BRC - Earnings call transcript Q1 2019

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Operator

Good day, ladies and gentlemen, and welcome to the Q1 2019 Brady Corporation Earnings Conference Call. [Operator Instructions] As a reminder, today’s conference is being recorded. I would now like to introduce your host for today's conference, Ms. Ann Thornton, Chief Accounting Officer. Ms. begin. may you Thornton,

Ann Thornton

www.bradycorp.com/investors. morning quarter to slides earnings are website morning's Good fiscal for Brady XXXX call at our on first conference located and you. the welcome Corporation this Thank call. The

and with It’s note a of We will begin release such uncertainties, to about and significantly is this this a the prepared without important Also, anticipate remarks please as comments SEC results. examples XX-Q, this forward-looking XXXX expect, expected we make news words information. believe, in were few that rebroadcast forecast the risk are and forward consent Form X. Risk fiscal may this and is Corporation that Brady’s morning. factors on which call, forward-looking -looking Brady could that copyrighted by during morning first to Slide subject our may note statement. factors our filed Please identifying Words will, of noted teleconference be note was in not Brady. quarter impact may, just information which various

will We call recording on broadcasting be the Internet. it this and

call I'd Q&A like such, being participation to constitute to and recorded. Executive Brady's to As your Nauman. your turn consent will session President the in the Chief over Michael now Officer,

Michael Nauman

our compared thank year. of year-on-year report increase of Thank of to an fiscal quarter first first all to pretax you, morning, released for I'm earnings Good the quarter results morning pleased for the you quarter our with XXXX Ann. consecutive and joining financial XX.X% of last growth us. We and XXth this improved

ability Staying priorities on with deliver have These quarter urgency with consecutive strong and our three been sense to behind a remain Xth our improved our success capabilities SG&A identifying consistent our structure. been X.X% organic extremely and innovative straight of marks serving our of efficiencies and drivers also years sales profits. the unchanged. quarter our our customers have a to of executing set products than improving growth critical of focused priorities to developing increase. high-quality We're well, manufacturing more This

entire improving and Our results also while for employees. can toward demonstrate is financial our customers working problem when common excellent we for results solve that opportunities our to shareholders these goals, provide Brady our team the

This our products creation X%, our and research investment of we our quarter, increased in new We customers' development across accelerate problems and that portfolio. and with growth. more our ideas to products continuing our new to we're commitment solve build innovative several organic by product will entire new the innovative launched than continued demonstrate pipeline

The the Australian sales was of with of solid Workplace I’m reported confident this an sales which consecutive action set than taking growth. more future we’re for Sales business increase led appropriate XX%. X.X%. growth posted by business consistent making investments in Our Safety the quarter identification in major solutions pipeline. growth that quarter do health adding to care to business product our build all healthcare continuing sales back our to sales three by organic and new area. our regions have growth, force which a X.X%, grew in all sales product work modest growth saw in including with lines to bring still product organic and lines right growth another up with of organic consistent to sales the improvement to business We third which growth includes organic

to increases business in including seeing it North a still cost line we off certain but personnel our have areas improve, and making throughout products identify of in business. customers our product in focusing continue Workplace customers, efficiencies employees. We're particularly good we cost to We're we're strong new We're in investments We're freight than investing accelerating in organization execute our we're and and to to our to delivering to growth a make continue promised cash within by XXXX, industries. increase in important our and our We're start opportunity growth in processes. delivering ever automation entire on healthcare what Safety shareholders We long-term growing America. and today. that variety efficiencies Overall, new adding development, new we our WPS the strong results bottom-line product throughout and factory generating automation sales, flow. while more all and our

year. have Aaron? I'll us over I’ll return Aaron our our commentary momentum Identification results and specific moving financial the positive call to throughout this nice keep we expect in to to Workplace to now quarter. the which provide We discuss a direction about Solutions Then, turn of businesses. first fiscal Safety

