Perma-Pipe International Holdings Reports 7% Revenue Growth, Improved Profitability in Q2 2024

Perma-Pipe International Holdings, Inc. reported significant financial improvements for the three and six months ended July 31, 2024, compared to the same periods in 2023. Net sales increased to $37.5 million for the three months, up 7% from $35.1 million, and to $71.8 million for the six months, an 11% increase from $64.8 million. The growth in revenue was attributed to increased sales volumes across its product lines, which include pre-insulated specialty piping systems and containment piping systems.

Gross profit for the three months rose to $13.5 million, representing 36% of net sales, compared to $9.5 million (27% of net sales) in the prior year. For the six months, gross profit reached $24.0 million (33% of net sales), up from $16.2 million (25% of net sales). This improvement was driven by better margins due to an advantageous product mix.

Operating income also saw a substantial increase, with income from operations for the three months ending July 31, 2024, at $6.1 million, compared to $2.7 million in 2023. For the six-month period, operating income was $9.3 million, up from $2.8 million. Net income attributable to common stock for the three months was $3.3 million, a significant rise from $1.0 million, while for the six months, it was $4.7 million, compared to a net loss of $0.1 million in the previous year.

The effective tax rate decreased significantly, from 45% in the prior year to 23% for the three months ended July 31, 2024, and from 97% to 25% for the six months. This change was due to recognizing tax benefits on losses in the U.S. and shifts in income and loss across jurisdictions.

As of July 31, 2024, the company reported total assets of $159.2 million, up from $155.7 million at the end of January 2024. Cash and cash equivalents increased to $9.5 million, compared to $5.8 million at the beginning of the year. However, total debt rose to $27.9 million from $25.7 million.

In terms of strategic developments, the company has initiated a remediation plan to address material weaknesses in internal controls over financial reporting, particularly in its operations in the Middle East and North Africa. The plan includes engaging outside consultants and enhancing internal audit functions. Despite these challenges, the company has not identified any material misstatements in its financial statements.