EX-99.1 2 exhibit991pressrelease1031.htm FIRST QUARTER FISCAL 2020 PRESS RELEASE Exhibit


EXHIBIT 99.1


For More Information:
Investor contact: Ann Thornton 414-438-6887
Media contact: Kate Venne 414-358-5176


Brady Corporation Reports Fiscal 2020 First Quarter Results and Increases its Fiscal 2020 EPS Guidance

•
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 (November 21, 2019)--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 INCOME
(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 accrued 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 borrowings 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
)%
Divestitures
—
 %
 
(6.2
)%
Total
(4.2
)%
 
(6.6
)%
Total Company
Organic
(0.4
)%
 
4.7
 %
Currency
(1.7
)%
 
(2.0
)%
Divestitures
—
 %
 
(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