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PPIH's Q2 Earnings Down Y/Y, Sales Rise on Strong Middle East Demand
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Shares of Perma-Pipe International Holdings, Inc. (PPIH - Free Report) have declined 26.4% since the company reported its earnings for the quarter ended July 31, 2025. This compares unfavorably with the S&P 500 index’s modest gain of 0.5% over the same period. Over the past month, PPIH shares have fallen 15.7%, while the S&P 500 advanced by 4.3%, underscoring a significant underperformance by the stock in contrast to the broader market.
For the fiscal second quarter ended July 31, 2025, Perma-Pipe reported earnings per share of 10 cents, down from 40 cents in the prior-year quarter.
Net sales of $47.9 million marked a robust 27.7% increase from $37.5 million in the same period last year. The top-line growth was attributed to stronger sales volumes in both the Middle East and North America. Gross profit rose modestly to $14.4 million from $13.5 million, reflecting elevated activity levels.
However, net income attributable to common stock dropped sharply to $0.9 million, compared to $3.3 million in the year-ago quarter, a decline of approximately 74%. This earnings contraction was primarily driven by increased general and administrative (G&A) expenses, including a one-time $2.1 million charge linked to executive compensation tied to the departure of the former CEO.
On a non-GAAP basis, adjusted income before tax was $4.9 million, just shy of the $5.6 million posted a year earlier, indicating that the core operating performance was relatively steady if normalized for extraordinary items.
Perma-Pipe International Holdings, Inc. Price, Consensus and EPS Surprise
Perma-Pipe’s G&A expenses surged to $10 million from $6 million, a 66.7% increase, largely due to elevated payroll and professional fees, alongside the aforementioned one-time compensation charge. Selling expenses declined slightly to $1.2 million from $1.4 million. Meanwhile, the company maintained control over interest costs, which remained at $0.4 million.
The company’s effective tax rate for the quarter spiked to 54% from 23% in the year-ago period. This steep rise was attributed to the jurisdictional income mix and tax deduction limitations related to the executive compensation charge, further pressuring net income.
Management Commentary
President and CEO Saleh Sagr acknowledged both the strong top-line momentum and the pressures on profitability. He emphasized that the quarter’s performance reflects continuing growth in the company’s core markets and the impact of strategic investments, including the establishment of a new manufacturing facility in Qatar. The facility, backed by over $5 million in new awards, is expected to contribute to near-term revenues.
Factors Behind Financial Performance
Perma-Pipe’s revenue growth was fueled by higher sales volumes across key geographies, particularly in the Middle East and North America. However, profitability was dampened by internal cost structures and transitional events. Notably, the executive leadership change led to a substantial one-time cost, impacting both net income and tax rates.
The company also invested in infrastructure expansion, with capital allocated to launch the Qatar facility. While this step positions the company for future growth, it adds pressure on current-period expenses.
Other Developments
A major structural update during the quarter was Perma-Pipe’s change in filer status with the SEC. Following a public float assessment, the company now qualifies as an “accelerated filer,” transitioning from its previous “Smaller Reporting Company” designation. This change means Perma-Pipe will now adhere to stricter reporting timelines and enhanced disclosure requirements beginning with its fiscal year ending Jan. 31, 2026.
In addition, the company's backlog reached $157.8 million as of July 31, 2025, up 14.3% from $138.1 million at the beginning of the year. This increase in backlog underscores strong demand and provides visibility into future revenue streams.
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PPIH's Q2 Earnings Down Y/Y, Sales Rise on Strong Middle East Demand
Shares of Perma-Pipe International Holdings, Inc. (PPIH - Free Report) have declined 26.4% since the company reported its earnings for the quarter ended July 31, 2025. This compares unfavorably with the S&P 500 index’s modest gain of 0.5% over the same period. Over the past month, PPIH shares have fallen 15.7%, while the S&P 500 advanced by 4.3%, underscoring a significant underperformance by the stock in contrast to the broader market.
For the fiscal second quarter ended July 31, 2025, Perma-Pipe reported earnings per share of 10 cents, down from 40 cents in the prior-year quarter.
Net sales of $47.9 million marked a robust 27.7% increase from $37.5 million in the same period last year. The top-line growth was attributed to stronger sales volumes in both the Middle East and North America. Gross profit rose modestly to $14.4 million from $13.5 million, reflecting elevated activity levels.
However, net income attributable to common stock dropped sharply to $0.9 million, compared to $3.3 million in the year-ago quarter, a decline of approximately 74%. This earnings contraction was primarily driven by increased general and administrative (G&A) expenses, including a one-time $2.1 million charge linked to executive compensation tied to the departure of the former CEO.
On a non-GAAP basis, adjusted income before tax was $4.9 million, just shy of the $5.6 million posted a year earlier, indicating that the core operating performance was relatively steady if normalized for extraordinary items.
Perma-Pipe International Holdings, Inc. Price, Consensus and EPS Surprise
Perma-Pipe International Holdings, Inc. price-consensus-eps-surprise-chart | Perma-Pipe International Holdings, Inc. Quote
Business Metrics and Cost Pressures
Perma-Pipe’s G&A expenses surged to $10 million from $6 million, a 66.7% increase, largely due to elevated payroll and professional fees, alongside the aforementioned one-time compensation charge. Selling expenses declined slightly to $1.2 million from $1.4 million. Meanwhile, the company maintained control over interest costs, which remained at $0.4 million.
The company’s effective tax rate for the quarter spiked to 54% from 23% in the year-ago period. This steep rise was attributed to the jurisdictional income mix and tax deduction limitations related to the executive compensation charge, further pressuring net income.
Management Commentary
President and CEO Saleh Sagr acknowledged both the strong top-line momentum and the pressures on profitability. He emphasized that the quarter’s performance reflects continuing growth in the company’s core markets and the impact of strategic investments, including the establishment of a new manufacturing facility in Qatar. The facility, backed by over $5 million in new awards, is expected to contribute to near-term revenues.
Factors Behind Financial Performance
Perma-Pipe’s revenue growth was fueled by higher sales volumes across key geographies, particularly in the Middle East and North America. However, profitability was dampened by internal cost structures and transitional events. Notably, the executive leadership change led to a substantial one-time cost, impacting both net income and tax rates.
The company also invested in infrastructure expansion, with capital allocated to launch the Qatar facility. While this step positions the company for future growth, it adds pressure on current-period expenses.
Other Developments
A major structural update during the quarter was Perma-Pipe’s change in filer status with the SEC. Following a public float assessment, the company now qualifies as an “accelerated filer,” transitioning from its previous “Smaller Reporting Company” designation. This change means Perma-Pipe will now adhere to stricter reporting timelines and enhanced disclosure requirements beginning with its fiscal year ending Jan. 31, 2026.
In addition, the company's backlog reached $157.8 million as of July 31, 2025, up 14.3% from $138.1 million at the beginning of the year. This increase in backlog underscores strong demand and provides visibility into future revenue streams.