8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): May 24, 2018

BRADY CORPORATION

(Exact name of registrant as specified in its charter)

Commission File Number 1-14959

Wisconsin	39-0971239
(State of Incorporation)	(IRS 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)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR 230.405) or Rule 12b-2 or the Securities Exchange Act of 1934 (17 CFR 240.12b-2).

Emerging growth company¨

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

Item 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION

On May 24, 2018, Brady Corporation (the “Company”) issued a press release announcing its fiscal 2018 third quarter financial results. A copy of the press release is being furnished to the Securities and Exchange Commission as Exhibit 99.1 attached hereto and is incorporated herein by reference.

Item 7.01 REGULATION FD DISCLOSURE

On May 24, 2018, the Company hosted a conference call related to its fiscal 2018 third quarter financial results. A copy of the slides referenced in the conference call, which is also posted on the Corporation’s website, is being furnished to the Securities and Exchange Commission as Exhibit 99.2 attached hereto and is incorporated herein by reference.

Item 9.01 FINANCIAL STATEMENTS AND EXHIBITS

(d) Exhibits

EXHIBIT NUMBER	DESCRIPTION
99.1	Press Release of Brady Corporation, dated May 24, 2018, relating to third quarter fiscal 2018 financial results.
99.2	Informational slides provided by Brady Corporation, dated May 24, 2018, relating to third quarter fiscal 2018 financial results.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	BRADY CORPORATION
Date: May 24, 2018	/s/ AARON J. PEARCE
	Aaron J. Pearce
	Chief Financial Officer and Treasurer

EX-99.1

EXHIBIT 99.1

For More Information:

Investor contact: Ann Thornton 414-438-6887

Media contact: Kate Venne 414-358-5176

Brady Corporation Reports Fiscal 2018 Third Quarter Results and Increases the Bottom of its Fiscal 2018 EPS Guidance

• Earnings before income taxes increased 20.7 percent, finishing at $37.0 million in the third quarter of fiscal 2018 compared to $30.6 million in the third quarter of fiscal 2017. This marks our 11^th consecutive quarter of profit growth.

• Earnings per diluted Class A Nonvoting Common Share were $0.49 in the third quarter of fiscal 2018 compared to $0.43 in the same quarter of the prior year.

• Total revenues increased 8.2 percent, which consisted of organic revenue growth of 3.2 percent and an increase of 5.0 percent from foreign currency translation. This is our fourth consecutive quarter of organic revenue growth.

• Earnings per diluted Class A Common Share guidance for the full year ending July 31, 2018 was tightened to a range of $1.95 to $2.00 from a previous range of $1.90 to $2.00, exclusive of tax charges primarily related to the enactment of the U.S. tax legislation.

MILWAUKEE (May 24, 2018)--Brady Corporation (NYSE: BRC) (“Brady” or “Company”), a world leader in identification solutions, today reported its financial results for its fiscal 2018 third quarter ended April 30, 2018.

Quarter Ended April 30, 2018 Financial Results:

Earnings before income taxes increased 20.7 percent, finishing at $37.0 million for the third quarter of fiscal 2018 compared to $30.6 million for the third quarter of fiscal 2017.

Net earnings for the quarter ended April 30, 2018, were $26.0 million compared to $22.6 million in the same quarter last year.

Earnings per diluted Class A Nonvoting Common Share were $0.49 for the third quarter of fiscal 2018, compared to $0.43 in the same quarter last year.

Sales for the quarter ended April 30, 2018 increased 8.2 percent to $298.4 million compared to $275.9 million in the same quarter last year. By segment, sales increased 7.8 percent in Identification Solutions and 9.1 percent in Workplace Safety, which consisted of organic sales growth of 3.7 percent in Identification Solutions and 1.7 percent in Workplace Safety.

Nine-Month Period Ended April 30, 2018 Financial Results:

Earnings before income taxes increased 17.7 percent, finishing at $106.8 million for the nine-month period ended April 30, 2018, compared to $90.7 million in the same period last year.

