MSA Safety Announces First Quarter Results
Quarterly Highlights
- Revenue was
$308 million , decreasing 10 percent from a year ago on a reported basis and 11 percent on a constant currency basis. - GAAP operating income was
$44 million or 14.3 percent of sales, compared to$59 million or 17.2 percent of sales in the same period a year ago. Adjusted operating income was$47 million or 15.4 percent of sales, compared to$64 million or 18.7 percent of sales in the same period a year ago. - GAAP earnings were
$36 million or$0.92 per diluted share, compared to$44 million or$1.11 per diluted share in the same period a year ago. Adjusted earnings were$37 million or$0.95 per diluted share, compared to$46 million or$1.18 per diluted share in the same period a year ago. - Operating cash flow was
$46 million , increasing 235% from a year ago. The company continues to execute a balanced capital allocation strategy focused on growing its business and returning value to shareholders. MSA deployed$63 million for the acquisition ofUK turnout gear leader Bristol Uniforms,$10 million for strategic capital expenditures, and funded$17 million of dividends to shareholders.
Comments from Management
"While the pandemic and its effects on the economy impacted our quarterly results, we remained focused on executing our strategy, investing in growth programs, improving productivity and generating strong cash flow," said
For the quarter, MSA invested four percent of revenue in its R&D portfolio and realized 35 percent of its total revenue from products developed in the past five years. "While we've taken steps to streamline our cost structure, we remain committed to investing in our product development pipeline," he said.
MSA deployed
"While economic recovery may not be a straight line, we're optimistic that the worst is behind us from a demand perspective. The uptick in our order book in March and April provides a sense of confidence in the near term, while our new product development pipeline and strong balance sheet position us well to increase shareholder value for many years to come,"
|
||||||||
Three Months Ended |
||||||||
2021 |
2020 |
|||||||
Net sales |
$ |
308,428 |
$ |
341,145 |
||||
Cost of products sold |
173,688 |
183,786 |
||||||
Gross profit |
134,740 |
157,359 |
||||||
Selling, general and administrative |
75,463 |
80,237 |
||||||
Research and development |
13,234 |
14,112 |
||||||
Restructuring charges |
1,308 |
2,007 |
||||||
Currency exchange (gains) losses, net |
(2,099) |
270 |
||||||
Product liability expense |
2,796 |
1,951 |
||||||
Operating income |
44,038 |
58,782 |
||||||
Interest expense |
1,911 |
3,144 |
||||||
Other income, net |
(4,213) |
(1,259) |
||||||
Total other (income) expense, net |
(2,302) |
1,885 |
||||||
Income before income taxes |
46,340 |
56,897 |
||||||
Provision for income taxes |
9,740 |
13,095 |
||||||
Net income |
36,600 |
43,802 |
||||||
Net income attributable to noncontrolling interests |
(186) |
(128) |
||||||
Net income attributable to |
$ |
36,414 |
$ |
43,674 |
||||
Earnings per share attributable to |
||||||||
Basic |
$ |
0.93 |
$ |
1.12 |
||||
Diluted |
$ |
0.92 |
$ |
1.11 |
||||
Basic shares outstanding |
39,094 |
38,824 |
||||||
Diluted shares outstanding |
39,420 |
39,352 |
|
|||||||
|
|
||||||
Assets |
|||||||
Cash and cash equivalents |
$ |
184,728 |
$ |
160,672 |
|||
Trade receivables, net |
224,954 |
252,283 |
|||||
Inventories |
220,021 |
197,819 |
|||||
Notes receivable, insurance companies |
3,825 |
3,796 |
|||||
Other current assets |
131,050 |
139,708 |
|||||
Total current assets |
764,578 |
754,278 |
|||||
Property, net |
197,832 |
189,620 |
|||||
Prepaid pension cost |
101,317 |
97,545 |
|||||
Operating lease assets, net |
68,199 |
53,451 |
|||||
|
447,059 |
443,272 |
|||||
Notes receivable, insurance companies, noncurrent |
48,837 |
48,540 |
|||||
Insurance receivable, noncurrent |
83,692 |
85,077 |
|||||
Other noncurrent assets |
231,248 |
200,701 |
|||||
Total assets |
$ |
1,942,762 |
$ |
1,872,484 |
|||
Liabilities and shareholders' equity |
|||||||
Notes payable and current portion of long-term debt, net |
$ |
20,000 |
$ |
20,000 |
|||
Accounts payable |
90,706 |
86,854 |
|||||
Other current liabilities |
196,021 |
