MSA Safety Announces First Quarter Results
Quarterly Highlights
- Total sales were
$331 million , increasing 7% from a year ago on a reported basis and 9% on a constant currency basis. Acquisitions contributed 5% and organic activity drove 4% of the constant currency growth. - GAAP operating income was
$42.7 million or 12.9% of sales, compared to$44.1 million or 14.3% of sales in the same period a year ago. Adjusted operating income was$53.8 million or 16.3% of sales, compared to$47.5 million or 15.4% of sales in the same period a year ago. - GAAP earnings were
$35.5 million or$0.90 per diluted share, compared to$36.5 million or$0.92 per diluted share in the same period a year ago. Adjusted earnings were$43.6 million or$1.10 per diluted share, compared to$37.5 million or$0.95 per diluted share in the same period a year ago. - Operating cash flow was
$24.5 million , compared to$45.6 million in the same period a year ago. The decrease was driven by an increased investment in working capital to respond to the strong growth environment and supply chain challenges.
Comments from Management
"The first quarter finished in line with our expectations as we continued to benefit from strong demand for our products," said
"We continue to deliver on our strategy and are excited by our recently-launched innovative technologies, including our fully-connected ALTAIR io™ 4 Gas Detection Wearable device that begins shipping at the beginning of May, and our V-Gard® C1 Hard Hat with ReflectIR™ Thermal Barrier technology. Furthermore, we have made significant progress integrating Bacharach, and it contributed positively to our results in the quarter,"
"While the operating environment remains dynamic, we saw demand strengthen through the quarter. We are seeing the effects of supply chain challenges and inflation throughout our regions. Looking forward, I am confident in our ability to execute our long-term vision to be the global leader of safety technologies that protect workers and facility infrastructures. Our balance sheet remains strong and we will continue our balanced approach to investing in growth and returning capital to shareholders,"
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Three Months Ended |
|||
2022 |
2021 |
||
Net sales |
$ 330,692 |
$ 308,428 |
|
Cost of products sold |
187,908 |
173,643 |
|
Gross profit |
142,784 |
134,785 |
|
Selling, general and administrative |
78,551 |
75,463 |
|
Research and development |
13,333 |
13,234 |
|
Restructuring charges |
2,189 |
1,308 |
|
Currency exchange losses (gains), net |
3,271 |
(2,099) |
|
Product liability expense |
2,772 |
2,796 |
|
Operating income |
42,668 |
44,083 |
|
Interest expense |
3,618 |
1,911 |
|
Other income, net |
(6,344) |
(4,213) |
|
Total other income, net |
(2,726) |
(2,302) |
|
Income before income taxes |
45,394 |
46,385 |
|
Provision for income taxes |
9,852 |
9,749 |
|
Net income |
35,542 |
36,636 |
|
Net income attributable to noncontrolling interests |
— |
(186) |
|
Net income attributable to |
$ 35,542 |
$ 36,450 |
|
Earnings per share attributable to |
|||
Basic |
$ 0.90 |
$ 0.93 |
|
Diluted |
$ 0.90 |
$ 0.92 |
|
Basic shares outstanding |
39,291 |
39,094 |
|
Diluted shares outstanding |
39,523 |
39,420 |
*Prior period has been adjusted to reflect the change in inventory accounting method, as described in the Company's fiscal 2021 Annual Report on Form 10-K.
