MSA Safety Inc 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis should be read in conjunction with the historical financial statements and other financial information included elsewhere in this quarterly report on Form 10-Q. This discussion may contain forward-looking statements that involve risks and uncertainties. The forward-looking statements are not historical facts, but rather are based on current expectations, estimates, assumptions and projections about our industry, business and future financial results. Our actual results could differ materially from the results contemplated by these forward-looking statements due to a number of factors, including but not limited to the effects of changes in U.S. trade policy and trade agreements, along with increased tariffs as well as those discussed in the sections of our annual report entitled “Forward-Looking Statements” and “Risk Factors,” and those discussed in our Form 10-Q quarterly reports filed after such annual report (such as in Part II, Item 1A, “Risk Factors.”) BUSINESS OVERVIEW MSA Safety Incorporated is the global leader in advanced safety products, technology and solutions. Driven by its singular mission of safety, the Company has been at the forefront of safety innovation since 1914, protecting workers and facility infrastructure around the world across a broad range of diverse end markets while creating sustainable value for shareholders. The Company's comprehensive product line, which is governed by rigorous safety standards across highly regulated industries, is used to protect workers and facility infrastructures around the world in a broad range of markets, including fire service, energy, utility, construction and industrial manufacturing applications as well as heating, ventilation, air conditioning and refrigeration ("HVAC-R"). The Company's principal product categories are fire service, detection and industrial personal protective equipment ("PPE"). Core products for fire service include self-contained breathing apparatus ("SCBA"), protective apparel and helmets; core products for detection include fixed gas and flame detection ("FGFD") systems and portable gas detection instruments; and core products for industrial PPE include industrial head protection and fall protection devices. In addition to its principal product categories, MSA continues to deploy and grow its MSA+™ solution, a business approach that combines MSA hardware, software, and services to simplify safety operations for customers and deliver recurring revenue. A detailed listing of our significant product offerings in the aforementioned product groups above is included in MSA's Annual Report on Form 10-K for the year ended December 31, 2024. We tailor our product and solution offerings and distribution strategy to satisfy distinct customer preferences that vary across geographic regions. To best serve these customer preferences, we have organized our business into four geographical operating segments that are aggregated into three reportable segments: Americas, International and Corporate. Americas. Our largest manufacturing and research and development facilities are located in the United States. We serve our markets across the Americas with manufacturing facilities in the U.S., Mexico and Brazil. Operations in the other countries within the Americas segment focus primarily on sales and distribution in their respective home country markets. International. Our International segment includes companies in Europe, the Middle East and Africa ("EMEA") and the Asia Pacific region. In our largest International subsidiaries (Germany, France, U.K., Ireland and China), we develop, manufacture and sell a wide variety of products. In China, the products manufactured are sold primarily in China as well as in regional markets. Operations in other International segment countries focus primarily on sales and distribution in their respective home country markets. Although some of these companies may perform limited production, most of their sales are of products manufactured in our plants in Germany, France, the U.S., U.K., Ireland, Morocco and China or are purchased from third-party vendors. Corporate. The Corporate segment primarily consists of general and administrative expenses incurred in our corporate headquarters, costs associated with corporate development initiatives, legal expense, interest expense, foreign exchange gains or losses and other centrally-managed costs. 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 $189 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. -26- Table of Contents RESULTS OF OPERATIONS Three Months Ended September 30, 2025, Compared to Three Months Ended September 30, 2024 Net Sales Three Months Ended September 30, Dollar Increase Percent Increase (In millions, except percentage change) 2025 2024 Consolidated $468.4 $432.7 $35.7 8.3% Americas 313.3 299.5 13.8 4.6% International 155.1 133.2 21.9 16.4% Net Sales. 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 September 30, 2025 versus September 30, 2024 (Percent Change) Americas International Consolidated GAAP reported sales change 4.6% 16.4% 8.3% Currency translation effects (0.4)% (4.0)% (1.5)% Less: Acquisitions (1.7)% (7.5)% (3.6)% Organic sales change 2.5% 4.9% 3.2% Note: Organic sales change is a non-GAAP financial measure. See the "Non-GAAP Financial Measures" section below. 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 $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. 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 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 $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. -27- Table of Contents 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 September 30, 2025 versus September 30, 2024 (Percent Change) Consolidated GAAP reported change 8.1% Currency translation effects (1.7)% Acquisitions and related strategic transaction costs (7.4)% Organic change (1.0)% Note: 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 $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 $20.2 million and $19.9 million during the third quarter of September 30, 2025, and 2024, respectively. Restructuring charges . 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 $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. 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 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 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. -28- Table of Contents 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 Three months ended September 30, 2025 Net sales $ 313,350 $ 155,095 $ — $ 468,445 GAAP operating income 94,310 Adjusted operating income (loss) 88,680 24,834 (9,773) 103,741 Adjusted operating margin % 28.3 % 16.0 % Adjusted EBITDA 98,656 29,831 (9,553) 118,934 Adjusted EBITDA % 31.5 % 19.2 % Three months ended September 30, 2024 Net sales $ 299,497 $ 133,182 $ — $ 432,679 GAAP operating income 91,477 Adjusted operating income (loss) 91,822 18,174 (12,081) 97,915 Adjusted operating margin % 30.7 % 13.6 % Adjusted EBITDA 101,339 22,119 (11,853) 111,605 Adjusted EBITDA % 33.8 % 16.6 % Note: 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: Three Months Ended September 30, (In thousands) 2025 2024 Adjusted EBITDA $ 118,934 $ 111,605 Less: Depreciation and amortization 15,193 13,690 Adjusted operating income $ 103,741 $ 97,915 Less: Currency exchange losses, net 3,875 2,985 Restructuring charges (Note 4) 58 1,184 Acquisition-related amortization 3,595 2,269 Transaction costs (a) 1,903 — GAAP operating income $ 94,310 $ 91,477 Less: Interest expense 8,416 9,153 Other income, net (6,562) (5,833) Income before income taxes 92,456 88,157 Provision for income taxes 22,843 21,509 Net income $ 69,613 $ 66,648 (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. -29- Table of Contents Total other expense, net. 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 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. 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 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 . 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. -30- Table of Contents Nine Months Ended September 30, 2025, Compared to Nine Months Ended September 30, 2024 Net Sales. 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 Nine Months Ended September 30, Dollar Increase Percent Increase (In millions, except percentage change) 2025 2024 Consolidated $1,363.9 $1,308.4 $55.5 4.2% Americas 926.6 909.7 16.9 1.9% International 437.3 398.7 38.6 9.7% Net Sales Nine Months Ended September 30, 2025 versus September 30, 2024 (Percent Change) Americas International Consolidated GAAP reported sales change 1.9% 9.7% 4.2% Currency translation effects 0.8% (2.0)% —% Acquisitions (1.0)% (4.4)% (2.0)% Organic change 1.7% 3.3% 2.2% Note: Organic sales change is a non-GAAP financial measure. See the "Non-GAAP Financial Measures" section below. 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 $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. 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 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 $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%. 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. -31- Table of Contents 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 Nine Months Ended September 30, 2025 versus September 30, 2024 (Percent Change) Consolidated GAAP reported change 4.9% Currency translation effects (0.2)% Less: Acquisitions and related strategic transaction costs (6.6)% Organic change (1.9)% Note: 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 $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. 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 $59.6 million and $59.7 million during the nine months ended September 30, 2025, and 2024, respectively. Restructuring charges . 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 $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. 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 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 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 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. -32- Table of Contents 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 Nine months ended September 30, 2025 Net sales $ 926,649 $ 437,251 $ — $ 1,363,900 GAAP operating income 257,933 Adjusted operating income (loss) 260,694 63,699 (31,718) 292,675 Adjusted operating margin % 28.1 % 14.6 % Adjusted EBITDA 290,434 77,217 (30,739) 336,912 Adjusted EBITDA % 31.3 % 17.7 % Nine months ended September 30, 2024 Net sales $ 909,745 $ 398,698 $ — $ 1,308,443 GAAP operating income 271,533 Adjusted operating income (loss) 276,523 55,944 (38,353) 294,114 Adjusted operating margin % 30.4 % 14.0 % Adjusted EBITDA 305,276 67,215 (37,702) 334,789 Adjusted EBITDA % 33.6 % 16.9 % Note: 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: Nine Months Ended September 30, (In thousands) 2025 2024 Adjusted EBITDA $ 336,912 $ 334,789 Less: Depreciation and amortization 44,237 40,675 Adjusted operating income $ 292,675 $ 294,114 Less: Currency exchange losses, net 13,237 4,715 Restructuring charges (Note 4) 2,470 5,744 Acquisition-related amortization 9,033 6,888 Transaction costs (a) 10,002 234 Net cost for product-related legal matter — 5,000 GAAP operating income $ 257,933 $ 271,533 Less: Interest expense 23,368 29,556 Other income, net (18,585) (16,215) Income before income taxes 253,150 258,192 Provision for income taxes 61,159 61,171 Net income $ 191,991 $ 197,021 (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. -33- Table of Contents Total other expense, net. 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 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 . 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 This report includes certain non-GAAP financial measures and operating ratios derived from non-GAAP financial measures. These financial measures and ratios include organic (referred to in our historical filings as constant currency) sales change, organic SG&A change, adjusted operating income (loss), adjusted operating margin %, adjusted EBITDA and adjusted EBITDA margin %. Organic sales and SG&A change are non-GAAP financial measures provided by the Company to give a better understanding of the Company's underlying business performance. Organic sales and SG&A change are calculated by deducting the percentage impact from currency translation effects as well as the impact from acquisitions and divestitures completed in the preceding 12 months from the overall percentage change in net sales and SG&A. The Company believes that organic sales and SG&A change are useful metrics for investors, as foreign currency translation can have a material impact on revenue and SG&A trends. Organic sales and SG&A change highlight ongoing business performance excluding the impact of fluctuating foreign currencies, acquisitions and divestitures. 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, 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; interest expense; other income, net; and provision for income taxes. 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 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. The non-GAAP financial measures and key performance indicators we use, and computational methods with respect thereto, may differ from the non-GAAP financial measures and key performance indicators, and computational methods, that our peers use to assess their performance and trends. The presentation of these non-GAAP financial measures does not comply with U.S. GAAP. These non-GAAP financial measures should be viewed as supplemental in nature, and not as a substitute for, or superior to, our reported results prepared in accordance with GAAP. -34- Table of Contents LIQUIDITY AND CAPITAL RESOURCES Our main source of liquidity is operating cash flows, supplemented by borrowings. 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. 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 $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 $239.9 million during the nine months ended September 30, 2025, compared to using $39.7 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 nine months ended September 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 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. -35- Table of Contents CUMULATIVE TRANSLATION ADJUSTMENTS The position of the U.S. 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 $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 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 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. Please refer to Note 19—Commitments and Contingencies to the unaudited condensed consolidated financial statements in Part I Item 1 of this Form 10-Q for further discussion on the Company's single incident and cumulative trauma product liabilities. CRITICAL ACCOUNTING POLICIES AND ESTIMATES We prepare our unaudited condensed consolidated financial statements in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"). The preparation of these unaudited condensed consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and the related disclosures. We evaluate these estimates and judgments on an on-going basis based on historical experience and various assumptions that we believe to be reasonable under the circumstances. However, different amounts could be reported if we had used different assumptions and in light of different facts and circumstances. Actual amounts could differ from the estimates and judgments reflected in our unaudited condensed consolidated financial statements. The more critical judgments and estimates used in the preparation of our unaudited condensed consolidated financial statements are discussed in Item 7. 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 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 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 Refer to Note 1—Basis of Presentation to the unaudited condensed consolidated financial statements in Part I Item 1 of this Form 10-Q for further information regarding recently adopted and recently issued accounting standards. -36- Table of Contents