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EX-10.1 - EXHIBIT 10.1 - BRADY CORPc22498exv10w1.htm
EX-99.2 - EXHIBIT 99.2 - BRADY CORPc22498exv99w2.htm
8-K - FORM 8-K - BRADY CORPc22498e8vk.htm
EXHIBIT 99.1
For More Information:
Investor contact: Aaron Pearce 414-438-6895
Media contact: Carole Herbstreit 414-438-6882
Brady Corporation Reports Fiscal 2011 Fourth Quarter Results and Announces Share Buyback Program.
MILWAUKEE (September 12, 2011)—Brady Corporation (NYSE: BRC), a world leader in identification solutions, today reported its full year fiscal 2011 financial results and financial results for the fourth quarter ended July 31, 2011. The company also announced that its Board of Directors authorized a share buyback program for up to two million shares of the company’s Class A Common Stock.
Year Ended July 31, 2011:
Net income for the year ended July 31, 2011 was up 32.6 percent to $108.7 million compared to $82.0 million for the year ended July 31, 2010. Excluding $6.6 million of after-tax restructuring charges for the year-ended July 31, 2011 and $11.4 million of after-tax restructuring charges for the year ended July 31, 2010, net income was up 23.4 percent to $115.3 million for the year ended July 31, 2011 compared to $93.4 million for the year ended July 31, 2010.
Earnings per diluted Class A Common Share were up 31.6 percent to $2.04 for the year ended July 31, 2011 compared to $1.55 for the year ended July 31, 2010. Excluding after-tax restructuring charges, earnings per diluted Class A Common Share increased 22.7 percent to $2.16 for the year ended July 31, 2011 compared to $1.76 per share for the year ended July 31, 2010.
Sales for the year-ended July 31, 2011 were up 6.4 percent to $1.34 billion compared to $1.26 billion for the year ended July 31, 2010. Organic sales growth was 2.9 percent, acquisitions net of divestitures contributed 1.0 percent to sales growth, and the impact of foreign currency translation increased sales by 2.5 percent during the year ended July 31, 2011. By segment, organic sales increased 3.2 percent in the Americas, 4.7 percent in Europe and 0.4 percent in the Asia-Pacific region.
Fourth Quarter Ended July 31, 2011:
Net income for the quarter ended July 31, 2011 was up 37.0 percent to $29.6 million compared to $21.6 million in the same quarter last year. Excluding $1.6 million of after-tax restructuring charges in the fourth quarter of fiscal 2011 and $4.6 million of after-tax restructuring charges in the same quarter last year, net income was up 19.1 percent to $31.2 million compared to $26.2 million in the same quarter last year.
Earnings per diluted Class A Common Share were up 34.1 percent to $0.55 in the fourth quarter of fiscal 2011 compared to $0.41 in the fourth quarter of fiscal 2010. Excluding after-tax restructuring charges, earnings per diluted Class A Common Share increased 18.4 percent to $0.58 in the fourth quarter of fiscal 2011 compared to $0.49 per share in the same quarter of fiscal 2010.
Sales for the fiscal 2011 fourth quarter were up 6.3 percent to $343.1 million compared to $322.9 million in the fourth quarter of fiscal 2010. Organic sales declined 0.6 percent, divestitures, net of acquisitions reduced sales by 0.2 percent, and the impact of foreign currency translation increased sales by 7.1 percent. By segment, organic sales increased 2.0 percent in Europe and 0.4 percent in the Asia-Pacific region and decreased 2.7 percent in the Americas’ region.

 

 


 

