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 21, 2020

BRADY CORPORATION

(Exact name of registrant as specified in its charter)

Commission File Number 1-14959

Wisconsin	39-0971239
(State or other jurisdiction of incorporation or organization)	(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))

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 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 21, 2020, Brady Corporation (the “Company”) issued a press release announcing its fiscal 2020 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 21, 2020, the Company hosted a conference call related to its fiscal 2020 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 21, 2020, relating to third quarter fiscal 2020 financial results.
99.2	Informational slides provided by Brady Corporation, dated May 21, 2020, relating to third quarter fiscal 2020 financial results.
104	Cover Page Interactive Data File (embedded within Inline XBRL document).

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 21, 2020
	/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 2020 Third Quarter Results and Withdraws Fiscal 2020 Financial Guidance

•Income before income taxes was $22.2 million in the third quarter of fiscal 2020 compared to $41.0 million in the same quarter of the prior year.Income before income taxes includes non-cash impairment charges of $13.8 million in the third quarter of fiscal 2020.

•Diluted EPS was $0.26 in the third quarter of fiscal 2020 compared to $0.65 in the same quarter of the prior year.Non-cash impairment charges reduced diluted EPS by approximately $0.21 in the third quarter of fiscal 2020.Diluted EPS in the third quarter of fiscal 2020 was also negatively impacted by an income tax rate of 38.5 percent.

•Sales for the quarter declined 8.2 percent.Organic sales declined 6.0 percent and the impact of foreign currency translation decreased sales by 2.2 percent.

•During the third quarter of fiscal 2020, we returned $64.1 million to shareholders through share repurchases and $11.3 million in the form of dividends.

•Due to the evolving and uncertain impact of the COVID-19 pandemic, the Company is withdrawing its previously communicated fiscal 2020 financial guidance.

MILWAUKEE (May 21, 2020) -- Brady Corporation (NYSE: BRC) (“Brady” or “Company”), a world leader in identification solutions, today reported its financial results for its fiscal 2020 third quarter ended April 30, 2020.

Quarter Ended April 30, 2020 Financial Results:

Income before income taxes declined 45.9 percent to $22.2 million for the quarter ended April 30, 2020, compared to $41.0 million in the same quarter last year.Income before income taxes for the quarter ended April 30, 2020 was reduced by non-cash impairment charges of $13.8 million primarily related to the write down of certain of the tangible and intangible assets in the Company’s Workplace Safety segment.These non-cash impairment charges were primarily driven by sales and profitability reductions and reduced forecasts for future sales and profitability growth in the WPS North American business.

Net income for the quarter ended April 30, 2020 declined 60.8 percent to $13.6 million compared to $34.8 million in the same quarter last year.Earnings per diluted Class A Nonvoting Common Share were $0.26 for the third quarter of fiscal 2020, compared to $0.65 in the same quarter last year.Diluted EPS for the quarter ended April 30, 2020 was reduced by non-cash impairment charges of approximately $0.21 per share.

Sales for the quarter ended April 30, 2020 declined 8.2 percent, which consisted of an organic sales decline of 6.0 percent and a decline of 2.2 percent from foreign currency translation. Sales for the quarter ended April 30, 2020 were $265.9 million compared to $289.7 million in the same quarter last year. By segment, sales declined 9.7

percent in Identification Solutions and declined 3.9 percent in Workplace Safety, which consisted of an organic sales decline of 8.2 percent in Identification Solutions and organic sales growth of 0.2 percent in Workplace Safety.

Nine-Month Period Ended April 30, 2020 Financial Results:

Income before income taxes declined 9.8 percent to $106.1 million for the nine-month period ended April 30, 2020, compared to $117.6 million for the nine-month period ended April 30, 2019.Income before income taxes was reduced by non-cash impairment charges of $13.8 million for the nine-month period ended April 30, 2020.

Net income for the nine-month period ended April 30, 2020 declined 10.5 percent to $84.7 million compared to $94.6 million in the same period last year.Earnings per diluted Class A Nonvoting Common Share were $1.58 for the nine-month period ended April 30, 2020, compared to $1.78 in the same period last year.Diluted EPS was reduced by non-cash impairment charges of approximately $0.21 per share for the nine-month period ended April 30, 2020.

