PITTSBURGH, July 28 MSA (NYSE: MSA) today announced that net sales for the second quarter of 2009 were $227.2 million compared with $293.2 million for the second quarter of 2008, a decrease of $66.0 million, or 22 percent. Net income for the second quarter of 2009 was $12.5 million, or 35 cents per basic share, a decrease of $7.5 million, or 38 percent, compared with $20.0 million, or 56 cents per basic share, for the same quarter last year.
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"MSA's consolidated sales continue to be clearly impacted by the effects of the ongoing recession," said William M. Lambert, MSA President and CEO. "Since the fourth quarter of 2008 and throughout this year we have been operating with a keen understanding that 2009 would be challenging for each of our three geographic segments. While our top line results have tracked with this expectation, I'm pleased and proud of the efforts our leadership team and our associates have put forth to manage MSA's expenses across the board. In particular, I was encouraged by a 19 percent reduction in selling, general and administrative expenses that we were able to achieve during the current quarter," he said. "Maintaining a high level of cost discipline throughout the balance of this year, while continuing to move forward with key new product development initiatives that restore our longer-term top line results, will continue to be our major focus in the second half of 2009. And, based on the progress we have made year-to-date, I am confident we will be successful on both fronts."
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Sales in the company's North American segment decreased $36.3 million, or 24 percent, in the second quarter of 2009. The decrease reflects the ongoing impact of the recession on end-user demand, especially in construction, oil and gas, and other industrial markets, as well as the completion of certain government contracts. Sales of self-contained breathing apparatus (SCBA) were $12.2 million lower in the current quarter. Second quarter 2008 SCBA sales included $12.6 million in shipments to the U.S. Air Force. Excluding these shipments, SCBA sales were flat quarter-to-quarter. Shipments of Advanced Combat Helmets to the U.S. military were down $8.8 million, reflecting a gap in production due to the transition to a new contract. Sales of CG634 ballistic helmets to the Canadian Forces were down $3.9 million due to completion of the contract. Shipments of head protection and fall protection were down $6.6 million and $2.4 million, respectively, as the effects of the recession reduced demand in construction and industrial markets.
Sales in the company's European segment decreased $21.0 million, or 27 percent, in the current quarter. Local currency sales were down $8.8 million, primarily due to lower shipments of helmets and gas masks to military and first responder markets in France and Germany. Local currency sales in Eastern Europe were flat quarter-to-quarter. Currency translation effects reduced European segment sales, when stated in U.S. dollars, by $12.2 million, reflecting the weaker euro.
Sales in MSA's International segment decreased by $8.6 million, or 13 percent, in the current quarter. Local currency sales were flat. Lower sales in Latin America, Australia and Africa, primarily due to the effects of the recession on the mining industry, were substantially offset by higher sales in China and the Middle East. Currency translation effects reduced International segment sales, when stated in U.S. dollars, by $8.3 million.
On a currency adjusted basis, and in particular on the relative strength of the U.S. dollar compared to the second quarter of last year, MSA's global sales declined 15 percent for the quarter, with a decline of 24 percent in North America, 11 percent in Europe, and no change in International.
Net income in the company's North American segment was down only $0.7 million, or 6 percent, on the 24 percent decrease in sales in the second quarter of 2009. The decrease was primarily related to the previously-discussed decrease in sales, substantially offset by the positive results of ongoing initiatives to reduce operating expenses.
Net income in the European segment was down $4.4 million, or 91 percent, in the second quarter of 2009. Local currency net income was $3.3 million lower due to the previously-discussed decrease in sales. Currency translation effects reduced European segment net income, when stated in U.S. dollars, by approximately $1.1 million.
Net income in MSA's International segment was down $2.1 million, or 59 percent, in the current quarter. Local currency income was $1.2 million lower, primarily due to the previously-discussed decrease in sales. Currency translation reduced International segment net income by approximately $0.9 million.
"In these uncertain economic times, our global teams are closely monitoring the markets we serve and are adjusting our responses to meet market realities. We must continue to be diligent in our efforts to reduce costs and manage our business in ways that allow us to not only weather the current downturn, but to be responsive in seizing opportunities when a recovery occurs," Mr. Lambert concluded.
About MSA:
Established in 1914, MSA is a global leader in the development, manufacture and supply of sophisticated safety products that protect people's health and safety. Sophisticated safety products typically integrate any combination of electronics, mechanical systems and advanced materials to protect users against hazardous or life-threatening situations. The company's comprehensive line of products is used by workers around the world in the fire service, homeland security, construction and other industries, as well as the military. Principal products include self-contained breathing apparatus, gas masks, gas detection instruments, head protection, respirators and thermal imaging cameras. The company also provides a broad range of consumer and contractor safety products through retail channels. These products are marketed and sold under the MSA Safety Works brand. MSA has annual sales of approximately $1 billion, manufacturing operations throughout the United States and Europe, and 42 international locations. Additional information is available on the company's Web site at www.msanet.com.
Cautionary Statement Regarding Forward-Looking Statements:
Except for historical information, certain matters discussed in this press release may be 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 herein. Actual results can be affected by any number of factors, many of which are outside of management's control. Among the factors that could cause such differences are spending patterns of government agencies, competitive pressures, product liability claims and our ability to collect related insurance receivables, the success of new product introductions, currency exchange rate fluctuations, the identification and successful integration of acquisitions and the risks of doing business in foreign countries. These risks, uncertainties and other factors are detailed from time to time in our filings with the United States Securities and Exchange Commission ("SEC"). You are strongly urged to review all such filings for a more detailed discussion of such risks and uncertainties. MSA's SEC filings are readily obtainable at no charge at www.sec.gov, as well as on a number of other commercial web sites.
Mine Safety Appliances Company Consolidated Condensed Statement of Income (Unaudited) (In thousands, except earnings per share) Three Months Ended Six Months Ended June 30 June 30 ------- ------- 2009 2008 2009 2008 ---- ---- ---- ---- Net sales $227,232 $293,162 $445,407 $559,506 Other income 672 1,464 1,531 2,523 --- ----- ----- ----- 227,904 294,626 446,938 562,029 ------- ------- ------- ------- Cost of products sold 141,917 181,573 277,115 341,565 Selling, general and administrative 56,041 68,919 112,861 135,013 Research and development 7,273 9,202 14,286 16,554 Restructuring and other charges 966 1,125 9,061 2,231 Interest 1,914 2,281 3,761 4,775 Currency exchange losses (gains) 579 (76) (347) 4,018 --- --- ---- ----- 208,690 263,024 416,737 504,156 ------- ------- ------- ------- Income before income taxes 19,214 31,602 30,201 57,873 Provision for income taxes 6,986 11,676 10,600 21,777 ----- ------ ------ ------ Net income 12,228 19,926 19,601 36,096 Net loss (income) attributable to the noncontrolling interests 230 28 78 (115) --- -- -- ---- Net income attributable to Mine Safety Appliances Company 12,458 19,954 19,679 35,981 ====== ====== ====== ====== Basic earnings per common share $0.35 $0.56 $0.55 $1.01 ===== ===== ===== ===== Diluted earnings per common share $0.35 $0.55 $0.55 $1.00 ===== ===== ===== ===== Dividends per common share $0.24 $0.24 $0.48 $0.46 ===== ===== ===== ===== Basic shares outstanding 35,672 35,594 35,652 35,567 Diluted shares outstanding 35,818 35,987 35,821 36,004
SOURCE MSA
