PPIH 10-Q
Perma-Pipe International Holdings, Inc. (PPIH)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
| | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ________ to ________
Commission File No.:
Perma-Pipe International Holdings, Inc.
(Exact name of registrant as specified in its charter)
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(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
| The |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer", "accelerated filer", "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act. Large accelerated filer ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
On September 9, 2026, there were
Perma-Pipe International Holdings, Inc.
FORM 10-Q
For the fiscal quarter ended July 31, 2026
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| Part I |
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| Item 1. |
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Condensed Consolidated Balance Sheets as of July 31, 2026 (Unaudited) and January 31, 2026 |
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Notes to Condensed Consolidated Financial Statements (Unaudited) |
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Management's Discussion and Analysis of Financial Condition and Results of Operations |
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| Part II |
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| Item 1. | Legal Proceedings | 38 |
| Item 5. | Other Information | 38 |
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| Financial Statements |
PERMA-PIPE INTERNATIONAL HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
| Three Months Ended July 31, | Six Months Ended July 31, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Net sales | $ | $ | $ | $ | ||||||||||||
| Cost of sales | ||||||||||||||||
| Gross profit | ||||||||||||||||
| Operating expenses | ||||||||||||||||
| General and administrative expenses | ||||||||||||||||
| Selling expenses | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Income from operations | ||||||||||||||||
| Interest expense, net | ||||||||||||||||
| Other (income) expense, net | ( | ) | ( | ) | ||||||||||||
| Income before income taxes | ||||||||||||||||
| Income tax expense | ||||||||||||||||
| Net income | ||||||||||||||||
| Less: Net income attributable to non-controlling interest | ||||||||||||||||
| Net income attributable to common stock | $ | $ | $ | $ | ||||||||||||
| Weighted average common shares outstanding | ||||||||||||||||
| Basic | ||||||||||||||||
| Diluted | ||||||||||||||||
| Earnings per share attributable to common stock | ||||||||||||||||
| Basic | $ | $ | $ | $ | ||||||||||||
| Diluted | $ | $ | $ | $ | ||||||||||||
See accompanying notes to condensed consolidated financial statements.
PERMA-PIPE INTERNATIONAL HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
(Unaudited)
| Three Months Ended July 31, |
Six Months Ended July 31, |
|||||||||||||||
| 2026 |
2025 |
2026 |
2025 |
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| Net income |
$ | $ | $ | $ | ||||||||||||
| Other comprehensive income (loss) |
||||||||||||||||
| Foreign currency translation adjustments, net of tax |
( |
) | ( |
) | ( |
) | ||||||||||
| Comprehensive income |
$ | $ | $ | $ | ||||||||||||
| Less: Comprehensive income attributable to non-controlling interests |
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| Total comprehensive income attributable to common stock |
$ | $ | $ | $ | ||||||||||||
See accompanying notes to condensed consolidated financial statements.
PERMA-PIPE INTERNATIONAL HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
(Unaudited)
| July 31, 2026 | January 31, 2026 | |||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Restricted cash | ||||||||
| Trade accounts receivable, less allowance for credit losses of $ at July 31, 2026 and $ at January 31, 2026 | ||||||||
| Inventories | ||||||||
| Prepaid expenses | ||||||||
| Unbilled accounts receivable | ||||||||
| Costs and estimated earnings in excess of billings on uncompleted contracts | ||||||||
| Other current assets | ||||||||
| Total current assets | ||||||||
| Long-term assets | ||||||||
| Property, plant and equipment, net of accumulated depreciation | ||||||||
| Operating lease right-of-use asset | ||||||||
| Deferred tax assets | ||||||||
| Goodwill | ||||||||
| Other long-term assets | ||||||||
| Total long-term assets | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Current liabilities | ||||||||
| Trade accounts payable | $ | $ | ||||||
| Accrued compensation and payroll taxes | ||||||||
| Commissions and management incentives payable | ||||||||
| Short-term borrowings and current maturities of long-term debt | ||||||||
| Customers' deposits | ||||||||
| Operating lease liability short-term | ||||||||
| Other accrued liabilities | ||||||||
| Billings in excess of costs and estimated earnings on uncompleted contracts | ||||||||
| Income taxes payable | ||||||||
| Total current liabilities | ||||||||
| Long-term liabilities | ||||||||
| Long-term debt, less current maturities | ||||||||
| Deferred compensation liabilities | ||||||||
| Deferred tax liabilities | ||||||||
| Operating lease liability long-term | ||||||||
| Other long-term liabilities | ||||||||
| Total long-term liabilities | ||||||||
| Commitments and contingencies | ||||||||
| Non-controlling interest | ||||||||
| Stockholders' equity | ||||||||
| Common stock, $ par value, authorized shares; issued and outstanding at July 31, 2026 and at January 31, 2026 | ||||||||
| Additional paid-in capital | ||||||||
| Retained earnings | ||||||||
| Accumulated other comprehensive loss | ( | ) | ( | ) | ||||
| Total stockholders' equity | ||||||||
| Total liabilities and stockholders' equity | $ | $ | ||||||
See accompanying notes to condensed consolidated financial statements.
PERMA-PIPE INTERNATIONAL HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(In thousands, except share data)
(Unaudited)
| Common Stock |
Additional Paid-in Capital |
Retained Earnings |
Accumulated Other Comprehensive Loss | Total Stockholders' Equity |
||||||||||||||||
| Total stockholders' equity at January 31, 2026 |
$ | $ | $ | $ | ( |
) | $ | |||||||||||||
| Net income attributable to common stock |
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| Stock-based compensation expense |
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| Amount attributable to non-controlling interest |
( |
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| Foreign currency translation adjustment |
( |
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| Total stockholders' equity at April 30, 2026 |
$ | $ | $ | $ | ( |
) | $ | |||||||||||||
| Net income attributable to common stock |
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| Common stock withheld related to net share settlement of equity award |
( |
) | ( |
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| Stock-based compensation expense |
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| Amount attributable to non-controlling interest |
( |
) | ( |
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| Foreign currency translation adjustment |
( |
) | ( |
) | ||||||||||||||||
| Total stockholders' equity at July 31, 2026 |
$ | $ | $ | $ | ( |
) | $ | |||||||||||||
| Common Stock |
Additional Paid-in Capital |
Retained Earnings |
Accumulated Other Comprehensive Loss | Total Stockholders' Equity |
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| Total stockholders' equity at January 31, 2025 |
$ | $ | $ | $ | ( |
) | $ | |||||||||||||
| Net income attributable to common stock |
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| Stock-based compensation expense |
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| Amount attributable to non-controlling interest |
( |
) | ( |
) | ||||||||||||||||
| Foreign currency translation adjustment |
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| Total stockholders' equity at April 30, 2025 |
$ | $ | $ | $ | ( |
) | $ | |||||||||||||
| Net income attributable to common stock |
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| Common stock withheld related to net share settlement of equity award |
( |
) | ( |
) | ||||||||||||||||
| Stock-based compensation expense |
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| Amount attributable to non-controlling interest |
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| Foreign currency translation adjustment |
( |
) | ( |
) | ||||||||||||||||
| Total stockholders' equity at July 31, 2025 |
$ | $ | $ | $ | ( |
) | $ | |||||||||||||
| Shares |
2026 |
2025 |
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| Opening balances at beginning of year (February 1) |
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| Shares issued, net of shares used for tax withholding |
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| Closing balances at period end (July 31) |
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See accompanying notes to condensed consolidated financial statements.
