Sign in

You're signed outSign in or to get full access.

MS

MSA Safety Inc (MSA)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 delivered a clear beat vs. Street: revenue $474.1M vs. $446.8M consensus (+6.1%); adjusted EPS $1.93 vs. $1.76 consensus (+10.0%). Strength in Detection and better-than-expected backlog conversion offset softer Fire Service and FX/tariff headwinds . Estimates from S&P Global*.
  • Profitability compressed YoY on gross margin pressure (46.6%, -170 bps YoY) from transactional FX, early tariff impacts, and lower organic volume; GAAP operating margin 18.1% (-350 bps YoY), adjusted operating margin 21.4% (-200 bps YoY) .
  • Outlook reaffirmed: low single-digit organic sales growth for 2025; FX now a modest 0–1% tailwind; M&C TechGroup expected to add ~2 pts to 2025 revenue growth and ~$0.10 to adjusted EPS; interest expense now guided to $29–32M (incl. acquisition) .
  • Strategic updates: acquisition of M&C TechGroup ($188M net), dividend declared ($0.53/sh payable Sep 10), $30M buybacks, and a footprint investment at the Detection Center of Excellence; net leverage remains conservative at 1.1x net debt/adj. EBITDA .

What Went Well and What Went Wrong

  • What Went Well
    • Detection led growth: +13% reported, +6% organic YoY; connected MSA+ portables and fixed gas projects were key drivers; M&C contributed ~$11M to Q2 sales and ~3¢ to adjusted EPS accretion in the quarter .
    • Strong capital allocation: closed M&C TechGroup acquisition; repurchased $30M of stock; declared $0.53 quarterly dividend; invested $29M in capacity at Cranberry Township Detection COE .
    • Better backlog conversion than expected in Fire Service and Detection supported the top-line beat; book-to-bill slightly below 1 consistent with seasonality .
  • What Went Wrong
    • Margins compressed: gross margin 46.6% (-170 bps YoY) on transactional FX (notably LATAM), early tariff impacts, inflation, and lower organic volume; adjusted EBITDA margin 24.6% (-180 bps YoY) .
    • Fire Service sales declined mid-single digits organically; U.S. order pace slowed late in Q2 amid 2025 NFPA standard timing; AFG funding awards had not started by the call date (expected to begin in August) .
    • International margins weakened (adjusted op margin 13.1%, -330 bps YoY) on lower organic volume and inflation; FX headwinds remained a drag .

Financial Results

Headline results vs. prior periods

MetricQ2 2024Q1 2025Q2 2025
Revenue ($M)$462.5 $421.3 $474.1
GAAP Diluted EPS ($)$1.83 $1.51 $1.59
Adjusted EPS ($)$2.01 $1.68 $1.93
Gross Margin (%)48.2% (calc. from $223.0M/$462.5M) 45.9% 46.6%
GAAP Operating Margin (%)21.6% 18.5% 18.1%
Adjusted Operating Margin (%)23.4% 20.8% 21.4%
Adjusted EBITDA ($M)$121.9 $101.5 $116.5
Adjusted EBITDA Margin (%)26.4% 24.1% 24.6%

Actual vs. S&P Global consensus (Q2 2025)

MetricActualConsensusSurprise
Revenue ($M)$474.1 $446.8*+$27.3 (+6.1%)*
Adjusted/Normalized EPS ($)$1.93 $1.755*+$0.175 (+10.0%)*

Values retrieved from S&P Global*.

Segment performance (Q2 YoY)

SegmentNet Sales Q2 2024 ($M)Net Sales Q2 2025 ($M)YoYAdjusted Op Margin Q2 2024Adjusted Op Margin Q2 2025
Americas$314.7 $320.1 +2% 31.3% 29.1%
International$147.8 $154.0 +4% 16.4% 13.1%

Product group mix (Consolidated)

ProductQ2 2024 Sales ($M)MixQ2 2025 Sales ($M)MixYoY
Detection$170.8 37% $193.8 41% +13% reported; +6% organic
Fire Service$172.3 37% $163.3 34% -5% reported; -6% organic
Industrial PPE & Other$119.3 26% $117.0 25% -2% reported; -1% organic

Additional KPIs and cash/returns

KPIQ1 2025Q2 2025
Free Cash Flow ($M)$51.0 $37.9
FCF Conversion (%)86% 60%
Capex ($M)$10.8 $29.3
Share Repurchases ($M)$10.0 $30.0
Dividends ($M)$20.0 $20.8
Net Debt ($M)$331 $532
Net Debt / Adj. EBITDA (TTM)0.7x 1.1x

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Organic Sales GrowthFY 2025Low single-digit (Q1 reaffirmed) Low single-digit reaffirmed Maintained
FX Impact to SalesFY 2025Headwind bias in early 2025 (context) 0%–1% tailwind to revenue Improved
M&C ContributionFY 2025N/A~+2 pts revenue growth; ~$0.10 EPS accretion New / Raised
Gross Margin RangeFY 202547–48% longer-run range (implied)On track for 47–48% in 2025 Clarified
Interest ExpenseFY 2025$24–$27M (Q4 outlook) $29–$32M (incl. M&C) Raised
SG&A Run-RateH2 2025N/A$107–$109M/quarter (organic) New
DividendQ3 2025$0.52 prior quarterly rate (context)$0.53/sh payable Sep 10, 2025 Raised

