Mace Security International Inc. (MACE)

F2Q2010 Earnings Call Transcript

August 17, 2010, 1:00 p.m. CT


Sarah Din - MarCom Manager

Dennis Raefield - Chief Executive Officer and President

Greg Krzemien - Chief Financial Officer


Hello, and welcome to today’s teleconference. My name is (Keisha), and I’ll be your conference operator today. All lines have been placed on mute, and this event will be recorded for future playback.

There will be a Q&A session at the end of today’s presentation. At that time, I’ll instruct to you on how to ask a live audio question.

Welcome to the Mace 2010 Second Quarter Result Investor Conference Call.

At this time, I’ like to turn the call over to Sarah Din.

Sarah Din

Thank you (Keisha). Welcome to Mace Security International Second Quarter Investor Conference Call. My name is Sarah Din, and I’m the MarCom Manager for Mace.

Also with us today for this call is Mace’s Chief Executive Officer and President, Dennis Raefield, and Mace's Chief Financial Officer, Greg Krzemien. Today, Greg Krzemien will be discussing the financial results for the quarter, while Dennis Raefield will discuss the market trends, business conditions, and the Company’s plans.

Now, before I turn the call over to Greg, there are some general housekeeping matters that we want to address.

Certain statements and information during this conference call will constitute forward-looking statements within the meaning of the Federal Private Securities Litigation Reform Act of 1995. When used during the conference call, the words or phrases "will likely result,” "are expected to,” "will continue,” "is anticipated,” "estimate,” "projected,” and "intend to" or similar expressions are intended to identify forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

Such statements are subjected to certain risks, known and unknown, and uncertainties including but not limited to economic conditions, limit of capital resources and the ability of management to effectively manage the business and integrate required businesses

Such factors could materially adversely affect Mace’s financial performance. It could cause Mace’s actual results for future periods to differ materially from any opinions or statements expressed during this call. Additional discussions for factors that could cause actual results to differ materially from management’s projected forecasts, estimates and expectations are contained under the heading “Risk Factors” in Mace’s SEC filings, which includes its registration statements and its periodic reports on Form 10-Q and 10-K.

All statements made during the conference call should also be considered in conjunction with the financial statements and notes contained in Mace’s annual reports on Form 10-K and quarterly reports on Form 10-Q.

You can access these reports on through the Investor Relations section on the Web site. With that, I would like to turn the call over to Greg Krzemien.

Greg Krzemien

Thank you, Sarah. Good afternoon. Good morning to those on the West Coast. And thanks again for joining us for our Second Quarter 2010 Investor Call.

I'm going to be discussing the results for the second quarter of 2010. I’ll be comparing that to the results for same period last year, talk a little bit about the six months 2010 results and also refer to some sequential changes in financial information over the last couple of quarters.

Just a little bit in the way of background for those who may be new to the call. Mace currently operates in two active business segments, our security segment which is our main business segment, and within the security segment, we really have four operations. We have our electronic surveillance operations, which we sell to both professional line of equipment, mostly to dealers in our home and small business operations. Our second division, if you will, is industrial vision and video conferencing division.

We have our personal defense, which is our famous Mace Pepper Spray and some other personal defense-type products. And the fourth division, which we added last April is Mace CS, which is our wholesale monitoring station out in Anaheim, California.

Our second segment is our digital media marketing segment, which consists of Linkstar, our e-commerce division selling multi home or beauty-type aid products and health-related products; and PromoPath, which is our media marketing division of that digital media marketing segment.

As far as the financial statements and the numbers I am going to be discussing, I’ll be mostly highlighting information from our continuing operations, which are those two active business segments. The car wash operations, which we continue to sell off and I’ll be addressing those in one brief set of comments shortly. But the numbers I’m going to discuss do not include those operations.

Those in the financial statements are disclosed as discontinued operations, in the income statement and the assets and liabilities of those car washes are pulled out and segregated on two lines on the balance sheet; assets held for sale and liabilities related to assets held for sale.

Again, I’m going to cover the financial highlights and then Dennis will be following up with some operation color commentary, shall we say, to my financial comments. On the income statement, I’m going to discuss some key points on revenues, gross profits, our operating losses, our trends there, SG&A cost and EBITDA and then I’ll make some additional comments on our cost reduction efforts.

I’ll review a few key items on our balance sheet. And I’ll make some comments on a few other key areas within our financial statements and disclosures.

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