Perma-Pipe International Holdings, Inc. 10-Q

Item 1. Financial Statements PERMA-PIPE INTERNATIONAL HOLDINGS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) (Unaudited) Three Months Ended July 31, Six Months Ended July 31, 2026 2025 2026 2025 Net sales $ 59,567 $ 47,902 $ 109,831 $ 94,648 Cost of sales 42,161 33,479 77,790 63,501 Gross profit 17,406 14,423 32,041 31,147 Operating expenses General and administrative expenses 11,870 10,033 20,705 17,781 Selling expenses 1,283 1,203 2,447 2,289 Total operating expenses 13,153 11,236 23,152 20,070 Income from operations 4,253 3,187 8,889 11,077 Interest expense, net 507 415 1,111 821 Other (income) expense, net ( 122 ) 21 ( 12 ) 70 Income before income taxes 3,868 2,751 7,790 10,186 Income tax expense 604 1,489 1,935 3,070 Net income 3,264 1,262 5,855 7,116 Less: Net income attributable to non-controlling interest 717 411 1,506 1,313 Net income attributable to common stock $ 2,547 $ 851 $ 4,349 $ 5,803 Weighted average common shares outstanding Basic 8,167 8,007 8,145 7,995 Diluted 8,260 8,133 8,251 8,108 Earnings per share attributable to common stock Basic $ 0.31 $ 0.11 $ 0.53 $ 0.73 Diluted $ 0.31 $ 0.10 $ 0.53 $ 0.72 See accompanying notes to condensed consolidated financial statements. 2 Table of Contents PERMA-PIPE INTERNATIONAL HOLDINGS, INC. CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In thousands) (Unaudited) Three Months Ended July 31, Six Months Ended July 31, 2026 2025 2026 2025 Net income $ 3,264 $ 1,262 $ 5,855 $ 7,116 Other comprehensive income (loss) Foreign currency translation adjustments, net of tax ( 781 ) ( 111 ) ( 1,117 ) 811 Comprehensive income $ 2,483 $ 1,151 $ 4,738 $ 7,927 Less: Comprehensive income attributable to non-controlling interests 717 411 1,506 1,313 Total comprehensive income attributable to common stock $ 1,766 $ 740 $ 3,232 $ 6,614 See accompanying notes to condensed consolidated financial statements. 3 Table of Contents PERMA-PIPE INTERNATIONAL HOLDINGS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except per share data) (Unaudited) July 31, 2026 January 31, 2026 ASSETS Current assets Cash and cash equivalents $ 31,778 $ 18,720 Restricted cash 2,973 3,575 Trade accounts receivable, less allowance for credit losses of $ 1,562 at July 31, 2026 and $ 1,571 at January 31, 2026 48,787 66,023 Inventories 19,070 18,115 Prepaid expenses 6,029 5,942 Unbilled accounts receivable 37,866 28,814 Costs and estimated earnings in excess of billings on uncompleted contracts 6,332 4,652 Other current assets 716 893 Total current assets 153,551 146,734 Long-term assets Property, plant and equipment, net of accumulated depreciation 45,670 44,116 Operating lease right-of-use asset 15,482 13,054 Deferred tax assets 6,917 5,954 Goodwill 2,126 2,188 Other long-term assets 8,884 5,440 Total long-term assets 79,079 70,752 Total assets $ 232,630 $ 217,486 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Trade accounts payable $ 35,662 $ 24,541 Accrued compensation and payroll taxes 1,360 1,449 Commissions and management incentives payable 5,341 6,580 Short-term borrowings and current maturities of long-term debt 6,086 19,843 Customers' deposits 8,135 11,853 Operating lease liability short-term 2,259 2,196 Other accrued liabilities 7,822 7,235 Billings in excess of costs and estimated earnings on uncompleted contracts 614 2,153 Income taxes payable 2,848 3,939 Total current liabilities 70,127 79,789 Long-term liabilities Long-term debt, less current maturities 29,975 12,696 Deferred compensation liabilities 1,998 1,781 Deferred tax liabilities 2,110 1,816 Operating lease liability long-term 14,723 12,125 Other long-term liabilities 2,694 2,978 Total long-term liabilities 51,500 31,396 Commitments and contingencies Non-controlling interest 17,513 15,663 Stockholders' equity Common stock, $ .01 par value, authorized 50,000 shares; 8,195 issued and outstanding at July 31, 2026 and 8,122 at January 31, 2026 82 81 Additional paid-in capital 60,717 61,097 Retained earnings 41,487 37,139 Accumulated other comprehensive loss ( 8,796 ) ( 7,679 ) Total stockholders' equity 93,490 90,638 Total liabilities and stockholders' equity $ 232,630 $ 217,486 See accompanying notes to condensed consolidated financial statements. 4 Table of Contents PERMA-PIPE INTERNATIONAL HOLDINGS, INC. CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (In thousands, except share data) (Unaudited) Common Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Loss Total Stockholders' Equity Total stockholders' equity at January 31, 2026 $ 81 $ 61,097 $ 37,139 $ ( 7,679 ) $ 90,638 Net income attributable to common stock - - 1,801 - 1,801 Stock-based compensation expense - 180 - - 180 Amount attributable to non-controlling interest - ( 42 ) - - ( 42 ) Foreign currency translation adjustment - - - ( 336 ) ( 336 ) Total stockholders' equity at April 30, 2026 $ 81 $ 61,235 $ 38,940 $ ( 8,015 ) $ 92,241 Net income attributable to common stock - - 2,547 - 2,547 Common stock withheld related to net share settlement of equity award 1 ( 447 ) - - ( 446 ) Stock-based compensation expense - 232 - - 232 Amount attributable to non-controlling interest - ( 303 ) - - ( 303 ) Foreign currency translation adjustment - - - ( 781 ) ( 781 ) Total stockholders' equity at July 31, 2026 $ 82 $ 60,717 $ 41,487 $ ( 8,796 ) $ 93,490 Common Stock Additional Paid-in Capital Retained Earnings 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 withheld related to net share settlement of equity award - ( 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 Shares 2026 2025 Opening balances at beginning of year (February 1) 8,121,549 7,982,568 Shares issued, net of shares used for tax withholding 73,628 61,115 Closing balances at period end (July 31) 8,195,177 8,043,683 See accompanying notes to condensed consolidated financial statements. 