Aaron Pearce

Michael. you, of of million $XXX.X the pipeline currency X. of a financial organic everyone. which quarter, year. and research in to Sales build increased to another of And sales last in starts development sale the good future. as The our in and increased X% our decrease which for X.X% of X% Runelandhs was growth Slide in X.X%, review foreign the of morning a translation Thank X.X% first we decrease Sweden consisted continue We from and the strong on quarter a in invest finalized fourth products investment by new business from

relentless and organic net SG&A of our efficiency Our on gains XX.X%. of result with profit sales throughout the increased pre-tax continued growth improvement our continued our trend sustainable combined driving increased our this profitability focus earnings quarter improved factories structure. was earnings as This and XX.X%,

quarter which rate down last Our tax year's this quarter, was tax was XX.X%. from rate of XX.X% first

last be result timing and lower we're due compensation equity-based compared good share earnings cash a working last This start. first this year's flow this benefits in were increased of payments, as quarter. our Our into was diluted EPS as of to the activities incentive increased the We're the million quarter. growing compensation Cash We're annual as in result continues well quarter, first as as area, in We're operating this a sales. investing sales to $X.XX decrease XX.X% executing efficiency to compared per Yes, to in from off up of materials from flow $XX.X cash selective capital to able Michael the focus a of result raw was was cost and $X.XX quarter last the a to people in been offset actions. quarter. as million quarter. we're cost in that increases from pricing generation but seeing mentioned, company. $XX.X a year's Diluted and such reform activity tax U.S. benefits we've these areas innovation, tax law rate efficiency and signed to of like gains quarter December, was the cost, throughout in gains with increases

increased again X experienced growth we sales with segments, X.X% of X, once sales in sales X.X%. And trends. margin Slide gross both IDS to with leading Moving our you'll profit growth way our find illustrates Slide trending. robust quarterly organic rate. a Organic our the

quarter margin first margin quarter of finished XX.X%. last first gross at year's line with gross Our XX% profit profit was which effectively in

directly source certain ultimately products country, we are seeing increasing direct offset subject just products efficiency pressures do these that mentioned, continue most we've are the and I actions. be they're manufactured to we increases As Even able certainly these have cost though tariffs. with - to been able region sold, materials materials to to cost are China and of from we do in increased certain a to where expect our

the from where seeing portfolio that because in significant increases, pass just X first are is to sale Slide and foreign entire been currency our impact our $XX.X This However, Runelandhs portfolio, structure. SG&A in these our and compared financial expense ongoing increases cost decrease of to trending. and results million quarter year. product from we've product last of business so quarter this tariffs. translation, categories neutralizing our niche SG&A of product relation to thus, was combination due Brady's along cost Brady to $XXX.X SG&A in our we SG&A was far opportunities in of execute able reduced throughout diverse a most increases not to tariff the any efficiency efforts identify million to are these the of

expense trending and million once year year this Slide this percent in increased in development in last this to XX.X% $XX.X our details the quarter. of investment research of decreased QX sales, $XX.X SG&A a million again quarter from last As which of the first XX.X% from quarter quarter. to X of

Slide Turning X. to

first to illustrates in sales year. the total million our quarter of and operational from sustainable at in increased quarter. year same focus $X.XX last were $XX.X $XX.X organic the the of summarizes million Overall, our employees. cash quarterly of the operating to last by net to XX.X% our Free these earnings pre-tax quarter to earnings as combined from turn improvements. a XX million earnings activities compared quarter X of cash We $XX.X in quarter. by all generated we the the year's flow outlines Michael increase the quarterly flow both in $XX.X generation. quarter $X.XX million million a consecutive marks first was on our of The second diluted into increased of in share generation X% sales improvement. year between earnings Last to of of increased change are annual XX.X% million cash decrease primarily trending $XX.X year XXth second made and the and due whereas payments mentioned payments the finish made of earnings quarterly this in earnings. to our find were compensation to split You'll incentive payments timing first $XX.X Net was per compared pre-tax Slide Slide net to this We and of of driving growth able trending pre-tax earnings EPS which and XX.X% benefits this cash XX.X% quarters. quarter this last

to quarter. to our our in business sales increased to and a investment as used of volume. also result funds also in a and our repurchased modest in dividends We form generation shareholders we organic invest return the We amount shares of the in capital working of the increased cash our direct

the this the provides snapshot net along XX, debt our end cash position our chart Slide Moving a at trending the and to of structure quarter. of of outlines

