Identification solutions and specialty products manufacturer Brady Corp. (BRC) reported Thursday a 41.6% year-over-year drop in profit for the first quarter of fiscal 2010, hurt by restructuring charges as well as a 15.8% decline in quarterly net sales, despite gross margin improvement of 160 basis points amid the ongoing cost-reduction initiatives. Adjusted earnings per share for the quarter dropped, but came in above analysts' expectations. The company also reaffirmed its earnings forecast for the full-year 2010.
In a statement, president and chief executive officer, Frank Jaehnert said, "I'm encouraged to see sales improve by 11 percent from our last fiscal quarter, driven by a stabilization in our markets, as well as new-product and market-based initiatives. Compared to last year's first quarter, our gross margins have improved by 160 basis points as a direct result of our ongoing cost-reduction efforts."
The company added that its continued investments in new product development resulted in a number of successful launches of new proprietary products during the first quarter, including the BMP 21 Portable Printer for wire identification and general labeling, which has already been well-received by our markets.
The Milwaukee, Wisconsin-based company reported net income of $21.67 million, down 41.6% from $37.11 million in the prior-year quarter, and earnings per Class A share dropped 41.4% to $0.41 from last year's $0.69.
The latest quarter results include after tax restructuring charges of $2.6 million or $0.05 per share. Excluding special items, adjusted earnings per share dropped to $0.46 from last year's $0.71.
On average, six analysts polled by Thomson Reuters expected the company to report earnings of $0.41 per share for the quarter. Analysts estimates typically exclude special items.
Net sales for the quarter declined 15.8% to $318.49 million from $378.32 million in the same quarter last year, but topped three Wall Street analysts' consensus estimate of $297.33 million.
Organic sales for the quarter declined 15.9%%, acquisition growth added 0.1%, and foreign currency translation had no impact on sales. On a geographical basis, sales were down 12.8% in Europe, 15.3% in the Americas, and 19.5% in Asia/Pacific.
Operating income for the first quarter dropped 36.7% to $35.56 million from $56.19 million in the prior-year quarter, and total operating expenses were $121.89 million, down 2.5% from $124.95 million in the year-ago quarter.
Gross margin for the quarter decreased 13.1% to $157.44 million from $181153 million in the prior-year quarter. Expenses include restructuring charges of $3.60 million, up 119.7% from $1.64 million in the year-ago quarter.
The company ended the first quarter with cash and cash equivalents of $207.64 million, compared to $178.79 million at end of the prior-year quarter.
Looking ahead to fiscal 2010, Brady said it remains cautious on the outlook because of limited visibility, though it is encouraged by the current results. However, the company maintained its original net income and earnings guidance in the range of $85 million to $95 million or $1.60 to $1.80 per share. The forecast excludes pretax restructuring charges of $15 million or $0.20 per share. The Street is looking for earnings of $1.78 per share for the full-year 2010.
BRC closed Wednesday's regular trading session at $30.00, down $0.16 on a volume of 0.14 million shares, lower than the three-month average volume of 0.27 million shares.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.