Brady Corp 8-K, filed Nov 16, 2023
Brady Corp (BRC)
8-K
2023-11-16
For: 2023-11-15
View Original
Added on
April 04, 2026
About this 8-K
Brady Corp filed this 8-K on November 16, 2023, reporting on events of November 15, 2023.
Items reported
- Item 2.02: Financial results
- Item 5.07: Shareholder vote results
- Item 7.01: Regulation FD disclosure
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 15, 2023
(Exact name of registrant as specified in its charter)
Commission File Number 1-14959
| (State or other jurisdiction of incorporation or organization) | (IRS Employer Identification No.) | |||||||
(Address of principal executive offices and Zip Code)
(414 ) 358-6600
(Registrant’s Telephone Number)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |||||
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |||||
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |||||
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |||||
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol | Name of each exchange on which registered | ||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 2.02 | RESULTS OF OPERATIONS AND FINANCIAL CONDITION | ||||
On November 16, 2023, Brady Corporation (the “Company”) issued a press release announcing its fiscal 2024 first quarter financial results. A copy of the press release is being furnished to the Securities and Exchange Commission as Exhibit 99.1 attached hereto and is incorporated herein by reference.
| Item 5.07 | SUBMISSIONS OF MATTERS TO A VOTE OF SECURITY HOLDERS | ||||
On November 15, 2023, at the Company’s Annual Shareholders’ Meeting, the holders of all of the 3,538,628 shares of the Company’s Class B Common Stock voted unanimously in favor of electing the following persons to serve as the Company’s directors until the next annual meeting of shareholders and until their successors have been elected:
Patrick W. Allender
David S. Bem
Elizabeth P. Bruno
Joanne Collins Smee
Nancy L. Gioia
Vineet Nargolwala
Bradley C. Richardson
Russell R. Shaller
Michelle E. Williams
| Item 7.01 | REGULATION FD DISCLOSURE | ||||
On November 16, 2023, the Company hosted a conference call related to its fiscal 2024 first quarter financial results. A copy of the slides referenced in the conference call, which is also posted on the Corporation’s website, is being furnished to the Securities and Exchange Commission as Exhibit 99.2 attached hereto and is incorporated herein by reference.
| Item 9.01 | FINANCIAL STATEMENTS AND EXHIBITS | ||||
(d) Exhibits
| EXHIBIT NUMBER | DESCRIPTION | ||||
| 99.1 | |||||
| 99.2 | |||||
| 104 | Cover Page Interactive Data File (embedded within Inline XBRL document). | ||||
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| BRADY CORPORATION | ||||||||
| Date: November 16, 2023 | ||||||||
| /s/ ANN E. THORNTON | ||||||||
| Ann E. Thornton | ||||||||
| Chief Financial Officer, Chief Accounting Officer and Treasurer | ||||||||
EXHIBIT 99.1
For More Information:
Investor contact: Ann Thornton 414-438-6887
Media contact: Kate Venne 414-358-5176
Brady Corporation Reports Fiscal 2024 First Quarter Results
•Sales for the quarter increased 2.9 percent. Organic sales increased 2.7 percent.
•Gross profit margin increased to 51.7 percent in the first quarter of fiscal 2024 compared to 48.1 percent in the first quarter of fiscal 2023.
•Diluted EPS increased 22.8 percent to $0.97 in the first quarter of fiscal 2024 compared to $0.79 in the same quarter of the prior year. Diluted EPS Excluding Certain Items* increased 19.0 percent to $1.00 in the first quarter of fiscal 2024 compared to $0.84 in the same quarter of the prior year.
•During the quarter ended October 31, 2023, we returned $25.5 million to our shareholders in the form of dividends and share repurchases.
MILWAUKEE (November 16, 2023) -- Brady Corporation (NYSE: BRC) (“Brady” or “Company”), a world leader in identification solutions, today reported its financial results for its fiscal 2024 first quarter ended October 31, 2023.
Quarter Ended October 31, 2023 Financial Results:
Sales for the quarter ended October 31, 2023 increased 2.9 percent, which consisted of an organic sales increase of 2.7 percent, an increase of 1.5 percent from foreign currency translation and a decrease of 1.3 percent from the divestiture of one business in the prior fiscal year as well as the divestiture of another non-core business in the current quarter. Sales for the quarter ended October 31, 2023 were $332.0 million compared to $322.6 million in the same quarter last year. By region, sales increased 1.4 percent in the Americas & Asia and increased 6.0 percent in Europe & Australia, which consisted of an organic sales increase of 3.3 percent in the Americas & Asia and an organic sales increase of 1.4 percent in Europe & Australia.
Income before income taxes increased 18.0 percent to $59.4 million for the quarter ended October 31, 2023 compared to $50.3 million in the same quarter last year. Income Before Income Taxes Excluding Certain Items* for the quarter ended October 31, 2023, which was adjusted for amortization expense of $2.4 million, was $61.8 million, an increase of 14.4 percent compared to the first quarter of last year. Income Before Income Taxes Excluding Certain Items* for the quarter ended October 31, 2022, which was adjusted for amortization expense of $3.6 million, was $54.0 million.