May line million modest a borrowings for net amount in October cash and of XX. Our our net million cash of in denominated the finished a quarter, and of of We our credit. denominated million consists in by of euro placement private at increased XXXX debt scheduled $XXX.X $X position €XX repayment position on

approach capital to unchanged. is allocation Our

and patient. disciplined are We

resources, IT cash returning our efficiency increase in we and the organic development, use cycle, in second, improvements, capital capability capital focus which sales expenditures factories. product opportunities generating on we First, to funding expenditures our includes investments form cash and enhancing, automation use returns fund then our through And in And and new throughout disciplined for cash strong opportunistic have of cash manner to our opportunities. funding we acquisitions synergistic we the in our investments share organic believe shareholder patiently dividends. repurchases. improve where we deploy a shareholders After to dividends, we to

XX. October of We X.X have as million authorized our is approximately cash shares generation Overall, repurchase for strong.

balance from increasing XXXX through capital. full-year focused Our $X.XX is value we're $X.XX our driving strong, per new our guidance. on long-term Slide and a our $X.XX allocation our EPS XX We're guidance of for sheet to of disciplined fiscal shareholders of to share. range range $X.XX to our is

growth from to range organic of to X% end - X%. rates our core from October guidance previous based expect sales foreign of of of XX. on as also guidance as X% end quarter range is is our the which range exchange We of This the our up X%, on currency to

U.S. the increased R&D due offset range. guidance we result was in of this an stronger foreign range headwinds the growth, sales for mid dollar. partially XX% tax and year in expenditures to be of increase of rate than and guidance strengthening our the our income continued increased approximately in full X% by currency expect of which remainder slightly increased to Included is year, a is the XXXX anticipated fiscal Our forecast

$XX construction We the and related are of included expenditures $XX of facilities expenditures approximately million amortization approximately guidance expect is our million in $XX that certain CapEx capital of currently depreciation leased. of approximately million, and to

higher improved making this capabilities. a and we're manufacturing CapEx incremental than to we're in costs, the historical running investments Excluding facility our due still for construction automation increased bit average

time items Lastly are not we one this and guidance. excluding restructuring any from anticipating not we charges are any

back to some comments provide over Q&A. to divisional to Michael? call turning and before the our over results turn to I'll Now cover Michael the closing call

Michael Nauman

results, of financial $XXX.X Thank Aaron. by quarter X% finishing growth with sales at Slide the first sales increased you, XX summarizes Solutions X.X%. Identification million organic IDS

sales by in quarter, in in mid-single growth digits decreased translation low-single X.X% organic Organic grew and IDS Identification our sales in Identification Europe sales strongest this in in Product currency the Wire Americas digits and the product lines. was Asia. Foreign

end We’re especially growing seeing in industrial and and most markets sector. the growth we're

products. We still we're with the to making sales new right improvements around. pipeline grow product our growth in the confident Our way to show work we're decisions ahead to line our and also us business have turning of starting healthcare rebuild modest identification is quarter. on our I'm organic to this force of and

first in the have Asia. India Within $XX.X the which IDS was mid organic our growth the increase We perform growth slowed. flat businesses of quarter saw was in general the our markets the European businesses last was to growth Outside in strong in businesses continue sales rate Europe led Our and of million Emerging appears XX% Western and in well quarter region for tended an Southeast year. in quarter. nicely based single-digit of and with China, in single-digit posted low grow the of quarter. as business growth China, division to rest the our Segment the growth Asia. to to relatively profit economic compared first

a XX.X% year. profit this sales, segment improved of compared last As to XX.X% percentage to quarter

business the improved our financial making significant performance. consistently with to segment in R&D. team's pleased profit increase a investment continues IDS in while to ability grow I'm lead Our our

