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MSA Announces Fourth Quarter and Full Year 2017 Results
Quarterly GAAP loss of $0.87 per share includes a noncash increase in the reserve for unasserted product liability claims and a charge associated with U.S. Tax Reform; Quarterly adjusted earnings increased 69 percent to $1.31 per share on double-digit revenue growth and a streamlined cost structure

PITTSBURGH, Feb. 20, 2018 /PRNewswire/ -- Global safety equipment manufacturer MSA Safety Incorporated (NYSE: MSA) today reported results for the fourth quarter and full year of 2017.

MSA Safety Incorporated

Quarterly Highlights

  • Reported revenue was $346 million, increasing 17 percent from a year ago on a reported basis and 14 percent on a constant currency basis.

  • Quarterly GAAP loss from continuing operations was $33 million or $0.87 per basic share, compared to earnings of $25 million or $0.67 per basic share in the same period a year ago. The decline in GAAP earnings is attributable to a $93 million non-cash pre-tax charge related primarily to increasing the cumulative trauma product liability reserve for estimated unasserted, or incurred but not reported ("IBNR"), claims, net of expected insurance collections, and a $20 million income tax charge associated with U.S. Tax Reform.

  • Adjusted earnings increased 69 percent to $51 million or $1.31 per diluted share, compared to adjusted earnings of $30 million or $0.78 per diluted share in the same period a year ago, on strong revenue growth throughout MSA's core product portfolio, the company's 2017 acquisition of firefighter protective clothing manufacturer Globe Manufacturing, and a streamlined cost structure.

Annual Highlights

  • Reported revenue was $1.197 billion, increasing 4 percent from a year ago on a reported basis and 3 percent on a constant currency basis.

  • Selling, general and administrative expenses declined $8 million on a reported basis and $16 million on an organic constant currency basis, exceeding the company's full year cost savings target of $10 million.

  • GAAP earnings from continuing operations were $26 million, or $0.68 per basic share, compared to $93 million, or $2.47 per basic share, in the same period a year ago. The decline in GAAP earnings is attributable to a $126 million pre-tax charge associated with increasing the company's cumulative trauma product liability reserve for asserted claims in the second quarter and IBNR claims in the fourth quarter, net of expected insurance collections, and a $20 million income tax charge associated with U.S. Tax Reform.

  • Adjusted earnings increased 34 percent to $141 million, or $3.65 per diluted share, compared to adjusted earnings of $105 million, or $2.77 per diluted share, in the same period a year ago. The acquisition of Globe, a streamlined cost structure, and a lower effective tax rate were the key drivers of earnings growth in 2017.

  • Cash flow from operating activities was $230 million compared to $135 million in the same period a year ago, reflecting higher collections of insurance receivables partially offset by higher levels of working capital to support elevated demand across the company's core product portfolio. In 2017, the company invested $216 million in the acquisition of Globe and returned $70 million to shareholders through dividend payments and repurchases of common stock.

Cumulative Trauma Product Liability Charge

  • In the fourth quarter of 2017, the company in consultation with an outside valuation consultant and outside legal counsel, performed a review for IBNR cumulative trauma product liability claims. Based on that review process, it was determined that a reasonable estimate for the liability of its IBNR claims was $111 million through the year 2060. The reserve is not discounted to present value.

  • The company's fourth quarter GAAP results include a $93 million non-cash pre-tax charge, or $63 million after tax ($1.65 per diluted share), which primarily reflects the increase to the cumulative trauma product liability reserve for IBNR claims, net of expected insurance collections.

  • The ability to make a reasonable estimate of the potential liability for IBNR cumulative trauma product liability claims reflects stabilization of a number of factors which are important to the estimation process. This stabilization has enabled greater predictability of potential cumulative trauma product liability related to IBNR claims.

  • The company's cumulative trauma product liability reserve balance was $181 million at the end of the quarter, which includes reserves for both asserted and IBNR claims. The company has insurance and notes receivable totaling $212 million.

Comments from Management

"Our fourth quarter results reflect improving macro conditions across many of our key end markets and geographies, as well as returns on investments made in strategic acquisitions and cost reduction programs," said William M. Lambert, MSA Chairman and CEO.  "Our quarterly revenue reflected record performance for MSA and increased 14 percent in constant currency from a year ago, or 6 percent excluding Globe.  Additionally, our streamlined cost structure provided support to leverage our revenue growth into a 69 percent increase in adjusted earnings."

