• Brady Corporation Reports Fiscal 2024 Second Quarter Results and Raises the low end of its Fiscal 2024 Guidance

    Source: Nasdaq GlobeNewswire / 22 Feb 2024 06:00:36   America/Chicago

    • Sales for the quarter decreased 1.1 percent. Organic sales increased 1.6 percent, foreign currency translation increased sales 0.8 percent and divestitures decreased sales 3.5 percent.
    • Gross profit margin increased to 50.2 percent in the second quarter of fiscal 2024 compared to 48.0 percent in the second quarter of fiscal 2023.
    • Diluted EPS increased 18.4 percent to $0.90 in the second quarter of fiscal 2024 compared to $0.76 in the same quarter of the prior year. Diluted EPS Excluding Certain Items* increased 14.8 percent to $0.93 in the second quarter of fiscal 2024 compared to $0.81 in the same quarter of the prior year.
    • Net cash provided by operating activities increased to $36.1 million in the second quarter of fiscal 2024 compared to $29.4 million in the second quarter of last year.
    • The low end of the Earnings per diluted Class A Common Share guidance was raised for the full year ending July 31, 2024 from the previous range of $3.70 to $3.95 to the new range of $3.80 to $3.95 on a GAAP basis, and was raised from the previous range of $3.85 to $4.10 to the new range of $3.95 to $4.10, excluding after-tax amortization expense.

    MILWAUKEE, Feb. 22, 2024 (GLOBE NEWSWIRE) -- Brady Corporation (NYSE: BRC) (“Brady” or “Company”), a world leader in identification solutions, today reported its financial results for its fiscal 2024 second quarter ended January 31, 2024.

    Quarter Ended January 31, 2024 Financial Results:
    Sales for the quarter ended January 31, 2024 decreased 1.1 percent, which consisted of organic sales growth of 1.6 percent, an increase of 0.8 percent from foreign currency translation, and a decrease of 3.5 percent from divestitures. Sales for the quarter ended January 31, 2024 were $322.6 million compared to $326.2 million in the same quarter last year. By region, sales decreased 3.8 percent in the Americas & Asia and sales increased 4.5 percent in Europe & Australia, which consisted of organic sales growth of 1.2 percent in the Americas & Asia and organic sales growth of 2.5 percent in Europe & Australia.

    Income before income taxes increased 15.1 percent to $55.8 million for the quarter ended January 31, 2024, compared to $48.5 million in the same quarter last year. Income Before Income Taxes Excluding Certain Items* for the quarter ended January 31, 2024, which was adjusted for amortization expense of $2.4 million, was $58.2 million, an increase of 12.4 percent compared to the second quarter of last year.

    Net income for the quarter ended January 31, 2024 was $43.6 million compared to $38.0 million in the same quarter last year. Earnings per diluted Class A Nonvoting Common Share were $0.90 in the second quarter of fiscal 2024, compared to $0.76 in the same quarter last year. Net Income Excluding Certain Items* for the quarter ended January 31, 2024 was $45.4 million and Diluted EPS Excluding Certain Items* for the quarter ended January 31, 2024 was $0.93. Net Income Excluding Certain Items* for the quarter ended January 31, 2023 was $40.5 million, and Diluted EPS Excluding Certain Items* for the quarter ended January 31, 2023 was $0.81.

    Six-Month Period Ended January 31, 2024 Financial Results:
    Sales for the six-month period ended January 31, 2024 increased 0.9 percent, which consisted of organic sales growth of 2.2 percent, an increase of 1.1 percent from foreign currency translation and a decrease of 2.4 percent from divestitures. Sales for the six months ended January 31, 2024 were $654.6 million compared to $648.8 million in the same period last year. By region, sales decreased 1.2 percent in the Americas & Asia and increased 5.3 percent in Europe & Australia, which consisted of organic sales growth of 2.3 percent in the Americas & Asia and organic sales growth of 2.0 percent in Europe & Australia.

    Income before income taxes increased 16.6 percent to $115.2 million for the six-month period ended January 31, 2024, compared to $98.8 million in the same period last year. Income Before Income Taxes Excluding Certain Items* for the six months ended January 31, 2024, which was adjusted for amortization expense of $4.7 million, was $119.9 million, an increase of 13.4 percent compared to the same period of the prior year.

