NILES, Ill.–(BUSINESS WIRE)–Perma-Pipe International Holdings, Inc. (NASDAQ: PPIH) announced today financial results for the first quarter ended April 30, 2021.

“First quarter revenue was $24.4 million, $1.7 million above the same quarter last year, and pre-tax loss was $0.7 million compared to a pre-tax loss of $2.7 million in the same quarter of 2020, which was mostly prior to the impact of the pandemic,” noted President and CEO David Mansfield.

“For the early part of our first quarter, our results continued to reflect the adverse business conditions arising as a result of the COVID-19 pandemic. In the latter half though, some of the restrictions began to ease and we were able to commence previously delayed projects. The cost reductions implemented last year also continued to have a favorable impact. The successful roll outs of the COVID-19 vaccines are beginning to allow a relaxation of restrictions and this appears to be having an encouraging effect on project schedules and on our backlog. While we are still in the early stages, the positive sentiment of a strengthening recovery is reflected in the increase in project activities. In addition, oil prices have reached a level that should begin to attract investment.

“The obstacles brought about by the pandemic through 2020 have not deterred us from our strategic plans and we continue to pursue the initiatives and strategies that had us on the path to acceptable profitability,” Mr. Mansfield continued.

“Our backlog currently stands at $58.9 million, which reflects an increase of $6.3 million from the backlog at January 31. Since these increases arise in the majority of our business units, it provides further confidence that we are entering a period of general recovery in conditions,” Mr. Mansfield concluded.

First Quarter Fiscal 2021 Results

Net sales were $24.4 million in the current quarter, an increase of $1.7 million, or 7%, from $22.7 million in the prior year quarter. The increase was largely a result of increased sales volumes in the Company’s U.A.E. business driven by the introduction of a new product line and project timing in its Saudi Arabian business.

Gross profit increased to $4.5 million, or 18% of net sales, in the current quarter from $3.5 million, or 15% of net sales, in the prior year quarter. This increase was driven by higher sales volumes and the impact of cost reduction strategies implemented in 2020.

General and administrative expenses were approximately the same in the current quarter and the prior year quarter.

Selling expenses decreased to $1.0 million in the current quarter, compared to $1.6 million in the prior year quarter due primarily to cost reduction strategies implemented in 2020.

Net interest expense remained consistent at $0.2 million in both the current quarter and the prior year quarter.

Other income, net increased to income of $0.4 million in the current quarter, compared to expense of $0.1 million in the prior year quarter. This increase was a result of income recorded for funds received under the Canadian Emergency Wage Subsidy and Canadian Emergency Rent Subsidy programs in Canada.

Loss from operations before income taxes decreased by $2.1 million to a loss of ($0.7 million) in the current quarter from a loss of ($2.8 million) in the prior year quarter. The reduced loss was a result of increased sales volumes in the Company’s U.A.E. business driven by the introduction of a new product line and project timing in its Saudi Arabian business.

The Company’s worldwide effective tax rates (“ETR”) were (24.3%) and 7.8% in the current quarter and the prior year quarter, respectively. The change in the ETR from the prior year quarter to the current year quarter is largely due to changes in the mix of income and loss in various jurisdictions.

The resulting net loss of ($0.9 million) in the current quarter was an improvement of $1.6 million over the net loss of ($2.5 million) in the prior year quarter. The reduced net loss was a result of increased sales volumes in the Company’s U.A.E. business driven by the introduction of a new product line and project timing in its Saudi Arabian business.

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, Inc. (the “Company”) 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, the Company 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 Company’s ability to comply with all covenants in its credit facilities; (iv) the Company’s ability to repay its debt and renew expiring international credit facilities; (v) the Company’s ability to obtain forgiveness of its loan under the Small Business Administration’s (“SBA”) Paycheck Protection Program (“PPP”); (vi) the Company’s ability to effectively execute its strategic plan and achieve profitability and positive cash flows; (vii) the impact of global economic weakness and volatility; (viii) fluctuations in steel prices and the Company’s ability to offset increases in steel prices through price increases in its products; (ix) the timing of order receipt, execution, delivery and acceptance for the Company’s products; (x) 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; (xi) the Company’s ability to successfully negotiate progress-billing arrangements for its large contracts; (xii) aggressive pricing by existing competitors and the entrance of new competitors in the markets in which the Company operates; (xiii) the Company’s ability to purchase raw materials at favorable prices and to maintain beneficial relationships with its suppliers; (xiv) the Company’s ability to manufacture products free of latent defects and to recover from suppliers who may provide defective materials to the Company; (xv) reductions or cancellations of orders included in the Company’s backlog; (xvi) the Company’s ability to collect an account receivable related to a project in the Middle East; (xvii) risks and uncertainties related to the Company’s international business operations; (xviii) the Company’s ability to attract and retain senior management and key personnel; (xix) the Company’s ability to achieve the expected benefits of its growth initiatives; (xx) the Company’s ability to interpret changes in tax regulations and legislation; (xxi) the Company’s ability to use its net operating loss carryforwards; (xxii) reversals of previously recorded revenue and profits resulting from inaccurate estimates made in connection with the Company’s percentage-of-completion revenue recognition; (xxiii) the Company’s failure to establish and maintain effective internal control over financial reporting; and (xiv) 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).

