Perma-Pipe’s Backlog Soars Amid Global Expansion—Is This a Pipeline to Profit?

Perma-Pipe International Holdings, Inc. (NASDAQ: PPIH) has delivered a mixed bag of results for fiscal 2024, with revenue growth and margin improvements overshadowed by a net income decline tied to a prior-year tax windfall. But beneath the numbers lies a story of strategic expansion and a robust order pipeline that could position the company for stronger performance in the coming year.

Revenue Growth, Margin Gains, and a Tax Headwind

Perma-Pipe’s fiscal 2024 net sales rose 5% to $158.4 million, driven by strong performances in the Middle East and Canada. The fourth quarter alone saw a 12% revenue jump to $45.0 million. While net income attributable to common stock fell 14% to $9.0 million compared to fiscal 2023, this drop was largely due to a $5.9 million non-recurring tax benefit in the prior year. Excluding that anomaly, net income grew by $4.4 million, signaling operational progress.

The company’s focus on high-margin products and services paid off: gross profit surged to $53.2 million, or 34% of revenue, up from 28% in 2023. This margin expansion reflects Perma-Pipe’s success in scaling higher-value projects, particularly in its key international markets.

Backlog Jumps 102%—A Sign of Future Growth?

The most striking metric is Perma-Pipe’s backlog, which skyrocketed to $138.1 million as of January 31, 2025—a 102% increase from the prior year. This surge is fueled by major projects in Saudi Arabia, Canada, and Qatar. The company’s joint venture in Saudi Arabia, launched in 2023, has already exceeded expectations, while its new Vars, Ontario facility is ramping up activity to support Canadian infrastructure initiatives.

CEO David Mansfield emphasized that this record backlog positions the company for a strong fiscal 2025. With 14 global locations across six countries, Perma-Pipe is well-positioned to capitalize on demand for its pipeline solutions in energy and infrastructure markets.

Costs and Risks to Monitor

Not all metrics are positive. General and administrative expenses rose $5.4 million to $28.0 million, driven by higher compensation and professional fees. While selling expenses declined slightly, the company’s ability to control costs will be critical as it scales.

Perma-Pipe also faces risks tied to its international operations. Fluctuating oil and gas prices could impact demand for its energy-sector projects, while supply chain disruptions and regulatory hurdles in foreign markets remain concerns. The company’s guidance acknowledges these challenges but maintains optimism, citing its diversified geographic footprint and strategic partnerships.

Balance Sheet Strength and Strategic Agility

Perma-Pipe’s balance sheet shows resilience. Total assets grew to $165.2 million, and stockholders’ equity rose to $72.1 million, reflecting improved financial health. The company’s adjusted income before tax—a metric that strips out one-time items—jumped to $19.0 million in 2024, up from $11.1 million in 2023, reinforcing the case for operational improvements.

Conclusion: A Pipeline to Profit or a Risky Gamble?

Perma-Pipe’s fiscal 2024 results highlight a company at a crossroads. The 102% backlog surge and margin expansion suggest strong execution in high-margin markets, while strategic investments in Saudi Arabia and Canada position it for long-term growth. However, its reliance on volatile energy markets and rising operational costs pose risks that investors must weigh carefully.

With a backlog that could translate into future revenue and a geographic footprint that diversifies its exposure, Perma-Pipe appears better prepared than many peers to navigate industry challenges. If it can sustain margin improvements and manage costs, fiscal 2025 could mark a turning point. For investors, the question remains: Will the company’s global ambitions outweigh its execution risks? The answer may lie in its ability to convert that $138 million backlog into sustained profitability.

In the meantime, the data paints a cautiously optimistic picture. A 5% revenue rise in a year of geopolitical and economic uncertainty is no small feat, and the adjusted income gains suggest Perma-Pipe is on the right track. The next 12 months will test whether this momentum can carry it to new heights—or if the company’s pipeline remains a work in progress.