MSA - Earnings call transcript Q1 2018 | MSA Safety Incorporated

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Operator

Good day, ladies and gentlemen, and welcome to the MSA First Quarter's Earnings Call. At this time all lines are in a listen-only mode and the floor will be open for questions following the presentation. [Operator Instructions] It is now my pleasure to introduce your host, Elyse Lorenzato, Director of Investor Relations. Please begin Elyse.

Elyse Lorenzato

Thank you, Kelly. welcome first and for earnings everyone XXXX. morning, to quarter MSA's call Good today Chairman Officer Bill Officer; me Chief are With here Lambert, Nish President Senior President, Operating Officer. and Ken Vice and Chief Treasurer; Financial and Vartanian, and Krause, Executive Chief

MSA press the at first available quarter night is was release Our www.msasafety.com. last issued and on website

Securities are Before Litigation of this call, on we matters the discussed meaning XXXX. of I'd begin, Act the historical Reform like forward-looking information, that the within to Private remind everyone statements excluding

Forward-looking and statements performance. but all include, are not anticipated to, limited projections future levels of

law. Forward-looking filings and materially XXXX. any cause call, CEO, from morning. forward-looking certain involve to Lambert. the Commission, turn Exchange Reconciliations with are this this Investor uncertainties will most GAAP statements factors most differ our here. duty publicly discussed update that factors These risks, Securities Form February measures made and to discussion statements may in over risks, investors.msasafety.com. our XX-K, non-GAAP uncertainties call measures our on filed required to the except at on that, those directly With We've and part our Relations MSA our and including available financial to the our actual recent no in results I undertakes comparable included other other as of are Chairman by website as Bill detailed

Bill Lambert

morning, good Thank and everyone. you much very Elyse

begin by for to thank want and MSA. your us I always, in morning for interest As saying you joining continued this

an $X.XX per than of by basis XX% into more issued year revenue press that basis. in night, saw was of an XX% or organic share first increase a a We currency increased our increase growth leverage you on a earnings As constant from revenue reported adjusted ago. reflecting last X% on that quarter release

we're strong our executing is markets. about in you in From around we and throughout performance open support regions in naturally across will review performance Nish start Then to questions. functions, various trends key the very and XXXX. embraced in pleased adjusted the In last high to growth, our Today quarter. investing Growth month, our that discuss after first initiative lead both the through EPS in driving revolves your that a pillars; Focus key and achieving New us our has with I'm our Day York positions, growth what At quarterly team basis fact, our talent deploying hit Ken Investor a and capital call culture. high In end Vartanian so our four vision quarter, strategically length on in record for to the GAAP ground with talked we XXXX. top running first for initiative us call the market leadership Krause profitable the at This seeing review, up will we'll and he'll financial bottom City

about transition. Nish, I the upcoming to Before call I our say over to a words few management want hand

at investor step full-time day of MSA back on last the associate My announced and earnings to presentation discussed is I December and our a company. As February as CEO in May month. our retire down and intention call in of

business continue the MSA our to associates and his MSA forward. within confidence throughout I a to elect board occasions motivate smooth to the safety our XX-year mindset Executive have that mentioned this well-honed and I his and and we've into As inspire skills process board Nish's on complete the he's transition and our Officer. working ensure history Chief succession been driving several have well expect Nish will prepared and growth with next I focused to Nish lead together Vartanian closely industry, leadership future. and

I've of XX shareholder my for health been lead CEO, I nearly less of be than years been organization As own to our a safety mission proud workers and this for beginning with plans, of tenure have one remain honored revenue and associated very is protecting the I MSA. $XXX Director decade. for of MSA's to was my million. as and At the the past will

billion Our the is was nine operating XX%. revenue trough about operating XXXX ahead was months of recession was margin X% of XX% the margin and between trending now and great just our In us. our $X.X and

protection, that developed fall guidance right XXX% on feel and forward the of had as under I seeing shareholder the XX introduced to Board I product say, lead that more us Like market and customer me continue years. a that have geographies. also total his safety world fortunate to for impact. the we markets oil time our customers a and and and this past with our his than strategy just The and great efficiently feel positions enables core leadership the includes leading systems name in service, protecting and establish our few. to have while before, we've helped team We develop allow to in privileged past have to Needless that have technologies, products as groundbreaking far focus look the of had be this having CEO the on gathering will core opportunity upstream gas on confidence great Directors three as run median. solutions a successful Chairman to since decade us to years. and the assets extremely innovative XXXX organization But peer Vartanian working We closely began proxy return their and that class market customers the engineered Nish's I Nish deliver and acquired key and executing fire and great benchmarks well workers. ever for to US great past feedback in have provided better MSA voice their more operations businesses alongside to their team turn as We're of outpacing major group more than to

call turn that Vartanian Nish fine the Nish? quarter discuss I'll over in to performance first our the to with of XXXX. So

