Brady Posts Record Fiscal-Year Results and Guides to 23% Adjusted EPS Growth at Midpoint

Brady Corporation reported record fiscal-year revenue and adjusted diluted earnings per share on Thursday, then set a fiscal 2027 earnings outlook that points to another large increase as its newly acquired productivity-solutions business enters the results. The Milwaukee-based industrial technology company expects adjusted diluted EPS of $6.25 to $6.75 for the year ending July 31, 2027. The $6.50 midpoint is about 23% above the record $5.29 Brady earned on an adjusted basis in fiscal 2026.

For the year ended July 31, sales increased 9.8% to $1.66 billion from $1.51 billion, with organic growth contributing 5.3 percentage points. Net income rose 8.5% to $205.4 million, while GAAP diluted EPS increased 9.1% to $4.30. Adjusted net income climbed 14.2% to $252.6 million and adjusted diluted EPS increased 15.0% from $4.60.

Brady said in its September 3 earnings release that operating cash flow reached $244.1 million in fiscal 2026, up nearly 35% from $181.2 million a year earlier. The company returned $88.3 million to shareholders through dividends and share repurchases. It ended July with a net cash position of $172.2 million, shortly before completing its largest recent expansion into mobile computing, scanning, RFID and workflow software.

Fourth-quarter sales grew 10% as adjusted profit outpaced GAAP results

Revenue for the fourth quarter rose 10.0% to $436.9 million from $397.3 million, led by 8.4% organic growth. The Americas and Asia business posted a 13.5% sales increase, including 11.6% organic growth, while Europe and Australia sales increased 3.2% with 2.1% organic growth. Those figures show that most of the quarter’s expansion came from Brady’s existing operations rather than acquisitions or currency effects.

The profit picture was more mixed on a GAAP basis because acquisition and integration costs weighed on reported earnings. Income before taxes fell 8.2% to $55.6 million from $60.5 million, and net income declined to $45.6 million from $49.9 million. Diluted EPS was $0.96, down from $1.04 in the prior-year quarter. On Brady’s adjusted measures, income before taxes increased 20.0% to $89.0 million, adjusted net income rose 17.5% to $70.7 million, and adjusted diluted EPS increased to $1.48 from $1.26.

The gap between the GAAP and adjusted figures is especially relevant this quarter because Brady was preparing to absorb the former Honeywell Productivity Solutions and Services business. The acquisition closed on August 3, three days after Brady’s fiscal year ended, so the fiscal 2026 revenue total does not include the acquired operation’s post-closing sales. Costs tied to the acquisition and integration, however, were already affecting the fourth-quarter income statement.

Fiscal 2027 guidance puts the new IPS segment at the center of growth

Management’s fiscal 2027 adjusted EPS range of $6.25 to $6.75 represents growth of 18.1% to 27.6% from fiscal 2026. The headline 23% figure is therefore a midpoint calculation, not a guaranteed growth rate or a separate point forecast. Brady expects approximately $0.80 of adjusted diluted EPS accretion from its new Intelligent Productivity Solutions, or IPS, segment after financing costs, with most of that contribution expected in the second half of the fiscal year as integration progresses.

The revenue outlook also shows how much the acquisition changes Brady’s scale. The company expects its legacy Identification Solutions, or IDS, segment to grow about 5% organically in fiscal 2027, while IPS is expected to contribute roughly $1.15 billion of revenue. Management anticipates an IDS segment profit margin of about 20% and an IPS margin in the low double digits. Other assumptions include roughly $45 million of depreciation expense, $40 million of capital spending and a full-year tax rate of about 21%.

Brady based the guidance on foreign-exchange rates as of July 31 and an assumption of continued economic growth. That matters because the earnings range depends not only on the acquired business meeting its sales and integration targets, but also on the operating environment remaining broadly supportive. The company has also identified customer retention, supplier relationships, integration costs, debt service and the timing of expected synergies among the risks that could affect the outcome.

The Honeywell acquisition changes Brady’s business mix and balance sheet

Brady completed the $1.4 billion cash acquisition of Honeywell’s Productivity Solutions and Services business on August 3, creating the IPS segment alongside IDS. An SEC filing on the acquisition says the purchase was funded with cash on hand, a senior unsecured credit facility and private-placement debt. The acquired business generated about $1.1 billion in 2025 sales before joining Brady.

The expansion adds mobile computers, barcode scanners, RFID products and workflow software to a company historically known for identification and safety products. Brady has said the acquisition expands its addressable market to about $14 billion and gives it more exposure to manufacturing, transportation, logistics, retail and healthcare. Management is also targeting at least $25 million of annual run-rate cost synergies within three years of closing.

Taking on debt for the acquisition changes the capital structure after Brady finished fiscal 2026 with net cash. At closing, the company expected net debt to EBITDA of about 2.5 times and said it aims to reduce that ratio below 2.0 times within two years. That deleveraging target sits alongside continued investment in research and development, dividends and selective share repurchases, making cash generation more important in the first full year after the acquisition.

The fiscal 2027 outlook therefore combines two different earnings engines: continued organic growth in the existing IDS operation and a large first-year contribution from IPS. Brady’s record fiscal 2026 results provide the starting base, but the 23% adjusted EPS growth figure depends on the midpoint of a range and on execution after the Honeywell acquisition. With most of the expected IPS earnings contribution weighted toward the second half, later quarters will carry more of the forecast benefit from the expanded business.