Net income for the quarter ended October 31, 2023 was $47.2 million compared to $39.4 million in the same quarter last year. Earnings per diluted Class A Nonvoting Common Share were $0.97 for the first quarter of fiscal 2024 compared to $0.79 in the same quarter last year. Net Income Excluding Certain Items* for the quarter ended October 31, 2023 was $49.1 million and Diluted EPS Excluding Certain Items* for the quarter ended October 31, 2023 was $1.00. Net Income Excluding Certain Items* for the quarter ended October 31, 2022 was $42.2 million, and Diluted EPS Excluding Certain Items* for the quarter ended October 31, 2022 was $0.84.
Commentary:
“Our investments in our salesforce and in research and development are paying off as we launched an exciting new printer this quarter and have set the stage for continued future growth,” said Brady’s President and Chief Executive Officer, Russell R. Shaller. “Our Americas and Asia region performed particularly well with another quarter of organic sales growth and significant improvement in segment profit. We continue to identify opportunities to further integrate our businesses, to support continued growth through the application of our best go-to-market strategies in key geographies and to further simplify our global businesses, which we believe positions us for future success.”
“Brady is financially strong and continues to generate significant cash flow. This quarter, we grew organic sales by 2.7 percent and we grew GAAP diluted earnings per share by 22.8 percent,” said Brady’s Chief Financial Officer, Ann Thornton. “We also returned $25.5 million to our shareholders in the form of dividends and share buybacks this quarter. We believe we are well-positioned for the future with a strong balance sheet which provides opportunities to drive continued shareholder value.”
Fiscal 2024 Guidance:
The Company’s GAAP earnings per diluted Class A Nonvoting Common Share guidance for the year ending July 31, 2024 remains unchanged at $3.70 to $3.95 per share, and the Company’s Diluted EPS Excluding Certain Items* guidance for the year ending July 31, 2024 also remains unchanged at $3.85 to $4.10 per share.
The other assumptions included in our fiscal 2024 guidance are effectively unchanged. We expect a full-year income tax rate of approximately 22 percent, depreciation and amortization expense ranging from $32 to $34 million, and capital expenditures of approximately $75 million, which are inclusive of $55 million related to the conversion of previously leased manufacturing facilities. Our fiscal 2024 guidance is based on foreign currency exchange rates as of October 31, 2023 and assumes continued economic growth.
A webcast regarding Brady’s fiscal 2024 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, 2023, employed approximately 5,600 people in its worldwide businesses. Brady’s fiscal 2023 sales were approximately $1.33 billion. Brady stock trades on the New York Stock Exchange under the symbol BRC. More information is available on the Internet at www.bradyid.com.
* Income Before Income Taxes Excluding Certain Items, Net Income Excluding Certain Items, and Diluted EPS Excluding Certain Items 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,” “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: increased cost of raw materials, labor and freight as well as material shortages and supply chain disruptions; decreased demand for our products; our ability to compete effectively or to successfully execute our strategy; our ability to develop technologically advanced products that meet customer demands; difficulties in protecting our websites, networks, and systems against security breaches; Brady’s ability to identify, integrate, and grow acquired companies, and to manage contingent liabilities from divested businesses; risks associated with the loss of key employees; extensive regulations by U.S. and non-U.S. governmental and self-regulatory entities; litigation, including product liability claims; adverse impacts of the novel coronavirus (“COVID-19”) pandemic or other pandemics; foreign currency fluctuations; potential write-offs of goodwill and other intangible assets; changes in tax legislation and tax rates; differing interests of voting and non-voting shareholders; numerous other matters of national, regional and global scale, including major public health crises and government responses thereto and 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, 2023.
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, | |||||||||||
| 2023 | 2022 | ||||||||||
| Net sales | $ | 331,983 | $ | 322,569 | |||||||
| Cost of goods sold | 160,264 | 167,305 | |||||||||
| Gross margin | 171,719 | 155,264 | |||||||||
| Operating expenses: | |||||||||||
| Research and development | 15,702 | 13,933 | |||||||||
| Selling, general and administrative | 96,287 | 89,945 | |||||||||