The Company’s Form 10-Q for the quarter ended April 30, 2021 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 April 30,

 

 

 

2021

 

 

2020

 

Net sales

 

$

24,423

 

 

$

22,741

 

Cost of sales

 

 

19,918

 

 

 

19,275

 

Gross profit

 

 

4,505

 

 

 

3,466

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

 

 

 

 

 

 

 

General and administrative expenses

 

 

4,404

 

 

 

4,304

 

Selling expenses

 

 

1,042

 

 

 

1,647

 

Total operating expenses

 

 

5,446

 

 

 

5,951

 

 

 

 

 

 

 

 

 

 

Loss from operations

 

 

(941

)

 

 

(2,485

)

 

 

 

 

 

 

 

 

 

Interest expense, net

 

 

178

 

 

 

186

 

Other income, net

 

 

441

 

 

 

(65

)

Loss from operations before income taxes

 

 

(678

)

 

 

(2,736

)

 

 

 

 

 

 

 

 

 

Income tax expense/(benefit)

 

 

165

 

 

 

(215

)

 

 

 

 

 

 

 

 

 

Net loss

 

$

(843

)

 

$

(2,521

)

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding

 

 

 

 

 

 

 

 

Basic

 

 

8,165

 

 

 

8,048

 

Diluted

 

 

8,165

 

 

 

8,048

 

 

 

 

 

 

 

 

 

 

Loss per share

 

 

 

 

 

 

 

 

Basic

 

 

(0.10

)

 

 

(0.31

)

Diluted

 

 

(0.10

)

 

 

(0.31

)

 

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

PERMA-PIPE INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except per share data)

 

 

 

April 30, 2021

 

 

January 31, 2021

 

 

 

 

(Unaudited)

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

8,483

 

 

$

7,174

 

Restricted cash

 

 

1,164

 

 

 

1,201

 

Trade accounts receivable, less allowance for doubtful accounts of $497 at April 30, 2021 and $474 at January 31, 2021

 

 

27,305

 

 

 

25,226

 

Inventories, net

 

 

15,069

 

 

 

12,157

 

Prepaid expenses and other current assets

 

 

9,078

 

 

 

4,110

 

Costs and estimated earnings in excess of billings on uncompleted contracts

 

 

3,473

 

 

 

4,007

 

Total current assets

 

 

64,572

 

 

 

53,875

 

Property, plant and equipment, net of accumulated depreciation

 

 

26,223

 

 

 

26,897

 

Other assets

 

 

 

 

 

 

 

 

Operating lease right-of-use asset

 

 

12,178

 

 

 

13,384

 

Deferred tax assets

 

 

911

 

 

 

823

 

Goodwill

 

 

2,427

 

 

 

2,332

 

Other assets

 

 

5,305

 

 

 

5,380

 

Total other assets

 

 

20,821

 

 

 

21,919

 

Total assets

 

$

111,616

 

 

$

102,691

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

Trade accounts payable

 

$

13,644

 

 

$

10,365

 

Accrued compensation and payroll taxes

 

 

1,660

 

 

 

1,448

 

Commissions and management incentives payable

 

 

231

 

 

 

218

 

Revolving line – North America

 

 

 

 

 

2,826

 

Current maturities of long-term debt

 

 

2,723

 

 

 

3,941

 

Customers’ deposits

 

 

2,206

 

 

 

2,088

 

Outside commission liability

 

 

1,980

 

 

 

1,431

 

Operating lease liability short-term

 

 

1,311

 

 

 

1,402

 

Other accrued liabilities

 

 

3,287

 

 

 

2,616

 

Billings in excess of costs and estimated earnings on uncompleted contracts

 

 

2,034

 

 

 

762

 

Income taxes payable

 

 

1,409

 

 

 

1,155

 

Total current liabilities

 

 

30,485

 

 

 

28,252

 

Long-term liabilities

 

 

 

 

 

 

 

 

Long-term debt, less current maturities

 

 

5,585

 

 

 

6,268

 

Long-term finance obligation

 

 

8,905

 

 

 

 

Deferred compensation liabilities

 

 

4,116

 

 

 

4,120

 

Deferred tax liabilities

 

 

868

 

 

 

914

 

Operating lease liability long-term

 

 

12,185

 

 

 

13,174

 

Other long-term liabilities

 

 

690

 

 

 

650

 

Total long-term liabilities

 

 

32,349

 

 

 

25,126

 

Stockholders’ equity

 

 

 

 

 

 

 

 

Common stock, $.01 par value, authorized 50,000 shares; 8,165 issued and outstanding at April 30, 2021 and 8,165 issued and outstanding at January 31, 2021

 

 

82

 

 

 

82

 

Additional paid-in capital

 

 

61,147

 

 

 

60,875

 

Accumulated deficit

 

 

(9,200

)

 

 

(8,357

)

Accumulated other comprehensive loss

 

 

(3,247

)

 

 

(3,287

)

Total stockholders’ equity

 

 

48,782

 

 

 

49,313

 

Total liabilities and stockholders’ equity

 

$

111,616

 

 

$

102,691