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Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended July 31, 2024

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from ________ to ________

 

Commission File No. 001-32530

 

Perma-Pipe International Holdings, Inc.

(Exact name of registrant as specified in its charter)

logo.jpg
 

Delaware

36-3922969

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

 

 

24900 Pitkin Road, Suite 309, Spring, Texas

77386

(Address of principal executive offices)

(Zip Code)

 

(847) 966-1000

(Registrant's telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $.01 par value per sharePPIHThe Nasdaq Stock Market LLC

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒    No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒    No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer", "accelerated filer", "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.  Large accelerated filer ☐   Accelerated filer ☐   Non-accelerated filer ☒   Smaller reporting company    Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes   No ☒

 

On September 11 2024, there were 7,977,853 shares of the registrant's common stock outstanding.

 

 

 

 

Perma-Pipe International Holdings, Inc.

 

FORM 10-Q

 

For the fiscal quarter ended July 31, 2024

 

TABLE OF CONTENTS

 

Item

 

Page

 

 

 

Part I

Financial Information

 

 

 

 

1.

Financial Statements

 

 

Consolidated Statements of Operations (Unaudited) for the Three and Six Months Ended July 31, 2024 and 2023

2

 

Consolidated Statements of Comprehensive Income (Loss) (Unaudited) for the Three and Six Months Ended July 31, 2024 and 2023

3

 

Consolidated Balance Sheets as of July 31, 2024 (Unaudited) and January 31, 2024

4

 

Consolidated Statements of Stockholders' Equity (Unaudited) for the Three and Six Months Ended July 31, 2024 and 2023

5

 

Consolidated Statements of Cash Flows (Unaudited) for the Six Months Ended July 31, 2024 and 2023

6

 

Notes to Consolidated Financial Statements (Unaudited)

7

 

 

 

2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

20

 

 

 

4.

Controls and Procedures

27

 

 

 

Part II

Other Information

 

     

6.

Exhibits

28

 

 

 

Signatures

29

 

 

 

PART I FINANCIAL INFORMATION

 

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,

 
   

2024

   

2023

   

2024

   

2023

 

Net sales

  $ 37,513     $ 35,141     $ 71,834     $ 64,798  

Cost of sales

    24,039       25,677       47,843       48,559  

Gross profit

    13,474       9,464       23,991       16,239  
                                 

Operating expenses

                               

General and administrative expenses

    5,979       5,283       12,128       10,742  

Selling expenses

    1,353       1,490       2,588       2,730  

Total operating expenses

    7,332       6,773       14,716       13,472  
                                 

Income from operations

    6,142       2,691       9,275       2,767  
                                 

Interest expense

    514       636       1,021       1,148  

Other (expense) income

    (38 )     81       (105 )     154  

Income before income taxes

    5,590       2,136       8,149       1,773  
                                 

Income tax expense

    1,306       966       2,076       1,725  
                                 

Net income

    4,284       1,170       6,073       48  

Less: Net income attributable to non-controlling interest

    995       148       1,341       148  

Net income (loss) attributable to common stock

  $ 3,289     $ 1,022     $ 4,732     $ (100 )
                                 

Weighted average common shares outstanding

                               

Basic

    7,954       8,029       7,930       8,017  

Diluted

    8,125       8,139       7,987       8,017  
                                 

Earnings (loss) per share attributable to common stock

                               

Basic

  $ 0.41     $ 0.13     $ 0.60     $ (0.01 )

Diluted

  $ 0.40     $ 0.13     $ 0.59     $ (0.01 )

 

See accompanying notes to consolidated financial statements.

 

 

 

 

PERMA-PIPE INTERNATIONAL HOLDINGS, INC. 

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In thousands)

 (Unaudited)

 

   

Three Months Ended July 31,

   

Six Months Ended July 31,

 
   

2024

   

2023

   

2024

   

2023

 

Net income

  $ 4,284     $ 1,170     $ 6,073     $ 48  
                                 

Other comprehensive income (loss)

                               

Foreign currency translation adjustments, net of tax

    (192 )     339       (1,607 )     (98 )

Comprehensive income (loss)

  $ 4,092     $ 1,509     $ 4,466     $ (50 )

Less: Comprehensive income attributable to non-controlling interests

    995       148       1,341       148  

Total comprehensive income (loss) attributable to common stock

  $ 3,097     $ 1,361     $ 3,125     $ (198 )

 

See accompanying notes to consolidated financial statements.

 

 

 

PERMA-PIPE INTERNATIONAL HOLDINGS, INC. 

CONSOLIDATED BALANCE SHEETS

(In thousands, except per share data)

(Unaudited)

 

         
  

July 31, 2024

  

January 31, 2024

 

ASSETS

        

Current assets

        

Cash and cash equivalents

 $9,455  $5,845 

Restricted cash

  1,426   1,395 

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

  39,927   46,646 

Inventories

  15,823   15,541 

Prepaid expenses and other current assets

  13,197   9,697 

Unbilled accounts receivable

  17,850   16,597 

Costs and estimated earnings in excess of billings on uncompleted contracts

  3,085   3,097 

Total current assets

  100,763   98,818 

Long-term assets

        

Property, plant and equipment, net of accumulated depreciation

  37,518   37,620 

Operating lease right-of-use asset

  6,938   6,467 

Deferred tax assets

  7,866   7,919 

Goodwill

  2,156   2,222 

Other long-term assets

  3,946   2,665 

Total long-term assets

  58,424   56,893 

Total assets

 $159,187  $155,711 

LIABILITIES AND STOCKHOLDERS' EQUITY

        

Current liabilities

        

Trade accounts payable

 $21,411  $25,323 

Accrued compensation and payroll taxes

  1,358   1,214 

Commissions and management incentives payable

  5,210   4,523 

Revolving line - North America

  6,699   5,519 

Current maturities of long-term debt

  5,522   4,071 

Customers' deposits

  5,949   4,264 

Operating lease liability short-term

  965   914 

Other accrued liabilities

  6,178   9,039 

Billings in excess of costs and estimated earnings on uncompleted contracts

  704   495 

Income taxes payable

  2,475   2,380 

Total current liabilities

  56,471   57,742 

Long-term liabilities

        

Long-term debt, less current maturities

  8,912   9,035 

Long-term finance obligation

  3,974   4,229 

Deferred compensation liabilities

  1,180   1,212 

Deferred tax liabilities

  1,165   1,217 

Operating lease liability long-term

  6,689   6,270 

Loan payable to GIG

  2,753   2,753 

Other long-term liabilities

  1,403   1,275 

Total long-term liabilities

  26,076   25,991 

Non-controlling interest

  8,057   6,266 

Commitments and contingencies

          

Stockholders' equity

        

Common stock, $.01 par value, authorized 50,000 shares; 7,978 issued and outstanding at July 31, 2024 and 8,017 at January 31, 2024

  81   80 

Additional paid-in capital

  59,808   60,063 

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

  (968)  (968)

Retained earnings

  16,820   12,088 

Accumulated other comprehensive loss

  (7,158)  (5,551)

Total stockholders' equity

  68,583   65,712 

Total liabilities and stockholders' equity

 $159,187  $155,711 

 

See accompanying notes to consolidated financial statements.

 

 

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, 2024

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

Net income

    -       -       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

    -       -       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  

 

   

Common Stock

   

Additional Paid-in Capital

   

Retained Earnings

   

Treasury Stock

   

Accumulated Other Comprehensive Loss

   

Total Stockholders' Equity

 

Total stockholders' equity at January 31, 2023

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

Net loss

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

Stock-based compensation expense

    -       229       -       -       -       229  

Foreign currency translation adjustment

    -       -       -       -       (437 )     (437 )

Total stockholders' equity at April 30, 2023

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

Net income

    -       -       1,022       -       -       1,022  

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

    -       (274 )     -       -       -       (274 )

Repurchase of common stock

    1       -       -       (312 )     -       (311 )

Stock-based compensation expense

    -       245       -       -       -       245  

Foreign currency translation adjustment

    -       -       -       -       339       339  

Total stockholders' equity at July 31, 2023

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

 

Shares

 

2024

   

2023

 

Balances at beginning of year

    8,016,781       8,007,002  

Shares issued, net of shares used for tax withholding

    73,087       66,726  

Prior period adjustments

    -       (56,947 )

Balances at period end

    8,089,868       8,016,781  

 

See accompanying notes to consolidated financial statements.

 

 

 

PERMA-PIPE INTERNATIONAL HOLDINGS, INC. 

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

   

Six Months Ended July 31,

 
   

2024

   

2023

 

Operating activities

               

Net income

  $ 6,073     $ 48  

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

               

Depreciation and amortization

    1,717       1,791  

Deferred tax expense

    203       191  

Stock-based compensation expense

    396       456  

Provision on uncollectible accounts

    43       8  

Gain (loss) from disposal of fixed assets

    29       (5 )

Changes in operating assets and liabilities

               

Accounts receivable

    6,090       (9,865 )

Inventories

    (809 )     882  

Costs and estimated earnings in excess of billings on uncompleted contracts

    221       2,495  

Accounts payable

    (3,064 )     8,044  

Accrued compensation and payroll taxes

    (48 )     (1,650 )

Customers' deposits

    1,810       534  

Income tax receivable

    (789 )     (766 )

Prepaid expenses and other current assets

    (3,209 )     989  

Unbilled accounts receivable

    (1,857 )     (8 )

Other assets and liabilities

    (2,974 )     389  

Net cash provided by operating activities

    3,832       3,533  

Investing activities

               

Capital expenditures

    (3,180 )     (6,797 )

Proceeds from insurance recovery for property and equipment

    -       5  

Net cash used in investing activities

    (3,180 )     (6,792 )

Financing activities

               

Proceeds from revolving credit lines

    39,540       96,920  

Payments of debt on revolving credit lines

    (36,887 )     (92,091 )

Payments of principal on finance obligation

    (91 )     (56 )

Payments of other debt

    (117 )     (124 )

Increase (decrease) in drafts payable

    8       (178 )

Payments on finance lease obligations

    (16 )     (154 )

Repurchase of common stock

    -       (312 )

Stock options exercised and taxes paid related to restricted shares vested

    (201 )     (273 )

Net cash provided by financing activities

    2,236       3,732  

Effect of exchange rate changes on cash, cash equivalents and restricted cash

    753       61  

Net increase in cash, cash equivalents and restricted cash

    3,641       534  

Cash, cash equivalents and restricted cash - beginning of period

    7,240       6,793  

Cash, cash equivalents and restricted cash - end of period

  $ 10,881     $ 7,327  

Supplemental cash flow information

               

Cash interest paid

  $ 1,000     $ 1,302  

Cash income taxes paid

    2,436       2,234  

Fixed assets acquired under finance leases - non-cash

    -       139  

Fixed assets acquired from non affiliates - non-cash

  $ -     $ 4,357  

 

See accompanying notes to consolidated financial statements.

 

 

PERMA-PIPE INTERNATIONAL HOLDINGS, INC. 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

July 31, 2024

(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, 2024 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 2024 and 2023 are for the fiscal year ending January 31, 2025 and for the fiscal year ended  January 31, 2024, respectively.

 

Significant New Accounting Policies

 

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

 

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

 

Note 2 - Business segment reporting

 

The Company is engaged in the manufacture and sale of products in one reportable segment: Piping Systems. The Company engineers, manufactures and sells pre-insulated specialty piping systems, and leak detection systems. Pre-insulated specialty piping systems include: (i) insulated and jacketed district heating and cooling piping systems for efficient energy distribution from central energy plants to multiple locations, (ii) primary and secondary containment piping systems for transporting chemicals, hazardous fluids and petroleum products, (iii) the coating and/or insulation of oil and gas gathering and transmission pipelines, and (iv) liquid and powder based anti-corrosion coatings applied both to the external and internal surfaces of steel pipe, including shapes like bends, reducers, tees, and other spools/fittings used in pipelines for the transportation of oil and gas products and potable water. The Company's leak detection systems are sold with its piping systems or on a stand-alone basis to monitor areas where fluid intrusion may contaminate the environment, endanger personal safety, cause a fire hazard, impair essential services or damage equipment or property.

 

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 allowance for credit losses is based on specifically identified amounts in customers' accounts, where future collectability is deemed uncertain. Management may exercise its judgment in adjusting the provision as a consequence of known items, such as current economic factors and credit trends. 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.

 

7

 

In 2015, the Company completed a project in the Middle East with billings in the aggregate amount of approximately $41.9 million. The system has not yet been commissioned by the customer. Nevertheless, the Company has received approximately $40.1 million as of July 31, 2024, with a remaining balance due in the amount of $1.8 million, all of which pertains to retention clauses within the agreements with the Company's customer, and which become payable by the customer when this project is fully tested and commissioned. Of this amount, $1.3 million is classified in other long-term assets on the Company's consolidated balance sheets.

 

The Company has been actively involved in ongoing efforts to collect this outstanding balance. The Company continues to engage with the customer to ensure full payment of the open balances, and during the six months ended July 31, 2024, and at various times throughout 2023, the Company received partial payments to settle $0.3 million and $0.6 million, respectively, of the customer's outstanding balances. Further, the Company has been engaged by the customer to perform additional work in 2024 under customary trade terms that supports the continued cooperation between the Company and the customer. As a result, the Company did not reserve any allowance against the remaining outstanding balances as of  July 31, 2024. However, if the Company's efforts to collect on this account are not successful, the Company may recognize an allowance for all, or substantially all, of any such then uncollected amounts. 

 

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

 

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

 

Note 4 - Revenue recognition 

 

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)

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

 

 

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 exist:

 

 

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, 2024 and 2023 are as follows:

 

  

Three Months Ended July 31,

  

Six Months Ended July 31,

 
  

2024

  

2023

  

2024

  

2023

 
  

Sales

  

% of Total

  

Sales

  

% of Total

  

Sales

  

% of Total

  

Sales

  

% of Total

 

Products

 $2,795   7% $2,146   7% $6,048   8% $4,988   7%
                                 

Specialty Piping Systems and Coating

                                

Revenue recognized under input method

  12,613   34%  12,801   36%  22,752   32%  23,139   36%

Revenue recognized under output method

  22,105   59%  20,194   57%  43,034   60%  36,671   57%

Total

 $37,513   100% $35,141   100% $71,834   100% $64,798   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 direct costs incurred to satisfy the performance obligations of the contract. Revenue recognition begins when projects costs are incurred.  

 

8

 

The output method as noted in ASC 606-10-55-17 is used by all other operating entities to measure revenue by the direct measurement of the outputs produced relative to the remaining goods promised under the contract. Due to the types of end customers, generally these contracts require formal inspection protocols or specific export documentation for units produced, or produced and shipped, therefore, the output method is the most faithful depiction of the Company’s performance. Depending on the conditions of the contract, revenue may be recognized based on units produced, inspected and held by the Company prior to shipment or on units produced, inspected and shipped. 

 

Some of the Company’s operating entities invoice and collect milestones or other contractual obligations prior to the transfer of goods and services, but do not recognize revenue until the performance obligations are satisfied under the methods discussed above.

 

Contract modifications that occur prior to the start of the manufacturing process will supersede the original contract and revenue is recognized using the modified contract value. Contract modifications that occur during the manufacturing process (changes in scope of work, job performance, material costs, and/or final contract settlements) are recognized in the period in which the revisions are known. Provisions are made for estimated losses on uncompleted contracts in the contract liabilities account in the period in which such losses are determined.

 

The transaction price associated with the Company's contracts with customers are generally determined based on the fixed amount of consideration as specified in a contract. This  may also include variable consideration in certain instances where it is considered probable that a significant reversal of cumulative revenue recognized will not occur. As a result, the amount of consideration ultimately received from the customer can fluctuate due to the variability of future events stated in a contract. Therefore, the aggregate amount of the transaction price includes the fixed consideration contained in a contract that is generally not subject to change and excludes sales and value added taxes, or amounts collected on behalf of third parties, along with any variable consideration. The total transaction price is then allocated to the performance obligations which is eventually recognized as revenue based on the project type and the method that is used to measure the transfer of promised goods and services to customers. Additionally, transaction prices relating to cost-plus contracts are determined by applying the applicable profit margin to costs incurred on contracts, whereas transaction prices relating to fixed price contracts are determined on a lump-sum basis. Further, standard payment terms are generally net 30 to 60 days, which is customer specific.

 

Contract assets and liabilities

 

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, 2024

  

January 31, 2024

 

Costs incurred on uncompleted contracts

 $17,686  $21,912 

Estimated earnings

  12,110   11,270 

Earned revenue

  29,796   33,182 

Less billings to date

  27,415   30,580 

Costs in excess of billings, net

 $2,381  $2,602 

Balance sheet classification

        

Contract assets: Costs and estimated earnings in excess of billings on uncompleted contracts

 $3,085  $3,097 

Contract liabilities: Billings in excess of costs and estimated earnings on uncompleted contracts

  (704)  (495)

Costs in excess of billings, net

 $2,381  $2,602 

 

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

 

Unbilled accounts receivable

 

The Company has recorded $17.9 million and $16.6 million of unbilled accounts receivable on the consolidated balance sheets as of July 31, 2024 and January 31, 2024, from revenues generated by certain of its subsidiaries. The Company has fulfilled all performance obligations and has recorded revenue under the respective contracts. The deliverables under these contracts have been accepted by the customer and billings will be made once the customer takes possession of or arranges shipping for the products. The Company anticipates that substantially all of the amounts included in unbilled accounts receivable as of  July 31, 2024 will be billed within one year.

 

Practical expedients

 

Costs to obtain a contract are not considered to be incremental or material, and project duration generally does not span more than one year. Accordingly, the Company applies the practical expedient for these types of costs and as such, are expensed in the period incurred.

 

As a result of the Company's contracts having a duration of less than one year, a practical expedient was applied regarding disclosure of the aggregate amount and future timing of performance obligations that are unsatisfied or partially satisfied as of the end of the reporting period. 

 

9

 
 

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. 

 

Inventories consisted of the following: 

 

  

July 31, 2024

  

January 31, 2024

 

Raw materials

 $14,777  $13,787 

Work in process

  574   611 

Finished goods

  1,275   2,022 

Subtotal

  16,626   16,420 

Less allowance

  803   879 

Inventories

 $15,823  $15,541 

 

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

 
 

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, 2024 and 2023 were 23% and 45%, respectively. The Company's ETR was 25% and 97% for the six months ended July 31, 2024 and 2023, respectively. The change in the ETR is due to the ability to recognize tax benefits on losses in the United States in the current year whereas the prior year had a full valuation allowance and changes in the mix of income and loss in various jurisdictions.

 

The Company expects that future distributions from foreign subsidiaries will not be subject to incremental U.S. federal tax as they will be excludible from U.S. taxable income either be remittances of previously taxed earnings and profits or eligible for a full dividends received deduction. Current and future earnings in the Company's subsidiaries in Canada and Egypt are not permanently reinvested. The earnings from these subsidiaries are subject to tax in their local jurisdiction, and withholding taxes in these jurisdictions are considered. As such, the Company has accrued a liability of $0.7 million as of July 31, 2024 related to these taxes.

 

Note 7 - Impairment of long-lived assets

 

The Company's assessment of long-lived assets, and other identifiable intangibles is based upon factors that market participants would use in accordance with the accounting guidance for the fair value measurement of assets. At  July 31, 2024, the Company performed an assessment to determine whether there were any triggering events that may have occurred which could indicate that the carrying value of the Company's long-lived assets are not recoverable, and an impairment may exist. Based on this assessment, the Company did not identify any triggering events that would indicate that the carrying amounts may not be recoverable with respect to long-lived assets at  July 31, 2024.  The Company will continue testing for potential impairment at least annually or as otherwise required by applicable accounting standards.

