AP NEWS

Brady Corporation Reports Fiscal 2019 First Quarter Results and Increases its Fiscal 2019 EPS Guidance

November 15, 2018

-- Organic revenues increased 4.7 percent in the first quarter of fiscal 2019. -- Earnings before income taxes increased 14.8 percent to $39.9 million in the first quarter of fiscal 2019 compared to $34.8 million in the same quarter of the prior year. -- Diluted EPS increased 18.4 percent to $0.58 in the first quarter of fiscal 2019 compared to $0.49 in the same quarter of the prior year. -- Diluted EPS guidance for the full year ending July 31, 2019 was increased to a range of $2.20 to $2.30 from the previous range of $2.15 to $2.25.

MILWAUKEE, Nov. 15, 2018 (GLOBE NEWSWIRE) -- Brady Corporation (NYSE: BRC) (“Brady” or “Company”), a world leader in identification solutions, today reported its financial results for its fiscal 2019 first quarter ended October 31, 2018.

Quarter Ended October 31, 2018 Financial Results:

Earnings before income taxes increased 14.8 percent to $39.9 million for the quarter ended October 31, 2018, compared to $34.8 million in the same quarter last year.

Net earnings for the quarter ended October 31, 2018, were $30.6 million compared to $25.8 million in the same quarter last year.

Net earnings per diluted Class A Nonvoting Common Share were $0.58 for the first quarter of fiscal 2019, compared to $0.49 in the same quarter last year.

Sales for the quarter ended October 31, 2018 increased 1.0 percent, which consisted of organic sales growth of 4.7 percent, a decrease in sales of 2.0 percent from foreign currency translation, and a decrease in sales of 1.7 percent from the divestiture of a business in the fourth quarter of fiscal 2018. Sales for the quarter ended October 31, 2018 were $293.2 million compared to $290.2 million in the same quarter last year. By segment, sales increased 4.0 percent in Identification Solutions and decreased 6.6 percent in Workplace Safety, which consisted of organic sales growth of 5.7 percent in Identification Solutions and organic sales growth of 2.2 percent in Workplace Safety.

Commentary:

“Our investments to increase organic sales growth through the development of innovative new products and to provide increased value to our customers is paying off as we reported 4.7 percent organic growth this quarter, which marks our sixth consecutive quarter of organic sales growth,” said Brady’s President and Chief Executive Officer, J. Michael Nauman. “This quarter also represents our thirteenth consecutive quarter of year-over-year pre-tax earnings growth. We apply a consistent and balanced approach to generating organic sales growth while driving sustainable efficiency gains throughout our global operations and SG&A structure. We expect this positive organic sales trend to continue as we invest in new product development in our global businesses and as our Workplace Safety business returns to consistent organic sales growth.”

“We used our cash generation this quarter to increase our investments in research and development and capability-enhancing capital expenditures while returning funds to our shareholders through dividends and further strengthening our balance sheet. We finished in a net cash position of $137.8 million as of October 31, 2018,” said Brady’s Chief Financial Officer, Aaron Pearce. “We’re experiencing increased costs in certain areas, making our focus on driving efficiency improvements and making investments in equipment and machinery to increase automation our top operational priorities. Our balance sheet provides significant flexibility for ongoing investments in growth opportunities to drive long-term shareholder value.”

Fiscal 2019 Guidance:

The Company is increasing its full year fiscal 2019 earnings per diluted Class A Nonvoting Common Share guidance from its previous range of $2.15 to $2.25 to a range of $2.20 to $2.30. Included in this guidance is organic sales growth of 3.0 percent to 5.0 percent, a full-year income tax rate in the mid-20 percent range, and depreciation and amortization expense of approximately $26 million. The Company expects to achieve efficiency gains in its manufacturing facilities and in selling, general and administrative expenses while continuing to increase investments in research and development. Capital expenditures are anticipated to be approximately $35 million during the year ending July 31, 2019. This guidance is based upon foreign currency exchange rates as of October 31, 2018.

A webcast regarding Brady’s fiscal 2019 first quarter financial results will be available at www.bradycorp.com/investors beginning at 9:30 a.m. Central Time today.

Brady Corporation is an international manufacturer and marketer of complete solutions that identify and protect people, products and places. Brady’s products help customers increase safety, security, productivity and performance and include high-performance labels, signs, safety devices, printing systems and software. Founded in 1914, the Company has a diverse customer base in electronics, telecommunications, manufacturing, electrical, construction, medical, aerospace and a variety of other industries. Brady is headquartered in Milwaukee, Wisconsin and as of July 31, 2018, employed approximately 6,200 people in its worldwide businesses. Brady’s fiscal 2018 sales were approximately $1.17 billion. Brady stock trades on the New York Stock Exchange under the symbol BRC. More information is available on the Internet at www.bradycorp.com.

In this news release, statements that are not reported financial results or other historic information are “forward-looking statements.” These forward-looking statements relate to, among other things, the Company’s future financial position, business strategy, targets, projected sales, costs, earnings, capital expenditures, debt levels and cash flows, and plans and objectives of management for future operations.

The use of words such as “may,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “believe,” “should,” “project” or “plan” or similar terminology are generally intended to identify forward-looking statements. These forward-looking statements by their nature address matters that are, to different degrees, uncertain and are subject to risks, assumptions, and other factors, some of which are beyond Brady’s control, that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. For Brady, uncertainties arise from: our ability to compete effectively or to successfully execute our strategy; Brady’s ability to develop technologically advanced products that meet customer demands; difficulties in protecting our websites, networks, and systems against security breaches; decreased demand for our products; Brady’s ability to retain large customers; extensive regulations by U.S. and non-U.S. governmental and self-regulatory entities; risks associated with the loss of key employees; divestitures and contingent liabilities from divestitures; Brady’s ability to properly identify, integrate, and grow acquired companies; litigation, including product liability claims; Brady’s ability to execute facility consolidations and maintain acceptable operational service metrics; foreign currency fluctuations; the impact of the Tax Reform Act and any other changes in tax legislation and tax rates; potential write-offs of Brady’s substantial intangible assets; differing interests of voting and non-voting shareholders; Brady’s ability to meet certain financial covenants required by our debt agreements; numerous other matters of national, regional and global scale, including those of a political, economic, business, competitive, and regulatory nature contained from time to time in Brady’s U.S. Securities and Exchange Commission filings, including, but not limited to, those factors listed in the “Risk Factors” section within Item 1A of Part I of Brady’s Form 10-K for the year ended July 31, 2018.

These uncertainties may cause Brady’s actual future results to be materially different than those expressed in its forward-looking statements. Brady does not undertake to update its forward-looking statements except as required by law.

BRADY CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited; Dollars in thousands, except per share data) Three months ended October 31, ------------------------ 2018 2017 - ------- - - ------- - Net sales $ 293,196 $ 290,151 Cost of products sold 146,657 144,086 - ------- - - ------- - Gross margin 146,539 146,065 Operating expenses: Research and development 11,326 10,520 Selling, general and administrative 94,591 100,134 - ------- - - ------- - Total operating expenses 105,917 110,654 Operating income 40,622 35,411 Other (expense) income: Investment and other (expense) income (17 ) 216 Interest expense (712 ) (863 ) - ------- - - ------- - Earnings before income taxes 39,893 34,764 Income tax expense 9,256 8,928 - ------- - - ------- - Net earnings $ 30,637 $ 25,836 - ------- - - ------- - Net earnings per Class A Nonvoting Common Share: Basic $ 0.59 $ 0.50 Diluted $ 0.58 $ 0.49 Dividends $ 0.21 $ 0.21 Net earnings per Class B Voting Common Share: Basic $ 0.57 $ 0.49 Diluted $ 0.56 $ 0.48 Dividends $ 0.20 $ 0.19 Weighted average common shares outstanding (in thousands): Basic 52,201 51,440 Diluted 52,958 52,383

BRADY CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Dollars in thousands) October 31, July 31, 2018 2018 ------------- ------------- (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 192,176 $ 181,427 Accounts receivable—net 169,327 161,282 Inventories: Finished products 71,092 73,133 Work-in-process 20,734 19,903 Raw materials and supplies 22,190 20,035 - --------- - - --------- - Total inventories 114,016 113,071 Prepaid expenses and other current assets 18,497 15,559 - --------- - - --------- - Total current assets 494,016 471,339 Other assets: Goodwill 415,129 419,815 Other intangible assets 41,033 42,588 Deferred income taxes 7,770 7,582 Other 17,621 17,662 Property, plant and equipment: Cost: Land 7,250 6,994 Buildings and improvements 95,386 96,245 Machinery and equipment 270,192 270,989 Construction in progress 7,492 4,495 - --------- - - --------- - 380,320 378,723 Less accumulated depreciation 282,263 280,778 - --------- - - --------- - Property, plant and equipment—net 98,057 97,945 - --------- - - --------- - Total $ 1,073,626 $ 1,056,931 - --------- - - --------- - LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 64,735 $ 66,538 Wages and amounts withheld from employees 48,945 67,619 Taxes, other than income taxes 8,377 8,318 Accrued income taxes 4,937 3,885 Other current liabilities 54,582 44,567 - --------- - - --------- - Total current liabilities 181,576 190,927 Long-term obligations 54,408 52,618 Other liabilities 64,699 61,274 - --------- - - --------- - Total liabilities 300,683 304,819 Stockholders’ equity: Common stock: Class A nonvoting common stock—Issued 51,261,487 shares, and outstanding 513 513 48,918,974 and 48,383,617 shares, respectively Class B voting common stock—Issued and outstanding, 3,538,628 shares 35 35 Additional paid-in capital 326,182 325,631 Retained earnings 570,858 553,454 Treasury stock—2,342,513 and 2,867,870 shares, respectively, of Class A nonvoting (58,414 ) (71,120 ) common stock, at cost Accumulated other comprehensive loss (66,231 ) (56,401 ) Total stockholders’ equity 772,943 752,112 - --------- - - --------- - Total $ 1,073,626 $ 1,056,931 - --------- - - --------- -

BRADY CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited; Dollars in thousands) Three months ended October 31, ------------------------ 2018 2017 - ------- - - ------- - Operating activities: Net earnings $ 30,637 $ 25,836 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 5,960 6,564 Non-cash portion of stock-based compensation expense 4,965 3,744 Deferred income taxes 2,164 (1,168 ) Changes in operating assets and liabilities: Accounts receivable (6,709 ) (4,807 ) Inventories (3,125 ) (3,571 ) Prepaid expenses and other assets (2,197 ) (2,005 ) Accounts payable and other liabilities (14,070 ) 7,799 Income taxes 1,193 2,327 - ------- - - ------- - Net cash provided by operating activities 18,818 34,719 Investing activities: Purchases of property, plant and equipment (6,009 ) (3,802 ) Other 337 974 - ------- - - ------- - Net cash used in investing activities (5,672 ) (2,828 ) Financing activities: Payment of dividends (11,096 ) (10,639 ) Proceeds from exercise of stock options 12,138 3,249 Proceeds from borrowing on credit facilities 5,737 10,901 Repayment of borrowing on credit facilities (2,269 ) (22,894 ) Income tax on equity-based compensation, and other (3,846 ) (2,280 ) - ------- - - ------- - Net cash provided by (used in) financing activities 664 (21,663 ) Effect of exchange rate changes on cash (3,061 ) (1,935 ) - ------- - - ------- - Net increase in cash and cash equivalents 10,749 8,293 Cash and cash equivalents, beginning of period 181,427 133,944 - ------- - - ------- - Cash and cash equivalents, end of period $ 192,176 $ 142,237 - ------- - - ------- -

BRADY CORPORATION AND SUBSIDIARIES SEGMENT INFORMATION (Unaudited; Dollars in thousands) Three months ended October 31, -------------------------- 2018 2017 - ------- -- - ------- -- NET SALES ID Solutions $ 218,100 $ 209,705 Workplace Safety 75,096 80,446 - ------- -- - ------- -- Total $ 293,196 $ 290,151 - ------- -- - ------- -- SALES INFORMATION ID Solutions Organic 5.7 % 2.9 % Currency (1.7 )% 1.3 % Total 4.0 % 4.2 % - ------- -- - ------- -- Workplace Safety Organic 2.2 % (1.4 )% Currency (2.6 )% 3.3 % Divestitures (6.2 )% — % Total (6.6 )% 1.9 % - ------- -- - ------- -- Total Company Organic 4.7 % 1.7 % Currency (2.0 )% 1.9 % Divestitures (1.7 )% — % Total 1.0 % 3.6 % - ------- -- - ------- -- SEGMENT PROFIT ID Solutions $ 41,562 $ 35,837 Workplace Safety 5,541 6,445 - ------- -- - ------- -- Total $ 47,103 $ 42,282 - ------- -- - ------- -- SEGMENT PROFIT AS A PERCENT OF NET SALES ID Solutions 19.1 % 17.1 % Workplace Safety 7.4 % 8.0 % - ------- -- - ------- -- Total 16.1 % 14.6 % - ------- -- - ------- -- Three months ended October 31, -------------------------- 2018 2017 - ------- -- - ------- -- Total segment profit $ 47,103 $ 42,282 Unallocated amounts: Administrative costs (6,481 ) (6,871 ) Investment and other (expense) income (17 ) 216 Interest expense (712 ) (863 ) - ------- -- - ------- -- Earnings before income taxes $ 39,893 $ 34,764 - ------- -- - ------- --

For More Information:Investor contact: Ann Thornton 414-438-6887Media contact: Kate Venne 414-358-5176

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