Net earnings for the nine-month period ended April 30, 2018 were $56.1 million compared to $70.4 million in the same period last year. During the nine-month period ended April 30, 2018, net earnings were reduced by $21.1 million due to tax charges primarily related to the passage of the U.S. Tax Cuts and Jobs Act of 2017. The prior nine-month period ended April 30, 2017 was impacted by a cash repatriation which resulted in a lower than normal income tax rate.

Earnings per diluted Class A Nonvoting Common Share were $1.07 for the nine-month period ended April 30, 2018, compared to $1.36 in the same period last year. Income tax expense in the prior nine-month period ended April 30, 2017 was impacted by a cash repatriation which increased earnings per diluted Class A Nonvoting Common Share by approximately $0.09, whereas the impact on income tax expense for the nine-month period ended April 30, 2018 from tax charges primarily related to the enactment of U.S. tax legislation was a reduction of approximately $0.40 of earnings per diluted Class A Nonvoting Common Share.

Sales for the nine-month period ended April 30, 2018 increased 6.3 percent to $876.4 million compared to $824.1 million in the same period last year. By segment, sales increased 6.7 percent in Identification Solutions and 5.6 percent in Workplace Safety, which consisted of organic sales growth of 3.7 percent in Identification Solutions and an organic sales decline of 0.1 percent in Workplace Safety.

Commentary:

“Our continued focus on innovation and the development of high-quality products resulted in organic sales growth of 3.2 percent in the quarter, which was driven by both the Identification Solutions and Workplace Safety businesses. This marks our fourth consecutive quarter of organic sales growth and our eleventh consecutive quarter of year-over-year pre-tax earnings growth. We take a consistent and balanced approach to driving organic sales growth while executing sustainable efficiency gains throughout our global operations and SG&A structure,” said Brady’s President and Chief Executive Officer, J. Michael Nauman. “We expect this positive organic sales trend to continue as we launch innovative new products in our Identification Solutions business, and as our Workplace Safety business returns to consistent quarterly organic sales growth and realizes benefits over the long-term due to its product innovation efforts.”

“Our cash generation remains strong,” said Brady’s Chief Financial Officer, Aaron Pearce. “Even after significantly increasing our investments in research and development, we still increased our net cash provided by operating activities by 23.6% this quarter and significantly increased our investments in capital expenditures. We also repaid $11.7 million in debt and finished in a net cash position of $72.7 million as of April 30, 2018. Our strong balance sheet provides us with significant flexibility for investing in opportunities to drive long-term value for our shareholders.”

Fiscal 2018 Guidance:

The Company is tightening its full year fiscal 2018 earnings per diluted Class A Nonvoting Common Share guidance from its previous range of $1.90 to $2.00 to a range of $1.95 to $2.00, exclusive of tax charges primarily related to the enactment of the U.S. Tax Cuts and Jobs Act of 2017. Included in this guidance is low-single digit organic sales growth, depreciation and amortization expense of approximately $26 million, and capital expenditures of approximately $20 to $25 million during the year ending July 31, 2018. The Company expects its full-year income tax rate, exclusive of charges primarily related to the enactment of the U.S. Tax Cuts and Jobs Act of 2017, to range from approximately 27 percent to 29 percent. The full benefit of the enactment of U.S. tax legislation will not be realized until next fiscal year. This guidance is based upon foreign exchange rates as of April 30, 2018.

A webcast regarding Brady’s fiscal 2018 third quarter financial results will be available atwww.bradycorp.com/investors beginning at 9:30 a.m. Central Time today.

Brady Corporation is an international manufacturer and marketer of complete solutions that identify and protect people, products and places. Brady’s products help customers increase safety, security, productivity and performance and include high-performance labels, signs, safety devices, printing systems and software. Founded in 1914, the Company has a diverse customer base in electronics, telecommunications, manufacturing, electrical, construction, medical, aerospace and a variety of other industries. Brady is headquartered in Milwaukee, Wisconsin and as of July 31, 2017, employed approximately 6,300 people in its worldwide businesses. Brady’s fiscal 2017 sales were approximately $1.11 billion. Brady stock trades on the New York Stock Exchange under the symbol BRC. More information is available on the Internet at www.bradycorp.com.

