News Details

Perma-Pipe International Holdings, Inc. Announces Fourth Quarter and Fiscal 2021 Financial Results

Company Release - 4/19/2022 4:05 PM ET
  • Net sales of $39.1 million for the quarter and $138.6 million for the year
  • Net income of $3.0 million for the quarter and $6.1 million for the year
  • Backlog of $39.3 million at January 31, 2022

NILES, Ill.--(BUSINESS WIRE)-- Perma-Pipe International Holdings, Inc. (NASDAQ: PPIH) announced today financial results for the fourth quarter and 2021 fiscal year ended January 31, 2022.

"Revenue for the fourth quarter was $39.1 million, $17.8 million above the same quarter last year, and net income of $3.0 million was an increase of $5.5 million compared to the same quarter of 2020. For the year ended January 31, 2022, revenues of $138.6 million were $53.9 million higher than the prior year. The resulting net income of $6.1 million was $13.7 million higher than the prior year," noted President and CEO David Mansfield.

"The adverse impact of the COVID-19 pandemic began to recede in the first quarter of fiscal 2021, resulting in an improvement in business activity and profitability. With rebounding oil prices and the recommencement of paused projects, we experienced profitability improvements in all of our business units. This year's results also benefitted from the Company's ability to continue to operate with a lower overhead cost base that was implemented in response to the downturn during the pandemic. In addition, the business recovery we experienced this year allowed us to resume our focus on implementing the growth plans that were paused in 2020. These initiatives recommenced during 2021 and will be impactful to our future results.

"In the past year we also enhanced our liquidity by entering into a sale and leaseback agreement for our land and buildings in Lebanon, Tennessee and by extending our $18 million North American credit agreement for an additional five years. With liquidity provided by these measures, we commenced a share repurchase program in October of last year,” Mr. Mansfield continued.

“I am proud of how our employees and Board of Directors responded to the challenges of the last two years. Their dedication and resilience not only helped us weather the pandemic, but also positioned us to respond quickly to the subsequent recovery,” concluded Mr. Mansfield.

Fourth Quarter Fiscal 2021 Results

Net sales increased 84% to $39.1 million in the fourth quarter from $21.3 million in the prior year quarter. This was a result of increased sales volumes in all business units due largely to recovery from the effects of the COVID-19 pandemic.

Gross profit increased to 25% of net sales, or $9.7 million in the fourth quarter, from 11% of net sales, or $2.4 million, in the prior year quarter. This increase was primarily driven by higher sales volumes without a corresponding increase in fixed plant costs.

General and administrative expenses increased to $5.3 million in the fourth quarter, compared to $3.9 million in the prior year quarter. This 35% increase was driven primarily by the increase in headcount as well as incentive compensation associated with the improved financial results in 2021.

Selling expenses were relatively consistent from the prior year quarter to the fourth quarter.

Net interest expense increased to expense of $0.1 million in the fourth quarter, compared to income of less than $0.1 million in the prior year quarter. This increase is primarily related to the sale and leaseback of the Company's land and buildings in Lebanon, Tennessee in April 2021, whereby a portion of the Company's monthly rent payments are recorded to interest expense.

Other income decreased to less than $0.1 million in the fourth quarter from $0.3 million in the prior year quarter. This decrease was primarily the result of income recorded in 2020 for funds received under the Canadian Emergency Wage Subsidy ("CEWS") and Canadian Emergency Rent Subsidy ("CERS") programs in Canada. The CEWS and CERS grants ceased in the second quarter of 2021.

Net income/(loss) increased to income of $3.0 million in the fourth quarter from a loss of ($2.5) million in the prior year quarter. The increase was a result of increased sales volumes in all business units due to recovery from the effects of the COVID-19 pandemic.

2021 Results

Net sales were $138.6 million in fiscal 2021, an increase of $53.9 million, or 64%, from $84.7 million in fiscal 2020. The increase was a result of increased sales volumes in all business units due largely to recovery from the effects of the COVID-19 pandemic.

Gross profit increased to $32.5 million, or 24% of net sales, in fiscal 2021. This was an increase of $21.4 million, or 191%, from $11.2 million, or 13% of net sales, in fiscal 2020. This increase was primarily driven by higher sales volumes without a corresponding increase in fixed plant costs. In addition, the Company's U.A.E. business benefitted for a full year from the introduction of a high margin new product line in late 2020.

General and administrative expenses were $19.9 million in fiscal 2021 compared to $17.2 million in fiscal 2020, an increase of $2.7 million, or 16%. This increase was driven primarily by the increase in headcount as well as incentive compensation associated with the improved financial results in 2021.

