Wisconsin | 39-0971239 | |
(State of Incorporation) | (IRS Employer Identification No.) |
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02 | RESULTS OF OPERATIONS AND FINANCIAL CONDITION |
Item 7.01 | REGULATION FD DISCLOSURE |
Item 9.01 | FINANCIAL STATEMENTS AND EXHIBITS |
EXHIBIT NUMBER | DESCRIPTION |
99.1 | Press Release of Brady Corporation, dated February 23, 2017, relating to second quarter fiscal 2017 financial results. |
99.2 | Informational slides provided by Brady Corporation, dated February 23, 2017, relating to second quarter fiscal 2017 financial results. |
BRADY CORPORATION | ||
Date: February 23, 2017 | /s/ AARON J. PEARCE | |
Aaron J. Pearce | ||
Chief Financial Officer and Treasurer |
EXHIBIT NUMBER | DESCRIPTION |
99.1 | Press Release of Brady Corporation, dated February 23, 2017, relating to second quarter fiscal 2017 financial results. |
99.2 | Informational slides provided by Brady Corporation, dated February 23, 2017, relating to second quarter fiscal 2017 financial results. |
• | Earnings per diluted Class A Nonvoting Common Share was $0.49 in the second quarter of fiscal 2017 compared to $0.30 in the same quarter of the prior year. Results for the quarter include $0.09 per share of discrete tax benefits. |
• | Organic revenue growth was 1.3 percent for the quarter ended January 31, 2017. |
• | Net debt was $37.7 million at January 31, 2017 compared to $132.5 million at January 31, 2016; providing flexibility for future investments. |
• | Earnings per diluted Class A Common Share guidance for the full year ending July 31, 2017 increased from a range of $1.55 to $1.70 to a range of $1.75 to $1.85. |
Three months ended January 31, | Six months ended January 31, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Net sales | $ | 268,001 | $ | 268,630 | $ | 548,177 | $ | 551,703 | |||||||
Cost of products sold | 133,843 | 135,738 | 273,661 | 279,462 | |||||||||||
Gross margin | 134,158 | 132,892 | 274,516 | 272,241 | |||||||||||
Operating expenses: | |||||||||||||||
Research and development | 9,481 | 9,097 | 18,627 | 17,666 | |||||||||||
Selling, general and administrative | 94,715 | 100,206 | 192,719 | 200,884 | |||||||||||
Total operating expenses | 104,196 | 109,303 | 211,346 | 218,550 | |||||||||||
Operating income | 29,962 | 23,589 | 63,170 | 53,691 | |||||||||||
Other income (expense): | |||||||||||||||
Investment and other income (expense) | 596 | (992 | ) | 107 | (1,751 | ) | |||||||||
Interest expense | (1,458 | ) | (2,130 | ) | (3,190 | ) | (4,281 | ) | |||||||
Earnings before income taxes | 29,100 | 20,467 | 60,087 | 47,659 | |||||||||||
Income tax expense | 3,803 | 5,177 | 12,237 | 13,666 | |||||||||||
Net earnings | $ | 25,297 | $ | 15,290 | $ | 47,850 | $ | 33,993 | |||||||
Net earnings per Class A Nonvoting Common Share: | |||||||||||||||
Basic | $ | 0.50 | $ | 0.30 | $ | 0.94 | $ | 0.67 | |||||||
Diluted | $ | 0.49 | $ | 0.30 | $ | 0.93 | $ | 0.67 | |||||||
Dividends | $ | 0.21 | $ | 0.20 | $ | 0.41 | $ | 0.41 | |||||||
Net earnings per Class B Voting Common Share: | |||||||||||||||
Basic | $ | 0.50 | $ | 0.30 | $ | 0.93 | $ | 0.65 | |||||||
Diluted | $ | 0.49 | $ | 0.30 | $ | 0.91 | $ | 0.65 | |||||||
Dividends | $ | 0.21 | $ | 0.20 | $ | 0.39 | $ | 0.39 | |||||||