###

In this news release, statements that are not reported financial results or other historic information are “forward-looking statements.” These forward-looking statements relate to, among other things, the Company's future financial position, business strategy, targets, projected sales, costs, earnings, capital expenditures, debt levels and cash flows, and plans and objectives of management for future operations.

The use of words such as “may,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “believe,” “should,” “project” or “plan” or similar terminology are generally intended to identify forward-looking statements. These forward-looking statements by their nature address matters that are, to different degrees, uncertain and are subject to risks, assumptions, and other factors, some of which are beyond Brady’s control, that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. For Brady, uncertainties arise from: our ability to compete effectively or to successfully execute our strategy; Brady’s ability to develop technologically advanced products that meet customer demands; difficulties in protecting our websites, networks, and systems against security breaches; decreased demand for our products; Brady’s ability to retain large customers; extensive regulations by U.S. and non-U.S. governmental and self-regulatory entities; Brady’s ability to execute facility consolidations and maintain acceptable operational service metrics; litigation, including product liability claims; risks associated with the loss of key employees; divestitures and contingent liabilities from divestitures; Brady’s ability to properly identify, integrate, and grow acquired companies; foreign currency fluctuations; the impact of the Tax Reform Act and any other changes in tax legislation and tax rates; potential write-offs of Brady’s substantial intangible assets; differing interests of voting and non-voting shareholders; Brady’s ability to meet certain financial covenants required by our debt agreements; numerous other matters of national, regional and global scale, including those of a political, economic, business, competitive, and regulatory nature contained from time to time in Brady’s U.S. Securities and Exchange Commission filings, including, but not limited to, those factors listed in the “Risk Factors” section within Item 1A of Part I of Brady’s Form 10-K for the year ended July 31, 2017.

These uncertainties may cause Brady's actual future results to be materially different than those expressed in its forward-looking statements. Brady does not undertake to update its forward-looking statements except as required by law.

BRADY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EARNINGS

(Unaudited; Dollars in thousands, except per share data)

	Three months ended April 30,						Nine months ended April 30,
	2018			2017			2018			2017
Net sales	$	298,421		$	275,927		$	876,352		$	824,104
Cost of products sold	147,339			136,018			435,513			409,679
Gross margin	151,082			139,909			440,839			414,425
Operating expenses:
Research and development	11,678			9,950			33,512			28,577
Selling, general and administrative	101,695			98,409			299,411			291,128
Total operating expenses	113,373			108,359			332,923			319,705
Operating income	37,709			31,550			107,916			94,720
Other income (expense):
Investment and other income	31			453			1,303			560
Interest expense	(761		)	(1,375		)	(2,453		)	(4,565		)
Earnings before income taxes	36,979			30,628			106,766			90,715
Income tax expense	10,979			8,075			50,657			20,312
Net earnings	$	26,000		$	22,553		$	56,109		$	70,403
Net earnings per Class A Nonvoting Common Share:
Basic	$	0.50		$	0.44		$	1.09		$	1.38
Diluted	$	0.49		$	0.43		$	1.07		$	1.36
Dividends	$	0.21		$	0.21		$	0.62		$	0.62
Net earnings per Class B Voting Common Share:
Basic	$	0.50		$	0.44		$	1.07		$	1.37
Diluted	$	0.49		$	0.43		$	1.05		$	1.34
Dividends	$	0.21		$	0.21		$	0.61		$	0.60
Weighted average common shares outstanding (in thousands):
Basic	51,747			51,227			51,628			50,972
Diluted	52,729			52,201			52,610			51,882

BRADY CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited; Dollars in thousands)

