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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Perma Pipe International Holdings Inc | NASDAQ:PPIH | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.05 | 0.57% | 8.85 | 3.55 | 11.82 | 9.015 | 8.80 | 8.80 | 16,104 | 21:30:00 |
x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
|
Delaware
|
36-3922969
|
(State or other jurisdiction of incorporation or organization)
|
(I.R.S. Employer Identification No.)
|
|
|
6410 W. Howard Street, Niles, Illinois
|
60714
|
(Address of principal executive offices)
|
(Zip Code)
|
Item
|
|
Page
|
|
|
|
Part I
|
|
|
|
|
|
1.
|
|
|
|
Consolidated Statements of Operations (Unaudited) for the Three Months Ended April 30, 2018 and 2017
|
|
|
Consolidated Statements of Comprehensive Loss (Unaudited) for the Three Months Ended April 30, 2018 and 2017
|
|
|
Consolidated Balance Sheets as of
April 30, 2018 (Unaudited) and January 31, 2018
|
|
|
Consolidated Statements of Stockholders' Equity as of April 30, 2018 (Unaudited) and January 31, 2018
|
|
|
Consolidated Statements of Cash Flows (Unaudited) for the Three Months Ended April 30, 2018 and 2017
|
|
|
Notes to Consolidated Financial Statements
(Unaudited)
|
|
|
|
|
2.
|
|
|
|
|
|
4.
|
|
|
|
|
|
Part II
|
|
|
6.
|
|
|
|
|
|
|
|
Three Months Ended April 30,
|
|||||
|
2018
|
|
2017
|
|
||
Net sales
|
|
$28,889
|
|
|
$23,501
|
|
Cost of sales
|
24,664
|
|
21,716
|
|
||
Gross profit
|
4,225
|
|
1,785
|
|
||
|
|
|
||||
Operating expenses
|
|
|
||||
General and administrative expenses
|
3,982
|
|
4,286
|
|
||
Selling expenses
|
1,142
|
|
1,316
|
|
||
Total operating expenses
|
5,124
|
|
5,602
|
|
||
|
|
|
||||
Loss from operations
|
(899
|
)
|
(3,817
|
)
|
||
|
|
|
||||
Interest expense, net
|
266
|
|
157
|
|
||
Loss from operations before income taxes
|
(1,165
|
)
|
(3,974
|
)
|
||
|
|
|
||||
Income tax benefit
|
(48
|
)
|
(485
|
)
|
||
|
|
|
||||
Net loss
|
|
($1,117
|
)
|
|
($3,489
|
)
|
|
|
|
||||
Weighted average common shares outstanding
|
|
|
||||
Basic and diluted
|
7,718
|
|
7,610
|
|
||
|
|
|
||||
Loss per share
|
|
|
||||
Basic and diluted
|
($0.14)
|
|
($0.46
|
)
|
|
Three Months Ended April 30,
|
|||||
|
2018
|
|
2017
|
|
||
Net loss
|
|
($1,117
|
)
|
|
($3,489
|
)
|
|
|
|
||||
Other comprehensive (loss) income
|
|
|
||||
Foreign currency translation adjustments, net of tax
|
(665
|
)
|
132
|
|
||
Unrealized gain on marketable security, net of tax
|
—
|
|
(5
|
)
|
||
Other comprehensive (loss) income
|
(665
|
)
|
127
|
|
||
|
|
|
||||
Comprehensive loss
|
|
($1,782
|
)
|
|
($3,362
|
)
|
(In thousands except per share data)
|
April 30, 2018
|
|
January 31, 2018
|
|
||
ASSETS
|
Unaudited
|
|
|
|||
Current assets
|
|
|
||||
Cash and cash equivalents
|
|
$9,879
|
|
|
$7,084
|
|
Restricted cash
|
1,101
|
|
1,237
|
|
||
Trade accounts receivable, less allowance for doubtful accounts of $438 at April 30, 2018 and $469 at January 31, 2018