PERMA-PIPE INTERNATIONAL HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
| Six Months Ended July 31, | ||||||||
| 2026 | 2025 | |||||||
| Operating activities | ||||||||
| Net income | $ | $ | ||||||
| Adjustments to reconcile net income to net cash provided by (used in) operating activities | ||||||||
| Depreciation and amortization | ||||||||
| Deferred tax (benefit) expense | ( | ) | ||||||
| Stock-based compensation expense | ||||||||
| Amortization of debt issuance costs | ||||||||
| Write-off of uncollectible accounts | ||||||||
| Gain from disposal of fixed assets | ( | ) | ||||||
| Changes in operating assets and liabilities | ||||||||
| Accounts receivable | ( | ) | ||||||
| Inventories | ( | ) | ||||||
| Costs and estimated earnings in excess of billings on uncompleted contracts | ( | ) | ( | ) | ||||
| Billings in excess of costs and estimated earnings on uncompleted contracts | ( | ) | ||||||
| Accounts payable | ( | ) | ||||||
| Accrued compensation and payroll taxes | ( | ) | ( | ) | ||||
| Customers' deposits | ( | ) | ||||||
| Income taxes payable | ( | ) | ||||||
| Prepaid expenses | ( | ) | ( | ) | ||||
| Unbilled accounts receivable | ( | ) | ( | ) | ||||
| Other assets and liabilities | ( | ) | ||||||
| Net cash provided by (used in) operating activities | ( | ) | ||||||
| Investing activities | ||||||||
| Capital expenditures | ( | ) | ( | ) | ||||
| Proceeds from sales of property and equipment | ||||||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| Financing activities | ||||||||
| Proceeds from revolving credit lines | ||||||||
| Payments of debt on revolving credit lines | ( | ) | ( | ) | ||||
| Debt issuance costs | ( | ) | ||||||
| Change in drafts payable | ||||||||
| Proceeds from other financing activities | ||||||||
| Payments of other financing activities | ( | ) | ( | ) | ||||
| Stock options exercised and taxes paid related to restricted shares vested | ( | ) | ( | ) | ||||
| Net cash provided by financing activities | ||||||||
| Effect of exchange rate changes on cash, cash equivalents and restricted cash | ( | ) | ||||||
| Net increase in cash, cash equivalents and restricted cash | ||||||||
| Cash, cash equivalents and restricted cash - beginning of period | ||||||||
| Cash, cash equivalents and restricted cash - end of period | $ | $ | ||||||
| Supplemental cash flow information | ||||||||
| Cash interest paid | $ | $ | ||||||
| Cash income taxes paid | ||||||||
| Fixed assets acquired under finance leases - non-cash | ||||||||
| Fixed assets acquired - non-cash | ||||||||
See accompanying notes to condensed consolidated financial statements.
PERMA-PIPE INTERNATIONAL HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands, except per share data, or unless otherwise specified)
(Unaudited)
Note 1 - Basis of presentation
The interim Condensed Consolidated Financial Statements of Perma-Pipe International Holdings, Inc., and subsidiaries (collectively, "PPIH", the "Company", "we", "our", or the "Registrant") are unaudited, but include all adjustments that the Company's management considers necessary to fairly state the financial position and results of operations for the periods presented. These adjustments consist of normal recurring adjustments. Certain information and footnote disclosures have been omitted pursuant to Securities and Exchange Commission ("SEC") rules and regulations. The Condensed Consolidated Balance Sheet as of January 31, 2026 is derived from the audited consolidated balance sheet as of that date. The results of operations for any interim period are not necessarily indicative of future or annual results. Interim financial statements should be read in conjunction with the financial statements and the notes thereto included in the Company's latest Annual Report on Form 10-K. The Company's fiscal year ends on January 31. Years and balances described as 2026 and 2025 are for the fiscal year ending January 31, 2027 and for the fiscal year ended January 31, 2026, respectively. Certain amounts in prior periods have been reclassified to conform to the current period presentation. These reclassifications had no impact on previously reported totals.
Amounts reported in thousands within this Quarterly Report on Form 10-Q are computed based on the actual amounts. As a result, the sum of the components may not equal the total amount reported in thousands due to rounding. In addition, certain columns and rows within tables may not sum to the totals due to the use of rounded numbers. Percentages presented are calculated from the underlying unrounded amounts.
Note 2 - Business segment reporting
The Company operates under segment: Piping Systems. The results are presented on a consolidated basis to the Chief Executive Officer who serves as the chief operating decision maker ("CODM"). The CODM regularly reviews consolidated revenues, significant expenses, and consolidated net income attributable to common stock to make operating decisions and assess performance. The CODM uses this information in making company-wide decisions when determining how to allocate resources.
Significant expenses represent amounts that are regularly provided to the CODM and included in consolidated net income attributable to common stock. Additionally, the CODM regularly reviews asset information in a manner that is consistent with the presentation on the Company's accompanying Condensed Consolidated Balance Sheets.
The following table summarizes the Company's revenues, net income attributable to common stock, and significant expenses:
| Three Months Ended July 31, | Six Months Ended July 31, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Net sales | $ | $ | $ | $ | ||||||||||||
| Cost of sales | ||||||||||||||||
| Labor | ||||||||||||||||
| Materials | ||||||||||||||||
| Depreciation and amortization | ||||||||||||||||
| Other costs of sales | ||||||||||||||||
| Total cost of sales | ||||||||||||||||
| Operating expenses | ||||||||||||||||
| Salaries and wages | ||||||||||||||||
| Depreciation and amortization | ||||||||||||||||
| Other general and administrative expense | ||||||||||||||||
| General and administrative expenses | ||||||||||||||||
| Selling expense | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Income from operations | ||||||||||||||||
| Interest expense, net | ||||||||||||||||
| Other (income) expense, net | ( | ) | ( | ) | ||||||||||||
| Income before income taxes | ||||||||||||||||
| Income tax expense | ||||||||||||||||
| Net income | ||||||||||||||||
| Less: Net income attributable to non-controlling interest | ||||||||||||||||
| Net income attributable to common stock | $ | $ | $ | $ | ||||||||||||
Note 3 - Accounts receivable
The majority of the Company's accounts receivable are due from geographically dispersed contractors and manufacturing companies. Credit is extended based on an evaluation of a customer's financial condition. In North America, collateral is not generally required. In the United Arab Emirates ("U.A.E."), Saudi Arabia, Egypt, Qatar and India, letters of credit are usually obtained for significant orders. Accounts receivable are due within various time periods specified in the terms applicable to the specific customer and are stated as amounts due from customers net of an allowance for claims and credit losses. Standard payment terms are generally net 30 to 60 days. The Company maintains an allowance for credit losses for accounts receivable. The assessment of the allowance for credit losses involves certain judgments and estimates. Management estimates the allowance balance using relevant available information from internal and external sources relating to past events and current conditions. The Company may also establish an allowance for credit losses for specific receivables when it is probable that a specific receivable will not be collected and the loss can be reasonably estimated. Past due trade accounts receivable balances are written off when the Company's collection efforts have been unsuccessful in collecting the amount due and the amount is deemed uncollectible. The write-off is recorded against the allowance for credit losses.
As of July 31, 2026,
During the quarter, the Company directly wrote off a $
Any future recoveries will be recognized if realized. The $
Note 4 - Revenue recognition
The Company accounts for its revenues under Accounting Standards Codification ("ASC") 606, Revenue from Contracts with Customers.
Revenue from contracts with customers
The Company defines a contract as an agreement that has approval and commitment from both parties, defined rights and identifiable payment terms, which ensures the contract has commercial substance and that collectability is reasonably assured.
