MSA Safety Inc
For the period ended Jun 30, 2024. Filed Jul 25, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Jul 25, 2024
MSA$170.14+0.1%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-04-30.
0000066570-24-000022
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-07-25.
0000066570-24-000037
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 53 previous paragraphs and 83 current paragraphs.
22 unchanged; 30 reworded; 22 added; 0 removed; 1 previous and 9 current paragraphs rearranged.
Tables are not compared: 6 previous and 11 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (22)
Current report
Note: Organic constant currency SG&A change is a non-GAAP financial measure. See the "Non-GAAP Financial Measures" section below.
Current report
International adjusted operating income for the second quarter of 2024 was $24.3 million, an increase of $2.6 million, or 11.7%, compared to $21.7 million in the prior year second quarter. The increase in adjusted operating income is attributable to higher sales and gross profit, partially offset by higher SG&A expenses to support business growth.
Current report
Income taxes. The reported effective tax rate for the second quarter of 2024 was 23.5% compared to 23.3% for the second quarter of 2023. This increase from the prior year is related to a one-time benefit recorded in the second quarter of 2023 related to prior year foreign tax returns, partially offset by a decrease in nondeductible compensation.
Current report
Six Months Ended June 30, 2024, Compared to Six Months Ended June 30, 2023
Current report
Net Sales. Net sales for the six months ended June 30, 2024, were $875.8 million, an increase of $30.2 million, or 3.6%, compared to $845.6 million in the same period last year, driven by volume growth and price realization. Please refer to the Net Sales table for a reconciliation of the period over period sales change.
Current report
Note: Organic constant currency sales change is a non-GAAP financial measure. See the "Non-GAAP Financial Measures" section below.
Current report
Net sales for the Americas segment were $610.2 million in the six months ended June 30, 2024, an increase of $21.6 million, or 3.7%, compared to $588.6 million in the same period last year. Organic constant currency sales in the Americas segment increased 3.6% compared to the prior year period. This growth was driven by increases in most products, particularly across fire service and FGFD partially offset by a decrease in portable instruments.
Current report
Net sales for the International segment were $265.5 million in the six months ended June 30, 2024, an increase of $8.6 million, or 3.3%, compared to $256.9 million in the same period last year. Organic constant currency sales in the International segment increased 3.3% during the period. This growth was driven by strength across fire service and FGFD, partially offset by decreases in portable instruments and industrial PPE.
Current report
Gross profit. Gross profit for the six months ended June 30, 2024, was $418.6 million, an increase of $23.4 million or 5.9%, compared to $395.2 million during the same period last year. The ratio of gross profit to net sales was 47.8% during the six months ended June 30, 2024 compared to 46.7% during the same period last year. Volume leverage, price/cost management and productivity efforts contributed to the gross profit improvement.
Current report
Selling, general and administrative expenses. SG&A expenses were $199.2 million during the six months ended June 30, 2024, an increase of $11.8 million or 6.3%, compared to $187.4 million during the same period last year. Overall, SG&A expenses were 22.7% of net sales during the six months ended June 30, 2024, compared to 22.2% of net sales during the same period in 2023. Organic constant currency SG&A increased $12.0 million or 6.4%. The increase in SG&A was driven by the higher level of sales, inflation, net cost for product related legal matter and higher professional service expense partially offset by lower variable compensation.
Current report
Please refer to the selling, general, and administrative expenses table for a reconciliation of the period over period expense change.
Current report
Note: Organic constant currency SG&A change is a non-GAAP financial measure. See the "Non-GAAP Financial Measures" section below.
Current report
Research and development expense. Research and development expense was $33.0 million during the six months ended June 30, 2024, an increase of $1.8 million, compared to $31.2 million during the same period last year. Research and development expense was 3.8% of net sales in the first six months ended June 30, 2024 and 3.7% in the same period of 2023.
Current report
Restructuring charges. Restructuring charges of $4.6 million during the six months ended June 30, 2024 were primarily related to ongoing initiatives to optimize our manufacturing footprint and improve productivity as well as management restructuring. Restructuring charges of $5.1 million during six months ended June 30, 2023 related to our ongoing initiatives to adjust our cost structure and improve productivity. We remain focused on executing programs to optimize our cost structure.
Current report
Currency exchange. Currency exchange losses were $1.7 million during the six months ended June 30, 2024, compared to $7.3 million in the same period of 2023. During 2024, we recognized non-cash net cumulative translation gains of $1.2 million associated with certain foreign subsidiaries. The remaining currency exchange activity for both periods related primarily due to foreign currency exposure on unsettled inter-company balances.
