What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-04-30 compared with 2023-10-25 · 143 added, 284 removed, 455 unchanged (48% of the section changed)

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended September 30, Nine Months Ended September 30,

Three Months Ended March 31,

(In thousands, except per share values) 2024 2023

8 unchanged sentences

Product liability expense (Note 17) — 3

Operating income 94,123 64,313 129,070 168,517

Operating income (loss) 80,112 ( 60,061 )

Interest expense 10,740 11,476

Other income, net ( 6,235 ) ( 3,800 )

Total other expense (income), net 6,461 3,603 21,662 ( 963 )

Income before income taxes 87,662 60,710 107,408 169,480

Total other expense, net 4,505 7,676

Income (loss) before income taxes 75,607 ( 67,737 )

Provision for income taxes (Note 10) 17,468 82,436

7 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Three Months Ended September 30, Nine Months Ended September 30,

Three Months Ended March 31,

(In thousands) 2024 2023

1 unchanged sentence

Other comprehensive gains (losses), net of tax:

Foreign currency translation adjustments

(Note 6) ( 18,771 ) ( 32,361 ) ( 2,538 ) ( 58,075 )

Foreign currency translation adjustments (Note 6) ( 10,673 ) 11,194

Pension and post-retirement plan actuarial gains, net of tax (Note 6) 374 439

Unrealized gain (loss) on available-for-sale securities (Note 6) — 13 2 ( 5 )

Reclassifications of currency translation from accumulated other comprehensive loss into net income (Note 6) 101 2,912 101 2,912

Total other comprehensive loss, net of tax ( 18,482 ) ( 27,137 ) ( 1,693 ) ( 48,275 )

Unrealized gain on available-for-sale securities (Note 6) — 2

Total other comprehensive (loss) gain, net of tax ( 10,299 ) 11,635

Comprehensive income (loss) $ 47,840 $ ( 138,538 )

2 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands) September 30, 2023 December 31, 2022

(In thousands) March 31, 2024 December 31, 2023

Cash and cash equivalents $ 148,329 $ 146,442

2 unchanged sentences

Inventories (Note 4) 305,556 292,604

Investments, short-term (Note 16) — 9,905

Prepaid income taxes 13,497 12,912

Notes receivable, insurance companies (Note 17) — 5,931

Prepaid expenses and other current assets 46,479 39,634

7 unchanged sentences

Intangible assets, net (Note 13) 260,925 266,134

Notes receivable, insurance companies (Note 17) — 38,695

Insurance receivables (Note 17) and other noncurrent assets 21,711 136,853

Other noncurrent assets 19,664 19,811

$ 2,174,330 $ 2,170,150

2 unchanged sentences

Employees’ compensation 38,360 73,386

Insurance and product liability (Note 17) 9,551 73,898

Income taxes payable (Note 10) 34,231 19,972

Accrued restructuring (Note 3) and other current liabilities 94,072 100,822

Other current liabilities 100,348 101,066

Total current liabilities

4 unchanged sentences

Deferred tax liabilities (Note 10) 102,228 102,419

Product liability (Note 17) and other noncurrent liabilities 3,763 336,889

Other noncurrent liabilities 3,988 4,479

Total liabilities

14 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended September 30,

Three Months Ended March 31,

(In thousands) 2024 2023

Operating Activities

Net (loss) income $ ( 17,827 ) $ 128,141

Net income (loss) $ 58,139 $ ( 150,173 )

Depreciation and amortization 15,559 14,572

3 unchanged sentences

Deferred income tax benefit (Note 10) ( 2,190 ) ( 237 )

(Gain) loss on asset dispositions, net ( 671 ) 4,776

Loss on asset dispositions, net 51 739

Pension contributions (Note 14) ( 1,316 ) ( 2,046 )

1 unchanged sentence

Product liability expense (Note 17) — 3

Collections on insurance receivables and notes receivable,

insurance companies (Note 17) — 9,510

Product liability payments (Note 17) — ( 5,250 )

5 unchanged sentences

Other noncurrent assets and liabilities ( 702 ) 769

Cash Flow (Used in) From Operating Activities ( 66,057 ) 103,903

Cash Flow From (Used in) Operating Activities 50,886 ( 285,909 )

Investing Activities

Capital expenditures ( 11,219 ) ( 8,402 )

Proceeds from maturities of short-term investments (Note 16) — 94,000

Purchase of short-term investments (Note 16) — ( 69,680 )

Property disposals and other investing — 35

7 unchanged sentences

Exercise of stock options (Note 7) 253 4

Employee stock purchase plan (Note 7) 497 486

Cash Flow From (Used in) Financing Activities 110,507 ( 56,163 )

Cash Flow (Used in) From Financing Activities ( 29,085 ) 272,771

Effect of exchange rate changes on cash, cash equivalents and restricted cash ( 8,676 ) ( 2,287 )

Increase in cash, cash equivalents and restricted cash 2,009 19,847

Increase (decrease) in cash, cash equivalents and restricted cash 1,906 ( 23,792 )

Beginning cash, cash equivalents and restricted cash 148,408 164,428

11 unchanged sentences

Comprehensive

Balances June 30, 2022 $ 1,098,048 $ ( 170,278 )

Net income 44,906 —

Foreign currency translation adjustments — ( 32,361 )

Pension and post-retirement plan adjustments, net of tax benefit of $ 981

Unrealized net losses on available-for-sale securities (Note 16) — 13

Reclassification from accumulated other comprehensive loss into net income — 2,912

Common dividends ($ 0.46 per share)

Preferred dividends ($ 0.5625 per share)

Balances September 30, 2022 $ 1,124,908 $ ( 197,415 )

Balances June 30, 2023 $ 1,038,750 $ ( 141,928 )

Net income 65,256 —

Balances December 31, 2022 $ 1,158,347 $ ( 158,717 )

Net loss ( 150,173 ) —

Foreign currency translation adjustments — 11,194

Pension and post-retirement plan adjustments, net of tax expense of $ 278

Reclassification from accumulated other comprehensive loss into net income (Note 6) — 101

Unrecognized net gains on available-for-sale securities (Note 16) — 2

Common dividends ($ 0.46 per share)

Preferred dividends ($ 0.5625 per share)

Balances September 30, 2023 $ 1,085,521 $ ( 160,410 )

Balances March 31, 2023 $ 990,129 $ ( 147,082 )

Balances December 31, 2023 $ 1,143,442 $ ( 129,249 )

