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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 24, 2023
BRADY CORPORATION
(Exact name of registrant as specified in its charter)
Commission File Number 1-14959
Wisconsin   39-0178960
(State or other jurisdiction of incorporation or organization)   (IRS Employer Identification No.)
6555 West Good Hope Road
Milwaukee, Wisconsin 53223
(Address of principal executive offices and Zip Code)
(414) 358-6600
(Registrant’s Telephone Number)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading
Symbol		 Name of each exchange on which registered
Class A Nonvoting Common Stock, par value $0.01 per share BRC New York Stock Exchange
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 or the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐


Item 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION

On February 24, 2023, Brady Corporation (the “Company”) issued a press release announcing its fiscal 2023 second quarter financial results. A copy of the press release is being furnished to the Securities and Exchange Commission as Exhibit 99.1 attached hereto and is incorporated herein by reference.

Item 7.01 REGULATION FD DISCLOSURE

On February 24, 2023, the Company hosted a conference call related to its fiscal 2023 second quarter financial results. A copy of the slides referenced in the conference call, which is also posted on the Company’s website, is being furnished to the Securities and Exchange Commission as Exhibit 99.2 attached hereto and is incorporated herein by reference.

Item 9.01 FINANCIAL STATEMENTS AND EXHIBITS

(d) Exhibits
EXHIBIT NUMBER DESCRIPTION
99.1
99.2
104 Cover Page Interactive Data File (embedded within Inline XBRL document).

SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
    BRADY CORPORATION
Date: February 24, 2023  
  /s/ AARON J. PEARCE
  Aaron J. Pearce
  Chief Financial Officer and Treasurer


EX-99.1 2 exhibit991pressrelease0131.htm SECOND QUARTER FISCAL 2023 PRESS RELEASE Document

EXHIBIT 99.1


For More Information:
Investor contact: Ann Thornton 414-438-6887
Media contact: Kate Venne 414-358-5176


Brady Corporation Reports Fiscal 2023 Second Quarter Results and Raises the low end of its Fiscal 2023 Guidance

•Sales for the quarter increased 2.6 percent. Organic sales increased 6.3 percent while foreign currency reduced sales by 3.7 percent.
•Diluted EPS increased 16.9 percent to $0.76 in the second quarter of fiscal 2023 compared to $0.65 in the same quarter of the prior year. Diluted EPS Excluding Certain Items* increased 15.7 percent to $0.81 in the second quarter of fiscal 2023 compared to $0.70 in the same quarter of the prior year.
•Net cash provided by operating activities increased to $29.4 million in the second quarter of fiscal 2023 compared to $(3.2 million) in the second quarter of last year.
•The low end of the Earnings per diluted Class A Common Share guidance was raised for the full year ending July 31, 2023 from the previous range of $3.13 to $3.43 to the new range of $3.23 to $3.43 on a GAAP basis and was raised from the previous range of $3.30 to $3.60 to the new range of $3.40 to $3.60, excluding after-tax amortization expense.

MILWAUKEE (February 24, 2023) -- Brady Corporation (NYSE: BRC) (“Brady” or “Company”), a world leader in identification solutions, today reported its financial results for its fiscal 2023 second quarter ended January 31, 2023.

Quarter Ended January 31, 2023 Financial Results:
Sales for the quarter ended January 31, 2023 increased 2.6 percent, which consisted of an organic sales increase of 6.3 percent and a decrease of 3.7 percent from foreign currency translation. Sales for the quarter ended January 31, 2023 were $326.2 million compared to $318.1 million in the same quarter last year. By segment, sales increased 4.4 percent in Identification Solutions and decreased 3.4 percent in Workplace Safety, which consisted of an organic sales increase of 7.4 percent in Identification Solutions and an organic sales increase of 2.8 percent in Workplace Safety.
Income before income taxes increased 15.4 percent to $48.5 million for the quarter ended January 31, 2023, compared to $42.0 million in the same quarter last year. Income Before Income Taxes Excluding Certain Items* for the quarter ended January 31, 2023, which was adjusted for amortization expense of $3.3 million, was $51.8 million, an increase of 13.1 percent compared to the second quarter of last year.
Net income for the quarter ended January 31, 2023 was $38.0 million compared to $33.8 million in the same quarter last year. Earnings per diluted Class A Nonvoting Common Share were $0.76 in the second quarter of fiscal 2023, compared to $0.65 in the same quarter last year. Net Income Excluding Certain Items* for the quarter ended January 31, 2023 was $40.5 million and Diluted EPS Excluding Certain Items* for the quarter ended January 31, 2023 was $0.81.


Net Income Excluding Certain Items* for the quarter ended January 31, 2022 was $36.7 million, and Diluted EPS Excluding Certain Items* for the quarter ended January 31, 2022 was $0.70.

Six-Month Period Ended January 31, 2023 Financial Results:
Sales for the six-month period ended January 31, 2023 increased 1.5 percent, which consisted of an organic sales increase of 6.6 percent and a decrease of 5.1 percent from foreign currency translation. Sales for the six months ended January 31, 2023 were $648.8 million compared to $639.5 million in the same period last year. By segment, sales increased 3.7 percent in Identification Solutions and decreased 6.3 percent in Workplace Safety, which consisted of an organic sales increase of 8.0 percent in Identification Solutions and an organic sales increase of 2.0 percent in Workplace Safety.
Income before income taxes increased 14.0 percent to $98.8 million for the six-month period ended January 31, 2023, compared to $86.7 million in the same period last year. Income Before Income Taxes Excluding Certain Items* for the six months ended January 31, 2023, which was adjusted for amortization expense of $6.9 million, was $105.7 million, an increase of 12.1 percent compared to the same period of the prior year.
Net income for the six-month period ended January 31, 2023 was $77.4 million compared to $68.9 million in the same period last year. Earnings per diluted Class A Nonvoting Common Share were $1.55 for the six months ended January 31, 2023, compared to $1.32 in the same period last year. Net Income Excluding Certain Items* for the six months ended January 31, 2023 was $82.7 million and Diluted EPS Excluding Certain Items* for the six months ended January 31, 2023 was $1.65. Net Income Excluding Certain Items* for the six months ended January 31, 2022 was $74.6 million, and Diluted EPS Excluding Certain Items* for the six months ended January 31, 2022 was $1.43.

