Sign in

You're signed outSign in or to get full access.

BC

BRADY CORP (BRC)·Q4 2025 Earnings Summary

Executive Summary

  • Q4 2025 delivered record adjusted EPS ($1.26), a revenue beat, and FY26 EPS guidance implying margin expansion despite tariff headwinds. Organic growth was modest (+2.4%), with outsized acquisition contribution (+11.3%) and FX tailwind (+2.0%) .
  • Revenue of $397.3M and adjusted EPS of $1.26 were above Wall Street consensus; GAAP EPS was $1.04 as reorg costs and higher amortization weighed on reported profitability . Estimates: Revenue $386.9M*, EPS $1.235*; Actual Revenue $397.3M, Adjusted EPS $1.26 (beat) .
  • Guidance: FY26 GAAP EPS $4.55–$4.85 and adjusted EPS $4.85–$5.15; assumptions include ~21% tax rate, D&A ~$42M, and CapEx ~$40M .
  • Strategic catalysts: continued R&D investment (Q4 R&D 5.8% of sales), printer/wire ID momentum (data centers; aerospace/defense), and acquisitions (Gravotech; Mecco) expanding direct part marking and verification capabilities .

What Went Well and What Went Wrong

  • What Went Well

    • Record adjusted EPS and revenue beat; adjusted pretax income +5.1% YoY to $74.2M; adjusted net income +5.1% YoY to $60.2M .
    • Americas & Asia organic growth +4.3% in Q4; Asia +12% ex-China; wire identification strong (data centers, aerospace/defense) .
    • Management exuded confidence on cost actions and mitigating tariffs: “we really took a decent amount of costs out of our structure in the last two quarters… mitigating strategies” .

  • What Went Wrong

    • Europe & Australia organic sales declined (-1.3%); segment profit down 21.8% YoY with margin -580 bps (11.0% vs 16.8%) due to amortization and reorg costs .
    • Gross margin compressed to 50.4% (vs 51.6% LY), with ~50 bps impact from facility closures/reorg; SG&A rose to 29.7% of sales from 27.2% LY on amortization and reorg costs .
    • Free cash flow softer vs LY: Q4 operating cash flow $58.3M vs $84.0M; inventory build tied to facility transitions drove lumpiness .

Financial Results

Summary Performance vs prior quarters

MetricQ2 2025Q3 2025Q4 2025
Revenue ($USD Millions)$356.7 $382.6 $397.3
GAAP Diluted EPS ($)$0.83 $1.09 $1.04
Adjusted Diluted EPS ($)$1.00 $1.22 $1.26
Gross Margin %49.3% 51.0% 50.4%
Operating Income ($USD Millions)$51.2 $67.2 $59.3
Income Before Taxes ($USD Millions)$52.0 $65.7 $60.5
Net Income ($USD Millions)$40.3 $52.3 $49.9
Operating Cash Flow ($USD Millions)$39.6 $59.9 $58.3

Q4 Year-over-Year

MetricQ4 2024Q4 2025YoY
Revenue ($USD Millions)$343.4 $397.3 +15.7%
GAAP Diluted EPS ($)$1.15 $1.04 -9.6%
Adjusted Diluted EPS ($)$1.19 $1.26 +5.9%
Gross Margin %51.6% 50.4% -120 bps
Income Before Taxes ($USD Millions)$68.2 $60.5 -11.3%
Adjusted Pretax Income ($USD Millions)$70.5 $74.2 +5.1%

Estimates vs Actuals

PeriodRevenue Consensus ($USD Millions)Revenue Actual ($USD Millions)EPS Consensus ($)EPS Actual ($)
Q3 2025386.6*382.6 1.215*1.22
Q4 2025386.9*397.3 1.235*1.26

Values retrieved from S&P Global.*

Segment Breakdown (Q4 2025)

SegmentNet Sales ($USD Millions)YoY Total GrowthOrganic GrowthSegment Profit ($USD Millions)Segment Margin
Americas & Asia$260.8 +14.1% +4.3% $51.6 19.8%
Europe & Australia$136.5 +18.8% -1.3% $15.1 11.0%
Total$397.3 +15.7% +2.4% $66.7 16.8%

KPIs and Non-GAAP Adjustments (Q4 2025)

KPIQ4 2025Notes
Gross Margin %50.4% ~50 bps impact from facility closures/reorg
SG&A % of Sales29.7% Higher amortization and reorg costs
R&D % of Sales5.8% Record investment levels; acquisitions lift mix
Adjusted EPS add-backs+$0.08 amortization; +$0.14 reorg Adjusted EPS $1.26
Net Cash Position$74.6M (as of 7/31/25) Cash $174.3M; Debt $99.8M

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
GAAP Diluted EPSFY26N/A$4.55–$4.85 New
Adjusted Diluted EPSFY26N/A$4.85–$5.15 New
Tax RateFY26N/A~21% New
Depreciation & AmortizationFY26N/A~$42M New
Capital ExpendituresFY26N/A~$40M New
Dividend (annual)Ongoing$0.96 $0.98; $0.245 quarterly (10/31/25) Raised

Context on FY25 guidance changes:

  • Adjusted EPS FY25 tightened to $4.48–$4.63 (from $4.45–$4.70) and GAAP EPS updated to $3.95–$4.10 in May ; reiterated in Q4 as actual FY25 EPS delivered: GAAP $3.94; Adjusted $4.60 .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2025)Previous Mentions (Q3 2025)Current Period (Q4 2025)Trend
Tariffs/macro riskMitigation options; potential Mexico/Canada impacts; ability to move high-value production; concern is broader slowdown $3–$5M Q4 impact estimated; mix of price increases, sourcing; rapidly changing ~$2M Q4 tariff expense; FY25 ~$7M; potential incremental $8–$12M in FY26 net of mitigation Rising headwind with clearer mitigation
R&D executioni7500 launch; R&D ~5.2% sales; targeted investment in engineered products Continued integration of Gravotech; new product roadmap R&D up 31% in Q4; 5.8% of sales; tech integration (optics + lasers + decoder software) Increasing investment intensity
Product performance (printers/wire ID)i7500 targets high-mix use; expected ROI for customers i6100 printer; HH86 RFID reader launched Wire ID strong (data centers, aerospace/defense); printers/consumables ~40% of sales Sustained momentum
Regional trendsEurope flat; Australia -6.4%; Asia +11.3% ex-China Europe/Australia challenging; Asia +23% (incl. China rebound); Americas +5.4% organic Americas & Asia +4.3% organic; Europe & Australia -1.3% organic; China ~-3% Mixed; Europe/Australia still weak
Regulatory/compliance——Targeting GS1 and EU digital product passport compliance capability set Building capability
Cash flow / inventory—Operating cash flow down YoY; facility moves; inventory effects Q4 OCF $58.3M vs $84.0M; inventory build from facility transitions Temporarily softer; expected to normalize

Management Commentary

  • “Our investments in new products once again led to strong results in the Americas & Asia… The result was a new all-time company record quarter and record year of adjusted earnings per share.” – Russell R. Shaller, CEO .
  • “We returned $96.4 million to shareholders… while also investing a record-high in research and development.” – Ann Thornton, CFO .
  • “We really took a decent amount of costs out of our structure in the last two quarters… mitigating strategies… reshoring… redoing supply chain.” – CEO on FY26 margin path .
  • “Printers and the included consumable products… just under 40% of our sales… customers have responded positively to… i7500.” – CEO on product mix .
  • “Asia… organic sales growth of 12%… China declined ~3% but outside China +23%.” – CEO on regional dynamics .

Q&A Highlights

  • Margin expansion in FY26 guidance: Management cited cost-outs and tariff mitigation (price increases, supply chain adjustments) as primary drivers, expressing confidence in achieving the range .
  • Cash flow softness in Q4: Inventory build tied to multi-facility transitions (Belgium; Buffalo closure), expected to normalize with cash impact largely through Q1 FY26 .
  • R&D cadence: Near-term moderation as teams merge, but long-term trend of higher R&D to drive engineered, higher-margin products; some products carry >10% R&D but 60–70% gross margins .
  • Tariffs phasing: More first-half loaded in FY26 as price actions roll through; nuanced by product category and customer expectations .
  • End-market strength: Wire markers benefitting from data centers and defense; printers/consumables category near 40% of sales .

Estimates Context

  • Results vs Wall Street consensus: Q4 revenue $397.3M vs $386.9M* and adjusted EPS $1.26 vs $1.235* — both beats; Q3 adjusted EPS $1.22 vs $1.215*; revenue slightly below $386.6M* .
  • Coverage remains thin (two estimates), but given tariff guidance and cost actions, earnings models likely need higher FY26 margins assumptions and modest organic growth (~low-single digit) .
    Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Q4 was quality: revenue and adjusted EPS beats with record adjusted EPS; acquisition and FX tailwinds masked modest organic growth .
  • FY26 EPS guidance signals ongoing margin lift via cost actions and tariff mitigation; watch first-half tariff cost phasing vs pricing realization .
  • Americas/Asia remain the growth engines; Europe/Australia require continued cost discipline amid weak industrial production .
  • Product cycle strength (i7500; wire ID; readers) and R&D intensity should sustain mix-shift toward higher-margin engineered solutions .
  • Cash generation dipped on facility transitions; balance sheet net cash provides flexibility for R&D, M&A (Mecco/Gravotech), and buybacks/dividends .
  • Near-term trading lens: expect sensitivity to tariff headlines, FX, and European macro; upside catalysts include continued printer adoption, data center demand, and execution on price/mix.
  • Medium-term thesis: R&D-led product differentiation, broader compliance/verification platform, and disciplined M&A should underpin EPS compounding and shareholder returns .

Additional Data Points and Cross-References

  • Q4 mix drivers: organic +2.4%, acquisitions +11.3%, FX +2.0% .
  • Non-GAAP reconciliations detail amortization and reorg impacts (Q4 EPS add-backs $0.22 total) .
  • Segment margins Q4: Americas & Asia 19.8% vs 23.3% LY; Europe & Australia 11.0% vs 16.8% LY .
  • Dividend increased to $0.98 annual; $0.245 quarterly, 40th consecutive year .