    Net income for the six-month period ended January 31, 2024 was $90.9 million compared to $77.4 million in the same period last year. Earnings per diluted Class A Nonvoting Common Share were $1.86 for the six months ended January 31, 2024, compared to $1.55 in the same period last year. Net Income Excluding Certain Items* for the six months ended January 31, 2024 was $94.5 million and Diluted EPS Excluding Certain Items* for the six months ended January 31, 2024 was $1.94. Net Income Excluding Certain Items* for the six months ended January 31, 2023 was $82.7 million, and Diluted EPS Excluding Certain Items* for the six months ended January 31, 2023 was $1.65.

    Commentary:
    “We are delighted with the progress of our reorganization to a regional structure, which we announced in December of 2022. We are realizing operational savings while reinforcing our organization through our investments in R&D and sales and marketing initiatives. Even in this challenging manufacturing environment, we continue to grow with our Europe & Australia region performing particularly well,” said Brady’s President and Chief Executive Officer, Russell R. Shaller. “We believe our pipeline of new products will allow us to grow sales and profit as we integrate our businesses and execute our best go-to-market strategies in each geography. Our financial strength enables us to fund organic and inorganic growth initiatives to position ourselves for future success and increased shareholder value.”

    “Brady is financially strong and we once again reported both organic sales growth and profit improvement. This quarter, we grew organic sales by 1.6 percent, we grew GAAP earnings per share by 18.4 percent, and cash flow from operating activities increased to $36.1 million from $29.4 million last year,” said Brady’s Chief Financial Officer, Ann Thornton. “Our capital expenditures increased to $60.8 million through January 31, 2024, which was primarily due to the purchase of a previously leased manufacturing facility. We are still in a net cash position of $95.8 million at January 31, 2024, which provides us with the flexibility to fully fund our organic growth investments, return funds to our shareholders in the form of dividends, and continue to be opportunistic with share buybacks and strategic acquisitions. We believe that our disciplined approach to capital allocation will continue to drive increased shareholder value over the long term.”

    Fiscal 2024 Guidance:
    The Company raised the low end of its GAAP earnings per diluted Class A Nonvoting Common Share guidance for the year ending July 31, 2024 from the previous guidance range of $3.70 to $3.95 per share to the new full year guidance range of $3.80 to $3.95 per share. The Company also raised the low end of its Diluted EPS Excluding Certain Items* guidance for the year ending July 31, 2024 from the previous range of $3.85 to $4.10 per share to the new full year guidance range of $3.95 to $4.10 per share.

    The assumptions included in fiscal 2024 guidance include a full-year income tax rate of approximately 22 percent, depreciation and amortization expense ranging from $30 million to $32 million, and capital expenditures of approximately $75 million, which are inclusive of approximately $55 million related to the purchase of previously leased manufacturing facilities. Fiscal 2024 guidance is based on foreign currency exchange rates as of January 31, 2024 and assumes continued economic growth.

    A webcast regarding Brady’s fiscal 2024 second 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, 2023, employed approximately 5,600 people in its worldwide businesses. Brady’s fiscal 2023 sales were approximately $1.33 billion. Brady stock trades on the New York Stock Exchange under the symbol BRC. More information is available on the Internet at www.bradyid.com.

    * Income Before Income Taxes Excluding Certain Items, Net Income Excluding Certain Items, and Diluted EPS Excluding Certain Items are non-GAAP measures. See appendix for more information on these measures, including reconciliations to the most directly comparable GAAP measures.

    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,” “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: increased cost of raw materials and labor as well as material shortages and supply chain disruptions; decreased demand for our products; our ability to compete effectively or to successfully execute our strategy; our ability to develop technologically advanced products that meet customer demands; difficulties in protecting our websites, networks, and systems against security breaches; Brady’s ability to identify, integrate, and grow acquired companies, and to manage contingent liabilities from divested businesses; risks associated with the loss of key employees; extensive regulations by U.S. and non-U.S. governmental and self-regulatory entities; litigation, including product liability claims; adverse impacts of regional epidemics or global pandemics; foreign currency fluctuations; potential write-offs of goodwill and other intangible assets; changes in tax legislation and tax rates; differing interests of voting and non-voting shareholders and changes in the regulatory and business environment around dual-class voting structures; numerous other matters of national, regional and global scale, including major public health crises and government responses thereto and 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, 2023.

