Perma-Pipe Reports Q3 Financial Results
Perma-Pipe International Holdings, Inc. has announced its financial results for the third quarter and fiscal year-to-date period ended October 31, 2024. Despite a decrease in third-quarter net sales, the company showed significant growth in net income, reflecting strong operational performance and strategic progress.
Third Quarter Financial Results
In the third quarter of fiscal 2024, Perma-Pipe reported net sales of $41.6 million, which marks a decrease of $4.1 million compared to $45.7 million in the same period last year. This 9% decrease was primarily attributed to the timing of project execution. However, the company showed an impressive 29% increase in net income attributable to common stock, which rose to $2.5 million from $1.9 million in Q3 2023.
Perma-Pipe’s gross profit in Q3 2024 reached $14.1 million, which was a $0.9 million increase from $13.2 million in the prior year. This growth was driven by improved margins due to an advantageous product mix, contributing to a higher gross margin of 34% of net sales, compared to 29% in Q3 2023.
On the expense side, general and administrative (G&A) expenses increased by $1.6 million to $7.3 million, mainly due to higher payroll expenses and professional fees. Meanwhile, selling expenses decreased by $0.3 million to $1.2 million, reflecting lower payroll costs. The company also saw a reduction in other expenses, which fell by $0.4 million due to favorable exchange rate fluctuations in foreign currency transactions.
Fiscal 2024 Year-to-Date Results
For the nine months ended October 31, 2024, Perma-Pipe posted net sales of $113.4 million, marking a 3% increase over the same period in 2023, which had net sales of $110.5 million. This growth was driven by increased sales volumes, particularly in the Middle East, Financial where demand for infrastructure projects has surged.
Gross profit for the year-to-date period rose by $8.7 million, reaching $38.1 million, or 34% of net sales, compared to $29.4 million or 27% of net sales in the first nine months of 2023. This increase in gross profit was also attributed to a favorable product mix that led to improved margins. G&A expenses grew by $3.1 million to $19.5 million, primarily due to higher payroll and professional fees. Selling expenses declined by $0.4 million to $3.8 million.
Net interest expense for the year-to-date period was $1.5 million, a decrease from $1.8 million in the previous year. The reduction in interest expense was primarily due to declining interest rates on certain variable-rate debts. Other expenses decreased to $0.2 million from $0.4 million in the prior year, driven by favorable foreign currency Financial exchange rate fluctuations.
Net income attributable to common stock for the nine months ended October 31, 2024, was $7.2 million, Financial reflecting a 294% increase from $1.8 million during the same period in 2023. The improvement in net income was primarily driven by better project execution and higher margins throughout the year.
Backlog and Outlook
Perma-Pipe’s backlog at the end of the third quarter stood at an impressive $114.2 million, a significant increase from previous quarters. This amount is equivalent to approximately nine months of revenue based on prior year sales, and it reflects the company’s strong position as it heads into the new Financial fiscal year. This is the highest backlog the company has experienced since its rebranding from MFRI to Perma-Pipe in March 2017, underscoring the company’s continued growth and solid performance in the market.
David Mansfield, President and CEO of Perma-Pipe, expressed optimism about the company’s continued growth, noting the rise in infrastructure spending in regions such as Saudi Arabia, India, and the UAE. These markets have been key drivers of Perma-Pipe’s business expansion, and the company remains focused on executing its long-term strategy, including strengthening its balance sheet through debt reduction and improving operational results.
