[PART I](index=3&type=section&id=PART%20I) [Item 1. Business](index=3&type=section&id=Item%201.%20Business) Brady Corporation, a global identification and safety product manufacturer, drives growth and profitability through innovation and strategic acquisitions in fiscal 2025 - **Brady Corporation is a global manufacturer and supplier of identification solutions and workplace safety products**, organized into two reportable segments: **Americas & Asia** and **Europe & Australia**[11](index=11&type=chunk)[12](index=12&type=chunk) - The company's strategy focuses on driving **long-term growth**, **improving profitability**, and **strengthening its competitive position** through key competencies like innovative products, customer experience, global leadership in niche markets, digital capabilities, compliance expertise, and operational excellence[13](index=13&type=chunk)[16](index=16&type=chunk) - In **fiscal 2025**, Brady completed the acquisitions of **Gravotech Holding**, **American Barcode and RFID Incorporated (AB&R)**, and the **Microfluidic Solutions business unit**, which strengthen its position in faster-growing markets and expand product offerings and R&D capabilities[14](index=14&type=chunk) Sales by Reportable Segment (FY2023-FY2025) | Segment | 2025 (%) | 2024 (%) | 2023 (%) | | :----------------- | :----- | :----- | :----- | | Americas & Asia | 65.7 % | 66.1 % | 66.7 % | | Europe & Australia | 34.3 % | 33.9 % | 33.3 % | | Total | 100.0 %| 100.0 %| 100.0 %| Research and Development Expenses (FY2023-FY2025) | Fiscal Year | R&D Expense (Millions USD) | | :---------- | :------------------------- | | 2025 | $79.9 | | 2024 | $67.7 | | 2023 | $61.4 | - As of July 31, 2025, the Company employed approximately **6,400 individuals worldwide**, with **1,700 in the United States** and **4,700 outside the United States**[31](index=31&type=chunk) - The Company's health and safety programs achieved a **Total Recordable Incident Rate (TRIR) of 0.43** and a **Lost Time Case Rate (LTCR) of 0.23** in **fiscal 2025**, with **no work-related fatalities**[33](index=33&type=chunk) [Item 1A. Risk Factors](index=7&type=section&id=Item%201A.%20Risk%20Factors) Brady Corporation faces diverse business, operational, and financial risks, including cost inflation, supply chain, cybersecurity, regulations, and foreign currency fluctuations - Business risks include **raw material and other cost inflation**, **product shortages**, **decreased demand for products** due to various factors (economic conditions, catastrophic events, competition), **failure to compete effectively or execute strategy**, and **challenges in developing or acquiring technologically advanced products**[41](index=41&type=chunk)[43](index=43&type=chunk)[44](index=44&type=chunk)[46](index=46&type=chunk)[47](index=47&type=chunk) - Global operating risks encompass **security breaches of sites, networks, and systems**, **failure to protect confidential information**, **extensive U.S. and non-U.S. governmental regulations**, **dependence on key employees**, **litigation** (including product liability and intellectual property claims), and the impact of **global climate change and ESG issues**[52](index=52&type=chunk)[55](index=55&type=chunk)[58](index=58&type=chunk)[59](index=59&type=chunk)[60](index=60&type=chunk)[61](index=61&type=chunk) - Financial and security ownership risks include **foreign currency fluctuations** (affecting **approximately 50% of sales outside the U.S.**), **changes in tax legislation or rates** (e.g., OBBBA, Pillar Two), **potential impairment of goodwill and other intangible assets** (**45.1% of total assets**), and the **control of substantially all voting stock by two shareholders**, which may not align with non-voting shareholders' interests[63](index=63&type=chunk)[64](index=64&type=chunk)[65](index=65&type=chunk)[67](index=67&type=chunk)[68](index=68&type=chunk)[69](index=69&type=chunk) [Item 1B. Unresolved Staff Comments](index=12&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company has no unresolved staff comments from the SEC - There are **no unresolved staff comments**[70](index=70&type=chunk) [Item 1C. Cybersecurity](index=12&type=section&id=Item%201C.%20Cybersecurity) Brady Corporation integrates cybersecurity risk management into its company-wide framework, focusing on strengthening defenses and preparing for evolving threats - Brady **integrates cybersecurity risk management into its company-wide framework**, adhering to the **Center for Internet Security (CIS) Controls**[71](index=71&type=chunk) - The cybersecurity strategy emphasizes **strengthening defenses**, **improving operational efficiencies**, and **preparedness for evolving threats**, utilizing measures like **network monitoring, intrusion prevention, rapid detection, and external consultants for assessments and penetration testing**[72](index=72&type=chunk) - The **Audit Committee of the Board of Directors is responsible for cybersecurity oversight**, receiving **quarterly updates from management**. The **information technology security team, led by the CIO, manages risks and incidents**, **escalating material cybersecurity incidents to executive leadership**[74](index=74&type=chunk)[75](index=75&type=chunk)[77](index=77&type=chunk) - To date, the company has **not experienced any material cybersecurity incidents**, but acknowledges that such threats could **materially affect business strategy, operations, or financial condition**[78](index=78&type=chunk) [Item 2. Properties](index=14&type=section&id=Item%202.%20Properties) Brady Corporation operates 41 modern and well-maintained manufacturing and distribution facilities globally, sufficient for current needs - **Brady Corporation operates 41 manufacturing and distribution facilities worldwide**[79](index=79&type=chunk) - The **Americas & Asia segment has 24 facilities**, including **8 in the United States**, **4 in China**, and others across South America and Asia[79](index=79&type=chunk) - The **Europe & Australia segment has 17 facilities**, including **4 each in France and the United Kingdom**, and others across Europe, the Middle East, Africa, and Australia[80](index=80&type=chunk) - The company considers its equipment and facilities to be **modern, well-maintained, and adequate for present needs**[81](index=81&type=chunk) [Item 3. Legal Proceedings](index=14&type=section&id=Item%203.%20Legal%20Proceedings) Brady Corporation is subject to various legal proceedings but expects no material adverse effect on its consolidated financial statements - The Company is subject to **various legal proceedings and claims arising in the normal course of business**, including intellectual property, employment, and contract matters[82](index=82&type=chunk) - Management believes that the ultimate resolution of current legal proceedings will **not have a material adverse impact on the Company's consolidated financial statements**[82](index=82&type=chunk) [Item 4. Mine Safety Disclosures](index=14&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to Brady Corporation - Item 4. Mine Safety Disclosures is **not applicable**[83](index=83&type=chunk) [PART II](index=15&type=section&id=PART%20II) [Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=15&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity,%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Brady Corporation's Class A Nonvoting Common Stock trades on the NYSE, with a history of quarterly dividends and an active share repurchase program - **Brady Corporation's Class A Nonvoting Common Stock trades on the NYSE under the symbol BRC**[85](index=85&type=chunk) - As of August 31, 2025, there were approximately **1,000 Class A Common Stock shareholders of record** and **17,000 beneficial shareholders**, with **three Class B Common Stock shareholders**[86](index=86&type=chunk) - The Company has **historically paid quarterly dividends**, with Class A Common Stock holders entitled to a **preferential annual cash dividend of $0.01665 per share** before Class B holders[87](index=87&type=chunk) Dividends Per Share (FY2024-Q1 FY2026) | Quarter | Class A ($) | Class B ($) | | :------ | :---------- | :---------- | | 1st Qtr 2026 | 0.2450 | 0.2284 | | 1st Qtr 2025 | 0.2400 | 0.2234 | | 2nd Qtr 2025 | 0.2400 | 0.2400 | | 3rd Qtr 2025 | 0.2400 | 0.2400 | | 4th Qtr 2025 | 0.2400 | 0.2400 | | 1st Qtr 2024 | 0.2350 | 0.2184 | | 2nd Qtr 2024 | 0.2350 | 0.2350 | | 3rd Qtr 2024 | 0.2350 | 0.2350 | | 4th Qtr 2024 | 0.2350 | 0.2350 | - On September 4, 2024, the Board **authorized an additional $100.0 million for the share repurchase program**, with **$87.0 million remaining as of July 31, 2025**[89](index=89&type=chunk) Issuer Purchases of Class A Nonvoting Common Stock (May-July 2025) | Period | Total Shares Purchased | Average Price Paid per Share ($) | Value Remaining (Thousands USD) | | :----------------------- | :--------------------- | :------------------------------- | :---------------------------- | | May 1, 2025 - May 31, 2025 | 29,740 | 69.63 | 102,562 | | June 1, 2025 - June 30, 2025 | 140,555 | 68.39 | 92,950 | | July 1, 2025 - July 31, 2025 | 86,987 | 68.97 | 86,951 | | Total | 257,282 | 68.73 | 86,951 | Cumulative Return on $100 Investment (FY2020-FY2025) | Index | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | | :----------------------------- | :----- | :----- | :----- | :----- | :----- | :----- | | Brady Corporation | $100.00| $121.03| $107.87| $118.55| $167.16| $166.97| | S&P 500 Index | $100.00| $136.45| $130.11| $147.05| $179.62| $208.95| | S&P SmallCap 600 Industrials Index | $100.00| $151.04| $150.74| $178.72| $225.09| $240.03| | Russell 2000 Index | $100.00| $151.97| $130.25| $140.55| $160.58| $159.69| [Item 6. [Reserved]](index=16&type=section&id=Item%206.