[10-Q] Perma-Pipe International Holdings, Inc. Quarterly Earnings Report

Rhea-AI Filing Summary

Perma-Pipe International Holdings (PPIH) reports interim disclosure of liquidity, credit facilities, and selected balance-sheet items for the six months ended July 31, 2025. The company maintains a Renewed Senior Credit Facility of $18.0 million maturing September 20, 2026, with $9.7 million borrowed and $3.0 million available under that North American facility as of July 31, 2025. Foreign revolving credit arrangements total approximately $45.0 million of facility limits, of which $5.8 million was borrowed and about $14.9 million remained available at July 31, 2025. The company completed a sale-leaseback of its Lebanon, Tennessee property that generated $9.1 million net proceeds and was recorded as a failed sale and leaseback under ASC 842, resulting in a current finance obligation of $0.2 million and a long-term finance obligation of $8.7 million.

Other balance-sheet items disclosed include approximately $18.9 million of unbilled accounts receivable as of July 31, 2025, an effective tax rate of 30% for the six months ended July 31, 2025 (25% in prior year), and foreign subsidiary debt guaranteed by the company of approximately $8.6 million at July 31, 2025. The company had approximately 8.09 million shares outstanding.

Positive

• $9.1 million net proceeds from sale of Lebanon, Tennessee property used to repay debt and for corporate needs
• $18.0 million Renewed Senior Credit Facility in North America provides core liquidity (with $3.0 million available as of July 31, 2025)
• Foreign revolving credit arrangements provide significant additional capacity (aggregate facility limits of approximately $45.0 million) with $14.9 million unused as of July 31, 2025
• $18.9 million of unbilled accounts receivable recorded (revenue earned and expected to be billed within one year)

Negative

• Sale-leaseback was recorded as a failed sale and leaseback under ASC 842, producing a finance obligation of $0.2 million current and $8.7 million long-term
• Effective tax rate increased to 30% for the six months ended July 31, 2025 from 25% prior year, reducing after-tax income
• Certain foreign credit lines carry high interest rates (up to 20.8% in Egypt) increasing cost of capital in those jurisdictions
• Company guarantees approximately $8.6 million of foreign subsidiary debt, increasing contingent corporate obligations

Insights

Financial Analyst

TL;DR: Liquidity is supported by an $18.0M North American revolver and sizable foreign lines, but finance obligations from a failed sale-leaseback and rising ETR affect net cash flow.

The Renewed Senior Credit Facility provides core liquidity with $3.0M available and $9.7M drawn as of July 31, 2025; foreign lines add material standby capacity with $14.9M unused. The $9.1M sale proceeds were used to repay debt and support operations, however ASC 842 accounting produces a $8.9M finance obligation (current plus long-term) that offsets cash benefits over time. Unbilled receivables of $18.9M represent revenue already recognized but not yet billed, likely supporting near-term cash conversion if billed and collected. The higher six-month ETR (30% v. 25%) and guaranteed foreign debt ($8.6M) modestly compress after-tax earnings and increase contingent obligations. Overall, liquidity appears adequate near-term but the company carries finance obligations and tax headwinds that affect free cash flow.

Risk Analyst

TL;DR: Credit exposure is diversified across regions but carries concentrated operational and currency, interest-rate, and counterparty risks from foreign lines and guarantees.

Perma-Pipe’s foreign credit arrangements span the U.A.E., Egypt, and Saudi Arabia with interest rates ranging up to 20.8% (Egypt) and a weighted average of 8.4%, creating uneven cost of capital across jurisdictions. Approximately $24.4M of facility availability is supporting letters of credit and guarantees, constraining usable liquidity. The company guarantees portions of foreign subsidiary debt ($8.6M), increasing corporate contingent liabilities. The failed sale-leaseback increases on-balance-sheet finance obligations of $8.9M, which combined with drawn borrowings ($15.5M total across North America and foreign lines) merits monitoring for covenant compliance and refinancing risk ahead of facility maturities in late 2025–2026.

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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, 2025

☐ 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)

Delaware	36-3922969
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
25025 Interstate 45, Suite 200, The Woodlands, Texas	77380
(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 class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $.01 par value per share	PPIH	The 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 15,2025, there were 8,094,045 shares of the registrant's common stock outstanding.

Table of Contents

Perma-Pipe International Holdings, Inc.

FORM 10-Q

For the fiscal quarter ended July 31, 2025

TABLE OF CONTENTS

Item		Page
Part I	FINANCIAL INFORMATION
Item 1.	Financial Statements
	Consolidated Statements of Operations (Unaudited) for the Three and Six Months Ended July 31, 2025 and 2024	2
	Consolidated Statements of Comprehensive Income (Unaudited) for the Three and Six Months Ended July 31, 2025 and 2024	3
	Consolidated Balance Sheets as of July 31, 2025 (Unaudited) and January 31, 2025	4
	Consolidated Statements of Stockholders' Equity (Unaudited) for the Three and Six Months Ended July 31, 2025 and 2024	5
	Consolidated Statements of Cash Flows (Unaudited) for the Six Months Ended July 31, 2025 and 2024	6
	Notes to Consolidated Financial Statements (Unaudited)	6
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	21
Item 4.	Controls and Procedures	29
Part II	OTHER INFORMATION
Item 5.	Other Information	30
Item 6.	Exhibits	30
SIGNATURES		31

Table of Contents

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,
		2025				2024				2025				2024
Net sales		$	47,902			$	37,513			$	94,648			$	71,834
Cost of sales			33,479				24,039				63,501				47,843
Gross profit			14,423				13,474				31,147				23,991
Operating expenses
General and administrative expenses			10,033				5,979				17,781				12,128
Selling expenses			1,203				1,353				2,289				2,588
Total operating expenses			11,236				7,332				20,070				14,716
Income from operations			3,187				6,142				11,077				9,275
Interest expense			415				514				821				1,021
Other expense			21				38				70				105
Income before income taxes			2,751				5,590				10,186				8,149
Income tax expense			1,489				1,306				3,070				2,076
Net income			1,262				4,284				7,116				6,073
Less: Net income attributable to non-controlling interest			411				995				1,313				1,341
Net income attributable to common stock		$	851			$	3,289			$	5,803			$	4,732
Weighted average common shares outstanding
Basic			8,007				7,954				7,995				7,930
Diluted			8,133				8,125				8,108				7,987
Earnings per share attributable to common stock
Basic		$	0.11			$	0.41			$	0.73			$	0.60
Diluted		$	0.10			$	0.40			$	0.72			$	0.59

See accompanying notes to consolidated financial statements.

2

Table of Contents

PERMA-PIPE INTERNATIONAL HOLDINGS, INC. 

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

 (Unaudited)

		Three Months Ended July 31,								Six Months Ended July 31,
		2025				2024				2025				2024
Net income		$	1,262			$	4,284			$	7,116			$	6,073
Other comprehensive income
Foreign currency translation adjustments, net of tax			(111	)			(192	)			811				(1,607	)
Comprehensive income		$	1,151			$	4,092			$	7,927			$	4,466
Less: Comprehensive income attributable to non-controlling interests			411				995				1,313				1,341
Total comprehensive income attributable to common stock		$	740			$	3,097			$	6,614			$	3,125

See accompanying notes to consolidated financial statements.

3

Table of Contents

PERMA-PIPE INTERNATIONAL HOLDINGS, INC. 

CONSOLIDATED BALANCE SHEETS

(In thousands, except per share data)

(Unaudited)

		July 31, 2025				January 31, 2025
ASSETS
Current assets
Cash and cash equivalents		$	17,258			$	15,716
Restricted cash			1,444				1,401
Trade accounts receivable, less allowance for credit losses of $1,064 at July 31, 2025 and $703 at January 31, 2025			47,206				43,148
Inventories			15,885				16,622
Prepaid expenses and other current assets			12,312				10,045
Unbilled accounts receivable			27,672				18,936
Costs and estimated earnings in excess of billings on uncompleted contracts			3,569				2,934
Total current assets			125,346				108,802
Long-term assets
Property, plant and equipment, net of accumulated depreciation			39,267				35,365
Operating lease right-of-use asset			11,862				8,199
Deferred tax assets			6,218				6,639
Goodwill			2,154				2,057
Other long-term assets			4,143				4,179
Total long-term assets			63,644				56,439
Total assets		$	188,990			$	165,241
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Trade accounts payable		$	23,069			$	23,691
Accrued compensation and payroll taxes			1,655				1,388
Commissions and management incentives payable			5,551				5,840
Revolving line - North America			9,732				6,765
Current maturities of long-term debt			6,358				2,481
Customers' deposits			5,371				2,506
Operating lease liability short-term			1,383				1,071
Other accrued liabilities			6,198				6,697
Billings in excess of costs and estimated earnings on uncompleted contracts			1,641				1,249
Income taxes payable			3,104				2,375
Loan payable to GIG			2,753				-
Total current liabilities			66,815				54,063
Long-term liabilities
Long-term debt, less current maturities			3,711				3,669
Long-term finance obligations			8,662				8,798
Deferred compensation liabilities			2,040				1,689
Deferred tax liabilities			1,373				1,320
Operating lease liability long-term			11,425				7,713
Loan payable to GIG			-				2,753
Other long-term liabilities			2,535				2,131
Total long-term liabilities			29,746				28,073
Commitments and contingencies
Non-controlling interest			12,225				10,967
Stockholders' equity
Common stock, $.01 par value, authorized 50,000 shares; 8,044 issued and outstanding at July 31, 2025 and 7,983 at January 31, 2025			80				80
Additional paid-in capital			61,603				60,151
Retained earnings			25,907				20,104
Accumulated other comprehensive loss			(7,386	)			(8,197	)
Total stockholders' equity			80,204				72,138
Total liabilities and stockholders' equity		$	188,990			$	165,241

See accompanying notes to consolidated financial statements.

