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Item 1A. Risk Factors

2025-02-14 compared with 2024-02-16 · 50 added, 51 removed, 209 unchanged (33% of the section changed)

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Our products and solutions are often used in high-risk and unpredictable environments and our mission, reputation and business success rely on our ability to design and provide safe, high quality and reliable products that earn and maintain customer trust.

In the event the parties using our products are injured, or if any of our products are alleged to have contributed, we could be subject to claims or suffer reputational harm.

In addition, we may be required to or may voluntarily recall or redesign certain products or components due to concern about product safety, quality, ease of use or customer confidence.

In the event that those using our products and solutions are injured, or if any of our products or solutions are alleged to have contributed, we could be subject to claims or suffer reputational harm.

In addition, we may be required to or may voluntarily recall, redesign, or update certain products, components, or solutions due to concern about product safety, quality, ease of use or customer confidence.

We continue to review, update, and execute the Company's quality management processes appropriately to meet changing market demands, technology, and product standards.

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and Obra Capital, Inc.

(the "Purchaser") The transaction is subject to risks related to counterparty commercial risk as well as agreement enforcement and interpretation.

(the "Purchaser").

The transaction is subject to risks related to counterparty commercial risk as well as agreement enforcement and interpretation.

Third parties also could seek to assert claims against us for which MSA LLC is the legally responsible party, and we may be required to incur fees and expenses to enforce that wrongly asserted claims are properly redirected to MSA LLC.

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MSA and its remaining subsidiaries continue to be responsible for claims relating to any current or former products and solutions that were not transferred as part of the divestiture.

Our ability to market and sell our products is subject to existing government laws, regulations and standards.

Our ability to market and sell our products and solutions is subject to existing government laws, regulations and standards.

Changes in such laws, regulations and standards or our failure to comply with them could materially and adversely affect our results of operations.

Most of our products are required to meet performance and test standards designed to protect the safety of people and infrastructures around the world.

Our inability to comply with these standards could result in declines in revenue, profitability and cash flow.

Changes in laws, regulations, or the standards themselves, including changes related to federal, national, state or provincial elections, could reduce the demand for our products or require us to re-engineer our products, thereby creating opportunities for our competitors.

Most of our products are required to meet performance and test standards designed to protect the safety of people and infrastructures around the world, and many of our products and solutions are required to comply with other various laws and regulations in the applicable markets where sold.

Our inability to comply with these standards and regulations could result in declines in revenue, profitability and cash flow.

Changes in laws, regulations, or the standards themselves, including changes resulting from the outcome of federal, national, state or provincial elections, could reduce the demand for our products or require us to re-engineer our products, thereby creating opportunities for our competitors.

Regulatory approvals for our products may be delayed or denied for a variety of reasons that are outside of our control.

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This includes laws and regulations in emerging markets where legal systems may be less developed or familiar to us.

Compliance with diverse legal requirements is costly, time-consuming and requires significant resources.

Violations of one or more of these laws or regulations in the conduct of our business could result in significant fines, criminal prosecution or sanctions and/or civil penalties against us or our officers or other personnel, prohibitions on doing business and damage to our reputation.

Compliance with diverse legal requirements is costly, time-consuming and requires significant resources, and in some cases may require us to obtain relevant information from our vendors and suppliers, which may be difficult to obtain in a timely manner or at all.

In addition, if we are required to transition away from components made with regulated materials, we could incur substantial costs to identify and transition to alternative components or product designs, or where feasible alternatives are not readily available.

Violations of one or more of these laws or regulations in the conduct of our business could result in significant fines, criminal prosecution or sanctions and/or civil penalties or civil litigation against us or our officers or other personnel, prohibitions on doing business and damage to our reputation.

These actions could result in liability for significant monetary damages, unfavorable publicity and other reputational damage and have a material adverse effect on our business, consolidated results of operations and financial condition.

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RISKS RELATED TO SUPPLY AND MANUFACTURING

Our future results are subject to the risk that purchased components and materials are unavailable or available at excessive cost due to material shortages, excessive demand, currency fluctuation, inflationary pressure and other factors.

