Brady Corporation (NYSE: BRC) (“Brady” or “Company”), a world
leader in identification solutions, today reported its financial
results for its fiscal 2023 first quarter ended October 31, 2022.
Quarter Ended October 31, 2022 Financial
Results:Sales for the quarter ended October 31, 2022
increased 0.3 percent, which consisted of an organic sales increase
of 6.9 percent and a decrease of 6.6 percent from foreign currency
translation. Sales for the quarter ended October 31, 2022 were
$322.6 million compared to $321.5 million in the same quarter last
year. By segment, sales increased 3.1 percent in Identification
Solutions and decreased 9.1 percent in Workplace Safety, which
consisted of an organic sales increase of 8.6 percent in
Identification Solutions and an organic sales increase of 1.2
percent in Workplace Safety.
Income before income taxes increased 12.6 percent to $50.3
million for the quarter ended October 31, 2022, compared to $44.7
million in the same quarter last year. Income Before Income Taxes
Excluding Certain Items* for the quarter ended October 31, 2022,
which was adjusted for amortization expense of $3.6 million, was
$54.0 million, an increase of 11.3 percent compared to the first
quarter of last year.
Net income for the quarter ended October 31, 2022 was $39.4
million compared to $35.0 million in the same quarter last year.
Earnings per diluted Class A Nonvoting Common Share were $0.79 in
the first quarter of fiscal 2023, compared to $0.67 in the same
quarter last year. Net Income Excluding Certain Items* for the
quarter ended October 31, 2022 was $42.2 million and Diluted EPS
Excluding Certain Items* for the quarter ended October 31, 2022 was
$0.84. Net Income Excluding Certain Items* for the quarter ended
October 31, 2021 was $38.0 million, and Diluted EPS Excluding
Certain Items* for the quarter ended October 31, 2021 was
$0.72.
Commentary: “Our first quarter results
demonstrate our commitment to serving our customers extremely well
while making our customers’ jobs easier and safer. This quarter, we
once again had strong organic sales growth, with organic growth in
each of our two segments. We are investing in sales, marketing, and
research and development, which when combined with our innovative
spirit are setting the stage for Brady to continue growing
organically,” said Brady’s President and Chief Executive Officer,
Russell R. Shaller. “Our ability to execute is driving sustained
growth across our businesses. Our Identification Solutions segment
is performing very well, with organic sales growth and a robust
pipeline of new products that help our customers become safer, more
efficient, and meet their sustainability goals. In our Workplace
Safety segment, we are seeing significant benefits from the actions
we took to simplify our product offering, to streamline our cost
structure, and to improve our price competitiveness, resulting in a
segment profit increase of more than 175 percent this quarter.
While we recognize that the macro-economy is uncertain and that
foreign currency translation is creating challenges for
international organizations such as Brady, we continue to see a
positive demand environment, and we have a highly-engaged workforce
and a strong balance sheet, which we believe position us for future
success.”
“Brady is financially solid and continues to generate
significant cash flow in a challenging macro environment. This
quarter, we grew organic sales by 6.9 percent and we grew GAAP
diluted earnings per share by 17.9 percent,” said Brady’s Chief
Financial Officer, Aaron Pearce. “We also returned $11.4 million to
our shareholders in the form of dividends and repurchased another
$12.1 million worth of shares this quarter. We are in a net cash
position of $15.5 million at October 31, 2022, and earlier this
week we extended and expanded our revolving line of credit
providing additional capacity for future shareholder value
enhancing investments.”
Fiscal 2023 Guidance:The Company’s GAAP
earnings per diluted Class A Nonvoting Common Share guidance for
the year ending July 31, 2023 remains unchanged at $3.13 to $3.43
per share, and the Company’s Diluted EPS Excluding Certain Items*
guidance for the year ending July 31, 2023 also remains unchanged
at $3.30 to $3.60 per share.
The other assumptions included in our fiscal 2023 guidance are
effectively unchanged. We expect a full-year income tax rate of
approximately 20 percent, depreciation and amortization expense
ranging from $32 million to $34 million, and capital expenditures
of approximately $32 million. Our fiscal 2023 guidance is based on
foreign currency exchange rates as of October 31, 2022 and assumes
continued economic growth.
A webcast regarding Brady’s fiscal 2023 first 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,
2022, employed approximately 5,700 people in its worldwide
businesses. Brady’s fiscal 2022 sales were approximately $1.30
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,”
“continue” 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: increased cost of raw materials, labor and freight as well as
material shortages and supply chain disruptions; adverse impacts of
the novel coronavirus (“COVID-19”) pandemic or other pandemics;
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; Brady’s ability to identify, integrate, and grow acquired
companies, and to manage contingent liabilities from divested
businesses; difficulties in protecting our websites, networks, and
systems against security breaches; 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; 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; 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, 2022.
