PITTSBURGH, Oct. 22, 2014 /PRNewswire/ -- Global safety
equipment manufacturer MSA Safety Incorporated (NYSE: MSA) today
reported results for the third quarter of 2014.
Quarterly Highlights
- Revenue was $275 million, up 4
percent from the third quarter of 2013. Income from continuing
operations was $19 million or
$0.50 per basic share.
Excluding after tax restructuring and foreign exchange losses,
adjusted earnings were $21 million,
or $0.57 per basic share, increasing
2 percent.
- The company is making progress towards certification of its new
G1 self-contained breathing apparatus (SCBA) and expects regulatory
approval and shipping to begin in the fourth quarter.
- Excluding sales of SCBA, quarterly local currency revenue from
core product lines increased 13 percent.
- Products developed within the last five years drove 36 percent
of quarterly core product revenue compared to 22 percent in the
same period a year ago.
- Gross profit margin was 45.0 percent of sales, up 140 basis
points from a year ago.
Comments from Management
"Our third quarter results reflected solid growth from the core,
despite headwinds associated with delays in securing approval of
our new SCBA platform. In particular, strength in our gas detection
product lines, ongoing product margin expansion and the pending
approval of the G1 SCBA provides encouragement as we head into the
final quarter of the year," said William M.
Lambert, MSA President and CEO.
Sales of core products represented 74 percent of total revenue
in the quarter and excluding sales of SCBA, quarterly revenue from
core product lines increased 13 percent. "Particularly noteworthy
were sales of gas detection products, which grew 17 percent during
the quarter on strong demand for portable gas detection instruments
and shipments of large orders of fixed gas and flame detection
systems," he said. Mr. Lambert also noted that although the company
continues to see challenging conditions in certain emerging
markets, core product sales across all emerging markets increased
13 percent in the quarter.
"Although we expect business conditions to remain challenged
across several of our emerging markets, this quarter showed
excellent progress toward clearing our SCBA certification hurdles
and reflects meaningful progress against our strategy, highlighting
our ongoing focus on increasing shareholder value," Mr. Lambert
said. "As we approach the end of our centennial year in business
and begin writing the next chapter in MSA's story, we will remain
focused on enhancing shareholder value by staying true to our
passion for innovation, our commitment to achieving operational
excellence, and our desire to create the best customer experience
in the safety industry," Mr. Lambert concluded.
MSA Safety
Incorporated
|
Condensed
Consolidated Statement of Income (Unaudited)
|
(In thousands, except
earnings per share)
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
$
|
275,159
|
|
|
$
|
264,884
|
|
|
$
|
822,697
|
|
|
$
|
820,629
|
|
Other income,
net
|
585
|
|
|
638
|
|
|
986
|
|
|
1,015
|
|
|
275,744
|
|
|
265,522
|
|
|
823,683
|
|
|
821,644
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of products
sold
|
151,436
|
|
|
149,458
|
|
|
447,489
|
|
|
453,835
|
|
Selling, general and
administrative
|
77,301
|
|
|
71,390
|
|
|
245,377
|
|
