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.
BRADY CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF
EARNINGS (Dollars in thousands, except per share data)
(Unaudited) (Unaudited) Three months
ended January 31, Six months ended January 31, 2014 2013 2014 2013
Net sales $ 291,194 $ 272,702 $ 598,724 $ 544,717 Cost of products
sold 148,658 130,811 298,341
252,641 Gross margin 142,536 141,891 300,383
292,076 Operating expenses: Research and development 8,440 8,213
17,027 16,100 Selling, general and administrative 111,426 109,948
224,159 209,010 Restructuring charges 4,324
1,933 11,163 1,933 Total
operating expenses 124,190 120,094 252,349 227,043 Operating
income 18,346 21,797 48,034 65,033 Other income and
(expense): Investment and other income 255 898 1,017 1,294 Interest
expense (3,676 ) (4,406 ) (7,397 )
(8,569 ) Earnings from continuing operations before income
taxes 14,925 18,289 41,654 57,758 Income tax expense
4,408 28,960 13,002
42,138 Earnings (loss) from continuing operations $
10,517 $ (10,671 ) $ 28,652 $ 15,620 Earnings from
discontinued operations, net of income taxes 5,907
1,987 11,701 2,884
Net earnings (loss) $ 16,424 $ (8,684 ) $ 40,353 $
18,504 Earnings (loss) from continuing operations per
Class A Nonvoting Common Share: Basic $ 0.20 $ (0.21 ) $ 0.55 $
0.30 Diluted $ 0.20 $ (0.21 ) $ 0.55 $ 0.30 Earnings (loss)
from continuing operations per Class B Voting Common Share: Basic $
0.20 $ (0.21 ) $ 0.53 $ 0.29 Diluted $ 0.20 $ (0.21 ) $ 0.53 $ 0.29
Earnings from discontinued operations per Class A Nonvoting
Common Share: Basic $ 0.11 $ 0.04 $ 0.22 $ 0.06 Diluted $ 0.11 $
0.04 $ 0.22 $ 0.06 Earnings from discontinued operations per
Class B Voting Common Share: Basic $ 0.11 $ 0.04 $ 0.23 $ 0.05
Diluted $ 0.11 $ 0.04 $ 0.22 $ 0.05 Net earnings (loss) per
Class A Nonvoting Common Share: Basic $ 0.31 $ (0.17 ) $ 0.77 $
0.36 Diluted $ 0.31 $ (0.17 ) $ 0.77 $ 0.36 Dividends $ 0.195 $
0.19 $ 0.39 $ 0.38 Net earnings (loss) per Class B Voting
Common Share: Basic $ 0.31 $ (0.17 ) $ 0.76 $ 0.34 Diluted $ 0.31 $
(0.17 ) $ 0.75 $ 0.34 Dividends $ 0.195 $ 0.19 $ 0.373 $ 0.36
Weighted average common shares outstanding (in thousands):
Basic 52,208 51,177 52,140 51,108 Diluted 52,494 51,177 52,457
51,507 BRADY CORPORATION AND SUBSIDIARIES CONSOLIDATED
BALANCE SHEETS (Dollars in thousands) (Unaudited) January
31, 2014 July 31, 2013
ASSETS
Current assets: Cash and cash equivalents $ 79,116 $ 91,058
Accounts receivable—net 168,037 169,261 Inventories: Finished
products 68,170 64,544 Work-in-process 16,077 14,776 Raw materials
and supplies 19,869 15,387 Total
inventories 104,116 94,707 Assets held for sale 124,508 119,864
Prepaid expenses and other current assets 44,120
37,600
Total current assets 519,897 512,490
Other assets: Goodwill 615,404 617,236 Other intangible
assets 146,859 156,851 Deferred income taxes 9,449 8,623 Other
21,915 21,325
Property, plant and equipment: Cost: Land
7,738 7,861 Buildings and improvements 92,886 91,471 Machinery and
equipment 272,128 266,787 Construction in progress 15,931
11,842 388,683 377,961 Less accumulated
depreciation 264,167 255,803
Property, plant and
equipment—net
124,516 122,158
Total $
1,438,040 $ 1,438,683
LIABILITIES AND
STOCKHOLDERS’ INVESTMENT
Current liabilities: Notes payable $ 23,946 $ 50,613
Accounts payable 86,918 82,519 Wages and amounts withheld from
employees 36,386 42,413 Liabilities held for sale 31,755 34,583
Taxes, other than income taxes 7,028 8,243 Accrued income taxes
