What changed in this filing

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Item 1. Financial Statements

2023-06-14 compared with 2022-12-06 · 218 added, 375 removed, 467 unchanged (56% of the section changed)

3 unchanged sentences

(In thousands, except per share data)

Three Months Ended October 31,

Nine Months Ended October 31,

$ 37,903  

$ 35,199  

Three Months Ended April 30,

$ 29,657  

3 unchanged sentences

24,173  

78,063  

76,549  

11,130  

28,065  

22,877  

Operating expenses

General and administrative expenses

16,180  

14,643  

Selling expenses

Total operating expenses

20,043  

18,040  

Income from operations

Interest expense, net

Other (expense)/income

( 948 )  

Loss before income taxes

( 365 )  

Income before income taxes

Income tax expense

$ ( 1,123 )  

$ 2,711  

$ 3,068  

Weighted average common shares outstanding

Earnings per share

$ 0.22  

$ 0.06  

$ 0.33  

$ 0.38  

$ 0.21  

$ 0.06  

Loss per share

$ ( 0.14 )  

3 unchanged sentences

PERMA-PIPE INTERNATIONAL HOLDINGS, INC. 

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

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Unaudited)

(In thousands)

Three Months Ended October 31,

Nine Months Ended October 31,

$ 1,728  

$ 2,711  

$ 3,068  

Other comprehensive (loss)/income

Three Months Ended April 30,

Other comprehensive loss

Foreign currency translation adjustments, net of tax

( 2,735 )  

( 4,122 )  

Minimum pension liability adjustment, net of tax

Other comprehensive (loss)/income

( 1,488 )  

( 2,875 )  

Comprehensive income/(loss)

$ ( 164 )  

$ 2,980  

Comprehensive loss

See accompanying notes to consolidated financial statements.

2 unchanged sentences

(In thousands, except per share data)

October 31, 2022

April 30, 2023

January 31, 2023

5 unchanged sentences

Restricted cash

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

Trade accounts receivable, less allowance for credit losses of $ 676 at April 30, 2023 and $ 612 at January 31, 2023

39,897  

5 unchanged sentences

Unbilled accounts receivable

11,907  

11,634  

Costs and estimated earnings in excess of billings on uncompleted contracts

7 unchanged sentences

Operating lease right-of-use asset

11,213  

Deferred tax assets

29 unchanged sentences

Operating lease liability long-term

11,270  

Other long-term liabilities

4 unchanged sentences

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

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

8,004 issued and outstanding at April 30, 2023 and January 31, 2023

Additional paid-in capital

1 unchanged sentence

62,562  

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

Accumulated deficit

Treasury stock, 3 shares at April 30, 2023 and January 31, 2023

( 26 )  

Retained earnings

Accumulated other comprehensive loss

11 unchanged sentences

Additional Paid-in Capital

Accumulated Deficit

Retained Earnings

Treasury Stock

2 unchanged sentences

Total stockholders' equity at January 31, 2023

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

$ 62,562  

$ 1,617  

$ (26)  

$ (6,449)  

$ 57,784  

( 1,123 )  

Stock-based compensation expense

1 unchanged sentence

Total stockholders' equity at April 30, 2023

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

Repurchase of common stock

Retirement of treasury stock

Stock-based compensation expense

Foreign currency translation adjustment

Total stockholders' equity at July 31, 2022

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

$ 62,791  

$ (26)  

$ (6,886)  

$ 56,453  

Additional Paid-in Capital

4 unchanged sentences

Total stockholders' equity at January 31, 2022

Stock-based compensation expense

Foreign currency translation adjustment

Total stockholders' equity at April 30, 2021

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

1 unchanged sentence

Foreign currency translation adjustment

Total stockholders' equity at July 31, 2021

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

Total stockholders' equity at April 30, 2022

Balances at beginning of year

7 unchanged sentences

(In thousands)

Nine Months Ended October 31,

Three Months Ended April 30,

Operating activities

Adjustments to reconcile net income to net cash flows used in operating activities

Adjustments to reconcile net loss to net cash provided by/(used in) operating activities