Nish Vartanian

that the we and your have also again and confidence Thanks in management thank through only guidance counsel input, not board continue but as you Bill. this And your for me, you the for transition. once placed

Bill As to and I is look start up on quarter. strong a to noted MSA momentum created is forward to entire team build continuing the XXXX our first a that through

and portfolio. focus and the excellent profile. are growth our our job bill team seeing products those in yielding is like the in of of Overall, and some we're our areas results is in corporate strong On through doing across walk I'd few Our profitability performance executing trends platform mentioned earlier markets. a to key you our that strategy. that the results evident note, And quarter for highlight an

and Globe first the for excluding total constant QX increased an Our in from reflect MSA a the FX tailwind currency, of acquisition sales contribution result revenue XX% record a of X% quarter and in about finished X% in end did with revenue we trending from XX% of Not the strong a backlog increased organic XXXX. quarter. uptick quarter, we up see the only the also revenue this

fluctuate broad products. to traction and where the detection can gas due quarter seasonality, during of Similar significant [ph] the based QX, trending growth. core achieved industrial balance to momentum higher this see backlog While be we've continues PPE it's fire to revenue among encouraging service, to

quarter. growth when Looking safety fighter Revenue results, X% in in the more acquisition revenue with increased markets Globe. and our up of continue strength in our exclude in closely fire notably was XX% first the order of SCBA see the the and XX% digits mid-single the quarter. US international to we in revenue core or in book you the at by products lead way also

GX fire Not only press in Authority order largest $XX reflects in competitive by of Country team. countries' is our earlier month, SCBA Fire to-date order Asia our the Victoria, seen work million service largest great to single have does secured we As Bob this Brigade you accessories this Pacific release to-date. Leenen, Australia; reflect provide two and Fire may our This conversion Metropolitan it issued the contract GX sales and departments. for of [indiscernible] our fire a GX largest

of to order press the majority in ship we of second that we in this the As a noted half year. related expect release,

at detection XX% now both In in or revenue saw and growth detection detection flame Looking our gas the first the base business the gas gas on gas products. of strong increased by area fixed core Portable double-digit detection and globe. FGFD. portable we quarter across

three gas next our US monitors investments FGFD in we our years. approximated our transmitters. count increase sales to time the levels performance positive for X,XXX detection evenly relatively, saw XXXX; meaningfully quarter portable throughout strong incoming first highlights of with and the SXXXX oil oil detection returns business. specifically in of and orders part more gas see fact, the the an momentum quarter. of FGFD, gas spread We the In and XX% between rig ultimate barrel In This the we segments. our in $XX a R&D surpassing gas in for also growth yielding are our saw XXXXX this contributed revenue generation above

at growth sector in indicative As in our the of and the quarter. continue XXXX is customers last trends detection, in before overall clearly order A industrial we in we're of customers market. quarter, manufacturing provide fall indicates we With of the manufacturing of with we index oil to cycle. protection protection mark revenue protection head orders increased levels in reducing product gas safety growth industrial platform And and head XX industrial TruCal while to every seeing underway exceeded in technology discussed business day, cost refinery healthy economic head and most investors hitting to our growth these saw revolutionary in the saw reflected Similar and certainly realized the turnaround to our at sensor the for the first good protection strength the the our new double-digit see the business, we cycle commodity just in about both utilizes this portable applications. being gas in growth sector. regard the core durability, head of recent talked ISM one book. in demand and ownership XX% in And about protection our regions. We our across industrial it's height

utilities Australia. transmission, dynamics fall more protection this the opportunities fall at our with and power Americas X% quarter on closely construction, the mentioned driven protection by market a order XX% quarter comp favorable just good International the Looking the difficult with in large increase in the posted along Sales in markets. increased decline a aviation area in business. largely in I segment XX% in

However, digging a fall our region revenue. bit deeper into in realized increase protection European and XX% this story

orders we drove As of at conversion engineered Latchways. systems

backlog much very basis growth our X% seeing revenue of favorable the this as for turn ago, year backlog in view we're as outside markets. higher also is we US. on in year in we fire In plan is up the level operating across that segment improvement of reflects improved largely review. many XX% markets end this the well a note, industrial and of should call the end of to point this performance his in running emerging time industrial sales fact, to strong about region, but Certainly strong we conditions than increases XXX for in revenue continue pace region with and and we're to financial that for all service improved and our significantly significant of in and good performance as I'll the of the year overall over margin and nice focused inside end nice wins our year quarter realized had Europe Ken healthy realizing the this European With our growth single-digit in regions. mid order Ken? the XXXX. market our full macro some organic start healthy conditions QX driving our In I markets performance. summary, very With profitability international from service a fire

