Perma-Pipe International Holdings Inc

Previous wording

Net sales were $ 113.4 million and $ 110.5 million in the nine months ended October 31, 2024 and 2023, respectively. The increase of $2.9 million, or 3% , was a result of increased sales volumes in the Middle East.

Current wording

Net sales were $ 46.7 million and $ 34.3 million in the three months ended April 30, 2025 and 2024, respectively. The increase of $12.4 million, or 36%, was a result of increased sales volumes in the Middle East and in North America.

Previous wording

Gross profit was $14.1 million, or 34% of net sales, and $13.2 million, or 29% of net sales, in the three months ended October 31, 2024 and 2023, respectively. The increase of $0.9 million, was driven primarily by better margins due to product mix.

Current wording

Gross profit was $16.7 million, or 36% of net sales, and $10.5 million, or 31% of net sales, in the three months ended April 30, 2025 and 2024, respectively. The increase of $6.2 million, was driven primarily by increased volume of activity and better margins due to product mix.

Previous wording

General and administrative expenses were $7.3 million and $5.7 million in the three months ended October 31, 2024 and 2023, respectively. The increase of $1.6 million, was due to higher payroll expenses and professional fees in the quarter.

Current wording

General and administrative expenses were $7.7 million and $6.1 million in the three months ended April 30, 2025 and 2024, respectively. The increase of $1.6 million, was due to higher payroll expenses and professional fees in the quarter.

Previous wording

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

Current wording

Net interest expense remained consistent and was $0.4 million and $0.5 million in the three months ended April 30, 2025 and 2024, respectively.

Previous wording

The Company's ETR was 32% and 31% in the three months ended October 31, 2024 and 2023, respectively. The change in the ETR is due to the ability to recognize tax benefits on losses in the United States in the current year whereas the prior year had a full valuation allowance and changes to the mix of income and loss in various jurisdictions.

Current wording

The Company's ETR was 21% and 30% in the three months ended April 30, 2025 and 2024, respectively. The change in the ETR is due to the mix of income and loss in various jurisdictions.

Previous wording

Net income attributable to common stock was $2.5 million and $1.9 million in thethree months ended October 31, 2024 and 2023, respectively. The increaseof $0.6 million, was mainly due to better project execution in the quarter.

Current wording

Net income attributable to common stock was $5.0 million and $1.4 million in thethree months ended April 30, 2025 and 2024, respectively. The increaseof $3.6 million, was mainly due to increased sales volumes and better project execution in the quarter.

Previous wording

Cash and cash equivalents as of October 31, 2024 were $13.3 million compared to $5.8 million on January 31, 2024. On October 31, 2024, $0.9 million was held in the United States, and $12.4 million was held at the Company's foreign subsidiaries. The Company's working capital was $50.6 million on October 31, 2024 compared to $41.1 million on January 31, 2024. Of the working capital components, accounts receivable decreased by $6.7 million and cash and cash equivalents increased by $7.5 million as the result of the movements discussed below. As of October 31, 2024, the Company had $3.5 million of borrowing capacity under the Renewed Senior Credit Facility in North America and $8.3 million of borrowing capacity under its foreign revolving credit agreements. The Company had $7.8 million borrowed under the Renewed Senior Credit Facility and $3.2 million borrowed under its foreign revolving credit agreements at October 31, 2024.

Current wording

Cash and cash equivalents as of April 30, 2025 were $18.8 million compared to $15.7 million on January 31, 2025. On April 30, 2025, $0.7 million was held in the United States, and $18.1 million was held at the Company's foreign subsidiaries. The Company's working capital was $58.9 million on April 30, 2025 compared to $54.7 million on January 31, 2025. Of the working capital components, accounts receivable increased by $3.9 million and cash and cash equivalents increased by $3.1 million as the result of the movements discussed below. As of April 30, 2025, the Company had $5.0 million of borrowing capacity under the Renewed Senior Credit Facility in North America and $14.5 million of borrowing capacity under its foreign revolving credit agreements. The Company had $8.5 million borrowed under the Renewed Senior Credit Facility and $6.3 million borrowed under its foreign revolving credit agreements at April 30, 2025.