We this announce consistently team that continue manufacturing delivers our executes to we and their month. automate processes the our quarter-after-quarter. in throughout opportunities excited and new to functions launched I'm and SG&A in two streamline business to IDS our printers and strategy last have

our mobile is and EM print builds first successful solution. label which upon based anywhere entirely XXX application of printers first mobile The from represents printer mobile line our

applications to that better from color which for wristbands within second This demand can small on can a The of wide print JXXXX with an inkjet unprecedented user a signage a and the systems works the range event provide both Brady cloud to services form is driven by and safety for used be is printer variety and Apple plant management. hospitals Android of experience. be the operating factor,

on tape launched thicker and setting to market. wear high a marking more we or the traffic occurs of and in tear sliding called is than maintaining manufacturing in floor tape a ToughStripe the quarter tape This any It's also other designed line durable marketing our This floor new adhesive providing customers. Max. marking introduction customers. organic where we areas development withstand to dragging this growth The durable pride our that products innovative continues, capabilities to focus our on. all build our floor solutions capabilities of continuing complete highly pipeline We're product a offering of the driving of ourselves and to of on new to committed of remain for while

slightly X% XXXX in organic Our growth range X% sales a expectations full fiscal X%. previous X% year for of to IDS the of in for from which to is guidance up

to We sites R&D. offset provide investment SG&A in will R&D, that in benefits while efficiency more continue activities will in invest our than through and our our will manufacturing

increase quarter achieved review. Slide sales safety the XX, to our consecutive report with Moving I'm pleased workplace business WPS you'll to that its third of find organic X.X%. an growth of

of growth XX% We're with expanding several grow last the was led sales customers markets more strong of into in quarter. financial leadership quarter first in growth compared highly our and X.X% quarters business to have Foreign a that while and the region. currency sales results new Organic organic been Runelandhs we target additional Australia decreased year. this has by capable in now, winning team profitably. for place has able of delivered Australian in by the X.X% our than by business decreased to Sweden sales sales

team in was Digital WPS organic Our our organic growth, exception. continue by extremely deliver in improvement. European to Europe grew executing strategy sales deliver this business to Europe sales nearly and sales no and steady quarter growth, continues profitability strong and well years. Organic efficiency results. their opportunities We're digits in mid-single has seen North continues last the this the sales which declined efforts put American business really delivering XX%, that we've the and the in This quarter. into for several trend

remain been strategies and calls, business priorities. and differentiated focused execution. the as lines, improving WPS As right are Overall, has our of strategies our previous the We that our confident on we mentioned this our anticipated the will channels choppy work market, recovery in to Americas strategies. WPS three improve product on our be and to are

as mobile, customer whether person way catalog, buying through to growing This gaining our a or these and like the that this our reaching share customer would experience First, for be is as channels. of in to we're combination possible the so improving reached they our market online, it's simple essential it's business.

standpoint, dealing solutions. complete we're Second, to to provide to offering identification expertise our customer with safety compliance than and increasing our and simply selling better allows interactions customers our serve more a orders. are needs those This value to what better understand and us from by

WPS division, year's million struggled orders improving to of and providing the in business, Third, while organic of our million, American priority by The for as compliance customize North profit one need is has to in Runelandhs We're to sales our quarter. customers of a North show to and profit compared quick consistent to improvement. in safety last American customized segment the segment North the $X.X was combination our extensive first was that to Returning introducing in decline business. and in products our currency is products and expertise. return decrease our more proprietary ability of sale the foreign a $X.X due American consistent WPS portfolio volume business our strengths translation business our our customers. growth top

committed effective We're they please Meanwhile sales I Operator, instructions which start our the motivated to The quarter. WPS you constantly We've Europe to company sales, not is decisions to delivering reversing on solid businesses. investment improve our healthcare And I improving than every are make single our WPS think, operational are in not development empowered our healthcare in well Q&A. so improvement of throughout accountable presence, in are provide make. decision and strong and automation and strategy in improvement Our line this mix decide the our in quick, North capable a and are deliver local every growing we're that automation and The the capabilities to Australia growing complexity autonomy for the feet day. expectations on important that and trend WPS managers their and need X% in for throughout team acceptable. XXXX, fiscal also been in promise. product and what improving growth. have process place obstacles And this to ever. IDS can our in for driving competition do. results continue move in to we I'm of now making continues deliver in X%. We business healthcare to results forward. reversing labor resources and we in our we would America. believer we a routing North team working strong making the I in But in quarter business year between to is invest everything and a this the and execute we’re the removing manufacturing our internal in real. proper and our years the showed to we're those product act and regions the excellence and to in continued of is would like to resulting online barriers Overall, our must and is a division WPS selling America. profits more good remain investing to digital while strong and digital does organic and people business and off we're R&D we listeners. business giving decline teams our grow right know by One and more unchanged, we're challenging, I'm decisions believe several sales sales in have make is in support to growth to start do, that work new

