Breaking News

Tweet TWEET

PMFG, Inc. (Parent of Peerless Mfg. Co.) Reports Second Quarter Fiscal Year 2014 Financial Results

PMFG, Inc. (Parent of Peerless Mfg. Co.) Reports Second Quarter Fiscal Year
2014 Financial Results

DALLAS, Feb. 6, 2014 (GLOBE NEWSWIRE) -- PMFG, Inc. (the "Company")
(Nasdaq:PMFG) today reported financial results for the second quarter ended
December 28, 2013.

Second Quarter Fiscal Year 2014 Compared to 2013

Revenue in the second quarter of fiscal 2014 decreased $1.8 million or 5.8
percent to $29.6 million. Improved revenue in the Company's Environmental
Systems segment was more than offset by the decline in the Process Products
segment. Revenue from the Process Products segment was negatively impacted by
sluggish demand in EMEA and the Americas, as well as customer-driven delays on
certain projects currently in backlog.

Gross profit decreased in the quarter by $3.4 million or 29.5 percent, to $8.1
million on lower revenue and margin deterioration on projects completed and or
in process. Gross profit as a percent of revenue decreased to 27.4 percent in
the quarter from 36.7 percent in the prior year. Included in cost of goods
sold is approximately $471,000 of non-recurring restructuring costs related to
the closure of a manufacturing plant in Texas and the relocation of the
fabrication activities to the remaining plants in Texas. The gross profit also
was impacted by cost overruns on certain projects completed in the quarter and
to a lesser extent the slower than planned ramp up of the new manufacturing
facility in Denton, Texas, that began fabrication in July 2013.

Operating expenses decreased $1.0 million or 9.0, percent in the quarter
primarily due to lower sales commissions and other selling related expenses.

Interest expense, primarily related to borrowings for the construction of
manufacturing facilities in Texas and China, totaled $0.3 million in the
quarter. With the completion of the construction of the two facilities,
capital expenditures in future quarters will decrease significantly. The
second quarter of fiscal 2014 reported a foreign exchange loss of $0.3 million
compared to a $0.1 million gain in the prior year.

Net loss attributable to PMFG, Inc. common stockholders was $3.0 million or
$0.14 per diluted share in the quarter compared to net income of $0.5 million
and $0.02 per diluted share in the prior year. Excluding the impact of the
non-recurring restructuring charges the net loss was $2.7 million or $0.13 per
diluted share in the quarter.

Reporting Segments

Process Products segment revenue decreased $4.2 million or 14.8 percent to
$24.3 million. Revenue was negatively impacted by sluggish demand in EMEA and
the Americas, as well as customer-driven delays on certain projects currently
in backlog. Segment operating income decreased $3.4 million or 73.0 percent to
$1.3 million on lower revenue and lower relative gross profit. Included in
cost of goods sold are non-recurring restructuring costs related to the
closure of a manufacturing plant in Texas and the relocation of the
fabrication activities to the Company's other facilities in Texas. In
addition, the Company incurred unanticipated cost overruns and penalties of
approximately $1.0 million on three unrelated projects in the quarter. The
overruns in material and labor, as well as expediting fees could not be passed
through to the customers. Finally, the hiring and onboarding of personnel at
the new manufacturing facility in Texas has progressed slower than
anticipated.

Environmental Systems segment revenue increased $2.4 million or 80.3 percent
to $5.4 million. The higher revenue in fiscal 2014 reflects the increase in
bookings throughout fiscal 2013 which is continuing into fiscal 2014. As we
move closer to compliance deadlines established by the Environmental
Protection Agency we anticipate a continued increase in demand for air
pollution control equipment. Segment operating income increased $0.9 million
to $1.4 million compared to $0.5 million in the prior year on higher revenue
and leveraging of sales, marketing and engineering resources.

Fiscal Year To-Date 2014 Compared to 2013

Revenue for the six month period ended December 28, 2013 decreased $5.7
million or 8.9 percent to $58.7 million. Increased revenue in the
Environmental Systems segment was more than offset by a decrease in revenue
from the Process Products segment when compared to the prior year.

Gross profit for the six month period ended December 28, 2013 decreased by
$5.1 million, or 22.2 percent, to $17.8 million on lower revenue, margin
deterioration on projects completed and or in process and non-recurring
restructuring related costs. That margin deterioration was most notable in the
second quarter.

Net loss attributable to PMFG, Inc. common stockholders was $4.6 million, or
$0.22 per diluted share compared to net income of $0.2 million, or $0.01 per
diluted share in the prior year. Excluding the impact of the non-recurring
restructuring charges the year to date net loss was $4.2 million or $0.20 per
diluted share.