5,383 7,056 Other current liabilities 36,971 36,806 Current
maturities on long-term debt 61,264 61,264
Total current liabilities 289,651 323,497
Long-term obligations, less current maturities 203,063
201,150
Other liabilities 81,896 83,239
Total liabilities 574,610 607,886
Stockholders’
investment: Common stock: Class A nonvoting common stock—Issued
51,261,487 and 51,261,487 shares, respectively and outstanding
48,828,416 and 48,408,544 shares, respectively 513 513 Class B
voting common stock—Issued and outstanding, 3,538,628 shares 35 35
Additional paid-in capital 313,963 306,191 Earnings retained in the
business 558,494 538,512 Treasury stock—2,353,071 and 2,626,276
shares, respectively of Class A nonvoting
common stock, at cost
(64,346 ) (69,797 ) Accumulated other comprehensive income 54,427
56,063 Other 344 (720 )
Total stockholders’
investment 863,430 830,797
Total $ 1,438,040 $ 1,438,683
BRADY CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH
FLOWS (Dollars in Thousands) (Unaudited) Six months ended January
31, 2014 2013 Operating activities: Net earnings $ 40,353 $ 18,504
Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation and amortization 22,342 22,046
Non-cash portion of stock-based compensation expense 4,377 6,868
Non-cash portion of restructuring charges 97 200 Loss on sales of
businesses — 3,138 Deferred income taxes (2,402 ) 26,050 Changes in
operating assets and liabilities (net of effects of business
acquisitions/divestitures): Accounts receivable (1,418 ) (5,418 )
Inventories (8,754 ) (4,475 ) Prepaid expenses and other assets
(3,505 ) (2,772 ) Accounts payable and accrued liabilities (7,263 )
(13,629 ) Income taxes (2,050 ) (6,318 ) Net cash
provided by operating activities 41,777 44,194 Investing
activities: Purchases of property, plant and equipment (17,607 )
(15,667 ) Acquisition of business, net of cash acquired — (300,757
) Sales of businesses, net of cash retained — 10,178 Other
89 (549 ) Net cash used in investing activities
(17,518 ) (306,795 ) Financing activities: Payment of
dividends (20,370 ) (19,499 ) Proceeds from issuance of common
stock 10,894 4,409 Purchase of treasury stock — (5,121 ) Proceeds
from borrowing on notes payable — 220,000 Repayment of borrowing on
notes payable (30,000 ) (112,472 ) Proceeds from borrowings on line
of credit 3,187 — Income tax on the exercise of stock options and
deferred compensation distribution, and other (984 )
1,273 Net cash (used in) provided by financing activities
(37,273 ) 88,590 Effect of exchange rate changes on cash
1,072 9,422 Net decrease in cash and cash equivalents
(11,942 ) (164,589 ) Cash and cash equivalents, beginning of period
91,058 305,900 Cash and cash
equivalents, end of period $ 79,116 $ 141,311
Supplemental disclosures: Cash paid during the period for:
Interest, net of capitalized interest $ 7,283 $ 7,866 Income taxes,
net of refunds 14,083 19,964 Acquisitions: Fair value of assets
acquired, net of cash — $ 168,674 Liabilities assumed — (57,859 )
Goodwill — 189,942 Net cash paid for
acquisitions — $ 300,757
BRADY CORPORATION AND SUBSIDIARIES SEGMENT
INFORMATION (Dollars in Thousands) Three Months
Ended January 31, Six Months Ended January 31, 2014 2013 2014 2013
SALES TO EXTERNAL CUSTOMERS ID Solutions $ 194,732 $ 168,234
$ 404,278 $ 330,627 Workplace Safety 96,462
104,468 194,446 214,090 Total $
291,194 $ 272,702 $ 598,724 $ 544,717
SALES INFORMATION ID Solutions Organic 2.5 %
1.8 % 2.9 % 1.4 % Currency (0.5 )% (0.5 )% (0.4 )% (1.5 )%
Acquisitions 13.8 % 11.1 % 19.8 % 5.5 %
