MFRI, INC. AND SUBSIDIARIES
Condensed Statements of Operations and Related Data (Unaudited)
Three Months Ended
(In 000's except per share data) April 30, January 31, April 30,
Operating Statement Information 2010 2010 2009
--------- ----------- ---------
Net sales
Piping Systems $ 25,216 $ 20,778 $ 32,627
Filtration Products 19,114 21,598 23,305
Industrial Process Cooling 5,191 5,268 5,053
Corporate and Other (1) 329 1,466 6,594
--------- ----------- ---------
Total 49,850 49,110 67,579
--------- ----------- ---------
Gross profit:
Piping Systems 7,002 4,011 14,148
Filtration Products 2,637 726 2,646
Industrial Process Cooling 1,289 1,178 1,051
Corporate and Other (176) 185 882
--------- ----------- ---------
Total 10,752 6,100 18,727
--------- ----------- ---------
Income (loss) from operations
Piping Systems 3,436 185 9,952
Filtration Products (519) (2,306) (285)
Industrial Process Cooling (184) (681) (495)
Corporate and Other (2,895) (1,466) (2,300)
--------- ----------- ---------
Total (162) (4,268) 6,872
(Loss) income from joint venture (97) 87 0
Interest expense, net 285 323 688
--------- ----------- ---------
(Loss) income before income taxes (544) (4,504) 6,184
Income tax (benefit) expense (60) 1,277 178
--------- ----------- ---------
Net (loss) income $ (484) $ (5,781) $ 6,006
========= =========== =========
Weighted average common shares
outstanding
Basic 6,837 6,835 6,816
Diluted 6,837 6,835 6,852
(Loss) earnings per share:
Basic $ (0.07) $ (0.85) $ 0.88
Diluted $ (0.07) $ (0.85) $ 0.88
April 30, January 31,
2010 2010
Backlog: ---------- -----------
Piping Systems $ 52,564 $ 48,770
Filtration Products 21,271 21,397
Industrial Process Cooling 4,021 2,377
Corporate and Other 8,223 788
---------- -----------
Total $ 86,079 $ 73,332
========== ===========
(1) Corporate and Other includes activity for the installation of heating,
ventilation and air conditioning systems.
See the Company's Form 10-Q for the period for notes to financial
statements.
MFRI Announces Results for First Quarter Ended April 30, 2010
| Quelle: MFRI
NILES, IL--(Marketwire - June 11, 2010) - MFRI, Inc. (NASDAQ : MFRI ) announced today sales
and earnings for the quarter ended April 30, 2010. The Company's net sales
in the first quarter were $49.9 million, 26.2% less than $67.6 million in
the corresponding quarter of the prior year; net loss was $484 thousand or
($0.07) per diluted share, compared to net income of $6.0 million or $0.88
per diluted share, in the prior-year's quarter.
FIRST QUARTER
SALES -- Sales were $49.9 million, 26.2% less than $67.6 million for the
prior-year's quarter and essentially the same as the previous quarter. The
prior-year quarter included sales related to the India pipeline project,
which was completed in the fall of 2009, and activity in the heating,
ventilation and air conditioning systems ("HVAC") business included in
Corporate and Other.
GROSS PROFIT -- Gross profit for the quarter decreased to $10.8 million or
21.6% of sales from $18.7 million or 27.7% of sales in the corresponding
prior-year quarter, which included gross profit related to the India
pipeline project. Excluding the effects of the India pipeline project and
HVAC activity, gross profit was in line with prior year and substantially
higher than the $6.1 million of the previous quarter.
EXPENSES -- Operating expenses decreased to $10.9 million or 21.9% of sales
from $11.9 million or 17.5% of sales in the prior-year period. The
decrease in expenses was primarily due to staffing reductions and decreased
profit-based incentive expense.
NET (LOSS) INCOME -- Net loss was $484 thousand or ($0.07) per diluted
share, compared to net income of $6.0 million or $0.88 per diluted share in
the prior-year's quarter. This decrease was primarily due to the absence
of sales and profits related to the India pipeline project and HVAC
activity that occurred in the prior-year first quarter. The effective
income tax rate of 11.1% was less than the statutory U. S. federal income
tax rate mainly due to the impact of tax-free foreign income in the United
Arab Emirates ("U.A.E.").
BACKLOG -- The Company's backlog on April 30, 2010 was $86.1 million, up
$12.8 million or 17.4% from January 31, 2010. The principal factors
driving this increase are bookings in domestic piping systems activity,
addition of an HVAC project, and the highest level of bookings in
industrial process cooling since October 2008.
