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

Business Editors

KANSAS CITY, Mo.--(BUSINESS WIRE)--Jan. 20, 2000

BHA Group Holdings, Inc. (Nasdaq:BHAG) today announced operating results for the three months ended December 31, 1999. Net sales for the quarter increased 11% to $39,036,000 from $35,228,000 for the same period in fiscal 1999. Operating income for the three month period in the current year was $2,334,000, down 3% from $2,409,000 last year. Net earnings for the quarter were $1,255,000 ($.18 per share), compared to $1,316,000 ($.18 per share) for the same period in the prior year.

Consolidated net earnings per diluted share were unchanged year over year despite the slight decline in fiscal 2000 net earnings. The number of weighted average shares outstanding decreased due to the repurchase by the Company of over 350,000 of its shares during the quarter. The Company has now accumulated nearly 2 million of the 2.5 million shares authorized by its Board of Directors for repurchase.

The Company's backlog was $52.0 million at December 31, 1999. This compares with order backlogs of $47.2 million at September 30, 1999 and $56.2 million at December 31, 1998.

Commenting on the results, James E. Lund, President and Chief Executive Officer, said: &uot;Within our core business, sales of air pollution control (APC) replacement parts and service to customers in North America remain strong. BHA's fine filtration products continue to be key drivers of sales growth. During the second half of our prior fiscal year, we incurred substantial charges relating to the restructuring of certain international operations and our BHA Technologies subsidiary. The goal of these actions was to immediately return BHA to its historical level of profits. Of equal importance was ensuring that adequate growth opportunities remained in place for BHA to achieve its long-term financial targets. Our first quarter performance provides good indication that the restructuring initiatives undertaken during fiscal 1999 are starting to produce the desired results.

&uot;Although the results of our international operations fell short of plan and were below those generated in the first quarter last year, they are showing improvement as compared to recent quarters. We are beginning to realize the benefits of the new sales and marketing programs that were initiated last year and are also seeing cost savings from the consolidation of our European manufacturing. The profitability of all of our international operations remains a primary area of focus for us.

&uot;The restructuring actions taken during fiscal 1999 at BHA Technologies have reduced current year expenses and have resulted in a decrease in operating losses during the first quarter. We are also encouraged by the level of new orders received during the quarter just completed and by the status of pending orders which are in the advanced stages of negotiation for the sale of expanded PTFE membrane products for use in non-APC applications. The reduction in expenses, combined with the expected increase in new orders are good signs that BHA Technologies will be able to achieve its financial goals for this year and is a business that will ultimately generate positive returns for our shareholders.

&uot;While not completely satisfied with the first quarter results, we are pleased to report that improvement is being made in a number of key areas. We intend to report continued progress in the quarters to come.&uot;

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 &uot;should,&uot; &uot;believe,&uot; &uot;anticipate,&uot; &uot;expect,&uot; 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 &uot;Factors Affecting Earnings and Stock Price&uot; and &uot;Management's Discussion and Analysis,&uot; which are included in the Company's report on Form 10-K. The Company assumes no obligation to update the information contained in this press release.

               BHA GROUP HOLDINGS, INC. AND SUBSIDIARIES
           CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED
                 Three Months Ended December 31, 1999
                  (With Comparative Figures for 1998)

                                               Three Months Ended
                                                   December 31,
                                             1999              1998
                                             ----              ----

Net Sales                               $  39,036,000    $  35,228,000
Operating Income                        $   2,334,000    $   2,409,000
Earnings Before Income Taxes            $   1,875,000    $   1,966,000
Net Earnings                            $   1,255,000    $   1,316,000
Earnings Per Share (a)                           $.18             $.18
Weighted Average Shares Outstanding (a)     6,890,000        7,364,000

(a)  The earnings per share figures in this press release are computed
     on a &uot;diluted&uot; basis as defined under Statement of Financial
     Accounting Standards No. 128, &uot;Earnings per Share.&uot;