MSA Safety Inc 10-Q

Item 1. Financial Statements MSA SAFETY INCORPORATED CONDENSED CONSOLIDATED STATEMENTS OF INCOME Unaudited Three Months Ended March 31, (In thousands, except per share values) 2025 2024 Net sales $ 421,340 $ 413,302 Cost of products sold 227,945 217,771 Gross profit 193,395 195,531 Selling, general and administrative 93,965 94,150 Research and development 15,669 15,919 Restructuring charges (Note 4) 1,924 3,017 Currency exchange losses, net 4,076 2,333 Operating income 77,761 80,112 Interest expense 6,835 10,740 Other income, net ( 7,023 ) ( 6,235 ) Total other (income) expense, net ( 188 ) 4,505 Income before income taxes 77,949 75,607 Provision for income taxes (Note 11) 18,344 17,468 Net income $ 59,605 $ 58,139 Earnings per share attributable to common shareholders (Note 10): Basic $ 1.51 $ 1.48 Diluted $ 1.51 $ 1.47 Dividends per common share $ 0.51 $ 0.47 The accompanying notes are an integral part of the unaudited condensed consolidated financial statements. -3- Table of Contents MSA SAFETY INCORPORATED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME Unaudited Three Months Ended March 31, (In thousands) 2025 2024 Net income $ 59,605 $ 58,139 Other comprehensive gain (loss), net of tax: Foreign currency translation adjustments (Note 7) 22,537 ( 10,673 ) Pension and post-retirement plan adjustments, net of tax (Note 7) 201 374 Total other comprehensive gain (loss), net of tax 22,738 ( 10,299 ) Comprehensive income $ 82,343 $ 47,840 The accompanying notes are an integral part of the unaudited condensed consolidated financial statements. -4- Table of Contents MSA SAFETY INCORPORATED CONDENSED CONSOLIDATED BALANCE SHEETS Unaudited (In thousands) March 31, 2025 December 31, 2024 Assets Cash and cash equivalents $ 170,617 $ 164,560 Trade receivables, less allowance for credit loss of $ 7,996 and $ 8,047 294,423 279,213 Inventories (Note 5) 306,675 296,796 Prepaid expenses and other current assets 51,447 62,461 Total current assets 823,162 803,030 Property, plant and equipment, net (Note 6) 211,714 211,865 Operating lease right-of-use assets, net 56,308 56,083 Prepaid pension cost (Note 15) 229,744 224,638 Deferred tax assets (Note 11) 27,489 26,180 Goodwill (Note 14) 627,200 620,895 Intangible assets, net (Note 14) 243,800 246,437 Other noncurrent assets 16,468 16,656 Total assets $ 2,235,885 $ 2,205,784 Liabilities Notes payable and current portion of long-term debt (Note 13) $ 32,886 $ 26,391 Accounts payable 116,474 108,163 Employees’ compensation 39,500 54,826 Other current liabilities 91,580 98,713 Total current liabilities 280,440 288,093 Long-term debt, net (Note 13) 469,171 481,622 Pensions and other employee benefits (Note 15) 136,854 134,251 Noncurrent operating lease liabilities 45,681 45,984 Deferred tax liabilities (Note 11) 108,106 107,691 Other noncurrent liabilities 5,488 4,824 Total liabilities $ 1,045,740 $ 1,062,465 Equity Preferred stock, 4.5 % cumulative, $ 50 par value (Note 8) $ 3,569 $ 3,569 Common stock, no par value (Note 8) 330,077 329,953 Treasury shares, at cost (Note 8) ( 413,812 ) ( 398,204 ) Accumulated other comprehensive loss (Note 7) ( 118,911 ) ( 141,649 ) Retained earnings 1,389,222 1,349,650 Total shareholders’ equity 1,190,145 1,143,319 Total liabilities and shareholders’ equity $ 2,235,885 $ 2,205,784 The accompanying notes are an integral part of the unaudited condensed consolidated financial statements. -5- Table of Contents MSA SAFETY INCORPORATED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS Unaudited Three Months Ended March 31, (In thousands) 2025 2024 Operating Activities Net income $ 59,605 $ 58,139 Depreciation and amortization 16,251 15,559 Stock-based compensation (Note 12) 2,629 4,187 Pension income (Note 15) ( 3,848 ) ( 2,208 ) Deferred income tax benefit (Note 11) ( 83 ) ( 2,190 ) Loss on asset dispositions, net 8 51 Pension contributions (Note 15) ( 1,832 ) ( 1,316 ) Currency exchange losses, net 4,076 2,333 Changes in: Trade receivables ( 13,727 ) 12,132 Inventories (Note 5) ( 4,422 ) ( 14,946 ) Accounts payable 8,502 6,175 Other current assets and liabilities ( 5,173 ) ( 26,328 ) Other noncurrent assets and liabilities ( 153 ) ( 702 ) Cash Flow From Operating Activities 61,833 50,886 Investing Activities Capital expenditures ( 10,784 ) ( 11,219 ) Property disposals and other investing 18 — Cash Flow Used in Investing Activities ( 10,766 ) ( 11,219 ) Financing Activities Proceeds from long-term debt (Note 13) 246,000 326,000 Payments on long-term debt (Note 13) ( 253,466 ) ( 331,010 ) Cash dividends paid ( 20,033 ) ( 18,490 ) Company stock purchases (Note 8) ( 18,343 ) ( 5,838 ) Exercise of stock options (Note 8) 230 253 Cash Flow Used in Financing Activities ( 45,612 ) ( 29,085 ) Effect of exchange rate changes on cash, cash equivalents and restricted cash 743 ( 8,676 ) Change in cash, cash equivalents and restricted cash 6,198 1,906 Beginning cash, cash equivalents and restricted cash 165,097 148,408 Ending cash, cash equivalents and restricted cash $ 171,295 $ 150,314 Supplemental cash flow information: Cash and cash equivalents $ 170,617 $ 148,329 Restricted cash included in prepaid expenses and other current assets 678 1,985 Total cash, cash equivalents and restricted cash $ 171,295 $ 150,314 The accompanying notes are an integral part of the unaudited condensed consolidated financial statements. -6- Table of Contents MSA SAFETY INCORPORATED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN RETAINED EARNINGS AND ACCUMULATED OTHER COMPREHENSIVE LOSS Unaudited (In thousands, except per share values) Retained Earnings Accumulated Other Comprehensive (Loss) Balances December 31, 2023 $ 1,143,442 $ ( 129,249 ) Net income 58,139 — Foreign currency translation adjustments — ( 10,673 ) Pension and post-retirement plan adjustments, net of tax benefit of $ 14 — 374 Common dividends ($ 0.47 per share) ( 18,480 ) — Preferred dividends ($ 0.5625 per share) ( 10 ) — Balances March 31, 2024 $ 1,183,091 $ ( 139,548 ) Balances December 31, 2024 $ 1,349,650 $ ( 141,649 ) Net income 59,605 — Foreign currency translation adjustments — 22,537 Pension and post-retirement plan adjustments, net of tax expense of $ 191 — 201 Common dividends ($ 0.51 per share) ( 20,023 ) — Preferred dividends ($ 0.5625 per share) ( 10 ) — Balances March 31, 2025 $ 1,389,222 $ ( 118,911 ) The accompanying notes are an integral part of the unaudited condensed consolidated financial statements. -7- Table of Contents MSA SAFETY INCORPORATED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Unaudited Note 1— Basis of Presentation The condensed consolidated financial statements of MSA Safety Incorporated and its subsidiaries ("MSA" or "the Company") are unaudited. These unaudited condensed consolidated financial statements include all adjustments, consisting of normal recurring adjustments, considered necessary by management to fairly state the Company's results. Intercompany accounts and transactions have been eliminated. The results reported in these unaudited condensed consolidated financial statements are not necessarily indicative of the results that may be expected for the entire year. The December 31, 2024, Balance Sheet data was derived from the audited Consolidated Balance Sheets, but does not include all disclosures required by accounting principles generally accepted in the United States of America ("U.S. GAAP"). This Form 10-Q report should be read in conjunction with MSA's Form 10-K for the year ended December 31, 2024, which includes all disclosures required by U.S. GAAP. In December 2023, the FASB issued ASU No. 2023-09 (“ASU 2023-09”), Improvements to Income Tax Disclosures . ASU 2023-09 requires disaggregated information about a reporting entity's effective tax rate reconciliation as well as information on income taxes paid. This standard also includes certain other amendments to improve the effectiveness of income tax disclosures. ASU 2023-09 is effective for public business entities, for annual periods beginning after December 15, 2024. With the exception of expanding disclosures, we do not expect the adoption of ASU 2023-09 to have a material effect on our consolidated financial statements taken as a whole. In November 2024, the FASB issued ASU No. 2024-03 (“ASU 2024-03”), Disaggregation of Income Statement Expenses (“DISE”) . ASU 2024-03 requires disaggregated disclosure of income statement expenses for public business entities. ASU 2024-03 does not change the expense captions an entity presents on the face of the income statement; rather, it requires disaggregation of certain expense captions into specified categories in disclosures within the footnotes to the financial statements. As revised by ASU No. 2025-01, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures , the provisions of ASU 2024-03 are effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. With the exception of expanding disclosures to include more granular income statement expense categories, we do not expect the adoption of ASU 2024-03 to have a material effect on our consolidated financial statements taken as a whole. Note 2— Revenue Recognition We generate revenue primarily from manufacturing and selling a comprehensive line of safety products and solutions to protect the health and safety of workers and facility infrastructures around the world. Our customers generally fall into two categories: distributors and industrial or end-users. All customer categories have similar nature, timing and uncertainty related to cash flows. As a result, the underlying principles of revenue recognition are identical for both categories of customers. We account for revenue in accordance with ASC 606, Revenue from Contracts with Customers. Revenue from the sale of products and solutions is recognized when there is persuasive evidence of an arrangement and control passes to the customer, which generally occurs either when product is shipped to the customer or, in the case of certain customers, when product is delivered to the customer's site. We establish our shipping terms according to local practice and market characteristics. We do not ship product unless we have an order or other documentation authorizing shipment to our customers. Our payment terms vary by the type and location of our customer and the products and solutions offered; however, in most cases, the term between invoicing and when payment is due is not significant. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring goods or providing services. Amounts billed and due from our customers are classified as receivables on the unaudited Condensed Consolidated Balance Sheets. We make appropriate provisions for credit losses, which have historically been insignificant in relation to our net sales. Certain contracts with customers may have an element of variable consideration that is estimated when revenue is recognized under the contract to the extent that it is material to the individual contract. Variable consideration could include volume incentive rebates and performance guarantees. Rebates are based on achieving a certain level of purchases and other performance criteria that are documented in established distributor programs. These rebates are estimated based on projected sales to the customer and accrued as a reduction of net sales as they are earned by the customer. Sales, value added and other taxes collected with revenue-producing activities and remitted to governmental authorities are excluded from revenue. -8- Table of Contents Depending on the terms of the arrangement, we may defer revenue for which we have a future obligation, which may include leases where the Company is the lessor, training, extended warranty, software subscriptions, maintenance and technical services, until such time that the obligation has been satisfied. We use an observable price, or a cost plus margin approach when one is not available, to determine the stand-alone selling price for separate performance