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Brady Corporation Reports Record EPS in its Fiscal 2023 Fourth Quarter, Expands its Share Buyback Program and Announces its Fiscal 2024 EPS Guidance

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Brady Corporation reports Q4 2023 financial results, with sales increasing 6.8% and gross profit margin increasing to 50.8%. Diluted EPS reaches an all-time high of $1.00, a 23.5% increase compared to the prior year. The company returned $120.4 million to shareholders in dividends and share repurchases. Fiscal 2023 sales increase 2.3% and diluted EPS reaches $3.51, a 21.0% increase over the previous year. Guidance for fiscal 2024 expects an increase of 5.4% to 12.5% in GAAP EPS compared to fiscal 2023.
Positive
  • Sales increase 6.8% in Q4 2023
  • Diluted EPS reaches all-time high of $1.00
  • $120.4 million returned to shareholders
Negative
  • None.
  • Sales for the quarter increased 6.8 percent. Organic sales increased 6.9 percent.
  • Gross profit margin increased to 50.8 percent in the fourth quarter of F’23 compared to 50.4 percent in the fourth quarter of F’22.
  • Diluted EPS increased 23.5 percent to an all-time high of $1.00 in the fourth quarter of fiscal 2023 compared to $0.81 in the same quarter of the prior year. Diluted EPS Excluding Certain Items* increased 19.5 percent to an all-time record high of $1.04 in the fourth quarter of fiscal 2023 compared to $0.87 in the same quarter of the prior year.
  • During the quarter and year ended July 31, 2023, we returned $56.4 million and $120.4 million, respectively, to our shareholders in the form of dividends and share repurchases. On August 30, 2023, Brady’s Board of Directors authorized an additional $100 million of shares for repurchase, which based on current share prices equates to approximately 2.0 million shares and approximately 4.4 percent of total outstanding shares.
  • Fiscal 2023 sales increased 2.3 percent and organic sales increased 5.5 percent. Diluted EPS increased 21.0 percent to an all-time high of $3.51 in fiscal 2023 compared to $2.90 in fiscal 2022.
  • Diluted EPS guidance for the year ending July 31, 2024 was announced at a range of $3.70 to $3.95 on a GAAP basis, and a range of $3.85 to $4.10 on a non-GAAP basis. This GAAP EPS guidance range is an increase of 5.4 percent to 12.5 percent compared to GAAP EPS of $3.51 for the year ended July 31, 2023.

MILWAUKEE, Sept. 05, 2023 (GLOBE NEWSWIRE) -- Brady Corporation (NYSE: BRC) (“Brady” or “Company”), a world leader in identification solutions, today reported its financial results for its fiscal 2023 fourth quarter ended July 31, 2023.

Quarter Ended July 31, 2023 Financial Results:
Sales for the quarter ended July 31, 2023 increased 6.8 percent, which consisted of an organic sales increase of 6.9 percent, an increase of 0.6 percent from foreign currency translation and a decrease of 0.7 percent from the divestiture of the PremiSys business. Sales for the quarter ended July 31, 2023 were $345.9 million compared to $324.0 million in the same quarter last year. By region, sales increased 4.4 percent in the Americas & Asia and increased 11.5 percent in Europe & Australia, which consisted of an organic sales increase of 5.6 percent in the Americas & Asia and an organic sales increase of 9.5 percent in Europe & Australia.

Income before income taxes increased 18.2 percent to $63.8 million for the quarter ended July 31, 2023, compared to $54.0 million in the same quarter last year. Income Before Income Taxes Excluding Certain Items* for the quarter ended July 31, 2023, which was adjusted for amortization expense of $2.4 million, was $66.2 million, an increase of 14.8 percent compared to the fourth quarter of 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.

Net income for the quarter ended July 31, 2023 was $49.4 million compared to $41.1 million in the same quarter last year. Earnings per diluted Class A Nonvoting Common Share were $1.00 for the fourth quarter of fiscal 2023, compared to $0.81 in the same quarter last year. Net Income Excluding Certain Items* for the quarter ended July 31, 2023 was $51.2 million and Diluted EPS Excluding Certain Items* for the quarter ended July 31, 2023 was $1.04. 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.

Year Ended July 31, 2023 Financial Results:
Sales for the year ended July 31, 2023 increased 2.3 percent, which consisted of an organic sales increase of 5.5 percent, a decrease of 3.0 percent from foreign currency translation and a decrease of 0.2 percent from the divestiture of the PremiSys business. Sales for the year ended July 31, 2023 were $1.33 billion compared to $1.30 billion in the same period last year. By region, sales increased 3.2 percent in the Americas & Asia and increased 0.5 percent in Europe & Australia, which consisted of an organic sales increase of 4.4 percent in the Americas & Asia and an organic sales increase of 7.6 percent in Europe & Australia.

