SEC Document

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): May 19, 2016

(Exact name of registrant as specified in its charter)

Commission File Number 1-14959




Wisconsin		39-0971239
(State of Incorporation)		(IRS Employer Identification No.)

6555 West Good Hope Road

Milwaukee, Wisconsin 53223

(Address of Principal Executive Offices and Zip Code)

(Registrant’s Telephone Number)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:



¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)



¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)



¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))



¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))



Item 2.02	RESULTS OF OPERATIONS AND FINANCIAL CONDITION

On May 19, 2016, Brady Corporation (the “Company”) issued a press release announcing its fiscal 2016 third quarter financial results. A copy of the press release is being furnished to the Securities and Exchange Commission as Exhibit 99.1 attached hereto and is incorporated herein by reference.



Item 7.01	REGULATION FD DISCLOSURE

On May 19, 2016, the Company hosted a conference call related to its fiscal 2016 third quarter financial results. A copy of the slides referenced in the conference call, which is also posted on the Corporation’s website, is being furnished to the Securities and Exchange Commission as Exhibit 99.2 attached hereto and is incorporated herein by reference.



Item 9.01	FINANCIAL STATEMENTS AND EXHIBITS



EXHIBIT NUMBER	DESCRIPTION
99.1	Press Release of Brady Corporation, dated May 19, 2016, relating to third quarter fiscal 2016 financial results.
99.2	Informational slides provided by Brady Corporation, dated May 19, 2016, relating to third quarter fiscal 2016 financial results.

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.



		BRADY CORPORATION


Date: May 19, 2016		/s/ AARON J. PEARCE
		Aaron J. Pearce
		Senior Vice President, Chief Financial Officer and Chief Accounting Officer



EXHIBIT NUMBER	DESCRIPTION
99.1	Press Release of Brady Corporation, dated May 19, 2016, relating to third quarter fiscal 2016 financial results.
99.2	Informational slides provided by Brady Corporation, dated May 19, 2016, relating to third quarter fiscal 2016 financial results.

For More Information:

Investor contact: Ann Thornton 414-438-6887

Media contact: Kate Venne 414-358-5176

Brady Corporation Reports Fiscal 2016 Third Quarter Results and Increases its Fiscal 2016 EPS Guidance

Earnings per diluted Class A Nonvoting Common Share of $0.42 in the third quarter of fiscal 2016 were up 27.3 percent and 23.5 percent compared to GAAP and non-GAAP earnings from continuing operations per diluted Class A Nonvoting Common Share* of $0.33 and $0.34, respectively, in the same quarter of the prior year.

Organic revenue decline of 0.1 percent for the quarter ended April 30, 2016.

Net cash provided by operating activities was $40.3 million during the third quarter of fiscal 2016, compared to $28.8 million in the same quarter of the prior year.

Earnings per diluted Class A Common Share guidance for the full year ending July 31, 2016, increased to a range of $1.37 to $1.45.

MILWAUKEE (May 19, 2016)--Brady Corporation (NYSE: BRC) (“Brady” or “Company”), a world leader in identification solutions, today reported its financial results for its fiscal 2016 third quarter ended April 30, 2016.

Quarter Ended April 30, 2016 Financial Results:

Net earnings for the quarter ended April 30, 2016, were $21.0 million compared to $17.2 million in the same quarter last year. Non-GAAP net earnings* were $17.6 million for the quarter ended April 30, 2015.

Earnings per diluted Class A Nonvoting Common Share were $0.42 for the third quarter ended April 30, 2016, compared to $0.33 in the same quarter last year. Non-GAAP earnings per diluted Class A Nonvoting Common Share* were $0.34 for the quarter ended April 30, 2015.

Sales for the quarter ended April 30, 2016, decreased 1.2 percent to $286.8 million compared to $290.2 million in the third quarter of fiscal 2015. Total organic sales decreased 0.1 percent and foreign currency translation decreased sales by 1.1 percent. By segment, organic sales decreased 0.8 percent in Identification Solutions and increased 1.2 percent in Workplace Safety.

Nine-Month Period Ended April 30, 2016 Financial Results:

Net earnings for the nine-month period ended April 30, 2016, were $55.0 million compared to $42.4 million in the same period last year. Non-GAAP earnings from continuing operations* were $51.1 million for the nine-month period ended April 30, 2015.

Earnings per diluted Class A Nonvoting Common Share were $1.08 for the nine-month period ended April 30, 2016, compared to earnings from continuing operations per diluted Class A Nonvoting Common Share of $0.86 in the same period in fiscal 2015. Non-GAAP earnings from continuing operations per diluted Class A Nonvoting Common Share* were $0.99 for the nine-month period ended April 30, 2015.

