MSA Safety rporated(MSA) - 2024 Q1 - Quarterly Results

Financial & Operational Highlights MSA Safety reported a solid start to 2024, achieving a 4% year-over-year increase in net sales to $413 million for the first quarter, demonstrating robust margin expansion with adjusted operating income rising 14% to $88 million and adjusted earnings per share growing 18% to $1.61, while management reaffirmed its full-year sales growth outlook of mid-single digits - Management commentary highlighted a solid start to 2024, driven by strategic execution, a resilient business model, and a commitment to continuous improvement, leading to strong growth and margin expansion[4] - The company is maintaining its full-year growth outlook of mid-single digits, supported by a solid start in both sales and orders and a strong balance sheet[7] Q1 2024 Financial Highlights vs. Q1 2023 | Financial Highlights | Q1 2024 | Q1 2023 | % Change | | :--- | :--- | :--- | :--- | | Net Sales | $413M | $398M | 4% | | Adjusted Operating Income | $88M | $77M | 14% | | Adjusted Earnings | $63M | $54M | 18% | | Adjusted Diluted EPS | $1.61 | $1.36 | 18% | - Key capital allocation activities in Q1 2024 included: $11 million in capital expenditures, $5 million in debt repayment, and $18 million returned to shareholders via dividends[4] Financial Statements The unaudited financial statements for the first quarter of 2024 show significant year-over-year improvement in profitability, with net income at $58.1 million compared to a $150.2 million net loss in the prior-year period due to a divestiture impact, while the balance sheet remains stable with total assets at $2.17 billion and operating cash flow turned positive at $50.9 million Condensed Consolidated Statements of Operations For the three months ended March 31, 2024, net sales increased to $413.3 million from $398.3 million in 2023, with gross profit rising to $195.5 million and operating income recovering significantly to $80.1 million from a $60.1 million loss in Q1 2023, resulting in net income of $58.1 million or $1.47 per diluted share Q1 2024 vs Q1 2023 Statement of Operations (in thousands) | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net sales | $413,302 | $398,262 | | Gross profit | $195,531 | $181,398 | | Operating income (loss) | $80,112 | $(60,061) | | Net income (loss) | $58,139 | $(150,173) | | Diluted EPS | $1.47 | $(3.83) | Condensed Consolidated Balance Sheets As of March 31, 2024, MSA's balance sheet showed total assets of $2.174 billion, stable compared to year-end 2023, with total liabilities decreasing slightly to $1.180 billion and total shareholders' equity increasing to $994.8 million from $966.8 million, while cash and cash equivalents stood at $148.3 million Balance Sheet Summary (in thousands) | Account | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Total current assets | $792,945 | $786,270 | | Total assets | $2,174,330 | $2,170,150 | | Total current liabilities | $316,526 | $332,818 | | Long-term debt, net | $569,692 | $575,170 | | Total shareholders' equity | $994,754 | $966,802 | Condensed Consolidated Statements of Cash Flows In Q1 2024, the company generated $50.9 million in cash flow from operating activities, a substantial improvement from a $285.9 million use of cash in Q1 2023, which was negatively impacted by a $341.2 million contribution on the divestiture of MSA LLC, while cash used in investing activities was $11.2 million and financing activities used $29.1 million Q1 2024 vs Q1 2023 Statement of Cash Flows (in thousands) | Cash Flow Activity | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Cash flow from operating activities | $50,886 | $(285,909) | | Cash flow used in investing activities | $(11,219) | $(8,367) | | Cash flow (used in) from financing activities | $(29,085) | $272,771 | Segment Information In Q1 2024, the Americas segment drove performance with a 5% sales increase to $295.5 million and an adjusted operating margin of 29.2%, while the International segment's sales were nearly flat at $117.8 million with its adjusted operating