Total 15.8 % 12.4 % 22.3 % 5.4 %
Workplace Safety Organic (6.8 )% (7.0 )% (8.4 )% (5.1 )%
Currency (0.9 )% 0.4 % (0.8 )% (1.0 )% Acquisitions — %
5.1 % — % 5.5 % Total (7.7 )%
(1.5 )% (9.2 )% (0.6 )%
Total Company Organic
(1.1 )% (1.8 )% (1.6 )% (1.3 )% Currency (0.6 )% (0.1 )% (0.5 )%
(1.3 )% Acquisitions 8.5 % 8.6 % 12.0 %
5.5 % Total 6.8 % 6.7 % 9.9 % 2.9 %
SEGMENT PROFIT ID Solutions $ 37,526 $ 34,643 $
88,493 $ 79,223 Workplace Safety 14,668
23,600 33,042 51,429
Total $ 52,194 $ 58,243 $ 121,535
$ 130,652
SEGMENT PROFIT AS A PERCENT OF SALES
ID Solutions 19.3 % 20.6 % 21.9 % 24.0 % Workplace Safety
15.2 % 22.6 % 17.0 % 24.0 % Total 17.9
% 21.4 % 20.3 % 24.0 % Three
Months Ended January 31, Six Months Ended January 31, 2014 2013
2014 2013 Total segment profit $ 52,194 $ 58,243 $ 121,535 $
130,652 Unallocated amounts: Administrative costs (29,524 ) (34,513
) (62,338 ) (63,686 ) Restructuring charges (4,324 ) (1,933 )
(11,163 ) (1,933 ) Investment and other income 255 898 1,017 1,294
Interest expense (3,676 ) (4,406 ) (7,397 )
(8,569 ) Earnings from continuing operations before income
taxes $ 14,925 $ 18,289 $ 41,654 $ 57,758
BRADY
CORPORATION AND SUBSIDIARIES SEGMENT INFORMATION (Dollars in
Thousands) Fiscal 2014 Fiscal 2013 Q1 Q2
Q2 YTD Q1 Q2 Q2 YTD Q3 Q4
Full Year
SALES TO EXTERNAL
CUSTOMERS
Identification Solutions $ 209,546 $ 194,732 $ 404,278 $ 162,393 $
168,234 $ 330,627 $ 197,417 $ 211,071 $ 739,115 Workplace Safety
97,984 96,462
194,446 109,622 104,468
214,090 105,066
99,521 418,677 Total Company $
307,530 $ 291,194 $ 598,724 $
272,015 $ 272,702 $ 544,717
$ 302,483 $ 310,592 $ 1,157,792
SALES
INFORMATION
Identification Solutions Organic 3.3 % 2.5 % 2.9 % 0.9 % 1.8 % 1.4
% (1.9 )% 2.3 % 0.8 % Currency (0.3 )% (0.5 )% (0.4 )% (2.4 )% (0.5
)% (1.5 )% (1.0 )% 0.2 % (1.0 )% Acquisitions 26.0 %
13.8 % 19.8 % 0.4 % 11.1
% 5.5 % 25.3 % 28.2 %
16.3 % Total 29.0 % 15.8 %
22.3 % (1.1 )% 12.4 %
5.4 % 22.4 % 30.7 %
16.1 % Workplace Safety Organic (10.0 )% (6.8 )% (8.4
)% (3.3 )% (7.0 )% (5.1 )% (9.0 )% (8.6 )% (7.0 )% Currency (0.6 )%
(0.9 )% (0.8 )% (2.3 )% 0.4 % (1.0 )% (1.1 )% 0.1 % (0.7 )%
Acquisitions — % — % — %
5.8 % 5.1 % 5.5 % 5.0 %
— % 4.0 % Total (10.6 )%
(7.7 )% (9.2 )% 0.2 %
(1.5 )% (0.6 )% (5.1 )%
(8.5 )% (3.7 )% Total Company Organic (2.1 )%
(1.1 )% (1.6 )% (0.8 )% (1.8 )% (1.3 )% (4.8 )% (2.1 )% (2.4 )%
Currency (0.4 )% (0.6 )% (0.5 )% (2.4 )% (0.1 )% (1.3 )% (1.0 )%
0.1 % (0.8 )% Acquisitions 15.6 % 8.5 %
12.0 % 2.6 % 8.6 % 5.5 %
17.0 % 16.9 % 11.3 %
Total 13.1 % 6.8 % 9.9 %
(0.6 )% 6.7 % 2.9 % 11.2
% 14.9 % 8.1 %
SEGMENT
PROFIT
Identification Solutions $ 50,967 $ 37,526 $ 88,493 $ 44,581 $
34,643 $ 79,223 $ 46,787 $ 48,379 $ 174,390 Workplace Safety
18,374 14,668 33,042
27,829 23,600
51,429 23,453
20,359 95,241 Total Company $ 69,341
$ 52,194 $ 121,535 $ 72,410
$ 58,243 $ 130,652 $
70,240 $ 68,738 $ 269,631
SEGMENT PROFIT AS
PERCENT OF SALES
Identification Solutions 24.3 % 19.3 % 21.9 % 27.5 % 20.6 % 24.0 %
23.7 % 22.9 % 23.6 % Workplace Safety 18.8 %
15.2 % 17.0 % 25.4 % 22.6 %
24.0 % 22.3 % 20.5 %
22.7 % Total Company 22.5 % 17.9
% 20.3 % 26.6 % 21.4 %
24.0 % 23.2 % 22.1 %
23.3 %
Net Earnings
Reconciliation
Total segment profit $ 69,341 $ 52,194 $ 121,535 $ 72,410 $ 58,243
$ 130,652 $ 70,240 $ 68,738 $ 269,631 Unallocated Amounts:
Administrative costs (32,813 ) (29,524 ) (62,338 ) (29,173 )
(34,513 ) (63,686 ) (30,764 ) (27,242 ) (121,692 ) Restructuring
charges (6,839 ) (4,324 ) (11,163 ) — (1,933 ) (1,933 ) (8,540 )
