Brady Reports Record Sales and Earnings in Fiscal 2005 Third Quarter.MILWAUKEE Milwaukee (mĭlwŏk`ē), city (1990 pop. 628,088), seat of Milwaukee co., SE Wis., at the point where the Milwaukee, Menominee, and Kinnickinnic rivers enter Lake Michigan; inc. 1846. -- Brady Corporation Brady Corporation is a US based multi-national company specialising in the manufacture of labels and label printers for use in offices and industry. Company History Brady was founded in 1914 in Eau Claire, Wisconsin, as W.H. Brady Co. (NYSE NYSE See: New York Stock Exchange :BRC BRC Black Rock City (Burning Man) BRC British Retail Consortium BRC Business Resource Center (Small Business Administration) BRC Bisexual Resource Center BRC Black Radical Congress ), a world leader in identification solutions, today announced record sales and earnings for its fiscal 2005 third quarter ended April 30, 2005. Sales for the quarter were $209.8 million compared to $180.9 million in the third quarter last year, an increase of 16 percent. Acquisitions contributed 13 percent to sales growth, and currency exchange contributed 3 percent, with base sales flat. Regionally, base business in Asia continued to grow with sales up 8 percent, base sales in the Americas A·mer·i·cas , the See America. were up 1 percent, and base business in Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). declined
3 percent in the quarter.
Net income for the quarter was $25.0 million compared to $16.4 million in the same quarter last year, and included a $1.2 million benefit from a reduction in tax rate to 29 percent. Earnings per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. Class A Common Share were $0.50, up 47 percent from $0.34 per share in the fiscal 2004 third quarter. Sales for the nine months ended April 30, 2005, rose 25 percent to $606.4 million compared to $485.7 million in the same period last year. Net income for the period was $65.9 million, up 89 percent compared to $34.8 million. Nine-month earnings per share were $1.32 compared to $0.73 per share in the period last year. "I am pleased to see the continued improvement in our quality of earnings as reflected by our record profitability," said Brady Bra·dy , James Buchanan Known as "Diamond Jim." 1856-1917. American financier and philanthropist who gained his nickname because of his attraction to diamonds and his extravagant lifestyle. Noun 1. President and Chief Executive Officer Frank M. Jaehnert. "This is due to disciplined cost control, increasing the profitability of our core business and successfully integrating our recent acquisitions." "Globally our third quarter had a sluggish start but ended with a return of modest base business growth in the Americas and Europe and continued strong growth in Asia," said Brady Chief Financial Officer David Mathieson David Mathieson (born January 18, 1978 in Dumfries, Scotland) is a goalkeeper currently playing for Scottish First Division side Gretna. He has previously played for St Johnstone and Queen of the South. . "As our visibility improves we are increasing our guidance on net income from $78 to $80 million, to $80 to $82 million, and earnings per diluted share from $1.55 to $1.60, to a range of $1.61 to $1.64. We are also narrowing our sales guidance from previously announced $790 to $810 million, to fiscal 2005 sales of $805 to $810 million." A webcast of a conference call regarding the company's fiscal 2005 third quarter results will be available at www.investor.bradycorp.com beginning at 9:30 a.m. Central Time today. Brady is an international manufacturer and marketer of identification and materials solutions, with products including labels, signs, precision die-cut materials, printing systems, software, and label-application and data-collection systems for electronics, telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. , manufacturing, electrical, and a variety of other markets. Founded in 1914, Brady is headquartered in Milwaukee and employs about 4,300 people in operations in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. , Europe, Asia/Pacific, Latin America Latin America, the Spanish-speaking, Portuguese-speaking, and French-speaking countries (except Canada) of North America, South America, Central America, and the West Indies. and Canada Canada (kăn`ədə), independent nation (2001 pop. 30,007,094), 3,851,787 sq mi (9,976,128 sq km), N North America. Canada occupies all of North America N of the United States (and E of Alaska) except for Greenland and the French islands of . More information is available on the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the at www.bradycorp.com.
