BRADY CORP - FORM 8-K - EX-99.1 - FOURTH QUARTER FISCAL 2017 PRESS RELEASE - September 7, 2017

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EX-99.3 - FOURTH QUARTER FISCAL 2017 INFORMATIONAL SLIDES - BRADY CORPf17q4conferencecallprese.htm
EX-99.2 - ADDITIONAL ANNOUNCEMENT - BRADY CORPexhibit992-dividendrelease.htm
8-K - 8-K - BRADY CORPform8-kearningsreleasex201.htm



EXHIBIT 99.1

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


Brady Corporation Reports Fiscal 2017 Fourth Quarter Results and Announces its Fiscal 2018 EPS Guidance

•
Organic revenues increased 3.0 percent for the quarter ended July 31, 2017.
•
Earnings before income taxes increased 12.2 percent to $35.9 million in the fourth quarter of fiscal 2017 compared to $32.0 million in the same quarter of the prior year.
•
Earnings per diluted Class A Nonvoting Common Share were $0.48 in the fourth quarter of fiscal 2017 compared to $0.49 in the same quarter of the prior year.
•
Earnings per diluted Class A Common Share guidance for the full year ending July 31, 2018 announced at a range of $1.85 to $1.95.

MILWAUKEE (September 7, 2017)--Brady Corporation (NYSE: BRC) (“Brady” or “Company”), a world leader in identification solutions, today reported its financial results for its fiscal 2017 fourth quarter ended July 31, 2017.

Quarter Ended July 31, 2017 Financial Results:
Net earnings for the quarter ended July 31, 2017, were $25.2 million compared to $25.1 million in the same quarter last year. Net earnings were significantly impacted by quarterly fluctuations in the income tax rate which was 29.7 percent for the quarter ended July 31, 2017, and 21.5 percent for the quarter ended July 31, 2016. Earnings before income taxes increased 12.2 percent to $35.9 million for the quarter ended July 31, 2017 compared to $32.0 million for the quarter ended July 31, 2016.
Earnings per diluted Class A Nonvoting Common Share were $0.48 for the quarter ended July 31, 2017, compared to $0.49 in the same quarter last year.
Sales for the quarter ended July 31, 2017, increased 2.5 percent to $289.2 million compared to $282.1 million in the same quarter last year. Total organic sales increased 3.0 percent and the impact of foreign currency translation decreased sales by 0.5 percent. By segment, organic sales increased 4.4 percent in Identification Solutions and decreased 0.6 percent in Workplace Safety.

Year Ended July 31, 2017 Financial Results:
Net earnings for the year ended July 31, 2017, were $95.6 million compared to $80.1 million last year. Earnings before income taxes increased 15.8 percent to $126.6 million for the year ended July 31, 2017, compared to $109.3 million last year.




Earnings per diluted Class A Nonvoting Common Share were $1.84 for the year ended July 31, 2017, compared to $1.58 last year.
Sales for the year ended July 31, 2017, decreased 0.7 percent to $1.11 billion compared to $1.12 billion last year. Total organic sales increased 0.5 percent and foreign currency translation decreased sales by 1.2 percent. By segment, organic sales increased 1.6 percent in Identification Solutions and decreased 2.0 percent in Workplace Safety.

Commentary:
“We finished fiscal 2017 with our eighth consecutive quarter of year-over-year improvement in pre-tax earnings. This is a direct result of our organic sales growth, our consistent focus on driving efficiencies throughout our SG&A structure, and our improved manufacturing processes,” said Brady’s President and Chief Executive Officer, J. Michael Nauman. “Organic sales growth was 3.0 percent this quarter. Our Identification Solutions business was the driver of our organic sales growth and is where we have been investing the most in the development of innovative new products. This is beginning to generate improved organic sales trends. Our priorities for fiscal 2018 remain unchanged, which are to grow our pipeline of innovative new products, accelerate organic sales growth, provide excellent customer service and deliver operational efficiencies throughout our business. We continue to focus on the long-term by taking actions today that we believe will result in sustainable organic sales growth into the future.”
“The benefits from our organic sales growth were supplemented by our focus on operational efficiencies, our drive for sustainable efficiency gains in our general and administrative cost structure, and a strong focus on cash generation,” said Brady’s Chief Financial Officer, Aaron Pearce. “During the year ended July 31, 2017, we increased our pre-tax earnings by 15.8 percent, increased net earnings by 19.4 percent, and generated $144.0 million of cash from operating activities, which represents 151 percent of net earnings. Our cash generation was primarily used to return funds to our shareholders in the form of dividends and to strengthen our balance sheet. We finished the year in a net cash position of $26.2 million compared to a net debt position of $75.7 million at the start of this fiscal year. Our balance sheet provides significant flexibility for investments to drive long-term shareholder value.”