Depreciation and amortization

1 unchanged sentence

Stock-based compensation expense

Non-cash pension termination expense

Provision on uncollectible accounts

Loss on disposal of fixed assets

Gain from disposal of fixed assets

Changes in operating assets and liabilities

9 unchanged sentences

Other assets and liabilities

Net cash used in operating activities

Net cash provided by/(used in) operating activities

Investing activities

Capital expenditures

Proceeds from insurance recovery for property and equipment

Proceeds from sales of property and equipment

3 unchanged sentences

Payments of debt on revolving lines

Payments of debt on mortgage

Proceeds from finance obligation, net of issuance costs

Payments of principal on finance obligation

Payments of other debt

Increase/(decrease) in drafts payable

Decrease in drafts payable

Payments on finance lease obligations, net

Repurchase of common stock

Stock options exercised and taxes paid related to restricted shares vested

1 unchanged sentence

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

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

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

Cash, cash equivalents and restricted cash - beginning of period

6 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

October 31, 2022

April 30, 2023

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

10 unchanged sentences

2023 and 

2021 are for the fiscal year ending 

January 31, 2023  and the fiscal year ended 

2022 are for the fiscal year ending January 31, 

2024  and the fiscal year ended 

January 31, 2023 , respectively.

2 unchanged sentences

for discussion of the Company's significant accounting policies.

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 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 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.

During the three months ended April 30, 2023 , the following accounting policy was adopted: 

Current Expected Credit Loss

In June 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No.

2016 - 13, Financial Instruments - Credit Losses (Topic 326 ):

Measurement of Credit Losses on Financial Instruments. The new guidance affects loans, debt securities, trade receivables, net investments in leases, off-balance-sheet credit exposures, reinsurance receivables, and any other financial assets not excluded from the scope that have the contractual right to receive cash.

The amended guidance requires the application of a current expected credit loss (“CECL”) model, which measures credit losses based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts.

This ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022. 

The Company adopted this guidance effective February 1, 2023, which was not material to the consolidated financial statements for the three months ended April 30, 2023 .

Subsequent Events

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. 

The Company has evaluated subsequent events through June 14, 2023, the date the financial statements were issued.

Any material subsequent events that occurred during this time have been properly recognized and/or disclosed in these consolidated financial statements.

Note 2 - Business segment reporting

The Company is engaged in the manufacture and sale of products in one segment:

Piping Systems. The Company engineers, designs, manufactures and sells specialty piping systems, and leak detection systems.

Specialty piping systems include:

The Company's leak detection systems are sold with its piping systems or on a stand-alone basis, to monitor areas where fluid intrusion may contaminate the environment, endanger personal safety, cause a fire hazard, impair essential services or damage equipment or property.

The Company is engaged in the manufacture and sale of products in one reportable segment:

Piping Systems. The Company engineers, manufactures and sells pre-insulated specialty piping systems, and leak detection systems.

Pre-insulated specialty piping systems include:

(i) insulated and jacketed district heating and cooling piping systems for efficient energy distribution from central energy plants to multiple locations, (ii) primary and secondary containment piping systems for transporting chemicals, hazardous fluids and petroleum products, (iii) the coating and/or insulation of oil and gas gathering and transmission pipelines, and (iv) liquid and powder based anti-corrosion coatings applied both to the external and internal surfaces of steel pipe, including shapes like bends, reducers, tees, and other spools/fittings used in pipelines for the transportation of oil and gas products and potable water. The Company's leak detection systems are sold with its piping systems or on a stand-alone basis to monitor areas where fluid intrusion may contaminate the environment, endanger personal safety, cause a fire hazard, impair essential services or damage equipment or property.

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 evaluations of customers' financial condition, including the availability of credit insurance.

Credit is extended based on an evaluation of a customer's financial condition.

In the United States, collateral is not generally required.

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.

The allowance for doubtful accounts is based on specifically identified amounts in customers' accounts, where future collectability is deemed uncertain.

Management exercises judgment in adjusting the allowance as a consequence of known events, such as current economic factors and credit trends.

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 doubtful accounts. 

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.

Nevertheless, the Company has been engaged in ongoing active efforts to collect this outstanding amount.

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.

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 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 , 

In the United Arab Emirates ("U.A.E."), Saudi Arabia, Egypt 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 contract and are stated at amounts due from customers net of any allowance for claims and credit losses. The allowance for credit losses is based on specifically identified amounts in customers' accounts, where future collectability is deemed uncertain.

