- The Company generated net sales of $34.5 million for the third quarter, a 5% improvement over the prior year quarter, and net sales of $95.4 million year-to-date
- Income from operations before income taxes of $1.6 million in the third quarter and $3.8 million year-to-date
- Backlog stood at $52.7 million on October 31, 2019 compared to $63.9 million on July 31, 2019.
NILES, Ill.--(BUSINESS WIRE)-- Perma-Pipe International Holdings, Inc. (NASDAQ: PPIH) announced today financial results for the third quarter and nine months ended October 31, 2019.
“Revenue for the third quarter was $34.5 million, $1.7 million above the same quarter last year, and income from operations before income taxes was $1.6 million compared to $0.8 million in the same quarter of 2018,” commented President and CEO David Mansfield.
"For the first nine months of 2019 revenue was $95.4 million compared to $94.0 million for the same period last year. While our revenues are very similar to last year, continued improvements in margins have provided income from operations of $3.8 million, which is an improvement from the breakeven level achieved during the same period last year."
"Our backlog stands at $52.7 million, after some previously delayed projects were executed during the quarter," continued Mr. Mansfield.
“We also experienced what we anticipate was as temporary weakness in our Canadian operating results. In response, we have reduced our cost structure to a more appropriate level while we endure these lower levels of activity,” concluded Mr. Mansfield.
Third Quarter Fiscal 2019 Results
Net sales increased $1.7 million to $34.5 million in the current quarter, from $32.8 million in the prior year quarter. Higher revenues resulted from our Middle East region partially offset by lower revenue in North America, primarily driven by a temporary weakness in our Canadian operations.
Gross profit increased to $7.6 million, or 22% of net sales, in the current quarter from $6.9 million, or 21% of net sales, in the prior year quarter. This 11% increase in gross profit was driven by improved pricing, product mix and cost reduction initiatives. The cost reduction initiatives include sourcing raw material at favorable prices and focusing efforts on quality improvements.
General and administrative expenses increased to $4.5 million in the current quarter, compared to $4.2 million in the prior year quarter. This increase of $0.3 million was primarily due to costs related to realignment of head office functions. Selling expenses reduced to $1.4 million in the current quarter, compared to $1.6 million in the prior year quarter. This was due to a new sales compensation program.
Net interest expense decreased to $0.2 million in the current quarter from $0.3 million in the prior year quarter due to lower borrowings.
Income from operations before income taxes increased by $0.8 million to $1.6 million in the current quarter from $0.8 million in the prior year quarter. This increase was due to increased revenue and improved margins.
Year-to-Date October 31, 2019 Results
Net sales increased $1.4 million to $95.4 million in the current year-to-date, from $94.0 million in the prior year year-to-date. The overall revenue increase resulted from higher revenues in the Middle East region and our leak detection systems, partially offset by lower revenues of our traditional coating revenues in North America, primarily driven by a temporary weakness in our Canadian operations.
Gross profit increased to $22.0 million, or 23% of net sales, in the current year-to-date from $17.0 million, or 18% of net sales, in the prior year year-to-date. This 30% increase in gross profit was driven by improved pricing, product mix and cost reduction initiatives. The cost reduction initiatives include sourcing raw material at favorable prices and focusing efforts on quality improvements.
General and administrative expenses increased to $13.6 million in the current year-to-date, compared to $12.2 million in the prior year year-to-date.This was due to increased compensation expenses and loss on disposal of an asset, partially offset by collection of a previously reserved bad debt. Selling expenses remained relatively flat at $4.0 million in the current year-to-date, compared to $4.0 million in the prior year year-to-date.
Net interest expense decreased to $0.6 million in the current year-to-date from $0.8 million in the prior year year-to-date due to lower borrowings.
Income from operations before income taxes increased $3.8 million in the current year-to-date from less than $0.1 million in the prior year year-to-date. This increase was due to increased revenue and improved margins.
Perma-Pipe International Holdings, Inc.
Perma-Pipe International Holdings, Inc. (the “Company”) 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, the Company has operations at eight locations in six 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.)
