What changed in this filing

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Item 1. Financial Statements

2023-12-08 compared with 2023-09-14 · 258 added, 181 removed, 563 unchanged (44% 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,

$ 45,690  

$ 37,903  

$ 110,489  

$ 106,128  

Cost of sales

32,506  

26,773  

81,065  

78,063  

13,184  

11,130  

29,424  

28,065  

Operating expenses

General and administrative expenses

16,417  

16,180  

Selling expenses

Total operating expenses

20,618  

20,043  

Income from operations

Interest expense

Other income (expense)

Other expense

( 502 )  

( 948 )  

( 350 )  

Income before income taxes

Income tax expense

Net income attributable to non-controlling interests

Net income (loss) attributable to common stock

Net income attributable to non-controlling interest

Net income attributable to common stock

$ 1,935  

$ 1,728  

$ 1,834  

$ 2,711  

Weighted average common shares outstanding

Earnings (loss) per share attributable to common stock

Earnings per share attributable to common stock

$ 0.24  

$ 0.22  

$ 0.23  

$ 0.33  

$ 0.24  

$ 0.21  

$ 0.23  

$ 0.33  

See accompanying notes to consolidated financial statements.

3 unchanged sentences

 (Unaudited)

Three Months Ended July 31,

Six Months Ended July 31,

Three Months Ended October 31,

Nine Months Ended October 31,

Other comprehensive income (loss)

Foreign currency translation adjustments, net of tax

Minimum pension liability adjustment, net of tax

Comprehensive income (loss)

Comprehensive income attributable to non-controlling interests

Total comprehensive income (loss) attributable to common stock

Total comprehensive (loss) income attributable to common stock

See accompanying notes to consolidated financial statements.

2 unchanged sentences

(In thousands, except per share data)

July 31, 2023

October 31, 2023

January 31, 2023

5 unchanged sentences

Restricted cash

Trade accounts receivable, less allowance for credit losses of $ 620 at July 31, 2023 and $ 612 at January 31, 2023

Trade accounts receivable, less allowance for credit losses of $ 574 at October 31, 2023 and $ 612 at January 31, 2023

47,095  

32 unchanged sentences

Customers' deposits

Outside commission liability

Operating lease liability short-term

11 unchanged sentences

Operating lease liability long-term

Related party loan

Other long-term liabilities

2 unchanged sentences

21,392  

Non-controlling interests

Non-controlling interest

Stockholders' equity

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

8,024 issued and outstanding at July 31, 2023 and 8,004 at January 31, 2023

7,951 issued and outstanding at October 31, 2023 and 8,004 at January 31, 2023

Additional paid-in capital

1 unchanged sentence

62,562  

Treasury stock, 37 shares at July 31, 2023 and 3 shares at January 31, 2023

Treasury stock, 109 shares at October 31, 2023 and 3 shares at January 31, 2023

( 967 )  

18 unchanged sentences

Total stockholders' equity at January 31, 2023

$ 62,562  

$ 1,617  

$ ( 26 )  

$ ( 6,449 )  

$ 57,784  

( 1,123 )  

Stock-based compensation expense

Foreign currency translation adjustment

( 437 )  

Total stockholders' equity at April 30, 2023

$ 62,791  

$ ( 26 )  

$ ( 6,886 )  

$ 56,453  

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

( 274 )  

Repurchase of common stock

( 312 )  

Stock-based compensation expense

1 unchanged sentence

Total stockholders' equity at July 31, 2023

$ 62,762  

$ 1,516  

$ ( 338 )  

$ ( 6,547 )  

$ 57,474  

Repurchase of common stock

( 629 )  

Stock-based compensation expense

Foreign currency translation adjustment

( 2,035 )  

Total stockholders' equity at October 31, 2023

$ 62,991  

$ 3,451  

$ ( 967 )  

$ ( 8,582 )  

