MFRI 1Q sales up 14 percent

NILES - MFRI Inc. said net sales for the first quarter increased 14 percent as projects in the U.S. and Canada drove the company's business.

Net sales for the quarter were $23.1 million, up from $20.3 million in the prior-year quarter. An increase of $2.1 million occurred in the company's new Canadian subsidiary, Bayou Perma-Pipe Canada, which it acquired in February, while the remaining increase was driven by large projects in the U.S. and India offsetting decreases in the Middle East.

"During the quarter, we took further steps to complete the series of actions we initiated last fall to focus all of our strategic efforts on MFRI's piping business," said CEO Bradley Mautner. "The effects of these

actions, which included acquiring full ownership of Bayou Perma-Pipe Canada, selling the pleated element portions of our Filtration business, taking actions to exit the fabric filter portion, and adjusting our staff and infrastructure accordingly - impacted our financial results for the first quarter.

"However, they also positioned us to broaden the set of offerings we bring to the Piping market and to expand our activities in North America, an important target area for long-term growth opportunities," he added.

Gross margin decreased to 9 percent of net sales in the current quarter from 12 percent of net sales in the prior-year quarter. Gross margin and gross profit decreased due to pricing pressure in the Middle East, an

excess inventory reserve adjustment of $200,000 recorded in the current quarter, and operations of the newly acquired Canadian facility, which had relatively low utilization.

"Overall, we believe that the list of available opportunities remains strong and when projects do proceed, we are better positioned today than ever to capitalize on those opportunities," Mautner said.