Ken Krause

you Nish Thank good and everyone. morning,

with Let's financial few highlights. start a

earnings margin is XXX on point measures share. operating of X% operating the we $XX earlier times The quarterly margin at GAAP GAAP and were driven improvements. $X XX% margin basis organic for mid earnings supporting Incremental adjusted communicated Both structure on three in increase was were track expectations growth in XX.X%, Our the cost per exceeded first gross our or in quarter. largely adjusted a million revenue is by the year. a $XX record single-digit quarter revenue. that this increase as million adjusted operating with streamlined more increasing increase well leverage diluted than XX% as profit the

an on quarter impact some or in Now the of you like to through in I'd basis, Total X% increased XX% financial revenue take to exclude our time the organic walk currency constant Globe. we quarterly results. when

basis drove profit of to growth. Globe core by the of quarter in on terms, sales every dilutive sales up points. organic line expanding three while In cost margin Gross indirect quarter Globe despite the organic sales mix, basis in or in flat SG&A product past XX.X% expense XX.X% was lower XX% was SG&A was quarter years. an points dilution was it operating constant manufacturing constant $XX was on average XX XX XXX from currency points performance revenue year gross accretive Solid growth. margin product compared the compared quarter million to basis of run core to a X the currency rate first organic over for ago X% to a of

GAAP drive deploying controlling strategic the will and while capital discretionary I nearly operating of growth past at months. such day, the operating which productivity XX.X% contributed mentioned efficiency earnings $XX up we were As GAAP for on acquisition to was focus quarter basis that and eight driving profitable as income over investments points. million Globe the costs and in has investor margins continue $X.XX GAAP XXX

XX.X% costs transaction margin strategic product expense, operating year a ago. basis was points restructuring, from liability XXX and improving exchange, foreign Excluding adjusted

a adopted or As periodic all cost that for accounting standard operating of point on classification of income pension is a in over call, XX of XX.X% has quarters XX% versus this highlighted indicates EBITDA EBITDA components the on sales recorded cost on net ago. XX% million trailing we of we The to first up I Quarterly this change driving February income. sales the year have Again income EBIT. the $XXX basis, a XX% million a earnings On outside benefit new only or increased impact basis change should income the negative of of accounting which result year operating recorded to over earnings change adjusted compared adjusted XX% margin. to be $X line sales below operating service just no of for XX.X% million impact of XX-month except $XX a out operating or pension that ago.

effective tax $X compared XX.X% US which an the reflecting stock year the reform. includes On benefits million quarter under from just of ago, our was was Our to XX.X% compensation. rate of adjusted tax for GAAP a ETR benefit basis, windfall XX.X%

acquisitions, XX% first growth If our year earnings past The growth year us the was activities. funding ago. reform earnings $XX been a back three compared strategic flow million net $X.XX the between related to revenue we've in the flexibility our from GAAP share $XX strategy quarter and in tax In more average foreign cash million was obligations. net support balanced core investments cash. per lower we profitability add our from has a as quarter $XX planning income we addition to repatriate the for million accretive in that rate, step million note per $XX will execute receivables to by was clear insurance the servicing effective ago. and and million streamline about a quarterly of may to I've adjusted year. first past. of the will this first with year and used allocation structure inflows to the quarter $XX you and growth, We tax to $X.XX the first we're million to flexibility to performance. repatriate quarter employ has a in or have the inflows coming repatriation years, increased also change seen Free continue to $XX quarter and provided tax share than earnings product about over more $X.XX million, prioritizes in reform the In driven We $XX MSA quarter years. of capital provides to of the mentioned year value in full debt $XXX capital order with dividend a in we XXXX as ago compare that working the planning remember cash plan cost stronger repatriate investments compared $XX million Adjusted in doubling to us in net million for

to even over results year end. times I'm at debt and the in pleased both was of first strength encouraging. more times EBITDA the markets importantly Our two X.X with book fire certainly in to quarter compared and industrial just the the is service order

quarter seasonality, the due pace. improved to While start backlog order second up the to fluctuate can is on it

We continue you With turn to we commentary. revenue the back as February. for call some over our that, year concluding XXXX growth Bill? full with Bill to for single-digit for call in the discussed of plan on mid I'll organic

Bill Lambert

very Ken. much Thanks

As the our end XXXX markets. start strong I mentioned we're many and earlier I'm in the pleased positive to seeing of with trends

this in attention this strategy focused XXXX executing growth our team are of higher on corporate beyond. and levels for you and morning. again have. we'll to focused happy future shareholder stand focus keep managing we'll this traction seeing As precludes to that leadership the we're earnings. the executive up tax momentum MSA in the us and remember control most now call your to solid on business areas and reform. detailed said, levels on cost Ken Please for and does for our that help any the our profitability XXXX for Having will questions. US our remained that future growth discussions end record realizing open going good capitalize this of guidance growth be you the sales very now revenue current driving With that investing in Thank market time is gaining focused value At company; cycle. we related benefit your and take may Nish, with while cost from not questions earnings expectations discretionary

