Fourth graph, second sentence of release should read: Including
the goodwill impairment charge, the fourth quarter of 2008 net loss
was $827,000, or $0.12 earnings per share basic and diluted, versus
a net loss of $3,762,000 in the prior-year�s fourth quarter, or
$0.56 per share basic and diluted. (sted Excluding the goodwill
impairment charge, the fourth quarter of 2008 had a net loss of
$827,000, or $0.12 earnings per share basic and diluted, versus a
net loss of $3,762,000 in the prior-year�s fourth quarter, or $0.56
per share basic and diluted.).
The corrected release reads:
MFRI ANNOUNCES RECORD 2008 SALES,
EARNINGS AND EARNINGS PER SHARE DESPITE FOURTH QUARTER NON-CASH
GOODWILL CHARGE
MFRI, Inc. (Nasdaq:MFRI) announced today record sales for the
fiscal year ended January 31, 2009 (�2008�). Net sales were
$303,066,000, up 26.5% from $239,487,000 in the prior year. Net
income in 2008 rose to $6,689,000 or $0.98 earnings per share basic
and diluted, versus a net loss of $298,000 for 2007, or $0.04 per
share basic and diluted. The 2008 net income was reduced by a
fourth quarter non-cash goodwill impairment charge of $2,788,000.
This charge net of tax impact reduced earnings per share by $0.27
basic and diluted. Net income for 2008 without the goodwill
impairment charge would have been $8,529,000, or $1.25 earnings per
share basic and $1.24 diluted.
Gross margin for 2008 increased to 19.5% from 17.2% in 2007. Net
sales increased primarily due to a higher starting backlog, the
growing success of the piping systems business in the United Arab
Emirates, progress on the crude oil pipeline project in India and
the start of field work on buildings in the heating, ventilation
and air conditioning (�HVAC�) backlog. Due to the increased net
sales and gross margin, 2008 gross profit of $58,948,000 was 42.9%
higher than 2007 gross profit of $41,249,000.
Net sales in 2008 for the piping systems business increased by
45.6%, the filtration products business increased by 8.5%, while
the industrial process cooling equipment business decreased by
12.6%. The HVAC business, included in corporate and other, grew
over 700 % as work ramped up on projects. In the fourth quarter
2008, the Company recognized a non-cash goodwill impairment charge
of $2,788,000, or net of tax impact at $0.27 earnings per share
basic, which was recorded in continuing operations. The goodwill
impairment charge eliminated all remaining Company goodwill and was
related to the Company�s filtration products and industrial process
cooling equipment businesses.
Net sales for the fourth quarter of 2008 were $82,623,000, or
41.2% greater than the $58,503,000 for the prior-year�s quarter.
Including the goodwill impairment charge, the fourth quarter of
2008 net loss was $827,000, or $0.12 earnings per share basic and
diluted, versus a net loss of $3,762,000 in the prior-year�s fourth
quarter, or $0.56 per share basic and diluted. Net income for the
fourth quarter of 2008 without the goodwill impairment charge net
of tax impact would have been $1,013,000, or $0.15 per share
basic.
Net sales for the fourth quarter of 2008 compared to the
prior-year�s fourth quarter increased by 73.7% in the piping
systems business, increased by 6.5% in the filtration products
business and decreased by 23.6% in the industrial process cooling
business. The HVAC business, included in corporate and other,
increased eleven fold as field work progressed steadily during the
2008 quarter compared to the 2007 quarter.
As previously announced, the piping systems business is
performing the insulating and jacketing services for a 600
kilometer (370 mile), 600 millimeter (24 inch) diameter heat-traced
crude oil pipeline. This work is being performed at a facility in
Mundra, India on the premises of Jindal Saw Ltd, one of India�s
largest steel pipe producers. As of January 31, 2009, the Company
had completed production on approximately sixty percent of the
India pipeline contract.
The Company�s backlog on January 31, 2009 was $108 million, down
24.8% from the prior year but still the second highest in Company
history. Part of the backlog decline was due to the normal progress
on specific projects such as the pipeline in India. The Company
would not expect a project similar to this one to be replaced in
the backlog in sequential years. Additionally, the difficult
worldwide economic environment has caused some orders to be
postponed or cancelled and has reduced the opportunities to obtain
new work. As a favorable sign, quoting activity has been maintained
at a reasonably high level but decision making by customers is
slow, most likely due to general financial constraints and caution
on expenditures.