5 Table of Contents PERMA-PIPE INTERNATIONAL HOLDINGS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) Six Months Ended July 31, 2026 2025 Operating activities Net income $ 5,855 $ 7,116 Adjustments to reconcile net income to net cash provided by (used in) operating activities Depreciation and amortization 3,237 1,894 Deferred tax (benefit) expense ( 637 ) 428 Stock-based compensation expense 413 1,692 Amortization of debt issuance costs 45 - Write-off of uncollectible accounts 3,949 361 Gain from disposal of fixed assets ( 22 ) - Changes in operating assets and liabilities Accounts receivable 12,759 ( 4,024 ) Inventories ( 1,156 ) 493 Costs and estimated earnings in excess of billings on uncompleted contracts ( 1,680 ) ( 635 ) Billings in excess of costs and estimated earnings on uncompleted contracts ( 1,539 ) 392 Accounts payable 10,941 ( 2,607 ) Accrued compensation and payroll taxes ( 1,303 ) ( 47 ) Customers' deposits ( 3,716 ) 2,861 Income taxes payable ( 1,088 ) 19 Prepaid expenses ( 1,985 ) ( 3,066 ) Unbilled accounts receivable ( 9,207 ) ( 8,712 ) Other assets and liabilities ( 1,519 ) 2,527 Net cash provided by (used in) operating activities 13,347 ( 1,308 ) Investing activities Capital expenditures ( 3,214 ) ( 3,478 ) Proceeds from sales of property and equipment 54 - Net cash used in investing activities ( 3,160 ) ( 3,478 ) Financing activities Proceeds from revolving credit lines 39,102 47,265 Payments of debt on revolving credit lines ( 36,008 ) ( 40,455 ) Debt issuance costs ( 109 ) - Change in drafts payable 13 6 Proceeds from other financing activities 447 - Payments of other financing activities ( 495 ) ( 240 ) Stock options exercised and taxes paid related to restricted shares vested ( 448 ) ( 295 ) Net cash provided by financing activities 2,502 6,281 Effect of exchange rate changes on cash, cash equivalents and restricted cash ( 233 ) 90 Net increase in cash, cash equivalents and restricted cash 12,456 1,585 Cash, cash equivalents and restricted cash - beginning of period 22,295 17,117 Cash, cash equivalents and restricted cash - end of period $ 34,751 $ 18,702 Supplemental cash flow information Cash interest paid $ 913 $ 801 Cash income taxes paid 3,581 1,769 Fixed assets acquired under finance leases - non-cash 606 - Fixed assets acquired - non-cash 683 1,669 See accompanying notes to condensed consolidated financial statements. 6 Table of Contents PERMA-PIPE INTERNATIONAL HOLDINGS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Tabular amounts in thousands, except per share data, or unless otherwise specified) (Unaudited) Note 1 - Basis of presentation The interim Condensed Consolidated Financial Statements of Perma-Pipe International Holdings, Inc., and subsidiaries (collectively, "PPIH", the "Company", "we", "our", or the "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 Condensed Consolidated Balance Sheet as of January 31, 2026 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 2026 and 2025 are for the fiscal year ending January 31, 2027 and for the fiscal year ended January 31, 2026 , respectively. Certain amounts in prior periods have been reclassified to conform to the current period presentation. These reclassifications had no impact on previously reported totals. Amounts reported in thousands within this Quarterly Report on Form 10 -Q are computed based on the actual amounts. As a result, the sum of the components may not equal the total amount reported in thousands due to rounding. In addition, certain columns and rows within tables may not sum to the totals due to the use of rounded numbers. Percentages presented are calculated from the underlying unrounded amounts. 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. Additionally, the CODM regularly reviews asset information in a manner that is consistent with the presentation on the Company's accompanying Condensed Consolidated Balance Sheets. 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, 2026 2025 2026 2025 Net sales $ 59,567 $ 47,902 $ 109,831 $ 94,648 Cost of sales Labor 8,215 6,904 16,484 13,193 Materials 25,213 18,947 44,716 36,363 Depreciation and amortization 933 860 1,858 1,710 Other costs of sales 7,800 6,768 14,732 12,235 Total cost of sales 42,161 33,479 77,790 63,501 Operating expenses Salaries and wages 4,634 6,928 9,300 11,145 Depreciation and amortization 169 95 287 184 Other general and administrative expense 7,067 3,010 11,118 6,452 General and administrative expenses 11,870 10,033 20,705 17,781 Selling expense 1,283 1,203 2,447 2,289 Total operating expenses 13,153 11,236 23,152 20,070 Income from operations 4,253 3,187 8,889 11,077 Interest expense, net 507 415 1,111 821 Other (income) expense, net ( 122 ) 21 ( 12 ) 70 Income before income taxes 3,868 2,751 7,790 10,186 Income tax expense 604 1,489 1,935 3,070 Net income 3,264 1,262 5,855 7,116 Less: Net income attributable to non-controlling interest 717 411 1,506 1,313 Net income attributable to common stock $ 2,547 $ 851 $ 4,349 $ 5,803 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 North America, collateral is not generally required. In the United Arab Emirates ("U.A.E."), Saudi Arabia, Egypt, Qatar 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 and current conditions. 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. As of July 31, 2026 , no individual customer accounted for more than 10% of the Company's accounts receivable. As of January 31, 2026 , one customer accounted for approximately 23 % of the Company's total accounts receivable . For the three and six months ended July 31, 2026 , one customer represented approximately 17 % and 16 % of total net sales, respectively. The Company monitors the creditworthiness of this customer on an ongoing basis. As of July 31, 2026 , no allowance for credit losses was deemed necessary as the Company expects to collect the full carrying value of the outstanding balance due from this customer. For the three and six months ended July 31, 2025 , no single customer accounted for more than 10% of net sales. During the quarter, the Company directly wrote off a $ 3.9 million customer receivable after determining that the receivable was uncollectible. This determination was based on the updated information received during the quarter regarding the customer’s ability and intent to pay. Any future recoveries will be recognized if realized. The $ 3.9 million write-off is included as a component of bad debt expense for the period and is presented within general and administrative expenses in the condensed consolidated statements of operations for the three and six months ended July 31, 2026. 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 energy and industrial markets. 