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Item 2. Management’s Discussion and Analysis

2025-08-05 compared with 2025-05-01 · 211 added, 68 removed, 147 unchanged (65% of the section changed)

29 unchanged sentences

Corporate general and administrative costs comprise the majority of the expense in the Corporate segment.

On May 6, 2025, we acquired M&C TechGroup and its affiliated companies ("M&C") in a transaction valued at approximately $188 million, net of cash acquired.

Headquartered in Ratingen, Germany, M&C provides a comprehensive range of gas analysis systems that detect, measure and monitor gases in critical environments.

M&C’s product portfolio includes systems and solutions for gas sampling, gas conditioning, as well as advanced process control.

Refer to Note 15—Acquisitions to the unaudited condensed consolidated financial statements in Part I Item 1 of this Form 10-Q for further information.

RESULTS OF OPERATIONS

Three Months Ended March 31, 2025, Compared to Three Months Ended March 31, 2024

Net Sales Three Months Ended March 31, Dollar

(Decrease) Percent

Three Months Ended June 30, 2025, Compared to Three Months Ended June 30, 2024

Net Sales Three Months Ended June 30, Dollar

Increase Percent

(In millions, except percentage change) 2025 2024

2 unchanged sentences

International 154.0 147.8 6.2 4.2%

Net sales for the three months ended March 31, 2025, were $421.3 million, an increase of $8.0 million, or 1.9%, compared to $413.3 million in the same period last year and included approximately $10.0 million of sales pulled forward into the quarter in consideration of tariffs.

Net sales for the three months ended June 30, 2025, were $474.1 million, an increase of $11.6 million, or 2.5%, compared to $462.5 million in the same period of 2024.

Please refer to the Net Sales table below for a reconciliation of the quarter over quarter sales change.

Net Sales Three Months Ended

March 31, 2025 versus March 31, 2024

June 30, 2025 versus June 30, 2024

(Percent Change) Americas International Consolidated

1 unchanged sentence

Currency translation effects 1.1% (3.6)% (0.4)%

Acquisitions (1.2)% (4.7)% (2.3)%

Organic sales change 1.6% (4.1)% (0.2)%

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See the "Non-GAAP Financial Measures" section below.

Net sales for the Americas segment were $293.1 million in the first quarter of 2025, a decrease of $2.4 million, or 0.8%, compared to $295.5 million in the first quarter of 2024.

Organic sales in the Americas segment increased 1.0% during the period, driven by growth in detection and industrial PPE partially offset by a decrease in fire service.

Net sales for the International segment were $128.2 million in the first quarter of 2025, an increase of $10.4 million, or 8.8%, compared to $117.8 million for the first quarter of 2024.

Organic sales in the International segment increased 10.9% during the period, driven by growth in detection and fire service partially offset by a modest decline in industrial PPE.

Net sales for the Americas segment were $320.1 million in the second quarter of 2025, an increase of $5.4 million, or 1.7%, compared to $314.7 million in the same period of 2024.

Organic sales in the Americas segment increased 1.6% during the period, driven by growth in detection partially offset by a decrease in fire service and a modest decline in industrial PPE.

M&C added $3.6 million of sales to the Americas segment during the period.

Net sales for the International segment were $154.0 million in the second quarter of 2025, an increase of $6.2 million, or 4.2%, compared to $147.8 million in the same period of 2024.

Organic sales in the International segment decreased 4.1% during the period, driven by declines in fire service, detection and industrial PPE.

M&C added $7.3 million of sales to the International segment during the period.

We maintain our low single-digit full-year organic sales growth outlook.

The business remains healthy, supported by stable order trends into April.

Our broad diversification across products, geographies, and markets, along with favorable underlying market trends in the safety industry, and a strong commercial pipeline, provides confidence as we move forward.

There has been increased macroeconomic uncertainty driven by global tariff policies which could present risk to our growth outlook.

Our business remains healthy, supported by stable order trends.

Ongoing macroeconomic factors including tariff-related uncertainty and the timing of the National Fire Protection Association (NFPA) standard approval process could present risk to our growth outlook.

Refer to Note 9—Segment Information to the unaudited condensed consolidated financial statements in Part I Item 1 of this Form 10-Q, for information regarding sales by product group.

Gross profit .

