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):  June 9, 2020

 

PERMA-PIPE INTERNATIONAL HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

 

Delaware

0-18370

36-3922969

(State or other jurisdiction of incorporation)

(Commission File Number)

(IRS Employer Identification No.)

 

6410 West Howard Street, Niles, Illinois 60714

(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 June 9, 2020, Perma-Pipe International Holdings, Inc. issued a press release announcing its financial results for its first quarter ended April 30, 2020. 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 June 9, 2020, regarding its financial results for its first quarter ended April 30, 2020

 

 

 

 

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: June 9, 2020

By:

/s/ D. Bryan Norwood

 

 

 

D. Bryan Norwood

 

 

 

Vice President and Chief Financial Officer

 

 

 
ex_125085.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 First Quarter Fiscal 2020 Financial Results

 

 

•        The Company generated net sales of $22.7 million for the first quarter

•        Loss from operations before income taxes of $2.7 million in the first quarter

•        Backlog stood at $43.1 million on April 30, 2020 compared to $46.7 million on January 31, 2020

 

NILES, IL, June 9, 2020 - Perma-Pipe International Holdings, Inc. (NASDAQ: PPIH) announced today financial results for the first quarter ended April 30, 2020. 

 

“Revenue for the first quarter was $22.7 million, $1.6 million below the same quarter last year, and loss from operations before income taxes was $2.7 million compared to a loss of $1.2 million in the same quarter of 2019,” commented President and CEO David Mansfield.

 

"Shortly after the beginning of our fiscal year the world began to experience the impact of the COVID-19 pandemic. This caused significant disruption to our business and to our customers’ businesses around the world, as lock-downs and stay-at-home orders were mandated. After the quarter end we began to emerge from these restrictions, although the pace of the return to ‘normal’ is varying by country.

 

"Simultaneous with the developing pandemic, worldwide oil prices suffered a significant downturn as battles over oil supplies began.  As a consequence of this decline in oil price, E&P companies quickly cut capital expenditure budgets significantly, which had the effect of postponing or cancelling some of their pipeline construction projects and drilling activities. This had a negative impact on our own activities on oil and gas related projects during the quarter, causing numerous delays in project schedules.    

 

"Immediately after the potential impact of COVID-19 became apparent, and after the decline in oil prices, we assessed and implemented action plans to contain costs and unessential cash outflows until more favorable economic conditions return. At this time, all of our plants are operational and we are prepared to execute the delayed projects as they recommence.

 

"Our backlog currently stands at $43.1 million, which reflects a decline of $3.7 million from the backlog at January 31, mostly a consequence of reduced levels of activity in the Canadian oil and gas industry," concluded Mr. Mansfield. 

 

 

 

 

 

First Quarter Fiscal 2020 Results 

 

Net sales were $22.7 million in the current quarter, a decrease of $1.5 million, or 6%, from $24.3 million in the prior year quarter. The decrease resulted from lower revenues in North America due to declines in oil prices and certain of our Middle East operations due to project delays as a result of the COVID-19 pandemic. These decreases were partially offset by increases from the new operations in Egypt.

 

Gross profit decreased to $3.5 million, or 15% of net sales, in the current quarter from $4.7 million, or 19% of net sales, in the prior year quarter. This decrease in gross profit was primarily driven by lower project margins in the Company's Middle East operations, particularly in Saudi Arabia and India.

 

General and administrative expenses remained consistent at $4.4 million in the current and prior year quarters.

 

Selling expenses increased to $1.6 million in the current quarter, compared to $1.3 million in the prior year quarter, an increase of $0.3 million, or 31%. This increase was primarily due to payroll expenses for additional sales employees added in 2019.

 

Interest expense remained consistent at $0.2 million in the current and prior year quarters. 

 

Income tax (benefit)/expense decreased to a benefit of $0.2 million in the current quarter, compared to an expense of $0.3 million in the prior year quarter, a change of $0.5 million, or 169%. The decrease in the expense in the current year quarter was largely due to changes in the mix of income and loss in various jurisdictions.

 

The net loss of $2.5 million in the current quarter was a decline of $1.0 million over the net loss of $1.5 million in the prior year quarter. The increased loss resulted from lower revenues in North America due to declines in oil prices and certain of our Middle East operations due to project delays as a result of the COVID-19 pandemic. The negative impact of these lower revenues was partially offset by increased income from the operations in Egypt.