| Total operating expenses | 111,989 | 103,878 | |||||||||
| Operating income | 59,730 | 51,386 | |||||||||
| Other income (expense): | |||||||||||
| Investment and other income (expense) | 438 | (157) | |||||||||
| Interest expense | (766) | (894) | |||||||||
| Income before income taxes | 59,402 | 50,335 | |||||||||
| Income tax expense | 12,161 | 10,894 | |||||||||
| Net income | $ | 47,241 | $ | 39,441 | |||||||
| Net income per Class A Nonvoting Common Share: | |||||||||||
| Basic | $ | 0.97 | $ | 0.79 | |||||||
| Diluted | $ | 0.97 | $ | 0.79 | |||||||
| Net income per Class B Voting Common Share: | |||||||||||
| Basic | $ | 0.96 | $ | 0.78 | |||||||
| Diluted | $ | 0.95 | $ | 0.77 | |||||||
| Weighted average common shares outstanding: | |||||||||||
| Basic | 48,505 | 49,868 | |||||||||
| Diluted | 48,811 | 50,090 | |||||||||
BRADY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
| October 31, 2023 | July 31, 2023 | ||||||||||
| (Unaudited) | |||||||||||
| ASSETS | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 175,352 | $ | 151,532 | |||||||
| Accounts receivable, net of allowance for credit losses of $6,923 and $8,467, respectively | 179,970 | 184,420 | |||||||||
| Inventories | 166,916 | 177,078 | |||||||||
| Prepaid expenses and other current assets | 12,827 | 11,790 | |||||||||
| Total current assets | 535,065 | 524,820 | |||||||||
| Property, plant and equipment—net | 143,792 | 142,149 | |||||||||
| Goodwill | 583,702 | 592,646 | |||||||||
| Other intangible assets | 58,774 | 62,096 | |||||||||
| Deferred income taxes | 14,931 | 15,716 | |||||||||
| Operating lease assets | 26,860 | 29,688 | |||||||||
| Other assets | 20,289 | 22,142 | |||||||||
| Total | $ | 1,383,413 | $ | 1,389,257 | |||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | $ | 79,512 | $ | 79,855 | |||||||
| Accrued compensation and benefits | 57,566 | 71,470 | |||||||||
| Taxes, other than income taxes | 14,249 | 13,575 | |||||||||
| Accrued income taxes | 17,970 | 12,582 | |||||||||
| Current operating lease liabilities | 13,225 | 14,726 | |||||||||
| Other current liabilities | 69,172 | 65,828 | |||||||||
| Total current liabilities | 251,694 | 258,036 | |||||||||
| Long-term debt | 52,267 | 49,716 | |||||||||
| Long-term operating lease liabilities | 14,483 | 16,217 | |||||||||
| Other liabilities | 69,977 | 74,369 | |||||||||
| Total liabilities | 388,421 | 398,338 | |||||||||
| Stockholders’ equity: | |||||||||||
| Common stock: | |||||||||||
| Class A nonvoting common stock—Issued 51,261,487 shares, and outstanding 44,868,082 and 45,008,724 shares, respectively | 513 | 513 | |||||||||
| Class B voting common stock—Issued and outstanding, 3,538,628 shares | 35 | 35 | |||||||||
| Additional paid-in capital | 352,421 | 351,771 | |||||||||
| Retained earnings | 1,057,773 | 1,021,870 | |||||||||
| Treasury stock—6,393,405 and 6,252,763 shares, respectively of Class A nonvoting common stock, at cost | (300,467) | (290,209) | |||||||||
| Accumulated other comprehensive loss | (115,283) | (93,061) | |||||||||
| Total stockholders’ equity | 994,992 | 990,919 | |||||||||
| Total | $ | 1,383,413 | $ | 1,389,257 | |||||||
BRADY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited; Dollars in thousands)
| Three months ended October 31, | |||||||||||
| 2023 | 2022 | ||||||||||
| Operating activities: | |||||||||||
| Net income | $ | 47,241 | $ | 39,441 | |||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
| Depreciation and amortization | 7,466 | 8,665 | |||||||||
| Stock-based compensation expense | 4,163 | 2,958 | |||||||||
| Deferred income taxes | (2,225) | (1,705) | |||||||||
| Other | 1,137 | (383) | |||||||||
| Changes in operating assets and liabilities: | |||||||||||
| Accounts receivable | (2,205) | (627) | |||||||||
| Inventories | 6,152 | (9,582) | |||||||||
| Prepaid expenses and other assets | (1,488) | (2,563) | |||||||||
| Accounts payable and accrued liabilities | (3,725) | (14,150) | |||||||||
| Income taxes | 5,757 | 5,945 | |||||||||
| Net cash provided by operating activities | 62,273 | 27,999 | |||||||||
| Investing activities: | |||||||||||
| Purchases of property, plant and equipment | (11,279) | (3,861) | |||||||||
| Net cash used in investing activities | (11,279) | (3,861) | |||||||||
| Financing activities: | |||||||||||
| Payment of dividends | (11,338) | (11,376) | |||||||||
| Proceeds from exercise of stock options | 2,598 | 349 | |||||||||
| Payments for employee taxes withheld from stock-based awards | (2,333) | (1,504) | |||||||||
| Purchase of treasury stock | (14,121) | (12,070) | |||||||||
| Proceeds from borrowing on credit facilities | 38,551 | 36,000 | |||||||||
| Repayment of borrowing on credit facilities | (36,000) | (32,000) | |||||||||
| Other | 1,149 | 66 | |||||||||
| Net cash used in financing activities | (21,494) | (20,535) | |||||||||
| Effect of exchange rate changes on cash | (5,680) | (3,201) | |||||||||
