Q3 2024 MSA Safety Inc Earnings Call
Unknown Executive: Good day and welcome to the MSA Safety 3rd quarter, 2024 earnings conference call. All participants will be in a 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. To ask a question, you may press star then one on your touchtone phone. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Larry D.
Operator: Good day and welcome to the MSA Safety third quarter 2024 earnings conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key, followed by zero.
Good day and welcome to the MSA safety third quarter 2024 earnings Conference call.
Speaker Change: All participants will be in a listen only mode should you need assistance. Please signal a conference specialist by pressing the Starkey followed by zero.
Operator: After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then 1 on your touch-tone phone. To withdraw your question, please press star then 2. Please note this event is being recorded.
Speaker Change: After todays presentation, there will be an opportunity to ask questions.
Speaker Change: To ask a question you May Press Star then one on your Touchtone phone.
Speaker Change: To withdraw your question. Please press Star then two.
Speaker Change: Please note this event is being recorded.
Larry DiMaria: I would now like to turn the conference over to Larry DiMaria, Executive Director of Investor Relations. Please go ahead.
Speaker Change: I would now like to turn the conference over to Larry de Maria Executive Director of Investor Relations. Please go ahead.
Lawrence Maria: Maria, Executive Director of Investor Relations. Please go ahead. Thank you. Good morning and welcome to MSA Safety 3rd quarter, 2024 earnings conference call.
Larry DiMaria: Thank you.
Speaker Change: Thank you good morning, and welcome to MSA Safety, Inc. Third quarter 2024 earnings Conference call. This is Larry de Maria Executive Director of Investor Relations I'm joined by Steve Blanco, President and CEO, Larry Gedney, Senior Vice President and CFO, Stephanie Shaw President of our Americas segment. During today's call, we will discuss Msa's third.
Larry DiMaria: Good morning and welcome to MSA Safety's third quarter 2024 earnings conference call. This is Larry DiMaria, Executive Director of Invest Relations. I'm joined by Steve Blanco, President and CEO, Lee McChesney, Senior Vice President and CFO, and Stephanie Sciullo, President of our America Segment. During today's call, we'll discuss MSA's third quarter financial results and provide an update on our full year 2024 outlook.
Larry D.: This is Larry D.
Lawrence Maria: Maria, Executive Director of Investor Relations.
Lawrence Maria: I'm joined by Steve Blanco, President & CEO, Lee McChesney, Senior Vice President and CEO, Stephanie Sciullo, President of America Segment. During today's call, we will discuss MSA 3rd quarter financial results and provide an update on our full year 2024 outlook. On slide 2, I'd like to remind everyone that the matter discussed during this call may include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward looking statements include, for now, limited to all projections and anticipated levels of future performance. Forward-looking statements involve a number of risks, uncertainties, and other factors that may cause their actual results to differ materially.
Speaker Change: Quarter financial results and provide an update on our full year 2020 for outlook.
Larry DiMaria: On slide 2, I'd like to remind everyone that the matters discussed during this call may include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, but are not limited to, all projections and anticipated levels of future performance. Forward-looking statements involve a number of risks, uncertainties, and other factors that may cause our actual results to differ materially from those discussed today. These risks, uncertainties, and other factors are detailed in our SEC filing.
Speaker Change: On slide two I'd like to remind everyone that the matters discussed during this call may include forward looking statements within the meaning of the private Securities Litigation Reform Act of 1095 forward. Looking statements include but are not limited to all projections and anticipated levels of future performance forward looking statements involve a number of risks uncertainties and other factors that may cause our acts.
Speaker Change: The results to differ materially from those discussed today. These risks uncertainties and other factors are detailed in our SEC filings.
Lawrence Maria: We have an update for notes discussed today. These risks, uncertainties, and other factors are detailed in RSEC Violence. MSA Safety undertakes no duty to publicly update any forward-looking statements made on this call, except as required by law. Turn to slide 3. We include a certain non-GAAP financial measures as part of our discussion this morning. The non-GAAP recommendations are available in the appendix of today's presentation. Presentation and press release are available on our Investor Relations website at investors.nsaafety.com.
Larry DiMaria: MSA Safety undertakes no duty to publicly update any forward-looking statements made on this call, except as required by law.
Speaker Change: Safety undertakes no duty to publicly update any forward looking statements made on this call except as required by law.
Larry DiMaria: Turn to slide 3. We've included certain non-GAAP financial measures as part of our discussion this morning. The non-GAAP reconciliations are available in the appendix of today's presentation. Presentation and press release are available on our investor relationship website at investors.msasafety.com.
Speaker Change: Turning to slide three we've included certain non-GAAP financial measures as part of our discussion. This morning. The non-GAAP reconciliations are available in the appendix of today's presentation presentation and press release are available on our Investor Relations website at investors, Scott MSA safety Dot com.
Steve Blanco: I now like to turn the call over to Steve Blanco.
Steve Blanco: I'd now like to turn the call over to Steve Blanco. Steve?
Speaker Change: I'd now like to turn the call over to Steve Blanco, Steve Thanks, Larry and good morning, everyone I'm on slide four thanks.
Steve Blanco: Steve? Thanks Larry, good morning everyone. I'm on slide 4. Thanks to our team's dedication and hard work, our ability to serve our customers and advance our mission has never been stronger. We continue to be guided by the strategy we outlined earlier this year at our Investor Day to drive profitable growth while judiciously deploying our capital as we work towards our 2028 financial goals. We remain focused on bringing industry-leading safety solutions to our customers around the world. I'll touch on some of our mission-driven innovation accomplishments in a few minutes, but let's first look at some of the third quarter highlights.
Steve Blanco: Thanks, Larry, and good morning, everyone. I'm on slide 4. Thanks to our team's dedication and hard work, our ability to serve our customers and advance our mission has never been. We continue to be guided by the strategy we outlined earlier this year at our Investor Day to drive profitable growth, while judiciously deploying our capital as we work towards our 2028 financial goals. We remain focused on bringing industry-leading safety solutions to our customers around the world.
Steve Blanco: Thanks to our team's dedication and hard work our ability to serve our customers and advance our mission has never been stronger.
Steve Blanco: We continue to be guided by the strategy. We outlined earlier this year at our Investor day to drive profitable growth, while judiciously deploying our capital as we work towards our 2020 financial goals.
We remain focused on bringing industry, leading safety solutions to our customers around the world I'll touch on some of our mission driven innovation that accomplishments in a few minutes, but let's first look at some of the third quarter highlights.
Steve Blanco: I'll touch on some of our mission-driven innovation accomplishments in a few minutes, but let's first look at some of the third-quarter highlights. Overall, we once again demonstrated operational resilience with our quarterly results. For the third quarter, net sales decreased 3% year-over-year on both a reported and organic constant currency basis, and adjusted earnings increased. As we noted in our press release, the decline in sales was largely due to the previously mentioned delivery timing with fire service and some specific customer With that said, we continue to see positive order momentum, and our backlog grew sequentially during the quarter.
Steve Blanco: Overall, we once again demonstrated operational resilience with our quarterly results. For the third quarter, net sales decreased 3% year over year on both a reported and organic constant currency basis, and adjusted earnings increased 3%. As we noted in our press release, the client and sales was largely due to the previously mentioned delivery timing with fire service and some specific customer delays. With that said, we continue to see positive order momentum, and our backlog grew sequentially during the quarter. Orders increased year over year by high single digits, excluding the impact of the US Air Force order in each period.
Steve Blanco: Overall, we once again demonstrated operational resilience with our quarterly results.
