8-K

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549


FORM 8-K


 CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

       Date of Report (Date of  earliest event reported):   August 22, 2006

MET-PRO CORPORATION
(Exact name of registrant as specified in its charter)

Pennsylvania	001-07763	23-1683282
(State or other jurisdiction of	(Commission File Number)	(I.R.S. Employer
incorporation or organization)		Identification No.)

160 Cassell Road, P.O. Box 144
Harleysville, Pennsylvania	19438
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (215) 723-6751

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions.

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02.  Results of Operations and Financial Condition.

On August 22, 2006, Met-Pro Corporation (the "Company") reported its results of operations for the three and six months ended July 31, 2006. A copy of the press release issued by the Company is furnished herewith as Exhibit 99.1

In addition, the Company held a teleconference call on August 22, 2006 during which members of management discussed the Company's financial performance for the second quarter ended July 31, 2006 and other matters relating to its business. A copy of the teleconference transcript is furnished herewith as Exhibit 99.2.

Item 9.01.  Financial Statements and Exhibits.

A copy of the press release dated August 22, 2006, reporting the results of operations for the three and six months ended July 31, 2006, is furnished herewith as Exhibit 99.1.

In addition, a copy of the transcript from the Company's teleconference held on August 22, 2006, to discuss its results of operations is furnished herewith as Exhibit 99.2.

The information in this Form 8-K and the Exhibits attached hereto shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934 nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 except as shall be expressly set forth by specific reference in such filing.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

      Date: August 23, 2006

MET-PRO CORPORATION

By: /s/ Raymond J. De Hont                               

Raymond J. De Hont,

President and Chief Executive Officer

Exhibit Index

Exhibit	Description
99.1	Press release issued by the Company to report its results of operations for the three and six months ended July 31, 2006
99.2	Transcript of conference call held August 22, 2006 to discuss results of operations for the three and six months ended July 31, 2006.

EX-99.1

Date:	August 22, 2006
For Release:	Immediate
Contact:	Investor Contact:
	Gary J. Morgan, Senior Vice President of Finance, CFO
	215-723-6751, gmorgan@met-pro.com

Met-Pro Corporation Announces Financial Results

for the Second Quarter Ended 7/31/2006

Harleysville, PA, August 22 - Raymond J. De Hont, Chairman and Chief Executive Officer of Met-Pro Corporation (NYSE: MPR), today announced the Company’s financial results for the second quarter ended July 31, 2006.

Sales for the second quarter ended July 31, 2006 were $23.8 million compared with $22.6 million for the same quarter last year. Sales for the first half ended July 31, 2006 were $43.6 million compared with $40.6 million for the same period last year.

Net income for the second quarter ended July 31, 2006 totaled $1.8 million compared with $2.0 million for the same quarter last year. Net income for the second quarter was impacted by (i) product mix and higher material costs in both operating segments, and (ii) a loss on one large Product Recovery/Pollution Control Equipment segment project, which reduced the company’s net income by approximately $264,000. For the first half, net income totaled $3.0 million compared with $3.3 million during last year’s first half. Net income for the first half was impacted by (i) product mix and higher material costs in both operating segments, (ii) a loss on one large Product Recovery/Pollution Control Equipment segment project, and (iii) non-recurring and non-capitalized expenses incurred in the first quarter resulting from the relocation of the Company’s Sethco and Mefiag Divisions and the expansion of the Company’s Netherlands and Telford, Pennsylvania facilities, which reduced net income in the Fluid Handling Equipment segment by approximately $243,000.

Diluted earnings per share for the second quarter ended July 31, 2006 were $0.16 per share compared with $0.17 per share for the second quarter of last year. Basic earnings per share for the second quarter were $0.16 per share compared with $0.18 for the second quarter of last year. For the first half, diluted and basic earnings per share were $0.27 per share compared with $0.29 for the same period last year.

Met-Pro’s bookings of new orders for the second quarter were the highest of any quarter in the Company’s history, totaling $26.6 million compared with $21.0 million for the same quarter last year. First half bookings of new orders were the highest of any first half in the Company’s history, totaling $50.4 million compared with $45.7 million during last year’s first half.

As a result of these record high bookings, the Company’s backlog of orders now totals $24.0 million compared with $16.0 million for the second quarter ended July 31, 2005. The Company’s backlog in the Product Recovery/Pollution Control segment totaled $16.8 million compared to $12.1 million for the second quarter ended July 31, 2005. The backlog in the Fluid Handling Equipment segment totaled $7.2 million compared to $3.9 million for the same period last year. This is the highest backlog total at the end of a second quarter in the Company’s history. Substantially the entire backlog that existed as of July 31, 2006 is expected to be shipped during the Company’s current fiscal year.