Commentary:
“This quarter’s results once again demonstrate our commitment to serving our customers extremely well while making their jobs easier and safer. Our investments in sales, marketing, and research and development are paying off as we’ve now generated organic sales growth of at least six percent in each of the last eight quarters and our reinvigorated innovative spirit has set the stage for continued future growth,” said Brady’s President and Chief Executive Officer, Russell R. Shaller. “Our Identification Solutions segment is performing well, with a robust pipeline of innovative new products set to launch in the second half of this fiscal year. In our Workplace Safety segment, we are seeing the benefits from the actions we took to simplify our product offering, to streamline our cost structure, and to improve our price competitiveness, resulting in another quarter of organic sales growth and increased segment profit. This quarter, we announced the reorganization of Brady around two new operating segments which will be effective next quarter: Americas & Asia and Europe & Australia. This reorganization allows us to further integrate our businesses, support continued growth through the application of our best go-to-market strategies in key geographies, facilitate new product development in our recent acquisitions, and further simplify our global businesses. While we recognize that the macro-economy is uncertain and that foreign currency translation is creating challenges, we continue to experience robust demand and we will continue to invest in our critical organic growth initiatives throughout the economic cycle, which we believe positions us for future success.”
“Brady is in an enviable financial position. This quarter, we grew organic sales by 6.3 percent, we grew GAAP diluted earnings per share by 16.9 percent, and cash flow from operating activities was a robust $29.4 million. For the first half of this fiscal year, our cash flow from operating activities was more than double what it was in the first half of last year,” said Brady’s Chief Financial Officer, Aaron Pearce. “We also returned $22.8 million to our shareholders in the form of dividends and repurchased another $17.9 million worth of shares in the first half of this fiscal year.


We are in a net cash position of $30.9 million at January 31, 2023. We will remain disciplined with capital allocation by fully funding our organic investments, returning funds to our shareholders in the form of dividends, being opportunistic with share buybacks and executing acquisitions that increase our growth trajectory in a highly disciplined manner. We are confident that this disciplined approach to capital allocation will serve our shareholders well over the long term.”

Fiscal 2023 Guidance:
The Company raised the low end of its GAAP earnings per diluted Class A Nonvoting Common Share guidance for the year ending July 31, 2023 from the previous guidance range of $3.13 to $3.43 per share to the new full year guidance range of $3.23 to $3.43 per share. The Company also raised the low end of its Diluted EPS Excluding Certain Items* guidance for the year ending July 31, 2023 from the previous range of $3.30 to $3.60 per share to the new full year guidance range of $3.40 to $3.60 per share.
The other assumptions included in our fiscal 2023 guidance include a full-year income tax rate of approximately 21 percent, depreciation and amortization expense ranging from $32 million to $34 million, and capital expenditures of approximately $22 million. Our fiscal 2023 guidance is based on foreign currency exchange rates as of January 31, 2023 and assumes continued economic growth.

A webcast regarding Brady’s fiscal 2023 second quarter financial results will be available at www.bradycorp.com/investors beginning at 9:30 a.m. central time today.

Brady Corporation is an international manufacturer and marketer of complete solutions that identify and protect people, products and places. Brady’s products help customers increase safety, security, productivity and performance and include high-performance labels, signs, safety devices, printing systems and software. Founded in 1914, the Company has a diverse customer base in electronics, telecommunications, manufacturing, electrical, construction, medical, aerospace and a variety of other industries. Brady is headquartered in Milwaukee, Wisconsin and as of July 31, 2022, employed approximately 5,700 people in its worldwide businesses. Brady’s fiscal 2022 sales were approximately $1.30 billion. Brady stock trades on the New York Stock Exchange under the symbol BRC. More information is available on the Internet at www.bradyid.com.


* Income Before Income Taxes Excluding Certain Items, Net Income Excluding Certain Items, and Diluted EPS Excluding Certain Items are non-GAAP measures. See appendix for more information on these measures, including reconciliations to the most directly comparable GAAP measures.

###

In this news release, 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, projected sales, costs, income, capital expenditures, debt levels and cash flows, and plans and objectives of management for future operations.



The use of words such as “may,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “believe,” “should,” “project,” “plan” or similar terminology are generally intended to identify forward-looking statements. These forward-looking statements by their nature address matters that are, to different degrees, uncertain and are subject to risks, assumptions, and other factors, some of which are beyond Brady’s control, that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. For Brady, uncertainties arise from: increased cost of raw materials, labor and freight as well as material shortages and supply chain disruptions; decreased demand for our products; our ability to compete effectively or to successfully execute our strategy; our ability to develop technologically advanced products that meet customer demands; Brady’s ability to identify, integrate, and grow acquired companies, and to manage contingent liabilities from divested businesses; adverse impacts of the novel coronavirus (“COVID-19”) pandemic or other pandemics; difficulties in protecting our websites, networks, and systems against security breaches; risks associated with the loss of key employees; extensive regulations by U.S. and non-U.S. governmental and self-regulatory entities; litigation, including product liability claims; foreign currency fluctuations; potential write-offs of goodwill and other intangible assets; changes in tax legislation and tax rates; differing interests of voting and non-voting shareholders; numerous other matters of national, regional and global scale, including major public health crises and government responses thereto and those of a political, economic, business, competitive, and regulatory nature contained from time to time in Brady’s U.S. Securities and Exchange Commission filings, including, but not limited to, those factors listed in the “Risk Factors” section within Item 1A of Part I of Brady’s Form 10-K for the year ended July 31, 2022.

These uncertainties may cause Brady's actual future results to be materially different than those expressed in its forward-looking statements. Brady does not undertake to update its forward-looking statements except as required by law.


