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DALLAS, May 8, 2014 (GLOBE NEWSWIRE) -- PMFG, Inc. (the "Company") (Nasdaq:PMFG) today reported financial results for the third quarter ended March 29, 2014.
Expansion of Environmental Products and Services
On March 28, 2014, the Company completed the acquisition of substantially all of the assets of Combustion Components Associates, Inc. ("CCA"), a leading provider of in-furnace and post-combustion environmental control technologies and combustion systems. CCA technology is used to improve efficiency and reduce emissions at a variety of facilities including utility power plants, pulp and paper mills, chemical plants, oil refineries and other industrial customers. The purchase price was $8.9 million in cash plus contingent performance-based payments. CCA's annual revenue was approximately $14 million in its most recently completed fiscal year. Excluding the impact of the transaction-related fees, the acquisition will be immediately accretive to earnings.
Third Quarter Fiscal Year 2014 Compared to 2013
Revenue in the third quarter of fiscal 2014 decreased $2.7 million or 7.7% to $32.3 million. Improved revenue in the Company's Environmental Systems segment partially offset the decline in the Process Products segment. The lower revenue from our Process Products segment resulted from lower demand for our silencer and heat transfer equipment, reduced demand for separation and filtration equipment in certain markets, and to a lesser extent delays in the design and fabrication process in the China market.
Gross profit decreased in the quarter by $2.7 million, or 25.2%, to $8.0 million on lower revenue and margin deterioration on projects completed and or in process. Gross profit as a percent of revenue decreased to 24.9% in the quarter from 30.7% in the prior year. The decrease in gross profit resulted from lower revenue, cost overruns on specific projects, and inefficiencies in the start-up of our new manufacturing facilities in Denton, Texas and Zhenjiang, China, partially offset by a change in estimated future warranty obligations. Approximately $1.7 million of the decline in gross profit is attributed to negative changes in estimated or actual fabrication costs on certain complex projects that are in process or completed during the quarter. The Company is undertaking focused initiatives to mitigate the impact of the cost overruns and inefficiencies in future periods.