In making this announcement, De Hont stated, “Market demand for Met-Pro’s products remains strong as evidenced by our booking performance and backlog. The impact of this demand, however, has been offset by margin compression due to a weak product mix and higher material costs. I find this unacceptable. The Company has taken aggressive steps to improve project management and avoid profit erosion on large projects. To offset the higher material costs experienced throughout our industries, we have taken certain measures including product price increases and improved purchasing practices, which are expected to relieve pressure on our gross margins in the third and fourth quarter of this fiscal year. The relocation of the Company’s Sethco and Mefiag Divisions and the expansion of the Company’s Netherlands and Telford, Pennsylvania facilities are complete and are expected to result in improved operational performance. The measures we have taken to improve our profitability, together with a strong market demand for our products and a quality backlog, give us optimism for our third quarter and full fiscal year.”

Continued Page 2

Met-Pro Corporation/Page 2

On June 7, 2006 the Company paid a quarterly dividend of $0.0625 per share to shareholders of record at the close of business on May 26, 2006. In addition, the Board of Directors, at their meeting on June 7, 2006, declared a quarterly dividend of $0.0625 per share payable September 6, 2006 to shareholders of record at the close of business on August 24, 2006. This represents a 7.5% increase over the corresponding dividends paid during the same periods last year, and is the thirty-second consecutive year the Company has paid a cash or stock dividend.

About Met-Pro

Met-Pro Corporation, with headquarters at 160 Cassell Road, Harleysville, Pennsylvania, manufactures and sells product recovery and pollution control equipment for purification of air and liquids and fluid handling equipment for corrosive, abrasive and high temperature liquids. The company, established in 1966, provides products to residential, commercial, industrial and municipal markets that include, but are not limited to, pharmaceuticals, chemicals, petrochemicals, water and aquariums. For more information, please visit www.met-pro.com.

The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking statements. Certain information included in this press release, and other materials filed or to be filed with the Securities and Exchange Commission (as well as information included in oral or other written statements made or to be made by the Company) contain statements that are forward-looking. Such statements may relate to plans for future expansion, business development activities, capital spending, financing, the effects of regulation and competition, or anticipated sales or earnings results. Such information involves risks and uncertainties that could significantly affect results in the future and, accordingly, such results may differ from those expressed in any forward-looking statements made by or on behalf of the Company. These risks and uncertainties include, but are not limited to, those relating to, the cancellation or delay of purchase orders and shipments, product development activities, computer systems implementation, dependence on existing management, the continuation of effective cost and quality control measures, retention of customers, global economic and market conditions, and changes in federal or state laws.

Met-Pro common shares are traded on the New York Stock Exchange, symbol MPR.

To obtain an Annual Report or additional information on the Company, please call 215-723-6751 and ask for the Investor Relations Department, or visit the Company’s Web site at www.met-pro.com.

Met-Pro Corporation

Condensed Consolidated Balance Sheet

(unaudited)

	July 31,	January 31,
	2006	2006
Assets
Current assets	$56,208,472	$54,004,947
Property, plant and equipment, net	16,491,707	13,838,221
Costs in excess of net assets of businesses acquired, net	20,798,913	20,798,913
Other Assets	1,009,959	1,020,844
Total assets	$94,509,051	$89,662,925
Liabilities and shareholders’ equity
Current liabilities	$16,717,058	$17,142,747
Long-term debt	5,825,255	2,723,586
Other liabilities	2,301,946	2,258,354
Total liabilities	24,844,259	22,124,687
Shareholders’ equity	69,664,792	67,538,238
Total liabilities and shareholders’ equity	$94,509,051	$89,662,925

Continued Page 3

Met-Pro Corporation/Page 3

Met-Pro Corporation

Consolidated Statement of Operations

(unaudited)

	Three Months Ended				Six Months Ended
	July 31,				July 31,
	2006		2005		2006		2005
Net sales	$23,778,882		$22,646,520		$43,557,923		$40,574,132
Cost of goods sold	17,044,392		15,583,797		30,968,074		27,557,134
Gross profit	6,734,490		7,062,723		12,589,849		13,016,998
Operating expenses
Selling	2,076,187		1,973,138		3,972,366		3,927,401
General and administrative	2,188,597		2,258,506		4,551,520		4,351,964
Income from operations	2,469,706		2,831,079		4,065,963		4,737,633
Interest expense	(87,509	)	(69,862	)	(147,314	)	(135,914	)
Other income, net	277,632		159,004		516,840		285,993
Income before taxes	2,659,829		2,920,221		4,435,489		4,887,712
Provision for taxes	851,144		963,672		1,419,356		1,612,945
Net income	$1,808,685		$1,956,549		$3,016,133		$3,274,767
Basic earnings per share (1)	$.16		$.18		$.27		$.29
Diluted earnings per share (1)	$.16		$.17		$.27		$.29
Average common shares outstanding:
Basic shares (1)	11,201,507		11,179,138		11,202,088		11,180,204
Diluted shares (1)	11,383,659		11,302,289		11,379,867		11,307,786

(1)    On October 10, 2005, the Board of Directors declared a four-for-three stock split which was paid on November 15, 2005 to shareholders of record on November 1, 2005. All references in the financial statements to per share amounts and number of shares outstanding give effect to the split.

