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What changed in Perma-Pipe International Holdings, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Perma-Pipe International Holdings, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+136 added−157 removedSource: 10-K (2024-04-26) vs 10-K (2023-04-27)

Top changes in Perma-Pipe International Holdings, Inc.'s 2024 10-K

136 paragraphs added · 157 removed · 111 edited across 5 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeThese 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. 2 Table of Contents Suppliers.
Biggest changeThe 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.
Specialty piping systems include: (i) insulated and jacketed district heating and cooling piping systems for efficient energy distribution from central energy plants to multiple locations, (ii) primary and secondary containment piping systems for transporting chemicals, hazardous fluids and petroleum products, (iii) the coating and/or insulation of oil and gas gathering and transmission pipelines, and (iv) liquid and powder based anti-corrosion coatings applied both to the external and internal surfaces of steel pipe, including shapes like bends, reducers, tees, and other spools/fittings used in pipelines for the transportation of oil and gas products and potable water.
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.
These impacts are expected to continue throughout 2023 , 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.
These impacts are expected to continue throughout 2024 , 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's fiscal year ends on January 31. Years, results and balances described as 2023 , 2022 and 2021 are for the fiscal year ending January 31, 2024 and the fiscal years ended January 31, 2023 and 2022 , respectively. PRODUCTS AND SERVICES The Company engineers, designs, manufactures and sells specialty piping systems and leak detection systems.
The Company's fiscal year ends on January 31. Years, results and balances described as 2024 , 2023 and 2022 are for the fiscal year ending January 31, 2025 and the fiscal years ended January 31, 2024 and 2023 , respectively. PRODUCTS AND SERVICES The Company engineers, designs, manufactures and sells specialty piping systems and leak detection systems.
The Company considers its relationship with its employees to be good. 3 Table of Contents INFORMATION ABOUT OUR EXECUTIVE OFFICERS The following table sets forth information regarding the executive officers of the Company as of April 27, 2023 : Executive officer of the Name Offices and Positions; Age Company since David J.
The Company considers its relationship with its employees to be good. 3 Table of Contents INFORMATION ABOUT OUR EXECUTIVE OFFICERS The following table sets forth information regarding the executive officers of the Company as of April 26, 2024 : Executive officer of the Name Offices and Positions; Age Company since David J.
For the years ended January 31, 2023 and 2022 , no one customer accounted for greater than 10% of the Company's consolidated net sales. As of January 31, 2023 , no one customer accounted for greater than 10% of accounts receivable. As of January 31, 2022 , one customer accounted for 11.9% of accounts receivable. Backlog.
For the years ended January 31, 2024 and 2023 , no one customer accounted for greater than 10% of the Company's consolidated net sales. As of January 31, 2024 and 2023, no one customer accounted for greater than 10% of accounts receivable. Backlog.
Perma-Pipe Middle East LLC Niles, IL Abu Dhabi, United Arab Emirates New Iberia, LA Perma-Pipe Middle East FZC Lebanon, TN Fujairah, United Arab Emirates Perma-Pipe Canada, Ltd. Perma-Pipe Saudi Arabia, LLC Camrose, Alberta, Canada Dammam, Kingdom of Saudi Arabia Perma-Pipe Egypt for Metal Fabrication and Insulation Industries (Perma-Pipe Egypt) S.A.E. Perma-Pipe India Pvt.
Perma-Pipe Middle East LLC Rolling Meadows, IL Abu Dhabi, United Arab Emirates New Iberia, LA Perma-Pipe Middle East FZC Lebanon, TN Fujairah, United Arab Emirates Perma-Pipe Canada, Ltd. Perma-Pipe Saudi Arabia, LLC Camrose, Alberta, Canada Perma-Pipe Gulf Arabia, LLC Vars, Ontario, Canada Dammam, Kingdom of Saudi Arabia Perma-Pipe Egypt for Metal Fabrication and Insulation Industries (Perma-Pipe Egypt) S.A.E.
EMPLOYEES As of January 31, 2023 , the Company had approximately 194 full-time employees working in the United States, of which approximately 77 were under two collective bargaining agreements expiring on April 30, 2023 and March 31, 2025 . As of January 31, 2023 , there were approximately 473 full-time employees working at the Company's international locations.
EMPLOYEES As of January 31, 2024 , the Company had approximately 179 full-time employees working in the United States, of which approximately 76 were under two collective bargaining agreements expiring on April 30, 2024 and March 31, 2025 . As of January 31, 2024 , there were approximately 640 full-time employees working at the Company's international locations.
Ltd Beni Suef, Egypt Gandhidham, India 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.
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.
If a customer cancels an order, 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.
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.
Mansfield Director, President and Chief Executive Officer; Age 63 2016 Grant Dewbre Chief Operating Officer; Age 54 2021 D. Bryan Norwood Vice President and Chief Financial Officer; Age 67 2018 David J. Mansfield: President, Chief Executive Officer ("CEO") and member of the Board of Directors since November 2016. From 2015 to 2016, Mr.
Mansfield Director, President and Chief Executive Officer; Age 64 2016 Matthew E. Lewicki Vice President and Chief Financial Officer; Age 41 2023 David J. Mansfield: President, Chief Executive Officer ("CEO") and member of the Board of Directors since November 2016. From 2015 to 2016, Mr.
The Company’s backlog on January 31, 2023 was $ 38.5 million compared to $ 39.3 million on January 31, 2022 , most of which is expected to be completed within the year ending January 31, 2024 . The Company's backlog has remained consistent year-over-year as completed projects have been replaced with new awards during the year.
The Company’s backlog on January 31, 2024 was $68.4 million, compared to $38.5 million on January 31, 2023 , most of which is expected to be completed within the year ending January 31, 2025 .
The Company defines backlog as the expected total revenue value 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.
The increase in the backlog was the result of new awards year-over-year in excess of completed projects during the year in North America and the Middle East. The Company defines backlog as the expected total revenue value resulting from confirmed customer purchase orders that have not yet been recognized as revenue.
Any cancellation or delay in orders may result in lower than expected revenue from the Company's reported backlog. 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.
Any cancellation or delay in orders may result in lower than expected revenues from the Company's reported backlog.
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He is a Fellow member of the Association of Chartered Certified Accountants . Grant Dewbre: Appointed Chief Operating Officer in July 2021. Mr. Dewbre was formerly Senior Vice President, Middle East & North Africa for the Company since December 2017. He was responsible for facilities in Fujairah, United Arab Emirates ("U.A.E."), Dammam, Saudi Arabia, Gujarat, India, and Beni Suef, Egypt.
