Brady Earnings 2021-01-31

Balance Sheet	Income Statement	Cash Flow
Assets, Equity	Rev, G Profit, Net Income	Ops, Inv, Fin

brc-20210131

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q


☑			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended January 31, 2021


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period from to

Commission File Number 1-14959

BRADY CORPORATION

(Exact name of registrant as specified in its charter)


Wisconsin						39-0178960
(State or other jurisdiction of incorporation or organization)						(I.R.S. 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, including area code)

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 (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☑

Accelerated filer

☐

Emerging growth company

☐

Non-accelerated filer

☐

Smaller reporting company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

As of February 16, 2021, there were 48,486,758 outstanding shares of Class A Nonvoting Common Stock and 3,538,628 shares of Class B Voting Common Stock. The Class B Voting Common Stock, all of which is held by affiliates of the Registrant, is the only voting stock.

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FORM 10-Q

BRADY CORPORATION

INDEX

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

BRADY CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in Thousands)


	January 31, 2021		July 31, 2020
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	277,588	$	217,643
Accounts receivable, net of allowances for credit losses of $7,450 and $7,157, respectively	154,052		146,181
Inventories	122,922		135,662
Prepaid expenses and other current assets	12,774		9,962
Total current assets	567,336		509,448
Property, plant and equipment—net	122,088		115,068
Goodwill	420,726		416,034
Other intangible assets	19,809		22,334
Deferred income taxes	8,261		8,845
Operating lease assets	38,849		41,899
Other assets	30,813		28,838
Total	$	1,207,882	$	1,142,466
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	67,483	$	62,547
Accrued compensation and benefits	52,098		41,546
Taxes, other than income taxes	8,518		8,057
Accrued income taxes	9,393		8,652
Current operating lease liabilities	16,534		15,304
Other current liabilities	47,518		49,782
Total current liabilities	201,544		185,888
Long-term operating lease liabilities	27,134		31,982
Other liabilities	59,869		61,524
Total liabilities	288,547		279,394
Stockholders’ equity:
Class A nonvoting common stock—Issued 51,261,487 shares, and outstanding 48,486,758 and 48,456,954 shares, respectively	513		513
Class B voting common stock—Issued and outstanding, 3,538,628 shares	35		35
Additional paid-in capital	334,077		331,761
Retained earnings	745,960		704,456
Treasury stock—2,774,729 and 2,804,533 shares, respectively, of Class A nonvoting common stock, at cost	(109,789)		(107,216)
Accumulated other comprehensive loss	(51,461)		(66,477)
Total stockholders’ equity	919,335		863,072
Total	$	1,207,882	$	1,142,466

See Notes to Condensed Consolidated Financial Statements.

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BRADY CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Dollars in Thousands, Except Per Share Amounts, Unaudited)


	Three months ended January 31,				Six months ended January 31,
	2021		2020		2021		2020
Net sales	$	265,838	$	276,665	$	543,065	$	563,612
Cost of goods sold	136,316		137,538		278,115		283,080
Gross margin	129,522		139,127		264,950		280,532
Operating expenses:
Research and development	9,876		10,517		20,079		21,484
Selling, general and administrative	82,234		87,366		165,271		176,913
Total operating expenses	92,110		97,883		185,350		198,397
Operating income	37,412		41,244		79,600		82,135
Other income (expense):
Investment and other income	2,036		1,760		2,191		3,140
Interest expense	(51)		(647)		(157)		(1,348)
Income before income taxes and losses of unconsolidated affiliate	39,397		42,357		81,634		83,927
Income tax expense	8,206		8,804		16,788		12,876
Income before losses of unconsolidated affiliate	31,191		33,553		64,846		71,051
Equity in losses of unconsolidated affiliate	(331)		—		(505)		—
Net income	$	30,860	$	33,553	$	64,341	$	71,051
Net income per Class A Nonvoting Common Share:
Basic	$	0.59	$	0.63	$	1.24	$	1.33
Diluted	$	0.59	$	0.62	$	1.23	$	1.32
Dividends	$	0.22	$	0.22	$	0.44	$	0.44
Net income per Class B Voting Common Share:
Basic	$	0.59	$	0.63	$	1.22	$	1.32
Diluted	$	0.59	$	0.62	$	1.21	$	1.31
Dividends	$	0.22	$	0.22	$	0.42	$	0.42
Weighted average common shares outstanding:
Basic	52,018		53,320		52,020		53,232
Diluted	52,282		53,827		52,288		53,781

See Notes to Condensed Consolidated Financial Statements.

