• Revenue: $421 million, an increase of 2% reported and 4% organic over the prior year.
• Gross Margin: 45.9%, down 140 basis points from last year.
• Operating Margin: GAAP operating margin at 18.5%; adjusted operating margin at 20.8%, down 50 basis points year over year.
• Net Income: $60 million or $1.51 per share GAAP; adjusted diluted earnings per share at $1.68, up 4% from last year.
• Free Cash Flow: $51 million, with a conversion rate of 86%.
• Segment Performance - Americas: Sales decreased 1% reported, up 1% organic; adjusted operating margin at 26.8%, down 240 basis points.
• Segment Performance - International: Sales increased 9% reported, 11% organic; adjusted operating margin at 14.6%, up 310 basis points.
• Adjusted EBITDA: $470 million for the trailing 12 months, 25.9% of net sales.
• Net Debt: $331 million, including cash of $171 million.
• Order Trends: Healthy order pace with a quarterly book-to-bill ratio above 1.

• Warning! GuruFocus has detected 4 Warning Signs with NMRK.

Release Date: April 30, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• MSA Safety Inc (NYSE:MSA) exceeded original expectations for the first quarter of 2025, delivering solid free cash flow generation.
• The company experienced strong demand across its Detection product category, contributing to higher sales.
• International growth was up double digits organically, particularly in the Asia Pacific region.
• MSA Safety Inc (NYSE:MSA) secured a $10 million breathing apparatus contract from the Orange County Fire Authority, marking a key competitive conversion.
• The company successfully amended and increased its revolving credit facility to $1.3 billion, providing ample liquidity for growth initiatives.

Negative Points

• Operating margins declined year over year due to gross margin pressure from transactional foreign currency headwinds.
• Sales in the Fire Service category were down high single digits year over year, primarily due to challenging comparables in the Americas segment.
• Gross margin was impacted by inflation and foreign exchange headwinds, particularly from Latin American currencies.
• The company faces increased macroeconomic uncertainty and global tariff activity, which could present risks to growth outlook.
• Tariffs have become a significant concern, with about 15% of the cost of sales now subject to tariffs, impacting long-term strategic planning.

Q & A Highlights

Q: How has project decision-making been affected by tariffs during the quarter? A: Steven Blanco, President and CEO, explained that while tariffs have been a concern, MSA Safety has seen strong project work, particularly in energy and petrochemical sectors. The company has accelerated shipments for some customers, especially in North America, to mitigate tariff impacts. Detection has shown strong performance globally, supporting a positive outlook for 2025.

Q: Can you provide more details on the growth in the Detection business, specifically between fixed and portable devices? A: Steven Blanco noted that both fixed and portable Detection devices performed well, with double-digit growth in incoming orders. The growth was balanced between traditional Detection and MSA+ connected devices, indicating strong demand across the portfolio.

Q: What was the impact of foreign exchange on gross margins, and how is it expected to evolve? A: Elyse Brody, Interim CFO, stated that foreign exchange, particularly in Latin American currencies, significantly impacted gross margins in the first quarter. This pressure is expected to continue into the second quarter, but the company anticipates seeing the effects of tariffs and mitigation efforts in the second half of the year.

Q: How is MSA Safety addressing potential tariff impacts and supply chain challenges? A: Steven Blanco highlighted that MSA Safety is implementing targeted price increases and leveraging its business system to manage costs and productivity. The company is evaluating long-term strategic initiatives to mitigate tariff impacts and is committed to maintaining a strong position despite potential short-term challenges.

Q: Will cost reduction actions taken in response to tariffs result in long-term margin gains? A: Steven Blanco indicated that cost reduction actions are viewed as long-term strategic initiatives, and the company expects these to contribute to sustained margin improvements. Pricing strategies will be adjusted based on market conditions, but cost efficiencies are expected to hold over the long term.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.