brc-20251031

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q


☑			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended October 31, 2025


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period from to

Commission File Number 1-14959

BRADY CORPORATION

(Exact name of registrant as specified in its charter)


Wisconsin						39-0178960
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

6555 West Good Hope Road

Milwaukee, Wisconsin 53223

(Address of principal executive offices and zip code)

(414) 358-6600

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of each exchange on which registered
Class A Nonvoting Common Stock, par value $0.01 per share	BRC	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☑

Accelerated filer

☐

Emerging growth company

☐

Non-accelerated filer

☐

Smaller reporting company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

As of November 13, 2025, there were 43,638,096 outstanding shares of Class A Nonvoting Common Stock and 3,538,628 shares of Class B Voting Common Stock. The Class B Voting Common Stock, all of which is held by affiliates of the Registrant, is the only voting stock.

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INDEX



			Page
PART I. Financial Information			3
Item 1. Financial Statements (Unaudited)			3
Condensed Consolidated Balance Sheets			3
Condensed Consolidated Statements of Income			4
Condensed Consolidated Statements of Comprehensive Income			5
Condensed Consolidated Statements of Stockholders ’ Equity			6
Condensed Consolidated Statements of Cash Flows			7
Notes to Condensed Consolidated Financial Statements			8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			18
Item 3. Quantitative and Qualitative Disclosures About Market Risk			24
Item 4. Controls and Procedures			24
PART II. Other Information			25
Item 1. Legal Proceedings			25
Item 1A. Risk Factors			25
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			25
Item 5. Other Information			25
Item 6. Exhibits			26
Signatures			27

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

BRADY CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in Thousands)


	October 31, 2025		July 31, 2025
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	182,684	$	174,349
Accounts receivable, net of allowance for credit losses of $7,253 and $7,876, respectively	248,551		231,944
Inventories	215,568		200,881
Prepaid expenses and other current assets	15,568		14,661
Total current assets	662,371		621,835
Property, plant and equipment—net	232,522		225,572
Goodwill	681,721		676,945
Other intangible assets	114,932		105,374
Deferred income taxes	18,495		20,862
Operating lease assets	60,350		58,422
Other assets	24,283		25,243
Total	$	1,794,674	$	1,734,253
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	103,804	$	105,028
Accrued compensation and benefits	69,886		92,657
Taxes, other than income taxes	22,933		21,537
Accrued income taxes	6,812		5,547
Current operating lease liabilities	16,590		15,234
Other current liabilities	100,683		90,329
Total current liabilities	320,708		330,332
Long-term debt	115,906		99,766
Long-term operating lease liabilities	44,288		43,565
Other liabilities	68,952		68,379
Total liabilities	549,854		542,042
Stockholders’ equity:
Class A nonvoting common stock—Issued 51,261,487 shares, and outstanding 43,666,121 and 43,530,012 shares, respectively	513		513
Class B voting common stock—Issued and outstanding, 3,538,628 shares	35		35
Additional paid-in capital	359,690		359,269
Retained earnings	1,360,156		1,317,739
Treasury stock—7,595,366 and 7,731,475 shares, respectively, of Class A nonvoting common stock, at cost	(388,847)		(393,186)
Accumulated other comprehensive loss	(86,727)		(92,159)
Total stockholders’ equity	1,244,820		1,192,211
Total	$	1,794,674	$	1,734,253

See Notes to Condensed Consolidated Financial Statements.

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BRADY CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Dollars in Thousands, Except Per Share Amounts, Unaudited)


	Three months ended October 31,
	2025		2024
Net sales	$	405,287	$	377,065
Cost of goods sold	196,455		187,376
Gross margin	208,832		189,689
Operating expenses:
Research and development	23,292		18,921
Selling, general and administrative	117,568		111,846
Total operating expenses	140,860		130,767
Operating income	67,972		58,922
Other income (expense):
Investment and other income	1,712		1,234
Interest expense	(1,208)		(1,356)
Income before income taxes	68,476		58,800
Income tax expense	14,540		12,017
Net income	$	53,936	$	46,783
Net income per Class A Nonvoting Common Share:
Basic	$	1.14	$	0.98
Diluted	$	1.13	$	0.97
Net income per Class B Voting Common Share:
Basic	$	1.13	$	0.96
Diluted	$	1.11	$	0.95
Weighted average common shares outstanding:
Basic	47,273		47,732
Diluted	47,731		48,217

See Notes to Condensed Consolidated Financial Statements.