	April 30, 2018			July 31, 2017
ASSETS
Current assets:
Cash and cash equivalents	$	130,903		$	133,944
Accounts receivable—net	161,319			149,638
Inventories:
Finished products	72,809			69,760
Work-in-process	20,126			18,117
Raw materials and supplies	22,598			19,147
Total inventories	115,533			107,024
Prepaid expenses and other current assets	17,295			17,208
Total current assets	425,050			407,814
Other assets:
Goodwill	435,426			437,697
Other intangible assets	48,036			53,076
Deferred income taxes	8,688			35,456
Other	17,758			18,077
Property, plant and equipment:
Cost:
Land	7,332			7,470
Buildings and improvements	98,005			98,228
Machinery and equipment	268,736			261,192
Construction in progress	6,557			4,109
	380,630			370,999
Less accumulated depreciation	282,181			272,896
Property, plant and equipment—net	98,449			98,103
Total	$	1,033,407		$	1,050,223
LIABILITIES AND STOCKHOLDERS’ INVESTMENT
Current liabilities:
Notes payable	$	—		$	3,228
Accounts payable	68,627			66,817
Wages and amounts withheld from employees	56,995			58,192
Taxes, other than income taxes	7,772			7,970
Accrued income taxes	5,564			7,373
Other current liabilities	42,436			43,618
Total current liabilities	181,394			187,198
Long-term obligations	58,157			104,536
Other liabilities	59,209			58,349
Total liabilities	298,760			350,083
Stockholders’ investment:
Common Stock:
Class A nonvoting common stock—Issued 51,261,487 and 51,261,487 shares, respectively, and outstanding 48,205,763 and 47,814,818 shares, respectively	513			513
Class B voting common stock—Issued and outstanding, 3,538,628 shares	35			35
Additional paid-in capital	327,401			322,608
Earnings retained in the business	531,135			507,136
Treasury stock—3,055,724 and 3,446,669 shares, respectively of Class A nonvoting common stock, at cost	(76,291		)	(85,470		)
Accumulated other comprehensive loss	(48,146		)	(44,682		)
Total stockholders’ investment	734,647			700,140
Total	$	1,033,407		$	1,050,223

BRADY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited; Dollars in thousands)

	Nine months ended April 30,
	2018			2017
Operating activities:
Net earnings	$	56,109		$	70,403
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	19,047			20,789
Non-cash portion of stock-based compensation expense	7,581			7,445
Deferred income taxes	26,501			(2,707		)
Changes in operating assets and liabilities:
Accounts receivable	(10,710		)	(931		)
Inventories	(7,790		)	666
Prepaid expenses and other assets	480			(1,987		)
Accounts payable and accrued liabilities	(133		)	754
Income taxes	(1,863		)	(3,270		)
Net cash provided by operating activities	89,222			91,162
Investing activities:
Purchases of property, plant and equipment	(14,755		)	(10,856		)
Other	(197		)	38
Net cash used in investing activities	(14,952		)	(10,818		)
Financing activities:
Payment of dividends	(32,110		)	(31,362		)
Proceeds from exercise of stock options	10,011			18,674
Purchase of treasury stock	(1,278		)	—
Proceeds from borrowing on credit facilities	17,439			154,653
Repayment of borrowing on credit facilities	(69,012		)	(215,068		)
Principal payments on debt	—			(16,371		)
Income tax on equity-based compensation, and other	(2,344		)	(512		)
Net cash used in financing activities	(77,294		)	(89,986		)
Effect of exchange rate changes on cash	(17		)	(2,509		)
Net decrease in cash and cash equivalents	(3,041		)	(12,151		)
Cash and cash equivalents, beginning of period	133,944			141,228
Cash and cash equivalents, end of period	$	130,903		$	129,077

BRADY CORPORATION AND SUBSIDIARIES

SEGMENT INFORMATION

(Unaudited; Dollars in thousands)

