Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis should be read in conjunction with the historical financial statements and other financial information included elsewhere in this annual report on Form 10-K. This discussion may contain forward-looking statements that involve risks and uncertainties. The forward-looking statements are not historical facts, but rather are based on current expectations, estimates, assumptions and projections about our industry, business and future financial results. Our actual results could differ materially from the results contemplated by these forward-looking statements due to a number of factors, including those discussed in the sections of this annual report entitled “Forward-Looking Statements” and “Risk Factors.”
This section generally discusses the results of our operations for the year ended December 31, 2025, compared to the year ended December 31, 2024. For a discussion on the year ended December 31, 2024, compared to the year ended December 31, 2023, please refer to Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the Securities and Exchange Commission on February 14, 2025.
MSA Safety Incorporated ("MSA") is organized into four geographical operating segments that are aggregated into two reportable segments: Americas and International. The Americas segment is comprised of our operations in North America and Latin America geographies. The International segment is comprised of our operations of all geographies outside of the Americas. Certain global expenses are allocated to each segment in a manner consistent with where the benefits from the expenses are derived. Please refer to Note 9—Segment Information of the consolidated financial statements in Part II Item 8 of this Form 10-K for further information.
On May 6, 2025, we acquired M&C TechGroup and its affiliated companies ("M&C") in a transaction valued at approximately $189 million, net of cash acquired. Headquartered in Ratingen, Germany, M&C provides a comprehensive range of gas analysis systems that detect, measure and monitor gases in critical environments. M&C’s product portfolio includes systems and solutions for gas sampling, gas conditioning, as well as advanced process control. Refer to Note 15—Acquisitions to the consolidated financial statements in Part II Item 8 of this Form 10-K for further information.
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BUSINESS OVERVIEW
MSA 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.
We tailor our product and solution offerings and distribution strategy to satisfy distinct customer preferences that vary across geographic regions. To best serve these customer preferences, we have organized our business into four geographical operating segments that are aggregated into two reportable segments: Americas and International. In 2025, 67% and 33% of our net sales were made by our Americas and International segments, respectively.
Americas. Our largest manufacturing and research and development facilities are located in the United States. We serve our markets across the Americas with manufacturing facilities in the U.S., Mexico and Brazil. Operations in the other countries within the Americas segment focus primarily on sales and distribution in their respective home country markets.
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, Mexico, Morocco and China or are purchased from third-party vendors.
Corporate. Corporate expenses not allocated to the reportable segments consist of general and administrative expenses incurred in our corporate headquarters, costs associated with corporate development initiatives, legal expense, interest expense, foreign exchange gains or losses and other centrally-managed costs. General and administrative costs and overhead comprise the majority of the corporate related expenses. During the years ended December 31, 2025, and 2024, corporate expenses were $43.4 million and $50.4 million, respectively. The decrease is related to lower professional service fees and variable compensation as well as other discretionary expense management partially offset by inflation.
We leverage the MSA Business System ("MBS") to develop and introduce innovative safety solutions, secure new business opportunities, and operate with greater efficiency. The MBS is our approach to working at our best - at our most efficient and most empowered. It is a combination of behaviors, processes and tools that provide a framework to run the business and continuously improve. Our commitment to MBS has enabled us to drive customer satisfaction and profitable growth while generating significant improvements in operating results.
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Year Ended December 31, 2025, Compared to Year Ended December 31, 2024
Net Sales 2025 2024 DollarIncrease PercentIncrease
(In millions)
Net Sales. Net sales for the year ended December 31, 2025, were $1.87 billion, an increase of $66.7 million from $1.81 billion for the year ended December 31, 2024. Please refer to the Net Sales table below for a reconciliation of the year over year sales change.
Net Sales Year Ended December 31, 2025, versus December 31, 2024
(Percent Change) Americas International Consolidated
GAAP reported sales change 1.2% 9.2% 3.7%
Currency translation effects 0.3% (2.8)% (0.7)%
Less: Acquisitions (1.0)% (5.0)% (2.3)%
Organic sales change 0.5% 1.4% 0.7%
Net sales for the Americas segment were $1.26 billion for the year ended December 31, 2025, an increase of $15.2 million, or 1.2%, compared to $1.25 billion for the year ended December 31, 2024. Organic sales in the Americas segment increased 0.5% compared to the prior year. This increase was driven by double digit growth in detection and a minor increase in industrial PPE partially offset by a decrease in fire service partly due to a shift in Assistance to Firefighters Grant (AFG) funding as well as the 2025 U.S. federal government shutdown. M&C added $13.0 million of sales to the Americas segment during the period.
Net sales for the International segment were $613.0 million for the year ended December 31, 2025, an increase of $51.5 million, or 9.2%, compared to $561.5 million for the year ended December 31, 2024. Organic sales in the International segment increased 1.4% compared to the prior year period. This increase was driven by growth in detection primarily in China and Europe and to a lesser extent industrial PPE partially offset by a modest decline in fire service due to budgetary shifts within key European markets. M&C added $27.9 million of sales to the International segment during the period.
The operating environment continues to be dynamic with an uncertain macroeconomic and geopolitical climate. We expect to generate full-year mid-single digit organic sales growth in 2026. We anticipate ongoing momentum in detection and fall protection as key growth drivers, as well as SCBA, which should benefit, in part, from the timing delays in 2025 that shifted some business to 2026. Furthermore, pricing actions in 2025 and 2026, along with moderate volume growth, should also support our outlook. Overall backlog remains healthy, and we have a solid commercial pipeline. Our overall book-to-bill was slightly below one and above the year-ago period.
Refer to Note 9—Segment Information to the consolidated financial statements in Part II Item 8 of this Form 10-K, for information regarding sales by product category.
Gross profit. Gross profit for the year ended December 31, 2025, was $871.1 million, an increase of $10.7 million, or 1.2%, compared to $860.4 million for the year ended December 31, 2024. The ratio of gross profit to net sales was 46.5% in 2025 compared to 47.6% in 2024. The decrease in gross profit margin is primarily related to inflation, transactional foreign currency challenges, tariffs and additional amortization related to the M&C acquisition partially offset by price realization, product mix and improved productivity.
Selling, general and administrative expenses. Selling, general and administrative ("SG&A") expenses were $414.3 million for the year ended December 31, 2025, an increase of $19.6 million, or 5.0%, compared to $394.7 million for the year ended December 31, 2024. Selling, general and administrative expenses were 22.1% of net sales in 2025 compared to 21.8% of net sales in 2024. Organic SG&A decreased $8.6 million, or 2.2%, driven primarily by the absence of the net cost for a product related legal matter from the prior year, lower variable compensation, discretionary expense management and lower professional service costs partially offset by inflation and higher sales commission expense on double-digit detection growth.
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(Percent Change) Consolidated
GAAP reported change 5.0%
Currency translation effects (0.7)%
Less: Acquisitions and related strategic transaction costs (6.5)%
Organic change (2.2)%
Research and development expense. Research and development expense was $65.3 million for the year ended December 31, 2025, a decrease of $1.2 million, or 1.8%, compared to $66.5 million for the year ended December 31, 2024. Research and development expense was 3.5% of net sales in 2025, compared to 3.7% of net sales in 2024.
We capitalized $14.9 million and $13.0 million of software development costs during the years ended December 31, 2025, and 2024, respectively. Amortization expense for capitalized software development cost of $12.0 million and $11.3 million during the years ended December 31, 2025, and 2024, was recorded in costs of products sold on the Consolidated Statements of Income. Refer to Note 1—Significant Accounting Policies of the consolidated financial statements in Part II Item 8 of this Form 10-K for further details regarding our software development costs.
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 $80.2 million and $79.5 million during the years ended December 31, 2025, and 2024.
Restructuring charges. During the year ended December 31, 2025, the Company recorded restructuring charges of $3.9 million primarily related to initiatives to right-size the organization in response to macroeconomic conditions and ongoing initiatives to optimize our manufacturing footprint and improve productivity. This compared to restructuring charges of $6.4 million during the year ended December 31, 2024, primarily related to our ongoing initiatives to optimize our manufacturing footprint and improve productivity as well as management restructuring. We remain focused on executing programs to optimize our cost structure.
Currency exchange. Currency exchange losses were $15.8 million during the year ended December 31, 2025, compared to $3.6 million during the year ended December 31, 2024. In 2025 and 2024, we recognized non-cash net cumulative translation gains of $0.8 million and $1.2 million, respectively, 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 19—Derivative Financial Instruments of the consolidated financial statements in Part II Item 8 of this Form 10-K for information regarding our currency exchange rate risk management strategy.
GAAP operating income. Consolidated operating income for the year ended December 31, 2025, was $371.8 million compared to $389.2 million for the year ended December 31, 2024. The decrease in operating results was primarily driven by increased SG&A expenses and currency exchange losses, partially offset by higher sales and lower restructuring charges as discussed further above.
Adjusted operating income. Americas adjusted operating income for the year ended December 31, 2025, was $364.8 million, a decrease of $15.3 million, or 4%, compared to $380.1 million for the year ended December 31, 2024. The decrease in adjusted operating income is attributable to lower gross profit and higher SG&A expenses.
International adjusted operating income for the year ended December 31, 2025, was $93.3 million, an increase of $8.7 million, or 10%, compared to adjusted operating income of $84.6 million for the year ended December 31, 2024. The increase in adjusted operating income is primarily attributable higher sales volumes, including the contribution from M&C, and discretionary cost management partially offset by higher SG&A expense due to inflationary pressures.
Corporate expenses for the year ended December 31, 2025, were $43.4 million, a decrease of $7.0 million, or 14%, compared to $50.4 million for the year ended December 31, 2024, driven by lower professional service fees and variable compensation as well as other discretionary expense management partially offset by inflation.
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The following tables represent a summary of adjusted operating income (loss), adjusted operating margin %, adjusted EBITDA and adjusted EBITDA %. Adjusted operating margin % is calculated as adjusted operating income divided by net sales and adjusted EBITDA margin % is calculated as adjusted EBITDA divided by net sales.
Adjusted operating margin % 28.9 % 15.2 % 24.4 %
Adjusted operating margin % 30.5 % 15.1 % 25.7 %
A reconciliation of total adjusted EBITDA and total adjusted operating income from reportable segments to net income is presented in the following table:
Year ended December 31,
Less:
Adjusted operating income from reportable segments $ 458,010 $ 464,657
Less:
Net cost for product-related legal matter — 5,000
Less:
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Total other expense, net. Total other expense, net, for the year ended December 31, 2025, was $5.4 million, a decrease of $8.8 million compared to $14.2 million for the year ended December 31, 2024, driven primarily by decreased interest expense related to lower interest rates as well as increased pension income driven by a higher expected rate of return. We expect total interest expense for 2026 to be in the range of $28 million to $31 million. This decrease for 2026 is primarily related to significant long-term debt payments made during 2025. We expect non-cash pension and other post-retirement benefits income to increase by $4 million to $5 million compared to 2025.
