- Net sales of $34.9 million for the
quarter and $129.0 million for the year ended January 31,
2019
- Income from operations before income
tax at $1.6 million in 2018 compared to a loss of $10.2
million in 2017
- Backlog of $61.0 million as of
January 31, 2019 an increase of 31% from
$46.7 million on January 31, 2018
Perma-Pipe International Holdings, Inc. (NASDAQ: PPIH) announced
today financial results for the fourth quarter and fiscal year
ended January 31, 2019.
President and CEO David Mansfield commented, “Fourth quarter
revenues of $34.9 million were 28% higher than the same quarter
last year. The resulting operating earnings of $1.9 million
improved $3.2 million over the $1.3 million loss incurred in the
fourth quarter of last year. For the year ended January 31, 2019,
revenues were $129.0 million, a 23% increase over the prior year,
and income from operations of $1.6 million increased $11.8 million
from last year's $10.2 million loss. Customer-driven delays to
project schedules in the Middle East continued into the fourth
quarter, and these projects are expected to be executed in the
first quarter of fiscal 2019.”
“Backlog has continued to grow and stands at $61 million
reflecting an increase of 31% above the level at the end of last
year,” continued Mr. Mansfield.
“All operating areas of the Company achieved year-over-year
increases in revenue, income from operations and backlog. The
results of the fourth quarter and the full year continue to
highlight the progress the company is making to return to
acceptable levels of profitability and growth,” concluded Mr.
Mansfield.
Fourth Quarter 2019 Results
Net sales increased 28% to $34.9 million in the current
quarter from $27.4 million in the prior year
quarter. Higher revenues were driven by increased oil prices,
favorable product mix and better sales and project
execution which resulted in increased sales in the Middle
East, U.S. and Canadian markets. We also experienced higher demand
for leak detection products.
Gross profit increased to 18%, or $6.3 million of net
sales, in the current quarter from 13%, or $3.6 million of net
sales, in the prior year quarter. This 77% improvement was due
to increased volumes and improved margins, which are a result
of strategic initiative improvements.
General and administrative expenses were slightly lower at
$3.2 million in the current quarter, compared to
$3.8 million in the prior year quarter. Selling expenses
were $1.2 million in the current quarter, compared to
$1.1 million in the prior quarter. This increase is due to
commissions related to increased sales.
Net interest expense increased to $0.3 million in the
current quarter, from $0.2 million in the prior-year quarter
due to higher borrowings and higher effective interest rates,
both domestic and foreign.
Year-to-Date 2018 Results
Net sales were $129.0 million in 2018, an increase of
23% from $105.2 million in 2017. Higher revenues were driven
by increased oil prices, favorable product mix and better sales and
project execution which resulted in increased sales in the
Middle East, U.S. and Canadian markets. We also experienced higher
demand for leak detection products.
Gross profit increased to $23.3 million in 2018,
an increase of 99% from 11.7 million in
2017. This increase is attributed to higher volumes, improved
pricing and manufacturing efficiencies.
General and administrative expenses were $15.4 million
in 2018 compared to $16.2 million in 2017,
an improvement of
$0.9 million or 5%. Excluding one-time charges
in both periods, annually recurring general and administrative
expenses were flat year over year at approximately $15.0 million.
The one-time charges include $1.2 million in 2017 for internal
control review fees incurred in the Middle East region and $0.4
million in 2018 primarily related to the retirement cost of our
prior CFO.
Selling expenses increased to $5.2 million in 2018 from
$5.0 million in 2017. Current year expenses included higher
commissions related to increased sales.
Interest expense increased to $1.1 million in 2018 from
$0.7 million in 2017 due to higher borrowings and increased
interest rates.
Income tax expense was $2.2 million in 2018 compared to $0.2
million of income tax benefit in 2017. This change is largely due
to the fact that the company is in a positive income position in
certain high tax rate jurisdictions.
Percentages set forth above in this press release have been
rounded to the nearest percentage point, and may not exactly
correspond to the comparative data presented.
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
Certain statements and other information contained in this press
release 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
following: (i) the Company’s ability to effectively execute
its strategic plan and achieve profitability and positive cash
flows; (ii) the impact of global economic weakness and
volatility; (iii) fluctuations in steel prices and the
Company’s ability to offset increases in steel prices through price
increases in its products; (iv) the timing of orders for the
Company’s products; (v) decreases in United States government
spending on projects using the Company’s products, and challenges
to the Company’s non-government customers’ liquidity and access to
capital funds; (vi) the Company’s ability to successfully
negotiate progress-billing arrangements for its large contracts;
(vii) fluctuations in crude oil and natural gas prices risks;
(viii) risks and uncertainties related to the Company’s
international business operations; (ix) the Company’s ability
to repay its debt and renew expiring international credit
facilities; (x) aggressive pricing by existing competitors and
the entrance of new competitors in the markets in which the Company
operates; (xi) the Company’s ability to purchase raw materials
at favorable prices and to maintain beneficial relationships with
its suppliers; (xii) the Company’s ability to manufacture
products free of latent defects and to recover from suppliers who
may provide defective materials to the Company;
(xiii) reductions or cancellations of orders included in the
Company’s backlog; (xiv) the Company’s ability to attract and
retain senior management and key personnel; (xv) the Company’s
ability to achieve the expected benefits of its growth initiatives;
(xvi) the Company’s ability to interpret changes in tax
regulations and legislation; (xvii) reversals of previously
recorded revenue and profits resulting from inaccurate estimates
made in connection with the Company’s percentage-of-completion
revenue recognition; (xviii) the Company’s failure to
establish and maintain effective internal control over financial
reporting; and (xix) the impact of cybersecurity threats on
the Company’s information technology systems. Shareholders,
potential investors and other readers are urged to consider these
factors carefully in evaluating the forward-looking statements and
are cautioned not to place undue reliance on such forward-looking
statements. The forward-looking statements made herein are made
only as of the date of this press release and we undertake no
obligation to publicly update any forward-looking statements,
whether as a result of new information, future events or otherwise.