Previous wording

Net cash provided by operating activities was $7.9 million and $7.6 million in the nine months ended October 31, 2024 and 2023, respectively. Theincrease of $0.3 million was primarily attributable to changes in accounts receivable and costs and estimated earnings in excess of billings on uncompleted contracts, partially offset by changes to accounts payable.

Current wording

Net cash provided by (used in) operating activities was $0.7 million and $(0.1) million in the three months ended April 30, 2025 and 2024, respectively. Theincrease of $0.8 million was primarily attributable to changes in inventories, customer deposits, prepaid expenses and other current assets and net income, partially offset by changes to accounts receivable and unbilled accounts receivable.

Previous wording

Net cash used in investing activities in thenine months ended October 31, 2024 and 2023 was $(1.6) million and $(8.2) million, respectively. Thedecrease of $(6.6) million was due primarily to fewer capital expenditures in the United States and Canada.

Current wording

Net cash used in investing activities in thethree months ended April 30, 2025 and 2024 was $0.9 million and $0.6 million, respectively. Theincrease of $0.3 million was primarily due to a greater amount of capital expenditures in the quarter.

Previous wording

Net cash provided by financing activities in thenine months ended October 31, 2024 and 2023 remained consistent and was $1.3 million and $1.2 million, respectively. Debt totaled $27.0 million and $25.7 million as of October 31, 2024 and January 31, 2024, respectively. See Note 10 - Debt, in the Notes to Consolidated Financial Statements for further discussion relating to this topic.

Current wording

Net cash provided by financing activities in thethree months ended April 30, 2025 and 2024 was $3.2 million and $2.6 million, respectively. Debt totaled $27.9 million and $24.5 million as of April 30, 2025 and January 31, 2025, respectively. See Note 10 - Debt, in the Notes to Consolidated Financial Statements for further discussion relating to this topic.

Previous wording

As of October 31, 2024, the Company had borrowed an aggregate of$7.8 million at a rate of 9.5% and had $3.5 million available under the Renewed Senior Credit Facility. As of January 31, 2024, the Company had borrowed an aggregate of $5.5 million and had $4.0 million available under the Renewed Senior Credit Facility.

Current wording

As of April 30, 2025, the Company had borrowed an aggregate of$8.5 million at a rate of 9.0% and had $5.0 million available under the Renewed Senior Credit Facility. As of January 31, 2025, the Company had borrowed an aggregate of $6.8 million and had $3.7 million available under the Renewed Senior Credit Facility.

Previous wording

The Company has a revolving line for 8.0 million U.A.E. Dirhams (approximately $ 2.2 million at October 31, 2024) from a bank in the U.A.E. As of October 31, 2024, the facility has an interest rate of approximately 7.7% and expired in July 2024. The facility was subsequently renewed in November 2024 with substantially the same terms and conditions and expires in July 2025. The Company had borrowed an aggregate of $1.1 million as of October 31, 2024 and $0.2 million as of January 31, 2024, respectively, and is presented as a component of current maturities of long-term debt in the Company's consolidated balance sheets. As of October 31, 2024 and January 31, 2024, the Company had unused borrowing availability of approximately $1.0 million and $1.9 million, respectively.

Current wording

The Company has a revolving line for 8.0 million U.A.E. Dirhams (approximately $ 2.2 million at April 30, 2025) from a bank in the U.A.E. As of April 30, 2025, the facility has an interest rate of approximately 7.5% and expires in July 2025. The Company had borrowed an aggregate of $0.4 million as of April 30, 2025 and January 31, 2025 , and is presented as a component of current maturities of long-term debt in the Company's consolidated balance sheets. As of April 30, 2025 and January 31, 2025, the Company had unused borrowing availability of approximately $1.7 million and $1.6 million, respectively.

