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MSA Safety Announces First Quarter Results

PITTSBURGH, April 28, 2021 /PRNewswire/ -- Global safety equipment manufacturer MSA Safety Incorporated (NYSE: MSA) today reported results for the first quarter of 2021.

MSA Safety Incorporated

Quarterly Highlights

  • Revenue was $308 million, decreasing 10 percent from a year ago on a reported basis and 11 percent on a constant currency basis.
  • GAAP operating income was $44 million or 14.3 percent of sales, compared to $59 million or 17.2 percent of sales in the same period a year ago. Adjusted operating income was $47 million or 15.4 percent of sales, compared to $64 million or 18.7 percent of sales in the same period a year ago.
  • GAAP earnings were $36 million or $0.92 per diluted share, compared to $44 million or $1.11 per diluted share in the same period a year ago. Adjusted earnings were $37 million or $0.95 per diluted share, compared to $46 million or $1.18 per diluted share in the same period a year ago.
  • Operating cash flow was $46 million, increasing 235% from a year ago. The company continues to execute a balanced capital allocation strategy focused on growing its business and returning value to shareholders. MSA deployed $63 million for the acquisition of UK turnout gear leader Bristol Uniforms, $10 million for strategic capital expenditures, and funded $17 million of dividends to shareholders.

Comments from Management

"While the pandemic and its effects on the economy impacted our quarterly results, we remained focused on executing our strategy, investing in growth programs, improving productivity and generating strong cash flow," said Nish Vartanian, MSA Chairman, President and CEO.  "In the first quarter, we launched breakthrough technology for firefighters, completed the acquisition of Bristol Uniforms, and generated significant improvements in cash flow that position us well for continued investments in our business," he said. Mr. Vartanian added that MSA's incoming orders strengthened in March and April, and backlog levels are healthy to start the second quarter.

For the quarter, MSA invested four percent of revenue in its R&D portfolio and realized 35 percent of its total revenue from products developed in the past five years. "While we've taken steps to streamline our cost structure, we remain committed to investing in our product development pipeline," he said.  Mr. Vartanian noted that the company's recent launch of its LUNAR technology for firefighters reflects the company's sustained commitment to product development. LUNAR is a handheld device that uses Cloud technology to deliver breakthrough fire-scene management capabilities for incident commanders.  

MSA deployed $63 million for the acquisition of Bristol Uniforms in late January 2021, which expands its reach in the International fire service market. "Our integration plans at Bristol are well underway. We expect to continue to use our balance sheet to enhance our leadership positions in core markets, geographies, and technologies," Mr. Vartanian added.

"While economic recovery may not be a straight line, we're optimistic that the worst is behind us from a demand perspective. The uptick in our order book in March and April provides a sense of confidence in the near term, while our new product development pipeline and strong balance sheet position us well to increase shareholder value for many years to come," Mr. Vartanian concluded.

MSA Safety Incorporated
Condensed Consolidated Statement of Income (Unaudited)
(In thousands, except per share amounts)



Three Months Ended March 31,



2021


2020







Net sales

$

308,428



$

341,145



Cost of products sold

173,688



183,786



Gross profit

134,740



157,359








Selling, general and administrative

75,463



80,237



Research and development

13,234



14,112



Restructuring charges

1,308



2,007



Currency exchange (gains) losses, net

(2,099)



270



Product liability expense

2,796



1,951



Operating income

44,038



58,782








Interest expense

1,911



3,144



Other income, net

(4,213)



(1,259)



Total other (income) expense, net

(2,302)



1,885








Income before income taxes

46,340



56,897



Provision for income taxes

9,740



13,095



Net income

36,600



43,802



Net income attributable to noncontrolling interests

(186)



(128)



Net income attributable to MSA Safety Incorporated

$

36,414



$

43,674








Earnings per share attributable to MSA Safety Incorporated common shareholders:





Basic

$

0.93



$

1.12



Diluted

$

0.92



$

1.11








Basic shares outstanding

39,094



38,824



Diluted shares outstanding

39,420



39,352



 

