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)
|
x | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
x | 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. |
Item 9.01. | Financial Statements and Exhibits. |
Date: June 6, 2013
|
MET-PRO CORPORATION
|
|
|
|
By: /s/ Neal E. Murphy
|
|
Neal E. Murphy
|
|
Vice President - Finance and Chief Financial Officer
|
|
(Duly Authorized Officer and Principal Financial Officer)
|
|
Exhibit
|
|
Description
|
|
|
|
Press release issued by Met-Pro Corporation to report its results of operations for the first quarter ended April 30, 2013.
|
||
|
|
|
|
|
|
|
Transcript of conference call held June 6, 2013 to discuss results of operations for the first quarter ended April 30, 2013.
|
Date:
|
June 6, 2013
|
|
For Release:
|
Immediate
|
|
Contact:
|
|
|
|
Neal E. Murphy
|
Joseph Hassett, SVP
|
|
Vice President of Finance, CFO
|
Gregory FCA Communications
|
|
215-723-6751
|
610-228-2110
|
|
Three Months Ended
April 30,
|
|||||||
|
2013
|
2012
|
||||||
Net sales
|
$
|
21,967,876
|
$
|
25,207,061
|
||||
Cost of goods sold
|
13,956,466
|
16,256,535
|
||||||
Gross profit
|
8,011,410
|
8,950,526
|
||||||
|
||||||||
Selling
|
2,717,246
|
3,059,581
|
||||||
General and administrative
|
3,019,415
|
4,144,089
|
||||||
Total selling, general and administrative
|
5,736,661
|
7,203,670
|
||||||
Acquisition expenses
|
1,392,819
|
–
|
||||||
Income from operations
|
881,930
|
1,746,856
|
||||||
|
||||||||
Interest expense
|
(36,417
|
)
|
(42,535
|
)
|
||||
Other (expense) income
|
(9,311
|
)
|
45,925
|
|||||
Income before taxes
|
836,202
|
1,750,246
|
||||||
|
||||||||
Provision for taxes
|
605,947
|
491,548
|
||||||
Net income
|
$
|
230,255
|
$
|
1,258,698
|
||||
|
||||||||
Earnings per share, basic
|
$
|
.02
|
$
|
.09
|
||||
Earnings per share, diluted
|
$
|
.02
|
$
|
.09
|
||||
|
||||||||
Average common shares outstanding:
|
||||||||
Basic shares
|
14,697,269
|
14,678,628
|
||||||
Diluted shares
|
14,854,906
|
14,744,826
|
|
April 30,
2013
|
January 31,
2013
|
||||||
Assets
|
(unaudited)
|
|||||||
Current assets
|
||||||||
Cash and cash equivalents
|
$
|
39,398,603
|
$
|
33,305,908
|
||||
Short-term investments
|
512,325
|
1,022,266
|
||||||
Accounts receivable, net of allowance for doubtful accounts of $287,351 and $288,102, respectively
|
15,309,966
|
19,094,589
|
||||||
Inventories
|
17,973,142
|
17,870,720
|
||||||
Prepaid expenses, deposits and other current assets
|
1,594,453
|
1,848,049
|
||||||
Deferred income taxes
|
1,214
|
1,043
|
||||||
Total current assets
|
74,789,703
|
73,142,575
|
||||||
|
||||||||
Property, plant and equipment, net
|
19,161,719
|
19,499,593
|
||||||
Goodwill
|
20,798,913
|
20,798,913
|
||||||
Other assets
|
2,820,720
|
2,814,100
|
||||||
Total assets
|
$
|
117,571,055
|
$
|
116,255,181
|
||||
|
||||||||
Liabilities and shareholders’ equity
|
||||||||
Current liabilities
|
||||||||
Current portion of debt
|
$
|
365,522
|
$
|
369,622
|
||||
Accounts payable
|
6,581,059
|
6,081,691
|
||||||
Accrued salaries, wages and benefits
|
1,406,130
|
1,775,438
|
||||||
Other accrued expenses
|
3,050,415
|
2,780,051
|
||||||
Dividend payable
|
1,070,074
|
1,068,862
|
||||||
Customers’ advances
|
3,217,088
|
1,397,553
|
||||||
Total current liabilities
|
15,690,288
|
13,473,217
|
||||||
|
||||||||
Long-term debt
|
2,170,358
|
2,269,885
|
||||||
Accrued pension retirement benefits
|
9,738,594
|
9,652,313
|
||||||
Other non-current liabilities
|
59,137
|
58,589
|
||||||
Deferred income taxes
|
2,118,355
|
2,118,801
|
||||||
Total liabilities
|
29,776,732
|
27,572,805
|
||||||
Commitments and contingencies
|
||||||||
Shareholders’ equity
|
||||||||
Common shares, $.10 par value; 36,000,000 shares authorized, 15,928,679 shares issued, of which 1,230,581 and 1,231,824 shares were reacquired and held in treasury at the respective dates
|
1,592,868
|
1,592,868
|
||||||
Additional paid-in capital
|
5,032,209
|
4,899,188
|
||||||
Retained earnings
|
99,217,801
|
100,054,279
|
||||||
Accumulated other comprehensive loss
|
(7,758,740
|
)
|
(7,613,536
|
)
|
||||
Treasury shares, at cost
|
(10,289,815
|
)
|
(10,250,423
|
)
|
||||
