PITTSBURGH, Feb. 23, 2017 /PRNewswire/ -- Global safety
equipment manufacturer MSA Safety Incorporated (NYSE: MSA) today
reported results for the fourth quarter and full year of 2016.
Annual Highlights
- Reported revenue was $1.15
billion, increasing 2 percent from a year ago on a reported
basis and 4 percent on a constant currency basis.
- Operating income was $164 million
or 14.3 percent of net sales, increasing 340 basis points from a
year ago. Adjusted operating income, excluding foreign currency
losses and restructuring, was $171
million or 14.8 percent of net sales, increasing 270 basis
points from a year ago. The company's recent acquisition of
UK-based Senscient, Inc. was dilutive to operating margin by 20
basis points for the year.
- Cash flow from operating activities was $135 million compared to $55 million in the same period a year ago,
primarily due to higher cash flow from working capital on increased
collections of receivables and effective inventory management
programs. A clear focus on improving working capital drove higher
cash flow in the quarter, with working capital finishing the year
at 21.7 percent of net sales, compared to 25.7 percent of net sales
in 2015.
Quarterly Highlights
- Reported revenue was $296
million, decreasing 6 percent from a year ago on a reported
basis, and 4 percent on a constant currency basis.
- Operating income was $48 million
or 16.1 percent of net sales, increasing 600 basis points from a
year ago. Adjusted operating income, excluding foreign currency
gains and restructuring, was $48
million or 16.2 percent of net sales, increasing 400 basis
points from a year ago.
- Cash flow from operating activities was $103 million, compared to $45 million in the same period a year ago.
Comments from Management
"Our results for 2016 reflect strong returns on the strategic
investments we've made in new products, acquisitions and
restructuring programs to drive earnings expansion in a challenging
economic cycle," said William M.
Lambert, MSA Chairman, President and CEO. "Despite a
difficult quarterly revenue comparison - attributable to the
clearing of a significant backlog for self-contained breathing
apparatus (SCBA) in the fourth quarter of 2015 - we achieved all of
our key financial targets for the year and posted record net income
of $92 million," he continued.
In particular, Mr. Lambert noted that net income increased 30
percent on revenue growth of 2 percent, driven by higher gross
profit and a streamlined cost structure. He added that the company
converted 119 percent of full year net income to free cash flow by
reducing working capital, and was able to continue funding an
increasing dividend while reducing its debt balance by $74 million from the end of 2015.
"While we managed through a slower growth environment in 2016,
our corporate strategy was successful in that it allowed us to
capture market share while expanding product margins and increasing
profitability. As we look ahead to 2017, I'm pleased to
see early signs of strengthening macro conditions and an increased
order pace across several of our industrial-related product areas,"
Mr. Lambert said. "This momentum - coupled with the steps we
have taken to drive leadership positions in our core product areas
and reduce our cost structure - positions us well to drive enhanced
shareholder value in 2017 and beyond."
MSA Safety
Incorporated
|
|
|
|
Condensed
Consolidated Statement of Income (Unaudited)
|
|
|
|
(In thousands, except
per share amounts)
|
Three Months
Ended
December 31,
|
|
Twelve Months
Ended
December 31,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
|
Net sales
|
$
|
296,031
|
|
|
$
|
313,318
|
|
|
$
|
