Perma-Pipe International Holdings, Inc. Announces Second Quarter and Year-to-Date Financial Results
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Net sales increased by 20% to $32.3 million for the second
quarter, and by 22% to $61.2 million year to date
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Income from operations improved by 131% to $0.6 million in the
second quarter of 2018
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Backlog of $65.1 million as of July 31, 2018 increased by 39%,
or $18.4 million, since January 31, 2018
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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.
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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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Six Months Ended
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|
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July 31
|
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July 31,
|
|
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2018
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2017
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|
2018
|
2017
|
Net sales
|
|
$32,325
|
|
$26,852
|
|
|
$61,214
|
|
$50,353
|
|
Cost of sales
|
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$26,432
|
|
$23,794
|
|
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$51,096
|
|
$45,510
|
|
Gross profit
|
|
$5,893
|
|
$3,058
|
|
|
$10,118
|
|
$4,843
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
|
|
|
|
General and administrative expenses
|
|
$3,924
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|
$3,856
|
|
|
$7,906
|
|
$8,142
|
|
Selling expenses
|
|
1,321
|
|
1,307
|
|
|
2,463
|
|
2,623
|
|
Total operating expenses
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$5,245
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|
$5,163
|
|
|
$10,369
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|
$10,765
|
|
|
|
|
|
|
|
|
Income/(loss) from operations
|
|
$648
|
|
($2,105
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)
|
|
($251
|
)
|
($5,922
|
)
|
|
|
|
|
|
|
|
Interest expense, net
|
|
284
|
|
157
|
|
|
550
|
|
314
|
|
Income/(loss) from operations before income taxes
|
|
364
|
|
(2,262
|
)
|
|
(801)
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(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
|
|
|
|
|
|
|
|
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Loss per share
|
|
|
|
|
|
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Basic and diluted
|
|
($0.04)
|
($0.22
|
)
|
|
($0.18)
|
($0.68
|
)
|
|
Note: Earnings per share calculations could be impacted by
rounding.
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|
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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)
|
|
July 31, 2018
|
|
January 31, 2018
|
ASSETS
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Unaudited
|
|
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Current assets
|
|
|
|
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Cash and cash equivalents
|
|
$5,247
|
|
|
$7,084
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Restricted cash
|
|
1,108
|
|
|
1,237
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Trade accounts receivable, net
|
|
29,703
|
|
|
32,936
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Inventories, net
|
|
14,707
|
|
|
16,856
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Prepaid expenses and other current assets
|
|
5,775
|
|
|
4,205
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Total current assets
|
|
56,540
|
|
|
62,318
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Property, plant and equipment, net of accumulated depreciation
|
|
31,967
|
|
|
34,509
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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
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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
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