Income taxes. The reported effective tax rate for the year ended December 31, 2025, was 23.9% compared to 24.0% for the year ended December 31, 2024. The decrease from the prior year was primarily driven by a decrease in state income taxes, partially offset by one-time benefits in foreign jurisdictions in 2024.
The Organization for Economic Co-operation and Development (OECD) framework for a global minimum corporate tax rate of 15% for companies with global revenues above €750.0 million (referred to as Pillar 2), with effective dates beginning in January 2024, has been enacted by a number of foreign jurisdictions. We meet the overall revenue threshold and fall within the scope of Pillar 2. As such, we have complied with the requirements of the legislation and the application of Pillar 2 resulted in additional tax expense of $2.2 million and $1.1 million, for the years ended December 31, 2025 and 2024, respectively.
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 consolidated financial statements.
Net income. Net income was $278.9 million for the year ended December 31, 2025, or $7.09 per diluted share, compared to $285.0 million, or $7.21 per diluted share, for the year ended December 31, 2024.
Non-GAAP Financial Measures
This report includes certain non-GAAP financial measures and operating ratios derived from non-GAAP financial measures. These financial measures and ratios include organic (referred to in our historical filings as constant currency) sales change, organic SG&A change, adjusted operating income, adjusted operating margin %, adjusted EBITDA and adjusted EBITDA margin %.
Organic 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 sales and SG&A change are calculated by deducting the percentage impact from currency translation effects as well as the impact from acquisitions and divestitures completed in the preceding 12 months from the overall percentage change in net sales and SG&A. The Company believes that organic sales 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 sales and SG&A change highlight ongoing business performance excluding the impact of fluctuating foreign currencies, acquisitions and divestitures.
Adjusted operating income, adjusted operating margin %, adjusted EBITDA and adjusted EBITDA margin % are non-GAAP financial measures and operating ratios derived from non-GAAP measures. Total reportable segment adjusted operating income is reconciled above to the nearest GAAP financial measure, operating income, 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. Total reportable segment adjusted EBITDA is reconciled above to the nearest GAAP financial measure, net income and, in addition to the items summarized above that are excluded from adjusted operating income (loss), excludes depreciation and amortization expense; interest expense; other income, net; and provision for income taxes. Adjusted operating margin % is defined as adjusted operating income (loss) divided by net sales to external customers and adjusted EBITDA margin % is defined as adjusted EBITDA divided by net sales to external customers. 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 make strategic decisions about the business and allocate resources. 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.
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.
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LIQUIDITY AND CAPITAL RESOURCES
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, dividend payments and share repurchases. At December 31, 2025, 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 due in 2030. At December 31, 2025, approximately 81% of our borrowings are denominated in US dollars, which limits our exposure to currency exchange rate fluctuations.
We believe MSA's healthy balance sheet and access to significant capital at the year ended December 31, 2025, positions us well to navigate through a dynamic operating environment and other unexpected events. We maintain a balanced capital deployment strategy that focuses on investing for organic growth and pursuing inorganic growth opportunities, returning cash to shareholders in the form of dividends and share buybacks.
At December 31, 2025, the Company had cash and cash equivalents totaling $165.1 million. Cash and cash equivalents increased $0.5 million during the year ended December 31, 2025, compared to increasing $18.1 million during the same period in 2024. At December 31, 2025, $1.0 billion of the existing $1.3 billion revolving credit facility was unused, including letters of credit issued under the facility.
Operating activities. Operating activities provided cash of $363.9 million in 2025, compared to providing $296.4 million in 2024. The increased cash flow from operating activities was primarily related to lower cash used for variable compensation, income and other taxes, and restructuring as compared to the prior year partially offset by higher cash usage for working capital needs.
Investing activities. Investing activities used cash of $257.6 million for the year ended December 31, 2025, compared to using $53.8 million in 2024. The acquisition of M&C for $189 million and capital expenditures of $68.4 million, including a $19.6 million strategic footprint investment, drove the increase in cash outflows from investing activities during the year ended December 31, 2025. We remain committed to evaluating acquisition opportunities that will allow us to continue to grow in key end markets and geographies.
Financing activities. Financing activities used cash of $105.5 million for the year ended December 31, 2025, compared to using cash of $208.7 million in 2024. During 2025, we had net proceeds from long-term debt of $67.3 million, used primarily to fund the M&C acquisition, compared to net payments of $94.3 million during the same period in 2024. We paid cash dividends of $82.3 million during 2025, compared to $78.8 million during 2024. We used cash of $90.0 million during 2025 to repurchase shares, including $80.0 million related to our share repurchase program compared to using $37.3 million during 2024, including $29.9 million related to our share repurchase program. The remainder in both periods related to our employee stock compensation transactions.
CUMULATIVE TRANSLATION ADJUSTMENTS
The position of the U.S. dollar relative to international currencies, primarily the euro and British pound, at December 31, 2025, resulted in a translation gain of $68.3 million being recorded to cumulative translation adjustments shareholders' equity account for the year ended December 31, 2025, compared to a translation loss of $42.5 million being recorded to the cumulative translation adjustments account during 2024.
COMMITMENTS AND CONTINGENCIES
We are obligated to make future payments under various contracts, including debt and lease agreements. Our significant cash obligations as of December 31, 2025, are as follows:
The significant obligations table does not include obligations to taxing authorities due to uncertainty surrounding the ultimate settlement of amounts and timing of these obligations. We expect to meet our future debt service obligations through cash provided by operations.
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The Company had outstanding bank guarantees and standby letters of credit with banks as of December 31, 2025 totaling $9.7 million, of which $1.5 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 December 31, 2025, the Company has $0.9 million of restricted cash in support of these arrangements.
We expect to make net contributions between $8 million and $10 million to our pension plans in 2026, which are primarily associated with our International segment. We have not been required to make contributions to our U.S. based qualified defined benefit pension plan in many years.
We have purchase commitments for materials, supplies, services and property, plant and equipment as part of our ordinary conduct of business.
Please refer to Note 21—Contingencies to the consolidated financial statements in Part II Item 8 of this Form 10-K for further discussion on the Company's product liabilities.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
We prepare our consolidated financial statements in accordance with U.S. generally accepted accounting principles (U.S. GAAP). The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and the related disclosures. We evaluate these estimates and judgments on an on-going basis based on historical experience and various assumptions that we believe to be reasonable under the circumstances. However, different amounts could be reported if we had used different assumptions and in light of different facts and circumstances. Actual amounts could differ from the estimates and judgments reflected in our consolidated financial statements. A summary of the Company's significant accounting policies is included in Note 1—Significant Accounting Policies to the consolidated financial statements in Part II, Item 8 of this Form 10-K.
The more critical judgments and estimates used in the preparation of our consolidated financial statements are discussed below.
Business Combinations.In accordance with the accounting guidance for business combinations, the Company uses the acquisition method of accounting to allocate costs of acquired businesses to the assets acquired and liabilities assumed based on their estimated fair values at the dates of acquisition. The excess costs of acquired businesses over the fair values of the assets acquired and liabilities assumed will be recognized as goodwill. The valuations of the acquired assets and liabilities will impact the determination of future operating results. In addition to using management estimates and negotiated amounts, the Company uses a variety of information sources to determine the estimated fair values of acquired assets and liabilities including: third-party appraisals for the estimated value and lives of identifiable intangible assets and property, plant and equipment; third-party actuaries for the estimated obligations of defined benefit pension plans and similar benefit obligations; and legal counsel or other experts to assess the obligations associated with legal, environmental and other contingent liabilities.
The business and technical judgment of management was used in determining which intangible assets have indefinite lives and in determining the useful lives of finite-lived intangible assets in accordance with the accounting guidance for goodwill and other intangible assets.
Income taxes. We recognize deferred tax assets and liabilities using enacted tax rates to record the tax effect of temporary differences between the book and tax basis of recorded assets and liabilities. We record valuation allowances to reduce deferred tax assets to the amounts that we estimate are probable to be realized. When assessing the need for valuation allowances, we consider projected future taxable income and prudent and feasible tax planning strategies. Should a change in circumstances lead to a change in our judgments about the realizability of deferred tax assets in future years, we adjust the related valuation allowances in the period that the change in circumstances occurs.
We record an estimated income tax liability based on our best judgment of the amounts likely to be paid in the various tax jurisdictions in which we operate. We record tax benefits related to uncertain tax positions taken or expected to be taken on a tax return when such benefits meet a more likely than not threshold. We recognize interest related to unrecognized tax benefits in interest expense and penalties in operating expenses. The tax liabilities ultimately paid are dependent on a number of factors, including the resolution of tax audits, and may differ from the amounts recorded. Tax liabilities are adjusted through income when it becomes probable that the actual liability differs from the amount recorded.
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Pensions and other post-retirement benefits. We sponsor certain pension and other post-retirement benefit plans. Accounting for the net periodic benefit costs and credits for these plans requires us to estimate the cost of benefits to be provided well into the future and to attribute these costs over the expected work life of the employees participating in these plans. These estimates require our judgment about discount rates used to determine these obligations, expected returns on plan assets, rates of future compensation increases, rates of increase in future health care costs, participant withdrawal and mortality rates and participant retirement ages. Differences between our estimates and actual results may significantly affect the cost of our obligations under these plans and could cause net periodic benefit costs and credits to change materially from year-to-year. Discount rates and plan asset valuations are point-in-time measures. The discount rate assumptions used in determining projected benefit obligations for our U.S. and foreign plans were based on the spot rate method at December 31, 2025. Expected returns on plan assets are based on capital market expectations by asset class.
The following table summarizes the impact of changes in significant actuarial assumptions on our December 31, 2025, actuarial valuations:
Impact of Changes in Actuarial Assumptions
Change in DiscountRate Change in ExpectedReturn Change in Market Value of Assets
(In thousands) 1% (1)% 1% (1)% 5% (5)%
(Decrease) increase in projected benefit obligation (48,531) 58,322 — — — —
Goodwill and Indefinite-lived Intangible Assets. On October 1st of each year, or more frequently if indicators of impairment exist or if a decision is made to sell a business, we evaluate goodwill for impairment. Such indicators may include a decline in expected cash flows, a significant adverse change in the business climate, unanticipated competition, slower growth rates, or negative developments in equity and credit markets, among others.