Consolidated Business Segment Data

(unaudited)

	Three Months Ended          July 31,		Six Months Ended          July 31,
	2006	2005	2006	2005
Net sales
Product recovery/pollution control equipment (2)	$14,344,461	$13,151,912	$25,004,126	$21,976,446
Fluid handling equipment (2)	9,434,421	9,494,608	18,553,797	18,597,686
	$23,778,882	$22,646,520	$43,557,923	$40,574,132
Income from operations
Product recovery/pollution control equipment (2)	$944,816	$1,136,398	$1,666,913	$1,858,726
Fluid handling equipment (2)	1,524,890	1,694,681	2,399,050	2,878,907
	$2,469,706	$2,831,079	$4,065,963	$4,737,633
			July 31,         2006	January 31,         2006
Identifiable assets
Product recovery/pollution control equipment (2)			$39,480,632	$40,526,378
Fluid handling equipment (2)			33,003,946	28,308,734
			72,484,578	68,835,112
Corporate			22,024,473	20,827,813
			$94,509,051	$89,662,925

(2)    Effective February 1, 2006, Sethco Division was transferred from the Product Recovery/Pollution Control Equipment Segment to the Fluid Handling Equipment Segment. The business segment information above for the three-month and six-month periods ended July 31, 2005 and the period ended January 31, 2006 was restated to reflect this change.

Continued Page 4

Met-Pro Corporation/Page 4

Met-Pro Corporation

Consolidated Statement of Cash Flows

(unaudited)

	Six Months Ended July 31,
	2006	2005
Increase (Decrease) in Cash and Cash Equivalents

Cash flows from operating activities
Net income	$3,016,133		$3,274,767
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization	768,427		742,600
Deferred income taxes	(1,106	)	(1,177	)
(Gain) loss on sale of property and equipment, net	(11,589	)	8,591
Stock-based compensation	163,601		-
Allowance for doubtful accounts	(79,629	)	55,466
(Increase) decrease in operating assets:
Accounts receivable	1,607,822		(2,305,022	)
Inventories	(1,405,805	)	(2,530,526	)
Prepaid expenses, deposits and other current assets	247,600		303,086
Other assets	(4,644	)	(17,394	)
Increase (decrease) in operating liabilities:
Accounts payable and accrued expenses	(276,556	)	1,267,070
Customers’ advances	(532,636	)	(329,212	)
Other non-current liabilities	1,098		1,098
Net cash provided by operating activities	3,492,716		469,347
Cash flows from investing activities
Proceeds from sale of property and equipment	12,810		30,907
Acquisitions of property and equipment	(3,275,209	)	(488,380	)
Net cash (used in) investing activities	(3,262,399	)	(457,473	)
Cash flows from financing activities
Proceeds from new borrowing	4,140,315		-
Reduction of debt	(713,113	)	(1,200,910	)
Exercise of stock options	55,232		184,146
Payment of dividends	(1,400,107	)	(1,298,639	)
Net cash provided by (used in) financing activities	2,082,327		(2,315,403	)
Effect of exchange rate changes on cash	23,357		(22,212	)
Net increase (decrease) in cash and cash equivalents	2,336,001		(2,325,741	)
Cash and cash equivalents at February 1	17,683,305		20,889,476
Cash and cash equivalents at July 31	$20,019,306		$18,563,735

###

EX-99.2

MET-PRO CORPORATION

Second Quarter Earnings Conference Call

Moderator: Kevin Bittle

August 22, 2006

10:00 am CT

Operator:	Good morning. My name is (Regina) and I will be your conference operator today. At this time I would like to welcome everyone to the Met-Pro Corporation Second Quarter Ending July 31, 2006 Earnings Conference Call. All lines have been placed on mute to prevent any background noise.
	After the speaker's remarks there will be a question and answer session. If you would like to ask a question during this time, simply press star then the number one on your telephone keypad. If you would like to withdraw your question, press star then the number two on your telephone keypad. I will now turn the call over to Kevin Bittle, Manager of Creative Services. Thank you. Mr. Bittle, you may begin your conference.
Kevin Bittle:	Good morning and welcome to Met-Pro Corporation's first ever earnings conference call. My name is Kevin Bittle and I'm with the company's Creative Services Department. On our call this morning with me is Ray De Hont, our Chairman and Chief Executive Officer, and Gary Morgan, our Senior Vice President of Finance and CFO.