2 unchanged sentences

Pension and post-retirement plan adjustments, net of tax benefit of $ 14

Unrecognized net losses on available-for-sale securities (Note 16) — ( 5 )

Reclassification from accumulated other comprehensive loss into net income (Note 6) — 2,912

Common dividends ($ 0.47 per share)

Preferred dividends ($ 0.5625 per share)

Balances September 30, 2022 $ 1,124,908 $ ( 197,415 )

Balances December 31, 2022 $ 1,158,347 $ ( 158,717 )

Net loss ( 17,827 ) —

Foreign currency translation adjustments — ( 2,538 )

Pension and post-retirement plan adjustments, net of tax expense of $ 259

Unrecognized net gains on available-for-sale securities (Note 16) — 2

Reclassification from accumulated other comprehensive loss into net income (Note 6) — 101

Common dividends ($ 1.40 per share)

Preferred dividends ($ 1.6875 per share)

Balances September 30, 2023 $ 1,085,521 $ ( 160,410 )

Balances March 31, 2024 $ 1,183,091 $ ( 139,548 )

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

15 unchanged sentences

The Company's net cash pool position consisted of the following:

(In thousands) September 30, 2023

(In thousands) March 31, 2024

Gross cash pool position $ 95,488

2 unchanged sentences

Note 3— Restructuring Charges

During the three and nine months ended September 30, 2023, we recorded restructuring charges of $ 3.3 million and $ 8.4 million, respectively.

Americas segment restructuring charges of $ 2.7 million during the nine months ended September 30, 2023, were related to manufacturing footprint optimization activities.

International segment restructuring charges of $ 3.6 million during the nine months ended September 30, 2023, were related to ongoing initiatives to drive profitable growth and improve productivity.

Corporate segment restructuring charges of $ 2.1 million during the nine months ended September 30, 2023, were related to footprint optimization activities and management restructuring.

During the three and nine months ended September 30, 2022, we recorded restructuring charges of $ 0.9 million and $ 3.1 million, respectively.

International segment restructuring charges of $ 2.2 million during the nine months ended September 30, 2022, were primarily related to the implementation of our European Shared Service Center in Warsaw, Poland.

Americas segment restructuring charges of $ 1.0 million during the nine months ended September 30, 2022, were primarily related to various optimization activities.

Restructuring reserves are included in Accrued restructuring and other current liabilities in the accompanying unaudited Condensed Consolidated Balance Sheets.

During the three months ended March 31, 2024, we recorded restructuring charges of $ 3.0 million.

Americas segment restructuring charges of $ 0.3 million during the three months ended March 31, 2024, were related to manufacturing footprint optimization activities.

International segment restructuring charges of $ 1.9 million during the three months ended March 31, 2024, were related to management restructuring and ongoing initiatives to drive profitable growth and improve productivity.

Corporate segment restructuring charges of $ 0.8 million during the three months ended March 31, 2024, were related to footprint optimization activities and management restructuring.

During the three months ended March 31, 2023, we recorded restructuring charges of $ 1.7 million.

Americas segment restructuring charges of $ 1.4 million during the three months ended March 31, 2023, were related to manufacturing footprint optimization activities.

Corporate segment restructuring charges of $ 0.6 million during the three months ended March 31, 2023, were primarily related to various optimization activities.

Restructuring reserves are included in Other current liabilities in the accompanying unaudited Condensed Consolidated Balance Sheets.

Activity and reserve balances for restructuring by segment were as follows:

8 unchanged sentences

Cash payments ( 0.6 ) ( 2.9 ) ( 0.3 ) ( 3.8 )

Reserve balances at September 30, 2023 $ 1.0 $ 9.7 $ 0.3 $ 11.0

Reserve balances at March 31, 2024 $ 0.5 $ 7.8 $ 0.5 $ 8.8

Note 4— Inventories

The following table sets forth the components of inventory:

(In thousands) September 30, 2023 December 31, 2022

(In thousands) March 31, 2024 December 31, 2023

Finished products $ 89,899 $ 88,687

4 unchanged sentences

The following table sets forth the components of property, plant and equipment, net:

(In thousands) September 30, 2023 December 31, 2022

(In thousands) March 31, 2024 December 31, 2023

Land $ 4,303 $ 4,332

7 unchanged sentences

Changes in accumulated other comprehensive loss were as follows:

Three Months Ended September 30, Nine Months Ended September 30,

Three Months Ended March 31,

(In thousands) 2024 2023

4 unchanged sentences

Recognized net actuarial losses (Note 14) 397 185

Tax expense (benefit) 27 ( 981 ) 259 ( 2,947 )

Tax (benefit) expense ( 14 ) 278

Total amount reclassified from accumulated other comprehensive loss, net of tax, into net income (loss) 374 439

2 unchanged sentences

Balance at beginning of period $ — $ ( 2 )

Unrealized net gains (losses) on available-for-sale securities (Note 16) — 13 2 ( 5 )

Unrealized net gains on available-for-sale securities (Note 16) — 2

Balance at end of period $ — $ —

1 unchanged sentence

Balance at beginning of period $ ( 86,597 ) $ ( 108,380 )

Reclassification from accumulated other comprehensive loss into net income (loss) (b)

101 2,912 101 2,912

Foreign currency translation adjustments ( 10,673 ) 11,194

1 unchanged sentence

(a) Reclassifications out of accumulated other comprehensive loss and into net income (loss) are included in the computation of net periodic pension and other post-retirement benefit costs (refer to Note 14—Pensions and Other Post-retirement Benefits).

(b) Reclassifications out of accumulated other comprehensive loss and into net income (loss) relate primarily to the approval of our plan to close a foreign subsidiary.

Note 7— Capital Stock

Preferred Stock - The Company has authorized 100,000 shares of $ 50 par value 4.5 % cumulative preferred nonvoting stock which is callable at $ 52.50 .

There were 71,340 shares issued and 52,998 shares held in treasury at both September 30, 2023 and December 31, 2022.

There were 71,340 shares issued and 52,998 shares held in treasury at both March 31, 2024 and December 31, 2023.

The Treasury shares at cost line in the unaudited Condensed Consolidated Balance Sheets includes $ 1.8 million related to preferred stock.

There were no shares of preferred stock purchased and subsequently held in treasury during the nine months ended September 30, 2023 or 2022.

There were no shares of preferred stock purchased and subsequently held in treasury during the three months ended March 31, 2024 or 2023.

The Company has also authorized 1,000,000 shares of $ 10 par value second cumulative preferred voting stock.

No shares have been issued as of September 30, 2023.