Sales for the nine-month period ended April 30, 2016, decreased 5.0 percent to $838.5 million compared to $883.1 million in the same period in fiscal 2015. Total organic sales decreased 0.7 percent and the impact of foreign currency translation decreased sales by 4.3 percent. By segment, organic sales decreased 0.9 percent in Identification Solutions and decreased 0.2 percent in Workplace Safety.

“We continue to realize benefits from our focus on operational efficiency and local accountability, as our gross profit margin, segment profit margins and net earnings have all improved on a year-over-year basis for the third consecutive quarter,” said Brady’s President and Chief Executive Officer, J. Michael Nauman. “Organic sales were essentially flat this quarter, and we expect to face continued economic challenges in certain industrial markets and geographies. Our top priorities remain unchanged, which are to grow our pipeline of innovative new products and deliver operational efficiencies while serving our customers exceptionally well. I am pleased with our ability to improve our financial performance while simultaneously investing in our capabilities to create innovative solutions for our customers. Our consistent focus on our long-term strategy has positioned Brady to compete effectively and deliver improved results to our shareholders.”

“Our focus on operational efficiency continues to result in improved cash flow. During the quarter ended April 30, 2016, net cash provided by operating activities increased to $40.3 million from $28.8 million in the same quarter of last year. Our year-to-date net cash provided by operating activities has increased by 87 percent as we finished with $98.6 million for the nine-month period ended April 30, 2016, compared with $52.7 million for the same period last year,” said Brady’s Chief Financial Officer, Aaron Pearce. “As a result of our strong cash generation, our balance sheet continues to provide significant flexibility for future investment.”

Fiscal 2016 Guidance:

The Company is increasing its earnings per share guidance for the full year ending July 31, 2016, and anticipates earnings per diluted Class A Common Share to range from $1.37 to $1.45. Included in this guidance is a low-single digit decline in organic sales for the full fiscal year, which is reflective of ongoing economic challenges. Offsetting these anticipated organic sales declines are efficiency gains in the Company’s manufacturing facilities and selling, general, and administrative expenses. This guidance is based upon exchange rates as of April 30, 2016, and a full-year income tax rate in the upper 20 percent range.

A webcast regarding Brady’s fiscal 2016 third quarter financial results will be available at www.bradycorp.com beginning at 9:30 a.m. Central Time today.

Brady Corporation is an international manufacturer and marketer of complete solutions that identify and protect people, products and places. Brady’s products help customers increase safety, security, productivity and performance and include high-performance labels, signs, safety devices, printing systems and software. Founded in 1914, the Company has a diverse customer base in electronics, telecommunications, manufacturing, electrical, construction, medical, aerospace and a variety of other industries. Brady is headquartered in Milwaukee, Wisconsin and as of July 31, 2015, employed approximately 6,400 people in its worldwide businesses. Brady’s fiscal 2015 sales were approximately $1.17 billion. Brady stock trades on the New York Stock Exchange under the symbol BRC. More information is available on the Internet at www.bradycorp.com.

* See accompanying notes for Non-GAAP measures.

In this news release, statements that are not reported financial results or other historic information are “forward-looking statements.” These forward-looking statements relate to, among other things, the Company's future financial position, business strategy, targets, projected sales, costs, earnings, capital expenditures, debt levels and cash flows, and plans and objectives of management for future operations.

The use of words such as “may,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “believe,” “should,” “project” or “plan” or similar terminology are generally intended to identify forward-looking statements. These forward-looking statements by their nature address matters that are, to different degrees, uncertain and are subject to risks, assumptions, and other factors, some of which are beyond Brady’s control, that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. For Brady, uncertainties arise from: implementation of the Workplace Safety strategy; Brady’s ability to develop and successfully market technologically advanced new products; technology changes and potential security violations to the Company’s information technology systems; future competition; future financial performance of major markets Brady serves, which include, without limitation, telecommunications, hard disk drive, manufacturing, electrical, construction, laboratory, education, governmental, public utility, computer, healthcare and transportation; fluctuations in currency rates versus the U.S. dollar; risks associated with international operations; difficulties associated with exports; changes in the supply of, or price for, parts and components; increased price pressure from suppliers and customers; Brady’s ability to retain significant contracts and customers; risk associated with loss of key talent; risks associated with obtaining governmental approvals and maintaining regulatory compliance; risk associated with product liability claims; environmental, health and safety compliance costs and liabilities; potential write-offs of Brady’s substantial intangible assets; unforeseen tax consequences; risks associated with restructuring plans and maintaining acceptable operational service metrics; risks associated with divestitures; risks associated with identifying, completing, and integrating acquisitions; risks associated with our ownership structure; Brady’s ability to maintain compliance with its debt covenants; increase in our level of debt; and numerous other matters of national, regional and global scale, including those of a political, economic, business, competitive, and regulatory nature contained from time to time in Brady’s U.S. Securities and Exchange Commission filings, including, but not limited to, those factors listed in the “Risk Factors” section within Item 1A of Part I of Brady’s Form 10-K for the year ended July 31, 2015.

