Brady Corporation Reports Sales and Earnings for Fiscal 2009 First Quarter and Announces Global Workforce Reduction

Brady Corporation (NYSE:BRC) reports sales and earnings for its fiscal 2009 first quarter ended October 31, 2008.

Sales for the quarter declined 0.5 percent to $378.3 million compared to $380.1 million in the first quarter of fiscal 2008. Organic sales declined 2.5 percent in the quarter, acquisitions contributed 2.1 percent to sales growth and currency exchange had a negative 0.1 percent impact on sales growth. By segment, sales were down 7.9 percent in the Americas and 0.6 percent in Europe; sales increased 13.2 percent in Asia/Pacific.

Net income increased 2.0 percent in the fiscal 2009 first quarter to $37.1 million compared to $36.4 million in the same quarter last year. Earnings per diluted Class A Common share were $0.69 in the first quarter of fiscal 2009, up 4.5 percent compared to $0.66 per diluted share in the prior year’s quarter. Earnings per share results reflect the repurchase of approximately 1.15 million shares in the quarter.

"Our proactive measures to control costs helped to mitigate the effects of a deteriorating economy, and combined with other factors including a lower effective tax rate, resulted in slight net income growth in the first quarter. This was despite a decline in organic sales caused by a marked slowdown in our markets in the later part of the quarter. We expect a continuation of the challenging global economy and are taking additional steps to reduce our costs. These steps include a global workforce reduction of approximately 10 percent to be implemented in the second quarter, a company-wide salary freeze, the continued reduction of discretionary spending and contingency plans for further reductions in the event of more severe business contraction,” said Frank M. Jaehnert, Brady’s president and chief executive officer.

"We expect restructuring charges of approximately $30 million pretax during fiscal 2009. Savings from our cost reduction actions should be approximately $30 million in fiscal 2009,” said Brady Chief Financial Officer Thomas J. Felmer. "Based on current exchange rates and as a result of these unprecedented economic conditions, we expect high single-digit declines in organic sales for the remainder of the fiscal year. We are revising our net income guidance for fiscal 2009 and now expect net income of between $75 and $85 million after restructuring charges of $20 million after tax (previously $140 to $145 million), and earnings per diluted share including restructuring charges of between $1.40 and $1.59 (previously $2.54 to $2.63). Excluding restructuring charges, we expect net income of $95 to $105 million and earnings per diluted share of between $1.78 and $1.97.”

"Brady is a financially strong company, with a solid balance sheet and good cash flow, and we are committed to taking all steps necessary to protect the long-term health of the company in these challenging times. To ensure our competitiveness when the current economic crisis subsides, we will continue to invest in growth strategies including new product development, acquisitions, e-business and the Brady Business Performance System, which focuses on ‘lean’ thinking and continuous improvement,” added Jaehnert.

A web cast regarding fiscal 2009 first quarter results will be available at www.investor.bradycorp.com.

Brady Corporation is an international manufacturer and marketer of complete solutions that identify and protect premises, products and people. Its products include high-performance labels and signs, safety devices, printing systems and software, and precision die-cut materials. Founded in 1914, the company has more than 500,000 customers in electronics, telecommunications, manufacturing, electrical, construction, education, medical and a variety of other industries. Brady is headquartered in Milwaukee and employs nearly 8,000 people at operations in the Americas, Europe and Asia/Pacific. Brady’s fiscal 2008 sales were approximately $1.523 billion. More information is available on the Internet at www.bradycorp.com.

Brady believes that certain statements in this news release are "forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. All statements related to future, not past, events included in this news release, including, without limitation, statements regarding Brady'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 are forward-looking statements. When used in this news release, 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 future financial performance of major markets Brady serves, which include, without limitation, telecommunications, manufacturing, electrical, construction, laboratory, education, governmental, public utility, computer, transportation; difficulties in making and integrating acquisitions; risks associated with newly acquired businesses; Brady's ability to retain significant contracts and customers; future competition; Brady's ability to develop and successfully market new products; changes in the supply of, or price for, parts and components; increased price pressure from suppliers and customers; interruptions to sources of supply; environmental, health and safety compliance costs and liabilities; Brady's ability to realize cost savings from operating initiatives; Brady's ability to attract and retain key talent; difficulties associated with exports; risks associated with international operations; fluctuations in currency rates versus the US dollar; technology changes; potential write-offs of Brady's substantial intangible assets; risks associated with obtaining governmental approvals and maintaining regulatory compliance for new and existing products; business interruptions due to implementing business systems; and 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 located in Item 1A of Part I of Brady's Form 10-K for the year ended July 31, 2008. 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.