MSA Announces First Quarter Results

Quarterly GAAP earnings were $23 million; Adjusted earnings were $44 million, growing 13 percent from a year ago

Published

PITTSBURGH, April 24, 2019 /PRNewswire/ -- Global safety equipment manufacturer MSA Safety Incorporated (NYSE: MSA) today reported results for the first quarter of 2019.

Quarterly Highlights

  • Revenue was $326 million, consistent with a year ago on a reported basis and increasing  3 percent on a constant currency basis.
  • GAAP operating income was $32 million or 9.9 percent of sales, compared to $44 million or 13.6 percent of sales in the same period a year ago. Adjusted operating income was $58 million or 17.9 percent of sales, compared to $55 million or 16.8 percent of sales in the same period a year ago. Adjusted operating margin increased 110 basis points from a year ago on product margin expansion and operating expense leverage.
  • GAAP earnings were $23 million or $0.59 per diluted share, compared to $32 million or $0.83 per diluted share in the same period a year ago.  Adjusted earnings increased 13 percent to $44 million or $1.14 per diluted share, compared to $39 million or $1.01 per diluted share in the same period a year ago.
  • Current quarter GAAP earnings include $21 million of expense related to the company's International footprint rationalization program, which is designed to improve profitability in MSA's International segment. $15 million of this charge reflects the recognition of currency translation adjustments associated with the closure of MSA's locations in South Africa. This non-cash charge is recorded within Currency Exchange Losses, while the remaining $6 million of expense is recorded within Restructuring Charges.
  • Recently announced a definitive agreement to acquire California-based Sierra Monitor Corporation (OTCQB: SRMC) in an all-cash transaction valued at approximately $33 million. Sierra Monitor is a leading provider of fixed gas and flame detection instruments and Industrial Internet of Things solutions that connect and help protect high-value infrastructure assets. The transaction is expected to close in the second quarter of 2019, subject to customary closing conditions.

Comments from Management

"MSA delivered another quarter of profitable growth. Through new product introductions and continuous improvement in our cost structure, we were able to drive adjusted earnings growth of 13 percent on revenue growth of 3 percent," said Nish Vartanian, MSA President and CEO.  He noted that the company's incoming orders and backlog levels reflect continued strength in its key end markets and geographies, highlighted by its book-to-bill ratio of 107 percent in the quarter.

Mr. Vartanian commented that the company's revenue growth, increase in earnings and margin expansion in the quarter demonstrate the returns MSA is seeing on its R&D investments and its focus on improving productivity.  "Overall, our market leading innovations like the G1 SCBA for firefighters and new industrial market products in gas detection and fall protection are supporting improvements in our sales vitality index and contributing nicely to our ability to drive profitable growth," he said. The company's sales vitality index - which measures the percentage of revenue from products introduced within the past five years - trended above 35 percent for the quarter.

"The momentum in our order book, coupled with our strong profitability profile and balance sheet, positions us well to continue investing in our business and creating value for all MSA stakeholders. In 2019 - our 105th year in business - we remain focused on executing our corporate strategy and fulfilling our collective mission to advance workplace safety throughout the world," Mr. Vartanian concluded.

 

 

MSA Safety Incorporated Condensed Consolidated Statement of Income (Unaudited) (In thousands, except per share amounts)
Three Months Ended
March 31,
2019 2018
Net sales $ 326,038 $ 325,894
Cost of products sold 176,056 178,555
Gross profit 149,982 147,339
Selling, general and administrative 78,429 80,250
Research and development 13,705 12,548
Restructuring charges 5,831 5,274
Currency exchange losses, net (a) 16,961 2,008
Product liability expense 2,896 2,824
Operating income 32,160 44,435
Interest expense 2,360 4,781
Other income, net (2,579) (2,340)
Total other (income) expense, net (219) 2,441
Income before income taxes 32,379 41,994
Provision for income taxes 9,003 9,505
Net income 23,376 32,489
Net income attributable to noncontrolling interests (144) (118)
Net income attributable to MSA Safety Incorporated $ 23,232 $ 32,371
Earnings per share attributable to MSA Safety Incorporated common shareholders:
Basic $ 0.60 $ 0.85
Diluted $ 0.59 $ 0.83
Basic shares outstanding 38,536 38,216
Diluted shares outstanding 39,084 38,778

 

MSA Safety Incorporated Condensed Consolidated Statement of Income (Unaudited) (In thousands, except per share amounts) (a) Currency exchange losses includes a $15.4 million non-cash charge related to the recognition of currency translation adjustments associated with the closure of MSA's South Africa affiliates.
Three Months Ended
March 31,
2019 2018
Net sales $ 326,038 $ 325,894
Cost of products sold 176,056 178,555
Gross profit 149,982 147,339
Selling, general and administrative 78,429 80,250
Research and development 13,705 12,548
Restructuring charges 5,831 5,274
Currency exchange losses, net (a) 16,961 2,008
Product liability expense 2,896 2,824
Operating income 32,160 44,435
Interest expense 2,360 4,781
Other income, net (2,579) (2,340)
Total other (income) expense, net (219) 2,441
Income before income taxes 32,379 41,994
Provision for income taxes 9,003 9,505
Net income 23,376 32,489
Net income attributable to noncontrolling interests (144) (118)
Net income attributable to MSA Safety Incorporated $ 23,232 $ 32,371
Earnings per share attributable to MSA Safety Incorporated common shareholders:
Basic $ 0.60 $ 0.85
Diluted $ 0.59 $ 0.83
Basic shares outstanding 38,536 38,216
Diluted shares outstanding 39,084 38,778

 

 

MSA Safety Incorporated Condensed Consolidated Statement of Income (Unaudited) (In thousands, except per share amounts) (a) Currency exchange losses includes a $15.4 million non-cash charge related to the recognition of currency translation adjustments associated with the closure of MSA's South Africa affiliates. MSA Safety Incorporated Condensed Consolidated Balance Sheet (Unaudited) (In thousands)
Three Months Ended March 31, 2019 December 31, 2018
March 31, Assets
2019 2018 Cash and cash equivalents $ 107,668 $ 140,095
Trade receivables, net 253,351 245,032
Net sales $ 326,038 $ 325,894 Inventories 172,663 156,602
Cost of products sold 176,056 178,555 Notes receivable, insurance companies 3,586 3,555
Gross profit 149,982 147,339 Other current assets 135,523 111,339
    Total current assets 672,791 656,623
Selling, general and administrative 78,429 80,250
Research and development 13,705 12,548 Property, net 156,099 157,940
Restructuring charges 5,831 5,274 Operating lease assets, net 52,020
Currency exchange losses, net (a) 16,961 2,008 Prepaid pension cost 61,500 57,568
Product liability expense 2,896 2,824 Goodwill 415,254 413,640
Operating income 32,160 44,435 Notes receivable, insurance companies, noncurrent 56,368 56,012
Insurance receivable, noncurrent 52,640 56,866
Interest expense 2,360 4,781 Other noncurrent assets 204,696 209,363
Other income, net (2,579) (2,340)    Total assets $ 1,671,368 $ 1,608,012
Total other (income) expense, net (219) 2,441
Liabilities and shareholders' equity
Income before income taxes 32,379 41,994 Notes payable and current portion of long-term debt, net $ 20,155 $ 20,063
Provision for income taxes 9,003 9,505 Accounts payable 75,524 78,367
Net income 23,376 32,489 Other current liabilities 170,591 183,630
   Total current liabilities 266,270 282,060
Net income attributable to noncontrolling interests (144) (118)
Long-term debt, net 357,304 341,311
Net income attributable to MSA Safety Incorporated $ 23,232 $ 32,371 Pensions and other employee benefits 166,294 166,101
Noncurrent operating lease liabilities 41,962
Earnings per share attributable to MSA Safety Incorporated common shareholders: Deferred tax liabilities 7,613 7,164
Basic $ 0.60 $ 0.85 Product liability and other noncurrent liabilities 168,640 171,857
Diluted $ 0.59 $ 0.83 Total shareholders' equity 663,285 639,519
   Total liabilities and shareholders' equity $ 1,671,368 $ 1,608,012
Basic shares outstanding 38,536 38,216
Diluted shares outstanding 39,084 38,778

