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Brady Corporation

Investors
News

Brady Corporation Reports Fiscal 2014 Second Quarter Results

MILWAUKEE--(BUSINESS WIRE)--Feb. 20, 2014-- Brady Corporation (NYSE: BRC) (“Brady” or “Company”), a world leader in identification solutions, today reported its financial results for the fiscal 2014 second quarter ended January 31, 2014.

Quarter Ended January 31, 2014 Financial Results:

Sales from continuing operations for the quarter ended January 31, 2014 were up 6.8 percent to $291.2 million compared to $272.7 million in the second quarter of fiscal 2013. Organic sales were down 1.1 percent, the acquisition of Precision Dynamics Corporation (“PDC”) added 8.5 percent to sales, and the impact of foreign currency translation decreased sales by 0.6 percent. By segment, organic sales were up 2.5 percent in Identification Solutions and down 6.8 percent in Workplace Safety.

Net earnings for the quarter ended January 31, 2014 were $16.4 million compared to a net loss of $8.7 million in the same quarter last year. Net earnings from continuing operations for the quarter ended January 31, 2014, were $10.5 million compared to a loss of $10.7 million in the same quarter last year. Non-GAAP net earnings from continuing operations* for the fiscal 2014 second quarter ended January 31, 2014, were $13.4 million compared to $19.6 million in the same quarter last year.

Net earnings (loss) per Class A Nonvoting Common Share were $0.31 for the second quarter ended January 31, 2014 compared to $(0.17) in the same quarter last year. Earnings (loss) from continuing operations per diluted Class A Nonvoting Common Share were $0.20 for the second quarter of fiscal 2014 compared to $(0.21) in the same quarter last year. Non-GAAP earnings from continuing operations per diluted Class A Nonvoting Common Share* were $0.25 in the second quarter of fiscal 2014 and $0.38 per share in the second quarter of fiscal 2013.

Six-Month Period Ended January 31, 2014 Financial Results:

Sales from continuing operations for the six-month period ended January 31, 2014 were up 9.9 percent to $598.7 million compared to $544.7 million in the same period in fiscal 2013. Organic sales were down 1.6 percent, the acquisition of Precision Dynamics Corporation (“PDC”) added 12.0 percent to sales, and the impact of foreign currency translation decreased sales by 0.5 percent. By segment, organic sales were up 2.9 percent in Identification Solutions and down 8.4 percent in Workplace Safety.

Net earnings for the six-month period ended January 31, 2014 were $40.4 million compared to $18.5 million in the same six-month period last year. Net earnings from continuing operations for the six-month period ended January 31, 2014, were $28.7 million compared to $15.6 million in the same six-month period last year. Non-GAAP net earnings from continuing operations* for the six-month period ended January 31, 2014, were $36.2 million compared to $45.8 million in the same six-month period last year.

Net earnings per Class A Nonvoting Common Share were $0.77 for the six-month period ended January 31, 2014 compared to $0.36 in the same six-month period last year. Earnings from continuing operations per diluted Class A Nonvoting Common Share were $0.55 for the six-month period ended January 31, 2014 compared to $0.30 in the same six-month period last year. Non-GAAP earnings from continuing operations per diluted Class A Nonvoting Common Share* were $0.69 in the six-month period ended January 31, 2014 and $0.89 per share in the six-month period ended January 31, 2013.

Commentary and Guidance:

“Our Identification Solutions business continued its steady revenue performance in the second quarter with 2.5 percent organic sales growth and 15.8 percent growth including sales from the PDC acquisition. During the quarter, sales in our Workplace Safety platform were down 7.7 percent which was below our expectations. We have been accelerating investments in our Workplace Safety business to drive organic sales growth. These investments are aimed at improving our e-commerce capabilities, expanding our product offerings and enhancing our overall value proposition which has resulted in an increase in new customers for the group. While we are investing to increase our competitiveness, we are balancing our investments to ensure more profitable growth over the long term,” said Brady’s Chief Financial Officer and Interim President and Chief Executive Officer, Thomas J. Felmer. “We have seen improvements in our Asian and European Identification Solutions’ results and continue to see growth opportunities driven by our new product pipeline and increased focus on industries such as healthcare; food and beverage; chemical, oil and gas; and aerospace and mass transit.”

