MSA Safety Incorporated

Good day and welcome to the MSA fourth quarter 2020 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touchtone phone. To withdraw your question, please press star then two. Once again, we apologize for the technical difficulty on our end. Again, anyone listening on the webcast can dial 412-902-6599 or 844-854-4415. Please note, this event is being recorded. I would now like to turn the conference over to Elise Lorenzotto, Director of Investor Relations. Please go ahead.

Thank you, Drew. Good morning, everyone, and welcome to MSA's fourth quarter earnings conference call for 2020. Joining me on the call today are Nish Vartanian, Chairman, President, and CEO, and Ken Krause, Senior Vice President, CFO, and Treasurer. Before we begin, I'd like to remind everyone that the matters discussed on this call, excluding historical information, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, but are not limited to, all projections and anticipated levels of future performance. Forward-looking statements 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 in our Form 10-K filings with the SEC. MSA undertakes no duty to publicly update any forward-looking statements made on this call except as required by law. We've included certain non-GAAP financial measures as part of our discussion this morning, and the non-GAAP reconciliations as well as our Q4 press release are available on our investor relations website at investors.msasafety.com. With that, I'll turn the call over to Mish Vartanian, Chairman, President, and CEO.

Thanks, Lise, and good morning, everyone. I appreciate your interest in MSA. I want to start today by thanking the MSA team for their resiliency as COVID changed the way business is done. I'm tremendously proud of the efforts of our team, which they focused on our mission, our people, our customers, and communities. I've often said our greatest asset is our employee engagement and commitment to our mission of protecting workers' lives. And I've never had greater appreciation for what our company contributes to society each and every day. We finished the challenging year with a very strong fourth quarter, realizing record high revenue of $388 million and double-digit improvements in pre-cash flow. From a full-year perspective, our revenue declined 3%. Strength in our fire service, market, and air purifying respirators was offset by weakness in industrial products. But there's no question that diversification of our product provided support through the downturn. Despite the revenue challenges in certain areas, our annual adjusted operating margin reached 18%. That's up 10 basis points from a year ago. We've talked about our long-term aspiration to get our operating margins into the 20% range over the coming years. Our performance in this challenging environment provides me with a great deal of optimism for the future. With that in mind, there are three key areas I'd like to discuss today that support my confidence. First, MSA's innovation engine is stronger than ever. We're launching safety technologies that solve our customers' toughest safety challenges. Second, our continuous improvement culture across all areas of our business is yielding strong results, especially in the international segment. Third, we're committed to using our balance sheet to make strategic acquisitions that strengthen our leadership positions in key markets. Starting with the first area, MSA's innovation engine and R&D pipeline. The accomplishments of our founders back in 1914 reflects what happens every day in MSA's product development labs around the world. At the turn of the century, they partnered with Thomas Edison to develop a battery-powered miner's cap lamp. This electric lamp helped reduce mining fatalities by 75% over the next 25 years. That same passion for innovation exists throughout NSA today as we continue to invest in new product development to drive organic growth. We do this to provide our customers with leading safety technologies that solve complex challenges. In 2020, we invested nearly $70 million in R&D to bring the most advanced safety solutions to our global customer base. One example is our new Advantage 290 reusable respirator. The Advantage 290 is the first government-approved reusable respirator designed without an exhalation valve. It filters both inhale and exhale breath that gives healthcare workers increased flexibility, adding yet another option to the available supply of respiratory protection. And it can be stored for long periods of time. The work we're doing in the fire service is another great example. The MSA Connected Firefighter Platform includes the Breakthrough G1 or M1 SCVA, as well as our soon-to-be-launched Lunar system. Lunar is a handheld device that uses cloud technology to deliver breakthrough fire scene management capabilities for incident commanders. It also uses real-time direction and distance data to help search and rescue teams locate a separated firefighter. And it's a personal thermal imaging camera. While system-oriented products like Lunar can have a longer adoption period, we continue to be very excited about the future possibilities that this technology has to offer on a global scale. Quite simply, our goal is to protect firefighters from head to toe. The same passion for innovation that led to the G1, the M1, and our Lunar system is being applied to firefighter software solutions, helmets, turnout gear, and boots. At the end of the day, it comes down to this. We understand our customers at a deep level. We listen, watch and learn from them. With this knowledge, we use the latest technology to keep them safe, solve their problems and simplify their day. Looking beyond the fire service, I'm also encouraged by the trends associated with our safety mission. A mission I believe is more relevant than ever. As an example, in one of his first acts in office, President Biden signed an executive order calling on OSHA to issue guidelines related to COVID-19 in the workplace. It's reflective where COVID is bringing safety to the forefront of the national discussion. The second area I want to highlight this morning is our continuous improvement culture and how it's yielding strong results across our business. An example is our international segment. Our entire international team continues to execute a playbook focused on three areas, driving growth in select markets, Optimizing our channels approach and delivering efficiencies. We've been executing on this international playbook for three years now, and it's encouraging to see the continued margin improvement. As an example, our long-term goal was to improve operating margin in the international segment by 500 basis points over 2017. In 2020, the international segment operating margin rose to 15%. This is a 270 basis point improvement compared to 2019, despite the 3% revenue decline. And to date, we've achieved 400 basis points of segment margin expansion. With the pipeline of programs we have in place, we're very confident in our ability to surpass our original goal over time. And that leads me to the third area I want to discuss today, which is our balance sheet. to make strategic acquisitions that strengthen our leadership position in key markets. In January this year, we closed the acquisition of Bristol Uniforms. Bristol is the UK leader for firefighter turnout gear. And so Bristol enhances our position as a global leader in fire service PPE. This acquisition builds on our 2017 North American Turnout Gear Leader Globe. So it's a great fit strategically and culturally. It also expands our footprint in a defensive area of our portfolio. Our fire service business increased 10% in the fourth quarter of 2020, even in the face of the pandemic. So we're very excited to welcome Bristel to the MSA family and look forward to serving our European and international customers with even a greater range of head to toe solutions. To summarize, there are three key areas that give me confidence in MSA's future. First, MSA's innovation engine is stronger than ever. Second, our continuous improvement culture across all areas of our business is yielding strong results, especially in the international segment. And third, we're effectively using our balance sheet to make strategic acquisitions that strengthen our leadership positions in key markets. Our integration plan for Bristol is well underway, and we continue to move forward with an M&A pipeline focused on evaluating assets that align with our safety mission. I'll now turn the call over to Ken to take you through our financial results and he'll also give more texture on the trends and assumptions we're making for 2021. Ken?