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PERMA-PIPE INTERNATIONAL HOLDINGS, INC. 

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(In thousands, except share data)

(Unaudited)

		Common Stock				Additional Paid-in Capital				Retained Earnings				Treasury Stock				Accumulated Other Comprehensive Loss				Total Stockholders' Equity
Total stockholders' equity at January 31, 2025		$	80			$	60,151			$	20,104			$	-			$	(8,197	)		$	72,138
Net income attributable to common stock			-				-				4,952				-				-				4,952
Stock-based compensation expense			-				224				-				-				-				224
Amount attributable to non-controlling interest			-				(369	)			-				-				-				(369	)
Foreign currency translation adjustment			-				-				-				-				922				922
Total stockholders' equity at April 30, 2025		$	80			$	60,006			$	25,056			$	-			$	(7,275	)		$	77,867
Net income attributable to common stock			-				-				851				-				-				851
Common stock issued under stock plans, net of shares used for tax withholding			-				(295	)			-				-				-				(295	)
Stock-based compensation expense			-				1,468				-				-				-				1,468
Amount attributable to non-controlling interest			-				424				-				-				-				424
Foreign currency translation adjustment			-				-				-				-				(111	)			(111	)
Total stockholders' equity at July 31, 2025		$	80			$	61,603			$	25,907			$	-			$	(7,386	)		$	80,204

		Common Stock				Additional Paid-in Capital				Retained Earnings				Treasury Stock				Accumulated Other Comprehensive Loss				Total Stockholders' Equity
Total stockholders' equity at January 31, 2024		$	80			$	60,063			$	12,088			$	(968	)		$	(5,551	)		$	65,712
Net income attributable to common stock			-				-				1,443				-				-				1,443
Stock-based compensation expense			-				228				-				-				-				228
Amount attributable to non-controlling interest			-				(421	)			-				-				-				(421	)
Foreign currency translation adjustment			-				-				-				-				(1,415	)			(1,415	)
Total stockholders' equity at April 30, 2024		$	80			$	59,870			$	13,531			$	(968	)		$	(6,966	)		$	65,547
Net income attributable to common stock			-				-				3,289				-				-				3,289
Common stock issued under stock plans, net of shares used for tax withholding			1				(210	)			-				-				-				(209	)
Stock-based compensation expense			-				177				-				-				-				177
Amount attributable to non-controlling interest			-				(29	)			-				-				-				(29	)
Foreign currency translation adjustment			-				-				-				-				(192	)			(192	)
Total stockholders' equity at July 31, 2024		$	81			$	59,808			$	16,820			$	(968	)		$	(7,158	)		$	68,583

Shares		2025				2024
Balances at beginning of year			7,982,568				8,016,781
Treasury stock retired			-				(112,015	)
Shares issued, net of shares used for tax withholding			61,115				77,802
Balances at period end			8,043,683				7,982,568

See accompanying notes to consolidated financial statements.

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PERMA-PIPE INTERNATIONAL HOLDINGS, INC. 

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

		Six Months Ended July 31,
		2025				2024
Operating activities
Net income		$	7,116			$	6,073
Adjustments to reconcile net income to net cash (used in) provided by operating activities
Depreciation and amortization			1,894				1,717
Deferred tax expense			428				203
Stock-based compensation expense			1,692				396
Provision on uncollectible accounts			361				43
Changes in operating assets and liabilities
Accounts receivable			(4,024	)			6,454
Inventories			493				(809	)
Costs and estimated earnings in excess of billings on uncompleted contracts			(243	)			221
Accounts payable			(2,607	)			(4,487	)
Accrued compensation and payroll taxes			(47	)			(48	)
Customers' deposits			2,861				1,810
Income taxes payable			19				(789	)
Prepaid expenses and other current assets			(1,834	)			(2,774	)
Unbilled accounts receivable			(8,712	)			(1,857	)
Other assets and liabilities			1,295				(3,409	)
Net cash (used in) provided by operating activities			(1,308	)			2,744
Investing activities
Capital expenditures			(3,478	)			(1,233	)
Net cash used in investing activities			(3,478	)			(1,233	)
Financing activities
Proceeds from revolving credit lines			47,265				39,540
Payments of debt on revolving credit lines			(40,455	)			(36,887	)
Payments of principal on finance obligations			(112	)			(91	)
Payments of other debt			(111	)			(117	)
Decrease in drafts payable			6				8
Payments on finance lease obligations			(17	)			(16	)
Stock options exercised and taxes paid related to restricted shares vested			(295	)			(201	)
Net cash provided by financing activities			6,281				2,236
Effect of exchange rate changes on cash, cash equivalents and restricted cash			90				(106	)
Net increase in cash, cash equivalents and restricted cash			1,585				3,641
Cash, cash equivalents and restricted cash - beginning of period			17,117				7,240
Cash, cash equivalents and restricted cash - end of period		$	18,702			$	10,881
Supplemental cash flow information
Cash interest paid		$	801			$	1,000
Cash income taxes paid		$	1,769			$	2,436
Fixed assets acquired - non-cash		$	1,669			$	-

See accompanying notes to consolidated financial statements.

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PERMA-PIPE INTERNATIONAL HOLDINGS, INC. 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts in thousands, except per share data, or unless otherwise specified)

(Unaudited)

Note 1 - Basis of presentation

The interim consolidated financial statements of Perma-Pipe International Holdings, Inc., and subsidiaries (collectively, "PPIH", "Company", or "Registrant") are unaudited, but include all adjustments that the Company's management considers necessary to fairly state the financial position and results of operations for the periods presented. These adjustments consist of normal recurring adjustments. Certain information and footnote disclosures have been omitted pursuant to Securities and Exchange Commission ("SEC") rules and regulations. The consolidated balance sheet as of  January 31, 2025 is derived from the audited consolidated balance sheet as of that date. The results of operations for any interim period are not necessarily indicative of future or annual results. Interim financial statements should be read in conjunction with the financial statements and the notes thereto included in the Company's latest Annual Report on Form 10-K. The Company's fiscal year ends on January 31. Years and balances described as 2025 and 2024 are for the fiscal year ending January 31, 2026 and for the fiscal year ended  January 31, 2025, respectively.

Note 2 - Business segment reporting

The Company operates under one segment: Piping Systems. The results are presented on a consolidated basis to the Chief Executive Officer who serves as the chief operating decision maker ("CODM"). The CODM regularly reviews consolidated revenues, significant expenses, and consolidated net income attributable to common stock to make operating decisions and assess performance. The CODM uses this information in making company-wide decisions when determining how to allocate resources.

Significant expenses represent amounts that are regularly provided to the CODM and included in consolidated net income attributable to common stock.

The following table summarizes the Company's revenues, net income attributable to common stock, and significant expenses:

		Three Months Ended July 31,								Six Months Ended July 31,
		2025				2024				2025				2024
Net sales		$	47,902			$	37,513			$	94,648			$	71,834
Cost of sales
Labor			6,904				5,312				13,193				10,550
Materials			18,947				12,719				36,363				25,902
Depreciation and amortization			860				738				1,710				1,472
Other costs of sales			6,768				5,270				12,235				9,919
Total cost of sales			33,479				24,039				63,501				47,843
Operating expenses
Salaries and wages			6,928				4,284				11,145				7,658
Depreciation and amortization			95				142				184				245
Other general and administrative expense			3,010				1,553				6,452				4,225
General and administrative expenses			10,033				5,979				17,781				12,128
Selling expense			1,203				1,353				2,289				2,588
Total operating expenses			11,236				7,332				20,070				14,716
Income from operations			3,187				6,142				11,077				9,275
Interest expense			415				514				821				1,021
Other expense			21				38				70				105
Income before income tax			2,751				5,590				10,186				8,149
Income tax expense			1,489				1,306				3,070				2,076
Net income			1,262				4,284				7,116				6,073
Less: Net income attributable to non-controlling interest			411				995				1,313				1,341
Net income attributable to common stock		$	851			$	3,289			$	5,803			$	4,732

The CODM regularly reviews asset information by our reporting segment in a manner that is consistent with the presentation on the Company's accompanying consolidated balance sheets.

