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Brady Corporation
Quarter Ended
Sales for the quarter ended
Income before income taxes increased 23.0 percent to
Net income for the quarter ended
Nine-Month Period Ended
Sales for the nine-month period ended
Income before income taxes increased 17.3 percent to
Net income for the nine-month period ended
Commentary:
“Our most recent financial results once again demonstrate how our investment in research and development is paying off and adding tremendous value to our customers. This quarter, we launched several new industrial printers that continue to separate us from our competition. Our ability to innovate has never been stronger and is setting the stage for continued future growth,” said Brady’s President and Chief Executive Officer,
“Brady had a strong quarter. We posted record high quarterly diluted EPS of
Fiscal 2023 Guidance:
The Company adjusted its GAAP earnings per diluted Class A Nonvoting Common Share guidance for the year ending
The assumptions included in our fiscal 2023 guidance include a full-year income tax rate of approximately 21 percent, depreciation and amortization expense ranging from
A webcast regarding Brady’s fiscal 2023 third quarter financial results will be available at www.bradycorp.com/investors beginning at
* 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, income, 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, labor and freight as well as raw 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; Brady’s ability to identify, integrate, and grow acquired companies, and to manage contingent liabilities from divested businesses; adverse impacts of the novel coronavirus (“COVID-19”) pandemic or other pandemics; difficulties in protecting our websites, networks, and systems against security breaches; risks associated with the loss of key employees; extensive regulations by
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:
Media contact:
BRADY CORPORATION AND SUBSIDIARIES | ||||||||||||||||
CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||||||
(Unaudited; Dollars in thousands, except per share data) | ||||||||||||||||
Three months ended |
Nine months ended |
|||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
Net sales | $ | 337,116 | $ | 338,551 | $ | 985,934 | $ | 978,081 | ||||||||
Cost of goods sold | 167,425 | 174,525 | 504,539 | 509,705 | ||||||||||||
Gross margin | 169,691 | 164,026 | 481,395 | 468,376 | ||||||||||||
Operating expenses: | ||||||||||||||||
Research and development | 15,715 | 14,923 | 45,025 | 42,795 | ||||||||||||
Selling, general and administrative | 90,975 | 96,214 | 273,202 | 285,485 | ||||||||||||
Total operating expenses | 106,690 | 111,137 | 318,227 | 328,280 | ||||||||||||
Operating income | 63,001 | 52,889 | 163,168 | 140,096 | ||||||||||||
Other income (expense): | ||||||||||||||||
Investment and other income (expense) | 785 | (1,308 | ) | 1,596 | (1,343 | ) | ||||||||||
Interest expense | (753 | ) | (329 | ) | (2,886 | ) | (763 | ) | ||||||||
Income before income taxes | 63,033 | 51,252 | 161,878 | 137,990 | ||||||||||||
Income tax expense | 14,981 | 11,198 | 36,399 | 29,075 | ||||||||||||
Net income | $ | 48,052 | $ | 40,054 | $ | 125,479 | $ | 108,915 | ||||||||
Net income per Class A Nonvoting Common Share: | ||||||||||||||||
Basic | $ | 0.97 | $ | 0.78 | $ | 2.52 | $ | 2.11 | ||||||||
Diluted | $ | 0.96 | $ | 0.78 | $ | 2.51 | $ | 2.09 | ||||||||
Net income per Class B Voting Common Share: | ||||||||||||||||
Basic | $ | 0.97 | $ | 0.78 | $ | 2.51 | $ | 2.09 | ||||||||
Diluted | $ | 0.96 | $ | 0.78 | $ | 2.49 | $ | 2.08 | ||||||||
Weighted average common shares outstanding: | ||||||||||||||||
Basic | 49,653 | 51,326 | 49,755 | 51,700 | ||||||||||||
Diluted | 50,001 | 51,568 | 50,033 | 52,055 | ||||||||||||
BRADY CORPORATION AND SUBSIDIARIES | |||||||
CONSOLIDATED BALANCE SHEETS | |||||||
(Dollars in thousands) | |||||||
(Unaudited) | |||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 135,047 | $ | 114,069 | |||
Accounts receivable, net of allowance for credit losses of |
184,907 | 183,233 | |||||
Inventories | 182,809 | 190,023 | |||||
Prepaid expenses and other current assets | 14,020 | 10,743 | |||||
Total current assets | 516,783 | 498,068 | |||||
Property, plant and equipment—net | 139,747 | 139,511 | |||||
590,684 | 586,832 | ||||||
