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8-K - FORM 8-K - MSA Safety Incd385561d8k.htm

Exhibit 99.1

 

LOGO

 

FROM:    MSA (Mine Safety Appliances Company)
   Ticker: MSA (NYSE)
   Contact: Mark Deasy – (724) 741- 8570

FOR IMMEDIATE RELEASE

MSA Announces Record Quarterly Sales and Income

PITTSBURGH, July 25, 2012 – MSA (NYSE: MSA) today announced that net sales for the second quarter of 2012 were $295 million, up slightly when compared to the second quarter of 2011, and a record for the quarter. Excluding the effect of weakening currencies, sales increased $16 million, or 6 percent. Net income for the second quarter 2012 was a record $28 million, or 76 cents per basic share, an increase of $8 million, or 43 percent, compared with $20 million, or 53 cents per basic share, for the same period last year.

“MSA’s consolidated second quarter results reflect further advancement in executing our corporate strategy,” said William M. Lambert, MSA President and CEO. “When you exclude the impact of weakening foreign currencies, our quarterly revenue from our 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 10 percent, with core product group sales to emerging markets up 18 percent. In addition, the results we are seeing in managing our manufacturing costs, product mix and pricing strategies are encouraging,” he said. Mr. Lambert noted that for the quarter, gross profit margins improved 140 basis points when compared to the second quarter of 2011.

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Second quarter sales in the company’s North American segment increased $8 million, or 6 percent, versus the same period of 2011. Sales increased $11 million in gas detection products, $2 million in head protection products and $1 million in fall protection products on higher shipments to industrial markets. Partially offsetting these increases was a decline of $5 million in sales of Advanced Combat Helmets (ACH) and ballistic vests to Military Markets. This decrease reflects the divestitures of the North American ballistic helmet and ballistic vest businesses. As announced in June, MSA completed the sale of its North American ballistic helmet business to Revision Military of Essex Junction, Vermont. The sale of the ballistic vest business closed in the fourth quarter of 2011.

Sales in the company’s European segment decreased $8 million, or 10 percent, when compared to the second quarter of 2011, on a weakening euro. Local currency sales were up 1 percent year-to-year. Currency translation effects decreased second quarter European segment sales, when stated in U.S. dollars, by $8 million.

Sales in MSA’s International segment were flat when compared to the second quarter of 2011. On a local currency basis, sales increased $7 million, or 10 percent, 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.

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Net income in MSA’s North American segment increased $4 million in the second quarter of 2012. The current quarter income includes $1 million of after-tax income related to the divestiture of the North American ballistic helmet business. Excluding this gain, net income increased $3 million. This increase reflects the previously discussed increase in sales and improved gross profits. These improvements were partially offset by higher operating costs on the higher level of sales.

Net income in MSA’s European segment income was up 2 percent in the quarter. Local currency net income increased $0.2 million in the current quarter in Europe, reflecting lower restructuring charges partially offset by increased research and development and selling, general, and administrative costs. The improvement in local currency net income was offset, when stated in U.S. dollars, by the currency translation effects of a weaker euro.

Net income in the International segment decreased $3 million in the second quarter of 2012. The decrease in income is primarily related to positive production variances in 2011 that did not repeat this quarter and weaker currencies in 2012. Currency translation effects decreased second quarter International segment net income, when stated in U.S. dollars, by $1 million, primarily related to a weaker Australian dollar, Brazilian real, and South African rand.

Net income in reconciling items for the second quarter of 2012 was $2 million, compared to a net loss of $5 million in the second quarter of 2011. This increase is primarily related to the gain on the sale of land in the company’s Cranberry Woods office park near Pittsburgh, an increase in currency exchange gains, and lower interest expense.

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“Our strategic focus on developing business from MSA’s core product lines continues to produce favorable results,” Mr. Lambert said. “On the strength of some large orders and nice gains in North America, Latin America and from General Monitors, our core product sales now represent nearly two-thirds of total sales, and our focus is on increasing that percentage in the quarters ahead. While the European economic situation remains a concern, and as we deal with slowing economic conditions in Asia and elsewhere, we remain committed to executing this strategy,” he concluded.

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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 fire service, the oil, gas and petrochemical industry, construction, mining and utilities, as well as the military. Principal products include self-contained breathing apparatus, handheld gas detection instruments, fixed gas and flame detection systems, 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 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 Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. 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.

