- Net sales increased by 20% to $32.3
million for the second quarter, and by 22% to $61.2 million year to
date
- Income from operations improved by
131% to $0.6 million in the second quarter of 2018
- Backlog of $65.1 million as of July
31, 2018 increased by 39%, or $18.4 million, since January 31,
2018
- Entered into a commitment letter for
a new $18 million credit facility
Perma-Pipe International Holdings, Inc. (NASDAQ: PPIH) announced
today financial results for the second quarter and year-to-date
ended July 31, 2018.
President and CEO David Mansfield commented, "The positive
momentum we experienced in the first quarter has continued into our
second quarter. For the second quarter and on a year-to-date basis
our revenues improved from last year by $5.5 million and $10.9
million, respectively. Our income from operations is similarly
improved by $2.7 million and $5.6 million. These results are driven
primarily by increasing levels of activity and improving margins.
This is particularly the case in our Middle East and North Africa
Region, where year-to-date revenues have increased by more than 85%
above last year’s levels."
"We have also continued to see very encouraging results from our
increased strategic focus on our leak detection business and our
operations in India. Both of these businesses have shown a
substantial improvement over the results of the prior year," Mr.
Mansfield continued.
"In addition to the improved results already achieved, we are
further encouraged by the growth in our backlog. This now stands at
$65.1 million, which is an increase of 39% on the position at the
beginning of the year. This backlog has been achieved after an
excellent quarter in which our bookings exceeded $43 million, and
included some significant project awards. We continue to pursue the
significant project opportunity in East Africa, but there has been
little progress on this during the quarter due to client-driven
delays."
"Other positive developments during the quarter are that we are
making progress with our increased efforts to strengthen our
organization through recruitment and the development of personnel,
and we continue to see excellent results from initiatives to raise
the performance and culture of our safety behaviors and awareness.
Additionally, on August 31, 2018, we entered into a commitment
letter with PNC Bank for a new $18 million credit facility, which
we are looking to finalize prior to the expiration of the existing
Credit Agreement."
"So far this year, I am very pleased with the progress we have
made. We are tracking very closely to our intended plans and the
current indicators are that we will continue in that direction,"
concluded Mr. Mansfield.
Second Quarter 2018 Results
Net sales increased 20% to $32.3 million in the second
quarter of 2018, from $26.9 million during the same period in
2017. Higher revenues resulted from increased sales in Canada, the
Middle East and India.
Gross profit increased to $5.9 million in the second quarter of
2018 from $3.1 million during the same period in 2017. This 93%
improvement was due to increased sales volumes, and improved
margins.
Selling expenses remained flat at $1.3 million in the second
quarter of 2018. General and administrative expenses also remained
at $3.9 million in the second quarter of 2018, unchanged from the
same period in 2017.
Income from operations improved by $2.7 million or 131%, to
pre-tax income of $0.6 million in the second quarter of 2018, from
a pre-tax loss of $2.1 million during the same period in 2017. The
positive contributing factors were increased sales and improved
margins.
Net interest expense increased to $0.3 million in the
second quarter of 2018, from $0.2 million in the same period
in 2017, due to higher borrowings, and higher interest rates, both
domestic and foreign.
Year-to-Date 2018 Results
Net sales increased 22% to $61.2 million in the six months ended
July 31, 2018, from $50.4 million during the same period in 2017.
Higher revenues resulted from increased sales in the Middle East
and India.
Gross profit increased to $10.1 million in the six months ended
July 31, 2018 from $4.8 million during the same period in 2017.
This 109% improvement was due to increased volumes in the Middle
East and India and improved margins.
Selling expenses decreased by 6% to $2.5 million in the six
months ended July 31, 2018, from $2.6 million during the same
period in 2017. General and administrative expenses decreased by 3%
to $7.9 million in the six months ended July 31, 2018 from $8.1
million during the same period in 2017.
Income from operations improved by $5.6 million to a pre-tax
loss of $0.3 million in the current year-to-date, from a pre-tax
loss of $5.9 million in the prior-year year-to-date. The positive
contributing factors were increased sales, improved margins, and
reduced selling, general and administration expenses.