Management exercises its judgment in adjusting the provision as a consequence of known items, such as current economic factors and credit trends.

Past due trade accounts receivable balances are written off when an amount is deemed uncollectible.

The write-off is recorded against the allowance for credit losses. 

In 2015, the Company completed a project in the Middle East with billings in the aggregate amount of approximately $ 41.9 million.

The system has not yet been commissioned by the customer.

Nevertheless, the Company has settled approximately $ 39.1 million as of April 30, 2023 , with a remaining balance due in the amount of $ 2.7 million, all of which pertains to retention clauses within the agreements with the Company's customer, and which become payable by the customer when this project is fully tested and commissioned.

Of this amount, $ 1.6 million is classified in other  long-term assets on the Company's consolidated balance sheets.

The Company has been engaged in ongoing active efforts to collect this outstanding amount.

The Company continues to engage with the customer to ensure full payment of open balances, and during June 

2022  received a partial payment to settle $ 0.9 million of the customer's outstanding balances.

Further, the Company has been engaged by the customer to perform additional work in 2022 and 2023  under customary trade terms that supports the continued cooperation between the Company and the customer.

As a result, the Company did not reserve any allowance against the remaining outstanding balances as of April 30, 2023 .

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 April 30, 2023 , 

one  customer accounted for 

1 unchanged sentence

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 , 

10%  of the Company’s consolidated net sales. 

April 30, 2023 and January 31, 2023 , 

one  customer accounted for 16.3 % and 

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

Note 4 - Revenue recognition 

The Company accounts for its revenues under ASC Topic 606, "Revenue from Contracts with Customers" ("Topic 606" ).

The Company accounts for its revenues under ASC 606, Revenue from Contracts with Customers .

Revenue from contracts with customers:

1 unchanged sentence

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

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. 

Systems and Coating - which include all bundled products in which PPIH engineers and manufactures pre-insulated specialty piping systems, provides insulation and anti-corrosion coatings to pipes used in land-lines and subsea flowlines, and to subsea oil production equipment. 

Products - which include cables, leak detection products, heat trace products, material/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 and coating systems revenue over time as the manufacturing process progresses because one of the following conditions exist:

the customer owns the material that is being insulated or coated, so the customer controls the asset and thus the work-in-process;

the customer controls the work-in-process due to the custom nature of the pre-insulated, fabricated system being manufactured as evidenced by the Company’s right to payment for work performed to date plus seller’s profit margin for products that have no alternative use for the Company.

the customer owns the material that is being coated, so the customer controls the asset and thus the work-in-process;

the customer controls the work-in-process due to the custom nature of the pre-insulated, fabricated system being manufactured as evidenced by the Company’s right to payment for work performed to date plus profit margin for products that have no alternative use to the Company.

 Products revenue is recognized when goods are shipped or services are performed (ASC 606 - 10 - 25 - 30 ).

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

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  

three months ended April 30, 2023  and 2022  are as follows (in thousands):

Three Months Ended April 30,

$ 2,842  

4 unchanged sentences

10,617  

33,118  

Revenue recognized under output method

3 unchanged sentences

$ 31,222  

$ 37,903  

$ 35,199  

$ 106,128  

$ 99,426  

The input method, as noted in ASC 606 - 10 - 55 - 20, is used by the U.S.

The input method as noted in ASC 606 - 10 - 55 - 20 is used by certain U.S.

operating entities to measure revenue by the costs incurred to date relative to the estimated costs to satisfy the contract over time.

Generally, these contracts are considered a single performance obligation satisfied over time and due to the custom nature of the goods and services, the input method is the most faithful depiction of the Company’s performance as it measures the value of the goods and services transferred to the customer.

Generally, these contracts are considered a single performance obligation satisfied over time and due to the custom nature of the goods and services, the "over time" method is the most faithful depiction of the Company’s performance as it measures the value of the goods and services transferred to the customer.

Costs include all material, labor, and direct costs incurred to satisfy the performance obligations of the contract.

Revenue recognition begins when project costs are incurred. 

Revenue recognition begins when projects costs are incurred.