Selling expenses decreased by $0.8 million, or 15%, from $5.3 million in 2020 to $4.5 million in 2021. This decrease was primarily due to organizational changes during the year.

Interest expense increased to $0.8 million in fiscal 2021 from $0.4 million in fiscal 2020. This increase is primarily related to the sale and leaseback of the Company's land and buildings in Lebanon, Tennessee in April 2021, whereby a portion of the Company's monthly rent payments are recorded to interest expense.

Other income was $1.1 million in 2021 compared to $4.0 million in 2020, a decrease of $2.9 million. This decrease was primarily the result of income recorded in 2020 for funds received under the Paycheck Protection Program of $3.2 million. Funds received under the CEWS and CERS programs in Canada during 2021 were also less than in 2020, as CEWS and CERS grants ceased in the second quarter of 2021.

Income tax expense increased to $2.3 million in fiscal 2021 compared to a benefit of $0.1 million in fiscal 2020. The increase of $2.4 million was largely due to changes in the mix of income and losses in various jurisdictions.

The resulting net income of $6.1 million in 2021 was a $13.7 million increase from the net loss of ($7.6) million in 2020. The increase was a result of increased sales volumes in all business units due to recovery from the effects of the COVID-19 pandemic. In addition, the Company's U.A.E. business benefitted from the introduction of a new product line in late 2020.

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 thirteen 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 impact of the coronavirus ("COVID-19") on the Company's results of operations, financial condition and cash flows; (ii) fluctuations in the price of oil and natural gas and its impact on the customer order volume for the Company's products; (iii) the impact of global economic weakness and volatility; (iv) fluctuations in steel prices and the Company’s ability to offset increases in steel prices through price increases in its products; (v) decreases in 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 repay its debt and renew expiring international credit facilities; (vii) the Company’s ability to effectively execute its strategic plan and achieve sustained profitability and positive cash flows; (viii) the Company's ability to collect a long-term account receivable related to a project in the Middle East; (ix) the Company’s ability to interpret changes in tax regulations and legislation; (x) the Company's ability to use its net operating loss carryforwards; (xi) reversals of previously recorded revenue and profits resulting from inaccurate estimates made in connection with the Company’s over-time revenue recognition; (xii) the Company’s failure to establish and maintain effective internal control over financial reporting; (xiii) the timing of order receipt, execution, delivery and acceptance for the Company’s products; (xiv) the Company’s ability to successfully negotiate progress-billing arrangements for its large contracts; (xv) aggressive pricing by existing competitors and the entrance of new competitors in the markets in which the Company operates; (xvi) the Company’s ability to purchase raw materials at favorable prices and to maintain beneficial relationships with its suppliers; (xvii) the Company’s ability to manufacture products free of latent defects and to recover from suppliers who may provide defective materials to the Company; (xviii) reductions or cancellations of orders included in the Company’s backlog; (xix) risks and uncertainties specific to the Company's international business operations; (xx) the Company’s ability to attract and retain senior management and key personnel; (xxi) the Company’s ability to achieve the expected benefits of its growth initiatives; and (xxii) 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-Kfor the 2021 fiscal year ended January 31, 2022 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)

 

 

 

Three months ended January 31,

 

Twelve months ended January 31,

(In thousands, except per share data)

 

2022

 

2021

 

2022

 

2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

39,126

 

 

$

21,295

 

 

$

138,552

 

 

$

84,694

 

Cost of sales

 

 

29,472

 

 

 

18,885

 

 

 

106,022

 

 

 

73,515

 

Gross profit

 

 

9,654

 

 

 

2,410

 

 

 

32,530

 

 

 

11,179

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

General and administrative expense

 

 

5,250

 

 

 

3,902

 

 

 

19,893

 

 

 

17,222

 

Selling expense

 

 

1,131

 

 

 

1,182

 

 

 

4,526

 

 

 

5,334

 

Total operating expenses

 

 

6,381

 

 

 

5,084

 

 

 

24,419

 

 

 

22,556

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income/(loss) from operations

 

 

3,273

 

 

 

(2,674

)

 

 

8,111

 

 

 

(11,377

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

 

112

 

 

 

(30

)

 

 

828

 

 

 

381

 

Other income, net

 

 

47

 

 

 

311

 

 

 

1,044

 

 

 

3,983

 

Income/(loss) from operations before income taxes

 

 

3,208

 

 

 

(2,333

)

 

 

8,327

 

 

 

(7,775

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax expense/(benefit)

 

 

216

 

 

 

206

 

 

 

2,265

 

 

 

(133

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income/(loss)

 

$

2,992

 

 

$

(2,539

)

 

$

6,062

 

 

$

(7,642

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

8,091

 

 

 

8,165

 

 

 

8,133

 

 

 

8,126

 

Diluted

 

 

8,375

 

 

 

8,165

 

 

 

8,418

 

 

 

8,126

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income/(loss) per share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.37

 

 

$

(0.31

)

 

$

0.75

 

 

$

(0.94

)

Diluted

 

$

0.36

 

 

$

(0.31

)

 

$

0.72

 

 

$

(0.94

)

 

Note: Earnings per share calculations could be impacted by rounding.