 

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 eight 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) risks and uncertainties related to the Company's newly reported material weakness in its internal control over financial reporting; (vi) risks and uncertainties related to the Company's receipt of funding under the Paycheck Protection Program; (vii) the Company’s ability to effectively execute its strategic plan and achieve profitability and positive cash flows; (viii) the impact of global economic weakness and volatility; (ix) fluctuations in steel prices and the Company’s ability to offset increases in steel prices through price increases in its products; (x) the timing of orders for the Company’s products; (xi) 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; (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 purchase raw materials at favorable prices and to maintain beneficial relationships with its suppliers; (xv) the Company’s ability to manufacture products free of latent defects and to recover from suppliers who may provide defective materials to the Company; (xvi) reductions or cancellations of orders included in the Company’s backlog; (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; (xiv) 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) reversals of previously recorded revenue and profits resulting from inaccurate estimates made in connection with the Company’s percentage-of-completion revenue recognition; 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.)

 

The Company's Form 10-Q for the quarter ended April 30, 2020 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,

 
   

2020

   

2019

 

Net sales

  $ 22,741     $ 24,276  

Cost of sales

    19,275       19,554  

Gross profit

    3,466       4,722  
                 

Operating expenses

               

General and administrative expenses

    4,369       4,442  

Selling expenses

    1,647       1,260  

Total operating expenses

    6,016       5,702  
                 

Loss from operations

    (2,550 )     (980 )
                 

Interest expense, net

    186       210  

Loss from operations before income taxes

    (2,736 )     (1,190 )
                 

Income tax (benefit)/expense

    (215 )     312  
                 

Net loss

  $ (2,521 )   $ (1,502 )
                 

Weighted average common shares outstanding

               

Basic

    8,048       7,887  

Diluted

    8,048       7,887  
                 

Loss per share

               

Basic

    (0.31 )     (0.19 )

Diluted

    (0.31 )     (0.19 )

 

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, 2020

   

January 31, 2020

 
      (Unaudited)          

ASSETS

               

Current assets

               

Cash and cash equivalents

  $ 12,450     $ 13,371  

Restricted cash

    1,105       1,287  

Trade accounts receivable, less allowance for doubtful accounts of $342 at April 30, 2020 and $407 at January 31, 2020

    25,284       29,402  

Inventories, net

    13,912       14,498  

Prepaid expenses and other current assets

    4,314       3,531  

Costs and estimated earnings in excess of billings on uncompleted contracts

    2,900       2,166  

Total current assets

    59,965       64,255  

Property, plant and equipment, net of accumulated depreciation

    27,553       28,629  

Other assets

               

Operating lease right-of-use asset

    11,165       11,475  

Deferred tax assets

    402       293  

Goodwill

    2,144       2,254  

Other assets

    5,564       5,319  

Total other assets

    19,275       19,341  

Total assets

  $ 106,793     $ 112,225  

LIABILITIES AND STOCKHOLDERS' EQUITY

               

Current liabilities

               

Trade accounts payable

  $ 8,557     $ 9,577  

Accrued compensation and payroll taxes

    1,601       1,190  

Commissions and management incentives payable

    2,155       1,759  

Revolving line - North America

    7,211       8,577  

Current maturities of long-term debt

    1,521       1,458  

Customers' deposits

    1,452       2,202  

Outside commission liability

    1,845       1,755  

Operating lease liability short-term

    1,254       1,040  

Other accrued liabilities

    3,403       3,444  

Billings in excess of costs and estimated earnings on uncompleted contracts

    1,061       1,173  

Income taxes payable

    765       664  

Total current liabilities

    30,825       32,839  

Long-term liabilities

               

Long-term debt, less current maturities

    6,244       6,717  

Deferred compensation liabilities

    4,241       4,199  

Deferred tax liabilities

    751       1,052  

Operating lease liability long-term

    10,851       11,214  

Other long-term liabilities

    921       575  

Total long-term liabilities

    23,008       23,757  

Stockholders' equity

               

Common stock, $.01 par value, authorized 50,000 shares; 8,048 issued and outstanding at April 30, 2020 and 8,048 issued and outstanding at January 31, 2020

    80       80  

Additional paid-in capital

    60,243       60,024  

Accumulated deficit

    (3,236 )     (715 )

Accumulated other comprehensive loss

    (4,127 )     (3,760 )

Total stockholders' equity

    52,960       55,629  

Total liabilities and stockholders' equity

  $ 106,793     $ 112,225