Income before income taxes increased 17.6 percent to $225.7 million for the year ended July 31, 2023, compared to $192.0 million in the same period last year. Income Before Income Taxes Excluding Certain Items* for the year ended July 31, 2023 was $233.7 million, an increase of 11.9 percent compared to the same period last year. Income Before Income Taxes Excluding Certain Items* for the year ended July 31, 2023 was adjusted for amortization expense of $11.7 million and removes the $3.8 million gain on the sale of the PremiSys business. Income Before Income Taxes Excluding Certain Items* for the prior year ended July 31, 2022 was $208.8 million, which was adjusted for amortization expense of $15.0 million and non-recurring charges primarily to streamline the cost structure of our Workplace Safety business of $1.8 million.

Net income for the year ended July 31, 2023 was $174.9 million compared to $150.0 million in the same period last year. Earnings per diluted Class A Nonvoting Common Share were $3.51 for the year ended July 31, 2023, compared to $2.90 in the same period last year. Net Income Excluding Certain Items* for the year ended July 31, 2023 was $181.5 million and Diluted EPS Excluding Certain Items* for the year ended July 31, 2022 was $3.64. 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.

Commentary:
“This quarter we once again reported all-time record high EPS, resulting in a strong finish and Brady’s best earnings year ever. For the full year ended July 31, 2023, our GAAP EPS was $3.51, which was a 21.0 percent increase over the previous year which was also a record,” said Brady’s President and Chief Executive Officer, Russell R. Shaller. “Both regions performed well this year with total organic sales growth of 5.5 percent and strong growth in operating income. We have exciting new products in our pipeline, our regional reorganization is driving benefits throughout our businesses, and we’re entering next fiscal year with positive momentum.”

“In addition to our organic revenue growth of 5.5 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 increased dividends. This year, we repurchased a total of 1.6 million shares for $75.0 million and we returned another $45.4 million to our shareholders in the form of dividends,” said Brady’s Chief Financial Officer, Ann Thornton. “Even after returning more than $120 million to our shareholders this year, we were still in a net cash position of $101.8 million at July 31, 2023. We are financially solid and are well-positioned for the future with a balance sheet that provides opportunities to invest in both organic and inorganic opportunities to increase shareholder value.”

Share Buyback Program:
On August 30, 2023, Brady’s Board of Directors authorized an additional $100 million of Class A Common Stock for repurchase under the Company’s share buyback program. The share buyback plan may be implemented from time to time in the open market or in privately negotiated transactions and has no expiration date.

Fiscal 2024 Guidance:
Brady expects GAAP earnings per diluted Class A Nonvoting Common Share to range from $3.70 to $3.95, which would be an increase of 5.4 percent to 12.5 percent over the GAAP earnings per diluted Class A nonvoting Common Share of $3.51 for the year ended July 31, 2023.

Brady also expects Diluted EPS Excluding Certain Items* to range from $3.85 to $4.10 for the year ending July 31, 2024, which would be an increase of 5.8 percent to 12.6 percent over Diluted EPS Excluding Certain Items* of $3.64 for the year ended July 31, 2023. Excluded from this Diluted EPS Excluding Certain Items* guidance is expected amortization expense equating to $0.15 per share for the year ending July 31, 2024.

Included in our fiscal 2024 guidance are a full-year income tax rate of approximately 22 percent and depreciation and amortization expense ranging from $32 million to $34 million. Capital expenditures are expected to approximate $75 million, which is inclusive of facility construction costs of approximately $55 million. Our fiscal 2024 guidance is based on foreign currency exchange rates as of July 31, 2023 and assumes continued economic growth.

A webcast regarding Brady’s fiscal 2023 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, 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.

* 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; 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 the novel coronavirus (“COVID-19”) pandemic or other 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; 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


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,
  2023   2022   2023   2022 
Net sales$345,929  $323,981  $1,331,863  $1,302,062 
Cost of goods sold 170,049   160,805   674,588   670,510 
Gross margin 175,880   163,176   657,275   631,552 
Operating expenses:       
Research and development 16,340   15,753   61,365   58,548 
Selling, general and administrative 97,495   94,507   370,697   379,992 
Total operating expenses 113,835   110,260   432,062   438,540 
        
Operating income 62,045   52,916   225,213   193,012 
        
Other income (expense):       
Investment and other income 2,426   1,587   4,022   244 
Interest expense (653)  (513)  (3,539)  (1,276)
        