	Three months ended April 30,						Nine months ended April 30,
	2018			2017			2018			2017
NET SALES
ID Solutions	$	212,154		$	196,880		$	628,291		$	589,106
Workplace Safety	86,267			79,047			248,061			234,998
Total	$	298,421		$	275,927		$	876,352		$	824,104
SALES INFORMATION
ID Solutions
Organic	3.7		%	(0.8		)%	3.7		%	0.6		%
Currency	4.1		%	(1.5		)%	3.0		%	(1.1		)%
Total	7.8		%	(2.3		)%	6.7		%	(0.5		)%
Workplace Safety
Organic	1.7		%	(4.6		)%	(0.1		)%	(2.5		)%
Currency	7.4		%	(2.9		)%	5.7		%	(2.1		)%
Total	9.1		%	(7.5		)%	5.6		%	(4.6		)%
Total Company
Organic	3.2		%	(1.9		)%	2.7		%	(0.3		)%
Currency	5.0		%	(1.9		)%	3.6		%	(1.4		)%
Total	8.2		%	(3.8		)%	6.3		%	(1.7		)%
SEGMENT PROFIT
ID Solutions	$	36,970		$	32,633		$	106,896		$	94,676
Workplace Safety	7,537			5,120			21,037			17,615
Total	$	44,507		$	37,753		$	127,933		$	112,291
SEGMENT PROFIT AS A PERCENT OF SALES
ID Solutions	17.4		%	16.6		%	17.0		%	16.1		%
Workplace Safety	8.7		%	6.5		%	8.5		%	7.5		%
Total	14.9		%	13.7		%	14.6		%	13.6		%

	Three months ended April 30,						Nine months ended April 30,
	2018			2017			2018			2017
Total segment profit	$	44,507		$	37,753		$	127,933		$	112,291
Unallocated amounts:
Administrative costs	(6,798		)	(6,203		)	(20,017		)	(17,571		)
Investment and other income	31			453			1,303			560
Interest expense	(761		)	(1,375		)	(2,453		)	(4,565		)
Earnings before income taxes	$	36,979		$	30,628		$	106,766		$	90,715

EX-99.2

Brady Corporation F’18 Q3 Financial Results May 24, 2018

Forward-Looking Statements 2 In this presentation, statements that are not reported financial results or other historic information are “forward-looking statements.” These forward-looking statements relate to, among other things, the Company's future financial position, business strategy, targets, projected sales, costs, earnings, capital expenditures, debt levels and cash flows, and plans and objectives of management for future operations. The use of words such as “may,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “believe,” “should,” “project” or “plan” or similar terminology are generally intended to identify forward-looking statements. These forward-looking statements by their nature address matters that are, to different degrees, uncertain and are subject to risks, assumptions, and other factors, some of which are beyond Brady's control, that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. For Brady, uncertainties arise from: our ability to compete effectively or to successfully execute our strategy; Brady’s ability to develop technologically advanced products that meet customer demands; difficulties in protecting our websites, networks, and systems against security breaches; decreased demand for our products; Brady’s ability to retain large customers; extensive regulations by U.S. and non- U.S. governmental and self-regulatory entities; Brady’s ability to execute facility consolidations and maintain acceptable operational service metrics; litigation, including product liability claims; risks associated with the loss of key employees, divestitures and contingent liabilities from divestitures; Brady’s ability to properly identify, integrate, and grow acquired companies; foreign currency fluctuations; the impact of the Tax Reform Act and any other changes in tax legislation and tax rates; potential write-offs of Brady’s substantial intangible assets; differing interests of voting and non-voting shareholders; Brady’s ability to meet certain financial covenants required by our debt agreements; numerous other matters of national, regional and global scale, including those of a political, economic, business, competitive, and regulatory nature contained from time to time in Brady’s U.S. Securities and Exchange Commission filings, including, but not limited to, those factors listed in the “Risk Factors” section within Item 1A of Part I of Brady’s Form 10-K for the year ended July 31, 2017. These uncertainties may cause Brady's actual future results to be materially different than those expressed in its forward-looking statements. Brady does not undertake to update its forward-looking statements except as required by law.

