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EXHIBIT 99.1

For More Information:

Investor contact: Aaron Pearce 414-438-6895

Media contact: Carole Herbstreit 414-438-6882

For Immediate Release

Brady Corporation Reports Fiscal 2013 First Quarter Results

MILWAUKEE (November 15, 2012)—Brady Corporation (NYSE: BRC) (“Brady” or “Company”), a world leader in identification solutions, today reported its financial results for the fiscal 2013 first quarter ended October 31, 2012.

Quarter Ended October 31, 2012 Financial Results:

Sales for the fiscal 2013 first quarter ended October 31, 2012, were down 3.4 percent to $337.6 million compared to $349.5 million in the first quarter of fiscal 2012. Organic sales were down 1.9 percent, the impact of foreign currency translation decreased sales by 2.1 percent, and acquisitions, net of divestitures added 0.6 percent. By segment, organic sales decreased 0.7 percent in the Americas, 3.2 percent in EMEA and 2.5 percent in the Asia-Pacific region.

Net income in the fiscal 2013 first quarter was down 16.9 percent to $27.2 million compared to $32.7 million in the same quarter last year. Excluding the losses in the first quarter of fiscal 2013 from the sales of Brady Medical, a medical die-cut business headquartered in Texas, and Varitronics, a business headquartered in Minnesota serving the education market, net income was down 7.1 percent to $30.4 million.

Earnings per diluted Class A Common Share were down 14.5 percent to $0.53 in the first quarter of fiscal 2013 compared to $0.62 in the same quarter last year. Diluted Earnings per Class A Common Share excluding losses on the sales of businesses were down 4.8 percent to $0.59 in the first quarter of fiscal 2013.

Commentary and Guidance:

“I am pleased with our performance in the quarter as our business in the Americas and Asia-Pacific showed improved results over last quarter. In Asia in particular we benefited from several new product wins in the mobile handset and tablet computer space,” said Brady’s President and Chief Executive Officer, Frank M. Jaehnert. “Europe continues to be impacted by a difficult economic environment, and we are shifting resources to higher growth opportunities in Central Europe, the Middle East, and Africa. In addition, we are continuing to prune our portfolio of businesses. As we look to the remainder of fiscal 2013, we believe there is limited likelihood that the macro-economy will provide a tailwind. We therefore will continue on the path to create our own growth story by further investing in geographic expansion; expanding globally in certain focus markets, such as aerospace and mass transit, chemical, oil and gas, and food and beverage processing; new product development; customer conversion; and expansion of our digital capabilities to provide the best overall buying experience for our customers.”


“We anticipate approximately flat organic sales growth for the full fiscal year 2013, with sales growth in the second half of the year driven by our initiatives,” said Brady’s Chief Financial Officer Thomas J. Felmer. “We are reiterating our full-year fiscal 2013 earnings per diluted Class A Common Share guidance of between $2.20 and $2.40, exclusive of after-tax restructuring charges and gains or losses on the sales of any businesses. This guidance is based on exchange rates as of October 31, 2012, and a full-year income tax rate in the mid-to-upper 20 percent range.”

A webcast regarding Brady’s fiscal 2013 first quarter financial results will be available at www.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 as of July 31, 2012 employed approximately 6,900 people at operations in the Americas, EMEA and Asia-Pacific. Brady’s fiscal 2012 sales were approximately $1.32 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: the length or severity of the current worldwide economic downturn or timing or strength of a subsequent recovery; increased usage of e-commerce allowing for ease of price transparency; future financial performance of major markets Brady serves, which include, without limitation, telecommunications, hard disk drive, manufacturing, electrical, construction, laboratory, education, governmental, public utility, computer, and transportation; future competition; changes in the supply of, or price for, parts and components; increased price pressure from suppliers and customers; Brady’s ability to retain significant contracts and customers; fluctuations in currency rates versus the U.S. dollar; risks associated with international operations; difficulties associated with exports; risks associated with obtaining governmental approvals and maintaining regulatory compliance; Brady’s ability to develop and successfully market new products; difficulties in making and integrating acquisitions; risks associated with newly acquired businesses; risks associated with restructuring plans; environmental, health and safety compliance costs and liabilities; technology changes and potential security violations to the Company’s information technology systems; Brady’s ability to maintain compliance with its debt covenants; increase in our level of debt; potential write-offs of Brady’s substantial intangible assets; unforeseen tax consequences; 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 within Item 1A of Part I of Brady’s Form 10-K for the year ended July 31, 2012.

