Mine Safety Baird 2026 Global Industrial Conference

Great. Thanks, Quinn, and thanks for the Baird team for hosting us. Thanks for everybody's interest in MSA. We're delighted to be here. I'll start off with the obligatory safe harbor comments about the forward-looking statements, certainly in GAAP financials. Just, Quinn, a couple minutes here for those that may not be familiar, if you're learning about the story, we are a purpose-driven company. We're 112 years old, driven by a singular purpose of our mission. That mission allows us to protect individuals and the environment and assets with all of the innovation that our team drives. It's customer-based. It enables us to protect over 40 million workers a year, and that's the impact that our team's able to have based on what the customers expect from us and, frankly, rely on us.

If you look at the business overall, with some of these metrics on the left, we're able, through that product innovation, to drive some really nice, attractive margins through our third quarter, and we just finished an acquisition of Autronica. Our leverage post that acquisition is about 1.7, and we continue to do really well across the globe. We've got two business segments that you can see here, and from a trailing 12-month, they're actually changing a little bit because of the Autronica business. When you think pro forma, it's about 37% for international because it's a European-based business. We have three product categories that we support along with these markets. Inside of each of these product categories, we innovate a number of different areas where we're trying to meet the needs customers have with solutions in that space of safety that Quinn referenced earlier.

Again, we protect individuals, and we protect assets, and we protect the environment through things like monitoring and refrigeration, et cetera. Just a quick recap on the third quarter. We had double-digit sales growth in the third quarter, supported by certainly our mid-single-digit organic growth, as well as the strong growth we had from the acquisition. We had great examples of the innovation. We had our first sales of our new G1 City Edition SCBA, which launched in the third quarter, and then we had our largest-ever order for the MSA+ Connected Solution, which is a really good example of how the market is accepting technology and continues to see the value of innovation. Talked about the Autronica acquisition. I'm sure we'll have some commentary on that later. We're delighted to have that team join MSA.

We think it's going to be a strong portfolio add for the long term, and we'll continue to allocate capital in a disciplined manner. We think we're trying to do that as effectively as possible. Julie and I always talk about our roles to be effective allocators of the capital that we are stewarding, and that's our focus going forward. To just summarize, I think I've talked about the mission. We're unique in that regard. It helps us with our talent. We're singularly focused on that mission to make sure we are a purpose-driven company. We use that strategy to really drive our growth and ensure that we're executing effectively. I think that's going to continue with our business system, and we're really optimistic about the future. Quinn, we're open for questions.

Yeah, we think there is some of that playing out. In the third quarter, we did have our first order from a department, a customer that was replacing from the 2015 period. What we look at is really, we've got decent line of sight to the fire service, to the opportunities, and if you look at our pipeline of opportunities and business, we see some of those starting to get sprinkled into that pipeline. As you go forward, the expectation we have is you'll see more of that play out. 2027, certainly, as we've talked before, we think you'll see a little bit of that kind of eke in, and then a graduation of that continuing from there. Yeah, I think if you look at the average life cycle of an SCBA, it's typically 12 to 15 years.

We're at the 12-year point when you think of 2027, so we're very optimistic.

Detection continues to be a strong business. We have a very challenging comp. We had a challenging comp in the third quarter, but really tough in the fourth quarter. We had, as you may recall, we had that customer shipment last year where a very large customer asked us to ship an entire year's worth of product based on funding they had available. That's just the nature of what we, excuse me, what we had play out last year. But the underlying business, detection business is very strong. The Middle East war certainly has put a damper year-to-date. It's affected our revenue by about a point and a half for the total enterprise, and we're expecting that to continue to be a headwind in the fourth quarter.

But when that kind of tails off, and hopefully sooner than later, because those people impacted in that region, that's got to be very, very challenging, and we know for our team it is. We see that as an opportunity. Don't expect it to be a snapback in 2027, because there's a lot of work that they have to do, that region has to do to get that recovery really going. What I'd expect to see is some momentum building, and over time, more and more of that momentum build. Hopefully, for the region as well as for the business situation, you start to see some investment go back into the region. I think longer term, I'm very optimistic about the Middle East. It's just a matter of getting through this situation with the conflict.