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While MSA Safety (NYSE: MSA) continues to face challenges in several of its end markets, it is doing an admirable job battling against these issues. That was the case again during the third quarter where the headwinds facing the company kept a lid on revenue growth. However, its restructuring programs, as well as investments in growth initiatives, propelled earnings up more than 20%. While the company does not expect its current challenges to go away anytime soon, it believes that it can continue to mute their impact and keep growing the bottom line.
MSA Safety's results: The raw numbers
Data source: MSA Safety. YOY = year over year.
What happened with MSA Safety this quarter?
MSA Safety's restructuring program continues to pay big dividends.
- Revenue edged up nearly 2% due primarily to the company's recent acquisition of Latchways, which boosted sales in the company's fall protection segment by 116% year over year. In fact, if it were not for the addition of Latchways, its net sales would have declined by 3% due to weaker year-over-year sales to fire departments.
- Latchways also padded the bottom line, adding $0.03 per share in net income during the quarter.
- Meanwhile, cost reductions made up the rest of profit growth during the quarter, with the company cutting the cost of products sold by 2.9% while keeping a lid on selling, general, and administrative (SG&A) costs.
What management had to say
About the quarter, CEO William Lambert said:
MSA Safety has overcome the challenges facing its business by cutting costs while at the same time investing in its future. These investments are paying off, with its recently launched G1 SCBA driving a 9% year-over-year improvement in sales in the breathing apparatus segment year to date. The company continues to secure key contract wins for this device, recently securing a $4 million deal to supply the Boston Fire Department with its state-of-the-art equipment.
In addition to those organic sales wins, MSA Safety continues to make strategic acquisitions and bring new products to its portfolio. During the quarter, it announced a deal to acquire Senscient, which will expand and enhance its offerings to the market for fixed gas and flame detection systems.
The company needs to continue these self-help efforts given its outlook for what lies ahead. According to Lambert:
Given MSA Safety's success over the past year, Lambert's confidence in its ability to meet challenges head-on does not appear to be misplaced.
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Matt DiLallo has no position in any stocks mentioned. The Motley Fool owns shares of and recommends MSA Safety. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.