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Brady Corporation Reports Fiscal 2021 Third Quarter Results and Increases its Fiscal 2021 EPS Guidance

  • Pre-tax income more than doubled to $47.8 million in the third quarter of fiscal 2021 compared to $22.2 million in the same quarter of the prior year.
  • Diluted EPS was $0.71 in the third quarter of fiscal 2021 compared to $0.26 in the same quarter of the prior year.
  • Sales for the quarter increased 11.1 percent. Organic sales increased 6.5 percent and the impact of foreign currency translation increased sales by 4.6 percent.
  • Net cash provided by operating activities was $56.0 million in the third quarter of fiscal 2021 compared to $42.8 million in the third quarter of the prior year.
  • Diluted EPS guidance for the full year ending July 31, 2021 was increased to a range of $2.58 to $2.68 from the previous range of $2.48 to $2.58.

MILWAUKEE, May 20, 2021 (GLOBE NEWSWIRE) -- Brady Corporation (NYSE: BRC) (“Brady” or “Company”), a world leader in identification solutions, today reported its financial results for its fiscal 2021 third quarter ended April 30, 2021.

Quarter Ended April 30, 2021 Financial Results:
Income before income taxes and losses of unconsolidated affiliate increased 115.7 percent to $47.8 million for the quarter ended April 30, 2021, compared to $22.2 million in the same quarter last year. Income before income taxes for the prior year quarter ended April 30, 2020 was reduced by non-cash impairment charges of $13.8 million primarily related to the write down of certain of the tangible and intangible assets in the Company’s Workplace Safety segment.  

Net income for the quarter ended April 30, 2021 increased 173.5 percent to $37.3 million compared to $13.6 million in the same quarter last year. Earnings per diluted Class A Nonvoting Common Share were $0.71 for the third quarter of fiscal 2021, compared to $0.26 in the same quarter last year. Diluted EPS for the prior year quarter ended April 30, 2020 was reduced by non-cash impairment charges of approximately $0.21 per share.

Sales for the quarter ended April 30, 2021 increased 11.1 percent, which consisted of an organic sales increase of 6.5 percent and an increase of 4.6 percent from foreign currency translation. Sales for the quarter ended April 30, 2021 were $295.5 million compared to $265.9 million in the same quarter last year. By segment, sales increased 12.9 percent in Identification Solutions and increased 6.4 percent in Workplace Safety, which consisted of an organic sales increase of 9.8 percent in Identification Solutions and an organic sales decline of 2.2 percent in Workplace Safety.

Nine-Month Period Ended April 30, 2021 Financial Results:
Income before income taxes and losses of unconsolidated affiliate increased 22.0 percent to $129.4 million for the nine-month period ended April 30, 2021, compared to $106.1 million for the nine-month period ended April 30, 2020. Income before income taxes for the prior year nine-month period ended April 30, 2020 was reduced by non-cash impairment charges of $13.8 million.

Net income for the nine-month period ended April 30, 2021 increased 20.0 percent to $101.6 million compared to $84.7 million for the same period last year. Earnings per diluted Class A Nonvoting Common Share were $1.94 for the nine-month period ended April 30, 2021, compared to $1.58 for the same period last year. Net income and earnings per diluted Class A Nonvoting Common Share for the prior year nine-month period ended April 30, 2020 were reduced by non-cash impairment charges of $13.8 million.

Sales for the nine-month period ended April 30, 2021 increased 1.1 percent, which consisted of an organic sales decline of 1.7 percent and an increase of 2.8 percent from foreign currency translation. Sales for the nine months ended April 30, 2021 were $838.6 million compared to $829.6 million in the same period last year. By segment, sales declined 0.5 percent in Identification Solutions and grew 5.6 percent in Workplace Safety, which consisted of an organic sales decline of 2.1 percent in Identification Solutions and an organic sales decline of 0.5 percent in Workplace Safety.

Commentary:
“Throughout the pandemic, we continued to invest in sales and marketing as well as research and development. These investments, coupled with improved market conditions, helped us to return to organic sales growth this quarter,” said Brady’s President and Chief Executive Officer, J. Michael Nauman. “Our outlook is positive. We expect accelerated organic sales growth in our fourth quarter and into the future.   Last month, we launched an all-cash tender offer in Finland to acquire all of the outstanding shares of Nordic ID Oyj. The acquisition of Nordic ID allows Brady to diversify and expand our presence in RFID into attractive new markets with faster long-term organic growth rates as we strengthen our product portfolio and service offerings.   Brady is in a strong financial position and we are using this strong financial position to set ourselves up for strong and sustainable growth as we move past this pandemic.”

