Acquisitions & product investment drive MSA income growth
Global safety equipment manufacturer MSA Safety Incorporated (NYSE: MSA) reported results for the second quarter of 2016.
• Reported revenue was $296 million, increasing 3 percent from a year ago. The recent acquisition of UK-based fall protection company Latchways increased constant currency and reported revenue by 5 percent, while organic constant currency revenue remained flat.
• Net income was $29 million or $0.77 per diluted share, compared to $24 million or $0.63 per diluted share in the second quarter a year ago. Adjusted earnings were $0.79 per diluted share, compared to $0.67 per diluted share a year ago.
Comments from management
“Our quarterly results reflect strong returns on several strategic investments we’ve made to drive profitable growth,” said William M. Lambert, MSA chairman, president and CEO. “While we continued to see weak conditions in sales of certain products associated with energy and industrial related end-markets, our investments in new product development, strategic acquisitions and restructuring programs allowed us to recognize earnings growth of 21
percent on 3 percent revenue growth,” he continued.
As examples, Lambert pointed to the continued success of the company’s breakthrough G1 self-contained breathing apparatus (SCBA), the recent acquisition of Latchways, and the company’s restructuring program that was executed in late 2015.
“Overall, we continue to gain market share in the U.S. fire service with the G1 SCBA, and we are realizing success in a number of international markets as well. On a year-over-year basis, our breathing apparatus sales increased 20 percent for the quarter and 28 percent for the first six months of 2016,” Lambert said. He also noted that Latchways continues to perform well, providing earnings accretion of $0.01 per diluted share for the quarter and $0.04 per diluted share for the first six months of 2016. Lambert added that MSA’s 2015 restructuring program has been successful in helping drive reductions in selling, general and administrative expense, down $2 million in the quarter and $4 million year-to-date on a reported basis, and down $4 million in the quarter and $8 million year-to-date in constant currency, excluding Latchways.
“In addition to making investments that drive profitable core product revenue growth, managing our cost structure continues to be a top priority in light of the headwinds we are seeing in key end markets and geographies. Despite these challenges, we remain committed to making strategic investments that help us capture market share, expand operating margins, and enhance the value we deliver to shareholders,” Lambert concluded.