Mine Safety Appliances Company (MSA)
Q4 Earnings Call
February 26, 2009 10:00 am ET
Mark Deasy - Communications Director
Bill Lambert - President and CEO
Dennis Zeitler - SVP and CFO
Joe Bigler - President of MSA North America
Rob Canizares - EVP and President of MSA International
Jack Hain - Barrington Research
Ed Marshall - Sidoti & Company
Brian Ruttenbur - Morgan, Keegan
Jason Rodgers - Great Lakes Review
Richard Eastman - Robert W. Baird & Co., Inc.
John Helmer - Caldwell Securities
Richard Ryan - Dougherty & Company
Previous Statements by MSA
» Mine Safety Appliances Company Q2 2009 Earnings Call Transcript
» Mine Safety Appliances Company Q1 2009 Earnings Call Transcript
» Mine Safety Appliances Co. Q3 2008 Earnings Call Transcript
I will now turn the call over to Mr. Mark Deasy. Mr. Deasy, you may begin.
Thank you, Kim, and good morning, everybody. Welcome to our fourth quarter and year end earnings conference call for 2008. As Kim said, I am Mark Deasy, Communications Director, and with me today are Bill Lambert, President and Chief Executive Officer; Dennis Zeitler, Senior Vice President and Chief Financial Officer; Joe Bigler, President of MSA North America, and Rob Canizares, Executive Vice President and President of MSA International.
Our fourth quarter earnings release was issued this morning at 8:30, and we hope everyone has had an opportunity to review it. The release is posted on the homepage of the MSA website, www.msanet.com.
This morning, Bill Lambert will provide commentary on our fourth quarter and year end results. He will be followed by Dennis, who will review our financials, and after Dennis's comments, we'll open up the call for questions and plan to adjourn by about 10:45.
Before we begin, I need to remind everyone that the matters discussed on this call, with the exception of historical information, are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.
Forward-looking statements, including, without limitation, all projections and anticipated levels of future performance, involve risks, uncertainties and other factors that may cause our actual results to differ materially from those discussed here. These risks, uncertainties and other factors are detailed from time to time in our filings with the Securities and Exchange Commission, including our most recent Form 10-Q, which was filed on October 27, 2008.
We strongly urge you to review all such filings for a more detailed discussion of such risks and uncertainties. Our SEC filings can easily be obtained at no charge at www.sec.gov, MSA’s own website, and at a number of other commercial websites.
That concludes our forward-looking statements. So, at this point, I will turn the call over to Bill Lambert for his comments. Bill?
Thank you, Mark, and good morning, everyone. Let me begin by saying, thank you for joining us today on this conference call and for your continued interest in MSA. Presumably, all of you have seen our fourth quarter and full year earnings release, and have our financial figures, with all comparisons corresponding to the equivalent periods in 2007.
MSA saw 2008 begin with a strong backlog of orders, which became a major contributor for us reporting record results throughout much of the year. As we pushed through the second and third quarters, the strength of our business held up, primarily through large orders and a few significant military contracts.
In our last investors conference call in October, however, it was clear that caution was in the air, because the health of the global economy was changing rapidly around us.
2008 was indeed a record year for MSA. As our press release indicated, 2008 was a breakthrough year for us in terms of sales revenue, exceeding, for the first time ever, the $1 billion threshold and reaching $1.13 billion in net sales. But it was especially gratifying to also recognize it as a record year in terms of pretax profit from operations.
Profit from operations ex-items was $127 million, exceeding our previous high, reached in 2005. The growth in sales and the growth in profit from operations are both testaments to our efforts and product leadership, customer intimacy, emerging market focus and operational excellence.
For the full year, sales increased $144 million or 15%, and our profit from operations ex-items increased 24% over 2007 on that 15% top line growth.
Gross profit margin improved slightly in 2008 and SG&A expenses, while up in absolute dollar terms, actually declined slightly as a percent of sales.
We funded many global and regional R&D projects last year, which resulted in a significantly stronger product portfolio for us, evidenced by the successful launch of innovative products like our new Altair 4 Multigas Detector.
This handheld instrument nicely exceeded our sales expectations for the year and has been broadly accepted by global markets and customers. Combined handheld and permanently installed gas detection instrument sales increased nearly $13 million for us in 2008, as the global oil, gas and petrochemical markets showed strong demand for our products throughout the year.
As a measure of our R&D effectiveness, 33% of our global sales in 2008 were from products introduced over the last three years, and that percentage increases to 42% when we consider only North America.
These are truly excellent results, and I applaud our global R&D and marketing teams for what they are generating in the way of innovative value-based customer desired products.