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Brady Corporation
Quarter Ended
Net earnings for the quarter ended
Earnings per diluted Class A Nonvoting Common Share increased 11.4 percent to
Sales for the quarter ended
Commentary:
“Our focus on serving our customers extremely well, developing high-quality innovative products, driving efficiencies throughout our global operations, and strengthening our culture of innovation is working. This marks our ninth consecutive quarter of year-over-year profit improvement,” said Brady’s President and Chief Executive Officer,
“Profitability improved compared to last year as a direct result of our focus on organic sales growth and on driving efficiencies throughout our operations and across our selling, general and administrative expense structure. We remain focused on the business fundamentals that will deliver consistent long-term cash generation. Cash provided by operating activities was
Fiscal 2018 Guidance:
The Company’s earnings per diluted Class A Nonvoting Common Share guidance for the year ending
A webcast regarding Brady’s fiscal 2018 first 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; decreased demand for our products; Brady’s ability to retain large customers; extensive regulations by U.S. and non-U.S. governmental and self-regulatory entities; Brady’s ability to execute facility consolidations and maintain acceptable operational service metrics; litigation, including product liability claims; 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; foreign currency fluctuations; changes in tax legislation and tax rates; 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 October 31, | ||||||||
2017 | 2016 | |||||||
Net sales | $ | 290,151 | $ | 280,176 | ||||
Cost of products sold | 144,086 | 139,818 | ||||||
Gross margin | 146,065 | 140,358 | ||||||
Operating expenses: | ||||||||
Research and development | 10,520 | 9,146 | ||||||
Selling, general and administrative | 100,134 | 98,004 | ||||||
Total operating expenses | 110,654 | 107,150 | ||||||
Operating income | 35,411 | 33,208 | ||||||
Other income (expense): | ||||||||
Investment and other income (expense) | 216 | (489 | ) | |||||
Interest expense | (863 | ) | (1,732 | ) | ||||
Earnings before income taxes | 34,764 | 30,987 | ||||||
Income tax expense | 8,928 | 8,434 | ||||||
Net earnings | $ | 25,836 | $ | 22,553 | ||||
Net Earnings per Class A Nonvoting Common Share: | ||||||||
Basic | $ | 0.50 | $ | 0.45 | ||||
Diluted | $ | 0.49 | $ | 0.44 | ||||
Dividends | $ | 0.21 | $ | 0.21 | ||||
Net Earnings per Class B Voting Common Share: | ||||||||
Basic | $ | 0.49 | $ | 0.43 | ||||
Diluted | $ | 0.48 | $ | 0.42 | ||||
Dividends | $ | 0.19 | $ | 0.19 | ||||
Weighted average common shares outstanding (in thousands): | ||||||||
Basic | 51,440 | 50,634 | ||||||
Diluted | 52,383 | 51,455 | ||||||
BRADY CORPORATION AND SUBSIDIARIES | |||||||
CONSOLIDATED BALANCE SHEETS | |||||||
(Unaudited; Dollars in thousands) | |||||||
October 31, 2017 | July 31, 2017 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 142,237 | $ | 133,944 | |||
Accounts receivable—net | 152,698 | 149,638 | |||||
Inventories: | |||||||
Finished products | 69,458 | 69,760 | |||||
Work-in-process | 19,052 | 18,117 | |||||
Raw materials and supplies | 21,152 | 19,147 | |||||
Total inventories | 109,662 | 107,024 | |||||
Prepaid expenses and other current assets | 19,045 | 17,208 | |||||
Total current assets | 423,642 | 407,814 | |||||
Other assets: | |||||||
Goodwill | 433,704 | 437,697 | |||||
Other intangible assets | 51,200 | 53,076 | |||||
Deferred income taxes | 36,281 | 35,456 | |||||
Other | 17,072 | 18,077 | |||||
Property, plant and equipment: | |||||||
Cost: | |||||||
Land | 7,344 | 7,470 | |||||
Buildings and improvements | 97,457 | 98,228 | |||||
Machinery and equipment | 262,820 | 261,192 | |||||
Construction in progress | 4,123 | 4,109 | |||||
371,744 | 370,999 | ||||||
Less accumulated depreciation | 276,030 | 272,896 | |||||
Property, plant and equipment—net | 95,714 | 98,103 | |||||
Total | $ | 1,057,613 | $ | 1,050,223 | |||
LIABILITIES AND STOCKHOLDERS’ INVESTMENT | |||||||
Current liabilities: | |||||||
Notes payable | $ | 749 | $ | 3,228 | |||
Accounts payable | 64,902 | 66,817 | |||||
Wages and amounts withheld from employees | 64,863 | 58,192 | |||||
Taxes, other than income taxes | 8,242 | 7,970 | |||||