2 ) Products - which include cables, leak detection products, heat trace products, materials/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 systems and coating revenue over time as the manufacturing process progresses if 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 at a point in time when control of the promised goods is transferred to the customer, generally upon shipment, or as 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, 2026 and 2025 are as follows: Three Months Ended July 31, Six Months Ended July 31, 2026 2025 2026 2025 Sales % of Total Sales % of Total Sales % of Total Sales % of Total Products $ 3,794 6 % $ 3,451 7 % $ 6,876 6 % $ 7,091 8 % Specialty Piping Systems and Coating Revenue recognized under input method 18,206 31 % 12,965 27 % 32,588 30 % 25,025 26 % Revenue recognized under output method 37,567 63 % 31,486 66 % 70,367 64 % 62,532 66 % Total $ 59,567 100 % $ 47,902 100 % $ 109,831 100 % $ 94,648 100 % The input method is used by certain operating entities to measure revenue by the costs incurred to date relative to the total estimated costs to satisfy the performance obligation. Generally, these contracts are considered a single performance obligation satisfied over time. Due to the custom nature of the goods and services, the Company believes this method is the most faithful depiction of the transfer of goods and services to the customer as it measures progress toward satisfaction of the performance obligation. Costs include all material, labor, and direct costs incurred to satisfy the contract. Revenue recognition begins when project costs are initially incurred. Estimates of total contract costs are reviewed and revised periodically as work progresses. The output method is used by all other operating entities to measure revenue based on the direct measurement of the value of goods or services transferred to date relative to the total goods or services promised under the contract. Due to the requirements of certain customers, these contracts often require formal inspection protocols or specific export documentation for units produced. Therefore, the Company believes the output method provides the most faithful depiction of the transfer of goods or services to the customer. Depending on the terms of the contract, revenue is recognized upon the transfer of control, which may occur when units are produced, inspected, and held by the Company at the customer’s request, or when units are produced, inspected, and shipped. 8 Table of Contents Contract assets and liabilities Contract assets represent revenue recognized in excess of amounts billed for which the right to payment is conditional upon something other than the passage of time (such as the completion of additional performance milestones). Contract liabilities represent billings or payments received in excess of revenue recognized to date, reflecting the Company's obligation to transfer remaining goods or services to the customer. Both customer billings and the satisfaction of performance obligations occur throughout the contract term, thus impacting the period-end balances of these accounts. Receivables are recorded separately when the Company’s right to consideration becomes unconditional, requiring only the passage of time before payment is due. The following table shows the reconciliation of contract assets and contract liabilities: July 31, 2026 January 31, 2026 Costs incurred on uncompleted contracts $ 21,501 $ 17,562 Estimated earnings 16,817 12,721 Earned revenue 38,318 30,283 Less billings to date 32,600 27,784 Costs in excess of billings, net $ 5,718 $ 2,499 Balance sheet classification Contract assets: Costs and estimated earnings in excess of billings on uncompleted contracts $ 6,332 $ 4,652 Contract liabilities: Billings in excess of costs and estimated earnings on uncompleted contracts ( 614 ) ( 2,153 ) Costs in excess of billings, net $ 5,718 $ 2,499 The Company anticipates that substantially all costs incurred on uncompleted contracts as of July 31, 2026 will be billed and collected within one year. Sub stantially all of the $ 2.2 million contract liability balance at January 31, 2026 is expected to be recognized in revenue during the 2026 fiscal year. Unbilled accounts receivable The Company has recorded $ 37.9 million and $ 28.8 million of unbilled accounts receivable on the Condensed Consolidated Balance Sheet s as of July 31, 2026 and January 31, 2026 , respectively. In these instances, 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 the Company has an unconditional right to payment; however, 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, 2026 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, 2026 January 31, 2026 Raw materials $ 18,961 $ 18,178 Work in process 610 447 Finished goods 306 300 Subtotal 19,877 18,925 Less allowance ( 807 ) ( 810 ) Inventories $ 19,070 $ 18,115 The Company conducts periodic reviews of its inventory and records allowances for slow moving and obsolete items to reflect their net realizable value. 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 effective tax rates ("ETR") for the three months ended July 31, 2026 and 2025 were 16 % and 54 %, respectively. The Company's ETR was 25 % and 30 % for the six months ended July 31, 2026 and 2025, respectively. The change in the ETR is due to changes in the mix of income and loss in various jurisdictions The Company expects that future distributions from foreign subsidiaries will not be subject to incremental U.S. 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 $ 1.4 million as of July 31, 2026 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. The Company has evaluated the provisions of the OBBBA and incorporated the initial impacts into its financial statements; however, the adoption of this legislation did not have a material impact on the Company’s consolidated financial position, results of operations, or cash flows. 11 Table of Contents Note 7 - Goodwill All identifiable goodwill as of July 31, 2026 and January 31, 2026 , 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 it is 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, 2026 Foreign exchange change effect July 31, 2026 Goodwill $ 2,188 $ ( 62 ) $ 2,126 There were no triggering events identified during the three and six months ended July 31, 2026 . 12 Table of Contents Note 8 - Stock-based compensation The Company's 2024 Omnibus Stock Incentive Plan, dated May 28, 2024 ( "2024 Plan"), was approved by the Company's stockholders in July 2024. 