203,691 |
|||||
Total current liabilities |
306,727 |
310,545 |
|||||
Long-term debt, net |
340,428 |
287,157 |
|||||
Pensions and other employee benefits |
201,040 |
208,068 |
|||||
Noncurrent operating lease liabilities |
59,211 |
44,639 |
|||||
Deferred tax liabilities |
12,065 |
10,916 |
|||||
Product liability and other noncurrent liabilities |
200,401 |
201,268 |
|||||
Total shareholders' equity |
822,890 |
809,891 |
|||||
Total liabilities and shareholders' equity |
$ |
1,942,762 |
$ |
1,872,484 |
|
||||||||
Three Months Ended |
||||||||
2021 |
2020 |
|||||||
Net income |
$ |
36,600 |
$ |
43,802 |
||||
Depreciation and amortization |
10,504 |
9,640 |
||||||
Change in working capital and other operating |
(1,488) |
(39,835) |
||||||
Cash flow from operating activities |
45,616 |
13,607 |
||||||
Capital expenditures |
(9,582) |
(6,562) |
||||||
Acquisition, net of cash acquired |
(62,992) |
— |
||||||
Change in short-term investments |
20,030 |
(19,612) |
||||||
Property disposals |
35 |
92 |
||||||
Cash flow used in investing activities |
(52,509) |
(26,082) |
||||||
Change in debt |
52,017 |
28,000 |
||||||
Cash dividends paid |
(16,820) |
(16,331) |
||||||
Other financing |
(3,558) |
(24,997) |
||||||
Cash flow from (used in) financing activities |
31,639 |
(13,328) |
||||||
Effect of exchange rate changes on cash, cash equivalents and restricted cash |
(720) |
(3,756) |
||||||
Increase (decrease) in cash, cash equivalents and restricted cash |
$ |
24,026 |
$ |
(29,559) |
|
|||||||||||||||
|
International |
Corporate |
Consolidated |
||||||||||||
Three Months Ended |
|||||||||||||||
Sales to external customers |
$ |
208,340 |
$ |
100,088 |
$ |
— |
$ |
308,428 |
|||||||
Operating income |
44,038 |
||||||||||||||
Operating margin % |
14.3 |
% |
|||||||||||||
Restructuring charges |
1,308 |
||||||||||||||
Currency exchange gains, net |
(2,099) |
||||||||||||||
Product liability expense |
2,796 |
||||||||||||||
Acquisition related costs |
1,373 |
||||||||||||||
Adjusted operating income (loss) |
45,152 |
8,790 |
(6,526) |
47,416 |
|||||||||||
Adjusted operating margin % |
21.7 |
% |
8.8 |
% |
15.4 |
% |
|||||||||
Depreciation and amortization |
10,504 |
||||||||||||||
Adjusted EBITDA |
52,186 |
12,163 |
(6,429) |
57,920 |
|||||||||||
Adjusted EBITDA % |
25.0 |
% |
12.2 |
% |
18.8 |
% |
|||||||||
Three Months Ended |
|||||||||||||||
Sales to external customers |
$ |
231,253 |
$ |
109,892 |
$ |
— |
$ |
341,145 |
|||||||
Operating income |
58,782 |
||||||||||||||
Operating margin % |
17.2 |
% |
|||||||||||||
Restructuring charges |
2,007 |
||||||||||||||
Currency exchange losses, net |
270 |
||||||||||||||
Product liability expense |
1,951 |
||||||||||||||
Acquisition related costs |
97 |
||||||||||||||
COVID-19 related costs |
757 |
||||||||||||||
Adjusted operating income (loss) |
59,807 |
12,671 |
(8,614) |
63,864 |
|||||||||||
Adjusted operating margin % |
25.9 |
% |
11.5 |
% |
18.7 |
% |
|||||||||
Depreciation and amortization |
9,640 |
||||||||||||||
Adjusted EBITDA |
66,257 |
15,765 |
(8,518) |
73,504 |
|||||||||||
Adjusted EBITDA % |
28.7 |
% |
14.3 |
% |
21.5 |
% |
The
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 gains / losses, product liability expense, acquisition related costs, including acquisition related amortization, and COVID-19 related costs. Adjusted operating margin is defined as adjusted operating income (loss) divided by segment 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 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.
|
||||||||||||||||||||
Consolidated |
||||||||||||||||||||
Three Months Ended |
||||||||||||||||||||
Breathing Apparatus |
Firefighter Helmets and Protective Apparel |
Industrial Head Protection |
Portable Gas Detection |
|
Fall Protection |
Core Sales |
Non-Core Sales |
|
||||||||||||
GAAP reported sales change |
(8) |
% |
8 |
% |
(7) |
% |
(9) |
% |
(14) |
% |
(5) |
% |
(7) |
% |
(26) |
% |
(10) |
% |
||
Plus: Currency translation effects |
(2) |
% |
(2) |
% |
— |
% |
(1) |
% |
(2) |
% |
(3) |
% |
(2) |
% |
(2) |
% |
(1) |
% |
||
Constant currency sales change |
(10) |
% |
6 |
% |
(7) |
% |
(10) |
% |
(16) |
% |
(8) |
% |
(9) |
% |
(28) |
% |
(11) |
% |
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.