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BRADY CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Dollars in Thousands, Unaudited)


	Three months ended October 31,
	2025		2024
Net income	$	53,936	$	46,783
Other comprehensive income (loss):
Foreign currency translation adjustments	4,743		(79)

Cash flow hedges:
Net gain (loss) recognized in other comprehensive income (loss)	621		(1,338)
Reclassification adjustment for losses (gains) included in net income	296		(464)
	917		(1,802)

Pension and other post-retirement benefits actuarial gain amortization	(151)		(151)

Other comprehensive income (loss), before tax	5,509		(2,032)
Income tax (expense) benefit related to items of other comprehensive (loss) income	(77)		52
Other comprehensive income (loss), net of tax	5,432		(1,980)
Comprehensive income	$	59,368	$	44,803

See Notes to Condensed Consolidated Financial Statements.

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BRADY CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Dollars in Thousands, Unaudited)


	Three months ended October 31, 2025
	Common Stock		Additional Paid-In Capital		Retained Earnings		Treasury Stock		Accumulated Other Comprehensive Loss		Total Stockholders’ Equity
Balances at July 31, 2025	$	548	$	359,269	$	1,317,739	$	(393,186)	$	(92,159)	$	1,192,211
Net income	—		—		53,936		—		—		53,936
Other comprehensive income, net of tax	—		—		—		—		5,432		5,432
Issuance of shares of Class A Common Stock under stock plan	—		(6,591)		—		8,393		—		1,802
Tax benefit and withholdings from deferred compensation distributions	—		266		—		—		—		266
Stock-based compensation expense	—		6,746		—		—		—		6,746
Repurchase of shares of Class A Common Stock, including excise taxes	—		—		—		(4,054)		—		(4,054)
Cash dividends on Common Stock:
Class A — $0.2450 per share	—		—		(10,711)		—		—		(10,711)
Class B — $0.2284 per share	—		—		(808)		—		—		(808)
Balances at October 31, 2025	$	548	$	359,690	$	1,360,156	$	(388,847)	$	(86,727)	$	1,244,820


	Three months ended October 31, 2024
	Common Stock		Additional Paid-In Capital		Retained Earnings		Treasury Stock		Accumulated Other Comprehensive Loss		Total Stockholders’ Equity
Balances at July 31, 2024	$	548	$	353,654	$	1,174,025	$	(351,947)	$	(109,622)	$	1,066,658
Net income	—		—		46,783		—		—		46,783
Other comprehensive loss, net of tax	—		—		—		—		(1,980)		(1,980)
Issuance of shares of Class A Common Stock under stock plan	—		(5,065)		—		7,935		—		2,870
Tax benefit and withholdings from deferred compensation distributions	—		190		—		—		—		190
Stock-based compensation expense	—		5,813		—		—		—		5,813

Cash dividends on Common Stock:
Class A — $0.2400 per share	—		—		(10,612)		—		—		(10,612)
Class B — $0.2234 per share	—		—		(790)		—		—		(790)
Balances at October 31, 2024	$	548	$	354,592	$	1,209,406	$	(344,012)	$	(111,602)	$	1,108,932

See Notes to Condensed Consolidated Financial Statements.

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BRADY CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in Thousands, Unaudited)


	Three months ended October 31,
	2025		2024
Operating activities:
Net income	$	53,936	$	46,783
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	11,008		10,164
Stock-based compensation expense	6,746		5,813
Deferred income taxes	3,973		(903)
Other	223		(880)
Changes in operating assets and liabilities:
Accounts receivable	(12,875)		(4,385)
Inventories	(10,980)		(2,107)
Prepaid expenses and other assets	(391)		(1,136)
Accounts payable and accrued liabilities	(19,530)		(33,960)
Income taxes	1,246		4,017
Net cash provided by operating activities	33,356		23,406

Investing activities:
Purchases of property, plant and equipment	(10,980)		(7,286)
Acquisition of businesses, net of cash acquired	(17,416)		(140,625)
Other	8		10
Net cash used in investing activities	(28,388)		(147,901)

