(Source: Business Wire)
Brady Corporation (NYSE:BRC) today reported results for its fiscal 2009 fourth quarter and fiscal year ended July 31, 2009.
Sales in the fiscal 2009 fourth quarter were $287.2 million compared to $396.8 million in the fourth quarter of fiscal 2008. Organic sales declined 23 percent, acquisition growth was flat, and foreign currency translation reduced sales by 5 percent. Regionally, organic sales were down 25 percent in Europe, 24 percent in the Americas, and 15 percent in Asia/Pacific.
Net income for the fiscal 2009 fourth quarter was $19.2 million or $0.37 per diluted Class A Common share, compared to $34.8 million or $0.64 per share in the fourth quarter of fiscal 2008. Results included after tax restructuring charges of $3.4 million in the quarter or $0.06 per share.
Brady's fiscal 2009 net sales were $1.209 billion compared to $1.523 billion in sales in fiscal 2008. Organic sales were down 16 percent, acquisitions added 1 percent to sales results, and foreign currency translation reduced sales by 5 percent. Net income for fiscal 2009, including after-tax restructuring charges of $20.2 million or $0.38 per share, was $70.1 million or $1.33 per share compared to $132.2 million or $2.41 per share in fiscal 2008.
"After a strong first quarter, the global economic downturn caused a 27 percent drop in our sales over the balance of the year. Despite this, we earned $90 million in net income excluding restructuring charges and generated $127 million in cash flow from operations," said Brady President and CEO Frank M. Jaehnert. "Beginning in the second quarter, we took quick and aggressive actions to adjust our cost structure, including a significant workforce reduction. We also continued to invest in our future and position the company for growth going forward by focusing on new product development, acquisition strategy, e-business opportunities and productivity improvement initiatives like the Brady Business Performance System (BBPS). We believe that these strategic investments along with our reduced cost structure position us well for the current economic climate as well as for future economic recovery."
"We expect that the challenges of the global recession will continue into the first half of fiscal 2010. As a result, we expect current fiscal year net income to be between $85 and $95 million and earnings per diluted share of between $1.60 and $1.80. This guidance is based on current exchange rates and a constant tax rate. It also assumes that sales will continue at or near current levels through the first half of our fiscal year, followed by modest growth in the second half of the year," said Brady Chief Financial Officer Thomas J. Felmer. "Our guidance excludes additional expected pretax restructuring charges of approximately $15 million or $0.20 per share, which would result in annualized pretax savings of approximately $15 million, of which $10 million are expected to be realized in fiscal 2010.
"While most of the cost reductions we made in fiscal 2009 are permanent, we expect up to $40 million of fiscal 2009 pretax savings to be non-recurring and will impact fiscal 2010 starting in the first quarter. We also expect capital expenditures in fiscal 2010 of approximately $25 million, with depreciation and amortization consistent with fiscal 2009 levels."
A Webcast regarding fiscal 2009 results will be available at www.investor.bradycorp.com beginning at 9:30 a.m. Central Daylight Time today.
Brady Corporation is an international manufacturer and marketer of complete solutions that identify and protect premises, products and people. Its products include high-performance labels and signs, safety devices, printing systems and software, and precision die-cut materials. Founded in 1914, the company has more than 500,000 customers in electronics, telecommunications, manufacturing, electrical, construction, education, medical and a variety of other industries. Brady is headquartered in Milwaukee and employs approximately 7,000 people at operations in the Americas, Europe and Asia/Pacific. 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 retain significant contracts and customers; future competition; 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; interruptions to sources of supply; environmental, health and safety compliance costs and liabilities; Brady's ability to realize cost savings from operating initiatives; Brady's ability to attract and retain key talent; difficulties associated with exports; risks associated with international operations; fluctuations in currency rates versus the US dollar; technology changes; potential write-offs of Brady's substantial intangible assets;Brady's ability to maintain its debt covenants; unforeseen tax consequences; risks associated with obtaining governmental approvals and maintaining regulatory compliance for new and existing products; business interruptions due to implementing business systems; 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 Annual Report on Form 10-K for the period ended July 31, 2008, as updated by subsequently filed reports. 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.
