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Item 1. Financial Statements

2024-07-25 compared with 2024-04-30 · 195 added, 108 removed, 490 unchanged (38% of the section changed)

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

(In thousands, except per share values) 2024 2023 2024 2023

5 unchanged sentences

Restructuring charges (Note 3) 1,543 3,350 4,560 5,097

Currency exchange losses, net 2,333 4,175

Currency exchange (gains) losses, net ( 603 ) 3,110 1,730 7,285

Loss on divestiture of MSA LLC (Note 17) — — — 129,211

Product liability expense (Note 17) — — — 3

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

Operating income 99,944 95,008 180,056 34,947

Interest expense 9,664 13,175 20,403 24,651

1 unchanged sentence

Total other expense, net 5,516 7,525 10,021 15,201

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

Income before income taxes 94,428 87,483 170,035 19,746

Provision for income taxes (Note 10) 22,194 20,393 39,662 102,829

7 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

(In thousands) 2024 2023 2024 2023

Net income (loss) $ 72,234 $ 67,090 $ 130,373 $ ( 83,083 )

Other comprehensive gains (losses), net of tax:

Other comprehensive (loss) gain, net of tax:

Foreign currency translation adjustments (Note 6) ( 8,822 ) 5,039 ( 19,495 ) 16,233

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

Pension and post-retirement plan adjustments, net of tax (Note 6) 2,022 115 2,396 554

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

Reclassification of currency translation from accumulated other comprehensive loss into net income (Note 6) ( 1,200 ) — ( 1,200 ) —

Total other comprehensive (loss) gain, net of tax ( 8,000 ) 5,154 ( 18,299 ) 16,789

3 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

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

(In thousands) June 30, 2024 December 31, 2023

Cash and cash equivalents $ 146,830 $ 146,442

42 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended March 31,

Six Months Ended June 30,

(In thousands) 2024 2023

6 unchanged sentences

Deferred income tax benefit (Note 10) ( 2,226 ) ( 393 )

Loss on asset dispositions, net 51 739

Loss (gain) on asset dispositions, net 752 ( 713 )

Pension contributions (Note 14) ( 2,632 ) ( 4,092 )

20 unchanged sentences

Exercise of stock options (Note 7) 326 542

Employee stock purchase plan (Note 7) 634 497

Cash Flow (Used in) From Financing Activities ( 67,718 ) 196,589

14 unchanged sentences

Comprehensive

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

Net income 67,090 —

Foreign currency translation adjustments — 5,039

Pension and post-retirement plan adjustments, net of tax benefit of $ 46

Common dividends ($ 0.47 per share)

Preferred dividends ($ 0.5625 per share)

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

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

Net income 72,234 —

Foreign currency translation adjustments — ( 8,822 )

Pension and post-retirement plan adjustments, net of tax benefit of $ 240

Reclassification from accumulated other comprehensive loss into net income (Note 6) — ( 1,200 )

Common dividends ($ 0.51 per share)

Preferred dividends ($ 0.5625 per share)

Balances June 30, 2024 $ 1,235,226 $ ( 147,548 )

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

5 unchanged sentences

Preferred dividends ($ 1.125 per share)

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

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

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

2 unchanged sentences

Pension and post-retirement plan adjustments, net of tax benefit of $ 254

Reclassification from accumulated other comprehensive loss into net income (Note 6) — ( 1,200 )

Common dividends ($ 0.98 per share)

Preferred dividends ($ 1.125 per share)

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

Balances June 30, 2024 $ 1,235,226 $ ( 147,548 )

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) March 31, 2024

(In thousands) June 30, 2024

Gross cash pool position $ 96,109

2 unchanged sentences

Note 3— Restructuring Charges

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.

During the three and six months ended June 30, 2024, we recorded restructuring charges of $ 1.5 million and $ 4.6 million, respectively.

Americas segment restructuring charges of $ 0.8 million during the six months ended June 30, 2024, were related to manufacturing footprint optimization activities.

International segment restructuring charges of $ 2.9 million during the six months ended June 30, 2024, were related to ongoing initiatives to optimize our manufacturing footprint and improve productivity as well as management restructuring.

Corporate segment restructuring charges of $ 0.9 million during the six months ended June 30, 2024, were related to management restructuring.

During the three and six months ended June 30, 2023, we recorded restructuring charges of $ 3.4 million and $ 5.1 million, respectively.

Americas segment restructuring charges of $ 2.2 million during the six months ended June 30, 2023, were related to manufacturing footprint optimization activities.

