Perma-Pipe International Holdings, Inc. 10-Q

Item 1. Financial Statements PERMA-PIPE INTERNATIONAL HOLDINGS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) (Unaudited) Three Months Ended July 31, Six Months Ended July 31, 2025 2024 2025 2024 Net sales $ 47,902 $ 37,513 $ 94,648 $ 71,834 Cost of sales 33,479 24,039 63,501 47,843 Gross profit 14,423 13,474 31,147 23,991 Operating expenses General and administrative expenses 10,033 5,979 17,781 12,128 Selling expenses 1,203 1,353 2,289 2,588 Total operating expenses 11,236 7,332 20,070 14,716 Income from operations 3,187 6,142 11,077 9,275 Interest expense 415 514 821 1,021 Other expense 21 38 70 105 Income before income taxes 2,751 5,590 10,186 8,149 Income tax expense 1,489 1,306 3,070 2,076 Net income 1,262 4,284 7,116 6,073 Less: Net income attributable to non-controlling interest 411 995 1,313 1,341 Net income attributable to common stock $ 851 $ 3,289 $ 5,803 $ 4,732 Weighted average common shares outstanding Basic 8,007 7,954 7,995 7,930 Diluted 8,133 8,125 8,108 7,987 Earnings per share attributable to common stock Basic $ 0.11 $ 0.41 $ 0.73 $ 0.60 Diluted $ 0.10 $ 0.40 $ 0.72 $ 0.59 See accompanying notes to consolidated financial statements. 2 Table of Contents PERMA-PIPE INTERNATIONAL HOLDINGS, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In thousands) (Unaudited) Three Months Ended July 31, Six Months Ended July 31, 2025 2024 2025 2024 Net income $ 1,262 $ 4,284 $ 7,116 $ 6,073 Other comprehensive income Foreign currency translation adjustments, net of tax ( 111 ) ( 192 ) 811 ( 1,607 ) Comprehensive income $ 1,151 $ 4,092 $ 7,927 $ 4,466 Less: Comprehensive income attributable to non-controlling interests 411 995 1,313 1,341 Total comprehensive income attributable to common stock $ 740 $ 3,097 $ 6,614 $ 3,125 See accompanying notes to consolidated financial statements. 3 Table of Contents PERMA-PIPE INTERNATIONAL HOLDINGS, INC. CONSOLIDATED BALANCE SHEETS (In thousands, except per share data) (Unaudited) July 31, 2025 January 31, 2025 ASSETS Current assets Cash and cash equivalents $ 17,258 $ 15,716 Restricted cash 1,444 1,401 Trade accounts receivable, less allowance for credit losses of $ 1,064 at July 31, 2025 and $ 703 at January 31, 2025 47,206 43,148 Inventories 15,885 16,622 Prepaid expenses and other current assets 12,312 10,045 Unbilled accounts receivable 27,672 18,936 Costs and estimated earnings in excess of billings on uncompleted contracts 3,569 2,934 Total current assets 125,346 108,802 Long-term assets Property, plant and equipment, net of accumulated depreciation 39,267 35,365 Operating lease right-of-use asset 11,862 8,199 Deferred tax assets 6,218 6,639 Goodwill 2,154 2,057 Other long-term assets 4,143 4,179 Total long-term assets 63,644 56,439 Total assets $ 188,990 $ 165,241 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Trade accounts payable $ 23,069 $ 23,691 Accrued compensation and payroll taxes 1,655 1,388 Commissions and management incentives payable 5,551 5,840 Revolving line - North America 9,732 6,765 Current maturities of long-term debt 6,358 2,481 Customers' deposits 5,371 2,506 Operating lease liability short-term 1,383 1,071 Other accrued liabilities 6,198 6,697 Billings in excess of costs and estimated earnings on uncompleted contracts 1,641 1,249 Income taxes payable 3,104 2,375 Loan payable to GIG 2,753 - Total current liabilities 66,815 54,063 Long-term liabilities Long-term debt, less current maturities 3,711 3,669 Long-term finance obligations 8,662 8,798 Deferred compensation liabilities 2,040 1,689 Deferred tax liabilities 1,373 1,320 Operating lease liability long-term 11,425 7,713 Loan payable to GIG - 2,753 Other long-term liabilities 2,535 2,131 Total long-term liabilities 29,746 28,073 Commitments and contingencies Non-controlling interest 12,225 10,967 Stockholders' equity Common stock, $ .01 par value, authorized 50,000 shares; 8,044 issued and outstanding at July 31, 2025 and 7,983 at January 31, 2025 80 80 Additional paid-in capital 61,603 60,151 Retained earnings 25,907 20,104 Accumulated other comprehensive loss ( 7,386 ) ( 8,197 ) Total stockholders' equity 80,204 72,138 Total liabilities and stockholders' equity $ 188,990 $ 165,241 See accompanying notes to consolidated financial statements. 4 Table of Contents PERMA-PIPE INTERNATIONAL HOLDINGS, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (In thousands, except share data) (Unaudited) Common Stock Additional Paid-in Capital Retained Earnings Treasury Stock Accumulated Other Comprehensive Loss Total Stockholders' Equity Total stockholders' equity at January 31, 2025 $ 80 $ 60,151 $ 20,104 $ - $ ( 8,197 ) $ 72,138 Net income attributable to common stock - - 4,952 - - 4,952 Stock-based compensation expense - 224 - - - 224 Amount attributable to non-controlling interest - ( 369 ) - - - ( 369 ) Foreign currency translation adjustment - - - - 922 922 Total stockholders' equity at April 30, 2025 $ 80 $ 60,006 $ 25,056 $ - $ ( 7,275 ) $ 77,867 Net income attributable to common stock - - 851 - - 851 Common stock issued under stock plans, net of shares