MSA Announces Fourth Quarter and Full Year 2018 Results

PITTSBURGH, Feb. 20, 2019 /PRNewswire/ -- Global safety equipment manufacturer MSA Safety Incorporated (NYSE: MSA) today reported results for the fourth quarter and full year of 2018.

Quarterly Highlights

    --  Revenue was $362 million, increasing 5 percent from a year ago on a
        reported basis and 7 percent on an organic constant currency basis.
    --  GAAP earnings were $25 million or $0.64 per diluted share, compared to a
        GAAP loss of $33 million or $0.87 per diluted share in the same period a
        year ago.  Adjusted earnings were $50 million or $1.27 per diluted
        share, compared to $51 million or $1.31 per diluted share in the same
        period a year ago.
    --  Operating cash flow was $81 million compared to $41 million a year ago.
        Free cash flow increased 114 percent from a year ago to $62 million.
        Free cash flow conversion exceeded 100 percent of net income, driven by
        strong management of working capital.

Annual Highlights

    --  Revenue was $1.36 billion, increasing 13 percent from a year ago on a
        reported basis and 8 percent on an organic constant currency basis.
    --  GAAP earnings were $124 million or $3.18 per diluted share, compared to
        $26 million or $0.67 per diluted share in the same period a year ago. 
        Adjusted earnings increased 24 percent to $175 million or $4.50 per
        diluted share, compared to $141 million or $3.65 per diluted share in
        the same period a year ago. Strong organic revenue growth, the
        acquisition of Globe, a streamlined cost structure, and a lower
        effective tax rate were the key drivers of earnings growth in 2018.
    --  Operating cash flow was $267 million compared to $230 million a year
        ago. Free cash flow increased 11 percent from a year ago to $230
        million. Free cash flow conversion exceeded 100 percent of net income,
        driven by a 220 basis point improvement from a year ago in working
        capital as a percent of sales.
    --  In 2018, the company invested more than $50 million in research and
        development, reduced its debt balance by $108 million, and returned $57
        million to shareholders through dividend payments.

Comments from Management

"In the fourth quarter MSA delivered record revenue and drove meaningful improvements in working capital, which resulted in free cash flow that more than doubled from a year ago," said Nish Vartanian, MSA President and CEO. He added that MSA's backlog remained elevated at the end of 2018, despite the notable uptick in quarterly invoicing.

The company realized strong growth across its core product portfolio, supported by investments in new product development. "It was certainly exciting to see continued growth in our fire service business, led by deliveries of our market-leading G1 SCBA to large fire departments in the U.S., Latin America, and Asia-Pacific," Mr. Vartanian continued. "On the industrial side of our business, we realized double-digit growth in our personal protective equipment product lines, where we've invested heavily to develop what we believe are the most comfortable and customizable hard hat and fall protection solutions available today."

"Our global teams remain committed to executing the profitable growth strategy that has helped us drive outstanding financial performance over the past several years," he said. Demonstrating these improvements, MSA posted full year revenue growth of 13 percent, adjusted earnings growth of 24 percent, and free cash flow conversion well in excess of 100 percent of net income in 2018. "As we enter 2019 - our 105th year in business - our strong balance sheet and healthy incremental margin profile position us well to build on this success and continue creating value for shareholders," Mr. Vartanian 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,


                                                                       2018                             2017          2018                                2017

                                                                                                                                                        ---




            Net sales                                                        $
            361,784                            $
        346,140                       $
        1,358,104  $
        1,196,809



            Cost of products sold                                  199,397                                   192,138                         746,241                   657,918




            Gross profit                                           162,387                                   154,002                         611,863                   538,891





            Selling, general and administrative                     84,558                                    76,321                         324,784                   300,062



            Research and development                                12,944                                    14,779                          52,696                    50,061



            Restructuring charges                                    3,024                                       712                          13,247                    17,632



            Currency exchange (gains) losses, net                    (241)                                    1,133                           2,330                     5,127



            Other operating expense                                 19,858                                    93,476                          45,327                   126,432



            Operating income (loss)                                 42,244                                  (32,419)                        173,479                    39,577