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 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, 2026 2025 2026 2025 Restricted stock-based compensation expense $ 232 $ 1,468 $ 413 $ 1,692 Total stock-based compensation expense $ 232 $ 1,468 $ 413 $ 1,692 Restricted stock The following table summarizes the Company's restricted stock activity for the six months ended July 31, 2026 : Restricted Shares Weighted Average Price (Per share) Aggregate Intrinsic Value Outstanding at January 31, 2026 160 $ 19.22 $ 3,069 Granted 59 27.15 Vested and issued ( 74 ) Forfeited or retired ( 17 ) Outstanding at July 31, 2026 128 $ 23.25 $ 2,977 As of July 31, 2026 , there was $ 2.6 million of unrecognized compensation expense related to unvested restricted stock granted under the 2024 Plan and previous plans. These costs are expected to be recognized over a weighted average period of 2.3 years. 13 Table of Contents Note 9 - Earnings per share Three Months Ended July 31, Six Months Ended July 31, 2026 2025 2026 2025 Basic weighted average common shares outstanding 8,167 8,007 8,145 7,995 Dilutive effect of equity compensation plans 93 126 106 113 Weighted average common shares outstanding assuming full dilution 8,260 8,133 8,251 8,108 Net income attributable to common stock $ 2,547 $ 851 $ 4,349 $ 5,803 Earnings per share attributable to common stock Basic $ 0.31 $ 0.11 $ 0.53 $ 0.73 Diluted $ 0.31 $ 0.10 $ 0.53 $ 0.72 14 Table of Contents Note 10 - Debt Debt consisted of the following: July 31, 2026 January 31, 2026 Short-term debt Revolving credit agreement - North America $ - $ 10,749 Revolving credit agreement - United Arab Emirates 1,489 2,573 Revolving credit agreement - Egypt - 190 Revolving credit agreement - Saudi Arabia 803 2,909 Current maturities of long-term debt 1,041 669 Loan payable to GIG 2,753 2,753 Total short-term debt $ 6,086 $ 19,843 Long-term debt Revolving credit agreement - North America $ 17,332 $ - Finance obligation - buildings and land 8,367 8,527 Mortgage note 3,517 3,737 Finance lease obligation 862 541 Unamortized debt issuance costs ( 103 ) ( 109 ) Total long-term debt $ 29,975 $ 12,696 Revolving lines - North America . On April 8, 2026, the Company entered into a Credit Agreement (the “Credit Agreement”) by and among the Company, as borrower, the other loan parties thereto, and JPMorgan Chase Bank, N.A., as lender (“JPMorgan”). The Credit Agreement effectively replaced the Company’s previous credit facility (the "PNC Credit Facility") with PNC Bank, National Association. On April 9, 2026, the Company drew $ 15.3 million under the Credit Agreement to pay off the remaining $ 15.2 million outstanding balance under the PNC Credit Facility and to fund $ 0.1 million of cash collateral required for cash management and purchasing card solutions. As of January 31, 2026, the Company had borrowed an aggregate of $ 10.7 million at a rate of 7.8 % and had $ 2.7 million available under the PNC Credit Facility. The Credit Agreement provides for a senior secured asset-based revolving credit facility with aggregate revolving commitments of $ 18.0 million, including a sublimit of up to $ 1.5 million for letters of credit. The revolving credit facility matures on October 7, 2027, unless earlier terminated in accordance with its terms. As of July 31, 2026 , the outstanding balance under the Credit Agreement was $ 17.3 million with a weighted-average interest rate of 6.9 % and there were no outstanding letters of credit under the sublimit. Borrowings under the Credit Agreement are limited to the lesser of the revolving commitment and a borrowing base calculated as (i) 80% of eligible North American accounts receivable, plus (ii) 25% of eligible North American inventory (valued at the lower of cost or market), in each case subject to customary eligibility criteria and reserves established by JPMorgan. Loans under the Credit Agreement bear interest, at the Company’s election, at either (i) a rate based on the CB Floating Rate (as defined in the Credit Agreement) or (ii) an adjusted term SOFR rate, in each case plus an applicable margin determined by the Company’s leverage ratio. The applicable margin for CB Floating Rate loans ranges from 1.50 % to 2.00 %, and for SOFR loans ranges from 2.50 % to 3.00 %. In addition, the Company is required to pay a commitment fee ranging from 0.20 % to 0.30 % on the unused portion of the revolving commitment. 15 Table of Contents The obligations under the Credit Agreement are secured by substantially all North American assets of the Company and the guarantor subsidiaries, subject to customary exclusions, and are guaranteed on a joint and several basis by certain existing and future subsidiaries of the Company, subject to customary exceptions. The Credit Agreement contains customary affirmative and negative covenants, including, among other things, limitations on additional indebtedness, liens, investments, acquisitions, asset sales, restricted payments, and transactions with affiliates. The Credit Agreement also includes financial maintenance covenants requiring the Company to maintain both a minimum Fixed Charge Coverage Ratio and a maximum Leverage Ratio (each as defined in the Credit Agreement), which are tested upon the occurrence of certain availability thresholds. The Credit Agreement includes customary events of default, including, among others, nonpayment of principal or interest, breaches of representations or covenants, cross‑defaults to other material indebtedness, insolvency events, judgments in excess of specified thresholds, certain ERISA and pension events, and a change in control. Upon the occurrence of an event of default, the Lender may terminate commitments, accelerate outstanding obligations, require cash collateralization of letters of credit, and exercise remedies against the collateral. As of July 31, 2026 , the Company was in compliance with all covenants under the Credit Agreement. Subsequent Event - 2026 Credit Agreement On August 25, 2026, the Company, as borrower, certain subsidiaries of the Company party thereto as loan parties, the lenders party thereto and JPMorgan as administrative agent, entered into a Credit Agreement (the “2026 Credit Agreement”). The 2026 Credit Agreement replaces the Company’s existing Credit Agreement dated April 8, 2026 with JPMorgan, as lender (the “Existing Credit Agreement”), which was terminated concurrently with the closing of the 2026 Credit Agreement. In connection with the closing, all outstanding borrowings under the Existing Credit Agreement were repaid