- Organic revenues increased 4.7 percent in the first quarter of fiscal 2019.
- Earnings before income taxes increased 14.8 percent to $39.9 million in the first quarter of fiscal 2019 compared
to $34.8 million in the same quarter of the prior year.
- Diluted EPS increased 18.4 percent to $0.58 in the first quarter of fiscal 2019 compared to $0.49 in the same
quarter of the prior year.
- Diluted EPS guidance for the full year ending July 31, 2019 was increased to a range of $2.20 to $2.30 from the
previous range of $2.15 to $2.25.
MILWAUKEE, Nov. 15, 2018 (GLOBE NEWSWIRE) -- Brady Corporation (NYSE: BRC) (“Brady” or “Company”), a world leader
in identification solutions, today reported its financial results for its fiscal 2019 first quarter ended October 31,
2018.
Quarter Ended October 31, 2018 Financial Results:
Earnings before income taxes increased 14.8 percent to $39.9 million for the quarter ended October 31, 2018,
compared to $34.8 million in the same quarter last year.
Net earnings for the quarter ended October 31, 2018, were $30.6 million compared to $25.8 million in the same
quarter last year.
Net earnings per diluted Class A Nonvoting Common Share were $0.58 for the first quarter of fiscal 2019, compared
to $0.49 in the same quarter last year.
Sales for the quarter ended October 31, 2018 increased 1.0 percent, which consisted of organic sales growth of 4.7
percent, a decrease in sales of 2.0 percent from foreign currency translation, and a decrease in sales of 1.7 percent from the
divestiture of a business in the fourth quarter of fiscal 2018. Sales for the quarter ended October 31, 2018 were $293.2 million
compared to $290.2 million in the same quarter last year. By segment, sales increased 4.0 percent in Identification Solutions and
decreased 6.6 percent in Workplace Safety, which consisted of organic sales growth of 5.7 percent in Identification Solutions and
organic sales growth of 2.2 percent in Workplace Safety.
Commentary:
“Our investments to increase organic sales growth through the development of innovative new products and to provide
increased value to our customers is paying off as we reported 4.7 percent organic growth this quarter, which marks our sixth
consecutive quarter of organic sales growth,” said Brady’s President and Chief Executive Officer, J. Michael Nauman. “This quarter
also represents our thirteenth consecutive quarter of year-over-year pre-tax earnings growth. We apply a consistent and balanced
approach to generating organic sales growth while driving sustainable efficiency gains throughout our global operations and
SG&A structure. We expect this positive organic sales trend to continue as we invest in new product development in our global
businesses and as our Workplace Safety business returns to consistent organic sales growth.”
“We used our cash generation this quarter to increase our investments in research and development and
capability-enhancing capital expenditures while returning funds to our shareholders through dividends and further strengthening our
balance sheet. We finished in a net cash position of $137.8 million as of October 31, 2018,” said Brady’s Chief Financial Officer,
Aaron Pearce. “We’re experiencing increased costs in certain areas, making our focus on driving efficiency improvements and making
investments in equipment and machinery to increase automation our top operational priorities. Our balance sheet provides
significant flexibility for ongoing investments in growth opportunities to drive long-term shareholder value.”
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 $2.15 to $2.25 to a range of $2.20 to $2.30. Included in this guidance is organic sales growth of 3.0
percent to 5.0 percent, a full-year income tax rate in the mid-20 percent range, and depreciation and amortization expense of
approximately $26 million. The Company expects to achieve efficiency gains in its manufacturing facilities and in selling, general
and administrative expenses while continuing to increase investments in research and development. Capital expenditures are
anticipated to be approximately $35 million during the year ending July 31, 2019. This guidance is based upon foreign currency
exchange rates as of October 31, 2018.
