Perma-Pipe(PPIH) - 2024 Q4 - Annual Report

PART I Cautionary Statements Regarding Forward Looking Information This section disclaims forward-looking statements, highlighting that actual results may differ due to various outlined risks - Forward-looking statements are subject to numerous risks and uncertainties that could cause actual results to differ materially from projections[12] - Key risk categories include market conditions, financial stability, business operations, and general factors such as cybersecurity threats[13][14][15] Item 1. BUSINESS PPIH manufactures and sells specialty piping and leak detection systems globally, with a significant FY2024 backlog increase from new awards - PPIH engineers, designs, manufactures, and sells specialty piping systems (insulated, containment, coating for oil/gas, anti-corrosion) and leak detection systems[17] Backlog Comparison (as of January 31) | Year | Backlog (Millions USD) | | :--- | :--------------------- | | 2024 | $68.4 | | 2023 | $38.5 | - The increase in backlog was primarily due to new awards exceeding completed projects in North America and the Middle East[23] - No single customer accounted for greater than 10% of consolidated net sales or accounts receivable in fiscal years 2024 and 2023, indicating a diverse customer base[21][22] - The company faces challenges from inflationary environments, raw material shortages, and transportation delays, mitigating these through alternative suppliers, advance purchasing, and price adjustments[27] Products and Services Employees Information about our Executive Officers Available Information Item 1A. RISK FACTORS This section details various market, financial, business, and general risks that could materially impact PPIH's operations - Market condition risks include significant impacts from changes in oil and gas prices, inability to purchase raw materials at favorable prices, and decreases in government spending[38][39][42] - Financial risks involve potential non-compliance with debt covenants, challenges in renewing international credit facilities, and the risk of not collecting a $2.2 million long-term account receivable from a Middle East project[44][47] - Business condition risks highlight potential negative impacts from delays in order execution, aggressive competition, claims for defective products, and the complexities of international operations, where foreign sales constituted 65.6% of total sales in FY2024[55][57][61] - General risks include the inability to retain senior management and key personnel, challenges in achieving expected benefits from growth initiatives, and the potential for cybersecurity threats to disrupt operations[64][65][67] Item 1B. UNRESOLVED STAFF COMMENTS No unresolved staff comments are reported - No unresolved staff comments were reported[68] Item 1C. CYBERSECURITY PPIH employs a comprehensive cybersecurity program, overseen by the Audit Committee, with no material events reported - The company's cybersecurity program utilizes technological safeguards, third-party providers for network monitoring and control testing, and maintains an incident response plan[68][69][71] - The Audit Committee of the Board of Directors is responsible for overseeing cybersecurity risks, receiving periodic updates from the Director of Information Technology[72][74] - As of the report date, the Company has not experienced any material cybersecurity events[72] Item 2. PROPERTIES PPIH operates from various owned and leased facilities across the United States, Canada, India, and the Middle East Operating Facilities by Location | 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 | Item 3. LEGAL PROCEEDINGS PPIH is involved in ordinary course legal proceedings; a 2018 customer dispute was resolved post-FY2024 for $0.8 million - The Company accrues liabilities for legal matters when probable and estimable[78] - A 2018 legal proceeding with a customer was resolved post-January 31, 2024, with an $0.8 million settlement expense recognized in the fiscal year ended January 31, 2024[78][310] Item 4. MINE SAFETY DISCLOSURES This item is not applicable to the Company - Mine Safety Disclosures are not applicable to Perma-Pipe International Holdings, Inc[78] PART II Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES PPIH common stock trades on Nasdaq, has never paid dividends, and completed a $3.0 million share repurchase in FY2024 - Common stock is traded on the Nasdaq Global Market under the symbol 'PPIH'[80] - The Company has never declared or paid a cash dividend and does not anticipate paying any in the foreseeable future, prioritizing funds for business development, working capital, and stock repurchases[81] - The Company completed its $3.0 million share repurchase program during the 12 months ended January 31, 2024, utilizing the remaining $1.0 million authorized[84][299] Issuer Purchases of Equity Securities (2022-2023) | Period | Total number of shares purchased | Average price paid per share | Total number of shares purchased as part of publicly announced plans or programs | | :----------------------------------- | :------------------------------- | :--------------------------- | :------------------------------------------------------------------------------- | | January 1, 2022 - January 31, 2022 | 98 | $8.81 | 98 | | July 1, 2022 - July 31, 2022 | 5 | $8.85 | 5 | | December 1, 2022 - December 31, 2022 | 3 | $8.61 | 3 | | July 1, 2023 - July 31, 2023 | 37 | $8.51 | 37 | | August 1, 2023 - August 31, 2023 | 62 | $8.67 | 62 | | September 1, 2023 - September 30, 2023 | 10 | $8.95 | 10 | | Total | 215 | | 215 | Item 6. [RESERVED] This item is reserved and contains no information Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS PPIH's MD&A reviews FY2024 financial performance, noting increased net sales and income, stable liquidity, and critical accounting policies [Results of Operations](index=20&type=section&id=Results%20