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Jan 31, 2022
Brady Q2 2022 Earnings Report
Brady's financial performance was solid, marked by strong revenue growth and increased earnings per share.
Key Takeaways
Brady Corporation reported a strong second quarter in fiscal year 2022, with a 19.6% increase in sales and a 10.2% increase in diluted EPS. The company's Identification Solutions division drove much of the sales growth, while the Workplace Safety business also returned to organic sales growth. Brady is managing inflationary pressures and expects continued growth and improved profitability.
Sales for the quarter increased 19.6 percent, driven by organic sales growth and acquisitions.
Income before income taxes increased 6.7 percent compared to the same quarter last year.
Diluted EPS increased 10.2 percent compared to the same quarter of the prior year.
The company is managing inflation in wages, freight, utilities, and raw materials, expecting it to pressure gross profit margins in the short-term.
Brady
Brady
Forward Guidance
Brady is modifying its Diluted EPS Excluding Amortization guidance from a range of $3.12 to $3.32 per share to a range of $3.00 to $3.15 for the full year ending July 31, 2022.
Positive Outlook
- Expect Diluted EPS Excluding Amortization to improve by 9% to 15% for the full year ending July 31, 2022 when compared to the adjusted fiscal 2021 diluted earnings per share of $2.75.
- Full-year income tax rate of approximately 20 percent.
- Depreciation and amortization expense ranging from $34 million to $36 million.
- Capital expenditures, excluding facility purchases are expected to range from $20 million to $25 million during the year ending July 31, 2022.
- The Company’s fiscal 2022 guidance is based on foreign currency exchange rates as of January 31, 2022 and assumes continued economic growth.
Challenges Ahead
- Inflationary forces compressed Brady’s gross profit margin during this period.
- Expect these cost pressures to continue for at least the short-term before price increases and efficiency actions can fully offset these inflationary forces.
- Reduction of $0.05 due to the strengthening of the U.S. dollar versus other major currencies.
- Unknown economic outlook
- Unspecified risks