Healthy sales growth and robust margin expansion;
Maintaining mid-single digit full year sales growth
outlook
PITTSBURGH, April 29,
2024 /PRNewswire/ -- Global safety equipment and
solutions provider MSA Safety Incorporated (NYSE: MSA) today
reported financial results for the first quarter of 2024.
Quarterly Highlights
- Achieved quarterly net sales of $413
million, a 4% increase year-over-year.
- Generated GAAP operating income of $80
million, or 19.4% of sales, and adjusted operating income of
$88 million, or 21.3% of sales.
- Recorded GAAP net income of $58
million, or $1.47 per diluted
share, and adjusted earnings of $63
million, or $1.61 per diluted
share.
- Invested $11 million for capital
expenditures, repaid $5 million of
debt, and returned $18 million to
shareholders through dividends.
"We are off to a solid start in 2024, with our team executing
our strategy and delivering strong growth and margin expansion,"
said Nish Vartanian, MSA Safety
Chairman and Chief Executive Officer. "Our resilient business model
driven by the diversity of our products, markets and geographies,
our team's commitment to continuous improvement, and their passion
for serving our customers continues to generate profitable growth
and sustained value for our shareholders."
Mr. Vartanian added, "Over the past several years, we have
focused on building a higher-performing, stronger MSA and the
opportunity in front of us is exciting. I want to thank our
associates for their dedication to advancing our mission and
ensuring we meet the needs of our customers around the world."
Financial Highlights and Balance Sheet
|
Financial
Highlights
|
|
Three Months Ended
March 31,
|
|
|
|
($ millions, except
per share data)
|
|
2024
|
|
2023
|
|
% Change(a)
|
|
Net Sales
|
|
$
413
|
|
$
398
|
|
4 %
|
|
Operating Income
(Loss)
|
|
80
|
|
(60)
|
|
n/m*
|
|
Adjusted Operating
Income
|
|
88
|
|
77
|
|
14 %
|
|
Net Income
(Loss)
|
|
58
|
|
(150)
|
|
n/m*
|
|
Diluted EPS
|
|
1.47
|
|
(3.83)
|
|
n/m*
|
|
Adjusted
Earnings
|
|
63
|
|
54
|
|
18 %
|
|
Adjusted Diluted
EPS
|
|
1.61
|
|
1.36
|
|
18 %
|
|
|
(a)
Percentage change may not calculate
exactly due to rounding.
|
|
* Not
meaningful
|
Lee McChesney, MSA Safety Senior
Vice President and Chief Financial Officer, commented, "Our team's
disciplined execution during the first quarter of the year,
underpinned by the MSA Business System, resulted in 4% sales
growth, robust margin expansion, and consistent cash flow
performance. Taking into consideration the solid start to the year
in both sales and orders while keeping a close eye on global
economic trends, we are maintaining our growth outlook of
mid-single digits for the full year. We believe our continued
momentum and strong balance sheet position us well in 2024 and
beyond."
Conference Call
MSA Safety will host a conference call on Tuesday, April 30, 2024 at 10:00 a.m. Eastern time to discuss its first
quarter 2024 results and outlook. The call and an accompanying
slide presentation will be webcast at
http://investors.msasafety.com/ under the "News and Events" tab,
subheading "Events & Presentations." Investors and interested
parties can also dial into the call at 1-844-854-4415 (Toll Free) or 1-412-902-6599 (International).
When prompted, please instruct the operator to be joined into the
MSA Safety Incorporated conference call. A replay of the conference
call will be available at http://investors.msasafety.com/ shortly
after the conclusion of the presentation and will be available for
the next 90 days.
Upcoming Investor Events
MSA Safety will host an Investor Day for institutional investors
and financial analysts in New York
City on Wednesday, May 22,
2024 at 8:30 a.m. Eastern
time.
Lee McChesney, Senior Vice
President and Chief Financial Officer, will present virtually at
the Oppenheimer 19th Annual Industrial Growth Conference on
Tuesday, May 7, 2024 at 10:30 a.m. Eastern time.