            Interest expense                                         4,427                                     4,794                          18,881                    15,360



            Loss on extinguishment of debt                               -                                                                   1,494



            Other income, net                                        (939)                                  (1,152)                        (9,231)                  (5,558)






            Total other expense, net                                 3,488                                     3,642                          11,144                     9,802





            Income (loss) before income taxes                       38,756                                  (36,061)                        162,335                    29,775



            Provision (benefit) for income taxes                    13,614                                   (3,487)                         37,220                     2,819




            Net income (loss)                                       25,142                                  (32,574)                        125,115                    26,956



            Net income attributable to noncontrolling interests      (259)                                    (410)                          (965)                    (929)




            Net income (loss) attributable to MSA Safety            24,883                                  (32,984)                        124,150                    26,027
    Incorporated










            Earnings per share attributable to MSA Safety
    Incorporated common shareholders:



            Basic                                                               $
            0.65                             $
        (0.87)                          $
         3.23      $
         0.68



            Diluted                                                             $
            0.64                             $
        (0.87)                          $
         3.18      $
         0.67





            Basic shares outstanding                                38,465                                    38,079                          38,362                    37,997



            Diluted shares outstanding                              39,104                                    38,079                          38,961                    38,697



     MSA Safety Incorporated



     Condensed Consolidated Balance Sheet (Unaudited)



     (In thousands)




                                                               December 31, 2018                 December 31, 2017

                                                                                                   ---


     Assets



     Cash and cash equivalents                                                    $
        140,095                     $
        134,244



     Trade receivables, net                                             245,032                  244,198



     Inventories                                                        156,602                  153,739



     Investments, short-term                                             55,106



     Notes receivable, insurance companies                                3,555                   17,333



     Other current assets                                                56,233                   72,783




         Total current assets                                           656,623                  622,297





     Property, net                                                      157,940                  157,014



     Prepaid pension cost                                                57,568                   83,060



     Goodwill                                                           413,640                  422,185



     Notes receivable, insurance companies, noncurrent                   56,012                   59,567



     Insurance receivable, noncurrent                                    56,866                  123,089



     Other noncurrent assets                                            209,363                  217,614




        Total assets                                                            $
        1,608,012                   $
        1,684,826






     Liabilities and shareholders' equity



     Notes payable and current portion of long-term debt, net                      $
        20,063                      $
        26,680



     Accounts payable                                                    78,367                   87,061



     Other current liabilities                                          183,630                  175,538




        Total current liabilities                                       282,060                  289,279





     Long-term debt, net                                                341,311                  447,832



     Pensions and other employee benefits                               166,101                  170,773



     Deferred tax liabilities                                             7,164                    9,341



     Other noncurrent liabilities                                       171,857                  165,023



     Total shareholders' equity                                         639,519                  602,578




        Total liabilities and shareholders' equity                              $
        1,608,012                   $
        1,684,826



              MSA Safety Incorporated



              Condensed Consolidated Statement of Cash Flows (Unaudited)



              (In thousands)




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


                                                                              2018                           2017           2018                           2017

                                                                                                                                                         ---




              Net income (loss)                                                     $
           25,142                              $
         (32,574)               $
        125,115   $
     26,956



              Depreciation and amortization                                 9,267                                   10,212                             37,852           37,877



              Change in working capital and other operating                46,208                                   63,452                            103,847          165,503



                Cash flow from operating activities                        80,617                                   41,090                            266,814          230,336






              Capital expenditures                                       (18,267)                                (11,995)                          (36,887)        (23,725)



              Acquisition, net of cash acquired                                 -                                 (2,318)                                         (216,308)



              Change in short-term investments                              2,068                                                                   (55,022)



              Property disposals and other investing                          586                                      103                              4,587              832



                Cash flow used in investing activities                   (15,613)                                (14,210)                          (87,322)       (239,201)






              Change in debt                                             (26,941)                                   1,346                          (107,616)           77,246



              Cash dividends paid                                        (14,643)                                (13,337)                          (57,248)        (52,537)



              Company stock purchases under repurchase program                  -                                                                                  (11,781)



