• Brady Corporation Reports Fiscal 2019 Fourth Quarter Results and Announces its Fiscal 2020 EPS Guidance

    Source: Nasdaq GlobeNewswire / 06 Sep 2019 07:00:14   America/New_York

    • Income before income taxes was $47.1 million in the fourth quarter of fiscal 2019 compared to $45.2 million in the fourth quarter of fiscal 2018.  Income before income taxes in the fourth quarter of fiscal 2018 included a gain on the sale of the Runelandhs business of $4.7 million. 
    • Diluted EPS was $0.68 in the fourth quarter of fiscal 2019 compared to $0.66 in the same quarter of the prior year.  The sale of the Runelandhs business contributed approximately $0.09 per diluted Class A Nonvoting Common Share in the fourth quarter of fiscal 2018.     
    • Sales for the quarter ended July 31, 2019 decreased 0.7 percent due to foreign currency and the impact of the sale of the Runelandhs business in fiscal 2018.  Organic revenues increased 1.7 percent in the fourth quarter of fiscal 2019.
    • Diluted EPS guidance for the full year ending July 31, 2020 announced at a range of $2.45 to $2.55.

    MILWAUKEE, Sept. 06, 2019 (GLOBE NEWSWIRE) -- Brady Corporation (NYSE: BRC) (“Brady” or “Company”), a world leader in identification solutions, today reported its financial results for its fiscal 2019 fourth quarter ended July 31, 2019. 

    Quarter Ended July 31, 2019 Financial Results:
    Income before income taxes was $47.1 million for the fourth quarter of fiscal 2019 compared to $45.2 million for the fourth quarter of fiscal 2018.  Income before income taxes included a gain on the sale of the Runelandhs business of $4.7 million in the fourth quarter of fiscal 2018. 

    Net income for the quarter ended July 31, 2019, was $36.6 million compared to $35.0 million in the same quarter last year.  The sale of the Runelandhs business increased net income by $4.7 million in the fourth quarter of fiscal 2018. 

    Earnings per diluted Class A Nonvoting Common Share were $0.68 for the fourth quarter of fiscal 2019, compared to $0.66 in the same quarter last year.  Results were increased in the fourth quarter of fiscal 2018 by approximately $0.09 per diluted Class A Nonvoting Common Share due to the sale of the Runelandhs business. 

    Sales for the quarter ended July 31, 2019 decreased 0.7 percent, which consisted of organic sales growth of 1.7 percent, a decrease in sales of 1.9 percent from foreign currency translation, and a decline in sales of 0.5 percent from the divestiture of our Runelandhs business during the fourth quarter of fiscal 2018.  Sales for the quarter ended July 31, 2019 were $295.3 million compared to $297.5 million in the same quarter last year.  By segment, sales increased 1.8 percent in Identification Solutions and decreased 7.8 percent in Workplace Safety, which consisted of organic sales growth of 3.3 percent in Identification Solutions and an organic sales decline of 2.6 percent in Workplace Safety.

    Year Ended July 31, 2019 Financial Results:
    Income before income taxes increased 8.3 percent, finishing at $164.6 million for the year ended July 31, 2019, compared to $152.0 million last year.  Fiscal 2018 results include a gain on the sale of the Runelandhs business of $4.7 million.

    Net income for the year ended July 31, 2019, was $131.3 million compared to $91.1 million last year.  Fiscal 2018 net income was reduced by $21.1 million due to income tax charges primarily related to the enactment of U.S. tax legislation, and was increased by $4.7 million due to the sale of the Runelandhs business.

    Earnings per diluted Class A Nonvoting Common Share were $2.46 for the year ended July 31, 2019, compared to $1.73 last year.  Fiscal 2018 results were decreased by approximately $0.40 per diluted Class A Nonvoting Common Share due to income tax charges primarily related to the enactment of U.S. tax legislation, and results were increased by approximately $0.09 per diluted Class A Nonvoting Common Share due to the sale of the Runelandhs business.

    Sales for the year ended July 31, 2019 decreased 1.1 percent, which consisted of organic sales growth of 2.8 percent, a decrease in sales of 2.6 percent from foreign currency translation, and a decline in sales of 1.3 percent from the divestiture of our Runelandhs business during fiscal 2018.  Fiscal 2019 sales were $1.16 billion compared to $1.17 billion last year.  By segment, sales increased 2.0 percent in Identification Solutions and decreased 9.2 percent in Workplace Safety, which consisted of organic sales growth of 4.1 percent in Identification Solutions and an organic sales decline of 0.7 percent in Workplace Safety.

