Perma-Pipe International Holdings, Inc. Announces First Quarter Financial Results
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Net sales of $28.9 million for the quarter
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Operating results improved to a loss of $1.1 million in the
first quarter in 2018
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Backlog of $53.8 million increased by 15% or $7.1 million since
January 31, 2018
Perma-Pipe International Holdings, Inc. (NASDAQ: PPIH) announced today
financial results for the first quarter ended April 30, 2018.
President and CEO David Mansfield commented, "Our revenues in the first
quarter are a significant improvement over the corresponding quarter of
the prior year. While some individual market segments decreased, the
increases in other market segments more than offset this, and both of
our geographic regions showed improvements."
"The combination of increased revenues of $5.4 million together with a
sustained reduction in overhead costs has enabled us to reduce our loss
from operations by $2.8 million when compared to the first quarter of
the prior year."
"Some notable improvements to our earnings compared to last year were
meaningful increases to our leak detection business and to our
operations in India, both of which have recently received an increased
strategic focus from us," Mr. Mansfield continued.
"The current year has commenced generally in line with our expectations,
which are of gradually improving market conditions. It was also an
encouraging indication of the future that our new contract awards during
the first quarter have increased versus last year and our backlog is now
15% higher than it was at January 31," concluded Mr. Mansfield.
First Quarter 2018 Results
Net sales increased 22.9% to $28.9 million in the first quarter of 2018,
from to $23.5 million during the same period in 2017. Higher revenues
resulted from increased sales in the domestic oil and gas business, and
in the Middle East.
Gross profit increased to $4.2 million in the first quarter of 2018,
from $1.8 million during the same period in 2017. This 136.7%
improvement is due to increased volumes, North American product mix, and
the utilization of previously reserved inventory of $0.4 million.
Selling expenses decreased by 13.2% to $1.1 million in the first quarter
of 2018, from $1.3 million during the same period in 2017. This
improvement was due to management changes in the Middle East and
realignment of the North American sales organization. General and
administrative expenses decreased by 7.1% to $4.0 million in the current
quarter of 2018, from $4.3 million in the prior-year quarter in 2017. In
the prior-year quarter of 2017 the Company recognized a $0.4 million
realized foreign exchange loss on the repayment of a loan extended to a
foreign subsidiary.
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 interest rates, both domestic and foreign.
Results from operations improved by $2.8 million to a pre-tax loss of
$1.2 million in the current quarter, from $4.0 million in the prior-year
quarter. The positive contributing factors were increased sales,
increased volume, and utilization of previously reserved inventory of
$0.4 million.
Cash flow for the first three months of 2018 were neutral, compared to
cash used in operations of $1.0 million during the first three months of
2017. This represents an improvement of $1.0 million in cash generated
by operations when compared to the prior year.
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 April 30, 2018 will
be accessible at www.sec.gov
and www.permapipe.com.
For more information, visit the Company's website.
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PERMA-PIPE INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARIES
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CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
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(In thousands, except per share data)
|
|
|
|
|
|
|
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Three Months Ended
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|
|
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April 30
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|
|
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2018
|
|
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2017
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Net sales
|
|
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$28,889
|
|
|
|
$23,501
|
|
Cost of sales
|
|
|
$24,664
|
|
|
|
$21,716
|
|
Gross profit
|
|
|
$4,225
|
|
|
|
$1,785
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
|
|
|
|
General and administrative expenses
|
|
|
$3,982
|
|
|
|
$4,286
|
|
Selling expenses
|
|
|
1,142
|
|
|
|
1,316
|
|
Total operating expenses
|
|
|
$5,124
|
|
|
|
$5,602
|
|
|
|
|
|
|
|
|
Loss from operations
|
|
|
($899
|
)
|
|
|
($3,817
|
)
|
|
|
|
|
|
|
|
Interest expense, net
|
|
|
266
|
|
|
|
157
|
|
Loss from operations before income taxes
|
|
|
(1,165
|
)
|
|
|
(3,974
|
)
|
|
|
|
|
|
|
|
Income tax benefit
|
|
|
(48
|
)
|
|
|
(485
|
)
|
|
|
|
|
|
|
|
Loss from continuing operations
|
|
|
(1,117
|
)
|
|
|
(3,489
|
)
|
|
|
|
|
|
|
|
Net loss
|
|
|
(1,117
|
)
|
|
|
(3,489
|
)
|
|
|
|
|
|
|
|
Weighted average common shares outstanding
|
|
|
|
|
|
|
Basic and diluted
|
|
|
7,718
|
|
|
|
7,610
|
|
|
|
|
|
|
|
|
Loss per share from continuing operations
|
|
|
|
|
|
|
Basic and diluted
|
|
|
($0.14)
|
|
|
($0.46
|
)
|
(Loss) earnings per share from discontinued operations
|
|
|
|
|
|
|
Basic and diluted
|
|
|
$—
|
|
|
|
$—
|
|
Loss per share
|
|
|
|
|
|
|
Basic and diluted
|
|
|
($0.14)
|
|
|
($0.46
|
)
|
|
Note: Earnings per share calculations could be impacted by
rounding.
|
|
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PERMA-PIPE INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARIES
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CONSOLIDATED BALANCE SHEETS
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(unaudited)
|
|
|
|
|
|
|
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(In thousands except per share data)
|
|
|
April 30, 2018
|
|
|
January 31, 2018
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ASSETS
|
|
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Unaudited
|
|
|
|
Current assets
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
$9,879
|
|
|
|
$7,084
|
Restricted cash
|
|
|
1,101
|
|
|
|
1,237
|
Trade accounts receivable, net
|
|
|
29,337
|
|
|
|
32,936
|
Inventories, net
|
|
|
15,804
|
|
|
|
16,856
|
Prepaid expenses and other current assets
|
|
|
4,609
|
|
|
|
4,205
|
Total current assets
|
|
|
60,730
|
|
|
|
62,318
|
Property, plant and equipment, net of accumulated depreciation
|
|
|
33,097
|
|
|
|
34,509
|
Other assets
|
|
|
|
|
|
|
Goodwill
|
|
|
2,321
|
|
|
|
2,423
|
Other assets
|
|
|
5,381
|
|
|
|
5,334
|
Total other assets
|
|
|
7,702
|
|
|
|
7,757
|
Total assets
|
|
|
$101,529
|
|
|
|
$104,584
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LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
Trade accounts payable
|
|
|
$12,301
|
|
|
|
$14,186
|
Accrued compensation, incentives, and payroll taxes liabilities
|
|
|
2,785
|
|
|
|
2,367
|
Current maturities of long-term debt
|
|
|
11,163
|
|
|
|
8,026
|
Other current liabilities, including customer deposits
|
|
|
11,722
|
|
|
|
14,601
|
Total current liabilities
|
|
|
37,971
|
|
|
|
39,180
|
Long-term liabilities
|
|
|
|
|
|
|
Long-term debt, less current maturities
|
|
|
7,309
|
|
|
|
7,728
|
Other long-term liabilities
|
|
|
5,945
|
|
|
|
5,864
|
Total long-term liabilities
|
|
|
13,254
|
|
|
|
13,592
|
Stockholders' equity
|
|
|
|
|
|
|
Total stockholders' equity
|
|
|
50,304
|
|
|
|
51,812
|
Total liabilities and stockholders' equity
|
|
|
$101,529
|
|
|
|
$104,584
|
|
|
|
|
|
|
|
|
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