	A few comments before we begin. During today's call we will be referring to our earnings release for the second quarter ended July 31, 3006. The earnings release is available on the investor Relations Page of our corporate website, www.met-pro.com. I'd also remind you that any statements made today with regard to our future expectations may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.
	Please refer to our annual report for the Fiscal Year ended January 31, 2006 that was filed with the SEC for important factors, that among others, could cause our actual results to differ from any results which might projected, forecasted, or estimated in any such forward-looking statement. And with that I will turn the call over to Ray.
Raymond De Hont:	Thank you, Kevin. Good morning everyone and welcome from Harleysville, Pennsylvania. Earlier this morning we released our financial results for the second quarter ended July 31, 2006. In a moment, Gary Morgan will provide more specific comments on the quarter's financial results, but prior to that I'd like to offer these general comments on our performance.
	Market demand from Met-Pro's products remain strong, resulting in the highest booking performance for any quarter in the company's history and the highest backlog total at the end of a second quarter in the company's history. The impact of this demand however was offset by margin compression due to weak product mix and higher material costs in both operating segments.

 Page 2

The company has taken steps which are expected to relieve pressure on our gross margins in the third and fourth quarters. In essence, these three things tell the story for our second quarter. We will discuss them at greater lengths throughout our call this morning. I would now like to ask Gary Morgan to review our second quarter financial performance, after which I will provide some concluding remarks before we take your questions. Gary?

Gary Morgan:	Thank you Ray. Today we reported net income of $1.8 million or 16 cents per share compared with $2 million or 17 cents per share in the second quarter of last year.
	Net income for the second quarter was impacted by product mix and higher material costs in both operating segments, combined with a loss on one large product recovery and pollution control equipment project, which alone reduced our net income by approximately $264,000 or 2 cents per share.
	Income from operations in the product recovery and pollution control equipment segment project totaled $900,000, a decline of $200,000 from the second quarter of last year.
	A loss on one large project in this segment reduced the income from operations by $387,000. In addition, this segment was impacted by product mix and higher material costs. These items were partially offset by a higher sales volume of $1.2 million.
	Income from operations in the fluid handling equipment segment totaled $1.5 million, a decline of $200,000 from the second quarter of last year. Product mix and higher material costs accounted for this decrease.
	Our record high bookings for the second quarter totaled $26.6 million compared to $21 million for the second quarter of last year. This increase in bookings was due to a 20% increase in product recovery and pollution control equipment segment and a 38% increase in the fluid handling equipment segment.

As a result of these record high bookings, we ended the second quarter with a record high backlog for the period ending July 31, 2006 of $24 million compared to $16 million for the second quarter of last year. Our backlog in the product recovery and pollution control equipment segment totaled $16.8 million compared to $11.1 million for the second quarter ended July 31 of 2005 or an increase of 38%. And the backlog in our fluid handling equipment segment totaled $7.2 million compared to $3.9 million for the same period last year or an increase of 85%.

Page 3 

	Our balance sheet remains strong. As of the end of the second quarter our cash on hand totaled $20 million or $1.75 per share and our current ratio has increased to 3.4. This concludes my comments. Thank you and I will now turn the call back to Ray.
Raymond De Hont:	Thank you, Gary. Let me focus again on the things that essentially tell the story for the second quarter. Market demand for Met-Pro's products remains strong in both segments, including international sales, resulting in record bookings for the second quarter and the highest backlog entry in the third quarter in the company's history.
	The impact of this demand, however, was offset by margin compression due to weak product mix and higher material costs in both operating segments. With regard to weak product mix, net sales from our product recover pollution control equipment segment were a larger share of our total net share when compared to last year. The gross margin for this segment of our business is typically not as high as those in our fluid handling equipment segment.
	In addition, a significant portion of the product mix within the product recovery pollution control equipment segment was made up of long lead time engineered projects whose margins are not normally as high as the shorter lead times standard product type sales.

Our total gross margin was also impacted by product mix in the fluid handling equipment segment, due to flat or reduced sales in the higher margin businesses within this segment and higher sales in its lower margin businesses. As Gary already mentioned, the backlog in the fluid handling equipment segment at the end of the second quarter totaled $7.2 million compared with $3.9 million for the same period last year.

A significant portion of this increase is in the higher margin businesses within this segment. In addition, the backlog in the product recovery pollution control equipment segment is of higher quality entering the third quarter than it was entering the second quarter.

Several large projects contained in the product recovery pollution control equipment segment's backlog were sold at gross margin similar to the gross margins normally achievable only on standard product type sales.

Our industries continue to experience higher material costs. Unlike the last two years, however, our customers are much more amenable to price increases and we have been able to increase our prices to offset some of the material cost increases we have incurred.

Most of these price increases occurred during the second quarter and as a result have not yet fully impacted our financials. In addition, we continue to improve our purchasing practices, reduce the total cost from our suppliers, and find new sources of supply both domestically and internationally.

Page 4 

With respect to the loss on one of our large product recovery pollution control equipment projects, this project was a long lead time engineered product that shipped in May and was severely impacted by higher material costs resulting from increases in commodity prices between the time the equipment was quoted and shipped and project execution. We have taken aggressive steps to improve project management and avoid profit erosion on this type of project in the future.

