MSA Announces Second Quarter Results
Quarterly Highlights
- Reported revenue was
$287 million , up 2 percent from the second quarter of 2014. Income from continuing operations was$24 million or$0.62 per diluted share. Adjusted earnings were$25 million or$0.67 per diluted share, increasing 12 percent from the second quarter of 2014. - Core sales grew 10 percent on a local currency basis in the quarter, with strong performance in fire service products and fixed gas and flame detection (FGFD) systems. This was offset by continued weakness in portable gas detection and industrial head protection, which are more exposed to employment levels within the energy market vertical.
- Local currency sales of self-contained breathing apparatus (SCBA) increased 41 percent globally, driven by a 90 percent increase in
North America , as the manufacturing ramp up of the company's groundbreaking G1 SCBA platform continues to gain traction. Global SCBA backlog at the end of the quarter was$77 million , compared to$82 million at the end of the first quarter of 2015 and almost$40 million at this same time a year ago. - Despite significant weakness in
Brazil on recessionary conditions and a slower growth environment inAsia , local currency sales across emerging markets increased 9 percent. This improvement was supported by large order shipments in theMiddle East andMexico . - R&D investments made in new products are generating strong returns, as products developed and launched within the last five years represented 45 percent of quarterly core product revenue, compared to 32 percent a year ago.
- In the quarter, MSA used
$12 million of cash flow to fund dividend payments,$7 million to repurchase common stock to offset dilution as part of its newly authorized$100 million stock repurchase plan and$4 million to service debt obligations as it continues to reduce leverage.
Comments from Management
"Our quarterly results reflect our team's highly focused execution of our strategy, despite challenging conditions that continue to impact certain areas of our business," said
"Although we saw strong sales and earnings growth in the quarter, headwinds associated with lower commodity prices, economic conditions in certain emerging markets and weakness in foreign currencies weighed on our results," Mr. Lambert said. "Looking ahead, I expect these challenges to persist into the second half of 2015. However, the demand we're seeing for the G1 SCBA and our sizable backlog in this area provides momentum as we head into the third quarter, helping us navigate these headwinds," he concluded.
MSA Safety Incorporated Condensed Consolidated Statement of Income (Unaudited) (In thousands, except per share amounts) |
|||||||||||||||
Three Months Ended |
Six Months Ended |
||||||||||||||
2015 |
2014 |
2015 |
2014 |
||||||||||||
Net sales |
$ |
287,011 |
$ |
282,493 |
$ |
543,719 |
$ |
547,538 |
|||||||
Other income, net |
94 |
45 |
735 |
401 |
|||||||||||
287,105 |
282,538 |
544,454 |
547,939 |
||||||||||||
Cost of products sold |
156,522 |
152,823 |
296,407 |
296,053 |
|||||||||||
Selling, general and administrative |
77,588 |
82,835 |
158,956 |
168,076 |
|||||||||||
Research and development |
12,984 |
11,943 |
23,898 |
23,184 |
|||||||||||
Restructuring and other charges |
227 |
857 |
958 |
2,757 |
|||||||||||
Interest expense |
2,502 |
2,594 |
4,975 |
5,124 |
|||||||||||
Currency exchange losses (gains), net |
1,557 |
(309) |
(991) |
43 |
|||||||||||
251,380 |
250,743 |
484,203 |
495,237 |
||||||||||||
Income from continuing operations before income taxes |
35,725 |
31,795 |
60,251 |
52,702 |
|||||||||||
Provision for income taxes |
12,350 |
9,753 |
27,734 |
17,357 |
|||||||||||
Income from continuing operations |
23,375 |
22,042 |
32,517 |
35,345 |
|||||||||||
Income from discontinued operations |
470 |
453 |
778 |
1,067 |
|||||||||||
Net income |
23,845 |
22,495 |
33,295 |
36,412 |
|||||||||||
Net loss (income) attributable to noncontrolling interests |
453 |
(7) |
685 |
102 |
|||||||||||
Net income attributable to MSA Safety Incorporated |
24,298 |
22,488 |
33,980 |
36,514 |
|||||||||||
Income from continuing operations |
23,722 |
22,132 |
33,038 |
35,654 |
|||||||||||
Income from discontinued operations |
576 |
356 |
942 |
860 |
|||||||||||
Net income attributable to MSA Safety Incorporated |
24,298 |
22,488 |
33,980 |
36,514 |
|||||||||||