    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.

     

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



    BRADY CORPORATION AND SUBSIDIARIES       
    CONSOLIDATED STATEMENTS OF INCOME       
    (Unaudited; Dollars in thousands, except per share data)       
            
     Three months ended January 31, Six months ended January 31,
      2024   2023   2024   2023 
    Net sales$322,624  $326,249  $654,607  $648,818 
    Cost of goods sold 160,541   169,809   320,805   337,114 
    Gross margin 162,083   156,440   333,802   311,704 
    Operating expenses:       
    Research and development 16,832   15,377   32,534   29,310 
    Selling, general and administrative 91,325   92,282   187,612   182,227 
    Total operating expenses 108,157   107,659   220,146   211,537 
            
    Operating income 53,926   48,781   113,656   100,167 
            
    Other income (expense):       
    Investment and other income 2,684   968   3,122   811 
    Interest expense (790)  (1,239)  (1,556)  (2,133)
            
    Income before income taxes 55,820   48,510   115,222   98,845 
            
    Income tax expense 12,192   10,524   24,353   21,418 
            
    Net income$43,628  $37,986  $90,869  $77,427 
            
    Net income per Class A Nonvoting Common Share:       
    Basic$0.90  $0.76  $1.88  $1.55 
    Diluted$0.90  $0.76  $1.86  $1.55 
            
    Net income per Class B Voting Common Share:       
    Basic$0.90  $0.76  $1.86  $1.54 
    Diluted$0.90  $0.76  $1.85  $1.53 
            
    Weighted average common shares outstanding:       
    Basic 48,374   49,745   48,440   49,806 
    Diluted 48,725   50,009   48,768   50,049 
            


    BRADY CORPORATION AND SUBSIDIARIES   
    CONSOLIDATED BALANCE SHEETS   
    (Dollars in thousands)   
        
     January 31, 2024 July 31, 2023
     (Unaudited)  
    ASSETS   
    Current assets:   
    Cash and cash equivalents$143,860  $151,532 
    Accounts receivable, net of allowance for credit losses of $6,531 and $8,467, respectively 185,569   184,420 
    Inventories 164,944   177,078 
    Prepaid expenses and other current assets 12,147   11,790 
    Total current assets 506,520   524,820 
    Property, plant and equipment—net 190,777   142,149 
    Goodwill 590,535   592,646 
    Other intangible assets 57,108   62,096 
    Deferred income taxes 14,899   15,716 
    Operating lease assets 24,686   29,688 
    Other assets 23,079   22,142 
    Total$1,407,604  $1,389,257 
    LIABILITIES AND STOCKHOLDERS’ EQUITY   
    Current liabilities:   
    Accounts payable$80,114  $79,855 
    Accrued compensation and benefits 56,408   71,470 
    Taxes, other than income taxes 13,345   13,575 
    Accrued income taxes 8,228   12,582 
    Current operating lease liabilities 12,758   14,726 
    Other current liabilities 66,449   65,828 
    Total current liabilities 237,302   258,036 
    Long-term debt 48,090   49,716 
    Long-term operating lease liabilities 12,510   16,217 
    Other liabilities 70,970   74,369 
    Total liabilities 368,872   398,338 
    Stockholders’ equity:   
    Common stock:   
    Class A nonvoting common stock—Issued 51,261,487 shares, and outstanding 44,792,328 and 45,008,724 shares, respectively 513   513 
    Class B voting common stock—Issued and outstanding, 3,538,628 shares 35   35 
    Additional paid-in capital 353,794   351,771 
    Retained earnings 1,090,045   1,021,870 
    Treasury stock—6,469,159 and 6,252,763 shares, respectively, of Class A nonvoting common stock, at cost (305,714)  (290,209)
    Accumulated other comprehensive loss (99,941)  (93,061)
    Total stockholders’ equity 1,038,732   990,919 
    Total$1,407,604  $1,389,257 
        