1,149,530
|
|
|
$
|
1,130,783
|
|
Cost of products
sold
|
157,710
|
|
|
179,308
|
|
|
625,887
|
|
|
629,680
|
|
Gross
profit
|
138,321
|
|
|
134,010
|
|
|
523,643
|
|
|
501,103
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative
|
78,288
|
|
|
83,587
|
|
|
306,144
|
|
|
315,270
|
|
Research and
development
|
12,224
|
|
|
12,200
|
|
|
46,847
|
|
|
48,630
|
|
Restructuring
charges
|
1,997
|
|
|
7,560
|
|
|
5,694
|
|
|
12,258
|
|
Currency exchange
(gains) losses, net
|
(1,732)
|
|
|
(1,132)
|
|
|
766
|
|
|
2,204
|
|
Operating
income
|
47,544
|
|
|
31,795
|
|
|
164,192
|
|
|
122,741
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
3,896
|
|
|
3,052
|
|
|
16,411
|
|
|
10,854
|
|
Other (income) loss,
net
|
(426)
|
|
|
2,027
|
|
|
(4,130)
|
|
|
861
|
|
Total other expense,
net
|
3,470
|
|
|
5,079
|
|
|
12,281
|
|
|
11,715
|
|
|
|
|
|
|
|
|
|
Income from
continuing operations before income taxes
|
44,074
|
|
|
26,716
|
|
|
151,911
|
|
|
111,026
|
|
Provision for income
taxes
|
18,938
|
|
|
7,738
|
|
|
57,804
|
|
|
44,407
|
|
Income from
continuing operations
|
25,136
|
|
|
18,978
|
|
|
94,107
|
|
|
66,619
|
|
(Loss) income from
discontinued operations
|
(300)
|
|
|
85
|
|
|
(245)
|
|
|
1,325
|
|
Net income
|
24,836
|
|
|
19,063
|
|
|
93,862
|
|
|
67,944
|
|
Net loss (income)
attributable to noncontrolling interests
|
80
|
|
|
1,788
|
|
|
(1,926)
|
|
|
2,863
|
|
Net income
attributable to MSA Safety Incorporated
|
24,916
|
|
|
20,851
|
|
|
91,936
|
|
|
70,807
|
|
|
|
|
|
|
|
|
|
Amounts attributable
to MSA Safety Incorporated common shareholders:
|
|
|
|
|
|
|
|
Income from
continuing operations
|
25,216
|
|
|
20,840
|
|
|
92,691
|
|
|
69,590
|
|
(Loss) income from
discontinued operations
|
(300)
|
|
|
11
|
|
|
(755)
|
|
|
1,217
|
|
Net
income
|
24,916
|
|
|
20,851
|
|
|
91,936
|
|
|
70,807
|
|
|
|
|
|
|
|
|
|
Earnings per share
attributable to MSA Safety Incorporated common
shareholders:
|
|
|
|
|
|
|
|
Basic
|
|
|
|
|
|
|
|
Income from
continuing operations
|
$
|
0.67
|
|
|
$
|
0.56
|
|
|
$
|
2.47
|
|
|
$
|
1.86
|
|
(Loss) income from
discontinued operations
|
$
|
(0.01)
|
|
|
$
|
—
|
|
|
$
|
(0.02)
|
|
|
$
|
0.03
|
|
Net
income
|
$
|
0.66
|
|
|
$
|
0.56
|
|
|
$
|
2.45
|
|
|
$
|
1.89
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
|
|
|
|
|
|
Income from
continuing operations
|
$
|
0.66
|
|
|
$
|
0.55
|
|
|
$
|
2.44
|
|
|
$
|
1.84
|
|
(Loss) income from
discontinued operations
|
$
|
(0.01)
|
|
|
$
|
—
|
|
|
$
|
(0.02)
|
|
|
$
|
0.03
|
|
Net
income
|
$
|
0.65
|
|
|
$
|
0.55
|
|
|
$
|
2.42
|
|
|
$
|
1.87
|
|
|
|
|
|
|
|
|
|
Basic shares
outstanding
|
37,602
|
|
|
37,269
|
|
|
37,456
|
|
|
37,293
|
|
Diluted shares
outstanding
|
38,218
|
|
|
37,512
|
|
|
37,986
|
|
|
37,710
|
|
MSA Safety
Incorporated
|
|
|
|
Condensed
Consolidated Balance Sheet (Unaudited)
|
|
|
|
(In
thousands)
|
|
|
|
|
|
|
|
|
December 31,
2016
|
|
December 31,
2015
|
Assets
|
|
|
|
Cash and cash
equivalents
|
$
|
113,759
|
|
|
$
|
105,925
|
|
Trade receivables,
net
|
209,514
|
|
|
232,862
|
|
Inventories
|
103,066
|
|
|
125,849
|
|
Notes receivable,
insurance companies
|
4,180
|
|
|
6,746
|
|
Other current
assets
|
42,287
|
|
|
33,230
|
|
Total current assets
|
472,806
|
|
|
504,612
|
|
|
|
|
|
Property,
net
|
148,678
|
|
|
155,839
|
|
Prepaid pension
cost
|
62,916
|
|
|
62,072
|
|
Goodwill
|
333,276
|
|
|
340,338
|
|
Notes receivable,
insurance companies, noncurrent
|
63,147
|
|
|
1,944
|
|
Insurance receivable,
noncurrent
|
157,929
|
|
|
227,483
|
|
Other noncurrent
assets
|
115,168
|
|
|
130,575
|
|
Total
assets
|
$
|
1,353,920
|
|
|
$
|
1,422,863
|
|
|
|
|
|
Liabilities and
shareholders' equity
|
|
|
|
Notes payable and
current portion of long-term debt