$ 56,973  

Additional Paid-in Capital

Accumulated Deficit

Treasury Stock

Accumulated Other Comprehensive Loss

11 unchanged sentences

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

Balances at beginning of year

Treasury stock purchased

Treasury stock retired

Shares issued, net of shares used for tax withholding

5 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

Gain (loss) from disposal of fixed assets

(Loss) gain from disposal of fixed assets

Changes in operating assets and liabilities

4 unchanged sentences

Customers' deposits

Income taxes receivable and payable

Income taxes payable

Prepaid expenses and other current assets

12 unchanged sentences

Payments of other debt

(Decrease) increase in drafts payable

Decrease in drafts payable

Payments on finance lease obligations

9 unchanged sentences

Cash income taxes paid

Fixed assets acquired under finance leases - non-cash

Fixed assets acquired from non affiliates - non-cash

2 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

July 31, 2023

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

October 31, 2023

(In thousands, except per share data, or unless otherwise specified)

Note 1 - Basis of presentation

1 unchanged sentence

These adjustments consist of normal recurring adjustments.

Information and footnote disclosures have been omitted pursuant to Securities and Exchange Commission ("SEC") rules and regulations.

Certain information and footnote disclosures have been omitted pursuant to Securities and Exchange Commission ("SEC") rules and regulations.

The consolidated balance sheet as of 

11 unchanged sentences

for discussion of the Company's significant accounting policies.

During the six months ended July 31, 2023 , the following accounting policy was adopted: 

During the nine months ended October 31, 2023 , the following accounting policy was adopted: 

Current Expected Credit Loss

4 unchanged sentences

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 six months ended July 31, 2023 .

The Company adopted this guidance effective February 1, 2023, which was not material to the consolidated financial statements for the nine months ended October 31, 2023 .

Subsequent Events

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

The Company has evaluated subsequent events through December 8, 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.

8 unchanged sentences

In the United States, collateral is not generally required.

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

In the United Arab Emirates ("U.A.E."), Saudi Arabia, Egypt and India, letters of credit are obtained for substantially all 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.

4 unchanged sentences

The system has not yet been commissioned by the customer.

Nevertheless, the Company has settled approximately $ 39.1 million as of July 31, 2023 , with a remaining balance due in the amount of $ 2.8 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.

Nevertheless, the Company has settled approximately $ 39.5  million as of October 31, 2023 , with a remaining balance due in the amount of $ 2.4 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.

Regardless of the contractual due date for payment, the Company has been actively engaged in ongoing efforts to collect this outstanding balance.

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

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

The Company continues to engage with the customer to ensure full payment of the open balances.

In September 2023 and June 

2022, a partial payment was received to settle $ 0.4  million and $ 0.9  million of the customer's outstanding balances, respectively.

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 July 31, 2023 .

As a result, the Company did not reserve any allowance against the remaining outstanding balances as of October 31, 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 uncollected amounts.

For the three months ended July 31, 2023 , 

For the three months ended October 31, 2023 , 

one  customer accounted for 

1 unchanged sentence

no  individual customer accounted for greater than 

10%  of the Company’s consolidated net sales. 

July 31, 2023 and January 31, 2023 , 

one  customer accounted for 14.2 %  and 

10%  of the Company’s consolidated net sales.

For the 

nine months ended October 31, 2023 and 2022 , 

no  individual customer accounted for greater than 

10%  of the Company's consolidated net sales. 

October 31, 2023 and January 31, 2023 , 

two  customers accounted for 24 %  of the Company's accounts receivable, and one customer accounted for 

12 %  of the Company's accounts receivable, respectively.

4 unchanged sentences

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

Systems and Coating - Includes 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. 

Systems and Coating - Includes all bundled products in which the Company engineers and manufactures pre-insulated specialty piping systems mainly relating to the district heating and cooling and oil & gas markets.

Products - Includes 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.

