What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-12-06 compared with 2022-09-07 · 228 added, 225 removed, 614 unchanged (42% of the section changed)

3 unchanged sentences

(In thousands, except per share data)

Three Months Ended July 31,

Six Months Ended July 31,

Three Months Ended October 31,

Nine Months Ended October 31,

$ 37,903  

23 unchanged sentences

( 963 )  

Income from operations before income taxes

Income before income taxes

Income tax expense

4 unchanged sentences

Earnings per share

$ 0.22  

$ 0.06  

$ 0.33  

$ 0.38  

$ 0.21  

$ 0.06  

$ 0.33  

$ 0.36  

See accompanying notes to consolidated financial statements.

1 unchanged sentence

PERMA-PIPE INTERNATIONAL HOLDINGS, INC. 

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS) (Unaudited)

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS) (Unaudited)

(In thousands)

Three Months Ended July 31,

Six Months Ended July 31,

Three Months Ended October 31,

Nine Months Ended October 31,

$ 1,728  

1 unchanged sentence

$ 3,068  

Other comprehensive loss

Other comprehensive (loss)/income

Foreign currency translation adjustments, net of tax

1 unchanged sentence

( 4,122 )  

( 1,387 )  

Other comprehensive loss

( 455 )  

Minimum pension liability adjustment, net of tax

Other comprehensive (loss)/income

( 1,488 )  

3 unchanged sentences

$ 2,980  

$ ( 404 )  

$ 2,463  

See accompanying notes to consolidated financial statements.

2 unchanged sentences

(In thousands, except per share data)

July 31, 2022

October 31, 2022

January 31, 2022

5 unchanged sentences

Restricted cash

Trade accounts receivable, less allowance for doubtful accounts of $ 500 at July 31, 2022 and $ 486 at January 31, 2022

Trade accounts receivable, less allowance for doubtful accounts of $ 502 at October 31, 2022 and $ 486 at January 31, 2022

44,026  

53 unchanged sentences

Common stock, $.01 par value, authorized 50,000 shares;

8,003 issued and outstanding at July 31, 2022 and 8,152 issued and outstanding at January 31, 2022

8,004 issued and outstanding at October 31, 2022 and 8,152 issued and outstanding at January 31, 2022

Additional paid-in capital

1 unchanged sentence

61,766  

Treasury Stock, no shares at July 31, 2022 and 234 shares at January 31, 2022

Treasury stock, no shares at October 31, 2022 and 234 shares at January 31, 2022

Accumulated deficit

18 unchanged sentences

Total stockholders' equity at January 31, 2022

$ 61,766  

$ ( 2,295 )  

$ ( 1,992 )  

$ ( 3,104 )  

$ 54,457  

( 885 )  

Common stock issued under stock plans, net of shares used for tax withholding

1 unchanged sentence

Foreign currency translation adjustment

( 932 )  

Total stockholders' equity at April 30, 2022

$ 62,018  

$ ( 3,180 )  

$ ( 1,992 )  

$ ( 4,036 )  

$ 52,892  

Common stock issued under stock plans, net of shares used for tax withholding

( 247 )  

Repurchase of common stock

( 43 )  

Retirement of treasury stock

( 2,033 )  

Stock-based compensation expense

Foreign currency translation adjustment

( 455 )  

Total stockholders' equity at July 31, 2022

$ 62,055  

$ ( 3,345 )  

$ ( 4,491 )  

$ 54,299  

Common stock issued under stock plans, net of shares used for tax withholding

Stock-based compensation expense

Pension liability

Foreign currency translation adjustment

Total stockholders' equity at October 31, 2022

Additional Paid-in Capital

4 unchanged sentences

Total stockholders' equity at January 31, 2021

$ 60,875  

$ ( 8,357 )  

$ ( 3,287 )  

$ 49,313  

( 843 )  

Stock-based compensation expense

1 unchanged sentence

Total stockholders' equity at April 30, 2021

$ 61,147  

$ ( 9,200 )  

$ ( 3,247 )  

$ 48,782  

Common stock issued under stock plans, net of shares used for tax withholding

( 254 )  

Stock-based compensation expense

Foreign currency translation adjustment

( 150 )  

Total stockholders' equity at July 31, 2021

$ 61,169  

$ ( 5,784 )  

$ ( 3,397 )  

$ 52,069  

Common stock issued under stock plans, net of shares used for tax withholding

Repurchase of common stock

Stock-based compensation expense

Foreign currency translation adjustment

Total stockholders' equity at October 31, 2021

Balances at beginning of year

8,151,754  

8,164,989  

Treasury stock purchased

( 4,887 )  

Shares issued, net of shares used for tax withholding

90,816  

221,046  

Prior period adjustments

( 234,281 )  

Balances at period end

8,003,402  

8,151,754  

See accompanying notes to consolidated financial statements.

2 unchanged sentences

(In thousands)

Six Months Ended July 31,

Nine Months Ended October 31,

Operating activities

3 unchanged sentences

Stock-based compensation expense

Non-cash pension termination expense

Provision on uncollectible accounts

29 unchanged sentences

Effect of exchange rate changes on cash, cash equivalents and restricted cash

Net decrease in cash, cash equivalents and restricted cash

Net (decrease)/increase in cash, cash equivalents and restricted cash

Cash, cash equivalents and restricted cash - beginning of period

3 unchanged sentences

Income taxes paid

Fixed assets acquired under capital leases - non-cash

See accompanying notes to consolidated financial statements.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

July 31, 2022

October 31, 2022

(Tabular amounts presented in thousands, except per share amounts)

10 unchanged sentences

2022 and 

2021 are for the fiscal years ended January 31, 2023 and 2022 , respectively.

2021 are for the fiscal year ending 

January 31, 2023  and the fiscal year ended 

January 31, 2022 , respectively.