 

 

MSA Safety Incorporated Condensed Consolidated Statement of Income (Unaudited) (In thousands, except per share amounts) (a) Currency exchange losses includes a $15.4 million non-cash charge related to the recognition of currency translation adjustments associated with the closure of MSA's South Africa affiliates. MSA Safety Incorporated Condensed Consolidated Balance Sheet (Unaudited) (In thousands) MSA Safety Incorporated Condensed Consolidated Statement of Cash Flows (Unaudited) (In thousands)
Three Months Ended March 31, 2019 December 31, 2018 Three Months Ended
March 31, Assets March 31,
2019 2018 Cash and cash equivalents $ 107,668 $ 140,095 2019 2018
Trade receivables, net 253,351 245,032
Net sales $ 326,038 $ 325,894 Inventories 172,663 156,602 Net income $ 23,376 $ 32,489
Cost of products sold 176,056 178,555 Notes receivable, insurance companies 3,586 3,555 Depreciation and amortization 9,326 9,671
Gross profit 149,982 147,339 Other current assets 135,523 111,339 Change in working capital and other operating (31,485) (24,807)
    Total current assets 672,791 656,623   Cash flow from operating activities 1,217 17,353
Selling, general and administrative 78,429 80,250
Research and development 13,705 12,548 Property, net 156,099 157,940 Capital expenditures (4,897) (3,241)
Restructuring charges 5,831 5,274 Operating lease assets, net 52,020 Change in short-term investments (18,941)
Currency exchange losses, net (a) 16,961 2,008 Prepaid pension cost 61,500 57,568 Property disposals 12 58
Product liability expense 2,896 2,824 Goodwill 415,254 413,640   Cash flow used in investing activities (23,826) (3,183)
Operating income 32,160 44,435 Notes receivable, insurance companies, noncurrent 56,368 56,012
Insurance receivable, noncurrent 52,640 56,866 Change in debt 14,091 (9,401)
Interest expense 2,360 4,781 Other noncurrent assets 204,696 209,363 Cash dividends paid (14,652) (13,390)
Other income, net (2,579) (2,340)    Total assets $ 1,671,368 $ 1,608,012 Other financing (5,981) (1,825)
Total other (income) expense, net (219) 2,441   Cash flow used in financing activities (6,542) (24,616)
Liabilities and shareholders' equity
Income before income taxes 32,379 41,994 Notes payable and current portion of long-term debt, net $ 20,155 $ 20,063 Effect of exchange rate changes on cash, cash equivalents and restricted cash (3,221) 1,363
Provision for income taxes 9,003 9,505 Accounts payable 75,524 78,367
Net income 23,376 32,489 Other current liabilities 170,591 183,630 Decrease in cash, cash equivalents and restricted cash $ (32,372) $ (9,083)
   Total current liabilities 266,270 282,060
Net income attributable to noncontrolling interests (144) (118)
Long-term debt, net 357,304 341,311
Net income attributable to MSA Safety Incorporated $ 23,232 $ 32,371 Pensions and other employee benefits 166,294 166,101
Noncurrent operating lease liabilities 41,962
Earnings per share attributable to MSA Safety Incorporated common shareholders: Deferred tax liabilities 7,613 7,164
Basic $ 0.60 $ 0.85 Product liability and other noncurrent liabilities 168,640 171,857
Diluted $ 0.59 $ 0.83 Total shareholders' equity 663,285 639,519
   Total liabilities and shareholders' equity $ 1,671,368 $ 1,608,012
Basic shares outstanding 38,536 38,216
Diluted shares outstanding 39,084 38,778

 

 

MSA Safety Incorporated Condensed Consolidated Statement of Income (Unaudited) (In thousands, except per share amounts) (a) Currency exchange losses includes a $15.4 million non-cash charge related to the recognition of currency translation adjustments associated with the closure of MSA's South Africa affiliates. MSA Safety Incorporated Condensed Consolidated Balance Sheet (Unaudited) (In thousands) MSA Safety Incorporated Condensed Consolidated Statement of Cash Flows (Unaudited) (In thousands) MSA Safety Incorporated Segment Information (Unaudited) (In thousands, except percentage amounts)
Three Months Ended March 31, 2019 December 31, 2018 Three Months Ended Americas International Corporate Consolidated
March 31, Assets March 31, Three Months Ended March 31, 2019
2019 2018 Cash and cash equivalents $ 107,668 $ 140,095 2019 2018 Sales to external customers $ 213,687 $ 112,351 $ $ 326,038
Trade receivables, net 253,351 245,032 Operating income 32,160
Net sales $ 326,038 $ 325,894 Inventories 172,663 156,602 Net income $ 23,376 $ 32,489 Operating margin % 9.9 %
Cost of products sold 176,056 178,555 Notes receivable, insurance companies 3,586 3,555 Depreciation and amortization 9,326 9,671 Restructuring charges 5,831
Gross profit 149,982 147,339 Other current assets 135,523 111,339 Change in working capital and other operating (31,485) (24,807) Currency exchange losses, net 16,961
    Total current assets 672,791 656,623   Cash flow from operating activities 1,217 17,353 Product liability expense 2,896
Selling, general and administrative 78,429 80,250 Strategic transaction costs 456
Research and development 13,705 12,548 Property, net 156,099 157,940 Capital expenditures (4,897) (3,241) Adjusted operating income (loss) 54,803 11,040 (7,539) 58,304
Restructuring charges 5,831 5,274 Operating lease assets, net 52,020 Change in short-term investments (18,941) Adjusted operating margin % 25.6 % 9.8 % 17.9 %
Currency exchange losses, net (a) 16,961 2,008 Prepaid pension cost 61,500 57,568 Property disposals 12 58 Depreciation and amortization 9,326
Product liability expense 2,896 2,824 Goodwill 415,254 413,640   Cash flow used in investing activities (23,826) (3,183) Adjusted EBITDA 60,900 14,171 (7,441) 67,630
Operating income 32,160 44,435 Notes receivable, insurance companies, noncurrent 56,368 56,012 Adjusted EBITDA % 28.5 % 12.6 % 20.7 %
Insurance receivable, noncurrent 52,640 56,866 Change in debt 14,091 (9,401)
Interest expense 2,360 4,781 Other noncurrent assets 204,696 209,363 Cash dividends paid (14,652) (13,390) Three Months Ended March 31, 2018
Other income, net (2,579) (2,340)    Total assets $ 1,671,368 $ 1,608,012 Other financing (5,981) (1,825) Sales to external customers $ 209,129 $ 116,765 $ $ 325,894
Total other (income) expense, net (219) 2,441   Cash flow used in financing activities (6,542) (24,616) Operating income 44,435
Liabilities and shareholders' equity Operating margin % 13.6 %
Income before income taxes 32,379 41,994 Notes payable and current portion of long-term debt, net $ 20,155 $ 20,063 Effect of exchange rate changes on cash, cash equivalents and restricted cash (3,221) 1,363 Restructuring charges 5,274
Provision for income taxes 9,003 9,505 Accounts payable 75,524 78,367 Currency exchange losses, net 2,008
Net income 23,376 32,489 Other current liabilities 170,591 183,630 Decrease in cash, cash equivalents and restricted cash $ (32,372) $ (9,083) Product liability expense 2,824
   Total current liabilities 266,270 282,060 Strategic transaction costs 94
Net income attributable to noncontrolling interests (144) (118) Adjusted operating income (loss) 50,086 12,778 (8,229) 54,635
Long-term debt, net 357,304 341,311 Adjusted operating margin % 23.9 % 10.9 % 16.8 %
Net income attributable to MSA Safety Incorporated $ 23,232 $ 32,371 Pensions and other employee benefits 166,294 166,101 Depreciation and amortization 9,671
Noncurrent operating lease liabilities 41,962 Adjusted EBITDA 56,225 16,209 (8,128) 64,306
Earnings per share attributable to MSA Safety Incorporated common shareholders: Deferred tax liabilities 7,613 7,164 Adjusted EBITDA % 26.9 % 13.9 % 19.7 %
Basic $ 0.60 $ 0.85 Product liability and other noncurrent liabilities 168,640 171,857
Diluted $ 0.59 $ 0.83 Total shareholders' equity 663,285 639,519
   Total liabilities and shareholders' equity $ 1,671,368 $ 1,608,012
Basic shares outstanding 38,536 38,216
Diluted shares outstanding 39,084 38,778