Earnings per share attributable to MSA Safety Incorporated common shareholders: |
|||||||||||||||
Basic |
|||||||||||||||
Income from continuing operations |
$0.63 |
$0.59 |
$0.88 |
$0.96 |
|||||||||||
Income from discontinued operations |
$0.02 |
$0.01 |
$0.03 |
$0.02 |
|||||||||||
Net income |
$0.65 |
$0.60 |
$0.91 |
$0.98 |
|||||||||||
Diluted |
|||||||||||||||
Income from continuing operations |
$0.62 |
$0.58 |
$0.87 |
$0.94 |
|||||||||||
Income from discontinued operations |
$0.01 |
$0.01 |
$0.03 |
$0.02 |
|||||||||||
Net income |
$0.63 |
$0.59 |
$0.90 |
$0.96 |
|||||||||||
Basic shares outstanding |
37,351 |
37,128 |
37,323 |
37,072 |
|||||||||||
Diluted shares outstanding |
37,826 |
37,719 |
37,807 |
37,669 |
MSA Safety Incorporated Condensed Consolidated Balance Sheet (Unaudited) (In thousands) |
|||||||
June 30, 2015 |
December 31, 2014 |
||||||
Assets |
|||||||
Cash and cash equivalents |
$ |
88,134 |
$ |
105,998 |
|||
Trade receivables, net |
218,833 |
211,440 |
|||||
Inventories |
150,415 |
122,954 |
|||||
Other current assets |
75,226 |
57,477 |
|||||
Total current assets |
532,608 |
497,869 |
|||||
Property, net |
144,955 |
151,352 |
|||||
Prepaid pension cost |
79,330 |
75,017 |
|||||
Goodwill |
248,416 |
252,520 |
|||||
Other noncurrent assets |
281,270 |
288,034 |
|||||
Total assets |
1,286,579 |
1,264,792 |
|||||
Liabilities and shareholders' equity |
|||||||
Notes payable and current portion of long-term debt |
$ |
6,667 |
$ |
6,700 |
|||
Accounts payable |
80,465 |
70,210 |
|||||
Other current liabilities |
194,223 |
157,147 |
|||||
Total current liabilities |
281,355 |
234,057 |
|||||
Long-term debt |
263,000 |
245,000 |
|||||
Pensions and other employee benefits |
165,272 |
174,598 |
|||||
Deferred tax liabilities |
28,334 |
26,306 |
|||||
Other noncurrent liabilities |
16,059 |
46,198 |
|||||
Total shareholders' equity |
532,559 |
538,633 |
|||||
Total liabilities and shareholders' equity |
1,286,579 |
1,264,792 |
MSA Safety Incorporated Condensed Consolidated Statement of Cash Flows (Unaudited) (In thousands) |
|||||||||||||||||
Three Months Ended |
Six Months Ended |
||||||||||||||||
2015 |
2014 |
2015 |
2014 |
||||||||||||||
Net income |
$ |
23,845 |
$ |
22,495 |
$ |
33,295 |
$ |
36,412 |
|||||||||
Depreciation and amortization |
8,727 |
7,656 |
15,664 |
15,115 |
|||||||||||||
Change in working capital and other operating |
(8,196) |
(24,238) |
(41,246) |
(36,217) |
|||||||||||||
Cash from operations |
24,376 |
5,913 |
7,713 |
15,310 |
|||||||||||||
Capital expenditures |
(8,546) |
(7,324) |
(16,015) |
(14,528) |
|||||||||||||
Property disposals |
7,969 |
— |
7,969 |
— |
|||||||||||||
Cash from investing |
(577) |
(7,324) |
(8,046) |
(14,528) |
|||||||||||||
Cash dividends paid |
(11,969) |
(11,320) |
(23,522) |
(22,501) |
|||||||||||||
Change in debt |
(3,549) |
4,886 |
18,004 |
20,183 |
|||||||||||||
Share repurchase program |
(7,104) |
— |
(7,104) |
— |
|||||||||||||
Other financing |
480 |
1,621 |
(255) |
2,075 |
|||||||||||||
Cash from financing |
(22,142) |
(4,813) |
(12,877) |
(243) |
|||||||||||||
Exchange rate changes |
176 |
195 |
(4,654) |
(621) |
|||||||||||||
Increase (decrease) in cash |
1,833 |
(6,029) |
(17,864) |
(82) |
MSA Safety Incorporated Segment Information (Unaudited) (In thousands) |
|||||||||||||||
Three Months Ended |
Six Months Ended |
||||||||||||||
2015 |
2014 |
2015 |
2014 |
||||||||||||
Net sales |
|||||||||||||||
North America |
$ |
156,193 |
$ |
138,782 |
$ |
289,757 |
$ |
268,303 |
|||||||
Europe |
75,317 |
78,883 |
141,330 |
153,821 |
|||||||||||
International |
55,501 |
64,828 |
112,632 |
125,414 |
|||||||||||
Total |
287,011 |
282,493 |
543,719 |
547,538 |
|||||||||||
Net income (loss) |
|||||||||||||||
North America |
$ |
22,253 |
$ |
19,407 |
$ |
36,684 |
$ |
33,667 |
|||||||
Europe |
6,596 |
6,780 |
2,159 |
10,232 |
|||||||||||
International |
2,989 |
3,172 |
6,651 |
7,763 |
|||||||||||
Corporate |
(7,655) |
(7,473) |
(12,492) |
(15,359) |
|||||||||||
Reconciling Items |
(461) |
246 |
36 |
(649) |
|||||||||||
Income from continuing operations |
23,722 |
22,132 |
33,038 |
35,654 |
|||||||||||
Income from discontinued operations |
576 |
356 |
942 |
860 |
|||||||||||
Total |
24,298 |
22,488 |
33,980 |
36,514 |
The Corporate segment was established on
MSA Safety Incorporated Supplemental Segment Information (Unaudited) Local Currency Revenue Growth |
|||||||||||
