MSA (MSA) Q3 2025: Fire Service Orders Down Double Digits, Shifting Revenue Into 2026
MSA’s Q3 results highlight the company’s resilience as strong detection and industrial PPE growth offset a sharp fire service order decline, driven by delayed U.S. government funding and regulatory timing. Management’s focus on price-cost neutrality and operational discipline is visible, but near-term revenue growth will remain muted as fire service demand shifts into next year. Investors should watch for margin recovery and the timing of pent-up fire service orders as key drivers for 2026.
Summary
- Fire Service Demand Deferred: Delayed AFG funding and regulatory timing push fire service orders into 2026.
- Detection and Fall Protection Outperform: Connected device sales and fall protection drive segment growth and share gains.
- Margin Recovery Focus: Price actions and tariff mitigation are critical to restoring profitability in coming quarters.
Performance Analysis
MSA delivered 8% reported sales growth in Q3, with 3% organic growth and the remainder driven by the MNC Tech Group acquisition and favorable currency translation. Detection led the way with 6% organic growth, anchored by robust demand for both fixed and portable instruments—over half of portable growth came from connected devices, a testament to MSA’s push into recurring revenue models. Industrial PPE, which includes products like fall protection gear and helmets, grew 7% organically, with fall protection maintaining a double-digit pace for the second straight quarter.
However, fire service organic sales declined 3% as delayed U.S. government AFG (Assistance to Firefighters Grant) funding and the pending NFPA (National Fire Protection Association) standard change stalled order flow. The Americas segment felt the brunt of this, but international fire service also contracted due to order delays in Asia and a shift in European funding from fire to defense. Margins faced pressure from inflation, tariffs, and FX, leading to a 140 basis point YoY gross margin decline. Still, sequential margin improvement and strong free cash flow (up 33% YoY) reflect disciplined cost control and working capital management.
- Segment Divergence Evident: Detection and industrial PPE offset fire service contraction, highlighting portfolio balance.
- Tariff and Inflation Headwinds: Cost inflation, especially in supply chain wages and electronic components, compressed gross margins.
- Free Cash Flow Strength: $100 million in Q3 free cash flow enabled debt paydown and set up for Q4 share buybacks.
MSA’s overall book-to-bill ratio dipped below one, reflecting the deferred fire service demand. The backlog remains within normalized levels, but the timing of order conversion is now a central variable for near-term growth and margin trajectory.
Executive Commentary
"Our team continued to perform well, delivering a solid quarter despite encountering stronger than expected near-term headwinds in the fire service. This was based on sustained strength and detection, along with healthy expansion of industrial PPE driven by fall protection."
Steve Blanco, President and CEO
"We are beginning to see the tariff impact become more noticeable in the second half, aligning with our mitigating pricing strategies, and our aim remains to balance this by the first half of 2026."
Julie Beck, Senior Vice President and CFO
Strategic Positioning
1. Detection and Connected Ecosystem Expansion
Detection, MSA’s largest growth lever, is benefiting from ongoing investment in connected devices and software-enabled solutions. The introduction of the Altair IO6 Multigas Connected Portable Device, part of the MSA+ platform, underscores the strategy to expand recurring revenue streams. Over half of portable detection growth came from connected solutions, and the fixed detection business delivered double-digit growth, supported by both project activity and the installed base.
2. Industrial PPE and Fall Protection Momentum
Industrial PPE, especially fall protection, continues to outperform as MSA leverages inventory availability and customer experience improvements to secure new business. The new H2 V-Guard helmet extends the company’s leadership in safety headgear, while ballistic helmet demand in Europe benefits from increased defense spending. These trends diversify revenue and cushion cyclicality in fire service.
3. Fire Service Demand Timing and Pipeline
Fire service faces a temporary demand trough due to delayed AFG funding and the pending NFPA standard update. Management emphasizes that the pipeline remains strong and that the majority of deferred orders are expected to convert in 2026, pending government resolution. International fire service softness is attributed to order delays in Asia and budget shifts in Europe, but these are also viewed as timing rather than structural issues.
