MSA Announces Fourth Quarter and Full Year 2017 Results

PITTSBURGH, Feb. 20, 2018 /PRNewswire/ -- Global safety equipment manufacturer MSA Safety Incorporated (NYSE: MSA) today reported results for the fourth quarter and full year of 2017.

Quarterly Highlights

    --  Reported revenue was $346 million, increasing 17 percent from a year ago
        on a reported basis and 14 percent on a constant currency basis.


    --  Quarterly GAAP loss from continuing operations was $33 million or $0.87
        per basic share, compared to earnings of $25 million or $0.67 per basic
        share in the same period a year ago. The decline in GAAP earnings is
        attributable to a $93 million non-cash pre-tax charge related primarily
        to increasing the cumulative trauma product liability reserve for
        estimated unasserted, or incurred but not reported ("IBNR"), claims, net
        of expected insurance collections, and a $20 million income tax charge
        associated with U.S. Tax Reform.
    --  Adjusted earnings increased 69 percent to $51 million or $1.31 per
        diluted share, compared to adjusted earnings of $30 million or $0.78 per
        diluted share in the same period a year ago, on strong revenue growth
        throughout MSA's core product portfolio, the company's 2017 acquisition
        of firefighter protective clothing manufacturer Globe Manufacturing, and
        a streamlined cost structure.

Annual Highlights

    --  Reported revenue was $1.197 billion, increasing 4 percent from a year
        ago on a reported basis and 3 percent on a constant currency basis.


    --  Selling, general and administrative expenses declined $8 million on a
        reported basis and $16 million on an organic constant currency basis,
        exceeding the company's full year cost savings target of $10 million.


    --  GAAP earnings from continuing operations were $26 million, or $0.68 per
        basic share, compared to $93 million, or $2.47 per basic share, in the
        same period a year ago. The decline in GAAP earnings is attributable to
        a $126 million pre-tax charge associated with increasing the company's
        cumulative trauma product liability reserve for asserted claims in the
        second quarter and IBNR claims in the fourth quarter, net of expected
        insurance collections, and a $20 million income tax charge associated
        with U.S. Tax Reform.


    --  Adjusted earnings increased 34 percent to $141 million, or $3.65 per
        diluted share, compared to adjusted earnings of $105 million, or $2.77
        per diluted share, in the same period a year ago. The acquisition of
        Globe, a streamlined cost structure, and a lower effective tax rate were
        the key drivers of earnings growth in 2017.
    --  Cash flow from operating activities was $230 million compared to $135
        million in the same period a year ago, reflecting higher collections of
        insurance receivables partially offset by higher levels of working
        capital to support elevated demand across the company's core product
        portfolio. In 2017, the company invested $216 million in the acquisition
        of Globe and returned $70 million to shareholders through dividend
        payments and repurchases of common stock.

Cumulative Trauma Product Liability Charge

    --  In the fourth quarter of 2017, the company in consultation with an
        outside valuation consultant and outside legal counsel, performed a
        review for IBNR cumulative trauma product liability claims. Based on
        that review process, it was determined that a reasonable estimate for
        the liability of its IBNR claims was $111 million through the year 2060.
        The reserve is not discounted to present value.


    --  The company's fourth quarter GAAP results include a $93 million non-cash
        pre-tax charge, or $63 million after tax ($1.65 per diluted share),
        which primarily reflects the increase to the cumulative trauma product
        liability reserve for IBNR claims, net of expected insurance
        collections.


    --  The ability to make a reasonable estimate of the potential liability for
        IBNR cumulative trauma product liability claims reflects stabilization
        of a number of factors which are important to the estimation process.
        This stabilization has enabled greater predictability of potential
        cumulative trauma product liability related to IBNR claims.
    --  The company's cumulative trauma product liability reserve balance was
        $181 million at the end of the quarter, which includes reserves for both
        asserted and IBNR claims. The company has insurance and notes receivable
        totaling $212 million.

Comments from Management

"Our fourth quarter results reflect improving macro conditions across many of our key end markets and geographies, as well as returns on investments made in strategic acquisitions and cost reduction programs," said William M. Lambert, MSA Chairman and CEO. "Our quarterly revenue reflected record performance for MSA and increased 14 percent in constant currency from a year ago, or 6 percent excluding Globe. Additionally, our streamlined cost structure provided support to leverage our revenue growth into a 69 percent increase in adjusted earnings."