in full. The 2026 Credit Agreement provides for a secured credit facility consisting of a $ 75.0 million revolving credit facility, which includes availability for letters of credit up to $ 30.0 million and swingline loans up to $ 5.0 million, and a $ 14.0 million term loan facility. Subject to the terms and conditions set forth in the 2026 Credit Agreement, the Company may also request increases in the revolving commitments or incremental term loans in an aggregate amount not to exceed $ 50.0 million. On the closing date, the Company borrowed $ 14.0 million under the term loan facility, and the proceeds thereof, together with other available cash, were used to repay outstanding borrowings under the Existing Credit Agreement. As of the closing date, $ 23.0 million was outstanding under the revolving credit facility. The Company intends to use borrowings under the 2026 Credit Agreement for working capital and general corporate purposes, which may include, from time to time, permitted acquisitions and other investments. The revolving loans may be borrowed, repaid and reborrowed from time to time prior to the revolving credit maturity date, and the term loans are scheduled to amortize in quarterly installments beginning September 30, 2026, with the remaining unpaid principal due on the term loan maturity date. The revolving credit facility and term loan facility mature on August 25, 2031, unless earlier terminated or accelerated in accordance with the terms of the 2026 Credit Agreement. Borrowings under the 2026 Credit Agreement bear interest, at the Company’s option and subject to the terms of the 2026 Credit Agreement, at rates based on the Alternate Base Rate or applicable term benchmark rates, including Adjusted Term SOFR, Adjusted EURIBOR or Adjusted Term CORRA, plus an applicable margin (each as defined in the 2026 Credit Agreement). The applicable margin is determined by reference to the Company’s leverage ratio and ranges from 1.50 % to 2.00 % for Alternate Base Rate loans and from 2.50 % to 3.00 % for term benchmark and RFR loans (each as defined in the 2026 Credit Agreement). The Company is also required to pay a commitment fee on the unused portion of the revolving commitments at a rate ranging from 0.20 % to 0.30 %, based on the Company’s leverage ratio, as well as customary fees with respect to letters of credit and administrative agent fees. The obligations under the 2026 Credit Agreement are guaranteed by certain subsidiaries of the Company and are secured by liens on collateral granted by the loan parties. The 2026 Credit Agreement contains customary representations and warranties, affirmative and negative covenants, and events of default. The covenants include, among others, restrictions on indebtedness, liens, investments, dispositions, restricted payments and certain other transactions, as well as financial covenants requiring compliance with a leverage ratio and a fixed charge coverage ratio. The 2026 Credit Agreement requires the Company to maintain a consolidated leverage ratio of not more than 3.00 to 1.00 and a fixed charge coverage ratio of not less than 1.25 to 1.00, subject to the terms and exceptions thereof. As the 2026 Credit Agreement was executed after the balance sheet date, no amounts were outstanding under this facility as of July 31, 2026. Credit facilities - foreign. The Company also has credit arrangements used by its Middle Eastern subsidiaries in the U.A.E., Egypt, and Saudi Arabia as further described below. United Arab Emirates (“U.A.E.”) The Company maintains a credit facility with a financial institution in the U.A.E. totaling 65.2 million U.A.E. Dirhams (“AED”) (approximately $ 17.7 million at July 31, 2026 ). Borrowings under the facility bear interest at the Emirates Inter Bank Offered Rate (“EIBOR”) plus 3.5 % per annum, subject to minimum interest rates ranging from 4.5 % to 8.0 % per annum, depending on the type of financing utilized. The facility is stratified by instrument type and expires at various dates through October 2026. While certain portions of the credit arrangement have expired, the subsidiary continues to access the facility under the same terms while formal documentation of a renewal is being finalized with the lender. As of July 31, 2026 the Company was in compliance with all financial covenants under the Facility, including a maximum Adjusted Leverage Ratio and a minimum Adjusted Tangible Net Worth requirement. As of July 31, 2026 and January 31, 2026 , the Company had outstanding borrowings of 5.5 million AED (approximately $ 1.5 million) and 9.4 million AED (approximately $ 2.6 million), respectively, which are included in “Short-term borrowings and current maturities of long-term debt” on the Condensed Consolidated Balance Sheets. Additionally, as of July 31, 2026 and January 31, 2026 , the Company had issued guarantees totaling 28.0 million AED (approximately $ 7.6 million) and 30.9 million AED (approximately $ 8.4 million). After accounting for outstanding borrowings and issued guarantees, the Company had unused availability of approximately $ 8.6 million and $ 6.8 million under the credit facility as of July 31, 2026 and January 31, 2026 , respectively. The Company maintains a letter of credit facility with a financial institution in the U.A.E. totaling 100.0 million AED (approximately $ 27.2 million at July 31, 2026 ). While the credit arrangement had a scheduled expiration date in July 2026, the subsidiary continues to access the facility under the same terms while formal documentation of a renewal is being finalized with the lender. T he facility is non-interest bearing; however, the Company incurs a commission ranging from 0.8 % to 1.0 % per annum on the face value of issued instruments and is required to maintain cash collateral (margins) ranging from 10 % to 15 % depending on the type of instrument utilized. As of July 31, 2026 , the Company had outstanding guarantees under this facility of 39.3 million AED (approximately $ 10.7 million). The remaining available balance under the facility was approximately $ 16.5 million as of July 31, 2026 . 