Gross profit for the first quarter of 2025 was $193.4 million, a decrease of $2.1 million or 1.1%, compared to $195.5 million for the first quarter of 2024.

The ratio of gross profit to net sales was 45.9% in the first quarter of 2025 compared to 47.3% in the same quarter last year.

The decrease in gross profit margin is related to transactional foreign currency headwinds and inflation partially offset by higher sales volume, price realization and favorable product mix.

While we are taking actions to mitigate tariffs and foreign exchange pressures, we may not be able to offset all the headwinds in the near term.

We will remain agile in this dynamic environment if the operating landscape significantly diverges from our expectations.

Gross profit for the second quarter of 2025 was $220.7 million, a decrease of $2.3 million or 1.0%, compared to $223.0 million in the same period of 2024.

The ratio of gross profit to net sales was 46.6% in the second quarter of 2025 compared to 48.2% in the same quarter last year.

The decrease in gross profit margin is related to inflation and transactional foreign currency headwinds and to a lesser extent lower organic volumes and the early impacts of tariffs partially offset by price realization and improved productivity.

We expect FX and tariff pressure on gross profit to continue in the second half of the year.

Selling, general and administrative expenses.

Selling, general and administrative ("SG&A") expenses were $94.0 million during the first quarter of 2025, a decrease of $0.2 million or 0.2%, compared to $94.2 million for the first quarter of 2024.

SG&A expenses were 22.3% of net sales during the first quarter of 2025, compared to 22.8% of net sales during the same period in 2024.

Organic SG&A increased by approximately $1.2 million or 1.3%.

The increase in SG&A was driven by inflation, higher commission expense on double-digit detection growth and corporate development-related costs, partially offset by discretionary expense management and $3 million of favorable discrete adjustments in the current quarter primarily related to variable compensation.

Selling, general and administrative ("SG&A") expenses were $112.1 million during the second quarter of 2025, an increase of $7.0 million or 6.7%, compared to $105.1 million in the same period of 2024.

SG&A expenses were 23.6% of net sales during the second quarter of 2025, compared to 22.7% of net sales in the same period of 2024.

SG&A includes $4.1 million of expenses associated with M&C operations and $6.6 million of strategic transaction costs related to the acquisition.

Organic SG&A decreased by approximately $5.3 million or 5.0%.

The decrease in SG&A was driven primarily by the absence of the net cost for product related legal matter from the prior year.

Other drivers of SG&A efficiency include discretionary expense management and lower professional service costs offset by inflation and higher sales commission expense on detection growth.

Please refer to the SG&A expenses table below for a reconciliation of the quarter over quarter expense change.

Selling, general, and administrative expenses Three Months Ended

March 31, 2025 versus March 31, 2024

June 30, 2025 versus June 30, 2024

(Percent Change) Consolidated

1 unchanged sentence

Currency translation effects (0.8)%

Acquisitions and related strategic transaction costs (10.9)%

Organic change (5.0)%

2 unchanged sentences

Research and development expense .

Research and development expense was $15.7 million during the first quarter of 2025, a decrease of $0.2 million, compared to $15.9 million during the first quarter of 2024.

Research and development expense was 3.7% of net sales in the first quarter of 2025 and 3.9% in the first quarter of 2024.

During the first quarter of 2025 and 2024, we capitalized $3.3 million and $3.4 million of software development costs, respectively.

Depreciation expense for capitalized software development costs of $2.9 million and $2.7 million for the first quarter of 2025 and 2024, respectively, was recorded in Costs of products sold on the unaudited Condensed Consolidated Statements of Income.

MSA remains committed to dedicating significant resources to research and development activities, including the recently announced MSA ® G1 ™ SCBA XR Edition and all-new Globe ® G-XTREME ® PRO Jacket.

Research and development expense was $17.0 million during the second quarter of 2025, a decrease of $0.1 million, compared to $17.1 million in the same period of 2024.

Research and development expense was 3.6% of net sales in the second quarter of 2025 and 3.7% in the second quarter of 2024.

During both the second quarter of 2025 and 2024, we capitalized $3.4 million of software development costs.

Depreciation expense for capitalized software development costs of $3.1 million and $2.8 million for the second quarter of 2025 and 2024, respectively, was recorded in Costs of products sold on the unaudited Condensed Consolidated Statements of Income.