 

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 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 and strategic transaction costs and 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 Condensed Consolidated Statement of Income (Unaudited) (In thousands, except per share amounts) (a) Currency exchange losses includes a $15.4 million non-cash charge related to the recognition of currency translation adjustments associated with the closure of MSA's South Africa affiliates. MSA Safety Incorporated Condensed Consolidated Balance Sheet (Unaudited) (In thousands) MSA Safety Incorporated Condensed Consolidated Statement of Cash Flows (Unaudited) (In thousands) MSA Safety Incorporated Segment Information (Unaudited) (In thousands, except percentage amounts) MSA Safety Incorporated Reconciliation of As Reported Financial Measures to Non-GAAP Financial Measures Constant currency revenue growth (Unaudited)
Three Months Ended March 31, 2019 December 31, 2018 Three Months Ended Americas International Corporate Consolidated Consolidated
March 31, Assets March 31, Three Months Ended March 31, 2019
2019 2018 Cash and cash equivalents $ 107,668 $ 140,095 2019 2018 Sales to external customers $ 213,687 $ 112,351 $ $ 326,038 Three Months Ended March 31, 2019
Trade receivables, net 253,351 245,032 Operating income 32,160 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
Net sales $ 326,038 $ 325,894 Inventories 172,663 156,602 Net income $ 23,376 $ 32,489 Operating margin % 9.9 % GAAP reported sales change 1 % (2) % 2 % (4) % (1) % 17 % 1 % (7) % %
Cost of products sold 176,056 178,555 Notes receivable, insurance companies 3,586 3,555 Depreciation and amortization 9,326 9,671 Restructuring charges 5,831
Gross profit 149,982 147,339 Other current assets 135,523 111,339 Change in working capital and other operating (31,485) (24,807) Currency exchange losses, net 16,961 Plus: Currency translation effects 3 % 2 % 4 % 4 % 3 % 5 % 3 % 5 % 3 %
    Total current assets 672,791 656,623   Cash flow from operating activities 1,217 17,353 Product liability expense 2,896
Selling, general and administrative 78,429 80,250 Strategic transaction costs 456 Constant currency sales change 4 % % 6 % % 2 % 22 % 4 % (2) % 3 %
Research and development 13,705 12,548 Property, net 156,099 157,940 Capital expenditures (4,897) (3,241) Adjusted operating income (loss) 54,803 11,040 (7,539) 58,304
Restructuring charges 5,831 5,274 Operating lease assets, net 52,020 Change in short-term investments (18,941) Adjusted operating margin % 25.6 % 9.8 % 17.9 %
Currency exchange losses, net (a) 16,961 2,008 Prepaid pension cost 61,500 57,568 Property disposals 12 58 Depreciation and amortization 9,326
Product liability expense 2,896 2,824 Goodwill 415,254 413,640   Cash flow used in investing activities (23,826) (3,183) Adjusted EBITDA 60,900 14,171 (7,441) 67,630
Operating income 32,160 44,435 Notes receivable, insurance companies, noncurrent 56,368 56,012 Adjusted EBITDA % 28.5 % 12.6 % 20.7 %
Insurance receivable, noncurrent 52,640 56,866 Change in debt 14,091 (9,401)
Interest expense 2,360 4,781 Other noncurrent assets 204,696 209,363 Cash dividends paid (14,652) (13,390) Three Months Ended March 31, 2018
Other income, net (2,579) (2,340)    Total assets $ 1,671,368 $ 1,608,012 Other financing (5,981) (1,825) Sales to external customers $ 209,129 $ 116,765 $ $ 325,894
Total other (income) expense, net (219) 2,441   Cash flow used in financing activities (6,542) (24,616) Operating income 44,435
Liabilities and shareholders' equity Operating margin % 13.6 %
Income before income taxes 32,379 41,994 Notes payable and current portion of long-term debt, net $ 20,155 $ 20,063 Effect of exchange rate changes on cash, cash equivalents and restricted cash (3,221) 1,363 Restructuring charges 5,274
Provision for income taxes 9,003 9,505 Accounts payable 75,524 78,367 Currency exchange losses, net 2,008
Net income 23,376 32,489 Other current liabilities 170,591 183,630 Decrease in cash, cash equivalents and restricted cash $ (32,372) $ (9,083) Product liability expense 2,824
   Total current liabilities 266,270 282,060 Strategic transaction costs 94
Net income attributable to noncontrolling interests (144) (118) Adjusted operating income (loss) 50,086 12,778 (8,229) 54,635
Long-term debt, net 357,304 341,311 Adjusted operating margin % 23.9 % 10.9 % 16.8 %
Net income attributable to MSA Safety Incorporated $ 23,232 $ 32,371 Pensions and other employee benefits 166,294 166,101 Depreciation and amortization 9,671
Noncurrent operating lease liabilities 41,962 Adjusted EBITDA 56,225 16,209 (8,128) 64,306
Earnings per share attributable to MSA Safety Incorporated common shareholders: Deferred tax liabilities 7,613 7,164 Adjusted EBITDA % 26.9 % 13.9 % 19.7 %
Basic $ 0.60 $ 0.85 Product liability and other noncurrent liabilities 168,640 171,857
Diluted $ 0.59 $ 0.83 Total shareholders' equity 663,285 639,519
   Total liabilities and shareholders' equity $ 1,671,368 $ 1,608,012
Basic shares outstanding 38,536 38,216
Diluted shares outstanding 39,084 38,778