Information by regional segment for the three and nine months ended
April 30, 2005 and 2004 is as follows:
(Dollars in thousands) Americas Europe Asia Corporate and Total
Eliminations
SALES TO EXTERNAL
CUSTOMERS
Three months ended:
April 30, 2005 $109,058 $71,452 $29,256 $209,766
April 30, 2004 89,251 69,683 21,920 180,854
Nine months ended:
April 30, 2005 $309,762 $206,865 $89,774 $606,401
April 30, 2004 243,539 183,308 58,861 485,708
SALES GROWTH
INFORMATION
Three months ended
April 30, 2005:
Base 0.7 % -2.9 % 7.5 % 0.1 %
Currency 1.2 % 5.4 % 1.8 % 2.9 %
Acquisitions 20.3 % 0.0 % 24.1 % 13.0 %
Total 22.2 % 2.5 % 33.4 % 16.0 %
Nine months ended
April 30, 2005:
Base 5.9 % 3.6 % 19.7 % 6.7 %
Currency 1.0 % 7.7 % 2.7 % 3.7 %
Acquisitions 20.3 % 1.5 % 30.1 % 14.4 %
Total 27.2 % 12.8 % 52.5 % 24.8 %
SEGMENT PROFIT (LOSS)
Three months ended:
April 30, 2005 $28,155 $21,563 $7,778 $(905) $56,591
April 30, 2004 17,656 19,461 6,520 (1,067) 42,570
Percentage
increase 59.5% 10.8% 19.3% 15.2% 32.9%
Nine months ended:
April 30, 2005 $73,966 $61,296 $25,397 ($2,915) $157,744
April 30, 2004 41,913 48,256 16,849 (3,037) 103,981
Percentage
increase 76.5% 27.0% 50.7% 4.0% 51.7%
PROFIT RECONCILIATION (Dollars in thousands)
Three months ended: Nine months ended:
April 30, April 30, April 30, April 30,
2005 2004 2005 2004
Total profit for reportable
segments $57,496 $43,637 $160,659 $107,018
Corporate and eliminations (905) (1,067) (2,915) (3,037)
Unallocated amounts:
Administrative costs (19,288) (17,474) (55,526) (48,074)
Interest - net (1,826) 138 (5,472) 363
Foreign exchange (211) (35) 35 (12)
Restructuring charge, net - (455) - (2,274)
Other (1,788) (1,318) (3,976) (2,909)
Income before income taxes 33,478 23,426 92,805 51,075
Income taxes (8,522) (7,027) (26,913) (16,290)
Net income $24,956 $16,399 $65,892 $34,785
This news release contains forward-looking information, as defined in
the Private Securities Litigation Reform Act of 1995. Forward-looking
information in this release involves risks and uncertainties,
including, but not limited to, domestic and international economic
conditions and growth rates; fluctuations in currency exchange rates
for international currencies versus the U.S. dollar; the successful
implementation of a new enterprise-resource-planning system; the
ability of the company to acquire, integrate and achieve anticipated
synergies from new businesses; the ability of the company to adjust
its cost structure to changes in levels of sales and product mix in a
timely manner; variations in the economic or political conditions in
the countries in which the company does business; technology changes;
and the continued availability of sources of supply. Brady cautions
that forward-looking statements are not guarantees, since there are
inherent difficulties in predicting future results, and that actual
results could differ materially from those expressed or implied in
forward-looking statements.
BRADY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Dollars in Thousands)
(Unaudited)
----------------------------------
Three Months Ended April 30,
----------------------------------
Percentage
2005 2004 Change
---------- ---------- ----------
Net sales $ 209,766 $ 180,854 16.0%
Cost of products sold 95,898 86,315 11.1%
---------- ----------
Gross margin 113,868 94,539 20.4%
Operating expenses:
Research and development 5,941 6,210 -4.3%
Selling, general and
administrative 72,384 64,549 12.1%
Restructuring charge - net - 455
---------- ----------
Total operating expenses 78,325 71,214 10.0%
Operating income 35,543 23,325 52.4%
Other income and (expense):
Investment and other income 36 106 -66.04%
Interest expense (2,101) (5) 41920.0%
---------- ----------
Income before income taxes 33,478 23,426 42.9%
Income taxes 8,522 7,027 21.3%
---------- ----------
Net income $ 24,956 $ 16,399 52.2%
========== ==========
Per Class A Nonvoting Common Share (1):
Basic net income $ 0.51 $ 0.35 45.7%
Diluted net income $ 0.50 $ 0.34 47.1%
Dividends $ 0.11 $ 0.11 0.0%
Per Class B Voting Common Share (1):
Basic net income $ 0.51 $ 0.35 45.7%
Diluted net income $ 0.50 $ 0.34 47.1%
Dividends $ 0.11 $ 0.11 0.0%
Weighted average common shares
outstanding (in Thousands) (1):
Basic 49,177 47,336
Diluted 50,192 47,998
(Unaudited)
----------------------------------
Nine Months Ended April 30,
----------------------------------
Percentage
2005 2004 Change
----------- ---------- ----------
Net sales $ 606,401 $ 485,708 24.8%
Cost of products sold 282,052 234,533 20.3%
---------- ----------
Gross margin 324,349 251,175 29.1%
Operating expenses:
Research and development 17,744 16,680 6.4%
Selling, general and
administrative 208,335 181,495 14.8%
Restructuring charge - net - 2,274
---------- ----------
Total operating expenses 226,079 200,449 12.8%
Operating income 98,270 50,726 93.7%
Other income and (expense):
Investment and other income 812 385 110.91%
Interest expense (6,277) (36) 17336.1%
---------- ----------
Income before income taxes 92,805 51,075 81.7%
Income taxes 26,913 16,290 65.2%
---------- ----------
Net income $ 65,892 $ 34,785 89.4%
========== ==========
Per Class A Nonvoting Common Share (1):
Basic net income $ 1.35 $ 0.74 82.4%
Diluted net income $ 1.32 $ 0.73 80.8%
