MSA - Earnings call transcript Q4 2018 | MSA Safety Incorporated

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Operator

Good day, ladies and gentlemen, and welcome to the 2018 4Q earnings webcast. At this time all are in a listen only mode and the floor will be open for questions following the presentation. [Operator Instructions] And it is now my pleasure to introduce today's host, Elyse Lorenzato, Director of Investor Relations. Please begin.

Elyse Lorenzato

Thank you, Kelly. welcome XXXX. Fourth and Earnings and everyone, for Call morning, to Quarter MSA's Year-end Good here are and me Krause, With today Senior and and Vice Ken CEO; President, CFO Treasurer. Nish Vartanian, President

was Our fourth on MSA at website last and is the issued www.msasafety.com. quarter available night release press

we like Litigation meaning the everyone of Private Securities to Before Act that on of discussed within matters begin, forward-looking excluding call, statements I'd Reform XXXX. this historical remind the information are the

all include, projections anticipated but future are statements to performance. limited Forward-looking of and not levels

statements this financial risks, most XXXX. most investors.msasafety.com. cause available with certain filings These are forward-looking Investor at part With of differ Form recent this Vartanian. undertakes those Forward-looking We've involve factors to factors MSA uncertainties statements made Relations call that our in duty to our no turn Nish on our here. on that, our materially any the XX-K and filed discussion over may included Reconciliations except publicly Securities as discussed risks, and other law. other in measures President the update measures to website are uncertainties as and and actual Exchange February results detailed including from Commission, comparable by GAAP CEO, morning. required to non-GAAP our call, I'll our directly the

Nish Vartanian

$X.XX successful year may Adjusted for a earnings earnings. and a Thank very us, most was The ago. of our quarter, And and in growth had fourth comparison strong in revenue of delivered revenue of down record-breaking as history. recall, morning, of that's quarter a we a and XXXX. share you and fourth fourth in you, X% result terms Not from currency team coming we quarter record good the year constant as $X.XX Elyse, per a XXXX MSA from only strong company's a capped everyone. in realized was

reflects in fourth line more digit that directly growth higher cover revenue performance in generate will tied is earnings Ken in stronger we to revenue, the our able mid-single quarter. to flow the variable were detail. While that compensation cash and

of team adjusted as a the the our growth and to per However, very was generate we that quarter. nicely earnings year. strong growth was for able for I'm between And and proud XX% service balanced In XX% view $X.XX our result full earnings the XXXX, fire industrial products. revenue growth share adjusted

as positions programs fuel fact, and In core mid-single a portfolio. product products, to all to growth across of our continue groups leadership and growth market-focused new posted double-digit combination our

and earnings a of XXXX XX%, of adjusted CAGR Latchways in contributed all our revenue double-digit from we've Globe, has growth XX% integrated which SG&A revenue and seen that to than three-year now driving a more there earnings in industrial of of and strong rebound growth, organic been we've revenue three in profitability acquired XX% the We seen We've With for step profile. to change improved years. consecutive XXXX.

XXXX. full-year in our Notably, to product provide more engine in I some of in other key briefly our segment. the business insight improving of the highlight Ken our results, and and will quarterly our While profitability want International progress successes drivers into new development

our momentum and like XXXX, computing management. we invested commitment, on to a technology at in XXXX. wireless Safety example, first live broad fleet of new and safety million very we monitoring services, range R&D focused for Let's of pipeline, $XX with pleased first subsidiary cloud-based development our look connected I'm in product the launched where io, enable our

of in year-end. launching in for all did say, by products. which we at On we XXXX, if you to the the PPE the under complete side, quarter included edge, introduced a XX that for NPD growth Day delivers marketing those supported year, planned XX% Personal the and fall series and a product XX% racing-style Limiter. Fall protection, NPD exceptional we last first-to-market, growth for Investors investments year. discussed robust I'm pipeline collectively in our V-Series and The recall, including leading pipeline launches harness new the premium protection pleased have We comfort, type line, sales and that resources innovations fall

