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Brady Corporation Reports Fiscal 2020 Fourth Quarter Results

Brady Corporation
  • Income before income taxes and losses of unconsolidated affiliate was $34.9 million in the fourth quarter of fiscal 2020 compared to $47.1 million in the same quarter of the prior year. 

  • Diluted EPS was $0.53 in the fourth quarter of fiscal 2020 compared to $0.68 in the same quarter of the prior year. 

  • Sales for the quarter declined 14.7 percent.  Organic sales declined 13.7 percent and the impact of foreign currency translation decreased sales by 1.0 percent.

MILWAUKEE, Sept. 16, 2020 (GLOBE NEWSWIRE) -- Brady Corporation (NYSE: BRC) (“Brady” or “Company”), a world leader in identification solutions, today reported its financial results for its fiscal 2020 fourth quarter ended July 31, 2020.

Quarter Ended July 31, 2020 Financial Results:

Income before income taxes and losses of unconsolidated affiliate declined 26.0 percent to $34.9 million for the quarter ended July 31, 2020, compared to $47.1 million in the same quarter last year.

Net income for the quarter ended July 31, 2020 declined 24.4 percent to $27.7 million compared to $36.6 million in the same quarter last year.  Earnings per diluted Class A Nonvoting Common Share were $0.53 for the fourth quarter of fiscal 2020, compared to $0.68 in the same quarter last year.

Sales for the quarter ended July 31, 2020 declined 14.7 percent, which consisted of an organic sales decline of 13.7 percent and a decline of 1.0 percent from foreign currency translation.  Sales for the quarter ended July 31, 2020 were $251.7 million compared to $295.3 million in the same quarter last year.  By segment, sales declined 22.8 percent in Identification Solutions and increased 9.7 percent in Workplace Safety, which consisted of an organic sales decline of 21.7 percent in Identification Solutions and organic sales growth of 10.8 percent in Workplace Safety.

Year Ended July 31, 2020 Financial Results:

Income before income taxes and losses of unconsolidated affiliate declined 14.4 percent to $140.9 million for the year ended July 31, 2020, compared to $164.6 million for the year ended July 31, 2019.  Income before income taxes and losses of unconsolidated affiliate was reduced by non-cash impairment charges of $13.8 million for the year ended July 31, 2020.

Net income for the year ended July 31, 2020 declined 14.4 percent to $112.4 million compared to $131.3 million last year.  Earnings per diluted Class A Nonvoting Common Share were $2.11 for the year ended July 31, 2020, compared to $2.46 last year.  Diluted EPS was reduced by non-cash impairment charges of approximately $0.21 for the year ended July 31, 2020.

Sales for the year ended July 31, 2020 declined 6.8 percent, which consisted of an organic sales decline of 5.4 percent and a decline of 1.4 percent from foreign currency translation.  Fiscal 2020 sales were $1.08 billion compared to $1.16 billion last year.  By segment, sales declined 9.1 percent in Identification Solutions and declined 0.3 percent in Workplace Safety, which consisted of an organic sales decline of 8.0 percent in Identification Solutions and organic sales growth of 2.3 percent in Workplace Safety.

Commentary:

“We are more focused than ever on doing our part to serve the front-line workers and other essential companies with the products and services they need to help fight this global pandemic.  Our foremost focus has been on the safety of our employees and supporting the needs of our customers with the high-quality products and services that they have come to expect from Brady,” said Brady’s President and Chief Executive Officer, J. Michael Nauman.  “This quarter, we saw demand in our Identification Solutions business begin to improve in June and July from the lows experienced in April and May; while our Workplace Safety business had a strong quarter with organic sales increasing more than 10% compared to last year.  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.  We remain focused on investing in new products, building on our positive momentum, and executing sustainable efficiencies throughout Brady.  We believe that our ongoing investments in new product development combined with the much improved financial results in our Workplace Safety business and the improving sequential sales trends in our Identification Solutions business will make Brady an even stronger company when industrial end-market demand returns.”

“Brady is financially strong.  As of July 31, 2020, we had $217.6 million of cash and no outstanding debt,” said Brady’s Chief Financial Officer, Aaron Pearce.  “We generated $141.0 million of cash flow from operating activities this year, we invested $27.3 million in capital expenditures, we returned $45.8 million to our shareholders in the form of dividends, and we returned $64.5 million to our shareholders in the form of share buybacks.  Our strong cash generation and balance sheet allow us to continue to execute our capital allocation strategy which involves investing to grow our organic business, paying a strong dividend, buying back our shares in an opportunistic manner, and investing in acquisitions that are consistent with our strategies.  Brady’s strong balance sheet and cash generation positions us well for future financial success.”