|
29,337
|
|
32,936
|
|
||
Inventories, net
|
15,804
|
|
16,856
|
|
||
Prepaid expenses and other current assets
|
2,775
|
|
2,703
|
|
||
Contract assets
|
1,834
|
|
1,502
|
|
||
Total current assets
|
60,730
|
|
62,318
|
|
||
Property, plant and equipment, net of accumulated depreciation
|
33,097
|
|
34,509
|
|
||
Other assets
|
|
|
||||
Deferred tax assets - long-term
|
330
|
|
391
|
|
||
Goodwill
|
2,321
|
|
2,423
|
|
||
Other assets
|
5,051
|
|
4,943
|
|
||
Total other assets
|
7,702
|
|
7,757
|
|
||
Total assets
|
|
$101,529
|
|
|
$104,584
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
||||
Current liabilities
|
|
|
||||
Trade accounts payable
|
|
$12,301
|
|
|
$14,186
|
|
Accrued compensation and payroll taxes
|
1,484
|
|
1,580
|
|
||
Commissions and management incentives payable
|
1,301
|
|
787
|
|
||
Revolving line North America
|
7,755
|
|
7,273
|
|
||
Current maturities of long-term debt
|
3,408
|
|
753
|
|
||
Customers' deposits
|
6,207
|
|
5,236
|
|
||
Outside commissions payable
|
1,964
|
|
1,800
|
|
||
Contract liability
|
569
|
|
1,967
|
|
||
Other accrued liabilities
|
2,339
|
|
4,259
|
|
||
Income taxes payable
|
643
|
|
1,339
|
|
||
Total current liabilities
|
37,971
|
|
39,180
|
|
||
Long-term liabilities
|
|
|
||||
Long-term debt, less current maturities
|
7,309
|
|
7,728
|
|
||
Deferred compensation liabilities
|
4,212
|
|
4,098
|
|
||
Deferred tax liabilities - long-term
|
1,187
|
|
1,242
|
|
||
Other long-term liabilities
|
546
|
|
524
|
|
||
Total long-term liabilities
|
13,254
|
|
13,592
|
|
||
Stockholders' equity
|
|
|
||||
Common stock, $.01 par value, authorized 50,000 shares; 7,720 issued and outstanding at April 30, 2018 and 7,717 issued and outstanding at January 31, 2018
|
77
|
|
77
|
|
||
Additional paid-in capital
|
56,578
|
|
56,304
|
|
||
(Accumulated deficit) retained earnings
|
(4,220
|
)
|
(3,103
|
)
|
||
Accumulated other comprehensive loss
|
(2,131
|
)
|
(1,466
|
)
|
||
Total stockholders' equity
|
50,304
|
|
51,812
|
|
||
Total liabilities and stockholders' equity
|
|
$101,529
|
|
|
$104,584
|
|
|
Common Stock
|
Additional Paid-in Capital
|
(Accumulated Deficit) Retained Earnings
|
Accumulated Other Comprehensive Income (Loss)
|
Total Stockholders' Equity
|
||||||
Total stockholders' equity at January 31, 2018
|
$77
|
$56,304
|
($3,103)
|
($1,466)
|
$51,812
|
||||||
|
|
|
|
|
|
||||||
Net loss
|
|
|
|
($1,117
|
)
|
|
(1,117
|
)
|
|||
Common stock issued under stock plans, net of shares used for tax withholding
|
—
|
|
25
|
|
|
|
25
|
|
|||
Stock-based compensation expense
|
|
249
|
|
|
|
249
|
|
||||
Foreign currency translation adjustment
|
|
|
|
(665
|
)
|
(665
|
)
|
||||
Total stockholders' equity at April
30
, 2018
|
$77
|
$56,578
|
($4,220)
|
($2,131)
|
$50,304
|
(In thousands)
|
Three Months Ended April 30,
|
|||||
|
2018
|
|
2017
|
|
||
Operating activities
|
|
|
||||
Net loss
|
|
($1,117
|
)
|
|
($3,489
|
)
|