The Company anticipates organic sales from continuing operations to range from a slight contraction to low single-digit growth for the full year ending July 31, 2014. The Company anticipates its earnings from continuing operations per diluted Class A Nonvoting Common Share to range from $1.55 to $1.75, exclusive of restructuring charges. This guidance is based on current exchange rates, a full-year income tax rate in the mid-to-upper 20 percent range, depreciation and amortization of approximately $45 to $50 million, and approximately $22 million of restructuring charges in fiscal 2014. Our guidance also includes capital expenditures of approximately $40 million in fiscal 2014.

A webcast regarding Brady’s fiscal 2014 second quarter financial results will be available at www.bradycorp.com beginning at 9:30 a.m. Central Time today.

Brady Corporation is an international manufacturer and marketer of complete solutions that identify and protect premises, products and people. Brady’s products help customers increase safety, security, productivity and performance and include high-performance labels, signs, safety devices, printing systems and software, and precision die-cut materials. Founded in 1914, the company has a diverse customer base in electronics, telecommunications, manufacturing, electrical, construction, education, medical and a variety of other industries. Brady is headquartered in Milwaukee, Wisconsin and as of July 31, 2013, employed approximately 7,400 people in its worldwide businesses. Brady’s fiscal 2013 sales were approximately $1.15 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.

* See accompanying notes for non-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” 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: Implementation of the Workplace Safety strategy; the length or severity of the current worldwide economic downturn or timing or strength of a subsequent recovery; future financial performance of major markets Brady serves, which include, without limitation, telecommunications, hard disk drive, manufacturing, electrical, construction, laboratory, education, governmental, public utility, computer, healthcare and transportation; future competition; changes in the supply of, or price for, parts and components; increased price pressure from suppliers and customers; Brady's ability to retain significant contracts and customers; fluctuations in currency rates versus the U.S. dollar; risks associated with international operations; difficulties associated with exports; risks associated with obtaining governmental approvals and maintaining regulatory compliance; Brady's ability to develop and successfully market new products; risks associated with identifying, completing, and integrating acquisitions; risks associated with divestitures and businesses held for sale; risks associated with restructuring plans; environmental, health and safety compliance costs and liabilities; risk associated with loss of key talent; risk associated with product liability claims; technology changes and potential security violations to the Company's information technology systems; Brady's ability to maintain compliance with its debt covenants; increase in our level of debt; potential write-offs of Brady's substantial intangible assets; unforeseen tax consequences; risk, associated with our ownership structure; and 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, 2013.

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
(Dollars in thousands, except per share data)
       
(Unaudited)   (Unaudited)
Three months ended January 31, Six months ended January 31,
2014 2013 2014 2013
Net sales $ 291,194 $ 272,702 $ 598,724 $ 544,717
Cost of products sold   148,658     130,811     298,341     252,641  
Gross margin 142,536 141,891 300,383 292,076
Operating expenses:
Research and development 8,440 8,213 17,027 16,100
Selling, general and administrative 111,426 109,948 224,159 209,010
Restructuring charges   4,324     1,933     11,163     1,933  
Total operating expenses 124,190 120,094 252,349 227,043
 
Operating income 18,346 21,797 48,034 65,033
 
Other income and (expense):
Investment and other income 255 898 1,017 1,294
Interest expense   (3,676 )   (4,406 )   (7,397 )   (8,569 )
 
Earnings from continuing operations before income taxes 14,925 18,289 41,654 57,758
 
Income tax expense   4,408     28,960     13,002     42,138  
 
Earnings (loss) from continuing operations $ 10,517 $ (10,671 ) $ 28,652 $ 15,620
 
Earnings from discontinued operations, net of income taxes   5,907     1,987     11,701     2,884  
 