In launches We international launched protection out we the have for the V-Series MX several continue new the exciting recently market. coming planned weeks fall our that in to SCBA build service, line. fire

leveraging And to In is fact, Spain we all in in our from among quarter, received solutions have and overall safer additional common launches And XXXX. a customer the our Europe. order delivered first revenue in customer's thread that to this is these in launched do to provide customers and fourth and make we we workplaces quite technology our developed past products XX% MX orders five from The of Taiwan. productive. innovation continue in and years. more the well

our to addition sharp the International pipeline, of In fueling keeping the improving NPD profitability we're focus segment. on a

a international our in over sense with in see give you in basis did nearly margin, are on better higher difficult this medium- and of region. a variable point we of year a a and cost We operating this, improvement comparison. XXXX XX%, to margin generated MSA good goals long-term quarter operating XX To full XXXX. representing International in financial the made primarily track decline strides a year compensation While very and due prior

executed revenue One for with quarter XX% and serve of was supports by the our of leading number channel average wrap channel partners in full partner. to total more up, our the improvements channels XXXX. to Overall, growth this program. by behind our XX% our the fourth importantly, But very for in XXXX, in the all improvement strategy. channels decreased progress efficient year, the well team To revenue of on our customers go-to-market a more per tailwinds meaningful front optimization ability the driven

ago. levels to compared year, to saw to historical remain decline typically we third was the contrary, from compared one backlog elevated this backlog third the the you to levels continue the we financial some gives quarter invoiced when consistent over that the case quarter more level review. both Ken? year While not quarter to turn momentum the call our which into order see to of we To quarter fourth a In backlog our book. in finishing $XXX a for and Ken million, see insight the with the I'll higher where year. than we finish that, With a solid

Ken Krause

Thanks, Nish, everyone. morning, and good

key P&L step the begin to discuss more I highlights. a in financial detail, like Before review and the quarter and back few provide I'd

strong. growth we of again The is a strongly high core the more than we year fourth continued at Investor cash was very versus products, the finished carrying X% $XXX performance all in business million, growth. improvement supported XXXX, level growth on and Profitability ago. of over of to end Free productivity. Great backlog in sales flow from this at quarter so managing level communicated over operating range organic revenue year reflective acquisition ongoing a operating strong in and mid-single million we full growth exceeded $XX XX% revenue when see flow impact same of that our our doubling quarter ago are into by record currency of our growth or XXXX. the free capital. with the our improved terms, XX% the elevated despite XXXX. margins XXX in focus of adjusted both the First, of the quarterly constant Annual you digit on year improving cash working and as XXXX, remains exclude focus earnings points the continue was gross we expectation line basis for or With Day

XX% For revenue the year, a we of XXX reduced working despite growth. by sales points, capital as generating percentage basis

a marks As our third result, of our conversion. cash consecutive year goal free of flow XXX% XXXX exceeding

our Day, communicated and can results you compare you, you revenue tracked expectations our full-year of generation. of with measures see Investor our long-term we that financial last As like to the growth ahead many cash results flow discussed we the at XXXX

a you International walk weaker Latin core the of fourth the weakened FX currency, quarter the a financial revenue segment, segment due our the most We notably in nearly as Americas a and primarily, X% in had had number quarter. America. products. all quarter on headwind to the headwind same a like We ago, X% results. currencies I'd to revenue X% versus increased year in constant in the currencies Total headwind growth in Now quarter X% with through a in Euro in

see weighed gas a continue to portable see results protection, We've our to detection revenue protection We in conditions. mind, all the fall off new of encouraging order on start area healthy growth year. finish the globally and in for and timing these regions in year, in XX% of this that across in barometer often quarter, which in been in segment. quarter, activity being the quarter. comparison and We to but in economic down hats With head the to solid operating about large orders it's hard in global talked was areas international International the the had X% a and performance, difficult has FGFD

