PR Newswire
PITTSBURGH, July 31, 2023
Strong double-digit sales and earnings growth; increasing full year sales growth outlook to low double-digits
PITTSBURGH, July 31, 2023 /PRNewswire/ -- Global safety equipment and solutions provider MSA Safety Incorporated (NYSE: MSA) today reported financial results for the second quarter of 2023.
Quarterly Highlights
- Achieved quarterly net sales of $447 million, a 20% increase year-over-year, reflecting broad-based strength across MSA's product portfolio and regions.
- Generated GAAP operating income of $95 million, or 21.2% of sales, and adjusted operating income of $104 million, or 23.2% of sales.
- Recorded GAAP net income of $67 million, or $1.70 per diluted share, and adjusted earnings of $72 million, or $1.83 per diluted share.
- Invested $10 million in capital expenditures, repaid $59 million of debt and deployed $18 million for dividends to shareholders.
"Our team delivered excellent results in the second quarter, as we built on the positive momentum from the start of the year to achieve strong quarterly sales and healthy growth," said Nish Vartanian, MSA Safety Chairman and Chief Executive Officer. "Our results demonstrate the strength of our diversified portfolio, leading global market positions and the resiliency of our end markets. Our purposeful investments in talent, innovation and strategic acquisitions have helped to enhance the breadth and depth of our portfolio, serving as a sustainable foundation for ongoing profitable growth."
Commenting on the recent promotions of Steve Blanco to President and Chief Operating Officer, Stephanie Sciullo to President of MSA's Americas segment and Rick Roda to Chief Legal Officer, Mr. Vartanian added, "I am excited about the promotions of Steve, Stephanie and Rick to their new roles, which recognizes their significant contributions to MSA's success and my confidence in their ability to create positive impacts and deliver results going forward."
Mr. Vartanian concluded, "As we move into the second half of the year, we will continue to emphasize operational and commercial excellence, supported by the MSA Business System. We are focused on providing our customers with innovative safety products and solutions, capturing growth from end markets aligned with secular growth trends and delivering long-term value creation for all our stakeholders."
Financial Highlights and Balance Sheet
Financial Highlights | Three Months Ended June 30, | |||||
($ millions, except per share data) | 2023 | 2022 | % Change(a) | |||
Net Sales | $ 447 | $ 372 | 20 % | |||
Operating Income | 95 | 62 | 54 % | |||
Adjusted Operating Income | 104 | 66 | 58 % | |||
Net Income | 67 | 48 | 41 % | |||
Diluted EPS | 1.70 | 1.21 | 40 % | |||
Adjusted Earnings | 72 | 51 | 42 % | |||
Adjusted Diluted EPS | 1.83 | 1.29 | 42 % | |||
(a) Percentage change may not calculate exactly due to rounding. | ||||||
Lee McChesney, MSA Safety Senior Vice President and Chief Financial Officer, commented, "Our team executed well in the second quarter and delivered robust growth, margin expansion and cash flow generation. We strengthened our balance sheet position and ended the quarter with 1.7x net leverage, a sequential improvement from 2.0x in the prior quarter. Looking ahead, we are confident in our ability to deliver on our financial commitments, and based on the strong first half performance, we are increasing our sales growth outlook to low double-digits for the full year and remain focused on delivering healthy margins and cash flow generation."
Conference Call
MSA Safety will host a conference call on Tuesday, August 1, 2023 at 10:00 a.m. Eastern Time to discuss its second quarter 2023 results and outlook. The call and an accompanying slide presentation will be webcast at http://investors.msasafety.com/ under the "News and Events" tab, subheading "Events & Presentations." Investors and interested parties can also dial into the call at 1-844-854-4415 (Toll Free) or 1-412-902-6599 (International). When prompted, please instruct the operator to be joined into the MSA Safety Incorporated conference call. A replay of the conference call will be available at http://investors.msasafety.com/ shortly after the conclusion of the presentation and will be available for the next 90 days.