(15,573 ) (26,046 ) Impairment charges — — — — — — — (204,448 )
(204,448 ) Investment and other income 761 255 1,017 395 898 1,294
1,132 1,098 3,523 Interest expense (3,721 )
(3,676 ) (7,397 ) (4,163 )
(4,406 ) (8,569 ) (4,186 )
(3,887 ) (16,642 ) Earnings (loss) from
continuing operations before income taxes $ 26,729 $
14,925 $ 41,654 $ 39,469 $
18,289 $ 57,758 $ 27,882
$ (181,314 ) $ (95,674 )
EBITDA from Continuing Operations Brady is presenting EBITDA
from Continuing Operations because it is used by many of our
investors and lenders, and is presented as a convenience to them.
EBITDA from Continuing Operations represents earnings (loss) from
continuing operations before interest expense, income taxes,
depreciation, amortization and impairment charges. EBITDA from
Continuing Operations is not a calculation based on generally
accepted accounting principles ("GAAP"). The amounts included in
the EBITDA from Continuing Operations calculation, however, are
derived from amounts included in the Consolidated Financial
Statements and supporting footnote disclosures. EBITDA from
Continuing Operations should not be considered as an alternative to
net earnings or operating income as an indicator of the Company's
operating performance, or as an alternative to net cash provided by
operating activities as a measure of liquidity. The EBITDA from
Continuing Operations measure presented may not always be
comparable to similarly titled measures reported by other companies
due to differences in the components of the calculation.
Fiscal 2014 Q1 Q2 Q3 Q4 Total EBITDA from Continuing
Operations: Earnings from continuing operations $ 18,135 $ 10,517 $
28,652 Interest expense 3,721 3,676 7,397 Income taxes 8,594 4,408
13,002 Depreciation and amortization 10,878 11,464
22,342 EBITDA from Continuing
Operations (non-GAAP measure) $ 41,328 $ 30,065
$ 71,393 Fiscal 2013 Q1 Q2 Q3 Q4
Total EBITDA from Continuing Operations: Earnings (loss) from
continuing operations $ 26,291 $ (10,671 ) $ 21,680 $ (175,557 ) $
(138,257 ) Interest expense 4,163 4,406 4,186 3,886 16,641 Income
taxes 13,178 28,960 6,202 (5,757 ) 42,583 Depreciation and
amortization 7,401 8,773 11,650 12,103 39,927 Intangible asset
write-down in restructuring charges — — 3,207 — 3,207 Impairment
charges — — — 204,448
204,448 EBITDA from Continuing Operations
(non-GAAP measure) $ 51,033 $ 31,468 $ 46,925 $
39,123 $ 168,549
EBITDA from
Discontinued Operations Brady is presenting EBITDA from
Discontinued Operations because it is used by many of our investors
and lenders, and is presented as a convenience to them. EBITDA from
Discontinued Operations represents earnings (loss) from
discontinued operations before interest expense, income taxes,
depreciation, amortization, and impairment charges. EBITDA from
Discontinued Operations is not a calculation based on generally
accepted accounting principles ("GAAP"). The amounts included in
the EBITDA from Discontinued Operations calculation, however, are
derived from amounts included in the Consolidated Financial
Statements and supporting footnote disclosures. EBITDA from
Discontinued Operations should not be considered as an alternative
to net earnings or operating income as an indicator of the
Company's operating performance, or as an alternative to net cash
provided by operating activities as a measure of liquidity. The
EBITDA from Discontinued Operations measure presented may not
always be comparable to similarly titled measures reported by other
companies due to differences in the components of the calculation.