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Riyadh, Kingdom of Saudi Arabia Beni Suef, Egypt Perma-Pipe India Pvt. Ltd Gandhidham, India Customers and sales channels. The Company's customer base is industrially and geographically diverse.
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Before joining the Company, Mr. Dewbre served as Managing Director for Seaway Heavy Lifting in Houston, Texas, a Dutch offshore construction company, which was part of the Subsea 7 group from July 2015 to November 2017.
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Additionally, a s 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.
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In addition, he was Senior Vice President for Ceona Offshore, a startup offshore construction specialist company based in London, United Kingdom from December 2013 to June 2015.
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The Company owns numerous trademarks connected with its piping and leak detection systems throughout the world. 2 Table of Contents Suppliers.
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From March 2004 to November 2013, he held several roles, including project management, sales, and commercial management, in Houston, Texas and Leiden, The Netherlands, for Heerema Marine Contractors, a Dutch offshore construction company specialized in the installation of fixed and floating offshore platforms as well as pipeline installation services. Mr.
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He is a Fellow member of the Association of Chartered Certified Accountants . Matthew E. Lewicki: Appointed Vice President and CFO in October 2023, and previously served as Chief Accounting Officer from May 2023 to October 2023. From 2019 to 2023, Mr.
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Dewbre has held various project and plant management and commercial positions in the United States, United Kingdom, Malaysia, Azerbaijan, and at other locations for Bredero Shaw, the world’s largest provider of protective coatings for the oil & gas pipeline industry from October 1992 to February 2004. D. Bryan Norwood: Appointed Vice President and CFO in November 2018.
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Lewicki served as Corporate Controller of HMT Holdings Corp, Inc., a global oil and gas manufacturing and infrastructure services company, consisting of manufacturing of above-ground storage tanks and associated materials, oilfield maintenance and repair services, and inspection services. In this position, Mr.
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From 2014 to 2018, Mr. Norwood served as CFO of API Perforating, LLC, an oilfield service company providing stage perforation and wireline services. From 2012 to 2014, Mr. Norwood served as CFO of Dupre’ Energy Services, LLC, an oilfield service company offering multiple services lines. From 2010 to 2012, Mr.
Added
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.
Removed
Norwood was Vice President Finance for the Environmental Services Division of PSC, LLC, a hazardous waste disposal company. From 1992 to 2010, Mr.
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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 is a Certified Public Accountant in the State of Texas.
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Norwood held several senior leadership positions, including CFO of Smith Equipment Rental and Services, LLC, a regional oilfield service provider, Vice President and Treasurer of Key Energy Services, Inc., an oilfield multi-service provider, and Corporate Controller and Vice President Finance-Americas with Bredero Shaw, the world's largest provider of protective coatings for the oil and gas pipeline industry.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThis 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.
Biggest changeCertain 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.
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 economically unfeasible because of the taxation of funds when moved to another subsidiary or to the parent company.
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.
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. The Company may be impacted by interpretations and changes in tax regulations and legislation which could adversely affect the Company's results of operations.
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 uncollected amounts. The Company may be impacted by interpretations and changes in tax regulations and legislation which could adversely affect the Company's results of operations.
Decreases in government spending on projects using the Company’s products, and challenges to the Company’s non-government 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.
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.
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 governmental agencies related to the Company’s operations . International sales represent a significant portion of the Company's total sales.
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.
In addition, if the Company is unable to acquire timely raw material supplies, it may need to decline bid and order opportunities, which could also 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.
Further, the Company has been engaged by the customer to perform additional work in the year ending January 31, 2024 under customary trade credit terms that supports the continued cooperation between the Company and the customer. As a result, the Company did not reserve any allowance against this outstanding receivable as of January 31, 2023 .
Further, the Company has been engaged by the customer to perform additional work in the year ending January 31, 2024 under customary trade credit terms which supports the continued cooperation between the Company and the customer. As a result, the Company did not reserve any allowance against this outstanding receivable as of January 31, 2024 .
The Company completed all of its deliverables in 2015 under the related contract, but the system has not yet been commissioned by the customer as additional activities must be completed prior to the overall system completion and commissioning. Nevertheless, the Company has been engaged in ongoing active efforts to collect this outstanding amount.
The Company completed all of its deliverables in 2015 under the related contract, but the system has not yet been commissioned by the customer as additional activities must be completed prior to the overall system completion and commissioning. Nevertheless, the Company has been actively involved in ongoing efforts to collect this outstanding amount.
In addition, these risks can include extraordinarily delayed collections 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.
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.
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, that could have a further adverse impact on our business.
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, could have an adverse impact on the business.
The Company has approximately $ 4.0 million becoming due in the year ending January 31, 2024 under its various foreign revolving lines of credit. The Company’s credit arrangements used by its Middle Eastern subsidiaries are renewed on an annual basis. In addition to these credit arrangements, the Company also obtains financing in the Middle East on a project-by-project basis.
The Company has approximately $ 3.5 million becoming due in the year ending January 31, 2025 under its various foreign revolving lines of credit. The Company’s credit arrangements used by its Middle Eastern subsidiaries are renewed on an annual basis. In addition to these credit arrangements, the Company also obtains financing in the Middle East on a project-by-project basis.
One of the Company’s accounts receivable in the total amount of $ 2.7 million and $ 3.6 million as of January 31, 2023 and 2022 , respectively, has been outstanding for several years. As of January 31, 2023 , the entire balance represents a retention receivable that is payable upon the commissioning of the system.
One of the Company’s accounts receivable in the total amount of $ 2.2 million and $ 2.7 million as of January 31, 2024 and 2023 , respectively, has been outstanding for several years. As of January 31, 2024 , the entire balance represents a retention asset that is payable upon the commissioning of the system.
The state NOLs expire at various dates from 2023 to 2032 . In addition, the Company's ability to use its NOLs may be limited in the event of future changes in its stock ownership.
The state NOLs expire at various dates from 2029 to 2053 . In addition, the Company's ability to use its NOLs may be limited in the event of future changes in its stock ownership.
The Company's sales to foreign customers were 63.8% and 66.2% in the years ended January 31, 2023 and 2022 , respectively. The Company's anticipated growth and profitability may require increasing foreign sales volume and may necessitate further international expansion.
The Company's sales to foreign customers were 65.6% and 63.8% in the years ended January 31, 2024 and 2023 , respectively. The Company's anticipated growth and profitability may require increasing foreign sales volume and may necessitate further international expansion.
The Company has approximately $ 1.7 million becoming due in the year ending January 31, 2024 under its project financing agreements.
The Company has approximately $ 0.1 million becoming due in the year ending January 31, 2025 under its project financing agreements.
Due to the long-term nature of the receivable, $ 2.5 million and $ 2.0 million were included in other long-term assets as of January 31, 2023 and 2022 , respectively.