which backlog XXXX. stronger quarter XX% up service special gas over start good over see improvements both sales was a we XX in in higher million price fixed strong globally up international or the we've notably, up SG&A continue just new over the XX% driven input was a the financial basis year revenues in and about increase in flame to record orders revenue levels under fourth down to with capital in been despite in margins, cycle we The in profit materials. of was our of basis the Our by in year at And optimism area healthy. SCBA quarter. was by offsetting quarter business, $XX inflationary working rising fourth raw ongoing ago, is some we of and had U.S. quarter, the in increase in costs, double-digit the growth quarter in $XX performance in and January, pace or incentive leading and and in globally. into quarter continue our It's were million from replacement implemented to segments primarily year segment. of working fire supporting the recent growth process position price XX.X% order to tightened ago, Americas pressures heading in organic see and provides X% the market the performance request and capital. in our Gross sales detection strong. Quarter-to-date compensation, variable driven SG&A Organic quarter, from expense the good the ago. $X International In and benefits came the million has points this a compared were associated year, points up a to quarter. improvements our XX%, XXX improvement the To

expect we and to for we continue expect Along before, inflationary first that quarter continue make we said programs in cost into business the XXXX. I've in rationalization on evaluate lines, project As of our XXXX. footprint segment of to our reduction to those productivity light progress environment the improvement International

of are recently drive our increase currency GAAP segment, reported charges reserve. in other is took we of cumulative claims. was expect to incurred operating the more may IBNR similar areas with or to to actions drive cumulative which associated related related sales non-cash The of not to but in $XX operating in liability the these other While the improve million footprint those the product International Japan. the increasing XX.X% expense most these efficient restructuring includes translation, income actions $XX our reduce business and quarter, mostly efficiency model, write-off or a trauma to million we steps and of our

with indicated external IBNR realized circumstances we've of ongoing our reserve facts and perform basis. and review that on actuaries The filings for our the counsel. robust of our As is an sometime, on review set a IBNR we we in

increase of assumptions Those As the a million. model notes our changes that is $XXX receivables, about reserve, in million consist assets and total liability at fourth recognize charge we reflected to equal of short-term $XX part million Including reserve of the quarter. just which $XXX of our is review, investments. and assets product to approximately year-end, underlying in the our in insurance-related

vary our in insurance flow and on receivable successful priorities. fund establishing of very from While and these without for liabilities allowed us been to cash do impact that cash the can have flows liability quarter-to-quarter, allocation capital timing streams a we've product material

and ago mentioned, and Excluding restructuring, XX XX%, transaction a strategic variable higher margin from just foreign points mentioned product was year a operating liability a down compensation favorable I ago, currency, cost expense programs I reflects the basis And adjusted on less closer across leverage moment in the adjusted Americas mix, our basis product the segments, nice at the to pricing ability improvement margins The quarter, primarily improvement the operating International looking points. in showed segment. up segment. XX in the the

out on the the we margin XXXX positive mid-year recall, and a region, you gas in of increase level the flame in Much the Middle impact region. has If in favorable the with moved came in quarter segment. associated price had pressure less of in the East the our mix in International this and on of product detection Americas, lower the in fixed a earlier year revenues

X% we double-digit growth. continue We to traction healthy earnings good in growth really leverage very the Europe, see as in

to down tax the quarter, in about Our reform charges effective basis, XX%, was the XX.X%, full-year and exit nearly XXX GAAP rate quarterly normalized primarily, basis includes for tax in effective effective U.S. rate tax was tax adjustments adjusted XXXX, under our reform points the taxes. associated to our XX% discrete tax related On due with was which an and rate just

rate, with Reform effective repatriate cash. to Tax lower ability foreign the U.S. provided driving to the also addition us has In

