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Brady Corporation
Quarter Ended
Net earnings for the quarter ended
Earnings per diluted Class A Nonvoting Common Share were
During the quarter ended
Sales for the quarter ended
Six-Month Period Ended
Net earnings for the six-month period ended
Earnings per diluted Class A Nonvoting Common Share were
During the six-month period ended
Sales for the six-month period ended
Commentary:
“Our continued focus on developing high-quality products, identifying efficiencies in our SG&A structure, and driving a culture of local ownership and accountability is working. This quarter marks our sixth consecutive quarter of year-over-year earnings growth. Our actions to improve organic sales are also working as we realized organic sales growth of 1.3 percent this quarter and are at 0.5 percent organic sales growth year-to-date. However, we do expect to see choppy organic growth patterns in the future as our initiatives gain traction and due to fewer billing days in the second half of fiscal 2017,” said Brady’s President and Chief Executive Officer,
“We continue to see profitability improvements as we focus on driving efficiencies throughout our manufacturing operations while actively reducing our selling, general and administrative expense structure, all while investing in organic growth opportunities,” said Brady’s Chief Financial Officer,
Fiscal 2017 Guidance:
The Company is increasing its earnings per diluted Class A Common Share guidance from a range of
A webcast regarding Brady’s fiscal 2017 second quarter financial results will be available at www.bradycorp.com beginning at
In this news release, statements that are not reported financial results or other historic information are “forward-looking statements.” These forward-looking statements relate to, among other things, the Company's future financial position, business strategy, targets, projected sales, costs, earnings, capital expenditures, debt levels and cash flows, and plans and objectives of management for future operations.
The use of words such as “may,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “believe,” “should,” “project” or “plan” or similar terminology are generally intended to identify forward-looking statements. These forward-looking statements by their nature address matters that are, to different degrees, uncertain and are subject to risks, assumptions, and other factors, some of which are beyond Brady’s control, that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. For Brady, uncertainties arise from: our ability to compete effectively or to successfully execute our strategy; Brady’s ability to develop technologically advanced products that meet customer demands; difficulties in protecting our websites, networks, and systems against security breaches; deterioration or instability in the global economy and financial markets; decreased demand for our products; Brady’s ability to retain large customers; risks associated with the loss of key employees; changes in tax legislation and tax rates; Brady’s ability to execute facility consolidations and maintain acceptable operational service metrics; extensive regulations by U.S. and non-U.S. governmental and self-regulatory entities; litigation, including product liability claims; divestitures and contingent liabilities from divestitures; Brady’s ability to properly identify, integrate, and grow acquired companies; foreign currency fluctuations; potential write-offs of Brady’s substantial intangible assets; differing interests of voting and non-voting shareholders; Brady’s ability to meet certain financial covenants required by our debt agreements; numerous other matters of national, regional and global scale, including those of a political, economic, business, competitive, and regulatory nature contained from time to time in Brady’s
These uncertainties may cause Brady's actual future results to be materially different than those expressed in its forward-looking statements. Brady does not undertake to update its forward-looking statements except as required by law.
BRADY CORPORATION AND SUBSIDIARIES |
||||||||||||||||
CONSOLIDATED STATEMENTS OF EARNINGS | ||||||||||||||||
(Unaudited; Dollars in thousands, except per share data) | ||||||||||||||||