Mr. Lambert noted that the company finished the year with a backlog pipeline that is trending approximately 10 percent higher than the end of the third quarter on strong demand for industrial products and self-contained breathing apparatus for the fire service market. "Typically, we see a seasonal decline in backlog during the fourth quarter. The solid quarterly revenue growth coupled with an elevated level of backlog at year end highlights the positive momentum we see occurring in many of our end markets," Mr. Lambert commented.

Regarding the increase to the company's product liability reserve, Mr. Lambert noted the reserve relates to products sold many years ago that are no longer part of the MSA portfolio. "For more than a decade, we have funded product liability settlements from operating cash flow," Mr. Lambert explained. "Through the ongoing successful resolution of insurance litigation, we continue to make good progress collecting insurance proceeds and establishing cash flow streams for the future, which I expect will allow us to fund these liabilities without a material impact on our capital allocation priorities."

"As we look ahead to 2018, we are highly focused on generating revenue growth and investing in the programs, people and technology that will help us reach our growth and profitability targets. With an expected tailwind from U.S. tax reform, combined with healthy conditions in our end markets and a strong balance sheet, we are well positioned to create value for our stakeholders in 2018 and beyond," he concluded.


    MSA Safety Incorporated

    Condensed Consolidated Statement of Income (Unaudited)

    (In thousands, except per share amounts)


                                                                                             Three Months Ended                          Twelve Months Ended
                                                                                                December 31,                                 December 31,

                                                                                        2017                  2016         2017                            2016
                                                                                        ----                  ----         ----                            ----


    Net sales                                                                                $346,140                           $296,031                            $1,196,809  $1,149,530

    Cost of products sold                                                            191,569                       157,710                   656,411                    625,887
                                                                                     -------                       -------                   -------                    -------

    Gross profit                                                                     154,571                       138,321                   540,398                    523,643


    Selling, general and administrative                                               75,467                        78,288                   297,801                    306,144

    Research and development                                                          14,779                        12,224                    50,061                     46,847

    Restructuring charges                                                                712                         1,997                    17,632                      5,694

    Currency exchange losses (gains), net                                              1,133                       (1,732)                    5,127                        766

    Other operating expense (a)                                                       93,476                             -                  126,432                          -

    Operating (loss) income                                                         (30,996)                       47,544                    43,345                    164,192


    Interest expense                                                                   4,794                         3,896                    15,360                     16,411

    Other expense (income), net                                                          271                         (426)                  (1,790)                   (4,130)
                                                                                         ---                          ----                    ------                     ------

    Total other expense, net                                                           5,065                         3,470                    13,570                     12,281


    (Loss) income from continuing operations before income taxes                    (36,061)                       44,074                    29,775                    151,911

    (Benefit) provision for income taxes                                             (3,487)                       18,938                     2,819                     57,804
                                                                                      ------                        ------                     -----                     ------

    (Loss) income from continuing operations                                        (32,574)                       25,136                    26,956                     94,107

    Loss from discontinued operations                                                      -                        (300)                        -                     (245)
                                                                                         ---                         ----                       ---                      ----

    Net (loss) income                                                               (32,574)                       24,836                    26,956                     93,862

    Net (income) loss attributable to noncontrolling interests                         (410)                           80                     (929)                   (1,926)
                                                                                        ----                           ---                      ----                     ------

    Net (loss) income attributable to MSA Safety Incorporated                       (32,984)                       24,916                    26,027                     91,936
                                                                                     =======                        ======                    ======                     ======


    Amounts attributable to MSA Safety Incorporated common shareholders:

    (Loss) income from continuing operations                                        (32,984)                       25,216                    26,027                     92,691

    Loss from discontinued operations                                                      -                        (300)                        -                     (755)
                                                                                         ---                         ----                       ---                      ----

      Net (loss) income                                                             (32,984)                       24,916                    26,027                     91,936
                                                                                     =======                        ======                    ======                     ======


    Earnings per share attributable to MSA Safety Incorporated common shareholders:

    Basic

    (Loss) income from continuing operations                                                  $(0.87)                             $0.67                                 $0.68       $2.47

    Loss from discontinued operations                                                      $        -                           $(0.01)                          $         -    $(0.02)
                                                                                         ---      ---                            ------                         ---       ---     ------

      Net (loss) income                                                                       $(0.87)                             $0.66                                 $0.68       $2.45
                                                                                               ======                              =====                                 =====       =====


    Diluted

    (Loss) Income from continuing operations                                                  $(0.87)                             $0.66                                 $0.67       $2.44

    Loss from discontinued operations                                                      $        -                           $(0.01)                          $         -    $(0.02)
                                                                                         ---      ---                            ------                         ---       ---     ------

      Net (loss) income                                                                       $(0.87)                             $0.65                                 $0.67       $2.42
                                                                                               ======                              =====                                 =====       =====


    Basic shares outstanding                                                          38,079                        37,602                    37,997                     37,456

    Diluted shares outstanding                                                        38,079                        38,218                    38,697                     37,986


    (a) Year to date amount is primarily associated with increasing the company's cumulative trauma product liability reserve for asserted and IBNR claims.


