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Brady Corporation Reports Record EPS in its Fiscal 2024 Third Quarter and Raises its Fiscal 2024 EPS Guidance

  • Sales for the quarter increased 1.9 percent compared to the same quarter of the prior year. Organic sales increased 4.5 percent, foreign currency decreased sales by 0.3 percent and divestitures decreased sales by 2.3 percent.
  • Diluted EPS increased 9.4 percent to a record high of $1.05 in the third quarter of fiscal 2024 compared to $0.96 in the same quarter of the prior year. Diluted EPS Excluding Certain Items* increased 14.7 percent to a record high of $1.09 in the third quarter of fiscal 2024 compared to $0.95 in the same quarter of the prior year.
  • Net cash provided by operating activities was $171.1 million in the nine months ended April 30, 2024 compared to $129.9 million in the nine months ended April 30, 2023.
  • Earnings per diluted Class A Common Share guidance was raised for the full year ending July 31, 2024 from the previous range of $3.80 to $3.95 to the new range of $3.93 to $4.00 on a GAAP basis, and was raised from the previous range of $3.95 to $4.10 to the new range of $4.08 to $4.15 on a non-GAAP basis.

MILWAUKEE, May 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 third quarter ended April 30, 2024.

Quarter Ended April 30, 2024 Financial Results:
Sales for the quarter ended April 30, 2024 increased 1.9 percent, which consisted of organic sales growth of 4.5 percent, a decrease of 0.3 percent from foreign currency translation and a decrease of 2.3 percent from divestitures. Sales for the quarter ended April 30, 2024 were $343.4 million compared to $337.1 million in the same quarter last year. By region, sales increased 0.9 percent in the Americas & Asia and increased 3.8 percent in Europe & Australia, which consisted of organic sales growth of 4.5 percent in the Americas & Asia and organic sales growth of 4.4 percent in Europe & Australia.

Income before income taxes increased 2.2 percent to $64.4 million for the quarter ended April 30, 2024, compared to $63.0 million in the same quarter last year. Income Before Income Taxes Excluding Certain Items* for the quarter ended April 30, 2024, which was adjusted for amortization expense in both periods, and removes the $3.8 million pre-tax gain on a divestiture from the same quarter last year, was $66.8 million, an increase of 8.2 percent.

Net income for the quarter ended April 30, 2024 was $50.9 million compared to $48.1 million in the same quarter last year. Earnings per diluted Class A Nonvoting Common Share were $1.05 in the third quarter of fiscal 2024, compared to $0.96 in the same quarter last year. Net Income Excluding Certain Items* for the quarter ended April 30, 2024 was $52.7 million and Diluted EPS Excluding Certain Items* for the quarter ended April 30, 2024 was $1.09. Net Income Excluding Certain Items* for the quarter ended April 30, 2023 was $47.6 million and Diluted EPS Excluding Certain Items* for the quarter ended April 30, 2023 was $0.95.

Nine-Month Period Ended April 30, 2024 Financial Results:
Sales for the nine-month period ended April 30, 2024 increased 1.2 percent, which consisted of organic sales growth of 3.0 percent, an increase of 0.6 percent from foreign currency translation and a decrease of 2.4 percent from divestitures. Sales for the nine months ended April 30, 2024 were $998.0 million compared to $985.9 million in the same period last year. By region, sales decreased 0.5 percent in the Americas & Asia and increased 4.7 percent in Europe & Australia, which consisted of organic sales growth of 3.0 percent in the Americas & Asia and organic sales growth of 2.8 percent in Europe & Australia.

Income before income taxes increased 11.0 percent to $179.6 million for the nine-month period ended April 30, 2024, compared to $161.9 million in the same period last year. Income Before Income Taxes Excluding Certain Items* for the nine months ended April 30, 2024, which was adjusted for amortization expense in both periods and removes the $3.8 million pre-tax gain on a divestiture from the same period last year, was $186.7 million, an increase of 11.5 percent compared to the same period of the prior year.