margin decreasing to 11.5% from 13.4%, leading to an overall consolidated adjusted operating margin improvement to 21.3% Segment Performance Q1 2024 vs Q1 2023 (in thousands) | Segment | Net Sales Q1 2024 | Net Sales Q1 2023 | Adjusted Operating Income Q1 2024 | Adjusted Operating Income Q1 2023 | Adjusted Operating Margin % Q1 2024 | Adjusted Operating Margin % Q1 2023 | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Americas | $295,539 | $280,267 | $86,218 | $71,694 | 29.2% | 25.6% | | International | $117,763 | $117,995 | $13,486 | $15,779 | 11.5% | 13.4% | - The Americas segment includes operations in North and Latin America, while the International segment comprises all other geographies[20] - Management uses non-GAAP measures like adjusted operating income and adjusted EBITDA to evaluate segment performance and allocate resources[21] Reconciliation of Non-GAAP Financial Measures This section provides reconciliations for key non-GAAP metrics to their most comparable GAAP measures, showing consolidated constant currency revenue growth of 3%, adjusted earnings increasing 18% to $63.5 million ($1.61 per diluted share), and a low leverage position with a Net Debt to Adjusted EBITDA ratio of 1.0x Constant Currency Revenue Growth For Q1 2024, consolidated constant currency sales grew by 3%, driven by 17% growth in the Firefighter Safety product line, with the Americas segment growing 5% on a constant currency basis led by a 20% increase in Firefighter Safety, while the International segment saw a 1% decline in constant currency sales Consolidated Constant Currency Sales Change by Product (Q1 2024) | Product Line | GAAP Reported Sales Change | Constant Currency Sales Change | | :--- | :--- | :--- | | Firefighter Safety | 17% | 17% | | Detection | (5)% | (5)% | | Industrial PPE and Other | (2)% | (3)% | | Total Net Sales | 4% | 3% | Adjusted Earnings Adjusted earnings for Q1 2024 were $63.5 million, an 18% increase from $53.7 million in Q1 2023, with adjusted diluted EPS also rising 18% to $1.61 from $1.36, as the reconciliation adjusts GAAP net income for items such as restructuring charges, amortization of acquisition-related intangibles, and currency exchange losses Reconciliation of Net Income to Adjusted Earnings (in thousands) | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net income (loss) | $58,139 | $(150,173) | | Adjustments (net) | $5,358 | $203,901 | | Adjusted earnings | $63,497 | $53,728 | Debt to Adjusted EBITDA For the twelve months ended March 31, 2024, MSA reported an adjusted EBITDA of $460.9 million, resulting in a Debt to Adjusted EBITDA ratio of 1.3x and a Net Debt to Adjusted EBITDA ratio of 1.0x, indicating a healthy leverage position Leverage Ratios (Twelve Months Ended March 31, 2024) | Metric | Value | | :--- | :--- | | Adjusted EBITDA | $460,850 thousand | | Total end-of-period debt | $596,154 thousand | | Debt to adjusted EBITDA | 1.3x | | Net debt | $447,825 thousand | | Net debt to adjusted EBITDA | 1.0x | Company Information and Disclosures MSA Safety will host an Investor Day on May 22, 2024, and participate in an investor conference on May 7, 2024, with the report including standard disclosures defining the company as a global leader in safety products with $1.8 billion in 2023 revenue, cautionary statements regarding forward-looking information, and explanations of non-GAAP financial measure reconciliations - Upcoming investor events include: Oppenheimer 19th Annual Industrial Growth Conference on May 7, 2024, and Investor Day in New York City on May 22, 2024[9][11] - MSA Safety is a global leader in advanced safety products, technologies, and solutions, with 2023 revenues of $1.8 billion and over 5,000 employees worldwide[34] - The press release contains forward-looking statements and advises caution, directing readers to SEC filings for a discussion of risks and uncertainties[35] - The report uses non-GAAP financial measures, which are presented as supplemental information and are reconciled to the most directly comparable GAAP measures within the document[36][39]