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BRADY CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Dollars in Thousands, Unaudited)


	Three months ended January 31,				Six months ended January 31,
	2021		2020		2021		2020
Net income	$	30,860	$	33,553	$	64,341	$	71,051
Other comprehensive income (loss):
Foreign currency translation adjustments	19,074		(1,009)		14,882		(959)

Cash flow hedges:
Net gain recognized in other comprehensive income (loss)	451		363		1,148		559
Reclassification adjustment for losses (gains) included in net income	60		(105)		271		(486)
	511		258		1,419		73
Pension and other post-retirement benefits:
Net loss recognized in other comprehensive income (loss)	(32)		(309)		(32)		(309)
Net actuarial gain amortization	(95)		(105)		(201)		(210)
	(127)		(414)		(233)		(519)

Other comprehensive income (loss), before tax	19,458		(1,165)		16,068		(1,405)
Income tax (expense) benefit related to items of other comprehensive income (loss)	(1,251)		(42)		(1,052)		169
Other comprehensive income (loss), net of tax	18,207		(1,207)		15,016		(1,236)
Comprehensive income	$	49,067	$	32,346	$	79,357	$	69,815

See Notes to Condensed Consolidated Financial Statements.

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BRADY CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in Thousands, Unaudited)


	Six months ended January 31,
	2021		2020
Operating activities:
Net income	$	64,341	$	71,051
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	11,421		11,672
Stock-based compensation expense	5,471		5,384
Deferred income taxes	(3,866)		1,272
Equity in losses of unconsolidated affiliate	505		—
Other	121		1,664
Changes in operating assets and liabilities:
Accounts receivable	(4,157)		6,209
Inventories	15,018		(1,311)
Prepaid expenses and other assets	(2,436)		(2,621)
Accounts payable and accrued liabilities	11,990		(39,777)
Income taxes	481		(436)
Net cash provided by operating activities	98,889		53,107

Investing activities:
Purchases of property, plant and equipment	(14,511)		(13,100)
Other	(1,881)		(3,406)
Net cash used in investing activities	(16,392)		(16,506)

Financing activities:
Payment of dividends	(22,837)		(23,136)
Proceeds from exercise of stock options	471		4,686
Payments for employee taxes withheld from stock-based awards	(2,638)		(7,733)
Purchase of treasury stock	(3,593)		—
Other	(231)		134
Net cash used in financing activities	(28,828)		(26,049)

Effect of exchange rate changes on cash	6,276		179

Net increase in cash and cash equivalents	59,945		10,731
Cash and cash equivalents, beginning of period	217,643		279,072

Cash and cash equivalents, end of period	$	277,588	$	289,803

See Notes to Condensed Consolidated Financial Statements.

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BRADY CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Six Months Ended January 31, 2021

(Unaudited)

(In thousands, except share and per share amounts)

NOTE A — Basis of Presentation

The condensed consolidated financial statements included herein have been prepared by Brady Corporation and subsidiaries (the "Company," "Brady," "we," or "our") without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. In the opinion of the Company, the foregoing statements contain all adjustments, consisting only of normal recurring adjustments necessary to present fairly the financial position of the Company as of January 31, 2021 and July 31, 2020, its results of operations and comprehensive income for the three and six months ended January 31, 2021 and 2020, and cash flows for the six months ended January 31, 2021 and 2020. The condensed consolidated balance sheet as of July 31, 2020, has been derived from the audited consolidated financial statements as of that date. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts therein. Due to the inherent uncertainty involved in making estimates, actual results in future periods may differ from the estimates.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been omitted pursuant to rules and regulations of the Securities and Exchange Commission. Accordingly, the condensed consolidated financial statements do not include all of the information and footnotes required by GAAP for complete financial statement presentation. It is suggested that these condensed consolidated financial statements be read in conjunction with the consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended July 31, 2020.