Our future results are subject to the risk that purchased components and materials are unavailable or available at excessive cost due to material shortages, tariff changes, excessive demand, currency fluctuation, inflationary pressure and other factors.

We depend on various components, materials and services from supply chain partners to manufacture our products.

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Any sustained interruption in our receipt of adequate supplies or services could have a material adverse effect on our business, results of operations and financial condition.

Our inability to successfully manage price fluctuations due to market demand, currency risks or material shortages, or future price fluctuations (whether due to inflationary pressures or otherwise) could have a material adverse effect on our business and our consolidated results of operations and financial condition.

Our inability to successfully manage price fluctuations or delays due to market demand, currency risks or material shortages, or future price fluctuations (whether due to inflationary pressures, tariffs or otherwise) could have a material adverse effect on our business and our consolidated results of operations and financial condition.

Our plans to continue to improve productivity and reduce complexity may not be successful, which could adversely affect our ability to compete.

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For example, current and future laws or regulations limiting such emissions could increase our own costs.

At this time, it is not possible to accurately estimate how potential future laws or regulations addressing greenhouse gas emissions would impact our business.

As the legal and regulatory environment continues to evolve, it is not possible to accurately estimate how potential future laws or regulations addressing greenhouse gas emissions would impact our business.

RISKS RELATED TO ECONOMIC, MARKET AND COMPETITIVE CONDITIONS

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We have significant operations in a number of countries outside the U.S., including some in emerging markets.

Long-term economic uncertainty in some of the regions of the world in which we operate, such as Asia, Latin America, the Middle East and Europe, could result in declines in revenue, profitability and cash flow due to reduced orders, payment delays, supply chain disruptions or other factors caused by the economic challenges faced by our customers and suppliers.

A portion of MSA's sales are made to customers in the energy market.

It is possible that volatility in the energy market, whether related to economic, climate-related energy policy, or other conditions, could negatively impact our business and could result in declines in our consolidated results of operations and cash flow.

Pandemics or disease outbreaks, such as COVID-19, may cause unfavorable economic or market conditions which could impact demand patterns and/or disrupt global supply chains and manufacturing operations.

It is possible that volatility in the energy market, whether related to economic, climate-related energy policy, geopolitical tensions or events, or other conditions, could negatively impact our business and could result in declines in our consolidated results of operations and cash flow.

Pandemics or disease outbreaks may cause unfavorable economic or market conditions which could impact demand patterns and/or disrupt global supply chains and manufacturing operations.

Collectively, these outcomes could materially and adversely affect our business, results of operations and financial condition.

Pandemics or disease outbreaks such as COVID-19 could result in a widespread health crisis that could adversely affect the economies of developed and emerging markets, potentially resulting in an economic downturn that could affect customers’ demand for our products in certain industrial-based end markets.

The spread of pandemics or disease outbreaks may also disrupt the Company’s manufacturing operations, supply chain, or logistics necessary to import, export and deliver products to our customers.

Pandemics or disease outbreaks could result in a widespread health crisis that could adversely affect the economies of developed and emerging markets, potentially resulting in an economic downturn that could affect customers’ demand for our products and solutions in certain industrial-based end markets.

The spread of pandemics or disease outbreaks may also disrupt the Company’s manufacturing operations, supply chain, or logistics necessary to import, export and deliver products and solutions to our customers.

During a pandemic or crisis, applicable laws and response directives such as vaccine mandates or occupational safety and health requirements, could, in some circumstances, result in skilled labor impacts including voluntary attrition or difficulty finding labor, or otherwise adversely affect our ability to operate our plants, obtain inputs from suppliers, or to deliver our products in a timely manner.

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These factors could negatively impact our consolidated results of operations and cash flow.

A reduction in the spending patterns of government customers or delays in obtaining government approval for our products could materially and adversely affect our net sales, earnings and cash flow.

The demand for our products sold to the fire service market, the homeland security market and other government customers is, in large part, driven by available government funding.

A reduction in the spending patterns of government customers or delays in obtaining government approval for our products and solutions could materially and adversely affect our net sales, earnings and cash flow.

The demand for our products and solutions sold to the fire service market, the homeland security market and other government customers is, in large part, driven by available government funding.

Government budgets are set annually, and we cannot assure that government funding will be sustained at similar levels in the future.

