MSA Announces Third Quarter Results

PITTSBURGH, Oct. 24, 2012 /PRNewswire/ -- MSA (NYSE: MSA) today announced that net sales for the third quarter of 2012 were $287 million, down $12 million when compared to the third quarter of 2011.  Excluding the effect of weakening currencies and the divestiture of the company's ballistic vest and North American ballistic helmet businesses, sales increased $14 million, or 5 percent.  Net income for the third quarter 2012 was $19 million, or 52 cents per basic share, a decrease of less than $1 million when compared with the same quarter last year. 

"Despite the slow-down we are seeing in certain geographic markets, the quarterly results we achieved from our primary areas of strategic focus in core product groups and emerging markets are providing a degree of encouragement," said William M. Lambert, MSA President and CEO.  "Excluding the impact of weakening foreign currencies, our quarterly revenue from our global core product groups increased 7 percent, with core product group sales to emerging markets up 18 percent," Mr. Lambert added. 

MSA's five core product groups include industrial head protection, fall protection devices, portable gas detection instruments, fixed gas and flame detection systems, and self-contained breathing apparatus (SCBA).  These products now represent 64 percent of MSA's global business.

"Driving demand for these products through innovation and exceptional customer support remains a critical element of our ongoing strategy," Mr. Lambert said.  "In addition to our emphasis on core products, our focus on reducing manufacturing costs, strengthening product mix and implementing more effective pricing strategies is providing solid returns."   Mr. Lambert noted that for the quarter, gross profit margins improved 220 basis points when compared to the third quarter of 2011. 

Sales in the North American segment decreased $10 million, or 7 percent, in the current quarter.  The decrease reflects the divestiture of the company's ballistic vest and North American Advanced Combat Helmet (ACH) businesses during the fourth quarter of 2011 and the second quarter of 2012, respectively.  Sales of ballistic vests and ACHs totaled $11 million in the third quarter of 2011.  Excluding this change, North America segment sales were flat, with a $4 million improvement in shipments of SCBAs to the fire service being partially offset by small decreases in other product groups.

Sales in the company's European segment decreased $4 million, or 6 percent, when compared to the third quarter of 2011, on a weakening euro.  Local currency sales were up $4 million on improved sales of gas detection products to industrial markets.  Currency translation effects decreased third quarter European segment sales, when stated in U.S. dollars, by $8 million.

Sales in MSA's International segment increased $2 million, or 2 percent, when compared to the third quarter of 2011.  On a local currency basis, sales increased $9 million reflecting stronger product demand in emerging markets across Latin America and Africa, primarily in industrial markets across a broad group of product lines.  Currency translation effects decreased International segment sales, when stated in U.S. dollars, by $7 million, primarily related to a weakening of the Australian dollar, Brazilian real and the South African rand.

Net income in MSA's North American segment was $15 million, a decrease of $4 million when compared to the third quarter of 2011.  The decrease in income reflects increased product liability related expenses and reduced pension income, partially offset by improved gross profit margins.  

Net income in MSA's European segment was $2 million.  Local currency net income increased $0.5 million in the current quarter due primarily to lower restructuring charges.  The remainder of the improvement reflects lower selling, general and administrative expenses in Western Europe, offset by lower gross profit margins.  Currency translation effects decreased current quarter European segment net income, when stated in U.S. dollars, by $0.4 million, primarily reflecting a weaker euro.

Net income in the International segment was $6 million, a decrease of $0.7 million due primarily to currency translation effects, which reduced current quarter International segment net income by $0.6 million reflecting a weaker Australian dollar, Brazilian real and South African rand.

The net loss reported in reconciling items for the third quarter of 2012 was $4 million compared to a net loss of $7 million in the third quarter of 2011.  The lower net loss in the third quarter of 2012 was primarily related to lower currency exchange losses and a tax benefit associated with a non-cash charitable contribution of land at MSA's Cranberry Woods office park near Pittsburgh.

"Our strategic focus on developing business from MSA's core product lines continues to produce favorable results," Mr. Lambert said.  "While we saw an increase in selling, general and administrative expenses during the quarter, we continued to see solid improvement in gross profits and other operating costs.  Although economic uncertainty is tempering some of our optimism going into the fourth quarter and beyond, it does not affect our determination.  I believe MSA's business strength and position in the marketplace afford us many opportunities for continued profitable growth," he concluded. 