|
$
|
26,666
|
|
|
$
|
6,650
|
|
Accounts
payable
|
62,734
|
|
|
68,206
|
|
Other current
liabilities
|
132,010
|
|
|
177,031
|
|
Total
current liabilities
|
221,410
|
|
|
251,887
|
|
|
|
|
|
Long-term debt,
net
|
363,836
|
|
|
458,022
|
|
Pensions and other
employee benefits
|
157,927
|
|
|
156,160
|
|
Deferred tax
liabilities
|
34,044
|
|
|
24,872
|
|
Other noncurrent
liabilities
|
15,491
|
|
|
14,794
|
|
Total shareholders'
equity
|
561,212
|
|
|
517,128
|
|
Total
liabilities and shareholders' equity
|
$
|
1,353,920
|
|
|
$
|
1,422,863
|
|
MSA Safety
Incorporated
|
|
|
|
Condensed
Consolidated Statement of Cash Flows (Unaudited)
|
|
|
(In
thousands)
|
|
|
|
|
|
|
|
|
Three Months
Ended
December 31,
|
|
Twelve Months
Ended
December 31,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
|
Net income
|
$
|
24,836
|
|
|
$
|
19,063
|
|
|
$
|
93,862
|
|
|
$
|
67,944
|
|
Depreciation and
amortization
|
8,622
|
|
|
9,038
|
|
|
35,273
|
|
|
31,684
|
|
Change in working
capital and other operating
|
69,999
|
|
|
17,323
|
|
|
5,759
|
|
|
(44,374)
|
|
Cash flow from
operating activities
|
103,457
|
|
|
45,424
|
|
|
134,894
|
|
|
55,254
|
|
|
|
|
|
|
|
|
|
Capital
expenditures
|
(9,377)
|
|
|
(11,093)
|
|
|
(25,523)
|
|
|
(36,241)
|
|
Acquisition, net of
cash acquired
|
(188)
|
|
|
(180,271)
|
|
|
(18,449)
|
|
|
(180,271)
|
|
Property
disposals
|
282
|
|
|
53
|
|
|
18,214
|
|
|
8,022
|
|
Cash flow
(used in) investing activities
|
(9,283)
|
|
|
(191,311)
|
|
|
(25,758)
|
|
|
(208,490)
|
|
|
|
|
|
|
|
|
|
Change in
debt
|
(76,991)
|
|
|
75,794
|
|
|
(60,908)
|
|
|
218,936
|
|
Cash dividends
paid
|
(12,399)
|
|
|
(11,932)
|
|
|
(49,074)
|
|
|
(47,380)
|
|
Other
financing
|
7,803
|
|
|
888
|
|
|
12,141
|
|
|
(6,607)
|
|
Cash flow
(used in) from financing activities
|
(81,587)
|
|
|
64,750
|
|
|
(97,841)
|
|
|
164,949
|
|
|
|
|
|
|
|
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
(4,861)
|
|
|
(2,281)
|
|
|
(3,461)
|
|
|
(11,786)
|
|
|
|
|
|
|
|
|
|
Increase (decrease)
in cash and cash equivalents
|
7,726
|
|
|
(83,418)
|
|
|
7,834
|
|
|
(73)
|
|
MSA Safety
Incorporated
|
|
|
|
|
|
|
Segment Information
(Unaudited)
|
|
|
|
|
|
|
(In
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas
|
|
International
|
|
Corporate
|
|
Consolidated
|
Three Months Ended
December 31, 2016
|
|
|
|
|
|
|
|
Sales to external
customers
|
$
|
168,109
|
|
|
$
|
127,922
|
|
|
—
|
|
|
$
|
296,031
|
|
Operating
income
|
|
|
|
|
|
|
47,544
|
|
Operating margin
%
|
|
|
|
|
|
|
16.1
|
%
|
Restructuring
charges
|
|
|
|
|
|
|
1,997
|
|
Currency exchange
(gains), net
|
|
|
|
|
|
|
(1,732)
|
|
Adjusted operating
income (loss)
|
45,313
|
|
|
14,832
|
|
|
(12,336)
|
|
|
$
|
47,809
|
|
Adjusted operating
margin %
|
27.0
|
%
|
|
11.6
|
%
|
|
|
|
16.2
|
%
|
|
|
|
|
|
|
|
|
Twelve Months Ended
December 31, 2016
|
|
|
|
|
|
|
|
Sales to external
customers
|
$
|
678,433
|
|
|
$
|
471,097
|
|
|
—
|
|
|
$
|
1,149,530
|
|
Operating
income
|
|
|
|
|
|
|
164,192
|
|
Operating margin
%
|
|
|
|
|
|
|
14.3
|
%
|
Restructuring
charges
|
|
|
|
|
|
|
5,694
|
|
Currency exchange
losses, net
|
|
|
|
|
|
|
766
|
|
Adjusted operating
income (loss)
|
162,788
|
|
|
46,491
|
|
|
(38,627)
|
|
|
$
|
170,652
|
|
Adjusted operating
margin %
|
24.0
|
%
|
|
9.9
|
%
|
|
|
|
14.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas
|
|
International
|
|
Corporate
|
|
Consolidated
|
Three Months Ended
December 31, 2015
|
|
|
|
|
|
|
|
Sales to external
customers
|
$
|
185,404
|
|
|
$
|
127,914
|
|
|
—
|
|
|
$
|
313,318
|
|
Operating
income
|
|
|
|
|
|
|
31,795
|
|
Operating margin
%
|
|
|
|
|
|
|
10.1
|
%
|
Restructuring
charges
|
|
|
|
|
|
|
7,560
|
|
Currency exchange