The Company’s standard revenue transactions are classified into two main categories:
| 1) | Specialty Piping Systems and Coating - which include all bundled products in which the Company engineers, and manufactures pre-insulated specialty piping systems mainly relating to the district heating and cooling and energy and industrial markets. |
| 2) | Products - which include cables, leak detection products, heat trace products, materials/goods not bundled with piping or flowline systems, and field services not bundled into a project contract. |
In accordance with ASC 606-10-25-27 through 29, the Company recognizes specialty piping systems and coating revenue over time as the manufacturing process progresses if one of the following conditions exists:
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| 1) | the customer owns the material that is being coated, so the customer controls the asset and thus the work-in-process; or |
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| 2) | the customer controls the work-in-process due to the custom nature of the pre-insulated, fabricated system being manufactured, which has no alternative future use, and there is a right to payment for work performed to date plus profit margin. |
Products revenue is recognized at a point in time when control of the promised goods is transferred to the customer, generally upon shipment, or as services are performed (ASC 606-10-25-30).
A breakdown of the Company's revenues by revenue class for the three and six months ended July 31, 2026 and 2025 are as follows:
| Three Months Ended July 31, | Six Months Ended July 31, | |||||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||||||||
| Sales | % of Total | Sales | % of Total | Sales | % of Total | Sales | % of Total | |||||||||||||||||||||||||
| Products | $ | % | $ | % | $ | % | $ | % | ||||||||||||||||||||||||
| Specialty Piping Systems and Coating | ||||||||||||||||||||||||||||||||
| Revenue recognized under input method | % | % | % | % | ||||||||||||||||||||||||||||
| Revenue recognized under output method | % | % | % | % | ||||||||||||||||||||||||||||
| Total | $ | % | $ | % | $ | % | $ | % | ||||||||||||||||||||||||
The input method is used by certain operating entities to measure revenue by the costs incurred to date relative to the total estimated costs to satisfy the performance obligation. Generally, these contracts are considered a single performance obligation satisfied over time. Due to the custom nature of the goods and services, the Company believes this method is the most faithful depiction of the transfer of goods and services to the customer as it measures progress toward satisfaction of the performance obligation. Costs include all material, labor, and direct costs incurred to satisfy the contract. Revenue recognition begins when project costs are initially incurred. Estimates of total contract costs are reviewed and revised periodically as work progresses.
The output method is used by all other operating entities to measure revenue based on the direct measurement of the value of goods or services transferred to date relative to the total goods or services promised under the contract. Due to the requirements of certain customers, these contracts often require formal inspection protocols or specific export documentation for units produced. Therefore, the Company believes the output method provides the most faithful depiction of the transfer of goods or services to the customer. Depending on the terms of the contract, revenue is recognized upon the transfer of control, which may occur when units are produced, inspected, and held by the Company at the customer’s request, or when units are produced, inspected, and shipped.
Contract assets and liabilities
Contract assets represent revenue recognized in excess of amounts billed for which the right to payment is conditional upon something other than the passage of time (such as the completion of additional performance milestones). Contract liabilities represent billings or payments received in excess of revenue recognized to date, reflecting the Company's obligation to transfer remaining goods or services to the customer.
Both customer billings and the satisfaction of performance obligations occur throughout the contract term, thus impacting the period-end balances of these accounts. Receivables are recorded separately when the Company’s right to consideration becomes unconditional, requiring only the passage of time before payment is due.
The following table shows the reconciliation of contract assets and contract liabilities:
| July 31, 2026 | January 31, 2026 | |||||||
| Costs incurred on uncompleted contracts | $ | $ | ||||||
| Estimated earnings | ||||||||
| Earned revenue | ||||||||
| Less billings to date | ||||||||
| Costs in excess of billings, net | $ | $ | ||||||
| Balance sheet classification | ||||||||
| Contract assets: Costs and estimated earnings in excess of billings on uncompleted contracts | $ | $ | ||||||
| Contract liabilities: Billings in excess of costs and estimated earnings on uncompleted contracts | ( | ) | ( | ) | ||||
| Costs in excess of billings, net | $ | $ | ||||||
The Company anticipates that substantially all costs incurred on uncompleted contracts as of July 31, 2026 will be billed and collected within one year. Substantially all of the $
Unbilled accounts receivable
The Company has recorded $
Note 5 - Inventories
Inventories are stated at the lower of cost or net realizable value. Cost is determined using the first-in, first-out method for all inventories.
| July 31, 2026 | January 31, 2026 | |||||||
| Raw materials | $ | $ | ||||||
| Work in process | ||||||||
| Finished goods | ||||||||
| Subtotal | ||||||||
| Less allowance | ( | ) | ( | ) | ||||
| Inventories | $ | $ | ||||||
The Company conducts periodic reviews of its inventory and records allowances for slow moving and obsolete items to reflect their net realizable value.
Note 6 - Income taxes
The determination of the consolidated provision for income taxes, deferred tax assets and liabilities and related valuation allowances requires management to make judgments and estimates. As a company with subsidiaries in foreign jurisdictions, the process of calculating income taxes involves estimating current tax obligations and exposures in each jurisdiction as well as making judgments regarding the future recoverability of deferred tax assets. The relative proportion of taxable income earned domestically versus internationally can fluctuate significantly from period to period. Changes in the estimated level of annual pre-tax income, tax laws and the results of tax audits can affect the overall effective income tax rate, which impacts the level of income tax expense and net income. Judgments and estimates related to the Company's projections and assumptions are inherently uncertain; therefore, actual results could differ materially from projections.
The Company's effective tax rates ("ETR") for the three months ended July 31, 2026 and 2025 were
The Company expects that future distributions from foreign subsidiaries will not be subject to incremental U.S. federal tax as they will be excludible from U.S. taxable income either as remittances of previously taxed earnings and profits or eligible for a full dividends received deduction. Current and future earnings in the Company's subsidiaries in Canada and Egypt are not permanently reinvested. The earnings from these subsidiaries are subject to tax in their local jurisdiction and withholding taxes in these jurisdictions are considered. As such, the Company has accrued a liability of $
On July 4, 2025, new tax legislation was signed into law (known as the "One Big Beautiful Bill Act" or "OBBBA") which makes permanent many of the tax provisions enacted in 2017 as part of the Tax Cuts and Jobs Act that were set to expire at the end of 2025. In addition, the OBBBA makes changes to certain U.S. corporate tax provisions. The Company has evaluated the provisions of the OBBBA and incorporated the initial impacts into its financial statements; however, the adoption of this legislation did not have a material impact on the Company’s consolidated financial position, results of operations, or cash flows.
Note 7 - Goodwill
All identifiable goodwill as of July 31, 2026 and January 31, 2026, is attributable to the purchase of the remaining
The Company performs an impairment assessment of goodwill annually as of January 31, or more frequently if triggering events occur that could indicate that it is more likely than not that the fair value of the reporting unit did not exceed its carrying value, resulting in an impairment.
The following table provides a reconciliation of changes in the carrying amount of goodwill:
| January 31, 2026 | Foreign exchange change effect | July 31, 2026 | ||||||||||
| Goodwill | $ | $ | ( | ) | $ | |||||||
There were no triggering events identified during the three and six months ended July 31, 2026.
Note 8 - Stock-based compensation
The Company's 2024 Omnibus Stock Incentive Plan, dated May 28, 2024 ("2024 Plan"), was approved by the Company's stockholders in July 2024. The 2024 Plan will expire in July 2027. The 2024 Plan authorizes awards to officers, employees, consultants, and independent directors. The 2024 Plan provides for the grant of deferred shares, non-qualified stock options, incentive stock options, restricted shares, restricted stock units, and performance-based restricted stock units intended to qualify under section 422 of the Internal Revenue Code. Grants were made in connection with the 2024 Plan to employees, officers, and independent directors, as further described below.
