NILES, IL -- (Marketwire) -- 06/13/11 -- MFRI, Inc. (NASDAQ: MFRI) - announced today sales and earnings for the first quarter ended April 30, 2011 ("2011"). The Company's net sales in 2011 were $53.4 million, 7% higher than $49.9 million for the prior-year quarter; net loss in 2011 was $1.5 million or ($0.22) per diluted share, compared to a net loss of $0.5 million or ($0.07) per diluted share, in the prior-year quarter.
FISCAL QUARTER ENDED APRIL 30, 2011
SALES - Sales were $53.4 million, 7% higher than $49.9 million for the prior-year quarter. Sales increased in the filtration products and industrial process cooling businesses, the heating, ventilation and air conditioning business included in Corporate and Other and decreased in the piping systems business.
GROSS PROFIT - Gross profit of $8.2 million in 2011 decreased 23% from $10.7 million in the prior-year quarter. Gross margin was 15.4% compared to 21.6% in the prior-year quarter. Gross profit increased in filtration products and industrial process cooling businesses due to higher sales and decreased in the piping systems business. The decrease in gross profit was attributable to lower volume from the piping systems business in the United Arab Emirates ("U.A.E.").
EXPENSES - Operating expenses decreased to $9.9 million or 19% of sales from $10.9 million or 22% of sales in the prior-year quarter. The reduction was mainly due to lower management incentive compensation and professional costs.
NET LOSS - Net loss rose to $1.5 million in the current quarter from a net loss of $0.5 million in the prior-year quarter. The increased loss was due to decreased sales in the U.A.E. and loss of $183 thousand from the Company's joint venture for pipe coating in Canada.
BACKLOG - The Company's backlog on April 30, 2011 was $84.8 million, up $4.3 million or 5% from January 31, 2011. The rise in the backlog is the result of increased activity in the U.S.
PIPING SYSTEMS - A poor economic climate, particularly in Dubai, has been a major cause of our decreased business activity in the Gulf Cooperation Council countries ("GCC"). Piping systems' domestic sales and earnings are seasonal, typically lower during the first and fourth 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 show improvement, which was indicated by a 30% increase in net sales and a 26% increase in gross profit from the prior-year quarter.
INDUSTRIAL PROCESS COOLING - Market conditions for industrial process cooling also show signs of improvement. In 2011, net sales grew 38%, gross profit grew 51% and the gross margin improved 2.4 percentage points. This progress, coupled with expense control, resulted in a modest profit for the quarter.
David Unger, CEO commented, "We believe that maintaining our diversified product mix and geographic reach during the difficult economic climate of recent years has benefited our Company. In 2011, new orders in North America and Europe show improvement over prior periods. We will continue to make strategic investments to facilitate growth for the long term. One example is our recently announced initiative to establish a pipe insulation facility in Saudi Arabia. This new factory, now under construction, represents a repositioning of our Middle East business strategy to build our presence where we believe the long-term market is growing and project funding is available. We anticipate operations to begin in the new Saudi plant during the fourth quarter of 2011. With this plant operational, we expect to capture a greater share of the growing market in Saudi Arabia and other nearby GCC countries."
Brad Mautner, President and COO said, "The first quarter delivered continued year-over-year improvement in our filtration and industrial process cooling segments. Continuing to face sluggish but slightly improving market conditions, both businesses have stayed focused on cost control while actively pursuing top line growth. Due to the absence of large project revenue from international activities, the piping systems business saw a typically slow first quarter. However, based on solid U.S. bookings we do expect improved contribution from our U.S. activities in the busier second and third quarters. A good part of 2011 will be spent investing in the piping segment to capture business in India and develop infrastructure needs of the Middle East outside of Dubai for 2012 and beyond. Overall, our strategy of maintaining diversity in our products and markets is serving us well by helping to minimize the impact of slow economic recovery and unpredictable events around the world."
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.
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 Three Months Ended (Unaudited) (In 000's except per share data) April 30, Operating Statement Information 2011 2010 -------- -------- Net sales Piping Systems $ 19,027 $ 25,216 Filtration Products 24,843 19,114 Industrial Process Cooling 7,155 5,191 Corporate and Other 2,376 329 -------- -------- Total 53,401 49,850 Gross profit Piping Systems $ 2,813 $ 7,002 Filtration Products 3,312 2,637 Industrial Process Cooling 1,945 1,289 Corporate and Other 172 (176) -------- -------- Total 8,242 10,752 Income (loss) from operations Piping Systems $ (223) $ 3,436 Filtration Products 510 (519) Industrial Process Cooling 204 (184) Corporate and Other (2,135) (2,895) -------- -------- Total (1,644) (162) Loss from joint ventures 183 97 Interest expense, net 287 285 -------- -------- Loss before income taxes (2,114) (544) Income tax benefit (622) (60) -------- -------- Net loss $ (1,492) $ (484) ======== ======== Weighted average number of common shares outstanding Basic and diluted 6,855 6,837 Earnings per share Basic and diluted $ (0.22) $ (0.07) Backlog 4/30/2011 1/31/2011 4/30/2010 ---------- ---------- ---------- Piping Systems $ 48,515 $ 46,452 $ 52,564 Filtration Products 22,428 19,935 21,271 Industrial Process Cooling 5,711 4,332 4,021 Corporate and Other 8,161 9,751 8,223 ---------- ---------- ---------- Total Backlog $ 84,815 $ 80,470 $ 86,079 See the Company's Form 10-Q for the period for notes to financial statements.