Financing activities:
Payment of dividends	(11,519)		(11,402)
Proceeds from exercise of stock options	5,001		5,855
Payments for employee taxes withheld from stock-based awards	(3,198)		(2,090)
Purchase of treasury stock	(4,054)		—
Proceeds from borrowing on credit agreement	46,640		135,149
Repayment of borrowing on credit agreement	(30,500)		(109,439)
Other	266		190
Net cash provided by financing activities	2,636		18,263

Effect of exchange rate changes on cash and cash equivalents	731		1,775

Net increase (decrease) in cash and cash equivalents	8,335		(104,457)
Cash and cash equivalents, beginning of period	174,349		250,118
Cash and cash equivalents, end of period	$	182,684	$	145,661

See Notes to Condensed Consolidated Financial Statements.

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BRADY CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Three Months Ended October 31, 2025

(Unaudited)

(In thousands, except share and per share amounts)

NOTE A — Basis of Presentation

The condensed consolidated financial statements included herein have been prepared by Brady Corporation and subsidiaries (the “Company,” “Brady,” “we,” or “our”) without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. In the opinion of the Company, the foregoing statements contain all adjustments, consisting only of normal recurring adjustments necessary to present fairly the financial position of the Company as of October 31, 2025 and July 31, 2025, its results of operations, cash flows and comprehensive income for the three months ended October 31, 2025 and 2024. The condensed consolidated balance sheet as of July 31, 2025 has been derived from the audited consolidated financial statements as of that date. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts therein. Due to the inherent uncertainty involved in making estimates, actual results in future periods may differ from the estimates.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been omitted pursuant to rules and regulations of the Securities and Exchange Commission. Accordingly, the condensed consolidated financial statements do not include all of the information and footnotes required by GAAP for complete financial statement presentation. It is suggested that these condensed consolidated financial statements be read in conjunction with the consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended July 31, 2025.

NOTE B — New Accounting Pronouncements

Adopted Standards

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, including the application of the provisions of ASU 2023-07 for the three months ended October 31, 2025 and 2024, is included in Note H to the condensed consolidated financial statements.

Standards not yet adopted

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 2026 Form 10-K. The Company is currently assessing its income tax disclosures in connection with the adoption of ASU 2023-09.

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 the impact this guidance will have on the Company’s disclosures.

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NOTE C — Additional Balance Sheet Information

Inventories

Inventories consisted of the following as of October 31, 2025 and July 31, 2025:


	October 31, 2025		July 31, 2025
Finished products	$	114,828	$	109,726
Work-in-process	38,189		32,787
Raw materials and supplies	62,551		58,368
Total inventories	$	215,568	$	200,881

Property, plant and equipment

Property, plant and equipment is presented net of accumulated depreciation of $316,274 and $313,778 as of October 31, 2025 and July 31, 2025, respectively.

NOTE D — Other Intangible Assets

Other intangible assets as of October 31, 2025 and July 31, 2025 consisted of the following:


	October 31, 2025							July 31, 2025
	Weighted Average Amortization Period (Years)	Gross Carrying Amount		Accumulated Amortization		Net Book Value		Weighted Average Amortization Period (Years)	Gross Carrying Amount		Accumulated Amortization		Net Book Value
Amortized other intangible assets:
Tradenames	2	$	925	$	(578)	$	347	2	$	912	$	(456)	$	456
Customer relationships	8	138,275		(42,759)		95,516		8	125,497		(38,427)		87,070
Technology	5	18,808		(7,413)		11,395		5	20,471		(10,275)		10,196
Unamortized other intangible assets:
Tradenames	N/A	7,674		—		7,674		N/A	7,652		—		7,652
Total		$	165,682	$	(50,750)	$	114,932		$	154,532	$	(49,158)	$	105,374

The change in the gross carrying amount of other intangible assets as of October 31, 2025 compared to July 31, 2025 was primarily due to the acquisition of MECCO Partners LLC (“Mecco”) completed during the three months ended October 31, 2025, partially offset by the removal of a fully amortized technology asset. Refer to Note O, “Acquisitions,” for additional information on intangible assets acquired.

Amortization expense on intangible assets was $5,341 and $4,713 for the three months ended October 31, 2025 and 2024, respectively.