Due to the long-term nature of the receivable, $ 1.4 million and $ 2.5 million were included in other long-term assets as of January 31, 2024 and 2023 , respectively.
However, by industry practice, orders may be canceled or modified at any time. If a customer cancels an order, 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.
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.
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.
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.
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 larger and have more resources than the Company.
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.
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 and its operations may be negatively impacted by pandemics and other public health crises.
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.
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.
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.
As of January 31, 2023 , the Company had $ 34.3 million of gross federal NOLs and $ 45.5 million of gross state NOLs available to offset the Company’s future taxable income. Of the gross federal NOL amount, $ 26.9 million will begin to expire between tax years 2033 and 2038 and the remainder has an indefinite carryforward.
As of January 31, 2024 , the Company had $ 30.1 million of gross federal NOLs and $ 21.0 million of gross state NOLs available to offset the Company’s future taxable income. Of the gross federal NOL amount, $ 22.7 million will begin to expire between tax years 2036 and 2037 and the remainder has an indefinite carryforward.
In addition, at the state level, there may be periods in the future during which the use of NOLs is suspended or otherwise limited, which could result in a state tax liability which would otherwise not arise.
In addition, at the state level, there may be periods in the future 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 may not be able to successfully negotiate progress-billing arrangements for its large contracts, which could adversely impact the Company’s working capital needs, cash flows and credit risk.
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 for its large contracts, which could adversely impact the Company’s working capital needs, cash flows and credit risk.
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.
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. 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.
The Company continues to engage with the customer to ensure full payment of open balances, and during April 2022 received an updated acknowledgment of the outstanding balances and assurances of payment from the customer. During 2022, the Company received a partial payment to settle $ 0.9 million of the customer's outstanding balance.
The Company continues to engage with the customer to ensure full payment of open balances. Additionally, at various times throughout 2023 and in June 2022, the Company received a partial payment to settle $0.6 million and $0.9 million of the customer's outstanding balances, respectively.
Due to the current inflationary environment, raw material supply shortages and transportation delays, the Company could experience delays and has incurred increased prices for raw materials used in our production processes.
Due to the current inflationary environment, raw material supply shortages and transportation delays, the Company could experience delays and increased prices for raw materials used in production processes. To mitigate these impacts, the Company has implemented several strategies, including purchasing from alternative suppliers and planning for material purchases farther in advance to ensure the Company has materials when needed.
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. The Company’s failure to establish and maintain effective internal control over financial reporting could harm its business and financial results.
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. 7 Table of Contents Business Condition Risks Delays in the timing of order receipt, execution, delivery and acceptance for the Company’s products generally negatively impact the Company’s operating results.
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To mitigate these impacts, the Company has implemented several strategies, including purchasing from alternative suppliers and planning for material purchases farther 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.
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The Company may be required to reverse previously recorded revenue and profits as a result of inaccurate estimates made in connection with the Company’s "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.
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As of January 31, 2023, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s internal control over financial reporting was not effective due to an identified material weakness. The material weakness was regarding the design and operating effectiveness of controls related to the existence of inventory during the fiscal year ended January 31, 2023.
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Specifically, the Company failed to appropriately perform cycle count procedures at one of the Company's operating facilities, resulting in a significant adjustment during the full physical inventory count at period end. Further, management review of the process and resulting adjustments on a periodic basis failed to identify the issue.
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The material weakness did not result in any material misstatements to the Company’s consolidated financial statements.
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A material weakness is defined as 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.
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If the current material weakness is not remediated, or if additional material weaknesses or significant deficiencies in the Company’s internal control over financial reporting are discovered or occur in the future, the Company’s consolidated financial statements may contain material misstatements and the Company could be required to restate its financial results.
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The failure to maintain an effective system of internal control over financial reporting could limit the Company’s ability to report its financial results accurately and in a timely manner or to detect and prevent fraud and could also cause a loss of investor confidence and decline in the market price of the Company’s common stock.
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See further discussion of the material weakness, including the Company's planned remediation procedures, in Item 9A., Controls and Procedures. 7 Table of Contents Business Condition Risks Delays in the timing of order receipt, execution, delivery and acceptance for the Company’s products generally negatively impact the Company’s operating results.
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Since the Company's revenues are based on discrete projects, the Company's operating results in any reporting period generally are negatively impacted as a result of large declines in the level of overall market demand or delays in the timing of project execution phases.
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Pandemics and other public health crises may impact the Company's office locations and manufacturing facilities, as well as those of its customers and third-party vendors, including through the effects of facility closures, reductions in operating hours and other social distancing efforts.
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The Company’s results of operations, financial condition, liquidity and cash flow may in the future be materially adversely affected by pandemics and other public health crises, although the extent of any such impacts cannot be predicted. The Company's information technology systems may be negatively affected by cybersecurity threats.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changePROPERTIES Location Leased and/or Owned Illinois Leased building and office space Louisiana Owned building and leased land Tennessee Leased building and office space Texas Leased office space Canada Owned building with office space on owned land; leased land and leased office space India Leased building, office space and land Kingdom of Saudi Arabia Owned building and office space on leased land United Arab Emirates Leased office space and building on leased land; owned building with office space on leased land Egypt Leased building and office space For further information, see Note 6 - Leases, in the Notes to Consolidated Financial Statements.
Biggest changePROPERTIES 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 Camrose, Alberta, Canada Owned building with office space on owned land; leased land and 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 and office space United Arab Emirates Leased office space and building on leased land; owned building with office space on leased land Egypt Leased building and office space on leased land For further information, see Note 6 - Leases, in the Notes to Consolidated Financial Statements.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe following table sets forth information with respect to repurchases by the Company of its shares of common stock during 2021 and 2022 (In thousands, except per share data) : Period Total number of shares purchased Average price paid per share Total number of shares purchased as part of publicly announced plans or programs Approximate dollar value of shares that may yet be purchased under the plans or programs October 1, 2021 - October 31, 2021 59 $ 8.45 59 $ 2,505 November 1, 2021 - November 30, 2021 21 8.55 21 2,323 December 1, 2021 - December 31, 2021 56 7.99 56 1,872 January 1, 2022 - January 31, 2022 98 8.81 98 1,008 July 1, 2022 - July 31, 2022 5 8.85 5 964 December 1, 2022 - December 31, 2022 3 8.61 3 939 Total 242 242 10 Table of Contents
Biggest changeThe following table sets forth information with respect to repurchases by the Company of its shares of common stock during 2022 and 2023 (In thousands, except per share data) : Period Total number of shares purchased Average price paid per share Total number of shares purchased as part of publicly announced plans or programs Approximate dollar value of shares that may yet be purchased under the plans or programs January 1, 2022 - January 31, 2022 98 $ 8.81 98 $ 1,008 July 1, 2022 - July 31, 2022 5 8.85 5 964 December 1, 2022 - December 31, 2022 3 8.61 3 939 July 1, 2023 - July 31, 2023 37 8.51 37 628 August 1, 2023 - August 31, 2023 62 8.67 62 92 September 1, 2023 - September 30, 2023 10 8.95 10 - Total 215 215 10 Table of Contents
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES The Company's common stock is traded on the Nasdaq Global Market under the symbol "PPIH". As of April 25, 2023 , there were approximately 58 stockholders of record and other additional stockholders for whom securities firms or banks acted as nominees.
