MSA Safety Inc - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - April 28, 2015

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8-K - 8-K - MSA Safety Incq12015pressrelease8-k.htm

FOR IMMEDIATE RELEASE
FROM: MSA Safety Incorporated
Ticker: MSA (NYSE)
Media Relations Contact: Mark Deasy (724) 741 - 8570
Investor Relations Contact: Ken Krause (724) 741 - 8534


MSA Announces First Quarter Results
Local currency sales growth of 4 percent driven by strong performance in core products

PITTSBURGH, April 27, 2015 - Global safety equipment manufacturer MSA Safety Incorporated (NYSE: MSA) today reported results for the first quarter of 2015.


Quarterly Highlights

•
Reported revenue was $257 million, down 3 percent from the first quarter of 2014. Income from continuing operations was $9 million, or $0.25 per diluted share. Adjusted earnings were $16 million, or $0.42 per diluted share.

•
While quarterly reported revenue was down 3 percent on weaker foreign currencies, local currency revenue increased 4 percent, driven by 7 percent growth in core products. Strong shipping activity of self-contained breathing apparatus (SCBA), fire helmets and fixed gas and flame detection was partially offset by weaker results in industrial head protection and portable gas detection instruments, primarily in energy markets.

•
Local currency sales of SCBA increased 27 percent, driven by growth of 62 percent in North America. Global backlog of SCBA is $82 million, more than doubling from the same period a year ago.

•
Products developed within the last five years drove 37 percent of quarterly core product revenue, compared to 22 percent a year ago.



    

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Comments from Management
“Our first quarter reflected a strong uptick in SCBA shipments offset by expected weakness in products sold into energy markets," said William M. Lambert, MSA President and CEO. He noted that the company continues to see meaningful levels of order activity in its new and revolutionary G1 SCBA, which helped to offset weakness in industrial head protection and portable gas detection, driven by decreased demand in the North American energy market. “Despite the challenges we’re seeing in the energy market, the 62 percent growth in SCBA in North America provides a sense of optimism as we enter the second quarter and further ramp up shipping activity against our growing backlog of business in this area," Mr. Lambert continued.
“While our first quarter results reflected anticipated weakness in foreign currencies and certain end markets, our robust SCBA backlog and continued success in Europe provides some momentum going forward. As it has in the past, our diversified geographic footprint and product portfolio continue to help us weather challenging conditions,” Mr. Lambert concluded.






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MSA Safety Incorporated
Condensed Consolidated Statement of Income (Unaudited)
(In thousands, except earnings per share)
 
Three Months Ended March 31,
 
2015
 
2014
 
 
 
 
Net sales
$
256,708

 
$
265,045

Other income, net
641

 
356

 
257,349

 
265,401

 
 
 
 
Cost of products sold
139,885

 
143,230

Selling, general and administrative
81,368

 
85,241

Research and development
10,914

 
11,241

Restructuring and other charges
731

 
1,900

Interest expense
2,473

 
2,530

Currency exchange (gains) losses, net
(2,548
)
 
352

 
232,823

 
244,494

 
 
 
 
Income from continuing operations before income taxes
24,526

 
20,907

Provision for income taxes
15,384

 
7,604

Income from continuing operations
9,142

 
13,303

Income from discontinued operations
308

 
614

Net income
9,450

 
13,917

Net loss attributable to noncontrolling interests
232

 
109

Net income attributable to MSA Safety Incorporated
9,682

 
14,026

 
 
 
 
 
 
 
 
Income from continuing operations
9,316

 
13,522

Income from discontinued operations
366

 
504

Net income attributable to MSA Safety Incorporated
9,682

 
14,026

 
 
 
 
Earnings Per Share Attributable to MSA Safety Incorporated
 
 
 
Basic
 
 
 
Income from continuing operations
$0.25
 
$0.37
Income from discontinued operations
$0.01
 
$0.01
  Net income
$0.26
 
$0.38
 
 
 
 
Diluted
 
 
 
Income from continuing operations
$0.25
 
$0.36
Income from discontinued operations
$0.01
 
$0.01
  Net income
$0.26
 
$0.37
 
 
 
 
Basic shares outstanding
37,356

 
37,015

Diluted shares outstanding
37,849

 
37,617


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MSA Safety Incorporated
Condensed Consolidated Balance Sheet (Unaudited)
(In thousands)
 
March 31, 2015
 
December 31, 2014
Assets
 
 
 
  Cash and cash equivalents
$
86,301

 
$
105,998

  Trade receivables, net
205,914

 
211,440

  Inventories
137,681

 
122,954

  Other current assets
70,994

 
57,477

    Total current assets
500,890

 
497,869

 
 
 
 
Property, net
147,723

 
151,352

Prepaid pension cost
77,142

 
75,017

Goodwill
246,653

 
252,520

Other noncurrent assets
285,779

 
288,034

   Total assets
1,258,187

 
1,264,792

 
 
 
 
