- Net sales of $34.9 million for the quarter and $129.0 million
for the year ended January 31, 2019
- Income from operations before income tax at $1.6 million in
2018 compared to a loss of $10.2 million in 2017
- Backlog of $61.0 million as of January 31, 2019 an increase of
31% from $46.7 million on January 31, 2018
NILES, Ill.--(BUSINESS WIRE)--
Perma-Pipe International Holdings, Inc. (NASDAQ: PPIH) announced today
financial results for the fourth quarter and fiscal year ended January
31, 2019.
President and CEO David Mansfield commented, “Fourth quarter revenues of
$34.9 million were 28% higher than the same quarter last year. The
resulting operating earnings of $1.9 million improved $3.2 million over
the $1.3 million loss incurred in the fourth quarter of last year. For
the year ended January 31, 2019, revenues were $129.0 million, a 23%
increase over the prior year, and income from operations of $1.6 million
increased $11.8 million from last year's $10.2 million loss.
Customer-driven delays to project schedules in the Middle East continued
into the fourth quarter, and these projects are expected to be executed
in the first quarter of fiscal 2019.”
“Backlog has continued to grow and stands at $61 million reflecting an
increase of 31% above the level at the end of last year,” continued Mr.
Mansfield.
“All operating areas of the Company achieved year-over-year increases in
revenue, income from operations and backlog. The results of the fourth
quarter and the full year continue to highlight the progress the company
is making to return to acceptable levels of profitability and growth,”
concluded Mr. Mansfield.
Fourth Quarter 2019 Results
Net sales increased 28% to $34.9 million in the current quarter from
$27.4 million in the prior year quarter. Higher revenues were driven by
increased oil prices, favorable product mix and better sales and project
execution which resulted in increased sales in the Middle East, U.S. and
Canadian markets. We also experienced higher demand for leak detection
products.
Gross profit increased to 18%, or $6.3 million of net sales, in the
current quarter from 13%, or $3.6 million of net sales, in the prior
year quarter. This 77% 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 $3.2 million
in the current quarter, compared to $3.8 million in the prior year
quarter. Selling expenses were $1.2 million in the current quarter,
compared to $1.1 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 were $129.0 million in 2018, an increase of 23% from $105.2
million in 2017. Higher revenues were driven by increased oil prices,
favorable product mix and better sales and project execution which
resulted in increased sales in the Middle East, U.S. and Canadian
markets. We also experienced higher demand for leak detection products.
Gross profit increased to $23.3 million in 2018, an increase
of 99% from 11.7 million in 2017. This increase is attributed to higher
volumes, improved pricing and manufacturing efficiencies.
General and administrative expenses were $15.4 million in 2018 compared
to $16.2 million in 2017, an improvement of
$0.9 million or 5%. Excluding one-time charges in both periods, annually
recurring general and administrative expenses were flat year over year
at approximately $15.0 million. The one-time charges include $1.2
million in 2017 for internal control review fees incurred in the Middle
East region and $0.4 million in 2018 primarily related to the retirement
cost of our prior CFO.
Selling expenses increased to $5.2 million in 2018 from $5.0 million in
2017. Current year expenses included higher commissions related
to increased sales.
Interest expense increased to $1.1 million in 2018 from $0.7 million in
2017 due to higher borrowings and increased interest rates.
Income tax expense was $2.2 million in 2018 compared to $0.2 million of
income tax benefit in 2017. This change is largely due to the fact that
the company is in a positive income position in certain high tax rate
jurisdictions.
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, 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 impact 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;
(viii) risks and uncertainties related to the Company’s international
business operations; (ix) the Company’s ability to repay its debt and
renew expiring international credit facilities; (x) aggressive pricing
by existing competitors and the entrance of new competitors in the
markets in which the Company operates; (xi) the Company’s ability to
purchase raw materials at favorable prices and to maintain beneficial
relationships with its suppliers; (xii) the Company’s ability to
manufacture products free of latent defects and to recover from
suppliers who may provide defective materials to the Company;
(xiii) reductions or cancellations of orders included in the Company’s
backlog; (xiv) the Company’s ability to attract and retain senior
management and key personnel; (xv) the Company’s ability to achieve the
