Thank you for joining us for the MSA Safety presentation. I'm Rob Mason, the Senior Analyst at Baird, covering Advanced Industrial Equipment, which also includes MSA Safety, which is a leading provider of pure and a pure play of sophisticated safety equipment products. The company targets high-end personal protection application in six core product areas in which it has leading market shares and where it's earned tremendous brand loyalty from its customers. So with us this morning, we have Nish Vartanian, who's the Chairman and CEO of MSA, and Lee McChesney, who is Senior Vice President and CFO, both up on stage with me. I should mention Steve Blanco, the President and COO, is also in the audience with us, and then, as well as Chris Hepler, who's heads up corporate development and investor relations for MSA. Nish is gonna open, and Lee as well, will open with a few comments. And then we'll be able to take your questions up here on stage, and if you have any of those, feel free to send those up via the iPad. So, Nish, I'll turn it over to you for- Great. a few remarks. All right. Thanks, Rob, and thanks for your interest in MSA and taking time to get to know a little bit, get to know a little bit more about us. Excellent. You know, before I get kicked off, just a couple quick words about MSA, a few takeaways for you before I get into the presentation. You know, number one, we're a mission-based company. So our mission is that men and women may work in safety, and that they, their families, and communities may live in health throughout the world. That's been our mission for over 110 years. Mm-hmm. And that hasn't changed. We recruit, retain, and motivate our workforce through that mission. So we get up in the morning, every day, our feet hit the ground, we think about how we protect people and how we protect the environment. Mm-hmm. So that's number one. Number two is, you know, while we're focused on safety, we're very diversified in the markets we serve and in the business that we have. So the business is very durable. Number one, the largest market segment we have is the fire service market, which represents about 37%-38% of our business. That's what the funding there is municipal funding, municipal-based funding. Recessions, industrial recessions really don't impact that business and the business cycle. We've got a strong number one position in protecting firefighters head to toe on a global basis. The second segment that's important to us is detection. So that's looking for, smelling for, listening for gas leaks. You know, those gas leaks prevent hazards from getting into the environment and also protecting individuals. And those products are used anywhere from utility plants, underground mines, refineries, chemical plants, pharmaceutical facilities, refrigeration systems, where we protect Freon, where you have refrigeration, and that's a segment that also represents about 35% of our portfolio. And then the last part of our portfolio is industrial PPE products. That's industrial hard hats, fall protection, respiratory protection, and that represents, you know, mid-20s of our portfolio. So really well-diversified in the products, geographies, markets we serve. And then the third component is you look at our balance sheet, it's really strong. We're in a strong position with the balance sheet, to continue to invest in this business as we go forward. So we're well-positioned, we believe, going into what could be a recession or, if nothing else, an economic slowdown. We think the balance in that portfolio protects us really well. Next slide. Mm-hmm. Just real quick to remind everybody on Safe Harbor, Safe Harbor, and this is also being webcast. Just a quick reminder on that before I get to the next slide, and the next slide, Lee. You know, revenue, about $1.7 billion. Margins, 46.7% on our gross profit. We work really hard from a continuous improvement standpoint to improve our business from a margin standpoint when we get to the MSA business system. Adjusted up margins have improved nicely over the last few years. We reinvest in this business through R&D. We really work hard to find unique solutions to our customers' problems. So when you go through our product portfolio, we have a number of patents. Typically, we get 20-30 patents per year. We have over 200 active patents today, and that R&D piece is critical for us in getting new products to market to solve customer problems, to gain some market share. Over 5,000 employees, we've paid a dividend for over 50 years, I believe 54 years, and running now an increasing dividend, so really a resilient market. Next slide. As I talked about with the segments of the business, the fire service market, we're number one across the board in these product categories that we serve. The self-contained breathing apparatus, thermal imaging cameras, fire helmets, turnout gear. We have unique distribution on a global basis to penetrate markets. We have a discrete sales force that's that sells specifically to the fire service as we take those to market. The gas detection business, you know, that business started in the underground mines with the rest of our business, where we were looking for methane and CO. You know, today, as I mentioned, we use those detection products in a broad range of product areas, you know, in odd places like the Smithsonian Institution, all the way up to the space station, where we're