Net Bookings and Backlog

Net bookings totaled $29.8 million and $72.2 million during the three and six
month periods ended December 28, 2013, respectively. This compares to net
bookings of $27.7 million and $52.4 million for the three and six month
periods ended December 29, 2012. The backlog at December 28, 2013 was $97.7
million compared to approximately $84.2 million at the end of fiscal 2013.
Approximately $15.0 million of the backlog value was subject to
customer-driven delays during the quarter. The delays primarily resulted from
finalization of material content, detailed design drawings, and fabrication
requirements. All but $2.5 million of those projects have been now released
for fabrication. The remaining projects are expected to move forward in the
later part of the third quarter. The Company estimates that approximately 90
percent of the backlog amount at the end of December will be recognized as
revenue over the next 12 months.

Financial Condition and Cash Flows

At December 28, 2013, the Company reported $61.7 million of cash and cash
equivalents (including $5.5 million of cash and cash equivalents that is
restricted as security for outstanding letters of credit), total assets of
$198.3 million, net working capital of $74.3 million and a current ratio of
2.6 to 1.0.

Unrestricted cash and cash equivalents increased $3.1 million during the six
month period ended December 28, 2013, compared to $8.3 million in the prior
year. Cash flows in year to-date fiscal 2014 include $0.9 million used in
operating activities, $8.4 million used in investing activities, $12.0 million
provided by financing activities and $0.4 million effect of exchange rate
changes on cash.

Industry Conditions and Management Changes

Peter Burlage, President and Chief Executive Officer of PMFG commented,
"Conditions in the first half of our fiscal year continued to be challenging
and were compounded by project delays and lumpy spending across our customer
base. Due in part to the steps necessary to maximize growth and improve
profitability, earlier this week our Board of Directors approved the following
realignment of resources within the organization:

  *John Conroy, Vice President of Engineering and Product Development has
    been promoted to Executive Vice President of our America's Process
    Products operations. John and his team will have direct reporting
    responsibility of all sales, engineering, manufacturing, and project
    management resources within the Americas.
  *Tim Shippy, Director of Environmental Systems has been promoted to the
    global leader of our Environmental Systems operations.
  *Jeff Hudson has been hired to serve as the Managing Director for the
    Company's EMEA operations. Jeff, who was previously with Clyde Bergemann
    Power Group, will be based at our office in the United Kingdom.

"Historically, the natural gas industry has accounted for 60 to 80 percent of
our consolidated revenue, which is a key strategic driver for our company. Our
opportunities across the natural gas value chain span from the production
well, across the midstream segment and through to the consumption including
power generation. We continue to believe this will have a positive, long-term
impact on our business. The global investments in natural gas infrastructure
and power generation are forecasted in the trillions over the coming years and
despite the choppy environment we have experienced in recent quarters, we
expect this to be a major driver in our long-term growth."

"We have also made great progress in expanding our presence in the nuclear
power market. Our year to date bookings in nuclear power generation exceeds 10
percent of our total bookings and we expect that percentage to increase as we
proceed through the fiscal year and into fiscal 2015. Our test projects tied
to the joint development agreement announced earlier this year are producing
good initial results and we expect to expand the scope in the future."

"Year to date bookings through December in our Environmental Systems segment
were approximately 50 percent higher than a year ago. This momentum continued
into January with the announcement of additional environmental systems
projects. I continue to be very optimistic about the demand prospects for our
SCR equipment on the back of a strong global pollution control market."

"I am clearly disappointed in our first half results and we are moving quickly
to adjust our management structure and activities to improve performance going
forward. Despite the short-term headwinds, I remain optimistic that our strong
energy technology product portfolio will leverage the global trends in power
generation, petrochemicals and natural gas, drive revenue growth, and create
value for our shareholders."

Outlook

With two quarters of the fiscal year completed, we are reducing our outlook
for fiscal 2014. While we believe revenue in the third and fourth quarter will
be meaningfully higher than the first two quarters of the fiscal year, we now
expect revenue growth for the full year of 3% to 6% over fiscal 2013 with
consolidated gross margins for the full year to be more in line with our
historical range of 30% and 32%. Given the lower than expected revenue and
profit expectations we will seek to scale back our operating costs. However
our planned investment in research and development and incremental internal
capabilities related to nuclear power generation products and services will
drive our operating costs higher than the prior year.

Conference Call

Peter Burlage, President and Chief Executive Officer, and Ron McCrummen, Chief
Financial Officer, will discuss the Company's results for the second quarter
ended December 28, 2013, during a conference call scheduled for Thursday,
February 6, 2014, at 9:30 a.m. EST.

