Brady Corp. continues to push R&D spending higher

Earnings up by almost 15 percent in Q1

Brady's headquarters on Good Hope Road.

Milwaukee-based Brady Corp. increased its research and development spending by 15 percent in the first quarter of fiscal 2018, continuing its investment in new product development

Brady’s headquarters on Good Hope Road.

“The key to our long-term success is through organic sales growth and we believe we’re making the right investments today for consistent organic sales growth,” said J. Michael Nauman, Brady president and chief executive officer.

Spending on R&D increased from $9.2 million last year to $10.5 million this year and the company is forecasting a 10 percent increase for the year.

The increase comes after Brady increased its R&D spending by 10.6 percent to $39.6 million in fiscal 2017. The company also ended the fiscal year with 234 employees working on R&D, an increase from 210 at the end of fiscal 2016.

Nauman said Brady’s focus on developing new products while also finding efficiencies throughout global operations is working.

The company reported net income of $25.8 million for the quarter, an increase of 14.6 percent. Earnings improved from 44 to 49 cents per diluted share.

Revenues increased by 3.6 percent to $290.2 million with 1.7 percent of the increase coming organically and 1.9 percent coming from foreign currency translation. Organic sales were up 2.9 percent in the identification solutions segment and down 1.4 percent in workplace safety.

“Brady is a company that was built on innovative products and solutions that our customers value to solve their unique safety and identification challenges,” Nauman said. “We are rekindling this culture of innovation and are focused on providing solutions and great customer service to our target markets.”

In addition to increasing research and development spending, Brady has been focused on decreasing selling, general and administrative expenses. The company spent $452.2 million on SG&A in fiscal 2014 and $387.7 million last year.

Spending was up by about $2.1 million to $100.1 million during the first quarter, but the company attributed most of that to foreign currency translation. Nauman did say Brady will be investing in additional sales people to help spur revenue in specific businesses.

Asked by analysts if the company would at some point look at more acquisitions, Nauman said there would be some, but not the kind that target competitors or market share.

“We fundamentally don’t believe that is the best way to develop a high powered growth engine with high profitability,” he said. “I fundamentally believe, rather, that as we look at acquisitions we need to look at them as an opportunity for us to bring key technology into the corporation that we can’t develop in a timely and cost effective manner ourselves.”

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Arthur covers banking and finance and the economy at BizTimes while also leading special projects as an associate editor. He also spent five years covering manufacturing at BizTimes. He previously was managing editor at The Waukesha Freeman. He is a graduate of Carroll University and did graduate coursework at Marquette. A native of southeastern Wisconsin, he is also a nationally certified gymnastics judge and enjoys golf on the weekends.

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