Earnings call transcript Q4 2023

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Operator

Good day, and welcome to the Brady Corporation Fourth Quarter 2023 Earnings Conference Call. At this time all participants are in a listen-only mode. After the speakers presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your speaker today Ann Thornton, Chief Financial Officer. ahead. go Please

Ann Thornton

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

We will begin prepared remarks number on slide our three.

call, this forward-looking will, forward-looking examples expect, may make believe, of a statement. few forecast and words during information. that comments such a Words note we Please just identifying as may, about anticipate are

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

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

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

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

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

Russell Shaller

thank us share result. morning, you company per which earnings Thank this you, record for represented results released Ann, today. our XXXX quarter joining and another fourth fiscal We

Our global this grew our per We by to quarter earnings organic and GAAP business. XX.X% share XX.X%. per to increased our results throughout non-GAAP growth sales we grew strong X.X% earnings our share due

finish This quarter great another excellent represented an year. to

of XXXX EPS years high record all-time of consecutive GAAP full-year two EPS. Our $X.XX record was all-time following another

a through position. grew share year, and regions to EPS cash while an sales dividends shareholders of throughout This businesses our record we year with finishing organic of the buybacks, $XXX we major non-GAAP growth Our $X.XX and million in still also by all net was X.X% our high. returned driven both all-time

direct the year. dedication I'm This work this company. entire is results and proud result of of a of the hard our

investment our our We capabilities. and out R&D, increasing expanding to improve profitability, salesforce, investing while in in digital continue

sales sales new into on products and consistent organic us generating growth to the continue positions generate future. focus investments Our to

net was income with of flow income. excellent XXX% quarter generation cash of operating of flow net cash free XXX% and this Our cash of

next to line our we growth share in years to to effectiveness grow; consistent, profitability for returning to support a shareholders are: effectively growth opportunity we in organic growing offering come; product and we evolution believe to acquisitions to our deploy order automation priorities and which are our into to initiatives, the includes capital buybacks. our faster which develop operational Our customer's year company; excess long-term GDP for execute drive opportunities our to is continue ensure of funds a as generate to value, to and dividends continue which investments, through shareholder improve top

announced authorization. our million we our And year shareholders, announced return. annual this share commitment committed increase consecutive yesterday, new to And We're our we X% XXth our delivering shareholder buyback in to repurchased our to existing dividend to diluted year exhausting of an returning buyback more demonstrated dividend returning cash authorization. our we consistently strong the which a while represents increases. share We count shareholders than nearly by funds as $XXX of a

results. now call the our turn on details Ann more to financial Ann? I'll over provide to

Ann Thornton

Thank you, Russell.

was in of This $X strong G&A last fourth to quarterly X.X%, percentage share, the our expense up our year. as quarter had reducing growth a improving compared gross sales, margins of profit EPS GAAP sales quarter, of XX.X%, record of we while and resulting a growth organic per earnings which and

strong organic quarter, our extremely per Americas year’s sales share Europe fourth well GAAP Non-GAAP expense this X.X% by X.X% was after calculated which sales EPS, of fourth and EPS region impact XX.X% increased regions our organic as tax over profit growth, which to the and Both sales up compared Asia was last and performed $X.XX less increased with year. quarter profit grew the by amortization of segment is grew X.X%. last and and quarter XX.X%, profit our and segment region Australia

executing our are teams extremely Our well throughout global businesses.

EPS, within performance commitment and to of continued regions, So the a revenue both this financial funds are key takeaways to strong return our growth, our excellent quarter record shareholders.

number impact versus our sales grew quarter Organic this the X.X%, resulted slide FX total strengthening this our dollar of dollar. resulting to sales premises growth quarterly positive the The divestiture quarters move in four the weaking that closed slight while to we quarter, third Let's trends. currency U.S. total foreign six opposite in the quarter. by growth sales currencies for reduced sales translation a and of to sales consecutive the this recent quarter, of other our due X.X% increased U.S. in major sales X.X% follows which impact

quarterly On trending. profit slide five, margin find you'll our number gross

Our efficiency quarter, other increases basis through charges third the freight gross the points to cost reduced compared our in to XX.X% last were profit and XX.X%, we year. increased gains. to XX of of quarter offset the fourth majority input Consistent with margin able