The output method as noted in ASC 606 - 10 - 55 - 17 is used by all other operating entities to measure revenue by the direct measurement of the outputs produced relative to the remaining goods promised under the contract.

2 unchanged sentences

Some of the Company’s operating entities invoice and collect milestones or other contractual obligations prior to the transfer of goods and services, but do 

not recognize revenue until the performance obligations are satisfied under the methods discussed above. 

Contract modifications that occur prior to the start of the manufacturing process will supersede the original contract and revenue is recognized using the modified contract value.

Contract modifications that occur during the manufacturing process (changes in scope of work, job performance, material costs, and/or final contract settlements) are recognized in the period in which the revisions are known.

Provisions for losses on uncompleted contracts are made in contract liabilities account in the period such losses are identified.

Provisions are made for estimated losses on uncompleted contracts in the contract liabilities account in the period in which such losses are determined.

Contract assets and liabilities

2 unchanged sentences

Both customer billings and the satisfaction (or partial satisfaction) of the performance obligation(s) occur throughout the manufacturing process and impact the period end balances in these accounts.

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

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

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

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

(In thousands)

October 31, 2022

April 30, 2023

January 31, 2023

3 unchanged sentences

Estimated earnings

12,030  

Earned revenue

4 unchanged sentences

26,329  

Costs in excess of billings, net

(Billings in excess of cost)/costs in excess of billings, net

$ ( 475 )  

8 unchanged sentences

( 3,449 )  

Costs in excess of billings, net

(Billings in excess of cost)/costs in excess of billings, net

$ ( 475 )  

$ 1,383  

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 .

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

April 30, 2023 will be billed and collected within one year and that substantially all billings made for uncompleted contracts as of April 30, 2023 will be billed and collected within one year. 

Unbilled accounts receivable:

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 recorded $ 11.9  million and $ 11.6  million of unbilled accounts receivable on the consolidated balance sheet s as of April 30, 2023 and January 31, 2023 , res pectively, 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 

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

The deliverables under these contracts have been accepted by the customer and billing will be made once the customer takes possession of or arranges shipping for the products.

The Company anticipates that substantially all of the amounts included in unbilled accounts receivable as of 

April 30, 2023  will be billed within one year.

Practical expedients:

Costs to obtain a contract are not considered project costs as they are not usually incremental, nor does job duration span more than one year.

The Company applies the practical expedient for these types of costs and as such are expensed in the period incurred.

As the Company's contracts are less than one year, the Company has applied the practical expedient regarding disclosure of the aggregate amount and future timing of performance obligations that are unsatisfied or partially satisfied as of the end of the reporting period.

Costs to obtain a contract are not considered to be incremental or material, and project duration generally does not span more than one year.

Accordingly, the Company applies the practical expedient for these types of costs and as such are expensed in the period incurred.

As the Company's contracts are generally less than one year, the Company has applied the practical expedient regarding disclosure of the aggregate amount and future timing of performance obligations that are unsatisfied or partially satisfied as of the end of the reporting period.

Note 5 - Income taxes 

1 unchanged sentence

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

Income earned in 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 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.

The Company's worldwide effective tax rates ("ETR") for the 

three months ended April 30, 2023 and 2022  were ( 207.7 %) and ( 455.9 %), respectively.

The change in the ETR is due to the inability to recognize tax benefits on losses in the United States due to a full valuation allowance and changes in the mix of income and loss in various jurisdictions.

The Company expects that future distributions from foreign subsidiaries will not be subject to incremental U.S.

1 unchanged sentence

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 $ 0.6 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.

The earnings from these subsidiaries are subject to tax in their local jurisdiction, and withholding taxes in these jurisdictions are considered. The Company's liability was $ 0.6 million as of April 30, 2023 related to these 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 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'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 April 30, 2023 , 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 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.

no impairment of the Company's long-lived assets for the three months ended April 30, 2023 .

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 October 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 April 30, 2023 and January 31, 2023 was attributable to the purchase of the remaining 50 % interest in Perma-Pipe Canada, Ltd., which occurred in 2016.

(In thousands)

1 unchanged sentence

Foreign exchange change effect  

October 31, 2022  

April 30, 2023  

$ 2,227  

3 unchanged sentences

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 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.

At April 30, 2023 , 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 or nine months ended October 31, 2022 .

three months ended April 30, 2023 .

