Brady Corporation Reports Earnings for Fiscal 2010 Fourth Quarter and Year End

Brady Corporation (NYSE:BRC) today reported results for its fiscal 2010 fourth quarter and its full fiscal year ended July 31, 2010.

Three Months Ended July 31, 2010

Sales in the fiscal 2010 fourth quarter increased 12.4 percent to $322.9 million compared to $287.2 million in the fourth quarter of fiscal 2009. Organic sales increased 10.7 percent with positive organic growth in all regions. Acquisitions added 2.7 percent to sales and foreign currency translation reduced sales by 1.0 percent in the fourth quarter ended July 31, 2010. Regionally, organic sales were up 14.7 percent in the Americas, 9.6 percent in Europe, and 5.2 percent in the Asia-Pacific region.

Net income for the quarter increased 12.4 percent to $21.6 million compared to $19.2 million in the same quarter last year. Excluding restructuring charges, net income in the quarter was up 15.9 percent to $26.2 million compared to $22.6 million in the fiscal 2009 fourth quarter.

Earnings per diluted Class A Common Share were $0.41 in the 2010 fourth quarter compared to $0.36 in the prior year quarter. Excluding after-tax restructuring charges, earnings per diluted Class A Common Share increased 14.0 percent to $0.49 in the fourth quarter compared to $0.43 in the prior year fourth quarter.

Year Ended July 31, 2010

Sales for the year ended July 31, 2010 were $1.259 billion compared to $1.209 billion in fiscal 2009, up 4.2 percent. Organic sales were up 0.2 percent, acquisitions added 1.3 percent to sales, and the impact of foreign currency translation added 2.7 percent.

Net income for the year ended July 31, 2010 increased 16.9 percent to $82.0 million compared to $70.1 million for the year ended July 31, 2009. Excluding after-tax restructuring charges, net income for the year ended July 31, 2010 was up 3.4 percent to $93.4 million compared to $90.3 million in fiscal 2009.

Earnings per diluted Class A Common Share were $1.55 for the year ended July 31, 2010 compared to $1.32 for the fiscal year ended July 31, 2009. Excluding after-tax restructuring charges, earnings per diluted Class A Common Share increased 2.9 percent to $1.76 for the year ended July 31, 2010 compared to $1.71 during the year ended July 31, 2009.

Commentary and Fiscal 2011 Guidance

“Brady had a strong fourth quarter and finished the year on a positive note. In particular, we were pleased to see double-digit organic growth in the fourth quarter and positive organic growth in all our regions for the second straight quarter, as well as significant improvement in our net income in the fourth quarter. These strong financial results were due to our continued focus on cost controls, as well as execution of our growth strategies including launching several new products. We also returned to acquisition activity this year after taking a pause last year due to the global economic crisis,” said Brady President and CEO Frank M. Jaehnert. “I’m also happy to report that yesterday our Board of Directors announced that we will increase our dividend to shareholders for the 25th straight year.”

“We maintain a strong financial position with significant liquidity to fund future growth. We generated free cash flow of $138.9 million during the year ended July 31, 2010, which equates to 169 percent of net income, and we finished the year with cash and cash equivalents of $314.8 million, an increase of $126.6 million compared to July 31, 2009,” said Brady Chief Financial Officer, Thomas J. Felmer. “As we look to fiscal 2011, we believe that the overall global economy will continue to improve, albeit slowly. As a result, we anticipate mid-single-digit organic revenue growth in fiscal 2011, with more significant profitability improvement in the second half of the year as our continued investment in profitability improvement initiatives begin to yield benefits. For fiscal 2011 we expect earnings per diluted Class A Common Share of between $1.95 and $2.15. This guidance is based on current exchange rates, a full-year tax rate of 26 percent, capital expenditures of between $25 and $30 million, depreciation and amortization of $50 million, and diluted weighted average common shares outstanding consistent with that of July 31, 2010. Our guidance excludes additional expected pretax restructuring charges of approximately $12 to $15 million or $0.17 to $0.21 per diluted share.”

A Webcast regarding fiscal 2010 results will be available at www.investor.bradycorp.com beginning at 9:30 a.m. Central Daylight Time today.

Brady Corporation is an international manufacturer and marketer of complete solutions that identify and protect premises, products and people. Its products include high-performance labels and signs, safety devices, printing systems and software, and precision die-cut materials. Founded in 1914, the company has more than 1,000,000 customers in electronics, telecommunications, manufacturing, electrical, construction, education, medical and a variety of other industries. Brady is headquartered in Milwaukee and employs approximately 6,600 people at operations in the Americas, Europe and Asia/Pacific. More information is available on the Internet at www.bradycorp.com.

Brady believes that certain statements in this news release are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. All statements related to future, not past, events included in this news release, including, without limitation, statements regarding Brady'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 are forward-looking statements. When used in this news release, words such as “may,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “believe,” “should,” “project” 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 the length or severity of the current worldwide economic downturn or timing or strength of a subsequent recovery; future financial performance of major markets Brady serves, which include, without limitation, telecommunications, manufacturing, electrical, construction, laboratory, education, governmental, public utility, computer, transportation; difficulties in making and integrating acquisitions; risks associated with newly acquired businesses; Brady's ability to retain significant contracts and customers; future competition; Brady's ability to develop and successfully market new products; changes in the supply of, or price for, parts and components; increased price pressure from suppliers and customers; interruptions to sources of supply; environmental, health and safety compliance costs and liabilities; Brady's ability to realize cost savings from operating initiatives; Brady's ability to attract and retain key talent; difficulties associated with exports; risks associated with international operations; fluctuations in currency rates versus the US dollar; technology changes; potential write-offs of Brady's substantial intangible assets; Brady’s ability to maintain its debt covenants; unforeseen tax consequences; risks associated with obtaining governmental approvals and maintaining regulatory compliance for new and existing products; business interruptions due to implementing business systems; and numerous other matters of national, regional and global scale, including 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 located in Item 1A of Part I of Brady's Annual Report on Form 10-K for the period ended July 31, 2009, as updated by subsequently filed reports. 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.