Significant New Accounting Policies

Refer to the Company's Annual Report on Form 10 -K for the year ended January 31, 2022 

as filed with the SEC on April 19, 2022 

Refer to the Company's Annual Report on Form 10 -K for the year ended January 31, 2022  as filed with the SEC on April 19, 2022 

for discussion of the Company's significant accounting policies.

During the six months ended July 31, 2022, the following accounting policies were adopted. 

During the nine months ended October 31, 2022 , the following accounting policies were adopted. 

Treasury Stock

In accordance with Accounting Standards Codification ("ASC") Topic 505, "Equity", the Company has accounted for the share repurchases under the cost method.

In accordance with Accounting Standards Codification ("ASC") Topic 505, "Equity", the Company accounted for share repurchases pursuant to its expired repurchase program under the cost method.

This resulted in recognizing the shares as treasury stock, a reduction of stockholders' equity on the Company's consolidated balance sheets and on the Company's consolidated statements of stockholders' equity.

These amounts included costs associated with the acqu isition of the shares.

July 26, 2022, the Company retired all treasury stock previously repurchased under this stock repurchase program.

July 26, 2022, the Company retired all treasury stock previously repurchased under the stock repurchase program.

The retirement was recorded as a reduction to common stock based on the par value of the shares, and the excess over par value was recorded as an increase to accumulated deficit in accordance with ASC 505 - 30, Equity -Treasury Stock.

Reclassifications  

Certain reclassifications have been made to prior period financial statements to conform to current period presentation.

Unbilled accounts receivable was segregated from prepaid expenses and other current assets and reclassified into its own line on the consolidated balance sheets and consolidated statements of cash flows.

Subsequent Events

The Company has evaluated subsequent events through September 7, 2022, the date the financial statements were issued.

No  material subsequent events occurred during this time that would require recognition or disclosure in these financial statements.

The Company has evaluated subsequent events through December 6, 2022, the date the financial statements were issued.

No  material subsequent events occurred during this time that would require recognition or disclosure in these financial statements. 

Note 2 - Business segment reporting

8 unchanged sentences

In the United States, collateral is not generally required.

In the United Arab Emirates (the "U.A.E.") and Saudi Arabia, letters of credit are usually obtained for significant orders.

In the Middle East, North Africa 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 each customer and are presented net of any allowance for claims and doubtful accounts.

3 unchanged sentences

The write-off is recorded against the allowance for doubtful accounts. 

One of the Company’s accounts receivable in the total amount of $ 2.7 million and $ 3.6 million as of July 31, 2022 and January 31, 2022 , respectively, has been outstanding for several years.

As of July 31, 2022, the entire balance represents a retention receivable that is payable upon the commissioning of the system. Due to the long-term nature of the receivable, $ 1.1  million and $ 2.0 million were included other long-term assets as of July 31, 2022 and January 31, 2022 , respectively.

One of the Company’s accounts receivable in the total amount of $ 2.7  million and $ 3.6 million as of October 31, 2022 and January 31, 2022 , respectively, has been outstanding for several years.

As of October 31, 2022 , the entire balance represents a retention receivable that is payable upon the commissioning of the system. Due to the long-term nature of the receivable, $ 2.5  million and $ 2.0  million were included in other long-term assets as of October 31, 2022 and January 31, 2022 , respectively.

The Company completed all of its deliverables in 2015 under the related contract, but the system has not yet been commissioned by the customer as additional activities must be completed prior to the overall system completion and commissioning.

1 unchanged sentence

The Company continues to engage with the customer to ensure full payment of open balances, and during April 2022 received an updated acknowledgment of the outstanding balances and assurances of payment from the customer.

In June 2022, the Company received a partial payment to settle $ 0.9 million of the customer's outstanding balance.

In June 2022, the Company received a partial payment to settle $ 0.9  million of the customer's outstanding balance.

Further, the Company has been engaged by the customer to perform additional work in 2022 under customary trade credit terms that supports the continued cooperation between the Company and the customer.

As a result, the Company did not reserve any allowance against this outstanding receivable as of July 31, 2022. 

However, if the Company’s efforts to collect on this account are

not successful, the Company

may recognize an allowance for all, or substantially all, of any such then uncollected amounts.

For the three months ended 

July 31, 2022 , 

no individual customer accounted for greater than 

10% of the Company’s consolidated net sales. During the three months ended July 31, 2021, one individual customer accounted for 12 % of the Company's consolidated net sales. 

For the six months ended July 31, 2022 and 2021, no individual customer accounted for more than 10% of the Company's consolidated net sales.

July 31, 2022, 

no individual customer accounted for 10%  of the Company's accounts receivable.

January 31, 2022 

one customer accounted for 11.9 % of the Company's accounts receivable. 

As a result, the Company did not reserve any allowance against this outstanding receivable as of October 31, 2022 .

However, if the Company’s efforts to collect on this account are not successful, the Company may recognize an allowance for all, or substantially all, of any such then uncollected amounts.

For the three months ended October 31, 2022 , 

one  customer accounted for 

10.5 % of the Company's consolidated net sales, and during the same period in 2021 , 

no  individual customer accounted for greater than 

of the Company’s consolidated net sales.

For the  

nine months ended October 31, 2022 and 2021 , 

no  individual customer accounted for greater than 

of the Company’s consolidated net sales.

October 31, 2022 and January 31, 2022 , 

one  customer accounted for 11.2 % and 

11.9 % of the Company's accounts receivable, respectively. 

Note 4 - Revenue recognition 

3 unchanged sentences

The Company’s standard revenue transactions are classified into two main categories:

Systems and Coating - which include all bundled products in which Perma-Pipe designs, engineers, and manufactures pre-insulated specialty piping systems, insulates subsea flowline pipe, subsea oil production equipment, and land-lines.