    BRADY CORPORATION AND SUBSIDIARIES   
    CONSOLIDATED STATEMENTS OF CASH FLOWS   
    (Unaudited; Dollars in thousands)   
     Six months ended January 31,
      2024   2023 
    Operating activities:   
    Net income$90,869  $77,427 
    Adjustments to reconcile net income to net cash provided by operating activities:   
    Depreciation and amortization 15,008   17,117 
    Stock-based compensation expense 5,263   4,381 
    Deferred income taxes (3,640)  (5,234)
    Other 947   (908)
    Changes in operating assets and liabilities:   
    Accounts receivable (5,030)  280 
    Inventories 10,078   (1,287)
    Prepaid expenses and other assets (1,187)  (3,502)
    Accounts payable and accrued liabilities (9,754)  (29,156)
    Income taxes (4,203)  (1,734)
           Net cash provided by operating activities 98,351   57,384 
        
    Investing activities:   
    Purchases of property, plant and equipment (60,832)  (8,167)
    Other    11 
          Net cash used in investing activities (60,832)  (8,156)
        
    Financing activities:   
    Payment of dividends (22,694)  (22,793)
    Proceeds from exercise of stock options 5,366   2,688 
    Payments for employee taxes withheld from stock-based awards (2,362)  (1,509)
    Purchase of treasury stock (21,797)  (17,861)
    Proceeds from borrowing on credit agreement 69,145   71,036 
    Repayment of borrowing on credit agreement (70,771)  (88,755)
    Other 149   66 
         Net cash used in financing activities (42,964)  (57,128)
        
    Effect of exchange rate changes on cash and cash equivalents (2,227)  2,041 
        
    Net decrease in cash and cash equivalents (7,672)  (5,859)
    Cash and cash equivalents, beginning of period 151,532   114,069 
        
    Cash and cash equivalents, end of period$143,860  $108,210 
        


    BRADY CORPORATION AND SUBSIDIARIES       
    SEGMENT INFORMATION       
    (Unaudited; Dollars in thousands)       
            
     Three months ended January 31, Six months ended January 31,
      2024   2023   2024   2023 
    NET SALES       
    Americas & Asia$211,643  $220,067  $433,269  $438,562 
    Europe & Australia 110,981   106,182   221,338   210,256 
    Total$322,624  $326,249  $654,607  $648,818 
            
    SALES INFORMATION       
    Americas & Asia       
    Organic 1.2%  6.9%  2.3%  5.4%
    Currency 0.1%  (1.0)%  %  (1.2)%
    Divestiture (5.1)%  %  (3.5)%  %
    Total (3.8)%  5.9%  (1.2)%  4.2%
    Europe & Australia       
    Organic 2.5%  5.2%  2.0%  8.9%
    Currency 2.0%  (8.9)%  3.3%  (12.8)%
    Total 4.5%  (3.7)%  5.3%  (3.9)%
    Total Company       
    Organic 1.6%  6.3%  2.2%  6.6%
    Currency 0.8%  (3.7)%  1.1%  (5.1)%
    Divestiture (3.5)%  %  (2.4)%  %
    Total (1.1)%  2.6%  0.9%  1.5%
            
    SEGMENT PROFIT       
    Americas & Asia$43,895  $40,174  $93,792  $81,319 
    Europe & Australia 15,054   13,459   31,798   30,217 
    Total segment profit$58,949  $53,633  $125,590  $111,536 
    SEGMENT PROFIT AS A PERCENT OF NET SALES       
    Americas & Asia 20.7%  18.3%  21.6%  18.5%
    Europe & Australia 13.6%  12.7%  14.4%  14.4%
    Total 18.3%  16.4%  19.2%  17.2%
            
            
     Three months ended January 31, Six months ended January 31,
      2024   2023   2024   2023 
    Total segment profit$58,949  $53,633  $125,590  $111,536 
    Unallocated amounts:       
    Administrative costs (5,023)  (4,852)  (11,934)  (11,369)
    Investment and other income 2,684   968   3,122   811 
    Interest expense (790)  (1,239)  (1,556)  (2,133)
    Income before income taxes$55,820  $48,510  $115,222  $98,845 
            


    GAAP to NON-GAAP MEASURES
    (Unaudited; Dollars in Thousands, Except Per Share Amounts)

    In accordance with the U.S. Securities and Exchange Commission’s Regulation G, the following provides definitions of the non-GAAP measures used in the earnings release and the reconciliation to the most closely related GAAP measure.