Net earnings (loss) $ 16,424   $ (8,684 ) $ 40,353   $ 18,504  
 
Earnings (loss) from continuing operations per Class A Nonvoting Common Share:
Basic $ 0.20 $ (0.21 ) $ 0.55 $ 0.30
Diluted $ 0.20 $ (0.21 ) $ 0.55 $ 0.30
 
Earnings (loss) from continuing operations per Class B Voting Common Share:
Basic $ 0.20 $ (0.21 ) $ 0.53 $ 0.29
Diluted $ 0.20 $ (0.21 ) $ 0.53 $ 0.29
 
Earnings from discontinued operations per Class A Nonvoting Common Share:
Basic $ 0.11 $ 0.04 $ 0.22 $ 0.06
Diluted $ 0.11 $ 0.04 $ 0.22 $ 0.06
 
Earnings from discontinued operations per Class B Voting Common Share:
Basic $ 0.11 $ 0.04 $ 0.23 $ 0.05
Diluted $ 0.11 $ 0.04 $ 0.22 $ 0.05
 
Net earnings (loss) per Class A Nonvoting Common Share:
Basic $ 0.31 $ (0.17 ) $ 0.77 $ 0.36
Diluted $ 0.31 $ (0.17 ) $ 0.77 $ 0.36
Dividends $ 0.195 $ 0.19 $ 0.39 $ 0.38
 
Net earnings (loss) per Class B Voting Common Share:
Basic $ 0.31 $ (0.17 ) $ 0.76 $ 0.34
Diluted $ 0.31 $ (0.17 ) $ 0.75 $ 0.34
Dividends $ 0.195 $ 0.19 $ 0.373 $ 0.36
 
Weighted average common shares outstanding (in thousands):
Basic 52,208 51,177 52,140 51,108
Diluted 52,494 51,177 52,457 51,507
 
BRADY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
  (Unaudited)
January 31, 2014   July 31, 2013

ASSETS

Current assets:
Cash and cash equivalents $ 79,116 $ 91,058
Accounts receivable—net 168,037 169,261
Inventories:
Finished products 68,170 64,544
Work-in-process 16,077 14,776
Raw materials and supplies   19,869     15,387  
Total inventories 104,116 94,707
Assets held for sale 124,508 119,864
Prepaid expenses and other current assets   44,120     37,600  
Total current assets 519,897 512,490
Other assets:
Goodwill 615,404 617,236
Other intangible assets 146,859 156,851
Deferred income taxes 9,449 8,623
Other 21,915 21,325
Property, plant and equipment:
Cost:
Land 7,738 7,861
Buildings and improvements 92,886 91,471
Machinery and equipment 272,128 266,787
Construction in progress   15,931     11,842  
388,683 377,961
Less accumulated depreciation   264,167     255,803  

Property, plant and equipment—net

  124,516     122,158  
Total $ 1,438,040   $ 1,438,683  

LIABILITIES AND STOCKHOLDERS’ INVESTMENT

Current liabilities:
Notes payable $ 23,946 $ 50,613
Accounts payable 86,918 82,519
Wages and amounts withheld from employees 36,386 42,413
Liabilities held for sale 31,755 34,583
Taxes, other than income taxes 7,028 8,243
Accrued income taxes 5,383 7,056
Other current liabilities 36,971 36,806
Current maturities on long-term debt   61,264     61,264  
Total current liabilities 289,651 323,497
Long-term obligations, less current maturities 203,063 201,150
Other liabilities   81,896     83,239  
Total liabilities 574,610 607,886
Stockholders’ investment:
Common stock:
Class A nonvoting common stock—Issued 51,261,487 and 51,261,487 shares, respectively and outstanding 48,828,416 and 48,408,544 shares, respectively 513 513
Class B voting common stock—Issued and outstanding, 3,538,628 shares 35 35
Additional paid-in capital 313,963 306,191
Earnings retained in the business 558,494 538,512
Treasury stock—2,353,071 and 2,626,276 shares, respectively of Class A nonvoting

common stock, at cost

(64,346 ) (69,797 )
Accumulated other comprehensive income 54,427 56,063
Other   344     (720 )
Total stockholders’ investment   863,430     830,797  
Total $ 1,438,040   $ 1,438,683  
   
