Earnings call transcript Q2 2023

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Operator

Good day and thank you for standing by. Welcome to the Q2 2023 Brady Corporation Earnings Conference Call. [Operator Instructions] Please be advised that today’s conference is being recorded. And I would now like to hand the conference over to your speaker today, Ms. Ann Thornton, Chief Accounting Officer. Ms. ahead. go please 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 second conference located and you. the welcome Corporation this Thank call. The

note the We will begin such about this a prepared anticipate remarks as comments examples forward-looking expect, we make words information. believe, few that forecast, are #X. may and on call, forward-looking during Slide our statement. Please identifying Words will, of may, just

subject is results. information various forward-looking noted XXXX. that XXXX note to which filed could morning expected important and Form factors impact in this was of which fiscal with Risk to uncertainties, in release It’s risk were Brady’s the and XX-K, September our SEC significantly news factors in

teleconference by may copyrighted note Also, Brady the of this please be not Brady. that and consent without rebroadcast Corporation is

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

will recorded. As Q&A participation consent session the your being such, in constitute to your

I’ll Shaller. President now turn the Executive Russell? Officer, Brady’s Chief and call over to Russell

Russell Shaller

you, quarter us we XXXX businesses. results today. our fiscal all released represented our and This second for joining across thank Thank results, solid quarter morning, which another of you financial for Ann,

quarter [ph] This [our This entire to experience, that delivering eighth least provide. our the possible consecutive sales providing who products best are growth. team cannot highly proprietary competition] at customer Brady while quarter hard organic work streak marks X% testament a the innovative is with the just of focused on

investing expanding and sales this be our entire share worked on by XX.X% us proud once And our improving trajectory. profitability, shareholders. I'm again We a capabilities, customers for We per all in of through how environment, should our currency Brady the digital macro our earnings delivering this so, headwind. while R&D, upward both foreign which and continues while still force, to this team challenging quarter. grew improved keep

the of give industrial footprint view a Brady's us many unique macro into and environment. end sales markets global

For development, areas remains in geographies, and be sets most still instance, improving IT demand. but challenging these and always somewhat skill hiring research in to in as where is such seem

and remain International we're positions we we pre-pandemic tight qualified filling we're labor in But had general, supply seeing rates than a the levels in In have returned past. chain market. more improving. quicker our shipping and is to candidates open

However, there in manner, are source specifically challenge scanners. a our and are certain still printers products that cost effective to for a

meet chip We're getting prices the are to critical circuit some and that parts customer but still board need we elevated. demand, quite

of but slowed rate increases including continue in still As it period the to a have and experiencing we geographies, it the to seems to expect relates for certain time. cost U.S., inflation, we of are inflation

crisis most it experiencing companies in such and as we're relates to Brady costs seem to to predicted, be the which doesn't [forcing] increased Europe, As many still as prices Europe, these forces. of but inflationary thankfully to bad offset rates wage increased is as energy increase [ph]

as of flexibility point, capital At our businesses demonstrated we quarter a are strong keep generation, pending experience solid products environment for continue balance access to give of and and our investing us there demand to uncertainties, by foreseeable a talk growth. lot number organic While economic to in environment. cash recession, sheet, this Brady's a of economic throughout another any of

growing faster foremost, first to and Brady's continue evolution company. remain our priorities into a

of way. and X% north eight our sales organic As on we're of we've growth, now consecutive I well quarters mentioned, logged

expect area capabilities where years enable we Second customers' tailwinds This is our initiatives. to is improve our to an come. to for automation

is environment. take of Third actions inflationary the to to necessary this the impacts offset

supporting encompasses with our well includes to as Fourth, actions, supply reinforce culture and operating the as to possible providing This all and long-term pricing best shareholder our shareholders. drive focused All and our of is or approach returning Brady's finally, view, chain employees, our shareholders. ESG funds of sustainably are while meeting organic it on our customer ensuring we're our to communities, to value, our be that acquisitions, demands which from course to we customers, in evaluating and service. suppliers. And long-term order to a investments, our deploying stakeholders of our capital