 

Goodwill. The purchase price of an acquired company is allocated between intangible assets and the net tangible assets of the acquired business with the residual of the purchase price recorded as goodwill. All identifiable goodwill as of July 31, 2024 and January 31, 2024 is attributable to the purchase of the remaining 50% interest in Perma-Pipe Canada, Ltd., which occurred in 2016.

 

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

 

  

January 31, 2024

  

Foreign exchange change effect

  

July 31, 2024

 

Goodwill

 $2,222  $(66) $2,156 

 

The Company performs an impairment assessment of goodwill annually as of January 31, or more frequently if triggering events occur, based on the estimated fair value of the related reporting unit or intangible asset. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. During the period ended  July 31, 2024, the Company performed a periodic assessment to determine whether there were any triggering events that may have occurred which could indicate that more likely than not that the fair value of the reporting unit did not exceed its carrying value, resulting in an impairment. Based on this assessment, the Company did not identify any triggering events that would indicate that the fair value is less than the carrying value of the reporting unit at  July 31, 2024. Accordingly, the Company did not proceed with performing an impairment test as a result of this periodic assessment. The Company will continue testing for impairment at least annually as of January 31, or as otherwise required by applicable accounting standards.

 

11

 
 

Note 8 - Stock-based compensation 

 

The Company has prior incentive plans under which previously granted awards remain outstanding, but under which no new awards may be granted, including the Company's 2021 Omnibus Stock Incentive Plan, which expired in May 2024. At  July 31, 2024, the Company had reserved a total 196,026 shares for grants and issuances under these incentive plans, including issuances pursuant to unvested or unexercised prior awards.

 

The Company's prior incentive plans provided for the grant of deferred shares, non-qualified stock options, incentive stock options, restricted shares, restricted stock units, and performance-based restricted stock units intended to qualify under section 422 of the Internal Revenue Code. The prior incentive plans authorized awards to officers, employees, consultants, and independent directors. 

 

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.

 

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 or 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,

 
  

2024

  

2023

  

2024

  

2023

 

Restricted stock-based compensation expense

 $177  $227  $396  $456 

 

Stock options

 

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

  22  $11.15   0.7  $6 

Exercised

  (1)  6.85   -   2 

Expired or forfeited

  (17)  12.41   -   - 

Outstanding and exercisable at July 31, 2024

  4  $6.89   1.4  $10 

 

There was no vesting, expiration or forfeiture of previously unvested stock options during the six months ended July 31, 2024. In addition, there were no remaining unvested stock options outstanding, and therefore no unrecognized compensation expense related to unvested stock options.

 

12

 

Restricted stock

 

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

 

  

Restricted Shares

  

Weighted Average Price (Per share)

  

Aggregate Intrinsic Value

 

Outstanding at January 31, 2024

  222  $9.33  $2,078 

Granted

  108   8.81     

Vested and issued

  (73)  9.36     

Forfeited or retired for taxes

  (27)  10.25     

Outstanding at July 31, 2024

  230  $9.05  $2,083 

 

As of July 31, 2024, there was $1.5 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 2.1 years.

 

Note 9 - Earnings per share

 

  

Three Months Ended July 31,

  

Six Months Ended July 31,

 
  

2024

  

2023

  

2024

  

2023

 

Basic weighted average common shares outstanding at July 31, 2024

  7,954   8,029   7,930   8,017 

Dilutive effect of equity compensation plans

  171   110   57   - 

Weighted average common shares outstanding assuming full dilution

  8,125   8,139   7,987   8,017 
                 

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

  0   79   114   18 

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

  171   110   57   170 
                 

Net income (loss) attributable to common stock

 $3,289  $1,022  $4,732  $(100)
                 

Earnings (loss) per share attributable to common stock

                

Basic

 $0.41  $0.13  $0.60  $(0.01)

Diluted

 $0.40  $0.13  $0.59  $(0.01)

 

13

 
 

Note 10 - Debt

 

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

 

Revolving lines - North AmericaOn September 20, 2018, the Company and certain of its U.S. and Canadian subsidiaries (collectively, together with the Company, the “North American Loan Parties”) entered into a Revolving Credit and Security Agreement (the “Credit Agreement”) with PNC Bank, National Association ("PNC"), as administrative agent and lender, providing for a three-year $18 million senior secured revolving credit facility, subject to a borrowing base including various reserves (the “Senior Credit Facility”).

 

On September 17, 2021, the North American Loan Parties executed an extension of the Credit Agreement with PNC, providing for a new five-year $18 million senior secured revolving credit facility, subject to a borrowing base including various reserves (the “Renewed Senior Credit Facility”). The Company's obligations under the Renewed Senior Credit Facility are currently guaranteed by Perma-Pipe Canada, Inc. Each of the North American Loan Parties other than Perma-Pipe Canada, Inc. (collectively, the "Borrowers") is a borrower under the Renewed Senior Credit Facility.

 

The Borrowers have used and will continue to use borrowings under the Renewed Senior Credit Facility (i) to fund future capital expenditures; (ii) to fund ongoing working capital needs; and (iii) for other corporate purposes, including potentially additional stock repurchases. Borrowings under the Renewed Senior Credit Facility bear interest at a rate equal to an alternate base rate, SOFR rate index, plus, in each case, an applicable margin. The applicable margin is based on a fixed charge coverage ratio ("FCCR") range. Interest on alternate base rate borrowings is the alternate base rate (as defined in the Renewed Senior Credit Facility) plus an applicable margin ranging from 1.00% to 1.50%, based on the FCCR in the most recently reported period. Interest on SOFR rate borrowings is the SOFR rate (as defined in the Renewed Senior Credit Facility) plus an applicable margin ranging from 2.00% to 2.50%, based on the FCCR in the most recently reported period, as well as an additional SOFR adjustment ranging from 0.10% to 0.25%, based on the term of the interest period. Additionally, the Borrowers pay a 0.25% per annum facility fee on the unused portion of the Renewed Senior Credit Facility.

 

Subject to certain exceptions, borrowings under the Renewed Senior Credit Facility are secured by substantially all of the North American Loan Parties’ assets. The Renewed Senior Credit Facility matures on September 20, 2026. Subject to certain qualifications and exceptions, the Renewed Senior Credit Facility contains covenants that, among other things, restrict the North American Loan Parties’ ability to create liens, merge or consolidate, consummate acquisitions, make investments, dispose of assets, incur debt, and pay dividends and other distributions. In addition, the North American Loan Parties may not make capital expenditures in excess of $5.0 million annually, plus a limited carryover of unused amounts. Further, the North American Loan Parties may not make repurchases of the Company's common stock in excess of $3.0 million.

 

The Renewed Senior Credit Facility also contains financial covenants requiring the North American Loan Parties to achieve a ratio of its EBITDA (as defined in the Renewed Senior Credit Facility) to the sum of scheduled cash principal payments on indebtedness for borrowed money and interest payments on the advances under the Renewed Senior Credit Facility to be not less than 1.10 to 1.00 for any five consecutive days in which the undrawn availability is less than $3.0 million or any day in which the undrawn availability is less than $2.0 million. In order to cure any future breach of these covenants by the North American Loan Parties, the Company may repatriate cash from any of its foreign subsidiaries that are otherwise not a party to the Renewed Senior Credit Facility in an amount which, when added to the amount of the Company’s Consolidated EBITDA, would result in compliance on a pro forma basis. The Company was in compliance with respect to these covenants as of  July 31, 2024.

 

The Renewed Senior Credit Facility contains customary events of default. If an event of default occurs and is continuing, then PNC may terminate all commitments to extend further credit and declare all amounts outstanding under the Renewed Senior Credit Facility due and payable immediately. In addition, if any of the North American Loan Parties or certain of their subsidiaries become the subject of voluntary or involuntary proceedings under any bankruptcy, insolvency or similar law, then any outstanding obligations under the Renewed Senior Credit Facility will automatically become immediately due and payable. Loans outstanding under the Renewed Senior Credit Facility will bear interest at a rate of 2.00% per annum in excess of the otherwise applicable rate (i) while a bankruptcy event of default exists or (ii) upon the lender's request, during the continuance of any other event of default.

 

As of July 31, 2024, the Company had borrowed an aggregate of $6.7 million at a rate of 10.0% and had $4.7 million available under the Renewed Senior Credit Facility. As of January 31, 2024, the Company had borrowed an aggregate of $5.5 million and had $4.0 million available under the Renewed Senior Credit Facility.  

 

14

 

Finance obligation - buildings and land. On April 14, 2021, the Company entered into a purchase and sale agreement (the "Purchase and Sale Agreement"). Pursuant to the terms of the Purchase and Sale Agreement, the Company sold its land and buildings in Lebanon, Tennessee (the "Property") for $10.4 million. 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 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 $8.9 million is recognized in long-term finance obligation on the Company's consolidated balance sheets as of July 31, 2024. The net carrying amount of the financial liability and remaining assets will be zero at the end of the lease term.

 

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, 2024) from a bank in the U.A.E. As of July 31, 2024 the facility has an interest rate of approximately 8.6%, and expired in July 2024, however, the Company has started the process to renew and extend this credit arrangement and the credit facility has continued without interruption and penalty. The Company had borrowed an aggregate of $1.2 million as of July 31, 2024 and $0.2 million as of January 31, 2024, respectively, and is presented as a component of current maturities of long-term debt in the Company's consolidated balance sheets. As of  July 31, 2024 and January 31, 2024, the Company had unused borrowing availability of approximately $1.0 million and $1.9 million, respectively.

 

The Company has a revolving line for 20.5 million U.A.E. Dirhams (approximately $5.6 million at July 31, 2024) from a bank in the U.A.E. As of July 31, 2024 the facility has an interest rate of approximately 8.7%. The facility expired in August 2024, however, the Company has started the process to renew and extend this credit arrangement and the credit facility has continued without interruption or penalty. The Company had borrowed an aggregate of $1.0 million as of July 31, 2024 and $0.1 million as of January 31, 2024, respectively, and is presented as a component of current maturities of long-term debt in the Company's consolidated balance sheets. As of  July 31, 2024 and January 31, 2024, the Company had unused borrowing availability of approximately $1.2 million and $1.0 million, respectively.

 

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 $2.1  million at July 31, 2024). This credit arrangement is in the form of project financing at rates competitive in Egypt. The line is secured by certain assets (such as accounts receivable) of the Company's Egyptian subsidiary. 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, 2024, the facility has an interest rate of approximately  20.8% and expires in November 2024. As of  July 31, 2024, the Company had substantially nothing outstanding with respect to this credit arrangement, and approximately $1.4 million outstanding at  January 31, 2024, which is presented as a component of current maturities of long-term debt in the Company's consolidated balance sheets. Further, as of  July 31, 2024 and  January 31, 2024, the Company had unused borrowing capacity of $2.1 million and $3.2 million, respectively. 
 
In December 2021, the Company entered into a credit arrangement for project financing with a bank in Egypt for 28.2 million Egyptian Pounds. As this project has progressed and the Company has made collections, the facility has decreased to a current amount of  2.1 million Egyptian Pounds (approximatel y $0.1 million at July 31, 2024). 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 11.0%  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 approximately $0.1 million outstanding  as of July 31, 2024 and January 31, 2024, respectively, and is presented as a component of current maturities of long-term debt in the Company's consolidated balance sheets.

 

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, 2024). This credit arrangement is in the form of project financing at rates competitive in Saudi Arabia. The line is secured by certain assets (such as accounts receivable) of the Company's Saudi Arabian subsidiary. The facility was renewed in May 2024 with substantially the same terms and conditions and expires in May 2025. As of July 31, 2024, the facility has an interest rate of approximately 9.7%. The Company had borrowed an aggregate of $2.6 million and $3.2 million as of July 31, 2024 and January 31, 2024, respectively, and is presented as a component of current maturities of long-term debt in the Company's consolidated balance sheets. The unused borrowing availability attributable to this credit arrangement at  July 31, 2024 and  January 31, 2024, was $6.3 million and $6.1 million, respectively. 

 

15

 

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

 

The Company was in compliance with the covenants under the credit arrangements in the U.A.E., Egypt and Saudi Arabia as of July 31, 2024, with the exception of those arrangements that have expired or are set to expire and have not yet been renewed. Although certain of the arrangements have expired and the borrowings could be required to be repaid immediately by the banks, the Company is in regular communication with the respective banks throughout the renewal process and all of the arrangements have continued without interruption or penalty. On July 31, 2024, interest rates were based on (i) the Emirates Inter Bank Offered Rate plus 3.0% to 3.5% per annum for the U.A.E. 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, 2024, the Company's interest rates ranged from 8.6% to 20.8%, with a weighted average rate of 11.5%, and the Company had facility limits totaling $24.7 million under these credit arrangements. As of July 31, 2024$7.1 million of availability was used to support letters of credit to guarantee amounts committed for inventory purchases and for performance guarantees. Additionally, as of July 31, 2024, the Company had borrowed $7.8 million and had an additional $12.6 million of borrowing remaining available under the foreign revolving credit arrangements. The foreign revolving lines balances were included as a component of current maturities of long-term debt in the Company's consolidated balance sheets as of July 31, 2024 and January 31, 2024.

 

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

 

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, 2024, the remaining balance on the mortgage in Canada is approximately CAD 5.9 million (approximately $4.3 million at July 31, 2024). The interest rate is variable, and was 8.8% at July 31, 2024. The principal balance is included as a component of long-term debt, less current maturities in the Company's consolidated balance sheets and is presented net of issuance costs of $0.1 million as of July 31, 2024 and January 31, 2024, respectively.

 

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. Operating leases are included in operating lease right-of-use (“ROU”) assets, operating lease liabilities short-term, and operating lease liabilities long-term in the Company's consolidated balance sheets. Finance leases are included in property, plant and equipment, current maturities of long-term debt, and long-term debt less current maturities in the Company's consolidated balance sheets. 

 

ROU assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent the Company's obligation to make lease payments arising from the lease calculated by discounting fixed lease payments over the lease term at the rate implicit in the lease or the Company’s incremental borrowing rate.  Lease liabilities are increased by interest and reduced by payments each period, and the ROU asset is amortized over the lease term.  For operating leases, interest on the lease liability and the amortization of the ROU asset result in straight-line rent expense over the lease term.  For finance leases, interest on the lease liability and the amortization of the ROU asset results in front-loaded expense over the lease term.  Variable lease expenses are recorded when incurred. ROU assets and liabilities are recognized at the commencement date of the lease based on the present value of lease payments over the lease term.

 

As most of the Company's leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. The incremental borrowing rate is the rate of interest that the Company would have to pay to borrow on a collateralized basis over a similar term and amount equal to the lease payments in a similar economic environment.

 

In calculating the ROU asset and lease liability, the Company elects to combine lease and non-lease components. Additionally, the Company excludes short-term leases having an initial term of 12 months or less in accordance with the new guidance as an accounting policy election, and recognizes rent expense on a straight-line basis over the lease term.

 

Operating Leases. In August 2020, the Company entered into a new lease in Abu Dhabi for land upon which the Company built a facility. The initial annual payments were approximately 1.2 million U.A.E. Dirhams (approximately $0.3 million at  July 31, 2024), inclusive of rent, escalation clauses, and other common charges contained in the agreement. The lease expires in August 2050. 

 

In March and December 2022, the Company served Notices of Termination to its lessor for the Company's lease of land and buildings in Fujairah in the U.A.E. The Company served the Notices of Termination in connection with the Company's intended relocation to a different facility in Abu Dhabi. The Company vacated portions of the leased space in December 2022 and expects to vacate the remaining space in December 2024. The first Notice of Termination required that the Company pay an additional amount equal to three months' rent after that termination to enable the lessor to prepare the assets for lease by another party. As a result of the termination, the Company has recognized adjustments to the amounts recorded in the consolidated financial statements as of July 31, 2024. The termination resulted in decreases of $0.4 million, $6.0 million and $5.5 million to operating lease liability short-term, operating lease liability long-term and operating lease right-of-use asset, respectively, in the consolidated balance sheets as of July 31, 2024. There were no other adjustments in connection with these terminations for the year ended January 31, 2024, or during the three and six months ended July 31, 2024

 

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

 

Finance Leases. The Company has several lease agreements, with lease terms of one to thirty 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 the options.  The Company does not have any arrangements where it acts as a lessor. 

 

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

 

16

 

Supplemental balance sheet information related to leases is as follows: 

 

Operating and Finance leases

 

July 31, 2024

  

January 31, 2024

 

Finance leases assets:

        

Property and Equipment - gross

 $942  $970 

Accumulated depreciation and amortization

  (595)  (536)

Property and Equipment - net

 $347  $434 
         

Finance lease liabilities:

        

Finance lease liability short-term

 $32  $113 

Finance lease liability long-term

  62   - 

Total finance lease liabilities

 $94  $113 
         

Operating lease assets:

        

Operating lease ROU assets

 $6,938  $6,467 
         

Operating lease liabilities:

        

Operating lease liability short-term

 $965  $914 

Operating lease liability long-term

  6,689   6,270 

Total operating lease liabilities

 $7,654  $7,184 

 

Total lease costs consist of the following: 

 

   

Three Months Ended July 31,

  

Six Months Ended July 31,

 

Lease costs

Consolidated Statements of Operations Classification

 

2024

  

2023

  

2024

  

2023

 

Finance Lease Costs

                 

Amortization of ROU assets

Cost of sales

 $37  $33  $75  $87 

Interest on lease liabilities

Interest expense

  2   3   3   5 

Operating lease costs

Cost of sales, SG&A expenses

  438   426   893   882 

Short-term lease costs (1)

Cost of sales, SG&A expenses

  93   59   236   245 

Sub-lease income

SG&A expenses

  -   (20)  -   (40)

Total Lease costs

 $570  $501  $1,207  $1,179 

 

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

 

17

 

Supplemental cash flow information related to leases is as follows:

 

  Six Months Ended July 31,
  

2024

  

2023

 

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

        

Financing cash outflows from finance leases

 $16  $154 

Operating cash outflows from finance leases

  3   5 

Operating cash outflows from operating leases

  1,045   890 
         

ROU assets obtained in exchange for new lease obligations:

        

Operating leases liabilities

 $1,041  $3,484 

 

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

 

  

July 31, 2024

 

Weighted-average remaining lease terms (in years):

    

Finance leases

  2.8 

Operating leases

  12.7 
     

Weighted-average discount rates:

    

Finance leases

  6.4%

Operating leases

  10.4%

 

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

 

   Operating Leases   Finance Leases 

For the six months ending January 31, 2025

 $1,012  $16 

For the year ended January 31, 2026

  1,993   33 

For the year ended January 31, 2027

  1,980   36 

For the year ended January 31, 2028

  1,963   9 

For the year ended January 31, 2029

  1,617   - 

For the year ended January 31, 2030

  612   - 

Thereafter

  6,982   - 

Total lease payments

 $16,159  $94 

Less: amount representing interest

  (8,505)  - 

Total lease liabilities at July 31, 2024

 $7,654  $94 

 

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

 

Note 12 - Restricted cash

 

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

July 31, 2024

  

January 31, 2024

 

Cash and cash equivalents

 $9,455  $5,845 

Restricted cash

  1,426   1,395 

Cash, cash equivalents and restricted cash shown in the statement of cash flows

 $10,881  $7,240 

 

18

 

 

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 November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The standard update requires additional disclosures, including further details about segment expenses regarding a public entity's reportable segments on an annual and interim basis. The additional segment disclosures are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. The Company is still evaluating the impact of these updated disclosure requirements on its statement of financial position or results of operations.