Liabilities and shareholders' equity
 
 
 
  Notes payable and current portion of long-term debt
$
7,205

 
$
6,700

  Accounts payable
79,512

 
70,210

  Other current liabilities
163,052

 
157,147

   Total current liabilities
249,769

 
234,057

 
 
 
 
Long-term debt
266,000

 
245,000

Pensions and other employee benefits
162,289

 
174,598

Deferred tax liabilities
27,094

 
26,306

Other noncurrent liabilities
33,789

 
46,198

Total shareholders' equity
519,246

 
538,633

   Total liabilities and shareholders' equity
1,258,187

 
1,264,792


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MSA Safety Incorporated
Condensed Consolidated Statement of Cash Flows (Unaudited)
(In thousands)
 
Three Months Ended March 31,
 
2015
 
2014
 
 
 
 
Net income
$
9,450

 
$
13,917

Depreciation and amortization
6,937

 
7,459

Change in working capital
(11,514
)
 
4,588

Other operating
(21,536
)
 
(16,567
)
  Cash from operations
(16,663
)
 
9,397

 
 
 
 
Capital expenditures
(7,469
)
 
(7,204
)
  Cash from investing
(7,469
)
 
(7,204
)
 
 
 
 
Change in debt
21,553

 
15,297

Cash dividends paid
(11,553
)
 
(11,181
)
Other financing
(735)

 
454

  Cash from financing
9,265

 
4,570

 
 
 
 
Exchange rate changes
(4,830
)
 
(816
)
 
 
 
 
(Decrease) Increase in cash
(19,697
)
 
5,947


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MSA Safety Incorporated
Segment Information (Unaudited)
(In thousands)
 
Three Months Ended March 31,
 
 
2015
 
2014
 
 
 
 
Net sales
 
 
 
  North America
$
133,564

 
$
129,521

  Europe
66,013

 
74,938

  International
57,131

 
60,586

    Total
256,708

 
265,045

 
 
 
 
Net income (loss)
 
 
 
  North America
$
14,431

 
$
14,260

  Europe
(4,437
)
 
3,452

  International
3,662

 
4,591

  Corporate
(4,837
)
 
(7,886
)
  Reconciling Items
497

 
(895
)
  Income from continuing operations
9,316

 
13,522

  Income from discontinued operations
366

 
504

     Total
9,682

 
14,026


The Corporate segment was established on January 1, 2015 to reflect the activities of centralized functions in our corporate headquarters and to capture results in a manner that the chief operating decision maker reviews. The corporate segment primarily consists of administrative expenses and centrally-managed costs such as interest expense and foreign exchange gains or losses. Additionally, effective January 1, 2015, we changed the allocation methodology applied to Research and Development expense. The 2014 segment results have been recast to conform with current period presentation.


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MSA Safety Incorporated
Supplemental Segment Information (Unaudited)
Local Currency Revenue Growth
 
Three Months Ended March 31, 2015
 
Consolidated
 
North America
 
Europe
 
International
 
 
 
 
 
 
 
 
Breathing Apparatus
27
 %
 
62
 %
 
4
 %
 
(9
)%
Fire and Rescue Helmets
13
 %
 
5
 %
 
7
 %
 
48
 %
Fixed Gas and Flame Detection
7
 %
 
9
 %
 
(10
)%
 
53
 %
Fall Protection
7
 %
 
4
 %
 
33
 %
 
12
 %
Portable Gas Detection
(4
)%
 
(19
)%
 
25
 %
 
14
 %
Industrial Head Protection
(7
)%
 
(8
)%
 
19
 %
 
(11
)%
  Core Sales
7
 %
 
9
 %
 
3
 %
 
9
 %
 
 
 
 
 
 
 
 
Non-Core Sales
(9
)%
 
(18
)%
 
10
 %
 
(14
)%
 
 
 
 
 
 
 
 
Net Sales
4
 %
 
4
 %
 
4
 %
 
2
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

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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 March 31,
 
 
 
2015
 
2014
 
%
Change
 
 
 
 
 
 
 
 
 
 
 
 
Income from continuing operations attributable to MSA Safety Incorporated
9,316

 
13,522

 
(31.1)%
Nonrecurring tax charges associated with European reorganization
7,605

 
—

 
 
Income from continuing operations excluding nonrecurring tax charges
16,921

 
13,522

 
25.1%
 
 
 
 
 
 
Foreign currency (gain) / loss
(2,548
)
 
352

 
 
Restructuring charges
731

 
1,900

 
 
Self insured legal settlements and defense costs
86

 
2,117

 
 
Income tax benefit / (expense) on adjustments
521

 
(1,590
)
 
 
  Adjusted earnings
15,711

 
16,301

 
(3.6)%
 
 
 
 
 
 
  Adjusted earnings per diluted share
$
0.42

 
$
0.43

 
(2.3)%
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.

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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, industrial head protection, fire and rescue helmets 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, 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 25, 2015. 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 diluted 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.
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