 

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 Condensed Consolidated Statement of Income (Unaudited) (In thousands, except per share amounts) (a) Currency exchange losses includes a $15.4 million non-cash charge related to the recognition of currency translation adjustments associated with the closure of MSA's South Africa affiliates. MSA Safety Incorporated Condensed Consolidated Balance Sheet (Unaudited) (In thousands) MSA Safety Incorporated Condensed Consolidated Statement of Cash Flows (Unaudited) (In thousands) MSA Safety Incorporated Segment Information (Unaudited) (In thousands, except percentage amounts) MSA Safety Incorporated Reconciliation of As Reported Financial Measures to Non-GAAP Financial Measures Constant currency revenue growth (Unaudited) MSA Safety Incorporated Reconciliation of As Reported Financial Measures to Non-GAAP Financial Measures Constant currency revenue growth (Unaudited)
Three Months Ended March 31, 2019 December 31, 2018 Three Months Ended Americas International Corporate Consolidated Consolidated Americas Segment
March 31, Assets March 31, Three Months Ended March 31, 2019
2019 2018 Cash and cash equivalents $ 107,668 $ 140,095 2019 2018 Sales to external customers $ 213,687 $ 112,351 $ $ 326,038 Three Months Ended March 31, 2019 Three Months Ended March 31, 2019
Trade receivables, net 253,351 245,032 Operating income 32,160 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 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
Net sales $ 326,038 $ 325,894 Inventories 172,663 156,602 Net income $ 23,376 $ 32,489 Operating margin % 9.9 % GAAP reported sales change 1 % (2) % 2 % (4) % (1) % 17 % 1 % (7) % % GAAP reported sales change 3 % 1 % % (6) % 1 % 27 % 2 % 1 % 2 %
Cost of products sold 176,056 178,555 Notes receivable, insurance companies 3,586 3,555 Depreciation and amortization 9,326 9,671 Restructuring charges 5,831
Gross profit 149,982 147,339 Other current assets 135,523 111,339 Change in working capital and other operating (31,485) (24,807) Currency exchange losses, net 16,961 Plus: Currency translation effects 3 % 2 % 4 % 4 % 3 % 5 % 3 % 5 % 3 % Plus: Currency translation effects % % 3 % 1 % 1 % 3 % 1 % 3 % 1 %
    Total current assets 672,791 656,623   Cash flow from operating activities 1,217 17,353 Product liability expense 2,896
Selling, general and administrative 78,429 80,250 Strategic transaction costs 456 Constant currency sales change 4 % % 6 % % 2 % 22 % 4 % (2) % 3 % Constant currency sales change 3 % 1 % 3 % (5) % 2 % 30 % 3 % 4 % 3 %
Research and development 13,705 12,548 Property, net 156,099 157,940 Capital expenditures (4,897) (3,241) Adjusted operating income (loss) 54,803 11,040 (7,539) 58,304
Restructuring charges 5,831 5,274 Operating lease assets, net 52,020 Change in short-term investments (18,941) Adjusted operating margin % 25.6 % 9.8 % 17.9 %
Currency exchange losses, net (a) 16,961 2,008 Prepaid pension cost 61,500 57,568 Property disposals 12 58 Depreciation and amortization 9,326
Product liability expense 2,896 2,824 Goodwill 415,254 413,640   Cash flow used in investing activities (23,826) (3,183) Adjusted EBITDA 60,900 14,171 (7,441) 67,630
Operating income 32,160 44,435 Notes receivable, insurance companies, noncurrent 56,368 56,012 Adjusted EBITDA % 28.5 % 12.6 % 20.7 %
Insurance receivable, noncurrent 52,640 56,866 Change in debt 14,091 (9,401)
Interest expense 2,360 4,781 Other noncurrent assets 204,696 209,363 Cash dividends paid (14,652) (13,390) Three Months Ended March 31, 2018
Other income, net (2,579) (2,340)    Total assets $ 1,671,368 $ 1,608,012 Other financing (5,981) (1,825) Sales to external customers $ 209,129 $ 116,765 $ $ 325,894
Total other (income) expense, net (219) 2,441   Cash flow used in financing activities (6,542) (24,616) Operating income 44,435
Liabilities and shareholders' equity Operating margin % 13.6 %
Income before income taxes 32,379 41,994 Notes payable and current portion of long-term debt, net $ 20,155 $ 20,063 Effect of exchange rate changes on cash, cash equivalents and restricted cash (3,221) 1,363 Restructuring charges 5,274
Provision for income taxes 9,003 9,505 Accounts payable 75,524 78,367 Currency exchange losses, net 2,008
Net income 23,376 32,489 Other current liabilities 170,591 183,630 Decrease in cash, cash equivalents and restricted cash $ (32,372) $ (9,083) Product liability expense 2,824
   Total current liabilities 266,270 282,060 Strategic transaction costs 94
Net income attributable to noncontrolling interests (144) (118) Adjusted operating income (loss) 50,086 12,778 (8,229) 54,635
Long-term debt, net 357,304 341,311 Adjusted operating margin % 23.9 % 10.9 % 16.8 %
Net income attributable to MSA Safety Incorporated $ 23,232 $ 32,371 Pensions and other employee benefits 166,294 166,101 Depreciation and amortization 9,671
Noncurrent operating lease liabilities 41,962 Adjusted EBITDA 56,225 16,209 (8,128) 64,306
Earnings per share attributable to MSA Safety Incorporated common shareholders: Deferred tax liabilities 7,613 7,164 Adjusted EBITDA % 26.9 % 13.9 % 19.7 %
Basic $ 0.60 $ 0.85 Product liability and other noncurrent liabilities 168,640 171,857
Diluted $ 0.59 $ 0.83 Total shareholders' equity 663,285 639,519
   Total liabilities and shareholders' equity $ 1,671,368 $ 1,608,012
Basic shares outstanding 38,536 38,216
Diluted shares outstanding 39,084 38,778

 