Mr. Lambert noted that the company finished the year with a backlog pipeline that is trending approximately 10 percent higher than the end of the third quarter on strong demand for industrial products and self-contained breathing apparatus for the fire service market. "Typically, we see a seasonal decline in backlog during the fourth quarter. The solid quarterly revenue growth coupled with an elevated level of backlog at year end highlights the positive momentum we see occurring in many of our end markets," Mr. Lambert commented.

Regarding the increase to the company's product liability reserve, Mr. Lambert noted the reserve relates to products sold many years ago that are no longer part of the MSA portfolio.   "For more than a decade, we have funded product liability settlements from operating cash flow," Mr. Lambert explained.  "Through the ongoing successful resolution of insurance litigation, we continue to make good progress collecting insurance proceeds and establishing cash flow streams for the future, which I expect will allow us to fund these liabilities without a material impact on our capital allocation priorities."

"As we look ahead to 2018, we are highly focused on generating revenue growth and investing in the programs, people and technology that will help us reach our growth and profitability targets. With an expected tailwind from U.S. tax reform, combined with healthy conditions in our end markets and a strong balance sheet, we are well positioned to create value for our stakeholders in 2018 and beyond," he concluded.

 

MSA Safety Incorporated

Condensed Consolidated Statement of Income (Unaudited)

(In thousands, except per share amounts)



Three Months Ended
December 31,


Twelve Months Ended
December 31,


2017


2016


2017


2016









Net sales

$

346,140



$

296,031



$

1,196,809



$

1,149,530


Cost of products sold

191,569



157,710



656,411



625,887


Gross profit

154,571



138,321



540,398



523,643










Selling, general and administrative

75,467



78,288



297,801



306,144


Research and development

14,779



12,224



50,061



46,847


Restructuring charges

712



1,997



17,632



5,694


Currency exchange losses (gains), net

1,133



(1,732)



5,127



766


Other operating expense (a)

93,476





126,432




Operating (loss) income

(30,996)



47,544



43,345



164,192










Interest expense

4,794



3,896



15,360



16,411


Other expense (income), net

271



(426)



(1,790)



(4,130)


Total other expense, net

5,065



3,470



13,570



12,281










(Loss) income from continuing operations before income taxes

(36,061)



44,074



29,775



151,911


(Benefit) provision for income taxes

(3,487)



18,938



2,819



57,804


(Loss) income from continuing operations

(32,574)



25,136



26,956



94,107


Loss from discontinued operations



(300)





(245)


Net (loss) income

(32,574)



24,836



26,956



93,862


Net (income) loss attributable to noncontrolling interests

(410)



80



(929)



(1,926)


Net (loss) income attributable to MSA Safety Incorporated

(32,984)



24,916



26,027



91,936










Amounts attributable to MSA Safety Incorporated common shareholders:








(Loss) income from continuing operations

(32,984)



25,216



26,027



92,691


Loss from discontinued operations



(300)





(755)


  Net (loss) income

(32,984)



24,916



26,027



91,936










Earnings per share attributable to MSA Safety Incorporated common shareholders:








Basic








(Loss) income from continuing operations

$

(0.87)



$

0.67



$

0.68



$

2.47


Loss from discontinued operations

$



$

(0.01)



$



$

(0.02)


  Net (loss) income

$

(0.87)



$

0.66



$

0.68



$

2.45










Diluted








(Loss) Income from continuing operations

$

(0.87)



$

0.66



$

0.67



$

2.44


Loss from discontinued operations

$



$

(0.01)



$



$

(0.02)


  Net (loss) income

$

(0.87)



$

0.65



$

0.67



$

2.42










Basic shares outstanding

38,079



37,602



37,997



37,456


Diluted shares outstanding

38,079



38,218



38,697



37,986



(a)  Year to date amount is primarily associated with increasing the company's cumulative trauma product liability reserve for asserted and IBNR claims.