Stock-based compensation expense
The Company has granted stock-based compensation awards to eligible employees, officers and independent directors. The Company recognized the following stock-based compensation expense for the periods presented:
| Three Months Ended July 31, | Six Months Ended July 31, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Restricted stock-based compensation expense | $ | $ | $ | $ | ||||||||||||
| Total stock-based compensation expense | $ | $ | $ | $ | ||||||||||||
Restricted stock
The following table summarizes the Company's restricted stock activity for the six months ended July 31, 2026:
| Restricted Shares | Weighted Average Price (Per share) | Aggregate Intrinsic Value | ||||||||||
| Outstanding at January 31, 2026 | $ | $ | ||||||||||
| Granted | ||||||||||||
| Vested and issued | ( | ) | ||||||||||
| Forfeited or retired | ( | ) | ||||||||||
| Outstanding at July 31, 2026 | $ | $ | ||||||||||
As of July 31, 2026, there was $
Note 9 - Earnings per share
| Three Months Ended July 31, | Six Months Ended July 31, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Basic weighted average common shares outstanding | ||||||||||||||||
| Dilutive effect of equity compensation plans | ||||||||||||||||
| Weighted average common shares outstanding assuming full dilution | ||||||||||||||||
| Net income attributable to common stock | $ | $ | $ | $ | ||||||||||||
| Earnings per share attributable to common stock | ||||||||||||||||
| Basic | $ | $ | $ | $ | ||||||||||||
| Diluted | $ | $ | $ | $ | ||||||||||||
Note 10 - Debt
Debt consisted of the following:
| July 31, 2026 | January 31, 2026 | |||||||
| Short-term debt | ||||||||
| Revolving credit agreement - North America | $ | $ | ||||||
| Revolving credit agreement - United Arab Emirates | ||||||||
| Revolving credit agreement - Egypt | ||||||||
| Revolving credit agreement - Saudi Arabia | ||||||||
| Current maturities of long-term debt | ||||||||
| Loan payable to GIG | ||||||||
| Total short-term debt | $ | $ | ||||||
| Long-term debt | ||||||||
| Revolving credit agreement - North America | $ | $ | ||||||
| Finance obligation - buildings and land | ||||||||
| Mortgage note | ||||||||
| Finance lease obligation | ||||||||
| Unamortized debt issuance costs | ( | ) | ( | ) | ||||
| Total long-term debt | $ | $ | ||||||
Revolving lines - North America. On April 8, 2026, the Company entered into a Credit Agreement (the “Credit Agreement”) by and among the Company, as borrower, the other loan parties thereto, and JPMorgan Chase Bank, N.A., as lender (“JPMorgan”). The Credit Agreement effectively replaced the Company’s previous credit facility (the "PNC Credit Facility") with PNC Bank, National Association. On April 9, 2026, the Company drew $
The Credit Agreement provides for a senior secured asset-based revolving credit facility with aggregate revolving commitments of $
As of July 31, 2026, the outstanding balance under the Credit Agreement was $
Loans under the Credit Agreement bear interest, at the Company’s election, at either (i) a rate based on the CB Floating Rate (as defined in the Credit Agreement) or (ii) an adjusted term SOFR rate, in each case plus an applicable margin determined by the Company’s leverage ratio. The applicable margin for CB Floating Rate loans ranges from
On August 25, 2026, the Company, as borrower, certain subsidiaries of the Company party thereto as loan parties, the lenders party thereto and JPMorgan as administrative agent, entered into a Credit Agreement (the “2026 Credit Agreement”). The 2026 Credit Agreement replaces the Company’s existing Credit Agreement dated April 8, 2026 with JPMorgan, as lender (the “Existing Credit Agreement”), which was terminated concurrently with the closing of the 2026 Credit Agreement. In connection with the closing, all outstanding borrowings under the Existing Credit Agreement were repaid in full. The 2026 Credit Agreement provides for a secured credit facility consisting of a $
The revolving loans may be borrowed, repaid and reborrowed from time to time prior to the revolving credit maturity date, and the term loans are scheduled to amortize in quarterly installments beginning September 30, 2026, with the remaining unpaid principal due on the term loan maturity date. The revolving credit facility and term loan facility mature on August 25, 2031, unless earlier terminated or accelerated in accordance with the terms of the 2026 Credit Agreement.
Borrowings under the 2026 Credit Agreement bear interest, at the Company’s option and subject to the terms of the 2026 Credit Agreement, at rates based on the Alternate Base Rate or applicable term benchmark rates, including Adjusted Term SOFR, Adjusted EURIBOR or Adjusted Term CORRA, plus an applicable margin (each as defined in the 2026 Credit Agreement). The applicable margin is determined by reference to the Company’s leverage ratio and ranges from
The obligations under the 2026 Credit Agreement are guaranteed by certain subsidiaries of the Company and are secured by liens on collateral granted by the loan parties. The 2026 Credit Agreement contains customary representations and warranties, affirmative and negative covenants, and events of default. The covenants include, among others, restrictions on indebtedness, liens, investments, dispositions, restricted payments and certain other transactions, as well as financial covenants requiring compliance with a leverage ratio and a fixed charge coverage ratio. The 2026 Credit Agreement requires the Company to maintain a consolidated leverage ratio of not more than
Credit facilities - foreign. The Company also has credit arrangements used by its Middle Eastern subsidiaries in the U.A.E., Egypt, and Saudi Arabia as further described below.
United Arab Emirates (“U.A.E.”)
The Company maintains a letter of credit facility with a financial institution in the U.A.E. totaling
In March 2022, the Company’s Saudi Arabian subsidiary entered into a credit arrangement with a financial institution in Saudi Arabia for a revolving line totaling
As of July 31, 2026, the facility bore interest at a rate of approximately
Foreign credit facilities - overall
These credit arrangements are in the form of overdraft facilities and project financing at rates competitive in the countries in which the Company operates. The lines are secured by certain equipment, certain assets (such as accounts receivable and inventory), and a guarantee by the Company. Some credit arrangement covenants require a minimum tangible net worth to be maintained, including maintaining certain levels of intercompany subordinated debt. In addition, some of the revolving credit facilities restrict payment of dividends or undertaking of additional debt. The Company guarantees only a portion of the subsidiaries' debt, including foreign debt. As of July 31, 2026 and January 31, 2026, the amount of foreign subsidiary debt guaranteed by the Company was approximately $
The Company was in compliance with respect to the financial covenants under the foreign credit arrangements as of July 31, 2026. Certain of these arrangements are subject to periodic renewal; while such renewals are being processed, the Company remains in regular communication with the lenders, and the arrangements have historically continued without interruption or penalty. On July 31, 2026, interest rates were based on (i) the EIBOR plus
Loan Payable to GIG. In June 2023, in connection with the formation of a joint venture with Gulf Insulation Group (“GIG”), the Company assumed a promissory note with an aggregate principal amount of approximately $
Note 11 - Leases
The Company enters into lease agreements for real estate, including office space, production buildings, and land, as well as non-real estate assets such as heavy machinery, office equipment, and vehicles. Our leases are classified as either operating or finance leases at the commencement date. Operating leases consist of each of the above asset types, which have lease terms of
As most of our leases do not provide an implicit interest rate, the Company uses its incremental borrowing rate ("IBR") to determine the present value of lease payments at lease commencement. The IBR is the rate of interest the Company would have to pay to borrow on a collateralized basis over a similar term and amount equal to the lease payments in a similar economic environment. In determining the ROU asset and corresponding lease liability, we evaluate whether a contract contains a lease by assessing if we have the right to control the use of an identified asset for a period of time in exchange for consideration. For arrangements involving multiple components, we have elected the practical expedient to combine lease and non-lease components (such as common area maintenance and utility charges) into a single lease component for all underlying asset classes.
