- Net sales increased by 19% to $32.8
million for the third quarter, and by 21% to $94.0 million
year-to-date
- Year over year Income from
operations improved by 132% to $0.8 million in the third quarter of
2018
- Backlog of $70.1 million as of
October 31, 2018 increased by 50%, or $23.4 million, since January
31, 2018
- Finalized new $18 million credit
facility
Perma-Pipe International Holdings, Inc. (NASDAQ: PPIH) announced
today financial results for the third quarter and year-to-date
ended October 31, 2018.
President and CEO David Mansfield commented, “While third
quarter revenues of $32.8 million were consistent with those
achieved in the second quarter, income from operations increased by
121% over the same periods. The improvement in gross profit
reflects the impact of our initiatives which resulted in an
increase to 21% versus 12% in the same quarter last year. On a year
to date basis versus the same period last year, revenue grew $16.2
million or 21%, while income from operations improved by $8.7
million. This increase in operating performance was achieved
despite the adverse impact on our revenues caused by
customer-driven delays to project schedules in the Middle East.
“We are also pleased to see that the continued focus on growing
our leak detection business generated significantly improved
results during the quarter,” Mr. Mansfield continued.
“Backlog has continued to grow and now stands at more than $70
million, an increase of 50% since the beginning of the year. This
level of backlog is a record for the Company and is driven by
increases in all areas combined with the aforementioned project
delays in the Middle East.
“As previously announced, during this quarter we entered into a
new $18 million credit facility with PNC Bank that will provide
enhanced liquidity to our North American operations,” added Mr.
Mansfield.
“Overall, we continue to see encouraging results from our
strategies to return the Company to profitability and we believe we
are continuing to make progress toward achieving this objective,”
concluded Mr. Mansfield.
Third Quarter 2018 Results
Net sales increased 19% to $32.8 million in the
current quarter, from $27.5 million in the prior year quarter.
Higher revenues resulted from increased sales in North America.
Gross profit increased to 21%, or $6.9 million of net
sales, in the current quarter from 12%, or $3.3 million of net
sales, in the prior year quarter. This 107% 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
$4.2 million in the current quarter, compared to $4.3 million
in the prior year quarter. Selling expenses were
$1.6 million in the current quarter, compared to
$1.3 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 increased 21% to $94.0 million in the current
year-to-date, from $77.9 million in the prior year
year-to-date. Higher revenues resulted from increased sales in all
geographic regions.
Gross profit increased to 18%, or $17.0 million of
sales, in the current year-to-date from 10%, or $8.2 million
of sales, in the prior year year-to-date. This improvement was due
to increased volumes and improved margins.
General and administrative expenses decreased by 2% to
$12.2 million in the current year-to-date, from $12.5 million in
the prior year year-to-date. In the prior year year-to-date,
the Company recognized foreign exchange losses on the payback of an
intercompany loan extended to a foreign subsidiary.
Selling expenses increased by 2% to $4.0 million in
the current year-to-date from $3.9 million the prior year
year-to-date. Current year expenses included higher commissions
related to increased sales.
Net interest expense increased to $0.8 million in the current
year-to-date, from $0.5 million in the prior year year-to-date
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, 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 October
31, 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 October 31, Nine Months
Ended October 31, 2018 2017
2018 2017 Net sales $ 32,806 $ 27,498 $
94,020 $ 77,851 Cost of sales 25,923
24,178 77,019
69,688 Gross profit 6,883 3,320 17,001 8,163
Operating expenses General and administrative expenses 4,247 4,314
12,153 12,456 Selling expenses 1,554
1,297 4,017 3,920
Total operating expenses 5,801 5,611 16,170 16,376
Income/(loss) from operations 1,082
(2,291 ) 831 (8,213 ) Interest expense, net 280
193 830
507 Income/(loss) from operations before income taxes
802 (2,484 ) 1 (8,720 ) Income tax expense/(benefit) 934 808
1,525 (241 )
Net loss $
(132 ) $ (3,292 ) $ (1,524 ) $ (8,479 )
Weighted average common shares outstanding Basic and diluted 7,877
7,714 7,806 7,668 Loss per share Basic and diluted (0.02 )
(0.43 ) (0.20 ) (1.11 )
See accompanying notes to consolidated
financial statements.
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)
October 31,
2018 January 31, 2018 ASSETS
Unaudited Current assets Cash and cash equivalents $
9,582 $ 7,084 Restricted cash 2,536 1,237 Trade accounts
receivable, less allowance for doubtful accounts of $480 at October
31, 2018 and $469 at January 31, 2018 32,280 32,936 Inventories,
net 14,330 16,856 Prepaid expenses and other current assets 3,345
2,703 Contract assets 2,357 1,502
Total current assets 64,430 62,318 Property, plant
and equipment, net of accumulated depreciation 31,020 34,509
Other assets Deferred tax assets - long-term 45 391 Goodwill
2,269 2,423 Other assets 5,966 4,943
Total other assets 8,280
7,757
Total assets $ 103,730 $ 104,584
LIABILITIES AND STOCKHOLDERS' EQUITY Current
liabilities Trade accounts payable $ 9,788 $ 14,186 Accrued
compensation and payroll taxes 1,893 1,580 Commissions and
management incentives payable 1,789 787 Revolving line of credit
13,662 7,273 Current maturities of long-term debt 1,046 753
Customers' deposits 4,028 5,236 Outside commissions payable 2,194
1,800 Contract liability 1,599 1,967 Other accrued liabilities
3,491 4,259 Income taxes payable 1,348
1,339
Total current liabilities 40,838 39,180
Long-term liabilities Long-term debt, less current
maturities 6,892 7,728 Deferred compensation liabilities 3,504
4,098 Deferred tax liabilities - long-term 1,149 1,242 Other
long-term liabilities 534 524
Total long-term liabilities 12,079
13,592
Stockholders' equity Common stock, $.01
par value, authorized 50,000 shares; 7,877 issued and outstanding
at October 31, 2018 and 7,717 issued and outstanding at January 31,
2018 79 77 Additional paid-in capital 58,365 56,304 Accumulated
deficit (4,627 ) (3,103 ) Accumulated other comprehensive loss
(3,004 ) (1,466 )
Total stockholders'
equity 50,813 51,812
Total liabilities and stockholders' equity $ 103,730
$ 104,584
See accompanying notes to consolidated
financial statements.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20181211005170/en/
Perma-Pipe International Holdings, Inc.David
Mansfield, President and CEO
Perma-Pipe Investor Relations(847)
929-1200investor@permapipe.com
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