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Shares of Perma-Pipe International Holdings, Inc. PPIH have gained 13% since the company reported its earnings for the quarter ended Oct. 31, 2024. This compares to the S&P 500 index’s 1.1% growth over the same time frame. Over the past month, the stock has gained 5.8% compared with the S&P 500’s 1.3% growth.
For the third quarter of fiscal 2024, Perma-Pipe reported earnings per share of 31 cents compared with 24 cents in the prior-year quarter.
Net sales of $41.6 million were down 9% compared to $45.7 million in the same quarter last year due to the timing of project execution.
Despite lower sales, the company achieved a gross profit of $14.1 million, an increase from $13.2 million a year ago, with gross margins improving to 34% from 29%, attributed to a favorable product mix.
Net income attributable to common stockholders rose to $2.5 million, up from $1.9 million in the year-ago period.
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Perma-Pipe International Holdings, Inc. Price, Consensus and EPS Surprise
Perma-Pipe International Holdings, Inc. price-consensus-eps-surprise-chart | Perma-Pipe International Holdings, Inc. Quote
Other Key Business Metrics
The company's backlog stood at $114.2 million as of Oct. 31, 2024, representing significant growth from $68.5 million as of Jan. 31, 2024. This backlog level is the highest since the company transitioned to Perma-Pipe from MFRI in 2017, equating to approximately nine months of revenue based on historical figures.
General and administrative expenses rose 28% year over year to $7.3 million in the quarter due to higher payroll and professional fees, while selling expenses decreased 20% to $1.2 million, reflecting lower payroll costs. Net interest expense remained stable, while other expenses fell by $0.4 million due to favorable foreign currency exchange rates.
Management Commentary
CEO David Mansfield highlighted the robust growth in backlog and its strategic implications, noting that it strengthens the company’s outlook heading into fiscal 2025. Mansfield attributed the company’s strong financial performance to better project execution and increasing infrastructure activity in markets such as Saudi Arabia, India and the UAE. He emphasized that the improvements in backlog and share price reflect the company’s ability to capitalize on regional infrastructure spending trends.
Influencing Factors
Perma-Pipe’s results benefited from its product mix, which bolstered gross margins despite a decline in sales. Additionally, increased activity in the Middle East and operational efficiencies contributed to improved financial performance. The company’s ability to manage costs, such as reducing selling expenses, further supported profitability.