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Note 3 - Accounts receivable

The majority of the Company's accounts receivable are due from geographically dispersed contractors and manufacturing companies. Credit is extended based on an evaluation of a customer's financial condition. In the United States, collateral is not generally required. In the United Arab Emirates ("U.A.E."), Saudi Arabia, Egypt and India, letters of credit are usually obtained for significant orders. Accounts receivable are due within various time periods specified in the terms applicable to the specific customer and are stated as amounts due from customers net of an allowance for claims and credit losses. Standard payment terms are generally net 30 to 60 days. The Company maintains an allowance for credit losses for accounts receivable. The assessment of the allowance for credit losses involves certain judgments and estimates. Management estimates the allowance balance using relevant available information from internal and external sources relating to past events, current conditions and reasonable and supportable forecasts. The Company may also establish an allowance for credit losses for specific receivables when it is probable that a specific receivable will not be collected and the loss can be reasonably estimated. Past due trade accounts receivable balances are written off when the Company's collection efforts have been unsuccessful in collecting the amount due and the amount is deemed uncollectible. The write off is recorded against the allowance for credit losses.

For the three and six months ended July 31, 2025 and 2024, no individual customer accounted for more than 10% of the Company's consolidated net sales.

As of  July 31, 2025 and January 31, 2025, no individual customer accounted for more than 10% of the Company's accounts receivable.

Note 4 - Revenue recognition 

The Company accounts for its revenues under Accounting Standards Codification ("ASC") 606, Revenue from Contracts with Customers.

Revenue from contracts with customers

The Company defines a contract as an agreement that has approval and commitment from both parties, defined rights and identifiable payment terms, which ensures the contract has commercial substance and that collectability is reasonably assured.

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

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

2) Products - which include cables, leak detection products, heat trace products, material/goods not bundled with piping or flowline systems, and field services not bundled into a project contract.

In accordance with ASC 606-10-25-27 through 29, the Company recognizes specialty piping and coating systems revenue over time as the manufacturing process progresses because one of the following conditions exists:

1) the customer owns the material that is being coated, so the customer controls the asset and thus the work-in-process; or

2) the customer controls the work-in-process due to the custom nature of the pre-insulated, fabricated system being manufactured, which has no alternative future use, and there is a right to payment for work performed to date plus profit margin.

 Products revenue is recognized when goods are shipped or services are performed (ASC 606-10-25-30).

A breakdown of the Company's revenues by revenue class for the three and six months ended July 31, 2025 and 2024 are as follows:

		Three Months Ended July 31,																Six Months Ended July 31,
		2025								2024								2025								2024
		Sales				% of Total				Sales				% of Total				Sales				% of Total				Sales				% of Total
Products		$	3,451				7	%		$	2,795				7	%		$	7,091				8	%		$	6,048				8	%
Specialty Piping Systems and Coating
Revenue recognized under input method			12,965				27	%			12,613				34	%			25,025				26	%			22,752				32	%
Revenue recognized under output method			31,486				66	%			22,105				59	%			62,532				66	%			43,034				60	%
Total		$	47,902				100	%		$	37,513				100	%		$	94,648				100	%		$	71,834				100	%

The input method as noted in ASC 606-10-55-20 is used by certain operating entities to measure revenue by the costs incurred to date relative to the estimated costs to satisfy the contract over time. Generally, these contracts are considered a single performance obligation satisfied over time and due to the custom nature of the goods and services, the "over time" method is the most faithful depiction of the Company’s performance as it measures the value of the goods and services transferred to the customer. Costs include all material, labor, and other direct costs incurred to satisfy the performance obligations of the contract. Revenue recognition begins when projects costs are incurred.  

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

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Contract assets and liabilities

Contract assets represent revenue recognized in excess of amounts billed for work in progress for which the Company has a valid contract and an enforceable right to payment for work completed. Contract liabilities represent billings in excess of costs for work in progress for which the Company has a valid contract and an enforceable right to payment for work completed. Both customer billings and the satisfaction (or partial satisfaction) of the performance obligation(s) occur throughout the manufacturing process and impact the period end balances in these accounts. In addition, contract assets include receivables or amounts that are billable beyond the passage of time. 

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

		July 31, 2025				January 31, 2025
Costs incurred on uncompleted contracts		$	16,079			$	11,621
Estimated earnings			10,842				9,366
Earned revenue			26,921				20,987
Less billings to date			24,993				19,302
Costs in excess of billings, net		$	1,928			$	1,685
Balance sheet classification
Contract assets: Costs and estimated earnings in excess of billings on uncompleted contracts		$	3,569			$	2,934
Contract liabilities: Billings in excess of costs and estimated earnings on uncompleted contracts			(1,641	)			(1,249	)
Costs in excess of billings, net		$	1,928			$	1,685

The Company anticipates that substantially all costs incurred on uncompleted contracts as of  July 31, 2025 will be billed and collected within one year. 

Unbilled accounts receivable

The Company has recorded $27.7 million and $18.9 million of unbilled accounts receivable on the consolidated balance sheets as of July 31, 2025 and January 31, 2025, respectively, from revenues generated by certain of its subsidiaries. The Company has fulfilled all performance obligations and has recorded revenue under the respective contracts. The deliverables under these contracts have been accepted by the customer and billings will be made once the customer takes possession of or arranges shipping for the products. The Company anticipates that substantially all of the amounts included in unbilled accounts receivable as of  July 31, 2025 will be billed within one year.

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Note 5 - Inventories

Inventories are stated at the lower of cost or net realizable value. Cost is determined using the first-in, first-out method for all inventories. 

		July 31, 2025				January 31, 2025
Raw materials		$	16,164			$	16,374
Work in process			437				745
Finished goods			298				366
Subtotal			16,899				17,485
Less allowance			1,014				863
Inventories		$	15,885			$	16,622

The Company conducts periodic reviews of its inventory and records allowances for slow moving and obsolete items to reflect their net realizable value, which is primarily attributable to finished goods. 

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Note 6 - Income taxes 

The determination of the consolidated provision for income taxes, deferred tax assets and liabilities and related valuation allowances requires management to make judgments and estimates. As a company with subsidiaries in foreign jurisdictions, the process of calculating income taxes involves estimating current tax obligations and exposures in each jurisdiction as well as making judgments regarding the future recoverability of deferred tax assets. The relative proportion of taxable income earned domestically versus internationally can fluctuate significantly from period to period. Changes in the estimated level of annual pre-tax income, tax laws and the results of tax audits can affect the overall effective income tax rate, which impacts the level of income tax expense and net income. Judgments and estimates related to the Company's projections and assumptions are inherently uncertain; therefore, actual results could differ materially from projections.

The Company's worldwide effective tax rates ("ETR") for the three months ended July 31, 2025 and 2024 were 54% and 23%, respectively. The Company's ETR was 30% and 25% for the six months ended July 31, 2025 and 2024, respectively. The change in the ETR is due to the mix of income and loss in various jurisdictions, primarily an increase in income in UAE, and a tax deduction limitation that was attributable to an acceleration of certain executive compensation.

The Company expects that future distributions from foreign subsidiaries will not be subject to incremental U.S. federal tax as they will be excludible from U.S. taxable income either as remittances of previously taxed earnings and profits or eligible for a full dividends received deduction. Current and future earnings in the Company's subsidiaries in Canada and Egypt are not permanently reinvested. The earnings from these subsidiaries are subject to tax in their local jurisdiction and withholding taxes in these jurisdictions are considered. As such, the Company has accrued a liability of $1.0 million as of July 31, 2025 related to these taxes.

On July 4, 2025, new tax legislation was signed into law (known as the "One Big Beautiful Bill Act" or "OBBBA") which makes permanent many of the tax provisions enacted in 2017 as part of the Tax Cuts and Jobs Act that were set to expire at the end of 2025. In addition, the OBBBA makes changes to certain U.S. corporate tax provisions, but many are generally not effective until 2026. Due to the timing of enactment within our current period end, the Company has undergone efforts to reasonably estimate the impact of the Act on our condensed consolidated financial statements and there were no material impacts to the financial statements. We will continue to evaluate the full impact of these legislative changes as more guidance becomes available. 

Note 7 - Goodwill

All identifiable goodwill as of July 31, 2025 and January 31, 2025, is attributable to the purchase of the remaining 50% interest in Perma-Pipe Canada, Ltd., which occurred in 2016.

The Company performs an impairment assessment of goodwill annually as of January 31, or more frequently if triggering events occur that could indicate that more likely than not that the fair value of the reporting unit did not exceed its carrying value, resulting in an impairment. 

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

		January 31, 2025				Foreign exchange change effect				July 31, 2025
Goodwill		$	2,057			$	97			$	2,154

There were no triggering events identified during the three and six months ended July 31, 2025.

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Note 8 - Stock-based compensation 

The Company has prior incentive plans under which previously granted awards remain outstanding, but under which no new awards may be granted, including the Company's 2021 Omnibus Stock Incentive Plan, which expired in May 2024. At  July 31, 2025, the Company had reserved a total of 197,026 shares for grants and issuances under these incentive plans, including issuances pursuant to unvested or unexercised prior awards.

The Company's 2024 Omnibus Stock Incentive Plan, dated May 28, 2024, was approved by the Company's stockholders in July 2024 ("2024 Plan"). The 2024 Plan will expire in July 2027. The 2024 Plan authorizes awards to officers, employees, consultants, and independent directors. The 2024 Plan provides for the grant of deferred shares, non-qualified stock options, incentive stock options, restricted shares, restricted stock units, and performance-based restricted stock units intended to qualify under section 422 of the Internal Revenue Code.