These uncertainties may cause Brady's actual future results to be materially different than those expressed in its forward-looking statements. Brady does not undertake to update its forward-looking statements except as required by law

BRADY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EARNINGS

(Unaudited; Dollars in thousands, except per share data)



	Three months ended April 30,		Nine months ended April 30,
	2016		2015		2016		2015
Net sales	$	286,816			$	290,227			$	838,519		$	883,095
Cost of products sold	141,373			149,228			420,835			453,732
Gross margin	145,443			140,999			417,684			429,363
Operating expenses:
Research and development	8,865			8,928			26,531			27,507
Selling, general and administrative	105,794			102,952			306,678			319,796
Restructuring charges	—			4,834			—			13,991
Total operating expenses	114,659			116,714			333,209			361,294

Operating income	30,784			24,285			84,475			68,069

Other income (expense):
Investment and other income (expense)	721			434			(1,030	)		968
Interest expense	(1,838	)		(2,503	)		(6,119	)		(8,394	)

Earnings from continuing operations before income taxes	29,667			22,216			77,326			60,643

Income tax expense	8,686			5,003			22,352			16,347

Earnings from continuing operations	$	20,981			$	17,213			$	54,974		$	44,296

Loss from discontinued operations, net of income taxes	—			—			—			(1,915	)

Net earnings	$	20,981			$	17,213			$	54,974		$	42,381

Earnings from continuing operations per Class A Nonvoting Common Share:
Basic	$	0.42			$	0.34			$	1.09		$	0.86
Diluted	$	0.42			$	0.33			$	1.08		$	0.86

Earnings from continuing operations per Class B Voting Common Share:
Basic	$	0.42			$	0.34			$	1.07		$	0.85
Diluted	$	0.42			$	0.33			$	1.07		$	0.85

Loss from discontinued operations per Class A Nonvoting Common Share:
Basic	$	—			$	—			$	—		$	(0.03	)
Diluted	$	—			$	—			$	—		$	(0.03	)

Loss from discontinued operations per Class B Voting Common Share:
Basic	$	—			$	—			$	—		$	(0.04	)
Diluted	$	—			$	—			$	—		$	(0.04	)

Net earnings per Class A Nonvoting Common Share:
Basic	$	0.42			$	0.34			$	1.09		$	0.83
Diluted	$	0.42			$	0.33			$	1.08		$	0.83
Dividends	$	0.20			$	0.20			$	0.61		$	0.60

Net earnings per Class B Voting Common Share:
Basic	$	0.42			$	0.34			$	1.07		$	0.81
Diluted	$	0.42			$	0.33			$	1.07		$	0.81
Dividends	$	0.20			$	0.20			$	0.59		$	0.58

Weighted average common shares outstanding (in thousands):
Basic	50,251			51,301			50,602			51,275
Diluted	50,505			51,450			50,747			51,370

BRADY CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited; Dollars in thousands)



