Pennsylvania | 1-15579 | 46-4914539 | ||
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification Number) |
1000 Cranberry Woods Drive Cranberry Township, Pennsylvania | 16066-5207 | |
(Address of principal executive offices) | (Zip Code) |
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02 | Results of Operations and Financial Condition |
Item 9.01 | Financial Statements and Exhibits |
(d) Exhibits | ||
99.1 | MSA Safety Incorporated Press Release dated October 27, 2016, announcing financial results for the quarter ended September 30, 2016. |
MSA SAFETY INCORPORATED | ||
(Registrant) | ||
By | /s/ Kenneth D. Krause | |
Kenneth D. Krause | ||
Vice President of Finance and Chief Financial Officer |
Exhibit No. | Description | |
99.1 | MSA Safety Incorporated Press Release dated October 27, 2016, announcing financial results for the quarter ended September 30, 2016. |
• | Reported revenue was $278 million, increasing 2 percent from a year ago on a reported and constant currency basis. |
• | Operating income was $40 million or 14.4 percent of net sales, increasing 470 basis points from a year ago. Adjusted operating income, excluding foreign currency losses and restructuring, was $43 million or 15.3 percent of net sales, increasing 270 basis points from a year ago. |
• | Net income from continuing operations was $25 million or $0.67 per diluted share, compared to $16 million or $0.41 per diluted share in the third quarter a year ago, increasing 63 percent. Adjusted earnings were $0.72 per diluted share, compared to $0.59 per diluted share a year ago, increasing 22 percent. |
• | UK-based fall protection company Latchways, acquired by MSA in 2015, generated net income of $0.03 per diluted share in the third quarter. |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Net sales | $ | 278,233 | $ | 273,746 | $ | 853,499 | $ | 817,465 | |||||||
Cost of products sold | 149,471 | 153,965 | 468,177 | 450,372 | |||||||||||
Gross profit | 128,762 | 119,781 | 385,322 | 367,093 | |||||||||||
Selling, general and administrative | 72,945 | 72,727 | 227,856 | 231,683 | |||||||||||
Research and development | 13,116 | 12,532 | 34,623 | 36,430 | |||||||||||
Restructuring and other charges | 1,889 | 3,740 | 3,697 | 4,698 | |||||||||||
Currency exchange losses, net | 790 | 4,327 | 2,498 | 3,336 | |||||||||||
Operating income | 40,022 | 26,455 | 116,648 | 90,946 | |||||||||||
Interest expense | 4,412 | 2,827 | 12,515 | 7,802 | |||||||||||
Other (income), net | (2,041) | (431) | (3,704) | (1,166) | |||||||||||
Total other expense, net | 2,371 | 2,396 | 8,811 | 6,636 | |||||||||||
Income from continuing operations before income taxes | 37,651 | 24,059 | 107,837 | 84,310 | |||||||||||
Provision for income taxes | 11,329 | 8,935 | 38,866 | 36,669 | |||||||||||
Income from continuing operations | 26,322 | 15,124 | 68,971 | 47,641 | |||||||||||
(Loss) income from discontinued operations | (1,300 | ) | 462 | 55 | 1,240 | ||||||||||
Net income | 25,022 | 15,586 | 69,026 | 48,881 | |||||||||||
Net (income) loss attributable to noncontrolling interests | (836 | ) | 390 | (2,006 | ) | 1,075 | |||||||||
Net income attributable to MSA Safety Incorporated | 24,186 | 15,976 | 67,020 | 49,956 | |||||||||||
Amounts attributable to MSA Safety Incorporated common shareholders: | |||||||||||||||
Income from continuing operations | 25,486 | 15,712 | 67,475 | 48,750 | |||||||||||
(Loss) income from discontinued operations | (1,300 | ) | 264 | (455 | ) | 1,206 | |||||||||