Systems and Coating - which include all bundled products in which PPIH engineers and manufactures pre-insulated specialty piping systems, insulates subsea flowline pipe, subsea oil production equipment, and land-lines.

Additionally, this systems classification includes coating applied to pipes and structures. 

5 unchanged sentences

A breakdown of the Company's revenues by revenue class for the 

three and six months ended July 31, 2022 and 2021  are as follows (in thousands):

Three Months Ended July 31,

Six Months Ended July 31,

three and nine months ended October 31, 2022 and 2021  are as follows (in thousands):

Three Months Ended October 31,

Nine Months Ended October 31,

$ 4,363  

$ 3,340  

$ 11,144  

$ 10,475  

Specialty Piping Systems and Coating

3 unchanged sentences

33,118  

23,952  

Revenue recognized under output method

25 unchanged sentences

The Company anticipates that substantially all costs incurred for uncompleted contracts as of 

July 31, 2022 will be billed and collected within one year.

During the year ended 

January 31, 2021, one of the Company's customers in Qatar made a call on a performance bond held to secure one of the Company's contracts.

The Company believes the customer's claims of non-performance under the contract are invalid and that the customer's actions were themselves a breach of the contract. The Company has engaged local counsel to seek reimbursement as well as additional compensation for lost profits suffered as a result of cancellation of certain work orders under the contract.

The Company has recorded the expense related to the encashment of approximately $ 0.6 million in other (expense)/income in the consolidated statement of operations for the year ended January 31, 2021.

No receivable has been recorded related to the potential reimbursement in the consolidated financial statements as of July 31, 2022.

October 31, 2022 will be billed and collected within one year.

The following table shows the reconciliation of the cost in excess of billings: 

(In thousands)

July 31, 2022

October 31, 2022

January 31, 2022

4 unchanged sentences

12,030  

Earned revenue

18 unchanged sentences

$ 1,032  

Substantially all of the $ 0.8  million contract liabilities balance as of January 31, 2021 

was recognized in revenues during 2021  and substantially all of the $ 1.3  million contract liabilities balance as of January 31, 2022 

is expected to be recognized in revenues during 2022.

Substantially all of the $ 0.8  million contract liabilities balance as of January 31, 2021  was recognized in revenues during 2021  and substantially all of the $ 1.3 million contract liabilities balance as of January 31, 2022  is expected to be recognized in revenues during 2022 .

Unbilled accounts receivable:

The Company has recorded $ 8.0  million and $ 2.7  million of unbilled accounts receivable on the consolidated balance sheets as of July 31, 2022  and January 31, 2022, respectively, from revenues generated by its subsidiaries in the Middle East, North Africa and India.

The Company has recorded $ 8.7  million and $ 2.7  million of unbilled accounts receivable on the consolidated balance sheets as of October 31, 2022 and January 31, 2022 , respectively, from revenues generated by its subsidiaries in the Middle East, North Africa and India.

The Company has fulfilled all performance obligations and has recorded revenue under the respective contracts.

The deliverables under these contracts have been accepted by the customer and await customer to pick up or arrange shipping for the product before billing can be made.

All of the amounts included in unbilled accounts receivable as of July 31, 2022 are expected to be billed before October 31, 2022.

All of the amounts included in unbilled accounts receivable as of 

October 31, 2022  are expected to be billed before January 31, 2023 .

Practical expedients:

5 unchanged sentences

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.

Income earned in the U.A.E.

is not subject to local country income tax.

Income earned in the United Arab Emirates (the "U.A.E.") is not subject to local country income tax.

Additionally, the relative proportion of taxable income earned domestically versus internationally can fluctuate significantly from period to period.

2 unchanged sentences

therefore, actual results could differ materially from projections. 

The Company's worldwide effective tax rate ("ETR") from operations for the three months ended July 31, 2022 and 2021 was 32 %  and 20 %, respectively.

The Company's worldwide ETR was 62 % and 29 % for the six months ended July 31, 2022 and 2021, respectively.

The Company's worldwide effective tax rate ("ETR") from operations for the 

three months ended October 31, 2022 and 2021  was 

40 % and 67 %, respectively.

The Company's worldwide ETR was 

50 % and 

40 % for the 

nine months ended October 31, 2022 and 2021 , respectively.

The change in the ETR is largely due to changes in the mix of income and loss in various jurisdictions.

2 unchanged sentences

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, including withholding taxes. As such, the Company has accrued a liability of $ 0.5  million as of July 31, 2022 related to these taxes.

The earnings from these subsidiaries are subject to tax in their local jurisdiction, including withholding taxes. As such, the Company has accrued a liability of $ 0.6 million as of October 31, 2022 related to these taxes.

The Inflation Reduction Act ("IRA") was signed into law in August 2022. 

The Company has evaluated the provisions of the IRA and does not expect any material impact to our consolidated provision for income taxes.

Note 6 - Impairment of long-lived assets

The Company's assessment of long-lived assets, and other identifiable intangibles is based upon factors that market participants would use in accordance with the accounting guidance for the fair value measurement of assets. At July 31, 2022 , the Company performed a qualitative analysis assessment to determine if it was more likely than not that the fair values of the Company's long-lived assets exceeded their carrying values.

The Company's assessment of long-lived assets, and other identifiable intangibles is based upon factors that market participants would use in accordance with the accounting guidance for the fair value measurement of assets. At October 31, 2022 , the Company performed a qualitative analysis assessment to determine if it was more likely than not that the fair values of the Company's long-lived assets exceeded their carrying values.

The Company assessed three asset groups as part of this analysis:

1 unchanged sentence

The qualitative assessment indicated that it was more likely than not that the fair values of the Company's long-lived assets exceeded their carrying values for all three  asset groups. Therefore, it was determined that there was 

no impairment of the Company's long-lived assets for the three and six months ended July 31, 2022 and 2021 .

