Brady Corp. (NYSE: BRC) reported Q3 EPS of $0.49, in-line with the analyst estimate of $0.49. Revenue for the quarter came in at $298.42 million versus the consensus estimate of $291.47 million.

• Earnings before income taxes increased 20.7 percent, finishing at $37.0 million in the third quarter of fiscal 2018 compared to $30.6 million in the third quarter of fiscal 2017. This marks our 11th consecutive quarter of profit growth.
• Earnings per diluted Class A Nonvoting Common Share were $0.49 in the third quarter of fiscal 2018 compared to $0.43 in the same quarter of the prior year.
• Total revenues increased 8.2 percent, which consisted of organic revenue growth of 3.2 percent and an increase of 5.0 percent from foreign currency translation. This is our fourth consecutive quarter of organic revenue growth.
• Earnings per diluted Class A Common Share guidance for the full year ending July 31, 2018 was tightened to a range of $1.95 to $2.00 from a previous range of $1.90 to $2.00, exclusive of tax charges primarily related to the enactment of the U.S. tax legislation.

Commentary:“Our continued focus on innovation and the development of high-quality products resulted in organic sales growth of 3.2 percent in the quarter, which was driven by both the Identification Solutions and Workplace Safety businesses. This marks our fourth consecutive quarter of organic sales growth and our eleventh consecutive quarter of year-over-year pre-tax earnings growth. We take a consistent and balanced approach to driving organic sales growth while executing sustainable efficiency gains throughout our global operations and SG&A structure,” said Brady’s President and Chief Executive Officer, J. Michael Nauman. “We expect this positive organic sales trend to continue as we launch innovative new products in our Identification Solutions business, and as our Workplace Safety business returns to consistent quarterly organic sales growth and realizes benefits over the long-term due to its product innovation efforts.”

“Our cash generation remains strong,” said Brady’s Chief Financial Officer, Aaron Pearce. “Even after significantly increasing our investments in research and development, we still increased our net cash provided by operating activities by 23.6% this quarter and significantly increased our investments in capital expenditures. We also repaid $11.7 million in debt and finished in a net cash position of $72.7 million as of April 30, 2018. Our strong balance sheet provides us with significant flexibility for investing in opportunities to drive long-term value for our shareholders.”

Fiscal 2018 Guidance:The Company is tightening its full year fiscal 2018 earnings per diluted Class A Nonvoting Common Share guidance from its previous range of $1.90 to $2.00 to a range of $1.95 to $2.00, exclusive of tax charges primarily related to the enactment of the U.S. Tax Cuts and Jobs Act of 2017. Included in this guidance is low-single digit organic sales growth, depreciation and amortization expense of approximately $26 million, and capital expenditures of approximately $20 to $25 million during the year ending July 31, 2018. The Company expects its full-year income tax rate, exclusive of charges primarily related to the enactment of the U.S. Tax Cuts and Jobs Act of 2017, to range from approximately 27 percent to 29 percent. The full benefit of the enactment of U.S. tax legislation will not be realized until next fiscal year. This guidance is based upon foreign exchange rates as of April 30, 2018.

GUIDANCE:

Brady Corp. sees FY2018 EPS of $1.95-$2.00, versus the consensus of $2.01.

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