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Brady Corporation
Quarter Ended
Net earnings for the quarter ended
Earnings per diluted Class A Nonvoting Common Share were
Sales for the quarter ended
Nine-Month Period Ended
Net earnings for the nine-month period ended
Earnings per diluted Class A Nonvoting Common Share were
Sales for the nine-month period ended
Commentary:
“Our consistent focus on developing high-quality products, providing excellent customer service, pushing for efficiencies throughout our SG&A structure, and empowering the Brady team with local ownership and accountability are the primary drivers of our improved financial results. This quarter marks our seventh consecutive quarter of year-over-year earnings growth,” said Brady’s President and Chief Executive Officer,
“Third quarter revenues were approximately in line with our expectations coming into the quarter, finishing with an organic sales decline of 1.9 percent. Our third quarter was impacted by fewer billing days compared to the same quarter in the prior year. Organic sales were up 0.7% on a per day basis. Our ability to drive operational efficiencies and actively reduce our general and administrative structure provided financial benefits this quarter,” said Brady’s Chief Financial Officer,
Fiscal 2017 Guidance:
The Company is tightening its earnings per diluted Class A Common Share guidance from a range of
A webcast regarding Brady’s fiscal 2017 third 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 April 30, | Nine months ended April 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Net sales | $ | 275,927 | $ | 286,816 | $ | 824,104 | $ | 838,519 | ||||||||
Cost of products sold | 136,018 | 141,373 | 409,679 | 420,835 | ||||||||||||
Gross margin | 139,909 | 145,443 | 414,425 | 417,684 | ||||||||||||
Operating expenses: | ||||||||||||||||
Research and development | 9,950 | 8,865 | 28,577 | 26,531 | ||||||||||||
Selling, general and administrative | 98,409 | 105,794 | 291,128 | 306,678 | ||||||||||||
Total operating expenses | 108,359 | 114,659 | 319,705 | 333,209 | ||||||||||||
Operating income | 31,550 | 30,784 | 94,720 | 84,475 | ||||||||||||
Other income (expense): | ||||||||||||||||
Investment and other income (expense) | 453 | 721 | 560 | (1,030 | ) | |||||||||||
Interest expense | (1,375 | ) | (1,838 | ) | (4,565 | ) | (6,119 | ) | ||||||||
Earnings before income taxes | 30,628 | 29,667 | 90,715 | 77,326 | ||||||||||||
Income tax expense | 8,075 | 8,686 | 20,312 | 22,352 | ||||||||||||
Net earnings | $ | 22,553 | $ | 20,981 | $ | 70,403 | $ | 54,974 | ||||||||
Net earnings per Class A Nonvoting Common Share: | ||||||||||||||||
Basic | $ | 0.44 | $ | 0.42 | $ | 1.38 | $ | 1.09 | ||||||||
Diluted | $ | 0.43 | $ | 0.42 | $ | 1.36 | $ | 1.08 | ||||||||
Dividends | $ | 0.21 | $ | 0.20 | $ | 0.62 | $ | 0.61 | ||||||||
Net earnings per Class B Voting Common Share: | ||||||||||||||||
Basic | $ | 0.44 | $ | 0.42 | $ | 1.37 | $ | 1.07 | ||||||||
Diluted | $ | 0.43 | $ | 0.42 | $ | 1.34 | $ | 1.07 | ||||||||
Dividends | $ | 0.21 | $ | 0.20 | $ | 0.60 | $ | 0.59 | ||||||||
Weighted average common shares outstanding (in thousands): | ||||||||||||||||
Basic | 51,227 | 50,251 | 50,972 | 50,602 | ||||||||||||
Diluted | 52,201 | 50,505 | 51,882 | 50,747 | ||||||||||||
BRADY CORPORATION AND SUBSIDIARIES | |||||||
CONSOLIDATED BALANCE SHEETS | |||||||
