MSA Safety Announces Third Quarter Results
Increasing full year sales growth outlook to mid-teens, supported by robust double-digit sales and earnings growth in the third quarter
Quarterly Highlights
- Achieved quarterly net sales of
$447 million , a 17% increase year-over-year, reflecting broad-based strength across MSA's product portfolio and regions.
- Generated GAAP operating income of
$94 million , or 21.1% of sales, and adjusted operating income of$101 million , or 22.7% of sales.
- Recorded GAAP net income of
$65 million , or$1.65 per diluted share, and adjusted earnings of$70 million , or$1.78 per diluted share.
- Invested
$13 million in capital expenditures, repaid$68 million of debt and deployed$18 million for dividends to shareholders.
"During the third quarter, the MSA team continued to deliver strong results," said
Financial Highlights and Balance Sheet
Financial Highlights |
Three Months Ended |
|||||
($ millions, except per share data) |
2023 |
2022 |
% Change(a) |
|||
|
$ 447 |
$ 382 |
17 % |
|||
Operating Income |
94 |
64 |
46 % |
|||
Adjusted Operating Income |
101 |
75 |
35 % |
|||
Net Income |
65 |
45 |
45 % |
|||
Diluted EPS |
1.65 |
1.14 |
45 % |
|||
Adjusted Earnings |
70 |
57 |
23 % |
|||
Adjusted Diluted EPS |
1.78 |
1.45 |
23 % |
|||
(a) Percentage change may not calculate exactly due to rounding. |
Conference Call
|
|||||||
Three Months Ended |
Nine Months Ended |
||||||
2023 |
2022 |
2023 |
2022 |
||||
Net sales |
$ 446,728 |
$ 381,694 |
|
|
|||
Cost of products sold |
227,967 |
212,299 |
678,335 |
608,120 |
|||
Gross profit |
218,761 |
169,395 |
613,955 |
476,579 |
|||
Selling, general and administrative |
102,175 |
82,753 |
289,602 |
247,378 |
|||
Research and development |
17,682 |
14,416 |
48,906 |
43,017 |
|||
Restructuring charges |
3,285 |
899 |
8,382 |
3,146 |
|||
Currency exchange losses, net |
1,496 |
2,979 |
8,781 |
4,788 |
|||
Loss on divestiture of |
— |
— |
129,211 |
— |
|||
Product liability expense |
— |
4,035 |
3 |
9,733 |
|||
Operating income |
94,123 |
64,313 |
129,070 |
168,517 |
|||
Interest expense |
12,498 |
5,962 |
37,149 |
14,158 |
|||
Other income, net |
(6,037) |
(2,359) |
(15,487) |
(15,121) |
|||
Total other expense (income), net |
6,461 |
3,603 |
21,662 |
(963) |
|||
Income before income taxes |
87,662 |
60,710 |
107,408 |
169,480 |
|||
Provision for income taxes |
22,406 |
15,804 |
125,235 |
41,339 |
|||
Net income (loss) |
$ 65,256 |
$ 44,906 |
$ (17,827) |
$ 128,141 |
|||
Earnings (loss) per share attributable to common |
|||||||
Basic |
$ 1.66 |
$ 1.15 |
$ (0.46) |
$ 3.26 |
|||
Diluted |
$ 1.65 |
$ 1.14 |
$ (0.46) |
$ 3.25 |
|||
Basic shares outstanding |
39,303 |
39,172 |
39,267 |
39,243 |
|||
Diluted shares outstanding |
39,450 |
39,299 |
39,267 |
39,414 |
|
|||
|
|
||
Assets |
|||
Cash and cash equivalents |
$ 164,499 |
$ 162,902 |
|
Trade receivables, net |
294,907 |
297,028 |
|
Inventories |
324,077 |
338,316 |
|
Notes receivable, insurance companies |
— |
5,931 |
|
Other current assets |
68,336 |
75,949 |
|
Total current assets |
851,819 |
880,126 |
|
Property, plant and equipment, net |
205,650 |
207,552 |
|
Prepaid pension cost |
151,400 |
141,643 |
|
|
620,343 |
620,622 |
|