BRADY CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (Dollars in Thousands) (Unaudited) Three Months Ended July 31, Twelve Months Ended July 31, Percentage Percentage 2009 2008 Change 2009 2008 Change Net sales $ 287,203 $ 396,849 -27.6 % $ 1,208,702 $ 1,523,016 -20.6 % Cost of products sold 151,081 204,920 -26.3 % 631,119 778,821 -19.0 % Gross margin 136,122 191,929 -29.1 % 577,583 744,195 -22.4 % Operating expenses: Research and development 8,856 11,284 -21.5 % 34,181 40,607 -15.8 % Selling, general and administrative 94,404 126,325 -25.3 % 397,180 495,904 -19.9 % Restructuring charges 2,573 - - 25,849 - - Total operating expenses 105,833 137,609 -23.1 % 457,210 536,511 -14.8 % Operating income 30,289 54,320 -44.2 % 120,373 207,684 -42.0 % Other income and (expense): Investment and other income 657 1,581 -58.4 % 1,800 4,888 -63.2 % Interest expense (5,919 ) (5,956 ) -0.6 % (24,901 ) (26,385 ) -5.6 % Income before income taxes 25,027 49,945 -49.9 % 97,272 186,187 -47.8 % Income taxes (2009 Q4 Restructuring - $1.6 million) 5,825 15,170 -61.6 % 27,150 53,999 -49.7 % Net income $ 19,202 $ 34,775 -44.8 % $ 70,122 $ 132,188 -47.0 % Per Class A Nonvoting Common Share: Basic net income $ 0.37 $ 0.65 -43.1 % $ 1.33 $ 2.45 -45.7 % Diluted net income $ 0.37 $ 0.64 -42.2 % $ 1.33 $ 2.41 -44.8 % Dividends $ 0.17 $ 0.15 13.3 % $ 0.68 $ 0.60 13.3 % Per Class B Voting Common Share: Basic net income $ 0.37 $ 0.65 -43.1 % $ 1.32 $ 2.43 -45.7 % Diluted net income $ 0.37 $ 0.64 -42.2 % $ 1.31 $ 2.39 -45.2 % Dividends $ 0.17 $ 0.15 13.3 % $ 0.66 $ 0.58 13.8 % Weighted average common shares outstanding (in Thousands): Basic 52,308 53,790 52,559 54,168 Diluted 52,583 54,514 52,866 54,873 -------------------------------------------------------------------------------
BRADY CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (IN THOUSANDS) (Unaudited) July 31, 2009 July 31, 2008 ASSETS Current assets: Cash and cash equivalents $ 188,156 $ 258,355 Accounts receivable, less allowance for losses ($7,931 and $10,059, respectively) 191,189 262,461 Inventories: Finished products 53,244 75,665 Work-in-process 13,159 21,187 Raw materials and supplies 27,405 37,767 Total inventories 93,808 134,619 Prepaid expenses and other current assets 36,274 43,650 Total current assets 509,427 699,085 Other assets: Goodwill 751,173 789,107 Other intangible assets, net 115,754 144,791 Deferred income taxes 36,374 25,943 Other 18,551 21,381 Total other assets 921,852 981,222 Property, plant and equipment: Cost: Land 6,335 6,490 Buildings and improvements 96,968 98,646 Machinery and equipment 283,301 282,232 Construction in progress 7,869 6,040 394,473 393,408 Less accumulated depreciation 242,485 223,202 Net property, plant and equipment 151,988 170,206 Total $ 1,583,267 $ 1,850,513 LIABILITIES AND STOCKHOLDERS' INVESTMENT Current liabilities: Accounts payable $ 83,793 $ 118,209 Wages and amounts withheld from employees 36,313 82,354 Taxes, other than income taxes 6,262 10,234 Accrued income taxes 5,964 21,523 Other current liabilities 45,247 54,810 Current maturities on long-term debt 44,893 21,431 Total current liabilities 222,472 308,561 Long-term obligations, less current maturities 346,457 457,143 Other liabilities 63,246 