MSA Announces Record Fourth Quarter Earnings - Siouxland News - KMEG 14 and FOX 44

MSA Announces Record Fourth Quarter Earnings

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SOURCE MSA

PITTSBURGH, Feb. 12, 2014 /PRNewswire/ -- Global safety equipment manufacturer MSA (NYSE: MSA) today reported results for the fourth quarter and full year of 2013. 

Quarterly Highlights

  • Quarterly revenue from continuing operations of $291 million, up 3 percent over fourth quarter 2012. Income from continuing operations of $25 million, up 30 percent. Quarterly continuing earnings per basic share of $0.67, up 29 percent.
                                  
  • Excluding foreign exchange losses, restructuring charges and asset related gains and losses, adjusted earnings of $28 million, or $0.75 per basic share, increasing 36 percent over equivalently adjusted 2012 results.

Annual Highlights

  • Revenue from continuing operations in 2013 of $1.1 billion was flat compared to 2012, but grew 2 percent excluding the results from divested businesses in 2012 and weaker foreign currencies. Income from continuing operations of $86 million declined 2 percent. Continuing earnings per basic share were $2.31, a decline of 3 percent.
                                     
  • Excluding foreign exchange losses, restructuring charges and asset related gains and losses, adjusted earnings were $94 million, or $2.54 per share, increasing 11 percent over equivalently adjusted 2012 results.

William M. Lambert, MSA President and CEO, said, "Consistent growth in our five core product groups, combined with a strong fourth quarter performance in emerging markets to close the year, certainly provides momentum as we start 2014 – the year of our Centennial Anniversary."

Excluding sales of self-contained breathing apparatus (SCBA) to the U.S. fire service market – which continue to be restricted by regulatory related delays of product approvals – local currency sales of MSA core products increased 8 percent while emerging market revenues were up 16 percent in the fourth quarter.  "This reflects continued progress in advancing our strategy focused on those products that represent the strength of MSA and drive value for our shareholders," Mr. Lambert commented.

During the fourth quarter, and in line with MSA's strategy aimed at investing in core products and key markets, the company initiated steps to divest its South African distribution business and Zambian operations.  More than 94 percent of sales from these businesses are comprised of non-core products, resulting in lower levels of profitability. "By divesting these non-core assets, we can further increase our focus and resources on those product areas that truly drive value for our customers and shareholders," Mr. Lambert said.

The results of these South African non-core businesses – $12 million of revenue in the fourth quarter; $53 million of revenue for the year; and earnings of $0.01 and $0.06 per basic share for these respective periods – have been reclassified to discontinued operations.  These businesses were historically reported in MSA's International segment.  The company expects to complete the divestiture of these non-core businesses in 2014.  

Quarterly Reporting Segment Analysis:

Fourth quarter sales in the company's North American segment increased $1 million versus the same period of 2012.  Sales of SCBA to the U.S. fire service were down $5 million, primarily due to the ongoing delay in approvals of new products. This decline was offset by a $2 million increase in industrial head protection sales and a $5 million increase in sales of gas detection products to industrial markets. Net income in the company's North American segment increased $2 million in the quarter, reflecting lower restructuring costs and reduced selling, general and administrative expense.

Sales in the company's European segment increased by $3 million, or 4 percent, compared to the same period last year. Excluding favorable currency effects from a strengthening euro, sales were flat versus the prior year with improvements in military markets offset by a decline in industrial sales due to a lower level of large supplied-air respirator orders in the Caspian Sea region. European segment net income increased $1 million in the fourth quarter of 2013, attributable to favorable currency effects. Local currency net income was relatively flat compared to the prior year as lower selling, general and administrative expenses were offset by lower gross profit.

Continuing sales in MSA's International segment increased $5 million, or 8 percent, versus the same period of 2012.  Excluding an unfavorable currency translation impact of $5 million, International segment local currency sales increased $10 million, or 17 percent, on a higher level of large fire service orders in Latin America and stronger sales of gas detection products to industrial markets in Asia.

Local currency net income from continuing operations increased by $2 million in the fourth quarter on higher sales in Latin America and Asia and lower selling, general and administrative expense.