|
||||||||||||||||||||
Americas Segment |
||||||||||||||||||||
Three Months Ended |
||||||||||||||||||||
Breathing Apparatus |
Firefighter Helmets and Protective Apparel |
Industrial Head Protection |
Portable Gas Detection |
|
Fall Protection |
Core Sales |
Non-Core Sales |
|
||||||||||||
GAAP reported sales change |
(3) |
% |
— |
% |
(9) |
% |
(8) |
% |
(12) |
% |
(11) |
% |
(7) |
% |
(32) |
% |
(10) |
% |
||
Plus: Currency translation effects |
— |
% |
— |
% |
3 |
% |
— |
% |
— |
% |
— |
% |
1 |
% |
1 |
% |
1 |
% |
||
Constant currency sales change |
(3) |
% |
— |
% |
(6) |
% |
(8) |
% |
(12) |
% |
(11) |
% |
(6) |
% |
(31) |
% |
(9) |
% |
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.
|
||||||||||||||||||||
International Segment |
||||||||||||||||||||
Three Months Ended |
||||||||||||||||||||
Breathing Apparatus |
Firefighter Helmets and Protective Apparel |
Industrial Head Protection |
Portable Gas Detection |
|
Fall Protection |
Core Sales |
Non-Core Sales |
|
||||||||||||
GAAP reported sales change |
(10) |
% |
48 |
% |
(2) |
% |
(13) |
% |
(17) |
% |
7 |
% |
(5) |
% |
(26) |
% |
(9) |
% |
||
Plus: Currency translation effects |
(7) |
% |
(13) |
% |
(7) |
% |
(6) |
% |
(5) |
% |
(8) |
% |
(7) |
% |
(6) |
% |
(7) |
% |
||
Constant currency sales change |
(17) |
% |
35 |
% |
(9) |
% |
(19) |
% |
(22) |
% |
(1) |
% |
(12) |
% |
(32) |
% |
(16) |
% |
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.
|
||||||||
Three Months Ended |
||||||||
Consolidated |
|
International |
||||||
Firefighter Helmets and Protective Apparel |
6 |
% |
— |
% |
35 |
% |
||
Industrial Head Protection |
(7) |
% |
(6) |
% |
(9) |
% |
||
Fall Protection |
(8) |
% |
(11) |
% |
(1) |
% |
||
Breathing Apparatus |
(10) |
% |
(3) |
% |
(17) |
% |
||
Portable Gas Detection |
(10) |
% |
(8) |
% |
(19) |
% |
||
|
(16) |
% |
(12) |
% |
(22) |
% |
||
Core Sales |
(9) |
% |
(6) |
% |
(12) |
% |
||
Non-Core Sales |
(28) |
% |
(31) |
% |
(32) |
% |
||
|
(11) |
% |
(9) |
% |
(16) |
% |
|
||||||||||
Three Months Ended |
||||||||||
2021 |
2020 |
% Change |
||||||||
Net income attributable to |
$ |
36,414 |
$ |
43,674 |
(17)% |
|||||
Tax benefit associated with ASU 2016-09: Improvements to employee share-based payment accounting |
(1,534) |
(1,271) |
||||||||
Subtotal |
34,880 |
42,403 |
(18)% |
|||||||
Product liability expense |
2,796 |
1,951 |
||||||||
Acquisition related costs |
1,373 |
97 |
||||||||
Restructuring charges |
1,308 |
2,007 |
||||||||
Asset related losses, net |
19 |
122 |
||||||||
COVID-19 related costs |
— |
757 |
||||||||
Currency exchange (gains) losses, net |
(2,099) |
270 |
||||||||
Income tax expense on adjustments |
(836) |
(1,301) |
||||||||
Adjusted earnings |
$ |
37,441 |
$ |
46,306 |
(19)% |
|||||
Adjusted earnings per diluted share |
$ |
0.95 |
$ |
1.18 |
(19)% |
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,
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 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, and adjusted earnings per diluted share. The presentation of these financial measures does not comply with
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SOURCE
Media Relations Contact: Mark Deasy (412) 559 - 8154; Investor Relations Contact: Elyse Lorenzato (412) 352 -1423