NOTE B — New Accounting Pronouncements

Adopted Standards

In June 2016, the FASB issued ASU 2016-13, "Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments," which changes the impairment model for most financial instruments. Prior guidance required the recognition of credit losses based on an incurred loss impairment methodology that reflected losses once the losses were probable. Under ASU 2016-13, the Company is required to use a current expected credit loss model ("CECL") that immediately recognizes an estimate of credit losses that are expected to occur over the life of the financial instruments that are in the scope of this update, including trade receivables. The Company adopted ASU 2016-13 effective August 1, 2020, which did not have a material impact on its consolidated financial statements.

In January 2017, the FASB issued ASU 2017-04, "Goodwill and Other, Simplifying the Test for Goodwill Impairment." The new guidance removes Step 2 of the goodwill impairment test, which required a hypothetical purchase price allocation. A goodwill impairment is now the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. All other goodwill impairment guidance remains largely unchanged. The Company adopted ASC 2017-04 effective August 1, 2020. This guidance only impacts the Company's consolidated financial statements if there is a future impairment of goodwill.

Standards not yet adopted

In December 2019, the FASB issued ASU 2019-12, "Income Taxes - Simplifying the Accounting for Income Taxes (Topic 740)." The new guidance removes certain exceptions to the general principles in ASC 740 such as recognizing deferred taxes for equity investments, the incremental approach to performing intraperiod tax allocation and calculating income taxes in interim periods. The standard also simplifies accounting for income taxes under U.S. GAAP by clarifying and amending existing guidance, including the recognition of deferred taxes for goodwill, the allocation of taxes to members of a consolidated group and requiring that an entity reflect the effect of enacted changes in tax laws or rates in the annual effective tax rate computation in the interim period that includes the enactment date. This guidance is effective for annual periods beginning after December 15, 2020, and interim periods thereafter. Early adoption is permitted. The Company is currently evaluating the impact that the adoption of this ASU will have on the consolidated financial statements and related disclosures.

In March 2020, the FASB issued ASU 2020-04, "Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting." Subject to meeting certain criteria, the new guidance provides optional expedients and exceptions to applying contract modification accounting under existing U.S. GAAP, to address the expected

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phase out of the London Inter-bank Offered Rate ("LIBOR") by the end of 2021. This guidance was effective upon issuance and allows application to contract changes as early as January 1, 2020. Some of the Company's contracts with respect to its borrowing agreements already contain comparable alternative reference rates that would automatically take effect upon the phasing out of LIBOR. The Company is in the process of reviewing its bank facilities and commercial contracts that utilize LIBOR as the reference rate and is currently evaluating the potential impact that the adoption of this ASU will have on the consolidated financial statements and related disclosures.

NOTE C — Additional Balance Sheet Information

Inventories

Inventories as of January 31, 2021, and July 31, 2020, consisted of the following:


	January 31, 2021		July 31, 2020
Finished products	$	79,100	$	85,547
Work-in-process	19,262		24,044
Raw materials and supplies	24,560		26,071
Total inventories	$	122,922	$	135,662

Property, plant and equipment

Property, plant and equipment is presented net of accumulated depreciation in the amount of $272,945 and $276,248 as of January 31, 2021, and July 31, 2020, respectively.

NOTE D — Other Intangible Assets

Other intangible assets as of January 31, 2021 and July 31, 2020, consisted of the following:


	January 31, 2021							July 31, 2020
	Weighted Average Amortization Period (Years)	Gross Carrying Amount		Accumulated Amortization		Net Book Value		Weighted Average Amortization Period (Years)	Gross Carrying Amount		Accumulated Amortization		Net Book Value
Definite-lived other intangible assets:
Customer relationships and tradenames	9	$	45,498	$	(35,431)	$	10,067	9	$	45,385	$	(32,670)	$	12,715
Indefinite-lived other intangible assets:
Tradenames	N/A	9,742		—		9,742		N/A	9,619		—		9,619
Total		$	55,240	$	(35,431)	$	19,809		$	55,004	$	(32,670)	$	22,334

The change in the gross carrying amount of other intangible assets as of January 31, 2021 compared to July 31, 2020 was mainly due to the effect of currency fluctuations during the six-month period.

Amortization expense of intangible assets was $1,353 and $1,291 for the three months ended January 31, 2021 and 2020, respectively, and $2,704 and $2,582 for the six months ended January 31, 2021 and 2020, respectively. Amortization expense over each of the next three fiscal years is projected to be $5,407, $5,123, and $2,241 for the fiscal years ending July 31, 2021, 2022, and 2023. No amortization expense for intangible assets is projected after July 31, 2023.

