MFRI ANNOUNCES THIRD QUARTER AND NINE MONTHS RECORD SALES AND EARNINGS
December 30, 2008

NILES, IL, December 10, 2008- MFRI, Inc. announced today record sales and earnings for the third quarter 2008 and the nine months ended October 31, 2008. For the third quarter 2008, Company net sales were $76.8 million, 18.0% greater than the $65.1 million for the prior-year’s third quarter. Third quarter net income was a record $4.7 million compared to $1.0 million in the prior-year period. Earnings per share for the third quarter 2008 increased 360.0% to $0.69 per share basic and $0.68 diluted, compared to $0.15 per share basic and diluted, in the third quarter of 2007.

For the current quarter versus the prior-year third quarter, the Piping Systems business net sales increased by 27.4%, the Filtration Products business net sales remained level, and the Industrial Process Cooling business net sales decreased by 10.1%. The heating, ventilation and air conditioning (“HVAC”) business, included in Corporate and Other, reported net sales of $5.0 million in the quarter and $8.2 million year-to-date.

For the nine months ended October 31, 2008, Company net sales set a new record at $220.4 million, up 21.8% from $181.0 million for the corresponding period in 2007. Net sales increased primarily due to a higher starting backlog, the growing success of the Piping Systems’ business in the United Arab Emirates, the production of the large crude oil pipeline project in India, and the start of work on buildings in the HVAC backlog. Net income for the first nine months of 2008, also a record, was $7.5 million versus $3.5 million in the prior-year’s first nine months. Earnings per share for the first nine months increased to $1.11 per share basic and $1.09 diluted, up 109.4% compared to $0.53 per share basic and $0.51 diluted for the first nine months of 2007.