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 Condensed Consolidated Statement of Income (Unaudited) (In thousands, except per share amounts) (a) Currency exchange losses includes a $15.4 million non-cash charge related to the recognition of currency translation adjustments associated with the closure of MSA's South Africa affiliates. MSA Safety Incorporated Condensed Consolidated Balance Sheet (Unaudited) (In thousands) MSA Safety Incorporated Condensed Consolidated Statement of Cash Flows (Unaudited) (In thousands) MSA Safety Incorporated Segment Information (Unaudited) (In thousands, except percentage amounts) MSA Safety Incorporated Reconciliation of As Reported Financial Measures to Non-GAAP Financial Measures Constant currency revenue growth (Unaudited) MSA Safety Incorporated Reconciliation of As Reported Financial Measures to Non-GAAP Financial Measures Constant currency revenue growth (Unaudited) MSA Safety Incorporated Reconciliation of As Reported Financial Measures to Non-GAAP Financial Measures Constant currency revenue growth (Unaudited)
Three Months Ended March 31, 2019 December 31, 2018 Three Months Ended Americas International Corporate Consolidated Consolidated Americas Segment International Segment
March 31, Assets March 31, Three Months Ended March 31, 2019
2019 2018 Cash and cash equivalents $ 107,668 $ 140,095 2019 2018 Sales to external customers $ 213,687 $ 112,351 $ $ 326,038 Three Months Ended March 31, 2019 Three Months Ended March 31, 2019 Three Months Ended March 31, 2019
Trade receivables, net 253,351 245,032 Operating income 32,160 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 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 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
Net sales $ 326,038 $ 325,894 Inventories 172,663 156,602 Net income $ 23,376 $ 32,489 Operating margin % 9.9 % GAAP reported sales change 1 % (2) % 2 % (4) % (1) % 17 % 1 % (7) % % GAAP reported sales change 3 % 1 % % (6) % 1 % 27 % 2 % 1 % 2 % GAAP reported sales change (3) % (13) % 11 % 2 % (3) % 5 % (1) % (15) % (4) %
Cost of products sold 176,056 178,555 Notes receivable, insurance companies 3,586 3,555 Depreciation and amortization 9,326 9,671 Restructuring charges 5,831
Gross profit 149,982 147,339 Other current assets 135,523 111,339 Change in working capital and other operating (31,485) (24,807) Currency exchange losses, net 16,961 Plus: Currency translation effects 3 % 2 % 4 % 4 % 3 % 5 % 3 % 5 % 3 % Plus: Currency translation effects % % 3 % 1 % 1 % 3 % 1 % 3 % 1 % Plus: Currency translation effects 8 % 7 % 8 % 8 % 7 % 7 % 7 % 7 % 8 %
    Total current assets 672,791 656,623   Cash flow from operating activities 1,217 17,353 Product liability expense 2,896
Selling, general and administrative 78,429 80,250 Strategic transaction costs 456 Constant currency sales change 4 % % 6 % % 2 % 22 % 4 % (2) % 3 % Constant currency sales change 3 % 1 % 3 % (5) % 2 % 30 % 3 % 4 % 3 % Constant currency sales change 5 % (6) % 19 % 10 % 4 % 12 % 6 % (8) % 4 %
Research and development 13,705 12,548 Property, net 156,099 157,940 Capital expenditures (4,897) (3,241) Adjusted operating income (loss) 54,803 11,040 (7,539) 58,304
Restructuring charges 5,831 5,274 Operating lease assets, net 52,020 Change in short-term investments (18,941) Adjusted operating margin % 25.6 % 9.8 % 17.9 %
Currency exchange losses, net (a) 16,961 2,008 Prepaid pension cost 61,500 57,568 Property disposals 12 58 Depreciation and amortization 9,326
Product liability expense 2,896 2,824 Goodwill 415,254 413,640   Cash flow used in investing activities (23,826) (3,183) Adjusted EBITDA 60,900 14,171 (7,441) 67,630
Operating income 32,160 44,435 Notes receivable, insurance companies, noncurrent 56,368 56,012 Adjusted EBITDA % 28.5 % 12.6 % 20.7 %
Insurance receivable, noncurrent 52,640 56,866 Change in debt 14,091 (9,401)
Interest expense 2,360 4,781 Other noncurrent assets 204,696 209,363 Cash dividends paid (14,652) (13,390) Three Months Ended March 31, 2018
Other income, net (2,579) (2,340)    Total assets $ 1,671,368 $ 1,608,012 Other financing (5,981) (1,825) Sales to external customers $ 209,129 $ 116,765 $ $ 325,894
Total other (income) expense, net (219) 2,441   Cash flow used in financing activities (6,542) (24,616) Operating income 44,435
Liabilities and shareholders' equity Operating margin % 13.6 %
Income before income taxes 32,379 41,994 Notes payable and current portion of long-term debt, net $ 20,155 $ 20,063 Effect of exchange rate changes on cash, cash equivalents and restricted cash (3,221) 1,363 Restructuring charges 5,274
Provision for income taxes 9,003 9,505 Accounts payable 75,524 78,367 Currency exchange losses, net 2,008
Net income 23,376 32,489 Other current liabilities 170,591 183,630 Decrease in cash, cash equivalents and restricted cash $ (32,372) $ (9,083) Product liability expense 2,824
   Total current liabilities 266,270 282,060 Strategic transaction costs 94
Net income attributable to noncontrolling interests (144) (118) Adjusted operating income (loss) 50,086 12,778 (8,229) 54,635
Long-term debt, net 357,304 341,311 Adjusted operating margin % 23.9 % 10.9 % 16.8 %
Net income attributable to MSA Safety Incorporated $ 23,232 $ 32,371 Pensions and other employee benefits 166,294 166,101 Depreciation and amortization 9,671
Noncurrent operating lease liabilities 41,962 Adjusted EBITDA 56,225 16,209 (8,128) 64,306
Earnings per share attributable to MSA Safety Incorporated common shareholders: Deferred tax liabilities 7,613 7,164 Adjusted EBITDA % 26.9 % 13.9 % 19.7 %
Basic $ 0.60 $ 0.85 Product liability and other noncurrent liabilities 168,640 171,857
Diluted $ 0.59 $ 0.83 Total shareholders' equity 663,285 639,519
   Total liabilities and shareholders' equity $ 1,671,368 $ 1,608,012
Basic shares outstanding 38,536 38,216
Diluted shares outstanding 39,084 38,778

 

