MFRI Reports Record Quarter Results From Improved Operational Perfomance and Sale of Subsidiary Business

MFRI Reports Record Quarter Results From Improved Operational Perfomance and 
Sale of Subsidiary Business 
NILES, IL -- (Marketwired) -- 06/11/13 --   MFRI, Inc. (NASDAQ: MFRI)
announced today sales and record earnings for the first fiscal
quarter ended April 30, 2013. Sales increased 30% in the quarter from
the prior year quarter and net income was $1.60 per diluted share
compared to the prior year quarter net loss of $(0.30) per diluted
share. As previously reported on April 30, 2013, the Company sold
most of the domestic assets of its subsidiary Thermal Care, Inc. This
business is reported as discontinued operations in the consolidated
financial statements, related prior period information and the notes
to consolidated financial statements have been restated to conform to
the current year reporting of this business. 
QUARTER ENDED APRIL 30, 2013 
SALES - The Company's sales from continuing operations for the
quarter increased 30% to $57.7 million from $44.5 million in the
prior-year quarter. Piping systems sales increased $16.3 million in
the quarter due to the ramp up of sales in Saudi Arabia with
deliveries to major projects including the expansion of the Grand
Mosque in Mecca and King Abdul-Aziz International Airport in Jeddah.
The increase is also due to domestic offshore oil and gas projects
that were underway during the current quarter and which will continue
into the second quarter. Filtration products decreased by $4.3
million due primarily to continued reduced demand for fabric filters. 
GROSS PROFIT - Gross profit almost doubled to $13.1 million in the
current quarter from $6.8 million in the prior-year quarter due to
the sales increase in piping systems while filtration products gross
profit decreased due to lower sales volume. 
EXPENSES - Operating expenses increased to $10.3 million in the
current quarter from $9.1 million in the prior-year quarter. The
increase was primarily due to start-up costs for the Saudi Arabia
facility and accrued commission and management incentive expense for
better performance. Also, the Company recorded bad debt expense
partially offset by reduced administrative costs from personnel
savings in Corporate and Other. Operating expenses as a percent of
net sales decreased to 17.9% in the current quarter from 20.5% in the
prior-year quarter. 
NET INCOME - Net income was $11 million or $1.60 per diluted share
including $1.32 per diluted share from the sale of the subsidiary. In
the prior year quarter the net loss was $2 million or $(0.30) per
diluted share including an $.08 profit from the discontinued
operation. Income from discontinued operations net of tax was $9.1
million including the gain on sale compared to $0.5 million for the
three months ended April 30, 2013 and 2012, respectively. 
BACKLOG - The Company's backlog on April 30, 2013 was approximately
$145 million, a slight increase from the prior quarter but almost 80%
higher than the backlog at the end of April last year. 


 
                                                              
Backlog ($ in thousands):       4/30/13    1/31/13    4/30/12 
                               ---------  ---------  ---------
  Piping Systems               $  95,640  $  89,508  $  55,870
  Filtration Products             22,232     25,834     12,329
  Other                           26,950     28,473     12,914
                               ---------  ---------  ---------
Total                          $ 144,822  $ 143,815  $  81,113
                               =========  =========  =========

 
PIPING SYSTEMS - Piping systems has been investing in its new plant in
Saudi Arabia for the last two years. In April 2012, the Company
opened the new factory in Dammam, Saudi Arabia. Since November 2012,
the Company has announced receipt of several orders totaling
approximately $50 million primarily for two landmark projects in
Saudi Arabia: the Grand Mosque in Mecca and the King Abdul-Aziz
International Airport in Jeddah. Additional marketing and sales
activities in the Gulf Cooperation Council and U.S. offshore oil
industry continue in an effort to further build the backlog for
future periods. 
FILTRATION PRODUCTS - U.S. environmental regulation uncertainty
regarding technologies and timing of implementation continues to
impact demand for fabric filters and therefore filtration product
sales decreased. Filtration products gained some sizeable orders for
the coming 24 months, resulting in a backlog increase of 80% over the
prior year period. Of the $22 million in backlog, approximately $10
million of those orders are scheduled for delivery in 2014.
Aggressive cost reduction and productivity improvement measures are
underway in both domestic manufacturing plants to adjust to the
market conditions. Also, realignment of sales efforts with an eye on
efficiency and expansion are in progress. 
Bradley Mautner, President and CEO, said, "We are certainly pleased
with the first quarter results. In addition to the $11.4 million
pre-tax gain from the previously announced sale of substantially all
of the Industrial Process Cooling segment assets, we posted a pretax
profit from continuing operations of about $2 million. The
improvement in liquidity provides resources to fuel our strategic
expansion and growth opportunities. Also, this demonstrates that the
strategy to invest in the Saudi expansion initiative and other
operational improvement efforts are producing favorable results. The
team in the Middle East has done an excellent job to scale up
production activities to support challenging project requirements.
Major order booking success during the past year has resulted in a
backlog nearly 80% greater than a year ago. Our efforts to improve
operational efficiency, cost reductions and working capital
utilization continue. This is especially important as we finance the
needs that result from our significant growth in backlog. All of
these elements should provide a solid base for continued revenue
growth and profitable performance in the quarters to come." 
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; and installation of heating, ventilation and
air conditioning for large buildings. 
Form 10-K for the period ended January 31, 2013 will be accessible at
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 deman
d 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                                                 
Statement of Operations (unaudited)                                         
($ in 000's except per share data)                                          
                                                                            
                                                        Three Months Ended  
                                                             April 30,      
                                                          2013       2012   
                                                       ---------  --------- 
Net sales                                                                   
Piping Systems                                         $  36,058  $  19,744 
Filtration Products                                       18,633     22,976 
Corporate and Other                                        3,053      1,779 
                                                       ---------  --------- 
  Total                                                $  57,744  $  44,499 
                                                       ---------  --------- 
                                                                            
Gross profit                                                                
Piping Systems                                         $  10,444  $   3,398 
Filtration Products                                        2,275      3,112 
Corporate and Other                                          413        322 
                                                       ---------  --------- 
  Total                                                $  13,132  $   6,832 
                                                       ---------  --------- 
                                                                            
Income (loss) from operations                                               
Piping Systems                                         $   5,380  $     155 
Filtration Products                                         (483)       196 
Corporate and Other                                       (2,092)    (2,648)
                                                       ---------  --------- 
  Total                                                $   2,805  $  (2,297)
                                                       ---------  --------- 
                                                                            
Loss from joint venture                                     (295)      (246)
                                                                            
Interest expense, net                                        490        371 
                                                       ---------  --------- 
Income (loss) from continuing operations before income                      
 taxes                                                     2,020     (2,914)
                                                                            
Income tax expense (benefit)                                  58       (317)
                                                                            
                                                       ---------  --------- 
Income (loss) from continuing operations                   1,962     (2,597)
                                                                            
Income from discontinued operations, net of tax            9,119        541 
                                                                            
                                                       ---------  --------- 
Net income (loss)                                      $  11,081  $  (2,056)
                                                       ---------  --------- 
                                                                            
Weighted average common shares outstanding                                  
  Basic                                                    6,932      6,915 
  Diluted                                                  6,934      6,915 
                                                                            
Earnings (loss) per share from continuing operations                        
  Basic and diluted                                    $    0.28  $   (0.38)
Earnings per share from discontinued operations                             
  Basic and diluted                                    $    1.32  $    0.08 
Earnings (loss) per share                                                   
  Basic and diluted                                    $    1.60  $   (0.30)

  
CONTACT:
Brad Mautner, CEO
David Unger, Chairman
(847) 966-1000 
 
 
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