used for tax withholding - ( 295 ) - - - ( 295 ) Stock-based compensation expense - 1,468 - - - 1,468 Amount attributable to non-controlling interest - 424 - - - 424 Foreign currency translation adjustment - - - - ( 111 ) ( 111 ) Total stockholders' equity at July 31, 2025 $ 80 $ 61,603 $ 25,907 $ - $ ( 7,386 ) $ 80,204 Common Stock Additional Paid-in Capital Retained Earnings Treasury Stock Accumulated Other Comprehensive Loss Total Stockholders' Equity 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 Stock-based compensation expense - 228 - - - 228 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 Shares 2025 2024 Balances at beginning of year 7,982,568 8,016,781 Treasury stock retired - ( 112,015 ) Shares issued, net of shares used for tax withholding 61,115 77,802 Balances at period end 8,043,683 7,982,568 See accompanying notes to consolidated financial statements. 5 Table of Contents PERMA-PIPE INTERNATIONAL HOLDINGS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) Six Months Ended July 31, 2025 2024 Operating activities Net income $ 7,116 $ 6,073 Adjustments to reconcile net income to net cash (used in) provided by operating activities Depreciation and amortization 1,894 1,717 Deferred tax expense 428 203 Stock-based compensation expense 1,692 396 Provision on uncollectible accounts 361 43 Changes in operating assets and liabilities Accounts receivable ( 4,024 ) 6,454 Inventories 493 ( 809 ) Costs and estimated earnings in excess of billings on uncompleted contracts ( 243 ) 221 Accounts payable ( 2,607 ) ( 4,487 ) Accrued compensation and payroll taxes ( 47 ) ( 48 ) Customers' deposits 2,861 1,810 Income taxes payable 19 ( 789 ) Prepaid expenses and other current assets ( 1,834 ) ( 2,774 ) Unbilled accounts receivable ( 8,712 ) ( 1,857 ) Other assets and liabilities 1,295 ( 3,409 ) Net cash (used in) provided by operating activities ( 1,308 ) 2,744 Investing activities Capital expenditures ( 3,478 ) ( 1,233 ) Net cash used in investing activities ( 3,478 ) ( 1,233 ) Financing activities Proceeds from revolving credit lines 47,265 39,540 Payments of debt on revolving credit lines ( 40,455 ) ( 36,887 ) Payments of principal on finance obligations ( 112 ) ( 91 ) Payments of other debt ( 111 ) ( 117 ) Decrease in drafts payable 6 8 Payments on finance lease obligations ( 17 ) ( 16 ) Stock options exercised and taxes paid related to restricted shares vested ( 295 ) ( 201 ) Net cash provided by financing activities 6,281 2,236 Effect of exchange rate changes on cash, cash equivalents and restricted cash 90 ( 106 ) Net increase in cash, cash equivalents and restricted cash 1,585 3,641 Cash, cash equivalents and restricted cash - beginning of period 17,117 7,240 Cash, cash equivalents and restricted cash - end of period $ 18,702 $ 10,881 Supplemental cash flow information Cash interest paid $ 801 $ 1,000 Cash income taxes paid $ 1,769 $ 2,436 Fixed assets acquired - non-cash $ 1,669 $ - See accompanying notes to consolidated financial statements. 6 Table of Contents PERMA-PIPE INTERNATIONAL HOLDINGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Tabular amounts in thousands, except per share data, or unless otherwise specified) (Unaudited) Note 1 - Basis of presentation The interim consolidated financial statements of Perma-Pipe International Holdings, Inc., and subsidiaries (collectively, "PPIH", "Company", or "Registrant") are unaudited, but include all adjustments that the Company's management considers necessary to fairly state the financial position and results of operations for the periods presented. These adjustments consist of normal recurring adjustments. Certain information and footnote disclosures have been omitted pursuant to Securities and Exchange Commission ("SEC") rules and regulations. The consolidated balance sheet as of January 31, 2025 is derived from the audited consolidated balance sheet as of that date. The results of operations for any interim period are not necessarily indicative of future or annual results. Interim financial statements should be read in conjunction with the financial statements and the notes thereto included in the Company's latest Annual Report on Form 10 -K. The Company's fiscal year ends on January 31. Years and balances described as 2025 and 2024 are for the fiscal year ending January 31, 2026 and for the fiscal year ended January 31, 2025 , respectively. Note 2 - Business segment reporting The Company operates under one segment: Piping Systems. The results are presented on a consolidated basis to the Chief Executive Officer who serves as the chief operating decision maker ("CODM"). The CODM regularly reviews consolidated revenues, significant expenses, and consolidated net income attributable to common stock to make operating decisions and assess performance. The CODM uses this information in making company-wide decisions when determining how to allocate resources. Significant expenses represent amounts that are regularly provided to the CODM and included in consolidated net income attributable to common stock. The following table summarizes the Company's revenues, net