Brady (NYSE:BRC) reported record revenue and adjusted earnings per share for fiscal 2026, its sixth consecutive year of record earnings, as printer and specialty adhesive-material sales supported organic growth and margin expansion. The company also outlined its first full-year outlook following the acquisition of Honeywell’s Productivity Solutions and Services business, now called Intelligent Productivity Solutions, or IPS.
Fiscal fourth-quarter sales increased 10% from the prior year, driven by 8.4% organic growth, a 1.1% contribution from acquisitions and a 0.5% benefit from foreign-currency translation, Chief Financial Officer Ann Thornton said. Adjusted diluted earnings per share rose 17.5% to $1.48, while GAAP diluted EPS was $0.96, compared with $1.04 a year earlier.
“With the PSS acquisition closed as of a month ago, Brady is now pivoting from a classic industrial company to an industrial technology company,” Nargolwala said.
Margins, Cash Flow and Capital Returns
Fourth-quarter gross margin increased to 52.9% from 50.4% a year earlier. Thornton said the prior-year period included a 50-basis-point effect from facility-consolidation costs, while the latest quarter benefited by approximately $4 million from tariff refunds, net of incremental tariffs incurred. Excluding those items, gross margin expanded by 110 basis points.
The company said its prior-year actions to streamline its footprint, including the closure of manufacturing facilities in Beijing and Buffalo, New York, continued to provide benefits. Adjusted for certain expenses, selling, general and administrative expense declined to 26.2% of sales from 26.8% in the prior-year fourth quarter.
Printer unit sales increased 25% in the fourth quarter and 10% for the fiscal year. Thornton said printer and keyed-consumable sales together, which account for slightly more than 40% of Brady’s organic sales, grew nearly 10% organically during fiscal 2026.
Operating cash flow rose 35.8% to $79.2 million in the fourth quarter, while free cash flow increased 22.9% to $60.7 million. At July 31, Brady had net cash of $172.2 million, more than double its net-cash position a year earlier, Thornton said.
The company announced its 41st consecutive annual dividend increase. It also repurchased 333,000 shares for $28.1 million during the fourth quarter at an average price of $84.36 per share. For the full year, Brady repurchased 517,000 shares for $42.2 million and had $44 million remaining under its repurchase authorization.
Regional Results Reflect Divergent Markets
In the Americas and Asia region, organic sales grew 11.6% in the fourth quarter, with reported sales reaching a record $296.1 million. Including acquisitions and currency effects, regional sales rose 13.5%. Wire-identification sales, which represent 20% of sales in the region, grew nearly 20% in the quarter and 16% for the fiscal year.
Organic sales rose 10.3% in the Americas and 20.3% in Asia. Segment profit increased 43.9% to $74.3 million, with margin reaching 25.1% of sales. Excluding the tariff-refund benefit, segment profit rose 36% and margin was 23.7%.
Olivier Bojarski, president of Brady’s Americas and Asia operations and incoming leader of its Identification Solutions segment, cited data-center investment, manufacturing activity and construction as sources of demand. He said India posted 23% growth for the year after the company expanded manufacturing there about two years ago.
Europe and Australia delivered 2.1% organic growth in the fourth quarter and 3.2% total sales growth, including a 1.1% currency benefit. Organic sales increased 2% in Europe and 3.1% in Australia. Segment profit rose 23.9% to $18.7 million, and segment margin improved to 13.3% from 11%.
Nargolwala said European manufacturing remained a difficult market, though the company saw strength tied to defense spending and digital-passport regulations. He also said rising electronics, memory and diesel costs were affecting the business, while describing the European segment’s margin execution as strong.
New Reporting Segments and Fiscal 2027 Outlook
Beginning in fiscal 2027, Brady will report two segments: Identification Solutions, or IDS, which comprises the legacy Brady business, and Intelligent Productivity Solutions, or IPS, which consists of the former Honeywell business. Bojarski will lead IDS, while David Barker, formerly president of Honeywell’s PSS operation, will lead IPS.
Brady expects IDS organic revenue growth of approximately 5% in fiscal 2027. It expects IPS to contribute approximately $1.15 billion in revenue, which Thornton said assumes low-single-digit growth on a trailing 12-month basis.
- Adjusted diluted EPS guidance: $6.25 to $6.75
- Expected IPS EPS accretion: approximately $0.80
- Expected IDS segment profit: approximately 20% of sales
- Expected IPS segment profit: low-double-digit percentage of sales, excluding one-time integration costs
- Expected depreciation expense: approximately $45 million
- Expected capital expenditures: approximately $40 million
- Expected full-year tax rate: approximately 21%
The EPS outlook represents growth of 18.1% to 27.6% from fiscal 2026, according to Thornton. The company expects most of the IPS accretion to occur in the second half as it works through early integration activities.
Integration, Product Development and Supply Chain
Nargolwala said Brady had identified approximately $25 million in synergies by the third year after the acquisition, but emphasized that the rationale for the transaction extends beyond cost savings. He cited opportunities to combine capabilities in healthcare, printing, scanning, RFID and software.
Barker said IPS has invested in making its software portfolio interoperable across its offerings and hardware-agnostic, which he said expands the market for its solutions and increases their value to customers. He also said the company has addressed industry-wide memory supply constraints through product redesigns, new supplier qualifications and long-term contracts.
Brady expects to reduce net leverage to below two times within the first two years following its ownership of IPS, while continuing to invest in growth, dividends and share repurchases, Thornton said.
About Brady (NYSE:BRC)
Brady Corporation is a global provider of identification and safety solutions, specializing in the design, manufacture and sale of products that help businesses improve safety, security and efficiency. The company offers an array of durable labels, signs, safety devices, printing systems and software platforms tailored to a wide range of industrial and commercial environments.
Founded in 1914 by William H. Brady, Brady Corporation has grown from a regional marker manufacturer into a diversified global enterprise.