Sales for the nine-month period ended April 30, 2020 declined 4.1 percent, which consisted of an organic sales decline of 2.5 percent and a decline of 1.6 percent from foreign currency translation.Sales for the nine-month period ended April 30, 2020 were $829.6 million compared to $865.4 million in the same period last year.By segment, sales declined 4.3 percent in Identification Solutions and declined 3.6 percent in Workplace Safety, which consisted of organic sales declines of 3.2 percent in Identification Solutions and 0.5 percent in Workplace Safety.

Commentary:

“During these challenging times, as a highly-innovative essential business, Brady is more focused than ever on doing our part to serve the front-line workers and other essential companies with the products and services they need to help fight this global pandemic,” said Brady’s President and Chief Executive Officer, J. Michael Nauman. “Brady’s operations are up and running all around the globe producing products that are going to first responders, healthcare providers, food processing, transportation and many other critical industries. Our foremost focus has been on the safety of our employees as well as supporting our customers with the highest level of service that they have come to expect from Brady. This quarter, we saw strong demand for our products through the first half of March and then demand declined in late March and April as a result of the challenging macro environment. Demonstrating the strength of Brady, even in this tough environment, we posted cash flow from operating activities well in excess of net income.”

“Brady is financially strong.As of April 30, 2020, we had $238.9 million of cash and less than $50 million of debt, putting Brady in an enviable net cash position of $190 million.This quarter, we generated $42.8 million of cash flow from operating activities.Our strong cash generation and our strong balance sheet allows us to continue to execute our capital allocation strategy which involves continuing to invest in ROI-positive capital expenditures; to pay a strong dividend; to buyback our shares in an opportunistic manner; and to, of course, continue to invest in innovation, in sales-generating resources, in efficiency actions, and in actions that improve customer service,” said Brady’s Chief Financial Officer, Aaron Pearce.

Fiscal 2020 Financial Guidance Withdrawn:

Due to the uncertainty around the duration and depth of the economic contraction caused by the COVID-19 pandemic, the Company is withdrawing its previously communicated full-year fiscal 2020 financial guidance, which was provided on February 20, 2020.

A webcast regarding Brady’s fiscal 2020 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, 2019, employed approximately 6,100 people in its worldwide businesses. Brady’s fiscal 2019 sales were approximately $1.16 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:adverse impacts of the COVID-19 pandemic or other pandemics; 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; raw material and other cost increases; extensive regulations by U.S. and non-U.S. governmental and self-regulatory entities; 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; litigation, including product liability claims; 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; numerous other matters of national, regional and global scale, including major public health issues and 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, 2019.

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 INCOME

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

	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

BRADY CORPORATION AND SUBSIDIARIES

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	11,383		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	$	1,040,342	$	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:
Common stock:
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

BRADY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited; Dollars in thousands)

	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 borrowings 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

BRADY CORPORATION AND SUBSIDIARIES

SEGMENT INFORMATION

(Unaudited; Dollars in thousands)

	Three months ended April 30,						Nine months ended April 30,
	2020			2019			2020			2019
NET SALES
ID Solutions	$	193,169		$	213,979		$	613,518		$	641,283
Workplace Safety	72,774			75,766			216,037			224,084
Total	$	265,943		$	289,745		$	829,555		$	865,367
SALES INFORMATION
ID Solutions
Organic	(8.2)		%	4.0		%	(3.2)		%	4.4		%
Currency	(1.5)		%	(3.1)		%	(1.1)		%	(2.3)		%
Total	(9.7)		%	0.9		%	(4.3)		%	2.1		%
Workplace Safety
Organic	0.2		%	(1.6)		%	(0.5)		%	(0.2)		%
Currency	(4.1)		%	(5.3)		%	(3.1)		%	(3.7)		%
Divestitures	—		%	(5.3)		%	—		%	(5.8)		%
Total	(3.9)		%	(12.2)		%	(3.6)		%	(9.7)		%
Total Company
Organic	(6.0)		%	2.4		%	(2.5)		%	3.1		%
Currency	(2.2)		%	(3.8)		%	(1.6)		%	(2.8)		%
Divestitures	—		%	(1.5)		%	—		%	(1.6)		%
Total	(8.2)		%	(2.9)		%	(4.1)		%	(1.3)		%
SEGMENT PROFIT
ID Solutions	$	36,401		$	39,892		$	119,499		$	119,311
Workplace Safety	4,379			6,099			14,991			16,301
Total	$	40,780		$	45,991		$	134,490		$	135,612
SEGMENT PROFIT AS A PERCENT OF NET SALES
ID Solutions	18.8		%	18.6		%	19.5		%	18.6		%
Workplace Safety	6.0		%	8.0		%	6.9		%	7.3		%
Total	15.3		%	15.9		%	16.2		%	15.7		%

