MSA Safety rporated(MSA) - 2025 Q1 - Quarterly Results

First Quarter 2025 Results Overview MSA Safety delivered solid Q1 results, driven by strategic execution, robust detection performance, and accelerated shipments due to tariffs CEO Commentary and Strategic Execution CEO Steve Blanco highlighted solid Q1 results driven by the 'Accelerate strategy,' robust performance in detection, and accelerated shipments due to tariffs, noting healthy order growth and stable market conditions - Solid first quarter results demonstrate the team's continued dedication to executing the 'Accelerate strategy'[4] - Revenue growth was fueled by robust performance in detection and accelerated shipments in consideration of tariffs[4] - Healthy order growth across product categories indicates stable market conditions to start the year[4] Key Financial Highlights MSA Safety reported Q1 2025 net sales of $421 million (4% organic increase), GAAP operating income of $78 million (18.5% of sales), and GAAP net income of $60 million ($1.51 diluted EPS), returning $20 million in dividends and $10 million in share repurchases - Achieved quarterly net sales of $421 million, a 2% GAAP increase and 4% organic increase year-over-year[5] - Generated GAAP operating income of $78 million, or 18.5% of sales, and adjusted operating income of $88 million, or 20.8% of sales[5] - Recorded GAAP net income of $60 million, or $1.51 per diluted share, and adjusted earnings of $66 million, or $1.68 per diluted share[5] - Returned capital to shareholders through $20 million of dividends and $10 million of share repurchases[5] Detailed Financial Performance (Q1 2025) This section provides a comprehensive overview of MSA Safety's consolidated and segment-specific financial results for the first quarter of 2025 Consolidated Financial Summary Consolidated net sales increased 2% GAAP and 4% organically year-over-year to $421.3 million, while GAAP operating income decreased 3% to $77.8 million, and free cash flow significantly improved by 29% to $51.0 million | Metric | Q1 2025 (Millions) | Q1 2024 (Millions) | % Change | | :---------------------- | :----------------- | :----------------- | :------- | | Net Sales (GAAP) | $421.3 | $413.3 | 2% | | Operating Income (GAAP) | $77.8 | $80.1 | (3)% | | % of Net Sales (GAAP) | 18.5% | 19.4% | (90) bps | | Net Income (GAAP) | $59.6 | $58.1 | 3% | | Diluted EPS (GAAP) | $1.51 | $1.47 | 3% | | Adjusted EBITDA | $101.5 | $101.3 | —% | | % of Net Sales (Adj. EBITDA) | 24.1% | 24.5% | (40) bps | | Adjusted Operating Income | $87.5 | $88.0 | (1)% | | % of Net Sales (Adj. Op. Inc.) | 20.8% | 21.3% | (50) bps | | Adjusted Earnings | $66.4 | $63.5 | 5% | | Adjusted Diluted EPS | $1.68 | $1.61 | 4% | | Free Cash Flow | $51.0 | $39.7 | 29% | | Free Cash Flow Conversion | 86% | 68% | | Segment Performance The Americas segment experienced a 1% GAAP net sales decrease and a 9% decline in operating income, while the International segment showed strong growth with net sales increasing 9% and GAAP operating income surging 56%, significantly expanding margins | Metric | Q1 2025 (Millions) | Q1 2024 (Millions) | % Change | | :---------------------- | :----------------- | :----------------- | :------- | | Americas Segment | | | | | Net Sales | $293.2 | $295.5 | (1)% | | GAAP Operating Income | $76.5 | $84.2 | (9)% | | % of Net Sales (GAAP) | 26.1% | 28.5% | (240) bps | | Adjusted Operating Income | $78.7 | $86.2 | (9)% | | % of Net Sales (Adj.) | 26.8% | 29.2% | (240) bps | | International Segment | | | | | Net Sales | $128.2 | $117.8 | 9% | | GAAP Operating Income | $17.3 | $11.1 | 56% | | % of Net Sales (GAAP) | 13.5% | 9.4% | 410 bps | | Adjusted Operating Income | $18.7 | $13.5 | 39% | | % of Net Sales (Adj.) | 14.6% | 11.5% | 310 bps | 2025 Net Sales Outlook MSA Safety maintained its full-year organic sales growth outlook for 2025 at a low-single-digit percentage, acknowledging increased macroeconomic risks 2025 Net Sales Outlook MSA Safety maintained its full-year organic sales growth outlook for 2025 at a low-single-digit percentage, while acknowledging increased macroeconomic risks, including tariffs - The company maintained its low-single-digit full-year organic sales growth outlook for 2025[8] - Acknowledged increased risk due to macroeconomic factors, including tariffs[8] Conference Call Information Details for MSA Safety's Q1 2025 earnings conference call, including