During July 2022, severe flooding in the United Arab Emirates negatively impacted the Company's facility in Fujairah.

The Company is currently assessing the damage to the facility, equipment, inventory and the impact of time lost due to business interruption.

As additional information becomes available, the Company will recognize any impact to the financial statements, including any potential impairment to long-lived assets.

no impairment of the Company's long-lived assets for the three and nine months ended October 31, 2022 and 2021 .

During July 2022, flooding in the U.A.E. negatively impacted the Company's facility in Fujairah.

The Company has an insurance policy with a deductible amount of $ 50 thousand. During the three and nine months ended October 31, 2022 , the Company recognized a net loss amount of less than $ 0.1  million i n other (expense)/income in the consolidated statements of operations, inclusive of the write off of damaged inventory and fixed assets and the applicable claim deductible, partially offset by the approved insurance proceeds .

As additional information becomes available, the Company will recognize any additional impact to the financial statements.

The Company expects that any losses will be recovered as a result of its pending insurance claim.

The Company will continue testing for potential impairment at least annually or as otherwise required by applicable accounting standards.

The purchase price of an acquired company is allocated between intangible assets and the net tangible assets of the acquired business with the residual of the purchase price recorded as goodwill.

All identifiable goodwill as of July 31, 2022 and January 31, 2022 was attributable to the purchase of Perma-Pipe Canada, Ltd., which occurred in 2016.

All identifiable goodwill as of October 31, 2022 and January 31, 2022 was attributable to the purchase of Perma-Pipe Canada, Ltd., which occurred in 2016.

(In thousands)

1 unchanged sentence

Foreign exchange change effect  

July 31, 2022  

October 31, 2022  

$ 2,342  

1 unchanged sentence

$ 2,186  

The Company performs an impairment assessment of goodwill annually as of January 31, or more frequently if triggering events occur, based on the estimated fair value of the related reporting unit or intangible asset.

The Company performs an impairment assessment of goodwill annually as of January 31,  or more frequently if triggering events occur, based on the estimated fair value of the related reporting unit or intangible asset.

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants.

At July 31, 2022 , the Company elected to perform a qualitative analysis assessment to determine if it was more likely than not that the fair value of the Company's Canadian reporting unit exceeded its carrying value, including goodwill.

At October 31, 2022 , the Company elected to perform a qualitative analysis assessment to determine if it was more likely than not that the fair value of the Company's Canadian reporting unit exceeded its carrying value, including goodwill.

The qualitative assessment did not  identify any triggering events that would indicate potential impairment of the Company's Canadian reporting unit. Therefore, it was determined that the fair value of the reporting unit exceeded its carrying value, resulting in no impairment for the 

three and six months ended July 31, 2022 and 2021 .

three or nine months ended October 31, 2022 .

The Company will continue testing for potential impairment at least annually or as otherwise required by applicable accounting standards.

12 unchanged sentences

may be granted.

July 31, 2022 the Company had reserved a total of

October 31, 2022 the Company had reserved a total of

 shares for grants and issuances under these incentive stock plans, which includes a reserve for issuances pursuant to unvested or unexercised prior awards.

2 unchanged sentences

The Company recognized the following stock-based compensation expense for the periods presented:

Three Months Ended July 31,

Six Months Ended July 31,

Three Months Ended October 31,

Nine Months Ended October 31,

(In thousands)

2 unchanged sentences

Stock Options

The Company did not grant any stock options during the three or six months ended July 31, 2022 .

The Company did not grant any stock options during the three or nine months ended October 31, 2022 .

The following table summarizes the Company's stock option activity:

(Shares in thousands)

(Options in thousands)

Options  

6 unchanged sentences

Expired or forfeited

Outstanding at July 31, 2022

Options exercisable at July 31, 2022

( 11 )  

There was no vesting, expiration or forfeiture of previously unvested stock options during the si x months ended July 31 , 2022.

As of July 31 , 2022, there were no remaining unvested stock options outstanding, and therefore no unrecognized compensation expense related to unvested stock options.

Outstanding at October 31, 2022

Options exercisable at October 31, 2022

$ 10.62  

There was no vesting, expiration or forfeiture of previously unvested stock options during the nine months ended October 31, 2022 .

As of October 31, 2022 , there were no remaining unvested stock options outstanding, and therefore no unrecognized compensation expense related to unvested stock options.

Restricted stock

The following table summarizes the Company's restricted stock activity for the 

six months ended July 31, 2022 :

nine months ended October 31, 2022 :

(Shares in thousands)

9 unchanged sentences

( 42 )  

Outstanding at July 31, 2022

Outstanding at October 31, 2022

$ 8.55  

$ 2,287  

As of July 31, 2022 , there was $ 1.4  million of unrecognized compensation expense related to unvested restricted stock granted under the plans.

As of October 31, 2022 , there was $ 1.4  million of unrecognized compensation expense related to unvested restricted stock granted under the plans.

That cost is expected to be recognized over a weighted average period of 2.0  years .

Note 8 - Retirement plans

Pension plan termination . 

The defined benefit plan (the "Plan") that covered the hourly rate employees of a non-operating filtration business unit, previously located in Winchester, Virginia, was frozen on June 

30, 2013 per the third Amendment to the Plan dated May 15, 2013.

The accrued benefit of each participant was frozen as of the freeze date, and no further benefits accrued with respect to any service or hours of service after the freeze date.

The benefits were based on fixed amounts multiplied by years of service of participants.

In the third quarter of 2022, the Company’s Board of Directors approved the termination of the Plan.

The Company provided participants of the Plan an option to elect either a lump sum distribution or an annuity.

A group annuity contract was purchased with an insurance company for all participants who did not elect a lump sum distribution.

That insurance company became responsible for administering and paying pension benefit payments effective December 1, 2022.

