2014

MSA Announces Record Continuing Sales and Operating Income -- Continuing Revenue Increases 4.5%

-- Operating Income Improves 16%

PITTSBURGH, July 24, 2013 /PRNewswire/ -- MSA (NYSE: MSA) today announced that net sales for the second quarter of 2013 were $300 million compared with $295 million for the second quarter of 2012, an increase of $5 million, or 2 percent.  Excluding the effect of weakening currencies and the company's second quarter 2012 divestiture of its North American ballistic helmet business, net sales were a record, increasing $13 million, or 4.5 percent.  Net income for the second quarter 2013 was $24 million, or $0.65 per basic share, a decrease of $4 million, or 14 percent, compared with $28 million, or $0.76 per basic share, for the same period last year.  Excluding after-tax restructuring expenses and foreign currency charges totaling $2 million, net income was $26 million, or $0.71 per basic share.  Furthermore, excluding $5 million of after-tax income from asset sales in the second quarter of 2012, the company's pro-forma net income this quarter was a record.

"MSA's consolidated second quarter results demonstrate continued success in executing our corporate strategy, a key element of which is driving global demand for the company's core products," said William M. Lambert, MSA President and CEO. 

"When you exclude the impact of weakening foreign currencies, our quarterly revenue from MSA's global core product groups – which include Head Protection, Fall Protection, Portable Gas Detection, Fixed Gas and Flame Detection, and Self-Contained Breathing Apparatus (SCBA) – increased 11 percent."  Mr. Lambert added that the company continued to see favorable results from its efforts to manage manufacturing costs and improve product mix.  For the current quarter, gross profit margins improved 250 basis points helping to drive operating income improvement of 16 percent when compared to the second quarter of 2012. 

On a geographic basis, second quarter sales in the company's North American segment increased $7 million, or 5 percent, versus the same period of 2012.  Excluding the impact of the ballistic helmet divestiture in the second quarter of 2012, North American segment sales increased $12 million, or 8 percent, when compared to the same period of 2012.  Sales of fixed gas and flame detection instruments, portable gas detection instruments and breathing apparatus increased $8 million, $4 million and $3 million, respectively, on higher shipments to the industrial and fire service markets.  These increases were partially offset by a $2 million decrease in gas mask sales to the military.

Sales in the company's European segment decreased $1 million, or 1 percent, when compared to the second quarter of 2012.  Excluding a favorable currency translation impact of $1 million, local currency sales decreased $2 million.  The decline was related to weakness in the fire service and military markets, notably in France and Italy, partially offset by strength in industrial markets throughout Europe.

Sales in MSA's International segment decreased $1 million, or 2 percent, versus the same period of 2012.  Excluding an unfavorable currency translation impact of $4 million, International segment local currency sales increased $3 million, or 4 percent, from the second quarter of 2012.  Local currency sales of portable gas detection instruments, fall protection products and fixed gas and flame detection instruments to industrial markets increased             $2 million, $1 million and $1 million, respectively.  These improvements were partially offset by declines across a range of other product groups. 

Net income in MSA's North American segment increased $1 million in the second quarter of 2013.  This increase reflects improved product margins on a higher level of core product sales and a lower effective tax rate, partially offset by increased research and development costs and higher selling, general and administrative expenses. 

Net income in MSA's European segment decreased $0.4 million in the second quarter of 2013, reflecting increased restructuring charges, partially offset by decreased selling, general and administrative expenses.    

International segment net income increased $2 million in the second quarter of 2013, primarily related to an increase in core product group sales, partially offset by higher restructuring charges. 

The net loss reported in segment information reconciling items for the second quarter of 2013 was $4 million, compared to net income of $2 million in the second quarter of 2012.  The decrease in reconciling items net income in the second quarter of 2013 reflects last year's one-time gain on the sale of assets and currency exchange losses.

"Our strategic focus on developing business from MSA's core product lines continues to generate strong results," Mr. Lambert said.  "While business conditions do remain challenging, our strategy is succeeding," he said.  "As we head into the second half of the year, our focus remains on driving demand for our core products, reducing manufacturing and operating costs, and accelerating our development of innovative safety products and instruments.  We have meaningful opportunities on each of these fronts, and we will continue to advance these initiatives in ways that equally benefit our customers and our shareholders," Mr. Lambert concluded.   