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

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Dollars in Thousands, Except Per Share Amounts)

 

     (Unaudited)  
     Three Months Ended October 31,  
     2012     2011  

Net sales

   $ 337,646      $ 349,508   

Cost of products sold

     173,026        181,677   
  

 

 

   

 

 

 

Gross margin

     164,620        167,831   

Operating expenses:

    

Research and development

     8,485        9,809   

Selling, general and administrative

     108,261        108,932   

Loss (gain) on sales of businesses

     3,438        —     
  

 

 

   

 

 

 

Total operating expenses

     120,184        118,741   

Operating income

     44,436        49,090   

Other income and (expense):

    

Investment and other income (expense)

     397        (202

Interest expense

     (4,163     (5,047
  

 

 

   

 

 

 

Income before income taxes

     40,670        43,841   

Income taxes

     13,482        11,109   
  

 

 

   

 

 

 

Net income

   $ 27,188      $ 32,732   
  

 

 

   

 

 

 

Per Class A Nonvoting Common Share:

    

Basic net income

   $ 0.53      $ 0.62   

Diluted net income

   $ 0.53      $ 0.62   

Dividends

   $ 0.19      $ 0.185   

Per Class B Voting Common Share:

    

Basic net income

   $ 0.52      $ 0.60   

Diluted net income

   $ 0.51      $ 0.60   

Dividends

   $ 0.173      $ 0.168   

Weighted average common shares outstanding (in thousands):

    

Basic

     51,039        52,657   

Diluted

     51,312        52,954   


BRADY CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in Thousands)

 

    (Unaudited)  
    October 31, 2012     July 31, 2012  

ASSETS

   

Current assets:

   

Cash and cash equivalents

  $ 321,309      $ 305,900   

Accounts receivable—net

    218,246        199,006   

Inventories:

   

Finished products

    67,992        64,740   

Work-in-process

    16,280        15,377   

Raw materials and supplies

    26,255        25,407   
 

 

 

   

 

 

 

Total inventories

    110,527        105,524   

Prepaid expenses and other current assets

    42,400        40,424   
 

 

 

   

 

 

 

Total current assets

    692,482        650,854   

Other assets:

   

Goodwill

    680,595        676,791   

Other intangible assets

    80,983        84,119   

Deferred income taxes

    46,627        45,356   

Other

    21,577        20,584   

Property, plant and equipment:

   

Cost:

   

Land

    8,892        8,651   

Buildings and improvements

    102,592        101,962   

Machinery and equipment

    296,561        292,130   

Construction in progress

    10,064        10,417   
 

 

 

   

 

 

 
    418,109        413,160   

Less accumulated depreciation

    288,949        283,145   
 

 

 

   

 

 

 

Property, plant and equipment—net

    129,160        130,015   
 

 

 

   

 

 

 

Total

  $ 1,651,424      $ 1,607,719   
 

 

 

   

 

 

 

LIABILITIES AND STOCKHOLDERS’ INVESTMENT

   

Current liabilities:

   

Accounts payable

  $ 105,348      $ 86,646   

Wages and amounts withheld from employees

    40,529        54,629   

Taxes, other than income taxes

    8,211        9,307   

Accrued income taxes

    12,153        14,357   

Other current liabilities

    44,686        40,815   

Current maturities on long-term debt

    61,264        61,264   
 

 

 

   

 

 

 

Total current liabilities

    272,191        267,018   

Long-term obligations, less current maturities

    259,729        254,944   

Other liabilities

    78,538        76,404   
 

 

 

   

 

 

 

Total liabilities

    610,458        598,366   

Stockholders’ investment:

   

Common stock:

   

Class A nonvoting common stock—Issued 51,261,487 and 51,261,487 shares, respectively and outstanding 47,563,704 and 47,630,926 shares, respectively