| Net increase in cash and cash equivalents | 23,820 | 402 | |||||||||
| Cash and cash equivalents, beginning of period | 151,532 | 114,069 | |||||||||
| Cash and cash equivalents, end of period | $ | 175,352 | $ | 114,471 | |||||||
BRADY CORPORATION AND SUBSIDIARIES
SEGMENT INFORMATION
(Unaudited; Dollars in thousands)
| Three months ended October 31, | |||||||||||
| 2023 | 2022 | ||||||||||
| NET SALES | |||||||||||
| Americas & Asia | $ | 221,626 | $ | 218,495 | |||||||
| Europe & Australia | 110,357 | 104,074 | |||||||||
| Total | $ | 331,983 | $ | 322,569 | |||||||
| SALES INFORMATION | |||||||||||
| Americas & Asia | |||||||||||
| Organic | 3.3 | % | 4.0 | % | |||||||
| Currency | — | % | (1.4) | % | |||||||
| Divestiture | (1.9) | % | — | % | |||||||
| Total | 1.4 | % | 2.6 | % | |||||||
| Europe & Australia | |||||||||||
| Organic | 1.4 | % | 12.8 | % | |||||||
| Currency | 4.6 | % | (17.0) | % | |||||||
| Total | 6 | % | (4.2) | % | |||||||
| Total Company | |||||||||||
| Organic | 2.7 | % | 6.9 | % | |||||||
| Currency | 1.5 | % | (6.6) | % | |||||||
| Divestiture | (1.3) | % | — | % | |||||||
| Total | 2.9 | % | 0.3 | % | |||||||
| SEGMENT PROFIT | |||||||||||
| Americas & Asia | $ | 49,897 | $ | 41,145 | |||||||
| Europe & Australia | 16,744 | 16,758 | |||||||||
| Total | $ | 66,641 | $ | 57,903 | |||||||
| SEGMENT PROFIT AS A PERCENT OF NET SALES | |||||||||||
| Americas & Asia | 22.5 | % | 18.8 | % | |||||||
| Europe & Australia | 15.2 | % | 16.1 | % | |||||||
| Total | 20.1 | % | 18.0 | % | |||||||
| Three months ended October 31, | |||||||||||
| 2023 | 2022 | ||||||||||
| Total segment profit | $ | 66,641 | $ | 57,903 | |||||||
| Unallocated amounts: | |||||||||||
| Administrative costs | (6,911) | (6,517) | |||||||||
| Investment and other income (expense) | 438 | (157) | |||||||||
| Interest expense | (766) | (894) | |||||||||
| Income before income taxes | $ | 59,402 | $ | 50,335 | |||||||
GAAP to NON-GAAP MEASURES
(Unaudited; Dollars in Thousands, Except Per Share Amounts)
In accordance with the U.S. Securities and Exchange Commission’s Regulation G, the following provides definitions of the non-GAAP measures used in the earnings release and the reconciliation to the most closely related GAAP measure.
Income Before Income Taxes Excluding Certain Items:
Brady is presenting the non-GAAP measure, "Income Before Income Taxes Excluding Certain Items." 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 to the non-GAAP measure of Income Before Income Taxes Excluding Certain Items:
| Three months ended October 31, | |||||||||||
| 2023 | 2022 | ||||||||||
| Income before income taxes (GAAP measure) | $ | 59,402 | $ | 50,335 | |||||||
| Amortization expense | 2,355 | 3,631 | |||||||||
| Income Before Income Taxes Excluding Certain Items (non-GAAP measure) | $ | 61,757 | $ | 53,966 | |||||||
Income Tax Expense Excluding Certain Items:
Brady is presenting the non-GAAP measure, "Income Tax Expense Excluding Certain Items." 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 Certain Items:
| Three months ended October 31, | |||||||||||
| 2023 | 2022 | ||||||||||
| Income tax expense (GAAP measure) | $ | 12,161 | $ | 10,894 | |||||||
| Amortization expense | 546 | 865 | |||||||||
| Income Tax Expense Excluding Certain Items (non-GAAP measure) | $ | 12,707 | $ | 11,759 | |||||||
Net Income Excluding Certain Items:
Brady is presenting the non-GAAP measure, "Net Income Excluding Certain Items." 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 Certain Items:
| Three months ended October 31, | |||||||||||
| 2023 | 2022 | ||||||||||
| Net income (GAAP measure) | $ | 47,241 | $ | 39,441 | |||||||
| Amortization expense | 1,809 | 2,766 | |||||||||
| Net Income Excluding Certain Items (non-GAAP measure) | $ | 49,050 | $ | 42,207 | |||||||
Diluted EPS Excluding Certain Items:
Brady is presenting the non-GAAP measure, "Diluted EPS Excluding Certain Items." 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 Certain Items (Note that certain amounts will not foot due to rounding):
| Three months ended October 31, | |||||||||||
| 2023 | 2022 | ||||||||||
| Net income per Class A Nonvoting Common Share (GAAP measure) | $ | 0.97 | $ | 0.79 | |||||||
| Amortization expense | 0.04 | 0.06 | |||||||||
| Diluted EPS Excluding Certain Items (non-GAAP measure) | $ | 1.00 | $ | 0.84 | |||||||
Diluted EPS Excluding Certain Items Guidance:
| Fiscal 2024 Expectations | |||||||||||||||||||||||
| Low | High | ||||||||||||||||||||||
| Earnings per Class A Nonvoting Common Share (GAAP measure) | $ | 3.70 | $ | 3.95 | |||||||||||||||||||
| Amortization expense | 0.15 | 0.15 | |||||||||||||||||||||
| Diluted EPS Excluding Certain Items (non-GAAP measure) | $ | 3.85 | $ | 4.10 | |||||||||||||||||||
F’24 Q1 Financial Results Brady Corporation November 16, 2023