$X.XX as comparison million For Nish achieving GAAP improvements offset were was or by goal million higher the The we Quarterly our did $XXX $XX net from our the difficult repatriated share. income in subsidiaries, tax foreign cash But and of profit million million SG&A in the mentioned, million year, earnings effective in were $XX revenue, the in repatriating of expect $XX quarter. rate quarter. adjusted to gross increase $XX we a this quarter. XXXX. per

team's flow third end share, the I'm or revenue. The on us the revenue to while strategic well very our the XX% the debt reflection For healthy for to debt of a capital cash of flow adjusted year year-end invest the third where to Free an year we $XXX to bringing end year a gross million. the million with business. at a flow were our demand full lability with for prior growth to strong programs of year, to I'm in a XX% from approximately was shareholders, average also and saw to improvements operating basis and in in well the business. of we to X.X%. consecutive the was with to the fourth for profit product remainder business. Debt-to-EBITDA strategy structure. activity in $X.XX well in years that to our some cash interest of that to fund to is on XXX a million the create of we $XX XXXX. dividends with in net over call and $XX quarter debt of of that, Order adjusted growth an We $XXX improving $XXX from million new cost compared the were we at X.X a the The managing invest million Nish million able our on capital growth continuing back from focus quarter, cash while With earnings flow cash start bank and the continue cash exceed earnings backlog made year flow. double-digit growth points was did million turn About is in outstanding I'll managing XX.X% the per the of reflects that on Double-digit remain quarter, to while year increase very acquisition, revenue growth. portfolio remain in $XX quarter. $XX that Globe compared revenue, million outflows Nish? conversion we in total this us outflows compared and Underlying job includes XXX% XXXX, cash year the in free the our times had XXXX. our $XX strong positions quarter the year. times We ago current team profitability and trend throughout the throughout at XXXX, despite million quarter fourth organic and $XX leverage of the remain reduce to saw finishing to And for of X% while ago. concluding working positioned pleased our value. in reflected very from pleased execute The and We the to positioned strong growth our see years working generation X/X commentary. rate rate at execute regularly used growth the net XX% we've few great year when strides XX% finished EBITDA conversion. down strong of enabled pay increasing X

Nish Vartanian

points We basis Thanks, Once I'm year. up gross a of in last earnings growth, comparison Ken. profit X% difficult held quarter. again revenue the performance XX from well and with pleased on strong the expansion had

Americas; generated by for was despite in the driving more positioned Steve XXXX. and the than questions. also not work the cash guidance. strong year, conversion the does be International Ken your of and for said Bob will top take questions XXX% of flow we MSA Blanco, now remember have growth for time, this joined great will morning. MSA I well you This We team, your Leenen, for may to President free Having call any open you the MSA President believe glad continue quarter attention I in give up this Thank and the margin simply and At have. performance. room, line that Please and that, remains expansion and to MSA

Operator

And is question Elliott [Operator our Stanley from have Stifel. Instructions] we right. All first from

Stanley Elliott

lines, the XXX% free kind have with see conversion improvements we'll cost, been to it is transportation capital all about then of material et made in you cash would've would especially assume what those ahead the cost higher flow cetera? talk that freight working Guys XXXX? in secondly on of thought that again side, could you along I fair And

Ken Krause

that Ken. question. it's Stanley, I'll take Hi,

team see other to. at thing there. current inventory prepared really segment, on those over the our some Leenen's in improvement Bob commentary, the we only saw things saw we both you International But in the I in And the some quarter. receivables U.S. really referred nice that despite really seeing capital But not a revenue, working in was had our well a really under of as strong improvements paid saw uptick indicated inventory, tremendous As the driving the did to just performance the was what the really improvements of receivables, in seeing focus in was we job older great we saw, leadership Despite as receivables, off also our receivables. in Americas. good performance the in in fourth

As at capital. forward, conversion we've and still cycle growth a remain we challenge times, good all been to seen free we to improvements in or cash Often continuing leverage you move it's committed to really driving are working like see, XXX%. above come to able that in seeing that improvements hold flow it's But last growth us a year. in being on despite when the

our remain conversion we focus the remains as cash to So driving forward. same, move flow XXX% committed We Stanley. free

Stanley Elliott

side? guess, be? maybe the if need the inflation you additional that's look then you cost balance of And what the road And lastly guys side Is internationally going I actions seeing on to enough sort and at it of cost maintain material the pricing forward? the fair both to that, domestically cover price to then January. are a assume pause mentioned Perfect. ability just And in down the pricing actions then on kind of