NOTE E — Leases

The Company leases certain manufacturing facilities, warehouses and office space, computer equipment, and vehicles accounted for as operating leases. Lease terms typically range from one year to ten years. As of January 31, 2021, the Company did not have any finance leases.

Operating lease expense was $4,169 and $4,274 for the three months ended January 31, 2021 and 2020, respectively, and $8,242 and $9,678 for the six months ended January 31, 2021 and 2020, respectively. Operating lease expense was recognized in either "Cost of goods sold" or "Selling, general and administrative" expenses in the condensed consolidated statements of income, based on the nature of the lease. Short-term lease expense, variable lease expenses, and sublease income was immaterial to the condensed consolidated statements of income for the three and six months ended January 31, 2021 and 2020.

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Supplemental cash flow information related to the Company's operating leases for the six months ended January 31, 2021 and 2020, was as follows:


	Six months ended January 31,
	2021		2020
Operating cash outflows from operating leases	$	8,762	$	8,216
Operating lease assets obtained in exchange for new operating lease liabilities	3,297		10,637

NOTE F – Stockholders' Equity

The following table illustrates the changes in the balances of each component of stockholders' equity for the three months ended January 31, 2021:


	Common Stock		Additional Paid-In Capital		Retained Earnings		Treasury Stock		Accumulated Other Comprehensive Loss		Total Stockholders' Equity
Balances at October 31, 2020	$	548	$	332,121	$	726,546	$	(109,146)	$	(69,668)	$	880,401
Net income	—		—		30,860		—		—		30,860
Other comprehensive income, net of tax	—		—		—		—		18,207		18,207
Issuance of shares of Class A Common Stock under stock plan	—		59		—		230		—		289
Stock-based compensation expense	—		1,897		—		—		—		1,897
Repurchase of shares of Class A Common Stock	—		—		—		(873)		—		(873)
Cash dividends on Common Stock:
Class A — $0.2200 per share	—		—		(10,667)		—		—		(10,667)
Class B — $0.2200 per share	—		—		(779)		—		—		(779)
Balances at January 31, 2021	$	548	$	334,077	$	745,960	$	(109,789)	$	(51,461)	$	919,335

The following table illustrates the changes in the balances of each component of stockholders' equity for the six months ended January 31, 2021:


	Common Stock		Additional Paid-In Capital		Retained Earnings		Treasury Stock		Accumulated Other Comprehensive Loss		Total Stockholders' Equity
Balances at July 31, 2020	$	548	$	331,761	$	704,456	$	(107,216)	$	(66,477)	$	863,072
Net income	—		—		64,341		—		—		64,341
Other comprehensive income, net of tax	—		—		—		—		15,016		15,016
Issuance of shares of Class A Common Stock under stock plan	—		(3,187)		—		1,020		—		(2,167)
Tax benefit and withholdings from deferred compensation distributions	—		32		—		—		—		32
Stock-based compensation expense	—		5,471		—		—		—		5,471
Repurchase of shares of Class A Common Stock	—		—		—		(3,593)		—		(3,593)
Cash dividends on Common Stock:
Class A — $0.4400 per share	—		—		(21,338)		—		—		(21,338)
Class B — $0.4234 per share	—		—		(1,499)		—		—		(1,499)
Balances at January 31, 2021	$	548	$	334,077	$	745,960	$	(109,789)	$	(51,461)	$	919,335

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The following table illustrates the changes in the balances of each component of stockholders' equity for the three months ended January 31, 2020:


	Common Stock		Additional Paid-In Capital		Retained Earnings		Treasury Stock		Accumulated Other Comprehensive Loss		Total Stockholders' Equity
Balances at October 31, 2019	$	548	$	327,241	$	663,808	$	(43,779)	$	(71,283)	$	876,535
Net income	—		—		33,553		—		—		33,553
Other comprehensive loss, net of tax	—		—		—		—		(1,207)		(1,207)
Issuance of shares of Class A Common Stock under stock plan	—		187		—		624		—		811
Tax benefit and withholdings from deferred compensation distributions	—		69		—		—		—		69
Stock-based compensation expense	—		1,766		—		—		—		1,766
Cash dividends on Common Stock:
Class A — $0.2175 per share	—		—		(10,833)		—		—		(10,833)
Class B — $0.2175 per share	—		—		(770)		—		—		(770)
Balances at January 31, 2020	$	548	$	329,263	$	685,758	$	(43,155)	$	(72,490)	$	899,924