No shares have been issued as of March 31, 2024, or December 31, 2023.

Common Stock - The Company has authorized 180,000,000 shares of no par value common stock.

There were 62,081,391 shares issued as of September 30, 2023 and December 31, 2022.

No new shares were issued during the nine months ended September 30, 2023 or 2022.

There were 39,310,511 and 39,213,064 shares outstanding at September 30, 2023 and December 31, 2022, respectively.

There were 62,081,391 shares issued as of March 31, 2024 and December 31, 2023.

No new shares were issued during the three months ended March 31, 2024 or 2023.

There were 39,381,219 and 39,317,212 shares outstanding at March 31, 2024 and December 31, 2023, respectively.

Treasury Shares - The Company's stock repurchase program authorizes up to $ 100.0 million to repurchase MSA common stock in the open market and in private transactions.

1 unchanged sentence

The maximum number of shares that may be repurchased is calculated based on the dollars remaining under the program and the respective month-end closing share price.

During the nine months ended September 30, 2023, no shares were repurchased under this program.

During the nine months ended September 30, 2022, 251,408 shares were repurchased under this program.

There were 22,770,880 and 22,868,327 treasury shares at September 30, 2023 and December 31, 2022, respectively.

During the three months ended March 31, 2024, and 2023, no shares were repurchased under this program.

There were 22,700,172 and 22,764,179 treasury shares at March 31, 2024 and December 31, 2023, respectively.

The Company issues treasury shares for all stock-based benefit plans.

Shares are issued from treasury at the average treasury share cost on the date of the transaction.

There were 125,967 and 203,619 Treasury shares issued for these purposes during the nine months ended September 30, 2023 and 2022, respectively.

There were 95,428 and 26,774 Treasury shares issued for these purposes during the three months ended March 31, 2024 and 2023, respectively.

Common stock activity is summarized as follows:

Three Months Ended September 30, 2023 Three Months Ended September 30, 2022

(In thousands) Common

Stock Treasury

Balance at beginning of period $ 294,364 $ ( 362,025 ) $ 267,645 $ ( 359,314 )

Stock compensation expense 8,477 — 2,967 —

Restricted and performance stock awards ( 15 ) 15 ( 103 ) 103

Stock options exercised 591 307 2,501 1,364

Treasury shares purchased for stock compensation programs — ( 70 ) — ( 59 )

Share repurchase program — — — ( 2,150 )

Balance at end of period $ 303,417 $ ( 361,773 ) $ 273,010 $ ( 360,056 )

(a) Excludes treasury cost related to preferred stock.

Nine Months Ended September 30, 2023 Nine Months Ended September 30, 2022

Three Months Ended March 31, 2024 Three Months Ended March 31, 2023

(In thousands) Common

6 unchanged sentences

Treasury shares purchased for stock compensation programs — ( 5,838 ) — ( 3,687 )

Employee stock purchase program 432 65 424 62

Share repurchase program — — — ( 30,375 )

Balance at end of period $ 315,241 $ ( 365,999 ) $ 287,009 $ ( 362,280 )

21 unchanged sentences

(In thousands, except percentages) Americas International Corporate Consolidated

Three Months Ended September 30, 2023

Net sales to external customers $ 314,273 $ 132,455 $ — $ 446,728

Operating income 94,123

Restructuring charges (Note 3) 3,285

Currency exchange losses, net 1,496

Amortization of acquisition-related intangible assets 2,315

Transaction costs (a)

Adjusted operating income (loss) 93,918 22,577 ( 15,198 ) 101,297

Adjusted operating margin % 29.9 % 17.0 %

Depreciation and amortization 13,189

Adjusted EBITDA 103,157 26,289 ( 14,960 ) 114,486

Adjusted EBITDA margin % 32.8 % 19.8 %

Three Months Ended September 30, 2022

Three Months Ended March 31, 2024

Net sales to external customers $ 295,539 $ 117,763 $ — $ 413,302

2 unchanged sentences

Currency exchange losses, net 2,333

Product liability expense (Note 17) 4,035

Amortization of acquisition-related intangible assets 2,314

5 unchanged sentences

Adjusted EBITDA margin % 32.4 % 14.5 %

(a) Transaction costs include advisory, legal, accounting, valuation, and other professional or consulting fees incurred during acquisitions and divestitures.

These costs are included in Selling, general and administrative expense in the unaudited Condensed Consolidated Statements of Operations.

(In thousands, except percentages) Americas International Corporate Consolidated

Nine Months Ended September 30, 2023

Three Months Ended March 31, 2023

Net sales to external customers $ 280,267 $ 117,995 $ — $ 398,262

Operating income 129,070

Operating loss ( 60,061 )

Restructuring charges (Note 3) 1,747

3 unchanged sentences

Amortization of acquisition-related intangible assets 2,305

Transaction costs (a)

Adjusted operating income (loss) 71,694 15,779 ( 10,093 ) 77,380

3 unchanged sentences

Adjusted EBITDA margin % 28.7 % 16.2 %

Nine Months Ended September 30, 2022

Net sales to external customers $ 754,116 $ 330,583 $ — $ 1,084,699

Operating income 168,517

Restructuring charges (Note 3) 3,146

Currency exchange losses, net 4,788

Product liability expense (Note 17) 9,733

Amortization of acquisition-related intangible assets 6,922

Transaction costs (a)

Adjusted operating income (loss) 184,664 34,674 ( 24,756 ) 194,582

Adjusted operating margin % 24.5 % 10.5 %

Depreciation and amortization 34,961

Adjusted EBITDA 210,201 43,708 ( 24,366 ) 229,543

Adjusted EBITDA margin % 27.9 % 13.2 %

(a) Transaction costs include advisory, legal, accounting, valuation, and other professional or consulting fees incurred during acquisitions and divestitures.