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 Condensed Consolidated Statement of Income (Unaudited) (In thousands, except per share amounts) (a) Currency exchange losses includes a $15.4 million non-cash charge related to the recognition of currency translation adjustments associated with the closure of MSA's South Africa affiliates. MSA Safety Incorporated Condensed Consolidated Balance Sheet (Unaudited) (In thousands) MSA Safety Incorporated Condensed Consolidated Statement of Cash Flows (Unaudited) (In thousands) MSA Safety Incorporated Segment Information (Unaudited) (In thousands, except percentage amounts) MSA Safety Incorporated Reconciliation of As Reported Financial Measures to Non-GAAP Financial Measures Constant currency revenue growth (Unaudited) MSA Safety Incorporated Reconciliation of As Reported Financial Measures to Non-GAAP Financial Measures Constant currency revenue growth (Unaudited) MSA Safety Incorporated Reconciliation of As Reported Financial Measures to Non-GAAP Financial Measures Constant currency revenue growth (Unaudited) MSA Safety Incorporated Supplemental Segment Information (Unaudited) Summary of constant currency revenue growth by segment and product group
Three Months Ended March 31, 2019 December 31, 2018 Three Months Ended Americas International Corporate Consolidated Consolidated Americas Segment International Segment Three Months Ended March 31, 2019
March 31, Assets March 31, Three Months Ended March 31, 2019 Consolidated Americas International
2019 2018 Cash and cash equivalents $ 107,668 $ 140,095 2019 2018 Sales to external customers $ 213,687 $ 112,351 $ $ 326,038 Three Months Ended March 31, 2019 Three Months Ended March 31, 2019 Three Months Ended March 31, 2019 Fall Protection 22 % 30 % 12 %
Trade receivables, net 253,351 245,032 Operating income 32,160 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 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 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 Industrial Head Protection 6 % 3 % 19 %
Net sales $ 326,038 $ 325,894 Inventories 172,663 156,602 Net income $ 23,376 $ 32,489 Operating margin % 9.9 % GAAP reported sales change 1 % (2) % 2 % (4) % (1) % 17 % 1 % (7) % % GAAP reported sales change 3 % 1 % % (6) % 1 % 27 % 2 % 1 % 2 % GAAP reported sales change (3) % (13) % 11 % 2 % (3) % 5 % (1) % (15) % (4) % Breathing Apparatus 4 % 3 % 5 %
Cost of products sold 176,056 178,555 Notes receivable, insurance companies 3,586 3,555 Depreciation and amortization 9,326 9,671 Restructuring charges 5,831 Fixed Gas and Flame Detection 2 % 2 % 4 %
Gross profit 149,982 147,339 Other current assets 135,523 111,339 Change in working capital and other operating (31,485) (24,807) Currency exchange losses, net 16,961 Plus: Currency translation effects 3 % 2 % 4 % 4 % 3 % 5 % 3 % 5 % 3 % Plus: Currency translation effects % % 3 % 1 % 1 % 3 % 1 % 3 % 1 % Plus: Currency translation effects 8 % 7 % 8 % 8 % 7 % 7 % 7 % 7 % 8 % Portable Gas Detection % (5) % 10 %
    Total current assets 672,791 656,623   Cash flow from operating activities 1,217 17,353 Product liability expense 2,896 Firefighter Helmets & Protective Apparel % 1 % (6) %
Selling, general and administrative 78,429 80,250 Strategic transaction costs 456 Constant currency sales change 4 % % 6 % % 2 % 22 % 4 % (2) % 3 % Constant currency sales change 3 % 1 % 3 % (5) % 2 % 30 % 3 % 4 % 3 % Constant currency sales change 5 % (6) % 19 % 10 % 4 % 12 % 6 % (8) % 4 % Core Sales 4 % 3 % 6 %
Research and development 13,705 12,548 Property, net 156,099 157,940 Capital expenditures (4,897) (3,241) Adjusted operating income (loss) 54,803 11,040 (7,539) 58,304
Restructuring charges 5,831 5,274 Operating lease assets, net 52,020 Change in short-term investments (18,941) Adjusted operating margin % 25.6 % 9.8 % 17.9 % Non-Core Sales (2) % 4 % (8) %
Currency exchange losses, net (a) 16,961 2,008 Prepaid pension cost 61,500 57,568 Property disposals 12 58 Depreciation and amortization 9,326
Product liability expense 2,896 2,824 Goodwill 415,254 413,640   Cash flow used in investing activities (23,826) (3,183) Adjusted EBITDA 60,900 14,171 (7,441) 67,630 Net Sales 3 % 3 % 4 %
Operating income 32,160 44,435 Notes receivable, insurance companies, noncurrent 56,368 56,012 Adjusted EBITDA % 28.5 % 12.6 % 20.7 %
Insurance receivable, noncurrent 52,640 56,866 Change in debt 14,091 (9,401)
Interest expense 2,360 4,781 Other noncurrent assets 204,696 209,363 Cash dividends paid (14,652) (13,390) Three Months Ended March 31, 2018
Other income, net (2,579) (2,340)    Total assets $ 1,671,368 $ 1,608,012 Other financing (5,981) (1,825) Sales to external customers $ 209,129 $ 116,765 $ $ 325,894
Total other (income) expense, net (219) 2,441   Cash flow used in financing activities (6,542) (24,616) Operating income 44,435
Liabilities and shareholders' equity Operating margin % 13.6 %
Income before income taxes 32,379 41,994 Notes payable and current portion of long-term debt, net $ 20,155 $ 20,063 Effect of exchange rate changes on cash, cash equivalents and restricted cash (3,221) 1,363 Restructuring charges 5,274
Provision for income taxes 9,003 9,505 Accounts payable 75,524 78,367 Currency exchange losses, net 2,008
Net income 23,376 32,489 Other current liabilities 170,591 183,630 Decrease in cash, cash equivalents and restricted cash $ (32,372) $ (9,083) Product liability expense 2,824
   Total current liabilities 266,270 282,060 Strategic transaction costs 94
Net income attributable to noncontrolling interests (144) (118) Adjusted operating income (loss) 50,086 12,778 (8,229) 54,635
Long-term debt, net 357,304 341,311 Adjusted operating margin % 23.9 % 10.9 % 16.8 %
Net income attributable to MSA Safety Incorporated $ 23,232 $ 32,371 Pensions and other employee benefits 166,294 166,101 Depreciation and amortization 9,671
Noncurrent operating lease liabilities 41,962 Adjusted EBITDA 56,225 16,209 (8,128) 64,306
Earnings per share attributable to MSA Safety Incorporated common shareholders: Deferred tax liabilities 7,613 7,164 Adjusted EBITDA % 26.9 % 13.9 % 19.7 %
Basic $ 0.60 $ 0.85 Product liability and other noncurrent liabilities 168,640 171,857
Diluted $ 0.59 $ 0.83 Total shareholders' equity 663,285 639,519
   Total liabilities and shareholders' equity $ 1,671,368 $ 1,608,012
Basic shares outstanding 38,536 38,216
Diluted shares outstanding 39,084 38,778

 

 