Net income | 24,186 | 15,976 | 67,020 | 49,956 | |||||||||||
Earnings per share attributable to MSA Safety Incorporated common shareholders: | |||||||||||||||
Basic | |||||||||||||||
Income from continuing operations | $ | 0.68 | $ | 0.42 | $ | 1.80 | $ | 1.30 | |||||||
(Loss) income from discontinued operations | $ | (0.04 | ) | $ | 0.01 | $ | (0.01 | ) | $ | 0.03 | |||||
Net income | $ | 0.64 | $ | 0.43 | $ | 1.79 | $ | 1.33 | |||||||
Diluted | |||||||||||||||
Income from continuing operations | $ | 0.67 | $ | 0.41 | $ | 1.77 | $ | 1.29 | |||||||
(Loss) income from discontinued operations | $ | (0.04 | ) | $ | 0.01 | $ | (0.01 | ) | $ | 0.03 | |||||
Net income | $ | 0.63 | $ | 0.42 | $ | 1.76 | $ | 1.32 | |||||||
Basic shares outstanding | 37,487 | 37,252 | 37,407 | 37,301 | |||||||||||
Diluted shares outstanding | 38,112 | 37,709 | 37,908 | 37,776 |
September 30, 2016 | December 31, 2015 | ||||||
Assets | |||||||
Cash and cash equivalents | $ | 106,033 | $ | 105,925 | |||
Trade receivables, net | 211,987 | 232,862 | |||||
Inventories | 132,542 | 125,849 | |||||
Notes receivable, insurance companies | 40,482 | 6,746 | |||||
Other current assets | 39,870 | 33,230 | |||||
Total current assets | 530,914 | 504,612 | |||||
Property, net | 149,939 | 155,839 | |||||
Prepaid pension cost | 69,300 | 62,072 | |||||
Goodwill | 340,533 | 340,338 | |||||
Notes receivable, insurance companies, noncurrent | 63,072 | 1,944 | |||||
Insurance receivable, noncurrent | 152,542 | 227,483 | |||||
Other noncurrent assets | 121,646 | 130,575 | |||||
Total assets | $ | 1,427,946 | $ | 1,422,863 | |||
Liabilities and shareholders' equity | |||||||
Notes payable and current portion of long-term debt | $ | 6,738 | $ | 6,650 | |||
Accounts payable | 56,367 | 68,206 | |||||
Other current liabilities | 130,183 | 177,031 | |||||
Total current liabilities | 193,288 | 251,887 | |||||
Long-term debt, net | 464,600 | 458,022 | |||||
Pensions and other employee benefits | 162,362 | 156,160 | |||||
Deferred tax liabilities | 26,255 | 24,872 | |||||
Other noncurrent liabilities | 14,508 | 14,794 | |||||
Total shareholders' equity | 566,933 | 517,128 | |||||
Total liabilities and shareholders' equity | $ | 1,427,946 | $ | 1,422,863 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Net income | $ | 25,022 | $ | 15,586 | $ | 69,026 | $ | 48,881 | |||||||
Depreciation and amortization | 8,919 | 6,982 | 26,651 | 22,646 | |||||||||||
Change in working capital and other operating | (15,026 | ) | (20,451 | ) | (64,240 | ) | (61,697) | ||||||||
Cash flow from operating activities | 18,915 | 2,117 | 31,437 | 9,830 | |||||||||||
Capital expenditures | (5,551 | ) | (9,133 | ) | (16,146 | ) | (25,148 | ) | |||||||
Acquisition, net of cash acquired | (18,261 | ) | — | (18,261 | ) | — | |||||||||
Property disposals and other investing | 967 | — | 17,932 | 7,969 | |||||||||||
Cash flow (used in) investing activities | (22,845 | ) | (9,133 | ) | (16,475 | ) | (17,179 | ) | |||||||
Change in debt | 19,459 | 125,138 | 16,083 | 143,142 | |||||||||||
Cash dividends paid | (12,391 | ) | (11,926 | ) | (36,675 | ) | (35,448 | ) | |||||||
Other financing | 1,177 | (136 | ) | 4,338 | (7,495 | ) | |||||||||
Cash flow from (used in) financing activities | 8,245 | 113,076 | (16,254 | ) | 100,199 | ||||||||||
Effect of exchange rate changes on cash and cash equivalents | (1,431 | ) | (4,851 | ) | 1,400 | (9,505 | ) | ||||||||