obligations. We have elected to recognize the cost for shipping and handling as an expense when control of the product has passed to the customer. These costs are included within the Cost of products sold line on the unaudited Condensed Consolidated Statements of Income. Amounts billed to customers for shipping and handling are included within the Net sales line on the unaudited Condensed Consolidated Statements of Income. Performance Obligations The Company recognizes revenue when performance obligations identified under the terms of the contract with its customers are satisfied, which generally occurs upon the transfer of control in accordance with the contractual terms and conditions of sale. For most contracts with customers, this results in point-in-time revenue recognition once contractual shipping terms are fulfilled. Disaggregation of Revenue Refer to Note 9—Segment Information for disaggregation of revenue by segment and product category, as we believe this best depicts how the nature, amount, timing and uncertainty of our revenue and cash flows are affected by economic factors. Lessor Arrangements The Company derives a portion of its revenue from various leasing contracts where the Company is the lessor, primarily managed fire service contracts. Such arrangements provide for recurring payments throughout the contract term. These payments cover equipment provided in addition to several services which include maintenance and interest. Managed fire service contracts meet the criteria to be accounted for as sales-type leases. Under ASC 842, Leases , these contracts contain both lease and non-lease components. For a component to be separate, the customer would be able to benefit from the right of use of the component separately or with other resources readily available to the customer and the right of the use is not highly dependent or highly interrelated with the other rights to use the other underlying assets or components. For managed fire service contracts, revenue from equipment provided is considered a lease component and recognized with point in time revenue recognition upon lease commencement. Upon the recognition of such revenue, an asset is established for the investment in sales-type leases. Maintenance revenue, which is considered a non-lease component, and interest are recognized monthly over the lease term. As of March 31, 2025, remaining maintenance performance obligations for managed fire service contracts were $ 33.4 million, which are expected to be recognized to revenue over approximately 3 years. Lease revenues and interest earned by the Company, included in the unaudited Condensed Consolidated Statements of Income, were not material to either the quarter ended March 31, 2025, or 2024. Practical Expedients and Exemptions We do not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed. We do not assess whether a contract has a significant financing component if the expectation at contract inception is such that the period between payment by the customer and the transfer of the promised goods or services to the customer will be one year or less. We generally expense sales commissions when incurred because the amortization period would have been one year or less. These costs are recorded within selling, general and administrative expenses in our Consolidated Statements of Income. -9- Table of Contents Note 3— Cash and Cash Equivalents Several of the Company's subsidiaries participate in a notional cash pooling arrangement to manage global liquidity requirements. As part of a master netting arrangement, the participants combine their cash balances in pooling accounts at the same financial institution with the ability to offset bank overdrafts of one participant against positive cash account balances held by another participant. Under the terms of the master netting arrangement, the financial institution has the right, ability and intent to offset a positive balance in one account against an overdrawn amount in another account. Amounts in each of the accounts are unencumbered and unrestricted with respect to use. As such, the net cash balance related to this pooling arrangement is included in Cash and cash equivalents in the unaudited Condensed Consolidated Balance Sheets. The Company's net cash pool position consisted of the following: (In thousands) March 31, 2025 Gross cash pool position $ 102,623 Less: cash pool borrowings ( 47,492 ) Net cash pool position $ 55,131 Note 4— Restructuring Charges During the three months ended March 31, 2025, we recorded restructuring charges of $ 1.9 million. Americas segment restructuring charges of $ 0.4 million during the three months ended March 31, 2025, were related to initiatives to right-size the organization in response to macroeconomic conditions. International segment restructuring charges of $ 0.9 million during the three months ended March 31, 2025, were primarily related to ongoing initiatives to optimize our manufacturing footprint and initiatives to right-size the organization in response to macroeconomic conditions. Corporate segment restructuring charges of $ 0.6 million during the three months ended March 31, 2025, were related to initiatives to right-size the organization in response to macroeconomic conditions. 