 

 

MSA Safety Incorporated

Condensed Consolidated Balance Sheet (Unaudited)

(In thousands)



December 31, 2017


December 31, 2016

Assets




Cash and cash equivalents

$

134,244



$

113,759


Trade receivables, net

244,198



209,514


Inventories

153,739



103,066


Notes receivable, insurance companies

17,333



4,180


Other current assets

72,783



42,287


    Total current assets

622,297



472,806






Property, net

157,014



148,678


Prepaid pension cost

83,060



62,916


Goodwill

422,185



333,276


Notes receivable, insurance companies, noncurrent

59,567



63,147


Insurance receivable, noncurrent

123,089



157,929


Other noncurrent assets

217,614



115,168


   Total assets

$

1,684,826



$

1,353,920






Liabilities and shareholders' equity




Notes payable and current portion of long-term debt, net

$

26,680



$

26,666


Accounts payable

87,061



62,734


Other current liabilities

175,538



132,010


   Total current liabilities

289,279



221,410






Long-term debt, net

447,832



363,836


Pensions and other employee benefits

170,773



157,927


Deferred tax liabilities

9,341



34,044


Other noncurrent liabilities

165,023



15,491


Total shareholders' equity

602,578



561,212


   Total liabilities and shareholders' equity

$

1,684,826



$

1,353,920


 

 

MSA Safety Incorporated

Condensed Consolidated Statement of Cash Flows (Unaudited)

(In thousands)



Three Months Ended
December 31,


Twelve Months Ended
December 31,


2017


2016


2017


2016









Net (loss) income

$

(32,574)



$

24,836



$

26,956



$

93,862


Depreciation and amortization

10,212



8,622



37,877



35,273


Change in working capital and other operating

63,452



69,999



165,503



5,759


  Cash flow from operating activities

41,090



103,457



230,336



134,894










Capital expenditures

(11,995)



(9,377)



(23,725)



(25,523)


Acquisition, net of cash acquired

(2,318)



(188)



(216,308)



(18,449)


Property disposals and other investing

103



282



832



18,214


  Cash flow used in investing activities

(14,210)



(9,283)



(239,201)



(25,758)










Change in debt

1,346



(76,991)



77,246



(60,908)


Cash dividends paid

(13,337)



(12,399)



(52,537)



(49,074)


Company stock purchases

(857)





(17,513)



(1,881)


Other financing

3,313



7,803



15,869



14,022


  Cash flow (used in) from financing activities

(9,535)



(81,587)



23,065



(97,841)










Effect of exchange rate changes on cash and cash equivalents

4,714



(4,861)



6,285



(3,461)










Increase in cash and cash equivalents

22,059



7,726



20,485



7,834


 

 

MSA Safety Incorporated

Segment Information (Unaudited)

(In thousands)



Americas


International


Corporate


Consolidated

Three Months Ended December 31, 2017








Sales to external customers

$

208,421



$

137,719





$

346,140


Operating loss







(30,996)


Operating margin %







(9.0)

%

Restructuring and other charges







712


Currency exchange losses, net







1,133


Other operating expense







93,476


Adjusted operating income (loss)

53,400



18,770



(7,845)



$

64,325


Adjusted operating margin %

25.6

%


13.6

%




18.6

%









Twelve Months Ended December 31, 2017








Sales to external customers

$

736,847



$

459,962





$

1,196,809


Operating income







43,345


Operating margin %







3.6

%

Restructuring and other charges







17,632


Currency exchange losses, net







5,127


Other operating expense







126,432


Adjusted operating income (loss)

184,287



45,461



(37,212)



$

192,536


Adjusted operating margin %

25.0

%


9.9

%




16.1

%




Americas


International


Corporate


Consolidated

Three Months Ended December 31, 2016








Sales to external customers

$

168,109



$

127,922





$

296,031


Operating income







47,544


Operating margin %







16.1

%

Restructuring charges







1,997


Currency exchange (gains), net







(1,732)


Other operating expense








Adjusted operating income (loss)

45,313



14,832



(12,336)



$

47,809


Adjusted operating margin %

27.0

%


11.6

%




16.2

%









Twelve Months Ended December 31, 2016








Sales to external customers

$

678,433



$

471,097





$

1,149,530


Operating income







164,192


Operating margin %







14.3

%

Restructuring charges







5,694


Currency exchange losses, net







766


Other operating expense








Adjusted operating income (loss)

162,788



46,491



(38,627)



$

170,652


Adjusted operating margin %

24.0

%


9.9

%




14.8

%

The Americas and International segments were established on January 1, 2016.  The Americas segment is comprised of our operations in the U.S., Canada and Latin America.  The International segment is comprised of our operations in all other parts of the world including Europe, Africa, the Middle East, India, China, South East Asia and Australia.  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) and adjusted operating 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) and adjusted operating margin are useful metrics for investors. Adjusted operating income (loss) is defined as operating income excluding restructuring, currency exchange gains (losses) and other operating expense. Adjusted operating margin is defined as adjusted operating income (loss) divided by segment sales to external customers. Adjusted operating income (loss) and adjusted operating 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) and adjusted operating 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)