We are of in a strength. position

Our industrial which greeted response. MXXX world-class proud and of printer is customer printer an our line launch, positive portable with been especially overwhelmingly I'm has

innovative and that products many our future our continuing we make We have way. for niches our single We're every day. Brady pipeline have of team of in fantastic a are we We delivering have a solid to is at balance investments on leaders of sheet, customers a in and the highly rock all

on I'll performance. Aaron? Aaron return details our to I'll our our financial specific Identification commentary and to businesses, as now Workplace to over turn results, as Safety geographic then the provide Solutions more well provide on call

Aaron Pearce

and everyone. Russell, morning, you, good Thank

profit a very This as expense we grew quarter profit two reduced each increased sales WPS nicely. margins, grew by IDS we our gross once our SG&A well. again sales grew percent bottom We profit segment the two our organic while of performed grew divisions X.X%, and our segment we XX.X%. divisions. of line in Each of by

quarter calculated the Putting last increase less of EPS, amortization GAAP expense of non-GAAP second it of as impact was And quarter second the $X.XX reported $X.XX in quarter, is after-tax EPS our quarter which EPS last all the together, $X.XX, year, compared year. compared to we $X.XX of second XX.X%. this to of in GAAP an

significantly of two organic financial the cash the all dollar U.S. us the organic quarter appreciation year-over-year divisions another in cash healthy takeaways and respectable overcome growth free very improved deliver flow growth, sales, nicely and another key which So, operating helped of of flow, segment profit EPS, of quarter. improved and and are sales each our

quarter, reduced currency dollar sales sales by X.X% reduced move sales with translation sales X. X.X%. trends currency our the X.X%. by to stronger The X%, impact foreign WPS of bringing this reduced total by Let's number U.S. but IDS sales to on Organic grew foreign sales X.X% thus Slide growth and

outsized WPS Australia. in for is WPS our currency performed of Even The another business significant Western with quarter. half because well foreign this sales are challenge, the WPS in on are sales WPS impact XX% foreign still extremely reason currency Europe and approximately this of

X, On can Slide see margin gross our trending. profit you number

experiencing the input gross we increases. Our the profit gross choppiness compared actions. expect through inflation to increased XX% bit some a and not we're in is XX%, to XXX last of increases several continue our to points quarters. price as pricing increases still of this, quarter profit offset between Russell We of Because majority see in cost mentioned, basis and and to the legs of second input gone And margin able cost next margins year. efficiency over gains were our to

quarter, million XX.X second number On Slide X, SG&A find in the expense compared trending. million SG&A of XX.X to our quarter last year. you'll was this

exclude As QX second a if from of quarter. the quarter year. percent you XX.X% sales of of in last to sales, SG&A XX.X%, XX.X% expense, SG&A compared of sales declined would And was last have then year this amortization to in of XX.X%

our addition currency compensation focus organization In and becoming from SG&A equity continual benefited to on foreign expense reduced a translation. efficient also based more

is investments X trending in and development. Slide our number research of the

development of lines of invested million our in across to businesses, opportunities the sales. we as our including product R&D, XX.X printers. we to X.X% new newest quarter, We about have equates development remain committed This which of

earnings can Slide increased XX.X% you number see GAAP pretax on that On a basis. X,

current both million the have expense to of XX.X% amortization this from our quarter. exclude XX.X from you in XX.X last QX prior If pretax non-GAAP and the increased earnings then increasing year year, million year would

another you earnings in can far followed XXXX trending trend and you the year $X.XX, Slide fiscal number a at to year EPS tax year right. and this EPS [ph]. of up Fiscal the illustrates see X XXXX with up is record general When basis. We EPS an was these another record after at of charts, so then and up of on XX.X%. [X.XX] the this look