International segment restructuring charges of $ 1.5 million during the six months ended June 30, 2023, were related to ongoing initiatives to drive profitable growth and rightsize our operations including the expansion of our European Shared Service Center in Warsaw, Poland.

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

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Cash payments ( 1.2 ) ( 5.5 ) ( 0.9 ) ( 7.6 )

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

Reserve balances at June 30, 2024 $ 0.3 $ 6.2 $ — $ 6.5

Note 4— Inventories

The following table sets forth the components of inventory:

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

(In thousands) June 30, 2024 December 31, 2023

Finished products $ 104,057 $ 88,687

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

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

(In thousands) June 30, 2024 December 31, 2023

Land $ 4,292 $ 4,332

7 unchanged sentences

Changes in accumulated other comprehensive loss were as follows:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

(In thousands) 2024 2023 2024 2023

13 unchanged sentences

Balance at beginning of period $ ( 97,270 ) $ ( 97,186 ) $ ( 86,597 ) $ ( 108,380 )

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

( 1,200 ) — ( 1,200 ) —

Foreign currency translation adjustments ( 8,822 ) 5,039 ( 19,495 ) 16,233

Balance at end of period $ ( 107,292 ) $ ( 92,147 ) $ ( 107,292 ) $ ( 92,147 )

(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).

(a) Amounts reclassified from accumulated other comprehensive loss 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) Reclassification from accumulated other comprehensive loss into net income (loss) relates primarily to the recognition of non-cash net cumulative translation gains associated with certain foreign subsidiaries.

The reclassifications are included in Currency exchange (gains) losses, net, within the unaudited Condensed Consolidated Statements of Income.

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 March 31, 2024 and December 31, 2023.

There were 71,340 shares issued and 52,998 shares held in treasury at both June 30, 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 three months ended March 31, 2024 or 2023.

There were no shares of preferred stock purchased and subsequently held in treasury during the six months ended June 30, 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 March 31, 2024, or December 31, 2023.

No shares have been issued as of June 30, 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 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.

There were 62,081,391 shares issued as of June 30, 2024 and December 31, 2023.

No new shares were issued during the six months ended June 30, 2024 or 2023.

There were 39,349,528 and 39,317,212 shares outstanding at June 30, 2024 and December 31, 2023, respectively.

Treasury Shares - The Company has a stock repurchase program that authorizes up to $ 200.0 million to repurchase MSA common stock in the open market and in private transactions.

The stock repurchase program has no expiration date.

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 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.

During the six months ended June 30, 2024, and 2023, the Company repurchased 52,561 and no shares, respectively, under this program.

There were 22,731,863 and 22,764,179 treasury shares at June 30, 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 95,428 and 26,774 Treasury shares issued for these purposes during the three months ended March 31, 2024 and 2023, respectively.

There were 121,790 and 105,894 Treasury shares issued for these purposes during the six months ended June 30, 2024 and 2023, respectively.

Common stock activity is summarized as follows:

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

Three Months Ended June 30, 2024 Three Months Ended June 30, 2023

(In thousands) Common

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Treasury shares purchased for stock compensation programs — ( 992 ) — ( 184 )

Employee stock purchase program 574 60 432 65

Share repurchase program — ( 10,000 ) — —

Balance at end of period $ 320,556 $ ( 376,556 ) $ 294,364 $ ( 362,025 )

(a) Excludes treasury cost related to preferred stock.

Six Months Ended June 30, 2024 Six Months Ended June 30, 2023

(In thousands) Common

Stock Treasury

Balance at beginning of period $ 312,324 $ ( 361,684 ) $ 281,980 $ ( 359,838 )

Stock compensation expense 9,229 — 13,029 —

Restricted and performance stock awards ( 1,783 ) 1,783 ( 1,434 ) 1,434

Stock options exercised 212 114 357 185

Treasury shares purchased for stock compensation programs — ( 6,829 ) — ( 3,871 )

Employee stock purchase program 574 60 432 65

Share repurchase program — ( 10,000 ) — —

Balance at end of period $ 320,556 $ ( 376,556 ) $ 294,364 $ ( 362,025 )

(a) Excludes treasury cost related to preferred stock.

Note 8— Segment Information

11 unchanged sentences

Adjusted operating income (loss), adjusted operating margin, adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) and adjusted EBITDA margin are the measures used by the chief operating decision maker to evaluate segment performance and allocate resources.

Adjusted operating income (loss) is defined as operating income (loss) excluding restructuring charges, currency exchange (gains) losses, product liability expense, loss on divestiture of Mine Safety Appliances Company, LLC ("MSA LLC"), transaction costs and acquisition-related amortization.