The following table illustrates the changes in the balances of each component of stockholders' equity for the six months ended January 31, 2020:


	Common Stock		Additional Paid-In Capital		Retained Earnings		Treasury Stock		Accumulated Other Comprehensive Loss		Total Stockholders' Equity
Balances at July 31, 2019	$	548	$	329,969	$	637,843	$	(46,332)	$	(71,254)	$	850,774
Net income	—		—		71,051		—		—		71,051
Other comprehensive loss, net of tax	—		—		—		—		(1,236)		(1,236)
Issuance of shares of Class A Common Stock under stock plan	—		(6,223)		—		3,177		—		(3,046)
Tax benefit and withholdings from deferred compensation distributions	—		133		—		—		—		133
Stock-based compensation expense	—		5,384		—		—		—		5,384
Cash dividends on Common Stock:
Class A — $0.4350 per share	—		—		(21,655)		—		—		(21,655)
Class B — $0.4184 per share	—		—		(1,481)		—		—		(1,481)
Balances at January 31, 2020	$	548	$	329,263	$	685,758	$	(43,155)	$	(72,490)	$	899,924

NOTE G — Accumulated Other Comprehensive Loss

Other comprehensive loss consists of foreign currency translation adjustments which includes the settlements of net investment hedges, unrealized gains and losses from cash flow hedges, and the unamortized gain on post-retirement plans, net of their related tax effects.

The following table illustrates the changes in the balances of each component of accumulated other comprehensive loss, net of tax, for the six months ended January 31, 2021:


	Unrealized (loss) gain on cash flow hedges		Unamortized gain on post-retirement plans		Foreign currency translation adjustments		Accumulated other comprehensive loss
Beginning balance, July 31, 2020	$	(200)	$	2,181	$	(68,458)	$	(66,477)
Other comprehensive income (loss) before reclassification	1,215		(23)		13,585		14,777
Amounts reclassified from accumulated other comprehensive loss	203		36		—		239
Ending balance, January 31, 2021	$	1,218	$	2,194	$	(54,873)	$	(51,461)

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The decrease in accumulated other comprehensive loss as of January 31, 2021 compared to July 31, 2020, was primarily due to the depreciation of the U.S. dollar against certain other currencies during the six-month period.

The following table illustrates the changes in the balances of each component of accumulated other comprehensive loss, net of tax, for the six months ended January 31, 2020:


	Unrealized gain on cash flow hedges		Unamortized gain on post-retirement plans		Foreign currency translation adjustments		Accumulated other comprehensive loss
Beginning balance, July 31, 2019	$	707	$	2,800	$	(74,761)	$	(71,254)
Other comprehensive income (loss) before reclassification	468		(216)		(913)		(661)
Amounts reclassified from accumulated other comprehensive loss	(365)		(210)		—		(575)
Ending balance, January 31, 2020	$	810	$	2,374	$	(75,674)	$	(72,490)

The increase in accumulated other comprehensive loss as of January 31, 2020, compared to July 31, 2019, was primarily due to the appreciation of the U.S. dollar against certain other currencies during the six-month period.

Of the amounts reclassified from accumulated other comprehensive loss during the six months ended January 31, 2021 and 2020, unrealized (losses) gains on cash flow hedges were reclassified to "Cost of goods sold" and net unamortized gains on post-retirement plans were reclassified into "Investment and other income" on the condensed consolidated statements of income.

