NILES, IL--(Marketwire - Apr 30, 2012) - MFRI, Inc. (
The Company also announced that fourth quarter 2011 sales were $45 million compared to $48 million for 2010's fourth quarter. Net loss for the fourth quarter was $2 million or $0.34 per share, compared to a net loss of $1.6 million or $0.23 per share, in the prior-year period.
FISCAL YEAR ENDED 1/31/2012
SALES - Net sales were $233.5 million in 2011, an increase of 7% from $219 million in 2010. Sales increased in filtration products, industrial process cooling and heating, ventilation and air conditioning ("HVAC"). Piping systems sales declined due to reduced activity at the United Arab Emirates ("U.A.E.") facility and no large project related revenue at the India facility.
GROSS PROFIT - Gross profit of $36 million in 2011 decreased 18% from $44 million in 2010. Gross margin was 16% compared to 20% in 2010. Gross profit increased significantly in filtration products, industrial process cooling and HVAC due to increased sales volume and margin improvements. Piping systems' gross profit decreased considerably to $14.4 million in 2011 from $27.3 million in 2010 due to lower volume at the U.A.E. facility and no large project related activity at the India facility.
EXPENSES - Operating expenses decreased to $41.4 million or 18% of sales from $41.6 million or 19% of sales in the prior year. The reduction was mainly due to lower profit-based management incentive compensation expense, lower stock compensation expense and lower legal expenses partially offset by $2.3 million of start-up costs for piping systems new facility in Saudi Arabia.
TAXES - The Company's worldwide effective income tax rate was (0.3)%. The effective tax rate in 2011 was less than the statutory U.S. federal income tax rate, due to foreign losses [see table below] and repatriation of foreign earnings. The Company recorded $1.8 million in tax expense associated with the $3.1 million repatriation of foreign earnings that occurred in July 2011. This tax expense included a payment of $0.5 million to the foreign tax authority and an accrual of $1.3 million U.S. tax on foreign source income. No cash will be paid for this tax in the U.S. since the Company has a net operating loss carryforward for federal income taxes.
| Income (loss) before income taxes | 2011 | 2010 | |||||||
| Domestic | $ | 4,517 | $ | (9,805 | ) | ||||
| Foreign | (9,487 | ) | 12,425 | ||||||
| Total | $ | (4,970 | ) | $ | 2,620 | ||||
NET (LOSS) INCOME - Net loss was $5 million compared to net income of $4.4 million in 2010. This decrease is mainly the result of lower volume at the U.A.E. facility and no large project related activity at the India facility. In addition, piping systems incurred incremental expenses of $2.3 million for 2011 relating to the completion of the new facility in Saudi Arabia.
FOURTH QUARTER
SALES - Sales for the fourth quarter compared to the prior-year's quarter increased in piping systems and in industrial process cooling while decreasing in filtration products.
GROSS PROFIT - Gross profit for the quarter decreased to $4.8 million, or 11% of sales, from $6.4 million or 13% in the prior-year's quarter. Each segment's gross profit decreased with the largest decrease in piping systems of $1.2 million.
EXPENSES - Operating expenses increased to $10.6 million, or 24% of sales, in the fourth quarter of 2011 from $9.2 million, or 19% of sales, in the prior-year's quarter. The increase was mainly due to start-up costs for the new facility in Dammam, Saudi Arabia and increase in non-cash deferred compensation expenses.
NET LOSS - The fourth quarter produced a net loss of $2.3 million, or $0.34 per share, compared to net loss of $1.6 million, or $0.23 per share, in the prior-year's quarter. Piping systems incurred one-time expenses of $1.0 million related to the completion of the new facility in Saudi Arabia.
CURRENT STATUS:
BACKLOG - The Company's backlog on January 31, 2012 was $83 million, up approximately 7 percent from the prior year.
| Backlog ($ in thousands): | 1/31/12 | 1/31/11 | % Change | ||||||||
| Piping Systems | $ | 53,769 | * | $ | 46,452 | 16 | % | ||||
| Filtration Products | 14,473 | 17,178 | (16 | %) | |||||||
| Industrial Process Cooling | 6,431 | 4,332 | 48 | % | |||||||
| Other | 8,539 | 9,751 | (12 | %) | |||||||
| Total | $ | 83,212 | $ | 77,713 | 7 | % | |||||
| *net of order cancelled after January 31, 2012 due to technical matters | |||||||||||
PIPING SYSTEMS - The manufacturing facility in Dammam, Saudi Arabia was formally opened in April 2012. Product shipped at the end of April 2012. Piping systems' domestic sales and earnings are seasonal, typically lower during the fourth and first quarters due to unfavorable weather for construction over much of North America and are correspondingly higher during the second and third quarters.