Operator

George Staphos Bank question of with America. Our Instructions] [Operator first from comes

John Babcock

on George. Babcock for line the John actually is This

margin Just want drove the regards quarter? there IDS, expansion to during ask, to what with the

Michael Nauman

missed question. I Pardon, the

John Babcock

that's Hopefully Yes. clear.

basis point what Just for in the a margin want to IDS? drove get XXX expansion sense

Michael Nauman

actually we're development innovation I actually but Sorry, importantly a of couple more is One factors. clearly is hear looking couldn't at you. John line working. mix product our

As differentiated we're seeing we proprietary above of our resulting. that margin growth in develop sales more GDP expansion space with some along products new

for future. well So it bodes very our

John Babcock

there Okay, little And but the talked call, about are products going more that's you foresee get generally just China you sourcing little great. detail a forward. during want question, from and on you impact the that next a then to bit also bit the this the

Michael Nauman

companies. that we in the news really that talked we couple do for out we That is a with Yes, geographically the also XX XX method awful offset in twofold. have particular of us overcome of of significant their majority lot manufacturing. said, from any of very China. do that manufactured manner autonomy of amount a a have we creating have lines product an their we ability derive That tariffs lot of derive that a locations increases. as And diversified about we goods have production good vast offering a countries about a tariffs and can product China. competitors to product the and are for gives price that are their positioned obstacles The our in One, other

solid seeing impact, various businesses we an able we are and deliver overcome So that to well but continue in are that we to believe yes our overall, impact results.

John Babcock

last question. the about just you I currently? then M&A the was could talk wondering landscape And if

Michael Nauman

on other unique in. it as And to you technology made make a allow providing others we from That had to know, approach to area over been we I we As means we words, to In have who are M&A It sure characterize active plus that that historically to us ago I a and solutions manufacturing our we specific we came in growth we company reconnect had wanted four mean both really that that philosophy to can't to excel board quite If is we first markets. approximately we organization to provide look we to be. want our that to haven't long-term. that We make old innovation then disconnect the marry an and to technology driven win, up niche year is win effective their would can a won't a approach. We possible that have that and really culturally an when companies win fit on to we us that and driven years is want have solid the doesn't would the with or focuses decision change acquisition markets acquire. technology a said, which for want see to it's organizations in resources fit markets. foremost technologies we have a first company look outside at our employees sure determine cost in to in not and old and manner. whether for we make We're that want what sure a the all XXX plus adjacent companies internal will to would and what would we world win. timely the fit their need with that

make we've has acquisitions. in management team are that, look synergies at got it's after of either opportunities of they size or available significant we take acquisition and the strong price sure a a the to completed. And have that those addition available In that been then key tuck what to is and complete points a

make a time price longer premium actuate now to But that right to timing would I actually private at span we're opportunities. that so, require points at making say sure we market sense are answer given question market your key the Often also moment. are looking over and specifically companies actively a expectations of on. these And

as the to acquisition they available. we cash don't allow significant extensively. hole become said our But execute a So, have properly a do burn our to powder we've as pocket we in

Operator

question next Poliniak Allison comes Our Wells Fargo. from with

Allison Poliniak

So that, incrementals of really investment? in think now. [indiscernible] year IDS, more forward going to that margins. with talk, the increased this investing rightfully did should incremental how that nice going about for back you impact we With business And to so,