(gains), net
|
|
|
|
|
|
|
(1,132)
|
|
Adjusted operating
income (loss)
|
40,138
|
|
|
13,632
|
|
|
(15,547)
|
|
|
$
|
38,223
|
|
Adjusted operating
margin %
|
21.6
|
%
|
|
10.7
|
%
|
|
|
|
12.2
|
%
|
|
|
|
|
|
|
|
|
Twelve Months Ended
December 31, 2015
|
|
|
|
|
|
|
|
Sales to external
customers
|
$
|
704,754
|
|
|
$
|
426,029
|
|
|
—
|
|
|
$
|
1,130,783
|
|
Operating
income
|
|
|
|
|
|
|
122,741
|
|
Operating margin
%
|
|
|
|
|
|
|
10.9
|
%
|
Restructuring
charges
|
|
|
|
|
|
|
12,258
|
|
Currency exchange
losses, net
|
|
|
|
|
|
|
2,204
|
|
Adjusted operating
income (loss)
|
141,971
|
|
|
33,501
|
|
|
(38,269)
|
|
|
$
|
137,203
|
|
Adjusted operating
margin %
|
20.1
|
%
|
|
7.9
|
%
|
|
|
|
12.1
|
%
|
The Americas and International segments were established on
January 1, 2016. The Americas
segment is comprised of our operations in the U.S., Canada and Latin America. The
International segment is comprised of our operations in all other
parts of the world including Europe, Africa, the Middle
East, India, China, South East
Asia and Australia. Certain global expenses are now
allocated to each segment in a manner consistent with where the
benefits from the expenses are derived. The 2015 segment
results have been recast to conform with current period
presentation.
Adjusted operating income (loss) and adjusted operating 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) and
adjusted operating margin are useful metrics for investors.
Adjusted operating income (loss) is defined as operating income
excluding restructuring and currency exchange gains / losses.
Adjusted operating margin is defined as adjusted operating income
(loss) divided by net sales. Adjusted operating income (loss) and
adjusted operating margin are not recognized terms under
GAAP, and the Company's definition of adjusted operating income
(loss) and adjusted operating 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)
|
Organic constant
currency revenue growth (Unaudited)
|
Consolidated
|
|
|
|
Three Months Ended
December 31, 2016
|
|
Breathing
Apparatus
|
Fire and Rescue
Helmets
|
Industrial Head
Protection
|
Portable Gas
Detection
|
Fixed Gas and Flame
Detection
|
Fall
Protection
|
Core Sales
|
|
Non-Core
Sales
|
|
Net Sales
|
GAAP reported
sales change
|
(17)
|
%
|
(18)
|
%
|
3
|
%
|
(3)
|
%
|
4
|
%
|
23
|
%
|
(5)
|
%
|
|
(9)
|
%
|
|
(6)
|
%
|
Plus: Currency
translation effects
|
1
|
%
|
1
|
%
|
1
|
%
|
2
|
%
|
—
|
%
|
12
|
%
|
2
|
%
|
|
1
|
%
|
|
2
|
%
|
Constant currency
sales change
|
(16)
|
%
|
(17)
|
%
|
4
|
%
|
(1)
|
%
|
4
|
%
|
35
|
%
|
(3)
|
%
|
|
(8)
|
%
|
|
(4)
|
%
|
Less:
Acquisitions
|
—
|
%
|
—
|
%
|
—
|
%
|
—
|
%
|
4
|
%
|
38
|
%
|
4
|
%
|
|
—
|
%
|
|
3
|
%
|
Organic constant
currency change
|
(16)
|
%
|
(17)
|
%
|
4
|
%
|
(1)
|
%
|
—
|
%
|
(3)
|
%
|
(7)
|
%
|
|
(8)
|
%
|
|
(7)
|
%
|
|
|
|
|
|
|
|
Twelve Months Ended
December 31, 2016
|
|
Breathing
Apparatus
|
Fire and Rescue
Helmets
|
Industrial Head
Protection
|
Portable Gas
Detection
|
Fixed Gas and Flame
Detection
|
Fall
Protection
|
Core Sales
|
|
Non-Core
Sales
|
|
Net Sales
|
GAAP reported
sales change
|
—
|
%
|
(6)
|
%
|
(5)
|
%
|
—
|
%
|
(1)
|
%
|
81
|
%
|
4
|
%
|
|
(7)
|
%
|
|
2
|
%
|
Plus: Currency
translation effects
|
1
|
%
|
1
|
%
|
4
|
%
|
3
|
%
|
1
|
%
|
7
|
%
|
2
|
%
|
|
3
|
%
|
|
2
|
%
|
Constant currency
sales change
|
1
|
%
|
(5)
|
%
|
(1)
|
%
|
3
|
%
|
—
|
%
|
88
|
%
|
6
|
%
|
|
(4)
|
%
|
|
4
|
%
|
Less:
Acquisitions
|
—
|
%
|
—
|
%
|
—
|
%
|
—
|
%
|
1
|
%
|
95
|
%
|
6
|
%
|
|
—
|
%
|
|
5
|
%
|
Organic constant
currency change
|
1
|
%
|
(5)
|
%
|
(1)
|
%
|
3
|
%
|
(1)
|
%
|
(7)
|
%
|
—
|
%
|
|
(4)
|
%
|
|
(1)
|
%
|
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.