MSA remains committed to dedicating significant resources to research and development activities, including the recently announced MSA ® G1 ™ SCBA XR Edition and Globe's all new G-XTREME ® PRO Jacket.

As we continue to invest a significant portion of our new product development into technology-based safety solutions, we anticipate that the historical relationship of research and development expense and capitalized software development costs to net sales will continue to evolve;

however, we do not anticipate reductions in the relative level of total spend on research and development activities on an annual basis.

Total spend on both software development and research and development activities was $19.0 million and $19.3 million during the first quarter of March 31, 2025, and 2024, respectively.

Total spend on both software development and research and development activities was $20.4 million and $20.5 million during the second quarter of June 30, 2025, and 2024, respectively.

Restructuring charges .

Restructuring charges of $1.9 million during the first quarter of 2025 were primarily related to initiatives to right-size the organization in response to macroeconomic conditions and ongoing initiatives to optimize our manufacturing footprint and improve productivity.

Restructuring charges of $3.0 million during the first quarter of 2024 were primarily related to management restructuring and initiatives to adjust our cost structure and optimize our manufacturing footprint.

Restructuring charges of $0.5 million during the second quarter of 2025 were primarily related to initiatives to right-size the organization in response to macroeconomic conditions.

Restructuring charges of $1.5 million in the same period of 2024 were primarily related to initiatives to optimize our manufacturing footprint and improve productivity.

Currency exchange .

Currency exchange losses were $4.1 million in the first quarter of 2025 compared to $2.3 million in the first quarter of 2024.

The currency exchange activity for both periods related primarily to foreign currency exposure on unsettled inter-company balances and recognized exchange loss for our Argentina affiliate operating in a hyper-inflationary environment.

Currency exchange losses were $5.3 million in the second quarter of 2025 compared to exchange gains of $0.6 million in the same period of 2024.

The currency exchange activity for both periods related primarily to foreign currency exposure on unsettled inter-company balances.

Refer to Note 17—Derivative Financial Instruments to the unaudited condensed consolidated financial statements in Part I Item 1 of this Form 10-Q, for information regarding our currency exchange rate risk management strategy.

GAAP operating income.

Consolidated operating income for the first quarter of 2025 was $77.8 million compared to $80.1 million in the same period last year.

The decrease in operating income was primarily driven by lower gross profit and increased currency exchange losses, partially offset by lower restructuring charges as discussed further above.

Consolidated operating income for the second quarter of 2025 was $85.9 million compared to $99.9 million in same period of 2024.

The decrease in operating income was primarily driven by an increase in SG&A expense due to the M&C acquisition and related strategic transaction costs, increased currency exchange losses and lower gross profit, partially offset by lower restructuring charges as discussed further above.

Adjusted operating income.

Americas adjusted operating income for the first quarter of 2025 was $78.7 million, a decrease of $7.5 million or 8.7% compared to $86.2 million in the prior year first quarter.

The decrease in adjusted operating income is attributable to lower sales and gross profit partially offset by a decline in SG&A expenses.

International adjusted operating income for the first quarter of 2025 was $18.7 million, an increase of $5.2 million, or 38.7%, compared to $13.5 million in the prior year first quarter.

The increase in adjusted operating income is attributable to higher sales volumes and higher gross profit driven by productivity improvements and pricing partially offset by higher SG&A expense.

Corporate segment adjusted operating loss for the first quarter of 2025 was $9.9 million, a decrease of $1.8 million, compared to an adjusted operating loss of $11.7 million in the first quarter of 2024, driven by lower variable compensation partially offset by inflation.

Americas adjusted operating income for the second quarter of 2025 was $93.3 million, a decrease of $5.2 million or 5.2% compared to $98.5 million in the same period of 2024.

The decrease in adjusted operating income is attributable to lower gross profit and higher SG&A expense.

International adjusted operating income for the second quarter of 2025 was $20.2 million, a decrease of $4.1 million, or 17.0%, compared to $24.3 million in the same period of 2024.

The decrease in adjusted operating income is attributable to lower sales and gross profit as well as higher SG&A expense.

Corporate segment adjusted operating loss for the second quarter of 2025 was $12.0 million, a decrease of $2.6 million, compared to an adjusted operating loss of $14.6 million in the same period of 2024, driven by decreased professional service fees and other discretionary expense management partially offset by inflation.