Intangible assets, net |
268,321 |
281,853 |
|
Notes receivable, insurance companies, noncurrent |
— |
38,695 |
|
Insurance receivable, noncurrent |
— |
110,300 |
|
Other noncurrent assets |
96,802 |
96,185 |
|
Total assets |
$ 2,194,335 |
$ 2,376,976 |
|
Liabilities and shareholders' equity |
|||
Notes payable and current portion of long-term debt, net |
$ 26,198 |
$ 7,387 |
|
Accounts payable |
108,554 |
112,532 |
|
Other current liabilities |
190,649 |
225,946 |
|
Total current liabilities |
325,401 |
345,865 |
|
Long-term debt, net |
715,814 |
565,445 |
|
Pensions and other employee benefits |
137,563 |
137,810 |
|
Deferred tax liabilities |
102,155 |
31,881 |
|
Product liability and other noncurrent liabilities |
44,676 |
372,234 |
|
Total shareholders' equity |
868,726 |
923,741 |
|
Total liabilities and shareholders' equity |
$ 2,194,335 |
$ 2,376,976 |
|
|||||||
Three Months Ended |
Nine Months Ended |
||||||
2023 |
2022 |
2023 |
2022 |
||||
Net income (loss) |
$ 65,256 |
$ 44,906 |
$ (17,827) |
$ 128,141 |
|||
Depreciation and amortization |
15,504 |
13,797 |
44,965 |
41,883 |
|||
Tax-effected loss on divestiture of |
— |
— |
199,578 |
— |
|||
Contribution on divestiture of |
— |
— |
(341,186) |
— |
|||
Change in working capital and other operating |
44,024 |
5,224 |
48,413 |
(66,121) |
|||
Cash flow from (used in) operating activities |
124,784 |
63,927 |
(66,057) |
103,903 |
|||
Capital expenditures |
(12,657) |
(8,948) |
(30,979) |
(28,753) |
|||
Change in short-term investments |
— |
10,113 |
— |
24,320 |
|||
Property disposals and other investing |
16 |
38 |
2,690 |
38 |
|||
Cash flow (used in) from investing activities |
(12,641) |
1,203 |
(28,289) |
(4,395) |
|||
Change in debt |
(68,250) |
(10,000) |
168,648 |
27,000 |
|||
Cash dividends paid |
(18,485) |
(18,046) |
(54,999) |
(53,447) |
|||
Other financing |
653 |
1,656 |
(3,142) |
(29,716) |
|||
Cash flow (used in) from financing activities |
(86,082) |
(26,390) |
110,507 |
(56,163) |
|||
Effect of exchange rate changes on cash, cash equivalents and restricted cash |
(8,501) |
(13,024) |
(14,152) |
(23,498) |
|||
Increase in cash, cash equivalents and restricted cash |
$ 17,560 |
$ 25,716 |
$ 2,009 |
$ 19,847 |
|
|||||||
|
International |
Corporate |
Consolidated |
||||
Three Months Ended |
|||||||
Net sales to external customers |
|
|
$ — |
$ 446,728 |
|||
Operating income |
94,123 |
||||||
Operating margin % |
21.1 % |
||||||
Restructuring charges |
3,285 |
||||||
Currency exchange losses, net |
1,496 |
||||||
Amortization of acquisition-related intangible |
2,315 |
||||||
Transaction costs (a) |
78 |
||||||
Adjusted operating income (loss) |
93,918 |
22,577 |
(15,198) |
101,297 |
|||
Adjusted operating margin % |
29.9 % |
17.0 % |
22.7 % |
||||
Depreciation and amortization |
13,189 |
||||||
Adjusted EBITDA |
103,157 |
26,289 |
(14,960) |
114,486 |
|||
Adjusted EBITDA margin % |
32.8 % |
19.8 % |
25.6 % |
||||
Three Months Ended |
|||||||
Net sales to external customers |
|
|
$ — |
$ 381,694 |
|||
Operating income |
64,313 |
||||||
Operating margin % |
16.8 % |
||||||
Restructuring charges |
899 |
||||||
Currency exchange losses, net |
2,979 |
||||||
Product liability expense |