Fiscal 2018 Guidance:
The Company anticipates organic sales to increase in the low-single digits for the year ending July 31, 2018. Brady expects earnings per diluted Class A Common Share to range from $1.85 to $1.95. This guidance is based upon a full-year income tax rate of approximately 27 percent to 29 percent, which is higher than fiscal 2017, and depreciation and amortization expense of approximately $26 million. The Company expects to continue to achieve efficiency gains in its manufacturing facilities and in selling, general and administrative expenses while increasing investments in research and development expenses by approximately 10 percent when compared to fiscal 2017. Capital expenditures are anticipated to be approximately $30 million during the year ending July 31, 2018. The Company’s fiscal 2018 guidance is based on foreign currency exchange rates as of July 31, 2017.





A webcast regarding Brady’s fiscal 2017 fourth 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 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, 2017, employed approximately 6,300 people in its worldwide businesses. Brady’s fiscal 2017 sales were approximately $1.11 billion. Brady stock trades on the New York Stock Exchange under the symbol BRC. More information is available on the Internet at www.bradycorp.com.

###
In this news release, statements that are not reported financial results or other historic information are “forward-looking statements.” These forward-looking statements relate to, among other things, the Company's future financial position, business strategy, targets, projected sales, costs, earnings, capital expenditures, debt levels and cash flows, and plans and objectives of management for future operations.

The use of words such as “may,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “believe,” “should,” “project” or “plan” or similar terminology are generally intended to identify forward-looking statements. These forward-looking statements by their nature address matters that are, to different degrees, uncertain and are subject to risks, assumptions, and other factors, some of which are beyond Brady’s control, that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. For Brady, uncertainties arise from: our ability to compete effectively or to successfully execute our strategy; Brady’s ability to develop technologically advanced products that meet customer demands; difficulties in protecting our websites, networks, and systems against security breaches; deterioration or instability in the global economy and financial markets; decreased demand for our products; Brady’s ability to retain large customers; risks associated with the loss of key employees; changes in tax legislation and tax rates; Brady’s ability to execute facility consolidations and maintain acceptable operational service metrics; extensive regulations by U.S. and non-U.S. governmental and self-regulatory entities; litigation, including product liability claims; divestitures and contingent liabilities from divestitures; Brady’s ability to properly identify, integrate, and grow acquired companies; foreign currency fluctuations; potential write-offs of Brady’s substantial intangible assets; differing interests of voting and non-voting shareholders; Brady’s ability to meet certain financial covenants required by our debt agreements; 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, 2016.

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 EARNINGS
(Unaudited; Dollars in thousands, except per share data)
 
Three months ended July 31,
 
Year ended July 31,
 
2017
 
2016
 
2017
 
2016
Net sales
$
289,212

 
$
282,106

 
$
1,113,316

 
$
1,120,625

Cost of products sold
145,345

 
141,017

 
555,024

 
561,852

Gross margin
143,867

 
141,089

 
558,292

 
558,773

Operating expenses:
 
 
 
 
 
 
 
Research and development
11,047

 
9,268

 
39,624

 
35,799

Selling, general and administrative
96,525

 
98,418

 
387,653

 
405,096

Total operating expenses
107,572

 
107,686

 
427,277

 
440,895

 
 
 
 
 
 
 
 
Operating income
36,295

 
33,403

 
131,015

 
117,878

 
 
 
 
 
 
 
 
Other income (expense):
 
 
 
 
 
 
 
Investment and other income (expense)
561

 
321

 
1,121

 
(709
)
Interest expense
(939
)
 
(1,705
)
 
(5,504
)
 
(7,824
)
 
 
 
 
 
 
 
 
Earnings before income taxes
35,917

 
32,019

 
126,632

 
109,345

 
 
 
 
 
 
 
 
Income tax expense
10,675

 
6,883

 
30,987

 
29,235

 
 