    MSA Safety Incorporated

    Condensed Consolidated Balance Sheet (Unaudited)

    (In thousands)


                                                             December 31, 2017            December 31, 2016
                                                             -----------------            -----------------

    Assets

    Cash and cash equivalents                                                    $134,244                      $113,759

    Trade receivables, net                                             244,198                       209,514

    Inventories                                                        153,739                       103,066

    Notes receivable, insurance companies                               17,333                         4,180

    Other current assets                                                72,783                        42,287
                                                                        ------                        ------

        Total current assets                                           622,297                       472,806


    Property, net                                                      157,014                       148,678

    Prepaid pension cost                                                83,060                        62,916

    Goodwill                                                           422,185                       333,276

    Notes receivable, insurance companies, noncurrent                   59,567                        63,147

    Insurance receivable, noncurrent                                   123,089                       157,929

    Other noncurrent assets                                            217,614                       115,168
                                                                       -------                       -------

       Total assets                                                            $1,684,826                    $1,353,920
                                                                               ==========                    ==========


    Liabilities and shareholders' equity

    Notes payable and current portion of long-term debt, net                      $26,680                       $26,666

    Accounts payable                                                    87,061                        62,734

    Other current liabilities                                          175,538                       132,010
                                                                       -------                       -------

       Total current liabilities                                       289,279                       221,410


    Long-term debt, net                                                447,832                       363,836

    Pensions and other employee benefits                               170,773                       157,927

    Deferred tax liabilities                                             9,341                        34,044

    Other noncurrent liabilities                                       165,023                        15,491

    Total shareholders' equity                                         602,578                       561,212
                                                                       -------                       -------

       Total liabilities and shareholders' equity                              $1,684,826                    $1,353,920
                                                                               ==========                    ==========


    MSA Safety Incorporated

    Condensed Consolidated Statement of Cash Flows (Unaudited)

    (In thousands)


                                                                       Three Months Ended                Twelve Months Ended
                                                                          December 31,                       December 31,

                                                                     2017                 2016            2017                    2016
                                                                     ----                 ----            ----                    ----


    Net (loss) income                                                       $(32,574)                           $24,836                  $26,956   $93,862

    Depreciation and amortization                                  10,212                          8,622                       37,877       35,273

    Change in working capital and other operating                  63,452                         69,999                      165,503        5,759

      Cash flow from operating activities                          41,090                        103,457                      230,336      134,894
                                                                   ------                        -------                      -------      -------


    Capital expenditures                                         (11,995)                       (9,377)                    (23,725)    (25,523)

    Acquisition, net of cash acquired                             (2,318)                         (188)                   (216,308)     (18,449)

    Property disposals and other investing                            103                            282                          832       18,214

      Cash flow used in investing activities                     (14,210)                       (9,283)                   (239,201)     (25,758)
                                                                  -------                         ------                     --------      -------


    Change in debt                                                  1,346                       (76,991)                      77,246     (60,908)

    Cash dividends paid                                          (13,337)                      (12,399)                    (52,537)    (49,074)

    Company stock purchases                                         (857)                             -                    (17,513)     (1,881)

    Other financing                                                 3,313                          7,803                       15,869       14,022

      Cash flow (used in) from financing activities               (9,535)                      (81,587)                      23,065     (97,841)
                                                                   ------                        -------                       ------      -------


    Effect of exchange rate changes on cash and cash equivalents    4,714                        (4,861)                       6,285      (3,461)



    Increase in cash and cash equivalents                          22,059                          7,726                       20,485        7,834
                                                                   ======                          =====                       ======        =====


    MSA Safety Incorporated

    Segment Information (Unaudited)

    (In thousands)


                                          Americas           International          Corporate          Consolidated
                                          --------           -------------          ---------          ------------

    Three Months Ended December 31, 2017

    Sales to external customers                     $208,421                                  $137,719                      -            $346,140

    Operating loss                                                                                       (30,996)

    Operating margin %                                                                                   (9.0)%

    Restructuring and other charges                                                                           712

    Currency exchange losses, net                                                                           1,133

    Other operating expense                                                                                93,476

    Adjusted operating income (loss)         53,400                          18,770                           (7,845)          $64,325

