Brady (BRC) investor relations material

Executive summary

• Achieved record-high adjusted EPS of $1.50, up 23% year-over-year, with 8.2% organic sales growth and nearly 52% gross margin, driven by strong performance across all major product lines and regions.

• Announced a definitive agreement to acquire Honeywell's Productivity Solutions and Services (PSS) business for $1.4 billion, expected to double the addressable market and close in the second half of 2026, pending regulatory approval.

• Continued focus on operational efficiency, digital transformation, and integration of recent acquisitions, including MECCO Partners LLC.

• Data centers and Wire ID products remain key growth drivers, with new product launches exceeding expectations.

Financial highlights

• Q3 2026 sales rose 13.8% year-over-year to $435.2 million; organic sales up 8.2%, acquisitions 2.1%, FX 3.5%.

• Gross margin improved to 51.8% for the quarter and 51.3% for the nine months, up from 51.0% and 50.2% respectively.

• Adjusted net income rose 22.3% to $71.9 million; GAAP net income up 10.6% to $57.8 million; diluted EPS increased 11% to $1.21; adjusted EPS up 23% to $1.50.

• Operating income for Q3 2026 was $73.2 million, up from $67.2 million; operating cash flow increased 30.7% to $78.2 million for the quarter and $164.9 million for nine months.

• Net cash position at $148.6 million at April 30, 2026; cash and equivalents at $175.5 million.

Outlook and guidance

• Raised full-year adjusted EPS guidance to $5.20–$5.30 (13–15.2% growth); GAAP EPS to $4.66–$4.76, assuming a 21% tax rate, $44–45 million depreciation/amortization, and $45 million capex.

• Guidance excludes any impact from the pending PSS acquisition; expects mid-single-digit organic sales growth for fiscal 2026.

• Expects to close the PSS acquisition in the second half of 2026, funded by cash and new debt financing.

• Management believes liquidity and financial resources are sufficient to support growth and manage macroeconomic risks.

• Risks include US dollar strengthening, inflation, economic slowdown, and supply chain disruptions.