Latest Press Releases

MSA Safety Announces Fourth Quarter and Full Year 2022 Results

Record quarterly sales and elevated backlog support healthy outlook for 2023

PITTSBURGH, Feb. 15, 2023 /PRNewswire/ -- Global safety equipment manufacturer MSA Safety Incorporated (NYSE: MSA) today reported financial results for the fourth quarter and year ended December 31, 2022.

Quarterly Highlights

(All comparisons against the fourth quarter of 2021 unless otherwise noted.)

  • Delivered record net sales of $443 million, an increase of 8% on a reported basis and 11% on a constant currency basis.
  • Generated GAAP operating income of $71 million, or 15.9% of sales, and adjusted operating income of $96 million, or 21.6% of sales.
  • Recorded GAAP earnings of $51 million or $1.31 per diluted share and adjusted earnings of $71 million or $1.80 per diluted share.
  • Achieved operating cash flow of $54 million. Free cash flow was $40 million, representing 77% of net income. MSA invested $14 million for capital expenditures, repaid $40 million of debt and returned $18 million to shareholders through dividends.

Annual Highlights

(All comparisons against the full year 2021 unless otherwise noted.)

  • Delivered record net sales of $1.53 billion, an increase of 9% on a reported basis and 12% on a constant currency basis.
  • Generated GAAP operating income of $239 million, or 15.7% of sales, and adjusted operating income of $290 million, or 19.0% of sales.
  • Recorded GAAP earnings of $180 million or $4.56 per diluted share, and adjusted earnings of $223 million or $5.65 per diluted share.
  • Achieved operating cash flow of $157 million. Free cash flow was $115 million, representing 64% of net income. MSA invested $43 million for capital expenditures, repaid $13 million of debt and returned more than $100 million to shareholders through dividends and share repurchases.

"2022 was a robust year for MSA Safety, with exceptional results in the fourth quarter," said Nish Vartanian, MSA Safety Chairman, President and Chief Executive Officer. "Strength across our product portfolio and healthy customer demand helped us deliver record sales and strong operating performance. Our outstanding team was able to navigate the challenging economic environment and executed well throughout the year. This execution, combined with our focus on advancing our mission and delivering innovative safety technologies and solutions to our customers, resulted in key wins and market share gains."

Mr. Vartanian added, "We enter 2023 with strong momentum, and continue to see demand and growth opportunities across our markets. Our business has been cycle-tested and has proven resilient due to our strategic portfolio composition and diverse end markets and geographies.  Additionally, our elevated backlog could help cushion an economic slowdown. Against that backdrop, I am confident in our ability to deliver value for our customers, shareholders, and other stakeholders as we move forward in 2023."

Financial Highlights and Balance Sheet

Financial Highlights


Three Months Ended
December 31,


Twelve Months Ended
December 31,

($ millions, except per share data)


2022


2021


%
Change (a)


2022


2021


%
Change (a)

Net Sales


$        443


$        410


8 %


$     1,528


$     1,400


9 %

Operating Income (Loss)


71


(89)


179 %


239


23


950 %

Adjusted Operating Income


96


80


20 %


290


241


21 %

Net Income (Loss)


51


(61)


184 %


180


21


742 %

Diluted EPS


1.31


(1.57)


183 %


4.56


0.54


743 %

Adjusted Earnings


71


66


7 %


223


185


20 %

Adjusted Diluted EPS


1.80


1.67


8 %


5.65


4.68


21 %


(a) Percentage change may not calculate exactly due to rounding.

 

MSA maintained a healthy balance sheet during the fourth quarter and full year 2022, with solid free cash flow and ample liquidity. Net leverage was 1.2x adjusted EBITDA at December 31, 2022. On a pro forma basis for the closing of the legacy liability subsidiary divestiture on January 5, 2023, net leverage would have been 2.2x adjusted EBITDA.