Total shareholders’ equity
|
87,794,323
|
88,682,376
|
||||||
Total liabilities and shareholders’ equity
|
$
|
117,571,055
|
$
|
116,255,181
|
|
Three Months Ended April 30,
|
|||||||
|
2013
|
2012
|
||||||
Net sales
|
||||||||
Product Recovery/Pollution Control Technologies
|
$
|
8,960,364
|
$
|
10,500,840
|
||||
Fluid Handling Technologies
|
8,121,186
|
9,400,199
|
||||||
Mefiag Filtration Technologies
|
2,635,229
|
2,852,166
|
||||||
Filtration/Purification Technologies
|
2,251,097
|
2,453,856
|
||||||
|
$
|
21,967,876
|
$
|
25,207,061
|
||||
|
||||||||
Income (loss) from operations
|
||||||||
Product Recovery/Pollution Control Technologies
|
$
|
134,881
|
$
|
(443,062
|
)
|
|||
Fluid Handling Technologies
|
2,058,027
|
2,384,370
|
||||||
Mefiag Filtration Technologies
|
(34,731
|
)
|
(72,088
|
)
|
||||
Filtration/Purification Technologies
|
116,572
|
(122,364
|
)
|
|||||
Acquisition Expenses
|
(1,392,819
|
)
|
–
|
|||||
|
$
|
881,930
|
$
|
1,746,856
|
April 30,
2013
|
January 31,
2013
|
|||||||
Identifiable assets
|
||||||||
Product Recovery/Pollution Control Technologies
|
$
|
35,928,133
|
$
|
37,932,865
|
||||
Fluid Handling Technologies
|
18,982,592
|
20,093,881
|
||||||
Mefiag Filtration Technologies
|
14,966,538
|
15,643,078
|
||||||
Filtration/Purification Technologies
|
7,900,359
|
8,011,212
|
||||||
|
77,777,622
|
81,681,036
|
||||||
Corporate
|
39,793,433
|
34,574,145
|
||||||
|
$
|
117,571,055
|
$
|
116,255,181
|
Three Months Ended April 30,
|
||||||||
|
2013
|
2012
|
||||||
Cash flows from operating activities
|
||||||||
Net income
|
$
|
230,255
|
$
|
1,258,698
|
||||
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||
Depreciation and amortization
|
537,160
|
487,599
|
||||||
Stock-based compensation
|
103,451
|
441,401
|
||||||
Deferred income taxes
|
(78,683
|
)
|
(209,278
|
)
|
||||
(Gain)/loss on sales of property and equipment, net
|
(19, 500
|
)
|
1,080
|
|||||
Allowance for doubtful accounts
|
(751
|
)
|
(38,862
|
)
|
||||
Change in operating assets and liabilities:
|
||||||||
Accounts receivable
|
3,713,797
|
2,171,197
|
||||||
Inventories
|
(161,868
|
)
|
(1,361,633
|
)
|
||||
Prepaid expenses, deposits and other assets
|
195,949
|
123,755
|
||||||
Accounts payable and accrued expenses
|
569,867
|
(862,836
|
)
|
|||||
Customers’ advances
|
1,819,481
|
(1,036,453
|
)
|
|||||
Accrued pension retirement benefits
|
86,280
|
62,569
|
||||||
Other non-current liabilities
|
549
|
549
|
||||||
|
||||||||
Net cash provided by operating activities
|
6,995,987
|
1,037,786
|
||||||
|
||||||||
Cash flows from investing activities
|
||||||||
Proceeds from sale of property and equipment
|
19,500
|
–
|
||||||
Acquisitions of property and equipment
|
(258,735
|
)
|
(474,884
|
)
|
||||
Purchases of investments
|
(253,323
|
)
|
(763,264
|
)
|
||||
Proceeds from maturities of investments
|
763,264
|
756,073
|
||||||
|
||||||||
Net cash provided by (used in) investing activities
|
270,706
|
(482,075
|
)
|
|||||
|
||||||||
Cash flows from financing activities
|
||||||||
Reduction of debt
|
(91,347
|
)
|
(387,451
|
)
|
||||
Exercise of stock options
|
123,210
|
–
|
||||||
Payment of dividends
|
(1,065,522
|
)
|
(1,042,183
|
)
|
||||
Purchase of treasury shares
|
(133,032
|
)
|
–
|
|||||
|
||||||||
Net cash used in financing activities
|
(1,166,691
|
)
|
(1,429,634
|
)
|
||||
Effect of exchange rate changes on cash
|
(7,307
|
)
|
11,495
|
|||||
|
||||||||
Net increase (decrease) in cash and cash equivalents
|
6,092,695
|
(862,428
|
)
|
|||||
|
||||||||
Cash and cash equivalents at February 1
|
33,305,908
|
34,581,394
|
||||||
Cash and cash equivalents at April 30
|
$
|
39,398,603
|
$
|
33,718,966
|
|
Three Months Ended
April 30,
|
|||||||
|
2013
|
2012
|
||||||
Reconciliation of GAAP operating income and GAAP operating margin:
|
||||||||
Income from operations in accordance with GAAP
|
$
|
881,930
|
$
|
1,746,856
|
||||
Operating margin in accordance with GAAP
|
4.0
|
%
|
7.0
|
%
|
||||
Acquisition expenses
|
1,392,819
|
–
|
||||||
CFO separation/transition expenses
|
–
|
695,000
|
||||||
Non-GAAP income from operations
|
$
|
2,274,749
|
$
|
2,441,856
|
||||
Non-GAAP operating margin
