ppih20260131_10k.htm
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
For the fiscal year ended January 31, 2026
or
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)
2445 Technology Forest Blvd, Suite 1010, The Woodlands, Texas 77381
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading symbol Name of each exchange on which registered
Common Stock, $.01 par value per share PPIH The Nasdaq Stock Market LLC
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒
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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes ☐ No ☒
The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant (the exclusion of the market value of the shares owned by any person shall not be deemed an admission by the registrant that such person is an affiliate of the registrant) was $174,846,721 based on the closing sale price of $22.16 per share as reported on the Nasdaq Global Market on July 31, 2025.
The number of shares of the registrant's common stock outstanding at April 16, 2026 was 8,123,273.
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DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's definitive proxy statement for its 2026 annual meeting of stockholders, which will be filed with the Securities and Exchange Commission within 120 days after January 31, 2026, are incorporated by reference in Part III of this Annual Report on Form 10-K.
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Perma-Pipe International Holdings, Inc.
FORM 10-K
For the fiscal year ended January 31, 2026
TABLE OF CONTENTS
Page
PART I
ITEM 1. Business 2
ITEM 1A. Risk Factors 5
ITEM 1B. Unresolved Staff Comments 9
ITEM 1C. Cybersecurity 10
ITEM 2. Properties 11
ITEM 3. Legal Proceedings 11
ITEM 4. Mine Safety Disclosures 11
PART II
ITEM 6. [Reserved] 13
ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk 20
ITEM 8. Financial Statements and Supplementary Data 20
ITEM 9A. Controls and Procedures 54
ITEM 9B. Other Information 56
ITEM 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 56
PART III
ITEM 10. Directors, Executive Officers and Corporate Governance 57
ITEM 11. Executive Compensation 57
ITEM 14. Principal Accountant Fees and Services 57
PART IV
ITEM 15. Exhibits and Financial Statement Schedules 57
Signatures 60
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PART I
Cautionary Statements Regarding Forward Looking Information
Certain statements contained in this Annual Report on Form 10-K, 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 ("Exchange Act"), 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, the following:
Market Condition Risks
Financial Risks
• the Company's ability to collect on long-term accounts receivable;
• the Company’s ability to use its net operating loss carryforwards;
Business Condition Risks
• reductions or cancellations of orders included in the Company’s backlog;
General Risks
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ITEM 1. BUSINESS
Perma-Pipe International Holdings, Inc., collectively with its subsidiaries ("PPIH", the "Company", "we", "our" or the "Registrant"), is engaged in the manufacture and sale of products in one reportable segment: Piping Systems. The Company was incorporated in Delaware on October 12, 1993. The Company's common stock is traded on the Nasdaq Global Market and reported under the ticker symbol "PPIH". The Company's fiscal year ends on January 31. Years, results and balances described as 2026, 2025 and 2024 are for the fiscal year ending January 31, 2027 and the fiscal years ended January 31, 2026 and 2025, respectively.
PRODUCTS AND SERVICES
The Company engineers, designs, manufactures and sells specialty piping systems and leak detection systems. Specialty piping systems include: (i) insulated and jacketed district heating and cooling piping systems for efficient energy distribution from central energy plants to multiple locations, (ii) primary and secondary containment piping systems for transporting chemicals, hazardous fluids and petroleum products, (iii) the coating and/or insulation of oil and gas gathering and transmission pipelines, and (iv) liquid and powder based anti-corrosion coatings applied both to the external and internal surfaces of steel pipe, including shapes such as bends, reducers, tees, and other spools/fittings used in pipelines for the transportation of oil and gas products and potable water. The Company's leak detection systems are sold with its piping systems or on a stand-alone basis to monitor areas where fluid intrusion may contaminate the environment, endanger personal safety, cause a fire hazard, impair essential services or damage equipment or property.
The Company frequently engineers and custom fabricates to job site dimensions and incorporates provisions for thermal expansion due to cycling temperatures. Most of the Company's piping systems are produced for underground installations and, therefore, require trenching, which is the responsibility of the general contractor, and completed by unaffiliated installation contractors.
The Company’s piping systems are typically sold as a part of discrete projects, and customer demand can vary by reporting period. See "Management's Discussion and Analysis of Financial Condition and Results of Operations."
Operating Facilities. The Company operates its business from the following locations:
Perma-Pipe, Inc. Perma-Pipe Middle East FZC
Rolling Meadows, IL Fujairah, United Arab Emirates
New Iberia, LA Perma-Pipe Saudi Arabia, LLC
Lebanon, TN Dammam, Kingdom of Saudi Arabia
Perma-Pipe Canada, Ltd. Perma-Pipe Arabia Contracting, LLC
Camrose, Alberta, Canada Dammam, Kingdom of Saudi Arabia
Vars, Ontario, Canada Perma-Pipe Gulf Arabia, LLC
Cairo, Egypt Riyadh, Kingdom of Saudi Arabia
Perma-Pipe India Pvt. Ltd Medina, Kingdom of Saudi Arabia
Gandhidham, India Perma-Pipe QA Factory, LLC
Perma-Pipe Middle East LLC Doha, Qatar
Abu Dhabi, United Arab Emirates
Customers and sales channels. The Company's customer base is industrially and geographically diverse. In the United States, the Company employs inside and outside sales managers who use and assist a network of independent manufacturers' representatives, none of whom sell products that are competitive with the Company's piping systems. The Company employs a direct sales force to market and sell products and services in Canada, India, Egypt, and across several countries in the Middle East. On a country-by-country basis, and where advantageous, the Company uses an agent network to assist in marketing and selling the Company's products and services.
As of January 31, 2026, one customer accounted for approximately 23% of the Company’s total accounts receivable. For the year ended January 31, 2026, this same customer represented approximately 12% of total net sales. As of January 31, 2025, and for the year then ended, no single customer accounted for more than 10% of total accounts receivable or net sales. The Company monitors the creditworthiness of this customer on an ongoing basis. As of January 31, 2026, no allowance for credit losses was deemed necessary as the Company expects to collect the full carrying value of the outstanding balance.
Backlog. The Company’s backlog on January 31, 2026 was $121.6 million, compared to $138.1 million on January 31, 2025, most of which is expected to be completed within the year ending January 31,2027. The decrease in backlog is primarily attributable to converting existing sales orders into revenue and the timing of new awards. The Company defines backlog as the expected value of total revenue resulting from confirmed customer purchase orders that have not yet been recognized as revenue. However, by industry practice, orders may be canceled or modified at any time. In the event of a cancellation, the customer is normally responsible for all finished goods produced or shipped, all direct and indirect costs incurred, and also for a reasonable allowance for anticipated profits. No assurance can be given that these amounts will be recovered after cancellation. Any cancellation or delay in orders may result in lower than expected revenues from the Company's reported backlog. Additionally, as a result of the Company's contracts having a duration of less than one year, a practical expedient was applied regarding disclosure of the aggregate amount and future timing of performance obligations that are unsatisfied or partially satisfied as of the end of the reporting period.
Intellectual property. The Company owns various patents covering its piping and electronic leak detection systems, as well as for some of the features of its sensor cables. These patents are not material to the Company either individually or in the aggregate because the Company believes its sales would not be materially reduced if patent protection was not available. The Company owns numerous trademarks connected with its piping and leak detection systems throughout the world.
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Suppliers. The basic raw materials used in production are pipes and tubes made of carbon steel, steel alloys, copper, ductile iron, or polymers and various chemicals such as polyols, isocyanate, urethane resin, polyethylene, and fiberglass, which are mostly purchased in bulk quantities. The Company believes there are currently adequate supplies and sources of availability of these raw materials needed.
The sensor cables used in the Company's leak detection and location systems are manufactured to the Company's specifications by companies regularly engaged in manufacturing such cables. The Company assembles the monitoring component of its leak detection and location systems from components purchased from many sources.
The Company continues to experience fluctuations in the cost and availability of raw materials due to volatile economic conditions, supply chain disruptions, tariff uncertainties, and transportation delays. To mitigate these impacts, the Company has implemented several strategies, including actively seeking alternative suppliers and planning for material purchases further in advance to ensure the Company has materials when needed. The Company also adjusts its pricing to customers to offset the impacts of the raw material price increases. These impacts are expected to continue throughout 2026, and the resulting future disruptions to the Company’s operations are uncertain.
Competition. The piping systems market is highly competitive. The Company believes that quality, service, engineering design capabilities and support, a comprehensive product line, timely execution, plant location and price are key competitive factors in the industry. The Company also believes it has a more comprehensive product line than any competitor.
Research and Development. The Company's research and development efforts primarily focus on activities and development to meet product specifications mandated by its customers and the industry.
Environmental impacts. The Company provides insulated pipe for district energy systems. A district energy system is a highly efficient way to provide heating or cooling to buildings. A central plant produces steam or chilled water that flows through insulated pipes to buildings. The goal of a district energy system is to centralize production to deliver energy efficiency, reduce operating costs, and use less equipment compared to individual buildings with their own boilers and chillers. In addition, district heating and cooling plants can provide better pollution control than localized boilers and cooling equipment.
HUMAN CAPITAL
As of January 31, 2026, we employed a total of 909 individuals, of whom 222 were located in the United States and 687 were located internationally. Within the United States, 97 employees are represented by labor unions and are covered under two collective bargaining agreements, which expire on April 30, 2027 and April 30, 2028, respectively.
We believe that our human capital, including our ability to attract, develop, and retain skilled personnel, is critical to the success of our operations. We consider our relationships with our employees to be constructive and stable, and we have not experienced any material work stoppages to date.
