GlobeNewswire Inc | Feb 18, 2021 07:00AM EST

February 18, 2021

-- Income before income taxes and losses of unconsolidated affiliate was $39.4 million in the second quarter of fiscal 2021 compared to $42.4 million in the same quarter of the prior year. -- Diluted EPS was $0.59 in the second quarter of fiscal 2021 compared to $0.62 in the same quarter of the prior year. -- Sales for the quarter declined 3.9 percent. Organic sales declined 6.3 percent and the impact of foreign currency translation increased sales by 2.4 percent. -- Net cash provided by operating activities was $36.1 million in the second quarter of fiscal 2021 compared to $14.3 million in the second quarter of the prior year. -- Diluted EPS guidance for the full year ending July 31, 2021 announced at a range of $2.48 to $2.58, which equates to EPS guidance for the second half of fiscal 2021 of $1.25 to $1.35.

MILWAUKEE, Feb. 18, 2021 (GLOBE NEWSWIRE) -- Brady Corporation (NYSE: BRC) (Brady or Company), a world leader in identification solutions, today reported its financial results for its fiscal 2021 second quarter ended January 31, 2021.

Quarter Ended January 31, 2021 Financial Results:

Income before income taxes and losses of unconsolidated affiliate decreased 7.0 percent to $39.4 million for the quarter ended January 31, 2021, compared to $42.4 million in the same quarter last year.

Net income for the quarter ended January 31, 2021 declined 8.0 percent to $30.9 million compared to $33.6 million in the same quarter last year. Earnings per diluted Class A Nonvoting Common Share were $0.59 for the second quarter of fiscal 2021, compared to $0.62 in the same quarter last year.

Sales for the quarter ended January 31, 2021 declined 3.9 percent, which consisted of an organic sales decline of 6.3 percent and an increase of 2.4 percent from foreign currency translation. Sales for the quarter ended January 31, 2021 were $265.8 million compared to $276.7 million in the same quarter last year. By segment, sales declined 5.4 percent in Identification Solutions and increased 0.4 percent in Workplace Safety, which consisted of an organic sales decline of 6.9 percent in Identification Solutions and an organic sales decline of 4.8 percent in Workplace Safety.

Six-Month Period Ended January 31, 2021 Financial Results:

Income before income taxes and losses of unconsolidated affiliate decreased 2.7 percent to $81.6 million for the six-month period ended January 31, 2021, compared to $83.9 million for the same period last year.

Net income for the six-month period ended January 31, 2021 declined 9.4 percent to $64.3 million compared to $71.1 million for the same period last year. Earnings per diluted Class A Nonvoting Common Share were $1.23 for the six-month period ended January 31, 2021, compared to $1.32 for the same period last year. Net income and earnings per diluted Class A Nonvoting Common Share for the six-month period ended January 31, 2020 were impacted by a reduced income tax rate of 15.3 percent primarily due to a favorable tax audit settlement and tax benefits from equity-based compensation.

Sales for the six-month period ended January 31, 2021 declined 3.6 percent, which consisted of an organic sales decline of 5.6 percent and an increase of 2.0 percent from foreign currency translation. Sales for the six months ended January 31, 2021 were $543.1 million compared to $563.6 million in the same period last year. By segment, sales declined 6.6 percent in Identification Solutions and increased 5.2 percent in Workplace Safety, which consisted of an organic sales decline of 7.6 percent in Identification Solutions and organic sales growth of 0.4 percent in Workplace Safety.

Commentary:

Our operations are running globally as we continue to do our part to supply products to first responders, healthcare providers, transportation, food processing and many other critical industries, said Bradys President and Chief Executive Officer, J. Michael Nauman. Our outlook has improved and to supplement organic sales growth, we are investing in sales, marketing and new product development that will help accelerate growth in the back half of this fiscal year and into the future. We are also actively investigating acquisitions that complement our strategic growth initiatives. Brady is in a strong financial position and we are using this strong financial position to set ourselves up for strong growth as we exit from the pandemic.

Brady continues to generate strong cash flow and has a very strong balance sheet. As of January 31, 2021, we had $277.6 million of cash on hand and no outstanding debt, said Bradys Chief Financial Officer, Aaron Pearce. We generated $36.1 million of cash flow from operating activities this quarter, which was an increase of 153 percent compared to last years second quarter. Positively impacting our cash flow this quarter were benefits from improved working capital management and a reduction in incentive-based compensation payments when compared to the second quarter of last year. This quarter, we also returned $12.3 million to our shareholders in the form of dividends and share buybacks. Although the economy is still challenged, we do expect the general trend of improving economic conditions to continue over the next several quarters. Regardless of what happens with the macro economy, Bradys strong balance sheet and cash generation position us well for future financial success.