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

Stock-based compensation expense

The Company has granted stock-based compensation awards to eligible employees, officers and independent directors. The Company recognized the following stock-based compensation expense for the periods presented:

		Three Months Ended July 31,								Six Months Ended July 31,
		2025				2024				2025				2024
Restricted stock-based compensation expense		$	1,468			$	177			$	1,692			$	396

Stock options

The Company did not grant any stock options during the three or six months ended July 31, 2025. The following table summarizes the Company's stock option activity:

		Options				Weighted Average Exercise Price (Per share)				Weighted Average Remaining Contractual Term (In years)				Aggregate Intrinsic Value
Outstanding at January 31, 2025			1			$	6.85				0.8			$	4
Exercised			-				-				-				-
Expired or forfeited			-				6.38				-				-
Outstanding and exercisable at July 31, 2025			1			$	7.33				0.8			$	2

There was no vesting, expiration or forfeiture of previously unvested stock options during the six months ended July 31, 2025. In addition, there were no remaining unvested stock options outstanding, and therefore no unrecognized compensation expense related to unvested stock options.

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Restricted stock

The following table summarizes the Company's restricted stock activity for the six months ended  July 31, 2025:

		Restricted Shares				Weighted Average Price (Per share)				Aggregate Intrinsic Value
Outstanding at January 31, 2025			230			$	9.05			$	2,080
Granted			90				21.61
Vested and issued			(111	)			10.99
Forfeited or retired for taxes			(22	)			17.41
Outstanding at July 31, 2025			187			$	17.48			$	2,228

As of July 31, 2025, there was $2.1 million of unrecognized compensation expense related to unvested restricted stock granted under the plans. These costs are expected to be recognized over a weighted average period of 2.3 years.

Note 9 - Earnings per share

		Three Months Ended July 31,								Six Months Ended July 31,
		2025				2024				2025				2024
Basic weighted average common shares outstanding at July 31, 2025			8,007				7,954				7,995				7,930
Dilutive effect of equity compensation plans			126				171				113				57
Weighted average common shares outstanding assuming full dilution			8,133				8,125				8,108				7,987
Stock options and restricted stock not included in the computation of diluted earnings per share of common stock because the option exercise prices or grant date prices exceeded the average market prices of the common shares			-				-				-				114
Stock options and restricted stock with exercise prices or grant date prices below the average market prices			126				171				113				57
Net income attributable to common stock		$	851			$	3,289			$	5,803			$	4,732
Earnings per share attributable to common stock
Basic		$	0.11			$	0.41			$	0.73			$	0.60
Diluted		$	0.10			$	0.40			$	0.72			$	0.59

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Note 10 - Debt

Debt totaled $31.3 million and $24.5 million at July 31, 2025 and January 31, 2025, respectively.

Revolving lines - North America. On September 20, 2018, and as amended, extended, or renewed subsequently thereafter, the Company and certain of its U.S. and Canadian subsidiaries (collectively the “North American Loan Parties”) entered into a Revolving Credit and Security Agreement (the “Credit Agreement”) with PNC Bank, National Association ("PNC"), as administrative agent and lender, providing for a three-year $18 million senior secured revolving credit facility, subject to a borrowing base including various reserves (the “Senior Credit Facility”). The Credit Agreement with PNC was subsequently extended on September 17, 2021, providing for a new five-year $18 million senior secured revolving credit facility, subject to a borrowing base including various reserves (the "Renewed Senior Credit Facility"). The Renewed Senior Credit Facility matures on September 20, 2026. 

As of July 31, 2025, the Company had borrowed an aggregate of $9.7 million at a rate of 9.0% and had $3.0 million available under the Renewed Senior Credit Facility. As of January 31, 2025, the Company had borrowed an aggregate of $6.8 million and had $3.7 million available under the Renewed Senior Credit Facility.  

The Company was in compliance with respect to the covenants under the Credit Agreement as of  July 31, 2025.

Finance obligation - buildings and land. On April 14, 2021, the Company entered into a purchase and sale agreement, pursuant to which the Company sold its land and buildings in Lebanon, Tennessee (the "Property") for $10.4 million. The transaction generated net cash proceeds of $9.1 million. Concurrently with the sale, the Company paid off the approximately $0.9 million mortgage note on the Property to its lender.  The Company used the remaining proceeds to repay its borrowings under the Senior Credit Facility, for strategic investments, and for general corporate needs. Concurrent with the sale of the Property, the Company entered into a fifteen-year lease agreement (the “Lease Agreement”), whereby the Company leases back the Property at an annual rental rate of approximately $0.8 million, subject to annual rent increases of 2.0%. Under the Lease Agreement, the Company has four consecutive options to extend the term of the lease by five years for each such option.  

In accordance with ASC 842, Leases, this transaction was recorded as a failed sale and leaseback as the present value of lease payments exceeded substantially all of the fair value of the underlying assets. The Company utilized an incremental borrowing rate of 8.0% to determine the finance obligation to record for the amounts received and will continue to depreciate the assets. The current portion of the finance obligation of $0.2 million is recognized in current maturities of long-term debt and the long-term portion of $8.7 million is recognized in long-term finance obligation on the Company's consolidated balance sheets as of July 31, 2025 . The net carrying amount of the financial liability and remaining assets will be zero at the end of the lease term.

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Revolving lines - foreign. The Company also has credit arrangements used by its Middle Eastern subsidiaries in the U.A.E., Egypt and Saudi Arabia as discussed further below.

United Arab Emirates

The Company has a revolving line for 8.0  million U.A.E. Dirhams (approximately $ 2.2  million at July 31, 2025 ) from a bank in the U.A.E. As of July 31, 2025 , the facility has an interest rate of approximately  7.6%  and expires in November 2025, of which, the Company has started the process to renew and extend this credit arrangement. The Company had no borrowings outstanding under the credit facility as of July 31, 2025 , and $0.4 million as of January 31, 2025 , respectively, and is presented as a component of current maturities of long-term debt in the Company's consolidated balance sheets. As of  July 31, 2025 and January 31, 2025 , the Company had unused borrowing availability of approximately $2.2 million and $1.6 million, respectively.

The Company has a revolving line for 17.5  million U.A.E. Dirhams (approximately $ 4.8  million at July 31, 2025 ) from a bank in the U.A.E. As of July 31, 2025 , the facility has an interest rate of approximately  7.6%  and expires in November 2025, of which, the Company has started the process to renew and extend this credit arrangement. The  Company had borrowed an aggregate of $2.4 million  as of July 31, 2025 and $0.1 million  as of January 31, 2025 , respectively, and is presented as a component of current maturities of long-term debt in the Company's consolidated balance sheets. The Company had unused borrowing availability of approximately $0.3 million and $2.5 million as of  July 31, 2025 and January 31, 2025 , respectively.

The Company has a revolving line for 47.7 million U.A.E. Dirhams (approximately $13.0 million at July 31, 2025) from a bank in the U.A.E. As of July 31, 2025, the facility has a minimum 8% interest rate and expires in December 2025. The Company had unused borrowing availability $5.3 million and $6.5 million as of  July 31, 2025 and January 31, 2025, respectively.

The Company has a guarantee for  48.6 million U.A.E. Dirhams (approximately $13.2 million at July 31, 2025) from a bank in the U.A.E. There is no interest rate on this facility, however, it earns a 1% commission. As of July 31, 2025, approximately $11.0 million has been utilized in the form of a bank guarantee, with  $2.2 million of availability remaining. Additionally, in August 2025, a line of credit was added to the agreement for 51.4 million U.A.E Dirhams (approximately $14.0 million at  July 31, 2025) which will incur an additional .8% commission.

Egypt

In June 2021, and as renewed or amended subsequently thereafter, the Company's Egyptian subsidiary entered into a credit arrangement with a bank in Egypt for a revolving line of 100.0  million Egyptian Pounds (approximately $ 2.0  million at July 31, 2025 ). This credit arrangement is in the form of project financing, for which the line is secured by certain assets (such as accounts receivable) of the Company's Egyptian subsidiary. Among other covenants, the credit arrangement established a maximum leverage ratio allowable and restricted the Company's Egyptian subsidiary's ability to undertake any additional debt. As of July 31, 2025 , the facility has an interest rate of approximately  20.8%  and expires in November 2025. As of  July 31, 2025 and  January 31, 2025, the Company had an immaterial amount outstanding, which is presented as a component of current maturities of long-term debt in the Company's consolidated balance sheets. Further, as of  July 31, 2025  and  January 31, 2025 , the Company had approximately $2.0 million of unused borrowing capacity with respect to this credit arrangement.

In December 2021, the Company entered into a credit arrangement for project financing with a bank in Egypt for 28.2 million Egyptian Pounds. As this project has progressed and the Company has received collections, the facility has decreased to a current amount of  2.1  million Egyptian Pounds (approximately $0.1 million at July 31, 2025 ). This credit arrangement is in the form of project financing at rates competitive in Egypt. The line is secured by the contract for a project being financed by the Company's Egyptian subsidiary. The facility has an interest rate of approximately  15.0%  and, as of  November 2022, is no longer available for borrowings by the Company. The facility will expire in connection with final customer balance collections and the completion of the project. The Company had no outstanding balance  as of  July 31, 2025 and January 31, 2025 .

