x
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
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Delaware
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36-3922969
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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7720 N. Lehigh Avenue, Niles, Illinois
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60714
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(Address of principal executive offices)
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(Zip Code)
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Item
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Page
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Part I
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1.
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Consolidated Statements of Operations for the Three Months Ended April 30, 2015 and 2014
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Consolidated Statements of Comprehensive (Loss) Income for the Three Months Ended April 30, 2015 and 2014
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2
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Consolidated Balance Sheets as of
April 30, 2015 and January 31, 2015
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Consolidated Statements of Stockholders' Equity as of April 30, 2015 and January 31, 2015
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Consolidated Statements of Cash Flows for the Three Months Ended April
30, 2015 and 2014
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2.
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||
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4.
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||
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Part II
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2.
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Unregistered Sales of Equity Securities and Use of Proceeds
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17
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6.
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17
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Three Months Ended April 30,
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|||||
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2015
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|
2014
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|
||
Net sales
|
|
$37,674
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|
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$59,524
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|
Cost of sales
|
33,633
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|
43,535
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||
Gross profit
|
4,041
|
|
15,989
|
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||
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|
|
||||
Operating expenses
|
|
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||||
General and administrative expenses
|
6,140
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|
7,417
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||
Selling expenses
|
2,701
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|
2,863
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||
Total operating expenses
|
8,841
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|
10,280
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||
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|
||||
(Loss) income from operations
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(4,800
|
)
|
5,709
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||
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|
|
||||
Income (loss) from joint venture
|
165
|
|
(8
|
)
|
||
|
|
|
||||
Interest (income) expense, net
|
(6
|
)
|
237
|
|
||
(Loss) income from continuing operations before income taxes
|
(4,629
|
)
|
5,464
|
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||
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|
|
||||
Income tax expense
|
26
|
1,266
|
|
|||
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||||
(Loss) income from continuing operations
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(4,655
|
)
|
4,198
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||
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|
||||
Loss from discontinued operations, net of tax
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—
|
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(371
|
)
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||
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|
||||
Net (loss) income
|
|
($4,655
|
)
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$3,827
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||||
Weighted average common shares outstanding
|
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||||
Basic
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7,252
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|
7,177
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||
Diluted
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7,252
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7,315
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||||
(Loss) earnings per share from continuing operations
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|
|
||||
Basic
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($0.64)
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$0.58
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Diluted
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($0.64)
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$0.57
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Loss per share from discontinued operations
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|
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||||
Basic and diluted
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—
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($0.05
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)
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(Loss) earnings per share
|
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|
||||
Basic
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($0.64)
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$0.53
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Diluted
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($0.64)
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$0.52
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Three Months Ended April 30,