During the 

three and nine months ended October 31, 2022 , the Company recognized a non-cash pre-tax settlement charge of $ 0.9 million, within other income/(expense) in the consolidated statements of operations in connection with the Plan termination process, which represents the acceleration of deferred charges previously included within accumulated other comprehensive loss and the impact of remeasuring the Plan assets and obligations at termination.

In addition, the Company recorded an income tax benefit of $ 0.1 million for the three and nine months ended October 31, 2022 , to reclassify the tax effects in accumulated other comprehensive loss upon completion of th e termination of the Plan.

The Plan termination did not require a cash outlay by the Company. Upon completion of the pension termination and settlement processes, the Company expects a remaining pension surplus investment balance of approximately $ 0.9 million.

Note 9 - Earnings per share

Three Months Ended July 31,

Six Months Ended July 31,

Three Months Ended October 31,

Nine Months Ended October 31,

(In thousands, except per share data)

8 unchanged sentences

Income per share

$ 0.22  

$ 0.06  

$ 0.33  

$ 0.38  

$ 0.21  

$ 0.06  

$ 0.33  

$ 0.36  

Note 10 - Debt

Debt totaled $ 32.1 million and $ 21.9 million at July 31, 2022  and January 31, 2022 , respectively.

Debt totaled $ 28.0 million and $ 21.9 million at October 31, 2022  and January 31, 2022 , respectively.

Revolving lines - North America . 

9 unchanged sentences

and (iii) for other corporate purposes, including potentially additional stock repurchases.

Borrowings under the Renewed Senior Credit Facility bears interest at a rate equal to an alternate base rate, London Inter-Bank Offered Rate ("LIBOR") or a LIBOR successor rate index, plus, in each case, an applicable margin.

Borrowings under the Renewed Senior Credit Facility bear interest at a rate equal to an alternate base rate, London Inter-Bank Offered Rate ("LIBOR") or a LIBOR successor rate index, plus, in each case, an applicable margin.

The applicable margin is based on a fixed charge coverage ratio ("FCCR") range.

7 unchanged sentences

Further, the North American Loan Parties may not make repurchases of the Company's common stock in excess of $ 3.0 million. 

The Renewed Senior Credit Facility also contains a free cash flow financial covenant (the "FCCR covenant") requiring the North American Loan Parties to achieve a ratio of its EBITDA to the sum of scheduled cash principal payments on indebtedness for borrowed money and interest payments on the advances under the Renewed Senior Credit Facility to be not less than 1.10 to 1.00 for any five consecutive days in which the undrawn availability is less than $ 3.0 million or any day in which the undrawn availability is less than $ 2.0 million.

As of July 31, 2022, the calculated ratio was greater than 1.10 to 1.00.

In order to cure any future breach of the FCCR covenant by the North American Loan Parties, the Company may repatriate cash from any of its foreign subsidiaries that are otherwise not a party to the Renewed Senior Credit Facility in an amount which, when added to the amount of the Company’s Consolidated EBITDA, would result in pro forma compliance with the FCCR covenant.

The Company was in compliance with these covenants as of July 31, 2022.

The Renewed Senior Credit Facility also contains a free cash flow financial covenant (the "FCF covenant") requiring the North American Loan Parties to achieve a ratio of its EBITDA to the sum of scheduled cash principal payments on indebtedness for borrowed money and interest payments on the advances under the Renewed Senior Credit Facility to be not less than 1.10 to 1.00 for any five consecutive days in which the undrawn availability is less than $ 3.0 million or any day in which the undrawn availability is less than $ 2.0 million.

As of October 31, 2022 , the calculated ratio was greater than 1.10 to 1.00.

In order to cure any future breach of the FCF covenant by the North American Loan Parties, the Company may repatriate cash from any of its foreign subsidiaries that are otherwise not a party to the Renewed Senior Credit Facility in an amount which, when added to the amount of the Company’s Consolidated EBITDA, would result in pro forma compliance with the FCF covenant.

The Company was in compliance with these covenants as of October 31, 2022 .

The Renewed Senior Credit Facility contains customary events of default.

2 unchanged sentences

Loans outstanding under the Renewed Senior Credit Facility will bear interest at a rate of 2.00 % per annum in excess of the otherwise applicable rate (i) while a bankruptcy event of default exists or (ii) upon the lender's request, during the continuance of any other event of default.

As of July 31, 2022, 

the Company had borrowed an aggregate of $ 8.6  million at a rate of 6.50 % and had $ 5 .9  million available under the Renewed Senior Credit Facility.

As of October 31, 2022 , the Company had borrowed an aggregate of $ 7.1  million at a rate of 7.25%  and had $ 7.9  million available under the Renewed Senior Credit Facility.

As of January 31, 2022 , the Company had borrowed an aggregate of $ 0.6  million and had $ 8.5  million available under the Renewed Senior Credit Facility.

11 unchanged sentences

In accordance with ASC Topic 842, "Leases", this transaction was recorded as a failed sale and leaseback as the present value of lease payments exceeded substantially all of the fair value of the underlying asset.

The Company utilized an incremental borrowing rate of 8.0 % to determine the finance obligation to record for the amounts received and will continue to depreciate the assets. The current portion of the finance obligation of $ 0.1  million is recognized in current maturities of long-term debt and the long-term portion of $ 9.3  million is recognized in long-term finance obligation on the Company's consolidated balance sheets as of July 31 , 2022.

 The net carrying amount of the financial liability and remaining assets will be zero at the end of the lease term.

The Company utilized an incremental borrowing rate of 8.0 % to determine the finance obligation to record for the amounts received and will continue to depreciate the assets. The current portion of the finance obligation of $ 0.1  million is recognized in current maturities of long-term debt and the long-term portion of $ 9.2  million is recognized in long-term finance obligation on the Company's consolidated balance sheets as of October 31, 2022 . The net carrying amount of the financial liability and remaining assets will be zero at the end of the lease term.