63,001 Total liabilities 632,175 828,705 Stockholders' investment: Common stock: Class A nonvoting common stock - Issued 51,261,487 and 51,261,487 shares, respectively and outstanding 48,780,560 and 50,005,296 shares, respectively 513 513 Class B voting common stock - Issued and outstanding, 3,538,628 shares 35 35 Additional paid-in capital 298,466 292,769 Income retained in the business 673,342 639,059 Treasury stock - 2,270,927 and 1,046,191 shares, respectively of Class A nonvoting common stock, at cost (69,823 ) (33,234 ) Accumulated other comprehensive income 53,051 128,161 Other (4,492 ) (5,495 ) Total stockholders' investment 951,092 1,021,808 Total $ 1,583,267 $ 1,850,513 -------------------------------------------------------------------------------
BRADY CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in Thousands) (Unaudited) Twelve Months Ended July 31, 2009 2008 2007 Operating activities: Net income $ 70,122 $ 132,188 $ 109,388 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 54,851 60,587 53,856 Deferred income taxes (8,640 ) (1,501 ) 70 Loss (gain) on disposal of property, plant & equipment 383 1,672 13 Non-cash portion of stock-based compensation expense 7,731 10,228 6,907 Non-cash portion of restructuring charges 2,469 - - Changes in operating assets and liabilities (net of effects of business acquisitions): Accounts receivable 53,389 (3,704 ) (17,021 ) Inventories 34,749 16,224 (12,323 ) Prepaid expenses and other assets (2,423 ) (629 ) (13,307 ) Accounts payable and accrued liabilities (78,684 ) 18,641 8,058 Income taxes (9,673 ) (8,492 ) (6,821 ) Other liabilities 2,371 340 7,198 Net cash provided by operating activities 126,645 225,554 136,018 Investing activities: Acquisition of businesses, net of cash acquired - (29,346 ) (159,475 ) Payments of contingent consideration (1,405 ) (5,798 ) (10,906 ) Purchases of short-term investments - (10,350 ) (68,100 ) Sales of short-term investments - 29,550 60,400 Purchases of property, plant and equipment (24,027 ) (26,407 ) (51,940 ) Purchase price adjustment 3,514 Net settlement of foreign currency contract - Proceeds from sale of property, plant and equipment 796 880 2,166 Other 2,078 2,263 (9,184 ) Net cash used in investing activities (19,044 ) (39,208 ) (237,039 ) Financing activities: Payment of dividends (35,839 ) (32,464 ) (30,141 ) Proceeds from issuance of common stock 1,683 14,500 6,829 Principal payments on debt (87,224 ) (39,443 ) (110,870 ) Proceeds from issuance of debt - 18,000 259,300 Purchase of treasury stock (40,267 ) (42,175 ) - Excess income tax benefit from the exercise of stock options & deferred comp 1,336 4,638 4,303 Net (used in) provided by financing activities (160,311 ) (76,944 ) 129,421 Effect of exchange rate changes on cash (17,489 ) 6,107 1,438 Net (decrease) increase in cash and cash equivalents (70,199 ) 115,509 29,838 Cash and cash equivalents, beginning of period 258,355 142,846 113,008 Cash and cash equivalents, end of period 188,156 258,355 142,846 Supplemental disclosures: Cash paid during the period for: Interest, net of capitalized interest $ 21,899 26,308 $ 19,842 Income taxes, net of refunds 32,995 51,834 49,233 Acquisitions: Fair value of assets acquired, net of cash $ - 21,508 $ 87,398 Liabilities assumed - (9,038 ) (33,248 ) Goodwill - 16,876 105,325 Net cash paid for acquisitions $ 29,346 $ 159,475 -------------------------------------------------------------------------------
