Perma-Fix Announces Second Quarter Results

ATLANTA, Aug. 2 /PRNewswire-FirstCall/ -- Perma-Fix Environmental Services, Inc. (Nasdaq: PESI; BSE)(Germany: PES.BE) today announced financial results for the quarter ended June 30, 2004. Revenues for the quarter were $19.9 million compared to $19.9 million for the same period in 2003. Net income applicable to common stock for the quarter was $70,000, compared to net loss applicable to common stock of $1.3 million, or $.04 per share, for the same period in 2003.

The second quarter of 2004 included $2.7 million in revenue resulting from sales by our new subsidiaries created from the acquisition of certain assets of USL Environmental Services, Inc. d/b/a A&A Environmental ("A&A") of Baltimore, Md. and US Liquids of Pennsylvania, Inc. d/b/a EMAX ("EMAX") of Pittsburgh, Pa. The second quarter of fiscal 2003 included $625,000 in revenue from the Company's Newport Hydrolysate Project with the Army.

Results for the quarter reflect an 8.0% increase in revenue from the Nuclear Segment and a 6.5% decrease in revenue from the Industrial Segment. The decrease in the Industrial Segment was largely attributable to the recent restructuring, in which the company eliminated low-margin, high volume services, and reduced its dependence on outside brokers. Also affecting the Industrial Segment during the quarter was the ongoing disruption at the Michigan facility resulting from a fire in the fourth quarter of 2003.

For the six months ended June 30, 2004, consolidated revenues were $37.3 million compared to $39.4 million for the period ended June 30, 2003. Net loss applicable to common stock for the six months was $2.0 million, or $.05 per share, compared with net loss applicable to common stock of $1.7 million, or $.05 per share for the same period in 2003.

Dr. Louis F. Centofanti, Chairman and CEO, commented, "Our recent restructuring efforts are now beginning to have a very positive effect on the Industrial Segment. As anticipated, our revenues were down slightly, as the Industrial Segment eliminated low-margin brokered customers. However, we are now seeing improved revenues as our new sales efforts take effect. As we analyze the results of the Industrial Segment for the quarter, the major contributor to its loss was the operating losses sustained at the Michigan facility, as a result of its ongoing disruption. Looking ahead, we remain focused on increasing revenues and achieving sustained profitability within the Industrial Segment, as we strengthen our dominant position in the Southeast."

Dr. Centofanti continued, "Within the Nuclear Segment, we increased revenues and achieved profitability during the second quarter. We also demonstrated a new PCB treatment process for contaminated soils to the U.S. Environmental Protection Agency. We believe such demonstrations are an important element to our long-term growth, and this particular technology addresses a sizeable untapped market. However, as important as this is, the demonstration also utilized capacity at the M&EC facility, which limited our revenue growth during the quarter. Nevertheless, as we enter the third quarter, our pipeline is stronger than ever, and we are encouraged by the outlook for both revenue growth and improved cash flow in the second half of 2004."

Perma-Fix Environmental Services, Inc. is a national environmental services company, providing unique mixed waste and industrial waste management services. The Nuclear Segment provides radioactive and mixed waste treatment services to hospitals, research laboratories and institutions, numerous federal agencies including the Departments of Energy and Defense and nuclear utilities. The Industrial Segment provides hazardous and non-hazardous waste treatment services for a diverse group of customers including Fortune 500 companies, numerous federal, state and local agencies and thousands of smaller clients. The Company operates eleven major waste treatment facilities across the country.

This press release contains "forward-looking statements" which are based largely on the Company's expectations and are subject to various business risks and uncertainties, certain of which are beyond the Company's control. Forward-looking statements include, but are not limited to, the information concerning increasing revenue and achieving sustained profitability within Industrial Segment, strengthening our dominant position in the Southeast, the Nuclear Segment pipeline being stronger than ever and the outlook for both revenue growth and improved cash flow in the second half of 2004. These forward-looking statements are intended to qualify for the safe harbors from liability established by the Private Securities Litigation Reform Act of 1995. While the Company believes the expectations reflected in this news release are reasonable, it can give no assurance such expectations will prove to be correct. There are a variety of factors which could cause future outcomes to differ materially from those described in this release, including without limitation, future economic conditions, industry conditions, competitive pressures, changes in environmental laws, continued disruption at the Michigan facility, and neither the government nor any party delivering waste as anticipated. 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.