Adjustments to reconcile net loss to net cash flows used in operating activities
|
|
|
||||
Depreciation and amortization
|
1,183
|
|
1,215
|
|
||
Deferred tax benefit
|
61
|
|
(290
|
)
|
||
Equity-based compensation expense
|
254
|
|
203
|
|
||
Loss on disposal of fixed assets
|
40
|
|
1
|
|
||
Provision on uncollectible accounts
|
(28
|
)
|
(329
|
)
|
||
Changes in operating assets and liabilities
|
|
|
||||
Accounts receivable
|
3,219
|
|
7,546
|
|
||
Inventories
|
934
|
|
(1,775
|
)
|
||
Change in contract assets and contract liabilities
|
(1,728
|
)
|
(978
|
)
|
||
Accounts payable
|
(2,925
|
)
|
(936
|
)
|
||
Accrued compensation and payroll taxes
|
524
|
|
(584
|
)
|
||
Customers' deposits
|
974
|
|
(191
|
)
|
||
Income taxes receivable and payable
|
(706
|
)
|
(755
|
)
|
||
Prepaid expenses and other current assets
|
147
|
|
(1,122
|
)
|
||
Other assets and liabilities
|
(835
|
)
|
472
|
|
||
Net cash used in operating activities
|
(3
|
)
|
(1,012
|
)
|
||
Investing activities
|
|
|
||||
Capital expenditures
|
(376
|
)
|
(267
|
)
|
||
Proceeds from sales of property and equipment
|
—
|
|
1
|
|
||
Net cash used in investing activities
|
(376
|
)
|
(266
|
)
|
||
Financing activities
|
|
|
||||
Proceeds from revolving lines
|
9,990
|
|
8,612
|
|
||
Payments of debt on revolving lines of credit
|
(6,571
|
)
|
(6,763
|
)
|
||
Payments of other debt
|
(90
|
)
|
(70
|
)
|
||
(Decrease) increase in drafts payable
|
(33
|
)
|
50
|
|
||
Payments on capitalized lease obligations
|
(93
|
)
|
(72
|
)
|
||
Release
of treasury stock
|
—
|
|
13
|
|
||
Stock options exercised and taxes related to restricted shares vested
|
25
|
|
114
|
|
||
Net cash provided by financing activities
|
3,228
|
|
1,884
|
|
||
Effect of exchange rate changes on cash, cash equivalents and restricted cash
|
(190
|
)
|
892
|
|
||
Net increase in cash, cash equivalents and restricted cash
|
2,659
|
|
1,498
|
|
||
Cash, cash equivalents and restricted cash - beginning of period
|
8,321
|
|
8,701
|
|
||
Cash, cash equivalents and restricted cash - end of period
|
|
$10,980
|
|
|
$10,199
|
|
Supplemental cash flow information
|
|
|
||||
Interest paid
|
|
$242
|
|
|
$177
|
|
Income taxes paid
|
568
|
|
530
|
|
||
Fixed assets acquired under capital leases
|
—
|
|
—
|
|
||
Funds held in escrow related to the sale of Filtration assets
|
—
|
|
502
|
|
1)
|
Systems which include
all bundled products in which Perma-Pipe designs, engineers, and manufactures pre-insulated piping systems, insulates subsea flowline pipe or subsea oil production equipment. Additionally, the systems classification will also include coating applied to pipes and structures which are provided by the customer.
|
2)
|
Products which include
cables, leak detection products, heat trace products sold under the PermAlert brand name, material/goods not bundled with piping or flowline systems, and field services not bundled into a project contract.