BRADY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
(Unaudited)
Six months ended January 31,
2014 2013
Operating activities:
Net earnings $ 40,353 $ 18,504
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 22,342 22,046
Non-cash portion of stock-based compensation expense 4,377 6,868
Non-cash portion of restructuring charges 97 200
Loss on sales of businesses — 3,138
Deferred income taxes (2,402 ) 26,050
Changes in operating assets and liabilities (net of effects of business acquisitions/divestitures):
Accounts receivable (1,418 ) (5,418 )
Inventories (8,754 ) (4,475 )
Prepaid expenses and other assets (3,505 ) (2,772 )
Accounts payable and accrued liabilities (7,263 ) (13,629 )
Income taxes   (2,050 )   (6,318 )
Net cash provided by operating activities 41,777 44,194
 
Investing activities:
Purchases of property, plant and equipment (17,607 ) (15,667 )
Acquisition of business, net of cash acquired — (300,757 )
Sales of businesses, net of cash retained — 10,178
Other   89     (549 )
Net cash used in investing activities (17,518 ) (306,795 )
 
Financing activities:
Payment of dividends (20,370 ) (19,499 )
Proceeds from issuance of common stock 10,894 4,409
Purchase of treasury stock — (5,121 )
Proceeds from borrowing on notes payable — 220,000
Repayment of borrowing on notes payable (30,000 ) (112,472 )
Proceeds from borrowings on line of credit 3,187 —
Income tax on the exercise of stock options and deferred compensation distribution, and other   (984 )   1,273  
Net cash (used in) provided by financing activities (37,273 ) 88,590
 
Effect of exchange rate changes on cash 1,072 9,422
 
Net decrease in cash and cash equivalents (11,942 ) (164,589 )
Cash and cash equivalents, beginning of period   91,058     305,900  
 
Cash and cash equivalents, end of period $ 79,116   $ 141,311  
 
Supplemental disclosures:
Cash paid during the period for:
Interest, net of capitalized interest $ 7,283 $ 7,866
Income taxes, net of refunds 14,083 19,964
Acquisitions:
Fair value of assets acquired, net of cash — $ 168,674
Liabilities assumed — (57,859 )
Goodwill   —     189,942  
Net cash paid for acquisitions   —   $ 300,757  
       
BRADY CORPORATION AND SUBSIDIARIES
SEGMENT INFORMATION
(Dollars in Thousands)
 
Three Months Ended January 31, Six Months Ended January 31,
2014 2013 2014 2013
SALES TO EXTERNAL CUSTOMERS
ID Solutions $ 194,732 $ 168,234 $ 404,278 $ 330,627
Workplace Safety   96,462     104,468     194,446     214,090  
Total $ 291,194   $ 272,702   $ 598,724   $ 544,717  
 
SALES INFORMATION
ID Solutions
Organic 2.5 % 1.8 % 2.9 % 1.4 %
Currency (0.5 )% (0.5 )% (0.4 )% (1.5 )%
Acquisitions   13.8 %   11.1 %   19.8 %   5.5 %
Total   15.8 %   12.4 %   22.3 %   5.4 %
Workplace Safety
Organic (6.8 )% (7.0 )% (8.4 )% (5.1 )%
Currency (0.9 )% 0.4 % (0.8 )% (1.0 )%
Acquisitions   — %   5.1 %   — %   5.5 %
Total   (7.7 )%   (1.5 )%   (9.2 )%   (0.6 )%
Total Company
Organic (1.1 )% (1.8 )% (1.6 )% (1.3 )%
Currency (0.6 )% (0.1 )% (0.5 )% (1.3 )%
Acquisitions   8.5 %   8.6 %   12.0 %   5.5 %
Total   6.8 %   6.7 %   9.9 %   2.9 %
 
SEGMENT PROFIT
ID Solutions $ 37,526 $ 34,643 $ 88,493 $ 79,223
Workplace Safety   14,668       23,600     33,042       51,429  
Total $ 52,194     $ 58,243   $ 121,535     $ 130,652  
SEGMENT PROFIT AS A PERCENT OF SALES
ID Solutions 19.3 % 20.6 % 21.9 % 24.0 %
Workplace Safety   15.2 %   22.6 %   17.0 %   24.0 %
Total   17.9 %   21.4 %   20.3 %   24.0 %
 