Weighted average common shares outstanding (in thousands): | |||||||||||||||
Basic | 51,054 | 50,527 | 50,844 | 50,778 | |||||||||||
Diluted | 51,954 | 50,647 | 51,721 | 50,868 |
January 31, 2017 | July 31, 2016 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 125,208 | $ | 141,228 | |||
Accounts receivable—net | 140,018 | 147,333 | |||||
Inventories: | |||||||
Finished products | 60,642 | 64,313 | |||||
Work-in-process | 17,029 | 16,678 | |||||
Raw materials and supplies | 19,737 | 18,436 | |||||
Total inventories | 97,408 | 99,427 | |||||
Prepaid expenses and other current assets | 19,051 | 19,436 | |||||
Total current assets | 381,685 | 407,424 | |||||
Other assets: | |||||||
Goodwill | 424,857 | 429,871 | |||||
Other intangible assets | 55,980 | 59,806 | |||||
Deferred income taxes | 27,403 | 27,238 | |||||
Other | 16,327 | 17,181 | |||||
Property, plant and equipment: | |||||||
Cost: | |||||||
Land | 7,272 | 5,809 | |||||
Buildings and improvements | 94,542 | 95,355 | |||||
Machinery and equipment | 254,688 | 256,549 | |||||
Construction in progress | 3,168 | 2,842 | |||||
359,670 | 360,555 | ||||||
Less accumulated depreciation | 262,786 | 258,111 | |||||
Property, plant and equipment—net | 96,884 | 102,444 | |||||
Total | $ | 1,003,136 | $ | 1,043,964 | |||
LIABILITIES AND STOCKHOLDERS’ INVESTMENT | |||||||
Current liabilities: | |||||||
Notes payable | $ | 5,691 | $ | 4,928 | |||
Accounts payable | 58,515 | 62,245 | |||||
Wages and amounts withheld from employees | 39,157 | 45,998 | |||||
Taxes, other than income taxes | 6,617 | 7,403 | |||||
Accrued income taxes | 2,011 | 6,136 | |||||
Other current liabilities | 38,210 | 40,017 | |||||
Total current liabilities | 150,201 | 166,727 | |||||
Long-term obligations, less current maturities | 157,223 | 211,982 | |||||
Other liabilities | 60,820 | 61,657 | |||||
Total liabilities | 368,244 | 440,366 | |||||
Stockholders’ investment: | |||||||
Common Stock: | |||||||
Class A nonvoting common stock—Issued 51,261,487 and 51,261,487 shares, respectively and outstanding 47,594,684 and 46,920,974 shares, respectively | 513 | 513 | |||||
Class B voting common stock—Issued and outstanding, 3,538,628 shares | 35 | 35 | |||||
Additional paid-in capital | 317,587 | 317,001 | |||||
Earnings retained in the business | 480,368 | 453,371 | |||||
Treasury stock—3,666,803 and 4,340,513 shares, respectively of Class A nonvoting common stock, at cost | (90,998 | ) | (108,714 | ) | |||
Accumulated other comprehensive loss | (68,214 | ) | (54,745 | ) | |||
Other | (4,399 | ) | (3,863 | ) | |||
Total stockholders’ investment | 634,892 | 603,598 | |||||
Total | $ | 1,003,136 | $ | 1,043,964 |
Six months ended January 31, | |||||||
2017 | 2016 | ||||||
Operating activities: | |||||||
Net earnings | $ | 47,850 | $ | 33,993 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 14,102 | 17,502 | |||||
Stock-based compensation expense | 5,394 | 4,569 | |||||
Deferred income taxes | (4,547 | ) | 3,338 | ||||
Changes in operating assets and liabilities: | |||||||
Accounts receivable | 3,407 | 3,204 | |||||
Inventories | 224 | 3,403 | |||||
Prepaid expenses and other assets | 220 | (3,811 | ) | ||||
Accounts payable and accrued liabilities | (9,384 | ) | (1,618 | ) | |||
