Executive Summary
Brady Corporation delivered solid organic top-line growth in Q2 2025, supported by a resequenced cost structure and selective capital investments. Organic sales rose 2.6% year over year while acquisitions contributed 10.2%, and currency translation dampened results by 2.2%, yielding total quarterly sales growth of 10.6%. The quarter featured a robust push in R&D and a high-profile product launch, the I7500 industrial label printer, which Brady positions as a transformational tool for high-volume, high-mix labeling. Despite softer Europe and Australia (organic -0.8%), the Americas and Asia posted a strong 4.3% organic gain, with Asia expanding 11.3% ex-China. Management reaffirmed disciplined cost actions, including Beijing and Buffalo plant closures and European overhead restructuring, which together added incremental costs of $5.7 million but are expected to improve long-run efficiency and margin profile.
Guidance for fiscal 2025 was nudged higher on the low end: adjusted diluted EPS now expected between $4.45 and $4.70 (up from $4.40–$4.70 previously), with organic sales in the low single digits and non-cash charges largely behind. Brady continues to emphasize a balanced capital-allocation framework—funding organic growth and R&D, maintaining dividend growth for 39 consecutive years, and pursuing M&A and buybacks when synergistic. The company remains in a strong balance-sheet position with a net cash balance and substantial operating cash flow that supports ongoing investments and shareholder returns. The near-term risks include FX headwinds, US-dollar strength, tariff dynamics, and macro industrial activity, which Brady acknowledges could influence the pace of capital investment in the sector. The blend of product innovation, cross-sell opportunities (printers and readers via Gravitech), and regional diversification underpins a constructive long‑term outlook, albeit with execution risk around integration and cost controls in Europe and evolving global demand.
Key Performance Indicators
QoQ: -13.05% | YoY:-4.99%
QoQ: -13.78% | YoY:-7.55%
QoQ: -14.29% | YoY:-6.67%
Key Insights
Revenue: $356.675 million (+10.55% YoY; -5.41% QoQ); Gross Profit: $175.843 million; Gross Margin: 49.30% (vs 50.20% prior-year Q2); Operating Income: $51.234 million; EBITDA: $63.291 million; Net Income: $40.334 million; Diluted EPS: $0.83; Adjusted Diluted EPS: $1.00 (+7.5% YoY).
Profitability & Margin Trend: Gross margin declined modestly year over year due to strategic cost actions and plant closures; ex-closure costs, gross margin would be ~50.0%. SG&A: $105.9 million (29.7% of sa...
Financial Highlights
Revenue: $356.675 million (+10.55% YoY; -5.41% QoQ); Gross Profit: $175.843 million; Gross Margin: 49.30% (vs 50.20% prior-year Q2); Operating Income: $51.234 million; EBITDA: $63.291 million; Net Income: $40.334 million; Diluted EPS: $0.83; Adjusted Diluted EPS: $1.00 (+7.5% YoY).
Profitability & Margin Trend: Gross margin declined modestly year over year due to strategic cost actions and plant closures; ex-closure costs, gross margin would be ~50.0%. SG&A: $105.9 million (29.7% of sales) vs 28.3% prior year; adjusted SG&A would be ~27.4% of sales (down 20 bps YoY on a like-for-like basis). R&D: $18.7 million (5.2% of sales), up 11.2% YoY, supporting the I7500 launch and Gravitech integration.
Cash Flow & Balance Sheet: Operating cash flow $39.594 million; free cash flow $32.457 million; CapEx ~$7.137 million this quarter; full-year CapEx guidance ~$35 million; cash position $138.452 million; total debt $130.155 million; net debt roughly -$8.30 million (net cash).
