Date: August 1, 2006
Source: Perma-Fix Environmental Services, Inc.
Gross Margin Increases Over 500 Basis Points to 35%
Perma-Fix Environmental Services, Inc. (Nasdaq: PESI) announced financial results for the second quarter and six months ended June 30, 2006.
Highlights for the second quarter include (year-over-year):
Gross profit increased 10.9% to $8.2 million
* Gross margin increased 542 basis points to 34.7%
* Net income increased 44.3% to $1.8 million
Dr. Louis F. Centofanti, Chairman and Chief Executive Officer, stated, "Our ongoing initiatives to improve profitability over the past year have had a positive impact, as illustrated by the continued margin improvement and our fifth consecutive quarter of profitability. Although our Nuclear segment declined slightly, reflecting an unusually strong second quarter in 2005 and our efforts to receive shipments more evenly throughout 2006, we anticipate this segment will continue its annual growth during the remainder of 2006, while generating strong cash flow. At the same time, we are moving away from lower margin waste streams within our Industrial segment, which is having a favorable impact on our profitability. During the second quarter, SG&A was unusually high, due to an adjustment to accruals for environmental liabilities and other items, which were offset by a gain from discontinued operations resulting from an adjustment to the environmental reserve for the closed facility in Detroit. Nevertheless, I am pleased to report we posted strong increases in net income available to common shareholders."
Dr. Centofanti continued, "Going forward, we will be rolling out new treatment capabilities in our Nuclear segment, as well as treating higher- level and classified radioactive mixed wastes, which we believe will have a positive impact on our revenue and gross margins during the balance of 2006. Although our Industrial segment revenue may remain relatively flat for the balance of 2006, as we replace unprofitable contracts, we expect our Industrial segment will continue to improve during the balance of 2006. Longer-term, we believe the new sales initiatives we are currently implementing to focus on higher margin oily water and fuel recycling waste streams should also have a positive impact on our Industrial segment."
Financial Results
Revenues for the second quarter of 2006 were $23.5 million versus $25.1 million for the same period last year. Revenue for the Nuclear segment was $13.1 million versus $13.8 million for the second quarter of 2005, reflecting a change in revenue mix. Revenue for the Industrial segment was $9.5 million versus $10.6 million in the same period last year, reflecting the Company's efforts to replace lower margin contracts.
Income from operations for the second quarter was $1.4 million versus $2.0 million for the same period last year. Income from operations for the second quarter of 2006 included approximately $1.0 million of increases for environmental liabilities and other items.
Net income applicable to common stock for the second quarter of 2006 was $1.8 million, or $0.04 per share, versus $1.2 million or $0.03 per share, for the same period last year. Net income applicable to common stock for the 2006 fiscal second quarter included an increase from discontinued operations of $1.0 million due to a reevaluation of the costs to close the facility in Detroit, which was partially offset by expenses incurred at the Company's discontinued operations in Detroit and Pittsburgh.
Revenues for the six months ended June 30, 2006, were $44.6 million versus $46.6 million for the same period last year. Revenue for the Nuclear segment was $25.3 million versus $24.7 million for the six months ended June 30, 2005. Revenue for the Industrial segment was $17.7 million versus $20.4 million for the same period last year.
Income from operations for the six months ended June 30, 2006, remained constant at $2.9 million from the same period last year.
Net income applicable to common stock for the six months ended June 30, 2006, was $2.5 million, or $0.05 per share, versus net income applicable to common stock of $1.1 million or $0.03 per share, for the same period last year. Net income applicable to common stock for the six months ended June 30, 2006, included a gain from discontinued operations of $1.0 million due to a reevaluation of the costs to close the facility in Detroit, which was partially offset by expenses incurred at the Company's discontinued operations in Detroit and Pittsburgh.
The Company's EBITDA increased to $3.5 million during the quarter ended June 30, 2006, as compared to $3.0 million for the same period of 2005. 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 because it helps improve the investors' 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. The table below reconciles EBITDA, a non-GAAP measure, to net income for the three and six months ended June 30, 2006 and 2005.
For more information visit: www.perma-fix.com.
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