Shares of Perma-Pipe International Holdings, Inc. (PPIH Quick QuotePPIH - Free Report) have rallied 14% since the company reported its earnings for the quarter ended Jan. 31, 2025, outperforming the S&P 500’s modest 0.8% growth during the same period. Over the past month, PPIH shares have posted a strong gain of 13.1%, again significantly ahead of the S&P 500’s 2.8% advance, suggesting investor optimism around the company’s latest results and future prospects.

Perma-Pipe reported fiscal 2024 earnings of $1.12 per share compared to $1.30 in the year-ago period. (See the Zacks Earnings Calendar to stay ahead of market-making news.)

Perma-Pipe delivered net sales of $158.4 million, a $7.7 million increase from the previous year, largely attributed to higher volumes in the Middle East and Canada. Gross profit improved materially to $53.2 million, or 34% of net sales, compared to $41.5 million, or 28%, a year ago. This 600-basis-point expansion was driven by product mix optimization and regional margin gains.

Operating income surged to $20.3 million from $13.4 million the prior year. Meanwhile, adjusted income before taxes, which excludes one-time charges such as litigation settlements and other non-recurring expenses, reached $19 million, compared to $11.1 million in fiscal 2023.

Q4 Update

Net sales of $45 million denoted an increase of $4.8 million from the prior-year period. Income before income taxes rose to $5.3 million, up by $2.1 million.

However, net income after taxes and minority interest fell to $1.5 million in the fiscal fourth quarter. This decline stemmed from the absence of a one-time non-cash tax benefit of $5.9 million recorded in the prior year. Excluding this benefit, the adjusted net income would have shown a year-over-year increase of $4.4 million.

Management Commentary

CEO David Mansfield described fiscal 2024 as a year marked by strategic execution and operational gains. He credited the improved performance to the company’s focus on higher-margin products and services, as well as the growing contribution from the joint venture in Saudi Arabia. Mansfield also highlighted the ramp-up at the Vars, Ontario, facility in Canada and characterized recent project wins as a source of strong momentum going into fiscal 2025.

Factors Behind Financial Results

Several factors influenced the headline results. The rise in gross profit was largely due to increased sales volumes and stronger margins in key international markets. Selling expenses declined $0.6 million year over year due to lower payroll costs, while general and administrative expenses increased by $5.4 million, reflecting higher compensation and professional service fees.

Interest expenses eased by $0.4 million thanks to reduced borrowing levels and favorable interest rates. Additionally, Perma-Pipe benefited from a swing in other income, which turned positive at $0.1 million versus a $1.2 million loss in the prior year, primarily due to a one-time pre-tax settlement charge that had impacted results in fiscal 2023.

On the tax front, the company’s effective tax rate returned to a normalized level of 29.1%, up from a negative 33.6% the year before. The prior year’s ETR was impacted by the release of a domestic valuation allowance, which significantly reduced reported tax expenses and inflated net income for fiscal 2023.