Perma-Pipe International Holdin (NASDAQ:PPIH)

On June 19 2013 we added MFRI to the GeoBargain list @ $9.70

 
Catalyst:

Strong first quarter 2013 results. In our 6/19/2013 email we stated we believed EPS would grow significantly over the next three quarters.  We expect the stock to move significantly higher from current levels.

We are now removing MFRI from the GeoSpeicial List @ $15.24

Current road block:

Quarterly comparison will begin to become more challenging and managment commentary suggest the business environment for certain filtration products will also be challenging.

• Peak performance: Reached a high of  $16.78 on 1/13/2014 for a maiximum potential return of 73%
• Current Price: At current price of $15.24 MFRI shares are up 57% from original coding.  

Third Quarter 2013 Results

• Net sales increased 23% to $58 million from $47.2 million in the 2012 quarter.
• EPS were $0.95 vs $0.02 in the prior year.
• The Company's backlog from continuing operations increased 9.3% or $8 million from October 31, 2012.

President and CEO Bradley Mautner commented, "MFRI turned in a strong year-over-year performance in the third quarter. Our sales and earnings increases were driven by Piping Systems, where our customers requested that we expedite orders in our backlog for key projects in Saudi Arabia and the United Arab Emirates ('U.A.E.'). The development work and start-up investments we made in 2011 and 2012 have proven very successful, demonstrating our ability to identify, win and effectively execute on major business opportunities worldwide and generate strong earnings for MFRI.

"The demand environment for Piping Systems remains active and we are now pursuing a wide variety of promising opportunities worldwide of varying size and duration with the aim of diversifying our business from a product, project and geographic point of view. We are also pursuing certain ventures that offer the potential over the long term to replicate the success we have had in the Middle East. In the near term, we do expect fourth-quarter revenue and earnings to be lower than the third quarter's as we fulfill orders at a moderated pace relative to the unusually fast pace of recent quarters. This trend illustrates the variability in the timing of the projects we win and execute."

Mr. Mautner continued, "As expected, the business environment for certain filtration products continues to be challenging. Over the past year, we have implemented many initiatives to resize our fabric filter business and lower manufacturing costs in all our plants, which enabled us to contain the quarterly operating loss for Filtration Products even as revenue declined. While maintaining margin and expense controls, we are also focused on developing sales opportunities that should strengthen this segment of our business."

Second Quarter 2013 Results

• Sales increased 44% to $62 million in the current quarter from $43 million in the prior-year quarter.
• Second quarter net income was $4.4 million compared to net loss of $1.4 million in the comparable prior-year's quarter.
• Second quarter EPS were $0.63 vs a loss of $0.18 in the prior year quarter.
• The Company's backlog from continuing operations has increased 61% or $46 million from July 31, 2012. The July 31, 2013 backlog rose $5 million or 4% to $121 million from January 31, 2013.

Bradley Mautner, President and CEO, said, "The record second quarter results were led by the terrific performance of the Piping Systems business as the team continued delivery of products for the large scale projects in Saudi Arabia and the U.A.E. In addition, piping systems' bookings in the second quarter for offshore pre-insulated piping, sub-sea equipment and other activities increased the backlog $11 million from the beginning of this year. We expect our active marketing efforts continue to add to our project base for future quarters.

"As we have been reporting, the filtration products segment faces a very difficult market for fabric filters but with improved margins and cost controls, we were able to achieve a profit compared to a loss in the prior year's quarter. There are many initiatives under way to improve the Filtration segment, yet soft demand for fabric filters will continue to provide a headwind in the coming quarters.

"Finally, during the quarter we made the strategic decision to exit the HVAC business via the sale of substantially all of its assets, which consisted primarily of backlog on existing orders. The backlog for this business was previously reported in corporate and other. We believe the focus on major project driven needs for our piping systems and on consumables in filtration remain an excellent platform for our manufacturing activities going forward."

NILES, IL--(Marketwired - Jun 19, 2013) - (NASDAQ: MFRI) In press releases dated November 26, 2012 and February 5, 2013, the Company described major orders received by Perma Pipe Saudi Arabia in support of large-scale construction projects expanding the Haram Grand Mosque in Mecca and the King Abdul-Aziz International Airport in Jeddah. Those orders totaled nearly $50 million. Since then, the Company has received $55 million in new global orders, of which $25 million was reported in the first quarter backlog. The new global orders include:

• several contracts exceeding $19 million for offshore pre-insulated piping and sub-sea equipment to support the construction of flow lines in the Gulf of Mexico,
• additions to the two landmark Saudi projects, and
• projects in Qatar, Abu Dhabi and other Gulf Cooperation Council ("GCC") markets awarded to our middle eastern subsidiaries.

Delivery of the new GCC orders has begun and we expect to commence production of the $19 million offshore orders in the fourth quarter of this year and complete all deliveries by mid-2014.