 

MSA Safety Incorporated
Condensed Consolidated Balance Sheet (Unaudited)
(In thousands)



March 31, 2021


December 31, 2020

Assets




Cash and cash equivalents

$

184,728



$

160,672


Trade receivables, net

224,954



252,283


Inventories

220,021



197,819


Notes receivable, insurance companies

3,825



3,796


Other current assets

131,050



139,708


    Total current assets

764,578



754,278






Property, net

197,832



189,620


Prepaid pension cost

101,317



97,545


Operating lease assets, net

68,199



53,451


Goodwill

447,059



443,272


Notes receivable, insurance companies, noncurrent

48,837



48,540


Insurance receivable, noncurrent

83,692



85,077


Other noncurrent assets

231,248



200,701


   Total assets

$

1,942,762



$

1,872,484






Liabilities and shareholders' equity




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

$

20,000



$

20,000


Accounts payable

90,706



86,854


Other current liabilities

196,021



203,691


   Total current liabilities

306,727



310,545






Long-term debt, net

340,428



287,157


Pensions and other employee benefits

201,040



208,068


Noncurrent operating lease liabilities

59,211



44,639


Deferred tax liabilities

12,065



10,916


Product liability and other noncurrent liabilities

200,401



201,268


Total shareholders' equity

822,890



809,891


   Total liabilities and shareholders' equity

$

1,942,762



$

1,872,484


 

 

MSA Safety Incorporated
Condensed Consolidated Statement of Cash Flows (Unaudited)
(In thousands)



Three Months Ended March 31,



2021


2020







Net income

$

36,600



$

43,802



Depreciation and amortization

10,504



9,640



Change in working capital and other operating

(1,488)



(39,835)



  Cash flow from operating activities

45,616



13,607








Capital expenditures

(9,582)



(6,562)



Acquisition, net of cash acquired

(62,992)





Change in short-term investments

20,030



(19,612)



Property disposals

35



92



  Cash flow used in investing activities

(52,509)



(26,082)








Change in debt

52,017



28,000



Cash dividends paid

(16,820)



(16,331)



Other financing

(3,558)



(24,997)



  Cash flow from (used in) financing activities

31,639



(13,328)








Effect of exchange rate changes on cash,

cash equivalents and restricted cash

(720)



(3,756)








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

$

24,026



$

(29,559)



 

 

MSA Safety Incorporated
Segment Information (Unaudited)
(In thousands, except percentage amounts)



Americas


International


Corporate


Consolidated

Three Months Ended March 31, 2021








Sales to external customers

$

208,340



$

100,088



$



$

308,428


Operating income







44,038


Operating margin %







14.3

%

Restructuring charges







1,308


Currency exchange gains, net







(2,099)


Product liability expense







2,796


Acquisition related costs







1,373


Adjusted operating income (loss)

45,152



8,790



(6,526)



47,416


Adjusted operating margin %

21.7

%


8.8

%




15.4

%

Depreciation and amortization







10,504


Adjusted EBITDA

52,186



12,163



(6,429)



57,920


Adjusted EBITDA %

25.0

%


12.2

%




18.8

%









Three Months Ended March 31, 2020








Sales to external customers

$

231,253



$

109,892



$



$

341,145


Operating income







58,782


Operating margin %







17.2

%

Restructuring charges







2,007


Currency exchange losses, net







270


Product liability expense







1,951


Acquisition related costs







97


COVID-19 related costs







757


Adjusted operating income (loss)

59,807



12,671



(8,614)



63,864


Adjusted operating margin %

25.9

%


11.5

%




18.7

%

Depreciation and amortization







9,640


Adjusted EBITDA

66,257



15,765



(8,518)



73,504


Adjusted EBITDA %

28.7

%


14.3

%




21.5

%

 

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, acquisition related costs, including acquisition related amortization, and COVID-19 related costs. 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.