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4’24 and Q1’25)Current Period (Q2’25)Trend
Detection momentum & connected devicesDouble-digit detection orders; large MSA+ win; expectation of high-single digit growth in 2025 +13% reported (+6% organic) YOY; fixed gas strong; MSA+ drove most portable growth; over half of MSA+ growth from connected; further launches expected Improving
Fire Service/NFPA & AFG2025 NFPA change to promulgate likely early 2026; U.S. Air Force delivery comp; pipeline solid but choppy Mid-single digit organic decline; late-Q2 slowdown from NFPA timing; AFG disbursements expected to begin Aug; pipeline intact Near-term pressure; medium-term constructive
Tariffs & PricingTariff risk flagged; targeted pricing in April; ~15% of COGS subject to tariffs (1/3 China) Gross margin pressure from early tariff impacts; took further pricing in Q2; more actions in H2; aim for better balance by early 2026 Active mitigation
FX/LatAmFX noted as headwind to GM and growth in Q1 Ongoing transactional FX headwinds, esp. LATAM; FX now 0–1% revenue tailwind for FY Mixed: revenue tailwind; margin headwind persists
Fall ProtectionExecution focus called out Double-digit growth in Q2 after new platforms (V-TEC, V-SHOCK) and better inventory/channel positions Strengthening
M&A (M&C TechGroup)Disciplined pipeline; capacity to deploy $188M acquisition closed; ~$11M Q2 revenue; margins neutral; ~$0.10 FY EPS accretion; €-weighted footprint; global cross-sell planned Integration underway

Management Commentary

  • “Financial results for the second quarter exceeded our original expectations. This was primarily due to better-than-expected backlog conversion in fire service and detection.” — Steve Blanco, CEO .
  • “Gross margins continued to be pressured in the quarter at 46.6%, down 170 basis points from last year…primarily reflect transactional FX and inflation headwinds and to a lesser degree volume and the early impacts of tariffs…We expect [tariff] impact to be more pronounced in the second half coinciding with our mitigating pricing actions.” — Elyse Brody, Interim CFO .
  • “We reaffirm our low-single-digit organic sales growth outlook for 2025 while actively preparing for a wide range of macro scenarios, including tariffs… and the timing of the NFPA approval for our next-generation SCBA.” — Elyse Brody .
  • “We repurchased $30 million of stock this quarter… and for the fifty-fifth consecutive year, we increased our annual dividend.” — Steve Blanco .

Q&A Highlights

  • Detection mix and MSA+: Growth led by fixed and connected portables; most of absolute portable growth came from MSA+ in Q2; additional connected announcements expected “in the next few months” (incl. IO6 timing hints) .
  • Pricing/tariffs and margins: Price added “a couple of points” to revenue; tariff impacts increase in H2 as backlog rolls; management targets 47–48% FY gross margin with further pricing and productivity actions .
  • Fire Service cadence: Customers split between buying before versus waiting for new NFPA; company prepared with G1 SCBA XR now and next-gen post-approval; AFG funding releases expected to begin in August; Q4 remains seasonally strong .
  • Orders/book-to-bill: Book-to-bill slightly below 1; orders up in Industrial and Detection; Fire Service orders down as expected; areas of macro softness include manufacturing and parts of non-resi construction; utilities/infrastructure better .
  • M&C TechGroup: Margins roughly in line with MSA; neutral to margin, ~$0.10 FY EPS accretion; predominantly Europe today, with global expansion opportunity through MSA channels .

Estimates Context

  • Q2 2025 beats vs. S&P Global consensus: revenue $474.1M vs. $446.8M* (+6.1%); adjusted/normalized EPS $1.93 vs. $1.755 (+10.0%). Detection outperformance and backlog conversion were primary drivers . Values retrieved from S&P Global.
  • Forward estimates (context): Street expects Q3 2025 EPS ~$1.87* on ~$461.4M* revenue; Q4 2025 EPS ~$2.28* on ~$508.6M* revenue. EBITDA for Q3/Q4 2025 at ~$114M* and ~$132M*, respectively*. Values retrieved from S&P Global*.
  • Implications: Consensus may trend up modestly on Detection and connected devices momentum; however, H2 gross margin pressures from tariffs/FX and Fire Service timing vs. NFPA/AFG may temper EPS revisions, especially in Q3 .

Key Takeaways for Investors

  • High-quality beat on both revenue and adjusted EPS driven by Detection and backlog conversion; margin compression remains the key watch item as tariffs/FX weigh into H2 .
  • Detection and Fall Protection are the growth engines; connected MSA+ penetration continues to rise with a robust product/software roadmap that can support mix and recurring revenue over time .
  • Fire Service likely stays choppy near-term until NFPA approval and AFG funding timing normalize; MSA has pre- and post-standard offerings to capture demand irrespective of timing .
  • Guidance stability is a positive signal (organic growth reaffirmed); the shift to an FX translation tailwind and explicit tariff-pricing mitigation plans provide visibility into 2025 trajectory .
  • Capital deployment remains shareholder-friendly and strategic: M&C adds capability and TAM in Detection; buybacks and the 55th straight annual dividend increase underline confidence .
  • Near-term trading: strength on beat/raise optics (vs. consensus) balanced by margin headwinds commentary; medium-term thesis anchored by Detection leadership, connected strategy, and disciplined M&A integration .

Notes:

  • All company figures and commentary cited from MSA’s Q2 2025 8-K/press release and earnings call transcript as referenced.
  • Values marked with an asterisk (*) are retrieved from S&P Global consensus estimates via the GetEstimates tool and do not have document citations.