	Three months ended April 30,				Nine months ended April 30,
	2020		2019		2020		2019
Total segment profit	$	40,780	$	45,991	$	134,490	$	135,612
Unallocated amounts:
Administrative costs	(4,290)		(6,370)		(15,865)		(19,339)
Impairment charges	(13,821)		—		(13,821)		—
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

EX-99.2

Brady Corporation F’20 Q3 Financial Results May 21, 2020

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: adverse impacts of the COVID-19 pandemic or other pandemics; 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; raw material and other cost increases; extensive regulations by U.S. and non-U.S. governmental and self-regulatory entities; 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; litigation, including product liability claims; 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; numerous other matters of national, regional and global scale, including major public health issues and 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, 2019. 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.

Managing Through the Pandemic 3 Managing Through the Pandemic • Thank you to all of the Brady employees and front-line workers. • Brady is an essential business. • Our factories are operational around the globe. Brady is financially strong. Strategies to Thrive: • Invest in growth. • Drive sustainable efficiencies and automation. • Consistent deployment of capital. • Reduce costs.

Q3 F’20 Financial Summary 4 • Sales were $265.9M in Q3 of F’20 compared with $289.7M in Q3 of F’19. – Organic sales declined 6.0%. – Foreign currency translation decreased sales 2.2%. • Gross profit margin of 48.7% in Q3 of F’20 compared with 50.3% in Q3 of F’19. • SG&A expense of $83.2M (31.3% of sales) in Q3 of F’20 compared with $94.7M (32.7% of sales) in Q3 of F’19. • R&D expense of $9.8M (3.7% of sales) in Q3 of F’20 compared with $11.4M (3.9% of sales) in Q3 of F’19. • Income before income taxes decreased 45.9% to $22.2M in Q3 of F’20 compared with $41.0M in Q3 of F’19. – Income before income taxes includes $13.8M of non-cash impairment charges in Q3 of F’20. • Net income per Class A Diluted Nonvoting Common Share decreased 60.0% to $0.26 in Q3 of F’20 compared with $0.65 in Q3 of F’19. – Diluted EPS includes $11.1M of after-tax impairment charges in Q3 of F’20. – Diluted EPS was impacted by a higher-than-normal tax rate of 38.5% in Q3 of F’20.

Sales Overview 5 SALES (millions of USD) $305 $298 $297 $295 $295 $293 $290 $290 $288 $287 $285 $282 $277 $275 $266 $265 $255 Q1 F'18 Q2 F'18 Q3 F'18 Q4 F'18 Q1 F'19 Q2 F'19 Q3 F'19 Q4 F'19 Q1 F'20 Q2 F'20 Q3 F'20 Organic Sales 1.7% 3.2% 3.2% 2.5% 4.7% 2.3% 2.4% 1.7% (0.4%) (1.2%) (6.0%) Q3 F’20 SALES: Q3 F’20 SALES COMMENTARY: • 6.0% organic sales decline: • Q3 F’20 organic sales grew 2.7% through March 31, 2020, but declined 22.6% in April 2020. • ID Solutions – Organic sales decline of 8.2%. • ID Solutions – Organic sales were down high-single • Workplace Safety – Organic sales growth of digits in the Americas, down in the low-teens in 0.2%. Europe, and up modestly in Asia. • 2.2% decrease due to foreign currency translation. • Workplace Safety – Organic sales were down mid- teens in the Americas, up in the low-single digits in Europe, and up more than 30% in Australia.