A webcast regarding Brady’s fiscal 2020 fourth 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.

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

BRADY CORPORATION AND SUBSIDIARIES

 

 

 

 

 

 

 

CONSOLIDATED STATEMENTS OF INCOME

 

 

 

 

 

 

 

(Unaudited; Dollars in thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended July 31,

 

Year ended July 31,

 

 

2020

 

 

 

2019

 

 

 

2020

 

 

 

2019

 

Net sales

$

251,744

 

 

$

295,278

 

 

$

1,081,299

 

 

$

1,160,645

 

Cost of goods sold

 

133,238

 

 

 

148,698

 

 

 

552,734

 

 

 

581,967

 

Gross margin

 

118,506

 

 

 

146,580

 

 

 

528,565

 

 

 

578,678

 

Operating expenses:

 

 

 

 

 

 

 

Research and development

 

9,364

 

 

 

11,331

 

 

 

40,662

 

 

 

45,168

 

Selling, general and administrative

 

75,923

 

 

 

89,094

 

 

 

336,059

 

 

 

371,082

 

Impairment charges

 

 

 

 

 

 

 

13,821

 

 

 

 

Total operating expenses

 

85,287

 

 

 

100,425

 

 

 

390,542

 

 

 

416,250

 

 

 

 

 

 

 

 

 

Operating income

 

33,219

 

 

 

46,155

 

 

 

138,023

 

 

 

162,428

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

Investment and other income

 

1,827

 

 

 

1,621

 

 

 

5,079

 

 

 

5,046

 

Interest expense

 

(190

)

 

 

(693

)

 

 

(2,166

)

 

 

(2,830

)

 

 

 

 

 

 

 

 

Income before income taxes and losses of unconsolidated affiliate

 

34,856

 

 

 

47,083

 

 

 

140,936

 

 

 

164,644

 

 

 

 

 

 

 

 

 

Income tax expense

 

6,925

 

 

 

10,470

 

 

 

28,321

 

 

 

33,386

 

 

 

 

 

 

 

 

 

Income before losses of unconsolidated affiliate

 

27,931

 

 

 

36,613

 

 

 

112,615

 

 

 

131,258

 

Equity in losses of unconsolidated affiliate

 

(246

)

 

 

-

 

 

 

(246

)

 

 

-

 

 

 

 

 

 

 

 

 

Net income

$

27,685

 

 

$

36,613

 

 

$

112,369

 

 

$

131,258

 

 

 

 

 

 

 

 

 

Net income per Class A Nonvoting Common Share:

 

 

 

 

 

 

 

Basic

$

0.53

 

 

$

0.69

 

 

$

2.13

 

 

$

2.50

 

Diluted

$

0.53

 

 

$

0.68

 

 

$

2.11

 

 

$

2.46

 

Dividends

$

0.22

 

 

$

0.21

 

 

$

0.87

 

 

$

0.85

 

 

 

 

 

 

 

 

 

Net income per Class B Voting Common Share:

 

 

 

 

 

 

 

Basic

$

0.53

 

 

$

0.69

 

 

$

2.11

 

 

$

2.48

 

Diluted

$

0.53

 

 

$

0.68

 

 

$

2.10

 

 

$

2.45

 

Dividends

$

0.22

 

 

$

0.21

 

 

$

0.85

 

 

$

0.83

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

Basic

 

51,983

 

 

 

52,885

 

 

 

52,763

 

 

 

52,596

 

Diluted

 

52,389

 

 

 

53,647

 

 

 

53,231

 

 

 

53,323

 

 

 

 

 

 

 

 

 


BRADY CORPORATION AND SUBSIDIARIES

 

 

 

CONSOLIDATED BALANCE SHEETS

 

 

 

(Unaudited; Dollars in thousands)

 

 

 

 

 

 

 

 

July 31, 2020

 

July 31, 2019

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

217,643

 

 

$

279,072

 

Accounts receivable—net

 

146,181

 

 

 

158,114

 

Inventories

 

135,662

 

 

 

120,037

 

Prepaid expenses and other current assets

 

9,962

 

 

 

16,056

 

Total current assets

 

509,448

 

 

 

573,279

 

Property, plant and equipment—net

 

115,068

 

 

 

110,048

 

Goodwill

 

416,034

 

 

 

410,987

 

Other intangible assets

 

22,334

 

 

 

36,123

 

Deferred income taxes

 

8,845

 

 

 

7,298

 

Operating lease assets

 

41,899

 

 

 

 

Other assets

 

28,838

 

 

 

19,573

 

Total

$

1,142,466

 

 

$

1,157,308

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

62,547

 

 

$

64,810

 

Accrued compensation and benefits

 

41,546

 

 

 

62,509

 

Taxes, other than income taxes

 

8,057

 

 

 

8,107

 

Accrued income taxes

 

8,652

 

 

 

6,557

 

Current operating lease liabilities

 

15,304

 

 

 

 

Other current liabilities

 

49,782

 

 

 

49,796

 

Current maturities on long-term debt

 

 

 

 

50,166

 

Total current liabilities

 

185,888

 

 

 

241,945

 

Long-term operating lease liabilities

 

31,982

 

 

 

 

Other liabilities

 

61,524

 

 

 

64,589

 

Total liabilities

 

279,394

 

 

 

306,534

 

Stockholders’ equity:

 

 

 

Common stock:

 

 

 

Class A nonvoting common stock—Issued 51,261,487 shares, and outstanding 48,456,954 and 49,458,841 shares, respectively

 

513

 

 

 

513

 

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

 

35

 

 

 

35

 

Additional paid-in capital

 

331,761

 

 

 

329,969

 

Retained earnings

 

704,456

 

 

 

637,843

 

Treasury stock—2,804,533 and 1,802.646 shares, respectively, of Class A nonvoting common stock, at cost

 

(107,216

)

 

 

(46,332

)

Accumulated other comprehensive loss

 

(66,477

)

 

 

(71,254

)

Total stockholders’ equity

 

863,072

 

 

 

850,774

 

Total

$

1,142,466

 

 

$

1,157,308

 

 

 

 

 


BRADY CORPORATION AND SUBSIDIARIES

 

 

 

CONSOLIDATED STATEMENTS OF CASH FLOWS

 

 

 

(Unaudited; Dollars in thousands)

 

 

 

 

Year ended July 31,

 

 

2020

 

 

 

2019

 

Operating activities:

 

 

 

Net income

$

112,369

 

 

$

131,258

 

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

 

 

 

Depreciation and amortization

 

23,437

 

 

 

23,799

 

Stock-based compensation expense

 

8,843

 

 

 

12,092

 

Deferred income taxes

 

(764

)

 

 

7,825

 

Impairment charges

 

13,821

 

 

 

 

Equity in losses of unconsolidated affiliate

 

246

 

 

 

 

Other

 

2,611

 

 

 

2,347

 

Changes in operating assets and liabilities:

 

 

 

Accounts receivable

 

13,902

 

 

 

3,496

 

Inventories

 

(13,917

)

 

 

(9,922

)

Prepaid expenses and other assets

 

4,477

 

 

 

368

 

Accounts payable and accrued liabilities

 

(26,128

)

 

 

(11,903

)

Income taxes

 

2,080

 

 

 

2,851

 

Net cash provided by operating activities

 

140,977

 

 

 

162,211

 

 

 

 

 

Investing activities:

 

 

 

Purchases of property, plant and equipment

 

(27,277

)

 

 

(32,825

)

Purchase of equity method investment

 

(6,000

)

 

 

 

Other

 

(2,842

)

 

 

(1,638

)

Net cash used in investing activities

 

(36,119

)

 

 

(34,463

)

 

 

 

 

Financing activities:

 

 

 

Payment of dividends

 

(45,756

)

 

 

(44,732

)

Proceeds from exercise of stock options

 

5,511

 

 

 

25,658

 

Payments for employee taxes withheld from stock-based awards

 

(9,065

)

 

 

(5,651

)

Purchase of treasury stock

 

(64,514

)

 

 

(3,182

)

Proceeds from borrowing on credit facilities

 

20,697

 

 

 

13,637

 

Repayment of borrowing on credit facilities

 

(21,855

)

 

 

(13,568

)

Principal payments on debt

 

(48,672

)

 

 

 

Other

 

134

 

 

 

210

 

Net cash used in financing activities

 

(163,520

)

 

 

(27,628

)

 

 

 

 

Effect of exchange rate changes on cash and cash equivalents

 

(2,767

)

 

 

(2,475

)

 

 

 

 

Net (decrease) increase in cash and cash equivalents

 

(61,429

)

 

 

97,645

 

Cash and cash equivalents, beginning of period

 

279,072

 

 

 

181,427

 

 

 

 

 

Cash and cash equivalents, end of period

$

217,643

 

 

$

279,072

 

 

 

 

 

Supplemental disclosures:

 

 

 

Cash paid during the period for:

 

 

 

Interest

$

2,401

 

 

$

2,651

 

Income taxes

 

29,600

 

 

 

24,335

 

 

 

 

 


BRADY CORPORATION AND SUBSIDIARIES

 

 

 

 

 

 

 

SEGMENT INFORMATION

 

 

 

 

 

 

 

(Unaudited; Dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended July 31,

 

Year Ended July 31,

 

 

2020

 

 

 

2019

 

 

 

2020

 

 

 

2019

 

NET SALES

 

 

 

 

 

 

 

ID Solutions

$

171,189

 

 

$

221,817

 

 

$

784,707

 

 

$

863,100

 

Workplace Safety

 

80,555

 

 

 

73,461

 

 

 

296,592

 

 

 

297,545

 

Total

$

251,744

 

 

$

295,278

 

 

$

1,081,299

 

 

$

1,160,645

 

 

 

 

 

 

 

 

 

SALES INFORMATION

 

 

 

 

 

 

 

ID Solutions

 

 

 

 

 

 

 

Organic

 

(21.7

)%

 

 

3.3

%

 

 

(8.0

)%

 

 

4.1

%

Currency

 

(1.1

)%

 

 

(1.5

)%

 

 

(1.1

)%

 

 

(2.1

)%

Total

 

(22.8

)%

 

 

1.8

%

 

 

(9.1

)%

 

 

2.0

%

Workplace Safety

 

 

 

 

 

 

 

Organic

 

10.8

%

 

 

(2.6

)%

 

 

2.3

%

 

 

(0.7

)%

Currency

 

(1.1

)%

 

 

(3.3

)%

 

 

(2.6

)%

 

 

(3.7

)%

Divestiture

 

%

 

 

(1.9

)%

 

 

%

 

 

(4.8

)%

Total

 

9.7

%

 

 

(7.8

)%

 

 

(0.3

)%

 

 

(9.2

)%

Total Company

 

 

 

 

 

 

 

Organic

 

(13.7

)%

 

 

1.7

%

 

 

(5.4

)%

 

 

2.8

%

Currency

 

(1.0

)%

 

 

(1.9

)%

 

 

(1.4

)%

 

 

(2.6

)%

Divestiture

 

%

 

 

(0.5

)%

 

 

%

 

 

(1.3

)%

Total

 

(14.7

)%

 

 

(0.7

)%

 

 

(6.8

)%

 

 

(1.1

)%

 

 

 

 

 

 

 

 

SEGMENT PROFIT

 

 

 

 

 

 

 

ID Solutions

$

31,140

 

 

$

45,642

 

 

$

150,639

 

 

$

164,953

 

Workplace Safety

 

6,028

 

 

 

6,724

 

 

 

21,019

 

 

 

23,025

 

Total

$

37,168

 

 

$

52,366

 

 

$

171,658

 

 

$

187,978

 

SEGMENT PROFIT AS A PERCENT OF NET SALES

 

 

 

 

 

 

 

ID Solutions

 

18.2

%

 

 

20.6

%

 

 

19.2

%

 

 

19.1

%

Workplace Safety

 

7.5

%

 

 

9.2

%

 

 

7.1

%

 

 

7.7

%

Total

 

14.8

%

 

 

17.7

%

 

 

15.9

%

 

 

16.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended July 31,

 

Year Ended July 31,

 

 

2020

 

 

 

2019

 

 

 

2020

 

 

 

2019

 

Total segment profit

$

37,168

 

 

$

52,366

 

 

$

171,658

 

 

$

187,978

 

Unallocated amounts:

 

 

 

 

 

 

 

Administrative costs

 

(3,949

)

 

 

(6,211

)

 

 

(19,814

)

 

 

(25,550

)

Impairment charges

 

-

 

 

 

-

 

 

 

(13,821

)

 

 

-

 

Investment and other income

 

1,827

 

 

 

1,621

 

 

 

5,079

 

 

 

5,046

 

Interest expense

 

(190

)

 

 

(693

)

 

 

(2,166

)

 

 

(2,830

)

Income before income taxes and losses of unconsolidated affiliate

$

34,856

 

 

$

47,083

 

 

$

140,936

 

 

$

164,644