Fiscal 2021 Guidance:

The Company expects earnings per diluted Class A Nonvoting Common Share to range from $2.48 to $2.58 for the full fiscal year ending July 31, 2021. This equates to diluted earnings per share in the range of $1.25 to $1.35 in the second half of the fiscal year ending July 31, 2021. The Company also expects organic sales growth to be in the mid-single digits in the second half of fiscal 2021. This guidance is based on foreign currency exchange rates as of January 31, 2021 and assumes a continued economic recovery.

A webcast regarding Bradys fiscal 2021 second 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. Bradys 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. Bradys 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.bradyid.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 Bradys 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; Bradys 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; Bradys ability to properly identify, integrate, and grow acquired companies; litigation, including product liability claims; foreign currency fluctuations; potential write-offs of Bradys 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 Bradys 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 Bradys Form 10-K for the year ended July 31, 2020 and subsequent Form 10-Q filings.

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 SUBSIDIARIESCONSOLIDATED STATEMENTS OF INCOME(Unaudited; Dollars inthousands, except per share data) Three months ended Six months ended January January 31, 31, 2021 2020 2021 2020 Net sales $ 265,838 $ 276,665 $ 543,065 $ 563,612 Cost of goods sold 136,316 137,538 278,115 283,080 Gross margin 129,522 139,127 264,950 280,532 Operating expenses: Research and 9,876 10,517 20,079 21,484 developmentSelling, general and 82,234 87,366 165,271 176,913 administrativeTotal operating 92,110 97,883 185,350 198,397 expenses Operating income 37,412 41,244 79,600 82,135 Other income (expense): Investment and other 2,036 1,760 2,191 3,140 incomeInterest expense (51 ) (647 ) (157 ) (1,348 ) Income before incometaxes and losses of 39,397 42,357 81,634 83,927 unconsolidatedaffiliate Income tax expense 8,206 8,804 16,788 12,876 Income before losses ofunconsolidated 31,191 33,553 64,846 71,051 affiliateEquity in losses ofunconsolidated (331 ) ? (505 ) ? affiliate Net income $ 30,860 $ 33,553 $ 64,341 $ 71,051 Net income per ClassA Nonvoting Common Share:Basic $ 0.59 $ 0.63 $ 1.24 $ 1.33 Diluted $ 0.59 $ 0.62 $ 1.23 $ 1.32 Dividends $ 0.22 $ 0.22 $ 0.44 $ 0.44 Net income per Class B Voting Common Share:Basic $ 0.59 $ 0.63 $ 1.22 $ 1.32 Diluted $ 0.59 $ 0.62 $ 1.21 $ 1.31 Dividends $ 0.22 $ 0.22 $ 0.42 $ 0.42 Weighted average common shares outstanding:Basic 52,018 53,320 52,020 53,232 Diluted 52,282 53,827 52,288 53,781

BRADY CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Dollars in thousands) January 31, July 31, 2020 2021 (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 277,588 $ 217,643 Accounts receivable, net of allowance for credit 154,052 146,181 losses of $7,450 and $7,157, respectivelyInventories 122,922 135,662 Prepaid expenses and other current assets 12,774 9,962 Total current assets 567,336 509,448 Property, plant and equipment?net 122,088 115,068 Goodwill 420,726 416,034 Other intangible assets 19,809 22,334 Deferred income taxes 8,261 8,845 Operating lease assets 38,849 41,899 Other assets 30,813 28,838 Total $ 1,207,882 $ 1,142,466 LIABILITIES AND STOCKHOLDERS? EQUITY Current liabilities: Accounts payable $ 67,483 $ 62,547 Accrued compensation and benefits 52,098 41,546 Taxes, other than income taxes 8,518 8,057 Accrued income taxes 9,393 8,652 Current operating lease liabilities 16,534 15,304 Other current liabilities 47,518 49,782 Total current liabilities 201,544 185,888 Long-term operating lease liabilities 27,134 31,982 Other liabilities 59,869 61,524 Total liabilities 288,547 279,394 Stockholders? equity: Common stock: ClassA nonvoting common stock?Issued 51,261,487shares, and outstanding 48,486,758 and 48,456,954 513 513 shares, respectivelyClass B voting common stock?Issued and 35 35 outstanding, 3,538,628 sharesAdditional paid-in capital 334,077 331,761 Retained earnings 745,960 704,456 Treasury stock?2,774,729 and 2,804,533 shares,respectively, of ClassA nonvoting common stock, (109,789 ) (107,216 )at costAccumulated other comprehensive loss (51,461 ) (66,477 )Total stockholders? equity 919,335 863,072 Total $ 1,207,882 $ 1,142,466

