What changed in this filing

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Item 1. Financial Statements

2024-12-23 compared with 2024-09-11 · 316 added, 237 removed, 475 unchanged (54% 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,

$ 41,563 $ 45,690 $ 113,397 $ 110,489

Cost of sales

27,477 32,506 75,320 81,065

14,086 13,184 38,077 29,424

Operating expenses

General and administrative expenses

7,330 5,674 19,457 16,417

Selling expenses

1,170 1,471 3,757 4,201

Total operating expenses

8,500 7,145 23,214 20,618

Income from operations

5,586 6,039 14,863 8,806

Interest expense

Other (expense) income

468 640 1,489 1,788

Other expense

( 50 ) ( 502 ) ( 156 ) ( 350 )

Income before income taxes

5,068 4,897 13,218 6,668

Income tax expense

1,615 1,533 3,692 3,257

3,453 3,364 9,526 3,411

Net income attributable to non-controlling interest

Net income (loss) attributable to common stock

962 1,429 2,303 1,577

Net income attributable to common stock

$ 2,491 $ 1,935 $ 7,223 $ 1,834

Weighted average common shares outstanding

Earnings (loss) per share attributable to common stock

7,981 7,955 7,947 7,996

8,027 8,021 7,991 8,106

Earnings per share attributable to common stock

$ 0.31 $ 0.24 $ 0.91 $ 0.23

$ 0.31 $ 0.24 $ 0.90 $ 0.23

See accompanying notes to consolidated financial statements.

2 unchanged sentences

(In thousands)

Three Months Ended July 31,

Six Months Ended July 31,

Three Months Ended October 31,

Nine Months Ended October 31,

$ 3,453 $ 3,364 $ 9,526 $ 3,411

Other comprehensive income (loss)

Foreign currency translation adjustments, net of tax

Comprehensive income (loss)

( 185 ) ( 2,035 ) ( 1,792 ) ( 2,133 )

Comprehensive income

$ 3,268 $ 1,329 $ 7,734 $ 1,278

Comprehensive income attributable to non-controlling interests

962 1,429 2,303 1,577

Total comprehensive income (loss) attributable to common stock

$ 2,306 $ ( 100 ) $ 5,431 $ ( 299 )

See accompanying notes to consolidated financial statements.

2 unchanged sentences

(In thousands, except per share data)

July 31, 2024

October 31, 2024

January 31, 2024

3 unchanged sentences

Restricted cash

Trade accounts receivable, less allowance for credit losses of $ 713 at July 31, 2024 and $ 699 at January 31, 2024

Trade accounts receivable, less allowance for credit losses of $ 704 at October 31, 2024 and $ 699 at January 31, 2024

39,904 46,646

44 unchanged sentences

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

7,978 issued and outstanding at July 31, 2024 and 8,017 at January 31, 2024

7,983 issued and outstanding at October 31, 2024 and 8,017 at January 31, 2024

Additional paid-in capital

60,130 60,063

Treasury stock, 112 shares at July 31, 2024 and January 31, 2024

( 968 ) ( 968 )

Treasury stock, no shares at October 31, 2024 and 112 shares at January 31, 2024

Retained earnings

16 unchanged sentences

Total stockholders' equity at January 31, 2024

$ 80 $ 60,063 $ 12,088 $ ( 968 ) $ ( 5,551 ) $ 65,712

Net income attributable to common stock

- - 1,443 - - 1,443

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

Stock-based compensation expense

- 220 - - - 220

Amount attributable to non-controlling interest

- ( 421 ) - - - ( 421 )

Foreign currency translation adjustment

- - - - ( 1,415 ) ( 1,415 )

Total stockholders' equity at April 30, 2024

$ 80 $ 59,870 $ 13,531 $ ( 968 ) $ ( 6,966 ) $ 65,547

Net income attributable to common stock

- - 3,289 - - 3,289

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

1 ( 210 ) - - - ( 209 )

Stock-based compensation expense

- 177 - - - 177

Amount attributable to non-controlling interest

- ( 29 ) - - - ( 29 )

Foreign currency translation adjustment

- - - - ( 192 ) ( 192 )

Total stockholders' equity at July 31, 2024

$ 81 $ 59,808 $ 16,820 $ ( 968 ) $ ( 7,158 ) $ 68,583

Net income attributable to common stock

- - 2,491 - - 2,491

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

- 23 - - - 23

Retirement of treasury stock

( 1 ) - ( 967 ) 968 - -

Stock-based compensation expense

- 232 - - - 232

Amount attributable to non-controlling interest

- 67 - - - 67

Foreign currency translation adjustment

- - - - ( 185 ) ( 185 )

Total stockholders' equity at October 31, 2024

$ 80 $ 60,130 $ 18,344 $ - $ ( 7,343 ) $ 71,211

Additional Paid-in Capital

4 unchanged sentences

Total stockholders' equity at January 31, 2023

$ 80 $ 62,562 $ 1,617 $ ( 26 ) $ ( 6,449 ) $ 57,784

Net loss attributable to common stock

- - ( 1,123 ) - - ( 1,123 )

Stock-based compensation expense

- 229 - - - 229

Foreign currency translation adjustment

- - - - ( 437 ) ( 437 )

Total stockholders' equity at April 30, 2023

$ 80 $ 62,791 $ 494 $ ( 26 ) $ ( 6,886 ) $ 56,453

Net income attributable to common stock

- - 1,022 - - 1,022

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

- ( 274 ) - - - ( 274 )

Repurchase of common stock

1 - - ( 312 ) - ( 311 )

Stock-based compensation expense

- 245 - - - 245

Foreign currency translation adjustment

- - - - 339 339

Total stockholders' equity at July 31, 2023

$ 81 $ 62,762 $ 1,516 $ ( 338 ) $ ( 6,547 ) $ 57,474

Net income attributable to common stock

- - 1,935 - - 1,935

Repurchase of common stock

( 1 ) - - ( 629 ) - ( 630 )

Stock-based compensation expense

- 229 - - - 229

Foreign currency translation adjustment

- - - - ( 2,035 ) ( 2,035 )

Total stockholders' equity at October 31, 2023

$ 80 $ 62,991 $ 3,451 $ ( 967 ) $ ( 8,582 ) $ 56,973

Balances at beginning of year

8,016,781 8,007,002

Treasury stock retired

( 112,015 ) -

Shares issued, net of shares used for tax withholding

77,802 66,726

Prior period adjustments

Balances at period end

7,982,568 8,016,781

See accompanying notes to consolidated financial statements.