%20%5BReserved%5D) This item is reserved and contains no information [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=16&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Brady Corporation's fiscal 2025 net sales increased 12.8% to $1,513.6 million, driven by organic growth and acquisitions, despite a gross margin decrease to 50.3% - Net sales **increased 12.8% to $1,513.6 million in fiscal 2025**, driven by **2.6% organic sales growth** and **10.5% from acquisitions**, partially offset by a **0.3% decrease due to divestitures**[104](index=104&type=chunk) - Gross margin **increased 10.6% to $760.8 million in fiscal 2025**, but **decreased as a percentage of net sales to 50.3%** (**from 51.3% in FY2024**) due to a **$4.1 million fair value adjustment to inventory from acquisitions**, **$4.9 million in facility closure costs**, and **incremental tariffs**[105](index=105&type=chunk) - R&D expenses **increased 17.9% to $79.9 million in fiscal 2025**, primarily due to the **Gravotech acquisition and increased R&D headcount**, reflecting a commitment to **innovative product development**[106](index=106&type=chunk) - Operating income **decreased 2.8% to $236.6 million in fiscal 2025**, with the **operating income margin decreasing to 15.6%** (**from 18.1% in FY2024**), mainly due to **facility closure and reorganization costs**, **incremental amortization from acquired businesses**, and **inventory fair value adjustments**[108](index=108&type=chunk) - Net income **decreased to $189.3 million in fiscal 2025 from $197.2 million in fiscal 2024**, with the **income tax rate at 20.2%** (**down from 20.4%**)[109](index=109&type=chunk)[111](index=111&type=chunk)[165](index=165&type=chunk) - The Americas & Asia segment saw **net sales increase 12.1% to $993.7 million**, driven by **4.8% organic growth** and **8.3% from acquisitions**. **Segment profit increased 6.6% to $209.8 million**, but **decreased as a percentage of sales to 21.1%** due to **facility closure costs and amortization**[114](index=114&type=chunk)[117](index=117&type=chunk) - The Europe & Australia segment's **sales increased 14.3% to $519.9 million**, primarily from **14.7% acquisition growth** and **1.4% currency impact**, despite a **1.8% organic sales decline** due to **softer industrial demand**. **Segment profit decreased 19.4% to $56.9 million**, with the **margin falling to 11.0%** due to **amortization, purchase accounting adjustments, and reorganization costs**[118](index=118&type=chunk)[121](index=121&type=chunk) - Cash and cash equivalents **decreased by $75.8 million to $174.3 million at July 31, 2025**. **Net cash provided by operating activities was $181.2 million** (**down from $255.1 million in FY2024**) due to **working capital changes**. **Net cash used in investing activities was $171.3 million**, mainly for **acquisitions ($144.5 million)** and **capital expenditures ($27.6 million)**[123](index=123&type=chunk)[124](index=124&type=chunk) - The company has a **credit agreement with $198.1 million available for future borrowing**, which can be **increased up to $1,093.1 million**, providing **total available liquidity of $1,267.4 million**[101](index=101&type=chunk) [Item 7A. Quantitative and Qualitative Disclosures About Market Risk](index=24&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Brady Corporation is exposed to foreign currency fluctuations, mitigating risks with forward contracts and foreign currency-denominated debt, with negligible sales impact in fiscal 2025 - **Approximately 50% of Brady's sales are derived outside the United States**, exposing the company to **foreign currency fluctuations**, particularly against the **Euro, British Pound, Mexican Peso, Canadian dollar, Australian dollar, Singapore dollar, Malaysian Ringgit, and Chinese Yuan**[63](index=63&type=chunk)[144](index=144&type=chunk) - The company uses **forward foreign exchange contracts (notional amount of $53.5 million as of July 31, 2025)** as **cash flow hedges** and **Euro-denominated ($50.2 million) and British Pound-denominated ($10.6 million) debt** as **net investment hedges** to minimize currency impact[145](index=145&type=chunk)[286](index=286&type=chunk) - In fiscal 2025, currency exchange rate fluctuations had a **negligible effect on sales**, but the **U.S. dollar's depreciation against other major currencies** had a more pronounced effect in interim periods[146](index=146&type=chunk) - As of July 31, 2025, the company had **no interest rate derivatives** and **no fixed-rate debt outstanding**, managing interest rate risk through its preferred mix of fixed and floating rate exposure[148](index=148&type=chunk) [Item 8. Financial Statements and Supplementary Data](index=25&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents Brady Corporation's audited consolidated financial statements for fiscal years 2023-2025, including balance sheets, income statements, and cash flows, with detailed notes - The **consolidated financial statements include the balance sheets as of July 31, 2025 and 2024, and statements of income, comprehensive income, stockholders' equity, and cash flows for the years ended July 31, 2025, 2024, and 2023**[150](index=150&type=chunk)[152](index=152&type=chunk) - **Deloitte & Touche LLP issued an unqualified opinion on the financial statements and the effectiveness of internal control over financial reporting as of July 31, 2025**[152](index=152&type=chunk)[153](index=153&type=chunk) Consolidated Balance Sheet Highlights (FY2024-FY2025, in thousands USD) | Item | 2025 (Thousands USD) | 2024 (Thousands USD) | | :------------------------ | :---------- | :---------- | | Total Current Assets | $621,835 | $599,715 | | Property, Plant & Equipment (net) | $225,572 | $195,758 | | Goodwill | $676,945 | $589,611 | | Other Intangible Assets | $105,374 | $51,839 | | Total Assets | $1,734,253 | $1,515,569 | | Total Current Liabilities | $330,332 | $264,682 | | Long-term Debt | $99,766 | $90,935 | | Total Liabilities | $542,042 | $448,911 | | Total Stockholders' Equity| $1,192,211 | $1,066,658 | Consolidated Statements of Income Highlights (FY2023-FY2025, in thousands USD) | Item | 2025 (Thousands USD) | 2024 (Thousands USD) | 2023 (Thousands USD) | | :------------------------ | :---------- | :---------- | :---------- | | Net Sales | $1,513,605 | $1,341,393 | $1,331,863 | | Gross Margin | $760,822 | $687,884 | $657,275 | | Operating Income | $236,638 | $243,414 | $225,213 | | Income Before Income Taxes| $237,097 | $247,841 | $225,696 | | Net Income | $189,256 | $197,215 | $174,857 | | Diluted EPS (Class A) | $3.94 | $4.07 | $3.51 | Consolidated Statements of Cash Flows Highlights (FY2023-FY2025, in thousands USD) | Item | 2025 (Thousands USD) | 2024 (Thousands USD) | 2023 (Thousands USD) | | :------------------------------------ | :---------- | :---------- | :---------- | | Net Cash Provided by Operating Activities | $181,196 | $255,074 | $209,149 | | Net Cash Used in Investing Activities | $(171,254) | $(81,047) | $(11,214) | | Net Cash Used in Financing Activities | $(83,871) | $(70,528) | $(163,568) | | Net (Decrease) Increase in Cash | $(75,769) | $98,586 | $37,463 | | Cash and Cash Equivalents, End of Period| $174,349 | $250,118 | $151,532 | - **Goodwill increased by $87.3 million in fiscal 2025**, primarily due to the **acquisitions of Gravotech ($66.2 million) and AB&R ($10.1 million)**, and **positive foreign currency translation effects ($11.1 million)**[207](index=207&type=chunk) - **Other intangible assets increased significantly**, with a **gross carrying amount of $154.5 million in FY2025 (from $81.9 million in FY2024)**, mainly due to Gravotech and