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Mine Safety Appliances Company (MSA)
Q2 2010 Earnings Conference Call
July 28, 2010 10:00 AM ET
Mark Deasy – Director, Global Public Relations
Bill Lambert – President & CEO
Dennis Zeitler – SVP & CFO
Joe Bigler – President, MSA North America
Brian Ruttenbur – Morgan Keegan
Edward Marshall – Sidoti & Company
Walter Liptak – Barrington Research Associates, Inc.
Dick Ryan – Dougherty
Previous Statements by MSA
» Mine Safety Appliances Q1 2010 Earnings Call Transcript
» Mine Safety Appliances Company Q2 2009 Earnings Call Transcript
» Mine Safety Appliances Company Q1 2009 Earnings Call Transcript
Okay. Thanks, Sandra, and good morning everybody. And welcome to our second quarter call for 2010, as Sandra said. Joining me on the call this morning are Bill Lambert, our President and Chief Executive Officer; Dennis Zeitler, Senior Vice President and Chief Financial Officer; Rob Cañizares, Executive Vice President and President of MSA International; and Joe Bigler, President of MSA North America.
Our earnings release was issued this morning at 8:30, and we hope everyone had an opportunity to review it. If you need to secure a copy, it can be found on the homepage of our own website at www.msanet.com.
This morning, Bill will provide commentary on our second quarter. He’ll then be followed by Dennis who will review our financials, and after Dennis’ comments we will open up the call for your questions.
As always before we begin, I want 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-Q, which was filed on April 29, 2010.
You’re strongly urged you to review all such filings for a more detailed discussion of such risks and uncertainties. Our SEC filings can be easily 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 Lambert for his comments on our second quarter. Bill?
Okay. Thank you, Mark, and good morning, everyone. Let me begin by saying thank you to all of you for joining us here today on this conference call and for continued interest in MSA. Presumably, all of you have seen our second quarter earnings release and have our financial figures with all comparisons corresponding to the equivalent second quarter of 2009.
I’ll start my comments by saying that at a very high level, during the quarter we saw signs of economic stabilization in many parts of the world in which we operate. And we saw growth in our Africa and Latin American markets and in portions of the North American economy as well. Certain indicators of global industrial and manufacturing output continue to improve in the quarter, even though global unemployment levels remain high by historical measures and are forecasted to remain high over the rest of 2010 and into 2011.
As we had discussed on first quarter call, our incoming order books strengthened the late in the first quarter of 2010, and has clearly helped us weather a decline in Military and Fire service business during the second quarter. I’m pleased to report that our order book remains relatively strong and continues to provide us with a certain amount of cautious optimism that the core industrial markets we serve, which makes up nearly two thirds of our consolidated sales, are slowly and steadily working their way out of this global economic recession.
The emphasis we are placing on driving core industrial business, that is the business outside of the Fire service and the Military, is without question generating results as on a year-over-year comparison. North American industrial sales increased 14% and our International segment, our local currency industrial sales were up 21% when compared to the second quarter of 2009. A large portion of this was in our Africa and Latin America zone, serving the mining and broad manufacturing markets in those regions. And even in Europe, our local core industrial sales were up slightly.
As you saw in our press release, our consolidated sales in the quarter were 237.2 million, representing an increase of $10 million or 4% over the same period a year ago. In our North American segment, sales were up 4% from a year ago while the International segment sales increased 19%. Conversely, sales in our European segment, as reported, declined 8% from a year ago, of more than half of this decline was due to a weakened Euro and the other half due to lower Fire service sales.
MSA consolidated gross profit, as reported, increased $4.9 million on a consolidated sales increase I just noted, an improvement of 50 basis points when expressed as a percent of sales. This improvement reflects both the change in product mix, with an increase waiting towards industrial markets, and the results of our continued efforts to improve those margins and operational efficiencies around the globe under project Magellan.