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Excrept from filing document 2025-07-31

based on the closing sale price of 74 49 per share on that date as reported for the New York Stock Exchange As of September 2 2025 there were 43 555 822 outstanding shares of Class A Nonvoting Common Stock the Class A Common Stock and 3 538 628 shares of Class B Common Stock The Class B Common Stock all of which is held by affiliates of the registrant is the only voting stock
In this Annual Report on Form 10 K for Brady Corporation Brady Company we us or our statements that are not reported financial results or other historic information are forward looking statements These forward looking statements relate to among other things the Company s future financial position business strategy targets projected sales costs income capital expenditures debt levels and cash flows and plans and objectives of management for future operations
The use of words such as may will expect intend estimate anticipate believe should project or plan or similar terminology are generally intended to identify forward looking statements These forward looking statements by their nature address matters that are to different degrees uncertain and are subject to risks assumptions and other factors some of which are beyond Brady s control that could cause actual results to differ materially from those expressed or implied by such forward looking statements For Brady uncertainties arise from
Numerous other matters of national regional and global scale including major public health crises and government responses thereto and those of a political economic business competitive and regulatory nature contained from time to time in Brady s U S Securities and Exchange Commission SEC filings including but not limited to those factors listed in the Risk Factors section within Item 1A of Part I of this Annual Report on Form 10 K
These uncertainties may cause Brady s actual future results to be materially different than those expressed in its forward looking statements Brady does not undertake to update its forward looking statements except as required by law
Brady was incorporated under the laws of the state of Wisconsin in 1914 Brady is a global manufacturer and supplier of identification solutions and workplace safety products that identify and protect premises products and people The ability to provide customers with a broad range of proprietary customized and diverse products for use in various applications across multiple industries and geographies along with a commitment to quality and service have made Brady a leader in many of its markets
The Company is organized and managed on a geographic basis with two reportable segments Americas Asia and Europe Australia The Americas Asia segment is comprised of our operations in North America South America and Asia while the Europe Australia segment is comprised of our operations in Europe the Middle East Africa and Australia This regional operating structure provides a framework to align local execution with global scale and supports consistent integration of acquired businesses
The Company s primary objective is to build upon its market position and increase shareholder value by enabling a highly competent and experienced organization to focus on the following key competencies
Innovative products Technologically advanced proprietary products that drive revenue growth and sustain gross profit margins through continuous research and development R D investment and close collaboration with customers on application specific needs
Customer experience Understanding customer needs and providing a high level of service through dedicated account support localized technical expertise and integrated tools that enhance responsiveness and ease of doing business
Global leadership position in niche markets Leveraging strong distribution networks application knowledge and long standing relationships to maintain leadership in specialized identification and safety markets while expanding scale and reach through targeted investments and acquisitions
Digital capabilities Enhancing transactional websites product content and customer portals to provide easy to find solutions and seamless transactions supported by digital tools that improve execution and reach
Operational excellence Driving productivity through lean manufacturing automation and supply chain optimization while expanding customization capabilities to deliver tailored solutions efficiently and at scale
Investing in organic growth by enhancing our R D process and utilizing customer feedback and observations to develop innovative new products that solve customer needs and improve environmental sustainability
Advancing operational excellence by executing sustainable efficiency gains within our selling general and administrative structures and within our global operations including cost reduction initiatives insourcing of critical products and manufacturing activities and reducing the Company s environmental footprint
During the year ended July 31 2025 Brady completed the acquisitions of three companies Gravotech Holding Gravotech American Barcode and RFID Incorporated AB R and the Microfluidic Solutions business unit of Funai Electric Co Ltd Microfluidic Solutions The acquired companies strengthen Brady s position in faster growing markets enabling us to accelerate growth while expanding our product offerings and research and development capabilities
The Company is organized and managed on a geographic basis with two reportable segments Americas Asia and Europe Australia Below is a summary of sales by reportable segment during the years ended July 31
Safety and facility identification and protection which includes safety signs traffic signs and control products floor marking tape pipe markers labeling systems spill control products lockout tagout devices personal protection equipment first aid products and software and services for safety compliance auditing procedures writing and training
Product identification which includes materials printing systems radio frequency identification RFID and barcode scanners for product identification direct part marking engraving equipment brand protection labeling work
Healthcare identification which includes wristbands labels printing systems and other products used in hospital laboratory and other healthcare settings for tracking and improving the safety of patients
The Company markets and sells its products through multiple channels including distributors a direct sales force and digital channels Brady has long standing relationships with a broad range of electrical safety industrial and other domestic and international distributors The direct sales force within each region partners with end users and distributors by providing technical application and product expertise The Company provides access to its products through brand specific websites and catalogs
Brady product identification labels wire identification products printers software safety and facility identification products lock out tag out products brand protection labels people identification products microfluidic solutions products and specialty materials
The Company manufactures differentiated proprietary products most of which have been internally developed These internally developed products include materials printing and identification systems tracking systems and software Materials manufactured by the Company generally require a high degree of precision and the application of adhesives with chemical and physical properties suited for specific uses The Company s manufacturing processes include compounding coating converting printing melt blown operations software development and printer design and assembly
Competition is based upon several factors including product innovation customer service breadth of product offering product quality price expertise production capabilities and for multinational customers our global footprint Competition is highly fragmented ranging from smaller companies offering minimal product variety to some of the world s largest adhesive and electrical product companies offering competing products as part of their overall product lines
These products serve customers in many industries within each reportable segment of which those industries include industrial manufacturing electronic manufacturing healthcare chemical oil gas alternative energy automotive aerospace governments mass transit mechanical contractors construction utilities education leisure and entertainment retail and telecommunications among others
The Company focuses its R D efforts on identification and printing systems track and trace applications pressure sensitive materials software and the development of other innovative workplace safety related products The Company incurred 79 9 million 67 7 million and 61 4 million of expense on its R D activities during the years ended July 31 2025 2024 and 2023 respectively The majority of R D spend supports the Company s identification products Material development involves the application of surface chemistry concepts for top coatings and adhesives applied to a variety of base materials The design of our identification and printing systems integrates materials embedded software a variety of printing technologies and product scanning and identification technologies to form a complete solution for customer applications In addition R D supports production and marketing efforts by providing application and technical expertise
The Company owns patents and tradenames relating to certain products in the United States and internationally Although the Company believes patents are a significant driver in maintaining its position for certain products technology in the areas covered by many of the patents continues to evolve and may limit the value of such patents The Company s business is not dependent on any single patent or group of patents Patents applicable to specific products extend for up to 20 years according to the date of patent application filing or patent grant depending upon the legal term of patents in the various countries where
The materials used in the products manufactured by the Company consist of a variety of plastic and synthetic films paper metal and metal foil cloth fiberglass inks dyes adhesives pigments natural and synthetic rubber organic chemicals polymers and solvents for consumable identification products in addition to molded parts electronic components chips and sub assemblies for identification and printing systems The Company operates coating facilities that manufacture bulk rolls of label stock for internal and external customers In addition the Company purchases finished products for resale
The Company purchases raw materials components and finished products from many suppliers Overall we are not dependent upon any single supplier for our most critical base materials or components However we have chosen in certain situations to sole source or limit the sources of materials components or finished items for design or cost reasons As a result disruptions in supply could have an impact on results for a period of time but we believe most disruptions would simply require qualification of new suppliers and the disruption would be modest In certain instances the qualification process could be more costly or take a longer period of time and in certain situations such as a global shortage of critical materials or components the financial impact could be material
The Company carries working capital mainly related to accounts receivable and inventory Inventory consists of raw materials work in process and finished goods Generally custom products are made to order while an on hand quantity of stock product is maintained to provide customers with timely delivery Average time to fulfill customer orders varies from same day to one month depending on the type of product customer request and whether the product is stock or custom designed and manufactured Normal and customary payment terms primarily range from net 10 to 90 days from date of invoice and vary by geography
As of July 31 2025 the Company employed approximately 6 400 individuals worldwide of which approximately 1 700 were employed in the United States and approximately 4 700 were employed outside the United States
The Company s Vice President of Human Resources is responsible for developing the Company s human capital strategy which includes the attraction acquisition development engagement and retention of talent to deliver on the Company s strategy as well as the design of employee compensation and benefits programs Management is responsible for executing the Company s human capital strategy The Vice President of Human Resources is also responsible for enhancing the Company s high performance culture which rewards execution and fosters inclusion to drive differential performance and execute our strategy for the organization The Company s Board of Directors and its committees receive regular updates on the operation and status of these initiatives and human capital trends and activities from the Vice President of Human Resources the CEO and others within senior management
The Company s health and safety programs are designed around global standards with appropriate variations addressing the multiple jurisdictions and regulations specific hazards and unique working environments of the Company s manufacturing distribution and headquarter operations The Company requires each of its locations to perform regular safety audits to ensure proper safety policies program procedures analyses and trainings are in place The Company utilizes a mixture of leading and lagging indicators to assess the health and safety performance of its operations Lagging indicators include the OSHA Total Recordable Incident Rate TRIR and the Lost Time Case Rate LTCR based upon the number of incidents per 100 employees Leading indicators include reporting and closure of all near miss events The Company also utilizes trainings such as Environmental Health and Safety EHS coaching and engagement conversations as preventative measures During the year ended July 31 2025 the Company had a TRIR of 0 43 a LTCR of 0 23 and no work related fatalities
The Company prioritizes fostering an inclusive workplace where employees feel valued and heard This commitment is central to our ability to leverage the full strengths of our workforce aiming to exceed customer expectations and achieve growth objectives To support this the Company engages employees through various employee resource groups These groups bring together employees to share common interests in personal and professional development while improving corporate culture and delivering business results Senior leaders throughout the organization sponsor and support each employee resource group
The Company also strives to build a robust talent pipeline by partnering with its business units in their workforce planning to develop initiatives and goals to recruit talent from all backgrounds across defined organizational levels and skill areas The Company trains its recruiting workforce in sourcing strategies aimed at broadening its talent pool and partners with external organizations that develop and supply a wide range of talent As a commitment to an inclusive workplace the Company supports the unique input of individuals at all levels within the organization As of July 31 2025 45 of the members of the Company s Board of Directors were women and 60 of Board committee chairs were women
The Company is committed to the continued development of its people Strategic talent reviews and succession planning occur on a planned cadence annually The CEO and the Vice President of Human Resources convene meetings with senior Company leadership and the Board of Directors to review top enterprise talent and discuss succession planning for key leadership roles The Company also emphasizes career development planning to support employee growth and progression across a wide range of roles and functions
The Company provides technical training to employees customers and suppliers who work for or with the Company s products Training is provided in a variety of formats to accommodate the respective learner s style pace location technical knowledge and access
The Company values its people and strives to deliver compensation and benefit programs and plans that are competitive with the external market The Company provides subsidized health and welfare benefits as well as postretirement incentive and equity based compensation plans and programs to eligible employees Refer to the Compensation Discussion Analysis for additional information regarding the Company s compensation and benefits programs
The Company s Corporate Internet address is www bradyid com The Company makes available free of charge on or through its website copies of its Annual Report on Form 10 K Quarterly Reports on Form 10 Q Current Reports on Form 8 K and amendments to all such reports as soon as reasonably practicable after such reports are electronically filed with or furnished to the SEC The Company is not including the information contained on or available through its website as part of or incorporating such information by reference into this Annual Report on Form 10 K
Investors should carefully consider the risks set forth below and all other information contained in this report and other documents we file with the SEC The risks and uncertainties described below are those that we have identified as material but are not the only risks and uncertainties facing us Our business is also subject to general risks and uncertainties that affect many other companies such as market conditions geopolitical events changes in laws or accounting rules fluctuations in interest rates terrorism wars or conflicts major health concerns natural disasters or other disruptions of expected economic or business conditions Additional risks and uncertainties not currently known to us or that we currently believe are immaterial also may impair our business and financial results
We manufacture certain parts and components of our products and therefore require raw materials from suppliers which could be interrupted for a variety of reasons including availability and pricing Our prices and lead times for raw materials and other components necessary for production have continued to fluctuate over the past year including increased raw production costs increased wage rates and extended lead times Significant increases could adversely affect our profit margins and results of operations Changes in trade policies supply chain disruptions and the imposition of duties and tariffs and potential retaliatory countermeasures could adversely impact the price or availability of raw materials which could adversely affect our profit margins and results of operations In addition labor shortages or an increase in the cost of labor could adversely affect our profit margins and results of operations Due to competitive pressures or other factors we may not be able to pass along increased raw material and component part costs to our customers in the form of price increases or our ability to do so could be delayed which could adversely impact our business and financial results
While we have implemented certain cost containment measures and selective price increases as well as taken other actions to offset recent inflationary pressures in our supply chain we may not be able to offset all of the increases in our operational costs which could adversely impact our business and financial results
We actively compete with companies that produce and market the same or similar products and in some instances with companies that sell different products that are designed for the same target markets Competition may force us to reduce prices or incur additional costs to remain competitive in an environment in which business models including the development and use of artificial intelligence technologies are changing rapidly We compete on the basis of several factors including customer support product innovation product offering product quality price expertise digital capabilities production capabilities and for multinational customers our global footprint Present or future competitors may develop and introduce new and enhanced products offer products based on alternative technologies and processes accept lower profit have greater financial technical or other resources or have lower production costs or other pricing advantages Any of these could put us at a disadvantage by threatening our share of sales or reducing our profit margins which could adversely impact our business and financial results
Additionally throughout our global business distributors and customers may not accept our price increases or may seek lower cost sourcing opportunities which could result in a loss of business that may adversely impact our business and financial results
Our strategy is to expand into higher growth adjacent product categories and markets with technologically advanced new products as well as to grow our sales generated through the digital channel While traditional direct marketing channels such as catalogs are an important means of advertising and selling our products an increasing number of customers are purchasing products online Our strategy to increase sales through the digital channel is an investment in our e commerce sales capabilities There is a risk that we may not continue to successfully implement this strategy or if successfully implemented we may not realize its expected benefits due to increased competition and pricing pressure brought about by other e commerce businesses Our failure to successfully implement our strategy could adversely impact our business and financial results
We develop technologically advanced new products to promote our organic growth and profitability Technology is changing rapidly and our competitors are innovating quickly If we do not keep pace with developing technologically advanced products we risk product commoditization deterioration of the value of our brand and reduced ability to effectively compete We must continue to develop innovative products as well as acquire and retain the necessary intellectual property rights in these products If we fail to innovate or we launch products with quality problems or if customers do not accept our products then our business and financial results could be adversely affected
Our historical growth has included acquisitions and our future growth strategy includes acquisitions Acquisitions place significant demands on management operational and financial resources Recent and future acquisitions will require integration of operations sales and marketing information technology finance and administrative operations which could decrease the time available to focus on our other growth strategies We cannot assure that we will be able to successfully integrate acquisitions that these acquisitions will operate profitably or that we will be able to achieve the desired sales growth
or operational success Our sales results of operations cash flow and liquidity could be adversely affected if we do not successfully integrate acquired businesses including realizing synergies or if our other businesses suffer due to the increased focus on the acquired businesses
We continually assess the strategic fit of our existing businesses and may divest businesses that we determine do not align with our strategic plan or that are not achieving the desired return on investment Divestitures pose risks and challenges that could negatively impact our business When we decide to sell a business or specific assets we may be unable to do so on satisfactory terms or within our anticipated timeframe and even after reaching a definitive agreement to sell a business the sale is typically subject to pre closing conditions which may not be satisfied In addition the impact of the divestiture on our revenue and net income may be larger than projected which could distract management and disputes may arise with buyers We have retained responsibility for and have agreed to indemnify buyers against certain contingent liabilities related to several businesses that we have sold The resolution of these contingencies has not had a material adverse impact on our financial results but we cannot be certain that this pattern will continue
Our failure or the failure of third party service providers to protect our sites networks and systems against security breaches to protect our confidential information or to facilitate our digital strategy could adversely affect our business and financial results
Our business systems collect transmit and store data about our customers vendors and others including credit card information and personally identifiable information We also employ third party service providers that store process and transmit proprietary personal and confidential information on our behalf We rely on encryption and authentication technology licensed from third parties in an effort to securely transmit confidential and sensitive information including credit card numbers Our security measures and those of our third party service providers may not detect or prevent all attempts to hack our systems denial of service attacks viruses malicious software break ins phishing attacks social engineering security breaches or other similar disruptions that may jeopardize the security of information stored in or transmitted by our sites networks and systems or that we or our third party service providers otherwise maintain We engage third party service providers to assist with certain of our website and digital platform upgrades which may result in a decline in sales when initially deployed which could have an adverse effect on our business and financial results
We and our service providers may not have the resources or technical sophistication to anticipate or prevent all types of attacks and techniques used to obtain unauthorized access to or to sabotage systems change frequently and may not be known until launched against us or our third party service providers In addition security breaches can also occur as a result of non technical issues including intentional or inadvertent breaches by our employees or by persons with whom we have commercial relationships Although we maintain privacy data breach and network security liability insurance we cannot be certain that our coverage will be adequate or will cover liabilities actually incurred or that insurance will continue to be available to us on economically reasonable terms or at all Any compromise or breach of our security measures or those of our third party service providers could adversely impact our ability to conduct business violate applicable privacy data security and other laws and cause significant legal and financial exposure adverse publicity and a loss of confidence in our security measures which could have an adverse effect on our business and financial results
We are a global company headquartered in the United States We are subject to extensive regulations by U S and non U S governmental and self regulatory entities at various levels of the governing bodies Failure to comply with laws and regulations could adversely affect our business and financial results
Imposition of new or changes in existing duties tariffs and trade agreements which could have a direct or indirect impact on our ability to manufacture products on our customers demand for our products or on our suppliers ability to deliver raw materials
Laws and regulations that apply to companies doing business with the government including audit requirements of government contracts related to procurement integrity export control employment practices and the accuracy of records and recording of costs
We cannot provide assurance that our internal controls and compliance systems will always protect us from acts committed by employees agents or business partners that would violate U S and or non U S laws including the laws governing payments to government officials bribery fraud anti kickback and false claims rules competition export and import compliance money laundering and data privacy Any such improper actions could subject us to civil or criminal investigations in the U S and in other jurisdictions lead to substantial civil or criminal monetary and non monetary penalties and related lawsuits by shareholders and others damage our reputation and adversely impact our business and financial results
