• Brady Corporation Reports Fiscal 2019 Third Quarter Results and Increases its Fiscal 2019 EPS Guidance

    Source: Nasdaq GlobeNewswire / 23 May 2019 07:00:10   America/New_York

    • Diluted EPS increased 32.7 percent to $0.65 in the third quarter of fiscal 2019 compared to $0.49 in the same quarter of the prior year.
    • Income before income taxes increased 10.8 percent to $41.0 million in the third quarter of fiscal 2019 compared to $37.0 million in the third quarter of fiscal 2018.
    • Sales for the quarter ended April 30, 2019 decreased 2.9 percent.  Organic revenues increased 2.4 percent in the third quarter of fiscal 2019.
    • Diluted EPS guidance for the full year ending July 31, 2019 was increased to a range of $2.35 to $2.40 from the previous range of $2.25 to $2.35.

    MILWAUKEE, May 23, 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 third quarter ended April 30, 2019. 

    Quarter Ended April 30, 2019 Financial Results:
    Income before income taxes increased 10.8 percent, finishing at $41.0 million for the third quarter of fiscal 2019 compared to $37.0 million for the third quarter of fiscal 2018.

    Net income for the quarter ended April 30, 2019, was $34.8 million compared to $26.0 million in the same quarter last year.  Net income was impacted by a reduced income tax rate of 15.1 percent primarily due to certain audit settlements in the current quarter.

    Earnings per diluted Class A Nonvoting Common Share were $0.65 for the third quarter of fiscal 2019, compared to $0.49 in the same quarter last year. 

    Sales for the quarter ended April 30, 2019 decreased 2.9 percent, which consisted of organic sales growth of 2.4 percent, a decrease in sales of 3.8 percent from foreign currency translation, and a decline in sales of 1.5 percent from the divestiture of a business during the fourth quarter of fiscal 2018.  Sales for the quarter ended April 30, 2019 were $289.7 million compared to $298.4 million in the same quarter last year.  By segment, sales increased 0.9 percent in Identification Solutions and decreased 12.2 percent in Workplace Safety, which consisted of organic sales growth of 4.0 percent in Identification Solutions and an organic sales decline of 1.6 percent in Workplace Safety.

    Nine-Month Period Ended April 30, 2019 Financial Results:
    Income before income taxes increased 10.1 percent, finishing at $117.6 million for the nine-month period ended April 30, 2019, compared to $106.8 million in the same period last year.

    Net income for the nine-month period ended April 30, 2019 was $94.6 million compared to $56.1 million in the same period last year.  During the nine-month period ended April 30, 2019, net income was impacted by a reduced income tax rate of 19.5 percent primarily due to certain audit settlements in the current quarter.  The prior nine-month period ended April 30, 2018 was impacted by tax charges of $21.1 million primarily related to the passage of the U.S. Tax Cuts and Jobs Act of 2017. 

    Earnings per diluted Class A Nonvoting Common Share were $1.78 for the nine-month period ended April 30, 2019, compared to $1.07 in the same period last year.  During the nine-month period ended April 30, 2018, earnings per diluted Class A Nonvoting Common Share were reduced by approximately $0.40 from tax charges primarily related to the enactment of U.S. tax legislation.

    Sales for the nine-month period ended April 30, 2019 decreased 1.3 percent, which consisted of organic sales growth of 3.1 percent, a decrease in sales of 2.8 percent from foreign currency translation, and a decline in sales of 1.6 percent from the divestiture of a business during the fourth quarter of fiscal 2018.  Sales for the nine-month period ended April 30, 2019 were $865.4 million compared to $876.4 million in the same period last year.  By segment, sales increased 2.1 percent in Identification Solutions and decreased 9.7 percent in Workplace Safety, which consisted of organic sales growth of 4.4 percent in Identification Solutions and an organic sales decline of 0.2 percent in Workplace Safety.

    Commentary:
    “Our continued focus on organic sales growth through the development of innovative new products that generate value for our customers and solve their problems while providing strong customer service is working as we posted our eighth consecutive quarter of organic sales growth,” said Brady’s President and Chief Executive Officer, J. Michael Nauman.  “Organic sales growth along with the execution of sustainable efficiency gains throughout our SG&A structure is once again the driver of our year-over-year pre-tax income growth.  We remain committed to our investments in automation in our manufacturing facilities, our digital presence, and in the development of innovative new products.  We’re taking actions today that we believe will result in continued long-term improvement in our financial results and will drive shareholder value.”