1 unchanged sentence

Total sales by product group was as follows:

Three Months Ended September 30, 2023 Consolidated Americas International

(In thousands, except percentages) Dollars Percent Dollars Percent Dollars Percent

Fixed Gas & Flame Detection $ 112,012 25 % $ 73,074 23 % $ 38,938 29 %

Breathing Apparatus 111,024 25 % 79,908 25 % 31,116 24 %

Firefighter Helmets & Protective Apparel 64,707 15 % 51,608 16 % 13,099 10 %

Portable Gas Detection 43,682 10 % 31,933 10 % 11,749 9 %

Industrial Head Protection 45,780 10 % 36,402 12 % 9,378 7 %

Fall Protection 31,980 7 % 20,235 7 % 11,745 9 %

Other 37,543 8 % 21,113 7 % 16,430 12 %

Total $ 446,728 100 % $ 314,273 100 % $ 132,455 100 %

Three Months Ended September 30, 2022 Consolidated Americas International

(In thousands, except percentages) Dollars Percent Dollars Percent Dollars Percent

Fixed Gas & Flame Detection $ 87,746 23 % $ 62,134 23 % $ 25,612 24 %

Breathing Apparatus 91,977 24 % 70,482 26 % 21,495 20 %

Firefighter Helmets & Protective Apparel 54,738 14 % 41,958 15 % 12,780 12 %

Portable Gas Detection 39,481 10 % 28,358 10 % 11,123 11 %

Industrial Head Protection 43,608 11 % 34,620 13 % 8,988 9 %

Fall Protection 27,839 7 % 17,658 6 % 10,181 10 %

Other 36,305 11 % 20,872 7 % 15,433 14 %

Total $ 381,694 100 % $ 276,082 100 % $ 105,612 100 %

Nine Months Ended September 30, 2023 Consolidated Americas International

Three Months Ended March 31, 2024 Consolidated Americas International

(In thousands, except percentages) Dollars Percent Dollars Percent Dollars Percent

Fixed Gas & Flame Detection $ 311,502 24 % $ 200,604 22 % $ 110,898 28 %

Breathing Apparatus 288,976 22 % 201,945 22 % 87,031 22 %

Firefighter Helmets & Protective Apparel 192,634 15 % 152,784 17 % 39,850 10 %

Portable Gas Detection 149,036 12 % 108,088 12 % 40,948 11 %

Industrial Head Protection 135,851 11 % 106,120 12 % 29,731 8 %

Fall Protection 97,019 7 % 63,168 7 % 33,851 9 %

Other 117,272 9 % 70,209 8 % 47,063 12 %

Firefighter Safety (a)

$ 163,694 40 % $ 122,252 41 % $ 41,442 35 %

Detection (b)

139,216 34 % 96,295 33 % 42,921 36 %

Industrial PPE and Other (c)

110,392 26 % 76,992 26 % 33,400 29 %

Total $ 413,302 100 % $ 295,539 100 % $ 117,763 100 %

Nine Months Ended September 30, 2022 Consolidated Americas International

Three Months Ended March 31, 2023 Consolidated Americas International

(In thousands, except percentages) Dollars Percent Dollars Percent Dollars Percent

Fixed Gas & Flame Detection $ 251,321 23 % $ 167,269 22 % $ 84,052 25 %

Breathing Apparatus 254,878 23 % 185,490 25 % 69,388 21 %

Firefighter Helmets & Protective Apparel 151,097 14 % 110,471 15 % 40,626 12 %

Portable Gas Detection 121,116 11 % 85,815 11 % 35,301 11 %

Industrial Head Protection 123,489 11 % 96,808 13 % 26,681 8 %

Fall Protection 79,114 7 % 50,940 7 % 28,174 9 %

Other 103,684 11 % 57,323 7 % 46,361 14 %

Firefighter Safety (a)

$ 139,388 35 % $ 102,056 36 % $ 37,332 32 %

Detection (b)

146,601 37 % 99,311 35 % 47,290 40 %

Industrial PPE and Other (c)

112,273 28 % 78,900 29 % 33,373 28 %

Total $ 398,262 100 % $ 280,267 100 % $ 117,995 100 %

Note 9—E arnings (Loss) per Share

(a) Firefighter Safety includes Breathing Apparatus and Firefighter Helmets and Protective Apparel.

(b) Detection includes Fixed Gas and Flame Detection and Portable Gas detection.

Note 9— Earnings (Loss) per Share

Basic earnings (loss) per share is computed by dividing net income, after the deduction of preferred stock dividends and undistributed earnings allocated to participating securities, by the weighted average number of common shares outstanding during the period.

1 unchanged sentence

Participating securities are defined as unvested stock-based compensation awards that contain nonforfeitable rights to dividends.

Three Months Ended September 30, Nine Months Ended September 30,

Three Months Ended March 31,

(In thousands, except per share values) 2024 2023

6 unchanged sentences

Stock-based compensation awards (a)

147 127 — 171

Diluted weighted-average shares outstanding 39,556 39,224

6 unchanged sentences

Note 10— Income Taxes

The Company's effective tax rate for the three months ended September 30, 2023, was 25.6 %, which differs from the United States of America ("U.S.") federal statutory rate of 21% primarily due to higher earnings in higher tax jurisdictions and nondeductible compensation.

The Company's effective tax rate for the three months ended September 30, 2022, was 26.0 %, which differs from the U.S.

federal statutory rate of 21% primarily due to state income taxes and nondeductible foreign exchange on entity closures.

The Company's effective tax rate for the nine months ended September 30, 2023, was 116.6 %, which differs from the "U.S." federal statutory rate of 21% primarily due to the divestiture of MSA LLC and the non-deductible loss recorded on the derecognition of the product liability reserves and related assets.

Refer to Note 17—Contingencies to the unaudited condensed consolidated financial statements in Part I Item 1 of this Form 10-Q for further information on this transaction.

The Company's effective tax rate for the nine months ended September 30, 2022, was 24.4 %, which differs from the U.S.

federal statutory rate of 21% primarily due to state income taxes and nondeductible foreign exchange on entity closures.

At September 30, 2023, the Company had a gross liability for unrecognized tax benefits of $ 3.4 million.

The Company has recognized tax benefits associated with these liabilities of $ 1.7 million at September 30, 2023.

The Company's effective tax rate for the three months ended March 31, 2024, was 23.1 %, which differs from the United States of America ("U.S.") federal statutory rate of 21% primarily due to state income taxes and nondeductible compensation.

The Company's effective tax rate for the three months ended March 31, 2023, was ( 121.7 )%, which differs from the U.S.

federal statutory rate of 21% primarily due to the divestiture of MSA LLC and the non-deductible loss recorded on the derecognition of the product liability reserves and related assets.

Refer to Note 17—Commitments and Contingencies to the unaudited condensed consolidated financial statements in Part I Item 1 of this Form 10-Q for further information on this transaction.

At March 31, 2024, the Company had a gross liability for unrecognized tax benefits of $ 7.2 million.

The Company has recognized tax benefits associated with these liabilities of $ 0.5 million at March 31, 2024.

The gross liability includes amounts associated with foreign tax exposure in prior periods.