Certain of our real estate lease agreements include variable lease payments based on inflation rates, which are contractually capped. These payments are not included in the measurement of the lease liability and are recognized in the period in which the obligation is incurred. Our lease agreements do not typically include material residual value guarantees or restrictive covenants; where present, they are not expected to result in material payments. Furthermore, the Company has elected the short-term lease exception for all asset classes, whereby we do not recognize ROU assets or lease liabilities for leases with an initial term of 12 months or less that do not include a purchase option we are reasonably certain to exercise.
Total lease costs consist of the following:
| Three Months Ended July 31, | Six Months Ended July 31, | ||||||||||||||||
| Lease costs | Consolidated Statements of Operations Classification | 2026 | 2025 | 2026 | 2025 | ||||||||||||
| Finance Lease Costs | |||||||||||||||||
| Amortization of ROU assets | Cost of sales | $ | $ | $ | $ | ||||||||||||
| Interest on lease liabilities | Interest expense | ||||||||||||||||
| Operating lease costs | Cost of sales, SG&A expenses | ||||||||||||||||
| Short-term lease costs (1) | Cost of sales, SG&A expenses | ||||||||||||||||
| Total Lease costs | $ | $ | $ | $ | |||||||||||||
(1) Includes variable lease costs, which are not material.
Supplemental balance sheet information related to leases is as follows:
| Operating and Finance leases | July 31, 2026 | January 31, 2026 | ||||||
| Finance lease assets: | ||||||||
| Property and Equipment - gross | $ | $ | ||||||
| Accumulated depreciation and amortization | ( | ) | ( | ) | ||||
| Property and Equipment - net | $ | $ | ||||||
| Finance lease liabilities: | ||||||||
| Finance lease liability short-term | $ | $ | ||||||
| Finance lease liability long-term | ||||||||
| Total finance lease liabilities | $ | $ | ||||||
| Operating lease assets: | ||||||||
| Operating lease ROU assets | $ | $ | ||||||
| Operating lease liabilities: | ||||||||
| Operating lease liability short-term | $ | $ | ||||||
| Operating lease liability long-term | ||||||||
| Total operating lease liabilities | $ | $ | ||||||
Weighted-average lease terms and discount rates are as follows:
| July 31, 2026 | ||||
| Weighted-average remaining lease terms (in years): | ||||
| Finance leases | ||||
| Operating leases | ||||
| Weighted-average discount rates: | ||||
| Finance leases | % | |||
| Operating leases | % | |||
Supplemental cash flow information related to leases is as follows:
| Six Months Ended July 31, | ||||||||
| 2026 | 2025 | |||||||
| Cash paid for amounts included in the measurement of lease liabilities: | ||||||||
| Financing cash outflows from finance leases | $ | $ | ||||||
| Operating cash outflows from finance leases | ||||||||
| Operating cash outflows from operating leases | ||||||||
| ROU assets obtained in exchange for new lease obligations: | ||||||||
| Operating leases liabilities | $ | $ | ||||||
Maturities of lease liabilities as of July 31, 2026, are as follows:
| Operating Leases | Finance Leases | |||||||
| Fiscal 2026 (remainder of fiscal year) | $ | $ | ||||||
| Fiscal 2027 | ||||||||
| Fiscal 2028 | ||||||||
| Fiscal 2029 | ||||||||
| Fiscal 2030 | ||||||||
| Fiscal 2031 | ||||||||
| Thereafter | ||||||||
| Total lease payments | $ | $ | ||||||
| Less: amount representing interest | ( | ) | ( | ) | ||||
| Total lease liabilities at July 31, 2026 | $ | $ |
Failed Sale and Leaseback Arrangement
The Company is a party to a
Note 12 - Cash, cash equivalents, and restricted cash
Restricted cash primarily relates to fixed deposits utilized as security deposits and financial guarantees.
| July 31, 2026 | January 31, 2026 | |||||||
| Cash and cash equivalents | $ | $ | ||||||
| Restricted cash | ||||||||
| Cash, cash equivalents and restricted cash shown in the statement of cash flows | $ | $ | ||||||
Note 13 - Fair value
The carrying values of cash and cash equivalents, accounts receivable and accounts payable are considered reasonable estimates of fair value due to their short-term nature. The carrying amounts of the Company's short-term debt, revolving lines of credit and variable-rate long-term debt approximate fair value because the amounts outstanding accrue interest at variable market rates.
Note 14 - Recent accounting pronouncements
In November 2024, the FASB issued ASU No. 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. In accordance with this standard update, companies are required to disclose specified information about certain costs and expenses in the notes to the financial statements at each interim and annual reporting period. The amendments are effective for fiscal years beginning after December 15, 2026, and for interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact of this standard update on its consolidated financial statements and related disclosures.
In September 2025, the FASB issued ASU No. 2025-06, Intangibles - Goodwill and Other Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software, aimed at modernizing the guidance for internal-use software development. This guidance removes reference to "development stages" and introduces a "probable-to-complete" recognition threshold to determine when to begin capitalizing software costs. This guidance will be effective starting with our quarterly report for the fiscal quarter ending April 30, 2028, with prospective, retrospective, or modified transition methods allowed and early adoption permitted. We are currently evaluating the impact of this ASU, including our timing and method of adoption.
In December 2025, the FASB issued ASU No. 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements (“ASU 2025-11”). ASU 2025-11 is intended to update the guidance in Topic 270 by improving navigability of the required interim disclosures, clarifying when that guidance is applicable and adding a principle that requires entities to disclose events since the end of the last annual reporting period that have a material impact on the entity. This standard update will be effective for interim reporting periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted at any time prior to the effective date and should be applied either prospectively to financial statements issued for reporting periods after the effective date or retrospectively to any or all prior periods presented in the financial statements. We are currently evaluating the impact of the standard on our consolidated financial statements and related disclosures.
Note 15 - Noncontrolling interest
On June 1, 2023, the Company closed on its formation of a joint venture (the "JV", and the agreement governing the JV, the "JV Agreement") with GIG, a leading provider of pre-insulated piping systems and pipe fabrication, in which the Company acquired a
The balance sheets and operating activities of this investment are included in the Company's Condensed Consolidated Financial Statements. As of July 31, 2026, the carrying amount of the assets and liabilities of the JV that are consolidated by the Company totaled $
The Company adjusts net income in the Condensed Consolidated Statements of Operations to exclude the proportionate share of results that is attributable to the non-controlling interest. Additionally, the Company presents the proportionate share that is attributable to the non-controlling interest as temporary equity within the Condensed Consolidated Balance Sheets. This temporary equity presentation is the result of the non-controlling interest being subject to certain redemption rights that are not entirely within the Company's control. Due to these redemption rights, at each balance sheet date, the Company is required to adjust the carrying value attributable to the non-controlling interest to fair value, which is limited to its original carrying value at the formation of the business arrangement. Adjustments made to reflect the change in the value of the redeemable non-controlling interest are offset against permanent equity within the Company's Condensed Consolidated Balance Sheets.
