GlobeNewswire Inc | Sep 16, 2020 07:00AM EDT

September 16, 2020

-- 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 Bradys 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 Bradys 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. Bradys strong balance sheet and cash generation positions us well for future financial success.

A webcast regarding Bradys fiscal 2020 fourth quarter financial results will be available atwww.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 SUBSIDIARIESCONSOLIDATED STATEMENTS OF INCOME(Unaudited; Dollarsin thousands, except per share data) Three months ended July Year ended July 31, 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 9,364 11,331 40,662 45,168 developmentSelling, general and 75,923 89,094 336,059 371,082 administrativeImpairment charges ? ? 13,821 ? Total operating 85,287 100,425 390,542 416,250 expenses Operating income 33,219 46,155 138,023 162,428 Other income (expense):Investment and other 1,827 1,621 5,079 5,046 incomeInterest expense (190 ) (693 ) (2,166 ) (2,830 ) Income before incometaxes and losses of 34,856 47,083 140,936 164,644 unconsolidatedaffiliate Income tax expense 6,925 10,470 28,321 33,386 Income before lossesof unconsolidated 27,931 36,613 112,615 131,258 affiliateEquity in losses ofunconsolidated (246 ) - (246 ) - affiliate Net income $ 27,685 $ 36,613 $ 112,369 $ 131,258 Net income perClassA 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 ClassB 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 averagecommon 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, 2019ASSETS 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: ClassA nonvoting common stock?Issued 51,261,487shares, and outstanding 48,456,954 and 49,458,841 513 513 shares, respectivelyClass B voting common stock?Issued and 35 35 outstanding, 3,538,628 sharesAdditional 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 ClassA nonvoting common stock, (107,216 ) (46,332 )at costAccumulated 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 (9,065 ) (5,651 )stock-based awardsPurchase 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 (2,767 ) (2,475 )equivalents 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 SUBSIDIARIESSEGMENT INFORMATION (Unaudited; Dollars in thousands) Three Months Ended July Year Ended July 31, 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 SALESID 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 Year Ended July 31, 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 1,827 1,621 5,079 5,046 incomeInterest expense (190 ) (693 ) (2,166 ) (2,830 )Income before incometaxes and losses of $ 34,856 $ 47,083 $ 140,936 $ 164,644 unconsolidatedaffiliate