FILTRATION PRODUCTS - Industrial markets showed slight improvement as sales grew 10%. The improvement in sales generated a gross profit improvement of 20% in 2011 due to volume driven operational benefits, while expenses remained essentially flat year-over-year.
INDUSTRIAL PROCESS COOLING - Domestic market conditions for industrial process cooling also show signs of improvement. In 2011, overall net sales grew 22% and gross profit increased by 21%.
David Unger, CEO, commented, "The operating loss for 2011 was driven primarily by the unfavorable full year impact of repositioning our piping systems activities in the Middle East and the absence of large project activity in India. This masks the significant improvements made by our other business units. Filtration products, industrial process cooling and HVAC were all profitable and operating profits improved by a combined $3.6 million compared to 2010. We believe that the piping business is set to return to more historical levels of profitability, even though the changes in the Middle East market and absence of large projects in India led to a $12.7 million year-over-year operating profit decline. Although disappointed with the 2011 result, I appreciate the effort made by the piping systems team during the past year to build and commission the Saudi factory which I believe will enable this new focus to become a reality."
Brad Mautner, President and COO, said, "As we have communicated all year, much of 2011 was dedicated to refocusing our piping systems business, driving a return to profitability for filtration and improving the profitability of industrial process cooling. Those goals were met. Looking forward, among our goals for the piping systems unit is to be a significant participant in the rapidly emerging infrastructure and industrial development needs of the Middle East outside of Dubai, with particular emphasis on the Saudi Arabian market. To that end, in April 2012, Perma Pipe celebrated a very successful facility opening in Saudi Arabia. Neither the fourth quarter nor the year's results were as we had hoped but we believe the stage is set for improved performance starting mid-2012."
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-K for the period ended January 31, 2012 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.
MFRI, INC. AND SUBSIDIARIES
| Condensed Statements of Operations and Related Data (Audited) ($ in 000's except per share data) | Three Months Ended January 31, |
Fiscal Year Ended January 31, |
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| Operating Statement Information | 2012 | 2011 | 2012 | 2011 | ||||||||||||||
| Net sales: | ||||||||||||||||||
| Piping Systems | $ | 16,240 | $ | 15,110 | $ | 96,977 | $ | 104,559 | ||||||||||
| Filtration Products | 19,583 | 23,815 | 93,705 | 85,133 | ||||||||||||||
| Industrial Process Cooling | 7,779 | 7,690 | 32,112 | 26,220 | ||||||||||||||
| Corporate and Other | 1,173 | 1,409 | 10,702 | 2,686 | ||||||||||||||
| Total | 44,775 | 48,024 | 233,496 | 218,598 | ||||||||||||||
| Gross profit: | ||||||||||||||||||
| Piping Systems | 716 | 1,852 | 14,382 | 27,303 | ||||||||||||||
| Filtration Products | 2,208 | 2,404 | 12,466 | 10,394 | ||||||||||||||
| Industrial Process Cooling | 1,885 | 2,146 | 8,541 | 7,044 | ||||||||||||||
| Corporate and Other | 26 | 6 | 904 | (283 | ) | |||||||||||||
| Total | 4,835 | 6,408 | 36,293 | 44,458 | ||||||||||||||
| (Loss) income from operations | ||||||||||||||||||
| Piping Systems | (2,614 | ) | (693 | ) | 1,115 | 13,831 | ||||||||||||
| Filtration Products | (727 | ) | (422 | ) | 614 | (1,335 | ) | |||||||||||
| Industrial Process Cooling | (204 | ) | 167 | 810 | 295 | |||||||||||||
| Corporate and Other | (2,222 | ) | (1,836 | ) | (7,630 | ) | (9,893 | ) | ||||||||||
| Total | (5,767 | ) | (2,784 | ) | (5,091 | ) | 2,898 | |||||||||||
| Income from joint venture | 973 | 409 | 1,558 | 983 | ||||||||||||||
| Interest expense - net | 422 | 201 | 1,437 | 1,261 | ||||||||||||||
| (Loss) income before income taxes | (5,216 | ) | (2,576 | ) | (4,970 | ) | 2,620 | |||||||||||
| Income tax (benefit) expense | (2,872 | ) | (988 | ) | 17 | (1,755 | ) | |||||||||||
| Net (loss) income | $ | (2,344 | ) | $ | (1,588 | ) | $ | (4,987 | ) | $ | 4,375 | |||||||
| Weighted average common shares outstanding | ||||||||||||||||||
| Basic | 6,913 | 6,850 | 6,878 | 6,842 | ||||||||||||||
| Diluted | 6,913 | 6,850 | 6,878 | 6,850 | ||||||||||||||
| (Loss) earnings per share: | ||||||||||||||||||
| Basic and diluted | $ | (0.34 | ) | $ | (0.23 | ) | $ | (0.73 | ) | $ | 0.64 | |||||||
See the Company's Form 10-K for the period for notes to financial statements.