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Brady Corp. Reports Operating Results (10-Q)

June 04, 2010 | About:
10qk

10qk

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Brady Corp. (BRC) filed Quarterly Report for the period ended 2010-04-30.

Brady Corp. has a market cap of $1.53 billion; its shares were traded at around $29.34 with a P/E ratio of 17.3 and P/S ratio of 1.2. The dividend yield of Brady Corp. stocks is 2.4%. Brady Corp. had an annual average earning growth of 14.5% 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.

Highlight of Business Operations:

Sales for the quarter ended April 30, 2010, increased 16.3% to $321.9 million, compared to $276.7 million in the same period of fiscal 2009. Of the increase in sales, organic sales increased 8.5%, acquisitions added 2.0% and the effects of fluctuations in the exchange rates used to translate financial results into the United States dollar increased sales 5.8%. Net income for the quarter ended April 30, 2010, was $23.7 million or $0.45 per diluted Class A Nonvoting Common Share, up 31.9% and 32.4%, respectively, from $18.0 million or $0.34 per diluted Class A Nonvoting Common Share reported in the third quarter of last fiscal year. Net income before restructuring-related expenses for the quarter ended April 30, 2010 was $25.4 million, or $0.48 per diluted Class A Nonvoting Common Share, an increase of 29.6% from $19.6 million or $0.37 per diluted Class A Nonvoting Common Share for the quarter ended April 30, 2009.

Sales for the nine months ended April 30, 2010, increased 1.6% to $936.2 million, compared to $921.5 million in the same period of fiscal 2009. Of the increase in sales, organic sales declined 3.1%, acquisitions added 0.9% and the effects of fluctuations in the exchange rates used to translate financial results into the United States dollar increased sales 3.8%. Net income for the nine months ended April 30, 2010, was $60.4 million or $1.14 per diluted Class A Nonvoting Common Share, up 18.5% and 18.8%, respectively, from $50.9 million or $0.96 per diluted Class A Nonvoting Common Share reported in the same period of the prior fiscal year. Net income before restructuring-related expenses for the nine months ended April 30, 2010 was $67.3 million or $1.27 per diluted Class A Nonvoting Common Share, a decrease of 0.6% from $67.7 million, or $1.28 per diluted Class A Nonvoting Common Share, for the nine months ended April 30, 2009.

Net income for the three months ended April 30, 2010, increased 31.9% to $23.7 million, compared to $18.0 million for the same quarter of the previous year. Net income as a percentage of sales increased to 7.4% from 6.5% for the quarter ended April 30, 2010, compared to the same period in the prior year. Net income before restructuring-related expenses for the quarter ended April 30, 2010 was $25.4 million, or $0.48 per diluted Class A Nonvoting Common Share, an increase of 29.6% from $19.6 million or $0.37 per diluted Class A Nonvoting Common Share, for the same period in the previous year. For the nine months ended April 30, 2010, net income increased 18.5% to $60.4 million, compared to $50.9 million for the same period in the previous year. As a percentage of sales, net income increased to 6.4% from 5.5% for the nine months ended April 30, 2010, compared to the same period in the previous year. Net income before restructuring-related expenses for the nine months ended April 30, 2010 was $67.3 million or $1.27 per diluted Class A Nonvoting Common Share, a decrease of 0.6% from $67.7 million, or $1.28 per diluted Class A Nonvoting Common Share, for the nine months ended April 30, 2009.

Accounts receivable increased $19.6 million for the nine months ended April 30, 2010 mainly due to higher sales volumes. Inventories decreased $1.8 million for the nine months ended April 30, 2010, to $92.0 from $93.8 million at July 31, 2009. The decline in inventory was due to the benefits generated from working capital initiatives and the impact of foreign currency translation. The net increase in current liabilities was $47.1 million from July 31, 2009 to April 30, 2010. The increase was composed of a significant increase in accrued wages and amounts withheld from employees due to the accrual of the fiscal 2010 incentive compensation plans during the nine months ended April 30, 2010. Annual incentive compensation plans were cancelled for fiscal 2009 due to the Companys financial performance resulting from the economic downturn and as such, no payouts for incentive compensation were made during the first quarter of fiscal 2010. The current maturities on long-term debt also increased during the third quarter of fiscal 2010 as principal payments on outstanding debt become due in the next twelve months.

Cash used for acquisitions totaled $30.4 million for the nine months ended April 30, 2010 due to the acquisitions of Welco, Stickolor, and Securimed. The net cash paid for Welco, Stickolor, and Securimed was $1.8 million, $18.5 million, and $10.1 million, respectively. The Company did not complete any acquisitions during the nine months ended April 30, 2009. Capital expenditures were $20.9 million for the nine months ended April 30, 2010, compared to $16.0 million in the same period last year. The Company expects the capital expenditures to be approximately $25.0 million for fiscal 2010. Net cash used in financing activities was $50.0 million for the nine months ended April 30, 2010, due primarily to the payment of dividends and the principal payment on debt, partially offset by the proceeds from the issuance of common stock. Net cash used in financing activities for the same period last year was $65.0 million due primarily to the repurchase of the Companys Class A Non-Voting Common Stock and the payment of dividends.

During fiscal 2004 through fiscal 2007, the Company completed three private placement note issuances totaling $500 million in ten-year fixed rate notes with varying maturity dates to institutional investors at interest rates varying from 5.14% to 5.33%. The notes must be repaid equally over seven years, with initial payment due dates ranging from 2008 to 2011, with interest payable on the notes due semiannually on various dates throughout the year, which began in December 2004. The private placements were exempt from the registration requirements of the Securities Act of 1933. The notes were not registered for resale and may not be resold absent such registration or an applicable exemption from the registration requirements of the Securities Act of 1933 and applicable state securities laws. The notes have certain prepayment penalties for repaying them prior to the maturity date. Under the debt agreement, the Company paid equal installments of $21.4 million in June 2008 and June 2009. In June 2009, the Company also completed a cash tender offer to purchase approximately $65.8 million of its outstanding notes at par without penalty. In February 2010, the Company paid an installment of $26.1 million.

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