Current report
Adjusted operating income. Americas adjusted operating income for the six months ended June 30, 2024 was $184.7 million, an increase of $18.2 million, or 10.9%, compared to $166.5 million in the prior year. The increase in adjusted operating income is primarily attributable to higher sales and gross profit, partially offset by higher SG&A expense to support business growth.
Current report
Net income (loss) attributable to MSA Safety Incorporated. Net income was $130.4 million for the six months ended June 30, 2024, or $3.30 per diluted share compared to net loss of $83.1 million, or $(2.12) per diluted share, for the same period last year.
Current report
Non-GAAP Financial Measures
Current report
This report includes certain non-GAAP financial measures and operating ratios derived from non-GAAP financial measures. These financial measures and ratios include organic constant currency revenue growth, organic constant currency SG&A change, adjusted operating income (loss), adjusted operating margin %, adjusted EBITDA and adjusted EBITDA margin %.
Current report
Organic constant currency sales and SG&A change are non-GAAP financial measures provided by the Company to give a better understanding of the Company's underlying business performance. Organic constant currency sales and SG&A change are calculated by deducting the percentage impact from currency translation effects from the overall percentage change in net sales and SG&A. The Company believes that organic constant currency revenue growth and SG&A change are useful metrics for investors, as foreign currency translation can have a material impact on revenue and SG&A trends. Organic constant currency revenue growth and SG&A change highlight ongoing business performance excluding the impact of fluctuating foreign currencies, which is outside of the Company's control.
Current report
Adjusted operating income (loss), adjusted operating margin %, adjusted EBITDA and adjusted EBITDA margin % are non-GAAP financial measures and operating ratios derived from non-GAAP measures. Adjusted operating income (loss) is reconciled above to the nearest GAAP financial measure, Operating income (loss), and excludes restructuring, currency exchange, product liability expense, loss on divestiture of MSA LLC, net cost for product related legal matter, transaction costs and acquisition-related amortization. Adjusted EBITDA is reconciled above to the nearest GAAP financial measure, Operating income (loss) and excludes depreciation and amortization expense. Adjusted operating margin % is defined as adjusted operating income (loss) divided by segment net sales to external customers and adjusted EBITDA margin % is defined as adjusted EBITDA divided by segment net sales to external customers. These metrics are consistent with how the Company's chief operating decision maker ("CODM") evaluates segment results and makes strategic decisions about the business. Additionally, these non-gaap financial measures provide information useful to investors in understanding our operating performance and trends, and to facilitate comparisons with the performance of our peers.
Current report
Management uses these measures internally to assess and better understand our underlying business performance and trends related to core business activities as well as to allocate resources. The non-GAAP financial measures and key performance indicators we use, and computational methods with respect thereto, may differ from the non-GAAP financial measures and key performance indicators, and computational methods, that our peers use to assess their performance and trends. The presentation of these non-GAAP financial measures does not comply with U.S. GAAP. These non-GAAP financial measures should be viewed as supplemental in nature, and not as a substitute for, or superior to, our reported results prepared in accordance with GAAP.
Reworded paragraphs (30)
Previous wording
MSA Safety Incorporated is the global leader in advanced safety products, technology and solutions. Driven by its singular mission of safety, the Company has been at the forefront of safety innovation since 1914, protecting workers and facility infrastructure around the world across a broad range of diverse end markets while creating sustainable value for shareholders. The Company's comprehensive product line, which is governed by rigorous safety standards across highly regulated industries, is used to protect workers and facility infrastructures around the world in a broad range of markets, including fire service, energy, utility, construction and industrial manufacturing applications as well as heating, ventilation, air conditioning and refrigeration ("HVAC-R"). The Company's product portfolio includes firefighter safety gear where core products include self-contained breathing apparatus ("SCBA"), protective apparel and helmets; detection where core products include fixed gas and flame detection ("FGFD") systems and portable gas detection instruments; and industrial personal protective equipment ("PPE") where core products include industrial head protection and fall protection devices.
Current wording
MSA Safety Incorporated is the global leader in advanced safety products, technology and solutions. Driven by its singular mission of safety, the Company has been at the forefront of safety innovation since 1914, protecting workers and facility infrastructure around the world across a broad range of diverse end markets while creating sustainable value for shareholders. The Company's comprehensive product line, which is governed by rigorous safety standards across highly regulated industries, is used to protect workers and facility infrastructures around the world in a broad range of markets, including fire service, energy, utility, construction and industrial manufacturing applications as well as heating, ventilation, air conditioning and refrigeration ("HVAC-R"). The Company's product portfolio includes fire service where core products include self-contained breathing apparatus ("SCBA"), protective apparel and helmets; detection where core products include fixed gas and flame detection ("FGFD") systems and portable gas detection instruments; and industrial personal protective equipment ("PPE") where core products include industrial head protection and fall protection devices.