Steve Blanco: For the third quarter net sales decreased 3% year over year on both a reported and organic constant currency basis, and adjusted earnings increased 3%.
Steve Blanco: As we noted in our press release the decline in sales was largely due to the previously mentioned delivery timing is fire service and some specific customer delays with that said, we continue to see positive order momentum and our backlog grew sequentially during the quarter orders increased year over year by high single digits exclude.
Steve Blanco: Orders increased year over year by high single digits, excluding the impact of the U.S. Air Force order in each period. During our earnings call in July, we discussed some aspects of order and delivery timing that could impact the cadence of the second half, including the Assistance for Firefighter Grants, or AFG, funding. This was released later this year than in 2023, and specifically around the U.S. Air Force SCBA order delivery timing. In final form, the U.S. Air Force schedule has shifted towards the end of the year, but we still expect to deliver most of that order in 2024.
Steve Blanco: The impact of the U S Air Force order in each period.
Steve Blanco: During our earnings call in July, we discussed some aspects of order and delivery timing that could impact the cadence of the second half, including the assistance for firefighter grants or AFG funding. This was released later this year than in 2023 and specifically around the US Air Force's SCBA order delivery time. In final form, the U.S. Air Force schedule has shifted towards the end of the year, but we still expect to deliver most of that order in 2024. While our top line sales number came in below what we planned, the team performed exceptionally well from an operational standpoint, as evidence by our overall earnings growth and margin performance.
Steve Blanco: During our earnings call in July we discuss some aspects of order and delivery timing that could impact the cadence in the second half, including the assistance for firefighter grants for AFG funding.
Steve Blanco: This was released later this year than in 2023, and specifically around the U S Air Force CBA order delivery timing.
Steve Blanco: In final form the U S Air Force schedule has shifted towards the end of the year, but we still expect to deliver most of that order in 2024.
Steve Blanco: While our top line sales number came in below what we planned, the team performed exceptionally well from an operational standpoint as evidenced by our overall earnings growth and margin growth. The overall demand environment remains healthy, albeit with some choppiness, and we continue to see a strong business pipeline.
Steve Blanco: While our top line sales number came in below what we planned the team performed exceptionally well from an operational standpoint, as evidenced by our overall earnings growth and margin performance.
Steve Blanco: The overall demand environment remains healthy, albeit with some happiness, and we continue to see a strong business pipeline. Moving to our product category, sales and fire service were down high single digits in the quarter, primarily due to the U.S. Air Force shipping delay, and also decline in bringing apparatus sales versus a strong prior year comp that included several large departments, such as LA County. As you know, fire service, SCBA order timing can be lumpy. While orders were up year over year, some customer orders have been delayed. At the same time, we retain a solid pipeline in North America.
Steve Blanco: The overall demand environment remains healthy, albeit with some choppiness and we continue to see a strong business pipeline.
Steve Blanco: Moving to our product categories. Sales in fire service were down high single digits in the quarter, primarily due to the U.S. Air Force shipping delay and also decline in breathing apparatus sales versus a strong prior year comp that included several large departments such as L.A. County. As you know, fire service SEBA order timing can be lumpy. While orders were up year over year, some customer orders have been delayed. At the same time, we retain a solid pipeline in North America, and we continue to have excellent international momentum with our M1 SCBA. In the third quarter, experience continued momentum in fire helmets with growth of our new Karnes 1836 and our F1XF, as well as turnout.
Steve Blanco: Moving to our product categories sales.
Steve Blanco: Sales in fire service was down high single digits in the quarter, primarily due to the U S. Air Force shipping delay and also decline in breathing apparatus sales versus a strong prior year comp that included several large departments such as L. A county.
Steve Blanco: As you know fire service SBA order timing can be lumpy, while orders were up year over year. Some customer orders have been delayed at the same time, we retain a solid pipeline in North America, and we continue to have excellent international momentum with our in one CBA and the third quarter experienced continued momentum in fire helmets.
Steve Blanco: And we continue to have excellent international momentum with our M1 SCBA. In the third quarter experience, continued momentum and fire helmets with growth of our new car in 1836, and our F1XF as well as turn out here. Sales and detection were up mid single digits. Fix gas and flame detection had a solid quarter, moderately declining compared to last year's robust third quarter growth, with good contribution from our FL 5000 flame detector. Portable detection sales continued to perform strongly in both traditional and connected devices. We also continue to see solid margin improvement in our detection business.
Steve Blanco: With growth of our new Karnes, 18, 36, and our F. One access as well as turn out gear.
Steve Blanco: Sales and detection were up mid single digits. Fixed gas and flame detection had a solid quarter, moderately declining compared to last year's robust third quarter growth, with good contribution from our FL5000 flame detection. Portable detection sails continue to perform strongly in both traditional and connected devices. We also continue to see solid margin improvement in our detection business. Industrial PPE sales were down mid-single digits year-over-year as international markets slowed. Head protection was up modestly, while fall protection declined mid-single digits, and we saw continued customer delays in ballistic helmets.
Steve Blanco: Sales in detection, we're up mid single digits fixed gas and flame detection had a solid quarter moderately declining compared to last year's robust third quarter growth with good contribution from our F. L 5000 flame detector.
Steve Blanco: Portable detection sales continued to perform strongly in both traditional and connected devices. We also continue to see solid margin improvement in our detection business.
Steve Blanco: Industrial PPE sales were down mid single digits year over year as international market slowed. Head protection was up modestly, while file protection declined mid single digits, and we saw continued customer delays in ballistic helmets.
Steve Blanco: Industrial PPE sales were down mid single digits year over year as international markets slowed head protection was up modestly while fall protection declined mid single digits, and we saw continued customer delays and ballistic helmets.
Steve Blanco: Turning to slide five, I'd like to share some innovation highlights from the third quarter. First, I'm proud to note that the Product Development and Management Association named MSA at 2024 Outstanding Corporate Innovator, making us one of only two companies to achieve this distinction twice in the 37-year history of the award. It recognizes companies consistently generating long-term value through exceptional product and service innovation. We were honored in part for our transformation from a safety equipment manufacturer to the global leader in developing and manufacturing advanced safety technologies and solutions. Second, I'd like to briefly highlight our portable detection business.
Steve Blanco: Turning to slide five, I'd like to share some innovation highlights from the third quarter. First, I'm proud to note that the Product Development and Management Association named MSA a 2024 Outstanding Corporate Innovator, making us one of only two companies to achieve this distinction twice in the 37-year history of the award. It recognizes companies consistently generating long-term value through exceptional product and service innovation. We were honored, in part, for our transformation from a safety equipment manufacturer to the global leader in developing and manufacturing advanced safety technologies and solutions. Second, I'd like to briefly highlight our portable detection business.
Steve Blanco: Turning to slide five I'd like to share some innovation highlights from the third quarter.
Steve Blanco: First I'm proud to note that the product development and management Association named MSA 2020 for outstanding corporate innovator, making us one of only two companies to achieve this distinction twice in the 37 year history of the award at.
Steve Blanco: It recognizes companies consistently generating long term value through exceptional product and service innovation, we were honored in part for our transformation from a safety equipment manufacturer to the global leader in developing and manufacturing advanced safety technologies and solutions.
Steve Blanco: Second I'd like to briefly highlight our portable detection business, we continue to grow across our diverse detection product category through innovation.
Steve Blanco: We continue to grow across our diverse detection product category through innovation. Portable sales have grown by nearly 40% over the last two years. While we continue to see strong growth in traditional portable devices, our fastest growing category is connected portables, now including a complete solution set sold through MSA Plus subscriptions. We're signing up new customers and are converting our existing installed BASA customers to connected solutions, with most customers selecting durable, multi-year contracts. In addition, there are opportunities for service contract add-ons and back-end contract renewals. We expect to see strong profitability from this business that will scale even more over time.
