Earnings call transcript Q1 2023

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Operator

Good day and welcome to the MSA First Quarter 2023 Earnings Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. [Operator Instructions]. is event this note, being recorded. Please

now Chris Hepler. would like to to over conference the Please turn I go ahead.

Chris Hepler

Blanco Thank call. Hepler, welcome XXXX Development and and Americas. you. to MSA Chairman, Nish With Vice President CEO; Relations. Safety the and Steve Good me President first and today CFO; Investor earnings This Segment Director Executive conference Chris for is of Corporate Lee President Vartanian, Senior morning are quarter and McChesney,

remind Private everyone may XXXX. to matters Reform we discussed within call like Before begin, of this that include the during I'd Act meaning Securities statements forward-looking of the Litigation

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

results risks, risks, SEC discussed a statements of to and uncertainties number materially actual Forward-looking uncertainties today. factors from our and those in factors are detailed that other These other involve differ filings. may our cause

safety MSA call update forward-looking this statements duty on made required publicly undertakes no law. as any except to by

certain and as available in financial included on are of presentation. today's at We measures appendix website release reconciliations our presentation are Relations The part discussion morning. our available non-GAAP the have investors.msasafety.com. non-GAAP press this The Investor of

to on agenda. today's Moving

key the will outlook. to highlights quarter. Nish then then the conclude turn will Nish discuss First, our financial will remarks. call He Lee to and over of discuss performance with closing

for the questions. Following prepared call will we our open remarks,

the turn I'll call over to that. With Nish.

Nish Vartanian

us today. Thanks, Chris. joining everyone. you morning, Good appreciate We

involved runs work a our in I ties and want in important our Slide four. with often purpose mission. to brief our that are that I'm start deep very community employees closely very on a story reminder. MSAs to has company

and fire lives firefighter a have here serves flames. helped who the smoke locally The also that two save were smoke the identified killed as no Pittsburgh, these which detectors house a tragically, of responded volunteer there home, One where were children. the in could children of investigation by our associates to recently, in

passionate about launched a become event detector he's result, on smoke and community a As awareness. smoke detectors

on important carbon regularly, this life. this they're amplify everyone and your check save to one's change to can remind installed and throughout detectors It call To the or batteries loved you ensure your message, smoke I home. your help want monoxide

MSA year to strong five. revenue, outstanding healthy start growth. to flow. this moving third flow Now had straight very and and quarter cash revenue on double-digit an encouraged Slide with of marks the incremental earnings We're the growth and margins cash as

the broad-based were for profitable year. growth solutions. result of last safety leading Our was MSAs digits double demand a over Orders up

more grew ratio X.Xx, book-to-bill was sequentially. we at than backlog and favorable Our

a in our strong the head protection we shorter Revenue quarter. was balanced and across saw and up was XX% our regions. categories product strong Growth portable like gas quarter, products in protection cycle the in detection, fall key growth

And saw also firefighter protective specifically saw detection business global safety, growth and Our in fixed orders. apparatus and growth we healthy gas in business. apparel solid a in our breathing

you So these to Results our unwavering to quarter. of mission globe, around another great our the by associates all dedication your for thank like are MSA delivering safety. driven of

markets. challenges leading helped in better demonstrates XXXX. industry product safety address center are and pride everything do, our strong has we for their toughest solutions product competing we're of at solutions the for innovative to fit our great This teams take to address ability to vitality, customers' the our that and customer these also We and in has safety design the able XX% our better By solutions, our which design putting that productivity. improve well challenges. a introduce was This market us in resulted solutions

line extending our an of sector, fall the addressable our complement lanyards in for competitive V-Shock side, with wins while V-Shock apparatus V-Tech recently effort the durability, City GX self-retracting for County Angeles contracts our in growing had fire series and in fall Los protection market and had China of to started improves Bedfordshire, this position product of Los protection notable United recent And was commercial with is momentum for launched Fire use, Brigade. build our the the pre-pandemic. of Chile, our the example designed ease A that expansion portfolio see market. wins is lineup. services to great with The continued MX, in We wins France. London we also year the we've Kingdom last on and that the recent we these breathing continue Angeles and And on

commitment sustainability sustainability pillars. as the and for company, mission our is six, with safety the to basis Slide to begins on key our Moving our

products, people our Celsius degree we're report by by annual and our planet. reducing X.X we To announced two our And our carbon a into daily achieve and emissions our XX% target, one Our principles recently incorporating target, globe. XXXX. across scope this sustainability the reduction published operations