David Unger, CEO said, �Total annual sales have more than
doubled from 2003 to 2008. Our global expansion strategy of
manufacturing our products in foreign countries to serve their
local markets has resulted in higher sales, earnings and backlog
for our Company. In 2008, 51.5% of the Company�s employees were
located outside the United States and 35% of the Company�s sales
were to customers outside the United States. We expect a mix of
domestic and global sales will continue to support our Company�s
growth.�
Brad Mautner, President and COO said, �Overall, 2008 was a very
good year. The piping systems business had a terrific year driven
by strong domestic activity and very robust performance in the
Middle East supplemented by project revenue in India. The
filtration products business grew the net sales nicely but
operating profit (not including the non-cash goodwill charge) was
down due to reduced margin from the marketplace and some higher
expenses for relocating a U.S. operation to a more efficient
manufacturing facility. This move will serve us well over the long
term. The industrial process cooling equipment business faced a
very difficult fourth quarter as the markets it serves were deeply
impacted by the global recession. Yet, excluding the non-cash
goodwill charge, the group still improved profitability compared to
the prior year. The HVAC business worked actively on project
backlog and via solid execution, delivered a nice profit for the
year. Turning to 2009, all the business units are focused on
maximizing the results from existing backlog while adjusting cost
structures to the new realities brought on by the uncertain depth
and duration of a global recession. Even in the most challenging
business climate in decades we are fortunate to have a strong
leadership team for each of our segments to navigate the challenges
ahead.�
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.
Form 10-K for the period ended January 31, 2009 will be
accessible at http://www.sec.gov/. For more information visit the
Company's website www.mfri.com 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,"
"future," "potential," believes," "plans," "likely," 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
(In $000�s except per share data)
Three Months Ended
January 31,
�
Fiscal Year Ended
January 31,
2009 2008 �
2009 2008 Net sales: Piping
Systems
$ 44,725
$ 25,746 $ 151,792 $ 104,273
Filtration Products 25,976 24,389 105,390 97,120 Industrial Process
Cooling Equipment 6,006 7,865 31,738 36,327 Corporate and Other (1)
5,916 � 503 � 14,146 � 1,767 � Totals 82,623 � 58,503 � 303,066 �
239,487 � Gross profit: Piping Systems 11,891 2,484 37,871 18,952
Filtration Products 1,325 3,024 11,424 13,776 Industrial Process
Cooling Equipment 1,321 1,424 7,919 8,508 Corporate and Other (1)
768 � 48 � 1,734 � 13 � Totals 15,305 � 6,980 � 58,948 � 41,249 �
Income (loss) from operations (2): Piping Systems 7,570 372 24,037
10,623 Filtration Products (3,694 ) 47 (2,936 ) 2,220 Industrial
Process Cooling Equipment (1,784 ) (838 ) (1,765 ) (1,227 )
Corporate and Other (1) (1,881 ) (2,347 ) (8,544 ) (8,720 ) Totals
211 � (2,766 ) 10,792 � 2,896 � � Income from joint venture 5 23
104 23 � Interest expense � net 813 657 2,834 2,408 � (Loss) income
before income taxes (597 ) (3,400 ) 8,062 511 � Income tax expense
230 362 1,373 809 � � � � Net (loss) income
$ (827 )
$ (3,762 ) $ 6,689 � $ (298 ) � Weighted average number of
common shares outstanding - basic 6,808 6,707 6,797 6,627 Earnings
per share - basic net (loss) income
$ (0.12 )
$ (0.56
) $ 0.98 $ (0.04 ) � Weighted average number of common shares
outstanding - diluted 6,808 6,707 6,853 6,627 Earnings per share -
diluted net (loss) income
$ (0.12 )
$ (0.56 ) $ 0.98
$ (0.04 )
Backlog: 1/31/09 � � 1/31/08 Piping Systems $
52,385 $ 65,810 Filtration Products 35,549 38,161 Industrial
Process Cooling Equipment 3,835 6,315 Corporate and Other (1) �
16,051 � 33,179 Total Backlog $ 107,820 $ 143,465
1. Corporate and Other includes activity for the installation of
heating, ventilation and air conditioning systems.
2. Income (loss) from operations for fourth quarter and full
year 2009 results includes the goodwill impairment charge totaling
$2,788,000 of which $1,688,000 was in the filtration products
business and $1,100,000 was in the industrial process cooling
equipment business.
See the Company�s Form 10-K for the period for notes to
financial statements.
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