PIPING SYSTEMS -- The first quarter net sales and profit were significantly
below the record first quarter last year. In the prior year, the Company
was working actively on a 600 Kilometer (370 mile) India pipeline project.
Since the initial project was completed in the fall of 2009, no work was
performed in the fourth quarter of 2009 or first quarter of 2010 at the
India facility. However, in January 2010, the Company received an order to
insulate and jacket at least an additional 150 kilometers (93 miles) of
pipeline for this project. The new work will begin in the second quarter
of 2010 and is expected to be completed by the end of the year. With
backlog up by 8% from the beginning of the fiscal year, the Company is off
to a good start considering the generally poor economic climate
particularly in the Dubai market.
FILTRATION PRODUCTS -- Industrial markets for filters continue to be
constrained, and this was reflected in an 18.0% decrease in net sales from
the prior-year's first quarter. Even so, the filtration products business
maintained a level gross profit and improved gross margin by 2.4 percentage
points compared to the prior-year period. Foreign exchange loss and
increased product development, selling and advertising expenses produced a
bigger operating loss than last year's first quarter. However, when
compared to the previous quarter, the loss was substantially reduced on
lower sales due to improved margins. The Company will continue to invest
in new product development and geographic expansion of sales activity to
improve its competitive position in this very challenging market.
INDUSTRIAL PROCESS COOLING -- Market conditions for industrial process
equipment continue to be difficult although the market is showing some
signs of improvement. Net sales were slightly higher than the same quarter
last year and essentially flat with last quarter. Gross profit margin
improved 4.0 percentage points from the prior year and 2.4 percentage
points from last quarter. This improvement, coupled with good expense
control, resulted in a small loss for the quarter compared to much larger
losses in the prior-year's quarters. Quoting activity and orders have
shown increased strength over the past several months, both domestically
and internationally. Several large orders were secured and the base
business seems to be solidifying with backlog at the highest level since
October 2008.
HVAC CONTRACTING -- The market for new HVAC projects remained constrained
by economic conditions. Quoting activity for HVAC projects has maintained
reasonably high levels and in early 2010, an $8 million contract was
obtained for a Chicago project. Fieldwork on this new project is expected
to begin late in the second quarter of 2010.
David Unger, CEO, said, "Maintaining our diversified product mix and
geographic view has helped mitigate the effects of a difficult global
economic climate. We believe market conditions will remain challenging for
some time. We plan to continue to make strategic investments that are
necessary to maintain growth in the long term. An example of that is our
recently announced initiative to establish a pipe insulation facility in
Saudi Arabia designed to capture a greater share of the growing market in
that country and nearby Gulf Cooperation Council countries."
Brad Mautner, President and COO, said, "Although the quarter produced a net
loss, each of the businesses worked diligently to maximize their results
from the opportunities that were available. This is certainly evident when
comparing sequential quarters. Net sales were essentially flat from last
quarter; however, the Company increased gross profit substantially and
reduced the net loss from $0.85 to $0.07 per diluted share. Balancing new
initiatives with the day-to-day challenges of reduced market demands will
continue to test our Company; however we are prepared to face this reality
and leverage our strengths to improve results even more."
MFRI, Inc. is a multi-line company engaged in the following businesses:
pre-insulated specialty piping systems for oil and gas gathering, district
heating and cooling and other applications; custom-designed industrial
filtration products to remove particulates from dry gas streams; industrial
process cooling equipment to remove heat from molding, printing and other
industrial processes; and installation of heating, ventilation and air
conditioning for large buildings.
Form 10-Q for the period ended April 30, 2010 will be accessible at
http://www.sec.gov/. For more information visit the Company's website
www.mfri.com or contact the Company directly.
Statements and other information contained in this announcement which can
be identified by the use of forward-looking terminology such as
"anticipate," "may," "will," "expect," "continue," "remain," "intend,"
"aim," "should," "prospects," "could," " position," "future," "potential,"
"believes," "plans," "likely," "seems," and "probable," or the negative
thereof or other variations thereon or comparable terminology, constitute
"forward-looking statements" within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934 as amended and are subject to the safe harbors created
thereby. These statements should be considered as subject to the many
risks and uncertainties that exist in the Company's operations and business
environment. Such risks and uncertainties include, but are not limited to,
economic conditions, market demand and pricing, competitive and cost
factors, raw material availability and prices, global interest rates,
currency exchange rates, labor relations and other risk factors.