Steve Blanco: We continue to grow across our diverse detection product category through innovation. Portable sales have grown by nearly 40% over the last two years. While we continue to see strong growth in traditional portable devices, our fastest growing category is connected portables, now including a complete solutions set sold through MSA plus subscriptions. We're signing up new customers and are converting our existing installed basic customers to connect solutions, with most customers selecting durable multi-year contracts. In addition, there are opportunities for service contract add-ons and back-end contract renewals. We expect to see strong profitability from this business that will scale even more over time.
Steve Blanco: Portable sales have grown by nearly 40% over the last two years.
Steve Blanco: While we continue to see strong growth in traditional portable devices, our fastest growing category as connected portables.
Steve Blanco: Now, including a complete solution set sold through MSA plus subscriptions.
Steve Blanco: We're signing up new customers and are converting our existing installed base of customers to connected solutions with most customers selecting durable multiyear contracts. In addition, there are opportunities for service contract add ons and backend contract renewals.
Steve Blanco: We expect to see strong profitability from this business that will scale, even more over time.
Steve Blanco: Most of these contracts are incremental, with many new customers. customers. We'll discuss connected portables more in the future, but we wanted to highlight the success and strength we've had so far. We're in these early innings of this journey led by our I-04 device, which is the heart of our industrial technology strategy. Finally, MSA is proud of our products and solutions protecting more than 40 million workers annually, demonstrating our team's impact and safety.
Steve Blanco: Most of these contracts are incremental, with many new customers. We'll discuss connected portables more in the future, but we wanted to highlight the success and strength we've had so far. We're in the early innings of this journey, led by our IO4 device, which is the heart of our industrial technology strategy. Finally, MSA is proud of our products and solutions, protecting more than 40 million workers annually, demonstrating our team's impact in safety. In the third quarter, we were made aware of two specific cases where MSA's end users were saved from significant injury or death. One case was related to our IO4 gas detector, and the other was related to our lunar device in the SPIRE service.
Steve Blanco: Most of these contracts are incremental with many new customers.
Steve Blanco: We will discuss connected portables more in the future, but we wanted to highlight the success and strength we've had so far.
Steve Blanco: We're in the early innings of this journey led by our I O four device, which is the heart of our industrial technology strategy.
Steve Blanco: Finally, MSA is proud of our products and solutions protecting more than 40 million workers annually, demonstrating our team's impact and safety in the third quarter. We were made aware of two specific cases, where MSA as end users were saved from significant injury or death, one case was related to our I O four gas detector and.
Steve Blanco: In the third quarter, we were made aware of two specific cases where MSA's end users were saved from significant injury or death. One case was related to our I-04 gas detector, and the other was related to our lunar device and the Spire service. These remind us each and every day of our purpose and the importance of our mission that the entire team and MSA is committed to. I want to thank our team for working hard with these customers and are more than 5,000 associates around the world for their dedication to delivering innovative products and solutions that enable us to continue advancing the MSA mission of helping men and women work in safety throughout the world.
Steve Blanco: The other was related to our lunar device in the fire service. These remind us each and every day of our purpose and the importance of our mission that the entire team at MSA is committed to.
Steve Blanco: These remind us each and every day of our purpose and the importance of our mission that the entire team in MSA is committed to.
Steve Blanco: I want to thank our team for working hard with these customers and our more than 5,000 associates around the world for their dedication to delivering innovative products and solutions that enable us to continue advancing the MSA mission of helping men and women work in safety throughout the world.
Steve Blanco: I want to thank our team for working hard with these customers and are more than 5000 associates around the world for their dedication to delivering innovative products and solutions that enable us to continue advancing the MSA mission of helping men and women working safety throughout the world.
Lee McChesney: With that, I'll turn the call over to Lee, who will discuss our financial results for the third quarter.
Lee McChesney: With that, I'll turn the call over to Lee, who will discuss our financial results for the third quarter. Lee?
Speaker Change: With that I'll turn the call over to Lee, who will discuss our financial results for the third quarter Lee.
Lee McChesney: Lee? Thank you, Steve, and good day, everyone. We appreciate you joining the call. Let's now review our third quarter performance and provide an update on our full-year outlook. Let's get started on slide 6 with the quality results. Sales are 433 million, down 3% year-over-year on an organic, constant currency, and a reported basis, with lower volumes offsetting positive price contributions. Currency translation was relatively new to the quarter. Across our party categories, mid-singled as a growth in detection was offset by contractions in fire service and industrial PPE. Though growth was challenged by a strong year-over-year comparable period and the shipment timing change Steve mentioned, double-digit sales growth on a two-year stack reflects the help of underlying business.
Lee McChesney: Thank you, Steve, and good day everyone. We appreciate you joining the call. Let's now review our third quarter performance and provide an update on our full year outlook.
Lee: Thank you, Steve and good day, everyone. We appreciate you joining the call.
I'll review, our third quarter performance and provide an update on our full year outlook.
Lee McChesney: Let's get started on slide six with the quality results. Sales are $433 million, down 3% year-over-year on an organic, constant currency, and a reported basis. Lower Volumes, Offsetting Positive, Price Currency translation was relatively neutral. Across our product categories, mid-signal disengagement and detection was offset by contractions in fire service and industrial. Though growth was challenged by a strong year-over-year comparable period and the shipment timing change Steve mentioned, double-digit sales growth on a two-year stack reflects the health of our underlying economy. Overall, orders in the quarter were robust and have been high single digits over the past six months with growth in all of our markets.
Let's get started on slide six with a quality results.
Lee: Sales of $433 million down 3% year over year on an organic constant currency and a reported basis with lower volumes offsetting positive price contributions.
Lee: Currency translation was relatively neutral in the quarter.
Lee: Across our product categories mid single digit growth in detection was offset by contractions in fire service and industrial P. P.
Speaker Change: So growth was challenged by strong year over year comparable period, and the shipment timing change Steve mentioned double digit sales growth on a two year stack reflects the health of our underlying business.
Lee McChesney: Overall, orders in the quarter were robust and have been high-single to this over the past six months, with growth in all of our markets. Our commercial pipeline remains encouraging across our party categories and in most of our regions. And we have seen a nice continuation of activity so far in October. In the third quarter, our book-to-bill ratio was about 1.1 times and exceeds the one times on a year-to-date basis. As a result, our backlog increased sequentially due to these favorable trends and the normal 3Q seasonality, but remains below the unusually elevated levels of the past couple of years.
Overall orders in the quarter were robust and it had been high single digits over the past six months with growth in all of our markets. Our commercial pipeline remains encouraging across our product categories and in most of our regions and we have seen a nice continuation of activity so far in October.
Lee McChesney: Our commercial pipeline remains encouraging across our product categories and in most of our regions. We have seen a nice continuation of activity so far in October. In the third quarter, our book-to-bill ratio was about 1.1 times and exceeded 1 times on a yearly basis. As a result, our backlog increased sequentially due to these favorable trends and the normal 3Q seasonality, but remains below the unusually elevated levels of the past couple years. Our margin performance continues to be resilient, and the team's commitment to the MSA business system processes and behaviors are evident in our results. Gross profit margins were 47.9% in the quarter, 110 basis points below the strong levels of the prior year.
Speaker Change: In the third quarter, our book to Bill ratio was about one one times and exceeds the one times on a year to date basis.
Speaker Change: As a result, our backlog increased sequentially due to these favorable trends in the normal <unk> seasonality, but remains below the unusually elevated levels over the past couple of years.