Operator

And our from [Operator go have Gall question first Barrington Research. from Matthew, please Instructions] is Matthew ahead. we

Matthew Gall

positive but Couple protection pretty continue facing [indiscernible] you Nish, we're up in least QX. a parts on fall regions much I that term double-digit. you're business that growth With pointed there some that nearly longer of I is currency had things every fall Europe noted challenges trends reported for in experiencing the and on which terms were specifically even can in know category by constant at basis were especially protection in was anything in that its seeing product

Nish Vartanian

in were our growth segment. in in in year just Europe real we really I quarter large overcome It's around had was overall to think had region, order we to the mentioned European intact in we see revenue good the so nice and pleased growth a first last XX% going where the that's I forward. Yes, Australia We expect for quite that good performance some shape. difficult business international very is

Matthew Gall

size Good is you any something that is have it different international it SCBA longer the safety a Australia is and you Is general in as and the announcement if then or than consistent, general sale a in in Americas order the order larger is recent mentioned the cycle? largest order. fire it

Nish Vartanian

I $XX order. the of a obviously sure million, the it's nature Australia. It's for we've very not large I'm received single Yes, fully question. order that's understand the if the GX and business largest

of purchases. in departments very and US very large fewer is departments tends Australian You very large up of orders, the where are here there there few are market thousands to tend fire The to get market. fire made be departments there

get not and big it's the to order unusual in of significant the Australia Australia, in those while those orders very So because department obviously of it's it's size departments. a largest

Matthew Gall

detection, some is it Ultima out lot I Got within the gas transmitter Ultima it the Thanks meaningfully technology the the then ahead expectations that that fixed and contributed more product pointed that quarter, with of and you for new a demand new that. and there. of the just And in was XXXX believe flame you it. have

Nish Vartanian

we've sales so conversion of in our of seeing back customers into anticipated combination shape things. a having are doing is we of features well value to lower really the The some discussed, What spend well little attractive a and than really product in were is is the frankly. the in product and levels SXXXX good level in it's like the them. to ownership legacy incremental good the product the and better the and a lower customers we quite the ago, we've They that's and their cost Those built pretty of really market really encouraging it's budget is the product, some So hit what good place. The some economy and so we that saw higher maintenance that. features a with with really our a year what We're as win which with us. quite place. with shape the seeing the and market our performance and of little pretty better remain have of for on they combination Ultima, in of showing market the in we're of the shape done with was some X of product was pretty the I

Matthew Gall

to side. latter wanted by Ken, SG&A up Thanks a dollar in just be the been the part improvement indicative maybe that. sequentially did was anything tracking congratulations as than the out percentage notice if range more perspective, of expense for quarter to higher that's for see at drastic reported QX I to to $X.X in and switching just And of SG&A range the or point pretty sales the to is that million might so there, year-over-year it then is at being and cause something last on that that year but looking million had year. that from a there over the color $X the where

Ken Krause

like notably of compensation we the heaviest SG&A investing so grants we've grants of several each around over occur the But related year. last compensation step terms relates just February Matt to is in in stock and thanks of provisions the and the have the years. that compensation impact quarter a stock stock of and seen grant first expense bit quarter The the quarter Yes, for historically question. biggest in to first the our

same cost we're our we're to continue continue that manage more at seeing look time of market some realize market. growth structure, in the the at but where in to growth to end it this investing we We stronger

starting to some selling investments come we're So investments. see in,

when SG&A but the the specifically look at you of was selling some if the commissions on and look exclude the at higher quarter saw we performance an the so of years. you about some So year-over-year basis, FGFD investments and of we've the flat it the million cost made on $X manage like several in quarter organic quarter in sales, expenses office the we're the to structure just reduction back continuing administrative actually and over last we have some

Matthew Gall

Well much very best great. congrats quarter. endeavors. right, and All the you future thank in luck your on of Bill,

Bill Lambert

Matt. Thanks very much

Operator

from you. question is And Please Nicolaus. with go Stanley from have your our Mr. Thank Stifel Elliott ahead next we Elliott.