              Other financing                                               2,170                                    5,466                              1,595           12,675



                Cash flow (used in) from financing activities            (39,414)                                 (6,525)                         (163,269)           25,603






              Effect of exchange rate changes on cash, cash               (3,556)                                   4,567                           (13,508)           6,189
    equivalents and restricted cash






              Increase in cash, cash equivalents and restricted cash       22,034                                   24,922                              2,715           22,927



              MSA Safety Incorporated



              Segment Information (Unaudited)



              (In thousands)




                                                     
     Americas            International          Corporate            Consolidated

                                                                                                                                ---


              Three Months Ended December 31, 2018



              Sales to external customers                      $
     220,475                                  $
     141,309                                    $
       361,784



              Operating income                                                                                            42,244


    Operating margin %                                                                                                    11.7%





              Restructuring and other charges                                                                              3,024



              Currency exchange (gains), net                                                                               (241)



              Other operating expense                                                                                     19,858



              Strategic transaction costs                                                                                    213



              Adjusted operating income (loss)          55,383                            17,906                             (8,191)        $
      65,098


    Adjusted operating margin %                         25.1%                            12.7%                                        18.0%







              Twelve Months Ended December 31, 2018



              Sales to external customers                      $
     854,287                                  $
     503,817                                  $
       1,358,104



              Operating income                                                                                           173,479


    Operating margin %                                                                                                    12.8%





              Restructuring and other charges                                                                             13,247



              Currency exchange losses, net                                                                                2,330



              Other operating expense                                                                                     45,327



              Strategic transaction costs                                                                                    421



              Adjusted operating income (loss)         206,839                            59,866                            (31,901)       $
      234,804


    Adjusted operating margin %                         24.2%                            11.9%                                        17.3%






                                                     
     Americas            International          Corporate            Consolidated

                                                                                                                                ---


              Three Months Ended December 31, 2017



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



              Operating loss                                                                                            (32,419)


    Operating margin %                                                                                                   (9.4)%



              Restructuring charges                                                                                          712



              Currency exchange losses, net                                                                                1,133



              Other operating expense                                                                                     93,476



              Strategic transaction costs                                                                                    860



              Adjusted operating income (loss)          50,502                            20,245                             (6,985)        $
      63,762


    Adjusted operating margin %                         24.2%                            14.7%                                        18.4%







              Twelve Months Ended December 31, 2017



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



              Operating income                                                                                            39,577


    Operating margin %                                                                                                     3.3%





              Restructuring charges                                                                                       17,632



              Currency exchange losses, net                                                                                5,127



              Other operating expense                                                                                    126,432



              Strategic transaction costs                                                                                  4,225



              Adjusted operating income (loss)         175,589                            50,391                            (32,987)       $
      192,993


    Adjusted operating margin %                         23.8%                            11.0%                                        16.1%

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 charges, currency exchange gains / losses, other operating expense and strategic transaction costs. 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, 2018


                                                                                      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                                                (1)%                                        10                                     2                          (4)%                11         4       10             5
                                                                                                                                                                                                                                                                                %
                                                                                               %                                                                                            %                                    %                                                        %        %          %



     Plus: Currency translation effects                                                       2                                                   1                                          3                                     2                             3                  4         2        4             2
                                                                                                                                                  %                                                                                                           %                 %
                                                                                               %                                                                                            %                                    %                                                        %        %          %




     Constant currency sales change                                                          11                                                             %                              13                                     4                          (1)%                15         6       14             7
                                                                                                                                                                                                                                                                                %
                                                                                               %                                                                                            %                                    %                                                        %        %          %

                                                                                                                                                                                                                                                                                                                        ---


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

                                                                                                                                                                                                                                                                                                                        ---


     Organic constant currency change                                                        11                                                             %                              13                                     4                          (1)%                15         6       14             7
                                                                                                                                                                                                                                                                                %
                                                                                               %                                                                                            %                                    %                                                        %        %          %