    Income Before Income Taxes Excluding Certain Items:
    Brady is presenting the non-GAAP measure, "Income Before Income Taxes Excluding Certain Items." This is not a calculation based upon GAAP. The amounts included in this non-GAAP measure are derived from amounts included in the Consolidated Financial Statements and supporting footnote disclosures. We do not view these items to be part of our ongoing results. We believe this profit measure provides an important perspective of underlying business trends and results and provides a more comparable measure from year to year. The table below provides a reconciliation of the GAAP measure of Income before income taxes to the non-GAAP measure of Income Before Income Taxes Excluding Certain Items:

        Three months ended January 31, Six months ended January 31,
        2024 2023 2024 2023
    Income before income taxes$55,820 $48,510 $115,222 $98,845
     Amortization expense  2,364  3,258  4,719  6,889
    Income Before Income Taxes Excluding Certain Items (non-GAAP measure)$ 58,184 $ 51,768 $ 119,941 $ 105,734
                

     


    Income Tax Expense Excluding Certain Items:
    Brady is presenting the non-GAAP measure, "Income Tax Expense Excluding Certain Items." This is not a calculation based upon GAAP. The amounts included in this nonGAAP measure are derived from amounts included in the Consolidated Financial Statements and supporting footnote disclosures. We do not view these items to be part of our ongoing results. We believe this measure provides an important perspective of underlying business trends and results and provides a more comparable measure from year to year. The table below provides a reconciliation of the GAAP measure of Income tax expense to the non-GAAP measure of Income Tax Expense Excluding Certain Items:

        Three months ended January 31, Six months ended January 31,
         2024  2023  2024  2023
    Income tax expense (GAAP measure)$12,192 $10,524 $24,353 $21,418
     Amortization expense  548  769  1,094  1,634
    Income Tax Expense Excluding Certain Items (non-GAAP measure)$ 12,740 $ 11,293 $ 25,447 $ 23,052
                

    Net Income Excluding Certain Items:
    Brady is presenting the non-GAAP measure, "Net Income Excluding Certain Items." This is not a calculation based upon GAAP. The amounts included in this non-GAAP measure are derived from amounts included in the Consolidated Financial Statements and supporting footnote disclosures. We do not view these items to be part of our ongoing results. We believe this measure provides an important perspective of underlying business trends and results and provides a more comparable measure from year to year. The table below provides a reconciliation of the GAAP measure of Net income to the non-GAAP measure of Net Income Excluding Certain Items:

        Three months ended January 31, Six months ended January 31,
         2024  2023  2024  2023
    Net income (GAAP measure)$43,628 $37,986 $90,869 $77,427
     Amortization expense  1,816  2,489  3,625  5,255
    Net Income Excluding Certain Items (non-GAAP measure)$ 45,444 $ 40,475 $ 94,494 $ 82,682
                

    Diluted EPS Excluding Certain Items:
    Brady is presenting the non-GAAP measure, "Diluted EPS Excluding Certain Items." This is not a calculation based upon GAAP. The amounts included in this non-GAAP measure are derived from amounts included in the Consolidated Financial Statements. We do not view these items to be part of our ongoing results. We believe this measure provides an important perspective of underlying business trends and results and provides a more comparable measure from year to year. The table below provides a reconciliation of the GAAP measure of Net income per Class A Nonvoting Common Share to the non-GAAP measure of Diluted EPS Excluding Certain Items (Note that certain amounts will not foot due to rounding): 

        Three months ended January 31, Six months ended January 31,
         2024  2023  2024  2023
    Net income per Class A Nonvoting Common Share (GAAP measure)$0.90 $0.76 $1.86 $1.55
     Amortization expense  0.04  0.05  0.07  0.10
    Diluted EPS Excluding Certain Items (non-GAAP measure)$ 0.93 $ 0.81 $ 1.94 $ 1.65
               
               
    Diluted EPS Excluding Certain Items Guidance:     Fiscal 2024 Expectations
            Low High
    Earnings per diluted Class A Common Share (GAAP measure)     $3.80 $3.95
     Amortization expense      0.15  0.15
    Diluted EPS Excluding Certain Items (non-GAAP measure)     $ 3.95 $ 4.10

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