PITTSBURGH, Oct. 22, 2014 /PRNewswire/ -- Global safety equipment manufacturer MSA Safety Incorporated (NYSE: MSA) today reported results for the third quarter of 2014.

Quarterly Highlights

  • Revenue was $275 million, up 4 percent from the third quarter of 2013. Income from continuing operations was $19 million or $0.50 per basic share.  Excluding after tax restructuring and foreign exchange losses, adjusted earnings were $21 million, or $0.57 per basic share, increasing 2 percent.
  • The company is making progress towards certification of its new G1 self-contained breathing apparatus (SCBA) and expects regulatory approval and shipping to begin in the fourth quarter.
  • Excluding sales of SCBA, quarterly local currency revenue from core product lines increased 13 percent.
  • Products developed within the last five years drove 36 percent of quarterly core product revenue compared to 22 percent in the same period a year ago.
  • Gross profit margin was 45.0 percent of sales, up 140 basis points from a year ago.

Comments from Management

"Our third quarter results reflected solid growth from the core, despite headwinds associated with delays in securing approval of our new SCBA platform. In particular, strength in our gas detection product lines, ongoing product margin expansion and the pending approval of the G1 SCBA provides encouragement as we head into the final quarter of the year," said William M. Lambert, MSA President and CEO.

Sales of core products represented 74 percent of total revenue in the quarter and excluding sales of SCBA, quarterly revenue from core product lines increased 13 percent. "Particularly noteworthy were sales of gas detection products, which grew 17 percent during the quarter on strong demand for portable gas detection instruments and shipments of large orders of fixed gas and flame detection systems," he said. Mr. Lambert also noted that although the company continues to see challenging conditions in certain emerging markets, core product sales across all emerging markets increased 13 percent in the quarter.

"Although we expect business conditions to remain challenged across several of our emerging markets, this quarter showed excellent progress toward clearing our SCBA certification hurdles and reflects meaningful progress against our strategy, highlighting our ongoing focus on increasing shareholder value," Mr. Lambert said. "As we approach the end of our centennial year in business and begin writing the next chapter in MSA's story, we will remain focused on enhancing shareholder value by staying true to our passion for innovation, our commitment to achieving operational excellence, and our desire to create the best customer experience in the safety industry," Mr. Lambert concluded.

 

MSA Safety Incorporated

Condensed Consolidated Statement of Income (Unaudited)

(In thousands, except earnings per share)










Three Months Ended
September 30,


Nine Months Ended
September 30,


2014



2013



2014



2013














Net sales

$

275,159



$

264,884



$

822,697



$

820,629


Other income, net

585



638



986



1,015



275,744



265,522



823,683



821,644














Cost of products sold

151,436



149,458



447,489



453,835


Selling, general and administrative

77,301



71,390



245,377



232,097


Research and development

13,420



12,298



36,604



34,280


Restructuring and other charges

3,640



1,515



6,397



3,942


Interest expense

2,493



2,741



7,617



8,151


Currency exchange (gains) losses, net

315



1,836



358



4,148



248,605



239,238



743,842



736,453














Income before income taxes

27,139



26,284



79,841



85,191


Provision for income taxes

8,699



7,750



26,056



24,675


Income from continuing operations

18,440



18,534



53,785



60,516


Income from discontinued operations

765



643



1,832



2,447


Net income

19,205



19,177



55,617



62,963


Net (income) loss attributable to noncontrolling interests

100



324



202



(127)


Net income attributable to MSA Safety Incorporated

19,305



19,501



55,819



62,836


























Income from continuing operations

18,674



18,987



54,328



60,929


Income from discontinued operations

631



514



1,491



1,907


Net income attributable to MSA Safety Incorporated

19,305



19,501



55,819



62,836














Earnings Per Share Attributable to MSA Safety Incorporated












Basic












Income from continuing operations

$0.50



$0.51



$1.45



$1.64


Income from discontinued operations

$0.02



$0.01



$0.04



$0.05


  Net income

$0.52



$0.52



$1.49



$1.69














Diluted












Income from continuing operations

$0.49



$0.51



$1.43



$1.61


Income from discontinued operations

$0.02



$0.01



$0.04



$0.05


  Net income

$0.51



$0.52



$1.47



$1.66














Basic shares outstanding

37,187



36,915



37,111



36,845


Diluted shares outstanding

37,784



37,507



37,708



37,438


















 

 

 

MSA Safety Incorporated

Condensed Consolidated Balance Sheet (Unaudited)

(In thousands)










September 30, 2014


December 31, 2013

Current assets






  Cash and cash equivalents

$

97,355



$

96,265


  Trade receivables, net

200,634



200,364


  Inventories

145,217



136,837


  Other current assets

58,110



67,500


   Total current assets

501,316



500,966








Property, net

152,377



152,755


Prepaid pension cost

130,414



121,054


Goodwill

255,049



260,134


Other noncurrent assets

221,149



199,361


   Total

1,260,305



1,234,270








Current liabilities






  Notes payable and current portion of long-term debt

$

6,671



$

7,500


  Accounts payable

67,253



66,902


  Other current liabilities

120,406



117,162


   Total current liabilities

194,330



191,564








Long-term debt

270,667



260,667


Pensions and other employee benefits

146,344



152,084


Deferred tax liabilities

48,365



49,621


Other noncurrent liabilities

10,941



7,987


Equity

589,658



572,347


   Total

1,260,305



1,234,270


 

