Q4 2013 Earnings Call
March 21, 2013 11:00 am ET
Raymond J. De Hont - Chief Executive Officer, President and Director
Neal E. Murphy - Chief Financial Officer, Vice President of Finance, Treasurer and Secretary
Michael E. Gaugler - Brean Capital LLC, Research Division
Gerard J. Sweeney - Boenning and Scattergood, Inc., Research Division
William D. Bremer - Maxim Group LLC, Research Division
Steve Shaw - Sidoti & Company, LLC
JinMing Liu - Ardour Capital Investments, LLC, Research Division
Previous Statements by MPR
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It is now my pleasure to hand the program over to Mr. Kevin Bittle.
Please go ahead.
Good morning, and welcome to Met-Pro Corporation's earnings conference call for the fourth quarter and fiscal year ended December 31, 2013. My name's Kevin Bittle, and I'm with the company's Creative Services Department. With me on our call this morning are Ray De Hont, our Chief Executive Officer and President; and Neal Murphy, Vice President of Finance and Chief Financial Officer.
Before we begin, I'd like to remind everyone that any statements made today with regard to our future expectations may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Please refer to our year-end report for the fiscal year ended January 31, 2013, that will be filed with the SEC for important factors that, among others, could cause our actual results to differ from any results that might be projected, forecasted or estimated in any of our forward-looking statements.
With that, I will now turn the call over to Ray. Ray?
Raymond J. De Hont
Thank you, Kevin. Good morning, everyone, and welcome again from Harleysville, Pennsylvania. Earlier this morning, we released our fiscal year 2013 financial results for the fourth quarter and full year, which ended on January 31, 2013. I hope all of you have had opportunity to review them. In a moment, Neal Murphy will provide more specific comments on our financial results, but first I would like to offer my perspective on our performance.
Overall, fiscal 2013 was a solid year as we experienced double-digit growth in both earnings and net sales when compared with fiscal 2012. Fiscal 2013 also marked the third consecutive year with both earnings and net sales growth. These results reflect the steady progress being made as our sales and marketing strategy, together with the productivity and efficiency enhancements implemented within our organization, continue to translate into improved financial performance.
In the fourth quarter, compared to the prior year, gross margins were up while total selling, general and administrative expenses as a percentage of sales were down, another indication of the steady progress being made improving operating efficiency. On the strength of our strong second half, we were able to restore fiscal year gross margins back to within their historical range at 34.4% for the year.
As a sign of the growing global strength of the Met-Pro brand and the continued success of our marketing strategy, quotation activity remained strong while our pipeline of potential opportunities continues to grow. Though hesitation in releasing large capital projects kept new orders and backlog in the fourth quarter down from the year ago, new orders for large capital projects booked in January and February exceeded $7.5 million, providing optimism regarding future market demand.
We previously guided that our largest segment, Product Recovery Pollution Control Technologies, would be profitable for the full year and that SG&A would trend in the 22% to 23% of revenue range on an annualized basis by the end of the year. As you can see today, we met both of these commitments.
Before turning the call over to Neal, I am pleased to announce the company's Board of Directors declared a quarterly dividend of $0.0725 per share representing a 2% increase compared to the dividend for the same quarter a year ago. The dividend was paid on March 15, 2013, to shareholders of record at the close of business on March 1, 2013. This is the 22nd consecutive year that Met-Pro Corporation has paid a cash dividend.
Neal E. Murphy
Thank you, Ray. And good morning, everyone. In the course of my remarks, I'm going to switch back and forth between the fourth quarter and the full year as our -- I speak to our operating performance. With that, let's turn to sales.
Our consolidated net sales in the fourth quarter were $27 million, down 5% from the fourth quarter of last year, while for the full year, net sales were up 10% to a record $110 million. And I'll speak to the drivers in more detail as I discuss each segment.
Fourth quarter net sales in our Product Recovery/Pollution Control Technology segment were $11.8 million, down 14% from a year-ago fourth quarter. But despite lower net sales, segment operating profits were up 53% from year-ago fourth quarter to $1 million or an 8.6% operating margin, which reflects improved project margins as well as execution.
For the full year, net sales in this segment were up 12% to $49 million while operating profit was $1 million, down slightly compared to the prior year. And this was primarily due to a weak first half of the year where income from operations in this segment was a loss of $900,000. In the second half of this year, we earned $1.9 million in this segment, so it really speaks to the turnabout.