"While our results were impacted by ongoing regulatory issues in the U.S., our ongoing focus on driving demand of core products in industrial markets provided a solid finish to 2013," Mr. Lambert noted. "We remain committed to executing our corporate strategy, and I remain confident that it will continue to drive profitable growth and increase shareholder value in 2014 and beyond," Mr. Lambert concluded.


Mine Safety Appliances Company

Consolidated Condensed Statement of Income (Unaudited)

(In thousands, except earnings per share)



Three Months Ended

December 31,


Year Ended

December 31,


2013


2012


2013


2012









Net sales

$ 291,429


$ 282,341


$ 1,112,058


$ 1,110,443

Other (loss) income, net

(1,190)


2,536


(175)


10,876


290,239


284,877


1,111,883


1,121,319









Cost of products sold

161,380


154,099


615,213


620,895

Selling, general and administrative

77,107


82,836


309,206


312,858

Research and development

11,578


11,193


45,858


40,900

Restructuring and other charges

1,402


2,787


5,344


2,787

Interest expense

2,526


2,501


10,677


11,344

Currency exchange losses, net

1,305


1,368


5,452


3,192


255,298


254,784


991,750


991,976









Income before income taxes

34,941


30,093


120,133


129,343

Provision for income taxes

10,469


10,889


35,145


41,401

Income from continuing operations

24,472


19,204


84,988


87,942

Income from discontinued operations

614


306


3,061


3,819

Net income

25,086


19,510


88,049


91,761

Net loss (income) attributable to

       noncontrolling interests

325


(23)


198


(1,124)

Net income attributable to Mine Safety

       Appliances Company

25,411


19,487


88,247


90,637









Income from continuing operations

24,929


19,216


85,858


87,557

Income from discontinued operations

482


271


2,389


3,080

Net income attributable to Mine Safety

       Appliances Company

25,411


19,487


88,247


90,637









Earnings Per Share Attributable to Mine    

       Safety Appliances Company

Basic








Income from continuing operations

$         .67


$         .52


$         2.31


$         2.37

Income from discontinued operations

$         .01


$         .01


$         0.06


$         0.08

         Net income

$         .68


$         .53


$         2.37


$         2.45









Diluted








Income from continuing operations

$         .66


$         .51


$         2.28


$         2.34

Income from discontinued operations

$         .01


$         .01


$         0.06


$         0.08

         Net income

$         .67


$         .52


$         2.34


$         2.42









Basic shares outstanding

36,939


36,650


36,868


36,564

Diluted shares outstanding

37,487


37,138


37,450


37,042









 


Mine Safety Appliances Company

Consolidated Condensed Balance Sheet (Unaudited)

(In thousands)



December 31,

2013


December 31,

2012

Current assets




         Cash and cash equivalents

$         96,265


$         82,718

         Trade receivables, net

200,364


191,289

         Inventories

136,837


136,300

         Other current assets

67,500


53,241

            Total current assets

500,966


463,548





Property, net

152,755


147,465

Prepaid pension cost

121,054


42,818

Goodwill

260,134


258,400

Other noncurrent assets

199,361


199,515

            Total

1,234,270


1,111,746





Current liabilities




         Notes payable and current portion of long-term debt    

$           7,500


$           6,823

         Accounts payable

66,902


59,519

         Other current liabilities

117,162


122,458

            Total current liabilities

191,564


188,800





Long-term debt

260,667


272,333

Pensions and other employee benefits

152,084


151,536

Deferred tax liabilities

49,621


17,249

Other noncurrent liabilities

7,987


11,124

Equity

572,347


470,704

            Total

1,234,270


1,111,746


 


Mine Safety Appliances Company

Consolidated Condensed Statement of Cash Flows (Unaudited)

(In thousands)



Twelve Months Ended

December 31,


2013


2012





Net income

$        88,049


$        91,761

Depreciation and amortization    

30,764


31,702

Change in working capital

(16,072)


34,162

Other operating

8,040


(7,149)

         Cash from operations

110,781


150,476





Capital expenditures

(36,517)


(32,209)

Property disposals

1,360


20,193

Other investing

-


(5,269)

         Cash from investing

(35,157)


(17,285)





Change in debt

(11,005)


(63,128)

Cash dividends paid

(43,993)