Adjusted operating income (loss) is defined as operating income (loss) excluding restructuring charges, currency exchange (gains) losses, product liability expense, loss on divestiture of Mine Safety Appliances Company, LLC ("MSA LLC"), net cost for product related legal matter, transaction costs and acquisition-related amortization.

Adjusted operating margin is defined as adjusted operating income (loss) divided by segment net sales to external customers.

5 unchanged sentences

(In thousands, except percentages) Americas International Corporate Consolidated

Three Months Ended March 31, 2024

Three Months Ended June 30, 2024

Net sales to external customers $ 314,711 $ 147,752 $ — $ 462,463

1 unchanged sentence

Restructuring charges (Note 3) 1,543

Currency exchange gains, net ( 603 )

Net cost for product related legal matter 5,000

Amortization of acquisition-related intangible assets 2,306

Adjusted operating income (loss) 98,468 24,285 ( 14,563 ) 108,190

Adjusted operating margin % 31.3 % 16.4 %

Depreciation and amortization 13,741

Adjusted EBITDA 108,230 28,052 ( 14,351 ) 121,931

Adjusted EBITDA margin % 34.4 % 19.0 %

Three Months Ended June 30, 2023

Net sales to external customers $ 308,378 $ 138,921 $ — $ 447,299

Operating income 95,008

Restructuring charges (Note 3) 3,350

Currency exchange losses, net 3,110

Amortization of acquisition-related intangible assets 2,315

Adjusted operating income (loss) 94,816 21,743 ( 12,776 ) 103,783

Adjusted operating margin % 30.7 % 15.7 %

Depreciation and amortization 12,574

Adjusted EBITDA 103,977 24,949 ( 12,569 ) 116,357

Adjusted EBITDA margin % 33.7 % 18.0 %

(In thousands, except percentages) Americas International Corporate Consolidated

Six Months Ended June 30, 2024

Net sales to external customers $ 610,249 $ 265,516 $ — $ 875,765

Operating income 180,056

Restructuring charges (Note 3) 4,560

Currency exchange losses, net 1,730

Net cost for product related legal matter 5,000

Amortization of acquisition-related intangible assets 4,620

Transaction costs (a)

4 unchanged sentences

Adjusted EBITDA margin % 33.4 % 17.0 %

Three Months Ended March 31, 2023

Six Months Ended June 30, 2023

Net sales to external customers $ 588,645 $ 256,916 $ — $ 845,561

Operating loss ( 60,061 )

Operating income 34,947

Restructuring charges (Note 3) 5,097

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Total sales by product group was as follows:

Three Months Ended March 31, 2024 Consolidated Americas International

Three Months Ended June 30, 2024 Consolidated Americas International

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

Firefighter Safety (a)

Fire Service (a)

$ 172,269 37 % $ 118,487 38 % $ 53,782 37 %

4 unchanged sentences

Total $ 462,463 100 % $ 314,711 100 % $ 147,752 100 %

Three Months Ended March 31, 2023 Consolidated Americas International

Three Months Ended June 30, 2023 Consolidated Americas International

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

Firefighter Safety (a)

Fire Service (a)

$ 166,490 37 % $ 121,157 39 % $ 45,333 33 %

4 unchanged sentences

Total $ 447,299 100 % $ 308,378 100 % $ 138,921 100 %

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

Six Months Ended June 30, 2024 Consolidated Americas International

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

Fire Service (a)

$ 335,962 39 % $ 240,738 39 % $ 95,224 36 %

Detection (b)

310,064 35 % 207,700 34 % 102,364 38 %

Industrial PPE and Other (c)

229,739 26 % 161,811 27 % 67,928 26 %

Total $ 875,765 100 % $ 610,249 100 % $ 265,516 100 %

Six Months Ended June 30, 2023 Consolidated Americas International

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

Fire Service (a)

$ 305,878 36 % $ 223,213 38 % $ 82,665 32 %

Detection (b)

304,843 36 % 203,685 35 % 101,158 39 %

Industrial PPE and Other (c)

234,840 28 % 161,747 27 % 73,093 29 %

Total $ 845,561 100 % $ 588,645 100 % $ 256,916 100 %

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

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

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

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

(In thousands, except per share values) 2024 2023 2024 2023

6 unchanged sentences

Stock-based compensation awards (a)

152 135 174 —

Diluted weighted-average shares outstanding 39,541 39,409 39,549 39,249

6 unchanged sentences

Note 10— Income Taxes

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.