(Unaudited; Dollars in thousands) | |||||||
April 30, 2017 | July 31, 2016 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 129,077 | $ | 141,228 | |||
Accounts receivable—net | 145,755 | 147,333 | |||||
Inventories: | |||||||
Finished products | 61,025 | 64,313 | |||||
Work-in-process | 17,326 | 16,678 | |||||
Raw materials and supplies | 19,126 | 18,436 | |||||
Total inventories | 97,477 | 99,427 | |||||
Prepaid expenses and other current assets | 20,343 | 19,436 | |||||
Total current assets | 392,652 | 407,424 | |||||
Other assets: | |||||||
Goodwill | 425,935 | 429,871 | |||||
Other intangible assets | 54,107 | 59,806 | |||||
Deferred income taxes | 26,228 | 27,238 | |||||
Other | 18,152 | 17,181 | |||||
Property, plant and equipment: | |||||||
Cost: | |||||||
Land | 7,271 | 5,809 | |||||
Buildings and improvements | 95,662 | 95,355 | |||||
Machinery and equipment | 257,465 | 256,549 | |||||
Construction in progress | 4,362 | 2,842 | |||||
364,760 | 360,555 | ||||||
Less accumulated depreciation | 268,586 | 258,111 | |||||
Property, plant and equipment—net | 96,174 | 102,444 | |||||
Total | $ | 1,013,248 | $ | 1,043,964 | |||
LIABILITIES AND STOCKHOLDERS’ INVESTMENT | |||||||
Current liabilities: | |||||||
Notes payable | $ | 4,072 | $ | 4,928 | |||
Accounts payable | 60,144 | 62,245 | |||||
Wages and amounts withheld from employees | 45,079 | 45,998 | |||||
Taxes, other than income taxes | 7,109 | 7,403 | |||||
Accrued income taxes | 2,706 | 6,136 | |||||
Other current liabilities | 39,022 | 40,017 | |||||
Total current liabilities | 158,132 | 166,727 | |||||
Long-term obligations, less current maturities | 133,894 | 211,982 | |||||
Other liabilities | 57,159 | 61,657 | |||||
Total liabilities | 349,185 | 440,366 | |||||
Stockholders’ investment: | |||||||
Common stock: | |||||||
Class A nonvoting common stock—Issued 51,261,487 and 51,261,487 shares, respectively and outstanding 47,738,671 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 | 321,936 | 317,001 | |||||
Earnings retained in the business | 492,411 | 453,371 | |||||
Treasury stock—3,522,816 and 4,340,513 shares, respectively of Class A nonvoting common stock, at cost | (87,493 | ) | (108,714 | ) | |||
Accumulated other comprehensive loss | (63,339 | ) | (54,745 | ) | |||
Other | — | (3,863 | ) | ||||
Total stockholders’ investment | 664,063 | 603,598 | |||||
Total | $ | 1,013,248 | $ | 1,043,964 | |||
BRADY CORPORATION AND SUBSIDIARIES | ||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
(Unaudited; Dollars in thousands) | ||||||||
Nine months ended April 30, | ||||||||
2017 | 2016 | |||||||
Operating activities: | ||||||||
Net earnings | $ | 70,403 | $ | 54,974 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 20,789 | 24,896 | ||||||
Stock-based compensation expense | 7,445 | 6,247 | ||||||
Deferred income taxes | (2,707 | ) | 3,169 | |||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | (931 | ) | 4,679 | |||||
Inventories | 666 | 4,556 | ||||||
Prepaid expenses and other assets | (1,987 | ) | (734 | ) | ||||
Accounts payable and other liabilities | 754 | 3,432 | ||||||
Income taxes | (3,270 | ) | (2,669 | ) | ||||
Net cash provided by operating activities | 91,162 | 98,550 | ||||||
Investing activities: | ||||||||
Purchases of property, plant and equipment | (10,856 | ) | (7,468 | ) | ||||
Other | 38 | 1,987 | ||||||
