The following discussion and analysis should be read in conjunction with the
historical financial statements and other financial information included
elsewhere in this quarterly report on Form 10-Q. 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 our annual
report entitled "Forward-Looking Statements" and "Risk Factors," and those
discussed in our Form 10-Q quarterly reports filed after such annual report
(such as in Part II, Item 1A, "Risk Factors."
BUSINESS OVERVIEW
MSA is a global leader in the development, manufacture and supply of safety
products that protect people and facility infrastructures. Recognized for their
market leading innovation, many MSA products integrate a combination of
electronics, mechanical systems and advanced materials to protect users against
hazardous or life-threatening situations. The Company's comprehensive product
line, which is governed by rigorous safety standards across highly regulated
industries, is used by workers around the world in a broad range of markets,
including fire service, oil, gas and petrochemical industry, construction,
industrial manufacturing applications, utilities, mining and the military. MSA's
core products include breathing apparatus, fixed gas and flame detection
systems, portable gas detection instruments, industrial head protection
products, firefighter helmets and protective apparel, and fall protection
devices. We are committed to providing our customers with service unmatched in
the safety industry and, in the process, enhancing our ability to provide a
growing line of safety solutions for customers in key global markets.
MSA provides safety equipment to a broad range of customers who must continue to
work in times of global pandemic as is now the case with COVID-19. Our customers
include first responders, who are tasked with keeping citizens safe, and include
industrial and utility workers tasked with maintaining critical infrastructure.
For this reason, in order to successfully fulfill our mission as The Safety
Company, MSA is an essential business and has continued operating its
manufacturing facilities during these times, to the extent practicable, while
protecting the health and safety of our workforce, and complying with all
applicable laws. The Company has established a special advisory committee to
evaluate ongoing concerns, risks and challenges with respect to COVID-19 across
its operations and corporate headquarters in January 2020. The Company's
pandemic response plan includes four key priorities: protecting the health and
safety of MSA associates, enabling business continuity, expanding manufacturing
capacity of MSA's existing air-purifying respirator portfolio, and managing its
operating expenses and capital structure.
We tailor our product offerings and distribution strategy to satisfy distinct
customer preferences that vary across geographic regions. On January 1, 2020, to
best serve these customer preferences, we restructured our business from six
geographical operating segments into four: Northern North America, Latin
America, Europe, Middle East & Africa ("EMEA"), and Asia Pacific ("APAC"). These
four operating segments are further aggregated into three reportable geographic
segments: Americas, International and Corporate. This change did not impact
reportable segments as all changes were within the International segment. In
2019, 65% and 35% 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 (U.S.). 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 the Asia Pacific region. In our largest International
subsidiaries (in Germany, France, United Kingdom (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 and China
or are purchased from third-party vendors.
Corporate. The Corporate segment primarily consists 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. Corporate general
and administrative costs comprise the majority of the expense in the Corporate
segment.

                                      -24-

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PRINCIPAL PRODUCTS
The following is a brief description of each of our principal product
categories:
MSA's corporate strategy includes a focus on driving sales of core products
where we have leading market positions and a distinct competitive advantage.
Core products, as mentioned above, include breathing apparatus, fixed gas and
flame detection systems, portable gas detection instruments, industrial head
protection products, firefighter helmets and protective apparel, and fall
protection devices. Core products comprised approximately 85% and 88% of sales
for the three months ended March 31, 2020 and 2019. MSA also maintains a
portfolio of non-core products. Non-core products reinforce and extend the core
offerings, drawing upon our customer relationships, distribution channels,
geographical presence and technical experience. These products are complementary
to the core offerings and often reflect more episodic or contract-driven growth
patterns. Key non-core products include air-purifying respirators ("APR"), eye
and face protection, ballistic helmets and gas masks.
MSA does not produce disposable respirators of any type; however, Mine Safety
Appliances Company, LLC ("MSA LLC"), one of the Company's subsidiaries, does
produce advanced elastomeric APR, including half-mask respirators,
full-facepiece respirators and powered air purifying respirators, each with
replaceable filters providing a minimum of N-95 filtration capability. These
products have historically been used in many industrial and first responder
applications. APR products represented 8% of our consolidated sales in the first
quarter of 2020 with approximately 70% of this business being in our Americas
segment. In the first quarter, Emergency Use Authorizations ("EUA") have been
issued by the FDA to expand the types of respiratory protection available to the
medical community in response to COVID-19. Those include an EUA that temporarily
permits the use of NIOSH-approved respirators in healthcare settings, including
elastomeric APR that are part of MSA's existing portfolio. MSA LLC is committed
to increasing production of masks within the existing portfolio to support our
customer base and other response efforts.
MSA maintains a diversified portfolio of safety products that protect workers
and facility infrastructure across a broad array of end markets. While the
company sells its products through distribution, which can limit end-user
visibility, the company provides estimated ranges of end market exposure to
facilitate understanding of its growth drivers. The company estimates that
approximately 35%-40% of its overall revenue is derived from the fire service
market and 25%-30% of its revenue is derived from the energy market. The
remaining 30%-40% is split between construction, utilities, general industrial
applications, military and mining.
A detailed listing of our significant product offerings in the aforementioned
product groups above is included in MSA's Annual Report on Form 10-K for the
year ended December 31, 2019.
RESULTS OF OPERATIONS
Three Months Ended March 31, 2020, Compared to Three Months Ended March 31, 2019
Net Sales. Net sales for the three months ended March 31, 2020, were $341.1
million, an increase of $15.1 million, or 4.6%, driven by a strong March
compared to $326.0 million for the three months ended March 31, 2019. Please
refer to the Net Sales table for a reconciliation of the quarter over quarter
sales change.
Net Sales      Three Months Ended March 31,      Dollar    Percent
(In millions)     2020              2019        Increase   Increase
Consolidated     $341.1            $326.0        $15.1       4.6%
Americas          231.2             213.7         17.5       8.2%
International     109.9             112.3        (2.4)      (2.1)%