Slide number $XX.X SG&A trending. was to quarter last million in fourth this year. compared SG&A quarter, six our $XX.X of details the expense million

declined a the last of XX.X% XX.X%, sales year. SG&A to quarter percent to compared fourth As of in of sales

quarter exclude each expense XX.X% of quarter. from of this from last SG&A amortization decrease of you XX% of in the then sales If the sales year presented, periods will fourth to

ago while in fiscal from our SG&A over investing expense overall, our making seven of growing cost and still in force, sales our progress Meanwhile, XX.X% We've ongoing sales opportunities XXXX. efficiency we're years generating resources structure. sales with we're by the reduced to identifying support sales So our throughout XX% nice functions. full-year other

development. investments in trending the details seven number our and research Slide of

sales. quarter, committed organic that development. to the are ROI of which new exciting have million, set investment once best pipeline of $XX.X R&D We to investments launch increased almost in development fiscal the X% products and an was believe This research particular product always with to in and investments new we we in XXXX. our again We're

both basis if from million $XX periods non-GAAP basis earnings $XX.X a $XX.X a eight, million. $XX.X from pretax million. on And on increased XX.X% from GAAP slide exclude number pretax XX.X% million to On amortization earnings to increased you

number earnings trending Slide the EPS. details nine of and

see earnings, is our of our you an increasing that on can can On EPS quarter also a clear record. both all-time fourth and basis, high. record non-GAAP fourth trend quarter You and strongest quarter was the GAAP a see

increased by This by if fourth XX.X%. quarter's And GAAP our both year. exclude last tax compared you non-GAAP EPS the after increased to from amortization of EPS periods, impact quarter XX.X%,

flow you'll summary this increased find quarter XXX% year of in our was QX free from cash slide On a income cash quarter. million to well was $XX.X number million And flow in and quarter. this million as $XX.X quarter. Operating from last cash net substantially year's $XX.X increased last flow cash Operating this of flow quarter generation. XX, net this cash free income of million fourth of $XX to XXX%

this in $XX perspective, to position Turning we form had than generation buybacks this still $XXX.X and number you position on a even million in more by see in increased impacts to slide million. balance dividends with put of more quarter, than XX, has sheet. currently We're $XX net shareholders Brady's historical To of can our the our cash that million. returning cash the net cash

of. in organic CapEx. Despite allocation to automation continue and first and we'll streak growth. generating increasing to capability sales dividend. drive capital sales economic Our any new investing enhancing uncertainty, resources, annually economic is use This the focused on the second And for sales proud We’ve -- increased product fund deploy we approach our to capital focused we're which our includes very capital productivity XX consecutive and that a to now years, consistently fully development, dividends on cash expenditures, efficiency opportunities. to our and is

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

such to funds balance us dividends strong to to the organic be as clear, opportunities able to our value positions additional return the R&D companies and buybacks. to sales and Our shareholders acquire when share execute other and price is and synergies are activities, investments, sheet right strategically through enhancing

sales results full-year was negative of for X.X%, and July our sale decline due offset quarter. the overview of of the Slide to number X.X% XX, ended provides the organic foreign XXXX. our by and sales third the X% XX of sales Overall, impact This a growth an translation of currency premises in increased X.X%. organic grew partially financial business

with our was fiscal increasing XXXX nearly our this earnings strong and and the consistent success quarter We record time us as investment in high after confident all Fiscal that future. year fourth quarter will record and non-GAAP year. our These finished by actions XXXX this EPS. well. in up for another year were set even another GAAP X% our R&D was priorities EPS results We're

$X.XX from increase X.X% which next year for EPS us this fiscal XX. share per to forecasting XXXX, in range of XX.X% slide So guidance to GAAP an represent to We're our year. takes on next number $X.XX to would

We the based sales anticipate expect approximately we fiscal growth ending weakening organic exchange U.S. XXXX. for by foreign also the an additional dollar to sales And year July on XX, percentages XX, as mid-single-digit increase rates the July of X%. in currency -- of ’XX

of approximately approximately income million. amortization million approximately and Other to of and include expense capital expenditures guidance of our $XX depreciation XX%, million elements an $XX $XX

million. leased totaling purchase the estimate and CapEx facility, build new of the out Our inclusive of facility previously a a $XX is of approximately

business through consecutive which are invest we the the both to force; mentioned, to and and price our development to for is Our increased organic strategic capital while sales buybacks, share acquisitions allocation just unchanged, research the opportunistic year; identifying clear. strategy continue to where is be our the right continue fit with potential continue in remains dividend, which pay and XXth

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

potential timely activity. our overall unable strengthening in slowdown to in manner the others to offset were enough dollar economic Potential guidance risks that include a U.S. pressures among or inflationary of an