income attributable to common stock, and significant expenses: Three Months Ended July 31, Six Months Ended July 31, 2025 2024 2025 2024 Net sales $ 47,902 $ 37,513 $ 94,648 $ 71,834 Cost of sales Labor 6,904 5,312 13,193 10,550 Materials 18,947 12,719 36,363 25,902 Depreciation and amortization 860 738 1,710 1,472 Other costs of sales 6,768 5,270 12,235 9,919 Total cost of sales 33,479 24,039 63,501 47,843 Operating expenses Salaries and wages 6,928 4,284 11,145 7,658 Depreciation and amortization 95 142 184 245 Other general and administrative expense 3,010 1,553 6,452 4,225 General and administrative expenses 10,033 5,979 17,781 12,128 Selling expense 1,203 1,353 2,289 2,588 Total operating expenses 11,236 7,332 20,070 14,716 Income from operations 3,187 6,142 11,077 9,275 Interest expense 415 514 821 1,021 Other expense 21 38 70 105 Income before income tax 2,751 5,590 10,186 8,149 Income tax expense 1,489 1,306 3,070 2,076 Net income 1,262 4,284 7,116 6,073 Less: Net income attributable to non-controlling interest 411 995 1,313 1,341 Net income attributable to common stock $ 851 $ 3,289 $ 5,803 $ 4,732 The CODM regularly reviews asset information by our reporting segment in a manner that is consistent with the presentation on the Company's accompanying consolidated balance sheets. 7 Table of Contents Note 3 - Accounts receivable The majority of the Company's accounts receivable are due from geographically dispersed contractors and manufacturing companies. Credit is extended based on an evaluation of a customer's financial condition. In the United States, collateral is not generally required. In the United Arab Emirates ("U.A.E."), Saudi Arabia, Egypt and India, letters of credit are usually obtained for significant orders. Accounts receivable are due within various time periods specified in the terms applicable to the specific customer and are stated as amounts due from customers net of an allowance for claims and credit losses. Standard payment terms are generally net 30 to 60 days. The Company maintains an allowance for credit losses for accounts receivable. The assessment of the allowance for credit losses involves certain judgments and estimates. Management estimates the allowance balance using relevant available information from internal and external sources relating to past events, current conditions and reasonable and supportable forecasts. The Company may also establish an allowance for credit losses for specific receivables when it is probable that a specific receivable will not be collected and the loss can be reasonably estimated. Past due trade accounts receivable balances are written off when the Company's collection efforts have been unsuccessful in collecting the amount due and the amount is deemed uncollectible. The write off is recorded against the allowance for credit losses. For the three and six months ended July 31, 2025 and 2024 , no individual customer accounted for more than 10% of the Company's consolidated net sales. As of July 31, 2025 and January 31, 2025 , no individual customer accounted for more than 10% of the Company's accounts receivable . Note 4 - Revenue recognition The Company accounts for its revenues under Accounting Standards Codification ("ASC") 606, Revenue from Contracts with Customers . Revenue from contracts with customers The Company defines a contract as an agreement that has approval and commitment from both parties, defined rights and identifiable payment terms, which ensures the contract has commercial substance and that collectability is reasonably assured. The Company’s standard revenue transactions are classified into two main categories: 1 ) Specialty Piping 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. 2 ) Products - which include cables, leak detection products, heat trace products, material/goods not bundled with piping or flowline systems, and field services not bundled into a project contract. In accordance with ASC 606 - 10 - 25 - 27 through 29, the Company recognizes specialty piping and coating systems revenue over time as the manufacturing process progresses because one of the following conditions exists: 1 ) the customer owns the material that is being coated, so the customer controls the asset and thus the work-in-process; or 2 ) the customer controls the work-in-process due to the custom nature of the pre-insulated, fabricated system being manufactured, which has no alternative future use, and there is a right to payment for work performed to date plus profit margin. 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, 2025 and 2024 are as follows: Three Months Ended July 31, Six Months Ended July 31, 2025 2024 2025 2024 Sales % of Total Sales % of Total Sales % of Total Sales % of Total Products $ 3,451 7 % $ 2,795 7 % $ 7,091 8 % $ 6,048 8 % Specialty Piping Systems and Coating Revenue recognized under input method 12,965 27 % 12,613 34 % 25,025 26 % 22,752 32 % Revenue recognized under output method 31,486 66 % 22,105 59 % 62,532 66 % 43,034 60 % Total $ 47,902 100 % $ 37,513 100 % $ 94,648 100 % $ 71,834 100 % The input method as noted in ASC 606 - 10 - 55 - 20 is used by certain operating entities to measure revenue by the costs incurred to date relative to the estimated costs to satisfy the contract over time. Generally, these contracts are considered a single performance obligation satisfied over time and due to the custom nature of the goods and services, the "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 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 under the contract. 