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INFORMATION ABOUT OUR EXECUTIVE OFFICERS
The following table sets forth information regarding the executive officers of the Company as of April 16, 2026:
Executive officer of the
Name Offices and Positions; Age Company since
Saleh N. Sagr President, Chief Executive Officer, and Director; Age 56 2025
Matthew E. Lewicki Vice President and Chief Financial Officer; Age 43 2023
Saleh Sagr: Appointed President of PERMA-PIPE as of March 31, 2025, and CEO on June 7, 2025; he further expanded his leadership mandate with an appointment to the Board of Directors in April 2026. Mr. Sagr was formerly Senior Vice President, Middle East North Africa (MENA), as of July 2021, where he had overall responsibility for MENA region expansion and the area’s continued business and financial growth. Mr. Sagr was formerly Vice President, MENA since May 2019, where he was responsible for facilities in Fujairah – UAE, Dammam – Saudi Arabia, Gujarat – India, and Beni Suef – Egypt. Before joining PERMA-PIPE, Mr. Sagr served as General Manager for Global Anti Corrosion Techniques in Saudi Arabia, a Saudi pipeline coating company he co-founded in 2005. Mr. Sagr has gained extensive knowledge and experience in strategic planning, business development, startups, and turnarounds during the last 32 years, specifically in the Middle East. Previously, he was based in Edinburgh, the United Kingdom, where he held several significant positions, including engineering, startups, and operations management for Bredero Shaw, the world’s largest provider of protective coatings for the oil & gas pipeline industry from October 1995 to February 2005. His projects took him to the United Kingdom, Russia, Nigeria, Saudi Arabia, and other international locations.
Matthew E. Lewicki: Vice President and CFO since October 2023 and previously served as Chief Accounting Officer from May 2023 to October 2023. From 2019 to 2023, Mr. Lewicki served as Corporate Controller of HMT Holdings Corp, Inc., a global oil and gas manufacturing and infrastructure services company, consisting of the manufacturing of above-ground storage tanks and associated materials, oilfield maintenance and repair services, and inspection services. In this position, Mr. Lewicki was responsible for the consolidated financial affairs of the worldwide organization, including financial strategy, mergers and acquisitions, and treasury management. From 2013 to 2019, Mr. Lewicki served as Senior Manager of Financial Planning and Reporting for Quanta Services, Inc., a Fortune 300 electric, oil and gas, and telecommunications infrastructure services company. In this role, Mr. Lewicki was responsible for overseeing financial reporting and SEC compliance, and financial planning and analysis, which consisted of strategic planning, budgeting, forecasting, mergers and acquisition integration, and investment strategy. He began his career in public accounting at Deloitte and is a Certified Public Accountant in the State of Texas.
AVAILABLE INFORMATION
The Company files with, and furnishes to, the Securities and Exchange Commission ("SEC") reports, including annual meeting materials, annual reports on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K, as well as amendments thereto. The Company maintains a website,
www.permapipe.com, where these reports and related materials are available free of charge as soon as reasonably practicable after the Company electronically files with, or furnishes such material to, the SEC. The information on the Company's website is not part of this Annual Report on Form 10-K and is not incorporated into this or any other filings by the Company with the SEC.
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ITEM 1A. RISK FACTORS
The Company's business, financial condition, results of operations and cash flows are subject to various risks, including, but not limited to, those set forth below, which could cause actual results to vary materially from recent results or from anticipated future results. These risk factors should be considered together with information included elsewhere in this Annual Report on Form 10-K.
Market Condition Risks
The Company's operations and earnings may be significantly affected by changes in oil and gas prices. Oil and gas prices depend on local, regional, and global events or conditions that affect supply and demand. Any material decline in oil or gas prices could have a material adverse effect on the demand for the Company's products, its operations and financial condition.
The Company may be unable to purchase raw materials at favorable prices, or maintain beneficial relationships with its suppliers, which could result in a shortage of supply, or increased pricing. There can be no assurance regarding the availability of supply for key components of the Company's products. The lack of supply of these components could result in an adverse effect on the financial condition of the Company. The steel industry in particular is highly cyclical in nature, and at times, pricing can be highly volatile due to a number of factors beyond the Company's control. The Company utilizes escalation clauses and bid expiration dates to mitigate the impact of this volatility on its earnings. This volatility may negatively impact market conditions thus reducing project activity and the Company's results of operations. If the United States or other countries in which the Company operates impose tariffs on imports of raw materials, including steel, used in the Company's operations, this could have an adverse impact on the Company's business.
The Company regularly updates its quoting system for the movements in raw material prices and seeks to recover price differentials through increases in the selling price of the Company's products; however, the Company may not always be successful, and any increase in raw material prices that is not offset by an increase in the Company's prices that is accepted by customers could have an adverse effect on the Company's business, results of operations, financial position and cash flows. In addition, if the Company is unable to acquire timely raw material supplies, it may need to decline opportunities, which could also have an adverse effect on the Company's business, results of operations, financial position and cash flows.
Due to volatile economic conditions, supply chain disruptions, tariff uncertainties, and transportation delays, the Company has experienced, and may in the future experience, delays and increased prices for raw materials used in its production processes. To mitigate these impacts, the Company has implemented several strategies, including purchasing larger volumes from existing suppliers to reduce near- and medium-term supply risk, actively seeking alternative suppliers, and planning material purchases further in advance to ensure availability when needed. The Company also adjusts its pricing to customers to offset the impacts of the raw material price increases. The Company is unable to predict the duration of the current inflationary environment, raw material supply shortages and transportation delays, and the resulting future disruptions to the Company’s operations are uncertain.
Decreases in government spending on projects using the Company’s products, and challenges to the Company’s customers’ liquidity and availability of capital funds, may adversely impact demand for the Company’s products. Decreases in government spending on projects using the Company's products can have a negative impact on the Company's sales volumes. Uncertainty about economic market conditions poses risks that the Company's customers may postpone spending for capital improvement and maintenance projects in response to tighter credit markets or negative financial news, which could have a material adverse effect on the demand for the Company's products.
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Financial Risks
The Company may be unable to maintain compliance with existing debt covenants,repay its debt or renew its expiring international credit facilities.There is a risk that the Company may not be able to remain in compliance with covenants in connection with its credit agreements. If there were an event of default under the Company's current credit facilities, the lenders could cause all amounts outstanding with respect to that debt to be due and payable immediately. The Company cannot assure that its cash flow will be sufficient to fully repay amounts due under any of the financing arrangements, if accelerated upon an event of default, or, that the Company would be able to repay, refinance or restructure the payments under any such arrangements. Complying with the covenants under the Company's domestic and/or foreign credit facilities may limit management's discretion by restricting options such as:
• incurring additional debt;
• entering into transactions with affiliates;
• making investments or other restricted payments;
• creating liens.
The Company has approximately $5.5 million of borrowings under foreign revolving lines of credit that are scheduled to mature in the year ending January 31,2027. Credit arrangements used by the Company’s Middle Eastern subsidiaries are typically renewed on an annual basis. In addition, the Company has obtained project-specific financing in the Middle East, with $0.2 million of borrowings under such arrangements becoming due in the year ending January 31,2027. While the Company expects to renew its Middle Eastern credit arrangements and maintain access to project financing, there can be no assurance that such arrangements will be renewed on similar terms or amounts, or that project-specific financing will be available for future projects. For additional information regarding the Company’s foreign debt, refer to Note 5 – Debt
Any replacement credit arrangements outside of the United States may further limit the Company’s ability to repatriate funds from abroad. Repatriation of funds from certain countries may become limited based upon regulatory restrictions or unfeasible economically because of the taxation of funds when moved to another subsidiary or to the parent company. In addition, any refinancing, replacement or additional financing the Company may obtain could contain similar or more restrictive covenants than those currently applicable to the Company. The Company’s ability to comply with any covenants may be adversely affected by general economic conditions, political decisions, industry conditions and other events beyond management’s control.
The Company may be unable to maintain sustained levels of profitability or positive cash flows in the future. There is no guarantee that the Company will be able to maintain profitability or positive cash flows in the future. The Company’s inability to successfully maintain profitability and positive cash flows may result in it experiencing a serious liquidity deficiency resulting in material adverse consequences that could threaten its viability.
The Company extended credit to a customer for a project in the Middle East in 2013 and, if the Company is unable to collect this outstanding balance, its future profitability could be adversely impacted. One of the Company’s accounts receivable, totaling $1.2 million and $1.8 million as of January 31, 2026 and 2025, respectively, has been outstanding for several years. As of January 31, 2026, the entire balance represents a retention asset payable upon the commissioning of the system. Due to the long-term nature of the receivable, $1.2 million was included in other long-term assets as of both January 31, 2026 and 2025. The Company completed all deliverables under the related contract in 2015; however, the system has not yet been commissioned by the customer, as additional activities must be completed prior to overall system completion and commissioning. The Company continues to actively engage in collection efforts to ensure full payment of the outstanding balance. At various times throughout 2024 and 2025, the Company received partial payments of $0.4 million and $0.6 million, respectively. Additionally, the Company has been engaged by the customer to perform additional work in 2026 under customary trade credit terms, supporting the continued cooperation between the Company and the customer. As a result, the Company did not record an allowance for this receivable as of January 31, 2026. However, if collection efforts are unsuccessful, the Company may recognize an allowance for all, or substantially all, of the uncollected amount.
The Company may be impacted by interpretations and changes in tax regulations and legislation which could adversely affect the Company's results of operations. Tax interpretations, regulations, and legislation in the various jurisdictions in which the Company operates are subject to measurement uncertainty and the interpretations can impact net income, income tax expense or benefit, and income tax assets or liabilities. Tax rules and regulations, including those relating to foreign jurisdictions, are subject to interpretation and require judgment by the Company that may be challenged by the applicable taxation authorities upon audit. Although the Company believes its assumptions, judgements and estimates are reasonable, changes in tax laws or the Company's interpretation of tax laws and the resolution of any tax audits could significantly impact the amounts provided for income taxes in the Company's consolidated financial statements.
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The Company’s ability to use itsnetoperatinglosscarryforwards and certain other tax attributes may be limited. The Company’s net operating loss (“NOL”) carryforwards in the U.S. could expire unused and be unavailable to offset future income tax liabilities because of their limited duration or because of restrictions under U.S. tax law. As of January 31, 2026, the Company had $16.6 million of gross federal NOLs and $22.2 million of gross state NOLs available to offset the Company’s future taxable income. Of the gross federal NOL amount, $9.3 million will begin to expire between tax years 2036 and 2037 and the remainder has an indefinite carryforward. State NOLs expire at various dates from 2026 to 2045. In addition, the Company’s ability to use its NOLs may be limited in the event of future changes in its stock ownership. As a result, if the Company earns net taxable income, the Company’s ability to use its pre-change NOLs to offset U.S. federal taxable income may be subject to limitations, which could potentially result in a future tax liability of the Company. In addition, at the state level, there may be periods during which the use of NOLs is suspended or otherwise limited, which could result in a state tax liability which would otherwise not arise.
