MSA Safety Announces First Quarter 2024 Results and Upcoming Investor Events

MSA Safety, Inc. -0.80% Post

MSA Safety, Inc.

MSA

187.63

187.63

-0.80%

0.00% Post

Healthy sales growth and robust margin expansion; Maintaining mid-single digit full year sales growth outlook

PITTSBURGH, April 29, 2024 /PRNewswire/ -- Global safety equipment and solutions provider MSA Safety Incorporated (NYSE: MSA) today reported financial results for the first quarter of 2024.

MSA Safety Incorporated

Quarterly Highlights

  • Achieved quarterly net sales of $413 million, a 4% increase year-over-year.
  • Generated GAAP operating income of $80 million, or 19.4% of sales, and adjusted operating income of $88 million, or 21.3% of sales.
  • Recorded GAAP net income of $58 million, or $1.47 per diluted share, and adjusted earnings of $63 million, or $1.61 per diluted share.
  • Invested $11 million for capital expenditures, repaid $5 million of debt, and returned $18 million to shareholders through dividends.

"We are off to a solid start in 2024, with our team executing our strategy and delivering strong growth and margin expansion," said Nish Vartanian, MSA Safety Chairman and Chief Executive Officer. "Our resilient business model driven by the diversity of our products, markets and geographies, our team's commitment to continuous improvement, and their passion for serving our customers continues to generate profitable growth and sustained value for our shareholders."

Mr. Vartanian added, "Over the past several years, we have focused on building a higher-performing, stronger MSA and the opportunity in front of us is exciting. I want to thank our associates for their dedication to advancing our mission and ensuring we meet the needs of our customers around the world."

Financial Highlights and Balance Sheet

Financial Highlights



Three Months Ended March 31,





($ millions, except per share data)



2024



2023



% Change(a)

Net Sales



$                 413



$                 398



4 %

Operating Income (Loss)



80



(60)



n/m*

Adjusted Operating Income



88



77



14 %

Net Income (Loss)



58



(150)



n/m*

Diluted EPS



1.47



(3.83)



n/m*

Adjusted Earnings



63



54



18 %

Adjusted Diluted EPS



1.61



1.36



18 %



(a) Percentage change may not calculate exactly due to rounding.

* Not meaningful

Lee McChesney, MSA Safety Senior Vice President and Chief Financial Officer, commented, "Our team's disciplined execution during the first quarter of the year, underpinned by the MSA Business System, resulted in 4% sales growth, robust margin expansion, and consistent cash flow performance. Taking into consideration the solid start to the year in both sales and orders while keeping a close eye on global economic trends, we are maintaining our growth outlook of mid-single digits for the full year. We believe our continued momentum and strong balance sheet position us well in 2024 and beyond."

Conference Call

MSA Safety will host a conference call on Tuesday, April 30, 2024 at 10:00 a.m. Eastern time to discuss its first quarter 2024 results and outlook. The call and an accompanying slide presentation will be webcast at http://investors.msasafety.com/ under the "News and Events" tab, subheading "Events & Presentations." Investors and interested parties can also dial into the call at 1-844-854-4415 (Toll Free) or 1-412-902-6599 (International). When prompted, please instruct the operator to be joined into the MSA Safety Incorporated conference call. A replay of the conference call will be available at http://investors.msasafety.com/ shortly after the conclusion of the presentation and will be available for the next 90 days.

Upcoming Investor Events

MSA Safety will host an Investor Day for institutional investors and financial analysts in New York City on Wednesday, May 22, 2024 at 8:30 a.m. Eastern time

Lee McChesney, Senior Vice President and Chief Financial Officer, will present virtually at the Oppenheimer 19th Annual Industrial Growth Conference on Tuesday, May 7, 2024 at 10:30 a.m. Eastern time.

A live webcast, along with the presentation materials, can be accessed on MSA Safety's Investor Relations website at http://investors.msasafety.com/ on the day of each event.  A replay of the webcast will be available on the company's Investor Relations website shortly following the conclusion of each event.

 

MSA Safety Incorporated

Condensed Consolidated Statements of Operations (Unaudited)

(In thousands, except per share amounts)





Three Months Ended March 31,



2024



2023









Net sales

$                         413,302



$                         398,262

Cost of products sold

217,771



216,864

Gross profit

195,531



181,398









Selling, general and administrative

94,150



91,091

Research and development

15,919



15,232

Restructuring charges

3,017



1,747

Currency exchange losses, net

2,333



4,175

Loss on divestiture of MSA LLC



129,211

Product liability expense



3

Operating income (loss)

80,112



(60,061)









Interest expense

10,740



11,476

Other income, net

(6,235)



(3,800)

Total other expense, net

4,505



7,676









Income (loss) before income taxes

75,607



(67,737)

Provision for income taxes

17,468



82,436

Net income (loss)

