UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 12, 2014
MINE SAFETY APPLIANCES COMPANY
(Exact name of registrant as specified in its charter)
Pennsylvania | 1-15579 | 25-0668780 | ||
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification Number) | ||
1000 Cranberry Woods Drive Cranberry Township, Pennsylvania | 16066-5207 | |
(Address of principal executive offices) | (Zip Code) | |
Registrant’s telephone number, including area code: 724-776-8600
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |
Item 2.02 | Results of Operations and Financial Condition |
On February 12, 2014, the Company issued a press release announcing its financial results for the quarter ended December 31, 2013. A copy of the press release is furnished herewith as Exhibit 99.1 to this report.
Item 9.01 | Financial Statements and Exhibits |
(d) Exhibits
99.1 | Mine Safety Appliances Company Press Release dated February 12, 2014, announcing financial results for the quarter ended December 31, 2013. | ||
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
MINE SAFETY APPLIANCES COMPANY | ||
(Registrant) | ||
By | /s/ Stacy P. McMahan | |
Stacy P. McMahan | ||
Senior Vice President of Finance and Chief Financial Officer | ||
Date: February 12, 2014
EXHIBIT INDEX
Exhibit No. | Description | ||
99.1 | Mine Safety Appliances Company Press Release dated February 12, 2014, announcing financial results for the quarter ended December 31, 2013. | ||
FROM: MSA (Mine Safety Appliances Company)
Ticker: MSA (NYSE)
Contact: Mark Deasy – (724) 741- 8570
FOR IMMEDIATE RELEASE
MSA Announces Record Fourth Quarter Earnings
PITTSBURGH, February 12, 2014 – Global safety equipment manufacturer MSA (NYSE: MSA) today reported results for the fourth quarter and full year of 2013.
Quarterly Highlights
• | Quarterly revenue from continuing operations of $291 million, up 3 percent over fourth quarter 2012. Income from continuing operations of $25 million, up 30 percent. Quarterly continuing earnings per basic share of $0.67, up 29 percent. |
• | Excluding foreign exchange losses, restructuring charges and asset related gains and losses, adjusted earnings of $28 million, or $0.75 per basic share, increasing 36 percent over equivalently adjusted 2012 results. |
Annual Highlights
• | Revenue from continuing operations in 2013 of $1.1 billion was flat compared to 2012, but grew 2 percent excluding the results from divested businesses in 2012 and weaker foreign currencies. Income from continuing operations of $86 million declined 2 percent. Continuing earnings per basic share were $2.31, a decline of 3 percent. |
• | Excluding foreign exchange losses, restructuring charges and asset related gains and losses, adjusted earnings were $94 million, or $2.54 per share, increasing 11 percent over equivalently adjusted 2012 results. |
William M. Lambert, MSA President and CEO, said “Consistent growth in our five core product groups, combined with a strong fourth quarter performance in emerging markets to close the year, certainly provides momentum as we start 2014 – the year of our Centennial Anniversary.”
(more)
2
Excluding sales of self-contained breathing apparatus (SCBA) to the U.S. fire service market – which continue to be restricted by regulatory related delays of product approvals – local currency sales of MSA core products increased 8 percent while emerging market revenues were up 16 percent in the fourth quarter. “This reflects continued progress in advancing our strategy focused on those products that represent the strength of MSA and drive value for our shareholders,” Mr. Lambert commented.
During the fourth quarter, and in line with MSA’s strategy aimed at investing in core products and key markets, the company initiated steps to divest its South African distribution business and Zambian operations. More than 94 percent of sales from these businesses are comprised of non-core products, resulting in lower levels of profitability. “By divesting these non-core assets, we can further increase our focus and resources on those product areas that truly drive value for our customers and shareholders,” Mr. Lambert said.
The results of these South African non-core businesses – $12 million of revenue in the fourth quarter; $53 million of revenue for the year; and earnings of $0.01 and $0.06 per basic share for these respective periods – have been reclassified to discontinued operations. These businesses were historically reported in MSA’s International segment. The company expects to complete the divestiture of these non-core businesses in 2014.
(more)
3
Quarterly Reporting Segment Analysis:
Fourth quarter sales in the company’s North American segment increased
$1 million versus the same period of 2012. Sales of SCBA to the U.S. fire service were down $5 million, primarily due to the ongoing delay in approvals of new products. This decline was offset by a $2 million increase in industrial head protection sales and a $5 million increase in sales of gas detection products to industrial markets. Net income in the company’s North American segment increased $2 million in the quarter, reflecting lower restructuring costs and reduced selling, general and administrative expense.