Organic constant currency revenue growth is defined as constant
currency revenue growth excluding acquisitions. Management believes
that organic constant currency revenue growth is a useful measure
for investors to provide an understanding of MSA's standalone
results.
There can be no assurances that MSA's definition of constant
currency revenue growth or organic 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 these non-GAAP financial
measures.
MSA Safety
Incorporated
|
|
Reconciliation of As
Reported Financial Measures to Non-GAAP Financial
Measures
|
Constant currency
revenue growth (Unaudited)
|
Organic constant
currency revenue growth (Unaudited)
|
Americas
Segment
|
|
|
|
|
Three Months Ended
December 31, 2016
|
|
Breathing
Apparatus
|
Fire and Rescue
Helmets
|
Industrial Head
Protection
|
Portable Gas
Detection
|
Fixed Gas and Flame
Detection
|
Fall
Protection
|
Core Sales
|
|
Non-Core
Sales
|
|
Net Sales
|
GAAP reported
sales change
|
(24)
|
%
|
(12)
|
%
|
4
|
%
|
(2)
|
%
|
(9)
|
%
|
28
|
%
|
(10)
|
%
|
|
(4)
|
%
|
|
(9)
|
%
|
Plus: Currency
translation effects
|
1
|
%
|
—
|
%
|
1
|
%
|
3
|
%
|
—
|
%
|
3
|
%
|
1
|
%
|
|
2
|
%
|
|
1
|
%
|
Constant currency
sales change
|
(23)
|
%
|
(12)
|
%
|
5
|
%
|
1
|
%
|
(9)
|
%
|
31
|
%
|
(9)
|
%
|
|
(2)
|
%
|
|
(8)
|
%
|
Less:
Acquisitions
|
—
|
%
|
—
|
%
|
—
|
%
|
—
|
%
|
—
|
%
|
36
|
%
|
3
|
%
|
|
—
|
%
|
|
2
|
%
|
Organic constant
currency change
|
(23)
|
%
|
(12)
|
%
|
5
|
%
|
1
|
%
|
(9)
|
%
|
(5)
|
%
|
(12)
|
%
|
|
(2)
|
%
|
|
(10)
|
%
|
|
|
|
|
|
|
|
Twelve Months Ended
December 31, 2016
|
|
Breathing
Apparatus
|
Fire and
Rescue
Helmets
|
Industrial Head
Protection
|
Portable Gas
Detection
|
Fixed Gas and Flame
Detection
|
Fall
Protection
|
Core Sales
|
|
Non-Core
Sales
|
|
Net Sales
|
GAAP reported
sales change
|
(4)
|
%
|
5
|
%
|
(5)
|
%
|
—
|
%
|
(7)
|
%
|
12
|
%
|
(3)
|
%
|
|
(7)
|
%
|
|
(4)
|
%
|
Plus: Currency
translation effects
|
—
|
%
|
1
|
%
|
3
|
%
|
3
|
%
|
1
|
%
|
4
|
%
|
2
|
%
|
|
3
|
%
|
|
2
|
%
|
Constant currency
sales change
|
(4)
|
%
|
6
|
%
|
(2)
|
%
|
3
|
%
|
(6)
|
%
|
16
|
%
|
(1)
|
%
|
|
(4)
|
%
|
|
(2)
|
%
|
Less:
Acquisitions
|
—
|
%
|
—
|
%
|
—
|
%
|
—
|
%
|
—
|
%
|
24
|
%
|
2
|
%
|
|
—
|
%
|
|
1
|
%
|
Organic constant
currency change
|
(4)
|
%
|
6
|
%
|
(2)
|
%
|
3
|
%
|
(6)
|
%
|
(8)
|
%
|
(3)
|
%
|
|
(4)
|
%
|
|
(3)
|
%
|
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.
