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What changed in MSA Safety Inc's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of MSA Safety Inc's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+247 added−258 removedSource: 10-K (2025-02-14) vs 10-K (2024-02-16)

Top changes in MSA Safety Inc's 2024 10-K

247 paragraphs added · 258 removed · 197 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeBecause of our broad and diverse product line and our desire to reach as many markets and market segments as possible, we have over 2,100 authorized distributor locations worldwide. 6 Table of Contents Competition —The global safety products market is broad and highly fragmented with few participants offering a comprehensive line of safety products.
Biggest changeCompetition —The global safety products and solutions market is broad and highly fragmented with few participants offering a comprehensive line of safety products and solutions. The sophisticated safety products market in which we compete is comprised of both core and non-core offerings and is a subset of the larger safety market.
Products — We design, manufacture, and sell a comprehensive line of safety products and solutions to protect workers and facility infrastructures around the world. Our products protect people and critical infrastructure against a wide variety of hazardous or life-threatening situations. The following is a brief description of each of our product categories: Core products.
Products and solutions — We design, manufacture, and sell a comprehensive line of safety products and solutions to protect workers and facility infrastructures around the world. Our products and solutions protect people and critical infrastructure against a wide variety of hazardous or life-threatening situations. The following is a brief description of each of our product categories: Core products.
We dedicate significant resources to research and development, which allows us to produce innovative safety products that are often first to market and usually protected by intellectual property. Our global product development teams include cross-functional associates throughout the Company, including research and development, marketing, sales, operations and quality management.
We dedicate significant resources to research and development, which allows us to produce innovative safety products and solutions that are often first to market and usually protected by intellectual property. Our global product development teams include cross-functional associates throughout the Company, including research and development, marketing, sales, operations and quality management.
Our engineers and technical associates work closely with the safety industry’s leading standards-setting groups and trade associations to develop industry specific product standards and to anticipate their impact on our product line. We leverage the MSA Business System ("MBS") to develop and introduce innovative safety solutions, secure new business opportunities, and operate with greater efficiency and purpose.
Our engineers and technical associates work closely with the safety industry’s leading standards-setting groups and trade associations to develop industry-specific product standards and to anticipate their impact on our product line. We leverage the MSA Business System ("MBS") to develop and introduce innovative safety solutions, secure new business opportunities, and operate with greater efficiency.
Research and Development — To achieve and maintain our market leading positions, we operate several sophisticated research and development facilities. We believe our dedication and commitment to innovation and research and development allows us to produce state-of-the-art safety products that are often first to market and exceed industry standards.
Research and Development — To achieve and maintain our market leading positions, we operate several sophisticated research and development facilities. We believe our dedication and commitment to innovation and research and development allows us to produce state-of-the-art safety products and solutions that are often first to market and exceed industry standards.
We believe our sales and distribution strategy allows us to deliver a customer value proposition that differentiates our products and services from those of our competitors, resulting in increased customer loyalty and demand. In areas where we use indirect selling, we promote, distribute and service our products to general industry through authorized national, regional and local distributors.
We believe our sales and distribution strategy allows us to deliver a customer value proposition that differentiates our products and solutions from those of our competitors, resulting in increased customer loyalty and demand. In areas where we use indirect selling, we promote, distribute and service our products to general industry through authorized national, regional and local distributors.
The MSA M1 SCBA, which is our primary breathing apparatus product in the International segment, represents the most advanced and ergonomic SCBA we have launched in the International markets. The “M” stands for modular, which is a critical design element that allows this platform to meet the many varied needs of customers around the world.
The MSA M1 SCBA, which is our primary breathing apparatus product in the International segment, represents the most advanced and ergonomic SCBA we have launched in the International markets. The “M” stands for modular, which is a critical design element that allows this platform to meet the needs of customers around the world.
We believe that participants in this industry compete primarily on the basis of product characteristics (such as functional performance, technology, cost of ownership, comfort, design and style), brand name recognition and after-market service support. We believe we compete favorably within each of our operating segments as a result of our high quality, innovative offerings and strong brand trust and recognition.
We believe that participants in this industry compete primarily on the basis of product characteristics (such as functional performance, technology, cost of ownership, comfort, design and style), brand name recognition and after-market service support. 6 Table of Contents We believe we compete favorably within each of our operating segments as a result of our high quality, innovative offerings and strong brand trust and recognition.
International segment sales are typically weaker for the Europe region in the summer holiday months of July and August and seasonality can be affected by the timing of delivery of larger orders. Invoicing and the delivery of larger orders can affect sales patterns variably across all reportable segments. Available Information — Our Internet address is www.MSAsafety.com.
International segment sales are typically weaker for the Europe region in the summer holiday months of July and August and seasonality can be affected by the timing of delivery of larger orders. Invoicing and the delivery of larger orders can affect sales patterns variably across all reportable segments. 8 Table of Contents Available Information — Our Internet address is www.MSAsafety.com.
Human Capital —As of December 31, 2023, the Company employed approximately 5,100 people worldwide, of which approximately 2,200 were employed in the United States and 2,900 were employed outside of the United States. Approximately 20% of our global workforce is covered by collective bargaining agreements or works councils. Overall, we consider our employee relations to be good.
Human Capital —As of December 31, 2024, the Company employed approximately 5,200 people worldwide, of which approximately 2,300 were employed in the United States and 2,900 were employed outside of the United States. Approximately 20% of our global workforce is covered by collective bargaining agreements or works councils. Overall, we consider our employee relations to be good.
Our core values are encircled by “A Culture of Safety.” Workplace Health & Safety — As a company whose mission is dedicated to worker safety, MSA places great emphasis on the health and safety of our own associates.
Our core values are encircled by “A Culture of Safety.” 7 Table of Contents Workplace Health & Safety — As a company whose mission is dedicated to worker safety, MSA places great emphasis on the health and safety of our own associates.
Customers — Our customers generally fall into two categories: distributors and end-users. In our Americas segment, the majority of our sales are made through distribution. In our International segment, sales are made through both indirect and direct sales channels. For the year ended December 31, 2023, no individual customer represented more than 10% of our sales.
Customers — Our customers generally fall into two categories: distributors and end-user customers. In our Americas segment, the majority of our sales are made through distribution. In our International segment, sales are made through both indirect and direct sales channels. For the year ended December 31, 2024, no individual customer represented more than 10% of our sales.
Non-core products reinforce and extend the core offerings, drawing upon our customer relationships, distribution channels, geographical presence and technical experience. These products are complementary to the core offerings and sometimes reflect more episodic or contract-driven growth patterns. Key non-core products include air-purifying respirators, eye and face protection, ballistic helmets and gas masks.
MSA maintains a portfolio of non-core products. Non-core products reinforce and extend the core offerings, drawing upon our customer relationships, distribution channels, geographical presence and technical experience. These products are complementary to the core offerings and sometimes reflect more episodic or contract-driven growth patterns. Key non-core products include air-purifying respirators, eye and face protection, ballistic helmets and gas masks.
Diversity and Inclusion —Diversity and Inclusion is a Core Value at MSA, and the Company seeks a wide variety of people, thoughts, perspectives, and ideas. MSA strives to provide a diverse and inclusive work environment, paired with a culture of excellence in which associates feel comfortable openly sharing thoughts and ideas.
Diversity and Inclusion —Diversity and Inclusion is a Core Value at MSA, and the Company seeks a wide variety of thoughts, perspectives, experiences and ideas. MSA strives to provide an inclusive work environment, paired with a culture of excellence in which associates feel comfortable openly sharing thoughts and ideas.
Grounded in core principles that define MSA’s high performance culture of excellence, the MSA Leader model guides the development of current and aspiring leaders. It outlines the traits, knowledge, competencies, and experiences that MSA requires for successful leadership while encouraging leaders to remain true to their personal styles. The model is the foundation of leadership development at MSA.
Second, the MSA Leader model sets the expectations of MSA people leaders. Grounded in core principles that define MSA’s high performance culture of excellence, the MSA Leader model guides the development of current and aspiring leaders. It outlines the traits, knowledge, competencies, and experiences that MSA requires for successful leadership while encouraging leaders to remain true to their personal styles.
In addition to our patents, we have also developed or acquired a substantial body of manufacturing know-how that we believe provides a significant competitive advantage over our competitors. 7 Table of Contents Raw Materials and Suppliers — Many of the components of our products are formulated, machined, tooled or molded in-house and by select tier one supplier partners, which comprise approximately two-thirds of our cost of sales.
In addition to our patents, we have also developed or acquired a substantial body of manufacturing know-how that we believe provides a significant competitive advantage over our competitors. Raw Materials and Suppliers — Many of the components of our products are formulated, machined, tooled or molded in-house and by select tier one supplier partners.
We determine race and gender diversity based on our employees’ self-identification or other information compiled to meet the requirements of the U.S. government, compiled as of December 31, 2023. We count a diverse woman as one individual for purposes of the calculating the aforementioned statistics.
This includes women who comprise approximately 40% of our U.S. workforce. We determine race and gender diversity based on our employees’ self-identification or other information compiled to meet the requirements of the U.S. government, compiled as of December 31, 2024. We count a diverse woman as one individual for purposes of the calculating the aforementioned statistics.
Core products comprised approximately 91% and 90% of sales in 2023 and 2022, respectively. 4 Table of Contents The following is a brief description of our core product offerings within each of our Firefighter Safety, Detection and Industrial PPE portfolios: Firefighter Safety Breathing apparatus products. The Company's primary breathing apparatus product is the SCBA.
Core products comprised approximately 92% and 91% of sales in 2024 and 2023, respectively. 4 Table of Contents The following is a brief description of our core product offerings within each of our Fire Service, Detection and Industrial PPE portfolios: Fire Service Breathing apparatus products. The Company's primary breathing apparatus solution is the SCBA.
MSA’s V-Series ® fall protection equipment has transformed the Company’s harness and self-retracting lanyard portfolio, with over 50 fall protection products launched over the past several years. Additionally, we recently launched a patent-pending Personal Fall Limiter with a smart hook connector that uses radio-frequency identification ("RFID") technology to alert wearers when they are not secured to an anchorage point.
MSA’s V-Series ® fall protection equipment has transformed the Company’s harness and self-retracting lanyard portfolio, with over 50 fall protection products launched over the past several years. Additionally, our V-TEC ® io1 self-retracting lifeline has a patented smart hook connector that uses radio-frequency identification (RFID) technology to alert wearers when they are not secured to an anchorage point. Non-core products.
Our hand-held portable gas detection instruments are used to detect the presence or absence of various gases in the air. The product line is used by energy, utility, general industrial workers as well as first responders or anyone working in a confined space environment.
These solutions provide users with real-time monitoring and alerts. Portable gas detection instruments. Our handheld portable gas detection instruments are used to detect the presence or absence of various gases in the air. The product line is used by energy, utility, general industrial workers as well as first responders or anyone working in a confined space environment.
Seasonality — Our operating results are not significantly affected by seasonal factors. During periods of economic expansion or contraction and following significant catastrophes, our sales by quarter have varied. Government-related sales tend to increase in the fourth quarter.
During periods of economic expansion or contraction and following significant catastrophes, our sales by quarter have varied. Government-related sales tend to increase in the fourth quarter.
The Company's product portfolio includes firefighter safety gear where core products include self-contained breathing apparatus ("SCBA"), protective apparel and helmets; detection where core products include fixed gas and flame detection ("FGFD") systems and portable gas detection instruments; and industrial personal protective equipment ("PPE") where core products include industrial head protection and fall protection devices.
The Company's principal product categories are fire service, detection and industrial personal protective equipment ("PPE"). Core products for fire service include self-contained breathing apparatus ("SCBA"), protective apparel and helmets; core products for detection include fixed gas and flame detection ("FGFD") systems and portable gas detection instruments; and core products for industrial PPE include industrial head protection and fall protection devices.
Item 1. Business Overview — MSA Safety Incorporated is the global leader in advanced safety products, technology and solutions. Driven by its singular mission of safety, the Company has been at the forefront of safety innovation since 1914, protecting workers and facility infrastructure around the world across a broad range of diverse end markets while creating sustainable value for shareholders.
Driven by its singular mission of safety, the Company has been at the forefront of safety innovation since 1914, protecting workers and facility infrastructure around the world across a broad range of diverse end markets while creating sustainable value for shareholders.
For example, we rely on integrated manufacturing capabilities for breathing apparatus, gas masks, ballistic helmets, hard hats and circuit boards. The primary materials that we source from third parties include electronic components, high density polyethylene, chemical filter media, rubber and plastic components, eye and face protective lenses, air cylinders, certain metals and ballistic resistant, flame resistant and non-ballistic fabrics.
The primary materials that we source from third parties include electronic components, high density polyethylene, chemical filter media, rubber and plastic components, eye and face protective lenses, air cylinders, certain metals and ballistic resistant, flame resistant and non-ballistic fabrics.
Environmental Matters — Our facilities and operations are subject to laws and regulations relating to environmental protection and human health and safety. In the opinion of management, compliance with current environmental protection laws will not have a material adverse effect on our financial condition. See Item 1A—Risk Factors, for further information regarding our environmental risks which could impact the Company.
In the opinion of management, compliance with current environmental protection laws will not have a material adverse effect on our financial condition. See Item 1A—Risk Factors, for further information regarding our environmental risks which could impact the Company. Seasonality — Our operating results are not significantly affected by seasonal factors.
By combining leadership development, culture, and business acumen, leaders are better prepared to drive a high-performance culture while maintaining an engaged workforce with opportunities for development and growth. Beyond these core programs, MSA designs and delivers a variety of associate leadership and development programs to further enhance the associate experience and opportunities for growth.
The model is the foundation of leadership development at MSA. By combining leadership development, culture, and business acumen, leaders are better prepared to drive a high-performance culture while maintaining an engaged workforce with opportunities for development and growth.
These instruments are used for plant-wide monitoring of toxic gases and for detecting the presence of flames. These systems use infrared optics to detect potentially hazardous conditions across long distances, making them suitable for use in applications such as processing industries, storage vessels and HVAC ducts.
These systems use infrared optics to detect potentially hazardous conditions across long distances, making them suitable for use in applications such as processing industries, storage vessels and HVAC ducts. • Refrigerant detection and identification .