Sales in the company’s European segment increased by $3 million, or 4 percent, compared to the same period last year. Excluding favorable currency effects from a strengthening euro, sales were flat versus the prior year with improvements in military markets offset by a decline in industrial sales due to a lower level of large supplied-air respirator orders in the Caspian Sea region. European segment net income increased $1 million in the fourth quarter of 2013, attributable to favorable currency effects. Local currency net income was relatively flat compared to the prior year as lower selling, general and administrative expenses were offset by lower gross profit.
Continuing sales in MSA’s International segment increased $5 million, or 8 percent, versus the same period of 2012. Excluding an unfavorable currency translation impact of
$5 million, International segment local currency sales increased $10 million, or 17 percent, on a higher level of large fire service orders in Latin America and stronger sales of gas detection
(more)
4
products to industrial markets in Asia. Local currency net income from continuing operations increased by $2 million in the fourth quarter on higher sales in Latin America and Asia and lower selling, general and administrative expense.
“While our results were impacted by ongoing regulatory issues in the U.S., our ongoing focus on driving demand of core products in industrial markets provided a solid finish to 2013,” Mr. Lambert noted. “We remain committed to executing our corporate strategy, and I remain confident that it will continue to drive profitable growth and increase shareholder value in 2014 and beyond,” Mr. Lambert concluded.
(more)
5
Mine Safety Appliances Company
Consolidated Condensed Statement of Income (Unaudited)
(In thousands, except earnings per share)
Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Net sales | $ | 291,429 | $ | 282,341 | $ | 1,112,058 | $ | 1,110,443 | |||||||
Other (loss) income, net | (1,190) | 2,536 | (175) | 10,876 | |||||||||||
290,239 | 284,877 | 1,111,883 | 1,121,319 | ||||||||||||
Cost of products sold | 161,380 | 154,099 | 615,213 | 620,895 | |||||||||||
Selling, general and administrative | 77,107 | 82,836 | 309,206 | 312,858 | |||||||||||
Research and development | 11,578 | 11,193 | 45,858 | 40,900 | |||||||||||
Restructuring and other charges | 1,402 | 2,787 | 5,344 | 2,787 | |||||||||||
Interest expense | 2,526 | 2,501 | 10,677 | 11,344 | |||||||||||
Currency exchange losses, net | 1,305 | 1,368 | 5,452 | 3,192 | |||||||||||
255,298 | 254,784 | 991,750 | 991,976 | ||||||||||||
Income before income taxes | 34,941 | 30,093 | 120,133 | 129,343 | |||||||||||
Provision for income taxes | 10,469 | 10,889 | 35,145 | 41,401 | |||||||||||
Income from continuing operations | 24,472 | 19,204 | 84,988 | 87,942 | |||||||||||
Income from discontinued operations | 614 | 306 | 3,061 | 3,819 | |||||||||||
Net income | 25,086 | 19,510 | 88,049 | 91,761 | |||||||||||
Net loss (income) attributable to noncontrolling interests | 325 | (23) | 198 | (1,124) | |||||||||||
Net income attributable to Mine Safety Appliances Company | 25,411 | 19,487 | 88,247 | 90,637 | |||||||||||
Income from continuing operations | 24,929 | 19,216 | 85,858 | 87,557 | |||||||||||
Income from discontinued operations | 482 | 271 | 2,389 | 3,080 | |||||||||||
Net income attributable to Mine Safety Appliances Company | 25,411 | 19,487 | 88,247 | 90,637 | |||||||||||
Earnings Per Share Attributable to Mine Safety Appliances Company Basic | |||||||||||||||
Income from continuing operations | $ .67 | $ .52 | $ | 2.31 | $ | 2.37 | |||||||||
Income from discontinued operations | $ .01 | $ .01 | $ | 0.06 | $ | 0.08 | |||||||||
Net income | $ .68 | $ .53 | $ | 2.37 | $ | 2.45 | |||||||||
Diluted | |||||||||||||||
Income from continuing operations | $ .66 | $ .51 | $ | 2.28 | $ | 2.34 | |||||||||
Income from discontinued operations | $ .01 | $ .01 | $ | 0.06 | $ | 0.08 | |||||||||
Net income | $ .67 | $ .52 | $ | 2.34 | $ | 2.42 | |||||||||
Basic shares outstanding | 36,939 | 36,650 | 36,868 | 36,564 | |||||||||||
Diluted shares outstanding | 37,487 | 37,138 | 37,450 | 37,042 | |||||||||||
(more)
6
Mine Safety Appliances Company
Consolidated Condensed Balance Sheet (Unaudited)
(In thousands)
December 31, 2013 | December 31, 2012 | ||||||