The following tables present a summary of adjusted operating income (loss), adjusted operating margin %, adjusted EBITDA and adjusted EBITDA % by reportable segment.

1 unchanged sentence

(In thousands) Americas International Corporate Consolidated

Three months ended March 31, 2025

Three months ended June 30, 2025

Net sales $ 320,139 $ 153,977 $ — $ 474,116

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Adjusted EBITDA % 32.3 % 16.0 %

Three months ended March 31, 2024

Three months ended June 30, 2024

Net sales $ 314,711 $ 147,752 $ — $ 462,463

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A reconciliation of total adjusted EBITDA and total adjusted operating income from reportable segments to net income is presented in the following table:

Three Months Ended March 31,

Three Months Ended June 30,

(In thousands) 2025 2024

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Restructuring charges (Note 4) 488 1,543

Currency exchange losses (gains), net 5,286 (603)

Acquisition-related amortization 3,153 2,306

Transaction costs (a)

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

GAAP operating income $ 85,862 $ 99,944

Interest expense 8,116 9,664

Other income, net (5,000) (4,148)

Income before income taxes 82,746 94,428

Provision for income taxes 19,973 22,194

Net income $ 62,773 $ 72,234

(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 other expense, net.

Total other expense, net, for the second quarter of 2025 was $3.1 million, compared to $5.5 million for the same period of 2024, driven primarily by decreased interest expense related to lower interest rates as well as increased pension income driven by a higher expected rate of return.

Income taxes.

The reported effective tax rate for the second quarter of 2025 was 24.1% compared to 23.5% in the same period of 2024.

The increase from the prior year was primarily driven by an increase in state income taxes and nondeductible executive compensation.

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.

On July 4, 2025, the United States enacted into law the One, Big, Beautiful Bill Act ("the Act").

The Act makes permanent key elements of the Tax Cuts and Jobs Act, including 100% bonus depreciation, domestic research cost expensing, and the business interest expense limitation.

The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027.

The Company is currently assessing the impact of these provisions on our consolidated financial statements, including the potential effects on current and deferred income tax balances.

Net income was $62.8 million for the second quarter of 2025, or $1.59 per diluted share, compared to $72.2 million, or $1.83 per diluted share, in the same period of 2024.

Six Months Ended June 30, 2025, Compared to Six Months Ended June 30, 2024

Net sales for the six months ended June 30, 2025, were $895.5 million, an increase of $19.7 million, or 2.2%, compared to $875.8 million in the same period of 2024.

Please refer to the Net Sales table for a reconciliation of the period over period sales change.

Net Sales Six Months Ended June 30, Dollar

Increase Percent

(In millions, except percentage change) 2025 2024

Consolidated $895.5 $875.8 $19.7 2.2%

Americas 613.3 610.2 3.1 0.5%

International 282.2 265.5 16.7 6.3%

Net Sales Six Months Ended

June 30, 2025 versus June 30, 2024

(Percent Change) Americas International Consolidated

GAAP reported sales change 0.5% 6.3% 2.2%

Currency translation effects 1.4% (1.2)% 0.7%

Acquisitions (0.6)% (2.6)% (1.2)%

Organic change 1.3% 2.5% 1.7%

Organic sales change is a non-GAAP financial measure.

See the "Non-GAAP Financial Measures" section below.

Net sales for the Americas segment were $613.3 million in the six months ended June 30, 2025, an increase of $3.1 million, or 0.5%, compared to $610.2 million in the same period of 2024.

Organic sales in the Americas segment increased 1.3% during the period, driven by growth in detection and industrial PPE partially offset by a decrease in fire service.

M&C added $3.6 million of sales to the Americas segment during the period.

Net sales for the International segment were $282.2 million in the six months ended June 30, 2025, an increase of $16.7 million, or 6.3%, compared to $265.5 million in the same period of 2024.

Organic sales in the International segment increased 2.5% during the period, driven by growth in detection and fire service partially offset by a modest decline in industrial PPE.

M&C added $7.3 million of sales to the International segment during the period.

Refer to Note 9—Segment Information to the unaudited condensed consolidated financial statements in Part I Item 1 of this Form 10-Q, for information regarding sales by product group.

Gross profit .

Gross profit for the six months ended June 30, 2025, was $414.1 million, a decrease of $4.5 million or 1.1%, compared to $418.6 million in the same period of 2024.

The ratio of gross profit to net sales was 46.2% during the six months ended June 30, 2025 compared to 47.8% in the same period of 2024.

We expect FX and tariff pressure on gross profit to continue in the second half of the year.

Selling, general and administrative expenses.

SG&A expenses were $206.0 million during the six months ended June 30, 2025, an increase of $6.8 million or 3.4%, compared to $199.2 million in the same period of 2024.

Overall, SG&A expenses were 23.0% of net sales during the six months ended June 30, 2025, compared to 22.7% of net sales in the same period of 2024.

SG&A includes $4.1 million of expenses associated with M&C operations and $6.6 million of strategic transaction costs related to the acquisition.

Organic SG&A decreased $4.1 million or 2.0%.

The decrease in SG&A was driven primarily by the absence of the net cost for product related legal matter from the prior year.

Other drivers of SG&A efficiency include discretionary expense management and lower professional service costs offset inflation and higher sales commission expense on double-digit detection growth.

Please refer to the selling, general, and administrative expenses table for a reconciliation of the period over period expense change.

Selling, general, and administrative expenses Six Months Ended

June 30, 2025 versus June 30, 2024

(Percent Change) Consolidated

GAAP reported change 3.4%

Currency translation effects 0.3%

Acquisitions and related strategic transaction costs (5.7)%

Organic change (2.0)%

Organic SG&A change is a non-GAAP financial measure.

See the "Non-GAAP Financial Measures" section below.

Research and development expense .

Research and development expense was $32.7 million during the six months ended June 30, 2025, a decrease of $0.3 million, compared to $33.0 million in the same period of 2024.

Research and development expense was 3.6% of net sales in the six months ended June 30, 2025 and 3.8% of net sales in the same period of 2024.

During the six months ended June 30, 2025 and 2024, we capitalized $6.7 million and $6.8 million of software development costs, respectively.

Depreciation expense for capitalized software development costs of $6.0 million and $5.5 million during the six months ended June 30, 2025 and 2024, respectively, was recorded in costs of products sold on the unaudited Condensed Consolidated Statements of Income.

MSA remains committed to dedicating significant resources to research and development activities, including the recently announced MSA G1 SCBA XR Edition and Globe's all new G-XTREME PRO Jacket.

however, we do not anticipate reductions in the relative level of total spend on research and development activities on an annual basis.

Total spend on both software development and research and development activities was $39.4 million and $39.8 million during the six months ended June 30, 2025, and 2024, respectively.

Restructuring charges .

Restructuring charges of $2.4 million during the six months ended June 30, 2025 were primarily related initiatives to right-size the organization in response to macroeconomic conditions and ongoing initiatives to optimize our manufacturing footprint and improve productivity.

Restructuring charges of $4.6 million in the same period of 2024 related to our ongoing initiatives to optimize our manufacturing footprint and improve productivity as well as management restructuring.

Currency exchange .

Currency exchange losses were $9.4 million during the six months ended June 30, 2025, compared to $1.7 million in the same period of 2024.

The currency exchange activity for both periods related primarily to foreign currency exposure on unsettled inter-company balances.

GAAP operating income.

Consolidated operating income for the six months ended June 30, 2025, was $163.6 million compared to $180.1 million in the same period of 2024.

The decrease in operating results was primarily driven by lower gross profit and increased SG&A expenses and currency exchange losses, partially offset by lower restructuring charges as discussed further above.

Adjusted operating income.

Americas adjusted operating income for the six months ended June 30, 2025 was $172.0 million, a decrease of $12.7 million, or 6.9%, compared to $184.7 million in the same period of 2024.

The decrease in adjusted operating income is attributable to lower gross profit.

International adjusted operating income was $38.9 million, an increase of $1.1 million, or 2.9%, compared to $37.8 million in the same period of 2024.

Higher sales volumes and higher gross profit driven by productivity improvements and pricing were partially offset by higher SG&A expense.

Corporate segment adjusted operating loss for the six months ended June 30, 2025, was $21.9 million, a decrease of $4.4 million compared to an adjusted operating loss of $26.3 million in the same period of 2024 driven by decreased professional service fees and other discretionary expense management partially offset by inflation.

