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Met-Pro Corp. (MPR)

Q2 2008 Earnings Call Transcript

August 21, 2008 11:00 am ET

Executives

Kevin Bittle - Manager of Creative Services

Ray De Hont - Chairman and CEO

Gary Morgan - SVP of Finance and CFO

Analysts

Michael Gaugler - Brean Murray, Carret

Ryan Connors - Boenning & Scattergood

William Bremer - Maxim Group

Richard Verdi - Sturdivant

Michael Roomberg - Boenning & Scattergood

Presentation

Operator

Good morning. My name is Tabatha and I’ll be your conference operator today. At this time, I’d like to welcome everyone to the Met-Pro Second Quarter Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. (Operator Instructions). Thank you.

I’ll now turn the call over to Mr. Kevin Bittle, Manager of Creative Services. Please go ahead.

Kevin Bittle

Good morning and welcome to Met-Pro Corporation’s earning conference call for the second quarter and six months ended July 31st, 2008. My name is Kevin Bittle and I’m with the company’s Creative Services Department. With me on our call this morning is Ray De Hont, our Chairman and Chief Executive Officer, and Gary Morgan, our Senior Vice President of Finance and Chief Financial Officer.

Shortly, you’ll hear comments from both of these individuals. But before we begin, I’d like to make a few comments. First, during today’s call we will be referring to adjusted net income and earnings. This is considered to be a non-GAAP financial measure since it excludes from our net income and earnings the effects of certain nonrecurring items.

In today’s release, we provided a reconciliation of adjusted net income and earnings to our GAAP based results, together with the discussion of why we use adjusted net income and earnings. The earnings release along with the reconciliation is available on the Investor Relations page of the corporate website, www.met-pro.com.

I’d also like to remind you 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 annual report for the fiscal year ended January 31st, 2008, that was filed with the SEC for important factors, that among others, could cause our actual results to differ from any results which might be projected, forecasted, or estimated in any of our forward-looking statements.

And with that, I’ll now turn the call over to Ray. Ray?

Ray De Hont

Thank you, Kevin. Good morning, everyone. And welcome, again, from Harleysville, Pennsylvania. Earlier this morning, we released our financial results for the second quarter ended July 31st, 2008.

In a moment, Gary Morgan will provide more specific comments on the quarter’s financial results. But prior to that, I’d like to offer these general comments. Your company had another excellent quarter. Second quarter sales, net income and fully diluted earnings per share were the highest for any second quarter in the company’s history. This performance demonstrates the ability of our employees to deliver solid results despite a soft economy in many countries around the world and in a period of rapidly rising commodity prices.

We continue to implement our strategy to leverage our business model through a variety of efficiency initiatives including facility consolidations, global sourcing and more effective logistics. These productivity improvements are enabling us to drive better earnings growth as evidenced by our performance.

Our international business remains vibrant and continues to be a growth driver for Met-Pro as we evolve into a global company. Met-Pro’s largest installed base of original equipment together with new original equipment sales continue to provide a tremendous source of opportunities for aftermarket sales to customers who trust the Met-Pro brand and value the relationship with us.

For the first time in the company’s history we have been added to the broad-market Russell 3000 Index. On June 4th, 2008, the company’s Board of Directors declared a quarterly dividend of $0.055 per share payable on September 10th, 2008 to shareholders of record at the close of business on August 27th, 2008. This dividend represents a 9% increase over the same period last year. This is a 33rd consecutive year that Met-Pro Corporation has paid either a cash or stock dividend.

With inquiry levels and quotation activity remaining strong throughout the company, we are optimistic regarding our prospects for the second half of our fiscal year.

I would now like to ask Gary Morgan to review our second quarter performance after which I will provide some concluding remarks before we take your questions. Gary?

Gary Morgan

Thank you, Ray. Met-Pro reported record second quarter net sales, net income, and earnings per share for the quarter ended July 31st, 2008. Net sales were a second quarter record $28.1 million, up 8% from the same quarter last year. Net sales growth in the quarter was led by our Product Recovery and Pollution Control Technologies reporting segment where sales were up 10% to $14.2 million.

This increase was due primarily to increase demand for our particular collection equipment and laboratory fume hood exhaust systems. Net sales at our Fluid Handling Technologies reporting segment were up 6%, in parts due to continued growth and demand for our pumps worldwide.

Net sales on our Mefiag filtration technologies reporting segment were up 9% due to strong domestic and international demand for our horizontal disc filter equipment. And net sales in our Filtration and Purification Technologies segment were up 3% as a result of continued demand for our Keystone Filter and Pristine Water Solutions products and services.

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