MFRI Announces Record Second Quarter 2013 Earnings

MFRI Announces Record Second Quarter 2013 Earnings 
NILES, IL -- (Marketwired) -- 09/12/13 --  MFRI, Inc. (NASDAQ: MFRI)
announced today financial results for the second quarter and six
months ended July 31, 2013. Second quarter net sales were $62 million
compared to $43 million in the prior-year quarter; net income in the
quarter was a second quarter record of $4.4 million or $0.62 per
diluted share compared to a net loss of $1.4 million or ($0.20) per
diluted share in the prior-year quarter. 
SECOND FISCAL QUARTER ENDED JULY 31, 2013  
SALES - Sales increased 44% to $62 million in the current quarter
from $43 million in the prior-year quarter. Piping systems sales
increased 90% or $21 million in the quarter mainly due to sales
growth in Saudi Arabia and the United Arab Emirates, ("U.A.E.") for
major projects expanding the Grand Mosque in Mecca and the King
Abdul-Aziz International Airport in Jeddah. Filtration products sales
decreased by $2 million due primarily to reduced domestic demand for
fabric filter bags. 
GROSS PROFIT - Gross profit approximately doubled to $14 million in
the current quarter from $8 million in the prior-year quarter mainly
due to the sales increase in piping systems. Filtration products'
gross profit increased 11.4% resulting from sales mix favoring
cartridge filters versus fabric filter bags. 
EXPENSES - Operating expenses as a percent of net sales decreased to
14.5% in the current quarter from 19.1% in the prior-year quarter.
Operating expenses increased to $8.9 million in the current quarter
from $8.2 million in the prior-year quarter. This dollar increase was
due to management incentive compensation expense partially offset by
reduced health insurance costs. 
NET INCOME - Second quarter net income was $4.4 million compared to
net loss of $1.4 million in the comparable prior-year's quarter.
Income rose primarily due to the gross profit generated from
increased piping system sales. 
YEAR-TO-DATE SIX MONTHS ("YTD") 
SALES - YTD net sales of $117.2 million increased 35% from $86.5
million for the prior-year YTD. Piping systems sales increased 86% or
$37 million due to the aforementioned projects in the Middle East.
Filtration products decreased by $6 million primarily due to reduced
domestic demand for fabric filter
 bags. 
GROSS PROFIT - Gross profit approximately doubled to $27 million from
$14 million in the prior-year period due to the sales increase in
piping systems. 
EXPENSES - Operating expenses as a percent of sales decreased to 16%
in the current year from 19% in the prior year. Operating expenses
for the first half of the current year were $19 million, up from $17
million in the prior year. This dollar increase was due to management
incentive compensation expense partially offset by reduced health
insurance costs. 
TAXES - The Company's consolidated effective tax rate from continuing
operations was a negative 2.9% for the six months ended July 31,
2013, which was affected primarily by the release of the full
valuation allowance related to the Company's deferred tax assets in
Saudi Arabia. 
NET INCOME - Net income was $15.5 million in 2013 compared to a net
loss of $3.4 million in the comparable prior-year's period. Income
rose due to the asset sale of Thermal Care, Inc., and the
aforementioned improvement in sales and profit primarily related to
piping systems growth. 
BACKLOG - The Company's backlog from continuing operations has
increased 61% or $46 million from July 31, 2012. The July 31, 2013
backlog rose $5 million or 4% to $121 million from January 31, 2013. 


 
                                                                            
                                                                            
                                                                            
Backlog                         July 31, 2013 January 31, 2013 July 31, 2012
                                ------------- ---------------- -------------
  in millions                                                               
Piping Systems                      $100.7          $89.5          $63.4    
Filtration Products                  19.5           25.8            11.1    
Corporate and Other                   .3             .3              .4     
                                ------------- ---------------- -------------
    Total Backlog                   $120.5         $115.6          $74.9    