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. 8 Table of Contents Contract assets and liabilities Contract assets represent revenue recognized in excess of amounts billed for work in progress for which the Company has a valid contract and an enforceable right to payment for work completed. Contract liabilities represent billings in excess of costs for work in progress for which the Company has a valid contract and an enforceable right to payment for work completed. Both customer billings and the satisfaction (or partial satisfaction) of the performance obligation(s) occur throughout the manufacturing process and impact the period end balances in these accounts. In addition, contract assets include receivables or amounts that are billable beyond the passage of time. The following table shows the reconciliation of costs in excess of billings and billings in excess of costs: July 31, 2025 January 31, 2025 Costs incurred on uncompleted contracts $ 16,079 $ 11,621 Estimated earnings 10,842 9,366 Earned revenue 26,921 20,987 Less billings to date 24,993 19,302 Costs in excess of billings, net $ 1,928 $ 1,685 Balance sheet classification Contract assets: Costs and estimated earnings in excess of billings on uncompleted contracts $ 3,569 $ 2,934 Contract liabilities: Billings in excess of costs and estimated earnings on uncompleted contracts ( 1,641 ) ( 1,249 ) Costs in excess of billings, net $ 1,928 $ 1,685 The Company anticipates that substantially all costs incurred on uncompleted contracts as of July 31, 2025 will be billed and collected within one year . Unbilled accounts receivable The Company has recorded $ 27.7 million and $ 18.9 million of unbilled accounts receivable on the consolidated balance sheet s as of July 31, 2025 and January 31, 2025 , 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, 2025 will be billed within one year. 9 Table of Contents Note 5 - Inventories Inventories are stated at the lower of cost or net realizable value. Cost is determined using the first -in, first -out method for all inventories. July 31, 2025 January 31, 2025 Raw materials $ 16,164 $ 16,374 Work in process 437 745 Finished goods 298 366 Subtotal 16,899 17,485 Less allowance 1,014 863 Inventories $ 15,885 $ 16,622 The Company conducts periodic reviews of its inventory and records allowances for slow moving and obsolete items to reflect their net realizable value, which is primarily attributable to finished goods. 10 Table of Contents Note 6 - Income taxes The determination of the consolidated provision for income taxes, deferred tax assets and liabilities and related valuation allowances requires management to make judgments and estimates. As a company with subsidiaries in foreign jurisdictions, the process of calculating income taxes involves estimating current tax obligations and exposures in each jurisdiction as well as making judgments regarding the future recoverability of deferred tax assets. The relative proportion of taxable income earned domestically versus internationally can fluctuate significantly from period to period. Changes in the estimated level of annual pre-tax income, tax laws and the results of tax audits can affect the overall effective income tax rate, which impacts the level of income tax expense and net income. Judgments and estimates related to the Company's projections and assumptions are inherently uncertain; therefore, actual results could differ materially from projections. The Company's worldwide effective tax rates ("ETR") for the three months ended July 31, 2025 and 2024 were 54 % and 23 % , respectively. The Company's ETR was 30 % and 25 % for the six months ended July 31, 2025 and 2024 , respectively. The change in the ETR is due to the mix of income and loss in various jurisdictions, primarily an increase in income in UAE, and a tax deduction limitation that was attributable to an acceleration of certain executive compensation. 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 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 $ 1.0 million as of July 31, 2025 related to these taxes. On July 4, 2025, new tax legislation was signed into law (known as the "One Big Beautiful Bill Act" or "OBBBA") which makes permanent many of the tax provisions enacted in 2017 as part of the Tax Cuts and Jobs Act that were set to expire at the end of 2025. In addition, the OBBBA makes changes to certain U.S. corporate tax provisions, but many are generally not effective until 2026. Due to the timing of enactment within our current period end, the Company has undergone efforts to reasonably estimate the impact of the Act on our condensed consolidated financial statements and there were no material impacts to the financial statements. We will continue to evaluate the full impact of these legislative changes as more guidance becomes available. Note 7 - Goodwill All identifiable goodwill as of July 31, 2025 and January 31, 2025 , 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: January 31, 2025 Foreign exchange change effect July 31, 2025 Goodwill $ 2,057 $ 97 $ 2,154 There were no triggering events identified during the three and six months ended July 31, 2025 . 