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Brady Corp. Reports Operating Results (10-Q)

December 07, 2010 | About:
10qk

10qk

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Brady Corp. (BRC) filed Quarterly Report for the period ended 2010-10-31.

Brady Corp. has a market cap of $1.68 billion; its shares were traded at around $32 with a P/E ratio of 17.4 and P/S ratio of 1.3. The dividend yield of Brady Corp. stocks is 2.2%. Brady Corp. had an annual average earning growth of 14.6% over the past 10 years.BRC is in the portfolios of John Rogers of ARIEL CAPITAL MANAGEMENT LLC, First Pacific Advisors of First Pacific Advisors, LLC, Richard Pzena of Pzena Investment Management LLC, Chuck Royce of Royce& Associates, Robert Olstein of Olstein Financial Alert Fund, Jim Simons of Renaissance Technologies LLC, Steven Cohen of SAC Capital Advisors.

Highlight of Business Operations:

Sales for the quarter ended October 31, 2010, increased 3.5% to $329.6 million, compared to $318.5 million in the same period of fiscal 2010. Of the 3.5% increase in sales, organic sales and acquisitions both increased 2.0% for a total increase of 4.0%. The sales increase was partially offset by a 0.5% decrease due to the fluctuations in the exchange rates used to translate financial results into the United States Dollar for the three months ended October 31, 2010 compared to the same period in the previous year. Net income for the quarter ended October 31, 2010, was $26.3 million or $0.50 per diluted Class A Nonvoting Common Share, up 21.3% from $21.7 million or $0.41 per diluted Class A Nonvoting Common Share reported in the first quarter of last fiscal year. Net income before restructuring related expenses for the quarter ended October 31, 2010 was $28.9 million, or $0.55 per diluted Class A Nonvoting Common Share, up 19.0% from $24.3 million or $0.46 per diluted Class A Nonvoting Common Share reported in the first quarter of last fiscal year.

Net income for the three months ended October 31, 2010, increased 21.3% to $26.3 million, compared to $21.7 million for the same quarter of the previous year. Net income as a percentage of sales increased to 8.0% for the quarter ended October 31, 2010 from 6.8% for the same period in the prior year. Net income before restructuring related expenses was $28.9 million or $0.55 per diluted Class A Common Share for the three months ended October 31, 2010 compared to $24.3 million, or $0.46 per diluted Class A Common Share for the same period of the previous year.

Cash and cash equivalents were $326.1 million at October 31, 2010, compared to $314.8 million at July 31, 2010. The increase in cash of $11.3 million was the result of cash provided by operations of $16.2 million, cash used in investing activities of $3.7 million, cash used in financing activities of $7.5 million, and the effects of the depreciation of the U.S. dollar against other currencies, which positively impacted cash in the amount of $6.3 million during the quarter ended October 31, 2010.

Capital expenditures were $2.8 million for the quarter ended October 31, 2010, compared to $9.0 million in the same period last year. The Company expects capital expenditures to be between $25.0 million and $30.0 million for fiscal 2011, similar to fiscal 2010. Net cash used in financing activities was $7.5 million for the quarter ended October 31, 2010, related primarily to the payment of dividends of $9.4 million.

Stockholders investment increased $52.2 million during the three months October 31, 2010 as a result of the Companys net income of $26.3 million as well as the increase in the accumulated other comprehensive income of $29.3 million due to the impact of foreign currency translation. The increase was offset by the dividends paid on Class A and Class B Common Stock of $8.8 million and $0.6 million, respectively.

The Company is subject to the risk of changes in foreign currency exchange rates due to its operations in foreign countries. The Company has manufacturing facilities and sells and distributes its products throughout the world. As a result, the Companys financial results could be significantly affected by factors such as changes in foreign currency exchange rates or weak economic conditions in the foreign markets in which the Company manufactures, distributes and sells its products. The Companys operating results are principally exposed to changes in exchange rates between the U.S. dollar and the Australian dollar, the Canadian dollar, the Singapore dollar, the Euro, the British Pound, the Brazilian Real, the Korean Won, and the Chinese Yuan. Changes in foreign currency exchange rates for the Companys foreign subsidiaries reporting in local currencies are generally reported as a component of stockholders investment. The Companys currency translation adjustments recorded for the three months ended October 31, 2010 and 2009 were $30.0 million favorable and $24.8 million unfavorable, respectively. As of October 31, 2010 and 2009, the Companys foreign subsidiaries had net current assets (defined as current assets less current liabilities) subject to foreign currency translation risk of $166.2 million and $268.0 million, respectively. The potential decrease in the net current assets as of October 31, 2010 from a hypothetical 10 percent adverse change in quoted foreign currency exchange rates would be $16.6 million. This sensitivity analysis assumes a parallel shift in foreign currency exchange rates. Exchange rates rarely move in the same direction relative to the dollar. This assumption may overstate the impact of changing exchange rates on individual assets and liabilities denominated in a foreign currency.

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