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. Restructuring reserves are included in Other current liabilities in the accompanying unaudited Condensed Consolidated Balance Sheets. Activity and reserve balances for restructuring by segment were as follows: (In millions) Americas International Corporate Total Reserve balances at December 31, 2023 $ 0.8 $ 9.0 $ — $ 9.8 Restructuring charges 1.6 3.5 1.3 6.4 Currency translation ( 0.1 ) ( 0.3 ) — ( 0.4 ) Cash payments / utilization ( 2.1 ) ( 9.0 ) ( 1.3 ) ( 12.4 ) Reserve balances at December 31, 2024 $ 0.2 $ 3.2 $ — $ 3.4 Restructuring charges 0.4 0.9 0.6 1.9 Currency translation — 0.1 — 0.1 Cash payments ( 0.1 ) ( 0.9 ) — ( 1.0 ) Reserve balances at March 31, 2025 $ 0.5 $ 3.3 $ 0.6 $ 4.4 -10- Table of Contents Note 5— Inventories The following table sets forth the components of inventory: (In thousands) March 31, 2025 December 31, 2024 Finished products $ 96,507 $ 93,356 Work in process 17,127 13,413 Raw materials and supplies 193,041 190,027 Total inventories $ 306,675 $ 296,796 Note 6— Property, Plant and Equipment The following table sets forth the components of property, plant and equipment, net: (In thousands) March 31, 2025 December 31, 2024 Land $ 4,309 $ 4,235 Buildings 144,166 142,605 Machinery and equipment 524,525 512,894 Construction in progress 22,276 25,451 Total 695,276 685,185 Less: accumulated depreciation ( 483,562 ) ( 473,320 ) Property, plant and equipment, net $ 211,714 $ 211,865 Note 7— Reclassifications Out of Accumulated Other Comprehensive Loss Changes in accumulated other comprehensive loss were as follows: Three Months Ended March 31, (In thousands) 2025 2024 Pension and other post-retirement benefits (a) Balance at beginning of period $ ( 11,390 ) $ ( 42,652 ) Amounts reclassified from accumulated other comprehensive loss into net income: Amortization of prior service cost (credit) (Note 15) 32 ( 9 ) Recognized net actuarial losses (Note 15) 360 397 Tax benefit ( 191 ) ( 14 ) Total amount reclassified from accumulated other comprehensive loss, net of tax, into net income 201 374 Balance at end of period $ ( 11,189 ) $ ( 42,278 ) Foreign currency translation Balance at beginning of period $ ( 130,259 ) $ ( 86,597 ) Foreign currency translation adjustments 22,537 ( 10,673 ) Balance at end of period $ ( 107,722 ) $ ( 97,270 ) (a) Amounts reclassified from accumulated other comprehensive loss into net income are included in the computation of net periodic pension and other post-retirement benefit costs (refer to Note 15—Pensions and Other Post-retirement Benefits). -11- Table of Contents Note 8— 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, 2025, and December 31, 2024. 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, 2025, or 2024. 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, 2025, or December 31, 2024. 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, 2025, and December 31, 2024. No new shares were issued during the three months ended March 31, 2025, or 2024. There were 39,298,861 and 39,260,080 shares outstanding at March 31, 2025, and December 31, 2024, respectively. Treasury Shares - The Company's 2024 stock repurchase program 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, 2025, and 2024, the Company repurchased 62,125 and no shares, respectively, under this and the prior stock repurchase program. There were 22,782,530 and 22,821,311 treasury shares at March 31, 2025, and December 31, 2024, 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 153,734 and 95,428 Treasury shares issued for these purposes during the three months ended March 31, 2025, and 2024, respectively. Common stock activity is summarized as follows: Three Months Ended March 31, 2025 Three Months Ended March 31, 2024 (In thousands) Common Stock Treasury Cost (a) Common Stock Treasury Cost (a) Balance at beginning of period $ 329,953 $ ( 396,604 ) $ 312,324 $ ( 361,684 ) Stock compensation expense 2,629 — 4,187 — Restricted and performance stock awards ( 2,642 ) 2,642 ( 1,436 ) 1,436 Stock options exercised 137 93 166 87 Treasury shares purchased for stock compensation programs — ( 8,347 ) — ( 5,838 ) Share repurchase program — ( 9,996 ) — — Balance at end of period $ 330,077 $ ( 412,212 ) $ 315,241 $ ( 365,999 ) (a) Excludes treasury cost related to preferred stock. Note 9— Segment Information The Company is organized into four geographical operating segments that are based on management responsibilities: Northern North America; Latin America; Europe, Middle East & Africa; and Asia Pacific. The operating segments have been aggregated (based on economic similarities, the nature of their products and solutions, end-user markets and methods of distribution) into three reportable segments: Americas, International, and Corporate. The Americas segment is comprised of our operations in Northern North America and Latin America geographies. The International segment is comprised of our operations in all geographies outside of the Americas. Certain global expenses are allocated to each segment in a manner consistent with where the benefits from the expenses are derived. The Company's sales are allocated to each segment based primarily on the country destination of the end-customer. The Company adopted ASU No. 2023-07 (“ASU 2023-07”), Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures for the year ended December 31, 2024, and applied it retrospectively for all prior periods presented. -12- Table of Contents Adjusted operating income (loss) is the measure used by the chief operating decision maker, identified as our President and Chief Executive Officer, to evaluate segment performance and identify opportunities when allocating resources. Adjusted operating income (loss) is defined as operating income excluding restructuring charges, currency exchange gains (losses), transaction costs and acquisition-related amortization. 