“This quarter, we generated diluted EPS of $0.71, which is an all-time quarterly record for Brady,” said Brady’s Chief Financial Officer, Aaron Pearce. “Brady continues to generate strong cash flow and has a very strong balance sheet.   As of April 30, 2021, we had $321.8 million of cash on hand and no outstanding debt. We generated $56.0 million of cash flow from operating activities this quarter, which was an increase of 30.9 percent compared to last year’s third quarter. Although the economy is still challenged in certain geographies, we do expect the general trend of improving economic conditions to continue over the next several quarters and we believe that Brady is well positioned to prosper in this environment through both organic sales growth and growth through acquisitions. Brady’s strong balance sheet and cash generation position us well for future financial success.”

Fiscal 2021 Guidance:
The Company is increasing its full year fiscal 2021 earnings per diluted Class A Nonvoting Common Share guidance from its previous range of $2.48 to $2.58 to a range of $2.58 to $2.68. This equates to diluted earnings per share in the range of $0.64 to $0.74 in the fourth quarter of the fiscal year ending July 31, 2021, which would represent an approximate increase of 20 percent to 40 percent over the fourth quarter of fiscal 2020. The Company also expects organic sales growth to be in the low-teen percentages in the fourth quarter of fiscal 2021 when compared to the fourth quarter of the prior year. This guidance is based on foreign currency exchange rates as of April 30, 2021 and assumes a continued economic recovery.

A webcast regarding Brady’s fiscal 2021 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, 2020, employed approximately 5,400 people in its worldwide businesses. Brady’s fiscal 2020 sales were approximately $1.08 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.

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: 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; Brady’s ability to develop technologically advanced products that meet customer demands; raw material and other cost increases; difficulties in protecting our websites, networks, and systems against security breaches; 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; foreign currency fluctuations; potential write-offs of Brady’s 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 issues 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, 2020 and subsequent Form 10-Q filings.

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,
    2021       2020       2021       2020  
Net sales $ 295,503     $ 265,943     $ 838,568     $ 829,555  
Cost of goods sold   146,656       136,416       424,771       419,496  
Gross margin   148,847       129,527       413,797       410,059  
Operating expenses:              
Research and development   11,305       9,814       31,384       31,298  
Selling, general and administrative   90,817       83,223       256,088       260,136  
Impairment charges         13,821             13,821  
Total operating expenses   102,122       106,858       287,472       305,255  
               
Operating income   46,725       22,669       126,325       104,804  
               
Other income (expense):              
Investment and other income   1,181       112       3,372       3,252  
Interest expense   (131 )     (628 )     (288 )     (1,976 )
               
Income before income taxes and losses of unconsolidated affiliate   47,775       22,153       129,409       106,080  
               
Income tax expense   10,229       8,520       27,017       21,396  
               
Income before losses of unconsolidated affiliate   37,546       13,633       102,392       84,684  
Equity in losses of unconsolidated affiliate   (255 )           (760 )      
               
Net income $ 37,291     $ 13,633     $ 101,632     $ 84,684  
               
Net income per Class A Nonvoting Common Share:              
Basic $ 0.72     $ 0.26     $ 1.95     $ 1.60  
Diluted $ 0.71     $ 0.26     $ 1.94     $ 1.58  
Dividends $ 0.22     $ 0.22     $ 0.66     $ 0.65  
               
Net income per Class B Voting Common Share:              
Basic $ 0.72     $ 0.26     $ 1.94     $ 1.58  
Diluted $ 0.71     $ 0.26     $ 1.93     $ 1.57  
Dividends $ 0.22     $ 0.22     $ 0.64     $ 0.64  
               
Weighted average common shares outstanding:              
Basic   52,050       52,607       52,030       53,023  
Diluted   52,449       52,972       52,341       53,512  
               


       
BRADY CORPORATION AND SUBSIDIARIES      
CONSOLIDATED BALANCE SHEETS      
(Dollars in thousands)      
       
  April 30, 2021   July 31, 2020
  (Unaudited)    
ASSETS      
Current assets:      
Cash and cash equivalents $ 321,801     $ 217,643  
Accounts receivable, net of allowance for credit losses of $7,551 and $7,157, respectively   163,381       146,181  
Inventories   122,847       135,662  
Prepaid expenses and other current assets   13,032       9,962  
Total current assets   621,061       509,448  
Property, plant and equipment—net   121,126       115,068  
Goodwill   422,091       416,034  
Other intangible assets   18,528       22,334  
Deferred income taxes   8,334       8,845  
Operating lease assets   37,622       41,899  
Other assets   31,415       28,838  
Total $ 1,260,177     $ 1,142,466  
LIABILITIES AND STOCKHOLDERS’ EQUITY      
Current liabilities:      
Accounts payable $ 72,234     $ 62,547  
Accrued compensation and benefits   69,621       41,546  
Taxes, other than income taxes   9,207       8,057  
Accrued income taxes   2,711       8,652  
Current operating lease liabilities   16,197       15,304  
Other current liabilities   51,145       49,782  
Total current liabilities   221,115       185,888  
Long-term operating lease liabilities   25,841       31,982  
Other liabilities   61,595       61,524  
Total liabilities   308,551       279,394  
Stockholders’ equity:      
Common stock:      
Class A nonvoting common stock—Issued 51,261,487 shares, and outstanding 48,524,455 and 48,456,954 shares, respectively   513       513  
Class B voting common stock—Issued and outstanding, 3,538,628 shares   35       35  
Additional paid-in capital   336,957       331,761  
Retained earnings   771,797       704,456  
Treasury stock—2,737,032 and 2,804,533 shares, respectively, of Class A nonvoting common stock, at cost   (109,128 )     (107,216 )
Accumulated other comprehensive loss   (48,548 )     (66,477 )
Total stockholders’ equity   951,626       863,072  
Total $ 1,260,177     $ 1,142,466  
       