Other intangible assets | 65,210 | 74,028 | |||||
Deferred income taxes | 15,124 | 15,881 | |||||
Operating lease assets | 27,378 | 31,293 | |||||
Other assets | 21,840 | 21,719 | |||||
Total | $ | 1,376,766 | $ | 1,367,332 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 74,745 | $ | 81,116 | |||
Accrued compensation and benefits | 65,789 | 76,764 | |||||
Taxes, other than income taxes | 13,246 | 12,539 | |||||
Accrued income taxes | 5,103 | 8,294 | |||||
Current operating lease liabilities | 14,196 | 15,003 | |||||
Other current liabilities | 63,357 | 61,458 | |||||
Total current liabilities | 236,436 | 255,174 | |||||
Long-term debt | 50,849 | 95,000 | |||||
Long-term operating lease liabilities | 14,573 | 19,143 | |||||
Other liabilities | 79,812 | 86,717 | |||||
Total liabilities | 381,670 | 456,034 | |||||
Stockholders’ equity: | |||||||
Common stock: | |||||||
Class A nonvoting common stock—Issued 51,261,487 shares, and outstanding 45,935,672 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 | 350,758 | 345,266 | |||||
Retained earnings | 983,694 | 892,417 | |||||
(244,503 | ) | (217,856 | ) | ||||
Accumulated other comprehensive loss | (95,401 | ) | (109,077 | ) | |||
Total stockholders’ equity | 995,096 | 911,298 | |||||
Total | $ | 1,376,766 | $ | 1,367,332 | |||
BRADY CORPORATION AND SUBSIDIARIES | ||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
(Unaudited; Dollars in thousands) | ||||||||
Nine months ended |
||||||||
2023 | 2022 | |||||||
Operating activities: | ||||||||
Net income | $ | 125,479 | $ | 108,915 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 24,522 | 25,448 | ||||||
Stock-based compensation expense | 6,427 | 9,153 | ||||||
Gain on sale of business | (3,770 | ) | — | |||||
Deferred income taxes | (5,947 | ) | 2,858 | |||||
Other | (1,336 | ) | (1,080 | ) | ||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | 1,744 | (26,438 | ) | |||||
Inventories | 9,279 | (47,784 | ) | |||||
Prepaid expenses and other assets | (3,429 | ) | (932 | ) | ||||
Accounts payable and accrued liabilities | (19,704 | ) | (5,584 | ) | ||||
Income taxes | (3,404 | ) | 680 | |||||
Net cash provided by operating activities | 129,861 | 65,236 | ||||||
Investing activities: | ||||||||
Purchases of property, plant and equipment | (12,912 | ) | (22,130 | ) | ||||
Sale of business | 8,000 | — | ||||||
Other | 11 | 59 | ||||||
Net cash used in investing activities | (4,901 | ) | (22,071 | ) | ||||
Financing activities: | ||||||||
Payment of dividends | (34,202 | ) | (34,701 | ) | ||||
Proceeds from exercise of stock options | 4,091 | 663 | ||||||
Payments for employee taxes withheld from stock-based awards | (1,965 | ) | (5,070 | ) | ||||
Purchase of treasury stock | (29,774 | ) | (84,930 | ) | ||||
Proceeds from borrowing on credit agreement | 102,916 | 155,216 | ||||||
Repayment of borrowing on credit agreement | (147,067 | ) | (116,216 | ) | ||||
Other | 66 | 3,276 | ||||||
Net cash used in financing activities | (105,935 | ) | (81,762 | ) | ||||
Effect of exchange rate changes on cash and cash equivalents | 1,953 | (5,670 | ) | |||||
Net increase (decrease) in cash and cash equivalents | 20,978 | (44,267 | ) | |||||
Cash and cash equivalents, beginning of period | 114,069 | 147,335 | ||||||
Cash and cash equivalents, end of period | $ | 135,047 | $ | 103,068 | ||||
BRADY CORPORATION AND SUBSIDIARIES | ||||||||||||||||
SEGMENT INFORMATION | ||||||||||||||||
(Unaudited; Dollars in thousands) | ||||||||||||||||
Three months ended |
Nine months ended |
|||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
$ | 222,813 | $ | 222,579 | $ | 661,375 | $ | 643,292 | |||||||||
114,303 | 115,972 | 324,559 | 334,789 | |||||||||||||
Total | $ | 337,116 | $ | 338,551 | $ | 985,934 | $ | 978,081 | ||||||||
SALES INFORMATION | ||||||||||||||||
Organic | 1.2 | % | 9.2 | % | 4.0 | % | 10.7 | % | ||||||||
Currency | (0.8 | )% | (0.1 | )% | (1.1 | )% | 0.3 | % | ||||||||
Divestiture | (0.3 | )% | — | % | (0.1 | )% | — | % | ||||||||
Acquisition | — | % | 8.6 | % | — | % | 8.3 | % | ||||||||
Total | 0.1 | % | 17.7 | % | 2.8 | % | 19.3 | % | ||||||||
Organic | 3.4 | % | 8.4 | % | 7.0 | % | 7.6 | % | ||||||||
Currency | (4.8 | )% | (8.1 | )% | (10.1 | )% | (4.6 | )% | ||||||||
Acqusition | — | % | 8.7 | % | — | % | 8.8 | % | ||||||||
Total | (1.4 | )% | 9.0 | % | (3.1 | )% | 11.8 | % | ||||||||
