NILES, IL--(Marketwire - Jun 11, 2012) - MFRI, Inc. (
FISCAL QUARTER ENDED APRIL 30, 2012
SALES -- Sales were $52.7 million in the current quarter, essentially unchanged from the prior-year quarter.
GROSS PROFIT -- Gross profit rose 11% to $9.1 million in the current quarter from $8.2 million in the prior-year quarter and gross margin increased to 17% of net sales in the current quarter from 15% of net sales in the prior-year quarter. Gross profit increased significantly in industrial process cooling and domestic piping systems due to higher volume.
EXPENSES -- Operating expenses increased to $10.8 million or 20% of sales from $9.9 million or 19% of sales in the prior-year quarter. The increase was mainly due to $1.1 million start-up costs for the new facility in Saudi Arabia and $300 thousand for audit, tax and other professional services. Net interest expense increased $84 thousand due to lower interest income earned overseas by piping systems as cash was primarily deployed for the new facility in Saudi Arabia.
TAXES -- The Company's consolidated effective tax rate ("ETR") was 12.0% and 29.4% for the three months ended April 30, 2012 and 2011, respectively, leading to a $342 thousand decrease in the tax benefit. The April 30, 2012 computation of the ETR was reduced primarily by the change in the mix of the projected tax-free earnings in the United Arab Emirates ("U.A.E.") versus total projected earnings. In 2011, a valuation allowance was recorded for the losses incurred by the new start-up entity in Saudi Arabia. In 2012, this valuation allowance was reduced, which also lowered the current ETR.
NET LOSS -- Net loss was $2.1 million in the current quarter versus $1.5 million in the prior-year quarter. The increase was driven by the additional expenses as noted in above paragraphs.
CURRENT STATUS:
BACKLOG -- The Company's backlog on April 30, 2012 rose $3.4 million or 4% to $86.6 million, from January 31, 2012.
| Backlog | April 30, 2012 | January 31, 2012 | April 30, 2011 | |||||||
| Piping Systems | $ | 55,870 | $ | 53,769 | $ | 48,516 | ||||
| Filtration Products | 12,329 | 14,473 | 19,671 | |||||||
| Industrial Process Cooling | 5,776 | 6,431 | 5,711 | |||||||
| Corporate and Other | 12,661 | 8,539 | 8,160 | |||||||
| Total Backlog | $ | 86,636 | $ | 83,212 | $ | 82,058 | ||||
RECENT DEVELOPMENTS -- In April 2012, the manufacturing facility in Dammam, Saudi Arabia formally opened and began shipping product. After end of the quarter, we have been notified by customers that new orders totaling $11.5 million for oil and gas subsea piping will soon be received and we anticipate that it will be manufactured in the current fiscal year.
David Unger, CEO, commented, "The increased operating loss during the first quarter of 2012 was driven primarily by the continued costs of repositioning our piping systems activities in the Middle East. Significant improvements continue in some of our other business units. Domestic piping products, industrial process cooling and filtration pleated products all showed increasing profitability. Piping systems and industrial process cooling improved operating profits by $737 thousand compared to 2011. We believe that international piping systems is set to return to more historical levels of profitability, because we have substantial orders for manufacture in the U.A.E and India plants, which will commence in the second quarter. Also, we are quoting and negotiating actively in Saudi Arabia for business to be produced this year."
Brad Mautner, President and COO, said, "First quarter income from operations was essentially flat versus last year's first quarter. This occurred even though we incurred a combined $1.4 million of greater start up expense in Saudi Arabia and higher professional services costs this year than in the year ago period. In addition, our industrial process cooling segment delivered increased sales and operating income and Perma Pipe oil and gas activities are positioned to have another solid year."
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, 2012 will be accessible at www.sec.gov. For more information visit the Company's website at 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.
This announcement may also contain certain non-GAAP financial information that management believes is helpful in understanding our business. This financial information should not be considered as an alternative to net (loss) income or any other GAAP measurement of performance.
| MFRI, INC. AND SUBSIDIARIES | |||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (In 000's except per share data) |
Three Months Ended April 30, |
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| Operating Statement Information | 2012 | 2011 | |||||||
| Net sales | |||||||||
| Piping Systems | $ | 19,744 | $ | 19,027 | |||||
| Filtration Products | 22,976 | 24,843 | |||||||
| Industrial Process Cooling | 9,131 | 7,155 | |||||||
| Corporate and Other | 877 | 2,376 | |||||||
| Total | 52,728 | 53,401 | |||||||
| Gross profit | |||||||||
| Piping Systems | 3,398 | 2,813 | |||||||
| Filtration Products | 3,112 | 3,312 | |||||||
| Industrial Process Cooling | 2,532 | 1,945 | |||||||
| Corporate and Other | 86 | 172 | |||||||
| Total | 9,128 | 8,242 | |||||||
| Income (loss) from operations | |||||||||
| Piping Systems | 155 | (223 | ) | ||||||
| Filtration Products | 196 | 510 | |||||||
| Industrial Process Cooling | 563 | 204 | |||||||
| Corporate and Other | (2,633 | ) | (2,135 | ) | |||||
| Total | (1,719 | ) | (1,644 | ) | |||||
| Loss from joint venture | (246 | ) | (183 | ) | |||||
| Interest expense, net | 371 | 287 | |||||||
| Loss before income taxes | (2,336 | ) | (2,114 | ) | |||||
| Income tax benefit | (280 | ) | (622 | ) | |||||
| Net loss | $ | (2,056 | ) | $ | (1,492 | ) | |||
| Weighted average number of common shares outstanding | |||||||||
| Basic and diluted | 6,915 | 6,855 | |||||||
| Loss per share | |||||||||
| Basic and diluted | $ | (0.30 | ) | $ | (0.22 | ) | |||
See the Company's Form 10-Q for the period for notes to financial statements.