Attached files
| file | filename |
|---|---|
| EX-99.2 - FIRST QUARTER FISCAL 2021 INFORMATIONAL SLIDES - BRADY CORP | f21q1conferencecallprese.htm |
| 8-K - 8-K - BRADY CORP | brc-20201118.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 2021 First Quarter Results
•Income before income taxes and losses of unconsolidated affiliate increased by 1.6 percent to $42.2 million in the first quarter of fiscal 2021 compared to $41.6 million in the same quarter of the prior year.
•Diluted EPS was $0.64 in the first quarter of fiscal 2021 compared to $0.70 in the same quarter of the prior year. Diluted EPS in the first quarter of fiscal 2020 was positively impacted by a reduced income tax rate of 9.8 percent primarily due to a favorable tax audit settlement and tax benefits from equity-based compensation.
•Cash flow from operating activities was up 61.8 percent to $62.8 million in the first quarter of fiscal 2021 compared to $38.8 million in the same quarter of the prior year.
•Sales for the quarter declined 3.4 percent. Organic sales declined 4.9 percent and the impact of foreign currency translation increased sales by 1.5 percent.
MILWAUKEE (November 19, 2020) -- Brady Corporation (NYSE: BRC) (“Brady” or “Company”), a world leader in identification solutions, today reported its financial results for its fiscal 2021 first quarter ended October 31, 2020.
Quarter Ended October 31, 2020 Financial Results:
Income before income taxes and losses of unconsolidated affiliate increased 1.6 percent to $42.2 million for the quarter ended October 31, 2020, compared to $41.6 million in the same quarter last year.
Net income for the quarter ended October 31, 2020 declined 10.7 percent to $33.5 million compared to $37.5 million in the same quarter last year. Earnings per diluted Class A Nonvoting Common Share were $0.64 for the first quarter of fiscal 2021, compared to $0.70 in the same quarter last year. Net income and earnings per diluted Class A Nonvoting Common Share in the first quarter of last year were positively impacted by a reduced income tax rate of 9.8 percent primarily due to a favorable tax audit settlement and tax benefits from equity-based compensation.
Sales for the quarter ended October 31, 2020 declined 3.4 percent, which consisted of an organic sales decline of 4.9 percent and an increase of 1.5 percent from foreign currency translation. Sales for the quarter ended October 31, 2020 were $277.2 million compared to $286.9 million in the same quarter last year. By segment, sales declined 7.8 percent in Identification Solutions and increased 9.8 percent in Workplace Safety, which consisted of an organic sales decline of 8.4 percent in Identification Solutions and organic sales growth of 5.5 percent in Workplace Safety.
Commentary:
“We experienced a steady improvement in sales volumes as the global economy slowly healed throughout our first quarter. Sales improved in each of the last six months and we expanded our customer base in our Workplace Safety business by providing the high-quality products and the service levels that our customers have come to expect,” said Brady’s President and Chief Executive Officer, J. Michael Nauman. “This quarter, we saw demand in our Identification Solutions business improve while our Workplace Safety business had another strong quarter with organic sales increasing more than 5 percent. Growth in our Workplace Safety business was primarily driven by increased sales of safety and identification products directly related to the COVID-19 pandemic, including social distancing and personal hygiene signage. Even with the negative impacts from the COVID-19 pandemic, we increased pre-tax income this quarter as a result of our focus on executing sustainable efficiency gains. Our ongoing investments in sales, marketing, and new product development combined with our reduced cost structure position us to drive substantial profit improvements when demand increases in industrial end-markets.”
“Brady is financially strong and continues to generate significant cash flow. As of October 31, 2020, we had $256.3 million of cash on hand and no outstanding debt,” said Brady’s Chief Financial Officer, Aaron Pearce. “We generated $62.8 million of cash flow from operating activities this quarter, which was an increase of 61.8 percent compared to last year’s first quarter, and we returned $14.1 million to our shareholders in the form of dividends and share buybacks. We are generating operating cash flow in excess of net income and we have a balance sheet that allows us to make the investments necessary to drive future revenue and earnings growth while paying a solid dividend. Although we are seeing some reduction in demand for products specifically designed to help in the fight of COVID-19 and there are macro-economic challenges caused by additional government lockdowns that will impact our financial results for the quarter ending January 31, 2021, Brady’s strong balance sheet and cash generation position us extremely well for future financial success as industrial production improves.”