Fiscal 2014 Q1 Q2 Q3 Q4 Total EBITDA from
Discontinued Operations: Earnings from discontinued operations $
5,794 $ 5,907 $ 11,701 Interest expense — — — Income taxes 2,535
(1,475 ) 1,060 Depreciation and amortization — —
— EBITDA from Discontinued
Operations (non-GAAP measure) $ 8,329 $ 4,432
$ 12,761 Fiscal 2013 Q1 Q2 Q3 Q4 Total
EBITDA from Discontinued Operations: Earnings (loss) from
discontinued operations $ 897 $ 1,987 $ (17,447 ) $ (1,714 ) $
(16,277 ) Interest expense — — — — — Income taxes 303 1,666 1,393
1,340 4,702 Depreciation and amortization 2,991 2,881 2,926 — 8,798
Loss on write-down of assets held for sale — —
15,658 — 15,658 EBITDA
from Discontinued Operations (non-GAAP measure) $ 4,191 $ 6,534
$ 2,530 $ (374 ) $ 12,881
EBITDA: Brady is presenting EBITDA because it is used by
many of our investors and lenders, and is presented as a
convenience to them. EBITDA represents net earnings (loss) before
interest expense, income taxes, depreciation, amortization and
impairment charges. EBITDA is not a calculation based on generally
accepted accounting principles ("GAAP"). The amounts included in
the EBITDA calculation, however, are derived from amounts included
in the Consolidated Financial Statements and supporting footnote
disclosures. EBITDA should not be considered as an alternative to
net earnings or operating income as an indicator of the Company's
operating performance, or as an alternative to net cash provided by
operating activities as a measure of liquidity. The EBITDA measure
presented may not always be comparable to similarly titled measures
reported by other companies due to differences in the components of
the calculation. Fiscal 2014 Q1 Q2 Q3 Q4 Total
EBITDA: Net earnings $ 23,929 $ 16,424 $ 40,353 Interest expense
3,721 3,676 7,397 Income taxes 11,129 2,933 14,062 Depreciation and
amortization 10,878 11,464
22,342 EBITDA (non-GAAP measure) $ 49,657 $ 34,497
$ 84,154 Fiscal 2013
Q1 Q2 Q3 Q4 Total EBITDA: Net earnings (loss) $ 27,188 $
(8,684 ) $ 4,233 $ (177,271 ) $ (154,534 ) Interest expense 4,163
4,406 4,186 3,886 16,641 Income taxes 13,481 30,626 7,595 (4,417 )
47,285 Depreciation and amortization 10,392 11,654 14,576 12,103
48,725 Intangible asset write-down in restructuring charges — —
3,207 — 3,207 Loss on write-down of assets held for sale — — 15,658
— 15,658 Impairment charges — — —
204,448 204,448 EBITDA (non-GAAP
measure) $ 55,224 $ 38,002 $ 49,455 $ 38,749 $
181,430
Earnings from Continuing Operations
Before Income Taxes Excluding Certain Items: Brady is
presenting the Non-GAAP measure "Earnings from Continuing
Operations Before Income Taxes Excluding Certain Items." This is
not a calculation based upon GAAP. The amounts included in this
Non-GAAP measure are derived from amounts included in the
Consolidated Financial Statements and supporting footnote
disclosures. We do not view these items to be part of our
sustainable results. We believe this profit measure provides an
important perspective of underlying business trends and results and
provides a more comparable measure from year to year. The table
below provides a reconciliation of Earnings from Continuing
Operations Before Income Taxes to Earnings from Continuing
Operations Before Income Taxes Excluding Certain Items:
Three Months Ended January 31, Six Months Ended January 31,
2014 2013 2014 2013
Earnings from Continuing Operations Before
Income Taxes (GAAP measure) $ 14,925 $ 18,289 $ 41,654 $ 57,758
Cost of goods sold: Purchase accounting expense related to
inventory — 1,530 — 1,530 Selling, general and administrative: PDC
acquisition-related expenses — 3,600 — 3,600 Restructuring charges
4,324 1,933 11,163 1,933 Non-cash income tax charges related to PDC
funding — — — —
Earnings from Continuing Operations
Before Income Taxes Excluding Certain Items (non-GAAP
measure)
$ 19,249 $ 25,352
$ 52,817 $ 64,821
Income Taxes on Continuing Operations Excluding Certain
Items: Brady is presenting the Non-GAAP measure "Income Taxes
on Continuing Operations Excluding Certain Items." This is not a
calculation based upon GAAP. The amounts included in this Non-GAAP