    Adjusted operating margin %             25.6%                          13.6%                                      18.6%


    Twelve Months Ended December 31, 2017

    Sales to external customers                     $736,847                                  $459,962                      -          $1,196,809

    Operating income                                                                                       43,345

    Operating margin %                                                                                     3.6%

    Restructuring and other charges                                                                        17,632

    Currency exchange losses, net                                                                           5,127

    Other operating expense                                                                               126,432

    Adjusted operating income (loss)        184,287                          45,461                          (37,212)         $192,536

    Adjusted operating margin %             25.0%                           9.9%                                      16.1%



                                          Americas           International          Corporate          Consolidated
                                          --------           -------------          ---------          ------------

    Three Months Ended December 31, 2016

    Sales to external customers                     $168,109                                  $127,922                      -            $296,031

    Operating income                                                                                       47,544

    Operating margin %                                                                                    16.1%

    Restructuring charges                                                                                   1,997

    Currency exchange (gains), net                                                                        (1,732)

    Other operating expense                                                                                     -

    Adjusted operating income (loss)         45,313                          14,832                          (12,336)          $47,809

    Adjusted operating margin %             27.0%                          11.6%                                      16.2%


    Twelve Months Ended December 31, 2016

    Sales to external customers                     $678,433                                  $471,097                      -          $1,149,530

    Operating income                                                                                      164,192

    Operating margin %                                                                                    14.3%

    Restructuring charges                                                                                   5,694

    Currency exchange losses, net                                                                             766

    Other operating expense                                                                                     -

    Adjusted operating income (loss)        162,788                          46,491                          (38,627)         $170,652

    Adjusted operating margin %             24.0%                           9.9%                                      14.8%

The Americas and International segments were established on January 1, 2016. The Americas segment is comprised of our operations in the U.S., Canada and Latin America. The International segment is comprised of our operations in all other parts of the world including Europe, Africa, the Middle East, India, China, South East Asia and Australia. Certain global expenses are allocated to each segment in a manner consistent with where the benefits from the expenses are derived.

Adjusted operating income (loss) and adjusted operating margin are the measures used by the chief operating decision maker to evaluate segment performance and allocate resources. As such, management believes that adjusted operating income (loss) and adjusted operating margin are useful metrics for investors. Adjusted operating income (loss) is defined as operating income excluding restructuring, currency exchange gains (losses) and other operating expense. Adjusted operating margin is defined as adjusted operating income (loss) divided by segment sales to external customers. Adjusted operating income (loss) and adjusted operating margin are not recognized terms under GAAP and therefore do not purport to be alternatives to operating income or operating margin as a measure of operating performance. The Company's definition of adjusted operating income (loss) and adjusted operating margin may not be comparable to similarly titled measures of other companies. As such, management believes that it is appropriate to consider operating income determined on a GAAP basis in addition to these non-GAAP measures.


    MSA Safety Incorporated

    Reconciliation of As Reported Financial Measures to Non-GAAP Financial Measures

    Constant currency revenue growth (Unaudited)

    Organic constant currency revenue growth (Unaudited)


    Consolidated


                                                                                                                            Three Months Ended December 31, 2017

                                                                                    Breathing   Firefighter   Industrial     Portable    Fixed Gas       Fall     Core                Non-               Net Sales
                                                                                    Apparatus     Helmets        Head          Gas       and Flame    Protection  Sales               Core
                                                                                                  and       Protection    Detection    Detection                                   Sales
                                                                                              Protective
                                                                                              Apparel(b)

    GAAP reported sales change                                                             9%                       236%                        9%                  14%                 11%                     8%                22%             (10)%               17%

    Plus: Currency translation effects                                                   (2)%                       (7)%                      (2)%                 (2)%                (5)%                   (4)%               (3)%              (3)%              (3)%
                                                                                                                                 ---                        ---                ---                 ---                     ---              ---                ---               ---

    Constant currency sales change                                                         7%                       229%                        7%                  12%                  6%                     4%                19%             (13)%               14%
                                                                                          ---                         ---                        ---                   ---                  ---                     ---                 ---               ----               ---

    Less: Acquisitions                                                                      -  %                    207%                         -   %                -   %            (4)%                      -   %            10%                 -   %            8%
                                                                                          ---  ---                   ---                        ---   ---            ---   ---           ---                     ---   ---          ---                ---   ---         ---

    Organic constant currency change                                                       7%                        22%                        7%                  12%                 10%                     4%                 9%             (13)%                6%
                                                                                          ===                         ===                        ===                   ===                  ===                     ===                 ===               ====               ===