Gross Profit Margin 6 GROSS PROFIT & GPM% (millions of USD) 50.6% 50.3% 50.3% 50.3% 49.9% 50.0% 49.6% 49.5% 49.6% $151 49.3% 50% $147 48.7% $150 $146 $147 $146 $147 $144 $140 $141 $139 $130 45% $125 $100 40% Q1 F'18 Q2 F'18 Q3 F'18 Q4 F'18 Q1 F'19 Q2 F'19 Q3 F'19 Q4 F'19 Q1 F'20 Q2 F'20 Q3 F'20 Q3 F’20 – GROSS PROFIT MARGIN: • Gross profit margin of 48.7% compared to 50.3% in Q3 of F’19. • We continue to invest in automation and manufacturing efficiencies. • Gross profit margin was impacted by costs incurred to ensure we could serve our customers, increased personnel costs, product mix, and costs to right-size our cost structure.

SG&A Expense 7 SG&A EXPENSE AND SG&A EXPENSE AS A % of SALES (millions of USD) $110 34.5% 33.9% 34.1% 35% 32.8% 32.7% $102 32.3% $100 31.6% 31.3% 33% $100 $98 30.6% 31.2% 30.2% $95 $95 $93 30% $91 $89 $90 $90 $87 28% $83 $80 25% Q1 F'18 Q2 F'18 Q3 F'18 Q4 F'18 Q1 F'19 Q2 F'19 Q3 F'19 Q4 F'19 Q1 F'20 Q2 F'20 Q3 F'20 Q3 F’20 – SG&A EXPENSE: • The $11.5M reduction in SG&A expense compared to Q3 of F’19 was a combination of: • Ongoing efforts to drive efficiency gains and reduce costs. • Foreign currency translation. • Reduced deferred compensation expense, reduced incentive-based compensation, net of incremental charges such as severance and other charges.

R&D Expense 8 R&D EXPENSE AND R&D EXPENSE AS A % of SALES (millions of USD) $14.0 3.9% 3.9% 3.9% 3.9% 3.9% 3.9% 4.0% 3.8% 3.8% 3.8% 3.6% 3.7% $12.0 $11.7 $11.7 $11.3 $11.3 $11.4 $11.3 $11.1 $11.0 $10.5 $10.5 3.5% $10.0 $9.8 3.0% $8.0 $6.0 2.5% Q1 F'18 Q2 F'18 Q3 F'18 Q4 F'18 Q1 F'19 Q2 F'19 Q3 F'19 Q4 F'19 Q1 F'20 Q2 F'20 Q3 F'20 Q3INCREASING F’20 – R&D OUR EXPENSE: INVESTMENT IN RESEARCH & DEVELOPMENT: • We continue to invest in R&D to drive future organic sales growth. • Solid new product pipeline. • Focused on ensuring our R&D spend is both efficient and effective.

Income Before Income Taxes 9 INCOME BEFORE INCOME TAXES (millions of USD) $50 $47.1 $45.2 $41.6 $42.4 $39.9 $41.0 $40 $37.0 $36.7 $34.8 $35.0 $30 $22.2 $20 $10 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 F'18 F'18 F'18 F'18 F'19 F'19 F'19 F'19 F'20 F'20 F'20 Year on Year Growth 12.2% 20.4% 20.7% 26.0% 14.8% 4.8% 10.8% 4.1% 4.2% 15.4% (45.9%) Q3 F’20 - INCOME BEFORE INCOME TAXES: • Income before income taxes decreased 45.9% to $22.2M in Q3 of F’20 compared to $41.0M in Q3 of F’19. • Income before income taxes was negatively impacted by $13.8M of non-cash impairment charges.