"Our fourth quarter performance was a strong finish to the year with double-digit organic sales growth and 210 basis points of adjusted operating margin expansion. Strong volume growth, strategic pricing, favorable mix and cost discipline resulted in a robust incremental operating margin and solid cash flow generation. While we expect the operating environment to remain challenging as we progress through 2023, we remain focused on delivering full year growth in the mid-single digits, healthy incremental margins and robust cash flow conversion," said Lee McChesney, MSA Safety Senior Vice President and Chief Financial Officer.

Conference Call

MSA Safety will host a conference call on Thursday, February 16, 2023 at 10:00 a.m. Eastern Time to discuss the fourth quarter and full year 2022 results. 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 Statement of Income (Unaudited)
(In thousands, except per share amounts)



Three Months Ended
December 31,


Twelve Months
Ended December 31,


2022


2021


2022


2021









Net sales

$   443,254


$   410,268


$  1,527,953


$  1,400,182

Cost of products sold

246,002


232,144


854,122


784,834

Gross profit

197,252


178,124


673,831


615,348









Selling, general and administrative

91,494


86,523


338,872


332,862

Research and development

13,995


15,643


57,012


57,793

Restructuring charges

4,819


4,194


7,965


16,433

Currency exchange losses, net

5,467


575


10,255


216

Product liability and other operating expense

10,857


160,029


20,590


185,264

Operating income (loss)

70,620


(88,840)


239,137


22,780









Interest expense

7,502


2,911


21,660


10,758

Other income, net

(5,935)


(2,810)


(21,056)


(11,582)

Total other expense (income), net

1,567


101


604


(824)









Income (loss) before income taxes

69,053


(88,941)


238,533


23,604

Provision (benefit) for income taxes

17,564


(27,465)


58,903


1,816

Net income (loss)

51,489


(61,476)


179,630


21,788

Net income attributable to noncontrolling interests




(448)

Net income (loss) attributable to MSA Safety
Incorporated

$     51,489


$   (61,476)


$   179,630


$     21,340









Earnings (loss) per share attributable to MSA
Safety Incorporated common shareholders:








Basic

$         1.31


$       (1.57)


$         4.58


$         0.54

Diluted

$         1.31


$       (1.57)


$         4.56


$         0.54









Basic shares outstanding

39,200


39,236


39,232


39,173

Diluted shares outstanding

39,387


39,236


39,407


39,449









 

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



December 31,
2022


December 31,
2021

Assets




Cash and cash equivalents

$                       162,902


$                      140,895

Trade receivables, net

297,028


254,187

Inventories

338,316


280,617

Notes receivable, insurance companies

5,931


3,914

Other current assets

75,949


113,191

    Total current assets

880,126


792,804





Property, plant and equipment, net

207,552


207,793

Prepaid pension cost

141,643


163,283

Goodwill

620,622


636,858

Intangible assets, net

281,853


306,948

Notes receivable, insurance companies, noncurrent

38,695


44,626

Insurance receivable, noncurrent

110,300


121,609

Other noncurrent assets

96,185


122,475

   Total assets

$                    2,376,976


$                   2,396,396





Liabilities and shareholders' equity




Notes payable and current portion of long-term debt, net

$                           7,387


$                                —

Accounts payable

112,532


106,780

Other current liabilities

225,946


223,826

   Total current liabilities

345,865


330,606





Long-term debt, net

565,445


597,651

Pensions and other employee benefits

137,810


189,973

Deferred tax liabilities

31,881


33,337

Product liability and other noncurrent liabilities

372,234


410,441

Total shareholders' equity

923,741


834,388

   Total liabilities and shareholders' equity

$                    2,376,976


$                   2,396,396

 

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



Three Months Ended
December 31,


Twelve Months Ended
December 31,


2022


2021


2022


2021









Net income (loss)

$     51,489


$   (61,476)


$   179,630


$     21,788

Depreciation and amortization

14,434


14,047


56,317


50,317

Product liability expense

10,857


160,029


20,590


185,264

Change in working capital and other operating

(23,228)