Dividends $ 0.33 $ 0.32 3.1%
Per Class B Voting Common Share (1):
Basic net income $ 1.33 $ 0.73 82.2%
Diluted net income $ 1.31 $ 0.72 81.9%
Dividends $ 0.31 $ 0.30 3.3%
Weighted average common shares
outstanding (in Thousands) (1):
Basic 48,872 47,101
Diluted 49,754 47,683
(1) Restated for two-for-one stock split, accounted for as a dividend,
effective December 31, 2004
BRADY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
(Unaudited)
-----------------------------
April 30, 2005 July 31, 2004
-------------- --------------
ASSETS
------
Current assets:
Cash and cash equivalents $ 70,287 $ 65,218
Short term investments 16,200 5,150
Accounts receivable, less allowance
for losses ($3,899 and $3,869,
respectively) 119,301 105,322
Inventories:
Finished Products 37,102 29,616
Work-in-process 9,744 6,550
Raw materials and supplies 20,193 16,765
-------------- --------------
Total inventories 67,039 52,931
Prepaid expenses and other current
assets 24,226 23,302
-------------- --------------
Total current assets 297,053 251,923
Other assets:
Goodwill 314,589 275,897
Other Intangible assets 60,557 45,879
Other 43,668 34,526
-------------- --------------
Total other assets 418,814 356,302
Property, plant and equipment:
Cost:
Land 6,451 6,242
Buildings and improvements 64,760 58,850
Machinery and equipment 156,490 153,467
Construction in progress 5,646 1,468
-------------- --------------
233,347 220,027
Less accumulated depreciation 138,507 133,922
-------------- --------------
Net property, plant and equipment 94,840 86,105
-------------- --------------
Total $ 810,707 $ 694,330
============== ==============
LIABILITIES AND STOCKHOLDERS' INVESTMENT
----------------------------------------
Current liabilities:
Accounts payable $ 36,914 $ 38,533
Wages and amounts withheld from
employees 38,809 41,872
Taxes, other than income taxes 5,810 3,852
Accrued income taxes 24,419 12,399
Other current liabilities 26,316 23,529
Short-term borrowings and current
maturities on long-term debt 11 32
-------------- --------------
Total current liabilities 132,279 120,217
Long-term obligations, less current
maturities 150,028 150,019
Other liabilities 36,857 20,779
-------------- --------------
Total liabilities 319,164 291,015
Stockholders' investment:
Common stock:
Class A nonvoting common stock - Issued
and outstanding, 45,735,249 and
44,690,798 shares, respectively 457 447
Class B voting common stock - Issued
and outstanding 3,538,628 shares 35 35
Additional paid-in capital 94,855 72,625
Income retained in the business 372,231 322,224
Treasury Stock - 117,245 and 69,314
shares, respectively, at cost (2,134) (1,074)
Accumulated other comprehensive
income 26,140 9,340
Other (41) (282)
-------------- --------------
Total stockholders' investment 491,543 403,315
-------------- --------------
Total $ 810,707 $ 694,330
============== ==============
BRADY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands) (Unaudited)
Nine Months Ended
April 30
2005 2004
-------------- --------------
Operating activities:
Net income $ 65,892 $ 34,785
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 19,991 14,654
Income tax benefit from the exercise
of stock options 4,747 2,134
Loss on sale or disposal of property,
plant & equipment 599 111
Provision for losses on accounts
receivable 980 1,116
Non-cash portion of stock-based
compensation expense 3,101 791
Net restructuring charge accrued
liability - 2,178
Changes in operating assets and
liabilities (net of effects of
business acquisitions):
Accounts receivable (5,099) (14,216)
Inventory (8,423) (4,677)
Prepaid expenses and other assets (979) (144)
Accounts payable and accrued
expenses (9,170) 2,470
Income taxes 7,753 7,452
Other liabilities 3,491 828
-------------- --------------
Net cash provided by operating
activities 82,883 47,482
Investing activities:
Acquisition of businesses, net of cash
acquired (49,397) (30,728)
Purchases of short-term investments (37,000) (28,050)
Sales of short-term investments 25,950 26,680
Purchases of property, plant and
equipment (14,411) (10,616)
Proceeds from sale of property, plant
and equipment 288 281
Other (1,188) (1,358)
-------------- --------------
Net cash used in investing
activities (75,758) (43,791)
Financing activities:
Payment of dividends (15,885) (14,854)
Proceeds from issuance of common stock 14,635 10,745
Principal payments on debt (83,046) (1,563)
Proceeds from debt 83,000
Purchase of treasury stock - (564)
-------------- --------------
Net cash used in financing
activities (1,296) (6,236)
Effect of exchange rate changes on cash (760) 4,918
Net increase in cash and cash
equivalents 5,069 2,373
Cash and cash equivalents, beginning of
period 65,218 64,208
-------------- --------------
Cash and cash equivalents,
end of period $ 70,287 $ 66,581
============== ==============
Supplemental disclosures:
Cash paid during the period for:
Interest $ 4,051 $ 73
Income taxes, net of refunds 12,982 5,616
Acquisitions:
Fair value of asset acquired, net
of cash $ 35,971 $ 14,784
Liabilities assumed (18,212) (8,916)
Goodwill 31,638 24,860
-------------- --------------
Net cash paid for
acquisitions $ 49,397 $ 30,728
============== ==============
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