A webcast regarding Brady’s fiscal 2019 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, 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 EARNINGS |
|
|
|
(Unaudited; Dollars in thousands, except per share data) |
|
|
|
|
|
|
|
|
Three months ended October
31, |
|
|
2018 |
|
|
|
2017 |
|
Net sales |
$ |
293,196 |
|
|
$ |
290,151 |
|
Cost of products sold |
|
146,657 |
|
|
|
144,086 |
|
Gross margin |
|
146,539 |
|
|
|
146,065 |
|
Operating expenses: |
|
|
|
Research and development |
|
11,326 |
|
|
|
10,520 |
|
Selling, general and administrative |
|
94,591 |
|
|
|
100,134 |
|
Total operating expenses |
|
105,917 |
|
|
|
110,654 |
|
|
|
|
|
Operating income |
|
40,622 |
|
|
|
35,411 |
|
|
|
|
|
Other (expense) income: |
|
|
|
Investment and other (expense) income |
|
(17 |
) |
|
|
216 |
|
Interest expense |
|
(712 |
) |
|
|
(863 |
) |
|
|
|
|
Earnings before income taxes |
|
39,893 |
|
|
|
34,764 |
|
|
|
|
|
Income tax expense |
|
9,256 |
|
|
|
8,928 |
|
|
|
|
|
Net earnings |
$ |
30,637 |
|
|
$ |
25,836 |
|
|
|
|
|
Net earnings per Class A Nonvoting Common Share: |
|
|
|
Basic |
$ |
0.59 |
|
|
$ |
0.50 |
|
Diluted |
$ |
0.58 |
|
|
$ |
0.49 |
|
Dividends |
$ |
0.21 |
|
|
$ |
0.21 |
|
|
|
|
|
Net earnings per Class B Voting Common Share: |
|
|
|
Basic |
$ |
0.57 |
|
|
$ |
0.49 |
|
Diluted |
$ |
0.56 |
|
|
$ |
0.48 |
|
Dividends |
$ |
0.20 |
|
|
$ |
0.19 |
|
|
|
|
|
Weighted average common shares outstanding (in thousands): |
|
|
|
Basic |
|
52,201 |
|
|
|
51,440 |
|
Diluted |
|
52,958 |
|
|
|
52,383 |
|
BRADY CORPORATION AND SUBSIDIARIES |
|
|
|
CONSOLIDATED BALANCE SHEETS |
|
|
|
(Dollars in thousands) |
|
|
|
|
|
|
|
|
October 31, 2018 |
|
July 31, 2018 |
|
(Unaudited) |
|
|
ASSETS |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
192,176 |
|
|
$ |
181,427 |
|
Accounts receivable—net |
|
169,327 |
|
|
|
161,282 |
|
Inventories: |
|
|
|
Finished products |
|
71,092 |
|
|
|
73,133 |
|
Work-in-process |
|
20,734 |
|
|
|
19,903 |
|
Raw materials and supplies |
|
22,190 |
|
|
|
20,035 |
|
Total inventories |
|
114,016 |
|
|
|
113,071 |
|
Prepaid expenses and other current assets |
|
18,497 |
|
|
|
15,559 |
|
Total current assets |
|
494,016 |
|
|
|
471,339 |
|
Other assets: |
|
|
|
Goodwill |
|
415,129 |
|
|
|
419,815 |
|
Other intangible assets |
|
41,033 |
|
|
|
42,588 |
|
Deferred income taxes |
|
7,770 |
|
|
|
7,582 |
|
Other |
|
17,621 |
|
|
|
17,662 |
|
Property, plant and equipment: |
|
|
|
Cost: |
|
|
|
Land |
|
7,250 |
|
|
|
6,994 |
|
Buildings and improvements |
|
95,386 |
|
|
|
96,245 |
|
Machinery and equipment |
|
270,192 |
|
|
|
270,989 |
|
Construction in progress |
|
7,492 |
|
|
|
4,495 |
|
|
|
380,320 |
|
|
|
378,723 |
|
Less accumulated depreciation |
|
282,263 |
|
|
|
280,778 |
|
Property, plant and equipment—net |
|
98,057 |
|
|
|
97,945 |
|
Total |
$ |
1,073,626 |
|
|
$ |
1,056,931 |
|
LIABILITIES AND STOCKHOLDERS’
EQUITY |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ |
64,735 |
|
|
$ |
66,538 |
|
Wages and amounts withheld from employees |
|
48,945 |
|
|
|
67,619 |
|
Taxes, other than income taxes |
|
8,377 |
|
|
|
8,318 |
|
Accrued income taxes |
|
4,937 |
|
|
|
3,885 |
|
Other current liabilities |
|
54,582 |
|
|
|
44,567 |
|
Total current liabilities |
|
181,576 |
|
|
|
190,927 |
|
Long-term obligations |
|
54,408 |
|
|
|
52,618 |
|
Other liabilities |
|
64,699 |
|
|
|
61,274 |
|
Total liabilities |
|
300,683 |
|
|
|
304,819 |
|
Stockholders’ equity: |
|
|
|
Common stock: |
|
|
|
Class A nonvoting common stock—Issued 51,261,487 shares, and
outstanding 48,918,974 and 48,383,617 shares, respectively |
|
513 |
|
|
|
513 |
|
Class B voting common stock—Issued and outstanding, 3,538,628
shares |
|
35 |
|
|
|
35 |
|
Additional paid-in capital |
|
326,182 |
|
|
|
325,631 |
|
Retained earnings |
|
570,858 |
|
|
|
553,454 |
|
Treasury stock—2,342,513 and 2,867,870 shares, respectively, of