Our financial results could be adversely affected by increased competition for employees difficulty in recruiting employees higher employee turnover or increased compensation and benefit costs Our employees are important to our success and we are dependent on our ability to retain the services of our employees in key roles We have built our business on a set of core values and we attempt to hire and retain employees who are committed to these values and our culture of providing exceptional service to our customers In order to compete and to continue to grow we must attract retain and motivate our employees We need qualified managers and skilled employees with technical and industry experience to operate our business successfully If we are unable to attract and retain qualified individuals or if our costs to do so increase significantly or if internal realignment of responsibilities are not executed properly our business and financial results could be adversely affected
We are or may become a party to litigation that arises in the normal course of our business operations including product liability and recall strict liability and negligence claims patent and trademark matters contract disputes and environmental employment and other litigation matters We face an inherent risk that our competitors will allege that aspects of our products infringe their intellectual property or that our intellectual property is invalid such that we could be prevented from manufacturing and selling our products or prevented from stopping others from manufacturing and selling competing products We face an inherent business risk of exposure to product liability claims in the event that the use of our products is alleged to have resulted in injury or other damage To date we have not incurred material costs related to these types of claims However while we currently maintain insurance coverage for certain types of claims that we believe is adequate we cannot be certain that we will be able to maintain this insurance on acceptable terms or that this insurance will provide sufficient coverage against potential liabilities that may arise Any claims brought against us with or without merit may have an adverse effect on our business financial results and reputation as a result of potential adverse outcomes The expenses associated with defending such claims and the diversion of our management s resources and time may have an adverse effect on our business and financial results
Increased public awareness and concern regarding global climate change may result in more regional and or federal requirements to reduce or mitigate the effects of greenhouse gas emissions There continues to be a lack of consistent climate legislation which creates economic and regulatory uncertainty Further our customers and the markets we serve may impose emissions or other environmental standards through regulation market based emissions policies or consumer preference that we may not be able to timely meet due to the required level of capital investment or technological advancement
Additionally the enhanced stakeholder focus on Environmental Social and Governance ESG issues relating to our business requires the continuous monitoring of various and evolving standards and the associated reporting requirements A failure to adequately meet stakeholder expectations may result in the loss of business diluted market valuation an inability to attract customers or an inability to attract and retain top talent
e us to fluctuations in foreign currencies relative to the U S dollar and may adversely affect our financial results Increased strength of the U S dollar could increase the effective price of our products sold in currencies other than U S dollars into other countries Decreased strength of the U S dollar could adversely affect the cost of materials products and services purchased overseas Our sales and expenses are translated into U S dollars for reporting purposes and further strengthening of the U S dollar could result in unfavorable translation effects In addition certain of our subsidiaries may invoice customers in a currency other than its functional currency or may be invoiced by suppliers in a currency other than its functional currency which could result in unfavorable translation effects on our business and financial results
We are subject to income taxes in the U S and in many non U S jurisdictions As such our income is subject to risk due to changing tax laws and tax rates around the world Our tax filings are subject to audit by U S federal state and local tax authorities and by non U S tax authorities If these audits result in payments or assessments that differ from our reserves our future net income may be adversely impacted
On July 4 2025 the U S government enacted tax legislation commonly referred to as the One Big Beautiful Bill Act OBBBA The OBBBA made permanent or extended several provisions from the Tax Cuts and Jobs Act of 2017 including restoration of 100 bonus depreciation an EBITDA based limitation on interest expense deductions and immediate expensing of domestic research and development expenditures Future changes to these or other tax laws as well as related regulations and interpretations could materially affect our financial results
We review the probability of the realization of our deferred tax assets quarterly based on forecasts of taxable income in both the U S and foreign jurisdictions As part of this review we utilize historical results projected future operating results eligible carry forward periods tax planning opportunities and other relevant considerations Changes in profitability and financial outlook in both the U S and or foreign jurisdictions or changes in our geographic footprint may require modifications in the valuation allowance for deferred tax assets
Globally many countries have enacted or plan to enact legislation and other guidance to align with the Organisation for Economic Co operation and Development s OECD Inclusive Framework on Base Erosion and Profit Shifting Pillar Two Pillar Two model rules which aim to establish a global minimum tax rate of 15 percent for large multinational enterprise groups The OECD has continued to issue new administrative guidance on the Pillar Two model rules throughout 2025 Significant uncertainty remains regarding the interpretation and consistent implementation of the Pillar Two model rules across jurisdictions their interaction with existing national tax laws and their alignment with current tax treaty obligations Final adoption and implementation of Pillar Two in the jurisdictions where we operate could adversely affect our business and financial results While it is impossible to predict whether other tax proposals will be enacted many could have an impact on our business and financial results
We have goodwill of 676 9 million and other intangible assets of 105 4 million as of July 31 2025 which represent 45 1 of our total assets and we have recognized impairment charges in the past We evaluate goodwill and other intangible assets for impairment on an annual basis or more frequently if impairment indicators are present based upon the fair value of each respective asset The valuations prepared for the required impairment test include management s estimates of sales profitability cash flow generation capital structure cost of debt interest rates capital expenditures and other assumptions Significant negative industry or economic trends disruptions to our business inability to achieve sales projections or cost savings inability to effectively integrate acquired businesses unexpected changes in the use of the assets and divestitures may adversely impact the assumptions used in the valuations If the estimated fair value of our goodwill or other intangible assets change in future periods we may be required to record an impairment charge which would reduce net income in such period
Substantially all of our voting stock is controlled by two shareholders while our public investors hold non voting stock The interests of the voting and non voting shareholders could differ potentially resulting in decisions that affect the value of the non voting shares
Substantially all of our voting stock is controlled by Elizabeth P Bruno one of our directors and William H Brady III both of whom are descendants of the Company s founder All of our publicly traded shares are non voting Therefore the voting shareholders have control in most matters requiring approval or acquiescence by shareholders including the composition of our Board of Directors and many corporate actions and their interests may not align with those of the non voting shareholders Such concentration of ownership may discourage a potential acquirer from making a purchase offer that our public shareholders may find favorable and it may adversely affect the trading price for our non voting common stock because investors may perceive disadvantages in owning stock in companies whose voting stock is controlled by a limited number of shareholders Additionally certain private investors mutual funds and index sponsors have implemented rules restricting ownership or excluding from indices companies with non voting publicly traded shares For example the Company was removed from the Russell 2000 Index in the fourth quarter of fiscal year 2023 for not meeting the minimum voting rights hurdle
Brady has strategically included cybersecurity risk management into our integrated Company wide risk management framework which consists of administrative operational physical and technical processes that we believe are appropriate to the scope and nature of our business We believe this integrated approach allows cybersecurity considerations to form an integral part of our corporate and strategic decision making processes Management works closely with our information technology security team to continuously evaluate and address cybersecurity risks in alignment with our business and operational needs Our cybersecurity policies and practices follow the cybersecurity framework of the Center for Internet Security CIS Controls
Our cybersecurity strategy focuses on continued strengthening of our cybersecurity defense model improvement of cybersecurity operational efficiencies and preparedness for evolving business and technology needs including the detection analysis and response to known anticipated and unexpected cybersecurity threats management of material risks related to cybersecurity threats and resilience against cybersecurity incidents We regularly assess potential threats and make investments to mitigate the risk of these threats against our critical information and assets by implementing a broad set of information security and cybersecurity measures including comprehensive monitoring and enhancement of our networks and systems intrusion prevention defense rapid detection and response and threat management capabilities To supplement our internal resources we engage external consultants to conduct independent assessments perform penetration testing and provide other cybersecurity related services as needed In addition we engage external vendors to review and test key controls within our cybersecurity program
Cybersecurity awareness training is provided to new employees and annually for current Brady employees which is designed to educate employees on recognizing information security and cybersecurity concerns how they can help protect the organization and how to inform the information technology security team of potential incidents In addition we implement processes to manage risks associated with our third party providers including security assessments prior to engagement and monitoring their compliance with our cybersecurity standards on an ongoing basis
The Audit Committee of our Board of Directors is responsible for the oversight of risks from cybersecurity threats Management updates the Audit Committee on a quarterly basis regarding our cybersecurity programs As part of its oversight responsibilities the Audit Committee regularly discusses and reviews with management among other items Brady s compliance and cybersecurity programs and any significant cybersecurity matters and related strategic risk management decisions are escalated to the Board of Directors
Our CIO is an experienced information technology professional with extensive cybersecurity and information technology risk management experience The information technology security team regularly informs our CIO General Counsel and Chief Financial Officer with regard to cybersecurity risks and incidents and our executive management team evaluates cybersecurity issues quarterly or as needed
Brady has a detailed incident response plan that provides the process and workflow of communication for escalation of cybersecurity incidents to executive leadership to determine if there is a breach warranting further action The information
technology security team in conjunction with various departments including finance corporate communications legal regional presidents and the CIO are charged with reviewing any incident under our materiality framework to assess whether further escalation and reporting is required and if an incident could constitute a material cybersecurity incident
Although we have not experienced any material cybersecurity incidents to date cybersecurity threats could materially affect the implementation of our business strategy results of operations or financial condition as further discussed in our risk factors in Part I Item 1A of this report
Twenty four manufacturing and distribution facilities are used for our Americas Asia business Eight facilities are located in the United States four in China two each in Brazil India and Mexico and one each in Canada Japan Malaysia Philippines Singapore and Thailand
Seventeen manufacturing and distribution facilities are used for our Europe Australia business Four facilities each are located in France and the United Kingdom two each in Belgium and Australia and one each in Austria Germany Norway South Africa and Turkey
The Company is and may in the future be named as a defendant in various legal proceedings and claims that arise in the normal course of business in which claims are asserted against the Company The Company records a liability for these legal actions when a loss is known or considered probable and the amount can be reasonably estimated The Company is not currently a party to any material pending legal proceedings in which management believes the ultimate resolution would have a material effect on the Company s consolidated financial statements
mon Stock are entitled to receive an annual noncumulative cash dividend of 0 01665 per share subject to adjustment in the event of future stock splits stock dividends or similar events involving shares of Class A Common Stock Thereafter any further dividend in that fiscal year must be paid on all shares of Class A Common Stock and Class B Common Stock on an equal basis The Company believes that based on its historic dividend practice this requirement will not impede it in following a similar dividend practice in the future
The Company maintains a share repurchase program for the Company s Class A Nonvoting Common Stock The program may be implemented by purchasing shares in the open market or in privately negotiated transactions with repurchased shares delivered to treasury and available for use in connection with the Company s stock based plans and for other corporate purposes On September 4 2024 the Company s Board of Directors authorized an increase in the Company s share repurchase program authorizing the repurchase of an additional 100 0 million of the Company s Class A Nonvoting Common Stock with no expiration date associated with the authorization As of July 31 2025 there were 87 0 million worth of shares authorized to purchase remaining pursuant to this share repurchase program
The graph below shows a comparison of the cumulative return over the last five fiscal years had 100 been invested at the close of business on July 31 2020 in each of Brady Corporation Class A Common Stock the Standard Poor s S P 500 Index the S P SmallCap 600 Industrials Index and the Russell 2000 Index
Brady Corporation is a global manufacturer and supplier of identification solutions and workplace safety products that identify and protect premises products and people The Company is organized and managed on a geographic basis with two reportable segments Americas Asia and Europe Australia
Management s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with our audited consolidated financial statements and the notes to those statements Item 8 in this Annual Report on Form 10 K The following discussion is intended to help the reader understand the results of operations and financial condition of the Company for the year ended July 31 2025 compared to the year ended July 31 2024
A discussion regarding our financial condition and results of operations for fiscal 2024 compared to fiscal 2023 can be found under Item 7 in our Annual Report on Form 10 K for the year ended July 31 2024 filed with the SEC on September 6 2024 which is available on the SEC s website at www sec gov and our corporate website at www bradyid com corporate investors and such information is incorporated by reference herein
References in this Annual Report on Form 10 K to organic sales refer to sales calculated in accordance with U S GAAP excluding the impact of foreign currency translation sales recorded from divested companies up to the first anniversary of their divestiture and sales recorded from acquired companies prior to the first anniversary date of their acquisition The Company s organic sales disclosures exclude the effects of foreign currency translation as foreign currency translation is subject to volatility that can obscure underlying business trends Management believes that the non GAAP financial measure of organic sales is meaningful to investors as it provides them with useful information to aid in identifying underlying sales trends in our businesses and facilitating comparisons of our sales performance with prior periods
The Company s operations and financial performance are subject to the risks and uncertainties inherent in the global economic environment including inflationary pressures supply chain disruptions and other macroeconomic challenges These pressures may impact the Company s business financial condition and results of operations as the global economic outlook remains uncertain
In recent months the U S government introduced incremental import tariffs on goods imported into the U S from numerous countries triggering reciprocal tariffs and other actions from many countries on goods exported from the U S Trade policies of the U S and other countries including China are complex and rapidly evolving Our strategy of manufacturing products near the point of sale reduces our overall exposure to tariffs though certain sourced inputs and manufactured items remain subject to incremental tariffs Our business has incurred and expects to continue to incur additional costs as it relates to these incremental tariffs for the foreseeable future The Company has taken and will continue to take action to mitigate inflationary pressures caused by the incremental tariffs through a combination of targeted price increases and surcharges strategic sourcing adjustments product portfolio optimization as well as our ongoing efforts to drive sustainable efficiency gains in our operations and administrative structures
Notwithstanding the uncertain situation relating to tariffs we believe our financial strength positions us well to continue investing in acquisitions and organic growth opportunities such as expanded sales channels marketing programs and research and development R D We remain focused on driving sustainable efficiency gains and automation across our operations and selling general and administrative SG A functions while also returning capital to our shareholders through dividends and share repurchases At
We believe that our financial resources and liquidity levels including the undrawn portion of our credit agreement and our ability to increase that credit line as necessary are sufficient to support the execution of our growth strategy and to manage the impact of economic or geopolitical events that could potentially reduce sales net income or cash provided by operating activities Refer to Risk Factors included in Part I Item 1A of this Annual Report on Form 10 K for the year ended
The comparability of the operating results for the year ended July 31 2025 to the year ended July 31 2024 has been impacted by the acquisitions of Gravotech Holding Gravotech on August 1 2024 American Barcode and RFID Incorporated AB R on October 1 2024 and the Microfluidic Solutions business unit of Funai Electric Co Ltd Microfluidic Solutions on April 1 2025 The operating results of Gravotech AB R and Microfluidic Solutions have been included since their acquisition dates Gravotech has been included in both reportable segments and AB R and Microfluidic Solutions have been included in the Americas Asia reportable segment The comparability of the operating results for the Americas Asia segment has also been impacted by the divestiture of two non core businesses one in March 2023 and another in October 2023
Net sales increased 12 8 to 1 513 6 million in fiscal 2025 compared to 1 341 4 million in fiscal 2024 which consisted of organic sales growth of 2 6 and sales growth from acquisitions of 10 5 which was partially offset by a decrease of 0 3 due to divestitures Organic sales grew 4 8 in the Americas Asia segment while organic sales declined 1 8 in the Europe Australia segment
Gross margin increased 10 6 to 760 8 million in fiscal 2025 compared to 687 9 million in fiscal 2024 As a percentage of net sales gross margin decreased to 50 3 in fiscal 2025 from 51 3 in fiscal 2024 The decrease in gross margin as a percentage of net sales was primarily due to a non recurring increase in cost of goods sold of 4 1 million related to the fair value adjustment to inventory from acquisitions facility closure and other reorganization costs of 4 9 million as well as the impact of incremental tariffs which were partially offset by organic sales growth in higher gross margin product lines
R D expenses increased 17 9 to 79 9 million in fiscal 2025 compared to 67 7 million in fiscal 2024 As a percentage of net sales R D expenses increased to 5 3 in fiscal 2025 compared to 5 1 in fiscal 2024 The increase in R D spending in fiscal 2025 was primarily due to the acquisition of Gravotech and to a lesser extent an increase in R D headcount within the Company s organic business The Company remains committed to investing in new innovative product development to drive long term organic sales growth Investments in new printing systems pressure sensitive materials scanners and software are the primary focus of R D expenditures in fiscal 2026
SG A expenses include selling and administrative costs directly attributed to the Americas Asia and Europe Australia segments as well as certain other corporate administrative expenses including finance information technology human resources and other administrative expenses SG A expenses increased 17 9 to 444 3 million in fiscal 2025 compared to 376 7 million in fiscal 2024 As a percentage of net sales SG A expense increased to 29 4 in fiscal 2025 compared to 28 1 in fiscal 2024 primarily due to incremental amortization expense from acquired intangible assets of 9 5 million and facility closure and other reorganization costs of 13 6 million
Operating income decreased 2 8 to 236 6 million in fiscal 2025 compared to 243 4 million in fiscal 2024 As a percentage of sales operating income decreased to 15 6 in fiscal 2025 compared to 18 1 in fiscal 2024 The decrease in operating income in fiscal 2025 was primarily due to facility closure and other reorganization costs incremental amortization expense related to acquired businesses and the fair value adjustment to inventory from acquisitions
Investment and other income was 5 2 million in fiscal 2025 compared to 7 6 million in fiscal 2024 The decrease in investment and other income in fiscal 2025 was primarily due to a decrease in interest income resulting from a reduced cash balance and lower interest rates
Interest expense increased to 4 7 million in fiscal 2025 compared to 3 1 million in fiscal 2024 The increase in interest expense in fiscal 2025 was primarily due to an increase in outstanding borrowings on the Company s credit agreement to fund acquisitions which was partially offset by a decrease in the weighted average interest rate compared to fiscal 2024
The Company evaluates short term segment performance based on segment profit and customer sales Interest expense investment and other income income tax expense and certain corporate administrative expenses are excluded when evaluating segment performance
Americas Asia net sales increased 12 1 to 993 7 million in fiscal 2025 compared to 886 5 million in fiscal 2024 which consisted of organic sales growth of 4 8 and sales growth from acquisitions of 8 3 which were partially offset by a decrease from foreign currency translation of 0 6 and a decrease due to a divestiture of 0 4 Organic sales growth reflected strong execution of our commercial strategies supported by steady industrial demand in North America continued expansion in key end markets across Latin America and resilient demand in Asia despite mixed economic conditions in certain countries
Organic sales in the Americas increased in the low single digits in fiscal 2025 The increase in organic sales was primarily due to growth in the wire identification safety and facility identification and product identification product lines which was partially offset by a decline in the people identification and healthcare identification product lines
Organic sales in Asia increased approximately 13 in fiscal 2025 The organic sales increase was primarily driven by higher demand from electronics manufacturing services providers technology companies and industrial suppliers across Japan India Malaysia and Singapore This growth was partially offset by lower volumes in China
Segment profit increased 6 6 to 209 8 million in fiscal 2025 from 196 8 million in fiscal 2024 As a percent of net sales segment profit decreased to 21 1 in fiscal 2025 from 22 2 in fiscal 2024 The increase in segment profit was primarily due to increased profit from organic sales growth which was partially offset by facility closure and other reorganization costs and incremental amortization expense related to acquired businesses The decrease in segment profit as a percentage of sales was primarily due to costs associated with the closure of two facilities incremental amortization from acquired businesses and purchase accounting adjustments which was partially offset by increased profit from organic sales growth
Europe Australia sales increased 14 3 to 519 9 million in fiscal 2025 compared to 454 9 million in fiscal 2024 The increase consisted of sales growth from acquisitions of 14 7 and an increase from foreign currency translation of 1 4 which was partially offset by an organic sales decline of 1 8 Organic sales declined due to softer industrial demand driven by lower manufacturing output and ongoing economic uncertainty in Europe particularly the United Kingdom and Germany and by a weaker growth outlook in Australia Looking ahead the Company remains focused on leveraging its capabilities and market presence to drive growth in key markets over the long term
Organic sales in Europe declined in the low single digits in fiscal 2025 The decline was driven by the safety and facility identification and people identification product lines which was partially offset by growth in the wire identification product line The decline was driven by the United Kingdom and Western Europe Regions which was partially offset by growth in the Middle East and Nordic Regions
Organic sales in Australia declined in the mid single digits in fiscal 2025 The organic sales decline was primarily driven by a decrease in volume in the safety and facility and wire identification product lines
Segment profit decreased 19 4 to 56 9 million in fiscal 2025 compared to 70 6 million in fiscal 2024 As a percentage of net sales segment profit decreased to 11 0 in fiscal 2025 compared to 15 5 in fiscal 2024 The decrease in segment profit and segment profit as a percentage of sales was primarily due to incremental amortization from acquired businesses purchase accounting adjustments and reorganization costs in order to streamline our operating structure
The Company s cash balances are generated and held in numerous locations throughout the world At July 31 2025 approximately 97 of the Company s cash and cash equivalents were held outside the United States The Company s organic and inorganic growth has historically been funded by a combination of cash provided by operating activities and debt financing The Company believes that its cash flow from operating activities and its borrowing capacity are sufficient to fund its anticipated requirements for working capital capital expenditures research and development common stock repurchases dividend payments and strategic acquisitions for the next 12 months and beyond Although the Company believes these sources of cash are currently sufficient to fund domestic operations annual cash needs could require repatriation of cash to the U S from foreign jurisdictions which may result in additional tax payments
