Brady Corporation Completes Acquisition of Gravotech Holding

Rhea-AI Summary

Brady (NYSE: BRC) has completed its acquisition of Gravotech Holding for EUR 120 million (approximately USD 130 million). Gravotech is a leader in specialized marking and engraving solutions, offering laser and mechanical engraving capabilities for direct part marking. This acquisition expands Brady's product offering and aligns with its market-leading position in product identification solutions and specialty adhesive materials.

For fiscal year 2025, Brady anticipates sales from Gravotech of EUR 116 million (approximately USD 125 million) and EBITDA of EUR 12 million (approximately USD 13 million), excluding integration-related costs. The acquisition is expected to enhance Brady's global footprint and generate long-term profitable growth.

Positive

• Acquisition expands Brady's product offering into precision direct part marking and engraving
• Anticipated sales from Gravotech of EUR 116 million (USD 125 million) in fiscal year 2025
• Expected EBITDA of EUR 12 million (USD 13 million) from Gravotech in fiscal year 2025
• Potential for market expansion using Brady's global footprint

Negative

• Integration-related costs not included in the projected EBITDA

Insights

Financial Analyst

Brady 's acquisition of Gravotech Holding for €120 million ($130 million) is a strategic move that significantly expands Brady's product portfolio and market reach. This deal aligns with Brady's core competencies in product identification solutions and specialty adhesive materials, potentially strengthening its competitive position.

The projected financials for fiscal year 2025 are noteworthy:

• Expected sales from Gravotech: €116 million ($125 million)
• Anticipated EBITDA: €12 million ($13 million)

These figures suggest an EBITDA margin of approximately 10.3%, which is relatively healthy. However, investors should note that these projections exclude integration-related costs, which could impact short-term profitability.

Brady's fiscal 2023 sales were $1.33 billion, meaning Gravotech's projected sales would represent about 9.4% of Brady's current revenue. This substantial addition could drive meaningful growth for Brady, especially if synergies are realized effectively.

The acquisition's valuation at €120 million implies a price-to-sales multiple of about 1.03x based on projected 2025 sales. This seems reasonable, particularly if Brady can leverage its global footprint to expand Gravotech's addressable market as intended.

Investors should monitor the integration process closely, as successful execution will be important for realizing the full potential of this acquisition and justifying the investment.

Market Research Analyst

The acquisition of Gravotech by Brady represents a significant market expansion in the specialized marking and engraving solutions sector. This move is likely to reshape the competitive landscape in several ways:

• Market Consolidation: By acquiring a leader in specialized marking and engraving, Brady is consolidating its position in the broader product identification market.
• Technological Diversification: Gravotech's expertise in laser and mechanical engraving for direct part marking complements Brady's existing portfolio, potentially opening new revenue streams.
• Global Market Penetration: Brady's intention to leverage its global footprint to expand Gravotech's addressable market could lead to increased market share across Europe, Asia and the Americas.

The deal aligns with the growing trend of industrial automation and Industry 4.0, where precise part marking and traceability are becoming increasingly critical. This acquisition positions Brady to capitalize on these evolving market demands.

Moreover, the synergy between Brady's high-performance labels and Gravotech's direct part marking solutions could create cross-selling opportunities across various industries, including electronics, telecommunications, manufacturing and aerospace.

Investors should watch for potential market share gains in the coming years, especially in regions where Gravotech previously had presence. The success of this acquisition could serve as a blueprint for further strategic moves in the fragmented specialty marking industry.

MILWAUKEE, Aug. 01, 2024 (GLOBE NEWSWIRE) -- Brady Corporation (NYSE: BRC) (“Brady”) today announced that it has completed its acquisition of Gravotech Holding (“Gravotech”), a leader in specialized marking and engraving solutions, in a transaction valued at EUR 120 million (approximately USD 130 million).

“We are pleased to welcome the Gravotech team to Brady,” said Brady’s President and Chief Executive Officer, Russell R. Shaller. “Gravotech offers specialty laser and mechanical engraving capabilities intended for direct part marking within a variety of industries and applications. The addition of Gravotech expands our product offering into precision direct part marking and engraving, directly aligning with Brady’s market leading position in product identification solutions and specialty adhesive materials. We intend to expand Gravotech’s addressable market by utilizing Brady’s global footprint throughout Europe, Asia and the Americas.”

Arnaud Linquette, President and CEO of Gravotech stated, “The sale of Gravotech to a market leader in printing and high-performance adhesive material solutions presents us with an excellent opportunity to expand into new markets and generate long-term profitable growth. Over the past several years, we have enhanced our new product development and manufacturing capabilities and broadened our portfolio of precision direct part marking and engraving solutions. We look forward to further developing and growing our business with Brady.”

In fiscal year 2025, Brady anticipates sales from Gravotech of EUR 116 million (approximately USD 125 million) and EBITDA of EUR 12 million (approximately USD 13 million), excluding integration-related costs.

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, Brady 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, 2023, employed approximately 5,600 people in its worldwide businesses. Brady’s fiscal 2023 sales were approximately $1.33 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,” “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, including any statements regarding and any financial impacts of the acquisition of Gravotech. For Brady, uncertainties arise from: the risks relating to the integration of Gravotech following the acquisition, including the ability of Brady and Gravotech to retain customers, to retain and hire key personnel, to maintain relationships with their suppliers and customers and to create synergies with regard to their operating results and businesses generally; increased cost of raw materials and labor as well as material shortages and supply chain disruptions; 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; difficulties in protecting our websites, networks, and systems against security breaches; Brady’s ability to identify, integrate, and grow acquired companies, and to manage contingent liabilities from divested businesses; 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; adverse impacts of regional epidemics or global pandemics; 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 and changes in the regulatory and business environment around dual-class voting structures; 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, 2023.

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

FAQ

What is the value of Brady 's acquisition of Gravotech Holding?

Brady (NYSE: BRC) acquired Gravotech Holding for EUR 120 million, which is approximately USD 130 million.

How much revenue is Gravotech expected to generate for Brady in fiscal year 2025?

Brady anticipates sales from Gravotech of EUR 116 million (approximately USD 125 million) in fiscal year 2025.

What is the projected EBITDA for Gravotech in fiscal year 2025?

Brady expects Gravotech to generate an EBITDA of EUR 12 million (approximately USD 13 million) in fiscal year 2025, excluding integration-related costs.

How does the Gravotech acquisition align with Brady 's business?

The acquisition expands Brady's product offering into precision direct part marking and engraving, aligning with Brady's market-leading position in product identification solutions and specialty adhesive materials.