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) Americas International Corporate Reconciling Items (a) Consolidated Totals Three Months Ended March 31, 2025 Net sales to external customers $ 293,160 $ 128,180 $ — $ 421,340 Less: Cost of products sold 154,180 71,479 — — Selling, general and administrative 50,918 31,693 9,899 — Research and development 9,369 6,300 — — Adjusted operating income (loss) 78,693 18,708 ( 9,899 ) — 87,502 Noncash items: Depreciation and amortization 11,517 4,505 229 $ — 16,251 Pension (income) expense ( 4,695 ) 847 — — ( 3,848 ) Total Assets 1,481,750 699,029 57,700 ( 2,594 ) 2,235,885 Capital expenditures 8,791 1,850 143 — 10,784 Three Months Ended March 31, 2024 Net sales to external customers $ 295,539 $ 117,763 $ — $ 413,302 Less: Cost of products sold 147,877 67,557 23 — Selling, general and administrative 51,925 30,321 11,672 — Research and development 9,519 6,399 — — Adjusted operating income (loss) 86,218 13,486 ( 11,695 ) — 88,009 Noncash items: Depreciation and amortization 11,273 4,075 211 $ — 15,559 Pension (income) expense ( 3,258 ) 1,050 — — ( 2,208 ) Total Assets 1,461,565 714,276 ( 2,092 ) (b) 581 2,174,330 Capital expenditures 6,554 4,066 599 — 11,219 (a) Reconciling items consist primarily of intercompany eliminations and items not directly attributable to operating segments. (b) Negative Corporate segment assets driven primarily by bank overdrafts under our notional cash pooling arrangement. Refer to Note 3—Cash and Cash Equivalents for further details. -13- Table of Contents A reconciliation of total Adjusted operating income from reportable segments to Income before income taxes is presented in the following table: Three Months Ended March 31, (In thousands) 2025 2024 Adjusted operating income $ 87,502 $ 88,009 Less: Restructuring charges (Note 4) 1,924 3,017 Currency exchange losses, net 4,076 2,333 Interest expense 6,835 10,740 Other income, net ( 7,023 ) ( 6,235 ) Amortization of acquisition-related intangible assets 2,286 2,314 Transaction costs (a) 1,455 233 Income before income taxes $ 77,949 $ 75,607 (a) Transaction costs include advisory, legal, accounting, valuation, and other professional or consulting fees incurred in connection with acquisitions and divestitures. These costs are included in Selling, general and administrative expense in the unaudited Condensed Consolidated Statements of Income. Total sales by product group was as follows: Three Months Ended March 31, 2025 Consolidated Americas International (In thousands, except percentages) Dollars Percent Dollars Percent Dollars Percent Fire Service (a) $ 150,616 36 % $ 105,907 36 % $ 44,709 35 % Detection (b) 161,070 38 % 109,891 37 % 51,179 40 % Industrial PPE and Other (c) 109,654 26 % 77,362 27 % 32,292 25 % Total $ 421,340 100 % $ 293,160 100 % $ 128,180 100 % Three Months Ended March 31, 2024 Consolidated Americas International (In thousands, except percentages) Dollars Percent Dollars Percent Dollars Percent Fire Service (a) $ 163,694 40 % $ 122,252 41 % $ 41,442 35 % Detection (b) 139,216 34 % 96,295 33 % 42,921 36 % Industrial PPE and Other (c) 110,392 26 % 76,992 26 % 33,400 29 % Total $ 413,302 100 % $ 295,539 100 % $ 117,763 100 % (a) Fire Service includes Breathing Apparatus and Firefighter Helmets and Protective Apparel. (b) Detection includes Fixed Gas and Flame Detection and Portable Gas detection. (c) Industrial PPE and Other includes Industrial Head Protection, Fall Protection and Non-Core. -14- Table of Contents Note 10— Earnings per Share Basic earnings per share is computed by dividing net income, after the deduction of preferred stock dividends and undistributed earnings allocated to participating securities, by the weighted average number of common shares outstanding during the period. Diluted earnings per share assumes the issuance of common stock for all potentially dilutive share equivalents outstanding not classified as participating securities. Participating securities are defined as unvested stock-based compensation awards that contain nonforfeitable rights to dividends. Three Months Ended March 31, (In thousands, except per share values) 2025 2024 Net income $ 59,605 $ 58,139 Preferred stock dividends ( 10 ) ( 10 ) Net income attributable to common equity 59,595 58,129 Dividends and undistributed earnings allocated to participating securities ( 5 ) ( 7 ) Net income attributable to common shareholders 59,590 58,122 Basic weighted-average shares outstanding 39,334 39,360 Stock-based compensation awards 167 196 Diluted weighted-average shares outstanding 39,501 39,556 Antidilutive shares — — Earnings per share: Basic $ 1.51 $ 1.48 Diluted $ 1.51 $ 1.47 Note 11— Income Taxes The Company's effective tax rate for the three months ended March 31, 2025, 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 March 31, 2024, was 23.1 %, which differs from the U.S. federal statutory rate of 21% primarily due to state income taxes and nondeductible compensation. At March 31, 2025, the Company had a gross liability for unrecognized tax benefits of $ 1.3 million. The Company has no recognized tax benefits associated with these liabilities at March 31, 2025. 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, 2025. We are subject to regular review and audit by both foreign and domestic tax authorities. While we believe our tax positions will be sustained, the final outcome of tax audits and related litigation may differ materially from the tax amounts recorded in our unaudited condensed consolidated financial statements. -15- Table of Contents Note 12— Stock Plans The 2023 Management Equity Incentive Plan and its predecessor, the 2016 Management Equity Incentive Plan, provide for various forms of stock-based compensation for eligible employees through, in the case of the 2023 Management Equity Incentive Plan, May 2033, including stock options, restricted stock awards, restricted stock units and performance stock units. The 2024 Non-Employee Directors’ Equity Incentive Plan and its predecessor, the 2017 Non-Employee Directors’ Equity Incentive Plan, provide for grants of stock options and restricted stock to non-employee directors through May 2034. The 2014 MSA Employee Stock Purchase Plan (“ESPP”) permits eligible employees to purchase the Company's shares of common stock at a 15 % discount from the fair market value stock price, semi-annually. The ESPP plan is considered a compensatory plan. The discount is recorded as a component of selling, general and administrative expense in the Company's Consolidated Statements of Income. Stock compensation expense, included in Selling, general and administrative expense in the unaudited Condensed Consolidated Statements of Income, is as follows: Three Months Ended March 31, (In thousands) 2025 2024 Stock compensation expense $ 2,629 $ 4,187 Income tax benefit 649 1,026 Stock compensation expense, net of tax $ 1,980 $ 3,161 We have not capitalized any stock-based compensation expense. A summary of stock option activity for the three months ended March 31, 2025, is as follows: Shares Weighted Average Exercise Price Outstanding at January 1, 2025 15,018 $ 45.10 Exercised ( 5,173 ) 44.50 Outstanding and exercisable at March 31, 2025 9,845 $ 45.41 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, 2025, is as follows: Shares Weighted Average Grant Date Fair Value Unvested at January 1, 2025 179,584 $ 150.39 Granted 55,124 159.70 Vested ( 31,277 ) 138.81 Forfeited ( 7,648 ) 153.94 Unvested at March 31, 2025 195,783 $ 154.72 Performance stock units that have a market condition modifier are valued at an estimated fair value using a Monte Carlo model. The final number of shares to be issued for performance stock units granted in the first quarter of 2025 may range from 0 % to 200 % of the target award based on achieving the specified performance targets over the performance period and further range based upon the achieved market metric over the performance period. The following weighted average assumptions were used in estimating the fair value of the performance stock units granted in the first quarter of 2025. Fair value per unit $ 160.54 Risk-free interest rate 4.28 % Expected dividend yield 1.14 % Expected volatility 25.3 % MSA stock beta 0.744 -16- Table of Contents The risk-free interest rate is based on the U.S. Treasury Constant Maturity rates as of the grant date converted into an implied spot rate yield curve. Expected dividend yield is based on the most recent annualized dividend divided by the one-year average closing share price. Expected volatility is based on the three-year historical volatility preceding the grant date using daily stock prices. Expected life is based on historical stock option exercise data. A summary of performance stock unit activity for the three months ended March 31, 2025, is as follows: Shares Weighted Average Grant Date Fair Value Unvested at January 1, 2025 161,996 $ 146.50 Granted 55,405 160.54 Performance adjustments (a) 64,457 143.49 Vested ( 118,605 ) 143.47 Forfeited ( 15,852 ) 154.55 Unvested at March 31, 2025 147,401 $ 152.03 (a) Performance adjustments relate primarily to the final number of shares issued for the 2022 performance unit awards which vested in the first quarter of 2025 at 220 % of the target award based on both cumulative performance against EBITDA margin and revenue growth targets and MSA's total shareholder return during the three-year performance period. Note 13— Long-Term Debt (In thousands) March 31, 2025 December 31, 2024 2016 Senior Notes payable through 2031, 3.40 %, net of debt issuance costs $ 47,237 $ 53,400 2021 Senior Notes payable through 2036, 2.69 %, net of debt issuance costs 99,759 99,754 2021 Senior Notes payable through 2036, 2.69 %, net of debt issuance costs 99,759 99,754 2023 Term Loan credit agreement maturing in 2026, net of debt issuance costs 205,346 205,152 2023 Senior Notes payable through 2028, 5.25 %, net of debt issuance costs 49,956 49,953 Total 502,057 508,013 Amounts due within one year 32,886 26,391 Long-term debt, net of debt issuance costs $ 469,171 $ 481,622 On May 24, 2021, the Company entered into a Fourth Amended and Restated Credit Agreement (the “Revolving Credit Facility" or "Facility”) that extended its term through May 24, 2026, and increased the capacity to $ 900.0 million. The agreement was amended in August 2021 and June 2023 to transition from Sterling LIBOR reference rates and U.S. LIBOR reference rates. Under the amended agreement, the Company may elect either a Base rate of interest (“BASE”) or an interest rate based on Secured Overnight Financing Rate (“SOFR”). The BASE is a daily fluctuating per annum rate equal to the highest of (i) 0.00 %, (ii) the Overnight Bank Funding Rate, plus 0.5 %, (iii) the Prime Rate (iv) the Daily Simple SOFR rate, plus 1.00 %. The Company pays a credit spread of 0 to 175 basis points based on the Company’s net EBITDA leverage ratio and elected rate (BASE or SOFR). At March 31, 2025, we had no borrowings outstanding under our $ 900.0 million senior revolving credit 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 January 5, 2023, the Company entered into a new $ 250 million term loan facility to fund the divestiture of MSA LLC, a wholly owned subsidiary. Under the agreement, the Company may elect either BASE or an interest rate based on SOFR. The Company pays a credit spread of 0 to 200 basis points based on the Company's net EBITDA leverage ratio and elected rate. The Company had a Term Loan interest rate of 5.30 % as of March 31, 2025. On April 1, 2025, the Company entered into a Fifth Amended and Restated Credit Agreement (the “Amended Revolving Credit Facility” or “Amended Facility”) that extended its term through April 1, 2030, and increased the capacity to $ 1.3 billion. As part of the Amended Facility, we have converted $ 207.3 million, inclusive of our $ 206.3 million 2023 Term Loan credit agreement and $ 1.0 million of accrued interest related to the 2023 Term Loan, into the Amended Revolving Credit Facility’s capacity. -17- Table of Contents 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, 2025, the Company has outstanding £ 36.6 million (approximately $ 47.3 million at March 31, 2025) of 3.4 % Series B Senior Notes due January 22, 2031. Remaining maturities of this note are £ 6.1 million (approximately $ 7.9 million at March 31, 2025) 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. Coincident with the amendment to the Revolving Credit Facility on April 1, 2025, the Company entered into Amendment No. 4 to the Prudential Note Agreement and Amendment No. 4 to the NYL Note Facility, in each case to conform to the changes made in the Amended Revolving Credit Facility. On June 29, 2023, the Company issued $ 50 million of 5.25 % Series B Senior Notes due July 1, 2028, pursuant to the NYL Note Facility (the "Notes"). The Notes bear interest at 5.25 % per annum, payable semi-annually, and mature on July 1, 2028. The Notes provide for a principal payment of $ 25 million on July 1, 2027, with the remaining $ 25 million due on July 1, 2028. The Notes may be redeemed at the Company’s option prior to their maturity at a make-whole redemption price calculated as provided in the NYL Note Facility. The proceeds of the Notes were used on June 29, 2023, to pay down an equivalent amount of borrowings under the Company’s Revolving Credit Facility with PNC Bank, National Association, as Administrative Agent. 