Increase in cash and cash equivalents | 2,884 | 101,209 | 108 | 83,345 |
Americas | International | Corporate | Consolidated | ||||||||||||
Three Months Ended September 30, 2016 | |||||||||||||||
Net sales | $ | 165,359 | $ | 112,874 | — | $ | 278,233 | ||||||||
Adjusted operating income (loss) | 41,458 | 10,511 | (9,268 | ) | 42,701 | ||||||||||
Adjusted operating margin % | 25.1 | % | 9.3 | % | 15.3 | % | |||||||||
Restructuring and other charges | (1,889 | ) | |||||||||||||
Currency exchange (losses), net | (790 | ) | |||||||||||||
Operating income | $ | 40,022 | |||||||||||||
Operating margin % | 14.4 | % | |||||||||||||
Nine Months Ended September 30, 2016 | |||||||||||||||
Net sales | $ | 510,324 | $ | 343,175 | — | $ | 853,499 | ||||||||
Adjusted operating income (loss) | 117,475 | 31,659 | (26,291 | ) | 122,843 | ||||||||||
Adjusted operating margin % | 23.0 | % | 9.2 | % | 14.4 | % | |||||||||
Restructuring and other charges | (3,697 | ) | |||||||||||||
Currency exchange (losses), net | (2,498 | ) | |||||||||||||
Operating income | $ | 116,648 | |||||||||||||
Operating margin % | 13.7 | % |
Americas | International | Corporate | Consolidated | |||||||||||||
Three Months Ended September 30, 2015 | ||||||||||||||||
Net sales | $ | 181,283 | $ | 92,463 | — | $ | 273,746 | |||||||||
Adjusted operating income (loss) | 40,470 | 1,408 | (7,356 | ) | 34,522 | |||||||||||
Adjusted operating margin % | 22.3 | % | 1.5 | % | 12.6 | % | ||||||||||
Restructuring and other charges | (3,740 | ) | ||||||||||||||
Currency exchange (losses), net | (4,327 | ) | ||||||||||||||
Operating income | $ | 26,455 | ||||||||||||||
Operating margin % | 9.7 | % | ||||||||||||||
Nine Months Ended September 30, 2015 | ||||||||||||||||
Net sales | $ | 519,350 | $ | 298,115 | — | $ | 817,465 | |||||||||
Adjusted operating income (loss) | 101,833 | 19,869 | (22,722 | ) | 98,980 | |||||||||||
Adjusted operating margin % | 19.6 | % | 6.7 | % | 12.1 | % | ||||||||||
Restructuring and other charges | (4,698 | ) | ||||||||||||||
Currency exchange (losses), net | (3,336 | ) | ||||||||||||||
Operating income | $ | 90,946 | ||||||||||||||
Operating margin % | 11.1 | % |
Three Months Ended September 30, 2016 | ||||||||||||||||||||
Breathing Apparatus | Fire and Rescue Helmets | Industrial Head Protection | Portable Gas Detection | Fixed Gas and Flame Detection | Fall Protection | Core Sales | Non-Core Sales | Net Sales | ||||||||||||
GAAP reported sales change | (21 | )% | (10 | )% | 2 | % | 8 | % | 9 | % | 114 | % | 1 | % | 5 | % | 2 | % | ||
Plus: Currency translation effects | — | % | — | % | 1 | % | 2 | % | — | % | 2 | % | 1 | % | 1 | % | — | % | ||
Constant currency sales change | (21 | )% | (10 | )% | 3 | % | 10 | % | 9 | % | 116 | % | 2 | % | 6 | % | 2 | % | ||
Less: Acquisitions | — | % | — | % | — | % | — | % | — | % | 124 | % | 6 | % | — | % | 5 | % | ||
Organic constant currency change | (21 | )% | (10 | )% | 3 | % | 10 | % | 9 | % | (8 | )% | (4 | )% | 6 | % | (3 | )% |
Nine Months Ended September 30, 2016 | ||||||||||||||||||||
Breathing Apparatus | Fire and Rescue Helmets | Industrial Head Protection | Portable Gas Detection | Fixed Gas and Flame Detection | Fall Protection | Core Sales | Non-Core Sales | Net Sales | ||||||||||||
GAAP reported sales change | 8 | % | (1 | )% | (7 | )% | 1 | % | (2 | )% | 116 | % | 7 | % | (6 | )% | 4 | % | ||
Plus: Currency translation effects | 1 | % | 1 | % | 4 | % | 4 | % | 1 | % | 4 | % | 2 | % | 3 | % | 3 | % | ||