Previous wording
International. Our International segment includes companies in Europe, the Middle East and Africa ("EMEA") and the Asia Pacific region. In our largest International subsidiaries (in Germany, France, U.K., Ireland and China), we develop, manufacture and sell a wide variety of products. In China, the products manufactured are sold primarily in China as well as in regional markets. Operations in other International segment countries focus primarily on sales and distribution in their respective home country markets. Although some of these companies may perform limited production, most of their sales are of products manufactured in our plants in Germany, France, the U.S., U.K., Ireland, Morocco and China or are purchased from third-party vendors.
Current wording
International. Our International segment includes companies in Europe, the Middle East and Africa ("EMEA") and the Asia Pacific region. In our largest International subsidiaries (Germany, France, U.K., Ireland and China), we develop, manufacture and sell a wide variety of products. In China, the products manufactured are sold primarily in China as well as in regional markets. Operations in other International segment countries focus primarily on sales and distribution in their respective home country markets. Although some of these companies may perform limited production, most of their sales are of products manufactured in our plants in Germany, France, the U.S., U.K., Ireland, Morocco and China or are purchased from third-party vendors.
Previous wording
Net Sales. Net sales for the three months ended March 31, 2024, were $413.3 million, an increase of $15.0 million, or 3.8%, compared to $398.3 million in the same period last year. Please refer to the Net Sales table for a reconciliation of the quarter over quarter sales change.
Current wording
Net Sales. Net sales for the three months ended June 30, 2024, were $462.5 million, an increase of $15.2 million, or 3.4%, compared to $447.3 million in the same period last year. Please refer to the Net Sales table for a reconciliation of the quarter over quarter sales change.
Previous wording
Net sales for the Americas segment were $295.5 million in the first quarter of 2024, an increase of $15.2 million, or 5.4%, compared to $280.3 million in the first quarter of 2023. Constant currency sales in the Americas segment increased 4.8%. This growth was driven by an increase in firefighter safety products, partially offset by declines in detection and industrial PPE.
Current wording
Net sales for the Americas segment were $314.7 million in the second quarter of 2024, an increase of $6.3 million, or 2.0%, compared to $308.4 million in the second quarter of 2023. Organic constant currency sales in the Americas segment increased 2.4%. This growth was driven by increases in detection and industrial PPE, partially offset by a decline in fire service.
Previous wording
Net sales for the International segment were $117.8 million in the first quarter of 2024, a decrease of $0.2 million, or 0.2%, compared to $118.0 million for the first quarter of 2023. Constant currency sales in the International segment decreased 1.1% during the quarter. Growth in our EMEA region was offset by a decline in our APAC region, particularly in Industrial PPE.
Current wording
Net sales for the International segment were $147.8 million in the second quarter of 2024, an increase of $8.9 million, or 6.4%, compared to $138.9 million for the second quarter of 2023. Organic constant currency sales in the International segment increased 7.2% during the quarter. Growth in fire service and detection was partially offset by a decline in industrial PPE.
Previous wording
The operating environment remains dynamic, and we continue to navigate these challenges to continue delivering solutions to our customers. Backlog continued to be slightly elevated, specifically in Detection and Industrial PPE, due to certain supply chain challenges. While the supply chain continues to be volatile, we’re working closely with our suppliers and now expect backlog to normalize by the end of the year. Orders were healthy in the quarter and through April. Looking forward, we continue to expect to generate mid-single digit sales growth in 2024.
Current wording
The operating environment remains dynamic, and we continue to navigate these challenges to continue delivering solutions to our customers. Our end markets are generally healthy, demand trends lean positive, and we have executed initiatives to bring our backlog down to more normalized levels. Timing of orders can be a factor but we expect growth rates for the second half of 2024 to be similar to the first half. Looking forward, we continue to expect to generate mid-single digit sales growth in 2024.
Previous wording
Gross profit. Gross profit for the first quarter of 2024 was $195.5 million, an increase of $14.1 million or 7.8%, compared to $181.4 million for the first quarter of 2023. The ratio of gross profit to net sales was 47.3% in the first quarter of 2024 compared to 45.5% in the same quarter last year. Improved productivity and price/cost management are the leading drivers of the increase year over year.