webcast and dial-in information, are provided Conference Call Details MSA Safety will host a conference call on April 30, 2025, at 10:00 a.m. Eastern time to discuss Q1 2025 results and outlook, with webcast and dial-in details available - MSA Safety will host a conference call on Wednesday, April 30, 2025, at 10:00 a.m. Eastern time to discuss its first quarter 2025 results and outlook[9] - The call and an accompanying slide presentation will be webcast at http://investors.msasafety.com/ under the 'News and Events' tab, subheading 'Events & Presentations'[9] - Investors and interested parties can also dial into the call at 1-844-854-4415 (toll-free) or 1-412-902-6599 (international)[9] Condensed Consolidated Financial Statements This section presents MSA Safety's condensed consolidated statements of income, balance sheets, and cash flows for Q1 2025 and comparative periods Statements of Income For Q1 2025, net sales were $421.3 million, with a gross profit of $193.4 million, operating income of $77.8 million, and net income of $59.6 million, or $1.51 per diluted share | Metric (in thousands) | Q1 2025 | Q1 2024 | | :-------------------- | :------ | :------ | | Net sales | $421,340 | $413,302 | | Cost of products sold | $227,945 | $217,771 | | Gross profit | $193,395 | $195,531 | | Operating income | $77,761 | $80,112 | | Net income | $59,605 | $58,139 | | Diluted EPS | $1.51 | $1.47 | Balance Sheets As of March 31, 2025, total assets were $2.236 billion, a slight increase from $2.206 billion at December 31, 2024, with total shareholders' equity growing to $1.190 billion | Metric (in thousands) | March 31, 2025 | December 31, 2024 | | :-------------------- | :------------- | :---------------- | | Total current assets | $823,162 | $803,030 | | Total assets | $2,235,885 | $2,205,784 | | Total current liabilities | $280,440 | $288,093 | | Long-term debt, net | $469,171 | $481,622 | | Total shareholders' equity | $1,190,145 | $1,143,319 | Statements of Cash Flows Net cash flow from operating activities for Q1 2025 was $61.8 million, an increase from $50.9 million in Q1 2024, while cash flow used in financing activities was $45.6 million | Metric (in thousands) | Q1 2025 | Q1 2024 | | :-------------------- | :------ | :------ | | Net income | $59,605 | $58,139 | | Cash flow from operating activities | $61,833 | $50,886 | | Cash flow used in investing activities | $(10,766) | $(11,219) | | Cash flow used in financing activities | $(45,612) | $(29,085) | | Increase in cash, cash equivalents and restricted cash | $6,198 | $1,906 | Sales by Product Group This section analyzes MSA Safety's Q1 2025 sales performance across different product groups, highlighting Detection as the largest segment Sales by Product Group Analysis In Q1 2025, Detection products became the largest segment, contributing 38% of consolidated sales ($161.1 million), up from 34% in Q1 2024, while Fire Service sales decreased to 36% | Product Group | Q1 2025 Sales (Thousands) | Q1 2025 % of Total | Q1 2024 Sales (Thousands) | Q1 2024 % of Total | | :-------------------- | :------------------------ | :----------------- | :------------------------ | :----------------- | | Fire Service | $150,616 | 36% | $163,694 | 40% | | Detection | $161,070 | 38% | $139,216 | 34% | | Industrial PPE and Other | $109,654 | 26% | $110,392 | 26% | | Total | $421,340 | 100% | $413,302 | 100% | - International segment's Detection sales grew from $42.9 million (36% of segment) in Q1 2024 to $51.2 million (40% of segment) in Q1 2025[15] Reconciliation of Non-GAAP Financial Measures This section provides reconciliations for MSA Safety's non-GAAP financial measures, including organic sales change, adjusted operating income, adjusted EBITDA, adjusted earnings, and debt ratios Organic Sales Change Consolidated organic sales increased by 4% year-over-year in Q1 2025, with Detection showing the strongest organic growth at 17% consolidated, and the International segment achieving 11% organic sales growth | Product Group | GAAP Reported Sales Change | Plus: Currency Translation Effects | Organic Sales Change | | :-------------------- | :------------------------- | :------------------------------- | :------------------- | | Fire Service | (8)% | 1% | (7)% | | Detection | 16% | 1% | 17% | | Industrial PPE and Other | (1)% | 4% | 3% | | Net Sales | 2% | 2% | 4% | | Product Group | GAAP Reported Sales Change | Plus: Currency Translation Effects | Organic Sales Change | | :-------------------- | :------------------------- | :------------------------------- | :------------------- | | International Segment | | | | | Fire Service | 8% | 2% | 10% | | Detection | 19% | 2% | 21% | | Industrial PPE and Other | (3)% | 2% | (1)% | | Net Sales | 9% | 2% | 11% | Adjusted Operating Income and Adjusted EBITDA Adjusted EBITDA for Q1 2025 was $101.5 million, flat compared to Q1 2024, while adjusted operating income was $87.5 million, a 1% decrease, excluding specific non-recurring charges | Metric (in thousands) | Q1 2025 | Q1 2024 | | :-------------------- | :------ | :------ | | Adjusted EBITDA | $101,467 | $101,254 | | Adjusted operating income | $87,502 | $88,009 | - Adjustments for Q1 2025 included $1.9 million in restructuring charges, $4.1 million in currency exchange losses, $2.3 million in amortization of acquisition-related intangible assets, and $1.5 million in transaction costs[20] Adjusted Earnings and Adjusted Diluted EPS Adjusted earnings increased 5% to $66.4 million in Q1 2025, and adjusted diluted EPS rose 4% to $1.68, after removing specific non-GAAP adjustments and their tax effects | Metric (in thousands, except per share) | Q1 2025 | Q1 2024 | % Change | | :-------------------------------------- | :------ | :------ | :------- | | Net income | $59,605 | $58,139 | 3% | | Adjusted earnings | $66,438 | $63,497 | 5% | | Adjusted diluted earnings per share | $1.68 | $1.61 | 4% | - Key adjustments for Q1 2025 included adding back $1.9 million for restructuring, $4.1 million for currency exchange losses, $2.3 million for acquisition-related intangible amortization, and $1.5 million for transaction costs[21] Debt to Adjusted EBITDA / Net Debt to Adjusted EBITDA As of March 31, 2025, MSA Safety reported a Debt to Adjusted EBITDA ratio of 1.1 and a Net Debt to Adjusted EBITDA ratio of 0.7, based on a trailing twelve-month adjusted EBITDA of $469.6 million - Debt to adjusted EBITDA was 1.1 as of March 31, 2025[23] - Net debt to adjusted EBITDA was 0.7 as of March 31, 2025[23] - Adjusted EBITDA for the twelve months ended March 31, 2025, was $469.6 million[23] Additional Information This section provides background on MSA Safety, cautionary statements regarding forward-looking information, and disclosures on non-GAAP financial measures About MSA Safety MSA Safety Incorporated, founded in 1914, is a global leader in advanced safety products, technologies, and solutions, generating $1.8 billion in 2024 revenue with over 5,000 associates worldwide - MSA Safety Incorporated is the global leader in advanced safety products, technologies and solutions[24] - The Company has been at the forefront of safety innovation since 1914[24] - With 2024 revenues of $1.8 billion, MSA Safety employs a team of over 5,000 associates across its more than 40 international locations[24] Cautionary Statement Regarding Forward-Looking Statements This press release contains forward-looking statements subject to various risks and uncertainties that could cause actual results to differ materially, and readers should not place undue reliance on them - Certain matters discussed in this press release may be 'forward-looking statements' relating to future events or financial performance[25] - These statements involve various assumptions, known and unknown risks, uncertainties and other factors that may cause actual results to be materially different[25] - The company is under no duty to update publicly any of the forward-looking statements after the date of this earnings press release, except as required by law[25] Non-GAAP Financial Measures Disclosure The press release includes non-GAAP financial measures to aid investor understanding of operating performance and trends, which are supplemental and not substitutes for GAAP results, with reconciliations provided - This press release includes certain non-GAAP financial measures such as organic sales change, adjusted operating income, adjusted EBITDA, adjusted earnings, and debt to adjusted EBITDA[26] - These non-GAAP financial measures provide information useful to investors in understanding operating performance and trends, and for internal management assessment[26] - These non-GAAP financial measures should be viewed as supplemental in nature, and not as a substitute for, or superior to, reported results prepared in accordance with GAAP[28]