All goodwill is assigned to and evaluated for impairment at the reporting unit level, which is defined as an operating segment or one level below an operating segment. The $731.6 million of goodwill on our Consolidated Balance Sheet as of December 31, 2025, is primarily comprised of $480.4 million at the Northern North America reporting unit and $247.8 million at the Europe reporting unit. The evaluation of impairment involves using either a qualitative or quantitative approach as outlined in Accounting Standards Codification ("ASC") Topic 350. In 2025, we performed a quantitative test at October 1, 2025. Quantitative testing involves comparing the estimated fair value of each reporting unit to its carrying value. We estimate reporting unit fair value using a weighted average of fair values determined by discounted cash flow ("DCF") and market approach methodologies, as we believe both are important indicators of fair value. A number of assumptions and estimates are involved in the application of the DCF model, including sales volumes and prices, costs to produce, tax rates, capital spending, discount rates, and working capital changes. Cash flow forecasts are generally based on approved business unit operating plans for the early years and historical relationships in later years. The market approach methodology measures value through an analysis of peer companies. The analysis entails measuring the multiples of EBITDA at which peer companies are trading.
In the event the carrying value is in excess of the estimated fair value of a reporting unit per the weighted average of the DCF and market approach models, an impairment loss equal to such excess would be recognized, which could materially and adversely affect reported consolidated results of operations and shareholders’ equity. At October 1, 2025, based on our quantitative test, the fair values of each of our reporting units exceeded their respective carrying value by at least 46%.
The intangible asset with an indefinite life is also subject to impairment testing on October 1st of each year, or more frequently if indicators of impairment exist. The impairment test compares the fair value of the intangible asset with its carrying amount. We perform a quantitative assessment of the indefinite lived trade name intangible asset as outlined in ASC 350 by comparing the estimated fair value of the trade name intangible asset to its carrying value. We estimate the fair value using the relief from royalty income approach. A number of significant assumptions and estimates are involved in the application of the relief from royalty model, including sales volumes and prices, royalty rates and tax rates. Forecasts are based on sales generated by the underlying trade name assets and are generally based on approved business unit operating plans for the early years and historical relationships in later years. At October 1, 2025, based on our quantitative test, the fair value of the trade name asset exceeded its carrying value by 53%.
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RECENTLY ISSUED ACCOUNTING STANDARDS AND DISCLOSURE RULES
In November 2024, the FASB issued ASU No. 2024-03 (“ASU 2024-03”), Disaggregation of Income Statement Expenses (“DISE”). ASU 2024-03 requires disaggregated disclosure of income statement expenses for public business entities. ASU 2024-03 does not change the expense captions an entity presents on the face of the income statement; rather, it requires disaggregation of certain expense captions into specified categories in disclosures within the footnotes to the financial statements. As revised by ASU No. 2025-01, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures, the provisions of ASU 2024-03 are effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. With the exception of expanding disclosures to include more granular income statement expense categories, we do not expect the adoption of ASU 2024-03 to have a material effect on our consolidated financial statements taken as a whole.
In September 2025, the FASB issued ASU No. 2025-06 (“ASU 2025-06”), Targeted Improvements to the Accounting for Internal-Use Software. ASU 2025-06 amends certain aspects of the accounting for a disclosure of software costs under ASC 350-40. ASU 2025-06 makes targeted improvements to ASC 350-40, but does not fully align the framework for accounting for internally developed software costs that are subject to ASC 350-40 with the framework applied to software to be sold or marketed externally that is subject to ASC 985-20. ASU 2025-06 also does not amend the guidance on costs of software licenses that are within the scope of ASC 985-20. ASU 2025-06’s amendments are effective for all entities for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods. The Company is still evaluating the impact that the adoption of ASU 2025-06 will have on the condensed consolidated financial statements.
In November 2025, the FASB issued ASU 2025‐09, Derivatives and Hedging (Topic 815): Hedge Accounting Improvements. The amendments are intended to improve the clarity, operability, and decision‐usefulness of hedge accounting guidance. ASU 2025‐09 is effective for the Company for annual and interim reporting periods beginning after December 15, 2026 with early adoption permitted. The Company is currently evaluating the impact of ASU 2025‐09 on its consolidated financial statements and related disclosures. Because the guidance primarily relates to hedge accounting mechanics and presentation, the Company does not expect the adoption of this update to have a material effect on our consolidated financial statements taken as a whole.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Market risk represents the risk of adverse changes in the value of a financial instrument caused by changes in currency exchange rates, interest rates and equity prices. We are exposed to market risks related to currency exchange rates and interest rates.
Currency exchange rates. We are subject to the effects of fluctuations in currency exchange rates on various transactions and on the translation of the reported financial position and operating results of our non-U.S. companies from local currencies to U.S. dollars. A hypothetical 10% strengthening or weakening of the U.S. dollar would increase or decrease our reported sales and net income for the year ended December 31, 2025, by approximately $80.0 million and $9.6 million, or 4.3% and 3.4%, respectively.
When appropriate, we may attempt to limit our transactional exposure to changes in currency exchange rates through forward contracts or other actions intended to reduce existing exposures by creating offsetting currency exposures. At December 31, 2025, we had open foreign currency forward contracts with a U.S. dollar notional value of $113.4 million. A hypothetical 10% increase in December 31, 2025, forward exchange rates would result in a $11.3 million increase in the fair value of these contracts.
Interest rates. We are exposed to changes in interest rates primarily as a result of borrowing and investing activities used to maintain liquidity and fund business operations. Because of the variable rate nature of our revolving credit facility, these financial instruments are reported at carrying values which approximate fair values.
At December 31, 2025, we had $299.3 million of fixed rate debt which matures at various dates through 2036. The incremental increase in the fair value of fixed rate long-term debt resulting from a hypothetical 10% decrease in interest rates would be approximately $4.2 million. However, our sensitivity to interest rate declines and the corresponding increase in the fair value of our debt portfolio would unfavorably affect earnings and cash flows only to the extent that we elected to repurchase or retire all or a portion of our fixed rate debt portfolio at prices above carrying values.
At December 31, 2025, we had $285.3 million of variable rate borrowings under our revolving credit facility. A 50 basis point increase or decrease in interest rates could have a $1.9 million impact on future pre-tax earnings under our current capital structure.
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Item 8. Financial Statements and Supplementary Data
Management’s Reports to Shareholders
Management’s Report on Responsibility for Financial Reporting
Management of MSA Safety Incorporated (the Company) is responsible for the preparation of the consolidated financial statements included in this annual report. The consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States of America and include amounts that are based on the best estimates and judgments of management. The other financial information contained in this annual report is consistent with the consolidated financial statements.
Management’s Report on Internal Control Over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting. The Company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.
The Company’s internal control over financial reporting includes policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and dispositions of assets; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of management and the directors of the Company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on our financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2025. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework (2013). Based on our assessment and those criteria, management has concluded that the Company maintained effective internal control over financial reporting as of December 31, 2025.
The Company acquired M&C TechGroup and its affiliated companies ("M&C") on May 6, 2025, which represented approximately 10% and 15% of the Company's total assets and net assets as of December 31, 2025, and 2% and (2%) of total sales and net income for the year ended December 31, 2025. As the M&C acquisition was completed during the second quarter of 2025, the scope of the Company's 2025 assessment of the effectiveness of its internal control over financial reporting does not include the M&C acquisition. This exclusion is pursuant to the SEC's general guidance that an assessment of a recently acquired business' internal control over financial reporting may be omitted from the scope of the Company's assessment of its internal control over financial reporting for twelve months following the date of acquisition.
The Company's Independent registered public accounting firm that audited the consolidated financial statements included in this annual report issued an attestation report on the Company's internal control over financial reporting.
/s/ STEVEN C. BLANCO
Steven C. BlancoPresident and Chief Executive Officer
/S/ JULIE A. BECK
Julie A. BeckSenior Vice President, Chief Financial Officer and Treasurer
February 12, 2026
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Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of MSA Safety Incorporated
Opinion on Internal Control over Financial Reporting
We have audited MSA Safety Incorporated’s internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, MSA Safety Incorporated (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on the COSO criteria.
As indicated in the accompanying Management’s Report on Internal Control Over Financial Reporting, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of M&C TechGroup, which is included in the 2025 (consolidated) financial statements of the Company and constituted 10% and 15% of total and net assets, respectively, as of December 31, 2025 and 2% and (2)% of revenues and net income, respectively, for the year then ended. Our audit of internal control over financial reporting of the Company also did not include an evaluation of the internal control over financial reporting of M&C TechGroup.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2025 and 2024, the related consolidated statements of income, comprehensive income, cash flows and changes in retained earnings and accumulated other comprehensive loss for each of the three years in the period ended December 31, 2025, and the related notes and financial statement schedule listed in the Index at Item 15(a) 2 and our report dated February 12, 2026 expressed an unqualified opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Ernst & Young LLP
Pittsburgh, Pennsylvania
February 12, 2026
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Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of MSA Safety Incorporated
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of MSA Safety Incorporated (the Company) as of December 31, 2025 and 2024, the related consolidated statements of income, comprehensive income, cash flows and changes in retained earnings and accumulated other comprehensive loss for each of the three years in the period ended December 31, 2025, and the related notes and financial statement schedule listed in the Index at Item 15(a) 2 (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 12, 2026 expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the account or disclosures to which it relates.
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Goodwill impairment assessment – Europe reporting unit
/s/ Ernst & Young LLP
We have served as the Company’s auditor since 2014.
Pittsburgh, Pennsylvania
February 12, 2026
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MSA SAFETY INCORPORATED
CONSOLIDATED STATEMENTS OF INCOME
Year ended December 31,
Loss on divestiture of MSA LLC (Note 21) — — 129,211
Product liability expense (Note 21) — — 3
Earnings per share attributable to common shareholders (Note 10):
Dividends per common share $ 2.10 $ 2.00 $ 1.87
The accompanying notes are an integral part of the consolidated financial statements.
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MSA SAFETY INCORPORATED
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Year ended December 31,
Other comprehensive income (loss), net of tax:
Unrealized losses on cash flow hedges (Note 7) (215) — —
Unrealized gains on available-for-sale securities (Note 7) — — 2
The accompanying notes are an integral part of the consolidated financial statements.
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MSA SAFETY INCORPORATED
CONSOLIDATED BALANCE SHEETS
December 31,
(In thousands, except share amounts) 2025 2024
Assets
Prepaid expenses and other current assets 32,273 43,830
Operating lease right-of-use assets, net (Note 18) 56,930 56,083
Liabilities
Notes payable and current portion of long-term debt (Note 13) $ 8,225 $ 26,391
Noncurrent operating lease liabilities (Note 18) 46,151 45,984
Shareholders' Equity
Preferred stock, 4.5% cumulative, $50 par value (Note 8) $ 3,569 $ 3,569
Accumulated other comprehensive loss (Note 7) (41,781) (141,649)
The accompanying notes are an integral part of the consolidated financial statements.