Saudi Arabia

In March 2022, the Company's Saudi Arabian subsidiary entered into a credit arrangement with a bank in Saudi Arabia for a revolving line of 37.0 million Saudi Riyals (approximately $9.9 million at  July 31, 2025). This credit arrangement is in the form of project financing at rates competitive in Saudi Arabia. The line is secured by certain assets (such as accounts receivable) of the Company's Saudi Arabian subsidiary, and expires in April 2026. As of July 31, 2025, the facility has an interest rate of approximately 9.0%. The Company had borrowed an aggregate of $3.3 million and $1.5 million as of July 31, 2025 and January 31, 2025, respectively, and is presented as a component of current maturities of long-term debt in the Company's consolidated balance sheets. The unused borrowing availability attributable to this credit arrangement at  July 31, 2025 and  January 31, 2025, was $2.9 million and $3.0 million, respectively. 

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These credit arrangements are in the form of overdraft facilities and project financing at rates competitive in the countries in which the Company operates. The lines are secured by certain equipment, certain assets (such as accounts receivable and inventory), and in some cases, a guarantee by the Company. Some credit arrangement covenants require a minimum tangible net worth to be maintained, including maintaining certain levels of intercompany subordinated debt. In addition, some of the revolving credit facilities restrict payment of dividends or undertaking of additional debt. The Company guarantees only a portion of the subsidiaries' debt, including foreign debt. As of  July 31, 2025 and  January 31, 2025, the amount of foreign subsidiary debt guaranteed by the Company was approximately $8.6 million and $4.8 million, respectively. 

The Company was in compliance with respect to the covenants under the credit arrangements in the U.A.E., Egypt, and Saudi Arabia as of July 31, 2025. Although certain arrangements are set to expire and the borrowings could be required to be repaid immediately by the bank, the Company is in regular communication with the bank throughout the renewal process and the arrangements have continued without interruption or penalty. On July 31, 2025, interest rates were based on (i) the Emirates Inter Bank Offered Rate plus 3.0% to 3.5% per annum for the U.A.E. credit arrangements, two of which have a minimum interest rate of 4.5% per annum; (ii) either the Central Bank of Egypt corporate loan rate plus 1.5% to 3.5% per annum or the stated interest rate in the agreements for the Egypt credit arrangements; and (iii) the Saudi Inter-Bank Offered Rate plus 3.5% for the Saudi Arabia credit arrangement. Based on these base rates, as of July 31, 2025, the Company's interest rates ranged from 7.6% to 20.8%, with a weighted average rate of 8.4%, and the Company had facility limits totaling $45.0 million  under these credit arrangements. As of July 31, 2025, $24.4 million 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, 2025, the Company had borrowed $5.8 million and had an additional $14.9 million of borrowing availability remaining under the foreign revolving credit arrangements. The foreign revolving lines balances were included as a component of current maturities of long-term debt in the Company's consolidated balance sheets as of July 31, 2025 and January 31, 2025.

In June 2023, the Company assumed a promissory note of approximately $2.8 million in connection with the formation of the joint venture with Gulf Insulation Group (see Note 15). 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. This amount is presented as a component of current liabilities in the Company's consolidated balance sheets. 

Mortgages. On July 28, 2016, the Company entered into a mortgage agreement secured by the Company's manufacturing facility located in Alberta, Canada that matures on December 23, 2042. As of July 31, 2025, the remaining balance on the mortgage in Canada is approximately CAD 5.6 million (approximately $4 million at July 31, 2025). The interest rate is variable, and was 6.8% at July 31, 2025. The principal balance is included as a component of long-term debt, less current maturities in the Company's consolidated balance sheets and is presented net of issuance costs of $0.1 million as of July 31, 2025 and January 31, 2025.

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Note 11 - Leases

The Company accounts for its leases under ASC 842, Leases. Under this guidance, arrangements meeting the definition of a lease are classified as operating or financing leases, and are recorded on the consolidated balance sheets, with the exception of leases with an initial term of 12 months or less in accordance with an accounting policy election, for which rent expense is recognized on a straight-line basis over the lease term. 

Operating Leases. 

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

In January 2025, the Company entered into a lease in Qatar for land upon which the Company intends to build a facility. The agreement provides for annual lease payments of 0.3 million Qatari Riyals (approximately $0.1 million at July 31, 2025), which is inclusive of certain escalation clauses and other variable consideration contained in the agreement. The agreement has an initial lease term of twenty years, which includes the option to terminate the lease agreement after ten years, and the ability to renew the lease at the end of the initial lease term. 

In July 2025, the Company entered into an additional lease agreement in Qatar for land and a building. The agreement has an initial lease term of three years with annual lease payments of 1.9 million Qatar Riyals (approximately $0.5 million at July 31, 2025), which includes an escalation clause of approximately 10% for each year thereafter. The agreement may be terminated at any time; however, the Company will be obligated to pay any unpaid balance through the remainder of the lease term. 

Finance Leases. 

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

The Company has several lease agreements, with lease terms of one to fifteen years, which consist of real estate, vehicles and office equipment leases. These leases do not require any contingent rental payments, impose any financial restrictions, or contain any residual value guarantees.  Certain of the Company’s leases include renewal options and escalation clauses; renewal options have not been included in the calculation of the lease liabilities and ROU assets as the Company is not reasonably certain to exercise these options. Variable expenses generally represent the Company’s share of the landlord’s operating expenses.  The Company does not have any arrangements where it acts as a lessor, other than one sub-lease arrangement, which is not material. 

Total lease costs consist of the following: 

			Three Months Ended July 31,								Six Months Ended July 31,
Lease costs	Consolidated Statements of Operations Classification		2025				2024				2025				2024
Finance Lease Costs
Amortization of ROU assets	Cost of sales		$	25			$	37			$	75			$	75
Interest on lease liabilities	Interest expense			1				2				2				3
Operating lease costs	Cost of sales, SG&A expenses			701				438				1,303				893
Short-term lease costs (1)	Cost of sales, SG&A expenses			759				93				1,041				236
Total Lease costs			$	1,486			$	570			$	2,421			$	1,207

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

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Supplemental balance sheet information related to leases is as follows: 

Operating and Finance leases		July 31, 2025				January 31, 2025
Finance leases assets:
Property and Equipment - gross		$	941			$	899
Accumulated depreciation and amortization			(743	)			(626	)
Property and Equipment - net		$	198			$	273
Finance lease liabilities:
Finance lease liability short-term		$	34			$	32
Finance lease liability long-term			27				43
Total finance lease liabilities		$	61			$	75
Operating lease assets:
Operating lease ROU assets		$	11,862			$	8,199
Operating lease liabilities:
Operating lease liability short-term		$	1,383			$	1,071
Operating lease liability long-term			11,425				7,713
Total operating lease liabilities		$	12,808			$	8,784

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

		July 31, 2025
Weighted-average remaining lease terms (in years):
Finance leases			1.8
Operating leases			14.4
Weighted-average discount rates:
Finance leases			6.4	%
Operating leases			9.4	%

Supplemental cash flow information related to leases is as follows:

		Six Months Ended July 31,
		2025				2024
Cash paid for amounts included in the measurement of lease liabilities:
Financing cash outflows from finance leases		$	17			$	16
Operating cash outflows from finance leases			2				3
Operating cash outflows from operating leases			673				1,045
ROU assets obtained in exchange for new lease obligations:
Operating leases liabilities		$	5,242			$	1,041

Maturities of lease liabilities as of July 31, 2025, are as follows:

			Operating Leases				Finance Leases
For the six months ending January 31, 2026		$	1,517			$	19
For the year ended January 31, 2027			2,452				37
For the year ended January 31, 2028			2,617				9
For the year ended January 31, 2029			1,945				-
For the year ended January 31, 2030			946				-
For the year ended January 31, 2031			784				-
Thereafter			15,557				-
Total lease payments		$	25,818			$	65
Less: amount representing interest			(13,010	)			(4	)
Total lease liabilities at July 31, 2025		$	12,808			$	61

Rent expense attributable to operating leases was $1.5 million and $0.6 million for the three months ended July 31, 2025 and 2024, respectively.

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Note 12 - Restricted cash

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

		July 31, 2025				January 31, 2025
Cash and cash equivalents		$	17,258			$	15,716
Restricted cash			1,444				1,401
Cash, cash equivalents and restricted cash shown in the statement of cash flows		$	18,702			$	17,117

Note 13 - Fair value

The carrying values of cash and cash equivalents, accounts receivable and accounts payable are considered reasonable estimates of fair value due to their short-term nature. The carrying amount of the Company's short-term debt, revolving lines of credit and long-term debt approximate fair value because the majority of the amounts outstanding accrue interest at variable market rates.

Note 14 - Recent accounting pronouncements

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. Pursuant to this standard update, companies are required to provide additional information, which is primarily attributable to the rate reconciliation and income taxes paid. The standard update is to be applied prospectively, with retrospective application permitted. The new income tax disclosures are effective for fiscal years beginning after December 15, 2024. The Company is still evaluating this standard update but does not expect it to have a material impact on its consolidated financial statements.

In November 2024, the FASB issued ASU No. 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. In accordance with this standard update, companies are required to disclose specified information about certain costs and expenses in the notes to the financial statements at each interim and annual reporting period. The amendments are effective for fiscal years beginning after December 15, 2026, and for interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact of this standard update on its consolidated financial statements and related disclosures. 