	April 30, 2016		July 31, 2015
ASSETS
Current assets:
Cash and cash equivalents	$	141,596			$	114,492
Accounts receivable—net	153,289			157,386
Inventories:
Finished products	63,105			66,700
Work-in-process	17,145			16,958
Raw materials and supplies	20,317			20,849
Total inventories	100,567			104,507
Prepaid expenses and other current assets	33,981			32,197
Total current assets	429,433			408,582
Other assets:
Goodwill	436,191			433,199
Other intangible assets	62,260			68,888
Deferred income taxes	16,465			22,310
Other	17,157			18,704
Property, plant and equipment:
Cost:
Land	5,258			5,284
Buildings and improvements	94,155			94,423
Machinery and equipment	262,992			270,086
Construction in progress	2,025			2,164
	364,430			371,957
Less accumulated depreciation	264,661			260,743
Property, plant and equipment—net	99,769			111,214
Total	$	1,061,275			$	1,062,897
LIABILITIES AND STOCKHOLDERS’ INVESTMENT
Current liabilities:
Notes payable	$	6,230			$	10,411
Accounts payable	64,428			73,020
Wages and amounts withheld from employees	40,987			30,282
Taxes, other than income taxes	7,817			7,250
Accrued income taxes	4,991			7,576
Other current liabilities	39,329			38,194
Current maturities on long-term debt	—			42,514
Total current liabilities	163,782			209,247
Long-term obligations, less current maturities	236,310			200,774
Other liabilities	65,843			65,188
Total liabilities	465,935			475,209
Stockholders’ investment:
Common Stock:
Class A nonvoting common stock—Issued 51,261,487 and 51,261,487 shares, respectively and outstanding 46,723,474 and 47,781,184 shares, respectively	513			513
Class B voting common stock—Issued and outstanding, 3,538,628 shares	35			35
Additional paid-in capital	316,373			314,403
Earnings retained in the business	438,441			414,069
Treasury stock—4,538,013 and 3,480,303 shares, respectively of Class A nonvoting common stock, at cost	(114,012	)		(93,234	)
Accumulated other comprehensive loss	(42,396	)		(45,034	)
Other	(3,614	)		(3,064	)
Total stockholders’ investment	595,340			587,688
Total	$	1,061,275			$	1,062,897

BRADY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited; Dollars in thousands)



	Nine months ended April 30,
	2016		2015
Operating activities:
Net earnings	$	54,974			$	42,381
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	24,896			28,511
Non-cash portion of stock-based compensation expense	6,247			3,556
Non-cash portion of restructuring charges	—			3,545
Loss on sale of business, net	—			426
Deferred income taxes	3,169			(4,533	)
Changes in operating assets and liabilities (net of effects of business acquisitions/divestitures):
Accounts receivable	4,679			(797	)
Inventories	4,556			(8,385	)
Prepaid expenses and other assets	(734	)		201
Accounts payable and accrued liabilities	3,432			(8,399	)
Income taxes	(2,669	)		(3,766	)
Net cash provided by operating activities	98,550			52,740

Investing activities:
Purchases of property, plant and equipment	(7,468	)		(23,545	)
Sale of business, net of cash retained	—			6,111
Other	1,987			3,927
Net cash used in investing activities	(5,481	)		(13,507	)

Financing activities:
Payment of dividends	(30,603	)		(30,712	)
Proceeds from issuance of common stock	663			1,591
Purchase of treasury stock	(23,552	)		—
Net proceeds from borrowing on credit facilities	28,819			64,638
Principal payments on debt	(42,514	)		(42,514	)
Debt issuance costs	(803	)		—
Income tax on equity-based compensation, and other	(1,238	)		(3,832	)
Net cash used in financing activities	(69,228	)		(10,829	)

Effect of exchange rate changes on cash	3,263			(9,770	)

Net increase in cash and cash equivalents	27,104			18,634
Cash and cash equivalents, beginning of period	114,492			81,834

Cash and cash equivalents, end of period	$	141,596			$	100,468

BRADY CORPORATION AND SUBSIDIARIES

(Unaudited; Dollars in thousands)



	Three months ended April 30,		Nine months ended April 30,
	2016		2015		2016		2015
SALES TO EXTERNAL CUSTOMERS
ID Solutions	$	196,953			$	200,786			$	578,160		$	604,948
Workplace Safety	89,863			89,441			260,359			278,147
Total	$	286,816			$	290,227			$	838,519		$	883,095

SALES INFORMATION
ID Solutions
Organic	(0.8	)%		3.0	%		(0.9	)%		2.4	%
Currency	(1.1	)%		(5.7	)%		(3.5	)%		(3.3	)%
Total	(1.9	)%		(2.7	)%		(4.4	)%		(0.9	)%
Workplace Safety
Organic	1.2	%		(1.1	)%		(0.2	)%		0.6	%
Currency	(0.7	)%		(12.2	)%		(6.2	)%		(7.1	)%
Total	0.5	%		(13.3	)%		(6.4	)%		(6.5	)%
Total Company
Organic	(0.1	)%		1.7	%		(0.7	)%		1.8	%
Currency	(1.1	)%		(8.0	)%		(4.3	)%		(4.6	)%
Total	(1.2	)%		(6.3	)%		(5.0	)%		(2.8	)%

