Perma-Pipe International Holdings Announces First Quarter Financial Results
13 June 2017 - 11:00PM
Perma-Pipe International Holdings, Inc. (NASDAQ:PPIH) announced
today financial results for the first quarter ended April 30, 2017.
CEO David Mansfield commented, “The earnings from
continuing operations in the quarter reflect an improvement versus
the prior-year period, but production volumes have continued to
reflect the depressed state of the markets that we have been
experiencing since last year. However, aside from the regular
seasonal downturn in Canada from April through July, during each
month of this year we have seen a steady recovery in the levels of
bid activity. Since the beginning of the fiscal year, our backlog
has increased by 25% to $55.9 million, with the largest percentage
increase from the U.S. market. We are hopeful that this is
indicative of some strengthening of the market conditions that we
had previously anticipated, and our current expectation is that
this market trend will continue during the coming months.
“Our efforts to reduce costs to better manage these
lower levels of activity are now showing notable impact, with a 19%
reduction in our SG&A costs in the quarter versus the
prior-year period when excluding the impact from foreign currency
losses. In addition, we reduced our plant fixed costs, which has
lessened the adverse impact to gross margins resulting from the
reduced volumes and pricing pressures.”
Mr. Mansfield concluded, “If our expectations of
improving market conditions and anticipated project bookings are
realized in the coming months, we believe we are in a good position
to respond to the upturn. In the meantime, we will continue to
maintain tight control over our infrastructure costs while seeking
to ensure that these prospects are secured into our backlog.”
BACKLOG
($ in thousands) |
May 31, 2017 |
April 30, 2017 |
January 31, 2017 |
Piping Systems |
$ |
55,947 |
$ |
49,365 |
$ |
44,615 |
FIRST FISCAL QUARTER ENDED APRIL 30,
2017
SALES - Net sales increased 2% to
$23.5 million in the current quarter from $23.1 million in the
prior-year quarter. Weak demand for insulated pipe used in
infrastructure projects in the Middle East negatively impacted the
year-over year revenue comparison. This was more than offset by
higher volumes, most prominently in our Canadian operations, where
we acquired full equity ownership a year ago.
GROSS PROFIT - Gross margin
decreased to 8% of net sales in the current quarter from 9% of net
sales in the prior-year quarter. Project bids in markets with
weak demand are increasingly competitive with corresponding
pressure on intake margins. Further reductions in plant expenses
helped to mitigate some of the impact.
EXPENSES - Operating expenses
decreased to $5.6 million from $6.5 million, as the
results of management changes and retirements took effect. Savings
from management changes and retirements were partly offset by $0.4
million in exchange rate losses realized in Q1 2017 on the payback
of intercompany loans extended to a foreign subsidiary.
TAXES - The Company's worldwide
effective income tax rates (“ETR”) on continuing operations for
2017 and 2016 were 12.2% and 4.0%, respectively. The change
in the ETR from the prior year to the current year was mainly due
to the foreign income activity.
NET LOSS - Net loss was
$3.5 million in fiscal 2017 compared to a loss of
$6.1 million in the prior-year-quarter.
Perma-Pipe International Holdings,
Inc.
Perma-Pipe International Holdings is a global
leader in pre-insulated piping and leak detection systems for oil
and gas gathering, district heating and cooling, and other
applications. It uses its extensive engineering and fabrication
expertise to develop piping solutions that solve complex challenges
regarding the safe and efficient transportation of many types of
liquids. In total, Perma-Pipe has operations at seven
locations in five countries.
Forward-Looking Statements
Statements and other information contained in this
announcement that can be identified by the use of forward-looking
terminology constitute "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended,
and are subject to the safe harbors created thereby, including,
without limitation, statements regarding the expected future
performance and operations of the Company. These statements should
be considered as subject to the many risks and uncertainties that
exist in the Company's operations and business environment. Such
risks and uncertainties include, but are not limited to, the
project nature of the business, the increasing international nature
of the business, economic conditions, market demand and pricing,
competitive and cost factors, raw material availability and prices,
global interest rates, currency exchange rates, labor relations and
other risk factors.
Perma-Pipe’s Form 10-Q for the period ended
April 30, 2017 will be accessible at www.sec.gov and
www.permapipe.com. For more information, visit the Company's
website or contact its investor relations representative, LHA.
