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Brady Corporation
Quarter Ended
Income before income taxes increased 10.8 percent, finishing at
Net income for the quarter ended
Earnings per diluted Class A Nonvoting Common Share were
Sales for the quarter ended
Nine-Month Period Ended
Income before income taxes increased 10.1 percent, finishing at
Net income for the nine-month period ended
Earnings per diluted Class A Nonvoting Common Share were
Sales for the nine-month period ended
Commentary:
“Our continued focus on organic sales growth through the development of innovative new products that generate value for our customers and solve their problems while providing strong customer service is working as we posted our eighth consecutive quarter of organic sales growth,” said Brady’s President and Chief Executive Officer,
“Our balance sheet and cash position are strong. We have over
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
A webcast regarding Brady’s fiscal 2019 third quarter financial results will be available at www.bradycorp.com/investors 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; 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
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 INCOME | |||||||||||||||
(Unaudited; Dollars in thousands, except per share data) | |||||||||||||||
Three months ended April 30, | Nine months ended April 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Net sales | $ | 289,745 | $ | 298,421 | $ | 865,367 | $ | 876,352 | |||||||
Cost of goods sold | 143,996 | 147,339 | 433,269 | 435,513 | |||||||||||
Gross margin | 145,749 | 151,082 | 432,098 | 440,839 | |||||||||||
Operating expenses: | |||||||||||||||
Research and development | 11,437 | 11,678 | 33,837 | 33,512 | |||||||||||
Selling, general and administrative | 94,691 | 101,695 | 281,988 | 299,411 | |||||||||||
Total operating expenses | 106,128 | 113,373 | 315,825 | 332,923 | |||||||||||
Operating income | 39,621 | 37,709 | 116,273 | 107,916 | |||||||||||
Other income (expense): | |||||||||||||||
Investment and other income | 2,065 | 31 | 3,425 | 1,303 | |||||||||||
Interest expense | (708 | ) | (761 | ) | (2,137 | ) | (2,453 | ) | |||||||
Income before income taxes | 40,978 | 36,979 | 117,561 | 106,766 | |||||||||||
Income tax expense | 6,197 | 10,979 | 22,916 | 50,657 | |||||||||||
Net income | $ | 34,781 | $ | 26,000 | $ | 94,645 | $ | 56,109 | |||||||
Net income per Class A Nonvoting Common Share: | |||||||||||||||
Basic | $ | 0.66 | $ | 0.50 | $ | 1.80 | $ | 1.09 | |||||||
Diluted | $ | 0.65 | $ | 0.49 | $ | 1.78 | $ | 1.07 | |||||||
Dividends | $ | 0.21 | $ | 0.21 | $ | 0.64 | $ | 0.62 | |||||||
Net income per Class B Voting Common Share: | |||||||||||||||
Basic | $ | 0.66 | $ | 0.50 | $ | 1.79 | $ | 1.07 | |||||||
Diluted | $ | 0.65 | $ | 0.49 | $ | 1.76 | $ | 1.05 | |||||||
Dividends | $ | 0.21 | $ | 0.21 | $ | 0.62 | $ | 0.61 | |||||||
Weighted average common shares outstanding (in thousands): | |||||||||||||||
Basic | 52,766 | 51,747 | 52,499 | 51,628 | |||||||||||
Diluted | 53,480 | 52,729 | 53,215 | 52,610 | |||||||||||
BRADY CORPORATION AND SUBSIDIARIES | |||||||
CONSOLIDATED BALANCE SHEETS | |||||||
(Dollars in thousands) | |||||||
April 30, 2019 | July 31, 2018 | ||||||
(Unaudited) | |||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 238,432 | $ | 181,427 | |||
Accounts receivable—net | 162,094 | 161,282 | |||||
Inventories | 119,895 | 113,071 | |||||
Prepaid expenses and other current assets | 18,746 | 15,559 | |||||
Total current assets | 539,167 | 471,339 | |||||
Property, plant and equipment—net | 99,491 | 97,945 | |||||
Goodwill | 412,378 | 419,815 | |||||
Other intangible assets | 38,135 | 42,588 | |||||
Deferred income taxes | 7,068 | 7,582 | |||||
Other | 19,638 | 17,662 | |||||
Total | $ | 1,115,877 | $ | 1,056,931 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 64,584 | $ | 66,538 | |||
Wages and amounts withheld from employees | 52,849 | 67,619 | |||||
Taxes, other than income taxes | 7,886 | 8,318 | |||||
Accrued income taxes | 4,378 | 3,885 | |||||
Other current liabilities | 48,169 | 44,567 | |||||
Total current liabilities | 177,866 | 190,927 | |||||
Long-term obligations | 50,303 | 52,618 | |||||
Other liabilities | 63,164 | 61,274 | |||||
Total liabilities | 291,333 | 304,819 | |||||
Stockholders’ equity: | |||||||
Class A nonvoting common stock—Issued 51,261,487 shares, and outstanding 49,284,372 and 48,393,617 shares, respectively | 513 | 513 | |||||
Class B voting common stock—Issued and outstanding, 3,538,628 shares | 35 | 35 | |||||