The safety products market is highly competitive, with participants ranging in size from small companies focusing on a single type of PPE to several large multinational corporations that manufacture and supply many types of sophisticated safety products. Our main competitors vary by region and product.
Their use is often mandated by government and industry regulations, which are increasingly enforced on a global basis. The safety products and solutions market is highly competitive, with participants ranging in size from small companies focusing on a single type of PPE to several large multinational corporations that manufacture and supply many types of sophisticated safety products and solutions.
Leadership and Development —MSA provides programs to enable continuous learning, growth and development opportunities. 8 Table of Contents First, our "MOVE" (Meaningful, Ongoing, Vital Exchanges) Performance Management philosophy is a core element of associate engagement.
Leadership and Development —MSA provides programs to enable continuous learning, growth and development opportunities. First, our "MOVE" (Meaningful, Ongoing, Vital Exchanges) Performance Management philosophy is a core element of associate engagement. Exchanges between associates and supervisors provide a flexible, ongoing feedback loop to drive and enhance the engagement of associates, while facilitating the achievement of our strategic goals.
Our permanently installed FGFD systems are used in energy and utility applications, HVAC-R and general industrial production facilities to detect the presence or absence of various gases in the air. Typical applications of these systems include the detection of an oxygen deficiency in confined spaces or the presence of combustible or toxic gases.
Our permanently installed FGFD solutions are used in energy and utility applications, HVAC-R, water and wastewater, food retail and general industrial production facilities to detect the presence or absence of various gases in the air.
Associates are empowered to own their career development through business-aligned resources, tools and programs. Compensation and Rewards —MSA’s global compensation philosophy strives to provide total compensation for all associates at the market median, utilizing base salary, cash incentives and, in some cases, equity grants to achieve this goal.
Compensation and Rewards —MSA’s global compensation philosophy strives to provide total compensation for all associates at the market median, utilizing base salary, cash incentives and, in some cases, equity grants to achieve this goal. We further strive to provide above-market compensation opportunities for associates who exceed goals and expectations.
We purchase these materials both domestically and internationally, and we work to ensure our supply sources are both well established and reliable. In spite of some market-softening, especially in the consumer space, the demand for certain industrial-based electronic components continues to outpace supply.
We purchase these materials both domestically and internationally, and we work to ensure our supply sources are both well established and reliable. Demand for certain industrial-based electronic components is gradually aligning with supply. For key components, lead times are improving, and market conditions are showing signs of stabilization across the industry.
This product line is used to monitor for combustible and toxic gases and oxygen deficiency in virtually any application where continuous monitoring is required. Our systems are used for gas detection in energy, pulp and paper, wastewater, refrigerant monitoring, pharmaceutical production and general industrial applications.
We sell these products and solutions in both our Americas and International segments. Key products and solutions include: • Fixed gas detection monitoring systems. This product line is used to monitor for combustible and toxic gases and oxygen deficiency in virtually any application where continuous monitoring is required.
We offer a complete line of industrial head protection and accessories that includes the iconic V-Gard ® helmet brand, a bellwether product in MSA's portfolio for over 50 years. We offer customers a wide range of color choices and we are a leader in the application of customized logos.
We sell portable gas detection instruments in both our Americas and International segments. 5 Table of Contents Industrial PPE and Other Industrial head protection. We offer a complete line of industrial head protection and accessories that includes the iconic V-Gard® helmet brand, a bellwether product in MSA's portfolio for over 50 years.
MSA also partners with a number of non-profit and community-based organizations to help to build a pipeline of future talent with differing backgrounds, thoughts, experiences, and perspectives. Approximately 53% of our U.S. workforce self-identifies as diverse. This includes women who comprise approximately 40% of our U.S. workforce. Among associates within executive pay grades, 46% self-identify as diverse.
Creating an inclusive environment helps to recruit and retain talent, promoting engagement, fostering innovation, and achieving MSA’s business objectives. MSA also partners with a number of non-profit and community-based organizations to help to build a pipeline of future talent with differing backgrounds, thoughts, experiences, and perspectives. Approximately 55% of our U.S. workforce self-identifies as diverse.
We distribute fire service products primarily through specially trained local and regional distributors who provide advanced training and service capabilities to volunteer and paid municipal fire departments.
We distribute fire service products primarily through specially trained local and regional distributors who provide advanced training and service capabilities to volunteer and paid municipal fire departments. Because of our broad and diverse product line and our desire to reach as many markets and market segments as possible, we have over 2,100 authorized distributor locations worldwide.
The sophisticated safety products market in which we compete is comprised of both core and non-core offerings and is a subset of the larger safety market. We maintain leading positions across various products in our portfolio. Over the long-term, we believe global demand for safety products will continue to grow.
We maintain leading positions across various products in our portfolio. Over the long-term, we believe global demand for safety products and solutions will continue to grow. Purchases of these products and solutions are non-discretionary, protecting workers' health and critical infrastructure in hazardous and life-threatening work environments.
Although we do not have long-term supply contracts with all suppliers, we have engaged in formal supply agreements with select strategic supplier partners. We work to establish long term agreements with all key partners to ensure a robust supply pipeline and have not experienced any significant problems in obtaining adequate raw materials.
We continue to effectively navigate these supply chain issues, as we have close supplier relationship programs with our key raw material distributors and strategic supplier partners. Although we do not have long-term supply contracts with all suppliers, we have engaged in formal supply agreements with select strategic supplier partners.
We further strive to provide above-market compensation opportunities for associates who exceed goals and expectations. This approach to total rewards is designed to help MSA attract, retain and motivate high-performing individuals who foster an innovative culture and drive business results.
This approach to total rewards is designed to help MSA attract, retain and motivate high-performing individuals who foster an innovative culture and drive business results. Environmental Matters — Our facilities and operations are subject to laws and regulations relating to environmental protection and human health and safety.
To best serve these customer preferences, we have organized our business into four geographic operating segments that are aggregated into three reportable segments: Americas, International and Corporate. Segment information is presented in Note 8—Segment Information of the consolidated financial statements in Part II Item 8 of this Form 10-K.
Segments — We tailor our product and solution offerings and distribution strategy to satisfy distinct customer preferences that vary across geographic regions. To best serve these customer preferences, we have organized our business into four geographic operating segments that are aggregated into three reportable segments: Americas, International and Corporate.
The FGFD product line generates a meaningful portion of overall revenue from recurring business including replacement components and related service. We sell these products in both our Americas and International segments. Key products include: • Fixed gas detection monitoring systems.
Typical applications of these systems include the detection of an oxygen deficiency in confined spaces or the presence of combustible or toxic gases as well as detecting leaks of refrigerants. The FGFD product and solution line generates a meaningful portion of overall revenue from recurring business including replacement components and related service.
We strive to serve our customers and help them solve their safety and compliance challenges while creating value for our shareholders. As part of our differentiated development process, we embed ourselves with our customers to deeply understand their processes, pain points and desired outcomes.
As part of our differentiated development process, we embed ourselves with our customers to deeply understand their processes, pain points and desired outcomes. Our commitment to MBS has enabled us to drive customer satisfaction and profitable growth while generating significant improvements in operating results.
Please refer to MSA's Form SD filed on May 25, 2023 for further information on our conflict minerals analysis. Form SD may be obtained free of charge at www.sec.gov.
We work to establish long term agreements with all key partners to ensure a robust supply pipeline and have not experienced any significant problems in obtaining adequate raw materials. Please refer to MSA's Form SD filed on May 24, 2024, for further information on our conflict minerals analysis. Form SD may be obtained free of charge at www.sec.gov.
One of our flagship products is the Ultima ® X5000 and S5000 gas monitors which enhances facility and worker safety while lowering overall cost of ownership for our customers through differentiated sensor technology. These systems utilize a wide array of sensor technologies including electrochemical, catalytic, infrared and ultrasonic. • Flame detectors and open-path infrared gas detectors.
Our systems are used for gas detection in energy, pulp and paper, wastewater, refrigerant monitoring, pharmaceutical production and general industrial applications. Some of our flagship products include the Ultima ® X5000 and S5000 gas monitors, which enhance facility and worker safety while lowering overall cost of ownership for our customers through differentiated sensor technology.
Globe Holding Company, LLC ("Globe") and B T Q Limited ("Bristol Uniforms"), two of our subsidiaries, are both leading innovators and providers of firefighter turnout gear and boots. Detection FGFD systems.
We recently introduced our Cairns® 1836 Fire Helmet, which includes embedded radio frequency identification (RFID) technology, providing the ability to quickly locate assets, through MSA’s FireGrid Inventory Management software. Globe Holding Company, LLC ("Globe") and B T Q Limited ("Bristol Uniforms"), two of our subsidiaries, are both leading innovators and providers of firefighter protective apparel. Detection FGFD systems.
The MBS is our approach to working at our best - at our most efficient and most empowered. It is a combination of behaviors, processes and tools that provide a framework to drive continuous improvement and create intentional problem-solving practices that are consistent across the organization.
The MBS is our approach to working at our best - at our most efficient and most empowered. It is a combination of behaviors, processes and tools that provide a framework to run the business and continuously improve. We strive to serve our customers and help them solve their safety and compliance challenges while creating value for our shareholders.
We recently introduced the V-Gard C1™ hard hat with patent-pending ReflectIR™ thermal barrier technology which helps to reduce temperatures inside the hard hat for a cooling effect to the wearer. Our industrial head protection products have a wide user base, including energy, utility, non-residential construction and industrial workers. Fall protection.
The optional Mips ® brain protection system for industrial safety helmets adds another layer of protection designed to help reduce the risk of brain trauma. Our industrial head protection products have a wide user base, including energy, utility, non-residential construction and industrial workers. Fall protection.
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Our commitment to MBS has enabled us to drive customer satisfaction and profitable growth while generating significant improvements in operating results. Segments — We tailor our product offerings and distribution strategy to satisfy distinct customer preferences that vary across geographic regions.
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Item 1. Business Overview — MSA Safety Incorporated (the "Company" or "MSA") is the global leader in advanced safety products, technology and solutions.
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In 2021 MSA acquired Bacharach, Inc. and its affiliated companies ("Bacharach"), a leader in gas detection technologies used in the HVAC-R markets. Bacharach’s advanced instrumentation technologies help protect lives and the environment, while also increasing operational efficiency for its diversified customer base.
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In addition to its principal product categories, MSA continues to deploy and grow its MSA+™ solution, a business approach that combines MSA hardware, software, and services to simplify safety operations for customers and deliver recurring revenue.
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Bacharach's portfolio of gas detection and analysis products are used to detect, measure and analyze leaks of various gases that are commonly found in both commercial and industrial settings. Bacharach has strong expertise in the refrigerant leak detection market with customers in the HVAC-R, food retail, automotive, commercial and industrial refrigeration, and military markets. Portable gas detection instruments.
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Examples of MSA+ offerings include MSA Grid and MSA FireGrid – cloud-hosted software platforms that provide situational awareness to customers during hazardous industrial and fire service activities while also streamlining everyday safety compliance and equipment maintenance procedures.
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We sell portable gas detection instruments in both our Americas and International segments. 5 Table of Contents MSA also leverages proprietary Internet of Things solutions and wireless solutions to connect certain MSA hardware products directly to our cloud offering ("MSA Grid").
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Segment information is presented in Note 9—Segment Information of the consolidated financial statements in Part II Item 8 of this Form 10-K.
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MSA Grid offers solutions for both fleet management and live monitoring while interfacing directly with the breadth of available MSA hardware products. Through this cloud technology, MSA provides services that enhance worker safety and accountability through additional transparency that does not normally exist in industrial settings. Industrial PPE Industrial head protection.
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These systems utilize a wide array of sensor technologies including electrochemical, catalytic, infrared and ultrasonic. • Flame detectors and open-path infrared gas detectors. These instruments are used for plant-wide monitoring of toxic gases and for detecting the presence of flames.
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MSA + ™ . Our safety solutions platform that integrates safety hardware technology, cloud software solutions and safety services was launched in 2022. MSA+ offerings span across our portfolio to include certain products across Firefighter Safety, Detection and Industrial PPE offerings.
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Our refrigerant leak detection monitors, such as the MSA Bacharach ® Multi-Zone Gas Monitor and the MSA Chillgard ® 5000 Refrigerant Leak Monitor, help identify and mitigate refrigerant leaks. Users can enhance their leak detection and mitigation efforts by utilizing MSA+ solutions, like the MSA Parasense Refrigerant Tracking and Compliance software and the MSA Parasense Enterprise Leak Detection software.
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By integrating these products with our cloud services and coupling them with subscription pricing, MSA improves access to our solutions and facilitates the digital transformation of safety programs while further accelerating our recurring revenue business. Non-core products. MSA maintains a portfolio of non-core products.
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We offer customers a wide range of color choices for V-Gard helmets, and we are a leader in the application of customized logos. Our V-Gard H2™ safety helmet incorporates the latest technology to help protect against lateral impacts.
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Purchases of these products are non-discretionary, protecting workers' health and critical infrastructure in hazardous and life-threatening work environments. Their use is often mandated by government and industry regulations, which are increasingly enforced on a global basis.
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Our main competitors vary by region and product.
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For these key electronic components (specifically, components manufactured in larger process nodes), lead times remain extended and the overall market constrained, which is not unique to MSA. We continue to effectively navigate these supply chain issues, as we have close supplier relationship programs with our key raw material distributors and strategic supplier partners.
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Material costs comprise approximately two-thirds of our cost of sales. For example, we rely on integrated manufacturing capabilities for breathing apparatus, gas masks, ballistic helmets, hard hats and circuit boards.
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Creating an inclusive environment helps to recruit and retain talent, promoting engagement, fostering innovation, and achieving MSA’s business objectives. The Company maintains several Employee Resource Business Groups designed to foster a culture that is both engaged and inclusive.
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Beyond these core programs, MSA designs and delivers a variety of associate leadership and development programs to further enhance the associate experience and opportunities for growth. Associates are empowered to own their career development through business-aligned resources, tools and programs.
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These groups are voluntary, associate-driven communities that capitalize on the wide variety of people and perspectives at MSA, driving our core value of Diversity and Inclusion. The Company also maintains an Executive Diversity Council and several regional councils focused on increasing organizational awareness, accountability and impact of Diversity and Inclusion initiatives.
