We have made great strides consolidating operations, streamlining logistics, and sourcing materials on a global basis to reduce costs, improve efficiency, and increase margins. In fiscal 2009, we implemented our first lean manufacturing program to further identify opportunities to drive down cost, and drive up productivity. With the success of this initial program, we will now be implementing lean manufacturing programs more widely throughout our various manufacturing facilities. We are also improving our manufacturing flexibility, by establishing effective vendor and other outsource relationships that enable us to move production closer to our international customers as well as to more quickly react to changes in the level of demand.

In fiscal 2009, we were pleased to welcome Judith A. Spires, President of Acme Markets, Inc., to the Company's Board of Directors to fill the vacancy created by the retirement of William L. Kacin. With her wealth of experience in marketing, merchandising, integration, operations, human resources, administration, and advertising, Ms. Spires will help broaden the diversity of backgrounds, experiences and viewpoints that contribute to a strong and effective Board of Directors.

Your Company’s achievements were nationally recognized by a number of prestigious organizations this year. As of the close of business on June 27, 2008, the Company was added to the broad-market Russell® 3000 Index. For the third consecutive year, Met-Pro Corporation was recognized as one of America’s “200 Best Small Companies” by Forbes magazine. This is a significant honor, especially since our ranking improved by more than 40 places compared with the prior year. The Company was also recognized for the second consecutive year as one of America’s “Top Publicly-Held Manufacturers,” by Start-It magazine.

Your Company has been built on a culture of honesty and integrity in our relationships with fellow employees, vendors and customers. In the pages of this Annual Report, we share our Core Values and our Purpose. We take very seriously these commitments to our customers, our employees, our vendors, our community and our other constituencies. They have served us well for over 40 years, and we will uphold them to serve us for future years as well.

The upcoming year will present new challenges and we are going to have to maintain our flexibility and resourcefulness to respond accordingly. But we cannot allow the prospect of a weaker economy to prevent us from sustaining the significant progress we have achieved in strengthening our entire competitive profile.

For fiscal 2010, we will show unrelenting commitment to those strategies that have served us well; investing in research and new product development, advancing our global expansion, improving our operational excellence, and exercising sound financial management. We are fortunate that we have both the talented workforce and financial strength to implement our strategy.

Over the long-term we are confident that your Company is well positioned to capitalize on the very powerful trends towards global environmental stewardship, energy efficiency, and process improvement. Though the pace at which these important advances in our society may vary in the short-term, there can be little doubt that these needs are certain to continue to rise well into the future.

In closing, I’d like to thank the many loyal, dedicated, and talented employees who have contributed to our success as well as thank our shareholders for their continued support.


Kindest Regards,

Dear Fellow Shareholder
I am pleased to report that, during the past year, your Company made significant progress, strengthening our overall competitive position for sustainable long-term growth, improving operating efficiencies, and solidifying our financial position.

Despite the global economic slowdown, net sales for fiscal 2009 were $103.4 million, down slightly from the prior record year, but still the second highest total in the Company’s history. Non- project sales including recurring demand for parts and consumables, which comprise nearly 40% of our total sales, remained strong throughout the year. The global economic slowdown, however, did negatively impact our project sales, which are sales greater than $500,000. Project sales, which totaled approximately $21.0 million in fiscal 2008 slipped to $11.8 million in fiscal 2009 due to the lengthening timeframe between quotation and order. Although a number of projects were delayed, many of them still remain viable opportunities.

Excluding the gain from a real estate sale in fiscal 2008 (which constitutes a non-GAAP(1) financial measure), this year’s net income of $9.9 million, and fully diluted earnings per share of $0.65, were the highest in the Company’s history.

The impact of the challenging market conditions on sales growth did not slow our efforts to improve the leverage in our business model. In fiscal 2009, we expanded both gross margins and operating margins. Gross margins continue to reflect the benefit of a more strategic product mix, as well as the efficiency improvements and lower costs realized through facility consolidations, global sourcing, and more effective logistics. Our disciplined cost management continues to enhance operating margins. Despite the additional legal, accounting and other costs incurred to support our more aggressive review of attractive acquisition opportunities in 2009, selling, general and administrative expenses were actually down this year compared with 2008.

Strong earnings were accompanied by strong cash generation as your Company increased operating cash flows 23% in fiscal 2009 to a record $12.1 million, or $0.80 per share. As a result, our balance sheet is the strongest in the Company’s history. Year end cash is only slightly lower compared with a year ago despite distributing $3.4 million in dividends and $7.7 million to repurchase stock in fiscal 2009. At a time when a more restrictive credit environment has become a major corporate concern, your Company continues to consistently generate cash and prudently manage its balance sheet. This will allow us to support investments to further enhance efficiency initiatives, develop exciting new products, and expand into new growth markets enabling us to sustain our momentum and strengthen our overall competitiveness. In addition, we often find ourselves competing against smaller businesses, which can frequently be undercapitalized. The pressure of a prolonged period of tight credit may create additional new growth or acquisition opportunities for us.

Our strong financial position enabled the Company to increase the quarterly cash dividend by 9%. This is the thirty-fourth consecutive year the Company has paid either a cash or stock dividend.

Met-Pro’s diverse and synergistic solutions and products address the world’s growing need to meet more stringent emission regulations, reduce energy consumption and employ “green” technology. The Company’s strategy is to capitalize on global niche-oriented growth opportunities in these markets through geographic expansion, new product introductions, and accretive acquisitions and/or technology licensing. We remain committed to further expanding our international markets and continue to actively strengthen our marketing and sales distribution worldwide.

Our investment in research and development undertaken over the last several years is producing new products that have been designed to not only positively impact our equipment sales, but also to create an opportunity to increase our recurring parts and consumable revenues, especially in our product lines that currently have limited aftermarket sales.