Income before income taxes 63,818   53,990   225,696   191,980 
        
Income tax expense 14,440   12,926   50,839   42,001 
        
Net income$49,378  $41,064  $174,857  $149,979 
        
Net income per Class A Nonvoting Common Share:       
Basic$1.01  $0.82  $3.53  $2.92 
Diluted$1.00  $0.81  $3.51  $2.90 
        
Net income per Class B Voting Common Share:       
Basic$1.01  $0.82  $3.51  $2.91 
Diluted$1.00  $0.81  $3.49  $2.89 
        
Weighted average common shares outstanding:       
Basic 49,099   50,185   49,591   51,321 
Diluted 49,377   50,437   49,869   51,651 
        



BRADY CORPORATION AND SUBSIDIARIES   
CONSOLIDATED BALANCE SHEETS   
(Dollars in thousands)   
    
 July 31, 2023 July 31, 2022
    
ASSETS   
Current assets:   
Cash and cash equivalents$151,532  $114,069 
Accounts receivable, net of allowance for credit losses of $8,467 and $7,355, respectively 184,420   183,233 
Inventories 177,078   190,023 
Prepaid expenses and other current assets 11,790   10,743 
    Total current assets 524,820   498,068 
Property, plant and equipment—net 142,149   139,511 
Goodwill 592,646   586,832 
Other intangible assets 62,096   74,028 
Deferred income taxes 15,716   15,881 
Operating lease assets 29,688   31,293 
Other assets 22,142   21,719 
Total$1,389,257  $1,367,332 
LIABILITIES AND STOCKHOLDERS’ EQUITY   
Current liabilities:   
Accounts payable$79,855  $81,116 
Accrued compensation and benefits 71,470   76,764 
Taxes, other than income taxes 13,575   12,539 
Accrued income taxes 12,582   8,294 
Current operating lease liabilities 14,726   15,003 
Other current liabilities 65,828   61,458 
    Total current liabilities 258,036   255,174 
Long-term debt 49,716   95,000 
Long-term operating lease liabilities 16,217   19,143 
Other liabilities 74,369   86,717 
    Total liabilities 398,338   456,034 
Stockholders’ equity:   
Common stock:   
    Class A nonvoting common stock—Issued 51,261,487 shares, and outstanding 45,008,724 and 46,370,708 shares, respectively 513   513 
    Class B voting common stock—Issued and outstanding, 3,538,628 shares 35   35 
Additional paid-in capital 351,771   345,266 
Retained earnings 1,021,870   892,417 
Treasury stock—6,252,763 and 4,890,779 shares, respectively, of Class A nonvoting common stock, at cost (290,209)  (217,856)
Accumulated other comprehensive loss (93,061)  (109,077)
    Total stockholders’ equity 990,919   911,298 
Total$1,389,257  $1,367,332 
    



BRADY CORPORATION AND SUBSIDIARIES   
CONSOLIDATED STATEMENTS OF CASH FLOWS   
(Dollars in thousands)   
 Year ended July 31,
  2023   2022 
Operating activities:   
Net income$174,857  $149,979 
Adjustments to reconcile net income to net cash provided by operating activities:   
Depreciation and amortization 32,370   34,182 
Stock-based compensation expense 7,508   10,504 
Gain on sale of business (3,770)   
Deferred income taxes (12,472)  (1,645)
Other (308)  1,197 
Changes in operating assets and liabilities:   
    Accounts receivable 2,380   (25,330)
    Inventories 14,972   (62,907)
    Prepaid expenses and other assets (1,023)  807 
    Accounts payable and accrued liabilities (9,459)  6,826 
    Income taxes 4,094   4,836 
            Net cash provided by operating activities 209,149   118,449 
    
Investing activities:   
Purchases of property, plant and equipment (19,226)  (43,138)
Sale of business 8,000    
Other 12   67 
            Net cash used in investing activities (11,214)  (43,071)
    
Financing activities:   
Payment of dividends (45,404)  (45,931)
Proceeds from exercise of stock options 4,091   1,082 
Payments for employee taxes withheld from stock-based awards (2,041)  (5,127)
Purchase of treasury stock (74,996)  (109,229)
Proceeds from borrowing on credit agreement 127,660   243,716 
Repayment of borrowing on credit agreement (172,944)  (186,716)
Other 66   116 
            Net cash used in financing activities (163,568)  (102,089)
    
Effect of exchange rate changes on cash and cash equivalents 3,096   (6,555)
    
Net increase (decrease) in cash and cash equivalents 37,463   (33,266)
Cash and cash equivalents, beginning of period 114,069   147,335 
    
Cash and cash equivalents, end of period$151,532  $114,069 
    



BRADY CORPORATION AND SUBSIDIARIES       
SEGMENT INFORMATION       
(Unaudited; Dollars in thousands)       
        