16 Table of Contents Egypt In June 2021, the Company's Egyptian subsidiary entered into a credit facility with a financial institution in Egypt, which has been subsequently amended. The facility provides project-based financing and expires in December 2026. The facility has a maximum borrowing capacity of 120.0 million Egyptian Pounds (approximately $ 2.4 million at July 31, 2026 ). The line is secured by certain assets of the subsidiary, including accounts receivable, and contains various covenants, including a maximum leverage ratio and restrictions on incurring additional indebtedness. Covenants under this facility are measured annually at year-end, and the Company was in compliance with all such covenants at its most recent measurement date. As of July 31, 2026 , borrowings under the Company’s credit facility in Egypt bore interest at rates ranging from 15.0 % to 20.8 %. The 15.0 % rate relates to specific government-sponsored initiatives, while the 20.8 % rate applies to our general facility limits. The Company had no amount outstanding and $ 0.2 million outstanding under this arrangement as of July 31, 2026 and January 31, 2026 , respectively. These amounts are included in "Short-term borrowings and current maturities of long-term debt" on the Condensed Consolidated Balance Sheets. As of July 31, 2026 and January 31, 2026 , the Company had unused availability of approximately $ 2.4 million and $ 2.2 million, respectively. Saudi Arabia In March 2022, the Company’s Saudi Arabian subsidiary entered into a credit arrangement with a financial institution in Saudi Arabia for a revolving line totaling 37.0 million Saudi Riyals (“SAR”) (approximately $ 9.9 million at July 31, 2026 ). The credit arrangement provides project-based financing at interest rates competitive in Saudi Arabia and is secured by certain assets of the subsidiary including accounts receivable. While the credit arrangement had a scheduled expiration date of April 27, 2026, the subsidiary continues to access the facility under the same terms while formal documentation of a renewal is being finalized with the lender. As of July 31, 2026 , the facility bore interest at a rate of approximately 8.5 %. As of July 31, 2026 and January 31, 2026 , the Company had outstanding borrowings of 3.0 million SAR (approximately $ 0.8 million) and 10.9 million SAR (approximately $ 2.9 million), respectively, which are included in “Short-term borrowings and current maturities of long-term debt” on the Condensed Consolidated Balance Sheets. Additionally, as of July 31, 2026 and January 31, 2026 , the Company had issued guarantees totaling 5.0 million SAR (approximately $ 1.3 million) and 6.3 million SAR (approximately $ 1.7 million), respectively. After accounting for outstanding borrowings and issued guarantees, the Company had unused availability of approximately $ 7.8 million and $ 5.3 million under the credit facility as of July 31, 2026 and January 31, 2026 , respectively. Foreign credit facilities - overall 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. 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, 2026 and January 31, 2026 , the amount of foreign subsidiary debt guaranteed by the Company was approximately $ 5.0 million and $ 8.4 million, respectively. The Company was in compliance with respect to the financial covenants under the foreign credit arrangements as of July 31, 2026 . Certain of these arrangements are subject to periodic renewal; while such renewals are being processed, the Company remains in regular communication with the lenders, and the arrangements have historically continued without interruption or penalty. On July 31, 2026 , interest rates were based on (i) the EIBOR plus 3.5 % per annum for the U.A.E. credit arrangements, which have minimum interest rates ranging from 4.5 % to 8.0 % per annum; (ii) interest rates ranging from 15.0 % to 20.8 % for the Egypt credit arrangements; and (iii) an interest rate of 8.5 % for the Saudi Arabia credit arrangement. Based on these base rates, as of July 31, 2026 , the Company's interest rates ranged from 7.4 % to 20.8 %, with a weighted average rate of 8.0 %, and the Company had facility limits totaling $ 57.2 million under these credit arrangements. As of July 31, 2026 , $ 19.6 million of the facility limits were utilized to support letters of credit to guarantee amounts committed for inventory purchases and for performance guarantees. Additionally, as of July 31, 2026 , the Company had borrowed $ 2.3 million and had an additional $ 35.3 million of borrowing availability remaining under the foreign revolving credit arrangements. The foreign revolving lines balances were included as a component of "Short-term borrowings and current maturities of long-term debt" on the Condensed Consolidated Balance Sheets as of July 31, 2026 and January 31, 2026 . 17 Table of Contents Finance obligation - buildings and land. On April 14, 2021, the Company entered into a purchase and sale agreement (the "Purchase and Sale Agreement") to sell its land and building in Lebanon, Tennessee (the "Property"). Pursuant to the terms of the Purchase and Sale Agreement, the Company sold the Property for $ 10.4 million. The transaction generated net cash proceeds of $ 9.1 million. Concurrently with the sale of the Property, the Company paid off the approximately $ 0.9 million remaining on the mortgage note on the Property to its lender. The Company used the remaining proceeds to repay its borrowings under the PNC 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 is leasing 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. As of July 31, 2026 and January 31, 2026 , the Company had a net book value relating to this asset of $ 1.6 million and $ 1.7 million, respectively. In accordance with ASC 842, Leases, this transaction was recorded as a failed sale and leaseback as the present value of lease payments exceeded substantially the fair value of the underlying asset. The Company utilized an incremental borrowing rate of 8.0 % to determine the finance obligation to record for the amounts received and will continue to depreciate the assets. The current portion of the finance obligation of $ 0.3 million is recognized in "Short-term borrowings and current maturities of long-term debt" and the long-term portion of $ 8.4 million is recognized in " Long-term debt, less current maturities " on the Condensed Consolidated Balance Sheets as of July 31, 2026 . The net carrying amount of the financial liability and remaining assets will be zero at the end of the lease term. Mortgage Note. 