looking for hydrogen leaks up in the space station, for NASA and other unique applications like that. We continue to innovate within the gas detection area. You know, some of the key things that customers are looking for is quick response time on sensors, longer life sensors, and of course, ease of use and less calibration time and maintenance on those products. And then, of course, the industrial PPE—you know, you'll often see the iconic V-Gard hard hat. That's a hard hat that has a V molded in it. You open up the Wall Street Journal and see industrial workers; that's part of the industrial work uniform. You'll see that V displayed prominently, or if you're just driving down the road and you see roadway construction, you'll typically see some V-Gards in the construction area. And then, of course, fall protection. Fall protection's a unique opportunity for us, and that's the one category that we're number three in that category. We think we have a long way to go to gain some market share. We've shown some good double-digit growth and gained some share. We've doubled our market share over the last five years. We think we have some room to run there to continue to bring unique solutions to our customers, to help protect workers. And that, you know, falls are still the number 1 killer for construction workers, and we think that there's some nice opportunity and unique things we can bring to market to help that. With that, I'll flip things over to Lee to talk a little bit about the business and how we've performed here. Yeah, so throughout the year, we've been updating our sales outlook. So if we go back to the beginning of the year, we talked about, you know, our, our core investment thesis, which is mid-single-digit growth, 30%-40% incrementals, and then, and then really nice, robust cash flow. Through the year, those businesses, and Nish just walked through it, performed well. So the fire business markets are still doing quite well. The detection space is our highest growth segment. We continue to grow that business, which also is our highest margin category. And then, you have the head and fall protection business, which has turned out to be stronger than we expected. That was a business we probably thought this year was gonna be quite flattish, just given the economic cycle. I think as we've all seen, that's turned out to be better. So that business performing better, we've actually made some really nice progress on the supply chain. We've continued to do a good job with just managing through price and cost environment, and we've elevated our sales outlook to the year to being in this mid-teens area. With that as well, we've made a lot of progress on margins. It's a multi-year journey. We touched a little bit earlier just on the business system. We've been bringing that to life. At first, that was how we combated through COVID and FX challenges and things like that, and kept our gross margins still in a healthy place, and in many cases, stable, growing a little bit. You've really seen the last 18 months, this progress with pricing, with productivity, with continued progress in SG&A to a really nice level, where we've now crossed into an operating margin territory in the low 20s%, which was one of our goals we set several years ago. So, certainly a good year. As we look forward, we're still confident in that investment thesis. Over a cycle, we're a mid single-digit growth company. We have a very resilient portfolio. That fire business typically does well, really, no matter what's going on in the macro cycle. Within the detection business, we had the fixed detection business, which is attached to a building, so a lot of recurring revenue that comes with that business. You attach that to a building, there's a 10-year+ cycle. So again, no matter what's going on in the economy, you still gotta protect in these critical safety environments we're in. And then, you know, we'll see how the industrial PPE business does, but in the end, that really sticky part of the business still perseveres, and we end up typically in a still positive growth environment, even in a challenged macro environment. So, you know, that's the business today. Again, come back to, we are 100% focused in these, in these three safety businesses. We've really built the business system out to really improve just how we perform in that, but in the end, we are focused on keeping people safe, keeping places safe, and doing it in a really good way for the environment. With that, I'll pass it to- Perfect ... Q&A. Perfect. Again, if anybody has any questions, send those up. We're at session4@rwbaird.com. Lee, you kinda touched on it- Mm-hmm ... but maybe just get your, your thoughts overall as the year has played out. You know, it's played out better than- Mm-hmm ... you know, we were talking about at the beginning of the year. We came into the year with some elevated backlog, but, you know, the orders, by and large, the orders have kinda matched- Mm-hmm ... sales closely, relatively closely moving through the year. So as we think about the momentum in each of those three areas as you go into 2024- Yeah ... maybe industrial PPE is the one that has, I guess, the biggest question mark, maybe the shortest- Yeah ... level of backlog. Is that fair as well? It's fair. I mean, overall, the book- to- bill for through quarters years is just slightly over one, so we've had you know, healthy