Current wording
Gross profit. Gross profit for the second quarter of 2024 was $223.0 million, an increase of $9.2 million or 4.3%, compared to $213.8 million for the second quarter of 2023. The ratio of gross profit to net sales was 48.2% in the second quarter of 2024 compared to 47.8% in the same quarter last year. Improved productivity, price/cost management and favorable mix of higher margin products are the leading drivers of the increase year over year.
Previous wording
Selling, general and administrative expenses. Selling, general and administrative ("SG&A") expenses were $94.2 million during the first quarter of 2024, an increase of $3.1 million or 3.4%, compared to $91.1 million for the same period a year ago. Overall, SG&A expenses were 22.8% of net sales during the first quarter of 2024, compared to 22.9% of net sales during the same period in 2023. Constant currency SG&A increased by approximately $2.7 million or 3.0%. The increase in SG&A was driven by the higher level of sales and inflation partially offset by lower variable compensation.
Current wording
Selling, general and administrative expenses. Selling, general and administrative ("SG&A") expenses were $105.1 million during the second quarter of 2024, an increase of $8.8 million or 9.1%, compared to $96.3 million for the same period a year ago. Overall, SG&A expenses were 22.7% of net sales during the second quarter of 2024, compared to 21.5% of net sales during the same period in 2023. Organic constant currency SG&A increased by approximately $9.3 million or 9.7%. The increase in SG&A was driven by the higher level of sales, inflation, net cost for product related legal matter and higher professional service expense related to strategic initiatives partially offset by lower variable compensation.
Previous wording
Research and development expense. Research and development expense was $15.9 million during the first quarter of 2024, an increase of $0.7 million, compared to $15.2 million during the first quarter of 2023. Research and development expense was 3.9% of net sales in the first quarter of 2024 and 3.8% in the first quarter of 2023.
Current wording
Research and development expense. Research and development expense was $17.1 million during the second quarter of 2024, an increase of $1.1 million, compared to $16.0 million during the second quarter of 2023. Research and development expense was 3.7% of net sales in the second quarter of 2024 and 3.6% in the second quarter of 2023.
Previous wording
During the first quarter of 2024 and 2023, we capitalized $3.4 million and $3.0 million of software development costs, respectively. Depreciation expense for capitalized software development cost of $2.7 million and $2.3 million during the first quarter of 2024 and 2023, respectively, was recorded in costs of products sold on the unaudited Condensed Consolidated Statements of Operations.
Current wording
During the second quarter of 2024 and 2023, we capitalized $3.4 million and $3.1 million of software development costs, respectively. Depreciation expense for capitalized software development costs of $2.8 million and $2.5 million during the second quarter of 2024 and 2023, respectively, was recorded in costs of products sold on the unaudited Condensed Consolidated Statements of Operations.
Previous wording
MSA remains committed to dedicating significant resources to research and development activities, including the development of technology-based safety solutions. As we continue to invest a significant portion of our new product development into technology-based safety solutions, we anticipate that the historical relationship of research and development expense to net sales will continue to evolve; however, we do not anticipate reductions in the relative level of total spend on research and development activities on an annual basis. Total spend on both software development and research and development activities was $19.3 million and $18.2 million during the first quarter of March 31, 2024, and 2023, respectively.
Current wording
MSA remains committed to dedicating significant resources to research and development activities, including the development of technology-based safety solutions. As we continue to invest a significant portion of our new product development into technology-based safety solutions, we anticipate that the historical relationship of research and development expense to net sales will continue to evolve; however, we do not anticipate reductions in the relative level of total spend on research and development activities on an annual basis. Total spend on both software development and research and development activities was $20.5 million and $19.1 million during the second quarter of June 30, 2024, and 2023, respectively.
Previous wording
Restructuring charges. Restructuring charges of $3.0 million during the first quarter of 2024 were primarily related to management restructuring and initiatives to adjust our cost structure and optimize our manufacturing footprint. Restructuring charges of $1.7 million during the first quarter of 2023 were related to manufacturing footprint optimization activities. We remain focused on executing programs to further optimize our cost structure.
Current wording
Restructuring charges. Restructuring charges of $1.5 million during the second quarter of 2024 were primarily related to initiatives to optimize our manufacturing footprint and improve productivity. Restructuring charges of $3.4 million during the second quarter of 2023 were primarily related to our initiatives to adjust our cost structure and improve productivity.