Three Months Ended June 30, 2015 |
|||||||||||
Consolidated |
North America |
Europe |
International |
||||||||
Breathing Apparatus |
41 |
% |
90 |
% |
1 |
% |
(8) |
% |
|||
Fire and Rescue Helmets |
11 |
% |
(3) |
% |
(10) |
% |
146 |
% |
|||
Fixed Gas and Flame Detection |
10 |
% |
6 |
% |
21 |
% |
— |
% |
|||
Fall Protection |
— |
% |
8 |
% |
(12) |
% |
(13) |
% |
|||
Portable Gas Detection |
(5) |
% |
(18) |
% |
12 |
% |
17 |
% |
|||
Industrial Head Protection |
(9) |
% |
(8) |
% |
20 |
% |
(16) |
% |
|||
Core Sales |
10 |
% |
15 |
% |
9 |
% |
— |
% |
|||
Non-Core Sales |
12 |
% |
10 |
% |
35 |
% |
(11) |
% |
|||
Net Sales |
11 |
% |
14 |
% |
16 |
% |
(3) |
% |
|||
Six Months Ended June 30, 2015 |
|||||||||||
Consolidated |
North America |
Europe |
International |
||||||||
Breathing Apparatus |
34 |
% |
77 |
% |
2 |
% |
(8) |
% |
|||
Fire and Rescue Helmets |
12 |
% |
1 |
% |
(2) |
% |
93 |
% |
|||
Fixed Gas and Flame Detection |
9 |
% |
8 |
% |
4 |
% |
23 |
% |
|||
Fall Protection |
3 |
% |
6 |
% |
5 |
% |
(2) |
% |
|||
Portable Gas Detection |
(4) |
% |
(18) |
% |
19 |
% |
15 |
% |
|||
Industrial Head Protection |
(8) |
% |
(8) |
% |
19 |
% |
(14) |
% |
|||
Core Sales |
9 |
% |
12 |
% |
6 |
% |
5 |
% |
|||
Non-Core Sales |
2 |
% |
(4) |
% |
23 |
% |
(12) |
% |
|||
Net Sales |
7 |
% |
9 |
% |
10 |
% |
— |
% |
MSA Safety Incorporated Reconciliation of As Reported Financial Measures to Non-GAAP Financial Measures Adjusted Earnings / Earnings per Share (Unaudited) (In thousands, except per share amounts) |
||||||||||||||||||||
Three Months Ended |
Six Months Ended |
|||||||||||||||||||
2015 |
2014 |
% Change |
2015 |
2014 |
% |
|||||||||||||||
Income from continuing operations attributable to MSA Safety Incorporated |
23,722 |
22,132 |
7.2% |
33,038 |
35,654 |
(7.3)% |
||||||||||||||
Nonrecurring tax charges associated with European reorganization |
— |
— |
7,605 |
— |
||||||||||||||||
Income from continuing operations excluding nonrecurring tax charges |
23,722 |
22,132 |
7.2% |
40,643 |
35,654 |
14.0% |
||||||||||||||
Asset related loss, net |
332 |
— |
332 |
— |
||||||||||||||||
Foreign currency loss / (gain), net |
1,557 |
(309) |
(991) |
43 |
||||||||||||||||
Self insured legal settlements and defense costs |
256 |
140 |
342 |
2,257 |
||||||||||||||||
Restructuring charges |
227 |
857 |
958 |
2,757 |
||||||||||||||||
Income tax expense on adjustments |
(820) |
(211) |
(214) |
(1,665) |
||||||||||||||||
Adjusted earnings |
25,274 |
22,609 |
11.8% |
41,070 |
39,046 |
5.2% |
||||||||||||||
Adjusted earnings per diluted |
$ |
0.67 |
$ |
0.60 |
11.7% |
$ |
1.09 |
$ |
1.04 |
4.8% |
Management believes that adjusted earnings and adjusted earnings per share are useful measures for investors when analyzing 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 determined on a GAAP basis as well as adjusted earnings.
About MSA:
Established in 1914,
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. Forward-looking statements include but are not limited to all projections and anticipated levels of future performance. Forward looking statements involve risks, uncertainties and other factors that may cause our actual results to differ materially from those discussed herein. Any number of factors could cause actual results to differ materially from projections or forward looking statements, including without limitation global economic conditions, spending patterns of government agencies, competitive pressures, product liability claims, the success of new product introductions, currency exchange rate fluctuations and the risks of doing business in foreign countries. A full listing of these risks, uncertainties and other factors are detailed from time-to-time in our filings with the
Non-GAAP Financial Measures
This earnings release includes certain non-GAAP financial measures. These financial measures include adjusted earnings and adjusted earnings per diluted share. The presentation of these financial measures does not comply with U.S. generally accepted accounting principles ("GAAP"). For an explanation of these measures, together 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.
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/msa-announces-second-quarter-results-300117326.html
SOURCE MSA
Media Relations Contact: Mark Deasy (724) 741 - 8570; Investor Relations Contact: Ken Krause (724) 741 - 8534