Note 10 - Debt |
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| Debt Disclosure [Text Block] |
Note 10 - Debt
Debt consisted of the following:
Revolving lines - North America. On April 8, 2026, the Company entered into a Credit Agreement (the “Credit Agreement”) by and among the Company, as borrower, the other loan parties thereto, and JPMorgan Chase Bank, N.A., as lender (“JPMorgan”). The Credit Agreement effectively replaced the Company’s previous credit facility (the "PNC Credit Facility") with PNC Bank, National Association. On April 9, 2026, the Company drew $15.3 million under the Credit Agreement to pay off the remaining $15.2 million outstanding balance under the PNC Credit Facility and to fund $0.1 million of cash collateral required for cash management and purchasing card solutions. As of January 31, 2026, the Company had borrowed an aggregate of $10.7 million at a rate of 7.8% and had $2.7 million available under the PNC Credit Facility.
The Credit Agreement provides for a senior secured asset-based revolving credit facility with aggregate revolving commitments of $18.0 million, including a sublimit of up to $1.5 million for letters of credit. The revolving credit facility matures on October 7, 2027, unless earlier terminated in accordance with its terms.
As of July 31, 2026, the outstanding balance under the Credit Agreement was $17.3 million with a weighted-average interest rate of 6.9% and there were no outstanding letters of credit under the sublimit. Borrowings under the Credit Agreement are limited to the lesser of the revolving commitment and a borrowing base calculated as (i) 80% of eligible North American accounts receivable, plus (ii) 25% of eligible North American inventory (valued at the lower of cost or market), in each case subject to customary eligibility criteria and reserves established by JPMorgan.
Loans under the Credit Agreement bear interest, at the Company’s election, at either (i) a rate based on the CB Floating Rate (as defined in the Credit Agreement) or (ii) an adjusted term SOFR rate, in each case plus an applicable margin determined by the Company’s leverage ratio. The applicable margin for CB Floating Rate loans ranges from 1.50% to 2.00%, and for SOFR loans ranges from 2.50% to 3.00%. In addition, the Company is required to pay a commitment fee ranging from 0.20% to 0.30% on the unused portion of the revolving commitment.
The obligations under the Credit Agreement are secured by substantially all North American assets of the Company and the guarantor subsidiaries, subject to customary exclusions, and are guaranteed on a joint and several basis by certain existing and future subsidiaries of the Company, subject to customary exceptions.
The Credit Agreement contains customary affirmative and negative covenants, including, among other things, limitations on additional indebtedness, liens, investments, acquisitions, asset sales, restricted payments, and transactions with affiliates. The Credit Agreement also includes financial maintenance covenants requiring the Company to maintain both a minimum Fixed Charge Coverage Ratio and a maximum Leverage Ratio (each as defined in the Credit Agreement), which are tested upon the occurrence of certain availability thresholds.
The Credit Agreement includes customary events of default, including, among others, nonpayment of principal or interest, breaches of representations or covenants, cross‑defaults to other material indebtedness, insolvency events, judgments in excess of specified thresholds, certain ERISA and pension events, and a change in control. Upon the occurrence of an event of default, the Lender may terminate commitments, accelerate outstanding obligations, require cash collateralization of letters of credit, and exercise remedies against the collateral.
As of
July 31, 2026
, the Company was in compliance with all covenants under the Credit Agreement.