Previous wording

The Company has a revolving line for 20.5 million U.A.E. Dirhams (approximately $ 5.6 million at October 31, 2024) from a bank in the U.A.E. As of October 31, 2024, the facility has an interest rate of approximately 8.6% and expired in August 2024. The facility was subsequently renewed in November 2024 with substantially the same terms and conditions, except for the revolving line, which decreased to 17.5 million U.A.E. Dirhams (approximately $4.8 million at October 31, 2024) and expires in August 2025. The reduction in the revolving line was due primarily to the removal of 2 million U.A.E. Dirhams (approximately $0.5 million) in connection with a capital expenditure component that is no longer applicable to the revolving credit facility and, to a lesser extent, 1 million U.A.E. Dirhams (approximately $0.3 million) due to a decrease in revolver capacity. The Company had borrowed an aggregate of $0.7 million as of October 31, 2024 and $0.1 million as of January 31, 2024, respectively, and is presented as a component of current maturities of long-term debt in the Company's consolidated balance sheets. The Company had unused borrowing availability of approximately $1.0 million as of October 31, 2024 and January 31, 2024, respectively.

Current wording

The Company has a revolving line for 65.2 million U.A.E. Dirhams (approximately $ 17.7 million at April 30, 2025) from a bank in the U.A.E. As of April 30, 2025, the facility has an interest rate of approximately 7.5% and expires in August 2025. The Company had no outstanding balance as of April 30, 2025 and $0.1 million as of January 31, 2025, respectively, and is presented as a component of current maturities of long-term debt in the Company's consolidated balance sheets. The Company had unused borrowing availability of approximately $8.0 million and $9.0 million as of April 30, 2025 and January 31, 2025, respectively.

Previous wording

In June 2021, and as renewed or amended subsequently thereafter, the Company's Egyptian subsidiary entered into a credit arrangement with a bank in Egypt for a revolving line of 100.0 million Egyptian Pounds (approximately $ 2.0 million at October 31, 2024). This credit arrangement is in the form of project financing, for which the line is secured by certain assets (such as accounts receivable) of the Company's Egyptian subsidiary. Among other covenants, the credit arrangement established a maximum leverage ratio allowable and restricted the Company's Egyptian subsidiary's ability to undertake any additional debt. As of October 31, 2024, the facility has an interest rate of approximately 20.8% and expired in November 2024. The Company has started the process to renew and extend this credit agreement and the credit facility has continued without interruption or penalty. As of October 31, 2024, the Company had an immaterial amount outstanding with respect to this credit arrangement, and approximately $1.4 million outstanding at January 31, 2024, which is presented as a component of current maturities of long-term debt in the Company's consolidated balance sheets. Further, as of October 31, 2024 and January 31, 2024, the Company had unused borrowing capacity of $2.0 million and $3.2 million, respectively.

Current wording

In June 2021, and as renewed or amended subsequently thereafter, the Company's Egyptian subsidiary entered into a credit arrangement with a bank in Egypt for a revolving line of 100.0 million Egyptian Pounds (approximately $ 2.0 million at April 30, 2025). This credit arrangement is in the form of project financing, for which the line is secured by certain assets (such as accounts receivable) of the Company's Egyptian subsidiary. Among other covenants, the credit arrangement established a maximum leverage ratio allowable and restricted the Company's Egyptian subsidiary's ability to undertake any additional debt. As of April 30, 2025, the facility has an interest rate of approximately 20.8% and expires in November 2025. As of April 30, 2025 and January 31, 2025, the Company had an immaterial amount outstanding, which is presented as a component of current maturities of long-term debt in the Company's consolidated balance sheets. Further, as of April 30, 2025 and January 31, 2025, the Company had approximately $2.0 million of unused borrowing capacity with respect to this credit arrangement.