Nish Vartanian

and business. special in requests, are job some in seeing job we have pricing year. we as on going done sophisticated can finding Yes, manage offset pricing reports then for Nish. tightened to and discounts with so Hey, a fantastic And increase standpoint. we from cost a more this special the effect The requirements, our price important anything we've Stanley, of and pricing nice doing a monitoring into side that also January from we really price into believe, the that team opportunities continue of this material went we're a up increases. And the effect, and has getting do standpoint is how

we inflation we a believe, So cost, nice we can as some that in job if in in the we price certainly offset mid-year any And of 'XX, offset see in we did adjustment same would we had do we to America, we the we did during mid-year mentioned of. we in price we fact saw year additional material thought just North here XXXX, which can 'XX, things. have increase sort inflation as the

we're pretty we're focused we're confident on So very execute And that. able that. to

Stanley Elliott

seen nice still the for you seeing would guys an story. a Latchways. And environment? interesting marketplace? M&A in an appetite What It's acquisition, something out component Monitors, for, the to the you me. you last You've Can talk are color of you have what any it Globe be that about job done General great? there in the Is the just

Nish Vartanian

track shareholders, no, and like make Stanley. very degree get are 'XX. in have our one. valuations We buying Globe accretive about were Realistically, right in know, can we in the and level type so was price, high. Monitors, we're value. And to place, we have active chase a General right for value acquisition, focused XXXX shareholder to that acquisition the the not to we of certainly a somewhat an the we of as a we're and make like Latchways high to are really didn't fairly got right of very for of returns and pipeline Yes, record all on going certainty get we've But generating first Stanley. drive want that good It year. I'd but disappointing, We'd good you move, with

Operator

question go All Richard Baird. we with right. ahead question. next Please your is have Eastman Eastman, from And Mr. from our

Richard Eastman

of But performance the of for year full what quarter? kind standpoint might you of impact of -- I discussion. two European the 'XX? Could the a on And for into margin just currency -- just incremental we -- maybe of And have much want Europe? did at for just was second in fourth an of could to trend just line just of be the from currency out just Op kind that the spend International a or parse just in operating expectation on quarter, kind kind a margin

Nish Vartanian

guys don't the Ken Bob, why ago, fourth quarter, Middle see in world news that wasn't really want part news. customer we fourth take some project is, headwind our for customers the that and was a chime the with you the it to new in I orders in So backlog we Europe if that color. in space. first East, Rick, significant year the East, and where good then and International detection the business This the gas into factors. extremely pipeline and soft natural The a great have as the to year have see quarter, shipments flame build. SXXXXs were to Middle of transition were that biggest Number today, to for transition was high. natural fixed first and quarter year cycle product. elevated going continues versus due that's transmitter, cycle And this is of the two down of it's that into we'll business, of projects news for that a that year then last secondly, to put they as SXXXX the our one which purchases It's customers on largest pause great one to one,

want the business. flame specifically, fixed So color? we with weakness and that saw detection add will gas you Middle Bob, that, here in East, some and rebound we're optimistic in 'XX, to fairly the

Bob Leenen

in And in see Middle backlog versus that's the increased activity before of We XX%. year East, Yes, a opportunities. lot QX, market, the in of actually, pipeline activity correct. very our actually the good

Middle period the to in XXXX, We was also encouraging structurally I'll Ken. question, a had that. improvement. leave see Europe solid, very one It back very market. we to good the to first bit QX, believe XXXX, it's in but European in East the profitability you in for step. showed So slow really and FX potential the substantial a a of And

productivity is revenue price on We looking longer-term We've the on pieces. this it's There help commercial is QX journey behind large of to and we since Europe. we're which we're and significantly, in which in deploy effort center know as well. group just to organization product increases. did us is delivering increase profitability the with in our Ken the front all Part Europe, our that course, price a of at is And referred to training of also a grown wind significant something, is sales in the with what XXXX. also amount culture

partners. of more is closing of internal we we're countries, all to affiliate we're where grow be a little ticket our analyzing, channel example example We shared cetera. an items at, The this. a what the But of range actioning, faster more opportunities the identify behind continue longer with looking believe, services, And and optimization in we're footprint foundation good of are profitable able bit bigger also have we're some and of we manufacturing, with optimization, productivity finally, channels can term do a on of is we're and which et channels the to for that short-term we less footprint more more. use

think in So I track here. the right in we're

Ken Krause

So the have the Rick, correct on is on you'd and European question I that incremental business? currency the margin believe profile,

