MSA Safety (MSA) The 44th Annual William Blair Growth Stock Conference summary

Business Overview and Strategy

• Focused exclusively on safety for 110 years, serving over 40 million workers annually with a $1.8B sales base and $80M annual R&D spend.

• Operates in three main product categories: detection (35% of sales), fire services (39%), and industrial PPE, with leading positions in each and 37% of sales from products launched in the past five years.

• Recent innovations include connected detection platforms like ALTAIR io 4 and the MSA+ business model, with acquisitions such as Bacharach enhancing the portfolio and ESG profile.

• Strategic pillars include leadership in premium safety, targeted growth accelerators (connected solutions, services, M&A), business system deployment, and disciplined capital allocation.

• Mission-driven culture and continuous improvement through the MSA Business System drive productivity, cost reduction, and enterprise-wide efficiency.

Financial Performance and Outlook

• Q1 2024 saw $413M in sales, mid-single-digit growth, 21% operating margin, and 18% EPS growth; full-year outlook reconfirms mid-single-digit growth.

• Achieved 5% net sales CAGR and 12% adjusted operating income CAGR from 2014 to 2023, with operating margin improvement from 12.5% to over 22%.

• 48.1% gross margin and 22.7% adjusted operating margin for the trailing 12 months ended March 31, 2024.

• Balance sheet strength supports ongoing investment, M&A, and shareholder returns, including a recent 8.5% dividend increase, $200M share buyback, and 54 consecutive years of dividend increases.

• 2028 targets: $2.1B–$2.3B revenue, 23.5%–25.0% operating margin, and $10.00–$11.00 EPS, with consistent mid-single-digit growth and 30–50 bps annual margin improvement.

Market Trends and Innovation

• Secular trends in safety drive resilient demand across energy, utilities, construction, manufacturing, and fire service markets.

• Customer intimacy and voice-of-customer research fuel innovation, leading to solutions like the ALTAIR io 4 connected detection platform.

• Digital strategy emphasizes cloud-based, easy-to-use solutions for asset management and situational awareness.

• Product development increasingly addresses diverse user needs, such as custom-fit PPE for different demographics.

• Ongoing focus on connected solutions, digital technologies, and services as growth accelerators, with disciplined M&A to enhance market position.