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|||||
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2015
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2014
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Net (loss) income
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($4,655
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)
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$3,827
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|
||||
Other comprehensive (loss) income
|
|
|
||||
Foreign currency translation adjustments, net of tax
|
342
|
|
70
|
|
||
Interest rate swap, net of tax
|
5
|
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(10
|
)
|
||
Other comprehensive income
|
347
|
|
60
|
|
||
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|
||||
Comprehensive (loss) income
|
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($4,308
|
)
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$3,887
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(In thousands except per share data)
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April 30, 2015
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|
January 31, 2015
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ASSETS
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Unaudited
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Current assets
|
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||||
Cash and cash equivalents
|
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$10,718
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$10,508
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Restricted cash
|
423
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|
428
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||
Trade accounts receivable, less allowance for doubtful accounts of $225 at April 30, 2015 and $110 at January 31, 2015
|
38,190
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41,847
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||
Inventories, net
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29,765
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29,770
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Prepaid expenses and other current assets
|
3,854
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4,349
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||
Costs and estimated earnings in excess of billings on uncompleted contracts
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2,442
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|
700
|
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||
Total current assets
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85,392
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87,602
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Property, plant and equipment, net of accumulated depreciation
|
42,131
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41,486
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Other assets
|
|
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||||
Note receivable from joint venture
|
3,814
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3,931
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Investment in joint venture
|
8,680
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8,514
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Cash surrender value on life insurance policies, net
|
1,406
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3,256
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Other assets
|
3,175
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|
3,215
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Assets held for sale long-term
|
503
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|
534
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Total other assets
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17,578
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19,450
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Total assets
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$145,101
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$148,538
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LIABILITIES AND STOCKHOLDERS' EQUITY
|
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|
||||
Current liabilities
|
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|
||||
Trade accounts payable
|
|
$15,072
|
|
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$11,072
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Accrued compensation and payroll taxes
|
11,933
|
|
5,551
|
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||
Commissions and management incentives payable
|
5,131
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|
5,734
|
|
||
Revolving line domestic
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11,954
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11,353
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Current maturities of long-term debt
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5,035
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5,679
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||
Customers' deposits
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6,064
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|
7,341
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Billings in excess of costs and estimated earnings on uncompleted contracts
|
742
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|
681
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Other accrued liabilities
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2,270
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|
2,486
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Deferred tax liabilities - current
|
166
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165
|
|
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Income taxes payable
|
977
|
|
1,688
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Total current liabilities
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59,344
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51,750
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Long-term liabilities
|
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Long-term debt, less current maturities
|
12,424
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12,603
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Deferred compensation liabilities
|
198
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|
6,560