 

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 new income tax disclosures are effective for fiscal years beginning after December 15, 2024. The Company is still evaluating this standard update but does not expect it to have a material impact on its statement of financial position or results of operations.

 

Note 15 - Treasury stock

 

The repurchase program approved on October 4, 2021 authorized the Company to use up to $3.0 million for the purchase of its outstanding shares of common stock. Stock repurchases were permitted to be executed through open market or privately negotiated transactions, depending upon current market conditions and other factors. On December 7, 2022 the Board of Directors authorized the use of $1.0 million remaining under the share repurchase program previously approved on October 4, 2021 that expired on October 3, 2022. During the twelve months ended  January 31, 2024, the Company used the remaining $1.0 million authorized to repurchase its outstanding shares of common stock. Accordingly, there was no repurchase activity with respect to the Company's shares of common stock during the three and six months ended July 31, 2024.

 

Note 16 - 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 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 remaining 40% owned by GIG. The Company expects this collaborative business arrangement to result in expanding its 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. GIG acquired its 40% non-controlling interest by contributing assets to the JV of approximately $6.8 million in fair value, mainly consisting of an idle building and equipment. The fair value of the net assets contributed was determined through the use of a third-party appraiser using the indirect cost method.

 

Pursuant to the applicable guidance in ASC 805, Business Combinations and Noncontrolling Interests, the Company determined that the transaction did not meet the necessary conditions to be considered a business as the set of assets acquired did not contain an organized workforce and therefore was recorded as an asset acquisition. The assets transferred by the Company to the JV were recorded at historical cost, and no gain was recognized as a result of this exchange due to the Company having a controlling interest in the JV. The Company’s measurement of the acquired assets is comprised of the fair value of the contributed net assets given up by the Company and the fair value of the non-controlling interest excluding the contributed assets. The non-controlling interest attributable to the other party was recorded as of the investment date and was measured as part of the carrying amount of the ownership interest in the net assets given up by the Company plus the fair value of the non-controlling interest excluding the contributed assets. No gain or loss was recognized as a result of this exchange. The Company also assumed a promissory note payable to GIG issued as part of the formation of the JV in the principal amount of $2.8 million. The principal amount is presented within the Long-term debt, less current maturities caption in the Company's consolidated balance sheets. The Company also has a promissory note due from the JV that was issued as part of the formation of the JV in the amount of approximately $4.2 million and eliminates in consolidation.

 

The Company has a 60% controlling financial interest in the JV which is not considered a wholly owned subsidiary. Accordingly, there remains a minority portion of the equity interest that is owned by a third party, GIG. Pursuant to the applicable guidance contained in ASC 810, Consolidations, the balance sheets and operating activities of this investment are included in the Company's consolidated financial statements. The carrying amount of the assets and liabilities of the JV that are consolidated by the Company totaled $26.4 million and $15.5 million, respectively, as of  July 31, 2024.

 

The Company adjusts net income in the consolidated statements of operations to exclude the proportionate share of results that is attributable to the non-controlling interest. Additionally, the Company presents the proportionate share that is attributable to the redeemable non-controlling interest as temporary equity within the consolidated balance sheets. This mezzanine presentation is the result of the non-controlling interest being subject to a put option that is not solely within the Company's control and in connection with the equity shares of the business arrangement that is redeemable at any time after five years following the date of formation. The redemption amount per the JV Agreement is at fair value of the non-controlling interest which represents the fair value of ordinary shares of the JV that are owned by GIG. Further, neither the call option nor put option contained in the JV Agreement met the definition of a derivative as a result of not containing a net settlement provision and the shares not being readily convertible to cash, thereby being considered embedded with respect to non-controlling interest and not a freestanding instrument.

 

As a result of the non-controlling interest being subject to redemption rights that are not entirely within the Company's control, it was concluded that the necessary conditions were met to be accounted for in accordance with ASC 480, Distinguishing Liabilities from Equity. Pursuant to this accounting standard, the Company determined that the only criteria for the security to become redeemable is the passage of time and, therefore, is considered probable of redemption. The Company made a policy election to measure changes in the non-controlling interest immediately as they occur and adjust the carrying amount of non-controlling interest equal to its redemption amount as the non-controlling interest has no stated fixed price or fixed date. As such, at each subsequent balance sheet date following the formation of the JV, the Company must determine whether further adjustment is required to increase the carrying value of the redeemable non-controlling interest. If the Company determines that the fair value of the redeemable non-controlling interest exceeds its carrying value, an adjustment is made to reflect this change. However, if the value is determined to be less than its carrying value, such adjustment is limited to its original carrying value at the formation of the business arrangement. Additionally, adjustments made to reflect the change in the value of the redeemable non-controlling interest are offset against permanent equity within the Company's consolidated balance sheets.

 

Net income attributable to GIG was $1.0 million and $0.1 million for the three months ended  July 31, 2024 and 2023, respectively. Net income attributable to GIG was $1.3 million and $0.1 million for the six months ended July 31, 2024 and 2023, respectively. The proportionate share of net income was accounted for as a reduction in deriving net income attributable to common stock in the Company's consolidated statements of operations.

 

The Company is the ultimate parent of the JV through its 60% controlling financial interest and as part of the JV Agreement majority control of the operational activities of the JV and no joint control exists. The JV Agreement has no veto or kickout rights and board voting is proportional to the ownership interest. Certain activities do include a two-thirds majority affirmative vote of shareholders of the JV and include acquiring another company, establishing new subsidiaries, entering another partnership or joint venture, engaging in any merger or materially changing the business of the JV. These are considered protective rights. The 60% equity ownership of the JV by the Company allows it to receive its proportionate share of losses and residual returns.

 

The non-controlling interest as measured at fair value was $8.1 million and $6.3 million, and was recorded within temporary equity at  July 31, 2024 and  January 31, 2024, respectively. The change in non-controlling interest consists of $1.3 million in current year net income attributable to non-controlling interest, and approximately $0.5 million as an adjustment in the carrying value of the redeemable non-controlling interest pertaining to the business arrangement. In addition, there were no dividends or any other form of distributions from non-controlling interest for the period ended  July 31, 2024 and  January 31, 2024, respectively. 

 

19

  
 

Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A")

 

The statements contained in this MD&A and other information contained elsewhere in this quarterly report, which can be identified by the use of forward-looking terminology such as "may," "will," "expect," "continue," "remains," "intend," "aim," "should," "prospects," "could," "future," "potential," "believes," "plans," "likely" and "probable" or the negative thereof or other variations thereon or comparable terminology, constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are subject to the safe harbors created thereby. These statements should be considered as subject to the many risks and uncertainties that exist in the Company's operations and business environment. Such risks and uncertainties could cause actual results to differ materially from those projected as a result of many factors, including, but not limited to, those under the heading Item 1A. Risk Factors 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 2024 and 2023 are for the fiscal year ending January 31, 2025 and the fiscal year ended January 31, 2024, respectively.

 

This MD&A should be read in conjunction with the Company’s consolidated financial statements, including the notes thereto, contained elsewhere in this report. Percentages set forth below in this MD&A have been rounded to the nearest percentage point. 

 

 

 CONSOLIDATED RESULTS OF OPERATIONS

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

(Unaudited)

 

The Company is engaged in the manufacture and sale of products in one reportable segment. Since the Company focuses on discrete projects, operating results can be significantly impacted as a result of large variations in the level of project activity in reporting periods.

 

   

Three Months Ended July 31,

           

Six Months Ended July 31,

         
   

2024

   

2023

   

Change favorable (unfavorable)

   

2024

   

2023

   

Change favorable (unfavorable)

 
   

Amount

   

Percent of Net Sales

   

Amount

   

Percent of Net Sales

   

Amount

   

Amount

   

Percent of Net Sales

   

Amount

   

Percent of Net Sales

   

Amount

 

Net sales

  $ 37,513             $ 35,141             $ 2,372     $ 71,834             $ 64,798             $ 7,036  
                                                                                 

Gross profit

    13,474       36 %     9,464       27 %     4,010       23,991       33 %     16,239       25 %     7,752  
                                                                                 

General and administrative expenses

    5,979       16 %     5,283       15 %     (696 )     12,128       17 %     10,742       17 %     (1,386 )
                                                                                 

Selling expense

    1,353       4 %     1,490       4 %     137       2,588       4 %     2,730       4 %     142  
                                                                                 

Interest expense

    514               636               122       1,021               1,148               127  
                                                                                 

Other (expense) income

    (38 )             81               (119 )     (105 )             154               (259 )
                                                                                 

Income before income taxes

    5,590               2,136               3,454       8,149               1,773               6,376  
                                                                                 

Income tax expense

    1,306               966               (340 )     2,076               1,725               (351 )
                                                                                 

Net income (loss)

    4,284               1,170               3,114       6,073               48               6,025  
                                                                                 

Less: Net income attributable to non-controlling interest

    995               148               (847 )     1,341               148               (1,193 )
                                                                                 

Net income (loss) attributable to common stock

    3,289               1,022               2,267       4,732               (100 )             4,832  

 

 

 

 

Three months ended July 31, 2024 vs. Three months ended July 31, 2023

 

Net sales:

 

Net sales were $ 37.5 million and $ 35.1 million in the three months ended July 31, 2024 and 2023, respectively.  The  increase o f $2.4  million, or 7%,  was a result of increased sales volumes. 

 

Gross profit:

 

Gross profit was $13.5 million, or 36% of net sales, and $9.5 million, or 27% of net sales, in the three months ended July 31, 2024 and 2023, respectively. The increase of $4.0 million, was primarily driven by increased sales volumes and better margins due to product mix.

 

General and administrative expenses:

 

General and administrative expenses were $6.0 million and $5.3 million in the three months ended July 31, 2024 and 2023, respectively. The increase of $0.7 million, was due to higher payroll expenses and professional service fees in the quarter.  

 

Selling expenses:

 

Selling expenses remained consistent and were $ 1.4 million and $ 1.5 million in the  three months ended July 31, 2024 and 2023, respectively.                                                                                               
 

Interest expense:

 

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

 

Other income:

 

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

 

Income tax expense:

 

The Company's ETR was 23% and 45% in the three months ended July 31, 2024 and 2023, respectively. The change in the ETR is due to the ability to recognize tax benefits on losses in the United States in the current year whereas the prior year had a full valuation allowance and changes in the mix of income and loss in various jurisdictions. 

 

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

 

Net income attributable to common stock:

 

Net income attributable to common stock was $3.3 million and $1.0 million in the three months ended July 31, 2024 and 2023, respectively. The increase of $2.3 million was mainly due to increased sales activity and better margin performance in the quarter. 

 

 

Six months ended July 31, 2024 vs. Six months ended July 31, 2023

 

Net sales:

 

Net sales were $ 71.8 million and $ 64.8 million in the six months ended July 31, 2024 and 2023, respectively.  The  increase o f $7.0  million, or 11% , was a result of increased sales volumes.

 

Gross profit:

 

Gross profit was $24.0 million, or 33% of net sales, and $16.2 million, or 25% of net sales, in the six months ended July 31, 2024 and 2023, respectively. The increase of $7.8 million, was primarily driven by increased sales volumes and better margins due to product mix.

 

General and administrative expenses:

 

General and administrative expenses were $12.1 million and $10.7 million in the six months ended July 31, 2024 and 2023, respectively. The increase of $1.4 million, was due to higher payroll expenses and professional service fees.  

 

Selling expenses:

 

Selling expenses remained consistent and were $ 2.6 million and $ 2.7 million in the six months ended July 31, 2024 and 2023, respectively.                                                                                             
 

Interest expense:

 

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

 

Other (expense) income:

 

Other (expense) income resulted in expense of $(0.1) million and income of $0.2 million in the six months ended July 31, 2024 and 2023, respectively. The change was primarily due to exchange rate fluctuations in foreign currency transactions.  

 

Income tax expense:

 

The Company's ETR was 25% and 97% in the six months ended July 31, 2024 and 2023, respectively. The change in the ETR is due to the ability to recognize tax benefits on losses in the United States in the current year whereas the prior year had a full valuation allowance and changes in the mix of income and loss in various jurisdictions. 

 

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

 

Net income (loss) attributable to common stock:

 

Net income (loss) attributable to common stock was $4.7 million and $(0.1) million in the six months ended July 31, 2024 and 2023, respectively. The increase of $4.8 million was mainly due to increased sales activity and better margin performance. 

 

 

Liquidity and capital resources

 

Cash and cash equivalents as of July 31, 2024 were $9.5 million compared to $5.8 million on January 31, 2024. On July 31, 2024, $0.5 million was held in the United States, and $9.0 million was held at the Company's foreign subsidiaries. The Company's working capital was $44.3 million on July 31, 2024 compared to $41.1 million on January 31, 2024. Of the working capital components, accounts receivable decreased by $6.7 million and cash and cash equivalents increased by $3.7 million as the result of the movements discussed below. As of July 31, 2024, the Company had $4.7 million of borrowing capacity under the Renewed Senior Credit Facility in North America and $12.6 million of borrowing capacity under its foreign revolving credit agreements. The Company had $6.7 million borrowed under the Renewed Senior Credit Facility and $7.8 million borrowed under its foreign revolving credit agreements at July 31, 2024.

 

Net cash from operating activities was $3.8 million and $3.5 million in the six months ended July 31, 2024 and 2023, respectively. The increase of $0.3 million was primarily attributable to changes in accounts receivable and customer deposits, partially offset by changes to accounts payable and prepaids expenses and other current assets. 

 

Net cash from investing activities in the six months ended July 31, 2024 and 2023 was $(3.2) million and $(6.8) million, respectively. The decrease of $(3.6) million was due primarily to fewer capital expenditures in the United States and Canada.

 

Net cash from financing activities in the six months ended July 31, 2024 and 2023 was $2.2 million and $3.7 million, respectively. The main source of cash from financing activities in the six months ended July 31, 2024, consisted of net proceeds from borrowings of approximately $2.7 million under the Company's credit facilities, as compared to net proceeds of approximately $4.8 million in the six months ended July 31, 2023. Debt totaled $27.9 million and $25.7 million as of July 31, 2024 and January 31, 2024, respectively. See Note 10 - Debt, in the Notes to Consolidated Financial Statements for further discussion relating to this topic.

 

Treasury stock. During the twelve months ended January 31, 2024, the Company used the remaining $1.0 million authorized to repurchase its outstanding shares of common stock. Accordingly, there was no repurchase activity with respect to the Company's shares of common stock during the three and six months ended July 31, 2024. See Note 15 - Treasury stock, for further discussion relating to this topic.

 

Revolving lines - North America On September 20, 2018, the Company and certain of its U.S. and Canadian subsidiaries (collectively, together with the Company, the “North American Loan Parties”) entered into a Revolving Credit and Security Agreement (the “Credit Agreement”) with PNC Bank, National Association ("PNC"), as administrative agent and lender, providing for a three-year $18 million senior secured revolving credit facility, subject to a borrowing base including various reserves (the “Senior Credit Facility”).

 

On September 17, 2021, the North American Loan Parties executed an extension of the Credit Agreement with PNC, providing for a new five-year $18 million senior secured revolving credit facility, subject to a borrowing base including various reserves (the “Renewed Senior Credit Facility”). The Company's obligations under the Renewed Senior Credit Facility are currently guaranteed by Perma-Pipe Canada, Inc. Each of the North American Loan Parties other than Perma-Pipe Canada, Inc. (collectively, the "Borrowers") is a borrower under the Renewed Senior Credit Facility.

 

The Borrowers have used and will continue to use borrowings under the Renewed Senior Credit Facility (i) to fund future capital expenditures; (ii) to fund ongoing working capital needs; and (iii) for other corporate purposes, including potentially additional stock repurchases. Borrowings under the Renewed Senior Credit Facility bear interest at a rate equal to an alternate base rate, SOFR rate index, plus, in each case, an applicable margin. The applicable margin is based on a fixed charge coverage ratio ("FCCR") range. Interest on alternate base rate borrowings is the alternate base rate (as defined in the Renewed Senior Credit Facility) plus an applicable margin ranging from 1.00% to 1.50%, based on the FCCR in the most recently reported period. Interest on SOFR rate borrowings is the SOFR rate (as defined in the Renewed Senior Credit Facility) plus an applicable margin ranging from 2.00% to 2.50%, based on the FCCR in the most recently reported period, as well as an additional SOFR adjustment ranging from 0.10% to 0.25%, based on the term of the interest period. Additionally, the Borrowers pay a 0.25% per annum facility fee on the unused portion of the Renewed Senior Credit Facility.

 

Subject to certain exceptions, borrowings under the Renewed Senior Credit Facility are secured by substantially all of the North American Loan Parties’ assets. The Renewed Senior Credit Facility matures on September 20, 2026. Subject to certain qualifications and exceptions, the Renewed Senior Credit Facility contains covenants that, among other things, restrict the North American Loan Parties’ ability to create liens, merge or consolidate, consummate acquisitions, make investments, dispose of assets, incur debt, and pay dividends and other distributions. In addition, the North American Loan Parties may not make capital expenditures in excess of $5.0 million annually, plus a limited carryover of unused amounts. Further, the North American Loan Parties may not make repurchases of the Company's common stock in excess of $3.0 million.

 

The Renewed Senior Credit Facility also contains financial covenants requiring the North American Loan Parties to achieve a ratio of its EBITDA (as defined in the Renewed Senior Credit Facility) to the sum of scheduled cash principal payments on indebtedness for borrowed money and interest payments on the advances under the Renewed Senior Credit Facility to be not less than 1.10 to 1.00 for any five consecutive days in which the undrawn availability is less than $3.0 million or any day in which the undrawn availability is less than $2.0 million. In order to cure any future breach of these covenants by the North American Loan Parties, the Company may repatriate cash from any of its foreign subsidiaries that are otherwise not a party to the Renewed Senior Credit Facility in an amount which, when added to the amount of the Company’s Consolidated EBITDA, would result in compliance on a pro forma basis. The Company was in compliance with respect to these covenants as of  July 31, 2024.

 

The Renewed Senior Credit Facility contains customary events of default. If an event of default occurs and is continuing, then PNC may terminate all commitments to extend further credit and declare all amounts outstanding under the Renewed Senior Credit Facility due and payable immediately. In addition, if any of the North American Loan Parties or certain of their subsidiaries become the subject of voluntary or involuntary proceedings under any bankruptcy, insolvency or similar law, then any outstanding obligations under the Renewed Senior Credit Facility will automatically become immediately due and payable. Loans outstanding under the Renewed Senior Credit Facility will bear interest at a rate of 2.00% per annum in excess of the otherwise applicable rate (i) while a bankruptcy event of default exists or (ii) upon the lender's request, during the continuance of any other event of default.

 

As of July 31, 2024, the Company had borrowed an aggregate of $6.7  million at a rate of 10.0%  and had $4.7  million available under the Renewed Senior Credit Facility. As of January 31, 2024, the Company had borrowed an aggregate of $5.5 million and had $4.0 million available under the Renewed Senior Credit Facility.

 

 
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, 2024) from a bank in the U.A.E. As of July 31, 2024 the facility has an interest rate of approximately  8.6%, and expired in July 2024, however, the Company has started the process to renew and extend this credit arrangement and the credit facility has continued without interruption and penalty. The Company had borrowed an aggregate of $1.2 million  as of July 31, 2024 and $0.2 million  as of January 31, 2024, respectively, and is presented as a component of current maturities of long-term debt in the Company's consolidated balance sheets. As of  July 31, 2024 and January 31, 2024, the Company had unused borrowing availability of approximately $1.0 million and $1.9 million, respectively.