	The relocation of the company's Sethco and Mefiag divisions and the expansion of the Company's Netherlands and Telford, Pennsylvania facilities are now complete and are expected to result in improved operational performance going forward.
	In closing, I believe the measures we have taken to improve our profitability, together with a strong market demand for our products and a quality backlog, give us optimism for our third quarter and full fiscal year. I'd like to thank all of you for your participation in today's call and I'll now turn the call back to Kevin. Kevin?
Kevin Bittle:	Thank you, Ray. At this time we would welcome any questions you may have. I would like to ask our operator, (Regina), to provide instructions for this portion of the call. Thank you.
Operator:	At this time I would like to remind everyone, if you would like a question, press star then the number one on your telephone keypad. We'll pause for just a moment to compile the Q&A roster. Your first question comes from Ryan Connors with Benning and Scattergood.
Ryan Connors:	Good morning, gentlemen.
Raymond De Hont:	Hi, Ryan. How you doing?
Ryan Connors:	Doing well. First of all, just a housekeeping kind of item for you Gary, I guess -- the SG&A line actually came in pretty low in the second quarter. I'm getting it just under 18% in terms of percent of sales. Is that - could you just talk about what drove that and whether or not that's a sustainable type number and whether we kind of revert to - back up to the mean on that?

Gary Morgan:	The SG - in the first quarter, the SG&A was higher due to the one-time charges related - non-reoccurring charges related to the move of our Hauppauge, New York facility down to Pennsylvania. In the second quarter, the reason the percentage went down, Ryan was due to higher sales volume, which the G&A portion of the SG&A is a bit - and basically a fixed number and it doesn't increase as high at the same levels of sales increase. And going forward we expect that - the same level of G&A expenses going forward.
Ryan Connors:	Okay. So presumably there is leverage there then? I mean if sales continue to expand based on the backlog and so forth, the SG&A should increase at a slower rate.
Gary Morgan:	The selling portion of this should increase consistent with sales, but the G&A portion should basically get - be flat or a little smaller - a lighter increase. So there is some - with the higher sales volume we should - some of that profitability should drop down to the bottom line.

Page 5 

Ryan Connors:

Right. Next, if I could just in terms of - if you back out the single project that was unprofitable and you look at the two different sort of contributors -- you talk about mix bringing down margins a little bit and input costs. Can you break down - again backing out that single project, just in terms of order or magnitude how big a contributor those two were. Are they - is it kind of 50/50 each or is more like 90/10 one way or the other?

Gary Morgan:

The - on the - one project that we had a loss on, that reduced our gross margin by $387,000…

Ryan Connors:	Yes.
Gary Morgan:	…or about 2% - about 2 cents a share -- a little - about 2.3 cents a share to be exact, Ryan. As related to the product mix and the material costs, we cannot quantify that, but that happened in both the product recovery and pollution control equipment segment and also the fluid handling equipment segment. I would imagine that would have an impact at about the same amount of money.
Ryan Connors:	Okay.
Gary Morgan:	Okay?
Ryan Connors:	Great. And then just quickly on the backlog, obviously the backlog is robust and that bodes very well for the rest of the year. Can you just talk about - so two questions on that -- number one, what's really driving that order flow in terms of - is it a general strength in one of the key end markets or is that something you guys are doing internally in terms of reorganizing the sales force or so forth?
Raymond De Hont:	I think it's a combination of - Ryan and far as - we've put a lot of effort into growing our top line over the last several years. We had to change the way we sold. We had to get in front of the customer more frequently than we were in the past, and we're doing that.
	And a lot of the industries that we play in also are doing well. So we've got the combination of the two where we're aggressively going out there and taking the business rather than waiting for it to come to us. And the markets are pretty good.

We - as far as the backlog - when you look at the backlog that's built now with the - approximately $24 million going into the third quarter, it's spread quite a bit across all of our divisions. The majority of our divisions are doing quite well as far as the booking end and as a result, our backlog has grown.

As I mentioned in my comments earlier today, when you look at the product recovery side of this, we have a number of projects in there that are very - at very good margins. In addition, the fluid handling equipment side has grown significant from - to $7.2 from $3.9 million. And that has historically been our higher margin business -- that segment. So we've got a lot of good things going for us moving forward.

Page 6 

Ryan Connors:	Okay. And then just finally, you know, you talked a lot in the past about margins getting back up into the, you know, the mid-30 range over the next several years. If you could just update us on your thinking in that front in terms of whether this quarter changes your time line -- it brings it forward, pushes it back, you know, what's your latest thinking is in terms of your roadmap towards that range?
Raymond De Hont:	Well we would like to get back to the 34/35% gross margins that we experienced three/four years ago. And we're doing that through a number of means. One is we are now able to increase our prices of our products. Customers are more amenable to that. We're selling more international, becoming more global. We're finding that our international business is at a higher margin because there's actually less competition.
	What's happening is the customers overseas, they're selecting a group of suppliers that they consider qualified suppliers. And typically you're on a level playing field when you're playing against the same type of supplier and so you're not having somebody coming in and cutting the margins drastically. So we're seeing higher margins there.