Net income attributable to GIG was $
The following table summarizes 2026 activity for the redeemable non-controlling interest:
| Redeemable non-controlling interest balance at January 31, 2026 | $ | |||
| Net income attributable to redeemable non-controlling interest | ||||
| Fair value adjustment (accretion to redemption value) | ||||
| Distributions to redeemable non-controlling interest holders | ||||
| Redeemable non-controlling interest balance at July 31, 2026 | $ |
Note 16 - Accumulated other comprehensive loss
Accumulated other comprehensive loss represents the change in equity from foreign currency translation.
| Foreign Currency Translation Adjustments | Total Accumulated Other Comprehensive Loss | |||||||
| Balance as of January 31, 2026 | $ | ( | ) | $ | ( | ) | ||
| Currency translation adjustments | ( | ) | ( | ) | ||||
| Tax effect of currency translation adjustments | ||||||||
| Balance as of July 31, 2026 | $ | ( | ) | $ | ( | ) | ||
Note 17 - Subsequent Events
2026 Credit Agreement
Subsequent to July 31, 2026 and prior to the issuance of these financial statements, the Company entered into the 2026 Credit Agreement with JPMorgan, replacing its Existing Credit Agreement. The 2026 Credit Agreement provides for a secured credit facility consisting of a $
See Note 10 - Debt for additional information.
| Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") |
The statements contained in this MD&A and other information contained elsewhere in this quarterly report, which can be identified by the use of forward-looking terminology such as "may," "will," "expect," "continue," "remains," "intend," "aim," "should," "prospects," "could," "future," "potential," "believes," "plans," "likely" and "probable" or the negative thereof or other variations thereon or comparable terminology, constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are subject to the safe harbors created thereby. These statements should be considered as subject to the many risks and uncertainties that exist in the Company's operations and business environment. Such risks and uncertainties could cause actual results to differ materially from those projected as a result of many factors, including, but not limited to, those under the heading Item 1A. Risk Factors included in the Company's latest Annual Report on Form 10-K. The Company's fiscal year ends on January 31. Years and balances described as 2026 and 2025 are for the fiscal year ending January 31, 2027 and the fiscal year ended January 31, 2026, respectively.
This MD&A should be read in conjunction with the Company’s Condensed Consolidated Financial Statements, including the notes thereto, contained elsewhere in this report. Percentages set forth below in this MD&A have been rounded to the nearest percentage point.
CONDENSED CONSOLIDATED RESULTS OF OPERATIONS
(In thousands unless otherwise specified)
(Unaudited)
The Company is engaged in the manufacture and sale of products in one reportable segment. Since the Company focuses on discrete projects, operating results can be significantly impacted as a result of large variations in the level of project activity in reporting periods.
| Three Months Ended July 31, |
Six Months Ended July 31, |
|||||||||||||||||||||||||||||||||||||||
| 2026 |
2025 |
Change favorable (unfavorable) |
2026 |
2025 |
Change favorable (unfavorable) |
|||||||||||||||||||||||||||||||||||
| Amount |
Percent of Net Sales |
Amount |
Percent of Net Sales |
Amount |
Amount |
Percent of Net Sales |
Amount |
Percent of Net Sales |
Amount |
|||||||||||||||||||||||||||||||
| Net sales |
$ | 59,567 | $ | 47,902 | $ | 11,665 | $ | 109,831 | $ | 94,648 | $ | 15,183 | ||||||||||||||||||||||||||||
| Gross profit |
17,406 | 29 | % | 14,423 | 30 | % | 2,983 | 32,041 | 29 | % | 31,147 | 33 | % | 894 | ||||||||||||||||||||||||||
| General and administrative expenses |
11,870 | 20 | % | 10,033 | 21 | % | (1,837 | ) | 20,705 | 19 | % | 17,781 | 19 | % | (2,924 | ) | ||||||||||||||||||||||||
| Selling expenses |
1,283 | 2 | % | 1,203 | 3 | % | (80 | ) | 2,447 | 2 | % | 2,289 | 2 | % | (158 | ) | ||||||||||||||||||||||||
| Interest expense, net |
507 | 415 | (92 | ) | 1,111 | 821 | (290 | ) | ||||||||||||||||||||||||||||||||
| Other (income) expense, net |
(122 | ) | 21 | 143 | (12 | ) | 70 | 82 | ||||||||||||||||||||||||||||||||
| Income before income taxes |
3,868 | 2,751 | 1,117 | 7,790 | 10,186 | (2,396 | ) | |||||||||||||||||||||||||||||||||
| Income tax expense |
604 | 1,489 | 885 | 1,935 | 3,070 | 1,135 | ||||||||||||||||||||||||||||||||||
| Net income |
3,264 | 1,262 | 2,002 | 5,855 | 7,116 | (1,261 | ) | |||||||||||||||||||||||||||||||||
| Less: Net income attributable to non-controlling interest |
717 | 411 | (306 | ) | 1,506 | 1,313 | (193 | ) | ||||||||||||||||||||||||||||||||
| Net income attributable to common stock |
2,547 | 851 | 1,696 | 4,349 | 5,803 | (1,454 | ) | |||||||||||||||||||||||||||||||||
Gross profit:
Gross profit was $17.4 million, or 29% of net sales and $14.4 million, or 30% of net sales, in the three months ended July 31, 2026 and 2025, respectively. The increase of $3.0 million was driven by higher sales volumes and consistent gross margins globally.
General and administrative expenses:
General and administrative expenses were $11.9 million and $10.0 million in the three months ended July 31, 2026 and 2025, respectively. The increase of $1.9 million was primarily due to a $3.9 million write-off of a customer receivable during the second quarter of 2026, partially offset by a $2.0 million non-recurring acceleration of certain executive compensation expense recorded during the second quarter of fiscal 2025 in connection with an executive departure.
Selling expenses:
Interest expense:
Net interest expense was $0.5 million and $0.4 million in the three months ended July 31, 2026 and 2025, respectively. The increase of $0.1 was due to an increase in debt.
Income tax expense:
The Company's ETR was 16% and 54% in the three months ended July 31, 2026 and 2025, respectively. The lower ETR for the three months ended July 31, 2026 is due to the mix of income and loss in various jurisdictions.
For further information, see Note 6 - Income taxes, in the Notes to Condensed Consolidated Financial Statements.
Net income attributable to common stock:
Net income attributable to common stock was $2.5 million and $0.9 million in the three months ended July 31, 2026 and 2025, respectively. The increase of $1.6 million was the result of the changes discussed above, net of amounts attributable to non-controlling interest.
Gross profit:
Gross profit was $32.0 million, or 29% of net sales and $31.1 million, or 33% of net sales, in the six months ended July 31, 2026 and 2025, respectively. The increase of $0.9 million was primarily driven by higher sales volumes, and is partially offset with the product mix across various jurisdictions in the first quarter, particularly in Canada due to seasonal factors, together with start-up and ramp-up costs associated with the Company's new Ohio manufacturing facility as well as ongoing project ramp-up costs in Qatar.
General and administrative expenses:
General and administrative expenses were $20.7 million and $17.8 million in the six months ended July 31, 2026 and 2025, respectively. The increase of $2.9 million was primarily due to a $3.9 million write-off of a customer receivable during the second quarter of fiscal 2026, partially offset by a non-recurring acceleration of certain executive compensation expenses recorded in the second quarter of fiscal 2025 in connection with an executive departure. This decrease was partially offset by higher IT and office-related costs in the current year.
Selling expenses:
Interest expense:
Net interest expense was $1.1 million and $0.8 million in the six months ended July 31, 2026 and 2025, respectively. The increase of $0.3 million was due to an increase in debt.
Income tax expense:
The Company's ETR was 25% and 30% in the six months ended July 31, 2026 and 2025, respectively.
For further information, see Note 6 - Income taxes, in the Notes to Condensed Consolidated Financial Statements.
Net income attributable to common stock:
Net income attributable to common stock was $4.3 million and $5.8 million in the six months ended July 31, 2026 and 2025, respectively. The decrease of $1.5 million was the result of the changes discussed above, net of amounts attributable to non-controlling interest.
The Company qualifies as both an accelerated filer and a Smaller Reporting Company ("SRC"), as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended. Based on the Company's public float as of July 31, 2026, the Company will continue to qualify as both an accelerated filer and an SRC, consistent with its filer status for the fiscal year ended January 31, 2026. Accordingly, the Company remains subject to the filing deadlines applicable to accelerated filers while continuing to be eligible for the scaled disclosure accommodations available to SRCs.