Subsequent Event - 2026 Credit Agreement
On August 25, 2026, the Company, as borrower, certain subsidiaries of the Company party thereto as loan parties, the lenders party thereto and JPMorgan as administrative agent, entered into a Credit Agreement (the “2026 Credit Agreement”). The 2026 Credit Agreement replaces the Company’s existing Credit Agreement dated April 8, 2026 with JPMorgan, as lender (the “Existing Credit Agreement”), which was terminated concurrently with the closing of the 2026 Credit Agreement. In connection with the closing, all outstanding borrowings under the Existing Credit Agreement were repaid in full. The 2026 Credit Agreement provides for a secured credit facility consisting of a $75.0 million revolving credit facility, which includes availability for letters of credit up to $30.0 million and swingline loans up to $5.0 million, and a $14.0 million term loan facility. Subject to the terms and conditions set forth in the 2026 Credit Agreement, the Company may also request increases in the revolving commitments or incremental term loans in an aggregate amount not to exceed $50.0 million. On the closing date, the Company borrowed $14.0 million under the term loan facility, and the proceeds thereof, together with other available cash, were used to repay outstanding borrowings under the Existing Credit Agreement. As of the closing date, $23.0 million was outstanding under the revolving credit facility. The Company intends to use borrowings under the 2026 Credit Agreement for working capital and general corporate purposes, which may include, from time to time, permitted acquisitions and other investments.
The revolving loans may be borrowed, repaid and reborrowed from time to time prior to the revolving credit maturity date, and the term loans are scheduled to amortize in quarterly installments beginning September 30, 2026, with the remaining unpaid principal due on the term loan maturity date. The revolving credit facility and term loan facility mature on August 25, 2031, unless earlier terminated or accelerated in accordance with the terms of the 2026 Credit Agreement.
Borrowings under the 2026 Credit Agreement bear interest, at the Company’s option and subject to the terms of the 2026 Credit Agreement, at rates based on the Alternate Base Rate or applicable term benchmark rates, including Adjusted Term SOFR, Adjusted EURIBOR or Adjusted Term CORRA, plus an applicable margin (each as defined in the 2026 Credit Agreement). The applicable margin is determined by reference to the Company’s leverage ratio and ranges from 1.50% to 2.00% for Alternate Base Rate loans and from 2.50% to 3.00% for term benchmark and RFR loans (each as defined in the 2026 Credit Agreement). The Company is also required to pay a commitment fee on the unused portion of the revolving commitments at a rate ranging from 0.20% to 0.30%, based on the Company’s leverage ratio, as well as customary fees with respect to letters of credit and administrative agent fees.
The obligations under the 2026 Credit Agreement are guaranteed by certain subsidiaries of the Company and are secured by liens on collateral granted by the loan parties. The 2026 Credit Agreement contains customary representations and warranties, affirmative and negative covenants, and events of default. The covenants include, among others, restrictions on indebtedness, liens, investments, dispositions, restricted payments and certain other transactions, as well as financial covenants requiring compliance with a leverage ratio and a fixed charge coverage ratio. The 2026 Credit Agreement requires the Company to maintain a consolidated leverage ratio of not more than 3.00 to 1.00 and a fixed charge coverage ratio of not less than 1.25 to 1.00, subject to the terms and exceptions thereof. As the 2026 Credit Agreement was executed after the balance sheet date, no amounts were outstanding under this facility as of July 31, 2026.
Credit facilities - foreign. 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 (“U.A.E.”)
The Company maintains a credit facility with a financial institution in the U.A.E. totaling 65.2 million U.A.E. Dirhams (“AED”) (approximately $17.7 million at
July 31, 2026
). Borrowings under the facility bear interest at the Emirates Inter Bank Offered Rate (“EIBOR”) plus 3.5% per annum, subject to minimum interest rates ranging from 4.5% to 8.0% per annum, depending on the type of financing utilized. The facility is stratified by instrument type and expires at various dates through October 2026. While certain portions of the credit arrangement have expired, the subsidiary continues to access the facility under the same terms while formal documentation of a renewal is being finalized with the lender. As of
July 31, 2026
the Company was in compliance with all financial covenants under the Facility, including a maximum Adjusted Leverage Ratio and a minimum Adjusted Tangible Net Worth requirement.
As of
July 31, 2026
and
January 31, 2026
, the Company had outstanding borrowings of 5.5 million AED (approximately $1.5 million) and 9.4 million AED (approximately $2.6 million), respectively, which are included in “Short-term borrowings and current maturities of long-term debt” on the Condensed Consolidated Balance Sheets. Additionally, as of
July 31, 2026
and
January 31, 2026
, the Company had issued guarantees totaling 28.0 million AED (approximately $7.6 million) and 30.9 million AED (approximately $8.4 million). After accounting for outstanding borrowings and issued guarantees, the Company had unused availability of approximately $8.6 million and $6.8 million under the credit facility as of
July 31, 2026
and
January 31, 2026
, respectively.