(50,990)

Other financing

(3,242)


3,597

         Cash from financing

(58,240)


(110,521)





Exchange rate changes

(3,837)


110





Increase in cash

13,547


22,780


 


Mine Safety Appliances Company

Segment Information (Unaudited)

(In thousands)



Three Months Ended

December 31,


Year Ended

December 31,




2013


2012


2013


2012









         Net sales








         North America

$   135,874


$   135,199


$   559,193


$   551,927

         Europe

85,026


82,099


289,760


289,549

         International

70,529


65,043


263,105


268,967

            Total

291,429


282,341


1,112,058


1,110,443









         Net income (loss)








         North America

$     17,383


$     15,407


$     70,577


$     64,270

         Europe

8,114


7,503


18,398


20,424

         International

5,787


4,147


20,373


19,238

         Reconciling Items

(6,355)


(7,841)


(23,490)


(16,375)

Income from Continuing

    Operations

24,929


19,216


85,858


87,557

         Discontinued Operations    

482


271


2,389


3,080

            Total

25,411


19,487


88,247


90,637


 


Mine Safety Appliances Company

Reconciliation of As Reported Financial Measures to Non-GAAP Financial Measures (Unaudited)

Adjusted Continuing Operations Revenue and Related Growth

(In thousands)



Three Months Ended

December 31,




2013


2012


% Change

Total Revenue

$    303,571


$    294,114


3.2%

Less: Discontinued Operations

12,142


11,773









Continuing Operations Revenue

291,429


282,341


3.2%







Less: North American Ballistic Helmet Business    

-


-



Less: FX Impact

-


(2,043)



Adjusted Continuing Operations Revenue

$    291,429


$    280,298


4.0%




Year Ended

December 31,




2013


2012

% Change

Total Revenue

$1,164,750


$ 1,168,904


(0.4%)

Less: Discontinued Operations

52,692


58,461









Continuing Operations Revenue

1,112,058


1,110,443


0.1%







Less: North American Ballistic Helmet Business    

-


(9,600)



Less: FX Impact

-


(9,548)



Adjusted Continuing Operations Revenue

$ 1,112,058


$1,091,295


1.9%


 


Mine Safety Appliances Company

Reconciliation of As Reported Financial Measures to Non-GAAP Financial Measures (Unaudited)

Adjusted Earnings / Earnings per Share

(In thousands, except per share amounts)



Three Months Ended

December 31,


Year Ended

December 31,


 

2013


 

2012


%

Change


 

2013


 

2012


%

Change













Net Income Attributable to    

Mine Safety Appliances

Company

$     25,411


$     19,487


30.4%


$     88,247


$     90,637


(2.6%)

Less: Income from

Discontinued Operations

482


271




2,389


3,080















Income from Continuing

Operations

24,929


$     19,216


29.7%


$     85,858


$     87,557


(1.9%)

Foreign Currency Loss

1,305


1,368




5,452


3,192



Restructuring Charges

1,402


2,787




5,344


2,787



Land Impairment Charges    

1,557


-




1,557


-



Gains on Property Sales

-


(2,500)




(600)


(8,200)



 

Gain on Divestiture of

North American Ballistic

Helmet Business

-


-




-


(2,100)



 

Income Tax Benefit /

(Expense)

(1,279)


(596)




(3,443)


1,370















Adjusted Earnings

$     27,914


$     20,275


37.7%


$     94,168


$     84,606


11.3%













Adjusted Earnings per

Basic Share

$         0.75


$         0.55


36.4%


$         2.54


$         2.29


10.9%















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.


About MSA:
Established in 1914, MSA is the global leader in the development, manufacture and supply of safety products that protect people and facility infrastructures.  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. MSA has annual sales of approximately $1.1 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.

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 sec.gov, as well as on a number of other commercial websites.

Non-GAAP Financial Measures
This earnings release includes certain non-GAAP financial measures.  These financial measures include adjusted earnings and adjusted earnings per basic share.  The presentation of these financial measures does not comply with U.S. generally accepted accounting principles ("GAAP").  For an explanation of adjusted earnings, together with a reconciliation to net income from continuing operations, which is 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.

©2012 PR Newswire. All Rights Reserved.

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