Current assets | |||||||
Cash and cash equivalents | $ | 96,265 | $ | 82,718 | |||
Trade receivables, net | 200,364 | 191,289 | |||||
Inventories | 136,837 | 136,300 | |||||
Other current assets | 67,500 | 53,241 | |||||
Total current assets | 500,966 | 463,548 | |||||
Property, net | 152,755 | 147,465 | |||||
Prepaid pension cost | 121,054 | 42,818 | |||||
Goodwill | 260,134 | 258,400 | |||||
Other noncurrent assets | 199,361 | 199,515 | |||||
Total | 1,234,270 | 1,111,746 | |||||
Current liabilities | |||||||
Notes payable and current portion of long-term debt | $ | 7,500 | $ | 6,823 | |||
Accounts payable | 66,902 | 59,519 | |||||
Other current liabilities | 117,162 | 122,458 | |||||
Total current liabilities | 191,564 | 188,800 | |||||
Long-term debt | 260,667 | 272,333 | |||||
Pensions and other employee benefits | 152,084 | 151,536 | |||||
Deferred tax liabilities | 49,621 | 17,249 | |||||
Other noncurrent liabilities | 7,987 | 11,124 | |||||
Equity | 572,347 | 470,704 | |||||
Total | 1,234,270 | 1,111,746 | |||||
(more)
7
Mine Safety Appliances Company
Consolidated Condensed Statement of Cash Flows (Unaudited)
(In thousands)
Twelve Months Ended December 31, | |||||||
2013 | 2012 | ||||||
Net income | $ | 88,049 | $ | 91,761 | |||
Depreciation and amortization | 30,764 | 31,702 | |||||
Change in working capital | (16,072) | 34,162 | |||||
Other operating | 8,040 | (7,149) | |||||
Cash from operations | 110,781 | 150,476 | |||||
Capital expenditures | (36,517) | (32,209) | |||||
Property disposals | 1,360 | 20,193 | |||||
Other investing | — | (5,269) | |||||
Cash from investing | (35,157) | (17,285) | |||||
Change in debt | (11,005) | (63,128) | |||||
Cash dividends paid | (43,993) | (50,990) | |||||
Other financing | (3,242) | 3,597 | |||||
Cash from financing | (58,240) | (110,521) | |||||
Exchange rate changes | (3,837) | 110 | |||||
Increase in cash | 13,547 | 22,780 | |||||
(more)
8
Mine Safety Appliances Company
Segment Information (Unaudited)
(In thousands)
Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Net sales | |||||||||||||||
North America | $ | 135,874 | $ | 135,199 | $ | 559,193 | $ | 551,927 | |||||||
Europe | 85,026 | 82,099 | 289,760 | 289,549 | |||||||||||
International | 70,529 | 65,043 | 263,105 | 268,967 | |||||||||||
Total | 291,429 | 282,341 | 1,112,058 | 1,110,443 | |||||||||||
Net income (loss) | |||||||||||||||
North America | $ | 17,383 | $ | 15,407 | $ | 70,577 | $ | 64,270 | |||||||
Europe | 8,114 | 7,503 | 18,398 | 20,424 | |||||||||||
International | 5,787 | 4,147 | 20,373 | 19,238 | |||||||||||
Reconciling Items | (6,355) | (7,841) | (23,490) | (16,375) | |||||||||||
Income from Continuing Operations | 24,929 | 19,216 | 85,858 | 87,557 | |||||||||||
Discontinued Operations | 482 | 271 | 2,389 | 3,080 | |||||||||||
Total | 25,411 | 19,487 | 88,247 | 90,637 | |||||||||||
(more)
9
Mine Safety Appliances Company
Reconciliation of As Reported Financial Measures to Non-GAAP Financial Measures (Unaudited)
Adjusted Continuing Operations Revenue and Related Growth
(In thousands)
Three Months Ended December 31, | ||||||||||
2013 | 2012 | % Change | ||||||||
Total Revenue | $ | 303,571 | $ | 294,114 | 3.2 | % | ||||
Less: Discontinued Operations | 12,142 | 11,773 | ||||||||
Continuing Operations Revenue | 291,429 | 282,341 | 3.2 | % | ||||||
Less: North American Ballistic Helmet Business | — | — | ||||||||
Less: FX Impact | — | (2,043) | ||||||||
Adjusted Continuing Operations Revenue | $ | 291,429 | $ | 280,298 | 4.0 | % | ||||
Year Ended December 31, | ||||||||||
2013 | 2012 | % Change | ||||||||
Total Revenue | $1,164,750 | $ | 1,168,904 | (0.4 | )% | |||||
Less: Discontinued Operations | 52,692 | 58,461 | ||||||||
Continuing Operations Revenue | 1,112,058 | 1,110,443 | 0.1 | % | ||||||
Less: North American Ballistic Helmet Business | — | (9,600) | ||||||||
Less: FX Impact | — | (9,548) | ||||||||
Adjusted Continuing Operations Revenue | $ | 1,112,058 | $1,091,295 | 1.9 | % | |||||
(more)
10
Mine Safety Appliances Company
Reconciliation of As Reported Financial Measures to Non-GAAP Financial Measures (Unaudited)
Adjusted Earnings / Earnings per Share
(In thousands, except per share amounts)
Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||||||||
2013 | 2012 | % Change | 2013 | 2012 | % Change | ||||||||||||||||