|
|
April 30, 2018
|
April 30, 2017
|
||||||
|
Sales
|
% to Total
|
Sales
|
% to Total
|
||||
Products
|
2,429
|
|
8
|
%
|
1,331
|
|
6
|
%
|
|
|
|
|
|
||||
Specialty Piping Systems and Coating
|
|
|
|
|
||||
Revenue recognized under input method
|
11,102
|
|
38
|
%
|
9,117
|
|
39
|
%
|
Revenue recognized under output method
|
15,358
|
|
54
|
%
|
13,053
|
|
55
|
%
|
Total
|
28,889
|
|
100
|
%
|
23,501
|
|
100
|
%
|
1)
|
the customer owns the material that is being insulated or coated, so they control the asset and thus the work-in-process; or
|
2)
|
the customer controls the work-in-process due to the custom nature of the pre-insulated, fabricated system being manufactured as evidenced by the Company’s right to payment for work performed to date plus seller’s profit margin for products that have no alternative use for the Company.
|
|
January 31, 2018
|
Foreign exchange change effect
|
April 30, 2018
|
||||||
Goodwill
|
|
$2,423
|
|
|
($102
|
)
|
|
$2,321
|
|
•
|
2017 Omnibus Stock Incentive Plan as Amended June 13, 2017, which stockholders approved in June 2017.
|
|
Three Months Ended April 30,
|
|||||
|
2018
|
|
2017
|
|
||
Stock-based compensation expense
|
|
$13
|
|
|
($6
|
)
|
Restricted stock-based compensation expense
|
|
$241
|
|
|
$192
|
|
Option activity
|
Options
|
Weighted Average Exercise Price
|
Weighted Average Remaining Contractual Term
|
Aggregate Intrinsic Value
|
|||||
Outstanding at January 31, 2018
|
358
|
|
|
$9.44
|
|
4.5
|
|
$534
|
|
Exercised
|
(4
|
)
|
6.88
|
|
|
37
|
|
||
Expired or forfeited
|
(5
|
)
|
9.23
|
|
|
|
|||
Outstanding end of period
|
349
|
|
9.47
|
|
4.3
|
338
|
|
||
|
|
|
|
|
|||||
Exercisable end of period
|
322
|
|
|
$9.57
|
|
3.9
|
|
$303
|
|
Unvested option activity
|
Options
|
Weighted Average Grant Date Fair Value
|
Aggregate Intrinsic Value
|
|||||
Outstanding at January 31, 2018
|
31
|
|
|
$8.24
|
|
|
$50
|
|
Vested
|
(4
|
)
|
|
|
||||
Expired or forfeited
|
|
|
|
|
|
|||
Outstanding end of period
|
27
|
|
|
$8.28
|
|
|
$44
|
|
Restricted stock activity
|
Restricted Shares
|
Weighted Average Grant Price Per Share
|
Aggregate Intrinsic Value
|
|||||
Outstanding at January 31, 2018
|
360
|
|
|
$9.05
|
|
|
$3,254
|
|
Granted
|
—
|
|
|
|
|
|||
Issued
|
—
|
|
|
|
||||
Forfeited
|
(1
|
)
|
8.00
|
|
|
|||
Outstanding end of period
|
359
|
|
|
$9.10
|
|
|
$3,274
|
|
|
Three Months Ended April 30,
|
|||
|
2018
|
|
2017
|
|
Basic weighted average common shares outstanding
|
7,718
|
|
7,610
|
|
Dilutive effect of equity compensation plans
|
—
|
|
—
|
|
Weighted average common shares outstanding assuming full dilution
|
7,718
|
|
7,610
|
|
|
|
|
||
Stock options not included in the computation of diluted earnings per share of common stock because the option exercise prices exceeded the average market prices of the common shares
|
137
|
|
229
|
|
|
|
|
||
Stock options with an exercise price below the average market price
|
212
|
|
263
|
|
|
Three Months Ended April 30,
|
|||||
|
2018
|
|
2017
|
|
||
Cash and cash equivalents
|
|
$9,879
|
|
|
$9,059
|
|
Restricted cash
|
1,101
|
|
1,140
|
|
||
Cash, cash equivalents and restricted cash shown in the statement of cashflows
|
|
$10,980
|
|
|
$10,199
|
|
|
Three Months Ended April 30,
|
|||||||
($ in thousands)
|
2018
|
|
2017
|
|
% Favorable (Unfavorable)
|
|||
Net sales
|
$28,889
|
$23,501
|
22.9
|
%
|
||||
|
|
|
|
|||||
Gross profit
|
4,225
|
|
1,785
|
|
136.7
|
%
|
||
Percentage of net sales
|
14.6
|
%
|
7.6
|
%
|
|
|||
|
|
|
|
|||||
General and administrative expenses