 
Three Months Ended January 31, Six Months Ended January 31,
2014 2013 2014 2013
Total segment profit $ 52,194 $ 58,243 $ 121,535 $ 130,652
Unallocated amounts:
Administrative costs (29,524 ) (34,513 ) (62,338 ) (63,686 )
Restructuring charges (4,324 ) (1,933 ) (11,163 ) (1,933 )
Investment and other income 255 898 1,017 1,294
Interest expense   (3,676 )   (4,406 )   (7,397 )   (8,569 )
Earnings from continuing operations before income taxes $ 14,925   $ 18,289   $ 41,654   $ 57,758  
             
BRADY CORPORATION AND SUBSIDIARIES
SEGMENT INFORMATION
(Dollars in Thousands)
   
Fiscal 2014 Fiscal 2013
Q1   Q2   Q2 YTD Q1   Q2   Q2 YTD   Q3   Q4   Full Year

SALES TO EXTERNAL CUSTOMERS

Identification Solutions $ 209,546 $ 194,732 $ 404,278 $ 162,393 $ 168,234 $ 330,627 $ 197,417 $ 211,071 $ 739,115
Workplace Safety   97,984       96,462       194,446     109,622       104,468       214,090       105,066       99,521       418,677  
Total Company $ 307,530     $ 291,194     $ 598,724   $ 272,015     $ 272,702     $ 544,717     $ 302,483     $ 310,592     $ 1,157,792  
 
 

SALES INFORMATION

Identification Solutions
Organic 3.3 % 2.5 % 2.9 % 0.9 % 1.8 % 1.4 % (1.9 )% 2.3 % 0.8 %
Currency (0.3 )% (0.5 )% (0.4 )% (2.4 )% (0.5 )% (1.5 )% (1.0 )% 0.2 % (1.0 )%
Acquisitions   26.0 %     13.8 %     19.8 %   0.4 %     11.1 %     5.5 %     25.3 %     28.2 %     16.3 %
Total   29.0 %     15.8 %     22.3 %   (1.1 )%     12.4 %     5.4 %     22.4 %     30.7 %     16.1 %
 
Workplace Safety
Organic (10.0 )% (6.8 )% (8.4 )% (3.3 )% (7.0 )% (5.1 )% (9.0 )% (8.6 )% (7.0 )%
Currency (0.6 )% (0.9 )% (0.8 )% (2.3 )% 0.4 % (1.0 )% (1.1 )% 0.1 % (0.7 )%
Acquisitions   — %     — %     — %   5.8 %     5.1 %     5.5 %     5.0 %     — %     4.0 %
Total   (10.6 )%     (7.7 )%     (9.2 )%   0.2 %     (1.5 )%     (0.6 )%     (5.1 )%     (8.5 )%     (3.7 )%
 
Total Company
Organic (2.1 )% (1.1 )% (1.6 )% (0.8 )% (1.8 )% (1.3 )% (4.8 )% (2.1 )% (2.4 )%
Currency (0.4 )% (0.6 )% (0.5 )% (2.4 )% (0.1 )% (1.3 )% (1.0 )% 0.1 % (0.8 )%
Acquisitions   15.6 %     8.5 %     12.0 %   2.6 %     8.6 %     5.5 %     17.0 %     16.9 %     11.3 %
Total   13.1 %     6.8 %     9.9 %   (0.6 )%     6.7 %     2.9 %     11.2 %     14.9 %     8.1 %
 
 

SEGMENT PROFIT

Identification Solutions $ 50,967 $ 37,526 $ 88,493 $ 44,581 $ 34,643 $ 79,223 $ 46,787 $ 48,379 $ 174,390
Workplace Safety   18,374       14,668       33,042     27,829       23,600       51,429       23,453       20,359       95,241  
Total Company $ 69,341     $ 52,194     $ 121,535   $ 72,410     $ 58,243     $ 130,652     $ 70,240     $ 68,738     $ 269,631  
 