Three months ended January 31, | Six months ended January 31, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Net sales | $ | 268,001 | $ | 268,630 | $ | 548,177 | $ | 551,703 | ||||||||
Cost of products sold | 133,843 | 135,738 | 273,661 | 279,462 | ||||||||||||
Gross margin | 134,158 | 132,892 | 274,516 | 272,241 | ||||||||||||
Operating expenses: | ||||||||||||||||
Research and development | 9,481 | 9,097 | 18,627 | 17,666 | ||||||||||||
Selling, general and administrative | 94,715 | 100,206 | 192,719 | 200,884 | ||||||||||||
Total operating expenses | 104,196 | 109,303 | 211,346 | 218,550 | ||||||||||||
Operating income | 29,962 | 23,589 | 63,170 | 53,691 | ||||||||||||
Other income (expense): | ||||||||||||||||
Investment and other income (expense) | 596 | (992 | ) | 107 | (1,751 | ) | ||||||||||
Interest expense | (1,458 | ) | (2,130 | ) | (3,190 | ) | (4,281 | ) | ||||||||
Earnings before income taxes | 29,100 | 20,467 | 60,087 | 47,659 | ||||||||||||
Income tax expense | 3,803 | 5,177 | 12,237 | 13,666 | ||||||||||||
Net earnings | $ | 25,297 | $ | 15,290 | $ | 47,850 | $ | 33,993 | ||||||||
Net earnings per Class A Nonvoting Common Share: | ||||||||||||||||
Basic | $ | 0.50 | $ | 0.30 | $ | 0.94 | $ | 0.67 | ||||||||
Diluted | $ | 0.49 | $ | 0.30 | $ | 0.93 | $ | 0.67 | ||||||||
Dividends | $ | 0.21 | $ | 0.20 | $ | 0.41 | $ | 0.41 | ||||||||
Net earnings per Class B Voting Common Share: | ||||||||||||||||
Basic | $ | 0.50 | $ | 0.30 | $ | 0.93 | $ | 0.65 | ||||||||
Diluted | $ | 0.49 | $ | 0.30 | $ | 0.91 | $ | 0.65 | ||||||||
Dividends | $ | 0.21 | $ | 0.20 | $ | 0.39 | $ | 0.39 | ||||||||
Weighted average common shares outstanding (in thousands): | ||||||||||||||||
Basic | 51,054 | 50,527 | 50,844 | 50,778 | ||||||||||||
Diluted | 51,954 | 50,647 | 51,721 | 50,868 |
BRADY CORPORATION AND SUBSIDIARIES | |||||||
CONSOLIDATED BALANCE SHEETS | |||||||
(Unaudited; Dollars in thousands) | |||||||
January 31, 2017 | July 31, 2016 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 125,208 | $ | 141,228 | |||
Accounts receivable—net | 140,018 | 147,333 | |||||
Inventories: | |||||||
Finished products | 60,642 | 64,313 | |||||
Work-in-process | 17,029 | 16,678 | |||||
Raw materials and supplies | 19,737 | 18,436 | |||||
Total inventories | 97,408 | 99,427 | |||||
Prepaid expenses and other current assets | 19,051 | 19,436 | |||||
Total current assets | 381,685 | 407,424 | |||||
Other assets: | |||||||
Goodwill | 424,857 | 429,871 | |||||
Other intangible assets | 55,980 | 59,806 | |||||
Deferred income taxes | 27,403 | 27,238 | |||||
Other | 16,327 | 17,181 | |||||
Property, plant and equipment: | |||||||
Cost: | |||||||
Land | 7,272 | 5,809 | |||||
Buildings and improvements | 94,542 | 95,355 | |||||
Machinery and equipment | 254,688 | 256,549 | |||||
Construction in progress | 3,168 | 2,842 | |||||
359,670 | 360,555 | ||||||
Less accumulated depreciation | 262,786 | 258,111 | |||||
Property, plant and equipment—net | 96,884 | 102,444 | |||||
Total | $ | 1,003,136 | $ | 1,043,964 | |||
LIABILITIES AND STOCKHOLDERS’ INVESTMENT | |||||||
Current liabilities: | |||||||
Notes payable | $ | 5,691 | $ | 4,928 | |||
Accounts payable | 58,515 | 62,245 | |||||
Wages and amounts withheld from employees | 39,157 | 45,998 | |||||
Taxes, other than income taxes | 6,617 | 7,403 | |||||
Accrued income taxes | 2,011 | 6,136 | |||||
Other current liabilities | 38,210 | 40,017 | |||||
Total current liabilities | 150,201 | 166,727 | |||||
Long-term obligations, less current maturities | 157,223 | 211,982 | |||||
Other liabilities | 60,820 | 61,657 | |||||
Total liabilities | 368,244 | 440,366 | |||||
Stockholders’ investment: | |||||||
Common stock: | |||||||
Class A nonvoting common stock—Issued 51,261,487 and 51,261,487 shares, respectively and outstanding 47,594,684 and 46,920,974 shares, respectively | 513 | 513 | |||||
Class B voting common stock—Issued and outstanding, 3,538,628 shares | 35 | 35 | |||||
Additional paid-in capital | 317,587 | 317,001 | |||||
Earnings retained in the business | 480,368 | 453,371 | |||||
Treasury stock—3,666,803 and 4,340,513 shares, respectively of Class A nonvoting common stock, at cost | (90,998 | ) | (108,714 | ) | |||
Accumulated other comprehensive loss | (68,214 | ) | (54,745 | ) | |||
Other | (4,399 | ) | (3,863 | ) | |||