Forward-Looking Statements 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, income, 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,” “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: increased cost of raw materials, labor and freight as well as raw material shortages and supply chain disruptions; decreased demand for our products; our ability to compete effectively or to successfully execute our strategy; our ability to develop technologically advanced products that meet customer demands; difficulties in protecting our websites, networks and systems against security breaches; Brady’s ability to identify, integrate, and grow acquired companies, and to manage contingent liabilities from divested businesses; risks associated with the loss of key employees; extensive regulations by U.S. and non-U.S. governmental and self-regulatory entities; litigation, including product liability claims; adverse impacts of the novel coronavirus (“COVID-19”) pandemic or other pandemics; foreign currency fluctuations; potential write-offs of goodwill and other intangible assets; changes in tax legislation and tax rates; differing interests of voting and non-voting shareholders; numerous other matters of national, regional and global scale, including major public health crises and government responses thereto and 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, 2023. 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. 2
Q1 F’24 Highlights 3 * Diluted EPS Excluding Certain Items is a non-GAAP measure. See appendix. Organic sales grew 2.7%, with organic growth in both regions.Organic Sales Growth GPM of 51.7% compared to 48.1% in Q1 of F’23. Healthy gross profit margins demonstrate our high value-add.Improved GPM GAAP EPS of $0.97 was up 22.8% over Q1 of last year. Diluted EPS Excluding Certain Items* increased 19.0% to $1.00 in Q1 of F’24 compared to $0.84 in Q1 of F’23. Expanding Earnings per Share Americas & Asia organic sales growth of 3.3%; segment profit increased 21.3%. Europe & Australia organic sales growth of 1.4%; segment profit was effectively flat. Regional Results Purchased 280k shares for $14.1M. Paid dividends of $11.3M. In a net cash position of $123.1M at October 31, 2023. Returning Capital to our Shareholders
Sales Overview 4 Q1 F’24 SALES: Total sales increased 2.9%. Organic sales increased 2.7%. • Americas & Asia – Organic sales increased 3.3%. • Europe & Australia – Organic sales increased 1.4%. Foreign currency translation increased sales 1.5%. Divestitures decreased sales 1.3%. $287 $277 $266 $252 $277 $266 $296 $306 $321 $318 $339 $324 $323 $326 $337 $346 $332 $225 $250 $275 $300 $325 $350 Q1 F'20 (0.4%) Q2 F'20 (1.2%) Q3 F'20 (6.0%) Q4 F'20 (13.7%) Q1 F'21 (4.9%) Q2 F'21 (6.3%) Q3 F'21 6.5% Q4 F'21 12.6% Q1 F'22 7.0% Q2 F'22 13.1% Q3 F'22 9.0% Q4 F'22 9.0% Q1 F'23 6.9% Q2 F'23 6.3% Q3 F'23 1.9% Q4 F'23 6.9% Q1 F'24 2.7% Organic Growth (Decline) SALES (millions of USD) Q1 F’24 SALES COMMENTARY: Organic sales were up 4.4% in the Americas with growth in wire ID and safety and facility ID. Organic sales declined 4.6% in Asia primarily due to weakness in China. Organic sales were up 0.8% in Europe with growth driven by safety and facility ID. Australia organic sales increased 5.1%.
Gross Profit Margin 5 $141 $139 $130 $119 $135 $130 $149 $148 $155 $149 $164 $163 $155 $156 $170 $176 $172 49.3% 50.3% 48.7% 47.1% 48.9% 48.7% 50.4% 48.2% 48.2% 47.0% 48.4% 50.4% 48.1% 48.0% 50.3% 50.8% 51.7% 38% 40% 42% 44% 46% 48% 50% 52% $100 $125 $150 $175 Q1 F'20 Q2 F'20 Q3 F'20 Q4 F'20 Q1 F'21 Q2 F'21 Q3 F'21 Q4 F'21 Q1 F'22 Q2 F'22 Q3 F'22 Q4 F'22 Q1 F'23 Q2 F'23 Q3 F'23 Q4 F'23 Q1 F'24 GROSS PROFIT & GPM% (millions of USD) Q1 F’24 – GROSS PROFIT MARGIN: Gross profit margin of 51.7% compared to 48.1% in Q1 of F’23. Strong gross profit margin in excess of 50% due to product mix, reduced freight and improved inventory management. Inflation continues, but we are experiencing a reduced rate of inflation in certain geographies.
SG&A Expense 6 Q1 F’24 – SG&A EXPENSE: SG&A expense was 29.0% of sales compared to 27.9% of sales in the same quarter last year. Excluding amortization* from both periods, SG&A expense was 28.3% of sales compared to 26.8% of sales in the same quarter last year. Inflation continues in certain geographies, we continue to focus on driving sustainable efficiency gains while making the investments necessary to increase sales into the future in order to offset cost increases. $90 $87 $83 $76 $83 $82 $91 $94 $97 $93 $96 $95 $90 $92 $91 $97 $96 31.2% 31.6% 31.3% 30.2% 30.0% 30.9% 30.7% 30.6% 30.1% 29.1% 28.4% 29.2% 27.9% 28.3% 27.0% 28.2% 29.0% 10% 15% 20% 25% 30% 35% $60 $70 $80 $90 $100 $110 $120 Q1 F'20 Q2 F'20 Q3 F'20 Q4 F'20 Q1 F'21 Q2 F'21 Q3 F'21 Q4 F'21 Q1 F'22 Q2 F'22 Q3 F'22 Q4 F'22 Q1 F'23 Q2 F'23 Q3 F'23 Q4 F'23 Q1 F'24 SG&A EXPENSE AND SG&A EXPENSE AS A % OF SALES (millions of USD) * See appendix for non-GAAP measures.