Q3 F’18 Financial Summary 3 • Sales increased 8.2% to $298.4M in Q3 of F’18 compared with $275.9M in Q3 of F’17. – Organic sales increased 3.2%. – Foreign currency translation increased sales 5.0%. • Gross profit margin of 50.6% in Q3 of F’18 compared with 50.7% in Q3 of F’17. • SG&A expense of $101.7M (34.1% of sales) in Q3 of F’18 compared with $98.4M (35.7% of sales) in Q3 of F’17. • R&D expense of $11.7M (3.9% of sales) in Q3 of F’18 compared with $10.0M (3.6% of sales) in Q3 of F’17. • Earnings before income taxes increased 20.7% to $37.0M in Q3 of F’18 compared with $30.6M in Q3 of F’17. • Net earnings per Class A Diluted Nonvoting Common Share of $0.49 in Q3 of F’18, compared with $0.43 in Q3 of F’17. • Cash flow from operating activities increased 23.6% to $46.8M in Q3 of F’18 (180% of net earnings), compared to Q3 of F’17.

Sales Overview 4 SALES (millions of USD) $305 $298 $295 $289 $290 $287 $288 $285 $282 $280 $276 $275 $268 $265 $255 Q3 F'16 Q4 F'16 Q1 F'17 Q2 F'17 Q3 F'17 Q4 F'17 Q1 F'18 Q2 F'18 Q3 F'18 Organic Sales (0.1%) (0.9%) (0.2%) 1.3% (1.9%) 3.0% 1.7% 3.2% 3.2% Growth Q3 F’18 SALES: Q3 F’18 SALES COMMENTARY: • 3.2% increase in organic sales: • ID Solutions - Organic sales increased in all three regions. • ID Solutions – Organic sales increased 3.7%. • Workplace Safety - Organic sales increased in all three • Workplace Safety – Organic sales increased regions. 1.7%. • Foreign currency translation had a positive impact on • 5.0% increase due to foreign currency translation. sales in the quarter.

Gross Profit Margin 5 GROSS PROFIT & GPM% (millions of USD) 50.7% 50.7% 50.6% 50.3% 50.1% 50.1% 50.0% 49.7% 49.9% $151 50% $150 $145 $146 $144 $144 $141 $140 $140 $134 45% $125 $100 40% Q3 F'16 Q4 F'16 Q1 F'17 Q2 F'17 Q3 F'17 Q4 F'17 Q1 F'18 Q2 F'18 Q3 F'18 Q3 F’18 – GROSS PROFIT MARGIN: • GPM was relatively flat at 50.6% in Q3 of F’18 compared with 50.7% in Q3 of F’17. • Operational efficiency gains are generally offsetting any pricing challenges.

SG&A Expense 6 SG&A EXPENSE AND SG&A EXPENSE AS A % of SALES (millions of USD) $120 40% 36.9% 35.7% 38% 35.3% $110 34.9% 35.0% 34.5% $106 33.4% 33.9% 34.1% 35% $98 $100 $100 $98 $98 33% $97 $98 $102 $95 30% $90 28% $80 25% Q3 F'16 Q4 F'16 Q1 F'17 Q2 F'17 Q3 F'17 Q4 F'17 Q1 F'18 Q2 F'18 Q3 F'18 Q3 F’18 – SG&A EXPENSE: • SG&A expense was $101.7M (34.1% of sales) in Q3 of F’18 compared to $98.4M (35.7% of sales) in Q3 of F’17. • The increase in SG&A expense was driven by foreign currency translation. In constant currencies, SG&A expense was down compared with Q3 of F’17. • We continue to drive efficiencies in administrative expenses and non-customer facing selling expenses while investing in additional sales-generating resources.

R&D Expense 7 R&D EXPENSE AND R&D EXPENSE AS A % of SALES (millions of USD) $14.0 3.8% 3.9% 3.9% 4.0% 3.6% 3.6% $12.0 3.5% $11.7 $11.3 $11.0 3.5% 3.3% $10.5 3.3% $10.0 $10.0 3.1% $9.5 $9.3 $9.1 3.0% $8.9 $8.0 $6.0 2.5% Q3 F'16 Q4 F'16 Q1 F'17 Q2 F'17 Q3 F'17 Q4 F'17 Q1 F'18 Q2 F'18 Q3 F'18 INCREASING OUR INVESTMENT IN RESEARCH & DEVELOPMENTDEVELOPMENT:: • Investing in R&D to drive future organic sales growth. • R&D expenses were up 17.4% in Q3 of F’18 compared to Q3 of F’17. • Improved new product pipeline. • Anticipate R&D expenditures to be up approximately 15% for the full year ending July 31, 2018.