A webcast regarding Brady’s fiscal 2021 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, 2020, employed approximately 5,400 people in its worldwide businesses. Brady’s fiscal 2020 sales were approximately $1.08 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, ” “continue” 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: adverse impacts of the novel coronavirus (“COVID-19”) pandemic or other pandemics; decreased demand for our products; our ability to compete effectively or to successfully execute our strategy; Brady’s ability to develop technologically advanced products that meet customer demands; raw material and other cost increases; difficulties in protecting our websites, networks, and systems against security breaches; extensive regulations by U.S. and non-U.S. governmental and self-regulatory entities; risks associated with the loss of key employees; divestitures and contingent liabilities from divestitures; Brady’s ability to properly identify, integrate, and grow acquired companies; litigation, including product liability claims; foreign currency fluctuations; potential write-offs of Brady’s 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 issues 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, 2020.
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, | |||||||||||
| 2020 | 2019 | ||||||||||
| Net sales | $ | 277,227 | $ | 286,947 | |||||||
| Cost of goods sold | 141,799 | 145,542 | |||||||||
| Gross margin | 135,428 | 141,405 | |||||||||
| Operating expenses: | |||||||||||
| Research and development | 10,203 | 10,967 | |||||||||
| Selling, general and administrative | 83,037 | 89,547 | |||||||||
| Total operating expenses | 93,240 | 100,514 | |||||||||
| Operating income | 42,188 | 40,891 | |||||||||
| Other income (expense): | |||||||||||
| Investment and other income | 155 | 1,380 | |||||||||
| Interest expense | (106) | (701) | |||||||||
| Income before income taxes and losses of unconsolidated affiliate | 42,237 | 41,570 | |||||||||
| Income tax expense | 8,582 | 4,072 | |||||||||
| Income before losses of unconsolidated affiliate | 33,655 | $ | 37,498 | ||||||||
| Equity in losses of unconsolidated affiliate | (174) | — | |||||||||
| Net income | $ | 33,481 | $ | 37,498 | |||||||
| Net income per Class A Nonvoting Common Share: | |||||||||||
| Basic | $ | 0.64 | $ | 0.71 | |||||||
| Diluted | $ | 0.64 | $ | 0.70 | |||||||
| Dividends | $ | 0.22 | $ | 0.22 | |||||||
| Net income per Class B Voting Common Share: | |||||||||||
| Basic | $ | 0.63 | $ | 0.69 | |||||||
| Diluted | $ | 0.62 | $ | 0.68 | |||||||
| Dividends | $ | 0.20 | $ | 0.20 | |||||||
| Weighted average common shares outstanding: | |||||||||||
| Basic | 52,021 | 53,143 | |||||||||
| Diluted | 52,292 | 53,736 | |||||||||
BRADY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
| October 31, 2020 | July 31, 2020 | ||||||||||
| (Unaudited) | |||||||||||
| ASSETS | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 256,333 | $ | 217,643 | |||||||
| Accounts receivable, net of allowance for credit losses of $7,704 and $7,157, respectively | 156,735 | 146,181 | |||||||||
| Inventories | 120,220 | 135,662 | |||||||||
| Prepaid expenses and other current assets | 11,489 | 9,962 | |||||||||
| Total current assets | 544,777 | 509,448 | |||||||||
| Property, plant and equipment—net | 119,960 | 115,068 | |||||||||
| Goodwill | 412,718 | 416,034 | |||||||||
| Other intangible assets | 20,910 | 22,334 | |||||||||
| Deferred income taxes | 8,976 | 8,845 | |||||||||
| Operating lease assets | 41,013 | 41,899 | |||||||||
| Other assets | 27,353 | 28,838 | |||||||||
| Total | $ | 1,175,707 | $ | 1,142,466 | |||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | $ | 62,907 | $ | 62,547 | |||||||
| Accrued compensation and benefits | 55,410 | 41,546 | |||||||||
| Taxes, other than income taxes | 8,497 | 8,057 | |||||||||
| Accrued income taxes | 10,707 | 8,652 | |||||||||
| Current operating lease liabilities | 16,097 | 15,304 | |||||||||
| Other current liabilities | 51,343 | 49,782 | |||||||||
| Total current liabilities | 204,961 | 185,888 | |||||||||
| Long-term operating lease liabilities | 29,951 | 31,982 | |||||||||
| Other liabilities | 60,394 | 61,524 | |||||||||
| Total liabilities | 295,306 | 279,394 | |||||||||