The Company recognizes interest and penalties related to unrecognized tax benefits in interest expense and operating expenses, respectively.

The Company's liability for accrued interest related to uncertain tax positions was $ 0.3 million at September 30, 2023.

The Company's liability for accrued interest related to uncertain tax positions was $ 0.2 million at March 31, 2024.

We are subject to regular review and audit by both foreign and domestic tax authorities.

4 unchanged sentences

Stock compensation expense, included in Selling, general and administrative expense in the unaudited Condensed Consolidated Statements of Operations, is as follows:

Three Months Ended September 30, Nine Months Ended September 30,

Three Months Ended March 31,

(In thousands) 2024 2023

3 unchanged sentences

We have not capitalized any stock-based compensation expense.

A summary of stock option activity for the nine months ended September 30, 2023, is as follows:

A summary of stock option activity for the three months ended March 31, 2024, is as follows:

Shares Weighted Average

2 unchanged sentences

Exercised ( 5,465 ) 46.32

Forfeited ( 226 ) 49.44

Outstanding and exercisable at September 30, 2023 27,195 $ 46.02

Outstanding and exercisable at March 31, 2024 21,071 $ 45.85

Restricted stock awards and restricted stock units are valued at the market value of the stock on the grant date.

A summary of restricted stock activity for the nine months ended September 30, 2023, is as follows:

A summary of restricted stock activity for the three months ended March 31, 2024, is as follows:

Shares Weighted Average

3 unchanged sentences

Forfeited ( 2,454 ) 143.89

Unvested at September 30, 2023 171,532 $ 141.66

Unvested at March 31, 2024 221,005 $ 151.23

Performance stock units that have a market condition modifier are valued at an estimated fair value using a Monte Carlo model.

11 unchanged sentences

Expected life is based on historical stock option exercise data.

A summary of performance stock unit activity for the nine months ended September 30, 2023, is as follows:

A summary of performance stock unit activity for the three months ended March 31, 2024, is as follows:

Shares Weighted Average

5 unchanged sentences

Forfeited ( 2,202 ) 141.61

Unvested at September 30, 2023 189,852 $ 146.14

Unvested at March 31, 2024 176,460 $ 147.17

(a) Performance adjustments relate primarily to the final number of shares issued for the 2021 performance unit awards which vested in the first quarter of 2024 at 174 % of the target award based on both cumulative performance against EBITDA margin and revenue growth targets and MSA's TSR during the three -year performance period.

Note 12— Long-Term Debt

(In thousands) September 30, 2023 December 31, 2022

(In thousands) March 31, 2024 December 31, 2023

2016 Senior Notes payable through 2031, 3.40 %, net of debt issuance costs

6 unchanged sentences

2023 Senior Notes payable through 2028, 5.25 %, net of debt issuance costs

49,943 49,939

Senior revolving credit facility maturing in 2026, net of debt issuance costs 68,427 59,602

3 unchanged sentences

On May 24, 2021, the Company entered into a Fourth Amended and Restated Credit Agreement (the “Revolving Credit Facility" or "Facility”) that extended its term through May 24, 2026 and increased the capacity to $ 900.0 million.

Under the amended agreement, the Company may elect either a Base rate of interest (“BASE”) or an interest rate based on the London Interbank Offered Rate (“LIBOR”).

The BASE is a daily fluctuating per annum rate equal to the highest of (i) 0.00 %, (ii) the Prime Rate, (iii) the Federal Funds Open Rate plus one half of one percent ( 0.5 %), (iv) the Overnight Bank Funding Rate, plus one half of one percent ( 0.5 %), or (v) the Daily LIBOR Rate plus one percent ( 1.00 %).

The Company pays a credit spread of 0 to 175 basis points based on the Company’s net EBITDA leverage ratio and elected rate (BASE or LIBOR).

The Company has a weighted average revolver interest rate of 6.72 % as of September 30, 2023.

At September 30, 2023, $ 700.8 million of the existing $ 900.0 million Revolving Credit Facility was unused, including letters of credit issued under the Facility.

The agreement was amended in August 2021 and June 2023 to transition from Sterling LIBOR reference rates and U.S.

LIBOR reference rates.

Under the amended agreement, the Company may elect either a Base rate of interest (“BASE”) or an interest rate based on Secured Overnight Financing Rate (“SOFR”).

The BASE is a daily fluctuating per annum rate equal to the highest of (i) 0.00 %, (ii) the Overnight Bank Funding Rate, plus 0.5 %, (iii) the Prime Rate (iv) the Daily Simple SOFR rate, plus 1.00 %.

The Company pays a credit spread of 0 to 175 basis points based on the Company’s net EBITDA leverage ratio and elected rate (BASE or SOFR).

The Company has a weighted average revolver interest rate of 6.22 % as of March 31, 2024.

At March 31, 2024, $ 829.5 million of the existing $ 900.0 million Revolving Credit Facility was unused, including letters of credit issued under the Facility.

The Facility also provides an accordion feature that allows the Company to access an additional $ 400.0 million of capacity pending approval by MSA’s board of directors and from the bank group.

2 unchanged sentences

The Prudential Note Agreement provided for (i) the issuance of $ 100.0 million of 2.69 % Series C Senior Notes due July 1, 2036 and (ii) the establishment of an uncommitted note issuance facility whereby the Company may request, subject to Prudential’s acceptance in its sole discretion, the issuance of up to $ 335.0 million aggregate principal amount of senior unsecured notes.

As of September 30, 2023, the Company has outstanding £ 48.8 million (approximately $ 59.6 million at September 30, 2023) of 3.4 % Series B Senior Notes due January 22, 2031.

Remaining maturities of this note are £ 6.1 million (approximately $ 7.4 million at September 30, 2023) due January 22, 2024, with annual maturities of £ 6.1 million through January 2031.

As of March 31, 2024, the Company has outstanding £ 42.7 million (approximately $ 54.0 million at March 31, 2024) of 3.4 % Series B Senior Notes due January 22, 2031.

Remaining maturities of this note are £ 6.1 million (approximately $ 7.7 million at March 31, 2024) due annually through January 2031.

On July 1, 2021, the Company entered into a Second Amended and Restated Master Note Facility (the “NYL Note Facility”) with NYL Investors.

5 unchanged sentences

The proceeds of the Notes were used on June 29, 2023, to pay down an equivalent amount of borrowings under the Company’s Revolving Credit Facility with PNC Bank, National Association, as Administrative Agent.

On January 5, 2023, the Company entered into a new $ 250 million term loan facility to fund the divestiture of MSA LLC, a wholly owned subsidiary.

