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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 January 31, 2026


☐			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 February 17, 2026, there were 43,689,411 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.

Table of Contents

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			8
Notes to Condensed Consolidated Financial Statements			9
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			17
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

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

BRADY CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in Thousands)


	January 31, 2026		July 31, 2025
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	176,492	$	174,349
Accounts receivable, net of allowance for credit losses of $7,446 and $7,876, respectively	242,905		231,944
Inventories	225,821		200,881
Prepaid expenses and other current assets	17,105		14,661
Total current assets	662,323		621,835
Property, plant and equipment—net	244,048		225,572
Goodwill	696,996		676,945
Other intangible assets	109,702		105,374
Deferred income taxes	19,396		20,862
Operating lease assets	65,703		58,422
Other assets	27,032		25,243
Total	$	1,825,200	$	1,734,253
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	100,002	$	105,028
Accrued compensation and benefits	72,842		92,657
Taxes, other than income taxes	20,517		21,537
Accrued income taxes	5,631		5,547
Current operating lease liabilities	17,451		15,234
Other current liabilities	94,386		90,329
Total current liabilities	310,829		330,332
Long-term debt	78,706		99,766
Long-term operating lease liabilities	48,741		43,565
Other liabilities	73,904		68,379
Total liabilities	512,180		542,042
Stockholders’ equity:
Class A nonvoting common stock—Issued 51,261,487 shares, and outstanding 43,679,050 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	361,567		359,269
Retained earnings	1,396,642		1,317,739
Treasury stock—7,582,437 and 7,731,475 shares, respectively, of Class A nonvoting common stock, at cost	(389,988)		(393,186)
Accumulated other comprehensive loss	(55,749)		(92,159)
Total stockholders’ equity	1,313,020		1,192,211
Total	$	1,825,200	$	1,734,253

See Notes to Condensed Consolidated Financial Statements.

Table of Contents

BRADY CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

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


	Three months ended January 31,				Six months ended January 31,
	2026		2025		2026		2025
Net sales	$	384,137	$	356,675	$	789,424	$	733,740
Cost of goods sold	189,743		180,832		386,198		368,208
Gross margin	194,394		175,843		403,226		365,532
Operating expenses:
Research and development	24,309		18,723		47,601		37,644
Selling, general and administrative	107,895		105,886		225,463		217,732
Total operating expenses	132,204		124,609		273,064		255,376
Operating income	62,190		51,234		130,162		110,156
Other income (expense):
Investment and other income	805		2,125		2,517		3,359
Interest expense	(990)		(1,312)		(2,198)		(2,668)
Income before income taxes	62,005		52,047		130,481		110,847
Income tax expense	13,954		11,713		28,494		23,730
Net income	$	48,051	$	40,334	$	101,987	$	87,117
Net income per Class A Nonvoting Common Share:
Basic	$	1.02	$	0.84	$	2.16	$	1.82
Diluted	$	1.01	$	0.83	$	2.14	$	1.81
Net income per Class B Voting Common Share:
Basic	$	1.02	$	0.84	$	2.14	$	1.81
Diluted	$	1.01	$	0.83	$	2.12	$	1.79
Weighted average common shares outstanding:
Basic	47,310		47,851		47,291		47,792
Diluted	47,738		48,306		47,734		48,261

See Notes to Condensed Consolidated Financial Statements.

Table of Contents

BRADY CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Dollars in Thousands, Unaudited)


	Three months ended January 31,				Six months ended January 31,
	2026		2025		2026		2025
Net income	$	48,051	$	40,334	$	101,987	$	87,117
Other comprehensive income (loss):
Foreign currency translation adjustments	30,317		(21,180)		35,060		(21,259)

Cash flow hedges:
Net gain (loss) recognized in other comprehensive income (loss)	702		935		1,323		(403)
Reclassification adjustment for losses (gains) included in net income	11		463		307		(1)
	713		1,398		1,630		(404)

Pension and other post-retirement benefits actuarial gain amortization	(151)		(151)		(302)		(302)

Other comprehensive income (loss), before tax	30,879		(19,933)		36,388		(21,965)
Income tax benefit (expense) related to items of other comprehensive income (loss)	99		(292)		22		(240)
Other comprehensive income (loss), net of tax	30,978		(20,225)		36,410		(22,205)
Comprehensive income	$	79,029	$	20,109	$	138,397	$	64,912

See Notes to Condensed Consolidated Financial Statements.

Table of Contents

BRADY CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Dollars in Thousands, Unaudited)


	Three months ended January 31, 2026
	Common Stock		Additional Paid-In Capital		Retained Earnings		Treasury Stock		Accumulated Other Comprehensive Loss		Total Stockholders’ Equity
Balances at October 31, 2025	$	548	$	359,690	$	1,360,156	$	(388,847)	$	(86,727)	$	1,244,820
Net income	—		—		48,051		—		—		48,051
Other comprehensive income, net of tax	—		—		—		—		30,978		30,978
Issuance of shares of Class A Common Stock under stock plan	—		(636)		—		3,769		—		3,133
Stock-based compensation expense	—		2,513		—		—		—		2,513
Repurchase of shares of Class A Common Stock, including excise taxes	—		—		—		(4,910)		—		(4,910)
Cash dividends on Common Stock:
Class A — $0.2450 per share	—		—		(10,698)		—		—		(10,698)
Class B — $0.2450 per share	—		—		(867)		—		—		(867)
Balances at January 31, 2026	$	548	$	361,567	$	1,396,642	$	(389,988)	$	(55,749)	$	1,313,020


