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Item 1. Financial Statements

2024-10-24 compared with 2024-07-25 · 120 added, 143 removed, 542 unchanged (33% of the section changed)

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

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

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

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

5 unchanged sentences

Restructuring charges (Note 3) 1,184 3,285 5,744 8,382

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

Currency exchange losses, net 2,985 1,496 4,715 8,781

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

14 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

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

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

(In thousands) 2024 2023 2024 2023

Net income (loss) $ 66,648 $ 65,256 $ 197,021 $ ( 17,827 )

Other comprehensive (loss) gain, net of tax:

Other comprehensive gain (loss), net of tax:

Foreign currency translation adjustments (Note 6) 21,329 ( 18,771 ) 1,834 ( 2,538 )

2 unchanged sentences

Reclassification of currency translation from accumulated other comprehensive loss into net income (Note 6) — 101 ( 1,200 ) 101

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

Total other comprehensive gain (loss), net of tax 21,343 ( 18,482 ) 3,044 ( 1,693 )

Comprehensive income (loss) $ 87,991 $ 46,774 $ 200,065 $ ( 19,520 )

2 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

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

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

Cash and cash equivalents $ 154,371 $ 146,442

2 unchanged sentences

Inventories (Note 4) 351,805 292,604

Prepaid income taxes 39,772 12,912

Prepaid expenses and other current assets 59,147 52,546

12 unchanged sentences

Employees’ compensation 56,831 73,386

Income taxes payable (Note 10) 41,105 19,972

Other current liabilities 102,701 121,038

22 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended June 30,

Nine Months Ended September 30,

(In thousands) 2024 2023

32 unchanged sentences

Effect of exchange rate changes on cash, cash equivalents and restricted cash ( 6,062 ) ( 14,152 )

Increase (decrease) in cash, cash equivalents and restricted cash 427 ( 15,551 )

Change in cash, cash equivalents and restricted cash 6,562 2,009

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

11 unchanged sentences

Comprehensive

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

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

Net income 65,256 —

Foreign currency translation adjustments — ( 18,771 )

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

Pension and post-retirement plan adjustments, net of tax expense of $ 27

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

Common dividends ($ 0.47 per share)

Preferred dividends ($ 0.5625 per share)

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

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

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

Net income 66,648 —

1 unchanged sentence

Pension and post-retirement plan adjustments, net of tax benefit of $ 374

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 September 30, 2024 $ 1,281,793 $ ( 126,205 )

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

3 unchanged sentences

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

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

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

5 unchanged sentences

Preferred dividends ($ 1.6875 per share)

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

Balances September 30, 2024 $ 1,281,793 $ ( 126,205 )

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

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This Form 10-Q report should be read in conjunction with MSA's Form 10-K for the year ended December 31, 2023, which includes all disclosures required by U.S.

In November 2023, the FASB issued ASU No.

2023-07 (“ASU 2023-07”), Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures.

ASU 2023-07 requires annual and interim disclosures that are expected to improve reportable segment disclosures, primarily through enhanced disclosures about significant expenses in determining segment profit or loss.

The provisions of ASU 2023-07 are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted.

We will apply the new disclosure requirements of ASU 2023-07 in our 2024 Form 10-K and, with the exception of expanding disclosures about significant segment expenses, do not expect that the adoption of ASU 2023-07 will have a material effect on our consolidated financial statements taken as a whole.

Note 2— Cash and Cash Equivalents

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

(In thousands) June 30, 2024

(In thousands) September 30, 2024

Gross cash pool position $ 69,117

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Note 3— Restructuring Charges

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.

During the three and nine months ended September 30, 2024, we recorded restructuring charges of $ 1.2 million and $ 5.7 million, respectively.

Americas segment restructuring charges of $ 1.3 million during the nine months ended September 30, 2024, were related to manufacturing footprint optimization activities.

International segment restructuring charges of $ 3.2 million during the nine months ended September 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 $ 1.2 million during the nine months ended September 30, 2024, were related to management restructuring.

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.

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

7 unchanged sentences

Restructuring charges 1.3 3.2 1.2 5.7

Currency translation ( 0.1 ) ( 0.2 ) — ( 0.3 )

Cash payments ( 1.9 ) ( 8.0 ) ( 1.2 ) ( 11.1 )

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

Reserve balances at September 30, 2024 $ 0.2 $ 4.2 $ — $ 4.4

Note 4— Inventories

The following table sets forth the components of inventory:

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

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

Finished products $ 118,294 $ 88,687

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

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

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

Land $ 4,379 $ 4,332

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Changes in accumulated other comprehensive loss were as follows:

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

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

(In thousands) 2024 2023 2024 2023

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(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.

The reclassifications are included in Currency exchange 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 June 30, 2024 and December 31, 2023.

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

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

No shares have been issued as of September 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 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.

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

No new shares were issued during the nine months ended September 30, 2024 or 2023.

There were 39,309,938 and 39,317,212 shares outstanding at September 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.

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 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.

During the nine months ended September 30, 2024, and 2023, the Company repurchased 108,917 and no shares, respectively, under this and the prior stock repurchase program.