(43,598)


(99,082)


(58,224)

  Cash flow from operating activities

53,552


69,002


157,455


199,145









Capital expenditures

(13,800)


(12,874)


(42,553)


(43,837)

Acquisition, net of cash acquired




(392,437)

Change in short-term investments

15,138


25


39,458


26,087

Property disposals and other investing

(1,427)


(37)


(1,389)


(5,286)

  Cash flow used in investing activities

(89)


(12,886)


(4,484)


(415,473)









Change in debt

(40,000)


(15,683)


(13,000)


293,176

Cash dividends paid

(18,050)


(17,264)


(71,497)


(68,586)

Other financing

863


3,441


(28,853)


(20,665)

  Cash flow (used in) from financing activities

(57,187)


(29,506)


(113,350)


203,925









Effect of exchange rate changes on cash,

cash equivalents and restricted cash

6,867


(3,016)


(16,631)


(7,193)









Increase (decrease) in cash, cash equivalents and
restricted cash

$       3,143


$     23,594


$     22,990


$   (19,596)

 

MSA Safety Incorporated
Segment Information (Unaudited)
(In thousands, except percentage amounts)



Americas


International


Corporate


Consolidated

Three Months Ended December 31, 2022








Sales to external customers

$   289,122


$   154,132


$               —


$   443,254

Operating income







70,620

Operating margin %







15.9 %

Restructuring charges







4,819

Currency exchange losses, net







5,467

Product liability expense







10,857

Acquisition related costs (a)







4,042

Adjusted operating income (loss)

82,728


26,249


(13,172)


95,805

Adjusted operating margin %

28.6 %


17.0 %




21.6 %

Depreciation and amortization (b)







12,149

Adjusted EBITDA

91,525


29,471


(13,042)


107,954

Adjusted EBITDA %

31.7 %


19.1 %




24.4 %









Three Months Ended December 31, 2021








Sales to external customers

$   252,945


$   157,323


$               —


$   410,268

Operating loss







(88,840)

Operating margin %







(21.7) %

Restructuring charges







4,194

Currency exchange losses, net







575

Product liability expense







160,029

Acquisition related costs (a)







3,993

Adjusted operating income (loss)

60,334


31,297


(11,680)


$     79,951

Adjusted operating margin %

23.9 %


19.9 %




19.5 %

Depreciation and amortization (b)







11,702

Adjusted EBITDA

68,488


34,714


(11,549)


91,653

Adjusted EBITDA %

27.1 %


22.1 %




22.3 %


(a) Acquisition related costs include advisory, legal, accounting, valuation, and other professional or consulting fees incurred during due diligence and integration. These costs are included in selling, general and administrative expense in the Consolidated Statements of Income. Acquisition related costs also include the acquisition related amortization, which is included in cost of products sold in the Consolidated Statements of Income.


(b) Excludes acquisition related amortization, which is included in acquisition related costs above.

 

MSA Safety Incorporated
Segment Information (Unaudited)
(In thousands, except percentage amounts)



Americas


International


Corporate


Consolidated

Twelve Months Ended December 31, 2022








Sales to external customers

$  1,043,238


$   484,715


$               —


$  1,527,953

Operating income







239,137

Operating margin %







15.7 %

Restructuring charges







7,965

Currency exchange losses, net







10,255

Product liability expense







20,590

Acquisition related costs (a)







12,440

Adjusted operating income (loss)

267,392


60,923


(37,928)


290,387

Adjusted operating margin %

25.6 %


12.6 %




19.0 %

Depreciation and amortization (b)







47,110

Adjusted EBITDA

301,726


73,179


(37,408)


337,497

Adjusted EBITDA %

28.9 %


15.1 %




22.1 %









Twelve Months Ended December 31, 2021








Sales to external customers

$   908,068


$   492,114


$               —


$  1,400,182

Operating income







22,780

Operating margin %







1.6 %

Restructuring charges







16,433

Currency exchange losses, net







216

Product liability expense







185,264

Acquisition related costs (a)