	We also - back in May of 2005 we brought on a Director of Procurement in Logistics and - in order to manage from the corporate office from a central location, our procurement and the logistics group. And that's starting to turn into some nice cost savings.
	You're not going to see them all immediately because what you do there is you may negotiate a contract that's going to result in say $100,000 in savings over a year, so you're only seeing the first month or two of that as you go forward into this year. But as the year goes on you'll receive more and more savings along those lines.
	So we're doing it on the operations side, we're doing it as far as going internationally, we're doing it on the pricing side and also domestically. The way we set up our organization, we're taking advantage of more synergies within our group then we ever have.
	We're packaging products, we're bringing - if a division has a good reputation in a certain market niche and another one doesn’t but has products that would work in that niche, that division with the reputation is bringing them into it.
	An example would be the aquarium industry where Fybroc is the dominating player as far as non-metallic pumps. They're now bringing Dean and Sethco into that.
Ryan Connors:	Yes. Great. That's very helpful. Listen, thanks guys for the time and best of luck the rest of the year.
Kevin Bittle:	You're welcome Ryan. Thank you.
Operator:	Your next question comes from Michael Gaugler with Brean Murray Carret.

Page 7 

Michael Gaugler:	Morning, Ray. Good morning, Gary.
Raymond De Hont:	Good morning, Michael.
Michael Gaugler:	Ray I'd like to go back to your comments a little bit about pricing. On this most recent price increase, any push back from customers at all?
Raymond De Hont:	Actually no. We've been able to have across the board increases in some of our pump businesses, our filter businesses. And the customers are accepting them. We're not getting a pushback like we did last year and the year before definitely. We got a pushback and basically the customer said that, "If you're going to increase our prices we're doing to your competition." And this year we're not seeing that.
	We've - in some of our divisions we've actually had some significant increases of 15/20% and not gotten the pushback. And as you can see, when you look at our bookings for the second quarter and the backlog, we're still growing. It's still a good market demand for our products.
Michael Gaugler:	Okay. That's helpful. Another question -- what's left on the restructuring plan? Do you basically have everything at a level you would consider optimal at this point?
Raymond De Hont:	I wouldn't say optimal. I think we've structured it in a way that's going to help us evaluate and move forward a little better going into the future. Recently this - early this year we put together - we promoted two people to executive vice president positions, one of them that's basically overseeing a group of our air companies. And he'll be evaluating with the vice presidents from those companies.

	How do we configure that group of companies to take it and move it forward more strongly into the future? We've simplified our organization as far as our pump organization where all of our pump companies are under one management group. We actually moved one of our divisions from Hauppauge, New York to our Telford facility. Now we have both plastic pump companies under one manufacturing roof.
	We simplified our Mefiag filer company by putting all of the Mefiag business under one head worldwide. These things build flexibility. They build depth and they allow us to take advantage of the synergies. But to say that we're at an optimum right now - I think that we have room for improvement and we'll continue to look to do so.
Michael Gaugler:	Okay. So I can - I take from that comment that we could be seeing some more manufacturing rationalization going on in the next couple of months?
Raymond De Hont:	I'd say months and even in to the - next year or so. Yes.
Michael Gaugler:	And last question -- how's the acquisition pipeline look?

Page 8 

Raymond De Hont:	We've got some opportunities that we're talking to right now. Hopefully we'll be able to close one or two of them, but we've got some good opportunities out there.
Michael Gaugler:	All right, gentlemen. Thank you
Raymond De Hont:	Thank you, Michael.
Operator:	Again, if you would like to ask a question, please press star then the number one on your telephone keypad. Your next question comes from Alvin Hoffman, Individual Stockholder.

Alvin Hoffman:	Hi.
Raymond De Hont:	Hi Alvin.
Alvin Hoffman:	Hi. A couple of my questions were already asked, but why at this time did you decide to go to conference call method of communicating with your stockholder?
Raymond De Hont:	I - Alvin I think the main reason was we wanted to give our shareholders more visibility into the company. Historically we basically put out a news release and that was about it. Recently I've been visiting a lot of - not only current stockholders but also potential stockholders and we felt that the conference call was another way of giving them visibility -- what's behind the numbers -- and to be able to discuss things as we're doing today. So that was the main reason for it.
Alvin Hoffman:	Thank you.
Operator:	Your next question comes from Jim Schwartz with Harvey Partners.
Jim Schwartz:	Hey you guys.
Raymond De Hont:	Hi. How you doing, Jim?
Jim Schwartz:	Good. Could you just break down for me in fluid handling the, you know, you said that the increase in backlog is, you know, from higher margin pieces. I mean if I did a year over year look, the change in your backlog in fluid handling just short of the margin differential between the two just so I could have an idea going forward of, you know, how we can get, you know, sort of the 500 basis point improvement in the gross margin.