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Note 15 - Noncontrolling interest

On June 1, 2023, the Company closed on its formation of a joint venture (the "JV", and the agreement governing the JV, the "JV Agreement") with Gulf Insulation Group ("GIG"), a leading provider of pre-insulated piping systems and pipe fabrication, in which the Company acquired a 60% controlling financial interest and contributed assets consisting of a building and equipment. The JV is a limited liability company named Perma Pipe Gulf Arabia Industry LLC and is a closed joint stock company established under the laws of the Kingdom of Saudi Arabia. The JV's capital is comprised of ordinary shares with 60% owned by the Company and the remaining 40% owned by GIG. This collaborative business arrangement results in expanding the Company's market presence in Saudi Arabia, Kuwait, and Bahrain. The primary business activities of the JV include the manufacture and sale of the pre-insulated piping systems and pipe coating services.

The balance sheets and operating activities of this investment are included in the Company's consolidated financial statements. As of  July 31, 2025, the carrying amount of the assets and liabilities of the JV that are consolidated by the Company totaled $39.8 million and $19.9 million, respectively, and $39.1 million and $22.1 million, respectively, as of  January 31, 2025. 

The Company adjusts net income in the consolidated statements of operations to exclude the proportionate share of results that is attributable to the non-controlling interest. Additionally, the Company presents the proportionate share that is attributable to the non-controlling interest as temporary equity within the consolidated balance sheets. This temporary equity presentation is the result of the non-controlling interest being subject to certain redemption rights that are not entirely within the Company's control. Due to these redemption rights, at each balance sheet date, the Company is required to adjust the carrying value attributable to the non-controlling interest to fair value, which is limited to its original carrying value at the formation of the business arrangement. Adjustments made to reflect the change in the value of the redeemable non-controlling interest are offset against permanent equity within the Company's consolidated balance sheets. 

Net income attributable to GIG was $0.4 million and $1.0 million for the three months ended  July 31, 2025 and 2024, respectively. Net income attributable to GIG was $1.3 million for the six months ended  July 31, 2025 and 2024. The proportionate share of net income was accounted for as a reduction in deriving net income attributable to common stock in the Company's consolidated statements of operations.

The non-controlling interest as measured at fair value was $12.2 million and $11.0 million at  July 31, 2025 and  January 31, 2025, respectively. The change in non-controlling interest consists of $1.3 million in current year net income attributable to non-controlling interest, and approximately $(0.1) million as an adjustment to the carrying value of the redeemable non-controlling interest pertaining to the business arrangement. In addition, there were no dividends or any other form of distributions from non-controlling interest for the periods ended  July 31, 2025 and  January 31, 2025. 

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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 2025 and 2024 are for the fiscal year ending January 31, 2026 and the fiscal year ended January 31, 2025, 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. 

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 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,
		2025								2024								Change favorable (unfavorable)				2025								2024								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		$	47,902							$	37,513							$	10,389			$	94,648							$	71,834							$	22,814
Gross profit			14,423				30	%			13,474				36	%			949				31,147				33	%			23,991				33	%			7,156
General and administrative expenses			10,033				21	%			5,979				16	%			(4,054	)			17,781				19	%			12,128				17	%			(5,653	)
Selling expenses			1,203				3	%			1,353				4	%			150				2,289				2	%			2,588				4	%			299
Interest expense			415								514								99				821								1,021								200
Other expense			21								38								17				70								105								35
Income before income taxes			2,751								5,590								(2,839	)			10,186								8,149								2,037
Income tax expense			1,489								1,306								(183	)			3,070								2,076								(994	)
Net income			1,262								4,284								(3,022	)			7,116								6,073								1,043
Less: Net income attributable to non-controlling interest			411								995								584				1,313								1,341								28
Net income attributable to common stock			851								3,289								(2,438	)			5,803								4,732								1,071

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Three months ended July 31, 2025 vs. Three months ended July 31, 2024

Net sales:

Net sales were $ 47.9 million and $ 37.5 million in the three months ended July 31, 2025 and 2024, respectively.  The  increase o f $10.4  million  was a result of increased sales volumes in the Middle East and in North America.

Gross profit:

Gross profit was $14.4 million and $13.5 million in the three months ended July 31, 2025 and 2024, respectively. The increase of $0.9 million, was driven primarily by increased volume of activity in the quarter.

General and administrative expenses:

General and administrative expenses were $10.0 million and $6.0 million in the three months ended July 31, 2025 and 2024, respectively. The increase of $4.0 million, was mainly due to higher payroll expenses and professional fees in the quarter. This includes a one-time charge due to an acceleration of certain executive compensation expense in the quarter as a result of a departure from the organization. 

Selling expenses:

Selling expenses were $ 1.2 million and $ 1.4 million in the  three months ended July 31, 2025 and 2024, respectively. The  decrease of $ 0.2 million, was due to lower payroll expense in the quarter.                                                                                    

Interest expense:

Net interest expense remained consistent and was $0.4 million and $0.5 million in the three months ended July 31, 2025 and 2024, respectively.  

Income tax expense:

The Company's ETR was 54% and 23% in the three months ended July 31, 2025 and 2024, respectively. The change in the ETR is due to the mix of income and loss in various jurisdictions, primarily an increase in income in UAE, and a tax deduction limitation that was attributable to an acceleration of certain executive compensation. 

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 $0.9 million and $3.3 million in the three months ended July 31, 2025 and 2024, respectively. The decrease of $2.4 million, was mainly due to higher payroll expenses in connection with a one-time charge of $2.1 million related to an acceleration of certain executive compensation as a result of a departure from the organization. 

Public Float:

The Company performed its public float calculation pursuant to the SEC's Public Float Test as of the last business day of its second fiscal quarter ended July 31, 2025. Based on this calculation, the Company concluded that its public float exceeded the threshold of $75 million to retain its filer status as a Smaller Reporting Company ("SRC"). As a result, the Company's filer status has changed and henceforth will be classified as an accelerated filer. Accordingly, the Company will be subject to the requirements within this classification, including an accelerated timeline to file certain periodic reports and will no longer be eligible for the scaled-down financial disclosure requirements provided to entities that meet the definition of an SRC. This change in filer status goes into effect for fiscal year ended January 31, 2026, which is the first annual report filed for the fiscal year in which the Company loses its SRC status. 

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Six months ended July 31, 2025 vs. Six months ended July 31, 2024

Net sales:

Net sales were $94.6 million and $71.8 million in the six months ended July 31, 2025 and 2024, respectively. The increase of $22.8 million was a result of increased sales volumes in the Middle East and in North America.

Gross profit:

Gross profit was $31.1 million and $24.0 million in the six months ended July 31, 2025 and 2024, respectively. The increase of $7.1 million, was driven primarily by increased volume of activity and better margins due to product mix.

General and administrative expenses:

General and administrative expenses were $17.8 million and $12.1 million in the six months ended July 31, 2025 and 2024, respectively. The increase of $5.7 million, was due to higher payroll expenses and professional fees.  This includes a one-time charge due to an acceleration of certain executive compensation expense as a result of a departure from the organization.  

Selling expenses:

Selling expenses remained consistent and were $2.3 million and $2.6 million in the six months ended July 31, 2025 and 2024, respectively. The decrease of $0.3 million was primarily attributable to lower payroll expenses.                                                                    

Interest expense:

Net interest expense was $0.8 million and $1.0 million in the six months ended July 31, 2025 and 2024, respectively. The decrease of $0.2 million was the result of an overall reduction in interest rates during the current year.

Income tax expense:

The Company's ETR was 30% and 25% in the six months ended July 31, 2025 and 2024, respectively. The change in the ETR is due to the mix of income and loss in various jurisdictions, primarily an increase in income in UAE, and a tax deduction limitation that was attributable to an acceleration of certain executive compensation.

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 $5.8 million and $4.7 million in the six months ended July 31, 2025 and 2024, respectively. The increase of $1.1 million, was mainly due to increased sales volumes and better project execution during the current year, offset by higher payroll expenses in connection with a one-time charge due to an acceleration of certain executive compensation expense as a result of the recent departure of the former chief executive officer. 

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Liquidity and capital resources

Cash and cash equivalents as of July 31, 2025 were $17.3 million compared to $15.7 million on January 31, 2025. On July 31, 2025, $0.2 million was held in the United States, and $17.1 million was held at the Company's foreign subsidiaries. The Company's working capital was $58.5 million on July 31, 2025 compared to $54.7 million on January 31, 2025. Of the working capital components, accounts receivable increased by $4.1 million and cash and cash equivalents increased by $1.6 million as the result of the movements discussed below. As of July 31, 2025, the Company had $3.0 million of borrowing capacity under the Renewed Senior Credit Facility in North America and $14.9 million of borrowing capacity under its foreign revolving credit agreements. The Company had $9.7 million borrowed under the Renewed Senior Credit Facility and $5.8 million borrowed under its foreign revolving credit agreements at July 31, 2025.