 
Bradley Mautner, President and CEO, said, "The record second quarter
results were led by the terrific performance of the Piping Systems
business as the team continued delivery of products for the large
scale projects in Saudi Arabia and the U.A.E. In addition, piping
systems' bookings in the second quarter for offshore pre-insulated
piping, sub-sea equipment and other activities increased the backlog
$11 million from the beginning of this year. We expect our active
marketing efforts continue to add to our project base for future
quarters. 
"As we have been reporting, the filtration products segment faces a
very difficult market for fabric filters but with improved margins
and cost controls, we were able to achieve a profit compared to a
loss in the prior year's quarter. There are many initiatives under
way to improve the Filtration segment, yet soft demand for fabric
filters will continue to provide a headwind in the coming quarters. 
"Finally, during the quarter we made the strategic decision to exit
the HVAC business via the sale of substantially all of its assets,
which consisted primarily of backlog on existing orders. The backlog
for this business was previously reported in corporate and other. We
believe the focus on major project driven needs for our piping
systems and on consumables in filtration remain an excellent platform
for our manufacturing activities going forward." 
MFRI, Inc. is a company engaged in the manufacturing of pre-insulated
specialty piping systems for oil and gas gathering, district heating
and cooling as well as other applications and custom-designed
industrial filtration products to remove particulates from dry gas
streams. 
Form 10-Q for the period ended July 31, 2013 will be accessible at
www.sec.gov and www.mfri.com. For more information visit the
Company's website 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 r
elations and
other risk factors. 


 
                                                                            
                                                                            
                                                                            
MFRI, INC. AND SUBSIDIARIES                                                 
CONSOLIDATED STATEMENTS OF                                                  
 OPERATIONS                                                                 
(Unaudited) (In 000's except per     Three Months Ended   Six Months Ended  
 share data)                              July 31,            July 31,      
                                     ------------------  ------------------ 
Operating Statement Information        2013      2012      2013      2012   
                                     --------  --------  --------  -------- 
Net sales                                                                   
Piping Systems                       $ 43,478  $ 22,905  $ 79,536  $ 42,649 
Filtration Products                    17,324    19,276    35,957    42,252 
Corporate and Other                       863       701     1,756     1,603 
                                     --------  --------  --------  -------- 
  Total                              $ 61,665  $ 42,882  $117,249  $ 86,504 
Gross profit                                                                
Piping Systems                       $ 10,590  $  4,869  $ 21,034  $  8,267 
Filtration Products                     2,842     2,552     5,117     5,664 
Corporate and Other                       261       162       509       398 
                                     --------  --------  --------  -------- 
  Total                              $ 13,693  $  7,583  $ 26,660  $ 14,329 
Income (loss) from operations                                               
Piping Systems                       $  6,493  $  1,443  $ 11,873  $  1,598 
Filtration Products                       501      (292)       18       (96)
Corporate and Other                    (2,224)   (1,754)   (4,231)   (3,967)
                                     --------  --------  --------  -------- 
  Total                              $  4,770  $   (603) $  7,660  $ (2,465)
                                                                            
(Loss) income from joint venture         (172)       69      (467)     (177)
Interest expense, net                     403       353       840       658 
                                     --------  --------  --------  -------- 
Income (loss) from continuing                                               
 operations before income taxes         4,195      (887)    6,353    (3,300)
Income tax (benefit) expense             (241)      350      (183)       61 
                                                                            
                                     --------  --------  --------  -------- 
Income (loss) from continuing                                               
 operations                             4,436    (1,237)    6,536    (3,361)
                                                                            
(Loss) income from discontinued                                             
 operations, net of tax                   (40)     (120)    8,941       (52)
                                     --------  --------  --------  -------- 
Net income (loss)                    $  4,396  $ (1,357) $ 15,477  $ (3,413)
                                     ========  ========  ========  ======== 
                                                                            
Weighted average number of common                                           
 shares outstanding                                                         
  Basic                                 6,985     6,923     6,958     6,919 
  Diluted                               7,054     6,923     6,985     6,919 
Earnings (loss) per share from                                              
 continuing operations                                                      
  Basic                              $   0.64  $  (0.18) $   0.94  $  (0.49)
  Diluted                            $   0.63  $  (0.18) $   0.94  $  (0.49)
Earnings (loss) per share from                                              
 discontinued operations                                                    
  Basic and diluted                  $  (0.01) $  (0.02) $   1.28  $  (0.01)
Earnings (loss) per share                                                   
  Basic                              $   0.63  $  (0.20) $   2.22  $  (0.49)
  Diluted                            $   0.62  $  (0.20) $   2.22  $  (0.49)

 
See the Company's Form 10-Q for the period for notes to financial
statements.
 Note: Earnings per share calculations could be impacted
by rounding. 
CONTACT: 
Brad Mautner
CEO
David Unger
Chairman
(847) 966-1000 
 
 
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