MFRI Reports First Quarter Records in Sales, Earnings and Backlog. Net Sales Were $57.0 Million, a 21% Increase; Earnings Per Share Were $0.16, a 433% Increase, and Backlog Was $112.3 Million, a 53% Increase over Last Year

Business Wire, June 11, 2007

NILES, Ill. -- MFRI, Inc. (NASDAQ NM: MFRI), a leading manufacturer of custom-designed industrial filtration products, specialty piping systems and industrial process cooling equipment, announced record sales and earnings for the first quarter ended April 30, 2007.

Net sales of $56,954,000 were a first quarter record, 21.4% more than the $46,932,000 reported for the corresponding prior year's quarter. Net income and earnings per share were also a first quarter record of $1,038,000 or $0.16 per share, with 6,537,000 weighted average shares outstanding ($0.15 diluted EPS) versus a $151,000 or $0.03 per share, with 5,281,000 weighted average shares outstanding ($0.03 diluted EPS) in the corresponding prior year's quarter. Gross margin was 18.9% for the current quarter, down from 20.9% compared to the first quarter of the prior year, but gross profits were a first quarter record $10,792,000 up 10.1% from the prior year's corresponding quarter $9,805,000. Income before taxes was $1,424,000 or 2.5% of sales, up 116.1% from the prior year's $659,000 or 1.4% of sales.

Due to the seasonality of the Company's Piping Systems business, sales and earnings are typically lower during the late fall, winter and early spring (first and fourth quarters), due to unfavorable weather for construction over much of North America, and are correspondingly higher during the late spring, summer and early fall months (second and third quarters).

Our new plant in the United Arab Emirates (UAE), which manufactures specialty pre-insulated piping systems for energy related projects in Dubai and other markets in the region, is now fully operational. During the first quarter of 2007 we began to ship products in substantial quantity from that plant. On May 14th we announced $11 million in new orders for the UAE plant, and new orders continue to be booked at a strong rate. On January 16th we announced $26 million in new orders for sea bottom gas and oil gathering lines for the Gulf of Mexico. Some of this work is already under way at our New Iberia, Louisiana factory.

During the first quarter of 2007 we completed a registered direct offering of the Company's common shares, selling 1,003,000 new shares, generating net proceeds of $18,322,000 after all costs. This new money was applied to the revolving line of credit. As a result, the increased revolving line of credit borrowing capacity is available to fund the growth of inventories and receivables required for the UAE plant and other projects to build the profitability of our business.

"We are very pleased with our new bookings and sales in the first quarter. Our total backlog at the end of the 2007 first quarter was $112.3 million compared with $73.4 million in the corresponding quarter last year, a 53% increase. Our piping systems and filtration products segments showed substantial increases in sales and gross profits when compared to last year. The sales and gross profits in the process cooling segment were lower than last year, but the backlog held steady." David Unger, CEO said. "We believe that our robust backlog and the new funds from the stock sale, along with the many opportunities we see before us, bode well for upcoming quarters" Unger added.

Form 10-Q for this first quarter of 2007 will be filed today and will be accessible at http://www.sec.gov/. The Company welcomes all inquiries at (847) 966-1000. For more information, visit the Company's web site www.mfri.com.

Statements and other information contained in this announcement which can be identified by the use of forward-looking terminology such as "anticipate," "may," "will," "expect," "continue," "remain," "intend," "aim," "should," "prospects," "could," "future," "potential," believes," "plans," "likely," and "probable," or the negative thereof or other variations thereon or comparable terminology, constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934 as amended and are subject to the safe harbors created thereby. These statements should be considered as subject to the many risks and uncertainties that exist in the Company's operations and business environment. Such risks and uncertainties include, but are not limited to, economic conditions, market demand and pricing, competitive and cost factors, raw material availability and prices, global interest rates, currency exchange rates, labor relations and other risk factors.

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