2 unchanged sentences

(In thousands)

Six Months Ended July 31,

Nine Months Ended October 31,

Operating activities

$ 9,526 $ 3,411

Adjustments to reconcile net income to net cash provided by operating activities

3 unchanged sentences

Provision on uncollectible accounts

Gain (loss) from disposal of fixed assets

Loss (gain) from disposal of fixed assets

Changes in operating assets and liabilities

Accounts receivable

6,047 ( 5,377 )

( 970 ) ( 1,426 )

Costs and estimated earnings in excess of billings on uncompleted contracts

1,452 ( 175 )

Accounts payable

( 3,954 ) 9,346

Accrued compensation and payroll taxes

( 124 ) 1,167

Customers' deposits

Income tax receivable

( 894 ) 1,272

Income taxes payable

Prepaid expenses and other current assets

Unbilled accounts receivable

( 3,708 ) ( 2,776 )

Other assets and liabilities

( 2,161 ) ( 1,912 )

Net cash provided by operating activities

1 unchanged sentence

Capital expenditures

( 1,555 ) ( 8,204 )

Proceeds from insurance recovery for property and equipment

Net cash used in investing activities

( 1,555 ) ( 8,199 )

Financing activities

Proceeds from revolving credit lines

57,637 120,467

Payments of debt on revolving credit lines

( 55,765 ) ( 117,419 )

Payments of principal on finance obligation

( 138 ) ( 84 )

Payments of other debt

Increase (decrease) in drafts payable

( 174 ) ( 179 )

Decrease in drafts payable

( 19 ) ( 199 )

Payments on finance lease obligations

( 23 ) ( 176 )

Repurchase of common stock

Stock options exercised and taxes paid related to restricted shares vested

( 178 ) ( 273 )

Net cash provided by financing activities

3 unchanged sentences

Cash, cash equivalents and restricted cash - end of period

$ 14,726 $ 7,408

Supplemental cash flow information

Cash interest paid

$ 1,456 $ 1,754

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, 2024

October 31, 2024

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

8 unchanged sentences

Years and balances described as 2024 and 2023 are for the fiscal year ending January 31, 2025 and for the fiscal year ended January 31, 2024 , respectively.

Significant New Accounting Policies

Refer to the Company's Annual Report on Form 10 -K for the year ended January 31, 2024 as filed with the SEC on April 26, 2024 for discussion of the Company's significant accounting policies.

During the six months ended July 31, 2024 , the Company did not adopt or make changes to any new or existing accounting policies.

Revision of Previously Issued Financial Statements

During the six months ended July 31, 2024, the Company identified and corrected an error relating to a subsidiary in the Middle East incorrectly recording a duplicate invoice related to the purchase of property, plant, and equipment ("PP&E"), resulting in an overstatement of PP&E and trade accounts payable of $ 1.4 million on the unaudited consolidated balance sheet as of April 30, 2024, and a corresponding overstatement of net cash provided by operating activities and net cash used in investing activities in the consolidated statement of cash flows during the three months ended April 30, 2024.

The Company determined that the error was not material to the unaudited consolidated financial statements in its Quarterly Report on Form 10 -Q for the three months ended April 30, 2024.

However, in order to correctly present the unaudited consolidated financial statements, management will revise the unaudited consolidated financial statements as of and for the three months ended April 30, 2024, the next time such unaudited consolidated financial statements are filed which will be in connection with the issuance of the Quarterly Report on Form 10 -Q for the three months ended April 30, 2025.

The following tables summarize the impact of this correction as of and for the periods presented:

April 30, 2024

Consolidated Balance Sheet

Property, plant and equipment, net of accumulated depreciation

$ 38,211 $ ( 1,423 ) $ 36,788

$ 157,163 $ ( 1,423 ) $ 155,740

Trade accounts payable

$ 24,672 ( 1,423 ) $ 23,249

Total current liabilities

$ 59,410 $ ( 1,423 ) $ 57,987

April 30, 2024

Consolidated Statement of Cash Flows

Operating activities

Accounts payable

( 268 ) ( 1,423 ) ( 1,691 )

Net cash provided by operating activities

$ 1,350 $ ( 1,423 ) $ ( 73 )

Investing activities

Capital expenditures

$ ( 2,012 ) $ 1,423 $ ( 589 )

Net cash used in investing activities

$ ( 2,012 ) $ 1,423 $ ( 589 )

Note 2 - Business segment reporting

18 unchanged sentences

The system has not yet been commissioned by the customer.

Nevertheless, the Company has received approximately $ 40.1 million as of July 31, 2024 , with a remaining balance due in the amount of $ 1.8 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 received approximately $ 40.1 million as of October 31, 2024 , with a remaining balance due in the amount of $ 1.8 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.

Of this amount, $ 1.3 million is classified in other long-term assets on the Company's consolidated balance sheets.

The Company has been actively involved 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 the six months ended July 31, 2024 , and at various times throughout 2023, the Company received partial payments to settle $ 0.3 million and $ 0.6 million, respectively, of the customer's outstanding balances.

Further, the Company has been engaged by the customer to perform additional work in 2024 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, 2024 .

The Company continues to engage with the customer to ensure full payment of the open balances, and during the nine months ended October 31, 2024 , and at various times throughout 2023, the Company received partial payments to settle $ 0.3 million and $ 0.6 million, respectively, of the customer's outstanding balances.

Further, the Company has been engaged by the customer to perform additional work in 2024 under customary trade terms that support 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 October 31, 2024 .

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

For the three months ended July 31, 2024 , no individual customer accounted for greater than 10% of the Company's consolidated net sales, and during the same period in 2023, one customer accounted for greater than 10% of the Company's consolidated net sales.

For the six months ended July 31, 2024 and 2023 , no individual customer accounted for greater than 10% of the Company's consolidated net sales.