MSA Safety Incorporated Condensed Consolidated Statement of Income (Unaudited) (In thousands, except per share amounts) (a) Currency exchange losses includes a $15.4 million non-cash charge related to the recognition of currency translation adjustments associated with the closure of MSA's South Africa affiliates. MSA Safety Incorporated Condensed Consolidated Balance Sheet (Unaudited) (In thousands) MSA Safety Incorporated Condensed Consolidated Statement of Cash Flows (Unaudited) (In thousands) MSA Safety Incorporated Segment Information (Unaudited) (In thousands, except percentage amounts) MSA Safety Incorporated Reconciliation of As Reported Financial Measures to Non-GAAP Financial Measures Constant currency revenue growth (Unaudited) MSA Safety Incorporated Reconciliation of As Reported Financial Measures to Non-GAAP Financial Measures Constant currency revenue growth (Unaudited) MSA Safety Incorporated Reconciliation of As Reported Financial Measures to Non-GAAP Financial Measures Constant currency revenue growth (Unaudited) MSA Safety Incorporated Supplemental Segment Information (Unaudited) Summary of constant currency revenue growth by segment and product group 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, 2019 December 31, 2018 Three Months Ended Americas International Corporate Consolidated Consolidated Americas Segment International Segment Three Months Ended March 31, 2019 Three Months Ended March 31,
March 31, Assets March 31, Three Months Ended March 31, 2019 Consolidated Americas International 2019 2018 %Change
2019 2018 Cash and cash equivalents $ 107,668 $ 140,095 2019 2018 Sales to external customers $ 213,687 $ 112,351 $ $ 326,038 Three Months Ended March 31, 2019 Three Months Ended March 31, 2019 Three Months Ended March 31, 2019 Fall Protection 22 % 30 % 12 %
Trade receivables, net 253,351 245,032 Operating income 32,160 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 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 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 Industrial Head Protection 6 % 3 % 19 % Net income attributable to MSA Safety Incorporated 23,232 32,371 (28)%
Net sales $ 326,038 $ 325,894 Inventories 172,663 156,602 Net income $ 23,376 $ 32,489 Operating margin % 9.9 % GAAP reported sales change 1 % (2) % 2 % (4) % (1) % 17 % 1 % (7) % % GAAP reported sales change 3 % 1 % % (6) % 1 % 27 % 2 % 1 % 2 % GAAP reported sales change (3) % (13) % 11 % 2 % (3) % 5 % (1) % (15) % (4) % Breathing Apparatus 4 % 3 % 5 % Non-deductible non-cash charge related to the recognition of currency translation adjustments (a) 15,359
Cost of products sold 176,056 178,555 Notes receivable, insurance companies 3,586 3,555 Depreciation and amortization 9,326 9,671 Restructuring charges 5,831 Fixed Gas and Flame Detection 2 % 2 % 4 % Tax benefit associated with ASU 2016-09: Improvements to employee share-based payment accounting (2,422) (914)
Gross profit 149,982 147,339 Other current assets 135,523 111,339 Change in working capital and other operating (31,485) (24,807) Currency exchange losses, net 16,961 Plus: Currency translation effects 3 % 2 % 4 % 4 % 3 % 5 % 3 % 5 % 3 % Plus: Currency translation effects % % 3 % 1 % 1 % 3 % 1 % 3 % 1 % Plus: Currency translation effects 8 % 7 % 8 % 8 % 7 % 7 % 7 % 7 % 8 % Portable Gas Detection % (5) % 10 % Subtotal 36,169 31,457 15%
    Total current assets 672,791 656,623   Cash flow from operating activities 1,217 17,353 Product liability expense 2,896 Firefighter Helmets & Protective Apparel % 1 % (6) %
Selling, general and administrative 78,429 80,250 Strategic transaction costs 456 Constant currency sales change 4 % % 6 % % 2 % 22 % 4 % (2) % 3 % Constant currency sales change 3 % 1 % 3 % (5) % 2 % 30 % 3 % 4 % 3 % Constant currency sales change 5 % (6) % 19 % 10 % 4 % 12 % 6 % (8) % 4 % Core Sales 4 % 3 % 6 % Restructuring charges 5,831 5,274
Research and development 13,705 12,548 Property, net 156,099 157,940 Capital expenditures (4,897) (3,241) Adjusted operating income (loss) 54,803 11,040 (7,539) 58,304 Currency exchange losses, net 1,602 2,008
Restructuring charges 5,831 5,274 Operating lease assets, net 52,020 Change in short-term investments (18,941) Adjusted operating margin % 25.6 % 9.8 % 17.9 % Non-Core Sales (2) % 4 % (8) % Product liability expense 2,896 2,824
Currency exchange losses, net (a) 16,961 2,008 Prepaid pension cost 61,500 57,568 Property disposals 12 58 Depreciation and amortization 9,326 Strategic transaction costs 456 94
Product liability expense 2,896 2,824 Goodwill 415,254 413,640   Cash flow used in investing activities (23,826) (3,183) Adjusted EBITDA 60,900 14,171 (7,441) 67,630 Net Sales 3 % 3 % 4 % Asset related losses and other, net 25 17
Operating income 32,160 44,435 Notes receivable, insurance companies, noncurrent 56,368 56,012 Adjusted EBITDA % 28.5 % 12.6 % 20.7 % Income tax expense on adjustments (2,594) (2,534)
Insurance receivable, noncurrent 52,640 56,866 Change in debt 14,091 (9,401) Adjusted earnings $ 44,385 $ 39,140 13%
Interest expense 2,360 4,781 Other noncurrent assets 204,696 209,363 Cash dividends paid (14,652) (13,390) Three Months Ended March 31, 2018
Other income, net (2,579) (2,340)    Total assets $ 1,671,368 $ 1,608,012 Other financing (5,981) (1,825) Sales to external customers $ 209,129 $ 116,765 $ $ 325,894 Adjusted earnings per diluted share $ 1.14 $ 1.01 13%
Total other (income) expense, net (219) 2,441   Cash flow used in financing activities (6,542) (24,616) Operating income 44,435
Liabilities and shareholders' equity Operating margin % 13.6 %
Income before income taxes 32,379 41,994 Notes payable and current portion of long-term debt, net $ 20,155 $ 20,063 Effect of exchange rate changes on cash, cash equivalents and restricted cash (3,221) 1,363 Restructuring charges 5,274
Provision for income taxes 9,003 9,505 Accounts payable 75,524 78,367 Currency exchange losses, net 2,008
Net income 23,376 32,489 Other current liabilities 170,591 183,630 Decrease in cash, cash equivalents and restricted cash $ (32,372) $ (9,083) Product liability expense 2,824
   Total current liabilities 266,270 282,060 Strategic transaction costs 94
Net income attributable to noncontrolling interests (144) (118) Adjusted operating income (loss) 50,086 12,778 (8,229) 54,635
Long-term debt, net 357,304 341,311 Adjusted operating margin % 23.9 % 10.9 % 16.8 %
Net income attributable to MSA Safety Incorporated $ 23,232 $ 32,371 Pensions and other employee benefits 166,294 166,101 Depreciation and amortization 9,671
Noncurrent operating lease liabilities 41,962 Adjusted EBITDA 56,225 16,209 (8,128) 64,306
Earnings per share attributable to MSA Safety Incorporated common shareholders: Deferred tax liabilities 7,613 7,164 Adjusted EBITDA % 26.9 % 13.9 % 19.7 %
Basic $ 0.60 $ 0.85 Product liability and other noncurrent liabilities 168,640 171,857
Diluted $ 0.59 $ 0.83 Total shareholders' equity 663,285 639,519
   Total liabilities and shareholders' equity $ 1,671,368 $ 1,608,012
Basic shares outstanding 38,536 38,216
Diluted shares outstanding 39,084 38,778

 

