EXHIBIT 99.1
For More Information:
Investor contact: Barbara Bolens 414-438-6940
Media contact: Carole Herbstreit 414-438-6882
FOR IMMEDIATE RELEASE
BRADY REPORTS RECORD THIRD-QUARTER SALES AND EARNINGS IN FISCAL 2006.
MILWAUKEE (May 17, 2006)--Brady Corporation (NYSE: BRC), a world leader in
identification solutions, today announced record sales and earnings for its
fiscal 2006 third quarter ended April 30, 2006.
Sales for the quarter were $266.5 million, up 27 percent compared to sales
of $209.8 million in the third quarter last year. Base sales were up 12 percent
over the prior year, acquisitions contributed 17 percent to sales growth, and
currency exchange reduced sales by 2 percent.
Net income for the quarter was up 21.2 percent to $30.2 million compared to
$25.0 million in the same quarter last year. Earnings per diluted Class A Common
Share were $0.61, up from $0.50 per share in the fiscal 2005 third quarter.
Sales for the nine months ended April 30, 2006, rose 20 percent to $730.1
million compared to $606.4 million in the same period last year. Net income for
the nine-month period was $81.7 million, up 24 percent compared to $65.9 million
in the prior year. Nine-month earnings per share were $1.64 compared to $1.32
per share in the period last year.
"We are particularly pleased to see healthy organic growth in all regions.
Both the Americas and Europe had solid core growth of 6 percent in the third
quarter, while the Asia/Pacific region continues to experience more rapid growth
with core business up 49 percent in the third quarter," said Brady President and
Chief Executive Officer Frank M. Jaehnert.
Brady Chief Financial Officer David Mathieson said, "We are increasing our
guidance for our fiscal year ending July 31, 2006 to net income of between $103
to $104 million or $2.06 to $2.08 per share, from previously stated guidance of
between $100 to $103 million or $2.00 to $2.06 per share. We are also increasing
our sales guidance for fiscal 2006 to between $985 million to $995 million, from
previously stated guidance of between $980 and $990 million in sales. This
guidance does not include results from Tradex Converting AB and Daewon Industry
Corp., as these previously announced acquisitions have not yet closed."
A webcast of a conference call regarding the company's fiscal 2006 third
quarter results will be available at www.investor.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. 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 300,000 customers in electronics, telecommunications, manufacturing,
electrical, construction, education, medical and a variety of other industries.
Brady is headquartered in Milwaukee and employs about 5,500 people in operations
in the United States, Europe, Asia/Pacific, Latin America and Canada. Brady's
fiscal 2005 sales were approximately $816 million. More information is available
on the Internet at www.bradycorp.com.
###
This news release contains "forward-looking statements" within the meaning of
the Private Securities Litigation Reform Act of 1995 - that is, statements
related to future, not past events. In this context forward-looking statements
often address our expected future business and financial performance, and often
contain certain words such as "expect, anticipate, intend, plan, believe, seek,
will, or may." Forward-looking statements by their nature address matters that
are, to different degrees uncertain. For us, uncertainties arise from future
financial performance of major markets we serve which include, without
limitation, telecommunications, manufacturing, electrical, construction,
laboratory, education, governmental, public utility, computer, transportation;
future integration of and performance of acquired businesses; fluctuations in
currency rates versus the US dollar; technology changes; interruptions to
sources of supply; 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 and
those identified in reports we file with the SEC. These uncertainties may cause
our actual future results to be materially different than those expressed in our
forward-looking statements. We do not undertake to update our forward-looking
statements.