 

 

MSA Safety Incorporated

Condensed Consolidated Statement of Cash Flows (Unaudited)

(In thousands)










Three Months Ended
September 30,


Nine Months Ended
September 30,


2014



2013



2014



2013














Net income

$

19,205



$

19,177



$

55,617



$

62,963


Depreciation and amortization

7,196



7,615



22,311



23,392


Change in working capital

15,003



10,212



(5,842)



(18,291)


Other operating

(5,912)



5,925



(21,284)



(3,358)


  Cash from operations

35,492



42,929



50,802



64,706














Capital expenditures

(9,705)



(9,258)



(24,233)



(26,214)


Property disposals



1,247





1,333


  Cash from investing

(9,705)



(8,011)



(24,233)



(24,881)














Change in debt

(11,012)



(10,921)



9,171



10,284


Cash dividends paid

(11,542)



(11,161)



(34,043)



(32,694)


Other financing

1,938



489



4,013



(1,181)


  Cash from financing

(20,616)



(21,593)



(20,859)



(23,591)














Exchange rate changes

(3,999)



272



(4,620)



(2,942)














Increase in cash

1,172



13,597



1,090



13,292


















 

 

 

MSA Safety Incorporated

Segment Information (Unaudited)

(In thousands)






Three Months Ended
September 30,


Nine Months Ended
September 30,




2014



2013



2014



2013














  Net sales












  North America

$ 131,844



$ 130,919



$ 400,147



$ 402,539


  Europe

75,785



66,360



229,606



207,480


  International

67,530



67,605



192,944



210,610


   Total

275,159



264,884



822,697



820,629














  Net income (loss)












  North America

$ 18,018



$ 17,001



$ 49,658



$ 46,638


  Europe

2,587



3,141



13,027



11,734


  International

2,821



5,004



9,040



20,570


  Reconciling Items

(4,752)



(6,159)



(17,397)



(18,013)


Income from continuing operations

18,674



18,987



54,328



60,929


  Discontinued operations

631



514



1,491



1,907


   Total

19,305



19,501



55,819



62,836


 

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 September 30, 2014


Consolidated


North America


Europe


International













Fixed Gas and Flame Detection

20

%


12

%


34

%


19

%

Portable Gas Detection

13

%


4

%


20

%


30

%

Fall Protection

8

%


8

%


2

%


8

%

Head Protection

3

%


13

%


(6)

%


(10)

%

Breathing Apparatus

(12)

%


(26)

%


23

%


(23)

%

Core Sales

6

%


%


25

%


1

%













Non-Core Sales

1

%


2

%


(5)

%


7

%













Net Sales

5

%


1

%


14

%


3

%


















































Nine Months Ended September 30, 2014


Consolidated


North America


Europe


International













Fixed Gas and Flame Detection

4

%


2

%


17

%


(12)

%

Portable Gas Detection

9

%


10

%


1

%


17

%

Fall Protection

1

%


(4)

%


29

%


12

%

Head Protection

5

%


11

%


1

%


(4)

%

Breathing Apparatus

(12)

%


(21)

%


3

%


(15)

%

Core Sales

1

%


(1)

%


8

%


(4)

%













Non-Core Sales

3

%


2

%


7

%


1

%













Net Sales

1

%


%


8

%


(2)

%

























 

 

 

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 September 30,




Nine Months Ended September 30,




2014



2013



%

Change


2014



2013



%
Change

















Net income attributable to
MSA Safety Incorporated

$

19,305



$

19,501



(1.0)%


$

55,819



$

62,836



(11.2)%

Less: Income from discontinued operations

631



514





1,491



1,907




















Income from continuing operations

18,674



18,987



(1.6)%


54,328



60,929



(10.8)%

Foreign currency loss

315



1,836





358



4,148




Restructuring charges

3,640



1,515





6,397



3,942




Asset sale (gain)



(600)







(600)




Income tax (expense)

(1,268)



(812)





(2,202)



(2,172)




















Adjusted earnings

21,361



20,926



2.1%


58,881



66,247



(11.1)%

















Adjusted earnings per

basic share

$

0.57



$

0.56



1.8%


$

1.58



$

1.78



(11.2)%

 

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. Management does not use these non-GAAP financial measures for any purpose other than the reasons stated above.

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 lifethreatening 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 selfcontained breathing apparatus, fixed gas and flame detection systems, portable gas detection instruments, head protection products and fall protection devices. With 2013 revenues of $1.1 billion, MSA employs approximately 5,300 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 and timing of new product approvals and related shipments. 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, 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 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 and adjusted earnings per basic 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.

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/msa-announces-third-quarter-results-395376968.html

SOURCE MSA

Copyright 2014 PR Newswire

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