|
10.4
|
%
|
9.7
|
%
|
||||
|
||||||||
Reconciliation of GAAP net income:
|
||||||||
Net income in accordance with GAAP
|
$
|
230,255
|
$
|
1,258,698
|
||||
Acquisition expenses
|
1,392,819
|
–
|
||||||
CFO separation/transition expenses
|
–
|
695,000
|
||||||
Tax benefit of acquisition expenses
|
(129,630
|
)
|
–
|
|||||
Tax benefit of CFO separation/transition expenses
|
–
|
(364,652
|
)
|
|||||
Non-GAAP net income
|
$
|
1,493,444
|
$
|
1,589,046
|
||||
|
||||||||
Per share data:
|
||||||||
Non-GAAP net income per basic share (14,697,269 and 14,678,628, respectively)
|
$
|
.10
|
$
|
.11
|
||||
Non-GAAP net income per diluted share (14,854,906 and 14,744,826, respectively)
|
$
|
.10
|
$
|
.11
|
Operator: | Ladies and gentlemen, thank you for standing by, and welcome to the Met-Pro first quarter results conference call. All lines have been placed on mute to prevent any background noise. After the speakers' 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 the pound key. Thank you. I will now turn the call over to Kevin Bittle, Manager of Creative Services. Please go ahead, sir. |
Kevin Bittle: | Good morning, and welcome to Met-Pro Corporation's earnings conference call for the first quarter of fiscal year 2014, which ended on April 30, 2013. My name's Kevin Bittle, and I'm with the company's creative services department. With me on our call this morning are Ray De Hont, our Chief Executive Officer and President, and Neal Murphy, our Vice President of Finance and Chief Financial Officer. Before we begin, I'd like to remind everyone that any statements made today with regards to our future expectations may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. |
Ray DeHont: | Thank you, Kevin. Good morning, everyone, and welcome again from Harleysville, Pennsylvania. Earlier this morning, we released our first quarter fiscal year 2014 financial results. I hope all of you have had the opportunity to review them. In a moment, Neal Murphy will provide more specific comments on our financial results, but first, I would like to offer my perspective on our performance. |
Neal Murphy: | Thank you, Ray. And good morning, everyone. First quarter net sales were $22 million dollars, compared with $25.2 million for the same quarter last year, with the decrease spread across our business segments. As Ray noted, despite lower revenues, we were able to increase year over year gross margins by 100 basis points, from 35.5 percent to 36.5 percent. This consolidated gross margin improvement is particularly encouraging, because it was achieved despite lower sales in our high margin Fluid Handling Technologies segment. |
RayDeHont: | Thank you, Neal. Just a few concluding remarks before we open the call to your questions. We are extremely excited about the recently announced merger of Met-Pro Corporation and CECO Environmental Corp. This is truly a combination in which the whole will be much greater than the sum of the parts. We are confident that this combination will lead to increased growth and profitability well beyond what would have been achieved by either company on a stand-alone basis. The market synergies, the expanded global footprint, the diversification of the product platform, and the cost efficiencies associated with combining our two companies, are just a few of the compelling drivers behind this combination. |
Kevin Bittle: | Thank you, Ray. At this time, we welcome any questions you may have. I'd like to ask our operator, (Lori), to provide instructions for this portion of the call. |
Operator: | At this time, I would like to remind everyone, if you'd like to ask a question, please 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 the line of Jerry Sweeney of (Manning). |
Jerry Sweeney: | Good morning, guys. |
Ray De Hont: | Good morning, (Jerry). |
Neal Murphy: | Hi, (Jerry). |
Jerry Sweeney: | Congratulations, nice job on the expenses in SG&A. If you have trouble hearing me, let me know. I'm actually on the train. But wondering if you could just dig in a little bit more on Product Recovery Pollution Control. I'm assuming some of the timing of projects that were focused on were seasonal. Were there any specific large projects that got pushed out to the next quarter, or was it a series of smaller projects and just, you know, overall timing in general? |