Share Buyback Program:
Brady’s Board of Directors has authorized a share buyback program for up to two million shares of the Company’s common stock. The share repurchase plan may be implemented from time to time on the open market or in privately negotiated transactions.
Commentary and Guidance:
“I am pleased with our strong earnings and cash flow both in the fourth quarter and the full fiscal year in light of a still challenging economy and relative moderate organic growth for the company. This is a testament to the positive impact BBPS is having on efficiency and productivity. During fiscal 2011, we returned $38.1 million of cash to our shareholders in the form of dividends, repaid $61.3 million of debt while increasing our cash position by $75.1 million; ending with $390 million of cash on hand at July 31, 2011,” said Frank M. Jaehnert, Brady’s President and Chief Executive Officer. “I’m also happy to report that our Board of Directors authorized a share buyback program for up to 2 million shares and approved an increase in the dividend to our shareholders for the 26th straight year.”
“We remain focused on putting our cash to work through investment in organic growth opportunities as well as strategic acquisitions,” said Brady Chief Financial Officer Thomas J. Felmer. “As we look into fiscal 2012, we remain cautious about the health of the overall global economy. We believe that the pace of economic growth will be modest. Accordingly, we anticipate low-single-digit organic sales growth in fiscal 2012. For fiscal 2012, we expect earnings per diluted Class A Common Share of between $2.30 and $2.50, exclusive of after-tax restructuring charges. This guidance is based on current exchange rates, a full-year tax rate in the mid-20 percent range, capital expenditures of approximately $25 million, and depreciation and amortization of $45 million.”
A webcast regarding Brady’s fiscal 2011 fourth quarter financial results will be available at www.investor.bradycorp.com beginning at 9:30 a.m. Central Time today.
Brady Corporation is an international manufacturer and marketer of complete solutions that identify and protect premises, products and people. Brady’s products help customers increase safety, security, productivity and performance and include high-performance labels and signs, safety devices, printing systems and software, and precision die-cut materials. Founded in 1914, the company has millions of customers in electronics, telecommunications, manufacturing, electrical, construction, education, medical and a variety of other industries. Brady is headquartered in Milwaukee, Wisconsin and employs approximately 6,500 people at operations in the Americas, Europe and Asia-Pacific. Brady’s fiscal 2011 sales were approximately $1.34 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.

 

 


 

###
Brady believes that certain statements in this news release are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. All statements related to future, not past, events included in this news release, including, without limitation, statements regarding Brady’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 are forward-looking statements. When used in this news release, 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 the length or severity of the current worldwide economic downturn or timing or strength of a subsequent recovery; future financial performance of major markets Brady serves, which include, without limitation, telecommunications, manufacturing, electrical, construction, laboratory, education, governmental, public utility, computer, transportation; difficulties in making and integrating acquisitions; risks associated with newly acquired businesses; Brady’s ability to develop and successfully market new products; changes in the supply of, or price for, parts and components; increased price pressure from suppliers and customers; fluctuations in currency rates versus the US dollar; unforeseen tax consequences; potential write-offs of Brady’s substantial intangible assets; Brady’s ability to retain significant contracts and customers; risks associated with international operations; Brady’s ability to maintain compliance with its debt covenants; technology changes; business interruptions due to implementing business systems; environmental, health and safety compliance costs and liabilities; future competition; interruptions to sources of supply; Brady’s ability to realize cost savings from operating initiatives; difficulties associated with exports; risks associated with restructuring plans; risks associated with obtaining governmental approvals and maintaining regulatory compliance; and 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 located in Item 1A of Part I of Brady’s Form 10-K for the year ended July 31, 2010. 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.

 

 


 

BRADY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Dollars in Thousands)
                                                 
    (Unaudited)  
    Three Months Ended Jul 31,     Twelve Months Ended Jul 31,  
                    Percentage                     Percentage  
    2011     2010     Change     2011     2010     Change  
Net sales
  $ 343,104     $ 322,894       6.3 %   $ 1,339,597     $ 1,259,096       6.4 %
Cost of products sold
    178,068       164,155       8.5 %     683,401       635,799       7.5 %
 
                                       
Gross margin
    165,036       158,739       4.0 %     656,196       623,297       5.3 %
 
                                               
Operating expenses:
                                               
Research and development
    10,775       11,671       -7.7 %     43,001       42,621       0.9 %
Selling, general and administrative
    109,421       107,268       2.0 %     441,815       435,906       1.4 %
Restructuring charge
    2,202       5,717       -61.5 %     9,188       15,314       -40.0 %
 
                                       
Total operating expenses
    122,398       124,656       -1.8 %     494,004       493,841       0.0 %
 
                                               
Operating income
    42,638       34,083       25.1 %     162,192       129,456       25.3 %
 
                                               
Other income (expense):
                                               
Investment and other income (expense)
    1,098       (105 )     -1145.7 %     3,990       1,168       241.6 %
Interest expense
    (5,484 )     (5,750 )     -4.6 %     (22,124 )     (21,222 )     4.3 %
 
                                       
 
                                               
Income before income taxes
    38,252       28,228       35.5 %     144,058       109,402       31.7 %
 