Lee McChesney: Our margin performance continues to be resilient, and a team's commitment to the MSA business system processes and behaviors are evident in our results. Rose profit margins were 47.9% in the quarter, 110 basis points below the strong levels of the prior year. Operating margin on a gap basis was 21.1% in the quarter, including the benefits of lower SG&A. Adjusted operating margin was 22.6%, down 10 basis points over the prior year, and decremental operating margin was 24% within our target range of 20 to 30%. Operating margin performance is largely driven by a mix for activity, cost price management, and lower SG&A.
Speaker Change: Our margin performance continues to be resilient and the team's commitment to the MSA business system processes and behaviors are evident in our results.
Speaker Change: Gross profit margins were 47, 9% in the quarter of 110 basis points below the strong levels of the prior year.
Lee McChesney: Operating margin on a gap basis was 21.1% in the quarter, including the benefits of lower SG&S. Adjusted Operating Margin was 22.6%, down 10 basis points over the prior year. And Decremental Operating Margin was 24%, within our target range of 20 to 30%. Operating margin performance is largely driven by mix, productivity, cost-price management, and lower SG&A levels. Yeah, net income in the quarter was $67 million, or $1.69 per diluted share. On an adjusted basis, diluted earnings per share were $1.83, up 3% over the prior year. The increase was a combination of positive mix, productivity, lower SG&A, lower interest expense, and a lower year-over-year adjusted tax.
Speaker Change: Operating margin on a GAAP basis was 21, 1% in the quarter, including the benefits of lower SG&A.
Speaker Change: Adjusted operating margin was 22, 6% down 10 basis points over the prior year and decremental operating margin was 24% within our target range of 20% to 30%.
Speaker Change: Operating margin performance was largely driven by a mix productivity cost price management and lower SG&A levels.
Lee McChesney: Levels. Yeah, net income in the quarter was $67 million or $1.69 for a diluted share. On an adjusted basis, duet earnings per share of $1.83, up 3% over the per year. The increase was a combination of positive mix, productivity, low-rescue, low interest expense, and a lower year-over-year adjusted tax rate.
Speaker Change: GAAP net income in the quarter was $67 million or $1 69 per diluted share.
Speaker Change: On an adjusted basis diluted earnings per share were $1 83 up 3% over the prior year.
Speaker Change: The increase was a combination of positive mix productivity lower SG&A lower interest expense and a lower year over year adjusted tax rate.
Lee McChesney: Now moving on to our segment performance. In our American segment, sales decreased 5% on a reported basis year-over-year, with mid-significant growth in detection, offset by a shipment impacted decline in the fire service, and a slight contraction in the industrial PPE. Currency was a 2% heavily in the quarter. The adjusted operating margin was 30.7% of 80 basis points compared to the prior year. Margin expansion was driven by a positive mix for activity, cost price actions, and a lower SG&A. In our international segment, sales increased 1% on a reported basis a year-over-year. Healthy growth in a fire service in detection was mostly offset by the client in industrial PPE.
Lee McChesney: Now moving on to our segment performance. In our America segment, sales decreased 5% on a reported basis year-over-year, with mid-single-digit growth in detection, offset by a shipment-impacted decline in fire service, and a slight contraction in industrial PPE. Currency with a 2% headwind in the quarter. The Adjusted Operating Margin was 30.7%, up 80 basis points compared to the prior year. Margin expansion was driven by a positive mix, productivity, cost-price actions, and a lower SQE. In our international segment, sales increased 1% on a reported basis year-over-year. Healthy growth in fire service and detection was mostly offset by a decline in industrial PPE.
Speaker Change: Now moving onto our segment performance in our Americas segment sales decreased 5% on a reported basis year over year with mid single digit growth in detection offset by a shipment impact of decline in fire service and a slight contraction in industrial P. P.
Speaker Change: Currency was a 2% headwind in the quarter.
Speaker Change: The adjusted operating margin was 37% up 80 basis points compared to the prior year.
Speaker Change: Margin expansion was driven by a positive mix productivity cost price actions and a lower SG&A.
Speaker Change: In our international segment sales increased 1% on a reported basis year over year.
Speaker Change: Healthy growth in fire service and detection was mostly offset by a decline in industrial P. P.
Lee McChesney: On a geographic basis, growth in APAC was partially offset by the client in the year. Currency translation was a 2% tailwind in the quarter. Adjusted operating margin was 13.6% at decrease of 340 basis points a year, and profitability was challenged by lower volumes, or bus comparisons in period, and partially offset by productivity and price. Now turning to slide 7. Free cash flow in the quarter was 70 million, representing a conversion rate of 97% of adjusted earnings. Third quarter cash flow reflected healthy earnings in solid working capital execution. Consistent with a capital allocation strategy outlined at our investor day, capital deployment in the third quarter was balanced.
Lee McChesney: On a geographic basis, growth in APEC was partially offset by decline in emissions. Currency translation was a 2% tailwind. Adjusted operating margin was 13.6%, a decrease of 340 basis points year-over-year, and profitability was challenged by lower volumes, a robust comparison period, and partially offset by productivity and budget.
Speaker Change: On a geographic basis growth in APAC was partially offset by decline in India.
Speaker Change: Currency translation was a 2% tailwind in the quarter.
Speaker Change: Adjusted operating margin was 13, 6% a decrease of 340 basis points year over year and profitability was challenged by lower volumes or bus comparison period, and partially offset by productivity and price.
Lee McChesney: Now turning to slide 7, free cash for the quarter was $70 million representing a conversion rate of 97% of adjusted earnings. Third Quarter Cash Flow Reflected Healthy Earnings is Solid Working Capital Execution. Consistent with the capital allocation strategy outlined at our investor day, capital deployment in the third quarter was balanced. Capital expenditures for $14 million, up modestly compared to the prior year. We return $20 million in dividends to our shareholders, and we repurchase $10 million in common savings. Debt payments totaled $38,000. Now net debt at the end of the quarter was $400 million with a cash balance of $154 million.
Speaker Change: Now turning to slide seven.
Speaker Change: Free cash flow in the quarter was $70 million, representing a conversion rate of 97% of adjusted earnings.
Speaker Change: Third quarter cash flow reflected healthy earnings and solid working capital execution.
Speaker Change: Consistent with our capital allocation strategy outlined at our Investor Day capital deployment in the third quarter was about.
Lee McChesney: Capital expenditures were 14 million, up modestly compared to the prior year. We returned 20 million dollars in dividends to our shareholders, and we repurchased 10 million in common stock. Debt payments totaled 38 million. Now net debt at the end of the quarter was 400 million, with a cash balance of 154 million. Our net leverage ratio of a quarter end was 0.9 times, consistent with second quarter levels. Adjusted EBITF for the trailing 12 months and to September 30th was 464 million, or 25.7% of net sales.
Speaker Change: Capital expenditures were $14 million up modestly compared to the prior year.
Speaker Change: We returned $20 million in dividends to our shareholders and we repurchased $10 million in common stock.
Speaker Change: Debt payments totaled $38 million.
Speaker Change: Our net debt at the end of the quarter was $400 million with a cash balance of $154 million.
Lee McChesney: Our net leverage ratio at quarter end was 0.9 times, consistent with a second quarter level.
Speaker Change: Our net leverage ratio at quarter end with 0.9 times consistent with the second quarter levels.