BRADY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited; Dollars in thousands, except per share data)

Three months ended January 31, Six months ended January 31,
  2023 2022 2023 2022
Net sales $ 326,249  $ 318,055  $ 648,818  $ 639,530 
Cost of goods sold 169,809  168,693  337,114  335,180 
Gross margin 156,440  149,362  311,704  304,350 
Operating expenses:
Research and development 15,377  13,965  29,310  27,872 
Selling, general and administrative 92,282  92,525  182,227  189,271 
Total operating expenses 107,659  106,490  211,537  217,143 
Operating income 48,781  42,872  100,167  87,207 
Other income (expense):
Investment and other income (expense) 968  (578) 811  (35)
Interest expense (1,239) (252) (2,133) (434)
Income before income taxes 48,510  42,042  98,845  86,738 
Income tax expense 10,524  8,227  21,418  17,877 
Net income $ 37,986  $ 33,815  $ 77,427  $ 68,861 
Net income per Class A Nonvoting Common Share:
Basic $ 0.76  $ 0.65  $ 1.55  $ 1.33 
Diluted $ 0.76  $ 0.65  $ 1.55  $ 1.32 
Net income per Class B Voting Common Share:
Basic $ 0.76  $ 0.65  $ 1.54  $ 1.31 
Diluted $ 0.76  $ 0.65  $ 1.53  $ 1.3 
Weighted average common shares outstanding:
Basic 49,745  51,800  49,806  51,887 
Diluted 50,009  52,162  50,049  52,299 



BRADY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)

  January 31, 2023 July 31, 2022
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 108,210  $ 114,069 
Accounts receivable, net of allowance for credit losses of $8,097 and $7,355, respectively 186,852  183,233 
Inventories 195,167  190,023 
Prepaid expenses and other current assets 13,986  10,743 
Total current assets 504,215  498,068 
Property, plant and equipment—net 140,784  139,511 
Goodwill 590,776  586,832 
Other intangible assets 67,513  74,028 
Deferred income taxes 15,826  15,881 
Operating lease assets 31,411  31,293 
Other assets 21,748  21,719 
Total $ 1,372,273  $ 1,367,332 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable $ 75,876  $ 81,116 
Accrued compensation and benefits 53,213  76,764 
Taxes, other than income taxes 12,799  12,539 
Accrued income taxes 6,794  8,294 
Current operating lease liabilities 15,402  15,003 
Other current liabilities 65,765  61,458 
Total current liabilities 229,849  255,174 
Long-term debt 77,281  95,000 
Long-term operating lease liabilities 17,822  19,143 
Other liabilities 79,917  86,717 
Total liabilities 404,869  456,034 
Stockholders’ equity:
Common stock:
Class A nonvoting common stock—Issued 51,261,487 shares, and outstanding 46,115,760 and 46,370,708 shares, respectively 513  513 
Class B voting common stock—Issued and outstanding, 3,538,628 shares 35  35 
Additional paid-in capital 348,513  345,266 
Retained earnings 947,051  892,417 
Treasury stock—5,145,727 and 4,890,779 shares, respectively of Class A nonvoting common stock, at cost (233,338) (217,856)
Accumulated other comprehensive loss (95,370) (109,077)
Total stockholders’ equity 967,404  911,298 
Total $ 1,372,273  $ 1,367,332 



BRADY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited; Dollars in thousands)

Six months ended January 31,
2023 2022
Operating activities:
Net income $ 77,427  $ 68,861 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 17,117  16,996 
Stock-based compensation expense 4,381  7,170 
Deferred income taxes (5,234) (788)
Other (908) (812)
Changes in operating assets and liabilities:
Accounts receivable 280  (7,216)
Inventories (1,287) (34,360)
Prepaid expenses and other assets (3,502) (1,148)
Accounts payable and accrued liabilities (29,156) (25,357)
Income taxes (1,734) 982 
Net cash provided by operating activities 57,384  24,328 
Investing activities:
Purchases of property, plant and equipment (8,167) (16,440)
Other 11  59 
Net cash used in investing activities (8,156) (16,381)
Financing activities:
Payment of dividends (22,793) (23,249)
Proceeds from exercise of stock options 2,688  374 
Payments for employee taxes withheld from stock-based awards (1,509) (5,025)
Purchase of treasury stock (17,861) (21,720)
Proceeds from borrowing on credit agreement 71,036  131,216 
Repayment of borrowing on credit agreement (88,755) (86,216)
Other 66  115 
Net cash used in financing activities (57,128) (4,505)
Effect of exchange rate changes on cash 2,041  (3,370)
Net (decrease) increase in cash and cash equivalents (5,859) 72 
Cash and cash equivalents, beginning of period 114,069  147,335 
Cash and cash equivalents, end of period $ 108,210  $ 147,407 



BRADY CORPORATION AND SUBSIDIARIES
SEGMENT INFORMATION
(Unaudited; Dollars in thousands)

Three months ended January 31, Six months ended January 31,
2023 2022 2023 2022
NET SALES
IDS $ 255,683  $ 244,986  $ 512,039  $ 493,603 
WPS 70,566  73,069  136,779  145,927 
Total $ 326,249  $ 318,055  $ 648,818  $ 639,530 
SALES INFORMATION
IDS
Organic 7.4  % 16.0  % 8.0  % 14.6  %
Currency (3.0) % (1.7) % (4.3) % (0.5) %
Acquisition —  % 11.8  % —  % 11.7  %
Total 4.4  % 26.1  % 3.7  % 25.8  %
WPS
Organic 2.8  % 5.2  % 2.0  % (2.0) %
Currency (6.2) % (3.2) % (8.3) % (1.1) %
Total (3.4) % 2.0  % (6.3) % (3.1) %
Total Company
Organic 6.3  % 13.1  % 6.6  % 10.0  %
Currency (3.7) % (2.1) % (5.1) % (0.7) %
Acquisition —  % 8.6  % —  % 8.5  %
Total 2.6  % 19.6  % 1.5  % 17.8  %
SEGMENT PROFIT
IDS $ 47,384  $ 44,129  $ 98,909  $ 92,945 
WPS 6,249  4,515  12,627  6,808 
Total $ 53,633  $ 48,644  $ 111,536  $ 99,753 
SEGMENT PROFIT AS A PERCENT OF NET SALES
IDS 18.5  % 18.0  % 19.3  % 18.8  %
WPS 8.9  % 6.2  % 9.2  % 4.7  %
Total 16.4  % 15.3  % 17.2  % 15.6  %
Three months ended January 31, Six months ended January 31,
2023 2022 2023 2022
Total segment profit $ 53,633  $ 48,644  $ 111,536  $ 99,753 
Unallocated amounts:
Administrative costs (4,852) (5,772) (11,369) (12,546)
Investment and other (expense) income 968  (578) 811  (35)
Interest expense (1,239) (252) (2,133) (434)
Income before income taxes $ 48,510  $ 42,042  $ 98,845  $ 86,738 