R&D Expense 7 Q1 F’24 – R&D EXPENSE: Our new product pipeline includes high-quality materials and products to help our customers become more efficient. We are focused on ensuring that our R&D spend is both efficient and effective. $11.0 $10.5 $9.8 $9.4 $10.2 $9.9 $11.3 $13.2 $13.9 $14.0 $14.9 $15.8 $13.9 $15.4 $15.7 $16.3 $15.7 3.8% 3.8% 3.7% 3.7% 3.7% 3.7% 3.8% 4.3% 4.3% 4.4% 4.4% 4.9% 4.3% 4.7% 4.7% 4.7% 4.7% 1.5% 2.5% 3.5% 4.5% $6.0 $8.0 $10.0 $12.0 $14.0 $16.0 $18.0 Q1 F'20 Q2 F'20 Q3 F'20 Q4 F'20 Q1 F'21 Q2 F'21 Q3 F'21 Q4 F'21 Q1 F'22 Q2 F'22 Q3 F'22 Q4 F'22 Q1 F'23 Q2 F'23 Q3 F'23 Q4 F'23 Q1 F'24 R&D EXPENSE AND R&D EXPENSE AS A % OF SALES (millions of USD)
Income Before Income Taxes 8 $41.6 $42.4 $22.2 $34.9 $42.2 $39.4 $47.8 $41.6 $44.7 $42.0 $51.3 $54.0 $50.3 $48.5 $63.0 $63.8 $59.4 $10 $20 $30 $40 $50 $60 $70 Q1 F'20 4.2% Q2 F'20 15.4% Q3 F'20 (45.9%) Q4 F'20 (26.0%) Q1 F'21 1.6% Q2 F'21 (7.0%) Q3 F'21 115.7% Q4 F'21 19.4% Q1 F'22 5.8% Q2 F'22 6.7% Q3 F'22 7.3% Q4 F'22 29.7% Q1 F'23 12.6% Q2 F'23 15.4% Q3 F'23 23.0% Q4 F'23 18.2% Q1 F'24 18.0% Year-on-Year Growth (Decline) * Income Before Income Taxes Excluding Certain Items is a non-GAAP measure. See appendix. (millions of USD)INCOME BEFORE INCOME TAXES (GAAP) Q1 F’24 – INCOME BEFORE INCOME TAXES: GAAP Income before income taxes was up 18.0% to $59.4M in Q1 of F’24 compared to $50.3M in Q1 of F’23. Income Before Income Taxes Excluding Certain Items*, which only removes amortization expense from each period presented, increased 14.4% to $61.8M in Q1 of F’24 compared to $54.0M in Q1 of F’23.
Net Income & Diluted EPS 9 Q1 F’24 – NET INCOME & DILUTED EPS: GAAP Net Income was $47.2M in Q1 of F’24 compared to $39.4M in Q1 of F’23 (an increase of 19.8%). • Net Income Excluding Certain Items* was $49.1M in Q1 of F’24 compared to $42.2M in Q1 of F’23 (an increase of 16.2%). GAAP Diluted EPS was $0.97 in Q1 of F’24 compared to $0.79 in Q1 of F’23 (an increase of 22.8%). • Diluted EPS Excluding Certain Items* was $1.00 in Q1 of F’24 compared to $0.84 in Q1 of F’23 (an increase of 19.0%). * Net Income Excluding Certain Items and Diluted EPS Excluding Certain Items are non-GAAP measures. See appendix. $33.5 $30.9 $37.3 $28.0 $35.0 $33.8 $40.1 $41.1 $39.4 $38.0 $48.1 $49.4 $47.2 $20 $30 $40 $50 Q1 F'21 Q2 F'21 Q3 F'21 Q4 F'21 Q1 F'22 Q2 F'22 Q3 F'22 Q4 F'22 Q1 F'23 Q2 F'23 Q3 F'23 Q4 F'23 Q1 F'24 NET INCOME (GAAP) (millions of USD) $0.64 $0.59 $0.71 $0.53 $0.67 $0.65 $0.78 $0.81 $0.79 $0.76 $0.96 $1.00 $0.97 $0.20 $0.40 $0.60 $0.80 $1.00 Q1 F'21 Q2 F'21 Q3 F'21 Q4 F'21 Q1 F'22 Q2 F'22 Q3 F'22 Q4 F'22 Q1 F'23 Q2 F'23 Q3 F'23 Q4 F'23 Q1 F'24 DILUTED EPS (GAAP)