Net cash (used in) provided by operating activities was $(1.3) million and $2.7 million in the six months ended July 31, 2025 and 2024, respectively. The decrease of $4.0 million was primarily attributable to changes in accounts receivable and unbilled accounts receivable, partially offset by increases related to inventories, customer deposits, accounts payable, prepaid expenses and other current assets, and net income. 

Net cash used in investing activities in the six months ended July 31, 2025 and 2024 was $3.5 million and $1.2 million, respectively. The increase of $2.3 million was primarily due to increases in the amount of capital expenditures during the year.

Net cash provided by financing activities in the six months ended July 31, 2025 and 2024 was $6.3 million and $2.2 million, respectively. Debt totaled $31.3 million and $24.5 million as of July 31, 2025 and January 31, 2025, respectively. See Note 10 - Debt, in the Notes to Consolidated Financial Statements for further discussion relating to this topic.

As of July 31, 2025, Perma-Pipe had $17.3 million of cash and cash equivalents on hand and committed debt facility agreements with commercial banks aggregating $63.0 million, for which $17.9 million was available. The Company believes these amounts are sufficient to meet future business requirements for at least the next 12 months and beyond. 

Revolving lines - North America . On September 20, 2018, and as amended, extended, or renewed subsequently thereafter, the Company and certain of its U.S. and Canadian subsidiaries (collectively the “North American Loan Parties”) entered into a Revolving Credit and Security Agreement (the “Credit Agreement”) with PNC Bank, National Association ("PNC"), as administrative agent and lender, providing for a three-year $18 million senior secured revolving credit facility, subject to a borrowing base including various reserves (the “Senior Credit Facility”). The Credit Agreement with PNC was subsequently extended on September 17, 2021, providing for a new five-year $18 million senior secured revolving credit facility, subject to a borrowing base including various reserves (the "Renewed Senior Credit Facility"). The Renewed Senior Credit Facility matures on September 20, 2026. 

As of July 31, 2025, the Company had borrowed an aggregate of $9.7 million at a rate of 9.0% and had $3.0 million available under the Renewed Senior Credit Facility. As of January 31, 2025, the Company had borrowed an aggregate of $6.8 million and had $3.7 million available under the Renewed Senior Credit Facility.  

The Company was in compliance with respect to the covenants under the Credit Agreement as of  July 31, 2025.

Finance obligation - buildings and land. On April 14, 2021, the Company entered into a purchase and sale agreement, pursuant to which the Company sold its land and buildings in Lebanon, Tennessee (the "Property") for $10.4 million. The transaction generated net cash proceeds of $9.1 million. Concurrently with the sale, the Company paid off the approximately $0.9 million mortgage note on the Property to its lender.  The Company used the remaining proceeds to repay its borrowings under the Senior Credit Facility, for strategic investments, and for general corporate needs. Concurrent with the sale of the Property, the Company entered into a fifteen-year lease agreement (the “Lease Agreement”), whereby the Company leases back the Property at an annual rental rate of approximately $0.8 million, subject to annual rent increases of 2.0%. Under the Lease Agreement, the Company has four consecutive options to extend the term of the lease by five years for each such option.  

In accordance with ASC 842, Leases, this transaction was recorded as a failed sale and leaseback as the present value of lease payments exceeded substantially all of the fair value of the underlying assets. The Company utilized an incremental borrowing rate of 8.0% to determine the finance obligation to record for the amounts received and will continue to depreciate the assets. The current portion of the finance obligation of $0.2 million is recognized in current maturities of long-term debt and the long-term portion of $8.7 million is recognized in long-term finance obligation on the Company's consolidated balance sheets as of July 31, 2025 . The net carrying amount of the financial liability and remaining assets will be zero at the end of the lease term.

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Revolving lines - foreign . The Company also has credit arrangements used by its Middle Eastern subsidiaries in the U.A.E. , Egypt and Saudi Arabia as discussed further below.

United Arab Emirates

The Company has a revolving line for 8.0  million U.A.E. Dirhams (approximately $ 2.2  million at July 31, 2025 ) from a bank in the U.A.E. As of July 31, 2025 , the facility has an interest rate of approximately  7.6%  and expires in November 2025, of which, the Company has started the process to renew and extend this credit arrangement. The Company had no borrowings outstanding under the credit facility as of July 31, 2025 , and $0.4 million as of January 31, 2025 , respectively, and is presented as a component of current maturities of long-term debt in the Company's consolidated balance sheets. As of  July 31, 2025 and January 31, 2025 , the Company had unused borrowing availability of approximately $2.2 million and $1.6 million, respectively.

The Company has a revolving line for 17.5  million U.A.E. Dirhams (approximately $4.8  million at July 31, 2025 ) from a bank in the U.A.E. As of July 31, 2025 , the facility has an interest rate of approximately  7.6%  and expires in November 2025, of which, the Company has started the process to renew and extend this credit arrangement. The  Company had borrowed an aggregate of $2.4 million  as of July 31, 2025 and $0.1 million  as of January 31, 2025 , respectively, and is presented as a component of current maturities of long-term debt in the Company's consolidated balance sheets. The Company had unused borrowing availability of approximately $0.3 million and $2.5 million as of  July 31, 2025 and January 31, 2025 , respectively.

The Company has a revolving line for 47.7 million U.A.E. Dirhams (approximately $13.0 million at July 31, 2025) from a bank in the U.A.E. As of July 31, 2025, the facility has a minimum 8% interest rate and expires in December 2025. The Company had unused borrowing availability $5.3 million and $6.5 million as of  July 31, 2025 and January 31, 2025, respectively.

The Company has a guarantee for 48.6 million U.A.E. Dirhams (approximately $13.2 million at July 31, 2025) from a bank in the U.A.E. There is no interest rate on this facility, however, it earns a 1% commission. As of July 31, 2025, approximately $11.0 million has been utilized in the form of a bank guarantee, with $2.2 million of availability remaining. Additionally, in August 2025, a line of credit was added to the agreement for 51.4 million U.A.E Dirhams (approximately $14.0 million at  July 31, 2025) which will incur an additional .8% commission.

Egypt

In June 2021, and as renewed or amended subsequently thereafter, the Company's Egyptian subsidiary entered into a credit arrangement with a bank in Egypt for a revolving line of 100.0  million Egyptian Pounds (approximately $ 2.0  million at July 31, 2025 ). This credit arrangement is in the form of project financing, for which the line is secured by certain assets (such as accounts receivable) of the Company's Egyptian subsidiary. Among other covenants, the credit arrangement established a maximum leverage ratio allowable and restricted the Company's Egyptian subsidiary's ability to undertake any additional debt. As of July 31, 2025 , the facility has an interest rate of approximately  20.8%  and expires in November 2025. As of July 31, 2025 and January 31, 2025, the Company had an immaterial amount outstanding, which is presented as a component of current maturities of long-term debt in the Company's consolidated balance sheets. Further, as of  July 31, 2025  and  January 31, 2025 , the Company had approximately $2.0 million of unused borrowing capacity with respect to this credit arrangement.

In December 2021, the Company entered into a credit arrangement for project financing with a bank in Egypt for 28.2 million Egyptian Pounds. As this project has progressed and the Company has received collections, the facility has decreased to a current amount of  2.1  million Egyptian Pounds (approximately $0.1 million at July 31, 2025 ). This credit arrangement is in the form of project financing at rates competitive in Egypt. The line is secured by the contract for a project being financed by the Company's Egyptian subsidiary. The facility has an interest rate of approximately  15.0%  and, as of November 2022, is no longer available for borrowings by the Company. The facility will expire in connection with final customer balance collections and the completion of the project. The Company had no outstanding balance  as of  July 31, 2025 and January 31, 2025 .

Saudi Arabia

In March 2022, the Company's Saudi Arabian subsidiary entered into a credit arrangement with a bank in Saudi Arabia for a revolving line of  37.0  million Saudi Riyals (approximately $ 9.9  million at  July 31, 2025 ). This credit arrangement is in the form of project financing at rates competitive in Saudi Arabia. The line is secured by certain assets (such as accounts receivable) of the Company's Saudi Arabian subsidiary, and expires in April 2026. As of July 31, 2025 , the facility has an interest rate of approximately  9.0% . The Company had borrowed an aggregate of $3.3 million and $1.5 million  as of July 31, 2025 and January 31, 2025 , respectively, and is presented as a component of current maturities of long-term debt in the Company's consolidated balance sheets. The unused borrowing availability attributable to this credit arrangement at  July 31, 2025  and  January 31, 2025 , was $2.9 million and $3.0 million, respectively. 

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These credit arrangements are in the form of overdraft facilities and project financing at rates competitive in the countries in which the Company operates. The lines are secured by certain equipment, certain assets (such as accounts receivable and inventory), and in some cases, a guarantee by the Company. Some credit arrangement covenants require a minimum tangible net worth to be maintained, including maintaining certain levels of intercompany subordinated debt. In addition, some of the revolving credit facilities restrict payment of dividends or undertaking of additional debt. The Company guarantees only a portion of the subsidiaries' debt, including foreign debt. As of  July 31, 2025 and January 31, 2025, the amount of foreign subsidiary debt guaranteed by the Company was approxim ately $8.6 million and $4.8 million, respectively. 

