MILWAUKEE - Brady Corporation (NYSE:BRC), a global leader in identification solutions, reported a lower-than-expected adjusted earnings per share (EPS) for the second quarter of fiscal 2024, sending its shares down 2.4% in market response. The company announced an adjusted EPS of $0.90, which fell short of the analyst consensus of $0.94. Revenue for the quarter was $322.62 million, also below the expected $339.44 million.
Despite the earnings miss, Brady saw a modest increase in organic sales and a notable improvement in gross profit margin. Organic sales grew by 1.6%, and gross profit margin rose to 50.2% in the second quarter of fiscal 2024, up from 48.0% in the corresponding quarter of the previous year. This growth was partially offset by a slight 1.1% decrease in overall sales compared to the same quarter last year, which included a 3.5% reduction due to divestitures.
Brady's President and CEO, Russell R. Shaller, expressed satisfaction with the company's reorganization to a regional structure and highlighted the strong performance in the Europe & Australia region. The company's CFO, Ann Thornton, also noted the growth in organic sales and GAAP earnings per share, as well as an increase in cash flow from operating activities to $36.1 million from $29.4 million in the previous year.
Looking forward, Brady has raised the lower end of its full-year GAAP EPS guidance from $3.70-$3.95 to $3.80-$3.95 and adjusted EPS guidance from $3.85-$4.10 to $3.95-$4.10, excluding after-tax amortization expense. This updated guidance suggests a midpoint of $3.975 for the adjusted EPS, which is slightly below the analyst consensus of $4.07 for FY2024.
The market's negative reaction to the earnings report seems to be driven by the EPS miss, as indicated by the 2.4% decline in Brady's stock following the announcement. Despite this, the company's financial position remains strong, with a net cash position of $95.8 million as of January 31, 2024, which Thornton believes will enable continued investments in growth and shareholder value.
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