 

SEGMENT PROFIT AS PERCENT OF SALES

Identification Solutions 24.3 % 19.3 % 21.9 % 27.5 % 20.6 % 24.0 % 23.7 % 22.9 % 23.6 %
Workplace Safety   18.8 %     15.2 %     17.0 %   25.4 %     22.6 %     24.0 %     22.3 %     20.5 %     22.7 %
Total Company   22.5 %     17.9 %     20.3 %   26.6 %     21.4 %     24.0 %     23.2 %     22.1 %     23.3 %
 

Net Earnings Reconciliation

Total segment profit $ 69,341 $ 52,194 $ 121,535 $ 72,410 $ 58,243 $ 130,652 $ 70,240 $ 68,738 $ 269,631
Unallocated Amounts:
Administrative costs (32,813 ) (29,524 ) (62,338 ) (29,173 ) (34,513 ) (63,686 ) (30,764 ) (27,242 ) (121,692 )
Restructuring charges (6,839 ) (4,324 ) (11,163 ) — (1,933 ) (1,933 ) (8,540 ) (15,573 ) (26,046 )
Impairment charges — — — — — — — (204,448 ) (204,448 )
Investment and other income 761 255 1,017 395 898 1,294 1,132 1,098 3,523
Interest expense   (3,721 )     (3,676 )     (7,397 )   (4,163 )     (4,406 )     (8,569 )     (4,186 )     (3,887 )     (16,642 )
Earnings (loss) from continuing operations before income taxes $ 26,729     $ 14,925     $ 41,654   $ 39,469     $ 18,289     $ 57,758     $ 27,882     $ (181,314 )   $ (95,674 )
         
EBITDA from Continuing Operations
Brady is presenting EBITDA from Continuing Operations because it is used by many of our investors and lenders, and is presented as a convenience to them. EBITDA from Continuing Operations represents earnings (loss) from continuing operations before interest expense, income taxes, depreciation, amortization and impairment charges. EBITDA from Continuing Operations is not a calculation based on generally accepted accounting principles ("GAAP"). The amounts included in the EBITDA from Continuing Operations calculation, however, are derived from amounts included in the Consolidated Financial Statements and supporting footnote disclosures. EBITDA from Continuing Operations should not be considered as an alternative to net earnings or operating income as an indicator of the Company's operating performance, or as an alternative to net cash provided by operating activities as a measure of liquidity. The EBITDA from Continuing Operations measure presented may not always be comparable to similarly titled measures reported by other companies due to differences in the components of the calculation.
 
 
Fiscal 2014
 
Q1 Q2 Q3 Q4 Total
EBITDA from Continuing Operations:
Earnings from continuing operations $ 18,135 $ 10,517 $ 28,652
Interest expense 3,721 3,676 7,397
Income taxes 8,594 4,408 13,002
Depreciation and amortization   10,878   11,464         22,342  
EBITDA from Continuing Operations (non-GAAP measure) $ 41,328 $ 30,065       $ 71,393  
 
 
Fiscal 2013
 
Q1 Q2 Q3 Q4 Total
EBITDA from Continuing Operations:
Earnings (loss) from continuing operations $ 26,291 $ (10,671 ) $ 21,680 $ (175,557 ) $ (138,257 )
Interest expense 4,163 4,406 4,186 3,886 16,641
Income taxes 13,178 28,960 6,202 (5,757 ) 42,583
Depreciation and amortization 7,401 8,773 11,650 12,103 39,927
Intangible asset write-down in restructuring charges — — 3,207 — 3,207
Impairment charges   —   —     —     204,448     204,448  
EBITDA from Continuing Operations (non-GAAP measure) $ 51,033 $ 31,468   $ 46,925   $ 39,123   $ 168,549  
 