Previous wording
Currency exchange. Currency exchange losses were $2.3 million in the first quarter of 2024 compared to $4.2 million in the first quarter of 2023. Currency exchange activity for both periods related primarily to foreign currency exposure on unsettled inter-company balances and recognized exchange loss for our Argentina affiliate operating in a hyper-inflationary environment. Refer to Note 15—Derivative Financial Instruments to the unaudited condensed consolidated financial statements in Part I Item 1 of this Form 10-Q, for information regarding our currency exchange rate risk management strategy.
Current wording
Currency exchange. Currency exchange gains were $0.6 million in the second quarter of 2024 compared to losses of $3.1 million in the second quarter of 2023. During the second quarter of 2024, we recognized non-cash net cumulative translation gains of $1.2 million associated with certain foreign subsidiaries. The remaining currency exchange activity for both periods related primarily to foreign currency exposure on unsettled inter-company balances and recognized exchange loss for our Argentina affiliate operating in a hyper-inflationary environment. Refer to Note 15—Derivative Financial Instruments to the unaudited condensed consolidated financial statements in Part I Item 1 of this Form 10-Q, for information regarding our currency exchange rate risk management strategy.
Previous wording
Adjusted operating income. Americas adjusted operating income for the first quarter of 2024 was $86.2 million, an increase of $14.5 million or 20.3% compared to $71.7 million in the prior year first quarter. The increase in adjusted operating income is attributable to higher sales and gross profit, partially offset by higher SG&A expenses to support business growth.
Current wording
Adjusted operating income. Americas adjusted operating income for the second quarter of 2024 was $98.5 million, an increase of $3.7 million or 3.9% compared to $94.8 million in the prior year second quarter. The increase in adjusted operating income is attributable to higher sales and gross profit, partially offset by higher SG&A expenses to support business growth.
Previous wording
Corporate segment adjusted operating loss for the first quarter of 2024 was $11.7 million, an increase of $1.6 million in comparison to an adjusted operating loss of $10.1 million in the first quarter of 2023, driven by inflation and increased professional service fees associated with various strategic initiatives.
Current wording
Corporate segment adjusted operating loss for the second quarter of 2024 was $14.6 million, an increase of $1.8 million in comparison to an adjusted operating loss of $12.8 million in the second quarter of 2023, driven by inflation and increased professional service fees associated with various strategic initiatives partially offset by lower variable compensation.
Previous wording
Total other expense, net. Total other expense, net, for the first quarter of 2024 was $4.5 million, compared to $7.7 million for the same period in 2023, driven primarily by decreased interest expense related to reduced debt balances related to prior year borrowings associated with the MSA LLC divestiture as well as increased pension income driven by a higher expected rate of return.
Current wording
Total other expense, net. Total other expense, net, for the second quarter of 2024 was $5.5 million, compared to $7.5 million for the same period in 2023, driven primarily by decreased interest expense related to reduced debt balances related to prior year borrowings associated with the MSA LLC divestiture as well as increased pension income driven by a higher expected rate of return partially offset by pension settlement expense recognized in the current year.
Previous wording
Net income. Net income was $58.1 million for the first quarter of 2024, or $1.47 per diluted share compared to net loss of $150.2 million, or $(3.83) per diluted share, for the same period last year.
Current wording
Net income. Net income was $72.2 million for the second quarter of 2024, or $1.83 per diluted share compared to $67.1 million, or $1.70 per diluted share, for the same period last year.
Previous wording
Product liability expense. Product liability expense for the first quarter of both 2024 and 2023 was minimal due to our divestiture of MSA LLC in January 2023, as discussed further in Note 17—Commitments and Contingencies to the unaudited condensed consolidated financial statements in Part I Item 1 of this Form 10-Q.
Current wording
Product liability expense. Product liability expense for the six months ended June 30, 2024, and 2023, was minimal due to our divestiture of MSA LLC in January 2023, as discussed further in Note 17—Commitments and Contingencies to the unaudited condensed consolidated financial statements in Part I Item 1 of this Form 10-Q.
Previous wording
relates to the derecognition of all legacy cumulative trauma product liability reserves and related insurance assets of the divested subsidiary during the first quarter of 2023. The loss also includes a $341.2 million contribution of cash and cash equivalents, as well as transaction related costs of $5.6 million. Refer to Note 17—Commitments and Contingencies to the unaudited condensed consolidated financial statements in Part I Item 1 of this Form 10-Q for further information.