15,884

Adjusted operating income (loss)

202,496


73,279


(35,198)


240,577

Adjusted operating margin %

22.3 %


14.9 %




17.2 %

Depreciation and amortization (b)







45,417

Adjusted EBITDA

233,732


86,997


(34,735)


285,994

Adjusted EBITDA %

25.7 %


17.7 %




20.4 %


(a) Acquisition related costs include advisory, legal, accounting, valuation, and other professional or consulting fees incurred during due diligence and integration. These costs are included in selling, general and administrative expense in the Consolidated Statements of Income. Acquisition related costs also include the acquisition related amortization, which is included in cost of products sold in the Consolidated Statements of Income.


(b) Excludes acquisition related amortization, which is included in acquisition related costs above.

 

The Americas segment is comprised of our operations in North America and Latin America geographies. The International segment is comprised of our operations in all geographies outside of the Americas. 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 acquisition related costs, including acquisition related amortization, 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
Reconciliation of As Reported Financial Measures to Non-GAAP Financial Measures
Constant currency revenue growth (Unaudited)


Consolidated



Three Months Ended December 31, 2022


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

GAAP reported
sales change

10 %

2 %

10 %

18 %

11 %

(5) %

9 %


— %


8 %

Plus: Currency
translation effects

4 %

4 %

2 %

4 %

3 %

5 %

3 %


5 %


3 %

Constant
currency sales
change

14 %

6 %

12 %

22 %

14 %

— %

12 %


5 %


11 %

Less:

Acquisitions

— %

— %

— %

— %

— %

— %

— %


— %


— %

Organic constant
currency sales
change

14 %

6 %

12 %

22 %

14 %

— %

12 %


5 %


11 %



Twelve Months Ended December 31, 2022


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

GAAP reported
sales change

15 %

2 %

14 %

7 %

19 %

(6) %

11 %


(3) %


9 %

Plus: Currency
translation effects

3 %

3 %

2 %

3 %

3 %

4 %

3 %


5 %


3 %

Constant
currency sales
change

18 %

5 %

16 %

10 %

22 %

(2) %

14 %


2 %


12 %

Less:

Acquisitions

— %

— %

— %

— %

11 %

— %

3 %


— %


2 %

Organic constant
currency sales
change

18 %

5 %

16 %

10 %

11 %

(2) %

11 %


2 %


10 %


 *Fixed Gas and Flame Detection includes the impact of the Bacharach acquisition completed on July 1, 2021. Acquisition constant currency revenue growth represents six months of Bacharach net sales from January 1, 2022 through June 30, 2022.

 

Organic constant currency sales change is a non-GAAP financial measure provided by the Company to give a better understanding of the Company's underlying business performance. Organic constant currency sales change is calculated by deducting the percentage impact from acquisitions and currency translation effects from the overall percentage change in net sales.

 

MSA Safety Incorporated
Reconciliation of As Reported Financial Measures to Non-GAAP Financial Measures
Constant currency revenue growth (Unaudited) 


Americas Segment 



Three Months Ended December 31, 2022


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

GAAP reported
sales change

13 %

28 %

18 %

23 %

9 %

1 %

15 %


7 %


14 %

Plus: Currency
translation effects

— %

— %

(1) %

1 %

(1) %

— %

— %


— %


— %

Constant
currency sales
change

13 %

28 %

17 %

24 %

8 %

1 %

15 %


7 %


14 %

Less:

Acquisitions

— %

— %

— %

— %

— %

— %

— %


— %


— %

Organic constant
currency sales
change

13 %

28 %

17 %

24 %

8 %

1 %

15 %


7 %


14 %



Twelve Months Ended December 31, 2022


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

GAAP reported
sales change

22 %

10 %

17 %

11 %

25 %

— %

17 %


(4) %


15 %

Plus: Currency
translation effects

— %

— %

— %

1 %

— %

1 %

— %


1 %


— %

Constant
currency sales
change

22 %

10 %

17 %

12 %

25 %

1 %

17 %


(3) %


15 %

Less:

