Fix operates its first-generation chemical destruction unit in Florida and already saw higher chemical sales and waste receipts in the third quarter than in the first half of the year, so management expects the state law to bring steady disposal work.
💲 Other KPIs
Unbilled receivables — revenue recorded for work completed that the company has not yet invoiced to customers — rose 24.2% from last quarter and 35.5% from the end of 2025 by our math. That buildup tied up $3.1 million of working capital over the first nine months while billed accounts receivable fell 8.5% to $10.3 million.
Weighted average diluted shares rose 14.9% from a year ago and 6.9% from the second quarter by our math. Perma-Fix sold new common stock in a May 2026 public offering to raise cash and fund its plant upgrades, which increased paid-in capital by $22.3 million since December 2025.
Overhead and administrative spending fell 2.1% from a year ago, dropping by 1.1 percentage points of revenue to 22.3% by our math. The nuclear services group held overhead down while revenue recovered 39.3% from the second quarter.
🔮 Guidance
Cut. The company pushed back testing of its second-generation chemical destruction reactor to the fourth quarter of 2026, with commercial work now starting in the first half of 2027. Earlier plans called for commissioning in the first quarter of 2026 and $500,000 in monthly sales by the end of 2026.
❓ Key Questions
How much revenue did the Hanford protocol change delay?
Processing of a Hanford waste stream only reached full speed in September after testing approvals arrived in late August. Knowing the dollar value of the delayed work would show how much of the third-quarter Treatment gross loss was one-off.
What are current monthly waste volumes from Hanford DFLAW?
Perma-Fix Northwest now receives both liquid and dry waste from the Department of Energy's DFLAW plant. Last year chief executive Mark Duff estimated early DFLAW receipts could bring $1 million to $2 million a month, so actual volume figures would test that target.
Why has the second-generation chemical unit slipped to 2027?
Commissioning of the Gen 2.0 PFAS unit moved from early 2026 to late 2026, with operations in the first half of 2027. Investors need to know whether engineering issues or permit approvals caused the delay.
How much capital spending remains for the grouting expansion?
Cash fell by $5.8 million in the third quarter while Perma-Fix upgraded its Florida, Kingston and Hanford plants. With a going-concern warning still in the filing, the remaining bill for Hanford grouting upgrades will decide whether current cash is enough.