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MSA SAFETY INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year ended December 31,
Operating Activities
Tax-effected loss on divestiture of MSA LLC (Note 21) — — 199,578
Loss on asset write-down and dispositions, net 1,408 819 173
Product liability expense (Note 21) — — 3
Product liability payments (Note 21) — — (5,250)
Contribution on divestiture of MSA LLC (Note 21) — — (341,186)
Changes in:
Investing Activities
Acquisitions, net of cash acquired (Note 15) (189,275) — —
Property disposals and other investing 79 468 2,811
Financing Activities
Change in cash, cash equivalents and restricted cash 895 16,689 (16,020)
Supplemental cash flow information:
The accompanying notes are an integral part of the consolidated financial statements.
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MSA SAFETY INCORPORATED
CONSOLIDATED STATEMENTS OF CHANGES IN RETAINED EARNINGS
AND ACCUMULATED OTHER COMPREHENSIVE LOSS
Foreign currency translation adjustments — 21,682
Pension and post-retirement plan adjustments, net of $1,706 tax benefit — 7,683
Unrecognized net gains on available-for-sale securities (Note 20) — 2
Common dividends ($1.87 per share) (73,447) —
Preferred dividends ($2.25 per share) (41) —
Foreign currency translation adjustments — (42,462)
Common dividends ($2.00 per share) (78,718) —
Preferred dividends ($2.25 per share) (41) —
Foreign currency translation adjustments — 68,273
Unrecognized net loss on hedges (Note 19) — (215)
Common dividends ($2.10 per share) (82,303) —
Preferred dividends ($2.25 per share) (41) —
The accompanying notes are an integral part of the consolidated financial statements.
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MSA SAFETY INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1—Significant Accounting Policies
General Information and Basis of Presentation—The consolidated financial statements of MSA Safety Incorporated ("MSA" or "the Company") are prepared in conformity with accounting principles generally accepted in the United States of America ("U.S. GAAP") and require management to make certain judgments, estimates, and assumptions. These may affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements. They also may affect the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates upon subsequent resolution of identified matters.
Principles of Consolidation—The consolidated financial statements include the accounts of the Company and all subsidiaries. Intercompany accounts and transactions are eliminated.
Reclassifications—Certain reclassifications of prior years' results have been made to conform to the current year presentation. These reclassifications relate to aligning prior year Other income, net, and Segment Information disclosures with current year presentation.
Currency Translation—The functional currency of all significant non-U.S. operating subsidiaries is the local country currency. Assets and liabilities of these operations are translated at year-end exchange rates. Income statement accounts are translated using the average exchange rates for the reporting period. Translation adjustments for these subsidiaries are reported as a component of shareholders’ equity and are not included in net income. Foreign currency transaction gains and losses are included in net income for the reporting period.
Cash Equivalents—Cash equivalents include temporary deposits with financial institutions and highly liquid investments with original maturities of 90 days or less.
Restricted Cash—Restricted cash, which is designated for use other than current operations, is included in prepaid expenses and other current assets in the Consolidated Balance Sheets. Restricted cash balances were $0.9 million and $0.5 million at December 31, 2025 and 2024, respectively. These balances were used to support letter of credit balances.
Inventories—Inventories are stated at the lower of cost or net realizable value. Cost is determined using the first-in, first-out ("FIFO") method. It is the Company's general policy to write-down any inventory balance in excess of the last 24 months of consumption and any inventory identified as obsolete.
Property and Depreciation—Property is recorded at cost. Depreciation is computed primarily using the straight-line method over the estimated useful lives of the assets, generally as follows: buildings 20 to 40 years, and machinery and equipment 3 to 10 years. Expenditures for significant renewals and improvements are capitalized. Ordinary repairs and maintenance are expensed as incurred. Gains or losses on property dispositions are included in other expense (income), net and the cost and related accumulated depreciation are removed from the accounts. Depreciation expense for the years ended December 31, 2025, 2024 and 2023 was $49.7 million, $45.6 million and $41.8 million, respectively. Properties, plant, and equipment are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets or asset groups may not be recoverable.
Software Development Costs—Software development costs are costs incurred to create, enhance and deploy the Company’s broad range of wireless technology and cloud-based computing safety services. Software development costs, other than software development costs qualifying for capitalization, are expensed as incurred. Costs of computer software developed or obtained for internal use that are incurred in the preliminary project and post implementation stages are expensed as incurred. Certain costs incurred during the application and development stage, which primarily include compensation and related expenses, are capitalized. Additionally, costs of upgrades and enhancements are capitalized when it is probable that the upgrades and enhancements will result in added functionality. During 2025, 2024 and 2023, respectively, there was $14.9 million, $13.0 million and $12.1 million of software development costs capitalized. The Company has unamortized computer software development costs of $22.9 million and $19.9 million as of December 31, 2025 and 2024, respectively, included in property, plant and equipment, net.
Capitalized costs are amortized through cost of products sold using the straight-line method over the estimated useful life, which is normally three years, beginning in the period in which the software is ready for its intended use or when the upgrade or enhancement is deployed. Software development amortization expense was $12.0 million, $11.3 million and $10.4 million during the years ended December 31, 2025, 2024 and 2023, respectively.
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Lessee Arrangements—At the inception of our contracts, we determine if the contract is or contains a lease. A contract is or contains a lease if it conveys the right to control the use of an identified asset for a period of time in exchange for consideration. We have elected to not separate the lease and non-lease components within our lease contracts. Right-of-use assets and operating lease liabilities are recognized based on the present value of lease payments over the lease term at commencement. We use our incremental borrowing rate ("IBR") at the recognition date in determining the present value of future payments for leases that do not have a readily determinable implicit rate. Our IBR reflects a fully secured rate based on our credit rating, taking into consideration the repayment timing of the lease and any impacts due to the economic environment in which the lease operates.
Our lease payments are largely fixed. Variable lease payments that depend on an index or a rate are included in the lease payments and are measured using the prevailing index or rate at the measurement date, with differences between the calculated lease payment and the actual lease payment being expensed in the period of the change. Other variable lease payments, including utilities, consumption and common area maintenance as well as repairs, maintenance and mileage overages on vehicles, are expensed during the period incurred. A majority of our real estate leases include options to extend the lease and options to early terminate the lease. Leases with an early termination option generally involve a termination payment. If we are reasonably certain to exercise an option to extend a lease, the extension period is included as part of the right-of-use asset and the lease liability. Some of our leases contain residual value guarantees. These are guarantees made to the lessor that the value of an underlying asset returned to the lessor at the end of a lease will be at least a specified amount. Our leases do not contain restrictions or covenants that restrict us from incurring other financial obligations. For our leases, we have elected to not apply the recognition requirements to leases of less than twelve months. These leases are expensed on a straight-line basis and are not included within the Company's operating lease asset or liability.
Lease right-of-use assets and liabilities are recognized based on the present value of the fixed future lease payments over the lease term. Operating leases are included in Operating lease right-of-use assets, net, Other current liabilities, and Noncurrent operating lease liabilities in our Consolidated Balance Sheets. Finance leases are included in Property, plant and equipment, net, Other current liabilities, and Other noncurrent liabilities in our Consolidated Balance Sheets. Lease expense for all operating leases is classified in Cost of products sold or Selling, general and administrative expense in the Consolidated Statements of Income. For finance leases, the amortization of the right-of-use asset is included in depreciation and amortization, and the interest is included in interest expense.
Lessor Arrangements—The Company derives a portion of its revenue from various leasing arrangements where the Company is the lessor, primarily managed fire service contracts. Such arrangements provide for payments covering equipment provided, maintenance and interest. These arrangements meet the criteria to be accounted for as sales-type leases under ASC 842 and contain both lease and non-lease components. For a component to be separate, the customer would be able to benefit from the right of use of the component separately or with other resources readily available to the customer and the right of the use is not highly dependent or highly interrelated with the other rights to use the other underlying assets or components.
Revenue from equipment provided is considered a lease component and recognized with point in time revenue recognition upon lease commencement. Upon the recognition of such revenue, an asset is established for the investment in sales-type leases. Maintenance revenue, which is considered a non-lease component, and interest is recognized over the lease term.
Goodwill and Other Intangible Assets—Intangible assets with a finite useful life are amortized on a straight-line basis over their useful lives. Indefinite lived intangible assets are assessed for possible impairment annually on October 1st or whenever circumstances change such that the recorded value of the asset may not be recoverable. We performed a quantitative assessment of the indefinite lived trade name intangible asset as outlined in ASC 350 by comparing the estimated fair value of the trade name intangible asset to its carrying value. We estimate the fair value using the relief from royalty income approach. A number of assumptions and estimates are involved in the application of the relief from royalty model, including sales volumes and prices, royalty rates and tax rates. Forecasts are based on sales generated by the underlying trade name assets and are generally based on approved business unit operating plans for the early years and historical relationships in later years. Based on these assessments, no impairments were identified during the years ended December 31, 2025, 2024 or 2023.
All goodwill is assigned to and evaluated for impairment at the reporting unit level, which is defined as an operating segment or one level below an operating segment. Goodwill is not amortized, but evaluated for impairment at least annually or whenever events or changes in circumstance indicate it is more likely than not that the fair value of a reporting unit is less than its carrying amount. The Company may perform either a qualitative assessment of potential impairment or proceed directly to a quantitative assessment of potential impairment. If the Company chooses not to perform a qualitative assessment, or if it chooses to perform a qualitative assessment but is unable to qualitatively conclude that no impairment has occurred, then the Company will perform a quantitative assessment. A quantitative test for goodwill impairment is performed by determining the fair value of the related reporting units.
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The Company estimates the fair value of the reporting unit with which the goodwill is associated and compares it to the carrying value. If the estimated fair value of a reporting unit is less than its carrying value, an impairment charge is recognized for the excess of the reporting unit's carrying value over its fair value. In 2025, we performed a quantitative test at October 1, 2025. We estimate fair value of each reporting unit using a combination of valuation techniques, including the discounted cash flow ("DCF") method, a form of the income approach, and the guideline public company method, a form of the market approach, as we believe each are important indicators of fair value. A number of assumptions and estimates are involved in the application of the DCF model, such as discount rates, revenue growth rates, and operating margins which are affected by expectations about future market or economic conditions. Cash flow forecasts are generally based on approved reporting unit operating plans for the early years and historical relationships in later years. The market approach methodology measures value through an analysis of peer companies. The analysis entails measuring the multiples of earnings before interest, taxes, depreciation and amortization ("EBITDA") at which peer companies are trading. Management performed its evaluation and determined the fair value of each reporting unit is greater than the carrying amount and, accordingly,no impairment of our goodwill has been recorded during the years ended December 31, 2025, 2024 or 2023.