$                           58,139



$                       (150,173)









Earnings (loss) per share attributable to common shareholders:







Basic

$                               1.48



$                             (3.83)

Diluted

$                               1.47



$                             (3.83)









Basic shares outstanding

39,360



39,224

Diluted shares outstanding

39,556



39,224

 

MSA Safety Incorporated

Condensed Consolidated Balance Sheets (Unaudited)

(In thousands)





March 31, 2024



December 31, 2023









Assets







Cash and cash equivalents

$                         148,329



$                         146,442

Trade receivables, net

279,084



294,678

Inventories

305,556



292,604

Other current assets

59,976



52,546

  Total current assets

792,945



786,270









Property, plant and equipment, net

210,955



211,877

Prepaid pension cost

175,891



172,161

Goodwill

625,049



627,534

Intangible assets, net

260,925



266,134

Other noncurrent assets

108,565



106,174

  Total assets

$                       2,174,330



$                       2,170,150









Liabilities and shareholders' equity







Notes payable and current portion of long-term debt, net

$                           26,462



$                           26,522

Accounts payable

117,125



111,872

Other current liabilities

172,939



194,424

  Total current liabilities

316,526



332,818









Long-term debt, net

569,692



575,170

Pensions and other employee benefits

142,016



143,967

Deferred tax liabilities

102,228



102,419

Other noncurrent liabilities

49,114



48,974

Total shareholders' equity

994,754



966,802

  Total liabilities and shareholders' equity

$                       2,174,330



$                       2,170,150

 

MSA Safety Incorporated

Condensed Consolidated Statements of Cash Flows (Unaudited)

(In thousands)





Three Months Ended March 31,



2024



2023









Net income (loss)

$                           58,139



$                       (150,173)

Depreciation and amortization

15,559



14,572

Tax-effected loss on divestiture of MSA LLC



199,578

Contribution on divestiture of MSA LLC



(341,186)

Change in working capital and other operating

(22,812)



(8,700)

Cash flow from (used in) operating activities

50,886



(285,909)









Capital expenditures

(11,219)



(8,402)

Property disposals and other investing



35

Cash flow used in investing activities

(11,219)



(8,367)









Change in debt

(5,010)



295,412

Cash dividends paid

(18,490)



(18,045)

Other financing

(5,585)



(4,596)

Cash flow (used in) from financing activities

(29,085)



272,771









Effect of exchange rate changes on cash, cash

equivalents and restricted cash

(8,676)



(2,287)









Increase (decrease) in cash, cash equivalents and restricted cash

$                             1,906



$                         (23,792)

 

MSA Safety Incorporated

Segment Information (Unaudited)

(In thousands, except percentage amounts)

 




Americas



International



Corporate



Consolidated

Three Months Ended March 31, 2024















Net sales to external customers

$ 295,539



$ 117,763



$             —



$   413,302

Operating income













80,112

Operating margin %













19.4 %

Restructuring charges













3,017

Currency exchange losses, net













2,333

Amortization of acquisition-related intangible assets













2,314

Transaction costs (a)













233

Adjusted operating income (loss)

86,218



13,486



(11,695)



88,009

Adjusted operating margin %

29.2 %



11.5 %







21.3 %

Depreciation and amortization













13,245

Adjusted EBITDA

95,693



17,045



(11,484)



101,254

Adjusted EBITDA margin %

32.4 %



14.5 %







24.5 %

















Three Months Ended March 31, 2023















Net sales to external customers

$ 280,267



$ 117,995



$             —



$   398,262

Operating loss













(60,061)

Operating margin %













(15.1) %

Restructuring charges













1,747

Currency exchange losses, net













4,175

Loss on divestiture of MSA LLC













129,211

Product liability expense













3

Amortization of acquisition-related intangible assets













2,305

Adjusted operating income (loss)

71,694



15,779



(10,093)



77,380

Adjusted operating margin %

25.6 %



13.4 %







19.4 %

Depreciation and amortization













12,267

Adjusted EBITDA

80,494



19,058



(9,905)



89,647

Adjusted EBITDA margin %

28.7 %



16.2 %







22.5 %

















(a) Transaction costs include advisory, legal, accounting, valuation, and other professional or consulting fees incurred during acquisitions and divestitures. These costs are included in Selling, general and administrative expense in the unaudited Condensed Consolidated Statements of Operations.

The Americas segment is comprised of our operations in Northern North American and Latin American 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 losses, loss on divestiture of MSA LLC, product liability expense, amortization of acquisition-related intangible assets, and transaction costs. Adjusted operating margin is defined as adjusted operating income (loss) divided by segment net 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 net 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.