The Company’s inability to establish and maintain effective internal control over financial reporting could harm its business and financial results. The Company’s management is responsible for establishing and maintaining effective internal control over financial reporting. However, there are material weaknesses in internal controls such that our internal control over financial reporting has been determined not to be effective. Internal control over financial reporting is a process to provide reasonable assurance regarding the reliability of financial reporting for external purposes in accordance with accounting principles generally accepted in the United States. Because of its inherent limitations, internal control over financial reporting is not intended to provide absolute assurance that the Company would prevent or detect a misstatement of its financial statements or fraud. If we are not able to remediate the material weaknesses and maintain effective internal control over financial reporting, our business and financial results could be harmed.
The Company may experience changes in estimates which could result in a reduction or elimination of previously recorded revenues and profit in connection with "over time" revenue recognition. Certain of the Company's contracts recognize revenues using periodic recognition of income. For these contracts, the Company uses the "over time" accounting method. This methodology allows revenue and profits to be recognized proportionally over the life of a contract by comparing the amount of the cost incurred to date against the total amount of cost expected to be incurred. The effect of revisions to revenue and total estimated cost is recorded when amounts are known or can be reasonably estimated. Revisions can occur at any time and could be material. On a historical basis, management believes that reasonably reliable estimates of the progress towards completion on long-term contracts have been made. However, given the uncertainties associated with these types of contracts, it is possible for actual cost to vary from estimates previously made, which may result in reductions or reversals of previously recorded revenue and profits.
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Business Condition Risks
Delays in the timing of order receipt, execution, delivery and acceptance of the Company’s products generally negatively impact the Company’s operating results. The Company's operating results in any reporting period could be negatively impacted as a result of delays in the timing of project execution.
The Company may not be able to successfully negotiate progress-billing arrangements on its large-scale contracts, which could adversely impact the Company’s working capital needs, cash flows and credit risk. The Company sells systems and products under contracts that allow the Company to either bill upon the completion of certain agreed milestones, or upon actual shipment of the system or product. The Company attempts to negotiate progress-billing milestones on large contracts to help manage its working capital and cash flows, and to reduce the credit risk associated with these large contracts. Consequently, changes in accepted billing terms of contracts could impact the Company's requirements for working capital and cash flows.
Aggressive pricing by existing competitors and the entrance of new competitors in the markets in which the Company operates could drive down the Company's profits and reduce the Company's revenue. The Company's business is highly competitive. Some of the Company's competitors are large organizations with access to considerable financial resources. Additionally, many of the Company's products are also subject to competition from alternative technologies and alternative products. In periods of declining demand, the Company's fixed cost structure may limit its ability to cut costs, which may be a competitive disadvantage compared to companies with more flexible cost structures, or may result in reduced operating margins, operating losses and negative cash flows.
The Company may be subject to claims for damages from defective products. The Company warrants its products to be free of certain defects. The Company has, from time to time, had claims alleging defects in its products. The Company may experience material product liability claims in the future and it could incur significant costs to defend such claims. While the Company currently has product liability insurance that it believes to be sufficient, the Company cannot be certain that its product liability insurance coverage will be adequate for liabilities that may be incurred in the future or that such coverage will continue to be available to the Company on commercially reasonable terms. Any claim relating to defective products that result in liabilities exceeding the Company's insurance coverage could have a material adverse effect on the Company's business, results of operations, financial position and cash flows.
The Company may not be able to recover costs and damages from vendors that supply defective materials. The Company may receive defective materials from its vendors that are incorporated into the Company's products during the manufacturing process. While the Company mitigates this risk through contract terms, traceability and specifications, and has recourse to recover from vendors the costs to repair, remake or replace defective products, such costs could be greater than the amount that can be recovered. Such excess costs could have an adverse effect on the Company's business, results of operations, financial position and cash flows.
Product and service orders included in the Company’s backlog may be reduced or cancelled. The Company defines backlog as the revenue value resulting from confirmed customer purchase orders that have not yet been recognized as revenue. Orders may be canceled or modified at any time. In the event of a cancellation, the customer is normally responsible for all finished goods produced or shipped, all direct and indirect costs incurred and also for a reasonable allowance for anticipated profits. No assurance can be given that these amounts will be recovered after cancellation. Any reduction or cancellation of orders may result in revenues that are lower than expected.
The Company's results of operations could be adversely affected by changes in international regulations and other activities of government agencies related to the Company’s operations. International sales represent a significant portion of the Company's total sales. The Company's sales to foreign customers were 71.7% and 66.9% in the years ended January 31, 2026 and 2025, respectively. The Company's anticipated growth and profitability may require increasing foreign sales volume and may necessitate further international expansion. The Company's results of operations could be adversely affected by changes in trade, monetary and fiscal policies, laws and regulations, other activities of governments, agencies and similar organizations, and other factors. These factors include, but are not limited to, changes in a country's or region's economic or political conditions, trade regulations affecting production, pricing and marketing of products, local labor conditions and regulations, reduced protection of intellectual property rights, changes in the regulatory or legal environment, restrictions on currency exchange activities, burdensome taxes and tariffs and other trade barriers. We cannot predict the impact of changes in foreign policies adopted by the current U.S. administration will have on our business. International risks and uncertainties, including changing social and economic conditions as well as terrorism, political hostilities and war, could lead to reduced international sales and reduced profitability associated with such sales. In addition, these risks can include delays in collection of accounts receivable. Because the Company conducts a significant portion of its business activities in the Gulf Cooperation Council ("GCC"), the political and economic events of the countries that comprise the GCC can have a material effect on the Company’s business, results of operations, financial condition, and cash flows.
Due to the international scope of the Company’s operations, it is subject to a complex system of commercial and trade regulations around the world. The Company’s foreign subsidiaries are governed by laws, rules and business practices that differ from those of the United States. If the activities of these entities do not comply with U.S. laws or business practices or the Company’s Code of Business Conduct, then violations of these laws or practices may result in severe criminal or civil sanctions, which could disrupt the Company’s business, and result in an adverse effect on the Company’s reputation, business and results of operations or financial condition. The Company cannot predict the nature, scope, or effect of future regulatory requirements to which its operations might be subject or the manner in which existing laws might be administered or interpreted.
Geopolitical Risks, Including Tensions Involving Iran, May Adversely Affect Our Business. Our operations in certain international markets expose us to geopolitical risks, including regional conflicts, political instability, and evolving government policies. Recent tensions involving Iran have increased uncertainty in parts of the regions in which we operate. Escalation of such tensions could disrupt our operations, delay project execution, restrict access to key markets, or adversely affect the security of our personnel and assets.
In addition, geopolitical developments may lead to broader economic or regulatory consequences, including sanctions, trade restrictions, or limitations on the movement of goods, services, and capital. While we have not experienced material adverse impacts to date, further escalation or prolonged instability could have a material adverse effect on our business, financial condition, and results of operations.
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General Risks
The Company may be unable to retain its senior management and key personnel. The Company's ability to meet its strategic and financial goals will depend to a significant extent on the continued contributions of its senior management and key personnel, or the successful transition of responsibilities of departing senior management and key personnel. Future success will also depend in large part on the Company's ability to identify, attract, motivate, effectively utilize and retain highly qualified managerial, sales, marketing and technical personnel. The loss of senior management or other key personnel or the inability to identify, attract and retain qualified personnel in the future could make it more difficult to manage the Company's business and could adversely affect operations and financial results.
The Company may not be able to achieve the expected benefits from its growth initiatives. The Company's cyclical or general expansion may result in unanticipated adverse consequences, including significant strain on management, operations and financial systems, as well as on the Company's ability to attract and retain competent employees. In the future, the Company may seek to grow its business by investing in new or existing facilities, making acquisitions, entering partnerships and joint ventures, or constructing new facilities, which could introduce additional risks, including:
• strain on working capital;
• inability to maintain key pre-acquisition business relationships;
• loss of key personnel of an acquired business or facility;
• exposure to unanticipated liabilities; and
• failure to realize efficiencies, synergies and cost savings.
As a result of these and other factors, including general economic risks, the Company may not be able to realize the expected benefits from future acquisitions, new facility developments, partnerships, joint ventures or other investments.
The Company's information technology systems may be negatively affected by cybersecurity threats. The Company faces risks relating to cybersecurity attacks that could cause the loss of confidential information and other business disruptions. The Company relies extensively on computer systems to process transactions and manage its business, and its business is at risk from and may be impacted by cybersecurity attacks. The Company employs a number of measures to prevent, detect and mitigate these threats, which include data and email encryption, strong password management policy, firewall systems, anti-virus software, and frequent backups. However, there is no guarantee such efforts will be successful in preventing a cyber-attack. A successful attack could adversely affect the Company's reputation and results of operations, including through lawsuits by third parties.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
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ITEM 1C. CYBERSECURITY
Risk Management and Strategy
The Company's policies and practices are based on frameworks and standards that address risks through a comprehensive, cross-functional approach that assess, identify, monitor, and mitigate material risks from cybersecurity threats as part of the overall enterprise risk management ("ERM") process. This includes the collection and storage of data and being responsive to incidents as they occur. Further, the Company's processes and technology are utilized to develop, implement, and maintain appropriate measures to safeguard information systems in protecting the integrity, availability, and confidentiality of data. Additionally, the Company engages certain third parties to assist in network monitoring and control testing, among other functions of similar capacity.
The Company's cybersecurity program focuses on the following areas:
The Company's on-going investment in information systems and utilization of external 3rd parties represents the best means for extensively testing both the design and operational effectiveness of cybersecurity controls, and to ensure continuity and functionality of the Company's operating systems.
