Earnings Recap — Q2 FY2026
CY Q3 2026 · Reported September 9, 2026 · Beat 3 of last 6 quarters
Perma-Pipe International Holdings, Inc. reported Q2 FY2026 revenue of $60M, a beat of 16.3% against consensus, and EPS of $0.31, a miss of 43.6%.
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Perma-Pipe's Q2 results show the company is increasingly levered to AI data center infrastructure, with management stating it has captured significant market share in PermAlert leak detection systems for North American AI data centers and expecting the market to remain active until about 2030 or 2031. The Ohio facility, primarily geared to serve data centers and district heating and cooling, is ramping toward full production by early 2027, adding capacity for that demand. The new $75 million revolver plus $14 million term loan gives Perma-Pipe the financial capacity to pursue projects exceeding $100 million, which could support larger-scale infrastructure awards in MENA and North America.
Perma-Pipe reported Q2 FY2026 net sales of $59.6 million, up 24% year-over-year, with net income attributable to common stock of $2.5 million, or $0.31 per diluted share, compared with $0.9 million, or $0.10 per diluted share, in the prior year period. The quarter included a $3.9 million charge for an uncollectible accounts receivable balance with a specific customer, partially offset by a $1.6 million tax benefit. Gross profit was $17.4 million, or approximately 29% of net sales, with gross profit dollars up 21% on higher volume. The company secured $67.8 million of new orders and ended the quarter with backlog of $142.3 million, up from $121.6 million at fiscal year-end. Operationally, the Ohio facility went operational and is ramping production, the Qatar facility ramped production to serve QatarEnergy and regional markets, and the leak detection business secured approximately 80% of its full-year bookings target. Subsequent to quarter end, the company closed a new global credit facility with JPMorgan Chase consisting of a $75 million revolver and $14 million term loan.
Management expressed confidence in a strong second half of fiscal 2026, supported by the $142.3M backlog, a growing pipeline of RFP and quoting opportunities, and business development initiatives across regions. The company expects approximately 40%-50% of backlog to convert to revenue in the third quarter. Both the Ohio and Qatar facilities are in ramp-up phase, with full production expected by early 2027, and management noted that near-term margin impact stems from absorbing fixed costs before full utilization. The objective remains to return consolidated gross margins to higher than 30%, with operating leverage expected as revenue growth outpaces corporate overhead. Management highlighted a product pipeline in excess of $900 million and said the new $75 million revolving credit facility plus $14 million term loan with JPMorgan Chase positions the company to compete for projects exceeding $100 million that it previously could not pursue. Saudi Aramco qualified a new product line for the Kingdom's energy expansion program, and the Jordan MOU with Welspun opens pipe manufacturing and broader Levant opportunities, though the National Water Carrier project is not yet a definitive award and is not in backlog.
“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.”
on Q2 results and bad debt charge
“Our objective remains to return consolidated gross margins to higher than 30s. Also keep in mind that some of the impact on our margins currently is due to the ongoing conflict in the Middle East. Shipping costs have risen significantly. Commodity prices have also increased.”
on Margin trajectory and cost pressures
“With having this facility in place, Tyler, would really enable us to be able to compete for and win large projects. As you probably know already, for the past several years, because of the value and the size of Perma-Pipe, we were hugely disadvantaged in terms of trying to compete for large opportunities. I mean, by large opportunities, anything in excess of $100 million.”
on New credit facility and project scale
Do you expect the recently introduced U.S. and Canadian tariffs to have any meaningful impact on the business, particularly on input costs? If so, how significant could that impact be?
Saleh Sagr said tariffs globally impact business operations everywhere. The company tries to mitigate by outsourcing locally, but it is not always possible to source everything from local markets. Some impact was expected and experienced over the first couple of quarters, and management expects this to subside and return to normal in the future.
Can you talk a bit more about the magnitude and scale of the Welspun joint venture? Are there any other opportunities elsewhere around the world with Welspun?
Saleh Sagr said the Welspun partnership is intended to establish local manufacturing capability in Jordan and position Perma-Pipe for a significant pipeline of infrastructure opportunities. The National Water Carrier Project is the immediate anchor opportunity, but the MOU is not yet a definitive award and has not been included in backlog. The investment will enable Perma-Pipe to serve the Levant region, including Syria, Iraq, Palestine, Lebanon, and Jordan, and will allow entry into pipe manufacturing for the first time.
Without discussing any individual customer, can you give us a sense of how the practical size of projects you can pursue has changed under this facility? Specifically on the Jordan Water Carrier project, what portion of that opportunity will potentially fall within the Welspun Perma-Pipe joint venture?
Matt Lewicki said the global facility positions the company for continued growth and strengthens liquidity management across the global entity, bringing operations into a common lending relationship. Saleh Sagr added that the facility enables Perma-Pipe to compete for and win large projects in excess of $100 million, which it previously could not support financially. He noted the product pipeline is in excess of $900 million and that priorities include funding organic expansion in Qatar and MENA, focusing on Jordan, and considering M&A that adds technology, customers, or recurring revenue.