Current wording
Loss on divestiture of MSA LLC. The $129.2 million pre-tax loss on divestiture of MSA LLC for the six months ended June 30, 2023, relates to the derecognition of all legacy cumulative trauma product liability reserves and related insurance assets of the divested subsidiary during the first quarter of 2023. The loss also includes a $341.2 million contribution of cash and cash equivalents, as well as transaction related costs of $5.6 million. Refer to Note 17—Commitments and Contingencies to the unaudited condensed consolidated financial statements in Part I Item 1 of this Form 10-Q for further information.
Previous wording
GAAP operating income. Consolidated operating income for the first quarter of 2024 was $80.1 million compared to loss of $60.1 million in the same period last year. The increase in operating income was primarily driven by the loss on divestiture of MSA LLC in the prior year as well as higher sales and gross margin in the Americas segment partially offset by increased SG&A.
Current wording
GAAP operating income. Consolidated operating income for the six months ended June 30, 2024, was $180.1 million compared to $34.9 million in the same period last year. The increase in operating results was driven by the higher sales and gross profit as well as the absence of loss on divestiture of MSA LLC that was recognized in 2023, partially offset by increased SG&A expense.
Previous wording
International adjusted operating income for the first quarter of 2024 was $13.5 million, a decrease of $2.3 million, or 14.5%, compared to $15.8 million in the prior year first quarter. The decrease in adjusted operating income is primarily attributable to lower gross profit due to unfavorable geographical mix and higher inflationary pressures.
Current wording
International adjusted operating income for the six months ended June 30, 2024, was $37.8 million, an increase of $0.3 million, or 0.7%, compared to $37.5 million in the prior year. The increase in adjusted operating income is primarily attributable to higher sales.
Previous wording
Income taxes. The reported effective tax rate for the first quarter of 2024 was 23.1% compared to (121.7)% for the first quarter of 2023. This significant variance from the prior year is primarily due to the divestiture of MSA LLC and the non deductible loss recorded on the derecognition of the product liability reserves and related assets. Refer to Note 17—Commitments and Contingencies to the unaudited condensed consolidated financial statements in Part I Item 1 of this Form 10-Q for further information on the MSA LLC divestiture.
Current wording
Income taxes. The reported effective tax rate for the six months ended June 30, 2024 was 23.3% compared to 520.8% for the same period in 2023. This significant variance is primarily due to the divestiture of MSA LLC and the non-deductible loss recorded on the derecognition of the product liability reserves and related assets in the prior year . Refer to Note 17—Commitments and Contingencies to the unaudited condensed consolidated financial statements in Part I Item 1 of this Form 10-Q for further information on this transaction.
Previous wording
Our main source of liquidity is operating cash flows, supplemented by borrowings. Our principal liquidity requirements are for working capital, capital expenditures, principal and interest payments on debt, declared dividend payments and acquisitions. At March 31, 2024, approximately 51% of our long-term debt is at fixed interest rates with repayment schedules through 2036. The remainder of our long-term debt is at variable rates on an unsecured revolving credit facility and a term loan, both due in 2026. At March 31, 2024, approximately 85% of our borrowings are denominated in U.S. dollars, which limits our exposure to currency exchange rate fluctuations.
Current wording
Our main source of liquidity is operating cash flows, supplemented by borrowings. Our principal liquidity requirements are for working capital, capital expenditures, principal and interest payments on debt, declared dividend payments and acquisitions. At June 30, 2024, approximately 52% of our long-term debt is at fixed interest rates with repayment schedules through 2036. The remainder of our long-term debt is at variable rates on an unsecured revolving credit facility and a term loan, both due in 2026. At June 30, 2024, approximately 84% of our borrowings are denominated in U.S. dollars, which limits our exposure to currency exchange rate fluctuations.
Previous wording
At March 31, 2024, the Company had cash and cash equivalents totaling $148.3 million and access to sufficient capital, providing ample liquidity and flexibility to continue to maintain our balanced capital allocation strategy that prioritizes growth investments, funding our dividends and servicing debt obligations. Cash, cash equivalents and restricted cash increased $1.9 million during the three months ended March 31, 2024 compared to cash decreasing $23.8 million during the same period in 2023. We believe MSA's healthy balance sheet and access to significant capital at March 31, 2024, positions us well to navigate through challenging business conditions, supply chain constraints or other unexpected events.
Current wording
At June 30, 2024, the Company had cash and cash equivalents totaling $146.8 million and access to sufficient capital, providing ample liquidity and flexibility to continue to maintain our balanced capital allocation strategy that prioritizes growth investments, funding our dividends and servicing debt obligations. Cash, cash equivalents and restricted cash increased $0.4 million during the six months ended June 30, 2024 compared to cash decreasing $15.6 million during the same period in 2023. We believe MSA's healthy balance sheet and access to significant capital at June 30, 2024, positions us well to navigate through challenging business conditions, supply chain constraints or other unexpected events.