As of July 31, 2024 and January 31, 2024 , no individual customer accounted for more than 10% of the Company's accounts receivable, and one customer accounted for more than 10% of the Company's accounts receivable, respectively.

For the three months ended October 31, 2024 , no individual customer accounted for more than 10% of the Company's consolidated net sales, and during the same period in 2023, one customer accounted for greater than 10% of the Company's consolidated net sales.

For the nine months ended October 31, 2024 and 2023 , no individual customer accounted for more than 10% of the Company's consolidated net sales.

As of October 31, 2024 and January 31, 2024 , no individual customer accounted for more than 10% of the Company's accounts receivable, and one customer accounted for more than 10% of the Company's accounts receivable, respectively.

Note 4 - Revenue recognition

3 unchanged sentences

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

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

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

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.

3 unchanged sentences

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, 2024 and 2023 are as follows:

Three Months Ended July 31,

Six Months Ended July 31,

A breakdown of the Company's revenues by revenue class for the three and nine months ended October 31, 2024 and 2023 are as follows:

Three Months Ended October 31,

Nine Months Ended October 31,

$ 3,622 8 % $ 2,553 5 % $ 9,670 8 % $ 7,541 7 %

7 unchanged sentences

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.

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

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.

Due to the types of end customers, generally these contracts require formal inspection protocols or specific export documentation for units produced, or produced and shipped, therefore, the output method is the most faithful depiction of the Company’s performance.

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

The transaction price associated with the Company's contracts with customers are generally determined based on the fixed amount of consideration as specified in a contract.

This may also include variable consideration in certain instances where it is considered probable that a significant reversal of cumulative revenue recognized will not occur.

As a result, the amount of consideration ultimately received from the customer can fluctuate due to the variability of future events stated in a contract.

Therefore, the aggregate amount of the transaction price includes the fixed consideration contained in a contract that is generally not subject to change and excludes sales and value added taxes, or amounts collected on behalf of third parties, along with any variable consideration.

The total transaction price is then allocated to the performance obligations which is eventually recognized as revenue based on the project type and the method that is used to measure the transfer of promised goods and services to customers.

Additionally, transaction prices relating to cost-plus contracts are determined by applying the applicable profit margin to costs incurred on contracts, whereas transaction prices relating to fixed price contracts are determined on a lump-sum basis.

Further, standard payment terms are generally net 30 to 60 days, which is customer specific.

Contract assets and liabilities

4 unchanged sentences

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

July 31, 2024

October 31, 2024

January 31, 2024

18 unchanged sentences

$ 1,149 $ 2,602

The Company anticipates that substantially all costs incurred on uncompleted contracts as of July 31, 2024 will be billed and collected within one year .

The Company anticipates that substantially all costs incurred on uncompleted contracts as of October 31, 2024 will be billed and collected within one year .

Unbilled accounts receivable

The Company has recorded $ 17.9 million and $ 16.6 million of unbilled accounts receivable on the consolidated balance sheet s as of July 31, 2024 and January 31, 2024 , from revenues generated by certain of its subsidiaries.

The Company has recorded $ 19.7 million and $ 16.6 million of unbilled accounts receivable on the consolidated balance sheet s as of October 31, 2024 and January 31, 2024 , respectively, 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 billings 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 July 31, 2024 will be billed within one year.

Practical expedients

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 a result of the Company's contracts having a duration of less than one year, a practical expedient was applied 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.

The Company anticipates that substantially all of the amounts included in unbilled accounts receivable as of October 31, 2024 will be billed within one year.

Note 5 - Inventories

2 unchanged sentences

Inventories consisted of the following:

July 31, 2024

October 31, 2024

January 31, 2024

14 unchanged sentences

therefore, actual results could differ materially from projections.

The Company's worldwide effective tax rates ("ETR") for the three months ended July 31, 2024 and 2023 were 23 % and 45 % , respectively.

The Company's ETR was 25 % and 97 % for the six months ended July 31, 2024 and 2023 , respectively.

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

The Company's worldwide effective tax rates ("ETR") for the three months ended October 31, 2024 and 2023 were 32 % and 31 % , respectively.

The Company's ETR was 28 % and 49 % for the nine months ended October 31, 2024 and 2023 , respectively.

The change in the ETR is due to the ability to recognize tax benefits on losses in the United States in the current year, whereas the prior year had a full valuation allowance and changes to 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.

federal tax as they will be excludible from U.S.

taxable income either be remittances of previously taxed earnings and profits or eligible for a full dividends received deduction.

taxable income either as remittances of previously taxed earnings and profits or eligible for a full dividends received deduction.

Current and future earnings in the Company's subsidiaries in Canada and Egypt are not permanently reinvested.

The earnings from these subsidiaries are subject to tax in their local jurisdiction, and withholding taxes in these jurisdictions are considered.

As such, the Company has accrued a liability of $ 0.7 million as of July 31, 2024 related to these taxes.

Note 7 - 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, 2024 , the Company performed an 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 at July 31, 2024 .

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, 2024 and January 31, 2024 is attributable to the purchase of the remaining 50 % interest in Perma-Pipe Canada, Ltd., which occurred in 2016.

As such, the Company has accrued a liability of $ 0.8 million as of October 31, 2024 related to these taxes.

Note 7 - Goodwill

All identifiable goodwill as of October 31, 2024 and January 31, 2024 , is attributable to the purchase of the remaining 50 % interest in Perma-Pipe Canada, Ltd., which occurred in 2016.

The Company performs an impairment assessment of goodwill annually as of January 31, or more frequently if triggering events occur that 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.

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

1 unchanged sentence

Foreign exchange change effect

July 31, 2024

October 31, 2024

$ 2,222 $ ( 81 ) $ 2,141

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.

During the period ended July 31, 2024 , 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 at July 31, 2024 .

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.

There were no triggering events identified during the three and nine months ended October 31, 2024 .

Note 8 - 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, including the Company's 2021 Omnibus Stock Incentive Plan, which expired in May 2024.

At July 31, 2024 , the Company had reserved a total 196,026 shares for grants and issuances under these incentive plans, including 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.