Accounts Receivable Write-Off
During the quarter, the Company directly wrote off a $3.9 million customer receivable after determining that the receivable was uncollectible. This determination was based on the updated information received during the quarter regarding the customer’s ability and intent to pay.
Any future recoveries will be recognized if realized. The $3.9 million write-off is included as a component of bad debt expense for the period and is presented within general and administrative expenses in the condensed consolidated statements of operations for the three and six months ended July 31, 2026.
Liquidity and capital resources
Cash and cash equivalents as of July 31, 2026, were $31.8 million, compared to $18.7 million as of January 31, 2026. As of July 31, 2026, $1.7 million of this total was held in the United States, and $30.1 million was held by the Company's foreign subsidiaries. The Company's working capital increased $16.5 million to $83.4 million at July 31, 2026, from $66.9 million at January 31, 2026. The increase primarily reflected a $13.8 million decrease in short-term borrowings and current maturities of long-term debt, a $13.1 million increase in cash and cash equivalents, a $9.1 million increase in unbilled accounts receivable, and decreases of $3.7 million in customers' deposits and $1.5 million in billings in excess of costs and estimated earnings on uncompleted contracts. These favorable movements, together with other current asset and liability movements that increased working capital by $3.7 million, net, were partially offset by a $17.2 million decrease in trade accounts receivable and an $11.1 million increase in trade accounts payable. Overall, current assets increased $6.8 million and current liabilities decreased $9.7 million.
Net cash provided by (used in) operating activities was $13.3 million and $(1.3) million in the six months ended July 31, 2026 and 2025, respectively. The increase of $14.6 million was primarily attributable to favorable changes in operating assets and liabilities, most notably through accounts receivable and accounts payable.
Net cash used in investing activities in the six months ended July 31, 2026 and 2025 was $3.2 million and $3.5 million, respectively. The change of $0.3 million was primarily due to decreases in the amount of capital expenditures during the current year.
Net cash provided by financing activities in the six months ended July 31, 2026 and 2025 was $2.5 million and $6.3 million, respectively. Debt totaled $36.1 million and $32.5 million as of July 31, 2026 and January 31, 2026, respectively. See Note 10 - Debt, in the Notes to Condensed Consolidated Financial Statements for further discussion relating to this topic.
The Company believes it will have the ability to satisfy all working capital needs and any planned capital expenditures for the twelve months following the issuance of the Condensed Consolidated Financial Statements, based on its existing cash on hand, cash flows from operations, and available credit facilities.
Restricted cash was $3.0 million as of July 31, 2026 and $3.6 million as of January 31, 2026. This balance primarily relates to fixed deposits utilized as security deposits and financial guarantees.
Debt
| July 31, 2026 |
January 31, 2026 |
|||||||
| Short-term debt |
||||||||
| Revolving credit agreement - North America |
$ | - | $ | 10,749 | ||||
| Revolving credit agreement - United Arab Emirates |
1,489 | 2,573 | ||||||
| Revolving credit agreement - Egypt |
- | 190 | ||||||
| Revolving credit agreement - Saudi Arabia |
803 | 2,909 | ||||||
| Current maturities of long-term debt |
1,041 | 669 | ||||||
| Loan payable to GIG |
2,753 | 2,753 | ||||||
| Total short-term debt |
$ | 6,086 | $ | 19,843 | ||||
| Long-term debt |
||||||||
| Revolving credit agreement - North America |
$ | 17,332 | $ | - | ||||
| Finance obligation - buildings and land |
8,367 | 8,527 | ||||||
| Mortgage note |
3,517 | 3,737 | ||||||
| Finance lease obligation |
862 | 541 | ||||||
| Unamortized debt issuance costs |
(103 | ) | (109 | ) | ||||
| Total long-term debt |
$ | 29,975 | $ | 12,696 | ||||
Revolving lines - North America. On April 8, 2026, the Company entered into a Credit Agreement (the “Credit Agreement”) by and among the Company, as borrower, the other loan parties thereto, and JPMorgan Chase Bank, N.A., as lender (“JPMorgan”). The Credit Agreement effectively replaced the Company’s previous credit facility (the "PNC Credit Facility") with PNC Bank, National Association. On April 9, 2026, the Company drew $15.3 million under the Credit Agreement to pay off the remaining $15.2 million outstanding balance under the PNC Credit Facility and to fund $0.1 million of cash collateral required for cash management and purchasing card solutions. As of January 31, 2026, the Company had borrowed an aggregate of $10.7 million at a rate of 7.8% and had $2.7 million available under the PNC Credit Facility.
The Credit Agreement provides for a senior secured asset-based revolving credit facility with aggregate revolving commitments of $18.0 million, including a sublimit of up to $1.5 million for letters of credit. The revolving credit facility matures on October 7, 2027, unless earlier terminated in accordance with its terms.
As of July 31, 2026, the outstanding balance under the Credit Agreement was $17.3 million with a weighted-average interest rate of 6.9% and there were no outstanding letters of credit under the sublimit. Borrowings under the Credit Agreement are limited to the lesser of the revolving commitment and a borrowing base calculated as (i) 80% of eligible North American accounts receivable, plus (ii) 25% of eligible North American inventory (valued at the lower of cost or market), in each case subject to customary eligibility criteria and reserves established by JPMorgan.
Loans under the Credit Agreement bear interest, at the Company’s election, at either (i) a rate based on the CB Floating Rate (as defined in the Credit Agreement) or (ii) an adjusted term SOFR rate, in each case plus an applicable margin determined by the Company’s leverage ratio. The applicable margin for CB Floating Rate loans ranges from 1.50% to 2.00%, and for SOFR loans ranges from 2.50% to 3.00%. In addition, the Company is required to pay a commitment fee ranging from 0.20% to 0.30% on the unused portion of the revolving commitment.
The obligations under the Credit Agreement are secured by substantially all North American assets of the Company and the guarantor subsidiaries, subject to customary exclusions, and are guaranteed on a joint and several basis by certain existing and future subsidiaries of the Company, subject to customary exceptions
The Credit Agreement contains customary affirmative and negative covenants, including, among other things, limitations on additional indebtedness, liens, investments, acquisitions, asset sales, restricted payments, and transactions with affiliates. The Credit Agreement also includes financial maintenance covenants requiring the Company to maintain both a minimum Fixed Charge Coverage Ratio and a maximum Leverage Ratio (each as defined in the Credit Agreement), which are tested upon the occurrence of certain availability thresholds.
The Credit Agreement includes customary events of default, including, among others, nonpayment of principal or interest, breaches of representations or covenants, cross‑defaults to other material indebtedness, insolvency events, judgments in excess of specified thresholds, certain ERISA and pension events, and a change in control. Upon the occurrence of an event of default, the Lender may terminate commitments, accelerate outstanding obligations, require cash collateralization of letters of credit, and exercise remedies against the collateral.
As of July 31, 2026, the Company was in compliance with all covenants under the Credit Agreement.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Critical accounting policies are described in Item 7. MD&A and in the Notes to the Condensed Consolidated Financial Statements for the year ended January 31, 2026 contained in the Company's latest Annual Report on Form 10-K. Any new accounting policies or updates to existing accounting policies as a result of new accounting pronouncements have been discussed in the Notes to Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q. The application of critical accounting policies may require management to make assumptions, judgments and estimates about the amounts reflected in the Condensed Consolidated Financial Statements. Management uses historical experience and all available information to make these estimates and judgments, and different amounts could be reported using different assumptions and estimates.
| Controls and Procedures |
Evaluation of Disclosure Controls and Procedures
The Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, the “Exchange Act”), as of July 31, 2026. The Company’s disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed by the Company in the reports the Company files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and to provide reasonable assurance that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. Based on this evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that, as of July 31, 2026, our disclosure controls and procedures were not effective because of the material weaknesses in internal control over financial reporting, as described below.