 

The Company has a revolving line for 20.5 million U.A.E. Dirhams (approximately $ 5.6 million at July 31, 2024) from a bank in the U.A.E. As of July 31, 2024 the facility has an interest rate of approximately  8.7%. The facility expired in August 2024, however, the Company has started the process to renew and extend this credit arrangement and the credit facility has continued without interruption or penalty. The Company had borrowed an aggregate o f $1.0 million  as of July 31, 2024 and $0.1 million  as of January 31, 2024, respectively, and is presented as a component of current maturities of long-term debt in the Company's consolidated balance sheets. As of  July 31, 2024 and January 31, 2024, the Company had unused borrowing availability of approximately $1.2 million and $1.0 million, respectively.
 
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 $2.1  million at July 31, 2024). This credit arrangement is in the form of project financing at rates competitive in Egypt. The line is secured by certain assets (such as accounts receivable) of the Company's Egyptian subsidiary. 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, 2024, the facility has an interest rate of approximately  20.8% and expires in November 2024. As of July 31, 2024, the Company had substantially nothing outstanding with respect to this credit arrangement, and approximately $1.4 million outstanding at January 31, 2024, which is presented as a component of current maturities of long-term debt in the Company's consolidated balance sheets. Further, as of  July 31, 2024 and  January 31, 2024, the Company had unused borrowing capacity of $2.1 million and $3.2 million, respectively. 
 
In December 2021, the Company entered into a credit arrangement for project financing with a bank in Egypt for 28.2 million Egyptian Pounds. As this project has progressed and the Company has made collections, the facility has decreased to a current amount of  2.1 million Egyptian Pounds (approximatel y $0.1 million at July 31, 2024). 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 11.0%  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 approximately $0.1 million outstanding  as of July 31, 2024 and January 31, 2024, respectively, and is presented as a component of current maturities of long-term debt in the Company's consolidated balance sheets.
 
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, 2024). This credit arrangement is in the form of project financing at rates competitive in Saudi Arabia. The line is secured by certain assets (such as accounts receivable) of the Company's Saudi Arabian subsidiary. The facility was renewed in May 2024 with substantially the same terms and conditions and expires in May 2025. As of July 31, 2024, the facility has an interest rate of approximately  9.7%. The Company had borrowed an aggregate o f $2.6 million and $3.2 million  as of July 31, 2024 and January 31, 2024, respectively, and is presented as a component of current maturities of long-term debt in the Company's consolidated balance sheets. The unused borrowing availability attributable to this credit arrangement at  July 31, 2024 and  January 31, 2024, was $6.3 million and $6.1 million, respectively.

 

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

 

The Company was in compliance with the covenants under the credit arrangements in the U.A.E., Egypt and Saudi Arabia as of July 31, 2024, with the exception of those arrangements that have expired or are set to expire and have not yet been renewed. Although certain of the arrangements have expired and the borrowings could be required to be repaid immediately by the banks, the Company is in regular communication with the respective banks throughout the renewal process and all of the arrangements have continued without interruption or penalty. On July 31, 2024, interest rates were based on (i) the Emirates Inter Bank Offered Rate plus 3.0% to 3.5% per annum for the U.A.E. 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, 2024, the Company's interest rates ranged from  8.6% to 20.8%, with a weighted average rate of 11.5%, and the Company had facility limits totaling $24.7  million under these credit arrangements. As of July 31, 2024 $7.1 million o f availability was used to support letters of credit to guarantee amounts committed for inventory purchases and for performance guarantees. Additionally, as of July 31, 2024 , the Company had borrow ed $7.8 million and had an additional $12.6 million of borrowing remaining available under the foreign revolving credit arrangements. The foreign revolving lines balances were included as a component of current maturities of long-term debt in the Company's consolidated balance sheets  as of July 31, 2024 and January 31, 2024.

 

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

 

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, 2024, the remaining balance on the mortgage in Canada is approximately CAD 5.9 million (approximately $ 4.3 million at July 31, 2024). The interest rate is variable, and was 8.8%  at July 31, 2024. The principal balance is included as a component of long-term debt, less current maturities in the Company's consolidated balance sheets and is presented net of issuance costs of $0.1 million  as of July 31, 2024 and January 31, 2024, respectively.

 

Finance obligation - buildings and land. On April 14, 2021, the Company entered into a purchase and sale agreement (the "Purchase and Sale Agreement"). Pursuant to the terms of the Purchase and Sale Agreement, the Company sold its land and buildings in Lebanon, Tennessee (the "Property") for $10.4 million. 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 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 $8.9 million is recognized in long-term finance obligation on the Company's consolidated balance sheets as of July 31, 2024 . The net carrying amount of the financial liability and remaining assets will be zero at the end of the lease term.

 

 

 

Accounts receivable: 

 

In 2015, the Company completed a project in the Middle East with billings in the aggregate amount of approximately $41.9 million. The system has not yet been commissioned by the customer. Nevertheless, the Company has received approximately $ 40.1 million as of July 31, 2024, with a remaining balance due in the amount of $ 1.8 million, all of which pertains to retention clauses within the agreements with the Company's customer, and which become payable by the customer when this project is fully tested and commissioned. Of this amount, $ 1.3 million is classified in other  long-term assets on the Company's consolidated balance sheets.
 
The Company has been actively involved in ongoing efforts to collect this outstanding balance. The Company continues to engage with the customer to ensure full payment of the open balances, and during the  six months ended July 31, 2024, and at various times throughout 2023, the Company received partial payments to settle $ 0.3 million and $ 0.6 million, respectively, of the customer's outstanding balances. Further, the Company has been engaged by the customer to perform additional work in 2024 under customary trade terms that supports the continued cooperation between the Company and the customer. As a result, the Company did not reserve any allowance against the remaining outstanding balances as of  July 31, 2024. However, if the Company's efforts to collect on this account are not successful, the Company may recognize an allowance for all, or substantially all, of any such then uncollected amounts.

 

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

 

Critical accounting policies are described in Item 7. MD&A and in the Notes to the Consolidated Financial Statements for the year ended January 31, 2024 contained in the Company's latest Annual Report on Form 10-K. Any new accounting policies or updates to existing accounting policies as a result of new accounting pronouncements have been discussed in the Notes to Consolidated Financial Statements in this Quarterly Report on Form 10-Q. The application of critical accounting policies may require management to make assumptions, judgments and estimates about the amounts reflected in the Consolidated Financial Statements. Management uses historical experience and all available information to make these estimates and judgments, and different amounts could be reported using different assumptions and estimates.

 

 

Item 4.

Controls and Procedures

 

Evaluation of Disclosure Controls and Procedures

 

The Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of the Company's disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of July 31, 2024. This evaluation included consideration of the controls, processes and procedures that are designed to ensure that information required to be disclosed by the Company in the reports the Company files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and to provide reasonable assurance that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. Based on this evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this Quarterly Report on Form 10-Q, our disclosure controls and procedures were not effective because of the material weaknesses in internal control over financial reporting, as described below. 

 

Material Weaknesses in Internal Control Over Financial Reporting

 

As previously reported, we have material weaknesses in the Company's internal control over information technology general controls ("ITGC"), financial reporting relating to the review and approval of manual journal entries, timely review of the financial close process, and timely review of certain financial policies and procedures and respective HR policies. The Company also did not maintain effective controls at certain operating locations in the Middle East and North Africa ("MENA"), specifically the Company did not maintain sufficient documentation to support an evaluation that controls over business processes were operating effectively. These deficiencies led management to conclude that a material weakness existed with respect to the Company's internal control over financial reporting. The material weakness did not result in any material misstatements to the Company’s consolidated financial statements. As a result of these material weaknesses, there is a reasonable possibility that a material misstatement of the Company's annual or interim financial statements will not be prevented or detected on a timely basis. 

 

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company's annual or interim financial statements will not be prevented or detected on a timely basis. 

 

Remediation Plan for the Material Weaknesses in Internal Control over Financial Reporting

 

To address these matters, the Company has begun implementing its remediation plan. Our ongoing remediation plans include the following:

 

(i) addressing the identified issues with control owners, including Company leadership and IT personnel; (ii) engaging outside consultants with expertise relating to ITGCs to document processes, assist in addressing the design and operating business process controls, monitoring and testing reviews focusing on systems supporting our financial reporting process (iii) developing and maintaining documentation underlying ITGCs for knowledge transfer and function changes, including access control and change management; and (iv) outsourcing certain functions to third-party providers, specifically relating to servers and firewalls, and managed detection and response.

 

Our remediation plans related to entity level controls and business process controls over MENA locations include: (i) addressing issues with control owners, including company leadership; (ii) evaluating and updating the Company's evidence of internal control policies and procedures as needed and providing necessary guidance to applicable locations; (iii) assessing the adequacy and determine whether enhancements are needed to the design of corporate and / or operating locations business process controls; and (iv) augmenting our internal audit function by hiring an additional resource to assist in overseeing the remediation process, including updating policies and procedures, and implementing internal controls; and (v) engaging outside consultants to conduct training sessions. 

 

The Company anticipates the actions described above and resulting improvements in controls will strengthen the Company's processes, procedures and will address the related material weaknesses described above. However, the material weaknesses cannot be considered fully remediated until the necessary controls have been appropriately designed and implemented. The remediation processes and procedures will also need to be in operation for a period of time and management conclude through testing, that these controls are operating effectively. Accordingly, the material weaknesses are not remediated as of July 31, 2024. 

 

Change in Internal Control over Financial Reporting. There were no changes to our internal control over financial reporting which were identified in connection with the evaluation required by Rules 13a-15(d) or 15d-15(d) under the Exchange Act during the fiscal quarter ended July 31, 2024, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

 

 

PART II OTHER INFORMATION

 

 

 

 

Item 6.

Exhibits

 

3.1 Certificate of Incorporation of Perma-Pipe International Holdings, Inc. [Incorporated by reference to Exhibit 3.3 to Registration Statement No. 33-70298]
3.2 Certificate of Amendment to Certificate of Incorporation of Perma-Pipe International Holdings, Inc. [Incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed on March 20, 2017]
3.3 Fifth Amended and Restated By-Laws of Perma-Pipe International Holdings, Inc. [Incorporated by reference to Exhibit 3.2 to the Company's Current Report on Form 8-K filed on May 6, 2019]
10.1 Perma-Pipe International Holdings, Inc. 2024 Omnibus Stock Incentive Plan [Incorporated by reference to Appendix A to the Company's Definitive Proxy Statement on Schedule 14A filed on June 21, 2024]*

31.1

Rule 13a - 14(a)/15d - 14(a) Certifications

(1) Chief Executive Officer certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2

Rule 13a - 14(a)/15d - 14(a) Certifications

(2) Chief Financial Officer certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32

Section 1350 Certifications (Chief Executive Officer and Chief Financial Officer certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002)

101.INS

Inline XBRL Instance Document (the Instance Document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)

101.SCH

Inline XBRL Taxonomy Extension Schema

101.CAL

Inline XBRL Taxonomy Extension Calculation

101.DEF

Inline XBRL Taxonomy Extension Definition

101.LAB

Inline XBRL Taxonomy Extension Labels

101.PRE

Inline XBRL Taxonomy Extension Presentation         

104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

 

*Management contracts and compensatory plans or agreements

 

 

SIGNATURES

 

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

 

    Perma-Pipe International Holdings, Inc.
     
     

Date:

September 11, 2024

By: /s/ David J. Mansfield

 

 

David J. Mansfield

 

 

President and Chief Executive Officer

 

 

(Principal Executive Officer)

 

 

 

Date:

September 11, 2024

By: /s/ Matthew E. Lewicki

 

 

Matthew E. Lewicki

 

 

Vice President and Chief Financial Officer

 

 

(Principal Financial and Accounting Officer)

 

29

Exhibit 31.1

 

I, David J. Mansfield, certify that:

 

1.

I have reviewed this quarterly report on Form 10-Q of Perma-Pipe International Holdings, Inc.;

 

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4.

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

 

a.

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

 

b.

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

 

c.

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

 

d.

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5.

The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

 

a.

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

 

b.

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date:

September 11, 2024

 

/s/ David J. Mansfield

David J. Mansfield

President and Chief Executive Officer

(Principal Executive Officer)

 

 

Exhibit 31.2

 

I, Matthew E. Lewicki, certify that:

 

1.

I have reviewed this quarterly report on Form 10-Q of Perma-Pipe International Holdings, Inc.;

 

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4.

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

 

a.

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

 

b.

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

 

c.

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

 

d.

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5.

The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

 

a.

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

 

b.

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date:

September 11, 2024

 

/s/ Matthew E. Lewicki

Matthew E. Lewicki

Vice President and Chief Financial Officer

(Principal Financial and Accounting Officer)

 

 

Exhibit 32

 

Certification of Principal Executive Officers

Pursuant to 18 U.S.C. 1350

(Section 906 of the Sarbanes-Oxley Act of 2002)

 

The undersigned, in their capacities as Chief Executive Officer and Chief Financial Officer of Perma-Pipe International Holdings, Inc. (the “Registrant") certify that, to the best of their knowledge, based upon a review of the Quarterly Report on Form 10-Q for the period ended July 31, 2024 of the Registrant, (the “Report”):

 

 

(1)

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

 

 

(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

 

/s/ David J. Mansfield

David J. Mansfield

President and Chief Executive Officer

(Principal Executive Officer)

 

/s/ Matthew E. Lewicki

Matthew E. Lewicki

Vice President and Chief Financial Officer

(Principal Financial and Accounting Officer)

 

September 11, 2024

 

 

 

A signed original of this written statement required by Section 906 has been provided by Perma-Pipe International Holdings, Inc. and will be retained by Perma-Pipe International Holdings, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

 

 