                                         Three Months Ended March 31, 2020 versus
Net Sales                                             March 31, 2019
(Percent Change)                           Americas    International Consolidated
GAAP reported sales change                   8.2%         (2.1)%         4.6%
Currency translation effects                 1.6%          2.9%          2.1%
Constant currency sales change               9.8%          0.8%          6.7%

Note: Constant currency sales change is a non-GAAP financial measure provided by the Company to give a better understanding of the Company's underlying business performance. Constant currency sales change is calculated by deducting the percentage impact from currency translation effects from the overall percentage change in net sales.



                                      -25-

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Net sales for the Americas segment were $231.2 million in the first quarter of 2020, an increase of $17.5 million, or 8.2%, compared to $213.7 million in the first quarter of 2019. During the quarter, constant currency sales in the Americas segment increased 9.8% compared to the prior year period, driven by growth across a substantial portion of the portfolio, with notable increases in gas detection and air purifying respirators ("APR") as a result of the global mask shortage caused by the COVID-19 pandemic. The Company's subsidiary, MSA LLC, is ramping production of APR in its Jacksonville, NC plant and expects to make progress in increasing capacity to meet the surge in demand in this area over the next several quarters. The backlog for APR is sizable and growing, however, it will take time to ramp up manufacturing capacity and convert the backlog into revenue. Net sales for the International segment were $109.9 million in the first quarter of 2020, a decrease of $2.4 million, or 2.1%, compared to $112.3 million for the first quarter of 2019. Constant currency sales in the International segment increased 0.8% during the quarter as stronger sales in the EMEA region were up 3% driven by fixed gas and flame detection sales, which more than offset lower fall protection system sales. Also, contributing to increased sales in the EMEA region was APR sales due to the pandemic, which more than offset lower ballistic sales in the region. Sales in the APAC region declined by over 5% primarily in China due to an extended closure in response to the COVID-19 pandemic. China is now back to full capacity.

For the month of April, MSA's total incoming order pace was up over 10% from the same period a year ago as strong demand for respirators and firefighter safety products more than offset a downturn in industrial-based products. APR demand increased significantly late in the quarter as we received a surge of orders in response to the COVID-19 pandemic. MSA LLC is investing in its respirator business to increase capacity to meet increasing demand in this area associated with the COVID-19 pandemic. At the same time, the Company has lowered its near-term growth expectations for employment-based personal protective equipment ("PPE") products in industrial and energy markets. While MSA's diversified portfolio and secular safety trends have supported healthy orders in April, conditions are challenging and there is a great deal of uncertainty in the economy and the Company's key end markets. These conditions could impact our future results and growth expectations.



Our backlog is healthy and is expected to convert to revenue over several
quarters. Fire service and APR are the primary areas of our business that are
contributing to this strong backlog, and these orders are expected to ship over
the next several quarters. The timing of these shipments, combined with
challenging conditions in employment-based industrial PPE products may result in
a weaker second quarter of 2020 when compared to the first quarter of 2020.
Refer to Note 8-Segment Information to the unaudited condensed consolidated
financial statements in Part I Item 1 of this Form 10-Q, for information
regarding sales by product group.
Gross profit. Gross profit for the first quarter of 2020 was $157.4 million, an
increase of $7.4 million or 4.9%, compared to $150.0 million for the first
quarter of 2019. The ratio of gross profit to net sales was 46.1% in the first
quarter of 2020 compared to 46.0% in the same quarter last year. The higher
gross profit ratio during the current quarter is primarily attributable to
pricing initiatives.
Selling, general and administrative expenses. Selling, general and
administrative ("SG&A") expenses were $80.2 million during the first quarter of
2020, an increase of $1.8 million or 2.3%, compared to $78.4 million in the
first quarter of 2019. Overall, selling, general and administrative expenses
were 23.5% of net sales during the first quarter of 2020, compared to 24.1% of
net sales during the same period in 2019.  The decrease was the result of
ongoing productivity improvements in the Americas segment and savings from
restructuring programs in the International Segment. Also, in response to the
COVID-19 pandemic and slowdown in certain end markets, additional cost savings
measures were enacted, including controlled hiring, lower travel expense,
reduced professional service engagements, and discretionary cost controls. These
actions resulted in lower SG&A expense as a percentage of sales for the month of
March compared to the earlier months of the quarter.