expected benefits of its growth initiatives; (xvi) the Company’s ability
to interpret changes in tax regulations and legislation; (xvii)
reversals of previously recorded revenue and profits resulting from
inaccurate estimates made in connection with the Company’s
percentage-of-completion revenue recognition; (xviii) the Company’s
failure to establish and maintain effective internal control over
financial reporting; and (xix) 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-K for the fiscal year ended January
31, 2019 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 January 31, |
| Twelve months ended January 31, |
| (In thousands, except per share data) |
| 2019 |
| 2018 |
| 2019 |
| 2018 |
| | |
| | | |
| |
|
Net sales
| | $ 34,945 | | $ 27,397 | | $ 128,965 | | $ 105,248 |
|
Cost of sales
| |
28,607
|
|
23,818
|
|
105,626
|
|
93,506
|
|
Gross profit
| |
6,338
| |
3,579
| |
23,339
| |
11,742
|
| | | | | | | |
|
|
Operating expenses:
| | | | | | | | |
|
General and administrative expense
| |
3,204
| |
3,758
| |
15,357
| |
16,214
|
|
Selling expense
| |
1,222
|
|
1,120
|
|
5,239
|
|
5,040
|
|
Total operating expenses
| |
4,426
| |
4,878
| |
20,596
| |
21,254
|
| |
|
|
|
|
|
|
|
|
Income/(loss) from operations
| |
1,912
| |
(1,299)
| |
2,743
| |
(9,512)
|
| | | | | | | |
|
|
Interest expense, net
| |
292
|
|
190
|
|
1,122
|
|
697
|
|
Income/(loss) from operations before income taxes
| |
1,620
| |
(1,489)
| |
1,621
| |
(10,209)
|
| | | | | | | |
|
|
Income tax expense/(benefit)
| |
625
| |
8
| |
2,150
| |
(233)
|
| |
|
|
|
|
|
|
|
| Net income/(loss) | | $ 995 |
| $ (1,497) |
| $ (529) |
| $ (9,976) |
| | | | | | | |
|
|
Weighted average common shares outstanding
| | | | | | | | |
|
Basic
| |
7,812
| |
7,715
| |
7,812
| |
7,680
|
|
Diluted
| |
7,966
| |
7,715
| |
7,812
| |
7,680
|
| | | | | | | |
|
|
Income/(loss) per share
| | | | | | | | |
|
Basic
| | $ 0.13 | | $ (0.19) | | $ (0.07) | | $ (1.30) |
|
Diluted
| | $ 0.12 | | $ (0.19) | | $ (0.07) | | $ (1.30) |
| | | | | | | |
|
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) |
| 2019 |
|
| 2018 | |
| ASSETS |
| | | |
| | | |
| Current assets | | | | | | | | |
|
Cash and cash equivalents
| |
$
|
10,156
| | |
$
|
7,084
| |
|
Restricted cash
| | |
2,581
| | | |
1,237
| |
|
Trade accounts receivable, less allowance for doubtful accounts of
$536 on January 31, 2019 and $469 on January 31, 2018 | | |
32,508
| | | |
32,936
| |
|
Inventories
| | |
12,289
| | | |
16,856
| |
|
Prepaid expenses and other current assets
| | |
3,773
| | | |
2,703
| |
|
Costs and estimated earnings in excess of billings on uncompleted
contracts
| |
|
1,653
|
|
|
|
1,502
| |
| Total current assets | | |
62,960
| | | |
62,318
| |
|
Property, plant and equipment, net of accumulated depreciation
| | |
30,398
| | | |
34,509
| |
| Other assets | | | | | | | | |
|
Deferred tax assets
| | |
458
| | | |
391
| |
| Goodwill | | |
2,269
| | | |
2,423
| |
|
Other assets
| |
|
6,120
|
|
|
|
4,943
| |
| Total other assets | |
|
8,847
|
|
|
|
7,757
| |
| Total assets | | $ | 102,205 |
|
| $ | 104,584 | |
| LIABILITIES AND STOCKHOLDERS' EQUITY | | | | | | | | |
| Current liabilities | | | | | | | | |
|
Trade accounts payable
| |
$
|
12,006
| | |
$
|
14,186
| |
|
Commissions and management incentives payable
| | |
1,866
| | | |
787
| |
|
Accrued compensation and payroll taxes
| | |
1,544
| | | |
1,580
| |
|
Revolving line North America | | |
8,890
| | | |
7,273
| |
|
Current maturities of long-term debt
| | |
640
| | | |
753
| |
|
Customers' deposits
| | |
3,708
| | | |
5,236
| |
|
Liabilities of discontinued operations
| | |
—
| | | |
137
| |
|
Outside commission liability
| | |
1,743
| | | |
1,800
| |
|
Other accrued liabilities
| | |
3,856
| | | |
4,122
| |
|
Billings in excess of costs and estimated earnings on uncompleted
contracts
| | |
1,569
| | | |
1,967
| |
|
Income tax payable
| |
|
1,266
|
|
|
|
1,339
| |
| Total current liabilities | | |
37,088
| | | |
39,180
| |
| Long-term liabilities | | | | | | | | |
|
Long-term debt, less current maturities
| | |
6,751
| | | |
7,728
| |
|
Deferred compensation liabilities
| | |
3,883
| | | |
4,098
| |
|
Deferred tax liabilities
| | |
1,435
| | | |
1,242
| |
|
Other long-term liabilities
| |
|
688
|
|
|
|
524
| |
| Total long-term liabilities | |
|
12,757
|
|
|
|
13,592
| |
| Stockholders' equity | | | | | | | | |
|
Common stock, $.01 par value, authorized 50,000 shares; 7,854 issued
and outstanding January 31, 2019 and 7,717 issued and outstanding
January 31, 2018 | | |
79
| | | |
77
| |
|
Additional paid-in capital
| | |
58,793
| | | |
56,304
| |
|
Accumulated deficit retained earnings
| | |
(3,632
|
)
| | |
(3,103
|
)
|
|
Accumulated other comprehensive loss
| |
|
(2,880
|
)
|
|
|
(1,466
|
)
|
| Total stockholders' equity | |
|
52,360
|
|
|
|
51,812
| |
| Total liabilities and stockholders' equity | | $ | 102,205 |
|
| $ | 104,584 | |
View source version on businesswire.com: https://www.businesswire.com/news/home/20190416005150/en/
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.