As of the date of this report, the Company has not experienced any material cybersecurity events. However, the presence of new or more advanced forms of cybersecurity threats could have a material and adverse impact on the business, results of operations, and financial position. For further discussion relating to this topic, see Item 1A. Risk Factors "The Company's information technology systems may be negatively affected by cybersecurity threats."
Governance
The Audit Committee of the Board of Directors has the responsibility of overseeing the Company's cybersecurity risks. The Director of Information Technology provides periodic updates to the Board of Directors regarding actions taken to mitigate the Company's exposure and protection from cybersecurity risks. Management routinely evaluates the Company's security processes, procedures, and systems to determine if enhancements are needed to reduce the possibility of a future cybersecurity event. This includes safeguards implemented by the Company, such as a multi-factor authentication process; restricted firewall settings; security and network monitoring, security awareness training, email phishing tests, and enhancing the Company's backup recovery strategy, among others.
The Director of Information Technology is responsible for assessing, monitoring, and managing the Company's cybersecurity risks. The Director of Information Technology has extensive experience in leading the Company's information systems and has previously led information security teams for several large global organizations prior to joining the Company.
The Director of Information Technology, along with members of management, inform the Audit Committee on cybersecurity risks by providing periodic updates regarding (i) Status of ongoing cybersecurity initiatives and strategies, (ii) The overall state of the Company's security program and potential exposure to risks, and (iii) Incident reports and learning from any cybersecurity events. Further, the Director of Information Technology maintains an open dialogue regarding any significant developments in cybersecurity risks, ensuring the Audit Committee's oversight is proactive and responsive.
In addition to periodic updates to the Audit Committee, the Director of Information Technology, in his capacity, regularly informs the Chief Executive Officer ("CEO") and the Chief Financial Officer ("CFO") regarding matters related to cybersecurity risks and incidents. This ensures the highest level of management are informed of potential risks associated with cybersecurity that could have a material and adverse effect on the Company.
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ITEM 2. PROPERTIES
Location Leased and/or Owned
Illinois Leased building and office space
Louisiana Owned building and leased land
Tennessee Leased building, office space, and land
Texas Leased office space
Vars, Ontario, Canada Leased building, office space, and land
India Leased building, office space, and land
Dammam, Kingdom of Saudi Arabia Owned building and office space on leased land
Riyadh, Kingdom of Saudi Arabia Leased building, office space, and land
Medinah, Kingdom of Saudi Arabia Leased building, office space, and land
Egypt Leased building, office space, and land
Qatar Leased building, office space, and land
For further information, see Note 6 - Leases, in the Notes to Consolidated Financial Statements.
ITEM 3. LEGAL PROCEEDINGS
The Company is subject to various legal proceedings and claims that arise in the ordinary course of business, including those involving environmental, tax, product liability, and general liability claims. The Company accrues a liability for these matters when it is considered probable that future costs will be incurred, and the amount can be reasonably estimated. Such accruals are based on developments to date, the Company's estimates of the outcomes with respect to any legal proceedings, and its experience in contesting, litigating, and settling other similar matters.
As of
January 31, 2026
, the Company had no material pending litigation.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
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PART II
The Company's common stock is traded on the Nasdaq Global Market under the symbol "PPIH".
As of April 16, 2026, there were 43 stockholders of record and other additional stockholders for whom securities firms or banks acted as nominees.
The Company has never declared or paid a cash dividend and does not anticipate paying any cash dividends on its common stock in the foreseeable future. Management presently intends to retain all available funds for the development of the Company's business and for use as working capital, including potentially repurchasing its common stock. The Company's credit facilities also restrict dividend payments. Future dividend policy will depend upon the Company's earnings, capital requirements, financial condition, credit agreement restrictions and other relevant factors. For further information, see "Financing" in Item 7 and Note 5 - Debt, in the Notes to Consolidated Financial Statements.
The Transfer Agent and Registrar for the Company's common stock is Broadridge Corporate Issuer Solutions, Inc., P.O. Box 1342 Brentwood, NY 11717, (877) 830-4936 or (720) 378-5591.
Reference is made to Item 12 in Part III of this report.
Unregistered Sales of Equity Securities and Use of Proceeds
The Company has not made any sale of unregistered securities during the preceding three fiscal years.
Issuer Purchases of Equity Securities
The Company did not make any purchases of its common stock during fiscal 2025.
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ITEM 6. [RESERVED]
ITEM 7.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
General
Certain statements contained in this Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A"), 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 Exchange Act 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 headings Cautionary Statements Regarding Forward Looking Information and Item 1A. Risk Factors.
Risk Mitigation and Management
The Company is subject to a variety of risks that could materially affect its business, financial condition, results of operations, and cash flows. To address these risks, the Company has implemented several mitigating strategies across financial, operational, and strategic areas. The Company actively implements strategies to mitigate the risks described in Item 1A of this Annual Report.
Financial and Liquidity Management
The Company monitors and actively manages its debt obligations to ensure continued access to financing. For fiscal 2027, approximately $5.5 million under foreign revolving lines of credit and $0.2 million under project-specific financing are scheduled to mature. The Company expects to renew its Middle Eastern credit arrangements and maintain access to project financing; however, there can be no assurance that such arrangements will be renewed on comparable terms or amounts. The Company also regularly monitors compliance with covenants under existing credit agreements to mitigate potential restrictions on dividends, intercompany obligations, additional debt, or liens.
Accounts Receivable and Credit Risk
The Company actively monitors the creditworthiness of its customers and manages concentrated receivables. Payments for large projects are typically secured through irrevocable letters of credit from banks. For example, as of January 31, 2026, one customer represented approximately 23% of accounts receivable. Partial payments received throughout 2024–2026 have significantly reduced the outstanding balance in accordance with contract terms. The Company engages in ongoing collection efforts and has structured credit terms to support continued cooperation with customers.
Internal Controls over Financial Reporting
The Company has strengthened its internal control environment to address previously identified material weaknesses. As of January 31, 2025, four material weaknesses were reported. Following implementation of efforts to remediate these material weaknesses, three material weaknesses remain, which are scheduled for testing in 2026. Management remains committed to fully remediating these weaknesses to maintain effective internal controls and ensure the reliability of financial reporting.
Supply Chain and Raw Material Risk
To mitigate risks associated with volatile raw material prices, supply chain disruptions, tariffs, and transportation delays, the Company has adopted a multi-pronged approach. This includes purchasing larger volumes from existing suppliers, securing alternative suppliers, planning material purchases further in advance, and adjusting customer pricing to offset cost increases. These measures are designed to maintain material availability and minimize disruptions to production schedules.
Backlog, Customer Diversification, and Contract Risk
The Company closely monitors its backlog, customer concentration, and contract terms. Its backlog as of January 31, 2026, was $121.6 million, primarily expected to be completed within the following fiscal year. Customer concentration is mitigated through secured payment methods and ongoing monitoring of financial strength. Contracts are structured to include progress-billing arrangements and provisions for recoverable costs in the event of cancellations, helping to protect cash flow and working capital.
Tax and Regulatory Risk
The Company regularly monitors tax regulations, legislation, and interpretations in jurisdictions where it operates. Management applies judgment in evaluating uncertain tax positions and plans for potential limitations on net operating loss carryforwards, mitigating the risk of unexpected future tax liabilities.
Human Capital and Operational Continuity
The Company invests in attracting, developing, and retaining skilled personnel, recognizing that its human capital is essential to operational success. Ongoing training, succession planning, and engagement initiatives are in place to ensure continuity of operations and strong performance across all regions.
Through these measures, the Company seeks to mitigate risks and sustain financial performance, operational stability, and long-term growth, despite external and internal challenges.
The analysis presented below and discussed in more detail throughout this MD&A was organized to provide instructive information for better understanding the Company's results of operations, financial condition and cash flows. However, this MD&A should be read in conjunction with the Consolidated Financial Statements in Item 8 of this Annual Report on Form 10-K, including the notes thereto and the risk factors contained herein. The Company's fiscal year ends on January 31. Years, results and balances described as 2025 and 2024 are for the fiscal years ended January 31, 2026 and 2025, respectively.
The Company is engaged in the manufacture and sale of products in one reportable segment: Piping Systems. Since the Company's revenues are significantly dependent upon discrete projects, the Company's operating results in any reporting period could be negatively impacted as a result of variations in the level of the Company's discrete project orders or delays in the timing of the specific project phases.
The tabular information presented throughout this MD&A is in thousands, except per share data, or unless otherwise specified.
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Results of Operations
Consolidated Results of Operations
Year Ended January 31,
Amount Percent of Net Sales Amount Percent of Net Sales Amount
Less: Net income attributable to non-controlling interest 3,614 4,108 (494 )
Year endedJanuary 31, 2026 Compared to year ended January 31, 2025
Net sales
Net sales were $210.9 million and $158.4 million in the years ended January 31, 2026 and 2025, respectively. The increase of $52.5 million was primarily the result of higher sales volumes in the Middle East, Canada, and the United States.
Gross profit
Gross profit was $69.5 million, or 33% of net sales and $53.2 million, or 34% of net sales, in the years ended January 31, 2026 and 2025, respectively. The increase of $16.3 million was driven by higher sales volumes and consistent gross margins globally.
General and administrative expenses
General and administrative expenses were $35.3 million and $28.0 million in the years ended January 31, 2026 and 2025, respectively. The increase of $7.3 million was primarily related to higher compensation costs and professional fees, including approximately $1.0 million relating to Sarbanes-Oxley 404 compliance in connection with our transition from a non-accelerated filer to an accelerated filer. This also includes a one-time compensation charge of approximately $2.0 million related to the departure of the previous CEO.
Selling expenses
Selling expenses were $4.7 million and $4.9 million in the years ended January 31, 2026 and 2025, respectively. The decrease of $0.2 million was primarily driven by lower payroll expenses during the year.
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Interest expense, net
Interest expense was $1.8 million and $1.9 million in the years ended January 31, 2026 and 2025, respectively. The decrease of $0.1 million was the result of an overall reduction in interest rates during the current year
Income taxes
The Company's worldwide effective tax rates ("ETR") were 24.9% and 29.1% in the years ended January 31, 2026 and 2025, respectively. The change in the ETR was largely due to changes in the mix of income and loss in various tax jurisdictions and the domestic Global Intangible Low-Taxed Income ("GILTI") inclusion. For further information, see Note 7 - Income taxes, in the Notes to Consolidated Financial Statements.
