Financial Results for Q3 2024: Perma-Pipe International Holdings, Inc. Reports Strong Performance
Perma-Pipe International Holdings, has announced its financial results for the third quarter and fiscal year-to-date period ended October 31, 2024. The company’s performance demonstrates strong growth, despite some fluctuations in quarterly revenues, driven by increased project execution and a larger backlog, marking an optimistic outlook for the future.
Third Quarter Performance
In the third quarter, Perma-Pipe reported net sales of $41.6 million, representing a decrease of $4.1 million compared to the same quarter in 2023. This decrease is primarily due to the timing of project execution. However, the company achieved a notable increase in net income attributable to common stock, which rose by 29% to $2.5 million, up from $1.9 million in the third quarter of 2023.
David Mansfield, President and CEO, commented, “Our third-quarter results reflect the exceptional performance we have seen across the business. Despite the decline in quarterly sales, we have continued to improve project execution, driving strong profit growth. We are pleased with the increase in net income, which highlights our ability to manage cost structures effectively and deliver on strategic objectives.”
Growth in Backlog
Perma-Pipe’s backlog as of October 31, 2024, surged to $114.2 million, marking an increase of approximately nine months’ worth of revenue. This figure represents the highest backlog level since the company’s transition from MFRI to Financial Perma-Pipe in March 2017. Mansfield expressed optimism regarding the backlog’s continued strength, adding, The growth in backlog over the past two quarters is very encouraging and sets a strong foundation for next year.
Gross Profit and Expenses
The gross profit for the third quarter was $14.1 million, or 34% of net sales, up from $13.2 million, or 29% of net sales, in the same period last year. The 6% increase in gross profit was driven primarily by better product mix and improved margins.
In terms of expenses, general and administrative (G&A) costs increased by $1.6 million, totaling $7.3 million for the third quarter. Financial The rise was attributed to higher payroll and professional fees. On the other hand, selling expenses decreased by $0.3 million, from $1.5 million in the third quarter of 2023 to $1.2 million this year, primarily due to lower payroll expenses.
Net interest expense remained relatively stable at $0.5 million, compared to $0.6 million in the previous year. Other expenses also decreased significantly, from $0.5 million in the third quarter of 2023 to $0.1 million this year, largely due to favorable exchange rate fluctuations in foreign currency transactions.
Effective Tax Rate (ETR)
The company’s effective tax rate (ETR) for the third quarter was 32%, up from 31% in the prior year. The slight increase in the ETR is attributed to the recognition of tax benefits on losses in the United States, which was not possible in the prior year due to a full valuation allowance.
Year-to-Date Performance
For the nine months ended October 31, 2024, Perma-Pipe posted net sales of $113.4 million, an increase of 3% compared to the $110.5 million reported during the same period in 2023. This growth was mainly driven by increased sales volumes in the Middle East.
Gross profit for the year-to-date period was $38.1 million, or 34% of net sales, compared to $29.4 million, or 27% of net sales, in 2023. The improvement of $8.7 million was primarily due to better margins and a more favorable product mix.
General and administrative expenses for the nine months rose by $3.1 million to $19.5 million, due to higher payroll costs and professional fees. However, Financial selling expenses decreased by $0.4 million to $3.8 million, reflecting reduced payroll expenses.
Net interest expense for the nine months was $1.5 million, down from $1.8 million last year, due to declining interest rates on certain variable rate debt. Other expenses for the nine months decreased to $0.2 million from $0.4 million, primarily due to favorable foreign currency exchange rate fluctuations.
Perma-Pipe’s net income attributable to common stock for the year-to-date period was $7.2 million, marking a remarkable 294% increase from the $1.8 million reported in the first nine months of 2023. This significant improvement was primarily driven by better project execution.
Strategic Outlook
Mansfield concluded, “We are encouraged by the continued rise in infrastructure spending in key international markets such as Saudi Arabia, India, and the UAE. These markets represent a significant driver for our business growth. The strength of our financial results, bolstered by our increased backlog, positions us well to continue executing on our strategic initiatives heading into next year.”
About Perma-Pipe International Holdings, Inc.
Financial Perma-Pipe International Holdings, Inc. is a global leader in the design and manufacture of pre-insulated piping systems and leak detection systems. The Financial company serves industries such as oil and gas gathering, district heating and cooling, and various other applications. With extensive engineering and fabrication expertise, Financial Perma-Pipe provides innovative solutions for the safe and efficient transportation of liquids across a variety of industries. The company operates in fourteen locations across six countries globally.