Perma-Pipe International Holdings, Inc. |
|
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited) |
(In
thousands, except per share data) |
|
|
Three Months Ended April 30 |
|
|
2017 |
|
|
2016 |
|
Net sales |
$ |
23,501 |
|
$ |
23,069 |
|
Cost of sales |
|
21,716 |
|
|
21,077 |
|
Gross
profit |
|
1,785 |
|
|
1,992 |
|
|
|
|
Operating expenses |
|
|
General
and administrative expenses |
|
4,286 |
|
|
5,093 |
|
Selling
expenses |
|
1,316 |
|
|
1,404 |
|
Total operating
expenses |
|
5,602 |
|
|
6,497 |
|
|
|
|
Loss from
operations |
|
(3,817 |
) |
|
(4,505 |
) |
|
|
|
Loss on consolidation
of joint venture |
|
— |
|
|
(1,620 |
) |
|
|
|
Interest expense,
net |
|
157 |
|
|
226 |
|
Loss from continuing
operations before income taxes |
|
(3,974 |
) |
|
(6,351 |
) |
|
|
|
Income tax benefit |
|
(485 |
) |
|
(257 |
) |
|
|
|
Loss from continuing
operations |
|
(3,489 |
) |
|
(6,094 |
) |
|
|
|
Loss from discontinued
operations, net of tax |
|
— |
|
|
(200 |
) |
|
|
|
Net
loss |
$ |
(3,489 |
) |
$ |
(6,294 |
) |
|
|
|
Weighted average common
shares outstanding |
|
|
Basic and
diluted |
|
7,610 |
|
|
7,351 |
|
|
|
|
Loss per share from
continuing operations |
|
|
Basic and
diluted |
$ |
(0.46 |
) |
$ |
(0.83 |
) |
Loss per share from
discontinued operations |
|
|
Basic and
diluted |
$ |
— |
|
$ |
(0.03 |
) |
Loss per share |
|
|
Basic and
diluted |
$ |
(0.46 |
) |
$ |
(0.86 |
) |
|
Note: Earnings per share calculations could be impacted
by rounding. |
Perma-Pipe International Holdings, Inc. |
CONDENSED CONSOLIDATED BALANCE SHEETS |
|
(In thousands) |
April 30, 2017 |
January 31, 2017 |
|
(Unaudited) |
|
ASSETS |
|
|
Current
assets |
|
|
Cash,
cash equivalents |
$ |
9,059 |
|
$ |
7,603 |
Restricted cash |
|
1,140 |
|
|
1,098 |
Trade
accounts receivable, net |
|
23,817 |
|
|
31,271 |
Inventories, net |
|
15,255 |
|
|
13,565 |
Prepaid
expenses and other current assets |
|
7,284 |
|
|
4,287 |
Total current assets |
|
56,555 |
|
|
57,824 |
Property, plant and
equipment, net of accumulated depreciation |
|
34,800 |
|
|
36,275 |
Long-term
assets |
|
|
Goodwill |
|
2,182 |
|
|
2,279 |
Other
assets |
|
5,548 |
|
|
5,233 |
Total long-term assets |
|
7,730 |
|
|
7,512 |
Total
assets |
$ |
99,085 |
|
$ |
101,611 |
LIABILITIES AND
STOCKHOLDERS' EQUITY |
|
|
Current
liabilities |
|
|
Trade
accounts payable |
$ |
9,977 |
|
$ |
10,901 |
Accrued
liabilities, compensation, incentives, and payroll taxes |
|
5,526 |
|
|
6,081 |
Current
maturities of long-term debt |
|
6,249 |
|
|
4,471 |
Other
current liabilities, including customer deposits |
|
9,408 |
|
|
8,595 |
Total current liabilities |
|
31,160 |
|
|
30,048 |
Long-term
liabilities |
|
|
Long-term
debt, less current maturities |
|
6,828 |
|
|
7,258 |
Other
long-term liabilities |
|
4,716 |
|
|
4,892 |
Total long-term liabilities |
|
11,544 |
|
|
12,150 |
Stockholders'
equity |
|
|
Total stockholders' equity |
|
56,381 |
|
|
59,413 |
Total
liabilities and stockholders' equity |
$ |
99,085 |
|
$ |
101,611 |
Perma-Pipe International Holdings, Inc. |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited) |
|
(In thousands) |
Three months ended April 30 |
|
|
2017 |
|
|
2016 |
|
Operating
activities |
|
|
Net
loss |
$ |
(3,489 |
) |
$ |
(6,294 |
) |
Adjustments to
reconcile net loss to net cash flows (used in) provided by
operating activities |
|
|
Depreciation and amortization |
|
1,215 |
|
|
1,448 |
|
Loss on
consolidation of joint venture |
|
— |
|
|
1,620 |
|
Gain on
disposal of discontinued operations |
|
— |
|
|
(867 |
) |
Other,
net |
|
(415 |
) |
|
1,653 |
|
Changes in
operating assets and liabilities |
|
|
Accounts
receivable |
|
7,546 |
|
|
12,228 |
|
Accrued
compensation and payroll taxes |
|
(584 |
) |
|
(2,536 |
) |
Other
assets and liabilities |
|
(5,285 |
) |
|
(3,474 |
) |
Net cash (used
in) provided by operating activities |
|
(1,012 |
) |
|
3,778 |
|
|
|
|
Investing
activities |
|
|
Acquisition of interest in subsidiary, net of cash acquired |
|
— |
|
|
(4,672 |
) |
Proceeds
from surrender of corporate-owned life insurance policies |
|
— |
|
|
1,894 |
|
Capital
expenditures |
|
(267 |
) |
|
(796 |
) |
Proceeds
from sales of property and equipment |
|
1 |
|
|
— |
|
Net cash used
in investing activities |
|
(266 |
) |
|
(3,574 |
) |
|
|
|
Financing
activities |
|
|
Proceeds
from debt |
|
8,612 |
|
|
14,786 |
|
Payments
of debt on revolving lines of credit, other |
|
(6,905 |
) |
|
(20,417 |
) |
Other
financing |
|
177 |
|
|
(161 |
) |
Net cash
provided by (used in) financing activities |
|
1,884 |
|
|
(5,792 |
) |
|
|
|
Effect of exchange rate
changes on cash, cash equivalents and restricted cash |
|
892 |
|
|
435 |
|
Net increase
(decrease) in cash, cash equivalents and restricted
cash |
|
1,498 |
|
|
(5,153 |
) |
Cash, cash equivalents
and restricted cash - beginning of period |
|
8,701 |
|
|
18,955 |
|
Cash, cash
equivalents and restricted cash - end of period |
$ |
10,199 |
|
$ |
13,802 |
|
CONTACTS:
David Mansfield, President & CEO
(847) 966-1000
Harriet Fried / Jody Burfening
LHA
(212) 838-3777
hfried@lhai.com
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