| Stockholders’ equity: | |||||||||||
| Common stock: | |||||||||||
| Class A nonvoting common stock—Issued 51,261,487 shares, and outstanding 48,497,649 and 48,456,954 shares, respectively | 513 | 513 | |||||||||
| Class B voting common stock—Issued and outstanding, 3,538,628 shares | 35 | 35 | |||||||||
| Additional paid-in capital | 332,121 | 331,761 | |||||||||
| Retained earnings | 726,546 | 704,456 | |||||||||
| Treasury stock—2,763,838 and 2,804,533 shares, respectively of Class A nonvoting common stock, at cost | (109,146) | (107,216) | |||||||||
| Accumulated other comprehensive loss | (69,668) | (66,477) | |||||||||
| Total stockholders’ equity | 880,401 | 863,072 | |||||||||
| Total | $ | 1,175,707 | $ | 1,142,466 | |||||||
BRADY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited; Dollars in thousands)
| Three months ended October 31, | |||||||||||
| 2020 | 2019 | ||||||||||
| Operating activities: | |||||||||||
| Net income | $ | 33,481 | $ | 37,498 | |||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
| Depreciation and amortization | 5,635 | 5,634 | |||||||||
| Stock-based compensation expense | 3,574 | 3,618 | |||||||||
| Deferred income taxes | (1,175) | 1,009 | |||||||||
| Equity in losses of unconsolidated affiliate | 174 | — | |||||||||
| Other | (266) | 1,533 | |||||||||
| Changes in operating assets and liabilities: | |||||||||||
| Accounts receivable | (11,371) | (4,362) | |||||||||
| Inventories | 14,758 | 249 | |||||||||
| Prepaid expenses and other assets | (1,398) | (1,404) | |||||||||
| Accounts payable and accrued liabilities | 17,363 | (5,193) | |||||||||
| Income taxes | 2,063 | 266 | |||||||||
| Net cash provided by operating activities | 62,838 | 38,848 | |||||||||
| Investing activities: | |||||||||||
| Purchases of property, plant and equipment | (9,321) | (7,724) | |||||||||
| Other | 119 | 527 | |||||||||
| Net cash used in investing activities | (9,202) | (7,197) | |||||||||
| Financing activities: | |||||||||||
| Payment of dividends | (11,391) | (11,533) | |||||||||
| Proceeds from exercise of stock options | 160 | 3,411 | |||||||||
| Payments for employee taxes withheld from stock-based awards | (2,617) | (7,269) | |||||||||
| Purchase of treasury stock | (2,720) | — | |||||||||
| Other | 17 | 65 | |||||||||
| Net cash used in financing activities | (16,551) | (15,326) | |||||||||
| Effect of exchange rate changes on cash | 1,605 | (304) | |||||||||
| Net increase in cash and cash equivalents | 38,690 | 16,021 | |||||||||
| Cash and cash equivalents, beginning of period | 217,643 | 279,072 | |||||||||
| Cash and cash equivalents, end of period | $ | 256,333 | $ | 295,093 | |||||||
BRADY CORPORATION AND SUBSIDIARIES
SEGMENT INFORMATION
(Unaudited; Dollars in thousands)
| Three months ended October 31, | |||||||||||
| 2020 | 2019 | ||||||||||
| NET SALES | |||||||||||
| ID Solutions | $ | 198,192 | $ | 214,987 | |||||||
| Workplace Safety | 79,035 | 71,960 | |||||||||
| Total | $ | 277,227 | $ | 286,947 | |||||||
| SALES INFORMATION | |||||||||||
| ID Solutions | |||||||||||
| Organic | (8.4) | % | (0.2) | % | |||||||
| Currency | 0.6 | % | (1.2) | % | |||||||
| Total | (7.8) | % | (1.4) | % | |||||||
| Workplace Safety | |||||||||||
| Organic | 5.5 | % | (0.8) | % | |||||||
| Currency | 4.3 | % | (3.4) | % | |||||||
| Total | 9.8 | % | (4.2) | % | |||||||
| Total Company | |||||||||||
| Organic | (4.9) | % | (0.4) | % | |||||||
| Currency | 1.5 | % | (1.7) | % | |||||||
| Total | (3.4) | % | (2.1) | % | |||||||
| SEGMENT PROFIT | |||||||||||
| ID Solutions | $ | 40,279 | $ | 42,443 | |||||||
| Workplace Safety | 7,988 | 5,157 | |||||||||
| Total | $ | 48,267 | $ | 47,600 | |||||||
| SEGMENT PROFIT AS A PERCENT OF NET SALES | |||||||||||
| ID Solutions | 20.3 | % | 19.7 | % | |||||||
| Workplace Safety | 10.1 | % | 7.2 | % | |||||||
| Total | 17.4 | % | 16.6 | % | |||||||
| Three months ended October 31, | |||||||||||
| 2020 | 2019 | ||||||||||
| Total segment profit | $ | 48,267 | $ | 47,600 | |||||||
| Unallocated amounts: | |||||||||||
| Administrative costs | (6,079) | (6,709) | |||||||||
| Investment and other income | 155 | 1,380 | |||||||||
| Interest expense | (106) | (701) | |||||||||
| Income before income taxes and losses of unconsolidated affiliate | $ | 42,237 | $ | 41,570 | |||||||