Stanley Elliott

all you tad apologize I talked of the late. function talk that function up profitability Or it mix? of at a question is But improve have the day trying I little got touched the had that really quick and a you the and on XXX in to on profitability there? business Is A can some more a points. about you international about that things a earlier; if bit the basis analyst

Bill Lambert

well and the focus Bob, laid optimization Day also X% within color that And we about had being in talked At going organization, talked reduction Nish but Bob we MSA international, revenue I'm feel European We chime more were made, and you if also as currency we we made to European international to constant in effort on reduction the cost four commercial do lot out the is organization channels to programs. add like improve was sales market our organization. about across Investor about realigning growth call performance as a mentioned as broadly cost programs leadership changes about terms. would Well the on and any the areas that talking and free. talked had as

out see region. key the segment of across the European had So completed and made really we're leadership and happy to have we growth changes the

Europe based and you and are we've as with in to markets time in with taking of here and strategy realignment the Europe we in our marketing we working that considerable through And leverage, know optimization organizations and further end reduce optimization of a some amounts many cost that have ago to spending years made that sales success to better We completed channels Europe. the the few the to we're leaders X.X improve best them Europe of Americas type to applying US which we have have, class also align and our structure our of efficiencies. our of strategy great programs had channels performance our within the foundation sales and

on so that quite all a that So now place day, we're cylinders for talked investor hitting all past the and in nine about had frankly Bob month the or points the at had we the ago has and roughly months.

each mentioned of in ago. that good seeing in that you So a those solid Bob, if to areas regard? there's anything like performance add We're else you'd month

Bob Leenen

quarter as the I the leadership largely executed. encouraging realigning Yes, of [indiscernible] customer results the is Bill organization one are and mentioned, the think changes

first capturing term optimization lot growth our our channels Europe quarters on we it. during track three investor from can profitability speaking the priority was expand that in that seeing and is both piece mix of the play benefits the of also a our the the years in came a as was bit for We're getting that with do of traction to with back was channels' But partners. to priority in think growth getting I users in revenue small said mindfully reducing that We revenue very conference frankly first reduction after slightly the longer the channel end five we're revenue because distributors, want and of QX decline, complexity expanding Europe customer we us, part revenue Europe. of working. see new relationships two,

you'll is, going in QX bit little towards what I respect results Europe optimizing how we're see management the specifically. that then encouraging think an cost [indiscernible] mapping out, a path structure focus more and our in have are to ongoing

full and the bit revenue sure significantly international the in we we to from executed aside that make area. benefited year the have from pipeline last for think QX be forward ongoing year an benefited performance why going effect more I growth, improvement will of bringing of that's savings have also significantly we

Bill Lambert

I'm gave guidance of indicated, and at When differences here you at for look just walked in whole numbers through and consolidated, around and the our quarter the margin of a our first great Ken XX% programs day are. kind strategies, roughly between XX%. margins success we've for we efficiency operating they XX% Stanley, Americas, Bob such channel lot that operating indirect meeting. where as the the XX.X% with and the where investor reduction under we're some is had through cost talking roughly walked programs. running and of had Ken, Americas roughly international our Bob We're

we're finally into Americas operating is and the effort close gap and international improve now to margins. but that to digits, So our between now double the further consolidated

Stanley Elliott

quite was certainly impressive. It

inflationary input deal quarter the that anything? side, things had with kind seeing about higher on you? all the an you there either horizon are you that of in to see, for out you about environment [Indiscernible] charges, On or that discussion the shipping like

Nish Vartanian

standpoint But very material up bit some is We're cost, from There's slightly. that. expense managing that. Nish. job doing of some little a there. this we're pricing on Stanley, a of we're that We're seeing increases nice the a going our of seeing some shipping and mindful and

we're as closely evident doing around there watching job going it way we're job nice to nice we doing our in through needed so managing continue and a our very through forward. and it We're really and if margins. we'll make adjustments, got good closely, it a So watch metrics

Stanley Elliott

Guys, the of to for and Well it. you. you best Perfect. thank time. much Bill, appreciate very congratulations luck I

Operator

from from Baird. is And go question Mr. our Eastman, ahead. Eastman you. next Richard please Thank

Richard Eastman

maybe kind is of business? And picture rate is timing your around looks backlog and Americas forward? in looking maybe Nish, double would. maybe growth comments SCBA to that there could backlog little I'm and of I'm going the back what the SCBA the little at give you thinking, to a Americas just the just if and better that a kind speak bit, like seasonality, just you

Nish Vartanian

it's Yes so and strong Rick. good

quarter fourth in booking supply had We which some strong a to contributed talked significantly chain, a we supply quarter we that American the As market. the issues. talked real backlog in we North about, chain about have

off in with for to ramp those cycle quarter. came a being not quarter. first quickly suppliers out that door and did in quite bit get headway late us of honestly, We in were with one caught those to up of not lot a So orders little the enough fourth the make guard able the we our

work Australian, first quarter in ship sub-assemblies is gains by early we worked you encouraged making our quarter, have and done we first to issues. didn't the was up prepare the in bit, were in backlog, in to SCBA backlog a some full build what there we we've but things backlog in the for here needle well. supply that about nice our in make start As put then and move really much book and coming. the out two, chain the part the still there again quarter in perspective bookings in ramped But backlog had the have that to so got the got with could sure XXX% in the good quite supply know, We the manage we chain next that through size And quarter. to supply any bill three that quarters. They've seeing over second to expect maybe we're got ratio to we'll quarter second a we better that chain we're for

but quarter okay first bookings an out have good are had chain. been the could still supply worked we So better we it had the much and shipping,