Acquisitions

— %

— %

— %

— %

14 %

— %

3 %


— %


3 %

Organic constant
currency sales
change

22 %

10 %

17 %

12 %

11 %

1 %

14 %


(3) %


12 %


 *Fixed Gas and Flame Detection includes the impact of the Bacharach acquisition completed on July 1, 2021. Acquisition constant currency revenue growth represents six months of Bacharach net sales from January 1, 2022 through June 30, 2022.    

 

Organic constant currency sales change is a non-GAAP financial measure provided by the Company to give a better understanding of the Company's underlying business performance. Organic constant currency sales change is calculated by deducting the percentage impact from acquisitions and currency translation effects from the overall percentage change in net sales.

 

MSA Safety Incorporated
Reconciliation of As Reported Financial Measures to Non-GAAP Financial Measures
Constant currency revenue growth (Unaudited) 


International Segment 



Three Months Ended December 31, 2022


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

GAAP reported
sales change

6 %

(32) %

(9) %

7 %

15 %

(13) %

(1) %


(7) %


(2) %

Plus: Currency
translation effects

10 %

8 %

9 %

10 %

7 %

11 %

9 %


10 %


9 %

Constant
currency sales
change

16 %

(24) %

— %

17 %

22 %

(2) %

8 %


3 %


7 %

Less:

Acquisitions

— %

— %

— %

— %

— %

— %

— %


— %


— %

Organic constant
currency sales
change

16 %

(24) %

— %

17 %

22 %

(2) %

8 %


3 %


7 %



Twelve Months Ended December 31, 2022


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

GAAP reported
sales change

1 %

(15) %

3 %

(3) %

10 %

(16) %

(1) %


(3) %


(2) %

Plus: Currency
translation effects

9 %

9 %

8 %

8 %

7 %

9 %

8 %


11 %


9 %

Constant
currency sales
change

10 %

(6) %

11 %

5 %

17 %

(7) %

7 %


8 %


7 %

Less:

Acquisitions

— %

— %

— %

— %

7 %

— %

2 %


— %


2 %

Organic constant
currency sales
change

10 %

(6) %

11 %

5 %

10 %

(7) %

5 %


8 %


5 %


 *Fixed Gas and Flame Detection includes the impact of the Bacharach acquisition completed on July 1, 2021. Acquisition constant currency revenue growth represents six months of Bacharach net sales from January 1, 2022 through June 30, 2022.

 

Organic constant currency sales change is a non-GAAP financial measure provided by the Company to give a better understanding of the Company's underlying business performance. Organic constant currency sales change is calculated by deducting the percentage impact from acquisitions and currency translation effects from the overall percentage change in net sales.

 

MSA Safety Incorporated
Supplemental Segment Information (Unaudited)
Summary of constant currency revenue growth by segment and product group




Three Months Ended December 31, 2022


Consolidated


Americas


International

Portable Gas Detection

22 %


24 %


17 %

Fixed Gas and Flame Detection

14 %


8 %


22 %

Breathing Apparatus

14 %


13 %


16 %

Industrial Head Protection

12 %


17 %


— %

Firefighter Helmets and Protective Apparel

6 %


28 %


(24) %

Fall Protection

— %


1 %


(2) %

Core Sales

12 %


15 %


8 %







Non-Core Sales

5 %


7 %


3 %







Net Sales

11 %


14 %


7 %

Net Sales excluding Acquisitions

11 %


14 %


7 %




Twelve Months Ended December 31, 2022


Consolidated


Americas


International

Portable Gas Detection

10 %


12 %


5 %

Fixed Gas and Flame Detection*

22 %


25 %


17 %

Breathing Apparatus

18 %


22 %


10 %

Industrial Head Protection

16 %


17 %


11 %

Firefighter Helmets and Protective Apparel

5 %


10 %


(6) %

Fall Protection

(2) %


1 %


(7) %

Core Sales

14 %


17 %


7 %







Non-Core Sales

2 %


(3) %


8 %







Net Sales

12 %


15 %


7 %

Net Sales excluding Acquisitions

10 %


12 %


5 %


 *Fixed Gas and Flame Detection includes the impact of the Bacharach acquisition completed on July 1, 2021. Acquisition constant currency revenue growth represents six months of Bacharach net sales from January 1, 2022 through June 30, 2022.