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES The Company's common stock is traded on the Nasdaq Global Market under the symbol "PPIH". As of April 26, 2024 , there were approximately 50 stockholders of record and other additional stockholders for whom securities firms or banks acted as nominees.
Stock repurchases were permitted to be executed through open market or privately negotiated transactions, depending upon current market conditions and other factors. In total, the Company used $2.0 million of the $3.0 million authorized to repurchase its outstanding shares of common stock under the program.
Issuer Purchases of Equity Securities The repurchase program approved on October 4, 2021, authorized the Company to use up to $3.0 million for the purchase of its outstanding shares of common stock. Stock repurchases were permitted to be executed through open market or privately negotiated transactions, depending upon current market conditions and other factors.
Issuer Purchases of Equity Securities On December 7, 2022 the Board of Directors authorized the use of $1.0 million remaining under the share repurchase program previously approved on October 4, 2021 that expired on October 3, 2022.
On December 7, 2022, the Board of Directors authorized the use of $1.0 million remaining under the share repurchase program previously approved on October 4, 2021 that expired on October 3, 2022. During the 12 months ended January 31, 2024, the Company used the remaining $1.0 million of the $3.0 million authorized to repurchase its outstanding shares of common stock.
Removed
Share repurchases may be executed through open market or in privately negotiated transactions over the course of the 12 months following the Board of Directors authorization. The repurchase program approved on October 4, 2021 authorized the Company to use up to $3.0 million for the purchase of its outstanding shares of common stock.
Removed
On July 26, 2022, the Company retired 239,168 shares of treasury stock previously repurchased under the stock repurchase program.
Removed
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 to retained earnings in accordance with Accounting Standards Codification ("ASC") 505-30, Equity - Treasury Stock .

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

64 edited+18 added−23 removed22 unchanged
Biggest changeRisk Factors for additional information. 11 Table of Contents Results of Operations Consolidated Results of Operations: ($ in thousands) Year Ended January 31, 2023 2022 Change favorable/(unfavorable) Amount Percent of Net Sales Amount Percent of Net Sales Amount Net sales $ 142,569 $ 138,552 $ 4,017 Gross profit 38,301 27 % 32,530 23 % 5,771 General and administrative expenses 21,994 15 % 19,893 14 % (2,101 ) Selling expense 5,163 4 % 4,526 3 % (637 ) Interest expense, net 2,119 828 (1,291 ) Other income 533 1,044 (511 ) Income before income taxes 9,558 8,327 1,231 Income tax expense 3,613 2,265 (1,348 ) Net income 5,945 6,062 (117 ) Year ended January 31, 2023 Compared to year ended January 31, 2022 Net sales Net sales were $ 142.6 million and $ 138.6 million in the years ended January 31, 2023 and 2022 , respectively.
Biggest changeSince 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. 11 Table of Contents Results of Operations Consolidated Results of Operations (In thousands, except per share data, or unless otherwise specified) Year Ended January 31, 2024 2023 Change favorable (unfavorable) Amount Percent of Net Sales Amount Percent of Net Sales Amount Net sales $ 150,668 $ 142,569 $ 8,099 Gross profit 41,458 28 % 38,301 27 % 3,157 General and administrative expenses 22,591 15 % 21,994 15 % (597 ) Selling expense 5,508 4 % 5,163 4 % (345 ) Interest expense 2,266 2,119 (147 ) Other (expense) income (1,202 ) 533 (1,735 ) Income before income tax 9,891 9,558 333 Income tax (benefit) expense (3,320 ) 3,613 6,933 Net income 13,211 5,945 7,266 Less: Net income attributable to non-controlling interest 2,740 - 2,740 Net income attributable to common stock 10,471 5,945 4,526 Year ended January 31, 2024 Compared to year ended January 31, 2023 Net sales Net sales were $ 150.7 million and $ 142.6 million in the years ended January 31, 2024 and 2023 , respectively.
Although certain of the arrangements have expired and the borrowings could be required to be repaid immediately by the banks, the Company is in regular communication with the respective banks throughout the renewal process and all of the arrangements have continued without interruption or penalty.
Although certain of the arrangements may have expired and the borrowings could be required to be repaid immediately by the banks, the Company is in regular communication with the respective banks throughout the renewal process and all of the arrangements have continued without interruption or penalty.
These amounts differ from the liabilities presented as debt in the consolidated balance sheet as the debt amount represents future payments discounted to the present date. Refer to Note 5 - Debt, in the Notes to the Consolidated Financial Statements for further discussion of the transaction. (5) Minimum contractual amounts, assuming no changes in variable expenses.
These amounts differ from the liabilities presented as debt in the consolidated balance sheets as the debt amount represents future payments discounted to the present date. Refer to Note 5 - Debt, in the Notes to the Consolidated Financial Statements for further discussion of the transaction. (5) Minimum contractual amounts, assuming no changes in variable expenses.
Further, the Company has been engaged by the customer to perform additional work in 2023 under customary trade terms that supports the continued cooperation between the Company and the customer. As a result, the Company did not reserve any allowance against the remaining outstanding balances as of January 31, 2023 .
Further, the Company has been engaged by the customer to perform additional work in 2024 under customary trade terms that supports the continued cooperation between the Company and the customer. As a result, the Company did not reserve any allowance against the remaining outstanding balances as of January 31, 2024 .
Years, results and balances described as 2022 and 2021 are for the fiscal years ended January 31, 2023 and 2022 , respectively. The Company is engaged in the manufacture and sale of products in one reportable segment: Piping Systems.
Years, results and balances described as 2023 and 2022 are for the fiscal years ended January 31, 2024 and 2023 , respectively. The Company is engaged in the manufacture and sale of products in one reportable segment: Piping Systems.
The Company was in compliance with these covenants as of January 31, 2023 . 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.
The Company was in compliance with respect to these covenants as of January 31, 2024 . The Renewed Senior Credit Facility contains customary events of default. If an event of default occurs and is continuing, then PNC may terminate all commitments to extend further credit and declare all amounts outstanding under the Renewed Senior Credit Facility due and payable immediately.