Revenue Recognition—We account for revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers. Revenue from the sale of products and solutions is recognized when there is persuasive evidence of an arrangement and control passes to the customer. We establish our shipping terms according to local practice and market characteristics. We do not ship product unless we have an order or other documentation authorizing shipment to our customers. Our payment terms vary by the type and location of our customer and the products and solutions offered. The term between invoicing and when payment is due is not significant. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring goods or providing services. Amounts billed and due from our customers are classified as receivables on the Consolidated Balance Sheets. We make appropriate provisions for credit losses, which have historically been insignificant in relation to our net sales. Certain contracts with customers have an element of variable consideration that is estimated when revenue is recognized under the contract. Rebates are based on achieving a certain level of purchases and other performance criteria that are documented in established distributor programs. These rebates are estimated based on projected sales to the customer and accrued as a reduction of net sales as they are earned by the customer. Sales, value add and other taxes collected with revenue-producing activities and remitted to governmental authorities are excluded from revenue.
Refer to Note 2—Revenue Recognition for additional disclosures on revenue recognition matters.
Product Warranties—Estimated expenses related to product warranties and additional service actions are charged to Cost of products sold in the period in which the related revenue is recognized or when significant product quality issues are identified.
Research and Development—Research and development costs are expensed as incurred.
Income Taxes—Deferred income taxes are recognized for temporary differences between financial and tax reporting. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. If it is more likely than not that some portion or all of a deferred tax asset will not be realized, a valuation allowance is recognized. We record tax benefits related to uncertain tax positions taken or expected to be taken on a tax return when such benefits meet a more likely than not threshold. We recognize interest related to unrecognized tax benefits in interest expense and penalties in operating expenses. Deferred taxes are booked for available cash in excess of working capital for non-U.S. subsidiaries as these earnings are not considered to be permanently reinvested. The Company treats any Global Intangible Low Taxed Income as a period cost.
Stock-Based Compensation—We recognize expense for employee and non-employee director stock-based compensation based on the grant date fair value of the awards. Except for retirement-eligible participants, for whom there is no requisite service period, this expense is recognized ratably over the requisite service periods following the date of grant.
Derivative Instruments—We may use derivative instruments from time to time to minimize the effects of changes in currency exchange rates. We do not enter into derivative transactions for speculative purposes and do not hold derivative instruments for trading purposes. We designate certain derivative instruments as cash flow hedges to manage exposure to variability in future cash flows related to forecasted transactions. At hedge inception, we formally document the hedging relationship, including the risk management objective, the nature of the risk being hedged, and the method for assessing hedge effectiveness. Hedge effectiveness is evaluated at inception and on an ongoing basis to ensure the hedge remains highly effective.
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Derivatives are recorded at fair value on the balance sheet and changes in the fair value of derivative instruments designated as fair value hedges are recorded in the balance sheet as adjustments to the underlying hedged asset or liability. The effective portion of gains and losses on cash flow hedges is reported in accumulated other comprehensive loss (“AOCL”) and reclassified into net income in the same period the hedged item affects earnings. Any ineffective portion is recognized immediately into net income. If a hedged forecasted transaction is no longer probable, amounts previously recorded in AOCL are reclassified into net income immediately. When a hedging instrument is terminated, amounts in AOCL remain until the forecasted transaction occurs or is deemed no longer probable. Changes in the fair value of derivative instruments that do not qualify for hedge accounting treatment are recognized immediately into net income. Refer to Note 19—Derivative Financial Instruments for further details on hedging activity.
Commitments and Contingencies—For asserted claims and assessments, liabilities are recorded when a loss is deemed to be probable and the amount of the loss is reasonably estimable. Management assesses the probability of an unfavorable outcome with respect to asserted claims or assessments based on many factors such as the nature of the matter, available defenses and case strategy, progress of the matter, views and opinions of legal counsel and other advisors, applicability and success of appeals processes, and the outcome of similar historical matters, among others. Once an unfavorable outcome is assessed to be probable, management evaluates estimates of the potential loss, and the most reasonable loss estimate is recorded (or, if the estimate of the loss is a range, and no amount within the range is considered to be a better estimate than any other amount, the minimum amount in the range is recorded). If a material loss is deemed to be reasonably possible but not probable, the matter is disclosed and no liability is recorded.
With respect to unasserted claims or assessments, management first determines whether it is probable that a claim or assessment may be asserted and then, if so, the degree of probability of an unfavorable outcome. If an unfavorable outcome is probable, management assesses whether the amount of potential loss can be reasonably estimated and, if so, accrues the most reasonable estimate of the loss (or, if the estimate of the loss is a range, and no amount within the range is considered to be a better estimate than any other amount, the minimum amount in the range is recorded). If an unfavorable outcome is reasonably possible but less than probable, or the amount of loss cannot be reasonably estimated, then the matter is disclosed and no liability is recorded. Legal matters are reviewed on a continuous basis to determine if there has been a change in management’s judgment regarding the likelihood and/or estimate of a potential loss. Refer to Note 21—Contingencies for further details on product liability related matters.
Concentration of credit and business risks—We sell to customers in a broad mix of industries and are exposed to credit risk in the event of nonpayment. Changes in these industries or other developments may significantly affect our financial performance and management's estimates. We mitigate our exposure to credit risk by performing ongoing credit evaluations and, when deemed necessary, requiring letters of credit, credit insurance, prepayments, guarantees or other collateral. No individual customer represented more than 10% of our receivables as of December 31, 2025, or 2024, or sales for any of the three years ended December 31, 2025.
Recently Issued Accounting Standards and Disclosure Rules—In November 2024, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update No. 2024-03 (“ASU 2024-03”), Disaggregation of Income Statement Expenses (“DISE”). ASU 2024-03 requires disaggregated disclosure of income statement expenses for public business entities. ASU 2024-03 does not change the expense captions an entity presents on the face of the income statement; rather, it requires disaggregation of certain expense captions into specified categories in disclosures within the footnotes to the financial statements. As revised by ASU No. 2025-01, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures, the provisions of ASU 2024-03 are effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. With the exception of expanding disclosures to include more granular income statement expense categories, we do not expect the adoption of ASU 2024-03 to have a material effect on our consolidated financial statements taken as a whole.
In September 2025, the FASB issued ASU No. 2025-06, Targeted Improvements to the Accounting for Internal-Use Software. ASU 2025-06 amends certain aspects of the accounting for software costs under ASC 350-40. ASU 2025-06 makes targeted improvements to ASC 350-40, but does not fully align the framework for accounting for internally developed software costs that are subject to ASC 350-40 with the framework applied to software to be sold or marketed externally that is subject to ASC 985-20. ASU 2025-06 also does not amend the guidance on costs of software licenses that are within the scope of ASC 985-20. ASU 2025-06’s amendments are effective for all entities for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods. The Company is still evaluating the impact that the adoption of ASU 2025-06 will have on the condensed consolidated financial statements.
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In November 2025, the FASB issued ASU 2025‐09, Derivatives and Hedging (Topic 815): Hedge Accounting Improvements. The amendments are intended to improve the clarity, operability, and decision‐usefulness of hedge accounting guidance. ASU 2025‐09 is effective for the Company for annual and interim reporting periods beginning after December 15, 2026 with early adoption permitted. The Company is currently evaluating the impact of ASU 2025‐09 on its consolidated financial statements and related disclosures. Because the guidance primarily relates to hedge accounting mechanics and presentation, the Company does not expect the adoption of this update to have a material effect on our consolidated financial statements taken as a whole.
Note 2—Revenue Recognition
We generate revenue primarily from manufacturing and selling a comprehensive line of safety products and solutions to protect the health and safety of workers and facility infrastructures around the world. Our customers generally fall into two categories: distributors and end-users. All customer categories have similar nature, timing and uncertainty related to cash flows. As a result, the underlying principles of revenue recognition are identical for both categories of customers.
We account for revenue in accordance with ASC 606, Revenue from Contracts with Customers. Revenue from the sale of products and solutions is recognized when there is persuasive evidence of an arrangement and control passes to the customer, which generally occurs either when product is shipped to the customer or, in the case of certain customers, when product is delivered to the customer's site. We establish our shipping terms according to local practice and market characteristics. We do not ship product unless we have an order or other documentation authorizing shipment to our customers. Our payment terms vary by the type and location of our customer and the products and solutions offered; however, in most cases, the term between invoicing and when payment is due is not significant.
Revenue is measured as the amount of consideration we expect to receive in exchange for transferring goods or providing services. Amounts billed and due from our customers are classified as receivables on the Consolidated Balance Sheets. We make appropriate provisions for credit losses, which have historically been insignificant in relation to our net sales. Certain contracts with customers may have an element of variable consideration that is estimated when revenue is recognized under the contract. Variable consideration could include volume incentive rebates and performance guarantees. Rebates are based on achieving a certain level of purchases and other performance criteria that are documented in established distributor programs. These rebates are estimated based on projected sales to the customer and accrued as a reduction of net sales as they are earned by the customer. Sales, value added and other taxes collected with revenue-producing activities and remitted to governmental authorities are excluded from revenue.
Depending on the terms of the arrangement, we may defer revenue for which we have a future obligation, which may include leases where the Company is the lessor, training, extended warranty, software subscriptions, maintenance and technical services, until such time that the obligation has been satisfied. We use an observable price, or a cost plus margin approach when one is not available, to determine the stand-alone selling price for separate performance obligations. We have elected to recognize the cost for shipping and handling as an expense when control of the product has passed to the customer. These costs are included within the Cost of products sold line on the Consolidated Statements of Income. Amounts billed to customers for shipping and handling are included within the Net sales line on the Consolidated Statements of Income.
Performance Obligations
The Company recognizes revenue when performance obligations identified under the terms of the contract with its customers are satisfied, which generally occurs upon the transfer of control in accordance with the contractual terms and conditions of sale. For most contracts with customers, this results in point-in-time revenue recognition once contractual shipping terms are fulfilled.
Disaggregation of Revenue
Refer to Note 9—Segment Information to the consolidated financial statements in Part II Item 8 of this Form 10-K for disaggregation of revenue by segment and product category, as we believe this best depicts how the nature, amount, timing and uncertainty of our revenue and cash flows are affected by economic factors.
Lessor Arrangements
The Company derives a portion of its revenue from various leasing contracts where the Company is the lessor, primarily managed fire service contracts. Such arrangements provide for recurring payments throughout the contract term. These payments cover equipment provided in addition to several services which include maintenance and interest.
