Welcome to the MSA First Quarter Earnings Conference Call. My name is John and I will be your operator for today’s call. At this time all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Please note that this conference is being recorded. And I will now turn the call over to Mr. Ken Krause. You may begin, Ken.

Thank you, John. Good morning, everyone, and welcome to our first quarter conference call for 2015. I am Ken Krause, Executive Director of Global Finance. We apologize for the delay that we just had in launching our first quarter conference call, our service provider - our webcasting service provider was having some technical difficulties, but believe difficulties have since been resolved. Joining me on the call this morning are Bill Lambert, President and Chief Executive Officer; Stacy McMahan, Senior Vice President and Chief Financial Officer; Ron Herring, President of MSA Europe; Kerry Bove, President of MSA International; and Nish Vartanian, President of MSA North America. Our first quarter press release was issued last night and is available on our website at www.msasafety.com. This morning, Bill Lambert will provide his commentary on our quarter. Stacy will then review our financials and then Bill will conclude with his closing comments. After that, we will open up the call for your questions. Before we begin, I need 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 including without limitations, 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 here. These risks, uncertainties and other factors are detailed from time to time in our filings with the Securities and Exchange Commission including our most recent 10-K which was filed on February 25, 2015. You are strongly urged to review all such filings for a more detailed discussion of such risks. Our SEC filings can be obtained at no charge at www.sec.gov, our own website and many other commercial sites. In addition, we have included certain non-GAAP financial measures as part of our discussion today. These non-GAAP financial measures should not be considered replacements for GAAP results. Reconciliations to the most directly comparable GAAP statements are included in our press release and on the Investor Relations section of our website. With that, let me introduce MSA’s President and Chief Executive Officer, Bill Lambert.

Thank you, Ken, and good morning, everyone. As always, I want to begin by saying thank you for joining us this morning on this conference call and for your continued interest in MSA. Presumably, all of you have seen our first quarter press release issued last night and have our financial figures with all comparisons corresponding to the equivalent period in 2014. I will begin this morning by reviewing the highlights of our first quarter. I also will give you some insight into our refreshed corporate strategy, a process we began and completed in 2014. Of course, I also want to give everyone a progress update on our recently launched G1 SCBA platform. And after that I will turn the call over to Stacy for a review of our financial results and then we’ll open up the call for your questions. As you saw in our press release, sales in the first quarter from continuing operations were $257 million, reflecting local currency growth of 4% from a year ago. Our performance was clearly driven by our continued focus on core product revenue growth with our SCBA business leading the way. Our Q1 growth was however offset by the impacts of the strong U.S. dollar on our international results. For the quarter, sales from our core product lines comprised 81% of total revenue with strong results across most of our product categories. As you may have noticed in our press release sales growth exhibit and included in the 81% core sales that I just mentioned, fire and rescue helmets are now included in our core product portfolio. This is just one change that came about from our strategy refresh initiative in 2014 and I’ll dive deeper into that in just a minute. But first, let’s take a quick look at our…

Thank you, Bill, and good morning. I will now share further insight into our first quarter financial performance. Additional information will be available when we file our Form 10-Q with the Securities and Exchange Commission later today. As Bill mentioned, sales from continuing operations in the first quarter were $257 million, down $8 million, or 3% from the prior year on a reported basis, and up 4% on a local currency basis, as weaker foreign currencies negatively impacted quarterly revenues by 7% and earnings by 4%. As Bill commented, we saw a healthy 7% local currency drift across the quarter - across the core during the quarter. The growth in core was driven by higher shipments of SCBA and fire and helmets to the fire service markets and good performance in FGFD partially offset by a lower level of industrial head protection and portable gas detection sales, primarily related to weaker conditions in the energy end markets. Looking at the sequential quarter comparison, local currency sales have decreased by 15% compared to our record fourth quarter of 2014. Excluding larger orders, local currency sequential quarter sales were down 8%, on the normal seasonal slowdown between the fourth quarter and first quarter coupled with the weaker results in energy markets, primarily North America in portable gas detection and industrial head protection. In Bill’s commentary, he mentioned our exposure to the oil and gas industry. If you recall, we communicated the scope of our energy exposure on the last call. But for those who are new to the MSA story, I would like to take just a few minutes to summarize. We estimate approximately 35% of our business in the energy market vertical. But as you know, not all of this business is at risk, and it is essential to understand the…

Thanks very much, Stacy. Despite the challenges presented by a strong dollar and the external headwinds we face in energy markets in certain geographies, we continue to see bright spots within the business. The G1 ramp-up is gaining traction. Our pipeline of exciting new products is having the desired impact. And with our recently refreshed corporate strategy we see a path of continued growth. At MSA we are focused on providing a customer experience like no other in executing on our mission of protecting the health and safety of workers around the world all while driving a higher level of value for our shareholders. Thank you very much for your attention and interest in MSA this morning. And at this time, Nish Vartanian, Kerry Bove and Ron Herring have joined Stacy McMahan and me and we will be happy to take any questions that you might have. Please remember that MSA does not give what’s referred to as guidance and that precludes most discussion related to our expectations for future sales and earnings. Having said that we will now open the call to your questions.

