MSA Announces Fourth Quarter and Full-Year Results
Quarterly Highlights
- Revenue was
$313 million , increasing 8 percent on a local currency basis, including 4 percent associated with the recent acquisition ofLatchways plc , aU.K. -based market leader in highly engineered fall protection systems. Reported revenue increased 1 percent, reflecting a 7 percent foreign currency translation headwind related to the stronger U.S. dollar.
- Adjusted earnings were
$32 million or$0.84 per diluted share versus$0.93 per diluted share in the same period a year ago. Reported income from continuing operations was$21 million , or$0.55 per diluted share.
- Local currency revenue from core product lines increased 12 percent, driven by robust shipping activity of the company's G1 self-contained breathing apparatus (SCBA) to the North American fire service market.
- The company executed on an expanded revolving credit facility that provides access to
$575 million of committed capital, while also taking advantage of low long-term interest rates by issuing notes totaling £55 million ($80 million ) at a fixed interest rate of 3.4 percent through 2031. These capital structure enhancements provide MSA with the flexibility and capacity to continue investing in strategic growth projects while maintaining a balanced approach to capital allocation.
Annual Highlights
- Revenue was
$1.1 billion , increasing 8 percent on a local currency basis, including 1 percent associated with the acquisition of Latchways. Reported revenue was flat compared to a year ago, reflecting an 8 percent foreign currency translation headwind related to the stronger U.S. dollar.
- Adjusted earnings were
$95 million or$2.52 per diluted share versus$2.53 per diluted share for the same period a year ago. Reported income from continuing operations was$70 million , or$1.84 per diluted share.
- Local currency revenue from core product lines increased 11 percent as the company's diversified portfolio supported double-digit growth in a challenging macro environment. Market share gains in the fire service fully offset weaker demand for products that are exposed to the energy sector.
- R&D investments in new product development are yielding strong results, as products developed and launched over the past five years reflected 38 percent of revenue compared to 27 percent in 2014.
Comments from Management
"Our fourth quarter results reflected strong execution of our strategy in a very challenging environment," said
Continuing its focus on driving growth in attractive markets, the company took steps in the fourth quarter to broaden its market coverage, geographic reach and product portfolio within the growing fall protection segment. "In October we deployed capital to acquire Latchways, a strategic investment that provides a very solid foundation for achieving growth in one of the largest areas of the global safety market," Mr. Lambert noted. "I'm pleased to report that we are very much on track with our integration plans, which include realizing synergies and leveraging the unique strengths of each organization to deliver unparalleled solutions to our customers," Mr. Lambert said.
"Although we continue to see solid results in certain areas of our business, our planning assumptions for 2016 reflect a slower growth environment associated with the macro headwinds that continue to impact the energy market and emerging markets like
"We took decisive steps in the fourth quarter to drive top-line growth while reducing our cost structure to align with the realities of our current operating environment," Mr. Lambert said. "As we look ahead to 2016, we will continue to focus on closely managing operating expenses while using our strong capital structure to invest in new product development and other strategic initiatives that advance our mission, build customer loyalty, and position MSA for profitable growth and value creation in 2016 and beyond," he concluded.