Organic constant currency revenue growth is defined as constant
currency revenue growth excluding acquisitions. Management believes
that organic constant currency revenue growth is a useful measure
for investors to provide an understanding of MSA's standalone
results.
There can be no assurances that MSA's definition of constant
currency revenue growth or organic 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 these non-GAAP financial
measures.
MSA Safety
Incorporated
|
Reconciliation of As
Reported Financial Measures to Non-GAAP Financial
Measures
|
Constant currency
revenue growth (Unaudited)
|
Organic constant
currency revenue growth (Unaudited)
|
International
Segment
|
|
|
|
Three Months Ended
December 31, 2016
|
|
Breathing
Apparatus
|
Fire and Rescue
Helmets
|
Industrial Head
Protection
|
Portable Gas
Detection
|
Fixed Gas and Flame
Detection
|
Fall
Protection
|
Core Sales
|
|
Non-Core
Sales
|
|
Net Sales
|
GAAP reported
sales change
|
(2)
|
%
|
(21)
|
%
|
—
|
%
|
(6)
|
%
|
17
|
%
|
18
|
%
|
4
|
%
|
|
(13)
|
%
|
|
—
|
%
|
Plus: Currency
translation effects
|
1
|
%
|
1
|
%
|
3
|
%
|
2
|
%
|
1
|
%
|
20
|
%
|
4
|
%
|
|
—
|
%
|
|
4
|
%
|
Constant currency
sales change
|
(1)
|
%
|
(20)
|
%
|
3
|
%
|
(4)
|
%
|
18
|
%
|
38
|
%
|
8
|
%
|
|
(13)
|
%
|
|
4
|
%
|
Less:
Acquisitions
|
—
|
%
|
—
|
%
|
—
|
%
|
—
|
%
|
8
|
%
|
20
|
%
|
7
|
%
|
|
—
|
%
|
|
6
|
%
|
Organic constant
currency change
|
(1)
|
%
|
(20)
|
%
|
3
|
%
|
(4)
|
%
|
10
|
%
|
18
|
%
|
1
|
%
|
|
(13)
|
%
|
|
(2)
|
%
|
|
|
|
|
|
|
|
Twelve Months Ended
December 31, 2016
|
|
Breathing
Apparatus
|
Fire and Rescue
Helmets
|
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
|
%
|
(12)
|
%
|
(4)
|
%
|
1
|
%
|
7
|
%
|
280
|
%
|
16
|
%
|
|
(6)
|
%
|
|
11
|
%
|
Plus: Currency
translation effects
|
2
|
%
|
1
|
%
|
4
|
%
|
3
|
%
|
2
|
%
|
16
|
%
|
3
|
%
|
|
2
|
%
|
|
2
|
%
|
Constant currency
sales change
|
12
|
%
|
(11)
|
%
|
—
|
%
|
4
|
%
|
9
|
%
|
296
|
%
|
19
|
%
|
|
(4)
|
%
|
|
13
|
%
|
Less:
Acquisitions
|
—
|
%
|
—
|
%
|
—
|
%
|
—
|
%
|
3
|
%
|
292
|
%
|
14
|
%
|
|
—
|
%
|
|
10
|
%
|
Organic constant
currency change
|
12
|
%
|
(11)
|
%
|
—
|
%
|
4
|
%
|
6
|
%
|
4
|
%
|
5
|
%
|
|
(4)
|
%
|
|
3
|
%
|
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.
Organic constant currency revenue growth is defined as constant
currency revenue growth excluding acquisitions. Management believes
that organic constant currency revenue growth is a useful measure
for investors to provide an understanding of MSA's standalone
results.
There can be no assurances that MSA's definition of constant
currency revenue growth or organic 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 these non-GAAP financial
measures.