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Deferred tax liabilities - long-term
|
294
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|
309
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Other long-term liabilities
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3,777
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3,793
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Total long-term liabilities
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16,693
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23,265
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Stockholders' equity
|
|
|
||||
Common stock, $.01 par value, authorized 50,000 shares; 7,246 issued and outstanding at April 30, 2015 and 7,291 issued and outstanding at January 31, 2015
|
73
|
|
73
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Additional paid-in capital
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52,792
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|
52,655
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||
Treasury Stock 45 shares at April 30, 2015 and none at January 31, 2015
|
(290
|
)
|
—
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Retained earnings
|
20,671
|
|
25,324
|
|
||
Accumulated other comprehensive loss
|
(4,182
|
)
|
(4,529
|
)
|
||
Total stockholders' equity
|
69,064
|
|
73,523
|
|
||
Total liabilities and stockholders' equity
|
|
$145,101
|
|
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$148,538
|
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($ in thousands, except share data)
|
|
Additional Paid-in Capital
|
Retained Earnings
|
Treasury Stock
|
Accumulated Other Comprehensive Income (Loss)
|
Total Stockholders' Equity
|
||||||||
Common Stock
|
||||||||||||||
Total stockholders' equity at January 31, 2014
|
$72
|
$52,144
|
$25,580
|
|
$—
|
|
($1,160)
|
$76,636
|
||||||
|
|
|
|
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|
||||||||
Net loss
|
|
|
(256
|
)
|
|
|
(256
|
)
|
||||||
Stock options exercised
|
|
330
|
|
|
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330
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|
||||||
Stock-based compensation expense
|
|
124
|
|
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124
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|
||||||
Deferred shares converted to common stock
|
1
|
|
57
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|
|
|
|
58
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|
|||||
Interest rate swap
|
|
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|
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(51
|
)
|
(51
|
)
|
||||||
Pension liability adjustment
|
|
|
|
|
(1,611
|
)
|
(1,611
|
)
|
||||||
Foreign currency translation adjustments
|
|
|
2
|
|
|
(1,631
|
)
|
(1,629
|
)
|
|||||
Tax benefit on above items
|
|
|
|
|
(76
|
)
|
(76
|
)
|
||||||
Total stockholders' equity at January 31, 2015
|
$73
|
$52,655
|
$25,324
|
|
$—
|
|
($4,529)
|
$73,523
|
||||||
|
|
|
|
|
|
|
||||||||
Net loss
|
|
|
|
($4,655
|
)
|
|
|
(4,655
|
)
|
|||||
Repurchase of common stock
|
|
|
|
(290
|
)
|
|
(290
|
)
|
||||||
Stock-based compensation expense
|
|
137
|
|
|
|
|
137
|
|
||||||
Interest rate swap
|
|
|
|
|
6
|
|
6
|
|
||||||
Foreign currency translation adjustments
|
|
|
2
|
|
|
378
|
|
380
|
|
|||||
Tax benefit on above items
|
|
|
|
|
(37
|
)
|
(37
|
)
|
||||||
Total stockholders' equity at April 30, 2015
|
$73
|
$52,792
|
$20,671
|
($290)
|
($4,182)
|
$69,064
|
Shares
|
2015
|
|
2014
|
|
|
Balances at beginning of year
|
7,290,576
|
|
7,168,537
|
|
|
Shares issued (repurchased)
|
(44,566
|
)
|
122,039
|
|
|
Balances at period end
|
7,246,010
|
|
7,290,576
|
|
|
(In thousands)
|
Three Months Ended April 30,
|
|||||
|
2015
|
|
2014
|
|
||
Operating activities
|
|
|
||||
Net (loss) income
|
|
($4,655
|
)
|
|
$3,827
|
|
Adjustments to reconcile net (loss) income to net cash flows used in operating activities
|
|
|
||||
Depreciation and amortization
|
1,423
|
|
1,433
|
|
||
Loss (gain) on disposal of discontinued operations
|
—
|
|
12
|
|
||
Deferred tax expense
|
1
|
|
612
|
|
||
Stock-based compensation expense (benefit)
|
137
|
|
(352
|
)
|
||
(Income) loss from joint venture
|
(165
|
)
|
8
|
|
||
Cash surrender value on life insurance policies
|
(66
|
)
|
(58
|
)
|
||
Loss on disposal of fixed assets
|
—
|
|
4
|
|
||
Provision on uncollectible accounts
|
115
|
|
(64
|
)
|
||
Changes in operating assets and liabilities
|
|
|
||||
Accounts receivable
|
3,500
|
|
(1,726
|
)
|
||
Inventories
|
(34
|
)
|
(1,027
|
)
|
||
Costs and estimated earnings in excess of billings on uncompleted contracts
|
(1,681
|
)
|
(2,313
|
)
|
||
Accounts payable
|
3,081
|
|
1,439
|
|
||
Accrued compensation and payroll taxes
|
5,782
|
|
(4,598
|
)
|
||
Customers' deposits
|
(1,280
|
)
|
1,283
|
|
||
Income taxes receivable and payable
|
(699
|
)
|
947
|
|
||
Prepaid expenses and other current assets
|
268
|
|
(1,023
|
)
|
||
Other assets and liabilities
|
(6,569
|
)
|
280
|
|
||
Net cash used in operating activities
|
(842
|
)
|
(1,316
|
)
|
||
|
|
|
||||
Investing activities
|
|
|
||||
Capital expenditures
|
(2,034
|
)
|
(776
|
)
|
||
Payments on loan from joint venture
|
331
|
|
—
|
|
||
Proceeds from sales of property and equipment
|
—
|
|
3
|
|
||
Net cash used in investing activities
|
(1,703
|
)
|
(773
|
)
|
||
|
|
|
||||
Financing activities
|
|
|
||||
Proceeds from revolving lines
|
22,394
|
|
20,359
|
|
||
Proceeds from debt
|
597
|
|
48
|
|
||
Proceeds from borrowing against life insurance policies
|
1,916
|
|
—
|
|
||
Payments of debt on revolving lines of credit
|
(22,482
|
)
|
(18,733
|
)
|
||
Payments of other debt
|
(539
|
)
|
(766
|
)
|
||
Increase (decrease) in drafts payable
|
933
|
|
435
|
|
||
Payments on capitalized lease obligations
|
(170
|
)
|
(145
|
)
|
||
Payments for repurchase of common stock
|
(290
|
)
|
—
|
|
||
Stock options exercised and restricted shares issued
|
—
|
|
161
|
|
||
Net cash provided by financing activities
|
2,359
|
|
1,359
|
|
||
|
|
|
||||
Effect of exchange rate changes on cash and cash equivalents
|
396
|
|
173
|
|
||
Net increase (decrease) in cash and cash equivalents
|
210
|
|
(557
|
)
|
||
Cash and cash equivalents - beginning of period
|
10,508
|
|
13,395
|
|
||
Cash and cash equivalents - end of period
|
|
$10,718
|
|
|
$12,838
|
|
|
|
|
||||
Supplemental cash flow information
|
|
|
||||
Interest paid
|
|
$272
|
|
|
$369
|
|
Income taxes paid
|
715
|
|
7
|
|
||
Fixed assets acquired under capital leases
|
732
|
|
—
|
|
||
Funds held in escrow related to the sale of Thermal Care, Inc. assets
|
—
|
|
1,125
|
|
1.
|
Basis of presentation.