11 Table of Contents 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, 2025 , the Company had reserved a total of 197,026 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"). The 2024 Plan will expire in July 2027. 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. Stock-based compensation expense The Company has granted stock-based compensation awards to eligible employees, officers and independent directors. The Company recognized the following stock-based compensation expense for the periods presented: Three Months Ended July 31, Six Months Ended July 31, 2025 2024 2025 2024 Restricted stock-based compensation expense $ 1,468 $ 177 $ 1,692 $ 396 Stock options The Company did not grant any stock options during the three or six months ended July 31, 2025 . The following table summarizes the Company's stock option activity: Options Weighted Average Exercise Price (Per share) Weighted Average Remaining Contractual Term (In years) Aggregate Intrinsic Value Outstanding at January 31, 2025 1 $ 6.85 0.8 $ 4 Exercised - - - - Expired or forfeited - 6.38 - - Outstanding and exercisable at July 31, 2025 1 $ 7.33 0.8 $ 2 There was no vesting, expiration or forfeiture of previously unvested stock options during the six months ended July 31, 2025 . In addition , there were no remaining unvested stock options outstanding, and therefore no unrecognized compensation expense related to unvested stock options. 12 Table of Contents Restricted stock The following table summarizes the Company's restricted stock activity for the six months ended July 31, 2025 : Restricted Shares Weighted Average Price (Per share) Aggregate Intrinsic Value Outstanding at January 31, 2025 230 $ 9.05 $ 2,080 Granted 90 21.61 Vested and issued ( 111 ) 10.99 Forfeited or retired for taxes ( 22 ) 17.41 Outstanding at July 31, 2025 187 $ 17.48 $ 2,228 As of July 31, 2025 , there was $ 2.1 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 2.3 years . Note 9 - Earnings per share Three Months Ended July 31, Six Months Ended July 31, 2025 2024 2025 2024 Basic weighted average common shares outstanding at July 31, 2025 8,007 7,954 7,995 7,930 Dilutive effect of equity compensation plans 126 171 113 57 Weighted average common shares outstanding assuming full dilution 8,133 8,125 8,108 7,987 Stock options and restricted stock not included in the computation of diluted earnings per share of common stock because the option exercise prices or grant date prices exceeded the average market prices of the common shares - - - 114 Stock options and restricted stock with exercise prices or grant date prices below the average market prices 126 171 113 57 Net income attributable to common stock $ 851 $ 3,289 $ 5,803 $ 4,732 Earnings per share attributable to common stock Basic $ 0.11 $ 0.41 $ 0.73 $ 0.60 Diluted $ 0.10 $ 0.40 $ 0.72 $ 0.59 13 Table of Contents Note 10 - Debt Debt totaled $ 31.3 million and $ 24.5 million at July 31, 2025 and January 31, 2025 , respectively. Revolving lines - North America . 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. As of July 31, 2025 , the Company had borrowed an aggregate of $ 9.7 million at a rate of 9.0 % and had $ 3.0 million available under the Renewed Senior Credit Facility. As of January 31, 2025 , the Company had borrowed an aggregate of $ 6.8 million and had $ 3.7 million available under the Renewed Senior Credit Facility. The Company was in compliance with respect to the covenants under the Credit Agreement as of July 31, 2025 . Finance obligation - buildings and land. 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. Concurrently with the sale, the Company paid off the approximately $ 0.9 million mortgage note on the Property to its lender. The Company used the remaining proceeds to repay its borrowings under the Senior Credit Facility, for strategic investments, and for general corporate needs. Concurrent with the sale of the Property, the Company entered into a fifteen -year lease agreement (the “Lease Agreement”), whereby the Company leases back the Property at an annual rental rate of approximately $ 0.8 million, subject to annual rent increases of 2.0 %. Under the Lease Agreement, the Company has four consecutive options to extend the term of the lease by five years for each such option. In accordance with ASC 842, Leases , this transaction was recorded as a failed sale and leaseback as the present value of lease payments exceeded substantially all of the fair value of the underlying assets. The Company utilized an incremental borrowing rate of 8.0 % to determine the finance obligation to record for the amounts received