    “Our balance sheet and cash position are strong.  We have over $238 million of cash on hand and are in a net cash position of $188.1 million at April 30, 2019,” said Brady’s Chief Financial Officer, Aaron Pearce.  “We generated $52.7 million of cash flow from operating activities this quarter, we invested $5.4 million in capital expenditures, and we returned $11.2 million to our shareholders in the form of dividends.  Our balance sheet provides significant flexibility to invest in growth opportunities while returning cash to our shareholders through dividends and opportunistic share buybacks.”

    Fiscal 2019 Guidance:
    The Company is increasing its full year fiscal 2019 Earnings per diluted Class A Nonvoting Common Share guidance from its previous range of $2.25 to $2.35 to a range of $2.35 to $2.40.  Included in this guidance is organic sales growth of approximately 3.0 percent, a fourth quarter income tax rate in the mid-20 percent range, depreciation and amortization expense of approximately $24 million, and capital expenditures of approximately $28 to $30 million during the year ending July 31, 2019.  This guidance is based upon foreign exchange rates as of April 30, 2019.

    A webcast regarding Brady’s fiscal 2019 third 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, 2018, employed approximately 6,200 people in its worldwide businesses.  Brady’s fiscal 2018 sales were approximately $1.17 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; Brady’s ability to retain large customers; 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; Brady’s ability to execute facility consolidations and maintain acceptable operational service metrics; 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; Brady’s ability to meet certain financial covenants required by our debt agreements; 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, 2018.

    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 April 30, Nine months ended April 30,
      2019   2018   2019   2018 
    Net sales$  289,745  $  298,421  $  865,367  $  876,352 
    Cost of goods sold  143,996    147,339    433,269    435,513 
    Gross margin  145,749    151,082    432,098    440,839 
    Operating expenses:       
    Research and development  11,437    11,678    33,837    33,512 
    Selling, general and administrative  94,691    101,695    281,988    299,411 
    Total operating expenses  106,128    113,373    315,825    332,923 
            
    Operating income   39,621    37,709    116,273    107,916 
            
    Other income (expense):       
    Investment and other income  2,065    31    3,425    1,303 
    Interest expense  (708)   (761)   (2,137)   (2,453)
            
    Income before income taxes  40,978    36,979    117,561    106,766 
            
    Income tax expense  6,197    10,979    22,916    50,657 
            
    Net income$  34,781  $  26,000  $  94,645  $  56,109 
            
    Net income per Class A Nonvoting Common Share:       
    Basic $  0.66  $  0.50  $  1.80  $  1.09 
    Diluted $  0.65  $  0.49  $  1.78  $  1.07 
    Dividends$  0.21  $  0.21  $  0.64  $  0.62 
            
    Net income per Class B Voting Common Share:       
    Basic $  0.66  $  0.50  $  1.79  $  1.07 
    Diluted $  0.65  $  0.49  $  1.76  $  1.05 
    Dividends$  0.21  $  0.21  $  0.62  $  0.61 
            
    Weighted average common shares outstanding (in thousands):       
    Basic  52,766    51,747    52,499    51,628 
    Diluted  53,480    52,729    53,215    52,610 
            

     

    BRADY CORPORATION AND SUBSIDIARIES   
    CONSOLIDATED BALANCE SHEETS   
    (Dollars in thousands)   
        
     April 30, 2019 July 31, 2018
     (Unaudited)  
    ASSETS   
    Current assets:   
    Cash and cash equivalents$  238,432  $  181,427 
    Accounts receivable—net  162,094    161,282 
    Inventories  119,895    113,071 
    Prepaid expenses and other current assets  18,746    15,559 
      Total current assets  539,167    471,339 
    Property, plant and equipment—net  99,491    97,945 
    Goodwill  412,378    419,815 
    Other intangible assets  38,135    42,588 
    Deferred income taxes  7,068    7,582 
    Other  19,638    17,662 
    Total$  1,115,877  $  1,056,931 
    LIABILITIES AND STOCKHOLDERS’ EQUITY   
    Current liabilities:   
    Accounts payable$  64,584  $  66,538 
    Wages and amounts withheld from employees  52,849    67,619 
    Taxes, other than income taxes  7,886    8,318 
    Accrued income taxes  4,378    3,885 
    Other current liabilities  48,169    44,567 
      Total current liabilities  177,866    190,927 
    Long-term obligations  50,303    52,618 
    Other liabilities  63,164    61,274 
      Total liabilities  291,333    304,819 
    Stockholders’ equity:   
    Class A nonvoting common stock—Issued 51,261,487 shares, and outstanding 49,284,372 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  330,051    325,631 
    Retained earnings  612,474    553,454 
    Treasury stock—1,977,115 and 2,867,870 shares, respectively, of Class A nonvoting common stock, at cost  (50,083)   (71,120)
    Accumulated other comprehensive loss  (68,446)   (56,401)
      Total stockholders’ equity  824,544    752,112 
    Total$  1,115,877  $  1,056,931 
        