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

Russell Shaller

the by currency X.X%. and of decreased results growth reduced sales resulting this The divestiture details of X.X% foreign this Thanks, growth XX sales Ann. Slide in organic total of sales premises region. was and X.X%, and Sales our Asia translation business by $XXX.X sales million financial quarter our were X% quarter. Americas

expect fiscal in increased ‘XX. the Segment to another normal change logistics profit sales we profit quarter, fiscal not the significant Barring year-over-year this returning macro year. growth environment, increase in XX.X% provide remain rates in freight which level, any these drastic at realized in $XX Organic that resulted contributing rates to were factor ’XX normalized we in benefit in will by the freight and fourth to while million.

third performance additional on previous segments. our details the February regarding quarter, in of X, our structure a sales new this provide but quarter disclosed regional we we’ll became As few effective the

business in Safety declined the former in this the and sales division. the and business remaining America revenue Solutions the our the mid-single-digits former whose IDS Our mid-single-digits in in of Identification Workplace of this XX% solutions region, the in former represents Asia revenue Workplace our the and Approximately Safety XX% represents division region region in and quarter. the Americas Asia former

product in a due exception additional Identification industry Starting Asia in in product Also, pandemic quarter-over-quarter. in Healthcare looking and quarter We the growth struggled India, recover challenges XX% fourth realized variety growth markets, our weakness except recently line. electronics The India chain to and continues pressures. in it between logistics a moving XXXX. China fiscal the has they most the in end mid-single-digit business that in struggled in years. from to inflationary our organically our XX% the impacted to into our fully most forward consumer potential lines supply have in reporting several our to business is and and We're and decline Asia. of of are with Southeast primarily and industry The the grow which for challenges expansion over Asia and last healthcare

our a summary Moving foreign of XX.X%. of million and were total Sales region. currency $XXX.X Australia Europe of increased XX, growth X.X% this by a quarter. find was X% growth to slide you'll sales performance for and Organic sales the

and the grew businesses Australia the Solutions our represents of previous half the sales organically revenue Identification as former in remainder region both far division Europe more high-single-digits to and Slightly former than Workplace division. represents in the As segments, Identification formed Workplace quarter. the the sales in Safety performance Safety the our Solutions and

supply lines, growth benefiting to that major seeing and we're Throughout Europe, find our product workers their companies demand organic our chain realize we're real in U.S. to Many are the similar for in many continue we trends and from shorten productivity solutions. working across resulting

to Europe the This sales and Our as XX% Europe $XX.X results Australian segment We're this has impact sales it. increased decreasing million and is operational the to significant by in slightly profit inflation these business a bring selective XX.X% XX.X% In occurred as grew the Australia total, through impact increases, profit organically later increase profitability to the this this quarter. pressures profit. segment with inflation than realizing X.X% slightly of of expectations of U.S. near-term segment percentage in in contributed cost quarter price efficiencies working nearly inflation and from impact quarter. address actively challenges along but

our for In business. total, fourth global entire quarter our

historical Our have solutions of organic global business historic growth X.X%, growth global sales ID safety would X.X%. of sales our organic business had had would workplace have and

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

Operator

first question Keith the time comes this with from Research. At Northcoast you. Thank we’ll conduct session. Housum Instructions] [Operator question-and-answer Our

line Your is open.

Keith Housum

of Russell, put some the I since has we're guess, started here great what that a on a year? morning your perhaps tenure we bit on place. you in and provide initiatives how in and Good color can terms touch as next can it's of you've seeing CEO perhaps expect growth growth driving congratulations that guys quarter. and

Russell Shaller

sure customers as to joining know, as you improve focusing for so, Keith. Brady we're very at really on improve their the safety, Yes, after targeting those rather whole in just vacation. traditionally and Yes, for been company in growth the their starting both thanks the good translation company. overall plant. selectively Hi, their automation day see has And into IDS, the to plant areas well initiatives than by for

back many years, track over decent at growth enjoyed look So IDS it were pretty to you a if record.

expansion group of of what across you're the within companies seeing the that is Now really consolidated Brady.

helping that's us. So

that share overall we the some traditional of part that's by drag the Second me, had smaller had of our that a helping is tailwind businesses or becomes excuse catalog the corporation. increasingly

some having is seeing in while businesses it's low-single-digits, still the less. on we're the overall the so those And decline, effect corporation certainly of

on So positive on business delivering, then the well. customers of we're of having impact The the I'm customer as our focusing really going some great a two smaller of things. is solutions And us giving to give helping the it us increasingly -- and dragging that's side, flip percentage tailwind.