Earnings Before Income Taxes 8 EARNINGS BEFORE INCOME TAXES (millions of USD) $40 $35.9 $37.0 $34.8 $35.0 $35 $32.0 $31.0 $30.6 $29.7 $30 $29.1 $25 $20 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 F'16 F'16 F'17 F'17 F'17 F'17 F'18 F'18 F'18 Year on Year Growth 30.4% 49.1% 14.0% 42.2% 3.2% 12.2% 12.2% 20.4% 20.7% EARNINGS BEFORE INCOME TAXES: • Earnings before income taxes increased 20.7% to $37.0M in Q3 of F’18 compared to $30.6M in Q3 of F’17. • The increase in pre-tax earnings was driven by organic sales growth and efficiency gains throughout both the ID Solutions and Workplace Safety businesses.

Net Earnings & Earnings per Share 9 NET EARNINGS (millions of USD) NET EARNINGS PER CLASS A DILUTED SHARE $40 $0.60 $30 $0.49 $0.49 $0.48 $0.49 $0.49 $25.1 $25.3 $25.2 $25.8 $26.0 $0.42 $0.44 $0.43 $22.6 $22.6 $21.0 $0.40 $20 $0.20 $10 $4.3 $0.08 $0 $0.00 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 F'16 F'16 F'17 F'17 F'17 F'17 F'18 F'18 F'18 F'16 F'16 F'17 F'17 F'17 F'17 F'18 F'18 F'18 Q3 F’18 – NET EARNINGS & EPS: • Net earnings increased 15.3% to $26.0M in Q3 of F’18 compared to $22.6M in Q3 of F’17. • Diluted EPS increased 14.0% to $0.49 in Q3 of F’18 compared to $0.43 in Q3 of F’17.

Cash Generation & Uses 10 CASH FLOW FROM OPERATING ACTIVITIES (millions of USD) CASH FLOWS IN Q3 OF F’18: $60 • Cash flow from operating activities was $52.9 $46.8M in Q3 of F’18 compared to $37.8M in $50 $46.8 $40.3 $40.4 Q3 of F’17. $37.8 $40 $34.0 $34.7 • Free cash flow* was $40.5M in Q3 of F’18 $30 compared to $34.2M in Q3 of F’17. $19.3 $20 • Spent $6.3M on capital projects to expand capabilities and increase efficiencies. $10 $7.7 • Returned $10.7M to our shareholders in the $0 form of dividends in Q3 of F’18. Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 F'16 F'16 F'17 F'17 F'17 F'17 F'18 F'18 F'18 % of Net Earnings 192% 161% 151% 76% 168% 209% 134% 181% 180% (millions of USD) 3 Mos. Ended 3 Mos. Ended Apr. 30, 2018 Apr. 30, 2017 Cash Balance - Beginning of Period $ 115.3 $ 125.2 Cash Flow from Operating Activities 46.8 37.8 Capital Expenditures (6.3) (3.6) Dividends (10.7) (10.5) Debt Repayments - Net (11.7) (26.3) Effect of Exchange Rates on Cash (1.8) 2.9 * Free Cash Flow is calculated as Net Cash Provided by Other (0.7) 3.6 Operating Activities less Capital Expenditures. Cash Balance - End of Period $ 130.9 $ 129.1