Lee McChesney: Adjusted EBITDA for the trailing 12 months and to September 30th. 464,000,000 or 25.7% Now, let's move on to our Full Year Outlook on Slide 8. So although the operating environment in the second half of the year has been incrementally more dynamic, our broad diversification across products, geographic regions, and markets, as well as the attractive underlying market trends in the safety industry, continue to position us to deliver resilient results. As we look ahead to the fourth quarter, we expect to finish the year favorably with mid-single-digit revenue growth in the quarter, implying low single-digit growth for the full year 2024.
Speaker Change: Adjusted EBITDA for the trailing 12 months ended September 30th was $464 million or 25, 7% of net sales.
Lee McChesney: Now let's move on to our full year outlook on sliding. Although the operating environment in the second half of the year has been incrementally more dynamic, our broad diversification across products, geographic regions, and markets, as well as the attractive underlying market trends in the safety industry, continue to position us to deliver resilient results. As we look ahead to the fourth quarter, we've expected to finish the year favorably with mid-single-digit revenue growth in the quarter, implying low single-digit growth for the full year 2024. The expected mid-single-digit growth for the fourth quarter is supported by our orders and backlog, including the US Air Force business in compounds on top of the 12% for 40 growth.
Speaker Change: Now, let's move on to our full year outlook on slide eight.
Speaker Change: So although the operating environment in the second half of the year has been incrementally more dynamic our broad diversification across products geographic regions and markets as well as the attractive underlying market trends of the safety industry continued to position us to deliver resilient results.
Speaker Change: As we look ahead to the fourth quarter, we expect to finish the year favorably with mid single digit revenue growth in the quarter, implying low single digit growth for the full year 2024.
Lee McChesney: The expected mid-single-digit growth in the fourth quarter is supported by our orders and backlog, including the U.S. Air Force business, and compounds on top of the 12 percent reported growth we delivered in the fourth quarter of last year. Now compared to our July sales outlook, we have adjusted our view in line with the order and shipment dynamics that we're seeing with specific Looking forward, we're also well positioned to deliver at or above the high end of our 30 to 40% incremental margin objectives, and we remain on track to deliver a healthy cash flow conversion.
Speaker Change: The expected mid single digit growth in the fourth quarter is supported by our orders and backlog, including the U S Air Force business and compounds on top of the 12% reported growth we delivered in the fourth quarter of last year.
Lee McChesney: We deliver in the fourth quarter of last. last year. Now, compared to our July sales outlook, we have a just our view in line with the order and shipment dynamics that we're seeing with specific customers. Looking forward, we're also well positioned to deliver at or above the high end of our 30 to 40 percent incremental margin objectives, and we remain on track to deliver a healthy cash flow conversion. Finally, I want to extend my thanks to our associates worldwide who are so focused on passionately supporting our customers each and every day and supporting the Nishan Steve highlighted earlier.
Speaker Change: Now compared to our July sales outlook, we have adjusted our view in line with the order and shipment dynamics that we're seeing with specific customers.
Speaker Change: Looking forward, we're also well positioned to deliver at or above the high end of our 30% to 40% incremental margin objectives, and we remain on track to deliver a healthy cash flow conversion.
Lee McChesney: And finally, I want to extend my thanks to our associates worldwide who are so focused on passionately supporting our customers each and every day and supporting the mission Steve highlighted earlier.
Speaker Change: Finally, I want to extend my thanks to our associates worldwide, who are so focused on pashley supporting our customers each and every day in supporting the mission Steve highlighted earlier.
Steve Blanco: Now I'll turn the call back to Steve for concluding remarks.
Steve Blanco: Now I'll turn the call back to Steve for concluding remarks. Thank you, Lee.
Speaker Change: Now I'll turn the call back to Steve for concluding remarks.
Steve Blanco: Thank you, Lee. As we look forward, I want to reiterate the resiliency of our business driven by strong underlying industry fundamentals, our proven innovation process, and leading positions across our markets.
Steve Blanco: Thank you Lee as we look forward I want to reiterate the resiliency of our business driven by strong underlying industry fundamentals are proven innovation process and leading positions across our markets. I believe we have the best team in the industry and with our mindset around continuous improvement and commitment to the MSA business system, where we are.
Steve Blanco: As we look forward, I want to reiterate the resiliency of our business driven by strong underlying industry fundamentals, our proven innovation process and leading positions across our markets. I believe we have the best team in the industry. And with our mindset around continuous improvement and commitment to the MSA business system, we're well positioned to create value over the long term for our state.
Steve Blanco: I believe we have the best team in the industry, and with our mindset around continuous improvement and commitment to the MSA business system, we will be well positioned to create value over the long term for stakeholders.
Steve Blanco: Well positioned to create value over the long term for our stakeholders.
Operator: With that, I'll turn the call back to the operator for questions. We will now begin the question and answer session. To ask a question, you may press star, then 1 on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the key. To withdraw your question, please press star then 2.
Unknown Executive: With that, I'll turn the call back to the operator for questions.
With that I'll turn the call back to the operator for questions.
Unknown Executive: We will now begin the question and answer session. To ask a question, you may press star then one on your touchstone phone. If you are using a speaker phone, please pick up your handset before pressing the keys.
Speaker Change: We will now begin the question and answer session.
Speaker Change: To ask a question you May Press Star then one on your Touchtone phone.
Speaker Change: Youre using a speakerphone please pick up your handset before pressing the keys.
Unknown Executive: To withdraw your question, please press star, then two.
Speaker Change: To withdraw your question. Please press Star then two.
Unknown Executive: At this time, we will pause momentarily to assemble our roster.
Operator: At this time, we will pause momentarily to assemble our roster.
Speaker Change: At this time, we will pause momentarily to assemble our roster.
Speaker Change: Okay.
Speaker Change: Yeah.
Rob Mason: And our first question today comes from Rob Mason with Barrett.
Rob Mason: And our first question today comes from Rob Mason with Barrett. Please go ahead.
Speaker Change: And our first question today comes from Rob Mason with Baird. Please go ahead.
Rob Mason: Please go ahead.
Lee McChesney: Yes, good morning. I just wanted to start with, you noted you were able to deliver the decrementals within your guided range, and it looked like SG&A was a lever within that dynamic. Can you just speak to, you know, we saw a sequential decline there, perhaps some seasonality around that, but how should we be thinking about SG&A as we go into the fourth quarter and your ability to manage that number specifically?
Rob Mason: Yes, good morning. I just wanted to start with, you noted that you were able to deliver the decremental within your guided range, and it looked like SG&A was a lever within that dynamic. Can you just speak to, you know, we saw a sequential decline. There may perhaps be some seasonality around that. But just actually, we'll be thinking about SG&A's going to the fourth quarter in your ability to manage that number specifically.
Speaker Change: Yes, good morning.
Speaker Change: Good morning, just wanted to start with.
Speaker Change: Good morning.
Speaker Change: Wanted to start with.
Speaker Change: You noted you were able to deliver the decrementals are within your guided range.
Speaker Change: It looked like S.
Speaker Change: SG&A was a lever.
Speaker Change: Within that dynamic can you just speak to.
Speaker Change: We saw a sequential decline there, perhaps some seasonality around that but just how should we be thinking about SG&A as we go into the fourth quarter.
Speaker Change: And your ability to manage that number specifically.
Lee McChesney: Yes, certainly, Rob. I'll give it to Lee to take that one. Sure, the mortar op. So, as you know, the decremental, certainly, in the range you've talked about in the past, it certainly, gross margin was a contingentized resilient level. And then, to your point, SG&A is in a good place. Certainly, you know, we are focused on prioritization in SG&A. We certainly flex when we need to. And, you know, there's a benefit in the third quarter from just a bit lower volumes that comes through as well. But as you go forward, I think versus, you know, what you've seen in the past, you're going to see continued momentum.
