MSA Safety Inc. (NYSE:MSA) reported its second-quarter results after the closing bell on Wednesday. The safety product manufacturer beat analysts' estimates on both the top and bottom lines, driven by strong sales of the company's new G1 SCBA, or self-contained breathing apparatus. Those strong sales enabled the company to more than overcome headwinds from foreign currencies and a weak energy market.
A look at the numbers
MSA Safety reported revenue of $287 million, which was up 2% from the second quarter of last year. Revenue also was ahead of analysts' estimates by more than $5 million. Further, if we strip out the negative impact of foreign currencies, sales would have grown by 11% over last quarter.
Driving revenue growth was the company's SCBA segment. Sales of the company's groundbreaking G1 SCBA platform were robust in the quarter, growing by 41% globally, after adjusting for foreign currency fluctuations, driven by a 90% surge in North America. This performance more than offset weakness in the company's energy-related businesses of Portable Gas Detection and Industrial Head Protection, which were down 5% and 9%, respectively. Further, the company was also able to overcome weakness in Brazil, which is experiencing recessionary conditions while growth in Asia is also slowing down.
Earnings were also much stronger than expected, as the company reported adjusted earnings of $25 million, or $0.67 per share. That not only represented earnings growth of 12% over last year's second quarter, but it also handily beat analysts' consensus estimates, as MSA Safety's earnings were higher than estimates by $0.08 per share.
A look at the outlook
Despite the strong showing this quarter, MSA Safety was cautious in its outlook for future quarters. CEO William Lambert was quoted in the company's press release as saying that "headwinds associated with lower commodity prices, economic conditions in certain emerging markets, and weakness in foreign currencies weighed on our results," and that "looking ahead, I expect these challenges to persist into the second half of 2015."
That said, the company is encouraged by the sales momentum of its G1 SCBA, as it ended the quarter with a sales backlog totaling $77 million. While this figure was down from $82 million last quarter, it's well ahead of the second quarter of last year, when the backlog stood at just $40 million. As a result of this sizable backlog, and the demand the company is seeing for future G1 SCBA sales, MSA Safety sees sales momentum continuing into the third quarter. The company thus sees its sales tracking at the high end of its targeted range of mid-single-digit growth this year.
MSA Safety reported a pretty solid quarter, as the company beat analyst estimates on the back of strong sales of the company's new G1 SBCA product line. Those sales not only helped the company overcome several headwinds, but given the robust backlog and strong demand, it's also acting as a tailwind for sales in the third quarter.