|
232,097
|
|
Research and
development
|
13,420
|
|
|
12,298
|
|
|
36,604
|
|
|
34,280
|
|
Restructuring and
other charges
|
3,640
|
|
|
1,515
|
|
|
6,397
|
|
|
3,942
|
|
Interest
expense
|
2,493
|
|
|
2,741
|
|
|
7,617
|
|
|
8,151
|
|
Currency exchange
(gains) losses, net
|
315
|
|
|
1,836
|
|
|
358
|
|
|
4,148
|
|
|
248,605
|
|
|
239,238
|
|
|
743,842
|
|
|
736,453
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income
taxes
|
27,139
|
|
|
26,284
|
|
|
79,841
|
|
|
85,191
|
|
Provision for income
taxes
|
8,699
|
|
|
7,750
|
|
|
26,056
|
|
|
24,675
|
|
Income from
continuing operations
|
18,440
|
|
|
18,534
|
|
|
53,785
|
|
|
60,516
|
|
Income from
discontinued operations
|
765
|
|
|
643
|
|
|
1,832
|
|
|
2,447
|
|
Net income
|
19,205
|
|
|
19,177
|
|
|
55,617
|
|
|
62,963
|
|
Net (income) loss
attributable to noncontrolling interests
|
100
|
|
|
324
|
|
|
202
|
|
|
(127)
|
|
Net income
attributable to MSA Safety Incorporated
|
19,305
|
|
|
19,501
|
|
|
55,819
|
|
|
62,836
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from
continuing operations
|
18,674
|
|
|
18,987
|
|
|
54,328
|
|
|
60,929
|
|
Income from
discontinued operations
|
631
|
|
|
514
|
|
|
1,491
|
|
|
1,907
|
|
Net income
attributable to MSA Safety Incorporated
|
19,305
|
|
|
19,501
|
|
|
55,819
|
|
|
62,836
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings Per Share
Attributable to MSA Safety Incorporated
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
|
|
|
|
|
|
|
|
Income from
continuing operations
|
$0.50
|
|
|
$0.51
|
|
|
$1.45
|
|
|
$1.64
|
|
Income from
discontinued operations
|
$0.02
|
|
|
$0.01
|
|
|
$0.04
|
|
|
$0.05
|
|
Net
income
|
$0.52
|
|
|
$0.52
|
|
|
$1.49
|
|
|
$1.69
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
|
|
|
|
|
|
|
|
|
|
Income from
continuing operations
|
$0.49
|
|
|
$0.51
|
|
|
$1.43
|
|
|
$1.61
|
|
Income from
discontinued operations
|
$0.02
|
|
|
$0.01
|
|
|
$0.04
|
|
|
$0.05
|
|
Net
income
|
$0.51
|
|
|
$0.52
|
|
|
$1.47
|
|
|
$1.66
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic shares
outstanding
|
37,187
|
|
|
36,915
|
|
|
37,111
|
|
|
36,845
|
|
Diluted shares
outstanding
|
37,784
|
|
|
37,507
|
|
|
37,708
|
|
|
37,438
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MSA Safety
Incorporated
|
Condensed
Consolidated Balance Sheet (Unaudited)
|
(In
thousands)
|
|
|
|
|
|
|
|
|
|
September 30,
2014
|
|
December 31,
2013
|
Current
assets
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
97,355
|
|
|
$
|
96,265
|
|
Trade
receivables, net
|
200,634
|
|
|
200,364
|
|
Inventories
|
145,217
|
|
|
136,837
|
|
Other current
assets
|
58,110
|
|
|
67,500
|
|
Total
current assets
|
501,316
|
|
|
500,966
|
|
|
|
|
|
|
|
Property,
net
|
152,377
|
|
|
152,755
|
|
Prepaid pension
cost
|
130,414
|
|
|
121,054
|
|
Goodwill
|
255,049
|
|
|
260,134
|
|
Other noncurrent
assets
|
221,149
|
|
|
199,361
|
|
Total
|
1,260,305
|
|
|
1,234,270
|
|
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
Notes payable
and current portion of long-term debt
|
$
|
6,671
|
|
|
$
|
7,500
|
|
Accounts
payable
|
67,253
|
|
|
66,902
|
|
Other current
liabilities
|
120,406
|
|
|
117,162
|
|
Total
current liabilities
|
194,330
|
|
|
191,564
|
|
|
|
|
|
|
|
Long-term
debt
|
270,667
|
|
|
260,667
|
|
Pensions and other
employee benefits
|
146,344
|
|