Guidance & Outlook: FY2025 adjusted diluted EPS guidance raised to $4.45–$4.70 (from $4.40–$4.70); GAAP EPS guidance $3.99–$4.24; organic sales expected in the low single digits. D&A ~ $40 million; CapEx ~ $35 million; tax rate ~21%.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
356.68M |
10.55% |
-5.41% |
| Gross Profit |
175.84M |
8.49% |
-7.30% |
| Operating Income |
51.23M |
-4.99% |
-13.05% |
| Net Income |
40.33M |
-7.55% |
-13.78% |
| EPS |
0.84 |
-6.67% |
-14.29% |
Key Financial Ratios
operatingProfitMargin
14.4%
operatingCashFlowPerShare
$0.83
freeCashFlowPerShare
$0.68
dividendPayoutRatio
28.4%
Management Commentary
- Strategy and product leadership: Russell Schaller highlighted the I7500 industrial label printer as a centerpiece for Brady’s growth, noting it can print on over 4,000 stock labels and 80+ materials, with Brady’s label sense technology delivering near-zero setup time. This positions Brady to capitalize on high-mix, high-volume labeling opportunities across multiple industries. Quote: “This is the fastest and most versatile printer we've designed to date, and we believe it will be an incredible efficiency tool for our customers.”
- Operational efficiency and cost discipline: Ann Thornton detailed actions to improve cost structure, including Beijing and Buffalo plant closures and European overhead reorganizations, with incremental costs of $5.7 million in Q2. Management expects most of the restructuring to be complete within the fiscal year to support a leaner, more efficient footprint. Quote: “We recognized facility closure and other reorganization costs of $5.7 million in the second quarter, and we believe these actions will allow us to operate more effectively and efficiently going forward.”
- Margin and mix dynamics: The company emphasized that gross margin would have been ~50% excluding closure costs, underscoring favorable product mix and margin capture from higher-margin offerings, even as SG&A as a percentage of sales rose due to non-operating costs.
- Regional performance and FX headwinds: Americas and Asia delivered 4.3% organic growth with Asia up 11.3% excluding China, while Europe and Australia declined 0.8% organically. Management cautioned FX headwinds but attributed year-to-date strength in the Americas and Asia to offsetting currency pressure. “FX is a headwind... Americas and Asia performance offsets it,” said Ann Thornton.
- Gravitech and automation backdrop: Brady underscored ongoing R&D investment (up 11% YoY) and Gravitech integration as part of a longer-term cross-sell strategy (printers with readers). Russell noted that the Gravitech story is still early, with only a few wins to date and a few quarters of maturation ahead. Quote: “The Gravotech story is very, very early… road map… a few quarters out.”
- Guidance and risk factors: Brady raised the low end of adjusted EPS guidance, signaling confidence in continued organic growth and margin stabilization, but management reiterated macro risks including currency, inflation, and broader industrial slowdown. “Potential risks to our guidance include potential strengthening of the US dollar, inflationary pressures… or an overall slowdown in economic activity.”
"This is the fastest and most versatile printer we've designed to date, and we believe it will be an incredible efficiency tool for our customers."
— Russell Schaller
"We recognized facility closure and other reorganization costs of $5.7 million in the second quarter, and we believe these actions will allow us to operate more effectively and efficiently going forward."
— Ann Thornton
Forward Guidance
Brady maintains a prudent yet constructive outlook for FY2025. Key quantitative targets include: adjusted diluted EPS of $4.45 to $4.70 vs prior guidance ($4.40–$4.70); GAAP EPS of $3.99 to $4.24; organic sales growth in the low single digits; depreciation & amortization around $40 million; capital expenditures around $35 million; expected effective tax rate near 21%. The guidance reflects ongoing investments in product development, a larger sales force, and omnichannel capabilities, offset by cost-reduction actions from restructuring. Management expects most European and global restructuring to wrap within the year, which should improve operating leverage going into 2026. Key factors for monitoring include: (i) the uptake and implementation success of the I7500 printer in target verticals; (ii) progress on Gravitech integration and related cross-sell opportunities; (iii) ongoing impact of currency translation and US-dollar strength on cost and pricing; (iv) the pace of end-market demand in Americas and Asia versus Europe; (v) the rate of acquisitions that can be integrated synergistically without margin dilution. Overall, investors should watch for margin expansion through mix and efficiency improvements, with a bias toward modest mid-cycle growth supported by cash flow enablement and a balanced capital-allocation strategy.