Under the agreement, the Company may elect either BASE or an interest rate based on SOFR.

The Company pays a credit spread of 0 to 200 basis points based on the Company's net EBITDA leverage ratio and elected rate.

The Company had a Term Loan interest rate of 6.42 % as of March 31, 2024.

The Revolving Credit Facility, Prudential Note Agreement and NYL Note Facility require the Company to comply with specified financial covenants, including a requirement to maintain a minimum fixed charges coverage ratio of not less than 1.50 to 1.00 and a consolidated leverage ratio not to exceed 3.50 to 1.00;

1 unchanged sentence

in each case calculated on the basis of the trailing four fiscal quarters.

In addition, the agreements contain negative covenants limiting the ability of the Company and its subsidiaries to incur additional indebtedness or issue guarantees, create or incur liens, make loans and investments, make acquisitions, transfer or sell assets, enter into transactions with affiliated parties, make changes in its organizational documents that are materially adverse to lenders or modify the nature of the Company's or its subsidiaries' business, subject to certain exceptions and limitations, including carve-outs and baskets.

All credit facilities exclude MSA LLC prior to the divestiture of this subsidiary on January 5, 2023, as discussed further in Note 17.

During August 2021 and June 2023, respectively, the Company amended its Revolving Credit Facility to transition from Sterling LIBOR reference rates to Sterling Overnight Interbank Average Rate ("SONIA") reference rates and from U.S.

LIBOR reference rates to Secured Overnight Financing Rate ("SOFR") reference rates.

The Company will apply the optional expedients in ASC 848, Reference Rate Reform, to these modifications driven by reference rate reform, accounting for the modifications as a continuation of the existing contracts.

Therefore, these modifications will not require remeasurement at the modification date or a reassessment of previous accounting determinations.

As such, the Company does not anticipate the change in reference rates will have an impact on the Company’s unaudited condensed consolidated financial statements.

On January 5, 2023, the Company entered into a new $ 250 million term loan facility to fund the divestiture of MSA LLC, a wholly owned subsidiary.

Under the agreement, the Company may elect either BASE or an interest rate based on SOFR.

The Company pays a credit spread of 0 to 200 basis points based on the Company's net EBITDA leverage ratio and elected rate.

The Company had a Term Loan interest rate of 6.93 % as of September 30, 2023.

As of September 30, 2023, the Company was in full compliance with the restrictive covenants under its various credit agreements.

The Company had outstanding bank guarantees and standby letters of credit with banks as of September 30, 2023, totaling $ 9.2 million, of which $ 1.5 million relate to the Revolving Credit Facility.

As of March 31, 2024, the Company was in full compliance with the restrictive covenants under its various credit agreements.

The Company had outstanding bank guarantees and standby letters of credit with banks as of March 31, 2024, totaling $ 9.3 million, of which $ 1.1 million relate to the Revolving Credit Facility.

The letters of credit serve to cover customer requirements in connection with certain sales orders and insurance companies.

The Company is also required to provide cash collateral in connection with certain arrangements.

At September 30, 2023, the Company has $ 1.9 million of restricted cash in support of these arrangements.

At March 31, 2024, the Company has $ 2.0 million of restricted cash in support of these arrangements.

Note 13— Goodwill and Intangible Assets, Net

Changes in goodwill during the nine months ended September 30, 2023, were as follows:

Changes in goodwill during the three months ended March 31, 2024, were as follows:

(In thousands) Goodwill

1 unchanged sentence

Currency translation ( 2,485 )

Balance at September 30, 2023 $ 620,343

At September 30, 2023, goodwill of $ 447.6 million and $ 172.7 million related to the Americas and International reportable segments, respectively.

Changes in intangible assets, net, during the nine months ended September 30, 2023, were as follows:

Balance at March 31, 2024 $ 625,049

At March 31, 2024, goodwill of $ 447.6 million and $ 177.4 million related to the Americas and International reportable segments, respectively.

Changes in intangible assets, net, during the three months ended March 31, 2024, were as follows:

(In thousands) Intangible Assets

2 unchanged sentences

Currency translation ( 773 )

Net balance at September 30, 2023 $ 268,321

At September 30, 2023, intangible assets, net, includes a trade name related to Globe Manufacturing Company, LLC ("Globe") with an indefinite life totaling $ 60.0 million .

Net balance at March 31, 2024 $ 260,925

At March 31, 2024, intangible assets, net, includes a trade name related to Globe Manufacturing Company, LLC ("Globe") with an indefinite life totaling $ 60.0 million .

Note 14— Pensions and Other Post-retirement Benefits

2 unchanged sentences

(In thousands) 2024 2023 2024 2023

Three Months Ended September 30,

Service cost $ 1,884 $ 3,099 $ 53 $ 82

Interest cost 5,918 3,613 273 148

Expected return on plan assets ( 9,906 ) ( 12,418 ) — —

Amortization of prior service cost (credit) 37 36 ( 61 ) ( 84 )

Recognized net actuarial losses 47 3,018 138 310

Net periodic benefit (income) cost (a)

$ ( 2,020 ) $ ( 2,652 ) $ 403 $ 456

Nine Months Ended September 30,

Three Months Ended March 31,

Service cost $ 2,315 $ 1,884 $ 44 $ 53

6 unchanged sentences

(a) Components of Net periodic benefit (income) cost other than service cost are included in the line item Other income, net, and service costs are included in the line items Cost of products sold and Selling, general and administrative in the unaudited Condensed Consolidated Statements of Operations.

We made contributions of $ 4.3 million and $ 5.7 million to our pension plans during the nine months ended September 30, 2023, and 2022, respectively.

We expect to make total contributions of $ 5.7 million to our pension plans in 2023, which are primarily associated with statutorily required plans in the International reporting segment.

We made contributions of $ 1.3 million and $ 2.0 million to our pension plans during the three months ended March 31, 2024, and 2023, respectively.

We expect to make net contributions of $ 5.3 million to our pension plans in 2024, which are primarily associated with statutorily required plans in the International reporting segment.

Note 15— Derivative Financial Instruments

2 unchanged sentences

We account for these forward contracts at fair value and report the related gains or losses in currency exchange losses, net, in the unaudited Condensed Consolidated Statements of Operations.

The notional amount of open forward contracts was $ 106.4 million and $ 103.0 million at September 30, 2023, and December 31, 2022, respectively.

The notional amount of open forward contracts was $ 115.0 million and $ 110.9 million at March 31, 2024, and December 31, 2023, respectively.

