MFRI, Inc. (MFRI) swung to a net loss for the quarter ended Oct. 31, 2016. The company has made a net loss of $3.76 million, or $ 0.50 a share in the quarter, against a net profit of $6.11 million, or $0.83 a share in the last year period.
Revenue during the quarter plunged 46.11 percent to $25.30 million from $46.95 million in the previous year period. Gross margin for the quarter contracted 1588 basis points over the previous year period to 14.61 percent. Operating margin for the quarter stood at negative 4.10 percent as compared to a positive 16.02 percent for the previous year period.
Operating loss for the quarter was $1.04 million, compared with an operating income of $7.52 million in the previous year period.
CEO David Mansfield commented, "MFRI's third-quarter results were impacted by the ongoing soft energy market and reductions in capital allocations to infrastructure development in North America and the Middle East. As a consequence of the market contraction, there is overcapacity in the market and this has had a significant impact on both revenue and pricing. Revenue was down 46% as compared to last year's period.
Operating cash flow remains negative
MFRI, Inc. has spent $4.80 million cash to meet operating activities during the nine month period as against cash outgo of $9.79 million in the last year period.
Cash flow from investing activities was $9.64 million for the nine month period as against cash outgo of $4.08 million in the last year period.
The company has spent $12.18 million cash to carry out financing activities during the nine month period as against cash inflow of $14 million in the last year period.
Cash and cash equivalents stood at $9.01 million as on Oct. 31, 2016, down 17.22 percent or $1.87 million from $10.88 million on Oct. 31, 2015.
Working capital increases marginally
MFRI, Inc. has recorded an increase in the working capital over the last year. It stood at $29.05 million as at Oct. 31, 2016, up 2.48 percent or $0.70 million from $28.35 million on Oct. 31, 2015. Current ratio was at 1.90 as on Oct. 31, 2016, up from 1.33 on Oct. 31, 2015.
Cash conversion cycle (CCC) has decreased to 107 days for the quarter from 141 days for the last year period. Days sales outstanding went up to 135 days for the quarter compared with 101 days for the same period last year.
Days inventory outstanding has decreased to 30 days for the quarter compared with 99 days for the previous year period. At the same time, days payable outstanding was almost stable at 58 days for the quarter, when compared with the previous year period.
Debt comes down significantly
MFRI, Inc. has recorded a decline in total debt over the last one year. It stood at $14.07 million as on Oct. 31, 2016, down 68.01 percent or $29.91 million from $43.98 million on Oct. 31, 2015. Total debt was 13.37 percent of total assets as on Oct. 31, 2016, compared with 25.45 percent on Oct. 31, 2015. Debt to equity ratio was at 0.23 as on Oct. 31, 2016, down from 0.61 as on Oct. 31, 2015.
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