SEGMENT PROFIT
ID Solutions	$	46,445			$	41,614			$	123,451		$	120,800
Workplace Safety	13,759			12,292			43,818			40,607
Total	$	60,204			$	53,906			$	167,269		$	161,407
SEGMENT PROFIT AS A PERCENT OF SALES
ID Solutions	23.6	%		20.7	%		21.4	%		20.0	%
Workplace Safety	15.3	%		13.7	%		16.8	%		14.6	%
Total	21.0	%		18.6	%		19.9	%		18.3	%



	Three months ended April 30,		Nine months ended April 30,
	2016		2015		2016		2015
Total segment profit	$	60,204			$	53,906			$	167,269		$	161,407
Unallocated amounts:
Administrative costs	(29,420	)		(24,787	)		(82,794	)		(79,347	)
Restructuring charges	—			(4,834	)		—			(13,991	)
Investment and other income (expense)	721			434			(1,030	)		968
Interest expense	(1,838	)		(2,503	)		(6,119	)		(8,394	)
Earnings from continuing operations before income taxes	$	29,667			$	22,216			$	77,326		$	60,643

(Unaudited; Dollars in Thousands, Except Per Share Amounts)

In accordance with the U.S. Securities and Exchange Commission’s Regulation G, the following provides definitions of the non-GAAP measures used in the earnings release and the reconciliation to the most closely related GAAP measure.



Earnings from Continuing Operations Before Income Taxes Excluding Certain Items:
Brady is presenting the Non-GAAP measure \"Earnings from Continuing Operations Before Income Taxes Excluding Certain Items.\" This is not a calculation based upon GAAP. The amounts included in this Non-GAAP measure are derived from amounts included in the Consolidated Financial Statements and supporting footnote disclosures. We do not view these items to be part of our sustainable results. We believe this profit measure provides an important perspective of underlying business trends and results and provides a more comparable measure from year to year. The table below provides a reconciliation of Earnings from Continuing Operations Before Income Taxes to Earnings from Continuing Operations Before Income Taxes Excluding Certain Items:





			Three Months Ended April 30,	Nine Months Ended April 30,
			2016	2015		2016		2015
Earnings from Continuing Operations Before Income Taxes (GAAP Measure)	$	29,667		$	22,216			$	77,326			$	60,643
	Restructuring charges	—		4,834			—			13,991
	Postretirement benefit plan curtailment gain	—		(4,296	)		—			(4,296	)
Earnings from Continuing Operations Before Income Taxes Excluding Certain Items (non-GAAP measure)	$	29,667		$	22,754			$	77,326			$	70,338



Income Taxes on Continuing Operations Excluding Certain Items:
Brady is presenting the Non-GAAP measure \"Income Taxes on Continuing Operations Excluding Certain Items.\" This is not a calculation based upon GAAP. The amounts included in this Non-GAAP measure are derived from amounts included in the Consolidated Financial Statements and supporting footnote disclosures. We do not view these items to be part of our sustainable results. We believe this measure provides an important perspective of underlying business trends and results and provides a more comparable measure from year to year. The table below provides a reconciliation of Income Taxes on Continuing Operations to Income Taxes on Continuing Operations Excluding Certain Items:


			Three Months Ended April 30,	Nine Months Ended April 30,
			2016	2015		2016		2015
Income Taxes on Continuing Operations (GAAP measure)	$	8,686		$	5,003			$	22,352			$	16,347
	Restructuring charges	—		1,636			—			4,406
	Postretirement benefit plan curtailment gain	—		(1,504	)		—			(1,504	)
Income Taxes on Continuing Operations Excluding Certain Items (non-GAAP measure)	$	8,686		$	5,135			$	22,352			$	19,249



Net Earnings from Continuing Operations Excluding Certain Items:
Brady is presenting the Non-GAAP measure \"Net Earnings from Continuing Operations Excluding Certain Items.\" This is not a calculation based upon GAAP. The amounts included in this Non-GAAP measure are derived from amounts included in the Consolidated Financial Statements and supporting footnote disclosures. We do not view these items to be part of our sustainable results. We believe this measure provides an important perspective of underlying business trends and results and provides a more comparable measure from year to year. The table below provides a reconciliation of Net Earnings from Continuing Operations to Net Earnings from Continuing Operations Excluding Certain Items:





			Three Months Ended April 30,	Nine Months Ended April 30,
	2016		2015	2016		2015
Net Earnings from Continuing Operations (GAAP measure)	$	20,981		$	17,213			$	54,974			$	44,296
	Restructuring charges	—		3,198			—			9,585
	Postretirement benefit plan curtailment gain	—		(2,792	)		—			(2,792	)
Net Earnings from Continuing Operations Excluding Certain Items (non-GAAP measure)	$	20,981		$	17,619			$	54,974			$	51,089