Michael Nauman

several us things. believe investing products we're going to allow new increased to One, us we is that is grow. in Well, help do going investment the to and that

seen expanded But I new products. products as segment has is in above you've building GDP and primarily couple Now think market differentiated the because new growth of growth years of from instantaneous. last been the our isn't our over we've that our that that

we to usually at future But the in at that expect and are pay-off also time But technology, I continue happens We the of investment the our this growth year's look occur. same as to as automation in to our investing we've we we new said, in on are years. in forward that. capabilities production capabilities without in and manufacturing XX literally have years segments money defining more the two combined years we the last last some the move than in invested continuing

growth longer So going say, you're to going new see and to our efficiencies would I better from you're even this see from term products.

that we year, to you based to products launching. isn't have that However this will, products been but that's say you aren't on going see growth new from

Allison Poliniak

FX? buckets WPS on impactful? divestiture? then that help guess the you driving a Was more I Was the you quantify Can couple was little that that it a margin, bit? Which And down. one investment? noted it it different were us Was

Aaron Pearce

at WPS know that was it there Basically margin you the was Allison you be drivers. It three were look When main down. absolutely down, it Number one mix down would was real. I answer bit. which can question. is the a geographic

some nice U.S. is source a that most the directly workplace they in from our a the safety. but really an versus prior there products They've job business. bit creates been a impact profitable with margin because business for European they felt which euro year compression the do of Our doing bit business definitely declining

of segment and In that addition business call have million to had that we above it about had $X profit WPS the This Runelandhs margins last did business business. year EBITDA.

over the business Americas of first of You that line. declined But saw the the safety the that it decline a a sales, workplace business biggest being I actually say three pretty would the and is so the also the bit was bottom X% a impact meaningful did impact. line quarter on little bit on on top

FX. by by it order I had would an if they Americas followed impact. followed three, the then But would So, be Runelandhs the all definitely and

Allison Poliniak

been volume still do a do on general then we working has your what from to you to while in just are solid WPS there? in been fairly last And that is need obviously, guess showing some declines have it an Americas in the and challenged I arguably in - we like environment. on seems for It perspective business?

Michael Nauman

Allison. correct, are You

we that confident that at to platforms are resolve. a starting did many If with business getting able issues that you our and the we actually did physically our believe with But to mode. we had we numbers space some area. address us had in our we of difficulties with our are impact supplier will working issue without a into in third core overcoming again, back come some the details, grow an quarter of But and have they look that to performance growth you too digital we're technology into that because supplier have bring us out we'll to start significant be some in and see were

Operator

Brady Robinson question Our Charlie comes next with SunTrust from Humphrey.

Charlie Brady

that of for you the IDS, to go are my having I segments. both in issue, second want R&D this margins? WPS R&D than that spend it we And comment But on your has go productivity increase Does up. had the really that just more on is ramp it on try the on the to year, really guess I you seasonality? back offset supplier margins guess tied the to I you are impact what particularly up often assume on as through I through a any margins you this are year-over-year on that have impact on that be we was question Can mean, the little And is granular more steady guess putting - which margin you segment? and framework I that? to is can year, as X%. - if get I a implies expecting

Michael Nauman

Let’s said, the start quarter Charlie said, next R&D a seeing in with little to year. to in be we IDS investment do year. the growing throughout you'll you uptick be larger entire as our probably the as expect That compared

that. as our you're There term positive we overcome and a other be that as to that result efforts quarter. WPS that So overall margin next initiatives, didn't structure. if we at slightly anticipate increase in If have we right. X% of in other But growth do our you pressure at cost a higher little the though the year might you see outcome look is a expect longer That does exactly look situation. that will said at

Charlie Brady

Is be supplier there resolved? timeline you to a when the as timeline there expect that to a issue supply - when you is expect

Michael Nauman

We we be this to we're prior that that Certainly, of quarter believe this. of the in. end able be out should to

Charlie Brady

the quarter, that pressure So, go then be should gone? fiscal as second we into margin

Michael Nauman

and not now reporting quarter we're quarter that The the on. in we're that

Charlie Brady

we as I and Sorry, into guess, XQ XQ, get XQ.

