Perma-Pipe International Holdings Announces Fourth Quarter and Full Year Financial Results
Net sales of $27.6 million for the quarter and $98.8 million for the year; Loss from continuing operations of $1.9 million for the quarter and $13.0 million for the year; Backlog at $44.6 million
(firmenpresse) - NILES, IL -- (Marketwired) -- 04/14/17 -- Perma-Pipe International Holdings, Inc. (NASDAQ: PPIH) announced today financial results for the fourth quarter and fiscal year ended January 31, 2017.
CEO David Mansfield commented, "Perma-Pipe''s fourth-quarter results continued to be constrained by the adverse conditions prevailing in the energy market and the negative impact on spending on infrastructure development. This is reflected in the reduction in revenues for the quarter, down 9% compared to last year, and for the full year, down 19% compared to the prior year.
"The 2016/17 year has been a challenging one, but also a transformative one as we implemented a series of strategic actions to refocus the business portfolio and cost structure. These steps included fully exiting our Filtration segment. Accordingly, our financial statements show the after-tax effect of the divestiture and related expenses in Discontinued Operations. In addition, during the fourth quarter the Company completed its efforts to reduce costs primarily through staffing reductions, which included a number of retirements and realignments amongst the senior management.
"The refocus of our resources on the Perma-Pipe business was evident in our acquisition of the remaining 51% outstanding equity capital in the pipe coating joint venture now named Perma-Pipe Canada Ltd. (previously Bayou Perma-Pipe Corporation) at the beginning of the fiscal year. The results of this Canadian entity are fully consolidated for the entire fiscal year, while in the prior year, results were shown in Joint Venture income.
"Our Company''s recent name change and the restructuring of the group reflect our strategy to focus solely on our piping business. We believe Perma-Pipe''s brand recognition will continue to provide value to us in geographies where we have an existing presence and as we seek to expand our presence into new markets, where we are actively identifying and pursuing opportunities."
Mr. Mansfield continued, "In fiscal 2016/17, the prolonged downturn in the energy industry, which had a profound impact on the market drivers, also had a major impact throughout the value chain in the oil and gas segment. All industry participants have been driving prices down in an effort to reduce development costs. Some major oil and gas operators have announced that they have been able to reduce their break-even prices from $70 to well below $30 per barrel. Some of these reductions have come from efficiencies and improvements, but a sizeable proportion of it has come from reduced costs of materials and services. The latter has a direct impact on our business.
"Despite the extremely challenging market conditions, our backlog at January 31, 2017 stood at $44.6 million, which represented 93% of the value at January 2016. We have recently seen some positive, although modest, indications that our market drivers could begin to become more favorable. However, our expectations are that we will not see a significant change to the dynamics in the Middle East until the latter half of 2017. Meanwhile, we believe we have now established our infrastructure at the optimum level where we are able to minimize costs while remaining responsive to an upturn in market demand.
"Recently we announced entering into a consortium with LOGSTOR to pursue jointly the significant East Africa Crude Oil Pipeline project. This pipeline will become the longest insulated and heat traced pipeline in the world, and represents a significant opportunity for the Consortium. While we do not expect a major impact on our financial results in fiscal 2017/18 should we be successful in our pursuit of the project award, we are preparing to positon ourselves as a competitive provider to this project, which will see execution over several coming years."
Net sales were $98.8 million in 2016, a decrease of 19% from $122.7 million in 2015. Various economic factors substantially reduced demand in the markets the Company serves during this fiscal year. Since the Company serves oil and gas customers, the low price of oil had a significant dampening effect on new exploration projects in the Gulf of Mexico and Canada. Restrained domestic federal and state infrastructure spending, combined with the oil-price induced recession in the Gulf Cooperation Council region, combined to weaken demand for district heating and cooling projects.
Gross profit decreased 56% to $11.7 million in 2016 from $26.7 million in 2015 due to lower volume. Gross margin decreased to 12% of net sales from 22% of net sales in the prior year. Despite having reduced manufacturing plant expenses in the U.S. and Middle East facilities, the resulting lower production levels led to a reduced absorption of manufacturing plant costs. Underutilization in the industry in the Middle East continued, with resulting pressure on project pricing, all contributing to a reduction in gross margins versus the prior year.
Operating expenses decreased 6% to $22.5 million from $23.9 million. Operating expenses decreased by $3.1 million partially offset by a one-time legal settlement of $0.8 million and the addition of the Canadian expenses in the period. The decrease was due to staffing reductions in the U.S. and the Middle East as well as lower management incentive compensation expense. Operating expenses as a percent of net sales increased to 22.8% from 19.4%.
The Company''s worldwide effective income tax rates ("ETR") on continuing operations for 2016 and 2015 were 4.7% and 45.7%, respectively. The 2016 ETR was significantly impacted by the Company reporting a pre-tax loss for the year, a portion of which was generated by the subsidiary in the United Arab Emirates, which receives no tax benefit due to a zero tax rate in that country and due to the impact of the full valuation allowance maintained against domestic deferred tax assets. Other changes in the ETR from the prior year-to-date to the current year are due to the Canadian acquisition and the allocation of tax expense between continuing operations, other comprehensive income and discontinued operations when applying intra-period allocation rules.
- Net loss was $11.7 million in fiscal 2016/17 compared to $4.4 million in fiscal 2016/15.
For the reasons discussed above, in the quarter net sales decreased 9% in the quarter to $27.6 million from $30.3 million in the prior-year quarter.
For the reasons discussed above, gross profit decreased 56% to $3.0 million from $6.9 million in the prior-year.
Operating expenses totaled $6.4 million, or 23% of net sales, compared to $5.5 million, or 18%, in the prior-year quarter. Changes in the senior executive positions of the Company went into effect in the fourth quarter with related hiring and separation costs of $1.1 million.
Pretax loss from continuing operations was $3.5 million versus income of $1.3 million in the prior year.
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.
Statements and other information contained in this announcement 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 project nature of the business, the increasing international nature of the business, economic conditions, market demand and pricing, competitive and cost factors, raw material availability and prices, global interest rates, currency exchange rates, labor relations and other risk factors.
Perma-Pipe''s Form 10-K for the period ended January 31, 2017 will be accessible at and . For more information, visit the Company''s website or contact its investor relations representative, LHA.
Themen in dieser Pressemitteilung:
Unternehmensinformation / Kurzprofil:
Datum: 14.04.2017 - 10:00 Uhr
Sprache: Deutsch
News-ID 1498635
Anzahl Zeichen: 2841
contact information:
Contact person:
Town:
NILES, IL
Phone:
Kategorie:
Forest and Paper Products
Typ of Press Release:
type of sending:
Date of sending:
Anmerkungen:
Diese Pressemitteilung wurde bisher 418 mal aufgerufen.
Die Pressemitteilung mit dem Titel:
"Perma-Pipe International Holdings Announces Fourth Quarter and Full Year Financial Results
"
steht unter der journalistisch-redaktionellen Verantwortung von
Perma-Pipe International Holdings (Nachricht senden)
Beachten Sie bitte die weiteren Informationen zum Haftungsauschluß (gemäß TMG - TeleMedianGesetz) und dem Datenschutz (gemäß der DSGVO).