At October 31, 2024 , the Company had reserved a total 196,276 shares for grants and issuances under these incentive plans, including issuances pursuant to unvested or unexercised prior awards.

The Company's 2024 Omnibus Stock Incentive Plan, dated May 28, 2024, was approved by the Company's stockholders in July 2024 ( "2024 Plan").

1 unchanged sentence

The 2024 Plan authorizes awards to officers, employees, consultants, and independent directors.

The 2024 Plan provides for the grant of deferred shares, non-qualified stock options, incentive stock options, restricted shares, restricted stock units, and performance-based restricted stock units intended to qualify under section 422 of the Internal Revenue Code.

Grants were made in connection with the 2024 Plan and the prior incentive plans to employees, officers, and independent directors, as further described below.

2 unchanged sentences

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

Three Months Ended July 31,

Six Months Ended July 31,

Three Months Ended October 31,

Nine Months Ended October 31,

Restricted stock-based compensation expense

1 unchanged sentence

Stock options

The Company did not grant any stock options during the three or six months ended July 31, 2024 .

The Company did not grant any stock options during the three or nine months ended October 31, 2024 .

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

7 unchanged sentences

( 17 ) 12.41 - -

Outstanding and exercisable at July 31, 2024

Outstanding and exercisable at October 31, 2024

- $ 6.85 1.1 $ 4

There was no vesting, expiration or forfeiture of previously unvested stock options during the six months ended July 31, 2024 .

There was no vesting, expiration or forfeiture of previously unvested stock options during the nine months ended October 31, 2024 .

In addition , 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, 2024 :

The following table summarizes the Company's restricted stock activity for the nine months ended October 31, 2024 :

Restricted Shares

5 unchanged sentences

Forfeited or retired for taxes

Outstanding at July 31, 2024

Outstanding at October 31, 2024

230 $ 9.05 $ 2,080

As of July 31, 2024 , there was $ 1.5 million of unrecognized compensation expense related to unvested restricted stock granted under the plans.

As of October 31, 2024 , there was $ 1.3 million of unrecognized compensation expense related to unvested restricted stock granted under the plans.

These costs are expected to be recognized over a weighted average period of 1.9 years .

Note 9 - Earnings per share

Three Months Ended July 31,

Six Months Ended July 31,

Basic weighted average common shares outstanding at July 31, 2024

Three Months Ended October 31,

Nine Months Ended October 31,

Basic weighted average common shares outstanding at October 31, 2024

7,981 7,955 7,947 7,996

4 unchanged sentences

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

171 110 57 170

Net income (loss) attributable to common stock

Net income attributable to common stock

$ 2,491 $ 1,935 $ 7,223 $ 1,834

Earnings (loss) per share attributable to common stock

Earnings per share attributable to common stock

$ 0.31 $ 0.24 $ 0.91 $ 0.23

1 unchanged sentence

Note 10 - Debt

Debt totaled $ 27.9 million and $ 25.7 million at July 31, 2024 and January 31, 2024 , respectively.

Debt totaled $ 27.0 million and $ 25.7 million at October 31, 2024 and January 31, 2024 , respectively.

Revolving lines - North America .

On September 20, 2018, the Company and certain of its U.S.

and Canadian subsidiaries (collectively, together with the Company, the “North American Loan Parties”) entered into a Revolving Credit and Security Agreement (the “Credit Agreement”) with PNC Bank, National Association ("PNC"), as administrative agent and lender, providing for a three -year $ 18 million senior secured revolving credit facility, subject to a borrowing base including various reserves (the “Senior Credit Facility”).

On September 17, 2021, the North American Loan Parties executed an extension of the Credit Agreement with PNC, providing for a new five -year $ 18 million senior secured revolving credit facility, subject to a borrowing base including various reserves (the “Renewed Senior Credit Facility”).

The Company's obligations under the Renewed Senior Credit Facility are currently guaranteed by Perma-Pipe Canada, Inc.

Each of the North American Loan Parties other than Perma-Pipe Canada, Inc.

(collectively, the "Borrowers") is a borrower under the Renewed Senior Credit Facility.

The Borrowers have used and will continue to use borrowings under the Renewed Senior Credit Facility (i) to fund future capital expenditures;

(ii) to fund ongoing working capital needs;

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, SOFR rate index, 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 SOFR rate 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’ assets.

On September 20, 2018, and as amended, extended, or renewed subsequently thereafter, the Company and certain of its U.S.

and Canadian subsidiaries (collectively the “North American Loan Parties”) entered into a Revolving Credit and Security Agreement (the “Credit Agreement”) with PNC Bank, National Association ("PNC"), as administrative agent and lender, providing for a three -year $ 18 million senior secured revolving credit facility, subject to a borrowing base including various reserves (the “Senior Credit Facility”).

The Credit Agreement with PNC was subsequently extended on September 17, 2021, providing for a new five -year $ 18 million senior secured revolving credit facility, subject to a borrowing base including various reserves (the "Renewed Senior Credit Facility").

The Renewed Senior Credit Facility matures on September 20, 2026.

Subject to certain qualifications and exceptions, the Renewed Senior Credit Facility contains covenants that, among other things, restrict the North American Loan Parties’ ability to create liens, merge or consolidate, consummate acquisitions, make investments, dispose of assets, incur debt, and pay dividends and other distributions.

In addition, the North American Loan Parties may not make capital expenditures in excess of $ 5.0 million annually, plus a limited carryover of unused amounts.

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

The Renewed Senior Credit Facility also contains 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 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.

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 Company’s Consolidated EBITDA, would result in compliance on a pro forma basis.

The Company was in compliance with respect to these covenants as of July 31, 2024 .

The Renewed Senior Credit Facility contains customary events of default.

If an event of default occurs and is continuing, then PNC may terminate all commitments to extend further credit and declare all amounts outstanding under the Renewed Senior Credit Facility due and payable immediately.

In addition, if any of the North American Loan Parties or certain of their subsidiaries become the subject of voluntary or involuntary proceedings under any bankruptcy, insolvency or similar law, then any outstanding obligations under the Renewed Senior Credit Facility will automatically become immediately due and payable.