Net cash provided by operating activities was 181 2 million during fiscal 2025 compared to 255 1 million in fiscal 2024 The decrease in cash provided by operating activities was primarily due to changes in working capital including inventory growth to maintain high service levels and align with customer needs higher receivables from strong organic growth in the Americas Asia segment and lower payroll related accruals and accounts payable due to the timing of payments
Net cash used in investing activities was 171 3 million during fiscal 2025 which primarily consisted of the acquisition of businesses of 144 5 million and capital expenditures of 27 6 million Net cash used in investing activities was 81 0 million in fiscal 2024 which primarily consisted of capital expenditures which included the purchase of a previously leased facility in Mexico and facility construction costs in Belgium
increase in cash used in financing activities was primarily due to increased net repayments on borrowings on our credit agreement following the funding of acquisitions in fiscal 2025 which was partially offset by a decline in share repurchases compared to the prior year
Our material cash requirements for known contractual obligations include capital expenditures borrowings on our credit agreement and lease obligations We believe that net cash provided by operating activities will continue to be adequate to meet our liquidity and capital needs for these items over the next 12 months and in the long term beyond the next 12 months We also have cash requirements for purchase orders and contracts for the purchase of inventory and other goods and services which are based on current and anticipated customer needs and are fulfilled by our suppliers within short time horizons We do not have significant agreements for the purchase of inventory or other goods or services specifying minimum order quantities In addition we may have liabilities for uncertain tax positions but we do not believe that the cash requirements to meet any of these liabilities will be material A discussion of income taxes is contained in Note 11 of the notes to consolidated financial statements
Essentially all of the Company s revenue is derived from the sale of its products and services in competitive markets Because prices are influenced by market conditions it is not always possible to fully recover cost increases through pricing Changes in product mix from year to year timing differences in instituting price changes and the large amount of custom products make it impracticable to accurately define the impact of inflation on profit margins
Management s discussion and analysis of the Company s financial condition and results of operations are based upon the company s consolidated financial statements which have been prepared in accordance with accounting principles generally accepted in the United States The preparation of these financial statements requires management to make estimates and judgments that affect the reported amounts of assets liabilities revenues and expenses and related disclosure of contingent assets and liabilities The Company bases these estimates and judgments on historical experience and on various other assumptions that are believed to be reasonable under the circumstances Actual results may differ from these estimates and judgments
The Company believes the following accounting estimates are most critical to an understanding of its financial statements Estimates are considered to be critical if they meet both of the following criteria 1 the estimate requires assumptions about material matters that are uncertain at the time the accounting estimates are made and 2 material changes in the estimates are reasonably likely from period to period For a detailed discussion on the application of these and other accounting estimates refer to Note 1 to the company s consolidated financial statements
The Company operates in numerous taxing jurisdictions and is subject to regular examinations by U S federal state and non U S taxing authorities Its income tax positions are based on research and interpretations of the income tax laws and rulings in each of the jurisdictions in which the Company does business Due to the ambiguity of laws and rulings in each jurisdiction the differences and interplay in tax laws between those jurisdictions the uncertainty of how underlying facts may be construed and the inherent uncertainty in estimating the final resolution of complex tax audit matters the Company s estimates of income tax liabilities may differ from actual payments or assessments
While the Company has support for the positions it takes on tax returns taxing authorities may assert different interpretations of laws and facts and may challenge cross jurisdictional transactions The Company generally re evaluates the technical merits of its tax positions and recognizes an uncertain tax benefit when i there is completion of a tax audit ii there is a change in applicable tax laws including a tax case ruling or legislative guidance or iii there is an expiration of the statute of limitations The liability for unrecognized tax benefits excluding interest and penalties was 21 8 million and 22 6 million as of July 31 2025 and 2024 respectively If recognized 18 3 million of unrecognized tax benefits would reduce the Company s income tax rate as of both July 31 2025 and 2024 Accrued interest and penalties related to unrecognized tax benefits were 6 6 million and 6 1 million as of July 31 2025 and 2024 respectively The Company recognizes interest and penalties related to unrecognized tax benefits in income tax expense on the consolidated statements of income The Company believes it is reasonably possible that the amount of gross unrecognized tax benefits could be reduced by up to 3 1 million in
the next 12 months as a result of the resolution of worldwide tax matters tax audit settlements amended tax filings and or statute expirations which would be the maximum amount that would be recognized as an income tax benefit in the consolidated statements of income
The Company recognizes deferred tax assets and liabilities for differences between the financial statement and tax basis of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income The Company establishes valuation allowances for its deferred tax assets if it is more likely than not that some or all of the deferred tax asset will not be realized This requires management to make judgments regarding i the timing and amount of the reversal of taxable temporary differences ii expected future taxable income or loss and iii the impact of tax planning strategies The Company recognized valuation allowances for its deferred tax assets
The allocation of purchase price for business combinations requires management estimates and judgment as to expectations for future cash flows of the acquired business and the allocation of those cash flows to identifiable intangible assets in determining the estimated fair value If the actual results differ from these estimates it could result in an impairment of intangible assets and goodwill or require acceleration of the amortization expense of finite lived intangible assets In addition goodwill and other indefinite lived intangible assets must be tested for impairment at least annually If circumstances or events prior to the date of the required annual assessment indicate that in management s judgment it is more likely than not that there has been a reduction of fair value of a reporting unit below its carrying value the Company performs an impairment analysis at the time of such circumstance or event Changes in management s estimates or judgments could result in an impairment charge and such a charge could have an adverse effect on the Company s financial condition and results of operations
The Company has identified six reporting units within its two reportable segments Americas Asia and Europe Australia with the following goodwill balances as of July 31 2025 North America 494 8 million Europe 179 3 million and Latin America 2 9 million The other three identified reporting units each have a goodwill balance of zero The Company has the option to first assess qualitative factors to determine if it is more likely than not that the fair value of the reporting unit is greater than its respective carrying value If the qualitative assessment leads to a determination that the fair value of a reporting unit may be less than its carrying value or if the Company elects to bypass the qualitative assessment altogether the Company performs a quantitative impairment test by calculating the fair value of the reporting unit and comparing the fair value with its associated carrying value When the Company performs the quantitative test for goodwill the Company establishes the fair value for the reporting unit based on the income approach in which a discounted cash flow model is utilized the market approach in which market multiples of comparable companies are utilized or a combination of both approaches The income approach requires the use of significant estimates and assumptions including forecasted sales growth operating income projections and discount rates and changes in these assumptions may adversely impact the fair value assessments The market approach requires significant assumptions related to the selection of comparable publicly traded companies and the market multiples Significant negative industry or macroeconomic trends disruptions to the Company s business loss of significant customers inability to effectively integrate acquired businesses unexpected significant changes or planned changes in use of the assets or in entity structure and divestitures may adversely impact the assumptions used in the valuations
The Company completes its annual goodwill impairment analysis on May 1 of each fiscal year and evaluates its reporting units for potential triggering events on a quarterly basis in accordance with ASC 350 Intangibles Goodwill and Other In addition to the metrics listed above the Company considers multiple internal and external factors when evaluating its reporting units for potential impairment including i GDP growth for the respective geography ii industry and market factors such as competition and changes in the market for the reporting unit s products iii new product development iv competing technologies v overall financial performance such as cash flows actual and planned revenue and profitability and vi changes in the strategy of the reporting unit In the event the fair value of a reporting unit is less than the carrying value the Company would recognize an impairment charge for the amount by which the carrying amount of the reporting unit exceeds the fair value If necessary the Company may consult valuation specialists to assist with the assessment of the estimated fair value of the reporting unit
On May 1 2025 the Company performed the qualitative assessment for all three reporting units with goodwill balances and determined that it was more likely than not that the fair value exceeds the carrying value for each reporting unit and as such goodwill was not considered impaired
The Company uses the acquisition method of accounting to allocate the purchase price of an acquired business to the assets acquired and liabilities assumed based on their estimated fair values at the date of acquisition The excess of the purchase price over the estimated fair value of assets and liabilities is recorded as goodwill If the fair value of net assets acquired exceeds the purchase price the Company records the excess as a bargain purchase gain in earnings after reassessing the estimated values Assigning fair market values to the assets acquired and liabilities assumed at the date of an acquisition requires knowledge of current market values and the values of assets in use and often requires the application of judgment regarding estimates and assumptions While the ultimate responsibility resides with management for material acquisitions we retain the services of certified valuation specialists to assist with assigning estimated values to certain acquired assets including intangible assets and significant tangible long lived assets The valuation methods used to determine the estimated fair value of intangible assets included the multi period excess earnings method for customer relationships using customer inputs and contributory charges and the relief from royalty method for tradenames and technological know how Several assumptions and estimates were involved in the application of these valuation methods including forecasted sales growth margin and cash flows attributable to existing customers obsolescence factor royalty rate contributory asset charges customer attrition rate tax rates and discount rates Tangible long lived assets are valued using a combination of the income cost and market value approaches While we believe expectations and assumptions utilized for historical business combinations have been reasonable they are inherently uncertain and include significant management judgment
The Company s business operations give rise to market risk exposure due to changes in foreign exchange rates To manage that risk effectively the Company enters into hedging transactions according to established guidelines and policies that enable it to mitigate the adverse effects of t
The global nature of the Company s business requires active participation in the foreign exchange markets The Company has manufacturing facilities and sells and distributes its products throughout the world and therefore has assets liabilities and cash flows in currencies other than the U S dollar As a result the Company s financial results could be significantly affected by factors such as changes in foreign currency exchange rates or weak macroeconomic conditions in the foreign markets in which the Company manufactures distributes and sells its products The Company s operating results are principally exposed to changes in exchange rates between the U S dollar and the Euro the British Pound the Mexican Peso the Canadian dollar the Australian dollar the Singapore dollar the Malaysian Ringgit and the Chinese Yuan
minimize the impact of currency movements on non functional currency transactions To achieve this objective the Company hedges a portion of known exposures using forward contracts As of July 31 2025 the notional amount of outstanding forward foreign exchange contracts designated as cash flow hedges was 53 5 million The Company uses Euro denominated debt of 50 2 million and British Pound denominated debt of 10 6 million designated as hedge instruments to hedge portions of the Company s net investment in its Euro denominated and British Pound denominated businesses The Company s multi currency revolving credit agreement allows it to borrow up to 200 million in currencies other than U S dollars Debt issued in currencies other than U S dollars acts as a natural hedge to the Company s exposure to the associated currency
The Company also faces exchange rate risk from transactions with customers in countries outside the United States and from intercompany transactions between affiliates Although the Company has a U S dollar functional currency for reporting purposes it has manufacturing sites throughout the world and a significant portion of its sales are generated in foreign currencies Costs incurred and sales recorded by subsidiaries operating outside of the United States are translated into U S dollars using exchange rates in effect during the respective period As a result the Company is exposed to movements in the exchange rates of various currencies against the U S dollar In particular the Company has more sales in European currencies than it has expenses in those currencies Therefore when European currencies strengthen or weaken against the U S dollar operating profits are increased or decreased respectively In fiscal 2025 the fluctuation in currency exchange rates had a negligible effect on sales however the effect was more pronounced in interim periods compared to fiscal 2024 as the U S dollar depreciated on average against other major currencies throughout the year
Changes in foreign currency exchange rates for the Company s foreign subsidiaries reporting in local currencies are generally reported as a component of stockholders equity The Company s currency translation adjustments recorded during the years ended July 31 2025 2024 and 2023 as a separate component of stockholders equity were favorable by 18 2 million unfavorable by 14 5 million and favorable by 16 0 million respectively As of July 31 2025 and 2024 the Company s foreign subsidiaries had net current assets defined as current assets less current liabilities subject to foreign currency translation risk of 259 2 million and 324 5 million respectively The potential decrease in net current assets as of July 31 2025 from a hypothetical 10 percent adverse change in quoted foreign currency exchange rates would be approximately 25 9 million This sensitivity analysis assumes a parallel shift in all major foreign currency exchange rates versus the U S dollar Exchange rates rarely move in the same direction relative to the U S dollar due to positive and negative correlations of the various global currencies This assumption may overstate the impact of changing exchange rates on individual assets and liabilities denominated in a foreign currency
The Company could be exposed to interest rate risk through its corporate borrowing activities The objective of the Company s interest rate risk management activities is to manage the levels of the Company s fixed and floating interest rate exposure to be consistent with the Company s preferred mix The interest rate risk management program allows the Company to enter into approved interest rate derivatives if there is a desire to modify the Company s exposure to interest rates As of July 31 2025 the Company had no interest rate derivatives and no fixed rate debt outstanding
We have audited the accompanying consolidated balance sheets of Brady Corporation and subsidiaries the Company as of July 31 2025 and 2024 the related consolidated statements of income comprehensive income stockholders equity and cash flows for each of the three years in the period ended July 31 2025 and the related notes and the schedule listed in the Index at Item 15 collectively referred to as the financial statements In our opinion the financial statements present fairly in all material respects the financial position of the Company as of July 31 2025 and 2024 and the results of its operations and its cash flows for each of the three years in the period ended July 31 2025 in conformity with accounting principles generally accepted in the United States of America
We have also audited in accordance with the standards of the Public Company Accounting Oversight Board United States PCAOB the Company s internal control over financial reporting as of July 31 2025 based on criteria established in
issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated September 4 2025 expressed an unqualified opinion on the Company s internal control over financial reporting
These financial statements are the responsibility of the Company s management Our responsibility is to express an opinion on the Company s financial statements based on our audits We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U S federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB
We conducted our audits in accordance with the standards of the PCAOB Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement whether due to error or fraud Our audits included performing procedures to assess the risks of material misstatement of the financial statements whether due to error or fraud and performing procedures that respond to those risks Such procedures included examining on a test basis evidence regarding the amounts and disclosures in the financial statements Our audits also included evaluating the accounting principles used and significant estimates made by management as well as evaluating the overall presentation of the financial statements We believe that our audits provide a reasonable basis for our opinion
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that 1 relates to accounts or disclosures that are material to the financial statements and 2 involved our especially challenging subjective or complex judgments The communication of critical audit matters does not alter in any way our opinion on the financial statements taken as a whole and we are not by communicating the critical audit matter below providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates
The Company recognizes deferred income tax assets and liabilities for the estimated future tax effects attributable to temporary differences and carryforwards Valuation allowances are established when necessary to reduce deferred tax assets to the amounts expected to be realized in the future Future realization of deferred tax assets depends on the existence of sufficient taxable income within the carryback or carryforward period of the appropriate character under the relevant tax law Sources of taxable income include future reversals of deferred tax assets and liabilities future taxable income exclusive of the reversals of deferred tax assets and liabilities taxable income in prior carryback year s if permitted under the tax law and tax planning strategies The Company s valuation allowance for deferred tax assets was 82 2 million as of July 31 2025
The Company s determination of the valuation allowance involves estimates Management s primary estimate in determining whether a valuation allowance should be established is the projection of future sources of taxable income Auditing
management s estimate of future sources of taxable income which affects the recorded valuation allowances required a high degree of auditor judgment and an increased extent of effort including the need to involve our income tax specialists
With the assistance of our income tax specialists we considered relevant tax laws and regulations in evaluating 1 the appropriateness of management s estimates of future sources of taxable income including whether the future sources were of the appropriate character and 2 the appropriateness of the carryforward periods utilized by management
We evaluated management s ability to accurately estimate future sources of taxable income by comparing actual results to management s historical estimates Further we evaluated the reasonableness of management s estimates of future sources of taxable income by comparing the estimates to historical sources of taxable income or losses and evaluating whether there have been any changes that would affect management s estimates of future sources of taxable income
Brady Corporation is a global manufacturer and supplier of identification solutions and workplace safety products that identify and protect premises products and people The ability to provide customers with a broad range of proprietary customized and diverse products for use in various applications along with a commitment to quality and service a global footprint and multiple sales channels have made Brady a world leader in many of its markets
The accompanying consolidated financial statements include the accounts of Brady Corporation and its wholly owned subsidiaries All intercompany accounts and transactions between consolidated subsidiaries have been eliminated in consolidation
The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States U S GAAP which requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period Actual results could differ from those estimates
The Company recognizes assets acquired liabilities assumed contractual contingencies and contingent consideration at their fair value on the acquisition date The operating results of the acquired companies are included in the Company s consolidated financial statements from the date of acquisition Acquisition related costs are expensed as incurred and changes in deferred tax asset valuation allowances and income tax uncertainties after the measurement period are recorded in income tax expense
The Company places temporary cash investments with global financial institutions of high credit quality The Company performs periodic evaluations of the relative credit standing of its financial institutions and limits the amount of credit exposure with any one financial institution In addition the Company has a broad customer base representing many diverse industries throughout the globe Consequently no significant concentration of credit risk is considered to exist
The Company s policy for estimating the allowance for credit losses on accounts receivables considers several factors including historical loss experience the age of delinquent receivable balances due and economic conditions Specific customer reserves are made during review of significant outstanding balances due in which customer creditworthiness and current economic trends may indicate that it is probable the receivable will not be recovered Accounts receivable are written off after collection efforts occur and the receivable is deemed uncollectible Adjustments to the allowance for credit losses are recorded in selling general and administrative SG A expense
Inventories are stated at the lower of cost or net realizable value and include material labor and overhead Cost has been determined using the last in first out LIFO method for certain inventories in the U S 12 8 of total inventories at July 31 2025 and 13 0 of total inventories at July 31 2024 and the first in first out FIFO or average cost methods for all other inventories Had all inventories been accounted for on a FIFO basis instead of on a LIFO basis the carrying value of inventories would have increased by 12 006 and 11 582 as of July 31 2025 and 2024 respectively
Property plant and equipment are stated at cost less accumulated depreciation Depreciation is computed primarily on a straight line basis over the estimated useful lives of the related assets Leasehold
The Company tests goodwill for impairment on an annual basis on the first day of the fourth quarter of each fiscal year or more frequently if events or changes in circumstances indicate that it may be impaired Under U S GAAP the Company has the option to first assess qualitative factors to determine if it is more likely than not that the fair value of one of its reporting units is greater than its carrying value Step 0 If the qualitative assessment leads to a determination that the reporting unit s fair value is less than its carrying value or if the Company elects to bypass the qualitative assessment altogether it is required to perform a quantitative impairment test Step 1 by calculating the fair value of the reporting unit and comparing the fair value with its associated carrying value During the fiscal year 2025 annual impairment test the Company first assessed goodwill recoverability qualitatively using the Step 0 approach for each reporting unit For the qualitative assessment the Company considered the most recent quantitative analysis which was performed during the fourth quarter of fiscal year 2023 for all three reporting units including assumptions used such as discount rates indicated fair values and the amounts by which those fair values exceeded their carrying amounts Further the Company compared actual performance in fiscal year 2025 to the internal financial projections used in the prior quantitative analyses Additionally the Company considered various other factors including macroeconomic conditions relevant industry and market trends and factors specific to the Company that could indicate a potential change in the fair value of the reporting units Lastly the Company evaluated whether any events have occurred or any circumstances have changed since that time that would indicate that goodwill may have become impaired since the last quantitative tests Based on these qualitative assessments the Company determined it is more likely than not that the fair value of each reporting unit exceeds its respective carrying value and goodwill was not considered impaired as of May 1 2025 As such the Step 1 quantitative goodwill impairment analysis was not necessary No goodwill impairment charges were recognized during the year ended July 31 2025
Intangible assets with definite lives are amortized on a straight line basis over their estimated useful lives to reflect the pattern of economic benefits consumed Intangible assets with indefinite lives as well as goodwill are not subject to amortization These assets are assessed for impairment on an annual basis or more frequently if events or changes in circumstances have occurred that indicate the asset may not be recoverable or that the remaining estimated useful life may warrant revision In addition the Company performs qualitative assessments on a quarterly basis of significant events and circumstances such as historical and current results assumptions regarding future performance and strategic initiatives and overall economic factors