Thank you. We will now begin the question-and-answer session. [Operator Instructions] Now we have a question with - from Walter Liptak from Global Hunter. Go ahead, Walter, with your question.

Yes, thanks, good morning, everyone. I want to ask about the SCBA business, the G1, and wonder if you could quantify a little bit for us the production improvement in March that you referred to.

Well, as I indicated in my commentary, Walt, what we saw on March was more than what we had produced in January and February. I won’t quantify exactly the numbers that we produced in the month of March, nor will I quantify what our end goal is here. But we’ve got $82 million total SCBA backlog across the world as we look at our SCBA business. We got very strong incoming demand and so we have increased our production dramatically here in North America and we are increasing our production efforts to produce the product in Berlin as well. So we see a point here over the back-half of the year where we will meaningfully reduce that backlog to more normal levels, but right now and as I indicated in my commentary in the first quarter our ability to ship product was just keeping pace with very strong incoming demand.

Okay, right, the backlog I think was at $80 million in December, so your book-to-bill was about $1 million for the G1.

That’s about right.

Okay. How is the profitability looking for the G1? Is there a ramp to the profits as well?

Well, over a longer period of time there will be I think doing any ramp-up of a new platform product like this we continue to work through our supply chain issues. I think the increased demand activity has caught some of our supply chain partners a little off-guard. And that has some additional expense associated with it. So the operating profit on the G1 is not at our longer-term target, but we are making meaningful improvements. And we see some opportunities to get that into the range that we’ve targeted for the G1.

Hey, Walt, if I can just give you a little more color. At a high level we do expect that the G1 will accrete operating margin. But it’s important to know that the SCBA as a category is not our most profitable core product category. In fact, it’s one of the least profitable core product groups. As a result, as the sales mix ship to the G1 SCBA, there is going to be some product mix effect that plays in at the gross profit line. As you saw within the first quarter improvements in other individual product groups within the core and even the adjacent areas offset the less favorable product mix and we’re still realizing an improvement in overall gross margins from direct cost certainly. So we talked to you about our relatively fixed cost structure in the past, and we expect to get operating margin leverage as we more effectively sell into a higher volume of sales, the G1 is certainly a big piece of that at the operating margin level.

Okay, got it. Thanks for this. I was hoping to ask one about the 10% to 15% of your revenue that’s related to energy employment, their personal protection, and I wondered if you could just give us some color on how they’re trending during the quarter, like, is it come down and stated like a steady level, or was it ramping its employment ramp down during the quarter?

Well, I think as you saw in our press release, the North American portable gas detection declined by 19% in the quarter and head protection declined by 8%, that was primarily driven by the North American oil and gas market. I think the message is pretty consistent with the message we provided on our February call, in that regard, do we expect it to get any worse, no, not at all. I think that, Stacy indicated in her commentary that we’re seeing a slight uptick in demand so far in the second quarter. But we’re not seeing any kind of a dramatic turnaround in that part of the business, largely driven by employment levels in North America related to oil and gas, and where they can, our customers can quickly cut their discretionary spending and cut their employment levels. The spring turnaround season for refineries this year has been the weakest that we have seen in some seven years. So I don’t believe - we don’t believe that we are losing any kind of market share in these product categories at all. We just think that it’s shifting out a few quarters for right now. So we don’t expect it to get any worse. Well, in fact, I would expect that it has - that the response has been swift by those end use customers in North American oil and gas market, and we don’t expect it really to get any worse for us.

Okay, yes. Thank you for that color.

Let me - excuse me, well, let me also just kind of provide the - the other side to that that’s that coin - that the story on the other side of that coin if you will is that if you - it’s interesting to note that the contrast in portable gas detection sales in North America and International and Europe. So while our North American portable gas detection sales were down 19%, international’s portable gas sales were up 14%. In Europe, was up 25%, so that’s indicative of winning share with this new line of portable gas detection instruments that we have. And I think it’s another great example of how the diversified product offerings in ten market customers and geographic footprint are helping to drive the overall MSA performance.

Okay, yes. Thanks for - that’s a good point. I want to ask one last one about, you’ve talked before about 15% operating margin target by the end of 2015. I know you guys don’t give guidance, but I wondered what your thoughts were about getting there by the fourth quarter.

Well, we maintain that as our target. We certainly were able to exceed that operating margin in the - in our record quarter in the fourth quarter of 2014. So we’re still able to have that as a goal for the year.

Okay. Okay, very good. Thank you.

Our next question is from Richard Eastman from Robert Baird.

Yes, good morning.