GAAP to NON-GAAP MEASURES
(Unaudited; Dollars in Thousands, Except Per Share Amounts)
In accordance with the U.S. Securities and Exchange Commission’s Regulation G, the following provides definitions of the non-GAAP measures used in the earnings release and the reconciliation to the most closely related GAAP measure.
Income Before Income Taxes Excluding Certain Items:
Brady is presenting the non-GAAP measure, "Income Before Income Taxes Excluding Certain Items." This is not a calculation based upon GAAP. The amounts included in this non-GAAP measure are derived from amounts included in the Consolidated Financial Statements and supporting footnote disclosures. We do not view these items to be part of our ongoing results. We believe this profit measure provides an important perspective of underlying business trends and results and provides a more comparable measure from year to year. The table below provides a reconciliation of the GAAP measure of Income before income taxes to the non-GAAP measure of Income Before Income Taxes Excluding Certain Items:
Three months ended January 31, Six months ended January 31,
2023 2022 2023 2022
Income before income taxes (GAAP measure) $ 48,510  $ 42,042  $ 98,845  $ 86,738 
Amortization expense 3,258  3,749  6,889  7,556 
Income Before Income Taxes Excluding Certain Items (non-GAAP measure) $ 51,768  $ 45,791  $ 105,734  $ 94,294 


Income Tax Expense Excluding Certain Items:
Brady is presenting the non-GAAP measure, "Income Tax Expense Excluding Certain Items." This is not a calculation based upon GAAP. The amounts included in this non-GAAP measure are derived from amounts included in the Consolidated Financial Statements and supporting footnote disclosures. We do not view these items to be part of our ongoing results. We believe this measure provides an important perspective of underlying business trends and results and provides a more comparable measure from year to year. The table below provides a reconciliation of the GAAP measure of Income tax expense to the non-GAAP measure of Income Tax Expense Excluding Certain Items:
Three months ended January 31, Six months ended January 31,
2023 2022 2023 2022
Income tax expense (GAAP measure) $ 10,524  $ 8,227  $ 21,418  $ 17,877 
Amortization expense 769  887  1,634  1,787 
Income Tax Expense Excluding Certain Items (non-GAAP measure) $ 11,293  $ 9,114  $ 23,052  $ 19,664 


Net Income Excluding Certain Items:
Brady is presenting the non-GAAP measure, "Net Income Excluding Certain Items." This is not a calculation based upon GAAP. The amounts included in this non-GAAP measure are derived from amounts included in the Consolidated Financial Statements and supporting footnote disclosures. We do not view these items to be part of our ongoing results. We believe this measure provides an important perspective of underlying business trends and results and provides a more comparable measure from year to year. The table below provides a reconciliation of the GAAP measure of Net income to the non-GAAP measure of Net Income Excluding Certain Items:
Three months ended January 31, Six months ended January 31,
2023 2022 2023 2022
Net income (GAAP measure) $ 37,986  $ 33,815  $ 77,427  $ 68,861 
Amortization expense 2,489  2,862  5,255  5,769 
Net Income Excluding Certain Items (non-GAAP measure) $ 40,475  $ 36,677  $ 82,682  $ 74,630 




Diluted EPS Excluding Certain Items:
Brady is presenting the non-GAAP measure, "Diluted EPS Excluding Certain Items." This is not a calculation based upon GAAP. The amounts included in this non-GAAP measure are derived from amounts included in the Consolidated Financial Statements. We do not view these items to be part of our ongoing results. We believe this measure provides an important perspective of underlying business trends and results and provides a more comparable measure from year to year. The table below provides a reconciliation of the GAAP measure of Net income per Class A Nonvoting Common Share to the non-GAAP measure of Diluted EPS Excluding Certain Items:
Three months ended January 31, Six months ended January 31,
2023 2022 2023 2022
Net income per Class A Nonvoting Common Share (GAAP measure) $ 0.76  $ 0.65  $ 1.55  $ 1.32 
Amortization expense 0.05  0.05  0.10  0.11 
Diluted EPS Excluding Certain Items (non-GAAP measure) $ 0.81  $ 0.70  $ 1.65  $ 1.43 


Diluted EPS Excluding Certain Items Guidance:
Fiscal 2023 Expectations
Low High
Earnings per Class A Nonvoting Common Share (GAAP measure) $ 3.23  $ 3.43 
Amortization expense 0.17  0.17 
Diluted EPS Excluding Certain Items (non-GAAP measure) $ 3.40  $ 3.60 

EX-99.2 3 f23q2conferencecallprese.htm SECOND QUARTER FISCAL 2023 INFORMATIONAL SLIDES f23q2conferencecallprese
F’23 Q2 Financial Results Brady Corporation February 24, 2023

 
Forward-Looking Statements In this news release, 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, projected sales, costs, income, capital expenditures, debt levels and cash flows, and plans and objectives of management for future operations. The use of words such as “may,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “believe,” “should,” “project,” “plan” or similar terminology are generally intended to identify forward-looking statements. These forward-looking statements by their nature address matters that are, to different degrees, uncertain and are subject to risks, assumptions, and other factors, some of which are beyond Brady’s control, that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. For Brady, uncertainties arise from: increased cost of raw materials, labor and freight as well as raw material shortages and supply chain disruptions; decreased demand for our products; our ability to compete effectively or to successfully execute our strategy; our ability to develop technologically advanced products that meet customer demands; Brady’s ability to identify, integrate, and grow acquired companies, and to manage contingent liabilities from divested businesses; adverse impacts of the novel coronavirus (“COVID-19”) pandemic or other pandemics; difficulties in protecting our websites, networks, and systems against security breaches; risks associated with the loss of key employees; extensive regulations by U.S. and non-U.S. governmental and self-regulatory entities; litigation, including product liability claims; foreign currency fluctuations; potential write-offs of goodwill and other intangible assets; changes in tax legislation and tax rates; differing interests of voting and non-voting shareholders; numerous other matters of national, regional and global scale, including major public health crises and government responses thereto and those of a political, economic, business, competitive, and regulatory nature contained from time to time in Brady’s U.S. Securities and Exchange Commission filings, including, but not limited to, those factors listed in the “Risk Factors” section within Item 1A of Part I of Brady’s Form 10-K for the year ended July 31, 2022. These uncertainties may cause Brady's actual future results to be materially different than those expressed in its forward- looking statements. Brady does not undertake to update its forward-looking statements except as required by law. 2