Previous wording

In December 2021, the Company entered into a credit arrangement for project financing with a bank in Egypt for 28.2 million Egyptian Pounds. As this project has progressed and the Company has made collections, the facility has decreased to a current amount of 2.1 million Egyptian Pounds (approximately $0.1 million at October 31, 2024). This credit arrangement is in the form of project financing at rates competitive in Egypt. The line is secured by the contract for a project being financed by the Company's Egyptian subsidiary. The facility has an interest rate of approximately 11.0% and, as of November 2022, is no longer available for borrowings by the Company. The facility will expire in connection with final customer balance collections and the completion of the project. The Company had approximately $0.1 million outstanding as of October 31, 2024 and January 31, 2024, respectively, and is presented as a component of current maturities of long-term debt in the Company's consolidated balance sheets.

Current wording

In December 2021, the Company entered into a credit arrangement for project financing with a bank in Egypt for 28.2 million Egyptian Pounds. As this project has progressed and the Company has received collections, the facility has decreased to a current amount of 2.1 million Egyptian Pounds (approximately $0.1 million at April 30, 2025). This credit arrangement is in the form of project financing at rates competitive in Egypt. The line is secured by the contract for a project being financed by the Company's Egyptian subsidiary. The facility has an interest rate of approximately 15.0% and, as of November 2022, is no longer available for borrowings by the Company. The facility will expire in connection with final customer balance collections and the completion of the project. The Company had no outstanding balance as of April 30, 2025 and $0.1 million as of January 31, 2025, respectively, and is presented as a component of current maturities of long-term debt in the Company's consolidated balance sheets.

Previous wording

In March 2022, the Company's Saudi Arabian subsidiary entered into a credit arrangement with a bank in Saudi Arabia for a revolving line of 37.0 million Saudi Riyals (approximately $ 9.9 million at October 31, 2024). This credit arrangement is in the form of project financing at rates competitive in Saudi Arabia. The line is secured by certain assets (such as accounts receivable) of the Company's Saudi Arabian subsidiary. The facility was renewed in May 2024 with substantially the same terms and conditions and expires in May 2025. As of October 31, 2024, the facility has an interest rate of approximately 9.5%. The Company had borrowed an aggregate of $1.3 million and $3.2 million as of October 31, 2024 and January 31, 2024, respectively, and is presented as a component of current maturities of long-term debt in the Company's consolidated balance sheets. The unused borrowing availability attributable to this credit arrangement at October 31, 2024 and January 31, 2024, was $3.3 million and $6.1 million, respectively.

Current wording

In March 2022, the Company's Saudi Arabian subsidiary entered into a credit arrangement with a bank in Saudi Arabia for a revolving line of 37.0 million Saudi Riyals (approximately $ 9.9 million at April 30, 2025). This credit arrangement is in the form of project financing at rates competitive in Saudi Arabia. The line is secured by certain assets (such as accounts receivable) of the Company's Saudi Arabian subsidiary, and expired in May 2025. The Company is in the process of renewing this credit arrangement with substantially the same terms and conditions and is in regular communication with the bank throughout this process ensuring the facility continues without interruption or penalty. As of April 30, 2025, the facility has an interest rate of approximately 8.9%. The Company had borrowed an aggregate of $3.1 million and $1.5 million as of April 30, 2025 and January 31, 2025, respectively, and is presented as a component of current maturities of long-term debt in the Company's consolidated balance sheets. The unused borrowing availability attributable to this credit arrangement at April 30, 2025 and January 31, 2025, was $2.3 million and $3.0 million, respectively.

Previous wording

These credit arrangements are in the form of overdraft facilities and project financing at rates competitive in the countries in which the Company operates. The lines are secured by certain equipment, certain assets (such as accounts receivable and inventory), and in some cases, a guarantee by the Company. Some credit arrangement covenants require a minimum tangible net worth to be maintained, including maintaining certain levels of intercompany subordinated debt. In addition, some of the revolving credit facilities restrict payment of dividends or undertaking of additional debt. The Company guarantees only a portion of the subsidiaries' debt, including foreign debt. The amount of foreign subsidiary debt guaranteed by the Company was approxim ately $1.1 million and $0.1 million at October 31, 2024 and January 31, 2024, respectively.