Not initiatives target. Our our a incorporated and incorporated ambition, to how us in the associates reach develop. process are it's help we in we by products operate, numerous inspired we sustainability only have also our into

the areas rooms we walk-in freezers by and are example, as provides Entrance improved accurate providing such when alarms gas levels recently too audible launched high. Monitor concentrations, visual safety mechanical Bacharach that an and gas MGS-XXX As to and monitored

and to comply way innovative evolving solutions customers refrigeration Importantly, our more standards. customers challenges. the with another safety our helps team solve monitor safety sustainability is also bringing It's easily

With outlook. that, to the I'll discuss quarter Lee pass Lee? financial and our call results first to

Lee McChesney

good Thanks, Nish, everyone. morning, and

adjusted results. of accounting numbers, to divesture Before have want In we transaction. in the I related is completed getting we the into the remind to our the quarter's in January liability legacy impact that numbers, you the removed this GAAP

a improved sales regions. of with X% highlights. across better the and XX% for protection results quarterly million result conditions. get strong start volume supply with in on saw strong year sales. and prior an to We XXX the solid was and financial gas Growth seven the We're fall on Slide year. increase compared product a had of price, let's were balanced off detection our categories about translation a chain contributing and Currency Now each demand unfavorable half. well with impact as started to between Sales

was healthy Mitch margin in backlog digits the from year-over-year from was price management mentioned, year. and prior quarter the mid-teen up and X.Xx cost XXX Gross leverage order to year. As last quarter up sequentially Book-to-bill XX.X% productivity. XX% compared double points grew basis and more the than in growth is was up sound volume

chain the progress business in that's and certain better are our with encouraged of in and throughput systems gross With we're moderation are lines sustained margin. and seeing product supply the We facilities our application we operations, the or results. showing in seeing

margin XX.X% up basis of was margin XX.X an last which points operating of Adjusted of adjusted XX% earnings quarter last year. share $X.XX, compared XXX million, XX%. to in first per was the over diluted year. In income Incremental increase net resulted

of results Now had XXX increase I'd like to key our the prior sales saw detection million, including gas over and industrial segment America firefighters across Americas all year. North review an balanced growth PPE and America. safety, strong categories, with and performance. Latin across double-digit Americas we of the segment In XX% both our growth was

up volume, year-over-year leverage management. the in Adjusted operating as was disciplined margin XX.X% a and cost of XXX points result basis quarter

translation increase and a we segment, From growth an the PPE international of detection by was In a which X% basis, on offset results, gas growth, and million, XX% quarter. reported were double-digit perspective, in was also a slower had sales a XXX basis. both gear. on partially safety constant our XX% firefighter headwind strong product in industrial Currency currency saw

APAC. We and performed well in both EMEA

over basis in was Our quarter, adjusted margin and points leverage volume by XXX management. the XX.X% the cost expanding year, driven operating prior disciplined

on and from the of higher the Free demonstrates flow XX% cash and flow proven capital earnings flow divestiture XX generation. cash adjusted when Now, improved moving to adjusted cash Slide and million, improved quarter to robust a ability our leverage Cash eight. deliver income. was or in net working for

quarter the Our debt for net XX and We XXX financial position March in to adjusting were million in million after was $XX CapEx X million divestiture of returned is debt million. we on the shareholders. invested and strong. XX our dividends paid In

leverage when When was announced divestiture XX, would leverage was on measurable and quarter X.Xx forma said for reducing making XXX we're XX million, end divestiture. adjusted net in adjusted to trailing the March we we compared progress. months pro For the year focus at end we ended January, XXXX EBITDA the at XXXX, X.X

let's turn Now our to updated outlook Slide nine. on

supply the this We the be The us. entering are responsibly the resilient business. have has markets continue supply second carry optimistic moderation throughput, in we constraints factory Demand has Short quarter. our been several well backlog recent be confidence that continue give cycle product and funded. an reasons year and and behind been chain challenges us to our worst approved to chain of across demand to strong elevated

macro uncertainty with to will half balance the the We positives year. of these continue in back

concerns and across continues there's very key to be economy most our recession of regions. The dynamic growing

teams and in past quarters. are control our start cash for to we've those and done Considering strategy deliver the of Our like strong focused the profit dynamics to growth, margins we free range conversion our these with flow low and XX%, a several strong flow are that on and the variables approximately digit executing for accept incremental of double-digit now our cash to single growth year, in year full XX% XXX%. range in high target our

