Brady Earnings 2020-04-30

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

brc-20200430

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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 April 30, 2020


☐			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 May 19, 2020, there were 48,421,588 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)


	April 30, 2020		July 31, 2019
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	238,880	$	279,072
Accounts receivable—net	145,133		158,114
Inventories	124,575		120,037
Prepaid expenses and other current assets	22,502		16,056
Total current assets	531,090		573,279
Property, plant and equipment—net	111,383		110,048
Goodwill	404,039		410,987
Other intangible assets	23,444		36,123
Deferred income taxes	7,006		7,298
Operating lease assets	41,553		—
Other assets	21,827		19,573
Total	$	1,140,342	$	1,157,308
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	58,819	$	64,810
Accrued compensation and benefits	41,591		62,509
Taxes, other than income taxes	7,667		8,107
Accrued income taxes	8,101		6,557
Current operating lease liabilities	14,381		—
Other current liabilities	48,473		49,796
Current maturities on long-term debt	48,927		50,166
Total current liabilities	227,959		241,945
Long-term operating lease liabilities	32,348		—
Other liabilities	59,433		64,589
Total liabilities	319,740		306,534
Stockholders’ equity:
Class A nonvoting common stock—Issued 51,261,487 shares, and outstanding 48,431,617 and 49,458,841 shares, respectively	513		513
Class B voting common stock—Issued and outstanding, 3,538,628 shares	35		35
Additional paid-in capital	330,968		329,969
Retained earnings	688,079		637,843
Treasury stock—2,829,870 and 1,802,646 shares, respectively, of Class A nonvoting common stock, at cost	(106,751)		(46,332)
Accumulated other comprehensive loss	(92,242)		(71,254)
Total stockholders’ equity	820,602		850,774
Total	$	1,140,342	$	1,157,308

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 April 30,						Nine months ended April 30,
	2020		2019		2020		2019
Net sales	$	265,943	$	289,745	$	829,555	$	865,367
Cost of goods sold	136,416		143,996		419,496		433,269
Gross margin	129,527		145,749		410,059		432,098
Operating expenses:
Research and development	9,814		11,437		31,298		33,837
Selling, general and administrative	83,223		94,691		260,136		281,988
Impairment charges	13,821		—		13,821		—
Total operating expenses	106,858		106,128		305,255		315,825
Operating income	22,669		39,621		104,804		116,273
Other income (expense):
Investment and other income	112		2,065		3,252		3,425
Interest expense	(628)		(708)		(1,976)		(2,137)
Income before income taxes	22,153		40,978		106,080		117,561
Income tax expense	8,520		6,197		21,396		22,916
Net income	$	13,633	$	34,781	$	84,684	$	94,645
Net income per Class A Nonvoting Common Share:
Basic	$	0.26	$	0.66	$	1.60	$	1.80
Diluted	$	0.26	$	0.65	$	1.58	$	1.78
Dividends	$	0.22	$	0.21	$	0.65	$	0.64
Net income per Class B Voting Common Share:
Basic	$	0.26	$	0.66	$	1.58	$	1.79
Diluted	$	0.26	$	0.65	$	1.57	$	1.76
Dividends	$	0.22	$	0.21	$	0.64	$	0.62
Weighted average common shares outstanding:
Basic	52,607		52,766		53,023		52,499
Diluted	52,972		53,480		53,512		53,215

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 April 30,						Nine months ended April 30,
	2020		2019		2020		2019
Net income	$	13,633	$	34,781	$	84,684	$	94,645
Other comprehensive loss:
Foreign currency translation adjustments	(17,424)		(7,337)		(18,383)		(10,641)

Cash flow hedges:
Net (loss) gain recognized in other comprehensive loss	(1,751)		220		(1,192)		377
Reclassification adjustment for gains included in net income	(293)		(292)		(779)		(579)
	(2,044)		(72)		(1,971)		(202)
Pension and other post-retirement benefits:
Net loss recognized in other comprehensive loss	—		—		(309)		(169)
Actuarial gain amortization	(105)		(124)		(315)		(423)
	(105)		(124)		(624)		(592)

Other comprehensive loss, before tax	(19,573)		(7,533)		(20,978)		(11,435)
Income tax expense related to items of other comprehensive loss	(179)		(348)		(10)		(610)
Other comprehensive loss, net of tax	(19,752)		(7,881)		(20,988)		(12,045)
Comprehensive (loss) income	$	(6,119)	$	26,900	$	63,696	$	82,600

