MFRI announced financial results for the second fiscal quarter ended July 31, 2015. The company also announced that its backlog of orders as of July 31, 2015 reached $105.1 million, an increase of 6% from its level at May 31, 2015.
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That previously represented MFRI's highest backlog level since July 31, 2013.
Net sales decreased 25% to $40.1 million in the current quarter, from $53.4 million in the prior-year quarter. Piping Systems sales decreased 26% or $8.6 million compared to the prior-year quarter due to lower domestic oil and gas projects and due to lower volume in Saudi Arabia and the United Arab Emirates (U.A.E.).
Gross profit decreased to $5.7 million in the current quarter from $10.5 million in the prior-year quarter, mainly due to the sales volume decrease in Piping Systems. The gross margin decreased to 14.1% of net sales in the current quarter from 19.8% in the prior-year quarter.
Operating expenses decreased to $8.1 million in the current quarter from $8.8 million in the prior-year quarter due to lower management incentive compensation expense, partially offset by higher stock compensation expense and increased professional expenses.
The pretax loss was $2.8 million in the current quarter versus income of $1.8 million in the prior-year quarter. The primary factor contributing to the 2015 results was lower volume in Piping Systems.
Net loss was $2.4 million compared to net income of $1.4 million in the prior-year quarter. The decrease was due to lower sales volume and gross profit in Piping Systems.
Net sales decreased 26% to $25.1 million in the current quarter from $33.8 million in the prior-year quarter. The decrease was attributed to lower global and domestic volume. Gross margin decreased to 12% of net sales in the current quarter from 23% of net sales in the prior-year quarter. Gross profit decreased due to lower volume.
Operating expenses decreased to $4.0 million from $4.1 million due to lower management incentive compensation expense and lower professional costs partially offset by higher selling expenses.
Net sales decreased 24% to $14.9 million in the current quarter from $19.6 million in the prior-year quarter. Gross profit decreased to $2.5 million from $2.7 million. Lower gross profit from volume was almost entirely offset by improved mix.
Gross margin increased to 17% in the current quarter from 14% in the prior-year quarter due to customer mix and lower costs related to product development. Startup costs for the new production facility in the U.A.E. offset some of the cost reductions elsewhere.
Operating expenses decreased to $2.5 million in the current quarter from $2.7 million in the prior-year quarter. Lower professional costs contributed to the net decrease in expenses. ■