                                                                                                                                                                                                                                                                                                                        ===



                                                                                                                                                             
             Twelve Months Ended December 31, 2018


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



     GAAP reported sales change                                                              11                                                  64                                         10                                    10                             6                 11        15        5            13
                                                                                                                                                  %                                                                                                           %                 %
                                                                                               %                                                                                            %                                    %                                                        %        %          %



     Plus: Currency translation effects                                                       -   
              %                                             %                               2

                                                                                                                                                                                            %                                        
      %                  (1)%              (1)%                %        %       
           %




     Constant currency sales change                                                          11                                                  64                                         12                                    10                             5                 10        15        5            13
                                                                                                                                                  %                                                                                                           %                 %
                                                                                               %                                                                                            %                                    %                                                        %        %          %

                                                                                                                                                                                                                                                                                                                        ---


     Less: Acquisitions                                                                       -   
              %                                  69                                              
              %                         
      %                         
      %              
      %  7                %   5
                                                                                                                                                  %
                                                                                                                                                                                                                                                                                          %                   %

                                                                                                                                                                                                                                                                                                                        ---


     Organic constant currency change                                                        11                                                (5)%                                        12                                    10                             5                 10         8        5             8
                                                                                                                                                                                                                                                              %                 %
                                                                                               %                                                                                            %                                    %                                                        %        %          %

                                                                                                                                                                                                                                                                                                                        ===




     
                (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, 2018


                                                                                      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                                                              5                                                 4                                         6                             7                    13                     2              6               %        6
                                                                                                                                               %                                                                                          %
                                                                                              %                                                                                         %                            %                                          %            %                       %



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




     Constant currency sales change                                                          6                                                 4                                         9                             8                    12                     5              7        3                7
                                                                                                                                               %                                                                                          %                                            %
                                                                                              %                                                                                         %                            %                                          %            %                       %

                                                                                                                                                                                                                                                                                                               ---


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

                                                                                                                                                                                                                                                                                                               ---


     Organic constant currency change                                                        6                                                 4                                         9                             8                    12                     5              7        3                7
                                                                                                                                               %                                                                                          %                                            %
                                                                                              %                                                                                         %                            %                                          %            %                       %

                                                                                                                                                                                                                                                                                                               ===



                                                                                                                                                    
              Twelve Months Ended December 31, 2018


                                                                                      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                                                              8                                                96                                         8                            11                    10                    13             19     (3)%              16
                                                                                                                                               %                                                                                          %
                                                                                              %                                                                                         %                            %                                          %            %                       %



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




     Constant currency sales change                                                          8                                                97                                        11                            12                    10                    13             20     (1)%              17
                                                                                                                                               %                                                                                          %
                                                                                              %                                                                                         %                            %                                          %            %                       %

                                                                                                                                                                                                                                                                                                               ---


     Less: Acquisitions                                                                      -   
              %                                99                                             
              %                 
      %                 
        %               
        %   10                 %      9
                                                                                                                                               %
                                                                                                                                                                                                                                                                             %                       %

                                                                                                                                                                                                                                                                                                               ---


     Organic constant currency change                                                        8                                              (2)%                                       11                            12                    10                    13             10               %        8
                                                                                                                                                                                                                                          %
                                                                                              %                                                                                         %                            %                                          %            %                       %

                                                                                                                                                                                                                                                                                                               ===




     
                (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, 2018


                                                                                      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                                                             15                                             (15)%                                       24
                                                                                              %                                                                                                                                                    %                       %           %
                                                                                                                                                                                        %                         (6)%           (16)%            23                  %    21            3



     Plus: Currency translation effects                                                      4                                                 3                                         5
                                                                                              %                                                %                                                                     %               %             %            %          %           %
                                                                                                                                                                                        %                            4                4              6             4           5            4




     Constant currency sales change                                                         19                                             (12)%                                       29
                                                                                              %                                                                                                                                                    %            %          %           %
                                                                                                                                                                                        %                         (2)%           (12)%            29             4          26            7

                                                                                                                                                                                                                                                                                              ---


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

                                                                                                                                                                                                                                                                                              ---


     Organic constant currency change                                                       19                                             (12)%                                       29
                                                                                              %                                                                                                                                                    %            %          %           %
                                                                                                                                                                                        %                         (2)%           (12)%            29             4          26            7