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Exchanges between associates and supervisors provide a flexible, ongoing feedback loop to drive and enhance the engagement of associates, while facilitating the achievement of our strategic goals. Second, the MSA Leader model sets the expectations of MSA people leaders.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

63 edited+8 added−5 removed69 unchanged
Biggest changeForeign Corrupt Practices Act, and similar local laws; • difficulty in hiring, retaining and motivating qualified employees; • difficulty in the ability to effectively negotiate with labor unions in foreign countries; • the need to take extra security precautions for our international operations; • costs and difficulties in managing culturally and geographically diverse international operations; • pandemics, severe weather events, or other disasters; and 16 Table of Contents • risks associated with disruptive political events, such as the United Kingdom's decision to exit the European Union, including disruptions to trade and free movement of goods, services and people to and from the United Kingdom; increased foreign exchange volatility with respect to the British pound; and additional legal and economic uncertainty.
Biggest changeForeign Corrupt Practices Act, and similar anti-corruption and anti-bribery laws in the countries where the Company does business; • difficulty in hiring, retaining and motivating qualified employees; • difficulty in the ability to effectively negotiate with labor unions in foreign countries; • the need to take extra security precautions for our international operations; • costs and difficulties in managing culturally and geographically diverse international operations; • pandemics, severe weather events, or other disasters; and • risks associated with disruptive political events and related legal and economic uncertainty.
MSA and its remaining subsidiaries continue to be responsible for claims relating to any current or former products and solutions that were not transferred as part of the divestiture. Our ability to market and sell our products is subject to existing government laws, regulations and standards.
MSA and its remaining subsidiaries continue to be responsible for claims relating to any current or former products and solutions that were not transferred as part of the divestiture. Our ability to market and sell our products and solutions is subject to existing government laws, regulations and standards.
We may not be able to compete successfully against current and future competitors, and the competitive pressures faced by us could have a material adverse effect our business, consolidated results of operations and financial condition. In addition, e-business is a rapidly developing area, and the execution of a successful e-business strategy involves significant time, investment and resources.
We may not be able to compete successfully against current and future competitors, and the competitive pressures faced by us could have a material adverse effect our business, consolidated results of operations and financial condition. In addition, e-commerce is a rapidly developing area, and the execution of a successful e-business strategy involves significant time, investment and resources.
From time to time, we have experienced attempts on our computer systems by unauthorized outside parties. Because the techniques used by computer hackers and others to access or sabotage networks continually evolve and generally are not recognized until launched against a target, we may be unable to anticipate, prevent or detect these attacks.
From time to time, we have experienced attempts on our information systems by unauthorized outside parties. Because the techniques used by computer hackers and others to access or sabotage networks continually evolve and generally are not recognized until launched against a target, we may be unable to anticipate, prevent or detect these attacks.
The competitive pressures faced by us could materially and adversely affect our business, results of operations and financial condition. The safety products market is highly competitive, with participants ranging in size from small companies focusing on single types of safety products, to large multinational corporations that manufacture and supply many types of safety products.
The competitive pressures faced by us could materially and adversely affect our business, results of operations and financial condition. The safety products and solutions market is highly competitive, with participants ranging in size from small companies focusing on single types of safety products, to large multinational corporations that manufacture and supply many types of safety products and solutions.
On January 5, 2023, the Company divested Mine Safety Appliances Company, LLC ("MSA LLC"), a wholly owned subsidiary that holds legacy product liability claims relating to coal dust, asbestos, silica, and other exposures, to a joint venture between R&Q Insurance Holdings Ltd. and Obra Capital, Inc.
On January 5, 2023, the Company divested Mine Safety Appliances Company, LLC ("MSA LLC"), a wholly owned subsidiary that holds legacy product liability claims relating to coal dust, asbestos, silica, and other exposures to a joint venture between R&Q Insurance Holdings Ltd. and Obra Capital, Inc. (the "Purchaser").
In addition, we may be required to or may voluntarily recall or redesign certain products or components due to concern about product safety, quality, ease of use or customer confidence. We continue to review, update, and execute the Company's quality management processes appropriately to meet changing market demands, technology, and product standards.
In addition, we may be required to or may voluntarily recall, redesign, or update certain products, components, or solutions due to concern about product safety, quality, ease of use or customer confidence. We continue to review, update, and execute the Company's quality management processes appropriately to meet changing market demands, technology, and product standards.
The demand for our products sold to the fire service market, the homeland security market and other government customers is, in large part, driven by available government funding. Government budgets are set annually, and we cannot assure that government funding will be sustained at similar levels in the future.
The demand for our products and solutions sold to the fire service market, the homeland security market and other government customers is, in large part, driven by available government funding. Government budgets are set annually, and we cannot assure that government funding will be sustained at similar levels in the future.
Some of our competitors have greater financial and other resources than we do, and our business could be adversely affected by competitors’ new product innovations, technological advances made to competing products and pricing changes made by us in response to competition from existing or new competitors.
Some of our competitors have greater financial and other resources than we do, and our business could be adversely affected by competitors’ new product innovations, technological advances made to competing products and solutions and pricing changes made by us in response to competition from existing or new competitors.
Violations of one or more of these laws or regulations in the conduct of our business could result in significant fines, criminal prosecution or sanctions and/or civil penalties against us or our officers or other personnel, prohibitions on doing business and damage to our reputation.
Violations of one or more of these laws or regulations in the conduct of our business could result in significant fines, criminal prosecution or sanctions and/or civil penalties or civil litigation against us or our officers or other personnel, prohibitions on doing business and damage to our reputation.
We continue to invest significant resources in research and development and market research, which includes the development of software platforms for our connected products. However, continued product and/or service development and marketing efforts are subject to the risks inherent in the development process.
We continue to invest significant resources in research and development and market research, which includes the development of software platforms for our connected products and solutions. However, continued product and/or service development and marketing efforts are subject to the risks inherent in the development process.
The spread of pandemics or disease outbreaks may also disrupt the Company’s manufacturing operations, supply chain, or logistics necessary to import, export and deliver products to our customers.
The spread of pandemics or disease outbreaks may also disrupt the Company’s manufacturing operations, supply chain, or logistics necessary to import, export and deliver products and solutions to our customers.
Long-term economic uncertainty in some of the regions of the world in which we operate, such as Asia, Latin America, the Middle East and Europe, could result in declines in revenue, profitability and cash flow due to reduced orders, payment delays, supply chain disruptions or other factors caused by the economic challenges faced by our customers and suppliers.
Long-term economic uncertainty in some of the regions of the world in which we operate, such as Asia, Latin America, the Middle East and Europe, could result in declines in revenue, profitability and cash flow due to reduced orders, payment delays, supply chain disruptions or other factors caused by the economic challenges faced by our customers, suppliers, and other business partners.
We have taken steps and incurred costs to further strengthen the security of our computer systems and continue to assess, maintain and enhance the ongoing effectiveness of our information security systems.
We have taken steps and incurred costs to further strengthen the security of our information systems and continue to assess, maintain and enhance the ongoing effectiveness of our information security systems.
If we are unable to identify emerging customer and technological trends, maintain and improve the competitiveness of our products and introduce new products, we may lose our market position, which could have a material adverse effect on our business, financial condition and results of operations.
If we are unable to identify emerging customer and technological trends, maintain and improve the competitiveness of our products and solutions and introduce new ones, we may lose our market position, which could have a material adverse effect on our business, financial condition and results of operations.
GENERAL RISK FACTORS Damage to the reputation of MSA or to one or more of our product brands could adversely affect our business. Developing and maintaining our reputation, as well as the reputation of our brands, is a critical factor in our relationship with customers, distributors, end users, suppliers, associates, and others.
GENERAL RISK FACTORS Damage to the reputation of MSA or to one or more of our Company brands could adversely affect our business. Developing and maintaining our reputation, as well as the reputation of our brands, is a critical factor in our relationship with customers, distributors, end users, suppliers, associates, and others.
If our information systems or security fail, or if there is any compromise or breach of our security, it could disrupt our operations and/or result in a violation of applicable privacy and other laws, legal and financial exposure, remediation costs, negative impacts on our customers' willingness to transact business with us, or a loss of confidence in our security measures, which could have an adverse effect on our business, our reputation and our consolidated results of operations and financial condition.
If our information systems or security fail, or if there is any compromise or breach of our security, it could disrupt our operations and/or result in a violation of applicable data protection and other laws, legal and financial exposure, remediation costs, negative impacts on our customers' willingness to transact business with us, or a loss of confidence in our security measures, which could have an adverse effect on our business, our reputation and our consolidated results of operations and financial condition.
A significant reduction in available government funding could result in declines in our consolidated results of operations and cash flow. The markets in which we compete are highly competitive, and some of our competitors have greater financial and other resources than we do.
A significant reduction in available government funding could result in declines in our consolidated results of operations and cash flow. The markets in which we operate are highly competitive, and some of our competitors have greater financial and other resources than we do.
Further examples of such risks include the following: • Scarcity or unavailability of parts and components necessary to manufacture our products; • unexpected changes in regulatory requirements; • changes in trade policy or tariff regulations; • changes in tax laws and regulations; • unintended consequences due to changes to the Company's legal structure; • additional valuation allowances on deferred tax assets due to an inability to generate sufficient profit in certain foreign jurisdictions; • intellectual property protection difficulties or intellectual property theft; • difficulty in collecting accounts receivable; • complications in complying with a variety of foreign laws and regulations, some of which may conflict with U.S. laws; • foreign privacy laws and regulations that impede our ability to effectively do business; • negative impacts from trade protection measures and price controls; • trade sanctions and embargoes; • nationalization and expropriation of assets; • increased international instability, potential instability of foreign governments or impacts from geopolitical conflict or wars, such as supplier or transportation disruptions; • lack of effective compliance with MSA's anti-bribery policy, the U.S.
Further examples of such risks include the following: • Scarcity or unavailability of parts and components necessary to manufacture our products; • unexpected changes in regulatory requirements; • changes in trade policy or tariff regulations; • changes in tax laws and regulations; • unintended consequences due to changes to the Company's legal structure; • additional valuation allowances on deferred tax assets due to an inability to generate sufficient profit in certain foreign jurisdictions; • intellectual property protection difficulties or intellectual property theft; • difficulty in collecting accounts receivable; • complications in complying with a variety of foreign laws and regulations, some of which may conflict with U.S. laws; • foreign privacy laws and regulations that impede our ability to effectively do business; • negative impacts from trade protection measures and price controls; • trade sanctions and embargoes; • nationalization and expropriation of assets; • increased international instability, potential instability of foreign governments or impacts from geopolitical conflicts, events, or wars; • lack of effective compliance with MSA's anti-bribery policy, the U.S.
If we are unable to successfully expand e-business capabilities in support of our customer needs, our brands may lose market share, which could negatively impact revenue and profitability. RISKS RELATED TO NEW AND ADJACENT INITIATIVES Our plans to improve future profitability through restructuring programs may not be successful and could lead to unintended consequences.
If we are unable to successfully expand e-business capabilities in support of our customer needs, our brands may lose market share, which could negatively impact revenue and profitability. 13 Table of Contents RISKS RELATED TO NEW AND ADJACENT INITIATIVES Our plans to improve future profitability through restructuring programs may not be successful and could lead to unintended consequences.
We compete to hire new personnel with a variety of capabilities in the many countries in which we manufacture and market our products. We also invest resources and time to develop and retain our employees' skills and competencies.
We compete to hire new personnel with a variety of capabilities in the many countries in which we design, manufacture and market our products and solutions. We also invest resources and time to develop and retain our employees' skills and competencies.
Please refer to Note 12—Long-Term Debt of the consolidated financial statements in Part II Item 8 of this Form 10-K for commentary on our compliance with the restrictive covenants.
Please refer to Note 13—Long-Term Debt of the consolidated financial statements in Part II Item 8 of this Form 10-K for commentary on our compliance with the restrictive covenants.
These actions could result in liability for significant monetary damages, unfavorable publicity and other reputational damage and have a material adverse effect on our business, consolidated results of operations and financial condition. 10 Table of Contents We are subject to various environmental laws and any violation of these laws could adversely affect our results of operations.
These actions could result in liability for significant monetary damages, unfavorable publicity and other reputational damage and have a material adverse effect on our business, consolidated results of operations and financial condition. We are subject to various environmental laws and any violation of these laws could adversely affect our results of operations.
A portion of MSA's sales are made to customers in the energy market. It is possible that volatility in the energy market, whether related to economic, climate-related energy policy, or other conditions, could negatively impact our business and could result in declines in our consolidated results of operations and cash flow.
A portion of MSA's sales are made to customers in the energy market. It is possible that volatility in the energy market, whether related to economic, climate-related energy policy, geopolitical tensions or events, or other conditions, could negatively impact our business and could result in declines in our consolidated results of operations and cash flow.
While we attempt to mitigate the aforementioned risks by employing a number of measures, including employee training, monitoring of our networks and systems, and maintenance of backup and protective systems, our systems, networks, facilities, business partners and associates remain potentially vulnerable to advanced persistent threats.
While we attempt to mitigate the aforementioned risks by employing a number of measures, including employee training, monitoring of our networks and systems, and maintenance of backup and protective systems, our systems, networks, facilities, business partners, including third party providers, and associates remain potentially vulnerable to advanced persistent threats.
If we fail to introduce successful new products or extend our existing product line, we could lose our market position and our financial performance could be materially and adversely affected. In the safety products market, there are frequent introductions of new products and product line extensions.
If we fail to introduce successful new products or solutions or extend our existing portfolio, we could lose our market position and our financial performance could be materially and adversely affected. In the safety products and solutions market, there are frequent introductions of new products, product line extensions, and related solutions.
It is therefore possible that we may suffer a cyber attack with a material breach or material loss, unauthorized parties may gain access to personal information in our possession and we may not be able to identify any such incident in a timely manner. 14 Table of Contents Our continued success depends on our ability to protect our intellectual property.
It is therefore possible that we may suffer a cyber attack with a material breach or material loss, unauthorized parties may gain access to personal information in our possession and we may not be able to identify any such incident in a timely manner. Our continued success depends on our ability to protect our intellectual property.
To remain competitive, we review and enhance our products and safety solutions against new technologies, including exploring the use of Generative AI in our solutions. If we fail to anticipate or respond to technological advancements, the demand for our products may be diminished.
To remain competitive, we review and enhance our products and solutions against new technologies, including exploring the use of Generative AI. If we fail to anticipate or respond to technological advancements appropriately, the demand for our products and solutions may be diminished.