                                                                                                                            Twelve Months Ended December 31, 2017

                                                                                    Breathing   Firefighter   Industrial     Portable    Fixed Gas       Fall     Core                Non-               Net Sales
                                                                                    Apparatus     Helmets        Head          Gas       and Flame    Protection  Sales               Core
                                                                                                  and       Protection    Detection    Detection                                   Sales
                                                                                              Protective
                                                                                              Apparel(b)

    GAAP reported sales change                                                           (4)%                        97%                       13%                   4%                  4%                     2%                 8%             (12)%                4%

    Plus: Currency translation effects                                                      -  %                    (1)%                      (2)%                    -   %            (2)%                     2%               (1)%              (2)%              (1)%
                                                                                                                   ---            ---                        ---         ---           ---           ---                     ---              ---                ---               ---

    Constant currency sales change                                                       (4)%                        96%                       11%                   4%                  2%                     4%                 7%             (14)%                3%
                                                                                          ---                         ---                        ---                   ---                  ---                     ---                 ---               ----               ---

    Less: Acquisitions                                                                      -  %                     89%                         -   %                -   %               -   %                  -   %             5%                 -   %            4%
                                                                                          ---  ---                   ---                        ---   ---            ---   ---           ---   ---              ---   ---          ---                ---   ---         ---

    Organic constant currency change                                                     (4)%                         7%                       11%                   4%                  2%                     4%                 2%             (14)%              (1)%
                                                                                          ===                         ===                        ===                   ===                  ===                     ===                 ===               ====               ===


    (b) Firefighter helmets and protective apparel includes the impact of the Globe acquisition, completed on July 31, 2017.

Management believes that constant currency revenue growth is a useful metric for investors, as foreign currency translation can have a material impact on revenue growth trends. Constant currency revenue growth highlights ongoing business performance excluding the impact of fluctuating foreign currencies, which is outside of management's control. Organic constant currency revenue growth is defined as constant currency revenue growth excluding acquisitions. Management believes that organic constant currency revenue growth is a useful measure for investors to provide an understanding of MSA's standalone results. There can be no assurances that MSA's definition of constant currency revenue growth or organic constant currency revenue growth is consistent with that of other companies. As such, management believes that it is appropriate to consider revenue growth determined on a GAAP basis in addition to these non-GAAP financial measures.


    MSA Safety Incorporated

    Reconciliation of As Reported Financial Measures to Non-GAAP Financial Measures

    Constant currency revenue growth (Unaudited)

    Organic constant currency revenue growth (Unaudited)



    Americas Segment


                                                                                                                            Three Months Ended December 31, 2017

                                                                                    Breathing   Firefighter   Industrial     Portable    Fixed Gas       Fall     Core            Non-         Net Sales
                                                                                    Apparatus     Helmets        Head          Gas       and Flame    Protection  Sales           Core
                                                                                                  and       Protection    Detection    Detection                               Sales
                                                                                              Protective
                                                                                              Apparel(b)

    GAAP reported sales change                                                            10%                       581%                       10%                  11%              4%              19%             29%           (5)%               24%

    Plus: Currency translation effects                                                      -  %                      2%                      (1)%                    -   %           -   %         (1)%            (1)%           (1)%                 -   %
                                                                                                                   ---            ---                        ---         ---       ---   ---        ---         ---            ---               ---        ---

    Constant currency sales change                                                        10%                       583%                        9%                  11%              4%              18%             28%           (6)%               24%
                                                                                          ---                         ---                        ---                   ---              ---               ---              ---             ---                ---

    Less: Acquisitions                                                                      -  %                    559%                         -   %                -   %           -   %            -   %         18%              -   %           16%
                                                                                          ---  ---                   ---                        ---   ---            ---   ---       ---   ---        ---   ---       ---             ---   ---         ---

    Organic constant currency change                                                      10%                        24%                        9%                  11%              4%              18%             10%           (6)%                8%
                                                                                          ===                         ===                        ===                   ===              ===               ===              ===             ===                ===



                                                                                                                            Twelve Months Ended December 31, 2017

                                                                                    Breathing   Firefighter   Industrial     Portable    Fixed Gas       Fall     Core            Non-         Net Sales
                                                                                    Apparatus     Helmets        Head          Gas       and Flame    Protection  Sales           Core
                                                                                                  and       Protection    Detection    Detection                               Sales
                                                                                              Protective
                                                                                              Apparel(b)

    GAAP reported sales change                                                           (4)%                       219%                       11%                   8%            (2)%              22%             11%           (7)%                9%