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

Note 7 - Stock-based compensation 

The Company's 2021 Omnibus Stock Incentive Plan dated May 26, 2021 

was approved by the Company's stockholders in May 2021 ( "2021 Plan").

The 2021 Plan will expire in May 2024.

The 2021 Plan authorizes awards to officers, employees, consultants and independent directors.

Grants were made to the Company's employees, officers and independent directors under the 2021 Plan, as described below.

The Company’s 2017 Omnibus Stock Incentive Plan dated June 13, 2017, as amended, which the Company's stockholders approved in June 2017 ( "2017 Plan"), expired in June 2020.

While the 2017 Plan provided 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, the Company issued only restricted shares and restricted stock units under the 2017 Plan.

The 2017 Plan authorized awards to officers, employees, consultants and independent directors.

The Company has prior incentive plans under which previously granted awards remain outstanding, including the

2017 Plan, but under which

no new awards

may be granted.

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.

The Company has prior incentive plans under which previously granted awards remain outstanding but under which no new awards may be granted.

At April 30, 2023 the Company had reserved a total of 307,446  shares for grants and issuances under these incentive stock plans, which includes a reserve for issuances pursuant to unvested or unexercised prior awards.

The Company's prior incentive plans provided 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.

The prior incentive plans authorized awards to officers, employees, consultants, and independent directors.

The Company's 

2021  Omnibus Stock Incentive Plan dated 

May 26, 2021 

was approved by the Company's stockholders in 

May 2021 ( "2021  Plan").

2021  Plan will expire in 

May 2024. 

2021  Plan authorizes awards to officers, employees, consultants and independent directors.

Grants were made to the Company's employees, officers and independent directors under the 

2021  Plan, as described below.

Stock-based compensation expense

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

Three Months Ended October 31,

Nine Months Ended October 31,

Three Months Ended April 30,

(In thousands)

Restricted stock-based compensation expense

Total stock-based compensation expense

Stock Options

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

The Company did not grant any stock options during the three months ended April 30, 2023 .

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

(Options in thousands)

(Shares in thousands)

Options  

Weighted Average Exercise Price  

Weighted Average Remaining Contractual Term  

Weighted Average Exercise Price (Per share)  

Weighted Average Remaining Contractual Term (In years)  

Aggregate Intrinsic Value  

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$ 10.85  

( 14 )  

Expired or forfeited

( 11 )  

Outstanding at October 31, 2022

Options exercisable at October 31, 2022

Outstanding at April 30, 2023

Options exercisable at April 30, 2023

$ 10.85  

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.

There was no vesting, expiration or forfeiture of previously unvested stock options during the three months ended April 30, 2023 .

As of April 30, 2023 , 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 

nine months ended October 31, 2022 :

three months ended April 30, 2023 :

(Shares in thousands)

Restricted Shares  

Weighted Average Price  

Weighted Average Price (Per share)  

Aggregate Intrinsic Value  

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$ 2,652  

Vested and issued

( 147 )  

Forfeited or retired for taxes

( 42 )  

Outstanding at October 31, 2022

Outstanding at April 30, 2023

$ 8.56  

$ 2,288  

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

As of April 30, 2023 , there was $ 0.9  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 October 31,

Nine Months Ended October 31,

Note 8  - Loss per share

Three Months Ended April 30,

(In thousands, except per share data)

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$ ( 1,123 )  

$ 2,711  

$ 3,068  

Income per share

$ 0.22  

$ 0.06  

$ 0.33  

$ 0.38  

$ 0.21  

$ 0.06  

Loss per share

$ ( 0.14 )  

Note 10 - Debt

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

Note 9  - Debt

Debt totaled $ 27.0 million and $ 24.3 million at April 30, 2023  and January 31, 2023 , respectively.

Revolving lines - North America . 

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

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.

Borrowings under the Renewed Senior Credit Facility bear interest at a rate equal to an alternate base rate or the Secured Overnight Financing Rate ("SOFR"), plus, in each case, an applicable margin.

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

Interest on alternate base rate borrowings is the alternate base rate (as defined in the Renewed Senior Credit Facility) plus an applicable margin ranging from 1.00 % to 1.50 %, based on the FCCR in the most recently reported period.

