Slide 1: F'14 Q2 Financial Results
F’14 Q2 Financial Results February 20, 2014
Slide 2: Forward-Looking Statements
2 FORWARD-LOOKING STATEMENTS 2 In this presentation, 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,
Slide 3: Overview Comments: F'14 Priorities
3 OVERVIEW COMMENTS F’14 Priorities: 1. Return WPS business to organic sales growth 2. Drive organic sales growth initiatives in IDS 3. Complete the sale of Die-Cut 4. Reduce cost structure through consolidation of manufacturing facilities 5. Relentless focus on our customers and converting sales op
Slide 4: Q2 F'14 Financial Summary
4 Q2 F’14 - FINANCIAL SUMMARY Sales up 6.8% to $291.2M vs. $272.7M in Q2 of F’13. • Organic sales down 1.1%, PDC acquisition increased sales by 8.5%, and foreign currency decreased sales by 0.6%. Gross profit margin of 48.9% in Q2 of F’14 compared with 52.0% in Q2 of F’13. SG&A expense of $111
Slide 5: F'14 Guidance
5 F’14 GUIDANCE F’14 Diluted EPS from Continuing Operations $1.55 to $1.75 (excluding restructuring charges). Guidance Assumptions – Continuing Operations: • Organic sales from continuing operations to range from a slight contraction to low single-digit growth for the full fiscal 2014. • Full-year i
Slide 6: Sales Overview
6 SALES OVERVIEW $273 $256 $272 $270 $272 $273 $302 $311 $308 $291 $150 $200 $250 $300 $350 Q1 F'12 Q2 F'12 Q3 F'12 Q4 F'12 Q1 F'13 Q2 F'13 Q3 F'13 Q4 F'13 Q1 F'14 Q2 F'14 Organic Sales 5.1% (0.7%) 0.9% 1.9% (0.8%) (1.8%) (4.8%) (2.1%) (2.1%) (1.1%) • (1.1%) organic sales decline. • 8.5% growth from
Slide 7: Gross Profit Margin & SG&A Expense
7 GROSS PROFIT MARGIN & SG&A EXPENSE 7 $99 $95 $98 $100 $99 $110 $112 $107 $113 $111 36.3% 37.3% 36.2% 37.3% 36.4% 40.3% 37.2% 34.4% 36.7% 38.3% 20.0% 25.0% 30.0% 35.0% 40.0% 45.0% $50 $100 $150 $200 Q1 F'12 Q2 F'12 Q3 F'12 Q4 F'12 Q1 F'13 Q2 F'13 Q3 F'13 Q4 F'13 Q1 F'14 Q2 F'14 GROSS PROFIT & GPM%
Slide 8: Net Earnings & EPS from Continuing Operations – Non-GAAP
8 NET EARNINGS & EPS FROM CONTINUING OPERATIONS – Non-GAAP* Q2 F’14 Non-GAAP net earnings from continuing operations* of $13.4M compared to $19.6M in Q2 of F’13. Q2 F’14 Non-GAAP diluted EPS from continuing operations* of $0.25 compared to $0.38 in Q2 of F’13. $28 $27 $29 $30 $26 $20 $29 $28 $23
Slide 9: Cash Generation
9 (millions of USD) 3 Mos. Ended Jan. 31, 2014 6 Mos. Ended Jan. 31, 2014 Cash Balance - Beginning of Period 81.9$ 91.1$ Cash Flow from Operating Activities 16.2 41.8 Capital Expenditures (8.5) (17.6) Proceeds from Sales of Businesses - - Repurchase of Stock - - Dividends (10.3) (20.4) Debt (Repayme
Slide 10: Debt & EBITDA
10 DEBT & EBITDA 2.3 2.2 2.0 1.8 1.8 1.8 1.6 1.6 1.6 2.0 1.7 1.7 1.6 1.7 1.0x 1.5x 2.0x 2.5x Q 1 F' 11 Q 3 F' 11 Q 1 F' 12 Q 3 F' 12 Q 1 F' 13 Q 3 F' 13 Q 1 F' 14 GROSS DEBT / TTM EBITDA* January 31, 2014 Cash = $79M, Debt = $288M (net debt = $209M), and TTM EBITDA of $172.4M. Net Debt/EBITDA* =
Slide 11: New product highlights
11 Asset Guard Expands to Cloud: All-in-one solution to track assets in the workplace, cloud-based, modular product with numerous variations on functionality. Barcode scanner compatible with software and Duragard labels. Link360 App Improves Lockout/Tagout Procedure Development: Brady customers now
Slide 12: Identification Solutions
12 IDENTIFICATION SOLUTIONS Q2 F’14 vs. Q2 F’3 PERFORMANCE (Millions of USD) Q2 F’14 Q2 F’13 Change Sales $194.7 $ 168.2 + 15.8% Segment Profit 37.5 34.6 + 8.3% Segment Profit % 19.3% 20.6% - 1.3 pts SALES & SEGMENT PROFIT % (Millions of USD) $164 $149 $161 $160 $162 $168 $197 $211 $210 $195 25.5% 2
Slide 13: Workplace Safety
13 WORKPLACE SAFETY Revenues down (7.7%): Organic= (6.8%), Fx= (0.9%) Australia impacted by weak economy, but beginning to show improvement; organic sales declined 8% in Q2 of F’14. The Americas and EMEA business impacted by reduced catalog advertising and continued competition; organic sale
Slide 14: WPS – Strategic Focus Areas
14 WPS – STRATEGIC FOCUS AREAS 14 1. Expand focus on e-commerce 2. Expand offering of workplace safety products 3. Enhance industry-specific expertise 4. Adjusting competitiveness 5. Increasing catalog advertising in all major geographies.
Slide 15: Investor Relations
15 INVESTOR RELATIONS Brady Contact: Aaron Pearce Investor Relations 414-438-6895 Aaron_Pearce@Bradycorp.com See our web site at www.investor.bradycorp.com
Slide 16: Total Company Income Statements Comparison
16 2014 2013 Change Sales 291.2$ 272.7$ 18.5$ Gross Margin 142.5 141.8 0.7 % of Sales 48.9% 52.0% (3.1) pts Research and Development (8.5) (8.2) (0.3) Selling, General and Admin. (111.4) (109.9) (1.5) % of Sales (38.3%) (40.3%) (2.0) pts Restructuring Charges (4.3) (1.9) (2.4) Operating Income 18.3
Slide 17: Debt Structure
17 DEBT STRUCTURE 17 (Thousands of USD) Int. Rate Fixed vs. Variable Jan. 31, 2014 Balance July 31, 2013 Balance Revolver Borrowings (due Feb. 2017): USD-denominated (L+1.125) 1.24% Variable 9,000$ 39,000$ China Borrowings: USD-denominated note payable 1.48% Variable 14,946 11,613 Private Placements
Slide 18: Historical Quarterly Financial Results
18 HISTORICAL QUARTERLY FINANCIAL RESULTS 18 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Sales 273.6$ 255.7$ 272.0$ 270.2$ 272.0$ 272.7$ 302.5$ 310.6$ 307.5$ 291.2$ Gross margin 150.5 141.5 150.9 148.1 150.2 141.9 159.4 157.9 157.8 142.5 % of Sales 55.0% 55.3% 55.5% 54.8% 55.2% 52.0% 52.7% 50.8% 51.3% 48.9% Resea
Slide 19: EBITDA Reconciliation
19 Q1 Q2 Q3 Q4 Total 23,929$ 16,424$ 40,353$ Interest expense 3,721 3,676 7,397 Income taxes 11,129 2,933 14,062 Depreciation and amortization 10,878 11,464 22,342 49,657$ 34,497$ 84,154$ Q1 Q2 Q3 Q4 Total 27,188$ (8,684)$ 4,233$ (177,271)$ (154,534)$ Interest expense 4,163 4,406 4,186 3,886 16,641
Slide 20: Net Earnings from Continuing Operations Excluding Certain Items
20 2014 2013 2014 2013 10,517$ (10,671)$ 28,652$ 15,620$ Cost of goods sold: Purchase accounting expense related to inventory — 949 — 949 Selling, general and administrative: PDC acquisition-related expenses — 2,959 — 2,959 Restructuring charges 2,843 1,316 7,552 1,316 Non-cash income tax charges re
Slide 21: Non-GAAP Net Earnings from Continuing Operations per Diluted Share
21 NON-GAAP NET EARNINGS FROM CONTINUING OPERATIONS PER DILUTED CLASS A NONVOTING SHARE 21 Reconciliation of Non-GAAP Net Earnings from Continuing Operations per Diluted Class A Nonvoting Share 2014 2013 2014 2013 $ 0.20 $ (0.21) $ 0.55 $ 0.30 Cost of goods sold: Purchase accounting expense related