MSA Announces Third Quarter Results
Quarterly Highlights
- Reported revenue was
$274 million , up 8 percent on a local currency basis from the third quarter of 2014 but down 1 percent on a reported basis, reflecting a 9 percent currency headwind associated with the stronger U.S. dollar. Income from continuing operations was$16 million, or$0.41 per diluted share. Adjusted earnings were$22 million , or$0.59 per diluted share, increasing 4 percent from the third quarter of 2014.
- Local currency sales of self-contained breathing apparatus (SCBA) increased 83 percent globally, driven by strong demand for the company's new G1 model within the North American fire service market. Global SCBA backlog at the end of the quarter was
$68 million , compared to$77 million at the end of the second quarter of 2015.
- Local currency sales of MSA core products increased 13 percent in the quarter, with strong performance in SCBA and fire helmets, offset by a lower level of fixed gas and flame detection (FGFD) shipments and continued weakness in the sale of portable gas detection and industrial head protection, both of which are more exposed to employment levels within the energy market.
- In response to challenging business conditions and weak outlooks in the energy market and key emerging geographies like
Brazil andChina , the company is executing a restructuring program to reduce operating costs. Restructuring investments are expected to total$4 to $6 million in the fourth quarter of 2015, resulting in approximately$10 million of cost savings in 2016.
- R&D investments in new products are generating strong returns, as products developed and launched over the last five years represented 44 percent of quarterly core product revenue, compared to 36 percent from a year ago.
- Earlier today, the company closed on its acquisition of
U.K. basedLatchways plc , a market leader in permanent engineered fall protection solutions. The transaction doubles MSA's market share in fall protection, which represents one of the largest and fastest growing segments of the global safety market.
Comments from Management
"The third quarter presented us with several challenges, including a stronger U.S. dollar, softer business conditions in emerging markets, and continued weakness in the energy market. Despite these headwinds, the results we continue to see in the fire service market provide a sense of optimism in an otherwise challenging macro environment," said
"Although we continue to see solid results in the fire service, we are actively taking steps to reduce our cost structure to mitigate the weakness we see in the energy sector and certain emerging markets," Mr. Lambert said. He explained that the company has started executing a restructuring program that is expected to generate
"The impacts of lower commodity prices, economic challenges in emerging markets like
"While we are taking steps to reduce our cost structure, we certainly recognize the importance of investing for growth and advancing the core areas of our business. That commitment, and the R&D investments we've made over the past several years, are what's driving the strong returns we're seeing in the fire service, and on the inorganic side we recently completed a strategic acquisition in a very attractive market," he said. "Overall, we are taking decisive action to mitigate risk in response to this challenging business cycle, but we continue to make key growth investments that have and will continue to generate long-term value for all of our stakeholders," he concluded.