BRADY CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited; Dollars in thousands) Six months ended January 31, 2021 2020 Operating activities: Net income $ 64,341 $ 71,051 Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization 11,421 11,672 Stock-based compensation expense 5,471 5,384 Deferred income taxes (3,866 ) 1,272 Equity in losses of unconsolidated affiliate 505 ? Other 121 1,664 Changes in operating assets and liabilities: Accounts receivable (4,157 ) 6,209 Inventories 15,018 (1,311 ) Prepaid expenses and other assets (2,436 ) (2,621 ) Accounts payable and accrued liabilities 11,990 (39,777 ) Income taxes 481 (436 ) Net cash provided by operating activities 98,889 53,107 Investing activities: Purchases of property, plant and equipment (14,511 ) (13,100 ) Other (1,881 ) (3,406 ) Net cash used in investing activities (16,392 ) (16,506 ) Financing activities: Payment of dividends (22,837 ) (23,136 ) Proceeds from exercise of stock options 471 4,686 Payments for employee taxes withheld from (2,638 ) (7,733 ) stock-based awardsPurchase of treasury stock (3,593 ) ? Other (231 ) 134 Net cash used in financing activities (28,828 ) (26,049 ) Effect of exchange rate changes on cash 6,276 179 Net increase in cash and cash equivalents 59,945 10,731 Cash and cash equivalents, beginning of period 217,643 279,072 Cash and cash equivalents, end of period $ 277,588 $ 289,803

BRADYCORPORATION ANDSUBSIDIARIESSEGMENT INFORMATION(Unaudited;Dollars in thousands) Three months ended January 31, Six months ended January 31, 2021 2020 2021 2020 NET SALES ID Solutions $ 194,227 $ 205,362 $ 392,419 $ 420,349 Workplace 71,611 71,303 150,646 143,263 SafetyTotal $ 265,838 $ 276,665 $ 543,065 $ 563,612 SALES INFORMATIONID Solutions Organic (6.9 )% (1.3 )% (7.6 )% (0.7 )% Currency 1.5 % (0.5 )% 1.0 % (0.9 )% Total (5.4 )% (1.8 )% (6.6 )% (1.6 )% Workplace SafetyOrganic (4.8 )% (1.0 )% 0.4 % (0.9 )% Currency 5.2 % (1.6 )% 4.8 % (2.5 )% Total 0.4 % (2.6 )% 5.2 % (3.4 )% Total Company Organic (6.3 )% (1.2 )% (5.6 )% (0.8 )% Currency 2.4 % (0.8 )% 2.0 % (1.3 )% Total (3.9 )% (2.0 )% (3.6 )% (2.1 )% SEGMENT PROFIT ID Solutions $ 39,000 $ 40,655 $ 79,279 $ 83,098 Workplace 3,463 5,455 11,451 10,612 SafetyTotal $ 42,463 $ 46,110 $ 90,730 $ 93,710 SEGMENT PROFITAS A PERCENT OF NET SALESID Solutions 20.1 % 19.8 % 20.2 % 19.8 % Workplace 4.8 % 7.7 % 7.6 % 7.4 % SafetyTotal 16.0 % 16.7 % 16.7 % 16.6 % Three months ended January 31, Six months ended January 31, 2021 2020 2021 2020 Total segment $ 42,463 $ 46,110 $ 90,730 $ 93,710 profitUnallocated amounts:Administrative (5,051 ) (4,866 ) (11,130 ) (11,575 ) costsInvestment and 2,036 1,760 2,191 3,140 other incomeInterest (51 ) (647 ) (157 ) (1,348 ) expenseIncome beforeincome taxesand losses of $ 39,397 $ 42,357 $ 81,634 $ 83,927 unconsolidatedaffiliate

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