Class A nonvoting common stock, at cost |
|
(58,414 |
) |
|
|
(71,120 |
) |
Accumulated other comprehensive loss |
|
(66,231 |
) |
|
|
(56,401 |
) |
Total stockholders’ equity |
|
772,943 |
|
|
|
752,112 |
|
Total |
$ |
1,073,626 |
|
|
$ |
1,056,931 |
|
BRADY CORPORATION AND SUBSIDIARIES |
|
|
|
CONSOLIDATED STATEMENTS OF CASH FLOWS |
|
|
|
(Unaudited; Dollars in thousands) |
|
|
|
|
Three months ended October
31, |
|
|
2018 |
|
|
|
2017 |
|
Operating activities: |
|
|
|
Net earnings |
$ |
30,637 |
|
|
$ |
25,836 |
|
Adjustments to reconcile net earnings to net cash provided by operating
activities: |
|
|
|
Depreciation and amortization |
|
5,960 |
|
|
|
6,564 |
|
Non-cash portion of stock-based compensation expense |
|
4,965 |
|
|
|
3,744 |
|
Deferred income taxes |
|
2,164 |
|
|
|
(1,168 |
) |
Changes in operating assets and liabilities: |
|
|
|
Accounts receivable |
|
(6,709 |
) |
|
|
(4,807 |
) |
Inventories |
|
(3,125 |
) |
|
|
(3,571 |
) |
Prepaid expenses and other assets |
|
(2,197 |
) |
|
|
(2,005 |
) |
Accounts payable and other liabilities |
|
(14,070 |
) |
|
|
7,799 |
|
Income taxes |
|
1,193 |
|
|
|
2,327 |
|
Net cash provided by operating activities |
|
18,818 |
|
|
|
34,719 |
|
|
|
|
|
Investing activities: |
|
|
|
Purchases of property, plant and equipment |
|
(6,009 |
) |
|
|
(3,802 |
) |
Other |
|
337 |
|
|
|
974 |
|
Net cash used in investing activities |
|
(5,672 |
) |
|
|
(2,828 |
) |
|
|
|
|
Financing activities: |
|
|
|
Payment of dividends |
|
(11,096 |
) |
|
|
(10,639 |
) |
Proceeds from exercise of stock options |
|
12,138 |
|
|
|
3,249 |
|
Proceeds from borrowing on credit facilities |
|
5,737 |
|
|
|
10,901 |
|
Repayment of borrowing on credit facilities |
|
(2,269 |
) |
|
|
(22,894 |
) |
Income tax on equity-based compensation, and other |
|
(3,846 |
) |
|
|
(2,280 |
) |
Net cash provided by (used in) financing activities |
|
664 |
|
|
|
(21,663 |
) |
|
|
|
|
Effect of exchange rate changes on cash |
|
(3,061 |
) |
|
|
(1,935 |
) |
|
|
|
|
Net increase in cash and cash equivalents |
|
10,749 |
|
|
|
8,293 |
|
Cash and cash equivalents, beginning of period |
|
181,427 |
|
|
|
133,944 |
|
|
|
|
|
Cash and cash equivalents, end of period |
$ |
192,176 |
|
|
$ |
142,237 |
|
BRADY CORPORATION AND SUBSIDIARIES |
|
|
|
SEGMENT INFORMATION |
|
|
|
(Unaudited; Dollars in thousands) |
|
|
|
|
|
|
|
|
Three months ended October
31, |
|
|
2018 |
|
|
|
2017 |
|
NET SALES |
|
|
|
ID Solutions |
$ |
218,100 |
|
|
$ |
209,705 |
|
Workplace Safety |
|
75,096 |
|
|
|
80,446 |
|
Total |
$ |
293,196 |
|
|
$ |
290,151 |
|
|
|
|
|
SALES INFORMATION |
|
|
|
ID Solutions |
|
|
|
Organic |
|
5.7 |
% |
|
|
2.9 |
% |
Currency |
|
(1.7 |
)% |
|
|
1.3 |
% |
Total |
|
4.0 |
% |
|
|
4.2 |
% |
Workplace Safety |
|
|
|
Organic |
|
2.2 |
% |
|
|
(1.4 |
)% |
Currency |
|
(2.6 |
)% |
|
|
3.3 |
% |
Divestitures |
|
(6.2 |
)% |
|
|
— |
% |
Total |
|
(6.6 |
)% |
|
|
1.9 |
% |
Total Company |
|
|
|
Organic |
|
4.7 |
% |
|
|
1.7 |
% |
Currency |
|
(2.0 |
)% |
|
|
1.9 |
% |
Divestitures |
|
(1.7 |
)% |
|
|
— |
% |
Total |
|
1.0 |
% |
|
|
3.6 |
% |
|
|
|
|
SEGMENT PROFIT |
|
|
|
ID Solutions |
$ |
41,562 |
|
|
$ |
35,837 |
|
Workplace Safety |
|
5,541 |
|
|
|
6,445 |
|
Total |
$ |
47,103 |
|
|
$ |
42,282 |
|
SEGMENT PROFIT AS A PERCENT OF NET SALES |
|
|
|
ID Solutions |
|
19.1 |
% |
|
|
17.1 |
% |
Workplace Safety |
|
7.4 |
% |
|
|
8.0 |
% |
Total |
|
16.1 |
% |
|
|
14.6 |
% |
|
|
|
|
|
|
|
|
|
Three months ended October
31, |
|
|
2018 |
|
|
|
2017 |
|
Total segment profit |
$ |
47,103 |
|
|
$ |
42,282 |
|
Unallocated amounts: |
|
|
|
Administrative costs |
|
(6,481 |
) |
|
|
(6,871 |
) |
Investment and other (expense) income |
|
(17 |
) |
|
|
216 |
|
Interest expense |
|
(712 |
) |
|
|
(863 |
) |
Earnings before income taxes |
$ |
39,893 |
|
|
$ |
34,764 |
|
|
|
|
|
For More Information:
Investor contact: Ann Thornton 414-438-6887
Media contact: Kate Venne 414-358-5176