White Brook Capital, LLC on Perma-Fix Environmental Services, Inc.
Thesis
White Brook believes Perma-Fix is undervalued relative to the long-duration cash flow potentially available from government nuclear-waste treatment. Waste shipments resumed regularly during the quarter, and the company qualified as one of three eligible bidders for a tank-waste program worth up to $4.4 billion overall. The fund expects Perma-Fix to win the largest share because of its location and specialized handling capabilities. At about $255 million enterprise value, the company trades for roughly 2.6 times management's illustrative $100 million Hanford revenue run rate for 2028, a valuation White Brook considers low if those revenues convert to cash.
“we expect the company to win the lion’s share.”
Key risks
- Government testing and administrative delays have already deferred waste shipments and billing.
- The company may need fresh capital before its waste-processing operation becomes cash-flow positive.
- Perma-Fix might not win the expected dominant share of the $4.4 billion procurement.
- The illustrative 2028 revenue run rate may be delayed or produce less cash than forecast.