1 unchanged sentence

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 six months ended July 31, 2023 and 2022  are as follows (in thousands):

Three Months Ended July 31,

Six Months Ended July 31,

three and nine months ended October 31, 2023 and 2022  are as follows:

Three Months Ended October 31,

Nine Months Ended October 31,

$ 2,553  

24 unchanged sentences

Depending on the conditions of the contract, revenue may be recognized based on units produced, inspected and held by the Company prior to shipment or on units produced, inspected and shipped. 

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 

Some of the Company’s operating entities invoice and collect milestone payments or receive 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.

3 unchanged sentences

Contract assets and liabilities

Contract assets represent revenue recognized in excess of amounts billed for contract work in progress for which the Company has a valid contract and an enforceable right to payment for work completed.

Contract liabilities represent billings in excess of costs for contract work in progress for which the Company has a valid contract and an enforceable right to payment for work completed.

Contract assets represent revenue recognized in excess of amounts billed for work in progress for which the Company has a valid contract and an enforceable right to payment for work completed.

Contract liabilities represent billings in excess of costs for work in progress for which the Company has a valid contract and an enforceable right to payment for work completed.

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 following table shows the reconciliation of costs in excess of billings and billings in excess of costs: 

(In thousands)

July 31, 2023

October 31, 2023

January 31, 2023

10 unchanged sentences

26,329  

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

Costs in excess of billings, net

$ 1,558  

8 unchanged sentences

( 904 )  

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

Costs in excess of billings, net

$ 1,558  

1 unchanged sentence

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

July 31, 2023  will be billed and collected within one year, and all billings on uncompleted contracts as of 

July 31, 2023  will 

October 31, 2023  will be billed and collected within one year, and all billings on uncompleted contracts as of 

October 31, 2023  will 

be satisfied and collected within one year. 

Unbilled accounts receivable

The Company has recorded $ 11.6  million of unbilled accounts receivable on the consolidated balance sheet s as of July 31, 2023 and January 31, 2023 ,  from revenues generated by certain of its subsidiaries.

The Company has recorded $ 14.3  million  and $ 11.6  million 

of unbilled accounts receivable on the consolidated balance sheet s as of October 31, 2023 and January 31, 2023 ,  from revenues generated by certain of its subsidiaries.

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 billing will be made once the customer takes possession of or arranges shipping for the products over time.

The deliverables under these contracts have been accepted by the customer in accordance with the terms of the contract.

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

July 31, 2023  will be billed within one year.

October 31, 2023  will be billed within one year.

Practical expedients

10 unchanged sentences

Judgments and estimates related to the Company's projections and assumptions are inherently uncertain;

therefore, actual results could differ materially from projections. 

therefore, actual results could differ materially from projections. 

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

three months ended July 31, 2023 and 2022  were 

three months ended October 31, 2023 and 2022  were 

31 %  and 40 % , respectively.

The change in the ETR is due primarily 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 change in the ETR is due primarily to the inability to recognize tax benefits due to losses incurred in the United States resulting in a full valuation allowance and due to 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, and withholding taxes in these jurisdictions are considered. The Company's liability was $ 0.6 million as of July 31, 2023 related to these 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 $ 0.9 million as of October 31, 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 July 31, 2023 , the Company assessed whether there were any triggering events that may have occurred which could indicate that more likely than not that the fair values of the Company's long-lived assets exceeded their carrying values, and an impairment may exist.

Based on this assessment, the Company determined that it was more likely than not that the fair values of the Company's long-lived assets exceeded their carrying values, and no impairment indicator exists with respect to the Company's long-lived assets for the three and six months ended July 31, 2023 and 2022 .

October 31, 2023 , the Company performed a periodic assessment to determine whether there were any triggering events that may have occurred which could indicate that the carrying value of the Company's long-lived assets are not recoverable, and an impairment may exist.

Based on this assessment, the Company did not identify any triggering events that would indicate that the carrying amounts may not be recoverable with respect to long-lived assets for the three and nine months ended October 31, 2023 and 2022 . Accordingly, the Company did not proceed with performing an impairment test as a result of this periodic assessment.