MSA Safety Incorporated Condensed Consolidated Statement of Income (Unaudited) (In thousands, except per share amounts) (a) Currency exchange losses includes a $15.4 million non-cash charge related to the recognition of currency translation adjustments associated with the closure of MSA's South Africa affiliates. MSA Safety Incorporated Condensed Consolidated Balance Sheet (Unaudited) (In thousands) MSA Safety Incorporated Condensed Consolidated Statement of Cash Flows (Unaudited) (In thousands) MSA Safety Incorporated Segment Information (Unaudited) (In thousands, except percentage amounts) MSA Safety Incorporated Reconciliation of As Reported Financial Measures to Non-GAAP Financial Measures Constant currency revenue growth (Unaudited) MSA Safety Incorporated Reconciliation of As Reported Financial Measures to Non-GAAP Financial Measures Constant currency revenue growth (Unaudited) MSA Safety Incorporated Reconciliation of As Reported Financial Measures to Non-GAAP Financial Measures Constant currency revenue growth (Unaudited) MSA Safety Incorporated Supplemental Segment Information (Unaudited) Summary of constant currency revenue growth by segment and product group 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) (a) Included in Currency exchange losses, net on the Statement of Income.
Three Months Ended March 31, 2019 December 31, 2018 Three Months Ended Americas International Corporate Consolidated Consolidated Americas Segment International Segment Three Months Ended March 31, 2019 Three Months Ended March 31,
March 31, Assets March 31, Three Months Ended March 31, 2019 Consolidated Americas International 2019 2018 %Change
2019 2018 Cash and cash equivalents $ 107,668 $ 140,095 2019 2018 Sales to external customers $ 213,687 $ 112,351 $ $ 326,038 Three Months Ended March 31, 2019 Three Months Ended March 31, 2019 Three Months Ended March 31, 2019 Fall Protection 22 % 30 % 12 %
Trade receivables, net 253,351 245,032 Operating income 32,160 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 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 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 Industrial Head Protection 6 % 3 % 19 % Net income attributable to MSA Safety Incorporated 23,232 32,371 (28)%
Net sales $ 326,038 $ 325,894 Inventories 172,663 156,602 Net income $ 23,376 $ 32,489 Operating margin % 9.9 % GAAP reported sales change 1 % (2) % 2 % (4) % (1) % 17 % 1 % (7) % % GAAP reported sales change 3 % 1 % % (6) % 1 % 27 % 2 % 1 % 2 % GAAP reported sales change (3) % (13) % 11 % 2 % (3) % 5 % (1) % (15) % (4) % Breathing Apparatus 4 % 3 % 5 % Non-deductible non-cash charge related to the recognition of currency translation adjustments (a) 15,359
Cost of products sold 176,056 178,555 Notes receivable, insurance companies 3,586 3,555 Depreciation and amortization 9,326 9,671 Restructuring charges 5,831 Fixed Gas and Flame Detection 2 % 2 % 4 % Tax benefit associated with ASU 2016-09: Improvements to employee share-based payment accounting (2,422) (914)
Gross profit 149,982 147,339 Other current assets 135,523 111,339 Change in working capital and other operating (31,485) (24,807) Currency exchange losses, net 16,961 Plus: Currency translation effects 3 % 2 % 4 % 4 % 3 % 5 % 3 % 5 % 3 % Plus: Currency translation effects % % 3 % 1 % 1 % 3 % 1 % 3 % 1 % Plus: Currency translation effects 8 % 7 % 8 % 8 % 7 % 7 % 7 % 7 % 8 % Portable Gas Detection % (5) % 10 % Subtotal 36,169 31,457 15%
    Total current assets 672,791 656,623   Cash flow from operating activities 1,217 17,353 Product liability expense 2,896 Firefighter Helmets & Protective Apparel % 1 % (6) %
Selling, general and administrative 78,429 80,250 Strategic transaction costs 456 Constant currency sales change 4 % % 6 % % 2 % 22 % 4 % (2) % 3 % Constant currency sales change 3 % 1 % 3 % (5) % 2 % 30 % 3 % 4 % 3 % Constant currency sales change 5 % (6) % 19 % 10 % 4 % 12 % 6 % (8) % 4 % Core Sales 4 % 3 % 6 % Restructuring charges 5,831 5,274
Research and development 13,705 12,548 Property, net 156,099 157,940 Capital expenditures (4,897) (3,241) Adjusted operating income (loss) 54,803 11,040 (7,539) 58,304 Currency exchange losses, net 1,602 2,008
Restructuring charges 5,831 5,274 Operating lease assets, net 52,020 Change in short-term investments (18,941) Adjusted operating margin % 25.6 % 9.8 % 17.9 % Non-Core Sales (2) % 4 % (8) % Product liability expense 2,896 2,824
Currency exchange losses, net (a) 16,961 2,008 Prepaid pension cost 61,500 57,568 Property disposals 12 58 Depreciation and amortization 9,326 Strategic transaction costs 456 94
Product liability expense 2,896 2,824 Goodwill 415,254 413,640   Cash flow used in investing activities (23,826) (3,183) Adjusted EBITDA 60,900 14,171 (7,441) 67,630 Net Sales 3 % 3 % 4 % Asset related losses and other, net 25 17
Operating income 32,160 44,435 Notes receivable, insurance companies, noncurrent 56,368 56,012 Adjusted EBITDA % 28.5 % 12.6 % 20.7 % Income tax expense on adjustments (2,594) (2,534)
Insurance receivable, noncurrent 52,640 56,866 Change in debt 14,091 (9,401) Adjusted earnings $ 44,385 $ 39,140 13%
Interest expense 2,360 4,781 Other noncurrent assets 204,696 209,363 Cash dividends paid (14,652) (13,390) Three Months Ended March 31, 2018
Other income, net (2,579) (2,340)    Total assets $ 1,671,368 $ 1,608,012 Other financing (5,981) (1,825) Sales to external customers $ 209,129 $ 116,765 $ $ 325,894 Adjusted earnings per diluted share $ 1.14 $ 1.01 13%
Total other (income) expense, net (219) 2,441   Cash flow used in financing activities (6,542) (24,616) Operating income 44,435
Liabilities and shareholders' equity Operating margin % 13.6 %
Income before income taxes 32,379 41,994 Notes payable and current portion of long-term debt, net $ 20,155 $ 20,063 Effect of exchange rate changes on cash, cash equivalents and restricted cash (3,221) 1,363 Restructuring charges 5,274
Provision for income taxes 9,003 9,505 Accounts payable 75,524 78,367 Currency exchange losses, net 2,008
Net income 23,376 32,489 Other current liabilities 170,591 183,630 Decrease in cash, cash equivalents and restricted cash $ (32,372) $ (9,083) Product liability expense 2,824
   Total current liabilities 266,270 282,060 Strategic transaction costs 94
Net income attributable to noncontrolling interests (144) (118) Adjusted operating income (loss) 50,086 12,778 (8,229) 54,635
Long-term debt, net 357,304 341,311 Adjusted operating margin % 23.9 % 10.9 % 16.8 %
Net income attributable to MSA Safety Incorporated $ 23,232 $ 32,371 Pensions and other employee benefits 166,294 166,101 Depreciation and amortization 9,671
Noncurrent operating lease liabilities 41,962 Adjusted EBITDA 56,225 16,209 (8,128) 64,306
Earnings per share attributable to MSA Safety Incorporated common shareholders: Deferred tax liabilities 7,613 7,164 Adjusted EBITDA % 26.9 % 13.9 % 19.7 %
Basic $ 0.60 $ 0.85 Product liability and other noncurrent liabilities 168,640 171,857
Diluted $ 0.59 $ 0.83 Total shareholders' equity 663,285 639,519
   Total liabilities and shareholders' equity $ 1,671,368 $ 1,608,012
Basic shares outstanding 38,536 38,216
Diluted shares outstanding 39,084 38,778

 

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 2018 revenues of $1.4 billion, MSA employs approximately 4,800 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 22, 2019. 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.

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SOURCE MSA Safety

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