The Company maintains a letter of credit facility with a financial institution in the U.A.E. totaling 100.0 million AED (approximately $27.2 million at July 31, 2026). While the credit arrangement had a scheduled expiration date in July 2026, the subsidiary continues to access the facility under the same terms while formal documentation of a renewal is being finalized with the lender. The facility is non-interest bearing; however, the Company incurs a commission ranging from 0.8% to 1.0% per annum on the face value of issued instruments and is required to maintain cash collateral (margins) ranging from 10% to 15% depending on the type of instrument utilized. As of July 31, 2026, the Company had outstanding guarantees under this facility of 39.3 million AED (approximately $10.7 million). The remaining available balance under the facility was approximately $16.5 million as of July 31, 2026.
Egypt
In June 2021, the Company's Egyptian subsidiary entered into a credit facility with a financial institution in Egypt, which has been subsequently amended. The facility provides project-based financing and expires in December 2026. The facility has a maximum borrowing capacity of 120.0 million Egyptian Pounds (approximately $2.4 million at
July 31, 2026
). The line is secured by certain assets of the subsidiary, including accounts receivable, and contains various covenants, including a maximum leverage ratio and restrictions on incurring additional indebtedness. Covenants under this facility are measured annually at year-end, and the Company was in compliance with all such covenants at its most recent measurement date.
As of
July 31, 2026
, borrowings under the Company’s credit facility in Egypt bore interest at rates ranging from 15.0% to 20.8%. The 15.0% rate relates to specific government-sponsored initiatives, while the 20.8% rate applies to our general facility limits. The Company had no amount outstanding and $0.2 million outstanding under this arrangement as of
July 31, 2026
and
January 31, 2026
, respectively. These amounts are included in "Short-term borrowings and current maturities of long-term debt" on the Condensed Consolidated Balance Sheets. As of
July 31, 2026
and
January 31, 2026
, the Company had unused availability of approximately $2.4 million and $2.2 million, respectively.
Saudi Arabia
In March 2022, the Company’s Saudi Arabian subsidiary entered into a credit arrangement with a financial institution in Saudi Arabia for a revolving line totaling 37.0 million Saudi Riyals (“SAR”) (approximately $9.9 million at July 31, 2026). The credit arrangement provides project-based financing at interest rates competitive in Saudi Arabia and is secured by certain assets of the subsidiary including accounts receivable. While the credit arrangement had a scheduled expiration date of April 27, 2026, the subsidiary continues to access the facility under the same terms while formal documentation of a renewal is being finalized with the lender.
As of July 31, 2026, the facility bore interest at a rate of approximately 8.5%. As of July 31, 2026 and January 31, 2026, the Company had outstanding borrowings of 3.0 million SAR (approximately $0.8 million) and 10.9 million SAR (approximately $2.9 million), respectively, which are included in “Short-term borrowings and current maturities of long-term debt” on the Condensed Consolidated Balance Sheets. Additionally, as of July 31, 2026 and January 31, 2026, the Company had issued guarantees totaling 5.0 million SAR (approximately $1.3 million) and 6.3 million SAR (approximately $1.7 million), respectively. After accounting for outstanding borrowings and issued guarantees, the Company had unused availability of approximately $7.8 million and $5.3 million under the credit facility as of July 31, 2026 and January 31, 2026, respectively.
Foreign credit facilities - overall 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 lines are secured by certain equipment, certain assets (such as accounts receivable and inventory), and a guarantee by the Company. Some credit arrangement covenants require a minimum tangible net worth to be maintained, including maintaining certain levels of intercompany subordinated debt. In addition, some of the revolving credit facilities restrict payment of dividends or undertaking of additional debt. The Company guarantees only a portion of the subsidiaries' debt, including foreign debt. As of July 31, 2026 and January 31, 2026, the amount of foreign subsidiary debt guaranteed by the Company was approximately $5.0 million and $8.4 million, respectively.