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, 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)

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

The following table provides a reconciliation of changes in the carrying amount of goodwill:

January 31, 2023

Foreign exchange change effect

July 31, 2023

October 31, 2023

$ 2,227  

$ ( 75 )  

$ 2,152  

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, 2023 , the Company assessed potential triggering events that may have occurred which could indicate that more likely than not that the fair value of recognized goodwill exceeded its carrying value, and an impairment may exist.

In performing this assessment, the Company determined that the fair value exceeded its carrying value, and no potential impairment exists with respect to the Company's goodwill for the 

three or six months ended July 31, 2023 .

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

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 the measurement date.

October 31, 2023 , the Company performed a periodic assessment to determine whether there were any triggering events that may have occurred which could indicate that more likely than not that the fair value of the reporting unit did not exceed its carrying value resulting in an impairment.

Based on this assessment, the Company did not identify any triggering events that would indicate that the fair value is less than the carrying value of the reporting unit for the Three and Nine Months Ended October 31, 2023 and 2022 .

Accordingly, the Company did not proceed with performing an impairment test as a result of this periodic assessment.

The Company will continue testing for impairment at least annually as of January 31, or as otherwise required by applicable accounting standards.

Note 7 - Stock-based compensation 

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

At July 31, 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.

At October 31, 2023 the Company had reserved a total of 250,448  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.

13 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,

(In thousands)

Three Months Ended October 31,

Nine Months Ended October 31,

Restricted stock-based compensation expense

Stock options

The Company did not grant any stock options during the three or six months ended July 31, 2023 .

The Company did not grant any stock options during the three or nine months ended October 31, 2023 .

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

(Shares in thousands)

Options  

Weighted Average Exercise Price (Per share)  

Weighted Average Remaining Contractual Term (In years)  

Aggregate Intrinsic Value  

Weighted Average Exercise Price (Per share)

Weighted Average Remaining Contractual Term (In years)

Aggregate Intrinsic Value

Outstanding at January 31, 2023

2 unchanged sentences

( 17 )  

Outstanding and exercisable at July 31, 2023

Outstanding and exercisable at October 31, 2023

$ 11.15  

There was no vesting, expiration or forfeiture of previously unvested stock options during the six months ended July 31, 2023 .

As of July 31, 2023 , 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 nine months ended October 31, 2023 .

As of October 31, 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 

six months ended July 31, 2023 :

(Shares in thousands)

Restricted Shares  

Weighted Average Price (Per share)  

Aggregate Intrinsic Value  

nine months ended 

October 31, 2023 :

Restricted Shares

Weighted Average Price (Per share)

Aggregate Intrinsic Value

Outstanding at January 31, 2023

5 unchanged sentences

( 47 )  

Outstanding at July 31, 2023

Outstanding at October 31, 2023

$ 9.35  

$ 2,133  

As of July 31, 2023 , there was $ 1.5  million of unrecognized compensation expense related to unvested restricted stock granted under the plans.

As of October 31, 2023 , there was $ 1.3  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  - Earnings (loss) per share

Three Months Ended July 31,

Six Months Ended July 31,

(In thousands, except per share data)

Basic weighted average common shares outstanding at July 31, 2023

Note 8  - Earnings per share

Three Months Ended October 31,

Nine Months Ended October 31,

Basic weighted average common shares outstanding at October 31, 2023

Dilutive effect of equity compensation plans

2 unchanged sentences

Stock options and restricted stock with exercise prices or grant date prices below the average market prices

Net income (loss) attributable to common stock

Net income attributable to common stock

$ 1,935  

1 unchanged sentence

$ 1,834  

Earnings (loss) per share attributable to common stock

$ 2,711  

Earnings per share attributable to common stock

$ 0.24  

5 unchanged sentences

$ 0.23  

$ 0.33  

Note 9  - Debt

Debt totaled $ 29.2 million and $ 24.3 million at July 31, 2023  and January 31, 2023 , respectively.