Nevertheless, the Company has settled approximately $ 39.1 million as of January 31, 2023 , with a remaining balance due in the amount of $ 2.7 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.
Nevertheless, the Company has settled approximately $ 39.7 million as of January 31, 2024 , with a remaining balance due in the amount of $ 2.2 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.
Concurrent with the sale of the Property, the Company entered into a 15-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 2.00%.
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%.
The Company utilized an incremental borrowing rate of 8.00% to determine the finance obligation to record for the amounts received and will continue to depreciate the 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 Company was in compliance with the covenants under the credit arrangements in the U.A.E., Egypt and Saudi Arabia as of January 31, 2023 , with the exception of those arrangements that have expired and have not yet been renewed.
The Company was in compliance with the covenants under the credit arrangements in the U.A.E., Egypt and Saudi Arabia as of January 31, 2024 , with the exception of those arrangements that may have expired and have not yet been renewed.
The current portion of the finance obligation of $ 0.1 million is recognized in current maturities of long-term debt and the long-term portion of $ 9.2 million is recognized in long-term finance obligation on the Company's consolidated balance sheets as of January 31, 2023 .
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 $ 9.0 million is recognized in long-term finance obligation on the Company's consolidated balance sheets as of January 31, 2024 .
There was no restricted cash held in the United States on January 31, 2023 or January 31, 2022 . Restricted cash held by foreign subsidiaries was $ 1.0 million and $ 1.6 million as of January 31, 2023 and 2022 , respectively. Restricted cash held by foreign subsidiaries related to fixed deposits that also serve as security deposits and guarantees.
There was no restricted cash held in the United States on January 31, 2024 or January 31, 2023 . Restricted cash held by foreign subsidiaries was $ 1.4 million and $ 1.0 million as of January 31, 2024 and 2023 , respectively. Restricted cash held by foreign subsidiaries related to fixed deposits that also serve as security deposits and guarantees.
As of January 31, 2023 , the calculated ratio was greater than 1.10 to 1.00.
As of January 31, 2024 , the calculated ratio was greater than 1.10 to 1.00.
The Company had $ 4.4 million borrowed under the Renewed Senior Credit Facility and $ 5.7 million borrowed under its foreign revolving credit agreements at January 31, 2023 . Net cash used in operating activities in the years ended January 31, 2023 and 2022 was $ 1.2 million and $ 2.6 million, respectively.
The Company had $ 5.5 million borrowed under the Renewed Senior Credit Facility and $ 6.4 million borrowed under its foreign revolving credit agreements at January 31, 2024 . Net cash from operating activities in the years ended January 31, 2024 and 2023 was $ 14.7 million and $ (1.2) million, respectively.
In order to cure any future breach of the FCF covenant 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 pro forma compliance with the FCF covenant.
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.
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 25.0 million Saudi Riyal (approximately $ 6.7 million at January 31, 2023 ) This credit arrangement is in the form of project financing at rates competitive in Saudi Arabia.
Saudi Arabia In March 2022, the Company's Saudi Arabian subsidiary entered into a credit arrangement with a bank in Saudi Arabia for a revolving line of 37.0 million Saudi Riyal (approximately $ 9.9 million at January 31, 2024 .) This credit arrangement is in the form of project financing at rates competitive in Saudi Arabia.
Based on the amount of such debt on January 31, 2023 , and the weighted average interest rate of 8.50% on that debt, such interest was being incurred at an annual rate of approximately $ 0.4 million. (2) Scheduled maturities, excluding interest. (3) Scheduled maturities of foreign revolver line, excluding interest.
Based on the amount of such debt on January 31, 2024 , and the weighted average interest rate of 10.0% on that debt, such interest was being incurred at an annual rate of approximately $ 0.6 million. (2) Scheduled maturities, excluding interest. (3) Scheduled maturities of foreign revolver line, excluding interest.
Borrowings under the Renewed Senior Credit Facility bear interest at a rate equal to an alternate base rate, London Inter-Bank Offered Rate ("LIBOR") or a LIBOR successor rate index, plus, in each case, an applicable margin. The applicable margin is based on a fixed charge coverage ratio ("FCCR") range.
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.
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 more detail. Income taxes.
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 input and output accounting methods. Income taxes.
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.
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.
The Renewed Senior Credit Facility also contains a free cash flow financial covenant (the "FCF covenant") requiring the North American Loan Parties to achieve a ratio of its EBITDA to the sum of scheduled cash principal payments on indebtedness for borrowed money and interest payments on the advances under the Renewed Senior Credit Facility to be not less than 1.10 to 1.00 for any five consecutive days in which the undrawn availability is less than $3.0 million or any day in which the undrawn availability is less than $2.0 million.
Further, the North American Loan Parties may not make repurchases of the Company's common stock in excess of $3.0 million. 14 Table of Contents The Renewed Senior Credit Facility also contains financial covenants requiring the North American Loan Parties to achieve a ratio of its EBITDA (as defined in the Renewed Senior Credit Facility) to the sum of scheduled cash principal payments on indebtedness for borrowed money and interest payments on the advances under the Renewed Senior Credit Facility to be not less than 1.10 to 1.00 for any five consecutive days in which the undrawn availability is less than $3.0 million or any day in which the undrawn availability is less than $2.0 million.
Based on these base rates, as of January 31, 2023 , the Company's interest rates ranged from 8.00% to 18.25% , with a weighted average rate of 10.72% , and the Company had facility limits totaling $ 21.5 million under these credit arrangements.
Based on these rates, as of January 31, 2024, the Company's interest rates ranged from 8.00% to 20.75% , with a weighted average rate of 10.71% , and the Company had facility limits totaling $ 24.5 million under these credit arrangements.
As of January 31, 2023 , $ 5.6 million of availability was used to support letters of credit to guarantee amounts committed for inventory purchases and for performance guarantees. Additionally, as of January 31, 2023 , the Company had borrowed $ 5.7 million and had an additional $ 10.2 million of borrowing remaining available under the foreign revolving credit arrangements.
As of January 31, 2024 , $ 8.3 million of availability was used to support letters of credit to guarantee amounts committed for inventory purchases and for performance guarantees. Additionally, the Company had borrowed approximately $6.4 million and had an additional $15.4 million of remaining borrowing capacity available under the foreign revolving credit arrangements.
The current year amount includes income from the release of the Company's liability for a past project and insurance recovery income, partially offset by a non-cash pre-tax settlement charge resulting from the termination of the Company's pension plan. The prior year amount includes the receipt of grants from the Canadian government in response to the COVID-19 pandemic.