                                               
Income taxes
    8,669       6,636       30.6 %     35,406       27,446       29.0 %
 
                                       
 
                                               
Net income
  $ 29,583     $ 21,592       37.0 %   $ 108,652     $ 81,956       32.6 %
 
                                       
 
                                               
Per Class A Nonvoting Common Share:
                                               
Basic net income
  $ 0.56     $ 0.41       36.6 %   $ 2.06     $ 1.56       32.1 %
Diluted net income
  $ 0.55     $ 0.41       34.1 %   $ 2.04     $ 1.55       31.6 %
Dividends
  $ 0.18     $ 0.175       2.9 %   $ 0.72     $ 0.70       2.9 %
 
                                               
Per Class B Voting Common Share:
                                               
Basic net income
  $ 0.56     $ 0.41       36.6 %   $ 2.04     $ 1.55       31.6 %
Diluted net income
  $ 0.55     $ 0.41       34.1 %   $ 2.03     $ 1.53       32.7 %
Dividends
  $ 0.18     $ 0.175       2.9 %   $ 0.70     $ 0.68       3.0 %
 
                                               
Weighted average common shares outstanding (in thousands):
                                               
Basic
    52,815       52,476               52,639       52,402          
Diluted
    53,333       52,872               53,133       52,946          

 


 

BRADY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
                 
    (Unaudited)  
    July 31, 2011     July 31, 2010  
 
               
ASSETS
               
 
               
Current assets:
               
Cash and cash equivalents
  $ 389,971     $ 314,840  
Accounts receivable, net
    228,483       221,621  
Inventories:
               
Finished products
    62,152       52,906  
Work-in-process
    14,550       13,146  
Raw materials and supplies
    27,484       28,620  
 
           
Total inventories
    104,186       94,672  
Prepaid expenses and other current assets
    35,647       37,839  
 
           
 
               
Total current assets
    758,287       668,972  
 
               
Other assets:
               
Goodwill
    800,343       768,600  
Other intangible assets, net
    89,961       103,546  
Deferred income taxes
    53,755       39,103  
Other
    19,244       20,808  
 
               
Property, plant and equipment:
               
Cost:
               
Land
    6,406       6,265  
Buildings and improvements
    104,644       101,138  
Machinery and equipment
    305,557       289,727  
Construction in progress
    11,226       9,873  
 
           
 
    427,833       407,003  
 
               
Less accumulated depreciation
    287,918       261,501  
 
           
 
               
Property, plant and equipment — net
    139,915       145,502  
 
           
 
               
Total
  $ 1,861,505     $ 1,746,531  
 
           
 
               
LIABILITIES AND STOCKHOLDERS’ INVESTMENT
               
 
               
Current liabilities:
               
Accounts payable
  $ 98,847     $ 96,702  
Wages and amounts withheld from employees
    69,798       67,285  
Taxes, other than income taxes
    7,612       7,537  
Accrued income taxes
    9,954       10,138  
Other current liabilities
    54,406       50,862  
Current maturities on long-term debt
    61,264       61,264  
 
           
 
               
Total current liabilities
    301,881       293,788  
 
               
Long-term obligations, less current maturities
    331,914       382,940  
 
               
Other liabilities
    71,518       64,776  
 
           
 
               
Total liabilities
    705,313       741,504  
 
               
Stockholders’ investment:
               
Common stock:
               
Class A nonvoting common stock — Issued 51,261,487 and 51,261,487 shares, respectively and outstanding 49,284,252 and 48,875,716 shares, respectively
    513       513  
Class B voting common stock — Issued and outstanding, 3,538,628 shares
    35       35  
Additional paid-in capital
    307,527       304,205  
Income retained in the business
    789,100       718,512  
Treasury stock — 1,667,235 and 2,175,771 shares, respectively of Class A nonvoting common stock, at cost
    (50,017 )     (66,314 )
Accumulated other comprehensive income
    113,898       50,905  
Other
    (4,864 )     (2,829 )
 
           
 
               
Total stockholders’ investment
    1,156,192       1,005,027  
 
           
 
               
Total
  $ 1,861,505     $ 1,746,531  
 
           

 


 

BRADY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
                 
    (Unaudited)  
    Twelve Months Ended  
    July 31,  
    2011     2010  
Operating activities:
               