 

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



Three Months
Ended December 31,




Twelve Months
Ended December 31,




2022


2021


%
Change


2022


2021


%
Change













Net income (loss) attributable to

MSA Safety Incorporated

$   51,489


$ (61,476)




$ 179,630


$   21,340















Product liability expense

10,857


160,029




20,590


185,264



Restructuring charges

4,819


4,194




7,965


16,433



Acquisition related costs (a)

4,042


3,993




12,440


15,884



Currency exchange losses, net

5,467


575




10,255


216



Asset related losses and other

1,515


365




6,290


788



Income tax expense on adjustments

(7,263)


(41,676)




(14,662)


(55,180)



Adjusted earnings

$   70,926


$   66,004


7 %


$ 222,508


$ 184,745


20 %













Adjusted earnings per diluted share

$       1.80


$       1.67


8 %


$       5.65


$       4.68


21 %


(a) Acquisition related costs include advisory, legal, accounting, valuation, and other professional or consulting fees incurred during due diligence and integration. These costs are included in selling, general and administrative expense in the Consolidated Statements of Income. Acquisition related costs also include the acquisition related amortization, which is included in cost of products sold in the Consolidated Statements of Income.

 

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

 

MSA Safety Incorporated
Reconciliation of As Reported Financial Measures to Non-GAAP Financial Measures
Debt to adjusted EBITDA / Net debt to adjusted EBITDA (Unaudited)
(In thousands)       




Twelve Months Ended
December 31,



2022

Operating income


$                         239,137

Depreciation and amortization (a)


47,110

Product liability expense


20,590

Restructuring charges


7,965

Currency exchange losses, net


10,255

Acquisition related costs (b)


12,440

Adjusted EBITDA


$                         337,497




Total end-of-period debt


572,832




Debt to adjusted EBITDA


1.7




Total end-of-period debt


572,832

Total end-of-period cash and cash equivalents


162,902

Net debt


$                         409,930




Net debt to adjusted EBITDA


1.2




Pro-forma gross debt to adjusted EBITDA(c)


2.6

Pro-forma net debt to adjusted EBITDA(c)


2.2


(a) Excludes acquisition related amortization, which is included in acquisition related costs.


(b) Acquisition related costs include advisory, legal, accounting, valuation, and other professional or consulting fees incurred during due diligence and integration. These costs are included in selling, general and administrative expense in the Consolidated Statements of Income. Acquisition related costs also include the acquisition related amortization, which is included in cost of products sold in the Consolidated Statements of Income.


(c) Includes cash and cash equivalents and incremental borrowing associated with the Mine Safety Appliances Company, LLC ("MSA LLC") divestiture completed on January 5, 2023.

 

Management believes that Debt to Adjusted EBITDA and Net Debt to Adjusted EBITDA are useful measures for investors, as management uses these measures to internally assess the Company's liquidity and balance sheet strength. There can be no assurances that that MSA's definition of Debt to Adjusted EBITDA and Net Debt to Adjusted EBITDA is consistent with that of other companies.

