Submitted by admin on 9/11/2015 @ 5:00 AM Companies mentioned in this article: Brady Corporation
MILWAUKEE -- (BUSINESS WIRE) -- Brady Corporation (NYSE: BRC) (“Brady” or “Company”), a world leader in identification solutions, today reported its financial results for its fiscal 2015 fourth quarter and year ended July 31, 2015.
Quarter Ended July 31, 2015 Financial Results:
Sales for the quarter ended July 31, 2015 decreased 8.9 percent to $288.6 million compared to $316.7 million in the fourth quarter of fiscal 2014. Total organic sales decreased 1.2 percent and foreign currency translation decreased sales by 7.7 percent. By segment, organic sales decreased 0.3 percent in Identification Solutions and decreased 3.2 percent in Workplace Safety.
During the fourth quarter ended July 31, 2015, the Company recorded an impairment charge of $46.9 million primarily related to the write down of intangible assets in the Company’s Workplace Safety segment. These impairment charges were primarily driven by sales and profitability reductions and reduced forecasts for future sales and profitability growth. In the fourth quarter of last year, the Company also incurred an impairment charge of $148.6 million related to its PeopleID reporting unit.
The Company’s loss from continuing operations for the quarter ended July 31, 2015 was $(39.4) million compared to a loss of $(97.0) million in the same quarter of last year. Non-GAAP earnings from continuing operations* for the current quarter were $14.4 million compared to $21.0 million in the fourth quarter of fiscal 2014.
The Company’s loss from continuing operations per diluted Class A Nonvoting Common Share was $(0.77) for the quarter ended July 31, 2015 compared to a loss of $(1.89) in the same quarter last year. Non-GAAP earnings from continuing operations per diluted Class A Nonvoting Common Share* for the current quarter were $0.28 compared to earnings of $0.41 per share in the fourth quarter of fiscal 2014.
Year Ended July 31, 2015 Financial Results:
Sales for the year ended July 31, 2015 decreased 4.4 percent to $1.17 billion compared to $1.23 billion in fiscal 2014. Total organic sales increased 1.0 percent and the impact of foreign currency translation decreased sales by 5.4 percent. By segment, organic sales increased 1.7 percent in Identification Solutions and decreased 0.4 percent in Workplace Safety.
Earnings (loss) from continuing operations for the year ended July 31, 2015 were $4.9 million compared to $(48.1) million for the year ended July 31, 2014. Non-GAAP earnings from continuing operations* for the year ended July 31, 2015 were $65.5 million compared to $79.5 million for the year ended July 31, 2014.
Earnings (loss) from continuing operations per diluted Class A Nonvoting Common share were $0.10 for the year ended July 31, 2015 compared to $(0.93) for the year ended July 31, 2014. Non-GAAP earnings from continuing operations per diluted Class A Common Share* were $1.27 for the year ended July 31, 2015 compared to $1.53 for the year ended July 31, 2014.
Share Buyback Program:
On September 10, 2015, Brady’s Board of Directors authorized an increase in the Company’s share buyback program, authorizing the repurchase of up to a total of two million shares of the Company’s Class A Common Stock, inclusive of the shares in the existing share buyback program. The share buyback plan may be implemented from time to time on the open market or in privately negotiated transactions.
Commentary:
“Our fourth quarter financial results did not meet our expectations. We realized an organic sales decline in our Identification Solutions business, and our gross profit margin deteriorated more than anticipated,” said Brady President and Chief Executive Officer J. Michael Nauman. “We completed the facility consolidations this quarter, but we continue to face operational inefficiencies. We have a full-time team dedicated to the facilities most impacted, we’re making improvements every day, and we expect to realize operational improvements and improved organic sales in the back half of fiscal 2016. We are increasing our focus on customer service and are making foundational improvements in our cost structure, which combined with disciplined capital allocation, will drive increased shareholder value over the long-term.”
“Our cash generation continued to show improvements in the fourth quarter as the cash outlays from our prior restructuring programs and the elevated levels of capital expenditures have subsided,” said Brady’s Chief Financial Officer, Aaron Pearce. “Cash provided by operating activities increased to $40.6 million during the quarter ended July 31, 2015 compared to $17.6 million in last year’s fourth quarter. With the significant improvement in cash generation in the second half of this fiscal year, our conservative net debt-to-EBITDA ratio of 1.1 to 1, and our confidence in the continued turnaround of Brady, yesterday our Board of Directors increased our dividend for the 30 th consecutive year and increased our share buyback program to a total of two million shares.”
Fiscal 2016 Guidance:
The Company anticipates approximately flat to low single-digit organic sales growth in fiscal 2016, with organic sales growth in both the Identification Solutions and Workplace Safety businesses increasing as the year progresses. Brady expects earnings from continuing operations per diluted Class A Nonvoting Common Share of between $1.10 and $1.30. This guidance is based on exchange rates as of July 31, 2015, a full-year income tax rate in the upper 20 percent range, capital expenditures moderating back to the Company’s historical norm of approximately $25 million, and depreciation and amortization of approximately $40 million.
A webcast regarding Brady’s fiscal 2015 fourth 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 people, products and places. Brady’s products help customers increase safety, security, productivity and performance and include high-performance labels, signs, safety devices, printing systems and software. Founded in 1914, the Company has a diverse customer base in electronics, telecommunications, manufacturing, electrical, construction, medical, aerospace and a variety of other industries. Brady is headquartered in Milwaukee, Wisconsin and as of August 1, 2015, employed approximately 6,400 people in its worldwide businesses. Brady’s fiscal 2015 sales were approximately $1.17 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 healthcare strategy; implementation of the Workplace Safety strategy; future competition; Brady’s ability to develop and successfully market new products; 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; technology changes and potential security violations to the Company's information technology system; fluctuations in currency rates versus the U.S. dollar; risks associated with international operations; difficulties associated with exports; risks associated with restructuring plans; risks associated with identifying, completing, and integrating acquisitions; 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; risk associated with loss of key talent; risks associated with divestitures and businesses held for sale; risks associated with obtaining governmental approvals and maintaining regulatory compliance; risk associated with product liability claims; environmental, health and safety compliance costs and liabilities; potential write-offs of Brady's substantial intangible assets; risks associated with our ownership structure; unforeseen tax consequences; Brady's ability to maintain compliance with its debt covenants; increase in our level of debt; 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, 2014.
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 (Unaudited; Dollars in thousands, except per share data)