Brady Corporation · NYSE:BRC
Brady — Q3 2013 Earnings Presentation
23 slides from Brady's earnings presentation, May 16, 2013
Slide 1: F'13 Q3 Financial Results
F’13 Q3 Financial Results May 16, 2013 1 WE IDENTIFY AND PROTECT PREMISES, PRODUCTS, AND PEOPLE. BRADY – FISCAL 2013 Q3 FINANCIAL RESULTS
Slide 2: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS BRADY – FISCAL 2013 Q3 FINANCIAL RESULTS 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 financia
Slide 3: Diluted EPS from Continuing Operations
DILUTED EPS FROM CONTINUING OPERATIONS BRADY – FISCAL 2013 Q3 FINANCIAL RESULTS 3 * Diluted EPS, excluding restructuring charges and non-routine items are non-GAAP measures. See slides #19 and #20. 3 * Net Earnings from Continuing Operations Per Class A Diluted Nonvoting Share Excluding Certain Item
Slide 4: Q3 F'13 - Financial Summary
Q3 F’13 - FINANCIAL SUMMARY Sales up 11.0% to $305.7M vs. $275.4M in Q3 of F’12. • Organic sales down 4.7%, acquisitions increased sales by 16.8%, and foreign currency decreased sales by 1.1%. Gross Profit Margin of 52.2% in Q3 of F’13 compared with 55.1% in Q3 of F’12. SG&A expense of $112.1M
Slide 5: Q4 F'13 Earnings from Continuing Operations Guidance
Q4 F’13 – EARNINGS FROM CONTINUING OPERATIONS GUIDANCE BRADY – FISCAL 2013 Q3 FINANCIAL RESULTS 5 Q4 F’13 Diluted EPS from Continuing Operations $ 0.45 to $0.55 (excluding restructuring charges and certain other items). Guidance Assumptions – Continuing Operations: Full-year income tax rate in the
Slide 6: Sales Overview
SALES OVERVIEW $279 $259 $275 $273 $275 $276 $306 $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 Organic Sales 5.1% (1.2%) 0.1% 1.1% (1.4%) (2.1%) (4.7%) BRADY – FISCAL 2013 Q3 FINANCIAL RESULTS 6 Q3 F’13 Sales up 11.0%. • (4.7%) organic sales decline. • 16.8% gro
Slide 7: Gross Profit Margin and SG&A
GROSS PROFIT MARGIN AND SG&A BRADY – FISCAL 2013 Q3 FINANCIAL RESULTS 7 $100 $95 $99 $101 $100 $110 $112 35.7% 36.7% 35.8% 36.8% 36.2% 40.0% 36.7% 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 GROSS PROFIT & GPM% (Millions of USD) SG&A
Slide 8: Net Earnings & EPS from Continuing Operations - Non-GAAP
NET EARNINGS & EPS FROM CONTINUING OPERATIONS – Non-GAAP* Q3 F’13 net earnings from continuing operations, excluding certain items* of $28.7M compared to $29.9M in Q3 of F’12. Q3 F’13 diluted EPS from continuing operations, excluding certain items* of $0.55 compared to $0.56 in Q3 of F’12. $29 $
Slide 9: Cash Generation
3 Mos. Ended April 30, 2013 Year-to-Date April 30, 2013 Cash Balance - Beginning of Period 141.3$ 305.9$ Cash Flow from Operating Activities 45.4 89.6 Capital Expenditures (10.4) (26.1) Proceeds from Sales of Businesses - 10.2 Acquisition of Businesses (0.4) (301.2) Repurchase of Stock - (5.1) Divid
Slide 10: Debt & EBITDA
DEBT & EBITDA 2.3 2.2 2.0 1.8 1.8 1.8 1.6 1.6 1.6 2.0 1.7 1.0x 1.5x 2.0x 2.5x 3.0x Q 1 F' 11 Q 3 F' 11 Q 1 F' 12 Q 3 F' 12 Q 1 F' 13 Q 3 F' 13 BRADY – FISCAL 2013 Q3 FINANCIAL RESULTS GROSS DEBT / TTM EBITDA* April 30, 2013 Cash = $77M. Debt = $338M Gross Debt/EBITDA = 1.9x (1.7 including the TT
Slide 11: Q3 F'13 New Product Launches
Q3 F’13 NEW PRODUCT LAUNCHES BRADY – FISCAL 2013 Q3 FINANCIAL RESULTS 11 11 Skydrol® Resistant Fluid Line Tape: New fluid line identification materials (B-990) for aerospace applications supporting our continuing focus on the aerospace and mass-transit industries. Continuous Sleeve System: Continuou
Slide 12: EMEA - Q3 F'13 Summary
EMEA – Q3 F’13 SUMMARY BRADY – FISCAL 2013 Q3 FINANCIAL RESULTS 12 SALES & SEGMENT PROFIT % (Millions of USD) Q3 F’13 vs. Q3 F’12 PERFORMANCE Revenues down (0.1%): Organic = (4.8%) Fx = (1.3%) Acquisitions = 6.0% Economic headwinds persist, including in Western Europe. Expanding in Centr
Slide 13: Americas - Q3 F'13 Summary
AMERICAS – Q3 F’13 SUMMARY BRADY – FISCAL 2013 Q3 FINANCIAL RESULTS 13 SALES & SEGMENT PROFIT % (Millions of USD) Q3 F’13 vs. Q3 F’12 PERFORMANCE Revenues up 24.8%: Organic = (2.9%) Fx = (0.7%) Acquisitions = 28.4% PDC contributed revenues of $41M and segment profit of $7M. Softness in B
Slide 14: Asia-Pacific - Q3 F'13 Summary
ASIA-PACIFIC – Q3 F’13 SUMMARY BRADY – FISCAL 2013 Q3 FINANCIAL RESULTS 14 SALES & SEGMENT PROFIT % (Millions of USD) Q3 F’13 vs. Q3 F’12 PERFORMANCE Revenues down (13.2%): Organic = (11.6%) Fx = (1.6%) We anticipated Q3 to be challenging due to weaknesses in Australian business. Australia
Slide 15: Summary Comments
SUMMARY COMMENTS • Actively Transforming our Portfolio of Businesses: • Purchased PDC in Q2 of F’13. • Disposed of 3 businesses in the last 12 months. • Announced plan to sell Die-Cut. • Taking Actions to Grow Organically: • Reorganizing around global business platforms. • Expanding in emerging geog
Slide 16: Investor Relations
INVESTOR RELATIONS Brady Contact: Aaron Pearce Investor Relations 414-438-6895 Aaron_Pearce@Bradycorp.com See our web site at www.investor.bradycorp.com BRADY – FISCAL 2013 Q3 FINANCIAL RESULTS 16 16
Slide 17: Debt Structure
DEBT STRUCTURE BRADY – FISCAL 2013 Q3 FINANCIAL RESULTS 17 17 (Thousands of USD) Int. Rate Fixed vs. Variable Apr. 30, 2013 Balance Jan. 31, 2013 Balance Change Revolver Borrowings (due Feb. 2017): USD-denominated (L+1.125) 1.30% Variable 47,000$ 13,000$ 34,000$ EUR-denominated (L+1.125) 1.18% Varia
Slide 18: Comparable Income Statements
2013 2012 Change Sales 305.7$ 275.4$ 30.3$ Gross Margin 159.7 151.7 8.0 % of Sales 52.2% 55.1% (2.8) pts Research and Development (8.1) (8.2) 0.1 Selling, General and Admin. (112.1) (98.6) (13.5) % of Sales (36.7%) (35.8%) 0.9 pts Restructuring Expense (8.5) (2.0) (6.5) Operating Income 31.0 42.9 (1
Slide 19: EBITDA (non-GAAP measure)
Q1 Q2 Q3 Q4 Total 27,188$ (8,684)$ 4,233$ 22,737$ Interest expense 4,163 4,406 4,185 12,754 Income taxes 13,482 30,625 7,595 51,702 Depreciation and amortization 10,675 11,371 13,991 36,037 Intangible asset write-down in restructuring charges — — 3,207 3,207 Loss on write-down of assets held for sal
Slide 20: Net Earnings Excluding Certain Items
2013 2012 2013 2012 21,838$ 28,039$ 37,669$ 84,328$ — — 949 — PDC acquisition-related expenses — — 2,959 — 6,849 1,815 8,484 1,815 — — 25,000 — 28,687$ 29,854$ 75,061$ 86,143$ Selling, general and administrative Restructuring charges Non-cash income tax charge Net Earnings from Continuing Operations
Slide 21: EPS Excluding Certain Items
2013 2012 2013 2012 0.42$ 0.53$ 0.73$ 1.59$ (GAAP measure) — — 0.02 — PDC acquisition-related expenses — — 0.06 — 0.13 0.03 0.16 0.03 — — 0.49 — Share Excluding Certain Items (non-GAAP measure) 0.55$ 0.56$ 1.45$ 1.62$ Net Earnings from Continuing Operations Per Class A Diluted Nonvoting Selling, gen
Slide 22: Quarterly Financial Statements
QUARTERLY FINANCIAL STATEMENTS BRADY – FISCAL 2013 Q3 FINANCIAL RESULTS 22 22 Reconciliation of Net Earnings from Continuing Operations per Diluted Class A Nonvoting Share Excluding Certain Items (in millions of USD, except per share amounts): Q1 Q2 Q3 Q4 Q1 Q2 Q3 Net Sales 278.8$ 259.4$ 275.4$ 273.
Slide 23: Net Earnings per Diluted Share Excluding Certain Items
2013 2012 2013 2012 0.08$ 0.52$ 0.44$ (0.57)$ Purchase accounting expense related to inventory — — 0.02 — PDC acquisition-related expenses — — 0.06 — 0.15 0.05 0.21 0.05 Losses on Sales of Brady Medical and Varitronics — — 0.06 — Gain on Thailand insurance recovery — — (0.08) — Intangible Asset writ