Brady Corporation — Fourth Quarter Fiscal 2026 Earnings Summary

Financial Performance

• Q4 2026 sales were $436.9 million, a 10.0% increase year-over-year from $397.3 million, driven by 8.4% organic growth.
• Full-year 2026 sales reached $1.66 billion, a 9.8% increase from $1.51 billion in 2025, driven by 5.3% organic growth.
• Q4 2026 GAAP net income was $45.6 million compared to $49.9 million in Q4 2025; Adjusted Net Income increased 17.5% to $70.7 million from $60.2 million.
• Full-year 2026 GAAP net income was $205.4 million, an 8.5% increase from $189.3 million; Adjusted Net Income rose 14.2% to $252.6 million from $221.3 million.
• Q4 2026 Adjusted Diluted EPS was $1.48, up 17.5% from $1.26; Full-year Adjusted Diluted EPS reached a record $5.29, a 15.0% increase from $4.60.
• Q4 2026 Income Before Income Taxes decreased 8.2% to $55.6 million; Adjusted Income Before Income Taxes increased 20.0% to $89.0 million.
• Full-year 2026 Income Before Income Taxes increased 9.4% to $259.4 million; Adjusted Income Before Income Taxes increased 15.2% to $322.1 million.
• Operating cash flow for fiscal 2026 increased nearly 35% to $244.1 million from $181.2 million in 2025.
• Net cash position was $172.2 million as of July 31, 2026.
• Long-term debt decreased to $14.985 million from $99.766 million in the prior year.

Guidance and Future Outlook

• Fiscal 2027 Adjusted Diluted EPS guidance is $6.25 to $6.75, representing 18.1% to 27.6% growth compared to 2026, with a midpoint growth of 23%.
• The IPS segment is expected to contribute approximately $0.80 Adjusted Diluted EPS accretion in 2027, net of financing costs, with the majority of contribution in the second half of the fiscal year.
• IDS segment revenue is expected to grow approximately 5% organically in 2027.
• IPS segment revenue is expected to contribute approximately $1.15 billion in 2027.
• Segment profit is expected to be approximately 20% of sales for IDS and in the low-double digits for IPS in 2027.
• Fiscal 2027 guidance assumes depreciation of $45 million, capital expenditures of $40 million, and a full-year income tax rate of 21%.
• Addressable market is expanding to $14 billion across manufacturing, transportation, logistics, retail, and healthcare.

Business Segments and Product Lines

• The company completed the acquisition of Honeywell Technologies' Productivity Solutions and Services Business on August 3, 2026, rebranded as Intelligent Productivity Solutions (IPS).
• Americas & Asia sales grew 13.5% in Q4 2026 (11.6% organic) and 11.4% for the full year (7.5% organic).
• Europe & Australia sales grew 3.2% in Q4 2026 (2.1% organic) and 6.7% for the full year (1.2% organic).
• Q4 2026 Segment Profit was $92.9 million (21.3% of sales), up from $66.7 million (16.8% of sales) in Q4 2025.
• Full-year 2026 Segment Profit was $330.9 million (19.9% of sales), up from $266.7 million (17.6% of sales) in 2025.
• Americas & Asia segment profit margin was 25.1% in Q4 2026 and 23.2% for the full year.
• Europe & Australia segment profit margin was 13.3% in Q4 2026 and 13.4% for the full year.

Market and Competitive Landscape

• The company operates in a $14 billion addressable market across manufacturing, transportation, logistics, retail, and healthcare.
• The acquisition of IPS expands Brady's presence in manufacturing, transportation, logistics, retail, and healthcare markets.
• The company employs approximately 9,300 people worldwide.

Risks and Challenges

• Potential difficulties integrating the IPS business or integration costs exceeding original estimates.
• Failure to achieve anticipated benefits and synergies of the transaction on the indicated timeline or at all.
• Increased cost of materials, labor, material shortages, and supply chain disruptions, including impacts from tariffs or the global trade environment.
• Decreased demand for the Company's products.
• Risks associated with retaining customers and key personnel.
• Foreign currency fluctuations and changes in tax legislation.
• Potential write-offs of goodwill and other intangible assets.
• Security breaches and extensive regulations by U.S. and non-U.S. governmental entities.

Management Commentary and Tone

• CEO Vineet Nargolwala stated results indicate "momentum" driven by strong organic growth, acquisitions, and foreign currency translation.
• CFO Ann Thornton highlighted the strong balance sheet supporting the acquisition, organic growth investment, and shareholder returns.
• Management expressed excitement about the new chapter for Brady as a stronger, more global industrial technology company.
• The tone is confident, emphasizing record annual revenue and adjusted diluted EPS.

Other Key Points

• The company returned $88.3 million to shareholders in fiscal 2026 via dividends and share buybacks.
• Dividends paid in fiscal 2026 were $46.1 million; purchase of treasury stock was $42.2 million.
• Acquisition of businesses, net of cash acquired, cost $17.4 million in fiscal 2026 compared to $144.5 million in 2025.
• Non-GAAP adjustments for Q4 2026 included $22.2 million in non-recurring acquisition-related costs, $6.1 million in executive transition costs, and $5.2 million in amortization expense.
• Non-GAAP adjustments for Full Year 2026 included $35.7 million in non-recurring acquisition-related costs, $6.1 million in executive transition costs, and $20.9 million in amortization expense.
• The company operates with a dual-class voting structure (Class A nonvoting and Class B voting common stock).