MILWAUKEE--(BUSINESS WIRE)--Feb. 21, 2013-- Brady Corporation (NYSE: BRC) (“Brady” or “Company”), a world leader in identification solutions, today reported its financial results for the fiscal 2013 second quarter ended January 31, 2013 and also announced a reorganization of its business.

Quarter Ended January 31, 2013 Financial Results:

Sales for the fiscal 2013 second quarter ended January 31, 2013, were up 1.1 percent to $324.2 million compared to $320.6 million in the second quarter of fiscal 2012. Organic sales declined 3.1 percent, the impact of foreign currency translation increased sales by 0.2 percent, and acquisitions, net of divestitures added 4.0 percent. By segment, organic sales increased 0.6 percent in the Americas and decreased 5.0 percent in EMEA and 7.0 percent in the Asia-Pacific region.

During the second quarter of fiscal 2013, the Company acquired Precision Dynamics Corporation (“PDC”) for $301 million. PDC is a leader in identification products primarily for the healthcare sector with annual revenues of approximately $173 million. In connection with this acquisition, the Company incurred certain acquisition-related costs including a non-cash tax charge of $25.0 million related to the repatriation of cash to the U.S. and $5.1 million of other acquisition-related expenses. During the second quarter of fiscal 2013, the Company also realized a $5.2 million pre-tax gain on the settlement of an insurance claim related to the 2011 flood in Thailand. In the second quarter of last fiscal year, the Company recorded a non-cash impairment charge of $115.7 million for the write down of goodwill in the Asia-Pacific region. Non-routine and other items, along with restructuring charges are quantified on pages 11-12 of this news release for comparability purposes.

Net income (loss) in the fiscal 2013 second quarter was $(8.7) million compared to $(90.0) million in the same quarter last year. Non-GAAP net income* was $19.5 million in the second quarter of fiscal 2013, compared to $25.7 million in the second quarter of fiscal 2012.

Earnings (loss) per diluted Class A Common Share were $(0.17) in the second quarter of fiscal 2013 compared to $(1.72) in the same quarter last year. Non-GAAP Diluted Earnings per Class A Common Share* were $0.38 in the second quarter of fiscal 2013, compared to $0.49 in the second quarter of fiscal 2012.

Six Months Ended January 31, 2013 Financial Results:

Sales for the six-month period ended January 31, 2013, were down 1.3 percent to $661.8 million compared to $670.1 million in the same period last year. Organic sales were down 2.5 percent, the impact of foreign currency translation decreased sales by 1.0 percent, and acquisitions, net of divestitures added 2.2 percent.

Net income (loss) for the six months ended January 31, 2013 was $18.5 million compared to $(57.2) million in the same period of fiscal 2012. Non-GAAP net income* was $49.9 million for the six months ended January 31, 2013, compared to $58.5 million in the same period of fiscal 2012.

Earnings (loss) per diluted Class A Common Share were $0.36 for the six-month period ended January 31, 2013 compared to $(1.09) in the same period of fiscal 2012. Non-GAAP Diluted Earnings per Class A Common Share* were $0.97 for the six months ended January 31, 2013, compared to $1.12 in the same period in fiscal 2012.

Brady to Reorganize its Business:

Brady also reported that as part of its strategy to improve organic growth and profitability that it will be changing its organizational structure from geographically-based to an organization structured around three global business platforms: Identification Solutions, Workplace Safety and Die-Cut.

The Identification Solutions business will focus on innovative identification solutions for a broad range of applications including wire identification, product identification, safety and facility identification and healthcare identification. The Workplace Safety business will be expanding its multi-channel direct marketing model by providing a broader set of workplace safety products with an increased focus on e-business. The Die-Cut business will continue to provide precision solutions primarily to the global electronics industry. Mr. Matthew Williamson will lead the global Identification Solutions business. Mr. Williamson has been with Brady for 34 years and is currently serving as Vice President of the Company and President - Brady Americas. Mr. Scott Hoffman will lead the global Workplace Safety business. Mr. Hoffman has been with Brady for 27 years and is currently serving as Vice President – Corporate and Business Development of the Company. Mr. Stephen Millar will lead the Die-Cut business. Mr. Millar has been with Brady for 14 years and is currently serving as Vice President of the Company and President – Asia-Pacific. Peter Sephton, currently president of Brady’s EMEA region, will be retiring from Brady effective July 31, 2013. Mr. Sephton will remain in his current role as Vice President of Brady and President - Brady EMEA through April 30, 2013 when he will resign these positions and will then assist with the transition to the new global business platforms through his retirement on July 31, 2013.

Commentary and Guidance:

“In the second quarter of fiscal 2013, we experienced slight organic sales growth in the Americas and we experienced a 5.0 percent organic sales decline in EMEA due to a challenging European economy. Our performance in Asia-Pacific was weaker than expected due to challenges in both our Australian business and our Thailand hard-disk drive business,” stated Brady’s President and Chief Executive Officer, Frank M. Jaehnert. “The acquisition of PDC, a leader in the U.S. healthcare identification space, is a significant step forward in our move into faster-growing end businesses with less cyclicality. PDC provides an important anchor position for Brady in the attractive healthcare sector, which is a sector in which we plan continued investment.”

Mr. Jaehnert continued, “We believe that our reorganization around global business platforms will create better alignment of resources required to deliver increasing levels of organic sales growth. We will also be able to create a leaner, flatter organization that is closer to the customer, allowing us to reduce costs by approximately $25 million to $30 million annually, some of which will be reinvested into growth initiatives. Costs to implement this reorganization are expected to range from $15 million to $18 million. The global business reorganization will be effective May 1, 2013 with most of the restructuring completed by the end of fiscal 2013. Looking forward, I am confident that the actions we are taking, including the acquisition of PDC and the reorganization around global businesses will accelerate future sales growth and increase future profitability.”

“We anticipate continuing pressure on organic sales for the remainder of fiscal 2013 as the global macro-economy remains sluggish,” said Brady’s Chief Financial Officer, Thomas J. Felmer. “Based on what we see for the remainder of the year, and including $0.05 to $0.07 of anticipated earnings from PDC as well as some savings from restructuring activities in the fourth quarter, we expect earnings per diluted Class A Common Share to be towards the lower end of our prior guidance of between $2.20 and $2.40, exclusive of non-routine items, restructuring charges, and other items, for our full-year fiscal 2013, with the fourth quarter being stronger than the third quarter. This is based on exchange rates as of January 31, 2013 and a full-year income tax rate, excluding the impact of non-routine items, in the mid-to-upper 20 percent range.”

A webcast regarding Brady’s fiscal 2013 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 and signs, safety devices, printing systems and software, and precision die-cut materials. Founded in 1914, the company has millions of customers in electronics, telecommunications, manufacturing, electrical, construction, education, medical and a variety of other industries. Brady is headquartered in Milwaukee, Wisconsin and as of January 31, 2013 employed approximately 8,200 people at operations in the Americas, EMEA and Asia-Pacific. Brady’s fiscal 2012 sales were approximately $1.32 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: the length or severity of the current worldwide economic downturn or timing or strength of a subsequent recovery; increased usage of e-commerce allowing for ease of price transparency; 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, 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; difficulties in making and integrating acquisitions; risks associated with newly acquired businesses; risks associated with restructuring plans; environmental, health and safety compliance costs and liabilities; 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; 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, 2012.

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.

Source: Brady Corporation

Brady Corporation
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Aaron Pearce 414-438-6895
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