Milwaukee-based Brady Corp. today reported a 32 percent increase in net income for the second quarter of fiscal 2016, despite a decrease in revenue driven by foreign currency exchange rates.
The company reported a profit of $15.3 million for the period, up from $11.6 million the previous year. The company had net earnings of 30 cents per diluted class A common share, up from 23 cents.
While the company reported organic sales were up 0.4 percent, the impact of foreign currency exchange led total sales to be down 5 percent to $268.6 million.
Brady’s identification solutions segment reported sales of $184.9 million for the quarter, a decrease of 3.7 percent. The segment’s organic sales were up 0.7 percent, but foreign currency offset the growth by 4.4 percent. The company had strength in Europe, but organic sales were down in Asia.
The workplace safety segment reported sales of $83.8 million, down 7.5 percent. The segment generates approximately half of its revenue in Europe and foreign currency exchange accounted for a 7.4 percent decrease. Organic sales were down 0.1 percent.
“Although organic sales increased in the second quarter, we expect to continue to be challenged by macroeconomic conditions in certain industrial markets and geographies, including the U.S., Canada, Brazil, and China, which will continue to work against our efforts to improve results,” said J. Michael Nauman, Brady president and chief executive officer.
The company did increase its fiscal 2016 earnings guidance to between $1.20 and $1.35 per diluted class A common share, up from $1.10 to $1.30. Company officials said the increased guidance reflects a belief in what it is doing internally to potentially overcome external challenges. The company is expecting to have a low-single digit decline in organic sales for the full year because of economic challenges in certain industrial markets and geographies, but hopes to offset the weaker sales with manufacturing efficiencies and improvements in selling, general and administrative expenses.
The company’s general and administrative expenses were flat to slightly up for the quarter, but they have been trending down in recent quarters from a focus on increased efficiencies. Nauman said while the company is looking for efficiencies, those with a direct impact on product and customers are still a point of emphasis.
“I think we had too much redundancy of thought,” Nauman said on the company’s earnings call. “People doing the work … are increasing throughout our organization.”