The Company evaluates indefinite lived intangible assets for impairment by comparing the estimated fair value of the asset to the carrying value Fair value is estimated using the income approach based upon current sales projections applying the relief from royalty method If the carrying value of the indefinite lived intangible asset exceeds its fair value an impairment loss is recognized in an amount equal to that excess The Company evaluates long lived assets including finite lived intangible assets operating lease assets and property plant and equipment for recoverability by comparing an estimate of undiscounted future cash flows derived from internal forecasts over the remaining life of the primary asset to the carrying amount of the asset group To the extent the undiscounted future cash flows attributable to the asset are less than the carrying amount an impairment loss is recognized for the amount by which the carrying value of the asset exceeds its fair value
The Company accounts for leases in accordance with Accounting Standards Codification ASC 842 Leases The Company determines whether an arrangement contains a lease at contract inception based on whether the arrangement provides the Company with the right to direct the use of and the right to obtain substantially all of the economic benefits from
The initial measurement of ROU assets and lease liabilities are recognized at the lease commencement date based on the present value of future lease payments over the expected lease term The ROU asset also includes any lease payments made on or before the commencement date initial direct costs incurred and is reduced by any lease incentives received Some of the Company s leases include options to extend the lease agreement of which the exercise is at the Company s sole discretion The majority of renewal options are not included in the calculation of ROU assets and liabilities as they are not reasonably certain to be exercised Some of the Company s lease agreements include rental payments that are adjusted periodically for inflation or the change in an index or rate These variable lease payments are generally excluded from the initial measurement of the ROU asset and lease liability and are recognized in the period in which the obligation for those payments is incurred The Company has lease agreements that include both lease and non lease components which the Company elected to account for as a single lease component
The Company determines the present value of future lease payments using its incremental borrowing rate as the discount rate implicit within the Company s leases generally cannot be readily determined The incremental borrowing rate is estimated based on the sovereign credit rating for the countries in which the Company has its largest operations adjusted for several factors such as internal credit spread lease terms and other market information available at the lease commencement date
As of July 31 2025 all leases are accounted for as operating leases with lease expense being recognized on a straight line basis over the lease term Operating leases are reflected in Operating lease assets Current operating lease liabilities and Long term operating lease liabilities in the accompanying consolidated balance sheets Operating lease expense is recognized in either cost of goods sold or selling general and administrative expenses in the consolidated statements of income based on the nature of the lease ROU assets are evaluated for impairment in the same manner as long lived assets No impairment charges were recognized related to operating lease assets during the year ended July 31 2025
The Company recognizes revenue when a sales arrangement with a customer exists the transaction price is fixed or determinable and the Company has satisfied its performance obligations per the sales arrangement The majority of the Company s revenue relates to the sale of identification and safety products and revenue is recognized at the point in which the customer obtains control of the products The Company considers control to have transferred when legal title physical possession and the significant risks and rewards of ownership of the asset have transferred to the customer and the collection of the transaction price is reasonably assured most of which occur upon the shipment or delivery of goods to customers Revenue is measured at the determinable transaction price net of estimated sales returns including product returns and credit memos and sales rebates The Company estimates product returns and credit memos based on historical return rates As of July 31 2025 and 2024 the allowance for product returns and credit memos was 5 434 and 4 210 respectively
The Company measures and recognizes the compensation expense for all share based awards made to employees and directors based on estimated grant date fair values The Black Scholes option valuation model is used to determine the fair value of stock option awards on the date of grant The Company recognizes the compensation cost net of estimated forfeitures of all share based awards on a straight line basis over the vesting period of the award If it is determined that it is unlikely the award will vest the expense recognized to date for the award is generally reversed in the period in which this is evident and the remaining expense is not recorded
The Black Scholes model requires the use of assumptions which determine the fair value of stock based awards The Company uses historical data regarding stock option exercise behaviors to estimate the expected term of options granted based on the period of time that options granted are expected to be outstanding Expected volatilities are based on the historical volatility of the Company s stock The expected dividend yield is based on the Company s historical dividend payments and historical yield The risk free interest rate is based on the U S Treasury yield curve in effect on the grant date for the length of time corresponding to the expected term of the option The market value is calculated as the average of the high and the low stock price on the date of the grant Refer to No
Other comprehensive income consists of net unrealized gains and losses from cash flow hedges the unamortized gain on defined benefit pension plans net of their related tax effects and foreign currency translation adjustments which includes the impact of foreign currency translations the settlements of net investment hedges and long term intercompany loan translation adjustments
The assets and liabilities of subsidiaries whose functional currency is a currency other than the U S dollar are translated into U S dollars at end of period rates of exchange and income and expense accounts are translated at the average rates of exchange for the period Resulting foreign currency translation adjustments are included in other comprehensive income
The Company accounts for income taxes in accordance with ASC 740 Income Taxes Deferred income tax assets and liabilities are recognized for the expected future tax consequences attributable to differences between the financial reporting and tax basis of assets and liabilities Deferred tax assets and liabilities are measured using the currently enacted tax laws and rates applicable to the periods in which the differences are expected to be realized or settled Valuation allowances are established when it is estimated that it is more likely than not that the tax benefit of the deferred tax asset will not be realized The Company recognizes the benefit of income tax positions only if those positions are more likely than not to be sustained upon examination by the tax authority Changes in recognition or measurement are reflected in the period in which a change in judgment occurs
The Company believes that the carrying amount of its financial instruments cash and cash equivalents accounts receivable accounts payable and other current liabilities approximates fair value due to the short term nature of these instruments Refer to Note 6 Debt for more information regarding the fair value of long term debt and Note 13 Fair Value Measurements for information regarding fair value measurements
The objective of the Company s foreign currency exchange risk management is to minimize the impact of currency movements on non functional currency transactions and minimize the foreign currency translation impact on the Company s foreign operations While the Company s risk management objectives and strategies are driven from an economic perspective the Company attempts where possible and practical to ensure that the hedging strategies it engages in qualify for hedge accounting and result in accounting treatment where the earnings effect of the hedging instrument provides substantial offset in the same period to the income effect of the hedged item
The Company recognizes derivative instruments as either assets or liabilities in the accompanying consolidated balance sheets at fair value Gains and losses resulting from changes in fair value of the derivatives designated as hedges are recorded as a component of Accumulated Other Comprehensive Income AOCI in the accompanying consolidated balance sheets and in the consolidated statements of comprehensive income and are reclassified into the same income statement line item in the period or periods during which the hedged transaction affects income Refer to Note 14 Derivatives and Hedging Activities for more information regarding the Company s derivative instruments and hedging activities
In November 2023 the Financial Accounting Standards Board FASB issued Accounting Standards Update ASU 2023 07 Segment Reporting Topic 280 Improvements to Reportable Segment Disclosures The guidance requires expanded interim and annual disclosures of segment information including the disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within segment profit and loss The Company adopted ASU 2023 07 for the year ended July 31 2025 with retrospective application of the expanded segment information for the years ended July 31 2024 and 2023 Additional information regarding the Company s reportable segments is included in Note 10 to the consolidated financial statements
In December 2023 the FASB issued ASU 2023 09 Income Taxes Topic 740 Improvements to Income Tax Disclosures The guidance requires expanded annual disclosures including the standardization and disaggregation of income tax rate reconciliation categories and the amount of income taxes paid by jurisdiction The guidance is effective for the Company s fiscal year 2026 Form 10 K The adoption of this guidance is not anticipated to have a material impact on the consolidated financial statements
In November 2024 the FASB issued ASU 2024 03 Income Statement Reporting Comprehensive Income Expense Disaggregation Disclosures Subtopic 220 40 Disaggregation of Income Statement Expenses The guidance requires expanded interim and annual disclosures of expense information including the amounts of inventory purchases employee compensation depreciation amortization and depletion within commonly presented expense captions during the period The guidance is effective for the Company s fiscal 2028 Form 10 K and interim periods thereafter The Company is currently evaluating the ASU to determine its impact on the Company s disclosures
Goodwill increased 87 334 during the year ended July 31 2025 Of the 87 334 increase 66 178 was due to the acquisition of Gravotech 10 079 was due to the acquisition of AB R and 11 077 was due to the positive effects of foreign currency translation
The qualitative assessment performed on May 1 2025 in accordance with ASC 350 Intangibles Goodwill and Other indicated that it is more likely than not that the fair value exceeds the carrying value for each of the three reporting units with goodwill North America Europe and Latin America
Other intangible assets include customer relationships tradenames and technology with finite lives being amortized in accordance with the accounting guidance for other intangible assets The Company also has unamortized indefinite lived tradenames that are classified as other intangible assets
The change in the gross carrying amount of amortized other intangible assets as of July 31 2025 compared to July 31 2024 was primarily due to the acquisitions of Gravotech and AB R completed during the year ended July 31 2025 and to a lesser extent the effect of currency fluctuations
Amortization expense on intangible assets during the years ended July 31 2025 2024 and 2023 was 18 916 9 421 and 11 739 respectively Amortization expense over each of the next five fiscal years is projected to be 18 583 17 604 17 192 16 837 and 12 022 for the fiscal years ending July 31 2026 2027 2028 2029 and 2030 respectively
The Company leases certain manufacturing facilities warehouses and office space computer equipment and vehicles accounted for as operating leases Lease terms typically range from one year to ten years As of July 31 2025 and 2024 the Company did not have any finance leases
The Company provides postretirement medical benefits the Plan for eligible regular full and part time domestic employees including spouses who retired prior to January 1 2016 as outlined by the Plan The Plan is unfunded and the liability unrecognized
and associated income statement impact are immaterial The current portion and non current portion of the liabilities for postretirement medical benefits are included in Other current liabilities and Other liabilities respectively on the accompanying consolidated balance sheets as of July 31 2025 and 2024 The unrecognized
The Company also has two deferred compensation plans the Executive Deferred Compensation Plan and the Director Deferred Compensation Plan which allow for compensation to be deferred into either the Company s Class A Nonvoting Common Stock or in other investment funds Neither plan allows funds to be transferred between the Company s Class A Nonvoting Common Stock and the other investment funds The Company has an additional non qualified deferred compensation plan the Brady Restoration Plan which allows an equivalent benefit to the Matched 401 k Plan and the Funded Retirement Plan for executives income exceeding the IRS limits for participation in a qualified 401 k plan Deferred compensation of 19 998 and 20 029 was included in Other liabilities in the accompanying consolidated balance sheets as of July 31 2025 and 2024 respectively
The Company has retirement and profit sharing plans covering substantially all full time domestic employees and certain employees of its foreign subsidiaries Contributions to the plans are determined annually or quarterly according to the respective plan based on income of the respective companies and employee contributions Accrued retirement and profit sharing contributions of 4 742 and 3 656 were included in Other current liabilities in the accompanying consolidated balance sheets as of July 31 2025 and 2024 respectively The amounts charged to expense for these retirement and profit sharing plans were 17 921 16 134 and 15 089 during the years ended July 31 2025 2024 and 2023 respectively
On November 14 2022 the Company and certain of its subsidiaries entered into a Second Amendment to the Credit Agreement Amendment No 2 to among other items a increase the lending commitments by 100 million for total lending commitments of 300 million b extend the final maturity date to November 14 2027 c increase the interest rate on certain borrowings by 0 125 and d increase the available amount under the credit agreement at the Company s option and subject to certain conditions from 300 million up to i an amount equal to the incremental borrowing necessary to bring the Company s consolidated net debt to EBITDA ratio as defined in the credit agreement to 2 5 to 1 0 plus ii 200 million
On October 10 2024 the Company and certain of its subsidiaries entered into a Third Amendment to the Credit Agreement Amendment No 3 with a group of six banks which amended the original credit agreement dated August 1 2019 Amendment No 3 amended the original credit agreement to among other things change the applicable benchmark under the
credit agreement for borrowings denominated in Canadian Dollars from the Canadian Dollar Offered Rate CDOR to the adjusted Term Canadian Overnight Repo Rate Average Rate CORRA Borrowings under Amendment No 3 are unsecured and are guaranteed by certain of the Company s domestic subsidiaries
As of July 31 2025 the outstanding balance on the credit agreement was 99 8 million The maximum amount outstanding on the credit agreement during the year ended July 31 2025 was 144 8 million As of July 31 2025 there was 198 1 million available for future borrowing which can be increased to 1 093 1 million at the Company s option subject to certain conditions The credit agreement has a final maturity date of November 14 2027 As such borrowings are classified as long term on the consolidated balance sheets
The Company s credit agreement requires it to maintain certain financial covenants including a ratio of debt to trailing twelve months EBITDA as defined in the agreement of not more than a 3 5 to 1 0 ratio leverage ratio and trailing twelve months EBITDA to interest expense of not less than a 3 0 to 1 0 ratio interest expense coverage ratio As of July 31 2025 the Company was in compliance with these financial covenants with a ratio of debt to EBITDA as defined by the agreements equal to 0 3 to 1 0 and the interest expense coverage ratio equal to 67 3 to 1 0
Borrowings under the revolving credit agreement as of July 31 2025 included USD denominated British pound denominated and Euro denominated borrowings of 39 000 10 588 and 50 178 respectively The weighted average interest rate of the USD denominated British pound denominated and Euro denominated borrowings was 5 3 5 1 and 2 8 respectively as of July 31 2025
Borrowings under the revolving credit agreement as of July 31 2024 included USD denominated British pound denominated and Euro denominated borrowings of 32 000 10 267 and 48 668 The weighted average interest rate of the USD denominated British pound denominated and Euro denominated borrowings was 6 3 6 1 and 4 5 respectively as of July 31 2024
Before any dividend may be paid on the Class B Common Stock holders of the Class A Common Stock are entitled to receive an annual noncumulative cash dividend of 0 01665 per share Thereafter any further dividend in that fiscal year must be paid on each share of Class A Common Stock and Class B Common Stock on an equal basis
Other than as required by law holders of the Class A Common Stock are not entitled to any vote on corporate matters unless in each of the three preceding fiscal years the 0 01665 preferential dividend described above has not been paid in full Holders of the Class A Common Stock are entitled to one vote per share for the entire fiscal year immediately following the third consecutive fiscal year in which the preferential dividend is not paid in full Holders of Class B Common Stock are entitled to one vote per share for the election of directors and for all other purposes
Upon liquidation dissolution or winding up of the Company and after distribution of any amounts due to holders of Preferred Stock if any holders of the Class A Common Stock are entitled to receive the sum
of 0 8333 per share before any payment or distribution to holders of the Class B Common Stock Thereafter holders of the Class B Common Stock are entitled to receive a payment or distribution of 0 8333 per share Thereafter holders of the Class
The preferences in dividends and liquidation rights of the Class A Common Stock over the Class B Common Stock will terminate at any time that the voting rights of Class A Common Stock and Class B Common Stock become equal
The Company has two deferred compensation plans the Executive Deferred Compensation Plan and the Director Deferred Compensation Plan that allow for compensation to be deferred into either the Company s Class A Nonvoting Common Stock or into other investment funds Neither plan allows funds to be transferred between the Company s Class A Nonvoting Common Stock and the other investment funds
At July 31 2025 the deferred compensation balance in stockholders equity represents the investment at the original cost of shares held in the Company s Class A Nonvoting Common Stock for the deferred compensation plans The balance of shares held in the Rabbi Trust represents the investment in the Company s Class A Nonvoting Common Stock at the original cost of all the Company s Class A Nonvoting Common Stock held in deferred compensation plans
The Company has an incentive stock plan under which the Board of Directors may grant nonqualified stock options to purchase shares of Class A Nonvoting Common Stock restricted stock units RSUs performance based restricted stock units PRSUs or restricted and unrestricted shares of Class A Nonvoting Common Stock to employees and non employee directors Certain awards may be subject to pre established performance goals The majority of the Company s annual share based awards are granted in the first quarter of the fiscal year
As of July 31 2025 the Company has reserved 1 367 247 shares of Class A Nonvoting Common Stock for outstanding stock options and RSUs and 4 721 007 shares of Class A Nonvoting Common Stock remain for future issuance of stock options and restricted and unrestricted shares under the active plans The Company uses treasury stock or will issue new Class A Nonvoting Common Stock to deliver shares under these plans
Total stock based compensation expense recognized during the years ended July 31 2025 2024 and 2023 was 11 882 7 361 and 7 508 respectively The total income tax benefit recognized in the consolidated statements of income was 1 526 1 014 and 1 497 during the years ended July 31 2025 2024 and 2023 respectively
The stock options issued under the plan have an exercise price equal to the fair market value of the underlying stock at the date of grant and generally vest ratably over a three year period with one third becoming exercisable one year after the grant date and one third additional in each of the succeeding two years Options issued under the plan referred to herein as time based options generally expire ten years from the date of grant The Company did not grant time based stock option awards during the year ended July 31 2025
The Company has estimated the fair value of its time based stock option awards granted during the years ended July 31 2024 and 2023 using the Black Scholes option valuation model The weighted average assumptions used in the Black Scholes valuation model are reflected in the following table
As of July 31 2025 total unrecognized compensation cost related to options that are expected to vest was 269 pre tax net of estimated forfeitures which the Company expects to recognize over a weighted average period of 0 9 years
RSUs issued under the plan have a grant date fair value equal to the market price of the Company s stock at the date of grant and generally vest ratably over three years with one third vesting one year after the grant date and one third additional in each of the succeeding two years
As of July 31 2025 total unrecognized compensation cost related to RSUs that are expected to vest was 4 107 pre tax net of estimated forfeitures which the Company expects to recognize over a weighted average period of 1 9 years
PRSUs are contingent on the achievement of predetermined market and performance targets The PRSUs granted under the plan vest at the end of a three year performance period provided the service period and specified performance targets are met For the PRSUs granted during the years ended July 31 2025 and 2024 awards will vest based on achievement of performance conditions relating to Company revenue and diluted EPS targets For the PRSUs granted during the year ended July 31 2023 the vesting criteria for 50 of the grant is based upon the Company s total shareholder return TSR relative to the S P 600 SmallCap Industrials Index over a three year performance period and the vesting criteria for the remaining 50 of the grant is based upon Company revenue targets
The PRSUs granted during the year ended July 31 2024 and 2023 had a weighted average grant date fair value of 51 16 and 55 77 respectively The total fair value of PRSUs vested during the years ended July 31 2025 2024 and 2023 was 595 141 and 889 respectively
As of July 31 2025 total unrecognized compensation cost related to PRSUs that are expected to vest was 5 093 pre tax net of estimated forfeitures which the Company expects to recognize over a weighted average period of 1 7 years
Other comprehensive loss consists of foreign currency translation adjustments which includes net investment hedges and long term intercompany loan translation adjustments unrealized gains or losses from cash flow hedges and the unamortized gain on post retirement plans net of their related tax effects
in accumulated other comprehensive loss as of July 31 2025 compared to July 31 2024 was primarily due to the depreciation of the U S dollar against certain other currencies during the fiscal year Of the amounts reclassified from accumulated other comprehensive loss during the years ended July 31 2025 and 2024 unrealized gains or losses on cash flow hedges were reclassified into Cost of goods sold and net unamortized gains on post retirement plans were reclassified into Investment and other income on the consolidated statements of income
The Company recognizes revenue when control of the product or service transfers to the customer at an amount that represents the consideration expected to be received in exchange for those products and services
The Company s revenues are primarily from the sale of identification solutions and workplace safety products that are shipped and billed to customers All revenue is from contracts with customers and is included in Net sales on the consolidated statements of income
The Company s contracts with customers consist of purchase orders which in some cases are governed by master supply or distributor agreements For each contract the Company considers the commitment to transfer tangible products which are generally capable of being distinct to be separate performance obligations
The majority of the Company s revenue is earned and recognized at a point in time through ship and bill performance obligations where the customer typically obtains control of the product upon shipment or delivery depending on freight terms The Company considers control to have transferred if legal title physical possession and the significant risks and rewards of ownership of the asset have transferred to the customer and the Company has a present right to payment In almost all cases control transfers once a product is shipped or delivered as this is when the customer is able to direct and obtain substantially all of the remaining benefits associated with use of the asset
Revenue is measured as the amount of consideration the Company expects to be entitled to in exchange for the transfer of product to a customer The transaction price is generally the price stated in the contract specific for each item sold adjusted for all applicable variable considerations Variable consideration generally includes discounts returns credits rebates or other allowances that reduce the transaction price Certain discounts and price assurances are fixed and known at the time of sale
The Company estimates the amount of variable consideration and reduces the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved The expected value method is used to estimate expected returns and allowances based on historical experience The most likely amount method is used to estimate customer rebates which are offered retrospectively and typically defined in the master supply or distributor agreement
While the Company s standard payment terms are net 30 days the specific payment terms and conditions in its contracts with customers vary by type and location of the customer Cash discounts may be offered to certain customers The Company has payment terms in its contracts with customers of less than one year and therefore does not recognize the time value of money or any financing component of such contracts
The Company offers standard warranty coverage on substantially all products which provides the customer with assurance that the product will function as intended This standard warranty coverage is accounted for as an assurance warranty and is not considered to be a separate performance obligation The Company records a liability for product warranty obligations at the time of sale based on historical warranty experience that is included in cost of goods sold