Revolving lines - foreign .

2 unchanged sentences

The Company has a revolving line for 8.0  million U.A.E.

Dirhams (approximately $ 2.2  million at July 31, 2022 ) from a bank in the U.A.E.

The facility has an interest rate of approximately 5.05 % and was originally set to expire in 

Dirhams (approximately $ 2.2  million at October 31, 2022 ) from a bank in the U.A.E.

The facility has an interest rate of approximately 

5.05 % and was originally set to expire in 

November 2020, however, the expiration was extended due to the COVID- 19 pandemic.

1 unchanged sentence

The Company has a revolving line for 17.5  million U.A.E.

Dirhams (approximately $ 4.8  million at July 31, 2022 ) from a bank in the U.A.E.

The facility has an interest rate of approximately 5.78 % and is set to expire in 

Dirhams (approximately $ 4.8  million at October 31, 2022 ) from a bank in the U.A.E.

The facility has an interest rate of approximately 

6.99 % and is set to expire in 

January 2023.

1 unchanged sentence

for 1.0  million U.A.E.

Dirhams (approximately $ 0.3  million at July 31, 2022 ).

Dirhams (approximately $ 0.3  million at October 31, 2022 ).

This credit arrangement is in the form of project financing at rates competitive in the U.A.E.

The line is secured by the contract for a project being financed by the Company's U.A.E.

The facility has an interest rate of approximately 5.78 % and is expected to expire in 

The facility has an interest rate of approximately 

6.99 % and is expected to expire in 

June 2023 in connection with the completion of the project.

The Company has a credit agreement for project financing with a bank in the U.A.E.

for 2.0  million U.A.E.

Dirhams (approximately $ 0.5  million at July 31, 2022 ).

for 2.0  million U.A.E.

Dirhams (approximately $ 0.5  million at October 31, 2022 ).

This credit arrangement is in the form of project financing at rates competitive in the U.A.E.

The line is secured by the contract for a project being financed by the Company's U.A.E.

The facility has an interest rate of approximately 6.53% and is expected to expire in 

The facility has an interest rate of approximately 

6.53 % and is expected to expire in 

May 2024 in connection with the completion of the project.

In June 2021, the Company's Egyptian subsidiary entered into a credit arrangement with a bank in Egypt for a revolving line of 100.0 million Egyptian Pounds (approximately $5.

3  million at July 31, 2022 ).

In June 2021, the Company's Egyptian subsidiary entered into a credit arrangement with a bank in Egypt for a revolving line of 100.0  million Egyptian Pounds (approximately $ 4.1  million at October 31, 2022 ).

This credit arrangement is in the form of project financing at rates competitive in Egypt.

2 unchanged sentences

In December 2021, the Company entered into a credit arrangement for project financing with a bank in Egypt for 28.2  million Egyptian Pounds.

As this project has progressed and the Company has made collections, the facility has decreased to a current amount of 22.7 million Egyptian Pounds (approximatel y $1.

2  mi llion at July 31, 2022).

As this project has progressed and the Company has made collections, the facility has decreased to a current amount of 13.5  million Egyptian Pounds (approximatel y $ 0.6  mi llion at October 31, 2022 ).

This credit arrangement is in the form of project financing at rates competitive in Egypt.

The line is secured by the contract for a project being financed by the Company's Egyptian subsidiary.

The facility has an interest rate of approximately 8.00 % and is expected to expire in November 2022 in connection with the completion of the project.

In March 2022, the Company's Saudi Arabian subsidiary entered into a credit arrangement with a bank in Saudi Arabia for a revolving line of 20.0 million Saudi Riyal (approximately $ 5.3 million at July 31, 2022).

The facil ity has an interest rate of approximately 

8.00 % and was set to expire in November 2022, however, the Company is in the process of extending it in connection with the completion of the project.

In August 2022, the Company's Egyptian subsidiary entered into a credit arrangement with a bank in Egypt for a revolving line of 

100.0 million Egyptian Pounds (approximately $ 4.1  

million at October 31, 2022 ).

This credit arrangement is in the form of project financing at rates competitive in Egypt.

The line is secured by certain assets (such as accounts receivable) of the Company's Egyptian subsidiary.

Among other covenants, the credit arrangement established a maximum leverage ratio allowable, to be tested annually at fiscal year-end. The facility has an interest rate of approximately 

8.00 %  and is set to expire in August 2023 .

In March 2022, the Company's Saudi Arabian subsidiary entered into a credit arrangement with a bank in Saudi Arabia for a revolving line of 

20.0  million Saudi Riyal (approximately $ 5.3  million at 

October 31, 2022 ).

This credit arrangement is in the form of project financing at rates competitive in Saudi Arabia.

The line is secured by certain assets (such as accounts receivable) of the Company's Saudi Arabian subsidiary.

The facility has an interest rate of approximately 6.5 % and is set to expire in April 2023.

The facility has an interest rate of approximately 

7.43 % and is set to expire in April 2023.

These credit arrangements are in the form of overdraft facilities and project financing at rates competitive in the countries in which the Company operates.

3 unchanged sentences

The Company guarantees only a portion of the subsidiaries' debt, including foreign debt.

As of July 31, 2022, the amount of foreign subsidiary debt guaranteed by the Company was approxim ately $ 0.6  million. 

The Company was in compliance with the covenants under the credit arrangements in the U.A.E., Egypt and Saudi Arabia as of July 31, 2022 . On July 31, 2022 , interest rates were based on the Emirates Inter Bank Offered Rate plus 3.0 % to 3.5 % per annum for the U.A.E.

credit arrangements, two  of which have a minimum interest rate of 4.5 % per annum, based on the stated interest rate in the agreement for the Egypt credit arrangement, and based on the Saudi Inter Bank Offered Rate plus 3.5 % for the Saudi Arabia credit arrangement.