A live webcast, along with the presentation materials, can be
accessed on MSA Safety's Investor Relations website at
http://investors.msasafety.com/ on the day of each event. A
replay of the webcast will be available on the company's Investor
Relations website shortly following the conclusion of each
event.
|
MSA Safety
Incorporated
Condensed Consolidated
Statements of Operations (Unaudited)
(In thousands, except
per share amounts)
|
|
|
Three Months Ended
March 31,
|
|
2024
|
|
2023
|
|
|
|
|
|
Net sales
|
$
413,302
|
|
$
398,262
|
|
Cost of products
sold
|
217,771
|
|
216,864
|
|
Gross profit
|
195,531
|
|
181,398
|
|
|
|
|
|
Selling, general and
administrative
|
94,150
|
|
91,091
|
|
Research and
development
|
15,919
|
|
15,232
|
|
Restructuring
charges
|
3,017
|
|
1,747
|
|
Currency exchange
losses, net
|
2,333
|
|
4,175
|
|
Loss on divestiture of
MSA LLC
|
—
|
|
129,211
|
|
Product liability
expense
|
—
|
|
3
|
|
Operating income
(loss)
|
80,112
|
|
(60,061)
|
|
|
|
|
|
Interest
expense
|
10,740
|
|
11,476
|
|
Other income,
net
|
(6,235)
|
|
(3,800)
|
|
Total other expense,
net
|
4,505
|
|
7,676
|
|
|
|
|
|
Income (loss) before
income taxes
|
75,607
|
|
(67,737)
|
|
Provision for income
taxes
|
17,468
|
|
82,436
|
|
Net income
(loss)
|
$
58,139
|
|
$
(150,173)
|
|
|
|
|
|
Earnings (loss) per
share attributable to common shareholders:
|
|
|
|
|
Basic
|
$
1.48
|
|
$
(3.83)
|
|
Diluted
|
$
1.47
|
|
$
(3.83)
|
|
|
|
|
|
Basic shares
outstanding
|
39,360
|
|
39,224
|
|
Diluted shares
outstanding
|
39,556
|
|
39,224
|
|
MSA Safety
Incorporated
Condensed Consolidated
Balance Sheets (Unaudited)
(In
thousands)
|
|
|
March 31,
2024
|
|
December 31,
2023
|
|
|
|
|
|
Assets
|
|
|
|
|
Cash and cash
equivalents
|
$
148,329
|
|
$
146,442
|
|
Trade receivables,
net
|
279,084
|
|
294,678
|
|
Inventories
|
305,556
|
|
292,604
|
|
Other current
assets
|
59,976
|
|
52,546
|
|
Total current assets
|
792,945
|
|
786,270
|
|
|
|
|
|
Property, plant and
equipment, net
|
210,955
|
|
211,877
|
|
Prepaid pension
cost
|
175,891
|
|
172,161
|
|
Goodwill
|
625,049
|
|
627,534
|
|
Intangible assets,
net
|
260,925
|
|
266,134
|
|
Other noncurrent
assets
|
108,565
|
|
106,174
|
|
Total
assets
|
$
2,174,330
|
|
$
2,170,150
|
|
|
|
|
|
Liabilities and
shareholders' equity
|
|
|
|
|
Notes payable and
current portion of long-term debt, net
|
$
26,462
|
|
$
26,522
|
|
Accounts
payable
|
117,125
|
|
111,872
|
|
Other current
liabilities
|
172,939
|
|
194,424
|
|
Total
current liabilities
|
316,526
|
|
332,818
|
|
|
|
|
|
Long-term debt,
net
|
569,692
|
|
575,170
|
|
Pensions and other
employee benefits
|
142,016
|
|
143,967
|
|
Deferred tax
liabilities
|
102,228
|
|
102,419
|
|
Other noncurrent
liabilities
|
49,114
|
|
48,974
|
|
Total shareholders'
equity
|
994,754
|
|
966,802
|
|
Total
liabilities and shareholders' equity
|
$
2,174,330
|
|
$
2,170,150
|
|
MSA Safety
Incorporated
Condensed Consolidated
Statements of Cash Flows (Unaudited)
(In
thousands)
|
|
|
Three Months Ended
March 31,
|
|
2024
|
|
2023
|
|
|
|
|
|
Net income
(loss)
|
$
58,139
|
|
$
(150,173)
|
|
Depreciation and
amortization
|
15,559
|
|
14,572
|
|
Tax-effected loss on
divestiture of MSA LLC
|
—
|
|
199,578
|
|
Contribution on
divestiture of MSA LLC