 

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, 2021


Breathing Apparatus

Firefighter Helmets and Protective Apparel

Industrial Head Protection

Portable Gas Detection

Fixed Gas and Flame Detection

Fall Protection

Core Sales


Non-Core Sales


Net Sales

GAAP reported sales change

(8)

%

8

%

(7)

%

(9)

%

(14)

%

(5)

%

(7)

%


(26)

%


(10)

%

Plus: Currency translation effects

(2)

%

(2)

%

%

(1)

%

(2)

%

(3)

%

(2)

%


(2)

%


(1)

%

Constant currency sales change

(10)

%

6

%

(7)

%

(10)

%

(16)

%

(8)

%

(9)

%


(28)

%


(11)

%

 

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
Constant currency revenue growth (Unaudited)


Americas Segment



Three Months Ended March 31, 2021


Breathing Apparatus

Firefighter Helmets and Protective Apparel

Industrial Head Protection

Portable Gas Detection

Fixed Gas and Flame Detection

Fall Protection

Core Sales


Non-Core Sales


Net Sales

GAAP reported sales change

(3)

%

%

(9)

%

(8)

%

(12)

%

(11)

%

(7)

%


(32)

%


(10)

%

Plus: Currency translation effects

%

%

3

%

%

%

%

1

%


1

%


1

%

Constant currency sales change

(3)

%

%

(6)

%

(8)

%

(12)

%

(11)

%

(6)

%


(31)

%


(9)

%

 

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
Constant currency revenue growth (Unaudited)


International Segment



Three Months Ended March 31, 2021


Breathing Apparatus

Firefighter Helmets and Protective Apparel

Industrial Head Protection

Portable Gas Detection

Fixed Gas and Flame Detection

Fall Protection

Core Sales


Non-Core Sales


Net Sales

GAAP reported sales change

(10)

%

48

%

(2)

%

(13)

%

(17)

%

7

%

(5)

%


(26)

%


(9)

%

Plus: Currency translation effects

(7)

%

(13)

%

(7)

%

(6)

%

(5)

%

(8)

%

(7)

%


(6)

%


(7)

%

Constant currency sales change

(17)

%

35

%

(9)

%

(19)

%

(22)

%

(1)

%

(12)

%


(32)

%


(16)

%

 

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
Supplemental Segment Information (Unaudited)
Summary of constant currency revenue growth by segment and product group




Three Months Ended March 31, 2021


Consolidated


Americas


International

Firefighter Helmets and Protective Apparel

6

%


%


35

%

Industrial Head Protection

(7)

%


(6)

%


(9)

%

Fall Protection

(8)

%


(11)

%


(1)

%

Breathing Apparatus

(10)

%


(3)

%


(17)

%

Portable Gas Detection

(10)

%


(8)

%


(19)

%

Fixed Gas and Flame Detection

(16)

%


(12)

%


(22)

%

Core Sales

(9)

%


(6)

%


(12)

%







Non-Core Sales

(28)

%


(31)

%


(32)

%







Net Sales

(11)

%


(9)

%


(16)

%

 

 

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 amounts)



Three Months Ended March 31,





2021


2020


%

Change









Net income attributable to MSA Safety Incorporated

$

36,414



$

43,674



(17)%


Tax benefit associated with ASU 2016-09: Improvements to employee share-based payment accounting

(1,534)



(1,271)





Subtotal

34,880



42,403



(18)%









Product liability expense

2,796



1,951





Acquisition related costs

1,373



97





Restructuring charges

1,308



2,007





Asset related losses, net

19



122





COVID-19 related costs



757





Currency exchange (gains) losses, net

(2,099)



270





Income tax expense on adjustments

(836)



(1,301)





Adjusted earnings

$

37,441



$

46,306



(19)%









Adjusted earnings per diluted share

$

0.95



$

1.18



(19)%


 

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 the oil, gas and petrochemical industry, the fire service, 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 19, 2021. 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.

Cision View original content to download multimedia:http://www.prnewswire.com/news-releases/msa-safety-announces-first-quarter-results-301279616.html

SOURCE MSA Safety

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