MISCOR Group Reports an Increase in Revenues and Net Income in the Second Quarter

Increased Service Revenues and Acquisitions Drive Strong Growth

SOUTH BEND, Ind., Aug. 13 -- Industrial services provider MISCOR Group, Ltd. (BULLETIN BOARD: MIGL) reported record results for the second quarter ended June 29, 2008, highlighted by strong product sales growth and an increase in service revenues.

MISCOR nearly doubled its net sales in the second quarter, reporting an 82.3 percent increase to $30.5 million, compared to net sales of $16.8 million in the same period in 2007. Net income increased 186 percent to $610,000, or $0.05 per diluted share, compared to net income of $213,000, or $0.03 per diluted share, in the 2007 second quarter.

The strong gains in the quarter were highlighted by a 120 percent increase in service revenues to $24.1 million, compared to $10.9 million in the second quarter of 2007. The Company said its service revenues continue to benefit from the nation's aging industrial base, reduced spending on new equipment, as well as the addition of new services such as MISCOR's increased focus on the wind generation industry. MISCOR entered the wind generation service industry with the December 2007 acquisition of 3-D Service, Ltd. MISCOR said both the acquisition of 3-D Service and mechanical contractor Ideal Consolidated in October 2007 were accretive to the 2008 second quarter results. MISCOR also reported a 10 percent increase in product sales to $6.3 million compared to product sales of $5.7 million in the prior year period. In addition, operating income more than doubled to $1 million, a 116 percent increase over operating income of $463,000 in the second quarter of 2007.

"Our second quarter results and strong year-over-year improvement in both our top and bottom lines are an indication of our increasing national leadership in the industrial repair and service industry," said John Martell, CEO of MISCOR. "The increase in our service-based revenues shows not only our ability to win new contracts and take advantage of the growth in the wind generation industry, but that our reputation for efficient, on-time and on-budget service is gaining recognition."

Through the first six months of 2008, MISCOR reported an 83.2 percent increase in net sales to $60.3 million compared to net sales of $32.9 million during the first six months of 2007. Net sales for the period were driven by a 117 percent increase over the 2007 six-month period in service revenues to $47.6 million and a 14.5 percent increase in product sales to $12.6 million. The Company posted net income of $1.1 million for the first six months of 2008, reversing a net loss of $2.4 million in the same period last year.

Additionally, the Company incurred losses and costs in the first six months of the year associated with the closure and consolidation of the Indianapolis and Mobile Magnetech Industrial Service locations, which are now completed. The total amount of these charges was $486,000 during the first half of the year.

Martell added: "We see great opportunity with American Motive Power, the rail services business we acquired in the first quarter of this year. The integration and ramp up of this business has been more difficult than anticipated, however, we expect it to start producing positive results in the third quarter."

"We have made a number of positive strides in the first half of 2008 that have resulted in new contracts and enhanced financial performance, and we are seeing the growing benefit from our recent acquisitions. Our entry into the wind generation industry last year, in particular, is paying dividends as we continue to see an uptick in the industry's need for nationwide maintenance, repair and remanufacturing services," said Martell.

Segment Results:

Repair, Remanufacturing and Manufacturing (RRM) and Construction and Engineering Services (CES)

For the second quarter of 2008, the RRM segment posted a 71 percent increase in revenues to $20.8 million compared to revenues of $12.1 million in the year ago period. The increase reflects gains in service revenues related to contracts within the wind generation industry, including the acquisition of 3-D Service, as well as higher sales of motor, magnets and other industrial products. The CES segment more than doubled its revenue for the second consecutive quarter to $9.7 million, up from revenues of $4.6 million in the prior year period, driven by an increasing national presence, strong demand for power distribution systems and a strong regional construction market.

"Our results reflect our ability to effectively control costs, improve margins and win new contracts across all our segments," said Rich Mullin, chief financial officer of MISCOR. "As our results show, we continue to experience the benefits of increasing name brand recognition which is enabling us to gain market share and compete for larger contracts."

Martell concluded: "We are beginning to see the results of a number of strategic initiatives put in place earlier this year by our veteran management team. In addition, the recent hiring of Ed Matheny as vice president of sales and marketing for RRM, and Michael Stefanik as director of wind power solutions, provides us with the added expertise and depth of management that we believe will enable us to continue growing what we see as high margin opportunities within the multi-industrial fields."