Constant currency sales change | 9 | % | — | % | (3 | )% | 5 | % | (1 | )% | 120 | % | 9 | % | (3 | )% | 7 | % | ||
Less: Acquisitions | — | % | — | % | — | % | — | % | — | % | 129 | % | 7 | % | — | % | 6 | % | ||
Organic constant currency change | 9 | % | — | % | (3 | )% | 5 | % | (1 | )% | (9 | )% | 2 | % | (3 | )% | 1 | % |
Three Months Ended September 30, 2016 | ||||||||||||||||||||
Breathing Apparatus | Fire and Rescue Helmets | Industrial Head Protection | Portable Gas Detection | Fixed Gas and Flame Detection | Fall Protection | Core Sales | Non-Core Sales | Net Sales | ||||||||||||
GAAP reported sales change | (33 | )% | (2 | )% | 3 | % | 11 | % | 2 | % | 11 | % | (10 | )% | (2 | )% | (9 | )% | ||
Plus: Currency translation effects | — | % | — | % | 1 | % | 2 | % | — | % | 2 | % | 1 | % | 1 | % | 1 | % | ||
Constant currency sales change | (33 | )% | (2 | )% | 4 | % | 13 | % | 2 | % | 13 | % | (9 | )% | (1 | )% | (8 | )% | ||
Less: Acquisitions | — | % | — | % | — | % | — | % | — | % | 20 | % | 1 | % | — | % | 1 | % | ||
Organic constant currency change | (33 | )% | (2 | )% | 4 | % | 13 | % | 2 | % | (7 | )% | (10 | )% | (1 | )% | (9 | )% |
Nine Months Ended September 30, 2016 | ||||||||||||||||||||
Breathing Apparatus | Fire and Rescue Helmets | Industrial Head Protection | Portable Gas Detection | Fixed Gas and Flame Detection | Fall Protection | Core Sales | Non-Core Sales | Net Sales | ||||||||||||
GAAP reported sales change | 5 | % | 12 | % | (8 | )% | — | % | (7 | )% | 7 | % | — | % | (8 | )% | (2 | )% | ||
Plus: Currency translation effects | 1 | % | 1 | % | 4 | % | 4 | % | 2 | % | 4 | % | 2 | % | 3 | % | 3 | % | ||
Constant currency sales change | 6 | % | 13 | % | (4 | )% | 4 | % | (5 | )% | 11 | % | 2 | % | (5 | )% | 1 | % | ||
Less: Acquisitions | — | % | — | % | — | % | — | % | — | % | 20 | % | 2 | % | — | % | 1 | % | ||
Organic constant currency change | 6 | % | 13 | % | (4 | )% | 4 | % | (5 | )% | (9 | )% | — | % | (5 | )% | — | % |
Three Months Ended September 30, 2016 | ||||||||||||||||||||
Breathing Apparatus | Fire and Rescue Helmets | Industrial Head Protection | Portable Gas Detection | Fixed Gas and Flame Detection | Fall Protection | Core Sales | Non-Core Sales | Net Sales | ||||||||||||
GAAP reported sales change | 12 | % | (15 | )% | (5 | )% | 3 | % | 19 | % | 810 | % | 25 | % | 13 | % | 22 | % | ||
Plus: Currency translation effects | — | % | 1 | % | 3 | % | 2 | % | 1 | % | 1 | % | 1 | % | — | % | 1 | % | ||
Constant currency sales change | 12 | % | (14 | )% | (2 | )% | 5 | % | 20 | % | 811 | % | 26 | % | 13 | % | 23 | % | ||
Less: Acquisitions | — | % | — | % | — | % | — | % | — | % | 822 | % | 17 | % | — | % | 13 | % | ||
Organic constant currency change | 12 | % | (14 | )% | (2 | )% | 5 | % | 20 | % | (11 | )% | 9 | % | 13 | % | 10 | % |
Nine Months Ended September 30, 2016 | ||||||||||||||||||||
Breathing Apparatus | Fire and Rescue Helmets | Industrial Head Protection | Portable Gas Detection | Fixed Gas and Flame Detection | Fall Protection | Core Sales | Non-Core Sales | Net Sales | ||||||||||||
GAAP reported sales change | 15 | % | (9 | )% | (6 | )% | 4 | % | 3 | % | 993 | % | 21 | % | (3 | )% | 15 | % | ||
Plus: Currency translation effects | 2 | % | 2 | % | 5 | % | 2 | % | 2 | % | 4 | % | 2 | % | 2 | % | 2 | % | ||
Constant currency sales change | 17 | % | (7 | )% | (1 | )% | 6 | % | 5 | % | 997 | % | 23 | % | (1 | )% | 17 | % | ||