NOTE E — Leases

The Company leases certain manufacturing facilities, warehouse and office spaces, and vehicles accounted for as operating leases. Lease terms typically range from one year to ten years. As of October 31, 2025, the Company did not have any finance leases.

Operating lease expense was $5,222 and $4,735 for the three months ended October 31, 2025 and 2024, respectively, which was recognized in either “Cost of goods sold” or “Selling, general and administrative” expenses in the condensed consolidated statements of income based on the nature of the lease. Short-term lease expense, variable lease expenses, and sublease income were immaterial to the condensed consolidated statements of income for the three months ended October 31, 2025 and 2024.

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Supplemental cash flow information related to the Company’s operating leases for the three months ended October 31, 2025 and 2024 was as follows:


	Three months ended October 31,
	2025		2024
Operating cash outflows from operating leases	$	5,028	$	4,619
Operating lease assets obtained in exchange for new operating lease liabilities (1)	5,975		7,630

(1) Includes new leases, acquired leases and remeasurements or modifications of existing leases.

NOTE F — Accumulated Other Comprehensive Loss

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 or loss on post-retirement plans, net of their related tax effects.

The following table illustrates the changes in the balances of each component of accumulated other comprehensive loss, net of tax, for the three months ended October 31, 2025:


	Unrealized (loss) gain on cash flow hedges		Unamortized gain (loss) on post-retirement plans		Foreign currency translation adjustments		Accumulated other comprehensive loss
Beginning balance, July 31, 2025	$	(394)	$	5	$	(91,770)	$	(92,159)
Other comprehensive income before reclassification	618		—		4,743		5,361
Amounts reclassified from accumulated other comprehensive loss	222		(151)		—		71
Ending balance, October 31, 2025	$	446	$	(146)	$	(87,027)	$	(86,727)

The decrease in accumulated other comprehensive loss as of October 31, 2025 compared to July 31, 2025 was primarily due to depreciation of the U.S. dollar against certain other currencies during the three-month period.

The changes in accumulated other comprehensive loss by component, net of tax, for the three months ended October 31, 2024 were as follows:


	Unrealized loss on cash flow hedges		Unamortized gain on post-retirement plans		Foreign currency translation adjustments		Accumulated other comprehensive loss
Beginning balance, July 31, 2024	$	(149)	$	462	$	(109,935)	$	(109,622)
Other comprehensive loss before reclassification	(1,402)		—		(79)		(1,481)
Amounts reclassified from accumulated other comprehensive loss	(348)		(151)		—		(499)
Ending balance, October 31, 2024	$	(1,899)	$	311	$	(110,014)	$	(111,602)

The increase in the accumulated other comprehensive loss as of October 31, 2024 compared to July 31, 2024 was primarily due to unrealized losses on cash flow hedges during the three-month period.

Of the amounts reclassified from accumulated other comprehensive loss during the three months ended October 31, 2025 and 2024, unrealized gains or losses on cash flow hedges were reclassified to “Cost of goods sold” and unamortized gains or losses on post-retirement plans were reclassified into “Investment and other income” on the condensed consolidated statements of income.

The following table illustrates the income tax (expense) benefit on the components of other comprehensive loss for the three months ended October 31, 2025 and 2024:


	Three months ended October 31,
	2025		2024
Income tax (expense) benefit related to items of other comprehensive loss:
Cash flow hedges	$	(77)	$	52

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NOTE G — Revenue Recognition

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 and direct part marking solutions, high-performance materials 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 condensed consolidated statements of income.

Disaggregation of Revenue

The following is a summary of net sales by segment and geographic region for the three months ended October 31, 2025:


	Three months ended October 31,
	2025		2024
Net sales:
Americas & Asia
Americas	$	234,049	$	214,033
Asia	34,844		31,395
Total	$	268,893	$	245,428
Europe & Australia
Europe	121,248		116,153
Australia	15,146		15,484
Total	$	136,394	$	131,637

Total Company	$	405,287	$	377,065

Contract Balances

The Company offers extended warranty coverage that is included in the sales price of certain products, which it accounts for as service warranties. The Company accounts for the deferred revenue associated with extended service warranties as a contract liability. The balance of contract liabilities associated with service warranty performance obligations was $3,271 and $3,060 as of October 31, 2025 and July 31, 2025, respectively. The current portion and non-current portion of contract liabilities are included in “Other current liabilities” and “Other liabilities,” respectively, on the condensed consolidated balance sheets. The Company recognized revenue of $374 and $337 during the three months ended October 31, 2025 and 2024, respectively, that was included in the contract liability balance at the beginning of the respective period from the amortization of extended service warranties. Of the contract liability balance outstanding at October 31, 2025, the Company expects to recognize 32% by the end of fiscal 2026, an additional 31% by the end of fiscal 2027, and the remaining balance thereafter.