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, 2024 , the Company had borrowed an aggregate of $ 6.7 million at a rate of 10.0 % and had $ 4.7 million available under the Renewed Senior Credit Facility.

As of October 31, 2024 , the Company had borrowed an aggregate of $ 7.8 million at a rate of 9.5 % and had $ 3.5 million available under the Renewed Senior Credit Facility.

As of January 31, 2024 , the Company had borrowed an aggregate of $ 5.5 million and had $ 4.0 million available under the Renewed Senior Credit Facility.

The Company was in compliance with respect to the covenants under the Credit Agreement as of October 31, 2024 .

Finance obligation - buildings and land.

On April 14, 2021, the Company entered into a purchase and sale agreement (the "Purchase and Sale Agreement").

Pursuant to the terms of the Purchase and Sale Agreement, the Company sold its land and buildings in Lebanon, Tennessee (the "Property") for $ 10.4 million.

On April 14, 2021, the Company entered into a purchase and sale agreement, pursuant to which the Company sold its land and buildings in Lebanon, Tennessee (the "Property") for $ 10.4 million.

The transaction generated net cash proceeds of $ 9.1 million.

5 unchanged sentences

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 $ 0.2 million is recognized in current maturities of long-term debt and the long-term portion of $ 8.9 million is recognized in long-term finance obligation on the Company's consolidated balance sheets as of July 31, 2024 .

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

3 unchanged sentences

United Arab Emirates

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

Dirhams (approximately $ 2.2 million at July 31, 2024 ) from a bank in the U.A.E.

As of July 31, 2024 the facility has an interest rate of approximately 8.6 %, and expired in July 2024, however, the Company has started the process to renew and extend this credit arrangement and the credit facility has continued without interruption and penalty.

The Company had borrowed an aggregate of $ 1.2 million as of July 31, 2024 and $ 0.2 million as of January 31, 2024 , respectively, and is presented as a component of current maturities of long-term debt in the Company's consolidated balance sheets.

As of July 31, 2024 and January 31, 2024 , the Company had unused borrowing availability of approximately $ 1.0 million and $ 1.9 million, respectively.

The Company has a revolving line for 20.5 million U.A.E.

Dirhams (approximately $ 5.6 million at July 31, 2024 ) from a bank in the U.A.E.

As of July 31, 2024 the facility has an interest rate of approximately 8.7 %.

The facility expired in August 2024, however, the Company has started the process to renew and extend this credit arrangement and the credit facility has continued without interruption or penalty.

The Company had borrowed an aggregate o f $ 1.0 million as of July 31, 2024 and $ 0.1 million as of January 31, 2024 , respectively, and is presented as a component of current maturities of long-term debt in the Company's consolidated balance sheets.

As of July 31, 2024 and January 31, 2024 , the Company had unused borrowing availability of approximately $ 1.2 million and $ 1.0 million, respectively.

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

The Company has a revolving line for

million U.A.E.

Dirhams (approximately $

October 31, 2024

) from a bank in the U.A.E.

October 31, 2024

, the facility has an interest rate of approximately

and expired in July 2024.

The facility was subsequently renewed in November 2024 with substantially the same terms and conditions and expires in July 2025.

The Company had borrowed an aggregate of $ 1.1 million

as of October 31, 2024

and $ 0.2 million

as of January 31, 2024

, respectively, and is presented as a component of current maturities of long-term debt in the Company's consolidated balance sheets.

October 31, 2024 and January 31, 2024

, the Company had unused borrowing availability of approximately $ 1.0 million and $ 1.9 million, respectively.

The Company has a revolving line for

million U.A.E.

Dirhams (approximately $

October 31, 2024

) from a bank in the U.A.E.

October 31, 2024

, the facility has an interest rate of approximately

and expired in August 2024.

The facility was subsequently renewed in November 2024 with substantially the same terms and conditions, except for the revolving line, which decreased to 17.5 million U.A.E.

Dirhams (approximately $ 4.8 million at

October 31, 2024

) and expires in August 2025.

The reduction in the revolving line was due primarily to the removal of 2 million U.A.E.

Dirhams (approximately $ 0.5 million) in connection with a capital expenditure component that is no longer applicable to the revolving credit facility and, to a lesser extent, 1 million U.A.E.

Dirhams (approximately $ 0.3 million) due to a decrease in revolver capacity.

The Company had borrowed an aggregate of $ 0.7 million

as of October 31, 2024

and $ 0.1 million

as of January 31, 2024

, respectively, and is presented as a component of current maturities of long-term debt in the Company's consolidated balance sheets.

The Company had unused borrowing availability of approximately $ 1.0 million as of

October 31, 2024 and January 31, 2024

, respectively.

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

million Egyptian Pounds (approximately $

July 31, 2024 ).

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.

October 31, 2024

This credit arrangement is in the form of project financing, for which 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.

July 31, 2024 , the facility has an interest rate of approximately

and expires in November 2024.

As of July 31, 2024 , the Company had substantially nothing outstanding with respect to this credit arrangement, and approximately $ 1.4 million outstanding at January 31, 2024 , which is presented as a component of current maturities of long-term debt in the Company's consolidated balance sheets.

October 31, 2024

, the facility has an interest rate of approximately

and expired in November 2024.

The Company has started the process to renew and extend this credit agreement and the credit facility has continued without interruption or penalty.

October 31, 2024

, the Company had an immaterial amount outstanding with respect to this credit arrangement, and approximately $ 1.4 million outstanding at

January 31, 2024

, which is presented as a component of current maturities of long-term debt in the Company's consolidated balance sheets.

Further, as of

July 31, 2024 and

January 31, 2024 , the Company had unused borrowing capacity

of $ 2.1 million and $ 3.2 m illion, respectively.

December 2021, the Company entered into a credit arrangement for project financing with a bank in Egypt for

28.2 million Egyptian Pounds.

October 31, 2024

January 31, 2024

, the Company had unused borrowing capacity of $ 2.0 million and $ 3.2 million, respectively.

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

2.1 million Egyptian Pounds (approximatel

y $ 0.1 mi llion at

July 31, 2024 ).

million Egyptian Pounds (approximately $ 0.1 million at

October 31, 2024

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

November 2022, is

no longer available for borrowings by the Company.