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
414-438-6887Media contact: Kate Venne 414-358-5176
BRADY CORPORATION AND SUBSIDIARIES |
|
|
|
CONSOLIDATED STATEMENTS OF EARNINGS |
|
|
|
(Unaudited;
Dollars in thousands, except per share data) |
|
|
|
|
|
|
|
|
Three months ended October 31, |
|
|
2022 |
|
|
|
2021 |
|
Net
sales |
$ |
322,569 |
|
|
$ |
321,475 |
|
Cost of
goods sold |
|
167,305 |
|
|
|
166,487 |
|
Gross margin |
|
155,264 |
|
|
|
154,988 |
|
Operating
expenses: |
|
|
|
Research and development |
|
13,933 |
|
|
|
13,907 |
|
Selling, general and administrative |
|
89,945 |
|
|
|
96,746 |
|
Total
operating expenses |
|
103,878 |
|
|
|
110,653 |
|
|
|
|
|
Operating
income |
|
51,386 |
|
|
|
44,335 |
|
|
|
|
|
Other
(expense) income: |
|
|
|
Investment and other (expense) income |
|
(157 |
) |
|
|
543 |
|
Interest expense |
|
(894 |
) |
|
|
(182 |
) |
|
|
|
|
Income
before income taxes |
|
50,335 |
|
|
|
44,696 |
|
|
|
|
|
Income tax
expense |
|
10,894 |
|
|
|
9,650 |
|
|
|
|
|
Net
income |
$ |
39,441 |
|
|
$ |
35,046 |
|
|
|
|
|
Net income
per Class A Nonvoting Common Share: |
|
|
|
Basic |
$ |
0.79 |
|
|
$ |
0.67 |
|
Diluted |
$ |
0.79 |
|
|
$ |
0.67 |
|
|
|
|
|
Net income
per Class B Voting Common Share: |
|
|
|
Basic |
$ |
0.78 |
|
|
$ |
0.66 |
|
Diluted |
$ |
0.77 |
|
|
$ |
0.65 |
|
|
|
|
|
Weighted
average common shares outstanding: |
|
|
|
Basic |
|
49,868 |
|
|
|
51,973 |
|
Diluted |
|
50,090 |
|
|
|
52,436 |
|
|
|
|
|
BRADY CORPORATION AND SUBSIDIARIES |
|
` |
|
CONSOLIDATED BALANCE SHEETS |
|
|
|
(Dollars in
thousands) |
|
|
|
|
|
|
|
|
October 31, 2022 |
|
July 31, 2022 |
|
(Unaudited) |
|
|
ASSETS |
|
|
|
Current
assets: |
|
|
|
Cash and cash equivalents |
$ |
114,471 |
|
|
$ |
114,069 |
|
Accounts receivable, net of allowance for credit losses of $6,938
and $7,355, respectively |
|
180,183 |
|
|
|
183,233 |
|
Inventories |
|
195,695 |
|
|
|
190,023 |
|
Prepaid expenses and other current assets |
|
12,902 |
|
|
|
10,743 |
|
Total current assets |
|
503,251 |
|
|
|
498,068 |
|
Property,
plant and equipment—net |
|
136,320 |
|
|
|
139,511 |
|
Goodwill |
|
579,404 |
|
|
|
586,832 |
|
Other
intangible assets |
|
69,494 |
|
|
|
74,028 |
|
Deferred
income taxes |
|
15,061 |
|
|
|
15,881 |
|
Operating
lease assets |
|
27,244 |
|
|
|
31,293 |
|
Other
assets |
|
19,855 |
|
|
|
21,719 |
|
Total |
$ |
1,350,629 |
|
|
$ |
1,367,332 |
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
Current
liabilities: |
|
|
|
Accounts payable |
$ |
79,604 |
|
|
$ |
81,116 |
|
Accrued compensation and benefits |
|
57,095 |
|
|
|
76,764 |
|
Taxes, other than income taxes |
|
13,495 |
|
|
|
12,539 |
|
Accrued income taxes |
|
13,943 |
|
|
|
8,294 |
|
Current operating lease liabilities |
|
14,126 |
|
|
|
15,003 |
|
Other current liabilities |
|
65,350 |
|
|
|
61,458 |
|
Total current liabilities |
|
243,613 |
|
|
|
255,174 |
|
Long-term
debt |
|
99,000 |
|
|
|
95,000 |
|
Long-term
operating lease liabilities |
|
15,558 |
|
|
|
19,143 |
|
Other
liabilities |
|
80,733 |
|
|
|
86,717 |
|
Total liabilities |
|
438,904 |
|
|
|
456,034 |
|
Stockholders’ equity: |
|
|
|
Common stock: |
|
|
|
