• Income before income taxes increased 4.2 percent to $41.6 million in the first quarter of fiscal 2020 compared to $39.9 million in the same quarter of the prior year.
• Diluted EPS increased 20.7 percent to $0.70 in the first quarter of fiscal 2020 compared to $0.58 in the same quarter of the prior year. Diluted EPS in the first quarter of fiscal 2020 was impacted by a reduced income tax rate of 9.8 percent primarily due to a favorable tax audit settlement and tax benefits from equity-based compensation.
• Sales for the quarter decreased 2.1 percent. Organic sales decreased 0.4 percent and the impact of foreign currency translation decreased sales by 1.7 percent.
• Diluted EPS guidance for the full year ending July 31, 2020 was increased to a range of $2.50 to $2.60 from the previous range of $2.45 to $2.55.

MILWAUKEE, Nov. 21, 2019 (GLOBE NEWSWIRE) -- Brady Corporation (NYSE: BRC) (“Brady” or “Company”), a world leader in identification solutions, today reported its financial results for its fiscal 2020 first quarter ended October 31, 2019.

Quarter Ended October 31, 2019 Financial Results:

Income before income taxes increased 4.2 percent to $41.6 million for the quarter ended October 31, 2019, compared to $39.9 million in the same quarter last year.

Net income for the quarter ended October 31, 2019 increased 22.4 percent to $37.5 million compared to $30.6 million in the same quarter last year. Earnings per diluted Class A Nonvoting Common Share were $0.70 for the first quarter of fiscal 2020, compared to $0.58 in the same quarter last year. Net income and earnings per diluted Class A Nonvoting Common Share were impacted by a reduced income tax rate of 9.8 percent primarily due to a favorable tax audit settlement and tax benefits from equity-based compensation.

Sales for the quarter ended October 31, 2019 decreased 2.1 percent, which consisted of an organic sales decline of 0.4 percent and a decrease of 1.7 percent from foreign currency translation. Sales for the quarter ended October 31, 2019 were $286.9 million compared to $293.2 million in the same quarter last year. By segment, sales decreased 1.4 percent in Identification Solutions and decreased 4.2 percent in Workplace Safety, which consisted of organic sales declines of 0.2 percent in Identification Solutions and 0.8 percent in Workplace Safety.

Commentary:

“This quarter marks our 17th consecutive quarter of year-on-year pre-tax earnings growth. Our investment in innovative new products to provide increased value to our customers while executing efficiencies throughout our manufacturing facilities and SG&A structure continue to drive our improved financial results,” said Brady’s President and Chief Executive Officer, J. Michael Nauman. “We see signs of a weakening industrial economic environment, which makes our commitment to the execution of sustainable efficiency gains throughout our businesses essential this fiscal year. Our priorities for fiscal 2020 are consistent with what has allowed us to deliver improved financial results the last four years, which we believe position us well for strong revenue and earnings growth as our end markets recover from the recent macro-economic weakness.”

“Cash provided by operating activities was $38.8 million this quarter and we finished in a net cash position of nearly $245 million at October 31, 2019, an increase of $107 million since October 31, 2018. Our balance sheet continues to provide significant flexibility for future investment and to return funds to our shareholders, which puts Brady in a strong financial position,” said Brady’s Chief Financial Officer, Aaron Pearce.

Fiscal 2020 Guidance:

The Company is increasing its full year fiscal 2020 earnings per diluted Class A Nonvoting Common Share guidance from its previous range of $2.45 to $2.55 to a range of $2.50 to $2.60 due to a reduction in its income tax rate. Included in this guidance is organic sales growth of approximately 1.5 to 2.5 percent, a full-year income tax rate of approximately 20 percent, and depreciation and amortization of approximately $25 million. The Company expects to achieve efficiency gains in its manufacturing facilities and in selling, general and administrative expenses. Capital expenditures are expected to be approximately $35 million during the year ending July 31, 2020. This guidance is based upon foreign currency exchange rates as of October 31, 2019.

A webcast regarding Brady’s fiscal 2020 first quarter financial results will be available at www.bradycorp.com/investors beginning at 9:30 a.m. central time today.

Brady Corporation is an international manufacturer and marketer of complete solutions that identify and protect people, products and places. Brady’s products help customers increase safety, security, productivity and performance and include high-performance labels, signs, safety devices, printing systems and software. Founded in 1914, the Company has a diverse customer base in electronics, telecommunications, manufacturing, electrical, construction, medical, aerospace and a variety of other industries. Brady is headquartered in Milwaukee, Wisconsin and as of July 31, 2019, employed approximately 6,100 people in its worldwide businesses. Brady’s fiscal 2019 sales were approximately $1.16 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.

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; raw material and other cost increases; 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; 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; 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, 2019.