Organic constant currency revenue growth (Unaudited)

Consolidated



Three Months Ended December 31, 2017


Breathing
Apparatus

Firefighter
Helmets
and
Protective
Apparel(b)

Industrial
Head
Protection

Portable
Gas
Detection

Fixed Gas
and Flame
Detection

Fall
Protection

Core
Sales


Non-
Core
Sales


Net Sales

GAAP reported sales change

9

%

236

%

9

%

14

%

11

%

8

%

22

%


(10)

%


17

%

Plus: Currency translation effects

(2)

%

(7)

%

(2)

%

(2)

%

(5)

%

(4)

%

(3)

%


(3)

%


(3)

%

Constant currency sales change

7

%

229

%

7

%

12

%

6

%

4

%

19

%


(13)

%


14

%

Less: Acquisitions

%

207

%

%

%

(4)

%

%

10

%


%


8

%

Organic constant currency change

7

%

22

%

7

%

12

%

10

%

4

%

9

%


(13)

%


6

%




Twelve Months Ended December 31, 2017


Breathing
Apparatus

Firefighter
Helmets
and
Protective
Apparel(b)

Industrial
Head
Protection

Portable
Gas
Detection

Fixed Gas
and Flame
Detection

Fall
Protection

Core
Sales


Non-
Core
Sales


Net Sales

GAAP reported sales change

(4)

%

97

%

13

%

4

%

4

%

2

%

8

%


(12)

%


4

%

Plus: Currency translation effects

%

(1)

%

(2)

%

%

(2)

%

2

%

(1)

%


(2)

%


(1)

%

Constant currency sales change

(4)

%

96

%

11

%

4

%

2

%

4

%

7

%


(14)

%


3

%

Less: Acquisitions

%

89

%

%

%

%

%

5

%


%


4

%

Organic constant currency change

(4)

%

7

%

11

%

4

%

2

%

4

%

2

%


(14)

%


(1)

%


(b)  Firefighter helmets and protective apparel includes the impact of the Globe acquisition, completed on July 31, 2017.

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. Organic constant currency revenue growth is defined as constant currency revenue growth excluding acquisitions. Management believes that organic constant currency revenue growth is a useful measure for investors to provide an understanding of MSA's standalone results. There can be no assurances that MSA's definition of constant currency revenue growth or organic 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 these non-GAAP financial measures.

MSA Safety Incorporated

Reconciliation of As Reported Financial Measures to Non-GAAP Financial Measures

Constant currency revenue growth (Unaudited)

Organic constant currency revenue growth (Unaudited)

 

Americas Segment



Three Months Ended December 31, 2017


Breathing
Apparatus

Firefighter
Helmets
and
Protective
Apparel(b)

Industrial
Head
Protection

Portable
Gas
Detection

Fixed Gas
and Flame
Detection

Fall
Protection

Core
Sales


Non-
Core
Sales


Net Sales

GAAP reported sales change

10

%

581

%

10

%

11

%

4

%

19

%

29

%


(5)

%


24

%

Plus: Currency translation effects

%

2

%

(1)

%

%

%

(1)

%

(1)

%


(1)

%


%

Constant currency sales change

10

%

583

%

9

%

11

%

4

%

18

%

28

%


(6)

%


24

%

Less: Acquisitions

%

559

%

%

%

%

%

18

%


%


16

%

Organic constant currency change

10

%

24

%

9

%

11

%

4

%

18

%

10

%


(6)

%


8

%




Twelve Months Ended December 31, 2017


Breathing
Apparatus

Firefighter
Helmets
and
Protective
Apparel(b)

Industrial
Head
Protection

Portable
Gas
Detection

Fixed Gas
and Flame
Detection

Fall
Protection

Core
Sales


Non-
Core
Sales


Net Sales

GAAP reported sales change

(4)

%

219

%

11

%

8

%

(2)

%

22

%

11

%


(7)

%


9

%

Plus: Currency translation effects

%

%

(1)

%

%

%

%

%


(1)

%


(1)

%

Constant currency sales change

(4)

%

219

%

10

%

8

%

(2)

%

22

%

11

%


(8)

%


8

%

Less: Acquisitions

%

213

%

%

%

%

%

8

%


%


7

%

Organic constant currency change

(4)

%

6

%

10

%

8

%

(2)

%

22

%

3

%


(8)

%


1

%


(b)  Firefighter helmets and protective apparel includes the impact of the Globe acquisition, completed on July 31, 2017.

