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Mine Safety Appliances (MSA)
Q1 2010 Earnings Call
April 29, 2010 10:00 a.m. ET
Mark Deasy - Director, Global Public Relations
Bill Lambert - President & CEO
Dennis Zeitler - SVP & CFO
Joe Bigler - President, MSA North America
Rob Cañizares - EVP & President, MSA International
Edward Marshall - Sidoti & Company
Brian Ruttenbur - Morgan Keegan
Richard Eastman - Robert W. Baird
Dick Ryan - Dougherty
Doug Thomas - JET Investment Research
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 Company Q4 Earnings Call Transcript
I will now turn the call over to Mr. Mark Deasy. Mr. Deasy, you may begin.
Thank you John and Good morning everybody. Welcome to our first quarter earnings conference call for 2010. With us on the call this morning are Bill Lambert, President and Chief Executive Officer; Dennis Zeitler, our Senior Vice President and Chief Financial Officer; Joe Bigler, President of MSA North America; and Rob Cañizares, Executive Vice President and President of MSA International.
Our earnings release was issued this morning at 8:30 and we hope everyone has had an opportunity to review it. If you need a copy it is available on the homepage of our own website, www.msanet.com. This morning Bill will provide commentary on our quarterly results. He will be followed by Dennis, who will review our financials and after Dennis' comments, we'll open up the call for you questions.
As always before we begin, I need to remind everybody 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 SEC, including our most recent Form 10-K, which was filed on February 26, 2010.
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 a number of other commercial sites. That concludes our forward-looking statements. At this point, I will turn the call over to Bill 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 first quarter earnings release and have our financial figures with all comparisons corresponding to the equivalent of first quarter of 2009.
Indicators of global industrial and manufacturing output improved in the quarter, even though global unemployment levels remain high by historical measures. We continue to see signs of economic stabilization and even solid signs of growth in the U.S. economy and in many parts of the world in which we operate.
Our incoming orders book strengthened late in the first quarter and continues to provide us with cautious optimism that the core industrial markets we serve, which makes up two thirds of our sales are now working their way out of this global economic recession. I'm pleased to report we are very clearly seeing a positive trend in our incoming orders, most notably in the industrial portions of our business.
More specifically orders began to show significant strength in March and we're seeing this trend continue in April. The emphasis we're placing on driving core industrial business in North America appears to be paying off as our industrial sales in this segment were up 17%, when compared to the first quarter of 2009.
Much of this improvement in incoming commercial orders came late in the quarter and our ability to get it all out was somewhat time constrained. As you saw in our press release, our consolidated sales in the quarter were $212 million, representing a decrease of $5.8 million or 3% over the same period a year ago. In our North American sales, sales were down 10% from a year ago, while European segment sales declined 6%.
Conversely, sales in our international segment increased almost 20% from a year ago, primarily due to currency translation. Comparing quarters between years, we did see in our most recent quarter a strengthening of major global currencies where MSA conducts business. MSA gross profit as reported $1.5 million on a consolidated sales declined I just noted but reflects an improvement of 80 basis points when expressed as a percent of sales. This improvement reflects both a change in product and the results of our continued efforts to improve operational efficiencies around the globe under project Magellan.
Overall our reported net income decreased $2.3 million or 32% on the previously stated 3% sales decline. During the quarter it's important to note that we recognized a $6.8 million pretax charge for restructuring or roughly $0.13 per basic share after tax. As I noted in our last earnings call back in February, we have moved into a new phase of activity in our efforts to transform MSA Europe.
This multi year project will reduce our operating costs in that segment, improve and streamline decision making and ultimately improve the profitability and effectiveness of our European organization. Of the $6.8 million charge in the current quarter, $5.3 million is associated with our restructuring efforts underway in Germany.
To give you a bit more insight into the results of our three geographic segments I'll start with North America. As I stated earlier, North American sales showed a $12 million or 10% decrease versus the same period last year. Lower invoicing in North America was a result of the following key factors.
First and most significantly, our North American military sales which include the U.S. and Canada were off $60 million or down 75% from the year ago. This was primarily due to lower SCBA sales to the Air Force but also due to our continuing delay in receiving first article approval on the next generation advanced combat helmet or what we more commonly refer to as the ACH-3.