Brady Q1 Results Miss Estimates, Backs 2015 Outlook

(RTTNews) - Identification solutions provider Brady Corp. (BRC) reported Thursday a profit for the first quarter that declined from last year, despite improved sales and lower charges, reflecting lower segment margins. Both adjusted earnings per share and quarterly sales missed analysts' expectations. The company also reaffirmed earnings forecast for the full-year 2015.

"We were encouraged by our revenue growth in the first quarter, which marks the third consecutive quarter of organic sales growth. Although we had organic sales growth, we continued to incur costs related to the consolidation of our manufacturing facilities and have been experiencing challenges in terms of sales mix," President and CEO Michael Nauman said in a statement.

The Milwaukee, Wisconsin-based company reported net earnings of $13.58 million or $0.26 per Class A Nonvoting share for the first quarter, lower than $23.93 million or $0.46 per Class A Nonvoting share in the prior-year quarter.

Earnings from continuing operations declined to $15.50 million or $0.30 per Class A share from $18.13 million or $0.35 per Class A share last year.

Results for the latest quarter include restructuring charges of $0.06 per share, while the year-ago quarter included $0.09 per share on charges.

Excluding items, adjusted net earnings from continuing operations for the quarter was $18.45 million or $0.36 per Class A share, compared to $22.77 million or $0.43 per Class A share in the year-ago quarter.

On average, seven analysts polled by Thomson Reuters expected the company to report earnings of $0.40 per share for the quarter. Analysts estimates typically exclude special items.

Net sales for the quarter edged up 0.9 percent to $310.24 million from $307.53 million in the same quarter last year, but missed six Wall Street analysts' consensus estimate of $310.27 million by a whisker.

Organic sales growth was 2.4 percent, with foreign currency translation reducing sales by 1.5 percent. There was consistent organic growth in both workplace safety and identification solutions.

ID solutions sales grew 1.2 percent to $212.10 million, and workplace safety sales edged up 0.2 percent to $98.14 million from the year-ago quarter.

Segment profit margin as a percent of sales contracted 350 basis points to 19.0 percent from last year's 22.5 percent.

Total operating expenses for the quarter decreased to $123.19 million from $128.16 million in the prior-year quarter.

On Wednesday, the company's board declared a quarterly dividend of $0.20 per share, payable on January 30 to shareholders of record at the close of business on January 9, 2015.

Looking ahead to the fiscal 2015, the company continues to expect adjusted earnings from continuing operations in a range of $1.50 to $1.70 per Class A nonvoting share, on organic sales growth in the low-single-digits.

Street is currently looking for full-year 2015 earnings of $1.57 per share on annual sales growth of 1.3 percent to $1.24 billion.

"We are focused on executing business fundamentals to drive organic sales growth and improve profitability while investing in research and development, focusing on selected markets to drive organic growth, and building an improved, scalable digital platform that will generate value for Brady and its customers," Nauman added.

The company added that it expects to incur additional incremental costs from the facility consolidation activities in the near-term and expects to complete its facility consolidation activities by July 31, 2015.

In Thursday's regular trading session, BRC is currently trading at $22.99, down $0.51 or 2.17% on a volume of 5,516 shares.