Additional paid-in capital | 330,051 | 325,631 | |||||
Retained earnings | 612,474 | 553,454 | |||||
Treasury stock—1,977,115 and 2,867,870 shares, respectively, of Class A nonvoting common stock, at cost | (50,083 | ) | (71,120 | ) | |||
Accumulated other comprehensive loss | (68,446 | ) | (56,401 | ) | |||
Total stockholders’ equity | 824,544 | 752,112 | |||||
Total | $ | 1,115,877 | $ | 1,056,931 | |||
BRADY CORPORATION AND SUBSIDIARIES | |||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||
(Unaudited; Dollars in thousands) | |||||||
Nine months ended April 30, | |||||||
2019 | 2018 | ||||||
Operating activities: | |||||||
Net income | $ | 94,645 | $ | 56,109 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 17,836 | 19,047 | |||||
Non-cash portion of stock-based compensation expense | 10,311 | 7,581 | |||||
Deferred income taxes | 3,796 | 26,501 | |||||
Changes in operating assets and liabilities: | |||||||
Accounts receivable | 332 | (10,710 | ) | ||||
Inventories | (9,254 | ) | (7,790 | ) | |||
Prepaid expenses and other assets | (2,204 | ) | 480 | ||||
Accounts payable and other liabilities | (19,176 | ) | (133 | ) | |||
Income taxes | 616 | (1,863 | ) | ||||
Net cash provided by operating activities | 96,902 | 89,222 | |||||
Investing activities: | |||||||
Purchases of property, plant and equipment | (17,528 | ) | (14,755 | ) | |||
Other | (1,810 | ) | (197 | ) | |||
Net cash used in investing activities | (19,338 | ) | (14,952 | ) | |||
Financing activities: | |||||||
Payment of dividends | (33,488 | ) | (32,110 | ) | |||
Proceeds from exercise of stock options | 20,333 | 10,011 | |||||
Proceeds from borrowing on credit facilities | 13,637 | 17,439 | |||||
Repayment of borrowing on credit facilities | (13,568 | ) | (69,012 | ) | |||
Other | (5,185 | ) | (3,622 | ) | |||
Net cash used in financing activities | (18,271 | ) | (77,294 | ) | |||
Effect of exchange rate changes on cash | (2,288 | ) | (17 | ) | |||
Net increase (decrease) in cash and cash equivalents | 57,005 | (3,041 | ) | ||||
Cash and cash equivalents, beginning of period | 181,427 | 133,944 | |||||
Cash and cash equivalents, end of period | $ | 238,432 | $ | 130,903 | |||
BRADY CORPORATION AND SUBSIDIARIES | |||||||||||||||
SEGMENT INFORMATION | |||||||||||||||
(Unaudited; Dollars in thousands) | |||||||||||||||
Three months ended April 30, | Nine months ended April 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
NET SALES | |||||||||||||||
ID Solutions | $ | 213,979 | $ | 212,154 | $ | 641,283 | $ | 628,291 | |||||||
Workplace Safety | 75,766 | 86,267 | 224,084 | 248,061 | |||||||||||
Total | $ | 289,745 | $ | 298,421 | $ | 865,367 | $ | 876,352 | |||||||
SALES INFORMATION | |||||||||||||||
ID Solutions | |||||||||||||||
Organic | 4.0 | % | 3.7 | % | 4.4 | % | 3.7 | % | |||||||
Currency | (3.1 | )% | 4.1 | % | (2.3 | )% | 3.0 | % | |||||||
Total | 0.9 | % | 7.8 | % | 2.1 | % | 6.7 | % | |||||||
Workplace Safety | |||||||||||||||
Organic | (1.6 | )% | 1.7 | % | (0.2 | )% | (0.1 | )% | |||||||
Currency | (5.3 | )% | 7.4 | % | (3.7 | )% | 5.7 | % | |||||||
Divestitures | (5.3 | )% | — | % | (5.8 | )% | — | % | |||||||
Total | (12.2 | )% | 9.1 | % | (9.7 | )% | 5.6 | % | |||||||
Total Company | |||||||||||||||
Organic | 2.4 | % | 3.2 | % | 3.1 | % | 2.7 | % | |||||||
Currency | (3.8 | )% | 5.0 | % | (2.8 | )% | 3.6 | % | |||||||
Divestitures | (1.5 | )% | — | % | (1.6 | )% | — | % | |||||||
Total | (2.9 | )% | 8.2 | % | (1.3 | )% | 6.3 | % | |||||||
SEGMENT PROFIT | |||||||||||||||
ID Solutions | $ | 39,892 | $ | 36,970 | $ | 119,311 | $ | 106,896 | |||||||
Workplace Safety | 6,099 | 7,537 | 16,301 | 21,037 | |||||||||||
Total | $ | 45,991 | $ | 44,507 | $ | 135,612 | $ | 127,933 | |||||||
SEGMENT PROFIT AS A PERCENT OF NET SALES | |||||||||||||||
ID Solutions | 18.6 | % | 17.4 | % | 18.6 | % | 17.0 | % | |||||||
Workplace Safety | 8.0 | % | 8.7 | % | 7.3 | % | 8.5 | % | |||||||
Total | 15.9 | % | 14.9 | % | 15.7 | % | 14.6 | % | |||||||
Three months ended April 30, | Nine months ended April 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Total segment profit | $ | 45,991 | $ | 44,507 | $ | 135,612 | $ | 127,933 | |||||||
Unallocated amounts: | |||||||||||||||
Administrative costs | (6,370 | ) | (6,798 | ) | (19,339 | ) | (20,017 | ) | |||||||
Investment and other income | 2,065 | 31 | 3,425 | 1,303 | |||||||||||
Interest expense | (708 | ) | (761 | ) | (2,137 | ) | (2,453 | ) | |||||||
Income before income taxes | $ | 40,978 | $ | 36,979 | $ | 117,561 | $ | 106,766 | |||||||
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Source: Brady Corporation