MSA Safety rporated(MSA) - 2022 Q4 - Annual Report

Product Performance - Core products accounted for approximately 90% of sales in 2022, up from 89% in 2021[15] - MSA launched the ALTAIR io™ 4 gas detection wearable in 2022, enhancing real-time visibility across worksites[19] - The acquisition of Bacharach, Inc. in 2021 strengthened MSA's position in gas detection technologies for the HVAC-R markets, contributing to operational efficiency[18] - MSA's new V-Series fall protection equipment includes approximately 50 new products launched over the past several years[21] - The MSA+™ safety solutions platform, launched in 2022, integrates hardware technology, cloud software solutions, and safety services, facilitating digital transformation and recurring revenue[22] - Ballistic helmet and gas mask sales to military customers reached approximately $55 million globally in 2022, compared to$43 million in 2021[23] - MSA estimates that approximately 35%-40% of its overall revenue is derived from the fire service market, and 25%-30% from the energy market[29] - The company maintains leading positions in nearly all core product categories, supported by significant investment in research and development[30] - MSA's global product development teams include cross-functional associates, enhancing innovation and responsiveness to customer needs[33] - The company has patents and pending patents across substantially all of its products, reinforcing its competitive advantage in the market[24] Workforce and Employee Relations - As of December 31, 2022, the company employed approximately 5,000 people worldwide, with 2,200 in the United States and 2,800 outside the U.S.[38] - Approximately 20% of the global workforce is covered by collective bargaining agreements or works councils, indicating a stable employee relations environment[38] - Approximately 52% of the U.S. workforce self-identifies as diverse, with women comprising approximately 41% of the U.S. workforce[43] - The company emphasizes continuous learning and development opportunities for associates through various leadership programs[44] Financial Performance - Consolidated net sales for the year ended December 31, 2022, were $1.53 billion, an increase of$127.7 million, or 9.1%, compared to $1.40 billion in 2021[130] - The Americas segment reported net sales of$1,043.2 million for 2022, a 14.9% increase from $908.1 million in 2021, driven by favorable unit growth and new products[132] - The International segment's net sales decreased by$7.4 million, or 1.5%, to $484.7 million in 2022, with constant currency sales increasing by 7.0$673.8 million, a 9.5% increase from $615.3 million in 2021, with a gross profit margin of 44.1$338.9 million in 2022, a 1.8% increase from $332.9 million in 2021, representing 22.2$57.0 million in 2022, a decrease of 1.4% from $57.8 million in 2021, accounting for 3.7$8.0 million in 2022, down from $16.4 million in 2021, as part of ongoing international initiatives[142] - Net income attributable to MSA Safety Incorporated was$179.6 million for 2022, or $4.56 per diluted share, compared to$21.3 million, or $0.54 per diluted share, in 2021[156] Supply Chain and Operational Challenges - The company has significant reliance on tier one suppliers, which account for approximately two-thirds of the cost of sales, and continues to navigate supply chain issues[36] - The company anticipates ongoing challenges in 2023 due to supply chain constraints, inflation, and geopolitical risks affecting operations[134] - Economic uncertainty in regions such as Asia, Latin America, the Middle East, and Europe could lead to declines in revenue, profitability, and cash flow due to reduced orders and supply chain disruptions[65] - Labor shortages and increased turnover rates could lead to higher operational costs and affect the company's ability to retain valuable employees[87] - The company is subject to risks related to supply shortages and sourcing delays due to its reliance on global supply chains[90] Financial Management and Risks - As of December 31, 2022, the company had$308.6 million of variable rate borrowings under its revolving credit facility[99] - A 50 basis point increase in interest rates could result in an additional $1.4 million of interest expense on variable rate borrowings[99] - The company has more than$500 million of availability remaining on its revolving credit facility following the divestiture of MSA LLC[167] - The company expects to generate sufficient operating cash flow to meet future debt service obligations, with total interest expense for 2023 projected between $48 million and$50 million[170] - The company must comply with restrictive covenants in its debt agreements, and failure to do so could result in a default[98] - The company is exposed to market risks related to currency exchange rates and interest rates, which could adversely affect its financial position and operating results[192] Corporate Governance and Compliance - The company maintained effective internal control over financial reporting as of December 31, 2022, based on the COSO criteria[204] - The independent registered public accounting firm expressed an unqualified opinion on the company's consolidated financial statements for the year ended December 31, 2022[209] - Management is responsible for establishing and maintaining adequate internal control over financial reporting to ensure reliability in financial statements[201] - The company assessed the effectiveness of its internal control over financial reporting as of December 31, 2022, concluding that it was effective[204] - The company’s financial reporting includes amounts based on the best estimates and judgments of management, consistent with generally accepted accounting principles[200]