<PAGE>
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended April 30, 1996 Commission file number 001-07763
MET-PRO CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 23-1683282
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
160 Cassell Road, Box 144
Harleysville, Pennsylvania 19438
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (215) 723-6751
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
------ -------
The number of shares outstanding of the Registrant's common stock (par
value $0.10 per share) is 4,634,765 (as of April 30, 1996).
===============================================================================
<PAGE>
MET-PRO CORPORATION
INDEX
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed consolidated balance sheet as of
April 30, 1996 and January 31, 1996........................... 2
Condensed consolidated statement of operations for the three-month
periods ended April 30, 1996 and April 30, 1995............... 3
Condensed consolidated statement of cash flows for the three-month
periods ended April 30, 1996 and April 30, 1995............... 4
Notes to condensed consolidated financial statements................. 5
Report on Review by Independent Accountants.......................... 6
Item 2. Management's discussion and analysis of financial condition
and results of operations..................................... 7
PART II - OTHER INFORMATION
Item 6(b). Reports on Form 8-K.......................................... 9
SIGNATURES................................................................. 9
-1-
<PAGE>
MET-PRO CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
(unaudited)
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
<CAPTION>
April 30, January 31,
ASSETS 1996 1996
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Current assets
Cash and cash equivalents $ 5,867,323 $ 7,415,375
Accounts receivable, net of allowance for doubtful
accounts of approximately $214,000 and
$195,000, respectively 10,119,181 8,941,157
Notes receivable-ESOT 400,000 400,000
Inventories 11,012,024 10,302,844
Prepaid expenses, deposits and other current assets 704,981 559,238
Deferred income taxes 649,947 649,947
- -----------------------------------------------------------------------------------------------------------------------
Total current assets 28,753,456 28,268,561
Property, plant and equipment, net 14,933,802 14,433,565
Cost in excess of net assets of businesses acquired, net 3,703,036 3,725,118
Other assets 1,115,410 1,199,343
- -----------------------------------------------------------------------------------------------------------------------
Total assets $48,505,704 $47,626,587
=======================================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
- -----------------------------------------------------------------------------------------------------------------------
Current liabilities
Current portion of long-term debt $ 1,104,850 $ 1,178,177
Accounts payable 2,803,693 2,307,034
Accrued salaries, wages and expenses 7,464,164 6,347,912
Payroll and other taxes payable 5,143 5,974
Customers' advances 309,492 411,409
- -----------------------------------------------------------------------------------------------------------------------
Total current liabilities 11,687,342 10,250,506
Long-term debt 1,472,494 1,692,962
Other non-current liabilities 119,242 101,345
Deferred income taxes 560,742 569,196
- -----------------------------------------------------------------------------------------------------------------------
Total liabilities 13,839,820 12,614,009
- -----------------------------------------------------------------------------------------------------------------------
Stockholders' equity
Common stock, $.10 par value; 10,000,000 shares
authorized, 4,759,221 shares issued, at both
dates, of which 124,456 and 121,531 shares,
respectively, were reacquired and held
in treasury. 475,922 475,922
Additional paid-in capital 7,397,662 7,442,810
Retained earnings 28,033,282 28,142,539
Cumulative translation adjustment 155,267 209,333
Treasury stock, at cost ( 1,396,249) ( 1,258,026)
- -----------------------------------------------------------------------------------------------------------------------
Net stockholders' equity 34,665,884 35,012,578
- -----------------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $48,505,704 $47,626,587
=======================================================================================================================
</TABLE>
See accompanying notes to condensed consolidated financial statements.
