Brady (BRC) - 2025 Q2 - Quarterly Report

Financial Performance - Net sales for the three months ended January 31, 2025 increased 10.6% to $356.7 million compared to$322.6 million in the same period in the prior year, driven by organic sales growth of 2.6% and acquisition-related growth of 10.2%[66] - Gross margin for the three months ended January 31, 2025 was $175.8 million, representing 49.3$51.2 million for the three months ended January 31, 2025, compared to $53.9 million in the same period in the prior year, impacted by acquisition-related costs and reorganization expenses[71] - Net income for the three months ended January 31, 2025 was$40.3 million, down from $43.6 million in the same period in the prior year, reflecting a decrease in net income margin from 13.5$733.7 million compared to 654.6 million in the prior year[67] Expenses - Research and development (R&D) expenses increased 11.2% to 18.7 million for the three months ended January 31, 2025, remaining at 5.2% of net sales[69] - Selling, general and administrative (SG&A) expenses rose 15.9% to $105.9 million for the three months ended January 31, 2025, increasing as a percentage of sales from 28.3$138.5 million and total available liquidity of $1,233.6 million as of January 31, 2025, supporting its growth strategy and acquisitions[62] - Cash and cash equivalents were$138.5 million as of January 31, 2025, an increase of $111.7 million from July 31, 2024[87] - Net cash provided by operating activities was$63.0 million for the six months ended January 31, 2025, down from $98.4 million in the prior year[87] - The Company used$151.7 million in investing activities during the six months ended January 31, 2025, primarily for business acquisitions[88] - As of January 31, 2025, the Company maintained a debt to EBITDA ratio of 0.3 to 1.0, well below the covenant limit of 3.5 to 1.0[95] Sales by Region - Americas & Asia net sales increased by 10.5% to $233.8 million for the three months ended January 31, 2025, driven by organic sales growth of 4.3$122.8 million for the three months ended January 31, 2025, with acquisitions contributing 15.1% despite a 0.8% organic sales decline[82] Segment Performance - Segment profit for Americas & Asia increased by 4.8% to $46.0 million for the three months ended January 31, 2025, but as a percentage of net sales decreased to 19.7$11.4 million for the three months ended January 31, 2025, with the profit margin dropping to 9.3% from 13.6%[85] Strategic Focus - The company plans to enhance its digital capabilities and customer service through improved sales channels and data-driven marketing automation tools[61] - The company is focused on integrating recent acquisitions to enhance its strategic position and drive long-term sales growth[61] - The company is focused on identifying, integrating, and growing acquired companies while managing contingent liabilities from divested businesses[99] Risks and Challenges - The company faces increased costs of raw materials and labor, along with material shortages and supply chain disruptions[99] - There has been a decrease in demand for the company's products, impacting overall performance[99] - Risks include the loss of key employees and challenges in protecting against security breaches and phishing attacks[99] - The company is subject to various risks including foreign currency fluctuations and changes in tax legislation[99] - The company acknowledges uncertainties that may cause actual future results to differ materially from its forward-looking statements[98] Compliance and Controls - The Company's income tax rate was 22.5% for the three months ended January 31, 2025, compared to 21.8% for the same period in 2024, and is expected to be approximately 21% going forward[76] - The company has maintained effective disclosure controls and procedures as of the end of the reporting period[100] - There were no changes in the company's internal control over financial reporting that materially affected its operations during the last fiscal quarter[101] - The company does not undertake to update its forward-looking statements except as required by law, indicating a cautious approach to future projections[98]