Accrued income taxes | 9,574 | 7,373 | |||||
Other current liabilities | 45,455 | 43,618 | |||||
Total current liabilities | 193,785 | 187,198 | |||||
Long-term obligations | 93,810 | 104,536 | |||||
Other liabilities | 57,347 | 58,349 | |||||
Total liabilities | 344,942 | 350,083 | |||||
Stockholders’ investment: | |||||||
Common stock: | |||||||
Class A nonvoting common stock—Issued 51,261,487 shares and outstanding 48,020,711 and 47,814,818 shares, respectively |
513 | 513 | |||||
Class B voting common stock—Issued and outstanding, 3,538,628 shares |
35 | 35 | |||||
Additional paid-in capital | 322,657 | 322,608 | |||||
Earnings retained in the business | 522,334 | 507,136 | |||||
Treasury stock—3,240,776 and 3,446,669 shares, respectively of Class A nonvoting common stock, at cost |
(80,806 | ) | (85,470 | ) | |||
Accumulated other comprehensive loss | (52,062 | ) | (44,682 | ) | |||
Total stockholders’ investment | 712,671 | 700,140 | |||||
Total | $ | 1,057,613 | $ | 1,050,223 | |||
BRADY CORPORATION AND SUBSIDIARIES | ||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
(Unaudited; Dollars in thousands) | ||||||||
Three months ended October 31, | ||||||||
2017 | 2016 | |||||||
Operating activities: | ||||||||
Net earnings | $ | 25,836 | $ | 22,553 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 6,564 | 7,234 | ||||||
Non-cash portion of stock-based compensation expense | 3,744 | 3,155 | ||||||
Deferred income taxes | (1,168 | ) | 2,027 | |||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | (4,807 | ) | (680 | ) | ||||
Inventories | (3,571 | ) | 1,197 | |||||
Prepaid expenses and other assets | (2,005 | ) | (1,170 | ) | ||||
Accounts payable and accrued liabilities | 7,799 | 2,546 | ||||||
Income taxes | 2,327 | (2,869 | ) | |||||
Net cash provided by operating activities | 34,719 | 33,993 | ||||||
Investing activities: | ||||||||
Purchases of property, plant and equipment | (3,802 | ) | (3,959 | ) | ||||
Other | 974 | 1,511 | ||||||
Net cash used in investing activities | (2,828 | ) | (2,448 | ) | ||||
Financing activities: | ||||||||
Payment of dividends | (10,639 | ) | (10,370 | ) | ||||
Proceeds from exercise of stock options | 3,249 | 8,813 | ||||||
Proceeds from borrowing on credit facilities | 10,901 | 27,565 | ||||||
Repayments of borrowing on credit facilities | (22,894 | ) | (27,139 | ) | ||||
Income tax on equity-based compensation, and other | (2,280 | ) | (1,232 | ) | ||||
Net cash used in financing activities | (21,663 | ) | (2,363 | ) | ||||
Effect of exchange rate changes on cash | (1,935 | ) | (4,109 | ) | ||||
Net increase in cash and cash equivalents | 8,293 | 25,073 | ||||||
Cash and cash equivalents, beginning of period | 133,944 | 141,228 | ||||||
Cash and cash equivalents, end of period | $ | 142,237 | $ | 166,301 | ||||
BRADY CORPORATION AND SUBSIDIARIES | ||||||||
SEGMENT INFORMATION | ||||||||
(Unaudited; Dollars in thousands) | ||||||||
Three months ended October 31, | ||||||||
2017 | 2016 | |||||||
SALES TO EXTERNAL CUSTOMERS | ||||||||
ID Solutions | $ | 209,705 | $ | 201,264 | ||||
Workplace Safety | 80,446 | 78,912 | ||||||
Total | $ | 290,151 | $ | 280,176 | ||||
SALES INFORMATION | ||||||||
ID Solutions | ||||||||
Organic | 2.9 | % | 0.7 | % | ||||
Currency | 1.3 | % | (0.6 | )% | ||||
Total | 4.2 | % | 0.1 | % | ||||
Workplace Safety | ||||||||
Organic | (1.4 | )% | (2.5 | )% | ||||
Currency | 3.3 | % | (1.3 | )% | ||||
Total | 1.9 | % | (3.8 | )% | ||||
Total Company | ||||||||
Organic | 1.7 | % | (0.2 | )% | ||||
Currency | 1.9 | % | (0.8 | )% | ||||
Total | 3.6 | % | (1.0 | )% | ||||
SEGMENT PROFIT | ||||||||
ID Solutions | $ | 35,837 | $ | 33,068 | ||||
Workplace Safety | 6,445 | 6,450 | ||||||
Total | $ | 42,282 | $ | 39,518 | ||||
SEGMENT PROFIT AS A PERCENT OF SALES | ||||||||
ID Solutions | 17.1 | % | 16.4 | % | ||||
Workplace Safety | 8.0 | % | 8.2 | % | ||||
Total | 14.6 | % | 14.1 | % | ||||
Three months ended October 31, | ||||||||
2017 | 2016 | |||||||
Total segment profit | $ | 42,282 | $ | 39,518 | ||||
Unallocated amounts: | ||||||||
Administrative costs | (6,871 | ) | (6,310 | ) | ||||
Investment and other income (expense) | 216 | (489 | ) | |||||
Interest expense | (863 | ) | (1,732 | ) | ||||
Earnings before income taxes | $ | 34,764 | $ | 30,987 | ||||
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