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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,
 
     2012     2011     2012     2011  

Net sales

   $ 294,738      $ 294,733      $ 588,223      $ 571,232   

Other income, net

     8,259        1,159        8,264        1,955   
  

 

 

   

 

 

   

 

 

   

 

 

 
     302,997        295,892        596,487        573,187   
  

 

 

   

 

 

   

 

 

   

 

 

 

Costs and expenses

        

Cost of products sold

     171,612        175,724        338,106        341,826   

Selling, general and administrative

     77,922        75,716        154,985        148,761   

Research and development

     10,342        9,440        19,634        19,983   

Restructuring and other charges

     —          2,027        —          5,114   

Interest

     2,914        3,788        6,063        7,225   

Currency exchange (gains) losses

     (1,192     (111     1,228        555   
  

 

 

   

 

 

   

 

 

   

 

 

 
     261,598        266,584        520,016        523,464   
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes

     41,399        29,308        76,471        49,723   

Provision for income taxes

     13,120        9,827        23,870        16,746   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

     28,279        19,481        52,601        32,977   

Net (income) loss attributable to noncontrolling interests

     (284     111        (684     (76
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to Mine Safety Appliances Company

     27,995        19,592        51,917        32,901   
  

 

 

   

 

 

   

 

 

   

 

 

 

Earnings per share attributable to Mine Safety Appliances Company common shareholders

        

Basic

   $ 0.76      $ 0.53      $ 1.41      $ 0.90   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

   $ 0.75      $ 0.53      $ 1.39      $ 0.88   
  

 

 

   

 

 

   

 

 

   

 

 

 

Dividends per common share

   $ 0.28      $ 0.26      $ 0.54      $ 0.51   
  

 

 

   

 

 

   

 

 

   

 

 

 

Basic shares outstanding

     36,590        36,217        36,486        36,191   

Diluted shares outstanding

     37,081        36,854        36,986        36,825   

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Mine Safety Appliances Company

Consolidated Condensed Balance Sheet (Unaudited)

(In thousands)

 

     June 30,
2012
     December 31,
2011
 

Current assets

     

Cash and cash equivalents

   $ 65,062       $ 59,938   

Trade receivables, net

     217,291         192,627   

Inventories

     143,668         141,475   

Other current assets

     57,421         64,809   
  

 

 

    

 

 

 

Total current assets

     483,442         458,849   
  

 

 

    

 

 

 

Property, net

     146,660         145,763   

Prepaid pension cost

     59,581         58,075   

Goodwill

     256,069         259,084   

Other noncurrent assets

     192,462         193,281   
  

 

 

    

 

 

 

Total

     1,138,214         1,115,052   
  

 

 

    

 

 

 

Current liabilities

     

Notes payable and current portion of long-term debt

   $ 8,548       $ 8,263   

Accounts payable

     67,665         50,208   

Other current liabilities

     123,601         113,299   
  

 

 

    

 

 

 

Total current liabilities

     199,814         171,770   
  

 

 

    

 

 

 

Long-term debt

     294,011         334,046   

Pensions and other employee benefits

     124,163         124,310   

Deferred tax liabilities

     30,333         30,458   

Other noncurrent liabilities

     14,526         15,057   

Equity

     475,367         439,411   
  

 

 

    

 

 

 

Total

     1,138,214         1,115,052   
  

 

 

    

 

 

 

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Mine Safety Appliances Company

Consolidated Condensed Statement of Cash Flows

(In thousands)

 

     Six Months Ended
June 30,
 
     2012     2011  

Net income

   $ 52,601      $ 32,977   

Depreciation and amortization

     15,911        16,728   

Change in working capital

     4,149        (17,006

Other operating

     (7,632     (14,019
  

 

 

   

 

 

 

Cash from operations

     65,029        18,680   
  

 

 

   

 

 

 

Capital expenditures

     (17,814     (14,027

Other investing

     16,721        1,222   
  

 

 

   

 

 

 

Cash from investing

     (1,093     (12,805
  

 

 

   

 

 

 

Change in debt

     (39,714     15,024   

Cash dividends paid

     (19,900     (18,675

Other financing

     1,458        (609
  

 

 

   

 

 

 

Cash from financing

     (58,156     (4,260
  

 

 

   

 

 

 

Exchange rate changes

     (656     2,401   
  

 

 

   

 

 

 

Increase (decrease) in cash

     5,124        4,016   
  

 

 

   

 

 

 

 

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Mine Safety Appliances Company

Segment Information (Unaudited)

(In thousands)

 

     Three Months Ended
June 30,
    Six Months Ended
June 30,
 
     2012      2011     2012     2011  

Net sales

         

North America

   $ 145,300       $ 137,691      $ 282,784      $ 268,607   

Europe

     67,324         74,868        139,790        139,707   

International

     82,114         82,174        165,649        162,918   
  

 

 

    

 

 

   

 

 

   

 

 

 

Total

     294,738         294,733        588,223        571,232   
  

 

 

    

 

 

   

 

 

   

 

 

 

Net income (loss)

         

North America

   $ 20,279       $ 16,111      $ 36,536      $ 25,934   

Europe

     2,134         2,094        7,755        3,681   

International

     3,619         6,466        11,884        13,843   

Reconciling

     1,963         (5,079     (4,258     (10,557
  

 

 

    

 

 

   

 

 

   

 

 

 

Total

     27,995         19,592        51,917        32,901   
  

 

 

    

 

 

   

 

 

   

 

 

 

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