Net income for the nine-month period ended April 30, 2024 was $141.8 million compared to $125.5 million in the same period last year. Earnings per diluted Class A Nonvoting Common Share were $2.91 for the nine months ended April 30, 2024, compared to $2.51 in the same period last year. Net Income Excluding Certain Items* for the nine months ended April 30, 2024 was $147.2 million and Diluted EPS Excluding Certain Items* for the nine months ended April 30, 2024 was $3.03. Net Income Excluding Certain Items* for the nine months ended April 30, 2023 was $130.3 million, and Diluted EPS Excluding Certain Items* for the nine months ended April 30, 2023 was $2.60.

Commentary:
“This quarter we reported all-time record high EPS and strong organic sales growth. Our ongoing investment in research and development continues to add value for our customers and increase organic sales. This quarter we launched several exciting new products that separate us from our competition and complement our current product offering. We remain focused on innovation and on our consistent priorities, which we believe will continue to drive future growth,” said Brady’s President and Chief Executive Officer, Russell R. Shaller. “Both regions performed extremely well this quarter and we are facilitating an increased pace of innovative new product development, which we believe positions us for future success.”

“In addition to our organic revenue growth of 4.5 percent and record EPS this quarter, we also used our strong balance sheet and cash generation to return funds to our shareholders in the form of share buybacks and dividends. This quarter, we repurchased a total of 863,365 shares for $50.4 million and we returned another $11.2 million to our shareholders in the form of dividends,” said Brady’s Chief Financial Officer, Ann Thornton. “Our balance sheet provides significant opportunities to invest in both organic opportunities and strategic acquisitions in order to drive long-term shareholder value.”

Fiscal 2024 Guidance:
The Company raised its GAAP earnings per diluted Class A Nonvoting Common Share guidance for the year ending July 31, 2024 from the previous guidance range of $3.80 to $3.95 per share to the new full year guidance range of $3.93 to $4.00 per share. The Company raised its Diluted EPS Excluding Certain Items* guidance for the year ending July 31, 2024 from the previous range of $3.95 to $4.10 per share to the new full year guidance range of $4.08 to $4.15 per share.

The assumptions included in fiscal 2024 guidance include a full-year income tax rate of approximately 21 percent and depreciation and amortization expense ranging from $30 million to $32 million. Capital expenditures are expected to approximate $75 million, which is inclusive of facility purchase and construction costs of approximately $55 million. Fiscal 2024 guidance is based on foreign currency exchange rates as of April 30, 2024 and assumes continued economic growth. Fiscal 2024 guidance does not include the Company’s pending acquisition of Gravotech Holding, which is expected to close by the end of its fiscal year ending July 31, 2024. Excluding acquisition-related costs, Brady expects the acquisition of Gravotech Holding to be immaterial to earnings per share in fiscal 2024.

A webcast regarding Brady’s fiscal 2024 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, 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: the occurrence of any event, change or other circumstances that could give rise to the termination of the offer to acquire Gravotech; the expected timing and likelihood of completion of the proposed transaction with Gravotech, including the timing, receipt and terms and conditions of any required governmental and regulatory approvals of the offer that could reduce anticipated benefits or cause the parties to abandon the transaction; the risk that the proposed offer and its announcement could have an adverse effect on the ability of Brady and Gravotech to retain customers and retain and hire key personnel and maintain relationships with their suppliers and customers and on their operating results and businesses generally; 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 April 30, Nine months ended April 30,
  2024   2023   2024   2023 
Net sales$343,384  $337,116  $997,991  $985,934 
Cost of goods sold 166,357   167,425   487,162   504,539 
Gross margin 177,027   169,691   510,829   481,395 
Operating expenses:       
Research and development 17,681   15,715   50,215   45,025 
Selling, general and administrative 95,803   90,975   283,415   273,202 
Total operating expenses 113,484   106,690   333,630   318,227 
        
Operating income 63,543   63,001   177,199   163,168 
        
Other income (expense):       
Investment and other income 1,596   785   4,718   1,596 
Interest expense (728)  (753)  (2,284)  (2,886)
        
Income before income taxes 64,411   63,033   179,633   161,878 
        
Income tax expense 13,521   14,981   37,874   36,399 
        
Net income$50,890  $48,052  $141,759  $125,479 
        
Net income per Class A Nonvoting Common Share:       
Basic$1.06  $0.97  $2.94  $2.52 
Diluted$1.05  $0.96  $2.91  $2.51 
        
