/ CORRECTION - MFRI, Inc.
NILES, IL--(Marketwired - Apr 18, 2014) - In the news release,
"MFRI Reports Net Sales of $227 Million and EPS OF $1.80 from
Continuing Operations for Fiscal 2013," issued Tuesday, April 15,
2014 by MFRI (NASDAQ: MFRI), we are advised by the company that
there was a typographical error in the first paragraph of the press
release and also in the Consolidated Statements of Operations for
the Three Months Ended January 31, 2014.
The corrected information for the release and the table,
respectively, is shown below:
Net sales from continuing operations rose 34%, and net income
from continuing operations was $13 million for the year compared to
a $21 million loss in the prior year.
Consolidated Statements of Operations Three Months Ended January
31, 2014
Income (loss) from discontinued operations, net of tax |
|
|
(1,276 |
) |
Net
income (loss) |
|
$ |
(1,841 |
) |
|
|
|
|
|
All other information, including all Earnings (loss) per share
information in the Consolidated Statements of Operations, are
reflected properly. Complete corrected text follows.
MFRI Reports Net Sales of $227 Million and EPS of $1.80 From
Continuing Operations for Fiscal 2013
NILES, IL -- April 15, 2014 -- MFRI, Inc. (NASDAQ: MFRI)
- Net sales rise 34% compared to 2012
- Net income from continuing operations of $13 million
- Net income of $21 million and EPS of $2.96, including
discontinued operations
- Bidding on large-scale infrastructure projects continues to
provide opportunities for execution after 2014
MFRI, Inc. (NASDAQ: MFRI) announced today financial results for
the fourth quarter and full year ended January 31, 2014.
President and CEO Bradley Mautner remarked, "Fiscal 2013 was a
transitional year for us and an extraordinarily successful
one. Net sales from continuing operations rose 34%, and net
income from continuing operations was $13 million for the year
compared to a $21 million loss in the prior year. Net income
including discontinued operations was $21 million and reflected the
benefits of the various portfolio composition changes we made
during the year, most notably the sale of substantially all of the
assets of Thermal Care, Inc.
"On an operating basis, the major Piping Systems projects in
Saudi Arabia and the United Arab Emirates ('U.A.E.') were key
drivers of our unusually strong top- and bottom-line results, and
made fiscal 2013 a stand-out year. They illustrate the
potential of investments made in the Middle East to serve the
region's rapid growth. In addition, some significant domestic
oil and gas projects serving the offshore market in the Gulf of
Mexico contributed to Piping Systems' outstanding performance.
"In fiscal 2014, we expect our current, large Piping Systems
projects in the Middle East to continue to make important
contributions to our performance, although not at as great a level
as in 2013, when customer timing led to unusually high shipments
from a compressed schedule. The execution of the projects is
reflected in a lower backlog at year-end 2013 as compared to
year-end 2012. At the same time, we are encouraged by the many
new bidding opportunities we are seeing in the region, as well as
in other parts of the world, and are currently pursuing several
significant prospects. The ultimate timing of these opportunities
is difficult to predict and they take considerable time to develop.
However, they are diverse in nature and geography, which is good
for the business and highlights the many capabilities of
Perma-Pipe.
"Despite continuing difficult conditions in the domestic fabric
filter market, we succeeded in improving the operations and
productivity of our Filtration Products business. The many
expense controls we implemented enabled us to maintain this
segment's gross margin for 2013 -- a critical step in our
turnaround of the business. Even with certain one-time
expenses in the fourth quarter, the segment reduced its operating
loss by 45% for the year on 13.6% lower sales. We are moving
in the right direction, with plenty of work ahead in the coming
quarters to return to a satisfactory level of performance.
"We expect our Filtration Products business to continue its
improvement in operations and productivity in 2014 and are
positioning ourselves to capitalize on demand outside the U.S. by
establishing operations in the Middle East and increasing our sales
presence in Asia. Our strengthened balance sheet, solidified
through the April 2013 sale of the Thermal Care assets, provides an
excellent foundation for the many initiatives, both short- and
longer-term, we are pursuing."
TWELVE MONTHS ENDED JANUARY 31, 2014 ("Fiscal Year 2013")
SALES - Net sales were $226.8 million in 2013, an increase
of 34% from $168.8 million in 2012. Piping Systems sales
increased 77%, or $68.8 million, mainly due to sales growth in
Saudi Arabia and the U.A.E. for major projects such as expanding
the Grand Mosque in Mecca and the King Abdul-Aziz International
Airport in Jeddah, as well as a significant domestic oil and gas
project. Filtration Products sales decreased by
$10.7 million due primarily to reduced domestic demand for
fabric filter bag products.