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.

The Company had approximately

$ 0.1 million outstanding

as of July 31, 2024 and January 31, 2024 , 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 Riyals (approximately $ 9.9 million at July 31, 2024 ).

The Company had approximately $ 0.1 million outstanding

as of October 31, 2024 and January 31, 2024

, respectively, and is presented as a component of current maturities of long-term debt in the Company's consolidated balance sheets.

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

1 unchanged sentence

The facility was renewed in May 2024 with substantially the same terms and conditions and expires in May 2025.

As of July 31, 2024 , the facility has an interest rate of approximately 9.7 %.

The Company had borrowed an aggregate o f $ 2.6 million and $ 3.2 million as of July 31, 2024 and January 31, 2024 , respectively, and is presented as a component of current maturities of long-term debt in the Company's consolidated balance sheets.

The unused borrowing availability attributable to this credit arrangement at July 31, 2024 and January 31, 2024 , was $ 6.3 million and $ 6.1 million, respectively.

As of October 31, 2024 , the facility has an interest rate of approximately 9.5 % .

The Company had borrowed an aggregate of $ 1.3 million and $ 3.2 million as of October 31, 2024 and January 31, 2024 , respectively, and is presented as a component of current maturities of long-term debt in the Company's consolidated balance sheets.

The unused borrowing availability attributable to this credit arrangement at October 31, 2024 and January 31, 2024 , was $ 3.3 million and $ 6.1 million, respectively.

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

The lines are secured by certain equipment, certain assets (such as accounts receivable and inventory), and a guarantee by the Company.

The lines are secured by certain equipment, certain assets (such as accounts receivable and inventory), and in some cases, a guarantee by the Company.

Some credit arrangement covenants require a minimum tangible net worth to be maintained, including maintaining certain levels of intercompany subordinated debt.

1 unchanged sentence

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

The amount of foreign subsidiary debt guaranteed by the Company was approxim ately $ 1.1 million and $ 0.1 million at July 31, 2024 and January 31, 2024 , respectively.

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, 2024 , with the exception of those arrangements that have expired or are set to expire 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, 2024 , 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.

The amount of foreign subsidiary debt guaranteed by the Company was approxim ately $ 1.1 million and $ 0.1 million at October 31, 2024 and January 31, 2024 , respectively.

The Company was in compliance with respect to the covenants under the credit arrangements in the U.A.E., Egypt, and Saudi Arabia as of October 31, 2024 , with the exception of an arrangement that has expired and has not yet been renewed.

Although a certain arrangement has expired and the borrowings could be required to be repaid immediately by the bank, the Company is in regular communication with the bank throughout the renewal process and the arrangement has continued without interruption or penalty.

On October 31, 2024 , 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;

1 unchanged sentence

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, 2024 , the Company's interest rates ranged from 8.6 % to 20.8 %, with a weighted average rate of 11.5 %, and the Company had facility limits totaling $ 24.7 million under these credit arrangements.

As of July 31, 2024 , $ 7.1 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, 2024 , the Company had borrow ed $ 7.8 million and had an additional $ 12.6 million of borrowing remaining available under the foreign revolving credit arrangements.

The foreign revolving lines balances were included as a component of current maturities of long-term debt in the Company's consolidated balance sheets as of July 31, 2024 and January 31, 2024 .

Based on these base rates, as of October 31, 2024 , the Company's interest rates ranged from 7.7 % to 20.8 %, with a weighted average rate of 10.6 %, and the Company had facility limits totaling $ 19.7 million under these credit arrangements.

As of October 31, 2024 , $ 11.0 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, 2024 , the Company had borrow ed $ 3.2 million and had an additional $ 8.3 million of borrowing remaining available under the foreign revolving credit arrangements.

The foreign revolving lines balances were included as a component of current maturities of long-term debt in the Company's consolidated balance sheets as of October 31, 2024 and January 31, 2024 .

In June 2023, the Company assumed a promissory note of approximately $ 2.8 million in connection with the formation of the joint venture with Gulf Insulation Group (see Note 16 ).

1 unchanged sentence

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 23, 2042.

As of July 31, 2024 , the remaining balance on the mortgage in Canada is approximately CAD 5.9 million (approximately $ 4.3 million at July 31, 2024 ).

The interest rate is variable, and was 8.8 % at July 31, 2024 .

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 July 31, 2024 and January 31, 2024 , respectively.

As of October 31, 2024 , the remaining balance on the mortgage in Canada is approximately CAD 5.8 million (approximately $ 4.2 million at October 31, 2024 ).

The interest rate is variable, and was 7.8 % at October 31, 2024 .

Note 11 - Leases

The Company accounts for its leases under ASC 842, Leases .

Under this guidance, arrangements meeting the definition of a lease are classified as operating or financing leases, and are recorded on the consolidated balance sheets.

The Company classifies its leases as either operating or finance leases, which are recorded on the Company's consolidated balance sheets.

Operating leases are included in operating lease right-of-use (“ROU”) assets, operating lease liabilities short-term, and operating lease liabilities long-term in the Company's consolidated balance sheets.

Finance leases are included in property, plant and equipment, current maturities of long-term debt, and long-term debt less current maturities in the Company's consolidated balance sheets.

ROU assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent the Company's obligation to make lease payments arising from the lease calculated by discounting fixed lease payments over the lease term at the rate implicit in the lease or the Company’s incremental borrowing rate.

Lease liabilities are increased by interest and reduced by payments each period, and the ROU asset is amortized over the lease term.

For operating leases, interest on the lease liability and the amortization of the ROU asset result in straight-line rent expense over the lease term.

For finance leases, interest on the lease liability and the amortization of the ROU asset results in front-loaded expense over the lease term.

Variable lease expenses are recorded when incurred.

ROU assets and liabilities are recognized at the commencement date of the lease based on the present value of lease payments over the lease term.

As most of the Company's leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments.

The incremental borrowing rate is the rate of interest that the Company would have to pay to borrow on a collateralized basis over a similar term and amount equal to the lease payments in a similar economic environment.

In calculating the ROU asset and lease liability, the Company elects to combine lease and non-lease components.