Net Income Attributable to Mine Safety Appliances Company | $ | 25,411 | $ | 19,487 | 30.4 | % | $ | 88,247 | $ | 90,637 | (2.6 | )% | |||||||||
Less: Income from Discontinued Operations | 482 | 271 | 2,389 | 3,080 | |||||||||||||||||
Income from Continuing Operations | 24,929 | $ | 19,216 | 29.7 | % | $ | 85,858 | $ | 87,557 | (1.9 | )% | ||||||||||
Foreign Currency Loss | 1,305 | 1,368 | 5,452 | 3,192 | |||||||||||||||||
Restructuring Charges | 1,402 | 2,787 | 5,344 | 2,787 | |||||||||||||||||
Land Impairment Charges | 1,557 | — | 1,557 | — | |||||||||||||||||
Gains on Property Sales | — | (2,500) | (600) | (8,200) | |||||||||||||||||
Gain on Divestiture of North American Ballistic Helmet Business | — | — | — | (2,100) | |||||||||||||||||
Income Tax Benefit / (Expense) | (1,279) | (596) | (3,443) | 1,370 | |||||||||||||||||
Adjusted Earnings | $ | 27,914 | $ | 20,275 | 37.7 | % | $ | 94,168 | $ | 84,606 | 11.3 | % | |||||||||
Adjusted Earnings per Basic Share | $ | 0.75 | $ | 0.55 | 36.4 | % | $ | 2.54 | $ | 2.29 | 10.9 | % | |||||||||
Management believes that adjusted earnings and adjusted earnings per share are useful measures for investors when analyzing 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. Management does not use these non-GAAP financial measures for any purpose other than the reasons stated above.
(more)
11
About MSA:
Established in 1914, MSA is the global leader in the development, manufacture and supply of safety products that protect people and facility infrastructures. Many MSA products typically integrate a combination of electronics, mechanical systems and advanced materials to protect users against hazardous or life-threatening situations. The company's comprehensive line of products is used by workers around the world in a broad range of industries, including the oil, gas and petrochemical industry, the fire service, construction, mining and utilities, and the military. Principal products include self-contained breathing apparatus, handheld gas detection instruments, fixed gas and flame detection systems, head protection products, and fall protection devices. MSA has annual sales of approximately $1.1 billion, manufacturing operations in the United States, Europe, Asia and Latin America, and 42 international locations. Additional information is available on the company’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, including without limitation all projections and anticipated levels of future performance, involve risks, uncertainties and other factors that may cause our actual results to differ materially from those discussed herein. Actual results can be affected by any number of factors, many of which are outside of management’s control. Among the factors that could cause such differences are global economic conditions, spending patterns of government agencies, competitive pressures, product liability claims, the success of new product introductions, currency exchange rate fluctuations, the identification and successful integration of acquisitions and the risks of doing business in foreign countries. These risks, uncertainties and other factors are detailed from time-to-time in our filings with the United States Securities and Exchange Commission ("SEC"). 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 sec.gov, as well as on a number of other commercial websites.
Non-GAAP Financial Measures
This earnings release includes certain non-GAAP financial measures. These financial measures include adjusted earnings and adjusted earnings per basic share. The presentation of these financial measures does not comply with U.S. generally accepted accounting principles ("GAAP"). For an explanation of adjusted earnings, together with a reconciliation to net income from continuing operations, which is 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.
This earnings release includes certain non-GAAP financial measures. These financial measures include adjusted earnings and adjusted earnings per basic share. The presentation of these financial measures does not comply with U.S. generally accepted accounting principles ("GAAP"). For an explanation of adjusted earnings, together with a reconciliation to net income from continuing operations, which is 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.
# # #