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Brady Corporation
Quarter Ended
Income before income taxes and losses of unconsolidated affiliate increased 5.8 percent to
Net income for the quarter ended
Sales for the quarter ended
Commentary:
“Our investments in sales, marketing, and research and development over the last several years are paying off. These investments, coupled with increased customer demand, and the acquisitions completed in the fourth quarter of last year, helped us generate double-digit sales growth this quarter,” said Brady’s President and Chief Executive Officer,
“Brady is financially strong and continues to generate significant cash flow. This quarter, sales grew 16.0 percent and Diluted EPS Excluding Amortization* grew 9.1 percent, which represents another very strong quarter,” said Brady’s Chief Financial Officer,
Fiscal 2022 Guidance:
The Company’s earnings per diluted Class A Nonvoting Common Share, excluding amortization guidance for the year ending
A webcast regarding Brady’s fiscal 2022 first quarter financial results will be available at www.bradycorp.com/investors beginning at
* Income Before Income Taxes Excluding Amortization, Net Income Excluding Amortization, and Diluted EPS Excluding Amortization are non-GAAP measures. See appendix for more information on these measures, including reconciliations to the most directly comparable 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,” “continue” 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: adverse impacts of the novel coronavirus (“COVID-19”) pandemic or other pandemics; adverse impacts from vaccination mandates issued by
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 |
|||||||
2021 | 2020 | ||||||
Net sales | $ | 321,475 | $ | 277,227 | |||
Cost of goods sold | 166,487 | 141,799 | |||||
Gross margin | 154,988 | 135,428 | |||||
Operating expenses: | |||||||
Research and development | 13,907 | 10,203 | |||||
Selling, general and administrative | 96,746 | 83,037 | |||||
Total operating expenses | 110,653 | 93,240 | |||||
Operating income | 44,335 | 42,188 | |||||
Other income (expense): | |||||||
Investment and other income | 543 | 155 | |||||
Interest expense | (182 | ) | (106 | ) | |||
Income before income taxes and losses of unconsolidated affiliate | 44,696 | 42,237 | |||||
Income tax expense | 9,650 | 8,582 | |||||
Income before losses of unconsolidated affiliate | 35,046 | 33,655 | |||||
Equity in losses of unconsolidated affiliate | — | (174 | ) | ||||
Net income | $ | 35,046 | $ | 33,481 | |||
Net income per Class A Nonvoting Common Share: | |||||||
Basic | $ | 0.67 | $ | 0.64 | |||
Diluted | $ | 0.67 | $ | 0.64 | |||
Dividends | $ | 0.23 | $ | 0.22 | |||
Net income per Class B Voting Common Share: | |||||||
Basic | $ | 0.66 | $ | 0.63 | |||
Diluted | $ | 0.65 | $ | 0.62 | |||
Dividends | $ | 0.21 | $ | 0.20 | |||
Weighted average common shares outstanding: | |||||||
Basic | 51,973 | 52,021 | |||||
Diluted | 52,436 | 52,292 | |||||
BRADY CORPORATION AND SUBSIDIARIES | |||||||
CONSOLIDATED BALANCE SHEETS | |||||||
(Dollars in thousands) | |||||||
(Unaudited) | |||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 157,553 | $ | 147,335 | |||
Accounts receivable, net of allowance for credit losses of |
182,791 | 170,579 | |||||
Inventories | 152,295 | 136,107 | |||||
Prepaid expenses and other current assets | 12,452 | 11,083 | |||||
Total current assets | 505,091 | 465,104 | |||||
Property, plant and equipment—net | 128,618 | 121,741 | |||||
610,836 | 614,137 | ||||||
Other intangible assets | 88,219 | 92,334 | |||||
Deferred income taxes | 16,377 | 16,343 | |||||
Operating lease assets | 36,655 | 41,880 | |||||
Other assets | 24,682 | 26,217 | |||||
Total | $ | 1,410,478 | $ | 1,377,756 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 79,497 | $ | 82,152 | |||
Accrued compensation and benefits | 89,283 | 81,173 | |||||
Taxes, other than income taxes | 13,061 | 13,054 | |||||
Accrued income taxes | 5,593 | 3,915 | |||||
Current operating lease liabilities | 17,129 | 17,667 | |||||
Other current liabilities | 61,930 | 59,623 | |||||
Total current liabilities | 266,493 | 257,584 | |||||
Long-term debt | 67,000 | 38,000 | |||||