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)


	Nine months ended April 30,
	2020		2019
Operating activities:
Net income	$	84,684	$	94,645
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	17,731		17,836
Stock-based compensation expense	7,180		10,311
Deferred income taxes	(309)		3,796
Impairment charges	13,821		—
Other	1,698		1,372
Changes in operating assets and liabilities:
Accounts receivable	9,019		332
Inventories	(7,439)		(9,254)
Prepaid expenses and other assets	(5,653)		(2,204)
Accounts payable and accrued liabilities	(26,609)		(20,548)
Income taxes	1,790		616
Net cash provided by operating activities	95,913		96,902

Investing activities:
Purchases of property, plant and equipment	(21,616)		(17,528)
Other	(4,419)		(1,810)
Net cash used in investing activities	(26,035)		(19,338)

Financing activities:
Payment of dividends	(34,447)		(33,488)
Proceeds from exercise of stock options	5,212		22,468
Payments for employee taxes withheld from stock-based awards	(7,832)		(4,348)
Purchase of treasury stock	(64,113)		(3,182)
Proceeds from borrowing on credit facilities	—		13,637
Repayment of borrowing on credit facilities	—		(13,568)
Other	133		210
Net cash used in financing activities	(101,047)		(18,271)

Effect of exchange rate changes on cash	(9,023)		(2,288)

Net (decrease) increase in cash and cash equivalents	(40,192)		57,005
Cash and cash equivalents, beginning of period	279,072		181,427

Cash and cash equivalents, end of period	$	238,880	$	238,432

See Notes to Condensed Consolidated Financial Statements.

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BRADY CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Nine Months Ended April 30, 2020

(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 April 30, 2020 and July 31, 2019, its results of operations and comprehensive income for the three and nine months ended April 30, 2020 and 2019, and cash flows for the nine months ended April 30, 2020 and 2019. The condensed consolidated balance sheet as of July 31, 2019, 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, 2019.

NOTE B — New Accounting Pronouncements

In February 2016, the FASB issued ASU 2016-02, "Leases (Topic 842)" ("ASC 842"), which replaced the former lease accounting standards. The update requires, among other items, lessees to recognize the assets and liabilities that arise from most leases on the balance sheet and disclose key information about leasing arrangements. In July 2018, the FASB issued ASU 2018-11 "Leases (Topic 842): Targeted Improvements," which provides, among other items, an additional transition method allowing a cumulative effect adjustment to the opening balance of retained earnings during the period of adoption. ASC 842 is effective for interim periods in fiscal years beginning after December 15, 2018.

The Company adopted ASU 2016-02 (and related updates) effective August 1, 2019, using the optional transition method provided in ASU 2018-11 to apply this guidance to the impacted lease population at the date of initial application. Results for reporting periods beginning after August 1, 2019, are presented under ASU 2016-02, while comparative prior period amounts have not been restated and continue to be presented under accounting standards in effect during those periods.

The Company elected the package of practical expedients permitted within the new standard, which among other things, allows the Company to carryforward the historical lease accounting of expired or existing leases with respect to lease identification, lease classification and accounting treatment for initial direct costs as of the adoption date. The Company also elected the practical expedient related to lease versus nonlease components, allowing the Company to recognize lease and nonlease components as a single lease. Lastly, the Company elected the hindsight practical expedient, allowing the Company to use hindsight in determining the lease term and assessing impairment of right-of-use assets when transitioning to ASC 842. The Company has made a policy election not to capitalize leases with an initial term of 12 months or less.

Upon adoption of ASC 842, the Company recorded additional operating lease assets and liabilities of $55,984 and $58,544, respectively, as of August 1, 2019, which included operating lease assets and liabilities of $9,769 and $9,674, respectively, for leases that commenced on the adoption date of August 1, 2019. No cumulative effect adjustment to retained earnings was recognized upon adoption of the new standard. Adoption of ASC 842 did not have a material impact on the Company's cash flows or operating results. Refer to Note E "Leases" for additional information and required disclosures under the new standard.

In August 2017, the Financial Accounting Standards Board ("FASB") issued ASU 2017-12, "Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities," which simplifies and reduces the complexity of the hedge accounting requirements and better aligns an entity's financial reporting for hedging relationships with its risk management activities. The guidance is effective for interim periods in fiscal years beginning after December 15, 2018, with

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early adoption permitted. The Company adopted ASU 2017-12 effective August 1, 2019, using the required modified retrospective adoption approach to apply this guidance to existing hedging relationships as of the adoption date, which did not have a material impact on its consolidated financial statements.