The Company's Form 10-Q for the quarter ended October 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 October 31, |
Nine Months Ended October 31, |
|||||||||||||||
2019 |
2018 |
2019 |
2018 |
|||||||||||||
Net sales |
$ |
34,457 |
$ |
32,806 |
$ |
95,400 |
$ |
94,020 |
||||||||
Cost of sales |
26,814 |
25,923 |
73,382 |
77,019 |
||||||||||||
Gross profit |
7,643 |
6,883 |
22,018 |
17,001 |
||||||||||||
Operating expenses |
||||||||||||||||
General and administrative expenses |
4,541 |
4,247 |
13,556 |
12,153 |
||||||||||||
Selling expenses |
1,354 |
1,554 |
4,030 |
4,017 |
||||||||||||
Total operating expenses |
5,895 |
5,801 |
17,586 |
16,170 |
||||||||||||
Income from operations |
1,748 |
1,082 |
4,432 |
831 |
||||||||||||
Interest expense, net |
194 |
280 |
612 |
830 |
||||||||||||
Income from operations before income taxes |
1,554 |
802 |
3,820 |
1 |
||||||||||||
Income tax expense |
1,699 |
934 |
1,747 |
1,525 |
||||||||||||
Net (loss)/income |
$ |
(145 |
) |
$ |
(132 |
) |
$ |
2,073 |
$ |
(1,524 |
) |
|||||
Weighted average common shares outstanding |
||||||||||||||||
Basic |
8,037 |
7,877 |
7,970 |
7,806 |
||||||||||||
Diluted |
8,037 |
7,877 |
8,047 |
7,806 |
||||||||||||
(Loss)/income per share |
||||||||||||||||
Basic |
(0.02 |
) |
(0.02 |
) |
0.26 |
(0.20 |
) |
|||||||||
Diluted |
(0.02 |
) |
(0.02 |
) |
0.26 |
(0.20 |
) |
|||||||||
Note: Earnings per share calculations could be impacted by rounding. |
||||||||||||||||
PERMA-PIPE INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (unaudited) |
||||||||
October 31, 2019 |
January 31, 2019 |
|||||||
ASSETS |
||||||||
Current assets |
||||||||
Cash and cash equivalents |
$ |
12,221 |
$ |
10,156 |
||||
Restricted cash |
1,138 |
2,581 |
||||||
Trade accounts receivable, less allowance for doubtful accounts of $355 at October 31, 2019 and $536 at January 31, 2019 |
28,235 |
32,508 |
||||||
Inventories, net |
16,270 |
12,289 |
||||||
Prepaid expenses and other current assets |
3,620 |
3,773 |
||||||
Contract assets |
4,363 |
1,653 |
||||||
Total current assets |
65,847 |
62,960 |
||||||
Property, plant and equipment, net of accumulated depreciation |
29,357 |
30,398 |
||||||
Other assets |
||||||||
Operating lease right-of-use asset |
11,717 |
- |
||||||
Deferred tax assets - long-term |
747 |
458 |
||||||
Goodwill |
2,264 |
2,269 |
||||||
Other assets |
7,518 |
6,120 |
||||||
Total other assets |
22,246 |
8,847 |
||||||
Total assets |
$ |
117,450 |
$ |
102,205 |
||||
LIABILITIES AND STOCKHOLDERS' EQUITY |
||||||||
Current liabilities |
||||||||
Trade accounts payable |
$ |
12,735 |
$ |
12,006 |
||||
Accrued compensation and payroll taxes |
1,675 |
1,544 |
||||||
Commissions and management incentives payable |
1,600 |
1,866 |
||||||
Revolving line North America |
7,758 |
8,890 |
||||||
Current maturities of long-term debt |
1,644 |
640 |
||||||
Customers' deposits |
3,005 |
3,708 |
||||||
Outside commissions payable |
2,185 |
1,743 |
||||||
Contract liability |
1,351 |
1,569 |
||||||
Operating lease liability short-term |
1,130 |
- |
||||||
Other accrued liabilities |
3,234 |
3,856 |
||||||
Income taxes payable |
1,352 |
1,266 |
||||||
Total current liabilities |
37,669 |
37,088 |
||||||
Long-term liabilities |
||||||||
Long-term debt, less current maturities |
6,931 |
6,751 |
||||||
Deferred compensation liabilities |
3,731 |
3,883 |
||||||
Deferred tax liabilities long-term |
1,434 |
1,435 |
||||||
Operating lease liability long-term |
10,617 |
- |
||||||
Other long-term liabilities |
1,620 |
688 |
||||||
Total long-term liabilities |
24,333 |
12,757 |
||||||
Stockholders' equity |
||||||||
Common stock, $.01 par value, authorized 50,000 shares; 8,042 issued and outstanding at |
||||||||
October 31, 2019 and 7,854 issued and outstanding at January 31, 2019 |
80 |
79 |
||||||
Additional paid-in capital |
59,754 |
58,793 |
||||||
Accumulated deficit |
(1,559 |
) |
(3,632 |
) |
||||
Accumulated other comprehensive loss |
(2,827 |
) |
(2,880 |
) |
||||
Total stockholders' equity |
55,448 |
52,360 |
||||||
Total liabilities and stockholders' equity |
$ |
117,450 |
$ |
102,205 |
||||
View source version on businesswire.com: https://www.businesswire.com/news/home/20191210005201/en/
Perma-Pipe International Holdings, Inc. David Mansfield, President and CEO
Perma-Pipe Investor Relations (847) 929-1200 investor@permapipe.com
Source: Perma-Pipe International Holdings, Inc.