and will continue to depreciate the assets. The current portion of the finance obligation of $ 0.2 million is recognized in current maturities of long-term debt and the long-term portion of $ 8.7 million is recognized in long-term finance obligation on the Company's consolidated balance sheets as of July 31, 2025 . The net carrying amount of the financial liability and remaining assets will be zero at the end of the lease term. 14 Table of Contents Revolving lines - foreign . The Company also has credit arrangements used by its Middle Eastern subsidiaries in the U.A.E. , Egypt and Saudi Arabia as discussed further below. United Arab Emirates The Company has a revolving line for 8.0 million U.A.E. Dirhams (approximately $ 2.2 million at July 31, 2025 ) from a bank in the U.A.E. As of July 31, 2025 , the facility has an interest rate of approximately 7.6 % and expires in November 2025, of which, the Company has started the process to renew and extend this credit arrangement. The Company had no borrowings outstanding under the credit facility as of July 31, 2025 , and $ 0.4 million as of January 31, 2025 , 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, 2025 and January 31, 2025 , the Company had unused borrowing availability of approximately $ 2.2 million and $ 1.6 million, respectively. The Company has a revolving line for 17.5 million U.A.E. Dirhams (approximately $ 4.8 million at July 31, 2025 ) from a bank in the U.A.E. As of July 31, 2025 , the facility has an interest rate of approximately 7.6 % and expires in November 2025, of which, the Company has started the process to renew and extend this credit arrangement. The Company had borrowed an aggregate of $ 2.4 million as of July 31, 2025 and $ 0.1 million as of January 31, 2025 , 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 $ 0.3 million and $ 2.5 million as of July 31, 2025 and January 31, 2025 , respectively. The Company has a revolving line for 47.7 million U.A.E. Dirhams (approximately $ 13.0 million at July 31, 2025 ) from a bank in the U.A.E. As of July 31, 2025 , the facility has a minimum 8 % interest rate and expires in December 2025. The Company had unused borrowing availability $ 5.3 million and $ 6.5 million as of July 31, 2025 and January 31, 2025 , respectively. The Company has a guarantee for 48.6 million U.A.E. Dirhams (approximately $ 13.2 million at July 31, 2025 ) from a bank in the U.A.E. There is no interest rate on this facility, however, it earns a 1 % commission. As of July 31, 2025 , approximately $ 11.0 million has been utilized in the form of a bank guarantee, with $ 2.2 million of availability remaining. Additionally, in August 2025, a line of credit was added to the agreement for 51.4 million U.A.E Dirhams (approximately $ 14.0 million at July 31, 2025 ) which will incur an additional .8% commission. Egypt In June 2021, and as renewed or amended subsequently thereafter, the Company's Egyptian subsidiary entered into a credit arrangement with a bank in Egypt for a revolving line of 100.0 million Egyptian Pounds (approximately $ 2.0 million at July 31, 2025 ). 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. As of July 31, 2025 , the facility has an interest rate of approximately 20.8 % and expires in November 2025. As of July 31, 2025 and January 31, 2025 , the Company had an immaterial amount outstanding, 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, 2025 and January 31, 2025 , the Company had approximately $ 2.0 million of unused borrowing capacity with respect to this credit arrangement. 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 received collections, the facility has decreased to a current amount of 2.1 million Egyptian Pounds (approximately $ 0.1 million at July 31, 2025 ). This credit arrangement is in the form of project financing at rates competitive in Egypt. The line is secured by the contract for a project being financed by the Company's Egyptian subsidiary. The facility has an interest rate of approximately 15.0 % 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 no outstanding balance as of July 31, 2025 and January 31, 2025 . Saudi Arabia 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, 2025 ). This credit arrangement is in the form of project financing at rates competitive in Saudi Arabia. The line is secured by certain assets (such as accounts receivable) of the Company's Saudi Arabian subsidiary, and expires in April 2026. As of July 31, 2025 , the facility has an interest rate of approximately 9.0 % . The Company had borrowed an aggregate of $ 3.3 million and $ 1.5 million as of July 31, 2025 and January 31, 2025 , 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, 2025 and January 31, 2025 , was $ 2.9 million and $ 3.0 million, respectively. 