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 October 31,
		2019				2018
Net sales	$	286,947			$	293,196
Cost of goods sold		145,542				146,657
Gross margin		141,405				146,539
Operating expenses:
Research and development		10,967				11,326
Selling, general and administrative		89,547				94,591
Total operating expenses		100,514				105,917
Operating income		40,891				40,622
Other income (expense):
Investment and other income (expense)		1,380				(17	)
Interest expense		(701	)			(712	)
Income before income taxes		41,570				39,893
Income tax expense		4,072				9,256
Net income	$	37,498			$	30,637
Net income per Class A Nonvoting Common Share:
Basic	$	0.71			$	0.59
Diluted	$	0.70			$	0.58
Dividends	$	0.22			$	0.21
Net income per Class B Voting Common Share:
Basic	$	0.69			$	0.57
Diluted	$	0.68			$	0.56
Dividends	$	0.20			$	0.20
Weighted average common shares outstanding:
Basic		53,143				52,201
Diluted		53,736				52,958

BRADY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
	October 31, 2019				July 31, 2019
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	295,093			$	279,072
Accounts receivable—net		162,561				158,114
Inventories		119,612				120,037
Prepaid expenses and other current assets		16,642				16,056
Total current assets		593,908				573,279
Property, plant and equipment—net		112,565				110,048
Goodwill		411,328				410,987
Other intangible assets		34,860				36,123
Deferred income taxes		7,447				7,298
Operating lease assets		52,233				—
Other assets		18,881				19,573
Total	$	1,231,222			$	1,157,308
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	59,385			$	64,810
Accrued compensation and benefits		63,794				62,509
Taxes, other than income taxes		8,885				8,107
Accrued income taxes		6,790				6,557
Current operating lease liabilities		14,857				—
Other current liabilities		52,092				49,796
Current maturities on long-term debt		50,144				50,166
Total current liabilities		255,947				241,945
Long-term operating lease liabilities		40,124				—
Other liabilities		58,616				64,589
Total liabilities		354,687				306,534
Stockholders’ equity:
Common stock:
Class A nonvoting common stock—Issued 51,261,487 shares, and outstanding 49,764,799 and 49,458,841 shares, respectively		513				513
Class B voting common stock—Issued and outstanding, 3,538,628 shares		35				35
Additional paid-in capital		327,241				329,969
Retained earnings		663,808				637,843
Treasury stock—1,496,688 and 1,802,646 shares, respectively, of Class A nonvoting common stock, at cost		(43,779	)			(46,332	)
Accumulated other comprehensive loss		(71,283	)			(71,254	)
Total stockholders’ equity		876,535				850,774
Total	$	1,231,222			$	1,157,308

BRADY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited; Dollars in thousands)
	Three months ended October 31,
		2019				2018
Operating activities:
Net income	$	37,498			$	30,637
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		5,634				5,960
Non-cash portion of stock-based compensation expense		3,618				4,965
Deferred income taxes		1,009				2,164
Other		1,533				218
Changes in operating assets and liabilities:
Accounts receivable		(4,362	)			(6,709	)
Inventories		249				(3,125	)
Prepaid expenses and other assets		(1,404	)			(2,197	)
Accounts payable and other liabilities		(5,193	)			(14,288	)
Income taxes		266				1,193
Net cash provided by operating activities		38,848				18,818
Investing activities:
Purchases of property, plant and equipment		(7,724	)			(6,009	)
Other		527				337
Net cash used in investing activities		(7,197	)			(5,672	)
Financing activities:
Payment of dividends		(11,533	)			(11,096	)
Proceeds from exercise of stock options		3,411				13,001
Payments for employee taxes withheld from stock-based awards		(7,269	)			(2,937	)
Proceeds from borrowing on credit facilities		—				5,737
Repayment of borrowing on credit facilities		—				(2,269	)
Other		65				(1,772	)
Net cash (used in) provided by financing activities		(15,326	)			664
Effect of exchange rate changes on cash		(304	)			(3,061	)
Net increase in cash and cash equivalents		16,021				10,749
Cash and cash equivalents, beginning of period		279,072				181,427
Cash and cash equivalents, end of period	$	295,093			$	192,176

BRADY CORPORATION AND SUBSIDIARIES
SEGMENT INFORMATION
(Unaudited; Dollars in thousands)
	Three months ended October 31,
		2019				2018
NET SALES
ID Solutions	$	214,987			$	218,100
Workplace Safety		71,960				75,096
Total	$	286,947			$	293,196
SALES INFORMATION
ID Solutions
Organic		(0.2	)%			5.7	%
Currency		(1.2	)%			(1.7	)%
Total		(1.4	)%			4.0	%
Workplace Safety
Organic		(0.8	)%			2.2	%
Currency		(3.4	)%			(2.6	)%
Divestiture		—	%			(6.2	)%
Total		(4.2	)%			(6.6	)%
Total Company
Organic		(0.4	)%			4.7	%
Currency		(1.7	)%			(2.0	)%
Divestiture		—	%			(1.7	)%
Total		(2.1	)%			1.0	%
SEGMENT PROFIT
ID Solutions	$	42,443			$	41,562
Workplace Safety		5,157				5,541
Total	$	47,600			$	47,103
SEGMENT PROFIT AS A PERCENT OF NET SALES
ID Solutions		19.7	%			19.1	%
Workplace Safety		7.2	%			7.4	%
Total		16.6	%			16.1	%
	Three months ended October 31,
		2019				2018
Total segment profit	$	47,600			$	47,103
Unallocated amounts:
Administrative costs		(6,709	)			(6,481	)
Investment and other income (expense)		1,380				(17	)
Interest expense		(701	)			(712	)
Income before income taxes	$	41,570			$	39,893

For More Information:

Investor contact:Ann Thornton414-438-6887

Media contact:Kate Venne414-358-5176

Source: Brady Corporation

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