 
EBITDA from Discontinued Operations
Brady is presenting EBITDA from Discontinued Operations because it is used by many of our investors and lenders, and is presented as a convenience to them. EBITDA from Discontinued Operations represents earnings (loss) from discontinued operations before interest expense, income taxes, depreciation, amortization, and impairment charges. EBITDA from Discontinued Operations is not a calculation based on generally accepted accounting principles ("GAAP"). The amounts included in the EBITDA from Discontinued Operations calculation, however, are derived from amounts included in the Consolidated Financial Statements and supporting footnote disclosures. EBITDA from Discontinued Operations should not be considered as an alternative to net earnings or operating income as an indicator of the Company's operating performance, or as an alternative to net cash provided by operating activities as a measure of liquidity. The EBITDA from Discontinued Operations measure presented may not always be comparable to similarly titled measures reported by other companies due to differences in the components of the calculation.
 
 
Fiscal 2014
 
Q1 Q2 Q3 Q4 Total
EBITDA from Discontinued Operations:
Earnings from discontinued operations $ 5,794 $ 5,907 $ 11,701
Interest expense — — —
Income taxes 2,535 (1,475 ) 1,060
Depreciation and amortization   —   —         —  
EBITDA from Discontinued Operations (non-GAAP measure) $ 8,329 $ 4,432       $ 12,761  
 
 
Fiscal 2013
 
Q1 Q2 Q3 Q4 Total
EBITDA from Discontinued Operations:
Earnings (loss) from discontinued operations $ 897 $ 1,987 $ (17,447 ) $ (1,714 ) $ (16,277 )
Interest expense — — — — —
Income taxes 303 1,666 1,393 1,340 4,702
Depreciation and amortization 2,991 2,881 2,926 — 8,798
Loss on write-down of assets held for sale   —   —     15,658     —     15,658  
EBITDA from Discontinued Operations (non-GAAP measure) $ 4,191 $ 6,534   $ 2,530   $ (374 ) $ 12,881  
 
 
EBITDA:
Brady is presenting EBITDA because it is used by many of our investors and lenders, and is presented as a convenience to them. EBITDA represents net earnings (loss) before interest expense, income taxes, depreciation, amortization and impairment charges. EBITDA is not a calculation based on generally accepted accounting principles ("GAAP"). The amounts included in the EBITDA calculation, however, are derived from amounts included in the Consolidated Financial Statements and supporting footnote disclosures. EBITDA should not be considered as an alternative to net earnings or operating income as an indicator of the Company's operating performance, or as an alternative to net cash provided by operating activities as a measure of liquidity. The EBITDA measure presented may not always be comparable to similarly titled measures reported by other companies due to differences in the components of the calculation.
 
 
Fiscal 2014
 
Q1 Q2 Q3 Q4 Total
EBITDA:
Net earnings $ 23,929 $ 16,424 $ 40,353
Interest expense 3,721 3,676 7,397
Income taxes 11,129 2,933 14,062
Depreciation and amortization   10,878   11,464         22,342  
EBITDA (non-GAAP measure) $ 49,657 $ 34,497       $ 84,154  
 
 
Fiscal 2013
 
Q1 Q2 Q3 Q4 Total
EBITDA:
Net earnings (loss) $ 27,188 $ (8,684 ) $ 4,233 $ (177,271 ) $ (154,534 )
Interest expense 4,163 4,406 4,186 3,886 16,641
Income taxes 13,481 30,626 7,595 (4,417 ) 47,285
Depreciation and amortization 10,392 11,654 14,576 12,103 48,725
Intangible asset write-down in restructuring charges — — 3,207 — 3,207
Loss on write-down of assets held for sale — — 15,658 — 15,658
Impairment charges   —   —     —     204,448     204,448  
EBITDA (non-GAAP measure) $ 55,224 $ 38,002   $ 49,455   $ 38,749   $ 181,430  
 
 
Earnings from Continuing Operations Before Income Taxes Excluding Certain Items:
Brady is presenting the Non-GAAP measure "Earnings from Continuing Operations 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 sustainable 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 Earnings from Continuing Operations Before Income Taxes to Earnings from Continuing Operations Before Income Taxes Excluding Certain Items:
 