More detailed information about factors that may affect our
performance may be found in our filings with the Securities and
Exchange Commission, which are available at https://www.sec.gov and
under the Investor Center section of our website
(http://investors.permapipe.com.)
Perma-Pipe’s Form 10-K for the fiscal year ended
January 31, 2019 will be accessible at www.sec.gov and www.permapipe.com. For more information, visit the
Company's website.
PERMA-PIPE INTERNATIONAL HOLDINGS, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share data)
Three months ended
January 31,
Twelve months ended
January 31,
(In thousands, except per share data)
2019
2018 2019 2018 Net
sales $ 34,945 $ 27,397 $ 128,965 $ 105,248 Cost of sales 28,607
23,818 105,626 93,506 Gross profit 6,338 3,579
23,339 11,742 Operating expenses: General and administrative
expense 3,204 3,758 15,357 16,214 Selling expense 1,222
1,120 5,239 5,040 Total operating expenses 4,426
4,878 20,596 21,254
Income/(loss) from operations 1,912 (1,299) 2,743 (9,512)
Interest expense, net 292 190 1,122 697
Income/(loss) from operations before income taxes 1,620 (1,489)
1,621 (10,209) Income tax expense/(benefit) 625 8 2,150
(233)
Net
income/(loss) $ 995 $ (1,497) $
(529)
$ (9,976)
Weighted average common shares outstanding Basic 7,812 7,715
7,812 7,680 Diluted 7,966 7,715 7,812 7,680 Income/(loss)
per share Basic $ 0.13 $ (0.19) $ (0.07) $ (1.30) Diluted $ 0.12 $
(0.19) $ (0.07) $ (1.30)
Note: Earnings per share calculations
could be impacted by rounding.
PERMA-PIPE INTERNATIONAL HOLDINGS, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(unaudited)
January 31, (In thousands, except per
share data)
2019 2018
ASSETS Current assets Cash and cash
equivalents $ 10,156 $ 7,084 Restricted cash 2,581 1,237 Trade
accounts receivable, less allowance for doubtful accounts of $536
on January 31, 2019 and $469 on January 31, 2018 32,508 32,936
Inventories 12,289 16,856 Prepaid expenses and other current assets
3,773 2,703 Costs and estimated earnings in excess of billings on
uncompleted contracts 1,653 1,502
Total current assets 62,960 62,318 Property, plant and
equipment, net of accumulated depreciation 30,398 34,509
Other
assets Deferred tax assets 458 391 Goodwill 2,269 2,423 Other
assets 6,120 4,943
Total other
assets 8,847 7,757
Total
assets $ 102,205 $
104,584 LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities Trade accounts payable $ 12,006 $ 14,186
Commissions and management incentives payable 1,866 787 Accrued
compensation and payroll taxes 1,544 1,580 Revolving line North
America 8,890 7,273 Current maturities of long-term debt 640 753
Customers' deposits 3,708 5,236 Liabilities of discontinued
operations — 137 Outside commission liability 1,743 1,800 Other
accrued liabilities 3,856 4,122 Billings in excess of costs and
estimated earnings on uncompleted contracts 1,569 1,967 Income tax
payable 1,266 1,339
Total current
liabilities 37,088 39,180
Long-term liabilities
Long-term debt, less current maturities 6,751 7,728 Deferred
compensation liabilities 3,883 4,098 Deferred tax liabilities 1,435
1,242 Other long-term liabilities 688
524
Total long-term liabilities 12,757
13,592
Stockholders' equity Common stock, $.01 par
value, authorized 50,000 shares; 7,854 issued and outstanding
January 31, 2019 and 7,717 issued and outstanding January 31, 2018
79 77 Additional paid-in capital 58,793 56,304 Accumulated deficit
retained earnings (3,632 ) (3,103 ) Accumulated other comprehensive
loss (2,880 ) (1,466 )
Total stockholders'
equity 52,360 51,812
Total
liabilities and stockholders' equity $ 102,205
$ 104,584
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190416005150/en/
Perma-Pipe International Holdings, Inc.David
Mansfield, President and CEOPerma-Pipe Investor
Relations(847) 929-1200investor@permapipe.com
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