Slide 1: Brady Corporation Investor Presentation
Brady Corporation Investor Presentation May 2017
Slide 2: Forward-Looking Statements
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, p
Slide 3: Brady's Mission & Vision
Brady’s Mission & Vision 3 Our Mission is to Identify and Protect PREMISES PRODUCTS PEOPLE Sustainable Our Vision is to Deliver profitable results for shareholders, offer customers innovative products long-term and unparalleled service, and be an employer of shareholder choice. value
Slide 4: Summary
Summary 4 History of Financial Success: • A global leader in niche identification markets. • Diversified customer base, and geographic presence and products. • History of innovation and strong customer service. Improved Financial Results: • Profitability and cash flow have improved. • Driving busine
Slide 5: Geographical Presence
Geographical Presence 5 F’16 Sales by Region 5% 11% 54% 30% ID Solutions: Workplace Safety: Americas = 70% EMEA = 50% EMEA = 20% Americas = 35% Asia = 10% Australia = 15% U.S.A. Rest of Americas Europe, Middle East & Africa Asia-Pacific Brazil, Canada, Mexico. Belgium, Denmark, France, Germany, Aust
Slide 6: Global Divisions
Global Divisions 6 Identification Solutions (approx. 2/3 of sales) Workplace Safety (approx. 1/3 of sales) Products: Products: • Safety & Facility ID • Vast offering of workplace safety • Wire ID products (signs, tags, labels, safety • Product ID equip, etc.). • People ID • Healthcare ID. Primary Br
Slide 7: Driving Operational Excellence
Driving Operational Excellence 7 Right Culture for Success Operational Improvements SG&A Efficiency • Local ownership with standardized processes. • Invest in more efficient, higher-quality equipment. • Cost structure alignment • Clarity, focus, and culture of under-performing of innovation. • Optim
Slide 8: Driving Organic Growth
Driving Organic Growth 8 Workplace Safety Identification Solutions Investing in Our Future • Renewed innovation development process. • Relentless focus on • Manage catalog-to-digital improving the customer • Investments in emerging shift. buying experience. and embedded technologies to create • Crea
Slide 9: Patient & Priority-Driven Capital Allocation
Patient & Priority-Driven Capital Allocation 9 1st – Reinvest in the Business: • Drive sustainable growth. • Deliver unrivaled customer service and operational • Invested $176M in R&D excellence. from F’12 to F’16. • Develop innovative new products that create value for our customers. 2nd – Dividend
Slide 10: Future Financial Performance
Future Financial Performance 10 Expectation F’16 Exiting F’18 Organic Sales Organic Sales Organic Revenue Drivers: Growth Growth • Unrivaled customer service. • Renewed R&D focus. Below GDP • Integrated solutions and technologies creating smarter products. Organic GDP+ • E-business / Digital. Growth
Slide 11: Financial Overview
11 Financial Overview
Slide 12: Revenue & Earnings Trends
Revenue & Earnings Trends 12 NON-GAAP NET EARNINGS FROM CONTINUING SALES (millions of USD) OPERATIONS* (millions of USD) $1,250 $1,225 $125 $113 $1,172 $1,158 $1,150 $1,121 $102 $100 $1,072 $1,050 $80 $80 $75 $65 $950 $50 $850 $750 $25 F'12 F'13 F'14 F'15 F'16 F'12 F'13 F'14 F'15 F'16 * See appendix
Slide 13: GPM & SG&A Expense
GPM & SG&A Expense 13 GROSS PROFIT MARGIN GPM: 60% 55.2% • Operational inefficiencies in F’14 and 55% 52.6% F’15 caused by facility consolidations. 49.8% 49.9% 50% 47.7% • Improvement in GPM in F’16 primarily 45% within facilities recently consolidated. 40% F'12 F'13 F'14 F'15 F'16 SG&A as % of SALE
Slide 14: Cash Generation
Cash Generation 14 CASH FLOW FROM OPERATING ACTIVITIES (Millions of USD) Cash Flow from Operating Activities $250 % of Net Income (excl. impairment charges & 250% F'13 Non-Cash tax charges) 200% $200 150% $145 $150 $144 $139 100% $93 $100 $93 50% $50 0% 2012 2013 2014 2015 2016 CASH GENERATION: • Im
Slide 15: Net Debt & EBITDA
Net Debt & EBITDA 15 NET DEBT (millions of USD) NET DEBT / TTM EBITDA* $200 1.5x $168 1.2 1.1 1.1 $150 $139 $140 1.0 $132 1.0x $101 0.8 $100 $76 0.5 $50 0.5x $50 $38 0.3 0.2 $9 0.1 $0 0.0x Q3 F'15 Q4 F'15 Q1 F'16 Q2 F'16 Q3 F'16 Q4 F'16 Q1 F'17 Q2 F'17 Q3 F'17 Q3 F'15 Q4 F'15 Q1 F'16 Q2 F'16 Q3 F'16
Slide 16: Debt Structure
Debt Structure 16 (‘000s of USD) April 30, 2017 July 31, 2016 Interest Rate Balance Balance Revolver Borrowings: USD-denominated 1.82% Variable $ 22,000 $ 112,000 EUR-denominated 0.88% Variable 30,442 - China Borrowings: USD & CNY-denominated notes payable 3.42% Variable 4,072 4,928 Private Placemen
Slide 17: Summary
Summary 17 • Improved Profitability and Cash Flow. • Strong Balance Sheet with Flexibility. • Opportunities for Efficiency Gains and Profitability Growth. • Driving Value without Losing Sight of the Long Term. • Tempered Sales Outlook.
Slide 18: Investor Relations
Investor Relations 18 Brady Contact: Ann Thornton 414-438-6887 Ann_Thornton@Bradycorp.com See our web site at www.investor.bradycorp.com
Slide 19: Appendix
19 Appendix
Slide 20: Q3 F'17 Financial Summary
Q3 F’17 Financial Summary 20 • Sales down 3.8% to $275.9M in Q3 of F’17 vs. $286.8M in Q3 of F’16. – Organic sales decreased 1.9%. – Foreign currency translation reduced sales by 1.9%. • Gross profit margin of 50.7% in Q3 of F’17 compared with 50.7% in Q3 of F’16. • SG&A expense of $98.4M (35.7% of
Slide 21: Sales Overview
Sales Overview 21 SALES (millions of USD) $305 $295 $290 $289 $287 $285 $283 $282 $280 $276 $275 $269 $268 $265 $255 Q3 F'15 Q4 F'15 Q1 F'16 Q2 F'16 Q3 F'16 Q4 F'16 Q1 F'17 Q2 F'17 Q3 F'17 Organic Sales 1.7% (1.2%) (2.2%) 0.4% (0.1%) (0.9%) (0.2%) 1.3% (1.9%) Growth Q3 F’17 SALES: Q3 F’17 SALES COMM
Slide 22: Gross Profit Margin
Gross Profit Margin 22 GROSS PROFIT & GPM% (millions of USD) $175 55% 51% 51% 50% 50% 50% 49% 49% 49% 50% $150 45% $145 $141 $139 $141 $140 $140 45% $133 $134 $129 40% $125 35% $100 30% Q3 F'15 Q4 F'15 Q1 F'16 Q2 F'16 Q3 F'16 Q4 F'16 Q1 F'17 Q2 F'17 Q3 F'17 GROSS PROFIT MARGIN COMMENTARY: • GPM of 5
Slide 23: SG&A Expense
23 SG&A Expense SG&A and SG&A% of SALES (millions of USD) $120 40% 37% 37% 38% 35% 36% 36% 35% 36% $110 35% 35% $106 $103 $103 35% $101 $100 $100 $98 $98 $98 33% $95 30% $90 28% $80 25% Q3 F'15 Q4 F'15 Q1 F'16 Q2 F'16 Q3 F'16 Q4 F'16 Q1 F'17 Q2 F'17 Q3 F'17 SG&A EXPENSE: • SG&A expense declined $7.4
Slide 24: Net Earnings & EPS
Net Earnings & EPS 24 NET EARNINGS FROM CONTINUING OPERATIONS, NET EARNINGS FROM CONTINUING OPERATIONS PER CLASS EXCLUDING CERTAIN ITEMS IN F’15* (millions of USD) A DILUTED SHARE, EXCLUDING CERTAIN ITEMS IN F’15* $40 $0.60 $30 $0.49 $0.49 $25 $25 $0.44 $0.43 $23 $23 $0.42 $21 $0.37 $19 $0.40 $0.34
Slide 25: Global Platform Results (Sales & Segment Profit %)
Global Platform Results (Sales & Segment Profit %) 25 IDENTIFICATION SOLUTIONS (millions of USD) Q3 F’17 IDENTIFICATION SOLUTIONS: $210 20% • Q3 F’17 organic revenues decreased 0.8%. $205 $201 $203 18% $201 $201 17% $200 • Organic sales decline in IDS Americas, partially 15% 16% offset by double-dig
Slide 26: Cash Generation & Uses
Cash Generation & Uses 26 Cash Flow from Operating Activities (millions of USD) CASH FLOWS IN Q3 OF F’17: $50 • Cash flow from operating activities was $41 $40 $40 $37.8M in Q3 of F’17 compared to $40.3M in $40 $38 Q3 of F’16. $34 $30 $30 $29 $28 • Free cash flow* was $34.2M in Q3 of F’17 compared t
Slide 27: Appendix - Non-GAAP Reconciliations
27 Appendix - Non-GAAP Reconciliations
Slide 28: EBITDA Reconciliation
EBITDA Reconciliation 28 EBITDA (‘000s of USD) Brady is presenting EBITDA because it is used by many of our investors and lenders, and is presented as a convenience to them. EBITDA represents net earnings before interest expense, income taxes, depreciation, amortization and impairment charges. EBITD
Slide 29: Annual EBITDA Reconciliation – Total Company
Annual EBITDA Reconciliation – Total Company 29 EBITDA – Total Company (‘000s of USD) Brady is presenting EBITDA because it is used by many of our investors and lenders, and is presented as a convenience to them. EBITDA represents net earnings before interest expense, income taxes, depreciation, amo
Slide 30: Annual Non-GAAP Earnings from Continuing Operations
Annual Non-GAAP Earnings from Continuing Operations 30 Reconciliation of Non-GAAP Net Earnings from Continuing Operations (‘000s of USD) Brady is presenting the Non-GAAP measure "Net Earnings from Continuing Operations Excluding Certain Items." This is not a calculation based upon GAAP. The amounts
Slide 31: Non-GAAP Reconciliations
Non-GAAP Reconciliations 31 Reconciliations of F’15 Non-GAAP Net Earnings from Continuing Operations (‘000s of USD) Brady is presenting the Non-GAAP measures "Net Earnings from Continuing Operations Excluding Certain Items“ and “Net Earnings from Continuing Operations Per Diluted Class A Nonvoting C