A significant reduction in available government funding could result in declines in our consolidated results of operations and cash flow.

The markets in which we compete are highly competitive, and some of our competitors have greater financial and other resources than we do.

The markets in which we operate are highly competitive, and some of our competitors have greater financial and other resources than we do.

The competitive pressures faced by us could materially and adversely affect our business, results of operations and financial condition.

The safety products market is highly competitive, with participants ranging in size from small companies focusing on single types of safety products, to large multinational corporations that manufacture and supply many types of safety products.

The safety products and solutions market is highly competitive, with participants ranging in size from small companies focusing on single types of safety products, to large multinational corporations that manufacture and supply many types of safety products and solutions.

Our main competitors vary by region and product.

We believe that participants in this industry compete primarily on the basis of product characteristics (such as functional performance, technology, cost of ownership, comfort, design and style), price, service and delivery, customer support, the ability to meet the special requirements of customers, brand name trust and recognition, purchasing options, and e-business capabilities.

Some of our competitors have greater financial and other resources than we do, and our business could be adversely affected by competitors’ new product innovations, technological advances made to competing products and pricing changes made by us in response to competition from existing or new competitors.

We believe that participants in this industry compete primarily on the basis of product characteristics (such as functional performance, technology, cost of ownership, comfort, design and style), price, service and delivery, integrated solutions, customer support, the ability to meet the special requirements of customers, brand name trust and recognition, purchasing options, and e-business capabilities.

Some of our competitors have greater financial and other resources than we do, and our business could be adversely affected by competitors’ new product innovations, technological advances made to competing products and solutions and pricing changes made by us in response to competition from existing or new competitors.

We may not be able to compete successfully against current and future competitors, and the competitive pressures faced by us could have a material adverse effect our business, consolidated results of operations and financial condition.

In addition, e-business is a rapidly developing area, and the execution of a successful e-business strategy involves significant time, investment and resources.

In addition, e-commerce is a rapidly developing area, and the execution of a successful e-business strategy involves significant time, investment and resources.

If we are unable to successfully expand e-business capabilities in support of our customer needs, our brands may lose market share, which could negatively impact revenue and profitability.

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We have incurred and may incur restructuring charges primarily related to severance costs for staff reductions associated with our ongoing initiatives to drive profitable growth and right size our operations as well as programs to adjust our operations in response to current business conditions.

For example, in 2023, 152 positions were eliminated in response to the changing business environment.

Our cost structure in future periods is somewhat dependent upon our ability to maintain increased productivity without backfilling certain positions.

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Any of these factors could materially and adversely affect our consolidated results of operations and financial condition.

If we fail to introduce successful new products or extend our existing product line, we could lose our market position and our financial performance could be materially and adversely affected.

In the safety products market, there are frequent introductions of new products and product line extensions.

If we are unable to identify emerging customer and technological trends, maintain and improve the competitiveness of our products and introduce new products, we may lose our market position, which could have a material adverse effect on our business, financial condition and results of operations.

We continue to invest significant resources in research and development and market research, which includes the development of software platforms for our connected products.

If we fail to introduce successful new products or solutions or extend our existing portfolio, we could lose our market position and our financial performance could be materially and adversely affected.

In the safety products and solutions market, there are frequent introductions of new products, product line extensions, and related solutions.

If we are unable to identify emerging customer and technological trends, maintain and improve the competitiveness of our products and solutions and introduce new ones, we may lose our market position, which could have a material adverse effect on our business, financial condition and results of operations.

We continue to invest significant resources in research and development and market research, which includes the development of software platforms for our connected products and solutions.

However, continued product and/or service development and marketing efforts are subject to the risks inherent in the development process.

These risks include delays, the failure of new products and product line extensions to achieve anticipated levels of market acceptance, disruptive products, technologies and services introduced by competitors, and the risk of failed product introductions.

These risks include delays, the failure of new products, product line extensions, and related solutions to achieve anticipated levels of market acceptance, disruptive products, technologies and services introduced by competitors, and the risk of failed product introductions.

RISKS RELATED TO CYBERSECURITY OR MISAPPROPRIATION OF OUR CRITICAL INFORMATION

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The proper functioning and security of our information systems is critical to the operation and reputation of our business.