 
 
 
 
 
 
Net earnings
$
25,242

 
$
25,136

 
$
95,645

 
$
80,110

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net earnings per Class A Nonvoting Common Share:
 
 
 
 
 
 
 
Basic
$
0.49

 
$
0.50

 
$
1.87

 
$
1.59

Diluted
$
0.48

 
$
0.49

 
$
1.84

 
$
1.58

Dividends
$
0.21

 
$
0.20

 
$
0.82

 
$
0.81

 
 
 
 
 
 
 
 
Net earnings per Class B Voting Common Share:
 
 
 
 
 
 
 
Basic
$
0.49

 
$
0.50

 
$
1.86

 
$
1.57

Diluted
$
0.48

 
$
0.49

 
$
1.83

 
$
1.56

Dividends
$
0.21

 
$
0.20

 
$
0.80

 
$
0.79

 
 
 
 
 
 
 
 
Weighted average common shares outstanding (in thousands):
 
 
 
 
 
 
 
Basic
51,307

 
50,355

 
51,056

 
50,541

Diluted
52,180

 
50,834

 
51,956

 
50,769





BRADY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited; Dollars in thousands)
 
July 31, 2017
 
July 31, 2016
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
133,944

 
$
141,228

Accounts receivable—net
149,638

 
147,333

Inventories:
 
 
 
Finished products
69,760

 
64,313

Work-in-process
18,117

 
16,678

Raw materials and supplies
19,147

 
18,436

Total inventories
107,024

 
99,427

Prepaid expenses and other current assets
17,208

 
19,436

Total current assets
407,814

 
407,424

Other assets:
 
 
 
Goodwill
437,697

 
429,871

Other intangible assets
53,076

 
59,806

Deferred income taxes
35,456

 
27,238

Other
18,077

 
17,181

Property, plant and equipment:
 
 
 
Cost:
 
 
 
Land
7,470

 
5,809

Buildings and improvements
98,228

 
95,355

Machinery and equipment
261,192

 
256,549

Construction in progress
4,109

 
2,842

 
370,999

 
360,555

Less accumulated depreciation
272,896

 
258,111

Property, plant and equipment—net
98,103

 
102,444

Total
$
1,050,223

 
$
1,043,964

LIABILITIES AND STOCKHOLDERS’ INVESTMENT
 
 
 
Current liabilities:
 
 
 
Notes payable
$
3,228

 
$
4,928

Accounts payable
66,817

 
62,245

Wages and amounts withheld from employees
58,192

 
45,998

Taxes, other than income taxes
7,970

 
7,403

Accrued income taxes
7,373

 
6,136

Other current liabilities
43,618

 
40,017

Total current liabilities
187,198

 
166,727

Long-term obligations, less current maturities
104,536

 
211,982

Other liabilities
58,349

 
61,657

Total liabilities
350,083

 
440,366

Stockholders’ investment:
 
 
 
Common Stock:
 
 
 
Class A nonvoting common stock—Issued 51,261,487 and outstanding 47,814,818 and 46,920,974 shares, respectively
513

 
513

Class B voting common stock—Issued and outstanding, 3,538,628 shares
35

 
35

Additional paid-in capital
322,608

 
317,001

Earnings retained in the business
507,136

 
453,371

Treasury stock—3,446,669 and 4,340,513 shares, respectively of Class A nonvoting common stock, at cost
(85,470
)
 
(108,714
)
Accumulated other comprehensive loss
(44,682
)
 
(54,745
)
Other
—

 
(3,863
)
Total stockholders’ investment
700,140

 
603,598

Total
$
1,050,223

 
$
1,043,964






BRADY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited; Dollars in thousands)
 
Year ended July 31,
 
2017
 
2016
Operating activities:
 
 
 
Net earnings
$
95,645

 
$
80,110

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation and amortization
27,303

 
32,432

Stock-based compensation expense
9,495

 
8,154

Deferred income taxes
(8,618
)
 
2,085

Changes in operating assets and liabilities:
 
 
 
Accounts receivable
766

 
8,159

Inventories
(5,687
)
 
4,833

Prepaid expenses and other assets
1,812

 
475

Accounts payable and accrued liabilities
22,255

 
3,928

Income taxes
1,061

 
(1,200
)
Net cash provided by operating activities
144,032

 
138,976

 
 
 
 