Debt totaled $ 27.2 million and $ 24.3 million at October 31, 2023  and January 31, 2023 , respectively.

Revolving lines - North America . 

21 unchanged sentences

The Renewed Senior Credit Facility also contains financial covenants requiring the North American Loan Parties to achieve a ratio of its EBITDA (as defined in the Renewed Senior Credit Facility) 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 of 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, 2023 , the calculated ratio was less than 1.10  to 1.00.

As of October 31, 2023 , the calculated ratio was less than 1.10  to 1.00.

In order to cure any future breach of these covenants 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, would result in compliance on a pro forma basis.

The Company was in compliance with respect to these covenants as of 

July 31, 2023 .

October 31, 2023 .

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, 2023 , the Company had borrowed an aggregate of $ 7.2  million at a rate of 10.0 %  and had $ 5.3  million available under the Renewed Senior Credit Facility.

As of October 31, 2023 , the Company had borrowed an aggregate of $ 6.7  million at a rate of 10.0 %  and had $ 4.6  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.

12 unchanged sentences

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 $ 9.1  million is recognized in long-term finance obligation on the Company's consolidated balance sheets as of July 31, 2023 . 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 $ 9.1  million is recognized in long-term finance obligation on the Company's consolidated balance sheets as of October 31, 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 .

3 unchanged sentences

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

Dirhams (approximately $ 2.2  million at July 31, 2023 ) from a bank in the U.A.E.

As of July 31, 2023  the facility has an interest rate of approximately 

8.4 % and is set to expire in May 2024.

Dirhams (approximately $ 2.2  million at October 31, 2023 ) from a bank in the U.A.E.

As of October 31, 2023  the facility has an interest rate of approximately 

9.0 % and is set to expire in May 2024. 

The Company had borrowed an aggregate of $ 0.1 million and $ 0.6  million as of October 31, 2023 and January 31, 2023 , respectively, and is presented as a component of current maturities of long-term debt in the Company's consolidated balance sheets. 

The Company has a revolving line for 19.5  million U.A.E.

Dirhams (approximately $ 4.8  million at July 31, 2023 ) from a bank in the U.A.E.

As of July 31, 2023  the facility has an interest rate of approximately 

Dirhams (approximately $ 5.3  million at October 31, 2023 ) from a bank in the U.A.E.

As of October 31, 2023  the facility has an interest rate of approximately 

9.0 % 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 July 31, 2023 ).

As of July 31, 2023  the facility has an interest rate of approximately 

8.5 % and is expected to expire in October 

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 July 31, 2023 ).

The Company had borrowed an aggregate of $ 1.3  million and $ 1.1  million as of October 31, 2023 and January 31, 2023 , respectively, and is presented as a component of current maturities of long-term debt in the Company's consolidated balance sheets. 

In June 2021, and as renewed or amended subsequently thereafter, 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, 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 July 31, 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.

This credit arrangement was subsequently renewed in August 2022 with substantially the same terms and conditions, expect for the facility interest rate which increased to 

20.8 %, and expired in August 2023. 

The Company is in regular communication with the bank throughout the renewal process and the facility has continued without interruption or penalty.

The Company had borrowed an aggregate of $ 1.6 million and $ 3.1 million as of October 31, 2023 and January 31, 2023 , respectively, and is presented as a component of current maturities of long-term debt in the Company's consolidated balance sheets. 

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 8.9  million Egyptian Pounds (approximatel y $ 0.3  mi llion at July 31, 2023 ).

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 October 31, 2023 ).

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

1 unchanged sentence

The facility has an interest rate of approximately 

20.8 % and, as of  

20.8 %  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 July 31, 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. As of July 31, 2023  the facility has an interest rate of approximately 

20.8 %  and is set to expire in August 2023 .

