Overview

• Pre-insulated piping systems maker's Q1 sales rose 7.5% yr/yr on higher North America, MENA volumes

• Gross profit and net income declined due to mix, seasonal factors, and start-up costs in Ohio, Qatar

• Company backlog rose 12% sequentially; Middle East geopolitics delayed project timing but no cancellations

Outlook

• Company expects both revenue and net income growth for fiscal 2026 versus fiscal 2025

• Company says project execution in the Middle East delayed by geopolitical developments, but expects normalization in coming quarters

• Company cites strong backlog and robust bidding activity supporting near-term and long-term demand

Result Drivers

• HIGHER SALES VOLUMES - Co said Q1 net sales rose 7.5% yr/yr due to higher sales volumes in North America and the MENA region

• GROSS PROFIT DECLINE - Co said lower gross profit reflected project and product mix, especially in Canada due to seasonal factors, and start-up costs at new Ohio and Qatar facilities

• MIDDLE EAST DELAYS - Co said geopolitical developments in the Middle East delayed project execution, affecting timing of revenue recognition and profitability in MENA region

Company press release: ID:nBwbPL23Wa

Key Details

Metric	Beat/Miss	Actual	Consensus Estimate
Q1 Sales	Miss	$50.27 mln	$54 mln (1 Analyst)
Q1 Net Income		$2.59 mln
Q1 Gross Profit		$14.64 mln
Q1 Income From Operations		$4.64 mln
Q1 Operating Expenses		$10 mln
Q1 Pretax Profit		$3.92 mln

Analyst Coverage

• The one available analyst rating on the shares is "buy"

• The average consensus recommendation for the iron & steel peer group is "buy"

• Wall Street's median 12-month price target for Perma-Pipe International Holdings Inc is $39.00, about 24.7% above its June 8 closing price of $31.27

• The stock recently traded at 14 times the next 12-month earnings vs. a P/E of 19 three months ago

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