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. Organic constant currency revenue growth is defined as constant currency revenue growth excluding acquisitions. Management believes that organic constant currency revenue growth is a useful measure for investors to provide an understanding of MSA's standalone results. There can be no assurances that MSA's definition of constant currency revenue growth or organic 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 these non-GAAP financial measures.

MSA Safety Incorporated

Reconciliation of As Reported Financial Measures to Non-GAAP Financial Measures

Constant currency revenue growth (Unaudited)

Organic constant currency revenue growth (Unaudited)

International Segment



Three Months Ended December 31, 2017


Breathing
Apparatus

Firefighter
Helmets
and
Protective
Apparel

Industrial
Head
Protection

Portable
Gas
Detection

Fixed Gas
and Flame
Detection

Fall
Protection

Core
Sales


Non-
Core
Sales


Net Sales

GAAP reported sales change

9

%

29

%

5

%

20

%

16

%

(3)

%

13

%


(15)

%


8

%

Plus: Currency translation effects

(7)

%

(9)

%

(3)

%

(7)

%

(7)

%

(7)

%

(7)

%


(5)

%


(7)

%

Constant currency sales change

2

%

20

%

2

%

13

%

9

%

(10)

%

6

%


(20)

%


1

%

Less: Acquisitions

%

%

%

%

(6)

%

%

(2)

%


%


(2)

%

Organic constant currency change

2

%

20

%

2

%

13

%

15

%

(10)

%

8

%


(20)

%


3

%




Twelve Months Ended December 31, 2017


Breathing
Apparatus

Firefighter
Helmets
and
Protective
Apparel

Industrial
Head
Protection

Portable
Gas
Detection

Fixed Gas
and Flame
Detection

Fall
Protection

Core
Sales


Non-
Core
Sales


Net Sales

GAAP reported sales change

(3)

%

10

%

18

%

(2)

%

9

%

(15)

%

2

%


(18)

%


(2)

%

Plus: Currency translation effects

(2)

%

(2)

%

(1)

%

(2)

%

(2)

%

3

%

(2)

%


(2)

%


(2)

%

Constant currency sales change

(5)

%

8

%

17

%

(4)

%

7

%

(12)

%

%


(20)

%


(4)

%

Less: Acquisitions

%

%

%

%

1

%

%

%


%


%

Organic constant currency change

(5)

%

8

%

17

%

(4)

%

6

%

(12)

%

%


(20)

%


(4)

%

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. Organic constant currency revenue growth is defined as constant currency revenue growth excluding acquisitions. Management believes that organic constant currency revenue growth is a useful measure for investors to provide an understanding of MSA's standalone results. There can be no assurances that MSA's definition of constant currency revenue growth or organic 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 these non-GAAP financial measures.

MSA Safety Incorporated

Supplemental Segment Information (Unaudited)

Summary of constant currency revenue growth by segment and product group



Three Months Ended December 31, 2017


Consolidated


Americas


International

Firefighter Helmets and Protective Apparel(b)

229

%


583

%


20

%

Portable Gas Detection

12

%


11

%


13

%

Industrial Head Protection

7

%


9

%


2

%

Breathing Apparatus

7

%


10

%


2

%

Fixed Gas and Flame Detection

6

%


4

%


9

%

Fall Protection

4

%


18

%


(10)

%

Core Sales

19

%


28

%


6

%

Core excluding Acquisitions

9

%


10

%


8

%







Non-Core Sales

(13)

%


(6)

%


(20)

%







Net Sales

14

%


24

%


1

%

Net Sales excluding Acquisitions

6

%


8

%


3

%




Twelve Months Ended December 31, 2017


Consolidated


Americas


International

Firefighter Helmets and Protective Apparel(b)

96

%


219

%


8

%

Portable Gas Detection

4

%


8

%


(4)

%

Industrial Head Protection

11

%


10

%


17

%

Breathing Apparatus

(4)

%


(4)

%


(5)

%

Fixed Gas and Flame Detection

2

%


(2)

%


7

%

Fall Protection

4

%


22

%


(12)

%

Core Sales

7

%


11

%


%

Core excluding Acquisitions

2

%


3

%


%







Non-Core Sales

(14)

%


(8)

%


(20)

%







Net Sales

3

%


8

%


(4)

%

Net Sales excluding Acquisitions

(1)

%


1

%


(4)

%


(b)  Firefighter helmets and protective apparel includes the impact of the Globe acquisition,
completed on July 31, 2017.