Occurrence of any of these conditions could deplete our institutional knowledge base and erode our competitiveness. 15 Table of Contents We continue to experience a tight and competitive labor market and could face unforeseen challenges in the availability of labor.
Occurrence of any of these conditions could deplete our institutional knowledge base and erode our competitiveness. We continue to experience a tight and competitive labor market and could face unforeseen challenges in the availability of labor.
Pandemics or disease outbreaks, such as COVID-19, may cause unfavorable economic or market conditions which could impact demand patterns and/or disrupt global supply chains and manufacturing operations. Collectively, these outcomes could materially and adversely affect our business, results of operations and financial condition.
Pandemics or disease outbreaks may cause unfavorable economic or market conditions which could impact demand patterns and/or disrupt global supply chains and manufacturing operations. Collectively, these outcomes could materially and adversely affect our business, results of operations and financial condition.
Therefore, our operations and sourcing strategies could face supply shortages, sourcing delays, changes in customer demand, or disruption due to various geopolitical, economic and natural disasters, as well as other risks and uncertainties related to doing business across borders, which could have a material adverse effect on our business.
Therefore, our operations and sourcing strategies could face supply shortages, supplier or sourcing delays, transportation disruptions, changes in customer demand, or disruption due to various geopolitical events, economic conditions, and natural disasters, as well as other risks and uncertainties related to doing business across borders, which could have a material adverse effect on our business.
Our inability to comply with these standards could result in declines in revenue, profitability and cash flow. Changes in laws, regulations, or the standards themselves, including changes related to federal, national, state or provincial elections, could reduce the demand for our products or require us to re-engineer our products, thereby creating opportunities for our competitors.
Our inability to comply with these standards and regulations could result in declines in revenue, profitability and cash flow. Changes in laws, regulations, or the standards themselves, including changes resulting from the outcome of federal, national, state or provincial elections, could reduce the demand for our products or require us to re-engineer our products, thereby creating opportunities for our competitors.
Conversely, there are risks that using AI could result in inadvertent data loss or disclosure (including but not limited to confidential information), biased algorithms, heightened regulatory scrutiny or inadvertent non-compliance, over-dependence, misleading or incomplete outputs,privacy and cybersecurity risks, ethical concerns, intellectual property risks,and other risks that could lead to reputational harm or have an adverse effect on our business, consolidated results of operations or financial condition.
Conversely, there are risks that using new technologies could result in inadvertent data loss or disclosure (including but not limited to confidential information), biased algorithms, heightened regulatory compliance obligations, over-dependence, inaccurate, misleading or incomplete outputs, data privacy and cybersecurity risks, ethical concerns, intellectual property risks, and other risks that could lead to reputational harm or have an adverse effect on our business, consolidated results of operations or financial condition.
Pandemics or disease outbreaks such as COVID-19 could result in a widespread health crisis that could adversely affect the economies of developed and emerging markets, potentially resulting in an economic downturn that could affect customers’ demand for our products in certain industrial-based end markets.
Pandemics or disease outbreaks could result in a widespread health crisis that could adversely affect the economies of developed and emerging markets, potentially resulting in an economic downturn that could affect customers’ demand for our products and solutions in certain industrial-based end markets.
Our main competitors vary by region and product. We believe that participants in this industry compete primarily on the basis of product characteristics (such as functional performance, technology, cost of ownership, comfort, design and style), price, service and delivery, customer support, the ability to meet the special requirements of customers, brand name trust and recognition, purchasing options, and e-business capabilities.
We believe that participants in this industry compete primarily on the basis of product characteristics (such as functional performance, technology, cost of ownership, comfort, design and style), price, service and delivery, integrated solutions, customer support, the ability to meet the special requirements of customers, brand name trust and recognition, purchasing options, and e-business capabilities.
See Note 13—Goodwill and Intangible Assets of the consolidated financial statements in Part II Item 8 of this Form 10-K for the carrying amounts of goodwill in each of our reporting segments and details on indefinite-lived intangible assets that we hold. 17 Table of Contents Failure to incorporate, or improperly incorporating, Artificial Intelligence (AI) could damage our business.
See Note 14—Goodwill and Intangible Assets of the consolidated financial statements in Part II Item 8 of this Form 10-K for the carrying amounts of goodwill in each of our reporting segments and details on indefinite-lived intangible assets that we hold. 18 Table of Contents Failure to effectively harness and/or protect Company data or to incorporate, or improperly incorporating, Artificial Intelligence (AI) could damage our business.
In the event the parties using our products are injured, or if any of our products are alleged to have contributed, we could be subject to claims or suffer reputational harm.
In the event that those using our products and solutions are injured, or if any of our products or solutions are alleged to have contributed, we could be subject to claims or suffer reputational harm.
New and emerging technologies, including Generative AI, bring opportunities and risks, and the implications of using (or not using) these technologies are only starting to emerge. Our business is subject to and impacted by these rapid technological advances.
New and emerging technologies, including Generative AI, bring opportunities and risks, and the implications of using (or not using) these technologies are only starting to emerge. Our business is subject to and impacted by these rapid technological advances, and the failure to effectively and/or lawfully deploy these technologies may impact the Company’s business.
We have incurred and may incur restructuring charges primarily related to severance costs for staff reductions associated with our ongoing initiatives to drive profitable growth and right size our operations as well as programs to adjust our operations in response to current business conditions. For example, in 2023, 152 positions were eliminated in response to the changing business environment.
We have incurred and may incur restructuring charges primarily related to severance costs for staff reductions associated with our ongoing initiatives to drive profitable growth and right size our operations as well as programs to adjust our operations in response to current business conditions.
If the Company fails to procure, adopt, or use AI in a way that is efficient and additive to our business, it may have an adverse effect on our business, consolidated results of operations or financial condition.
If the Company fails to build and implement an effective data strategy or to procure, adopt, or use new technologies in a way that is efficient and additive to our business, it may have an adverse effect on our business, consolidated results of operations or financial condition.
At this time, it is not possible to accurately estimate how potential future laws or regulations addressing greenhouse gas emissions would impact our business. RISKS RELATED TO ECONOMIC, MARKET AND COMPETITIVE CONDITIONS Unfavorable economic and market conditions could materially and adversely affect our business, results of operations and financial condition.
As the legal and regulatory environment continues to evolve, it is not possible to accurately estimate how potential future laws or regulations addressing greenhouse gas emissions would impact our business. 12 Table of Contents RISKS RELATED TO ECONOMIC, MARKET AND COMPETITIVE CONDITIONS Unfavorable economic and market conditions could materially and adversely affect our business, results of operations and financial condition.
Third parties also could seek to assert claims against us for which MSA LLC is the legally responsible party, and we may be required to incur fees and expenses to enforce that wrongly asserted claims are properly redirected to MSA LLC.
The transaction is subject to risks related to counterparty commercial risk as well as agreement enforcement and interpretation. Third parties also could seek to assert claims against us for which MSA LLC is the legally responsible party, and we may be required to incur fees and expenses to enforce that wrongly asserted claims are properly redirected to MSA LLC.
These factors could negatively impact our consolidated results of operations and cash flow. 12 Table of Contents A reduction in the spending patterns of government customers or delays in obtaining government approval for our products could materially and adversely affect our net sales, earnings and cash flow.
A reduction in the spending patterns of government customers or delays in obtaining government approval for our products and solutions could materially and adversely affect our net sales, earnings and cash flow.
As of December 31, 2023, we had $292.1 million of variable rate borrowings under our senior revolving credit facility and 2023 term loan credit agreement. A 50 basis point increase or decrease in interest rates could result in $1.7 million of additional interest expense. 18 Table of Contents
As of December 31, 2024, we had $206.3 million of variable rate borrowings on a term loan under our revolving credit facility. A 50 basis point increase or decrease in interest rates could result in $1.0 million of additional interest expense.
Some laws and directives may also hinder our ability to move certain products across borders. Economic conditions can also influence order patterns.
Some laws and directives may also hinder our ability to move certain products across borders. Economic conditions can also influence order patterns. These factors could negatively impact our consolidated results of operations and cash flow.
RISKS RELATED TO HUMAN CAPITAL MANAGEMENT If we lose any of our key personnel or are unable to attract, train and/or retain qualified personnel or properly plan the succession of senior management, our ability to manage our business and continue our growth could be negatively impacted.
Our inability to maintain the proprietary nature of our technologies could have a material adverse effect on our consolidated results of operations and financial condition. 15 Table of Contents RISKS RELATED TO HUMAN CAPITAL MANAGEMENT If we lose any of our key personnel or are unable to attract, train and/or retain qualified personnel or properly plan the succession of senior management, our ability to manage our business and continue our growth could be negatively impacted.
This includes the systems that support and operate our Safety io and MSA+ platforms. Our information systems may be vulnerable to damage or disruption from natural or man-made disasters, computer viruses, power losses or other system or network failures.
The proper functioning and security of our information systems is critical to the operation and reputation of our business. This includes the systems that support and operate our GRID, FireGRID, and similar connected product platforms. Our information systems may be vulnerable to damage or disruption from natural or man-made disasters, computer viruses, power losses or other system or network failures.
This includes laws and regulations in emerging markets where legal systems may be less developed or familiar to us. Compliance with diverse legal requirements is costly, time-consuming and requires significant resources.
This includes laws and regulations in emerging markets where legal systems may be less developed or familiar to us. Compliance with diverse legal requirements is costly, time-consuming and requires significant resources, and in some cases may require us to obtain relevant information from our vendors and suppliers, which may be difficult to obtain in a timely manner or at all.
Our inability to successfully manage price fluctuations due to market demand, currency risks or material shortages, or future price fluctuations (whether due to inflationary pressures or otherwise) could have a material adverse effect on our business and our consolidated results of operations and financial condition. 11 Table of Contents Our plans to continue to improve productivity and reduce complexity may not be successful, which could adversely affect our ability to compete.
Our inability to successfully manage price fluctuations or delays due to market demand, currency risks or material shortages, or future price fluctuations (whether due to inflationary pressures, tariffs or otherwise) could have a material adverse effect on our business and our consolidated results of operations and financial condition.
Failure to achieve and maintain a diverse workforce, compensate our employees competitively and fairly, maintain a safe and inclusive environment or promote the well-being of our employees could affect our reputation and also result in lower performance and an inability to retain valuable employees.
Failure to achieve and maintain a diverse workforce, compensate our employees competitively and fairly, maintain a safe and inclusive environment or promote the well-being of our employees could affect our reputation and also result in lower performance and an inability to retain valuable employees. 16 Table of Contents RISKS RELATED TO DOING BUSINESS INTERNATIONALLY We have significant international operations and are subject to the risks of doing business in foreign countries and global supply chains.
We are subject to various federal, state and local laws and regulations across our global organization and any violation of these laws or regulations could adversely affect our results of operations.
Additionally, market anticipation of significant new standards can cause customers to accelerate or delay buying decisions. 10 Table of Contents We are subject to various federal, state and local laws and regulations across our global organization and any violation of these laws or regulations could adversely affect our results of operations.
MSA periodically evaluates the efficiency of our business, which may result in changes to the way that we operate. For example, MSA has integrated parts of its European operating segment that have historically been individually managed entities, into a centrally managed organization model.
For example, MSA has integrated parts of its European operating segment that have historically been individually managed entities, into a centrally managed organization model.
These agreements may not provide meaningful protection for our trade secrets, know-how or other proprietary information in the event of any unauthorized use, misappropriation or disclosure of such trade secrets, know-how or other proprietary information. Our inability to maintain the proprietary nature of our technologies could have a material adverse effect on our consolidated results of operations and financial condition.
These agreements may not provide meaningful protection for our trade secrets, know-how or other proprietary information in the event of any unauthorized use, misappropriation or disclosure of such trade secrets, know-how or other proprietary information.
Changes in such laws, regulations and standards or our failure to comply with them could materially and adversely affect our results of operations. Most of our products are required to meet performance and test standards designed to protect the safety of people and infrastructures around the world.
Changes in such laws, regulations and standards or our failure to comply with them could materially and adversely affect our results of operations.
Regulatory approvals for our products may be delayed or denied for a variety of reasons that are outside of our control. Additionally, market anticipation of significant new standards can cause customers to accelerate or delay buying decisions.
Regulatory approvals for our products may be delayed or denied for a variety of reasons that are outside of our control.
Acquisitions involve a number of risks including: • failure of the acquired businesses to achieve the results we expect; • diversion of our management’s attention from operational matters; • our inability to retain key personnel of the acquired businesses; • risks associated with unanticipated or underestimated events or liabilities; • negative impacts due to evolving legal or regulatory landscape; • potential disruption of our existing business; and • customer dissatisfaction or performance problems at the acquired businesses. 13 Table of Contents If we are unable to integrate or successfully manage businesses that we have recently acquired or may acquire in the future, we may not realize anticipated cost savings, improved manufacturing efficiencies and increased revenue, which may result in material adverse short and long-term effects on our consolidated operating results, financial condition and liquidity.
Acquisitions involve a number of risks including: • failure of the acquired businesses to achieve the results we expect; • diversion of our management’s attention from operational matters; • our inability to retain key personnel of the acquired businesses; • risks associated with unanticipated or underestimated events or liabilities; • negative impacts due to evolving legal or regulatory landscape; • potential disruption of our existing business; and • customer dissatisfaction or performance problems at the acquired businesses.
Any one or more of these risks could have a negative impact on the success of our global operations and, thereby, have a material adverse effect on our business, consolidated results of operations and financial condition.
Any one or more of these risks could have a negative impact on the success of our global operations and, thereby, have a material adverse effect on our business, consolidated results of operations and financial condition. 17 Table of Contents Because we derive a significant portion of our sales from the operations of our foreign subsidiaries, future currency exchange rate fluctuations could adversely affect our results of operations and financial condition and could affect the comparability of our results between financial periods.
While we believe our tax positions will be sustained, the final outcome of tax audits and related litigation may differ materially from the tax amounts recorded in our consolidated financial statements, which could have a material adverse effect on our consolidated results of operations, financial condition and cash flows.