Based on these base rates, as of July 31, 2022 , the Company's interest rates ranged from 5.05 % to 8.0 %, with a weighted average rate of 7.21 %, and the Company had facility limits totaling $ 19.6  million under these credit arrangements.

As of July 31, 2022 , 

As of October 31, 2022 , the amount of foreign subsidiary debt guaranteed by the Company was approxim ately $ 0.6  million. 

The Company was in compliance with the covenants under the credit arrangements in the U.A.E., Egypt and Saudi Arabia as of October 31, 2022 . On October 31, 2022 , interest rates were based on the Emirates Inter Bank Offered Rate plus 3.0 % to 3.5 % per annum for the U.A.E.

credit arrangements, two  of which have a minimum interest rate of 4.5 % per annum, based on the stated interest rate in the agreements for the Egypt credit arrangements, and based on the Saudi Inter Bank Offered Rate plus 3.5 % for the Saudi Arabia credit arrangement.

Based on these base rates, as of October 31, 2022 , the Company's interest rates ranged from 

5.05 % to 8.00 %, with a weighted average rate of 7.36 %, and the Company had facility limits totaling $ 21.9  million under these credit arrangements.

As of October 31, 2022 , 

$ 3.2  million o f availability was used to support letters of credit to guarantee amounts committed for inventory purchases and for performance guarantees.

Additionally, as of July 31, 2022 , the Company had borrow ed $ 8.7  million  and had an additional $ 8.2  million of borrowing remaining available under the foreign revolving credit arrangements.

The foreign revolving lines balances as of July 31, 2022 and January 31, 2022 , were included as current maturities of long-term debt in the Company's consolidated balance sheets. 

Additionally, as of October 31, 2022 , the Company had borrow ed $ 6.6  million  and had an additional $ 12.1  million of borrowing remaining available under the foreign revolving credit arrangements.

The foreign revolving lines balances as of October 31, 2022 and January 31, 2022 , were included as current maturities of long-term debt in the Company's consolidated balance sheets. 

On July 

28, 2016, the Company entered into a mortgage agreement secured by the Company's manufacturing facility located in Alberta, Canada that matures on December 

As of July 31, 2022, the remaining balance on the mortgage in Canada is approximately CAD 6.5 million (approximately $ 5.1 million at July 31, 2022). 

The interest rate is variable, and was 6.55 % at July 31, 2022 . Principal payments began in January 2018.

As of October 31, 2022 , the remaining balance on the mortgage in Canada is approximately CAD 6.5  million (approximately $ 4.7  million at October 31, 2022 ). The interest rate is variable, and was 7.30 %  

at October 31, 2022 . Principal payments began in January 2018.

On June 

4 unchanged sentences

In August 2020, the Company entered into a new lease in Abu Dhabi for land upon which the Company intends to build a facility.

The annual payments are initially expected to be approximately 1.2 million U.A.E.

Dirhams (approximately $ 0.3 million at July 31 , 2022 ), inclusive of rent and common charges, with escalation clauses in the agreement. Rent payments were deferred until August 2022 and have now commenced. The lease expires in August 2050. 

In March 2022, the Company served a Notice of Termination to its lessor for a portion of the Company's lease of certain land and buildings in Fujairah in the U.A.E. The termination will take effect in September 2022.

The Company served the Notice of Termination in connection with the Company's intended relocation to a different facility under a new lease in Abu Dhabi.

The annual payments are initially expected to be approximately 1.2  million U.A.E.

Dirhams (approximately $ 0.3  million at October 31, 2022 ), inclusive of rent and common charges, with escalation clauses in the agreement. Rent payments were deferred until August 2022 and have now commenced. The lease expires in August 2050. 

In March 2022, the Company served a Notice of Termination to its lessor for a portion of the Company's lease of certain land and buildings in Fujairah in the U.A.E. The Company served the Notice of Termination in connection with the Company's intended relocation to a different facility under a new lease in Abu Dhabi.

The termination took effect in September 2022 and the Company expects to vacate the space in December 2022.

The Company is required to pay an additional amount equal to three months' rent after the termination to enable the lessor to prepare the assets for lease by another party.

As a result of the termination, the Company has recognized adjustments to the amounts recorded in the consolidated financial statements as of July 31, 2022.

The termination resulted in decreases of $ 0.3 million, $ 4.0 million and $ 3.6 million to operating lease liability short-term, operating lease liability long-term and operating lease right-of-use asset, respectively, in the consolidated balance sheets as of April 30, 2022.

The termination also resulted in a decrease in rent expense of $ 0.8 million i n the consolidated statement of operations for the three months ended April 30, 2022.

As a result of the termination, the Company has recognized adjustments to the amounts recorded in the consolidated financial statements as of October 31, 2022 .

The termination also resulted in a decrease in rent expense of $ 0.8 million in the consolidated statement of operations for the nine months ended October 31, 2022 .

The Company will continue to lease the remaining land and buildings under the Fujairah lease until 2032.

2 unchanged sentences

The interest rates for these finance leases were 8.0 % per annum with monthly principal and interest payments of less than $ 0.1 million.

These leases mature in August 2023. 

In 2017, the Company obtained three finance leases for a total of CAD 1.1 million (approximately $ 0.8 million at the prevailing exchange rates on the transaction dates) to finance vehicle equipment.

The interest rates for these finance leases range from 4.0 % to 7.8 % per annum with monthly principal and interest payments of less than $ 0.1 million.

Two of these leases matured in April 

2021 and new leases have been entered into in May 2021 to replace the matured leases.

The remaining lease matures in September 

These leases mature in August 2023.  

The Company has several significant operating lease agreements, with lease terms of one to thirty  years, which consist of real estate, vehicles and office equipment leases.