The Company also offers extended warranty coverage for certain products which it accounts for as service warranties In most cases the extended service warranty is included in the sales price of the product and is not sold separately The Company considers the extended service warranty to be a separate performance obligation and allocates a portion of the transaction price to the service warranty based on the estimated stand alone selling price At the time of sale the extended warranty transaction price is recorded as deferred revenue on the consolidated balance sheets and is recognized on a straight line basis over the life of the service warranty period The deferred revenue is considered a contract liability as the Company has a right to payment at the time the product with the related extended service warranty is shipped or delivered and therefore payment is received in advance of the Company s performance
The balance of contract liabilities associated with service warranty performance obligations was 3 060 and 2 947 as of July 31 2025 and 2024 respectively This also represents the amount of unsatisfied performance obligations related to contracts that extend beyond one year The current portion and non current portion of contract liabilities are included in Other current liabilities and Other liabilities respectively on the accompanying consolidated balance sheets During the year ended July 31 2025 the Company recognized revenue of 1 373 that was included in the contract liability balance at the beginning of the period from the amortization of extended service warranties Of the contract liability balance outstanding at July 31 2025 the Company expects to recognize 42 by the end of fiscal 2026 an additional 28 by the end of fiscal 2027 and the balance thereafter
The Company expenses incremental direct costs of obtaining a contract e g sales commissions when incurred because the amortization period is generally twelve months or less Contract costs are included in Selling general and administrative expense on the consolidated statements of income
During fiscal 2024 the Company divested operations related to the safety and facility identification product line while in fiscal 2023 the divested business was associated with the people identification product line
The Company is organized and managed within two regions Americas Asia and Europe Australia which are the reportable segments The Company s Chief Executive Officer CEO who is also the Company s Chief Operating Decision Maker CODM uses segment profit in measuring segment performance allocating resources evaluating performance in periodic reviews and during the development of the annual budget and the regular forecasting process The CODM considers budget to actual variances on a quarterly basis as well as segment specific forecasting when making decisions about the allocation of operating and capital resources to each segment The CODM also uses the segment s net sales in measuring segment performance
The Company follows the guidance in ASC 740 Income Taxes regarding uncertain tax positions The guidance requires application of a more likely than not threshold to the recognition and de recognition of income tax positions A reconciliation of unrecognized tax benefits excluding interest and penalties is as follows
Of the 21 802 of unrecognized tax benefits if recognized 18 318 would affect the Company s income tax rate The Company has classified 18 502 and 19 527 excluding interest and penalties of the reserve for uncertain tax positions in Other liabilities on the consolidated balance sheets as of July 31 2025 and 2024 respectively The Company has classified 3 300 and 3 063 excluding interest and penalties as a reduction of long term deferred income tax assets on the accompanying consolidated balance sheets as of July 31 2025 and 2024 respectively
Interest expense is recognized on the amount of potentially underpaid taxes associated with the Company s tax positions beginning in the first period in which interest starts accruing under the respective tax law and continuing until the tax positions are settled The Company recognized interest expense of 299 893 and 700 on the reserve for uncertain tax positions during the years ended July 31 2025 2024 and 2023 respectively The Company also recognized benefits related to penalties of 120 38 and 281 during the years ended July 31 2025 2024 and 2023 respectively These amounts are net of reversals due to reductions for tax positions of prior years statute of limitations and settlements At July 31 2025 and 2024 the Company had 4 740 and 4 448 respectively accrued for interest on unrecognized tax benefits Penalties are accrued if the tax position does not meet the minimum statutory threshold to avoid the payment of a penalty At July 31 2025 and 2024 the Company had 1 893 and 1 631 respectively accrued for penalties on unrecognized tax benefits Interest expense and penalties are recorded as a component of Income tax expense in the consolidated statements of income
The Company estimates that it is reasonably possible that the unrecognized tax benefits may be reduced by up to 3 117 in the next 12 months as a result of the resolution of worldwide tax matters tax audit settlements amended tax filings and or the expiration of statute of limitations all of which if recognized would result in an income tax benefit in the consolidated statements of income
Potentially dilutive securities attributable to outstanding stock options and restricted stock units were excluded from the calculation of diluted earnings per share where the combined exercise price and average unamortized fair value were greater than the average market price of Brady s Class A Nonvoting Common Stock because the effect would have been anti dilutive The amount of anti dilutive shares were 4 319 113 641 and 549 031 for the years ended July 31 2025 2024 and 2023 respectively
In accordance with fair value accounting guidance the Company determines fair value based on the exchange price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants The inputs used to measure fair value are classified into the following hierarchy
The following table summarizes the Company s financial assets and liabilities that were accounted for at fair value on a recurring basis at July 31 2025 and July 31 2024 according to the valuation techniques the Company used to determine their fair values
The Company s deferred compensation investments consist of investments in mutual funds which are included in Other assets on the accompanying consolidated balance sheets These investments were classified as Level 1 as the shares of these investments trade with sufficient frequency and volume to enable us to obtain pricing information on an ongoing basis
The Company s foreign exchange contracts were classified as Level 2 as the fair value was based on the present value of the future cash flows using external models that use observable inputs such as interest rates yield curves and foreign exchange rates See
The Company utilizes forward foreign exchange currency contracts to reduce the exchange rate risk of specific foreign currency denominated transactions These contracts typically require the exchange of a foreign currency for U S dollars at a fixed rate at a future date with maturities of less than 18 months which qualify as cash flow hedges or net investment hedges under the accounting guidance for derivative instruments and hedging activities The primary objective of the Company s foreign currency exchange risk management program is to minimize the impact of currency movements due to transactions in other than the respective subsidiaries functional currency and to minimize the impact of currency movements on the Company s net investment denominated in a currency other than the U S dollar To achieve this objective the Company hedges a portion of known exposures using forward foreign exchange contracts
Main foreign currency exposures are related to transactions denominated in the British Pound Euro Canadian dollar Australian dollar Mexican Peso Chinese Yuan Malaysian Ringgit and Singapore dollar Generally these risk management
The Company has designated a portion of its forward foreign exchange contracts as cash flow hedges and recorded these contracts at fair value on the accompanying consolidated balance sheets For these instruments the gain or loss on the derivative is reported as a component of other comprehensive income OCI and reclassified into income in the same period or periods during which the hedged transaction affects income At July 31 2025 and 2024 unrealized losses of 493 and 124 have been included in AOCI respectively
The Company has designated certain third party foreign currency denominated debt borrowed under its credit agreement as net investment hedges These debt obligations denominated in Euros and British Pounds were designated as net investment hedges to hedge portions of the Company s net investment in its European operations The Company s foreign currency denominated debt obligations are valued under a market approach using publicized spot prices and the net gains or losses attributable to the changes in spot prices are recorded as cumulative translation within AOCI and are included in the foreign currency translation adjustments section of the consolidated statements of comprehensive income As of July 31 2025 and July 31 2024 the cumulative balance recognized in accumulated other comprehensive income were losses of 2 753 and 1 237 respectively on any outstanding foreign currency denominated debt obligations
On August 1 2024 the Company acquired all of the outstanding shares of Gravotech Headquartered in Lyon France Gravotech is a leader in the design manufacture and distribution of innovative solutions for specialized engraving marking and cutting offering laser mechanical engraving scribing and dot peen capabilities across multiple industries The acquisition of Gravotech expands the Company s identification product offerings and research and development capabilities to include specialized direct part marking and engraving expertise The acquisition was funded through cash on hand and borrowings under the Company s existing credit agreement Net sales and net loss attributable to Gravotech from the acquisition date through July 31 2025 were 113 919 and 15 375 respectively The net loss attributable to Gravotech is due to a non recurring increase in cost of goods sold related to the fair value adjustment to inventory upon acquisition and amortization expense for intangible assets The purchase price allocation was finalized in the fourth quarter of the year ended July 31 2025 Measurement period adjustments did not have a material impact on the Company s consolidated statement of income
The purchase price allocation included goodwill of 66 178 of which 46 951 was assigned to the Americas Asia segment and 19 227 was assigned to the Europe Australia segment The goodwill for this acquisition is not deductible for tax purposes
The following table presents the unaudited pro forma operating results of the Company for the year ended July 31 2025 and 2024 reflecting the acquisition of Gravotech as if it had occurred at the beginning of fiscal year 2024 The unaudited pro forma operating results for the year ended July 31 2025 do not contain any adjustments to the accompanying condensed consolidated financial statements The unaudited pro forma operating results for the year ended July 31 2024 include Gravotech s normal operating results and pro forma adjustments to include cumulative expenses net of tax for the non recurring fair value adjustment to inventory amortization expense for acquired intangible assets and interest expense on acquisition related debt The unaudited pro forma operating results are presented for comparative purposes only and do not necessarily reflect future operating results or those that would have occurred had the acquisition been completed at the beginning of fiscal year 2024
On October 1 2024 the Company acquired all of the outstanding shares of AB R for 14 827 net of cash acquired Based in Phoenix Arizona AB R provides integrated solutions for asset tracking inventory management and workflow optimization using advanced identification and tracking technologies including barcoding radio frequency identification RFID and Internet of Things IoT based systems The acquisition was funded through cash on hand and borrowings under the Company s existing credit agreement The purchase price allocation was finalized in the fourth quarter of the year ended July 31 2025 The purchase price allocation included goodwill of 10 079 intangible assets of 4 600 and net tangible assets of 148 The goodwill for this acquisition is assigned to the Americas Asia segment and is deductible for tax purposes Acquisition related expenses of 305 were recognized in SG A expenses during the year ended July 31 2025
On April 1 2025 the Company acquired certain assets and liabilities representing the Microfluidic Solutions business unit of Funai Electric Co Ltd for 10 731 Headquartered in Lexington Kentucky with a manufacturing facility in Cebu Philippines Microfluidic Solutions specializes in the research development and manufacturing of advanced inkjet microfluidic technologies The acquisition was funded through cash on hand and borrowings under the Company s existing credit agreement The purchase price allocation was finalized in the fourth quarter of the year ended July 31 2025 The purchase price allocation included property plant and equipment of 13 315 inventories of 3 028 accounts payable of 1 111 and other liabilities of 3 903
The accompanying consolidated financial statements include the results of AB R and Microfluidic Solutions from the date of acquisition through July 31 2025 Pro forma and other financial information are not presented for AB R or Microfluidic Solutions because their impact on the Company s results of operations and financial position is immaterial
In the normal course of business the Company is subject to a variety of investigations claims suits and other legal proceedings including but not limited to intellectual property employment unclaimed property tort and breach of contract matters Any legal proceedings are subject to inherent uncertainties and these matters and their potential effects may change in the future The Company records a liability for contingencies when a loss is deemed to be probable and the loss can be reasonably estimated The Company currently believes that the outcomes of such proceedings will not have a material adverse impact on its business financial position results of operations or cash flows
On August 4 2025 the Company acquired MECCO Partners LLC a company that specializes in automated laser engraving systems headquartered in Pittsburgh Pennsylvania for a cash purchase price of approximately 20 000 subject to a working capital adjustment provision The Company expects to allocate a significant portion of the purchase price to goodwill and intangible assets The assignment of goodwill to the Company s existing reporting units is not complete as of the financial statements issuance date
On September 3 2025 the Company announced an increase in the annual dividend to shareholders of the Company s Class A Common Stock from 0 96 to 0 98 per share A quarterly dividend of 0 245 will be paid on October 31 2025 to shareholders of record at the close of business on October 10 2025 This dividend represents an increase of 2 1 and is the 40th consecutive annual increase in dividends
Brady Corporation maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed by the Company in the reports filed by the Company under the Securities Exchange Act of 1934 as amended the Exchange Act is recorded processed summarized and reported within the time periods specified in the SEC s rules and forms Disclosure controls and procedures include without limitation controls and procedures designed to ensure that information required to be disclosed by the Company in the reports the Company files under the Exchange Act is accumulated and communicated to the Company s management including the Company s principal executive and principal financial officers or persons performing similar functions as appropriate to allow timely decisions regarding required disclosure The
Company carried out an evaluation under the supervision and with the participation of its management including its President and Chief Executive Officer and its Chief Financial Officer and Treasurer of the effectiveness of the design and operation of the Company s disclosure controls and procedures pursuant to Rule 13a 15 of the Exchange Act Based on that evaluation the Company s President and Chief Executive Officer and Chief Financial Officer and Treasurer concluded that the Company s disclosure controls and procedures are effective as of the end of the period covered by this report
The management of Brady Corporation and its subsidiaries is responsible for establishing and maintaining adequate internal control over financial reporting for the Company as such term is defined in Rule 13a 15 f under the Securities Exchange Act of 1934 The Company s internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles
With the participation of the President and Chief Executive Officer and Chief Financial Officer and Treasurer management conducted an evaluation of the effectiveness of our internal control over financial reporting as of July 31 2025 based on the framework and criteria established in
Consistent with guidance issued by the Securities and Exchange Commission that an assessment of a recently acquired business may be omitted from management s report on internal control over financial reporting in the year of acquisition management excluded an assessment of the effectiveness of the Company s internal control over financial reporting related to Gravotech AB R and Microfluidic Solutions The summation of the acquisitions represented 7 7 of the Company s consolidated total assets excluding goodwill and intangible assets which were included in management s assessment of internal control over financial reporting as of July 31 2025 and 9 4 of the consolidated net sales for the year ended July 31 2025 Based on the assessment management concluded that as of July 31 2025 the Company s internal control over financial reporting is effective based on those criteria
Because of the inherent limitations of internal control over financial reporting misstatements may not be prevented or detected on a timely basis Also projections of any evaluation of the effectiveness of internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate
The Company s internal control over financial reporting as of July 31 2025 has been audited by Deloitte Touche LLP an independent registered public accounting firm as stated in their report which is included herein
There were no changes in the Company s internal control over financial reporting as defined in Exchange Act Rules 13a 15 f and 15d 15 f that occurred during the Company s most recently completed fiscal quarter that have materially affected or are reasonably likely to materially affect the Company s internal control over financial reporting
issued by the Committee of Sponsoring Organizations of the Treadway Commission COSO In our opinion the Company maintained in all material respects effective internal control over financial reporting as of July 31 2025 based on criteria established in
We have also audited in accordance with the standards of the Public Company Accounting Oversight Board United States PCAOB the consolidated financial statements as of and for the year ended July 31 2025 of the Company and our report dated September 4 2025 expressed an unqualified opinion on those financial statements
As described in Management s Report on Internal Control over Financial Reporting management excluded from its assessment the internal control over financial reporting at Gravotech Holding Gravotech American Barcode and RFID Incorporated AB R and the Microfluidic Solutions business unit of Funai Electric Co Ltd Microfluidic Solutions which were acquired on August 1 2024 October 1 2024 and April 1 2025 respectively and whose financial statements constitute 7 7 of total assets and 9 4 of net sales of the consolidated financial statement amounts as of and for the year ended July 31 2025 Accordingly our audit did not include the internal control over financial reporting at Gravotech AB R and Microfluidic Solutions
The Company s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management s Report on Internal Control over Financial Reporting Our responsibility is to express an opinion on the Company s internal control over financial reporting based on our audit We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U S federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB
We conducted our audit in accordance with the standards of the PCAOB Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects Our audit included obtaining an understanding of internal control over financial reporting assessing the risk that a material weakness exists testing and evaluating the design and operating effectiveness of internal control based on the assessed risk and performing such other procedures as we considered necessary in the circumstances We believe that our audit provides a reasonable basis for our opinion
A company s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles A company s internal control over financial reporting includes those policies and procedures that 1 pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company 2 provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company and 3 provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition use or disposition of the company s assets that could have a material effect on the financial statements
Because of its inherent limitations internal control over financial reporting may not prevent or detect misstatements Also projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate
During the three months ended July 31 2025 no director or Section 16 officer of the Company adopted or terminated a Rule 10b5 1 trading arrangement or non Rule 10b5 1 trading arrangement as each term is defined in Item 408 a of Regulation S K
Mr Shaller joined the Company in 2015 and has served on the Company s Board of Directors and as the Company s President and CEO since April 2022 after serving as the Company s Senior Vice President and President Identification Solutions from 2015 to 2022 From 2008 to 2015 he served as President Teledyne Microwave Solutions Before joining Teledyne Mr Shaller held a number of positions of increasing responsibility at W L Gore Associates including Division Leader Electronic Products Division from 2003 to 2008 and General Manager of Gore Photonics from 2001 to 2003 Prior to joining W L Gore in 1993 Mr Shaller worked in engineering and program management positions at Westinghouse Corporation In 2023 Mr Shaller was elected to the Board of Directors of Quaker Houghton Mr Shaller holds a bachelor s degree in electrical engineering from the University of Michigan a master s degree in electrical engineering from Johns Hopkins University and a master s degree in business administration from the University of Delaware
Ms Thornton joined the Company in 2009 and was named Chief Financial Officer and Treasurer in April 2023 after serving as Brady s Chief Accounting Officer since 2016 and Corporate Controller and Director of Investor Relations since 2015 She held the positions of Corporate Accounting Supervisor Corporate Accounting Manager External Reporting Manager Corporate Finance Manager and Director of Global Accounting from 2009 to 2014 Prior to joining the Company Ms Thornton was an auditor with PricewaterhouseCoopers from 2005 to 2009 She has a bachelor s degree in business administration and a master of accountancy degree from the University of Wisconsin Madison and is a certified public accountant
Mr Bojarski joined the Company in August 2022 as President Identification Solutions before assuming the role of President Americas Asia in February 2023 From 2016 to 2022 Mr Bojarski held several positions of increasing responsibility at Belden Incorporated and served as Executive Vice President Broadband and 5G from 2019 to 2022 Before joining Belden Mr Bojarski was General Manager of a business unit within the electrification division of ABB Ltd
Prior to joining ABB Mr Bojarski held a number of positions of increasing responsibility at Panduit Corporation He holds a bachelor s degree in electrical engineering from the Georgia Institute of Technology and a master s degree in business administration from Georgia State University
Mr DeBruine joined the Company in November 2000 and was named Chief Operating Officer in June 2024 after serving as Vice President Global Operations since 2022 and Director of Operations Americas since 2016 Prior to 2016 Mr DeBruine held local regional and global roles in manufacturing procurement and engineering within the Company Prior to joining the Company Mr DeBruine held various operating leadership roles in automotive tier one supply and electric motor manufacturing industries He holds a bachelor of science degree in industrial technology from the University of Wisconsin Platteville
Mr Gorman joined the Company as General Counsel and Corporate Secretary in April 2020 Prior to joining the Company he was employed at AptarGroup Inc beginning in 2012 At AptarGroup he served as Vice President General Counsel North America Compliance Officer and Assistant Secretary Before joining AptarGroup he counseled corporate clients in private practice including as an attorney at Mayer Brown LLP in Chicago where Mr Gorman started his legal career He holds a juris doctor from Loyola University Chicago School of Law a master in professional accounting from The University of Texas at Austin a bachelor of business administration from The University of Texas at Austin and is a certified public accountant
Brett Wilms joined the Company in June 2018 as Managing Director of Identification Solutions EMEA In October 2022 Mr Wilms added responsibility as the Interim General Manager of the Workplace Safety business before being appointed to the role of President EMEA Australia in February 2023 Prior to joining Brady he was Managing Director of a business within Groupe Autajon a French publicly traded labels and packaging group with a primary focus on the pharmaceutical market Before joining Groupe Autajon Mr Wilms was Vice President of Operations EMEA for Pentair Inc He holds a master s degree in electrical engineering from the University of Brussels and a master s degree in business administration from the University of Minnesota
Mr Allender was elected to the Board of Directors in 2007 He serves as the Chair of the Finance Committee and as a member of the Audit and Corporate Governance Committees He served as Executive Vice President and CFO of Danaher Corporation from 1998 to 2005 and Executive Vice President from 2005 to 2007 He served as a director of Colfax Corporation from 2008 to 2022 when ESAB Corporation separated from Colfax Corporation Mr Allender joined ESAB Corporation s board in 2022 and currently serves as a director Mr Allender previously served as a director of Diebold Nixdorf Inc from 2011 to 2020 He has a bachelor s degree in accounting from Loyola University Maryland and is a certified public accountant Mr Allender s strong background in finance and accounting as well as his past experience as the CFO of a public company provides the Board with financial expertise and insight
Dr Bem was elected to the Board of Directors in 2019 He serves as a member of the Management Development and Compensation Audit and Technology Committees Dr Bem is Vice President Science and Technology and Chief Technology Officer of PPG Prior to PPG he spent 8 years at Dow Chemical Company in a number of research and development roles most recently as Vice President Research and Development Consumer Solutions and Infrastructure Solutions and also worked in research and development roles at Celanese Corporation and UOP Honeywell International Inc He has a bachelor s degree in chemistry from West Virginia University and a doctorate in inorganic chemistry from the Massachusetts Institute of Technology Dr Bem s extensive experience in technology and research and development provides the Board with important expertise in new product development and innovation