                                                                                                                                                                                                                                                                                              ===



                                                                                                                                                    
              Twelve Months Ended December 31, 2018


                                                                                      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                                                             18                                              (2)%                                       15
                                                                                              %                                                                                                                      %               %             %            %          %           %
                                                                                                                                                                                        %                            8                2              8             8          16           10



     Plus: Currency translation effects                                                   (2)%                                             (4)%                                            
              %          (2)%            (2)%          (1)%         (2)%       (2)%        (2)%




     Constant currency sales change                                                         16                                              (6)%                                       15
                                                                                              %                                                                                                                      %                             %            %          %           %
                                                                                                                                                                                        %                            6                   %          7             6          14            8

                                                                                                                                                                                                                                                                                              ---


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

                                                                                                                                                                                                                                                                                              ---


     Organic constant currency change                                                       16                                              (7)%                                       15
                                                                                              %                                                                                                                      %                             %            %          %           %
                                                                                                                                                                                        %                            6                   %          7             6          14            7

                                                                                                                                                                                                                                                                                              ===




     
                (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



     Supplemental Segment Information (Unaudited)



     Summary of constant currency revenue growth by segment and product group




                                                                                                                      Three Months Ended December 31, 2018


                                                                                                           Consolidated                                 Americas     International

                                                                                                                                                                               ---


     Fall Protection                                                                                                15                                            5
                                                                                                                      %                                                               %
                                                                                                                                                                  %                  29



     Industrial Head Protection                                                                                     13                                            9
                                                                                                                      %                                                               %
                                                                                                                                                                  %                  29



     Breathing Apparatus                                                                                            11                                            6
                                                                                                                      %                                                               %
                                                                                                                                                                  %                  19



     Portable Gas Detection                                                                                          4                                            8
                                                                                                                      %                                                               %
                                                                                                                                                                  %                 (2)



     Firefighter Helmets and Protective Apparel(b)                                                                   -   
              %                            4
                                                                                                                                                                                      %
                                                                                                                                                                  %                (12)



     Fixed Gas and Flame Detection                                                                                 (1)                                          12
                                                                                                                                                                                      %
                                                                                                                      %                                           %                (12)

                                                                                                                                                                                          ---


     Core Sales                                                                                                      6                                            7
                                                                                                                      %                                                               %
                                                                                                                                                                  %                   4

                                                                                                                                                                                          ---

                                                                                                                     6             7


                                                                                                                      %                                                               %

     
                Core excluding Acquisitions                                                                                                                    %                   4





     Non-Core Sales                                                                                                 14                                            3
                                                                                                                      %                                                               %
                                                                                                                                                                  %                  26





     Net Sales                                                                                                       7                                            7
                                                                                                                      %                                                               %
                                                                                                                                                                  %                   7

                                                                                                                                                                                          ===

                                                                                                                     7             7


                                                                                                                      %                                                               %

     
                Net Sales excluding Acquisitions                                                                                                               %                   7




                                                                                                                      Twelve Months Ended December 31, 2018


                                                                                                           Consolidated                                 Americas     International

                                                                                                                                                                               ---


     Fall Protection                                                                                                10                                           13
                                                                                                                      %                                                               %
                                                                                                                                                                  %                   7



     Industrial Head Protection                                                                                     12                                           11
                                                                                                                      %                                                               %
                                                                                                                                                                  %                  15



     Breathing Apparatus                                                                                            11                                            8
                                                                                                                      %                                                               %
                                                                                                                                                                  %                  16



     Portable Gas Detection                                                                                         10                                           12
                                                                                                                      %                                                               %
                                                                                                                                                                  %                   6



     Firefighter Helmets and Protective Apparel(b)                                                                  64                                           97
                                                                                                                      %                                                               %
                                                                                                                                                                  %                 (6)



     Fixed Gas and Flame Detection                                                                                   5                                           10
                                                                                                                      %
                                                                                                                                                                  %                     
     %

                                                                                                                                                                                          ---


     Core Sales                                                                                                     15                                           20
                                                                                                                      %                                                               %
                                                                                                                                                                  %                   6