4,035 |
||||||
Amortization of acquisition-related intangible |
2,279 |
||||||
Transaction costs (a) |
620 |
||||||
Adjusted operating income (loss) |
75,088 |
8,448 |
(8,411) |
75,125 |
|||
Adjusted operating margin % |
27.2 % |
8.0 % |
19.7 % |
||||
Depreciation and amortization |
11,518 |
||||||
Adjusted EBITDA |
83,945 |
10,980 |
(8,282) |
86,643 |
|||
Adjusted EBITDA margin % |
30.4 % |
10.4 % |
22.7 % |
||||
(a) Transaction costs include advisory, legal, accounting, valuation, and other professional or consulting fees incurred |
|
|||||||
|
International |
Corporate |
Consolidated |
||||
Nine Months Ended |
|||||||
Net sales to external customers |
|
|
$ — |
|
|||
Operating income |
129,070 |
||||||
Operating margin % |
10.0 % |
||||||
Restructuring charges |
8,382 |
||||||
Currency exchange losses, net |
8,781 |
||||||
Loss on divestiture of |
129,211 |
||||||
Product liability expense |
3 |
||||||
Amortization of acquisition-related intangible |
6,936 |
||||||
Transaction costs (a) |
78 |
||||||
Adjusted operating income (loss) |
260,428 |
60,099 |
(38,066) |
282,461 |
|||
Adjusted operating margin % |
28.8 % |
15.4 % |
21.9 % |
||||
Depreciation and amortization |
38,029 |
||||||
Adjusted EBITDA |
287,628 |
70,296 |
(37,434) |
320,490 |
|||
Adjusted EBITDA margin % |
31.9 % |
18.1 % |
24.8 % |
||||
Nine Months Ended |
|||||||
Net sales to external customers |
|
|
$ — |
|
|||
Operating income |
168,517 |
||||||
Operating margin % |
15.5 % |
||||||
Restructuring charges |
3,146 |
||||||
Currency exchange losses, net |
4,788 |
||||||
Product liability expense |
9,733 |
||||||
Amortization of acquisition-related intangible |
6,922 |
||||||
Transaction costs (a) |
1,476 |
||||||
Adjusted operating income (loss) |
184,664 |
34,674 |
(24,756) |
194,582 |
|||
Adjusted operating margin % |
24.5 % |
10.5 % |
17.9 % |
||||
Depreciation and amortization |
34,961 |
||||||
Adjusted EBITDA |
210,201 |
43,708 |
(24,366) |
229,543 |
|||
Adjusted EBITDA margin % |
27.9 % |
13.2 % |
21.2 % |
||||
(a) Transaction costs include advisory, legal, accounting, valuation, and other professional or consulting fees incurred |
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, loss on divestiture of
|
|||||||||||
Consolidated |
|||||||||||
Three Months Ended |
|||||||||||
Breathing |
Firefighter |
|
Portable |
Industrial |
Fall |
Core Sales |
Non-Core |
|
|||
GAAP reported sales |
21 % |
18 % |
28 % |
11 % |
5 % |
15 % |
18 % |
3 % |
17 % |
||
Plus: Currency |
(2) % |
(2) % |
(2) % |
(2) % |
(3) % |
(4) % |
(2) % |
(3) % |
(2) % |
||
Constant currency sales |
19 % |
16 % |
26 % |
9 % |
2 % |
11 % |
16 % |
— % |
15 % |
Nine Months Ended |
|||||||||||
Breathing |
Firefighter |
|
Portable |
Industrial |
Fall |
Core Sales |
Non-Core |
|
|||
GAAP reported sales |
13 % |
27 % |
24 % |
23 % |
10 % |
23 % |
20 % |
13 % |
19 % |
||
Plus: Currency |
— % |
1 % |
(1) % |
— % |
(1) % |
(1) % |
(1) % |
(1) % |
— % |
||
Constant currency sales |
13 % |
28 % |
23 % |
23 % |
9 % |
22 % |
19 % |
12 % |
19 % |
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 |
|
Portable |
Industrial |
Fall |
Core Sales |
Non-Core |
|
|||
GAAP reported sales |
13 % |
23 % |
18 % |
13 % |