About MSA:
Established in 1914, MSA is a global leader in the development, manufacture and supply of safety products that protect people's health and safety.  Many MSA products typically 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 industries, including the oil, gas and petrochemical industry, the fire service, construction, mining and utilities, and the military.  Principal products include self-contained breathing apparatus, handheld gas detection instruments, fixed gas and flame detection systems, head protection products, and fall protection devices . The company also provides a broad range of consumer and contractor safety products through a joint venture with MCR Safety.  These products are marketed and sold under the Safety Works® brand.  MSA has annual sales of approximately $1.2 billion, manufacturing operations in the United States, Europe, Asia and Latin America, and 42 international locations.  Additional information is available on the company's Web site at www.MSAsafety.com.  Information on Safety Works products can be found at www.SafetyWorks.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, including without limitation all projections and anticipated levels of future performance, involve risks, uncertainties and other factors that may cause our actual results to differ materially from those discussed herein. Actual results can be affected by any number of factors, many of which are outside of management's control.  Among the factors that could cause such differences are global economic conditions, spending patterns of government agencies, competitive pressures, product liability claims, the success of new product introductions, currency exchange rate fluctuations, the identification and successful integration of acquisitions and the risks of doing business in foreign countries. These risks, uncertainties and other factors are detailed from time-to-time in our filings with the United States Securities and Exchange Commission ("SEC"). 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 a number of other commercial websites.

Mine Safety Appliances Company

Consolidated Condensed Statement of Income (Unaudited)

(In thousands, except earnings per share)





Three Months Ended
June 30,

Six Months Ended
June 30,


2013

2012

2013

2012

Net sales

$299,695

$ 294,738

$ 582,934

$ 588,223

Other income, net

548

8,259

428

8,264







300,243

302,997

583,362

596,487






Costs and expenses





Cost of products sold

166,815

171,612

325,272

338,106

Selling, general and administrative

81,021

77,922

164,608

154,985

Research and development

11,398

10,342

21,982

19,634

Restructuring and other charges

2,427

2,427

Interest expense

2,750

2,914

5,410

6,063

Currency exchange losses (gains), net

993

(1,192 )

2,112

1,228







265,404

261,598

521,811

520,016






Income before income taxes

34,839

41,399

61,551

76,471

Provision for income taxes

10,448

13,120

17,765

23,870






Net income

24,391

28,279

43,786

52,601

Net income attributable to noncontrolling interests

(342)

(284)

(451)

(684)






Net income attributable to Mine Safety Appliances Company

24,049

27,995

43,335

51,917






Earnings per share attributable to Mine Safety Appliances Company common shareholders





Basic

$       0.65

$       0.76

$       1.17

$       1.41






Diluted

$       0.64

$       0.75

$       1.15

$       1.39






Dividends per common share

$       0.30

$       0.28

$       0.58

$       0.54






Basic shares outstanding

36,880

36,590

36,807

36,486

Diluted shares outstanding

37,431

37,081

37,400

36,986

 

 

Mine Safety Appliances Company

Consolidated Condensed Balance Sheet (Unaudited)

(In thousands)




June 30,

2013


December 31,

2012

Current assets




Cash and cash equivalents

$        82,413


$        82,718

Trade receivables, net

212,874


191,289

Inventories

134,019


136,300

Other current assets

42,941


53,241

         Total current assets

472,247


463,548





Property, net

146,980


147,465

Prepaid pension cost

46,133


42,818

Goodwill

257,169


258,400

Other noncurrent assets

218,714


199,515

         Total

1,141,243


1,111,746





Current liabilities




Notes payable and current portion of long-term debt

$          7,020


$          6,823

Accounts payable

63,745


59,519

Other current liabilities

106,706


122,458

         Total current liabilities

177,471


188,800





Long-term debt

293,333


272,333

Pensions and other employee benefits

150,920


151,536

Deferred tax liabilities

18,064


17,249

Other noncurrent liabilities

11,189


11,124

Equity

490,266


470,704

         Total

1,141,243


1,111,746

 

 

Mine Safety Appliances Company

Consolidated Condensed Statement of Cash Flows

(In thousands)



Six Months Ended

June 30,


2013


2012





Net income

$    43,786


$    52,601

Depreciation and amortization

15,777


15,911

Change in working capital

(28,503)


4,149

Other operating

(9,283)


(7,632)

         Cash from operations

21,777


65,029





Capital expenditures

(16,956)


(17,814)

Property disposals and other investing

86


16,721

         Cash from investing

(16,870)


(1,093)





Change in debt

21,205


(39,714)

Cash dividends paid

(21,533)


(19,900)

Other financing

(1,670)


1,458

         Cash from financing

(1,998)


(58,156)





Exchange rate changes

(3,214)


(656)





Increase (decrease) in cash

(305)


5,124

 

 

Mine Safety Appliances Company

Segment Information (Unaudited)

(In thousands)



Three Months Ended

June 30,


Six Months Ended

June 30,


2013


2012


2013


2012









Net sales








North America

$    152,315


$    145,300


$    288,430


$    282,784

Europe

66,643


67,324


137,642


139,790

International

80,737


82,114


156,862


165,649

            Total

299,695


294,738


582,934


588,223









Net income (loss)








North America

$      21,009


$      20,279


$      37,164


$      36,536

Europe

1,707


2,134


5,336


7,755

International

5,188


3,619


11,857


11,884

Reconciling

(3,855)


1,963


(11,022)


(4,258)

         Total

24,049


27,995


43,335


51,917

 

 

SOURCE MSA



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