orders environment. You know, again, I think that speaks to the resilience of the business, but you're right. The fire detection business been, you know, it's a really good, healthy funding environment, that's still planning to continue. That's our mindset as we look forward here. In the detection business, certainly the fixed piece is, you know, it has the dynamics, I talked about it earlier. The portable could have a little bit of flux, depending on what goes on with projects and things like that. But, you know, the head and fall protection business, you know, does move with the macro world. As, as Nish noted, you know, the hard hat business, we serve a lot of spaces, so it's not just about one segment. So you could have maybe some manufacturing softness, but if the infrastructure projects still continue, as Nish mentioned, you see a hard hat. But, you know, fall protection is also a space where we can grow some share, and, you know, that could actually have us perform a little bit better than maybe the macro does as well. But that's, that is our caution area as we look forward. Okay. Maybe to start, deeper discussion just around the fire service business- Mm-hmm ... because that has been the standout business this year. Do you think you've gained some share this year? And if so, you know, the sources of that share. Well, maybe I'll stop there. I have a follow-up, but go ahead. Sure. So in the fire service business, you know, we continue to do well in that space. You know, the G1 breathing apparatus, which we launched in 2015, has performed really well in the marketplace. You know, those are long buying cycles for the fire service. That product is you typically buy a product like that and keep it for 12-15 years. So we've done really well as new opportunities have popped up. You know, some of you who follow the story probably have seen L.A. City, L.A. County, and a number of other, London Fire Brigade. So we've had a number of nice wins, but that also helps us with winning, They've called the halo effect of winning other businesses within that geography, in the smaller departments and the surrounding communities within those areas. We continue to do really well in retaining the share that we had. So, you know, what we like to look at in the performance of that, one out of every two wins that we've had is a competitive conversion. So we've done a nice job in improving our market share, and that continues here into 2023, and we think we'll continue to have success in 2024. The budgets remain really well. In Globe, in this year with our Globe, our turnout gear, we've done a nice job in gaining some share there. You know, we're excited about some new products we'll be launching for the fire service that will enhance our position in a couple of areas. So we think fire has a bright outlook for it in 2024, regardless as to what the economy does. We think funding's gonna remain in place, be solid. There's federal funding that comes into the market, and that's all well intact, and we think we'll be in a good position to reap some of that. You know, not just here in the North American market, but on a global basis. With some of the key wins that we've had, there's a few more coming up that we think we can have success with. You know, historically, just looking at the SCBA business, you mentioned the funding environment being very healthy, sustained, consistent as well. Just optically, though, you look at the performance and, you know, a step up, you know, typically, the next year may have a pause and then another step up. Is that... I don't fully understand what always drives that dynamic funding and just timing of awards and the like. Is there a reason to think that cadence could continue, or, you know, do we show a different trajectory on that? No, we think the cadence will continue, and as far as the funding that's available in the fire service market, that's federal funding that's been in place for a number of years. Certainly don't think, and we certainly knew coming into the Biden years, that that wouldn't back off, and that's been enhanced slightly. We think going forward, that the funding will remain intact, not just at the federal level, but also state and municipal level. Funding will continue to be strong. And the number of firefighters remains fairly consistent. What's changed is, so we have about 1.1 million firefighters in the North American market, but what's changed is the dynamic of more paid firefighters. When you get more professional and paid firefighters, they're the equipment purchases tend to be at the higher end of the scale when it comes to some accessories, and we do a little better with those markets. So we think that that'll continue. So, you know, the buying cycle and replacement of breathing apparatus, you know, every 12-15 years. Turnout gear, you'll see replacement on that, you know, every five or six years, they'll buy turnout gear, and that's just real steady business where fire departments give us orders of, you know, four-six sets of turnout gear or clothing for a firefighter. And that's real stable business, and it's almost a razor blade type business once you're established in a fire department. Of course, the helmet business goes along with the turnout gear. Yeah. And you made the comment around 50% of the wins, competitive conversions. When you drill into that, is that the result of competing against kinda