PR Newswire
PITTSBURGH, Oct. 24, 2023
Increasing full year sales growth outlook to mid-teens, supported by robust double-digit sales and earnings growth in the third quarter
PITTSBURGH, Oct. 24, 2023 /PRNewswire/ -- Global safety equipment and solutions provider MSA Safety Incorporated (NYSE: MSA) today reported financial results for the third quarter of 2023.
Quarterly Highlights
- Achieved quarterly net sales of $447 million, a 17% increase year-over-year, reflecting broad-based strength across MSA's product portfolio and regions.
- Generated GAAP operating income of $94 million, or 21.1% of sales, and adjusted operating income of $101 million, or 22.7% of sales.
- Recorded GAAP net income of $65 million, or $1.65 per diluted share, and adjusted earnings of $70 million, or $1.78 per diluted share.
- Invested $13 million in capital expenditures, repaid $68 million of debt and deployed $18 million for dividends to shareholders.
"During the third quarter, the MSA team continued to deliver strong results," said Nish Vartanian, MSA Safety Chairman and Chief Executive Officer. "Growth was broad-based across our key product platforms and regions, a testament to the resiliency of our business, our differentiated safety products and solutions, and strategic exposure to attractive end markets and long-term secular trends. Our ability to create sustainable growth is also supported by significant competitive advantages such as our purpose-driven culture, best-in-class innovation and relentless focus on solving our customers' safety challenges."
Mr. Vartanian added, "We remain encouraged by our progress and are excited about the opportunities ahead. With our singular mission of safety, I believe we are well-positioned to continue our strong performance and deliver value to our shareholders in the fourth quarter and beyond."
Financial Highlights and Balance Sheet
Financial Highlights | Three Months Ended | |||||
($ millions, except per share data) | 2023 | 2022 | % Change(a) | |||
Net Sales | $ 447 | $ 382 | 17 % | |||
Operating Income | 94 | 64 | 46 % | |||
Adjusted Operating Income | 101 | 75 | 35 % | |||
Net Income | 65 | 45 | 45 % | |||
Diluted EPS | 1.65 | 1.14 | 45 % | |||
Adjusted Earnings | 70 | 57 | 23 % | |||
Adjusted Diluted EPS | 1.78 | 1.45 | 23 % | |||
(a) Percentage change may not calculate exactly due to rounding. | ||||||
Lee McChesney, MSA Safety Senior Vice President and Chief Financial Officer, commented, "Our team's disciplined execution and commitment to continuous improvement, enabled by the MSA Business System, resulted in healthy margin expansion and robust cash generation, as well as double-digit sales growth during the third quarter. We continued to strengthen our financial position, ending the quarter at 1.3x net leverage, an improvement from 1.7x in the prior quarter. We enter the balance of the year with confidence in our capacity to deliver on our financial commitments, and based on our robust year-to-date performance, we are increasing our sales growth outlook to the mid-teens for the full year 2023."
Conference Call
MSA Safety will host a conference call on Wednesday, October 25, 2023 at 10:00 a.m. Eastern Time to discuss its third 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 | |||||||
Three Months Ended | Nine Months Ended | ||||||
2023 | 2022 | 2023 | 2022 | ||||
Net sales | $ 446,728 | $ 381,694 | $ 1,292,290 | $ 1,084,699 | |||
Cost of products sold | 227,967 | 212,299 | 678,335 | 608,120 | |||
Gross profit | 218,761 | 169,395 | 613,955 | 476,579 | |||
Selling, general and administrative | 102,175 | 82,753 | 289,602 | 247,378 | |||
Research and development | 17,682 | 14,416 | 48,906 | 43,017 | |||
Restructuring charges | 3,285 | 899 | 8,382 | 3,146 | |||
Currency exchange losses, net | 1,496 | 2,979 | 8,781 | 4,788 | |||
Loss on divestiture of MSA LLC | — | — | 129,211 | — | |||
Product liability expense | — | 4,035 | 3 | 9,733 | |||
Operating income | 94,123 | 64,313 | 129,070 | 168,517 | |||
Interest expense | 12,498 | 5,962 | 37,149 | 14,158 | |||
Other income, net | (6,037) | (2,359) | (15,487) | (15,121) | |||
Total other expense (income), net | 6,461 | 3,603 | 21,662 | (963) | |||
Income before income taxes | 87,662 | 60,710 | 107,408 | 169,480 | |||
Provision for income taxes | 22,406 | 15,804 | 125,235 | 41,339 | |||
