Denali Reports Significant Increases in Operating Earnings and Sales.

HOUSTON--(BUSINESS WIRE)--Oct. 20, 1998--Denali Incorporated (Nasdaq:DNLI) today announced record net income and revenues for the fiscal first quarter ending September 26, 1998.

The Company reported net income of $1,285,000 or $.27 per diluted share on $35.5 million in revenue. Net income for the first quarter fiscal year 1998 was $347,000, or $.15 per diluted share on $22.0 million in revenue. The fiscal 1998 values exclude the impact of a non-recurring compensation expense of $2.3 million, or ($1.06) per diluted share associated with the exchange of certain employee stock options.

Relative to the same period last year, net income increased 270 percent, earnings per diluted share increased 80 percent, and revenues increased 62 percent.

"Denali's revenues and earnings again showed a tremendous jump from year to year, coming from both internal growth and acquisitions," stated Steve Harcrow, chairman and CEO. "Our backlog continues to be strong, and we believe the opportunities to maintain this growth remain available to us."

Denali has also entered into a letter of intent to purchase the outstanding stock of Plasti-Fab Inc. Located in Tualatin, Ore., Plasti-Fab is a leader in providing fiberglass-reinforced flumes and metering stations to the water and wastewater industries. Trailing 12 months revenue was $4.5 million.

Denali Incorporated is a provider of products and services for handling critical fluids, which are liquids, liquid mixtures, and slurries that are economically valuable or potentially hazardous to the environment. The company is a manufacturer of fiberglass-composite, underground storage tanks; steel, aboveground storage tanks; and engineered, fiberglass-reinforced, plastic-composite products for corrosion-resistant applications. Denali Incorporated is headquartered in Houston, Texas, and markets its products nationally through its subsidiaries Containment Solutions Inc. (Houston), Ershigs Inc. (Bellingham, Wash.), Fibercast (Tulsa, Okla.), and SEFCO Inc. (Tulsa, Okla.).

For more information on Denali Incorporated, please contact Mel Carter (vice president of business development) at 713/627-0933. Or visit the Denali Incorporated Website at www.denaliincorporated.com.

NOTE: This news release contains certain forward-looking statements as such term is defined in the Private Securities Litigation Reform Act of 1995 and information relating to the company and its subsidiaries that are based on the beliefs of the company's management as well as assumptions made by and information currently available to the company management. When used in this report, the words, "anticipate," "believe," "estimate," "expect," and "intend" and words or phrases of similar import, as they relate to the company or its subsidiaries or company management, are intended to identify forward-looking statements. Such statements reflect the current risks, uncertainties and assumptions related to certain factors including, without limitations, competitive factors, general economic conditions, customer relations, relationships with vendors, the interest rate environment, governmental regulation and supervision, seasonality, distribution networks, product introductions and acceptance, technological change, changes in industry practices, onetime events and other factors described herein. Based upon changing conditions, should any one or more of these risks or uncertainties materialize, or should any underlying assumptions prove incorrect, actual results may vary materially from those described herein as anticipated, believed, estimated, expected or intended.

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               Denali Incorporated Financial Highlights
                              (Unaudited)

                                           Three Months Ended
                                    September 26,      September 27,
                                        1998               1997
                                        ----               ----
                            (In Thousands, except for per share amounts)

Revenues                              $35,535            $21,979

Gross Margin                            8,766              4,830
           % of Revenue                  24.7%              22.0%

Operating Income         (A)            2,577              1,005
           % of Revenue                   7.3%               4.6%

Net Income               (A)            1,285                347
           % of Revenue                   3.6%               1.6%

Earnings per Share:      (A)
           Basic                        $0.27              $0.15
           Diluted                      $0.27              $0.15

     (A)Quarter Ended September 27, 1997, operating income, net
income and earnings per share values excludes the impact of a
non-recurring compensation expense of approximately $2.3 million (or
$1.06 per share) associated with the exchange of certain employee
stock options.

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