Stockholders and other interested parties may participate in the conference
call by dialing +1 877 474 9504 (domestic) or +1 857 244 7557 (international)
and entering access code 12636802, a few minutes before 9:30 a.m. EST on
February 6, 2014. Those who wish to listen to the live conference call and
view the accompanying presentation slides should visit"Event Calendar"in
the"Investor Relations"portion of the PMFG, Inc. website at
www.peerlessmfg.com.

A replay of the conference call will be accessible two hours after its
completion through February 13, 2014 by dialing +1 888 286 8010 (domestic) or
+1 617 801 6888 (international) and entering access code 90923009. The call
also will be archived for 30 days at www.peerlessmfg.com.

About PMFG

We are a leading provider of custom engineered systems and products designed
to help ensure that the delivery of energy is safe, efficient and clean. We
primarily serve the markets for natural gas infrastructure, power generation
and petrochemical processing. Headquartered in Dallas, Texas, we market our
systems and products worldwide.

Safe Harbor Under The Private Securities Litigation Reform Act of 1995

Certain statements contained in this press release that are not historical
facts are forward-looking statements that involve a number of known and
unknown risks, uncertainties and other factors that could cause the actual
results to be materially different from those expressed or implied by such
forward-looking statements. The words "anticipate," "preliminary," "expect,"
"believe," "intend" and similar expressions identify forward-looking
statements. The Private Securities Litigation Reform Act of 1995 provides a
"safe harbor" for these forward-looking statements. In order to comply with
the terms of the safe harbor, the Company notes that a variety of factors
could cause actual results to differ materially from the anticipated results
expressed in these forward-looking statements. The risks and uncertainties
that may affect the Company's results include the growth rate of the Company's
revenue and market share; the receipt of new, and the non-cancellation of
existing, contracts; the Company's ability to effectively manage its business
functions while growing its business in a rapidly changing environment; the
Company's ability to identify growth opportunities, including through
acquisitions and strategic partnerships; the Company's ability to satisfy
financial and nonfinancial covenants and requirements of our debt agreements;
the Company's ability to adapt and expand its services in such an environment;
the quality of the Company's plans and strategies; and the Company's ability
to execute such plans and strategies. Other important information regarding
factors that may affect the Company's future performance is included in the
public reports that the Company files with the Securities and Exchange
Commission, including the information under Item 1A. "Risk Factors" in our
Annual Report on Form 10-K for the fiscal year ended June 29, 2013. The
Company undertakes no obligation to update any forward-looking statements to
reflect events or circumstances occurring after the date of this release, or
to reflect the occurrence of other events. Readers are cautioned not to place
undue reliance on these forward-looking statements, which speak only as of the
date of this release. The inclusion of any statement in this release does not
constitute an admission by the Company or any other person that the events or
circumstances described in such statement are material.

                                                                         
                                                                         
PMFG, Inc.
Condensed Financial Information
(In thousands, except per share amounts)
                                                                         
                Three Months Ended December 28,      Three Months Ended December 29,
                2013                                 2012
Operating        GAAP       Adjustments    Non-GAAP   GAAP      Adjustments    Non-GAAP
Results
                                                                         
Revenues         $29,613  $--         $29,613  $31,452 $--         $31,452
Cost of goods    21,486    (471)         21,015    19,923   --           19,923
sold
Gross profit     8,127     471           8,598     11,529   --           11,529
Operating        9,704     --           9,704     10,669   --           10,669
expenses
Operating income (1,577)   471           (1,106)   860      --           860
Other income                                                              
(expense):
Interest income  14        --           14        7        --           7
Interest expense (268)     --           (268)     (210)    --           (210)
Loss on
extinguishment   --       --           --       --      --           --
of debt
Foreign exchange (269)     --           (269)     117      --           117
gain (loss)
Other income     6         --           6         32       --           32
(expense), net
Income (loss)
before income    (2,094)   471           (1,623)   806      --           806
taxes
Income tax
benefit          (831)     (160)         (991)     (213)    --           (213)
(expense)
Net earnings     (2,925)   311           (2,614)   593      --           593
(loss)
Less net income
(loss)
attributable to  89        --           89        127      --           127
noncontrolling
interest
Net earnings
(loss)           $(3,014) $311         $(2,703) $466    $--         $466
attributible to
PMFG
Income (loss)
applicable to    $(3,014) $311         $(2,703) $466    $--         $466
PMFG common
stockholders
                                                                         
Basic earnings   $(0.14)                $(0.13)  $0.02                 $0.02
per share
Diluted earnings $(0.14)                $(0.13)  $0.02                 $0.02
per share
                                                                         
Weighted-average
shares                                                                    
outstanding
Basic           21,101                  21,101    20,920                 20,920
Diluted          21,101                  21,101    20,935                 20,935
                                                                         