At every our for Before life closing, have I MSA, the commitment approach to the and execution And take around mission safety. now results. is our and worker over to team's thank this world fueling vision soldiers for of strong moment to our over quarter. to a our resilient I want and bringing seen each that day our

pass I'll a With that, to Nish remarks. his for closing callback

Nish Vartanian

Lee. Thanks,

by to In mission our accelerate by market. energized investing innovative sustainable, growth. encouraged strategically XX. profitable closing, momentum the unparalleled initiatives We're our the are in safety Slide teams the on I'm driven by progress portfolio our continues and solutions And strong to to our our business I'm key of safety. of in start deliver gain to year,

to and creation. will As our diversification across business strategy execution And MSAs forward of markets look products, our expectation made has geographies that drive our in value long-term resilient. successful the continue is more we

back to the I'll the turn that, call With operator for over the Q&A.

Operator

Thank you.

first question-and-answer Instructions]. Elliott the And the from Stifel. from begin now will go We be Please [Operator Stanley will question ahead. session.

Stanley Elliott

Hey, everyone. the strong to year. on Congratulations the start good morning,

Nish Vartanian

Thanks, Stanley.

Stanley Elliott

from the you ability Force the to week, the the can physical Question really about seeing business you're mentioned FDIC I there out into and the there's you standpoint, for a within how just think still you deliver do capacity just works, considerable there, How of evolve. about conversions. the you ones things mean, to business momentum that in guys department. the some even mentioned, that all how it. you curious around that that had I go Air last all mean, fire think

Nish Vartanian

Sure, Stanley.

know, you SCBA, that, GX AFG the that as knowing with door, So line get those in of business the the back production of funding in the we plenty half the that for ramp year, typically, up very when the out to we predominantly have units cycles fourth is and capacity, in built flex built the to quarter. the clumpy, we

So plenty don't over I getting increased the That's lose breathing run the over capacity, we far have is can supply the apparatus out demand in when increased I as very that line high we're ease. to chains. at really comes constraints, of capacity lose it good issue or capacity concerned, and as handle sleep shape. gating our But with really capacity sleep door. our rates we

Stanley Elliott

to of And looking the so. kind with how the could of go-to-market of there, longer mean, what that that those Just of up thought contracts, new How product strategies? you're differently, revenue maybe kind kind performed much about and about gas how I uptake? curious core detection how of or seeing to in you just is, share XX% much going products you've some anything of is at kind market of quarter, term

Nish Vartanian

So supply in gas two strong what portable was also great product good was, chains quarter, favorable. you result we and the were starting product saw Stanley. in a demand was Number uptake, and the demand really had the quarter, into the we for things, demand. key Actually, for detection, quarter one, first of quarter fourth really really saw

shipping Xx door, tremendous hours, So a lot we product which a get were successful. to amount of the were very able of out

you X that to supply about ramps worker, saw IO connected up was in quarter, the the quarter continues and is better. very chain up, getting and the what in a favorable in the more the On demand also ramp really, manner. business pipeline But

Stanley Elliott

we've with you mentioned a And short businesses I at you're was business in Do may talked, of results strength we've along seem to potentially. cycle about think PMIs. -- a preparing recession, those and then lot you over cycle But me, of think would kind of up cycles seemed that counter you're projects, really reshoring but standpoint. about recessionary even of last end, from heard of be it more mentioned like around infrastructure might it's think concerns been you putting here concerns the Lee, the recent different mega what the your things have the lines, short spending, for your one CapEx softer kind kind for a