The prior year amount includes income from the release of the Company's liability for a past project and insurance recovery income, partially offset by a non-cash pre-tax settlement charge resulting from the termination of the Company's pension plan.
As of January 31, 2023 , the Company had borrowed an aggregate of $ 4.4 million at a rate of 8.50% and had $ 9.9 million available under the Renewed Senior Credit Facility.
As of January 31, 2024 , the Company had borrowed an aggregate of $ 5.5 million at a rate of 10.0% and had $ 4.0 million available under the Renewed Senior Credit Facility.
The Company guarantees only a portion of the subsidiaries' debt, including foreign debt. As of January 31, 2023 , the amount of foreign subsidiary debt guaranteed by the Company was approximately $0.5 million.
The Company guarantees only a portion of the subsidiaries' debt, including foreign debt. The amount of foreign subsidiary debt guaranteed by the Company was approximately $0.1 at January 31, 2024 and January 31, 2023, respectively.
The Company has not recognized any tax benefits on losses in the United States due to a full valuation allowance applied against its 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.
The Company is now recognizing a tax benefit on losses in the United States after removal of a partial valuation allowance applied against its 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.
Subject to certain exceptions, borrowings under the Renewed Senior Credit Facility are secured by substantially all of the North American Loan Parties’ assets. The Renewed Senior Credit Facility matures on September 20, 2026.
Additionally, the Borrowers pay a 0.25% per annum facility fee on the unused portion of the Renewed Senior Credit Facility. Subject to certain exceptions, borrowings under the Renewed Senior Credit Facility are secured by substantially all of the North American Loan Parties’ assets. The Renewed Senior Credit Facility matures on September 20, 2026.
The increase of $ 4.0 million was primarily a result of higher sales volumes in North America and Saudi Arabia. Gross profit Gross profit was $ 38.3 million, or 27% of net sales and $ 32.5 million, or 23% of net sales, in the years ended January 31, 2023 and 2022 , respectively.
The increase of $ 8.1 million was primarily a result of higher sales volumes in Saudi Arabia. Gross profit Gross profit was $ 41.5 million, or 28% of net sales and $ 38.3 million, or 27% of net sales, in the years ended January 31, 2024 and 2023 , respectively.
Net cash used in investing activities in the years ended January 31, 2023 and 2022 was $ 6.4 million and $ 2.3 million, respectively. The increase of $ 4.1 million was primarily due to investment in the Middle East and Canada during the period.
Net cash from investing activities in the years ended January 31, 2024 and 2023 was $ 11.1 million and $ 6.4 million, respectively. The increase of $ 4.7 million was primarily due to investments capital assets in the Middle East and Canada during the period.
The increase of $ 1.3 million was related to increased borrowings and higher interest rates. Other income, net Net other income was $ 0.5 million and $ 1.0 million in the years ended January 31, 2023 and 2022 , respectively.
The increase of $ 0.2 million was related to increased borrowings and, to a lesser extent, higher interest rates. Other expense Other expense was $ 1.2 million, as compared to other income of $ 0.5 million in the years ended January 31, 2024 and 2023 , respectively.
On January 31, 2023 , interest rates were based on the Emirates Inter Bank Offered Rate plus 3.00% to 3.50% per annum for the U.A.E. credit arrangements, two of which have a minimum interest rate of 4.50% per annum, based on the stated interest rate in the agreement for the Egypt credit arrangement, and based on the Saudi Inter Bank Offered Rate plus 3.5% for the Saudi Arabia credit arrangement.
As of January 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.
Net cash provided by financing activities in the years ended January 31, 2023 and 2022 was $ 4.5 million and $ 6.2 million, respectively.
Net cash from financing activities in the years ended January 31, 2024 and 2023 was $ (3.3) million and $ 4.5 million, respectively.
(6) Refer to Note 7 - Income taxes, in the Notes to Consolidated Financial Statements for a description of the uncertain tax position obligations. Financing Revolving lines - North America .
(6) Refer to Note 7 - Income taxes, in the Notes to Consolidated Financial Statements for a description of the uncertain tax position obligations. (7) Refer to Note 12 - Non-controlling interest, in the Notes to Consolidated Financial Statements for further discussion regarding the loan payable to Gulf Insulation Group ("GIG"). Financing Revolving lines - North America .
For further information, see Note 7 - Income taxes, in the Notes to Consolidated Financial Statements. Net income Net income was $ 5.9 million and $ 6.1 million in the years ended January 31, 2023 and 2022 , respectively. The increase in net income was a result of the changes discussed above.
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 $10.5 million and $5.9 million in the years ended January 31, 2024 and 2023 , respectively.
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”). 14 Table of Contents 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.
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.
Interest on LIBOR or LIBOR successor rate borrowings is the LIBOR 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. Additionally, the Borrowers pay a 0.25% per annum facility fee on the unused portion of the Renewed Senior Credit Facility.
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.
Under the Lease Agreement, the Company has four consecutive options to extend the term of the lease by five years for each such option. In accordance with ASC 842, Leases , this transaction was recorded as a failed sale and leaseback as the present value of lease payments exceeded substantially all of the fair value of the underlying asset.
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.
As of January 31, 2023 , the Company had borrowed an aggregate of $ 4.4 million and had $ 9.9 million available under the Renewed Senior Credit Facility. See further discussion of the Company's liquidity position as of January 31, 2023 in "Liquidity and capital resources" below.
As of January 31, 2023 , the Company had borrowed an aggregate of $ 4.4 million and had $ 9.9 million available under the Renewed Senior Credit Facility. Revolving lines - foreign .
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 11.2 million Egyptian Pounds (approximately $ 0.4 million at January 31, 2023 ).
As this project has progressed and the Company received collections, the facility has decreased to a current amount of 2.1 million Egyptian Pounds (approximately $ 0.1 million at January 31, 2024). This credit arrangement is in the form of project financing at rates competitive in Egypt.
Liquidity and capital resources Cash and cash equivalents as of January 31, 2023 were $ 5.8 million compared to $ 8.2 million on January 31, 2022 . On January 31, 2023 $ 0.1 million was held in the United States, and $ 5.7 million was held by the Company's foreign subsidiaries.
On January 31, 2024 , approximately $ 0.1 million was held in the United States, and $ 5.7 million was held by the Company's foreign subsidiaries. The Company's working capital was $ 41.1 million on January 31, 2024 compared to $ 41.9 million on January 31, 2023 .
The Company's working capital was $ 41.9 million on January 31, 2023 compared to $ 40.0 million on January 31, 2022 . As o f January 31, 2023 , the Company had $ 9.9 million of borrowing capacity under the Renewed Senior Credit Facility in North America and $ 10.2 million of borrowing capacity under its foreign revolving credit agreements.