GROSS PROFIT - Gross profit increased 90% to $52.2 million in
2013 from $27.5 million in 2012 mainly due to the sales increase in
Piping Systems.
EXPENSES - Operating expenses increased 7.8% to $39.1 million
from $36.3 million. Improved sales performance led to higher
incentive compensation expense partially offset by reduced health
insurance costs. The Company's 2012 results included a
non-cash $1.5 million charge related to the impairment of
fixed assets related to an idle Filtration Products manufacturing
facility in Cicero, Illinois.
TAXES - The Company's consolidated effective income tax rate
("ETR") from continuing operations for 2013 and 2012 were negative
4.0% and negative 132.4%, respectively. The ETR in 2013 was
less than the statutory U.S. federal income tax rate, mainly due to
the $1.2 million release of the full valuation allowance
related to the Company's deferred tax assets in Saudi
Arabia. The 2013 and 2012 ETRs have been impacted by the mix
of the U.A.E. earnings (loss) versus total earnings (loss), because
the U.A.E. is not subject to any local country income tax. In
2012, the Company recorded a full valuation allowance on domestic
deferred tax assets. This resulted in a $12.5 million non-cash
charge.
FOURTH FISCAL QUARTER ENDED JANUARY 31, 2014
SALES - Net sales increased 45.6% to $53.4 million from $36.7
million in the 2012 fourth quarter. Piping Systems sales
increased 78%, or $16.1 million, mainly due to sales growth in
Saudi Arabia and the U.A.E. for major projects such as expanding
the Grand Mosque in Mecca and the King Abdul-Aziz International
Airport in Jeddah. Filtration Products sales rose 4% to $16.8
million.
GROSS PROFIT - Gross profit increased 88% to $9.2 million from
$4.9 million in the prior-year quarter primarily due to the
sales increase in Piping Systems. Filtration Products' gross
profit decreased 24%, due to the volume shortfall and an inventory
adjustment of $0.6 million for slow-moving product.
EXPENSES - Operating expenses totaled $10.2 million, or 19.1% of
net sales, compared to $10.9 million, or 29.6%, in the prior-year
quarter. Higher incentive expenses from success in Piping
Systems were partially offset by the effect of the prior-year,
non-cash write-down of $1.5 million for idle fixed assets at
Filtration Products' Cicero, IL location.
TAXES - The Company's consolidated effective tax rate from
continuing operations was 41.1% for the 2013 fourth quarter and
negative 219.6% for the 2012 fourth quarter. The 2012 fourth
quarter reflects the full valuation allowance on domestic deferred
taxes, a non-cash adjustment of $12.5 million.
NET INCOME - Fourth-quarter net loss was $1.8 million, $13.7
million less than the prior-year period due to the 2012 deferred
tax adjustment and increased volume in Piping Systems.
BACKLOG
The Company's backlog from continuing operations decreased 27.5%
or $31.8 million from January 31, 2013. This decrease
primarily reflects the execution of large-scale Piping Systems
projects in Saudi Arabia and the U.A.E. MFRI's Piping Systems
business is based on large, discrete projects so revenues can vary
significantly in both geographies and reporting periods, and fiscal
2013 was an exceptionally active period. The Company is pursuing
new Piping Systems and Filtration Products projects worldwide but
any success in winning projects will not become shipments until
2015.
|
|
|
January 31, |
Backlog ($ in millions): |
2014 |
|
2013 |
Piping Systems |
$ |
60.6 |
|
$ |
89.5 |
Filtration Products |
|
22.9 |
|
|
25.8 |
Total |
$ |
83.5 |
|
$ |
115.3 |
|
|
|
|
|
|
MFRI, Inc.
MFRI, Inc. manufactures pre-insulated specialty piping systems
for oil and gas gathering, district heating and cooling as well as
other applications. The Company also manufactures
custom-designed industrial filtration products to remove
particulates from air and other gas streams. In total, MFRI
has operations at 10 locations in six countries.
Forward-Looking Statements
Statements and other information contained in this announcement
that can be identified by the use of forward-looking 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, including, without
limitation, statements regarding the expected future performance
and operations of the Company. 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, the
project nature of the business, the increasing international nature
of the business, 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's Form 10-K for the period ended January 31, 2014 will be
accessible at www.sec.gov and www.mfri.com. For more
information, visit the Company's website or contact its investor
relations representative, LHA.