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Managed fire service contracts meet the criteria to be accounted for as sales-type leases. Under ASC 842, Leases, these contracts contain both lease and non-lease components. For a component to be separate, the customer would be able to benefit from the right of use of the component separately or with other resources readily available to the customer and the right of the use is not highly dependent or highly interrelated with the other rights to use the other underlying assets or components.
For managed fire service contracts, revenue from equipment provided is considered a lease component and recognized with point in time revenue recognition upon lease commencement. Upon the recognition of such revenue, an asset is established for the investment in sales-type leases. Maintenance revenue, which is considered a non-lease component, and interest are recognized monthly over the lease term. As of December 31, 2025, remaining maintenance performance obligations for managed fire service contracts were $29.3 million, which are expected to be recognized to revenue over the remaining contract lives which are primarily less than 3 years.
Lease revenues and interest earned by the Company, included in the Consolidated Statements of Income, were not material to any of the years ended December 31, 2025, 2024 and 2023.
Net investment in sales-type leases of $5.7 million and $7.5 million were included in Prepaid expenses and other current assets and Other noncurrent assets, respectively, in the Consolidated Balance Sheets as of December 31, 2025. These amounts at December 31, 2025, are expected to be collected over the remaining life of each contract.
Practical Expedients and Exemptions
We do not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed.
We do not assess whether a contract has a significant financing component if the expectation at contract inception is such that the period between payment by the customer and the transfer of the promised goods or services to the customer will be one year or less.
We generally expense sales commissions when incurred because the amortization period would have been one year or less. These costs are recorded within selling, general and administrative expenses in our Consolidated Statements of Income.
Note 3—Cash and Cash Equivalents
Several of the Company's subsidiaries participate in a notional cash pooling arrangement to manage global liquidity requirements. As part of a master netting arrangement, the participants combine their cash balances in pooling accounts at the same financial institution with the ability to offset bank overdrafts of one participant against positive cash account balances held by another participant. Under the terms of the master netting arrangement, the financial institution has the right, ability and intent to offset a positive balance in one account against an overdrawn amount in another account. Amounts in each of the accounts are unencumbered and unrestricted with respect to use. As such, the net cash balance related to this pooling arrangement is included in Cash and cash equivalents in the Consolidated Balance Sheets.
The Company's net cash pool position consisted of the following:
(In thousands) December 31, 2025
Gross cash pool position $ 86,392
Less: cash pool borrowings (83,118)
Net cash pool position $ 3,274
Note 4—Restructuring Charges
During the years ended December 31, 2025, 2024 and 2023, we recorded restructuring charges of $3.9 million, $6.4 million and $9.9 million, respectively. These charges were primarily related to our ongoing initiatives to adjust our cost structure, improve productivity, and right-size the organization in response to macroeconomic conditions.
Americas segment restructuring charges of $1.2 million during the year ended December 31, 2025, were to right-size the organization in response to macroeconomic conditions. International segment restructuring charges of $1.7 million during the year ended December 31, 2025, were related to ongoing initiatives to optimize our manufacturing footprint and right-size the organization in response to macroeconomic conditions. Corporate related restructuring charges of $1.0 million during the year ended December 31, 2025, were to right-size the organization in response to macroeconomic conditions.
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Americas segment restructuring charges of $1.6 million during the year ended December 31, 2024, were related to manufacturing footprint optimization activities. International segment restructuring charges of $3.5 million during the year ended December 31, 2024, were related to ongoing initiatives to optimize our manufacturing footprint and improve productivity as well as management restructuring. Corporate related restructuring charges of $1.3 million during the year ended December 31, 2024, were related to management restructuring.
Americas segment restructuring charges of $3.1 million during the year ended December 31, 2023, were related to manufacturing footprint optimization activities. International segment restructuring charges of $4.7 million during the year ended December 31, 2023, were related to ongoing initiatives to drive profitable growth and improve productivity. Corporate related restructuring charges of $2.1 million during the year ended December 31, 2023, were related to footprint optimization activities and management restructuring.
Activity and reserve balances for restructuring charges were as follows:
(in millions) Americas segment International segment Corporate Total
Currency translation and other adjustments (0.1) 0.1 — —
Cash payments / utilization (3.9) (8.6) (2.6) (15.1)
Currency translation and other adjustments (0.1) (0.3) — (0.4)
Cash payments / utilization (2.1) (9.0) (1.3) (12.4)
Currency translation and other adjustments — 0.4 — 0.4
Cash payments / utilization (0.6) (2.8) (1.0) (4.4)
Restructuring reserves at December 31, 2025 and 2024 are included in Other current liabilities in our Consolidated Balance Sheets.
Note 5—Inventories
The following table sets forth the components of inventory:
December 31,
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Note 6—Property, Plant, and Equipment
The following table sets forth the components of property, plant and equipment:
December 31,
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Note 7—Reclassifications Out of Accumulated Other Comprehensive Loss
MSA Safety Incorporated
Pension and other post-retirement benefits(a)
Amounts reclassified from accumulated other comprehensive loss into net income:
Amortization of prior service cost (credit) (Note 16) 650 (42) (84)
Foreign currency forward cash flow hedges
Balance at beginning of period $ — $ — $ —
Unrealized losses on cash flow hedges (Note 19) (215) — —
Balance at end of period $ (215) $ — $ —
Available-for-sale securities
Balance at beginning of period $ — $ — $ (2)
Unrealized gains on available-for-sale securities (Note 20) — — 2
Balance at end of period $ — $ — $ —
Foreign currency translation
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Note 8—Capital Stock
Preferred Stock—The Company has authorized 100,000 shares of $50 par value 4.5% cumulative preferred nonvoting stock which is callable at $52.50. There were 71,340 shares issued and 52,998 shares held in treasury at both December 31, 2025 and 2024. The Treasury shares at cost line of the Consolidated Balance Sheets includes $1.8 million related to preferred stock. There were no shares of preferred stock purchased and subsequently held in treasury during the years ended December 31, 2025, or 2024. The Company has also authorized 1,000,000 shares of $10 par value second cumulative preferred voting stock. No shares have been issued as of December 31, 2025 or 2024.
Common Stock—The Company has authorized 180,000,000 shares of no par value common stock. There were 62,081,391 shares issued as of December 31, 2025 and December 31, 2024. No new shares were issued during the years ended December 31, 2025, or 2024. There were 38,912,629 and 39,260,080 shares outstanding at December 31, 2025 and 2024, respectively.
Treasury Shares—The Company's 2024 stock repurchase program authorizes up to $200.0 million to repurchase MSA common stock in the open market and in private transactions. The share repurchase program has no expiration date. The maximum number of shares that may be purchased is calculated based on the dollars remaining under the program and the respective month-end closing share price. Under this and prior stock repurchase programs, there were 501,420 shares repurchased during 2025, 166,292 shares repurchased during 2024, and no shares repurchased during 2023. There were 23,168,762 and 22,821,311 Treasury shares at December 31, 2025 and 2024, respectively.
The Company issues Treasury shares for all stock based benefit plans. Shares are issued from Treasury at the average Treasury share cost on the date of the transaction. There were 216,350 and 149,179 Treasury shares issued for these purposes during the years ended December 31, 2025 and 2024, respectively.
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Common stock activity is summarized as follows:
Shares Dollars
(Dollars in thousands) Issued Treasury CommonStock TreasuryCost(a)
Restricted stock expense — — 9,476 —
Restricted stock forfeitures — — (1,414) —
Stock option expense — — 11 —
Stock option forfeitures — — (11) —
Performance stock expense — — 23,546 —
Performance stock forfeitures — — (1,585) —
Employee stock purchase plan shares issued — 7,140 849 114
Treasury shares purchased — (28,649) — (3,961)
Restricted stock expense — — 15,769 —
Restricted stock forfeitures — — (4,530) —
Stock option expense — — 41 —
Stock option forfeitures — — (41) —
Performance stock expense — — 8,394 —
Performance stock forfeitures — — (1,634) —
Employee stock purchase expense — — 186 —
Employee stock purchase plan shares issued — 8,871 1,215 148
Treasury shares purchased — (40,019) — (7,408)
Restricted stock expense — — 12,202 —
Restricted stock forfeitures — — (2,223) —
Stock option forfeitures — — (1) —
Performance stock expense — — 8,041 —
Performance stock forfeitures — — (3,179) —
Employee stock purchase plan shares issued — 15,278 1,756 286
Employee stock purchase plan expense — — 356 —
(a)Excludes treasury cost related to preferred stock.
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Note 9—Segment Information
The Company is organized into four geographical operating segments that are based on management responsibilities: Northern North America; Latin America; Europe, Middle East & Africa; and Asia Pacific. The operating segments have been aggregated (based on economic similarities, the nature of their products and solutions, end-user markets and methods of distribution) into two reportable segments: Americas and International.
The Americas segment is comprised of our operations in Northern North America and Latin America geographies. The International segment is comprised of our operations in all geographies outside of the Americas. Certain global expenses are allocated to each segment in a manner consistent with where the benefits from the expenses are derived. General and administrative expenses incurred in our corporate headquarters, costs associated with corporate development initiatives, legal expense, interest expense, foreign exchange gains or losses and other centrally-managed costs are considered corporate expenses and are not allocated to the reportable segments.
The Company's sales are allocated to each segment based primarily on the country destination of the end-customer.
The Company adopted ASU No. 2023-07 (“ASU 2023-07”), Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures for the year ended December 31, 2024 and applied it retrospectively for all prior periods presented.
Adjusted operating income is the measure used by the chief operating decision maker, identified as our President and Chief Executive Officer, to evaluate reportable segment performance and identify opportunities when allocating resources. Adjusted operating income is defined as operating income excluding restructuring charges, currency exchange, product liability expense, loss on divestiture of Mine Safety Appliances Company, LLC ("MSA LLC"), net cost for product-related legal matter, transaction costs and acquisition-related amortization.
The accounting principles applied at the operating segment level in determining the segment measure of profit or loss are the same as those applied at the consolidated financial statement level. Sales and transfers between operating segments are accounted for at market-based transaction prices and are eliminated in consolidation.