Nish Vartanian

first, for in that non-residential call take color. the industry, products space. the markets solid in it then for by gas to driven that really utility general strength some will all Stanley, was were I industrial Lee we market, -- pass more that saw what And We and the those certainly cycle was on PPE short the and construction, us. oil the

of business half want as as the don't some continue But you more And get know, add to tremendous that, color looks closely. for pretty of we the that that sight now, year. into line if We good. to to business second Lee, you in you business pace have monitor And of

Lee McChesney

Yes.

to return trades. what far So be the But if we're think be of turned quarter. frankly, to the in when what To work positive, there the care stronger continue employment out people in be it the we these go in I so And expecting we are on because going to that an Nish's point, we frankly, back second the business I Nish certainly and there, And if that going February, balanced. said the would And cautious be I We're we're think backlog smallest half, quickly. as strong. would it it some would only what to if more view. we you part just That's the played could say this levels even quarter Stanley to said out can an of is, where underneath it is, outlook, back first be update. area had that's some opportunity. in see to of gave in

see out to now. out be And I we'll for opportunity. to going hey, be as maybe So how We're turn optimistic. it said, responsibly an plays it'll

Operator

Thank you. go ahead. from from is [Operator Baird. Instructions]. The question Mason Rob Please next

Rob Mason

on and morning good good quarter well. the Yes, work as

about quarter. How double the you trend roughly low outlook it does points into in digit Your did factor I guess be single to how for for to the raise high price that that digit, full year? sales year was the the year, through growth that, the price I'm XX extent first does

Nish Vartanian

why don't you Thanks, that? take Rob, Lee, and good morning.

Lee McChesney

Yes, sure.

part closely, as like of will So the watching part as I We're our most watching price outlook as keep the environment And be the And impact will through think consideration. in to its goal commodity go of year, at pricing we in math and smaller a that is first and the well. just the quarter, the the become frankly, those that's we're space balance. the well. Rob,

So done job that. good with far, we've a

out out. perspective well, accordingly. a -- We'll going It's it guess, plays I'm and perfection. from not and played And that I we think how tools happy So where I manage so seems are, well, insight we'll with to see we're assume far.

Rob Mason

full volume Would in it you call you assume, year for quarter? a XX:XX as price the had weighting the first similar, between

Lee McChesney

Yes.

just balance. I continue depending of plays I be because opportunities on are both you again, Rob, that's we back the about out. to factors. think sides, going macro think the to on back think it cautious just there half right And But could be when how that half, the some

Rob Mason

that one just being or of X.X or the that product in solidly curious then a the well from above, so the around And were bigger what Sure. above standpoint? I'm book-to-bill quarter was drivers

Lee McChesney

terms demand the the think being partly think double I'll as well. the it's insights or the that if is first about of on being let the funny, only in add the frankly, in similar that's then little say The a look consistent in Steve Nish difference But and book-to-bill then here industrial quickly. had bit all because, we the to the interesting. in and broad business speaks quarter, PPD they're you numbers. It's growth, a And just about you when order When at categories space. in you growth at across I'll Well, just turns very you positive environment. look digits very number, very

Nish Vartanian

we real apparatus the where those in And Rob, the was protective good fire couple strong strength ones were were breathing real helmets apparel, some saw, of segment, a and good. also

Rob Mason

a out Nish, softer just I in think timing a difference the some that Is the that a was mention there services year up you also there. fire called maybe how I bit but does the shape for overseas, guess? quarter? Or little wins

Nish Vartanian

timing Yes, on basis. and quarterly a that's correct. seasonality just It's

orders international nice some an from the have in We pipeline standpoint.

optimistic We nice a win. had business. we're So about really that

were Another nice few U.K. There one the pipeline. a the in more in

That that solid optimistic we're the year. So should about business. be throughout

Operator

would for gentlemen, conference session. to I ladies turn concludes this any And to question-and-answer remarks. over back our the and Hepler, like Chris closing

Chris Hepler

you And Chad. thank you, for Thank all joining.

of call, be website, will on the We missed you available days. And today's forward Investor replay us you we speaking for you If an our look be morning. again you. Thank joining will soon. made today available later the and to Relations this appreciate next XX audio with portion

Operator

has Thank now conference today's for attending presentation. concluded. The you

disconnect. You may now

MSA Safety (MSA) 2 May 232023 Q1 Earnings call transcript