Brady Corporation (BRC) has reported a 20.58 percent rise in profit for the quarter ended Oct. 31, 2016. The company has earned $22.55 million in the quarter, compared with $18.70 million for the same period last year.
Revenue during the quarter went down marginally by 1.02 percent to $280.18 million from $283.07 million in the previous year period. Gross margin for the quarter expanded 87 basis points over the previous year period to 50.10 percent. Total expenses were 88.15 percent of quarterly revenues, down from 89.37 percent for the same period last year. This has led to an improvement of 122 basis points in operating margin to 11.85 percent.
Operating income for the quarter was $33.21 million, compared with $30.10 million in the previous year period.
"The Brady team is focused on producing high-quality products, providing excellent customer service, developing efficient and effective manufacturing processes, pushing for efficiencies in our SG&A structure, and building a culture where local teams are empowered to own and are held accountable for their financial results. This focus is working as evidenced by our fifth consecutive quarter of year-on-year earnings growth," said Brady’s President and Chief Executive Officer, J. Michael Nauman. "Looking to the remainder of this fiscal year, we do not see a clear catalyst to accelerate global economic growth.
For financial year 2017, the company forecasts diluted earnings per Class A Nonvoting Common Share to be in the range of $1.55 to $1.70.
Operating cash flow improves
Brady Corporation has generated cash of $33.99 million from operating activities during the quarter, up 11.93 percent or $3.62 million, when compared with the last year period.
The company has spent $2.45 million cash to meet investing activities during the quarter as against cash outgo of $0.80 million in the last year period.
The company has spent $2.36 million cash to carry out financing activities during the quarter as against cash outgo of $30.89 million in the last year period.
Cash and cash equivalents stood at $166.30 million as on Oct. 31, 2016, up 50.35 percent or $55.69 million from $110.61 million on Oct. 31, 2015.
Working capital increases
Brady Corporation has recorded an increase in the working capital over the last year. It stood at $264.43 million as at Oct. 31, 2016, up 11.46 percent or $27.18 million from $237.25 million on Oct. 31, 2015. Current ratio was at 2.60 as on Oct. 31, 2016, up from 2.40 on Oct. 31, 2015.
Cash conversion cycle (CCC) has decreased to 39 days for the quarter from 71 days for the last year period. Days sales outstanding went down to 50 days for the quarter compared with 51 days for the same period last year.
Days inventory outstanding has decreased to 32 days for the quarter compared with 66 days for the previous year period. At the same time, days payable outstanding went down to 43 days for the quarter from 47 for the same period last year.
Debt comes down
Brady Corporation has recorded a decline in total debt over the last one year. It stood at $215.96 million as on Oct. 31, 2016, down 13.82 percent or $34.65 million from $250.61 million on Oct. 31, 2015. Total debt was 20.56 percent of total assets as on Oct. 31, 2016, compared with 23.89 percent on Oct. 31, 2015. Debt to equity ratio was at 0.35 as on Oct. 31, 2016, down from 0.44 as on Oct. 31, 2015. Interest coverage ratio improved to 19.17 for the quarter from 13.99 for the same period last year.
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