Previous wording
Operating activities. Operating activities provided cash of $50.9 million during the three months ended March 31, 2024, compared to using cash of $285.9 million during the same period in 2023. The improved cash flow from operating activities as compared to the same period in 2023 was primarily related to the prior year contribution of $341.2 in the divestiture of MSA LLC. Refer to Note 17—Commitments and Contingencies to the unaudited condensed consolidated financial statements in Part I Item 1 of this Form 10-Q for further information. Cash flow provided by operating activities decreased slightly excluding the cash flow impact of the MSA LLC divestiture as higher cash usage for bonus and incentive payouts related to prior year performance was mostly offset by improved operating results.
Current wording
Operating activities. Operating activities provided cash of $104.2 million during the six months ended June 30, 2024, compared to using cash of $190.8 million during the same period in 2023. The improved cash flow from operating activities as compared to the same period in 2023 was primarily related to the prior year contribution of $341.2 million in the divestiture of MSA LLC. Refer to Note 17—Commitments and Contingencies to the unaudited condensed consolidated financial statements in Part I Item 1 of this Form 10-Q for further information. Cash flow provided by operating activities decreased slightly excluding the cash flow impact of the MSA LLC divestiture. Improved operating results were offset by higher cash usage for working capital needs, primarily inventory partially offset by improved accounts payable cash flow as well as higher cash usage for variable compensation payouts and tax prepayments both driven by prior year performance.
Previous wording
Investing activities. Investing activities used cash of $11.2 million during the three months ended March 31, 2024, compared to using $8.4 million during the same period in 2023. The increase in cash used in investing activities as compared to the same period in 2023 was related to increased capital expenditures to support our manufacturing footprint optimization activities. We remain committed to evaluating additional acquisition opportunities that will allow us to continue to grow in key end markets and geographies.
Current wording
Investing activities. Investing activities used cash of $25.5 million during the six months ended June 30, 2024, compared to using $15.6 million during the same period in 2023. The increase in cash used in investing activities as compared to the same period in 2023 was related to increased capital expenditures to support our manufacturing footprint optimization activities. We remain committed to evaluating additional acquisition opportunities that will allow us to continue to grow in key end markets and geographies.
Previous wording
Financing activities. Financing activities used cash of $29.1 million during the three months ended March 31, 2024, compared to providing cash of $272.8 million during the same period in 2023. During the three months ended March 31, 2024, we had net payments on long-term debt of $5.0 million as compared to net proceeds from long-term debt of $295.4 million during the same period in 2023 to fund the MSA LLC divestiture. Since the MSA LLC divestiture in January 2023, we have paid down $294.1 million of our outstanding borrowings. We paid cash dividends of $18.5 million during the three months ended March 31, 2024, compared to $18.0 million in the same period in 2023. We used cash of $5.8 million during the three months ended March 31, 2024 to repurchase shares related to our employee stock compensation transactions compared to $3.7 million in the same period in 2023.
Current wording
Financing activities. Financing activities used cash of $67.7 million during the six months ended June 30, 2024, compared to providing cash of $196.6 million during the same period in 2023. During the six months ended June 30, 2024, we had net payments on long-term debt of $13.3 million as compared to net proceeds from long-term debt of $236.9 million during the same period in 2023 to fund the MSA LLC divestiture. Since the MSA LLC divestiture in January 2023, we have paid down $302.3 million of our outstanding borrowings. We paid cash dividends of $38.6 million during the six months ended June 30, 2024, compared to $36.5 million in the same period in 2023. We used cash of $16.8 million during the six months ended June 30, 2024, to repurchase shares, including $10.0 million related to our share repurchase program and the remainder related to our employee stock compensation transactions compared to $3.9 million in the same period in 2023, all of which related to our employee stock compensation transactions.
Previous wording
The position of the U.S. dollar relative to international currencies, primarily the euro, at March 31, 2024, resulted in a translation loss of $10.7 million being recorded to the cumulative translation adjustments shareholders' equity account during the three months ended March 31, 2024, compared to a $11.2 million translation gain being recorded to the cumulative translation adjustments shareholders' equity account during the same period in 2023.