|
3,982
|
|
4,286
|
|
7.1
|
%
|
||
Percentage of net sales
|
13.8
|
%
|
18.2
|
%
|
|
|||
|
|
|
|
|||||
Selling expense
|
1,142
|
|
1,316
|
|
13.2
|
%
|
||
Percentage of net sales
|
4.0
|
%
|
5.6
|
%
|
|
|||
|
|
|
|
|||||
Interest expense, net
|
266
|
|
157
|
|
(69.4
|
)%
|
||
Loss from operations before income taxes
|
|
($1,165
|
)
|
|
($3,974
|
)
|
70.7
|
%
|
•
|
Increased sales of $5.4 million;
|
•
|
Improved gross profit of $2.4 million; and
|
•
|
Utilization of previously reserved inventory of $0.4 million.
|
•
|
Expanded the training of employees in financial technical accounting, reporting and disclosure-related positions;
|
•
|
Reinforced the importance of a strong control environment, to emphasize the technical requirements for controls that are designed, implemented and operating effectively and to set the appropriate expectations on internal controls through establishing the related policies and procedures;
|
•
|
Implemented a catalog of key accounting rules that have been applied during the quarter. In the reviews of any major journal entries for non-standard operational accounting matters, this catalog will be used as a checklist to validate that the required accounting treatment is applied and disclosures are made accordingly. Management will evaluate whether the accounting treatment follows the current rules in the catalog and will decide whether outside firm expertise is warranted in such a review; and
|
•
|
Validated and updated the catalog quarterly for any changes resulting from changed or newly pronounced accounting rules;
|
•
|
Reviewed the categories that are underlying the calculations related to stock-based compensation, and revise procedures for the calculation and review of effects from vested, forfeited and expired options;
|
•
|
Implementation of Certent; an equity compensation management and reporting tool, to be completed in the second quarter of 2018.
|
Rule 13a - 14(a)/15d - 14(a) Certifications
(1) Chief Executive Officer certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
|
Rule 13a - 14(a)/15d - 14(a) Certifications
(2) Chief Financial Officer certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
|
Section 1350 Certifications (Chief Executive Officer and Chief Financial Officer certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002)
|
|
Limited Waiver and Eighth Amendment to Credit and Security Agreement
|
|
101.INS
|
XBRL Instance
|
101.SCH
|
XBRL Taxonomy Extension Schema
|
101.CAL
|
XBRL Taxonomy Extension Calculation
|
101.DEF
|
XBRL Taxonomy Extension Definition
|
101.LAB
|
XBRL Taxonomy Extension Labels
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101.PRE
|
XBRL Taxonomy Extension Presentation
|
Date:
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June 12, 2018
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/s/ David J. Mansfield
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|
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David J. Mansfield
|
|
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President and Chief Executive Officer
|
|
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(Principal Executive Officer)
|
|
|
|
Date:
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June 12, 2018
|
/s/ Karl J. Schmidt
|
|
|
Karl J. Schmidt
|
|
|
Vice President and Chief Financial Officer
|
|
|
(Principal Financial and Accounting Officer)
|
1 Year Perma Pipe Chart |
1 Month Perma Pipe Chart |
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