	Six months ended January 31, 2026
	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	—		—		101,987		—		—		101,987
Other comprehensive income, net of tax	—		—		—		—		36,410		36,410
Issuance of shares of Class A Common Stock under stock plan	—		(7,227)		—		12,162		—		4,935
Tax benefit and withholdings from deferred compensation distributions	—		266		—		—		—		266
Stock-based compensation expense	—		9,259		—		—		—		9,259
Repurchase of shares of Class A Common Stock, including excise taxes	—		—		—		(8,964)		—		(8,964)
Cash dividends on Common Stock:
Class A — $0.4900 per share	—		—		(21,409)		—		—		(21,409)
Class B — $0.4734 per share	—		—		(1,675)		—		—		(1,675)
Balances at January 31, 2026	$	548	$	361,567	$	1,396,642	$	(389,988)	$	(55,749)	$	1,313,020


	Three months ended January 31, 2025
	Common Stock		Additional Paid-In Capital		Retained Earnings		Treasury Stock		Accumulated Other Comprehensive Loss		Total Stockholders’ Equity
Balances at October 31, 2024	$	548	$	354,592	$	1,209,406	$	(344,012)	$	(111,602)	$	1,108,932
Net income	—		—		40,334		—		—		40,334
Other comprehensive loss, net of tax	—		—		—		—		(20,225)		(20,225)
Issuance of shares of Class A Common Stock under stock plan	—		(241)		—		953		—		712
Stock-based compensation expense	—		2,180		—		—		—		2,180

Cash dividends on Common Stock:
Class A — $0.2400 per share	—		—		(10,616)		—		—		(10,616)
Class B — $0.2400 per share	—		—		(849)		—		—		(849)
Balances at January 31, 2025	$	548	$	356,531	$	1,238,275	$	(343,059)	$	(131,827)	$	1,120,468

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	Six months ended January 31, 2025
	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	—		—		87,117		—		—		87,117
Other comprehensive loss, net of tax	—		—		—		—		(22,205)		(22,205)
Issuance of shares of Class A Common Stock under stock plan	—		(5,306)		—		8,888		—		3,582
Tax benefit and withholdings from deferred compensation distributions	—		190		—		—		—		190
Stock-based compensation expense	—		7,993		—		—		—		7,993

Cash dividends on Common Stock:
Class A — $0.4800 per share	—		—		(21,228)		—		—		(21,228)
Class B — $0.4634 per share	—		—		(1,639)		—		—		(1,639)
Balances at January 31, 2025	$	548	$	356,531	$	1,238,275	$	(343,059)	$	(131,827)	$	1,120,468

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)


	Six months ended January 31,
	2026		2025
Operating activities:
Net income	$	101,987	$	87,117
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	22,205		20,096
Stock-based compensation expense	9,259		7,993

Deferred income taxes	7,571		(3,076)
Other	410		231
Changes in operating assets and liabilities:
Accounts receivable	(1,924)		6,605
Inventories	(16,747)		(8,384)
Prepaid expenses and other assets	(1,280)		(2,571)
Accounts payable and accrued liabilities	(34,710)		(41,650)
Income taxes	(101)		(3,361)
Net cash provided by operating activities	86,670		63,000

Investing activities:
Purchases of property, plant and equipment	(21,947)		(14,423)
Acquisition of businesses, net of cash acquired	(17,416)		(137,348)

Other	(1,958)		53
Net cash used in investing activities	(41,321)		(151,718)

Financing activities:
Payment of dividends	(23,084)		(22,867)
Proceeds from exercise of stock options	8,255		5,712
Payments for employee taxes withheld from stock-based awards	(3,318)		(2,130)
Purchase of treasury stock	(8,964)		—
Proceeds from borrowing on credit agreement	72,500		159,373
Repayment of borrowing on credit agreement	(93,560)		(162,621)
Other	266		190
Net cash used in financing activities	(47,905)		(22,343)

Effect of exchange rate changes on cash and cash equivalents	4,699		(605)

Net increase (decrease) in cash and cash equivalents	2,143		(111,666)
Cash and cash equivalents, beginning of period	174,349		250,118

Cash and cash equivalents, end of period	$	176,492	$	138,452

See Notes to Condensed Consolidated Financial Statements.

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BRADY CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Six Months Ended January 31, 2026

(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 January 31, 2026 and July 31, 2025, its results of operations, comprehensive income and changes in stockholders’ equity for the three and six months ended January 31, 2026 and 2025, and cash flows for the six months ended January 31, 2026 and 2025. 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 and six months ended January 31, 2026 and 2025, 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 January 31, 2026 and July 31, 2025:


	January 31, 2026		July 31, 2025
Finished products	$	119,662	$	109,726
Work-in-process	38,166		32,787
Raw materials and supplies	67,993		58,368
Total inventories	$	225,821	$	200,881

Property, plant and equipment

Property, plant and equipment is presented net of accumulated depreciation of $325,321 and $313,778 as of January 31, 2026 and July 31, 2025, respectively.