5 % |
15 % |
15 % |
1 % |
14 % |
||
Plus: Currency |
— % |
— % |
(2) % |
(3) % |
(3) % |
(4) % |
(2) % |
(3) % |
(2) % |
||
Constant currency sales |
13 % |
23 % |
16 % |
10 % |
2 % |
11 % |
13 % |
(2) % |
12 % |
Nine Months Ended |
|||||||||||
Breathing |
Firefighter |
|
Portable |
Industrial |
Fall |
Core Sales |
Non-Core |
|
|||
GAAP reported sales |
9 % |
38 % |
20 % |
26 % |
10 % |
24 % |
20 % |
22 % |
20 % |
||
Plus: Currency |
— % |
— % |
(1) % |
(1) % |
(2) % |
(2) % |
(1) % |
(2) % |
(1) % |
||
Constant currency sales |
9 % |
38 % |
19 % |
25 % |
8 % |
22 % |
19 % |
20 % |
19 % |
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 |
Firefighter |
|
Portable |
Industrial |
Fall |
Core Sales |
Non-Core |
|
|||
GAAP reported sales |
45 % |
3 % |
52 % |
6 % |
4 % |
15 % |
29 % |
6 % |
25 % |
||
Plus: Currency |
(6) % |
(7) % |
(5) % |
(2) % |
(1) % |
(6) % |
(5) % |
(4) % |
(4) % |
||
Constant currency sales |
39 % |
(4) % |
47 % |
4 % |
3 % |
9 % |
24 % |
2 % |
21 % |
Nine Months Ended |
|||||||||||
Breathing |
Firefighter |
|
Portable |
Industrial |
Fall |
Core Sales |
Non-Core |
|
|||
GAAP reported sales |
25 % |
(2) % |
32 % |
16 % |
11 % |
20 % |
20 % |
2 % |
18 % |
||
Plus: Currency |
1 % |
— % |
— % |
2 % |
3 % |
1 % |
1 % |
— % |
— % |
||
Constant currency sales |
26 % |
(2) % |
32 % |
18 % |
14 % |
21 % |
21 % |
2 % |
18 % |
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 |
|||
|
26 % |
16 % |
47 % |
||
Breathing Apparatus |
19 % |
13 % |
39 % |
||
Firefighter Helmets & Protective Apparel |
16 % |
23 % |
(4) % |
||
Fall Protection |
11 % |
11 % |
9 % |
||
Portable Gas Detection |
9 % |
10 % |
4 % |
||
Industrial Head Protection |
2 % |
2 % |
3 % |
||
Core Sales |
16 % |
13 % |
24 % |
||
Non-Core Sales |
— % |
(2) % |
2 % |
||
|
15 % |
12 % |
21 % |
Nine Months Ended |
|||||
Consolidated |
|
International |
|||
|
23 % |
19 % |
32 % |
||
Breathing Apparatus |
13 % |
9 % |
26 % |
||
Firefighter Helmets & Protective Apparel |
28 % |
38 % |
(2) % |
||
Fall Protection |
22 % |
22 % |
21 % |
||
Portable Gas Detection |
23 % |
25 % |
18 % |
||
Industrial Head Protection |
9 % |
8 % |
14 % |
||
Core Sales |
19 % |
19 % |
21 % |
||
Non-Core Sales |
12 % |
20 % |
2 % |
||
|
19 % |
19 % |
18 % |
|
|||||||||||
Three Months Ended |
Nine Months Ended |
||||||||||
2023 |
2022 |
% Change |
2023 |
2022 |
% Change |
||||||
Net income (loss) |
$ 65,256 |
$ 44,906 |
45 % |
$ (17,827) |
$ 128,141 |
(114) % |
|||||
Loss on divestiture of |
— |
— |
129,211 |
— |
|||||||
Deferred tax asset write-off related |
— |
— |
70,366 |
— |
|||||||
Product liability expense |
— |
4,035 |
3 |
9,733 |
|||||||
Amortization of acquisition-related |
2,315 |
2,279 |
6,936 |
6,922 |
|||||||
Transaction costs (a) |
78 |
620 |
78 |
1,476 |
|||||||
Restructuring charges |
3,285 |
899 |
8,382 |
3,146 |
|||||||
Asset related losses (gains) and |
42 |
4,652 |
(671) |
4,776 |
|||||||
Currency exchange losses, net |
1,496 |
2,979 |
8,781 |
4,788 |
|||||||
Income tax expense on |
(2,327) |
(3,331) |
(9,248) |
(7,400) |
|||||||
Adjusted earnings |
$ 70,145 |
$ 57,039 |
23 % |
$ 196,011 |
$ 151,582 |
29 % |
|||||
Adjusted earnings per diluted |
$ 1.78 |
$ 1.45 |
23 % |
$ 4.97 |