(Unaudited; Dollars in Thousands, Except Per Share Amounts)



Net Earnings from Continuing Operations Per Diluted Class A Nonvoting Common Share Excluding Certain Items:
Brady is presenting the Non-GAAP measure \"Net Earnings from Continuing Operations Per Diluted Class A Nonvoting Common Share Excluding Certain Items.\" This is not a calculation based upon GAAP. The amounts included in this Non-GAAP measure are derived from amounts included in the Consolidated Financial Statements and supporting footnote disclosures. We do not view these items to be part of our sustainable results. We believe this measure provides an important perspective of underlying business trends and results and provides a more comparable measure from year to year. The table below provides a reconciliation of Net Earnings from Continuing Operations Per Diluted Class A Nonvoting Common Share to Net Earnings from Continuing Operations Per Diluted Class A Nonvoting Common Share Excluding Certain Items:


			Three Months Ended April 30,	Nine Months Ended April 30,
	2016		2015	2016		2015
Net Earnings from Continuing Operations Per Diluted Class A Nonvoting Common Share (GAAP measure)	$	0.42		$	0.33			$	1.08			$	0.86
	Restructuring charges	—		0.06			—			0.19
	Postretirement benefit plan curtailment gain	—		(0.05	)		—			(0.05	)
Net Earnings from Continuing Operations Per Diluted Class A Nonvoting Common Share Excluding Certain Items (non-GAAP measure)	$	0.42		$	0.34			$	1.08			$	0.99

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May 19, 2016 Brady Corporation F’16 Q3 Financial Results

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2Forward-Looking Statements In this presentation, statements that are not reported financial results or other historic information are “forward-looking statements.” These forward-looking statements relate to, among other things, the Company's future financial position, business strategy, targets, projected sales, costs, earnings, capital expenditures, debt levels and cash flows, and plans and objectives of management for future operations. The use of words such as “may,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “believe,” “should,” “project” or “plan” or similar terminology are generally intended to identify forward-looking statements. These forward-looking statements by their nature address matters that are, to different degrees, uncertain and are subject to risks, assumptions, and other factors, some of which are beyond Brady's control, that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. For Brady, uncertainties arise from: implementation of the Workplace Safety strategy; Brady's ability to develop and successfully market technologically advanced new products; technology changes and potential security violations to the Company's information technology systems; future competition; future financial performance of major markets Brady serves, which include, without limitation, telecommunications, hard disk drive, manufacturing, electrical, construction, laboratory, education, governmental, public utility, computer, healthcare and transportation; fluctuations in currency rates versus the U.S. dollar; risks associated with international operations; difficulties associated with exports; changes in the supply of, or price for, parts and components; increased price pressure from suppliers and customers; Brady's ability to retain significant contracts and customers; risk associated with loss of key talent; risks associated with obtaining governmental approvals and maintaining regulatory compliance; risk associated with product liability claims; environmental, health and safety compliance costs and liabilities; potential write-offs of Brady's substantial intangible assets; unforeseen tax consequences; risks associated with restructuring plans and maintaining acceptable operational service metrics; risks associated with divestitures; risks associated with identifying, completing, and integrating acquisitions; risks associated with our ownership structure; Brady's ability to maintain compliance with its debt covenants; increase in our level of debt; and numerous other matters of national, regional and global scale, including those of a political, economic, business, competitive, and regulatory nature contained from time to time in Brady's U.S. Securities and Exchange Commission filings, including, but not limited to, those factors listed in the “Risk Factors” section within Item 1A of Part I of Brady’s Form 10-K for the year ended July 31, 2015. These uncertainties may cause Brady's actual future results to be materially different than those expressed in its forward-looking statements. Brady does not undertake to update its forward-looking statements except as required by law.

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3Q3 F’16 Financial Summary • Sales down 1.2% to $286.8M in Q3 of F’16 vs. $290.2M in Q3 of F’15. – Organic sales decreased 0.1%. Foreign currency translation reduced sales by 1.1%. • Gross profit margin of 50.7% in Q3 of F’16 compared with 48.6% in Q3 of F’15. • SG&A expense of $105.8M (36.9% of sales) in Q3 of F’16 compared with $103.0M (35.5% of sales) in Q3 of F’15. • Net earnings of $21.0M in Q3 of F’16 compared with GAAP earnings from continuing operations of $17.2M and non-GAAP earnings* of $17.6M in Q3 of F’15, respectively. • Net earnings per Class A Diluted Nonvoting Share of $0.42 in Q3 of F’16, up 27.3% compared with Net earnings from continuing operations per Class A Diluted Nonvoting Share of $0.33 in Q3 of F’15 and up 23.5% compared with non-GAAP Earnings per Share* of $0.34 in Q3 of F’15. • Net cash provided by operating activities of $40.3M in Q3 of F’16 vs. $28.8M in Q3 of F’15. * Non-GAAP earnings and non-GAAP Earnings per Share are non-GAAP measures. See appendix.