Net income per Class B Voting Common Share:       
Basic$1.06  $0.97  $2.92  $2.51 
Diluted$1.05  $0.96  $2.90  $2.49 
        
Weighted average common shares outstanding:       
Basic 48,004   49,653   48,294   49,755 
Diluted 48,386   50,001   48,640   50,033 
        


BRADY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
    
 April 30, 2024 July 31, 2023
 (Unaudited)  
ASSETS   
Current assets:   
Cash and cash equivalents$160,458  $151,532 
Accounts receivable, net of allowance for credit losses of $6,690 and $8,467, respectively 195,099   184,420 
Inventories 153,272   177,078 
Prepaid expenses and other current assets 12,443   11,790 
Total current assets 521,272   524,820 
Property, plant and equipment—net 194,732   142,149 
Goodwill 588,095   592,646 
Other intangible assets 53,893   62,096 
Deferred income taxes 14,881   15,716 
Operating lease assets 27,438   29,688 
Other assets 23,785   22,142 
Total$1,424,096  $1,389,257 
LIABILITIES AND STOCKHOLDERS’ EQUITY   
Current liabilities:   
Accounts payable$79,965  $79,855 
Accrued compensation and benefits 73,697   71,470 
Taxes, other than income taxes 14,462   13,575 
Accrued income taxes 7,945   12,582 
Current operating lease liabilities 12,230   14,726 
Other current liabilities 64,850   65,828 
Total current liabilities 253,149   258,036 
Long-term debt 63,774   49,716 
Long-term operating lease liabilities 15,552   16,217 
Other liabilities 69,519   74,369 
Total liabilities 401,994   398,338 
Stockholders’ equity:   
Common stock:   
Class A nonvoting common stock—Issued 51,261,487 shares, and outstanding 43,941,713 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 354,432   351,771 
Retained earnings 1,129,739   1,021,870 
Treasury stock—7,319,774 and 6,252,763 shares, respectively, of Class A nonvoting common stock, at cost (356,210)  (290,209)
Accumulated other comprehensive loss (106,407)  (93,061)
Total stockholders’ equity 1,022,102   990,919 
Total$1,424,096  $1,389,257 
    


BRADY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited; Dollars in thousands)
 
 Nine months ended April 30,
  2024   2023 
Operating activities:   
Net income$141,759  $125,479 
Adjustments to reconcile net income to net cash provided by operating activities:   
Depreciation and amortization 22,406   24,522 
Stock-based compensation expense 6,422   6,427 
Gain on sale of business    (3,770)
Deferred income taxes (6,902)  (5,947)
Other 1,358   (1,336)
Changes in operating assets and liabilities:   
Accounts receivable (15,915)  1,744 
Inventories 20,861   9,279 
Prepaid expenses and other assets (1,849)  (3,429)
Accounts payable and accrued liabilities 7,347   (19,704)
Income taxes (4,393)  (3,404)
      Net cash provided by operating activities 171,094   129,861 
    
Investing activities:   
Purchases of property, plant and equipment (69,157)  (12,912)
Sale of business    8,000 
Other (1,174)  11 
      Net cash used in investing activities (70,331)  (4,901)
    
Financing activities:   
Payment of dividends (33,890)  (34,202)
Proceeds from exercise of stock options 5,583   4,091 
Payments for employee taxes withheld from stock-based awards (2,664)  (1,965)
Purchase of treasury stock (72,225)  (29,774)
Proceeds from borrowing on credit agreement 111,790   102,916 
Repayment of borrowing on credit agreement (97,732)  (147,067)
Other 149   66 
      Net cash used in financing activities (88,989)  (105,935)
    
Effect of exchange rate changes on cash and cash equivalents (2,848)  1,953 
    
Net increase in cash and cash equivalents 8,926   20,978 
Cash and cash equivalents, beginning of period 151,532   114,069 
    
Cash and cash equivalents, end of period$160,458  $135,047 
    



BRADY CORPORATION AND SUBSIDIARIES
SEGMENT INFORMATION
(Unaudited; Dollars in thousands)
        
