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MSA Announces Record Fourth Quarter Results
Strength in core products drives record quarterly sales and earnings

PITTSBURGH, Feb. 16, 2015 /PRNewswire/ -- Global safety equipment manufacturer MSA Safety Incorporated (NYSE: MSA) today reported results for the fourth quarter and full year of 2014.

Quarterly Highlights

  • Revenue was a record $311 million, up 7 percent from the fourth quarter of 2013. Income from continuing operations was a record $33 million or $0.88 per basic share. Adjusted earnings were a record $35 million, or $0.94 per basic share, increasing 24 percent.
  • Quarterly local currency revenue from core product lines increased 13 percent, driven by strong shipping activity across all core product categories.
  • Operating margin of 16.4 percent of sales reflects a 220 basis point increase from a year ago.
  • Free cash flow was $47 million or 143 percent of net income, increasing 31 percent compared to the same quarter a year ago.

Annual Highlights

  • Revenue was $1.1 billion, up 2 percent from 2013. Income from continuing operations was $87 million or $2.34 per basic share. Adjusted earnings were $95 million, or $2.55 per basic share, decreasing 1 percent compared to a year ago.
  • Local currency revenue from core product lines increased 8 percent excluding sales of self-contained breathing apparatus (SCBA), which were hampered for most of the year by regulatory delays in the U.S.
  • Free cash flow of $73 million, or 83 percent of net income, helped to fund further reductions in long-term debt and dividend payments to shareholders.

Comments from Management

"Our fourth quarter reflected a very strong finish to what turned out to be a most challenging year," said William M. Lambert, MSA President and CEO. "In addition to clearing certification hurdles and beginning shipments of our new and revolutionary G1 SCBA to the fire service market, we recognized solid growth in our core products and drove record earnings in the quarter."

Sales of core products represented 74 percent of total revenue in the quarter and increased 13 percent compared to the same period a year ago. "While a higher level of large fixed gas and flame detection orders was a leader of growth in the quarter, we saw strong shipment activity across each of our core product categories," Mr. Lambert said. He also commented on MSA's continued success in introducing innovative new core products, explaining that 36 percent of quarterly core sales were from products developed within the last five years.

"While our fourth quarter results and a robust SCBA backlog certainly provide momentum as we transition into 2015, headwinds associated with weakness in commodity-based end markets, a stronger U.S. dollar and challenging conditions across key emerging markets somewhat temper my optimism moving forward," Mr. Lambert said. "As we conclude our centennial year in business and turn our attention to the next chapter of MSA's story, we will maintain our long-standing commitment to driving profitable growth and increasing shareholder value, even as we navigate through inevitable periods of uncertainty," Mr. Lambert concluded.

MSA Safety Incorporated
Condensed Consolidated Statement of Income (Unaudited)
(In thousands, except earnings per share)



Three Months Ended
December 31,


Twelve Months Ended
December 31,


2014



2013



2014



2013














Net sales

$

311,188



$

291,429



$

1,133,885



$

1,112,058


Other income (loss), net

1,779



(1,190)



2,765



(175)



312,967



290,239



1,136,650



1,111,883














Cost of products sold

171,047



161,378



618,536



615,213


Selling, general and administrative

77,420



77,109



322,797



309,206


Research and development

11,643



11,578



48,247



45,858


Restructuring and other charges

2,118



1,402



8,515



5,344


Interest expense

2,234



2,526



9,851



10,677


Currency exchange losses, net

1,151



1,304



1,509



5,452



265,613



255,297



1,009,455



991,750














Income before income taxes

47,354



34,942



127,195



120,133


Provision for income taxes

14,988



10,470



41,044



35,145


Income from continuing operations

32,366



24,472



86,151



84,988


(Loss) income from discontinued operations

(56)



614



1,776



3,061


Net income

32,310



25,086



87,927



88,049


Net loss attributable to noncontrolling interests

377



325



579



198


Net income attributable to MSA Safety
Incorporated

32,687



25,411



88,506



88,247


























Income from continuing operations

33,119



24,929



87,447



85,858


(Loss) income from discontinued operations

(432)



482



1,059



2,389


Net income attributable to MSA Safety
Incorporated

32,687



25,411



88,506



88,247














Earnings Per Share Attributable to MSA
Safety Incorporated












Basic












Income from continuing operations

$

0.88



$

0.67



$

2.34



$

2.31


(Loss) income from discontinued operations

$

(0.01)



$

0.01



$

0.03



$

0.06


  Net income

$

0.87



$

0.68



$

2.37



$

2.37














Diluted












Income from continuing operations

$

0.87



$

0.66



$

2.30



$

2.28


(Loss) income from discontinued operations

$

(0.01)