The facility will expire in connection with final customer balance collections and the completion of the project.

The Company had approximately $ 0.3  million outstanding as of October 31, 2023 and January 31, 2023 , respectively, and is presented as a component of current maturities of long-term debt in the Company's consolidated balance sheets.

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 

37.0  million Saudi Riyal (approximately $ 9.9  million at 

July 31, 2023 ).

37.0  million Saudi Riyals (approximately $ 9.9  million at 

October 31, 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 was renewed in May 2023, and the line was increased to 37.0 million Saudi Riyal (approximately $ 9.9  million at July 31, 2023 ).

July 31, 2023 , the facility has an interest rate of approximately 

9.3 % and is set to expire in May 2024.

The facility was renewed in May 2023, and the line was increased to 37.0 million Saudi Riyal (approximately $ 9.9  million at October 31, 2023 ).

As of October 31, 2023 , the facility has an interest rate of approximately 

9.5 % and is set to expire in May 2024. 

The Company had borrowed an aggregate of $ 3.8  million and $ 1.1  million as of October 31, 2023 and January 31, 2023 , respectively, and is presented as a component of current maturities of long-term debt in the Company's consolidated balance sheets. 

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 July 31, 2023 , the amount of foreign subsidiary debt guaranteed by the Company was approxim ately $ 0.7  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, 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 July 31, 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.

As of October 31, 2023 , the amount of foreign subsidiary debt guaranteed by the Company was approxim ately $ 0.1  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, 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 October 31, 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 1.5 % to 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 July 31, 2023 , the Company's interest rates ranged from 

Based on these base rates, as of October 31, 2023 , the Company's interest rates ranged from 

8.0 % to 20.8 %, with a weighted average rate of 12.1 %, and the Company had facility limits totaling $ 27.2  million under these credit arrangements.

As of July 31, 2023 , 

As of October 31, 2023 , 

$ 6.7  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 July 31, 2023 , the Company had borrow ed $ 8.1  million  and had an additional $ 13.7  million of borrowing remaining available under the foreign revolving credit arrangements.

The foreign revolving lines balances as of July 31, 2023 and January 31, 2023 , were included as current maturities of long-term debt in the Company's consolidated balance sheets. 

Additionally, as of October 31, 2023 , the Company had borrow ed $ 9.5  million  and had an additional $ 13.7  million of borrowing remaining available under the foreign revolving credit arrangements.

The foreign revolving lines balances as of October 31, 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 July 31, 2023 , the remaining balance on the mortgage in Canada is approximately CAD 6.2  million (approximately $ 4.7  million at July 31, 2023 ). The interest rate is variable, and was 9.1 %  

at July 31, 2023 . Principal payments began in January 2018.

As of October 31, 2023 , the remaining balance on the mortgage in Canada is approximately CAD 6.1  million (approximately $ 4.4  million at October 31, 2023 ). The interest rate is variable, and was 9.1 %  

at October 31, 2023 .

The principal balance is included as a component of long-term debt, less current maturities in the Company's consolidated balance sheets and is presented net of issuance costs of $ 0.1  million as of October 31, 2023 and January 31, 2023 , respectively.

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.

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

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

Dirhams (approximately $ 0.8  million at 

July 31, 2023 ), inclusive of rent, escalation clauses, and other common charges contained in the agreement.

Dirhams (approximately $ 0.3  million), inclusive of rent, escalation clauses, and other common charges contained in the agreement.

Rent payments previously deferred until August 2022 

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The Company vacated portions of the leased space in December 2022 and expects 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 July 31, 2023 .

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 July 31, 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. 

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renewal options have not been included in the calculation of the lease liabilities and right-of-use ("ROU") assets as the Company is not reasonably certain to exercise the options. 

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

At July 31, 2023 , the Company had total operating lease liabilities of $ 8.1  

The Company does not have any arrangements where it acts as a lessor. 