    Plus: Currency translation effects                                                      -  %                       -   %                  (1)%                    -   %           -   %            -   %           -   %       (1)%              (1)%
                                                                                                                   ---   ---                 ---             ---         ---       ---   ---        ---   ---       ---   ---                   ---               ---

    Constant currency sales change                                                       (4)%                       219%                       10%                   8%            (2)%              22%             11%           (8)%                8%
                                                                                          ---                         ---                        ---                   ---              ---               ---              ---             ---                ---

    Less: Acquisitions                                                                      -  %                    213%                         -   %                -   %           -   %            -   %          8%              -   %            7%
                                                                                          ---  ---                   ---                        ---   ---            ---   ---       ---   ---        ---   ---       ---             ---   ---         ---

    Organic constant currency change                                                     (4)%                         6%                       10%                   8%            (2)%              22%              3%           (8)%                1%
                                                                                          ===                         ===                        ===                   ===              ===               ===              ===             ===                ===


    (b) Firefighter helmets and protective apparel includes the impact of the Globe acquisition, completed on July 31, 2017.

Management believes that constant currency revenue growth is a useful metric for investors, as foreign currency translation can have a material impact on revenue growth trends. Constant currency revenue growth highlights ongoing business performance excluding the impact of fluctuating foreign currencies, which is outside of management's control. Organic constant currency revenue growth is defined as constant currency revenue growth excluding acquisitions. Management believes that organic constant currency revenue growth is a useful measure for investors to provide an understanding of MSA's standalone results. There can be no assurances that MSA's definition of constant currency revenue growth or organic constant currency revenue growth is consistent with that of other companies. As such, management believes that it is appropriate to consider revenue growth determined on a GAAP basis in addition to these non-GAAP financial measures.


    MSA Safety Incorporated

    Reconciliation of As Reported Financial Measures to Non-GAAP Financial Measures

    Constant currency revenue growth (Unaudited)

    Organic constant currency revenue growth (Unaudited)


    International Segment


                                                                                                                            Three Months Ended December 31, 2017

                                                                                    Breathing   Firefighter   Industrial    Portable     Fixed Gas       Fall     Core               Non-          Net Sales
                                                                                    Apparatus     Helmets        Head          Gas       and Flame    Protection  Sales              Core
                                                                                                  and       Protection    Detection    Detection                                  Sales
                                                                                              Protective
                                                                                                Apparel

    GAAP reported sales change                                                             9%                        29%                        5%                  20%                16%              (3)%             13%            (15)%              8%

    Plus: Currency translation effects                                                   (7)%                       (9)%                      (3)%                 (7)%               (7)%              (7)%            (7)%             (5)%            (7)%
                                                                                                                                 ---                        ---               ---              ---                  ---            ---               ---              ---

    Constant currency sales change                                                         2%                        20%                        2%                  13%                 9%             (10)%              6%            (20)%              1%
                                                                                          ---                         ---                        ---                   ---                 ---               ----             ---               ----              ---

    Less: Acquisitions                                                                      -  %                       -  %                      -   %                -   %           (6)%                 -   %        (2)%                -   %        (2)%
                                                                                          ---  ---                   ---  ---                  ---   ---            ---   ---          ---                ---   ---       ---               ---   ---       ---

    Organic constant currency change                                                       2%                        20%                        2%                  13%                15%             (10)%              8%            (20)%              3%
                                                                                          ===                         ===                        ===                   ===                 ===               ====             ===               ====              ===



                                                                                                                            Twelve Months Ended December 31, 2017

                                                                                    Breathing   Firefighter   Industrial    Portable     Fixed Gas       Fall     Core               Non-          Net Sales
                                                                                    Apparatus     Helmets        Head          Gas       and Flame    Protection  Sales              Core
                                                                                                  and       Protection    Detection    Detection                                  Sales
                                                                                              Protective
                                                                                                Apparel

    GAAP reported sales change                                                           (3)%                        10%                       18%                 (2)%                 9%             (15)%              2%            (18)%            (2)%

    Plus: Currency translation effects                                                   (2)%                       (2)%                      (1)%                 (2)%               (2)%                3%            (2)%             (2)%            (2)%
                                                                                                                                 ---                        ---               ---              ---                  ---            ---               ---              ---

    Constant currency sales change                                                       (5)%                         8%                       17%                 (4)%                 7%             (12)%               -  %         (20)%            (4)%
                                                                                          ---                         ---                        ---                   ---                 ---               ----             ---   ---        ----              ---

