What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-12-23 compared with 2024-09-11 · 146 added, 146 removed, 144 unchanged (67% of the section changed)

12 unchanged sentences

Since the Company focuses on discrete projects, operating results can be significantly impacted as a result of large variations in the level of project activity in reporting periods.

Three Months Ended July 31,

Six Months Ended July 31,

Three Months Ended October 31,

Nine Months Ended October 31,

Change favorable (unfavorable)

7 unchanged sentences

Interest expense

Other (expense) income

Other expense

Income before income taxes

3 unchanged sentences

Net income (loss) attributable to common stock

Three months ended July 31, 2024

Three months ended July 31, 2023

Three months ended October 31, 2024

Three months ended October 31, 2023

Net sales were $

1 unchanged sentence

45.7 million in the

three months ended July 31, 2024 and 2023, respectively.

three months ended October 31, 2024 and 2023, respectively.

million, or 9%,

was a result of increased sales volumes.

was a result of the timing of project execution.

Gross profit:

Gross profit was $13.5 million, or 36% of net sales, and $9.5 million, or 27% of net sales, in the three months ended July 31, 2024 and 2023, respectively.

The increase of $4.0 million, was primarily driven by increased sales volumes and better margins due to product mix.

Gross profit was $14.1 million, or 34% of net sales, and $13.2 million, or 29% of net sales, in the three months ended October 31, 2024 and 2023, respectively.

The increase of $0.9 million, was driven primarily by better margins due to product mix.

General and administrative expenses:

General and administrative expenses were $6.0 million and $5.3 million in the three months ended July 31, 2024 and 2023, respectively.

The increase of $0.7 million, was due to higher payroll expenses and professional service fees in the quarter.

General and administrative expenses were $7.3 million and $5.7 million in the three months ended October 31, 2024 and 2023, respectively.

The increase of $1.6 million, was due to higher payroll expenses and professional fees in the quarter.

Selling expenses:

Selling expenses remained consistent and were $

Selling expenses were $

1.2 million and $

1.5 million in the

three months ended July 31, 2024 and 2023, respectively.

three months ended October 31, 2024 and 2023, respectively.

decrease of $

0.3 million, was due to lower payroll expense in the quarter.

Interest expense:

Net interest expense remained consistent and was $0.5 million and $0.6 million in the three months ended July 31, 2024 and 2023, respectively.

Other income:

Other income was consistent and less than $0.1 million in the three months ended July 31, 2024 and 2023 , respectively.

Net interest expense remained consistent and was $0.5 million and $0.6 million in the three months ended October 31, 2024 and 2023, respectively.

Other expense:

Other expense was $0.1 million and $0.5 million in the three months ended October 31, 2024 and 2023 , respectively.

The decrease of $0.4 million, was due primarily to exchange rate fluctuations in foreign currency transactions.

Income tax expense:

The Company's ETR was 23% and 45% in the three 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 ETR was 32% and 31% in the three 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.

For further information, see Note 6 - Income taxes, in the Notes to Consolidated Financial Statements.

Net income attributable to common stock:

Net income attributable to common stock was $3.3 million and $1.0 million in the three months ended July 31, 2024 and 2023 , respectively.

The increase of $2.3 million was mainly due to increased sales activity and better margin performance in the quarter.

Six months ended July 31, 2024

Six months ended July 31, 2023

Net income attributable to common stock was $2.5 million and $1.9 million in the three months ended October 31, 2024 and 2023 , respectively.

The increase of $0.6 million, was mainly due to better project execution in the quarter.

Nine months ended October 31, 2024

Nine months ended October 31, 2023

Net sales were $

1 unchanged sentence

110.5 million in the

six months ended July 31, 2024 and 2023, respectively.

nine months ended October 31, 2024 and 2023, respectively.

million, or 3%

, was a result of increased sales volumes.

, was a result of increased sales volumes in the Middle East.

Gross profit:

Gross profit was $24.0 million, or 33% of net sales, and $16.2 million, or 25% of net sales, in the six months ended July 31, 2024 and 2023, respectively.