15 Table of Contents 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 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. In addition, some of the revolving credit facilities restrict payment of dividends or undertaking of additional debt. The Company guarantees only a portion of the subsidiaries' debt, including foreign debt. As of July 31, 2025 and January 31, 2025 , the amount of foreign subsidiary debt guaranteed by the Company was approxim ately $ 8.6 million and $ 4.8 million, 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 July 31, 2025 . Although certain arrangements are set to expire 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 arrangements have continued without interruption or penalty. On July 31, 2025 , interest rates were based on (i) the Emirates Inter Bank Offered Rate plus 3.0 % to 3.5 % per annum for the U.A.E. credit arrangements, two of which have a minimum interest rate of 4.5 % per annum; (ii) either the Central Bank of Egypt corporate loan rate plus 1.5 % to 3.5 % per annum or the stated interest rate in the agreements for the Egypt credit arrangements; and (iii) the Saudi Inter-Bank Offered Rate plus 3.5 % for the Saudi Arabia credit arrangement. Based on these base rates, as of July 31, 2025 , the Company's interest rates ranged from 7.6 % to 20.8 %, with a weighted average rate of 8.4 %, and the Company had facility limits totaling $ 45.0 million under these credit arrangements. As of July 31, 2025 , $ 24.4 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, 2025 , the Company had borrow ed $ 5.8 million and had an additional $ 14.9 million of borrowing availability remaining 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, 2025 and January 31, 2025 . 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 15 ). 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. This amount is presented as a component of current liabilities in the Company's consolidated balance sheets. Mortgages. 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, 2025 , the remaining balance on the mortgage in Canada is approximately CAD 5.6 million (approximately $ 4 million at July 31, 2025 ). The interest rate is variable, and was 6.8 % at July 31, 2025 . 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, 2025 and January 31, 2025 . 16 Table of Contents 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, with the exception of leases with an initial term of 12 months or less in accordance with an accounting policy election, for which rent expense is recognized on a straight-line basis over the lease term. Operating Leases. 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. In January 2025, the Company entered into a lease in Qatar for land upon which the Company intends to build a facility. The agreement provides for annual lease payments of 0.3 million Qatari Riyals (approximately $ 0.1 million at July 31, 2025), which is inclusive of certain escalation clauses and other variable consideration contained in the agreement. The agreement has an initial lease term of twenty years, which includes the option to terminate the lease agreement after ten years, and the ability to renew the lease at the end of the initial lease term. In July 2025, the Company entered into an additional lease agreement in Qatar for land and a building. The agreement has an initial lease term of three years with annual lease payments of 1.9 million Qatar Riyals (approximately $ 0.5 million at July 31, 2025), which includes an escalation clause of approximately 10 % for each year thereafter. The agreement may be terminated at any time; however, the Company will be obligated to pay any unpaid balance through the remainder of the lease term. Finance Leases. 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. The Company has several lease agreements, with lease terms of one to fifteen years, which consist of real estate, vehicles and office equipment leases. These leases do not require any contingent rental payments, impose any financial restrictions, or contain any residual value guarantees. Certain of the Company’s leases include renewal options and escalation clauses; 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 these options. Variable expenses generally represent the Company’s share of the landlord’s operating expenses. The Company does not have any arrangements where it acts as a lessor, other than one sub-lease arrangement, which is not material. Total lease costs consist of the following: Three Months Ended July 31, Six Months Ended July 31, Lease costs Consolidated Statements of Operations Classification 2025 2024 2025 2024 Finance Lease Costs Amortization of ROU assets Cost of sales $ 25 $ 37 $ 75 $ 75 Interest on lease liabilities Interest expense 1 2 2 3 Operating lease costs Cost of sales, SG&A expenses 701 438 1,303 893 Short-term lease costs (1) Cost of sales, SG&A expenses 759 93 1,041 236 Total Lease costs $ 1,486 $ 570 $ 2,421 $ 1,207 ( 1 ) Includes variable lease costs, which are not material. 