Press Release

PITTSBURGH, Feb. 18, 2021 /PRNewswire/ -- Global safety equipment manufacturer MSA Safety Incorporated (NYSE: MSA) today reported results for the fourth quarter and full year of 2020.

Quarterly Highlights

• Revenue was $388 million, increasing 3 percent from a year ago on a reported basis and 2 percent on a constant currency basis.
• GAAP operating income was $19 million or 4.8 percent of sales, compared to $40 million or 10.7 percent of sales in the same period a year ago. Adjusted operating income was $67 million or 17.3 percent of sales, compared to $65 million or 17.3 percent of sales in the same period a year ago.
• GAAP earnings were $12 million or $0.31 per diluted share, compared to $31 million or $0.79 per diluted share in the same period a year ago.  Adjusted earnings were $50 million or $1.27 per diluted share, compared to $51 million or $1.29 per diluted share in the same period a year ago.
• GAAP operating income and earnings includes a pre-tax charge of $34 million associated primarily with an increase to the company's cumulative trauma product liability reserve, compared to a pre-tax charge of $18 million in the same period a year ago.
• Operating cash flow was $96 million, increasing 26% from a year ago. The company realized a 320 basis point improvement in working capital from the third quarter of 2020.

Annual Highlights

• Revenue was $1.35 billion, decreasing 4 percent from a year ago on a reported basis or 3 percent on a constant currency basis.
• GAAP operating income was $167 million or 12.4 percent of sales, compared to $186 million or 13.3 percent of sales in the same period a year ago. Adjusted operating income was $243 million or 18.0 percent of sales, compared to $251 million or 17.9 percent of sales in the same period a year ago.
• GAAP earnings were $120 million or $3.05 per diluted share, compared to $136 million or $3.48 per diluted share in the same period a year ago.  Adjusted earnings were $177 million or $4.50 per diluted share, compared to $188 million or $4.80 per diluted share in the same period a year ago.
• GAAP operating income and earnings includes a pre-tax charge of $39 million associated primarily with an increase to the company's cumulative trauma product liability reserve, compared to a pre-tax charge of $27 million in the same period a year ago.
• Operating cash flow was $207 million, increasing 25% from a year ago. The company continues to execute a balanced capital allocation strategy focused on growing its business and returning value to shareholders. For the year, MSA invested $49 million in capital expenditures, paid down $44 million of debt, funded $67 million of dividends to shareholders, and deployed $20 million for share repurchases.

Comments from Management

"Our organization finished out a challenging year with strong fourth quarter performance that resulted in record revenue for the quarter, double-digit growth in cash flow, and a healthy backlog to enter 2021," commented Nish Vartanian, MSA Chairman, President and CEO.  "Along with protecting the health and safety of our 5,000 associates, we remained focused on three key deliverables throughout the year:  developing the most advanced safety technologies for our global customer base; driving operational excellence programs to improve our business model; and using our strong balance sheet to make investments that enhance our leadership positions in key markets," he said. Mr. Vartanian added that MSA's full year adjusted operating margin improved 10 basis points to 18 percent of sales, despite the 3 percent revenue decline associated with the pandemic and recession. "Overall, our diverse product portfolio and focus on continuous improvement drove strong performance in a challenging environment."

MSA's quarterly results include 10 percent revenue growth in firefighter safety products, a defensive market segment that has performed well through a broad range of economic conditions. "From our break-through G1 and M1 breathing apparatus platforms, to the recent acquisition of UK turnout gear leader Bristol Uniforms, to the upcoming launch of MSA's cloud-based Connected Firefighter platform and LUNAR system – which will create a new standard for firefighter accountability – we've made significant investments to help protect firefighters from head to toe with the most progressive technologies being developed today," Mr. Vartanian explained. MSA completed the Bristol Uniforms acquisition in January 2021.  The transaction, valued at approximately $60 million, expands MSA's addressable market in the International fire service business.

In addition to the recent acquisition, Mr. Vartanian noted that profitability improvements in MSA's International segment were an ongoing highlight for the company in 2020.  Adjusted operating margin in the segment expanded by 320 basis points in the fourth quarter and 270 basis points for the year. "Our restructuring investments and continuous improvement culture continue to yield strong returns across our International business," he said.

"Protecting the health and safety of workers around the world has never been more important or more relevant than it is today, and our team remains committed to advancing our mission," Mr. Vartanian said.   "Our new product development pipeline, our focus on continuous improvement, and our strong balance sheet position us to continue to deliver value for our customers, employees, and shareholders in 2021 and beyond," Mr. Vartanian concluded.

 

 

 

The Americas segment is comprised of our operations in North America and Latin America geographies. The International segment is comprised of our operations in all geographies outside of the Americas. 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), 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 and strategic transaction costs, and 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.

The Americas segment is comprised of our operations in North America and Latin America geographies. The International segment is comprised of our operations in all geographies outside of the Americas. 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), 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, strategic transaction costs and COVID-19 related costs, and 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.

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.

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.

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.

 

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 fire service, the oil, gas and petrochemical industry, 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 2020 revenues of $1.35 billion, MSA employs approximately 5,000 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 20, 2020. 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 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 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 Safety

Media Relations Contact: Mark Deasy (412) 559 - 8154, Investor Relations Contact: Elyse Lorenzato (412) 352 -1423