Net income (loss) | $ 65,256 | $ 44,906 | $ (17,827) | $ 128,141 | |||
Earnings (loss) per share attributable to common | |||||||
Basic | $ 1.66 | $ 1.15 | $ (0.46) | $ 3.26 | |||
Diluted | $ 1.65 | $ 1.14 | $ (0.46) | $ 3.25 | |||
Basic shares outstanding | 39,303 | 39,172 | 39,267 | 39,243 | |||
Diluted shares outstanding | 39,450 | 39,299 | 39,267 | 39,414 | |||
MSA Safety Incorporated | |||
September 30, | December 31, | ||
Assets | |||
Cash and cash equivalents | $ 164,499 | $ 162,902 | |
Trade receivables, net | 294,907 | 297,028 | |
Inventories | 324,077 | 338,316 | |
Notes receivable, insurance companies | — | 5,931 | |
Other current assets | 68,336 | 75,949 | |
Total current assets | 851,819 | 880,126 | |
Property, plant and equipment, net | 205,650 | 207,552 | |
Prepaid pension cost | 151,400 | 141,643 | |
Goodwill | 620,343 | 620,622 | |
Intangible assets, net | 268,321 | 281,853 | |
Notes receivable, insurance companies, noncurrent | — | 38,695 | |
Insurance receivable, noncurrent | — | 110,300 | |
Other noncurrent assets | 96,802 | 96,185 | |
Total assets | $ 2,194,335 | $ 2,376,976 | |
Liabilities and shareholders' equity | |||
Notes payable and current portion of long-term debt, net | $ 26,198 | $ 7,387 | |
Accounts payable | 108,554 | 112,532 | |
Other current liabilities | 190,649 | 225,946 | |
Total current liabilities | 325,401 | 345,865 | |
Long-term debt, net | 715,814 | 565,445 | |
Pensions and other employee benefits | 137,563 | 137,810 | |
Deferred tax liabilities | 102,155 | 31,881 | |
Product liability and other noncurrent liabilities | 44,676 | 372,234 | |
Total shareholders' equity | 868,726 | 923,741 | |
Total liabilities and shareholders' equity | $ 2,194,335 | $ 2,376,976 | |
MSA Safety Incorporated | |||||||
Three Months Ended | Nine Months Ended | ||||||
2023 | 2022 | 2023 | 2022 | ||||
Net income (loss) | $ 65,256 | $ 44,906 | $ (17,827) | $ 128,141 | |||
Depreciation and amortization | 15,504 | 13,797 | 44,965 | 41,883 | |||
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 | 44,024 | 5,224 | 48,413 | (66,121) | |||
Cash flow from (used in) operating activities | 124,784 | 63,927 | (66,057) | 103,903 | |||
Capital expenditures | (12,657) | (8,948) | (30,979) | (28,753) | |||
Change in short-term investments | — | 10,113 | — | 24,320 | |||
Property disposals and other investing | 16 | 38 | 2,690 | 38 | |||
Cash flow (used in) from investing activities | (12,641) | 1,203 | (28,289) | (4,395) | |||
Change in debt | (68,250) | (10,000) | 168,648 | 27,000 | |||
Cash dividends paid | (18,485) | (18,046) | (54,999) | (53,447) | |||
Other financing | 653 | 1,656 | (3,142) | (29,716) | |||
Cash flow (used in) from financing activities | (86,082) | (26,390) | 110,507 | (56,163) | |||
Effect of exchange rate changes on cash, cash equivalents and restricted cash | (8,501) | (13,024) | (14,152) | (23,498) | |||
Increase in cash, cash equivalents and restricted cash | $ 17,560 | $ 25,716 | $ 2,009 | $ 19,847 | |||
MSA Safety Incorporated | |||||||
Americas | International | Corporate | Consolidated | ||||
Three Months Ended September 30, 2023 | |||||||
Net sales to external customers | $ 314,273 | $ 132,455 | $ — | $ 446,728 | |||
Operating income | 94,123 | ||||||
Operating margin % | 21.1 % | ||||||
Restructuring charges | 3,285 | ||||||
Currency exchange losses, net | 1,496 | ||||||
Amortization of acquisition-related intangible | 2,315 | ||||||
Transaction costs (a) | 78 | ||||||
Adjusted operating income (loss) | 93,918 | 22,577 | (15,198) | 101,297 | |||
Adjusted operating margin % | 29.9 % | 17.0 % | 22.7 % | ||||
Depreciation and amortization | 13,189 | ||||||
Adjusted EBITDA | 103,157 | 26,289 | (14,960) | 114,486 | |||
Adjusted EBITDA margin % | 32.8 % | 19.8 % | 25.6 % | ||||
Three Months Ended September 30, 2022 | |||||||
Net sales to external customers | $ 276,082 | $ 105,612 | $ — | $ 381,694 | |||
Operating income | 64,313 | ||||||
Operating margin % | 16.8 % | ||||||
Restructuring charges | 899 | ||||||
Currency exchange losses, net | 2,979 | ||||||
Product liability expense | 4,035 | ||||||
Amortization of acquisition-related intangible | 2,279 | ||||||
Transaction costs (a) | 620 | ||||||
Adjusted operating income (loss) | 75,088 | 8,448 | (8,411) | 75,125 | |||
Adjusted operating margin % | 27.2 % | ||||||
