MSA Safety (MSA) Baird 2024 Global Industrials Conference summary

Business Overview and Strategy

• Focused exclusively on safety equipment, impacting over 40 million workers globally and maintaining a 110-year mission of safety and innovation.

• Achieved $1.8 billion in trailing 12-month sales, with $80 million invested in R&D and a 37% product vitality rate.

• Operates in two main segments: Americas (over two-thirds of business) and International (just under one-third), serving fire service, detection, and industrial PPE markets.

• Maintains market leadership in all major categories, including fire service, detection, and industrial PPE, with a product mix of 39% fire service, 36% detection, and 25% industrial PPE and other categories.

• Completed 54 consecutive years of dividend increases, with an 8.5% rise this year.

Financial Performance and Outlook

• Demonstrated resilient margins and strong cash flow in Q3, with $433M net sales and adjusted diluted EPS up 3% year-over-year, despite some sales pressure due to order timing.

• Expects low single-digit growth for the full year and mid-single-digit growth in Q4, supported by recent order patterns and government contracts.

• Set 2028 goals for organic revenue growth to $2.1B–$2.3B, operating margin expansion to 23.5%–25%, and adjusted EPS of $10.00–$11.00.

• Plans to generate over $1.5B in cumulative free cash flow after dividends and share repurchases, maintaining strong return on capital.

• Strong cash flow supports organic investment, shareholder returns, and M&A opportunities.

Market and Operational Dynamics

• Manufacturing strategy emphasizes regional production to mitigate tariff and supply chain risks.

• Government funding for safety remains stable, with multi-year AFG funding secured and bipartisan support.

• Backlog has normalized, supporting confidence in Q4 growth, with significant Air Force and Coast Guard contracts contributing to near-term results.

• Fire service orders remain lumpy due to timing of funding releases and customer decision cycles, but pipeline remains solid.

• The MSA Business System underpins continuous improvement, high-performance culture, and stakeholder value creation.