The following tables present a summary of adjusted operating income (loss), adjusted operating margin %, adjusted EBITDA and adjusted EBITDA % by reportable segment.

Adjusted operating margin % is calculated as adjusted operating income (loss) divided by net sales and adjusted EBITDA margin % is calculated as adjusted EBITDA divided by net sales.

(In thousands) Americas International Corporate Consolidated

Six months ended June 30, 2025

Net sales $ 613,299 $ 282,157 $ — $ 895,456

GAAP operating income 163,623

Adjusted operating income (loss) 172,014 38,866 (21,944) 188,936

Adjusted operating margin % 28.0 % 13.8 %

Adjusted EBITDA 191,779 47,387 (21,187) 217,979

Adjusted EBITDA % 31.3 % 16.8 %

Six months ended June 30, 2024

Net sales $ 610,249 $ 265,516 $ — $ 875,765

GAAP operating income 180,056

Adjusted operating income (loss) 184,688 37,770 (26,258) 196,200

Adjusted operating margin % 30.3 % 14.2 %

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

Adjusted EBITDA % 33.4 % 17.0 %

Adjusted operating income (loss), adjusted operating margin %, adjusted EBITDA and Adjusted EBITDA margin % are non-GAAP financial measures and operating ratios derived from non-GAAP financial measures.

Refer to Note 9—Segment Information to the unaudited condensed consolidated financial statements in Part I Item 1 of this Form 10-Q for reconciliation of total adjusted operating income from reportable segments to income before income taxes and table below for reconciliation of adjusted EBITDA to net income.

See also the "Non-GAAP Financial Information" section below.

A reconciliation of total adjusted EBITDA and total adjusted operating income from reportable segments to net income is presented in the following table:

Six Months Ended June 30,

(In thousands) 2025 2024

Adjusted EBITDA $ 217,979 $ 223,185

Depreciation and amortization 29,043 26,985

Adjusted operating income $ 188,936 $ 196,200

Restructuring charges (Note 4) 2,412 4,560

Currency exchange losses, net 9,363 1,730

Amortization of acquisition-related intangible assets 2,286 2,314

Acquisition-related amortization 5,439 4,620

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

Transaction costs (a)

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

Total other (income) expense, net.

Total other income, net, for the first quarter of 2025 was $0.2 million, compared to other expense, net, of $4.5 million for the same period in 2024, driven primarily by decreased interest expense related to lower debt balances and interest rates as well as increased pension income driven by a higher expected rate of return.

Total other expense, net.

Total other expense, net, for the six months ended June 30, 2025 was $2.9 million, compared to $10.0 million in the same period of 2024, driven primarily by decreased interest expense related to lower interest rates as well as increased pension income driven by a higher expected rate of return.

Income taxes.

The reported effective tax rate for the first quarter of 2025 was 23.5% compared to 23.1% for the first quarter of 2024.

The increase from the prior year was primarily driven by an increase in state income taxes.

The reported effective tax rate for the six months ended June 30, 2025 was 23.8% compared to 23.3% in the same period of 2024.

The increase from the prior year was primarily driven by an increase in state income taxes and nondeductible executive compensation.

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

Net income was $59.6 million for the first quarter of 2025, or $1.51 per diluted share, compared to $58.1 million, or $1.47 per diluted share, for the same period last year.

Net income was $122.4 million for the six months ended June 30, 2025, or $3.10 per diluted share compared to net income of $130.4 million, or $3.30 per diluted share, in the same period of 2024.

Non-GAAP Financial Measures

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Adjusted operating income (loss), adjusted operating margin %, adjusted EBITDA and adjusted EBITDA margin % are non-GAAP financial measures and operating ratios derived from non-GAAP measures.

Total reportable segment adjusted operating income is reconciled above to the nearest GAAP financial measure, operating income, and excludes restructuring, currency exchange, transaction costs and acquisition-related amortization.

Total reportable segment adjusted operating income is reconciled above to the nearest GAAP financial measure, operating income, and excludes restructuring, currency exchange, net cost for product related legal matter, transaction costs and acquisition-related amortization.