Standards not yet adopted

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. Current guidance requires the recognition of credit losses based on an incurred loss impairment methodology that reflects losses once the losses are probable. Under ASU 2016-13, the Company will be required to use a current expected credit loss model ("CECL") that will immediately recognize 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 CECL model uses a broader range of reasonable and supportable information in the development of credit loss estimates. This guidance becomes effective for interim periods in fiscal years beginning after December 15, 2019. The Company is still evaluating the impact that the adoption of this ASU will have on the consolidated financial statements and related disclosures.

In January 2017, the FASB issued ASU 2017-04, "Goodwill and Other, Simplifying the Test for Goodwill Impairment," which simplifies the accounting for goodwill impairment. The new guidance removes Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. A goodwill impairment will now be 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 will remain largely unchanged. This guidance is effective for annual periods beginning after December 15, 2019, and interim periods thereafter; however, early adoption is permitted for any impairment tests performed after January 1, 2017. The Company has not adopted this guidance, which will only impact the Company's consolidated financial statements if there is an impairment of goodwill after July 31, 2020.

In December 2019, the FASB issued ASU 2019-12, "Income Taxes - Simplifying the Accounting for Income Taxes (Topic 740)," which simplifies the accounting for income taxes. 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; however, 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 phase out of the London Inter-bank Offered Rate ("LIBOR") by the end of 2021. This guidance is 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 debt securities, 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 April 30, 2020, and July 31, 2019, consisted of the following:


	April 30, 2020		July 31, 2019
Finished products	$	77,634	$	77,532
Work-in-process	22,819		20,515
Raw materials and supplies	24,122		21,990
Total inventories	$	124,575	$	120,037

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Property, plant and equipment

Property, plant and equipment is presented net of accumulated depreciation in the amount of $279,757 and $273,880 as of April 30, 2020, and July 31, 2019, respectively.

NOTE D — Other Intangible and Long-Lived Assets

Other intangible assets include customer relationships, tradenames, and patents with finite lives being amortized in accordance with the accounting guidance for other intangible assets. The Company also has unamortized indefinite-lived tradenames that are classified as other intangible assets.

The net book value of these assets was as follows:


	April 30, 2020												July 31, 2019
	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
Amortized other intangible assets:
Customer relationships and other	8	$	47,180	$	(33,150)	$	14,030	9	$	46,595	$	(29,343)	$	17,252
Unamortized other intangible assets:
Tradenames	N/A	9,414		—		9,414		N/A	18,871		—		18,871
Total		$	56,594	$	(33,150)	$	23,444		$	65,466	$	(29,343)	$	36,123

The change in the gross carrying amount of other intangible assets as of April 30, 2020 compared to July 31, 2019 was due to impairments and the effects of currency fluctuations during the nine-month period ended April 30, 2020.

The Company evaluates other intangible and long-lived assets for impairment on an annual basis or more frequently if events or changes in circumstances have occurred that indicate the asset may not be recoverable or that the remaining estimated useful life may warrant revision. In addition, the Company performs qualitative assessments on a quarterly basis of significant events and circumstances, such as historical and current results, assumptions regarding future performance, and strategic initiatives and overall economic factors.

The outbreak of the novel coronavirus (“COVID-19”), which was declared a pandemic by the World Health Organization on March 11, 2020, has led to adverse impacts on the U.S. and global economies and has negatively impacted the Company’s supply chain, operations, and customer demand. As a result, the Company evaluated the macro-economic developments of the COVID-19 pandemic to determine the existence of potential impairment indicators. If indicators of impairment were identified, a quantitative impairment test was performed.

Qualitative tests performed in the quarter indicated the existence of impairment indicators for intangible assets in certain businesses within the Company’s WPS segment. These indicators of impairment consisted of a decline in sales in the three months ended April 30, 2020, and the expectation that sales will continue to decline as these businesses navigate the economic challenges presented by the COVID-19 pandemic. Indefinite-lived tradenames were valued using the income approach based upon current sales projections applying the relief from royalty method. As a result of the analysis, indefinite-lived tradenames with a carrying amount of $9,328 were written down to their estimated fair value of $663 in the three months ended April 30, 2020.