AB&R acquisitions. **Amortization expense for intangible assets was $18.9 million in FY2025, up from $9.4 million in FY2024**[210](index=210&type=chunk)[211](index=211&type=chunk) - The company's credit agreement has a **final maturity date of November 14, 2027**, with an **outstanding balance of $99.8 million as of July 31, 2025**. The company was **in compliance with all financial covenants**, with a **debt-to-EBITDA ratio of 0.3 to 1.0** and an **interest expense coverage ratio of 67.3 to 1.0**[223](index=223&type=chunk)[224](index=224&type=chunk) Net Sales by Product Category (FY2023-FY2025, in thousands USD) | Product Category | 2025 (Thousands USD) | 2024 (Thousands USD) | 2023 (Thousands USD) | | :--------------------------- | :---------- | :---------- | :---------- | | Safety and Facility Identification | $611,242 | $607,235 | $608,938 | | Product Identification | $428,655 | $274,429 | $259,164 | | Wire Identification | $247,933 | $228,415 | $209,284 | | Healthcare Identification | $140,612 | $141,767 | $145,225 | | People Identification | $85,163 | $89,547 | $109,252 | | Total Company | $1,513,605 | $1,341,393 | $1,331,863 | - The **income tax rate was 20.2% in fiscal 2025, compared to 20.4% in fiscal 2024**. The **valuation allowance for deferred tax assets increased to $82.2 million in FY2025 from $47.2 million in FY2024**, primarily related to **foreign tax credit and net operating loss carryforwards**[111](index=111&type=chunk)[135](index=135&type=chunk) - In **fiscal 2025**, the company **acquired Gravotech Holding for $120.9 million, AB&R for $14.8 million, and Microfluidic Solutions for $10.7 million**, expanding its product offerings and market presence[290](index=290&type=chunk)[294](index=294&type=chunk)[295](index=295&type=chunk) - **Subsequent to July 31, 2025, Brady acquired MECCO Partners LLC for approximately $20.0 million** and **announced a 2.1% increase in the annual dividend for Class A Common Stock to $0.98 per share**[298](index=298&type=chunk)[299](index=299&type=chunk) [Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure](index=56&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20With%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) There have been no changes in or disagreements with accountants on accounting and financial disclosure - There were **no changes in or disagreements with accountants on accounting and financial disclosure**[300](index=300&type=chunk) [Item 9A. Controls and Procedures](index=56&type=section&id=Item%209A.%20Controls%20and%20Procedures) Brady Corporation's management concluded disclosure controls and internal control over financial reporting were effective as of July 31, 2025, excluding recent acquisitions - The Company's President and Chief Executive Officer and Chief Financial Officer and Treasurer concluded that the Company's **disclosure controls and procedures are effective as of July 31, 2025**[302](index=302&type=chunk) - Management assessed the effectiveness of **internal control over financial reporting as of July 31, 2025**, based on the **COSO framework**, and concluded it was **effective**[304](index=304&type=chunk) - The assessment **excluded recently acquired businesses (Gravotech, AB&R, and Microfluidic Solutions)**, which collectively represented **7.7% of consolidated total assets** (excluding goodwill and intangible assets) and **9.4% of consolidated net sales for the year ended July 31, 2025**[304](index=304&type=chunk)[311](index=311&type=chunk) - **Deloitte & Touche LLP audited and expressed an unqualified opinion on the effectiveness of the Company's internal control over financial reporting as of July 31, 2025**[306](index=306&type=chunk)[309](index=309&type=chunk) - There were **no changes in the Company's internal control over financial reporting during the most recently completed fiscal quarter that materially affected, or are reasonably likely to materially affect, internal control over financial reporting**[307](index=307&type=chunk) [Item 9B. Other Information](index=58&type=section&id=Item%209B.%20Other%20Information) No director or Section 16 officer adopted or terminated a Rule 10b5-1 trading arrangement during the three months ended July 31, 2025 - **No director or Section 16 officer adopted or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement during the three months ended July 31, 2025**[317](index=317&type=chunk) [Item 9C. Disclosure Regarding Foreign Jurisdictions That Prevent Inspections](index=59&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20That%20Prevent%20Inspections) There are no disclosures regarding foreign jurisdictions that prevent inspections - There are **no disclosures regarding foreign jurisdictions that prevent inspections**[318](index=318&type=chunk) [PART III](index=60&type=section&id=PART%20III) [Item 10. Directors, Executive Officers and Corporate Governance](index=60&type=section&id=Item%2010.%20Directors,%20Executive%20Officers%20and%20Corporate%20Governance) This section lists Brady Corporation's executive officers and directors, detailing Board oversight of risk management, including cybersecurity and ESG issues Executive Officers and Directors | Name | Age | Title | | :----------------- | :-- | :----------------------------------------- | | Russell R. Shaller | 62 | President, CEO and Director | | Ann E. Thornton | 43 | Chief Financial Officer, CAO and Treasurer | | Olivier Bojarski | 46 | President – Americas & Asia | | Thomas F. DeBruine | 58 | Chief Operating Officer | | Andrew T. Gorman | 45 | General Counsel and Secretary | | Brett Wilms | 51 | President – EMEA & Australia | | Patrick W. Allender| 78 | Director | | David S. Bem | 56 | Director | | Elizabeth P. Bruno | 58 | Director | | Joanne Collins Smee| 68 | Director | | Deidre E. Cusack | 60 | Director | | Anne De Greef-Safft| 63 | Director | | Christopher M. Hix | 63 | Director | | Vineet Nargolwala | 53 | Director | | Bradley C. Richardson| 67 | Director | | Michelle E. Williams| 64 | Director | - The Board's leadership structure includes a **non-executive Chair (Bradley C. Richardson)** to **enhance oversight and independence from management**[339](index=339&type=chunk) - The **Board oversees the company's risk management processes, including cybersecurity and ESG strategies**, directly and through its committees[341](index=341&type=chunk) - **All directors, with the exception of the President and CEO, Mr. Shaller, are deemed independent based on NYSE criteria**[343](index=343&type=chunk) - The **Audit Committee includes at least one financial expert (Messrs. Hix, Allender, and Richardson) and all members are independent**[342](index=342&type=chunk)[345](index=345&type=chunk) - The company maintains a **Code of Ethics**, an **Insider Trading Policy (prohibiting hedging and pledging company stock)**, and **Corporate Governance Guidelines**, all **publicly available**[346](index=346&type=chunk)[347](index=347&type=chunk)[348](index=348&type=chunk) [Item 11. Executive Compensation](index=64&type=section&id=Item%2011.%20Executive%20Compensation) Brady Corporation's executive compensation aligns with shareholder value through pay-for-performance, utilizing variable compensation, equity grants, and stock ownership requirements - The **executive compensation philosophy aims to attract, retain, motivate, develop, and reward talented executives, aligning their interests with shareholders through a pay-for-performance approach**[363](index=363&type=chunk)[365](index=365&type=chunk) - For **fiscal 2025**, the **CEO's base salary increased by 17.2% to $1,025,000**, and **other NEOs also received increases to recognize performance and responsibilities**[355](index=355&type=chunk)[374](index=374&type=chunk) - **Annual equity grants in fiscal 2025 consisted of 50% time-based RSUs and 50% PRSUs**, with **PRSUs vesting based on company revenue and diluted EPS targets over a three-year performance period**, with **payouts ranging from 0% to 200% of target**[356](index=356&type=chunk)[358](index=358&type=chunk)[359](index=359&type=chunk)[393](index=393&type=chunk) - The compensation program includes **stock ownership requirements (e.g., CEO: 5x base salary)**, **clawback provisions for erroneous incentive-based compensation**, **performance thresholds and caps on incentive payouts**, and an **insider trading and anti-hedging policy**[361](index=361&type=chunk)[362](index=362&type=chunk)[404](index=404&type=chunk)[407](index=407&type=chunk) Summary Compensation Table (FY2023-FY2025, in thousands USD) | Name and Principal Position | Fiscal Year | Salary ($) | Stock Awards ($) | Non-Equity Incentive Plan Compensation ($) | All Other Compensation ($) | Total ($) | | :-------------------------- | :---------- | :--------- | :--------------- | :----------------------------------------- | :------------------------- | :-------- | | R.R. Shaller, President, CEO & Director | 2025 | 996,058 | 4,990,208 | 1,373,414 | 237,686 | 7,597,366 | | | 2024 | 859,212 | 3,551,028 | 1,439,180 | 198,208 | 6,047,628 | | | 2023 | 774,808 | 1,164,390 | 1,162,212 | 141,087 | 3,242,497 | | A.E. Thornton, CFO, CAO & Treasurer | 2025 | 506,828 | 800,043 | 425,380 | 99,952 | 1,832,203 | | | 2024 | 468,173 | 675,016 | 439,146 | 75,978 | 1,658,313 | | | 2023 | 314,614 | 50,025 | 203,881 | 44,423 | 663,003 | | O. Bojarski, President - Americas & Asia | 2025 | 485,481 | 750,035 | 527,960 | 124,826 | 1,888,302 | | | 2024 | 461,404 | 682,053 | 449,869 | 97,005 | 1,690,331 | | | 2023 | 401,077 | 600,029 | 387,290 | 78,133 | 1,666,529 | | T.F. DeBruine, Chief Operating Officer | 2025 | 450,000 | 490,078 | 412,020 | 96,171 | 1,448,269 | | | 2024 | 354,327 | 220,084 | 306,896 | 80,432 | 961,739 | | | 2023 | 317,500 | 151,926 | 238,125 | 68,912 | 836,526 | | A.T. Gorman, General Counsel and Secretary | 2025 | 369,230 | 368,998 | 265,625 | 83,305 | 1,087,158 | | | 2024 | 341,250 | 315,072 | 342,957 | 69,987 | 1,069,266 | | | 2023 | 322,616 | 191,792 | 193,569 | 72,292 | 856,097 | - The **CEO's annual total compensation for fiscal 2025 was $7,597,366**, resulting in a **pay ratio of approximately 138:1 compared to the median employee's total compensation of $55,173**[465](index=465&type=chunk) - The **most important financial performance measures linking Compensation Actually Paid to NEOs in fiscal 2025 were Operating Income, Organic Sales Growth, Total Shareholder Return, and Earnings Per Share**[489](index=489&type=chunk) [Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=94&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Two trusts control Brady Corporation's Class B Voting Common Stock, while management and directors beneficially own 3.6% of Class A Common Stock - As of July 31, 2025, the **EBL GST Non-Exempt Stock B Trust (controlled by Elizabeth P. Bruno) and the William H. Brady III Living Trust each beneficially own 50% of the Class B Common Stock**, which is the **only voting stock**[499](index=499&type=chunk) - **Elizabeth P. Bruno is the largest beneficial owner of Class A Common Stock among directors and NEOs, holding 939,130 shares (2.2%)**[503](index=503&type=chunk) - **All officers and directors as a group (16 persons) beneficially own 1,582,393 shares, representing 3.6% of the Class A Common Stock**[503](index=503&type=chunk) - As of July 31, 2025, the company's **equity compensation plans have 1,367,247 securities to be issued upon exercise of outstanding options, warrants, and rights**, with a **weighted-average exercise price of $49.19**[506](index=506&type=chunk) - There are **4,721,007 shares remaining available for future issuance under equity compensation plans**[506](index=506&type=chunk) - **No arrangements are known to the Company that may result in a change of control**[504](index=504&type=chunk) [Item 13. Certain Relationships and Related Transactions, and Director Independence](index=99&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions,%20and%20Director%20Independence) Brady Corporation reviews potential conflicts and related party transactions annually, concluding no material related party transactions in fiscal 2025 - The Company **annually solicits and reviews information from directors to ensure no conflicts of interest** and **refers potential issues to the Corporate Governance Committee**[507](index=507&type=chunk) - The Board concluded that **commercial relationships with entities employing directors were not material** and **did not prevent directors from being considered independent**[508](index=508&type=chunk) - The Company determined that there were **no material related party transactions affecting its financial condition or operations in fiscal 2025**, and **no transactions requiring disclosure under Item 404(a) of Regulation S-K**[508](index=508&type=chunk) [Item 14. Principal Accountant Fees and Services](index=100&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Brady Corporation incurred $2,392 thousand in total fees from Deloitte & Touche LLP in fiscal 2025, with all services pre-approved by the Audit Committee Aggregate Fees for Professional Services (FY2024-FY2025, in thousands USD) | Category | 2025 (Thousands USD) | 2024 (Thousands USD) | | :---------------------------------------- | :---- | :---- | | Audit fees | $1,402| $1,209| | Tax fees — compliance | $550 | $525 | | Subtotal audit, audit-related and tax compliance fees | $1,952| $1,734| | Tax fees — planning and advice | $440 | $477 | | Subtotal non-audit related fees | $440 | $477 | | Total fees | $2,392| $2,211| - **All services performed by the Independent Registered Public Accounting Firm in fiscal 2025 were pre-approved by the Audit Committee to assure auditor independence**[513](index=513&type=chunk) [PART IV](index=101&type=section&id=PART%20IV) [Item 15. Exhibits and Financial Statement Schedules](index=101&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists the Consolidated Financial Statement Schedule and a comprehensive Exhibit Index, detailing various agreements and certifications - The report includes **Consolidated Financial Statement Schedule II Valuation and Qualifying Accounts**[516](index=516&type=chunk) - A **comprehensive Exhibit Index is provided**, **detailing various agreements, plans, and policies**, with **many documents incorporated by reference from prior SEC filings**[517](index=517&type=chunk)[519](index=519&type=chunk)[520](index=520&type=chunk)[525](index=525&type=chunk) Schedule II — Valuation and Qualifying Accounts (FY2023-FY2025, in thousands USD) | Description | 2025 (Thousands USD) | 2024 (Thousands USD) | 2023 (Thousands USD) | | :---------------------------------------- | :------ | :------ | :------ | | Accounts receivable — allowance for credit losses (end of period) | $7,876 | $6,749 | $8,467 | | Inventory — Reserve for slow-moving inventory (end of period) | $46,768 | $31,982 | $35,855 | | Valuation allowances against deferred tax assets (end of period) | $82,180 | $47,224 | $52,750 | [Item 16. Form 10-K Summary](index=105&type=section&id=Item%2016.%20Form%2010-K%20Summary) This item indicates that no Form 10-K Summary is provided - **No Form 10-K Summary is provided**[522](index=522&type=chunk) [Signatures](index=106&type=section&id=Signatures) The report is duly signed on behalf of Brady Corporation by its Principal Financial Officer, Principal Executive Officer, and other directors as of September 4, 2025 - The report is **signed by Ann E. Thornton (Principal Financial Officer and Principal Accounting Officer) and Russell R. Shaller (Principal Executive Officer), along with other directors, as of September 4, 2025**[527](index=527&type=chunk)[528](index=528&type=chunk)

[Executive Summary & Key Announcements](index=1&type=section&id=Executive%20Summary%20%26%20Key%20Announcements) Brady Corporation's fiscal 2025 performance highlights strong sales and adjusted EPS growth, alongside fiscal 2026 guidance [Fiscal 2025 Fourth Quarter Highlights](index=1&type=section&id=Quarter%20Ended%20July%2031%2C%202025%20Financial%20Results%20Highlights) Brady Corporation reported a 15.7% increase in sales for Q4 FY2025, reaching $397.3 million, driven by acquisitions and foreign currency translation, alongside 2.4% organic growth. Adjusted Diluted EPS increased by 5.9% to a record $1.26, despite a GAAP EPS decline Q4 FY2025 Sales Performance | Metric | Q4 FY2025 | Q4 FY2024 | | :-------------------------- | :--------- | :--------- | | Total Sales | $397.3M | $343.4M | | Organic Sales Growth | 2.4% | - | | Acquisitions Impact | 11.3% | - | | Foreign Currency Impact | 2.0% | - | | Americas & Asia Sales Growth | 14.1% | - | | Europe & Australia Sales Growth | 18.8% | - | | Americas & Asia Organic Sales Growth | 4.3% | - | | Europe & Australia Organic Sales Growth | (1.3)% | - | Q4 FY2025 Earnings Per Share | Metric | Q4 FY2025 | Q4 FY2024 | Change (%) | | :-------------------- | :--------- | :--------- | :--------- | | Diluted EPS (GAAP) | $1.04 | $1.15 | (9.6)% | | Adjusted Diluted EPS | $1.26 | $1.19 | 5.9% | [Fiscal 2025 Annual Highlights](index=1&type=section&id=Year%20Ended%20July%2031%2C%202025%20Financial%20Results%20Highlights) For the full fiscal year 2025, Brady Corporation achieved a 12.8% sales increase to $1.51 billion, with 2.6% organic sales growth. Adjusted Diluted EPS reached a record $4.60, up 9.0% year-over-year. The company also returned $96.4 million to shareholders FY2025 Sales Performance | Metric | FY2025 | FY2024 | | :-------------------- | :------- | :------- | | Total Sales | $1.51B | $1.34B | | Organic Sales Growth | 2.6% | - | | Acquisitions Impact | 10.5% | - | | Divestitures Impact | (0.3)% | - | FY2025 Earnings Per Share | Metric | FY2025 | FY2024 | Change (%) | | :-------------------- | :------- | :------- | :--------- | | Diluted EPS (GAAP) | $3.94 | $4.07 | (3.2)% | | Adjusted Diluted EPS | $4.60 | $4.22 | 9.0% | - Returned **$96.4 million** to shareholders in fiscal 2025 through dividends and share repurchases[7](index=7&type=chunk)[11](index=11&type=chunk) [Fiscal 2026 EPS Guidance Announcement](index=1&type=section&id=Fiscal%202026%20EPS%20Guidance%20Announcement) Brady Corporation announced its diluted EPS guidance for the fiscal year ending July 31, 2026, projecting a range of $4.55 to $4.85 on a GAAP basis and $4.85 to $5.15 on an adjusted basis Fiscal 2026 Diluted EPS Guidance | Metric | Low End | High End | | :-------------------- | :------ | :------- | | GAAP EPS | $4.55 | $4.85 | | Adjusted Diluted EPS | $4.85 | $5.15 | [Company Overview](index=3&type=section&id=Company%20Overview) Brady Corporation is a global manufacturer of identification solutions, serving diverse industries with high-performance labels, signs, and printing systems [About Brady Corporation](index=3&type=section&id=About%20Brady%20Corporation) Brady Corporation is an international manufacturer and marketer of complete identification solutions, providing products like high-performance labels, signs, safety devices, printing systems, and software to diverse industries globally - Brady Corporation is an international manufacturer and marketer of complete solutions that identify and protect people, products and places[16](index=16&type=chunk) - Products include high-performance labels, signs, safety devices, printing systems and software, helping customers increase safety, security, productivity and performance[16](index=16&type=chunk) - Serves a diverse customer base in electronics, telecommunications, manufacturing, electrical, construction, medical, aerospace and other industries[16](index=16&type=chunk) - Headquartered in Milwaukee, Wisconsin, with approximately **6,400 employees worldwide** as of July 31, 2025[16](index=16&type=chunk) - Fiscal 2025 sales were approximately **$1.51 billion**[16](index=16&type=chunk) [Fiscal 2025 Financial Performance](index=1&type=section&id=Fiscal%202025%20Financial%20Performance) This section details Brady Corporation's Q4 and full fiscal year 2025 financial results, highlighting sales, profitability, and earnings per share [Fourth Quarter Results](index=1&type=section&id=Fourth%20Quarter%20Results) For Q4 FY2025, Brady reported total sales of $397.3 million, a 15.7% increase. Income before income taxes decreased by 11.3% to $60.5 million, while Adjusted Income Before Income Taxes increased by 5.1% to $74.2 million. Net income and GAAP diluted EPS also saw declines, but Adjusted Net Income and Adjusted Diluted EPS increased Q4 FY2025 Sales Performance (in millions) | Metric | Q4 FY2025 | Q4 FY2024 | Change (%) | | :-------------------- | :--------- | :--------- | :--------- | | Net Sales | $397.3 | $343.4 | 15.7% | | Americas & Asia Sales | $260.8 | $228.5 | 14.1% | | Europe & Australia Sales | $136.5 | $114.9 | 18.8% | Q4 FY2025 Profitability (in millions) | Metric | Q4 FY2025 | Q4 FY2024 | Change (%) | | :-------------------------------- | :--------- | :--------- | :--------- | | Income before income taxes (GAAP) | $60.5 | $68.2 | (11.3)% | | Adjusted Income Before Income Taxes | $74.2 | $70.5 | 5.1% | | Net Income (GAAP) | $49.9 | $55.5 | (10.1)% | | Adjusted Net Income | $60.2 | $57.3 | 5.1% | Q4 FY2025 Earnings Per Share | Metric | Q4 FY2025 | Q4 FY2024 | Change (%) | | :-------------------- | :--------- | :--------- | :--------- | | Diluted EPS (GAAP) | $1.04 | $1.15 | (9.6)% | | Adjusted Diluted EPS | $1.26 | $1.19 | 5.9% | [Full Year Results](index=1&type=section&id=Full%20Year%20Results) For the full fiscal year 2025, Brady's sales increased 12.8% to $1.51 billion. Income before income taxes decreased by 4.3% to $237.1 million, while Adjusted Income Before Income Taxes rose 8.7% to $279.5 million. Net income and GAAP diluted EPS declined, but Adjusted Net Income and Adjusted Diluted EPS achieved record highs FY2025 Sales Performance (in billions) | Metric | FY2025 | FY2024 | Change (%) | | :-------------------- | :------- | :------- | :--------- | | Net Sales | $1.51 | $1.34 | 12.8% | | Americas & Asia Sales | $0.99 | $0.89 | 12.1% | | Europe & Australia Sales | $0.52 | $0.45 | 14.3% | FY2025 Profitability (in millions) | Metric | FY2025 | FY2024 | Change (%) | | :-------------------------------- | :------- | :------- | :--------- | | Income before income taxes (GAAP) | $237.1 | $247.8 | (4.3)% | | Adjusted Income Before Income Taxes | $279.5 | $257.3 | 8.7% | | Net Income (GAAP) | $189.3 | $197.2 | (4.0)% | | Adjusted Net Income | $221.3 | $204.5 | 8.2% | FY2025 Earnings Per Share | Metric | FY2025 | FY2024 | Change (%) | | :-------------------- | :------- | :------- | :--------- | | Diluted EPS (GAAP) | $3.94 | $4.07 | (3.2)% | | Adjusted Diluted EPS | $4.60 | $4.22 | 9.0% | [Management Commentary and Outlook](index=2&type=section&id=Management%20Commentary%20and%20Outlook) Management commentary highlights strategic investments and acquisitions driving performance, alongside the fiscal 2026 diluted EPS guidance [Management Remarks](index=2&type=section&id=Commentary) Management highlighted strong organic sales growth in Americas & Asia due to new product investments, leading to record adjusted EPS. Strategic acquisitions (Gravotech, Mecco) expanded product portfolio in direct part marking and laser engraving. The company maintains a strong balance sheet, enabling continued investment in R&D and shareholder returns - Investments in new products led to strong results in the Americas & Asia region, with **4.3% organic sales growth in Q4** and **4.8% in fiscal 2025**, contributing to record adjusted earnings per share[11](index=11&type=chunk) - Acquired Gravotech (beginning of fiscal 2025) and Mecco (closed August 4, 2025) to add direct part marking and laser engraving capabilities, expanding identification solutions[11](index=11&type=chunk) - Strong balance sheet and net cash position provide flexibility to fund organic and inorganic opportunities, and return funds to shareholders[11](index=11&type=chunk) - Returned **$96.4 million** to shareholders in fiscal 2025 through dividends and share buybacks, while also investing a record-high in research and development[11](index=11&type=chunk) [Fiscal 2026 Guidance](index=2&type=section&id=Fiscal%202026%20Guidance) Brady Corporation provided diluted EPS guidance for fiscal year 2026, expecting GAAP EPS between $4.55 and $4.85 (15.5% to 23.1% increase) and Adjusted Diluted EPS between $4.85 and $5.15 (5.4% to 12.0% increase) Fiscal 2026 Diluted EPS Guidance | Metric | Low End | High End | YoY Change (vs. FY2025 GAAP $3.94) | YoY Change (vs. FY2025 Adj. $4.60) | | :-------------------- | :------ | :------- | :-------------------------------- | :---------------------------------- | | GAAP EPS | $4.55 | $4.85 | 15.5% - 23.1% | - | | Adjusted Diluted EPS | $4.85 | $5.15 | - | 5.4% - 12.0% | - Guidance assumptions include a full-year income tax rate of approximately **21%**, depreciation and amortization expense of approximately **$42 million**, and capital expenditures of approximately **$40 million**[14](index=14&type=chunk) - Fiscal 2026 guidance is based upon foreign currency exchange rates as of July 31, 2025, and assumes economic growth[14](index=14&type=chunk) [Consolidated Financial Statements](index=4&type=section&id=Consolidated%20Financial%20Statements) Brady Corporation's consolidated financial statements detail income, balance sheet positions, and cash flow activities for fiscal years 2025 and 2024 [Consolidated Statements of Income](index=4&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20INCOME) The consolidated statements of income show a significant increase in net sales for both the quarter and full year ended July 31, 2025, primarily driven by acquisitions. Gross margin also increased, but operating income and net income (GAAP) saw slight declines for the full year Key Income Statement Figures (in thousands) | Metric | Q4 FY2025 | Q4 FY2024 | FY2025 | FY2024 | | :-------------------------- | :-------- | :-------- | :------- | :------- | | Net sales | $397,275 | $343,402 | $1,513,605 | $1,341,393 | | Cost of goods sold | $197,044 | $166,347 | $752,783 | $653,509 | | Gross margin | $200,231 | $177,055 | $760,822 | $687,884 | | Operating income | $59,292 | $66,215 | $236,638 | $243,414 | | Income before income