-2-
<PAGE>
MET-PRO CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended
April 30,
1996 1995
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net sales $13,731,982 $13,131,816
Cost of goods sold 8,756,662 8,643,367
- -----------------------------------------------------------------------------------------------------------------------
Gross profit 4,975,320 4,488,449
- -----------------------------------------------------------------------------------------------------------------------
Operating expenses
Selling 1,255,845 1,125,728
General and administrative 1,503,515 1,645,585
- -----------------------------------------------------------------------------------------------------------------------
2,759,360 2,771,313
- -----------------------------------------------------------------------------------------------------------------------
Income from operations 2,215,960 1,717,136
Other income, net 133,523 133,214
- -----------------------------------------------------------------------------------------------------------------------
Income before taxes on income 2,349,483 1,850,350
Provision for taxes on income 928,046 749,391
- -----------------------------------------------------------------------------------------------------------------------
Net income $ 1,421,437 $ 1,100,959
=======================================================================================================================
Earnings per share, primary and fully diluted (1) $ .30 $ .23
Cash dividend per share - declared (2) $ .33 $ .30
Cash dividend per share - paid (2) $ .33 $ --
=======================================================================================================================
</TABLE>
(1) Based on weighted average number of common stock and common stock
equivalents outstanding during each three-month period (adjusted for a
3-for-2 stock split completed on May 12, 1995). The weighted average number
of common shares outstanding was 4,694,951 and 4,715,097 in the respective
three-month periods.
(2) The Company declared a 3-for-2 stock split and a cash dividend of $.30 per
share, both of which were paid on May 12, 1995 to stockholders of record on
April 7, 1995. The cash dividend was paid on all outstanding shares,
including those issued as a result of the stock split. The Company also
declared a cash dividend of $.33 per share on February 26, 1996 payable on
April 26, 1996 to shareholders of record on April 12, 1996.
See accompanying notes to condensed consolidated financial statements.
-3-
<PAGE>
MET-PRO CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended
April 30,
1996 1995
- -----------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
<S> <C> <C>
Net cash provided by operating activities 1,275,134 1,272,275
- -----------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities
Proceeds from sale of property and equipment 573 --
Acquisitions of property and equipment ( 813,078) ( 575,348)
- -----------------------------------------------------------------------------------------------------------------------
Net cash (used in) investing activities ( 812,505) ( 575,348)
- -----------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities
Reduction of debt ( 293,795) ( 292,147)
Exercise of stock options 109,838 299,990
Payment of dividends ( 1,530,693) --
Purchase of treasury shares ( 293,215) ( 3,603)
- -----------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities ( 2,007,865) 4,240
- -----------------------------------------------------------------------------------------------------------------------
Effect of exchange rate changes on cash ( 2,816) 24,371
- -----------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents ( 1,548,052) 725,538
Cash and cash equivalents at February 1 7,415,375 6,648,380
- -----------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at April 30 $ 5,867,323 $ 7,373,918
=======================================================================================================================
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid during the period for:
Interest $ 46,794 $ 72,266
Income taxes $ 177,119 $ 272,572
=======================================================================================================================
</TABLE>
See accompanying notes to condensed consolidated financial statements.
-4-
<PAGE>
MET-PRO CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - PRINCIPLES OF CONSOLIDATION
The condensed consolidated financial statements include Met-Pro Corporation and
its wholly-owned subsidiaries, Mefiag B.V. and Mefiag of Puerto Rico, Inc. All
significant intercompany accounts and transactions have been eliminated in
consolidation.
NOTE 2 - BASIS OF PRESENTATION
In the opinion of management, the accompanying unaudited condensed consolidated
financial statements contain all adjustments necessary to present fairly the
financial position as of April 30, 1996 and the results of operations for the
three-month periods ended April 30, 1996 and 1995 and the statement of cash
flows for the three-month periods then ended. The results of operations for the
three-month period ended April 30, 1996 are not necessarily indicative of the
results to be expected for the full year.
Margolis & Company P.C., the Company's auditors, has performed a limited review
of the financial information included herein. Their report on such review
accompanies this filing.
NOTE 3 - INVENTORIES
Inventories were comprised of the following:
April 30, January 31,
1996 1996
----------- ------------
Raw materials $ 4,571,470 $ 4,277,065
Work in progress 2,194,984 2,053,626
Finish goods 4,245,570 3,972,153
----------- -----------
$11,012,024 $10,302,844
=========== ===========
-5-
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
Met-Pro Corporation and its Wholly-Owned Subsidiaries
Harleysville, Pennsylvania
We have reviewed the accompanying condensed consolidated balance sheet of
Met-Pro Corporation and its Wholly-Owned Subsidiaries as of April 30, 1996 and
the related condensed consolidated statements of operations and of cash flows
for the three-month periods ended April 30, 1996 and 1995. These financial
statements are the responsibility of the Company's management.