Income taxes | (3,932 | ) | (2,326 | ) | |||
Net cash provided by operating activities | 53,334 | 58,254 | |||||
Investing activities: | |||||||
Purchases of property, plant and equipment | (7,235 | ) | (3,928 | ) | |||
Other | 593 | 2,521 | |||||
Net cash used in investing activities | (6,642 | ) | (1,407 | ) | |||
Financing activities: | |||||||
Payment of dividends | (20,852 | ) | (20,425 | ) | |||
Proceeds from exercise of stock options | 14,659 | 53 | |||||
Purchase of treasury stock | — | (23,397 | ) | ||||
Repayment of borrowing on credit facilities | (50,469 | ) | (437 | ) | |||
Debt issuance costs | — | (803 | ) | ||||
Income tax on equity-based compensation, and other | (640 | ) | (1,299 | ) | |||
Net cash used in financing activities | (57,302 | ) | (46,308 | ) | |||
Effect of exchange rate changes on cash | (5,410 | ) | (4,833 | ) | |||
Net (decrease) increase in cash and cash equivalents | (16,020 | ) | 5,706 | ||||
Cash and cash equivalents, beginning of period | 141,228 | 114,492 | |||||
Cash and cash equivalents, end of period | $ | 125,208 | $ | 120,198 |
Three months ended January 31, | Six months ended January 31, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
SALES TO EXTERNAL CUSTOMERS | |||||||||||||||
ID Solutions | $ | 190,962 | $ | 189,780 | $ | 392,226 | $ | 390,800 | |||||||
Workplace Safety | 77,039 | 78,850 | 155,951 | 160,903 | |||||||||||
Total | $ | 268,001 | $ | 268,630 | $ | 548,177 | $ | 551,703 | |||||||
SALES INFORMATION | |||||||||||||||
ID Solutions | |||||||||||||||
Organic | 1.9 | % | 0.9 | % | 1.3 | % | (0.7 | )% | |||||||
Currency | (1.3 | )% | (4.6 | )% | (0.9 | )% | (5.0 | )% | |||||||
Total | 0.6 | % | (3.7 | )% | 0.4 | % | (5.7 | )% | |||||||
Workplace Safety | |||||||||||||||
Organic | (0.2 | )% | (0.6 | )% | (1.3 | )% | (1.4 | )% | |||||||
Currency | (2.1 | )% | (7.2 | )% | (1.8 | )% | (8.5 | )% | |||||||
Total | (2.3 | )% | (7.8 | )% | (3.1 | )% | (9.9 | )% | |||||||
Total Company | |||||||||||||||
Organic | 1.3 | % | 0.4 | % | 0.5 | % | (0.9 | )% | |||||||
Currency | (1.5 | )% | (5.4 | )% | (1.1 | )% | (6.0 | )% | |||||||
Total | (0.2 | )% | (5.0 | )% | (0.6 | )% | (6.9 | )% | |||||||
SEGMENT PROFIT | |||||||||||||||
ID Solutions | $ | 28,961 | $ | 23,056 | $ | 62,035 | $ | 48,487 | |||||||
Workplace Safety | 6,059 | 6,296 | 12,504 | 15,678 | |||||||||||
Total | $ | 35,020 | $ | 29,352 | $ | 74,539 | $ | 64,165 | |||||||
SEGMENT PROFIT AS A PERCENT OF SALES | |||||||||||||||
ID Solutions | 15.2 | % | 12.1 | % | 15.8 | % | 12.4 | % | |||||||
Workplace Safety | 7.9 | % | 8.0 | % | 8.0 | % | 9.7 | % | |||||||
Total | 13.1 | % | 10.9 | % | 13.6 | % | 11.6 | % |
Three months ended January 31, | Six months ended January 31, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Total segment profit | $ | 35,020 | $ | 29,352 | $ | 74,539 | $ | 64,165 | |||||||
Unallocated amounts: | |||||||||||||||
Administrative costs | (5,058 | ) | (5,763 | ) | (11,369 | ) | (10,474 | ) | |||||||
Investment and other income (expense) | 596 | (992 | ) | 107 | (1,751 | ) | |||||||||
Interest expense | (1,458 | ) | (2,130 | ) | (3,190 | ) | (4,281 | ) | |||||||
Earnings before income taxes | $ | 29,100 | $ | 20,467 | $ | 60,087 | $ | 47,659 |
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