Net income
  $ 108,652     $ 81,956  
Adjustments to reconcile net income to net cash provided by operating activities:
               
Depreciation and amortization
    48,827       53,022  
Deferred income taxes
    (8,161 )     (6,834 )
Gain on the sale of business (pre-tax)
    (4,394 )      
Non-cash portion of restructuring charges
    2,155       2,260  
Non-cash portion of stock-based compensation expense
    9,830       9,721  
Changes in operating assets and liabilities
(net of effects of business acquisitions/divestitures):
               
Accounts receivable
    7,680       (29,479 )
Inventories
    (2,886 )     426  
Prepaid expenses and other assets
    5,624       (3,502 )
Accounts payable and accrued liabilities
    (3,365 )     52,410  
Income taxes
    3,388       5,258  
 
           
Net cash provided by operating activities
    167,350       165,238  
 
               
Investing activities:
               
Acquisition of business, net of cash acquired
    (7,970 )     (30,431 )
Payments of contingent consideration
    (1,528 )      
Divestiture of business, net of cash retained in business
    12,980        
Purchases of property, plant and equipment
    (20,532 )     (26,296 )
Settlement of net investment hedges
    (5,542 )     6,248  
Other
    (39 )     1,798  
 
           
Net cash used in investing activities
    (22,631 )     (48,681 )
 
               
Financing activities:
               
Payment of dividends
    (38,064 )     (36,786 )
Proceeds from issuance of common stock
    8,193       3,717  
Principal payments on debt
    (61,264 )     (44,893 )
Proceeds from issuance of debt
          94,915  
Purchase of treasury stock
          (2,537 )
Income tax benefit from the exercise of stock options and deferred compensation distribution, and other
    (439 )     859  
 
           
Net cash (used in) provided by financing activities
    (91,574 )     15,275  
 
               
Effect of exchange rate changes on cash
    21,986       (5,148 )
 
               
Net increase in cash and cash equivalents
    75,131       126,684  
Cash and cash equivalents, beginning of period
    314,840       188,156  
 
           
 
               
Cash and cash equivalents, end of period
  $ 389,971     $ 314,840  
 
           
 
               
Supplemental disclosures:
               
Cash paid during the period for:
               
Interest, net of capitalized interest
  $ 21,298     $ 21,626  
Income taxes, net of refunds
    35,851       30,870  
Acquisitions:
               
Fair value of assets acquired, net of cash
  $ 4,624     $ 15,366  
Liabilities assumed
    (1,446 )     (5,201 )
Goodwill
    4,792       20,266  
 
           
Net cash paid for acquisitions
  $ 7,970     $ 30,431  
 
           

 


 

Information by regional segment for the three and twelve months ended July 31, 2011 and 2010 is as follows:
                                                 
                                    Corporate and        
(in thousands)   Americas     Europe     Asia-Pacific     Total Region     Eliminations     Total Company  
SALES TO EXTERNAL CUSTOMERS
                                               
Three months ended:
                                               
July 31, 2011
  $ 146,212     $ 102,970     $ 93,922     $ 343,104     $     $ 343,104  
July 31, 2010
  $ 148,929     $ 91,020     $ 82,945     $ 322,894     $     $ 322,894  
July 31, 2009
  $ 124,867     $ 86,567     $ 75,769     $ 287,203     $     $ 287,203  
 
                                               
Twelve months ended:
                                               
July 31, 2011
  $ 577,428     $ 404,955     $ 357,214     $ 1,339,597     $     $ 1,339,597  
July 31, 2010
  $ 551,185     $ 380,121     $ 327,790     $ 1,259,096     $     $ 1,259,096  
July 31, 2009
  $ 534,440     $ 367,156     $ 307,106     $ 1,208,702     $     $ 1,208,702  
 
                                               
SALES GROWTH INFORMATION
                                               
Three months ended July 31, 2011:
                                               
Base
    -2.7 %     2.0 %     0.4 %     -0.6 %           -0.6 %
Currency
    1.6 %     12.8 %     10.5 %     7.1 %           7.1 %
Acquisitions/Divestitures
    -0.7 %     -1.6 %     2.3 %     -0.2 %           -0.2 %
 
                                   
Total
    -1.8 %     13.2 %     13.2 %     6.3 %           6.3 %
 
                                               
Twelve months ended July 31, 2011:
                                               