Net income attributable to common stock
Net income attributable to common stock was $17.0 million and $9.0 million in the years ended January 31, 2026 and 2025, respectively. The increase in net income was a result of the changes discussed above, less amounts attributable to non-controlling interest.
Liquidity and capital resources
Cash and cash equivalents were $18.7 million and $15.7 million as of January 31, 2026 and January 31, 2025, respectively. On January 31, 2026, approximately $0.2 million was held in the United States, and $18.5 million was held by the Company's foreign subsidiaries. The Company's working capital was $66.9 million on January 31, 2026 compared to $54.7 million on January 31, 2025. As of January 31, 2026, the Company had $2.7 million of borrowing capacity under the Renewed Senior Credit Facility (as defined below) in North America and $29.9 million of borrowing capacity under its foreign credit agreements. The Company had $10.7 million borrowed under the Renewed Senior Credit Facility and $8.4 million borrowed under its foreign credit agreements at January 31, 2026.
Net cash provided by operating activities in the years ended January 31, 2026 and 2025 was $9.2 million and $13.9 million, respectively. The decrease of $4.7 million was primarily driven by an increase in accounts receivable, partially offset by an increase in net income and customer deposits compared to the prior year.
Net cash used in investing activities in the years ended January 31, 2026 and 2025 was $10.4 million and $2.8 million, respectively. The increase of $7.6 million was primarily driven by higher capital expenditures during the period, related to the Middle East.
Net cash provided by financing activities was $6.6 million for the year ended January 31, 2026, compared to net cash used in financing activities of $0.9 million for the year ended January 31, 2025. The $7.5 million increase in cash provided was primarily driven by increased net borrowings under the Company’s revolving lines of credit.
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Subsequent to January 31, 2026, the Company entered into a credit agreement with JPMorgan Chase Bank, N.A., which provides for a revolving credit facility with total commitments of $18.0 million. The facility effectively refinanced and replaced the Company’s existing credit facility with PNC Bank, National Association and to support the Company’s ongoing working capital and general corporate needs.
The credit facility is intended to serve as a temporary bridge financing arrangement. The Company expects to enter into a new global credit facility with a syndicate of lenders, with JPMorgan expected to act as administrative agent and lead arranger. Upon execution of the global credit facility, the Company expects that any outstanding borrowings under this credit agreement will be repaid or refinanced and the credit agreement will be terminated; however, there can be no assurance as to the timing or terms of such transaction.
The Company believes it will have the ability to satisfy all working capital needs and any planned capital expenditures for the twelve months following the issuance of the Consolidated Financial Statements, based on its existing cash on hand, cash flows from operations, and available credit facilities.
There was no restricted cash held in the United States on January 31, 2026 or January 31, 2025. Restricted cash held by foreign subsidiaries was $3.6 million and $1.4 million as of January 31, 2026 and 2025, respectively. Restricted cash held by foreign subsidiaries related to fixed deposits that also serve as security deposits and guarantees.
The following table summarizes the Company's estimated contractual obligations on January 31, 2026:
Year Ending January 31,
Revolving line - North America (1) $ 10,749 $ 10,749 $ - $ - $ - $ - $ -
Revolving lines - foreign (3) 5,672 5,672 - - - - -
Uncertain tax position obligations (6) 1,320 - - - - - 1,320
(2) Scheduled maturities, excluding interest.
(3) Scheduled maturities of foreign credit facilities, excluding interest.
(5) Minimum contractual amounts, assuming no changes in variable expenses.
Financing
Revolving lines -North America. On September 20, 2018, the Company and certain of its U.S. and Canadian subsidiaries (collectively, together with the Company, the “North American Loan Parties”) entered into a Revolving Credit and Security Agreement (the “Credit Agreement”) with PNC Bank, National Association ("PNC"), as administrative agent and lender, providing for a three-year, $18 million Senior Secured Revolving Credit Facility, subject to a borrowing base including various reserves (the “Senior Credit Facility”).
On September 17, 2021, the North American Loan Parties executed an extension of the Credit Agreement with PNC, providing for a new five-year, $18 million senior secured revolving credit facility, subject to a borrowing base including various reserves (the “Renewed Senior Credit Facility”). The Company's obligations under the Renewed Senior Credit Facility are currently guaranteed by Perma-Pipe Canada, Inc. Each of the North American Loan Parties other than Perma-Pipe Canada, Inc. is a borrower under the Renewed Senior Credit Facility (collectively, the “Borrowers”). The Renewed Senior Credit Facility matures on September 20, 2026.
The Borrowers have used and will continue to use borrowings under the Renewed Senior Credit Facility (i) to fund future capital expenditures; (ii) to fund ongoing working capital needs; and (iii) for other corporate purposes, including potentially additional stock repurchases. Borrowings under the Renewed Senior Credit Facility bear interest at a rate equal to an alternate base rate, SOFR rate index, plus, in each case, an applicable margin. The applicable margin is based on a fixed charge coverage ratio ("FCCR") range. Interest on alternate base rate borrowings is the alternate base rate (as defined in the Renewed Senior Credit Facility) plus an applicable margin ranging from 1.00% to 1.50%, based on the FCCR in the most recently reported period. Interest on SOFR rate borrowings is the SOFR rate (as defined in the Renewed Senior Credit Facility) plus an applicable margin ranging from 2.00% to 2.50%, based on the FCCR in the most recently reported period, as well as an additional SOFR adjustment ranging from 0.10% to 0.25%, based on the term of the interest period. Additionally, the Borrowers pay a 0.25% per annum facility fee on the unused portion of the Renewed Senior Credit Facility.
Subject to certain exceptions, borrowings under the Renewed Senior Credit Facility are secured by substantially all of the North American Loan Parties’ assets. Subject to certain qualifications and exceptions, the Renewed Senior Credit Facility contains covenants that, among other things, restrict the North American Loan Parties’ ability to create liens, merge or consolidate, consummate acquisitions, make investments, dispose of assets, incur debt, and pay dividends and other distributions. In addition, the North American Loan Parties may not make capital expenditures in excess of $5.0 million annually, plus a limited carryover of unused amounts. Further, the North American Loan Parties may not make repurchases of the Company's common stock in excess of $3.0 million.
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The Renewed Senior Credit Facility also contains financial covenants requiring the North American Loan Parties to achieve a ratio of its EBITDA (as defined in the Renewed Senior Credit Facility) to the sum of scheduled cash principal payments on indebtedness for borrowed money and interest payments on the advances under the Renewed Senior Credit Facility to be not less than 1.10 to 1.00 for any five consecutive days in which the undrawn availability is less than $3.0 million or any day in which the undrawn availability is less than $2.0 m
illion. As of
January 31, 2026
, the calculated ratio was greater than 1.10 to 1.00. In order to cure any future breach of these covenants by the North American Loan Parties, the Company may repatriate cash from any of its foreign subsidiaries that are otherwise not a party to the Renewed Senior Credit Facility in an amount which, when added to the amount of the Company’s Consolidated EBITDA, would result in compliance on a pro forma basis. The Company was in compliance with respect to these covenants as of and for the year ended
January 31, 2026
.
The Renewed Senior Credit Facility contains customary events of default. If an event of default occurs and is continuing, then PNC may terminate all commitments to extend further credit and declare all amounts outstanding under the Renewed Senior Credit Facility due and payable immediately. In addition, if any of the North American Loan Parties or certain of their subsidiaries become the subject of voluntary or involuntary proceedings under any bankruptcy, insolvency or similar law, then any outstanding obligations under the Renewed Senior Credit Facility will automatically become immediately due and payable. Loans outstanding under the Renewed Senior Credit Facility will bear interest at a rate of 2.00% per annum in excess of the otherwise applicable rate (i) while a bankruptcy event of default exists or (ii) upon the lender's request, during the continuance of any other event of default.
As of
January 31, 2026
, the Company had borrowed an aggregate of $
10.7
million at a rate of
7.8%
and had $
2.7
million available under the Renewed Senior Credit Facility. As of
January 31, 2025, the Company had borrowed an aggregate of $
6.8 million at a rate of 9.0% and had $
3.7 million available under the Renewed Senior Credit Facility.
Subsequent Event — Credit Agreement. Subsequent to January 31, 2026, the Company entered into a credit agreement (the “Credit Agreement”) with JPMorgan Chase Bank, N.A., which effectively replaced the Company’s existing credit facility with PNC Bank, National Association. The Credit Agreement provides for a revolving credit commitment of up to $18.0 million, subject to customary borrowing base limitations, and matures in October 2027. Borrowings bear interest at variable rates based on SOFR or an alternate base rate, plus an applicable margin.
The Credit Agreement is intended to serve as a temporary bridge financing arrangement. The Company expects to enter into a new global credit facility with a syndicate of lenders in the coming months; however, there can be no assurance as to the timing or terms of such a transaction. Upon execution of the global credit facility, any outstanding borrowings under the Credit Agreement are expected to be transitioned into the new facility. As the Credit Agreement was executed after the balance sheet date, no amounts were outstanding under this facility as of January 31, 2026.
Credit facilities -foreign. The Company also has credit arrangements used by its Middle Eastern subsidiaries in the U.A.E., Egypt, and Saudi Arabia as further described below:
United Arab Emirates
The Company’s credit facilities in the United Arab Emirates (“U.A.E.”) consist of the following:
Active Facilities (U.A.E.)
The Company maintains a credit facility with a financial institution in the U.A.E. totaling 65.2 million U.A.E. Dirhams (“AED”) (approximately $17.8 million at
January 31, 2026). Borrowings under the facility bear interest at the Emirates Inter Bank Offered Rate (“EIBOR”) plus 3.5% per annum, subject to minimum interest rates ranging from 4.5% to 8.0% per annum, depending on the type of financing utilized. The facility is stratified by instrument type and expires at various dates through October 2026. As of January 31, 2026, the Company was in compliance with all covenants under this facility. As of
January 31, 2026, the Company had outstanding borrowings of 9.4 million AED (approximately $2.6 million), which are included in “Short-term borrowings and current maturities of long-term debt” on the Consolidated Balance Sheets. Additionally, as of
January 31, 2026, the Company had issued guarantees totaling 30.9 million AED (approximately $8.4 million). After accounting for outstanding borrowings and issued guarantees, the Company had unused availability of approximately $6.8 million under the credit facility as of
January 31, 2026.