The Company records deferred revenue for payments received in advance for certain software and services. These amounts are classified as contract liabilities and recognized as revenue over the service period. The balance of contract liabilities related to software and services was $10,178 and $9,246 as of October 31, 2025 and July 31, 2025, respectively. During the three months ended October 31, 2025 and 2024, the Company recognized $2,764 and $2,066 in revenue, respectively, which was previously included in the beginning balance of deferred revenue as of July 31, 2025 and July 31, 2024.

NOTE H — Segment Information

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.

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The following is a summary of segment information as of and for the three months ended October 31, 2025 and 2024:


	Three months ended October 31,
	2025		2024
Americas & Asia
Net sales	$	268,893	$	245,428
Cost of goods sold	131,106		119,178
Gross margin	137,787		126,250
Segment expenses:
Research and development	16,715		13,216
Selling, general and administrative	61,209		58,134
Total segment expenses	77,924		71,350
Segment profit	$	59,863	$	54,900

Europe & Australia
Net sales	$	136,394	$	131,637
Cost of goods sold	65,349		68,198
Gross margin	71,045		63,439
Segment expenses:
Research and development	6,577		5,705
Selling, general and administrative	45,736		44,620
Total segment expenses	52,313		50,325
Segment profit	$	18,732	$	13,114
Total profit from reportable segments	$	78,595	$	68,014

Reconciliation to income before income taxes
Total profit from reportable segments	$	78,595	$	68,014
Unallocated costs:
Administrative costs	(10,623)		(9,092)

Investment and other income	1,712		1,234
Interest expense	(1,208)		(1,356)
Income before income taxes	$	68,476	$	58,800

Other Segment Information
Depreciation & amortization:
Americas & Asia	$	7,280	$	6,612
Europe & Australia	3,728		3,552
Total Company	$	11,008	$	10,164
Expenditures for property, plant & equipment:
Americas & Asia	$	8,217	$	4,005
Europe & Australia	2,763		3,281
Total Company	$	10,980	$	7,286

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NOTE I – Stock-Based Compensation

Incentive Stock 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.

Total stock-based compensation expense recognized during the three months ended October 31, 2025 and 2024 was $6,746 and $5,813, respectively. The total income tax benefit recognized in the condensed consolidated statements of income was $1,411 and $632 during the three months ended October 31, 2025 and 2024, respectively.

Stock Options

The stock options issued under the plan have an exercise price equal to the market price of the Company’s stock at the date of the grant and generally vest ratably over three years, 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 issue stock options in its annual grant of share-based awards to employees in the current fiscal year.

The following is a summary of stock option activity for the three months ended October 31, 2025:


Time-Based Options	Options Outstanding	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding at July 31, 2025	1,052,314	$	45.17
Granted	—	—
Exercised	(122,610)	41.22
Forfeited	(712)	54.80
Outstanding at October 31, 2025	928,992	$	45.68	4.6	$	28,192
Exercisable at October 31, 2025	915,638	$	45.56	4.6	$	27,895

The following table summarizes additional stock option information:


	Three months ended October 31,
	2025		2024

Intrinsic value of options exercised during the period (in thousands)	$	4,676	$	4,622
Fair value of options vested during the period (in thousands)	492		1,249
Cash received from the exercise of stock options during the period (in thousands)	5,001		5,855
Tax benefit on options exercised during the period (in thousands)	1,067		1,112

As of October 31, 2025, total unrecognized compensation cost related to stock options was $152 pre-tax, net of estimated forfeitures, which the Company expects to recognize over a weighted-average period of 0.9 years.

RSUs

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 an additional one-third in each of the succeeding two years.