                                      -26-

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Please refer to the Selling, general and administrative expenses table for a reconciliation of the period over period expense change.


                                                          Three Months Ended
                                                     March 31, 2020 versus March
Selling, general, and administrative expenses                  31, 2019
(Percent Change)                                             Consolidated
GAAP reported change                                             2.3%
Currency translation effects                                     1.8%
Constant currency change                                         4.1%

Less: Acquisitions and related strategic transaction costs

                                                           (1.5)%
Organic constant currency change                                 2.6%


Note: Organic constant currency change is a non-GAAP financial measure provided
by the Company to give a better understanding of the Company's underlying
business performance. Organic constant currency change in selling, general, and
administrative expenses is calculated by deducting the percentage impact from
acquisitions and related strategic transaction costs as well as the currency
translation effects from the overall percentage change in selling, general, and
administrative expense. Management believes excluding acquisitions and currency
translation effects provides investors with a greater level of clarity into
spending levels on a year-over-year basis.
Research and development expense. Research and development expense was $14.1
million during the first quarter of 2020, an increase of $0.4 million, compared
to $13.7 million during the first quarter of 2019. Research and development
expense was 4.1% of net sales in the first quarter of 2020 compared to 4.2% in
the same period of 2019. In 2020, MSA plans to launch its connected firefighter
ecosystem powered by LUNAR. We also launched the Altair io 360 Gas Detector, an
area monitor that operates with the simplicity of a smart-home device during the
first quarter. During the first quarter of 2020, we capitalized $1.8 million of
software development costs.
Restructuring charges. Restructuring charges during the first quarter of 2020,
were $2.0 million primarily related to footprint rationalization and other
restructuring programs associated with our ongoing initiatives to drive
profitable growth in our International segment. This compared to restructuring
charges of $5.8 million during the first quarter of 2019, primarily related to
footprint rationalization and other restructuring programs associated with our
ongoing initiatives to drive profitable growth in our International segment
primarily in Europe. We remain focused on executing programs that will optimize
our cost structure.
Currency exchange. Currency exchange losses were $0.3 million in the first
quarter of 2020 compared to $17.0 million in the first quarter of 2019. The
decrease in currency exchange losses in the first quarter of 2020 was primarily
due to the recognition of non-cash cumulative translation losses of
approximately $15.4 million during the first quarter of 2019 as a result of the
approval of our plan to close our South Africa subsidiaries. This charge is
related to the historical translation of the elements of the financial
statements for the business from the functional currency to the U.S. Dollar. The
translation impact has been historically recorded as currency translation
adjustment ("CTA"), a separate component of accumulated other comprehensive loss
within the equity section of the unaudited Condensed Consolidated Balance Sheet.
Refer to Note 15-Derivative Financial Instruments to the unaudited condensed
consolidated financial statements in Part I Item 1 of this Form 10-Q, for
information regarding our currency exchange rate risk management strategy.
Product liability expense. Product liability expense for the three months ended
March 31, 2020 was $2.0 million compared to $2.9 million in the same period last
year. Product liability expense for both periods related primarily to defense
costs incurred for cumulative trauma product liability claims.
GAAP operating income. Consolidated operating income for the first quarter of
2020 was $58.8 million compared to $32.2 million in the same period last year.
The increase in operating results was primarily driven by lower currency
exchange losses and higher sales volumes as discussed above.
Adjusted operating income. Americas adjusted operating income for the first
quarter of 2020 was $59.8 million, an increase of $5.0 million, or 9%, compared
to $54.8 million in the prior year quarter. The increase was related to the
higher level of sales and improved SG&A leverage.
International adjusted operating income for the first quarter of 2020 was $12.7
million, an increase of $1.7 million, or 15%, compared to $11.0 million in the
prior year quarter. The increase in adjusted operating income is primarily
attributable to selling, general and administrative costs being down 4% as we
realize returns from restructuring programs executed over the past 12 to 18
months.

                                      -27-

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Corporate segment adjusted operating loss for the first quarter of 2020 was $8.6 million, an increase of $1.1 million, or 14%, compared to an adjusted operating loss of $7.5 million in the first quarter of 2019 due to higher compensation and professional service expenses. The following tables represent a reconciliation from GAAP operating income to adjusted operating income (loss) and adjusted EBITDA. Adjusted operating margin % is calculated as adjusted operating income (loss) divided by net sales and adjusted EBITDA margin % is calculated as adjusted EBITDA divided by net sales.

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