|
|
|
|
|
|
|
|
|
|
|
|
|
MFRI, INC. AND SUBSIDIARIES |
|
|
|
|
|
|
|
|
|
|
|
|
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(In 000's except per share data) |
|
Three Months Ended January 31, |
|
|
Twelve Months Ended January 31, |
|
Operating Statement Information |
|
2014 |
|
|
2013 |
|
|
2014 |
|
|
2013 |
|
Net sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Piping Systems |
|
$ |
36,597 |
|
|
$ |
20,517 |
|
|
$ |
158,422 |
|
|
$ |
89,664 |
|
Filtration Products |
|
|
16,778 |
|
|
|
16,153 |
|
|
|
68,413 |
|
|
|
79,143 |
|
|
Total |
|
$ |
53,375 |
|
|
$ |
36,670 |
|
|
$ |
226,835 |
|
|
$ |
168,807 |
|
Gross profit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Piping Systems |
|
$ |
7,513 |
|
|
$ |
2,693 |
|
|
$ |
43,273 |
|
|
$ |
17,020 |
|
Filtration Products |
|
|
1,665 |
|
|
|
2,194 |
|
|
|
8,942 |
|
|
|
10,474 |
|
|
Total |
|
$ |
9,178 |
|
|
$ |
4,887 |
|
|
$ |
52,215 |
|
|
$ |
27,494 |
|
Income (loss) from operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Piping Systems |
|
$ |
2,937 |
|
|
$ |
(731 |
) |
|
$ |
24,213 |
|
|
$ |
3,452 |
|
Filtration Products |
|
|
(1,161 |
) |
|
|
(2,456 |
) |
|
|
(1,629 |
) |
|
|
(2,962 |
) |
Corporate |
|
|
(2,786 |
) |
|
|
(2,795 |
) |
|
|
(9,501 |
) |
|
|
(9,310 |
) |
|
Total |
|
$ |
(1,010 |
) |
|
$ |
(5,982 |
) |
|
$ |
13,083 |
|
|
$ |
(8,820 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from joint venture |
|
|
280 |
|
|
|
1,032 |
|
|
|
528 |
|
|
|
1,386 |
|
Interest expense, net |
|
|
229 |
|
|
|
350 |
|
|
|
1,311 |
|
|
|
1,498 |
|
Income (loss) from continuing operations before income
taxes |
|
|
(959 |
) |
|
|
(5,300 |
) |
|
|
12,300 |
|
|
|
(8,932 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax (benefit) expense |
|
|
(394 |
) |
|
|
11,640 |
|
|
|
(493 |
) |
|
|
11,825 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations |
|
|
(565 |
) |
|
|
(16,940 |
) |
|
|
12,793 |
|
|
|
(20,757 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from discontinued operations, net of
tax |
|
|
(1,276 |
) |
|
|
1,414 |
|
|
|
8,234 |
|
|
|
2,272 |
|
Net income (loss) |
|
$ |
(1,841 |
) |
|
$ |
(15,526 |
) |
|
$ |
21,027 |
|
|
$ |
(18,485 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares
outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
7,129 |
|
|
|
6,924 |
|
|
|
7,028 |
|
|
|
6,922 |
|
|
Diluted |
|
|
7,268 |
|
|
|
6,924 |
|
|
|
7,096 |
|
|
|
6,922 |
|
Earnings (loss) per share from continuing
operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
(0.08 |
) |
|
$ |
(2.45 |
) |
|
$ |
1.82 |
|
|
$ |
(3.00 |
) |
|
Diluted |
|
$ |
(0.08 |
) |
|
$ |
(2.45 |
) |
|
$ |
1.80 |
|
|
$ |
(3.00 |
) |
Earnings per share from discontinued operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
(0.18 |
) |
|
$ |
0.20 |
|
|
$ |
1.17 |
|
|
$ |
0.33 |
|
|
Diluted |
|
$ |
(0.18 |
) |
|
$ |
0.20 |
|
|
$ |
1.16 |
|
|
$ |
0.33 |
|
Earnings (loss) per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
(0.26 |
) |
|
$ |
(2.24 |
) |
|
$ |
2.99 |
|
|
$ |
(2.67 |
) |
|
Diluted |
|
$ |
(0.25 |
) |
|
$ |
(2.24 |
) |
|
$ |
2.96 |
|
|
$ |
(2.67 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See the Company's Form 10-K for the period for notes to
financial statements. Note: Earnings or loss per share calculations
could be impacted by rounding.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MFRI, INC. AND SUBSIDIARIES |
|
|
|
|
CONDENSED CONSOLIDATED BALANCE SHEETS |
|
|
|
|
|
|
January 31, |
(In thousands) |
|
2014 |
|
2013 |
ASSETS |
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
Cash,
cash equivalents and restricted cash |
|
$ |
13,834 |
|
$ |