Material Weaknesses in Internal Control Over Financial Reporting
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.
The material weaknesses are as follows:
| ● | We did not design and maintain effective controls in response to the risks of material misstatement. Specifically, changes to existing controls or the implementation of new controls have not been sufficient to respond to changes to the risks of material misstatement in financial reporting. This contributed to the following material weaknesses; |
| ● | We did not design and maintain effective controls over segregation of duties related to manual journal entries, account reconciliations and the purchases and payables process. We did not design and maintain effective controls over review of the financial close process, including the statement of cash flows and to verify the financial statement disclosures agree to the Company’s accounting records; and |
| ● | We did not design and maintain effective controls at operating locations in the Middle East and North Africa (“MENA”), including not maintaining sufficient documentation to support an evaluation that controls over all business processes were designed and operating effectively. |
These material weaknesses resulted in adjustments to property, plant, and equipment, net of accumulated depreciation, trade accounts payable, trade accounts receivable, and the statement of cash flows. These adjustments resulted in a revision of the unaudited Condensed Consolidated Financial Statements as of and for the period ended April 30, 2024, a restatement as of and for the period ended July 31, 2024 and material adjustments as of and for the period ended October 31, 2024. These material weaknesses also resulted in immaterial corrected and uncorrected misstatements in the statement of cash flows and to stock based compensation expense, unbilled receivables, prepaid expenses and other current assets, operating lease liability short-term, other long-term assets, cost of sales, property, plant and equipment, net of accumulated depreciation, income taxes payable, deferred tax assets, income tax expense costs in excess of billings on uncompleted contracts, and billings in excess of costs and estimated earnings on uncompleted contracts as of and for the year ended January 31, 2025 and January 31, 2026, and in the interim periods ended April 30, 2024, July 31, 2024, October 31, 2024, April 30, 2025, July 31, 2025, October 31, 2025, and April 30, 2026.
Additionally, each of these material weaknesses could result in a material misstatement of substantially all accounts and disclosures that would result in a material misstatement in the Company’s consolidated annual or interim financial statements that would not be prevented or detected on a timely basis.
Remediation Plan for the Material Weaknesses in Internal Control over Financial Reporting
While management, under the leadership of our CEO, has improved our internal control over financial reporting throughout the three months ended July 31, 2026, additional time and effort is required to fully complete the remediation activities. During the fiscal quarter ended July 31, 2026, we continued an entity wide risk assessment over our financial reporting and our internal control over financial reporting, including identification of financially relevant systems and business processes at the financial statement assertion level, and to identify controls to address the identified risks. We will continue to complete our risk assessment and enhance the design of existing controls, as well as implement new controls in future periods. We continue to design and implement controls to identify and evaluate changes in our business and the impact on our internal control over financial reporting.
Our remediation plans related to entity level controls, financial reporting controls, and business process controls include:
| ● |
Further enhancements to our segregation of duties framework within the purchases and payables cycle to ensure appropriate segregation of duties within these areas; |
| ● |
Continued to operate previously implemented controls related to our segregation of duties framework within the journal entry and account reconciliation processes as well as controls regarding the review of the statement of cash flows and to verify the financial statement disclosures agree to the Company’s accounting records; and |
| ● |
Providing continuing training, coaching, and reviews around our internal control over financial reporting. |
In addition to the items noted above, our remediation plans related to our MENA locations include the following:
| ● |
Further enhancements to the design and operation of controls over business processes that are relevant to our MENA locations; |
| ● |
Providing continuing training, coaching, and reviews around our internal control over financial reporting; and |
| ● |
Continuing to formalize our financial reporting processes and procedures. |
The Company anticipates the actions described above will strengthen the Company’s internal control over financial reporting and will address the related material weaknesses described above. However, the material weaknesses cannot be considered fully remediated until the necessary controls have been appropriately designed and implemented. The remediation process and procedures will also need to be in operation for a period of time and management conclude through testing, that these controls are operating effectively. As we continue to evaluate and improve our internal control over financial reporting, we may design or modify additional controls or certain of the remediation procedures described above.
Changes in Internal Control over Financial Reporting
As described in the "Remediation Plan for the Material Weaknesses in Internal Control over Financial Reporting" above, there were changes to our internal control over financial reporting which were identified in connection with the evaluation required by Rules 13a-15(d) or 15d-15(d) under the Exchange Act during the fiscal quarter ended July 31, 2026, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
| Item 1. | Legal Proceedings |
The Company is subject to various legal proceedings and claims that arise in the ordinary course of business, including those involving environmental, tax, product liability, and general liability claims. The Company accrues a liability for these matters when it is considered probable that future costs will be incurred, and the amount can be reasonably estimated. Such accruals are based on developments to date, the Company's estimates of the outcomes with respect to any legal proceedings, and its experience in contesting, litigating, and settling other similar matters.
As of July 31, 2026, the Company had no material pending litigation.
| Other Information |
During the three months ended July 31, 2026, of the Company's directors or executive officers adopted or terminated any contract, instruction, or written plan for the purchase or sale of Company securities that was intended to satisfy the affirmative defense conditions of Rule -(c) or any "non-Rule -1 trading arrangement" (as those terms are defined in Regulation S-K, Item 408).
| Exhibits |
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| Perma-Pipe International Holdings, Inc. | ||
| Date: |
September 9, 2026 | By: /s/ Saleh Sagr |
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Saleh Sagr |
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President, Chief Executive Officer, and Director |
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(Principal Executive Officer) |
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| Date: |
September 9, 2026 | By: /s/ Matthew Lewicki |
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Matthew Lewicki |
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Vice President and Chief Financial Officer |
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(Principal Financial and Accounting Officer) |
Exhibit 31.1
I, Saleh Sagr, certify that:
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1. |
I have reviewed this quarterly report on Form 10-Q of Perma-Pipe International Holdings, Inc.; |
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2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
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3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
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4. |
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
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a. |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
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b. |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
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c. |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
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d. |
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
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5. |
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
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a. |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
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b. |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
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Date: |
September 9, 2026 |
/s/ Saleh Sagr
Saleh Sagr
President, Chief Executive Officer, and Director
(Principal Executive Officer)
Exhibit 31.2
I, Matthew Lewicki, certify that:
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1. |
I have reviewed this quarterly report on Form 10-Q of Perma-Pipe International Holdings, Inc.; |
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2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
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3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
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4. |
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
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a. |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
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b. |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
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c. |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
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d. |
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
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5. |
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
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a. |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
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b. |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
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Date: |
September 9, 2026 |
/s/ Matthew Lewicki
Matthew Lewicki
Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)
Exhibit 32
Certification of Principal Executive Officers
Pursuant to 18 U.S.C. 1350
(Section 906 of the Sarbanes-Oxley Act of 2002)
The undersigned, in their capacities as Chief Executive Officer and Chief Financial Officer of Perma-Pipe International Holdings, Inc. (the “Registrant") certify that, to the best of their knowledge, based upon a review of the Quarterly Report on Form 10-Q for the period ended July 31, 2026 of the Registrant, (the “Report”):
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(1) |
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
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(2) |
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant. |
/s/ Saleh Sagr
Saleh Sagr
President, Chief Executive Officer, and Director
(Principal Executive Officer)
/s/ Matthew Lewicki
Matthew Lewicki
Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)
September 9, 2026
A signed original of this written statement required by Section 906 has been provided by Perma-Pipe International Holdings, Inc. and will be retained by Perma-Pipe International Holdings, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.