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Brady Corporation Reports Fiscal 2013 Second Quarter Results And Announces Reorganization

Stocks in this article: BRC

Commentary and Guidance:

“In the second quarter of fiscal 2013, we experienced slight organic sales growth in the Americas and we experienced a 5.0 percent organic sales decline in EMEA due to a challenging European economy. Our performance in Asia-Pacific was weaker than expected due to challenges in both our Australian business and our Thailand hard-disk drive business,” stated Brady’s President and Chief Executive Officer, Frank M. Jaehnert. “The acquisition of PDC, a leader in the U.S. healthcare identification space, is a significant step forward in our move into faster-growing end businesses with less cyclicality. PDC provides an important anchor position for Brady in the attractive healthcare sector, which is a sector in which we plan continued investment.”

Mr. Jaehnert continued, “We believe that our reorganization around global business platforms will create better alignment of resources required to deliver increasing levels of organic sales growth. We will also be able to create a leaner, flatter organization that is closer to the customer, allowing us to reduce costs by approximately $25 million to $30 million annually, some of which will be reinvested into growth initiatives. Costs to implement this reorganization are expected to range from $15 million to $18 million. The global business reorganization will be effective May 1, 2013 with most of the restructuring completed by the end of fiscal 2013. Looking forward, I am confident that the actions we are taking, including the acquisition of PDC and the reorganization around global businesses will accelerate future sales growth and increase future profitability.”

“We anticipate continuing pressure on organic sales for the remainder of fiscal 2013 as the global macro-economy remains sluggish,” said Brady’s Chief Financial Officer, Thomas J. Felmer. “Based on what we see for the remainder of the year, and including $0.05 to $0.07 of anticipated earnings from PDC as well as some savings from restructuring activities in the fourth quarter, we expect earnings per diluted Class A Common Share to be towards the lower end of our prior guidance of between $2.20 and $2.40, exclusive of non-routine items, restructuring charges, and other items, for our full-year fiscal 2013, with the fourth quarter being stronger than the third quarter. This is based on exchange rates as of January 31, 2013 and a full-year income tax rate, excluding the impact of non-routine items, in the mid-to-upper 20 percent range.”

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