PERMA-PIPE INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (Unaudited)

 

 

 

January 31,

(In thousands, except per share data)

 

2022

 

2021

ASSETS

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

8,214

 

 

$

7,174

 

Restricted cash

 

 

1,557

 

 

 

1,201

 

Trade accounts receivable, less allowance for doubtful accounts of $486 on January 31, 2022 and $474 on January 31, 2021

 

 

44,449

 

 

 

25,226

 

Inventories, net

 

 

13,760

 

 

 

12,157

 

Prepaid expenses and other current assets

 

 

5,444

 

 

 

3,863

 

Unbilled accounts receivable

 

 

2,656

 

 

 

247

 

Costs and estimated earnings in excess of billings on uncompleted contracts

 

 

2,309

 

 

 

4,007

 

Total current assets

 

 

78,389

 

 

 

53,875

 

Property, plant and equipment, net of accumulated depreciation

 

 

24,756

 

 

 

26,897

 

Other assets

 

 

 

 

 

 

 

 

Operating lease right-of-use assets

 

 

11,213

 

 

 

13,384

 

Deferred tax assets

 

 

811

 

 

 

823

 

Goodwill

 

 

2,342

 

 

 

2,332

 

Other assets

 

 

5,890

 

 

 

5,380

 

Total other assets

 

 

20,256

 

 

 

21,919

 

Total assets

 

$

123,401

 

 

$

102,691

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

Trade accounts payable

 

$

13,618

 

 

$

10,365

 

Commissions and management incentives payable

 

 

2,047

 

 

 

218

 

Accrued compensation and payroll taxes

 

 

1,612

 

 

 

1,448

 

Revolving line - North America

 

 

634

 

 

 

2,826

 

Current maturities of long-term debt

 

 

6,750

 

 

 

3,941

 

Customers' deposits

 

 

3,072

 

 

 

2,088

 

Outside commission liability

 

 

1,255

 

 

 

1,431

 

Operating lease liabilities short-term

 

 

1,496

 

 

 

1,402

 

Other accrued liabilities

 

 

4,616

 

 

 

2,616

 

Billings in excess of costs and estimated earnings on uncompleted contracts

 

 

1,277

 

 

 

762

 

Income tax payable

 

 

2,020

 

 

 

1,155

 

Total current liabilities

 

 

38,397

 

 

 

28,252

 

Long-term liabilities

 

 

 

 

 

 

 

 

Long-term debt, less current maturities

 

 

5,059

 

 

 

6,268

 

Long-term finance obligation

 

 

9,327

 

 

 

-

 

Deferred compensation liabilities

 

 

3,379

 

 

 

4,120

 

Deferred tax liabilities

 

 

712

 

 

 

914

 

Operating lease liabilities long-term

 

 

11,270

 

 

 

13,174

 

Other long-term liabilities

 

 

800

 

 

 

650

 

Total long-term liabilities

 

 

30,547

 

 

 

25,126

 

Stockholders' equity

 

 

 

 

 

 

 

 

Common stock, $.01 par value, authorized 50,000 shares; 8,152 issued and outstanding January 31, 2022 and 8,165 issued and outstanding January 31, 2021

 

 

82

 

 

 

82

 

Additional paid-in capital

 

 

61,766

 

 

 

60,875

 

Treasury Stock, 234 shares at January 31, 2022 and no shares at January 31, 2021

 

 

(1,992

)

 

 

-

 

Accumulated deficit

 

 

(2,295

)

 

 

(8,357

)

Accumulated other comprehensive loss

 

 

(3,104

)

 

 

(3,287

)

Total stockholders' equity

 

 

54,457

 

 

 

49,313

 

Total liabilities and stockholders' equity

 

$

123,401

 

 

$

102,691

 

 

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.

PERMA-PIPE International Holdings, Inc. (NASDAQ:PPIH) is a global engineered pipe services company offering core competencies in anti-corrosion coatings, insulation solutions, containment systems, leak detection systems, engineering support, field service, and custom fabrication.