Class A nonvoting common stock—Issued 51,261,487 shares, and
outstanding 46,176,267 and 46,370,708 shares, respectively |
|
513 |
|
|
|
513 |
|
Class B voting common stock—Issued and outstanding, 3,538,628
shares |
|
35 |
|
|
|
35 |
|
Additional paid-in capital |
|
346,064 |
|
|
|
345,266 |
|
Retained earnings |
|
920,482 |
|
|
|
892,417 |
|
Treasury stock—5,085,220 and 4,890,779 shares, respectively, of
Class A nonvoting common stock, at cost |
|
(228,855 |
) |
|
|
(217,856 |
) |
Accumulated other comprehensive loss |
|
(126,514 |
) |
|
|
(109,077 |
) |
Total stockholders’ equity |
|
911,725 |
|
|
|
911,298 |
|
Total |
$ |
1,350,629 |
|
|
$ |
1,367,332 |
|
|
|
|
|
BRADY CORPORATION AND SUBSIDIARIES |
|
|
|
CONSOLIDATED STATEMENTS OF CASH FLOWS |
|
|
|
(Unaudited;
Dollars in thousands) |
|
|
|
|
Three months ended October 31, |
|
|
2022 |
|
|
|
2021 |
|
Operating
activities: |
|
|
|
Net income |
$ |
39,441 |
|
|
$ |
35,046 |
|
Adjustments to reconcile net income to net cash provided by
operating activities: |
|
|
|
Depreciation and amortization |
|
8,665 |
|
|
|
8,509 |
|
Stock-based compensation expense |
|
2,958 |
|
|
|
4,129 |
|
Deferred income taxes |
|
(1,705 |
) |
|
|
(625 |
) |
Other |
|
(383 |
) |
|
|
(187 |
) |
Changes in operating assets and liabilities: |
|
|
|
Accounts receivable |
|
(627 |
) |
|
|
(13,302 |
) |
Inventories |
|
(9,582 |
) |
|
|
(16,579 |
) |
Prepaid expenses and other assets |
|
(2,563 |
) |
|
|
(655 |
) |
Accounts payable and accrued liabilities |
|
(14,150 |
) |
|
|
9,499 |
|
Income taxes |
|
5,945 |
|
|
|
1,656 |
|
Net cash provided by operating activities |
|
27,999 |
|
|
|
27,491 |
|
|
|
|
|
Investing
activities: |
|
|
|
Purchases of property, plant and equipment |
|
(3,861 |
) |
|
|
(11,328 |
) |
Other |
|
— |
|
|
|
2 |
|
Net cash used in investing activities |
|
(3,861 |
) |
|
|
(11,326 |
) |
|
|
|
|
Financing
activities: |
|
|
|
Payment of dividends |
|
(11,376 |
) |
|
|
(11,595 |
) |
Proceeds from exercise of stock options |
|
349 |
|
|
|
151 |
|
Payments for employee taxes withheld from stock-based awards |
|
(1,504 |
) |
|
|
(3,339 |
) |
Purchase of treasury stock |
|
(12,070 |
) |
|
|
(18,924 |
) |
Proceeds from borrowing on credit facilities |
|
36,000 |
|
|
|
56,200 |
|
Repayment of borrowing on credit facilities |
|
(32,000 |
) |
|
|
(27,200 |
) |
Other |
|
66 |
|
|
|
115 |
|
Net cash used in financing activities |
|
(20,535 |
) |
|
|
(4,592 |
) |
|
|
|
|
Effect of
exchange rate changes on cash |
|
(3,201 |
) |
|
|
(1,355 |
) |
|
|
|
|
Net increase
in cash and cash equivalents |
|
402 |
|
|
|
10,218 |
|
Cash and
cash equivalents, beginning of period |
|
114,069 |
|
|
|
147,335 |
|
|
|
|
|
Cash and
cash equivalents, end of period |
$ |
114,471 |
|
|
$ |
157,553 |
|
|
|
|
|
BRADY CORPORATION AND SUBSIDIARIES |
|
|
|
SEGMENT INFORMATION |
|
|
|
(Unaudited;
Dollars in thousands) |
|
|
|
|
|
|
|
|
Three months ended October 31, |
|
|
2022 |
|
|
|
2021 |
|
NET
SALES |
|
|
|
ID Solutions |
$ |
256,356 |
|
|
$ |
248,617 |
|
Workplace Safety |
|
66,213 |
|
|
|
72,858 |
|
Total |
$ |
322,569 |
|
|
$ |
321,475 |
|
|
|
|
|
SALES INFORMATION |
|
|
|
ID
Solutions |