While we believe our tax positions will be sustained, the final outcome of tax audits and related litigation may differ materially from the tax amounts recorded in our consolidated financial statements, which could have a material adverse effect on our consolidated results of operations, financial condition and cash flows. 11 Table of Contents RISKS RELATED TO SUPPLY AND MANUFACTURING Our future results are subject to the risk that purchased components and materials are unavailable or available at excessive cost due to material shortages, tariff changes, excessive demand, currency fluctuation, inflationary pressure and other factors.
These risks include delays, the failure of new products and product line extensions to achieve anticipated levels of market acceptance, disruptive products, technologies and services introduced by competitors, and the risk of failed product introductions.
These risks include delays, the failure of new products, product line extensions, and related solutions to achieve anticipated levels of market acceptance, disruptive products, technologies and services introduced by competitors, and the risk of failed product introductions. 14 Table of Contents RISKS RELATED TO CYBERSECURITY OR MISAPPROPRIATION OF OUR CRITICAL INFORMATION A failure of our information systems or a cybersecurity breach could materially and adversely affect our business, results of operations and financial condition.
It is possible that any of our supplier relationships could be terminated or otherwise disrupted, or that our suppliers may be unable to timely deliver quality components, materials or services to us. Any sustained interruption in our receipt of adequate supplies or services could have a material adverse effect on our business, results of operations and financial condition.
Any sustained interruption in our receipt of adequate supplies or services could have a material adverse effect on our business, results of operations and financial condition.
A weakening of the currencies in which sales are generated relative to the currencies in which costs are denominated would decrease our results of operations and cash flow. Although the Company uses instruments to hedge certain foreign currency risks, these hedges only offset a portion of the Company’s exposure to foreign currency fluctuations.
Although the Company uses instruments to hedge certain foreign currency risks, these hedges only offset a portion of the Company’s exposure to foreign currency fluctuations.
The results of our foreign operations are generally reported in local currency and then translated into U.S. dollars at the applicable exchange rates for inclusion in our consolidated financial statements. The exchange rates between some of these currencies and the U.S. dollar have fluctuated significantly in recent years and may continue to do so in the future.
Our operations outside of the United States account for a significant portion of our net sales. The results of our foreign operations are generally reported in local currency and then translated into U.S. dollars at the applicable exchange rates for inclusion in our consolidated financial statements.
We also rely on global supply chains or otherwise source critical components and raw materials from suppliers based in foreign countries, which at times are used in manufacturing operations across our global footprint. In certain cases, components could be sole sourced or otherwise not easily substituted due to the highly regulated or complex nature of our products.
We have business operations in more than 40 international locations. In 2024, approximately 40% of our net sales were made by operations located outside the United States. We also rely on global supply chains or otherwise source critical components and raw materials from suppliers based in foreign countries, which at times are used in manufacturing operations across our global footprint.
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(the "Purchaser") The transaction is subject to risks related to counterparty commercial risk as well as agreement enforcement and interpretation.
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Most of our products are required to meet performance and test standards designed to protect the safety of people and infrastructures around the world, and many of our products and solutions are required to comply with other various laws and regulations in the applicable markets where sold.
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RISKS RELATED TO SUPPLY AND MANUFACTURING Our future results are subject to the risk that purchased components and materials are unavailable or available at excessive cost due to material shortages, excessive demand, currency fluctuation, inflationary pressure and other factors. We depend on various components, materials and services from supply chain partners to manufacture our products.
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In addition, if we are required to transition away from components made with regulated materials, we could incur substantial costs to identify and transition to alternative components or product designs, or where feasible alternatives are not readily available.
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RISKS RELATED TO CYBERSECURITY OR MISAPPROPRIATION OF OUR CRITICAL INFORMATION A failure of our information systems or a cybersecurity breach could materially and adversely affect our business, results of operations and financial condition. The proper functioning and security of our information systems is critical to the operation and reputation of our business.
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We depend on various components, materials and services from supply chain partners to manufacture our products. It is possible that any of our supplier relationships could be terminated or otherwise disrupted, or that our suppliers may be unable to timely deliver quality components, materials or services to us.
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RISKS RELATED TO DOING BUSINESS INTERNATIONALLY We have significant international operations and are subject to the risks of doing business in foreign countries and global supply chains. We have business operations in more than 40 international locations. In 2023, approximately one-half of our net sales were made by operations located outside the United States.
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Our plans to continue to improve productivity and reduce complexity may not be successful, which could adversely affect our ability to compete. MSA periodically evaluates the efficiency of our business, which may result in changes to the way that we operate.
Removed
Because we derive a significant portion of our sales from the operations of our foreign subsidiaries, future currency exchange rate fluctuations could adversely affect our results of operations and financial condition and could affect the comparability of our results between financial periods. Our operations outside of the United States account for a significant portion of our net sales.
Added
Our main competitors vary by region and product.
Added
If we are unable to integrate or successfully manage businesses that we have recently acquired or may acquire in the future, we may not realize anticipated cost savings, improved manufacturing efficiencies and increased revenue, which may result in material adverse short and long-term effects on our consolidated operating results, financial condition and liquidity.
Added
In certain cases, components could be sole sourced or otherwise not easily substituted due to the highly regulated or complex nature of our products.
Added
The exchange rates between some of these currencies and the U.S. dollar have fluctuated significantly in recent years and may continue to do so in the future. A weakening of the currencies in which sales are generated relative to the currencies in which costs are denominated would decrease our results of operations and cash flow.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

1 edited+0 added−0 removed23 unchanged
Biggest changeThe Company conducts cybersecurity tabletop exercises to enhance mitigating controls and incident response preparedness. The Company also has incident response plans in place to address contingencies in the event of a cybersecurity incident.
Biggest changeThe Company conducts cybersecurity exercises to enhance mitigating controls and incident response preparedness. The Company also has incident response plans in place to address contingencies in the event of a cybersecurity incident.

Item 2. Properties

Properties — owned and leased real estate

2 edited+0 added−0 removed2 unchanged
Biggest changeThe primary manufacturing locations in the International segment are located in Berlin, Germany; Bristol, United Kingdom; Châtillon-sur-Chalaronne, France, Devizes, United Kingdom; Galway, Ireland; Chelalate, Morocco; and Suzhou, China. Our primary research and development centers are located in Berlin, Germany; Cranberry Township, PA; Suzhou, China; and Johannesburg, South Africa.
Biggest changeThe primary manufacturing locations in the International segment are located in Berlin, Germany; Bristol, United Kingdom; Châtillon-sur-Chalaronne, France; Galway, Ireland; Chelalate, Morocco; and Suzhou, China. Our primary research and development centers are located in Berlin, Germany; Cranberry Township, PA; Suzhou, China; Johannesburg/Cape Town, South Africa; and Châtillon-sur-Chalaronne, France.
Our primary manufacturing locations in the Americas segment are located in Cranberry Township, PA; Jacksonville, NC; Murrysville, PA; New Kensington, PA; and Pittsfield, NH, and our primary distribution center is located in New Galilee, PA.
Our primary manufacturing locations in the Americas segment are located in Cranberry Township, PA; Jacksonville, NC; Murrysville, PA; New Kensington, PA; Pittsfield, NH,; and Querétaro, Mexico, and our primary distribution center is located in New Galilee, PA.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

5 edited+1 added−1 removed1 unchanged
Biggest change(a) Prior to his present position, Mr. Vartanian served as Chairman, President and Chief Executive Officer since May 2020 and President and Chief Executive Officer since May 2018. (b) Prior to his present position, Mr. Blanco served as Sr. Vice President and President, MSA Americas segment since June 2022 and Vice President and President, MSA Americas segment since August 2017.
Biggest changeBlanco served as President and Chief Operating Officer since June 2023; Sr. Vice President and President, MSA Americas segment since June 2022 and Vice President and President, MSA Americas segment since August 2017. (b) Prior to his present position, Mr.
Roda served as Deputy General Counsel, Secretary and Chief Compliance Officer since January 2020; and prior thereto served as Associate General Counsel, Corporate Secretary and Chief Compliance Officer since December 2016. (e) Prior to her present position, Ms. Sciullo served as Sr.
(d) Prior to his present position, Mr. Roda served as Deputy General Counsel, Secretary and Chief Compliance Officer since January 2020; and prior thereto served as Associate General Counsel, Corporate Secretary and Chief Compliance Officer since December 2016. (e) Prior to her present position, Ms. Sciullo served as Sr.
Item 4. Mine Safety Disclosures Not applicable. 22 Table of Contents Information about our Executive Officers The following sets forth the names and ages of our executive officers as of February 16, 2024: Name Age Title Nishan J. Vartanian (a) 64 Chairman and Chief Executive Officer since June 2023. Steven C.
Item 4. Mine Safety Disclosures Not applicable. 22 Table of Contents Information about our Executive Officers The following sets forth the names and ages of our executive officers as of February 14, 2025: Name Age Title Steven C. Blanco (a) 58 President and Chief Executive Officer since May 2024. David J. Howells (b) 68 Sr.
(a manufacturer of industrial tools and household hardware) since January 2021; Chief Financial Officer, Global Tools and Storage and Corporate FP&A since November 2019; and prior thereto served as President, Hand Tools, Accessories and Storage since 2016. (d) Prior to his present position, Mr.
McChesney served as Vice President, Corporate Finance and Chief Financial Officer, Global Tools and Storage for Stanley Black & Decker, Inc. (a manufacturer of industrial tools and household hardware) since January 2021; Chief Financial Officer, Global Tools and Storage and Corporate FP&A since November 2019; and prior thereto served as President, Hand Tools, Accessories and Storage since 2016.
Blanco (b) 57 President and Chief Operating Officer since June 2023. Lee B. McChesney (c) 52 Sr. Vice President, Chief Financial Officer and Treasurer since October 2022. Richard W. Roda (d) 51 Vice President, Secretary and Chief Legal Officer since June 2023. Stephanie L. Sciullo (e) 39 Sr. Vice President and President, MSA Americas segment since June 2023.
Vice President and President, International since June 2024. Lee B. McChesney (c) 53 Sr. Vice President and Chief Financial Officer since October 2022. Richard W. Roda (d) 52 Vice President, Secretary and Chief Legal Officer since June 2023. Stephanie L. Sciullo (e) 40 Sr. Vice President and President, Americas since June 2023. (a) Prior to his present position, Mr.
Removed
(c) Prior to his present position, Mr. McChesney served as Vice President, Corporate Finance and Chief Financial Officer, Global Tools and Storage for Stanley Black & Decker, Inc.
Added
Howells served as Interim President, MSA International since February 2024; Vice President, International Sales and Customer Marketing since August 2021; Vice President Business Leader EMEA since January 2020; Interim Vice President and General Manager, MEAIRR since September 2019; and prior thereto served as Vice President, Global Distribution Channels since October 2017. (c) Prior to his present position, Mr.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

6 edited+2 added−2 removed2 unchanged
Biggest changeWe do not have any other share repurchase programs. 24 Table of Contents Comparison of Five-Year Cumulative Total Return The following paragraph compares the most recent five-year performance of MSA stock with (1) the Standard & Poor’s 500 Composite Index, (2) S&P Midcap 400 Index and (3) S&P Midcap 400 Industrials.
Biggest changeThe above shares purchased during the quarter, excluding those related to the share repurchase program, related to stock-based compensation transactions. 24 Table of Contents Comparison of Five-Year Cumulative Total Return The following paragraph compares the most recent five-year performance of MSA stock with (1) the Standard & Poor’s 500 Composite Index, (2) S&P Midcap 400 Index and (3) S&P Midcap 400 Industrials.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN ASSUMES INITIAL INVESTMENT OF $100 Among MSA Safety Incorporated, the S&P 500 Index, S&P Midcap 400, and S&P Midcap 400 Industrials Assumes $100 invested on December 31, 2018 in stock or index, including reinvestment of dividends. Fiscal year ending December 31.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN ASSUMES INITIAL INVESTMENT OF $100 Among MSA Safety Incorporated, the S&P 500 Index, S&P Midcap 400, and S&P Midcap 400 Industrials Assumes $100 invested on December 31, 2019, in stock or index, including reinvestment of dividends. Fiscal year ending December 31.
Used with permission. All rights reserved. Copyright 1980-2024. Index Data: Copyright Standard and Poor’s, Inc. Used with permission. All rights reserved.
Used with permission. All rights reserved. Copyright 1980-2025. Index Data: Copyright Standard and Poor’s, Inc. Used with permission. All rights reserved.
Item 5. Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Our common stock is traded on the New York Stock Exchange under the symbol “MSA.” On February 9, 2024, there were 142 registered holders of our shares of common stock.
Item 5. Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Our common stock is traded on the New York Stock Exchange under the symbol “MSA.” On February 7, 2025, there were 138 registered holders of our shares of common stock.
The share purchase program has no expiration date. The maximum number of shares that may be purchased is calculated based on the dollars remaining under the program and the respective month-end closing share price. We have purchased a total of 778,814 shares, or $72.7 million, since this program's inception.
The share repurchase program has no expiration date. The maximum number of shares that may be purchased is calculated based on the dollars remaining under the program and the respective month-end closing share price. We have purchased a total of 166,292 shares, or $29.9 million, since this program's inception. We do not have any other share repurchase programs.
Issuer Purchases of Equity Securities Period Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs October 1 — October 31, 2023 28 $ 146.31 — 172,786 November 1 — November 30, 2023 — — — 156,653 December 1 — December 31, 2023 101 $ 165.29 — 161,580 The share repurchase program authorizes up to $100.0 million in repurchases of MSA common stock in the open market and in private transactions.
Issuer Purchases of Equity Securities Period Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs October 1 — October 31, 2024 7,000 $ 167.06 7,000 1,077,458 November 1 — November 30, 2024 34,100 172.17 34,100 994,955 December 1 — December 31, 2024 16,319 176.04 16,275 1,025,927 The share repurchase program authorizes up to $200.0 million in repurchases of MSA common stock in the open market and in private transactions.
Removed
The above shares purchased during the quarter related to stock-based compensation transactions.
Added
A substantially greater number of holders of our common stock are “street name” or beneficial holders, whose shares are held by banks, brokers and other financial institutions.
Removed
Value at December 31, 2018 2019 2020 2021 2022 2023 MSA Safety Incorporated $ 100.00 $ 136.09 $ 163.01 $ 166.51 $ 161.23 $ 191.06 S&P 500 Index 100.00 131.49 155.68 200.37 164.08 207.21 S&P Midcap 400 100.00 126.20 143.44 178.95 155.58 181.15 S&P Midcap 400 Industrials 100.00 133.55 155.57 199.82 176.84 232.43 Prepared by Zacks Investment Research, Inc.