       
BRADY CORPORATION AND SUBSIDIARIES      
CONSOLIDATED STATEMENTS OF CASH FLOWS      
(Unaudited; Dollars in thousands)      
  Nine months ended April 30,
    2021       2020  
Operating activities:      
Net income $ 101,632     $ 84,684  
Adjustments to reconcile net income to net cash provided by operating activities:      
Depreciation and amortization   17,240       17,731  
Stock-based compensation expense   8,003       7,180  
Deferred income taxes   (3,957 )     (309 )
Impairment charges         13,821  
Equity in losses of unconsolidated affiliate   760        
Other   (1,186 )     1,698  
Changes in operating assets and liabilities:      
Accounts receivable   (13,247 )     9,019  
Inventories   15,210       (7,439 )
Prepaid expenses and other assets   (2,584 )     (5,653 )
Accounts payable and accrued liabilities   39,244       (26,609 )
Income taxes   (6,207 )     1,790  
Net cash provided by operating activities   154,908       95,913  
       
Investing activities:      
Purchases of property, plant and equipment   (21,411 )     (21,616 )
Other   2,567       (4,419 )
Net cash used in investing activities   (18,844 )     (26,035 )
       
Financing activities:      
Payment of dividends   (34,290 )     (34,447 )
Proceeds from exercise of stock options   1,612       5,212  
Payments for employee taxes withheld from stock-based awards   (2,772 )     (7,832 )
Purchase of treasury stock   (3,593 )     (64,113 )
Other   (231 )     133  
Net cash used in financing activities   (39,274 )     (101,047 )
       
Effect of exchange rate changes on cash   7,368       (9,023 )
       
Net increase (decrease) in cash and cash equivalents   104,158       (40,192 )
Cash and cash equivalents, beginning of period   217,643       279,072  
       
Cash and cash equivalents, end of period $ 321,801     $ 238,880  
       



               
BRADY CORPORATION AND SUBSIDIARIES              
SEGMENT INFORMATION              
(Unaudited; Dollars in thousands)              
               
  Three months ended April 30,   Nine months ended April 30,
    2021       2020       2021       2020  
NET SALES                  
ID Solutions $ 218,065     $ 193,169     $ 610,484     $ 613,518  
Workplace Safety   77,438       72,774       228,084       216,037  
Total $ 295,503     $ 265,943     $ 838,568     $ 829,555  
                   
SALES INFORMATION                  
ID Solutions                  
Organic   9.8 %     (8.2 )%     (2.1 )%     (3.2 )%
Currency   3.1 %     (1.5 )%     1.6 %     (1.1 )%
Total   12.9 %     (9.7 )%     (0.5 )%     (4.3 )%
Workplace Safety              
Organic   (2.2 )%     0.2 %     (0.5 )%     (0.5 )%
Currency   8.6 %     (4.1 )%     6.1 %     (3.1 )%
Total   6.4 %     (3.9 )%     5.6 %     (3.6 )%
Total Company              
Organic   6.5 %     (6.0 )%     (1.7 )%     (2.5 )%
Currency   4.6 %     (2.2 )%     2.8 %     (1.6 )%
Total   11.1 %     (8.2 )%     1.1 %     (4.1 )%
                   
SEGMENT PROFIT                  
ID Solutions $ 47,539     $ 36,401     $ 126,818     $ 119,499  
Workplace Safety   5,656       4,379       17,107       14,991  
Total $ 53,195     $ 40,780     $ 143,925     $ 134,490  
SEGMENT PROFIT AS A PERCENT OF NET SALES              
ID Solutions   21.8 %     18.8 %     20.8 %     19.5 %
Workplace Safety   7.3 %     6.0 %     7.5 %     6.9 %
Total   18.0 %     15.3 %     17.2 %     16.2 %
               
               
  Three months ended April 30,   Nine months ended April 30,
    2021       2020       2021       2020  
Total segment profit $ 53,195     $ 40,780     $ 143,925     $ 134,490  
Unallocated amounts:              
Administrative costs   (6,470 )     (4,290 )     (17,600 )     (15,865 )
Impairment charges   -       (13,821 )     -       (13,821 )
Investment and other income   1,181       112       3,372       3,252  
Interest expense   (131 )     (628 )     (288 )     (1,976 )
Income before income taxes and losses of unconsolidated affiliate $ 47,775     $ 22,153     $ 129,409     $ 106,080  
               

 


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