The Company maintains a letter of credit facility with a financial institution in the U.A.E. totaling 100.0 million AED (approximately $27.2 million at January 31, 2026) and expiring in July 2026. The facility is non-interest bearing; however, the Company incurs a commission ranging from 0.8% to 1.0% per annum on the face value of issued instruments and is required to maintain cash collateral (margins) ranging from 10% to 15% depending on the type of instrument utilized. As of January 31, 2026, the Company had outstanding guarantees under this facility of 40.5 million AED (approximately $11.0 million). The remaining available balance under the facility was 59.5 million AED (approximately $16.2 million) as of January 31, 2026.
Expired Facilities (U.A.E.)
As of
January 31, 2025, the Company maintained a credit facility with a financial institution in the U.A.E. totaling 65.2 million AED (approximately $17.7 million). This facility, which expired in August 2025, bore interest at a rate of approximately 7.9% as of
January 31, 2025. Outstanding borrowings under this facility were $0.1 million at
January 31, 2025, and were included in “Short-term borrowings and current maturities of long-term debt” on the Consolidated Balance Sheets. As of
January 31, 2025, the Company had unused availability of approximately $9.0 million, which was net of issued guarantees and letters of credit.
As of
January 31, 2025, the Company maintained a revolving credit facility with a financial institution in the U.A.E. totaling 8.0 million AED (approximately $2.2 million). This facility, which expired in July 2025, bore interest at a rate of approximately 7.9% as of
January 31, 2025. Outstanding borrowings under this facility were $0.4 million at
January 31, 2025, and were included in “Short-term borrowings and current maturities of long-term debt” on the Consolidated Balance Sheets. As of
January 31, 2025, the Company had unused availability of approximately $1.6 million, which was net of issued guarantees and letters of credit.
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Egypt
In June 2021, the Company's Egyptian subsidiary entered into a credit facility with a financial institution in Egypt, which has been subsequently amended. The facility provides project-based financing and expires in December 2026. The facility has a maximum borrowing capacity of 120.0 million Egyptian Pounds ("EGP") (approximately $2.6 million) and 100.0 million EGP (approximately $2.0 million) as of January 31, 2026 and 2025, respectively. The line is secured by certain assets of the subsidiary, including accounts receivable, and contains various covenants, including a maximum leverage ratio and restrictions on incurring additional indebtedness. As of January 31, 2026, the Company was in compliance with all covenants under this facility.
As of January 31, 2026, borrowings under the Company’s credit facility in Egypt bore interest at rates ranging from 15.0% to 20.8%. The 15.0% rate relates to specific government-sponsored initiatives, while the 20.8% rate applies to our general facility limits. The Company had $0.2 million outstanding under this arrangement as of January 31, 2026, and an insignificant amount outstanding as of January 31, 2025. Both amounts are included in "Short-term borrowings and current maturities of long-term debt" on the Consolidated Balance Sheets. As of January 31, 2026 and 2025, the Company had unused availability of approximately $2.4 million and $2.0 million, respectively.
Saudi Arabia
In March 2022, the Company’s Saudi Arabian subsidiary entered into a credit arrangement with a financial institution in Saudi Arabia for a revolving line totaling 37.0 million Saudi Riyals (“SAR”) (approximately $9.9 million at January 31, 2026). The credit arrangement provides project-based financing at interest rates competitive in Saudi Arabia, is secured by certain assets of the subsidiary including accounts receivable, and expires on April 27, 2026. As of January 31, 2026, the facility bore interest at a rate of approximately 8.5%. As of January 31, 2026, the Company was in compliance with all covenants under this arrangement. The Company had outstanding borrowings of $2.9 million and $1.5 million as of January 31, 2026 and 2025, respectively, which are included in “Short-term borrowings and current maturities of long-term debt” on the Consolidated Balance Sheets. Unused availability under this arrangement was $5.3 million and $3.0 million as of January 31, 2026 and 2025, respectively, which are net of both outstanding borrowings and issued letters of guarantee.
Foreign credit facilities - overall
These credit arrangements are in the form of overdraft facilities and project financing at rates competitive in the countries in which the Company operates. The lines are secured by certain equipment, certain assets (such as accounts receivable and inventory), and a guarantee by the Company. Some credit arrangement covenants require a minimum tangible net worth to be maintained, including maintaining certain levels of intercompany subordinated debt. In addition, some of the revolving credit facilities restrict payment of dividends or undertaking of additional debt. The Company guarantees only a portion of the subsidiaries' debt, including foreign debt. As of January 31, 2026 and January 31, 2025, the amount of foreign subsidiary debt guaranteed by the Company was approximately $8.4 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 January 31, 2026. Certain of these arrangements are subject to periodic renewal; while such renewals are being processed, the Company remains in regular communication with the lenders, and the arrangements have historically continued without interruption or penalty. On January 31, 2026, interest rates were based on (i) the EIBOR plus 3.5% per annum for the U.A.E. credit arrangements, which have minimum interest rates ranging from 4.5% to 8.0% per annum; (ii) interest rates ranging from 15.0% to 20.8% for the Egypt credit arrangements; and (iii) an interest rate of 8.5% for the Saudi Arabia credit arrangement. Based on these base rates, as of January 31, 2026, the Company's interest rates ranged from 7.1% to 20.8%, with a weighted average rate of 8.1%, and the Company had facility limits totaling $57.5 million under these credit arrangements. As of January 31, 2026, $21.1 million of the facility limits were utilized to support letters of credit to guarantee amounts committed for inventory purchases and for performance guarantees. Additionally, as of January 31, 2026, the Company had borrowed $5.7 million and had an additional $29.9 million of borrowing availability remaining under the foreign revolving credit arrangements. The foreign revolving lines balances were included as a component of "Short-term borrowings and current maturities of long-term debt" on the Consolidated Balance Sheets as of January 31, 2026 and January 31, 2025.
Finance obligation - buildings and land. On April 14, 2021, the Company entered into a purchase and sale agreement (the "Purchase and Sale Agreement") to sell its land and building in Lebanon, Tennessee (the "Property"). Pursuant to the terms of the Purchase and Sale Agreement, the Company sold the Property for $10.4 million. The transaction generated net cash proceeds of $9.1 million. Concurrently with the sale of the Property, the Company paid off the approximately $0.9 million remaining on the mortgage note on the Property to its lender. The Company used the remaining proceeds to repay its borrowings under the 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 is leasing back the Property at an annual rental rate of approximately $0.8 million, subject to annual rent increases of 2.0%. Under the Lease Agreement, the Company has four consecutive options to extend the term of the lease by five years for each such option. As of January 31, 2026 and 2025, the Company had a net book value relating to this asset of $1.7 million and $1.8 million, respectively.
In accordance with ASC 842, Leases, this transaction was recorded as a failed sale and leaseback as the present value of lease payments exceeded substantially all of the fair value of the underlying asset. The Company utilized an incremental borrowing rate of 8.0% to determine the finance obligation to record for the amounts received and will continue to depreciate the assets. The current portion of the finance obligation of $0.3 million is recognized in "Short-term borrowings and current maturities of long-term debt" and the long-term portion of $8.5 million is recognized in "Long-term finance obligation" on the Consolidated Balance Sheets as of January 31, 2026. The net carrying amount of the financial liability and remaining assets will be zero at the end of the lease term.
Mortgage Note. On July 28, 2016, the Company entered into a mortgage agreement secured by the Company's manufacturing facility located in Alberta, Canada that matures on December 23, 2042. As of January 31, 2026, the remaining balance on the mortgage in Canada is approximately 5.4 million Canadian Dollars ("CAD") (approximately $4.0 million at January 31, 2026). The interest rate is variable, and was 6.3% at January 31, 2026. The principal balance is included as a component of "Short-term borrowings and current maturities of long-term debt" and "Long-term debt, less current maturities" on the Consolidated Balance Sheets and is presented net of issuance costs of $0.1 million as of January 31, 2026 and January 31, 2025.
Loan Payable to GIG. In June 2023, in connection with the formation of a joint venture with Gulf Insulation Group (“GIG”), the Company assumed a promissory note with an aggregate principal amount of approximately $2.8 million, which originally carried a maturity date of April 9, 2026. Subsequent to the fiscal year ended January 31, 2026, the Company and GIG entered into discussions to formally extend the maturity of the note. While a specific revised maturity date has not yet been finalized, both parties expect the joint venture to continue for the foreseeable future and the joint venture has continued to operate without any restrictions or disruption. Because the Company does not currently have a contractual, unconditional right to defer settlement for at least twelve months following the balance sheet date, the obligation is classified as a current liability within “Short-term borrowings and current maturities of long-term debt” at January 31, 2026, compared to its classification within “Long-term debt, less current maturities” at January 31, 2025. The Company is currently evaluating a formal amendment to the note agreement and will reclassify the debt to long-term in future periods should a formal extension beyond one year be executed.
We assess going concern uncertainty on a quarterly basis to determine if we have sufficient cash and cash equivalents on hand, working capital and access to capital through financing agreements to operate for a period of at least a year from the date of our consolidated financial statements are issued (the lookforward period). Our ability to continue as a going concern is dependent on many factors, including, among other things, our ability to comply with the covenants in our debt agreements, our ability to cure any defaults that may occur under our debt agreements, or forbearances with respect to any such defaults, and our ability to pay, retire, amend, replace or refinance our indebtedness as principal payments come due. We can offer no assurances that we will be able to successfully obtain financing.
A summary of our liquidity and relevant cash flows is presented above. We believe that our unrestricted cash, cash flows from operating activities and availability and commitments under existing financing agreements are sufficient to meet future business requirements for the look-forward period.
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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 settled approximately $40.7 million as of January 31, 2026, 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 retention amount, $1.2 million is classified in a long-term asset account.
