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Item 2. Management’s Discussion and Analysis

2025-10-29 compared with 2025-08-05 · 111 added, 112 removed, 246 unchanged (48% of the section changed)

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RESULTS OF OPERATIONS

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

Net Sales Three Months Ended June 30, Dollar

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

Net Sales Three Months Ended September 30, Dollar

Increase Percent

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International 155.1 133.2 21.9 16.4%

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.

Net sales for the three months ended September 30, 2025, were $468.4 million, an increase of $35.7 million, or 8.3%, compared to $432.7 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

June 30, 2025 versus June 30, 2024

September 30, 2025 versus September 30, 2024

(Percent Change) Americas International Consolidated

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

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.

Net sales for the Americas segment were $313.3 million in the third quarter of 2025, an increase of $13.8 million, or 4.6%, compared to $299.5 million in the same period of 2024.

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

M&C added $5.3 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.

Net sales for the International segment were $155.1 million in the third quarter of 2025, an increase of $21.9 million, or 16.4%, compared to $133.2 million in the same period of 2024.

Organic sales in the International segment increased 4.9% during the period, driven by double-digit growth in industrial PPE and to a lesser extent detection partially offset by a decline in fire service.

M&C added $10.0 million of sales to the International segment during the period.

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

While our business remains healthy, the fourth quarter will be impacted by timing in the Fire Service market and the U.S.

government shutdown.

The timing of Assistance to Firefighter Grants (AFG) being released and approval of the next National Fire Protection Association standard remain key variables for the balance of the year that are beyond our control.

We are monitoring the status of the U.S.

government shutdown and analyzing how a prolonged shutdown could impact our business.

We believe a portion of our fourth quarter sales will be impacted by the AFG timing delay and the ongoing U.S.

government shutdown, with most of that impact in Fire Service.

We also continue to monitor evolving macroeconomic factors including tariffs and analyze how they could impact our business.

However, we expect continued momentum in Fall Protection and Detection as key performance tailwinds.

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 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.

Gross profit for the third quarter of 2025 was $217.6 million, an increase of $10.1 million or 4.9%, compared to $207.5 million in the same period of 2024.

The ratio of gross profit to net sales was 46.5% in the third quarter of 2025 compared to 47.9% in the same quarter last year.

The decrease in gross profit margin is primarily related to inflation and tariff impacts as well as to a lesser extent transactional foreign currency challenges and the additional amortization related to the M&C acquisition, partially offset by price realization.

Selling, general and administrative expenses.

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.

Selling, general and administrative ("SG&A") expenses were $102.9 million during the third quarter of 2025, an increase of $7.8 million or 8.1%, compared to $95.1 million in the same period of 2024.

SG&A expenses were 22.0% of net sales during both the third quarter of 2025 and 2024.

SG&A includes $5.4 million of expenses associated with M&C operations and $1.9 million of strategic transaction costs.

Organic SG&A decreased by approximately $0.9 million or 1.0% driven primarily by lower variable compensation and discretionary expense management partially 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

June 30, 2025 versus June 30, 2024

September 30, 2025 versus September 30, 2024

(Percent Change) Consolidated

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Research and development expense .

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.

Research and development expense was $16.5 million during the third quarter of 2025, a decrease of $0.2 million, compared to $16.7 million in the same period of 2024.

Research and development expense was 3.5% of net sales in the third quarter of 2025 and 3.9% in the third quarter of 2024.

During the third quarter of 2025 and 2024, we capitalized $3.7 million and $3.2 million of software development costs, respectively.

Depreciation expense for capitalized software development costs of $2.8 million and $2.7 million for the third 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 introduced ALTAIR io ™ 6 portable gas detector and V-Gard H2 ® full brim safety helmet.

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 $20.4 million and $20.5 million during the second quarter of June 30, 2025, and 2024, respectively.

Total spend on both software development and research and development activities was $20.2 million and $19.9 million during the third quarter of September 30, 2025, and 2024, respectively.

Restructuring charges .

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 $0.1 million during the third quarter of 2025 were primarily related to initiatives to right-size the organization in response to macroeconomic conditions.

Restructuring charges of $1.2 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 $5.3 million in the second quarter of 2025 compared to exchange gains of $0.6 million in the same period of 2024.

Currency exchange losses were $3.9 million in the third quarter of 2025 compared to $3.0 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.

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GAAP operating income.

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.

Consolidated operating income for the third quarter of 2025 was $94.3 million compared to $91.5 million in same period of 2024.

The increase in operating income was primarily related to the contribution from M&C.

Adjusted operating income.

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.

Americas adjusted operating income for the third quarter of 2025 was $88.7 million, a decrease of $3.1 million or 3.4% compared to $91.8 million in the same period of 2024.

The decrease in adjusted operating income is primarily attributable to higher SG&A expense.

International adjusted operating income for the third quarter of 2025 was $24.8 million, an increase of $6.6 million, or 36.6%, compared to $18.2 million in the same period of 2024.