Hi. Good morning, Rick.

Can I ask, when I look at the breakdown core products versus the non-core, the ancillary peripheral products. You restated you kind of pulled the fire helmets out of there and now have that as a core product. But what I’m curious is, how does - what’s in that non-core that declined by 9%? And what’s the new base of this the non-core revenue? Are we talking about maybe $200 million a year now?

Of non-core on an annual basis, that’s…

If you look at the total sales in Q1, so…

That’s right, Rick. And I think it’s just maybe just roughly just a little bit north of that $200 million for total non-core sales.

Okay. And so, where is the exposure of there that was down 9%, I mean 18% in North America? Where is the exposure end market, and what’s in that that number at this point of products?

Rick, that’s primarily in air-purifying respirators and gas masks. As we deemphasize those efforts and focus our efforts on those six core product areas, where we quite honestly have the greatest profitability and see continued growth potential is primarily the de-emphasis in air-purifying respirators and gas masks.

We have a large order to that, went through on respirators in the first quarter of 2014. So that comp was difficult in that category.

In North America?

It was in North America.

Okay, okay. And then the other question I had, when we speak to the portable gas and the industrial head protection and kind of recognizing the O&G exposure, upstream exposure there, do you have any sense of what the sell-out versus sell-in was through distribution? I mean, was there any destocking in the channel after the first of the year if you’re relative to the announcements that we saw out of the exploration companies in the fourth quarter?

We certainly saw some of that Rick. In fact, we saw some of that happening late in the year. In December, we saw quite a few of those and channel partners and market channel partners destocking, cutting back on orders, and preparing for what they are experiencing, which is a severe reversal in market.

Yes. And is that, again, when you look at those two product lines for the full-year, we’re seeing a little recovery, we should see some stabilization. I think the head protection business in general is a core, product line was up maybe mid single-digits, portable gas was up more, but for 2015, are those product lines now maybe expected to be down year-over-year, or can we still think about them as being flattish with some recovery, or again, we still have international growth there and some Europe growth, how do you think of those two product lines for the full-year with this start?

Yes, I think that the North American segment of the business for head protection and portable gas detection is so big that it would be hard for us to overcome what we see here, unless we see some, I would classify as dramatic improvement in the price of oil and a return to employment levels - 2014 employment levels, let’s say, in the oil and gas sector. And I don’t think there are too many people who are protecting that as an outcome in 2015. So I would expect that head protection - industrial head protection and portable gas detection would be flat at best year-over-year and perhaps even down slightly.

In total, okay…

In total.

Okay. And then just talk a little bit - one last question, I’ll jump out of here. The backlog on the fixed gas and flame, I think Stacy referenced the fact that it was good outside of the U.S., but again is that a product category that given current backlog and tone that you would expect to be up and hold up for the balance of the year?

We are still expecting, yes, the backlog - relatively healthy across, say, this reported segments...

Yes.

And we have not seen any indications of the slowdown, because projects are completing at scheduled. But, again, we’re just predicting that there could be a lower level of this business in the back-half. So we are somewhat expecting that although we are not seeing indications that people are delaying projects or canceling them it’s just that potentially that they could.

I see, okay, so cautious there. Okay. Thank you. I will jump off. Thank you very much.

Thanks, Rick.

Our next question is from Stanley Elliot from Stifel.

Good morning. Thank you, guys.

Good morning.

I apologize if I’m going to ask a question that you guys already answered, but who was the core sales growth if you backed out the fire and the rescue helmets?

Just a minute, Stanley, we’ll get that for you.

The year-on-year growth was about $1 million in fire and rescue helmets stand. So if you take our overall growth and back out $1 million from it in currency neutral terms, it was about $1 million more in fire and rescue helmets year-over-year.

But not yet and okay. And your product was the core products and had been that the margin profile had been so much greater than some of the adjacent products or some of the other categories. Does the inclusion of that now moving into the core products, is that kind of chip away that delta, or how do we think about the profitability of that once it gets added to the mix?

Well, out of our six core product areas Stacy indicated that SCBA was on the lower-end of those six product categories. And I think in previous calls we’ve indicated that fixed gas and flame detection is among our most profitable areas of the business. And I would put firing how much right about in the middle. It’s not our most profitable, but it’s not at the lower-end either, it’s right about in the middle.

Okay, perfect. That’s all I had. Thank you very much.

[Operator Instructions] And I’m showing no further questions. So I’ll turn it back over to you Ken for any closing comments.

Great. Thank you, John. I think that we have no more questions. That concludes this morning’s call. If you missed the portion of the conference call, an audio replay will be available on our website for the next 90 days, as well as the transcript of the call. On behalf of our entire team here, I want to thank you for your continued interest in MSA, and we look forward to talking with you again soon. Have a great day.

Thank you, ladies and gentlemen. This concludes today’s conference. Thank you for participating. You may now disconnect.