MFRI Announces Third Quarter 2011 Results
(firmenpresse) - NILES, IL -- (Marketwire) -- 12/12/11 -- (NASDAQ: MFRI) "
- Sales were $71.3 million, 21% higher than $58.8 million for the prior-year quarter. Sales increased in all segments.
- Gross profit of $12.4 million in the current quarter decreased 9% from $13.6 million in the prior-year quarter and gross margin decreased to 17% of net sales in the current quarter from 23% of net sales in the prior-year quarter. Gross profit increased significantly in industrial process cooling and filtration products due to higher volume. Piping systems' gross profit decreased considerably due to lower volume at the United Arab Emirates ("U.A.E.") facility and no large project related activity at the India facility, partially offset by an increase in domestic oil and gas products. In addition, extreme competitive market conditions also contributed to the margin decrease.
- Operating expenses decreased to $10.2 million or 14% of sales from $10.5 million or 18% of sales in the prior-year quarter. The reduction was mainly due to lower profit based management incentive and deferred compensation expenses, partially offset by additional sales commission expense associated with higher volumes.
- Net income was $0.7 million in the current quarter versus $3.6 million in the prior-year quarter. The decrease was driven by lower sales and profit in the U.A.E. and India.
- Sales increased 11% to $188.7 million from $170.6 million for the prior-year's first nine months. Sales increased in filtration products, industrial process cooling, and heating, ventilation and air conditioning (included in corporate and other). Piping systems' sales declined due to reduced activity at the U.A.E. facility and no large project related revenue at the India facility.
- Gross profit of $31.5 million decreased 17% from $38.1 million in the prior-year YTD and gross margin decreased to 17% of net sales YTD from 22% of net sales in the prior-year YTD. Gross profit increased significantly in filtration products and industrial process cooling due to higher volume. Piping systems' gross profit decreased considerably due to lower volume at the U.A.E. facility and no large project related activity at the India facility. In addition, a temporary overstaffing condition resulted from the need to maintain experienced staff that will be transferred to the new plant in Saudi Arabia to support its rapid start-up later this year. Extremely competitive market conditions also contributed to the margin decrease.
- Operating expenses decreased to $30.8 million or 16% of sales from $32.4 million or 19% of sales in the prior year. The reduction was mainly due to lower profit based management incentive compensation partially offset by higher commission expense associated with higher volumes.
- In July 2011, the Company recorded a $1.8 million discrete tax expense associated with a one-time $3.1 million repatriation of foreign earnings. This tax expense included a payment of $0.5 million to the foreign tax authority and an accrual of $1.3 million U.S. tax on foreign source income. No cash was paid for this tax in the U.S. since the Company has a net operating loss carryforward for federal taxes. The modest pre-tax profit realized year-to-date caused the Company's permanent and discrete tax items to have an exaggerated percentage impact. The diluted earnings per share impact of this discrete tax item is ($0.26) as detailed in the reconciliation below:
- Net loss for the first nine months was $2.6 million compared to net income of $6.0 million in the prior-year. The loss was driven by lower sales and profit in the U.A.E. and India and the one-time $1.8 million discrete tax expense from the repatriation of foreign earnings.
- The Company's backlog on October 31, 2011 rose $10.6 million or 14% to $88.3 million, from January 31, 2011. The rise in the backlog is virtually the result of a 48% increase in piping systems as illustrated in the table below.
Some of the major projects were described in the September 14 press release.
- The manufacturing facility in Dammam, Saudi Arabia is approaching production ready status, and staff is being recruited and trained. Some initial customer orders have been received and technical submittals are awaiting approval. Expenses of $470 thousand for the quarter and $860 thousand for the nine months relating to this facility were recorded to cost of goods sold, general and administrative and selling expenses.
Piping systems' domestic sales and earnings are seasonal, typically higher during the second and third quarters due to favorable weather for construction over much of North America, and are correspondingly lower during the first and fourth quarters.
- Industrial markets show improvement, as indicated by a 21% increase in net sales and a 29% increase in gross profit for the first nine months. Gross profit increased to $10 million in 2011 from $8 million in the prior-year period. Efforts are in place to shift the mix of products sold and improve overall profitability.
- Market conditions for industrial process cooling also show signs of improvement. In 2011, net sales grew 31% and gross profit grew 36% for the first nine months. This progress, coupled with expense control, resulted in a profit for the quarter.
"Although margins remain competitively constrained, 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, Europe and the Middle East increased over prior periods. We will continue to make strategic investments to facilitate growth for the long term. One example is our new pipe insulation facility in Saudi Arabia, which is on schedule to begin production early next year. This 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."
, "The third quarter again delivered year over year improvement in our filtration and industrial process cooling segments. Our piping systems business saw an absence of large project revenue from international activities and the continued prolonged downturn in the Dubai district cooling market. These factors, coupled with ramp up costs for the Saudi and India markets, drive a very weak 2011. As I noted earlier this year, 2011 includes significant investment in the piping segment to develop our India and Saudi Arabia initiatives. With the recent completion of the domestic oil and gas projects, the 2011 fourth quarter should be similar to the 2010 fourth quarter. Although the large non-cash tax impact described above significantly lowered reported earnings, we believe the right programs are in place to resume profitable growth in 2012."
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.
for the period ended October 31, 2011 will be accessible at . 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 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.
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Datum: 12.12.2011 - 07:30 Uhr
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