MSA Safety Incorporated |
|||||||||||||||
Condensed Consolidated Statement of Income (Unaudited) |
|||||||||||||||
(In thousands, except per share amounts) |
|||||||||||||||
Three Months Ended |
Twelve Months Ended |
||||||||||||||
2015 |
2014 |
2015 |
2014 |
||||||||||||
Net sales |
$ |
313,318 |
$ |
311,188 |
$ |
1,130,783 |
$ |
1,133,885 |
|||||||
Other (loss) income, net |
(2,027) |
1,779 |
(861) |
2,765 |
|||||||||||
311,291 |
312,967 |
1,129,922 |
1,136,650 |
||||||||||||
Cost of products sold |
179,308 |
171,047 |
629,680 |
618,536 |
|||||||||||
Selling, general and administrative |
83,587 |
77,420 |
315,270 |
322,797 |
|||||||||||
Research and development |
12,200 |
11,643 |
48,630 |
48,247 |
|||||||||||
Restructuring and other charges |
7,560 |
2,118 |
12,258 |
8,515 |
|||||||||||
Interest expense |
3,052 |
2,234 |
10,854 |
9,851 |
|||||||||||
Currency exchange (gains) losses, net |
(1,132) |
1,151 |
2,204 |
1,509 |
|||||||||||
284,575 |
265,613 |
1,018,896 |
1,009,455 |
||||||||||||
Income from continuing operations before income |
26,716 |
47,354 |
111,026 |
127,195 |
|||||||||||
Provision for income taxes |
7,738 |
14,988 |
44,407 |
41,044 |
|||||||||||
Income from continuing operations |
18,978 |
32,366 |
66,619 |
86,151 |
|||||||||||
Income (loss) from discontinued operations |
85 |
(56) |
1,325 |
1,776 |
|||||||||||
Net income |
19,063 |
32,310 |
67,944 |
87,927 |
|||||||||||
Net loss attributable to noncontrolling interests |
1,788 |
377 |
2,863 |
579 |
|||||||||||
Net income attributable to MSA Safety Incorporated |
20,851 |
32,687 |
70,807 |
88,506 |
|||||||||||
Amounts attributable to MSA Safety Incorporated |
|||||||||||||||
Income from continuing operations |
20,840 |
33,119 |
69,590 |
87,447 |
|||||||||||
Income (loss) from discontinued operations |
11 |
(432) |
1,217 |
1,059 |
|||||||||||
Net income |
20,851 |
32,687 |
70,807 |
88,506 |
|||||||||||
Earnings Per Share attributable to MSA Safety |
|||||||||||||||
Basic |
|||||||||||||||
Income from continuing operations |
$ |
0.56 |
$ |
0.88 |
$ |
1.86 |
$ |
2.34 |
|||||||
Income (loss) from discontinued operations |
$ |
— |
$ |
(0.01) |
$ |
0.03 |
$ |
0.03 |
|||||||
Net income |
$ |
0.56 |
$ |
0.87 |
$ |
1.89 |
$ |
2.37 |
|||||||
Diluted |
|||||||||||||||
Income from continuing operations |
$ |
0.55 |
$ |
0.87 |
$ |
1.84 |
$ |
2.30 |
|||||||
Income (loss) from discontinued operations |
$ |
— |
$ |
(0.01) |
$ |
0.03 |
$ |
0.03 |
|||||||
Net income |
$ |
0.55 |
$ |
0.86 |
$ |
1.87 |
$ |
2.33 |
|||||||
Basic shares outstanding |
37,269 |
37,216 |
37,293 |
37,138 |
|||||||||||
Diluted shares outstanding |
37,512 |
37,786 |
37,710 |
37,728 |
MSA Safety Incorporated |
|||||||||||||||
Condensed Consolidated Statement of Cash Flows (Unaudited) |
|||||||||||||||
(In thousands) |
|||||||||||||||
Three Months Ended |
Twelve Months Ended |
||||||||||||||
2015 |
2014 |
2015 |
2014 |
||||||||||||
Net income |
$ |
19,063 |
$ |
32,310 |
$ |
67,944 |
$ |
87,927 |
|||||||
Depreciation and amortization |
9,038 |
7,610 |
31,684 |
29,921 |
|||||||||||
Change in working capital and other operating |
17,323 |
16,309 |
(44,374) |
(10,817) |
|||||||||||
Cash from operations |
45,424 |
56,229 |
55,254 |
107,031 |
|||||||||||
Capital expenditures |
(11,093) |
(9,350) |
(36,241) |
(33,583) |
|||||||||||
Property disposals |
53 |
3,385 |
8,022 |
3,385 |
|||||||||||
Acquisition of business, net of cash acquired |
