Perma-Pipe International Holdings, Inc. — Second Quarter 2026 Earnings Summary

Financial Performance

• Net sales increased 24.4% year-over-year to $59.6 million, up from $47.9 million in the prior-year quarter, driven by higher sales volumes in North America and the MENA region.
• Gross profit rose 20.7% to $17.4 million compared to $14.4 million in the prior-year quarter; gross margin decreased to 29.2% from 30.1% due to increased materials, logistics costs, and ramp-up costs at the new Ohio facility.
• Net income attributable to common stock increased to $2.5 million ($0.31 per diluted share) from $0.9 million ($0.10 per diluted share) in the prior-year quarter.
• Income from operations grew to $4.3 million from $3.2 million in the prior-year quarter.
• General and administrative expenses were $11.9 million, up from $10.0 million, primarily due to a $3.9 million charge for an uncollectible receivable and $0.5 million in Ohio start-up costs, partially offset by lower personnel costs.
• Adjusted income before taxes was $8.3 million for the quarter, compared to $4.9 million in the prior-year quarter; for the six-month period, adjusted income before taxes was $12.5 million versus $12.3 million.
• Cash and cash equivalents totaled $31.8 million at quarter-end, an increase of $3.5 million from the previous quarter.
• Operating cash flow for the quarter was approximately $7.2 million, driven by net income and favorable working capital changes; for the first six months, operating cash flow was $13.3 million compared to $1.3 million used in the prior-year period.
• Total debt was $36.1 million at July 31, 2026, up from $32.5 million at January 31, 2026.
• Capital expenditures were $2.0 million in the second quarter and $3.2 million for the first six months of fiscal 2026.

Guidance and Future Outlook

• Management expressed confidence in converting current opportunities into sustainable, long-term value, citing strong backlog momentum, a growing pipeline of RFP and quoting activity, and a new global credit facility.
• The company entered the second half of the year with momentum supported by its $142.3 million backlog and strategic market expansion.

Business Segments and Product Lines

• New orders exceeded $67 million in the second quarter, including significant oil and gas awards in MENA and Canada, the company's first critical-cooling infrastructure award in MENA, and continued growth at the new Ohio facility.
• Operations commenced and production ramped up at the new Ohio manufacturing facility to support higher U.S. demand.
• Expansion is underway at the Qatar facility in MENA to meet local demand.
• A memorandum of understanding was entered into subsequent to quarter-end to form a joint venture in Jordan to serve a large-scale, government-supported water-security infrastructure program.

Market and Competitive Landscape

• Backlog stood at $142.3 million at July 31, 2026, up from $136.5 million at April 30, 2026, and $121.6 million at January 31, 2026, remaining well diversified across geographies, customers, and end-markets.
• The company is capitalizing on strong secular demand for localized infrastructure solutions.

Risks and Challenges

• Gross margins were impacted by increased materials and logistics costs affecting global operations.
• The quarter included a $3.9 million non-recurring charge related to an uncollectible account receivable from a specific customer.
• The effective tax rate was 16% in the current quarter compared to 54% in the prior-year quarter, largely due to a $1.6 million discrete tax benefit related to the uncollectible receivable.

Management Commentary and Tone

• President and CEO Saleh Sagr stated that results reflect continued commercial momentum and the fundamental strength of end markets, highlighting year-over-year growth in net income as evidence of the platform's earnings power.
• Management emphasized operational foundation building for sustainable long-term growth through facility expansions in Ohio, Qatar, and the new Jordan joint venture.
• The tone was confident regarding the company's ability to execute its strategic plan and convert opportunities into shareholder value.

Other Key Points

• Subsequent to quarter-end on August 25, 2026, the company entered into a new global credit agreement with JPMorgan Chase Bank, N.A., replacing the previous $18.0 million facility.
• The new credit facility includes a $75.0 million revolving credit facility (with up to $30.0 million for letters of credit) and a $14.0 million term loan facility, representing approximately $90 million in total commitments at closing, with access to an additional $50.0 million of incremental capacity.
• At closing of the new facility, the company borrowed $14.0 million under the term loan and $23.0 million under the revolving credit facility, using proceeds to repay the prior JPMorgan credit agreement and the mortgage note on its Alberta, Canada manufacturing plant.
• The company reported a $1.6 million discrete tax benefit related to the uncollectible account receivable.