Net Cash (Debt) 11 NET CASH (DEBT) (millions of USD) DEBT STRUCTURE (millions of USD) $73 $75 Interest April 30, 2018 July 31, 2017 $48 $44 Rate Balance Balance $26 Revolver Borrowings: $25 USD-denominated - $ - $ (17.0) EUR-denominated 0.75% (3.6) (34.3) -$25 $(9) China Borrowings: USD & CNY-denominated - - (3.2) $(38) $(50) Private Placements: -$75 EUR-den. 2010 Series (10-yr.) 4.24% (54.6) (53.2) $(76) TOTAL DEBT $ (58.2) $ (107.7) $(101) -$125 Cash and Cash Equivalents 130.9 133.9 NET CASH $ 72.7 $ 26.2 -$175 Q3 F'16 Q4 F'16 Q1 F'17 Q2 F'17 Q3 F'17 Q4 F'17 Q1 F'18 Q2 F'18 Q3 F'18 STRONG BALANCE SHEET: • April 30, 2018 cash = $130.9M and debt = $58.2M. • Net cash increased $81.6M from April 30, 2017 to April 30, 2018. • Balance sheet provides flexibility for future investments.

Full-Year F’18 Guidance 12 F’18 Diluted EPS guidance range tightened to $1.95 to $2.00.* F’18 Guidance Assumptions: • Low-single digit organic sales growth. • Full-year depreciation and amortization expense of approximately $26M. • Income tax rate of 27% to 29%.* • Full-year capital expenditures of approximately $20M to $25M. * Exclusive of $0.40 per share of tax charges primarily related to the enactment of the U.S. Tax Cuts and Jobs Act.

Identification Solutions 13 Q3 F’18 vs. Q3 F’17 PERFORMANCE (millions of USD) Q3 F’18 SUMMARY: Q3 F’18 Q3 F’17 Change • Revenues increased 7.8%: • Organic = +3.7% Sales $ 212.2 $ 196.9 + 7.8% • Fx = +4.1% Segment Profit 37.0 32.6 + 13.3% • Organic sales increased in the mid-single digits in Segment Profit % 17.4% 16.6% + 80 pts EMEA and Asia and increased in the low-single digits in the Americas. • R&D expenses up due to increased investments to SALES & SEGMENT PROFIT % (millions of USD) develop innovative products. 19% 17% 17% 17% 17% • Segment profit as a percent of sales increased due to $220 16% 17% 16% 17% ongoing efficiency gains in our operations and 16% 15% $212 general and administrative expense structure. $211 $210 15% $210 $206 $203 13% $201 $201 $200 $197 11% OUTLOOK: $191 9% • Expect continued low-to-mid single digit organic sales $190 growth in F’18. 7% • Expect segment profit to continue to be in the mid-to- $180 5% high teens as a percent of sales in F’18. Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 F'16 F'16 F'17 F'17 F'17 F'17 F'18 F'18 F'18

Workplace Safety 14 Q3 F’18 vs. Q3 F’17 PERFORMANCE (millions of USD) Q3 F’18 SUMMARY: Q3 F’18 Q3 F’17 Change • Revenues increased 9.1%: • Organic = +1.7% Sales $ 86.3 $ 79.0 + 9.1% • Fx = +7.4% Segment Profit 7.5 5.1 + 47.2% • Organic sales increased in the mid-single digits in Segment Profit % 8.7% 6.5% + 220 pts Australia and increased in the low-single digits in Europe and North America. • North American business is showing signs of SALES & SEGMENT PROFIT % (millions of USD) improvement. $100 12% 12% • Segment profit as a percent of sales increased due to 10% sales growth and ongoing efficiency gains in our $95 10% 9% 9% operations and general and administrative expense 8% structure. $90 8% 7% 8% 6% 8% $86 $85 $85 6% $81 OUTLOOK: $80 $80 $79 $79 $79 4% $77 $78 • Expect approximately flat to slightly positive organic sales growth in F’18. $75 2% • Expect segment profit to continue to be in the high $70 0% single digits as a % of sales in F’18. Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 F'16 F'16 F'17 F'17 F'17 F'17 F'18 F'18 F'18

Investor Relations 15 Brady Contact: Ann Thornton Investor Relations 414-438-6887 Ann_Thornton@bradycorp.com See our web site at www.bradycorp.com