     

    BRADY CORPORATION AND SUBSIDIARIES   
    CONSOLIDATED STATEMENTS OF CASH FLOWS   
    (Unaudited; Dollars in thousands)   
     Nine months ended April 30,
      2019   2018 
    Operating activities:   
    Net income$  94,645  $  56,109 
    Adjustments to reconcile net income to net cash provided by operating activities:   
    Depreciation and amortization  17,836    19,047 
    Non-cash portion of stock-based compensation expense  10,311    7,581 
    Deferred income taxes  3,796    26,501 
    Changes in operating assets and liabilities:   
      Accounts receivable  332    (10,710)
      Inventories  (9,254)   (7,790)
      Prepaid expenses and other assets  (2,204)   480 
      Accounts payable and other liabilities  (19,176)   (133)
      Income taxes  616    (1,863)
          Net cash provided by operating activities  96,902    89,222 
        
    Investing activities:   
    Purchases of property, plant and equipment  (17,528)   (14,755)
    Other  (1,810)   (197)
          Net cash used in investing activities  (19,338)   (14,952)
        
    Financing activities:   
    Payment of dividends  (33,488)   (32,110)
    Proceeds from exercise of stock options  20,333    10,011 
    Proceeds from borrowing on credit facilities  13,637    17,439 
    Repayment of borrowing on credit facilities  (13,568)   (69,012)
    Other  (5,185)   (3,622)
          Net cash used in financing activities  (18,271)   (77,294)
        
    Effect of exchange rate changes on cash  (2,288)   (17)
        
    Net increase (decrease) in cash and cash equivalents  57,005    (3,041)
    Cash and cash equivalents, beginning of period  181,427    133,944 
        
    Cash and cash equivalents, end of period$  238,432  $  130,903 
        

     

    BRADY CORPORATION AND SUBSIDIARIES       
    SEGMENT INFORMATION       
    (Unaudited; Dollars in thousands)       
            
     Three months ended April 30, Nine months ended April 30,
      2019   2018   2019   2018 
    NET SALES       
    ID Solutions$  213,979  $  212,154  $  641,283  $  628,291 
    Workplace Safety   75,766     86,267     224,084     248,061 
    Total$  289,745  $  298,421  $  865,367  $  876,352 
            
    SALES INFORMATION       
    ID Solutions       
    Organic 4.0%  3.7%  4.4%  3.7%
    Currency (3.1)%  4.1%  (2.3)%  3.0%
    Total 0.9%  7.8%  2.1%  6.7%
    Workplace Safety       
    Organic (1.6)%  1.7%  (0.2)%  (0.1)%
    Currency (5.3)%  7.4%  (3.7)%  5.7%
    Divestitures (5.3)%  %  (5.8)%  %
    Total (12.2)%  9.1%  (9.7)%  5.6%
    Total Company       
    Organic  2.4%  3.2%  3.1%  2.7%
    Currency (3.8)%  5.0%  (2.8)%  3.6%
    Divestitures (1.5)%  %  (1.6)%  %
    Total (2.9)%  8.2%  (1.3)%  6.3%
            
    SEGMENT PROFIT       
    ID Solutions$  39,892  $  36,970  $  119,311  $  106,896 
    Workplace Safety   6,099     7,537     16,301     21,037 
    Total$  45,991  $  44,507  $  135,612  $  127,933 
    SEGMENT PROFIT AS A PERCENT OF NET SALES       
    ID Solutions 18.6%  17.4%  18.6%  17.0%
    Workplace Safety 8.0%  8.7%  7.3%  8.5%
    Total 15.9%  14.9%  15.7%  14.6%
            
            
     Three months ended April 30, Nine months ended April 30,
      2019   2018   2019   2018 
    Total segment profit$  45,991  $  44,507  $  135,612  $  127,933 
    Unallocated amounts:       
    Administrative costs   (6,370)    (6,798)    (19,339)    (20,017)
    Investment and other income   2,065     31     3,425     1,303 
    Interest expense   (708)    (761)    (2,137)    (2,453)
    Income before income taxes$  40,978  $  36,979  $  117,561  $  106,766 
            


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

    Primary Logo

Share on,