Investing activities:
 
 
 
Purchases of property, plant and equipment
(15,167
)
 
(17,140
)
Other
(86
)
 
1,724

Net cash used in investing activities
(15,253
)
 
(15,416
)
 
 
 
 
Financing activities:
 
 
 
Payment of dividends
(41,880
)
 
(40,808
)
Proceeds from exercise of stock options
19,728

 
5,246

Purchase of treasury stock
—

 
(23,552
)
Proceeds from borrowing on credit facilities
180,320

 
96,276

Repayment of borrowing on credit facilities
(244,268
)
 
(91,759
)
Principal payments on debt
(49,302
)
 
(42,514
)
Debt issuance costs
—

 
(803
)
Income tax on equity-based compensation, and other
(839
)
 
(1,662
)
Net cash used in financing activities
(136,241
)
 
(99,576
)
 
 
 
 
Effect of exchange rate changes on cash
178

 
2,752

 
 
 
 
Net (decrease) increase in cash and cash equivalents
(7,284
)
 
26,736

Cash and cash equivalents, beginning of period
141,228

 
114,492

 
 
 
 
Cash and cash equivalents, end of period
$
133,944

 
$
141,228





BRADY CORPORATION AND SUBSIDIARIES
SEGMENT INFORMATION
(Unaudited; Dollars in thousands)
 
Three months ended July 31,
 
Year ended July 31,
 
2017
 
2016
 
2017
 
2016
SALES
 
 
 
 
 
 
 
ID Solutions
$
211,286

 
$
203,229

 
$
800,392

 
$
795,511

Workplace Safety
77,926

 
78,877

 
312,924

 
325,114

Total
$
289,212

 
$
282,106

 
$
1,113,316

 
$
1,120,625

 
 
 
 
 
 
 
 
SALES INFORMATION
 
 
 
 
 
 
 
ID Solutions
 
 
 
 
 
 
 
Organic
4.4
 %
 
(0.6
)%
 
1.6
 %
 
(0.7
)%
Currency
(0.4
)%
 
(1.2
)%
 
(1.0
)%
 
(3.1
)%
Total
4.0
 %
 
(1.8
)%
 
0.6
 %
 
(3.8
)%
Workplace Safety
 
 
 
 
 
 
 
Organic
(0.6
)%
 
(1.8
)%
 
(2.0
)%
 
(0.7
)%
Currency
(0.6
)%
 
(1.8
)%
 
(1.7
)%
 
(5.0
)%
Total
(1.2
)%
 
(3.6
)%
 
(3.7
)%
 
(5.7
)%
Total Company
 
 
 
 
 
 
 
Organic
3.0
 %
 
(0.9
)%
 
0.5
 %
 
(0.7
)%
Currency
(0.5
)%
 
(1.4
)%
 
(1.2
)%
 
(3.7
)%
Total
2.5
 %
 
(2.3
)%
 
(0.7
)%
 
(4.4
)%
 
 
 
 
 
 
 
 
SEGMENT PROFIT
 
 
 
 
 
 
 
ID Solutions
$
35,896

 
$
31,891

 
$
130,572

 
$
112,276

Workplace Safety
7,939

 
9,102

 
25,554

 
30,792

Total
$
43,835

 
$
40,993

 
$
156,126

 
$
143,068

SEGMENT PROFIT AS A PERCENT OF SALES
 
 
 
 
 
 
 
ID Solutions
17.0
 %
 
15.7
 %
 
16.3
 %
 
14.1
 %
Workplace Safety
10.2
 %
 
11.5
 %
 
8.2
 %
 
9.5
 %
Total
15.2
 %
 
14.5
 %
 
14.0
 %
 
12.8
 %

 
Three months ended July 31,
 
Year ended July 31,
 
2017
 
2016
 
2017
 
2016
Total segment profit
$
43,835

 
$
40,993

 
$
156,126

 
$
143,068

Unallocated amounts:
 
 
 
 
 
 
 
Administrative costs
(7,540
)
 
(7,590
)
 
(25,111
)
 
(25,190
)
Investment and other income (expense)
561

 
321

 
1,121

 
(709
)
Interest expense
(939
)
 
(1,705
)
 
(5,504
)
 
(7,824
)
Earnings before income taxes
$
35,917

 
$
32,019

 
$
126,632

 
$
109,345




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