MSA Safety
Incorporated
|
Supplemental Segment
Information (Unaudited)
|
Summary of constant
currency revenue growth by segment and product group
|
|
|
|
Three Months Ended
December 31, 2016
|
|
Consolidated
|
|
Americas
|
|
International
|
Fall
Protection*
|
35
|
%
|
|
31
|
%
|
|
38
|
%
|
Fixed Gas and Flame
Detection
|
4
|
%
|
|
(9)
|
%
|
|
18
|
%
|
Head
Protection
|
4
|
%
|
|
5
|
%
|
|
3
|
%
|
Portable Gas
Detection
|
(1)
|
%
|
|
1
|
%
|
|
(4)
|
%
|
Breathing
Apparatus
|
(16)
|
%
|
|
(23)
|
%
|
|
(1)
|
%
|
Fire & Rescue
Helmets
|
(17)
|
%
|
|
(12)
|
%
|
|
(20)
|
%
|
Total Core
Products
|
(3)
|
%
|
|
(9)
|
%
|
|
8
|
%
|
Core excluding
Acquisitions
|
(7)
|
%
|
|
(12)
|
%
|
|
1
|
%
|
|
|
|
|
|
|
Non-Core
Products
|
(8)
|
%
|
|
(2)
|
%
|
|
(13)
|
%
|
|
|
|
|
|
|
Net
Sales
|
(4)
|
%
|
|
(8)
|
%
|
|
4
|
%
|
Net Sales
excluding Acquisitions
|
(7)
|
%
|
|
(10)
|
%
|
|
(2)
|
%
|
|
|
|
|
|
|
|
Twelve Months Ended
December 31, 2016
|
|
Consolidated
|
|
Americas
|
|
International
|
Fall
Protection*
|
88
|
%
|
|
16
|
%
|
|
296
|
%
|
Fixed Gas and Flame
Detection
|
—
|
%
|
|
(6)
|
%
|
|
9
|
%
|
Head
Protection
|
(1)
|
%
|
|
(2)
|
%
|
|
—
|
%
|
Portable Gas
Detection
|
3
|
%
|
|
3
|
%
|
|
4
|
%
|
Breathing
Apparatus
|
1
|
%
|
|
(4)
|
%
|
|
12
|
%
|
Fire & Rescue
Helmets
|
(5)
|
%
|
|
6
|
%
|
|
(11)
|
%
|
Total Core
Products
|
6
|
%
|
|
(1)
|
%
|
|
19
|
%
|
Core excluding
Acquisitions
|
—
|
%
|
|
(3)
|
%
|
|
5
|
%
|
|
|
|
|
|
|
Non-Core
Products
|
(4)
|
%
|
|
(4)
|
%
|
|
(4)
|
%
|
|
|
|
|
|
|
Net
Sales
|
4
|
%
|
|
(2)
|
%
|
|
13
|
%
|
Net Sales
excluding Acquisitions
|
(1)
|
%
|
|
(3)
|
%
|
|
3
|
%
|
|
|
|
|
|
|
|
|
|
*Fall protection
growth rates include the impact from Latchways sales.
|
MSA Safety
Incorporated
|
|
|
|
|
|
|
Reconciliation of As
Reported Financial Measures to Non-GAAP Financial
Measures
|
|
|
|
|
Constant currency
selling, general and administrative (SG&A) expense
(Unaudited)
|
|
|
|
|
Organic constant
currency SG&A expense (Unaudited)
|
|
|
|
|
|
|
(In
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
December 31,
|
|
|
|
Twelve Months
Ended
December 31,
|
|
|
|
2016
|
|
2015
|
|
% Change
|
|
2016
|
|
2015
|
|
% Change
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP reported
SG&A expense
|
$
|
78,288
|
|
|
$
|
83,587
|
|
|
(6)
|
%
|
|
$
|
306,144
|
|
|
$
|
315,270
|
|
|
(3)
|
%
|
Plus: Currency
translation effects
|
|
|
(1,384)
|
|
|
|
|
|
|
(6,906)
|
|
|
|
Constant currency
SG&A expense
|
$
|
78,288
|
|
|
$
|
82,203
|
|
|
(5)
|
%
|
|
$
|
306,144
|
|
|
$
|
308,364
|
|
|
(1)
|
%
|
Less:
Acquisitions
|
4,245
|
|
|
3,232
|
|
|
|
|
15,101
|
|
|
3,232
|
|
|
|
Less: Strategic
transaction costs
|
1,710
|
|
|
6,755
|
|
|
|
|
2,531
|
|
|
7,462
|
|
|
|
Organic constant
currency SG&A expense
|
$
|
72,333
|
|
|
$
|
72,216
|
|
|
—
|
%
|
|
$
|
288,512
|
|
|
$
|
297,670
|
|
|
(3)
|
%
|
Management believes that constant currency SG&A expense and
organic constant currency SG&A expense are useful metrics for
investors to measure the effectiveness of the company's cost
reduction program announced in 2015. Constant currency
SG&A expense highlights spending patterns excluding fluctuating
foreign currencies. Organic constant currency SG&A expense
highlights the impact of acquisitions and strategic transaction
costs. These metrics provide investors with a greater level of
clarity into spending levels on a year-over-year basis. MSA's
definition of this metric may not be comparable to metrics used by
other companies. As such, management believes that it is
appropriate to consider SG&A expense 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
|
|
|
|
|
|
|
Adjusted earnings
(Unaudited)
|
|
|
|
|
|
|
Adjusted earnings per
diluted share (Unaudited)
|
|
|
|
|
|
|
(In thousands, except
per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
December 31,
|
|
|
|
Twelve Months
Ended
December 31,