 
3 * Diluted EPS Excluding Certain Items is a non-GAAP measure. See appendix. Organic sales grew 6.3%, with organic growth in both segments. Organic growth has exceeded 6% for 8 consecutive quarters. Strong Organic Sales Growth GPM of 48.0% compared to 47.0% in Q2 of F’22. Healthy gross profit margins indicative of Brady’s high value add. Healthy Gross Profit Margins GAAP EPS of $0.76 was up 16.9% over Q2 of last year. Diluted EPS Excluding Certain Items* increased 15.7% to $0.81 in Q2 of F’23 compared to $0.70 in Q2 of F’22. Expanding Earnings per Share Workplace Safety segment profit was up 38.4% over Q2 of F’22. Identification Solutions segment profit was up 7.4% over Q2 of F’22. Strong Divisional Results Repurchased 123,421 shares for $5.8M in Q2 of F’23. Returned $11.4M to our shareholders in the form of dividends. In a net cash position of $30.9M at January 31, 2023. Returning Capital to our Shareholders Q2 F’23 Highlights SG&A expense of 28.3% of sales in Q2 of F’23 compared to 29.1% in the prior year. SG&A expense benefiting from economies of scale and leverage. Driving Efficiencies in SG&A Expense

 
Sales Overview 4 Q2 F’23 SALES: Total sales increased 2.6%. Organic sales increased 6.3%. • ID Solutions – Organic sales increased 7.4%. • Workplace Safety – Organic sales increased 2.8%. 3.7% decrease due to foreign currency translation. $287 $277 $266 $252 $277 $266 $296 $306 $321 $318 $339 $324 $323 $326 $225 $250 $275 $300 $325 $350 Q1 F'20 (0.4%) Q2 F'20 (1.2%) Q3 F'20 (6.0%) Q4 F'20 (13.7%) Q1 F'21 (4.9%) Q2 F'21 (6.3%) Q3 F'21 6.5% Q4 F'21 12.6% Q1 F'22 7.0% Q2 F'22 13.1% Q3 F'22 9.0% Q4 F'22 9.0% Q1 F'23 6.9% Q2 F'23 6.3% Organic Growth (Decline) SALES (millions of USD) Q2 F’23 SALES COMMENTARY: ID Solutions experienced strong organic sales growth in the Americas and Europe. Workplace Safety realized organic sales growth for the fifth consecutive quarter. Foreign currency translation is a headwind due to the year-over-year strengthening of the U.S. dollar against other major currencies.

 
Gross Profit Margin 5 $141 $139 $130 $119 $135 $130 $149 $148 $155 $149 $164 $163 $155 $156 49.3% 50.3% 48.7% 47.1% 48.9% 48.7% 50.4% 48.2% 48.2% 47.0% 48.4% 50.4% 48.1% 48.0% 38% 40% 42% 44% 46% 48% 50% $100 $125 $150 $175 Q1 F'20 Q2 F'20 Q3 F'20 Q4 F'20 Q1 F'21 Q2 F'21 Q3 F'21 Q4 F'21 Q1 F'22 Q2 F'22 Q3 F'22 Q4 F'22 Q1 F'23 Q2 F'23 GROSS PROFIT & GPM% (millions of USD) Q2 F’23 – GROSS PROFIT MARGIN: Gross profit margin of 48.0% compared to 47.0% in Q2 of F’22. Price increases, efficiency gains, and automation are partially offsetting the negative impacts of inflation. Experiencing reduced inflation in certain geographies.

 
SG&A Expense 6 Q2 F’23 – SG&A EXPENSE: SG&A expense was 28.3% of sales compared to 29.1% of sales in the same quarter last year. We continue to focus on driving sustainable efficiency gains and increasing organic sales to continue reducing SG&A expense as a percent of sales. $90 $87 $83 $76 $83 $82 $91 $94 $97 $93 $96 $95 $90 $92 31.2% 31.6% 31.3% 30.2% 30.0% 30.9% 30.7% 30.6% 30.1% 29.1% 28.4% 29.2% 27.9% 28.3% 10% 15% 20% 25% 30% 35% $60 $70 $80 $90 $100 $110 $120 Q1 F'20 Q2 F'20 Q3 F'20 Q4 F'20 Q1 F'21 Q2 F'21 Q3 F'21 Q4 F'21 Q1 F'22 Q2 F'22 Q3 F'22 Q4 F'22 Q1 F'23 Q2 F'23 SG&A EXPENSE AND SG&A EXPENSE AS A % OF SALES (millions of USD)

 
R&D Expense 7 Q2 F’23 – R&D EXPENSE: We have a solid new product pipeline of high-quality materials and products to help make our customers more efficient. We are focused on ensuring that our R&D spend is both efficient and effective and we remain committed to investing in new product development. $11.0 $10.5 $9.8 $9.4 $10.2 $9.9 $11.3 $13.2 $13.9 $14.0 $14.9 $15.8 $13.9 $15.4 3.8% 3.8% 3.7% 3.7% 3.7% 3.7% 3.8% 4.3% 4.3% 4.4% 4.4% 4.9% 4.3% 4.7% 1.5% 2.5% 3.5% 4.5% $6.0 $8.0 $10.0 $12.0 $14.0 $16.0 $18.0 Q1 F'20 Q2 F'20 Q3 F'20 Q4 F'20 Q1 F'21 Q2 F'21 Q3 F'21 Q4 F'21 Q1 F'22 Q2 F'22 Q3 F'22 Q4 F'22 Q1 F'23 Q2 F'23 R&D EXPENSE AND R&D EXPENSE AS A % OF SALES (millions of USD)