 Three months ended April 30, Nine months ended April 30,
  2024   2023   2024   2023 
NET SALES       
Americas & Asia$224,766  $222,813  $658,035  $661,375 
Europe & Australia 118,618   114,303   339,956   324,559 
Total$343,384  $337,116  $997,991  $985,934 
        
SALES INFORMATION       
Americas & Asia       
Organic 4.5%  1.2%  3.0%  4.0%
Currency (0.1)%  (0.8)%  %  (1.1)%
Divestiture (3.5)%  (0.3)%  (3.5)%  (0.1)%
Total 0.9%  0.1%  (0.5)%  2.8%
Europe & Australia       
Organic 4.4%  3.4%  2.8%  7.0%
Currency (0.6)%  (4.8)%  1.9%  (10.1)%
Total 3.8%  (1.4)%  4.7%  (3.1)%
Total Company       
Organic 4.5%  1.9%  3.0%  5.0%
Currency (0.3)%  (2.1)%  0.6%  (4.1)%
Divestiture (2.3)%  (0.2)%  (2.4)%  (0.1)%
Total 1.9%  (0.4)%  1.2%  0.8%
        
SEGMENT PROFIT       
Americas & Asia$49,697  $49,192  $143,489  $130,511 
Europe & Australia 19,537   17,099   51,335   47,316 
Total segment profit$69,234  $66,291  $194,824  $177,827 
SEGMENT PROFIT AS A PERCENT OF NET SALES       
Americas & Asia 22.1%  22.1%  21.8%  19.7%
Europe & Australia 16.5%  15.0%  15.1%  14.6%
Total 20.2%  19.7%  19.5%  18.0%
        
        
 Three months ended April 30, Nine months ended April 30,
  2024   2023   2024   2023 
Total segment profit$69,234  $66,291  $194,824  $177,827 
Unallocated amounts:       
Administrative costs (5,691)  (7,060)  (17,625)  (18,429)
Gain on sale of business -   3,770   -   3,770 
Investment and other income 1,596   785   4,718   1,596 
Interest expense (728)  (753)  (2,284)  (2,886)
Income before income taxes$64,411  $63,033  $179,633  $161,878 
        



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 April 30, Nine months ended April 30,
    2024   2023   2024   2023 
Income before income taxes$64,411  $63,033  $179,633  $161,878 
 Amortization expense  2,365   2,461   7,084   9,350 
 Gain on sale of business  -   (3,770)  -   (3,770)
Income Before Income Taxes Excluding Certain Items (non-GAAP measure)$ 66,776  $ 61,724  $ 186,717  $ 167,458 
          
          
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 April 30, Nine months ended April 30,
    2024   2023   2024   2023 
Income tax expense (GAAP measure)$13,521  $14,981  $37,874  $36,399 
 Amortization expense  548   569   1,642   2,203 
 Gain on sale of business  -   (1,431)  -   (1,431)
Income Tax Expense Excluding Certain Items (non-GAAP measure)$ 14,069  $ 14,119  $ 39,516  $ 37,171 
          
          
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 April 30, Nine months ended April 30,
    2024   2023   2024   2023 
Net income (GAAP measure)$50,890  $48,052  $141,759  $125,479 
 Amortization expense  1,817   1,892   5,442   7,147 
 Gain on sale of business  -   (2,339)  -   (2,339)
Net Income Excluding Certain Items (non-GAAP measure)$ 52,707  $ 47,605  $ 147,201  $ 130,287 
          
          
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 April 30, Nine months ended April 30,
    2024   2023   2024   2023 
Net income per Class A Nonvoting Common Share (GAAP measure)$1.05  $0.96  $2.91  $2.51 
 Amortization expense  0.04   0.04   0.11   0.14 
 Gain on sale of business  -   (0.05)  -   (0.05)
Diluted EPS Excluding Certain Items (non-GAAP measure)$ 1.09  $ 0.95  $ 3.03  $ 2.60 
          
          
Diluted EPS Excluding Certain Items Guidance:     Fiscal 2024 Expectations
       Low High
Earnings per diluted Class A Common Share (GAAP measure)     $3.93  $4.00 
 Amortization expense      0.15   0.15 
Diluted EPS Excluding Certain Items (non-GAAP measure)     $ 4.08  $ 4.15 


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