The interim consolidated financial statements of MFRI, Inc. and subsidiaries ("MFRI," "Company," or "Registrant") are unaudited, but include all adjustments which the Company's management considers necessary to present fairly the financial position and results of operations for the periods presented. These adjustments consist of normal recurring adjustments. Information and footnote disclosures have been omitted pursuant to Securities and Exchange Commission ("SEC") rules and regulations. The consolidated balance sheet as of
January 31, 2015
is derived from the audited consolidated balance sheet as of that date. The results of operations for any interim period are not necessarily indicative of future or annual results. Interim financial statements should be read in conjunction with the financial statements and the notes thereto included in the Company's latest Annual Report on Form 10-K. The Company's fiscal year ends on January 31. Years and balances described as
2015
and
2014
are for the
three months ended April 30,
2015
and
2014
, respectively.
|
2.
|
Business segment reporting.
The Company has
two
reportable segments:
Piping Systems, which engineers, designs, manufactures and sells specialty piping, leak detection and location systems
, and
Filtration Products, which manufactures custom-designed industrial filtration products to remove particulates from air and other gas streams
.
|
|
Three Months Ended April 30,
|
|||||
|
2015
|
|
2014
|
|
||
Net sales
|
|
|
||||
Piping Systems
|
|
$20,277
|
|
|
$42,354
|
|
Filtration Products
|
17,397
|
|
17,170
|
|
||
Total
|
|
$37,674
|
|
|
$59,524
|
|
Gross profit
|
|
|
||||
Piping Systems
|
|
$2,355
|
|
|
$13,458
|
|
Filtration Products
|
1,686
|
|
2,531
|
|
||
Total
|
|
$4,041
|
|
|
$15,989
|
|
(Loss) income from operations
|
|
|
||||
Piping Systems
|
|
($1,426
|
)
|
|
$8,017
|
|
Filtration Products
|
(1,230
|
)
|
(544
|
)
|
||
Corporate
|
(2,144
|
)
|
(1,764
|
)
|
||
Total
|
|
($4,800
|
)
|
|
$5,709
|
|
3.
|
Income taxes.
The determination of the consolidated provision for income taxes, deferred tax assets and liabilities and related valuation allowances requires management to make judgments and estimates. As a company with subsidiaries in foreign jurisdictions, the process of calculating income taxes involves estimating current tax obligations and exposures in each jurisdiction as well as making judgments regarding the future recoverability of deferred tax assets. Income earned in the United Arab Emirates ("U.A.E.") is not subject to local country income tax. Additionally, the relative proportion of taxable income earned domestically versus internationally can fluctuate significantly from period to period. Changes in the estimated level of annual pre-tax income, tax laws and the results of tax audits can affect the overall effective income tax rate, which impacts the level of income tax expense and net income. Judgments and estimates related to the Company's projections and assumptions are inherently uncertain; therefore, actual results could differ materially from projections.
|
4.
|
Impairment of long-lived assets.
The Company evaluates long-lived assets (including intangible assets) for impairment whenever events or changes in circumstances indicate that the carrying amount of a long-lived asset may not be recoverable. An asset is considered impaired if its carrying amount exceeds the undiscounted future net cash flow the asset is expected to generate.
|
5.
|
Other intangible assets with definite lives.
The Company owns several patents, including those covering features of its piping and electronic leak detection systems.
Patents are capitalized and amortized on a straight-line basis over a period not to exceed the legal lives of the patents.
The Company expenses costs incurred to
|
|
Three Months Ended April 30,
|
|||||
|
2015
|
|
2014
|
|
||
Patent amortization expense
|
|
$13
|
|
|
$13
|
|
6.
|
Investment in joint venture.
In
October 2009
, the Company invested
$5.9 million
, which consisted of
$2 million
for a
49%
interest and
$3.9 million
for a note receivable, in a Canadian joint venture with The Bayou Companies, Inc., a subsidiary of Aegion Corporation. The joint venture operates in Camrose, Alberta, Canada, which provides the Company the opportunity to participate in the growing oil sands market.
|
|
Three Months Ended April 30,
|
|||||
|
2015
|
|
2014
|
|
||
Share of income (loss) from joint venture
|
|
$165
|
|
|
($8
|
)
|
|
April 30, 2015
|
|
January 31, 2015
|
|
Current assets
|
$9,588
|
$13,820
|
||
Noncurrent assets
|
12,217
|
|
14,023
|
|
Current liabilities
|
2,529
|
|
4,499
|
|
Noncurrent liabilities
|
6,825
|
|
9,013
|
|
Equity
|
12,451
|
|
14,331
|
|
|
Three Months Ended April 30,
|
|||||
|
2015
|
|
2014
|
|
||
Revenue
|
|
$6,267
|
|
|
$8,937
|
|
Gross profit
|
1,167
|
|
725
|
|
||
Income from continuing operations
|
685
|
|
213
|
|
||
Net income (loss)
|
337
|
|
(16
|
)
|
8.
|
Stock-based
compensation.