taxes | $60,505 | $68,208 | $237,097 | $247,841 | | Net income | $49,876 | $55,456 | $189,256 | $197,215 | | Diluted EPS | $1.04 | $1.15 | $3.94 | $4.07 | [Consolidated Balance Sheets](index=5&type=section&id=CONSOLIDATED%20BALANCE%20SHEETS) The balance sheet as of July 31, 2025, shows an increase in total assets, primarily driven by goodwill and other intangible assets, reflecting recent acquisitions. Total liabilities also increased, while stockholders' equity grew Key Balance Sheet Figures (in thousands) | Metric | July 31, 2025 | July 31, 2024 | | :---------------------------------------------------------------- | :------------ | :------------ | | Cash and cash equivalents | $174,349 | $250,118 | | Accounts receivable, net | $231,944 | $185,486 | | Inventories | $200,881 | $152,729 | | Total current assets | $621,835 | $599,715 | | Property, plant and equipment—net | $225,572 | $195,758 | | Goodwill | $676,945 | $589,611 | | Other intangible assets | $105,374 | $51,839 | | Total Assets | $1,734,253 | $1,515,569 | | Total current liabilities | $330,332 | $264,682 | | Long-term debt | $99,766 | $90,935 | | Total Liabilities | $542,042 | $448,911 | | Total Stockholders' Equity | $1,192,211 | $1,066,658 | [Consolidated Statements of Cash Flows](index=6&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) Cash provided by operating activities decreased significantly in FY2025 compared to FY2024, largely due to changes in operating assets and liabilities. Cash used in investing activities increased substantially due to business acquisitions, while cash used in financing activities also increased Key Cash Flow Figures (in thousands) | Metric | FY2025 | FY2024 | | :---------------------------------------- | :------- | :------- | | Net cash provided by operating activities | $181,196 | $255,074 | | Net cash used in investing activities | $(171,254) | $(81,047) | | Net cash used in financing activities | $(83,871) | $(70,528) | | Net (decrease) increase in cash and cash equivalents | $(75,769) | $98,586 | | Cash and cash equivalents, end of period | $174,349 | $250,118 | [Segment Information](index=7&type=section&id=Segment%20Information) This section details Brady Corporation's net sales, growth, and profitability across its Americas & Asia and Europe & Australia operating segments [Net Sales and Growth by Segment](index=7&type=section&id=NET%20SALES%20by%20Segment) Both Americas & Asia and Europe & Australia segments reported increased net sales for Q4 and the full year FY2025. Americas & Asia showed strong organic growth, while Europe & Australia experienced organic sales decline but significant growth from acquisitions and currency translation Net Sales by Segment (in thousands) | Segment | Q4 FY2025 | Q4 FY2024 | FY2025 | FY2024 | | :----------------- | :-------- | :-------- | :------- | :------- | | Americas & Asia | $260,789 | $228,493 | $993,715 | $886,528 | | Europe & Australia | $136,486 | $114,909 | $519,890 | $454,865 | | Total | $397,275 | $343,402 | $1,513,605 | $1,341,393 | Sales Growth Components (Q4 YoY) | Segment | Organic | Acquisitions | Currency | Divestiture | Total | | :----------------- | :------ | :----------- | :------- | :---------- | :---- | | Americas & Asia | 4.3% | 9.8% | 0% | 0% | 14.1% | | Europe & Australia | (1.3)% | 14.4% | 5.7% | 0% | 18.8% | | Total Company | 2.4% | 11.3% | 2.0% | 0% | 15.7% | Sales Growth Components (FY YoY) | Segment | Organic | Acquisitions | Currency | Divestiture | Total | | :----------------- | :------ | :----------- | :------- | :---------- | :---- | | Americas & Asia | 4.8% | 8.3% | (0.6)% | (0.4)% | 12.1% | | Europe & Australia | (1.8)% | 14.7% | 1.4% | 0% | 14.3% | | Total Company | 2.6% | 10.5% | 0% | (0.3)% | 12.8% | [Segment Profitability](index=7&type=section&id=SEGMENT%20PROFIT) Total segment profit decreased for both the quarter and full year FY2025. Both Americas & Asia and Europe & Australia segments experienced a decline in segment profit and segment profit as a percentage of net sales Segment Profit (in thousands) | Segment | Q4 FY2025 | Q4 FY2024 | FY2025 | FY2024 | | :----------------- | :-------- | :-------- | :------- | :------- | | Americas & Asia | $51,617 | $53,353 | $209,765 | $196,842 | | Europe & Australia | $15,070 | $19,277 | $56,942 | $70,612 | | Total Segment Profit | $66,687 | $72,630 | $266,707 | $267,454 | Segment Profit as a Percent of Net Sales | Segment | Q4 FY2025 | Q4 FY2024 | FY2025 | FY2024 | | :----------------- | :-------- | :-------- | :------- | :------- | | Americas & Asia | 19.8% | 23.3% | 21.1% | 22.2% | | Europe & Australia | 11.0% | 16.8% | 11.0% | 15.5% | | Total | 16.8% | 21.2% | 17.6% | 19.9% | [Non-GAAP Financial Measures Reconciliation](index=8&type=section&id=Non-GAAP%20Financial%20Measures%20Reconciliation) This section reconciles Brady Corporation's GAAP to non-GAAP adjusted financial measures, including income, net income, and diluted EPS, for historical and guidance periods [Adjusted Income Before Income Taxes Reconciliation](index=8&type=section&id=Adjusted%20Income%20Before%20Income%20Taxes) Brady reconciles GAAP Income before income taxes to Adjusted Income Before Income Taxes by adding back amortization expense, facility closure and other reorganization costs, and non-recurring acquisition-related costs. This adjustment shows a 5.1% increase for Q4 and 8.7% for the full year FY2025 Adjusted Income Before Income Taxes Reconciliation (in thousands) | Metric | Q4 FY2025 | Q4 FY2024 | FY2025 | FY2024 | | :------------------------------------------ | :-------- | :-------- | :------- | :------- | | Income before income taxes (GAAP) | $60,505 | $68,208 | $237,097 | $247,841 | | Amortization expense | $4,778 | $2,337 | $18,916 | $9,421 | | Facility closure and other reorganization costs | $8,890 | — | $18,474 | — | | Non-recurring acquisitions-related costs and other expenses | — | — | $5,059 | — | | Adjusted Income Before Income Taxes (non-GAAP) | $74,173 | $70,545 | $279,546 | $257,262 | [Adjusted Income Tax Expense Reconciliation](index=8&type=section&id=Adjusted%20Income%20Tax%20Expense) The reconciliation of GAAP Income tax expense to Adjusted Income Tax Expense shows an increase in adjusted tax expense for both the quarter and full year FY2025, reflecting the tax impact of the adjustments made to income before taxes Adjusted Income Tax Expense Reconciliation (in thousands) | Metric | Q4 FY2025 | Q4 FY2024 | FY2025 | FY2024 | | :------------------------------------------ | :-------- | :-------- | :------- | :------- | | Income tax expense (GAAP) | $10,629 | $12,752 | $47,841 | $50,626 | | Amortization expense | $1,148 | $540 | $4,550 | $2,182 | | Facility closure and other reorganization costs | $2,222 | — | $4,618 | — | | Non-recurring acquisitions-related costs and other expenses | — | — | $1,265 | — | | Adjusted Income Tax Expense (non-GAAP) | $13,999 | $13,292 | $58,274 | $52,808 | [Adjusted Net Income Reconciliation](index=9&type=section&id=Adjusted%20Net%20Income) Adjusted Net Income, which excludes the after-tax impact of amortization, facility closure, and acquisition-related costs, increased by 5.1% for Q4 and 8.2% for the full year FY2025, indicating stronger underlying profitability Adjusted Net Income Reconciliation (in thousands) | Metric | Q4 FY2025 | Q4 FY2024 | FY2025 | FY2024 | | :------------------------------------------ | :-------- | :-------- | :------- | :------- | | Net income (GAAP) | $49,876 | $55,456 | $189,256 | $197,215 | | Amortization expense | $3,630 | $1,797 | $14,366 | $7,239 | | Facility closure and other reorganization costs | $6,668 | — | $13,856 | — | | Non-recurring acquisitions-related costs and other expenses | — | — | $3,794 | — | | Adjusted Net Income (non-GAAP) | $60,174 | $57,253 | $221,272 | $204,454 | [Adjusted Diluted EPS Reconciliation](index=9&type=section&id=Adjusted%20Diluted%20EPS) Adjusted Diluted EPS, a key non-GAAP measure, increased to a record $1.26 for Q4 and $4.60 for the full year FY2025, reflecting the company's operational performance excluding certain non-recurring or non-cash items Adjusted Diluted EPS Reconciliation | Metric | Q4 FY2025 | Q4 FY2024 | FY2025 | FY2024 | | :------------------------------------------------ | :--------- | :--------- | :------- | :------- | | Net income per Class A Nonvoting Common Share (GAAP) | $1.04 | $1.15 | $3.94 | $4.07 | | Amortization expense | $0.08 | $0.04 | $0.30 | $0.15 | | Facility closure and other reorganization costs | $0.14 | — | $0.29 | — | | Non-recurring acquisitions-related costs and other expenses | — | — | $0.08 | — | | Adjusted Diluted EPS (non-GAAP) | $1.26 | $1.19 | $4.60 | $4.22 | [Adjusted Diluted EPS Guidance Reconciliation](index=9&type=section&id=Adjusted%20Diluted%20EPS%20Guidance) The company provides a reconciliation for its Fiscal 2026 Adjusted Diluted EPS guidance, which excludes an estimated $0.30 per share for amortization expense from the GAAP EPS guidance Adjusted Diluted EPS Guidance Reconciliation (FY2026) | Metric | Low End | High End | | :------------------------------------------ | :------ | :------- | | Earnings per Class A Nonvoting Common Share (GAAP) | $4.55 | $4.85 | | Amortization expense | $0.30 | $0.30 | | Adjusted Diluted EPS (non-GAAP) | $4.85 | $5.15 | [Forward-Looking Statements & Risks](index=3&type=section&id=Forward-Looking%20Statements%20%26%20Risks) This section outlines Brady Corporation's forward-looking statements and the various risk factors that could materially impact future financial results [Forward-Looking Statements](index=3&type=section&id=Forward-Looking%20Statements) The report contains forward-looking statements regarding future financial position, business strategy, targets, and operations, which are inherently uncertain and subject to various risks - Statements that are not reported financial results or other historic information are 'forward-looking statements,' relating to future financial position, business strategy, targets, projected sales, costs, earnings, capital expenditures, debt levels, cash flows, and management plans[19](index=19&type=chunk) - Identified by words such as 'may,' 'will,' 'expect,' 'intend,' 'estimate,' 'anticipate,' 'believe,' 'should,' 'project,' 'plan' or similar terminology[20](index=20&type=chunk) - These statements address matters that are, to different degrees, uncertain and are subject to risks, assumptions, and other factors beyond Brady's control[20](index=20&type=chunk) [Risk Factors](index=3&type=section&id=Risk%20Factors) Various factors could cause actual results to differ materially from forward-looking statements, including increased costs, decreased demand, competition, ability to develop new products, M&A integration, cybersecurity risks, regulatory changes, and global economic conditions - Uncertainties arise from increased cost of materials, labor, material shortages, supply chain disruptions, and decreased demand for products[20](index=20&type=chunk) - Risks include the ability to compete effectively, successfully execute strategy, develop technologically advanced products, and identify, integrate, and grow acquired companies[20](index=20&type=chunk) - Other factors include difficulties in protecting against security breaches, extensive regulations, loss of key employees, litigation, global climate change, foreign currency fluctuations, changes in tax legislation, potential write-offs of goodwill, and differing interests of shareholders[20](index=20&type=chunk)

Core Viewpoint - Brady Corporation reported strong financial results for the fourth quarter and fiscal year 2025, highlighting significant sales growth driven by acquisitions and product investments, despite a decline in net income compared to the previous year [1][4][5]. Financial Results for the Quarter Ended July 31, 2025 - Sales increased by 15.7% to $397.3 million, with organic sales growth of 2.4%, acquisition-related growth of 11.3%, and a 2.0% increase from foreign currency translation [2][9]. - Income before income taxes was $60.5 million, down from $68.2 million in the same quarter last year, while adjusted income before income taxes rose by 5.1% to $74.2 million [3][9]. - Net income decreased to $49.9 million from $55.5 million year-over-year, with diluted EPS at $1.04 compared to $1.15 previously; however, adjusted diluted EPS increased to a record $1.26 from $1.19 [4][9]. Financial Results for the Year Ended July 31, 2025 - Annual sales rose by 12.8% to $1.51 billion, with organic growth of 2.6% and a 10.5% increase from acquisitions [5][7]. - Income before income taxes for the year was $237.1 million, down from $247.8 million, while adjusted income before income taxes increased by 8.7% to $279.5 million [6]. - Net income for the year was $189.3 million, down from $197.2 million, with diluted EPS at $3.94 compared to $4.07; adjusted diluted EPS reached a record $4.60, up from $4.22 [7][9]. Regional Sales Performance - In the Americas & Asia, sales increased by 14.1%, with organic growth of 4.3%, while Europe & Australia saw an 18.8% increase, despite a 1.3% organic sales decline [2][5]. - For the fiscal year, sales in the Americas & Asia grew by 12.1%, with organic growth of 4.8%, while Europe & Australia experienced a 14.3% increase, with an organic decline of 1.8% [5][9]. Strategic Commentary - The company emphasized the success of new product investments, particularly in the Americas & Asia, and noted the strategic acquisitions of Gravotech and Mecco to enhance its product portfolio [8][10]. - Brady Corporation returned $96.4 million to shareholders through dividends and share repurchases while investing heavily in research and development [10][9]. Fiscal 2026 Guidance - The company anticipates GAAP earnings per diluted Class A Nonvoting Common Share to range from $4.55 to $4.85, representing a 15.5% to 23.1% increase compared to the previous year [11]. - Adjusted diluted EPS is expected to range from $4.85 to $5.15, indicating a 5.4% to 12.0% increase from the prior year [12].

Group 1 - Brady Corporation's Board of Directors approved an increase in the annual dividend from $0.96 to $0.98 per share, marking the 40th consecutive annual increase in dividends [1] - A quarterly dividend of $0.245 per share will be paid on October 31, 2025, to shareholders of record as of October 10, 2025 [1] Group 2 - Brady Corporation is an international manufacturer and marketer of solutions that enhance safety, security, productivity, and performance [2] - The company offers a range of products including high-performance labels, signs, safety devices, printing systems, and software [2] - Founded in 1914, Brady serves a diverse customer base across various industries such as electronics, telecommunications, manufacturing, and aerospace [2] - As of July 31, 2024, Brady employed approximately 5,700 people and reported fiscal 2024 sales of approximately $1.34 billion [2]

Core Viewpoint - Brady Corporation has acquired Mecco Partners, LLC for approximately $20 million, expecting to generate similar revenue in the fiscal year ending July 31, 2026, funded by cash on hand [1][2]. Group 1: Acquisition Details - The acquisition of Mecco enhances Brady's existing direct part marking solutions, which were previously expanded with the acquisition of Gravotech in fiscal year 2025 [2][3]. - Mecco specializes in industrial product marking and identification systems, offering laser marking and pin marking technologies tailored for various applications [2][3]. Group 2: Strategic Implications - The integration of Mecco's consultative strategy and customized product offerings is expected to drive future growth for Brady, complementing its existing technologies [3]. - Brady aims to provide a comprehensive range of end-to-end direct part marking and specialty identification products, improving visibility in manufacturing processes for customers [2][3]. Group 3: Company Overview - Brady Corporation is an international manufacturer and marketer of solutions that enhance safety, security, productivity, and performance across various industries, including electronics, telecommunications, and medical [3]. - As of July 31, 2024, Brady employed approximately 5,700 people and reported fiscal 2024 sales of approximately $1.34 billion [3].

Core Insights - The article discusses the author's academic and professional background in Machine Learning, Economics, and Finance, highlighting expertise in Data Science and Machine Learning applications within the banking and finance sectors [1]. Group 1: Academic Background - The author holds a PhD in Machine Learning with a focus on Economics and Finance [1]. - The author has academic affiliations with IESE Business School, ESADE Business School, and the Barcelona Supercomputing Center [1]. Group 2: Professional Experience - The author has worked at Deloitte Financial Advisory, specializing in Data Science and Machine Learning applications for clients in banking, insurance, and finance [1]. - The author currently teaches Asset Pricing and Introduction to Corporate Finance at ESADE Business School at the MSc/BSc level [1]. Group 3: Research Focus - The current research of the author focuses on Generative AI in sustainable finance [1]. - The author's interests include machine learning and generative AI applications in finance and economics [1]. Group 4: Technical Proficiency - The author is proficient in programming languages such as Python, R, and SQL [1].

Summary of Brady Corporation Conference Call (June 11, 2025) Company Overview - **Company**: Brady Corporation (Ticker: BRC) - **Industry**: Specialty adhesives and printing solutions for safety and identification applications - **Product Portfolio**: Includes wire identification, specialty adhesive labels, printers, safety identification products, healthcare identification, and more [4][5] Core Financial Highlights - **Revenue Generation**: 48% of revenue generated outside the US; diversified customer base with no single customer exceeding 10% of total sales [5] - **R&D Investment**: R&D spending reached an all-time high of 5.1% of sales in fiscal year 2024, aimed at increasing organic growth [6][28] - **Earnings Performance**: Record EPS for four consecutive years (2021-2024), with a 17% increase in EPS from 2023 to 2024 [7][32] - **Operating Cash Flow**: Increased by 22% in 2024 compared to 2023, reaching $255 million, a company record [7] - **Shareholder Returns**: Announced 30 consecutive annual dividend increases; returned $117 million to shareholders in buybacks and dividends in 2024 [9][11] Geographic Revenue Breakdown - **Revenue by Geography**: 52% from the US, 30% from Europe, 8% from Asia, and 10% from Australia and the rest of the Americas [12] - **Asia Growth**: Reported 23% organic growth in Asia, with a recovery observed in China [44] Market and Economic Environment - **Competitive Landscape**: Fragmented market with a focus on innovation and operational efficiency [6] - **Tariff Impact**: Discussed the evolving global tariff situation and its potential impact on operations, with a focus on maintaining pricing power and operational efficiencies [13][48] Acquisitions and Strategic Focus - **Recent Acquisitions**: Notable acquisitions include Nordic ID, Code, and Gravotech, aimed at filling product portfolio gaps and enhancing capabilities [20][53] - **M&A Strategy**: Focused on acquiring technologies that complement existing offerings; maintaining a disciplined approach to acquisitions [10][56] Operational Efficiency - **SG&A Reduction**: Reduced SG&A as a percentage of sales by 800 basis points over the last eight years, contributing to improved profitability [6][30] - **Gross Profit Margin**: Improved to 51.3% in 2024, recovering from a dip during inflationary pressures [27] Future Outlook - **Growth Strategy**: Focused on organic sales growth, innovation, and automation; positioned well for long-term growth with a diverse product portfolio [22][24] - **Financial Position**: Maintains a strong balance sheet with a net cash position of $49 million, allowing for continued investment in growth and shareholder returns [35][36] Key Risks and Considerations - **Economic Environment**: Acknowledged tougher economic conditions in Europe and Australia compared to the Americas and Asia [42][45] - **Tariff Uncertainty**: Ongoing evaluation of the impact of tariffs on operations and pricing strategies [48][64] This summary encapsulates the key points discussed during the Brady Corporation conference call, highlighting the company's financial performance, strategic initiatives, and market outlook.

Core Insights - The article discusses the author's background in analytics and accounting, highlighting over 10 years of experience in the investment arena, progressing from an analyst to a management role [1]. Group 1 - The author holds a master's degree in Analytics from Northwestern University and a bachelor's degree in Accounting [1]. - The author has a personal interest in dividend investing and aims to share insights with the Seeking Alpha community [1].

Financial Data and Key Metrics Changes - The company reported record high adjusted earnings per share, increasing by 11.9% from $1.09 to $1.22 [11][17] - Organic sales growth was 1.6%, with acquisitions contributing 10.5% to sales growth, resulting in total sales growth of 11.4% [12][18] - Adjusted operating income in the Americas and Asia region grew by 20.2% [5][26] Business Line Data and Key Metrics Changes - The Americas region achieved organic sales growth of 5.4%, while Europe and Australia experienced a decline of 5.4% in organic sales [5][11] - Adjusted operating income in Europe increased by 3.8% despite the sales decline, attributed to restructuring actions [6][29] - Research and development (R&D) investment increased by over 8% this quarter, totaling $19.2 million [6][15] Market Data and Key Metrics Changes - Revenue by geography showed 52% from the US, 30% from Europe, 8% from Asia, and 10% from Australia and the rest of the Americas [10] - The Asia business reported organic sales growth of nearly 23%, with a return to growth in China [26][52] Company Strategy and Development Direction - The company is focused on integrating R&D functions and building new product roadmaps, including direct part marking technologies [6][25] - The acquisition of Funai's microfluidic solution business is expected to enhance the company's capabilities in custom part marking [7][40] - The company aims to mitigate tariff impacts through strategic sourcing and price adjustments while maintaining a focus on operational efficiency [21][60] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges posed by the global tariff environment but expressed confidence in the company's ability to mitigate impacts through geographic diversification [10][60] - The company tightened its adjusted diluted EPS guidance range for the fourth quarter due to anticipated tariff expenses and economic uncertainties [21][22] Other Important Information - The company returned $44.5 million to shareholders through dividends and share buybacks during the quarter [19][20] - Incremental tariff expenses were approximately $3 million in the third quarter, impacting diluted earnings per share by about $0.05 [20][21] Q&A Session Summary Question: Impact of tariffs on top line - Management indicated no significant demand destruction from tariffs yet, as inventory levels have buffered the immediate effects [33][34] Question: Sustainability of SG&A actions - Management noted ongoing efforts to drive down SG&A costs, with expectations for continued operational efficiency [36][37] Question: Details on the Funai acquisition - The acquisition is expected to enhance the company's product offerings in industrial inkjet solutions, with a purchase price of $11.6 million and estimated first-year sales of $15 to $20 million [38][54] Question: Fourth quarter guidance discrepancies - Management explained anticipated headwinds in the Americas due to tariffs, while expecting a flat performance in Europe [44][46] Question: Current situation in China - The company has reduced its footprint in China, focusing on multinational customers while maintaining a small presence [51][52]

Financial Data and Key Metrics Changes - The company reported record high adjusted earnings per share of $1.22, an increase of 11.9% from $1.09 in the same quarter last year [9][14] - Total sales growth for the quarter was 11.4%, driven by a 1.6% organic sales growth and a 10.5% contribution from acquisitions [10][11] - Gross profit margin decreased slightly to 51% from 51.6% year-over-year, with restructuring actions impacting costs [11] - Operating cash flow was $59.9 million, down from $72.7 million in the previous year [15] Business Line Data and Key Metrics Changes - The Americas and Asia region achieved organic sales growth of 5.4%, while Europe and Australia experienced a decline of 5.4% in organic sales [4][9] - Adjusted operating income in the Americas and Asia grew by 20.2%, while Europe saw a 3.8% increase in adjusted operating income despite the sales decline [5][28] - Research and development expenses increased by 8.5% to $19.2 million, reflecting ongoing investments in new product development [13] Market Data and Key Metrics Changes - Revenue by geography showed 52% from the US, 30% from Europe, 8% from Asia, and 10% from Australia and the rest of the Americas [8] - The Asia business reported organic sales growth of nearly 23%, with a return to growth in China after a previous decline [25] Company Strategy and Development Direction - The company is focused on integrating R&D functions and expanding product offerings, including the recent acquisition of Funai's microfluidic solution business [5][6] - Strategic actions are being taken to lower costs and improve efficiency, particularly in Europe, to drive future earnings growth [5][28] - The company aims to mitigate tariff impacts through targeted price increases and strategic sourcing alternatives [19] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about future growth despite current uncertainties related to tariffs and economic conditions [60] - The company anticipates continued exposure to incremental tariff expenses but believes its geographic diversification will help mitigate impacts [19][60] Other Important Information - The company returned $44.5 million to shareholders through dividends and share buybacks during the quarter [17] - The acquisition of Funai's microfluidic solutions is expected to enhance the company's capabilities in custom part marking [6][37] Q&A Session Summary Question: Impact of tariffs on top line - Management noted no significant demand destruction from tariffs yet, as inventory levels have buffered the immediate effects [31][32] Question: Sustainability of SG&A actions - Management indicated ongoing efforts to drive down SG&A costs, with expectations for continued operational efficiency [34][35] Question: Details on the recent acquisition - The acquisition of Funai is seen as a growth opportunity, enhancing the company's capabilities in high-performance inks and direct part marking [36][37] Question: Q4 guidance rationale - Management expects headwinds in the Americas due to tariffs while anticipating a recovery in Europe to flat growth [42][44] Question: Performance in China - The company has reduced its footprint in China, focusing on multinational customers while maintaining a small presence [49][50]