current competitors versus your competitors that have exited the market? And has that provided a little extra runway? Sure. The competitors that have exited the market have created, you know, obviously, a nice opportunity for us. So, but it's pretty well split between those players that are still in the market and those who have exited. So we've had a few competitors who no longer have NFPA-compliant breathing apparatus that compete in the marketplace. So we've seen two competitors out of six fall out of the market. One came out of the market for three or four years and then came back and finally got their NFPA approval, so they're back in the space. But, you know, for the most part, there are two players that have the majority of the business, and that's us and one other competitor. Right. And just to... And we talked earlier, just, you know, the NFPA standard cycle itself has, in the past, had some influence on the cadence of the business. Is that over- as you look over the next 12-24 months, is that likely to have an influence? That's correct. Yeah. So NFPA standards, you typically see those promulgated every five years on a five-year cycle. And municipalities don't like to be more than two cycles out on NFPA standards, so they'll buy. And if there are two NFPA standards, they'll typically buy before that third standard hits. So that's another piece that drives the replacement cycle of the breathing apparatus. And then also, those standards create significant barriers to entry. Mm-hmm. You know, I talked about other competitors dropping out of the market. You know, fact of the matter is, their share fell to a point, and the investment required to meet those standards, it just- Right ... didn't make sense for them to be in the marketplace, so they fell out. So the barriers to come into the space of self-contained breathing apparatus, and helmets, quite frankly, the fire helmets, that's significant. So that's a nice moat around the business for us, as you look at that business going forward. Your detection business is, certainly on the fixed gas side, tends to have some longer sales cycles, also lead times and backlog as well. As we look at the backlog position right now, again, it looks a little elevated relative to historical position. Is that mainly because it's got more fixed gas in it, and how should we think about that in the context of looking at the next 12 months or so? Right. So the dynamic around the gas detection piece, you have two pieces. You have fixed gas and flame detection. That fixed gas piece has that longer buying cycle and also replacement cycle. So when you think about fixed gas detection, you're putting detectors up in a facility to look for, listens for, smell for leaks in that facility. They're in place, and they keep them in place for 12, again, similar to a breathing apparatus, 12-15 years, and every three or four years, you're replacing sensors. So there's a nice replacement market component of that. And also, once a facility's established on our detection, they don't replace it. So when they're adding points of detection, or they're doing a turnaround, or they're doing some enhancements in the facility, they'll continue to buy more additional units. So you have a nice replacement cycle and recurring revenue from those facilities that, when you get those units installed. The backlog really around both fixed and portables, you know, that was really about components, electronic components. And we've worked our way out of that. That continues to improve. We do have a nice backlog. The backlog goes into some of the greenfield and brownfield projects. We have a good rhythm of what will happen there, and that business continues to do well. On the portable gas detection side, those are detectors that you hang on individual industrial workers or even firefighters, for that matter. They go into a number of industries. The replacement cycle on those products are typically 5 and 6 years, and again, the replacement sensors are about every three years. So what you might find is a customer will buy those products, they'll run them, they'll replace the sensors one time, and then after a five or six-year period, they want the latest technology in the market, so they'll replace their fleet with new devices. You've referenced, in the past, gas detection overall as being one of the more fruitful opportunities for inorganic opportunity- Mm-hmm. -for MSA. Is that, is that still the case? You've added some capabilities with Bacharach, but is that- It is. Yeah, so in the de- Yeah. In the detection area, we've made three acquisitions. Really four, but three key ones. One was a technology play. So in 2010, we acquired a company called General Monitors. Did a real nice job in diversifying our product portfolio by geography, by product, and by market. It got us into some unique markets, but the manufacturing of products are typically the same, and that was a real successful acquisition we've done in 2010. The next one we did in gas detection was a small company named Sierra Monitor. Sierra Monitor had some gateways that helped short cycle some of our development costs. It was a real nice gross margin business. They lost money, so we were able to take out that SG&A and plug that into our business and enhance that business and with our sales force, expand some of the sales, and the margin fell through into the bottom line, of course, which