This includes the systems that support and operate our Safety io and MSA+ platforms.

This includes the systems that support and operate our GRID, FireGRID, and similar connected product platforms.

Our information systems may be vulnerable to damage or disruption from natural or man-made disasters, computer viruses, power losses or other system or network failures.

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To date, we have not experienced any known material breaches or material losses related to cyber-attacks.

If our information systems or security fail, or if there is any compromise or breach of our security, it could disrupt our operations and/or result in a violation of applicable privacy and other laws, legal and financial exposure, remediation costs, negative impacts on our customers' willingness to transact business with us, or a loss of confidence in our security measures, which could have an adverse effect on our business, our reputation and our consolidated results of operations and financial condition.

From time to time, we have experienced attempts on our computer systems by unauthorized outside parties.

If our information systems or security fail, or if there is any compromise or breach of our security, it could disrupt our operations and/or result in a violation of applicable data protection and other laws, legal and financial exposure, remediation costs, negative impacts on our customers' willingness to transact business with us, or a loss of confidence in our security measures, which could have an adverse effect on our business, our reputation and our consolidated results of operations and financial condition.

From time to time, we have experienced attempts on our information systems by unauthorized outside parties.

Because the techniques used by computer hackers and others to access or sabotage networks continually evolve and generally are not recognized until launched against a target, we may be unable to anticipate, prevent or detect these attacks.

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Any such system failure or loss of such information could harm our competitive position or cause us to incur significant costs to remedy the damages caused by the incident.

We have taken steps and incurred costs to further strengthen the security of our computer systems and continue to assess, maintain and enhance the ongoing effectiveness of our information security systems.

While we attempt to mitigate the aforementioned risks by employing a number of measures, including employee training, monitoring of our networks and systems, and maintenance of backup and protective systems, our systems, networks, facilities, business partners and associates remain potentially vulnerable to advanced persistent threats.

We have taken steps and incurred costs to further strengthen the security of our information systems and continue to assess, maintain and enhance the ongoing effectiveness of our information security systems.

While we attempt to mitigate the aforementioned risks by employing a number of measures, including employee training, monitoring of our networks and systems, and maintenance of backup and protective systems, our systems, networks, facilities, business partners, including third party providers, and associates remain potentially vulnerable to advanced persistent threats.

We cannot assure that ongoing improvements to our infrastructure and cybersecurity programs will be sufficient to prevent or limit the damage from any future cyber-attack or disruption to our information systems.

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It is important to our business to hire, retain and develop a highly skilled and diverse global workforce.

We compete to hire new personnel with a variety of capabilities in the many countries in which we manufacture and market our products.

We compete to hire new personnel with a variety of capabilities in the many countries in which we design, manufacture and market our products and solutions.

We also invest resources and time to develop and retain our employees' skills and competencies.

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We have business operations in more than 40 international locations.

In 2023, approximately one-half of our net sales were made by operations located outside the United States.

In 2024, approximately 40% of our net sales were made by operations located outside the United States.

We also rely on global supply chains or otherwise source critical components and raw materials from suppliers based in foreign countries, which at times are used in manufacturing operations across our global footprint.

In certain cases, components could be sole sourced or otherwise not easily substituted due to the highly regulated or complex nature of our products.

Therefore, our operations and sourcing strategies could face supply shortages, sourcing delays, changes in customer demand, or disruption due to various geopolitical, economic and natural disasters, as well as other risks and uncertainties related to doing business across borders, which could have a material adverse effect on our business.

Therefore, our operations and sourcing strategies could face supply shortages, supplier or sourcing delays, transportation disruptions, changes in customer demand, or disruption due to various geopolitical events, economic conditions, and natural disasters, as well as other risks and uncertainties related to doing business across borders, which could have a material adverse effect on our business.

Further examples of such risks include the following:

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• nationalization and expropriation of assets;

• increased international instability, potential instability of foreign governments or impacts from geopolitical conflict or wars, such as supplier or transportation disruptions;

• increased international instability, potential instability of foreign governments or impacts from geopolitical conflicts, events, or wars;

• lack of effective compliance with MSA's anti-bribery policy, the U.S.