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The following is a summary of RSU activity for the three months ended October 31, 2025:


	Number of Shares	Weighted Average Grant Date Fair Value
Non-vested RSUs as of July 31, 2025	162,667	$	65.19
Granted	97,750	78.19
Vested	(67,719)	61.32
Forfeited	(1,587)	68.21
Non-vested RSUs as of October 31, 2025	191,111	$	73.19

The RSUs granted during the three months ended October 31, 2024 had a weighted-average grant date fair value of $74.63. The total fair value of RSUs vested during the three months ended October 31, 2025 and 2024 was $5,305 and $4,201, respectively.

As of October 31, 2025, total unrecognized compensation cost related to RSUs was $7,524 pre-tax, net of estimated forfeitures, which the Company expects to recognize over a weighted-average period of 2.3 years.

PRSUs

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. PRSUs granted during the three months ended October 31, 2025, 2024 and 2023 will vest based on achievement of performance conditions relating to Company revenue and diluted EPS targets.

The PRSUs granted during the three months ended October 31, 2025 had a fair value determined by the average of the high and low stock price on the date of the grant.

The following is a summary of PRSU activity for the three months ended October 31, 2025:


	Number of Shares	Weighted Average Grant Date Fair Value
Non-vested PRSUs as of July 31, 2025	152,266	$	59.92
Granted	73,123	70.14
Vested	(25,074)	60.79
Forfeited	(11,105)	48.62
Non-vested PRSUs as of October 31, 2025	189,210	$	64.19

The PRSUs granted during the three months ended October 31, 2024 had a weighted-average grant date fair value of $71.24. The total fair value of PRSUs vested during the three months ended October 31, 2025 and 2024 was $1,934 and $595, respectively.

As of October 31, 2025, total unrecognized compensation cost related to PRSUs was $8,855 pre-tax, net of estimated forfeitures, which the Company expects to recognize over a weighted-average period of 2.1 years.

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NOTE J — Net Income per Common Share

Reconciliations of the numerator and denominator of the basic and diluted per share computations for the Company’s Class A and Class B common stock are summarized as follows:


	Three months ended October 31,
	2025		2024
Numerator (in thousands):
Net income (Numerator for basic and diluted income per Class A Nonvoting Common Share)	$	53,936	$	46,783
Less:
Preferential dividends	(728)		(736)
Preferential dividends on dilutive stock options	(8)		(8)
Numerator for basic and diluted income per Class B Voting Common Share	$	53,200	$	46,039
Denominator (in thousands):
Denominator for basic income per share for both Class A and Class B	47,273		47,732
Plus: Effect of dilutive equity awards	458		485
Denominator for diluted income per share for both Class A and Class B	47,731		48,217
Net income per Class A Nonvoting Common Share:
Basic	$	1.14	$	0.98
Diluted	$	1.13	$	0.97
Net income per Class B Voting Common Share:
Basic	$	1.13	$	0.96
Diluted	$	1.11	$	0.95

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 the Company’s Class A Nonvoting Common Stock because the effect would have been anti-dilutive. The amount of anti-dilutive shares were 18,468 and 17,278 for the three months ended October 31, 2025 and 2024, respectively.

NOTE K — Fair Value Measurements

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:

Level 1 — Unadjusted quoted prices in active markets for identical instruments that are accessible as of the reporting date.

Level 2 — Other significant pricing inputs that are either directly or indirectly observable.

Level 3 — Significant unobservable pricing inputs, which result in the use of management’s own assumptions.

The following table summarizes the Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis at October 31, 2025 and July 31, 2025:


	October 31, 2025		July 31, 2025		Fair Value Hierarchy
Assets:
Deferred compensation plan assets	$	19,332	$	19,998	Level 1
Foreign exchange contracts	534		—		Level 2
Liabilities:
Foreign exchange contracts	97		198		Level 2

The following methods and assumptions were used to estimate the fair value of each class of financial instrument:

Deferred compensation plan assets: The Company’s deferred compensation investments consist of investments in mutual funds, which are included in “Other assets” on the condensed 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.

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Foreign exchange contracts: 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 Note L, “Derivatives and Hedging Activities,” for additional information.

The fair values of cash and cash equivalents, accounts receivable, accounts payable, and other liabilities approximated carrying values due to their short-term nature.