The increase of $7.8 million, was primarily driven by increased sales volumes and better margins due to product mix.

Gross profit was $38.1 million, or 34% of net sales, and $29.4 million, or 27% of net sales, in the nine months ended October 31, 2024 and 2023, respectively.

The increase of $8.7 million, was driven primarily by better margins due to product mix.

General and administrative expenses:

General and administrative expenses were $12.1 million and $10.7 million in the six months ended July 31, 2024 and 2023, respectively.

The increase of $1.4 million, was due to higher payroll expenses and professional service fees.

General and administrative expenses were $19.5 million and $16.4 million in the nine months ended October 31, 2024 and 2023, respectively.

The increase of $3.1 million, was due to higher payroll expenses and professional fees.

Selling expenses:

Selling expenses remained consistent and were $

Selling expenses were $

3.8 million and $

4.2 million in the

six months ended July 31, 2024 and 2023, respectively.

nine months ended October 31, 2024 and 2023, respectively.

decrease of $

0.4 million, was due to lower payroll expenses.

Interest expense:

Net interest expense remained consistent and was $1.0 million and $1.1 million in the six months ended July 31, 2024 and 2023, respectively.

Other (expense) income:

Other (expense) income resulted in expense of $(0.1) million and income of $0.2 million in the six months ended July 31, 2024 and 2023 , respectively.

The change was primarily due to exchange rate fluctuations in foreign currency transactions.

Net interest expense was $1.5 million and $1.8 million in the nine months ended October 31, 2024 and 2023, respectively.

The decrease of $0.3 million, was due primarily to declining interest rates on certain variable rate debt.

Other expense:

Other expense was $0.2 million and $0.4 million in the nine months ended October 31, 2024 and 2023 , respectively.

The change was due primarily to exchange rate fluctuations in foreign currency transactions.

Income tax expense:

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

The Company's ETR was 28% and 49% in 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.

For further information, see Note 6 - Income taxes, in the Notes to Consolidated Financial Statements.

Net income (loss) attributable to common stock:

Net income (loss) attributable to common stock was $4.7 million and $(0.1) million in the six months ended July 31, 2024 and 2023 , respectively.

The increase of $4.8 million was mainly due to increased sales activity and better margin performance.

Net income attributable to common stock:

Net income attributable to common stock was $7.2 million and $1.8 million in the nine months ended October 31, 2024 and 2023 , respectively.

The increase of $5.4 million, was mainly due to better project execution during the year.

Liquidity and capital resources

Cash and cash equivalents as of July 31, 2024 were $9.5 million compared to $5.8 million on January 31, 2024.

On July 31, 2024, $0.5 million was held in the United States, and $9.0 million was held at the Company's foreign subsidiaries.

The Company's working capital was $44.3 million on July 31, 2024 compared to $41.1 million on January 31, 2024.

Cash and cash equivalents as of October 31, 2024 were $13.3 million compared to $5.8 million on January 31, 2024.

On October 31, 2024, $0.9 million was held in the United States, and $12.4 million was held at the Company's foreign subsidiaries.

The Company's working capital was $50.6 million on October 31, 2024 compared to $41.1 million on January 31, 2024.

Of the working capital components, accounts receivable decreased by $6.7 million and cash and cash equivalents increased by $7.5 million as the result of the movements discussed below.

As of July 31, 2024, the Company ha d $4.7 million of borrowing capacity under the Renewed Senior Credit Facility in North America and $12.6 million of borrowing capacity under its foreign revolving credit agreements.

The Company had $6.7 million borrowed under the Renewed Senior Credit Facility and $7.8 million borro wed under its foreign revolving credit agreements at July 31, 2024.

Net cash from operating activities was $ 3.8 million and $ 3.5 million in the six months ended July 31, 2024 and 2023 , respectively.

The increase of $ 0.3 million was primarily attributable to changes in accounts receivable and customer deposits, partially offset by changes to accounts payable and prepaids expenses and other current assets.

Net cash from investing activities in the six months ended July 31, 2024 and 2023 was $( 3.2 ) million and $( 6.8 ) million, respectively.