Richard Eastman

But the the just maybe and bit. then might Yes, impact on it from currencies incremental Americas? expect from just I in broaden around quarter? just really just on, ramble there my the you a was 'XX fourth margin International And little question

Ken Krause

Yes, Rick. the prepared so the in looking When first, as was at look currency, there. Euro of I comments, headwind some certainly a the we currency, at said

a healthy out about being And of U.S. segments coming the was the segment, relatively headwind though. hard in headwind a earnings maybe on it of terms dollar. incrementals It's of slightly are in it's consistent think back smaller European revenue on I X% coming to the the translated that earnings out the I'll the quarter. the Overall, see quarter really look the because incrementals the sequential see And it comp, when was coming margin challenging the incremental I'll is, what International segment, to in what sequential the quarter oftentimes was at just the margins year-over-year was to nice XX%. you at incremental comp. profile. look But in do at

International was segment. so the year last year. to you every quarter, comp, tough quarter know we a and did fourth see. to But in see that And Year-over-year good the in almost is improvement this really as continued each we XX%

drive And XXXX, think so we're margin to business. head into on still we positioned we as business XX% well the incremental our profile across

different going so generally, much so in from are I come at it's or very think ago Day, sources. the And intact. But Investor we provided the to targets a that year

Richard Eastman

year you one some maybe year. head your strong on Or indicator the curious, a Really there? heading gains? as of Was And last well business, of distribution a let do as business how leading tremendous all protection there in kind fourth throughout question, And that that I'm alone 'XX? business? very up factor quarter. cyclical, set out pricing kind performance were of just I'm into just the protection head just the is curious, view

Nish Vartanian

it a others. as share All which have head had double-digit really in basis. very was we with strong, in go We the near single know from is you strong you region, the regions every protection. share better Yes, growth geographically well did We saw and some Americas, than Rick, diversified market areas, really then really healthy. around world,

share had think some So have market gains and segments. in that we've we International we some

our detection, in industrial And have a three segments, business business. doesn't and that gas head different we follow then quick-turn has portable a at fire fall adjacent service, protection, typically products air leading purifying near are indicator the quite area. the industrial, you up the track. business look of well. production, even being Remember, respirators held somewhat that we kind with And look at the So that is in

later that holds little that that tends more breathing up will a downturn continue apparatus even if hold replacement economic well. cycle for cycle to up And that little years. on in FGFD be expect pretty And for should several well. late and business business comes We there's a this

If see detection gas hats portable for fire XXXX that's recession, you progressed they breathing hard but that dropped, back to quite self-contained some, industrial contracted where go the you apparatus contracted, the service nicely. business

optimistic So we're here, type we you might if we profile, haven't we a But the so go seen see have yet, about short downturn forward. that business. as a similar downturn

Operator

do we from Blair. William another And right. question. All Instructions] question De is have from Larry [Operator Maria This

Larry De Maria

clarification. First

increase, portfolio? maybe expectations average the tax discussed just the for of and You rate 'XX, on magnitude also price

Ken Krause

Larry. first, question, Sure. I'll take the tax

well to very see positioned we're continue here at think tax favorable MSA. to a I rate

range in. kind XX% we'd of is like the I to to that range XX%-ish think be probably

As of something that into the a and analyzing, in we at not is point. guidance specific talk I'll we number quarter. it year that, we'll of more also to there's a reason bit over the little I'll first around provide the first turn probably out From this for go as about we're of a that But through realm range but quarter, get things Nish. perspective, pricing a the

pricing the strong. been has very think I

has in increase the earlier indicated our so this the look been, introducing at year. that were business, off-cycle on follow we And We've as very we price an call, we've earlier Nish continued in active here as at Americas. to

head for of very offset inflation cost to positioned certainly seeing we're we business. strong direct as the some pricing that so we're And into the than more XXXX, in