XX, heavily find year year-over-year number inflow flow summary X.X last a a based cash of outflow annual you'll our our Operating increased year-over-year improvement. Slide factored into XX.X compensation this of of quarter increase from million Timing cash over million to payments million. cash this a significant this of quarter generation. incentive a XX.X jumping substantially cash of On

in year, were in our second they paid the quarter. paid we bonuses this the year, Last quarter, whereas first annual

timing date, further operating the to at months six this look first and you Year comp full of the year. up flow half flow based expect to of the incentive second payments impact. was the of year, cash a we If year-over-year strengthen in XX.X comparability cash no million to had XXX%

Slide strong generation cash if had number Brady that on balance sheet. turn see historically to you'll XX, impact the can our Now, has you

cash position of $XX.X currently in net are We a million.

investing includes resources, cash capital organic opportunities. to in approach first sales Our automation development, sales fund and product and capital to fully capability and our focused efficiency This to is use new CapEx. enhancing expenditures, allocation generating foremost

we the drive dividend economic year businesses where every increased secular and our We've going focus sales our tailwinds. Despite growth we consistently And dividends. will from enhanced uncertainty, especially productivity single to to we capital second, continue growth, on in deploy increasing since expect public. our

in investments organic a opportunities and have for disconnect we we either clear between acquisitions manner an trading we dividends, then funding a synergistic where value our buybacks in cash and fully After or disciplined Brady's see for price. deploy manner opportunistic intrinsic when

right, organic activities, in sheet R&D completing if including well shareholders. generating positions us price investing to are our is execute acquisitions value returning and the and synergies clear, funds enviable balance additional the Our enhancing other activities, and sales to

our confident for momentum the look and future, we're we sheet that balance up set As further strong to us success. positive our

XX share share deck. of of full-year new share. We're EPS XXXX to of guidance per number per GAAP low-end $X.XX $X.XX us XXXX basis. updated range per to to to guidance, share of we're $X.XX previously non-GAAP to per new our on articulated brings guidance fiscal our $X.XX the per previously share the to our range our raising of established $X.XX on our share fiscal $X.XX range per a per increasing which per to This share Slide share $X.XX the is range established range And from $X.XX of

continued exchange based is outlook XX, economic of January Our on rates as and expansion.

of about stability we're in nice the global China. outside the growth experiencing concerned of economy, geographies certainly organic we're sales most still Although

we expect full-year ending such, XX, be As the to percentages year growth for in July XXXX. the organic sales mid-single-digit

We originally anticipated million, and include a our guidance CapEx of approximately starting this year. as towards in Other tax million rate capital and earlier depreciation approximately XXXX the result We’ve expenditures facility start to $XX $XX the these XX%, guidance in $XX certain projects of these of amortization our be income reduced and fiscal will now delays of fiscal had of end expense of elements starting million. approximately projects. of an projects

with opportunistic As major announced for our be We'll another We keep investing the and buybacks, allocation, changes is dividend acquisitions looking strategy. for right capital our strategic while just in we price where clear. business. fit foresee any and quarterly in don't the organic will is

tool have balance we'll value. shareholder long-term a sheet strong We as and to it a drive use

further slowdown to in activity. this manner dollar, that offset risks of we guidance, among an through others, or price overall includes strengthening inflationary in increases, the pressures Potential a enough timely can't economic U.S.