Michael Nauman

know. XQ, not an you should Right. Yes, as XQ orderly, gone, but by XQ diminishing. instantaneous switch rapidly the not It's pressure be margin yes,

Charlie Brady

you Yes. where assuming more where to sense IDS have into economy us some - XX%s? I or long-term little in but And in low know longer so? products out get just far-looking, presumably proprietary margins. bit which can see basis, don't mid margins obviously From get term, as period three-year guess mean, putting back I you I you new to - do a getting you better IDS a the there, are downtick see to we over, say margins give a it's

Michael Nauman

those that we we as numbers just publicly Charlie, you way. know new and you expect though continue drive forecast at to What know that don't that don't innovative and products it in spaces. you can positions Well real we is look to R&D product the have really is lines starting pay in to off are and as those is proprietary see investment more defensible the newer and you and fresher more

that thing much moved pricing system and our and deployment. in harder pleased really in to other added are The we're is quite value pushing a that we've our am with I that approach doing

that sales us our managers to We our and and are teams positive as sell should be manner a and rewards in from product a customers the and well. to really value to them challenging our that ourselves

Charlie Brady

Can a you sales us Just one tell the sales digital in of as WPS more. quarter? percent

Michael Nauman

in been Well, exact last it it's The number. range. we've XX% we don't disclose time disclosed that

Aaron Pearce

assume. consistent. And you That is can

Operator

with Our & question next Co. from comes Mondillo Joe Sidoti

Joe Mondillo

affected there forward? that affect specific differently things. translation to just Or any it than to mostly going wanted And bottom understand line currency Just how the translation? much currency is may other is things

Aaron Pearce

the impact top way the line all Currency to did don't breakout line. the bottom our down Well X%. impact

down quarter the expense As you reduction of as a Runelandhs this know and example to foreign bottom currency through half flew and the in of was chunk an the of SG&A our that big line summation almost business.

lines So P&L. it the in other the impacts clearly

impacts that X% of strictly fair you or get also We on most amount or other we although impacts U.S. mitigating region ship So the is from of sell, do we thus, purchase the but currency margins. translation, that country, our a there still manufacture of foreign what within out because

margins some currency strengthening will. in, on of be you to us if does a would in Europe for euro that are compress currencies more, and our your I’ll to biggest question for sure. say The So the declines susceptible other we dollar U.S. particularly

the standpoint. as not from clearly that's thing Brady for big euro declines picture good So a a

Joe Mondillo

dollar, mostly terms that? translation in outside of is there maybe towards And nothing the Australian of

Aaron Pearce

well. No. transaction dollar, Australian some In issues absolutely the of as the case we have

because course in manufactured So USD is Australia, Australia, is denominated. compressed margins not everything we some of in sell that is

definitely impact biggest So definitely have But, we the there to is as is euro. the organization well. that impact an the there

Joe Mondillo

the the And business, wondering that then you out in break between I X% that Runelandhs if just decline then quarter. also declines? and was SG&A FX, you organic the could decline saw

Aaron Pearce

control, that way the out half those the about to bit and Yes, were course. about of be foreign well was I guess them of combined our two it Runelandhs decline that of of think and both the reason simply we because out called currency of would is summation

we think the gains primarily which And remaining have valuation a to then that efficiency decline So items, SG&A. of item to those about the the way throughout was it half organizations. was that our related assets, compensation were did a of half small positive deferred SG&A two also

at of but gains was half was deferred you a there from look if the efficiency So other benefit little also half the and compensation. Runelandhs impact mostly FX

Joe Mondillo

me. And then last from question

was last spoke it through - pretty halfway time quarter. was the much So we

lot be revenue there. guys, I guidance than least too, seemed to better IDS a at so you And anticipated you increased and the since guess I

sort mentioned in weeks quarter? performance you you the that saw are several But - business that six of wondering you really else what is guidance going a surprise. into that well. your that of quarter about anything you of Healthcare be last the talk the maybe doing could drove pieces built And saw Just just the in may different forward?