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Reportable segment information is presented in the following table:
Less:
Noncash items:
Less:
Noncash items:
Less:
Noncash items:
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A reconciliation of total Adjusted operating income from reportable segments to Income before income taxes is presented in the following table:
Less:
Net cost for product-related legal matter — 5,000 —
Loss on divestiture of MSA LLC (Note 21) — — 129,211
Product liability expense (Note 21) — — 3
Geographic information on Net sales to external customers, based on country of origin:
Geographic information on tangible long-lived assets, net, based on country of origin:
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Total Net sales by product category was as follows:
2025 Consolidated Americas International
(In thousands) Dollars Percent Dollars Percent Dollars Percent
2024 Consolidated Americas International
(In thousands) Dollars Percent Dollars Percent Dollars Percent
2023 Consolidated Americas International
(In thousands) Dollars Percent Dollars Percent Dollars Percent
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Note 10—Earnings per Share
Basic earnings per share attributable to MSA Safety Incorporated common shareholders is computed by dividing net income, after the deduction of preferred stock dividends and undistributed earnings allocated to participating securities, by the weighted average number of common shares outstanding during the period. Diluted earnings per share assumes the issuance of common stock for all potentially dilutive share equivalents outstanding not classified as participating securities. Participating securities are defined as unvested stock-based compensation awards that contain nonforfeitable rights to dividends.
Preferred stock dividends (41) (41) (41)
Stock options and other stock-based awards 130 164 166
Antidilutive stock-based awards — — —
Earnings per share:
Note 11—Income Taxes
The Company adopted ASU No. 2023-09 (“ASU 2023-09”), Improvements to Income Tax Disclosures, applying it prospectively for the year ended December 31, 2025.
Components of income before income taxes
Provision for income taxes
Current
Deferred
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Below is a tabular rate reconciliation pursuant to the disclosure requirements of ASU 2023-09 for the year ended December 31, 2025:
(in thousands, except percentages) Amount Percent
U.S. federal statutory income tax $ 76,944 21.0 %
State and local income taxes, net of federal income tax effect(1) 6,652 1.8 %
Foreign tax effects 5,700 1.6 %
Nontaxable or nondeductible items 2,606 0.7 %
Effect of cross-border tax laws (149) — %
Changes in unrecognized tax benefits (420) (0.1) %
Other 32 — %
Provision for income taxes $ 87,474 23.9 %
Below is a reconciliation of the U.S. federal income tax rates to the Company's effective tax rate for the years ended December 21, 2024 and 2023:
U.S. federal income tax rate 21.0 % 21.0 %
State income taxes-U.S. 2.9 % 3.7 %
Taxes on non-U.S. income 1.1 % (0.6) %
Nondeductible compensation 0.5 % 1.9 %
Divestiture (Note 21) — % 46.6 %
Valuation allowances (1.2) % (0.2) %
Research and development credit (0.7) % (0.8) %
Employee share-based payments (0.2) % (0.4) %
Foreign exchange on entity closures (0.1) % — %
Effective income tax rate 24.0 % 71.6 %
Disclosed below is a summary of income taxes paid by jurisdiction pursuant to the disclosure requirements of ASU 2023-09 for the year ended December 31, 2025:
United States - Federal $ 48,993
United States - State and local 11,798
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Components of deferred tax assets and liabilities:
December 31,
Deferred tax assets
Capitalized research and development $ 33,915 $ 31,030
Net operating losses and tax credit carryforwards 8,078 6,715
Accrued expenses and other reserves 6,419 5,006
Reserve for doubtful accounts 1,391 1,071
Deferred tax liabilities
At December 31, 2025, we had net operating loss carryforwards of approximately $30.0 million. All net operating loss carryforwards without a valuation allowance may be carried forward for a period of at least six years.
A reconciliation of the change in the tax liability for unrecognized tax benefits for the years ended December 31, 2025 and 2024 is as follows:
Adjustments for tax positions related to the current year — 51
Adjustments for tax positions related to prior years 3,347 (607)
The total amount of unrecognized tax benefits, if recognized, would reduce our future effective tax rate. We have $1.5 million in recognized tax benefits associated with these liabilities in 2025 and had no recognized tax benefits associated with these liabilities in 2024.
We recognize interest related to unrecognized tax benefits in interest expense and penalties in operating expenses. Our liability for accrued interest and penalties related to uncertain tax positions was $0.5 million at December 31, 2025 and $0.2 million at December 31, 2024.
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 consolidated financial statements.
On July 4, 2025, the United States enacted into law the One, Big, Beautiful Bill Act ("the Act"). The Act makes permanent key elements of the Tax Cuts and Jobs Act, including 100% bonus depreciation, domestic research cost expensing, and the business interest expense limitation. The Act has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. The Act did not have a material impact on the financial statements in 2025.
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We file income tax returns in the U.S. federal jurisdiction, and various state and foreign jurisdictions. With few exceptions, we are no longer subject to U.S. federal, state, and local, or non-U.S. income tax examinations by tax authorities for years prior to 2021.
The Organization for Economic Co-operation and Development (OECD) framework for a global minimum corporate tax rate of 15% for companies with global revenues above €750.0 million (referred to as Pillar 2), with effective dates beginning in January 2024, has been enacted by a number of foreign jurisdictions. We meet the overall revenue threshold and fall within the scope of Pillar 2. As such, we have complied with the requirements of the legislation and the application of Pillar 2 resulted in additional tax expense of $2.2 million and $1.1 million, for the years ended December 31, 2025 and 2024, respectively.
Note 12—Stock Plans
The 2023 Management Equity Incentive Plan and its predecessor, the 2016 Management Equity Incentive Plan, provide for various forms of stock-based compensation for eligible employees through, in the case of the 2023 Management Equity Incentive Plan, May 2033, including stock options, restricted stock awards, restricted stock units and performance stock units. The 2024 Non-Employee Directors' Equity Incentive Plan and its predecessor, the 2017 Non-Employee Directors’ Equity Incentive Plan provides for grants of stock options and restricted stock to non-employee directors through, in the case of the 2024 Non-Employee Directors' Equity Incentive Plan, May 2034. Stock options are granted at market prices and expire after ten years. The 2014 MSA Employee Stock Purchase Plan (“ESPP”) permits eligible employees to purchase the Company's shares of common stock at a 15% discount from fair market value, semi-annually, from the stock market. The ESPP plan is considered a compensatory plan. The discount is recorded as a component of selling, general and administrative expense in the Company's Consolidated Statements of Operations. As of December 31, 2025, there were 1,612,699; 79,844; and 53,126 shares, respectively, reserved for future grants under the management and non-employee directors’ equity incentive and employee stock purchase plans.
Stock options are exercisable beginning three years after the grant date. Restricted stock and restricted stock units are granted without payment to the Company and generally vest three years after the grant date. Restricted stock and restricted stock units are valued at the market value of the stock on the grant date. Performance stock units with a market condition are valued at an estimated fair value using a Monte Carlo simulation model. The final number of shares to be issued for performance stock units may range from zero to 240% of the target award based on achieving the specified performance targets over the performance period and further range based upon the achieved market metric over the performance period. In general, unvested stock options, restricted stock and performance stock units are forfeited if the participant’s employment with the Company terminates for any reason other than retirement, death or disability. We issue Treasury shares for stock option exercises and grants of restricted stock and performance stock. Please refer to Note 8—Capital Stock for further information regarding stock compensation share issuance.
Stock-based compensation expense was as follows:
Employee stock purchase program 356 186 —
We did not capitalize any stock-based compensation expense, and all expense is included in Selling, general and administrative expense in the Consolidated Statements of Income.
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A summary of option activity follows:
Shares WeightedAverageExercise Price Exercisable atYear-end
For various exercise price ranges, characteristics of outstanding and exercisable stock options at December 31, 2025, were as follows:
Stock Options Outstanding and Exercisable
Range of Exercise Prices Shares Weighted-Average
Exercise Price Remaining Life
Cash received from the exercise of stock options was $0.6 million, $0.5 million and $1.5 million for the years ended December 31, 2025, 2024 and 2023, respectively. The tax benefit we realized from these exercises was $0.7 million, $0.6 million and $0.9 million for the years ended December 31, 2025, 2024 and 2023, respectively.
Stock options become exercisable when they are vested. The aggregate intrinsic value of stock options exercisable and outstanding at December 31, 2025 was $0.2 million.
Restricted stock awards and restricted stock units are valued at the market value of the stock on the grant date. A summary of restricted stock unit activity follows:
Shares Weighted AverageGrant DateFair Value
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A summary of performance stock unit activity follows:
Shares Weighted AverageGrant DateFair Value
The 2025 performance adjustments above relate primarily to 2022 performance unit awards which vested in the first quarter of 2025 at 220% of the target award based on both cumulative performance against EBITDA margin and revenue growth targets and MSA's TSR during the three-year performance period.
During the years ended December 31, 2025, 2024 and 2023, the total intrinsic value of stock options exercised (the difference between the market price on the date of exercise and the option price paid to exercise the option) was $1.4 million, $1.5 million and $3.7 million, respectively. The fair values of restricted stock vested during the years ended December 31, 2025, 2024 and 2023 were $9.7 million, $8.3 million and $5.4 million, respectively. The fair value of performance stock units vested during the years ended December 31, 2025, 2024 and 2023 was $17.0 million, $13.5 million and $6.8 million, respectively.
On December 31, 2025, there was $17.3 million of unrecognized stock-based compensation expense. The weighted average period over which this expense is expected to be recognized was approximately 1.5 years.
Note 13—Long-Term Debt
Long-Term Debt
December 31,
Long-term debt, net of debt issuance costs $ 572,709 $ 481,622
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On April 1, 2025, the Company entered into a Fifth Amended and Restated Credit Agreement (the “Revolving Credit Facility" or "Facility”) with a capacity of $1.3 billion. Under the amended agreement, the Company may elect either a Base rate of interest (“BASE”) or an interest rate based on Secured Overnight Financing Rate (“SOFR”). The BASE is a daily fluctuating per annum rate equal to the highest of (i) the Overnight Bank Funding Rate, plus 0.5%, (ii) the Prime Rate (iii) the Daily Simple SOFR rate, plus 1.00%. The Company pays a credit spread of 0 to 175 basis points based on the Company’s net leverage ratio and elected rate (BASE or SOFR). The Company has a weighted average revolver interest rate of 4.56% as of December 31, 2025. At December 31, 2025, $1.0 billion of the existing $1.3 billion Revolving Credit Facility was unused, including letters of credit issued under the facility. The facility also provides an accordion feature that allows the Company to access an additional $500.0 million of capacity pending approval by MSA’s board of directors and from the bank group.
On July 1, 2024, the Company entered into Amendment No. 3 to the Third Amended and Restated Multi-Currency Note Purchase and Private Shelf Agreement (the “Prudential Note Agreement”) with PGIM, Inc. (“Prudential”). The Prudential Note Agreement provided for (i) the issuance of $100.0 million of 2.69% Series C Senior Notes due July 1, 2036 and (ii) the establishment of an uncommitted note issuance facility whereby the Company may request, subject to Prudential’s acceptance in its sole discretion, the issuance of up to $335.0 million aggregate principal amount of senior unsecured notes. The Company has outstanding £36.6 million (approximately $49.3 million at December 31, 2025) of 3.4% Series B Senior Notes due January 22, 2031. Remaining maturities of this note are £6.1 million (approximately $8.2 million at December 31, 2025) due annually through January 2031.