 
v3.24.2.u1
Document And Entity Information - shares
6 Months Ended
Jul. 31, 2024
Sep. 11, 2024
Document Information [Line Items]    
Entity Central Index Key 0000914122  
Entity Registrant Name Perma-Pipe International Holdings, Inc.  
Amendment Flag false  
Current Fiscal Year End Date --01-31  
Document Fiscal Period Focus Q2  
Document Fiscal Year Focus 2024  
Document Type 10-Q  
Document Quarterly Report true  
Document Period End Date Jul. 31, 2024  
Document Transition Report false  
Entity File Number 001-32530  
Entity Incorporation, State or Country Code DE  
Entity Tax Identification Number 36-3922969  
Entity Address, Address Line One 24900 Pitkin Road, Suite 309  
Entity Address, City or Town Spring  
Entity Address, State or Province TX  
Entity Address, Postal Zip Code 77386  
City Area Code 847  
Local Phone Number 966-1000  
Title of 12(b) Security Common Stock, $.01 par value per share  
Trading Symbol PPIH  
Security Exchange Name NASDAQ  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Filer Category Non-accelerated Filer  
Entity Small Business true  
Entity Emerging Growth Company false  
Entity Shell Company false  
Entity Common Stock, Shares Outstanding   7,977,853
v3.24.2.u1
Consolidated Statements of Operations (Unaudited) - USD ($)
shares in Thousands, $ in Thousands
3 Months Ended 6 Months Ended
Jul. 31, 2024
Jul. 31, 2023
Jul. 31, 2024
Jul. 31, 2023
Net sales $ 37,513 $ 35,141 $ 71,834 $ 64,798
Cost of sales 24,039 25,677 47,843 48,559
Gross profit 13,474 9,464 23,991 16,239
Operating expenses        
General and administrative expenses 5,979 5,283 12,128 10,742
Selling expenses 1,353 1,490 2,588 2,730
Total operating expenses 7,332 6,773 14,716 13,472
Income from operations 6,142 2,691 9,275 2,767
Interest expense 514 636 1,021 1,148
Other (expense) income (38) 81 (105) 154
Income before income taxes 5,590 2,136 8,149 1,773
Income tax expense 1,306 966 2,076 1,725
Net income 4,284 1,170 6,073 48
Less: Net income attributable to non-controlling interest 995 148 1,341 148
Net income (loss) attributable to common stock $ 3,289 $ 1,022 $ 4,732 $ (100)
Weighted average common shares outstanding        
Basic (in shares) 7,954 8,029 7,930 8,017
Diluted (in shares) 8,125 8,139 7,987 8,017
Earnings (loss) per share attributable to common stock        
Basic (in dollars per share) $ 0.41 $ 0.13 $ 0.6 $ (0.01)
Diluted (in dollars per share) $ 0.4 $ 0.13 $ 0.59 $ (0.01)
v3.24.2.u1
Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jul. 31, 2024
Jul. 31, 2023
Jul. 31, 2024
Jul. 31, 2023
Net income $ 4,284 $ 1,170 $ 6,073 $ 48
Other comprehensive income (loss)        
Foreign currency translation adjustment (192) 339 (1,607) (98)
Comprehensive income (loss) 4,092 1,509 4,466 (50)
Less: Comprehensive income attributable to non-controlling interests 995 148 1,341 148
Total comprehensive income (loss) attributable to common stock $ 3,097 $ 1,361 $ 3,125 $ (198)
v3.24.2.u1
Consolidated Balance Sheets (Current Period Unaudited) - USD ($)
$ in Thousands
Jul. 31, 2024
Jan. 31, 2024
Current assets    
Cash and cash equivalents $ 9,455 $ 5,845
Restricted cash 1,426 1,395
Trade accounts receivable, less allowance for credit losses of $713 at July 31, 2024 and $699 at January 31, 2024 39,927 46,646
Inventories 15,823 15,541
Prepaid expenses and other current assets 13,197 9,697
Unbilled accounts receivable 17,850 16,597
Costs and estimated earnings in excess of billings on uncompleted contracts 3,085 3,097
Total current assets 100,763 98,818
Long-term assets    
Property, plant and equipment, net of accumulated depreciation 37,518 37,620
Operating lease right-of-use asset 6,938 6,467
Deferred tax assets 7,866 7,919
Goodwill 2,156 2,222
Other long-term assets 3,946 2,665
Total long-term assets 58,424 56,893
Total assets 159,187 155,711
Current liabilities    
Trade accounts payable 21,411 25,323
Accrued compensation and payroll taxes 1,358 1,214
Commissions and management incentives payable 5,210 4,523
Revolving line - North America 6,699 5,519
Current maturities of long-term debt 5,522 4,071
Customers' deposits 5,949 4,264
Operating lease liability short-term 965 914
Other accrued liabilities 6,178 9,039
Billings in excess of costs and estimated earnings on uncompleted contracts 704 495
Income taxes payable 2,475 2,380
Total current liabilities 56,471 57,742
Long-term liabilities    
Long-term debt, less current maturities 8,912 9,035
Long-term finance obligation 3,974 4,229
Deferred compensation liabilities 1,180 1,212
Deferred tax liabilities 1,165 1,217
Operating lease liability long-term 6,689 6,270
Other long-term liabilities 1,403 1,275
Total long-term liabilities 26,076 25,991
Non-controlling interest 8,057 6,266
Commitments and contingencies
Stockholders' equity    
Common stock, $.01 par value, authorized 50,000 shares; 7,978 issued and outstanding at July 31, 2024 and 8,017 at January 31, 2024 81 80
Additional paid-in capital 59,808 60,063
Treasury stock, 112 shares at July 31, 2024 and January 31, 2024 (968) (968)
Retained earnings 16,820 12,088
Accumulated other comprehensive loss (7,158) (5,551)
Total stockholders' equity 68,583 65,712
Total liabilities and stockholders' equity 159,187 155,711
Related Party [Member]    
Long-term assets    
Total assets 26,400  
Long-term liabilities    
Loan payable to GIG $ 2,753 $ 2,753
v3.24.2.u1
Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - USD ($)
shares in Thousands, $ in Thousands
Jul. 31, 2024
Jan. 31, 2024
Allowance for doubtful accounts $ 713 $ 699
Common stock, par value (in dollars per share) $ 0.01 $ 0.01
Common stock, authorized (in shares) 50,000 50,000
Common stock, issued (in shares) 7,978 8,017
Common stock, outstanding (in shares) 7,978 8,017
Treasury stock (in shares) 112 112
v3.24.2.u1
Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($)
$ in Thousands
Common Stock [Member]
Revision of Prior Period, Adjustment [Member]
Common Stock [Member]
Additional Paid-in Capital [Member]
Retained Earnings [Member]
Treasury Stock, Common [Member]
AOCI Attributable to Parent [Member]
Total
Balance at Jan. 31, 2023   $ 80 $ 62,562 $ 1,617 $ (26) $ (6,449) $ 57,784
Net income   0 0 (1,123) 0 0 (1,123)
Stock-based compensation expense   0 229 0 0 0 229
Foreign currency translation adjustment   0 0 0 0 (437) (437)
Balance at Apr. 30, 2023   $ 80 62,791 494 (26) (6,886) 56,453
Balances (in shares) at Jan. 31, 2023 (56,947) 8,007,002          
Balance at Jan. 31, 2023   $ 80 62,562 1,617 (26) (6,449) 57,784
Net income             (100)
Foreign currency translation adjustment             (98)
Balance at Jul. 31, 2023   $ 81 62,762 1,516 (338) (6,547) 57,474
Balances (in shares) at Jan. 31, 2023 (56,947) 8,007,002          
Shares issued, net of shares used for tax withholding (in shares)   66,726          
Balances (in shares) at Jul. 31, 2023   8,016,781          
Balance at Apr. 30, 2023   $ 80 62,791 494 (26) (6,886) 56,453
Net income   0 0 1,022 0 0 1,022
Stock-based compensation expense   0 245 0 0 0 245
Foreign currency translation adjustment   0 0 0 0 339 339
Common stock issued under stock plans, net of shares used for tax withholding   0 (274) 0 0 0 (274)
Balance at Jul. 31, 2023   81 62,762 1,516 (338) (6,547) 57,474
Repurchase of common stock   $ 1          
Repurchase of common stock     0 0 (312) 0 (311)
Balances (in shares) at Jul. 31, 2023   8,016,781          
Balance at Jan. 31, 2024   $ 80 60,063 12,088 (968) (5,551) 65,712
Net income   0 0 1,443 0 0 1,443
Stock-based compensation expense   0 228 0 0 0 228
Amount attributable to non-controlling interest   0 (421) 0 0 0 (421)
Foreign currency translation adjustment   0 0 0 0 (1,415) (1,415)
Balance at Apr. 30, 2024   $ 80 59,870 13,531 (968) (6,966) 65,547
Balances (in shares) at Jan. 31, 2024 0 8,016,781          
Balance at Jan. 31, 2024   $ 80 60,063 12,088 (968) (5,551) 65,712
Net income             4,732
Foreign currency translation adjustment             (1,607)
Balance at Jul. 31, 2024   $ 81 59,808 16,820 (968) (7,158) 68,583
Balances (in shares) at Jan. 31, 2024 0 8,016,781          
Shares issued, net of shares used for tax withholding (in shares)   73,087          
Balances (in shares) at Jul. 31, 2024   8,089,868          
Balance at Apr. 30, 2024   $ 80 59,870 13,531 (968) (6,966) 65,547
Net income   0 0 3,289 0 0 3,289
Stock-based compensation expense   0 177 0 0 0 177
Amount attributable to non-controlling interest   0 (29) 0 0 0 (29)
Foreign currency translation adjustment   0 0 0 0 (192) (192)
Common stock issued under stock plans, net of shares used for tax withholding   1 (210) 0 0 0 (209)
Balance at Jul. 31, 2024   $ 81 $ 59,808 $ 16,820 $ (968) $ (7,158) $ 68,583
Balances (in shares) at Jul. 31, 2024   8,089,868          
v3.24.2.u1
Consolidated Statements of Cash Flows (Unaudited) - USD ($)
$ in Thousands
6 Months Ended
Jul. 31, 2024
Jul. 31, 2023
Operating activities    
Net income $ 6,073 $ 48
Adjustments to reconcile net income to net cash provided by operating activities    
Depreciation and amortization 1,717 1,791
Deferred tax expense 203 191
Stock-based compensation expense 396 456
Provision on uncollectible accounts 43 8
Gain (loss) from disposal of fixed assets 29 (5)
Changes in operating assets and liabilities    
Accounts receivable 6,090 (9,865)
Inventories (809) 882
Costs and estimated earnings in excess of billings on uncompleted contracts 221 2,495
Accounts payable (3,064) 8,044
Accrued compensation and payroll taxes (48) (1,650)
Customers' deposits 1,810 534
Income tax receivable (789) (766)
Prepaid expenses and other current assets (3,209) 989
Other assets and liabilities (2,974) 389
Net cash provided by operating activities 3,832 3,533
Investing activities    
Capital expenditures (3,180) (6,797)
Proceeds from insurance recovery for property and equipment 0 5
Net cash used in investing activities (3,180) (6,792)
Financing activities    
Proceeds from revolving credit lines 39,540 96,920
Payments of debt on revolving credit lines (36,887) (92,091)
Payments of other debt (117) (124)
Increase (decrease) in drafts payable 8 (178)
Payments on finance lease obligations (16) (154)
Repurchase of common stock 0 (312)
Stock options exercised and taxes paid related to restricted shares vested (201) (273)
Net cash provided by financing activities 2,236 3,732
Effect of exchange rate changes on cash, cash equivalents and restricted cash 753 61
Net increase in cash, cash equivalents and restricted cash 3,641 534
Cash, cash equivalents and restricted cash - beginning of period 7,240 6,793
Cash, cash equivalents and restricted cash - end of period 10,881 7,327
Supplemental cash flow information    
Cash interest paid 1,000 1,302
Cash income taxes paid 2,436 2,234
Fixed assets acquired under finance leases - non-cash 0 139
Fixed assets acquired from non affiliates - non-cash 0 4,357
Finance Lease Obligations [Member]    
Financing activities    
Payments on finance lease obligations (16) (154)
Land and Buildings in Lebanon, Tennessee [Member]    
Financing activities    
Payments of principal on finance obligation (91) (56)
Unbilled Revenues [Member]    
Changes in operating assets and liabilities    
Unbilled accounts receivable $ (1,857) $ (8)
v3.24.2.u1
Note 1 - Basis of Presentation
6 Months Ended
Jul. 31, 2024
Notes to Financial Statements  
Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block]

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

 

Significant New Accounting Policies

 

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

 

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

v3.24.2.u1
Note 2 - Business Segment Reporting
6 Months Ended
Jul. 31, 2024
Notes to Financial Statements  
Segment Reporting Disclosure [Text Block]

Note 2 - Business segment reporting

 

The Company is engaged in the manufacture and sale of products in one reportable segment: Piping Systems. The Company engineers, manufactures and sells pre-insulated specialty piping systems, and leak detection systems. Pre-insulated specialty piping systems include: (i) insulated and jacketed district heating and cooling piping systems for efficient energy distribution from central energy plants to multiple locations, (ii) primary and secondary containment piping systems for transporting chemicals, hazardous fluids and petroleum products, (iii) the coating and/or insulation of oil and gas gathering and transmission pipelines, and (iv) liquid and powder based anti-corrosion coatings applied both to the external and internal surfaces of steel pipe, including shapes like bends, reducers, tees, and other spools/fittings used in pipelines for the transportation of oil and gas products and potable water. The Company's leak detection systems are sold with its piping systems or on a stand-alone basis to monitor areas where fluid intrusion may contaminate the environment, endanger personal safety, cause a fire hazard, impair essential services or damage equipment or property.

v3.24.2.u1
Note 3 - Accounts Receivable
6 Months Ended
Jul. 31, 2024
Notes to Financial Statements  
Loans, Notes, Trade and Other Receivables Disclosure [Text Block]

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 allowance for credit losses is based on specifically identified amounts in customers' accounts, where future collectability is deemed uncertain. Management may exercise its judgment in adjusting the provision as a consequence of known items, such as current economic factors and credit trends. 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.

 

In 2015, the Company completed a project in the Middle East with billings in the aggregate amount of approximately $41.9 million. The system has not yet been commissioned by the customer. Nevertheless, the Company has received approximately $40.1 million as of July 31, 2024, with a remaining balance due in the amount of $1.8 million, all of which pertains to retention clauses within the agreements with the Company's customer, and which become payable by the customer when this project is fully tested and commissioned. Of this amount, $1.3 million is classified in other long-term assets on the Company's consolidated balance sheets.

 

The Company has been actively involved in ongoing efforts to collect this outstanding balance. The Company continues to engage with the customer to ensure full payment of the open balances, and during the six months ended July 31, 2024, and at various times throughout 2023, the Company received partial payments to settle $0.3 million and $0.6 million, respectively, of the customer's outstanding balances. Further, the Company has been engaged by the customer to perform additional work in 2024 under customary trade terms that supports the continued cooperation between the Company and the customer. As a result, the Company did not reserve any allowance against the remaining outstanding balances as of  July 31, 2024. However, if the Company's efforts to collect on this account are not successful, the Company may recognize an allowance for all, or substantially all, of any such then uncollected amounts. 

 

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

 

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

v3.24.2.u1
Note 4 - Revenue Recognition
6 Months Ended
Jul. 31, 2024
Notes to Financial Statements  
Revenue from Contract with Customer [Text Block]

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)

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

 

 

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 exist:

 

 

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, 2024 and 2023 are as follows:

 

  

Three Months Ended July 31,

  

Six Months Ended July 31,

 
  

2024

  

2023

  

2024

  

2023

 
  

Sales

  

% of Total

  

Sales

  

% of Total

  

Sales

  

% of Total

  

Sales

  

% of Total

 

Products

 $2,795   7% $2,146   7% $6,048   8% $4,988   7%
                                 

Specialty Piping Systems and Coating

                                

Revenue recognized under input method

  12,613   34%  12,801   36%  22,752   32%  23,139   36%

Revenue recognized under output method

  22,105   59%  20,194   57%  43,034   60%  36,671   57%

Total

 $37,513   100% $35,141   100% $71,834   100% $64,798   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 direct costs incurred to satisfy the performance obligations of the contract. Revenue recognition begins when projects costs are incurred.  

 

The output method as noted in ASC 606-10-55-17 is used by all other operating entities to measure revenue by the direct measurement of the outputs produced relative to the remaining goods promised under the contract. Due to the types of end customers, generally these contracts require formal inspection protocols or specific export documentation for units produced, or produced and shipped, therefore, the output method is the most faithful depiction of the Company’s performance. Depending on the conditions of the contract, revenue may be recognized based on units produced, inspected and held by the Company prior to shipment or on units produced, inspected and shipped. 

 

Some of the Company’s operating entities invoice and collect milestones or other contractual obligations prior to the transfer of goods and services, but do not recognize revenue until the performance obligations are satisfied under the methods discussed above.

 

Contract modifications that occur prior to the start of the manufacturing process will supersede the original contract and revenue is recognized using the modified contract value. Contract modifications that occur during the manufacturing process (changes in scope of work, job performance, material costs, and/or final contract settlements) are recognized in the period in which the revisions are known. Provisions are made for estimated losses on uncompleted contracts in the contract liabilities account in the period in which such losses are determined.

 

The transaction price associated with the Company's contracts with customers are generally determined based on the fixed amount of consideration as specified in a contract. This  may also include variable consideration in certain instances where it is considered probable that a significant reversal of cumulative revenue recognized will not occur. As a result, the amount of consideration ultimately received from the customer can fluctuate due to the variability of future events stated in a contract. Therefore, the aggregate amount of the transaction price includes the fixed consideration contained in a contract that is generally not subject to change and excludes sales and value added taxes, or amounts collected on behalf of third parties, along with any variable consideration. The total transaction price is then allocated to the performance obligations which is eventually recognized as revenue based on the project type and the method that is used to measure the transfer of promised goods and services to customers. Additionally, transaction prices relating to cost-plus contracts are determined by applying the applicable profit margin to costs incurred on contracts, whereas transaction prices relating to fixed price contracts are determined on a lump-sum basis. Further, standard payment terms are generally net 30 to 60 days, which is customer specific.

 

Contract assets and liabilities

 

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, 2024

  

January 31, 2024

 

Costs incurred on uncompleted contracts

 $17,686  $21,912 

Estimated earnings

  12,110   11,270 

Earned revenue

  29,796   33,182 

Less billings to date

  27,415   30,580 

Costs in excess of billings, net

 $2,381  $2,602 

Balance sheet classification

        

Contract assets: Costs and estimated earnings in excess of billings on uncompleted contracts

 $3,085  $3,097 

Contract liabilities: Billings in excess of costs and estimated earnings on uncompleted contracts

  (704)  (495)

Costs in excess of billings, net

 $2,381  $2,602 

 

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

 

Unbilled accounts receivable

 

The Company has recorded $17.9 million and $16.6 million of unbilled accounts receivable on the consolidated balance sheets as of July 31, 2024 and January 31, 2024, from revenues generated by certain of its subsidiaries. The Company has fulfilled all performance obligations and has recorded revenue under the respective contracts. The deliverables under these contracts have been accepted by the customer and billings will be made once the customer takes possession of or arranges shipping for the products. The Company anticipates that substantially all of the amounts included in unbilled accounts receivable as of  July 31, 2024 will be billed within one year.

 

Practical expedients

 

Costs to obtain a contract are not considered to be incremental or material, and project duration generally does not span more than one year. Accordingly, the Company applies the practical expedient for these types of costs and as such, are expensed in the period incurred.

 

As a result of the Company's contracts having a duration of less than one year, a practical expedient was applied regarding disclosure of the aggregate amount and future timing of performance obligations that are unsatisfied or partially satisfied as of the end of the reporting period. 

 

v3.24.2.u1
Note 5 - Inventories
6 Months Ended
Jul. 31, 2024
Notes to Financial Statements  
Inventory Disclosure [Text Block]

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. 

 

Inventories consisted of the following: 

 

  

July 31, 2024

  

January 31, 2024

 

Raw materials

 $14,777  $13,787 

Work in process

  574   611 

Finished goods

  1,275   2,022 

Subtotal

  16,626   16,420 

Less allowance

  803   879 

Inventories

 $15,823  $15,541 

 

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. 

 

v3.24.2.u1
Note 6 - Income Taxes
6 Months Ended
Jul. 31, 2024
Notes to Financial Statements  
Income Tax Disclosure [Text Block]

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, 2024 and 2023 were 23% and 45%, respectively. The Company's ETR was 25% and 97% for the six months ended July 31, 2024 and 2023, respectively. The change in the ETR is due to the ability to recognize tax benefits on losses in the United States in the current year whereas the prior year had a full valuation allowance and changes in the mix of income and loss in various jurisdictions.

 

The Company expects that future distributions from foreign subsidiaries will not be subject to incremental U.S. federal tax as they will be excludible from U.S. taxable income either be remittances of previously taxed earnings and profits or eligible for a full dividends received deduction. Current and future earnings in the Company's subsidiaries in Canada and Egypt are not permanently reinvested. The earnings from these subsidiaries are subject to tax in their local jurisdiction, and withholding taxes in these jurisdictions are considered. As such, the Company has accrued a liability of $0.7 million as of July 31, 2024 related to these taxes.

v3.24.2.u1
Note 7 - Impairment of Long-lived Assets
6 Months Ended
Jul. 31, 2024
Notes to Financial Statements  
Asset Impairment Charges [Text Block]

Note 7 - Impairment of long-lived assets

 

The Company's assessment of long-lived assets, and other identifiable intangibles is based upon factors that market participants would use in accordance with the accounting guidance for the fair value measurement of assets. At  July 31, 2024, the Company performed an assessment to determine whether there were any triggering events that may have occurred which could indicate that the carrying value of the Company's long-lived assets are not recoverable, and an impairment may exist. Based on this assessment, the Company did not identify any triggering events that would indicate that the carrying amounts may not be recoverable with respect to long-lived assets at  July 31, 2024.  The Company will continue testing for potential impairment at least annually or as otherwise required by applicable accounting standards.

 

Goodwill. The purchase price of an acquired company is allocated between intangible assets and the net tangible assets of the acquired business with the residual of the purchase price recorded as goodwill. All identifiable goodwill as of July 31, 2024 and January 31, 2024 is attributable to the purchase of the remaining 50% interest in Perma-Pipe Canada, Ltd., which occurred in 2016.

 

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

 

  

January 31, 2024

  

Foreign exchange change effect

  

July 31, 2024

 

Goodwill

 $2,222  $(66) $2,156 

 

The Company performs an impairment assessment of goodwill annually as of January 31, or more frequently if triggering events occur, based on the estimated fair value of the related reporting unit or intangible asset. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. During the period ended  July 31, 2024, the Company performed a periodic assessment to determine whether there were any triggering events that may have occurred which could indicate that more likely than not that the fair value of the reporting unit did not exceed its carrying value, resulting in an impairment. Based on this assessment, the Company did not identify any triggering events that would indicate that the fair value is less than the carrying value of the reporting unit at  July 31, 2024. Accordingly, the Company did not proceed with performing an impairment test as a result of this periodic assessment. The Company will continue testing for impairment at least annually as of January 31, or as otherwise required by applicable accounting standards.

 

v3.24.2.u1
Note 8 - Stock-based Compensation
6 Months Ended
Jul. 31, 2024
Notes to Financial Statements  
Share-Based Payment Arrangement [Text Block]

Note 8 - Stock-based compensation 

 

The Company has prior incentive plans under which previously granted awards remain outstanding, but under which no new awards may be granted, including the Company's 2021 Omnibus Stock Incentive Plan, which expired in May 2024. At  July 31, 2024, the Company had reserved a total 196,026 shares for grants and issuances under these incentive plans, including issuances pursuant to unvested or unexercised prior awards.

 

The Company's prior incentive plans provided for the grant of deferred shares, non-qualified stock options, incentive stock options, restricted shares, restricted stock units, and performance-based restricted stock units intended to qualify under section 422 of the Internal Revenue Code. The prior incentive plans authorized awards to officers, employees, consultants, and independent directors. 

 

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.

 

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 or 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,

 
  

2024

  

2023

  

2024

  

2023

 

Restricted stock-based compensation expense

 $177  $227  $396  $456 

 

Stock options

 

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

  22  $11.15   0.7  $6 

Exercised

  (1)  6.85   -   2 

Expired or forfeited

  (17)  12.41   -   - 

Outstanding and exercisable at July 31, 2024

  4  $6.89   1.4  $10 

 

There was no vesting, expiration or forfeiture of previously unvested stock options during the six months ended July 31, 2024. In addition, there were no remaining unvested stock options outstanding, and therefore no unrecognized compensation expense related to unvested stock options.