The following table presents the unaudited Condensed Consolidated Balance Sheets location and fair value of assets and liabilities associated with derivative financial instruments:

(In thousands) September 30, 2023 December 31, 2022

(In thousands) March 31, 2024 December 31, 2023

Derivatives not designated as hedging instruments:

3 unchanged sentences

accrued restructuring and other current liabilities 660 242

The following table presents the unaudited Condensed Consolidated Statements of Operations and unaudited Condensed Consolidated Statements of Cash Flows location and the loss impact of derivative financial instruments:

Nine Months Ended September 30,

Three Months Ended March 31,

(In thousands) 2024 2023

9 unchanged sentences

• Level 3—Unobservable inputs for the asset or liability.

The valuation methodologies we used to measure financial assets and liabilities include the derivative financial instruments described in Note 15—Derivative Financial Instruments.

The valuation methodologies we used to measure financial assets and liabilities are also used to value the derivative financial instruments described in Note 15—Derivative Financial Instruments.

We estimate the fair value of the derivative financial instruments, consisting of foreign currency forward contracts, based upon valuation models with inputs that generally can be verified by observable market conditions and do not involve significant management judgment.

Accordingly, the fair values of the derivative financial instruments are classified within Level 2 of the fair value hierarchy.

With the exception of our investments in marketable securities and fixed rate long-term debt, we believe that the reported carrying amounts of our financial assets and liabilities approximate their fair values.

Our investments in available-for-sale marketable securities, primarily fixed income, were transferred to Sag Main Holdings, LLC, on January 5, 2023, as part of our MSA LLC divestiture as described in Note 17—Contingencies.

Prior to the divestiture, these investments were valued at fair value using quoted market prices for similar securities or pricing models.

Accordingly, the fair values of the investments were classified within Level 2 of the fair value hierarchy.

The amortized cost basis of our investments was $ 9.9 million as of December 31, 2022.

The fair value was $ 9.9 million as of December 31, 2022, which was reported in Investments, short-term in the accompanying unaudited Condensed Consolidated Balance Sheets.

Prior to the divestiture, changes in fair value were recorded in Other comprehensive income (loss), net of tax.

No impairment losses relating to these securities occurred during the three months ended March 31, 2023.

All investments in marketable securities had maturities of one year or less and were in an unrealized loss position as of December 31, 2022.

The reported carrying amount of our fixed rate long-term debt was $ 309.6 million and $ 266.5 million at September 30, 2023, and December 31, 2022, respectively.

The fair value of this debt was $ 255.1 million and $ 218.3 million at September 30, 2023, and December 31, 2022, respectively.

With the exception of our fixed rate long-term debt, we believe that the reported carrying amounts of our financial assets and liabilities approximate their fair values.

The reported carrying amount of our fixed rate long-term debt was $ 304.0 million and $ 312.2 million at March 31, 2024, and December 31, 2023, respectively.

The fair value of this debt was $ 265.2 million and $ 278.7 million at March 31, 2024, and December 31, 2023, respectively.

The fair value of this debt was determined using Level 2 inputs by evaluating similarly rated companies with publicly traded bonds where available or current borrowing rates available for financings with similar terms and maturities.

Note 17— Contingencies

Note 17— Commitments and Contingencies

Product liability

5 unchanged sentences

To determine the reserves, Management makes reasonable estimates of losses for single incident claims based on the number and characteristics of asserted claims, historical experience, sales volumes, expected settlement costs, and other relevant information.

The reserve for single incident product liability claims was $ 1.3 million at September 30, 2023 and $ 1.4 million at December 31, 2022.

Single incident product liability benefit was $ 0.1 million for the nine months ended September 30, 2023, and expense was $ 0.1 million for the nine months ended September 30, 2022.

The reserve for single incident product liability claims was $ 1.4 million at March 31, 2024 and $ 1.3 million at December 31, 2023.

Single incident product liability expense was $ 0.1 million for both the three months ended March 31, 2024, and 2023.

Single incident product liability exposures are evaluated on an annual basis, or more frequently if changing circumstances warrant.

5 unchanged sentences

These lawsuits mainly involve respiratory protection products allegedly manufactured and sold by MSA LLC or its predecessors.

Management previously established a reserve for MSA LLC's potential exposure to cumulative trauma product liability claims.

Prior to its divestiture, MSA LLC's total cumulative trauma product liability reserve was $ 395.1 million, including $ 13.4 million for claims settled but not yet paid and related defense costs, as of December 31, 2022.

The reserve included estimated amounts related to asserted and IBNR asbestos, silica, and coal dust claims expected to be resolved through the year 2075.

The reserve was not discounted to present value and did not include future amounts which will be spent to defend the claims.

Defense costs were recognized in the unaudited Condensed Consolidated Statements of Operations as incurred.

At December 31, 2022, $ 65.1 million of the total reserve for cumulative trauma product liability claims was recorded in the Insurance and product liability line within other current liabilities in the Consolidated Balance Sheets and the remainder, $ 330.0 million, is recorded in the Product liability and other noncurrent liabilities line.

Prior to the divestiture, MSA LLC's cumulative trauma product liability reserve was based upon an estimate of MSA LLC’s current and potential future liability for cumulative trauma product liability claims, in accordance with applicable accounting principles.

See further discussion on the process and assumptions used to derive this estimate in Note 20—Contingencies of the consolidated financial statements in Part II Item 8 of MSA's Form 10-K for the year ended December 31, 2022.

On January 5, 2023, the Company entered into a membership interest purchase agreement (the “Purchase Agreement”) with Sag Main Holdings, LLC (the “Buyer”).

The Buyer is a joint venture between R&Q Insurance Holdings Ltd.

The Buyer was a joint venture between R&Q Insurance Holdings Ltd.

(“R&Q”) and Obra Capital, Inc.

1 unchanged sentence

In connection with the closing, the Company contributed $ 341.2 million in cash and cash equivalents, while R&Q and Obra contributed an additional $ 35.0 million.

As MSA LLC was the obligor for the Company's legacy cumulative trauma product liability reserves and policyholder of the related insurance assets, the rights and obligations related to these items transferred upon the sale to the Buyer.

MSA LLC was the obligor for the claims to which the Company's legacy cumulative trauma product liability reserves relate and policyholder of the related insurance assets.

The rights and obligations related to these items remained with MSA LLC upon the sale to the Buyer.