Nish Vartanian

That's correct.

of X% world. the in And effect pricing so as for that pricing to effect varies parts the January, X.X% we of different It we're on looking net that had.

didn't for have most of and we the Brazil, but So parts of for a other the we in world increase, very Americas did. aggressive instance price

to lapping. and you're You then know, again, be going

Canadian for and the had increase price we U.S. in July of year. markets the last So

the they of get on top half year first we'll benefit this of So increase additional place. in the in just of put that the

So, we're the focused channel. increase to opposed we're continue again in see inflation doing off-cycle to we not on do once And an price very that. if

Larry De Maria

the you, get back increase X.X% helpful. X% net Got a very the of nominal price from that you is just that after that's net And discounting? materials, net rate or to that's

Nish Vartanian

increase. price Net

Ken Krause

would see a we So net realization.

Larry De Maria

lot in maybe now structural like things Is like footprint the service, maybe there there closing more right is of rationalization, more I we're Now a to going and on efficiencies, or point? this shared any appetite International this. facilities do this things on rationalization, anything doing like terms think at

Nish Vartanian

Yes, that, services we Europe. are. of America We're taken efficiencies looking where That's for a certainly South at shared we've driven a hard lot Larry. in at and look North America. model We're

we're so And that taking at opportunity. hard a look

and to place area improvement sustain with we'll will that be one this segment. we're things a a that at. hard But that months. we short XX that's more benefits we International X-year And type on That go structural certainly some longer-term, that's that as were activities we're the probably the think in will XXXX, So some or XX realize able over in There journey do to is looking next 'XX. X- at continue we profit some also term that are taking forward. take look

Ken Krause

that we that and Something up have Larry, have is opportunities consistently, P&L. we said down the

And so but that we much very have SG&A manufacturing opportunities, opportunities we also we're we continue at to look actioning. opportunities, sourcing have

margin go ahead amount about underlying short we also just from more really ago of in of good It's that us period But margins continue years in International profitability. so And see more time. opportunities the to improve to a continue XX% opportunities. X to sub-XX to now and just a and to see short tremendous of there's

Larry De Maria

by question upgrades or that seems guess, business about you we for strength is then mentioned it and I lines? healthy, flow being is driven last And how various replacement, sequentially, backlog the projects? economic broad-based 'XX, flattish. the growth Obviously, market by you expect through your in When more think me. And driven to

Nish Vartanian

necessarily think Yes, upgrades. I it's don't

normal We're think good product I portfolio product really with especially some it's gains that new we've the a business our across flow. launches seeing had.

we done launched. done the of in nice we've protection, whether new fall of think thought. many products we've organic growth XXXX XX products markets, supports the strengthening And with the a wise, little we're that the So job bit the have what series in share with our really a gaining it's position X% transmitter,

went some really they slowdown talk what's fourth into the You that know interesting of is the people as quarter.

had we new we that launches built, will back quarter fourth year. product real I of had the business of first and that quarter. on strength this into the protection some in continue that was the fall Our the think And

optimistic the pretty our going we're we and do what about position in can market forward. So

Operator

looks All Edward please Marshall Marshall, final is question. like and go Mr. from your right, & our question it with ahead from Sidoti Company.

Edward Marshall

guess. margin? in just maybe of impact just the these Which be mentioned MSA? are factor you manufacturing could mix, what there even biggest sourcing, levers for swing you that talk biggest about Could margin I for several So the might have

Ken Krause

around efficient the the specific optimization historically Sure, to customer nice we not across International said manner themselves and thing avail is that that's factor. and is work had. that the dependent What in factors our see But really channels on are consistently Ed. P&L. We've upon got the us we've one access leading our a than ability in more is to to much Bob we

there. seeing to So it's profile this incremental to versus quarter. the we around build that looking those P&L we're we're progress across at third the good opportunities margin to making here fourth in really see the XX% But on forward, continue at we're go all as of the quarter