Added
Value at December 31, 2019 2020 2021 2022 2023 2024 MSA Safety Incorporated $ 100.00 $ 119.78 $ 122.35 $ 118.48 $ 140.39 $ 139.38 S&P 500 Index 100.00 118.40 152.39 124.79 157.59 197.02 S&P Midcap 400 100.00 113.66 141.80 123.28 143.54 163.54 S&P Midcap 400 Industrials 100.00 116.49 149.62 132.42 174.04 197.51 Prepared by Zacks Investment Research, Inc.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

67 edited+29 added−41 removed26 unchanged
Biggest changeAdjusted operating income Year Ended December 31, 2023 (In thousands) Americas International Corporate Consolidated Net sales $ 1,235,594 $ 552,053 $ — $ 1,787,647 GAAP operating income 231,320 Restructuring charges (Note 3) 9,892 Currency exchange losses, net 17,079 Loss on divestiture of MSA LLC (Note 20) 129,211 Product liability expense (Note 20) 3 Amortization of acquisition-related intangible assets 9,246 Transaction costs (a) 965 Adjusted operating income (loss) 359,617 89,699 (51,600) 397,716 Adjusted operating margin % 29.1 % 16.2 % Depreciation and amortization 36,979 13,705 843 51,527 Adjusted EBITDA 396,596 103,404 (50,757) 449,243 Adjusted EBITDA % 32.1 % 18.7 % (a) Transaction costs include advisory, legal, accounting, valuation, and other professional or consulting fees incurred during acquisitions and divestitures.
Biggest changeA reconciliation of total adjusted EBITDA and total adjusted operating income from reportable segments to net income is presented in the following table: Year ended December 31, (In thousands) 2024 2023 Adjusted EBITDA $ 469,431 $ 449,243 Less: Depreciation and amortization 55,159 51,527 Adjusted operating income $ 414,272 $ 397,716 Less: Currency exchange losses, net 3,638 17,079 Amortization of acquisition-related intangible assets 9,174 9,246 Restructuring charges (Note 4) 6,397 9,892 Net cost for product-related legal matter 5,000 — Transaction costs (a) 886 965 Loss on divestiture of MSA LLC (Note 20) — 129,211 Product liability expense (Note 20) — 3 GAAP operating income $ 389,177 $ 231,320 Less: Interest expense 36,889 46,733 Other income, net (Note 16) (22,718) (22,101) Income before income taxes 375,006 206,688 Provision for income taxes (Note 11) 90,039 148,105 Net income $ 284,967 $ 58,583 (a) Transaction costs include advisory, legal, accounting, valuation, and other professional or consulting fees incurred during our evaluation of acquisitions and divestitures.
On January 5, 2023, the Company divested Mine Safety Appliances LLC ("MSA LLC") a wholly owned subsidiary that held legacy product liability claims relating to coal dust, asbestos, silica, and other exposures, to a joint venture between R&Q Insurance Holdings Ltd. and Obra Capital, Inc.
On January 5, 2023, the Company divested Mine Safety Appliances Company, LLC ("MSA LLC") a wholly owned subsidiary that held legacy product liability claims relating to coal dust, asbestos, silica, and other exposures, to a joint venture between R&Q Insurance Holdings Ltd. and Obra Capital, Inc.
Certain global expenses are allocated to each segment in a manner consistent with where the benefits from the expenses are derived. Please refer to Note 8—Segment Information of the consolidated financial statements in Part II Item 8 of this Form 10-K for further information.
Certain global expenses are allocated to each segment in a manner consistent with where the benefits from the expenses are derived. Please refer to Note 9—Segment Information of the consolidated financial statements in Part II Item 8 of this Form 10-K for further information.
Our actual results could differ materially from the results contemplated by these forward-looking statements due to a number of factors, including those discussed in the sections of this annual report entitled “Forward-Looking Statements” and “Risk Factors.” This section generally discusses the results of our operations for the year ended December 31, 2023 compared to the year ended December 31, 2022.
Our actual results could differ materially from the results contemplated by these forward-looking statements due to a number of factors, including those discussed in the sections of this annual report entitled “Forward-Looking Statements” and “Risk Factors.” This section generally discusses the results of our operations for the year ended December 31, 2024, compared to the year ended December 31, 2023.
All goodwill is assigned to and evaluated for impairment at the reporting unit level, which is defined as an operating segment or one level below an operating segment. The evaluation of impairment involves using either a qualitative or quantitative approach as outlined in Accounting Standards Codification ("ASC") Topic 350. In 2023, we performed a quantitative test at October 1, 2023.
All goodwill is assigned to and evaluated for impairment at the reporting unit level, which is defined as an operating segment or one level below an operating segment. The evaluation of impairment involves using either a qualitative or quantitative approach as outlined in Accounting Standards Codification ("ASC") Topic 350. In 2024, we performed a quantitative test at October 1, 2024.
For a discussion on the year ended December 31, 2022 compared to the year ended December 31, 2021, please refer to Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2022 filed with the Securities and Exchange Commission on February 16, 2023.
For a discussion on the year ended December 31, 2023, compared to the year ended December 31, 2022, please refer to Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the Securities and Exchange Commission on February 16, 2024.
R&Q and Obra have assumed management of the divested subsidiary, including the management of its claims. Refer to Note 20—Contingencies of the consolidated financial statements in Part II Item 8 of this Form 10-K for further information. 26 Table of Contents BUSINESS OVERVIEW MSA is the global leader in advanced safety products, technology and solutions.
Following completion of the transaction, R&Q and Obra assumed management of the divested subsidiary, including the management of its claims. Refer to Note 20—Contingencies of the consolidated financial statements in Part II Item 8 of this Form 10-K for further information. 26 Table of Contents BUSINESS OVERVIEW MSA is the global leader in advanced safety products, technology and solutions.
At October 1, 2023, based on our quantitative test, the fair values of each of our reporting units exceeded their respective carrying value by at least 76%. The intangible asset with an indefinite life is also subject to impairment testing on October 1 st of each year, or more frequently if indicators of impairment exist.
At October 1, 2024, based on our quantitative test, the fair values of each of our reporting units exceeded their respective carrying value by at least 70%. The intangible asset with an indefinite life is also subject to impairment testing on October 1 st of each year, or more frequently if indicators of impairment exist.
These letters of credit serve to cover customer requirements in connection with certain sales orders and insurance companies. The Company is also required to provide cash collateral in connection with certain arrangements. At December 31, 2023, the Company has $2.0 million of restricted cash in support of these arrangements.
These letters of credit serve to cover customer requirements in connection with certain sales orders and insurance companies. The Company is also required to provide cash collateral in connection with certain arrangements. At December 31, 2024, the Company has $0.5 million of restricted cash in support of these arrangements.
We remain committed to evaluating additional acquisition opportunities that will allow us to continue to grow in key end markets and geographies. Financing activities. Financing activities used cash of $52.3 million for the year ended December 31, 2023, compared to using cash of $113.4 million in 2022.
We remain committed to evaluating acquisition opportunities that will allow us to continue to grow in key end markets and geographies. Financing activities. Financing activities used cash of $208.7 million for the year ended December 31, 2024, compared to using cash of $52.3 million in 2023.
At December 31, 2023, approximately 83% of our borrowings are denominated in US dollars, which limits our exposure to currency exchange rate fluctuations.
At December 31, 2024, approximately 89% of our borrowings are denominated in US dollars, which limits our exposure to currency exchange rate fluctuations.
The decreased operating cash flow as compared to the same period in 2022 was primarily related to the contribution of $341.2 million in the divestiture of MSA LLC. Refer to Note 20—Contingencies to the consolidated financial statements in Part II Item 8 of this Form 10-K for further information.
The improved cash flow from operating activities as compared to the same period in 2023 was primarily related to the prior year contribution of $341.2 million in the divestiture of MSA LLC. Refer to Note 20—Contingencies to the consolidated financial statements in Part II Item 8 of this Form 10-K for further information.
Pensions and other post-retirement benefits. We sponsor certain pension and other post-retirement benefit plans. Accounting for the net periodic benefit costs and credits for these plans requires us to estimate the cost of benefits to be provided well into the future and to attribute these costs over the expected work life of the employees participating in these plans.
Accounting for the net periodic benefit costs and credits for these plans requires us to estimate the cost of benefits to be provided well into the future and to attribute these costs over the expected work life of the employees participating in these plans.
Total spend on both software development and research and development activities was $80.1 million and $65.7 million during the years ended December 31, 2023 and 2022. Restructuring charges.
Total spend on both software development and research and development activities was $79.5 million and $80.1 million during the years ended December 31, 2024, and 2023. Restructuring charges.
We expect to make net contributions of $5.0 million to our pension plans in 2024 which are primarily associated with our International segment. We have not been required to make contributions to our U.S. based qualified defined benefit pension plan in many years.
We expect to make net contributions between $6 million and $8 million to our pension plans in 2025, which are primarily associated with our International segment. We have not been required to make contributions to our U.S. based qualified defined benefit pension plan in many years.
The discount rate assumptions used in determining projected benefit obligations for our U.S. and foreign plans were based on the spot rate method at December 31, 2023. Expected returns on plan assets are based on capital market expectations by asset class. The following table summarizes the impact of changes in significant actuarial assumptions on our December 31, 2023 actuarial valuations.
The discount rate assumptions used in determining projected benefit obligations for our U.S. and foreign plans were based on the spot rate method at December 31, 2024. Expected returns on plan assets are based on capital market expectations by asset class.
Adjusted operating income (loss) is reconciled above to the nearest GAAP financial measure, Operating income (loss), and excludes restructuring, currency exchange, product liability expense, loss on divestiture of MSA LLC, transaction costs and acquisition-related amortization. Adjusted EBITDA is reconciled above to the nearest GAAP financial measure, Operating income (loss) and excludes depreciation and amortization expense.
Total reportable segment adjusted operating income is reconciled above to the nearest GAAP financial measure, operating income, and excludes restructuring, currency exchange, product liability expense, loss on divestiture of MSA LLC, net cost for product related legal matter, transaction costs and acquisition-related amortization.
We expect total interest expense for 2024 to be approximately $40 million. 33 Table of Contents The Company had outstanding bank guarantees and standby letters of credit with banks as of December 31, 2023 totaling $9.1 million, of which $1.1 million relate to the senior revolving credit facility.
We expect total interest expense for 2025 to be in the range of $24 million to $27 million. The Company had outstanding bank guarantees and standby letters of credit with banks as of December 31, 2024 totaling $9.5 million, of which $1.5 million relate to the senior revolving credit facility.
Our significant cash obligations as of December 31, 2023, are as follows: (In millions) Total 2024 2025 2026 2027 2028 Thereafter Long-term debt $ 604.3 $ 26.5 $ 32.8 $ 256.1 $ 32.8 $ 32.8 $ 223.3 Operating leases 63.9 11.1 9.5 7.9 6.4 5.5 23.5 Inventory costing method change tax 5.3 2.7 2.6 — — — — Transition tax 1.3 1.3 — — — — — Totals $ 674.8 $ 41.6 $ 44.9 $ 264.0 $ 39.2 $ 38.3 $ 246.8 The significant obligations table does not include obligations to taxing authorities due to uncertainty surrounding the ultimate settlement of amounts and timing of these obligations.
Our significant cash obligations as of December 31, 2024, are as follows: (In millions) Total 2025 2026 2027 2028 2029 Thereafter Long-term debt $ 509.6 $ 26.4 $ 195.1 $ 32.6 $ 32.6 $ 7.6 $ 215.3 Operating leases 67.7 13.3 11.2 8.5 6.5 5.1 23.1 Inventory costing method change tax 2.6 2.6 — — — — — Totals $ 579.9 $ 42.3 $ 206.3 $ 41.1 $ 39.1 $ 12.7 $ 238.4 The significant obligations table does not include obligations to taxing authorities due to uncertainty surrounding the ultimate settlement of amounts and timing of these obligations.
At December 31, 2023, the Company had cash and cash equivalents, including restricted cash, totaling $148.4 million, and access to sufficient capital, providing ample liquidity and flexibility to continue to maintain our balanced capital allocation strategy that prioritizes growth investments, funding our dividends and servicing debt obligations.
At December 31, 2024, the Company had cash and cash equivalents totaling $164.6 million and access to sufficient capital, providing ample liquidity and flexibility to continue to maintain our balanced capital allocation strategy that prioritizes growth investments, funding our dividends and servicing debt obligations. Cash, cash equivalents and restricted cash increased $16.7 million during the year ended December 31, 2024.
Net sales for the International segment were $552.1 million for the year ended December 31, 2023, an increase of $67.4 million, or 13.9%, compared to $484.7 million for the year ended December 31, 2022. Constant currency sales in the International segment increased 13.2% compared to the prior year period.
Net sales for the International segment were $561.5 million for the year ended December 31, 2024, an increase of $9.4 million, or 1.7%, compared to $552.1 million for the year ended December 31, 2023. Organic sales in the International segment increased 1.5% compared to the prior year period.
Operations in other International segment countries focus primarily on sales and distribution in their respective home country markets. Although some of these companies may perform limited production, most of their sales are of products manufactured in our plants in Germany, France, the U.S., U.K., Ireland, Morocco and China or are purchased from third-party vendors. Corporate .
Although some of these companies may perform limited production, most of their sales are of products manufactured in our plants in Germany, France, the U.S., U.K., Ireland, Mexico, Morocco and China or are purchased from third-party vendors. Corporate .
Amortization expense for capitalized software development cost of $10.4 million and $7.9 million during the years ended December 31, 2023 and 2022, was recorded in costs of products sold on the Consolidated Statements of Income.
We capitalized $13.0 million and $12.1 million of software development costs during the years ended December 31, 2024, and 2023, respectively. Amortization expense for capitalized software development cost of $11.3 million and $10.4 million during the years ended December 31, 2024, and 2023, was recorded in costs of products sold on the Consolidated Statements of Income.
We expect total interest expense for 2024 to be approximately $40 million, this decrease is primarily related to significant long-term debt payments made during 2023. We expect non-cash pension income to increase by $2 million compared to 2023. Income taxes.
