MSA Safety Incorporated

Good day and welcome to the MSA first quarter 2021 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. Please note, this event is being recorded. I would now like to turn the conference over to Elise Borenzotto. Please go ahead.

Thank you, Drew. Good morning, everyone, and welcome to MSA's first quarter earnings call for 2021. 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 earnings press release, are available on our investor relations website at investors.msasafety.com. With that, I'll turn the call over to our Chairman, President, and CEO, Nish Vartanian.

Thanks, Elise, and good morning, everyone. I want to start today by thanking the MSA team for their dedication to our mission of protecting the lives of workers around the world. Yesterday, I reviewed our annual employee engagement scores and was really pleased to see the overall scores improved from our high levels a year ago. The connection our associates have with our mission was a highlight of the survey. Today, I'll provide a quick overview of the quarter, then I'll highlight three areas that give me confidence in our business. Beginning with the quarter, it was a challenging start to the year. Quarterly revenue was down 10% from a year ago. Our results are aligned with our expectations and the direction provided in our most recent public webcast. Keep in mind, Q1 2020 reflects a pre-pandemic environment for MSA, so it's a challenging comparison. In addition, our business is seasonally lower in Q1. Economic conditions and COVID impacts created additional pressure. We saw that pressure in January and February, followed by a strong recovery in March. I'm optimistic that recent trends in our order book support a much brighter outlook and also recognize the road to recovery might not be a straight line. Based on economic stimulus and vaccine deployment, the U.S. is leading the recovery in our business. At the same time, the situation remains challenging in Europe, Latin America, and some other smaller markets with COVID lockdowns. That said, on the whole, we're optimistic that the worst is behind us from a demand perspective. We're staying close to the challenges associated with the supply chain. We expect resin supply to improve in Q3 and anticipate continued challenges with electronic components throughout the year. We've managed through effectively with limited constraints in production. We recognize this is an evolving situation and we've experienced inflation in these areas and we'll manage that effectively. As macroeconomic conditions become more favorable, I'm very confident in our position to create value for all of our stakeholders. As you've heard me say before, There are three key areas that continue to support my confidence in the future of MSA. We've made progress in each of these areas in the first quarter. First, MSA's innovation engine is stronger than ever. In Q1, we continue to launch technologies that solve our customers' toughest safety challenges. Second, our continuous improvement culture positions us to achieve our long-term margin aspirations as revenue growth returns. We've made some nice progress with our manufacturing footprint. Third, We're using our balance sheet to make strategic acquisitions that strengthen our position in key markets. In Q1, we closed the acquisition of Bristol, and the integration work is on track. And our M&A pipeline remains healthy. Starting with the first area, MSA's innovation engine and R&D pipeline, which is really the lifeblood of our business. Our engineering excellence has never been more evident than our breakthrough innovations in connected firefighter technology and connected industrial technology. I'm pleased to report that our team has celebrated exciting milestones in both of these areas. On the fire service side, we've launched the Lunar Firefighter Location System. It's a big accomplishment for teams of associates across MSA that worked on this system, and it's the most technologically advanced product and software system that we've ever unveiled. Lunar is a handheld device that uses cloud technology to deliver fire scene management capabilities for incident commanders. It also helps search and rescue teams locate a separated firefighter. And it's a thermal imaging camera. I know the fire service is excited about this product. It'll help them tremendously with their work. Our connected platform also provided competitive advantage in industrial markets. We recently began delivery to supply one of the largest utilities in the U.S. with connected gas detection, utilizing our cloud-based grid software. This customer is now able to use data-based insights to manage their gas detection program with greater effectiveness. They ordered thousands of Altair 5XR portable gas detectors with SafetyIO subscriptions. Over the next few years, this will result in a total order value of over $5 million. These are just some of the indicators I'm seeing in Q1 that our innovation engine is running strong, achieving the milestones we've expected. Longstanding investments in connected technology position us to deliver new-to-world products for our customers. This is timely as the pandemic has accelerated connected applications that'll help workers become safer and more efficient. The second area I want to highlight this morning is our continuous improvement culture. Our team is always striving to drive higher levels of productivity and efficiency throughout the organization. Along those lines, we continue to execute our gas detection manufacturing consolidation project. As we announced in 2020, we're making CapEx investments to expand our Cranberry Township Gas Detection Center of Excellence. Consolidating production will help with inventory management and having our engineering and operations teams under one roof will certainly drive greater effectiveness and efficiency, which will improve margins. As part of the program, we remain on track to close a manufacturing operation in California in the third quarter of this year, and I want to thank the associates in California who've helped us prepare for this transition for nearly a year now. As you know, I worked with the team out there when we acquired General Monitors, and I'm very proud how our associates have managed through this process. The third area I want to discuss today is using our balance sheet to make strategic acquisitions that strengthen our leadership position in key markets. At the start of the quarter, we closed the acquisition of Bristol uniforms. Our integration plans are off to a good start. We've spoken before about the UK fire service market being a potential growth opportunity for MSA. We're investing organically and inorganically to penetrate this opportunity. Both the recent launch of the M1S CBA and now Bristol are great examples of the investments we've made. And we'll see benefits across the entire international fire service market by having a greater range of head-to-toe solutions for our customers. In addition to having strength in our balance sheet, we continue to move forward with an M&A pipeline focused on evaluating assets that align with our safety mission. So 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 is positioning us for long-term success. And third, we're effectively using our balance sheet to grow our business. With that, I'll turn the call over to Ken to take you through more detail on our financial results. Ken?