 

Restricted stock

 

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

 

  

Restricted Shares

  

Weighted Average Price (Per share)

  

Aggregate Intrinsic Value

 

Outstanding at January 31, 2024

  222  $9.33  $2,078 

Granted

  108   8.81     

Vested and issued

  (73)  9.36     

Forfeited or retired for taxes

  (27)  10.25     

Outstanding at July 31, 2024

  230  $9.05  $2,083 

 

As of July 31, 2024, there was $1.5 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 2.1 years.

v3.24.2.u1
Note 9 - Earnings Per Share
6 Months Ended
Jul. 31, 2024
Notes to Financial Statements  
Earnings Per Share [Text Block]

Note 9 - Earnings per share

 

  

Three Months Ended July 31,

  

Six Months Ended July 31,

 
  

2024

  

2023

  

2024

  

2023

 

Basic weighted average common shares outstanding at July 31, 2024

  7,954   8,029   7,930   8,017 

Dilutive effect of equity compensation plans

  171   110   57   - 

Weighted average common shares outstanding assuming full dilution

  8,125   8,139   7,987   8,017 
                 

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

  0   79   114   18 

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

  171   110   57   170 
                 

Net income (loss) attributable to common stock

 $3,289  $1,022  $4,732  $(100)
                 

Earnings (loss) per share attributable to common stock

                

Basic

 $0.41  $0.13  $0.60  $(0.01)

Diluted

 $0.40  $0.13  $0.59  $(0.01)

 

v3.24.2.u1
Note 10 - Debt
6 Months Ended
Jul. 31, 2024
Notes to Financial Statements  
Debt Disclosure [Text Block]

Note 10 - Debt

 

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

 

Revolving lines - North AmericaOn September 20, 2018, the Company and certain of its U.S. and Canadian subsidiaries (collectively, together with the Company, the “North American Loan Parties”) entered into a Revolving Credit and Security Agreement (the “Credit Agreement”) with PNC Bank, National Association ("PNC"), as administrative agent and lender, providing for a three-year $18 million senior secured revolving credit facility, subject to a borrowing base including various reserves (the “Senior Credit Facility”).

 

On September 17, 2021, the North American Loan Parties executed an extension of the Credit Agreement with PNC, providing for a new five-year $18 million senior secured revolving credit facility, subject to a borrowing base including various reserves (the “Renewed Senior Credit Facility”). The Company's obligations under the Renewed Senior Credit Facility are currently guaranteed by Perma-Pipe Canada, Inc. Each of the North American Loan Parties other than Perma-Pipe Canada, Inc. (collectively, the "Borrowers") is a borrower under the Renewed Senior Credit Facility.

 

The Borrowers have used and will continue to use borrowings under the Renewed Senior Credit Facility (i) to fund future capital expenditures; (ii) to fund ongoing working capital needs; and (iii) for other corporate purposes, including potentially additional stock repurchases. Borrowings under the Renewed Senior Credit Facility bear interest at a rate equal to an alternate base rate, SOFR rate index, plus, in each case, an applicable margin. The applicable margin is based on a fixed charge coverage ratio ("FCCR") range. Interest on alternate base rate borrowings is the alternate base rate (as defined in the Renewed Senior Credit Facility) plus an applicable margin ranging from 1.00% to 1.50%, based on the FCCR in the most recently reported period. Interest on SOFR rate borrowings is the SOFR rate (as defined in the Renewed Senior Credit Facility) plus an applicable margin ranging from 2.00% to 2.50%, based on the FCCR in the most recently reported period, as well as an additional SOFR adjustment ranging from 0.10% to 0.25%, based on the term of the interest period. Additionally, the Borrowers pay a 0.25% per annum facility fee on the unused portion of the Renewed Senior Credit Facility.

 

Subject to certain exceptions, borrowings under the Renewed Senior Credit Facility are secured by substantially all of the North American Loan Parties’ assets. The Renewed Senior Credit Facility matures on September 20, 2026. Subject to certain qualifications and exceptions, the Renewed Senior Credit Facility contains covenants that, among other things, restrict the North American Loan Parties’ ability to create liens, merge or consolidate, consummate acquisitions, make investments, dispose of assets, incur debt, and pay dividends and other distributions. In addition, the North American Loan Parties may not make capital expenditures in excess of $5.0 million annually, plus a limited carryover of unused amounts. Further, the North American Loan Parties may not make repurchases of the Company's common stock in excess of $3.0 million.

 

The Renewed Senior Credit Facility also contains financial covenants requiring the North American Loan Parties to achieve a ratio of its EBITDA (as defined in the Renewed Senior Credit Facility) to the sum of scheduled cash principal payments on indebtedness for borrowed money and interest payments on the advances under the Renewed Senior Credit Facility to be not less than 1.10 to 1.00 for any five consecutive days in which the undrawn availability is less than $3.0 million or any day in which the undrawn availability is less than $2.0 million. In order to cure any future breach of these covenants by the North American Loan Parties, the Company may repatriate cash from any of its foreign subsidiaries that are otherwise not a party to the Renewed Senior Credit Facility in an amount which, when added to the amount of the Company’s Consolidated EBITDA, would result in compliance on a pro forma basis. The Company was in compliance with respect to these covenants as of  July 31, 2024.

 

The Renewed Senior Credit Facility contains customary events of default. If an event of default occurs and is continuing, then PNC may terminate all commitments to extend further credit and declare all amounts outstanding under the Renewed Senior Credit Facility due and payable immediately. In addition, if any of the North American Loan Parties or certain of their subsidiaries become the subject of voluntary or involuntary proceedings under any bankruptcy, insolvency or similar law, then any outstanding obligations under the Renewed Senior Credit Facility will automatically become immediately due and payable. Loans outstanding under the Renewed Senior Credit Facility will bear interest at a rate of 2.00% per annum in excess of the otherwise applicable rate (i) while a bankruptcy event of default exists or (ii) upon the lender's request, during the continuance of any other event of default.

 

As of July 31, 2024, the Company had borrowed an aggregate of $6.7 million at a rate of 10.0% and had $4.7 million available under the Renewed Senior Credit Facility. As of January 31, 2024, the Company had borrowed an aggregate of $5.5 million and had $4.0 million available under the Renewed Senior Credit Facility.  

 

Finance obligation - buildings and land. On April 14, 2021, the Company entered into a purchase and sale agreement (the "Purchase and Sale Agreement"). Pursuant to the terms of the Purchase and Sale Agreement, the Company sold its land and buildings in Lebanon, Tennessee (the "Property") for $10.4 million. 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 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 $8.9 million is recognized in long-term finance obligation on the Company's consolidated balance sheets as of July 31, 2024. The net carrying amount of the financial liability and remaining assets will be zero at the end of the lease term.

 

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, 2024) from a bank in the U.A.E. As of July 31, 2024 the facility has an interest rate of approximately 8.6%, and expired in July 2024, however, the Company has started the process to renew and extend this credit arrangement and the credit facility has continued without interruption and penalty. The Company had borrowed an aggregate of $1.2 million as of July 31, 2024 and $0.2 million as of January 31, 2024, respectively, and is presented as a component of current maturities of long-term debt in the Company's consolidated balance sheets. As of  July 31, 2024 and January 31, 2024, the Company had unused borrowing availability of approximately $1.0 million and $1.9 million, respectively.

 

The Company has a revolving line for 20.5 million U.A.E. Dirhams (approximately $5.6 million at July 31, 2024) from a bank in the U.A.E. As of July 31, 2024 the facility has an interest rate of approximately 8.7%. The facility expired in August 2024, however, the Company has started the process to renew and extend this credit arrangement and the credit facility has continued without interruption or penalty. The Company had borrowed an aggregate of $1.0 million as of July 31, 2024 and $0.1 million as of January 31, 2024, respectively, and is presented as a component of current maturities of long-term debt in the Company's consolidated balance sheets. As of  July 31, 2024 and January 31, 2024, the Company had unused borrowing availability of approximately $1.2 million and $1.0 million, respectively.

 

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 $2.1  million at July 31, 2024). This credit arrangement is in the form of project financing at rates competitive in Egypt. The line is secured by certain assets (such as accounts receivable) of the Company's Egyptian subsidiary. 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, 2024, the facility has an interest rate of approximately  20.8% and expires in November 2024. As of  July 31, 2024, the Company had substantially nothing outstanding with respect to this credit arrangement, and approximately $1.4 million outstanding at  January 31, 2024, which is presented as a component of current maturities of long-term debt in the Company's consolidated balance sheets. Further, as of  July 31, 2024 and  January 31, 2024, the Company had unused borrowing capacity of $2.1 million and $3.2 million, respectively. 
 
In December 2021, the Company entered into a credit arrangement for project financing with a bank in Egypt for 28.2 million Egyptian Pounds. As this project has progressed and the Company has made collections, the facility has decreased to a current amount of  2.1 million Egyptian Pounds (approximatel y $0.1 million at July 31, 2024). 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 11.0%  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 approximately $0.1 million outstanding  as of July 31, 2024 and January 31, 2024, respectively, and is presented as a component of current maturities of long-term debt in the Company's consolidated balance sheets.

 

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, 2024). This credit arrangement is in the form of project financing at rates competitive in Saudi Arabia. The line is secured by certain assets (such as accounts receivable) of the Company's Saudi Arabian subsidiary. The facility was renewed in May 2024 with substantially the same terms and conditions and expires in May 2025. As of July 31, 2024, the facility has an interest rate of approximately 9.7%. The Company had borrowed an aggregate of $2.6 million and $3.2 million as of July 31, 2024 and January 31, 2024, respectively, and is presented as a component of current maturities of long-term debt in the Company's consolidated balance sheets. The unused borrowing availability attributable to this credit arrangement at  July 31, 2024 and  January 31, 2024, was $6.3 million and $6.1 million, respectively. 

 

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

 

The Company was in compliance with the covenants under the credit arrangements in the U.A.E., Egypt and Saudi Arabia as of July 31, 2024, with the exception of those arrangements that have expired or are set to expire and have not yet been renewed. Although certain of the arrangements have expired and the borrowings could be required to be repaid immediately by the banks, the Company is in regular communication with the respective banks throughout the renewal process and all of the arrangements have continued without interruption or penalty. On July 31, 2024, interest rates were based on (i) the Emirates Inter Bank Offered Rate plus 3.0% to 3.5% per annum for the U.A.E. 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, 2024, the Company's interest rates ranged from 8.6% to 20.8%, with a weighted average rate of 11.5%, and the Company had facility limits totaling $24.7 million under these credit arrangements. As of July 31, 2024$7.1 million of availability was used to support letters of credit to guarantee amounts committed for inventory purchases and for performance guarantees. Additionally, as of July 31, 2024, the Company had borrowed $7.8 million and had an additional $12.6 million of borrowing remaining available under the foreign revolving credit arrangements. The foreign revolving lines balances were included as a component of current maturities of long-term debt in the Company's consolidated balance sheets as of July 31, 2024 and January 31, 2024.

 

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

 

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, 2024, the remaining balance on the mortgage in Canada is approximately CAD 5.9 million (approximately $4.3 million at July 31, 2024). The interest rate is variable, and was 8.8% at July 31, 2024. The principal balance is included as a component of long-term debt, less current maturities in the Company's consolidated balance sheets and is presented net of issuance costs of $0.1 million as of July 31, 2024 and January 31, 2024, respectively.

v3.24.2.u1
Note 11 - Leases
6 Months Ended
Jul. 31, 2024
Notes to Financial Statements  
Lessee, Operating and Finance Leases [Text Block]

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. Operating leases are included in operating lease right-of-use (“ROU”) assets, operating lease liabilities short-term, and operating lease liabilities long-term in the Company's consolidated balance sheets. Finance leases are included in property, plant and equipment, current maturities of long-term debt, and long-term debt less current maturities in the Company's consolidated balance sheets. 

 

ROU assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent the Company's obligation to make lease payments arising from the lease calculated by discounting fixed lease payments over the lease term at the rate implicit in the lease or the Company’s incremental borrowing rate.  Lease liabilities are increased by interest and reduced by payments each period, and the ROU asset is amortized over the lease term.  For operating leases, interest on the lease liability and the amortization of the ROU asset result in straight-line rent expense over the lease term.  For finance leases, interest on the lease liability and the amortization of the ROU asset results in front-loaded expense over the lease term.  Variable lease expenses are recorded when incurred. ROU assets and liabilities are recognized at the commencement date of the lease based on the present value of lease payments over the lease term.

 

As most of the Company's leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. The incremental borrowing rate is the rate of interest that the Company would have to pay to borrow on a collateralized basis over a similar term and amount equal to the lease payments in a similar economic environment.

 

In calculating the ROU asset and lease liability, the Company elects to combine lease and non-lease components. Additionally, the Company excludes short-term leases having an initial term of 12 months or less in accordance with the new guidance as an accounting policy election, and recognizes rent expense on a straight-line basis over the lease term.

 

Operating Leases. In August 2020, the Company entered into a new lease in Abu Dhabi for land upon which the Company built a facility. The initial annual payments were approximately 1.2 million U.A.E. Dirhams (approximately $0.3 million at  July 31, 2024), inclusive of rent, escalation clauses, and other common charges contained in the agreement. The lease expires in August 2050. 

 

In March and December 2022, the Company served Notices of Termination to its lessor for the Company's lease of land and buildings in Fujairah in the U.A.E. The Company served the Notices of Termination in connection with the Company's intended relocation to a different facility in Abu Dhabi. The Company vacated portions of the leased space in December 2022 and expects to vacate the remaining space in December 2024. The first Notice of Termination required that the Company pay an additional amount equal to three months' rent after that termination to enable the lessor to prepare the assets for lease by another party. As a result of the termination, the Company has recognized adjustments to the amounts recorded in the consolidated financial statements as of July 31, 2024. The termination resulted in decreases of $0.4 million, $6.0 million and $5.5 million to operating lease liability short-term, operating lease liability long-term and operating lease right-of-use asset, respectively, in the consolidated balance sheets as of July 31, 2024. There were no other adjustments in connection with these terminations for the year ended January 31, 2024, or during the three and six months ended July 31, 2024

 

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

 

Finance Leases. The Company has several lease agreements, with lease terms of one to thirty 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 the options.  The Company does not have any arrangements where it acts as a lessor. 

 

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

 

Supplemental balance sheet information related to leases is as follows: 

 

Operating and Finance leases

 

July 31, 2024

  

January 31, 2024

 

Finance leases assets:

        

Property and Equipment - gross

 $942  $970 

Accumulated depreciation and amortization

  (595)  (536)

Property and Equipment - net

 $347  $434 
         

Finance lease liabilities:

        

Finance lease liability short-term

 $32  $113 

Finance lease liability long-term

  62   - 

Total finance lease liabilities

 $94  $113 
         

Operating lease assets:

        

Operating lease ROU assets

 $6,938  $6,467 
         

Operating lease liabilities:

        

Operating lease liability short-term

 $965  $914 

Operating lease liability long-term

  6,689   6,270 

Total operating lease liabilities

 $7,654  $7,184 

 

Total lease costs consist of the following: 

 

   

Three Months Ended July 31,

  

Six Months Ended July 31,

 

Lease costs

Consolidated Statements of Operations Classification

 

2024

  

2023

  

2024

  

2023

 

Finance Lease Costs

                 

Amortization of ROU assets

Cost of sales

 $37  $33  $75  $87 

Interest on lease liabilities

Interest expense

  2   3   3   5 

Operating lease costs

Cost of sales, SG&A expenses

  438   426   893   882 

Short-term lease costs (1)

Cost of sales, SG&A expenses

  93   59   236   245 

Sub-lease income

SG&A expenses

  -   (20)  -   (40)

Total Lease costs

 $570  $501  $1,207  $1,179 

 

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

 

Supplemental cash flow information related to leases is as follows:

 

  Six Months Ended July 31,
  

2024

  

2023

 

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

        

Financing cash outflows from finance leases

 $16  $154 

Operating cash outflows from finance leases

  3   5 

Operating cash outflows from operating leases

  1,045   890 
         

ROU assets obtained in exchange for new lease obligations:

        

Operating leases liabilities

 $1,041  $3,484 

 

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

 

  

July 31, 2024

 

Weighted-average remaining lease terms (in years):

    

Finance leases

  2.8 

Operating leases

  12.7 
     

Weighted-average discount rates:

    

Finance leases

  6.4%

Operating leases

  10.4%

 

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

 

   Operating Leases   Finance Leases 

For the six months ending January 31, 2025

 $1,012  $16 

For the year ended January 31, 2026

  1,993   33 

For the year ended January 31, 2027

  1,980   36 

For the year ended January 31, 2028

  1,963   9 

For the year ended January 31, 2029

  1,617   - 

For the year ended January 31, 2030

  612   - 

Thereafter

  6,982   - 

Total lease payments

 $16,159  $94 

Less: amount representing interest

  (8,505)  - 

Total lease liabilities at July 31, 2024

 $7,654  $94 

 

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

v3.24.2.u1
Note 12 - Restricted Cash
6 Months Ended
Jul. 31, 2024
Notes to Financial Statements  
Cash and Cash Equivalents Disclosure [Text Block]

Note 12 - Restricted cash

 

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

July 31, 2024

  

January 31, 2024

 

Cash and cash equivalents

 $9,455  $5,845 

Restricted cash

  1,426   1,395 

Cash, cash equivalents and restricted cash shown in the statement of cash flows

 $10,881  $7,240 

 

 

v3.24.2.u1
Note 13 - Fair Value
6 Months Ended
Jul. 31, 2024
Notes to Financial Statements  
Fair Value Disclosures [Text Block]

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.

v3.24.2.u1
Note 14 - Recent Accounting Pronouncements
6 Months Ended
Jul. 31, 2024
Notes to Financial Statements  
Accounting Standards Update and Change in Accounting Principle [Text Block]

Note 14 - Recent accounting pronouncements

 

In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The standard update requires additional disclosures, including further details about segment expenses regarding a public entity's reportable segments on an annual and interim basis. The additional segment disclosures are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. The Company is still evaluating the impact of these updated disclosure requirements on its statement of financial position or results of operations.

 

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 new income tax disclosures are effective for fiscal years beginning after December 15, 2024. The Company is still evaluating this standard update but does not expect it to have a material impact on its statement of financial position or results of operations.

v3.24.2.u1
Note 15 - Treasury Stock
6 Months Ended
Jul. 31, 2024
Notes to Financial Statements  
Treasury Stock [Text Block]

Note 15 - Treasury stock

 

The repurchase program approved on October 4, 2021 authorized the Company to use up to $3.0 million for the purchase of its outstanding shares of common stock. Stock repurchases were permitted to be executed through open market or privately negotiated transactions, depending upon current market conditions and other factors. On December 7, 2022 the Board of Directors authorized the use of $1.0 million remaining under the share repurchase program previously approved on October 4, 2021 that expired on October 3, 2022. During the twelve months ended  January 31, 2024, the Company used the remaining $1.0 million authorized to repurchase its outstanding shares of common stock. Accordingly, there was no repurchase activity with respect to the Company's shares of common stock during the three and six months ended July 31, 2024.

v3.24.2.u1
Note 16 - Noncontrolling Interest
6 Months Ended
Jul. 31, 2024
Notes to Financial Statements  
Noncontrolling Interest Disclosure [Text Block]

Note 16 - 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 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 remaining 40% owned by GIG. The Company expects this collaborative business arrangement to result in expanding its 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. GIG acquired its 40% non-controlling interest by contributing assets to the JV of approximately $6.8 million in fair value, mainly consisting of an idle building and equipment. The fair value of the net assets contributed was determined through the use of a third-party appraiser using the indirect cost method.

