PESI Q3 Deep Dive: Treatment Segment Growth and PFAS Commercialization Drive Outlook

Environmental waste treatment and services provider Perma-Fix (NASDAQ:PESI) announced better-than-expected revenue in Q3 CY2025, with sales up 3.8% year on year to $17.45 million. Its non-GAAP loss of $0.10 per share was 16.7% above analysts’ consensus estimates.

Is now the time to buy PESI? Find out in our full research report (it’s free for active Edge members).

StockStory’s Take

Perma-Fix’s third quarter results were well received by the market, with management attributing the positive outcome to strong revenue growth in the Treatment segment and operational improvements across facilities. CEO Mark Duff highlighted that higher waste volumes and a shift to more favorable project mix contributed to gross margin expansion, supported by automation and plant optimization initiatives. The company also benefited from increased throughput at its plants, as well as steady international waste shipments, which together helped more than double gross profit compared to the prior year. Duff noted, “These results demonstrate consistent progress in margin expansion, backlog growth and positioning Perma-Fix for long-term sustainable growth.”

Looking ahead, management believes that the combination of Hanford project milestones, expanding PFAS destruction capabilities, and a robust federal bid pipeline will be key drivers. Perma-Fix expects to benefit from the Department of Energy’s (DOE) ongoing cleanup efforts at Hanford, where the company is designated as the primary commercial treatment pathway for secondary waste streams. CEO Mark Duff stated, “Our priorities remain clear: convert backlog efficiently, scale PFAS commercialization, capitalize on DOE opportunities such as those at Hanford and maintain a disciplined cost management program.” The company is also preparing for the ramp-up of its next-generation PFAS unit and anticipates increased customer demand as regulatory requirements tighten.

Key Insights from Management’s Remarks

Management attributed the quarter’s performance to strong execution in Treatment operations, improved operational efficiency, and early returns from PFAS initiatives, while government project delays weighed on the Services segment.

• Treatment segment outperformance: The Treatment segment saw significant growth, with revenue rising year-over-year due to higher waste volumes and improved throughput. This was supported by both commercial and Department of Energy (DOE) projects, as well as international waste shipments, particularly from Canada and Germany.
• Margin expansion from plant optimization: Gross margin improvements were driven by automation, digital scheduling, and plant optimization initiatives, which increased productivity and throughput. These operational changes are now yielding full benefits, evidenced by sequential margin improvement.
• PFAS destruction progress: The company’s PFAS (per- and polyfluoroalkyl substances) destruction system in Florida operated reliably, achieving complete destruction of PFAS compounds at a cost advantage to incineration and with zero air emissions. The backlog for PFAS destruction is expected to keep the unit fully utilized into 2026.
• Hanford project momentum: Perma-Fix Northwest is positioned as the designated commercial treatment provider for secondary waste streams from the DOE’s Hanford Direct Feed Low Activity Waste (DFLAW) facility. Initial waste shipments are expected in late Q4 or early Q1 2026, with multiyear recurring revenue potential.
• Services segment headwinds: The Services segment experienced a revenue decline, mainly due to delays and timing of government projects. Management noted a strong federal bid pipeline and expects field activity to rebound as DOE and Department of Defense programs resume under approved funding.

Drivers of Future Performance

Perma-Fix’s outlook is shaped by the ongoing ramp-up at Hanford, PFAS commercialization, and the pace of government project awards.

• Hanford waste treatment ramp: Management expects the DOE’s DFLAW facility to begin sending waste shipments in late Q4 or early Q1 2026, with recurring monthly revenue potential as operations scale. Perma-Fix is preparing for increased throughput and is confident in its capacity to handle the anticipated waste volumes.
• PFAS market expansion: The company is nearing completion of its second-generation PFAS destruction unit in Tennessee, which will triple processing capacity and lower costs. Perma-Fix anticipates rising demand as regulatory scrutiny intensifies, and is exploring on-site, mobile solutions to address customer needs in the liquid PFAS market.
• Government project timing risk: While the federal bid pipeline is robust, management identified the timing of government project awards and potential impacts from temporary government shutdowns as key uncertainties. The company expects pent-up demand from project delays to drive a rebound in activity as funding normalizes.

Catalysts in Upcoming Quarters

In future quarters, the StockStory team will be watching (1) the pace and scale of Hanford DFLAW waste shipments and Perma-Fix’s throughput ramp, (2) successful commissioning and customer adoption of the second-generation PFAS destruction unit, and (3) the timing and size of new government project awards, particularly in the Services segment. Execution on mobile PFAS solutions and international waste contracts will also serve as important markers for sustained growth.

Perma-Fix currently trades at $15, up from $12.90 just before the earnings. Is there an opportunity in the stock?The answer lies in our full research report (it’s free for active Edge members).

Now Could Be The Perfect Time To Invest In These Stocks

Donald Trump’s April 2025 "Liberation Day" tariffs sent markets into a tailspin, but stocks have since rebounded strongly, proving that knee-jerk reactions often create the best buying opportunities.

The smart money is already positioning for the next leg up. Don’t miss out on the recovery - check out our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.

StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.