$

0.01



$

0.03



$

0.06


  Net income

$

0.86



$

0.67



$

2.33



$

2.34














Basic shares outstanding

37,216



36,939



37,138



36,868


Diluted shares outstanding

37,786



37,487



37,728



37,450


 

MSA Safety Incorporated
Condensed Consolidated Balance Sheet (Unaudited)
(In thousands)



December 31, 2014


December 31, 2013

Current assets






  Cash and cash equivalents

$

105,998



$

96,265


  Trade receivables, net

211,440



200,364


  Inventories

122,954



136,837


  Other current assets

57,477



67,500


   Total current assets

497,869



500,966








Property, net

151,352



152,755


Prepaid pension cost

75,017



121,054


Goodwill

252,520



260,134


Other noncurrent assets

288,034



199,361


   Total

1,264,792



1,234,270








Current liabilities






  Notes payable and current portion of long-term debt

$

6,700



$

7,500


  Accounts payable

70,210



66,902


  Other current liabilities

157,147



117,162


   Total current liabilities

234,057



191,564








Long-term debt

245,000



260,667


Pensions and other employee benefits

174,598



152,084


Deferred tax liabilities

26,306



49,621


Other noncurrent liabilities

46,198



7,987


Equity

538,633



572,347


   Total

1,264,792



1,234,270


 

MSA Safety Incorporated
Condensed Consolidated Statement of Cash Flows (Unaudited)
(In thousands)



Three Months Ended
December 31,


Twelve Months Ended
December 31,


2014



2013



2014



2013














Net income

$

32,310



$

25,086



$

87,927



$

88,049


Depreciation and amortization

7,610



7,372



29,921



30,764


Change in working capital and other operating

16,309



13,617



(10,817)



(8,032)


  Cash from operations

56,229



46,075



107,031



110,781














Capital expenditures

(9,350)



(10,303)



(33,583)



(36,517)


Property disposals

3,385



27



3,385



1,360


Other investing

(500)





(500)




  Cash from investing

(6,465)



(10,276)



(30,698)



(35,157)














Change in debt

(25,634)



(21,288)



(16,463)



(11,004)


Cash dividends paid

(11,543)



(11,300)



(45,586)



(43,994)


Other financing

(82)



(2,061)



3,931



(3,242)


  Cash from financing

(37,259)



(34,649)



(58,118)



(58,240)














Exchange rate changes

(3,862)



(895)



(8,482)



(3,837)














Increase in cash

8,643



255



9,733



13,547


















 

MSA Safety Incorporated
Segment Information (Unaudited)
(In thousands)



Three Months Ended
December 31,


Twelve Months Ended
December 31,


2014



2013



2014



2013














  Net sales












  North America

$

147,592



$

130,360



$

547,739



$

533,161


  Europe

92,012



86,579



321,618



293,092


  International

71,584



74,490



264,528



285,805


   Total

311,188



291,429



1,133,885



1,112,058














  Net income (loss)












  North America

$

24,215



$

17,373



$

73,874



$

62,835


  Europe

9,159



8,832



22,187



20,204


  International

6,194



6,371



15,234



27,206


  Reconciling Items

(6,449)



(7,647)



(23,848)



(24,387)


Income from continuing operations

33,119



24,929



87,447



85,858


  (Loss) income from discontinued operations

(432)



482



1,059



2,389


   Total

32,687



25,411



88,506



88,247


MSA's sales are allocated to each country based primarily on the destination of the end-customer. Effective January 1, 2014, the General Monitors business has been fully integrated into MSA. As such, sales made by General Monitors companies now follow a similar allocation methodology by which sales are allocated to each country based on the destination of the end-customer and the value added to that order. In prior years, sales made by General Monitors companies were reported as domestic sales based on the country from which the product was shipped. The 2013 results presented above have been restated to reflect this change in allocation methodology.

MSA Safety Incorporated
Supplemental Segment Information (Unaudited)
Local Currency Revenue Growth



Three Months Ended December 31, 2014


Consolidated


North America


Europe


International













Fixed Gas and Flame Detection

24

%


35

%


9

%


18

%

Fall Protection

19

%


19

%


27

%


20

%

Breathing Apparatus

8

%


28

%


9

%


(22)

%

Portable Gas Detection

8

%


(1)

%


8

%


32

%

Head Protection

5

%


8

%


25

%


(5)

%

Core Sales

13

%


20

%


10

%


2

%













Non-Core Sales

8

%


(7)

%


28

%


4

%













Net Sales

11

%


14

%


15

%


3

%


















































Twelve Months Ended December 31, 2014


Consolidated


North America


Europe


International













Fixed Gas and Flame Detection

10

%


11

%


16

%


(7)

