8-K
Perma-Pipe International Holdings, Inc. (PPIH)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
_______________________
Date of Report (Date of earliest event reported): December 23, 2024
PERMA-PIPE INTERNATIONAL HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
| Delaware | 001-32530 | 36-3922969 |
|---|---|---|
| (State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
24900 Pitkin Road, Suite 309 , Spring, Texas 77386
(Address of principal executive offices, including zip code)
(847) 966-1000
(Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| --- | --- |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common Stock, $.01 par value per share | PPIH | The Nasdaq Stock Market LLC |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 2.02. | Results of Operations and Financial Condition. |
|---|
On December 23, 2024, Perma-Pipe International Holdings, Inc. issued a press release announcing its financial results for its third quarter ended October 31, 2024. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.
| Item 9.01. | Financial Statements and Exhibits. |
|---|---|
| (a) | Not applicable. |
| --- | --- |
| (b) | Not applicable. |
| --- | --- |
| (c) | Not applicable. |
| --- | --- |
| (d) | Exhibits. The following exhibit is being furnished herewith: |
| --- | --- |
Exhibit
Number
| (99.1) | Press Release of Perma-Pipe International Holdings, Inc., dated December 23, 2024, regarding its financial results for its third quarter ended October 31, 2024 |
|---|---|
| (104) | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| PERMA-PIPE INTERNATIONAL HOLDINGS, INC. | ||
|---|---|---|
| Date: December 23, 2024 | By: | /s/ Matthew E. Lewicki |
| Matthew E. Lewicki | ||
| Vice President and Chief Financial Officer |
ex_725831.htm
Exhibit 99.1
| COMPANY: | Perma-Pipe International Holdings, Inc. |
|---|---|
| CONTACT: | David Mansfield, President and CEO |
| --- | --- |
Perma-Pipe Investor Relations
(847) 929-1200
investor@permapipe.com
Perma-Pipe International Holdings, Inc. Announces its Third Quarter Financial Results
• The Company generated net sales of $41.6 million for the quarter and $113.4 million year-to-date
• Income (loss) before income taxes of $5.1 million for the quarter and $13.2 million year-to-date
• Backlog of $114.2 million at October 31, 2024, compared to $68.5 million at January 31, 2024
SPRING, TX, December 23, 2024 - Perma-Pipe International Holdings, Inc. (NASDAQ: PPIH) announced today financial results for the third quarter and fiscal year-to-date ended October 31, 2024.
"Net sales for the second quarter were $41.6 million, a decrease of $4.1 million, as compared to the same quarter last year. Net income attributable to common stock of $2.5 million, was an increase of $0.6 million, or 29%, compared to $1.9 million in the third quarter of 2023. For the nine months ended October 31, 2024, net sales of $113.4 million represent an increase of 3% compared to the nine months ended October 31, 2023. The net income attributable to common stock of $7.2 million, was an increase of $5.4 million, or 294%, compared to net income attributable to common stock of $1.8 million in the nine months ended October 31, 2023,” noted President and CEO David Mansfield.
“Backlog in the third quarter shows considerable growth and now stands at $114.2 million. This is the equivalent to approximately nine months revenue based upon prior years’ revenues. The continual strengthening of our backlog over the past two quarters is encouraging and provides a sense of optimism heading into next year. Additionally, backlog at the end of the third quarter represents the highest level since transitioning from MFRI to Perma-Pipe, which occurred in March 2017,” Mr. Mansfield continued.
“Our third quarter and fiscal 2024 year-to-date results continue to reflect exceptional performance, which has remained consistent throughout the year. It is worth noting that our net income attributable to common stock for the nine months ended October 31, 2024, represents the highest level of earnings on a year-to-date basis since transitioning from MFRI to Perma-Pipe,” said Mr. Mansfield.
“We are pleased with the level of business activity we have experienced and continue to see, as supported by the significant rise in backlog and share price. The increases in infrastructure spending in Saudi Arabia, India, and the U.A.E., represent key drivers of our overall improvement, for which the strength of our financial results further enables us to continue to execute on strategic initiatives,” concluded Mr. Mansfield.
Second Quarter Fiscal 2024 Results
Net sales were $41.6 million and $45.7 million in the three months ended October 31, 2024 and 2023, respectively. The decrease of $4.1 million, or 9%, was a result of the timing of project execution.
Gross profit was $14.1 million, or 34% of net sales, and $13.2 million, or 29% of net sales, in the three months ended October 31, 2024 and 2023, respectively. The increase of $0.9 million, was driven primarily by better margins due to product mix.
General and administrative expenses were $7.3 million and $5.7 million in the three months ended October 31, 2024 and 2023, respectively. The increase of $1.6 million, was due to higher payroll expenses and professional fees in the quarter.
Selling expenses were $1.2 million and $1.5 million in the three months ended October 31, 2024 and 2023, respectively. The decrease of $0.3 million, was due to lower payroll expense in the quarter.
Net interest expense remained consistent and was $0.5 million and $0.6 million in the three months ended October 31, 2024 and 2023, respectively.
Other expense was $0.1 million and $0.5 million in the three months ended October 31, 2024 and 2023, respectively. The decrease of $0.4 million, was due primarily to exchange rate fluctuations in foreign currency transactions.
The Company's ETR was 32% and 31% in the three months ended October 31, 2024 and 2023, respectively. The change in the ETR is due to the ability to recognize tax benefits on losses in the United States in the current year whereas the prior year had a full valuation allowance and changes to the mix of income and loss in various jurisdictions.
Net income attributable to common stock was $2.5 million and $1.9 million in the three months ended October 31, 2024 and 2023, respectively. The increase of $0.6 million, was mainly due to better project execution in the quarter.