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4Sales Overview • (0.1%) organic sales decline: • ID Solutions – Organic sales decline of (0.8%). • Workplace Safety – Organic sales increase of 1.2%. • (1.1%) decrease due to currency translation. Q3 F’16 SALES: • Our European businesses in both IDS and WPS performed well, with continued organic growth in Q3 and year-to-date. • Challenges persist in Asia and Australia where organic sales were down vs. Q3 of F’15. • Foreign currency translation headwinds are subsiding. Q3 F’16 SALES COMMENTARY: Organic Sales Growth SALES (millions of USD)

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Gross Profit Margin 5 • GPM of 50.7% in Q3 of F’16 compared with 48.6% in Q3 of F’15. • GPM in Q3 of F’15 was impacted by facility consolidation-related costs. • On-going operational improvements are positively impacting profitability. GROSS PROFIT MARGIN COMMENTARY: GROSS PROFIT & GPM% (millions of USD)

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SG&A Expense and G&A Expense 6 • G&A expense was up $4.6M to $29.4M in Q3 of F’16 compared to $24.8M in Q3 of F’15. • G&A expense was up vs. the prior year due to a benefit of $4.3M pre-tax from the curtailment of a retiree medical plan in Q3 of F’15. • Excluding the prior year curtailment benefit, G&A expense increased by $0.3M in Q3 of F’16 compared to the prior year. G&A EXPENSE (subset of SG&A): • SG&A expense was up $2.8M to $105.8M in Q3 of F’ 16 compared to $103.0M in Q3 of F’15. • SG&A expense was up vs. the prior year due to a benefit of $4.3M pre-tax from the curtailment of a retiree medical plan in Q3 of F’15. • Excluding the prior year curtailment benefit, SG&A expense decreased by $1.5M in Q3 of F’16 compared to the prior year. SG&A EXPENSE: GENERAL & ADMIN. EXPENSE (millions of USD)SG&A and SG&A% of SALES (millions of USD)

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7Net Earnings & EPS From Continuing Operations * Non-GAAP Net Earnings from Continuing Operations and Non-GAAP Net Earnings from Continuing Operations Per Class A Diluted Nonvoting Share are non-GAAP measures. See appendix. • Q3 F’16 net earnings were $21.0M compared to Non- GAAP net earnings* of $17.6M in Q3 of F’15. • Increase in earnings driven by improved gross profit margins and efficiencies in operating expenses. Q3 F’16 – NET EARNINGS: • Q3 F’16 Diluted EPS was $0.42 compared to GAAP EPS of $0.33 and Non-GAAP EPS* of $0.34 in Q3 of F’ 15. • EPS modestly impacted by a reduction in diluted weighted average common shares outstanding which decreased from 51.5M in Q3 of F’15 to 50.5M in Q3 of F’16. Q3 F’16 – EPS NET EARNINGS FROM CONTINUING OPERATIONS PER CLASS A DILUTED NONVOTING SHARE, EXCLUDING CERTAIN ITEMS* NET EARNINGS FROM CONTINUING OPERATIONS, EXCLUDING CERTAIN ITEMS* (millions of USD)

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8Cash Generation & Uses • Cash flow from operating activities up nearly 40% to $40.3M in Q3 of F’16 compared to $28.8M in Q3 of F’15. • Free cash flow* of $36.8M in Q3 of F’16 compares to $23.1 in Q3 of F’15. • Returned $10.2M to our shareholders in the form of dividends in Q3 of F’16. • Repaid $13.3M in debt in Q3 of F’16 compared to repayments of $7.3M in Q3 of F’15. • Reduced net debt by over $30M. CASH FLOWS IN Q3 OF F’16: * Free Cash Flow is calculated as Net Cash Provided by Operating Activities less Capital Expenditures. Cash Flow from Operating Activities (millions of USD)

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Net Debt & EBITDA 9 NET DEBT / TTM EBITDA* • April 30, 2016 Cash = $141.6M, Debt = $242.5M (net debt = $100.9M), and TTM EBITDA = $130.3M. • Net Debt/EBITDA* = 0.8 to 1. • Net debt declined by $67M from April 30, 2015 to April 30, 2016. • Balance sheet continues to provide flexibility for future cash uses. STRONG BALANCE SHEET: * EBITDA is a non-GAAP measure. See appendix for the reconciliation of net income to EBITDA. NET DEBT (millions of USD)

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10F’16 Guidance F’16 Diluted EPS $1.37 to $1.45 Guidance Assumptions: • Low single digit organic sales declines, which is reflective of economic challenges in certain industrial markets and geographies. • Exchange rates consistent with those as of April 30, 2016. • Full-year depreciation and amortization expense of approximately $33M. • Full-year tax rate in the upper 20% range. • Full-year capital expenditures of approximately $13M.