We conducted our reviews in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.
Based on our reviews, we are not aware of any material modifications that should
be made to the accompanying condensed consolidated financial statements for them
to be in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the balance sheet as of January 31, 1996 and the related statements
of operations, stockholders equity, and cash flows for the year then ended (not
presented herein); and in our report dated February 19, 1996, we expressed an
unqualified opinion on those financial statements. In our opinion, the
information set forth in the accompanying condensed consolidated balance sheet
as of January 31, 1996 is fairly stated, in all material respects, in relation
to the balance sheet from which it has been derived.
Certified Public Accountants
Bala Cynwyd, Pennsylvania
May 20, 1996
-6-
<PAGE>
MET-PRO CORPORATION
Item 2. Management's Discussion and Analysis of the Financial Condition and
Results of Operations
Results of Operations:
Net sales for the three-month period ended April 30, 1996 were $13,731,982
compared to $13,131,816 for the three-month period ended April 30, 1995, an
increase of $600,166 or 4.6%. This increase was due to higher sales in both the
Fluid Handling and the Pollution Control Systems and Allied Equipment segments
of the business. The backlog at April 30, 1996 was 21.3% higher compared to the
backlog at the beginning of the fiscal year. Bookings of new orders were 10.0%
higher for the three-month period ended April 30, 1996 than for the three-month
period ended April 30, 1995. The length of time required to design, engineer,
manufacture and ship product, especially in the Pollution Control and Allied
Equipment segment of our business, combined with contract requirements, will
cause shipments to vary from quarter to quarter.
Net income for the three-month period ended April 30, 1996 was $1,421,437
compared to $1,100,959 for the three-month period ended April 30, 1995, an
increase of $320,478 or 29.1%. The increase in net income is primarily related
to increased sales of $600,166 for the three-month period ended April 30, 1996,
combined with the improvement in the gross margin to 36.2%.
The gross margin for the three-month period ended April 30, 1996 was 36.2%
compared to 34.2% for the same period last year. The improvement in the gross
margin can be attributed to higher sales volume, product mix and production
efficiencies in both business segments.
Selling expense increased $130,117 during the three-month period ended April 30,
1996 compared to the same period last year. This is due primarily to an increase
in staffing levels to position our diversified businesses for future growth.
Selling expense as a percentage of sales was 9.1%, compared to 8.6% for the
three-month period ended April 30, 1995.
General and administrative expense was $1,503,515 for the three-month period
ended April 30, 1996 compared to $1,645,585 for the same period last year.
General and administrative expense as a percentage of sales declined to 10.9%
for the three-month period ended April 30, 1996 from 12.5% for the same period
last year.
Other income, net, primarily interest income was flat for the three-month period
ended April 30, 1996 compared to the three-month period ended April 30, 1995.
The effective tax rate for the three-month period ended April 30, 1996 was 39.5%
compared to 40.5% for the three-month period ended April 30, 1995. The change in
the effective tax rate had virtually no effect on earnings per share.
Liquidity:
The Company's cash and cash equivalents was $5,867,323 on April 30, 1996
compared to $7,415,375 on January 31, 1996, a decrease of $1,548,052. This
decrease is the net result of positive cashflow provided by operating activities
of $1,275,134 and proceeds received from the exercise of stock options of
$109,838, offset by the payment of the annual cash dividend amounting to
$1,530,693, payments on long-term debt totalling $293,795, purchase of treasury
stock amounting to $293,215 and investment in property and equipment amounting
to $813,078. The Company's cash flows from operating activities are affected by
the timing of shipments and negotiated standard payment terms, including
retention associated with major projects.
-7-
<PAGE>
MET-PRO CORPORATION
Item 2. Management's Discussion and Analysis of the Financial Condition and
Results of Operations
continued...
Accounts receivable (net) amounted to $10,119,181 on April 30, 1996 compared to
$8,941,157 on January 31, 1996, which represents an increase of $1,178,024. The
timing and size of shipments combined with retainage on contracts, especially in
the Pollution Control Systems and Allied Equipment segment, will influence
accounts receivable balances at any point in time.