Fiscal 2024 Year-to-Date Results
Net sales were $113.4 million and $110.5 million in the nine months ended October 31, 2024 and 2023, respectively. The increase of $2.9 million, or 3%, was a result of increased sales volumes in the Middle East.
Gross profit was $38.1 million, or 34% of net sales, and $29.4 million, or 27% of net sales, in the nine months ended October 31, 2024 and 2023, respectively. The increase of $8.7 million, was driven primarily by better margins due to product mix.
General and administrative expenses were $19.5 million and $16.4 million in the nine months ended October 31, 2024 and 2023, respectively. The increase of $3.1 million, was due to higher payroll expenses and professional fees.
Selling expenses were $3.8 million and $4.2 million in the nine months ended October 31, 2024 and 2023, respectively. The decrease of $0.4 million, was due to lower payroll expenses.
Net interest expense was $1.5 million and $1.8 million in the nine months ended October 31, 2024 and 2023, respectively. The decrease of $0.3 million, was due primarily to declining interest rates on certain variable rate debt.
Other expense was $0.2 million and $0.4 million in the nine months ended October 31, 2024 and 2023, respectively. The change was due primarily to exchange rate fluctuations in foreign currency transactions.
The Company's ETR was 28% and 49% in the nine months ended October 31, 2024 and 2023, respectively. The change in the ETR is due to the ability to recognize tax benefits on losses in the United States in the current year whereas the prior year had a full valuation allowance and changes to the mix of income and loss in various jurisdictions.
Net income attributable to common stock was $7.2 million and $1.8 million in the nine months ended October 31, 2024 and 2023, respectively. The increase of $5.4 million, was mainly due to better project execution during the year.
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 fourteen 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) fluctuations in the price of oil and natural gas and its impact on customer order volume for the Company's products; (ii) the Company’s ability to purchase raw materials at favorable prices and to maintain beneficial relationships with its suppliers; (iii) 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; (iv) the Company’s ability to repay its debt and renew expiring international credit facilities; (v) the Company’s ability to effectively execute its strategic plan and achieve sustained profitability and positive cash flows; (vi) the Company's ability to collect a long-term account receivable related to a project in the Middle East; (vii) the Company’s ability to interpret changes in tax regulations and legislation; (viii) the Company's ability to use its net operating loss carryforwards; (ix) reversals of previously recorded revenue and profits resulting from inaccurate estimates made in connection with the Company’s "over-time" revenue recognition; (x) the Company’s failure to establish and maintain effective internal control over financial reporting; (xi) the timing of order receipt, execution, delivery and acceptance for the Company’s products; (xii) the Company’s ability to successfully negotiate progress-billing arrangements for its large contracts; (xiii) aggressive pricing by existing competitors and the entrance of new competitors in the markets in which the Company operates; (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) risks and uncertainties specific to the Company's international business operations; (xvii) the Company’s ability to attract and retain senior management and key personnel; (xviii) the Company’s ability to achieve the expected benefits of its growth initiatives; (xix) the impact of pandemics and other public health crises on the Company and its operations; and (xx) 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.)
Additional information regarding the Company's financial results for the three months ended October 31, 2024, including management's discussion and analysis of the Company's financial condition and results of operations, is contained in the Company's Quarterly Report on Form 10-Q for the quarterly period ended October 31, 2024, which will be filed with the Securities and Exchange Commission on or about the date hereof and 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
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
| Three Months Ended October 31, | Nine Months Ended October 31, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2024 | 2023 | 2024 | 2023 | |||||||||
| Net sales | $ | 41,563 | $ | 45,690 | $ | 113,397 | $ | 110,489 | ||||
| Gross profit | 14,086 | 13,184 | 38,077 | 29,424 | ||||||||
| Total operating expenses | 8,500 | 7,145 | 23,214 | 20,618 | ||||||||
| Income from operations | 5,586 | 6,039 | 14,863 | 8,806 | ||||||||
| Interest expense | 468 | 640 | 1,489 | 1,788 | ||||||||
| Other expense | (50 | ) | (502 | ) | (156 | ) | (350 | ) | ||||
| Income before income taxes | 5,068 | 4,897 | 13,218 | 6,668 | ||||||||
| Income tax expense | 1,615 | 1,533 | 3,692 | 3,257 | ||||||||
| Net income | $ | 3,453 | $ | 3,364 | $ | 9,526 | $ | 3,411 | ||||
| Less: Net income attributable to non-controlling interest | 962 | 1,429 | 2,303 | 1,577 | ||||||||
| Net income attributable to common stock | $ | 2,491 | $ | 1,935 | $ | 7,223 | $ | 1,834 | ||||
| Earnings per share attributable to common stock | ||||||||||||
| Basic | $ | 0.31 | $ | 0.24 | $ | 0.91 | $ | 0.23 | ||||
| Diluted | $ | 0.31 | $ | 0.24 | $ | 0.90 | $ | 0.23 |
PERMA-PIPE INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
| October 31, 2024 | January 31, 2024 | |||
|---|---|---|---|---|
| ASSETS | ||||
| Current assets | $ | 104,405 | $ | 98,818 |
| Long-term assets | 56,344 | 56,893 | ||
| Total assets | $ | 160,749 | $ | 155,711 |
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||
| Current liabilities | $ | 53,794 | $ | 57,742 |
| Long-term liabilities | 26,792 | 25,991 | ||
| Total liabilities | 80,586 | 83,733 | ||
| Non-controlling interests | 8,952 | 6,266 | ||
| Stockholders' equity | 71,211 | 65,712 | ||
| Total liabilities and equity | $ | 160,749 | $ | 155,711 |