Lee McChesney: Yes, certainly, Rob. I'll give it to Lee to take that one.
Speaker Change: Certainly Rob I'll I'll give it to lead to take that one sure. Good morning, Rob. So as you know the good Decrementals certainly in the range you've talked about in the past.
Lee McChesney: Sure.
Lee McChesney: Good morning, Rob. So, as you know, it's decremental, certainly, in the range we've talked about in the past. It certainly, gross margin was a continued nice resilient level. And then to your point, SG&A is in a good place. Certainly, are focused on prioritization in SGA. We certainly flex when we need to. And, you know, there's a benefit in the third quarter from just a bit lower volumes that comes through as well. But as you as you go forward, I think versus What you've seen in the past, you're going to see continued momentum. It won't be quite what it was in the third quarter.
It's certainly gross margin was a continued nice resilient level.
Speaker Change: To your point SG&A.
Speaker Change: <unk> is in a good place certainly.
Speaker Change: We are focused on prioritization in SG&A, we certainly flex when we need to.
Speaker Change: And you know there's a benefit in the third quarter from just a bit lower volumes that comes through as well but.
Speaker Change: But as you as we go forward.
Speaker Change: Versus a.
Speaker Change: What you've seen in the past you're going to see continued momentum all won't be quite what it wasn't a third quarter will certainly go up dollar wise, just because of the higher volume, but you'll still see a pretty pretty healthy ratio there. So.
Lee McChesney: It won't be quite what it was in the third quarter. We'll certainly go up dollar-wise just because of the higher volume. But you'll still see a pretty, pretty healthy ratio there. So, you know, but again, we're focused in driving incrementals, not. Yeah, yeah.
Lee McChesney: We'll certainly go up dollar-wise just because of the higher volume, but you'll still see a pretty healthy ratio. So. But again, we're focused on driving incrementals, not decrementals, but you get to see that when it happens. Yeah, yeah.
So yeah, but again, we're focused on driving Incrementals decrementals.
Speaker Change: Good to see that when it happens.
Speaker Change: Yep Yep.
Steve Blanco: Okay, the I wanted to see again that some of the customer timing shipment timing You know, not not a complete surprise there. But I'm curious, as you're thinking about your fourth quarter levels, sounds like Air Force, you are counting on shipping some of that. But just could you parse through some of the other specific customer delays? You know, what? Are you expecting those to abate in the fourth quarter? Or do those carry through year end? And where would we see those? If it's AFG related? You mentioned ballistic helmets, I thought also, but I'm just, you know, Provide a little more color around where you're seeing those delays.
Rob Mason: Okay.
Okay.
Rob Mason: I wanted to see, again, some of the customer timing, shipment timing.
Speaker Change: I wanted to see again, some of the customer timing shipment timing.
Speaker Change: Hum.
Speaker Change: You know, it's not it's not a complete surprise there.
Speaker Change: But I am curious as Youre thinking about your fourth quarter levels.
Speaker Change: Sounds like Air Force you are counting on shipping some of that but just could you parse through some of the other specific customer delays.
Speaker Change: Are you expecting those to abate in the fourth quarter or do those carry through year end and where would we see those if its AFG related you mentioned ballistic helmets I thought also but I'm just.
Speaker Change: Provide a little more color around where you're seeing those delays, yes, yes sure. So so if you think about the Air Force first answer that question we expect.
Steve Blanco: Yeah, yeah, sure, Rob. So so if you think about the Air Force first answer that question, we expect, you know, pretty much, I'd say 90 plus percent of that to ship in the fourth quarter. So that will ship and again, that's based on customer timing and what they would what they want to accept at what time. So that's really how that push. So we're prepared and expecting to do that. So I'd say most of that ships in the fourth quarter.
Speaker Change: Pretty much.
Speaker Change: I would say 90 plus percent of that to ship in the fourth quarter. So that will ship and again, that's based on customer timing and what they would what they want to accept at what time. So that's really how that pushed so we're prepared and expecting to do that so I'd say most of that shipped in the fourth quarter and then the other things you talked about ballistic.
Steve Blanco: And then the other things you talked about ballistics, this happened in Q2, actually, but in Q3, the customer, this is a European government customer, push this back to 2025. So that, you know, obviously comes out of the 24 story from a revenue perspective. We've got that business. You know, we have the contract here, but it's a push from them on timing to to take that order. So that's what we see. And we've seen a couple others like that.
Speaker Change: This happened in Q2 actually but in Q3.
Speaker Change: Customer this is a European government customer.
Speaker Change: Push this back to 2025, so that obviously comes out of the 24 story from a revenue perspective, we've got that business.
Speaker Change: We have the the contract here, but it's a push from them on timing to take that order. So that's what we see and we've seen a couple of others like that we saw a third that are going to affect the fourth quarter. We got one in the Americas and Latin America are large government order the same thing.
Steve Blanco: We saw a third that are going to affect the fourth quarter. We've gotten one in the Americas, in Latin America, a large government order, the same thing. Again, we have the business, we're the incumbent, and they've told us we have the business. They just pushed it back because of the election change that they had with their government. So everything's intact there.
Speaker Change: Again, we have the business, where we're the incumbent and they've told US we have the business. They just pushed it back because of.
Speaker Change: The election change that they had with their government. So everything is intact. There you know in the fire service.
Steve Blanco: You know, on the fire service, it's not inconsistent as you, you know, you know our story pretty well. So we've seen this lumpiness before. The pipeline's really good. Business is resilient. The AFG funding is now released, which is good. But the order timing can be lumpy, as we've seen in past years, and that's what we've seen this time. You know, they haven't gone to competitive accounts, but they're slower to close than we expected. So that's really where we're at on why we called out, you know, some of these orders taking a little bit more time than we had hoped.
Speaker Change: It's not inconsistent as you you know you know our story pretty well so.
Speaker Change: We've seen this lumpiness before the pipeline is really good businesses resilient. The AFG funding is now released which is good but the order timing can be lumpy as we've seen in past years and that's what we've seen this time they haven't gone to competitive accounts, but they are slower to close than we expected. So that's really where we're at.
Speaker Change: On why we called out.
Speaker Change: Some of these orders taken a little bit more time than we had hoped.
Rob Mason: Sure.
Sure.
Steve Blanco: Just one last follow up. Just could you go through, you know, you called out portable, portable gas strength in the quarter, both on the traditional and the connected side, just kind of the underlying market drivers there? Or do you think this is, you know, the strength?
Speaker Change: Okay.
Speaker Change: One last follow up I just could you go through you know you called out portable portable gas strength in the quarter.
Speaker Change: Both on the traditional and the connected side just.
Speaker Change: The underlying market drivers there or do you think this is.
Steve Blanco: Or do you think that is Some share gain mixed in into that, just What kind of underpins the double-lidded growth? I think it's both. I think you're correct on your thesis on share gain. We're certainly seeing that occur. We're also seeing expansion of your wallet share, right, as we're providing more value through these connected solutions to our customer base. And really, we're expanding the customer base overall itself.
Speaker Change: The strength or do you think that is.
Speaker Change: Some share gain mixed in and do that just.
Speaker Change: What kind of underpins the double digit growth there.
Speaker Change: It's both I think you're correct on your your thesis on share gain which certainly seen that occur. We're also seeing expansion of.
Speaker Change: Your wallet share right as we're providing more value through these connected solutions to our customer base.
Speaker Change: And really where we're expanding the customer base overall itself. So we have this.