Long-term operating lease liabilities | 23,434 | 28,347 | |||||
Other liabilities | 89,658 | 90,797 | |||||
Total liabilities | 446,585 | 414,728 | |||||
Stockholders’ equity: | |||||||
Common stock: | |||||||
Class A nonvoting common stock—Issued 51,261,487 shares, and outstanding 48,257,592 and 48,528,245 shares, respectively | 513 | 513 | |||||
Class B voting common stock—Issued and outstanding, 3,538,628 shares | 35 | 35 | |||||
Additional paid-in capital | 340,182 | 339,125 | |||||
Retained earnings | 811,820 | 788,369 | |||||
(127,986 | ) | (109,061 | ) | ||||
Accumulated other comprehensive loss | (60,671 | ) | (55,953 | ) | |||
Total stockholders’ equity | 963,893 | 963,028 | |||||
Total | $ | 1,410,478 | $ | 1,377,756 | |||
BRADY CORPORATION AND SUBSIDIARIES | |||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||
(Unaudited; Dollars in thousands) | |||||||
Three months ended |
|||||||
2021 | 2020 | ||||||
Operating activities: | |||||||
Net income | $ | 35,046 | $ | 33,481 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 8,509 | 5,635 | |||||
Stock-based compensation expense | 4,129 | 3,574 | |||||
Deferred income taxes | (625 | ) | (1,175 | ) | |||
Equity in losses of unconsolidated affiliate | — | 174 | |||||
Other | (187 | ) | (266 | ) | |||
Changes in operating assets and liabilities: | |||||||
Accounts receivable | (13,302 | ) | (11,371 | ) | |||
Inventories | (16,579 | ) | 14,758 | ||||
Prepaid expenses and other assets | (655 | ) | (1,398 | ) | |||
Accounts payable and accrued liabilities | 9,499 | 17,363 | |||||
Income taxes | 1,656 | 2,063 | |||||
Net cash provided by operating activities | 27,491 | 62,838 | |||||
Investing activities: | |||||||
Purchases of property, plant and equipment | (11,328 | ) | (9,321 | ) | |||
Other | 2 | 119 | |||||
Net cash used in investing activities | (11,326 | ) | (9,202 | ) | |||
Financing activities: | |||||||
Payment of dividends | (11,595 | ) | (11,391 | ) | |||
Proceeds from exercise of stock options | 151 | 160 | |||||
Payments for employee taxes withheld from stock-based awards | (3,339 | ) | (2,617 | ) | |||
Purchase of treasury stock | (18,924 | ) | (2,720 | ) | |||
Proceeds from borrowing on credit facilities | 56,200 | 12,971 | |||||
Repayment of borrowing on credit facilities | (27,200 | ) | (12,988 | ) | |||
Other | 115 | 34 | |||||
Net cash used in financing activities | (4,592 | ) | (16,551 | ) | |||
Effect of exchange rate changes on cash | (1,355 | ) | 1,605 | ||||
Net increase in cash and cash equivalents | 10,218 | 38,690 | |||||
Cash and cash equivalents, beginning of period | 147,335 | 217,643 | |||||
Cash and cash equivalents, end of period | $ | 157,553 | $ | 256,333 | |||
BRADY CORPORATION AND SUBSIDIARIES | |||||||
SEGMENT INFORMATION | |||||||
(Unaudited; Dollars in thousands) | |||||||
Three months ended |
|||||||
2021 | 2020 | ||||||
ID Solutions | $ | 248,617 | $ | 198,192 | |||
Workplace Safety | 72,858 | 79,035 | |||||
Total | $ | 321,475 | $ | 277,227 | |||
SALES INFORMATION | |||||||
ID Solutions | |||||||
Organic | 13.2 | % | (8.4 | )% | |||
Acquisition | 11.6 | % | — | % | |||
Currency | 0.6 | % | 0.6 | % | |||
Total | 25.4 | % | (7.8 | )% | |||
Workplace Safety | |||||||
Organic | (8.6 | )% | 5.5 | % | |||
Currency | 0.8 | % | 4.3 | % | |||
Total | (7.8 | )% | 9.8 | % | |||
Organic | 7.0 | % | (4.9 | )% | |||
Acquisition | 8.3 | % | — | % | |||
Currency | 0.7 | % | 1.5 | % | |||
Total | 16.0 | % | (3.4 | )% | |||
SEGMENT PROFIT | |||||||
ID Solutions | $ | 48,816 | $ | 40,279 | |||
Workplace Safety | 2,293 | 7,988 | |||||
Total | $ | 51,109 | $ | 48,267 | |||
SEGMENT PROFIT AS A PERCENT OF |
|||||||
ID Solutions | 19.6 | % | 20.3 | % | |||
Workplace Safety | 3.1 | % | 10.1 | % | |||
Total | 15.9 | % | 17.4 | % | |||
Three months ended |
|||||||
2021 | 2020 | ||||||
Total segment profit | $ | 51,109 | $ | 48,267 | |||
Unallocated amounts: | |||||||
Administrative costs | (6,774 | ) | (6,079 | ) | |||
Investment and other income | 543 | 155 | |||||
Interest expense | (182 | ) | (106 | ) | |||
Income before income taxes and losses of unconsolidated affiliate | $ | 44,696 | $ | 42,237 | |||
GAAP to NON-GAAP MEASURES | |||||||||
(Unaudited; Dollars in Thousands, Except Per Share Amounts) | |||||||||