Total reportable segment adjusted EBITDA is reconciled above to the nearest GAAP financial measure, net income and, in addition to the items summarized above that are excluded from adjusted operating income (loss), excludes depreciation and amortization expense;

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

Management uses these measures internally to assess and better understand our underlying business performance and trends related to core business activities as well as to makes strategic decisions about the business and allocate resources.

Management uses these measures internally to assess and better understand our underlying business performance and trends related to core business activities as well as to make strategic decisions about the business and allocate resources.

Additionally, these non-GAAP financial measures provide information useful to investors in understanding our operating performance and trends, and to facilitate comparisons with the performance of our peers.

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Our principal liquidity requirements are for working capital, capital expenditures, principal and interest payments on debt, dividend payments and share repurchases.

At March 31, 2025, approximately 60% of our long-term debt is at fixed interest rates with repayment schedules through 2036.

At June 30, 2025, approximately 44% of our long-term debt is at fixed interest rates with repayment schedules through 2036.

The remainder of our long-term debt is at variable rates on an unsecured revolving credit facility and a term loan, both due in 2026.

At March 31, 2025, approximately 90% of our borrowings are denominated in U.S.

At June 30, 2025, approximately 82% of our borrowings are denominated in U.S.

dollars, which limits our exposure to currency exchange rate fluctuations.

At March 31, 2025, the Company had cash and cash equivalents totaling $170.6 million and access to sufficient capital, providing ample liquidity and flexibility to continue to maintain our balanced capital allocation strategy that prioritizes growth investments, funding our dividends and servicing debt obligations.

Cash, cash equivalents and restricted cash increased $6.2 million during the three months ended March 31, 2025, compared to increasing $1.9 million during the same period in 2024.

At March 31, 2025, we had no borrowings outstanding under our $900.0 million senior revolving credit facility.

At June 30, 2025, the Company had cash and cash equivalents totaling $147.0 million and access to sufficient capital, providing ample liquidity and flexibility to continue to maintain our balanced capital allocation strategy that prioritizes growth investments, funding our dividends and servicing debt obligations.

Cash, cash equivalents and restricted cash decreased $17.2 million during the six months ended June 30, 2025, compared to increasing $0.4 million during the same period in 2024.

At June 30, 2025, we had $379.6 million borrowings outstanding under our $1.3 billion senior revolving credit facility.

The facility also provides an accordion feature that allows the Company to access an additional $500.0 million of capacity pending approval by MSA’s board of directors and from the bank group.

We believe MSA's healthy balance sheet and access to significant capital at March 31, 2025, positions us well to navigate through a dynamic operating environment and other unexpected events.

We believe MSA's healthy balance sheet and access to significant capital at June 30, 2025 positions us well to navigate through a dynamic operating environment and other unexpected events.

We maintain a balanced capital deployment strategy that focuses on investing for organic growth and pursuing inorganic growth opportunities, as well as returning cash to shareholders in the form of dividends and share buybacks.

Additionally, as disclosed in Note 13—Long-Term Debt to the unaudited condensed consolidated financial statements in Part I Item 1 of this Form 10-Q, on April 1, 2025, we entered into a Fifth Amended and Restated Credit Agreement that extended its term through April 1, 2030, and increased the capacity to $1.3 billion.

Operating activities.

Operating activities provided cash of $61.8 million during the three months ended March 31, 2025, compared to $50.9 million during the same period in 2024.

Operating activities provided cash of $129.1 million during the six months ended June 30, 2025, compared to $104.2 million during the same period in 2024.

The increased cash flow from operating activities was primarily related to lower cash used for variable compensation as compared to the prior year, partially offset by higher cash usage for working capital needs.

The working capital cash usage increase related primarily to accounts receivable, partially offset by lower cash usage for inventory and accounts payable.

The working capital cash usage increase related primarily to accounts receivable, partially offset by lower cash source from accounts payable and lower cash usage for inventory.

Investing activities.

Investing activities used cash of $10.8 million during the three months ended March 31, 2025, compared to using $11.2 million during the same period in 2024.

Investing activities used cash of $227.9 million during the six months ended June 30, 2025, compared to using $25.5 million during the same period in 2024.

The acquisition of M&C and capital expenditures, including a $19.6 million strategic footprint investment, drove the increase in cash outflows from investing activities during the six months ended June 30, 2025.

We remain committed to evaluating acquisition opportunities that will allow us to continue to grow in key end markets and geographies.

Financing activities.