The following table illustrates the income tax (expense) benefit on the components of other comprehensive income (loss) for the three and six months ended January 31, 2021 and 2020:


	Three months ended January 31,				Six months ended January 31,
	2021		2020		2021		2020
Income tax (expense) benefit related to items of other comprehensive income (loss):
Cash flow hedges	$	47	$	(5)	$	(1)	$	30
Pension and other post-retirement benefits	6		93		246		93
Other income tax adjustments and currency translation	(1,304)		(130)		(1,297)		46
Income tax (expense) benefit related to items of other comprehensive income (loss)	$	(1,251)	$	(42)	$	(1,052)	$	169

NOTE H — Revenue Recognition

The Company recognizes revenue when control of the product or service transfers to the customer at an amount that represents the consideration expected to be received in exchange for those products and services. The Company’s revenues are primarily from the sale of identification solutions and workplace safety products that are shipped and billed to customers. All revenue is from contracts with customers and is included in “Net sales” on the condensed consolidated statements of income. See Note I, “Segment Information,” for the Company’s disaggregated revenue disclosure.

The Company offers extended warranty coverage that is included in the sales price of certain products, which it accounts for as service warranties. The Company accounts for the deferred revenue associated with extended service warranties as a contract liability. The balance of contract liabilities associated with service warranty performance obligations was $2,531 and $2,559 as of January 31, 2021 and July 31, 2020, respectively. The current portion and non-current portion of contract liabilities are included in “Other current liabilities” and “Other liabilities," respectively, on the condensed consolidated balance sheets. The Company recognized revenue of $294 and $316 during the three months ended January 31, 2021 and 2020, respectively, and $591 and $631 during the six months ended January 31, 2021 and 2020, respectively, that was included in the contract liability balance at the beginning of the respective period from the amortization of extended service warranties. Of the contract liability balance outstanding at January 31, 2021, the Company expects to recognize 22% by the end of fiscal 2021, an additional 35% by the end of fiscal 2022, and the remaining balance thereafter.

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NOTE I — Segment Information

The Company is organized and managed on a global basis within three operating segments, Identification Solutions ("IDS"), Workplace Safety ("WPS"), and People Identification ("PDC"), which aggregate into two reportable segments that are organized around businesses with consistent products and services: IDS and WPS. The IDS and PDC operating segments aggregate into the IDS reporting segment, while the WPS reporting segment is comprised solely of the Workplace Safety operating segment.

The following is a summary of net sales by segment and geographic region for the three and six months ended January 31, 2021 and 2020:


	Three months ended January 31,				Six months ended January 31,
	2021		2020		2021		2020
Net sales:
ID Solutions
Americas	$	124,970	$	137,909	$	258,237	$	287,271
Europe	44,040		45,319		86,622		88,701
Asia	25,217		22,134		47,560		44,377
Total	$	194,227	$	205,362	$	392,419	$	420,349
Workplace Safety
Americas	$	20,200	$	23,636	$	44,231	$	47,939
Europe	40,165		37,002		81,431		73,027
Australia	11,246		10,665		24,984		22,297
Total	$	71,611	$	71,303	$	150,646	$	143,263
Total Company
Americas	$	145,170	$	161,545	$	302,468	$	335,210
Europe	84,205		82,321		168,053		161,728
Asia-Pacific	36,463		32,799		72,544		66,674
Total	$	265,838	$	276,665	$	543,065	$	563,612

The following is a summary of segment profit for the three and six months ended January 31, 2021 and 2020:


	Three months ended January 31,				Six months ended January 31,
	2021		2020		2021		2020
Segment profit:
ID Solutions	$	39,000	$	40,655	$	79,279	$	83,098
Workplace Safety	3,463		5,455		11,451		10,612
Total Company	$	42,463	$	46,110	$	90,730	$	93,710

The following is a reconciliation of segment profit to income before income taxes and losses of unconsolidated affiliate for the three and six months ended January 31, 2021 and 2020:


	Three months ended January 31,				Six months ended January 31,
	2021		2020		2021		2020
Total profit from reportable segments	$	42,463	$	46,110	$	90,730	$	93,710
Unallocated amounts:
Administrative costs	(5,051)		(4,866)		(11,130)		(11,575)
Investment and other income	2,036		1,760		2,191		3,140
Interest expense	(51)		(647)		(157)		(1,348)
Income before income taxes and losses of unconsolidated affiliate	$	39,397	$	42,357	$	81,634	$	83,927

Table of Contents

NOTE J — Net Income per Common Share

The following table summarizes the computation of basic and diluted net income per share for the Company’s Class A and Class B common stock:


	Three months ended January 31,		Six months ended January 31,
	2021	2020	2021	2020
Numerator (in thousands):
Net Income (Numerator for basic and diluted income per Class A Nonvoting Common Share)