Net interest expense increased to $0.6 million in the six months
ended 2018, from $0.3 million during the same period in 2017. This
was due to higher borrowings, and higher effective interest rates,
both domestic and foreign.
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
(“Exchange Act”), 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 impacts 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 and uncertainties related to the Company’s
international business operations; (viii) the Company’s
ability to repay its debt, refinance its current expiring United
States credit agreement, and renew expiring international credit
facilities; (ix) aggressive pricing by existing competitors
and the entrance of new competitors in the markets in which the
Company operates; (x) the Company’s ability to purchase raw
materials at favorable prices and to maintain beneficial
relationships with its suppliers; (xi) the Company’s ability
to manufacture products free of latent defects and to recover from
suppliers who may provide defective materials to the Company;
(xii) reductions or cancellations of orders included in the
Company’s backlog; (xiii) the Company’s ability to attract and
retain senior management and key personnel; (xiv) the
Company’s ability to achieve the expected benefits of its growth
initiatives; (xv) reversals of previously recorded revenue and
profits resulting from inaccurate estimates made in connection with
the Company’s percentage-of-completion revenue recognition;
(xvi) the Company’s failure to establish and maintain
effective internal control over financial reporting; and
(xvii) 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-Q for the period ended July 3l, 2018
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 Six Months Ended
July 31 July 31, 2018 2017
2018 2017 Net sales $32,325 $26,852 $61,214 $50,353
Cost of sales $26,432 $23,794 $51,096 $45,510
Gross profit $5,893 $3,058 $10,118
$4,843 Operating expenses General and administrative
expenses $3,924 $3,856 $7,906 $8,142 Selling expenses 1,321
1,307 2,463 2,623 Total operating expenses
$5,245 $5,163 $10,369 $10,765
Income/(loss) from operations $648 ($2,105 ) ($251 ) ($5,922 )
Interest expense, net 284 157 550 314
Income/(loss) from operations before income taxes 364 (2,262
) (801) (6,236 ) Income tax expense/(benefit) 639 (564 ) 591
(1,049 ) Net loss (275 ) (1,698 )
($1,392 ) ($5,187) Weighted average common shares
outstanding Basic and diluted 7,820 7,679 7,769 7,645 Loss
per share Basic and diluted ($0.04) ($0.22 ) ($0.18) ($0.68 )
Note: Earnings per share calculations
could be impacted by rounding.
PERMA-PIPE INTERNATIONAL HOLDINGS, INC. AND
SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
(unaudited)
(In thousands except per share data)
July 31,
2018 January 31, 2018 ASSETS
Unaudited Current assets Cash and cash equivalents
$5,247 $7,084 Restricted cash 1,108 1,237 Trade accounts
receivable, net 29,703 32,936 Inventories, net 14,707 16,856
Prepaid expenses and other current assets 5,775 4,205
Total current assets 56,540 62,318 Property, plant and
equipment, net of accumulated depreciation 31,967 34,509
Other
assets Goodwill 2,287 2,423 Other assets 5,214
5,334
Total other assets 7,501 7,757
Total
assets $96,008 $104,584
LIABILITIES AND
STOCKHOLDERS' EQUITY Current liabilities Trade accounts
payable $10,806 $14,186 Accrued compensation, incentives, and
payroll taxes liabilities 2,540 2,367 Current maturities of
long-term debt 10,105 8,026 Other current liabilities, including
customer deposits 9,098 14,601
Total current
liabilities 32,549 39,180
Long-term liabilities
Long-term debt, less current maturities 7,079 7,728 Other long-term
liabilities 5,169 5,864
Total long-term
liabilities 12,248 13,592
Stockholders' equity Total
stockholders' equity 51,211 51,812
Total
liabilities and stockholders' equity $96,008
$104,584
View source
version on businesswire.com: https://www.businesswire.com/news/home/20180911005156/en/
Perma-Pipe International Holdings, Inc.David Mansfield,
President and CEOPerma-Pipe Investor Relations(847)
929-1200investor@permapipe.com
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