Current wording

These credit arrangements are in the form of overdraft facilities and project financing at rates competitive in the countries in which the Company operates. The lines are secured by certain equipment, certain assets (such as accounts receivable and inventory), and in some cases, a guarantee by the Company. Some credit arrangement covenants require a minimum tangible net worth to be maintained, including maintaining certain levels of intercompany subordinated debt. In addition, some of the revolving credit facilities restrict payment of dividends or undertaking of additional debt. The Company guarantees only a portion of the subsidiaries' debt, including foreign debt. As of April 30, 2025 and January 31, 2025, the amount of foreign subsidiary debt guaranteed by the Company was approxim ately $10.0 million.

Previous wording

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 October 31, 2024, with the exception of an arrangement that has expired and has not yet been renewed. Although a certain arrangement has expired and the borrowings could be required to be repaid immediately by the bank, the Company is in regular communication with the bank throughout the renewal process and the arrangement has continued without interruption or penalty. On October 31, 2024, interest rates were based on (i) the Emirates Inter Bank Offered Rate plus 3.0% to 3.5% per annum for the U.A.E. credit arrangements, two of which have a minimum interest rate of 4.5% per annum; (ii) either the Central Bank of Egypt corporate loan rate plus 1.5% to 3.5% per annum or the stated interest rate in the agreements for the Egypt credit arrangements; and (iii) the Saudi Inter-Bank Offered Rate plus 3.5% for the Saudi Arabia credit arrangement. Based on these base rates, as of October 31, 2024, the Company's interest rates ranged from 7.7% to 20.8%, with a weighted average rate of 10.6%, and the Company had facility limits totaling$19.7 million under these credit arrangements. As of October 31, 2024, $11.0 million o f availability was used to support letters of credit to guarantee amounts committed for inventory purchases and for performance guarantees. Additionally, as of October 31, 2024, the Company had borrow ed $3.2 million and had an additional$8.3 million ofborrowing remaining available under the foreign revolving credit arrangements. The foreign revolving lines balances were included as a component of current maturities of long-term debt in the Company's consolidated balance sheets as of October 31, 2024 and January 31, 2024.

Current wording

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 April 30, 2025, with the exception of an arrangement that has expired and has not yet been renewed. Although a certain arrangement has expired and the borrowings could be required to be repaid immediately by the bank, the Company is in regular communication with the bank throughout the renewal process and the arrangement has continued without interruption or penalty. On April 30, 2025, interest rates were based on (i) the Emirates Inter Bank Offered Rate plus 3.0% to 3.5% per annum for the U.A.E. credit arrangements, two of which have a minimum interest rate of 4.5% per annum; (ii) either the Central Bank of Egypt corporate loan rate plus 1.5% to 3.5% per annum or the stated interest rate in the agreements for the Egypt credit arrangements; and (iii) the Saudi Inter-Bank Offered Rate plus 3.5% for the Saudi Arabia credit arrangement. Based on these base rates, as of April 30, 2025, the Company's interest rates ranged from 7.5% to 20.8%, with a weighted average rate of 8.4%, and the Company had facility limits totaling$31.8 million under these credit arrangements. As of April 30, 2025, $16.6 million o f availability was used to support letters of credit to guarantee amounts committed for inventory purchases and for performance guarantees. Additionally, as of April 30, 2025, the Company had borrow ed $6.3 million and had an additional$14.5 million ofborrowing remaining available under the foreign revolving credit arrangements. The foreign revolving lines balances were included as a component of current maturities of long-term debt in the Company's consolidated balance sheets as of April 30, 2025 and January 31, 2025.

Previous wording

In June 2023, the Company assumed a promissory note of approximately $2.8 million in connection with the formation of the joint venture with Gulf Insulation Group (see Note 16). In accordance with the promissory note, all principal is due and payable on the maturity date of April 9, 2026, with the option to prepay, in whole or in part, at any time prior to the maturity date, without premium or penalty.