The Company continues to actively engage in ongoing collection efforts with the customer to ensure full payment of open balances, and at various times throughout
2025
and 2024, the Company received a partial payment to settle $
0.6
million and $0.4 million of the customer's outstanding balances, respectively. Additionally, the Company has been engaged by the customer to perform additional work in
2026
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
January 31, 2026
. 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.
Stock repurchase plan
On August 29, 2024, the Company retired all remaining treasury stock previously acquired under the stock repurchase program. The retirement was recorded as a reduction to common stock based on the par value of the shares, and the excess over par value was recorded as a decrease in retained earnings in accordance with ASC 505-30, Equity - Treasury Stock.
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Critical accounting estimates and policies
The Company's significant accounting policies are discussed in the Notes to Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K. The application of certain of these policies requires significant judgments or a historical based estimation process that can affect the results of operations and financial position of the Company, as well as the related footnote disclosures. The Company bases its estimates on historical experience and other assumptions that it believes are reasonable. If actual amounts ultimately differ from previous estimates, the revisions are included in the Company's results of operations for the period in which the actual amounts become known.
Revenue recognition. In accordance with Accounting Standards Codification ("ASC") 606, Revenue from Contracts with Customers, the Company recognizes revenue over time for certain contracts when a customer obtains control of promised goods or services. Other contracts recognize revenues using periodic recognition of income. Under the input accounting method, income is recognized in each reporting period based on the status of the uncompleted contracts and the current estimates of costs to complete. The amount of revenue recognized is determined by the relationship of costs incurred to the total estimated costs of the contract. Provisions are made for estimated losses on uncompleted contracts in the period in which such losses are determined. Changes in job performance, job conditions, and estimated profitability, including those arising from contract penalty provisions and final contract settlements, may result in revisions to costs and income. Such revisions are recognized in the period in which they are determined. Claims for additional compensation due to the Company are recognized in contract revenues when realization is probable, the amount can be reliably estimated, and the amount is not subject to reversal. See Note 4 - Revenue recognition, in the Notes to Consolidated Financial Statements, for further information relating to the revenue recognition accounting methods.
Income taxes. Deferred income taxes have been provided for temporary differences arising from differences in the basis of assets and liabilities for tax and financial reporting purposes. Deferred income taxes on temporary differences have been recorded at the current tax rate. The Company assesses its deferred tax assets for realizability at each reporting period. The Company maintains a partial valuation allowance in the United States against certain deferred tax assets.
The Company recognizes a tax position in its consolidated financial statements only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more likely than not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the relevant tax authority. For further information, see Note 7 - Income taxes, in the Notes to Consolidated Financial Statements.
New accounting pronouncements. See "Accounting Pronouncements Recently Adopted" in Note 2 - Significant accounting policies, in the Notes to Consolidated Financial Statements.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
PERMA-PIPE INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page
Report of Independent Registered Public Accounting Firm (PCAOB ID: 238) 21
Consolidated Statements of Operations 23
Consolidated Statements of Comprehensive Income 24
Consolidated Balance Sheets 25
Consolidated Statements of Stockholders' Equity 26
Consolidated Statements of Cash Flows 27
Notes to Consolidated Financial Statements 28
Note 1 - Business information 28
Note 2 - Significant accounting policies 29
Note 3 - Retention 34
Note 4 - Revenue recognition 34
Note 5 - Debt 37
Note 6 - Leases 40
Note 7 - Income taxes 43
Note 8 - Retirement plans 46
Note 9 - Stock-based compensation 47
Note 10 - Interest expense 49
Note 11 - Joint venture and non-controlling interest 50
Note 12 - Segment reporting 51
Note 13 - Subsequent events 52
Schedule II - Valuation and qualifying accounts 53
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Index to Consolidated Financial Statements
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of Perma-Pipe International Holdings, Inc.
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of Perma-Pipe International Holdings, Inc. and its subsidiaries (the "Company") as of January 31, 2026 and 2025, and the related consolidated statements of operations, of comprehensive income, of stockholders’ equity and of cash flows for the years then ended, including the related notes and schedule of valuation and qualifying accounts for the years then ended appearing under Item 8 (collectively referred to as the "consolidated financial statements"). We also have audited the Company's internal control over financial reporting as of January 31, 2026, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of January 31, 2026 and 2025, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company did not maintain, in all material respects, effective internal control over financial reporting as of January 31, 2026, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO because material weaknesses in internal control over financial reporting existed as of that date related to the Company not designing and maintaining effective controls in response to the risks of material misstatement, not designing and maintaining effective controls over segregation of duties related to manual journal entries, account reconciliations and the purchases and payables process, not designing and maintaining effective controls over the review of the financial close process, including the statement of cash flows and verifying the financial statement disclosures agree to the Company's accounting records, and not designing and maintaining effective controls at operating locations in the Middle East and North Africa ("MENA").
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 annual or interim financial statements will not be prevented or detected on a timely basis. The material weaknesses referred to above are described in Management’s Annual Report on Internal Control over Financial Reporting appearing under Item 9A. We considered these material weaknesses in determining the nature, timing, and extent of audit tests applied in our audit of the 2025 consolidated financial statements, and our opinion regarding the effectiveness of the Company’s internal control over financial reporting does not affect our opinion on those consolidated financial statements.
Basis for Opinions
The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in management's report referred to above. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
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Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process 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. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
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.
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Specialty Piping Systems and Coating Revenue Recognition under the Input Method
As described in Notes 2 and 4 to the consolidated financial statements, approximately $52 million of the Company’s revenue for year ended January 31, 2026 relates to specialty piping systems and coating revenue recognized over time under the input method. Under this approach, income is recognized in each reporting period based on the status of the uncompleted contracts and the current estimates of costs to complete. The amount of revenue recognized is determined by the relationship of costs incurred to the total estimated costs of the contract. Generally, these contracts are considered a single performance obligation satisfied over time. Due to the custom nature of the goods and services, the "over time" method is the most faithful depiction of the transfer of goods and services to the customer as it measures the value of the work performed. Costs include all material, labor, and direct costs incurred to satisfy the performance obligations of the contract. Revenue recognition begins when a project’s costs are initially incurred. Estimates of total contract costs are reviewed and revised periodically as work progresses.
The principal considerations for our determination that performing procedures relating to specialty piping systems and coating revenue recognition under the input method is a critical audit matter are (i) the significant judgment by management when developing the estimated total costs to complete the contracts and (ii) a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating management’s significant assumptions related to the total costs to complete. As described in the “Opinions on the Financial Statements and Internal Control over Financial Reporting” section, a material weakness was identified that impacted this matter.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the revenue recognition process, including controls over the estimates of total costs to complete the contracts. These procedures also included, among others, for certain open contracts (i) testing management’s process for developing the estimated total costs to complete and (ii) evaluating the reasonableness of the significant assumptions used by management related to the estimated total costs to complete. Evaluating the reasonableness of the significant assumptions related to the estimated total costs to complete involved considering (i) the terms of the contracts and other documents that support those estimates; (ii) using actual costs to date to assess the reasonableness of the estimate of the remaining costs to complete the contract; and (iii) performing a retrospective review of certain open contracts as of January 31, 2025 to evaluate actual costs incurred to estimated costs.
/s/ PricewaterhouseCoopers LLP
Houston, Texas
April 16, 2026
We have served as the Company’s auditor since 2024.
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Index to Consolidated Financial Statements
PERMA-PIPE INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
Year ended January 31,
Operating expenses
Other (expense) income, net (134 ) 107
Less: Net income attributable to non-controlling interest 3,614 4,108
Net income attributable to common stock $ 17,035 $ 8,983
Weighted average common shares outstanding
Earnings per share attributable to common stock
See accompanying notes to consolidated financial statements.
23
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Index to Consolidated Financial Statements
PERMA-PIPE INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
Year ended January 31,
Other comprehensive income
Currency translation adjustments, net of tax 518 (2,646 )
Less: Comprehensive income attributable to non-controlling interest 3,614 4,108
Total comprehensive income attributable to common stock $ 17,553 $ 6,337
See accompanying Notes to Consolidated Financial Statements.
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Index to Consolidated Financial Statements
PERMA-PIPE INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
January 31,
ASSETS
Current assets
Prepaid expenses and other current assets 6,835 10,045
Long-term assets
Property, plant and equipment, net of accumulated depreciation 44,116 35,365
Operating lease right-of-use asset 13,054 8,199
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accrued compensation and payroll taxes 1,449 1,388
Commissions and management incentives payable 6,580 5,840
Short-term borrowings and current maturities of long-term debt 19,843 9,246
Operating lease liability short-term 2,196 1,071
Long-term liabilities
Long-term debt, less current maturities 4,169 3,669
Deferred compensation liabilities 1,781 1,689
Operating lease liability long-term 12,125 7,713
Commitments and contingencies (See Item 3)
Stockholders' equity
Accumulated other comprehensive loss (7,679 ) (8,197 )
Total liabilities and stockholders' equity $ 217,486 $ 165,241
See accompanying notes to consolidated financial statements.
25
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Index to Consolidated Financial Statements
PERMA-PIPE INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(In thousands, except share data)
Retirement of treasury stock (1 ) (967 ) 968 -
Stock-based compensation expense - 860 - - - 860
Amount attributable to non-controlling interest - (646 ) - - - (646 )
Foreign currency translation adjustment - - - - (2,646 ) (2,646 )
Retirement of treasury stock - - - - - -
Stock-based compensation expense - 2,537 - - - 2,537
Amount attributable to non-controlling interest - (1,081 ) - - - (1,081 )
Foreign currency translation adjustment - - - - 518 518
Treasury stock retired - (112,015 )
Shares issued, net of shares used for tax withholding 138,981 77,802
See accompanying notes to consolidated financial statements.