    Less: Acquisitions                                                                      -  %                       -  %                      -   %                -   %             1%                 -   %           -  %             -   %           -   %
                                                                                          ---  ---                   ---  ---                  ---   ---            ---   ---          ---                ---   ---       ---  ---         ---   ---       ---   ---

    Organic constant currency change                                                     (5)%                         8%                       17%                 (4)%                 6%             (12)%               -  %         (20)%            (4)%
                                                                                          ===                         ===                        ===                   ===                 ===               ====             ===   ===        ====              ===

Management believes that constant currency revenue growth is a useful metric for investors, as foreign currency translation can have a material impact on revenue growth trends. Constant currency revenue growth highlights ongoing business performance excluding the impact of fluctuating foreign currencies, which is outside of management's control. Organic constant currency revenue growth is defined as constant currency revenue growth excluding acquisitions. Management believes that organic constant currency revenue growth is a useful measure for investors to provide an understanding of MSA's standalone results. There can be no assurances that MSA's definition of constant currency revenue growth or organic constant currency revenue growth is consistent with that of other companies. As such, management believes that it is appropriate to consider revenue growth determined on a GAAP basis in addition to these non-GAAP financial measures.


    MSA Safety Incorporated

    Supplemental Segment Information (Unaudited)

    Summary of constant currency revenue growth by segment and product group


                                                                                 Three Months Ended December 31, 2017

                                                                             Consolidated                     Americas       International
                                                                             ------------                     --------       ------------

    Firefighter Helmets and Protective Apparel(b)                                    229%                              583%                  20%

    Portable Gas Detection                                                            12%                               11%                  13%

    Industrial Head Protection                                                         7%                                9%                   2%

    Breathing Apparatus                                                                7%                               10%                   2%

    Fixed Gas and Flame Detection                                                      6%                                4%                   9%

    Fall Protection                                                                    4%                               18%                (10)%

    Core Sales                                                                        19%                               28%                   6%
                                                                                      ---                                ---                   ---

    Core excluding Acquisitions                                                        9%                               10%                   8%


    Non-Core Sales                                                                  (13)%                              (6)%                (20)%


    Net Sales                                                                         14%                               24%                   1%
                                                                                      ===                                ===                   ===

    Net Sales excluding Acquisitions                                                   6%                                8%                   3%



                                                                                 Twelve Months Ended December 31, 2017

                                                                             Consolidated                     Americas       International
                                                                             ------------                     --------       ------------

    Firefighter Helmets and Protective Apparel(b)                                     96%                              219%                   8%

    Portable Gas Detection                                                             4%                                8%                 (4)%

    Industrial Head Protection                                                        11%                               10%                  17%

    Breathing Apparatus                                                              (4)%                              (4)%                 (5)%

    Fixed Gas and Flame Detection                                                      2%                              (2)%                   7%

    Fall Protection                                                                    4%                               22%                (12)%

    Core Sales                                                                         7%                               11%                    -   %
                                                                                      ---                                ---                   ---   ---

    Core excluding Acquisitions                                                        2%                                3%                    -   %


    Non-Core Sales                                                                  (14)%                              (8)%                (20)%


    Net Sales                                                                          3%                                8%                 (4)%
                                                                                      ===                                ===                   ===

    Net Sales excluding Acquisitions                                                 (1)%                                1%                 (4)%


    (b)  Firefighter helmets and protective apparel includes the impact of the Globe acquisition,
    completed on July 31, 2017.


    MSA Safety Incorporated

    Reconciliation of As Reported Financial Measures to Non-GAAP Financial Measures

    Organic constant currency SG&A expense (Unaudited)

    (In thousands)


                                                                                        Three Months Ended                                Twelve Months Ended
                                                                                         December 31,                                December 31,

                                                                                      2017                   2016          %          2017                       2016             %
                                                                                                                    Change                                               Change
                                                                                                                                                                           ------


    GAAP reported SG&A expense                                                                 $75,467            $78,288       (4)%                          $297,801              $306,144 (3)%

    Plus: currency translation effects                                                   -                 2,334                        -                     2,279
                                                                                       ---                                           ---

    Constant currency SG&A expense                                                  75,467                 80,622     (6)%   297,801                 308,423           (3)%

    Less: Acquisitions and strategic transaction costs                               2,957                  3,173                    9,783                      3,994

    Organic constant currency SG&A expense                                          72,510                 77,449     (6)%   288,018                 304,429           (5)%
                                                                                    ======                 ======            =======                 =======

Management believes that organic constant currency SG&A expense is a useful metric for investors to measure the effectiveness of the company's cost reduction programs. Constant currency SG&A expense highlights spending patterns excluding fluctuating foreign currencies. Organic constant currency SG&A expense highlights the impact of acquisitions and strategic transaction costs. These metrics provide investors with a greater level of clarity into spending levels on a year-over-year basis. There can be no assurances that MSA's definition of organic constant currency SG&A expense is consistent with that of other companies. As such, management believes that it is appropriate to consider SG&A expense determined on a GAAP basis in addition to this non-GAAP financial measure.