At October 31, 2023 , the Company had total operating lease liabilities of $ 7.1  

million and operating ROU assets of $ 6.4  million , which are reflected in the consolidated balance sheets.

At July 31, 2023 , 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): 

At October 31, 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 $ 0.5  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: 

Operating and Finance leases:

July 31, 2023

October 31, 2023

January 31, 2023

14 unchanged sentences

Operating lease liability short-term

$ 1,148  

Operating lease liability long-term

2 unchanged sentences

$ 5,164  

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

Three Months Ended July 31,

Six Months Ended July 31,

Total lease costs consist of the following: 

Three Months Ended October 31,

Nine Months Ended October 31,

Consolidated Statements of Operations Classification

15 unchanged sentences

$ 1,867  

( 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,

( 1 ) Includes variable lease costs, which are not material.

Supplemental cash flow information related to leases is as follows:

Nine Months Ended October 31,

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

5 unchanged sentences

$ 3,615  

Six Months Ended July 31,

Nine Months Ended October 31,

ROU liabilities obtained in exchange for new lease obligations:

2 unchanged sentences

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

July 31, 2023

October 31, 2023

Weighted-average remaining lease terms (in years):

4 unchanged sentences

Operating leases

Maturities of lease liabilities as of July 31, 2023 , are as follows (in thousands):

Maturities of lease liabilities as of October 31, 2023 , are as follows:

Operating Leases

Finance Leases

For the six months ending January 31, 2024

$ 1,054  

For the three months ending January 31, 2024

For the year ending January 31, 2025

7 unchanged sentences

( 7,377 )  

Total lease liabilities at July 31, 2023

Total lease liabilities at October 31, 2023

$ 7,063  

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 

July 31, 2023  and 2022 , respectively.

Rent expense on operating leases, which is recorded on straight-line basis, was $ 0.7  

million  

for the three months ended 

October 31, 2023  and 2022 , respectively.

Note 11  - Restricted cash

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

(In thousands)

July 31, 2023

October 31, 2023

January 31, 2023

15 unchanged sentences

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.

During the three months ended 

July 31, 2023  the Company used $ 0.3 million of the $ 1.0 million authorized to repurchase its outstanding shares of common stock.

The following table sets forth the repurchase activity with respect to the Company's shares of common stock during the three months ended July 31, 2023 ( in thousands, except per share information):

October 31, 2023  the Company used the remaining $ 0.6  million of the $ 1.0 million authorized to repurchase its outstanding shares of common stock.

The following table sets forth the repurchase activity with respect to the Company's shares of common stock during the three months ended October 

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, 2023 - May 31, 2023

June 1, 2023 - June 30, 2023

July 1, 2023 - July 31, 2023

August 1, 2023 - August 31, 2023

$ 8.64  

September 1, 2023 - September 30, 2023

October 1, 2023 - October 31, 2023

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.

Note 15  - Noncontrolling interests

The Company has a controlling financial interest in certain investments which are not considered wholly owned subsidiaries.

Note 15  - Noncontrolling interest

The Company has a controlling financial interest in a certain investment which is 

not considered a wholly owned subsidiary.

Accordingly, there remains a minority portion of the equity interest that is owned by a third party.

Pursuant to the applicable guidance contained in ASC 810,  

Consolidations , the balance sheet and operating activities of these investments are included in the Company's consolidated financial statements.

The Company adjusts the net income in the consolidated statements of operations to exclude the proportionate share of results that is attributable to non-controlling interests. Additionally, the Company presents the proportionate share that is attributable to redeemable non-controlling interests as temporary equity within our consolidated balance sheet.

This mezzanine presentation is the result of the non-controlling interests being subject to a put option that is not solely within the Company's control and in connection with the equity shares of the business arrangement that is redeemable any time after five years following the date of incorporation.

Further, the put option did not meet the definition of a derivative due to not containing a net settlement provision and the shares not being readily convertible to cash, thereby being considered embedded with respect to the non-controlling interests. 