Interest on LIBOR or LIBOR successor rate borrowings is the LIBOR rate (as defined in the Renewed Senior Credit Facility) plus an applicable margin ranging from 2.00 % to 2.50 %, based on the FCCR in the most recently reported period. Additionally, the Borrowers pay a 0.25 % per annum facility fee on the unused portion of the Renewed Senior Credit Facility. 

Interest on SOFR borrowings is the SOFR rate (as defined in the Renewed Senior Credit Facility) plus an applicable margin ranging from 2.00 % to 2.50 %, based on the FCCR in the most recently reported period, as well as an additional SOFR adjustment ranging from 0.10 % to 0.25 %, based on the term of the interest period. Additionally, the Borrowers pay a 0.25 % per annum facility fee on the unused portion of the Renewed Senior Credit Facility. 

Subject to certain exceptions, borrowings under the Renewed Senior Credit Facility are secured by substantially all of the North American Loan Parties’

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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 .

As of April 30, 2023 , 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 North American Loan Parties' EBITDA (as defined in the Renewed Senior Credit Facility), would result in pro forma compliance with the FCF covenant.

The Company was in compliance with these covenants as of 

April 30, 2023 .

The Renewed Senior Credit Facility contains customary events of default.

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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 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 April 30, 2023 , the Company had borrowed an aggregate of $ 4.1  million at a rate of 9.0 %  and had $ 7.5  million available under the Renewed Senior Credit Facility.

As of January 31, 2023 , the Company had borrowed an aggregate of $ 4.4  million and had $ 9.9  million available under the Renewed Senior Credit Facility.

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five years for each such option.

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 $ 9.2  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.

In accordance with ASC 

842, Leases , this transaction was recorded as a failed sale and leaseback as the present value of lease payments exceeded substantially the fair value of the underlying assets.

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 April 30, 2023 . The net carrying amount of the financial liability and remaining assets will be zero at the end of the lease term.

Revolving lines - foreign .

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, Egypt and Saudi Arabia as discussed further below.

United Arab Emirates

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

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.

The facility was renewed in July 2022 and is now set to expire in July 2025.

Dirhams (approximately $ 2.2  million at April 30, 2023 ) from a bank in the U.A.E.

As of April 30, 2023  the facility has an interest rate of approximately 

8.4 % and is set to expire in May 2024.

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

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.

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

for 1.0  million U.A.E.

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 

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.

Dirhams (approximately $ 4.8  million at April 30, 2023 ) from a bank in the U.A.E.

As of April 30, 2023  the facility has an interest rate of approximately 

8.4 % and is set to expire in May 2024.

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

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 

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 $ 4.1  million at October 31, 2022 ).

Dirhams (approximately $ 0.5  million at April 30, 2023 ).

As of April 30, 2023  the facility has an interest rate of approximately 

8.7 % and is expected to expire in July 2023.

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 $ 3.2  million at April 30, 2023 ).

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 and restricted the Company's Egyptian subsidiary's ability to undertake any additional debt. As of April 30, 2023  the facility has an interest rate of approximately 8.0 %  and expired in June 2022 , however the Company has started the renewal process for this credit arrangement. The Company is in regular communication with the bank throughout the renewal process and the facility has continued without interruption or penalty.

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 13.5  million Egyptian Pounds (approximatel y $ 0.6  mi llion at October 31, 2022 ).

As this project has progressed and the Company has made collections, the facility has decreased to a current amount of 8.9  million Egyptian Pounds (approximatel y $ 0.3  mi llion at April 30, 2023 ).

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 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.

The facility has an interest rate of approximately 

21.1 % and, as of  

November 2022, is no longer available for borrowings by the Company.

The facility will expire in connection with final customer balance collections and 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 $ 3.2  

million at October 31, 2022 ).

million at April 30, 2023 ).

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 

Among other covenants, the credit arrangement established a maximum leverage ratio allowable, to be tested annually at fiscal year-end. As of April 30, 2023  the facility has an interest rate of approximately 

8.0 %  and is set to expire in August 2023 .

1 unchanged sentence

25.0  million Saudi Riyal (approximately $ 6.7  million at 

October 31, 2022 ).

April 30, 2023 ).