Information by regional segment for the three and nine months ended April 30,
2006 and 2005 is as follows:
Corporate and
Americas Europe Asia Subtotals Eliminations Total
-------- -------- -------- --------- ------------- --------
(in Thousands)
SALES TO EXTERNAL CUSTOMERS
Three months ended:
April 30, 2006 $137,438 $ 80,420 $ 48,636 $266,494 -- $266,494
April 30, 2005 109,058 71,452 29,256 209,766 -- 209,766
Nine months ended:
April 30, 2006 $363,446 $230,466 $136,191 $730,103 -- $730,103
April 30, 2005 309,762 206,865 89,774 606,401 -- 606,401
SALES GROWTH INFORMATION
Three months ended April 30, 2006:
Base 5.8% 6.0% 48.9% 11.8% -- 11.8%
Currency 1.4% -8.4% 0.3% -2.1% -- -2.1%
Acquisitions 18.8% 15.0% 17.1% 17.3% -- 17.3%
Total 26.0% 12.6% 66.3% 27.0% -- 27.0%
Nine months ended April 30, 2006:
Base 4.9% 3.1% 40.0% 9.5% -- 9.5%
Currency 1.5% -6.5% 1.0% -1.3% -- -1.3%
Acquisitions 10.9% 14.8% 10.7% 12.2% -- 12.2%
Total 17.3% 11.4% 51.7% 20.4% -- 20.4%
SEGMENT PROFIT (LOSS)
Three months ended:
April 30, 2006 $ 35,026 $ 21,304 $ 12,397 $ 68,727 ($2,724) $ 66,003
April 30, 2005 28,155 21,563 7,778 57,496 (905) 56,591
Percentage increase (decrease) 24.4% -1.2% 59.4% 19.5% 201.0% 16.6%
Nine months ended:
April 30, 2006 $ 92,188 $ 62,071 $ 37,124 $191,383 ($7,741) $183,642
April 30, 2005 73,966 61,296 25,397 160,659 (2,915) 157,744
Percentage increase 24.6% 1.3% 46.2% 19.1% 165.6% 16.4%
NET INCOME RECONCILIATION (in thousands)
Three months ended: Nine months ended:
--------------------- ---------------------
April 30, April 30, April 30, April 30,
2006 2005 2006 2005
--------- --------- --------- ---------
Total profit for reportable segments $ 68,727 $ 57,496 $191,383 $160,659
Corporate and eliminations (2,724) (905) (7,741) (2,915)
Unallocated amounts:
Administrative costs (20,947) (19,288) (61,885) (55,526)
Interest - net (3,784) (1,826) (7,694) (5,472)
Foreign exchange 1,574 (211) 1,635 35
Other (837) (1,788) (2,228) (3,976)
-------- -------- -------- --------
Income before income taxes 42,009 33,478 113,470 92,805
Income taxes (11,763) (8,522) (31,772) (26,913)
-------- -------- -------- --------
Net income $ 30,246 $ 24,956 $ 81,698 $ 65,892
======== ======== ======== ========
RECONCILIATION OF GAAP MEASURES TO NON-GAAP MEASURES
(in thousands)
Fiscal 2005
-----------------------------------------------------------
9 Months
Q1 Q2 Q3 YTD Q4 Total
------- ------- ------- -------- ------- --------
EBITDA (1)
Net income $20,357 $20,579 $24,956 $ 65,892 $16,055 $ 81,947
Interest expense 2,139 2,037 2,101 6,277 2,126 8,403
Income taxes 9,580 8,811 8,522 26,913 6,558 33,471
Depreciation and amortization 6,775 6,478 6,738 19,991 6,831 26,822
------- ------- ------- -------- ------- --------
EBITDA (non-GAAP measure) $38,851 $37,905 $42,317 $119,073 $31,570 $150,643
Fiscal 2006
-------------------------------------------------------
9 Months
Q1 Q2 Q3 YTD Q4 Total
------- ------- ------- -------- --- --------
EBITDA (1)
Net income $30,198 $21,254 $30,246 $ 81,698 $ 81,698
Interest expense 1,989 2,435 4,496 8,920 8,920
Income taxes 12,334 7,675 11,763 31,772 31,772
Depreciation and amortization 7,360 7,194 9,419 23,973 23,973
------- ------- ------- -------- --- --------
EBITDA (non-GAAP measure) $51,881 $38,558 $55,924 $146,363 $-- $146,363
(1) 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
income before interest expense, income taxes and depreciation and
amortization. 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 Condensed
Consolidated Statements of Income data. EBITDA should not be considered as
an alternative to net income or operating income as an indicator of the
company's operating performance, or as an alternative to operating cash
flows 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.