|
152,084
|
|
Deferred tax
liabilities
|
48,365
|
|
|
49,621
|
|
Other noncurrent
liabilities
|
10,941
|
|
|
7,987
|
|
Equity
|
589,658
|
|
|
572,347
|
|
Total
|
1,260,305
|
|
|
1,234,270
|
|
MSA Safety
Incorporated
|
Condensed
Consolidated Statement of Cash Flows (Unaudited)
|
(In
thousands)
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
$
|
19,205
|
|
|
$
|
19,177
|
|
|
$
|
55,617
|
|
|
$
|
62,963
|
|
Depreciation and
amortization
|
7,196
|
|
|
7,615
|
|
|
22,311
|
|
|
23,392
|
|
Change in working
capital
|
15,003
|
|
|
10,212
|
|
|
(5,842)
|
|
|
(18,291)
|
|
Other
operating
|
(5,912)
|
|
|
5,925
|
|
|
(21,284)
|
|
|
(3,358)
|
|
Cash from
operations
|
35,492
|
|
|
42,929
|
|
|
50,802
|
|
|
64,706
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital
expenditures
|
(9,705)
|
|
|
(9,258)
|
|
|
(24,233)
|
|
|
(26,214)
|
|
Property
disposals
|
—
|
|
|
1,247
|
|
|
—
|
|
|
1,333
|
|
Cash from
investing
|
(9,705)
|
|
|
(8,011)
|
|
|
(24,233)
|
|
|
(24,881)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in
debt
|
(11,012)
|
|
|
(10,921)
|
|
|
9,171
|
|
|
10,284
|
|
Cash dividends
paid
|
(11,542)
|
|
|
(11,161)
|
|
|
(34,043)
|
|
|
(32,694)
|
|
Other
financing
|
1,938
|
|
|
489
|
|
|
4,013
|
|
|
(1,181)
|
|
Cash from
financing
|
(20,616)
|
|
|
(21,593)
|
|
|
(20,859)
|
|
|
(23,591)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exchange rate
changes
|
(3,999)
|
|
|
272
|
|
|
(4,620)
|
|
|
(2,942)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase in
cash
|
1,172
|
|
|
13,597
|
|
|
1,090
|
|
|
13,292
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MSA Safety
Incorporated
|
Segment Information
(Unaudited)
|
(In
thousands)
|
|
|
|
|
|
Three Months
Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
|
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
sales
|
|
|
|
|
|
|
|
|
|
|
|
North
America
|
$ 131,844
|
|
|
$ 130,919
|
|
|
$ 400,147
|
|
|
$ 402,539
|
|
Europe
|
75,785
|
|
|
66,360
|
|
|
229,606
|
|
|
207,480
|
|
International
|
67,530
|
|
|
67,605
|
|
|
192,944
|
|
|
210,610
|
|
Total
|
275,159
|
|
|
264,884
|
|
|
822,697
|
|
|
820,629
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
|
|
|
|
|
|
|
|
|
|
|
North
America
|
$ 18,018
|
|
|
$ 17,001
|
|
|
$ 49,658
|
|
|
$ 46,638
|
|
Europe
|
2,587
|
|
|
3,141
|
|
|
13,027
|
|
|
11,734
|
|
International
|
2,821
|
|
|
5,004
|
|
|
9,040
|
|
|
20,570
|
|
Reconciling
Items
|
(4,752)
|
|
|
(6,159)
|
|
|
(17,397)
|
|
|
(18,013)
|
|
Income from
continuing operations
|
18,674
|
|
|
18,987
|
|
|
54,328
|
|
|
60,929
|
|
Discontinued
operations
|
631
|
|
|
514
|
|
|
1,491
|
|
|
1,907
|
|
Total
|
19,305
|
|
|
19,501
|
|
|
55,819
|
|
|
62,836
|
|
MSA's sales are allocated to each country based primarily on the
destination of the end-customer. Effective January 1, 2014, the General Monitors business
has been fully integrated into MSA. As such, sales made by General
Monitors companies now follow a similar allocation methodology by
which sales are allocated to each country based on the destination
of the end-customer and the value added to that order. In prior
years, sales made by General Monitors companies were reported as
domestic sales based on the country from which the product was
shipped. The 2013 results presented above have been restated to
reflect this change in allocation methodology.