Cash Generation 10 CASH FLOW FROM OPERATING ACTIVITIES (millions of USD) $38.8 $14.3 $42.8 $45.1 $62.8 $36.1 $56.0 $50.8 $27.5 ($3.2) $40.9 $53.2 $28.0 $29.4 $72.5 $79.3 $62.3 -$5 $15 $35 $55 $75 Q1 F'20 104% Q2 F'20 43% Q3 F'20 313% Q4 F'20 163% Q1 F'21 188% Q2 F'21 117% Q3 F'21 150% Q4 F'21 181% Q1 F'22 78% Q2 F'22 (9%) Q3 F'22 102% Q4 F'22 130% Q1 F'23 71% Q2 F'23 77% Q3 F'23 151% Q4 F'23 161% Q1 F'24 132%% of Net Income CASH FLOWS IN Q1 OF F’24: Overview: Cash flow from operating activities was up 122.4% in Q1 of F’24; increasing from $28.0M in Q1 of last year to $62.3M in the current quarter. Free cash flow* was $51.0M in Q1 of F’24 compared to $24.1M in Q1 of F’23. Cash generation was in excess of net income due to improved working capital management and a constant focus on cash generation. Returning Funds to our Shareholders: In Q1 of F’24, we returned a total of $25.5M to our shareholders in the form of dividends and buybacks. Dividends – Increased our annual dividend for the 38th consecutive year. Buybacks – Repurchased 279,683 shares in Q1 of F’24 for $14.1M (average price of $50.49/share). * Free cash flow is calculated as Net Cash Provided by Operating Activities less Capital Expenditures. (millions of USD) 3 Mos. Ended Oct. 31, 2023 3 Mos. Ended Oct. 31, 2022 Cash Balance - Beginning of Period 151.5$ 114.1$ Cash Flow from Operating Activities 62.3 28.0 Capital Expenditures (11.3) (3.9) Dividends (11.3) (11.4) Share Repurchases (14.1) (12.1) Debt Borrowings 2.6 4.0 Effect of Exchange Rates on Cash (5.7) (3.2) Other 1.4 (1.0) Cash Balance - End of Period 175.4$ 114.5$
Net Cash 11 STRONG BALANCE SHEET: October 31, 2023 cash = $175.4M. October 31, 2023 debt = $52.3M. Balance sheet provides flexibility for future organic and inorganic investments. $245 $240 $190 $218 $256 $278 $322 $109 $91 $64 $26 $19 $15 $31 $84 $102 $123 $0 $50 $100 $150 $200 $250 $300 Q1 F'20 Q2 F'20 Q3 F'20 Q4 F'20 Q1 F'21 Q2 F'21 Q3 F'21 Q4 F'21 Q1 F'22 Q2 F'22 Q3 F'22 Q4 F'22 Q1 F'23 Q2 F'23 Q3 F'23 Q4 F'23 Q1 F'24 NET CASH (millions of USD)
F’24 Diluted EPS Guidance GAAP Diluted EPS $3.70 to $3.95 (+5.4% to +12.5% vs. F’23) F’24 Diluted EPS, Excluding Certain Items* $3.85 to $4.10 (+5.8% to +12.6% vs. F’23) Guidance Assumptions: F’24 organic sales growth in the mid-single digit percentages. The only difference between GAAP Diluted EPS and Diluted EPS, Excluding Certain Items* F’24 guidance is the impact of amortization expense of $0.15 per share. Full-year income tax rate of approximately 22%. Foreign currency exchange rates as of October 31, 2023. Depreciation and amortization expense of $32M to $34M. Capital expenditures of approximately $75M (inclusive of $55M related to the conversion of previously leased critical manufacturing facilities). 12 * Diluted EPS Excluding Certain Items is a non-GAAP measure. See appendix.