Dr Bruno was elected to the Board of Directors in 2003 She serves as the Chair of the Corporate Governance Committee and is a member of the Management Development and Compensation Finance and Technology Committees Dr Bruno is the President of the Brady Education Foundation in Chapel Hill North Carolina Dr Bruno has a bachelor s degree in psychology from the University of Rochester a master of child clinical psychology degree from the University of North Carolina Chapel Hill and a doctorate in developmental psychology from the University of North Carolina Chapel Hill She is the granddaughter of William H Brady Jr the founder of Brady Corporation As a result of her substantial ownership stake in the Company as well as her family s history with the Company she is well positioned to understand articulate and advocate for the rights and interests of the Company s shareholders
Ms Collins Smee was elected to the Board of Directors in 2022 She serves as Chair of the Management Development and Compensation Committee and is a member of the Audit Committee Ms Collins Smee was the Executive Vice President and President Americas for Xerox Corporation and had been in this role from June 2022 until her retirement in 2023 She was also an Executive Vice President of Xerox Holdings Corporation during that same period Previously she was Chief Commercial SMB and Channels Officer for Xerox from February 2020 to June 2022 Ms Collins Smee joined Xerox in September 2018 as Senior Vice President and Chief Commercial Officer Before Xerox she led
Technology Transformation Services for the U S Federal Government and spent more than two decades at IBM in global executive roles spanning client sales and delivery of technical products and services Ms Collins Smee has a bachelor s degree of arts from Boston College a master of business administration degree from New York University and a master of arts degree from Columbia University Ms Collins Smee s extensive experience in high technology global business and strong leadership skills provide the Board with important expertise in product and services innovation
Ms Cusack was elected to the Board of Directors in 2024 and serves as a member of the Technology Committee She was the Executive Vice President of Global Products Solutions of Dematic from 2020 until her retirement in 2024 She previously was Group Senior Vice President Global Product Group Manager of Distribution Transformers for ABB Prior to ABB she spent 19 years with Ametek Inc in a variety of business unit leadership roles Ms Cusack serves on the boards of Central Moloney and Rosendin Electric Ms Cusack has a bachelor s degree in optics from the University of Rochester and a master s degree in electrical engineering from Tufts University Ms Cusack s extensive experience in technology and research and development provides the Board with valuable expertise in new product development and innovation Ms Cusack was originally identified as a director nominee by a third party search firm through a process conducted by the Corporate Governance Committee of the Board of Directors
Ms De Greef Safft was elected to the Board of Directors in 2025 and serves as a member of the Audit Committee From 2018 to 2024 she provided strategic and operational consulting services to private equity firms including Windjammer Capital and their portfolio companies She was Group President of the Food Service Equipment Group for Standex International from 2015 to 2017 Prior to Standex she held four successive positions at Danaher over a period of 12 years She previously served in a variety of engineering marketing sales and business development roles within several global manufacturing companies Ms De Greef Safft also serves on the board of Benchmark Electronics A native of Belgium Ms De Greef Safft has a bachelor s and master s degree in electronics engineering from the Catholic University of Louvain in Belgium and a master of business administration from Babson College in Wellesley Massachusetts Ms De Greef Safft brings to the Company broad business acumen in global innovation driven industrial companies as well as public company governance experience Ms De Greef Safft was originally identified as a director nominee by a third party search firm through a process conducted by the Corporate Governance Committee of the Board of Directors
Mr Hix was elected to the Board of Directors in May 2024 He serves as the Chair of the Audit Committee and is a member of the Finance Committee He served as the Executive Vice President and Chief Financial Officer of Enovis Corporation from 2016 to 2022 and its predecessor Colfax Corporation He previously served as the Senior Vice President and Chief Financial Officer of OM Group and as the Senior Vice President and Chief Financial Officer of Robbins Myers Prior to Robbins Myers he spent 14 years with Roper Industries now Roper Technologies in a variety of operating financial and strategic roles Mr Hix served on the board of ESAB Corporation from 2021 through 2024 Mr Hix has a bachelor s degree in business administration from the University of Southern California and a master of business administration from St Mary s College of California He brings to the Company extensive knowledge and background in finance global business operations and mergers and acquisitions from his past experiences as the CFO of public companies
Mr Nargolwala was with Sensata Technologies from 2013 to June 2022 most recently serving as the Executive Vice President Sensing Solutions from March 2020 to June 2022 Before joining Sensata he was with Honeywell International Inc in business strategy and leadership roles of increasing responsibility Mr Nargolwala has a bachelor s degree in electrical engineering from Maharaja Sayajirao University a master of science in electrical engineering from the University of Texas Arlington and a master in business administration from Cornell University Mr Nargolwala s extensive experience in high technology global business and strong leadership skills provides the Board with important expertise in product and services innovation
Mr Richardson was elected to the Board of Directors in 2007 and became Chairman of the Board in May 2021 He serves as the Chair of the Board of Directors and is a member of the Audit Corporate Governance Finance and Management Development and Compensation Committees He served as the Executive Vice President and CFO of Avient Corporation from 2013 through 2020 He previously served as the Executive Vice President and CFO of Diebold Inc and as Executive Vice President Corporate Strategy and CFO of Modine Manufacturing Prior to Modine he spent 21 years with BP Amoco serving in various financial and operational roles Mr Richardson has served on the boards of Modine Manufacturing and Tronox Inc In 2023 Mr Richardson was elected to the Board of Directors of Virco Mfg Corporation Mr Richardson has a bachelor s degree in finance and economics from Miami University and a master of business administration in accounting and finance from Indiana University He brings to the Company extensive knowledge and global experience in the areas of operations strategy accounting tax accounting and finance which are areas of critical importance to the Company as a global company
Dr Williams was elected to the Board of Directors in 2019 She serves as the Chair of the Technology Committee and is a member of the Corporate Governance Committee Dr Williams served as Global Group President of Altuglas International a subsidiary of Arkema S A through May 2021 Prior to joining Arkema in 2011 she spent 23 years with Rohm and Haas Company and Dow Chemical in manufacturing commercial strategy and general management positions She was General Manager Chemical Mechanical Polishing Technologies and later General Manager Adhesives and Sealants In 2023 Dr Williams was elected to the Board of Directors of Cabot Corporation She has a bachelor s degree in chemistry from Pace University and a doctorate in physical chemistry from the University of Utah Dr Williams experience in commercial technology and business leadership roles provides the Board with important expertise in innovation new product development and operations
All directors are elected to serve until their respective successors are elected at the next annual meeting of shareholders Officers serve at the discretion of the Board of Directors None of the Company s directors or executive officers has any family relationship with any other director or executive officer
The Board does not have a formal policy regarding the separation of the roles of Chief Executive Officer and Chair of the Board as the Board believes it is in the best interest of the Company to make that determination based on the position and direction of the Company and the membership of the Board Since September 2015 the Board s leadership structure has included a non executive Chair of the Board of Directors Mr Richardson an independent director currently serves in the position of non executive Chair of the Board The duties of the non executive Chair include among others chairing meetings of the Board and executive sessions of the non management directors meeting periodically with the Chief Executive Officer and consulting as necessary with management on issues facing the Company facilitating effective communication among the Chief Executive Officer and all members of the Board and overseeing the Board s shareholder communication policies and procedures
The Board believes that its current leadership structure enhances the Board s oversight of and independence from Company management the ability of the Board to carry out its roles and responsibilities on behalf of the Company s shareholders and the Company s overall corporate governance
The Board oversees the Company s risk management processes directly and through its committees In general the Board oversees the management of risks inherent in the operation of the Company s businesses the implementation of its strategic plan its acquisition and capital allocation program and its organizational structure Each of the Board s committees also oversees the management of Company risks that fall within the respective committee s areas of responsibility Specifically cybersecurity is a critical part of risk management for the Company The Audit Committee is aware of the rapidly evolving nature of threats presented by cybersecurity incidents and is committed to the prevention timely detection and mitigation of the effects of any such incidents on the Company Additionally the Audit Committee Corporate Governance Committee Management Development and Compensation Committee and Technology Committee each review certain risks exposures and opportunities relating to the Company s ESG strategies initiatives policies and practices The Company s management is responsible for reporting significant risks to executive management as a part of the disclosure process The significance of the risk is assessed by executive management and escalated to the respective Board committee or the Board of Directors as deemed appropriate The Company reviews its risk assessment with the Audit Committee annually
The Board of Directors has determined that at least one Audit Committee financial expert is serving on its Audit Committee Messrs Hix Chair of the Audit Committee Allender member of the Audit Committee and Richardson member of the Audit Committee are financial experts under the rules of the SEC and financially literate and independent under the rules of the NYSE
A majority of the directors must meet the criteria for independence established by the Board in accordance with the rules of the NYSE In determining the independence of a director the Board must find that a director has no relationship that may interfere with the exercise of his or her independence from management and the Company In undertaking this determination with respect to the Company s directors other than Mr Shaller President and CEO the Board considered the commercial relationships of the Company if any with those entities that have employed the Company s directors The commercial relationships which involved the purchase and sale of products on customary terms did not exceed the maximum amounts proscribed by the director independence rules of the NYSE Furthermore the compensation paid to the Company s directors by their employers was not linked in any way to the commercial relationships their employers had with the Company After consideration of these factors the Board concluded that the commercial relationships were not material and did not prevent the Company s directors from being considered independent Based on application of the NYSE independence criteria all directors with the exception of Mr Shaller are deemed independent All members of the Audit Management Development and Compensation and Corporate Governance Committees are deemed independent
The non management directors of the Board regularly meet without any members of management present The Chair of the Board Mr Richardson is the presiding director at these sessions In fiscal 2025 executive sessions were conducted at all regularly scheduled Board meetings Interested parties can raise concerns to be addressed at these meetings by calling the confidential Brady hotline at 1 877 781 9309
The Audit Committee which is a separately designated standing committee of the Board of Directors is composed of Messrs Hix Chair Allender Bem and Richardson and Mses Collins Smee and De Greef Safft Each member of the Audit Committee has been determined by the Board to be independent under the rules of the SEC and NYSE
The Company has a code of ethics This code of ethics applies to all of the Company s employees officers and directors The code of ethics can be viewed at the Company s corporate website www bradyid com or may be obtained in print by any person without charge by contacting Brady Corporation Investor Relations P O Box 571 Milwaukee WI 53201 or by contacting
The Company intends to satisfy the disclosure requirements under Item 5 05 of Form 8 K regarding an amendment to or a waiver from a provision of its code of ethics by placing such information on its website
The Company s Board of Directors has adopted an insider trading policy which governs the purchase sale and other dispositions of our securities by the Company directors officers and employees and is reasonably designed to promote compliance with insider trading laws rules and regulations and the listing standards applicable to us Our insider trading policy has been filed as Exhibit 19 to this Annual Report on Form 10 K We reserve the right to purchase securities outside of the scope of the insider trading policy subject to compliance with applicable laws
Brady s Corporate Governance Principles as well as the charters of the Audit Corporate Governance Finance Management Development and Compensation and Technology Committees are available on the Company s Corporate website www bradyid com Shareholders may request printed copies of these documents from Brady Corporation Investor Relations P O Box 571 Milwaukee WI 53201 or by contacting
Brady s Corporate Governance Committee reviews the individual skills and characteristics of the directors as well as the composition of the Board as a whole This assessment includes a consideration of independence age skills expertise and industry backgrounds in the context of the needs of the Board and the Company The Corporate Governance Committee seeks a broad range of perspectives and considers both the personal characteristics and experience of directors and prospective nominees to the Board so that as a group the Board will possess the appropriate talent skills and expertise to oversee the Company s businesses The Board does not discriminate on the basis of race national origin gender religion disability or sexual orientation in selecting director candidates
To the Company s knowledge based solely on a review of the Section 16 a filings and written representations that no other reports were required during the fiscal year ended July 31 2025 all Section 16 a filing requirements were complied with applicable to the Company s officers directors and greater than 10 percent beneficial owners
Our Compensation Discussion and Analysis describes the Company s executive compensation pay for performance philosophy and practices the elements of our executive compensation programs and the compensation decisions the Management Development and Compensation Committee the Committee has made under those programs and the factors considered in making those decisions The Compensation Discussion and Analysis also analyzes the total compensation of Brady s Chief Executive Officer principal executive officer Chief Financial Officer principal financial officer and the three other most highly compensated executive officers that were serving as executive officers as of July 31 2025
The Company completed the acquisitions of Gravotech Holding Gravotech American Barcode and RFID Incorporated AB R and the Microfluidic Solutions business unit of Funai Electric Co Ltd Microfluidic Solutions during fiscal 2025
Net sales were 1 513 6 million in fiscal 2025 compared to 1 341 4 million in fiscal 2024 an increase of 12 8 Organic sales increased 2 6 acquisitions increased sales by 10 5 and divestitures decreased sales by 0 3
For fiscal 2025 the Board of Directors approved a 17 2 increase in base salary for Mr Shaller In addition Mr Shaller recommended and the Committee approved increases in base salary for Ms Thornton and Messrs Bojarski and Gorman All increases were made to recognize the performance current scope of responsibilities and peer company data for each executive
The Company s fiscal 2025 annual equity grants consisted of 50 time based restricted stock units RSUs and 50 performance based restricted stock units PRSUs to align executive compensation with the creation of long term shareholder value The RSUs vest equally over three years and are intended to facilitate retention and align with the creation of long term shareholder value The PRSUs reinforce the Company s pay for performance philosophy because award payout increases and decreases based on Company performance Specifically the PRSU awards granted in fiscal 2025 will vest based on
The Company believes that the interests of shareholders and executives are aligned when executives are shareholders in possession of a meaningful amount of Company stock Furthermore stock ownership requirements encourage positive performance behaviors and discourage executive officers from taking excessive risk In order to encourage our executive officers and directors to acquire and retain ownership of a significant number of shares of the Company s stock stock ownership requirements have been established and are equal to a specified multiple of the executive officer s base salary Our NEOs are expected to obtain the required ownership levels within five years of becoming an executive officer Refer to the heading Stock Ownership Requirements for further discussion of the stock ownership requirements established for each NEO and the actions that the Company may take when an executive is not in compliance with his or her respective stock ownership requirement
During fiscal 2024 the Committee adopted the Brady Corporation Incentive Recovery Policy which requires the Company to recover the amount of erroneously awarded incentive based compensation received by certain covered officers including the NEOs in the event of certain accounting restatements The Incentive Recovery Policy satisfies NYSE listing requirements implementing SEC rules adopted under the Dodd Frank Wall Street and Consumer Protection Act and applies to incentive based compensation received on or after the effective date required by the listing requirements The Incentive Recovery Policy is filed as Exhibit 97 to this Annual Report on Form 10 K and incorporated by reference
In addition to the Incentive Recovery Policy there is a recoupment policy under which incentive compensation payments and or awards may be recouped by the Company if such payments and or awards were based on erroneous results The recoupment policy applies to executive officers and other key executives who participate in any of the Company s incentive plans and i have engaged in intentional misconduct that results in a material inaccuracy in the Company s financial statements ii have engaged in fraudulent or other willful and deliberate conduct that is detrimental to the Company or iii there is a material negative revision of a performance measure for which incentive compensation was paid or awarded Under the recoupment policy the Committee may take a variety of actions including among others seeking repayment of incentive compensation cash and or equity that is greater than what would have been awarded if the compensation had been based on accurate results and the forfeiture of incentive compensation As this policy suggests the Committee believes that any incentive compensation should be based only on accurate and reliable financial and operational information and thus any inappropriately paid incentive compensation should be returned to the Company for the benefit of shareholders The Committee believes that this recoupment policy enhances the Company s compensation risk mitigation efforts
Excessive risk taking is mitigated by utilizing caps on incentive plan payouts multiple performance metrics and different performance metrics for our annual cash incentive program and PRSUs Our cash incentive awards are determined based on financial results for organic revenue income before income taxes division organic revenue and division operating income which aggregate to a maximum payout of 200 of target Executive officers then receive a performance rating that results in a multiplier ranging from 0 to 150 resulting in a maximum payout of 300 of target
We grant equity compensation to executive officers that promotes long term financial and operating performance by delivering incremental value to the extent that our stock price increases over time PRSUs incorporate Company performance relative to a benchmark over a three year period and have a maximum payout of 200 of target
Our Insider Trading Policy prohibits executive officers from trading during certain periods each quarter until after we publicly disclose our financial and operating results We may impose additional restricted trading periods at any time if we believe trading by executives would be inappropriate because of developments that are or could be material and which have not been publicly disclosed The Insider Trading Policy also prohibits the pledging of Company stock as collateral for loans holding Company securities in a margin account by officers directors or employees and the hedging of Company securities
Messrs Shaller Bojarski and DeBruine and Ms Thornton s maximum cash benefit is equal to two times their base salary and two times their target annual cash incentive in the year in which the termination occurs For all other NEOs their maximum cash benefit is equal to two times salary and two times the average annual cash incentive payment received in the three years immediately prior to the date the change of control occurs In the event of a change of control unexercised stock options become fully exercisable or if canceled each named executive officer shall be given cash or stock equal to the in the money value of the canceled stock options In the event of a change of control PRSUs and RSUs become fully vested at target
We generally grant annual equity based awards during the first quarter of our fiscal year based on the Committee s approval of the awards although such timing may change from year to year The Committee also may consider and approve interim or mid year grants or grants made on another basis from time to time based on business needs changing compensation practices or other factors in the discretion of the Committee The Committee does not take into account material nonpublic information in determining the timing and terms of equity based awards and we have not timed the disclosure of material nonpublic information for the purpose of affecting the value of executive compensation
We seek to align the interests of our executives with those of our shareholders by evaluating performance on the basis of key financial measurements that we believe closely correlate to long term shareholder value To this end we have structured our compensation program to accomplish the following
Deliver compensation plans that are both internally equitable when comparing similar roles and levels within the Company and externally competitive when comparing to the external market and the Company s designated peer group
Provide integrated compensation programs aligned to the Company s annual and long term financial goals and realized performance in order to reward the successful creation of long term shareholder value
Recognize and reward individual initiative and achievement with the amount of compensation each executive receives reflective of the executive s level of proficiency within his or her role and their level of sustained performance and
On an annual basis with respect to executive officers the Committee approves base salary adjustments long term equity incentive awards the annual cash incentives paid for the achievement of performance metrics in the prior fiscal year and the annual cash incentive performance targets for the upcoming fiscal year In addition the Committee annually reviews a summary of the elements of compensation for each executive officer in order to evaluate among other items how a potential change to an element of our compensation program would affect the respective executive officer s overall compensation When a new
executive officer is hired the Committee is involved in reviewing and approving base salary annual incentive target sign on incentives annual equity awards and other aspects of the executive s compensation
ls and policies on a periodic basis as well as to provide advice with respect to new or modified compensation programs In fiscal 2025 the Committee utilized the services of Pearl Meyer as their compensation consultant which was determined to be independent by the Corporate Governance Committee In fiscal 2025 the compensation consultant completed an analysis of the Company s current compensation peer group reviewed the Company s short term and long term incentive framework relative to market trends and the Company s strategy and objectives completed a peer group review of CEO annual total compensation presented to the Board of Directors any significant regulatory changes and executive compensation trends and worked on ad hoc compensation related requests from the Management Development Compensation Committee throughout the year
or fiscal 2025 management obtained compensation data on peer group executive officer compensation through a subscription with Equilar Inc and published survey data from various third parties Our CEO Mr Shaller used this data to make recommendations to the Committee concerning compensation for each executive officer other than himself Mr Shaller made no recommendation with respect to his own compensation In setting compensation for each executive officer the Committee takes into consideration these recommendations along with Company results during the fiscal year the level of responsibility and demonstrated leadership capability third party market compensation data and the results of annual performance reviews which for our CEO included a self assessment and feedback from his direct reports and each member of the Board of Directors The Committee also took into consideration the recommendations of Pearl Meyer with respect to compensation elements for the CEO Mr Shaller did not attend the portion of
Our total compensation program includes five elements base salary annual cash incentives long term equity incentives employee benefits and perquisites We use these elements of compensation to attract retain motivate develop and reward our executives
Our compensation philosophy is to allocate a significant portion of total compensation to long term compensation equity incentive awards in order to align the achievement of performance goals for our executives with shareholder interests For fiscal 2025 equity incentive awards comprised 70 of Mr Shaller s total target compensation in his role as President Chief Executive Officer and Director of the Company and on average 43 of the total target compensation of the other NEOs
In general we target each NEO s total of base salary annual cash incentive and long term equity incentive compensation elements to be at or near the market median 50th percentile with an opportunity for above market median pay generally up to the 75th percentile if performance goals for annual and long term incentives are achieved above target Our compensation structure is balanced by the payment of below market median compensation to our NEOs when actual financial results or individual performance do not meet expected results The following table describes the purpose of each compensation element and how that element is related to our pay for performance approach