MSA Safety Incorporated

Reconciliation of As Reported Financial Measures to Non-GAAP Financial Measures

Constant currency revenue growth (Unaudited)





Consolidated











Three Months Ended March 31, 2024





Firefighter

Safety(a)

Detection(b)

Industrial PPE

and Other(c)



Net Sales



GAAP reported sales change

17 %

(5) %

(2) %



4 %



Plus: Currency translation effects

— %

— %

(1) %



(1) %



Constant currency sales change

17 %

(5) %

(3) %



3 %



Americas Segment







Three Months Ended March 31, 2024





Firefighter

Safety(a)

Detection(b)

Industrial PPE

and Other(c)



Net Sales



GAAP reported sales change

20 %

(3) %

(2) %



5 %



Plus: Currency translation effects

— %

(1) %

(2) %



— %



Constant currency sales change

20 %

(4) %

(4) %



5 %



International Segment







Three Months Ended March 31, 2024





Firefighter

Safety(a)

Detection(b)

Industrial PPE

and Other(c)



Net Sales



GAAP reported sales change

11 %

(9) %

— %



— %



Plus: Currency translation effects

(2) %

(1) %

(1) %



(1) %



Constant currency sales change

9 %

(10) %

(1) %



(1) %



 (a) Firefighter Safety includes Breathing Apparatus and Firefighter Helmets and Protective Apparel.

 (b) Detection includes Fixed Gas and Flame Detection and Portable Gas Detection.

 (c) Industrial PPE and Other includes Industrial Head Protection, Fall Protection and Non-Core.

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.

MSA Safety Incorporated

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 and percentage amounts)





Three Months Ended

March 31,







2024



2023



%

Change













Net income (loss) attributable to MSA Safety Incorporated

$     58,139



$ (150,173)



n/m*













Loss on divestiture of MSA LLC



129,211





Deferred tax asset write-off related to divestiture of MSA LLC



70,366





Product liability expense



3





Amortization of acquisition-related intangible assets

2,314



2,305





Transaction costs (a)

233







Restructuring charges

3,017



1,747





Asset related losses and other

51



739





Currency exchange losses, net

2,333



4,175





Income tax expense on adjustments

(2,590)



(4,645)





Adjusted earnings

$     63,497



$     53,728



18 %













Adjusted earnings per diluted share

$         1.61



$         1.36



18 %













(a) Transaction costs include advisory, legal, accounting, valuation, and other professional or consulting fees incurred during acquisitions and divestitures. These costs are included in Selling, general and administrative expense in the unaudited Condensed Consolidated Statements of Operations.

 

* Not meaningful











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.

MSA Safety Incorporated

Reconciliation of As Reported Financial Measures to Non-GAAP Financial Measures

Debt to adjusted EBITDA / Net debt to adjusted EBITDA (Unaudited)

(In thousands)







Twelve Months Ended

March 31, 2024

Operating income



$                         371,493

Depreciation and amortization



52,505

Restructuring charges



11,162

Currency exchange losses, net



15,237

Amortization of acquisition-related intangible assets



9,255

Transaction costs (a)



1,198

Adjusted EBITDA



$                         460,850







Total end-of-period debt



596,154







Debt to adjusted EBITDA



1.3







Total end-of-period debt



$                         596,154

Total end-of-period cash and cash equivalents



148,329

Net debt



$                         447,825







Net debt to adjusted EBITDA



1.0



(a) Transaction costs include advisory, legal, accounting, valuation, and other professional or consulting fees incurred during acquisitions and divestitures. These costs are included in Selling, general and administrative expense in the unaudited Condensed Consolidated Statements of Operations.

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 MSA Safety:  

MSA Safety Incorporated (NYSE: MSA) is the global leader in advanced safety products, technologies and solutions. Driven by its singular mission of safety, the Company has been at the forefront of safety innovation since 1914, protecting workers and facility infrastructure around the world across a broad range of diverse end markets while creating sustainable value for shareholders. With 2023 revenues of  $1.8 billion, MSA Safety is headquartered in Cranberry Township, Pennsylvania and employs a team of over 5,000 associates across its more than 40 international locations. For more information, please visit 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. 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 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. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements, and caution should be exercised against placing undue reliance upon such statements, which are based only on information currently available to us and speak only as of the date hereof. We are under no duty to update publicly any of the forward-looking statements after the date of this earnings press release, whether as a result of new information, future events or otherwise, 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, 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 U.S. GAAP. These non-GAAP financial measures should be viewed as supplemental in nature, and not as a substitute for, or superior to, our reported results prepared in accordance with GAAP. When non-GAAP financial measures are disclosed, the Securities and Exchange Commission's Regulation G requires: (i) the presentation of the most directly comparable financial measure calculated and presented in accordance with GAAP and (ii) a reconciliation of the differences between the non-GAAP financial measure presented and the most directly comparable financial measure calculated and presented in accordance with GAAP. The presentation of these financial measures does not comply with U.S. generally accepted accounting principles ("GAAP"). For an explanation of these measures, 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

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