Current wording
The position of the U.S. dollar relative to international currencies, primarily the euro, at June 30, 2024, resulted in a translation loss of $19.5 million being recorded to the cumulative translation adjustments shareholders' equity account during the six months ended June 30, 2024, compared to a $16.2 million translation gain being recorded to the cumulative translation adjustments shareholders' equity account during the same period in 2023.
Previous wording
We made contributions of $1.3 million to our pension plans during the three months ended March 31, 2024. We expect to make total contributions of approximately $5.3 million to our pension plans in 2024 primarily associated with statutorily required plans in the International segment.
Current wording
We made contributions of $2.6 million to our pension plans during the six months ended June 30, 2024. We expect to make total contributions of approximately $5.3 million to our pension plans in 2024 primarily associated with statutorily required plans in the International segment.
Previous wording
The Company had outstanding bank guarantees and standby letters of credit with banks as of March 31, 2024, totaling $9.3 million, of which $1.1 million relate to the senior revolving credit facility. These letters of credit serve to cover customer requirements in connection with certain sales orders and insurance companies. The Company is also required to provide cash collateral in connection with certain arrangements. At March 31, 2024, the Company has $2.0 million of restricted cash in support of these arrangements.
Current wording
The Company had outstanding bank guarantees and standby letters of credit with banks as of June 30, 2024, totaling $10.2 million, of which $1.1 million relate to the senior revolving credit facility. These letters of credit serve to cover customer requirements in connection with certain sales orders and insurance companies. The Company is also required to provide cash collateral in connection with certain arrangements. At June 30, 2024, the Company has $2.0 million of restricted cash in support of these arrangements.
Rearranged current paragraphs (9)
Current report — wording carried from elsewhere
GAAP operating income. Consolidated operating income for the second quarter of 2024 was $99.9 million compared to $95.0 million in the same period last year. The increase in operating income was primarily driven by higher sales and gross profit partially offset by increased SG&A.
Current report — wording carried from elsewhere
Refer to Note 8—Segment Information to the unaudited condensed consolidated financial statements in Part I Item 1 of this Form 10-Q, for information regarding sales by product group.
Current report — wording carried from elsewhere
During the six months ended June 30, 2024 and 2023, we capitalized $6.8 million and $6.1 million of software development costs, respectively. Depreciation expense for capitalized software development costs of $5.5 million and $4.8 million during the six months ended June 30, 2024 and 2023, respectively, was recorded in costs of products sold on the unaudited Condensed Consolidated Statements of Operations.
Current report — wording carried from elsewhere
MSA remains committed to dedicating significant resources to research and development activities, including the development of technology-based safety solutions. As we continue to invest a significant portion of our new product development into technology-based safety solutions, we anticipate that the historical relationship of research and development expense to net sales will continue to evolve; however, we do not anticipate reductions in the relative level of total spend on research and development activities on an annual basis. Total spend on both software development and research and development activities was $39.8 million and $37.3 million during the six months ended June 30, 2024, and 2023, respectively.
Current report — wording carried from elsewhere
Refer to Note 15—Derivative Financial Instruments to the unaudited condensed consolidated financial statements in Part I Item 1 of this Form 10-Q, for information regarding our currency exchange rate risk management strategy.
Current report — wording carried from elsewhere
Corporate segment adjusted operating loss for the six months ended June 30, 2024, was $26.3 million, an increase of $3.4 million compared to an adjusted operating loss of $22.9 million in the same period of 2023 driven by inflation and increased professional service fees associated with various strategic initiatives partially offset by lower variable compensation.
Current report — wording carried from elsewhere
The following tables represent a reconciliation from GAAP operating income to adjusted operating income (loss) and adjusted EBITDA. Adjusted operating margin % is calculated as adjusted operating income (loss) divided by net sales and adjusted EBITDA margin % is calculated as adjusted EBITDA divided by net sales.
Current report — wording carried from elsewhere
Total other expense, net. Total other expense, net, for the six months ended June 30, 2024 was $10.0 million, compared to total other income, net, of $15.2 million for the same period in 2023 due to decreased interest expense related to reduced debt balances related to prior year borrowings associated with the MSA LLC divestiture as well as increased pension income driven by a higher expected rate of return partially offset by pension settlement expense recognized in the current year.
Current report — wording carried from elsewhere
We are subject to regular review and audit by both foreign and domestic tax authorities. While we believe our tax positions will be sustained, the final outcome of tax audits and related litigation may differ materially from the tax amounts recorded in our unaudited condensed consolidated financial statements.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
Loss on divestiture of MSA LLC. The $129.2 million pre-tax loss on divestiture of MSA LLC for the first quarter of 2023