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Brady Corporation Reports Fiscal 2019 First Quarter Results and Increases its Fiscal 2019 EPS Guidance

  • Organic revenues increased 4.7 percent in the first quarter of fiscal 2019.
  • Earnings before income taxes increased 14.8 percent to $39.9 million in the first quarter of fiscal 2019 compared to $34.8 million in the same quarter of the prior year.
  • Diluted EPS increased 18.4 percent to $0.58 in the first quarter of fiscal 2019 compared to $0.49 in the same quarter of the prior year.
  • Diluted EPS guidance for the full year ending July 31, 2019 was increased to a range of $2.20 to $2.30 from the previous range of $2.15 to $2.25.

MILWAUKEE, Nov. 15, 2018 (GLOBE NEWSWIRE) -- Brady Corporation (NYSE: BRC) (“Brady” or “Company”), a world leader in identification solutions, today reported its financial results for its fiscal 2019 first quarter ended October 31, 2018. 

Quarter Ended October 31, 2018 Financial Results:

Earnings before income taxes increased 14.8 percent to $39.9 million for the quarter ended October 31, 2018, compared to $34.8 million in the same quarter last year.

Net earnings for the quarter ended October 31, 2018, were $30.6 million compared to $25.8 million in the same quarter last year.

Net earnings per diluted Class A Nonvoting Common Share were $0.58 for the first quarter of fiscal 2019, compared to $0.49 in the same quarter last year.

Sales for the quarter ended October 31, 2018 increased 1.0 percent, which consisted of organic sales growth of 4.7 percent, a decrease in sales of 2.0 percent from foreign currency translation, and a decrease in sales of 1.7 percent from the divestiture of a business in the fourth quarter of fiscal 2018. Sales for the quarter ended October 31, 2018 were $293.2 million compared to $290.2 million in the same quarter last year. By segment, sales increased 4.0 percent in Identification Solutions and decreased 6.6 percent in Workplace Safety, which consisted of organic sales growth of 5.7 percent in Identification Solutions and organic sales growth of 2.2 percent in Workplace Safety.


“Our investments to increase organic sales growth through the development of innovative new products and to provide increased value to our customers is paying off as we reported 4.7 percent organic growth this quarter, which marks our sixth consecutive quarter of organic sales growth,” said Brady’s President and Chief Executive Officer, J. Michael Nauman. “This quarter also represents our thirteenth consecutive quarter of year-over-year pre-tax earnings growth. We apply a consistent and balanced approach to generating organic sales growth while driving sustainable efficiency gains throughout our global operations and SG&A structure. We expect this positive organic sales trend to continue as we invest in new product development in our global businesses and as our Workplace Safety business returns to consistent organic sales growth.”

“We used our cash generation this quarter to increase our investments in research and development and capability-enhancing capital expenditures while returning funds to our shareholders through dividends and further strengthening our balance sheet. We finished in a net cash position of $137.8 million as of October 31, 2018,” said Brady’s Chief Financial Officer, Aaron Pearce. “We’re experiencing increased costs in certain areas, making our focus on driving efficiency improvements and making investments in equipment and machinery to increase automation our top operational priorities. Our balance sheet provides significant flexibility for ongoing investments in growth opportunities to drive long-term shareholder value.”

Fiscal 2019 Guidance:

The Company is increasing its full year fiscal 2019 earnings per diluted Class A Nonvoting Common Share guidance from its previous range of $2.15 to $2.25 to a range of $2.20 to $2.30. Included in this guidance is organic sales growth of 3.0 percent to 5.0 percent, a full-year income tax rate in the mid-20 percent range, and depreciation and amortization expense of approximately $26 million. The Company expects to achieve efficiency gains in its manufacturing facilities and in selling, general and administrative expenses while continuing to increase investments in research and development. Capital expenditures are anticipated to be approximately $35 million during the year ending July 31, 2019. This guidance is based upon foreign currency exchange rates as of October 31, 2018.

A webcast regarding Brady’s fiscal 2019 first quarter financial results will be available at 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, 2018, employed approximately 6,200 people in its worldwide businesses. Brady’s fiscal 2018 sales were approximately $1.17 billion. Brady stock trades on the New York Stock Exchange under the symbol BRC. More information is available on the Internet 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; 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; Brady’s ability to execute facility consolidations and maintain acceptable operational service metrics; foreign currency fluctuations; the impact of the Tax Reform Act and any other 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 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, 2018.

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. 

(Unaudited; Dollars in thousands, except per share data)      
  Three months ended October 31,
    2018       2017  
Net sales $ 293,196     $ 290,151  
Cost of products sold   146,657       144,086  
Gross margin   146,539       146,065  
Operating expenses:      
Research and development   11,326       10,520  
Selling, general and administrative   94,591       100,134  
Total operating expenses   105,917       110,654  
Operating income   40,622       35,411  
Other (expense) income:      
Investment and other (expense) income   (17 )     216  
Interest expense   (712 )     (863 )
Earnings before income taxes   39,893       34,764  
Income tax expense   9,256       8,928  
Net earnings $ 30,637     $ 25,836  
Net earnings per Class A Nonvoting Common Share:      
Basic $ 0.59     $ 0.50  
Diluted $ 0.58     $ 0.49  
Dividends $ 0.21     $ 0.21  
Net earnings per Class B Voting Common Share:      
Basic $ 0.57     $ 0.49  
Diluted $ 0.56     $ 0.48  
Dividends $ 0.20     $ 0.19  
Weighted average common shares outstanding (in thousands):      
Basic   52,201       51,440  
Diluted   52,958       52,383  