Page 9 

Raymond De Hont:	Well if you look at the fluid-handling portion of our business, I - last year ending 7/31/05, our total gross margin was 38%.
Jim Schwartz:	Yes.
Raymond De Hont:	And in the first quarter, that - the second quarter this year at 7/30/06 the gross profit was down to $36.1. And the reason is the product mix. However on the booking and backlog side, that's flipped. That's changed now, where for instance our Fybroc and Sethco divisions, which are typically the higher gross margins companies within that group, their backlog is increased significantly during this period.
	They've had a lot of bookings during the second quarter. They're entering the third quarter with a very strong backlog and that's why I say that a large share of this backlog for the fluid handling going into the third quarter is from the higher margin parts of that fluid handling group -- primarily the pump business -- the two pump businesses, Sethco and Fybroc.
Jim Schwartz:	Okay. Great. Thanks guys.
Operator:	Your next question comes from Brad Osleger with Deprince Race Zollo.
Brad Osleger:	Hi. Good morning guys.
Raymond De Hont:	Hi, Brad. How you doing?
Brad Osleger:	I'm doing fine, thanks. Couple quick questions for you -- the first of which goes back to Michael's question I believe on your gross margin outlook -- 34 to 35% longer term. Could you help us understand kind of a reasonable timeframe, you know, for when method -- or excuse me, Met-Pro would begin to approach that goal? Is it a number of years, should we see steady progress throughout - obviously we're looking for improvement in the back half of the year but going forward beyond that would it be a reasonable expectation to expect continued progress off of that level?

Raymond De Hont:	Yes. I think we would look at continued progress from where we're at. And I'd say to get back to those type of numbers you're talking about a three to five year span if everything that were implementing goes the way we think it can.
Brad Osleger:	Okay. But continued progress from here on out.
Raymond De Hont:	Yes. I think that the - there'll be a gradual increase in the gross margin as we go forward.
Brad Osleger:	Okay. Great. Last question -- can you give us an update on China? Is it currently profitable and kind of what do you see the market heading there?
Raymond De Hont:	Well we don't break out the businesses, as you know. And we wouldn't break that out, but what's happening now is we're getting the bookings and the shipments. We're like on the hockey stick. We're at the lower end of the hockey stick looking at some decent - large size or decent-sized quotations that we feel we'll be able to book during the third and fourth quarter.

Page 10 

Brad Osleger:	Okay. Very good.
Raymond De Hont:	It's progressing well. We're doing some things there that I think will give us some good future business.
Brad Osleger:	Thank you very much.
Raymond De Hont:	You're welcome.

Operator:	Your next question comes from Kevin Wenck with Polynous Capital Management.
Kevin Wenck:	Good morning.
Raymond De Hont:	Hi.
Kevin Wenck:	I've got a couple of questions. Your comments on the backlog said that you had some higher gross margin products in the backlog. What I was uncertain about is whether you'd looked through the whole backlog and whether the gross margin potential at this point -- and I know things can change as you, you know, manufacture stuff and ship products -- but whether the gross margin potential on the whole backlog is higher than what you had in the latest quarter adjusted for the loss on the contract.
Raymond De Hont:	I think the answer to that would be yes. The quality of that backlog in the margins in that total (back) - we have looked at the total backlog, not just these individual jobs. And we think the quality is better than it was going into the second quarter and during the second quarter.
Kevin Wenck:	Okay. Then the next question is, I feel that in the press release and in some of your comments there's a suggestion that there's specific things you're going to work on in Q3 and Q4 to improve gross margins aside from, you know, possibly increasing prices and, you know, and being more disciplined on, you know, monitoring gross margin potential of larger projects. And so if you could give us some more color as to what some of those individual activities might be internal and gross, you know, internal gross margin improvement.
Raymond De Hont:	Well first of all, we've merged one of our divisions for - Sethco division with our Fybroc group over in Telford, PA and that's going to help us as far as operating costs because of the synergies and so forth and where we don't have to duplicate overhead as far as management and having two of each, you know, two engineering managers, two controllers and so forth. That's going to help us on the operating side.

Our procurement group -- we're negotiating contracts with suppliers. We're negotiating on the total Met-Pro spent rather than the individual division. When you look at it historically, each of the individual divisions would typically do their purchasing in their logistics in the regional area or sometimes somewhere in the domestic United States.

Page 11 

We're now looking not only at the domestic, we're looking at the international for buying our products. And again we're going to these vendors on a total spend. Instead of going for each individual division we're adding up all the divisions going to a supplier and saying, "Look this is what our spend is. What can you do for us?" And we're seeing some good results from that already that will result in pickups as far as margins and so forth.