Net cash used in investing activities | (10,818 | ) | (5,481 | ) | ||||
Financing activities: | ||||||||
Payment of dividends | (31,362 | ) | (30,603 | ) | ||||
Proceeds from exercise of stock options | 18,674 | 663 | ||||||
Purchase of treasury stock | — | (23,552 | ) | |||||
(Repayments) proceeds from borrowing on credit facilities | (60,415 | ) | 28,819 | |||||
Principal payments on debt | (16,371 | ) | (42,514 | ) | ||||
Debt issuance costs | — | (803 | ) | |||||
Income tax on equity-based compensation, and other | (512 | ) | (1,238 | ) | ||||
Net cash used in financing activities | (89,986 | ) | (69,228 | ) | ||||
Effect of exchange rate changes on cash | (2,509 | ) | 3,263 | |||||
Net (decrease) increase in cash and cash equivalents | (12,151 | ) | 27,104 | |||||
Cash and cash equivalents, beginning of period | 141,228 | 114,492 | ||||||
Cash and cash equivalents, end of period | $ | 129,077 | $ | 141,596 | ||||
BRADY CORPORATION AND SUBSIDIARIES | ||||||||||||||||
SEGMENT INFORMATION | ||||||||||||||||
(Unaudited; Dollars in thousands) | ||||||||||||||||
Three Months Ended April 30, | Nine months Ended April 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
SALES TO EXTERNAL CUSTOMERS | ||||||||||||||||
ID Solutions | $ | 196,880 | $ | 201,482 | $ | 589,106 | $ | 592,282 | ||||||||
Workplace Safety | 79,047 | 85,334 | 234,998 | 246,237 | ||||||||||||
Total | $ | 275,927 | $ | 286,816 | $ | 824,104 | $ | 838,519 | ||||||||
SALES INFORMATION | ||||||||||||||||
ID Solutions | ||||||||||||||||
Organic | (0.8 | )% | (0.9 | )% | 0.6 | % | (0.8 | )% | ||||||||
Currency | (1.5 | )% | (1.1 | )% | (1.1 | )% | (3.7 | )% | ||||||||
Total | (2.3 | )% | (2.0 | )% | (0.5 | )% | (4.5 | )% | ||||||||
Workplace Safety | ||||||||||||||||
Organic | (4.6 | )% | 1.7 | % | (2.5 | )% | (0.4 | )% | ||||||||
Currency | (2.9 | )% | (0.9 | )% | (2.1 | )% | (6.0 | )% | ||||||||
Total | (7.5 | )% | 0.8 | % | (4.6 | )% | (6.4 | )% | ||||||||
Total Company | ||||||||||||||||
Organic | (1.9 | )% | (0.1 | )% | (0.3 | )% | (0.7 | )% | ||||||||
Currency | (1.9 | )% | (1.1 | )% | (1.4 | )% | (4.3 | )% | ||||||||
Total | (3.8 | )% | (1.2 | )% | (1.7 | )% | (5.0 | )% | ||||||||
SEGMENT PROFIT | ||||||||||||||||
ID Solutions | $ | 32,633 | $ | 31,898 | $ | 94,676 | $ | 80,385 | ||||||||
Workplace Safety | 5,120 | 6,012 | 17,615 | 21,690 | ||||||||||||
Total | $ | 37,753 | $ | 37,910 | $ | 112,291 | $ | 102,075 | ||||||||
SEGMENT PROFIT AS A PERCENT OF SALES | ||||||||||||||||
ID Solutions | 16.6 | % | 15.8 | % | 16.1 | % | 13.6 | % | ||||||||
Workplace Safety | 6.5 | % | 7.0 | % | 7.5 | % | 8.8 | % | ||||||||
Total | 13.7 | % | 13.2 | % | 13.6 | % | 12.2 | % | ||||||||
Three Months Ended April 30, | Nine months Ended April 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Total segment profit | $ | 37,753 | $ | 37,910 | $ | 112,291 | $ | 102,075 | ||||||||
Unallocated amounts: | ||||||||||||||||
Administrative costs | (6,203 | ) | (7,126 | ) | (17,571 | ) | (17,600 | ) | ||||||||
Investment and other income (expense) | 453 | 721 | 560 | (1,030 | ) | |||||||||||
Interest expense | (1,375 | ) | (1,838 | ) | (4,565 | ) | (6,119 | ) | ||||||||
Earnings before income taxes | $ | 30,628 | $ | 29,667 | $ | 90,715 | $ | 77,326 | ||||||||
For More Information: Investor contact:Ann Thornton 414-438-6887 Media contact:Kate Venne 414-358-5176