PITTSBURGH — On Feb. 17, global safety equipment manufacturer MSA Safety Incorporated reported its 2021 fourth quarter and full-year financial results for the period and year ended Dec. 31.
Quarterly Highlights
- Quarterly revenues were a record at $410 million, increasing 6% from a year ago. Core product revenue increased 9% from a year ago.
- GAAP operating loss was $89 million, compared to operating income of $22 million in the same period a year ago. Adjusted operating income was $80 million or 19.5% of sales, compared to $70 million or 18.0% of sales in the same period a year ago.
- GAAP net loss was $61 million or $1.57 per diluted share, compared to net income of $15 million or $0.38 per diluted share in the same period a year ago. Adjusted earnings were $66 million or $1.67 per diluted share, compared to $52 million or $1.33 per diluted share in the same period a year ago.
- GAAP operating and net loss includes a pre-tax charge of $160 million associated with an increase to MSA LLC's cumulative trauma product liability reserve, compared to a pre-tax charge of $34 million in the same period a year ago. The increase in the reserve was driven by an increase in claims activity and reflects the estimated liability through 2074.
- Operating cash flow was $69 million. MSA deployed $13 million for capital expenditures, $16 million for debt repayments and funded $17 million of dividends to shareholders.
Annual Highlights
- Revenue finished at $1.40 billion, increasing 4% from a year ago. Core product revenue increased 9% from a year ago.
- GAAP operating income was $23 million, compared to $172 million in the same period a year ago. Adjusted operating income was $241 million or 17.2% of sales, compared to $248 million or 18.4% of sales in the same period a year ago.
- GAAP earnings were $21 million or $0.54 per diluted share, compared to $124 million or $3.15 per diluted share in the same period a year ago. Adjusted earnings were $185 million or $4.68 per diluted share, compared to $181 million or $4.60 per diluted share in the same period a year ago.
- GAAP operating income and earnings includes a pre-tax charge of $185 million associated with an increase to MSA LLC's cumulative trauma product liability reserve, compared to a pre-tax charge of $39 million in the same period a year ago. The increase in the reserve was driven by an increase in claims activity and reflects the estimated liability through 2074.
- Operating cash flow was $199 million. MSA deployed $392 million for strategic acquisitions, $44 million for capital expenditures and funded $69 million of dividends to shareholders. Net leverage was 1.6x adjusted EBITDA at December 31, 2021.
Comments from Management
"Our team's disciplined execution enabled MSA to finish out a challenging year with very strong performance," commented Nish Vartanian, MSA Chairman, President and CEO. "While we reported record revenues, incoming order trends were also strong throughout the quarter, reflecting momentum across our end markets and driving our book-to-bill ratio above 1x. Robust demand and record backlog levels at year-end positions us well going into 2022."
Vartanian continued, "We achieved 150 basis points of adjusted operating margin expansion in the quarter, driven by improved gross margin from price realization and productivity programs. We remain focused on driving further improvements in profitability heading into 2022."
MSA deployed more than $500 million of capital in the year on strategic acquisitions, capital expenditure projects and shareholder dividends. "I'm pleased with the progress we are making with our recent acquisitions. The integration of Bacharach and Bristol Uniforms are on track, and each transaction has successfully expanded our reach into attractive markets. Our balance sheet remains strong and we will continue to maintain a balanced capital allocation strategy focused on growing our business and returning value to shareholders."
"Despite the ongoing supply chain challenges and economic uncertainties, I remain confident in our ability to drive value for our stakeholders. We continue to invest in and launch innovative safety solutions for our customers, and our employees remain highly engaged. We exited 2021 with record backlog levels, a strong balance sheet, and a focus on executing our long-term growth strategy that has driven significant value for our stakeholders" Vartanian concluded.