NOTE D — Other Intangible Assets

Other intangible assets as of January 31, 2026 and July 31, 2025 consisted of the following:


	January 31, 2026							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	$	918	$	(697)	$	221	2	$	912	$	(456)	$	456
Customer relationships	8	138,780		(47,491)		91,289		8	125,497		(38,427)		87,070
Technology	5	18,866		(8,439)		10,427		5	20,471		(10,275)		10,196
Unamortized other intangible assets:
Tradenames	N/A	7,765		—		7,765		N/A	7,652		—		7,652
Total		$	166,329	$	(56,627)	$	109,702		$	154,532	$	(49,158)	$	105,374

The change in the gross carrying amount of other intangible assets as of January 31, 2026 compared to July 31, 2025 was primarily due to the acquisition of MECCO Partners LLC (“Mecco”) completed during the six months ended January 31, 2026, partially offset by the removal of a fully amortized technology asset. Refer to Note N, “Acquisitions,” for additional information on intangible assets acquired.

Amortization expense on intangible assets was $5,172 and $4,671 for the three months ended January 31, 2026 and 2025, respectively, and $10,513 and $9,384 for the six months ended January 31, 2026 and 2025, 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 January 31, 2026, the Company did not have any finance leases.

Operating lease expense was $5,274 and $4,539 for the three months ended January 31, 2026 and 2025, respectively, and $10,496 and $9,274 for the six months ended January 31, 2026 and 2025, 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 and six months ended January 31, 2026 and 2025.

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Supplemental cash flow information related to the Company’s operating leases for the six months ended January 31, 2026 and 2025 was as follows:


	Six months ended January 31,
	2026		2025
Operating cash outflows from operating leases	$	10,271	$	9,157
Operating lease assets obtained in exchange for new operating lease liabilities (1)	13,303		12,749

(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 and 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 six months ended January 31, 2026:


	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	1,422		—		35,060		36,482
Amounts reclassified from accumulated other comprehensive loss	230		(302)		—		(72)
Ending balance, January 31, 2026	$	1,258	$	(297)	$	(56,710)	$	(55,749)

The decrease in accumulated other comprehensive loss as of January 31, 2026 compared to July 31, 2025 was primarily due to the depreciation of the U.S. dollar against certain other currencies during the six-month period.

The changes in accumulated other comprehensive loss by component, net of tax, for the six months ended January 31, 2025 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	(643)		—		(21,259)		(21,902)
Amounts reclassified from accumulated other comprehensive loss	(1)		(302)		—		(303)
Ending balance, January 31, 2025	$	(793)	$	160	$	(131,194)	$	(131,827)

The increase in accumulated other comprehensive loss as of January 31, 2025 compared to July 31, 2024 was primarily due to the appreciation of the U.S. dollar against certain other currencies during the six-month period.

Of the amounts reclassified from accumulated other comprehensive loss during the six months ended January 31, 2026 and 2025, 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 benefit (expense) on the components of other comprehensive loss for the three and six months ended January 31, 2026 and 2025:


	Three months ended January 31,				Six months ended January 31,
	2026		2025		2026		2025
Income tax benefit (expense) related to items of other comprehensive loss:
Cash flow hedges	$	99	$	(292)	$	22	$	(240)

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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 and six months ended January 31, 2026 and 2025:


	Three months ended January 31,				Six months ended January 31,
	2026		2025		2026		2025
Net sales:
Americas & Asia
Americas	$	215,137	$	202,547	$	449,186	$	416,580
Asia	36,467		31,299		71,311		62,694
Total	$	251,604	$	233,846	$	520,497	$	479,274
Europe & Australia
Europe	$	119,920	$	110,477	$	241,168	$	226,630
Australia	12,613		12,352		27,759		27,836
Total	$	132,533	$	122,829	$	268,927	$	254,466

Total Company	$	384,137	$	356,675	$	789,424	$	733,740

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 $3,292 and $3,060 as of January 31, 2026 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 $381 and $341 during the three months ended January 31, 2026 and 2025, respectively, and $755 and $678 during the six months ended January 31, 2026 and 2025, 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 January 31, 2026, the Company expects to recognize 22% by the end of fiscal 2026, an additional 35% 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 $10,582 and $9,246 as of January 31, 2026 and July 31, 2025, respectively. The Company recognized revenue of $2,262 and $1,664 during the three months ended January 31, 2026 and 2025, respectively, and $5,026 and $3,730 during the six months ended January 31, 2026 and 2025, 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 and six months ended January 31, 2026 and 2025:


	Three months ended January 31,				Six months ended January 31,
	2026		2025		2026		2025
Americas & Asia
Net sales	$	251,604	$	233,846	$	520,497	$	479,274
Cost of goods sold	124,591		119,073		255,697		238,251
Gross margin	127,013		114,773		264,800		241,023
Segment expenses:
Research and development	17,499		12,911		34,214		26,127
Selling, general and administrative	55,763		55,876		116,972		114,010
Total segment expenses	73,262		68,787		151,186		140,137
Segment profit	$	53,751	$	45,986	$	113,614	$	100,886

Europe & Australia
Net sales	$	132,533	$	122,829	$	268,927	$	254,466
Cost of goods sold	65,152		61,759		130,501		129,957
Gross margin	67,381		61,070		138,426		124,509
Segment expenses:
Research and development	6,810		5,812		13,387		11,517
Selling, general and administrative	45,149		43,880		90,885		88,500
Total segment expenses	51,959		49,692		104,272		100,017
Segment profit	$	15,422	$	11,378	$	34,154	$	24,492
Total profit from reportable segments	$	69,173	$	57,364	$	147,768	$	125,378