As o f January 31, 2024 , the Company had $ 4.0 million of borrowing capacity under the Renewed Senior Credit Facility in North America and $ 15.4 million of borrowing capacity under its foreign revolving credit agreements.
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.
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 The repurchase program approved on October 4, 2021, authorized the Company to use up to $3.0 million for the purchase of its outstanding shares of common stock.
This decrease of $ 1.4 million was due primarily to increases in accounts receivable and prepaid expenses and other current assets, partially offset by increases in accounts payable and accrued compensation and payroll taxes in the current year compared to the prior year.
The current year increase of $ 15.9 million was due primarily to a rise customer deposits and accounts payable, partially offset by increases in accounts receivable, unbilled accounts receivable, and prepaid expenses and other current assets, as compared to the prior year.
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.
On April 14, 2021, the Company entered into a purchase and sale agreement (the "Purchase and Sale Agreement"). Pursuant to the terms of the Purchase and Sale Agreement, the Company sold the Property for $10.4 million. The transaction generated net cash proceeds of $9.1 million.
The Company used the remaining proceeds to repay its borrowings under the Senior Credit Facility, for strategic investments, and for general corporate needs.
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.
The Company has a revolving line for 8.0 million U.A.E. Dirhams (approximately $ 2.2 million at January 31, 2023 ) from a bank in the U.A.E. The facility has an interest rate of approximately 8.38% . The facility was renewed in July 2022 and is now set to expire in July 2025.
Dirhams (approximately $ 2.2 million at January 31, 2024 ) from a bank in the U.A.E. as of January 31, 2024, the facility has an interest rate of approximately 9.00% and is set to expire in May 2024.
Stock repurchase plan On December 7, 2022 the Board of Directors authorized the use of $1.0 million remaining under the share repurchase program previously approved on October 4, 2021 that expired on October 3, 2022.
Stock repurchases were permitted to be executed through open market or privately negotiated transactions, depending upon current market conditions and other factors. On December 7, 2022, the Board of Directors authorized the use of $1.0 million remaining under the share repurchase program previously approved on October 4, 2021 that expired on October 3, 2022.
The increase of $ 5.8 million was driven by higher sales volumes and improved gross margins as a result of the mix of projects globally. General and administrative expense General and administrative expenses were $ 22.0 million and $ 19.9 million in the years ended January 31, 2023 and 2022 , respectively.
The increase of $ 3.2 million was driven primarily by higher sales volumes and improved gross margins in Saudi Arabia. General and administrative expense General and administrative expenses were $ 22.6 million and $ 22.0 million in the years ended January 31, 2024 and 2023 , respectively. The increase of $ 0.6 million was primarily related to higher compensation costs.
The line is secured by certain assets (such as accounts receivable) of the Company's Saudi Arabian subsidiary. The facility has an interest rate of approximately 9.15% and is set to expire in April 2023. 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 line is secured by certain assets (such as accounts receivable) of the Company's Saudi Arabian subsidiary, and as of January 31, 2024, the facility has an interest rate of approximately 9.50% and is set to expire in May 2024.
The increase of $ 2.1 million was primarily related to higher compensation costs. Selling expenses Selling expenses were $ 5.2 million and $ 4.5 million in the years ended January 31, 2023 and 2022 , respectively.
Selling expenses Selling expenses were $ 5.5 million and $ 5.2 million in the years ended January 31, 2024 and 2023 , respectively.
The facility has an interest rate of approxi mately 8.38% and is expected t o expire in May 2024 in connection with the completion of the project. 15 Table of Contents In June 2021, 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 $ 3.3 million at January 31, 2023 ).
As of January 31, 2024 and January 31, 2023, the Company had unused borrowing availability of approximately $1.0 million and $1.8 million, respectively. 15 Table of Contents 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 $ 3.2 million at January 31, 2024).
As of January 31, 2022 , the Company had borrowed an aggregate of $ 0.6 million and had $ 8.5 million available under the Renewed Senior Credit Facility. Revolving lines - foreign . The Company also has credit arrangements used by its Middle Eastern subsidiaries in the U.A.E., Egypt, and Saudi Arabia as discussed further below.
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 has a revolving line for 8.0 million U.A.E.
The increase of $ 0.7 million was due to the expansion of the Company's sales force in the current period. 12 Table of Contents Interest expense, net Net interest expense was $ 2.1 million and $ 0.8 million in the years ended January 31, 2023 and 2022 , respectively.
The increase of $ 0.3 million was driven by higher payroll expenses. 12 Table of Contents Interest expense Interest expense remained consistent and was $ 2.3 million and $ 2.1 million in the years ended January 31, 2024 and 2023 , respectively.
Of this retention amount, $ 2.5 million is classified in a long-term receivable account. The Company has been engaged in ongoing active efforts to collect the outstanding amount. The Company continues to engage with the customer to ensure full payment of open balances, and during June 2022 received a partial payment to settle $0.9 million of the customer's outstanding balances.
The Company continues to engage with the customer to ensure full payment of open balances, and at various times throughout 2023 and in June 2022, the Company received a partial payment to settle $0.6 million and $0.9 million of the customer's outstanding balances, respectively.
The Company has a revolving line for 17.5 million U.A.E. Dirhams (approximately $ 4.8 million at January 31, 2023 ) from a bank in the U.A.E. The facility has an interest rate of approximately 8.38% and expired in January 2023, however the Company is in the process of renewing it.
Dirhams (approximately $ 5.6 million at January 31, 2024 ) from a bank in the U.A.E. as of January 31, 2024, the facility has an interest rate of approximately 9.00% and is set to expire in May 2024.
The foreign revolving lines balances as of January 31, 2023 and 2022 , were included as current maturities of long-term debt in the Company's consolidated balance sheets. 16 Table of Contents Finance obligation - buildings and land. On April 14, 2021, the Company entered into a purchase and sale agreement (the "Purchase and Sale Agreement").
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 January 31, 2024 and January 31, 2023, respectively. 16 Table of Contents Finance obligation - buildings and land.
The main source of cash from financing activities during the year ended January 31, 2023 was net proceeds from borrowings of approximately $ 5.5 million under the Company's credit facilities, as compared to the year ended January 31, 2022 , when net proceeds were approximately $ 0.5 million.
Additionally, a net repayment was made from borrowings under the Company's credit facilities of approximately $6.8 million, as compared to net proceeds received from borrowings of approximately $5.5 million during the year ended January 31, 2023 . Further, d ebt totaled $ 25.7 million and $ 24.4 million as of January 31, 2024 and 2023 , respectively.