Richard Eastman

book including international the bill and that's you total Americas? referenced Okay and there, to

Nish Vartanian

right. Correct,

Richard Eastman

currency much then And not I'm bigger In for is you curious sell headway Europe sure in you I'm number. wasn't on distribution words X% it the in quickly to maybe X%. growth okay. constant side. how Yes, sellout made this your and Bob, the sense the spoke that equaled just a other But

Nish Vartanian

through jump for Rick, Nish user, end orders from yes understand in that. the so that. so Yes, this we're distribution with the I sell is you're saying, I'll balanced on and what

encouraged typically about the - you piece, of what to work see that's still pretty lot see balanced. you We're talk do. industrial with with So the distributors with but what European

Richard Eastman

then. and enough fair Okay,

curious first in again to me at feels is suspect growth $XX the maybe I number strong I'm that question math was me, if any that a seasonality it is is Globe? or about that. currency Just Globe's contribution year-over-year, well, quarter quick the in no the million. to on there's double-digit revenue again serves growth there Globe

Nish Vartanian

is fairly Yes, the business consistent at quarter-to-quarter. Globe

So that's If double-digit days the a other believe work Globe relatively It some don't and math go issues, your it's the number the pretty and $XX is - good single-digit. number bit, I back million and good. that's consistent. a we $XX to but good fairly That it's fluctuates is million growth. a and

Richard Eastman

And whether are fair away to enough. the any or move said to business early any that or really feature it's growth Okay, steps for product a positioning from set two either just year Globe? any product there that we flag maybe offshore? distribution I seeing or could you international like there the steps suggest Any adjustments still line,

Nish Vartanian

we're move our is Yes, US we any America. international with here fire and efficient. to very in look continue spending we it's in we're very not market opportunities departments But to it's [indiscernible] important, Latin the continue fire to at look having Certainly at domestic for that. productive, going and operations fighters that those offshore and

FDIC fire a we week In of in have look American coming some fact, the fighters some this products. taking Globe close at and at the Latin

those opportunities We some continue world. to around [indiscernible] opportunities the look and other at

Richard Eastman

Ken. for just then and Okay question last

revenue to to flow insurance of operations matched good In in the terms the trying some business, inventory absorb structure it shipments adjust in the was from sounds cash the there's is - and was the the the again of and some in the there's the timing here, kind which cash in payment flow see, like But the quarter, settlement of the and out, some insurance did cash receivables. of maybe any that timing of quarter.

a Just issue is or? timing curious that

Ken Krause

is Nish much in. it is the just to flow number and will a is free the just March also that but go target had we're for growth the start so as general, conversion I've management Yes, number. the of generally of very it XXX% we are - said have focused the inventory we dependent feel It's saw our cash in backlog business upon and is income, We're and times, build still like working still good like we're still talked receivable forward, here of track. did some about, it closely we capital just so for of heavy March upon cycle so on feel then in on we this we improve dependent net we flow which And planning curve. hit out and year business a for that, kind Rick.

Richard Eastman

enough all fair Nish. nice Okay, right. really work quarter, and Very good nice

Operator

question. question ahead you. we Mr. your And Company. Marshall Edward from our next Sidoti is go Marshall, Thank from with & please have

Edward Marshall

I wanted noticed far. to on if earnings see thus potentially - I to to like want you an that of I update if GAAP you're said know, Globe. there's revise. $X.XX would

XX% you're but the already business. that think of hit I high through, you've end

Ken Krause

mean It's well. business. margins Ken. come that synergies the the We're It's performing well. I performing through seeing are

year reason that most don't mean why to I XX. business. likely think our XX target of any I I for we get see full on a basis was to won't $X.XX GAAP

bit ahead range. And little the tracking we certainly end the a high of so of think that's

Edward Marshall

as will to Do you the range adjusted that think carry over nickel well?

Ken Krause

carry certainly will through certainly will, the it on Yes it adjusted range.