MSA Safety Incorporated Condensed Consolidated Statements of Operations (Unaudited) (In thousands, except per share amounts) | |||||||
Three Months Ended | Six Months Ended | ||||||
2023 | 2022 | 2023 | 2022 | ||||
Net sales | $ 447,299 | $ 372,313 | $ 845,561 | $ 703,005 | |||
Cost of products sold | 233,503 | 207,913 | 450,367 | 395,821 | |||
Gross profit | 213,796 | 164,400 | 395,194 | 307,184 | |||
Selling, general and administrative | 96,336 | 86,076 | 187,427 | 164,625 | |||
Research and development | 15,992 | 15,268 | 31,224 | 28,601 | |||
Restructuring charges | 3,350 | 57 | 5,097 | 2,247 | |||
Currency exchange losses (gains), net | 3,110 | (1,463) | 7,285 | 1,809 | |||
Loss on divestiture of MSA LLC | — | — | 129,211 | — | |||
Product liability expense | — | 2,926 | 3 | 5,698 | |||
Operating income | 95,008 | 61,536 | 34,947 | 104,204 | |||
Interest expense | 13,175 | 4,578 | 24,651 | 8,196 | |||
Other income, net | (5,650) | (6,419) | (9,450) | (12,762) | |||
Total other expense (income), net | 7,525 | (1,841) | 15,201 | (4,566) | |||
Income before income taxes | 87,483 | 63,377 | 19,746 | 108,770 | |||
Provision for income taxes | 20,393 | 15,684 | 102,829 | 25,535 | |||
Net income (loss) | $ 67,090 | $ 47,693 | $ (83,083) | $ 83,235 | |||
Earnings (loss) per share attributable to common shareholders: | |||||||
Basic | $ 1.71 | $ 1.21 | $ (2.12) | $ 2.12 | |||
Diluted | $ 1.70 | $ 1.21 | $ (2.12) | $ 2.11 | |||
Basic shares outstanding | 39,274 | 39,266 | 39,249 | 39,279 | |||
Diluted shares outstanding | 39,409 | 39,421 | 39,249 | 39,472 | |||
MSA Safety Incorporated Condensed Consolidated Balance Sheets (Unaudited) (In thousands) | |||
June 30, 2023 | December 31, 2022 | ||
Assets | |||
Cash and cash equivalents | $ 146,897 | $ 162,902 | |
Trade receivables, net | 302,201 | 297,028 | |
Inventories | 337,954 | 338,316 | |
Notes receivable, insurance companies | — | 5,931 | |
Other current assets | 63,328 | 75,949 | |
Total current assets | 850,380 | 880,126 | |
Property, plant and equipment, net | 206,066 | 207,552 | |
Prepaid pension cost | 148,172 | 141,643 | |
Goodwill | 626,262 | 620,622 | |
Intangible assets, net | 275,305 | 281,853 | |
Notes receivable, insurance companies, noncurrent | — | 38,695 | |
Insurance receivable, noncurrent | — | 110,300 | |
Other noncurrent assets | 92,966 | 96,185 | |
Total assets | $ 2,199,151 | $ 2,376,976 | |
Liabilities and shareholders' equity | |||
Notes payable and current portion of long-term debt, net | $ 26,492 | $ 7,387 | |
Accounts payable | 107,046 | 112,532 | |
Other current liabilities | 166,412 | 225,946 | |
Total current liabilities | 299,950 | 345,865 | |
Long-term debt, net | 787,527 | 565,445 | |
Pensions and other employee benefits | 139,783 | 137,810 | |
Deferred tax liabilities | 102,744 | 31,881 | |
Product liability and other noncurrent liabilities | 38,016 | 372,234 | |
Total shareholders' equity | 831,131 | 923,741 | |
Total liabilities and shareholders' equity | $ 2,199,151 | $ 2,376,976 | |
MSA Safety Incorporated Condensed Consolidated Statements of Cash Flows (Unaudited) (In thousands) | |||||||
Three Months Ended | Six Months Ended June 30, | ||||||
2023 | 2022 | 2023 | 2022 | ||||
Net income (loss) | $ 67,090 | $ 47,693 | $ (83,083) | $ 83,235 | |||
Depreciation and amortization | 14,889 | 13,922 | 29,461 | 28,087 | |||
Tax-effected loss on divestiture of MSA LLC | — | — | 199,578 | — | |||
Contribution on divestiture of MSA LLC | — | — | (341,186) | — | |||
Change in working capital and other operating | 13,089 | (46,162) | 4,389 | (71,346) | |||
Cash flow from (used in) operating activities | 95,068 | 15,453 | (190,841) | 39,976 | |||
Capital expenditures | (9,920) | (11,829) | (18,322) | (19,805) | |||
Change in short-term investments | — | 5,180 | — | 14,207 | |||
Property disposals and other investing | 2,639 | — | 2,674 | — | |||
Cash flow used in investing activities | (7,281) | (6,649) | (15,648) | (5,598) | |||
Change in debt | (58,514) | 32,000 | 236,898 | 37,000 | |||
Cash dividends paid | (18,469) | (18,109) | (36,514) | (35,401) | |||
Other financing | 801 | (27,764) | (3,795) | (31,372) | |||
Cash flow (used in) from financing activities | (76,182) | (13,873) | 196,589 | (29,773) | |||
Effect of exchange rate changes on cash, cash equivalents and restricted cash | (3,364) | (7,113) | (5,651) | (10,474) | |||
Increase (decrease) in cash, cash equivalents and restricted cash | $ 8,241 | $ (12,182) | $ (15,551) | $ (5,869) | |||
MSA Safety Incorporated Segment Information (Unaudited) (In thousands, except percentage amounts) | |||||||
Americas | International | Corporate | Consolidated | ||||
Three Months Ended June 30, 2023 | |||||||
Net sales to external customers | $ 308,378 | $ 138,921 | $ — | $ 447,299 | |||
Operating income | 95,008 | ||||||
Operating margin % | 21.2 % | ||||||
Restructuring charges | 3,350 | ||||||
Currency exchange losses, net | 3,110 | ||||||
Amortization of acquisition-related intangible assets | 2,315 | ||||||
Adjusted operating income (loss) | 94,816 | 21,743 | (12,776) | 103,783 | |||
Adjusted operating margin % | 30.7 % | 15.7 % | 23.2 % | ||||
Depreciation and amortization | 12,574 | ||||||
Adjusted EBITDA | 103,977 | 24,949 | (12,569) | 116,357 | |||
Adjusted EBITDA margin % | 33.7 % | 18.0 % | 26.0 % | ||||
Three Months Ended June 30, 2022 | |||||||
Net sales to external customers | $ 252,386 | $ 119,927 | $ — | $ 372,313 | |||
Operating income | 61,536 | ||||||
Operating margin % | 16.5 % | ||||||
Restructuring charges | 57 | ||||||
Currency exchange gains, net | (1,463) | ||||||
Product liability expense | 2,926 | ||||||
Amortization of acquisition-related intangible assets | 2,318 | ||||||
Transaction costs (a) | 239 | ||||||
Adjusted operating income (loss) | 57,141 | 17,207 | (8,735) | ||||