I'll provide now results back to cover divisional Russell? Q&A. closing before our turn some to the Russell thoughts and call

Russell Shaller

Aaron. we R&D. outlines Thank innovation IDS organic continue quarter growth XXX.X X.X%. business. in Solutions In Slide quarter the in sales and this invest XX sales IDS, Identification was you, million second results were our to for

that on majority IDS of stream effective focus safety done help in our launches product to get providing of customers products, the jobs new complete and in goals spend where more is improve services are a manner. steady continue vast with a their the our solutions global cost software particular and to The R&D combine our division

this to companies efficiency solutions. to have that as a as We profit continue sales employee year. XX% thus tailwind last years increased demand for for productivity, gains compared percent to we secular Brady's XX.X% improved productivity a increasing of push to believe for and Segment come quarter,

in sales organic New with in Outside Chinese rest digits in Year. grew of quarter. periodic declined low-single-digits the to of Regionally along of business the primarily, single the which China, spread China, Asia of in high this timing the disruptions COVID was driven due Asia, the by

quarter. In the Europe, up organic mid-single-digits were this sales in

our did grew once sales driving a of through Our the And great progress again a to Americas, working cost approximately this structure. by realignment XX% European as hard to in growth we reporting quarter. manage team sales and organic job regional their is structure we

generate in to sales, come expanded expansion underserved years us new investment continue our drive business. product to into that line-up, gives growth and IDS Our for markets confidence sales our we'll organic to

year-over-year Moving to appreciation quarter, declined of U.S. our you'll Slide to a performance. of XX, financial workplace dollar. the find WPS summary X.X% due safety entirely this sales

foreign This sales over continuation marks of we've improvements growth currency, and organic profitability consecutive out the strip the of been our WPS fifth of X.X%. If business year. you growth major is sales had quarter organic last our generating

increased from to plus quarter. X.X a of in with headwinds. year is million in major foreign profit quarter Segment last XX% the profitability this second the $X.X currency increase even million This

geographically, WPS business in Europe and our the at our U.S. saw we business organic Looking continued Australia in contracted. whereas growth

on focusing WPS business improving. that our three-pronged sustainably to been ensure We've a approach is

our provide focus the identifying First, with are customers. that a products relevant we're to ensuring most on value SKUs our

Second, right products appropriately. the product our we're WPS helping value customers of the enhancing and our by pricing choose

we're on our efficiencies increasing our our to away and and catalogs. websites distribution reducing personnel costs. accelerate shift costs, overhead while spend catalog including advertising Third, and from driving on online All

performing brands WPS internally solutions along and businesses provide been improving more key and business to resell selling our value with With well. simply focus, buy consultative And custom a our of heightened level several our foundation of have number is than quite that our customers items. produced with of the

we'll drive to ahead, we'll Looking profit to portfolio. continue products look and business at our critically continue our and improvements

Although team the ensuring of focused performance, lapsed will improved business results our period WPS fully is the WPS become on that we've are challenging now comparables more weak sustainable.

of this X. we've also transitioning since a slide the on And morning. regional December we this granular provide deck, the intention process in announced more a geographic In will our We've segments like. separate new structure of view to what included release a we press in results new been quarterly our look

a sales organization aligned future Our about to is organization change us all our structure sets up growth that by a creating aligning for our geographically to customers.

always have key customers close is being and their strategic of a Brady. believed We our to listening to pillar needs

By Additionally, the will of geographies, between unique help scale solutions region. to each that of structure development, geographic of divisions. this best go synergies to market utilizing new using accelerate in our by our our current the tailored the while delivering our accelerate advantage exist increased new and us by meet strategies growth product our key that needs taking

fiscal reduction And in in do although $X.XX improvement for realize per was of beginning an we the cost year to share earnings this not to primary of the motivator reorganization, $X.XX expect XXXX.

will reduced certain one-time again, in be effectively expect This severance costs. employee offset for But quarter, severance incurred we charges that we the for by mostly full-year, Europe. personnel any one-off charges

our performed, Workplace have releases, segments. of segment. Many investors as within Solutions business possible transparent in and as IDS being our talk in will the geographic our underlying become in how We to WPS accustomed performed geographic IDS future business so Safety and also explain regions about their believe we how our businesses earnings as we our

and lose teams and identities ID specific divisions. will their Solutions realize Workplace we between synergies Eventually, Safety combine as these

to the businesses at of visibility However, next this time, intend provide WPS as several can will for bit so least quarters. to as we a we IDS and the take much underlying

