Brady Corporation Reports Fiscal 2014 Second Quarter Results

Brady Corporation (NYSE: BRC) (“Brady” or “Company”), a world leader in identification solutions, today reported its financial results for the fiscal 2014 second quarter ended January 31, 2014.

Quarter Ended January 31, 2014 Financial Results:

Sales from continuing operations for the quarter ended January 31, 2014 were up 6.8 percent to $291.2 million compared to $272.7 million in the second quarter of fiscal 2013. Organic sales were down 1.1 percent, the acquisition of Precision Dynamics Corporation (“PDC”) added 8.5 percent to sales, and the impact of foreign currency translation decreased sales by 0.6 percent. By segment, organic sales were up 2.5 percent in Identification Solutions and down 6.8 percent in Workplace Safety.

Net earnings for the quarter ended January 31, 2014 were $16.4 million compared to a net loss of $8.7 million in the same quarter last year. Net earnings from continuing operations for the quarter ended January 31, 2014, were $10.5 million compared to a loss of $10.7 million in the same quarter last year. Non-GAAP net earnings from continuing operations* for the fiscal 2014 second quarter ended January 31, 2014, were $13.4 million compared to $19.6 million in the same quarter last year.

Net earnings (loss) per Class A Nonvoting Common Share were $0.31 for the second quarter ended January 31, 2014 compared to $(0.17) in the same quarter last year. Earnings (loss) from continuing operations per diluted Class A Nonvoting Common Share were $0.20 for the second quarter of fiscal 2014 compared to $(0.21) in the same quarter last year. Non-GAAP earnings from continuing operations per diluted Class A Nonvoting Common Share* were $0.25 in the second quarter of fiscal 2014 and $0.38 per share in the second quarter of fiscal 2013.

Six-Month Period Ended January 31, 2014 Financial Results:

Sales from continuing operations for the six-month period ended January 31, 2014 were up 9.9 percent to $598.7 million compared to $544.7 million in the same period in fiscal 2013. Organic sales were down 1.6 percent, the acquisition of Precision Dynamics Corporation (“PDC”) added 12.0 percent to sales, and the impact of foreign currency translation decreased sales by 0.5 percent. By segment, organic sales were up 2.9 percent in Identification Solutions and down 8.4 percent in Workplace Safety.

Net earnings for the six-month period ended January 31, 2014 were $40.4 million compared to $18.5 million in the same six-month period last year. Net earnings from continuing operations for the six-month period ended January 31, 2014, were $28.7 million compared to $15.6 million in the same six-month period last year. Non-GAAP net earnings from continuing operations* for the six-month period ended January 31, 2014, were $36.2 million compared to $45.8 million in the same six-month period last year.

Net earnings per Class A Nonvoting Common Share were $0.77 for the six-month period ended January 31, 2014 compared to $0.36 in the same six-month period last year. Earnings from continuing operations per diluted Class A Nonvoting Common Share were $0.55 for the six-month period ended January 31, 2014 compared to $0.30 in the same six-month period last year. Non-GAAP earnings from continuing operations per diluted Class A Nonvoting Common Share* were $0.69 in the six-month period ended January 31, 2014 and $0.89 per share in the six-month period ended January 31, 2013.

Commentary and Guidance:

“Our Identification Solutions business continued its steady revenue performance in the second quarter with 2.5 percent organic sales growth and 15.8 percent growth including sales from the PDC acquisition. During the quarter, sales in our Workplace Safety platform were down 7.7 percent which was below our expectations. We have been accelerating investments in our Workplace Safety business to drive organic sales growth. These investments are aimed at improving our e-commerce capabilities, expanding our product offerings and enhancing our overall value proposition which has resulted in an increase in new customers for the group. While we are investing to increase our competitiveness, we are balancing our investments to ensure more profitable growth over the long term,” said Brady’s Chief Financial Officer and Interim President and Chief Executive Officer, Thomas J. Felmer. “We have seen improvements in our Asian and European Identification Solutions’ results and continue to see growth opportunities driven by our new product pipeline and increased focus on industries such as healthcare; food and beverage; chemical, oil and gas; and aerospace and mass transit.”

The Company anticipates organic sales from continuing operations to range from a slight contraction to low single-digit growth for the full year ending July 31, 2014. The Company anticipates its earnings from continuing operations per diluted Class A Nonvoting Common Share to range from $1.55 to $1.75, exclusive of restructuring charges. This guidance is based on current exchange rates, a full-year income tax rate in the mid-to-upper 20 percent range, depreciation and amortization of approximately $45 to $50 million, and approximately $22 million of restructuring charges in fiscal 2014. Our guidance also includes capital expenditures of approximately $40 million in fiscal 2014.

A webcast regarding Brady’s fiscal 2014 second quarter financial results will be available at www.bradycorp.com beginning at 9:30 a.m. Central 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, signs, safety devices, printing systems and software, and precision die-cut materials. Founded in 1914, the company has a diverse customer base in electronics, telecommunications, manufacturing, electrical, construction, education, medical and a variety of other industries. Brady is headquartered in Milwaukee, Wisconsin and as of July 31, 2013, employed approximately 7,400 people in its worldwide businesses. Brady’s fiscal 2013 sales were approximately $1.15 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.

* See accompanying notes for non-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” 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: Implementation of the Workplace Safety strategy; 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, hard disk drive, manufacturing, electrical, construction, laboratory, education, governmental, public utility, computer, healthcare and transportation; future competition; changes in the supply of, or price for, parts and components; increased price pressure from suppliers and customers; Brady's ability to retain significant contracts and customers; fluctuations in currency rates versus the U.S. dollar; risks associated with international operations; difficulties associated with exports; risks associated with obtaining governmental approvals and maintaining regulatory compliance; Brady's ability to develop and successfully market new products; risks associated with identifying, completing, and integrating acquisitions; risks associated with divestitures and businesses held for sale; risks associated with restructuring plans; environmental, health and safety compliance costs and liabilities; risk associated with loss of key talent; risk associated with product liability claims; technology changes and potential security violations to the Company's information technology systems; Brady's ability to maintain compliance with its debt covenants; increase in our level of debt; potential write-offs of Brady's substantial intangible assets; unforeseen tax consequences; risk, associated with our ownership structure; 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 within Item 1A of Part I of Brady’s Form 10-K for the year ended July 31, 2013.

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.