Reconciliation to income before income taxes
Total profit from reportable segments	$	69,173	$	57,364	$	147,768	$	125,378
Unallocated costs:
Administrative costs	(6,983)		(6,130)		(17,606)		(15,222)

Investment and other income	805		2,125		2,517		3,359
Interest expense	(990)		(1,312)		(2,198)		(2,668)
Income before income taxes	$	62,005	$	52,047	$	130,481	$	110,847

Other Segment Information
Depreciation & amortization:
Americas & Asia	$	7,378	$	6,485	$	14,658	$	13,097
Europe & Australia	3,819		3,447		7,547		6,999
Total Company	$	11,197	$	9,932	$	22,205	$	20,096
Expenditures for property, plant & equipment:
Americas & Asia	$	9,135	$	5,448	$	17,352	$	9,453
Europe & Australia	1,832		1,689		4,595		4,970
Total Company	$	10,967	$	7,137	$	21,947	$	14,423

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NOTE I — 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 January 31,				Six months ended January 31,
	2026		2025		2026		2025
Numerator (in thousands):
Net income (Numerator for basic and diluted income per Class A Nonvoting Common Share)	$	48,051	$	40,334	$	101,987	$	87,117
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	$	48,051	$	40,334	$	101,251	$	86,373
Denominator (in thousands):
Denominator for basic income per share for both Class A and Class B	47,310		47,851		47,291		47,792
Plus: Effect of dilutive equity awards	428		455		443		469
Denominator for diluted income per share for both Class A and Class B	47,738		48,306		47,734		48,261
Net income per Class A Nonvoting Common Share:
Basic	$	1.02	$	0.84	$	2.16	$	1.82
Diluted	$	1.01	$	0.83	$	2.14	$	1.81
Net income per Class B Voting Common Share:
Basic	$	1.02	$	0.84	$	2.14	$	1.81
Diluted	$	1.01	$	0.83	$	2.12	$	1.79

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. There were no anti-dilutive shares for the three months ended January 31, 2026 and 2025. The amount of anti-dilutive shares were 9,234 and 8,639 for the six months ended January 31, 2026 and 2025, respectively.

NOTE J — 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 as of January 31, 2026 and July 31, 2025:


	January 31, 2026		July 31, 2025		Fair Value Hierarchy
Assets:
Deferred compensation plan assets	$	20,378	$	19,998	Level 1
Foreign exchange contracts	1,377		—		Level 2
Liabilities:
Foreign exchange contracts	433		198		Level 2

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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.

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 K, “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 K — 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:


	January 31, 2026		July 31, 2025
Designated as cash flow hedges	$	26,843	$	53,542
Non-designated hedges	4,823		4,380
Total foreign exchange contracts	$	31,666	$	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 January 31, 2026 and July 31, 2025, unrealized gains of $1,138 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 January 31, 2026 and July 31, 2025, the cumulative balances recognized in accumulated other comprehensive income were losses of $4,394 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 January 31,				Six months ended January 31,
	2026		2025		2026		2025
Gains (losses) recognized in OCI:
Forward exchange contracts (cash flow hedges)	$	702	$	935	$	1,323	$	(403)
Foreign currency denominated debt (net investment hedges)	(1,371)		1,460		(1,641)		1,270
(Losses) gains reclassified from OCI into cost of goods sold
Forward exchange contracts (cash flow hedges)	(11)		(463)		(307)		1

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


	January 31, 2026						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)	$	1,368	$	433	$	—	$	—	$	197	$	—
Foreign currency denominated debt (net investment hedges)	—		—		36,177		—		—		34,536
Derivatives not designated as hedging instruments:
Foreign exchange contracts (non-designated hedges)	9		—		—		—		1		—
Total derivative instruments	$	1,377	$	433	$	36,177	$	—	$	198	$	34,536

NOTE L — Income Taxes

The income tax rate for both the three months ended January 31, 2026 and 2025 was 22.5%. The income tax rate for the six months ended January 31, 2026 and 2025, was 21.8% and 21.4%, respectively.

NOTE M — 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 N — 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 based on its estimates of the fair value of the acquired assets and assumed liabilities as of the acquisition date. 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 January 31, 2026. Pro forma and other financial information are not presented for the Mecco acquisition because its impact on the Company’s results of operations 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, 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 and service, have made Brady a leader in many of its markets. Brady’s long-term sales growth and profitability will depend not only on the overall economic environment and our ability to successfully navigate changes in the macro environment, but also on our ability to develop and market innovative products, deliver a high level of customer service, advance our digital capabilities, and continuously improve the efficiency of our global operations. Our strategy for growth includes an increased focus on certain industries and products, streamlining our product offerings, expanding into higher growth end-markets, intensifying efforts to leverage our diverse product portfolio and synergies across our business, improving the overall customer experience, developing technologically advanced, innovative, and proprietary products, and improving our digital capabilities.

The following are key initiatives supporting our strategy in fiscal 2026:

•Investing in organic growth by enhancing our research and development process and utilizing customer feedback and observations to develop innovative new products that solve customer needs and improve environmental sustainability.

•Delivering a high-quality customer experience by aligning with customers’ preferred communications channels and leveraging technology to strengthen engagement.

