MSA Safety Incorporated (NYSE:MSA) Q3 2023 Earnings Call Transcript

Lee McChesney: Yes, I’ll add to that. So I always caution not to get overreacting to any 1 quarter, but we certainly talked about this last quarter. The book-to-bill for the halfway point was just about one and you had two quarters, one was positive, one was negative. This quarter certainly played out. It actually be just slightly above one, so it’s still in that same vein. And obviously, if you do the math and you know what our sales number is, you can figure out what the orders number is. So your math is good math there. I think as we look forward here, we like that we’ve made progress with backlog, right? When we reduced our backlog, it means we’re returning orders faster, we’re serving our customers, meeting our mission even a faster clip.

There’s still some opportunity out there. It’s certainly not what it was a year ago at this time. If I looked at back while right now, it’s probably 30% or something like that higher than a two-year stack. It will come down in the fourth quarter. That’s what normally happens in the fourth quarter, so no surprise there. But, hey, as we look forward, again, this is why we have this balanced optimism about mid-single-digit growth, even in a challenged macro environment. We have a good backlog. We’ve matched year-to-date, those really strong sales numbers with really good order numbers and kept the backlog where it is. And yes, there’s things going on in the world, but we serve a lot of industries. We’re well positioned in our product lines. And as we look back to maybe challenged macroeconomic times, we’ve done well.

And so again, that’s why we still sit here today saying, hey, you look out over the next couple of years over a cycle, that mid-single-digit growth is a safe assumption and a reason to invest in MSA.

Rob Mason: Very good. Just as a follow-up on that, the — if you could speak to the gas detection business or maybe energy more broadly speaking. Just any perspective there as to where you feel that business resides within any type of cycle, whether it’s mid-cycle, later cycle? And I guess I’m referencing more of the project-related activity on that end. And just while you mentioned that things going on in the world, just how you feel about the Middle East aspects of that business right now?

Nish Vartanian: So Rob, overall, and I’ll have some comments and pass it on to Steve. Steve was just in the Middle East and have him add a little more color on what he saw last week when he was there and visited some customers and channel partners and spent time with our organization, of course. But overall, the business is solid when it comes to our gas detection space within the energy markets. We talk about oil and gas and then obviously, the utility business remains strong as we build out the electric grid throughout the Americas. I think that, that business will continue to do well. It’s hard to put my finger on where we are, whether early days or midstream as far as the cycle for that. Certainly, demand for oil and gas has been strong, and we’re back up above and got back above 100 million barrels a day demand on a global basis.

And there’s a lot of concern about filling that pipeline for that amount of oil. And so there’s a lot of activity on projects and refineries. So that business remains pretty good. The outlook remains good. That was one of the things that we really focused on in building our portfolio is getting a good balanced portfolio where we could thrive in different cycles of business. So the Bacharach business also provides us a good balance within the portfolio. But from my perspective, the oil and gas business continues to look good. The overall energy market looks good. Steve, maybe you could speak specific to the Middle East.