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, 2026 , the remaining balance on the mortgage in Canada is approximately 5.3 million Canadian Dollars ("CAD") (approximately $ 3.7 million). The interest rate is variable, and was 6.3 % at July 31, 2026 . The principal balance is included as a component of "Short-term borrowings and current maturities of long-term debt" and "Long-term debt, less current maturities" on the Condensed Consolidated Balance Sheets and is presented net of issuance costs of $ 0.1 million as of July 31, 2026 and January 31, 2026 . Subsequent to July 31, 2026 , the mortgage note was repaid in full on August 28, 2026, using proceeds from the 2026 Credit Agreement. Loan Payable to GIG. In June 2023, in connection with the formation of a joint venture with Gulf Insulation Group (“GIG”), the Company assumed a promissory note with an aggregate principal amount of approximately $ 2.8 million, which matured on April 9, 2026. Through the date of this filing, the Company and GIG are engaged in constructive discussions to reach an agreement on renewal or settlement of the promissory note. Because a definitive agreement has not been executed as of the balance sheet date, the Company did not possess a contractual, unconditional right to defer settlement of the obligation for at least twelve months following July 31, 2026 . Accordingly, the full obligation is classified within “Short-term borrowings and current maturities of long-term debt” on the Condensed Consolidated Balance Sheets as of July 31, 2026 . 18 Table of Contents Note 11 - Leases The Company enters into lease agreements for real estate, including office space, production buildings, and land, as well as non-real estate assets such as heavy machinery, office equipment, and vehicles. Our leases are classified as either operating or finance leases at the commencement date. Operating leases consist of each of the above asset types, which have lease terms of 2 years to 30 years. Operating leases are included in operating lease right-of-use (“ROU”) assets, operating lease liabilities short-term, and operating lease liabilities long-term on the Condensed Consolidated Balance Sheets. Finance leases consist primarily of heavy machinery with lease terms of 4 to 5 years. Finance leases are included in property, plant, and equipment, net , current maturities of long-term debt , and long-term debt, less current maturities on the Condensed Consolidated Balance Sheets. Our lease agreements may include options to extend or terminate the lease, as well as options to purchase the underlying asset. These options are factored into the lease term and the measurement of right-of-use ("ROU") assets and lease liabilities when it is reasonably certain that the Company will exercise them. These decisions are based on an assessment of economic incentives, such as the strategic importance of the underlying asset to our regional operations and the expected fair market value of the assets at the end of the lease term. As most of our leases do not provide an implicit interest rate, the Company uses its incremental borrowing rate ("IBR") to determine the present value of lease payments at lease commencement. The IBR is the rate of interest 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 determining the ROU asset and corresponding lease liability, we evaluate whether a contract contains a lease by assessing if we have the right to control the use of an identified asset for a period of time in exchange for consideration. For arrangements involving multiple components, we have elected the practical expedient to combine lease and non-lease components (such as common area maintenance and utility charges) into a single lease component for all underlying asset classes. Certain of our real estate lease agreements include variable lease payments based on inflation rates, which are contractually capped. These payments are not included in the measurement of the lease liability and are recognized in the period in which the obligation is incurred. Our lease agreements do not typically include material residual value guarantees or restrictive covenants; where present, they are not expected to result in material payments. Furthermore, the Company has elected the short-term lease exception for all asset classes, whereby we do not recognize ROU assets or lease liabilities for leases with an initial term of 12 months or less that do not include a purchase option we are reasonably certain to exercise. Total lease costs consist of the following: Three Months Ended July 31, Six Months Ended July 31, Lease costs Consolidated Statements of Operations Classification 2026 2025 2026 2025 Finance Lease Costs Amortization of ROU assets Cost of sales $ 71 $ 25 $ 138 $ 75 Interest on lease liabilities Interest expense 7 1 16 2 Operating lease costs Cost of sales, SG&A expenses 948 701 1,826 1,303 Short-term lease costs (1) Cost of sales, SG&A expenses 25 759 671 1,041 Total Lease costs $ 1,051 $ 1,486 $ 2,651 $ 2,421 ( 1 ) Includes variable lease costs, which are not material. 19 Table of Contents Supplemental balance sheet information related to leases is as follows: Operating and Finance leases July 31, 2026 January 31, 2026 Finance lease assets: Property and Equipment - gross $ 2,221 $ 1,676 Accumulated depreciation and amortization ( 961 ) ( 847 ) Property and Equipment - net $ 1,260 $ 829 Finance lease liabilities: Finance lease liability short-term $ 262 $ 174 Finance lease liability long-term 862 541 Total finance lease liabilities $ 1,124 $ 715 Operating lease assets: Operating lease ROU assets $ 15,482 $ 13,054 Operating lease liabilities: Operating lease liability short-term $ 2,259 $ 2,196 Operating lease liability long-term 14,723 12,125 Total operating lease liabilities $ 16,982 $ 14,321 Weighted-average lease terms and discount rates are as follows: July 31, 2026 Weighted-average remaining lease terms (in years): Finance leases 4.3 Operating leases 12.3 Weighted-average discount rates: Finance leases 2.4 % Operating leases 8.7 % Supplemental cash flow information related to leases is as follows: Six Months Ended July 31, 2026 2025 Cash paid for amounts included in the measurement of lease liabilities: Financing cash outflows from finance leases $ 152 $ 17 Operating cash outflows from finance leases 16 2 Operating cash outflows from operating leases 1,372 673 ROU assets obtained in exchange for new lease obligations: Operating leases liabilities $ 3,838 $ 5,242 Maturities of lease liabilities as of July 31, 2026 , are as follows: Operating Leases Finance Leases Fiscal 2026 (remainder of fiscal year) $ 1,908 $ 155 Fiscal 2027 3,581 283 Fiscal 2028 2,908 274 Fiscal 2029 1,956 274 Fiscal 2030 1,955 195 Fiscal 2031 1,790 - Thereafter 16,039 - Total lease payments $ 30,137 $ 1,181 Less: amount representing interest ( 13,155 ) ( 57 ) Total lease liabilities at July 31, 2026 $ 16,982 $ 1,124 Failed Sale and Leaseback Arrangement The Company is a party to a 15 -year leaseback agreement for its property in Lebanon, Tennessee. Because the related transfer did not qualify for sale accounting under ASC 842, the transaction is accounted for as a financing arrangement. Accordingly, the underlying property and the related financial liability are not included in the lease right-of-use assets, lease liabilities, or related lease disclosures presented above. See Note 10 — Debt for additional information regarding this arrangement. 