•Expanding and enhancing sales capabilities through an improved digital presence and the use of data-driven marketing automation tools.

•Maintaining profitability through pricing mechanisms to mitigate the impacts of ongoing supply chain disruptions and inflationary pressures while ensuring prices remain competitive.

•Integrating recent acquisitions and evaluating future acquisition opportunities to enhance our strategic position and accelerate long-term sales growth.

•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.

•Continuing to build a high-performance culture, which rewards execution, fosters inclusion, and strengthens employee engagement, recruitment, and retention.

Macroeconomic Conditions and Trends

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.

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The global trade environment remains complex and is rapidly evolving, driven by the imposition of tariffs on goods entering the U.S. and countermeasures from other nations. Our business has incurred, and expects to continue to incur, additional costs as it relates to these incremental tariffs and countermeasures 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 opportunistic share repurchases.

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 our Annual Report on Form 10-K for the year ended July 31, 2025, for further discussion of the possible impact of global economic or geopolitical events on our business.

Results of Operations

The comparability of the operating results for the three and six months ended January 31, 2026 compared to the same periods in the prior year have been impacted by the acquisitions of Microfluidic Solutions business unit of Funai Electric Co., Ltd. (“Microfluidic Solutions”) on April 1, 2025 and MECCO Partners LLC (“Mecco”) on August 4, 2025. The comparability of the operating results for the six months ended January 31, 2026 compared to the same period in the prior year has also been impacted by the acquisition of American Barcode and RFID Incorporated (“AB&R”) on October 1, 2024. All three entities have been included in the Americas & Asia reportable segment since their respective acquisition dates.

A comparison of results of operating income for the three and six months ended January 31, 2026 and 2025, is as follows:


	Three months ended January 31,								Six months ended January 31,
(Dollars in thousands)	2026		% Sales		2025		% Sales		2026		% Sales		2025		% Sales
Net sales	$	384,137			$	356,675			$	789,424			$	733,740
Gross margin	194,394		50.6	%	175,843		49.3	%	403,226		51.1	%	365,532		49.8	%
Operating expenses:
Research and development	24,309		6.3	%	18,723		5.2	%	47,601		6.0	%	37,644		5.1	%
Selling, general and administrative	107,895		28.1	%	105,886		29.7	%	225,463		28.6	%	217,732		29.7	%
Total operating expenses	132,204		34.4	%	124,609		34.9	%	273,064		34.6	%	255,376		34.8	%
Operating income	$	62,190	16.2	%	$	51,234	14.4	%	$	130,162	16.5	%	$	110,156	15.0	%

References in this Quarterly Report on Form 10-Q to “organic sales” refer to sales calculated in accordance with GAAP, excluding the impact of foreign currency translation, sales recorded from acquired companies prior to the first anniversary date of their acquisition, and sales recorded from divested companies up to the first anniversary of their divestiture. 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.

Net sales for the three months ended January 31, 2026 increased 7.7% to $384.1 million compared to $356.7 million in the same period in the prior year. The increase consisted of organic sales growth of 1.6%, sales growth from acquisitions of 2.3%, and a 3.8% increase from foreign currency translation. Organic sales grew 3.1% in the Americas & Asia segment, while organic sales declined 1.1% in the Europe & Australia segment during the three months ended January 31, 2026 compared to the same period in the prior year.

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Net sales for the six months ended January 31, 2026 increased 7.6% to $789.4 million compared to $733.7 million in the same period in the prior year. The increase consisted of organic sales growth of 2.2%, sales growth from acquisitions of 2.8%, and a 2.6% increase from foreign currency translation. Organic sales grew 3.9% in the Americas & Asia segment, while organic sales declined 0.9% in the Europe & Australia segment during the six months ended January 31, 2026 compared to the same period in the prior year.

Gross margin increased 10.5% to $194.4 million in the three months ended January 31, 2026 compared to $175.8 million in the same period in the prior year. As a percentage of net sales, gross margin increased to 50.6% from 49.3% in the three-month period. Gross margin increased 10.3% to $403.2 million in the six months ended January 31, 2026 compared to $365.5 million in the same period in the prior year. As a percentage of net sales, gross margin increased to 51.1% from 49.8% in the six-month period. The increase in gross margin as a percentage of net sales during the three-month period is primarily driven by the absence of facility closure and other reorganization costs of $1.9 million recorded in the prior-year period. The increase in gross margin as a percentage of net sales during the six months ended January 31, 2026 was primarily due to the absence of a $4.1 million non-recurring fair value adjustment related to acquisition inventory, as well as the facility closure and other reorganization costs recorded in the prior-year period. Organic sales growth in higher gross margin product lines also contributed to the increase in both the three and six-month periods, which was partially offset by incremental tariffs in the same periods.