Adjusted EBITDA                                                           
Net earnings                             $(2,614)                        $593
(loss)
Depreciation and                         647                              693
amortization
Interest                                 254                              203
expense, net
Income tax
expense                                  991                              213
(benefit)
Adjusted EBITDA                          $(722)                          $1,702
                                                                         
                                                                         
PMFG, Inc.
Condensed Financial Information
(In thousands, except per share amounts)
                                                                         
                Six Months Ended December 28,        Six Months Ended December 29,
                2013                                 2012
Operating        GAAP       Adjustments(a) Non-GAAP   GAAP      Adjustments(c) Non-GAAP
Results
                                                                         
Revenues         $58,684  $--         $58,684  $64,429 $--         $64,429
Cost of goods    40,849    (421)         40,428    41,508   --           41,508
sold
Gross profit     17,835    421           18,256    22,921   --           22,921
Operating        21,071    --           21,071    21,601   --           21,601
expenses
Operating income (3,236)   421           (2,815)   1,320    --           1,320
Other income                                                              
(expense):
Interest income  32        --           32        17       --           17
Interest expense (706)     --           (706)     (315)    --           (315)
Loss on
extinguishment   --       --           --       (291)    291           --
of debt
Foreign exchange (472)     --           (472)     35       --           35
gain (loss)
Other income     71        --           71        33       --           33
(expense), net
Income (loss)
before income    (4,311)   421           (3,890)   799      291           1,090
taxes
Income tax
benefit          (184)     (143)         (327)     (212)    (99)          (311)
(expense)
Net earnings     (4,495)   278           (4,217)   587      192           779
(loss)
Less net
earnings (loss)
attributable to  100       --           100       432      --           432
noncontrolling
interest
Net earnings
(loss)           $(4,595) $278         $(4,317) $155    $192         $347
attributible to
PMFG
Income (loss)
applicable to    $(4,595) $278         $(4,317) $155    $192         $347
PMFG common
stockholders
                                                                         
Basic earnings   $(0.22)                $(0.20)  $0.01                 $0.02
per share
Diluted earnings $(0.22)                $(0.20)  $0.01                 $0.02
per share
                                                                         
Weighted-average
shares                                                                    
outstanding
Basic           21,089                  21,089    20,919                 20,919
Diluted          21,089                  21,089    20,934                 20,934
                                                                         
Adjusted EBITDA                                                           
Net earnings                             $(4,217)                        $779
(loss)
Depreciation and                         1,225                            1,397
amortization
Interest                                 674                              298
expense, net
Income tax
expense                                  327                              311
(benefit)
Adjusted EBITDA                          $(1,991)                        $2,785
                                                                         
                                                                         
                December                 June 29,                          
                 28,
Condensed
Balance Sheet    2013                     2013                              
Information
                                                                         
Current assets   $120,221               $108,473                        
Non-current      78,127                  71,638                           
assets
Total assets     $198,348               $180,111                        
                                                                         
Current          $45,965                $33,471                         
liabilities
Long term debt   15,467                  8,719                            
Other non
current          5,993                   6,035                            
liabilities
Total equity     130,923                 131,886                          
Total
liabilities and  $198,348               $180,111                        
equity

                     STATEMENT REGARDING NON-GAAP RESULTS

PMFG, Inc. has provided a reconciliation of non-GAAP measures in order to
provide the users of this financial information with a better understanding of
the impact on our financial results resulting from certain non-recurring costs
associated with transitioning to our new manufacturing facilities offset by
the gain on the sale of the former manufacturing facility in Denton, Texas, in
the three and six months ended December 28, 2013 and the loss on
extinguishment of debt in the six months ended December 29, 2012.Management
believes that excluding these items from the Company's financial results
provides investors with a clearer perspective of the current underlying
operating performance of the Company, a clearer comparison between results in
different periods and greater transparency regarding supplemental information
used by management in its financial and operational decision making. These
non-GAAP measures are not measurements under accounting principles generally
accepted in the United States. These measures should be considered in addition
to, but not as a substitute for, the information contained in our financial
statements prepared in accordance with GAAP.

CONTACT: For Further Information Contact:
        
         Mr. Peter J. Burlage, Chief Executive Officer
         Mr. Ronald L. McCrummen, Chief Financial Officer
         PMFG, Inc.
         14651 North Dallas Parkway, Suite 500
         Dallas, Texas 75254
         Phone: (214) 353-5545
         Fax: (214) 351-4172
         www.peerlessmfg.com
        
         or
        
         Mr. Shawn Severson
         The Blueshirt Group
         Phone: (415) 489-2198
         Email: shawn@blueshirtgroup.com

PMFG, Inc.
 
Press spacebar to pause and continue. Press esc to stop.