The Company has stock-based compensation awards that can be granted to eligible employees, officers or directors.
|
|
Three Months Ended April 30,
|
|||||
|
2015
|
|
2014
|
|
||
Stock-based compensation expense (benefit)
|
|
$59
|
|
|
($381
|
)
|
Restricted stock based compensation expense (benefit)
|
|
$89
|
|
|
($69
|
)
|
|
Three Months Ended April 30,
|
|
Fair value assumptions
|
2015
|
2014
|
Risk free interest rate
|
.74% - 1.77%
|
.74% - 2.19%
|
Expected volatility
|
40.88% - 59.39%
|
42.12% - 60.26%
|
Expected life
|
4.9 - 5.1 years
|
4.9 - 5.7 years
|
Dividend yield
|
none
|
none
|
Option activity
|
Options
|
Weighted Average Exercise Price
|
Weighted Average Remaining Contractual Term
|
Aggregate Intrinsic Value
|
|||||
Outstanding at January 31, 2015
|
764
|
|
|
$11.45
|
|
5.7
|
|
$—
|
|
Expired or forfeited
|
(15
|
)
|
12.95
|
|
|
|
|||
Outstanding end of period
|
749
|
|
11.42
|
|
5.4
|
4
|
|
||
|
|
|
|
|
|||||
Exercisable end of period
|
527
|
|
|
$11.98
|
|
4.3
|
|
$2
|
|
Unvested option activity
|
Options
|
Weighted Average Grant Date Fair Value
|
Aggregate Intrinsic Value
|
|||||
Outstanding at January 31, 2015
|
232
|
|
|
$10.11
|
|
|
$—
|
|
Vested
|
(3
|
)
|
|
|
||||
Expired or forfeited
|
(7
|
)
|
10.24
|
|
|
|||
Outstanding end of period
|
222
|
|
|
$10.10
|
|
|
$2
|
|
Restricted stock activity
|
Restricted Shares
|
Weighted Average Grant Price Per Share
|
Aggregate Intrinsic Value
|
|||||
Outstanding at January 31, 2015
|
33
|
|
|
$11.53
|
|
|
$186
|
|
Granted
|
—
|
|
|
|
|
|||
Issued
|
—
|
|
|
|
||||
Outstanding end of period
|
33
|
|
|
$11.53
|
|
|
$198
|
|
9.
|
Treasury stock / share repurchase program.
On
February 5, 2015
, the Company's Board of Directors approved a share repurchase program, which authorizes the Company to use up to
$2 million
for the purchase of its outstanding shares of common stock. Share repurchases may be executed through open market or privately negotiated transactions on or prior to
December 31, 2015
.
|
10.
|
Earnings per share.
|
|
Three Months Ended April 30,
|
|||
|
2015
|
|
2014
|
|
Basic weighted average common shares outstanding
|
7,252
|
|
7,177
|
|
Dilutive effect of equity compensation plans
|
—
|
|
138
|
|
Weighted average common shares outstanding assuming full dilution
|
7,252
|
|
7,315
|
|
|
|
|
||
Stock options not included in the computation of diluted earnings per share of common stock because the option exercise prices exceeded the average market prices of the common shares
|
643
|
|
160
|
|
|
|
|
||
Stock options with an exercise price below the average market price
|
106
|
|
547
|
|
11.
|
Interest expense, net.
|
12.
|
Debt.
Debt totaled
$29.4 million
at
April 30, 2015
, a net
decrease
of
$0.2 million
since
January 31, 2015
.
|
13
.
|
Fair value of financial instruments.
At
April 30, 2015
, an interest rate swap agreement that relates to a mortgage note in Denmark was in effect with a notional value of
$1.3 million
that matures
December 2021
. The Company entered into an interest swap agreement in 2012 to reduce its exposure to market risks from changing interest rates and exchange the variable rate to fixed interest rate payments of
2.47%
. The exchange traded swap is valued on a recurring basis using quoted market prices and was classified within Level 2 of the
|
14.
|
Recent accounting pronouncements
.
