Brady Corporation Reports 13.6% Net Sales Growth, Acquires Gravotech and AB&R

Brady Corporation reported its financial results for the three months ended October 31, 2024, showing a notable increase in net sales and strategic developments, including acquisitions. Net sales reached $377.1 million, a 13.6% increase from $332.0 million in the same period of 2023. This growth was driven by a 3.6% contribution from organic sales, a 9.9% increase from acquisitions, and a 1.2% boost from foreign currency translation, although partially offset by a 1.1% decrease from divestitures.

The company's gross margin improved to $189.7 million, up 10.5% from $171.7 million year-over-year, but as a percentage of net sales, it decreased to 50.3% from 51.7% due to increased costs associated with acquisitions. Total operating expenses rose to $130.8 million from $112.0 million, leading to a slight decline in operating income to $58.9 million, down from $59.7 million in the prior year. Net income for the quarter was $46.8 million, a decrease from $47.2 million in the same period last year.

Brady's strategic initiatives included two significant acquisitions: Gravotech, which contributed $29.5 million in net sales but incurred a net loss of $4.7 million due to increased costs, and AB&R, acquired for $15.6 million. The company recorded goodwill of $71.8 million from Gravotech and $10.9 million from AB&R, both assigned to the Americas & Asia segment.

Cash and cash equivalents decreased significantly to $145.7 million from $250.1 million as of July 31, 2024. The company reported net cash provided by operating activities of $23.4 million, down from $62.3 million in the same period last year. Net cash used in investing activities surged to $147.9 million, primarily due to the acquisitions, while financing activities provided $18.3 million compared to a net cash outflow of $21.5 million in the prior year.

Brady's total assets increased to $1.63 billion, up from $1.52 billion, while total liabilities rose to $518.9 million from $448.9 million. The company maintained a strong liquidity position with $1.18 billion available, including cash and credit facilities. The income tax rate for the quarter was 20.4%, slightly down from 20.5% in the previous year.

Overall, Brady Corporation's performance reflects a combination of growth through acquisitions and organic sales, alongside challenges in profitability margins and cash flow management.