Current wording

In June 2023, the Company assumed a promissory note of approximately $2.8 million in connection with the formation of the joint venture with Gulf Insulation Group (see Note 15). In accordance with the promissory note, all principal is due and payable on the maturity date of April 9, 2026, with the option to prepay, in whole or in part, at any time prior to the maturity date, without premium or penalty. This amount is presented as a component of current liabilities in the Company's consolidated balance sheets.

Previous wording

***Mortgages.***On July 28, 2016, the Company entered into a mortgage agreement secured by the Company's manufacturing facility located in Alberta, Canada that matures on December 23, 2042. As of October 31, 2024, the remaining balance on the mortgage in Canada is approximately CAD 5.8 million (approximately $ 4.2 million at October 31, 2024). The interest rate is variable, and was 7.8% at October 31, 2024. The principal balance is included as a component of long-term debt, less current maturities in the Company's consolidated balance sheets and is presented net of issuance costs of $0.1 million as of October 31, 2024 and January 31, 2024, respectively.

Current wording

***Mortgages.***On July 28, 2016, the Company entered into a mortgage agreement secured by the Company's manufacturing facility located in Alberta, Canada that matures on December 23, 2042. As of April 30, 2025, the remaining balance on the mortgage in Canada is approximately CAD 5.7 million (approximately $ 4.1 million at April 30, 2025). The interest rate is variable, and was 6.8% at April 30, 2025. The principal balance is included as a component of long-term debt, less current maturities in the Company's consolidated balance sheets and is presented net of issuance costs of $0.1 million as of April 30, 2025 and January 31, 2025.

Previous wording

In accordance with ASC 842,Leases, this transaction was recorded as a failed sale and leaseback as the present value of lease payments exceeded substantially the fair value of the underlying assets. The Company utilized an incremental borrowing rate of 8.0% to determine the finance obligation to record for the amounts received and will continue to depreciate the assets. The current portion of the finance obligation of $0.2 million is recognized in current maturities of long-term debt and the long-term portion of $8.9 million is recognized in long-term finance obligation on the Company's consolidated balance sheets as of October 31, 2024 . The net carrying amount of the financial liability and remaining assets will be zero at the end of the lease term.

Current wording

In accordance with ASC 842,Leases, this transaction was recorded as a failed sale and leaseback as the present value of lease payments exceeded substantially the fair value of the underlying assets. The Company utilized an incremental borrowing rate of 8.0% to determine the finance obligation to record for the amounts received and will continue to depreciate the assets. The current portion of the finance obligation of $0.2 million is recognized in current maturities of long-term debt and the long-term portion of $8.7 million is recognized in long-term finance obligation on the Company's consolidated balance sheets as of April 30, 2025 . The net carrying amount of the financial liability and remaining assets will be zero at the end of the lease term.

Previous wording

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

Current wording

In 2015, the Company completed a project in the Middle East with billings in the aggregate amount of approximately $41.9 million. The system has not yet been commissioned by the customer. Nevertheless, the Company has received approximately $ 40.7 million as of April 30, 2025, with a remaining balance due in the amount of $ 1.2 million, all of which pertains to retention clauses within the agreements with the Company's customer, and which become payable by the customer when this project is fully tested and commissioned. Of this amount, $ 1.2 million is classified in other long-term assets on the Company's consolidated balance sheets.

Previous wording

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

Current wording

The Company has been actively involved in ongoing efforts to collect this outstanding balance. The Company continues to engage with the customer to ensure full payment of the open balances, and during the three months ended April 30, 2025, and at various times throughout 2024, the Company received partial payments to settle $ 0.6 million and $ 0.3 million, respectively, of the customer's outstanding balances. Further, the Company has been engaged by the customer to perform additional work in 2024 under customary trade terms that support the continued cooperation between the Company and the customer. As a result, the Company did not reserve any allowance against the remaining outstanding balances as of April 30, 2025. However, if the Company's efforts to collect on this account are not successful, the Company may recognize an allowance for all, or substantially all, of any such then uncollected amounts.