Brady Corporation Reports Fiscal 2024 First Quarter Results

| Source: Brady Corporation Brady Corporation

  • 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, Nov. 16, 2023 (GLOBE NEWSWIRE) -- 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.

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

BRADY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(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 6.0%  (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 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