BRADY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Dollars in Thousands)
(Unaudited)
-------------------------------------------------------------------
Three Months Ended April 30, Nine Months Ended April 30,
-------------------------------- --------------------------------
Percentage Percentage
2006 2005 Change 2006 2005 Change
-------- -------- ---------- -------- -------- ----------
Net sales $266,494 $209,766 27.0% $730,103 $606,401 20.4%
Cost of products sold 125,739 95,898 31.1% 348,252 282,052 23.5%
-------- -------- -------- --------
Gross margin 140,755 113,868 23.6% 381,851 324,349 17.7%
Operating expenses:
Research and development 7,314 5,941 23.1% 20,677 17,744 16.5%
Selling, general and administrative 89,215 72,384 23.3% 241,543 208,335 15.9%
-------- -------- -------- --------
Total operating expenses 96,529 78,325 23.2% 262,220 226,079 16.0%
Operating income 44,226 35,543 24.4% 119,631 98,270 21.7%
Other income and (expense):
Investment and other income 2,279 36 6230.6% 2,759 812 239.8%
Interest expense (4,496) (2,101) 114.0% (8,920) (6,277) 42.1%
-------- -------- -------- --------
Income before income taxes 42,009 33,478 25.5% 113,470 92,805 22.3%
Income taxes 11,763 8,522 38.0% 31,772 26,913 18.1%
-------- -------- -------- --------
Net income $ 30,246 $ 24,956 21.2% $ 81,698 $ 65,892 24.0%
======== ======== ======== ========
Per Class A Nonvoting Common Share:
Basic net income $ 0.62 $ 0.51 21.6% $ 1.67 $ 1.35 23.7%
Diluted net income $ 0.61 $ 0.50 22.0% $ 1.64 $ 1.32 24.2%
Dividends $ 0.13 $ 0.11 18.2% $ 0.39 $ 0.33 18.2%
Per Class B Voting Common Share:
Basic net income $ 0.62 $ 0.51 21.6% $ 1.65 $ 1.33 24.1%
Diluted net income $ 0.61 $ 0.50 22.0% $ 1.62 $ 1.31 23.7%
Dividends $ 0.13 $ 0.11 18.2% $ 0.37 $ 0.31 19.4%
Weighted average common shares outstanding
(in Thousands):
Basic 48,923 49,177 49,039 48,872
Diluted 49,833 50,192 49,962 49,754
BRADY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
(Unaudited)
------------------------------
APRIL 30, 2006 JULY 31, 2005
-------------- -------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 90,314 $ 72,970
Short term investments 30,000 7,100
Accounts receivable, less allowance for losses ($5,309 and 166,962 123,453
$3,726, respectively)
Inventories:
Finished Products 53,100 38,827
Work-in-process 8,889 9,681
Raw materials and supplies 31,863 22,227
---------- --------
Total inventories 93,852 70,735
Prepaid expenses and other current assets 37,402 28,114
---------- --------
TOTAL CURRENT ASSETS 418,530 302,372
OTHER ASSETS:
Goodwill 452,748 332,369
Other Intangible assets, net 95,189 71,647
Deferred Income Taxes 40,302 39,043
Other 9,145 6,305
---------- --------
TOTAL OTHER ASSETS 597,384 449,364
PROPERTY, PLANT AND EQUIPMENT:
Cost:
Land 6,553 6,388
Buildings and improvements 73,606 65,007
Machinery and equipment 175,205 157,093
Construction in progress 10,424 6,510
---------- --------
265,788 234,998
Less accumulated depreciation 150,251 136,587
---------- --------
NET PROPERTY, PLANT AND EQUIPMENT 115,537 98,411
---------- --------
TOTAL $1,131,451 $850,147
========== ========
LIABILITIES AND STOCKHOLDERS' INVESTMENT
CURRENT LIABILITIES:
Accounts payable $ 60,790 $ 52,696
Wages and amounts withheld from employees 46,361 49,620
Taxes, other than income taxes 6,443 4,815
Accrued income taxes 23,205 24,028
Other current liabilities 32,713 29,649
Short-term borrowings and current maturities on long-term debt 126 4
---------- --------
TOTAL CURRENT LIABILITIES 169,638 160,812
LONG-TERM OBLIGATIONS, LESS CURRENT MATURITIES 350,187 150,026
OTHER LIABILITIES 56,377 42,035
---------- --------
TOTAL LIABILITIES 576,202 352,873
STOCKHOLDERS' INVESTMENT:
Common stock:
Class A nonvoting common stock - Issued 45,881,743 and 45,877,543 shares,
respectively and outstanding 45,462,077 and 45,792,199 shares,
respectively 459 458
Class B voting common stock - Issued and outstanding, 3,538,628 shares 35 35
Additional paid-in capital 101,242 99,029
Income retained in the business 445,508 382,880
Treasury Stock - 419,666 and 85,344 shares, respectively of Class A
nonvoting common stock, at cost (15,341) (1,575)
Accumulated other comprehensive income 25,198 17,497
Other (1,852) (1,050)
---------- --------
TOTAL STOCKHOLDERS' INVESTMENT 555,249 497,274
---------- --------
TOTAL $1,131,451 $850,147
========== ========
BRADY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in Thousands)
(Unaudited)
Nine Months Ended
April 30
--------------------
2006 2005
--------- --------
Operating activities:
Net income $ 81,698 $ 65,892
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 23,973 19,991
Gain on Foreign Currency Contract (1,517)
Income tax benefit from the exercise of stock options -- 4,747
Deferred Income taxes 2,397 (2,354)
Loss on sale or disposal of property, plant & equipment 188 599
Provision for losses on accounts receivable 1,102 980
Non-cash portion of stock-based compensation expense 4,275 3,101
Changes in operating assets and liabilities (net of
effects of business acquisitions):
Accounts receivable (25,570) (5,099)
Inventories (14,123) (8,423)
Prepaid expenses and other assets (8,501) (979)
Accounts payable and accrued liabilities (3,748) (10,056)
Income taxes (1,657) 10,107
Other liabilities 4,813 3,491
--------- --------
Net cash provided by operating activities 63,330 81,997
Investing activities:
Acquisition of businesses, net of cash acquired (155,283) (49,397)
Purchases of short-term investments (33,800) (34,000)
Sales of short-term investments 10,900 22,950
Purchases of property, plant and equipment (26,291) (14,411)
Purchase of Foreign Currency Contract (2,134) --
Proceeds from sale of property, plant and equipment (51) 288
Other (1,907) (1,188)
--------- --------
Net cash used in investing activities (208,566) (75,758)
Financing activities:
Payment of dividends (19,070) (15,885)
Proceeds from issuance of common stock 6,960 14,635
Principal payments on debt (721) (83,046)
Net proceeds from issuance of debt 200,000 83,000
Purchase of treasury stock (27,299) --
Income tax benefit from the exercise of stock options 3,707 --
--------- --------
Net cash provided by (used in) financing activities 163,577 (1,296)
Effect of exchange rate changes on cash (997) (760)
Net increase in cash and cash equivalents 17,344 4,183
Cash and cash equivalents, beginning of period 72,970 68,788
--------- --------
Cash and cash equivalents, end of period $ 90,314 $ 72,971
========= ========
Supplemental disclosures:
Cash paid during the period for:
Interest, net of capitalized interest $ 4,572 $ 4,051
Income taxes, net of refunds 30,844 12,982
Acquisitions:
Fair value of asset acquired, net of cash $ 62,129 $ 35,971
Liabilities assumed (17,289) (18,212)
Goodwill 110,443 31,638
--------- --------
Net cash paid for acquisitions $ 155,283 $ 49,397
========= ========