Mothers and Mine Safety Appliances (MSA) might agree, "Be good, and if you can't be good, be safe." The company develops, manufactures, and distributes protective equipment for workers in hazardous situations, from the military and homeland security to firefighting, construction, and mining, of course. MSA specializes in air-purifying respirators, gas detectors, and head protection gear, sold under the MSA Safety Works brand. Its thermal imaging cameras help first responders see through pitch and smoke. MSA aligns its activities with three geographic segments: North America (the largest in sales and operations), Europe, and international. Products are made worldwide by MSA or by third parties.
The North America segment, 48% of sales, markets most of its non-military products through distributors. Fire service products are sold through specially trained local and regional distributors. Safety Works serves the DIY and contractor segments. Canada, Mexico, and the US are included in this segment.
The international segment, 28% of sales, distributes through direct and indirect sales forces and focuses on the fire service market. Because a distribution network has not been fully developed in that segment, MSA staff markets products directly to end users. The segment maintains facilities in South America, Africa, and Asia/Pacific. Manufacturing is centered in Australia, Brazil, China, and South Africa.
The Europe segment, 24% of sales, also distributes through direct and indirect sales and focuses on the fire service market. The segment has facilities in Denmark, France, Germany, Ireland, Italy, Morocco, Sweden, and the UK. Most products sold by both the international and European segments are obtained from third parties or made by the company in China, France, Germany, and the US.
Net sales rose 20% in 2011 compared with 2010 as all three of the company's segments recorded similar upticks. The North American segment enjoyed a jump of 21% thanks to contributions from General Monitors, a company acquired in 2010, and demand for instruments, head protection, and fall protection from the oil and gas and other industrial markets. The European segment headed up 14% in 2011 vs. 2010 thanks again to a strong contribution from General Monitors. Another important factor in the segment's healthy income growth was favorable translation rates of some European currencies. The segment also benefitted from strong demand in the Eastern European and the Middle Eastern fire service, industrial, and military markets for self-contained breathing apparatus (SCBA), instruments, and ballistic helmets. SCBAs and instruments were also in strong demand in Western Europe. The international segment surged 24% in 2011 compared with 2010 to meet demand for SCBAs, as well as products for head, eye, and face protection and gas detection from the mining, fire service, and core industrial markets. Demand was especially strong in Latin America and China.
Net income rose 83% in 2011 compared with 2010. By segment, net income for the North American segment rose 30% thanks to a strong performance by General Monitors in particular but also to better sales and gross profits in general. The European segment recorded a net income of $7.3 million in 2011 after a net loss of $5.4 million in 2010. Contributors include General Monitors' strong performance and lower operating cost. The international segment's net income went up 72% in 2011 compared with 2010 thanks mainly to better sales and gross profits.
MSA acquired California-based General Monitors for a reported $280 million in late 2010. General Monitors was acquired to augment MSA's market position for gas-detection products. The addition fit the company's strategy of growth by acquiring companies with complementary products.
To focus more on industrial head protection, respiratory protective equipment, fall protection products, portable gas detection instruments and sensors, and fixed gas- and flame-detection systems, MSA sold its North America ballistic helmet business to Vermont-based Revision Military for an undisclosed amount in 2012.
As a more general strategy the company aligns its manufacturing footprint with demand from three core groups: the military, industrial end-users, distributors (Airgas, W.W. Grainger, and Hagemeyer), and retailers and equipment rental outlets, such as United Rentals, The Home Depot and TrueValue.
Chairman John Ryan controls about 12% of MSA. – less