MSA Safety Incorporated |
||||||||||||||||
Condensed Consolidated Statement of Income (Unaudited) |
||||||||||||||||
(In thousands, except per share amounts) |
||||||||||||||||
Three Months Ended |
Nine Months Ended |
|||||||||||||||
2015 |
2014 |
2015 |
2014 |
|||||||||||||
Net sales |
$ |
273,746 |
$ |
275,159 |
$ |
817,465 |
$ |
822,697 |
||||||||
Other income, net |
431 |
585 |
1,166 |
986 |
||||||||||||
274,177 |
275,744 |
818,631 |
823,683 |
|||||||||||||
Cost of products sold |
153,965 |
151,436 |
450,372 |
447,489 |
||||||||||||
Selling, general and administrative |
72,727 |
77,301 |
231,683 |
245,377 |
||||||||||||
Research and development |
12,532 |
13,420 |
36,430 |
36,604 |
||||||||||||
Restructuring and other charges |
3,740 |
3,640 |
4,698 |
6,397 |
||||||||||||
Interest expense |
2,827 |
2,493 |
7,802 |
7,617 |
||||||||||||
Currency exchange losses, net |
4,327 |
315 |
3,336 |
358 |
||||||||||||
250,118 |
248,605 |
734,321 |
743,842 |
|||||||||||||
Income from continuing operations before income taxes |
24,059 |
27,139 |
84,310 |
79,841 |
||||||||||||
Provision for income taxes |
8,935 |
8,699 |
36,669 |
26,056 |
||||||||||||
Income from continuing operations |
15,124 |
18,440 |
47,641 |
53,785 |
||||||||||||
Income from discontinued operations |
462 |
765 |
1,240 |
1,832 |
||||||||||||
Net income |
15,586 |
19,205 |
48,881 |
55,617 |
||||||||||||
Net loss attributable to noncontrolling interests |
390 |
100 |
1,075 |
202 |
||||||||||||
Net income attributable to MSA Safety Incorporated |
15,976 |
19,305 |
49,956 |
55,819 |
||||||||||||
Amounts attributable to MSA Safety Incorporated common shareholders: |
||||||||||||||||
Income from continuing operations |
15,712 |
18,674 |
48,750 |
54,328 |
||||||||||||
Income from discontinued operations |
264 |
631 |
1,206 |
1,491 |
||||||||||||
Net income |
15,976 |
19,305 |
49,956 |
55,819 |
||||||||||||
Earnings per share attributable to MSA Safety Incorporated common shareholders: |
||||||||||||||||
Basic |
||||||||||||||||
Income from continuing operations |
$0.42 |
$0.50 |
$1.30 |
$1.45 |
||||||||||||
Income from discontinued operations |
$0.01 |
$0.02 |
$0.03 |
$0.04 |
||||||||||||
Net income |
$0.43 |
$0.52 |
$1.33 |
$1.49 |
||||||||||||
Diluted |
||||||||||||||||
Income from continuing operations |
$0.41 |
$0.49 |
$1.29 |
$1.43 |
||||||||||||
Income from discontinued operations |
$0.01 |
$0.02 |
$0.03 |
$0.04 |
||||||||||||
Net income |
$0.42 |
$0.51 |
$1.32 |
$1.47 |
||||||||||||
Basic shares outstanding |
37,252 |
37,187 |
37,301 |
37,111 |
||||||||||||
Diluted shares outstanding |
37,709 |
37,784 |
37,776 |
37,708 |
||||||||||||
MSA Safety Incorporated |
|||||||
Condensed Consolidated Balance Sheet (Unaudited) |
|||||||
(In thousands) |
|||||||
September 30, 2015 |
December 31, 2014 |
||||||
Assets |
|||||||
Cash and cash equivalents |
$ |
189,343 |
$ |
105,998 |
|||
Trade receivables, net |
211,709 |
211,440 |
|||||
Inventories |
150,125 |
122,954 |
|||||
Other current assets |
69,407 |
57,477 |
|||||
Total current assets |
620,584 |
497,869 |
|||||
Property, net |
144,805 |
151,352 |
|||||
Prepaid pension cost |
82,011 |
75,017 |
|||||
Goodwill |