    Commentary:
    “Our investment in the development of innovative new products, and our dedication to providing excellent customer service continue to drive positive results as we posted our ninth consecutive quarter of organic sales growth,” said Brady’s President and Chief Executive Officer, J. Michael Nauman.  “We have seen signs of a weakening industrial economic environment.  However, our previous investments along with strong execution have helped us continue to generate organic sales growth in this difficult environment.  Our priorities in fiscal 2020 are to continue to launch high-quality new products while further developing our new product pipeline, continue our positive momentum in improving all of our businesses, and execute sustainable efficiency gains throughout Brady.  We believe that our actions today will result in continued improvement in our financial results and long-term value for our shareholders.”

    “Our organic sales growth and our focus on operational efficiencies continue to drive profit improvements and strong cash flow,” said Brady’s Chief Financial Officer, Aaron Pearce.  “Our net cash position increased by $100.1 million this fiscal year, finishing at $228.9 million at July 31, 2019.  We generated $162.2 million of cash from operating activities this year, we invested $32.8 million in capital expenditures, and we returned $47.9 million to our shareholders in the form of dividends and share buybacks.  Our balance sheet provides significant flexibility for further investments to drive long-term shareholder value and to return funds to our shareholders.”

    Fiscal 2020 Guidance:
    The Company expects organic sales growth to be approximately 1.5 to 2.5 percent for the year ending July 31, 2020.  Brady expects earnings per diluted Class A Nonvoting Common Share to range from $2.45 to $2.55.  This guidance is based upon a full-year income tax rate in the low twenties percent range, and depreciation and amortization expense of approximately $25 million.  The Company expects to achieve efficiency gains in its manufacturing facilities and in selling, general and administrative expenses while increasing investments in research and development.  Capital expenditures are expected to be approximately $35 million during the year ending July 31, 2020.  The Company’s fiscal 2020 guidance is based on foreign currency exchange rates as of July 31, 2019. 

    A webcast regarding Brady’s fiscal 2019 fourth quarter financial results will be available at www.bradycorp.com/investors beginning at 9:30 a.m. Central Time today.

    Brady Corporation is an international manufacturer and marketer of complete solutions that identify and protect people, products and places.  Brady’s products help customers increase safety, security, productivity and performance and include high-performance labels, signs, safety devices, printing systems and software.  Founded in 1914, the Company has a diverse customer base in electronics, telecommunications, manufacturing, electrical, construction, medical, aerospace and a variety of other industries.  Brady is headquartered in Milwaukee, Wisconsin and as of July 31, 2019, employed approximately 6,100 people in its worldwide businesses.  Brady’s fiscal 2019 sales were approximately $1.16 billion.  Brady stock trades on the New York Stock Exchange under the symbol BRC.  More information is available on the Internet at www.bradycorp.com.

    In this news release, statements that are not reported financial results or other historic information are “forward-looking statements.” These forward-looking statements relate to, among other things, the Company's future financial position, business strategy, targets, projected sales, costs, earnings, capital expenditures, debt levels and cash flows, and plans and objectives of management for future operations.

    The use of words such as “may,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “believe,” “should,” “project” or “plan” or similar terminology are generally intended to identify forward-looking statements.  These forward-looking statements by their nature address matters that are, to different degrees, uncertain and are subject to risks, assumptions, and other factors, some of which are beyond Brady’s control, that could cause actual results to differ materially from those expressed or implied by such forward-looking statements.  For Brady, uncertainties arise from:  our ability to compete effectively or to successfully execute our strategy; Brady’s ability to develop technologically advanced products that meet customer demands; difficulties in protecting our websites, networks, and systems against security breaches; decreased demand for our products; raw material and other cost increases; extensive regulations by U.S. and non-U.S. governmental and self-regulatory entities; risks associated with the loss of key employees; divestitures and contingent liabilities from divestitures; Brady’s ability to properly identify, integrate, and grow acquired companies; litigation, including product liability claims; foreign currency fluctuations; the impact of the Tax Reform Act and any other changes in tax legislation and tax rates; potential write-offs of Brady’s substantial intangible assets; differing interests of voting and non-voting shareholders; numerous other matters of national, regional and global scale, including those of a political, economic, business, competitive, and regulatory nature contained from time to time in Brady’s U.S. Securities and Exchange Commission filings, including, but not limited to, those factors listed in the “Risk Factors” section within Item 1A of Part I of Brady’s Form 10-K for the year ended July 31, 2019.