About MSA:
Established in 1914, MSA is a 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 industries, including the fire service, the oil, gas and petrochemical industry, construction, mining and utilities, as well as the military.  Principal products include self-contained breathing apparatus, fixed gas and flame detection systems, handheld gas detection instruments, head protection products, fall protection devices and thermal imaging cameras.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:
This press release may contain forward-looking statements that involve risks and uncertainties. The forward-looking statements are not historical facts, but rather are based on current expectations, estimates, assumptions and projections about our industry, business, and future financial results.  Our actual results could differ materially from the results contemplated by these forward-looking statements due to a number of factors.  These factors include, but are not limited to, global economic conditions, spending patterns of government agencies, competitive pressures, product liability claims and our ability to collect related insurance receivables, 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
Condensed Consolidated Statement of Income (Unaudited)
(In thousands, except earnings per share)







Three Months Ended
September 30,

Nine Months Ended
September 30,


2012

2011

2012

2011

Net sales

$286,567

$ 298,241

$874,790

$ 869,473

Other income, net

169

2,398

8,433

4,353







286,736

300,639

883,223

873,826






Costs and expenses





Cost of products sold

164,313

177,353

502,419

519,179

Selling, general and administrative

81,606

78,621

236,591

227,382

Research and development

10,073

9,663

29,707

29,646

Restructuring and other charges

1,004

6,118

Interest

2,797

3,198

8,860

10,423

Currency exchange losses

617

431

1,845

986







259,406

270,270

779,422

793,734






Income before income taxes

27,330

30,369

103,801

80,092

Provision for income taxes

7,680

10,188

31,550

26,934






Net income

19,650

20,181

72,251

53,158

Net income attributable to noncontrolling interests

(417)

(209)

(1,101)

(285)






Net income attributable to Mine Safety Appliances Company

19,233

19,972

71,150

52,873






Earnings per share attributable to Mine Safety Appliances Company common shareholders





Basic

$       0.52

$       0.54

$       1.93

$       1.44






Diluted

$       0.51

$       0.54

$       1.90

$       1.42






Dividends per common share

$       0.28

$       0.26

$       0.82

$       0.77






Basic shares outstanding

36,633

36,236

36,535

36,206

Diluted shares outstanding

37,055

36,799

37,009

36,817









Mine Safety Appliances Company
Condensed Consolidated Balance Sheet (Unaudited)
(In thousands)


September 30,

2012


December 31,

2011

Current assets




Cash and cash equivalents

$        74,456


$        59,938

Trade receivables, net

214,930


192,627

Inventories

142,825


141,475

Other current assets

52,783


64,809

         Total current assets

484,994


458,849





Property, net

146,835


145,763

Prepaid pension cost

60,398


58,075

Goodwill

257,087


259,084

Other noncurrent assets

198,274


193,281

            Total

1,147,588


1,115,052





Current liabilities




Notes payable and current portion of long-term debt

$              726


$          8,263

Accounts payable

61,233


50,208

Other current liabilities

120,246


113,299

         Total current liabilities

182,205


171,770





Long-term debt

304,000


334,046

Pensions and other employee benefits

125,899


124,310

Deferred tax liabilities

30,398


30,458

Other noncurrent liabilities

14,465


15,057

Equity

490,621


439,411

         Total

1,147,588


1,115,052

Mine Safety Appliances Company
Consolidated Condensed Statement of Cash Flows (Unaudited)
(In thousands)


Nine Months Ended

September 30,


2012


2011





Net income

$      72,251


$    53,158

Depreciation and amortization

24,057


24,886

Change in working capital

2,763


(15,448)

Other operating

(10,037)


(24,190)

         Cash from operations

89,034


38,406





Capital expenditures

(24,949)


(21,330)

Property disposals and other investing

16,801


3,478

         Cash from investing

(8,148)


(17,852)





Change in debt

(37,551)


8,385

Cash dividends paid

(30,261)


(28,210)

Other financing

1,373


(125)

         Cash from financing

(66,439)


(19,950)





Exchange rate changes

71


(1,542)





Increase (decrease) in cash

14,518


(938)

Mine Safety Appliances Company
Segment Information (Unaudited)
(In thousands)


Three Months Ended

September 30,


Nine Months Ended

September 30,


2012


2011


2012


2011









Net sales








         North America

$    133,944


$    143,547


$    416,728


$    412,154

         Europe

67,660


71,696


207,450


211,403

         International

84,963


82,998


250,612


245,916

            Total

286,567


298,241


874,790


869,473









Net income (loss)








         North America

$      15,100


$      18,839


$      51,636


$      44,773

         Europe

2,039


1,859


9,794


5,540

         International

6,016


6,666


17,900


20,509

         Reconciling

(3,922)


(7,392)


(8,180)


(17,949)

            Total

19,233


19,972


71,150


52,873

SOURCE MSA



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