Financing activities used cash of $45.6 million during the three months ended March 31, 2025, compared to $29.1 million during the same period in 2024.

During the three months ended March 31, 2025, we had net payments on long-term debt of $7.5 million as compared to $5.0 million during the same period in 2024.

We paid cash dividends of $20.0 million during the three months ended March 31, 2025, compared to $18.5 million in the same period in 2024.

We used cash of $18.3 million during the three months ended March 31, 2025, to repurchase shares, including $10.0 million related to our share repurchase program and the remainder related to our employee stock compensation transactions compared to $5.8 million in the same period in 2024, all of which related to our employee stock compensation programs.

Financing activities provided cash of $74.0 million during the six months ended June 30, 2025, compared to using cash of $67.7 million during the same period in 2024.

During the six months ended June 30, 2025, we had net proceeds on long-term debt of $165.2 million, used primarily to fund the M&C acquisition, as compared to net payments of $13.3 million during the same period in 2024.

We paid cash dividends of $40.9 million during the six months ended June 30, 2025, compared to $38.6 million in the same period in 2024.

We used cash of $48.9 million during the six months ended June 30, 2025, to repurchase shares, including $40.0 million related to our share repurchase program, compared to $16.8 million in the same period in 2024, including $10.0 million related to our share repurchase program.

The remainder in both periods related to our employee stock compensation programs.

CUMULATIVE TRANSLATION ADJUSTMENTS

The position of the U.S.

dollar relative to international currencies, primarily the euro and British pound, at March 31, 2025, resulted in a translation gain of $22.5 million being recorded to the cumulative translation adjustments shareholders' equity account during the three months ended March 31, 2025, compared to a $10.7 million translation loss being recorded to the cumulative translation adjustments shareholders' equity account during the same period in 2024.

dollar relative to international currencies, primarily the euro and British pound, at June 30, 2025, resulted in a translation gain of $66.7 million being recorded to the cumulative translation adjustments shareholders' equity account during the six months ended June 30, 2025, compared to a $19.5 million translation loss being recorded to the cumulative translation adjustments shareholders' equity account during the same period in 2024.

COMMITMENTS AND CONTINGENCIES

We made contributions of $1.8 million to our pension plans during the three months ended March 31, 2025.

We made contributions of $3.7 million to our pension plans during the six months ended June 30, 2025.

We expect to make net contributions between $6.0 million and $8.0 million to our pension plans in 2025, which are primarily associated with statutorily required plans in the International reporting segment.

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 senior revolving credit facility.

The Company had outstanding bank guarantees and standby letters of credit with banks as of June 30, 2025, totaling $10.3 million, of which $1.5 million relate to the senior revolving credit facility.

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

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

At March 31, 2025, the Company has $0.7 million of restricted cash in support of these arrangements.

At June 30, 2025, the Company has $1.0 million of restricted cash in support of these arrangements.

We have purchase commitments for materials, supplies, services, and property, plant and equipment as part of our ordinary conduct of business.

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Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2024.

During the second quarter of 2025 we made an acquisition that raised business combinations to a critical accounting policy and estimate used in the preparation of our consolidated financial statements.

Business Combinations

In accordance with the accounting guidance for business combinations, the Company uses the acquisition method of accounting to allocate costs of acquired businesses to the assets acquired and liabilities assumed based on their estimated fair values at the dates of acquisition.

The excess costs of acquired businesses over the fair values of the assets acquired and liabilities assumed will be recognized as goodwill.

The valuations of the acquired assets and liabilities will impact the determination of future operating results.

In addition to using management estimates and negotiated amounts, the Company uses a variety of information sources to determine the estimated fair values of acquired assets and liabilities including:

third-party appraisals for the estimated value and lives of identifiable intangible assets and property, plant and equipment;

third-party actuaries for the estimated obligations of defined benefit pension plans and similar benefit obligations;

and legal counsel or other experts to assess the obligations associated with legal, environmental and other contingent liabilities.

The business and technical judgment of management was used in determining which intangible assets have indefinite lives and in determining the useful lives of finite-lived intangible assets in accordance with the accounting guidance for goodwill and other intangible assets.

RECENTLY ADOPTED AND RECENTLY ISSUED ACCOUNTING STANDARDS

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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 2. Management’s Discussion and Analysis