There were 22,771,453 and 22,764,179 treasury shares at September 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 121,790 and 105,894 Treasury shares issued for these purposes during the six months ended June 30, 2024 and 2023, respectively.

There were 141,618 and 125,967 Treasury shares issued for these purposes during the nine months ended September 30, 2024, and 2023, respectively.

Common stock activity is summarized as follows:

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

Three Months Ended September 30, 2024 Three Months Ended September 30, 2023

(In thousands) Common

6 unchanged sentences

Treasury shares purchased for stock compensation programs — ( 571 ) — ( 70 )

Employee stock purchase program 574 60 432 65

Share repurchase program — ( 10,027 ) — —

1 unchanged sentence

(a) Excludes treasury cost related to preferred stock.

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

Nine Months Ended September 30, 2024 Nine Months Ended September 30, 2023

(In thousands) Common

22 unchanged sentences

The Company's sales are allocated to each segment based primarily on the country destination of the end-customer.

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 the measure 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"), 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.

Adjusted EBITDA is defined as adjusted operating income (loss) plus depreciation and amortization.

Adjusted EBITDA margin is defined as adjusted EBITDA divided by segment net sales to external customers.

The accounting principles applied at the operating segment level in determining operating income (loss) are generally the same as those applied at the unaudited condensed consolidated financial statement level.

The accounting principles applied at the operating segment level in determining the segment measure of profit or loss are the same as those applied at the unaudited condensed consolidated financial statement level.

Sales and transfers between operating segments are accounted for at market-based transaction prices and are eliminated in consolidation.

Reportable segment information is presented in the following table:

(In thousands, except percentages) Americas International Corporate Consolidated

Three Months Ended June 30, 2024

(In thousands) Americas International Corporate Consolidated

Three Months Ended September 30, 2024

Net sales to external customers $ 299,497 $ 133,182 $ — $ 432,679

Operating income 99,944

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) 91,822 18,174 ( 12,081 ) 97,915

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

Three Months Ended September 30, 2023

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

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) 93,918 22,577 ( 15,198 ) 101,297

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

(In thousands) Americas International Corporate Consolidated

Nine Months Ended September 30, 2024

Net sales to external customers $ 909,745 $ 398,698 $ — $ 1,308,443

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)

Adjusted operating income (loss) 276,523 55,944 ( 38,353 ) 294,114

Adjusted operating margin % 30.3 % 14.2 %

Depreciation and amortization 26,985

Adjusted EBITDA 203,923 45,097 ( 25,835 ) 223,185

Adjusted EBITDA margin % 33.4 % 17.0 %

Six Months Ended June 30, 2023

Nine Months Ended September 30, 2023

Net sales to external customers $ 902,918 $ 389,372 $ — $ 1,292,290

Operating income 34,947

Adjusted operating income (loss) 260,428 60,099 ( 38,066 ) 282,461

A reconciliation of total Adjusted operating income from reportable segments to Income before income taxes is presented in the following table:

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

(In thousands) 2024 2023 2024 2023

Adjusted operating income $ 97,915 $ 101,297 $ 294,114 $ 282,461

Restructuring charges (Note 3) 1,184 3,285 5,744 8,382

Currency exchange losses, net 2,985 1,496 4,715 8,781

Interest expense 9,153 12,498 29,556 37,149

Other income, net ( 5,833 ) ( 6,037 ) ( 16,215 ) ( 15,487 )

Amortization of acquisition-related intangible assets 2,269 2,315 6,888 6,936

Transaction costs (a)

Net cost for product related legal matter — — 5,000 —

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

Product liability expense (Note 17) — — — 3

Amortization of acquisition-related intangible assets 4,620

Adjusted operating income (loss) 166,510 37,522 ( 22,869 ) 181,163

Adjusted operating margin % 28.3 % 14.6 %

Depreciation and amortization 24,841

Adjusted EBITDA 184,471 44,007 ( 22,474 ) 206,004

Adjusted EBITDA margin % 31.3 % 17.1 %

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

Income before income taxes 88,157 87,662 258,192 107,408

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

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

Total sales by product group was as follows:

Three Months Ended June 30, 2024 Consolidated Americas International

Three Months Ended September 30, 2024 Consolidated Americas International

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

6 unchanged sentences

Total $ 432,679 100 % $ 299,497 100 % $ 133,182 100 %

Three Months Ended June 30, 2023 Consolidated Americas International

Three Months Ended September 30, 2023 Consolidated Americas International

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

6 unchanged sentences

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

Six Months Ended June 30, 2024 Consolidated Americas International

Nine Months Ended September 30, 2024 Consolidated Americas International

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

6 unchanged sentences

Total $ 1,308,443 100 % $ 909,745 100 % $ 398,698 100 %

Six Months Ended June 30, 2023 Consolidated Americas International

Nine Months Ended September 30, 2023 Consolidated Americas International

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

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

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

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

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

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Note 10— Income Taxes

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.