 
Three Months Ended January 31, Six Months Ended January 31,
2014 2013 2014 2013
Earnings from Continuing Operations Before Income Taxes (GAAP measure) $ 14,925 $ 18,289 $ 41,654 $ 57,758
Cost of goods sold:
Purchase accounting expense related to inventory — 1,530 — 1,530
Selling, general and administrative:
PDC acquisition-related expenses — 3,600 — 3,600
Restructuring charges 4,324 1,933 11,163 1,933
Non-cash income tax charges related to PDC funding   —     —     —     —  

Earnings from Continuing Operations Before Income Taxes Excluding Certain Items (non-GAAP measure)

$ 19,249   $ 25,352   $ 52,817   $ 64,821  
 
 
Income Taxes on Continuing Operations Excluding Certain Items:
Brady is presenting the Non-GAAP measure "Income Taxes on Continuing Operations 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 sustainable 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 Income Taxes on Continuing Operations to Income Taxes on Continuing Operations Excluding Certain Items:
 
 
Three Months Ended January 31, Six Months Ended January 31,
2014 2013 2014 2013
Income Taxes on Continuing Operations (GAAP measure) $ 4,408 $ 28,960 $ 13,002 $ 42,138
Cost of goods sold:
Purchase accounting expense related to inventory — 581 — 581
Selling, general and administrative:
PDC acquisition-related expenses — 641 — 641
Restructuring charges 1,481 617 3,611 617
Non-cash income tax charges related to PDC funding   —     (25,000 )   —     (25,000 )

Income Taxes on Continuing Operations Excluding Certain Items (non-GAAP measure)

$ 5,889   $ 5,799   $ 16,613   $ 18,977  
 
 
Net Earnings from Continuing Operations Excluding Certain Items:
Brady is presenting the Non-GAAP measure "Net Earnings from Continuing Operations 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 sustainable 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 Net Earnings from Continuing Operations to Net Earnings from Continuing Operations Excluding Certain Items:
 
 
Three Months Ended January 31, Six Months Ended January 31,
2014 2013 2014 2013
Net Earnings (loss) from Continuing Operations (GAAP measure) $ 10,517 $ (10,671 ) $ 28,652 $ 15,620
Cost of goods sold:
Purchase accounting expense related to inventory — 949 — 949
Selling, general and administrative:
PDC acquisition-related expenses — 2,959 — 2,959
Restructuring charges 2,843 1,316 7,552 1,316
Non-cash income tax charges related to PDC funding   —     25,000     —     25,000  

Net Earnings from Continuing Operations Excluding Certain Items (non- GAAP measure)

$ 13,360   $ 19,553   $ 36,204   $ 45,844  
 
 
Net Earnings from Continuing Operations Per Diluted Class A Diluted Nonvoting Common Share Excluding Certain Items:
Brady is presenting the Non-GAAP measure "Net Earnings from Continuing Operations Per Diluted Class A Nonvoting Common Share 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 sustainable 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 Net Earnings from Continuing Operations Per Diluted Class A Nonvoting Common Share to Net Earnings from Continuing Operations Per Diluted Class A Nonvoting Common Share Excluding Certain Items:
 
 
Three Months Ended January 31, Six Months Ended January 31,
2014 2013 2014 2013
Net Earnings (Loss) from Continuing Operations Per Class A Diluted Nonvoting $ 0.20 $ (0.21 ) $ 0.55 $ 0.30
Nonvoting Common Share (GAAP measure)
Cost of goods sold:
Purchase accounting expense related to inventory — 0.02 — 0.02
Selling, general and administrative:
PDC acquisition-related expenses — 0.06 — 0.06
Restructuring charges 0.05 0.03 0.14 0.03
Non-cash income tax charges related to PDC funding — 0.49 — 0.49

Net Earnings from Continuing Operations Per Class A Diluted Nonvoting Common Share Excluding Certain Items (non-GAAP measure)

$ 0.25   $ 0.38   $ 0.69   $ 0.89  

Source: Brady Corporation

Brady Corporation
Investor contact:
Aaron Pearce, 414-438-6895
or
Media contact:
Carole Herbstreit, 414-438-6882

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