Brady Corporation Reports Fiscal 2011 Second Quarter Results

Brady Corporation (NYSE: BRC), a world leader in identification solutions, today reported financial results for its fiscal 2011 second quarter ended January 31, 2011.

Second-quarter results:

Sales for the fiscal 2011 second quarter were up 11.2 percent to $329.0 million compared to $295.8 million in the second quarter of fiscal 2010. Organic sales growth was 9.8 percent, acquisitions net of divestitures contributed 1.8 percent to sales, and the impact of foreign currency translation decreased sales by 0.4 percent. By segment, organic sales increased 9.7 percent in the Americas, 12.4 percent in Europe and 6.9 percent in the Asia-Pacific region.

Net income in the fiscal 2011 second quarter was up 61.3 percent to $24.2 million compared to $15.0 million in the same quarter last year. Excluding $1.5 million of after-tax restructuring charges in the second quarter of fiscal 2011 and $2.6 million of after-tax restructuring charges in the same quarter last year, net income was up 46.0 percent to $25.7 million compared to $17.6 million in the same quarter last year.

Earnings per diluted Class A Common Share were up 64.3 percent to $0.46 in the second quarter of fiscal 2011 compared to $0.28 in the second quarter of fiscal 2010. Excluding after-tax restructuring charges, earnings per diluted Class A Common Share increased 45.5 percent to $0.48 in the second quarter of fiscal 2011 compared to $0.33 per share in the same quarter of fiscal 2010.

Six-month results:

Sales for the six-month period ended January 31, 2011 were up 7.2 percent to $658.6 million compared to $614.3 million in the same period last year.

Net income for the six months ended January 31, 2011 was up 37.7 percent to $50.5 million compared to $36.7 million in the same period in fiscal 2010. Excluding $4.2 million of after-tax restructuring charges in the six-month period ended January 31, 2011 and $5.2 million of after-tax restructuring charges in the same period last year, net income was up 30.4 percent to $54.6 million compared to $41.9 million in the same period last year.

Earnings per diluted Class A Common Share were up 37.7 percent to $0.95 for the six-month period ended January 31, 2011 compared to $0.69 in the same period of fiscal 2010. Excluding after-tax restructuring charges, earnings per diluted Class A Common Share increased 30.4 percent to $1.03 for the six-month period ended January 31, 2011 compared to $0.79 per share in the same period of fiscal 2010.

Commentary and Guidance:

“We are pleased to see strong organic sales growth in all our regions, and are encouraged by the substantial growth in earnings resulting from the increased organic sales and our on-going focus on improving profitability,” said Frank M. Jaehnert, Brady’s President and Chief Executive Officer.

“Cash generation remains a highlight for Brady as we delivered $41.4 million of cash flow from operating activities in the quarter, resulting in an increase in our cash balance to $362.3 million at January 31, 2011. Our strong cash position along with our untapped $200 million line of credit provides us with adequate flexibility to take advantage of future growth opportunities,” said Brady Chief Financial Officer Thomas J. Felmer. “As a result of our strong second quarter earnings, we are increasing our full year fiscal 2011 guidance range for earnings per diluted Class A Common share from between $2.05 and $2.25 to between $2.15 and $2.35, excluding pre-tax restructuring charges of $7 to $10 million, or $0.10 to $0.14 per share. We also expect mid-single digit organic sales growth for the balance of fiscal 2011 as sales comparisons become more challenging in the second half of fiscal 2011. Our guidance reflects all cost savings we expect to realize this year from restructuring activities as well as from our Brady Business Performance System initiatives for operational improvements.”

A webcast regarding fiscal 2011 second quarter results will be available at www.investor.bradycorp.com beginning at 9:30 a.m. Central Standard Time today.

Brady Corporation is an international manufacturer and marketer of complete solutions that identify and protect premises, products and people. Brady’s products help customers increase safety, security, productivity and performance and include high-performance labels and signs, safety devices, printing systems and software, and precision die-cut materials. Founded in 1914, the company has millions of customers in electronics, telecommunications, manufacturing, electrical, construction, education, medical and a variety of other industries. Brady is headquartered in Milwaukee, Wisconsin and employs approximately 6,600 people at operations in the Americas, Europe and Asia-Pacific. Brady’s fiscal 2010 sales were approximately $1.26 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.

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 develop and successfully market new products; changes in the supply of, or price for, parts and components; increased price pressure from suppliers and customers; fluctuations in currency rates versus the US dollar; unforeseen tax consequences; potential write-offs of Brady’s substantial intangible assets; Brady’s ability to retain significant contracts and customers; risks associated with international operations; Brady’s ability to maintain compliance with its debt covenants; technology changes; business interruptions due to implementing business systems; environmental, health and safety compliance costs and liabilities; future competition; interruptions to sources of supply; Brady’s ability to realize cost savings from operating initiatives; difficulties associated with exports; risks associated with restructuring plans; risks associated with obtaining governmental approvals and maintaining regulatory compliance; 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 Form 10-K for the year ended July 31, 2010. 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.