Base
    3.2 %     4.7 %     0.4 %     2.9 %           2.9 %
Currency
    1.1 %     0.6 %     6.9 %     2.5 %           2.5 %
Acquisitions/Divestitures
    0.5 %     1.2 %     1.7 %     1.0 %           1.0 %
 
                                   
Total
    4.8 %     6.5 %     9.0 %     6.4 %           6.4 %
 
                                               
SEGMENT PROFIT (LOSS)
                                               
Three months ended:
                                               
July 31, 2011
  $ 36,850     $ 29,882     $ 11,775     $ 78,507     $ (3,655 )     74,852  
July 31, 2010
  $ 34,964     $ 25,035     $ 13,516     $ 73,515     $ (3,970 )     69,545  
Percentage increase (decrease)
    5.4 %     19.4 %     -12.9 %     6.8 %             7.6 %
 
                                               
Twelve months ended:
                                               
July 31, 2011
  $ 145,516     $ 112,047     $ 50,105     $ 307,668     $ (15,742 )   $ 291,926  
July 31, 2010
  $ 125,169     $ 103,316     $ 52,105     $ 280,590     $ (14,131 )   $ 266,459  
Percentage increase (decrease)
    16.3 %     8.5 %     -3.8 %     9.7 %             9.6 %
NET INCOME RECONCILIATION (in thousands)
                                 
    Three months ended:     Twelve months ended:  
    July 31, 2011     July 31, 2010     July 31, 2011     July 31, 2010  
Total profit for reportable segments
  $ 78,507     $ 73,515     $ 307,668     $ 280,590  
Corporate and eliminations
    (3,655 )     (3,970 )     (15,742 )     (14,131 )
Unallocated amounts:
                               
Administrative costs
    (30,012 )     (29,745 )     (120,546 )     (121,689 )
Restructuring costs
    (2,202 )     (5,717 )     (9,188 )     (15,314 )
Investment and other income (expense)
    1,098       (105 )     3,990       1,168  
Interest expense
    (5,484 )     (5,750 )     (22,124 )     (21,222 )
 
                       
Income before income taxes
    38,252       28,228       144,058       109,402  
Income taxes
    (8,669 )     (6,636 )     (35,406 )     (27,446 )
 
                       
Net income
  $ 29,583     $ 21,592     $ 108,652     $ 81,956  
 
                       

 


 

RECONCILIATION OF GAAP MEASURES TO NON-GAAP MEASURES
(in thousands)
                                         
    Fiscal 2011  
    Q1     Q2     Q3     Q4     Total  
EBITDA (1)
                                       
Net income
  $ 26,281     $ 24,199     $ 28,589     $ 29,583     $ 108,652  
Interest expense
    5,687       5,850       5,103       5,484       22,124  
Income taxes
    9,925       8,205       8,607       8,669       35,406  
Depreciation and amortization
    12,594       12,908       12,020       11,305       48,827  
 
                             
 
                                       
EBITDA (non-GAAP measure)
  $ 54,487     $ 51,162     $ 54,319     $ 55,041     $ 215,009  
 
                             
                                         
    Fiscal 2010  
    Q1     Q2     Q3     Q4     Total  
EBITDA (1)
                                       
Net income
  $ 21,668     $ 15,001     $ 23,695     $ 21,592     $ 81,956  
Interest expense
    5,162       5,163       5,147       5,750       21,222  
Income taxes
    8,775       4,842       7,193       6,636       27,446  
Depreciation and amortization
    13,817       13,549       12,910       12,746       53,022  
 
                             
 
                                       
EBITDA (non-GAAP measure)
  $ 49,422     $ 38,555     $ 48,945     $ 46,724     $ 183,646  
 
                             
     
(1)  
Brady is presenting EBITDA because it is used by many of our investors and lenders, and is presented as a convenience to them. EBITDA represents net income before interest expense, income taxes and depreciation and amortization. EBITDA is not a calculation based on generally accepted accounting principles (GAAP). The amounts included in the EBITDA calculation, however, are derived from amounts included in the Condensed Consolidated Statements of Income data. EBITDA should not be considered as an alternative to net income or operating income as an indicator of the company’s operating performance, or as an alternative to operating cash flows as a measure of liquidity. The EBITDA measure presented may not always be comparable to similarly titled measures reported by other companies due to differences in the components of the calculation.