Ray De Hont: | It's a combination of things, (Jerry). Our normal business, we have projects, you know, million dollar projects, million and a half, and so forth. But some of them, the timing isn't what you expect, and that's what happened here on that particular side of the business, you had some projects there, but on the fluid-handling side, if you go over to that side, you had a very large project last year which I mentioned, which was a six million dollar project, which is an extraordinary sized project – not normal day-to-day business, or even project business. |
Jerry Sweeney: | OK – sorry, I apologize. So you know, the fact that it is a little seasonal, maybe have a build-up until the end of the year, or is that a way to look at it, on the PRPC? |
Ray De Hont: | Well, look at it this way. When you look at January and February, not a lot of construction is going on during that – those months. So you could have some of that, and we see some of that, where customers in different parts of the country don't want their equipment until, let's say, our second or third quarter, because of the weather – the impact to a construction project. So there's some seasonality because of that. |
Jerry Sweeney: | OK, got it. Finally, you know, the cash flows seem pretty good – $7 million. I mean, is that just a little bit of timing of some of the cash coming in, or is that a detail that you want to … |
Neal Murphy: | Yes, (Jerry), it's a combination of things. Some focus on the working capital side, a little – a little higher profitability as a percentage of sales. But the largest driver is cash advances. That can – there's a lot of timing issues around customer cash advances, and we received a substantial cash advance in the – in the quarter, that drove cash flow up. |
Jerry Sweeney: | OK, and then any – any comment on the deal closure timing? |
Ray De Hont: | Well, as it was published, the published date was, we were estimating September. |
Jerry Sweeney: | OK. |
Ray De Hont: | And I couldn't give you any other estimate than that – what we put on the table there. Because we have no control over it, as far as with the SEC and so forth. |
Jerry Sweeney: | Got it. Now, this is a little bit of a different question. You think we'll – I did notice that a dividend was being paid, of record, at the end of May. Are we going to squeeze another one of those in before the end – before the merger closes? |
Ray De Hont: | Well, as we discussed during the conversation earlier, we have basically announced a quarterly dividend. And – but we also made it clear that as previously announced, in the April 21 conference call, and the information that went out, that this may not happen if this merger closes before August 30th. |
Neal Murphy: | Yes, so, (Jerry), there's two – as you said, there's two different dividends. We have the one to the shareholders of record May 30, that'll be paid June 14th. And then we've announced a second dividend today, to shareholders of record as of August 30. And if the transaction closes … |
Jerry Sweeney: | All right, got it. OK. I misheard that, I apologize. |
Male: | OK. Hey, (Jerry), one clarification. You were talking about bookings with the product recovery and pollution control side. Their bookings are actually up year to date, over last year. |
Jerry Sweeney: | OK, got it. Yes, I was just curious, timing, I mean, how that develops. And you know it seems it maybe gets a little bit of seasonality at year end sometimes. But I understand. |
Ray De Hont: | OK. |
Operator: | Once again, if you'd like to ask a question, please press star then the number one on your telephone keypad. Your next question comes from the line of William Bremer of Maxim Group. |
William Bremer: | Good morning, Ray. Good morning, Neal. |
Ray De Hont: | Good morning, Bill. |
William Bremer: | Let's talk pricing of the bookings. How's pricing year over year, and let's go through the segments, if we can. |
Ray De Hont: | Well, I think overall, we're doing a better job as far as getting value for our products. And that's what we've set out to do. If you remember last year, we had – especially on the product recovery pollution control side – we had some issues with regard to margins. And we've dedicated, you know, time and energy to improving that, and getting the value that we're selling – getting paid for the value. So they've improved. |
William Bremer: | OK, so pricing in backlog is better year over year. |
Neal Murphy: | That's correct, yes. I think, Bill, I'd say even across the segments, I'd say we're not seeing price reduction, and we're seeing selective price increasing. And really, a concerted effort, particularly in Pollution Control Product Recovery. You know, each project's a little different, so it's hard to say year over year pricing. But we're focused on getting value – getting paid for the value we're delivering. |
William Bremer: | OK, no, agreed. Mefiag, let's go there. We're starting to see the automotive builds stabilize, even grow a little bit here. A lot more optimistic talk in that segment. I'm assuming Mefiag sequentially should be better than this first quarter. |
Ray De Hont: | Well, when you look at it – look for the year, we're seeing as far as the automotive, we're also seeing the housing, where that should start to actually help Mefiag. They also are getting into the printed circuit board market. We have a filter that we've designed, working with one of the chemical suppliers in that industry, for that specific industry, which is a much bigger industry than the metal positioning and plating. So we're trying to expand the market breadth for Mefiag, but you're right, Bill. Especially in Europe, you're actually starting to see some activity in Europe with the automotive. Now, on the housing side, that's in the pits over there. But of course in the U.S. and other parts of the world, the housing is coming back and we see that being a positive impact on Mefiag globally. |
William Bremer: | Any chance you want to comment on what your targeted margins are for the year in that segment? |
Ray De Hont: | No. Very simply. |
William Bremer: | OK. Neal, in your commentary, you spoke on the Fluid Handling year objectives. What are those objectives? |
Neal Murphy: | Yes, we don't – we don't share specific objectives for the company for each business, but we could foresee growth in our core business, and that includes the core elements of GPS. |
William Bremer: | OK. Noticed that you bought back some stock in this quarter. I'm assuming that was prior to the announcement of the acquisition. Now, does that cease because of the timing? |
Neal Murphy: | Yes, I think there were very – very small amount of options with respect to prior employees, but beyond that, there's prohibitions against trading up through the proxy filing. |
William Bremer: | OK. And my last question is just on the restructuring. Fantastic job on really curtailing the expenses, pretty much broad-based. How much – what inning would you say you're in on that currently, and how much more can we expect? |
Neal Murphy: | Yes, that's a fair question. If you kind of look at our history, and I'll talk in percentage terms, Bill, but obviously events and variations in revenue can change that. But you know, if you look at the last few years, our SG&A was, you know, a few years back, 26 percent of sales, then 24 percent of sales the following year – 24.7, and last year, it was 23.6 percent of sales. |
William Bremer: | OK, gentlemen, thank you. |
Neal Murphy: | Thank you. |
Male: | Thanks, Bill. |
Operator: | At this time, there are no further questions. I will now return the call to Ray DeHont for any closing remarks. |
Ray DeHont: | Thank you, (Lori). Once again, thank you for joining us this morning. We hope we have been able to provide you with a useful update on Met-Pro's progress and performance. If you should have any further questions, please feel free to contact either Neal or me at any time. Thank you. |
Operator: | Thank you for participating in the Met-Pro first quarter results conference call. You may now disconnect. |