                                                                                                                                                                                          ---

                                                                                                                     8            10


                                                                                                                      %                                                               %

     
                Core excluding Acquisitions                                                                                                                    %                   6





     Non-Core Sales                                                                                                  5                                          (1)
                                                                                                                      %                                                               %
                                                                                                                                                                  %                  14





     Net Sales                                                                                                      13                                           17
                                                                                                                      %                                                               %
                                                                                                                                                                  %                   8

                                                                                                                                                                                          ===

                                                                                                                     8             8


                                                                                                                      %                                                               %

     
                Net Sales excluding Acquisitions                                                                                                               %                   7





     
                (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



              Free Cash Flow (Unaudited)



              (In thousands, except percentages)




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


                                                                                  2018                          2017           
        % Change           2018                        2017    
          % Change

                                                                                                                                                                                                         ---




              Cash flow from operating                                                  $
              80,617                      $
              41,090                     96%             $
       266,814             $
     230,336 16%
    activities



              Capital expenditures                                           (18,267)                               (11,995)                                               (36,887)                  (23,725)






              Free cash flow                                                            $
              62,350                      $
              29,095                    114%             $
       229,927             $
     206,611 11%






              Net income (loss) attributable                                   24,883                                (32,984)                                                124,150                     26,027
    to MSA Safety Incorporated





              Free cash flow conversion                                          251%                                  (88)%                                                   185%                      794%

Management believes that free cash flow is a meaningful measure for investors. Management reviews cash from operations after deducting capital expenditures because these expenditures are necessary to promote growth of MSA's business and are likely to produce cash from operations in future periods. It is important to note that free cash flow does not reflect the residual cash balance of the company for discretionary spending since other items, including debt and dividend payments, are deducted from free cash flow before arriving at the company's ending cash balance. Management defines free cash flow conversion as free cash flow divided by net income attributable to MSA. There can be no assurances that MSA's definition of free cash flow is consistent with that of other companies. As such, management believes that it is appropriate to consider cash from operating activities determined on a GAAP basis as well as free cash flow.



              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 December 31,                                       
      Twelve Months Ended December 31,


                                                                                  2018                               2017            
            %               2018                       2017           
             %
                                                                                                                                    Change                                                           Change






              Net income (loss) attributable                                   24,883                                     (32,984)                    (175)%           124,150                            26,027             377%
    to MSA Safety Incorporated



              Tax charges associated with                                       4,475                                       19,817                                                    2,518                           19,817
    U.S. Tax Reform



              Tax (benefit) associated with                                     (225)                                     (1,413)                                                 (2,531)                         (8,323)
    ASU 2016-09: Improvements
    to employee share-based
    payment accounting



              Tax charges (benefits)                                            1,794                                         (30)                                                   1,794                          (2,504)
    associated with restructuring
    activities




              Subtotal                                                         30,927                                     (14,610)                    (312)%           125,931                            35,017             260%






              Other operating expense                                          19,858                                       93,476                                                   45,327                          126,432



              Restructuring charges                                             3,024                                          712                                                   13,247                           17,632



              Strategic Transaction Costs                                         213                                          860                                                      421                            4,225



              Asset related losses and                                             68                                          492                                                    1,978                              678
    other, net



              Currency exchange (gains)                                         (241)                                       1,133                                                    2,330                            5,127
    losses, net



              Income tax expense on                                           (4,155)                                    (31,443)                                                (13,800)                        (47,810)
    adjustments




              Adjusted earnings                                                         $
              49,694                              $
         50,620                      (2)%               $
             175,434                  $
        141,301 24%






              Adjusted earnings per diluted                                               $
              1.27                                $
         1.31                      (3)%                  $
             4.50                     $
        3.65 23%
    share

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 2018 revenues of $1.4 billion, MSA employs approximately 4,800 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 22, 2018. 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 press release includes certain non-GAAP financial measures. These financial measures include constant currency revenue growth, organic constant currency revenue growth, adjusted operating income, adjusted operating margin, adjusted earnings, adjusted earnings per diluted share and free cash flow. 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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SOURCE MSA