The Company's effective tax rate for the three months ended June 30, 2024, was 23.5 %, which differs from the United States of America ("U.S.") federal statutory rate of 21% primarily due to state income taxes.

The Company's effective tax rate for the three months ended June 30, 2023, was 23.3 %, which differs from the U.S.

federal statutory rate of 21% primarily due to state income taxes.

The Company's effective tax rate for the six months ended June 30, 2024, was 23.3 %, 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 six months ended June 30, 2023, was 520.8 %, 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.

At June 30, 2024, the Company had a gross liability for unrecognized tax benefits of $ 7.3 million.

The Company has recognized tax benefits associated with these liabilities of $ 0.6 million at June 30, 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 $ 0.2 million at March 31, 2024.

The Company's liability for accrued interest related to uncertain tax positions was $ 0.2 million at June 30, 2024.

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

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

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

(In thousands) 2024 2023 2024 2023

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We have not capitalized any stock-based compensation expense.

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

A summary of stock option activity for the six months ended June 30, 2024, is as follows:

Shares Weighted Average

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Exercised ( 7,070 ) 46.13

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

Forfeited ( 852 ) 48.65

Outstanding and exercisable at June 30, 2024 18,614 $ 45.76

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 three months ended March 31, 2024, is as follows:

A summary of restricted stock activity for the six months ended June 30, 2024, is as follows:

Shares Weighted Average

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Forfeited ( 21,904 ) 166.54

Unvested at March 31, 2024 221,005 $ 151.23

Unvested at June 30, 2024 189,659 $ 150.08

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

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Expected life is based on historical stock option exercise data.

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

A summary of performance stock unit activity for the six months ended June 30, 2024, is as follows:

Shares Weighted Average

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Forfeited ( 5,895 ) 158.69

Unvested at March 31, 2024 176,460 $ 147.17

Unvested at June 30, 2024 166,501 $ 146.13

(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) March 31, 2024 December 31, 2023

(In thousands) June 30, 2024 December 31, 2023

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

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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 Company has a weighted average revolver interest rate of 6.23 % as of June 30, 2024.

At June 30, 2024, $ 831.4 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.

On July 1, 2021, the Company entered into a Third Amended and Restated Multi-Currency Note Purchase and Private Shelf Agreement (the “Prudential Note Agreement”) with PGIM, Inc.

On July 1, 2024, the Company entered into Amendment No.

3 to the Third Amended and Restated Multi-Currency Note Purchase and Private Shelf Agreement (the “Prudential Note Agreement”) with PGIM, Inc.

(“Prudential”).

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 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.

As of June 30, 2024, the Company has outstanding £ 42.7 million (approximately $ 54.1 million at June 30, 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 June 30, 2024) due annually through January 2031.

On July 1, 2024, the Company entered into Amendment No.

3 to the Second Amended and Restated Master Note Facility (the “NYL Note Facility”) with NYL Investors.

The NYL Note Facility provided for (i) the issuance of $ 100.0 million of 2.69 % Series A Senior Notes due July 1, 2036, and (ii) the establishment of an uncommitted note issuance facility whereby the Company may request, subject to NYL Investors’ acceptance in its sole discretion, the issuance of up to $ 200.0 million aggregate principal amount of senior unsecured notes.

7 unchanged sentences

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 Company had a Term Loan interest rate of 6.43 % as of June 30, 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;

2 unchanged sentences

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.

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

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.

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

As of June 30, 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 June 30, 2024, totaling $ 10.2 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 March 31, 2024, the Company has $ 2.0 million of restricted cash in support of these arrangements.

At June 30, 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 three months ended March 31, 2024, were as follows:

Changes in goodwill during the six months ended June 30, 2024, were as follows:

(In thousands) Goodwill

1 unchanged sentence

Currency translation ( 2,897 )

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:

Balance at June 30, 2024 $ 624,637

At June 30, 2024, goodwill of $ 447.6 million and $ 177.0 million related to the Americas and International reportable segments, respectively.

Changes in intangible assets, net, during the six months ended June 30, 2024, were as follows:

(In thousands) Intangible Assets

2 unchanged sentences

Currency translation ( 839 )

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 .