 
Income Before Income Taxes 8 Q2 F’23 – INCOME BEFORE INCOME TAXES: GAAP Income before income taxes was up 15.4% to $48.5M in Q2 of F’23 compared to $42.0M in Q2 of F’22. Income Before Income Taxes Excluding Certain Items*, which only removes amortization expense from each period presented, increased 13.1% to $51.8M in Q2 of F’23 compared to $45.8M in Q2 of F’22. INCOME BEFORE INCOME TAXES (GAAP) (millions of USD) $41.6 $42.4 $22.2 $34.9 $42.2 $39.4 $47.8 $41.6 $44.7 $42.0 $51.3 $54.0 $50.3 $48.5 $10 $20 $30 $40 $50 $60 Q1 F'20 4.2% Q2 F'20 15.4% Q3 F'20 (45.9%) Q4 F'20 (26.0%) Q1 F'21 1.6% Q2 F'21 (7.0%) Q3 F'21 115.7% Q4 F'21 19.4% Q1 F'22 5.8% Q2 F'22 6.7% Q3 F'22 7.3% Q4 F'22 29.7% Q1 F'23 12.6% Q2 F'23 15.4% Year-on-Year Growth (Decline) * Income Before Income Taxes Excluding Certain Items is a non-GAAP measure. See appendix.

 
Net Income & Diluted EPS 9 Q2 F’23 – NET INCOME & DILUTED EPS: GAAP Net Income was $38.0M in Q2 of F’23 compared to $33.8M in Q2 of F’22 (an increase of 12.3%). • Net Income Excluding Certain Items* was $40.5M in Q2 of F’23 compared to $36.7M in Q2 of F’22 (an increase of 10.4%). GAAP Diluted EPS was $0.76 in Q2 of F’23 compared to $0.65 in Q2 of F’22 (an increase of 16.9%). • Diluted EPS Excluding Certain Items* was $0.81 in Q2 of F’23 compared to $0.70 in Q2 of F’22 (an increase of 15.7%). * Net Income Excluding Certain Items and Diluted EPS Excluding Certain Items are non-GAAP measures. See appendix. $37.5 $33.6 $13.6 $27.7 $33.5 $30.9 $37.3 $28.0 $35.0 $33.8 $40.1 $41.1 $39.4 $38.0 $0 $10 $20 $30 $40 Q1 F'20 Q2 F'20 Q3 F'20 Q4 F'20 Q1 F'21 Q2 F'21 Q3 F'21 Q4 F'21 Q1 F'22 Q2 F'22 Q3 F'22 Q4 F'22 Q1 F'23 Q2 F'23 NET INCOME (GAAP) (millions of USD) $0.70 $0.62 $0.26 $0.53 $0.64 $0.59 $0.71 $0.53 $0.67 $0.65 $0.78 $0.81 $0.79 $0.76 $0.00 $0.20 $0.40 $0.60 $0.80 Q1 F'20 Q2 F'20 Q3 F'20 Q4 F'20 Q1 F'21 Q2 F'21 Q3 F'21 Q4 F'21 Q1 F'22 Q2 F'22 Q3 F'22 Q4 F'22 Q1 F'23 Q2 F'23 DILUTED EPS (GAAP)

 
Cash Generation 10 CASH FLOW FROM OPERATING ACTIVITIES (millions of USD) $38.8 $14.3 $42.8 $45.1 $62.8 $36.1 $56.0 $50.8 $27.5 ($3.2) $40.9 $53.2 $28.0 $29.4 -$5 $15 $35 $55 $75 Q1 F'20 104% Q2 F'20 43% Q3 F'20 313% Q4 F'20 163% Q1 F'21 188% Q2 F'21 117% Q3 F'21 150% Q4 F'21 181% Q1 F'22 78% Q2 F'22 (9%) Q3 F'22 102% Q4 F'22 130% Q1 F'23 71% Q2 F'23 77%% of Net Income CASH FLOWS IN Q2 OF F’23: Overview: Cash flow from operating activities was $29.4M in Q2 of F’23 compared to $(3.2M) in Q2 of F’22. Free cash flow* was $25.1M in Q2 of F’23 compared to $(8.3M) in Q2 of F’22. Cash generation was impacted by the timing of annual incentive-based compensation payments which were paid in Q1 of the current year and Q2 last year. Returning Funds to our Shareholders: Thus far in F’23, we returned a total of $40.7M to our shareholders in the form of dividends and buybacks. Dividends – Increased our annual dividends for the 37th consecutive year. Buybacks – Repurchased 402,934 shares in the first half of F’23 for $17.9M. * Free cash flow is calculated as Net Cash Provided by Operating Activities less Capital Expenditures. (millions of USD) 3 Mos. Ended Jan. 31, 2023 3 Mos. Ended Jan. 31, 2022 6 Mos. Ended Jan. 31, 2023 6 Mos. Ended Jan. 31, 2022 Cash Balance - Beginning of Period 114.5$ 157.6$ 114.1$ 147.3$ Cash Flow from Operating Activities 29.4 (3.2) 57.4 24.3 Capital Expenditures (4.3) (5.1) (8.2) (16.4) Dividends (11.4) (11.7) (22.8) (23.2) Share Repurchases (5.8) (2.8) (17.9) (21.7) Debt (Repayments) Borrowings (21.7) 16.0 (17.7) 45.0 Effect of Exchange Rates on Cash 5.2 (2.0) 2.0 (3.4) Other 2.3 (1.4) 1.3 (4.5) Cash Balance - End of Period 108.2$ 147.4$ 108.2$ 147.4$

 
Net Cash 11 STRONG BALANCE SHEET: January 31, 2023 cash = $108.2M. January 31, 2023 debt = $77.3M. Balance sheet provides flexibility for future organic and inorganic investments. $245 $240 $190 $218 $256 $278 $322 $109 $91 $64 $26 $19 $15 $31 $0 $50 $100 $150 $200 $250 $300 Q1 F'20 Q2 F'20 Q3 F'20 Q4 F'20 Q1 F'21 Q2 F'21 Q3 F'21 Q4 F'21 Q1 F'22 Q2 F'22 Q3 F'22 Q4 F'22 Q1 F'23 Q2 F'23 NET CASH (millions of USD)

 
F’23 Diluted EPS Guidance Diluted EPS Excluding Certain Items* $3.40 to $3.60 (+7.9% to +14.3% vs. F’22) GAAP Diluted EPS $3.23 to $3.43 (+11.4% to +18.3% vs. F’22) Guidance Assumptions: Organic sales growth in the mid-single digit percentages. Negative foreign currency impact of approximately 3% on net sales. The only difference between GAAP Diluted EPS and Diluted EPS Excluding Certain Items* F’23 guidance is the after-tax impact of amortization expense. Full-year income tax rate of approximately 21%. Depreciation and amortization expense of $32M to $34M. Capital expenditures of approximately $22M. Foreign currency exchange rates as of January 31, 2023. 12 * Diluted EPS Excluding Certain Items is a non-GAAP measure. See appendix.