Organic | 1.9 | % | 9.0 | % | 5.0 | % | 9.6 | % | ||||||||
Currency | (2.1 | )% | (3.0 | )% | (4.1 | )% | (1.5 | )% | ||||||||
Divestiture | (0.2 | )% | — | % | (0.1 | )% | — | % | ||||||||
Acquisition | — | % | 8.6 | % | — | % | 8.5 | % | ||||||||
Total | (0.4 | )% | 14.6 | % | 0.8 | % | 16.6 | % | ||||||||
SEGMENT PROFIT | ||||||||||||||||
$ | 49,192 | $ | 45,021 | $ | 130,511 | $ | 114,659 | |||||||||
17,099 | 16,050 | 47,316 | 46,165 | |||||||||||||
Total | $ | 66,291 | $ | 61,071 | $ | 177,827 | $ | 160,824 | ||||||||
SEGMENT PROFIT AS A PERCENT OF |
||||||||||||||||
22.1 | % | 20.2 | % | 19.7 | % | 17.8 | % | |||||||||
15.0 | % | 13.8 | % | 14.6 | % | 13.8 | % | |||||||||
Total | 19.7 | % | 18.0 | % | 18.0 | % | 16.4 | % | ||||||||
Three months ended |
Nine months ended |
|||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
Total segment profit | $ | 66,291 | $ | 61,071 | $ | 177,827 | $ | 160,824 | ||||||||
Unallocated amounts: | ||||||||||||||||
Administrative costs | (7,060 | ) | (8,182 | ) | (18,429 | ) | (20,728 | ) | ||||||||
Gain on sale of business | 3,770 | - | 3,770 | - | ||||||||||||
Investment and other income (expense) | 785 | (1,308 | ) | 1,596 | (1,343 | ) | ||||||||||
Interest expense | (753 | ) | (329 | ) | (2,886 | ) | (763 | ) | ||||||||
Income before income taxes | $ | 63,033 | $ | 51,252 | $ | 161,878 | $ | 137,990 | ||||||||
GAAP to NON-GAAP MEASURES | ||||||||||||||||||
(Unaudited; Dollars in Thousands, Except Per Share Amounts) | ||||||||||||||||||
In accordance with the |
||||||||||||||||||
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 |
Nine months ended |
|||||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||||
Income before income taxes | $ | 63,033 | $ | 51,252 | $ | 161,878 | $ | 137,990 | ||||||||||
Amortization expense | 2,461 | 3,735 | 9,350 | 11,291 | ||||||||||||||
Gain on sale of business | (3,770 | ) | - | (3,770 | ) | - | ||||||||||||
Other non-routine charges | - | 1,841 | - | 1,841 | ||||||||||||||
Income Before Income Taxes Excluding Certain Items (non-GAAP measure) | $ | 61,724 | $ | 56,828 | $ | 167,458 | $ | 151,122 | ||||||||||
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 |
Nine months ended |
|||||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||||
Income tax expense (GAAP measure) | $ | 14,981 | $ | 11,198 | $ | 36,399 | $ | 29,075 | ||||||||||
Amortization expense | 569 | 885 | 2,203 | 2,672 | ||||||||||||||
Gain on sale of business | (1,431 | ) | - | (1,431 | ) | - | ||||||||||||
Other non-routine charges | - | 496 | - | 496 | ||||||||||||||
Income Tax Expense Excluding Certain Items (non-GAAP measure) | $ | 14,119 | $ | 12,579 | $ | 37,171 | $ | 32,243 | ||||||||||
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 |
Nine months ended |
|||||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||||
Net income (GAAP measure) | $ | 48,052 | $ | 40,054 | $ | 125,479 | $ | 108,915 | ||||||||||
Amortization expense | 1,892 | 2,850 | 7,147 | 8,619 | ||||||||||||||
Gain on sale of business | (2,339 | ) | - | (2,339 | ) | - | ||||||||||||
Other non-routine charges | - | 1,345 | - | 1,345 | ||||||||||||||
Net Income Excluding Certain Items (non-GAAP measure) | $ | 47,605 | $ | 44,249 | $ | 130,287 | $ | 118,879 | ||||||||||
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: | ||||||||||||||||||
Three months ended |
Nine months ended |
|||||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||||
Net income per Class A Nonvoting Common Share (GAAP measure) | $ | 0.96 | $ | 0.78 | $ | 2.51 | $ | 2.09 | ||||||||||
Amortization expense | 0.04 | 0.06 | 0.14 | 0.17 | ||||||||||||||
Gain on sale of business | (0.05 | ) | - | (0.05 | ) | - | ||||||||||||
Other non-routine charges | - | 0.03 | - | 0.03 | ||||||||||||||
Diluted EPS Excluding Certain Items (non-GAAP measure) | $ | 0.95 | $ | 0.86 | $ | 2.60 | $ | 2.28 | ||||||||||
Diluted EPS Excluding Certain Items Guidance: | Fiscal 2023 Expectations | |||||||||||||||||
Low | High | |||||||||||||||||
Earnings per diluted Class A Common Share (GAAP measure) | $ | 3.32 | $ | 3.47 | ||||||||||||||
Amortization expense | 0.18 | 0.18 | ||||||||||||||||
Gain on sale of business | (0.05 | ) | (0.05 | ) | ||||||||||||||
Diluted EPS Excluding Certain Items (non-GAAP measure) | $ | 3.45 | $ | 3.60 | ||||||||||||||
Source: Brady Corporation