Net balance at June 30, 2024 $ 256,328

At June 30, 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 March 31,

Three Months Ended June 30,

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

3 unchanged sentences

Recognized net actuarial losses 282 47 115 138

Settlements 1,308 — — —

Net periodic benefit (income) cost (a)

$ ( 900 ) $ ( 2,020 ) $ 361 $ 403

Six Months Ended June 30,

Service cost $ 4,630 $ 3,768 $ 88 $ 106

Interest cost 11,940 11,836 496 546

Expected return on plan assets ( 21,624 ) ( 19,812 ) — —

Amortization of prior service cost (credit) 74 74 ( 92 ) ( 122 )

Recognized net actuarial losses 564 94 230 276

Settlements 1,308 —

Net periodic benefit (income) cost (a)

$ ( 3,108 ) $ ( 4,040 ) $ 722 $ 806

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

We made contributions of $ 2.6 million and $ 4.1 million to our pension plans during the six months ended June 30, 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.

2 unchanged sentences

GAAP criteria for hedge accounting but have the impact of partially offsetting certain of our foreign currency exposures.

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 $ 115.0 million and $ 110.9 million at March 31, 2024, and December 31, 2023, respectively.

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

The notional amount of open forward contracts was $ 113.6 million and $ 110.9 million at June 30, 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) March 31, 2024 December 31, 2023

(In thousands) June 30, 2024 December 31, 2023

Derivatives not designated as hedging instruments:

2 unchanged sentences

Foreign exchange contracts:

accrued restructuring and other current liabilities 660 242

other current liabilities 882 242

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

Three Months Ended March 31,

Six Months Ended June 30,

(In thousands) 2024 2023

1 unchanged sentence

Foreign exchange contracts:

currency exchange losses, net $ 1,758 $ ( 502 )

currency exchange (gains) losses, net $ 3,659 $ 123

Note 16— Fair Value Measurements

9 unchanged sentences

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 reported carrying amount of our fixed rate long-term debt was $ 304.1 million and $ 312.2 million at June 30, 2024, and December 31, 2023, respectively.

The fair value of this debt was $ 263.9 million and $ 278.7 million at June 30, 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.

7 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 $ 1.4 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.

The reserve for single incident product liability claims was $ 1.4 million at June 30, 2024 and $ 1.3 million at December 31, 2023.

Single incident product liability expense was $ 0.1 million for both the six months ended June 30, 2024, and 2023.

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

1 unchanged sentence

The reserve has not been discounted to present value and does not include future amounts which will be spent to defend the claims.

During the second quarter of 2024, the Company recorded $ 5.0 million of net cost for product related legal matter.

The expense is reflected within the selling, general and administration line of the unaudited Condensed Consolidated Statement of Operations.

Cumulative trauma product liability claims.

15 unchanged sentences

The Buyer 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 March 31, 2024):

(In millions) Three Months Ended March 31, 2023

Cash and cash equivalents $ ( 341.2 )

Current insurance receivables ( 17.3 )

Notes receivable, insurance companies ( 5.9 )

Noncurrent insurance receivables ( 110.3 )

Notes receivable, insurance companies, noncurrent ( 38.7 )

Current product liability 65.1

Noncurrent product liability 324.7

Loss on divestiture of MSA LLC before transaction costs ( 123.6 )

Transaction costs ( 5.6 )

Loss on divestiture of MSA LLC ( 129.2 )

Income tax expense (a)

Tax-effected loss on divestiture of MSA LLC $ ( 199.6 )

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

Other Litigation

7 unchanged sentences

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

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.

As of July 17, 2024, Globe was named as a defendant in 659 lawsuits comprised of 12,137 claims, predominantly styled as individual personal injury claims and including two putative class actions.

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.

MSA LLC is also a defendant in a number of PFAS lawsuits predominantly relating to Aqueous Film-Forming Foam.

The Buyer assumed responsibility for these and any similar future claims specific to MSA LLC, including such claims that have been or may be brought against MSA Safety Inc.

or its subsidiaries, under the terms of the divestiture on January 5, 2023.

Further information about the transaction can be found in the Company’s Current Report on Form 8-K filed on January 6, 2023.

Product Warranty

5 unchanged sentences

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

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

(In thousands) Six Months Ended June 30, 2024 Year Ended

December 31, 2023

4 unchanged sentences

Ending warranty reserve $ 13,935 $ 14,288

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.

Warranty expense was $ 5.0 million and $ 4.7 million for the six months ended June 30, 2024, and 2023, respectively, and is included in Costs of products sold on the unaudited Condensed Consolidated Statements of Operations.

Outstanding Performance Obligations

4 unchanged sentences

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.

As of June 30, 2024, the Company had remaining maintenance performance obligations of approximately $ 29.5 million which are expected to be recognized to revenue in approximately three 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