My wish was their command.
Last week, after running down the litany of horrors that is Mine Safety's (NYSE: MSA) business with the U.S. government, I wrapped up with the wish that "the company proves me overly pessimistic next week." Well, it did.
Management released its fourth-quarter and full-year 2006 earnings results yesterday morning, and although it's true that the numbers told a tale of woe, it wasn't nearly as miserable as the one we had been led to expect. The firm grew its sales a respectable 6% for the quarter, surprising the skeptics (including yours Fool-y), and bringing sales into positive territory with a 1% gain for the year. Granted, profits were still down year over year, but it still made a profit -- $0.54 per share for the quarter, $1.76 for the year.
Song remains the same
In the U.S., it was second verse, same as the first, for Mine Safety. Sales of fire safety equipment remained depressed as customers continued to await funding from the U.S. Assistance to Firefighters Grant program (AFG). And sales of advanced combat helmets (ACH) to the military were, of course, down thanks to the government's decision to split ACH contracts among three suppliers. Piling on the bad news, Homeland Security bought fewer gas masks this year than last.
Sing a new song
On the plus side, management's announced intention to try to offset lower sales to U.S. government agencies with new sales through commercial channels in Europe and elsewhere began to bear fruit. Mine Safety also benefited from $5.2 million in new revenues, thanks in large part to its acquisition of Paraclete, which sells body armor to the U.S. military. (But on the minus side again, that puts Mine Safety into competition with stronger body-armor players such as Armor Holdings (NYSE: AH), Ceradyne (Nasdaq: CRDN), and DHB.)
Next verse
Peering forward into 2007, we have another mix of good and bad news. On the good side, the 50% or so of fiscal 2006 federal AFG funding that failed to be disbursed last year will probably be disbursed in 2007, which should boost sales of fire safety equipment in the U.S. Waxing optimistic, CEO John Ryan mused that if things go as they should, technically, the feds owe state and local governments about a "year and a half worth of normal funding" this year.
And the bad news? Mr. Ryan's druthers aside, to date the U.S. government hasn't done a lot to establish a reputation for on-time payment.
What did we expect out of Mine Safety last quarter, and what did it produce? Find out in:
Mine Safety is a
Hidden Gems
selection. You can view the entire Hidden Gems scorecard with your free trial.
Fool contributor Rich Smith does not own shares of any company named above. The Fool has a disclosure policy.
Terms & Conditions
RSS Headlines
Fool UK