|
—
|
|
(341,186)
|
|
Change in working
capital and other operating
|
(22,812)
|
|
(8,700)
|
|
Cash flow from (used
in) operating activities
|
50,886
|
|
(285,909)
|
|
|
|
|
|
Capital
expenditures
|
(11,219)
|
|
(8,402)
|
|
Property disposals and
other investing
|
—
|
|
35
|
|
Cash flow used in
investing activities
|
(11,219)
|
|
(8,367)
|
|
|
|
|
|
Change in
debt
|
(5,010)
|
|
295,412
|
|
Cash dividends
paid
|
(18,490)
|
|
(18,045)
|
|
Other
financing
|
(5,585)
|
|
(4,596)
|
|
Cash flow (used in)
from financing activities
|
(29,085)
|
|
272,771
|
|
|
|
|
|
Effect of exchange rate
changes on cash, cash
equivalents and
restricted cash
|
(8,676)
|
|
(2,287)
|
|
|
|
|
|
Increase (decrease) in
cash, cash equivalents and restricted cash
|
$
1,906
|
|
$
(23,792)
|
|
MSA Safety
Incorporated
Segment Information
(Unaudited)
(In thousands, except
percentage amounts)
|
|
|
Americas
|
|
International
|
|
Corporate
|
|
Consolidated
|
|
Three Months Ended
March 31, 2024
|
|
|
|
|
|
|
|
|
Net sales to external
customers
|
$ 295,539
|
|
$ 117,763
|
|
$
—
|
|
$
413,302
|
|
Operating
income
|
|
|
|
|
|
|
80,112
|
|
Operating margin
%
|
|
|
|
|
|
|
19.4 %
|
|
Restructuring
charges
|
|
|
|
|
|
|
3,017
|
|
Currency exchange
losses, net
|
|
|
|
|
|
|
2,333
|
|
Amortization of
acquisition-related intangible assets
|
|
|
|
|
|
|
2,314
|
|
Transaction costs
(a)
|
|
|
|
|
|
|
233
|
|
Adjusted operating
income (loss)
|
86,218
|
|
13,486
|
|
(11,695)
|
|
88,009
|
|
Adjusted operating
margin %
|
29.2 %
|
|
11.5 %
|
|
|
|
21.3 %
|
|
Depreciation and
amortization
|
|
|
|
|
|
|
13,245
|
|
Adjusted
EBITDA
|
95,693
|
|
17,045
|
|
(11,484)
|
|
101,254
|
|
Adjusted EBITDA margin
%
|
32.4 %
|
|
14.5 %
|
|
|
|
24.5 %
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31, 2023
|
|
|
|
|
|
|
|
|
Net sales to external
customers
|
$ 280,267
|
|
$ 117,995
|
|
$
—
|
|
$
398,262
|
|
Operating
loss
|
|
|
|
|
|
|
(60,061)
|
|
Operating margin
%
|
|
|
|
|
|
|
(15.1) %
|
|
Restructuring
charges
|
|
|
|
|
|
|
1,747
|
|
Currency exchange
losses, net
|
|
|
|
|
|
|
4,175
|
|
Loss on divestiture of
MSA LLC
|
|
|
|
|
|
|
129,211
|
|
Product liability
expense
|
|
|
|
|
|
|
3
|
|
Amortization of
acquisition-related intangible assets
|
|
|
|
|
|
|
2,305
|
|
Adjusted operating
income (loss)
|
71,694
|
|
15,779
|
|
(10,093)
|
|
77,380
|
|
Adjusted operating
margin %
|
25.6 %
|
|
13.4 %
|
|
|
|
19.4 %
|
|
Depreciation and
amortization
|
|
|
|
|
|
|
12,267
|
|
Adjusted
EBITDA
|
80,494
|
|
19,058
|
|
(9,905)
|
|
89,647
|
|
Adjusted EBITDA margin
%
|
28.7 %
|
|
16.2 %
|
|
|
|
22.5 %
|
|
|
|
|
|
|
|
|
|
(a)
Transaction costs include advisory,
legal, accounting, valuation, and other professional or consulting
fees incurred during acquisitions and divestitures. These costs are
included in Selling, general and administrative expense in the
unaudited Condensed Consolidated Statements of
Operations.
|
The Americas segment is comprised of our operations in Northern
North American and Latin American geographies. The International
segment is comprised of our operations in all geographies outside
of the Americas. Certain global expenses are allocated to each
segment in a manner consistent with where the benefits from the
expenses are derived.