    These uncertainties may cause Brady's actual future results to be materially different than those expressed in its forward-looking statements. Brady does not undertake to update its forward-looking statements except as required by law.



            
    BRADY CORPORATION AND SUBSIDIARIES 
    CONSOLIDATED STATEMENTS OF INCOME 
    (Unaudited; Dollars in thousands, except per share data) 
            
     Three months ended July 31, Year ended July 31,
      2019   2018   2019   2018 
    Net sales$295,278  $297,499  $1,160,645  $1,173,851 
    Cost of goods sold 148,698   150,047   581,967   585,560 
    Gross margin 146,580   147,452   578,678   588,291 
    Operating expenses:       
    Research and development 11,331   11,741   45,168   45,253 
    Selling, general and administrative 89,094   90,931   371,082   390,342 
    Total operating expenses 100,425   102,672   416,250   435,595 
            
    Operating income 46,155   44,780   162,428   152,696 
            
    Other income (expense):       
    Investment and other income 1,621   1,184   5,046   2,487 
    Interest expense (693)  (715)  (2,830)  (3,168)
            
    Income before income taxes 47,083   45,249   164,644   152,015 
            
    Income tax expense 10,470   10,298   33,386   60,955 
            
    Net income$36,613  $34,951  $131,258  $91,060 
            
    Net income per Class A Nonvoting Common Share:       
    Basic$0.69  $0.67  $2.50  $1.76 
    Diluted$0.68  $0.66  $2.46  $1.73 
    Dividends$0.21  $0.21  $0.85  $0.83 
            
    Net income per Class B Voting Common Share:       
    Basic$0.69  $0.67  $2.48  $1.75 
    Diluted$0.68  $0.66  $2.45  $1.72 
    Dividends$0.21  $0.21  $0.83  $0.81 
            
    Weighted average common shares outstanding:       
    Basic 52,885   51,822   52,596   51,677 
    Diluted 53,647   52,658   53,323   52,524 
            



        
    BRADY CORPORATION AND SUBSIDIARIES 
    CONSOLIDATED BALANCE SHEETS 
    (Unaudited; Dollars in thousands) 
        
     July 31, 2019 July 31, 2018
    ASSETS   
    Current assets:   
    Cash and cash equivalents$279,072  $181,427 
    Accounts receivable—net 158,114   161,282 
    Inventories 120,037   113,071 
    Prepaid expenses and other current assets 16,056   15,559 
    Total current assets 573,279   471,339 
    Property, plant and equipment—net 110,048   97,945 
    Goodwill 410,987   419,815 
    Other intangible assets 36,123   42,588 
    Deferred income taxes 7,298   7,582 
    Other 19,573   17,662 
    Total$1,157,308  $1,056,931 
    LIABILITIES AND STOCKHOLDERS’ EQUITY   
    Current liabilities:   
    Accounts payable$64,810  $66,538 
    Accrued compensation and benefits 62,509   67,619 
    Taxes, other than income taxes 8,107   8,318 
    Accrued income taxes 6,557   3,885 
    Other current liabilities 49,796   44,567 
    Current maturities on long-term debt 50,166    
    Total current liabilities 241,945   190,927 
    Long-term obligations, less current maturities    52,618 
    Other liabilities 64,589   61,274 
    Total liabilities 306,534   304,819 
    Stockholders’ equity:   
    Common stock:   
    Class A nonvoting common stock—Issued 51,261,487 shares, and outstanding 49,458,841 and 48,393,617 shares, respectively 513   513 
    Class B voting common stock—Issued and outstanding, 3,538,628 shares 35   35 
    Additional paid-in capital 329,969   325,631 
    Retained earnings 637,843   553,454 
    Treasury stock—1,802,646 and 2,867,870 shares, respectively, of Class A nonvoting common stock, at cost (46,332)  (71,120)
    Accumulated other comprehensive loss (71,254)  (56,401)
    Total stockholders’ equity 850,774   752,112 
    Total$1,157,308  $1,056,931 
        



        
    BRADY CORPORATION AND SUBSIDIARIES 
    CONSOLIDATED STATEMENTS OF CASH FLOWS 
    (Unaudited; Dollars in thousands) 
     