    513        513   

Class B voting common stock—Issued and outstanding, 3,538,628 shares

    35        35   

Additional paid-in capital

    314,896        313,008   

Earnings retained in the business

    749,773        732,290   

Treasury stock—3,387,783 and 3,245,561 shares, respectively of Class A nonvoting common stock, at cost

    (93,535     (92,600

Accumulated other comprehensive income

    72,178        59,411   

Other

    (2,894     (3,304
 

 

 

   

 

 

 

Total stockholders’ investment

    1,040,966        1,009,353   
 

 

 

   

 

 

 

Total

  $ 1,651,424      $ 1,607,719   
 

 

 

   

 

 

 


BRADY CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in Thousands)

 

     (Unaudited)  
     Three Months Ended  
     October 31,  
     2012     2011  

Operating activities:

    

Net income

   $ 27,188      $ 32,732   

Adjustments to reconcile net income to net cash provided by operating activities:

    

Depreciation and amortization

     10,675        11,241   

Deferred income taxes

     (109     4,399   

Non-cash portion of stock-based compensation expense

     4,399        3,591   

Loss (gain) on sales of businesses

     3,138        —     

Changes in operating assets and liabilities
(net of effects of business acquisitions/divestitures):

    

Accounts receivable

     (18,426     (7,798

Inventories

     (8,141     (7,156

Prepaid expenses and other assets

     (2,710     (7,384

Accounts payable and accrued liabilities

     6,752        (21,814

Income taxes

     (2,548     7,470   
  

 

 

   

 

 

 

Net cash provided by operating activities

     20,218        15,281   

Investing activities:

    

Purchases of property, plant and equipment

     (6,177     (5,817

Settlement of net investment hedges

     —          (958

Sales of businesses, net of cash retained

     10,178        —     

Other

     (70     (233
  

 

 

   

 

 

 

Net cash provided by (used in) investing activities

     3,931        (7,008

Financing activities:

    

Payment of dividends

     (9,704     (9,690

Proceeds from issuance of common stock

     1,684        683   

Purchase of treasury stock

     (5,121     (12,309

Income tax benefit from the exercise of stock options and deferred compensation distribution, and other

     400        456   
  

 

 

   

 

 

 

Net cash used in financing activities

     (12,741     (20,860

Effect of exchange rate changes on cash

     4,001        (5,790

Net increase (decrease) in cash and cash equivalents

     15,409        (18,377

Cash and cash equivalents, beginning of period

     305,900        389,971   
  

 

 

   

 

 

 

Cash and cash equivalents, end of period

   $ 321,309      $ 371,594   
  

 

 

   

 

 

 

Supplemental disclosures:

    

Cash paid during the period for:

    

Interest, net of capitalized interest

   $ 4,953      $ 6,082   

Income taxes, net of refunds

     12,199        5,825   


Information by regional segment for the three months ended October 31, 2012 and 2011 is as follows:

 

(in thousands)

   Americas     EMEA     Asia-Pacific     Total Region     Corporate
and
Eliminations
    Total  

SALES TO EXTERNAL CUSTOMERS

  

Three months ended:

            

October 31, 2012

   $ 148,692      $ 93,233      $ 95,721      $ 337,646        —        $ 337,646   

October 31, 2011

   $ 153,863      $ 97,356      $ 98,289      $ 349,508        —        $ 349,508   

SALES GROWTH INFORMATION

            

Three months ended October 31, 2012:

            

Base

     -0.7     -3.2     -2.5     -1.9     —          -1.9

Currency

     -1.1     -5.7     -0.1     -2.1     —          -2.1

Acquisitions/Divestitures

     -1.6     4.7     0.0     0.6     —          0.6
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

     -3.4     -4.2     -2.6     -3.4     —          -3.4

Three months ended October 31, 2011:

            

Base

     5.7     3.7     -0.2     3.5     —          3.5

Currency

     0.4     3.7     5.5     2.7     —          2.7

Acquisitions/Divestitures

     -0.7     -1.6     2.1     -0.2     —          -0.2
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

     5.4     5.8     7.4     6.0     —          6.0

SEGMENT PROFIT (LOSS)

            

Three months ended:

