MSA Safety Inc Q3 FY2024 earnings call

• Innovation: Product Development and Management Association named MSA an outstanding corporate innovator twice. Portable detection business growing, with connected portables via MSA+ subscriptions showing strong growth. Two cases where MSA products saved users from significant injury/death. - Quarterly Highlights: Net sales $433M, down 3% Y/Y on organic constant currency and reported basis; adjusted earnings up 3%. Orders up high single digits over past six months, book-to-bill ratio 1.1 times in Q3. - Financial Results: Gross profit margin 47.9% in Q3, 110 basis points below prior year; GAAP operating margin 21.1%, adjusted operating margin 22.6%; diluted EPS $1.83 adjusted, up 3% Y/Y.

Fire Services: Sales down high single digits in the quarter, primarily due to U.S. Air Force shipping delay and breathing apparatus sales decline vs strong prior year comp. Orders up Y/Y but some customer orders delayed; retains solid pipeline in North America and international momentum with M1 SCBA, fire helmets, and turnout gear growth. Detection: Sales up mid-single digits. Fixed gas and flame detection solid, portable detection strong with margin improvement. Industrial PPE: Sales down mid-single digits Y/Y, international markets slowed; head protection up modestly, fall protection down mid-single digits, ballistic helmets delayed.

• Full year 2024 outlook: Expect mid-single digit revenue growth in Q4, implying low single-digit growth for full year 2024. - Well-positioned to deliver at or above the high end of 30%-40% incremental margin objectives. - Expect most of the US Air Force order to ship in Q4.

• Customer order delays: U.S. Air Force shipping delay, European government customer pushing ballistic helmets to 2025, Latin American government order delay due to election changes. - Lumpy order timing: Fire Services order timing can be lumpy, AFG funding release timing affecting order closure.

Q: Rob Mason asked about SG&A management and customer delays.

A: Lee McChesney said SG&A is in a good place with focus on prioritization, and Steve Blanco discussed that most of the US Air Force order is expected to ship in Q4, along with details on customer delays like European government and Latin American orders.

Q: Rob Mason inquired about portable gas strength.

A: Steve Blanco stated it's due to both share gain and expansion of wallet share through connected solutions.

Q: Ross Sparenblek asked about end-market demand and portable gas.

A: Steve Blanco and Lee McChesney discussed backlog, market share, and portable growth, including details on order dynamics and connected portable expansion.