Consistent with the circumstances leading to the intangible asset impairment, the Company performed a recoverability and fair value test of other long-lived assets in certain businesses within both the IDS and WPS segments. Long-lived assets were evaluated for recoverability by comparing undiscounted future cash flows derived from internal forecasts to the carrying amount of the asset. For specific long-lived assets, this analysis resulted in an amount that was less than the carrying value of the asset. The Company measured the impairment loss of long-lived assets as the amount by which the carrying value of the assets exceeded their fair value. As a result of the analysis, impairment charges of $2,681 were recorded related to property, plant and equipment, of which $2,353 and $328 related to the IDS and WPS segments, respectively. In addition, impairment charges of $2,475 were recorded related to operating lease assets, of which $2,035 and $440 related to the WPS and IDS segments, respectively.

These items resulted in a total impairment charge of $13,821 recorded in "Impairment charges" on the condensed consolidated statements of income for the three and nine months ended April 30, 2020.

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A lack of recovery or further deterioration in market conditions, a sustained trend of weaker than expected financial performance or a lack of recovery among other factors, as a result of the COVID-19 pandemic could result in an impairment charge in future periods which could have a material adverse effect on the Company's financial statements.

Amortization expense of intangible assets was $1,290 and $1,443 for the three months ended April 30, 2020 and 2019, respectively, and $3,872 and $4,314 for the nine months ended April 30, 2020 and 2019, respectively. The amortization over each of the next five fiscal years is projected to be $5,218, $5,384, $5,109, $2,191 and $0 for the fiscal years ending July 31, 2020, 2021, 2022, 2023 and 2024, respectively.

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 fifteen years. As of April 30, 2020, the Company did not have any finance leases.

The Company determines whether an arrangement contains a lease at contract inception. The contract is considered to contain a lease if it provides the Company with the right to direct the use of and the right to obtain substantially all of the economic benefits from an identified asset in exchange for consideration. The Company recognizes a right-of-use (“ROU”) asset and a lease liability at the lease commencement date based on the present value of the future lease payments over the expected lease term. Additionally, the ROU asset includes any lease payments made on or before the commencement date, initial direct costs incurred, and is reduced by any lease incentives received.

Some of the Company’s leases include options to extend the lease agreement. The exercise of an extension is at the Company’s sole discretion. The majority of renewal options are not included in the calculation of ROU assets and liabilities as they are not reasonably certain to be exercised. Some of the Company's lease agreements include rental payments that are adjusted periodically for inflation or the change in an index or rate, which are considered to be variable lease payments. Due to the nature of the Company’s variable lease payments, they are generally excluded from the initial measurement of the ROU asset and lease liability and are recognized in the period in which the obligation for those payments is incurred. The Company has lease agreements that include both lease and non-lease components, which the Company has elected to account for as a single lease component. The Company's lease agreements do not contain any material residual value guarantees or material restrictive covenants.

Generally, the discount rate implicit within the Company’s leases cannot be readily determined, and therefore the Company uses its incremental borrowing rate to determine the present value of the future lease payments. The incremental borrowing rate is estimated based on the sovereign credit rating for the countries in which the Company has its largest operations, adjusted for several factors, such as internal credit spread, lease terms and other market information available at the lease commencement date.

Right-of-use assets are evaluated for impairment in the same manner as long-lived assets. During the three months ended April 30, 2020, impairment charges of $2,475 were recorded related to right-of-use assets, of which $2,035 and $440 related to the WPS and IDS segments, respectively. Refer to Note D, "Other Intangible and Long-Lived Assets" for additional information.

Operating leases are reflected in “Operating lease assets,” “Current operating lease liabilities,” and “Long-term operating lease liabilities” on the Company's condensed consolidated balance sheets.

Short-term lease expense, variable lease expenses, and sublease income was immaterial to the condensed consolidated statements of income for the three and nine months ended April 30, 2020.