Adjusted operating income (loss), adjusted operating margin,
adjusted earnings before interest, taxes, depreciation and
amortization (EBITDA) and adjusted EBITDA margin are the measures
used by the chief operating decision maker to evaluate segment
performance and allocate resources. As such, management believes
that adjusted operating income (loss), adjusted operating margin,
adjusted EBITDA and adjusted EBITDA margin are useful metrics for
investors. Adjusted operating income (loss) is defined as operating
income excluding restructuring charges, currency exchange losses,
loss on divestiture of MSA LLC, product liability expense,
amortization of acquisition-related intangible assets, and
transaction costs. Adjusted operating margin is defined as adjusted
operating income (loss) divided by segment net sales to external
customers. Adjusted EBITDA is defined as adjusted operating income
(loss) plus depreciation and amortization, and adjusted EBITDA
margin is defined as adjusted EBITDA divided by segment net sales
to external customers. Adjusted operating income (loss), adjusted
operating margin, adjusted EBITDA and adjusted EBITDA margin are
not recognized terms under GAAP, and therefore do not purport to be
alternatives to operating income or operating margin as a measure
of operating performance. The company's definition of adjusted
operating income (loss), adjusted operating margin, adjusted EBITDA
and adjusted EBITDA margin may not be comparable to similarly
titled measures of other companies. As such, management believes
that it is appropriate to consider operating income determined on a
GAAP basis in addition to these non-GAAP measures.
|
MSA Safety
Incorporated
Reconciliation of As
Reported Financial Measures to Non-GAAP Financial
Measures
Constant currency
revenue growth (Unaudited)
|
|
|
|
Consolidated
|
|
|
|
|
|
Three Months Ended
March 31, 2024
|
|
|
Firefighter
Safety(a)
|
Detection(b)
|
Industrial PPE
and Other(c)
|
|
Net Sales
|
|
GAAP reported sales
change
|
17 %
|
(5) %
|
(2) %
|
|
4 %
|
|
Plus: Currency
translation effects
|
— %
|
— %
|
(1) %
|
|
(1) %
|
|
Constant currency sales
change
|
17 %
|
(5) %
|
(3) %
|
|
3 %
|
|
|
Americas
Segment
|
|
|
|
Three Months Ended
March 31, 2024
|
|
|
Firefighter
Safety(a)
|
Detection(b)
|
Industrial PPE
and Other(c)
|
|
Net Sales
|
|
GAAP reported sales
change
|
20 %
|
(3) %
|
(2) %
|
|
5 %
|
|
Plus: Currency
translation effects
|
— %
|
(1) %
|
(2) %
|
|
— %
|
|
Constant currency sales
change
|
20 %
|
(4) %
|
(4) %
|
|
5 %
|
|
|
International
Segment
|
|
|
|
Three Months Ended
March 31, 2024
|
|
|
Firefighter
Safety(a)
|
Detection(b)
|
Industrial PPE
and Other(c)
|
|
Net Sales
|
|
GAAP reported sales
change
|
11 %
|
(9) %
|
— %
|
|
— %
|
|
Plus: Currency
translation effects
|
(2) %
|
(1) %
|
(1) %
|
|
(1) %
|
|
Constant currency sales
change
|
9 %
|
(10) %
|
(1) %
|
|
(1) %
|
|
|
(a)
Firefighter Safety includes Breathing Apparatus and Firefighter
Helmets and Protective Apparel.
|
|
(b)
Detection includes Fixed Gas and Flame Detection and Portable Gas
Detection.
|
|
(c)
Industrial PPE and Other includes Industrial Head Protection, Fall
Protection and Non-Core.