$ 3.85 |
29 % |
|||||
(a)Transaction costs include advisory, legal, accounting, valuation, and other professional or consulting fees incurred |
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 (loss) determined on a GAAP basis as well as adjusted earnings.
|
||
Twelve Months Ended |
||
Operating income |
$ 199,690 |
|
Loss on divestiture of |
129,211 |
|
Depreciation and amortization |
50,178 |
|
Product liability expense |
10,860 |
|
Restructuring charges |
13,201 |
|
Currency exchange losses, net |
14,248 |
|
Amortization of acquisition-related intangible assets |
9,221 |
|
Transaction costs (a) |
1,835 |
|
Adjusted EBITDA |
$ 428,444 |
|
Total end-of-period debt |
742,012 |
|
Debt to adjusted EBITDA |
1.7 |
|
Total end-of-period debt |
$ 742,012 |
|
Total end-of-period cash and cash equivalents |
164,499 |
|
Net debt |
$ 577,513 |
|
Net debt to adjusted EBITDA |
1.3 |
|
(a) Transaction costs include advisory, legal, accounting, valuation, and other professional or consulting fees incurred |
Management believes that Debt to adjusted EBITDA and Net debt to adjusted EBITDA are useful measures for investors, as management uses these measures to internally assess the company's liquidity and balance sheet strength. There can be no assurances that that MSA's definition of Debt to Adjusted EBITDA and Net Debt to Adjusted EBITDA is consistent with that of other companies.
About
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. These statements relate to future events or our future financial performance and involve various assumptions, known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. In some cases, you can identify forward-looking statements by words such as "may," "will," "should," "expects," "intends," "plans," "anticipates," "believes," "estimates," "predicts," "potential" or other comparable words. Actual results, performance or outcomes may differ materially from those expressed or implied by these forward-looking statements and may not align with historical performance and events due to a number of factors, including those discussed in the sections of our annual report on Form 10-K entitled "Cautionary Statement Regarding Forward-Looking Statements" and "Risk Factors," and those discussed in our Form 10-Q quarterly reports filed after such annual report. MSA's
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, adjusted earnings per diluted share, debt to adjusted EBITDA, and net debt to adjusted EBITDA. These non-GAAP financial measures provide information useful to investors in understanding our operating performance and trends, and to facilitate comparisons with the performance of our peers. Management also uses these measures internally to assess and better understand our underlying business performance and trends related to core business activities. The non-GAAP financial measures and key performance indicators we use, and computational methods with respect thereto, may differ from the non-GAAP financial measures and key performance indicators, and computational methods, that our peers use to assess their performance and trends.
The presentation of these non-GAAP 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