And so we any turn there to color as continue over to if I'll Bob, well. look to want at add it that. you

Bob Leenen

And some think, that also, we of council now. undertaking through. items, ticket footprint. that services manufacturing we're And Europe I analysis larger Yes, especially, process I or there's have the we're shared bigger these to work in need go right think

talk can't really we now. right So about that much

We in process color have due more provide those that. we'll follow first. I'm to sure course on

Edward Marshall

what I'm international international about segment? North And from curious talk if versus talk baseball what you channel think I America difference, channel second, strategy you in go-to-market between with inning characteristic maybe are optimization, for significant can what could maybe think the doing. you the between the in terms past you a was was discussions, if the seen you've optimization

Nish Vartanian

we who didn't relationships was And working in America, channels some the is I with. has very has some manager, on we're leading America. of just into to have way job really nice the nice effort, job now North in model much it International channels and leading developed Director We're when leadership. he a really Sales The done with a comes the for team, that that was The person team our front-end. the Dave team, was that. he channels. Yes, done And North inning. certainly early I European mean, really the under he our and of third person when distribution there

we're So And with relationships. nice building distributors. we're progress position our those We're seeing building those that some within position.

really So we next if we several early stages years. the of gain effectively execute we over we're leverage that. the think can And that some in

Edward Marshall

that. consistent the, this I you of kind about product the what the talk pace liability reserve. you've questions of a And I September. been curious just had to maybe with was on know, the I'm anticipate? that few what is lawsuits in here, And seen end would about there X,XXX drives also

the that it in is decisions impact? that the kind lawsuits the is lawsuits in would Or increase drives drive existing P&L it that So of reserve closer new the necessarily for P&L?

Ken Krause

exposures product the well first very your address liability managed. to So are question, feel we that

to product multifaceted front. addressing and them, manage continue continue that deploy a a can on We it to approach Albeit, quite quickly. to we an our area it's liability manage change and we're feel positioned area uncertain to is well that like to very we continue exposures very

continue a all so to really liability. of we things on close securing the positioned, nicely us that we very see area, we're And of really we're that this our the to to feel at, front, we for flow performance. we we number to cash at values, at positioned flow was one look when the claims a again, feel a we're And the we we it's and cash continue watch and was help of like the of streams What look different quite last liability But this in, number number continue keep had a success experience, exposure summary, weigh the on claims like a to to in impact well, we mitigate but over good overall well. that as years. certainly are things of coming area area. this positioned insurance look several settlement and XXXX manage the continued manage in uncertain we've on Claims average

Edward Marshall

current do consistent How treated you with -- from increases insurance -- of kind of now think I treatment the it the the would the I insurance at be here, And Or that point. it? lawsuits pursuing? be guess about the that essentially you've the with it. is this exhausted And reserve. would about we -- that, this way how Got is mean, from out do that's kind receivables MSA you're additional there there think are in receivables of used cash

Ken Krause

current It we MSA. noncash manufactured related impact and at for in And out is was to of look change was purely charge, for the sold such. noncash as entirely It and decades we a IBNR it ago. adjusted in a a we it's it We products the earnings. when accounted our treatment, it's that So legacy estimate. change the

have pursue insurance secured I disclosed well and coverages. And But we're coverage. in that our continue through portion additional uncertainty. We positioned so this insurance it's public of been profile manage assets our not operations. do our at feel our And as as that earlier, and like at look we to substantial part insurance such to our of to opportunities filings. identify we've said do still We current the disclosed still we've

Operator

it right. question. we no And further looks have All like

So for will final turn it back Elyse you, to comments. I

Elyse Lorenzato

Thank will questions, you, Kelly. Seeing that call. we have that today's no more conclude

we talking for look If joining you to I and of us this the website next transcript want missed to On will Investor a days. an and team replay for a portion our available the Relations audio you again here, with call, you XX behalf be on our of again thank morning, forward entire soon.

MSA Safety (MSA) 22 Feb 192018 Q4 Earnings call transcript