As of October 31, 2024, the Company ha d $3.5 million of borrowing capacity under the Renewed Senior Credit Facility in North America and $8.3 million of borrowing capacity under its foreign revolving credit agreements.

The Company had $7.8 million borrowed under the Renewed Senior Credit Facility and $3.2 million borro wed under its foreign revolving credit agreements at October 31, 2024.

Net cash provided by operating activities was $ 7.9 million and $ 7.6 million in the nine months ended October 31, 2024 and 2023 , respectively.

The increase of $ 0.3 million was primarily attributable to changes in accounts receivable and costs and estimated earnings in excess of billings on uncompleted contracts, partially offset by changes to accounts payable.

Net cash used in investing activities in the nine months ended October 31, 2024 and 2023 was $( 1.6 ) million and $( 8.2 ) million, respectively.

The decrease of $( 6.6 ) million was due primarily to fewer capital expenditures in the United States and Canada.

Net cash from financing activities in the six months ended July 31, 2024 and 2023 was $ 2.2 million and $ 3.7 million, respectively.

The main source of cash from financing activities in the six months ended July 31, 2024 , consisted of net proceeds from borrowings of approximately $2.7 million under the Company's credit facilities, as compared to net proceeds of approximately $4.8 million in the six months ended July 31, 2023 .

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

Net cash provided by financing activities in the nine months ended October 31, 2024 and 2023 remained consistent and was $ 1.3 million and $ 1.2 million, respectively.

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

See Note 10 - Debt, in the Notes to Consolidated Financial Statements for further discussion relating to this topic.

1 unchanged sentence

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.

See Note 15 - Treasury stock, for further discussion relating to this topic.

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.

See Note 15 - Treasury stock, in the Notes to Consolidated Financial Statements for further discussion relating to this topic.

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.

July 31, 2024, the Company had borrowed an aggregate of

October 31, 2024, the Company had borrowed an aggregate of

million at a rate of 9.5%

1 unchanged sentence

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.

Revolving lines - foreign

6 unchanged sentences

Dirhams (approximately $

2.2 million at

July 31, 2024) from a bank in the U.A.E.

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

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.

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

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

1 unchanged sentence

Dirhams (approximately $

5.6 million at

July 31, 2024) from a bank in the U.A.E.

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

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.

July 31, 2024 and January 31, 2024, the Company had unused borrowing availability of approximately

$1.2 million and

$1.0 million, respectively.

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.

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.

3 unchanged sentences

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.

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.

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

million Saudi Riyals (approximately $

9.9 million at

July 31, 2024).

October 31, 2024

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.

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

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.

October 31, 2024

, the facility has an interest rate of approximately

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

July 31, 2024 and

January 31, 2024, was

$6.3 million and $6.1 million, respectively.

October 31, 2024

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.

2 unchanged sentences

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.

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.

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.

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;

2 unchanged sentences

Based on these base rates, as of

July 31, 2024, the Company's interest rates ranged from

October 31, 2024, the Company's interest rates ranged from

20.8%, with a weighted average rate of

1 unchanged sentence

million under these credit arrangements.

July 31, 2024

October 31, 2024

$11.0 million

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

October 31, 2024

, the Company had borrow

1 unchanged sentence

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.

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).

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).

I n accordance with the promissory note, all principal is due and payable on the maturity date of April 9, 2026, with the option to prepay, in whole or in part, at any time prior to the maturity date, without premium or penalty.

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.

July 31, 2024, the remaining balance on the mortgage in Canada is approximately CAD

October 31, 2024, the remaining balance on the mortgage in Canada is approximately CAD

5.8 million (approximately $

4.2 million at

July 31, 2024).

October 31, 2024).

The interest rate is variable, and was

July 31, 2024.

October 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 and January 31, 2024, respectively.

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.

4 unchanged sentences

40.1 million as of

July 31, 2024, with a remaining balance due in the amount 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.

4 unchanged sentences

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 $

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 supports the continued cooperation between the Company and the customer.

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

July 31, 2024.

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.

6 unchanged sentences

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 2. Management’s Discussion and Analysis