The Company was in compliance with respect to the covenants under the credit arrangements in the U.A.E., Egypt, and Saudi Arabia as of July 31, 2025.  Although certain arrangements are set to expire and the borrowings could be required to be repaid immediately by the bank, the Company is in regular communication with the bank throughout the renewal process and the arrangements have continued without interruption or penalty. On July 31, 2025, interest rates were based on (i) the Emirates Inter Bank Offered Rate plus 3.0% to 3.5% per annum for the U.A.E. credit arrangements, two of which have a minimum interest rate of 4.5% per annum; (ii) either the Central Bank of Egypt corporate loan rate plus 1.5% to 3.5% per annum or the stated interest rate in the agreements for the Egypt credit arrangements; and (iii) the Saudi Inter-Bank Offered Rate plus 3.5% for the Saudi Arabia credit arrangement. Based on these base rates, as of July 31, 2025, the Company's interest rates ranged from  7.6% to 20.8%, with a weighted average rate of 8.4%, and the Company had facility limits totaling $45.0  million  under these credit arrangements. As of July 31, 2025 ,  $24.4 million o f availability was used to support letters of credit to guarantee amounts committed for inventory purchases and for performance guarantees. Additionally, as of July 31, 2025 , the Company had borrow ed $5.8 million and had an additional $14.9 million of borrowing availability remaining under the foreign revolving credit arrangements. The foreign revolving lines balances were included as a component of current maturities of long-term debt in the Company's consolidated balance sheets  as of July 31, 2025 and January 31, 2025.

In June 2023, the Company assumed a promissory note of approximately $2.8 million in connection with the formation of the joint venture with Gulf Insulation Group (see Note 15). 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. This amount is presented as a component of current liabilities in the Company's consolidated balance sheets. 

Mortgages. On July 28, 2016, the Company entered into a mortgage agreement secured by the Company's manufacturing facility located in Alberta, Canada that matures on December 23, 2042. As of July 31, 2025, the remaining balance on the mortgage in Canada is approximately CAD 5.6 million (approximately $ 4 million at July 31, 2025). The interest rate is variable, and was 6.8%  at July 31, 2025. The principal balance is included as a component of long-term debt, less current maturities in the Company's consolidated balance sheets and is presented net of issuance costs of $0.1 million  as of July 31, 2025 and January 31, 2025.

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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 $ 40.7 million as of July 31, 2025, with a remaining balance due in the amount of $ 1.2 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, $ 1.2 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, 2025, and at various times throughout 2024, the Company received partial payments to settle $ 0.6 million and $ 0.3 million, respectively, of the customer's outstanding balances. Further, the Company has been engaged by the customer to perform additional work in 2024 under customary trade terms that support the continued cooperation between the Company and the customer. As a result, the Company did not reserve any allowance against the remaining outstanding balances as of  July 31, 2025. 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, 2025 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.

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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 Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of July 31, 2025. The Company's disclosure controls and procedures are designed to provide reasonable assurance 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 July 31, 2025, our disclosure controls and procedures were not effective because of the material weaknesses in internal control over financial reporting, as described below. 

The Company's management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) under the Exchange Act. As required by Rule 13a-15(c) under the Exchange Act, the Company's management carried out an evaluation, with the participation of the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the Company's internal control over financial reporting as of January 31, 2025. The framework on which such evaluation was based is contained in the report entitled "Internal Control-Integrated Framework" (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

The Company's internal control over financial reporting is designed 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. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Based on management's evaluation, management has concluded that we did not maintain effective internal control over financial reporting as of July 31, 2025, due to the material weaknesses identified below.

Material Weaknesses in Internal Control Over Financial Reporting

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.

The material weaknesses are as follows:

	•	We did not design and maintain effective controls in response to the risks of material misstatement. Specifically, changes to existing controls or the implementation of new controls have not been sufficient to respond to changes to the risks of material misstatement in financial reporting. This contributed to the following material weaknesses;
	•	We did not design and maintain effective certain controls over financial reporting relating to the review and approval of manual journal entries, review of the financial close process, including the statement of cash flows, and review of certain financial policies and procedures; and
	•	We did not design and maintain effective controls at operating locations in the Middle East and North Africa ("MENA"), including not maintaining sufficient documentation to support an evaluation that controls over business processes were designed and operating effectively;

These material weaknesses resulted in adjustments to property, plant, and equipment, net of accumulated depreciation, trade accounts payable, trade accounts receivable, and the statement of cash flows. These adjustments resulted in a revision of the unaudited consolidated financial statements as of and for the period ended April 30, 2024, a restatement as of and for the period ended July 31, 2024 and material adjustments as of and for the period ended October 31, 2024. 

In addition, we had the following additional material weaknesses:

	•	We did not design and maintain effective information technology general controls ("ITGCs"), specifically controls over the timely review of user access and administrative access to adequately restrict access, program change management, computer operations, and program development; and
	•	We did not design and maintain effective controls over managements review of the completeness and accuracy of certain system-generated reports.

These material weaknesses did not result in a misstatement to the Company's annual or interim financial statements. However, each of these material weaknesses could result in a material misstatement of substantially all accounts and disclosures in the Company's annual or interim financial statements that would 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) performing an entity wide risk assessment to identify relevant risks and changes to those relevant risks to our financial reporting; ii) designing and implementing controls to identify and evaluate changes in our business and the impact on our internal control over financial reporting; (iii) engaging outside consultants with expertise relating to ITGCs to document processes, assist in addressing the design and operation of  ITGCs, monitoring and testing reviews focusing on systems supporting our financial reporting process (iv) designing and maintaining controls and documentation evidencing those ITGCs for knowledge transfer and function changes, including access and program control and change management, computer operations, and program development, (v) designing and maintaining effective controls to review the completeness and accuracy of certain system-generated reports; and (vi) 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, financial reporting controls, and business process controls include:

(i) enhancing the design of controls for the review of and posting of journal entries; (ii) evaluating and updating documented formal accounting policies, financial reporting, processes and procedures; and overall internal control procedures; and (iii) updating the design of controls for the preparation and review of the financial close process, including the statement of cash flows.

In addition to the items noted above, our remediation plans related to our MENA locations include: (i) evaluating and updating the Company's evidence of internal control policies and procedures; (ii) enhancing the design of controls over business processes that are relevant to our MENA locations; and (iii) formalizing our financial reporting processes and procedures.

The Company anticipates the actions described above will strengthen the Company's internal control over financial reporting 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.

Changes 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 during the fiscal quarter ended July 31, 2025, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II OTHER INFORMATION

Item 5. Other Information

During the three months ended July 31, 2025, none of the Company's directors or executive officers adopted or terminated any contract, instruction, or written plan for the purchase or sale of Company securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any "non-Rule 10b5-1 trading arrangement" (as those terms are defined in Regulation S-K, Item 408).

The Company entered into an Executive Employment Agreement with Mr. Saleh Sagr, effective as of September 9, 2025 (the "Employment Agreement"). Pursuant to the Employment Agreement, Mr. Sagr will receive an initial annual base salary of $450,000 and a short-term annual incentive bonus opportunity with a target incentive equal to 100% of his base salary. In addition, Mr. Sagr will also be eligible to receive a long-term incentive, consisting of a cash performance award and restricted stock grants with a total annual target award equal to 100% of his base salary, with pro-rata vesting of restricted stock grants over a three-year period. The Employment Agreement is for an initial term of three years, with automatic annual renewal periods for up to two successive one-year terms. 

The Employment Agreement, which is filed as Exhibit 10.1 hereto, is incorporated herein by reference. The foregoing description of the Employment Agreement does not purport to be complete and is qualified in its entirety by reference to Exhibit 10.1.              

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	Seventh Amended and Restated By-Laws 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 April 4, 2025]
10.1*	Executive Employment Agreement by and between Perma-Pipe International Holdings, In. and Saleh Sagr, dated September 9, 2025
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

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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 15, 2025	By: /s/ Saleh N. Sagr
		Saleh N. Sagr
		President and Chief Executive Officer
		(Principal Executive Officer)
Date:	September 15, 2025	By: /s/ Matthew E. Lewicki
		Matthew E. Lewicki
		Vice President and Chief Financial Officer
		(Principal Financial and Accounting Officer)

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FAQ

What is Perma-Pipe's (PPIH) primary U.S. credit facility and how much is drawn?

Perma-Pipe has a Renewed Senior Credit Facility of $18.0 million maturing September 20, 2026; $9.7 million was borrowed under it as of July 31, 2025.

How much unbilled revenue does PPIH have as of July 31, 2025?

The company reported approximately $18.9 million of unbilled accounts receivable as of July 31, 2025, largely expected to be billed within one year.

Did Perma-Pipe sell any property and what was the accounting impact?

Perma-Pipe sold its Lebanon, Tennessee property for $10.4 million, netting $9.1 million cash; the related leaseback was a failed sale-leaseback under ASC 842, creating finance obligations of $0.2 million current and $8.7 million long-term.

What is the company’s effective tax rate for the six months ended July 31, 2025?

Perma-Pipe’s effective tax rate was 30% for the six months ended July 31, 2025, compared with 25% in the prior-year period.

How much foreign borrowing availability did Perma-Pipe report?

As of July 31, 2025 the company reported approximately $14.9 million of unused borrowing availability under its foreign revolving credit agreements out of ~$45.0 million total foreign facility limits.