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Index to Consolidated Financial Statements
PERMA-PIPE INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Year ended January 31,
Operating activities
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization 4,910 3,629
Stock-based compensation expense 2,537 860
Provision on uncollectible accounts 880 4
(Gain) loss on disposal of fixed assets (16 ) 292
Changes in operating assets and liabilities
Accrued compensation and payroll taxes 772 1,530
Income tax receivable 15 -
Prepaid expenses and other current assets 3,247 (447 )
Unbilled accounts receivable (9,943 ) (2,987 )
Other assets and liabilities (85 ) (2,419 )
Net cash provided by operating activities 9,169 13,928
Investing activities
Proceeds from sales of property and equipment 17 27
Net cash used in investing activities (10,423 ) (2,848 )
Financing activities
Payments of debt on revolving lines (84,210 ) (76,540 )
Payments of debt on mortgage (222 ) (360 )
Payments of principal on finance obligation (229 ) (187 )
Increase (decrease) in drafts payable (17 ) 46
Payments on finance lease obligations, net (84 ) (31 )
Net cash provided by (used in) financing activities 6,586 (907 )
Net increase in cash, cash equivalents and restricted cash 5,178 9,877
Cash, cash equivalents and restricted cash - beginning of period 17,117 7,240
Cash, cash equivalents and restricted cash - end of period $ 22,295 $ 17,117
Supplemental cash flow information
Fixed assets acquired under financing leases - non-cash 711 -
Fixed assets acquired - non-cash 257 21
See accompanying notes to consolidated financial statements.
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Index to Consolidated Financial Statements
PERMA-PIPE INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED JANUARY 31, 2026 AND 2025
(Tabular amounts in thousands, except per share data, or unless otherwise specified)
Note 1 - Business information
Perma-Pipe International Holdings, Inc. ("PPIH", the "Company", "we", or "our") was incorporated in Delaware on October 12,1993. The Company is engaged in the manufacture and sale of products in one distinct segment: Piping Systems.
Fiscal year. The Company's fiscal year ends on January 31. Years, results and balances described as 2025 and 2024 are for the fiscal years ended January 31, 2026 and 2025, respectively.
Nature of business. The Company engineers, designs, manufactures and sells specialty piping systems and leak detection systems. Specialty piping systems include: (i) insulated and jacketed district heating and cooling ("DHC") piping systems for efficient energy distribution from central energy plants to multiple locations, (ii) primary and secondary containment piping systems for transporting chemicals, hazardous fluids and petroleum products, and (iii) the coating and/or insulation of oil and gas gathering and transmission pipelines, and (iv) liquid and powder based anti-corrosion coatings applied both to the external and internal surfaces of steel pipe, including shapes such as bends, reducers, tees, and other spools/fittings used in pipelines for the transportation of oil and gas products and potable water. The Company's leak detection systems are sold with its piping systems or on a stand-alone basis, to monitor areas where fluid intrusion may contaminate the environment, endanger personal safety, cause a fire hazard, impair essential services or damage equipment or property.
Geographic information. Net sales are attributed to geographic areas based on the location of the facility from which the product is shipped. Sales originating from international operations represented 71.7% and 66.9% of total net sales in 2025 and 2024, respectively. Long-lived assets, which consist of property, plant, and equipment, are attributed to geographic areas based on their physical location.
Net sales
Property, plant and equipment, net of accumulated depreciation
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Index to Consolidated Financial Statements
Note 2 - Significant accounting policies
Principles of Consolidation and Basis of Presentation. The consolidated financial statements include the accounts of the Company and its subsidiaries. This includes all wholly owned subsidiaries as well as certain joint ventures in which the Company has a controlling financial interest. All intercompany balances and transactions have been eliminated. Certain amounts in prior periods have been reclassified to conform to the current year presentation.
Use of estimates. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Revenue recognition. In accordance with Accounting Standards Codification ("ASC") 606,Revenue from Contracts with Customers, the Company recognizes revenue for certain contracts when a customer obtains control of promised goods or services. Other contracts recognize revenues using periodic recognition of income. For these contracts, the Company uses the "over time" accounting method. Under the input approach, income is recognized in each reporting period based on the status of the uncompleted contracts and the current estimates of costs to complete. The amount of revenue recognized is determined by the relationship of costs incurred to the total estimated costs of the contract. Provisions are made for estimated losses on uncompleted contracts in the period in which such losses are determined. Changes in job performance, job conditions, and estimated profitability, including those arising from contract penalty provisions and final contract settlements, may result in revisions to costs and income. Such revisions are recognized in the period in which they are determined. Claims for additional compensation due to the Company are recognized in contract revenues when realization is probable, the amount can be reliably estimated, and the amount is not subject to reversal. Under the output method, revenue is recognized based on the direct measurement of the value of goods or services transferred to date relative to the remaining goods promised under the contract. See Note 4 - Revenue recognition, in the Notes to Consolidated Financial Statements, for further information relating to input and output accounting methods.
Shipping and handling. Shipping and handling costs are included in cost of sales, and the amounts invoiced to customers relating to shipping and handling are included in net sales.
Operating cycle. The length of contracts varies but is typically less than one year. The Company includes in current assets and liabilities amounts realizable and payable in the normal course of contract completion unless completion of such contracts extends significantly beyond one year.
Consolidation. The consolidated financial statements include the accounts of the Company and its subsidiaries. This includes all wholly owned subsidiaries as well as certain joint ventures in which the Company has a controlling financial interest. All intercompany balances and transactions have been eliminated.
Translation of foreign currency. Assets and liabilities of consolidated foreign subsidiaries are translated into U.S. dollars at exchange rates in effect at year-end. Revenues and expenses are translated at average exchange rates prevailing during the year. The resulting translation adjustments are included in stockholders' equity as part of accumulated other comprehensive loss. Gains or losses on foreign currency transactions and the related tax effects are reflected in net income. The aggregate foreign exchange transaction loss recognized in the income statement was $0.3 million in both 2025 and 2024. Additionally, translation adjustments attributable to intercompany transactions, such as loans and receivables, are included in stockholders' equity as part of accumulated other comprehensive loss.
Contingencies. The Company is subject to various legal proceedings and claims that arise in the ordinary course of business, including those involving environmental, tax, product liability and general liability claims. The Company accrues for such liabilities when it is probable that future costs will be incurred, and the amount can be reasonably estimated. Such accruals are based on developments to date, the Company's estimates of the outcomes of these matters, and its experience in contesting, litigating and settling other similar matters. The Company does not currently anticipate the amount of any ultimate liability with respect to these matters will materially affect the Company's financial position, liquidity, or future operations.
Cash and cash equivalents. All highly liquid investments with a maturity of three months or less when purchased are considered to be cash equivalents. Cash and cash equivalents was $18.7 million and $15.7 million as of January 31, 2026 and 2025, respectively. On January 31, 2026, $0.2 million was held in the United States and $18.5 million was held by foreign subsidiaries. On January 31, 2025, $0.3 million was held in the United States and $15.4 million was held by foreign subsidiaries.
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Index to Consolidated Financial Statements
Restricted cash. There was no restricted cash held in the United States on January 31, 2026 or 2025. Restricted cash held by foreign subsidiaries was $3.6 million and $1.4 million as of January 31, 2026 and 2025, respectively. Restricted cash held by foreign subsidiaries related to fixed deposits that also serve as security deposits and guarantees.
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 doubtful accounts. 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.
Concentration of credit risk. The Company maintains its U.S. cash in bank deposit accounts at financial institutions that are insured by the Federal Deposit Insurance Corporation ("FDIC"). Cash balances are below FDIC limits. The Company has not experienced any losses in such accounts. The Company's foreign cash is held in accounts at multiple institutions in the various countries in which the Company operates, limiting the concentration of risk internationally. The Company maintains a broad and diversified customer base, operating throughout the United States, the Middle East, and Canada.
As of January 31, 2026, one customer accounted for approximately 23% of the Company’s total accounts receivable. For the year ended January 31, 2026, this same customer represented approximately 12% of total net sales. As of January 31, 2025, and for the year then ended, no single customer accounted for more than 10% of total accounts receivable or net sales. The Company monitors the creditworthiness of this customer on an ongoing basis. As of January 31, 2026, no allowance for credit losses was deemed necessary as the Company expects to collect the full carrying value of the outstanding balance.
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Accumulated other comprehensive loss. Accumulated other comprehensive loss represents the change in equity from non-owner transactions and consists of foreign currency translation.
Currency translation adjustments (2,971 ) (2,971 )
Tax effect of currency translation adjustments 325 325
Currency translation adjustments 612 612
Tax effect of currency translation adjustments (94 ) (94 )
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.
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.
Long-lived assets. Property, plant and equipment are stated at cost. Interest is capitalized in connection with the construction of facilities and amortized over the estimated useful life of the asset. Long-lived assets are reviewed for possible impairment whenever events indicate that the carrying amount of such assets may not be recoverable. If such a review indicates impairment, the carrying amount of such assets is reduced to an estimated fair value.
Depreciation is computed using the straight-line method over the estimated useful lives of assets, as presented in the following table. Leasehold improvements are depreciated over the remaining life of the lease or its useful life, whichever is shorter. Amortization of finance lease assets is included in depreciation. Depreciation expense was approximately $3.2 million and $3.6 million in the years ended January 31, 2026 and 2025, respectively.
Furniture, office equipment and computer systems 3 - 7 3,417 3,218
Property, plant and equipment, net of accumulated depreciation $ 44,116 $ 35,365
Impairment of long-lived assets. The Company's assessment of long-lived assets and other identifiable intangibles is based upon factors that market participants would use in accordance with the accounting guidance for the fair value measurement of assets. At January 31, 2026, the Company performed an assessment to determine whether there were any triggering events that may have occurred which could indicate that the carrying value of the Company's long-lived assets are not recoverable. Based on this assessment, the Company did not identify any triggering events that would indicate that the carrying amounts may not be recoverable with respect to long-lived assets. Accordingly, there was no impairment charge for the year ended January 31, 2026.
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Goodwill. The purchase price of an acquired company is allocated between intangible assets and the net tangible assets of the acquired business with the residual of the purchase price recorded as goodwill. All identifiable goodwill as of January 31, 2026 and 2025, is attributable to the purchase of the remaining 50% interest in Perma-Pipe Canada, Ltd., which occurred in 2016.
The following table provides a reconciliation of changes in the carrying amount of goodwill:
Balance at beginning of year $ 2,057 $ 2,222