Less: Acquisitions | — | % | — | % | — | % | — | % | — | % | 998 | % | 16 | % | — | % | 12 | % | ||
Organic constant currency change | 17 | % | (7 | )% | (1 | )% | 6 | % | 5 | % | (1 | )% | 7 | % | (1 | )% | 5 | % |
Three Months Ended September 30, 2016 | ||||||||
Consolidated | Americas | International | ||||||
Fall Protection* | 116 | % | 13 | % | 811 | % | ||
Portable Gas Detection | 10 | % | 13 | % | 5 | % | ||
Fixed Gas and Flame Detection | 9 | % | 2 | % | 20 | % | ||
Industrial Head Protection | 3 | % | 4 | % | (2 | )% | ||
Fire and Rescue Helmets | (10 | )% | (2 | )% | (14 | )% | ||
Breathing Apparatus | (21 | )% | (33 | )% | 12 | % | ||
Core Sales | 2 | % | (9 | )% | 26 | % | ||
Core excluding Latchways | (4 | )% | (10 | )% | 9 | % | ||
Non-Core Sales | 6 | % | (1 | )% | 13 | % | ||
Net Sales | 2 | % | (8 | )% | 23 | % | ||
Net Sales excluding Latchways | (3 | )% | (9 | )% | 10 | % |
Nine Months Ended September 30, 2016 | ||||||||
Consolidated | Americas | International | ||||||
Fall Protection* | 120 | % | 11 | % | 997 | % | ||
Portable Gas Detection | 5 | % | 4 | % | 6 | % | ||
Fixed Gas and Flame Detection | (1 | )% | (5 | )% | 5 | % | ||
Industrial Head Protection | (3 | )% | (4 | )% | (1 | )% | ||
Fire and Rescue Helmets | — | % | 13 | % | (7 | )% | ||
Breathing Apparatus | 9 | % | 6 | % | 17 | % | ||
Core Sales | 9 | % | 2 | % | 23 | % | ||
Core excluding Latchways | 2 | % | — | % | 7 | % | ||
Non-Core Sales | (3 | )% | (5 | )% | (1 | )% | ||
Net Sales | 7 | % | 1 | % | 17 | % | ||
Net Sales excluding Latchways | 1 | % | — | % | 5 | % |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||
2016 | 2015 | % Change | 2016 | 2015 | % Change | ||||||||||||||||
GAAP reported SG&A expense | $ | 72,945 | $ | 72,727 | — | % | $ | 227,856 | $ | 231,683 | (2 | )% | |||||||||
Plus: Currency translation effects | — | (1,049 | ) | — | (5,522 | ) | |||||||||||||||
Constant currency SG&A expense | $ | 72,945 | $ | 71,678 | 2 | % | $ | 227,856 | $ | 226,161 | 1 | % | |||||||||
Less: Acquisitions | 3,089 | 707 | 11,218 | 707 | |||||||||||||||||
Organic constant currency SG&A expense | $ | 69,856 | $ | 70,971 | (2 | )% | $ | 216,638 | $ | 225,454 | (4 | )% |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||
2016 | 2015 | % Change | 2016 | 2015 | % Change | ||||||||||||||
Income from continuing operations attributable to MSA Safety Incorporated | $ | 25,486 | $ | 15,712 | 62% | $ | 67,475 | $ | 48,750 | 38% | |||||||||
Tax charges associated with European reorganization | — | — | 3,600 | 7,605 | |||||||||||||||
Non-deductible transaction costs | — | 707 | — | 707 | |||||||||||||||
Subtotal | 25,486 | 16,419 | 55% | 71,075 | 57,062 | 25% | |||||||||||||
Restructuring and other charges | 1,889 | 3,740 | 3,697 | 4,698 | |||||||||||||||
Self-insured legal settlements and defense costs | 20 | 708 | 315 | 1,050 | |||||||||||||||
Transaction and integration costs | 310 | — | 821 | — | |||||||||||||||
Asset related (gains) losses, net | (256 | ) | 206 | (815 | ) | 538 | |||||||||||||
Currency exchange losses, net | 790 | 4,327 | 2,498 | 3,336 | |||||||||||||||
Income tax expense on adjustments | (829 | ) | (3,287 | ) | (2,123 | ) | (3,300 | ) | |||||||||||
Adjusted earnings | 27,410 | 22,113 | 24% | 75,468 | 63,384 | 19% | |||||||||||||
Adjusted earnings per diluted share | $ | 0.72 | $ | 0.59 | 22% | $ | 1.99 | $ | 1.68 | 18% |
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