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 

7.43 % and is set to expire in April 2023.

The facility was set to expire in April 2023.

Upon renewal of the credit arrangement in May 2023, the line was increased to 37.0 million Saudi Riyal (approximately $ 9.9  million at April 30, 2023 ).

April 30, 2023 ), the facility has an interest rate of approximately 

9.2 % and is set to expire in May 2024.

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

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

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 

As of April 30, 2023 , the amount of foreign subsidiary debt guaranteed by the Company was approxim ately $ 1.2  million. 

The Company was in compliance with the covenants under the credit arrangements in the U.A.E., Egypt and Saudi Arabia as of April 30, 2023 , with the exception of those arrangements that have expired and have not yet been renewed. Although certain of the arrangements have expired and the borrowings could be required to be repaid immediately by the banks, the Company is in regular communication with the respective banks throughout the renewal process and all of the arrangements have continued without interruption or penalty.

On April 30, 2023 , interest rates were based on (i) 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;

(ii) either the Central Bank of Egypt corporate loan rate plus 3.5 % per annum or the stated interest rate in the agreements for the Egypt credit arrangements; and (iii) the Saudi Inter Bank Offered Rate plus 3.5 % for the Saudi Arabia credit arrangement.

Based on these base rates, as of April 30, 2023 , the Company's interest rates ranged from 

8.0 % to 21.1 %, with a weighted average rate of 11.5 %, and the Company had facility limits totaling $ 21.2  million under these credit arrangements.

As of October 31, 2022 , 

As of April 30, 2023 , 

$ 2.7  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 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. 

Additionally, as of April 30, 2023 , the Company had borrow ed $ 8.9  million  and had an additional $ 10.0  million of borrowing remaining available under the foreign revolving credit arrangements.

The foreign revolving lines balances as of April 30, 2023 and January 31, 2023 , 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 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 

19, 2012, the Company borrowed $ 1.8 million under a mortgage note secured by its manufacturing facility in Lebanon, Tennessee.

The proceeds were used for repayment of amounts borrowed. O n April 14, 2021, the Company entered into the Purchase and Sale Agreement discussed above. Concurrently with the sale, the Company paid off the approximately $ 0.9 million remaining on the mortgage note on the Property to its lender.

Note 11 - Leases

As of April 30, 2023 , the remaining balance on the mortgage in Canada is approximately CAD 6.3  million (approximately $ 4.6  million at April 30, 2023 ). The interest rate is variable, and was 8.6 %  

at April 30, 2023 . Principal payments began in January 2018.

Note 10  - Leases

Operating Leases.

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 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 October 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 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.

The annual payments were initially approximately 1.2  million U.A.E.

Dirhams (approximately $ 0.8  million at April 30, 2023 ), 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 and December 2022, the Company served Notices of Termination to its lessor for the Company's lease of land and buildings in Fujairah in the U.A.E. The Company served the Notices of Termination in connection with the Company's intended relocation to a different facility in Abu Dhabi.

The Company vacated portions of the leased space in December 2022 and is expected to vacate the remaining space in 2023.

The first Notice of Termination required that the Company pay an additional amount equal to three months' rent after that 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 April 30, 2023 .

The termination also resulted in a decrease in rent expense of $ 1.1  million in the consolidated statement of operations for the year ended January 31, 2023. 

Finance Leases.

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

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

At April 30, 2023 , the Company had total operating lease liabilities of $ 5  

million and operating ROU assets of $ 4.3  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.

At April 30, 2023 , the Company also had total finance lease liabilities of $ 0.1  million included in current maturities of long-term debt, and total finance ROU assets of $ 0.4  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:

October 31, 2022

April 30, 2023

January 31, 2023

2 unchanged sentences

$ 1,161  

$ 1,221  

Accumulated depreciation and amortization

3 unchanged sentences

Finance lease liability short-term

Finance lease liability long-term

Total finance lease liabilities

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Operating lease liability short-term

$ 1,108  

$ 1,496  

Operating lease liability long-term

11,270  

Total operating lease liabilities

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

Three Months Ended October 31,  

Nine Months Ended October 31,

Three Months Ended April 30,

Consolidated Statements of Operations Classification

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( 20 )  

( 61 )  