20 Table of Contents Note 12 - Cash, cash equivalents, and restricted cash Restricted cash primarily relates to fixed deposits utilized as security deposits and financial guarantees. July 31, 2026 January 31, 2026 Cash and cash equivalents $ 31,778 $ 18,720 Restricted cash 2,973 3,575 Cash, cash equivalents and restricted cash shown in the statement of cash flows $ 34,751 $ 22,295 21 Table of Contents 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 amounts of the Company's short-term debt, revolving lines of credit and variable-rate long-term debt approximate fair value because the amounts outstanding accrue interest at variable market rates. 22 Table of Contents Note 14 - Recent accounting pronouncements 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. In September 2025, the FASB issued ASU No. 2025 - 06, Intangibles - Goodwill and Other Internal-Use Software ( Subtopic 350 - 40 ): Targeted Improvements to the Accounting for Internal-Use Software, aimed at modernizing the guidance for internal-use software development. This guidance removes reference to "development stages" and introduces a "probable-to-complete" recognition threshold to determine when to begin capitalizing software costs. This guidance will be effective starting with our quarterly report for the fiscal quarter ending April 30, 2028, with prospective, retrospective, or modified transition methods allowed and early adoption permitted. We are currently evaluating the impact of this ASU, including our timing and method of adoption. In December 2025, the FASB issued ASU No. 2025 - 11, Interim Reporting (Topic 270 ): Narrow-Scope Improvements (“ASU 2025 - 11” ). ASU 2025 - 11 is intended to update the guidance in Topic 270 by improving navigability of the required interim disclosures, clarifying when that guidance is applicable and adding a principle that requires entities to disclose events since the end of the last annual reporting period that have a material impact on the entity. This standard update will be effective for interim reporting periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted at any time prior to the effective date and should be applied either prospectively to financial statements issued for reporting periods after the effective date or retrospectively to any or all prior periods presented in the financial statements. We are currently evaluating the impact of the standard on our consolidated financial statements and related disclosures. 23 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 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 pre-insulated piping systems and pipe coating services. The balance sheets and operating activities of this investment are included in the Company's Condensed Consolidated Financial Statements. As of July 31, 2026 , the carrying amount of the assets and liabilities of the JV that are consolidated by the Company totaled $ 46.5 million and $ 12.3 million, respectively, and $ 44.2 million and $ 18.6 million, respectively, as of January 31, 2026 . The Company adjusts net income in the Condensed 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 Condensed 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 Condensed Consolidated Balance Sheets. Net income attributable to GIG was $ 0.7 million and $ 0.4 million for the three months ended July 31, 2026 and 2025 , respectively. Net income attributable to GIG was $ 1.5 million and $ 1.3 million for the six months ended July 31, 2026 and 2025 , 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 Condensed Consolidated Statements of Operations. The following table summarizes 2026 activity for the redeemable non-controlling interest: Redeemable non-controlling interest balance at January 31, 2026 $ 15,663 Net income attributable to redeemable non-controlling interest 1,506 Fair value adjustment (accretion to redemption value) 344 Distributions to redeemable non-controlling interest holders - Redeemable non-controlling interest balance at July 31, 2026 $ 17,513 24 Table of Contents Note 16 - Accumulated other comprehensive loss Accumulated other comprehensive loss represents the change in equity from foreign currency translation. Foreign Currency Translation Adjustments Total Accumulated Other Comprehensive Loss Balance as of January 31, 2026 $ ( 7,679 ) $ ( 7,679 ) Currency translation adjustments ( 1,193 ) ( 1,193 ) Tax effect of currency translation adjustments 76 76 Balance as of July 31, 2026 $ ( 8,796 ) $ ( 8,796 ) Note 17 - Subsequent Events 2026 Credit Agreement Subsequent to July 31, 2026 and prior to the issuance of these financial statements, the Company entered into the 2026 Credit Agreement with JPMorgan, replacing its Existing Credit Agreement. The 2026 Credit Agreement provides for a secured credit facility consisting of a $ 75.0 million revolving credit facility, including up to $ 30.0 million of letters of credit and $ 5.0 million of swingline loans, and a $ 14.0 million term loan facility, and matures in August 2031. Borrowings bear interest at variable rates based on SOFR, EURIBOR, CORRA or an alternate base rate, plus an applicable margin based on the Company's leverage ratio. The facility is subject to a commitment fee on unused amounts, as well as customary covenants and events of default. Obligations are guaranteed by certain subsidiaries and secured by liens on specified collateral, subject to customary exceptions and limitations. See Note 10 - Debt for additional information. 25 Table of Contents