Two weeks ago Perma-Fix Environmental Services, Inc, a hazardous and non-hazardous waste treatment and storage services provider, paid its lender $12,500 not to test the company’s Q3 2024 fixed charge coverage ratio (FCCR), a loan covenant that requires it to maintain a minimum ratio of cash flow or earnings to fixed charges.

The lender will also allow Perma-Fix to change how it calculates FCCR in Q4 and beyond as FCCR testing resumes.

Perma-Fix also included new language in its latest quarterly filing that seems to sow doubt regarding its ability to comply with the FCCR covenant when it resumes:

“...in the event we are able to achieve our minimum quarterly FCCR requirement…the maintenance of a daily minimum Liquidity requirement of $3,000,000…will be removed.”

The leniency comes as Perma-Fix’s business significantly deteriorates.

Though it says business will improve in 2025, Perma-Fix’s revenue decreased by $5,065,000 or 23.2%, with gross margin falling $3,215,000 or 70.7%.

Perma-Fix blamed equipment break downs, investments in PFAS treatment facilities, Hurricane Helene, and waste shipments that will push into the fourth quarter.

However, the decline was predominantly, in our view, due to what appear to be one-off projects from federal spending programs that will not recur, including:

“...the completion of two large projects in the Services Segment in late 2023 were not replaced by new projects of similar value. Together, these two large projects had generated significant amount of revenue in the third quarter of 2023 when they were in full operational status.”