The following table summarizes lease expense recognized for the three and nine months ended April 30, 2020:


		Three months ended		Nine months ended
	Condensed Consolidated Statements of Income Location	April 30, 2020		April 30, 2020
Operating lease cost	Cost of goods sold	$	2,074	$	7,036
Operating lease cost	Selling, general, and administrative expenses	2,145		6,861

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The following table summarizes the maturity of the Company's lease liabilities as of April 30, 2020:


Years ended July 31,	Operating Leases
Remainder of 2020	$	4,245
2021	15,429
2022	12,554
2023	9,209
2024	5,470
Thereafter	3,160
Total lease payments	$	50,067
Less interest	(3,338)
Present value of lease liabilities	$	46,729

The weighted average remaining lease terms and discount rates for the Company's operating leases as of April 30, 2020 were as follows:


	April 30, 2020
Weighted average remaining lease term (in years)	3.7
Weighted average discount rate	3.4	%

Supplemental cash flow information related to the Company's operating leases for the nine months ended April 30, 2020, were as follows:


	Nine months ended
	April 30, 2020
Operating cash outflows from operating leases	$	12,469
Operating lease assets obtained in exchange for new operating lease liabilities	10,637

Operating lease assets obtained in exchange for new operating lease liabilities include $9,769 of operating lease assets related to leases that commenced on August 1, 2019, which were included in the adoption impact of the new lease accounting standard.

The following table summarizes future minimum lease payments under operating leases as of July 31, 2019:


Years ended July 31,	Operating Leases
2020	$	18,450
2021	16,132
2022	13,439
2023	10,065
2024	5,656
Thereafter	3,502
Total lease payments	$	67,244

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NOTE F – Stockholders' Equity

The following table illustrates the changes in the balances of each component of stockholders' equity for the three months ended April 30, 2020:


	Common Stock		Additional Paid-In Capital		Retained Earnings		Treasury Stock		Accumulated Other Comprehensive Loss		Total Stockholders' Equity
Balances at January 31, 2020	$	548	$	329,263	$	685,758	$	(43,155)	$	(72,490)	$	899,924
Net income	—		—		13,633		—		—		13,633
Other comprehensive loss, net of tax	—		—		—		—		(19,752)		(19,752)
Issuance of shares of Class A Common Stock under stock plan	—		(91)		—		517		—		426
Stock-based compensation expense	—		1,796		—		—		—		1,796
Repurchase of shares of Class A Common Stock	—		—		—		(64,113)		—		(64,113)
Cash dividends on Common Stock:
Class A — $0.22 per share	—		—		(10,542)		—		—		(10,542)
Class B — $0.22 per share	—		—		(770)		—		—		(770)
Balances at April 30, 2020	$	548	$	330,968	$	688,079	$	(106,751)	$	(92,242)	$	820,602

The following table illustrates the changes in the balances of each component of stockholders' equity for the nine months ended April 30, 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	—		—		84,684		—		—		84,684
Other comprehensive loss, net of tax	—		—		—		—		(20,988)		(20,988)
Issuance of shares of Class A Common Stock under stock plan	—		(6,314)		—		3,694		—		(2,620)
Tax benefit and withholdings from deferred compensation distributions	—		133		—		—		—		133
Stock-based compensation expense	—		7,180		—		—		—		7,180
Repurchase of shares of Class A Common Stock	—		—		—		(64,113)		—		(64,113)
Cash dividends on Common Stock:
Class A — $0.65 per share	—		—		(32,197)		—		—		(32,197)
Class B — $0.64 per share	—		—		(2,251)		—		—		(2,251)
Balances at April 30, 2020	$	548	$	330,968	$	688,079	$	(106,751)	$	(92,242)	$	820,602

Table of Contents

The following table illustrates the changes in the balances of each component of stockholders' equity for the three months ended April 30, 2019:


	Common Stock		Additional Paid-In Capital		Retained Earnings		Treasury Stock		Accumulated Other Comprehensive Loss		Total Stockholders' Equity
Balances at January 31, 2019	$	548	$	328,978	$	588,918	$	(54,498)	$	(60,565)	$	803,381
Net income	—		—		34,781		—		—		34,781
Other comprehensive loss, net of tax	—		—		—

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	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	2020-05-21
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-20200430xex311.htm
EX-31.2	brc-20200430xex312.htm
EX-32.1	brc-20200430xex321.htm
EX-32.2	brc-20200430xex322.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			20
Item 3. Quantitative and Qualitative Disclosures About Market Risk			27
Item 4. Controls and Procedures			27
PART II. Other Information			28
Item 1A. Risk Factors			28
Item 2. U nregistered Sales of Equity Securities and Use of Proceeds			28
Item 6. Exhibits			29
Signatures			30

BRC 10Q Quarterly Report

Brady Earnings 2020-04-30