The Company was in compliance with respect to the financial covenants under the foreign credit arrangements as of July 31, 2026. Certain of these arrangements are subject to periodic renewal; while such renewals are being processed, the Company remains in regular communication with the lenders, and the arrangements have historically continued without interruption or penalty. On July 31, 2026, interest rates were based on (i) the EIBOR plus 3.5% per annum for the U.A.E. credit arrangements, which have minimum interest rates ranging from 4.5% to 8.0% per annum; (ii) interest rates ranging from 15.0% to 20.8% for the Egypt credit arrangements; and (iii) an interest rate of 8.5% for the Saudi Arabia credit arrangement. Based on these base rates, as of July 31, 2026, the Company's interest rates ranged from 7.4% to 20.8%, with a weighted average rate of 8.0%, and the Company had facility limits totaling $57.2 million under these credit arrangements. As of July 31, 2026, $19.6 million of the facility limits were utilized to support letters of credit to guarantee amounts committed for inventory purchases and for performance guarantees. Additionally, as of July 31, 2026, the Company had borrowed $2.3 million and had an additional $35.3 million of borrowing availability remaining under the foreign revolving credit arrangements. The foreign revolving lines balances were included as a component of "Short-term borrowings and current maturities of long-term debt" on the Condensed Consolidated Balance Sheets as of July 31, 2026 and January 31, 2026.
Finance obligation - buildings and land.
On April 14, 2021, the Company entered into a purchase and sale agreement (the "Purchase and Sale Agreement") to sell its land and building in Lebanon, Tennessee (the "Property"). 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. The Company used the remaining proceeds to repay its borrowings under the PNC Credit Facility, for strategic investments, and for general corporate needs. Concurrent with the sale of the Property, the Company entered into a -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%. Under the Lease Agreement, the Company has consecutive options to extend the term of the lease by years for each such option. As of
July 31, 2026
and
January 31, 2026
, the Company had a net book value relating to this asset of $1.6 million and $1.7 million, respectively.
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 the fair value of the underlying asset. 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 current portion of the finance obligation of $0.3 million is recognized in "Short-term borrowings and current maturities of long-term debt" and the long-term portion of $8.4 million is recognized in "Long-term debt, less current maturities
" on the Condensed Consolidated Balance Sheets as of
July 31, 2026
. The net carrying amount of the financial liability and remaining assets will be zero at the end of the lease term.
Mortgage Note.
On July 28, 2016, the Company entered into a mortgage agreement secured by the Company's manufacturing facility located in Alberta, Canada that matures on December 23, 2042. As of
July 31, 2026
, the remaining balance on the mortgage in Canada is approximately 5.3 million Canadian Dollars ("CAD") (approximately $3.7 million). The interest rate is variable, and was 6.3% at
July 31, 2026
. The principal balance is included as a component of "Short-term borrowings and current maturities of long-term debt" and "Long-term debt, less current maturities" on the Condensed Consolidated Balance Sheets and is presented net of issuance costs of $0.1 million as of
July 31, 2026
and
January 31, 2026
. Subsequent to July 31, 2026, the mortgage note was repaid in full on August 28, 2026, using proceeds from the 2026 Credit Agreement.
Loan Payable to GIG. In June 2023, in connection with the formation of a joint venture with Gulf Insulation Group (“GIG”), the Company assumed a promissory note with an aggregate principal amount of approximately $2.8 million, which matured on April 9, 2026. Through the date of this filing, the Company and GIG are engaged in constructive discussions to reach an agreement on renewal or settlement of the promissory note. Because a definitive agreement has not been executed as of the balance sheet date, the Company did not possess a contractual, unconditional right to defer settlement of the obligation for at least twelve months following July 31, 2026 . Accordingly, the full obligation is classified within “Short-term borrowings and current maturities of long-term debt” on the Condensed Consolidated Balance Sheets as of July 31, 2026 .
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