Edward Marshall

margin given as talked you wanted international the view, kind once reach Americas, more it perspective? the Americas. for had targeting of international through the this. just about of regional but mix as of has Americas Probably there. the I on kind mix Obviously the you're I think I of what earlier the mean is geographic If can't maybe margins the the it we the as and far and XX% guys structure are from don't relates ask a international business the Stanley one maybe structure question talk it to to that. about could businesses

Nish Vartanian

Ed, investor the initiatives. is in executed margin, gross opportunities we there the the on both opportunities is day but at also on and had essentially there side on the talked that quarter, SG&A we

You a two-thirds so know that points, is profit. SG&A or and basis of third that gross XXX that's of

but we're mean it don't we the last months. right early years. it's on, but in low foreseeable to the we continue to - certainly or very get significant double-digit range We're opportunities So think several and the nine we've tracking a point get now see will over changes to made over next I ever the future we're nicely. Americas very that very higher this early from go is,

Edward Marshall

double-digit or rather mid More mid-teens [indiscernible]? or like

Nish Vartanian

mean end. of number the come where Bob A in on, in a first business. I and said the through we're growth good try. quarter one mean quarter it's I early very Ed. It's European seen we've as had quarters

making, under progress another But some of business seeing that get side our now tracking kind of us think more versus the let that and initial and the relationships to expectations. we're continue reassess So and to on right in we're some expanded good quarter - industrial belt would forthcoming. I our the just of making we're execution be well

Edward Marshall

Great.

comparisons still know the the the But I the in you order, are So Australian competitive in still seeing mentioned conversions you international competitive seeing? you are US, the order. US?

Nish Vartanian

Steve?

Steve Blanco

quarter ship, the that nice continue This to incoming We still just and continue had Nish in we reinforce is quarter Steve that. share work SCBA, be and yes I to market Blanco, convert the first Ed. to would to say, as we And a leader backlog. mentioned need on

haven't any been So and in we yes change it's that. seen solid

Edward Marshall

go Are you it you're product you of the Globe seeing on than kind or with along on with that the to still shift orders SCBA more add product are seeing that devices line? on now the line

Steve Blanco

has Well accessories the go, with we we at talked the success the certainly continue successful. which I they about separate integrated a very and thermal mean camera, product they're its But see product to strong of it's very, what Investor if Globe been does, Day, Globe imaging different. the SCBA.

to yes that's expect going we continue the throughout position So year. to us be that's for gain traction, leading market

been it's good. really So

Bill Lambert

was the one the with synergy of and that. of some us beginning to into for and much Globe acquisition encouraging see What's we didn't revenue, things Globe built we're

pretty really So wasn't side model we're that us not speak in Ken in wins, keeps part Globe and business so that's wins additional in we're on the see for we that our you the don't of helmet there. few that so that a of fire encouraging as MSA that's seeing that built that, the those acquisition. made of disciplined accounted so some to us so some SCBA and when Globe speak, P&L, seeing with comes to in

Edward Marshall

wanted best peers. to wishes stated by echo the my Bill, I

I think company it's know hands. you built team; for great a with been going known I'm in luck. XX changes instrumental years miss in you. good and you so I've is you working the Good the positive to MSA now

Bill Lambert

very appreciate those I Thanks very much Ed. comments. much,

Operator

Dempsey. Mr. you. Thank from day is go question please Brian Rafn, Rafn from of our Morgan question. final And your the with ahead

Brian Rafn

error guys balance GX or Give now pent Are gotten demand. up look the international at that forecast? domestic that of it it you to SCBA of you've opportunities is more or in me for sales the kind a sense, than out of your when a is difficult

Nish Vartanian

in the remains pipeline US. quite The good

a business So our careful US and remains be pretty it we analysis do the looks business in of good. to our pipeline,

But wins. with the quarter the on business budgets. cycle goes business US is gets pipeline Europe and had timing year so launching view, just later the some apparatus focused this business, obviously good start on and about an Australia Our SCBA little out where is there's good a a breathing XX on MX have the got other issue where focus a we're emphasis which clumpy international mid-sized months international remains pretty the on the when and we've market. we of heavy sometimes good

of the MSA you globe. and think the there's opportunities the apparatus around you brand for a fire Australian opportunities very world. service order of and the and around major representation, cities around there's When think the has breathing So good your for strong globe us. world think of throughout

going the think is future be good. the to we pipeline in quite So

Brian Rafn

a given sales and how domestic that on sense cycle? - is sales there what cycle international Nish, is your between different

Nish Vartanian

visitors necessarily, making at in some a Not we purchase looking XXXX possibly. this had from We Europe. so week XXXX, in just were

not post-sale, the with obviously the departments major Build start do and level a manufacturers They with support You have know take thorough and they they on process America. of unusual from visit the evaluations. that's a for support departments in so time, It's beginning relations North commitment to fire here comfort product. making. long-term and their manufacturers are we'll the

North cycle fairly the here So similar is world. it is in the America buying around as

Brian Rafn

like that just the departments? would Navy and I airport service municipal military, niches rural those volunteer or the are at fire look service, fire under When primarily it viable niches you carriers, say it maybe fire US is some