sales well in segment our we geographic challenges China. in If and very quarter, the time, At strong performed experienced you X.X% offset the the the Europe but showed organic U.S. Asia, European quarter, despite Aussie the other major this and performance substantial dollar of Americas Australia the was this year-over-year same a our strengthening this currencies. at by dollar growth look versus and of

of reported year as share now of first for record sales quarter. appear currency segment. last third of to two in we've record be We're the our very XX.X% yield to by of coming Foreign a performed the increased years in and and consecutive X.X% earnings by Australia year. we fiscal growth half the EPS, quarters. the on way at In EPS per We've we total, well organic X% reduced off this Europe sales eight least each consecutive

which have organization. across positive We entire build momentum, to the continues

invest automation healthy Given they our through development, ability to have generate capabilities, serving even research to times, customers and economic our work our the cash we to improve as ability flow, during challenging and geographic continue their to expansion journeys. while in

to and companies come supply to shorten tailwind With chains, as we drive automation, these work expect to their have initiatives, efficiencies. years for increase a

please to I'd to listeners? Operator, instructions Q&A. start that, our you like would provide the With

Operator

[Operator Securities, Bank Instructions] Thank come George Inc. Staphos of will first you. America Our of question from

open. line Your is

Cashen Keeler

is morning. behalf this of Hi, Yes. This George you. actually thank Keeler on Cashen

So, guidance last understand Can gave what to the the relative guess main drivers guidance raise low-end help you I first, to ultimately what it the lowered gave quarter? the confidence of for you growth just particularly as you us here? like are, year your organic looks the you assumption

Russell Shaller

pretty these shipping previous feel we taken in at more terms year if back some view the that costs. take current which We of Shaller. had material in conservative pessimistic factors raw a at to Russell keep really beginning of seeing of is not relatively, source the transportation, least inventory, not it levels. the And if shipping us much supply is of as look time This availability, least, unwind. in flat We the of we're some costs of bring at to and confident headwinds a Yes. least and our normal would get down helping also more at the of terms at inventory

Cashen Keeler

it. you're here. I as got obviously, look realigning Okay, segments And out, then we guess the

So, your units? guess mid-single-digit new think split if assumption, breakdown this given business I how will about growth organic or we that

Russell Shaller

Yes.

and the it units. think in different both their They U.S. has European similar GDP. less will than I cons. GDP two pros been business be Historically, have slightly

time, a than been market share has business ability same expand good better the pretty their that had penetration increase has the and On slightly European their to Americas. the

look think regions of basis, the in forward pretty I two between race horse their growth. go a we if on the it's fair a So, terms expected at

of right America and now Europe between energy difference potential real is costs. only impact the Now, the

the levels no reached in that predictions beginning costs the in the more optimistic of in and levels dire Europe certainly some no way this energy cautiously year. the is of way reached the and We're were and

I as again, terms they similar So, to isn't up of factors dollar to in and Europe, not And long will performance to euro or there energy additional hit holds I'm be predict as currencies. their dollar that think pound. in going

growth similar So, that currencies. are their rates when saying I'm the would be constant

Cashen Keeler

Okay, got recently. reassuring of there's lot discussion I and it. may, around been trends And then last if one nearshoring a

manufacturing coming discuss there can could what if Brady activity what your vantage fact from you that and this of point are just levels this So, and seeing potentially Thanks. for industrial mean elevated in on is back domestically? you're

Russell Shaller

will Brady. net a It absolutely positive Yes. for be

countries, we locate We much close try as in manufacturing manufacturing possible we they're in of customer general industrial dozens our and Although or the Nonetheless, as to region that a industrial have it is of when in. investment in expansion and you. to have of safety, our for country particular get construction in in workers, helping workplace we're Typically what are the ways. of commissioned, signage, big process Brady. two positive part facilities terms

see we we as whenever on in industrial basis, construction, the definitely So, that and things equal, being positive. U.S. Europe. all in a then see an we And better ongoing do

whenever it in positive. manufacturing about manufacturing, two a we as we hear net continued those regions, so And see

go said, decades to that been what or long U.S. happens a which see really it's with turn. two between stagnant Now, and in in over road has down tide and that really industrialization to substantially gone the Europe,

I years a It's to be of next kind X as looking we're the of it at see a if be not really which XX one it's going to years. do probably think I the sustained will net bump. So, timing positive, year

Cashen Keeler

the in luck quarter. good and you, Thank

Russell Shaller

you. Thank

Operator

please moment next question. one our And you. for Thank

Next question Steve come of Sidoti. will from Ferazani

Your line is open.

Steve Ferazani

in a want Russell, had growing that you're I few all That's in when sounds I'm which Russell, terms shrink growth outlining like X% for sort years of the strategy, quarters, the was dig see business in into do margins WPS. it and a hadn't in growth resale confused. a Good type margin, Aaron. you've sounded generating products. you to call. the grow seen the this on for it what removing like yet of, And to products taken it Thanks quarter over it margin with we and still and you're lower for the the color been morning,

just you doesn't because I'm – it can help imply the good me the I'm growth or trying shrink plan. figure out to would misinterpreted I out, strategy that confused, maybe figure So, of but see shrink

Russell Shaller

shrinking providing we've our is are in of yes, in the but are the because outfit been businesses point products consultative buy grow, own of to strong WPS would how in absolutely of the the that that ones some So And have these all our facility niches own Europe. which are traffic WPS. manufacture selling we and a manufacturing or niches not is anyway, of we're are we the management, where how those And fortunate resell. we do that would both they particular value where they

expected. Those have than growing much better we been

the So, buy think while of that the had we made the the it general stronger I is resell. business parts just definitely it fortunate of in, has We've than shrinking a XXX% are the undifferentiated we accurate been strength expected. that other and parts is business of look

Steve Ferazani

like you this it sounds fiscal expect from guidance, through this to least And at year? continue

Russell Shaller

a the think house. we to last the clutter. decluttering teams found be I've I had to spent some better – with pockets Brady, as strength than say, I and year of turned expected, some we at had definitely It here it's than but on like house anticipated. originally it out want your we of more kind and working working Yes, definitely

where me And about, know wrong, few get this we are that but definitely And there which business, our some about a take again, you cash the we of same week some to them, at and legs had through flow. segments. looking a sectors are smaller the some very of percentage time session areas as which had behind talked went don't businesses strategy strong down we us the optimistic

specific give I'll Europe. in a so, example And very

specific facility. you like a medical and sized sells medium very in to might France French that due business, do have small a which law, business, have companies. kits there's of have med things undifferentiated and types your to while secure to don't in We sound about requirement And the

working to is to essentially create with they to these right be the manufacturers compliant French able that value have team ensure our by things law. with so, And

surface it's powerful niche doesn't the I operating translate a in. is, the It other super And have but and the only might in a of pockets salespeople and base few a unfortunately that positioned countries, we're we of our the on to we're we that buy kind like to help bring as seem with lot products. knowledge but a other this of country well resell, that up reason because using simple how those

grow. They've been continue remarkably and strong to

I'm formerly So advantage going products that I'm the which expert Because customers? to service story differentiated – WPS, will create the or Can be a are segment. called knowledge we is to say relevant reason equally that we through and services? either particular the expert in the in what's relevant are or that the happy will if because be future, the we that is, we're

is What definitely we're any not going the resell the step away buy stream. where adding simple and is at in value

Steve Ferazani

growth. out, you're products organic ID has if played as Great. story contributing a in reopening to that of getting X% to sort any sector you of, trying markets, new much to organic still growth? the provide X% of how terms are performance, detail helpful. economy That's key well your I'm sense as can increased Solutions, get

Russell Shaller

Yes.

and patterns. have variability So seen continue it's to in interesting more see we order

a the time long to still out get sell. all to figure industrial as to companies, levels the what the I wants think are inventory trying will nobody are take because well stuck distributors with things right that as

lot either, we predictable. bring a to our the it a the swings. could quarters same up in that lumpiness was we across I particular order people growth feel of ruler And more we've seeing to is, well, and stock in pre-pandemic, draw but a more as don't there's the what reason in time, that seen than At intake. definitely that have want about We're this I very coming had good foresee the we out It lot the past.

optimistic, we this optimism seeing because temper we're of some And our both we're but lumpiness. to tend

So, lower-end in that was upping our why think we guidance. comfortable felt reason the part very earnings I of

some time, position and we line from see the the now be right think, are the I a assuming shock think happening, can will to not economic same pretty I sitting interesting. of we At to major there's that system. sight clear revenue,

would up how based I distributors could pick as inventory. think be look points on how few how we their I at our another customers best the easily and our mean, just description. carrying –

Steve Ferazani

Gotcha.

Okay. updates on just And could get more any one efforts? track the trace and if then industrial I in,

Russell Shaller

Yes. That we've long from a We very is the technology. what any beginning we're said the to We and don't doing – with super we're journey. that in impediments feel is headed. where positive see

I have these can of sure make too I as product don't to as well roadmap, IP a but people we we to think clear deliver ahead that get the solutions, want at themselves. same time, far

be segment. truly launched XX in of some redoing the progress made of Industrial our reader still robust. products of rugged finish some essentially Those our the they're fit to products also great better industrialization the next Nordic have on to will We like the that code months. and the readers We've printers into and sure make

that offering a at look as selective augment We M&A to well. potentially

there's hours. in we've months have they seen essentially a used lot a of be measured because our by that journey. essentially on automation, particular the of still closing that fourth, So, in fantastic. a savings And in we're probably inning industrialization the solutions the products we we to be a labor the in And but that it's I payback of our going look forward to And are it have. trends feel third like labor maybe because of some our could cut feel case,

that portfolio, which XXX, just I to So, including is good I be position we launched. the And feel think in. a great a like got we've

Steve Ferazani

Great. Thanks Russell.

Russell Shaller

our from next Research. next you. And our please Thank And Instructions] question. Keith [Operator will Northcoast Housum one for moment of come question

open. Your is line

Keith Housum

I Great. Thank increases? you. this quarter that about to come of driven it. waiting the your And how just and question of growth Aaron up. had in revenue fact, growth, was was debate price that in much Russell, I for by terms a

So, somewhat apologize answer non I'm and unfortunately that. for you I to give going a

and have we A do is lot custom of necessarily it comparison. doesn't quarter-to-quarter what a

tough. it's So,

is quarter of what our of like price? time custom the another a nature it's the one-quarter you order, very all question custom And products. one-month, to compare to the have this majority of because have We difficult when really

margin and I where material factors going products And leave labor and blend what because into and experiencing that play, we if take at we're and by What our custom and treading I'm that we quarter. if of you in in margin terms way least products to very water, our any the together is, I blend have you given can change. them look we gross of this costs at of you we're for look maintain all guess at say costs should our do that the other does come particular given the essentially this gross

costs when in that's and But our well, and up it's margin portfolio, another. as say area we specifically. cost margin have you covering at held the the in our times that more kind are years higher would which over if not There gross least than gross change our look material slightly one of might the directionally, labor at well. pricing our productivity pretty is if And

something step been part So, company our a It's move commodity of we like lock huge. or based clearly, not growth. say, oil is steel with, or pricing We've where that. never

it's for hard on factor, get that. a resolution but to us specific really it's So,

Keith Housum

response. appreciate Okay, okay. that I

pandemic, the Due your to of sized medium you to in lot probably your was has spike of you part quarter back margin businesses third did this How Going that in obviously third small happen. pre-pandemic been a as because of business quarter the gross businesses. see amount because the we quarter Should gross year? days, seen and was best that margins business of or if a lost? about think do didn't

Russell Shaller

margin, weak parts. very some same the the moving of of one of very gross was just our that growing concepts high time, – There's fastest to year actually of one business for business businesses, personal we margin see a recovery. of businesses it's very, a date. our At lot gross that instance, some businesses know, lower unfortunately, our You

And particular course of territory margins, corporation. but should other collectively really equal, a be are being a not higher see certainly of few is, quarter, it of that get quite XX% Brady that our that more reasonable we say should XX] things Brady in versus all the [ph], gross there, lower. would I [ph]. we margin as that margin might be might have [XX] much to basically able software a We be gross [XX, businesses is gross again, a for if

Keith Housum

So, telegraphing this anytime you're XX% year. not

down You're cost inflation just [indiscernible] the that's saying more of out [indiscernible] road everything when correct? kind

Russell Shaller

look from part mix, I recognize what chain, the Yes. our mean, gross another. quarter-to-quarter at of to roles, we you. I purchase both you XXX there's that's one nature variances, supply if basis mean, cost have bounce quarter of points how margin,

company. it. So, it's a quarter, look wouldn't trajectory I as any long-term kind we where much of the as, in I – would too take are it into given at of

And XX gross then be. also at play. price I And economics to at the us close could unquestionably We demand. of good it for get that getting some higher overall to point, think a margins is higher place into expense and comes

customers less. marginal some they'll up price slightly seen or things we've and high, if you too that do will without either it do that So,

Keith Housum

Okay, [ph], can [Magicard] as company, Code, And being seen three Prior one ask ID, if been an your Nordic you acquisitions, got you. and ID more IT last that Solutions. guys have I to primarily here?

secular part [indiscernible] behind of the You is solutions that you. definitely mentioned tailwinds

not you just material acquisitions, three part your revenue. take overall those that's very a of If still

some guess about? should we tailwinds] [ph]? business the that should a some I examples solutions big of How we other [secular your can of think about as of So, be part of that the terms that you productivity is give thinking in me

Russell Shaller

printers is print the part really of been engine pretty and generating significant portfolio of a always the corporation. and Well, material the profit have

disadvantaged reason the the Nordic placement. we're automation to the behind in ensure not so, Code, is that And

of have some the reader say, we So, can the printer a reader that well, have the that for resell and have opportunities some placed I traditionally have customer we just along goes with with at had, along look the often of optic the years. but the of business a or than goes those if customer, had products would I not I And we've printer a can more buy RFID with that and printer.

look that a Now, yet, portfolio I that as that there of imagine well to imagine will is company part significant half can but be of to products. I it's of portfolio I having can that not future, products. as over going us the the be

Keith Housum

Appreciate All right. Thanks. it.

Operator

conference to Russell I turn Thank remarks. you. like the I would closing the in see no to now further for back questions Shaller queue.

Russell Shaller

and Perfect. questions. today time Thank is growth. thoughtful proven the sales positioned perform Brady economy your to for you of organic all direction a have for the of which well regardless We has. history now

gross generate pricing Our to blended are near margins actions and XX%. efficiency helping

and Even to can And will initiatives, our while our investing clearly the to division challenges that business safety am face. that and sales continues I global growth working. sheet perform to have funds meet we've to in keep well our our returning future, are shareholders. actions that company improve optimistic us in IDS allows certainly our any workplace may the also a balance taken we we the face though challenges team economy Our

day. this time your always, all call. as for a interest disconnect thank the you Have you morning. Operator, in Thank for your great Brady. And you may

Operator

for This call. does Thank you. participating. today's conference all Thank you conclude

Have day may weekend. You your enjoy now disconnect. a pleasant and

Brady (BRC) 24 Feb 232023 Q2 Earnings call transcript