 

MSA Safety Incorporated
Reconciliation of As Reported Financial Measures to Non-GAAP Financial Measures
Free cash flow (Unaudited)
(In thousands, except percentages)



Three Months Ended
December 31,


Twelve Months Ended
December 31,


2022


2021


2022


2021









Cash flow from operating activities

$      53,552


$      69,002


$    157,455


$    199,145

Capital expenditures

(13,800)


(12,874)


(42,553)


(43,837)









Free cash flow

$      39,752


$      56,128


$    114,902


$    155,308









Net income (loss) attributable to MSA
Safety Incorporated

$      51,489


$     (61,476)


$    179,630


$      21,340









Free cash flow conversion

77 %


(91) %


64 %


728 %

 

Management believes that free cash flow is a meaningful measure for investors. Management reviews cash from operations after deducting capital expenditures because these expenditures are necessary to promote growth of MSA's business and are likely to produce cash from operations in future periods. It is important to note that free cash flow does not reflect the residual cash balance of the Company for discretionary spending since other items, including debt and dividend payments, are deducted from free cash flow before arriving at the Company's ending cash balance. Management defines free cash flow conversion as free cash flow divided by net income attributable to MSA. There can be no assurances that MSA's definition of free cash flow is consistent with that of other companies. As such, management believes that it is appropriate to consider cash from operating activities determined on a GAAP basis as well as free cash flow.

About MSA Safety:  
Established in 1914, MSA Safety Incorporated is the global leader in the development, manufacture and supply of safety products and software that protect people and facility infrastructures.  Many MSA products integrate a combination of electronics, software, 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 fire service, the oil, gas and petrochemical industry,  construction, industrial manufacturing applications, heating, ventilation, air conditioning and refrigeration, utilities, 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 2022 revenues of $1.5 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 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. These statements relate to future events or our future financial performance and involve various assumptions, known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. In some cases, you can identify forward-looking statements by words such as "may," "will," "should," "expects," "intends," "plans," "anticipates," "believes," "estimates," "predicts," "potential" or other comparable words. Actual results, performance or outcomes may differ materially from those expressed or implied by these forward-looking statements and may not align with historical performance and events due to a number of factors, including those discussed in the sections of our annual report on Form 10-K entitled "Cautionary Statement Regarding Forward-Looking Statements" and "Risk Factors," and those discussed in our Form 10-Q quarterly reports filed after such annual report. 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. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements, and caution should be exercised against placing undue reliance upon such statements. We are under no duty to update publicly any of the forward-looking statements after the date of this earnings press release, whether as a result of new information, future events or otherwise, except as required by law. 

Non-GAAP Financial Measures:
This press release includes certain non-GAAP financial measures. These financial measures include organic constant currency revenue growth, adjusted operating income, adjusted operating margin, adjusted EBITDA, adjusted EBITDA margin, adjusted earnings, adjusted earnings per diluted share, debt to adjusted EBITDA, net debt to adjusted EBITDA, free cash flow and free cash flow conversion. These non-GAAP financial measures provide information useful to investors in understanding our operating performance and trends, and to facilitate comparisons with the performance of our peers. Management also uses these measures internally to assess and better understand our underlying business performance and trends related to core business activities. The non-GAAP financial measures and key performance indicators we use, and computational methods with respect thereto, may differ from the non-GAAP financial measures and key performance indicators, and computational methods, that our peers use to assess their performance and trends.

The presentation of these non-GAAP financial measures does not comply with U.S. GAAP. These non-GAAP financial measures should be viewed as supplemental in nature, and not as a substitute for, or superior to, our reported results prepared in accordance with GAAP. When non-GAAP financial measures are disclosed, the Securities and Exchange Commission's Regulation G requires: (i) the presentation of the most directly comparable financial measure calculated and presented in accordance with GAAP and (ii) a reconciliation of the differences between the non-GAAP financial measure presented and the most directly comparable financial measure calculated and presented in accordance with GAAP. The presentation of these financial measures does not comply with U.S. generally accepted accounting principles ("GAAP"). For an explanation of these measures, 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.

 

SOURCE MSA Safety

For further information: Media Relations Contact: Mark Deasy (412) 559-8154; Investor Relations Contact: Chris Hepler (412) 225-3717