We - we're being more selective I think as far as on the front end also. We're looking at - we put some limits of authority on some of the divisions to where we wont' allow them to go below a certain margin without coming to the corporate office and discussing it. And we've bumped them up a little bit and I think that will help us to be more disciplined as far as the gross margins and sell it at the higher gross margins.

We do not want to change from what our historical core value was as far as going after a niche market where we can be one of the top or three players where it's a growing market and where we can make good margins. So we want to continue to do that. And sometimes you have to reevaluate and change (unintelligible) year-end because it's no longer what it originally was.

Kevin Wenck:	Okay. That's helpful. And without asking you for quantifications as to, you know, how much of the improvement we're going to see in Q3 and Q4, in terms of the relative timing, and we going to see, you know, 25% of what you're talking about in Q3 and 75% in Q4 or what are your thoughts on that?
Raymond De Hont:	That's a difficult one to answer because of the - all the different things that are going on within there is the different pieces that make up the improvement. And it comes down to again project execution. It comes down to getting the better pricing from suppliers and so forth.
	And that's going to be a month-to-month thing. We're already seeing some - I can give you some examples where we've gone out and on our freight - our freight costs -- as everybody freights costs -- had gone up over the last two/three years.
	And we went out - we went to a broker as far as the (3PL) and we negotiated a contract. And what we've been able to do is reduce the cost of our freight significantly compared to what it once was.

Page 12 

And the problem we had before is all the divisions were negotiating on small pieces of it - of our freight. And we found that for the same carrier we had different discounts throughout the company. So by putting it all together we've been able to improve that part of our business significantly.

And that's going to help us in two areas. It's going to save us on our inbound freight, but it's going to help us with our customers, which will make our pricing to them less than what it would than with all the increased freight costs. So it is difficult to answer as far what the impact's going to be at any given time. And it depends on what product shipped at what time.

Kevin Wenck:	Okay. And a couple minor questions -- the other income in the quarter -- how much of that was interest income and how much of that was, you know, non-interest income?
Gary Morgan:	Kevin, the majority of that was interest income.
Kevin Wenck:	Okay.
Gary Morgan:	(Had) $20 million of cash on hand and interest rates have gone up from last year and the majority -- I would say 95% of that is interest income.
Kevin Wenck:	Okay. And then a rough cap-x budget for the second half?
Gary Morgan:	The second half -- in the first half we spent about $3.2 million on cap-x, $1.5 was for the completing of building in Telford, Pennsylvania to relocate the Sethco division from Long Island down to Pennsylvania.
	We spent a - an additional $700,00 to complete the expansion of our Netherlands operations. And the balance -- $700/800,000 for the first six months -- was from normal operations. We expect the balance of the year to be somewhere around $800,000 for the balance of the year.
Kevin Wenck:	Okay. And then one final question -- cash at quarter end?
Gary Morgan:	Cash at the quarter end was $20 million.
Kevin Wenck:	Okay. All right thanks for your help.
Gary Morgan:	Okay. Thank you, Kevin.
Raymond De Hont:	Thank you, Kevin.

Operator: Again, if you would like to ask a question please press star then the number one on your telephone keypad. That is star then the number one on your telephone keypad. You have a follow-up question from the line of Alvin Hoffman, individual stockholder.

Page 13 

Alvin Hoffman:	The last conference call you mentioned that you found the Dean pumps applicable to fresh water aquarium. How big a business is fresh water aquariums as a potential?
Raymond De Hont:	Well it's not necessarily fresh water aquariums. It's the fresh water within the aquarium park and also with - you get parks such as Sesame Street Park and so forth that have a lot of fresh water. What it does gets us into a - and zoos -- lot of zoos use fresh water.
	It's difficult to pull that together Alvin as far as the total market for that type of a group because a lot of those people play close to the vest as far as how much they spend and how - they promote how big the park is but they don't promote how much they spend on the parks.
Alvin Hoffman:	All right. Are there any new saltwater aquariums on the horizon?
Raymond De Hont:	There are. There's some large ones that we're working on overseas. There's some good international ones. There's some smaller projects domestically, but the aquarium business still is quite robust.
Alvin Hoffman:	They - the current aquariums that are operating continually buy more pumps?
Raymond De Hont:	Yes. What they have to do - they have to change up their exhibits. And they do it on a pretty frequent basis so they'll change an exhibit because after a while -- after two or three years customers want to see something different so they do change up their exhibits. In some cases they build a whole new park, which there are quite a few on the drawing board right now.

Alvin Hoffman:	So it's a dynamic industry.
Raymond De Hont:	Yes.
Alvin Hoffman:	I didn't understand that. Thank you.
Raymond De Hont:	You're welcome.
Operator:	At this time there are no further questions. Mr. Bittle, are there any closing remarks?
Kevin Bittle:	Yes. Thank you, (Regina). That concludes our conference call for today. We just want to thank everyone again for your participation.
Operator:	The concludes today's conference call. You may now disconnect.
END