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; except during an acquisition period, defined as four consecutive fiscal quarters beginning with the quarter of acquisition, in which case the consolidated net leverage ratio shall not exceed 4.00 to 1.00; in each case calculated on the basis of the trailing four fiscal quarters. In addition, the agreements contain negative covenants limiting the ability of the Company and its subsidiaries to incur additional indebtedness or issue guarantees, create or incur liens, make loans and investments, make acquisitions, transfer or sell assets, enter into transactions with affiliated parties, make changes in its organizational documents that are materially adverse to lenders or modify the nature of the Company's or its subsidiaries' business. As of March 31, 2025, 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, 2025, totaling $ 9.5 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. As of March 31, 2025, the Company has $ 0.7 million of restricted cash in support of these arrangements. Note 14— Goodwill and Intangible Assets, Net Changes in goodwill during the three months ended March 31, 2025, were as follows: (In thousands) Goodwill Balance at January 1, 2025 $ 620,895 Currency translation 6,305 Balance at March 31, 2025 $ 627,200 At March 31, 2025, goodwill of $ 447.6 million and $ 179.6 million related to the Americas and International reportable segments, respectively. -18- Table of Contents Changes in intangible assets, net, during the three months ended March 31, 2025, were as follows: (In thousands) Intangible Assets Net balance at January 1, 2025 $ 246,437 Amortization expense ( 4,406 ) Currency translation 1,769 Net balance at March 31, 2025 $ 243,800 At March 31, 2025, intangible assets, net, includes a trade name related to Globe Manufacturing Company, LLC ("Globe") with an indefinite life totaling $ 60.0 million . Note 15— Pensions and Other Post-retirement Benefits Components of Net periodic benefit (income) cost consisted of the following: Pension Benefits Other Benefits (In thousands) 2025 2024 2025 2024 Three Months Ended March 31, Service cost $ 1,994 $ 2,315 $ 31 $ 44 Interest cost 5,934 5,970 276 248 Expected return on plan assets ( 12,005 ) ( 10,812 ) — — Amortization of prior service cost (credit) 32 37 — ( 46 ) Recognized net actuarial losses 197 282 163 115 Net periodic benefit (income) cost (a) $ ( 3,848 ) $ ( 2,208 ) $ 470 $ 361 (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 Income. We made contributions of $ 1.8 million and $ 1.3 million to our pension plans during the three months ended March 31, 2025, and 2024, respectively. We expect to make net contributions between $ 6 million and $ 8 million to our pension plans in 2025, which are primarily associated with statutorily required plans in the International reporting segment. Note 16— Derivative Financial Instruments As part of our currency exchange rate risk management strategy, we enter into certain derivative foreign currency forward contracts that do not meet the U.S. 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 Income. The notional amount of open forward contracts was $ 150.7 million and $ 184.0 million at March 31, 2025, and December 31, 2024, 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, 2025 December 31, 2024 Derivatives not designated as hedging instruments: Foreign exchange contracts: prepaid expenses and other current assets $ 236 $ 175 Foreign exchange contracts: other current liabilities 146 1,111 -19- Table of Contents The following table presents the amount and classification of the (gain) loss associated with derivative financial instruments within the unaudited Condensed Consolidated Statements of Income and unaudited Condensed Consolidated Statements of Cash Flows: Three Months Ended March 31, (In thousands) 2025 2024 Derivatives not designated as hedging instruments: Foreign exchange contracts: currency exchange losses, net $ ( 2,634 ) $ 1,758 Note 17— Fair Value Measurements Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are: • Level 1—Observable inputs that reflect unadjusted quoted prices for identical assets or liabilities in active markets. • Level 2—Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. • Level 3—Unobservable inputs for the asset or liability. The valuation methodologies we used to measure financial assets and liabilities are also used to value the derivative financial instruments described in Note 16—Derivative Financial Instruments. We estimate the fair value of the derivative financial instruments, consisting of foreign currency forward contracts, based upon valuation models with inputs that generally can be verified by observable market conditions and do not involve significant management judgment. Accordingly, the fair values of the derivative financial instruments are classified within Level 2 of the fair value hierarchy. With the exception of our 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 $ 297.3 million and $ 303.5 million at March 31, 2025, and December 31, 2024, respectively. The fair value of this debt was $ 263.0 million and $ 266.4 million at March 31, 2025, and December 31, 2024, respectively. The fair value of this debt was determined using Level 2 inputs by evaluating similarly rated companies with publicly traded bonds where available or current borrowing rates available for financings with similar terms and maturities. Note 18— Commitments and Contingencies Product liability The Company and its subsidiaries face an inherent business risk of exposure to product liability claims arising from the alleged failure of our products to prevent the types of personal injury or death against which they are designed to protect. Single incident product liability claims. Single incident product liability claims involve incidents of short duration that are typically known when they occur and involve observable injuries, which provide an objective basis for quantifying damages. Management has established reserves for the single incident product liability claims of the Company's various subsidiaries, including asserted single incident product liability claims and incurred but not reported ("IBNR") single incident claims. 