On June 1, 2023, the Company closed on its formation of the joint venture ("The JV Agreement") with Gulf Insulation Group ("GIG") a leading provider of pre-insulated piping systems, leak detection systems, and pipe fabrication, in which the Company acquired a 60 % controlling interest in exchange for consideration of $ 2.7  million in the form of land and equipment.

Consolidations , the balance sheets and operating activities of this investment is included in the Company's consolidated financial statements.

The Company adjusts net income in the consolidated statements of operations to exclude the proportionate share of results that is attributable to non-controlling interest. Additionally, the Company presents the proportionate share that is attributable to redeemable non-controlling interest as temporary equity within the consolidated balance sheets.

This mezzanine presentation is the result of the non-controlling interest being subject to a put option that is not solely within the Company's control and in connection with the equity shares of the business arrangement that is redeemable any time after five years following the date of incorporation.

Further, the put option did not meet the definition of a derivative as a result of 

not containing a net settlement provision and the shares not being readily convertible to cash, thereby being considered embedded with respect to non-controlling interest. 

The Company expects this collaborative business arrangement to result in expanding its market presence in Saudi Arabia, Kuwait, and Bahrain.

2 unchanged sentences

Further, the other party to this business arrangement acquired a 40 % non-controlling interest by contributing assets of approximately $ 2.7  million, mainly consisting of land and equipment.

The non-controlling interests attributable to the other party was recorded at its estimated fair value as of the investment date, and no gain was recognized as a result of this exchange.

The Company had non-controlling interests of $ 1.7  million and $ 0.0 million recorded within temporary equity as of July 31, 2023 and January 31, 2023 , respectively. The proportionate share of net income was accounted for as a reduction in deriving net income attributable to common stock in the Company's consolidated statements of operations.

Net income attributable to GIG was $ 0.1  million and $ 0.0  million for the three months ended July 31, 2023 and 2022 , respectively. 

In connection with the joint venture, at the formation of the JV Agreement, the Company agreed to a promissory note in the principal amount $ 2.7 million payable to the related party contained in this agreement.

The principal amount is presented within the other long-term liabilities caption in the Company's consolidated balance sheet. 

The non-controlling interest attributable to the other party was recorded at its estimated fair value as of the investment date, and no gain was recognized as a result of this exchange. In connection with the joint venture, the Company agreed to a promissory note in the principal amount $ 2.7 million payable to the related party contained in this agreement.

The principal amount is presented within the note payable to GIG caption in the Company's consolidated balance sheets. 

Net income attributable to GIG was $ 1.4  million and $ 0.0  million for the three months ended October 31, 2023 and 2022 , respectively.

Net income attributable to GIG was $ 1.6  million and $ 0.0  million for the 

nine months ended October 31, 2023 and 2022 , respectively. The proportionate share of net income was accounted for as a reduction in deriving net income attributable to common stock in the Company's consolidated statements of operations.

The Company had carrying amounts attributable to non-controlling interest of $ 4.2  million and $ 0.0  million recorded within temporary equity at 

October 31, 2023 and January 31, 2023 , respectively.

There were no dividends or any other forms of distributions from non-controlling interest as of October 31, 2023 and January 31, 2023 , respectively. 

Note 16 - Contingencies

The Company is subject to various legal proceedings and claims that arise in the ordinary course of business, including those involving environmental, tax, product liability and general liability claims.

The Company accrues for such liabilities when it is probable that future costs will be incurred and such costs can be reasonably estimated.

Such accruals are based on developments to date, the Company's estimates of the outcomes with respect to these matters, and its experience in contesting, litigating and settling other similar matters.

As of October 31, 2023, the Company is actively involved in certain legal proceedings that are ongoing and for which the ultimate outcome remains uncertain.

For all other legal proceedings, the Company does not  currently anticipate that the ultimate liability with respect to these matters will materially affect the Company's financial position, liquidity or future operations.

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