Americas & Asia 13 • Revenues increased 1.4% in Q1 of F’24: • Organic growth = + 3.3%. • Divestiture = (1.9%). • Organic sales grew 4.4% in the Americas, driven by growth in the wire identification and safety and facility identification product lines. • Organic sales declined 4.6% in Asia primarily due to a decline in China. • Segment profit increased due to organic sales growth, reduced freight expense and operational efficiencies. Q1 F’24 SUMMARY:Q1 F’24 vs. Q1 F’23 (millions of USD) $180 $170 $189 $196 $213 $208 $223 $218 $218 $220 $223 $227 $222 20% 18% 20% 17% 18% 16% 20% 20% 19%18% 22% 22% 23% 0% 5% 10% 15% 20% 25% $100 $150 $200 $250 $300 Q1 F'21 (7.9%) (0.4%) - Q2 F'21 (7.3%) 0.1% - Q3 F'21 7.8% 1.1% - Q4 F'21 18.0% 1.9% 3.7% Q1 F'22 9.3% 0.9% 8.3% Q2 F'22 13.9% - 8.1% Q3 F'22 9.2% (0.1%) 8.6% Q4 F'22 9.1% (1.0%) 2.8% Q1 F'23 4.0% (1.4%) - Q2 F'23 6.9% (1.0%) - Q3 F'23 1.2% (0.8%) (0.3%) Q4 F'23 5.6% (0.2%) (1.0%) Q1 F'24 3.3% - (1.9%) SALES & SEGMENT PROFIT % (millions of USD) Q1 F’24 Q1 F’23 Change Sales $ 221.6 $ 218.5 + 1.4% Segment Profit 49.9 41.1 + 21.3% Segment Profit % 22.5% 18.8% + 370 bps Organic For. Curr. Acq. & Div. • Organic sales growth in the mid-single digit percentages in F’24. • Continued growth in segment profit. OUTLOOK:
Europe & Australia 14 • Revenues increased 6.0% in Q1 of F’24: • Organic growth = + 1.4%. • Fx increase = + 4.6%. • Organic sales grew 0.8% in Europe driven by growth in the safety and facility identification product line. • Organic sales grew 5.1% in Australia which was driven by a combination of increased volume and pricing. • Segment profit was effectively flat and inflationary pressures reduced segment profit as a % of sales. Q1 F’24 SUMMARY:Q1 F’24 vs. Q1 F’23 (millions of USD) $98 $95 $106 $110 $109 $110 $116 $106 $104 $106 $114 $118 $110 13%12% 15% 14% 13% 15% 14% 16% 16% 13% 15%16% 15% 0% 5% 10% 15% $50 $100 $150 Q1 F'21 1.5% 5.6% - Q2 F'21 (4.4%) 7.0% - Q3 F'21 4.2% 11.0% - Q4 F'21 3.2% 8.6% 6.3% Q1 F'22 2.6% 0.6% 8.2% Q2 F'22 11.7% (5.8%) 9.6% Q3 F'22 8.5% (8.2%) 8.7% Q4 F'22 8.8% (13.9%) 1.8% Q1 F'23 12.8% (17.0%) - Q2 F'23 5.2% (8.9%) - Q3 F'23 3.4% (4.8%) - Q4 F'23 9.5% 2.0% - Q1 F'24 1.4% 4.6% - SALES & SEGMENT PROFIT % Q1 F’24 Q1 F’23 Change Sales $ 110.4 $ 104.1 + 6.0% Segment Profit 16.7 16.8 (0.1%) Segment Profit % 15.2% 16.1% (90 bps) Organic For. Curr. Acquisitions • Organic sales growth in the mid-single digit percentages in F’24. • Growth in segment profit. OUTLOOK: (millions of USD)
Investor Relations Brady Contact: Ann Thornton Investor Relations 414-438-6887 Ann_Thornton@bradycorp.com See our website at www.bradycorp.com/investors 15
Appendix GAAP to Non-GAAP Reconciliations
Non-GAAP Reconciliations 17 2023 2022 59,402$ 50,335$ Amortization expense 2,355 3,631 61,757$ 53,966$ 2023 2022 12,161$ 10,894$ Amortization expense 546 865 12,707$ 11,759$ Income Tax Expense Excluding Certain Items (non-GAAP measure) Income Before Income Taxes Excluding Certain Items (non-GAAP measure) Income tax expense (GAAP measure) Income Tax Expense Excluding Certain Items: Brady is presenting the non-GAAP measure, "Income Tax Expense Excluding Certain Items." 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 Certain Items: Three months ended October 31, GAAP to NON-GAAP MEASURES Income Before Income Taxes Excluding Certain Items: (Unaudited; Dollars in Thousands, Except Per Share Amounts) In accordance with the U.S. Securities and Exchange Commission’s Regulation G, the following provides definitions of the non-GAAP measures used in the earnings release and the reconciliation to the most closely related GAAP measure. Brady is presenting the non-GAAP measure, "Income Before Income Taxes Excluding Certain Items." 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 to the non-GAAP measure of Income Before Income Taxes Excluding Certain Items: Three months ended October 31, Income before income taxes (GAAP measure)
Non-GAAP Reconciliations 18 2023 2022 47,241$ 39,441$ Amortization expense 1,809 2,766 49,050$ 42,207$ 2023 2022 $ 0.97 $ 0.79 Amortization expense 0.04 0.06 1.00$ 0.84$ Diluted EPS Excluding Certain Items Guidance: Low High Earnings per diluted Class A Common Share (GAAP measure) $ 3.70 $ 3.95 Amortization expense 0.15 0.15 Diluted EPS Excluding Certain Items (non-GAAP measure) 3.85$ 4.10$ Fiscal 2024 Expectations Diluted EPS Excluding Certain Items (non-GAAP measure) Net Income Excluding Certain Items (non-GAAP measure) Net income (GAAP measure) Diluted EPS Excluding Certain Items: Brady is presenting the non-GAAP measure, "Diluted EPS Excluding Certain Items." 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 Certain Items (Note that certain amounts will not foot due to rounding): Three months ended October 31, Net income per Class A Nonvoting Common Share (GAAP measure) Three months ended October 31, GAAP to NON-GAAP MEASURES (Unaudited; Dollars in Thousands, Except Per Share Amounts) In accordance with the U.S. Securities and Exchange Commission’s Regulation G, the following provides definitions of the non-GAAP measures used in the earnings release and the reconciliation to the most closely related GAAP measure. Brady is presenting the non-GAAP measure, "Net Income Excluding Certain Items." 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 Certain Items: Net Income Excluding Certain Items: