BRC - Earnings call transcript Q2 2021

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Operator

Ladies and gentlemen, thank you for standing by. And welcome to the Q2 2021 Brady Corporation Earnings Call. At this time, all participants' lines are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session [Operator Instructions] Please be advised, that today's conference is being recorded. [Operator Instructions]. to Thornton, conference Chief like speaker to now Ann today, Accounting would hand over the your I Officer. Thank you. Please go ahead, madam.

Ann Thornton

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

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

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

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

Michael Nauman

thank providing needed I'm of help of innovating executing times unprecedented products fight this and was we Brady that Brady us in joining This these is accomplishments for for Good challenging are through is quarter on to winter navigating all job the financial Ann. good our fiscal our the environment. entire and released customers morning of a you a team. XXXX day. strong well, The beautiful many the you, This morning, second team Thank another proud economic results. pandemic. this doing quarter and

We're so first food customers products companies, certainly in continues safety vaccine several pandemic this that to will they of the over. the The and the Even including array challenging the employees our essential that establishments, businesses and responders, employees providing small industry. to around and is all logistic keep to be operate in challenged schools, near processing companies, workers workers, positive environment news priority healthcare and remains that and markets can far customers every believe term. global macro we're front, support virtually from need their retail ensuring in proud safe. continue to with Our globe, the frontline we the continue be our on their

business, at aimed IDS our venues many small in in instance, For niche we entertainment the people identifying workplace, such events as markets other sell and into concerts. at identification

markets business coming to whereas much period certainly be for of faster. depressed general is these expect time, a We industrial our longer back

investing will been stronger our results. We've in short-term At been keeping has heavily this to has in be customers trends business organization, exit to working the drive while to executing revenues. clearly improvement same This employees growth safe, financial increase trend gross which expense our on seen our control our cash SG&A our can strong challenging to strong driven help margins are a effort leaner continue downwards. accelerate improve comp as as businesses We've extremely goal profits strong financial be structure, multi-year our which what on by to our the and in continues and our cost Our become delivering order as a to we're time, we well will fundamentals. and us a in flow even our investing in the period. now focus we long-term enabled serving and

to opportunities streamline. future, the effectiveness on leaner Our and as many And and we is we to over. additional important. is look Becoming organization more efficient to certainly efficiency continue certainly a not focus see

in more capabilities, what's actions developing to investing the we're new ensuring been products, is accelerate appropriate marketing important sales enhancing grow websites, we taking juncture our to making our upgrading history at our machinery is and into line our this improving However, growth. of priority. marketing the one investments downturn future, out capacity, profitable come the in number necessary as We've our sales this growth and top

increasing continuing We're with ID heavily as expanding and force competitors who rate distance online sales For increasing been ourselves other new to the and in investing Asia to talent. our We're we markets improving Southeast presence seeing invest by the from also in R&D. at have results business, and this growth Solutions our and we've don't positive potential, websites in instance, products our geographically are spend we're underserved our launching R&D Europe. our in future and an and globe more into expanding strong throughout upgrading also marketing digital markets including India scale Eastern

growing We've that investments confidence business, us IDS growth. business sales pandemic, to the stronger to online a we're our online grow sales and as ability common changing and our organic with today, Brady to gives market In us marketing and want and giving the market platform, And which solid globe Safety improve. dynamics. to and a dry adapt will us in increased customers sales, We've on cash adding further. rate growth the focus further and development campaigns, our new the product increase new our Safety Workplace safe. accelerate around customers presence combined in taking rock our growth quickly salespeople much and efforts strong revenue our intelligence R&D business. sheet also confident, our Throughout completed the strong keep with investments powder even a accelerate customer as quarters, and will making business line-up with strong this their very that significant of number our many our The significant future will Workplace our actions combined I'm expand result our helping Our investments sales flow, will of that migration marketing accelerate strong combined expanded our faster in a at to we're ratcheting us the products upcoming in-markets need our we're result new new we're acquisitions. employees customers increased for Solutions in today recent web new base. through reach up a proprietary product base, gives customer see balance to to which

the healthy I'll shareholders. course, to to keep Solutions work. our strong expect we turn Overall, financial I'll us growth. Today, confident now and shareholders, return detail for revenue balance Safety results our give as to XXXX, calendar as also XXXX. the Workplace over to little enter the for positioned return in our and employees, to to investing in returning to we commentary where fiscal ability keep guidance shareholder will to earnings is our to outside specific Aaron put provide well our I'm results. providing a our of funds earnings allows our And future of and enable then businesses. balance which we returns we're call deliver Our and Aaron? Identification customers, to sheet us Brady back about sheet on for to generate more our our

Aaron Pearce

decrease to And to $XXX.X Good when year. of second financial EPS start $X.XX was compared decline EPS morning, this in which million, of X% on million, $XX.X compared $X.XX. quarter a year's Sales second the finished Diluted quarter last at of quarter, last of was income X.X%. everyone. number a pretax Michael. Slide quarter the which review the X. I'll was you, were Thank second

strong solid $XX.X also quarter operating cash We last this than year. Net had operating cash XXX% which quarter. a million, more the is of by cash flow in the higher million than was generation provided very generated $XX.X again activities second of

from number X.X%. saw our down of that been you'll this primarily sales decline quarters. improve weakness We continued sales heavily foreign sales improvement was two as of consisted finished mandated X.X% Safety, X.X%, a the two by Total sales small impacted and quarters quarterly companies in X.X% of organic into of business Moving ID over of X, an an Slide find currency translation of to Workplace down shutdowns. our Solutions to an trends. sales in consecutive decline government which organic X.X%, that businesses quarter. U.S. Organic previous growth, very solid sequentially In our have which we organic sales sells one were increase after experienced

clients. We also which products virus, saw the reduction sale were we offset industrial specifically through of in fully the fighting into a core aimed our COVID-XX to increased sales unable at

gross Slide number see X, to our profit margin you'll Turning trending.

product majority SG&A in gross continual quarter, This primarily once combined sales, volumes, over our XX.X% this we've several of down the again compared combined business, challenges of margin trend. our was in X, profit compared Workplace Slide second mix SG&A efficiencies On focus basis driving our find of decline the Safety was partially by factories. in Our both point due sales number with to year. XX.X% was SG&A last to reduced XXX XX.X% of SG&A of been nicely quarter were actions on the the period XX.X% ticked to last which same the you'll offset expense a driving percent million efficiency last spend. quarter million was in down of in last quarter, with year. discretionary reduction second years, to in our $XX.X And a The this decline result year. $XX.X the as to from of our

mean not at we to trend cutting that Not investments. back continues this are does all. but SG&A on Our downwards,

non-customer it drive the in becoming are our line We and marketing absolutely resources, facing more while sense in our to same makes areas. time top investing sales at efficient where

trending to in research number investments the and find X, Moving of development. Slide our you'll

we This in quarter, million invested R&D. $X.X

and the continue increasing dollar to while out of time invest to that at We investments, have ensuring new we same the spent. products opportunities every get committed in these to most we're

was $XX.X volumes last decline and R&D, after-tax to timing a year. we headcount of in number and our second our was $XX.X our XX reduced again, down trends. compared Slide remain to gross and long-term SG&A in by year when X margins spend. income reduced of committed illustrates declined million efficiency driven income X% structure. quarter our to income the last number EPS quarter Pretax second it spend is profit offset R&D million critical slightly our lower result partially sales from our absolutely of gains trends. to this year Slide by illustrates But the as the of project This pretax success. Our as

diluted million. was this million to When Slide from second to quarter. flow a which find paid $XX.X compared XXX% operating quarter, management. and flow activities quarter, quarter was strong continues activities in income year's increase represents As cash in in equal our sizable flow extremely $X.XX EPS in $X.XX annual reduction cash net generation our a of free free generation a cash this On to you'll cash activities flow was capital Cash summary drive and year amount XX, the this this strong. quarter, of $XX.X when last last compared be operating second in generated a last from I from We to compared year, number helping mentioned, to of strong cash and increase quarter operating bonuses working same cash XXX% was flow. the XXX% of

in compensation the without compared year, nicely up and our reduction quality of a even is However, been to cash payments, to decision cash-based which still disciplined incentive-based making. our last strong testament generation earnings we've

XX, On no we million cash find net position. debt $XXX.X you'll of the outstanding. Turning number and to had our trending cash XXst, of January Slide

million the $XX.X This million, returning in of buybacks. cash shareholders and after our increased quarter our to balance form $XX.X dividends even

capital to is approach and consistent Our patient. allocation

First, fund generating further automate and development, resources, IT our sales cycle. organic expenditures product our We're the investments capital and efficiency improvements, CapEx facilities. to economic opportunities cash capability, throughout new in to fully sales we used funding enhancing

our believe consecutive deploy investments it buybacks And we We annual form and positive. keep investments the where synergistic dividend XXth of have manner dividends, either our on After or of year Fiscal we investments we where these we opportunities. that our disciplined and ROI funding acquisitions, shareholders will for focus funding cash 'XX organic strong absolutely returning to cash then marks second, increases. a are dividends. the long-term where in makes sense in

for to of which our number rest outlook on articulated the XXXX, Let's is Slide XX. move along fiscal

recovery, through into do again, move choppy quite But be actions recovery, to the taking of the Although the as vaccines expect it an being nice steady the states of out countries expect and economic economy, the do are quite economy establish various contrary. continue cities as rolled are certainly the we globe economic nor progress around months. we neither a We and globe, six anticipate prop-up earnings improve our we around immediate the next we but to guidance, to lockdown. and as recovery, out we to expect governments

we're controlling on we're what costs, drive Michael disciplined investing We're control. staying As sales and to can growth. we mentioned,

guidance and somewhere any we've our in actions today right fiscal we'll EPS the XX% confident our economy half range throws to expect investments continue Michael? that combined strong taken of the fiscal XXXX range compared Q&A generating Given to positioned cover the while our share our fiscal fiscal ending divisional make upon XX% and closing non-revenue a guidance $X.XX to take range XX, course of range improvements. in I'll the strategies, strong of continue growth well to over and the we provide turn Brady's headwinds the we view being of to growth, generation balance year, on what and with contingent to some to of we'll the X.XX sheet to second ending This enable macroeconomic implies organic now finish of economy, gains is last of improve second per advance on of to future. half share, overcome Regardless deliver and back EPS current to July before per to second continue when the Michael expenses. of diluted to expect $X.XX year to extremely search our to continue that the for year. us strong drive we'll sustainable second macro the in which results, half drive in tight July XX, acquisitions sales focus our that at cash call for year. the to us This to X.XX this to continued comments session. half efficiency the year XXXX. economic a equates will the us, necessary our with We're

Michael Nauman

steady number financial shock ID Solutions pandemic initial our nearly Slide outlines from ago. the for business second improvement XX Aaron. you, our Identification quarter continued Thank Overall, business. results Solutions months XX following

year. cost X.X% our foreign making X.X% to organic currency at quarter generate of segment quarter healthcare admissions hospital quarter, quarter of We a it's profit of in in this of pandemic Demand a sales with to sequential an various improvement organic X% somewhat on strong while from to year-on-year the economy, Regionally, increase Overall, of decline X.X%, improve Healthcare from lockdown. an quarter the appear of flow, quarter, patterns with levels. saw an countries realize the over continue Elective X% And IDS we cases were year. to significantly compared not to XXXX. sales investments X.X% over to ended for surgeries on our efficiencies led greatest the continuing sales declined this division percentage the subsides. business X.X% decline side, our were sales sales relatively followed experienced pre-pandemic numbers as down the Sales U.S. cash the second the last October just the levels. our first as of sales deal Asia product in pandemic, order quarter's as growth are compared decline strong the in of last declined pandemic to and focus quarter XX-basis Asian volumes is pandemic XX% the in finishing once IDS $XXX.X organic in earnings areas in of XX, of each year. and but the during is translation. the a on normal IDS second in improving, yet many and and Overall, approximately the to European larger organic with and to to sales continue of with back decline is point outsized increase be improvement with this which still states whereas the countries better million when this our in Europe line this compared strong growth necessary coping coronavirus still in countries Americas patterns

sacrificing on to keeping investments. and generating lean driving while efficiency our continue cost structure never sales We focus activity

Solutions in than year's million that to expansion. $XX.X sales was was marketing from structure research our are organization. keep team quarter. last investing sales are selected these investments quickly profitable testament in emerge constantly the $XX activities to adjust year this and pandemic We ID million competitors. to IDS our compared entire profit cost continuing necessary of work and quarter. second and geographic is to believe and our stronger they illustrates Segment become more increase how profit in of This and efficient segment work We percentage development to the sales from costs the improvement increased of profitability out. XX.X% personnel, a to sales as last team, a This hard XX.X% this as of able

As only down only were million. down while was profit a $XX.X result, XX% our was $X.X decremental margin sales million, and segment

to variety commitment business. resistant a can two tubing an Brady commercial This our and humidity cable material biomarker be many IDS It's shrink PermaSleeve. a and run a UV. of extremely We corrosion, materials printers applications priority labelling. high BXXX through in and grade electrical chemicals, as wire R&D and to is Our launched the launched that high-performance on performance we top remains heat new called

the products of These demonstrate We and applications. a applications marking during high resistance labels for required, where required. use and for electronic wide also labels materials solvent heat Brady's as general-purpose performance in when BXXX range component These resistance, engineer good require the ability that labels clean removable designed to These removal. They're not here barcode any such residue ideal and applications other upon launched resistance movability. intended intended are polypropylene performance while solvent manufacturing, leaving called temporary in-process for print applications are for labels. behind are

R&D strong cost is that streamlining doing are and our our the products rest structure. Our our efficient in problems ID our to effective. customers customer in excited I'm what about our be help new and We're continue launch and future of pipeline we're solve more improving business. innovative we service, and investing Solutions

positive As definitely and business. sales. and for economy growth every dollar future combined the pay improves ID with cost our on we strong initiatives strong incremental trends, off, profitability discipline, revenue These well generate of strong growth bode Solutions realize our should our of revenue

of decline our find decline currency consisted WPS in organic Moving X.X%. North driven summary foreign this quarter. X.X%, X.X% and of to business, mid-teens Slide sales growth performance. financial of decreased XX, you'll Workplace which Safety sales of which our a by was grew The American

that One of companies, of our rate. their do value pace step sells current to can back took actions as continues shutdown grow struggle, at we and businesses other deliver in reach small in primarily our taking customers. profitable quarter. they and business European France, elevated an to new this working we're We're customers, the it new quarter our still in growth. micro this so shutdowns was in able the countries Europe, return to customers North Despite as low-single-digits And to business America to the UK, continues to another and to business this Western strong Germany

as Brady products, customers same Our team these with came its outstanding the job well. need done who customers our done customer quite base newly related identification providing how team during critical of an safety essential to the pleased are and job for increasing we're has many those customers nice has for core as Overall, as a products COVID initially and companies this products supplying time. our performing acquired we're

quarter sales related as the Our product business this the declined in Australian COVID slowed. of pace low-single-digits

we repeat is to last base, the to return customers opportunities quarters, enhance that digital new Over continue marketing ensure Australian customer term on and to a-long we customers. our several increased approach our substantially find

quarter, margin, launched driving us keep other Workplace keep markings we the vaccine. helping administration Safety signage second focus continues And form million quarter product our we'll new stored and on Our the offerings. include product American our at business quarter. while segment COVID-XX profit hunker we North will These vaccine protecting a decline improving margin strong this of with websites. new term. signs custom team This variety $X.X of last of our to our new our markings down, $X.X quarter. ahead of competition. this medco.com and launch and in on this mix gross form of products compared quarter, signage are invest keep businesses long believe at segment grew many to customize that manufacturer, to gross seton.com cash proprietary that while gross year some in million driven to our the WPS by revenue was products continue easy and We'll or in to We reserve business competitors our the the over strongest was businesses margin decrease profit of this in low some along declined our

team is there's high globe. aren't are distancing, delivering uncertain, away with in in remains of likelihood and existing identify social the customers we're to yet. with We're companies December, delivering environment through over from virus for at the Brady willing pandemic to And through industries. new financial Our an our lot rollout playing is macro within and The extremely when victory started frontline to modifying the portfolio. They're position. fight I'm areas We've over declare to virus the workers of we're reach listening products challenging the we're many keeping and learned enviable marketing address Brady's even ensure quite to customers going need. to up COVID-XX. all used serve set new and that time. their entirely people the campaigns against certainly vaccine helping this highly we role customers to safety to where we're and we're by in growth providing continue aimed proud well spread. they aimed this products WPS businesses entirely And at hard what their products underperforming new that working they're a a the identification

and up our Our is cash robust. sheet balance is incredibly flow

further all sales being returning enhancing our strategic And through looking and by generating balance CapEx to We our I'm we're tight expenses. generating funds proud will put has never this With solve solid provide a and compromising long-term the their to think all period, would inorganically Q&A. to invest to performed work our to the their for R&D, please ability very foundation I'd non-revenue problems of resources, how technology-based feet quickly, has and future. that, and like our Again, adding to to uncertainty, set team shareholders, instructions capacity Brady's deal now you on sheet throughout growth challenging in with while really start continue acquisitions. listeners? Operator,

Operator

[Operator comes Instructions] from Poliniak with Your Allison question first Wells Fargo.

Allison Poliniak

Good morning.

Michael Nauman

morning, Good Allison.

Allison Poliniak

talk there you and whether been Could benefits. efforts Is terms help you bit, can guys that traction sales little around in reinvesting you of a some guys certainly Or have you're in what maybe color of of masking investments way now? those terms share think are you on quantify macro returns getting getting, any the kind gains that of pretty consistent those a in R&D the maybe it's you that?

Allison Poliniak

may you Allison can that give thing Yeah, one I help.

of pipeline, when I to of started very most five Because reinvigorating think four actually new see industrial even sell we we products I we timeline. R&D applications, don't talking years. revenue spoke ramping into full or about our for our do

over year up see spaces. for right, any heavily, impacted saw really started a we that, we couple to period and and accelerating invested that, So, are output some has and so definitely but larger you years didn't first that the the pipeline, we've result actually pipeline, rise of of introducing see product going because then and had pandemic there this going you're of long a on. of as in marching than a first next or And out our product been is you're you the those introductions,

virtually. to Some as products, very sell continue do to effectively, effectively. on Other of products require able we're to sell interaction, our hands

revenue fact And those specifically, products the so, a But to of because full of take ramp some situation. grow will you you that many to hit that products, larger five literally are our degradation because years or see of four seeing ability fruition. our of

Allison Poliniak

question the on then And a of terms IDS just Great. Thanks. in margins.

you've think How that You job stemming this a this obviously decrementals what in should those done, of guys incrementals of historically have environment. to able out great to do we in segment? coming the relative on been

Michael Nauman

we'll the able our think new well. of think to We that. of many we nature of quite to to our proprietary increase be able because products, should do We continue be

In us to result products have lower years, paying end, period. also that led over back fact, a us during those company, margins. peered some really our that we and future which we've rates couple that time stronger the But from potential of much margins, lower a percentages, has growth of back makes the from also, as our in last non-proprietary both growth think

Allison Poliniak

lot be Got if products it, your quantify percent a of back hopeful of instance this towards that a and and related still how one half things, of down. of referenced this event of revenue there you just of I in some can you obviously way we reopening much in, could that we more head can the sneak shut or know to as side as Is the - if a year?

Michael Nauman

we hate particularly world would more from big they extremely people communities, venues, that out to loud it's very pushed not businesses, has ask, at will or think can't a confident do of back push even Many one come introducing those that around the together, going in I I events, percent I back, of fundamentally, to businesses Allison, the can large spring around are our our noise of pretty demand. believe definitely much And declines. us I say, Many us, still getting to the are many are have will tell though when people super they a are love to I this, new now out lot say of I those talk understandable pent-up for again around they're not? me, events rate. Allison, But concerts are concerts, come you. loud. you Very, going quantify and going rapid that seeing the fall. we the the actual that

very the parks, will that that a retraining couple restrictive believe very give of those probably will going you'll some rides the a it cruise that in I theme the the may I there, there, see there, just little large-scale redeploying buildings that comes But me to. of capital and that limit. and But strong there shifts are are to see infrastructure for infrastructure, the to are that personnel. see to some we is a overall, limit is riskier, examples Let little rapid reintroduction least a would The think there. the Brady. a and really people when I situations. you be think area, longer you're think very, lines, impact do I on events, bounce deploy the take are people hotels back And be

Allison Poliniak

Thanks. Great. I'll it pass along.

Michael Nauman

so much your Thanks Allison. you. Thank time, for

Operator

Steve comes question Sidoti. next Ferazani with Your from

Steve Ferazani

Thank mix, was that you to bit of more The number me know, and you kind stood was much. I on. detail that bit surprised I a a hopefully out very me one product said it purely lower margin get but that within be margins? tied we higher it Workplace Workplace Safety, is shipping any mix to aware headcount other add or Safety the to product were of costs the should there additional costs little

Michael Nauman

that. there up, are have to have We're certainly going questions. the Good Steve. now, not morning, the shipping regard In out the in deny cost, world. to are oil to you challenges We're to glad call. there instance. on Good prices for Right

that. fares on not has and my refinery impact impact significant Southern But they a been How up I like that shipping. remain may Brady. things oil family overall, the that depend say does through So that shutdowns how would

companies particularly Steve, there everywhere. be start And Why businesses. suffered fire, happens, has to That the it those mix so, things all that to really very And work But work to L.A., coming that, strongest to small get is really you up timing happens our America, around popping it products based, because some as it green I fire. particularly for from to a pandemic. look say of mass We of to small fundamentally is of a businesses But with are lot is we're see in a what lot like that the looks pitch want of suddenly depend you black more happy businesses, forest does I look, small margin these poor And that where been overall, exactly as after economy are strong. for when to will customer entrepreneurialism will regrowth. black dark. for what that say We're going will definitely North massive the a around cannot opportunity industrial based, have appetite congestion instance, We it confidence believe is tell port again, happy when done don't case definitely this fundamentally you look suddenly, I a dramatically. And company forest issues. going issue this a see it dark? want we issues. that, When of level small a that downturn mix. so on to people happens, still benefit in green. and

Steve Ferazani

ask Okay, really, just quarter want strong thank really you. And for to flow. I then cash another

how back much sense flow. CapEx as half going on cash capital As revenue growth? and on thoughts you Just the drive manage start then of general working about you can the year, to you start any thinking second

Aaron Pearce

Yeah.

back this half our strongest expect continue the and would to Brady, typically for that quarters at of cash our look the we are year, third we year. and quarters generating as So, fourth

let our customers So, companies, we that unlike use actually supply of to of any if which, last a in was to And our course had a fourth back you didn't built-up history inventories, products and third that we steady year down. of and go in ensure we cash. of many did quarter, we intentionally

as So, comparable of X% the to CapEx, range. CapEx call Then would at from it lapsing this our expect term, we over be sales in be look to we perspective. continue longer a the standpoint will that we obviously of

this However, quarters couple of we've now. about a talked

a are facilities. We couple our at of purchasing/constructing looking strategic manufacturing

However, time positive every lease or manufacturing purchase that and option our our build always ROI it secures facility, assured, future. we rest it's versus a

for again, don't over I in term, long our neighborhood those sales we're but know CapEx. of CapEx the some the the X% in could of timing looking facility term. somewhere that But on actions, So, the at potentially potential near of skew

Steve Ferazani

into The lumpy, recovery are a ramp you the XQ as that know about EPS talked guidance. you guidance about XQ? I being being thinking

Aaron Pearce

the fourth against come as we We than out bit our if prior to quarter continue third be would stronger a you're pandemic, expect comparing quarter to particularly this of our year.

point our us, For lowest last was QX year. of

Steve Ferazani

everyone. Great. Thanks so much

Michael Nauman

Steve. Appreciate you, time. your Thank

Operator

with from Northcoast comes Your Keith next Research. Housum question

Keith Housum

Good this I that your you growth, around, customers turning with one heard strategy? that as digital that America. what areas little on I know to morning, organic to we focused Can in compared on you anything especially were a getting but terms sales of guys. expand How the we've on be bit digital hoping continues WPS was this North do? are just about the of think progress that's call. quarter Obviously, challenge guys in really

Michael Nauman

hone as the Just strategy, and start that I'll quarter. as far then in with the on

compared didn't antiquated sales industrial everything significant, that ourselves at the to XX to able have. our great space. that even Just customer plus our and in across But have companies we years that been think we digital for health and crucial has the know base our provide We really was IDS interaction look now percent a has presence a you at of the few gaining board, much, we approach have really our industrials, and we believe with upper products, customers. particularly a ago, in was looked believe great websites. very in been We we're digital care

become come we job customers people come supplying that site good it's gain to to. the to have to it's helped us customers a products, just other of that products for continue for but We at But want that from helping that. to add-on a do then back products customers initial new us also, been with. sell great And our not very in

the we've to that. So, in quarter, last continued upgrade

mean? are What back on them much be sites WPS customize now able able our able is common to faster. of each to upgrade market, the end does substained. location, [ph] We're effectively, platforms. All them We're each to that very, for very

company six is, board, presence news more to robust. our ahead good we than were our Our cybersecurity were when digital pandemic But Across pandemic we even started. before are regards the much-much the in most efforts and stronger the we're a competition of started. stronger of or even far nine the ago months

Keith still of develop. great opportunities. to have yes, lot we And it So continues a

a is still having that is very, to with on many good our not the think teams. that have review done even And feel that also got a continual that it we way. aren't competitors be destination, very we I seeing a it Just that looking progression understand it I of for. And

be combine us well of people do mentality able for to of staying that we're and fact a many many ahead organizations we more properly. not we fact cost allows that to so, critical people, believe umbrella that ahead people, And lot only be to us the of so of our and invest the will as we're we willing a under Remember and than groups can believe lot one we have can. effective that

Keith Housum

So, do point you're sales now, you're where it's where at getting or you think growth now at good as that sales? seeing from you're year-over-year to what than a catalog point a digital equal more

Michael Nauman

growth. see I strong mean, Yes, yes, continued we will do believe we

the sales about talk digital growth. Now let versus the us catalog

foreseeable is We now for also future. believe a probably that combination critical the it's strategy and

of a of still purchases majority are So, amount contact we yet offline. large website, through see our

do to companies? has strong with is why ability with to combine offline an by connectivity. proactive easy digital to that? that do sales, So, with having controls purchasing with presence a But sales, systems, personal Has

For instance, electronic sales, we don't consider digital sales.

out a digital make companies critical. That important that buying see electronic sales for necessary. enter, multi-legged strong they it's how said, that's that's are. get us much healthy actual we fact disconnect that afterwards, not of they does stool do sales reiterate a are our really the understanding us approach for and sales, it's one the a they include see for very Some digital where there been offline there XX-years. decisions as that It We is out to because of how you'll they've

And so, sales to repeat, efforts. direct we have

We sales have follow-up. direct

digital have We strong presence.

We with electronic purchase want have folders, that data, either work or are to customers offline have strong a we to transferring to and have unable don't that ability systems digitally.

Keith Housum

years? your of strategy little of two you're I gears, And how more to And look us vertically many the terms to for impressed color about you sure your that. If as developed three as M&A? to just Thanks. M&A focus over that appreciate mean, what a deals had years Have where I've at able I'm chance strategy follow-up looking I over a has refine in has as give guys I here a just do well can been a for geographically bit size? several you time now. perhaps period. been - a past to moral change deal or

Michael Nauman

an we're shows to up enough ever for a show Keith, time what area you've know the waterline does deliberate, rapidly. change long see before worked the on it And we're working of us it that with you often below period up.

I get grow strategy. that it our and strategy of profitable through thoughtful, We But strategy. important our that defined technologies growth. significant strategy aware, use quite have a making overall we fits our reflective is And acquisitions, part industries, are not yes, to very for below key to We're that doing and be we're you're we're way we the key as into think into looking on and working waterline overall acquisitions us. really in is looking to we've that been are as the sure our is back market when clear that to there

have companies a you job that excited really and although to about are We long-term that a we acquiring never confident particular significant and or positioned can with. make we're do particular a guarantee difference have that we're relationships success of Brady. And to that good having timing,

Keith Housum

it. you. appreciate guys, Great Thank

Operator

comes of America. George Your next from question with Staphos Bank

Unidentified Analyst

actually on is Cas Staphos. This Taylor of behalf [ph] George everyone. Hi,

Michael Nauman

from today? hear you Good to you. are How

Unidentified Analyst

sales the generate of mid-single performance aggregate comfortable And what organic in growth half, in why considering Great, IDS how half company? Just second are in comps in the you? the kind of is tougher the some to digit you an relatedly, WPS? the wondering, required second are growth

Aaron Pearce

as confidence challenging expect year. a year go get shake April we of say ramp course much effectively that's I'll as as internal down and of times We pandemic. the that forecasts, where last we in Yeah. result we it throughout to own out, would to we some started basically comes of had And of it the we pretty, run some our pretty

looking just pretty results, the last in ID particularly at we declines saw significant where So Solutions some year.

this had substantial. quite economy, XX.X%, model with sales of this decline of out, strong the in course organic organic choppy last as fourth year. back put the relatively we and So out we perspective, is in ID quarter frankly, improvement in just Solutions in our And to modest year come half some an of continued which sales growth

through our challenging Now for sale quarter of fourth particularly in you're likely we'll be gained comparables, new the But make down the customers we will many right, ID our WPS in business. Solutions we in up most pretty many, some in have fourth WPS, where quarter. products. COVID

Unidentified Analyst

you what headwind That's inflation it. I or creates are discuss all it a any to earlier? company logistics then helpful. guess, on you or seeing that you're whether kind Got and commented of beyond for any going tailwind And sort freight of the

Michael Nauman

I the lot good said, of we're us about news as a as As driven is not commodity companies.

But us, we and not secondary overcome inflationary But for of between us. was on are that patterns, metals our factors oil should that will a couple major in that example. transportation of businesses fuel of a a like for the And large stores I that. the amazing year uptick very But so, second fiscal costs. so everything mentioned, overall, we're really just themselves has to to for drive to that a logistics aren't think of keys the But a internally, this doing have as clearly, secondary lot working hits in great is, factor anything operations our those do that of drivers logistics come a our influenced in costs. and in we transportation, created hard we're also, versus are in primary everyone. be anything can Transportation, we a lot able by we half us, one efficiencies of precious user a is challenge and shipping people with oil driver out

Unidentified Analyst

And it. quick, got final Okay, one. just then one

you're able [Indiscernible] to snap how more reduce were which the offset kind that you see wondering starts You and some or much as normalized conditions come just of back but of that commented back to discretionary some spending, timing

Michael Nauman

increased of we've years, approximately some after some pressure. sales, We've increased things record we've Obviously, overall, the same organization. there that have now will of costs and like five are incentive compensation, done R&D. long driving shown time, our quarter at of out that a track But quarter they

clear. want increasing quite done that We've optional been revenue be I half of long-term that So, anything We've to will while increase cost. both effort. the decreasing

the example, load critical key all did that people answer digging we can can look to them like to we've costs we're you we're out, fundamentals by been I downturn, at realized requirements, panic. is And that level can our is, a from to an through to comes locations lot panic, jerk we our were all as And that drive down to thing I out drive the costs doing that front do across cost was we were confidence of change, customers. questionable, we what effective? we our are it from that down critical is elements, efficient things how extremely saying most our not the pandemic. think out handled be inventory, our by clear, responses. the the throughout what make reduction as we organization, to inventory And logistics show more we How and doing or knee the Want a When risk to continued most this of are So, track right our a or in don't knowing that drive temporary, record. board shutting becoming not how you? result, of that or

long-term. a Very key us are that designed the to respect things in our for the shows also us, As create customers. short-term, long-term making we around ever for it we that will but not did disruption their hurt sure a we don't costs, cut do the result,

be Thank clear of our I to cost temporary So, nature. reductions my believe were in you. none answer back,

Operator

further no Michael back the like time. would to turn at I showing questions call this Nauman. to Mr. I'm

Michael Nauman

a concluding I'd this Cindy. very like much, few to comments with you morning. leave you Thank

that unfortunately, our tragedy. help safe. and living the products uncertainty, employees safety oftentimes customers the are keep dealing we're delivering and times of disruption our in We with amazing prioritizing and unprecedented We'll keep

continued performance, to its segment once This ID of business quarter, a profit percentage Solutions again and sales. as improve our increased

had cash Our and growth today on digital position, the place through a equitable on long-term, confident for our for and pandemic. and help an of future incremental We're our long-term incredibly which safer, this for It's for doing that strong business place market At to gives critical And its making the are reality, up focus our set presence, serve focus employees, long-term success. slogan shareholder strengthening our that continued Workplace us communities, our in is for in up world tremendous the is the and We're flexibility can global and to investments success. quarter our we people trends. cash and communities, every XXX%. making for another time, that the well extremely us maintaining value. and all better Brady. to our Safety the net we're investments not a positioned will day enhance for right world capitalize is we're same all world foundation customers customers, our add we well, We're the employees, strong to generation, already further growth. its prioritizing Making Brady

Please our shareholders. for stay day. disconnect the we safe. value may this where As Operator, both a well time put the great Have significant and XXXX our you this generate for and we rear-view calendar mirror is focus calendar you positioned strong on in call. XXXX, Brady year, a for Thank morning. customers

Operator

Ladies and much for conference call. participating. conclude gentlemen, you this Thank does today's so

may disconnect. now You

Brady (BRC) 18 Feb 212021 Q2 Earnings call transcript