On July 1, 2024, the Company entered into Amendment No. 3 to the Second Amended and Restated Master Note Facility (the “NYL Note Facility”) with NYL Investors. The NYL Note Facility provided for (i) the issuance of $100.0 million of 2.69% Series A Senior Notes due July 1, 2036 and (ii) the establishment of an uncommitted note issuance facility whereby the Company may request, subject to NYL Investors’ acceptance in its sole discretion, the issuance of up to $200.0 million aggregate principal amount of senior unsecured notes.
Coincident with the amendment to the Revolving Credit Facility on April 1, 2025, the Company entered into Amendment No. 4 to the Prudential Note Agreement and Amendment No. 4 to the NYL Note Facility, in each case to conform to the changes made in the Revolving Credit Facility.
On June 29, 2023, the Company issued $50 million of 5.25% Series B Senior Notes due July 1, 2028, pursuant to the NYL Note Facility (the "Notes"). The Notes bear interest at 5.25% per annum, payable semi-annually, and mature on July 1, 2028. The Notes provide for a principal payment of $25 million on July 1, 2027, with the remaining $25 million due on July 1, 2028. The Notes may be redeemed at the Company’s option prior to their maturity at a make-whole redemption price calculated as provided in the NYL Note Facility. The proceeds of the Notes were used on June 29, 2023, to pay down an equivalent amount of borrowings under the Company’s Revolving Credit Facility with PNC Bank, National Association, as Administrative Agent.
On January 5, 2023, the Company entered into a new $250 million term loan facility (the "Term Loan Facility") to fund the divestiture of MSA LLC. In conjunction with the updated Revolving Credit Facility signed on April 1, 2025, MSA converted the balance of the Term Loan Facility to the Revolving Credit Facility, closing the Term Loan Facility. Under the agreement, the Company elected either BASE or an interest rate based on SOFR. The Company paid a credit spread of 0 to 200 basis points based on the Company's net leverage ratio and elected rate.
The Revolving Credit Facility, Prudential Note Agreement and NYL Note Facility require the Company to comply with specified financial covenants, including a requirement to maintain a minimum fixed charges coverage ratio of not less than 1.50 to 1.00 and a consolidated leverage ratio not to exceed 3.50 to 1.00; except during an acquisition period, defined as four consecutive fiscal quarters beginning with the quarter of acquisition, in which case the consolidated net leverage ratio shall not exceed 4.00 to 1.00; in each case calculated on the basis of the trailing four fiscal quarters. In addition, the agreements contain negative covenants limiting the ability of the Company and its subsidiaries to incur additional indebtedness or issue guarantees, create or incur liens, make loans and investments, make acquisitions, transfer or sell assets, enter into transactions with affiliated parties, make changes in its organizational documents that are materially adverse to lenders or modify the nature of the Company's or its subsidiaries' business.
As of December 31, 2025, MSA was in full compliance with the restrictive covenants under its various credit agreements.
Approximate maturities on our long-term debt over the next five years are $8.2 million in 2026, $33.2 million in 2027 and 2028, $8.2 million in 2029, $293.5 million in 2030 and $208.2 million thereafter.
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The Company had outstanding bank guarantees and standby letters of credit with banks as of December 31, 2025, totaling $9.7 million, of which $1.5 million relate to the revolving credit facility. The 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 December 31, 2025, the Company has $0.9 million of restricted cash in support of these arrangements.
On May 6, 2025, the Company acquired M&C in a transaction valued at approximately $189 million, net of cash acquired. Refer to Note 15—Acquisitions for further information. The acquisition was financed by $137.3 million under the Revolving Credit Facility and cash on hand.
Note 14—Goodwill and Intangible Assets
Changes in goodwill during the years ended December 31, 2025 and 2024, were as follows:
Additions and measurement period adjustments (Note 15) 91,616 —
At December 31, 2025, goodwill of $481.4 million and $250.2 million related to the Americas and International reportable segments, respectively.
Changes in intangible assets, net of accumulated amortization, during the years ended December 31, 2025 and 2024, were as follows:
At December 31, 2025, the intangible assets balance includes a trade name related to the Globe acquisition with an indefinite life totaling $60.0 million.
Intangible asset amortization expense over the next five years is expected to be approximately $21.9 million in 2026, $21.7 million in 2027, $21.3 million in 2028, $20.6 million in 2029, and $18.3 million in 2030.
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Note 15—Acquisitions
Acquisition of M&C
On May 6, 2025, the Company acquired 100% of the common stock of M&C in an all-cash transaction valued at approximately $189 million, net of cash acquired.
Headquartered in Ratingen, Germany, M&C provides a comprehensive range of gas analysis systems that detect, measure and monitor gases in critical environments. M&C's product portfolio includes systems and solutions for gas sampling, gas conditioning, as well as advanced process control. M&C products and systems are used in a wide range of industries and applications, including energy, chemicals, utilities, manufacturing, food and beverage, and other industrial applications.
M&C’s operating results are included in our consolidated financial statements from the acquisition date within the Americas and International reportable segments. The acquisition qualified as a business combination and was accounted for using the acquisition method of accounting.
The following table summarizes the preliminary fair values of the M&C’s assets acquired and liabilities assumed at the date of the acquisition:
Current assets (including cash of $10.0) $ 38.8
Property, plant and equipment and other noncurrent assets 50.0
Customer relationships and other intangible assets 66.6
Total assets acquired $ 247.0
Deferred tax liability (24.9)
Other liabilities (22.8)
Total liabilities assumed $ (47.7)
Net assets acquired $ 199.3
As of December 31, 2025, the purchase accounting for M&C is substantially complete, but subject to change based on management's continued review of estimates and assumptions reflected in preliminary valuation data or receipt of additional information related to tax balances and liabilities assumed.
Assets acquired and liabilities assumed in connection with the acquisition were recorded at their preliminary fair values. Fair values were determined by management, based in part on an independent valuation performed by a third-party valuation specialist. The valuation methods used to determine the fair value of intangible assets included the excess earnings approach for customer relationships using customer inputs and contributory charges; the relief from royalty method for trade name and developed technologies and the cost approach for assembled workforce, which is included in goodwill. Assumptions and estimates were involved in the application of these valuation methods, including forecasted sales volumes and prices, royalty rates, costs to produce, tax rates and amortization tax benefits, capital spending, discount rates, customer attrition rates, technology obsolescence assumptions and working capital changes. Cash flow forecasts were generally based on M&C pre-acquisition forecasts, coupled with estimated MSA financial synergies. Identifiable intangible assets with finite lives are subject to amortization over their estimated useful lives. The customer relationships, developed technology, and trade name acquired in the M&C transaction are being amortized over periods of 20 years, 8 years, and 20 years, respectively. Estimated future amortization expense related to the identifiable intangible assets is approximately $4 million annually for 2026 through 2030, and $43.8 million thereafter.
Goodwill was calculated as the excess of the purchase price over the fair value of net assets acquired and represents the future economic benefits arising from other assets acquired that could not be individually identified and separately recognized. Among the factors that contributed to a purchase price in excess of the fair value of the net tangible and intangible assets acquired were the acquisition of an assembled workforce, the expected synergies and other benefits that we believe will result from combining the operations of M&C with our operations. Goodwill of $91.6 million related to the M&C acquisition was recorded, with $57.9 million and $33.7 million allocated to the International and Americas reportable segments, respectively. This Goodwill is nondeductible for tax purposes.
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Our results as of December 31, 2025, include strategic acquisition costs of $10.5 million, including $9.2 million related to the M&C acquisition. Our results as of December 31, 2024 and 2023, include $0.9 million and $1.0 million, respectively, of strategic acquisition costs. These costs are reported in selling, general, and administrative expenses.
The operating results of this acquisition have been included in our consolidated financial statements from the acquisition date through December 31, 2025. Our results as of December 31, 2025, include net sales and net loss of $41.0 million and $4.8 million, respectively, attributable to this acquisition.
The following unaudited pro forma information presents our combined results as if the M&C acquisition had occurred on January 1, 2024. The unaudited pro forma financial information was prepared to give effect to events that are (1) directly attributable to the acquisition; (2) factually supportable; and (3) expected to have a continuing impact on the combined Company's results. There were no material transactions between MSA and M&C during the periods presented that are required to be eliminated in the unaudited pro forma condensed combined financial information. The unaudited pro forma condensed combined financial information does not reflect any cost savings, operating synergies, or revenue enhancements that the combined companies may achieve as a result of the acquisition or the costs to integrate the operations or the costs necessary to achieve cost savings, operating synergies, or revenue enhancements.
(In millions, except per share amounts) 2025 2024
Basic earnings per share $ 7.17 $ 7.41
Diluted earnings per share $ 7.15 $ 7.38
The unaudited pro forma combined financial information is presented for informational purposes only and is not intended to represent or be indicative of the combined results of operations or financial position that we would have reported had the acquisition been completed as of the date and for the periods presented, and should not be taken as representative of our consolidated results of operations or financial condition following the acquisition. In addition, the unaudited pro forma condensed combined financial information is not intended to project the future financial position or result of operations of the combined Company.
The unaudited pro forma combined financial information was prepared using the acquisition method of accounting under existing U.S. GAAP. MSA has been treated as the acquirer.
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Note 16—Pensions and Other Post-retirement Benefits
We maintain various defined benefit and defined contribution plans covering the majority of our employees. Our principal U.S. plan is funded in compliance with the Employee Retirement Income Security Act ("ERISA"). It is our general policy to fund current costs for the international plans according to local requirements and general market practice. We provide health care benefits and limited life insurance for certain retired employees who are covered by our principal U.S. defined benefit pension plan until they become Medicare-eligible.
Defined benefit pension plan and other post-retirement benefits plan information is provided in the following tables:
Pension Benefits Other Benefits
Change in Benefit Obligations
Plan amendments 605 (20) — —
Acquisitions 8,554 — — —
Change in Plan Assets
Fair value of plan assets at January 1 $ 580,364 $ 563,449 $ — $ —
Administrative expenses paid (56) (62) — —
Currency translation 546 (1,007) — —
Funded Status
Unrecognized prior service cost 794 728 — —
Amounts Recognized in the Balance Sheets
Amounts Recognized in Accumulated Other Comprehensive Loss
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Pension Benefits Other Benefits