|
Management believes that constant currency revenue growth is a
useful metric for investors, as foreign currency translation can
have a material impact on revenue growth trends. Constant currency
revenue growth highlights ongoing business performance excluding
the impact of fluctuating foreign currencies, which is outside of
management's control. There can be no assurances that MSA's
definition of constant currency revenue growth is consistent with
that of other companies. As such, management believes that it is
appropriate to consider revenue growth determined on a GAAP basis
in addition to this non-GAAP financial measure.
|
MSA Safety
Incorporated
Reconciliation of As
Reported Financial Measures to Non-GAAP Financial
Measures
Adjusted earnings
(Unaudited)
Adjusted earnings per
diluted share (Unaudited)
(In thousands, except
per share and percentage amounts)
|
|
|
Three Months Ended
March 31,
|
|
|
|
2024
|
|
2023
|
|
%
Change
|
|
|
|
|
|
|
|
Net income (loss)
attributable to MSA Safety Incorporated
|
$ 58,139
|
|
$ (150,173)
|
|
n/m*
|
|
|
|
|
|
|
|
Loss on divestiture of
MSA LLC
|
—
|
|
129,211
|
|
|
|
Deferred tax asset
write-off related to divestiture of MSA LLC
|
—
|
|
70,366
|
|
|
|
Product liability
expense
|
—
|
|
3
|
|
|
|
Amortization of
acquisition-related intangible assets
|
2,314
|
|
2,305
|
|
|
|
Transaction costs
(a)
|
233
|
|
—
|
|
|
|
Restructuring
charges
|
3,017
|
|
1,747
|
|
|
|
Asset related losses
and other
|
51
|
|
739
|
|
|
|
Currency exchange
losses, net
|
2,333
|
|
4,175
|
|
|
|
Income tax expense on
adjustments
|
(2,590)
|
|
(4,645)
|
|
|
|
Adjusted
earnings
|
$ 63,497
|
|
$ 53,728
|
|
18 %
|
|
|
|
|
|
|
|
Adjusted earnings per
diluted share
|
$
1.61
|
|
$
1.36
|
|
18 %
|
|
|
|
|
|
|
|
(a)
Transaction costs include advisory,
legal, accounting, valuation, and other professional or consulting
fees incurred during acquisitions and divestitures. These costs are
included in Selling, general and administrative expense in the
unaudited Condensed Consolidated Statements of
Operations.
|
|
* Not
meaningful
|
|
|
|
|
|
Management believes that adjusted earnings and adjusted earnings
per diluted share are useful measures for investors, as management
uses these measures to internally assess the company's performance
and ongoing operating trends. There can be no assurances that
additional special items will not occur in future periods, nor that
MSA's definition of adjusted earnings is consistent with that of
other companies. As such, management believes that it is
appropriate to consider both net income (loss) determined on a GAAP
basis as well as adjusted earnings.
|
MSA Safety
Incorporated
Reconciliation of As
Reported Financial Measures to Non-GAAP Financial
Measures
Debt to adjusted EBITDA
/ Net debt to adjusted EBITDA (Unaudited)
(In
thousands)
|
|
|
|
Twelve Months Ended
March 31, 2024
|
|
Operating
income
|
|
$
371,493
|
|
Depreciation and
amortization
|
|
52,505
|
|
Restructuring
charges
|
|
11,162
|
|
Currency exchange
losses, net
|
|
15,237
|
|
Amortization of
acquisition-related intangible assets
|
|
9,255
|
|
Transaction costs
(a)
|
|
1,198
|
|
Adjusted
EBITDA
|
|
$
460,850
|
|
|
|
|
Total end-of-period
debt
|
|
596,154
|
|
|
|
|
Debt to adjusted
EBITDA
|
|
1.3
|
|
|
|
|
Total end-of-period
debt
|
|
$
596,154
|
|
Total end-of-period
cash and cash equivalents
|
|
148,329
|
|
Net debt
|
|
$
447,825
|
|
|
|
|
Net debt to adjusted
EBITDA
|
|
1.0
|
|
|
(a)
Transaction costs include advisory,
legal, accounting, valuation, and other professional or consulting
fees incurred during acquisitions and divestitures. These costs are
included in Selling, general and administrative expense in the
unaudited Condensed Consolidated Statements of
Operations.
|
Management believes that Debt to adjusted EBITDA and Net debt to
adjusted EBITDA are useful measures for investors, as management
uses these measures to internally assess the company's liquidity
and balance sheet strength. There can be no assurances that that
MSA's definition of Debt to Adjusted EBITDA and Net Debt to
Adjusted EBITDA is consistent with that of other companies.