Net Income & Diluted EPS 10 NET INCOME PER CLASS A DILUTED SHARE NET INCOME (millions of USD) $0.70 $0.66 $0.68 $0.65 $40 $36.6 $37.5 $0.62 $35.0 $34.8 $0.60 $0.58 $33.6 $0.55 $30.6 $0.49 $0.49 $29.2 $30 $25.8 $26.0 $0.40 $20 $0.26 $13.6 $0.20 $10 $0.08 $4.3 $0.00 $0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 F'18 F'18 F'18 F'18 F'19 F'19 F'19 F'19 F'20 F'20 F'20 F'18 F'18 F'18 F'18 F'19 F'19 F'19 F'19 F'20 F'20 F'20 Q3 F’20 – NET INCOME & DILUTED EPS: • Net income decreased 60.8% to $13.6M in Q3 of F’20 compared to $34.8M in Q3 of F’19. • Diluted EPS decreased 60.0% to $0.26 in Q3 of F’20 compared to $0.65 in Q3 of F’19. • Net income and diluted EPS were negatively impacted by the following: • $13.8M of impairment charges ($11.1M after tax). • Higher-than-normal income tax rate of 38.5% primarily due to an increase in valuation allowances against foreign tax credit carryforwards. • Diluted EPS benefited from the buyback of 1,407,393 shares during the quarter ended April 30, 2020.

Cash Generation & Uses 11 CASH FLOW FROM OPERATING ACTIVITIES (millions of USD) CASH FLOWS IN Q3 OF F’20: $70 $65.3 • Cash flow from operating activities was $42.8M in Q3 of F’20 compared to $52.7M in Q3 of F’19. $60 $53.8 $52.7 $46.8 • Cash flow from operating activities was $50 $42.8 $38.8 significantly in excess of net earnings during the $40 $34.7 quarter ended April 30, 2020. $30 $25.4 • Free cash flow* was $34.3M in Q3 of F’20 $18.8 $20 $14.3 compared to $47.3M in Q3 of F’19. $10 $7.7 • We returned $11.3M to our shareholders in the form of dividends and returned $64.1M to our $0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 shareholders in the form of share buybacks in F'18 F'18 F'18 F'18 F'19 F'19 F'19 F'19 F'20 F'20 F'20 Q3 of F’20. (millions of USD) 3 Mos. Ended 3 Mos. Ended 9 Mos. Ended 9 Mos. Ended April 30, 2020 April 30, 2019 April 30, 2020 April 30, 2019 Cash Balance - Beginning of Period $ 289.8 $ 202.2 $ 279.1 $ 181.4 Cash Flow from Operating Activities 42.8 52.7 95.9 96.9 Capital Expenditures (8.5) (5.4) (21.6) (17.5) Dividends (11.3) (11.2) (34.4) (33.5) Share Repurchases (64.1) (3.2) (64.1) (3.2) Effect of Exchange Rates on Cash (9.2) (1.5) (9.0) (2.3) Other (0.7) 4.8 (7.0) 16.6 Cash Balance - End of Period $ 238.8 $ 238.4 $ 238.8 $ 238.4 * Free Cash Flow is calculated as Net Cash Provided by Operating Activities less Capital Expenditures.

Net Cash 12 NET CASH (millions of USD) DEBT STRUCTURE (millions of USD) $300 $250 $245 $240 $229 Interest Apr. 30, 2020 July 31, 2019 Rate Balance Balance $200 $188 $190 Private Placements: EUR-den. 2010 Series (10-yr.) 4.24% $ (48.9) $ (50.2) $151 $150 $138 TOTAL DEBT $ (48.9) $ (50.2) $129 Cash and Cash Equivalents 238.9 279.1 $100 $73 NET CASH $ 190.0 $ 228.9 $48 $50 $44 $0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 F'18 F'18 F'18 F'18 F'19 F'19 F'19 F'19 F'20 F'20 F'20 STRONG BALANCE SHEET: • April 30, 2020 cash = $238.9M and debt = $48.9M. • Approximately $88M of our cash is held in the United States. • Balance sheet provides flexibility for future investments. • Private placement debt was fully repaid in May 2020.

Guidance 13 Withdrawing financial guidance for the balance of fiscal 2020 due to the lack of visibility. We intend to: • Continue investing in ROI-positive capital expenditures that improve capabilities or drive automation. • Continue paying dividends. • Continue opportunistically repurchasing shares. • Continue investing in innovation, in sales-generating resources, in efficiency actions, and other actions that improve our customers’ experience. Brady’s strong balance sheet and cash generation afford us the opportunity to stay true to our operating and capital allocation strategies.