 

Pursuant to the applicable guidance in ASC 805, Business Combinations and Noncontrolling Interests, the Company determined that the transaction did not meet the necessary conditions to be considered a business as the set of assets acquired did not contain an organized workforce and therefore was recorded as an asset acquisition. The assets transferred by the Company to the JV were recorded at historical cost, and no gain was recognized as a result of this exchange due to the Company having a controlling interest in the JV. The Company’s measurement of the acquired assets is comprised of the fair value of the contributed net assets given up by the Company and the fair value of the non-controlling interest excluding the contributed assets. The non-controlling interest attributable to the other party was recorded as of the investment date and was measured as part of the carrying amount of the ownership interest in the net assets given up by the Company plus the fair value of the non-controlling interest excluding the contributed assets. No gain or loss was recognized as a result of this exchange. The Company also assumed a promissory note payable to GIG issued as part of the formation of the JV in the principal amount of $2.8 million. The principal amount is presented within the Long-term debt, less current maturities caption in the Company's consolidated balance sheets. The Company also has a promissory note due from the JV that was issued as part of the formation of the JV in the amount of approximately $4.2 million and eliminates in consolidation.

 

The Company has a 60% controlling financial interest in the JV which is not considered a wholly owned subsidiary. Accordingly, there remains a minority portion of the equity interest that is owned by a third party, GIG. Pursuant to the applicable guidance contained in ASC 810, Consolidations, the balance sheets and operating activities of this investment are included in the Company's consolidated financial statements. The carrying amount of the assets and liabilities of the JV that are consolidated by the Company totaled $26.4 million and $15.5 million, respectively, as of  July 31, 2024.

 

The Company adjusts net income in the consolidated statements of operations to exclude the proportionate share of results that is attributable to the non-controlling interest. Additionally, the Company presents the proportionate share that is attributable to the redeemable non-controlling interest as temporary equity within the consolidated balance sheets. This mezzanine presentation is the result of the non-controlling interest being subject to a put option that is not solely within the Company's control and in connection with the equity shares of the business arrangement that is redeemable at any time after five years following the date of formation. The redemption amount per the JV Agreement is at fair value of the non-controlling interest which represents the fair value of ordinary shares of the JV that are owned by GIG. Further, neither the call option nor put option contained in the JV Agreement met the definition of a derivative as a result of not containing a net settlement provision and the shares not being readily convertible to cash, thereby being considered embedded with respect to non-controlling interest and not a freestanding instrument.

 

As a result of the non-controlling interest being subject to redemption rights that are not entirely within the Company's control, it was concluded that the necessary conditions were met to be accounted for in accordance with ASC 480, Distinguishing Liabilities from Equity. Pursuant to this accounting standard, the Company determined that the only criteria for the security to become redeemable is the passage of time and, therefore, is considered probable of redemption. The Company made a policy election to measure changes in the non-controlling interest immediately as they occur and adjust the carrying amount of non-controlling interest equal to its redemption amount as the non-controlling interest has no stated fixed price or fixed date. As such, at each subsequent balance sheet date following the formation of the JV, the Company must determine whether further adjustment is required to increase the carrying value of the redeemable non-controlling interest. If the Company determines that the fair value of the redeemable non-controlling interest exceeds its carrying value, an adjustment is made to reflect this change. However, if the value is determined to be less than its carrying value, such adjustment is limited to its original carrying value at the formation of the business arrangement. Additionally, adjustments made to reflect the change in the value of the redeemable non-controlling interest are offset against permanent equity within the Company's consolidated balance sheets.

 

Net income attributable to GIG was $1.0 million and $0.1 million for the three months ended  July 31, 2024 and 2023, respectively. Net income attributable to GIG was $1.3 million and $0.1 million for the six months ended July 31, 2024 and 2023, respectively. The proportionate share of net income was accounted for as a reduction in deriving net income attributable to common stock in the Company's consolidated statements of operations.

 

The Company is the ultimate parent of the JV through its 60% controlling financial interest and as part of the JV Agreement majority control of the operational activities of the JV and no joint control exists. The JV Agreement has no veto or kickout rights and board voting is proportional to the ownership interest. Certain activities do include a two-thirds majority affirmative vote of shareholders of the JV and include acquiring another company, establishing new subsidiaries, entering another partnership or joint venture, engaging in any merger or materially changing the business of the JV. These are considered protective rights. The 60% equity ownership of the JV by the Company allows it to receive its proportionate share of losses and residual returns.

 

The non-controlling interest as measured at fair value was $8.1 million and $6.3 million, and was recorded within temporary equity at  July 31, 2024 and  January 31, 2024, respectively. The change in non-controlling interest consists of $1.3 million in current year net income attributable to non-controlling interest, and approximately $0.5 million as an adjustment in the carrying value of the redeemable non-controlling interest pertaining to the business arrangement. In addition, there were no dividends or any other form of distributions from non-controlling interest for the period ended  July 31, 2024 and  January 31, 2024, respectively. 

 

v3.24.2.u1
Insider Trading Arrangements
3 Months Ended 6 Months Ended
Jul. 31, 2024
Jul. 31, 2024
Insider Trading Arr Line Items    
Material Terms of Trading Arrangement [Text Block]  

PART II OTHER INFORMATION

 

 

Rule 10b5-1 Arrangement Adopted [Flag] false  
Non-Rule 10b5-1 Arrangement Adopted [Flag] false  
Rule 10b5-1 Arrangement Terminated [Flag] false  
Non-Rule 10b5-1 Arrangement Terminated [Flag] false  
v3.24.2.u1
Significant Accounting Policies (Policies)
6 Months Ended
Jul. 31, 2024
Accounting Policies [Abstract]  
New Accounting Pronouncements, Policy [Policy Text Block]

Significant New Accounting Policies

 

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

 

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

v3.24.2.u1
Note 4 - Revenue Recognition (Tables)
6 Months Ended
Jul. 31, 2024
Notes Tables  
Disaggregation of Revenue [Table Text Block]
  

Three Months Ended July 31,

  

Six Months Ended July 31,

 
  

2024

  

2023

  

2024

  

2023

 
  

Sales

  

% of Total

  

Sales

  

% of Total

  

Sales

  

% of Total

  

Sales

  

% of Total

 

Products

 $2,795   7% $2,146   7% $6,048   8% $4,988   7%
                                 

Specialty Piping Systems and Coating

                                

Revenue recognized under input method

  12,613   34%  12,801   36%  22,752   32%  23,139   36%

Revenue recognized under output method

  22,105   59%  20,194   57%  43,034   60%  36,671   57%

Total

 $37,513   100% $35,141   100% $71,834   100% $64,798   100%
Schedule of Assumptions for Long-Duration Contracts by Product and Guarantee [Table Text Block]
  

July 31, 2024

  

January 31, 2024

 

Costs incurred on uncompleted contracts

 $17,686  $21,912 

Estimated earnings

  12,110   11,270 

Earned revenue

  29,796   33,182 

Less billings to date

  27,415   30,580 

Costs in excess of billings, net

 $2,381  $2,602 

Balance sheet classification

        

Contract assets: Costs and estimated earnings in excess of billings on uncompleted contracts

 $3,085  $3,097 

Contract liabilities: Billings in excess of costs and estimated earnings on uncompleted contracts

  (704)  (495)

Costs in excess of billings, net

 $2,381  $2,602 
v3.24.2.u1
Note 5 - Inventories (Tables)
6 Months Ended
Jul. 31, 2024
Notes Tables  
Schedule of Inventory, Current [Table Text Block]
  

July 31, 2024

  

January 31, 2024

 

Raw materials

 $14,777  $13,787 

Work in process

  574   611 

Finished goods

  1,275   2,022 

Subtotal

  16,626   16,420 

Less allowance

  803   879 

Inventories

 $15,823  $15,541 
v3.24.2.u1
Note 7 - Impairment of Long-lived Assets (Tables)
6 Months Ended
Jul. 31, 2024
Notes Tables  
Schedule of Goodwill [Table Text Block]
  

January 31, 2024

  

Foreign exchange change effect

  

July 31, 2024

 

Goodwill

 $2,222  $(66) $2,156 
v3.24.2.u1
Note 8 - Stock-based Compensation (Tables)
6 Months Ended
Jul. 31, 2024
Notes Tables  
Share-Based Payment Arrangement, Expensed and Capitalized, Amount [Table Text Block]
  

Three Months Ended July 31,

  

Six Months Ended July 31,

 
  

2024

  

2023

  

2024

  

2023

 

Restricted stock-based compensation expense

 $177  $227  $396  $456 
Share-Based Payment Arrangement, Option, Activity [Table Text Block]
  

Options

  

Weighted Average Exercise Price (Per share)

  

Weighted Average Remaining Contractual Term (In years)

  

Aggregate Intrinsic Value

 

Outstanding at January 31, 2024

  22  $11.15   0.7  $6 

Exercised

  (1)  6.85   -   2 

Expired or forfeited

  (17)  12.41   -   - 

Outstanding and exercisable at July 31, 2024

  4  $6.89   1.4  $10 
Share-Based Payment Arrangement, Restricted Stock and Restricted Stock Unit, Activity [Table Text Block]
  

Restricted Shares

  

Weighted Average Price (Per share)

  

Aggregate Intrinsic Value

 

Outstanding at January 31, 2024

  222  $9.33  $2,078 

Granted

  108   8.81     

Vested and issued

  (73)  9.36     

Forfeited or retired for taxes

  (27)  10.25     

Outstanding at July 31, 2024

  230  $9.05  $2,083 
v3.24.2.u1
Note 9 - Earnings Per Share (Tables)
6 Months Ended
Jul. 31, 2024
Notes Tables  
Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]
  

Three Months Ended July 31,

  

Six Months Ended July 31,

 
  

2024

  

2023

  

2024

  

2023

 

Basic weighted average common shares outstanding at July 31, 2024

  7,954   8,029   7,930   8,017 

Dilutive effect of equity compensation plans

  171   110   57   - 

Weighted average common shares outstanding assuming full dilution

  8,125   8,139   7,987   8,017 
                 

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

  0   79   114   18 

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

  171   110   57   170 
                 

Net income (loss) attributable to common stock

 $3,289  $1,022  $4,732  $(100)
                 

Earnings (loss) per share attributable to common stock

                

Basic

 $0.41  $0.13  $0.60  $(0.01)

Diluted

 $0.40  $0.13  $0.59  $(0.01)
v3.24.2.u1
Note 11 - Leases (Tables)
6 Months Ended
Jul. 31, 2024
Notes Tables  
Supplemental Balance Sheet Information Related to Leases [Table Text Block]

Operating and Finance leases

 

July 31, 2024

  

January 31, 2024

 

Finance leases assets:

        

Property and Equipment - gross

 $942  $970 

Accumulated depreciation and amortization

  (595)  (536)

Property and Equipment - net

 $347  $434 
         

Finance lease liabilities:

        

Finance lease liability short-term

 $32  $113 

Finance lease liability long-term

  62   - 

Total finance lease liabilities

 $94  $113 
         

Operating lease assets:

        

Operating lease ROU assets

 $6,938  $6,467 
         

Operating lease liabilities:

        

Operating lease liability short-term

 $965  $914 

Operating lease liability long-term

  6,689   6,270 

Total operating lease liabilities

 $7,654  $7,184 
Lease, Cost [Table Text Block]
   

Three Months Ended July 31,

  

Six Months Ended July 31,

 

Lease costs

Consolidated Statements of Operations Classification

 

2024

  

2023

  

2024

  

2023

 

Finance Lease Costs

                 

Amortization of ROU assets

Cost of sales

 $37  $33  $75  $87 

Interest on lease liabilities

Interest expense

  2   3   3   5 

Operating lease costs

Cost of sales, SG&A expenses

  438   426   893   882 

Short-term lease costs (1)

Cost of sales, SG&A expenses

  93   59   236   245 

Sub-lease income

SG&A expenses

  -   (20)  -   (40)

Total Lease costs

 $570  $501  $1,207  $1,179 
Supplemental Cash Flow Information Related Leases [Table Text Block]
  Six Months Ended July 31,
  

2024

  

2023

 

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

        

Financing cash outflows from finance leases

 $16  $154 

Operating cash outflows from finance leases

  3   5 

Operating cash outflows from operating leases

  1,045   890 
         

ROU assets obtained in exchange for new lease obligations:

        

Operating leases liabilities

 $1,041  $3,484 
Weighted-average Lease Terms and Discount Rates [Table Text Block]
  

July 31, 2024

 

Weighted-average remaining lease terms (in years):

    

Finance leases

  2.8 

Operating leases

  12.7 
     

Weighted-average discount rates:

    

Finance leases

  6.4%

Operating leases

  10.4%
Finance and Operating Lease, Liability, Maturity [Table Text Block]
   Operating Leases   Finance Leases 

For the six months ending January 31, 2025

 $1,012  $16 

For the year ended January 31, 2026

  1,993   33 

For the year ended January 31, 2027

  1,980   36 

For the year ended January 31, 2028

  1,963   9 

For the year ended January 31, 2029

  1,617   - 

For the year ended January 31, 2030

  612   - 

Thereafter

  6,982   - 

Total lease payments

 $16,159  $94 

Less: amount representing interest

  (8,505)  - 

Total lease liabilities at July 31, 2024

 $7,654  $94 
v3.24.2.u1
Note 12 - Restricted Cash (Tables)
6 Months Ended
Jul. 31, 2024
Notes Tables  
Restrictions on Cash and Cash Equivalents [Table Text Block]
  

July 31, 2024

  

January 31, 2024

 