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                           FINANCIAL TABLE FOLLOWS


                           Three Months Ended           Six Months Ended
                                 June 30,                     June 30,
    (Amounts in Thousands,
     Except for Per
      Share Amounts)          2004         2003         2004         2003

    Net revenues           $19,868      $19,909      $37,337      $39,427
    Cost of goods sold      14,438       15,391       28,346       29,848

      Gross profit           5,430        4,518        8,991        9,579

    Selling, general and
     expenses                4,417        4,786        8,807        9,166

     Income (loss) from
      operations             1,013        (268)          184          413

    Other income (expense):
     Interest income             1            3            2            5
     Interest expense        (579)        (691)      (1,249)      (1,393)
     Interest expense-
      financing fees         (257)        (257)        (513)        (558)
     Other                    (61)           10        (305)         (55)

    Net income (loss)          117      (1,203)      (1,881)      (1,588)

    Preferred Stock dividends (47)         (48)         (94)         (94)
    Net income (loss)
     applicable to
     Common Stock              $70     $(1,251)     $(1,975)     $(1,682)

    Net income (loss)
     per common share:

    Basic                      $--       $(.04)       $(.05)       $(.05)
    Diluted                    $--       $(.04)       $(.05)       $(.05)

    Number of shares and
     potential common shares
     used in net income (loss)
     per common share:

    Basic                   41,448       34,798       39,244       34,702
    Diluted                 45,210       34,798       39,244       34,702

               (Amounts in Thousands, Except for Share Amounts)

                                             June 30, 2004  December 31, 2003

    Current assets:
     Cash                                            $190             $411
     Restricted cash                                   61               30
     Accounts receivable, net of allowance
      for doubtful accounts of $711 and $703       27,347           24,622
     Prepaid expenses and other                     3,085            3,318
      Total current assets                         30,683           28,381

    Net property and equipment                     54,545           53,069
    Permits                                        16,680           16,680
    Goodwill                                        6,216            6,216
    Finite Risk Sinking Fund                        2,225            1,234
    Other assets                                    4,128            4,635
      Total assets                               $114,477         $110,215

    Current liabilities:
     Accounts payable                              $7,245           $6,359
     Accrued expenses and other                    13,904           14,967
     Current portion of long-term debt              2,296            2,896
      Total current liabilities                    23,445           24,222

    Other long-term liabilities                     8,809            8,074
    Long-term debt, less current portion           21,478           26,192
      Total long-term liabilities                  30,287           34,266

      Total liabilities                            53,732           58,488

    Commitments and Contingencies                      --               --

     Preferred Stock of subsidiary,
      $1.00 par value; 1,467,396
      shares authorized, 1,284,730 shares
      issued and outstanding, liquidation
      value $1.00 per share                         1,285            1,285

     Stockholders' equity:
      Preferred Stock, $.001 par value;
      2,000,000 shares authorized,
      2,500 shares issued and outstanding              --               --
     Common Stock, $.001 par value;
      75,000,000 shares authorized,
      42,545,331 and 37,241,881 shares
      issued, including 988,000 shares held
      as treasury stock, respectively                  43               37
     Additional paid-in capital                    80,573           69,640
     Accumulated deficit                         (19,218)         (17,243)
     Interest rate swap                              (76)            (130)
                                                   61,322           52,304

    Less Common Stock in treasury at cost;
     988,000 shares                               (1,862)          (1,862)

     Total stockholders' equity                    59,460           50,442
     Total liabilities and stockholders'
       equity                                    $114,477         $110,215

Source: Perma-Fix Environmental Services, Inc.