helped us profitability-wise. We made an acquisition of a real small company called Senscient in Europe, which is a point-to-point detection type technology, and that was really a technology play for us to acquire to help us with some technology we'd like to introduce in the future. And then recently, we made the Bacharach acquisition about two and half years ago. You know, we sold about $10 million of product into the HVAC refrigeration market, and we... Our decision was, were we gonna continue to invest in that product area or just spin that out? And the decision was to make an investment in the area to make the acquisition of Bacharach. Again, a real nice margin profile business. We think that that's a nice opportunity to grow the business 'cause the refrigeration markets and monitoring for refrigerants is really important- Mm-hmm ... because those refrigerants are changing in a significant way. The older refrigerants that are used are just really harsh on the environment. They're nasty on the environment, and obviously, customers don't like releasing those in the environment for greenhouse gas effect. So there's a lot of monitoring that goes there. The new gases that are being introduced are really expensive. Mm. The customers don't want to lose that product, because it's really expensive for them to replace it, and then the second piece is they're highly flammable. Mm-hmm. So monitoring those is really important. So the detection piece around refrigerants, you know, whether you're in a Whole Foods or a Walmart, wherever you see refrigeration or industrial refrigeration, there's a lot of refrigerants that are being used and detectors to monitor those. So we think that that's a nice opportunity for us, and we think that there are other opportunities within that detection space, that we can invest in, whether it's organically or inorganically, to find some opportunities to continue to enhance that business. Real quickly, just to hit on Industrial PP&E, again, I think of that as more a headcount-driven business. Is there employment levels influential there? Any reason to think about that differently as we go through the next several- No, that's, no, that's the way to look at it. Well, it- Obviously, you need, for hard hats, you need heads to put them on. Mm-hmm. Yeah. So that fluctuates with employment. One of the things that's interesting is Mm-hmm ... you know, as I mentioned, you don't build anything, anywhere without hard hats, fall protection, and even portable gas detection, right? So whether you're building bridges, tunnels, roadway construction, you'll see hard hats, fall protection on those sites. So that presents some opportunities for us, beyond just the industrial work area. But that is driven predominantly by employment. You know, one of the unique things is, you know, the hard hat market share for us is really strong. Fall protection, we're a number three player. Mm-hmm. So, you know, even if we see a slowdown in the market, our belief is we can continue to gain some market share and continue to see some growth in fall protection. We invested in that space heavily through COVID. You know, before COVID, we had three years of double-digit growth in fall protection. During COVID, we had some real difficulty with supply chain. We just didn't have scale. We had trouble coming out of that, but we developed a lot of new products, and as we came out of COVID, we've seen some nice double-digit growth with fall protection, and we think we're doing a nice job in gaining market share. We think that pattern will continue as we go forward. So we think that even if there's somewhat of a slowdown, we can protect ourselves a bit with some share gain in fall protection, 'cause we are a distant number three player. Okay. The operating model, as you articulated, Lee, again, considers mid-single digit top line, 30%-40% incrementals. Yeah. We've been seeing, yeah, that flow through on the incremental side, if not even better. Gross margins have been, you know, a big contributor there, stepped up. As we go forward, how to think about the contribution to that 30%-40%, where it comes from, and if there's a regional distinction to be made. Yeah ... also, you know? Well, I think if you think about the single-digit growth, it's gonna be in the similar mix that we've seen in the past, which, in its own nature, helps because we're mixing into higher margin categories. But you know, we've- ... It's really nice to see the progress to get to the 47-48 zone. There's certainly been a little bit of benefit from sales growth that could be, you know, a little bit of a challenge if the macro was to deteriorate. But underneath that is the business system, and the business system is, you know, focused on the entire P&L and the balance sheet. So we've built out, you know, a pricing capability that frankly goes back, you know, a number of years now. You know, a team is in the excess of, you know, over 10 people for us. You know, productivity, you know, was going on across the organization, but we've really focused on globalizing that and bringing that to life across the entire organization. NPE, that makes sure it has a appropriate lift to it as well, 'cause again, if you bring the right solution to market, you can price it from a value perspective, to, to a solution you're solving. And then, you know, as, as we just talked about earlier, we've seen really nice progress