Perma-Pipe International Holdings, Inc. 2027 Q2 Earnings Call

Please go ahead. Thank you, operator.

Good morning, everyone, and thank you for joining Perma-Pipe International Holdings' second quarter fiscal 2026 earnings conference call. With me on the call today are Saleh Sagr, President and Chief Executive Officer, and Matt Lewicki, Chief Financial Officer. Our second quarter results were issued this morning before market open. If you have not yet seen the release, it is available in the investor section of our website at investors.permapipe.com, where an archive of today's call will also be posted. Our Form 10-Q for the second quarter was filed this morning and is available on our IR site or at sec.gov. Before we begin, a reminder that our remarks today will include forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended.

These include, without limitation, statements regarding the expected future performance and operations of the company. These statements should be considered subject to the many risks and uncertainties that exist in the company's operation and business environment, and our actual results could differ materially from what we describe today. Those risks and uncertainties are described in today's earnings release and in our filings with the Securities and Exchange Commission, which are available at sec.gov and in the investors section of our website. Those include, among others, movement in input prices and our ability to pass through input costs, the timing of order receipt, execution, delivery, and acceptance, and possible reductions or cancellations of backlog, the risks of our international operations, competitive pricing, and supplier relationships, the level of government and customer infrastructure spending, and our ability to execute our strategic plan and growth initiatives.

A complete discussion of these factors appears in today's earnings release and in our filings with the Securities and Exchange Commission, including, but not limited to, those under the heading Risk Factors in the company's latest annual report on Form 10-K. We caution you not to place undue reliance on any forward-looking statement. These statements are made only as of today's date, and we undertake no obligation to update them publicly, whether as a result of new information, future events, or otherwise. In addition, on today's call, management will refer to certain non-GAAP financial measures that management considers to be useful and differ from GAAP. These non-GAAP measures should be considered supplemental to corresponding GAAP figures.

Before turning the call over to our first speaker, in keeping with Perma-Pipe's plans to elevate our visibility and engagement with the investment community on a more proactive basis, we recently engaged Alliance Advisors as our investor relations agency of record. To follow up with IR, please contact the 847 area code number listed in our press release or via investor@permapipe.com. With that, I will now turn the call over to Saleh Sagr, President and Chief Executive Officer. Please go ahead, Saleh. Thank you, Chuck.

Good day, and welcome to our shareholders, our board members, and our employees. It is a privilege to address you today on Perma-Pipe's second quarter earnings conference call. Today marks an important milestone in how we engage with you. Beginning with this call, we are introducing regular quarterly calls to raise Perma-Pipe's profile with the investment community. Our goal is straightforward: to provide analysts and investors with a consistent forum in which to hear directly from us about our results, our operational progress, where we are taking the business, and to ask questions of us. I will begin today with an overview of the second quarter performance. We focus on our strategy and operational accomplishments. I will then turn the call over to Matt to review our financial results in detail.

Following Matt's remarks, I will return to discuss our outlook for the second half of the year, after which we will open the call to your questions. First, I would like to take a step back and give everyone a brief overview of Perma-Pipe. Perma-Pipe is a global leader in pre-insulated piping, anti-corrosion coatings, and leak detection systems. We deliver mission-critical infrastructure that moves, monitors, and protects energy, water, and thermal systems in demanding environments around the world. Because our work centers on discrete Custom engineer developments rather than commodity supply, we compete on engineering capability, technology, quality, and execution while manufacturing close to the markets we serve. Since I became CEO over one year ago, Perma-Pipe has pursued a clear set of priorities: sustainable growth, customer-centric innovation, investment in our people and culture, disciplined execution, and consistent communication with our shareholders.

We have expanded our manufacturing footprint where demand is growing, extended our reach across MENA through our joint venture in the Kingdom of Saudi Arabia, and continue to develop and commercialize technologies that address increasingly important infrastructure needs. Governments and corporations worldwide are investing heavily in infrastructure to support energy security, water security, urban development, and their digital ecosystems. Our products and solutions are increasingly aligned with these global priorities. The long-term structural demand trends across the end markets we serve, district heating and cooling, oil and gas, water security, energy, industrial, digital infrastructure, are creating durable wins for our business. We entered the year following a record fiscal 2025, which was defined by our strong financial performance, disciplined execution, and continued progress in our long-term expansion strategy. We delivered net sales of $210.9 million, up 33% year-over-year.

Net income attributable to common stock was $17 million, up 89%, and we ended the year with a backlog of $121.6 million. Building on that strong foundation, we delivered a second quarter that demonstrated continued momentum across our business. Starting with slide 2, we delivered net sales of $59.6 million, up 24% year-over-year. We grew net income attributable to common stock to $2.5 million, or approximately $0.31 per diluted share, from $0.9 million, or $0.10 per diluted share in the year ago period. After absorbing a $3.9 million charge related to an uncollectible accounts receivable balance, partially offset by a related $1.6 million tax benefit. We ended the quarter with a backlog of $142.3 million. Importantly, our second quarter was not only about financial performance, but also about operational execution.

We continue to execute against strategic initiatives that we believe will drive Perma-Pipe's growth over the long term. First, our Ohio facility, which serves as an important growth engine for our North American business, went operational and is ramped in production. The facility extends our reach, expands our ability to serve customers, supports our North American growth strategy, and provides additional capacity as demand continues to develop. Second, we ramped production at our Qatar facility, which is strategically positioned to serve the world's largest LNG exporter, QatarEnergy, as well as regional and international markets. The ramp underscores the growing importance of MENA to Perma-Pipe, and our strategy of establishing manufacturing capacity close to our customers and the markets we serve. Third, we continue to see strong demand across our core markets.

During the quarter, we secured $67.8 million of new orders, including significant awards from the oil and gas and infrastructure markets, as well as new mission-critical application for our leak detection solutions. Our quarter-end backlog provide us with a strong foundation for the second half of the year. I want to highlight the performance of our leak detection technology. Leak detection is an increasingly important component of our overall strategy. Customers and infrastructure owners are placing greater emphasis on pipeline integrity, asset protection, early detection, operational reliability, and minimizing the potential environmental and financial consequences of leaks. We are seeing tangible evidence of this market opportunity in our results. Our leak detection business has already secured approximately 80% of its full-year bookings target. This is significant achievement and provides us with a strong visibility into the remainder of the year.

More importantly, we believe this is indicative of a broader opportunity. Leak detection allows us to move beyond simply supplying pipes and into providing technology-enabled solutions that monitor and protect critical infrastructure through its operating life. We see meaningful opportunities to further expand PermAlert and our distributed fiber optic sensing capabilities across water, energy, oil and gas, DHC, and other critical infrastructure framework applications. This is an area where we believe Perma-Pipe has a differentiated position, and we intend to continue investing in the technology, market development, and commercial capabilities necessary to capture this market potential. In June, reflecting the growth in our market capitalization, Perma-Pipe joined the Russell 2000 and Russell 3000 Indexes, broadening our visibility within the investment community. We view this as another positive step in increasing awareness of Perma-Pipe among institutional investors and the broader capital markets.

Overall, we are pleased with the progress we are making. We are expanding our capacity, strengthening our geographic footprint, growing our technology-enabled offerings, and capitalizing on favorable secular trends across the markets we serve. With that overview, I will now turn the call over to Matt to take you through our financial results in detail.