3 unchanged sentences

The Company does not have any arrangements where it acts as a lessor, other than one sub-lease arrangement. 

At July 31, 2022 , the Company had total operating lease liabilities of $ 8.1  

million and operating ROU assets of $7.

2  million , which are reflected in the consolidated balance sheets.

At July 31, 2022 , the Company also had total finance lease liabilities of $ 0.3 million included in current maturities of long-term debt and long-term debt less current maturities, and total finance ROU assets of $ 0.6 million which were included in property plant and equipment, net of accumulated depreciation in the consolidated balance sheets.

At October 31, 2022 , the Company had total operating lease liabilities of $ 7.5  

million and operating ROU assets of $ 6.6  million , which are reflected in the consolidated balance sheets.

At October 31, 2022 , the Company also had total finance lease liabilities of $ 0.2  million included in current maturities of long-term debt, and total finance ROU assets of $ 0.5  million which were included in property plant and equipment, net of accumulated depreciation in the consolidated balance sheets.

Supplemental balance sheet information related to leases is as follows (in thousands): 

Operating and Finance leases:

July 31, 2022

October 31, 2022

January 31, 2022

24 unchanged sentences

Total lease costs consist of the following (in thousands): 

Three Months Ended October 31,  

Nine Months Ended October 31,

Consolidated Statements of Operations Classification

Three Months Ended July 31, 2022

Three Months Ended July 31, 2021

Six Months Ended July 31, 2022

Six Months Ended July 31, 2021

Finance Lease Costs

14 unchanged sentences

$ 1,505  

$ 2,509  

( 1 ) Includes variable lease costs, which are immaterial.

Supplemental cash flow information related to leases is as follows (in thousands):

Six Months Ended July 31, 2022

Six Months Ended July 31, 2021

Nine Months Ended October 31,

Cash paid for amounts included in the measurement of lease liabilities:

2 unchanged sentences

Operating cash outflows from operating leases

Six Months Ended July 31, 2022

Six Months Ended July 31, 2021

Nine Months Ended October 31,

ROU Assets obtained in exchange for new lease obligations:

2 unchanged sentences

Weighted-average lease terms and discount rates are as follows: 

July 31, 2022

October 31, 2022

Weighted-average remaining lease terms (in years):

4 unchanged sentences

Operating leases

Maturities of lease liabilities as of July 31, 2022 , are as follows (in thousands):

Maturities of lease liabilities as of October 31, 2022 , are as follows (in thousands):

Operating Leases

Finance Leases

For the six months ended January 31, 2023

$ 1,639  

For the year ended January 31, 2024

For the year ended January 31, 2025

For the year ended January 31, 2026

For the year ended January 31, 2027

For the year ended January 31, 2028

For the three months ending January 31, 2023

For the year ending January 31, 2024

For the year ending January 31, 2025

For the year ending January 31, 2026

For the year ending January 31, 2027

For the year ending January 31, 2028

Total lease payments

2 unchanged sentences

( 7,247 )  

Total lease liabilities at July 31, 2022

Total lease liabilities at October 31, 2022

$ 7,495  

Rent expense on operating leases, which is recorded on straight-line basis, was $ 0.

7  million for the three months ended 

July 31, 2022  and 2021 . 

Rent expense on operating leases, which is recorded on straight-line basis, was $ 0.7  million and $ 0.9 million for the three months ended 

October 31, 2022  and 2021 , respectively.

Note 12  - Restricted cash

Restricted cash held by foreign subsidiaries was $ 1.5  million and $ 1.2 million as of July 31, 2022 and 2021 , respectively, and is related to fixed deposits that also serve as security deposits and guarantees. 

Restricted cash held by foreign subsidiaries was

$ 1.1  million and $

1.7  million as of

October 31, 2022 and

2021 , respectively, and is related to fixed deposits that also serve as security deposits and guarantees. 

(In thousands)

July 31, 2022  

July 31, 2021  

October 31, 2022

October 31, 2021

Cash and cash equivalents

28 unchanged sentences

Note 15 - Treasury stock

The stock repurchase program, which was approved by the Company's Board of Directors on 

October 4, 2021, 

the Company's Board of Directors approved a stock repurchase program, which authorizes the Company to use up to $ 3.0  million for the purchase of its outstanding shares of common stock.

Stock repurchases are permitted to be executed through open market or privately negotiated transactions over the course of 

expired on October 3, 2022.

The repurchase program authorized the Company to use up to $ 3.0  million for the purchase of its outstanding shares of common stock.

Stock repurchases were permitted to be executed through open market or privately negotiated transactions over the course of 

12  months, depending upon current market conditions and other factors.

As of July 31, 2022, the Company has used $ 2.0 million of the $3.0 million authorized to repurchase its outstanding shares of common stock.

The following table sets forth information with respect to repurchases by the Company of its shares of common stock during the three months ended July 31, 2022:

In total, the Company used $ 2.0 million of the $ 3.0 million authorized to repurchase its outstanding shares of common stock under the program.

There were no purchases of shares of the Company's common stock made by or on behalf of the Company during the three months ended October 31, 2022 .

July 26, 2022, the Company retired all treasury stock previously repurchased under the stock repurchase program.

The following table sets forth information with respect to repurchases by the Company of its shares of common stock during the program (In thousands, except per share data) :

Total number of shares purchased

2 unchanged sentences

Approximate dollar value of shares that may yet be purchased under the plans or programs

May 1, 2022 - May 31, 2022

October 1, 2021 - October 31, 2021

$ 8.45  

June 1, 2022 - June 30, 2022

$ 2,505  

November 1, 2021 - November 30, 2021

December 1, 2021 - December 31, 2021

January 1, 2022 - January 31, 2022

July 1, 2022 - July 31, 2022

964,496  

July 26, 2022, the Company retired all treasury stock previously repurchased under this stock repurchase program.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements