Slide 1: Brady Corporation F'16 Q2 Financial Results
February 19, 2016 Brady Corporation F’16 Q2 Financial Results
Slide 2: Forward-Looking Statements
2Forward-Looking Statements 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, pr
Slide 3: Q2 F'16 Financial Summary
3Q2 F’16 Financial Summary • Sales down 5.0% to $268.6M in Q2 of F’16 vs. $282.6M in Q2 of F’15. – Organic sales increased 0.4%. Foreign currency translation reduced sales by 5.4%. • Gross profit margin of 49.5% in Q2 of F’16 compared with 48.9% in Q2 of F’15. • SG&A expense of $100.2M (37.3% of sal
Slide 4: Sales Overview
4Sales Overview • 0.4% organic sales growth: • ID Solutions – Organic sales growth of 0.7%. • Workplace Safety – Organic sales decline of (0.1%). • (5.4%) decrease due to currency translation. Q2 F’16 SALES: • Our European businesses in both IDS and WPS performed well, with continued organic growth
Slide 5: Gross Profit Margin
Gross Profit Margin 5 • GPM of 49.5% in Q2 of F’16 compared with 48.9% in Q2 of F’15. • GPM in Q2 of F’15 was impacted by facility consolidation-related costs. • On-going operational improvements are positively impacting profitability. GROSS PROFIT MARGIN COMMENTARY: $159 $158 $158 $143 $155 $154 $1
Slide 6: SG&A Expense and G&A Expense
SG&A Expense and G&A Expense 6 • G&A expense was flat at $26.8M in Q2 of F’16 and Q2 of F’15. • At constant foreign exchange rates, G&A expense increased slightly. • The general downward trend in G&A expense continues as we focus on driving efficiencies. G&A EXPENSE (subset of SG&A): • SG&A expense
Slide 7: Net Earnings & EPS From Continuing Operations
7Net Earnings & EPS From Continuing Operations * Non-GAAP Net Earnings from Continuing Operations and Non-GAAP Net Earnings from Continuing Operations Per Class A Diluted Nonvoting Share are non-GAAP measures. See appendix. • Q2 F’16 net earnings were $15.3M compared to Non- GAAP net earnings* of $1
Slide 8: Cash Generation & Uses
8Cash Generation & Uses • Cash flow from operating activities of $27.9M in Q2 of F’16 compared to $5.3M in Q2 of F’15. • Free cash flow* of $26.3M in Q2 of F’16 compared to $(1.0M) in Q2 of F’15. • Returned $10.2M to our shareholders in the form of dividends in Q2 of F’16. • Returned $7.2M to our sh
Slide 9: Net Debt & EBITDA
Net Debt & EBITDA 9 1.3 1.2 1.2 1.3 1.5 1.2 1.2 1.2 1.2 1.1 1.1 1.0 0.0x 0.5x 1.0x 1.5x Q3 F'13 Q4 F'13 Q1 F'14 Q2 F'14 Q3 F'14 Q4 F'14 Q1 F'15 Q2 F'15 Q3 F'15 Q4 F'15 Q1 F'16 Q2 F'16 NET DEBT / TTM EBITDA* • January 31, 2016 Cash = $120.2M, Debt = $252.7M (net debt = $132.5M), and TTM EBITDA = $127
Slide 10: F'16 Guidance
10F’16 Guidance F’16 Diluted EPS $1.20 to $1.35 Guidance Assumptions: • Low single digit organic sales declines in fiscal 2016, which is reflective of economic challenges in certain industrial markets and geographies. • Exchange rates consistent with those as of January 31, 2016. • Full-year depreci
Slide 11: Identification Solutions
Q2 F’16 vs. Q2 F’15 PERFORMANCE (millions of USD) 11Identification Solutions • Revenues down 3.7%: • Organic = +0.7% • Fx = -(4.4)% • Strong organic sales growth in Europe-based business. • Organic sales down in Asia. • Segment profit as a percent of sales increased as a result of operational improv
Slide 12: Workplace Safety
Q2 F’16 vs. Q2 F’15 PERFORMANCE (millions of USD) 12Workplace Safety • Revenues down 7.5%: • Organic = -(0.1)% • Fx = -(7.4)% • Strengthening of the U.S. dollar had a more significant impact on the Workplace Safety platform as approximately half of WPS revenues are generated in Western Europe. • Seg
Slide 13: Investor Relations
13Investor Relations Brady Contact: Ann Thornton Investor Relations 414-438-6887 Ann_Thornton@bradycorp.com See our web site at www.bradycorp.com
Slide 14: Appendix
Appendix 14
Slide 15: Comparable Income Statements
COMPARABLE INCOME STATEMENTS (millions of USD) 15Comparable Income Statements 2016 2015 Change Sales 268.6$ 282.6$ (14.0)$ Gross Margin 132.9 138.2 (5.3) % of Sales 49.5% 48.9% Research and Development (9.1) (8.9) (0.2) Selling, General and Admin. (100.2) (107.6) 7.4 % of Sales (37.3%) (38.1%) (0.8)
Slide 16: Debt Structure
(‘000s of USD) 16Debt Structure January 31, 2016 Balance July 31, 2015 Balance Revolver Borrowings: USD-denominated 1.30% Variable 107,000$ 102,000$ China Borrowings: USD & CNY-denominated notes payable 3.85% Variable 4,974 10,411 Private Placements: USD-denominated 2006 Series 5.30% Fixed 26,143 26
Slide 17: EBITDA reconciliation
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. EBITDA is not a calculation based on generally accep
Slide 18: Non-GAAP Net Earnings from Continuing Operations reconciliation
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 Common Share Excluding Certain Items.” These are not calculations based upon GAAP. The amounts included in these Non-