In August 2014, the Financial Accounting Standards Board, ("FASB"), issued ASU No. 2014-15, Presentation of Financial Statements - Going Concern (Subtopic 205-40) - Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (“ASU 2014-15”). ASU 2014-15 provides guidance about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures. ASU 2014-15 is effective for annual periods ending after December 15, 2016, and for annual periods and interim periods thereafter. Early adoption is permitted. The adoption of ASU 2014-15 is not expected to have an impact on the Company’s consolidated financial statements.
|
15.
|
Reclassifications.
Reclassifications were made to the prior-year financial statements to conform to the current-year presentations.
|
|
Three Months Ended April 30,
|
||||||
($ in thousands)
|
2015
|
|
%
|
2014
|
|
%
|
% Decrease
|
Net sales
|
$20,277
|
|
$42,354
|
|
(52)%
|
||
Gross profit
|
2,355
|
|
12%
|
13,458
|
|
32%
|
(83)%
|
(Loss) income from operations
|
(1,426
|
)
|
(7)%
|
8,017
|
|
19%
|
(118)%
|
Income (loss) from joint venture
|
165
|
|
|
(8
|
)
|
|
|
|
Three Months Ended April 30,
|
||||||
($ in thousands)
|
2015
|
|
%
|
2014
|
|
%
|
% Increase (Decrease)
|
Net sales
|
$17,397
|
|
$17,170
|
|
1%
|
||
Gross profit
|
1,686
|
|
10%
|
2,531
|
|
15%
|
(33)%
|
Loss from operations
|
(1,230
|
)
|
(7)%
|
(544
|
)
|
(3)%
|
(126)%
|
Period
|
Total number of shares purchased
|
Average price paid per share
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
|
Maximum number (or approximate dollar value) of shares (or units) that may yet be purchased under the plans or programs
|
February
|
28
|
$6.64
|
28
|
$1,814
|
March
|
17
|
6.27
|
17
|
1,710
|
April
|
—
|
—
|
—
|
1,710
|
Total
|
45
|
$6.50
|
45
|
|
10
|
|
Limited Waiver and Second Amendment to Credit and Security Agreement between the Company and BMO Harris Bank, N.A. dated April 30, 2015
|
31
|
|
Rule 13a - 14(a)/15d - 14(a) Certifications
(1) Chief Executive Officer certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
(2) Chief Financial Officer certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
32
|
|
Section 1350 Certifications (Chief Executive Officer and Chief Financial Officer certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002)
|
101.INS
|
|
XBRL Instance
|
101.SCH
|
|
XBRL Taxonomy Extension Schema
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation
|
101.DEF
|
|
XBRL Taxonomy Extension Definition
|
101.LAB
|
|
XBRL Taxonomy Extension Labels
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation
|
Date:
|
June 12, 2015
|
/s/ Bradley E. Mautner
|
|
|
Bradley E. Mautner
|
|
|
Director, President and
|
|
|
Chief Executive Officer
|
|
|
(Principal Executive Officer)
|
|
|
|
|
|
|
Date:
|
June 12, 2015
|
/s/ Karl J. Schmidt
|
|
|
Karl J. Schmidt
|
|
|
Vice President and Chief Financial Officer
|
|
|
(Principal Financial and Accounting Officer)
|
|
BORROWERS:
MFRI, INC., MIDWESCO FILTER RESOURCES, INC., PERMA-PIPE, INC., TC NILES CORPORATION
,
TDC FILTER MANUFACTURING, INC., MM NILES CORPORATION
and
PERMA-PIPE CANADA, INC.
|
|
By:
/s/ Karl S. Schmidt
|
|
Name: Karl J. Schmidt
Title: Vice President and Chief Financial Officer
|
|
|
|
LENDER:
BMO HARRIS BANK, N.A.
|
|
By:
/s/ Terrence McKenna, Jr.
|
|
Name: Terrence McKenna, Jr.
Title: Vice President
|
1.
|
I have reviewed this quarterly report on Form 10-Q of MFRI, Inc.
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with the respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act rules 13a-15(e) and 15d-15(e))
and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))
for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date:
|
June 12, 2015
|
1.
|
I have reviewed this quarterly report on Form 10-Q of MFRI, Inc.
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with the respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act rules 13a-15(e) and 15d-15(e))
and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))
for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date:
|
June 12, 2015
|