BHA Group Holdings, Inc. Announces First Quarter 1999 Unaudited Operating Results.

KANSAS CITY, Mo.--(BUSINESS WIRE)--Jan. 19, 1999--BHA Group Holdings, Inc. (Nasdaq:BHAG) today announced unaudited operating results for the three months ended Dec. 31, 1998.

Net sales for the quarter increased 17% to $35,228,000 from $30,022,000 for the same period in fiscal 1998. Operating income for the three month period in the current year was $2,409,000, up 4% from $2,306,000 last year. Net earnings for the quarter were $1,316,000 ($.18 per diluted share), down 5% from $1,390,000 ($.18 per diluted share) for the same period in the prior year.

Net earnings per diluted share in the Company's core air pollution control business increased 42% to $.27 from $.19 in the prior year. The increase was offset by losses in BHA Technologies, Inc., the Company's wholly-owned subsidiary which manufactures and sells expanded PTFE membrane products. Net loss per diluted share attributable to BHA Technologies was $.09 per share in fiscal 1999 compared to a loss per diluted share of $.01 during fiscal 1998.

Consolidated net earnings per diluted share were flat year over year despite the decrease in fiscal 1999 net earnings as the number of weighted average shares outstanding in the current year was less than the prior year because of Company share repurchases and a decline in the number of stock option related common share equivalents which are included in the diluted calculation.

The Company's backlog was $56.2 million at Dec. 31, 1998. This compares with order backlogs of $51.5 million at Sept. 30, 1998 and $55.3 million at Dec. 31, 1997.

Commenting on the results, James E. Lund, president and chief executive officer, said, "Our traditional air pollution control businesses performed well during the quarter. Domestic sales of fabric filter and electrostatic precipitator replacement parts and service increased 21% over the previous year.

"Many of our customers continue to benefit from favorable business conditions in the U.S. which has had a positive impact on our results. Despite the current crisis in Brazil, we are cautiously optimistic that our overall plan for Latin America will remain intact as many of our customers in these markets continue to do well. Although business in Asia has not improved, we are on track to meet our fiscal 1999 sales and earnings targets for that region.

"BHA's primary financial goals are to achieve a 15% compounded EPS growth rate and to increase return on equity to 20%. Since going public in 1986, BHA has achieved a 13% compounded growth rate. We believe that our traditional air pollution control businesses have the potential to consistently grow earnings by 10% to 15%. In BHA Technologies, we are establishing a business which we believe in the long-term will provide the opportunity to exceed our goal of consistent 15% EPS growth and to achieve our return on equity target.

"To date, BHA Technologies has fallen short of its financial targets. Although customer interest in our products outside of air pollution control remains high, there has been insufficient revenue to cover manufacturing, product development, and selling overheads. We are actively working with key customers in target markets to commercialize products suitable for sale during 1999.

"During the second quarter of our fiscal year, we expect to receive and execute our first substantial order for a major customer in the apparel industry. BHA Technologies' performance outerwear products, which have recently adopted the brand name eVENT(tm) Performance Fabrics, will be exhibited at a major outdoor retailer show later this month.

"During the first quarter, the net loss per diluted share attributable to BHA Technologies was $.09 per share. For fiscal 1999, we established a net loss per diluted share target for BHA Technologies of $.06, which was consistent with our loss during fiscal 1998. At the present time, we do not believe that our initial EPS target for BHA Technologies is achievable due to product development issues, customer order timelines, and lower profit margins in initial orders during the startup phase of this business.

"Accordingly, we believe the fiscal 1999 net loss for BHA Technologies could be as high as $.30 per diluted share. The strength in our core business will most likely not offset this shortfall. Therefore, we believe that BHA's consolidated fiscal 1999 net earnings per diluted share may be 10% to 15% below the prior year.

"While we are disappointed with these projections for fiscal 1999, we believe that continued development of BHA Technologies' business will provide substantial growth in the future."

In other news, the Company announced that the Board of Directors has declared a cash dividend of $.03 per share payable on Feb. 5, 1999 to shareholders of record at the close of business on Jan. 29, 1999. The Company also reports that it has accumulated 1.3 million shares of BHA common stock under its ongoing stock repurchase program.

BHA Group Holdings, Inc., is a world leader in innovative filtration technology. Through its principal operating subsidiary, BHA Group, Inc., it manufactures and markets industrial air pollution control parts and services worldwide.

This press release contains forward-looking statements that reflect the Company's current views with respect to future events and financial performance. These statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or those anticipated. The words "should," "believe," "anticipate," "expect," and other expressions that indicate future events and trends identify forward-looking statements. Actual future results and trends may differ materially from historical results or those anticipated depending on a variety of factors, including, but not limited to, the performance of newly established domestic and international operations, demand and price for the Company's products and services, and other factors. You should also consult the sections entitled "Factors Affecting Earnings and Stock Price" and "Management's Discussion and Analysis" which are included in the Company's report on Form 10-K. -0-

               BHA GROUP HOLDINGS, INC. AND SUBSIDIARIES
            CONSOLIDATED STATEMENTS OF OPERATIONS-UNAUDITED
                   Three Months Ended Dec. 31, 1998
                  (With Comparative Figures for 1997)

                                             Three Months Ended
                                                 December 31

                                              1998             1997
                                              ----             ----

Net Sales                              $  35,228,000     $  30,022,000
Operating Income                       $   2,409,000     $   2,306,000
Earnings Before Income Taxes           $   1,966,000     $   2,060,000
Net Earnings                           $   1,316,000     $   1,390,000
Earnings Per Share(1)                  $         .18     $         .18
Weighted Average Shares Outstanding(1)     7,364,425         7,679,995

(1)  The weighted average number of shares outstanding for all periods
     presented have been adjusted to reflect the 10% stock dividend
     distributed in June of 1998. The earnings per share figures in
     this press release are computed on a "diluted" basis as defined
     under Statement of Financial Accounting Standards No. 128,
     "Earnings per Share."