Nish Vartanian

well so business No. military fairly is the significant.

major As you Air ours. Air the Defense out, is The US ours. Army, with a of of imagine would you customer as force, of customer is the the pointed major Department Canadian force a

militaries all we and throughout are those opportunities and different with the protection. for do So work world, fire firefighting

gear. fire So not but the SCBA turnout and with also it's helmets only opportunities

Brian Rafn

Can on out there product little talk in sale? you. ability about GX's Got you a an that bit GX? Is to the add are accessories camera imaging is a new field already to the primarily single thermal the that or

Steve Blanco

a do Blanco, we good Steve that. is this question. It's actually Brian

existing high integrated camera imaging actually to customers. techs the We thermal sell of number have that we a GX or

those new leaning year tech. we customers units, towards more So really good they're that we roughly a were sold and to launched first field, as customers. still this quite of high from take continue see that that rate nice a have of product rate a product the we taking field of gate, year. the out It's units pretty number now number but actually not had high the in the before a we take the XX,XXX are We have have in

Brian Rafn

Got you.

can as you You made put currently. stand SCBA a any we comment numbers in about the that side, market here on share,

Steve Blanco

shape but for we've Yes so in XXs and now really we've Brian. been share America, good QX maintained the right as market see we mid ourselves leader we that North a we range gotten in had, haven't

Brian Rafn

bit, any see beyond inflation the Nish little you. on wondering payroll and you're a materials talked cost normal? you you inflation anything I'm inflation, then maybe feedstock Ken, Got raw seeing if wage - side what

Nish Vartanian

Nothing carefully. Yes manageable. seen significant. we're watching that's little so pricing a we've some, seen on But not and our very material cost. We've bit, the nothing

some believe we'll we we as the some and increases So maintain and place those see we our margin as pass along rational we profile in of have market competitors that forward. go

disciplined closely. watching pretty and very area we're that in that So

Ken Krause

so of an in really We're taking close price to And ways we at that big in starting Nish's offset wage just a echoing increases wage inflation and can comments. on a the inflation business. that we're mitigate see our look inflation

Brian Rafn

Bill from about policies, they tariffs, Trump of out challenges way you. The or Got provide structural you and excluding redrafting any question a NAFTA strategic any these guys? for Do the TPP. for on Got the trade talk whole here. do government headwinds

Bill Lambert

the front, see tariffs to costs minimal XXXX that's that time. think from impact so and steel at to aluminum don't our impact I this at meaningful expect in expectation Well that point in far, really least the we on we're any seeing

and of our the we're bigger chain are to the steel high raw than polyethylene. cylinders. SCBA US talked are greater what we trend causes be those with inflation regard increases electronic supply is seeing Inflation produced, in certain whether the that cost watch the areas so domestically utilize which cylinders that see think concern far. aluminum materials, I with our and density questions composite tariffs on. areas to what steel think The cylinders components, has we I or about, and in Those Nish's the

impact. So really a big not it's

Brian Rafn

a guys mentioned XX big pretty talking And between the domestic to I'm close international a there about where be that's challenges are Bill impediments Europe not little to between any you base X.X. and XX is between politics structural then Are culture, domestic structural Obviously gap. gap And international bit, happen. that a the it those getting how and for you geographic, parity standpoint. from obviously going

Bill Lambert

think I Brian. quite a hit Well quite on bit, Ken that frankly

Canada we in structural differences that quite the Europe, as and do be market the as particular structural the able Middle efficient Australia, difference US Americas, can There US can't think that serving or East, rest broad the world. in China. market. to are between, in that we there I we're the are sense be and of Canadian the Africa,

goal gap. our so that is close And to

point opportunity reach, the be plants we distances me think the in and customers. our margins just would it international geographic about investor regulation, though whether these you mentioned It's areas. operating for to that in between I that see length don't pleased see Government whole our difficult, not our as meeting see time parity and by different our very too There's is say at difficult we be that That's we performance at that we roughly further still Americas for ever of margins a we're all least will to increase. it at statutory margins. quarter There opportunities host reasons. and last to this there the segment reach day expect the month. improvement mentioned talked continue requirements Ken first to between operating operating for too and reasons and of XX%

Brian Rafn

All right. of pleasure. luck it's Best a you. Bill to been real

Bill Lambert

Thank appreciate you. that. Brian,

Operator

and questions. no we have you further Thank

will comments. I the back for So to program final Elyse over you turn

Elyse Lorenzato

Thank no call. have questions, you. that Seeing we will more we conclude today's

us our will this available call, replay I the of missed our the joining morning. be the website thank transcript and you of behalf conference for If team here, want next audio Relations for portion a days. on an you to Investor XX entire On

MSA Safety (MSA) 24 Apr 182018 Q1 Earnings call transcript