    MSA Safety Incorporated

    Reconciliation of As Reported Financial Measures to Non-GAAP Financial Measures

    Adjusted earnings (Unaudited)

    Adjusted earnings per diluted share (Unaudited)

    (In thousands, except per share amounts)


                                                                                         Three Months Ended                                        Twelve Months Ended
                                                                                            December 31,                                               December 31,

                                                                                        2017                2016                %                        2017                      2016          %
                                                                                                                          Change                                                        Change



    (Loss) income from continuing operations attributable to MSA Safety Inc.                    $(32,984)                         $25,216                           (231)%              $26,027                      $92,691  (72)%

    Tax charges associated with U.S. Tax Reform                                       19,817                            -                                                      19,817

    Tax (benefit) associated with ASU 2016-09: Improvements to employee              (1,413)                           -                                                     (8,323)                     -
    share-based payment accounting

    Tax (benefits) charges associated with European reorganization                      (30)                       2,873                                                      (2,504)                 6,473

    Subtotal                                                                        (14,610)                      28,089                   (152)%                   35,017                99,164              (65)%
                                                                                     -------                       ------                                            ------                ------


    Self-insured legal settlements and defense costs (a)                              93,476                           26                                                      126,432                    341

    Currency exchange losses (gains), net                                              1,133                      (1,732)                                                       5,127                    766

    Strategic transaction costs                                                          860                        1,710                                                        4,225                  2,531

    Restructuring charges                                                                712                        1,997                                                       17,632                  5,694

    Asset related losses and other, net                                                  492                          847                                                          678                     32

    Income tax expense on adjustments                                               (31,443)                     (1,038)                                                    (47,810)               (3,161)


    Adjusted earnings                                                                 50,620                       29,899                      69%                  141,301               105,367                34%
                                                                                      ------                       ------                                           -------               -------


    Adjusted earnings per diluted share                                                             $1.31                            $0.78                              68%                $3.65                        $2.77    32%
                                                                                                    =====                            =====                                                 =====                        =====


    (a) Year to date amount is primarily associated with increasing the company's cumulative trauma product liability reserve for asserted and IBNR claims.

Management believes that adjusted earnings and adjusted earnings per diluted share are useful measures for investors, as management uses these measures to internally assess the company's performance and 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.

About MSA:
Established in 1914, MSA Safety Incorporated is the 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 product line is used by workers around the world in a broad range of markets, including the oil, gas and petrochemical industry, the fire service, the construction industry, mining and the military. MSA's core products include self-contained breathing apparatus, fixed gas and flame detection systems, portable gas detection instruments, industrial head protection products, firefighter helmets and protective apparel, and fall protection devices. With 2017 revenues of $1.2 billion, MSA employs approximately 4,700 people worldwide. The company is headquartered north of Pittsburgh in Cranberry Township, Pa., and has manufacturing operations in the United States, Europe, Asia and Latin America. With more than 40 international locations, MSA realizes approximately half of its revenue from outside North America. For more information visit MSA'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 include but are not limited to all projections and anticipated levels of future performance. Forward looking statements involve risks, uncertainties and other factors that may cause our actual results to differ materially from those discussed herein. Any number of factors could cause actual results to differ materially from projections or forward looking statements, including without limitation global economic conditions, spending patterns of government agencies, competitive pressures, the impact of acquisitions and related integration activities, product liability claims, the success of new product introductions, currency exchange rate fluctuations and the risks of doing business in foreign countries. A full listing of these risks, uncertainties and other factors are detailed from time-to-time in our filings with the United States Securities and Exchange Commission ("SEC"), including our most recent Form 10-K filed on February 28, 2017. 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 its own investor relations website at http://investors.MSAsafety.com. MSA undertakes no duty to publicly update any forward looking statements contained herein, except as required by law.

Non-GAAP Financial Measures:
This earnings release includes certain non-GAAP financial measures. These financial measures include constant currency revenue growth, organic constant currency growth, organic constant currency SG&A expense, adjusted operating income, adjusted operating margin, adjusted earnings and adjusted earnings per diluted share. The presentation of these financial measures does not comply with U.S. generally accepted accounting principles ("GAAP"). For an explanation of these measures, together with a reconciliation to 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.

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