 Three months ended July 31, Year ended July 31,
  2023   2022   2023   2022 
NET SALES       
Americas & Asia$227,482  $217,792  $888,857  $861,084 
Europe & Australia 118,447   106,189   443,006   440,978 
Total$345,929  $323,981  $1,331,863  $1,302,062 
        
SALES INFORMATION       
Americas & Asia       
Organic 5.6%  9.1%  4.4%  10.3%
Currency (0.2)%  (1.0)%  (0.9)%  (0.1)%
Divestiture (1.0)%  %  (0.3)%  %
Acquisition %  2.8%  %  6.9%
Total 4.4%  10.9%  3.2%  17.1%
Europe & Australia       
Organic 9.5%  8.8%  7.6%  7.9%
Currency 2.0%  (13.9)%  (7.1)%  (7.0)%
Acquisition %  1.8%  %  6.9%
Total 11.5%  (3.3)%  0.5%  7.8%
Total Company       
Organic 6.9%  9.0%  5.5%  9.4%
Currency 0.6%  (5.7)%  (3.0)%  (2.6)%
Divestiture (0.7)%  %  (0.2)%  %
Acquisition %  2.5%  %  6.9%
Total 6.8%  5.8%  2.3%  13.7%
        
SEGMENT PROFIT       
Americas & Asia$49,992  $42,648  $180,503  $157,307 
Europe & Australia 18,426   16,893   65,742   63,058 
Total$68,418  $59,541  $246,245  $220,365 
SEGMENT PROFIT AS A PERCENT OF NET SALES       
Americas & Asia 22.0%  19.6%  20.3%  18.3%
Europe & Australia 15.6%  15.9%  14.8%  14.3%
Total 19.8%  18.4%  18.5%  16.9%
        
        
 Three months ended July 31, Year ended July 31,
  2023   2022   2023   2022 
Total segment profit$68,418  $59,541  $246,245  $220,365 
Unallocated amounts:       
Administrative costs (6,373)  (6,625)  (24,802)  (27,353)
Gain on sale of business -   -   3,770   - 
Investment and other income 2,426   1,587   4,022   244 
Interest expense (653)  (513)  (3,539)  (1,276)
Income before income taxes$63,818  $53,990  $225,696  $191,980 
        



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 to the non-GAAP measure of Income Before Income Taxes Excluding Certain Items:
                 
            
    Three months ended July 31, Year ended July 31, 
     2023  2022  2023   2022 
Income before income taxes$63,818 $53,990 $225,696  $191,980 
 Amortization expense  2,389  3,675  11,739   14,966 
 Gain on sale of business  -  -  (3,770)  - 
 Other non-routine charges  -  -  -   1,841 
Income Before Income Taxes Excluding Certain Items (non-GAAP measure)$ 66,207 $ 57,665 $ 233,665  $ 208,787 
            
            
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, 
     2023  2022  2023   2022 
Income tax expense (GAAP measure)$14,440 $12,926 $50,839  $42,001 
 Amortization expense  553  873  2,756   3,545 
 Gain on sale of business  -  -  (1,431)  - 
 Other non-routine charges  -  -  -   496 
Income Tax Expense Excluding Certain Items (non-GAAP measure)$ 14,993 $ 13,799 $ 52,164  $ 46,042 
            
            
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, 
     2023  2022  2023   2022 
Net income (GAAP measure)$49,378 $41,064 $174,857  $149,979 
 Amortization expense  1,836  2,802  8,983   11,421 
 Gain on sale of business  -  -  (2,339)  - 
 Other non-routine charges  -  -  -   1,345 
Net Income Excluding Certain Items (non-GAAP measure)$ 51,214 $ 43,866 $ 181,501  $ 162,745 
            
            
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, 
     2023  2022  2023   2022 
Net income per Class A Nonvoting Common Share (GAAP measure)$1.00 $0.81 $3.51  $2.90 
 Amortization expense  0.04  0.06  0.18   0.22 
 Gain on sale of business  -  -  (0.05)  - 
 Other non-routine charges  -  -  -   0.03 
Diluted EPS Excluding Certain Items (non-GAAP measure)$ 1.04 $ 0.87 $ 3.64  $ 3.15 
            
            
Diluted EPS Excluding Certain Items Guidance:     Fiscal 2024 Expectations 
        Low High 
Earnings per diluted Class A Common Share (GAAP measure)     $3.70  $3.95 
 Amortization expense      0.15   0.15 
Diluted EPS Excluding Certain Items (non-GAAP measure)     $ 3.85  $ 4.10 
            

Brady Corporation

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