Additionally, the Company excludes short-term leases having an initial term of 12 months or less in accordance with the new guidance as an accounting policy election, and recognizes rent expense on a straight-line basis over the lease term.

Additionally, most of the Company's leases do not provide an implicit rate, resulting in the Company using its incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments.

The Company excludes short-term leases having an initial term of 12 months or less in accordance with an accounting policy election and recognizes rent expense on a straight-line basis over the lease term.

Operating Leases.

1 unchanged sentence

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

Dirhams (approximatel y $ 0.3 million at July 31, 2024 ), inclusive of rent, escalation clauses, and other common charges contained in the agreement.

Dirhams (approximatel y $ 0.3 million at October 31, 2024 ), inclusive of rent, escalation clauses, and other common charges contained in the agreement.

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 expects to vacate the remaining space in December 2024.

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, 2024 .

The termination resulted in decreases of $ 0.4 million, $ 6.0 million and $ 5.5 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, 2024 .

There were no other adjustments in connection with these terminations for the year ended January 31, 2024, or during the three and six months ended July 31, 2024 .

At July 31, 2024 , the Company had total operating lease liabilities of $ 7.7 million and operating ROU assets of $ 6.9 million , which are reflected in the consolidated balance sheets.

In March and December 2022, the Company served Notices of Termination to its lessor in connection with a lease of land and buildings in Fujairah in the U.A.E., for which the Company intended to relocate to a different facility in Abu Dhabi.

Portions of the leased space were vacated in December 2022, and the Company expects to vacate the remaining space in December 2024.

In connection with the Notices of Termination, the Company was required to pay an additional amount equal to three months' rent.

This also resulted in adjustments to reduce the carrying balances attributable to short-term and long-term operating lease liabilities and operating lease right-of-use assets by $ 0.4 million, $ 6.0 million, and $ 5.5 million, respectively.

The additional payment and the effect of these adjustments were recorded in prior periods, and did not impact the Company's consolidated financial statements for the year ended January 31, 2024 , or during the three and nine months ended October 31, 2024 .

There were no other adjustments in connection with the Notices the Termination.

Finance Leases.

3 unchanged sentences

renewal options have not been included in the calculation of the lease liabilities and 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.

At July 31, 2024 , the Company also had finance lease liabilities of $ 0.1 million included in current maturities of long-term debt and long-term debt less current maturities, and financial ROU assets of $ 0.3 million which were included in property plant and equipment, net of accumulated depreciation in the consolidated balance sheets.

At October 31, 2024 , the Company had finance lease liabilities of $ 0.1 million included in current maturities of long-term debt and long-term debt less current maturities, and financial ROU assets of $ 0.3 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, 2024

October 31, 2024

January 31, 2024

13 unchanged sentences

Operating lease liability short-term

$ 1,061 $ 914

Operating lease liability long-term

2 unchanged sentences

Total lease costs consist of the following:

Three Months Ended July 31,

Six Months Ended July 31,

Three Months Ended October 31,

Nine Months Ended October 31,

Consolidated Statements of Operations Classification

18 unchanged sentences

Supplemental cash flow information related to leases is as follows:

Six Months Ended July 31,

Nine Months Ended October 31,

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

3 unchanged sentences

ROU assets obtained in exchange for new lease obligations:

Finance leases liabilities

Operating leases liabilities

1 unchanged sentence

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

July 31, 2024

October 31, 2024

Weighted-average remaining lease terms (in years):

4 unchanged sentences

Operating leases

Maturities of lease liabilities as of July 31, 2024 , are as follows:

Maturities of lease liabilities as of October 31, 2024 , are as follows:

Operating Leases Finance Leases

8 unchanged sentences

amount representing interest

Total lease liabilities at July 31, 2024

Rent expense on operating leases, which is recorded on straight-line basis, was $ 0.6 million for the three months ended July 31, 2024 and 2023 , respectively.

( 8,420 ) ( 6 )

Total lease liabilities at October 31, 2024

Rent expense attributable to operating leases was $ 0.6 million for the three months ended October 31, 2024 and 2023 , respectively.

Note 12 - Restricted cash

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

July 31, 2024

October 31, 2024

January 31, 2024

13 unchanged sentences

The additional segment disclosures are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

The Company is still evaluating the impact of these updated disclosure requirements on its statement of financial position or results of operations.

The Company is still evaluating the impact of these updated disclosure requirements on its consolidated financial statements and related disclosures.

In December 2023, the FASB issued ASU No.

3 unchanged sentences

The new income tax disclosures are effective for fiscal years beginning after December 15, 2024.

The Company is still evaluating this standard update but does not expect it to have a material impact on its statement of financial position or results of operations.

The Company is still evaluating this standard update but does not expect it to have a material impact on its financial position or results of operations.

In November 2024, the FASB issued ASU No.

2024 - 03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220 - 40 ):

Disaggregation of Income Statement Expenses .

In accordance with this standard update, companies are required to disclose specified information about certain costs and expenses in the notes to the financial statements at each interim and annual reporting period.

The amendments are effective for fiscal years beginning after December 15, 2026, and for interim periods within fiscal years beginning after December 15, 2027.

Early adoption is permitted.

The Company is currently evaluating the impact of this standard update on its consolidated financial statements and related disclosures.

Note 15 - Treasury stock

3 unchanged sentences

During the twelve months ended January 31, 2024 , the Company used the remaining $ 1.0 million authorized to repurchase its outstanding shares of common stock.

Accordingly, t here was no repurchase activity with respect to the Company's shares of common stock during the three and six months ended July 31, 2024 .

Accordingly, t here was no repurchase activity with respect to the Company's shares of common stock during the three and nine months ended October 31, 2024 .

On August 29, 2024, the Company retired all remaining 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 in retained earnings in accordance with ASC 505 - 30, Equity-Treasury Stock .

Note 16 - Noncontrolling interest

4 unchanged sentences

The primary business activities of the JV include the manufacture and sale of the pre-insulated piping systems and pipe coating services.

GIG acquired its 40 % non-controlling interest by contributing assets to the JV of approximately $ 6.8 million in fair value, mainly consisting of an idle building and equipment.