Steve Blanco: So we have this – if you think about the portable portfolio, we really got options, a diverse set of options for the markets, right? So our customers can choose whether they want that traditional platform or they want to have this connected platform, which we go to market through MSA+. And it's a tremendous combination for the customers to choose from. So the growth was both. So we saw some mid to upper single digit, depending on the market, for the traditional. But really, by and large, the high acceleration of growth is the connected platforms we're seeing. So that's what we expect to kind of continue to see.
Speaker Change: If you think about the affordable portfolio, we really got.
Speaker Change: Options a diverse set of options for the markets right. So our customers can choose whether they want that traditional platform or they want to have this connected platform, which we go to market through MSA plus and its a tremendous combination for the customers to choose from so the growth was both.
Speaker Change: So we saw some mid to upper single digit depending on the market for the traditional but really by and large the high acceleration of growth as the connected platforms. We're saying so that's that's what we expected.
Continue to see it fits really well with what we talked about.
Steve Blanco: It fits really well with what we talked about earlier this year as we walked through the strategy at Investor Day. And that's playing out really nicely. Very good.
Speaker Change: Earlier this year as we walked through the strategy at Investor Day, and that's that's playing out really nicely.
Speaker Change: Very good.
Operator: I'll turn it back. Again, if you have a question, please press star then 1.
Speaker Change: I will turn it back thank you.
Speaker Change: Okay.
Speaker Change: But again if you have a question. Please press Star then one.
Ross Sparenblek: And our next question today comes from Ross Sparenblek with William Blair. Please go ahead.
Speaker Change: And our next question today comes from Ross Sparing Black with William Blair. Please go ahead.
Steve Blanco: Good morning, guys. Morning, Ross. Maybe just starting with broader in-market demand, backlog's difficult to track, so can you just give us a sense of the high single-digit growth in the quarter? Is that seasonal? Is that, you know, kind of, you know, maybe more just the push out of the orders from the third quarter? And what expectations are just broader demand? Because, I mean, it would appear like you guys are taking share across most of these sides.
Speaker Change: Hey, good morning, guys.
Speaker Change: Morning Ross.
Speaker Change: Maybe just starting with broader end market demand.
Speaker Change: Backlog difficult to track. So can you just give us a sense.
Ross: The high single digit growth in the quarter is that seasonal is that kind of maybe more just a push out of the orders in the third quarter and what expectations are and just broader demand because I mean, it would appear like you guys are taking share across most of your segments.
Steve Blanco: Thanks, Ross. Thanks for the question. So, if we think of demand, it was healthy, to your point, with orders up by single digits.
Speaker Change: Thanks Ross.
Speaker Change: Thanks for the question. So if we think of demand it was healthy to your point with orders up high single digits, and <unk> and I'll turn it over to Lee to talk a little bit more about.
Lee McChesney: And I'll turn it over to Lee to talk a little bit more about what it does on the backlog story and a bit on the book to build. But when we look at the markets, I would kind of think of it this way. We do feel like we're in a really good position from a share perspective. Detection, we just talked a little bit about as I answered Rob's question on portables. We're seeing some nice performance in fixed as well. Last year was a tough comp because we had such great growth, but really solid performance. Industrial is still mixed.
Lee: What it does on the backlog story and a bit on the book to Bill, but when we look at the markets.
Speaker Change: I would kind of think of it this way we do feel like.
Speaker Change: We're in a really good position from a share perspective detection, we just talked a little bit about <unk>.
Speaker Change: As I answer Rob's question on Portables were seeing some nice performance in fixed as well last year was a tough comp because we had such great growth, but really solid performance industrial still mixed we see some really good market performance in some categories and some we don't.
Steve Blanco: We see some really good market performance in some categories and some we don't that are a little softer. Europe is a little softer than most right now. But overall, it's been consistent throughout the year. I haven't seen an uptick. as we've come into the second half of the year, but we haven't seen much degradation either, and we kind of expect it to remain fairly constant through the rest of the year.
Speaker Change: They're a little softer Europe's a little softer than most right now, but overall, it's been consistent throughout the year I haven't seen an uptick.
Speaker Change: As we've come into the second half of the year, but we haven't seen much degradation, either and we kind of expect it to remain fairly constant through the rest of the year and in the fire service, you know really doing well with.
Steve Blanco: And in the fire service, you know, we're really doing well with international growth in the fire service. The team's taking a ton of share, which we're really pleased with. They're performing well. They're competing extremely well with customers across the international markets, which is a real strength for us. And then we expect the fire service in North America to, as we said, we've got the pipeline. It's just a matter of getting some of those orders to close. But overall, yeah, we feel like in totality our position in the markets are really strong, probably as strong as they've ever been.
Speaker Change: With international growth in the fire service the teams, taking a ton of share, which we're really pleased with they are performing well they are competing extremely well with customers across the international markets, which is a real strength for US and then we expect the fire service in North America due as we said we've got the pipeline, it's just a matter.
Speaker Change: I'm getting some of those orders to close but overall, yeah, we feel like.
Speaker Change: In totality.
Speaker Change: Our position in the markets are a really strong probably as strong as they've ever been but maybe Lee you can parse out a little bit about the backlog sure sure. So hey, good morning Ross.
Lee McChesney: But maybe, Lee, you can parse out a little bit about the backlog.
Lee McChesney: Sure, sure.
Lee McChesney: So, hey, good morning, Ross.
Unknown Executive: As we noted on the call here, Unknown Executive, Chris Hepler, Gregory Martin, Ross Sparenblek, Lee McChesney, Gregory Martin, Unknown Executive, Chris Hepler, Gregory Martin, Ross Sparenblek, Lee McChesney, Gregory Martin, Ross Sparenblek, No, that's very helpful.
Speaker Change: As we noted on the call here.
Speaker Change: A reminder, never never to overreact to one quarter.
Speaker Change: But certainly a nice quarter.
Speaker Change: One one but we also gave you the full year year to date number as well, which is slightly above one.
Speaker Change: And I think it really speaks to where Steve was going you know we're still seeing it.
Speaker Change: Good good markets it can be lumpy from quarter to quarter, we're talking about for orders you know a nice high single digit number here in the third quarter.
Speaker Change: Performance in the second quarter. So I think you know that does speak to Jefferies C was walking through those you look forward as well I'm.
Speaker Change: Just giving some insight too across the market as we say you know what is your high single digit was very very consistent frankly across all three categories of our business.
Speaker Change: And good performance around the globe as well there are spots in the world that are not as healthy, but overall, it's a good place.
Speaker Change: <unk> also that in the third quarter.
Speaker Change: The orders we saw did not include airports, we book Air Force in the second quarter. So it just speaks to the order dynamic.
Speaker Change: So.
Speaker Change: Okay.
Speaker Change: No that's very helpful.
Ross Sparenblek: Maybe just follow up on Rob's question. I mean, could you maybe help us size that third quarter order impact?
Speaker Change: Maybe just follow up on Rob's question I mean can you maybe help us size that third quarter order tax impact and I know I'm not trying to pin you guys down to a 25.
Steve Blanco: And I know I'm not trying to pin you guys down to a 25, but it would be good solid to get a sense of kind of the comp impact we should expect as we think about the $23 million Air Force order and also the backlog conversion in the first half of the year. So, yeah, and Ross, just let me clarify, too, because we had Air Force in the first half of the year for the first truck. And obviously that went through the business. And then, you know, a good portion of Air Force also fell into three Q, which is really what you're gonna see here are nominally in four Qs we talked about earlier.
Speaker Change: It would be get the seller to get a sense of kind of the comp impact you should expect is when you're thinking about the $23 million of Air Force order and also the backlog conversion in the first half of the year.