R&D expenses increased 29.8% to $24.3 million in the three months ended January 31, 2026 compared to $18.7 million in the same period in the prior year. As a percentage of net sales, R&D expenses increased to 6.3% in the three-month period compared to 5.2% in the same period in the prior year. R&D expenses increased 26.5% to $47.6 million in the six months ended January 31, 2026 compared to $37.6 million in the same period in the prior year. As a percentage of net sales, R&D expenses increased to 6.0% from 5.1% in the six-month period. The increase in R&D spending was primarily due to the acquisitions of Microfluidic Solutions and Mecco, and, to a lesser extent, an increase in R&D headcount within the Company’s organic business. The Company remains committed to investing in innovative product development to drive long-term organic sales growth. Investments in new printing systems, pressure sensitive materials, engraving systems, microfluidic technologies, scanners and software remain 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 1.9% to $107.9 million in the three months ended January 31, 2026 compared to $105.9 million in the same period in the prior year. As a percentage of net sales, SG&A expenses decreased to 28.1% from 29.7% in the three-month period. SG&A expenses increased 3.6% to $225.5 million for the six months ended January 31, 2026 compared to $217.7 million in the same period in the prior year. As a percentage of net sales, SG&A expenses decreased to 28.6% from 29.7% in the six-month period. The increase in SG&A expenses during the three and six months ended January 31, 2026 was primarily due to foreign currency translation, as well as increased headcount and other costs from acquisitions, including incremental amortization expense from the acquired intangible assets. The decrease in SG&A as a percentage of net sales for both the three and six-month periods is primarily due to cost reductions from facility closures and other reorganization activities completed in the prior fiscal year, as well as the absence of $3.8 million of charges related to those activities recorded in the prior-year periods.

Operating income increased 21.4% to $62.2 million and increased 18.2% to $130.2 million in the three and six months ended January 31, 2026, respectively, compared to $51.2 million and $110.2 million in the same periods in the prior year. The increase in operating income in both the three and six-month periods was driven by organic sales growth in the Americas & Asia reportable segment, gross margin improvement across both reportable segments, and SG&A cost efficiencies in the Europe & Australia segment. Additionally, operating income for the three and six months ended January 31, 2025 included facility closure and other reorganization costs of $5.7 million. Operating income for the six months ended January 31, 2025 also included non-recurring acquisition-related and other costs of $5.1 million.

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OPERATING INCOME TO NET INCOME


	Three months ended January 31,								Six months ended January 31,
(Dollars in thousands)	2026		% Sales		2025		% Sales		2026		% Sales		2025		% Sales
Operating income	$	62,190	16.2	%	$	51,234	14.4	%	$	130,162	16.5	%	$	110,156	15.0	%
Other income (expense):
Investment and other income	805		0.2	%	2,125		0.6	%	2,517		0.3	%	3,359		0.5	%
Interest expense	(990)		(0.3)	%	(1,312)		(0.4)	%	(2,198)		(0.3)	%	(2,668)		(0.4)	%
Income before income taxes	62,005		16.1	%	52,047		14.6	%	130,481		16.5	%	110,847		15.1	%
Income tax expense	13,954		3.6	%	11,713		3.3	%	28,494		3.6	%	23,730		3.2	%
Net income	$	48,051	12.5	%	$	40,334	11.3	%	$	101,987	12.9	%	$	87,117	11.9	%

The Company’s income tax rate was 22.5% for both the three months ended January 31, 2026 and 2025, and the income tax rate was 21.8% and 21.4% for the six months ended January 31, 2026 and 2025, respectively.

Business Segment Operating Results

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.

The following is a summary of segment information for the three and six months ended January 31, 2026 and 2025:


	Three months ended January 31,						Six months ended January 31,
	2026			2025			2026			2025
SALES GROWTH INFORMATION
Americas & Asia
Organic	3.1		%	4.3		%	3.9		%	4.7		%
Acquisitions	3.5		%	7.6		%	4.2		%	7.5		%
Currency	1.0		%	(1.4)		%	0.5		%	(0.8)		%
Divestiture	—		%	—		%	—		%	(0.8)		%
Total	7.6		%	10.5		%	8.6		%	10.6		%
Europe & Australia
Organic	(1.1)		%	(0.8)		%	(0.9)		%	—		%
Acquisitions	—		%	15.1		%	—		%	15.1		%
Currency	9.0		%	(3.6)		%	6.6		%	(0.1)		%

Total	7.9		%	10.7		%	5.7		%	15.0		%
Total Company
Organic	1.6		%	2.6		%	2.2		%	3.1		%
Acquisitions	2.3		%	10.2		%	2.8		%	10.0		%
Currency	3.8		%	(2.2)		%	2.6		%	(0.5)		%
Divestiture	—		%	—		%	—		%	(0.5)		%
Total	7.7		%	10.6		%	7.6		%	12.1		%
SEGMENT PROFIT
Americas & Asia	$	53,751		$	45,986		$	113,614		$	100,886
Europe & Australia	15,422			11,378			34,154			24,492
Total	$	69,173		$	57,364		$	147,768		$	125,378
SEGMENT PROFIT AS A PERCENT OF NET SALES
Americas & Asia	21.4		%	19.7		%	21.8		%	21.0		%
Europe & Australia	11.6		%	9.3		%	12.7		%	9.6		%
Total	18.0		%	16.1		%	18.7		%	17.1		%

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Americas & Asia

Americas & Asia net sales increased 7.6% to $251.6 million in the three months ended January 31, 2026 compared to $233.8 million in the same period in the prior year, which consisted of organic sales growth of 3.1%, sales growth from acquisitions of 3.5%, and a 1.0% increase from foreign currency translation. Americas & Asia net sales increased 8.6% to $520.5 million in the six months ended January 31, 2026 compared to $479.3 million in the same period in the prior year, which consisted of organic sales growth of 3.9%, sales growth from acquisitions of 4.2%, and a 0.5% increase from foreign currency translation.

