Brady Corporation reports 14.4% Net Income decline in 2020 and 0.57 pp EBITDA Margin growth from 16.0% to 16.6%
09/16/2020 • About Brady Corporation (
$BRC) • By InTwits
Brady Corporation reported FY2020 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Brady Corporation has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.0%. At the same time it's in pair with industry average of 2.5%
- CAPEX is quite volatile: $6m in FY2020, $1m in FY2019, $0m in FY2018, $6m in FY2017, $0m in FY2016
- The company has highly profitable business model: ROIC is 15.5%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue decreased on 6.8%. Revenue decline showed acceleration in FY20Q4 - it was 14.7% YoY. During the last 5 years Revenue growth topped in FY2018 at 5.4% and was decelerating since that time. Despite revenue decline the EBITDA margin expanded. EBITDA Margin increased slightly on 0.57 pp from 16.0% to 16.6% in FY2020. EBITDA Margin stuck to a growing trend at 0.82 pp per annum in FY2016-FY2020.
Gross Margin decreased slightly on 0.98 pp from 49.9% to 48.9% in FY2020. During the last 5 years Gross Margin topped in FY2017 at 50.1% and was declining since that time. SG&A as a % of Revenue decreased slightly on 0.89 pp from 32.0% to 31.1% in FY2020. SG&A as a % of Revenue declined at -1.3 pp per annum in FY2016-FY2020.
Net Income margin decreased slightly on 0.92 pp from 11.3% to 10.4% in FY2020.
Investments (CAPEX, working capital and M&A)
In FY2020 the company had CAPEX/Revenue of 2.5%. CAPEX/Revenue increased slightly on 1.2 pp from 1.4% in FY2017 to 2.5% in FY2020. For the last three years the average CAPEX/Revenue was 2.4%.
Return on investment
The company operates at good ROIC (15.5%) and ROE (13.1%). ROIC decreased on 3.6 pp from 19.1% to 15.5% in FY2020. ROE decreased on 3.3 pp from 16.4% to 13.1% in FY2020. During FY2016-FY2020 ROIC topped in FY2019 at 19.1%.
Leverage (Debt)
Debt level is -0.9x Net Debt / EBITDA and 0.3x Debt / EBITDA. Debt decreased on 5.7% while cash dropped on 22.0%.
Brady Corporation has no short term refinancing risk: cash is higher than short term debt (1,422.1%).
Valuation and dividends
The company's trades at EV/EBITDA 9.2x and P/E 16.3x.
Management team
The company's CEO J Michael Nauman has spent 6 years with the company. The company's CFO is Aaron James Pearce. Aaron James Pearce has 6 years tenure at the company.
Financial and operational results
FY ended 07/31/2020
Brady Corporation ($BRC) key annual financial indicators| mln. $ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 1,121 | 1,113 | 1,174 | 1,161 | 1,081 | -6.8% |
| Gross Profit | 559 | 558 | 588 | 579 | 529 | -8.7% |
| SG&A | 405 | 388 | 390 | 371 | 336 | -9.4% |
| EBITDA | 150 | 158 | 178 | 186 | 180 | -3.5% |
| Net Income | 80 | 96 | 91 | 131 | 112 | -14.4% |
Balance Sheet
|
|---|
| Cash | 141 | 134 | 181 | 279 | 218 | -22.0% |
| Short Term Debt | 5 | 3 | 0 | 50 | 15 | -69.5% |
| Long Term Debt | 212 | 105 | 53 | 0 | 32 | |
Cash flow
|
|---|
| Capex | 17 | 15 | 22 | 33 | 27 | -16.9% |
Ratios
|
|---|
| Revenue growth | -4.4% | -0.7% | 5.4% | -1.1% | -6.8% | |
| EBITDA growth | 101.0% | 5.3% | 12.5% | 4.5% | -3.5% | |
|
|---|
| Gross Margin | 49.9% | 50.1% | 50.1% | 49.9% | 48.9% | -1.0% |
| EBITDA Margin | 13.4% | 14.2% | 15.2% | 16.0% | 16.6% | 0.6% |
| SG&A, % of revenue | 36.1% | 34.8% | 33.3% | 32.0% | 31.1% | -0.9% |
| Net Income Margin | 7.1% | 8.6% | 7.8% | 11.3% | 10.4% | -0.9% |
| CAPEX, % of revenue | 1.5% | 1.4% | 1.9% | 2.8% | 2.5% | -0.3% |
|
|---|
| ROIC | 13.6% | 15.4% | 18.5% | 19.1% | 15.5% | -3.6% |
| ROE | 13.4% | 14.7% | 12.5% | 16.4% | 13.1% | -3.3% |
| Net Debt/EBITDA | 0.5x | -0.2x | -0.7x | -1.2x | -0.9x | 0.3x |
Brady Corporation ($BRC) key quoterly financial indicators
| mln. $ | FY20Q1 | FY20Q2 | FY20Q3 | FY20Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 287 | 277 | 266 | 252 | | -2.1% | -2.0% | -8.2% | -14.7% |
| EBITDA | 52 | 52 | 33 | 53 | | 11.5% | 22.8% | -27.7% | 1.5% |
| Net Income | 37 | 34 | 14 | 28 | | 22.4% | 14.8% | -60.8% | -24.4% |
Balance Sheet
|
|---|
| Cash | 295 | 290 | 239 | 218 | | 53.6% | 43.3% | 0.2% | -22.0% |
| Short Term Debt | 65 | 65 | 63 | 15 | | - | - | - | -69.5% |
| Long Term Debt | 40 | 37 | 32 | 32 | | 1,094.2% | -28.3% | -35.7% | - |
Ratios
|
|---|
| Gross Margin | 49.3% | 50.3% | 48.7% | 47.1% | | -0.7% | 0.8% | -1.6% | -2.6% |
| EBITDA Margin | 18.1% | 18.6% | 12.4% | 21.0% | | 2.2% | 3.8% | -3.3% | 3.4% |
| Net Income Margin | 13.1% | 12.1% | 5.1% | 11.0% | | 2.6% | 1.8% | -6.9% | -1.4% |
Peers in Commercial Printing
Below you can find Brady Corporation benchmarking vs. other companies in Commercial Printing industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