 
Identification Solutions 13 • Revenues increased 4.4%: • Organic growth = + 7.4%. • Fx reduction = (3.0%). • Organic sales grew in the Americas and Europe. • Organic sales declined in the high-single digits in Asia primarily due to declines in China. • We are investing in geographic expansion, innovation and sales-generating resources. • Increased segment profit as a percent of sales versus the prior year was partially driven by improved gross profit margins stemming from pricing actions and efficiency gains. Q2 F’23 SUMMARY:Q2 F’23 vs. Q2 F’22 (millions of USD) $198 $194 $218 $231 $249 $245 $264 $253 $256 $256 20% 20% 22% 18% 20% 18% 20% 20% 20% 19% 0% 5% 10% 15% 20% $150 $175 $200 $225 $250 $275 $300 $325 Q1 F'21 (8.4%) Q2 F'21 (6.9%) Q3 F'21 9.8% Q4 F'21 24.5% Q1 F'22 13.2% Q2 F'22 16.0% Q3 F'22 11.8% Q4 F'22 10.8% Q1 F'23 8.6% Q2 F'23 7.4% SALES & SEGMENT PROFIT % (millions of USD) • Organic sales growth in the mid-to-high single-digit percentages in F’23. • Continued profit growth, partially offset by foreign currency headwinds as well as the negative impact of inflation on profit margins. OUTLOOK: Q2 F’23 Q2 F’22 Change Sales $ 255.7 $ 245.0 + 4.4% Segment Profit 47.4 44.1 + 7.4% Segment Profit % 18.5% 18.0% + 50 bps Organic Growth / (Decline)

 
Workplace Safety 14 • Revenues declined 3.4%: • Organic growth = + 2.8%. • Fx reduction = (6.2%). • Segment profit increased as a result of our actions to: • Streamline our product offering. • Simplify and reduce our cost structure. • Improve our price competitiveness. • Organic sales growth was strong in Europe and Australia. • Profitability increased in North America, Europe, and Australia. Q2 F’23 SUMMARY:Q2 F’23 vs. Q2 F’22 (millions of USD) • Organic sales growth in the low single-digit percentages in F’23. • Significant foreign currency headwinds. • Continued profit improvements, partially offset by inflation and foreign currency. OUTLOOK: Q2 F’23 Q2 F’22 Change Sales $ 70.6 $ 73.1 (3.4%) Segment Profit 6.2 4.5 + 38.4% Segment Profit % 8.9% 6.2% + 270 bps $79 $72 $77 $75 $73 $73 $74 $71 $66 $71 10% 5% 7% 8% 3% 6% 10% 13% 10% 9% 0% 2% 4% 6% 8% 10% 12% 14% $50 $75 $100 $125 Q1 F'21 5.5% Q2 F'21 (4.8%) Q3 F'21 (2.2%) Q4 F'21 (12.7%) Q1 F'22 (8.6%) Q2 F'22 5.2% Q3 F'22 0.9% Q4 F'22 3.3% Q1 F'23 1.2% Q2 F'23 2.8% SALES & SEGMENT PROFIT % (millions of USD) Organic Growth / (Decline)

 
Appendix Regional Financial Results

 
Americas & Asia 16 • Revenues increased 5.9% in Q2 of F’23: • Organic growth = + 6.9%. • Fx reduction = (1.0%). • Organic sales grew in the high-single digits in the Americas, driven by approximately 11% growth in Identification Solutions and a mid-single digit decline in Workplace Safety. • Although revenues declined in Workplace Safety, operating income improved significantly. • Organic sales declined in the high-single digits in Asia due to declines in China. Outside of China, organic sales grew in the low single digits. Q2 F’23 SUMMARY: Q2 F’23 vs. Q2 F’22 (millions of USD) $180 $170 $189 $196 $213 $208 $223 $218 $218 $220 20% 18% 20% 17% 18% 16% 20% 20% 19% 18% 0% 5% 10% 15% 20% $100 $150 $200 $250 Q1 F'21 (7.9%) (0.4%) - Q2 F'21 (7.3%) 0.1% - Q3 F'21 7.8% 1.1% - Q4 F'21 18.0% 1.9% 3.7% Q1 F'22 9.3% 0.9% 8.3% Q2 F'22 13.9% 0% 8.1% Q3 F'22 9.2% (0.1%) 8.6% Q4 F'22 9.1% (1.0%) 2.8% Q1 F'23 4.0% (1.4%) - Q2 F'23 6.9% (1.0%) - SALES & SEGMENT PROFIT % (millions of USD) Q2 F’23 Q2 F’22 Change Sales $ 220.1 $ 207.8 + 5.9% Segment Profit 40.2 32.3 + 24.3% Segment Profit % 18.3% 15.6% + 270 bps Organic For. Curr. Acquisitions YTD F’23 vs. YTD F’22 (millions of USD) YTD F’23 YTD F’22 Change Sales $ 438.6 $ 420.7 + 4.2% Segment Profit 81.3 69.6 + 16.8% Segment Profit % 18.5% 16.6% + 190 bps