The Committee uses peer group data to assess the reasonableness and competitiveness of several elements of compensation including base salaries annual cash incentives and long term equity awards of positions similar to those of our NEOs The guiding principles of the Company s peer group company selection process includes considerations for company size and scope industry focus operational scope product and workforce The following 18 companies were included in the fiscal 2025 total compensation analysis conducted using publicly available data
Management and the Committee annually evaluate the performance metrics of the cash incentive award program and concluded that the elements of the fiscal 2025 plan represent critical elements of the Company s performance that when combined are designed to result in sustainable long term sales and profit growth Set forth below is a description of the fiscal 2025 financial performance metrics for the annual cash incentive plan
Total income before income taxes is defined as total net sales minus total expenses before deducting income tax expense calculated in accordance with U S GAAP excluding the impact of foreign currency translation current year acquisitions or divestitures and other adjustments approved by the Committee In fiscal 2025 other adjustments include facility closure and other reorganization costs
Division operating income is measured as division net sales less cost of goods sold selling expenses research and development expenses and administrative expenses calculated in accordance with U S GAAP excluding the impact of foreign currency translation current year acquisitions or divestitures and other adjustments approved by the Committee In fiscal 2025 other adjustments include facility closure and other reorganization costs
Total income before income taxes is defined as total net sales minus total expenses before deducting income tax expense calculated in accordance with U S GAAP excluding the impact of foreign currency translation and any current year acquisitions or divestitures current year acquisitions or divestitures and other adjustments approved by the Committee In fiscal 2025 other adjustments include facility closure and other reorganization costs
The funding level of the fiscal 2025 annual cash incentive plan was determined based on the level of achievement of the annual sales and profit metrics described above compared to stated thresholds that were established at the beginning of the fiscal year These thresholds are set forth in the tables below for each NEO The annual cash incentive plan also includes a minimum profit threshold that must be exceeded in order for any cash incentive amount to be funded regardless of the achievement of revenue In addition plan participants must be employed on the payment date to receive the payout of their annual incentive award
Individual contribution is determined by assessing the level of achievement of each NEO s individual annual goals combined with his or her ability to deliver on the competencies needed to achieve those goals The competencies include items such as optimizing work processes through continuous improvement initiatives building strong customer relationships and providing excellent customer service creating innovative new product solutions valuing different perspectives and developing our people Individual annual goals and competencies are included in each NEO s performance assessment to ensure they are focused on initiatives within their area of responsibility that will increase both sales and profitability and drive long term shareholder value
While our objective is to set goals that are quantitative and measurable certain elements of the performance assessment may be subjective Assessments and rating recommendations for all executive officers except the CEO are delivered to the Committee by the CEO in July The CEO provides the Committee with a self assessment of his own performance without a
The Company s rating system consists of five performance level ranges that are applied to the available annual cash incentive that is earned and payable based upon the NEO s contribution to the fiscal year objectives and their individual annual goals Unsatisfactory 0 Needs Improvement 50 Fully Meets Objectives 75 to 110 Exceeds Objectives 95 to 125 and Outstanding 120 to 150 The annual cash incentive target is calculated as a percentage of the NEO s eligible compensation which is defined as base salary paid during the fiscal year The achievement of the financial performance metrics defined in the table above is applied to this target for each NEO and their individual performance rating is then applied resulting in the annual cash incentive award The following sections detail this calculation for each NEO
The cash incentive payable to Messrs Shaller DeBruine and Gorman and Ms Thornton for fiscal 2025 was based on total sales and income before income taxes For fiscal 2025 an annual cash incentive was funded for the achievement of total sales and income before income taxes The multiplier for individual performance was applied to the two components to arrive at the final cash incentive award achieved
Strategy Objective focused on establishing the strategic direction for the total company in order to drive long term sales growth Advanced the Company s strategic direction by executing against its long term growth objectives including completing and integrating three acquisitions that expanded our presence in targeted markets
Total income before income taxes Objective focused on improving income before income taxes while making the investments for sustainable long term organic sales growth In fiscal 2025 the Company exceeded its income before income taxes target
Selling general and administrative expenses Objective focused on reducing selling general and administrative expenses throughout the Company with a specific focus on reducing general and administrative expenses in a sustainable manner while continuing to invest in sales generating resources As a percentage of net sales SG A expenses increased from 28 1 in fiscal 2024 to 29 4 in fiscal 2025 primarily due to incremental amortization expense from acquired businesses facility closure and other reorganization costs and non recurring acquisition related costs These actions reflect deliberate short term costs increases intended to create a more effective and efficient operating environment in the future
Income before income taxes Objective focused on improving income before income taxes while making the investments for sustainable long term organic sales growth In fiscal 2025 the Company exceeded its income before income taxes target
Digital enhancement Objective focused on improving the Company s digital presence and the use of data driven marketing automation tools to expand and enhance our sales capabilities across both our Americas Asia and Europe Australia segments
Technology Objective focused on leading the integration of artificial intelligence AI and other advanced technologies into company processes to enhance efficiency optimize existing tools and drive innovation across all operational areas
Facilities Objective focused on overseeing all aspects of physical location management including site selection site closures and facility ownership or lease rationalization to ensure optimal operational efficiency and continuity
The cash incentive payable to Mr Bojarski for fiscal 2025 was based on achievement of Americas Asia segment sales and operating income For fiscal 2025 a cash incentive was funded for the achievement of the Americas Asia segment sales and operating income as well as total company sales and total company income before income taxes based upon the achievement of the financial targets established at the beginning of the fiscal year The multiplier for individual performance was applied to the achievement of these components to arrive at the final cash incentive award achieved
Americas Asia segment profit Objective focused on improving segment profit in the Americas Asia segment while making the investments for sustainable long term organic sales growth In fiscal 2025 segment profit in the Americas Asia segment was 209 8 million an improvement of 6 6 over the prior year
Innovation development process Objective focused on implementing sustainable processes to grow the Company s pipeline of new products and to deliver the new products to market in a timely and cost effective manner Advanced this objective by strengthening product development processes supporting growth in the new product pipeline and working to deliver products to market in a timely and cost effective manner
For fiscal 2025 the Committee reviewed historical award sizes and median levels of equity awarded to similar positions at our peer companies and other relevant market data The Committee then approved the fiscal 2025 awards consisting of a combination of RSUs and PRSUs to align executive compensation with the creation of long term shareholder value The Committee uses its discretion in combination with peer group data analysis of actual pay and performance and advice from its independent compensation consultant to determine the size and type of equity awards granted to the CEO For all other executives the Committee also considers the input from the CEO when determining the size and type of annual equity awards
RSUs generally vest one third annually for three years The Committee has the ability to vary the vesting schedule for new RSU grants in accordance with the terms of the plan All RSUs are granted following the Committee s approval with a fair value equal to the average of the high and low stock price on the grant date
PRSUs granted in fiscal 2025 include two vesting criteria 50 of the shares vest based on diluted EPS targets and 50 of the shares vest based on revenue performance Each of these metrics is based on achievement over four separate performance periods as discussed in the Executive Summary The diluted EPS performance measure aligns executive compensation with the creation of long term shareholder value If threshold performance is not achieved for a particular performance period then no award will vest relative to that performance period PRSUs will vest between 0 and 200 of target depending on the relative three year achievement of revenue and diluted EPS growth goals over the respective performance periods
The target performance and baseline have been adjusted to reflect divestitures As the Company divested businesses in fiscal 2023 and fiscal 2024 the corresponding baseline and target performance has been adjusted for these performance periods The Company s target performance was a CAGR of 6 for each of these years
During fiscal year 2025 the Management Development and Compensation Committee approved a modification to the performance vesting conditions for the above awards Specifically the performance metrics for a portion of the PRSU awards granted in fiscal year 2023 were adjusted to include revenue from acquisitions in the achievement of the revenue target This is considered a Type III modification under ASC Topic 718 Share Based Payment as the modification resulted in a change to the probability of vesting from improbable to probable The Management Development and Compensation Committee made the decision to align these awards with the PRSUs granted in fiscal 2024 and fiscal 2025 which include the revenue from acquisitions as part of the performance metric There was no modification made to the portion of awards vesting based on the TSR metric The PRSUs achieved a total payout of 84 with half the awards vesting based on the TSR metric and the other half vesting based on the revenue growth metric
We provide subsidized health and welfare benefits which include medical dental life and disability insurance and paid time off Executive officers are entitled to participate in our health and welfare plans on generally the same terms and conditions as other employees subject to limitations under applicable law In addition the Company maintains a supplemental long term disability policy for its U S executives The supplemental long term disability policy provides for an additional 15 of compensation up to a maximum additional benefit of 5 000 per month Brady pays the premiums for these benefits therefore these benefits represent taxable benefits to the executive
Brady employees including NEOs in the United States and certain expatriate employees working for its international subsidiaries are eligible to participate in the Brady Corporation Matched 401 k Plan the Matched 401 k Plan NEOs in the United States and employees at certain United States locations are also eligible to participate in the Brady Corporation Funded Retirement Plan Funded Retirement Plan In addition certain Brady international employees are eligible to participate in Company sponsored statutory and supplementary defined benefit pension plans that are primarily unfunded and provide an income benefit upon termination or retirement
The Funded Retirement Plan is a defined contribution plan through which the Company contributes 4 of the annual wages of each eligible participant In addition participants may elect to defer up to 5 of their annual wages into the Matched 401 k Plan which is matched up to an additional 4 contribution from the Company Participants may elect to contribute an additional 45 of their eligible earnings to their Matched 401 k Plan account without an additional matching contribution from the Company which is subject to specified maximum limits allowed by the Internal Revenue Service IRS The assets of the Matched 401 k Plan and Funded Retirement Plan credited to each participant are invested by the trustee of the Plans as directed by each plan participant in a variety of investment funds as permitted by the Plans Participants in the Matched 401 k Plan become fully vested in employer contributions over a two year period of continuous service Employer contributions to the Funded Retirement Plan become fully vested over a six year period of continuous service
Benefits are generally payable upon the death disability or retirement of the participant or upon termination of employment before retirement although benefits may be withdrawn from the Matched 401 k Plan and paid to the participant in certain circumstances Under certain specified circumstances the Matched 401 k Plan allows a participant to withdraw loans on their account
The Company has two deferred compensation plans the Executive Deferred Compensation Plan and the Director Deferred Compensation Plan that allow for compensation to be deferred into either the Company s Class A Nonvoting Common Stock or other investment funds Both the Director Deferred Compensation and the Executive Deferred Compensation Plans disallow transfers from other investment funds into the Company s Class A Nonvoting Stock and both disallow transfers from the Company s Class A Nonvoting Stock into other investment funds The assets in both deferred compensation plans are held in a Rabbi Trust and are invested by the trustee as directed by the participant Executives and directors may elect whether to receive their account balance following termination of employment in a single lump sum payment or by means of distribution under an annual installment method Distributions of the Company s Class A Nonvoting Common Stock are made in kind distributions of mutual funds are made in cash
Executives are eligible to participate in the Brady Restoration Plan which is a non qualified deferred compensation plan that allows an equivalent benefit to the Matched 401 k Plan and the Funded Retirement Plan for executives income exceeding the IRS limits of participation in a qualified 401 k plan
Our NEOs are expected to meet their ownership requirement within five years of becoming an executive officer and may not sell shares other than to cover tax withholding requirements associated with the vesting or exercise of an equity award until such time as they meet the requirements All NEOs were in compliance with their respective ownership requirements as of July 31 2025 If an executive does not meet his or her ownership requirement within five years the Committee may direct that the executive s after tax payout on any incentive plans will be in Class A Nonvoting Common Stock in order to satisfy the executive s ownership requirement
Actual stock ownership of each NEO is reviewed on an annual basis to ensure the guidelines are met The following equity balances are included for purposes of determining whether an executive meets his or her ownership requirements the fair market values of Company stock owned Company stock held in the Executive Deferred Compensation Plan RSUs and the
The Company s Insider Trading Policy prohibits hedging and other monetization transactions in Company securities by officers directors and employees The prohibition of hedging transactions includes financial instruments such as prepaid variable forwards equity swaps collars and exchange funds The Insider Trading Policy also prohibits the pledging of Company stock as collateral for loans or holding Company securities in a margin account by officers directors or employees
Mr Shaller has an employment offer letter providing for certain severance benefits as described below under Potential Payments Upon Termination or Change of Control None of the other NEOs have any severance agreements or similar arrangements that would apply outside of a change of control
The Board of Directors previously approved change of control agreements for all of the NEOs of the Company The agreements applicable to the NEOs provide a payment of an amount commensurate to a multiple of their salary and annual cash incentive payment as specified in their respective agreement prior to the date the change of control occurs in the event of termination or resignation for good cause upon a change of control All of the NEO s agreements provide for up to 25 000 of attorney fees to enforce the executive s rights under the agreement Payments under the agreement will be made over two years
Under the terms of the 2017 and 2023 Omnibus Incentive Plans in the event of a the merger or consolidation of the Company with or into another corporation or corporations in which the Company is not the surviving corporation b the adoption of any plan for the dissolution of the Company or c the sale or exchange of all or substantially all the assets of the Company for cash or for shares of stock or other securities of another corporation all then unexercised stock options become fully exercisable and all restrictions placed on restricted stock and performance based and time based restricted stock units will lapse If any stock option is canceled subsequent to the events described above the Company or the corporation assuming the obligations of the Company shall pay an amount of cash or stock equal to the in the money value of the canceled stock options The awards granted under the 2017 and 2023 Omnibus Incentive Plans provide for either accelerated or continuation of vesting of stock options and RSUs upon termination due to retirement for which the eligibility criteria is 60 years of age and 5 years of service
Equity awards under the Company s 2017 and 2023 Omnibus Incentive Plans contain non competition non solicitation and confidential information covenants applicable to the award recipients The confidential information covenant prohibits the use disclosure copying or duplication of the Company s confidential information other than in the course of authorized activities conducted in the course of the recipient s employment with the Company The other covenants prohibit the NEOs for 12 months after termination of employment with the Company from i performing duties for or as a competitor of the Company which are the same or similar to those performed by the recipient in the 24 months prior to termination of employment with the Company ii soliciting customers for the sale of competitive products iii soliciting employees to join a competitor or otherwise terminate their relationship with the Company or iv interfering in the Company s relationships with its vendors and suppliers
Section 162 m of the Internal Revenue Code generally disallows a federal income tax deduction to publicly traded companies for compensation in excess of 1 million per year paid to certain current and former executive officers Historically the 1 million deduction limit generally has not applied to compensation that satisfies IRS requirements for qualified performance based compensation
The Committee s intent is to preserve the deductibility of executive compensation to the extent reasonably practicable and to the extent consistent with its other compensation objectives However the Committee believes Section 162 m is only one of several relevant considerations in establishing executive compensation and believes Section 162 m implications should not compromise its ability to design and maintain executive compensation arrangements intended to among other things attract motivate and help retain a highly qualified and successful management team to lead the Company As a result the Committee
When reviewing preliminary recommendations and in connection with approving the terms of a given incentive plan management and the Committee review and consider the accounting implications of a compensation arrangement including the estimated expense and other accounting and disclosure requirements With consideration of the accounting treatment associated with an incentive plan design management and the Committee may alter or modify the incentive award if the award and the related accounting consequences were to adversely affect our financial performance
During fiscal 2025 the Committee was composed of Mses Collins Smee and Bruno and Messrs Bem Richardson and Nargolwala There are no relationships among the Company s executive officers members of the Committee or entities whose executives serve on the Board that require disclosure under applicable SEC regulations
The Committee has reviewed and discussed the Compensation Discussion and Analysis with management based on the review and discussions the Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in the Company s Annual Report on Form 10 K
The Company believes that its compensation policies practices and procedures for executive officers and all other employees are designed to avoid incentives that create unnecessary or excessive risks that are reasonably likely to have a material adverse effect on the Company The Company s compensation programs are weighted towards offering long term incentives that reward sustainable performance do not offer significant short term incentives that might drive high risk investments at the expense of long term Company value and are set at reasonable and sustainable levels as determined by a review of the Company s economic position as well as the compensation offered by comparable companies Under the oversight of its Audit and Management Development and Compensation Committees the Company reviewed its compensation policies practices and procedures for all employees including executive officers to evaluate and ensure that they did not foster risk taking beyond that deemed acceptable within the Company s business model
The following table sets forth compensation awarded to earned by or paid to the NEOs who served as executive officers during the year ended July 31 2025 for services rendered as an executive officer to the Company and its subsidiaries during the years ended July 31 2025 July 31 2024 and July 31 2023
Represents the grant date fair value of RSUs and PRSUs computed in accordance with accounting guidance for equity grants made or modified in the applicable year The grant date fair value of RSUs is calculated based on the number of shares of Class A Common Stock underlying the RSUs times the average of the high and low stock price of Class A Common Stock on the date of grant The grant date fair value of PRSUs was calculated based on the number of shares of Class A Common Stock underlying the award times the average of the high and low stock price of Class A Common Stock on the date of grant The actual value of a RSU will depend on the market value of the Class A Common Stock on the date the stock is sold The table reflects the grant date fair value at target for PRSUs 100 The values of the PRSU awards in fiscal 2025 at the grant date if the highest level of performance conditions were to be achieved would be as follows Mr Shaller 4 800 008 Ms Thornton 800 026 Mr Bojarski 750 014 Mr DeBruine 475 028 and Mr Gorman 350 074
The amounts in the All Other Compensation column include matching contributions to the Company s Matched 401 k Plan Funded Retirement Plan and Restoration Plan company car or car allowance the cost of group term life insurance the cost of long term care insurance the cost of disability insurance and other compensation or perquisites The other compensation includes pay related to severance agreements settlement agreements and other perquisites including annual allowances for financial and tax planning and the cost of personal liability insurance Refer to the table following these footnotes
Upon his appointment to President Chief Executive Officer and Director on April 1 2022 Mr Shaller was awarded 760 500 of stock options and 760 500 of RSUs In addition Mr Shaller was granted an additional 250 000 RSU award at this time The 760 500 stock option and 760 500 RSU grants related to an early grant of Mr Shaller s fiscal 2023 equity awards so he did not receive any stock options or RSUs during fiscal 2023 As such fiscal 2024 was the first year in which Mr Shaller received his full Chief Executive Officer compensation and benefits
Ms Thornton was appointed as Chief Financial Officer Chief Accounting Officer and Treasurer effective April 14 2023 As part of her appointment Ms Thornton received a base salary of 450 000 In fiscal 2024 Ms Thornton began receiving equity awards and other incentive benefits corresponding to her appointment as Chief Financial Officer
As discussed within the PRSU achievement section above the Management Development and Compensation Committee approved a modification to certain outstanding stock awards to align their performance vesting conditions with current grant design and evolving business priorities Specifically the performance metrics for a portion of the PRSU awards granted in fiscal year 2023 were adjusted to include acquisitions from newly acquired companies in the achievement of the revenue target In the Summary Compensation Table above this incremental fair value is included
in the Stock Awards column for each named executive officer who received the modified awards The amounts reported in this column reflect the new grant date fair value based on the market price average of the high and low of the stock price on the date of the modification as well as the amount expected to vest under the revised performance conditions The value of the modification included in the Stock Awards column for fiscal year 2025 is as follows Mr Shaller 190 172 Mr DeBruine 15 009 and Mr Gorman 18 948
At its July 2024 meeting the Committee approved the values of the annual cash incentive award threshold target and maximums under the Company s annual cash incentive plan The structure of the plan is described in the Compensation Discussion and Analysis above and was set prior to the beginning of the fiscal year
This award represents PRSUs granted August 1 2024 as part of the annual fiscal 2025 equity grant These PRSUs have a three year performance period with the number of shares issued at vesting determined by the Company s achievement of revenue and diluted EPS growth goals over the three year performance period Payout opportunities will range from 0 to 200 of the target award Target payout is set at 100 of award value with threshold and maximum payouts set at 25 and 200 of target award value respectively
As discussed in the Summary Compensation Table the portion of the fiscal 2023 PRSU awards that have a performance vesting condition were modified in fiscal 2025 The above amounts represent the incremental fair value recognized as part of the modification based on the market on the date of the modification The shares listed within represent the original shares granted to each of Mr Shaller Mr DeBruine and Mr Gorman
This award represents RSUs awarded on October 2 2024 as part of the annual fiscal 2025 equity grant One third of the units vest on October 2 2025 one third of the units vest on October 2 2026 and one third of the units vest on October 2 2027
This award represents PRSUs awarded on August 1 2022 as part of the annual fiscal 2023 equity grant These PRSUs have a three year performance period with the number of shares issued at vesting determined relative to the Company s revenue performance measured with respect to organic revenue growth over four equally weighted performance periods Payout opportunities will range from 0 to 200 of the target award The amounts listed above are based on the target value of each award 100