About MSA Safety:
MSA Safety Incorporated (NYSE: MSA) is the global leader in
advanced safety products, technologies and solutions. Driven by its
singular mission of safety, the Company has been at the forefront
of safety innovation since 1914, protecting workers and facility
infrastructure around the world across a broad range of diverse end
markets while creating sustainable value for shareholders. With
2023 revenues of $1.8 billion,
MSA Safety is headquartered in Cranberry
Township, Pennsylvania and employs a team of over 5,000
associates across its more than 40 international locations. For
more information, please visit www.MSASafety.com.
Cautionary Statement Regarding Forward-Looking
Statements:
Except for historical information, certain matters discussed
in this press release may be "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of
1995. These statements relate to future events or our future
financial performance and involve various assumptions, known and
unknown risks, uncertainties and other factors that may cause our
actual results, levels of activity, performance or achievements to
be materially different from any future results, levels of
activity, performance or achievements expressed or implied by these
forward-looking statements. In some cases, you can identify
forward-looking statements by words such as "may," "will,"
"should," "expects," "intends," "plans," "anticipates," "believes,"
"estimates," "predicts," "potential" or other comparable words.
Actual results, performance or outcomes may differ materially from
those expressed or implied by these forward-looking statements and
may not align with historical performance and events due to a
number of factors, including those discussed in the sections of our
annual report on Form 10-K entitled "Cautionary Statement Regarding
Forward-Looking Statements" and "Risk Factors," and those discussed
in our Form 10-Q quarterly reports filed after such annual report.
MSA's SEC filings are readily obtainable at no charge at
www.sec.gov, as well as on its own investor relations website at
http://investors.MSAsafety.com. Although we believe that the
expectations reflected in the forward-looking statements are
reasonable, we cannot guarantee future results, levels of activity,
performance or achievements, and caution should be exercised
against placing undue reliance upon such statements, which are
based only on information currently available to us and speak only
as of the date hereof. We are under no duty to update publicly any
of the forward-looking statements after the date of this earnings
press release, whether as a result of new information, future
events or otherwise, except as required by law.
Non-GAAP Financial Measures:
This press release includes certain non-GAAP financial measures.
These financial measures include constant currency revenue growth,
adjusted operating income, adjusted operating margin, adjusted
EBITDA, adjusted EBITDA margin, adjusted earnings, adjusted
earnings per diluted share, debt to adjusted EBITDA, and net debt
to adjusted EBITDA. These non-GAAP financial measures provide
information useful to investors in understanding our operating
performance and trends, and to facilitate comparisons with the
performance of our peers. Management also uses these measures
internally to assess and better understand our underlying business
performance and trends related to core business activities. The
non-GAAP financial measures and key performance indicators we use,
and computational methods with respect thereto, may differ from the
non-GAAP financial measures and key performance indicators, and
computational methods, that our peers use to assess their
performance and trends.
The presentation of these non-GAAP financial measures does
not comply with U.S. GAAP. These non-GAAP financial measures should
be viewed as supplemental in nature, and not as a substitute for,
or superior to, our reported results prepared in accordance with
GAAP. When non-GAAP financial measures are disclosed, the
Securities and Exchange Commission's Regulation G requires: (i) the
presentation of the most directly comparable financial measure
calculated and presented in accordance with GAAP and (ii) a
reconciliation of the differences between the non-GAAP financial
measure presented and the most directly comparable financial
measure calculated and presented in accordance with GAAP. The
presentation of these financial measures does not comply with U.S.
generally accepted accounting principles ("GAAP"). For an
explanation of these measures, with a reconciliation to the most
directly comparable GAAP financial measure, see the Reconciliation
of As Reported Financial Measures to Non-GAAP Financial Measures in
the financial tables section above.
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SOURCE MSA Safety