Total Lease costs

$ 1,505  

$ 2,509  

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

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

Nine Months Ended October 31,

Three Months Ended April 30,

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

2 unchanged sentences

Operating cash outflows from operating leases

Nine Months Ended October 31,

ROU Assets obtained in exchange for new lease obligations:

Finance leases liabilities

Operating leases liabilities

Three Months Ended April 30,

ROU Assets obtained in exchange for new lease obligations:

Operating leases liabilities

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

October 31, 2022

April 30, 2023

Weighted-average remaining lease terms (in years):

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Operating leases

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

Maturities of lease liabilities as of April 30, 2023 , are as follows (in thousands):

Operating Leases

Finance Leases

For the three months ending January 31, 2023

For the nine months ending January 31, 2024

$ 1,108  

For the year ending January 31, 2025

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( 5,649 )  

Total lease liabilities at October 31, 2022

Total lease liabilities at April 30, 2023

$ 5,033  

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.

April 30, 2023  and 2022 , respectively.

Note 11  - Restricted cash

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. 

Restricted cash held by foreign subsidiaries is related to fixed deposits that also serve as security deposits and guarantees. 

(In thousands)

October 31, 2022

October 31, 2021

April 30, 2023

January 31, 2023

Cash and cash equivalents

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Note 13  - Recent accounting pronouncements

In March 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2020 - 04,  

Reference Rate Reform (Topic 848 ), which provides guidance designed to provide relief from the accounting analysis and impacts that may otherwise be required for modifications to agreements necessitated by the scheduled discontinuation of LIBOR on December 31, 2021.

It also provides optional expedients to enable companies to continue to apply hedge accounting to certain hedging relationships impacted by reference rate reform.

The ASU provides the option to account for and present a modification that meets the scope of the standard as an event that does not require contract remeasurement at the modification date or reassessment of a previous accounting determination required under the relevant topic or subtopic.

This ASU is effective for all entities;

however, application of the guidance is optional, is only available in certain situations and is only available for companies to apply from March 12, 2020 until December 31, 2022.

In April 2022, 

the FASB proposed to extend the effective date through December 31, 2024;

however, a final ruling has not been issued. 

The Company's Renewed Senior Credit Facility, which matures on September 20, 2026, 

bears interest at a rate equal to an alternate base rate, LIBOR or a LIBOR successor rate index, plus, in each case, an applicable margin. Based on the inclusion of the LIBOR successor rate index in the Renewed Senior Credit Facility, the Company does not expect a material impact from the adoption of this standard on the financial statements of the Company.

In June 2016, the FASB issued ASU No.

2016 - 13, Financial Instruments-Credit Losses (Topic 326 ):

Measurement of Credit Losses on Financial Instruments. The guidance affects loans, debt securities, trade receivables, net investments in leases, off-balance-sheet credit exposures, reinsurance receivables, and any other financial assets not excluded from the scope that have the contractual right to receive cash.

This ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019, with early adoption permitted.

A recently adopted amendment has delayed the effective date until fiscal years beginning after December 15, 2022. 

The Company is currently evaluating this standard and the impact to the financial statements of the Company. 

The Company evaluated other recent accounting pronouncements and does not expect them to have a material impact on its consolidated financial statements or related disclosures.

Note 15 - Treasury stock

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

October 4, 2021, 

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.

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

Average price paid per share

Total number of shares purchased as part of publicly announced plans or programs

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

October 1, 2021 - October 31, 2021

$ 8.45  

$ 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

The Company evaluated recent accounting pronouncements and does not expect any to have a material impact on its consolidated financial statements or related disclosures.

Note 14  - Treasury stock

On December 7, 2022 the Board of Directors authorized the use of $ 1.0 million remaining under the share repurchase program previously approved on October 4, 2021 that expired on October 3, 2022.

Share repurchases may be executed through open market or in privately negotiated transactions over the course of the 12 months following the Board of Directors authorization. The repurchase program approved on October 4, 2021 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, depending upon current market conditions and other factors.

During the three months ended 

April 30, 2023 , the Company has not made any repurchases of its outstanding shares of common stock.

July 26, 2022, the Company retired 239,168 shares of 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 a decrease to retained earnings in accordance with ASC 505 - 30, Equity - Treasury Stock.

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