 

 

MSA Safety Incorporated

Reconciliation of As Reported Financial Measures to Non-GAAP Financial Measures

Organic constant currency SG&A expense (Unaudited)

(In thousands)



Three Months Ended
December 31,




Twelve Months Ended
December 31,




2017


2016


%
Change


2017


2016


%
Change

















GAAP reported SG&A expense

$

75,467


$

78,288


(4)%


$

297,801


$

306,144


(3)%

Plus: currency translation effects


2,334





2,279



Constant currency SG&A expense

75,467


80,622


(6)%


297,801


308,423


(3)%

Less: Acquisitions and strategic transaction costs

2,957


3,173




9,783


3,994



Organic constant currency SG&A expense

72,510


77,449


(6)%


288,018


304,429


(5)%

Management believes that organic constant currency SG&A expense is a useful metric for investors to measure the effectiveness of the company's cost reduction programs. Constant currency SG&A expense highlights spending patterns excluding fluctuating foreign currencies. Organic constant currency SG&A expense highlights the impact of acquisitions and strategic transaction costs. These metrics provide investors with a greater level of clarity into spending levels on a year-over-year basis. There can be no assurances that MSA's definition of organic constant currency SG&A expense is consistent with that of other companies. As such, management believes that it is appropriate to consider SG&A expense 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 amounts)



Three Months Ended
December 31,




Twelve Months Ended
December 31,




2017


2016


%
Change


2017


2016


%
Change













(Loss) income from continuing operations attributable to MSA Safety Inc.

$

(32,984)



$

25,216



(231)%


$

26,027



$

92,691



(72)%

Tax charges associated with U.S. Tax Reform

19,817







19,817






Tax (benefit) associated with ASU 2016-09: Improvements to employee
share-based payment accounting

(1,413)







(8,323)






Tax (benefits) charges associated with European reorganization

(30)



2,873





(2,504)



6,473




Subtotal

(14,610)



28,089



(152)%


35,017



99,164



(65)%













Self-insured legal settlements and defense costs (a)

93,476



26





126,432



341




Currency exchange losses (gains), net

1,133



(1,732)





5,127



766




Strategic transaction costs

860



1,710





4,225



2,531




Restructuring charges

712



1,997





17,632



5,694




Asset related losses and other, net

492



847





678



32




Income tax expense on adjustments

(31,443)



(1,038)





(47,810)



(3,161)




Adjusted earnings

50,620



29,899



69%


141,301



105,367



34%













Adjusted earnings per diluted share

$

1.31



$

0.78



68%


$

3.65



$

2.77



32%


(a)  Year to date amount is primarily associated with increasing the company's cumulative trauma product liability reserve for asserted and IBNR claims.

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 determined on a GAAP basis as well as adjusted earnings.

About MSA:  
Established in 1914, MSA Safety Incorporated is the global leader in the development, manufacture and supply of safety products that protect people and facility infrastructures.  Many MSA products integrate a combination of electronics, mechanical systems and advanced materials to protect users against hazardous or life-threatening situations.  The company's comprehensive product line is used by workers around the world in a broad range of markets, including the oil, gas and petrochemical industry, the fire service, the construction industry, mining and the military.  MSA's core products include self-contained breathing apparatus, fixed gas and flame detection systems, portable gas detection instruments, industrial head protection products, firefighter helmets and protective apparel, and fall protection devices.  With 2017 revenues of $1.2 billion, MSA employs approximately 4,700 people worldwide.  The company is headquartered north of Pittsburgh in Cranberry Township, Pa., and has manufacturing operations in the United States, Europe, Asia and Latin America.  With more than 40 international locations, MSA realizes approximately half of its revenue from outside North America.  For more information visit MSA's web site at 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. 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 United States Securities and Exchange Commission ("SEC"), including our most recent Form 10-K filed on February 28, 2017. You are strongly urged to review all such filings for a more detailed discussion of such risks and uncertainties.  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. MSA undertakes no duty to publicly update any forward looking statements contained herein, except as required by law.

Non-GAAP Financial Measures: 
This earnings release includes certain non-GAAP financial measures. These financial measures include constant currency revenue growth, organic constant currency growth, organic constant currency SG&A expense, adjusted operating income, adjusted operating margin, 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.

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SOURCE MSA

Media Relations Contact: Mark Deasy (724) 741 - 8570; Investor Relations Contact: Elyse Lorenzato (724) 741 - 8525