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|
|
||
Assets |
|||
Cash and cash equivalents |
$ 147,300 |
$ 140,895 |
|
Trade receivables, net |
244,005 |
254,187 |
|
Inventories |
321,602 |
280,617 |
|
Notes receivable, insurance companies |
3,943 |
3,914 |
|
Other current assets |
109,304 |
113,191 |
|
Total current assets |
826,154 |
792,804 |
|
Property, plant and equipment net |
205,995 |
207,793 |
|
Prepaid pension cost |
169,842 |
163,283 |
|
|
631,821 |
636,858 |
|
Intangible assets, net |
299,725 |
306,948 |
|
Notes receivable, insurance companies, noncurrent |
44,893 |
44,626 |
|
Insurance receivable, noncurrent |
117,805 |
121,609 |
|
Other noncurrent assets |
119,542 |
122,475 |
|
Total assets |
$ 2,415,777 |
$ 2,396,396 |
|
Liabilities and shareholders' equity |
|||
Notes payable and current portion of long-term debt, net |
$ 8,021 |
$ — |
|
Accounts payable |
108,407 |
106,780 |
|
Other current liabilities |
217,509 |
223,826 |
|
Total current liabilities |
333,937 |
330,606 |
|
Long-term debt, net |
591,393 |
597,651 |
|
Pensions and other employee benefits |
187,818 |
189,973 |
|
Noncurrent operating lease liabilities |
40,219 |
40,706 |
|
Deferred tax liabilities |
33,049 |
33,337 |
|
Product liability and other noncurrent liabilities |
368,454 |
369,735 |
|
Total shareholders' equity |
860,907 |
834,388 |
|
Total liabilities and shareholders' equity |
$ 2,415,777 |
$ 2,396,396 |
|
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Three Months Ended |
|||
2022 |
2021 |
||
Net income |
$ 35,542 |
$ 36,636 |
|
Depreciation and amortization |
14,165 |
10,504 |
|
Change in working capital and other operating |
(25,184) |
(1,524) |
|
Cash flow from operating activities |
24,523 |
45,616 |
|
Capital expenditures |
(7,976) |
(9,582) |
|
Acquisition, net of cash acquired |
— |
(62,992) |
|
Change in short-term investments |
9,027 |
20,030 |
|
Property disposals and other investing |
— |
35 |
|
Cash flow from (used in) investing activities |
1,051 |
(52,509) |
|
Change in debt |
5,000 |
52,017 |
|
Cash dividends paid |
(17,292) |
(16,820) |
|
Other financing |
(3,608) |
(3,558) |
|
Cash flow (used in) from financing activities |
(15,900) |
31,639 |
|
Effect of exchange rate changes on cash, cash equivalents and restricted cash |
(3,361) |
(720) |
|
Increase in cash, cash equivalents and restricted cash |
$ 6,313 |
$ 24,026 |
*Prior period has been adjusted to reflect the change in inventory accounting method, as described in the Company's fiscal 2021 Annual Report on Form 10-K.
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|
International |
Corporate |
Consolidated |
||||
Three Months Ended |
|||||||
Sales to external customers |
$ 225,648 |
$ 105,044 |
$ — |
$ 330,692 |
|||
Operating income |
42,668 |
||||||
Operating margin % |
12.9 % |
||||||
Restructuring charges |
2,189 |
||||||
Currency exchange losses, net |
3,271 |
||||||
Product liability expense |
2,772 |
||||||
Acquisition related costs (a) |
2,943 |
||||||
Adjusted operating income (loss) |
52,435 |
9,024 |
(7,616) |
53,843 |
|||
Adjusted operating margin % |
23.2 % |
8.6 % |
16.3 % |
||||
Depreciation and amortization (b) |
11,829 |
||||||
Adjusted EBITDA |
60,796 |
12,362 |
(7,486) |
65,672 |
|||
Adjusted EBITDA margin % |
26.9 % |
11.8 % |
19.9 % |
||||
Three Months Ended |
|||||||
Sales to external customers |
$ 208,340 |
$ 100,088 |
$ — |
$ 308,428 |
|||
Operating income |
44,083 |
||||||
Operating margin % |
14.3 % |
||||||
Restructuring charges |
1,308 |
||||||
Currency exchange gains, net |
(2,099) |
||||||
Product liability expense |
2,796 |
||||||
Acquisition related costs (a) |
1,373 |
||||||
Adjusted operating income (loss) |
45,195 |
8,792 |
(6,526) |
47,461 |
|||
Adjusted operating margin % |
21.7 % |
8.8 % |
15.4 % |
||||
Depreciation and amortization |
10,504 |
||||||
Adjusted EBITDA |
52,229 |
12,165 |
(6,429) |
57,965 |
|||
Adjusted EBITDA margin % |
25.1 % |
12.2 % |
18.8 % |
*Prior period has been adjusted to reflect the change in inventory accounting method, as described in the Company's fiscal 2021 Annual Report on Form 10-K. Adjustments were made to
(a) Acquisition related costs include advisory, legal, accounting, valuation, and other professional or consulting fees incurred during due diligence and integration. These costs are included in selling, general and administrative expense in the unaudited Condensed Consolidated Statements of Income. Acquisition related costs also include the acquisition related amortization, which is included in cost of products sold in the unaudited Condensed Consolidated Statements of Income.
(b) Excludes acquisition related amortization, which is included in acquisition related costs above.
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. 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.