Fati Elgendy, President of Perma-Pipe, Inc., said, "We are honored to participate in the efforts to enhance the Kingdom of Saudi Arabia's capacity to accommodate religious tourism. These orders expand the chilled water infrastructure at the Holy Haram and provide insulated piping for district cooling plants as well as other utility infrastructure at the Jeddah airport. Additionally, Perma Pipe's subsidiary in the United Arab Emirates received several orders to provide piping for the district cooling utility infrastructure for Abu Dhabi Airport and at Qatar's flagship planned community named Lusail City. We believe these orders establish our subsidiaries in the GCC as the undisputed market leader and are another strong endorsement of our resolve to serve the high growth markets of the GCC."

Bradley Mautner, President and CEO, added, "The success of Perma-Pipe in continuing to secure these significant orders demonstrates our strong technical and commercial capabilities required for sophisticated insulated piping systems. Our ability to meet ever-changing customer requirements and willingness to go where needed differentiate us from others who serve these markets. I am particularly proud of Perma Pipe's proactive attitude as they address customer needs wherever they may arise around the globe."

First Quarter 2013 Results

• The Company's sales from continuing operations for the quarter increased 30% to $57.7 million from $44.5 million in the prior-year quarter.
• EPS from continuing operations were $0.28 in the first quarter 2013 vs a loss of $0.38 in the prior year period.
• The Company's backlog on April 30, 2013 was approximately $145 million, a slight increase from the prior quarter but almost 80% higher than the backlog at the end of April last year.

We are certainly pleased with the first quarter results. In addition to the $11.4 million pre-tax gain from the previously announced sale of substantially all of the Industrial Process Cooling segment assets, we posted a pretax profit from continuing operations of about $2 million. The improvement in liquidity provides resources to fuel our strategic expansion and growth opportunities. Also, this demonstrates that the strategy to invest in the Saudi expansion initiative and other operational improvement efforts are producing favorable results. The team in the Middle East has done an excellent job to scale up production activities to support challenging project requirements. Major order booking success during the past year has resulted in a backlog nearly 80% greater than a year ago. Our efforts to improve operational efficiency, cost reductions and working capital utilization continue. This is especially important as we finance the needs that result from our significant growth in backlog. All of these elements should provide a solid base for continued revenue growth and profitable performance in the quarters to come."

Full Year 2012 Results

• Net sales were $212 million in 2012, a decrease of 9% from $233.5 million in 2011.
• Before non-cash charges described above, the net loss was $4.5 million compared to net loss of $5 million in 2011
• Backlog- The Company's backlog on January 31, 2013 was $148 million, up 78% from the prior year. Additionally, since January 31, 2013, piping systems has received approximately $27 million of additional orders, which were highlighted in a February 5, 2013 press release.

"The information in our 2012 annual report filing, this press release and our recent announcement of the sale of the U.S. assets of our Thermal Care business describe an important time for our Company. We have taken the strategic decision to focus our resources on our two large reportable segments: filtration products and piping systems. From an operating standpoint, we are largely a project driven company. Therefore, the dramatic 78% growth in backlog, not including the additional orders won during the first quarter this year will take time to turn into sales and profits. Fiscal 2012 was difficult operationally, as extremely weak market demand for fabric filters continued and we built backlog in piping, but did not yet realize the benefits. We expect to realize these benefits in 2013 and are working actively to size the fabric filter business to the lower demand expected in the near term. There are also programs now under way to lower manufacturing costs, improve working capital turns and control capital expenses. However, based on the recent results, accounting rules require us to record the large non-cash impairments that resulted in 75% of the reported loss per share for the year. I fully expect that we will perform in our core businesses at a level that will ultimately make use of tax benefits that have now been fully reserved.

"This year also contained some unusual expenses for audit, tax consulting and other professional services related to our strategic initiatives to drive improved operating performance in filtration and piping systems. Additionally, we invested nearly $1 million in startup costs for Saudi Arabia in 2012. It has taken two years of development and investment, but we have now transitioned from the startup phase to being fully operational. Therefore, those costs will not recur and we expect profitable revenue to begin this year. The momentum we have built is important, and we are focused on getting the most out of our opportunities this year. We also know that in order to drive ongoing profitable growth, we must explore new product initiatives, geographical expansion opportunities and alliances to further enhance our future for 2014 and beyond."

Bradley Mautner continued: "The decision to generate and redeploy capital from the sale of Thermal Care U.S. assets was not an easy one. It is a business started by the predecessor of MFRI in the 1960's, and it has generally been a steady contributor to the Company. More recently, the team led by Steve Buck did an excellent job of managing its recovery from the deep and lengthy recession that began in 2008. As we studied the various choices to support our emerging growth initiatives and larger market places, it became apparent that this was the appropriate choice for MFRI and our shareholders. We appreciate the efforts of the Thermal Care team and know they will bring a strong level of expertise and professionalism to complement IPEG's portfolio. We certainly wish them all the best going forward."