We expect total interest expense for 2025 to be in the range of $24 million to $27 million. This decrease is primarily related to significant long-term debt payments made during 2024. We expect non-cash pension income to increase by $4 million to $5 million compared to 2024. Income taxes.
Driven by its singular mission of safety, the Company has been at the forefront of safety innovation since 1914, protecting workers and facility infrastructure around the world across a broad range of diverse end markets while creating sustainable value for shareholders . We tailor our product offerings and distribution strategy to satisfy distinct customer preferences that vary across geographic regions.
Driven by its singular mission of safety, the Company has been at the forefront of safety innovation since 1914, protecting workers and facility infrastructure around the world across a broad range of diverse end markets while creating sustainable value for shareholders .
We believe that the use of these non-GAAP financial measures provide investors with additional useful information and provide a more complete understanding of our operating performance and trends, and facilitate comparisons with the performance of our peers. Management also uses these measures internally to assess and better understand our underlying business performance and trends related to core business activities.
Additionally, these non-GAAP financial measures provide information useful to investors in understanding our operating performance and trends, and to facilitate comparisons with the performance of our peers. Management uses these measures internally to assess and better understand our underlying business performance and trends related to core business activities as well as to allocate resources.
During the year ended December 31, 2023, the Company recorded restructuring charges of $9.9 million primarily related to our ongoing manufacturing footprint optimization activities and other initiatives to adjust our cost structure and improve productivity.
This compared to restructuring charges of $9.9 million during the year ended December 31, 2023, primarily related to manufacturing footprint optimization activities and other initiatives to adjust our cost structure and improve productivity. We remain focused on executing programs to optimize our cost structure. Currency exchange .
Selling, general and administrative ("SG&A") expenses were $396.6 million for the year ended December 31, 2023, an increase of $57.7 million, or 17.0%, compared to $338.9 million for the year ended December 31, 2022. Overall, selling, general and administrative expenses were 22.2% of net sales in both periods.
Selling, general and administrative expenses. Selling, general and administrative ("SG&A") expenses were $394.7 million for the year ended December 31, 2024, a decrease of $1.9 million, or 0.5%, compared to $396.6 million for the year ended December 31, 2023. Selling, general and administrative expenses were 21.8% of net sales in 2024 compared to 22.2% of net sales in 2023.
We recognize interest related to unrecognized tax benefits in interest expense and penalties in operating expenses. The tax liabilities ultimately paid are dependent on a number of factors, including the resolution of tax audits, and may differ from the amounts recorded. Tax liabilities are adjusted through income when it becomes probable that the actual liability differs from the amount recorded.
The tax liabilities ultimately paid are dependent on a number of factors, including the resolution of tax audits, and may differ from the amounts recorded. Tax liabilities are adjusted through income when it becomes probable that the actual liability differs from the amount recorded. Pensions and other post-retirement benefits. We sponsor certain pension and other post-retirement benefit plans.
Interest payments on fixed rate debt over the next five years are excluded from the table above and are expected to be approximately $9.8 million in 2024, $9.6 million in 2025, $9.3 million in 2026, $8.5 million in 2027 and $7.0 million in 2028.
We expect to meet our future debt service obligations through cash provided by operations. Interest payments on fixed rate debt over the next five years are excluded from the table above and are expected to be approximately $9.6 million in 2025, $9.4 million in 2026, $9.1 million in 2027, $7.5 million in 2028 and $6.0 million in 2029.
Currency exchange losses were $17.1 million during the year ended December 31, 2023, compared to $10.3 million during the year ended December 31, 2022. Currency exchange activity for both periods related primarily due to foreign currency exposure on unsettled inter-company balances and recognized exchange loss for our Argentina affiliate operating in a hyper-inflationary environment.
The remaining currency exchange activity for both periods related primarily to foreign currency exposure on unsettled inter-company balances and recognized exchange loss for our Argentina affiliate operating in a hyper-inflationary environment.
Consolidated operating income for the year ended December 31, 2023 was $231.3 million compared to $239.1 million for the year ended December 31, 2022. The decrease in operating income was primarily driven by the loss on divestiture of MSA LLC, partially offset by strong operating results driven by higher sales and gross profit. Adjusted operating income.
Consolidated operating income for the year ended December 31, 2024, was $389.2 million compared to $231.3 million for the year ended December 31, 2023. The increase in operating results was primarily driven by the absence of loss on divestiture of MSA LLC as recognized in 2023 in addition to higher sales. Adjusted operating income.
During 2022, we also recognized non-cash cumulative translation losses as a result of our plan to close a foreign subsidiary. Refer to Note 18—Derivative Financial Instruments of the consolidated financial statements in Part II Item 8 of this Form 10-K for information regarding our currency exchange rate risk management strategy. 29 Table of Contents Product liability expense.
Refer to Note 18—Derivative Financial Instruments of the consolidated financial statements in Part II Item 8 of this Form 10-K for information regarding our currency exchange rate risk management strategy. Product liability expense.
At December 31, 2023, $838.1 million of the existing $900.0 million senior revolving credit facility was unused, including letters of credit issued under the facility. The facility also provides an accordion feature that allows the Company to access an additional $400.0 million of capacity pending approval by MSA’s board of directors and from the bank group.
The facility also provides an accordion feature that allows the Company to access an additional $400.0 million of capacity pending approval by MSA’s board of directors and from the bank group.
These non-GAAP financial measures should be viewed as supplemental in nature, and not as a substitute for, or superior to, our reported results prepared in accordance with GAAP.
These non-GAAP financial measures should be viewed as supplemental in nature, and not as a substitute for, or superior to, our reported results prepared in accordance with GAAP. 31 Table of Contents LIQUIDITY AND CAPITAL RESOURCES Our main source of liquidity is operating cash flows, supplemented by borrowings.
Forecasts are based on sales generated by the underlying trade name assets and are generally based on approved business unit operating plans for the early years and historical relationships in later years. At October 1, 2023, based on our quantitative test, the fair value of the trade name asset exceeded its carrying value by approximately 39%.
Forecasts are based on sales generated by the underlying trade name assets and are generally based on approved business unit operating plans for the early years and historical relationships in later years.
The following tables represent a reconciliation from GAAP operating income to adjusted operating income (loss) and adjusted EBITDA. Adjusted operating margin % is calculated as adjusted operating income (loss) divided by net sales and adjusted EBITDA margin % is calculated as adjusted EBITDA divided by net sales.
Adjusted operating margin % is calculated as adjusted operating income (loss) divided by net sales and adjusted EBITDA margin % is calculated as adjusted EBITDA divided by net sales.
Our International segment includes companies in Europe, the Middle East and Africa ("EMEA") and the Asia Pacific region. In our largest International subsidiaries (in Germany, France, U.K., Ireland and China), we develop, manufacture and sell a wide variety of products. In China, the products manufactured are sold primarily in China as well as in regional markets.
In our largest International subsidiaries (in Germany, France, U.K., Ireland and China), we develop, manufacture and sell a wide variety of products. In China, the products manufactured are sold primarily in China as well as in regional markets. Operations in other International segment countries focus primarily on sales and distribution in their respective home country markets.
We paid cash dividends of $73.5 million during 2023, compared to $71.5 million during 2022. We used cash of $4.0 million during 2023 to repurchase shares related to our employee stock compensation transactions. We used cash of $34.4 million during 2022, including $30.4 million related to our share repurchase program with the remainder related to employee stock compensation transactions.
We used cash of $37.3 million during 2024 to repurchase shares, including $29.9 million related to our share repurchase program, and the remainder related to our employee stock compensation transactions compared to $4.0 million during 2023, all of which related to employee stock compensation transactions.
Refer to Note 20—Contingencies to the consolidated financial statements in Part II Item 8 of this Form 10-K for further discussion on the Company's product liability claims and divestiture of MSA LLC on January 5, 2023.
Product liability expense during the years ended December 31, 2024, and 2023, was minimal due to our divestiture of MSA LLC in January 2023, as discussed further in Note 20—Contingencies of the consolidated financial statements in Part II Item 8 of this Form 10-K. Loss on divestiture of MSA LLC .
CUMULATIVE TRANSLATION ADJUSTMENTS The year-end position of the U.S. dollar relative to international currencies at December 31, 2023, resulted in a translation gain of $21.7 million being recorded to cumulative translation adjustments shareholders' equity account for the year ended December 31, 2023, compared to a translation loss of $19.5 million being recorded to the cumulative translation adjustments account during 2022.
CUMULATIVE TRANSLATION ADJUSTMENTS The position of the U.S. dollar relative to international currencies, primarily the euro, at December 31, 2024, resulted in a translation loss of $42.5 million being recorded to cumulative translation adjustments shareholders' equity account for the year ended December 31, 2024, compared to a translation gain of $21.7 million being recorded to the cumulative translation adjustments account during 2023. 32 Table of Contents COMMITMENTS AND CONTINGENCIES We are obligated to make future payments under various contracts, including debt and lease agreements.
Total other expense, net, for the year ended December 31, 2023, was $24.6 million, an increase of $24.0 million compared to $0.6 million for the year ended December 31, 2022, due primarily to increased interest expense related to higher interest rates and increased debt balances associated with the MSA LLC divestiture as well as decreased pension income driven by a lower expected rate of return.
Total other expense, net, for the year ended December 31, 2024, was $14.2 million, a decrease of $10.4 million compared to $24.6 million for the year ended December 31, 2023, due primarily to decreased interest expense on reduced debt balances as well as increased pension income driven by a higher expected rate of return, partially offset by pension settlement expense recognized in the current year.
We continue to monitor the potential financial impacts and compliance requirements of Pillar 2. We are subject to regular review and audit by both foreign and domestic tax authorities. While we believe our tax positions will be sustained, the final outcome of tax audits and related litigation may differ materially from the tax amounts recorded in our consolidated financial statements.
While we believe our tax positions will be sustained, the final outcome of tax audits and related litigation may differ materially from the tax amounts recorded in our consolidated financial statements. Net income .
Net Sales Year Ended December 31, 2023 versus December 31, 2022 (Percent Change) Americas International Consolidated GAAP reported sales change 18.4% 13.9% 17.0% Currency translation effects (0.9)% (0.7)% (0.9)% Constant currency sales change 17.5% 13.2% 16.1% Note: Constant currency sales change is a non-GAAP financial measure provided by the Company to give a better understanding of the Company's underlying business performance.
Net Sales Year Ended December 31, 2024, versus December 31, 2023 (Percent Change) Americas International Consolidated GAAP reported sales change 0.9% 1.7% 1.1% Currency translation effects 0.7% (0.2)% 0.4% Organic sales change 1.6% 1.5% 1.5% Note: Organic sales change is a non-GAAP financial measure. See the "Non-GAAP Financial Measures" section below.
During 2023, we had net proceeds on long-term debt of $23.9 million to fund the MSA LLC divestiture as compared to net payments on long-term debt of $13.0 million during the same period in 2022. Since the MSA LLC divestiture in January 2023, we have paid down $289.0 million of our outstanding borrowings.
During 2024, we had net payments on long-term debt of $94.3 million compared to net proceeds from long-term debt of $23.9 million during the same period in 2023 to fund the MSA LLC divestiture. We paid cash dividends of $78.8 million during 2024, compared to $73.5 million during 2023.
This significant variance from the prior year is primarily due to the divestiture of MSA LLC and the non-deductible loss recorded on the derecognition of the product liability reserves and related assets partially offset by a $5.3 million tax adjustment for Switzerland tax reform.
The reported effective tax rate for the year ended December 31, 2024, was 24.0% compared to 71.6% for the year ended December 31, 2023. This significant variance is primarily due to the prior year divestiture of MSA LLC and the non-deductible loss recorded on the derecognition of the product liability reserves and related assets.
To best serve these customer preferences, we have organized our business into four geographical operating segments that are aggregated into three reportable segments: Americas, International and Corporate. In 2023, 69% and 31% of our net sales were made by our Americas and International segments, respectively. Americas .
We tailor our product and solution offerings and distribution strategy to satisfy distinct customer preferences that vary across geographic regions. To best serve these customer preferences, we have organized our business into four geographical operating segments that are aggregated into three reportable segments: Americas, International and Corporate.
Our largest manufacturing and research and development facilities are located in the United States. We serve our markets across the Americas with manufacturing facilities in the U.S., Mexico and Brazil. Operations in the other countries within the Americas segment focus primarily on sales and distribution in their respective home country markets. International .
In 2024, 69% and 31% of our net sales were made by our Americas and International segments, respectively. Americas . Our largest manufacturing and research and development facilities are located in the United States. We serve our markets across the Americas with manufacturing facilities in the U.S., Mexico and Brazil.
Americas adjusted operating income for the year ended December 31, 2023 was $359.6 million, an increase of $92.2 million or 34%, compared to $267.4 million for the year ended December 31, 2022. The increase in adjusted operating income is primarily attributable to higher sales and gross profit, partially offset by higher SG&A expenses to support business growth.
Americas adjusted operating income for the year ended December 31, 2024, was $380.1 million, an increase of $20.5 million, or 6%, compared to $359.6 million for the year ended December 31, 2023. The increase in adjusted operating income is primarily attributable to higher sales and effective price/cost management as well as controlled SG&A expense.
Please refer to the Selling, general and administrative expenses table for a reconciliation of the year-over-year expense change. 28 Table of Contents Selling, general, and administrative expenses Year Ended December 31, 2023 versus December 31, 2022 (Percent Change) Consolidated GAAP reported change 17.0% Currency translation effects (0.6)% Constant currency change 16.4% Note: Constant currency SG&A change is a non-GAAP financial measure provided by the Company to give a better understanding of the Company's underlying business performance.
Selling, general, and administrative expenses Year Ended December 31, 2024, versus December 31, 2023 (Percent Change) Consolidated GAAP reported change (0.5)% Currency translation effects 0.5% Organic change —% Note: Organic SG&A change is a non-GAAP financial measure. See the "Non-GAAP Financial Measures" section below. 28 Table of Contents Research and development expense.
Research and development expense was 3.8% of net sales in 2023, compared to 3.7% of net sales in 2022. We capitalized approximately $12.1 million and $8.7 million of software development costs during the years ended December 31, 2023 and 2022, respectively.
Research and development expense was $66.5 million for the year ended December 31, 2024, a decrease of $1.5 million, or 2.2%, compared to $68.0 million for the year ended December 31, 2023. Research and development expense was 3.7% of net sales in 2024, compared to 3.8% of net sales in 2023.
