Brady (US:BRC)2022-05-25 16:00Financial Performance - Net sales for the three months ended April 30, 2022, increased 14.6% to $338.6 million, compared to $295.5 million in the same period in the prior year[83]. - Net sales for the nine months ended April 30, 2022, increased 16.6% to $978.1 million, compared to $838.6 million in the same period in the prior year[85]. - Operating income increased 13.2% to $52.9 million for the three months ended April 30, 2022, compared to $46.7 million in the same period in the prior year[91]. - Net income for the three months ended April 30, 2022, was $40.1 million, representing 11.8% of net sales, compared to $37.3 million in the same period in the prior year[92]. - Total Company net sales increased by 14.6% to $335.5 million for the three months ended April 30, 2022, compared to $292.3 million in the same period in the prior year, with organic sales growth of 9.0% and acquisitions contributing 8.6%[98]. Segment Performance - The Company's net sales for ID Solutions increased by 21.1% to $264.1 million for the three months ended April 30, 2022, compared to $218.1 million in the same period in the prior year, driven by organic sales growth of 11.8% and acquisitions contributing 11.7%[99]. - Segment profit for ID Solutions increased by 13.5% to $54.0 million for the three months ended April 30, 2022, compared to $47.5 million in the same period in the prior year, but as a percentage of net sales, it decreased to 20.4% from 21.8%[100]. - Workplace Safety net sales decreased by 3.9% to $74.4 million for the three months ended April 30, 2022, with organic sales growth of 0.9% and a decrease from foreign currency translation of 4.8%[102]. - The Company recorded a segment profit of $7.1 million for Workplace Safety for the three months ended April 30, 2022, an increase of 25.7% from $5.7 million in the same period in the prior year, with segment profit as a percentage of net sales increasing to 9.6%[107]. Expenses and Margins - Gross margin for the three months ended April 30, 2022, was $164.0 million, representing 48.4% of net sales, a decrease from 50.4% in the same period in the prior year[86]. - Research and development expenses increased 32.0% to $14.9 million for the three months ended April 30, 2022, compared to $11.3 million in the same period in the prior year[87]. - Selling, general and administrative expenses increased 5.9% to $96.2 million for the three months ended April 30, 2022, compared to $90.8 million in the same period in the prior year[90]. Cash Flow and Liquidity - The company had cash of $103.1 million and a credit facility with $121.3 million available for future borrowing, totaling approximately $424.4 million in available liquidity as of April 30, 2022[78]. - Net cash provided by operating activities was $65.2 million for the nine months ended April 30, 2022, compared to $154.9 million in the same period of the prior year, reflecting higher cash outflows for inventory and increased incentive compensation payments[110]. - The Company believes its cash flow from operating activities and borrowing capacity are sufficient to fund anticipated requirements for working capital and capital expenditures for the next 12 months and beyond[108]. Debt and Financial Health - As of April 30, 2022, the company's debt to EBITDA ratio was 0.31 to 1.0, significantly below the required maximum of 3.5 to 1.0, indicating strong financial health[116]. - The interest expense coverage ratio was 255.5 to 1.0, well above the minimum requirement of 3.0 to 1.0, demonstrating robust earnings relative to interest obligations[116]. - The Company had an outstanding balance of $77.0 million on its revolving loan agreement as of April 30, 2022, with a maximum amount outstanding during the nine months ended April 30, 2022, of $101.0 million[115]. Share Repurchase and Capital Management - The company has a share repurchase program authorized for up to 2 million shares, with 203,664 shares remaining available for purchase as of April 30, 2022[129]. - During the three months ended April 30, 2022, the company repurchased a total of 1,365,580 shares at an average price of $46.29 per share[131]. - On May 24, 2022, the board authorized an increase in the share repurchase program to allow for the repurchase of up to $100 million of Class A Nonvoting Common Stock[130]. Operational Challenges and Controls - The company is currently facing uncertainties including supply chain disruptions and increased costs of raw materials, which could impact future performance[122]. - The company does not have material off-balance sheet arrangements or financial guarantees that could adversely affect liquidity[118]. - There have been no material changes in the company's internal control over financial reporting during the most recently completed fiscal quarter[127]. - The company maintains effective disclosure controls and procedures as evaluated by its management[126].