|
|
|
Organic |
|
8.6 |
% |
|
|
13.2 |
% |
Currency |
|
(5.5 |
)% |
|
|
0.6 |
% |
Acquisition |
|
— |
% |
|
|
11.6 |
% |
Total |
|
3.1 |
% |
|
|
25.4 |
% |
Workplace Safety |
|
|
|
Organic |
|
1.2 |
% |
|
|
(8.6 |
)% |
Currency |
|
(10.3 |
)% |
|
|
0.8 |
% |
Total |
|
(9.1 |
)% |
|
|
(7.8 |
)% |
Total Company |
|
|
|
Organic |
|
6.9 |
% |
|
|
7.0 |
% |
Currency |
|
(6.6 |
)% |
|
|
0.7 |
% |
Acquisition |
|
— |
% |
|
|
8.3 |
% |
Total |
|
0.3 |
% |
|
|
16.0 |
% |
|
|
|
|
SEGMENT PROFIT |
|
|
|
ID Solutions |
$ |
51,525 |
|
|
$ |
48,816 |
|
Workplace Safety |
|
6,378 |
|
|
|
2,293 |
|
Total |
$ |
57,903 |
|
|
$ |
51,109 |
|
SEGMENT PROFIT AS A PERCENT OF NET SALES |
|
|
|
ID Solutions |
|
20.1 |
% |
|
|
19.6 |
% |
Workplace Safety |
|
9.6 |
% |
|
|
3.1 |
% |
Total |
|
18.0 |
% |
|
|
15.9 |
% |
|
|
|
|
|
|
|
|
|
Three months ended October 31, |
|
|
2022 |
|
|
|
2021 |
|
Total
segment profit |
$ |
57,903 |
|
|
$ |
51,109 |
|
Unallocated
amounts: |
|
|
|
Administrative costs |
|
(6,517 |
) |
|
|
(6,774 |
) |
Investment and other (expense) income |
|
(157 |
) |
|
|
543 |
|
Interest expense |
|
(894 |
) |
|
|
(182 |
) |
Income
before income taxes |
$ |
50,335 |
|
|
$ |
44,696 |
|
|
|
|
|
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 October 31, |
|
|
2022 |
|
|
|
2021 |
|
Income before income taxes (GAAP measure) |
$ |
50,335 |
|
|
$ |
44,696 |
|
Amortization expense |
|
3,631 |
|
|
|
3,807 |
|
Income Before Income Taxes Excluding Certain Items
(non-GAAP measure) |
$ |
53,966 |
|
|
$ |
48,503 |
|
|
|
|
|
|
|
|
|
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 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 Income tax expense to the
non-GAAP measure of Income Tax Expense Excluding Certain
Items: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended October 31, |
|
|
2022 |
|
|
|
2021 |
|
Income tax expense (GAAP measure) |
$ |
10,894 |
|
|
$ |
9,650 |
|
Amortization expense |
|
865 |
|
|
|
900 |
|
Income Tax Expense Excluding Certain Items (non-GAAP
measure) |
$ |
11,759 |
|
|
$ |
10,550 |
|
|
|
|
|
|
|
|
|
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 October 31, |
|
|
2022 |
|
|
|
2021 |
|
Net
income (GAAP measure) |
$ |
39,441 |
|
|
$ |
35,046 |
|
Amortization expense |
|
2,766 |
|
|
|
2,907 |
|
Net
Income Excluding Certain Items (non-GAAP measure) |
$ |
42,207 |
|
|
$ |
37,953 |
|
|
|
|
|
|
|
|
|
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 October 31, |
|
|
2022 |
|
|
|
2021 |
|
Net
income per Class A Nonvoting Common Share (GAAP
measure) |
$ |
0.79 |
|
|
$ |
0.67 |
|
Amortization expense |
|
0.06 |
|
|
|
0.06 |
|
Diluted EPS Excluding Certain Items (non-GAAP
measure) |
$ |
0.84 |
|
|
$ |
0.72 |
|
|
|
|
|
|
|
|
|
Diluted EPS Excluding Certain Items Guidance: |
Fiscal 2023 Expectations |
|
Low |
|
High |
Earnings per diluted Class A Common Share (GAAP
measure) |
$ |
3.13 |
|
|
$ |
3.43 |
|
Amortization expense |
|
0.17 |
|
|
|
0.17 |
|
Diluted EPS Excluding Certain Items (non-GAAP
measure) |
$ |
3.30 |
|
|
$ |
3.60 |
|
Brady (NYSE:BRC)
Historical Stock Chart
From Jun 2024 to Jul 2024
Brady (NYSE:BRC)
Historical Stock Chart
From Jul 2023 to Jul 2024