%

Fall Protection

5

%


1

%


29

%


14

%

Breathing Apparatus

(7)

%


(11)

%


5

%


(17)

%

Portable Gas Detection

9

%


7

%


3

%


21

%

Head Protection

5

%


10

%


6

%


(4)

%

Core Sales

4

%


4

%


9

%


(3)

%













Non-Core Sales

5

%


(1)

%


13

%


2

%













Net Sales

4

%


3

%


10

%


(1)

%

























 

MSA Safety Incorporated
Reconciliation of As Reported Financial Measures to Non-GAAP Financial Measures
Adjusted Earnings / Earnings per Share (Unaudited)
(In thousands, except per share amounts)


















Three Months Ended
December 31,




Twelve Months Ended
December 31,




2014



2013



%

Change


2014



2013



%
Change

















Net income attributable to
MSA Safety Incorporated

$

32,687



$

25,411



28.6%


$

88,506



$

88,247



0.3%





















Less: (Loss) income from
discontinued operations

(432)



482





1,059



2,389




















Income from continuing operations

33,119



24,929



32.9%


87,447



85,858



1.9%

















Restructuring charges

2,118



1,402





8,515



5,344




















Self-insured legal settlements
and defense costs

1,607



317





3,893



1,697




















Currency exchange losses,
net

1,151



1,304





1,509



5,452




















Asset related (gains) / losses

(1,731)



1,557





(2,116)



957




















Income tax (expense)

(997)



(1,374)





(3,812)



(3,941)




















Adjusted earnings

35,267



28,135



25.3%


95,436



95,367



0.1%

















Adjusted earnings per
basic share

$

0.94



$

0.76



23.7%


$

2.55



$

2.57



(0.8)%

Management believes that adjusted earnings and adjusted earnings per share are useful measures for investors when analyzing ongoing operating trends. There can be no assurances that additional special items will not occur in future periods, nor that MSA's definition of adjusted earnings is consistent with that of other companies. As such, management believes that it is appropriate to consider both net income determined on a GAAP basis as well as adjusted earnings.

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,


2014



2013



2014



2013














Cash from operations

$

56,229



$

46,075



$

107,031



$

110,781


Capital expenditures

(9,350)



(10,303)



(33,583)



(36,517)














Free cash flow

46,879



35,772



73,448



74,264


















Management believes that free cash flow is a meaningful measure for investors, as 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.

About MSA:  

Established in 1914, MSA Safety Incorporated is the global leader in the development, manufacture and supply of safety products that protect people and facility infrastructures. Many MSA products integrate a combination of electronics, mechanical systems and advanced materials to protect users against hazardous or life-threatening situations.  The company's comprehensive line of products is used by workers around the world in a broad range of markets, including the oil, gas and petrochemical industry, the fire service, the construction industry, mining, and the military. The company's core products include self-contained breathing apparatus, fixed gas and flame detection systems, portable gas detection instruments, head protection products and fall protection devices. With 2014 revenues of $1.1 billion, MSA employs approximately 5,000 people worldwide. The company is headquartered north of Pittsburgh in Cranberry Township, Pa., and has manufacturing operations in the United States, Europe, Asia and Latin America. With more than 40 international locations, MSA realizes approximately half of its revenue from outside North America. For more information, visit MSA's website at www.MSAsafety.com.

Cautionary Statement Regarding Forward-Looking Statements:

Except for historical information, certain matters discussed in this press release may be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include but are not limited to all projections and anticipated levels of future performance. Forward looking statements involve risks, uncertainties and other factors that may cause our actual results to differ materially from those discussed herein. Any number of factors could cause actual results to differ materially from projections or forward looking statements, including without limitation global economic conditions, spending patterns of government agencies, competitive pressures, product liability claims, the success of new product introductions, foreign exchange rate fluctuations and the risks of doing business in foreign countries. A full listing of these risks, uncertainties and other factors are detailed from time-to-time in our filings with the United States Securities and Exchange Commission ("SEC"), including our most recent Form 10-K filed on February 24, 2014. You are strongly urged to review all such filings for a more detailed discussion of such risks and uncertainties.  MSA's SEC filings are readily obtainable at no charge at www.sec.gov, as well as on its own investor relations website at http://investors.MSAsafety.com . MSA undertakes no duty to publicly update any forward looking statements contained herein, except as required by law.

Non-GAAP Financial Measures:  

This earnings release includes certain non-GAAP financial measures. These financial measures include adjusted earnings, adjusted earnings per basic share and free cash flow. 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-record-fourth-quarter-results-300036682.html

SOURCE MSA

For further information: Media Relations Contact: Mark Deasy (724) 741-8570, or Investor Relations Contact: Ken Krause (724) 741-8534