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 to retained earnings in accordance with ASC 505-30, Equity - Treasury Stock . 17 Table of Contents 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.
During the 12 months ended January 31, 2024, the Company used the remaining $1.0 million of the $3.0 million authorized to repurchase its outstanding shares of common stock. 17 Table of Contents 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.
This credit arrangement is in the form of project financing at rates competitive in the U.A.E. The line is secured by the contract for a project being financed by the Company's U.A.E. subsidiary. The facility has an interest rate of approximately 8.38% and is expected to expire in June 2023 in connection with the completion of the project.
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 20.75% 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.
In August 2022, 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 $ 3.3 million at January 31, 2023 ). This credit arrangement is in the form of project financing at rates competitive in Egypt.
Further, as of January 31, 2024 and January 31, 2023, the Company had unused borrowing capacity of $3.2 million and $2.0 million, respectively. In December 2021, the Company entered into a credit arrangement for project financing with a bank of Egypt for 28.2 million Egyptian Pounds.
Grants to the Company under these programs ended in the second quarter of 2021 . Income taxes The Company's worldwide effective tax rates ("ETR") were 37.8% and 27.2% in the years ended January 31, 2023 and 2022 , respectively.
Income taxes The Company's worldwide effective tax rates ("ETR") were (33.6%) and 37.8% in the years ended January 31, 2024 and 2023 , respectively. The change in ETR was largely due to a partial release of the U.S. valuation allowance and changes in the mix of income and loss in various tax jurisdictions.
The following table summarizes the Company's estimated contractual obligations on January 31, 2023 (In thousands) Year Ending January 31, Contractual obligations Total 2024 2025 2026 2027 2028 Thereafter Revolving line - North America (1) $ 4,387 $ 4,387 $ - $ - $ - $ - $ - Mortgage note (2) 4,772 251 251 251 251 251 3,517 Revolving lines - foreign (3) 5,714 5,714 - - - - - Long-term finance obligation (4) 9,327 112 137 168 201 - 8,709 Term loan - foreign 5 5 - - - - - Subtotal 24,205 10,469 388 419 452 251 12,226 Finance lease obligations 145 145 - - - - - Operating lease obligations (5) 10,995 1,533 650 443 442 404 7,523 Uncertain tax position obligations (6) 901 - - - - - 901 Total $ 36,246 $ 12,147 $ 1,038 $ 862 $ 894 $ 655 $ 20,650 (1) Interest obligations exclude floating rate interest on debt payable under the North American revolving line of credit.
The following table summarizes the Company's estimated contractual obligations on January 31, 2024 Year Ending January 31, Contractual obligations Total 2025 2026 2027 2028 2029 Thereafter Revolving line - North America (1) $ 5,519 $ 5,519 $ - $ - $ - $ - $ - Mortgage note (2) 4,512 239 239 239 239 239 3,317 Revolving lines - foreign (3) 3,632 3,632 - - - - - Long-term finance obligation (4) 9,203 175 210 247 287 329 7,955 Subtotal 22,866 9,565 449 486 526 568 11,272 Finance lease obligations 113 25 34 37 17 - - Operating lease obligations (5) 15,709 1,871 1,714 1,701 1,656 1,286 7,481 Uncertain tax position obligations (6) 1,112 - - - - - 1,112 Loan payable to GIG (7) 2,753 - - - - - 2,753 Total $ 42,553 $ 11,461 $ 2,197 $ 2,224 $ 2,199 $ 1,854 $ 22,618 (1) Interest obligations exclude floating rate interest on debt payable under the North American revolving line of credit.
The Company has a credit agreement for project financing with a bank in the U.A.E. for 2.0 million U.A.E. Dirhams (approximately $ 0.5 million at January 31, 2023 ). This credit arrangement is in the form of project financing at rates competitive in the U.A.E.
The unused borrowing availability attributable to this credit arrangement at January 31, 2024 and January 31, 2023, was $6.1 million and $2.3 million, respectively. These credit arrangements are in the form of overdraft facilities and project financing at rates competitive in the countries in which the Company operates.
Removed
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.
Added
The current year amount includes certain one-time adjustments, including a charge associated with the termination of the Company's pension plan and the settlement of a legal proceeding.
Removed
Ukraine War The war in Ukraine and resulting Russian oil and gas boycotts have added to the surge in oil prices which has impacted some of the Company's material and freight costs. However, the Company has not experienced any direct impact from the disruption in this region.
Added
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 $5.8 million as of January 31, 2024 and January 31, 2023 , respectively.
Removed
The Company does not source materials from this region, nor does it serve this market in any material nature.
Added
The decrease of $7.8 million during the year ended January 31, 2024 consisted of using the remaining $1.0 million authorized as part of the Company's share repurchase program to reacquire its outstanding shares of common stock, as compared to $0.1 million during the year ended January 31, 2023.
Removed
Oil and Gas Market Increases in oil prices helped to improve demand for the Company's products in the oil and gas markets during the year ended January 31, 2023 as compared to the year ended January 31, 2022 ,the Company's activity level in Canada has increased significantly due to the rise in energy prices. See Item 1A.
Added
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”).
Removed
Liquidity Position The Company further enhanced its liquidity position on September 17, 2021 when it executed an extension of a Revolving Credit and Security Agreement (the “Credit Agreement”) with PNC Bank, National Association ("PNC"), as administrative agent and lender, 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”).
Added
The Company had borrowed an aggregate of $0.2 million and $0.6 million as of January 31, 2024 and January 31, 2023, respectively, and is presented as a component of current maturities of long-term debt in the Company's consolidated balance sheets.
Removed
Additionally, as of January 31, 2023 , the Company had borrowed $ 5.7 million and had an additional $ 10.2 million of borrowing remaining available under its foreign revolving credit arrangements.
Added
As of January 31, 2024 and January 31, 2023, the Company had unused borrowing availability of approximately $1.9 million and $1.6 million, respectively. The Company has a revolving line for 20.5 million U.A.E.
Removed
Supply Chain Constraints and Inflationary Impacts Due to the current inflationary environment, raw material supply shortages and transportation delays, the Company could experience delays and has incurred increased prices for raw materials used in the Company's production processes.
Added
The Company had borrowed an aggregate of $0.1 million and $1.0 million as of January 31, 2024 and January 31, 2023, respectively, and is presented as a component of current maturities of long-term debt in the Company's consolidated balance sheets.
Removed
To mitigate these impacts, the Company has implemented several strategies, including purchasing from 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. See Item 1A.
Added
As of January 31, 2024, the facility has an interest rate of approximately 20.75% and expired in August 2023. This credit arrangement was subsequently renewed in November 2023 with substantially the same terms and conditions and expires in November 2024.

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