|
|
|
|
2016
|
|
2015
|
|
%
Change
|
|
2016
|
|
2015
|
|
%
Change
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from
continuing operations
attributable to MSA Safety
Incorporated
|
$
|
25,216
|
|
|
$
|
20,840
|
|
|
21%
|
|
$
|
92,691
|
|
|
$
|
69,590
|
|
|
33%
|
Tax charges
associated with European reorganization
|
2,873
|
|
|
—
|
|
|
|
|
6,473
|
|
|
7,605
|
|
|
|
Non-deductible
strategic transaction costs
|
—
|
|
|
2,172
|
|
|
|
|
—
|
|
|
2,879
|
|
|
|
Subtotal
|
28,089
|
|
|
23,012
|
|
|
22%
|
|
99,164
|
|
|
80,074
|
|
|
24%
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring
charges
|
1,997
|
|
|
7,560
|
|
|
|
|
5,694
|
|
|
12,258
|
|
|
|
Strategic transaction
costs
|
1,710
|
|
|
4,583
|
|
|
|
|
2,531
|
|
|
4,583
|
|
|
|
Senscient operating
loss
|
788
|
|
—
|
|
—
|
|
|
|
|
788
|
|
|
—
|
|
|
|
Asset related losses
(gains), net
|
59
|
|
|
1,098
|
|
|
|
|
(756)
|
|
|
1,636
|
|
|
|
Self-insured legal
settlements and defense costs
|
26
|
|
|
(69)
|
|
|
|
|
341
|
|
|
982
|
|
|
|
Currency exchange
(gains) losses, net
|
(1,732)
|
|
|
(1,132)
|
|
|
|
|
766
|
|
|
2,204
|
|
|
|
Income tax expense on
adjustments
|
(1,038)
|
|
|
(3,492)
|
|
|
|
|
(3,161)
|
|
|
(6,792)
|
|
|
|
Adjusted
earnings
|
29,899
|
|
|
31,560
|
|
|
(5)%
|
|
105,367
|
|
|
94,945
|
|
|
11%
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted earnings per
diluted share
|
$
|
0.78
|
|
|
$
|
0.84
|
|
|
(7)%
|
|
$
|
2.77
|
|
|
$
|
2.52
|
|
|
10%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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.
MSA Safety
Incorporated
|
|
|
|
Reconciliation of As
Reported Financial Measures to Non-GAAP Financial
Measures
|
|
|
Free cash flow
(Unaudited)
|
|
|
|
(In
thousands)
|
|
|
|
|
|
|
|
|
Three Months
Ended
December 31,
|
|
Twelve Months
Ended
December 31,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
|
Cash flow from
operating activities
|
$103,457
|
|
|
$45,424
|
|
|
$134,894
|
|
|
$55,254
|
|
Capital
expenditures
|
(9,377)
|
|
|
(11,093)
|
|
|
(25,523)
|
|
|
(36,241)
|
|
|
|
|
|
|
|
|
|
Free cash
flow
|
$
|
94,080
|
|
|
$
|
34,331
|
|
|
$
|
109,371
|
|
|
$
|
19,013
|
|
|
|
|
|
|
|
|
|
Net income
attributable to MSA Safety
Incorporated
|
$
|
24,916
|
|
|
$
|
20,851
|
|
|
$
|
91,936
|
|
|
$
|
70,807
|
|
|
|
|
|
|
|
|
|
Free cash flow
conversion
|
378%
|
|
|
165%
|
|
|
119%
|
|
|
27%
|
|
Management believes that free cash flow is a meaningful measure
for investors. Management reviews cash from operations after
deducting capital expenditures because these expenditures are
necessary to promote growth of MSA's business and are likely to
produce cash from operations in future periods. It is important to
note that free cash flow does not reflect the residual cash balance
of the company for discretionary spending since other items,
including debt and dividend payments, are deducted from free cash
flow before arriving at the company's ending cash balance.
Management defines free cash flow conversion as free cash flow
divided by net income attributable to MSA Safety.
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, fire and rescue helmets, and
fall protection devices. With 2016 revenues of $1.15 billion, MSA employs approximately 4,300
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 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 29, 2016. 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 constant currency
revenue growth, organic constant currency revenue growth, constant
currency selling, general and administrative expense, organic
constant currency selling, general and administrative expense,
adjusted operating income, adjusted operating margin, adjusted
earnings per diluted share, free cash flow and free cash flow
conversion. 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-full-year-and-fourth-quarter-results-300412928.html
SOURCE MSA