Foreign Corrupt Practices Act, and similar local laws;

Foreign Corrupt Practices Act, and similar anti-corruption and anti-bribery laws in the countries where the Company does business;

• difficulty in hiring, retaining and motivating qualified employees;

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• pandemics, severe weather events, or other disasters;

• risks associated with disruptive political events, such as the United Kingdom's decision to exit the European Union, including disruptions to trade and free movement of goods, services and people to and from the United Kingdom;

increased foreign exchange volatility with respect to the British pound;

and additional legal and economic uncertainty.

• risks associated with disruptive political events and related legal and economic uncertainty.

Any one or more of these risks could have a negative impact on the success of our global operations and, thereby, have a material adverse effect on our business, consolidated results of operations and financial condition.

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GENERAL RISK FACTORS

Damage to the reputation of MSA or to one or more of our product brands could adversely affect our business.

Damage to the reputation of MSA or to one or more of our Company brands could adversely affect our business.

Developing and maintaining our reputation, as well as the reputation of our brands, is a critical factor in our relationship with customers, distributors, end users, suppliers, associates, and others.

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See Note 14—Goodwill and Intangible Assets of the consolidated financial statements in Part II Item 8 of this Form 10-K for the carrying amounts of goodwill in each of our reporting segments and details on indefinite-lived intangible assets that we hold.

Failure to incorporate, or improperly incorporating, Artificial Intelligence (AI) could damage our business.

Failure to effectively harness and/or protect Company data or to incorporate, or improperly incorporating, Artificial Intelligence (AI) could damage our business.

New and emerging technologies, including Generative AI, bring opportunities and risks, and the implications of using (or not using) these technologies are only starting to emerge.

Our business is subject to and impacted by these rapid technological advances.

To remain competitive, we review and enhance our products and safety solutions against new technologies, including exploring the use of Generative AI in our solutions.

If we fail to anticipate or respond to technological advancements, the demand for our products may be diminished.

If the Company fails to procure, adopt, or use AI in a way that is efficient and additive to our business, it may have an adverse effect on our business, consolidated results of operations or financial condition.

Conversely, there are risks that using AI could result in inadvertent data loss or disclosure (including but not limited to confidential information), biased algorithms, heightened regulatory scrutiny or inadvertent non-compliance, over-dependence, misleading or incomplete outputs,privacy and cybersecurity risks, ethical concerns, intellectual property risks,and other risks that could lead to reputational harm or have an adverse effect on our business, consolidated results of operations or financial condition.

Our business is subject to and impacted by these rapid technological advances, and the failure to effectively and/or lawfully deploy these technologies may impact the Company’s business.

To remain competitive, we review and enhance our products and solutions against new technologies, including exploring the use of Generative AI.

If we fail to anticipate or respond to technological advancements appropriately, the demand for our products and solutions may be diminished.

If the Company fails to build and implement an effective data strategy or to procure, adopt, or use new technologies in a way that is efficient and additive to our business, it may have an adverse effect on our business, consolidated results of operations or financial condition.

Conversely, there are risks that using new technologies could result in inadvertent data loss or disclosure (including but not limited to confidential information), biased algorithms, heightened regulatory compliance obligations, over-dependence, inaccurate, misleading or incomplete outputs, data privacy and cybersecurity risks, ethical concerns, intellectual property risks, and other risks that could lead to reputational harm or have an adverse effect on our business, consolidated results of operations or financial condition.

Risks related to our defined benefit pension and other post-retirement plans could adversely affect our results of operations and cash flow.

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Any period of interest rate increases may adversely affect our ability to obtain new financing or to refinance existing debt on terms the Company deems attractive, the cost of such financing, exchange-rates, and our profitability, which in turn may have a material adverse effect on our liquidity and capital resources.

As of December 31, 2023, we had $292.1 million of variable rate borrowings under our senior revolving credit facility and 2023 term loan credit agreement.

As of December 31, 2024, we had $206.3 million of variable rate borrowings on a term loan under our revolving credit facility.

A 50 basis point increase or decrease in interest rates could result in $1.0 million of additional interest expense.

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-K

Item 1A. Risk Factors