     Year ended July 31,
      2019   2018 
    Operating activities:   
    Net income$131,258  $91,060 
    Adjustments to reconcile net earnings to net cash provided by operating activities:   
    Depreciation and amortization 23,799   25,442 
    Non-cash portion of stock-based compensation expense 12,092   9,980 
    Gain on sale of business, net    (4,666)
    Deferred income taxes 7,825   33,656 
    Other 2,347   (15)
    Changes in operating assets and liabilities:   
    Accounts receivable 3,496   (16,612)
    Inventories (9,922)  (7,563)
    Prepaid expenses and other assets 368   1,747 
    Accounts payable and other liabilities (11,903)  13,106 
    Income taxes 2,851   (3,093)
    Net cash provided by operating activities 162,211   143,042 
        
    Investing activities:   
    Purchases of property, plant and equipment (32,825)  (21,777)
    Divestiture of business, net of cash transferred with business    19,141 
    Other (1,638)  (269)
    Net cash used in investing activities (34,463)  (2,905)
        
    Financing activities:   
    Payment of dividends (44,732)  (42,873)
    Proceeds from exercise of stock options 23,466   12,099 
    Purchase of treasury stock (3,182)  (1,462)
    Proceeds from borrowing on credit facilities 13,637   23,221 
    Repayment of borrowing on credit facilities (13,568)  (78,419)
    Other (3,249)  (3,246)
    Net cash used in financing activities (27,628)  (90,680)
        
    Effect of exchange rate changes on cash (2,475)  (1,974)
        
    Net increase in cash and cash equivalents 97,645   47,483 
    Cash and cash equivalents, beginning of period 181,427   133,944 
        
    Cash and cash equivalents, end of period$279,072  $181,427 
        
    Supplemental disclosures:   
    Cash paid during the period for:   
    Interest$2,651  $2,976 
    Income taxes 24,335   33,267 
        



            
    BRADY CORPORATION AND SUBSIDIARIES 
    SEGMENT INFORMATION 
    (Unaudited; Dollars in thousands) 
            
     Three Months Ended July 31, Year Ended July 31,
      2019   2018   2019   2018 
    NET SALES       
    ID Solutions$221,817  $217,796  $863,100  $846,087 
    Workplace Safety 73,461   79,703   297,545   327,764 
    Total$295,278  $297,499  $1,160,645  $1,173,851 
            
    SALES INFORMATION       
    ID Solutions       
    Organic 3.3%  2.4%  4.1%  3.4%
    Currency (1.5)%  0.7%  (2.1)%  2.3%
    Divestiture %  %  %  %
    Total 1.8%  3.1%  2.0%  5.7%
    Workplace Safety       
    Organic (2.6)%  3.0%  (0.7)%  0.7%
    Currency (3.3)%  1.6%  (3.7)%  4.6%
    Divestiture (1.9)%  (2.3)%  (4.8)%  (0.6)%
    Total (7.8)%  2.3%  (9.2)%  4.7%
    Total Company       
    Organic 1.7%  2.5%  2.8%  2.6%
    Currency (1.9)%  1.0%  (2.6)%  3.0%
    Divestiture (0.5)%  (0.6)%  (1.3)%  (0.2)%
    Total (0.7)%  2.9%  (1.1)%  5.4%
            
    SEGMENT PROFIT       
    ID Solutions$45,642  $36,515  $164,953  $143,411 
    Workplace Safety 6,724   10,675   23,025   31,712 
    Total$52,366  $47,190  $187,978  $175,123 
    SEGMENT PROFIT AS A PERCENT OF NET SALES       
    ID Solutions 20.6%  16.8%  19.1%  16.9%
    Workplace Safety 9.2%  13.4%  7.7%  9.7%
    Total 17.7%  15.9%  16.2%  14.9%
            
            
     Three Months Ended July 31, Year Ended July 31,
      2019   2018   2019   2018 
    Total segment profit$52,366  $47,190  $187,978  $175,123 
    Unallocated amounts:       
    Administrative costs (6,211)  (7,076)  (25,550)  (27,093)
    Gain on divestiture -   4,666   -   4,666 
    Investment and other income 1,621   1,184   5,046   2,487 
    Interest expense (693)  (715)  (2,830)  (3,168)
    Income before income taxes$47,083  $45,249  $164,644  $152,015 
            


    For More Information:
    Investor contact:  Ann Thornton 414-438-6887
    Media contact:  Kate Venne 414-358-5176

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