(180,271) |
— |
(180,271) |
— |
|||||||||||
Other investing |
— |
(500) |
— |
(500) |
|||||||||||
Cash from investing |
(191,311) |
(6,465) |
(208,490) |
(30,698) |
|||||||||||
Change in debt |
75,794 |
(25,634) |
218,936 |
(16,463) |
|||||||||||
Cash dividends paid |
(11,932) |
(11,543) |
(47,380) |
(45,586) |
|||||||||||
Share repurchase program |
— |
— |
(7,104) |
— |
|||||||||||
Other financing |
888 |
(82) |
497 |
3,931 |
|||||||||||
Cash from financing |
64,750 |
(37,259) |
164,949 |
(58,118) |
|||||||||||
Exchange rate changes |
(2,281) |
(3,862) |
(11,786) |
(8,482) |
|||||||||||
(Decrease) Increase in cash |
(83,418) |
8,643 |
(73) |
9,733 |
MSA Safety Incorporated |
|||||||||||||||
Segment Information (Unaudited) |
|||||||||||||||
(In thousands) |
|||||||||||||||
Three Months Ended |
Twelve Months Ended |
||||||||||||||
2015 |
2014 |
2015 |
2014 |
||||||||||||
Net sales |
|||||||||||||||
North America |
$ |
163,085 |
$ |
147,592 |
$ |
608,983 |
$ |
547,739 |
|||||||
Europe |
89,337 |
92,012 |
293,156 |
321,618 |
|||||||||||
International |
60,896 |
71,584 |
228,644 |
264,528 |
|||||||||||
Total |
313,318 |
311,188 |
1,130,783 |
1,133,885 |
|||||||||||
Net income (loss) |
|||||||||||||||
North America |
$ |
25,183 |
$ |
25,696 |
$ |
87,092 |
$ |
77,687 |
|||||||
Europe |
5,521 |
10,001 |
6,843 |
22,808 |
|||||||||||
International |
1,211 |
5,407 |
10,137 |
16,977 |
|||||||||||
Corporate |
(10,369) |
(8,465) |
(33,218) |
(30,324) |
|||||||||||
Reconciling Items |
(706) |
480 |
(1,264) |
299 |
|||||||||||
Income from continuing operations |
20,840 |
33,119 |
69,590 |
87,447 |
|||||||||||
Income (loss) from discontinued operations |
11 |
(432) |
1,217 |
1,059 |
|||||||||||
Total |
20,851 |
32,687 |
70,807 |
88,506 |
The Corporate segment was established on
MSA Safety Incorporated |
|||||||||||
Supplemental Segment Information (Unaudited) |
|||||||||||
Local Currency Revenue Growth |
|||||||||||
Three Months Ended December 31, 2015 |
|||||||||||
Consolidated |
North America |
Europe |
International |
||||||||
Fall Protection* |
78 |
% |
7 |
% |
4,605 |
% |
12 |
% |
|||
Breathing Apparatus |
57 |
% |
130 |
% |
(6) |
% |
16 |
% |
|||
Portable Gas Detection |
(6) |
% |
(11) |
% |
1 |
% |
(2) |
% |
|||
Fire and Rescue Helmets |
(8) |
% |
(4) |
% |
4 |
% |
(30) |
% |
|||
Industrial Head Protection |
(10) |
% |
(17) |
% |
25 |
% |
(7) |
% |
|||
Fixed Gas and Flame Detection |
(11) |
% |
(25) |
% |
8 |
% |
4 |
% |
|||
Core Sales |
12 |
% |
16 |
% |
15 |
% |
1 |
% |
|||
Core excluding Latchways |
8 |
% |
15 |
% |
2 |
% |
(2) |
% |
|||
Non-Core Sales |
(10) |
% |
(14) |
% |
(6) |
% |
(9) |
% |
|||
Net Sales |
8 |
% |
11 |
% |
9 |
% |
(2) |
% |
|||
Net Sales excluding Latchways |
4 |
% |
10 |
% |
— |
% |
(4) |
% |
|||
Twelve Months Ended December 31, 2015 |
|||||||||||
Consolidated |
North America |
Europe |
International |
||||||||
Fall Protection* |
22 |
% |
4 |
% |
1,216 |
% |
1 |
% |
|||
Breathing Apparatus |
52 |
% |
113 |
% |
— |
% |
11 |
% |
|||
Portable Gas Detection |
(7) |
% |
(16) |
% |
5 |
% |
6 |
% |
|||
Fire and Rescue Helmets |
9 |
% |
4 |
% |
4 |
% |
29 |
% |
|||
Industrial Head Protection |
(9) |
% |
(11) |
% |
21 |
% |
(11) |
% |
|||
Fixed Gas and Flame Detection |
(2) |
% |
(6) |
% |
2 |
% |
4 |
% |
|||
Core Sales |
11 |
% |
16 |
% |
7 |
% |
3 |
% |
|||
Core excluding Latchways |
10 |
% |
16 |
% |
3 |
% |
2 |
% |
|||
Non-Core Sales |
(4) |
% |
(6) |
% |