248,319 |
252,520 |
|||||
Other noncurrent assets |
281,248 |
288,034 |
|||||
Total assets |
1,376,967 |
1,264,792 |
|||||
Liabilities and shareholders' equity |
|||||||
Notes payable and current portion of long-term debt |
$ |
6,806 |
$ |
6,700 |
|||
Accounts payable |
68,798 |
70,210 |
|||||
Other current liabilities |
175,664 |
157,147 |
|||||
Total current liabilities |
251,268 |
234,057 |
|||||
Long-term debt |
388,000 |
245,000 |
|||||
Pensions and other employee benefits |
167,151 |
174,598 |
|||||
Deferred tax liabilities |
29,410 |
26,306 |
|||||
Other noncurrent liabilities |
16,235 |
46,198 |
|||||
Total shareholders' equity |
524,903 |
538,633 |
|||||
Total liabilities and shareholders' equity |
1,376,967 |
1,264,792 |
MSA Safety Incorporated |
|||||||||||||||
Condensed Consolidated Statement of Cash Flows (Unaudited) |
|||||||||||||||
(In thousands) |
|||||||||||||||
Three Months Ended |
Nine Months Ended |
||||||||||||||
2015 |
2014 |
2015 |
2014 |
||||||||||||
Net income |
$ |
15,586 |
$ |
19,205 |
$ |
48,881 |
$ |
55,617 |
|||||||
Depreciation and amortization |
6,982 |
7,196 |
22,646 |
22,311 |
|||||||||||
Change in working capital and other operating |
(20,451) |
9,091 |
(61,697) |
(27,126) |
|||||||||||
Cash from operations |
2,117 |
35,492 |
9,830 |
50,802 |
|||||||||||
Capital expenditures |
(9,133) |
(9,705) |
(25,148) |
(24,233) |
|||||||||||
Property disposals |
— |
— |
7,969 |
— |
|||||||||||
Cash from investing |
(9,133) |
(9,705) |
(17,179) |
(24,233) |
|||||||||||
Cash dividends paid |
(11,926) |
(11,542) |
(35,448) |
(34,043) |
|||||||||||
Change in debt |
125,138 |
(11,012) |
143,142 |
9,171 |
|||||||||||
Share repurchase program |
— |
— |
(7,104) |
— |
|||||||||||
Other financing |
(136) |
1,938 |
(391) |
4,013 |
|||||||||||
Cash from financing |
113,076 |
(20,616) |
100,199 |
(20,859) |
|||||||||||
Exchange rate changes |
(4,851) |
(3,999) |
(9,505) |
(4,620) |
|||||||||||
Increase in cash |
101,209 |
1,172 |
83,345 |
1,090 |
MSA Safety Incorporated |
|||||||||||||||
Segment Information (Unaudited) |
|||||||||||||||
(In thousands) |
|||||||||||||||
Three Months Ended |
Nine Months Ended |
||||||||||||||
2015 |
2014 |
2015 |
2014 |
||||||||||||
Net sales |
|||||||||||||||
North America |
$ |
156,141 |
$ |
131,844 |
$ |
445,898 |
$ |
400,147 |
|||||||
Europe |
62,489 |
75,785 |
203,819 |
229,606 |
|||||||||||
International |
55,116 |
67,530 |
167,748 |
192,944 |
|||||||||||
Total |
273,746 |
275,159 |
817,465 |
822,697 |
|||||||||||
Net income (loss) |
|||||||||||||||
North America |
$ |
25,225 |
$ |
18,324 |
$ |
61,909 |
$ |
51,991 |
|||||||
Europe |
(837) |
2,575 |
1,322 |
12,807 |
|||||||||||
International |
2,275 |
3,807 |
8,926 |
11,570 |
|||||||||||
Corporate |
(10,357) |
(6,500) |
(22,849) |
(21,859) |
|||||||||||
Reconciling Items |
(594) |
468 |
(558) |
(181) |
|||||||||||
Income from continuing operations |
15,712 |
18,674 |
48,750 |
54,328 |
|||||||||||
Income from discontinued operations |
264 |
631 |
1,206 |
1,491 |
|||||||||||
Total |
15,976 |
19,305 |
49,956 |
55,819 |
The Corporate segment was established on
MSA Safety Incorporated |
|||||||||||
Supplemental Segment Information (Unaudited) |