Inventories were $11,012,024 on April 30, 1996 compared to $10,302,844 on
January 31, 1996, an increase of $709,180. Inventory balances fluctuate
depending upon market demand, the size and timing of orders and long lead times
required.
Current liabilities amounted to $11,687,342 on April 30, 1996 compared to
$10,250,506 on January 31, 1996, an increase of $1,436,836. Accounts payable and
accrued expenses accounted for $1,612,080 of the increase offset by a reduction
of $73,327 of current portion of long term debt and $101,917 of customer
progress payments.
The Company has consistently maintained a high current ratio and has not
utilized either the domestic line of credit or the foreign line of credit
totalling $5.0 million, which are available for working capital purposes. Funds,
in general, have exceeded the current needs of the Company. The Company
presently foresees no change in this situation.
Capital Resources and Requirements:
Cash flows provided by operating activities during the three-month period ended
April 30, 1996 amounted to $1,275,134 compared with $1,272,275 in the
three-month period ended April 30, 1995, an increase of $2,859. This slight
increase is attributable to higher sales activity in both business segments, the
timing of the payment of current obligations, and advances from customers on
projects in progress.
Cash flows used in investing activities during the three-month period ended
April 30, 1996 amounted to $812,505 compared with $575,348 for the three-month
period ended April 30, 1995. The Company's investing activities principally
represent the acquisition of property, plant, and equipment in the combined
operations.
Financing activities during the three-month period ended April 30, 1996 utilized
$2,007,865 of available resources compared to $4,240 of cash provided for the
three-month period ended April 30, 1995. This utilization of cash is the result
of the payment of the annual cash dividend amounting to $1,530,693, reduction of
long-term debt totalling $293,795 and the purchase of treasury stock totalling
$293,215 offset by $109,838 provided by the exercise of stock options. During
the prior year, the annual cash dividend was paid in the second quarter.
On February 26, 1996, the Board of Directors declared a $.33 per share annual
cash dividend payable on April 26, 1996 to stockholders of record on April 12,
1996. The dividend paid on the Common Stock represented 31.3% of the prior
fiscal year earnings.
Consistent with past practices, the Company will continue to invest in new
product development programs, and to make capital expenditures to support the
on-going operations during the coming year. The Company expects to finance all
capital expenditures requirements through cash flows generated from operations.
-8-
<PAGE>
MET-PRO CORPORATION
PART II - OTHER INFORMATION
Item 6(b). Reports on Form 8-K
There were no reports on Form 8-K filed for the three-month period ended
April 30, 1996.
SIGNATURES
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.
Met-Pro Corporation
-------------------------
(Registrant)
May 24, 1996 /S/ William L. Kacin
-------------------------
William L. Kacin,
President,
Chief Executive Officer and Director
May 24, 1996 /S/ William F. Moffitt
-------------------------
William F. Moffitt,
Vice President of Finance,
Secretary and Treasurer, Chief
Financial Officer, Chief Accounting Officer,
and Director
-9-
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-31-1997
<PERIOD-END> APR-30-1996
<CASH> 5,867,323
<SECURITIES> 0
<RECEIVABLES> 10,119,181
<ALLOWANCES> 214,323
<INVENTORY> 11,012,024
<CURRENT-ASSETS> 28,753,456
<PP&E> 27,541,076
<DEPRECIATION> 12,607,274
<TOTAL-ASSETS> 48,505,704
<CURRENT-LIABILITIES> 11,687,342
<BONDS> 2,577,344
0
0
<COMMON> 475,922
<OTHER-SE> 34,189,962
<TOTAL-LIABILITY-AND-EQUITY> 48,505,704
<SALES> 13,731,982
<TOTAL-REVENUES> 13,731,982
<CGS> 8,756,662
<TOTAL-COSTS> 11,516,022
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 41,300
<INCOME-PRETAX> 2,349,483
<INCOME-TAX> 928,046
<INCOME-CONTINUING> 1,421,437
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,421,437
<EPS-PRIMARY> .30
<EPS-DILUTED> .30
</TABLE>