MSA Safety Incorporated

And welcome to the MSA Safety's first quarter 2022 earnings conference call. All participants will be in a 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 telephone keypad. 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 Chris Hepler. Please go ahead.

Thank you. Good morning and welcome to MSA's first quarter 2022 conference call. This is Chris Hepler, Executive Director of Corporate Development and Investor Relations. I'm here with Nish Vartanian, Chairman, President, and CEO, Ken Krause, Senior Vice President, CFO, and Treasurer, and Steve Blanco, President of Americas. Before we begin, I'd like to remind everyone that matters discussed during this call may include 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 include a number of risks, uncertainties, and other factors that may cause our actual results to differ materially from those discussed today. These risks, uncertainties, and other factors are detailed in our SEC filings. MSA undertakes no duty to publicly update any forward-looking statements made on this call, except as required by law. We have included certain non-GAAP financial measures as part of our discussion this morning. And the non-GAAP reconciliations, as well as the first quarter 2022 press release, are available on our investor relations website at investors.msasafety.com. Moving to today's agenda, Nish will discuss key highlights of the quarter and then turn the call over to Ken to discuss our financial performance. Nish will then provide closing remarks. Following our prepared remarks, we will open the call for questions. With that, I'll turn the call over to Nish.

Thank you, Chris, and good morning, everyone. I'll start today's call by recognizing a key milestone at MSA, then talk about highlights for the quarter and the progress we're making around new innovative technologies. First with the milestone, which I'm particularly proud of. We officially completed the first quarter without a lost time incident. We often talk about a culture of safety at MSA. This milestone certainly reflects that mindset and is a great start to the year from this perspective. it reflects the hard work and commitment to safety our associates bring to work every day. As a company focused on workplace safety, we know we have a responsibility to lead by example to help create a safe work environment. I want to thank our entire team on this very important achievement. Now moving on to the highlights for the first quarter, we're off to a solid start to the year, performing in line with our expectations. Demand for our products and technology continue to be robust across our core product groups and key geographies. And our teams did a nice job of navigating various challenges throughout the quarter. Our quarterly revenue was $331 million, a 7% increase from a year ago, and 9% on a constant currency basis. Organic orders were exceptionally strong, up double digits resulting in a book-to-bill of 1.2 and record backlog, up more than $60 million from the end of the year. Gross margin was healthy, and adjusted operating margin improved 90 basis points year over year. It was good to see the healthy operating margin again this quarter. This is a trend we believe can continue, provided we successfully manage supply chain disruptions going forward. This is a key priority of ours, along with pricing, as inflation doesn't show signs of moderating. Supply chain constraints continue to be a challenge, particularly around electronic components. This is most pronounced in our gas detection business. The tight supply chain environment has resulted in price escalation on many of our input costs. Our teams are managing through it, and while there are no quick fixes, we're working diligently to get products into the hands of our customers. To that end, we've invested in resources to help us address these challenges. This includes investments in artificial intelligence software that help our supply chain teams anticipate issues around key inventory items. We're building visibility deeper into our supply chain, adding resources to our sourcing team, and working through engineering and approvals to increase flexibility around certain constrained components. We're also working on initiatives to increase flexibility within our production lines so that when constrained parts are obtained, were able to better accelerate throughput. All that said, given the current environment, we expect these supply chain challenges to continue in the coming quarters. We're staying close to our customers and are actively monitoring our backlog. To date, we're not seeing any signs of material cancellations, which makes sense given the nature of our business and is in line with what we'd expect as our products are specified into their processes and procedures. So that gives us confidence that our backlog will ultimately be converted to revenue over the coming quarters. Moving on, I want to provide color on two of our end markets, firefighter safety and energy. Starting with firefighter safety, we saw a very strong level of new incoming orders and 5% constant currency sales growth in a quarter. The funding environment remains healthy in support of continued growth of our key products. In the quarter, we saw several meaningful U.S. fire service orders for our G1SCBA. Demand for turnout gear remains strong, and we continue to work to reach our output goals. Next to energy, across the energy sector, we're focused on protecting the health and safety of workers and facilities, whether in oil, gas, petrochemical, or renewable applications. Historically, elevated oil and natural gas prices like we're seeing today, have positive impacts on employment and expenditures in the sector. Ultimately, that translates into a nice tailwind for our business, as approximately 25% to 30% of our annual sales are related to this sector, and we're seeing strong demand across all our product lines. Lastly, before I turn the call over to Ken, I want to highlight the progress we're making in the connected worker space. where our innovations are driving improvements in worker safety. Last year, we previewed at the National Safety Congress MSA's Connected Work Platform for industrial markets. This platform is a powerful hardware-software combination. It starts with the Altair IO4, a wearable cloud-ready gas detector device. When connected with our MSA Plus Safety Subscription Service, safety managers will have a powerful platform to enhance worker safety while driving efficiency and simplifying safety program management. It's incredibly exciting to see this area of MSA's business begin to gain traction. We've already begun taking pre-orders for the Altair IO4 and shipments to customers will begin in early May. Also in May, our team will be hosting a connectivity summit. This is a virtual three-day event focused on how gas detection wearables and software solutions can help enhance worker safety and productivity. The summit is scheduled for May 17th, 18th, and 19th, and will feature MSA experts discussing the future of connected work, the Altair IO4, and our cloud-based software solutions. For the industrial worker, we also launched the V-Guard C1 hard hat. Head protection is an area where we continue to leverage our strong market position to drive innovation. The new V-Guard C1 is a cooling hard hat. By that, I mean it has a heat reflective interior liner that essentially reduces the temperature inside the hard hat by as much as 20 degrees Fahrenheit. As we near the summer months here in the Northern Hemisphere, we're seeing a lot of interest in the C1 in Florida, the Gulf Coast region, and other markets where heat stress is an important safety issue that we're helping to address. It's a really exciting time to be at MSA. We're making meaningful strides in advancing our mission of worker safety. And with that, I'll turn the call over to Ken to take you through more detail on our financial results. Ken?