Net income was $58.6 million for the year ended December 31, 2023, or $1.48 per diluted share, compared to $179.6 million, or $4.56 per diluted share, for the year ended December 31, 2022. 31 Table of Contents Non-GAAP Financial Information To supplement our Consolidated Financial Statements presented in accordance with generally accepted accounting principles (“GAAP”), we use, and this report includes, certain non-GAAP financial measures.
Net income was $285.0 million for the year ended December 31, 2024, or $7.21 per diluted share, compared to $58.6 million, or $1.48 per diluted share, for the year ended December 31, 2023. Non-GAAP Financial Information This report includes certain non-GAAP financial measures and operating ratios derived from non-GAAP financial measures.
At December 31, 2023, approximately 52% of our long-term debt is at fixed interest rates with repayment schedules through 2036. The remainder of our long-term debt is at variable rates on an unsecured revolving credit facility that is due in 2026.
Our principal liquidity requirements are for working capital, capital expenditures, principal and interest payments on debt, dividend payments and share repurchases. At December 31, 2024, approximately 60% of our long-term debt is at fixed interest rates with repayment schedules through 2036. The remainder of our long-term debt is at variable rates on a term loan due in 2026.
We record an estimated income tax liability based on our best judgment of the amounts likely to be paid in the various tax jurisdictions in which we operate. We record tax benefits related to uncertain tax positions taken or expected to be taken on a tax return when such benefits meet a more likely than not threshold.
We record tax benefits related to uncertain tax positions taken or expected to be taken on a tax return when such benefits meet a more likely than not threshold. We recognize interest related to unrecognized tax benefits in interest expense and penalties in operating expenses.
When assessing the need for valuation allowances, we consider projected future taxable income and prudent and feasible tax planning strategies. Should a change in circumstances lead to a change in our judgments about the realizability of deferred tax assets in future years, we adjust the related valuation allowances in the period that the change in circumstances occurs.
We record valuation allowances to reduce deferred tax assets to the amounts that we estimate are probable to be realized. When assessing the need for valuation allowances, we consider projected future taxable income and prudent and feasible tax planning strategies.
Please refer to the Net Sales table below for a reconciliation of the year over year sales change.
Net sales for the year ended December 31, 2024, were $1.81 billion, an increase of $20.4 million from $1.79 billion for the year ended December 31, 2023. Please refer to the Net Sales table below for a reconciliation of the year over year sales change.
We believe MSA's healthy balance sheet and access to significant capital at the year ended December 31, 2023, positions us well to navigate through challenging business conditions and supply chain constraints or other unexpected events. 32 Table of Contents Operating activities. Operating activities provided cash of $92.9 million in 2023, compared to providing cash of $157.5 million in 2022.
We believe MSA's healthy balance sheet and access to significant capital at the year ended December 31, 2024, positions us well to navigate through a dynamic operating environment and other unexpected events.
We recognize deferred tax assets and liabilities using enacted tax rates to record the tax effect of temporary differences between the book and tax basis of recorded assets and liabilities. We record valuation allowances to reduce deferred tax assets to the amounts that we estimate are probable to be realized.
The more critical judgments and estimates used in the preparation of our consolidated financial statements are discussed below. Income taxes. We recognize deferred tax assets and liabilities using enacted tax rates to record the tax effect of temporary differences between the book and tax basis of recorded assets and liabilities.
Impact of Changes in Actuarial Assumptions Change in Discount Rate Change in Expected Return Change in Market Value of Assets (In thousands) 1% (1)% 1% (1)% 5% (5)% (Decrease) increase in net benefit cost $ (906) $ 1,035 $ (5,767) $ 5,767 $ (384) $ 355 (Decrease) increase in projected benefit obligation (55,749) 67,271 — — — — Increase (decrease) in funded status 55,749 (67,271) — — 28,106 (28,106) 35 Table of Contents Goodwill and Indefinite-lived Intangible Assets.
The following table summarizes the impact of changes in significant actuarial assumptions on our December 31, 2024, actuarial valuations: Impact of Changes in Actuarial Assumptions Change in Discount Rate Change in Expected Return Change in Market Value of Assets (In thousands) 1% (1)% 1% (1)% 5% (5)% (Decrease) increase in net benefit cost $ (1,029) $ 2,135 $ (5,981) $ 5,980 $ (486) $ 466 (Decrease) increase in projected benefit obligation (51,948) 63,107 — — — — Increase (decrease) in funded status 51,948 (63,107) — — 29,849 (29,849) Goodwill and Indefinite-lived Intangible Assets.
International adjusted operating income for the year ended December 31, 2023 was $89.7 million, an increase of $28.8 million, or 47%, compared to adjusted operating income of $60.9 million for the year ended December 31, 2022. The increase in adjusted operating income is primarily attributable to higher sales and gross profit.
International adjusted operating income for the year ended December 31, 2024, was $84.6 million, a decrease of $5.1 million, or 6%, compared to adjusted operating income of $89.7 million for the year ended December 31, 2023. The decrease in adjusted operating income is primarily attributable to inflationary pressures, partially offset by pricing and discretionary cost management.
These costs are included in selling, general and administrative expense in the Consolidated Statements of Income. Note: Adjusted operating income (loss) and adjusted EBITDA are non-GAAP financial measures.
These costs are included in Selling, general and administrative expense in the Consolidated Statements of Operations. 30 Table of Contents Total other expense, net.
Refer to Note 8—Segment Information to the consolidated financial statements in Part II Item 8 of this Form 10-K, for information regarding sales by product group. Gross profit. Gross profit for the year ended December 31, 2023 was $852.1 million, an increase of $178.3 million, or 26.5%, compared to $673.8 million for the year ended December 31, 2022.
We expect to generate low-single digit organic sales growth in 2025 and expect the year to follow normal seasonal patterns. Refer to Note 9—Segment Information to the consolidated financial statements in Part II Item 8 of this Form 10-K, for information regarding sales by product category. Gross profit.
These increases reflect an increase in centrally managed functions and is primarily the result of higher variable compensation expense related to sales growth and improved performance results from prior year. 27 Table of Contents Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 Net Sales 2023 2022 Dollar Increase Percent Increase (In millions) Consolidated $1,787.7 $1,527.9 $259.8 17.0% Americas 1,235.6 1,043.2 192.4 18.4% International 552.1 484.7 67.4 13.9% Net Sales.
Our commitment to MBS has enabled us to drive customer satisfaction and profitable growth while generating significant improvements in operating results. 27 Table of Contents Year Ended December 31, 2024, Compared to Year Ended December 31, 2023 Net Sales 2024 2023 Dollar Increase Percent Increase (In millions) Consolidated $1,808.1 $1,787.7 $20.4 1.1% Americas 1,246.6 1,235.6 11.0 0.9% International 561.5 552.1 9.4 1.7% Net Sales.
Constant currency sales change is calculated by deducting the percentage impact from currency translation effects from the overall percentage change in net sales. Net sales for the Americas segment were $1.2 billion for the year ended December 31, 2023, an increase of $0.2 billion, or 18.4%, compared to $1.0 billion for the year ended December 31, 2022.
Net sales for the Americas segment were $1.25 billion for the year ended December 31, 2024, an increase of $11.0 million, or 0.9%, compared to $1.24 billion for the year ended December 31, 2023. Organic sales in the Americas segment increased 1.6% compared to the prior year. This growth was driven by strength across detection, fire service and industrial PPE.
During the years ended December 31, 2023, and 2022 corporate general and administrative costs were $52.7 million and $40.3 million, respectively.
During the years ended December 31, 2024, and 2023, corporate general and administrative costs were $56.3 million and $52.7 million, respectively. The increase is related to higher costs for centrally managed functions, including legal and other professional services associated with various strategic initiatives, partially offset by lower variable compensation expense.
See further discussion on the process and assumptions used to derive this estimate in Note 20— Contingencies of the consolidated financial statements in Part II Item 8 of MSA's Form 10-K for the year ended December 31, 2022. Income taxes.
Refer to Note 9—Segment Information to the consolidated financial statements in Part II Item 8 of this Form 10-K for reconciliation of total adjusted operating income from reportable segments to income before income taxes and table below for reconciliation of adjusted EBITDA to net income. See also the "Non-GAAP Financial Information" section below.
Investing activities used cash of $40.0 million for the year ended December 31, 2023, compared to using $4.5 million in 2022. The increase in cash used in investing activities as compared to the same period in 2022 was primarily related to the absence of short-term investment activity.
Additionally, working capital cash usage increased related primarily to inventory purchases to support customer demand, which were partially offset by improved accounts payable and accounts receivable management. Investing activities. Investing activities used cash of $53.8 million for the year ended December 31, 2024, compared to using $40.0 million in 2023.
Removed
Net sales for the year ended December 31, 2023, were $1.8 billion, an increase of $0.3 billion, from $1.5 billion for the year ended December 31, 2022, driven by volume growth and pricing actions. We saw healthy growth across product categories and both reporting segments. Constant currency sales increased by 16.1% for the year ended December 31, 2023.
Added
Operations in the other countries within the Americas segment focus primarily on sales and distribution in their respective home country markets. International . Our International segment includes companies in Europe, the Middle East and Africa ("EMEA") and the Asia Pacific region.
Removed
During 2023, constant currency sales in the Americas segment increased 17.5% compared to the prior year driven by volume growth and pricing actions.
Added
We leverage the MSA Business System ("MBS") to develop and introduce innovative safety solutions, secure new business opportunities, and operate with greater efficiency. The MBS is our approach to working at our best - at our most efficient and most empowered.
Removed
This growth was driven by increases in all products, particularly firefighter protective apparel and detection associated with healthy demand and improved output as well as backlog conversion as a result of continued progress with the supply chain and by applying the MSA Business System mindset.
Added
It is a combination of behaviors, processes and tools that provide a framework to run the business and continuously improve.
Removed
This growth was driven by strength across most core products, particularly detection and breathing apparatus. We expect to generate mid-single digit sales growth in 2024 with incremental margin and cash flow conversion aligned with our long-term targets.
Added
This growth was driven by strength across fire service partially offset by a decline in industrial PPE. The operating environment continues to be dynamic with an uncertain macroeconomic and geopolitical climate. We remain cautiously optimistic in our outlook, which balances the opportunities and risks we see ahead of us given the resilient nature of our business.
Removed
We expect to have greater visibility in the first half of the year and we will continue to be agile in the event the operating environment differs meaningfully from our expectations. There are a number of other evolving factors that will continue to influence our revenue and earnings outlook.
Added
Gross profit for the year ended December 31, 2024, was $860.4 million, an increase of $8.3 million, or 1.0%, compared to $852.1 million for the year ended December 31, 2023. The ratio of gross profit to net sales was 47.6% in 2024 compared to 47.7% in 2023. Price realization and productivity efforts mostly offset inflationary pressures.
Removed
These factors include, among other things, supply chain constraints, raw material availability, industrial employment rates, interest rate changes, military conflict, currency exchange volatility, the pace of economic recovery, and geopolitical risk. These or other conditions could impact our future results and growth expectations into 2024.
Added
Organic SG&A was consistent from 2023 to 2024. Lower variable compensation and discretionary cost management offset inflation, net cost for product-related legal matter and higher professional service expenses. Please refer to the Selling, general and administrative expenses table for a reconciliation of the year over year expense change.
Removed
The ratio of gross profit to net sales was 47.7% in 2023 compared to 44.1% in 2022. Volume leverage, price/cost management, favorable product mix and productivity efforts contributed to the gross profit improvement. Selling, general and administrative expenses.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

6 edited+0 added−0 removed3 unchanged
Biggest changeBecause of the relatively short maturities of temporary investments and the variable rate nature of our revolving credit facility, these financial instruments are reported at carrying values which approximate fair values. At December 31, 2023, we had $312.2 million of fixed rate debt which matures at various dates through 2036.
Biggest changeBecause of the variable rate nature of our revolving credit facility, these financial instruments are reported at carrying values which approximate fair values. At December 31, 2024, we had $303.5 million of fixed rate debt which matures at various dates through 2036.
When appropriate, we may attempt to limit our transactional exposure to changes in currency exchange rates through forward contracts or other actions intended to reduce existing exposures by creating offsetting currency exposures. At December 31, 2023, we had open foreign currency forward contracts with a U.S. dollar notional value of $110.9 million.
When appropriate, we may attempt to limit our transactional exposure to changes in currency exchange rates through forward contracts or other actions intended to reduce existing exposures by creating offsetting currency exposures. At December 31, 2024, we had open foreign currency forward contracts with a U.S. dollar notional value of $184.0 million.
A hypothetical 10% increase in December 31, 2023 forward exchange rates would result in a $11.1 million increase in the fair value of these contracts. Interest rates. We are exposed to changes in interest rates primarily as a result of borrowing and investing activities used to maintain liquidity and fund business operations.
A hypothetical 10% increase in December 31, 2024, forward exchange rates would result in a $18.4 million increase in the fair value of these contracts. Interest rates. We are exposed to changes in interest rates primarily as a result of borrowing and investing activities used to maintain liquidity and fund business operations.
The incremental increase in the fair value of fixed rate long-term debt resulting from a hypothetical 10% decrease in interest rates would be approximately $9.4 million.
The incremental increase in the fair value of fixed rate long-term debt resulting from a hypothetical 10% decrease in interest rates would be approximately $6.7 million.
A hypothetical 10% strengthening or weakening of the U.S. dollar would increase or decrease our reported sales and net income for the year ended December 31, 2023 by approximately $71.3 million and $10.1 million, or 4.0% and 17.3%, respectively.
A hypothetical 10% strengthening or weakening of the U.S. dollar would increase or decrease our reported sales and net income for the year ended December 31, 2024, by approximately $71.6 million and $10.6 million, or 4.0% and 3.7%, respectively.
At December 31, 2023, we had $292.1 million of variable rate borrowings under our revolving credit facility. A 50 basis point increase or decrease in interest rates could have a $1.7 million impact on future pre-tax earnings under our current capital structure. 37 Table of Contents
At December 31, 2024, we had $206.3 million of variable rate borrowings on a term loan under our revolving credit facility. A 50 basis point increase or decrease in interest rates could have a $1.0 million impact on future pre-tax earnings under our current capital structure. 35 Table of Contents

Other MSA 10-K year-over-year comparisons