NOTE L — Derivatives and Hedging Activities

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 on 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 currency 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 transactions will involve the use of foreign currency derivatives to minimize the impact of currency movements on non-functional currency transactions.

The U.S. dollar equivalent notional amounts of outstanding forward exchange contracts were as follows:


	October 31, 2025		July 31, 2025
Designated as cash flow hedges	$	40,212	$	53,542
Non-designated hedges	4,469		4,380
Total foreign exchange contracts	$	44,681	$	57,922

Cash Flow Hedges

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 condensed consolidated balance sheets. For these instruments, the effective portion of 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. As of October 31, 2025 and July 31, 2025, unrealized gains of $423 and unrealized losses of $493 have been included in OCI, respectively.

Net Investment Hedges

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 condensed consolidated statements of comprehensive income. As of October 31, 2025 and July 31, 2025, the cumulative balance recognized in accumulated other comprehensive income were losses of $3,023 and $2,753, respectively, on any outstanding foreign currency denominated debt obligations.

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The following table summarizes the amount of pre-tax gains and losses related to derivatives designated as hedging instruments:


	Three months ended October 31,
	2025		2024
Gains (losses) recognized in OCI:
Forward exchange contracts (cash flow hedges)	$	621	$	(1,338)
Foreign currency denominated debt (net investment hedges)	(270)		(190)
(Losses) gains reclassified from OCI into cost of goods sold:
Forward exchange contracts (cash flow hedges)	(296)		464

Fair values of derivative instruments in the condensed consolidated balance sheets were as follows:


	October 31, 2025						July 31, 2025
	Prepaid expenses and other current assets		Other current liabilities		Long-term Obligations		Prepaid expenses and other current assets		Other current liabilities		Long-term Obligations
Derivatives designated as hedging instruments:
Foreign exchange contracts (cash flow hedges)	$	532	$	97	$	—	$	—	$	197	$	—
Foreign currency denominated debt (net investment hedges)	—		—		34,807		—		—		34,536
Derivatives not designated as hedging instruments:
Foreign exchange contracts (non-designated hedges)	2		—		—		—		1		—
Total derivative instruments	$	534	$	97	$	34,807	$	—	$	198	$	34,536

NOTE M – Income Taxes

The income tax rate for the three months ended October 31, 2025 and 2024 was 21.2% and 20.4%, respectively.

NOTE N — Contingencies

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.

NOTE O — Acquisitions

On August 4, 2025, the Company acquired all of the membership interest of Mecco for $19,166, net of cash acquired. The purchase price includes a cash payment of $17,416 and a holdback liability of $1,750. Based in Pittsburgh, Pennsylvania, Mecco specializes in industrial product marking and identification systems designed for a variety of applications and industries. The acquisition of Mecco complements the Company’s existing offering of direct part marking solutions and advances the Company’s strategy to provide customers with a variety of end-to-end direct part marking and specialty identification products. The acquisition was funded through cash on hand. The Company recorded its preliminary purchase price allocation during the first quarter of fiscal year 2026 based on its estimates of the fair value of the acquired assets and assumed liabilities at that time. The preliminary purchase price allocation included goodwill of $3,412, intangible assets of $14,040, and net tangible assets of $1,714. The goodwill for this acquisition is assigned to the Americas & Asia segment and is deductible for tax purposes. The final purchase price allocation is subject to post-closing adjustments and the finalization of certain intangible asset valuations and deferred tax adjustments. The accompanying condensed consolidated financial statements include the results of Mecco from the date of acquisition through October 31, 2025. Pro forma and other financial information are not presented for the Mecco acquisition because its impact on the Company’s results of operation and financial position is immaterial.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Brady Corporation is a global manufacturer and supplier of identification and direct part marking solutions, high-performance materials 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. This regional operating structure allows the Company to further integrate its businesses, support continued growth through the application of the best go-to-market strategies in key geographies, facilitate new product development within recent acquisitions and further simplify and scale the global business.

Within each of the reportable segments, the Company markets, sells and distributes a broad range of identification and safety products and solutions across the following primary product categories:

•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 in process labeling, finished product identification, asset tracking labels, asset tags and industrial track and trace applications.

•Wire identification, which includes handheld printers, wire markers, sleeves, and tags.

•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.

•People identification, which includes name tags, badges, lanyards, rigid card printing systems, and access control software.

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 an