            

October 31, 2012

   $ 44,633      $ 23,567      $ 12,055      $ 80,255      $ (1,973   $ 78,282   

October 31, 2011

   $ 43,230      $ 26,299      $ 13,304      $ 82,833      $ (3,263   $ 79,570   

Percentage increase (decrease)

     3.2     -10.4     -9.4     -3.1       -1.6

NET INCOME RECONCILIATION (in thousands)

 

     Three months ended:  
     October 31,
2012
    October 31,
2011
 

Total profit for reportable segments

   $ 80,255      $ 82,833   

Corporate and eliminations

     (1,973     (3,263

Unallocated amounts:

    

Administrative costs

     (30,408     (30,480

Loss (gain) on sales of businesses

     (3,438     —     

Investment and other income (expense)

     397        (202

Interest expense

     (4,163     (5,047
  

 

 

   

 

 

 

Income before income taxes

     40,670        43,841   

Income taxes

     (13,482     (11,109
  

 

 

   

 

 

 

Net income

   $ 27,188      $ 32,732   
  

 

 

   

 

 

 


NON-GAAP MEASURES

(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.

EBITDA:

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, 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.

 

     Fiscal 2013  
     Q1      Q2     Q3      Q4      Total  

EBITDA:

             

Net income

   $ 27,188       $ —        $ —         $ —         $ 27,188   

Interest expense

     4,163         —          —           —           4,163   

Income taxes

     13,482         —          —           —           13,482   

Depreciation and amortization

     10,675         —          —           —           10,675   
  

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

EBITDA (non-GAAP measure)

   $ 55,508       $ —        $ —         $ —         $ 55,508   
  

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 
     Fiscal 2012  
     Q1      Q2     Q3      Q4      Total  

EBITDA:

             

Net income (loss)

   $ 32,732       $ (89,954   $ 27,652       $ 11,659       $ (17,911

Interest expense

     5,047         4,933        4,735         4,375         19,090   

Income taxes

     11,109         8,635        9,676         11,241         40,661   

Depreciation and amortization

     11,241         10,935        10,745         11,066         43,987   

Impairment charge

     —           115,688        —           —           115,688   
  

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

EBITDA (non-GAAP measure)

   $ 60,129       $ 50,237      $ 52,808       $ 38,341       $ 201,515   
  

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

Diluted Earnings Per Share Excluding Losses on the Sales of Businesses:

This is a measure of the Company’s diluted net earnings per share excluding current year losses on the sales of businesses. We do not view these items to be part of our sustainable results. We believe this earnings per share measure provides an important perspective of underlying business trends and results and provides a more comparable measure of year-on-year earnings per share growth. The table below provides a reconciliation of diluted earnings per share to diluted earnings per share excluding losses on the sales of businesses:

 

     Three Months Ended
October 31,
 
     2012      2011  

Diluted Earnings per Share

   $ 0.53       $ 0.62   

Loss on the sale of Brady Medical

     0.05         —     

Loss on the sale of Varitronics

     0.01         —     
  

 

 

    

 

 

 

Diluted Earnings per Share Excluding Losses on the Sales of Businesses

   $ 0.59       $ 0.62   
  

 

 

    

 

 

 

All reconciling items are presented net of tax. Tax effects are calculated consistent with the nature of the underlying transaction.

Net Income Excluding Losses on the Sales of Businesses:

This is a measure of the Company’s net income excluding current year losses on the sales of businesses. We do not view these items to be part of our sustainable results. We believe this net income measure provides an important perspective of underlying business trends and results and provides a more comparable measure of year-on-year net income growth. The table below provides a reconciliation of net income to net income excluding the losses on the sales of businesses:

 

     Three Months Ended
October 31,
 
     2012      2011  

Net Income

   $ 27,188       $ 32,732   

Loss on the sale of Brady Medical

     2,577         —     

Loss on the sale of Varitronics

     638         —     
  

 

 

    

 

 

 

Net Income Excluding Losses on the Sales of Businesses

   $ 30,403       $ 32,732   
  

 

 

    

 

 

 

All reconciling items are presented net of tax. Tax effects are calculated consistent with the nature of the underlying transaction.