BRADY CORP

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.

NOTE C —Additional Balance Sheet Information

Inventories

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

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:

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 thethree 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.

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

(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:

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:

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:

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:

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 withintwo regions: Americas & Asia and Europe & Australia, which are the reportable segments. The Company’s Chief Executive Officer (“CEO”), who is also the Company’s Chief Operating Decision Maker (“CODM”), uses segment profit in measuring segment performance, allocating resources, evaluating performance in periodic reviews, and during the development of the annual budget and the regular forecasting process. The CODM considers budget-to-actual variances on a quarterly basis, as well as segment-specific forecasting, when making decisions about the allocation of operating and capital resources to each segment. The CODM also uses the segment’s net sales in measuring segment performance.

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

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 expireten 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:

The following table summarizes additional stock option information:

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.

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

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 athree-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:

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.

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:

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:

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 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:

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.

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

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

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.