Michael Nauman

Obviously we are projecting we anything last call. projected the what other at publicly than

didn't growth quarter. we that mode there communications that the of October. And particularly was other of external at an expansion we So, in an of saw or change any way half the But improved in is during our end October. the

last quarter. see So any model you to even step are first in quarter an changes the the up half growth. of internally that the correct our did definitely third seeing we weren't of In in improved we the

Joe Mondillo

And could the you saw just you of strength? of where expand most sort

Michael Nauman

broad across last the regions, saw the product It was lines we and last of the in an pretty the weeks two based. month. will across I actually you tell acceleration

Joe Mondillo

improvement your of weren't for And year? the then much rest improvement that of of sort the the you to XXXX. the in follow-up be more call, healthcare expecting terms last Most year. the on on just provide recovery a color little sort It like sort of by question, this thoughts seemed you driven should or throughout Could of fiscal just of business.

the that Is take the of time some was you to growth sort are sustainable? that that your quarter, the initiatives there? improvement. modest, maybe it thoughts just see place, but of you sort provide given will you that it is updated Just in could in Or putting saw

Aaron Pearce

I in of I correct. to second out are not some of the the you growth fiscal Joe that improvement Well I We would we did recall, year. call in and that see the of half called our starting as half improvement in out fiscal year forecast expect believe the first

of expect So the we more reiterate in improvement half year. the second see would fiscal I to

with teams pleased sales than our our position faster with us drive we’d though move we proper these the more in right than areas are at a of right We price helped That management initially our putting teams you can't you Overall leadership had the everything. and situations in said ability anticipated. pace forward of to as anticipated. timing guarantee team's the the out initiatives has come people the key it rapidly in a

Operator

Keith with Housum Research. And Northcoast final question our comes from

Brendan Popson

This is Brendan on for Keith.

just if end the saying? I from some, I ask light the was heard have you of there slack demand they to you industrial just business. pretty - heard, talked tunnel Is because know that? any but strong, just side but more just want choppy if just the is is is for are for what about obviously color with the tariffs. on production business? any kind there I outlook of And WPS So at with some wondering it on I you've you customers. of guess what that the

Michael Nauman

that Well, as actually strong. Europe you Australia in is know, and quite business

an example, at being And as so I wouldn't mining we in an very aren’t a strong characterize very, seeing as We a very the seeing if good though improvement they'd you and the historically, globally enough been look are business segment of definitely Australia take segment weak. yet. Interesting expansion. that

seen problems with unique to place number of properly we've our from GDP-plus Australian and and for that Europe, ability a overall quarters products actually solve place So there. economy. is growth in their penetrate the And ability on consistent coming to sets team's customer really their growth our we

have with in in as said left to place. we've North more you're America had create some So first than and to disconnects they difficult significantly been the that we've overcome historically were

the is, that seeing So we're news in addressing. slowdown the positive we’re a not key any geographies

be a not instant reactor has the we clear However, long a six-month company an to have a don’t We're economy. we’re pipeline, that backlog.

clear you. to to just So be that about I want

Brendan Popson

really the the North was Obviously, geographies referring color. clarify. great. strong, appreciate. I you. appreciate other I Yes, Thank I to are but Yes, America. definitely should I

Operator

closing to thank over call for participating Ladies I you now and any Nauman like remarks. in Mr. to back turn today's gentlemen, the question-and-answer for session. would Michael

Michael Nauman

I and you all We X.X%, future development earnings you. start drive past organic in good I'd healthcare pre-tax sales leave off we're of to of growth like morning. concluding seeing and our and business, while businesses drive with the our pre-tax believe safety we're SG&A few increasing we We're We're XXXX. increasing product the to a to for fiscal our of delivered has to XXth capital improve and and to in moves a growth in efficiencies, organic growth. right manufacturing sales Thank sales organic to our three automation now in R&D our consecutive new is investment workplace growth identify XX.X% shown which expenditures opportunities our quarter structure. this improvement quarters. earnings as continue comments making underperforming business improvement

deliver more and quarter but ourselves our years do better organization shareholders first to an we're as pushing and we come. employees strong to to to Our was for customers, can our our to

all you participating if Thank the disconnect a please call. us. day. Operator, and you for contact have questions As great always, please today have

Operator

participating in and today's conference. This program. thank the Ladies you gentlemen, for does conclude

all You may disconnect have a and day. wonderful

Brady (BRC) 15 Nov 182019 Q1 Earnings call transcript