In accordance with the |
|||||||||
Income Before Income Taxes Excluding Amortization: | |||||||||
Brady is presenting the non-GAAP measure, "Income Before Income Taxes Excluding Amortization." This is not a calculation based upon GAAP. The amounts included in this non-GAAP measure are derived from amounts included in the Consolidated Financial Statements and supporting footnote disclosures. We do not view these items to be part of our ongoing results. We believe this profit measure provides an important perspective of underlying business trends and results and provides a more comparable measure from year to year. The table below provides a reconciliation of the GAAP measure of Income before income taxes and losses of unconsolidated affiliate to the non-GAAP measure of Income Before Income Taxes Excluding Amortization: | |||||||||
Three months ended |
|||||||||
2021 | 2020 | ||||||||
Income before income taxes and losses of unconsolidated affiliate (GAAP measure) | $ | 44,696 | $ | 42,237 | |||||
Amortization expense | 3,807 | 1,351 | |||||||
Income Before Income Taxes Excluding Amortization (non-GAAP measure) | $ | 48,503 | $ | 43,588 | |||||
Income Tax Expense Excluding Amortization: | |||||||||
Brady is presenting the non-GAAP measure, "Income Tax Expense Excluding Amortization." This is not a calculation based upon GAAP. The amounts included in this non-GAAP measure are derived from amounts included in the Consolidated Financial Statements and supporting footnote disclosures. We do not view these items to be part of our ongoing results. We believe this measure provides an important perspective of underlying business trends and results and provides a more comparable measure from year to year. The table below provides a reconciliation of the GAAP measure of Income tax expense to the non-GAAP measure of Income Tax Expense Excluding Amortization: | |||||||||
Three months ended |
|||||||||
2021 | 2020 | ||||||||
Income tax expense (GAAP measure) | $ | 9,650 | $ | 8,582 | |||||
Amortization expense | 900 | 338 | |||||||
Income Tax Expense Excluding Amortization (non-GAAP measure) | $ | 10,550 | $ | 8,920 | |||||
Net Income Excluding Amortization: | |||||||||
Brady is presenting the non-GAAP measure, "Net Income Excluding Amortization." This is not a calculation based upon GAAP. The amounts included in this non-GAAP measure are derived from amounts included in the Consolidated Financial Statements and supporting footnote disclosures. We do not view these items to be part of our ongoing results. We believe this measure provides an important perspective of underlying business trends and results and provides a more comparable measure from year to year. The table below provides a reconciliation of the GAAP measure of Net income to the non-GAAP measure of Net Income Excluding Amortization: | |||||||||
Three months ended |
|||||||||
2021 | 2020 | ||||||||
Net income (GAAP measure) | $ | 35,046 | $ | 33,481 | |||||
Amortization expense | 2,907 | 1,013 | |||||||
Net Income Excluding Amortization (non-GAAP measure) | $ | 37,953 | $ | 34,494 | |||||
Diluted EPS Excluding Amortization: | |||||||||
Brady is presenting the non-GAAP measure, "Diluted EPS Excluding Amortization." This is not a calculation based upon GAAP. The amounts included in this non-GAAP measure are derived from amounts included in the Consolidated Financial Statements. We do not view these items to be part of our ongoing results. We believe this measure provides an important perspective of underlying business trends and results and provides a more comparable measure from year to year. The table below provides a reconciliation of the GAAP measure of Net income per Class A Nonvoting Common Share to the non-GAAP measure of Diluted EPS Excluding Amortization (Note that certain amounts will not foot due to rounding): | |||||||||
Three months ended |
|||||||||
2021 | 2020 | ||||||||
Net income per Class A Nonvoting Common Share (GAAP measure) | $ | 0.67 | $ | 0.64 | |||||
Amortization expense | 0.06 | 0.02 | |||||||
Diluted EPS Excluding Amortization (non-GAAP measure) | $ | 0.72 | $ | 0.66 | |||||
For More Information:
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Source: Brady Corporation