Information by regional segment for the three and twelve months ended July 31, 2009 and 2008 is as follows: (in thousands) Americas Europe Asia-Pacific Total Region Corporate and Eliminations Total Company SALES TO EXTERNAL CUSTOMERS Three months ended: July 31, 2009 $124,867 $86,567 $75,769 $287,203 - $287,203 July 31, 2008 169,303 131,765 95,781 396,849 - 396,849 July 31, 2007 169,063 114,037 79,665 362,765 - 362,765 Twelve months ended: July 31, 2009 $534,440 $367,156 $307,106 $1,208,702 - $1,208,702 July 31, 2008 667,106 496,715 359,195 1,523,016 - 1,523,016 July 31, 2007 609,855 416,514 336,262 1,362,631 - 1,362,631 SALES GROWTH INFORMATION Three months ended July 31, 2009: Base -24.5 % -25.0 % -15.0 % -22.4 % - -22.4 % Currency -1.7 % -9.3 % -5.9 % -5.3 % - -5.3 % Acquisitions 0.0 % 0.0 % 0.0 % 0.0 % - 0.0 % Total -26.2 % -34.3 % -20.9 % -27.7 % - -27.7 % Twelve months ended July 31, 2009: Base -18.5 % -18.1 % -10.3 % -16.4 % - -16.4 % Currency -1.7 % -9.4 % -4.2 % -4.8 % - -4.8 % Acquisitions 0.3 % 1.4 % 0.0 % 0.6 % - 0.6 % Total -19.9 % -26.1 % -14.5 % -20.6 % - -20.6 % SEGMENT PROFIT (LOSS) Three months ended: July 31, 2009 $28,300 $22,018 $9,072 $59,390 ($1,320 ) 58,070 July 31, 2008 $41,212 $38,214 $15,129 $94,555 ($2,648 ) 91,907 Percentage increase (decrease) -31.3 % -42.4 % -40.0 % -37.2 % -50.2 % -36.8 % Twelve months ended: July 31, 2009 $114,404 $99,875 $42,575 $256,854 ($7,952 ) $248,902 July 31, 2008 $157,523 $135,426 $58,234 $351,183 ($9,048 ) $342,135 Percentage increase (decrease) -27.4 % -26.3 % -26.9 % -26.9 % -12.1 % -27.3 % NET INCOME RECONCILIATION (in thousands) Three months ended: Twelve months ended: July 31, 2009 July 31, 2008 July 31, 2009 July 31, 2008 Total profit for reportable segments $59,390 $94,555 $256,854 $351,183 Corporate and eliminations (1,320 ) ($2,648 ) ($7,952 ) ($9,048 ) Unallocated amounts: Administrative costs (25,208 ) (37,587 ) (102,680 ) (134,451 ) Restructuring costs (2,573 ) (25,849 ) Investment and other income 657 1,581 1,800 4,888 Interest expense (5,919 ) (5,956 ) (24,901 ) (26,385 ) Income before income taxes 25,027 49,945 $97,272 186,187 Income taxes (2009 Q4 Restructuring - $1.6 million) (5,825 ) (15,170 ) (27,150 ) (53,999 ) Net income $ 19,202 $ 34,775 $70,122 $132,188 -------------------------------------------------------------------------------
RECONCILIATION OF GAAP MEASURES TO NON-GAAP MEASURES (in thousands) Fiscal 2008 Q1 Q2 Q3 Q4 Total EBITDA (1) Net income $ 36,370 $ 26,690 $ 34,353 $ 34,775 $ 132,188 Interest expense 6,720 6,747 6,962 5,956 26,385 Income taxes 15,366 11,276 12,187 15,170 53,999 Depreciation and amortization 14,168 15,501 16,013 14,905 60,587 EBITDA (non-GAAP measure) $ 72,624 $ 60,214 $ 69,515 $ 70,806 $ 273,159 Fiscal 2009 Q1 Q2 Q3 Q4 Total EBITDA (1) Net income $ 37,110 $ (4,150 ) $ 17,960 $ 19,202 $ 70,122 Interest expense 6,361 6,314 6,307 5,919 24,901 Income taxes 14,575 756 5,994 5,825 27,150 Depreciation and amortization 13,712 13,481 13,479 14,179 54,851 A service of YellowBrix, Inc.