The increase in adjusted operating income is attributable to higher sales volumes and the contribution from M&C.

Corporate segment adjusted operating loss for the third quarter of 2025 was $9.8 million, a decrease of $2.3 million, compared to an adjusted operating loss of $12.1 million in the same period of 2024, driven by decreased professional service fees and other discretionary expense management as well as decreased variable compensation 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.

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(In thousands) Americas International Corporate Consolidated

Three months ended June 30, 2025

Three months ended September 30, 2025

Net sales $ 313,350 $ 155,095 $ — $ 468,445

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Adjusted EBITDA % 31.5 % 19.2 %

Three months ended June 30, 2024

Three months ended September 30, 2024

Net sales $ 299,497 $ 133,182 $ — $ 432,679

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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 June 30,

Three Months Ended September 30,

(In thousands) 2025 2024

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Adjusted operating income $ 103,741 $ 97,915

Currency exchange losses, net 3,875 2,985

Restructuring charges (Note 4) 58 1,184

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

Acquisition-related amortization 3,595 2,269

Transaction costs (a)

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

GAAP operating income $ 94,310 $ 91,477

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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.

Total other expense, net, for the third quarter of 2025 was $1.9 million, compared to $3.3 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.

The reported effective tax rate for the third quarter of 2025 was 24.7% compared to 24.4% in the same period of 2024.

The increase from the prior year was primarily driven by discrete expense booked in the third quarter of 2025 related to the filing of prior period tax returns, partially offset by a discrete benefit booked in the third quarter of 2025 related to the statutory rate decrease in Germany.

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

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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.

The Act 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 and currently do not expect a material impact.

Net income was $69.6 million for the third quarter of 2025, or $1.77 per diluted share, compared to $66.6 million, or $1.69 per diluted share, in the same period of 2024.

Nine Months Ended September 30, 2025, Compared to Nine Months Ended September 30, 2024

Net sales for the nine months ended September 30, 2025, were $1,363.9 million, an increase of $55.5 million, or 4.2%, compared to $1,308.4 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

Net Sales Nine Months Ended September 30, Dollar

Increase Percent

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International 437.3 398.7 38.6 9.7%

Net Sales Six Months Ended

June 30, 2025 versus June 30, 2024

Net Sales Nine Months Ended

September 30, 2025 versus September 30, 2024

(Percent Change) Americas International Consolidated

5 unchanged sentences

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.

Net sales for the Americas segment were $926.6 million in the nine months ended September 30, 2025, an increase of $16.9 million, or 1.9%, compared to $909.7 million in the same period of 2024.

Organic sales in the Americas segment increased 1.7% during the period, driven by growth in detection and industrial PPE partially offset by a decrease in fire service.

M&C added $8.9 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.

Net sales for the International segment were $437.3 million in the nine months ended September 30, 2025, an increase of $38.6 million, or 9.7%, compared to $398.7 million in the same period of 2024.

Organic sales in the International segment increased 3.3% during the period, driven by growth in detection and industrial PPE.

M&C added $17.3 million of sales to the International segment during the period.

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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.

Gross profit for the nine months ended September 30, 2025, was $631.7 million, an increase of $5.7 million or 0.9%, compared to $626.0 million in the same period of 2024.

The ratio of gross profit to net sales was 46.3% during the nine months ended September 30, 2025 compared to 47.8% in the same period of 2024.

The decrease in gross profit margin is primarily related to inflation and transactional foreign currency challenges as well as to a lesser extent the impacts of tariffs and additional amortization related to the M&C acquisition partially offset by price realization and improved productivity.

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.

SG&A expenses were $308.9 million during the nine months ended September 30, 2025, an increase of $14.6 million or 4.9%, compared to $294.3 million in the same period of 2024.

Overall, SG&A expenses were 22.6% of net sales during the nine months ended September 30, 2025, compared to 22.5% of net sales in the same period of 2024.

SG&A includes $9.5 million of expenses associated with M&C operations and $10.0 million of strategic transaction costs.

Organic SG&A decreased $5.6 million or 1.9%.

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.

driven primarily by the absence of the net cost for product related legal matter from the prior year, lower variable compensation, discretionary expense management and lower professional service costs mostly offset by 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

Selling, general, and administrative expenses Nine Months Ended

September 30, 2025 versus September 30, 2024

(Percent Change) Consolidated

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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.

Research and development expense was $49.2 million during the nine months ended September 30, 2025, a decrease of $0.5 million, compared to $49.7 million in the same period of 2024.

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

During the nine months ended September 30, 2025 and 2024, we capitalized $10.4 million and $10.0 million of software development costs, respectively.

Depreciation expense for capitalized software development costs of $8.8 million and $8.2 million during the nine months ended September 30, 2025 and 2024, respectively, was recorded in costs of products sold on the unaudited Condensed Consolidated Statements of Income.

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.

Total spend on both software development and research and development activities was $59.6 million and $59.7 million during the nine months ended September 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 $2.5 million during the nine months ended September 30, 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 $5.7 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.

Currency exchange losses were $13.2 million during the nine months ended September 30, 2025, compared to $4.7 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.

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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.

Consolidated operating income for the nine months ended September 30, 2025, was $257.9 million compared to $271.5 million in the same period of 2024.

The decrease in operating results was primarily driven by increased SG&A expenses and currency exchange losses, partially offset by higher sales and 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.

Americas adjusted operating income for the nine months ended September 30, 2025 was $260.7 million, a decrease of $15.8 million, or 5.7%, compared to $276.5 million in the same period of 2024.

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

International adjusted operating income was $63.7 million, an increase of $7.8 million, or 13.9%, compared to $55.9 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.

Higher sales volumes and the contribution from M&C were partially offset by higher SG&A expense.

Corporate segment adjusted operating loss for the nine months ended September 30, 2025, was $31.7 million, a decrease of $6.7 million compared to an adjusted operating loss of $38.4 million in the same period of 2024 driven by decreased professional service fees and decreased variable compensation as well as 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.

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(In thousands) Americas International Corporate Consolidated

Six months ended June 30, 2025

Nine months ended September 30, 2025

Net sales $ 926,649 $ 437,251 $ — $ 1,363,900

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Adjusted EBITDA % 31.3 % 17.7 %

Six months ended June 30, 2024

Nine months ended September 30, 2024

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

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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:

Six Months Ended June 30,

Nine Months Ended September 30,

(In thousands) 2025 2024

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Adjusted operating income $ 292,675 $ 294,114

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

Currency exchange losses, net 13,237 4,715

Restructuring charges (Note 4) 2,470 5,744

Acquisition-related amortization 9,033 6,888

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

Transaction costs (a)

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

GAAP operating income $ 257,933 $ 271,533

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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.

Total other expense, net, for the nine months ended September 30, 2025 was $4.8 million, compared to $13.3 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 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.

The reported effective tax rate for the nine months ended September 30, 2025 was 24.2% compared to 23.7% in the same period of 2024.

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

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.

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.

Net income was $192.0 million for the nine months ended September 30, 2025, or $4.87 per diluted share compared to net income of $197.0 million, or $4.98 per diluted share, in the same period of 2024.

Non-GAAP Financial Measures

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Our main source of liquidity is operating cash flows, supplemented by borrowings.

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

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

At September 30, 2025, approximately 47% 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 due in 2030.

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

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

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 June 30, 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 September 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.

At September 30, 2025, the Company had cash and cash equivalents totaling $170.0 million.

Cash, cash equivalents and restricted cash increased $5.8 million during the nine months ended September 30, 2025, compared to increasing $6.6 million during the same period in 2024.

At September 30, 2025, $965.3 million of the existing $1.3 billion revolving credit facility was unused, including letters of credit issued under the facility.

Operating activities.

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 source from accounts payable and lower cash usage for inventory.

Operating activities provided cash of $241.5 million during the nine months ended September 30, 2025, compared to $188.5 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 and lower cash usage for working capital needs.

The working capital cash usage decrease related primarily to inventory, partially offset by higher cash use for accounts payable and accounts receivable.

Investing activities.

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.

Investing activities used cash of $239.9 million during the nine months ended September 30, 2025, compared to using $39.7 million during the same period in 2024.

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 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.

Financing activities provided cash of $2.2 million during the nine months ended September 30, 2025, compared to using cash of $136.2 million during the same period in 2024.

During the nine months ended September 30, 2025, we had net proceeds on long-term debt of $115.3 million, used primarily to fund the M&C acquisition, as compared to net payments of $51.0 million during the same period in 2024.

We paid cash dividends of $61.6 million during the nine months ended September 30, 2025, compared to $58.7 million in the same period in 2024.

We used cash of $50.0 million during the nine months ended September 30, 2025, to repurchase shares, including $40.0 million related to our share repurchase program, compared to $27.4 million in the same period in 2024, including $20.0 million related to our share repurchase program.

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

1 unchanged sentence

The position of the U.S.

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.

dollar relative to international currencies, primarily the euro and British pound, at September 30, 2025, resulted in a translation gain of $65.0 million being recorded to the cumulative translation adjustments shareholders' equity account during the nine months ended September 30, 2025, compared to a $1.8 million translation gain being recorded to the cumulative translation adjustments shareholders' equity account during the same period in 2024.

COMMITMENTS AND CONTINGENCIES

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

We made contributions of $5.7 million to our pension plans during the nine months ended September 30, 2025.

We expect to make net contributions between $7.0 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 June 30, 2025, totaling $10.3 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 September 30, 2025, totaling $10.4 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 June 30, 2025, the Company has $1.0 million of restricted cash in support of these arrangements.

At September 30, 2025, the Company has $0.9 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.

8 unchanged sentences

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.

During the nine months ended September 30, 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

10 unchanged sentences

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