MFRI Inc. (MFRI, Financial) filed Quarterly Report for the period ended 2011-10-31.
Mfri Inc. has a market cap of $46.25 million; its shares were traded at around $6.44 with a P/E ratio of 84.13 and P/S ratio of 0.21.
Net loss was $2.6 million YTD compared to net income of $6.0 million in the prior-year YTD. The loss was driven by lower sales and profit in the U.A.E.and India and the one-time $1.8 million discrete tax expense from the repatriation of foreign earnings. With the recent completion of the domestic oil and gas projects, the 2011 fourth quarter should be similar to the 2010 fourth quarter.
The Company's consolidated ETR was 1,174.4% and (14.8)% for the nine months ended October 31, 2011 and 2010, respectively. The computation of the projected annual tax rate has been significantly impacted by the loss in the U.A.E. for which no tax benefit can be provided. In the second quarter of 2011, the Company recorded a one-time $1.8 million discrete tax expense associated with the $3.1 million repatriation of foreign earnings. No cash will be paid for this tax in the U.S. since the Company has a net operating loss carryforward for federal income taxes. These foreign earnings were previously considered to be indefinitely reinvested outside the United States. The Company has not provided Federal tax on unremitted earnings of its international subsidiaries. The Company anticipates that unremitted earnings will be reinvested overseas to fund current working capital requirements and expansion in foreign markets. Accordingly, a provision for income tax expense in excess of foreign jurisdiction income tax requirements relative to such unremitted earnings has not been provided in the accompanying financial statements.
On July 11, 2002, the Company entered into the Loan Agreement. Under the terms of the Loan Agreement as amended, which matures on November 30, 2013, the Company can borrow up to $38.0 million, subject to borrowing base and other requirements, under a revolving line of credit. The Loan Agreement covenants restrict debt, liens, investments, do not permit payment of dividends and require attainment of levels of profitability and cash flows. At October 31, 2011, the Company was in compliance with all covenants under the Loan Agreement. Interest rates are based on options selected by the Company as follows: (a) a margin in effect plus a prime rate; or (b) a margin in effect plus the LIBOR rate for the corresponding interest period. At October 31, 2011, the prime rate was 3.25% and the margins added to the prime rate and the LIBOR rate, which are determined each quarter based on the applicable financial statement ratio, were 0.50 and 2.75 percentage points, respectively. Monthly interest payments were made during the nine months ended October 31, 2011 and 2010. As of October 31, 2011, the Company had borrowed $25.1 million and had $10.8 million available to it under the revolving line of credit. In addition, $189 thousand of availability was used under the Loan Agreement primarily to support letters of credit to guarantee amounts committed for inventory purchases. The Loan Agreement provides that all domestic receipts are deposited in a bank account from which all funds may only be used to pay the debt under the Loan Agreement. At October 31, 2011, the amount of such restricted cash was $1.8 million. Cash required for operations is provided by draw-downs on the line of credit.
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Mfri Inc. has a market cap of $46.25 million; its shares were traded at around $6.44 with a P/E ratio of 84.13 and P/S ratio of 0.21.
Highlight of Business Operations:
The Company's consolidated ETR was 1,174.4% and (14.8)% for the nine months ended October 31, 2011 and 2010, respectively. The computation of the projected annual tax rate has been significantly impacted by the loss in the U.A.E. for which no tax benefit can be provided. The modest pre-tax profit realized year-to-date caused the Company's permanent and discrete tax items to have an exaggerated percentage impact. In the second quarter of 2011, the Company recorded a one-time $1.8 million discrete tax expense associated with the $3.1 million repatriation of foreign earnings. These foreign earnings were previously considered to be indefinitely reinvested outside the United States. This tax expense included a payment of $0.5 million to the foreign tax authority and an accrual of $1.3 million U.S. tax on foreign source income. No cash will be paid for this tax in the U.S. since the Company has a net operating loss carryforward for federal taxes. For additional information, see Note 3 Income taxes in the Notes to Condensed Consolidated Financial Statements.Net loss was $2.6 million YTD compared to net income of $6.0 million in the prior-year YTD. The loss was driven by lower sales and profit in the U.A.E.and India and the one-time $1.8 million discrete tax expense from the repatriation of foreign earnings. With the recent completion of the domestic oil and gas projects, the 2011 fourth quarter should be similar to the 2010 fourth quarter.
The Company's consolidated ETR was 1,174.4% and (14.8)% for the nine months ended October 31, 2011 and 2010, respectively. The computation of the projected annual tax rate has been significantly impacted by the loss in the U.A.E. for which no tax benefit can be provided. In the second quarter of 2011, the Company recorded a one-time $1.8 million discrete tax expense associated with the $3.1 million repatriation of foreign earnings. No cash will be paid for this tax in the U.S. since the Company has a net operating loss carryforward for federal income taxes. These foreign earnings were previously considered to be indefinitely reinvested outside the United States. The Company has not provided Federal tax on unremitted earnings of its international subsidiaries. The Company anticipates that unremitted earnings will be reinvested overseas to fund current working capital requirements and expansion in foreign markets. Accordingly, a provision for income tax expense in excess of foreign jurisdiction income tax requirements relative to such unremitted earnings has not been provided in the accompanying financial statements.
On July 11, 2002, the Company entered into the Loan Agreement. Under the terms of the Loan Agreement as amended, which matures on November 30, 2013, the Company can borrow up to $38.0 million, subject to borrowing base and other requirements, under a revolving line of credit. The Loan Agreement covenants restrict debt, liens, investments, do not permit payment of dividends and require attainment of levels of profitability and cash flows. At October 31, 2011, the Company was in compliance with all covenants under the Loan Agreement. Interest rates are based on options selected by the Company as follows: (a) a margin in effect plus a prime rate; or (b) a margin in effect plus the LIBOR rate for the corresponding interest period. At October 31, 2011, the prime rate was 3.25% and the margins added to the prime rate and the LIBOR rate, which are determined each quarter based on the applicable financial statement ratio, were 0.50 and 2.75 percentage points, respectively. Monthly interest payments were made during the nine months ended October 31, 2011 and 2010. As of October 31, 2011, the Company had borrowed $25.1 million and had $10.8 million available to it under the revolving line of credit. In addition, $189 thousand of availability was used under the Loan Agreement primarily to support letters of credit to guarantee amounts committed for inventory purchases. The Loan Agreement provides that all domestic receipts are deposited in a bank account from which all funds may only be used to pay the debt under the Loan Agreement. At October 31, 2011, the amount of such restricted cash was $1.8 million. Cash required for operations is provided by draw-downs on the line of credit.
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