7,759 |
Trade
accounts receivable, less allowance for doubtful accounts |
|
|
45,659 |
|
|
23,278 |
Inventories, net |
|
|
33,547 |
|
|
37,529 |
Prepaid expenses and other current assets |
|
|
8,052 |
|
|
15,780 |
Total
current assets |
|
$ |
101,092 |
|
$ |
84,346 |
|
|
|
|
|
|
|
Property, plant and equipment, net of accumulated depreciation |
|
|
42,541 |
|
|
45,582 |
|
|
|
|
|
|
|
Other
assets |
|
|
|
|
|
|
Note
receivable from joint venture |
|
|
4,659 |
|
|
5,200 |
Investment in joint venture |
|
|
6,550 |
|
|
6,022 |
Other
assets |
|
|
8,427 |
|
|
8,338 |
Total
other assets |
|
|
19,636 |
|
|
19,560 |
TOTAL
ASSETS |
|
$ |
163,269 |
|
$ |
149,488 |
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
Trade
accounts payable |
|
$ |
15,276 |
|
$ |
18,740 |
Accrued commissions, compensation, incentives and payroll
taxes |
|
|
16,331 |
|
|
8,819 |
Current maturities of long-term debt |
|
|
8,274 |
|
|
5,384 |
Customers' deposits, other current liabilities |
|
|
13,603 |
|
|
16,267 |
Total
current liabilities |
|
|
53,484 |
|
|
49,210 |
|
|
|
|
|
|
|
Long-term liabilities |
|
|
|
|
|
|
Long-term debt, less current maturities |
|
|
23,469 |
|
|
35,579 |
Other
long-term liabilities |
|
|
9,680 |
|
|
10,444 |
Total
long-term liabilities |
|
|
33,149 |
|
|
46,023 |
|
|
|
|
|
|
|
Stockholders' equity |
|
|
76,636 |
|
|
54,255 |
TOTAL
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
$ |
163,269 |
|
$ |
149,488 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MFRI, INC. AND SUBSIDIARIES |
|
|
|
|
|
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS |
|
|
|
|
|
|
Twelve Months Ended January 31, |
|
($
in thousands) |
2014 |
|
|
2013 |
|
Operating activities |
|
|
|
|
|
|
|
Net
income (loss) |
$ |
21,027 |
|
|
$ |
(18,485 |
) |
Adjustments to reconcile net income (loss) to net cash flows
provided by operating activities |
|
|
|
|
|
|
|
Depreciation and amortization |
|
5,785 |
|
|
|
5,806 |
|
Gain
on disposal of discontinued operations |
|
(11,449 |
) |
|
|
0 |
|
Impairment on fixed assets |
|
0 |
|
|
|
1,520 |
|
Deferred tax (benefit) expense |
|
(3,190 |
) |
|
|
12,594 |
|
Income from joint venture |
|
(528 |
) |
|
|
(1,386 |
) |
Other, net |
|
779 |
|
|
|
499 |
|
Changes in operating assets and liabilities |
|
|
|
|
|
|
|
Accounts payable |
|
(4,438 |
) |
|
|
2,908 |
|
Inventories |
|
8,608 |
|
|
|
(2,080 |
) |
Accounts receivable |
|
(18,592 |
) |
|
|
204 |
|
Other
assets and liabilities |
|
8,398 |
|
|
|
3,767 |
|
Net
cash provided by operating activities |
|
6,400 |
|
|
|
5,347 |
|
|
|
|
|
|
|
|
|
Investing activities |
|
|
|
|
|
|
|
Net
proceeds from sale of discontinued operations |
|
15,172 |
|
|
|
0 |
|
Capital expenditures, other investing activities |
|
(2,745 |
) |
|
|
(6,254 |
) |
Net
cash provided by (used in) investing activities |
|
12,427 |
|
|
|
(6,254 |
) |
|
|
|
|
|
|
|
|
Financing activities |
|
|
|
|
|
|
|
Proceeds from debt |
|
83,530 |
|
|
|
194,035 |
|
Payments of debt on revolving lines of credit, other debt |
|
(93,133 |
) |
|
|
(189,684 |
) |
Decrease in drafts payable |
|
(3,125 |
) |
|
|
(8 |
) |
Other
financing |
|
989 |
|
|
|
(545 |
) |
Net
cash (used in) provided by financing activities |
|
(11,739 |
) |
|
|
3,798 |
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash and cash equivalents |
|
(727 |
) |
|
|
(66 |
) |
Net
increase in cash and cash equivalents |
|
6,361 |
|
|
|
2,825 |
|
Cash
and cash equivalents - beginning of period |
|
7,034 |
|
|
|
4,209 |
|
Cash
and cash equivalents - end of period |
$ |
13,395 |
|
|
$ |
7,034 |
|
|
|
|
|
|
|
|
|
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