|||||||||||
Local Currency Revenue Growth |
|||||||||||
Three Months Ended September 30, 2015 |
|||||||||||
Consolidated |
North America |
Europe |
International |
||||||||
Breathing Apparatus |
83 |
% |
163 |
% |
5 |
% |
48 |
% |
|||
Fire and Rescue Helmets |
32 |
% |
21 |
% |
21 |
% |
82 |
% |
|||
Fall Protection |
(2) |
% |
(1) |
% |
75 |
% |
(4) |
% |
|||
Industrial Head Protection |
(8) |
% |
(10) |
% |
21 |
% |
(10) |
% |
|||
Fixed Gas and Flame Detection |
(9) |
% |
(4) |
% |
(7) |
% |
(26) |
% |
|||
Portable Gas Detection |
(13) |
% |
(15) |
% |
(17) |
% |
(2) |
% |
|||
Core Sales |
13 |
% |
25 |
% |
(1) |
% |
3 |
% |
|||
Non-Core Sales |
(11) |
% |
(5) |
% |
(11) |
% |
(18) |
% |
|||
Net Sales |
8 |
% |
20 |
% |
(4) |
% |
(3) |
% |
|||
Nine Months Ended September 30, 2015 |
|||||||||||
Consolidated |
North America |
Europe |
International |
||||||||
Breathing Apparatus |
50 |
% |
105 |
% |
3 |
% |
9 |
% |
|||
Fire and Rescue Helmets |
18 |
% |
7 |
% |
4 |
% |
89 |
% |
|||
Fall Protection |
2 |
% |
3 |
% |
23 |
% |
(3) |
% |
|||
Industrial Head Protection |
(8) |
% |
(9) |
% |
20 |
% |
(13) |
% |
|||
Fixed Gas and Flame Detection |
2 |
% |
3 |
% |
— |
% |
4 |
% |
|||
Portable Gas Detection |
(7) |
% |
(17) |
% |
6 |
% |
9 |
% |
|||
Core Sales |
10 |
% |
16 |
% |
3 |
% |
4 |
% |
|||
Non-Core Sales |
(2) |
% |
(4) |
% |
12 |
% |
(14) |
% |
|||
Net Sales |
8 |
% |
13 |
% |
5 |
% |
(1) |
% |
MSA Safety Incorporated |
|||||||||||||||||||
Reconciliation of As Reported Financial Measures to Non-GAAP Financial Measures |
|||||||||||||||||||
Adjusted Earnings / Earnings per Diluted Share (Unaudited) |
|||||||||||||||||||
(In thousands, except per share amounts) |
|||||||||||||||||||
Three Months Ended |
Nine Months Ended |
||||||||||||||||||
2015 |
2014 |
% Change |
2015 |
2014 |
% |
||||||||||||||
Income from continuing |
15,712 |
18,674 |
(15.9)% |
48,750 |
54,328 |
(10.3)% |
|||||||||||||
Nonrecurring tax charges associated with European reorganization |
— |
— |
7,605 |
— |
|||||||||||||||
Non-deductible transaction |
707 |
— |
707 |
— |
|||||||||||||||
Income from continuing operations excluding non-deductible charges |
16,419 |
18,674 |
(12.1)% |
57,062 |
54,328 |
5.0% |
|||||||||||||
Currency exchange losses, net |
4,327 |
315 |
3,336 |
358 |
|||||||||||||||
Restructuring and other charges |
3,740 |
3,640 |
4,698 |
6,397 |
|||||||||||||||
Self-insured legal settlements and defense costs |
708 |
29 |
1,050 |
2,286 |
|||||||||||||||
Asset related losses, net |
206 |
— |
538 |
— |
|||||||||||||||
Income tax expense on adjustments |
(3,287) |
(1,279) |
(3,300) |
(2,950) |
|||||||||||||||
Adjusted earnings |
22,113 |
21,379 |
3.4% |
63,384 |
60,419 |
4.9% |
|||||||||||||
Adjusted earnings per diluted share |
$ |
0.59 |
$ |
0.57 |
3.5% |
$ |
1.68 |
$ |
1.60 |
5.0% |
|||||||||
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, the impact of acquisitions and related integration activities, 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-third-quarter-results-300164330.html
SOURCE MSA
Media Relations Contact: Mark Deasy (724) 741 - 8570, or Investor Relations Contact: Kenneth Krause (724) 741 - 8534