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While MSA Safety (MSA -0.25%) continues to face challenges in several of its end markets, it is doing an admirable job battling against these issues. That was the case again during the third quarter where the headwinds facing the company kept a lid on revenue growth. However, its restructuring programs, as well as investments in growth initiatives, propelled earnings up more than 20%. While the company does not expect its current challenges to go away anytime soon, it believes that it can continue to mute their impact and keep growing the bottom line.

MSA Safety's results: The raw numbers


Q3 2016 Actuals

Q3 2015 Actuals

Growth (YOY)


$278.2 million

$273.7 million


Adjusted earnings

$27.4 million

$21.1 million


Adjusted earnings per share (EPS)




Data source: MSA Safety. YOY = year over year.

What happened with MSA Safety this quarter?

MSA Safety's restructuring program continues to pay big dividends.

  • Revenue edged up nearly 2% due primarily to the company's recent acquisition of Latchways, which boosted sales in the company's fall protection segment by 116% year over year. In fact, if it were not for the addition of Latchways, its net sales would have declined by 3% due to weaker year-over-year sales to fire departments.
  • Latchways also padded the bottom line, adding $0.03 per share in net income during the quarter.
  • Meanwhile, cost reductions made up the rest of profit growth during the quarter, with the company cutting the cost of products sold by 2.9% while keeping a lid on selling, general, and administrative (SG&A) costs.

What management had to say

About the quarter, CEO William Lambert said:

While challenging macro conditions persist in certain areas of our business, our results continue to reflect the steps we've taken to drive improved profitability in a slow growth environment. The cost reduction program that we began in late 2015 and the key strategic investments we've made over the past year were designed to mitigate the expected market headwinds of 2016, and that's exactly what we're seeing.

MSA Safety has overcome the challenges facing its business by cutting costs while at the same time investing in its future. These investments are paying off, with its recently launched G1 SCBA driving a 9% year-over-year improvement in sales in the breathing apparatus segment year to date. The company continues to secure key contract wins for this device, recently securing a $4 million deal to supply the Boston Fire Department with its state-of-the-art equipment.

In addition to those organic sales wins, MSA Safety continues to make strategic acquisitions and bring new products to its portfolio. During the quarter, it announced a deal to acquire Senscient, which will expand and enhance its offerings to the market for fixed gas and flame detection systems.

Looking forward

The company needs to continue these self-help efforts given its outlook for what lies ahead. According to Lambert:

While many of the challenges that we've faced in 2016 will likely continue into 2017, that will not diminish our focus on making smart investments that drive earnings growth and market leadership positions in our core product areas. Through these targeted investments, I am confident we will position MSA strategically and financially to drive enhanced shareholder value for many years to come.

Given MSA Safety's success over the past year, Lambert's confidence in its ability to meet challenges head-on does not appear to be misplaced.