4. Margin Management and Tariff Mitigation
Margin pressure from tariffs and inflation is a central challenge, but MSA is executing targeted price increases and cost discipline to offset these headwinds. Price-cost neutrality is targeted for the first half of 2026, with sequential margin improvement already visible. SG&A productivity and variable compensation adjustments are supporting near-term profitability.
5. Capital Allocation and M&A Pipeline
Strong free cash flow and a low net leverage ratio (1x) provide flexibility for both organic investment and disciplined M&A. The MNC Tech Group integration is progressing well, with cross-sell opportunities identified in the Americas. Management reiterated an active M&A pipeline and plans to resume share buybacks in Q4, signaling confidence in cash generation and balance sheet strength.
Key Considerations
MSA’s Q3 reveals a business balancing growth in detection and PPE with cyclical and regulatory-driven volatility in fire service. The company’s accelerate strategy is delivering in core growth areas, but execution on pricing and cost management will determine the pace of margin recovery as macro and government timing risks persist.
Key Considerations:
- Fire Service Revenue Shift: Delayed U.S. AFG funding and NFPA approval push significant revenue into 2026, impacting near-term growth visibility.
- Detection and MSA+ Platform: Connected devices and recurring revenue models are gaining traction, supporting higher-margin growth and share gains.
- Tariff and Inflation Response: Margin recovery hinges on successful execution of price increases and cost mitigation, with price-cost neutrality targeted by H1 2026.
- Capital Deployment Optionality: Strong cash flow and low leverage enable ongoing M&A and shareholder returns, with Q4 buybacks planned.
Risks
Deferred fire service orders represent a timing risk with potential for further slippage if U.S. government shutdowns persist or NFPA approvals are delayed. Inflation and tariffs remain a threat to margins, and any failure to pass through additional costs could erode profitability. International fire service and project-driven detection revenue remain exposed to regional funding and macro uncertainty, while the competitive landscape in detection and PPE is intensifying.
Forward Outlook
For Q4 2025, MSA expects:
- Sales to remain roughly flat sequentially, with only a slight seasonal uptick due to fire service delays.
- Adjusted operating margins to improve slightly from Q3, supported by continued pricing actions and SG&A discipline.
For full-year 2025, management maintained guidance:
- Low single-digit organic growth, with MNC expected to add 2 points and FX a 1% tailwind.
Management flagged that the timing of AFG grant releases and NFPA standard approval are key variables for Q4 and early 2026.
- Fire service revenue will be depressed in Q4, with demand expected to shift into 2026.
- Detection and fall protection remain key growth drivers for the remainder of the year.
Takeaways
MSA’s portfolio resilience is clear as detection and industrial PPE offset fire service volatility, but near-term growth is capped by deferred government-driven demand. Margin recovery and execution on price-cost neutrality are the next critical milestones.
- Fire Service Revenue Deferral: Near-term growth is muted as order delays push a meaningful portion of fire service revenue into 2026, but the pipeline remains strong.
- Detection and PPE Strength: Growth in connected detection and fall protection validates the accelerate strategy and supports a more diversified revenue base.
- Margin Recovery Watch: Investors should track the pace of price realization and tariff mitigation, as well as the timing of fire service order conversion as key inflection points for 2026.
Conclusion
MSA’s Q3 demonstrates solid execution in detection and industrial PPE, but the timing of fire service recovery will define the growth trajectory into 2026. Investors should focus on margin trends and the conversion of deferred demand as the clearest signals of future upside.
Industry Read-Through
MSA’s experience this quarter highlights the vulnerability of safety equipment providers to government funding cycles and regulatory timing, especially in fire service and defense-adjacent categories. The outperformance in connected detection and fall protection signals a broader industry shift toward digital, recurring revenue models and inventory-driven share gains. Margin pressure from tariffs and supply chain inflation remains a sector-wide challenge, with price discipline and cost management as critical differentiators. For peers, the timing of U.S. government grant flows and standards updates will be a key watchpoint for revenue and order visibility into 2026.