MSA Safety Incorporated

Good day and welcome to the MSA Safety Second Quarter 2025 Earnings Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note, this event is being recorded. I would now like to turn the conference over to Larry DiMaria. Please go ahead.

Thank you. Good morning and welcome to MSA Safety's Second Quarter 2025 Earnings Conference Call. This is Larry DiMaria, Executive Director of Investor Relations. I'm joined by Steve Blanco, President and CEO, Elise Brody, Interim CFO, and Stephanie Shulow, President of our America segment. During today's call, we will discuss MSA's Second Quarter financial results and provide an update on our full year 2025 outlook. Before we begin, I'd like to remind everyone that the matters discussed during this call may include forward-looking statements within the meeting of the Private Security Affiliate Reform Act of 1995. Forward-looking statements include, but are now limited to, all projections and anticipated levels of future performance. Forward-looking statements involve a number of risks, uncertainties, and other factors that may cause our actual results to differ material from those discussed today. These risks, uncertainties, and other factors are detailed in our SEC filings. MSA Safety undertakes no duty to publicly update any forward-looking statements made on this call, except as required by law. We've included certain non-GAAP financial measures as part of our discussion this morning. The non-GAAP reconciliations are available in the appendix of presentation. The presentation and press release are available at our Investor Relations website at .msasafety.com. Moving on to today's agenda, Steve will provide an update on the business. Elise will then review our Second Quarter financial performance and 2025 outlook. Steve will then provide closing remarks and open the call for your questions. With that, I'll turn the call over to Steve Blanco.

Steve? Steve Blanco Thanks, Larry, and good morning, everyone. Thank you for your continued interest in MSA Safety. I'm on slide four. In the Second Quarter, consolidated reported sales growth was 3 percent, or flat organic, and adjusted earnings per share were $1.93. Our team continued to execute well in a dynamic environment. 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. The M&C Tech Group acquisition contributed $11 million to reported sales for the quarter. Operating margins declined compared to last year due to gross margin pressures, primarily from transactional foreign currency headwinds and inflation. We also saw the impacts of lower organic volume, as well as the early impacts of tariffs on input costs. These pressures were partially offset by pricing and improved productivity. Overall demand was stable and across our product categories. A decline in fire service was offset by growth in detection and industrial PPE. Sequentially, the backlog declined more than expected in the Second Quarter, though it remains within normalized levels. Consistent with seasonal patterns, our book to bill was slightly below one. Moving to our product categories, detection's -single-digit organic growth was driven by expansion in both fixed and portable gas detection. Despite a challenging -over-year comparison, detection grew 6% organically on top of high single-digit growth in 2024. Organic sales in fire service declined mid-single digits -over-year. We were pleased to ship several large orders from our backlog and get product into the hands of our customers, notably the Orange County Fire Department order. Domestically, market dynamics surrounding the NFPA Standard change began to impact order pace towards the end of the quarter. As we've discussed in the past, NFPA Standard years often carry short-term volatility as customers evaluate when to renew their fleets. The pipeline of business opportunities remain intact. It's a matter of customer timing. As a reminder, we continue to expect the NFPA Standard to promulgate sometime later this year or early next. We've managed through approval cycles before and successfully navigated similar market dynamics. I'm confident we will continue to be well prepared to serve our customers in the fire service. Industrial PPE organic sales were down low single digits as contractions in head protection and ballistic helmets offset strength in fall protection. We've invested in fall protection as part of our accelerated strategy to capitalize on a strong market growth, and it's encouraging to see double-digit growth in this area in the second quarter, which remains one of the fastest growing areas of the safety market. Turning to slide five, as we move through the year, we continue to utilize the principles of the MSA business system and lean into our Accelerate strategy actions to drive long-term value creation. Let me highlight a few strategic actions and commercial successes in the quarter before I delve deeper into our capital allocation progress and strategy on the next slide. First, we continue to expand our leadership in industrial safety technology while making a positive impact. I'm proud to share that we recently published our annual impact report for 2024. You can see some report highlights in the appendix on slide 15. I want to draw your attention to the callout of 40 million workers protected, which we reaffirmed with this report. This demonstrates our scale and commitment to our mission. Second, on the operational side, we implemented targeted price increases in the second quarter and continued to build our pipeline of tariff mitigation and productivity actions. We plan to take further actions in the second half based on the tariff developments. Third, strong commercial and operating performance enable us to fulfill some customer needs ahead of schedule, leading to similar levels of backlog conversion as last year. I'm also pleased to see our strategies in detection and fall protection yielding results. Turning to slide six, now that we are more than a year removed from our 2024 Investor Day, I'd like to update you on our recent actions regarding capital deployment and the investments we're making for our future. As you know, we have a disciplined, growth-oriented approach to capital allocation that focuses on organic growth, M&A, and cash returns to shareholders through dividends and share repurchases. Fundamentally, we continue investing in our business and people to achieve profitable organic growth. Our R&D investments support new product development and contribute to our mid-30s product vitality index. This proven R&D engine focuses on delivering market-leading innovation to our customers in the industrial safety technology markets we serve. Here are two examples of this engine yielding results. First, we've seen exponential growth in our connected portables business, and for the past couple of quarters, over half of our absolute growth in portables has come from our MSA Plus solutions driven by the Altair IO4. Second, we've been very intentional with our lean-into fall protection. Our recent launches of the VTech and VShock platforms are performing well in the market and have been major catalysts for our double-digit growth in the area. During the second quarter, we also strategically invested in our future at Cranberry Township, Pennsylvania, which is home to our detection manufacturing center of excellence and our largest R&D center. This footprint investment supports our accelerate strategy by enabling us to scale our R&D efforts effectively and provide flexibility on additional manufacturing expansion over time. It also aligns with our plan to foster a more collaborative in-person workforce and keeps us well positioned to attract and retain top talent. On the inorganic front, I'm excited to welcome M&C Tech Group to the MSA family. M&C is a German-based manufacturer of gas analysis solutions and technologies that enhance our fixed gas offerings. Their technology complements our fixed gas detection business and expands our TAM by 500 million. The team's doing a great job engaging for our collective success, and we're on track with our integration plans. Slide 14 in the appendix provides more details on the transaction. We maintain an active pipeline of potential strategic targets focused on high growth and differentiated product categories. We continue to build out our capabilities to enable a more consistent M&A flywheel. Finally, we also return cash to shareholders. For the 55th consecutive year, we increased our annual dividend. We also repurchased 30 million of stock this quarter and 40 million year to date. Increased share repurchases were enabled by our strong balance sheet, expected cash flow generation, and having our net leverage remain below our target range following the acquisition of M&C. I'll reiterate what I said at last year's Investor Day. You can count on us to be responsible stewards of capital focused on allocating effectively to create value for our stakeholders, all focused on advancing our mission of safety. I'd like to now turn the call over to Elise to discuss our financial performance in the second quarter. Elise?