Reconciliation of As Reported Financial Measures to Non-GAAP Financial Measures
Constant currency revenue growth (Unaudited)
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 |
1% |
5% |
9% |
(2)% |
38% |
(6)% |
10% |
(12)% |
7% |
|||
Plus: Currency translation effects |
2% |
2% |
1% |
1% |
2% |
2% |
1% |
3% |
2% |
|||
Constant currency sales change |
3% |
7% |
10% |
(1)% |
40% |
(4)% |
11% |
(9)% |
9% |
|||
Less: Acquisitions |
—% |
—% |
—% |
—% |
28% |
—% |
6% |
—% |
5% |
|||
Organic constant currency sales change |
3% |
7% |
10% |
(1)% |
12% |
(4)% |
5% |
(9)% |
4% |
*
Organic constant currency sales change is a non-GAAP financial measure provided by the Company to give a better understanding of the Company's underlying business performance. Organic constant currency sales change is calculated by deducting the percentage impact from acquisitions and currency translation effects from the overall percentage change in net sales.
Reconciliation of As Reported Financial Measures to Non-GAAP Financial Measures
Constant currency revenue growth (Unaudited)
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 |
5% |
(4)% |
11% |
—% |
47% |
3% |
11% |
(19)% |
8% |
||
Plus: Currency translation effects |
1% |
—% |
—% |
—% |
—% |
1% |
1% |
—% |
1% |
||
Constant currency sales change |
6% |
(4)% |
11% |
—% |
47% |
4% |
12% |
(19)% |
9% |
||
Less: Acquisitions |
—% |
—% |
—% |
—% |
33% |
—% |
7% |
—% |
6% |
||
Organic constant currency sales change |
6% |
(4)% |
11% |
—% |
14% |
4% |
5% |
(19)% |
3% |
*
Organic constant currency sales change is a non-GAAP financial measure provided by the Company to give a better understanding of the Company's underlying business performance. Organic constant currency sales change is calculated by deducting the percentage impact from acquisitions and currency translation effects from the overall percentage change in net sales.
Reconciliation of As Reported Financial Measures to Non-GAAP Financial Measures
Constant currency revenue growth (Unaudited)
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 |
(8)% |
35% |
4% |
(7)% |
24% |
(20)% |
6% |
—% |
5% |
||
Plus: Currency translation effects |
5% |
9% |
4% |
5% |
3% |
3% |
5% |
6% |
5% |
||
Constant currency sales change |
(3)% |
44% |
8% |
(2)% |
27% |
(17)% |
11% |
6% |
10% |
||
Less: Acquisitions |
—% |
—% |
—% |
—% |
19% |
—% |
6% |
—% |
5% |
||
Organic constant currency sales change |
(3)% |
44% |
8% |
(2)% |
8% |
(17)% |
5% |
6% |
5% |
*
Organic constant currency sales change is a non-GAAP financial measure provided by the Company to give a better understanding of the Company's underlying business performance. Organic constant currency sales change is calculated by deducting the percentage impact from acquisitions and currency translation effects from the overall percentage change in net sales.
Supplemental Segment Information (Unaudited)
Summary of constant currency revenue growth by segment and product group
Three Months Ended |
|||||
Consolidated |
|
International |
|||
|
40% |
47% |
27% |
||
Industrial Head Protection |
10% |
11% |
8% |
||
Firefighter Helmets and Protective Apparel |
7% |
(4)% |
44% |
||
Breathing Apparatus |
3% |
6% |
(3)% |
||
Portable Gas Detection |
(1)% |
—% |
(2)% |
||
Fall Protection |
(4)% |
4% |
(17)% |
||
Core Sales |
11% |
12% |
11% |
||
Non-Core Sales |
(9)% |
(19)% |
6% |
||
|
9% |
9% |
10% |
||
|
4% |
3% |
5% |
*
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 |
||||||
2022 |
2021 |
% Change |
||||
Net income attributable to |
$ 35,542 |
$ 36,450 |
(2)% |
|||
Product liability expense |
2,772 |
2,796 |
||||
Acquisition related costs (a) |
2,943 |
1,373 |
||||
Restructuring charges |
2,189 |
1,308 |
||||
Asset related losses and other |
4 |
19 |
||||
Currency exchange losses (gains), net |
3,271 |
(2,099) |
||||
Income tax expense on adjustments |
(3,123) |
(2,370) |
||||
Adjusted earnings |
$ 43,598 |
$ 37,477 |
16% |
|||
Adjusted earnings per diluted share |
$ 1.10 |
$ 0.95 |
16% |
(a) Acquisition related costs include advisory, legal, accounting, valuation, and other professional or consulting fees incurred during due diligence and integration. These costs are included in selling, general and administrative expense in the unaudited Condensed Consolidated Statements of Income. Acquisition related costs also include the acquisition related amortization, which is included in cost of products sold in the unaudited Condensed Consolidated Statements of Income.
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 organic 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: Chris Hepler (412) 225 - 3717