MSA Safety
Incorporated
|
Supplemental Segment
Information (Unaudited)
|
Local Currency
Revenue Growth
|
|
|
|
|
|
Three Months Ended
September 30, 2014
|
|
Consolidated
|
|
North
America
|
|
Europe
|
|
International
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed Gas and Flame
Detection
|
20
|
%
|
|
12
|
%
|
|
34
|
%
|
|
19
|
%
|
Portable Gas
Detection
|
13
|
%
|
|
4
|
%
|
|
20
|
%
|
|
30
|
%
|
Fall
Protection
|
8
|
%
|
|
8
|
%
|
|
2
|
%
|
|
8
|
%
|
Head
Protection
|
3
|
%
|
|
13
|
%
|
|
(6)
|
%
|
|
(10)
|
%
|
Breathing
Apparatus
|
(12)
|
%
|
|
(26)
|
%
|
|
23
|
%
|
|
(23)
|
%
|
Core Sales
|
6
|
%
|
|
—
|
%
|
|
25
|
%
|
|
1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Core
Sales
|
1
|
%
|
|
2
|
%
|
|
(5)
|
%
|
|
7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Sales
|
5
|
%
|
|
1
|
%
|
|
14
|
%
|
|
3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
September 30, 2014
|
|
Consolidated
|
|
North
America
|
|
Europe
|
|
International
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed Gas and Flame
Detection
|
4
|
%
|
|
2
|
%
|
|
17
|
%
|
|
(12)
|
%
|
Portable Gas
Detection
|
9
|
%
|
|
10
|
%
|
|
1
|
%
|
|
17
|
%
|
Fall
Protection
|
1
|
%
|
|
(4)
|
%
|
|
29
|
%
|
|
12
|
%
|
Head
Protection
|
5
|
%
|
|
11
|
%
|
|
1
|
%
|
|
(4)
|
%
|
Breathing
Apparatus
|
(12)
|
%
|
|
(21)
|
%
|
|
3
|
%
|
|
(15)
|
%
|
Core Sales
|
1
|
%
|
|
(1)
|
%
|
|
8
|
%
|
|
(4)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Core
Sales
|
3
|
%
|
|
2
|
%
|
|
7
|
%
|
|
1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Sales
|
1
|
%
|
|
—
|
%
|
|
8
|
%
|
|
(2)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MSA Safety
Incorporated
|
|
|
Reconciliation of As
Reported Financial Measures to Non-GAAP Financial
Measures
|
|
|
Adjusted Earnings /
Earnings per Share (Unaudited)
|
|
|
(In thousands, except
per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
|
|
Nine Months Ended
September 30,
|
|
|
|
2014
|
|
|
2013
|
|
|
%
Change
|
|
2014
|
|
|
2013
|
|
|
%
Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to
MSA Safety Incorporated
|
$
|
19,305
|
|
|
$
|
19,501
|
|
|
(1.0)%
|
|
$
|
55,819
|
|
|
$
|
62,836
|
|
|
(11.2)%
|
Less: Income from
discontinued operations
|
631
|
|
|
514
|
|
|
|
|
1,491
|
|
|
1,907
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from
continuing operations
|
18,674
|
|
|
18,987
|
|
|
(1.6)%
|
|
54,328
|
|
|
60,929
|
|
|
(10.8)%
|
Foreign currency
loss
|
315
|
|
|
1,836
|
|
|
|
|
358
|
|
|
4,148
|
|
|
|
Restructuring
charges
|
3,640
|
|
|
1,515
|
|
|
|
|
6,397
|
|
|
3,942
|
|
|
|
Asset sale
(gain)
|
—
|
|
|
(600)
|
|
|
|
|
—
|
|
|
(600)
|
|
|
|
Income tax
(expense)
|
(1,268)
|
|
|
(812)
|
|
|
|
|
(2,202)
|
|
|
(2,172)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
earnings
|
21,361
|
|
|
20,926
|
|
|
2.1%
|
|
58,881
|
|
|
66,247
|
|
|
(11.1)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted earnings
per
basic
share
|
$
|
0.57
|
|
|
$
|
0.56
|
|
|
1.8%
|
|
$
|
1.58
|
|
|
$
|
1.78
|
|
|
(11.2)%
|
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.
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 line of products 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. The company's core products
include self‐contained breathing apparatus, fixed gas and
flame detection systems, portable gas detection instruments, head
protection products and fall protection devices. With 2013 revenues
of $1.1 billion, MSA employs
approximately 5,300 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 website 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 and timing of new product
approvals and related shipments. 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, 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
24, 2014. 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 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 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.
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/msa-announces-third-quarter-results-395376968.html
SOURCE MSA