Identification Solutions 14 Q3 F’20 vs. Q3 F’19 (millions of USD) Q3 F’20 SUMMARY: • Revenues declined - (9.7%): Q3 F’20 Q3 F’19 Change • Organic = - (8.2%). Sales $ 193.2 $ 214.0 - 9.7% • Fx = - (1.5%). Segment Profit 36.4 39.9 - 8.8% • Organic sales decreased due to an overall slowdown in economic activity in April 2020. Segment Profit % 18.8% 18.6% + 20 bps • Certain expenses were incurred, including severance and facility closure costs, in response to reduced sales levels. These incremental costs were more than offset by reduced incentive-based SALES & SEGMENT PROFIT % (millions of USD) compensation. 22% $300 21% • Segment profit as a percent of sales increased due to 20% 20% 20% ongoing efficiency gains and cost reductions in our $280 19% 19% 19% 18% operations and SG&A structure. $260 17% 18% 17% 17% 17% $240 $222 16% $212 $218 $218 $215 $220 $210 $206 $209 $214 $205 OUTLOOK: $200 $193 14% • Exited Q3 of F’20 with April organic sales down $180 12% 27.6%. $160 10% • May organic sales are trending below prior year $140 levels. $120 8% th $100 6% • We anticipate our fiscal 4 quarter ending July 31, Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2020 to be challenging, but do not yet have clarity as F'18 F'18 F'18 F'18 F'19 F'19 F'19 F'19 F'20 F'20 F'20 to future revenues or earnings.

Workplace Safety 15 Q3 F’20 vs. Q3 F’19 (millions of USD) Q3 F’20 SUMMARY: • Revenues declined - (3.9%): Q3 F’20 Q3 F’19 Change • Organic growth = + 0.2%. Sales $ 72.8 $ 75.8 - 3.9% • Fx = - (4.1%). Segment Profit 4.4 6.1 - 28.2% • Organic sales increased in both Europe and Segment Profit % 6.0% 8.0% - 200 bps Australia, but declined mid-teens in the Americas. • Certain expenses were incurred, including severance and the write-down of capitalized catalog costs, in response to reduced sales levels in April. These incremental costs were partially, but not fully, offset (millions of USD) SALES & SEGMENT PROFIT % by the reduction in incentive-based compensation. 13% 14% • Segment profit as a percent of sales decreased due $120 12% to the impact of certain charges, net of reduced incentive-based compensation. 10% 9% 9% $100 9% 8% 8% 7% 7% 8% 8% $86 6% 6% OUTLOOK: $80 $81 $80 $80 $75 $76 6% $73 $73 $72 $71 $73 • Exited Q3 of F’20 with April organic sales down 7.5%. 4% • May organic sales are trending below prior year $60 2% levels. • We anticipate our fiscal 4th quarter ending July 31, $40 0% 2020 to be challenging, but do not yet have clarity as Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 to future revenues or earnings. F'18 F'18 F'18 F'18 F'19 F'19 F'19 F'19 F'20 F'20 F'20

Investor Relations 16 Brady Contact: Ann Thornton Investor Relations 414-438-6887 Ann_Thornton@bradycorp.com See our web site at www.bradycorp.com

XML

Document and Entity Information Document	May 21, 2020
Document and Entity Information [Abstract]
Entity Central Index Key	0000746598
Title of 12(b) Security	Class A Nonvoting Common Stock, par value $0.01 per share
Pre-commencement Issuer Tender Offer	false
Pre-commencement Tender Offer	false
Soliciting Material	false
Written Communications	false
City Area Code	414
Entity Address, Address Line One	6555 West Good Hope Road
Entity Incorporation, State or Country Code	WI
Document Type	8-K
Document Period End Date	May 21, 2020
Entity Registrant Name	BRADY CORP
Entity File Number	1-14959
Entity Tax Identification Number	39-0971239
Entity Address, City or Town	Milwaukee
Entity Address, State or Province	WI
Entity Address, Postal Zip Code	53223
Local Phone Number	358-6600
Trading Symbol	BRC
Security Exchange Name	NYSE
Entity Emerging Growth Company	false
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q3
Amendment Flag	false