GlobeNewswire Inc | Nov 19, 2020 07:00AM EST

November 19, 2020

-- 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, Nov. 19, 2020 (GLOBE NEWSWIRE) -- 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, 2020Financial 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.

CommentaryWe 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 Bradys 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 Bradys 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 years 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, Bradys strong balance sheet and cash generation position us extremely well for future financial success as industrial production improves.

A webcast regarding Bradys 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. 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.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 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.

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 414-438-6887Media contact: Kate Venne 414-358-5176

BRADY CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS (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 42,237 41,570 unconsolidated affiliate 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 ClassA 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, July 31, 2020 2020 (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 256,333 $ 217,643 Accounts receivable, net of allowance forcredit losses of $7,704 and $7,157, 156,735 146,181 respectivelyInventories 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: ClassA nonvoting common stock?Issued51,261,487 shares, and outstanding 48,497,649 513 513 and 48,456,954 shares, respectivelyClass B voting common stock?Issued and 35 35 outstanding, 3,538,628 sharesAdditional 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 ClassA nonvoting common (109,146 ) (107,216 ) stock, at costAccumulated 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 (2,617 ) (7,269 ) stock-based awardsPurchase 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 $ 42,237 $ 41,570 unconsolidated affiliate