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. Cumulative trauma product liability claims. Cumulative trauma product liability claims involve alleged exposures to harmful substances (e.g., silica, asbestos and coal dust) that occurred years ago and may have developed over long periods of time into diseases such as silicosis, asbestosis, mesothelioma, or coal worker’s pneumoconiosis. A former subsidiary of the Company, Mine Safety Appliances Company, LLC ("MSA LLC"), which was divested on January 5, 2023, under a membership interest purchase agreement (the "Purchase Agreement") with Sag Main Holdings LLC (the "Purchaser"), as further described in the Company’s Current Report on Form 8-K filed on January 6, 2023, has been named as a defendant in various lawsuits related to such claims. These lawsuits mainly involve respiratory protection products allegedly manufactured and sold by MSA LLC or its predecessors. -20- Table of Contents As MSA LLC was the obligor for the claims to which the Company's legacy cumulative trauma product liability reserves relate and policyholder of the related insurance assets, the rights and obligations related to these items remained with MSA LLC when it transferred to the Purchaser's ownership pursuant to the Purchase Agreement. In addition, pursuant to the Purchase Agreement, the Purchaser and MSA LLC have agreed to indemnify the Company and its affiliates for legacy cumulative trauma product liabilities and other product liabilities, and a subsidiary of the Company has agreed to indemnify MSA LLC for all other historical liabilities of MSA LLC. This indemnification is not subject to any cap or time limitation. In connection with the sale, the Company and its Board of Directors received a solvency opinion from an independent advisory firm that MSA LLC was solvent and adequately capitalized after giving effect to the transaction. Other Litigation Globe, a subsidiary of the Company, is defending claims in which plaintiffs assert that certain products allegedly containing per- and polyfluoroalkyl substances (“PFAS”) have caused harm, including injury or health issues. PFAS are a large class of substances that are widely used in everyday products. Specifically, Globe builds firefighter turnout gear from technical fabrics sourced from a small pool of specialty textile manufacturers. These protective fabrics have been tested and certified to meet current National Fire Protection Association safety standards, and some of them as supplied to Globe contain or historically have contained PFAS to achieve performance characteristics such as water, oil, or chemical resistance. Globe believes it has valid defenses to these claims. These matters are at a very early stage with numerous factual and legal issues to be resolved. Defense costs relating to these lawsuits are recognized in the unaudited Condensed Consolidated Statements of Income as incurred. Globe is also pursuing insurance coverage and indemnification related to the lawsuits. As of April 22, 2025, Globe was named as a defendant in 731 lawsuits comprised of 9,274 claims, predominantly styled as individual personal injury claims and including several 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 predominantly relating to Aqueous Film-Forming Foam. The purchaser 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 purchase agreement governing the Company's January 5, 2023, divestiture of MSA LLC. Further information about the transaction and the purchase agreement can be found in the Company’s Current Report on Form 8-K filed on January 6, 2023. Product Warranty The Company provides warranties on certain product sales. Product warranty reserves are established in the same period that revenue from the sale of the related products is recognized, or in the period that a specific issue arises as to the functionality of the Company's product. The determination of such reserves requires the Company to make estimates of product return rates and expected costs to repair or to replace the products under warranty. The amounts of the reserves are based on established terms and the Company's best estimate of the amounts necessary to settle future and existing claims on products sold as of the balance sheet date. If actual return rates and/or repair and replacement costs differ significantly from estimates, adjustments to recognize additional cost of sales may be required in future periods. The following table reconciles changes in the Company's accrued warranty reserve: (In thousands) Three Months Ended March 31, 2025 Year Ended December 31, 2024 Beginning warranty reserve $ 13,724 $ 14,288 Warranty payments ( 3,650 ) ( 11,802 ) Warranty claims, current 2,790 10,684 Warranty claims, preexisting 319 765 Currency translation and other adjustments 101 ( 211 ) Ending warranty reserve $ 13,284 $ 13,724 Warranty expense was $ 3.2 million and $ 2.1 million for the three months ended March 31, 2025, and 2024, respectively, and is included in Costs of products sold on the unaudited Condensed Consolidated Statements of Income. -21- Table of Contents