(Dollars in thousands)      
  October 31, 2018   July 31, 2018
Current assets:      
Cash and cash equivalents $ 192,176     $ 181,427  
Accounts receivable—net   169,327       161,282  
Finished products   71,092       73,133  
Work-in-process   20,734       19,903  
Raw materials and supplies   22,190       20,035  
Total inventories   114,016       113,071  
Prepaid expenses and other current assets   18,497       15,559  
Total current assets   494,016       471,339  
Other assets:      
Goodwill   415,129       419,815  
Other intangible assets   41,033       42,588  
Deferred income taxes   7,770       7,582  
Other   17,621       17,662  
Property, plant and equipment:      
Land   7,250       6,994  
Buildings and improvements   95,386       96,245  
Machinery and equipment   270,192       270,989  
Construction in progress   7,492       4,495  
    380,320       378,723  
Less accumulated depreciation   282,263       280,778  
Property, plant and equipment—net   98,057       97,945  
Total $ 1,073,626     $ 1,056,931  
Current liabilities:      
Accounts payable $ 64,735     $ 66,538  
Wages and amounts withheld from employees   48,945       67,619  
Taxes, other than income taxes   8,377       8,318  
Accrued income taxes   4,937       3,885  
Other current liabilities   54,582       44,567  
Total current liabilities   181,576       190,927  
Long-term obligations   54,408       52,618  
Other liabilities   64,699       61,274  
Total liabilities   300,683       304,819  
Stockholders’ equity:      
Common stock:      
Class A nonvoting common stock—Issued 51,261,487 shares, and outstanding 48,918,974 and 48,383,617 shares, respectively   513       513  
Class B voting common stock—Issued and outstanding, 3,538,628 shares   35       35  
Additional paid-in capital   326,182       325,631  
Retained earnings   570,858       553,454  
Treasury stock—2,342,513 and 2,867,870 shares, respectively, of Class A nonvoting common stock, at cost   (58,414 )     (71,120 )
Accumulated other comprehensive loss   (66,231 )     (56,401 )
Total stockholders’ equity   772,943       752,112  
Total $ 1,073,626     $ 1,056,931  

(Unaudited; Dollars in thousands)      
  Three months ended October 31,
    2018       2017  
Operating activities:      
Net earnings $ 30,637     $ 25,836  
Adjustments to reconcile net earnings to net cash provided by operating activities:      
Depreciation and amortization   5,960       6,564  
Non-cash portion of stock-based compensation expense   4,965       3,744  
Deferred income taxes   2,164       (1,168 )
Changes in operating assets and liabilities:      
Accounts receivable   (6,709 )     (4,807 )
Inventories   (3,125 )     (3,571 )
Prepaid expenses and other assets   (2,197 )     (2,005 )
Accounts payable and other liabilities   (14,070 )     7,799  
Income taxes   1,193       2,327  
Net cash provided by operating activities   18,818       34,719  
Investing activities:      
Purchases of property, plant and equipment   (6,009 )     (3,802 )
Other   337       974  
Net cash used in investing activities   (5,672 )     (2,828 )
Financing activities:      
Payment of dividends   (11,096 )     (10,639 )
Proceeds from exercise of stock options   12,138       3,249  
Proceeds from borrowing on credit facilities   5,737       10,901  
Repayment of borrowing on credit facilities   (2,269 )     (22,894 )
Income tax on equity-based compensation, and other   (3,846 )     (2,280 )
Net cash provided by (used in) financing activities   664       (21,663 )
Effect of exchange rate changes on cash   (3,061 )     (1,935 )
Net increase in cash and cash equivalents   10,749       8,293  
Cash and cash equivalents, beginning of period   181,427       133,944  
Cash and cash equivalents, end of period $ 192,176     $ 142,237  

(Unaudited; Dollars in thousands)      
  Three months ended October 31,
    2018       2017  
ID Solutions $ 218,100     $ 209,705  
Workplace Safety   75,096       80,446  
Total $ 293,196     $ 290,151  
ID Solutions      
Organic   5.7 %     2.9 %
Currency   (1.7 )%     1.3 %
Total   4.0 %     4.2 %
Workplace Safety      
Organic   2.2 %     (1.4 )%
Currency   (2.6 )%     3.3 %
Divestitures   (6.2 )%     %
Total   (6.6 )%     1.9 %
Total Company      
Organic   4.7 %     1.7 %
Currency   (2.0 )%     1.9 %
Divestitures   (1.7 )%     %
Total   1.0 %     3.6 %
ID Solutions $ 41,562     $ 35,837  
Workplace Safety   5,541       6,445  
Total $ 47,103     $ 42,282  
ID Solutions   19.1 %     17.1 %
Workplace Safety   7.4 %     8.0 %
Total   16.1 %     14.6 %
  Three months ended October 31,
    2018       2017  
Total segment profit $ 47,103     $ 42,282  
Unallocated amounts:      
Administrative costs   (6,481 )     (6,871 )
Investment and other (expense) income   (17 )     216  
Interest expense   (712 )     (863 )
Earnings before income taxes $ 39,893     $ 34,764  

For More Information:
Investor contact: Ann Thornton 414-438-6887
Media contact: Kate Venne 414-358-5176


Brady Corporation

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