Perma-Pipe International Holdings, Inc. has announced financial results for the first quarter ended 30 April, 2020.
“Revenue for the first quarter was US$22.7 million, US$1.6 million below the same quarter last year, and loss from operations before income taxes was US$2.7 million compared to a loss of US$1.2 million in the same quarter of 2019,” commented President and CEO David Mansfield.
“Shortly after the beginning of our fiscal year the world began to experience the impact of the COVID-19 pandemic. This caused significant disruption to our business and to our customers’ businesses around the world, as lock-downs and stay-at-home orders were mandated. After the quarter end we began to emerge from these restrictions, although the pace of the return to ‘normal’ is varying by country.
“Simultaneous with the developing pandemic, worldwide oil prices suffered a significant downturn as battles over oil supplies began. As a consequence of this decline in oil price, E&P companies quickly cut capital expenditure budgets significantly, which had the effect of postponing or cancelling some of their pipeline construction projects and drilling activities. This had a negative impact on our own activities on oil and gas related projects during the quarter, causing numerous delays in project schedules.
“Immediately after the potential impact of COVID-19 became apparent, and after the decline in oil prices, we assessed and implemented action plans to contain costs and unessential cash outflows until more favourable economic conditions return. At this time, all of our plants are operational and we are prepared to execute the delayed projects as they recommence.
“Our backlog currently stands at US$43.1 million, which reflects a decline of US$3.7 million from the backlog at 31 January, mostly a consequence of reduced levels of activity in the Canadian oil and gas industry,” concluded Mr. Mansfield.
1Q20 fiscal results
Net sales were US$22.7 million in the current quarter, a decrease of US$1.5 million, or 6%, from US$24.3 million in the prior year quarter. The decrease resulted from lower revenues in North America due to declines in oil prices and certain of our Middle East operations due to project delays as a result of the COVID-19 pandemic. These decreases were partially offset by increases from the new operations in Egypt.
Gross profit decreased to US$3.5 million, or 15% of net sales, in the current quarter from US$4.7 million, or 19% of net sales, in the prior year quarter. This decrease in gross profit was primarily driven by lower project margins in the Company's Middle East operations, particularly in Saudi Arabia and India.
General and administrative expenses remained consistent at US$4.4 million in the current and prior year quarters.
Selling expenses increased to US$1.6 million in the current quarter, compared to US$1.3 million in the prior year quarter, an increase of US$0.3 million, or 31%. This increase was primarily due to payroll expenses for additional sales employees added in 2019.
Interest expense remained consistent at US$0.2 million in the current and prior year quarters.
Income tax (benefit)/expense decreased to a benefit of US$0.2 million in the current quarter, compared to an expense of US$0.3 million in the prior year quarter, a change of US$0.5 million, or 169%. The decrease in the expense in the current year quarter was largely due to changes in the mix of income and loss in various jurisdictions.
The net loss of US$2.5 million in the current quarter was a decline of US$1.0 million over the net loss of US$1.5 million in the prior year quarter. The increased loss resulted from lower revenues in North America due to declines in oil prices and certain of our Middle East operations due to project delays as a result of the COVID-19 pandemic. The negative impact of these lower revenues was partially offset by increased income from the operations in Egypt.
Percentages set forth above in this press release have been rounded to the nearest percentage point and may not exactly correspond to the comparative data presented.
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