Speaker Change: So Ross, let me clarify it too because we had air force in the first half of the year for the first tranche.
Speaker Change: And obviously that went through the business and then.
Speaker Change: Good good good portion of Air Force also fell into three <unk>, which is really what youre going to see here pardon nominally and <unk> as we've talked about really sort of clarify that for you. So.
Steve Blanco: Just make clear. So beyond that, you still have healthy growth in the category that I mentioned. Yeah, I would say, Ross, you're right. I mean, we're going to be comping. Two straight years of Air Force, right, for 25, to your point.
Speaker Change: So beyond that bill had healthy growth in the categories. I mentioned, yeah, I would I would say Ross you're right I mean, we're going to be comping.
Speaker Change: Two straight years of Air Force rate for 25 to your to your point.
Steve Blanco: But, you know, we'll plan to talk more about 25 as we wrap 24. What I would suggest that you think about and just we stay centered on and we're very comfortable with is we're fully committed to our 28 targets we identified during Investor Day. And as we noted, 25, and as you said, the 25 comp challenges are there with Air Force, but we're fully committed to what we laid out there for the Investor Day. You know, the margin expansion, certainly the growth, and the compounding on EPS.
Speaker Change: But we'll plan to talk more about 25 as we ramped 24, what I would suggest that you think about and just restate centered on and we're very comfortable with as we are fully committed to our 28 targets. We identified during Investor day, and as we noted 25 and you said that 25 comp challenges are there with air Force.
Speaker Change: But we're fully committed to what we laid out there for for the Investor Day, you know the margin expansion certainly the growth.
Speaker Change: And the compounding on EPS.
Steve Blanco: And then maybe just for International Flyer, do you get the sense that competitors become more price rational there? That's probably more volume and order. It's a really interesting question. It's really different by market. China and Asia-Pacific are a bit different. We introduced a different product category for SCBAs in the Asian market this year that's doing really well, but it's matching the needs of the customer base in that area. It's a little lower price point, but the M1 is competing really well. A lot of what we're seeing, there's still some of this price-based customer needs, I guess I'd call it out there.
Speaker Change: Got it okay.
Speaker Change: And then maybe just for international fire do you get the sense that competitors have become more price rational there.
Speaker Change: Should we think that that is probably more volume this quarter.
Speaker Change: Yeah.
That's a really interesting question so we have it.
It's really different by markets in China, and Asia Pacific are a bit different. So we've we introduced a a different product category for S. C. B as in the Asian market. This year, Thats doing really well, but it's matching the needs of the customer base in that area. So it's a little lower lower price.
Speaker Change: Point.
Speaker Change: But the M. One is competing really well a lot of what we've seen there's still some of this price based.
Customer needs I guess I'd call. It out there and we're certainly we understand that but a lot of the customers really looking to functionality fit performance and when they do an evaluation. It's it's really nice to see them way that a lot more than they do price. So theyre looking at total value, which I think we compete very well with it.
Steve Blanco: We understand that, but a lot of the customer is really looking to functionality, fit, performance. When they do an evaluation, it's really nice to see them weigh that a lot more than they do price. They're looking at total value, which I think we compete very well with.
Steve Blanco: And then there's one more in here on portables, you know, 3Q is a seasonal low historically and double-digit growth, and that's obviously showing some signs of acceleration. By our math, maybe there's 5,000, 6,000 incremental units, so it's kind of the expectation that we're kind of ramping to maybe there's 20,000 unit run rate. You mean on portable instruments? Is that what your question is? Gas, yeah, portable gas detection. Okay, so, yeah, so if you look at fixed, fixed gas detection, I think the unit run rate continues to be pretty consistent. Portable gas detection, you know, I think on orders, you may be closer on the order count, but on unit count, it's a magnitude higher than that.
Speaker Change: That's perfect.
Speaker Change: Then just one more in here on portables, <unk> seasonal low historically and double digit growth and that's obviously showing some signs of acceleration.
Speaker Change: By our math, maybe there is 5000 6000 incremental units.
Speaker Change: The expectation that we're kind of ramping into maybe there's 20000 unit run rate.
Speaker Change: Okay.
Speaker Change: You mean on portable instruments is that what your question is yes, yes, and portable gas detection. Okay. So yes. So if you look at fixed fixed gas detection I think the unit run rate continues to be pretty consistent portable gas detection.
Speaker Change: I think on orders you may be closer on the order count but on unit counts.
Speaker Change: It's a magnitude higher than that.
Steve Blanco: We're seeing, what's really nice is we're seeing on this traditional business, the customer continues to really look at our value prop. So we talk about accuracy of sensors, durability of the product, reliability across our portfolio, and certainly our service. So we're winning there in, you know, converting business in a, you know, probably a higher rate than we expected on the traditional. And then what's happening on, you know, the connected portable side is playing exactly, playing out how we thought it would. You think of the growth there more like you would think of a software platform, and that's the kind of growth we're actually seeing there.
Speaker Change: We have seen.
Speaker Change: It's really nice as we're seeing it on this on this.
Speaker Change: Traditional business the customer continues to really look at our value prop. So.
Speaker Change: So we talk about accuracy of sensors durability of the product reliability.
Speaker Change: Across our portfolio and certainly our service so we're winning there and converting business.
Speaker Change: Probably a higher rate than we expected on the traditional and then what's happening on the <unk>.
Speaker Change: Connected portable side is playing exactly playing out how we thought it would you think of the growth there more like you would think of a software platform and thats the kind of growth. We're actually seeing there. So we do expect that to continue and now it is on a low base.
Steve Blanco: So we do expect that to continue. Now, it is on a low base.
Steve Blanco: It's still under 10% of our overall portables revenue, and I think that's important to note, which is why we keep these combined, and we'll continue to track that and keep you updated on the progress.
Speaker Change: Still under 10% of our overall portables revenue and I think that's important to note, which is why we keep these combined and we will we will continue to track that and keep you updated on the progress.
Rob Mason: Thank you, guys.
Ross Sparenblek: That's great. Thank you guys.
Speaker Change: That's great. Thank you guys.
Unknown Executive: Thank you.
Operator: Thank you.
Speaker Change: Thank you.
Unknown Executive: This concludes our question and answer session.
Operator: This concludes our question and answer session.
Speaker Change: This concludes our question and answer session I would like to turn the conference back over to Larry de Maria for any closing remarks.
Larry DiMaria: I would like to turn the conference back over to Larry DeMaria for any closing remarks. Okay, thank you. We appreciate you joining the call this morning and for your continued interest in MSA safety.
Lawrence Maria: I would like to turn the conference back over to Larry DeMaria for any closing remarks.
Lawrence Maria: Okay, thank you.
Speaker Change: Okay. Thank you. We appreciate you joining the call. This morning and for your continued interest in MSA safety. If you missed a portion of today's call. An audio replay will be made available later today on our Investor Relations Web site and will be available for the next 90 days, we look forward to updating you on our continued progress again next quarter.
Lawrence Maria: We appreciate you joining the call this morning. If you continue to interest in MSA Safety. If you missed a portion of today's call, an audio replay will be made available later today on our investor relations website and will be available for the next 90 days. We look forward to updating you on our continued progress again next quarter.
Larry DiMaria: If you missed a portion of today's call, an audio replay will be made available later today on our Investor Relations website, and will be available for the next 90 days.
Larry DiMaria: We look forward to updating you on our continued progress again next quarter.
Unknown Executive: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect. Thank you.
Operator: The conference is now concluded. Thank you for attending today's presentation.
Speaker Change: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Operator: You may now disconnect.
Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: [noise] [music].
Operator: © BF-WATCH TV 2021