 
Europe & Australia 17 • Revenues declined 3.7% in Q2 of F’23: • Organic growth = + 5.2%. • Fx reduction = (8.9%). • Organic sales grew in the mid-single digits in Europe, driven by mid-single digit growth in Identification Solutions and low-single digit growth in Workplace Safety. • Organic sales grew in the mid-teens in Australia which was driven by a combination of increased volume and pricing. • Segment profit declined due to foreign currency and increased costs that were not fully offset by price increases in Europe. Q2 F’23 SUMMARY: Q2 F’23 vs. Q2 F’22 (millions of USD) $98 $95 $106 $110 $109 $110 $116 $106 $104 $106 13% 12% 15% 14% 13% 15% 14% 16% 16% 13% 0% 5% 10% 15% $50 $100 $150 Q1 F'21 1.5% 5.6% - Q2 F'21 (4.4%) 7.0% - Q3 F'21 4.2% 11.0% - Q4 F'21 3.2% 8.6% 6.3% Q1 F'22 2.6% 0.6% 8.2% Q2 F'22 11.7% (5.8%) 9.6% Q3 F'22 8.5% (8.2%) 8.7% Q4 F'22 8.8% (13.9%) 1.8% Q1 F'23 12.8% (17.0%) - Q2 F'23 5.2% (8.9%) - SALES & SEGMENT PROFIT % (millions of USD) Q2 F’23 Q2 F’22 Change Sales $ 106.2 $ 110.2 (3.7%) Segment Profit 13.5 16.3 (17.5%) Segment Profit % 12.7% 14.8% (210 bps) Organic For. Curr. Acquisitions YTD F’23 vs. YTD F’22 (millions of USD) YTD F’23 YTD F’22 Change Sales $ 210.3 $ 218.8 (3.9%) Segment Profit 30.2 30.1 + 0.3% Segment Profit % 14.4% 13.8% + 60 bps

 
Investor Relations Brady Contact: Ann Thornton Investor Relations 414-438-6887 Ann_Thornton@bradycorp.com See our website at www.bradycorp.com/investors 18

 
Appendix GAAP to Non-GAAP Reconciliations

 
Non-GAAP Reconciliations 20 2023 2022 2023 2022 48,510$ 42,042$ 98,845$ 86,738$ Amortization expense 3,258 3,749 6,889 7,556 51,768$ 45,791$ 105,734$ 94,294$ 2023 2022 2023 2022 10,524$ 8,227$ 21,418$ 17,877$ Amortization expense 769 887 1,634 1,787 11,293$ 9,114$ 23,052$ 19,664$ Income before income taxes Income Before Income Taxes Excluding Certain Items (non-GAAP measure) Income Tax Expense Excluding Certain Items: Brady is presenting the non-GAAP measure, "Income Tax Expense Excluding Certain Items." This is not a calculation based upon GAAP. The amounts included in this non-GAAP measure are derived from amounts included in the Consolidated Financial Statements and supporting footnote disclosures. We do not view these items to be part of our ongoing results. We believe this measure provides an important perspective of underlying business trends and results and provides a more comparable measure from year to year. The table below provides a reconciliation of the GAAP measure of Income tax expense to the non-GAAP measure of Income Tax Expense Excluding Certain Items: Six months ended January 31, Income tax expense (GAAP measure) Six months ended January 31, GAAP to NON-GAAP MEASURES (Unaudited; Dollars in Thousands, Except Per Share Amounts) In accordance with the U.S. Securities and Exchange Commission’s Regulation G, the following provides definitions of the non-GAAP measures used in the earnings release and the reconciliation to the most closely related GAAP measure. Income Before Income Taxes Excluding Certain Items: Brady is presenting the non-GAAP measure, "Income Before Income Taxes Excluding Certain Items." This is not a calculation based upon GAAP. The amounts included in this non-GAAP measure are derived from amounts included in the Consolidated Financial Statements and supporting footnote disclosures. We do not view these items to be part of our ongoing results. We believe this profit measure provides an important perspective of underlying business trends and results and provides a more comparable measure from year to year. The table below provides a reconciliation of the GAAP measure of Income before income taxes to the non-GAAP measure of Income Before Income Taxes Excluding Certain Items: Three months ended January 31, Three months ended January 31, Income Tax Expense Excluding Certain Items (non-GAAP measure)

 
Non-GAAP Reconciliations 21 2023 2022 2023 2022 37,986$ 33,815$ 77,427$ 68,861$ Amortization expense 2,489 2,862 5,255 5,769 40,475$ 36,677$ 82,682$ 74,630$ 2023 2022 2023 2022 $ 0.76 $ 0.65 $ 1.55 $ 1.32 Amortization expense 0.05 0.05 0.10 0.11 0.81$ 0.70$ 1.65$ 1.43$ Diluted EPS Excluding Certain Items Guidance: Low High Earnings per diluted Class A Common Share (GAAP measure) $ 3.23 $ 3.43 Amortization expense 0.17 0.17 Diluted EPS Excluding Certain Items (non-GAAP measure) 3.40$ 3.60$ Fiscal 2023 Expectations GAAP to NON-GAAP MEASURES (Unaudited; Dollars in Thousands, Except Per Share Amounts) In accordance with the U.S. Securities and Exchange Commission’s Regulation G, the following provides definitions of the non-GAAP measures used in the earnings release and the reconciliation to the most closely related GAAP measure. Diluted EPS Excluding Certain Items (non-GAAP measure) Three months ended January 31, Net Income Excluding Certain Items: Brady is presenting the non-GAAP measure, "Net Income Excluding Certain Items." This is not a calculation based upon GAAP. The amounts included in this non-GAAP measure are derived from amounts included in the Consolidated Financial Statements and supporting footnote disclosures. We do not view these items to be part of our ongoing results. We believe this measure provides an important perspective of underlying business trends and results and provides a more comparable measure from year to year. The table below provides a reconciliation of the GAAP measure of Net income to the non-GAAP measure of Net Income Excluding Certain Items: Six months ended January 31, Net income (GAAP measure) Net Income Excluding Certain Items (non-GAAP measure) Three months ended January 31, Diluted EPS Excluding Certain Items: Brady is presenting the non-GAAP measure, "Diluted EPS Excluding Certain Items." This is not a calculation based upon GAAP. The amounts included in this non-GAAP measure are derived from amounts included in the Consolidated Financial Statements. We do not view these items to be part of our ongoing results. We believe this measure provides an important perspective of underlying business trends and results and provides a more comparable measure from year to year. The table below provides a reconciliation of the GAAP measure of Net income per Class A Nonvoting Common Share to the non-GAAP measure of Diluted EPS Excluding Certain Items: Six months ended January 31, Net income per Class A Nonvoting Common Share (GAAP measure)