The fair value of the net assets contributed was determined through the use of a third -party appraiser using the indirect cost method.

Pursuant to the applicable guidance in ASC 805, Business Combinations and Noncontrolling Interests , the Company determined that the transaction did not meet the necessary conditions to be considered a business as the set of assets acquired did not contain an organized workforce and therefore was recorded as an asset acquisition.

The assets transferred by the Company to the JV were recorded at historical cost, and no gain was recognized as a result of this exchange due to the Company having a controlling interest in the JV.

The Company’s measurement of the acquired assets is comprised of the fair value of the contributed net assets given up by the Company and the fair value of the non-controlling interest excluding the contributed assets.

The non-controlling interest attributable to the other party was recorded as of the investment date and was measured as part of the carrying amount of the ownership interest in the net assets given up by the Company plus the fair value of the non-controlling interest excluding the contributed assets.

No gain or loss was recognized as a result of this exchange.

The Company also assumed a promissory note payable to GIG issued as part of the formation of the JV in the principal amount of $ 2.8 million.

The principal amount is presented within the Long-term debt, less current maturities caption in the Company's consolidated balance sheets.

The Company also has a promissory note due from the JV that was issued as part of the formation of the JV in the amount of approximately $ 4.2 million and eliminates in consolidation.

The Company has a 60 % controlling financial interest in the JV 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, GIG.

Pursuant to the applicable guidance contained in ASC 810, Consolidations , the balance sheets and operating activities of this investment are included in the Company's consolidated financial statements.

T he carrying amount of the assets and liabilities of the JV that are consolidated by the Company totaled $ 26.4 million and $ 15.5 million, respectively, as of July 31, 2024 .

The balance sheets and operating activities of this investment are included in the Company's consolidated financial statements.

T he carrying amount of the assets and liabilities of the JV that are consolidated by the Company totaled $ 31.8 million and $ 18.5 million, respectively, as of October 31, 2024 .

The Company adjusts net income in the consolidated statements of operations to exclude the proportionate share of results that is attributable to the non-controlling interest.

Additionally, the Company presents the proportionate share that is attributable to the 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 at any time after five years following the date of formation.

The redemption amount per the JV Agreement is at fair value of the non-controlling interest which represents the fair value of ordinary shares of the JV that are owned by GIG.

Further, neither the call option nor put option contained in the JV Agreement met 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 and not a freestanding instrument.

As a result of the non-controlling interest being subject to redemption rights that are not entirely within the Company's control, it was concluded that the necessary conditions were met to be accounted for in accordance with ASC 480, Distinguishing Liabilities from Equity .

Pursuant to this accounting standard, the Company determined that the only criteria for the security to become redeemable is the passage of time and, therefore, is considered probable of redemption.

The Company made a policy election to measure changes in the non-controlling interest immediately as they occur and adjust the carrying amount of non-controlling interest equal to its redemption amount as the non-controlling interest has no stated fixed price or fixed date.

As such, at each subsequent balance sheet date following the formation of the JV, the Company must determine whether further adjustment is required to increase the carrying value of the redeemable non-controlling interest.

If the Company determines that the fair value of the redeemable non-controlling interest exceeds its carrying value, an adjustment is made to reflect this change.

However, if the value is determined to be less than its carrying value, such adjustment is limited to its original carrying value at the formation of the business arrangement.

Additionally, adjustments made to reflect the change in the value of the redeemable non-controlling interest are offset against permanent equity within the Company's consolidated balance sheets.

Net income attributable to GIG was $ 1.0 million and $ 0.1 million for the three months ended July 31, 2024 and 2023 , respectively.

Net income attributable to GIG was $ 1.3 million and $ 0.1 million for the six months ended July 31, 2024 and 2023 , respectively.

Additionally, the Company presents the proportionate share that is attributable to the non-controlling interest as temporary equity within the consolidated balance sheets.

This temporary equity presentation is the result of the non-controlling interest being subject to certain redemption rights that are not entirely within the Company's control.

Due to these redemption rights, at each balance sheet date, the Company is required to adjust the carrying value attributable to the non-controlling interest to fair value, which is limited to its original carrying value at the formation of the business arrangement.

Adjustments made to reflect the change in the value of the redeemable non-controlling interest are offset against permanent equity within the Company's consolidated balance sheets.

Net income attributable to GIG was $ 1.0 million and $ 1.4 million for the three months ended October 31, 2024 and 2023 , respectively.

Net income attributable to GIG was $ 2.3 million and $ 1.6 million for the nine months ended October 31, 2024 and 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.

The Company is the ultimate parent of the JV through its 60% controlling financial interest and as part of the JV Agreement majority control of the operational activities of the JV and no joint control exists.

The JV Agreement has no veto or kickout rights and board voting is proportional to the ownership interest.

Certain activities do include a two -thirds majority affirmative vote of shareholders of the JV and include acquiring another company, establishing new subsidiaries, entering another partnership or joint venture, engaging in any merger or materially changing the business of the JV.

These are considered protective rights.

The 60% equity ownership of the JV by the Company allows it to receive its proportionate share of losses and residual returns.

The non-controlling interest as measured at fair value was $ 8.1 million and $ 6.3 million, and was recorded within temporary equity at July 31, 2024 and January 31, 2024 , respectively.

The change in non-controlling interest consists of $ 1.3 million in current year net income attributable to non-controlling interest, and approximately $ 0.5 million as an adjustment in the carrying value of the redeemable non-controlling interest pertaining to the business arrangement.

In addition, there were no dividends or any other form of distributions from non-controlling interest for the period ended July 31, 2024 and January 31, 2024 , respectively.

The non-controlling interest as measured at fair value was $ 9.0 million and $ 6.3 million at October 31, 2024 and January 31, 2024 , respectively.

The change in non-controlling interest consists of $ 2.3 million in current year net income attributable to non-controlling interest, and approximately $ 0.4 million as an adjustment to the carrying value of the redeemable non-controlling interest pertaining to the business arrangement.

In addition, there were no dividends or other forms of distributions from non-controlling interest for the period ended October 31, 2024 and January 31, 2024 , respectively.

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