Brady (BRC) - 2025 Q4 - Annual Results

Executive Summary & Key Announcements Brady Corporation's fiscal 2025 performance highlights strong sales and adjusted EPS growth, alongside fiscal 2026 guidance Fiscal 2025 Fourth Quarter Highlights 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 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][11] Fiscal 2026 EPS Guidance Announcement 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 Brady Corporation is a global manufacturer of identification solutions, serving diverse industries with high-performance labels, signs, and printing systems About Brady Corporation 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] - Products include high-performance labels, signs, safety devices, printing systems and software, helping customers increase safety, security, productivity and performance[16] - Serves a diverse customer base in electronics, telecommunications, manufacturing, electrical, construction, medical, aerospace and other industries[16] - Headquartered in Milwaukee, Wisconsin, with approximately 6,400 employees worldwide as of July 31, 2025[16] - Fiscal 2025 sales were approximately $1.51 billion[16] Fiscal 2025 Financial Performance This section details Brady Corporation's Q4 and full fiscal year 2025 financial results, highlighting sales, profitability, and earnings per share Fourth Quarter Results 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 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 Management commentary highlights strategic investments and acquisitions driving performance, alongside the fiscal 2026 diluted EPS guidance Management Remarks 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] - 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] - Strong balance sheet and net cash position provide flexibility to fund organic and inorganic opportunities, and return funds to shareholders[11] - 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] Fiscal 2026 Guidance 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] - Fiscal 2026 guidance is based upon foreign currency exchange rates as of July 31, 2025, and assumes economic growth[14] Consolidated Financial Statements 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 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 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 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 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 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 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 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 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 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 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 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 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 This section outlines Brady Corporation's forward-looking statements and the various risk factors that could materially impact future financial results Forward-Looking Statements 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] - Identified by words such as 'may,' 'will,' 'expect,' 'intend,' 'estimate,' 'anticipate,' 'believe,' 'should,' 'project,' 'plan' or similar terminology[20] - These statements address matters that are, to different degrees, uncertain and are subject to risks, assumptions, and other factors beyond Brady's control[20] Risk Factors 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] - Risks include the ability to compete effectively, successfully execute strategy, develop technologically advanced products, and identify, integrate, and grow acquired companies[20] - 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]