17 Table of Contents Supplemental balance sheet information related to leases is as follows: Operating and Finance leases July 31, 2025 January 31, 2025 Finance leases assets: Property and Equipment - gross $ 941 $ 899 Accumulated depreciation and amortization ( 743 ) ( 626 ) Property and Equipment - net $ 198 $ 273 Finance lease liabilities: Finance lease liability short-term $ 34 $ 32 Finance lease liability long-term 27 43 Total finance lease liabilities $ 61 $ 75 Operating lease assets: Operating lease ROU assets $ 11,862 $ 8,199 Operating lease liabilities: Operating lease liability short-term $ 1,383 $ 1,071 Operating lease liability long-term 11,425 7,713 Total operating lease liabilities $ 12,808 $ 8,784 Weighted-average lease terms and discount rates are as follows: July 31, 2025 Weighted-average remaining lease terms (in years): Finance leases 1.8 Operating leases 14.4 Weighted-average discount rates: Finance leases 6.4 % Operating leases 9.4 % Supplemental cash flow information related to leases is as follows: Six Months Ended July 31, 2025 2024 Cash paid for amounts included in the measurement of lease liabilities: Financing cash outflows from finance leases $ 17 $ 16 Operating cash outflows from finance leases 2 3 Operating cash outflows from operating leases 673 1,045 ROU assets obtained in exchange for new lease obligations: Operating leases liabilities $ 5,242 $ 1,041 Maturities of lease liabilities as of July 31, 2025 , are as follows: Operating Leases Finance Leases For the six months ending January 31, 2026 $ 1,517 $ 19 For the year ended January 31, 2027 2,452 37 For the year ended January 31, 2028 2,617 9 For the year ended January 31, 2029 1,945 - For the year ended January 31, 2030 946 - For the year ended January 31, 2031 784 - Thereafter 15,557 - Total lease payments $ 25,818 $ 65 Less: amount representing interest ( 13,010 ) ( 4 ) Total lease liabilities at July 31, 2025 $ 12,808 $ 61 Rent expense attributable to operating leases was $ 1.5 million and $ 0.6 million for the three months ended July 31, 2025 and 2024 , respectively. 18 Table of Contents 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, 2025 January 31, 2025 Cash and cash equivalents $ 17,258 $ 15,716 Restricted cash 1,444 1,401 Cash, cash equivalents and restricted cash shown in the statement of cash flows $ 18,702 $ 17,117 Note 13 - Fair value The carrying values of cash and cash equivalents, accounts receivable and accounts payable are considered reasonable estimates of fair value due to their short-term nature. The carrying amount of the Company's short-term debt, revolving lines of credit and long-term debt approximate fair value because the majority of the amounts outstanding accrue interest at variable market rates. Note 14 - Recent accounting pronouncements In December 2023, the FASB issued ASU No. 2023 - 09, Income Taxes ( Topic 740 ): Improvements to Income Tax Disclosures . Pursuant to this standard update, companies are required to provide additional information, which is primarily attributable to the rate reconciliation and income taxes paid. The standard update is to be applied prospectively, with retrospective application permitted. 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 consolidated financial statements. 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. 19 Table of Contents Note 15 - Noncontrolling interest On June 1, 2023, the Company closed on its formation of a joint venture (the "JV", and the agreement governing the JV, the "JV Agreement") with Gulf Insulation Group ("GIG"), a leading provider of pre-insulated piping systems and pipe fabrication, in which the Company acquired a 60 % controlling financial interest and contributed assets consisting of a building and equipment. The JV is a limited liability company named Perma Pipe Gulf Arabia Industry LLC and is a closed joint stock company established under the laws of the Kingdom of Saudi Arabia. The JV's capital is comprised of ordinary shares with 60 % owned by the Company and the remaining 40 % owned by GIG. This collaborative business arrangement results in expanding the Company's market presence in Saudi Arabia, Kuwait, and Bahrain. The primary business activities of the JV include the manufacture and sale of the pre-insulated piping systems and pipe coating services. The balance sheets and operating activities of this investment are included in the Company's consolidated financial statements. As of July 31, 2025 , t he carrying amount of the assets and liabilities of the JV that are consolidated by the Company totaled $ 39.8 million and $ 19.9 million, respectively, and $ 39.1 million and $ 22.1 million, respectively, as of January 31, 2025 . 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 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 $ 0.4 million and $ 1.0 million for the three months ended July 31, 2025 and 2024 , respectively. Net income attributable to GIG was $ 1.3 million for the six months ended July 31, 2025 and 2024 . 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 non-controlling interest as measured at fair value was $ 12.2 million and $ 11.0 million at July 31, 2025 and January 31, 2025 , respectively. The change in non-controlling interest consists of $ 1.3 million in current year net income attributable to non-controlling interest, and approximately $( 0.1 ) 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 any other form of distributions from non-controlling interest for the periods ended July 31, 2025 and January 31, 2025 . 20 Table of Contents