MFRI, Inc. (MFRI) Swings to Q3 Profit

MFRI, Inc. (NASDAQ: MFRI) reported Q3 EPS of $0.83, versus ($0.09) reported last year. Revenue for the quarter came in at $66.3 million, versus $43.8 million reported last year.

CEO Bradley Mautner commented, "During the third quarter, we began delivering orders and generating income from the many significant wins secured by Perma-Pipe during the first half of the year. The piping contracts we have been executing include both large-scale infrastructure projects in the Middle East and significant mining and oil & gas projects in North America. The successful scale-up of our facilities and production processes for these projects enabled us to achieve a strong increase in net sales during the third quarter. Our pre-tax income of approximately $7.6 million, the Company's highest in two years, fully offset the operating losses incurred in the first six months of the year, when we were rebuilding our backlog.

"As we continue to process backlog during the fourth quarter, we expect net sales and operating profit levels to deliver the positive fiscal 2015/16 results we mentioned in our September earnings announcement. We continue to actively quote in the Middle East and look forward to participating further in the multi-phase chilled-water projects that are essential to the region's long-term infrastructure development plans, although their timing is difficult to predict. The substantial decline in global oil prices that has taken place over the last 18 months is impacting project timing and new bidding activity worldwide, adding uncertainty to the size and timing of new business opportunities."

Mr. Mautner continued, "In MFRI's Filtration segment, third-quarter sales rose by 12% over the prior-year period. Our new pleated manufacturing facility in the Middle East has been well received and we are leveraging our reputation as an international high-quality supplier in the region. Two recent awards -- a two-year contract valued at approximately $1.5 million from a petroleum development corporation in the Middle East and a sizable order for a gas turbine project in Africa -- illustrate the traction we are gaining in the region and the competitive structure we have obtained as a result of our Middle East operations. Even with the start-up expenses we have been incurring for this facility, Filtration reached essentially breakeven on an operating basis in the third quarter."

Mr. Mautner concluded, "We are pleased that our plans to offset the year's slow start and reap the benefits of the strong backlog we announced in September 2015 are materializing as anticipated. As shown in the table below, the backlog entering the fourth quarter was 45% higher than at the same time last year, positioning us to end fiscal 2015/16 on a stronger note. Given the current uncertain economic climate, however, we continue to examine MFRI's cost structures and business portfolio to adjust to changes in the Company's business environment and bidding activity as needed."

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