Organic sales in the Americas increased in the low-single digits in both the three and six months ended January 31, 2026 compared to the same periods in the prior year. Organic sales growth in both the three and six-month periods was driven by growth in the wire identification and product identification product lines, which was partially offset by an organic sales decline in the people identification product line.

Organic sales in Asia increased approximately 14% in the three months ended January 31, 2026, and increased approximately 13% in the six months ended January 31, 2026 compared to the same periods in the prior year. The organic sales increase in both the three month and six-month periods was realized throughout Asia with continued growth from electronics manufacturing services providers, technology companies, and industrial suppliers across the region. Organic sales growth in both the three and six-month periods was primarily driven by increased organic sales in China, India and Malaysia, as well as Japan in the six-month period.

Americas & Asia segment profit increased 16.9% to $53.8 million in the three months ended January 31, 2026 compared to $46.0 million in the same period in the prior year. Segment profit increased 12.6% to $113.6 million in the six months ended January 31, 2026 compared to $100.9 million in the same period in the prior year. As a percentage of net sales, segment profit increased to 21.4% from 19.7% in the three-month period and segment profit increased to 21.8% from 21.0% in the six-month period ended January 31, 2026 compared to the same periods in the prior year. The increase in segment profit as a percentage of net sales was due to increased profit from organic sales growth in both the three and six-month periods, as well as the absence of costs from the prior year period related to the closure of two facilities during the three-month period and incremental amortization and purchase accounting adjustments during the six-month period.

Europe & Australia

Europe & Australia net sales increased 7.9% to $132.5 million in the three months ended January 31, 2026 compared to $122.8 million in the same period in the prior year. The increase was due to foreign currency translation of 9.0%, which was partially offset by an organic sales decline of 1.1%. Europe & Australia net sales increased 5.7% to $268.9 million in the six months ended January 31, 2026 compared to $254.5 million in the same period in the prior year, which consisted of an increase of 6.6% from foreign currency translation, which was partially offset by an organic sales decline of 0.9%.

Organic sales in Europe declined in the low-single digits in both the three and six months ended January 31, 2026 compared to the same periods in the prior year. For both the three and six-month periods, the organic sales decline was primarily driven by lower volume in the safety and facility identification and product identification product lines, which was partially offset by organic growth in the wire identification product line.

Organic sales in Australia declined in the low-single digits in both the three and six months ended January 31, 2026 compared to the same periods in the prior year. The organic sales decline in both the three and six-month periods was driven by an organic sales decline in the product identification and safety and facility identification product lines, which was partially offset by organic sales growth in the wire identification product line.

Europe & Australia segment profit increased 35.5% to $15.4 million in the three months ended January 31, 2026 compared to $11.4 million in the same period in the prior year. Segment profit increased 39.4% to $34.2 million in the six months ended January 31, 2026 compared to $24.5 million in the same period in the prior year. As a percentage of net sales, segment profit increased to 11.6% from 9.3% for the three-month period and segment profit increased to 12.7% from 9.6% for the six-month period ended January 31, 2026, compared to the same periods in the prior year. The increase in segment profit was primarily driven by a more efficient cost structure following reorganization activities completed in the prior fiscal year. Additionally, segment profit for the three and six months ended January 31, 2025 included reorganization costs and purchase accounting adjustments.

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Liquidity and Capital Resources

The Company’s cash balances are generated and held in numerous locations throughout the world. At January 31, 2026, approximately 98% 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, share repurchases, and dividend payments for the next 12 months. 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.

Cash Flows

Cash and cash equivalents were $176.5 million at January 31, 2026, an increase of $2.1 million from July 31, 2025. The significant changes were as follows:


	Six months ended January 31,
(Dollars in thousands)	2026		2025
Net cash flow provided by (used in):
Operating activities	$	86,670	$	63,000
Investing activities	(41,321)		(151,718)
Financing activities	(47,905)		(22,343)
Effect of exchange rate changes on cash	4,699		(605)
Net increase (decrease) in cash and cash equivalents	$	2,143	$	(111,666)

Net cash provided by operating activities was $86.7 million in the six months ended January 31, 2026, compared to $63.0 million in the same period of the prior year. The increase in cash provided by operating activities was primarily due to improved segment profit from both reportable segments.

Net cash used in investing activities was $41.3 million in the six months ended January 31, 2026, which consisted of the acquisition of a business of $17.4 million and capital expenditures of $21.9 million. Net cash used in investing activities was $151.7 million in the six months ended January 31, 2025, which consisted of the acquisition of businesses totaling $137.3 million and capital expenditures of $14.4 million.

Net cash used in financing activities was $47.9 million in the six months ended January 31, 2026, compared to $22.3 million used in the same period of the prior year. The change was primarily driven by increased net repayments on the Company's credit agreement and, to a lesser extent, increased share repurchases during the six months ended January 31, 2026 compared to the same period in the prior year.

Material Cash Requirements

Our material cash requirements for known contractual obligations include capital expenditures, repayment of 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.

Credit Agreement

On August 1, 2019, the Company and certain of its subsidiaries entered into an unsecured $200 million multi-currency credit agreement with a group of five banks.

On November 14, 2022, the Company and certain of its subsidiaries entered into a second amendment to the credit agreement 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.