6 |
% |
(13) |
% |
|||
Net Sales |
8 |
% |
12 |
% |
7 |
% |
(1) |
% |
|||
Net Sales excluding Latchways |
7 |
% |
12 |
% |
4 |
% |
(2) |
% |
|||
*Fall protection growth rates include the impact from Latchways sales. |
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 December 31, |
Twelve Months Ended December 31, |
||||||||||||||||||
2015 |
2014 |
% Change |
2015 |
2014 |
% |
||||||||||||||
Income from continuing |
$ |
20,840 |
$ |
33,119 |
(37.1)% |
$ |
69,590 |
$ |
87,447 |
(20.4)% |
|||||||||
Nonrecurring tax charges |
— |
— |
7,605 |
— |
|||||||||||||||
Non-deductible transaction |
2,172 |
— |
2,879 |
— |
|||||||||||||||
Subtotal |
23,012 |
33,119 |
80,074 |
87,447 |
|||||||||||||||
Restructuring and other |
7,560 |
2,118 |
12,258 |
8,515 |
|||||||||||||||
Deductible transaction costs |
4,583 |
— |
4,583 |
— |
|||||||||||||||
Asset related loss (gain), net |
1,098 |
(1,731) |
1,636 |
(2,116) |
|||||||||||||||
Self-insured legal settlements |
(69) |
1,607 |
982 |
3,893 |
|||||||||||||||
Currency exchange (gains) |
(1,132) |
1,151 |
2,204 |
1,509 |
|||||||||||||||
Income tax expense on |
(3,492) |
(997) |
(6,792) |
(3,812) |
|||||||||||||||
Adjusted earnings |
31,560 |
35,267 |
(10.5)% |
94,945 |
95,436 |
(0.5)% |
|||||||||||||
Adjusted earnings per diluted |
$ 0.84 |
$ 0.93 |
(9.7)% |
$ |
2.52 |
$ |
2.53 |
(0.4)% |
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.
MSA Safety Incorporated |
|||||||||||
Reconciliation of As Reported Financial Measures to Non-GAAP Financial Measures |
|||||||||||
Local Currency Revenue Growth (Unaudited) |
|||||||||||
Three Months Ended December 31, 2015 |
|||||||||||
Consolidated |
North America |
Europe |
International |
||||||||
Local currency revenue growth, |
4 |
% |
10 |
% |
— |
% |
(4) |
% |
|||
Latchways acquisition |
4 |
% |
1 |
% |
9 |
% |
2 |
% |
|||
Local currency revenue growth |
8 |
% |
11 |
% |
9 |
% |
(2) |
% |
|||
FX translation |
(7) |
% |
(1) |
% |
(12) |
% |
(13) |
% |
|||
GAAP reported revenue growth |
1 |
% |
10 |
% |
(3) |
% |
(15) |
% |
|||
Twelve Months Ended December 31, 2015 |
|||||||||||
Consolidated |
North America |
Europe |
International |
||||||||
Local currency revenue growth, |
7 |
% |
12 |
% |
4 |
% |
(2) |
% |
|||
Latchways acquisition |
1 |
% |
— |
% |
3 |
% |
1 |
% |
|||
Local currency revenue growth |
8 |
% |
12 |
% |
7 |
% |
(1) |
% |
|||
FX translation |
(8) |
% |
(1) |
% |
(16) |
% |
(13) |
% |
|||
GAAP reported revenue growth |
— |
% |
11 |
% |
(9) |
% |
(14) |
% |
Management believes that local currency revenue growth is a useful metric for investors, as foreign currency translation can have a material impact on revenue growth trends. Local 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 local currency revenue growth is consistent with that of other companies. As such, management believes that it is appropriate to consider both revenue growth determined on a GAAP basis as well as local currency revenue growth.
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 impact of acquisitions and related integration activities, 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, adjusted earnings per diluted share and local currency revenue growth. 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-fourth-quarter-and-full-year-results-300224985.html
SOURCE
Media Relations Contact: Mark Deasy (724) 741 - 8570, or Investor Relations Contact: Kenneth Krause (724) 741 - 8534