also just on applying it within working capital and seeing it, you know, again, quickly, that how quickly you can, you can generate cash and then use that to continue to invest in the business organically or through acquisitions as well. So as we look forward, I mean, we're happy where we are, but we think there's still an opportunity to have, you know, 50 basis points of operating margin lift each year, and it would come from both gross margin and SG&A, whereas in the past you probably were seeing more lift just from SG&A. In the last couple of years, you know, I think show that we've built that muscle to do it, and, you know, frankly, in a more challenged volume world, that's gonna be even more important that we have that muscle in place now. I wanted to return to, just really quickly, the... We had a question from the audience around fall protection. Your market share there, you know, stated as number three, but it's obviously room to move up. Just how product innovation will contribute to that aspect, as well as, you know, maybe your strategy around pricing in that area, if it, to the extent it may differ from pricing strategy where you have leading shares. Mm-hmm. So, from a technology standpoint, there's some real unique solutions that we've introduced here over the last few years. You know, one of them is an eye hook. So, if you think about a picker who works in a warehouse, and they go up in these pickers, and they're up high off the ground. Tragically, what's been happening is these pickers are working fast, they're trying to fulfill orders. They reach, and they fall, and there's been some deaths in some of those cases. And it's not for lack of training or good intention on the part of the employer. The fact of the matter is workers just don't wear the fall protection that they're provided, and they're not using it properly. So we've developed an eye hook, snap hook, that ties into these pickers, and if it's not connected to the machine, and they're not tied off, the picker won't move. It won't operate. Mm-hmm. So, this is a, you know, a solution we have to help safety managers ensure that workers are wearing their equipment. You know, if you go on a construction site, it's easy to see if someone's wearing their hard hat or safety glasses. Mm-hmm. If you go to a fire scene, you can see they have their helmet on and their breathing apparatus. It's really hard to see whether a worker is actually tied off. Somewhere where you might see it is you'll see someone doing roofing work in a residential area. They'll be wearing fall protection, and they're not tied off on anything, and usually that's what leads to high injury, fall, and death. So that's a solution that we came up technology-wise to help solve that problem. Another one is horizontal lifelines. So there are temporary horizontal lifelines that you put up on a construction site when you're on your leading-edge type construction, and you set that up, and when you get done with that one floor, you wrap it up, and then you go up to the next floor to do some work. MSA's and all of our competitors, those horizontal lifelines were super heavy. Mm-hmm. 75-80 lbs, you're lugging them up steps. It would take two people to set those up with screwdrivers and wrenches, and there was a lot of downtime, and we were able to develop a horizontal lifeline. One person can set it up, super lightweight. In fact, the engineer was a woman, and to make her point, she would walk in with heels, carrying it, set it up herself. No tools are required, and from a cost standpoint, it has a price point that's very similar to what we were selling and our competitors were selling in the past. So it's finding those pain points that our customers have and finding unique solutions to help them with higher levels of protection and obviously more productivity. Mm-hmm. We look and we focus on that, whether it's in that category or even in a hard hat. Heat stress is a major problem for workers, and it's a high OSHA citation area. So one of the things we did was we developed what's called the C1 hard hat, which is a cooling hard hat. It takes the temperature inside the hard hat down 15 degrees. We have a patent way that we do this within the helmet, and we get a nice price premium for that product. So we use technology in even the simplest products to better protect workers and make them safer so they can get home. Yeah. We need-- just about to conclude, maybe in 30 seconds, with leverage having come down- Mm-hmm ... quite a bit from where you started the year, what is the appetite for M&A at this point, given what you also see in the marketplace around valuations and- Yeah ... higher rates? So innovation has been an important part of the equation for MSA. So we've done four transactions in the past five years. Balance sheet today certainly puts us in a good place. We've got the debt leverage down to one, you know, low, low ones. The market's active. You know, certainly, the bolt-on acquisitions in the spaces that we're in today make sense, but we're disciplined. They got to hit the financial thresholds we're looking for. But, you know, it would make sense you're gonna see some more of that play out over the next couple of years. But we'll see. We'll see about the timing, and again, making sure we remain disciplined. Perfect. Okay. Well, we need to break there. Thank you. Thank you. Thank you, Lee. Thank you, everybody.