Perma-Pipe Stock Up 14% Despite Y/Y Decline in 2024 Earnings

Core Insights - Perma-Pipe International Holdings, Inc. (PPIH) shares have increased by 14% since the earnings report for the quarter ended January 31, 2025, outperforming the S&P 500's 0.8% growth during the same period [1] - The company reported fiscal 2024 earnings of $1.12 per share, down from $1.30 in the previous year, but net sales increased to $158.4 million, a $7.7 million rise attributed to higher volumes in the Middle East and Canada [2] - Gross profit improved to $53.2 million, representing 34% of net sales, compared to 28% the previous year, driven by product mix optimization and regional margin gains [2] Financial Performance - Operating income surged to $20.3 million from $13.4 million the prior year, while adjusted income before taxes reached $19 million, up from $11.1 million in fiscal 2023 [3] - In Q4, net sales were $45 million, an increase of $4.8 million from the prior year, but net income after taxes fell to $1.5 million due to the absence of a one-time non-cash tax benefit of $5.9 million recorded in the previous year [4] - Excluding the one-time benefit, adjusted net income would have increased by $4.4 million year-over-year [4] Management Commentary - CEO David Mansfield highlighted fiscal 2024 as a year of strategic execution and operational gains, attributing improved performance to a focus on higher-margin products and services, as well as contributions from a joint venture in Saudi Arabia [5] - The ramp-up at the Vars, Ontario facility in Canada and recent project wins were noted as sources of strong momentum heading into fiscal 2025 [5] Factors Influencing Results - The rise in gross profit was largely due to increased sales volumes and stronger margins in key international markets, while selling expenses declined by $0.6 million due to lower payroll costs [6] - General and administrative expenses increased by $5.4 million, reflecting higher compensation and professional service fees [6] - Interest expenses decreased by $0.4 million due to reduced borrowing levels and favorable interest rates, and other income turned positive at $0.1 million compared to a $1.2 million loss in the prior year [7] Taxation - The effective tax rate returned to a normalized level of 29.1%, up from a negative 33.6% the previous year, which was impacted by the release of a domestic valuation allowance [8]