measure are derived from amounts included in the Consolidated
Financial Statements and supporting footnote disclosures. We do not
view these items to be part of our sustainable results. We believe
this measure provides an important perspective of underlying
business trends and results and provides a more comparable measure
from year to year. The table below provides a reconciliation of
Income Taxes on Continuing Operations to Income Taxes on Continuing
Operations Excluding Certain Items: Three Months
Ended January 31, Six Months Ended January 31, 2014 2013 2014 2013
Income Taxes on Continuing Operations (GAAP measure) $ 4,408
$ 28,960 $ 13,002 $ 42,138 Cost of goods sold: Purchase accounting
expense related to inventory — 581 — 581 Selling, general and
administrative: PDC acquisition-related expenses — 641 — 641
Restructuring charges 1,481 617 3,611 617 Non-cash income tax
charges related to PDC funding — (25,000 )
— (25,000 )
Income Taxes on Continuing Operations
Excluding Certain Items (non-GAAP measure)
$ 5,889 $ 5,799 $
16,613 $ 18,977
Net Earnings from Continuing Operations Excluding Certain
Items: Brady is presenting the Non-GAAP measure "Net Earnings
from Continuing Operations Excluding Certain Items." This is not a
calculation based upon GAAP. The amounts included in this Non-GAAP
measure are derived from amounts included in the Consolidated
Financial Statements and supporting footnote disclosures. We do not
view these items to be part of our sustainable results. We believe
this measure provides an important perspective of underlying
business trends and results and provides a more comparable measure
from year to year. The table below provides a reconciliation of Net
Earnings from Continuing Operations to Net Earnings from Continuing
Operations Excluding Certain Items: Three Months
Ended January 31, Six Months Ended January 31, 2014 2013 2014 2013
Net Earnings (loss) from Continuing Operations (GAAP
measure) $ 10,517 $ (10,671 ) $ 28,652 $ 15,620 Cost of goods
sold: Purchase accounting expense related to inventory — 949 — 949
Selling, general and administrative: PDC acquisition-related
expenses — 2,959 — 2,959 Restructuring charges 2,843 1,316 7,552
1,316 Non-cash income tax charges related to PDC funding —
25,000 — 25,000
Net Earnings from Continuing Operations
Excluding Certain Items (non- GAAP measure)
$ 13,360 $ 19,553
$ 36,204 $ 45,844
Net Earnings from Continuing Operations Per Diluted Class
A Diluted Nonvoting Common Share Excluding Certain Items: Brady
is presenting the Non-GAAP measure "Net Earnings from Continuing
Operations Per Diluted Class A Nonvoting Common Share Excluding
Certain Items." This is not a calculation based upon GAAP. The
amounts included in this Non-GAAP measure are derived from amounts
included in the Consolidated Financial Statements and supporting
footnote disclosures. We do not view these items to be part of our
sustainable results. We believe this measure provides an important
perspective of underlying business trends and results and provides
a more comparable measure from year to year. The table below
provides a reconciliation of Net Earnings from Continuing
Operations Per Diluted Class A Nonvoting Common Share to Net
Earnings from Continuing Operations Per Diluted Class A Nonvoting
Common Share Excluding Certain Items: Three Months
Ended January 31, Six Months Ended January 31, 2014 2013 2014 2013
Net Earnings (Loss) from Continuing Operations Per Class A
Diluted Nonvoting $ 0.20 $ (0.21 ) $ 0.55 $ 0.30
Nonvoting
Common Share (GAAP measure) Cost of goods sold: Purchase
accounting expense related to inventory — 0.02 — 0.02 Selling,
general and administrative: PDC acquisition-related expenses — 0.06
— 0.06 Restructuring charges 0.05 0.03 0.14 0.03 Non-cash income
tax charges related to PDC funding — 0.49 — 0.49
Net Earnings from Continuing Operations
Per Class A Diluted Nonvoting Common Share Excluding Certain Items
(non-GAAP measure)
$ 0.25 $ 0.38 $
0.69 $ 0.89
Brady CorporationInvestor contact:Aaron Pearce,
414-438-6895orMedia contact:Carole Herbstreit, 414-438-6882
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