Price	53.44	EPS	3
Shares	54	P/E	21
MCap	2,872	P/FCF	18
Net Debt	-244	EBIT	169
TEV	2,628	TEV/EBIT	16
TTM 2019-10-31, in MM, except price, ratios

10-Q	2021-01-31	Filed 2021-02-18
10-Q	2020-10-31	Filed 2020-11-19
10-K	2020-07-31	Filed 2020-09-16
10-Q	2020-04-30	Filed 2020-05-21
10-Q	2020-01-31	Filed 2020-02-20
10-Q	2019-10-31	Filed 2019-11-21
10-K	2019-07-31	Filed 2019-09-06
10-Q	2019-04-30	Filed 2019-05-23
10-Q	2019-01-31	Filed 2019-02-21
10-Q	2018-10-31	Filed 2018-11-15
10-K	2018-07-31	Filed 2018-09-13
10-Q	2018-04-30	Filed 2018-05-24
10-Q	2018-01-31	Filed 2018-02-22
10-Q	2017-10-31	Filed 2017-11-16
10-K	2017-07-31	Filed 2017-09-13
10-Q	2017-04-30	Filed 2017-05-25
10-Q	2017-01-31	Filed 2017-02-23
10-Q	2016-10-31	Filed 2016-11-16
10-K	2016-07-31	Filed 2016-09-15
10-Q	2016-04-30	Filed 2016-05-19
10-Q	2016-01-31	Filed 2016-02-19
10-Q	2015-10-31	Filed 2015-11-19
10-K	2015-07-31	Filed 2015-09-21
10-Q	2015-04-30	Filed 2015-05-27
10-Q	2015-01-31	Filed 2015-03-04
10-Q	2014-10-31	Filed 2014-12-02
10-K	2014-07-31	Filed 2014-09-29
10-Q	2014-04-30	Filed 2014-06-04
10-Q	2014-01-31	Filed 2014-03-05
10-Q	2013-10-31	Filed 2013-12-06
10-K	2013-07-31	Filed 2013-09-30
10-Q	2013-04-30	Filed 2013-06-06
10-Q	2013-01-31	Filed 2013-03-08
10-Q	2012-10-31	Filed 2012-12-05
10-K	2012-07-31	Filed 2012-09-27
10-Q	2012-04-30	Filed 2012-06-05
10-Q	2012-01-31	Filed 2012-03-08
10-Q	2011-10-31	Filed 2011-12-07
10-K	2011-07-31	Filed 2011-09-27
10-Q	2011-04-30	Filed 2011-06-07
10-Q	2011-01-31	Filed 2011-03-08
10-Q	2010-10-31	Filed 2010-12-07
10-K	2010-07-31	Filed 2010-09-21
10-Q	2010-04-30	Filed 2010-06-04
10-Q	2010-01-31	Filed 2010-03-05

8-K	2020-11-18
8-K	2020-09-14
8-K	2020-05-21
8-K	2020-02-20
8-K	2019-11-20
8-K	2019-09-30
8-K	2019-09-16
8-K	2019-09-04
8-K	2019-08-01
8-K	2019-05-23
8-K	2019-02-21
8-K	2019-02-07
8-K	2018-11-15
8-K	2018-09-13
8-K	2018-05-24
8-K	2018-02-22

EX-31.1	brc-20210131xex311.htm
EX-31.2	brc-20210131xex312.htm
EX-32.1	brc-20210131xex321.htm
EX-32.2	brc-20210131xex322.htm



			Page
PART I. Financial Information			3
Item 1. F inancial Statements (Unaudited)			3
Condensed Consolidated Balance Sheets			3
Condensed Consolidated Statements of Income			4
Condensed Consolidated Statements of Comprehensive Income			5
Condensed Consolidated Statements of Cash Flows			6
Notes to Condensed Consolidated Financial Statements			7
Item 2. Management’s Discussion and Analysis of Results of Operations and Financial Condition			16
Item 3. Quantitative and Qualitative Disclosures About Market Risk			23
Item 4. Controls and Procedures			23
PART II. Other Information			24
Item 1A. Risk Factors			24
Item 6. Exhibits			25
Signatures			26

BRC 10Q Quarterly Report

Brady Earnings 2021-01-31