This award represents PRSUs awarded on August 1 2022 as part of the annual fiscal 2023 equity grant These PRSUs have a three year performance period with the number of shares issued at vesting determined by the Company s TSR relative to the S P 600 SmallCap Industrials Index Payout opportunities will range from 0 to 200 of the target award The amounts listed above are based on the target value of each award 100
This award represents PRSUs awarded on August 1 2023 as part of the annual fiscal 2024 equity grant These PRSUs have a three year performance period with the number of shares issued at vesting determined by the Company s achievement of revenue and diluted EPS growth goals over the three year performance period Payout opportunities will range from 0 to 200 of the target award The amounts listed above are based on the target value of each award 100
This award represents PRSUs awarded on August 1 2024 as part of the annual fiscal 2025 equity grant These PRSUs have a three year performance period with the number of shares issued at vesting determined by the Company s achievement of revenue and diluted EPS growth goals over the three year performance period Payout opportunities will range from 0 to 200 of the target award The amounts listed above are based on the target value of each award 100
The executive contribution amounts included in this table are derived from the Salary and Non Equity Incentive Plan Compensation columns of the Summary Compensation Table The Company s contribution amounts included in this table are reported in the All Other Compensation columns of the Summary Compensation Table Amounts reported in the aggregate balance at July 31 2025 net of historical earnings and losses were previously reported as compensation to the NEO in the Summary Compensation Table for previous years See discussion of the Company s non qualified deferred compensation plans in the Compensation Discussion and Analysis
As described in the Employment and Change of Control Agreements section of the Compensation Discussion and Analysis above the Company has entered into an employment offer letter with Mr Shaller and change of control agreements with all of the NEOs that provide for benefits following termination of employment and or a change of control In addition our equity incentive plans provide for certain potential benefits upon a change of control
The offer letter entered into with Mr Shaller provides that he is deemed an at will employee but will receive a severance benefit equal to equal to two times the sum of his base salary and target bonus payable in monthly installments over a 24 month period in the event his employment is terminated without cause or he resigns for good reason as described therein The offer letter also contains 24 month non competition and non solicitation provisions as well as standard confidentiality and non disparagement provisions None of the other NEOs have any severance agreements or similar arrangements that would apply outside of a change of control
The terms of the change of control agreement are triggered if within a 24 month period beginning with the date a change of control occurs i the executive s employment with the Company is involuntarily terminated other than by reason of death disability or cause or ii the executive s employment with the Company is voluntarily terminated by the executive subsequent to a any reduction in the total of the executive s annual base salary exclusive of fringe benefits and the executive s target annual cash incentive in comparison with the executive s annual base salary and target annual cash incentive immediately prior to the date the change of control occurs b a significant diminution in the responsibilities or authority of the executive in comparison with the executive s responsibility and authority immediately prior to the date the change of control occurs or c the imposition of a requirement by the Company that the executive relocate to a principal work location more than 50 miles from the executive s principal work location immediately prior to the date the change of control occurs
Following termination due to a change of control executives shall be paid a multiplier of their annual base salary in effect immediately prior to the date the change of control occurs plus a multiplier of their annual cash incentive payment as discussed in their respective change of control agreements prior to the date the change of control occurs payable in monthly installments over a 24 month period If the payments upon termination due to change of control result in any excise tax being incurred by Messrs Shaller Bojarski DeBruine and Gorman and Ms Thornton as a result of Section 280G of the Internal Revenue Code the officer will be solely responsible for such excise tax The Company will also reimburse a maximum of 25 000 of legal fees incurred by the executives in order to enforce the change of control agreement in which the executive prevails The Company s change of control agreements contain confidentiality provisions
The amounts detailed in the tables assume that each NEO terminated employment on July 31 2025 Accordingly the tables reflect amounts earned as of July 31 2025 and include estimates of amounts that would be paid to the NEO upon the termination or occurrence of a change of control The actual amounts that would be paid to an NEO can only be determined at the time of termination
The tables below include amounts the Company is obligated to pay the NEO as a result of the severance agreement and executed change of control agreement or under the applicable equity incentive plan The tables do not include benefits that are paid generally to all salaried employees or a broad group of salaried employees Therefore the NEOs would receive benefits in addition to those set forth in the tables
An NEO is entitled to receive base salary earned during their term of employment regardless of the manner in which the named executive officer s employment is terminated As such this amount is not disclosed in the tables
The following table outlines the amount payable assuming that the terms of the change of control agreement or equity incentive plan were triggered on July 31 2025 and the NEO was required to legally enforce the terms of the agreement
Represents the closing market price of 70 57 on 139 566 unvested RSUs and PRSU awards that would vest due to change of control regardless of whether employment were terminated The restricted stock unit acceleration gain for PRSUs is based on the number of shares earned based on actual performance for the fiscal 2023 award and target performance for the fiscal 2024 and 2025 awards
As Mr Shaller is eligible for continued vesting of equity awards through the retirement conditions of the applicable equity incentive plan agreements which requires the employee to reach age 60 and 5 years of service the following table outlines the amount subject to continued vesting assuming that Mr Shaller retired on July 31 2025
Represents the closing market price of 70 57 on 51 784 unvested PRSU awards that would continue vesting as part of satisfying retirement conditions The value for PRSUs is based on the number of shares earned based on actual performance for the fiscal 2023 award and target performance for the fiscal 2024 and 2025 awards pro rated for service period satisfied
The following table outlines the amount payable assuming that the terms of the change of control agreement or equity incentive plan were triggered on July 31 2025 and the NEO was required to legally enforce the terms of the agreement
Represents the closing market price of 70 57 on 22 061 unvested RSUs and PRSUs that would vest due to the change of control The restricted stock unit acceleration gain for PRSUs is based on the number of shares earned based on target performance for the 2024 and 2025 awards
The following table outlines the amount payable assuming that the terms of the change of control agreement or equity incentive plan were triggered on July 31 2025 and the NEO was required to legally enforce the terms of the agreement
Represents the closing market price of 70 57 on 25 190 unvested RSUs and PRSUs that would vest due to the change in control The restricted stock unit acceleration gain for PRSUs is based on the number of shares earned based on target performance for the 2024 and 2025 awards
The following table outlines the amount payable assuming that the terms of the change of control agreement or equity incentive plan were triggered on July 31 2025 and the NEO was required to legally enforce the terms of the agreement
Represents the closing market price of 70 57 on 11 840 unvested RSUs and PRSUs that would vest due to the change of control The restricted stock unit acceleration gain for PRSUs is based on the number of shares earned based on actual performance for the fiscal 2023 award and target performance for the fiscal 2024 and 2025 awards
The following table outlines the amount payable assuming that the terms of the change of control agreement or equity incentive plan were triggered on July 31 2025 and the NEO was required to legally enforce the terms of the agreement
Represents the closing market price of 70 57 on 12 112 unvested RSUs and PRSUs that would vest due to the change of control The restricted stock unit acceleration gain for PRSUs is based on the number of shares earned based on actual performance for the fiscal 2023 award and target performance for the fiscal 2024 and 2025 awards
In the event of termination due to death or disability all unexercised unexpired stock options would immediately vest and all restricted stock unit awards would immediately become unrestricted and fully vested The following table shows the amount payable to the NEOs should this event occur on July 31 2025
Represents the closing market price of 70 57 on unvested RSUs and PRSUs awards that would vest due to death or disability The restricted stock unit acceleration gain for PRSUs is based on the number of shares earned based on actual performance for the fiscal 2023 award and target performance for the fiscal 2024 and 2025 awards
For our median employee we elected to use the same employee identified as the median employee in fiscal 2024 for calculating the pay ratio in fiscal 2025 There were no material changes in our employee population or compensation arrangements that we reasonably believe would result in a significant change in our pay ratio disclosures since we identified the median employee for determination of the CEO pay ratio in fiscal 2024
A measurement date of May 31 2024 was used to identify our median employee which is within three months of the Company s fiscal 2024 year end As of this date the Company s total employee population excluding the CEO consisted of 5 660 individuals which comprised all full time and part time employees
The Company used annual total cash compensation earned by our employees as compiled from our payroll records as the consistently applied compensation measure by which to determine the median employee This reflects the principal forms of compensation delivered to all of our employees and is readily available in each country
Our median employee s total compensation for 2025 was calculated in the same manner as total compensation for each of the NEOs within the Summary Compensation Table and includes contributions to health and welfare benefits
The following Pay Versus Performance table summarizes compensation for our principal executive officers PEOs and the average compensation amounts to all other non PEO NEOs as reported in the Summary Compensation Table SCT for the past five fiscal years as well as amounts for Compensation Actually Paid CAP to these groups calculated and reported as required under new SEC disclosure requirements The below table also includes the Company s Total Shareholder Return TSR results Peer Group TSR net income and the Company selected performance measure Operating Income We have selected Operating Income as our primary financial measure we consider to be most important in linking performance to compensation actually paid as the Company s overall NEO compensation structure is designed to drive profitable growth leading to long term shareholder value creation
In fiscal 2022 J Michael Nauman retired as the Company s PEO effective April 1 2022 Effective that same day Russell R Shaller was appointed the Company s new PEO Compensation information is provided separately for each PEO Mr Nauman was also the Company s PEO for fiscal 2021
The amounts shown for CAP have been calculated in accordance with Item 402 v of Regulation S K and do not reflect compensation actually realized or received by the Company s NEOs These amounts reflect total compensation as set forth in the Summary Compensation Table above for each year adjusted as described in the reconciliation tables below
The Peer Group TSR set forth in this table utilizes the S P SmallCap 600 Industrials Index which we also utilize in the stock performance graph required by Item 201 e of Regulation S K included in Item 5 Market for Registrant s Common Equity Related Stockholder Matters and Issuer Purchases of Equity Securities above The comparison assumes 100 was invested for the period starting July 31 2020 through the end of the listed year in the Company and in the S P SmallCap 600 Industrials Index respectively Historical stock performance is not necessarily indicative of future stock performance
The reported value of equity awards represents the grant date fair value of equity based awards granted each year The total of the amounts reported in this column are the totals from the Stock Awards and Option Awards columns in the Summary Compensation Table for each applicable year
The equity award adjustments reflects the value of equity calculated in accordance with the SEC methodology for determining CAP for each year shown These equity award adjustments are set forth in the PEO Equity Award Adjustments table below For the equity values included in the below table the valuation assumptions used to calculate fair values did not materially differ from those disclosed at the time of the grant
The reported value of equity awards represents the grant date fair value of equity based awards granted each year The total of the amounts reported in this column are the totals from the Stock Awards and Option Awards columns in the Summary Compensation Table for each applicable year
The equity award adjustments reflects the value of equity calculated in accordance with the SEC methodology for determining CAP for each year shown These equity award adjustments are set forth in the PEO Equity Award Adjustments table below For the equity values included in the below table the valuation assumptions used to calculate fair values did not materially differ from those disclosed at the time of the grant
The following chart sets forth the relationship between CAP to our PEO the average of CAP to our other NEOs and the Company s cumulative TSR over the five year period from fiscal 2021 through fiscal 2025
The following table presents the financial performance measures that the Company considers to have been the most important in linking Compensation Actually Paid to our PEO and other NEOs in fiscal 2025 to Company performance The measures in this table are not ranked
To ensure competitive compensation for the Board of Directors compensation is reviewed every other year and market surveys prepared by various consulting firms and the National Association of Corporate Directors are reviewed by the Corporate Governance Committee and the Management Development and Compensation Committee and they confer with the Board s independent compensation consultant in making recommendations to the Board of Directors regarding director compensation Directors who are employees of the Company receive no additional compensation for service on the Board or on any committee of the Board
In fiscal 2025 the annual cash retainer paid to non management directors was 72 500 Each member of the Audit Committee received an annual retainer of 15 000 and an additional annual retainer of 15 000 was paid to the Chair of the Audit Committee each member of the Management Development and Compensation Committee received an annual retainer of 12 000 and an additional annual retainer of 12 000 was paid to the Chair and each member of the Corporate Governance Finance and Technology Committees received an annual retainer of 10 000 and an additional annual retainer of 10 000 was paid to each committee chair Non management directors do not receive meeting fees The annual cash retainers are pro rated in situations where there are changes to committee members or committee chairs that take place during the fiscal year Non management directors are eligible to receive compensation of up to 1 000 per day for special assignments required by management or the Board of Directors so long as the compensation does not impair independence and is approved by the Board as required No such special assignment fees were paid in fiscal year 2025
The Board has established stock ownership requirements for directors The ownership requirement for each director is five times the annual Board retainer Directors have five years to achieve their stock ownership requirements Mr Hix elected to the Board in May 2024 and Mses Cusack elected to the Board in September 2024 and De Greef Safft elected to the Board in February 2025 have not yet met their stock ownership requirements All other directors have met their stock ownership requirements
Under the terms of the Brady Corporation 2023 Omnibus Incentive Stock Plan 5 000 000 shares of the Company s Class A Common Stock have been authorized for issuance to directors and employees The Board has full and final authority to designate the non management directors to whom awards will be granted the date on which awards will be granted and the number of shares of stock covered by each grant
On May 20 2024 the Board approved an annual stock based compensation award of 135 000 fair value of unrestricted shares of Class A Common Stock with a grant date fair value of 74 63 per share for each non management director effective October 2 2024
Directors are also eligible to defer portions of their fees into the Brady Corporation Director Deferred Compensation Plan Director Deferred Compensation Plan the value of which is measured by the fair value of the underlying investments The assets of the Director Deferred Compensation Plan are held in a Rabbi Trust and are invested by the trustee as directed by the participant in several investment funds as permitted by the Director Deferred Compensation Plan The investment funds available include Brady Corporation Class A Nonvoting Common Stock and various mutual funds that are offered in the employee Matched 401 k Plan Directors may elect whether to receive their account balance following termination in a single lump sum payment or by means of distribution under an annual installment method Distributions of the Brady Corporation Class A Nonvoting Common Stock are made in kind distributions of mutual funds are made in cash
Represents the fair value of shares of Brady Corporation Class A Non Voting Common Stock granted in fiscal 2025 as compensation for their services The shares of unrestricted stock granted to the non management directors were valued at the average of the high and low market price of 74 63 on October 2 2024 for those non management directors on the board as of that grant date
Ms De Greef Safft was appointed to the Board on February 25 2025 As such the value of her compensation reported in the table above is prorated for her time served on the Board during fiscal 2025 As part of her appointment Ms De Greef Safft also received a grant of unrestricted stock valued at the average of the high and low market price of 72 60 on February 25 2025
The following table sets forth the current beneficial ownership of shareholders who are known by the Company to own more than five percent 5 of any class of the Company s voting shares on July 31 2025 As of that date nearly all of the voting stock of the Company was held by two trusts controlled by direct descendants of the Company s founder William H Brady as follows
The trustee is Elizabeth P Bruno who has sole voting and dispositive power and who is the remainder beneficiary Elizabeth Bruno is the great granddaughter of William H Brady and currently serves on the Company s Board of Directors
The following table sets forth the current beneficial ownership of each class of equity securities of the Company by each director and NEO individually and by all directors and Officers of the Company as a group as of July 31 2025 Unless otherwise noted the address for each of the listed persons is c o Brady Corporation 6555 West Good Hope Road Milwaukee Wisconsin 53223 Except as otherwise indicated all shares are owned directly
and 8 220 shares owned by trusts in which she is a co trustee Ms Bruno s holdings of Class B Common Stock include 1 769 304 shares owned by a trust over which she has sole dispositive and voting authority
The amount shown for all officers and directors individually and as a group 16 persons includes options to acquire a total of 231 045 shares of Class A Common Stock which are currently exercisable or will be exercisable within 60 days of July 31 2025 including the following Mr Shaller 172 952 shares Ms Thornton 25 867 shares Mr Gorman 12 528 shares and Mr DeBruine 5 013 shares It does not include other options for Class A Common Stock which have been granted at later dates and are not exercisable within 60 days of July 31 2025
The amount shown for all officers and directors individually and as a group 16 persons includes unvested restricted stock units to acquire 26 378 shares of Class A Common stock which will vest within 60 days of July 31 2025 including the following Mr Shaller 17 414 units Ms Thornton 383 units Mr Gorman 2 315 units Mr DeBruine 1 834 units and Mr Bojarski 4 087 units It does not include unvested restricted stock awards or restricted stock units to acquire Class A Common Stock which have been granted at later dates and will not vest within 60 days of July 31 2025
The amount shown for all officers and directors individually and as a group 16 persons includes Class A Common Stock owned in deferred compensation plans totaling 223 479 shares of Class A Common Stock including the following Ms Bruno 2 923 shares Mr Allender 97 461 shares Mr Richardson 79 354 shares Dr Williams 19 728 shares Ms Collins Smee 9 310 shares Mr Nargolwala 9 310 shares Mr Hix 3 566 shares and Ms Cusack 1 827 shares
The Company s equity compensation plan allows the granting of stock options restricted stock RSUs and unrestricted stock to various officers directors and other employees of the Company at prices equal to fair market value at the date of grant The Company has reserved 5 000 000 shares of Class A Nonvoting Common Stock for issuance under the Brady Corporation 2023 Omnibus Incentive Stock Plan Generally options will not be exercisable until one year after the date of grant and will be exercisable thereafter to the extent of one third per year and have a maximum term of ten years Generally RSUs vest one third per year for the first three years
The Company annually solicits information from its directors in order to ensure there are no conflicts of interest The information gathered annually is reviewed by the Company and if any transactions are not in accordance with the rules of the NYSE or are potentially in violation of the Company s Corporate Governance Principles the transactions are referred to the Corporate Governance Committee for approval or other action Further potential affiliated party transactions would be reported as a part of the Company s quarterly disclosure process In addition pursuant to its charter the Company s Audit Committee periodically reviews reports and disclosures of insider and affiliated party transaction with the Company if any Furthermore the Company s directors are expected to be mindful of their fiduciary obligations to the Company and to report any potential conflicts to the Corporate Governance Committee for review Based on the Company s consideration of all relevant facts and circumstances the Corporate Governance Committee will decide whether or not to approve such transactions and will approve only those transactions that are in the best interest of the Company Additionally the Company has processes in place to educate executives and employees about affiliated transactions The Company maintains an anonymous hotline by which employees may report potential conflicts of interest such as affiliated party transactions
In undertaking its review of potential related party transactions the Board considered the commercial relationships of the Company if any with those entities that have employed the Company s directors The commercial relationships which involved the purchase and sale of products on customary terms did not exceed the maximum amounts proscribed by the director independence rules of the NYSE Furthermore the compensation paid to the Company s directors by their employers was not linked in any way to the commercial relationships their employers had with the Company in fiscal 2025 After consideration of these factors the Board concluded that none of the directors whose employers had a commercial relationship with the Company had a material interest in the transactions and the commercial relationships were not material to the Company Based on these factors the Company has determined that it does not have material related party transactions that affect the results of operations cash flow or financial condition The Company has also determined that no transactions occurred in fiscal 2025 or are currently proposed that would require disclosure under Item 404 a of Regulation S K
The following table presents the aggregate fees incurred for professional services by Deloitte Touche LLP and Deloitte Tax LLP during the years ended July 31 2025 and 2024 Other than as set forth below no professional services were rendered or fees billed by Deloitte Touche LLP or Deloitte Tax LLP during the years ended July 31 2025 and 2024
Audit fees consist of professional services rendered for the audit of the Company s annual financial statements attestation of management s assessment of internal control and reviews of the quarterly financial statements
The services performed by the Independent Registered Public Accounting Firm Independent Auditors in fiscal 2025 were pre approved in accordance with the pre approval policy and procedures adopted by the Audit Committee The policy requires the Audit Committee to pre approve the audit and non audit services performed by the Independent Auditors in order to assure that the provision of such services does not impair the auditor s independence All services performed for the Company by the Independent Auditor must be approved in advance by the Audit Committee Any proposed services exceeding pre approved cost levels also require specific pre approval by the Audit Committee
Purchase Agreement dated as of June 16 2021 by and among Brady Worldwide Inc BW Acquisition Corp The Code Corporation Certain Stockholders of the Code Corporation and Shareholder Representative Services LLC 24
Securities Sale and Purchase Agreement dated as of July 3 2024 by and between Braton Europe S A R L MML Capital Europe VI Equity II S A and the other institutional and individual holders of outstanding shares of Gravotech Holding 19
Credit Agreement dated as of August 1 2019 by and among Brady Corporation and certain of its subsidiaries the lenders listed therein BMO Harris Bank N A as administrative agent and L C issuer Bank of America N A as syndication agent and L C issuer and Wells Fargo Bank N A as documentation agent 38
First Amendment to Credit Agreement dated as of December 21 2021 by and among Brady Corporation and certain of its subsidiaries the lenders listed therein and BMO Harris Bank N A as administrative agent 20
Second Amendment to Credit Agreement dated as of November 14 2022 by and among Brady Corporation and certain of its subsidiaries the lenders listed therein and BMO Harris Bank N A as administrative agent 35
Third Amendment to Credit Agreement dated as of October 10 2024 by and among Brady Corporation and certain of its subsidiaries the lenders listed therein and BMO Harris Bank N A as administrative agent 22
Pursuant to the requirements of Section 13 or 15 d of the Securities Exchange Act of 1934 the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized this 4th day of September 2025
Pursuant to the requirements of the Securities Exchange Act of 1934 this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated

Company Name	BRADY CORP Vist SEC web-site
Category	MISCELLANEOUS MANUFACTURING INDUSTRIES
Trading Symbol	BRC