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MFRI Announces Fourth Quarter and Full Year Financial Results

$3.0 Million in Income from Continuing Operations Before Income Taxes for Fiscal 2015/16; $9.6 Million Invested to Advance Strategic Positioning Through Acquisition of JV Interest in Bayou Perma-Pipe Canada; Filtration Business Reclassified as Discontinued Operations; Pursuing Bidding Opportunities in Traditional and New Areas of Piping Business

NILES, IL, Apr 28, 2016 (Marketwired via COMTEX) -- MFRI, Inc. MFRI, +2.24% announced today financial results for the fourth quarter and fiscal year ended January 31, 2016.

CEO Bradley Mautner commented, "Fiscal 2015/16 was a year of tremendous change for MFRI. We began planning for and then implemented a series of strategic actions to refocus MFRI's business portfolio and cost structure. These steps included exiting our Filtration segment through the sale of our domestic and international businesses, and initiating a process to sell our domestic fabric filter business.

"The goal of our efforts is to concentrate all of our resources on expanding our Piping business segment. As part of that strategy, on February 4, 2016 we acquired full ownership of Bayou Perma-Pipe Canada (BPCC), a well-regarded coating and insulation company that we believe represents a compelling opportunity to diversify our specialty piping operations in North America. From this platform, we expect to expand our insulation business in Canada and more competitively serve the district heating and cooling market in the Northwestern U.S.

"The energy markets we serve are also in the midst of tremendous change, which impacts our piping activities in two key ways. First, the direct impact of the dramatic drop in oil and gas prices has caused many oil-related projects to be delayed or cancelled. Second, the economic impact of low oil prices has caused the postponement of many large scale chilled water infrastructure projects in the Middle East, particularly in the Kingdom of Saudi Arabia. Our piping business has always been project driven and therefore subject to wide variation in sales year-to-year and even quarter-to-quarter. We have taken appropriate cost reductions measures in general and administrative costs as well as marketing idle facilities to ensure our support costs are in line with our simplified business structure. Given the current state of the energy markets and economic conditions, it is not possible to predict when projects will be restarted, but we are better positioned today to emerge from the downturn with a strong, well-focused and streamlined business."

Mr. Mautner continued, "Our financial results for fiscal 2015/16 reflect our new strategic positioning and the Filtration segment businesses has been reclassified to discontinued operations. Although we expected to complete the sale of the remaining domestic fabric filter business by this time, we have not yet been able to come to satisfactory terms and so are proceeding expediently with other transaction options to complete this important last step.

"As of year-end, we had generated $3.0 million in income from continuing operations before income taxes, up from $152,000 at the end of the year's third quarter, whose results included the Filtration segment. This increase, and the rise in earnings (loss) per diluted share from continuing operations to $0.26 from ($0.19) as of October 31, 2015, reflect the execution on significant wins secured by Perma-Pipe early in fiscal 2015/16. Our net loss for the full year including discontinued operations was $4.4 million, and was driven by taking a reserve of $6.5 million related to our fabric filter business.

"As a result of selling the pleated filter business in the U.S., Europe and the United Arab Emirates ("U.A.E") and other favorable contributors to cash flow, we improved the Company's cash positons by $7.6 million and reduced our overall debt balance by $19.7 million compared to the end of the third quarter. As previously noted, in early February we invested $9.6 million in cash and debt to advance our strategic repositioning through the acquisition of 100% ownership of BPCC, a joint venture in which we had previously owned 49%. We have re-named the entity Perma-Pipe Canada."

Mr. Mautner concluded, "Our backlog as of January 31, 2016 was almost 60% higher than at the prior year-end, reflecting Perma-Pipe's wins in the first half of fiscal 2015/16. However, the turbulence in the energy markets and resulting slowdown in activity have led to a reduction in backlog since October 31, 2015. We are aggressively working to offset the impact of the slow markets by expanding the scope of activities we perform, particularly in the Middle East and Canada. For example, Perma-Pipe Canada has been pursing promising opportunities in the insulation and anti-corrosion markets. In both the Middle East and Canada, we are also continuing to quote on projects in our traditional business areas such as chilled water distribution, pipe spool fabrication and oil & gas transportation and gathering. Although we expect fiscal 2016/17 to be a challenging year, we look forward to moving ahead with our Company's full focus squarely placed on a single segment."


                                     January 31,   October 31,   January 31,
Backlog ($ in thousands):                   2016          2015          2015
Piping Systems                           $47,937       $65,254       $30,715

DISCONTINUED OPERATIONS AND REVISION TO PRIOR YEAR During fiscal 2015/16, the Company sold certain assets and liabilities of its TDC Filter business based in Bolingbrook, Illinois and its Nordic Air Filtration, Denmark and Nordic Air Filtration, Middle East businesses. For both 2015 and 2016 the Filtration segment businesses, including the domestic fabric filter business based in Winchester, Virginia, have been reclassified as discontinued...