The Company's effective tax rate for the three months ended September 30, 2024, was 24.4 %, 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 September 30, 2023, was 25.6 %, which differs from the 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 nine months ended September 30, 2024, was 23.7 %, 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 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—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 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.

At September 30, 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 $ 0.6 million at September 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 June 30, 2024.

The Company's liability for accrued interest related to uncertain tax positions was $ 0.2 million at September 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 June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 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 six months ended June 30, 2024, is as follows:

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

Shares Weighted Average

3 unchanged sentences

Forfeited ( 852 ) 48.65

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

Outstanding and exercisable at September 30, 2024 15,153 $ 45.10

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 six months ended June 30, 2024, is as follows:

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

Shares Weighted Average

3 unchanged sentences

Forfeited ( 25,482 ) 164.47

Unvested at June 30, 2024 189,659 $ 150.08

Unvested at September 30, 2024 182,678 $ 150.16

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 six months ended June 30, 2024, is as follows:

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

Shares Weighted Average

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Forfeited ( 10,619 ) 149.13

Unvested at June 30, 2024 166,501 $ 146.13

Unvested at September 30, 2024 162,333 $ 146.50

(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) June 30, 2024 December 31, 2023

(In thousands) September 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 6.23 % 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 Company has a weighted average revolver interest rate of 5.80 % as of September 30, 2024.

At September 30, 2024, $ 861.5 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.

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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 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.

As of September 30, 2024, the Company has outstanding £ 42.7 million (approximately $ 57.2 million at September 30, 2024) of 3.4 % Series B Senior Notes due January 22, 2031.

Remaining maturities of this note are £ 6.1 million (approximately $ 8.2 million at September 30, 2024) due annually through January 2031.

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

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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 6.43 % as of June 30, 2024.

The Company had a Term Loan interest rate of 6.35 % as of September 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;

3 unchanged sentences

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.

As of September 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 September 30, 2024, totaling $ 10.0 million, of which $ 1.5 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 June 30, 2024, the Company has $ 2.0 million of restricted cash in support of these arrangements.

At September 30, 2024, the Company has $ 0.6 million of restricted cash in support of these arrangements.

Note 13— Goodwill and Intangible Assets, Net

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

Changes in goodwill during the nine months ended September 30, 2024, were as follows:

(In thousands) Goodwill

1 unchanged sentence

Currency translation 5,303

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:

Balance at September 30, 2024 $ 632,837

At September 30, 2024, goodwill of $ 447.6 million and $ 185.2 million related to the Americas and International reportable segments, respectively.

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

(In thousands) Intangible Assets

2 unchanged sentences

Currency translation 1,622

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 .

Net balance at September 30, 2024 $ 254,364

At September 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

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(In thousands) 2024 2023 2024 2023

Three Months Ended June 30,

Three Months Ended September 30,

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

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Recognized net actuarial losses 282 47 115 138

Settlements 1,308 — — —

Net periodic benefit (income) cost (a)

$ ( 2,208 ) $ ( 2,020 ) $ 361 $ 403

Six Months Ended June 30,

Nine Months Ended September 30,

Service cost $ 6,945 $ 5,652 $ 132 $ 159

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(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 $ 2.6 million and $ 4.1 million to our pension plans during the six months ended June 30, 2024, and 2023, respectively.

We made contributions of $ 3.9 million and $ 4.3 million to our pension plans during the nine months ended September 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.

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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 (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.

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 $ 184.8 million and $ 110.9 million at September 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) June 30, 2024 December 31, 2023

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

Derivatives not designated as hedging instruments:

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other current liabilities 1,038 242

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:

Six Months Ended June 30,

Nine Months Ended September 30,

(In thousands) 2024 2023

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Foreign exchange contracts:

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

currency exchange losses, net $ 1,683 $ 2,986

Note 16— Fair Value Measurements

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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 $ 304.1 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 reported carrying amount of our fixed rate long-term debt was $ 307.2 million and $ 312.2 million at September 30, 2024, and December 31, 2023, respectively.

The fair value of this debt was $ 278.1 million and $ 278.7 million at September 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.

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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 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.

The reserve for single incident product liability claims was $ 0.8 million at September 30, 2024 and $ 1.3 million at December 31, 2023.

Single incident product liability benefit was $ 0.2 million and $ 0.1 million for the nine months ended September 30, 2024, and 2023, respectively.

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

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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.

During the first nine months 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.

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

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.

As of October 15, 2024, Globe was named as a defendant in 535 lawsuits comprised of 7,850 claims, predominantly styled as individual personal injury claims and including two putative class actions.

Certain of these lawsuits include MSA Safety Inc.

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

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

(In thousands) Nine Months Ended September 30, 2024 Year Ended

December 31, 2023

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Ending warranty reserve $ 13,655 $ 14,288

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.

Warranty expense was $ 7.9 million and $ 6.7 million for the nine months ended September 30, 2024, and 2023, respectively, and is included in Costs of products sold on the unaudited Condensed Consolidated Statements of Operations.

Outstanding Performance Obligations

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

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 .

As of September 30, 2024, the Company had remaining maintenance performance obligations of approximately $ 28.7 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