Cash and cash equivalents

 $9,455  $5,845 

Restricted cash

  1,426   1,395 

Cash, cash equivalents and restricted cash shown in the statement of cash flows

 $10,881  $7,240 
v3.24.2.u1
Note 2 - Business Segment Reporting (Details Textual)
6 Months Ended
Jul. 31, 2024
Number of Reportable Segments 1
v3.24.2.u1
Note 3 - Accounts Receivable (Details Textual)
$ in Thousands
3 Months Ended 6 Months Ended 12 Months Ended 103 Months Ended
Jul. 31, 2024
USD ($)
Jul. 31, 2023
Jul. 31, 2024
USD ($)
Jul. 31, 2023
USD ($)
Jan. 31, 2024
Jul. 31, 2024
USD ($)
Dec. 31, 2015
USD ($)
Increase (Decrease) in Accounts Receivable     $ (6,090) $ 9,865      
Revenue Benchmark [Member] | Customer Concentration Risk [Member]              
Number of Major Customers 0 1 0 0      
Accounts Receivable [Member] | Customer Concentration Risk [Member]              
Number of Major Customers     0   1    
Financial Asset, Equal to or Greater than 90 Days Past Due [Member]              
Accounts Receivable, after Allowance for Credit Loss $ 1,800   $ 1,800     $ 1,800 $ 41,900
Increase (Decrease) in Accounts Receivable     (300) $ (600)   (40,100)  
Accounts Receivable, Allowance for Credit Loss 0   0     0  
Financial Asset, Equal to or Greater than 90 Days Past Due [Member] | Other Noncurrent Assets [Member]              
Accounts Receivable, after Allowance for Credit Loss $ 1,300   $ 1,300     $ 1,300  
v3.24.2.u1
Note 4 - Revenue Recognition (Details Textual) - USD ($)
$ in Thousands
6 Months Ended
Jul. 31, 2024
Jan. 31, 2024
Costs Incurred for Uncompleted Contracts, Anticipated Collection Period (Year) 1 year  
Unbilled Receivables, Current $ 17,850 $ 16,597
v3.24.2.u1
Note 4 - Revenue Recognition - Revenues by Revenue Class (Details) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jul. 31, 2024
Jul. 31, 2023
Jul. 31, 2024
Jul. 31, 2023
Sales by product $ 37,513 $ 35,141 $ 71,834 $ 64,798
Sales by product, percent 100.00% 100.00% 100.00% 100.00%
Product [Member] | Transferred at Point in Time [Member]        
Sales by product $ 2,795 $ 2,146 $ 6,048 $ 4,988
Sales by product, percent 7.00% 7.00% 8.00% 7.00%
Specialty Piping Systems And Coating [Member] | Transferred at Point in Time Using Input Method [Member]        
Sales by product $ 12,613 $ 12,801 $ 22,752 $ 23,139
Sales by product, percent 34.00% 36.00% 32.00% 36.00%
Specialty Piping Systems And Coating [Member] | Transferred at Point in Time Using Output Method [Member]        
Sales by product $ 22,105 $ 20,194 $ 43,034 $ 36,671
Sales by product, percent 59.00% 57.00% 60.00% 57.00%
v3.24.2.u1
Note 4 - Revenue Recognition - Reconciliation of the Cost in Excess of Billings (Details) - USD ($)
$ in Thousands
Jul. 31, 2024
Jan. 31, 2024
Costs incurred on uncompleted contracts $ 17,686 $ 21,912
Estimated earnings 12,110 11,270
Earned revenue 29,796 33,182
Less billings to date 27,415 30,580
Costs in excess of billings, net 2,381 2,602
Contract assets: Costs and estimated earnings in excess of billings on uncompleted contracts 3,085 3,097
Contract liabilities: Billings in excess of costs and estimated earnings on uncompleted contracts (704) (495)
Costs in excess of billings, net $ 2,381 $ 2,602
v3.24.2.u1
Note 5 - Inventories - Schedule of Inventory (Details) - USD ($)
$ in Thousands
Jul. 31, 2024
Jan. 31, 2024
Raw materials $ 14,777 $ 13,787
Work in process 574 611
Finished goods 1,275 2,022
Subtotal 16,626 16,420
Less allowance 803 879
Inventories $ 15,823 $ 15,541
v3.24.2.u1
Note 6 - Income Taxes (Details Textual) - USD ($)
$ in Millions
3 Months Ended 6 Months Ended
Jul. 31, 2024
Jul. 31, 2023
Jul. 31, 2024
Jul. 31, 2023
Effective Income Tax Rate Reconciliation, Percent 23.00% 45.00% 25.00% 97.00%
Undistributed Earnings of Foreign Subsidiaries $ 0.7   $ 0.7  
v3.24.2.u1
Note 7 - Impairment of Long-lived Assets (Details Textual)
Dec. 31, 2016
Perma-Pipe Canada, Ltd [Member]  
Business Combination, Step Acquisition, Equity Interest in Acquiree, Including Subsequent Acquisition, Percentage 50.00%
v3.24.2.u1
Note 7 - Impairment of Long-lived Assets - Goodwill (Details)
$ in Thousands
6 Months Ended
Jul. 31, 2024
USD ($)
Goodwill $ 2,222
Goodwill, foreign exchange change effect (66)
Goodwill $ 2,156
v3.24.2.u1
Note 8 - Stock-based Compensation (Details Textual)
$ in Thousands
3 Months Ended 6 Months Ended
Jul. 31, 2024
USD ($)
shares
Jul. 31, 2024
USD ($)
shares
Common Stock, Capital Shares Reserved for Future Issuance (in shares) 196,026 196,026
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Grants in Period, Gross (in shares) 0 0
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Vested, Number of Shares (in shares)   0
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Nonvested, Number of Shares (in shares) 0 0
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Forfeitures and Expirations in Period (in shares)   0
Share-Based Payment Arrangement, Option [Member]    
Share-Based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Amount | $ $ 0 $ 0
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Forfeitures and Expirations in Period (in shares)   17,000
Restricted Stock [Member]    
Share-Based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Amount | $ $ 1,500 $ 1,500
Share-Based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Period for Recognition (Year)   2 years 1 month 6 days
v3.24.2.u1
Note 8 - Stock-based Compensation - Stock-based Compensation Expense (Details) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jul. 31, 2024
Jul. 31, 2023
Jul. 31, 2024
Jul. 31, 2023
Restricted Stock [Member]        
Stock-based compensation expense $ 177 $ 227 $ 396 $ 456
v3.24.2.u1
Note 8 - Stock-based Compensation - Stock Option Activity (Details) - USD ($)
$ / shares in Units, shares in Thousands, $ in Thousands
6 Months Ended 12 Months Ended
Jul. 31, 2024
Jan. 31, 2024
Expired or forfeited, options (in shares) 0  
Share-Based Payment Arrangement, Option [Member]    
Outstanding, options (in shares) 22  
Outstanding, weighted average exercise price (in dollars per share) $ 11.15  
Outstanding, weighted average remaining contractual term (Year) 1 year 4 months 24 days 8 months 12 days
Outstanding, aggregate intrinsic value $ 10 $ 6
Exercised, options (in shares) (1)  
Exercised, weighted average exercise price (in dollars per share) $ 6.85  
Exercised, aggregate intrinsic value $ 2  
Expired or forfeited, options (in shares) (17)  
Expired or forfeited, weighted average exercise price (in dollars per share) $ 12.41  
Outstanding, options (in shares) 4 22
Outstanding, weighted average exercise price (in dollars per share) $ 6.89 $ 11.15
v3.24.2.u1
Note 8 - Stock-based Compensation - Restricted Stock Activity (Details) - Restricted Stock [Member] - USD ($)
$ / shares in Units, shares in Thousands, $ in Thousands
6 Months Ended
Jul. 31, 2024
Jan. 31, 2024
Outstanding (in shares) 222  
Outstanding, weighted average price (in dollars per share) $ 9.33  
Outstanding, aggregate intrinsic value $ 2,083 $ 2,078
Granted (in shares) 108  
Granted, weighted average price (in dollars per share) $ 8.81  
Vested and issued (in shares) (73)  
Vested and issued, weighted average price (in dollars per share) $ 9.36  
Forfeited or retired for taxes (in shares) (27)  
Forfeited or retired for taxes (in dollars per share) $ 10.25  
Outstanding (in shares) 230  
Outstanding, weighted average price (in dollars per share) $ 9.05  
v3.24.2.u1
Note 9 - Earnings Per Share - Schedule of Earnings Per Share (Details) - USD ($)
$ / shares in Units, shares in Thousands, $ in Thousands
3 Months Ended 6 Months Ended
Jul. 31, 2024
Apr. 30, 2024
Jul. 31, 2023
Apr. 30, 2023
Jul. 31, 2024
Jul. 31, 2023
Basic (in shares) 7,954   8,029   7,930 8,017
Dilutive effect of equity compensation plans (in shares) 171   110   57 0
Weighted average common shares outstanding assuming full dilution (in shares) 8,125   8,139   7,987 8,017
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 (in shares) 0   79   114 18
Stock options and restricted stock with exercise prices or grant date prices below the average market prices (in shares) 171   110   57 170
Net income (loss) attributable to common stock $ 3,289 $ 1,443 $ 1,022 $ (1,123) $ 4,732 $ (100)
Basic (in dollars per share) $ 0.41   $ 0.13   $ 0.6 $ (0.01)
Diluted (in dollars per share) $ 0.4   $ 0.13   $ 0.59 $ (0.01)
v3.24.2.u1
Note 10 - Debt (Details Textual)
$ in Thousands, د.إ in Millions, ج.م. in Millions, $ in Millions
6 Months Ended
Sep. 17, 2021
USD ($)
Apr. 14, 2021
USD ($)
Sep. 20, 2018
USD ($)
Jul. 28, 2016
Jul. 31, 2024
USD ($)
Jul. 31, 2024
AED (د.إ)
Jul. 31, 2024
EGP (ج.م.)
Jul. 31, 2024
CAD ($)
Jan. 31, 2024
USD ($)
Aug. 31, 2023
Jun. 30, 2023
USD ($)
Nov. 30, 2022
USD ($)
Mar. 31, 2022
USD ($)
Dec. 31, 2021
EGP (ج.م.)
Jun. 30, 2021
EGP (ج.م.)
Debt and Lease Obligation         $ 27,900       $ 25,700            
Line of Credit, Current         6,699       5,519            
Long-Term Debt and Lease Obligation, Noncurrent         3,974       4,229            
Long-term Debt, Current Maturities, Excluding North American Revolving Line         5,522       4,071            
Land and Buildings in Lebanon, Tennessee [Member]                              
Lessee, Finance Lease, Term of Contract (Year)   15 years                          
Sale Leaseback Transaction, Annual Rental Payments, Amount   $ 800                          
Lessee, Finance Lease, Annual Rent Increase, Percentage   2.00%                          
Lessee, Finance Lease, Number of Options to Extend   4                          
Lessee, Finance Lease, Renewal Term (Year)   5 years                          
Lessee, Finance Lease, Discount Rate   8.00%                          
Long-Term Debt and Lease Obligation, Current         200                    
Long-Term Debt and Lease Obligation, Noncurrent         8,900                    
Mortgage Note Secured by Tennessee Manufacturing Facility [Member]                              
Repayments of Secured Debt   $ 900                          
Promissory Note [Member]                              
Debt Instrument, Face Amount                     $ 2,800        
Canadian Mortgage Note [Member]                              
Debt Instrument, Maturity Date       Dec. 23, 2042                      
Secured Debt         $ 4,300     $ 5.9              
Debt Instrument, Interest Rate, Effective Percentage         8.80% 8.80% 8.80% 8.80%              
Debt Issuance Costs, Net         $ 100       100            
Land and Buildings in Lebanon, Tennessee [Member]                              
Disposal Group, Including Discontinued Operation, Consideration   10,400                          
Proceeds from Sale of Property, Plant, and Equipment, Total   $ 9,100                          
Minimum [Member]                              
Lessee, Finance Lease, Term of Contract (Year)         1 year 1 year 1 year 1 year              
Maximum [Member]                              
Lessee, Finance Lease, Term of Contract (Year)         30 years 30 years 30 years 30 years              
Revolving Lines, North America [Member]                              
Debt Instrument, Term (Year) 5 years   3 years                        
Line of Credit Facility, Maximum Borrowing Capacity $ 18,000   $ 18,000                        
Line of Credit Facility, Unused Capacity, Commitment Fee Percentage 0.25%                            
Line of Credit, Current         $ 6,700       5,500            
Line of Credit Facility, Interest Rate at Period End         10.00% 10.00% 10.00% 10.00%              
Line of Credit Facility, Current Borrowing Capacity         $ 4,700       4,000            
Revolving Lines, North America [Member] | North American Loan Parties [Member]                              
Line of Credit Facility, Capital Expenditures Restrictions $ 5,000                            
Line of Credit Facility, Common Stock Repurchase Restrictions $ 3,000                            
Line of Credit Facility, Fixed Charge Coverage Ratio Required 1.1                            
Line of Credit Facility, Covenant Terms, EBITDA Ratio, Minimum Undrawn Availability for Five Consecutive Days $ 3,000                            
Line of Credit Facility, Covenant Terms, EBITDA Ratio, Minimum Undrawn Availability $ 2,000                            
Line of Credit Facility, Default, Additional Interest Rate 2.00%                            
Revolving Lines, North America [Member] | Base Rate [Member] | Minimum [Member]                              
Debt Instrument, Basis Spread on Variable Rate 1.00%                            
Revolving Lines, North America [Member] | Base Rate [Member] | Maximum [Member]                              
Debt Instrument, Basis Spread on Variable Rate 1.50%                            
Revolving Lines, North America [Member] | Secured Overnight Financing Rate (SOFR) [Member] | Minimum [Member]                              
Debt Instrument, Basis Spread on Variable Rate 2.00%                            
Revolving Lines, North America [Member] | Secured Overnight Financing Rate (SOFR) [Member] | Minimum [Member] | Additional SOFR Adjustment Based on Interest Period [Member]                              
Debt Instrument, Basis Spread on Variable Rate 0.10%                            
Revolving Lines, North America [Member] | Secured Overnight Financing Rate (SOFR) [Member] | Maximum [Member]                              
Debt Instrument, Basis Spread on Variable Rate 2.50%                            
Revolving Lines, North America [Member] | Secured Overnight Financing Rate (SOFR) [Member] | Maximum [Member] | Additional SOFR Adjustment Based on Interest Period [Member]                              
Debt Instrument, Basis Spread on Variable Rate 0.25%                            
Foreign Revolving Lines [Member]                              
Line of Credit Facility, Maximum Borrowing Capacity         24,700                    
Line of Credit Facility, Remaining Borrowing Capacity         12,600                    
Line of Credit Facility, Guaranteed Amount         1,100       100            
Letters of Credit Outstanding, Amount         7,100                    
Proceeds from Issuance of Debt         7,800                    
Foreign Revolving Lines [Member] | Revolving Credit Lines Used by Middle Eastern Subsidiaries, 1 [Member]                              
Line of Credit Facility, Maximum Borrowing Capacity         $ 2,200 د.إ 8.0                  
Line of Credit Facility, Interest Rate at Period End         8.60% 8.60% 8.60% 8.60%              
Long-term Debt, Current Maturities, Excluding North American Revolving Line         $ 1,200       200            
Line of Credit Facility, Remaining Borrowing Capacity         1,000       1,900            
Foreign Revolving Lines [Member] | Revolving Credit Lines Used by Middle Eastern Subsidiaries, 2 [Member]                              
Line of Credit Facility, Maximum Borrowing Capacity         $ 5,600 د.إ 20.5                  
Line of Credit Facility, Interest Rate at Period End         8.70% 8.70% 8.70% 8.70%              
Long-term Debt, Current Maturities, Excluding North American Revolving Line         $ 1,000       100            
Line of Credit Facility, Remaining Borrowing Capacity         1,200       1,000            
Foreign Revolving Lines [Member] | Revolving Credit Lines Used by Egypt Subsidiaries [Member]                              
Line of Credit Facility, Interest Rate at Period End                   20.80%          
Long-term Debt, Current Maturities, Excluding North American Revolving Line                 1,400            
Line of Credit Facility, Remaining Borrowing Capacity         2,100       3,200           ج.م. 100.0
Foreign Revolving Lines [Member] | Revolving Credit Lines Used by Egypt Subsidiaries 2 [Member]                              
Line of Credit Facility, Maximum Borrowing Capacity         $ 100   ج.م. 2.1         $ 0   ج.م. 28.2  
Line of Credit Facility, Interest Rate at Period End         11.00% 11.00% 11.00% 11.00%              
Long-term Debt, Current Maturities, Excluding North American Revolving Line         $ 100       100            
Foreign Revolving Lines [Member] | Revolving Credit Lines Used by Saudi Arabian Subsidiary [Member]                              
Line of Credit Facility, Maximum Borrowing Capacity         $ 9,900               $ 37,000    
Line of Credit Facility, Interest Rate at Period End         9.70% 9.70% 9.70% 9.70%              
Long-term Debt, Current Maturities, Excluding North American Revolving Line         $ 2,600       3,200            
Foreign Revolving Lines [Member] | Renewal of Revolving Credit Lines Used by Saudi Arabian Subsidiary [Member]                              
Line of Credit Facility, Remaining Borrowing Capacity         $ 6,300       $ 6,100            
Foreign Revolving Lines [Member] | Minimum [Member]                              
Line of Credit Facility, Interest Rate at Period End         8.60% 8.60% 8.60% 8.60%              
Debt Instrument, Interest Rate, Stated Percentage         4.50% 4.50% 4.50% 4.50%              
Foreign Revolving Lines [Member] | Maximum [Member]                              
Line of Credit Facility, Interest Rate at Period End         20.80% 20.80% 20.80% 20.80%              
Foreign Revolving Lines [Member] | Weighted Average [Member]                              
Line of Credit Facility, Interest Rate at Period End         11.50% 11.50% 11.50% 11.50%              
Foreign Revolving Lines [Member] | EIBOR [Member] | Minimum [Member]                              
Debt Instrument, Basis Spread on Variable Rate         3.00%                    
Foreign Revolving Lines [Member] | EIBOR [Member] | Maximum [Member]                              
Debt Instrument, Basis Spread on Variable Rate         3.50%                    
Foreign Revolving Lines [Member] | Central Bank of Eqypt (CBE) Rate [Member] | Minimum [Member]                              
Debt Instrument, Basis Spread on Variable Rate         1.50%                    
Foreign Revolving Lines [Member] | Central Bank of Eqypt (CBE) Rate [Member] | Maximum [Member]                              
Debt Instrument, Basis Spread on Variable Rate         3.50%                    
Foreign Revolving Lines [Member] | SIBOR [Member]                              
Debt Instrument, Basis Spread on Variable Rate         3.50%                    
v3.24.2.u1
Note 11 - Leases (Details Textual)
$ in Thousands, د.إ in Millions
3 Months Ended 6 Months Ended 12 Months Ended
Jul. 31, 2024
USD ($)
Jul. 31, 2024
USD ($)
Jan. 31, 2024
AED (د.إ)
Jan. 31, 2024
USD ($)
Operating Lease, Liability $ 7,654 $ 7,654   $ 7,184
Operating Lease, Right-of-Use Asset 6,938 6,938   6,467
Finance Lease, Liability 94 94   $ 113
Finance Lease, Right-of-Use Asset, after Accumulated Amortization 300 300    
Operating Lease, Expense $ 600 $ 600    
Minimum [Member]        
Lessee, Finance Lease, Term of Contract (Year) 1 year 1 year    
Maximum [Member]        
Lessee, Finance Lease, Term of Contract (Year) 30 years 30 years    
Abu Dhabi Land Lease [Member]        
Lessee, Operating Lease, Annual Payment   $ 300 د.إ 1.2  
Decrease in Operating Lease Liability, Current $ 400 400    
Decrease in Operating Lease Liability, Noncurrent 6,000 6,000    
Decrease in Operating Lease Right-of-use Asset $ 5,500 $ 5,500    
v3.24.2.u1
Note 11 - Leases - Supplemental Balance Sheet Information Related to Leases (Details) - USD ($)
$ in Thousands
Jul. 31, 2024
Jan. 31, 2024
Property and Equipment - net $ 37,518 $ 37,620
Finance lease liability short-term 32 113
Finance lease liability long-term 62 0
Total finance lease liabilities 94 113
Operating Lease, Right-of-Use Asset 6,938 6,467
Operating lease liability short-term 965 914
Operating lease liability long-term 6,689 6,270
Total operating lease liabilities 7,654 7,184
Finance Leases Assets [Member]    
Property and Equipment - gross 942 970
Accumulated depreciation and amortization (595) (536)
Property and Equipment - net $ 347 $ 434
v3.24.2.u1
Note 11 - Leases - Lease Costs (Details) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jul. 31, 2024
Jul. 31, 2023
Jul. 31, 2024
Jul. 31, 2023
Amortization of ROU assets $ 37 $ 33 $ 75 $ 87
Interest on lease liabilities 2 3 3 5
Operating lease costs 438 426 893 882
Short-term lease costs (1) [1] 93 59 236 245
Sub-lease income 0 (20) 0 (40)
Total Lease costs $ 570 $ 501 $ 1,207 $ 1,179
[1] Includes variable lease costs, which are not material.
v3.24.2.u1
Note 11 - Leases - Supplemental Cash Flow Information Related to Leases (Details) - USD ($)
$ in Thousands
6 Months Ended
Jul. 31, 2024
Jul. 31, 2023
Financing cash outflows from finance leases $ 16 $ 154
Operating cash outflows from finance leases 3 5
Operating cash outflows from operating leases 1,045 890
Operating leases liabilities $ 1,041 $ 3,484
v3.24.2.u1
Note 11 - Leases - Weighted-average Lease Terms and Discount Rates (Details)
Jul. 31, 2024
Finance leases (Year) 2 years 9 months 18 days
Operating leases (Year) 12 years 8 months 12 days
Finance leases 6.40%
Operating leases 10.40%
v3.24.2.u1
Note 11 - Leases - Maturities of Lease Liabilities (Details) - USD ($)
$ in Thousands
Jul. 31, 2024
Jan. 31, 2024
For the six months ending January 31, 2025 $ 1,012  
For the six months ending January 31, 2025, finance leases 16  
For the year ended January 31, 2026, operating leases 1,993  
For the year ended January 31, 2026, finance leases 33  
For the year ended January 31, 2027, operating leases 1,980  
For the year ended January 31, 2027, finance leases 36  
For the year ended January 31, 2028, operating leases 1,963  
For the year ended January 31, 2028, finance leases 9  
For the year ended January 31, 2029, operating leases 1,617  
For the year ended January 31, 2029, finance leases 0  
For the year ended January 31, 2030, operating leases 612  
For the year ended January 31, 2030, finance leases 0  
Thereafter, operating leases 6,982  
Thereafter, finance leases 0  
Total lease payments, operating leases 16,159  
Total lease payments, finance leases 94  
Less: amount representing interest, operating leases (8,505)  
Less: amount representing interest, finance leases 0  
Total lease liabilities, operating leases 7,654 $ 7,184
Total lease liabilities, finance leases $ 94 $ 113
v3.24.2.u1
Note 12 - Restricted Cash - Summary of Cash, Cash Equivalents and Restricted Cash (Details) - USD ($)
$ in Thousands
Jul. 31, 2024
Jan. 31, 2024
Cash and cash equivalents $ 9,455 $ 5,845
Restricted cash 1,426 1,395
Cash, cash equivalents and restricted cash shown in the statement of cash flows $ 10,881 $ 7,240
v3.24.2.u1
Note 15 - Treasury Stock (Details Textual) - USD ($)
shares in Thousands, $ in Millions
3 Months Ended 6 Months Ended
Jul. 31, 2024
Jul. 31, 2024
Jan. 31, 2024
Dec. 07, 2022
Oct. 04, 2021
Share Repurchase Program, Authorized, Amount       $ 1 $ 3
Stock Repurchase Program, Authorized Repurchase Amount Used     $ 1    
Stock Repurchased During Period, Shares (in shares) 0 0      
v3.24.2.u1
Note 16 - Noncontrolling Interest (Details Textual) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jul. 31, 2024
Jul. 31, 2023
Jul. 31, 2024
Jul. 31, 2023
Jan. 31, 2024
Jun. 01, 2023
Assets $ 159,187   $ 159,187   $ 155,711  
Net Income (Loss) Attributable to Noncontrolling Interest 995 $ 148 1,341 $ 148    
Redeemable Noncontrolling Interest, Equity, Carrying Amount 8,057   8,057   6,266  
Gulf Insulation Group [Member]            
Net Income (Loss) Attributable to Noncontrolling Interest 1,000 $ 100 1,300 $ 100    
Redeemable Noncontrolling Interest, Equity, Carrying Amount 8,100   8,100   $ 6,300  
Noncontrolling Interest, Increase from Business Combination     500      
Related Party [Member]            
Financing Receivable, after Allowance for Credit Loss           $ 4,200
Assets 26,400   26,400      
Liabilities $ 15,500   $ 15,500      
Gulf Insulation Group [Member] | Related Party [Member]            
Notes Payable           $ 2,800
Joint Venture [Member]            
Subsidiary, Ownership Percentage, Parent           60.00%
Joint Venture [Member] | Gulf Insulation Group [Member]            
Subsidiary, Ownership Percentage, Parent           40.00%
Property, Plant, and Equipment, Fair Value Disclosure           $ 6,800

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