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On October 10, 2024, the Company and certain of its subsidiaries entered into a third amendment to the credit agreement to, among other items, change the applicable benchmark rate for borrowings denominated in Canadian Dollars under the credit agreement.

As of January 31, 2026, the outstanding balance on the Company’s credit agreement was $78.7 million. The maximum amount outstanding on the credit agreement during the six months ended January 31, 2026 was $119.6 million. As of January 31, 2026, the U.S. dollar-denominated borrowings of $15.0 million bear interest at 4.9%; the Euro-denominated borrowings of €44.0 million bear interest at 2.8%; and the British Pound-denominated borrowings of £8.0 million bear interest at 4.6%. The Company had letters of credit outstanding under the credit agreement of $2.1 million as of January 31, 2026, and there was $219.2 million available for future borrowing, which can be increased to $1,169.2 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 were classified as long-term on the condensed consolidated balance sheets.

Covenant Compliance

The Company’s credit agreement requires it to maintain certain financial covenants, including a ratio of debt to the trailing twelve months EBITDA, as defined in the debt agreements, of not more than a 3.5 to 1.0 ratio (leverage ratio) and the trailing twelve months EBITDA to interest expense of not less than a 3.0 to 1.0 ratio (interest expense coverage). As of January 31, 2026, the Company was in compliance with these financial covenants, with a ratio of debt to EBITDA, as defined by the agreements, equal to 0.2 to 1.0 and the interest expense coverage ratio equal to 77.9 to 1.0.

Forward-Looking Statements

In this Quarterly Report on Form 10-Q, 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:

•Increased cost of raw materials, labor, material shortages and supply chain disruptions, including as a result of tariffs or other impacts of the global trade environment

•Decreased demand for the Company’s products

•Ability to compete effectively or to successfully execute the Company’s strategy

•Ability to develop technologically advanced products that meet customer demands

•Ability to identify, integrate, and grow acquired companies

•Difficulties in protecting websites, networks, and systems against security breaches and difficulties in preventing phishing attacks, social engineering or malicious break-ins

•Risks associated with the loss of key employees

•Litigation, including product liability claims

•Global climate change and environmental regulations

•Foreign currency fluctuations

•Changes in tax legislation and tax rates

•Potential write-offs of goodwill and other intangible assets

•Differing interests of voting and non-voting shareholders and changes in the regulatory and business environment around dual-class voting structures

•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 Brady’s Form 10-K for the year ended July 31, 2025.

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.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Refer to the Company’s annual report on Form 10-K for the year ended July 31, 2025 (“2025 Form 10-K”). There has been no material change in this information since the 2025 Form 10-K.

ITEM 4. CONTROLS AND PROCEDURES

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 (the “Chief Executive Officer”) and its Chief Financial Officer, Chief Accounting Officer and Treasurer (the “Chief Financial Officer”), 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 Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of the end of the period covered by this report.

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.

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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The information set forth in Note M, “Contingencies” included in this Quarterly Report on Form 10-Q is incorporated herein by reference.

ITEM 1A. RISK FACTORS

The Company’s business, results of operations, financial condition, and cash flows are subject to various risks and uncertainties, including those described in Part I, Item 1A, “Risk Factors” of Company’s Annual Report on Form 10-K for the year ended July 31, 2025. There have been no material changes from the risk factors set forth in the 2025 Form 10-K.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

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 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, which expanded upon the Company’s prior authorization for a total authorized amount of $137.8 million. The share repurchase program may be implemented from time to time on the open market or in privately negotiated transactions and has no expiration date. As of January 31, 2026, there was $78.0 million worth of shares authorized to purchase remaining pursuant to the existing share repurchase program.

The following table provides information with respect to the purchases by the Company of Class A Nonvoting Common Stock during the three months ended January 31, 2026:


Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (Dollars in Thousands)
November 1, 2025 - November 30, 2025	65,747	$	74.68	65,747	$	77,987
December 1, 2025 - December 31, 2025	—	—		—	77,987
January 1, 2026 - January 31, 2026	—	—		—	77,987
Total	65,747	$	74.68	65,747	$	77,987

ITEM 5. OTHER INFORMATION

During the three months ended January 31, 2026, 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 identified in Item 408(a) of Regulation S-K.

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ITEM 6. EXHIBITS


Exhibit No.						Exhibit Description

31.1						Rule 13a-14(a)/15d-14(a) Certification of Russell R. Shaller

31.2						Rule 13a-14(a)/15d-14(a) Certification of Ann E. Thornton

32.1						Section 1350 Certification of Russell R. Shaller

32.2						Section 1350 Certification of Ann E. Thornton

101.INS						Inline XBRL Instance Document (The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.)

101.SCH						Inline XBRL Taxonomy Extension Schema Document

101.CAL						Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF						Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB						Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE						Inline XBRL Taxonomy Extension Presentation Label Linkbase Document

104						Cover Page Interactive Data File (Formatted as Inline XBRL contained in Exhibit 101)

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SIGNATURES

Pursuant to the requirements 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.

BRADY CORPORATION

Date: February 19, 2026

/s/ RUSSELL R. SHALLER

Russell R. Shaller

President and Chief Executive Officer

(Principal Executive Officer)

Date: February 19, 2026

/s/ ANN E. THORNTON

Ann E. Thornton

Chief Financial Officer, Chief Accounting Officer and Treasurer

(Principal Financial Officer and Principal Accounting Officer)

BRADY CORP 10-Q