Total stockholders’ investment | 634,892 | 603,598 | |||||
Total | $ | 1,003,136 | $ | 1,043,964 |
BRADY CORPORATION AND SUBSIDIARIES | |||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||
(Unaudited; Dollars in thousands) | |||||||
Six months ended January 31, | |||||||
2017 | 2016 | ||||||
Operating activities: | |||||||
Net earnings | $ | 47,850 | $ | 33,993 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 14,102 | 17,502 | |||||
Stock-based compensation expense | 5,394 | 4,569 | |||||
Deferred income taxes | (4,547 | ) | 3,338 | ||||
Changes in operating assets and liabilities: | |||||||
Accounts receivable | 3,407 | 3,204 | |||||
Inventories | 224 | 3,403 | |||||
Prepaid expenses and other assets | 220 | (3,811 | ) | ||||
Accounts payable and other liabilities | (9,384 | ) | (1,618 | ) | |||
Income taxes | (3,932 | ) | (2,326 | ) | |||
Net cash provided by operating activities | 53,334 | 58,254 | |||||
Investing activities: | |||||||
Purchases of property, plant and equipment | (7,235 | ) | (3,928 | ) | |||
Other | 593 | 2,521 | |||||
Net cash used in investing activities | (6,642 | ) | (1,407 | ) | |||
Financing activities: | |||||||
Payment of dividends | (20,852 | ) | (20,425 | ) | |||
Proceeds from exercise of stock options | 14,659 | 53 | |||||
Purchase of treasury stock | — | (23,397 | ) | ||||
Repayment of borrowing on credit facilities | (50,469 | ) | (437 | ) | |||
Debt issuance costs | — | (803 | ) | ||||
Income tax on equity-based compensation, and other | (640 | ) | (1,299 | ) | |||
Net cash used in financing activities | (57,302 | ) | (46,308 | ) | |||
Effect of exchange rate changes on cash | (5,410 | ) | (4,833 | ) | |||
Net (decrease) increase in cash and cash equivalents | (16,020 | ) | 5,706 | ||||
Cash and cash equivalents, beginning of period | 141,228 | 114,492 | |||||
Cash and cash equivalents, end of period | $ | 125,208 | $ | 120,198 |
BRADY CORPORATION AND SUBSIDIARIES | |||||||||||||||
SEGMENT INFORMATION | |||||||||||||||
(Unaudited; Dollars in thousands) | |||||||||||||||
Three Months Ended January 31, | Six Months Ended January 31, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
SALES TO EXTERNAL CUSTOMERS | |||||||||||||||
ID Solutions | $ | 190,962 | $ | 189,780 | $ | 392,226 | $ | 390,800 | |||||||
Workplace Safety | 77,039 | 78,850 | 155,951 | 160,903 | |||||||||||
Total | $ | 268,001 | $ | 268,630 | $ | 548,177 | $ | 551,703 | |||||||
SALES INFORMATION | |||||||||||||||
ID Solutions | |||||||||||||||
Organic | 1.9 | % | 0.9 | % | 1.3 | % | (0.7 | )% | |||||||
Currency | (1.3 | )% | (4.6 | )% | (0.9 | )% | (5.0 | )% | |||||||
Total | 0.6 | % | (3.7 | )% | 0.4 | % | (5.7 | )% | |||||||
Workplace Safety | |||||||||||||||
Organic | (0.2 | )% | (0.6 | )% | (1.3 | )% | (1.4 | )% | |||||||
Currency | (2.1 | )% | (7.2 | )% | (1.8 | )% | (8.5 | )% | |||||||
Total | (2.3 | )% | (7.8 | )% | (3.1 | )% | (9.9 | )% | |||||||
Total Company | |||||||||||||||
Organic | 1.3 | % | 0.4 | % | 0.5 | % | (0.9 | )% | |||||||
Currency | (1.5 | )% | (5.4 | )% | (1.1 | )% | (6.0 | )% | |||||||
Total | (0.2 | )% | (5.0 | )% | (0.6 | )% | (6.9 | )% | |||||||
SEGMENT PROFIT | |||||||||||||||
ID Solutions | $ | 28,961 | $ | 23,056 | $ | 62,035 | $ | 48,487 | |||||||
Workplace Safety | 6,059 | 6,296 | 12,504 | 15,678 | |||||||||||
Total | $ | 35,020 | $ | 29,352 | $ | 74,539 | $ | 64,165 | |||||||
SEGMENT PROFIT AS A PERCENT OF SALES | |||||||||||||||
ID Solutions | 15.2 | % | 12.1 | % | 15.8 | % | 12.4 | % | |||||||
Workplace Safety | 7.9 | % | 8.0 | % | 8.0 | % | 9.7 | % | |||||||
Total | 13.1 | % | 10.9 | % | 13.6 | % | 11.6 | % | |||||||
Three Months Ended January 31, | Six Months Ended January 31, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Total segment profit | $ | 35,020 | $ | 29,352 | $ | 74,539 | $ | 64,165 | |||||||
Unallocated amounts: | |||||||||||||||
Administrative costs | (5,058 | ) | (5,763 | ) | (11,369 | ) | (10,474 | ) | |||||||
Investment and other income (expense) | 596 | (992 | ) | 107 | (1,751 | ) | |||||||||
Interest expense | (1,458 | ) | (2,130 | ) | (3,190 | ) | (4,281 | ) | |||||||
Earnings before income taxes | $ | 29,100 | $ | 20,467 | $ | 60,087 | $ | 47,659 |
For More Information: Investor contact:Ann Thornton 414-438-6887 Media contact:Kate Venne 414-358-5176