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Q3 F’16 vs. Q3 F’15 PERFORMANCE (millions of USD) 11Identification Solutions • Revenues down (1.9%): • Organic = -(0.8%) • Fx = -(1.1)% • Organic sales growth in Europe-based business. • Organic sales down in the Americas and Asia. • Segment profit as a percent of sales increased as a result of operational improvements in recently consolidated facilities and the management of operating expenses. Q3 F’16 SUMMARY: • Expect low-single digit organic sales declines for Q4 of F’16. • Expect segment profit to be slightly above 20% of sales in F’16. OUTLOOK: Q3 F’16 Q3 F’15 Change Sales $ 197.0 $ 200.8 - 1.9% Segment Profit 46.4 41.6 + 11.6% Segment Profit % 23.6% 20.7% + 2.9 pts SALES & SEGMENT PROFIT % (millions of USD)

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Q3 F’16 vs. Q3 F’15 PERFORMANCE (millions of USD) 12Workplace Safety • Revenues increased 0.5%: • Organic = + 1.2% • Fx = -(0.7)% • Continued increase in revenues in Europe, partially offset by low-single digit declines in the U.S. and Australia. • Digital sales are improving as we are starting to see the payback from investments this year. • Segment profit of 15.3% is an improvement compared to the prior year of 13.7% due to efficiencies in catalog advertising and other selling expenses. Q3 F’16 SUMMARY: • Expect low-single digit organic sales declines for Q4 of F’16. • Expect segment profit to continue to be in the mid-to- upper teens as a % of sales in F’16. OUTLOOK: Q3 F’16 Q3 F’15 Change Sales $ 89.9 $ 89.4 + 0.5% Segment Profit 13.8 12.3 + 12.2% Segment Profit % 15.3% 13.7% + 1.6 pts SALES & SEGMENT PROFIT % (millions of USD)

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13Investor Relations Brady Contact: Ann Thornton Investor Relations 414-438-6887 Ann_Thornton@bradycorp.com See our web site at www.bradycorp.com

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Appendix 14

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COMPARABLE INCOME STATEMENTS (millions of USD) 15Comparable Income Statements

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(‘000s of USD) 16Debt Structure

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Brady is presenting EBITDA because it is used by many of our investors and lenders, and is presented as a convenience to them. EBITDA represents net earnings before interest expense, income taxes, depreciation, amortization and impairment charges. EBITDA is not a calculation based on generally accepted accounting principles ("GAAP"). The amounts included in the EBITDA calculation, however, are derived from amounts included in the Consolidated Statements of Earnings data. EBITDA should not be considered as an alternative to net earnings or operating income as an indicator of the Company's operating performance, or as an alternative to net cash provided by operating activities as a measure of liquidity. The EBITDA measure presented may not always be comparable to similarly titled measures reported by other companies due to differences in the components of the calculation. EBITDA - Total Company (‘000s of USD) 17EBITDA Reconciliation – Total Company

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Brady is presenting the Non-GAAP measures "Net Earnings from Continuing Operations Excluding Certain Items“ and “Net Earnings from Continuing Operations Per Diluted Class A Nonvoting Common Share Excluding Certain Items.” These are not calculations based upon GAAP. The amounts included in these Non- GAAP measures are derived from amounts included in the Consolidated Financial Statements and supporting footnote disclosures. We do not view these items to be part of our sustainable results. We believe these measures provide an important perspective of underlying business trends and results and provide more comparable measures from year to year. The tables below provide reconciliations of Net Earnings from Continuing Operations to Net Earnings from Continuing Operations Excluding Certain Items, and Net Earnings from Continuing Operations Per Diluted Class A Nonvoting Common Share to Net Earnings from Continuing Operations Per Diluted Class A Nonvoting Common Share Excluding Certain Items. Reconciliations of Non-GAAP Net Earnings from Continuing Operations (‘000s of USD) 18Non-GAAP Reconciliations

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