In addition, pursuant to the Purchase Agreement, the Buyer and MSA LLC have agreed to indemnify the Company and its affiliates for legacy cumulative trauma product liabilities and other product liabilities, and a subsidiary of the Company has agreed to indemnify MSA LLC for all other historical liabilities of MSA LLC.

1 unchanged sentence

In connection with the sale, the Company and its Board of Directors received a solvency opinion from an independent advisory firm that MSA LLC was solvent and adequately capitalized after giving effect to the transaction.

Following the completion of the sale and transfer, the Company no longer has any obligation with respect to pending and future cumulative trauma product liability claims relating to these matters.

Following the completion of the transaction, the Company no longer has any obligation with respect to pending and future cumulative trauma product liability claims relating to these matters.

As such, all legacy cumulative trauma product liability reserves, related insurance assets, and associated deferred tax assets of the divested subsidiary were derecognized from our balance sheet and the Company incurred a tax-effected loss on the divestiture of MSA LLC of $ 199.6 million, including transaction related costs of $ 5.6 million.

R&Q and Obra's joint venture has assumed management of the divested subsidiary, including the management of its claims and associated assets.

Below is a summary of the impact of the divestiture of MSA LLC on our unaudited Condensed Consolidated Statements of Operations for the three months ended March 31, 2023 (no additional impact for the three months ended September 30, 2023):

The Buyer has assumed management of the divested subsidiary, including the management of its claims and associated assets.

(In millions) Three Months Ended March 31, 2023

12 unchanged sentences

(a) Related to the write-off of deferred tax asset related to product liability reserve

Insurance Receivable and Notes Receivable, Insurance Companies

Many years ago, MSA LLC purchased insurance policies from various insurance carriers that, subject to common contract exclusions, provided coverage for cumulative trauma product liability losses (the "Occurrence-Based Policies").

Prior to the divestiture of MSA LLC, when adjustments were made to amounts recorded in the cumulative trauma product liability reserve, we calculated amounts due to be reimbursed pursuant to the terms of the negotiated Coverage-In-Place Agreements, including cumulative trauma product liability losses and related defense costs, and we recorded the amounts probable of reimbursement as insurance receivables.

Insurance receivables at December 31, 2022 totaled $ 127.6 million, of which $ 17.3 million was reported in Prepaid expenses and other current assets in the unaudited Condensed Consolidated Balance Sheets and $ 110.3 million was reported in Insurance receivables and other noncurrent assets.

A summary of insurance receivables balance and activity related to cumulative trauma product liability losses and divestiture of MSA LLC is as follows:

(In millions) Nine Months Ended September 30, 2023 Year Ended

December 31, 2022

Balance beginning of period $ 127.6 $ 130.2

Divestiture of MSA LLC ( 127.6 ) —

Additions — 1.8

Collections and other adjustments — ( 4.4 )

Balance end of period $ — $ 127.6

Prior to the divestiture of MSA LLC, notes receivable from insurance companies at December 31, 2022 totaled $ 44.6 million of which $ 5.9 million was reported in Notes receivable, insurance companies, current in the unaudited Condensed Consolidated Balance Sheets and $ 38.7 million was reported in Notes receivable, insurance companies, noncurrent.

A summary of notes receivables from insurance companies balance is as follows:

(In millions) Nine Months Ended September 30, 2023 Year Ended

December 31, 2022

Balance beginning of period $ 44.6 $ 48.5

Divestiture of MSA LLC ( 44.6 ) —

Additions — 1.2

Collections — ( 5.1 )

Balance end of period $ — $ 44.6

Other Litigation

1 unchanged sentence

PFAS are a large class of substances that are widely used in everyday products.

Specifically, Globe builds turnout gear from technical fabrics sourced from a small pool of specialty textile manufacturers.

These protective fabrics have been tested and certified to meet industry standards, and some of them contain PFAS to achieve water, oil, or chemical resistance.

At this time, no manufacturer of firefighter protective clothing is able to meet current National Fire Protection Association safety standards while offering coats or pants that are completely PFAS free.

Specifically, Globe builds firefighter turnout gear from technical fabrics sourced from a small pool of specialty textile manufacturers.

These protective fabrics have been tested and certified to meet current National Fire Protection Association safety standards, and some of them as supplied to Globe contain or historically have contained PFAS to achieve performance characteristics such as water, oil, or chemical resistance.

Globe believes it has valid defenses to these claims.

2 unchanged sentences

Globe is also pursuing insurance coverage and indemnification related to the lawsuits.

As of October 20, 2023, Globe was named as a defendant in 165 lawsuits comprised of approximately 8,432 claims, plus one action filed on behalf of a putative class of Florida firefighters and certain of their dependents.

As of April 22, 2024, Globe was named as a defendant in 600 lawsuits comprised of approximately 12,189 claims, plus one action filed on behalf of a putative class of Florida firefighters and certain of their dependents.

Certain of these lawsuits include MSA Safety Inc.

or other Globe affiliates as defendants.

MSA LLC is also a defendant in a number of PFAS lawsuits and the Buyer assumed responsibility for these and any similar future claims specific to MSA LLC in connection with the divestiture on January 5, 2023.

6 unchanged sentences

The following table reconciles changes in the Company's accrued warranty reserve:

(In thousands) Nine Months Ended September 30, 2023 Year Ended

(In thousands) Three Months Ended March 31, 2024 Year Ended

December 31, 2023

4 unchanged sentences

Ending warranty reserve $ 13,985 $ 14,288

Warranty expense was $ 6.7 million and $ 9.0 million for the nine months ended September 30, 2023, and 2022, respectively, and is included in Costs of products sold on the unaudited Condensed Consolidated Statements of Operations.

Warranty expense was $ 2.1 million and $ 2.4 million for the three months ended March 31, 2024, and 2023, respectively, and is included in Costs of products sold on the unaudited Condensed Consolidated Statements of Operations.

Outstanding Performance Obligations

The Company derives a portion of its revenue from various leasing arrangements where the Company is the lessor, primarily fire service contracts entered into by Bristol.

Such arrangements provide for monthly payments covering equipment provided, maintenance and interest.

These arrangements meet the criteria to be accounted for as sales-type leases under Accounting Standards Codification ("ASC") 842 and contain both lease and non-lease components.

Revenue from equipment provided is considered a lease component and recognized with point in time revenue recognition upon lease commencement.

Maintenance revenue, which is considered a non-lease component, and interest is recognized monthly over the lease term.

As of March 31, 2024, the Company had remaining maintenance performance obligations of approximately $ 31.2 million which are expected to be recognized to revenue in less than 4 years.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements