• Brady Corporation Reports Record EPS in its Fiscal 2022 Fourth Quarter and Announces its Fiscal 2023 EPS Guidance

    ソース: Nasdaq GlobeNewswire / 01 9 2022 06:00:44   America/Chicago

    • Sales for the quarter increased 5.8 percent. Organic sales increased 9.0 percent.
    • Gross profit margin increased to 50.4 percent in the fourth quarter of F’22 compared to 48.2 percent in the fourth quarter of F’21.
    • Diluted EPS increased 52.8 percent to an all-time high of $0.81 in the fourth quarter of fiscal 2022 compared to $0.53 in the same quarter of the prior year. Diluted EPS Excluding Certain Items* increased 16.0 percent to an all-time record high of $0.87 in the fourth quarter of fiscal 2022 compared to $0.75 in the same quarter of the prior year.
    • During the quarter and year ended July 31, 2022, we returned $35.5 million and $155.2 million, respectively, to our shareholders in the form of dividends and share repurchases.
    • Diluted EPS guidance for the year ending July 31, 2023 was announced at a range of $3.13 to $3.43 on a GAAP basis, and a range of $3.30 to $3.60 on a non-GAAP basis. This GAAP EPS guidance range is an increase of 7.9 percent to 18.3 percent compared to GAAP EPS of $2.90 for the year ended July 31, 2022.

    MILWAUKEE, Sept. 01, 2022 (GLOBE NEWSWIRE) -- Brady Corporation (NYSE: BRC) (“Brady” or “Company”), a world leader in identification solutions, today reported its financial results for its fiscal 2022 fourth quarter ended July 31, 2022.

    Quarter Ended July 31, 2022 Financial Results:
    Sales for the quarter ended July 31, 2022 increased 5.8 percent, which consisted of an organic sales increase of 9.0 percent, an increase of 2.5 percent from acquisitions and a decrease of 5.7 percent from foreign currency translation. Sales for the quarter ended July 31, 2022 were $324.0 million compared to $306.1 million in the same quarter last year. By segment, sales increased 9.6 percent in Identification Solutions and decreased 5.7 percent in Workplace Safety, which consisted of an organic sales increase of 10.8 percent in Identification Solutions and an organic sales increase of 3.3 percent in Workplace Safety.

    Income before income taxes and losses of unconsolidated affiliate increased 29.7 percent to $54.0 million for the quarter ended July 31, 2022, compared to $41.6 million in the same quarter last year. Income Before Income Taxes Excluding Certain Items* for the quarter ended July 31, 2022, which was adjusted for amortization expense of $3.7 million, was $57.7 million, an increase of 19.2 percent compared to the fourth quarter of last year. Income Before Income Taxes Excluding Certain Items* for the quarter ended July 31, 2021, which was adjusted for non-recurring acquisition-related charges of $3.7 million and amortization expense of $3.0 million, was $48.4 million.

    Net income for the quarter ended July 31, 2022 was $41.1 million compared to $28.0 million in the same quarter last year. Earnings per diluted Class A Nonvoting Common Share were $0.81 for the fourth quarter of fiscal 2022, compared to $0.53 in the same quarter last year. Net Income Excluding Certain Items* for the quarter ended July 31, 2022 was $43.9 million and Diluted EPS Excluding Certain Items* for the quarter ended July 31, 2022 was $0.87. Net Income Excluding Certain Items* for the quarter ended July 31, 2021 was $39.3 million, and Diluted EPS Excluding Certain Items* for the quarter ended July 31, 2021 was $0.75.

    Year Ended July 31, 2022 Financial Results:
    Sales for the year ended July 31, 2022 increased 13.7 percent, which consisted of an organic sales increase of 9.4 percent, an increase of 6.9 percent from acquisitions and a decrease of 2.6 percent from foreign currency translation. Sales for the year ended July 31, 2022 were $1.30 billion compared to $1.14 billion in the same period last year. By segment, sales increased 20.1 percent in Identification Solutions and decreased 4.0 percent in Workplace Safety, which consisted of an organic sales increase of 12.8 percent in Identification Solutions and flat organic sales in Workplace Safety.

    Income before income taxes and losses of unconsolidated affiliate increased 12.3 percent to $192.0 million for the year ended July 31, 2022, compared to $171.0 million in the same period last year. Income Before Income Taxes Excluding Certain Items* for the year ended July 31, 2022 was $208.8 million, an increase of 14.8 percent compared to the same period of last year. Income Before Income Taxes Excluding Certain Items* for the year ended July 31, 2022 was adjusted for non-recurring charges primarily to streamline the cost structure of our Workplace Safety business of $1.8 million and amortization expense of $15.0 million. Income Before Income Taxes Excluding Certain Items* for the prior year ended July 31, 2021, which was adjusted for non-recurring acquisition-related charges of $3.7 million and amortization expense of $7.1 million, was $181.8 million.

    Net income for the year ended July 31, 2022 was $150.0 million compared to $129.7 million in the same period last year. Earnings per diluted Class A Nonvoting Common Share were $2.90 for the year ended July 31, 2022, compared to $2.47 in the same period last year. Net Income Excluding Certain Items* for the year ended July 31, 2022 was $162.7 million and Diluted EPS Excluding Certain Items* for the year ended July 31, 2022 was $3.15. Net Income Excluding Certain Items* for the year ended July 31, 2021 was $144.0 million, and Diluted EPS Excluding Certain Items* for the year ended July 31, 2021 was $2.75.

    Commentary:
    “This quarter, we generated an all-time record high EPS, capping off Brady’s best earnings year ever. For the full year ended July 31, 2022, we earned GAAP EPS of $2.90, which was a 17.4 percent increase over the previous year, which was also a record,” said Brady’s President and Chief Executive Officer, Russell R. Shaller. “Our Identification Solutions segment is performing very well, with strong organic sales growth and a robust pipeline of new products, including products that position us well to help our customers become more efficient, thus taking advantage of the global trend towards increased factory automation. In our Workplace Safety segment, the actions we took to simplify our product offering, to streamline our cost structure, and to improve our price competitiveness resulted in another strong quarter. Segment profit increased by more than 65 percent in our Workplace Safety segment this quarter. While we recognize that macro-economic challenges are clouding the global economic outlook, we are entering fiscal 2023 with positive momentum, a highly-engaged workforce, and a strong balance sheet, which we believe position us for future success.”

    “Not only did we have total revenue growth of 13.7 percent and record EPS this year, we also used our strong balance sheet and cash generation to return funds to our shareholders in the form of share buybacks and increasing dividends. This year, we repurchased a total of 2.3 million shares for $109.2 million and we returned another $45.9 million to our shareholders in the form of dividends,” said Brady’s Chief Financial Officer, Aaron Pearce. “Even after returning more than $155 million to our shareholders this year, we were still in a net cash position of $19 million at July 31, 2022. We believe that we are well-positioned for the future, as we have built up inventory levels to ensure a steady supply of products to our customers and we have a solid balance sheet, which provides opportunities to drive shareholder value.”

    Fiscal 2023 Guidance:
    Brady expects GAAP earnings per diluted Class A Nonvoting Common Share to range from $3.13 to $3.43, which would be an increase of 7.9 percent to 18.3 percent over the GAAP earnings per diluted Class A nonvoting Common Share of $2.90 for the year ended July 31, 2022.

    Brady also expects Diluted EPS Excluding Certain Items* to range from $3.30 to $3.60 for the year ending July 31, 2023, which would be an increase of 4.8 percent to 14.3 percent over Diluted EPS Excluding Certain Items* of $3.15 for the year ended July 31, 2022. Excluded from this Diluted EPS Excluding Certain Items* guidance is expected amortization expense equating to $0.17 per share for the year ending July 31, 2023.

    Included in our fiscal 2023 guidance are a full-year income tax rate of approximately 20 percent and depreciation and amortization expense ranging from $32 million to $34 million. Capital expenditures are expected to approximate $32 million, which is inclusive of facility construction costs of approximately $10 million. Our fiscal 2023 guidance is based on foreign currency exchange rates as of July 31, 2022 and assumes continued economic growth.

    A webcast regarding Brady’s fiscal 2022 fourth quarter and full year 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, 2022, employed approximately 5,700 people in its worldwide businesses. Brady’s fiscal 2022 sales were approximately $1.30 billion. Brady stock trades on the New York Stock Exchange under the symbol BRC. More information is available on the Internet at www.bradyid.com.

    * Income Before Income Taxes Excluding Certain Items, Net Income Excluding Certain Items, and Diluted EPS Excluding Certain Items are non-GAAP measures. See appendix for more information on these measures, including reconciliations to the most directly comparable GAAP measures.

    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: increased cost of raw materials, labor and freight as well as material shortages and supply chain disruptions; 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; our ability to develop technologically advanced products that meet customer demands; Brady’s ability to identify, integrate, and grow acquired companies, and to manage contingent liabilities from divested businesses; difficulties in protecting our websites, networks, and systems against security breaches; risks associated with the loss of key employees; extensive regulations by U.S. and non-U.S. governmental and self-regulatory entities; litigation, including product liability claims; foreign currency fluctuations; potential write-offs of 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 crises and government responses thereto 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, 2022.

    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,
      2022   2021   2022   2021 
    Net sales$323,981  $306,130  $1,302,062  $1,144,698 
    Cost of goods sold 160,805   158,481   670,510   583,252 
    Gross margin 163,176   147,649   631,552   561,446 
    Operating expenses:       
    Research and development 15,753   13,167   58,548   44,551 
    Selling, general and administrative 94,507   93,680   379,992   349,768 
    Total operating expenses 110,260   106,847   438,540   394,319 
            
    Operating income 52,916   40,802   193,012   167,127 
            
    Other income (expense):       
    Investment and other income 1,587   961   244   4,333 
    Interest expense (513)  (149)  (1,276)  (437)
            
    Income before income taxes and losses of unconsolidated affiliate 53,990   41,614   191,980   171,023 
            
    Income tax expense 12,926   8,593   42,001   35,610 
            
    Income before losses of unconsolidated affiliate 41,064   33,021   149,979   135,413 
    Equity in losses of unconsolidated affiliate    (4,994)     (5,754)
            
    Net income$41,064  $28,027  $149,979  $129,659 
            
    Net income per Class A Nonvoting Common Share:       
    Basic$0.82  $0.54  $2.92  $2.49 
    Diluted$0.81  $0.53  $2.90  $2.47 
            
    Net income per Class B Voting Common Share:       
    Basic$0.82  $0.54  $2.91  $2.48 
    Diluted$0.81  $0.53  $2.89  $2.46 
            
    Weighted average common shares outstanding:       
    Basic 50,185   52,065   51,321   52,039 
    Diluted 50,437   52,611   51,651   52,409 



    BRADY CORPORATION AND SUBSIDIARIES   
    CONSOLIDATED BALANCE SHEETS   
    (Dollars in thousands)   
        
     July 31, 2022 July 31, 2021
        
    ASSETS   
    Current assets:   
    Cash and cash equivalents$114,069  $147,335 
    Accounts receivable, net of allowance for credit losses of $7,355 and $7,306, respectively 183,233   170,579 
    Inventories 190,023   136,107 
    Prepaid expenses and other current assets 10,743   11,083 
    Total current assets 498,068   465,104 
    Property, plant and equipment—net 139,511   121,741 
    Goodwill 586,832   614,137 
    Other intangible assets 74,028   92,334 
    Deferred income taxes 15,881   16,343 
    Operating lease assets 31,293   41,880 
    Other assets 21,719   26,217 
    Total$1,367,332  $1,377,756 
    LIABILITIES AND STOCKHOLDERS’ EQUITY   
    Current liabilities:   
    Accounts payable$81,116  $82,152 
    Accrued compensation and benefits 76,764   81,173 
    Taxes, other than income taxes 12,539   13,054 
    Accrued income taxes 8,294   3,915 
    Current operating lease liabilities 15,003   17,667 
    Other current liabilities 61,458   59,623 
    Total current liabilities 255,174   257,584 
    Long-term debt 95,000   38,000 
    Long-term operating lease liabilities 19,143   28,347 
    Other liabilities 86,717   90,797 
    Total liabilities 456,034   414,728 
    Stockholders’ equity:   
    Common stock:   
    Class A nonvoting common stock—Issued 51,261,487 shares, and outstanding
    46,370,708 and 48,528,245 shares, respectively
     513   513 
    Class B voting common stock—Issued and outstanding, 3,538,628 shares 35   35 
    Additional paid-in capital 345,266   339,125 
    Retained earnings 892,417   788,369 
    Treasury stock—4,890,779 and 2,733,242 shares, respectively, of Class A nonvoting common stock, at cost (217,856)  (109,061)
    Accumulated other comprehensive loss (109,077)  (55,953)
    Total stockholders’ equity 911,298   963,028 
    Total$1,367,332  $1,377,756 



    BRADY CORPORATION AND SUBSIDIARIES   
    CONSOLIDATED STATEMENTS OF CASH FLOWS   
    (Unaudited; Dollars in thousands)   
     Year ended July 31,
      2022   2021 
    Operating activities:   
    Net income$149,979  $129,659 
    Adjustments to reconcile net income to net cash provided by operating activities:   
    Depreciation and amortization 34,182   25,483 
    Stock-based compensation expense 10,504   10,098 
    Deferred income taxes (1,645)  (8,965)
    Equity in losses of unconsolidated affiliate    5,754 
    Other 1,197   (831)
        Changes in operating assets and liabilities (net of effects of business acquisitions):   
        Accounts receivable (25,330)  (12,614)
        Inventories (62,907)  7,298 
        Prepaid expenses and other assets 807   (4,498)
        Accounts payable and accrued liabilities 6,826   58,283 
        Income taxes 4,836   (4,002)
                Net cash provided by operating activities 118,449   205,665 
        
    Investing activities:   
    Purchases of property, plant and equipment (43,138)  (27,189)
    Acquisition of businesses, net of cash acquired    (243,983)
    Other 67   2,580 
                Net cash used in investing activities (43,071)  (268,592)
        
    Financing activities:   
    Payment of dividends (45,931)  (45,746)
    Proceeds from exercise of stock options 1,082   1,765 
    Payments for employee taxes withheld from stock-based awards (5,127)  (2,783)
    Purchase of treasury stock (109,229)  (3,593)
    Proceeds from borrowing on credit facilities 243,716   101,957 
    Repayment of borrowing on credit facilities (186,716)  (63,957)
    Other 116   33 
                Net cash used in financing activities (102,089)  (12,324)
        
    Effect of exchange rate changes on cash (6,555)  4,943 
        
    Net decrease in cash and cash equivalents (33,266)  (70,308)
    Cash and cash equivalents, beginning of period 147,335   217,643 
        
    Cash and cash equivalents, end of period$114,069  $147,335 



    BRADY CORPORATION AND SUBSIDIARIES       
    SEGMENT INFORMATION       
    (Unaudited; Dollars in thousands)       
            
     Three months ended July 31, Year ended July 31,
      2022   2021   2022   2021 
    NET SALES       
    ID Solutions$253,156  $231,024  $1,010,883  $841,508 
    Workplace Safety 70,825   75,106   291,179   303,190 
    Total$323,981  $306,130  $1,302,062  $1,144,698 
            
    SALES INFORMATION       
    ID Solutions       
    Organic 10.8%  24.5%  12.8%  3.7%
    Acquisition 3.3%  6.9%  9.4%  1.5%
    Currency (4.5)%  3.6%  (2.1)%  2.0%
    Total 9.6%  35.0%  20.1%  7.2%
    Workplace Safety       
    Organic 3.3%  (12.7)%  0.0%  (3.8)%
    Currency (9.0)%  5.9%  (4.0)%  6.0%
    Total (5.7)%  (6.8)%  (4.0)%  2.2%
    Total Company       
    Organic 9.0%  12.6%  9.4%  1.6%
    Acquisition 2.5%  4.7%  6.9%  1.1%
    Currency (5.7)%  4.3%  (2.6)%  3.2%
    Total 5.8%  21.6%  13.7%  5.9%
            
    SEGMENT PROFIT       
    ID Solutions$50,218  $42,420  $197,125  $169,238 
    Workplace Safety 9,323   5,647   23,240   22,754 
    Total$59,541  $48,067  $220,365  $191,992 
    SEGMENT PROFIT AS A PERCENT OF NET SALES       
    ID Solutions 19.8%  18.4%  19.5%  20.1%
    Workplace Safety 13.2%  7.5%  8.0%  7.5%
    Total 18.4%  15.7%  16.9%  16.8%
            
            
     Three months ended July 31, Year ended July 31,
      2022   2021   2022   2021 
    Total segment profit$59,541  $48,067  $220,365  $191,992 
    Unallocated amounts:       
    Administrative costs (6,625)  (7,265)  (27,353)  (24,865)
    Investment and other income 1,587   961   244   4,333 
    Interest expense (513)  (149)  (1,276)  (437)
    Income before income taxes and losses of unconsolidated affiliate$53,990  $41,614  $191,980  $171,023 



    GAAP to NON-GAAP MEASURES
    (Unaudited; 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.
                   
                   
    Income Before Income Taxes Excluding Certain Items:
    Brady is presenting the non-GAAP measure, "Income Before Income Taxes Excluding Certain Items." This is not a calculation based upon GAAP. The amounts included in this non-GAAP measure are derived from amounts included in the Consolidated Financial Statements and supporting footnote disclosures. We do not view these items to be part of our ongoing results. We believe this profit measure provides an important perspective of underlying business trends and results and provides a more comparable measure from year to year. The table below provides a reconciliation of the GAAP measure of Income before income taxes and losses of unconsolidated affiliate to the non-GAAP measure of Income Before Income Taxes Excluding Certain Items:
                   
                   
                   
      Three months ended July 31, Year ended July 31,
       2022  2021   2022  2021 
    Income before income taxes and losses of unconsolidated affiliate (GAAP measure)$53,990 $41,614  $191,980 $171,023 
     Amortization expense 3,675  3,021   14,966  7,077 
     Other non-routine charges -  -   1,841  - 
     Non-recurring acquisition transaction fees and other expenses -  3,742   -  3,742 
    Income Before Income Taxes Excluding Certain Items (non-GAAP measure)$ 57,665 $ 48,377  $ 208,787 $ 181,842 
                   
                   
    Income Tax Expense Excluding Certain Items:
    Brady is presenting the non-GAAP measure, "Income Tax Expense Excluding Certain Items." This is not a calculation based upon GAAP. The amounts included in this non-GAAP measure are derived from amounts included in the Consolidated Financial Statements and supporting footnote disclosures. We do not view these items to be part of our ongoing results. We believe this measure provides an important perspective of underlying business trends and results and provides a more comparable measure from year to year. The table below provides a reconciliation of the GAAP measure of Income tax expense to the non-GAAP measure of Income Tax Expense Excluding Certain Items:
                   
                   
                   
      Three months ended July 31, Year ended July 31,
       2022  2021   2022  2021 
    Income tax expense (GAAP measure)$12,926 $8,593  $42,001 $35,610 
     Amortization expense 873  720   3,545  1,734 
     Other non-routine charges -  -   496  - 
     Non-recurring acquisition transaction fees and other expenses -  689   -  689 
     Acquisition-related tax charges -  (942)  -  (942)
    Income Tax Expense Excluding Certain Items (non-GAAP measure)$ 13,799 $ 9,060  $ 46,042 $ 37,091 
                   
                   
    Net Income Excluding Certain Items:
    Brady is presenting the non-GAAP measure, "Net Income Excluding Certain Items." This is not a calculation based upon GAAP. The amounts included in this non-GAAP measure are derived from amounts included in the Consolidated Financial Statements and supporting footnote disclosures. We do not view these items to be part of our ongoing results. We believe this measure provides an important perspective of underlying business trends and results and provides a more comparable measure from year to year. The table below provides a reconciliation of the GAAP measure of Net income to the non-GAAP measure of Net Income Excluding Certain Items:
                   
                   
                   
      Three months ended July 31, Year ended July 31,
       2022  2021   2022  2021 
    Net income (GAAP measure)$41,064 $28,027  $149,979 $129,659 
     Amortization expense 2,802  2,301   11,421  5,343 
     Other non-routine charges -  -   1,345  - 
     Non-recurring acquisition transaction fees and other expenses -  3,053   -  3,053 
     Acquisition-related tax charges -  942   -  942 
     Other-than-temporary impairment of unconsolidated affiliate -  4,994   -  4,994 
    Net Income Excluding Certain Items (non-GAAP measure)$ 43,866 $ 39,317  $ 162,745 $ 143,991 
                   
                   
    Diluted EPS Excluding Certain Items:              
    Brady is presenting the non-GAAP measure, "Diluted EPS Excluding Certain Items." This is not a calculation based upon GAAP. The amounts included in this non-GAAP measure are derived from amounts included in the Consolidated Financial Statements. We do not view these items to be part of our ongoing results. We believe this measure provides an important perspective of underlying business trends and results and provides a more comparable measure from year to year. The table below provides a reconciliation of the GAAP measure of Net income per Class A Nonvoting Common Share to the non-GAAP measure of Diluted EPS Excluding Certain Items:
                   
                   
                   
      Three months ended July 31, Year ended July 31,
       2022  2021   2022  2021 
    Net income per Class A Nonvoting Common Share (GAAP measure)$0.81 $0.53  $2.90 $2.47 
     Amortization expense 0.06  0.04   0.22  0.10 
     Other non-routine charges -  -   0.03  - 
     Non-recurring acquisition transaction fees and other expenses -  0.06  $-  0.06 
     Acquisition-related tax charges -  0.02  $-  0.02 
     Other-than-temporary impairment of unconsolidated affiliate -  0.09  $-  0.10 
    Diluted EPS Excluding Certain Items (non-GAAP measure)$ 0.87 $ 0.75  $ 3.15 $ 2.75 
                   
                   
                   
    Diluted EPS Excluding Certain Items Guidance:       Fiscal 2023 Expectations
              Low  High 
    Earnings per diluted Class A Common Share (GAAP measure)       $3.13 $3.43 
     Amortization expense        0.17  0.17 
    Diluted EPS Excluding Certain Items (non-GAAP measure)       $ 3.30 $ 3.60 

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