the always give guidance, kind seems of answer, and we've plus be we into year, total macro So Europe but do you couple China' doing What will is is anybody's long next strong. winded underlying not to of, okay points. our environment I GDP next that well. very countries felt can a America year, is of think, guess. too

Keith Housum

the your expanding above it Can Yes. I about Got one it. revenue where of If could before more just how drill expanding comments a of percentage is sales force. growing the of points force? in terms by you're you provide much on -- the bit sales force Is growth color the down perhaps or terms sales driver? in your little several

Russell Shaller

It know, marginal those you continue, investment. of we granular. unfortunately, great is people Yes, sales a sales are kind us for

to not. we on in X%, enormous an bounds to add grow them. we hiring as Texas, invest for We third worth Texas, saying it sales to the hire return we're to X% long Is sales marginal is it Absolutely person push a a you we increase getting at our in should business? But that our sales instance? force? continue as look in continue people as if we So people force of another as continue two in

about for something in whether it's India marketing because we a every And U.K. granular that we in instance. invest at say, would or we in digital salesperson they're month, very look add, the whether decisions would

tremendously investments. that we team resolution analytics where great the helping a have making us are in is we our of So

Keith Housum

others. could here turn I'll one it I squeeze then to and more over And Great. in if

case? profitability and help has lower segments, the an In segment the reconcile, there balance of into a the than obviously forward? profit the going more and Can perhaps of Australia Europe get the summit terms to is while margin us of Americas Asia. you And opportunity a that's

Russell Shaller

in are Europe. little structures a higher. tougher it's a bit cost little Part is of just environment bit it The

both of demand in destroying the start good I businesses a margins. And question profit do do some of in you see for profit push you we margins, place are It's that. if products. our terms always think

pricing too consumables. buy less printers they'll instead far, you people or If will buy two push three of

in the So clearly up love and is at business there you mean, in different the growth fantastic quarter. European difficult to know, their languages love and particular do how different than by you U.S. if look we the and to them It's with and region in last cut did But slightly business. expensive the slightly the it's logistics costs I you. that you'd We do have countries and it just said, have the just a what place more more opportunities.

Keith Housum

it Great. I appreciate, over. Thanks. guys. I'll turn

Russell Shaller

Yes.

Operator

[Operator question from Instructions] comes Ferazani Our next Sidoti. Steve with

Your line open. is

Steve Ferazani

we've a do some Good in management year. in other EPS in Good I'm what reductions bit efforts the made $X.XX to want reducing ask to about year? this a $X.XX And wanted forward? the to in SG&A morning, you fiscal when seen a talked to it those benefits of I to going Do you've morning, and job to re-segmentation see Obviously, $X.XX XXXX. about are adding $X.XX further SG&A. assuming Russell. you cost benefit announced back Ann. here? already go second-half to little Is continued it costs. I of being next great

Russell Shaller

Yes.

we of you're did expected. right. So in originally ‘XX that absolutely than We savings capture had more

we be when in realize XXXX, pessimistic think said was savings. that I how to I bit in $X.XX the a to were to fast able had I So probably $X.XX going

that how some The be come has it I picked ‘XX, in remainder with will far in fantastic ‘XX. certainly we so up So feel of together.

as in all of the always out said was this this digested our costs go our we've event. able is to We've been it pay absolutely were exceeded profit. business making going And fact, We that case churn be a associated record with going and you expectations still change. to yet, through. In

we're ‘XX, ‘XX. positioned some of but that in gain was absolutely explicitly So think well to in I seen your question, answer

Steve Ferazani

the Great. the little provide The a conversion detail CapEx in to million related what Can bit facility. you funding? in $XX new on more you're

Russell Shaller

sure. Yes,

always do we're had of versus on decision, still companies previously And capital which plant think, significant pretty have plant, we opportunity purchasing me, it's doing as decision. and a a buy versus lease of excuse but I do facilities. we converting approximately the the a or a lease. buy all return fantastic So would to for lease was $XX outlay significant we the million that, on The thought been cash it's make

And we a there’s we've parts and occupancy next towards significant have little the bit facility constructing that this of [bills] happen another (ph) been but over end of process the in will year. due year, is the of year for

So years. bites, typical time. same the be wouldn’t significant coincidentally, our We company. have are to those few or It once plant one-time at two of up lined two these investments, every just they purchases tend

Steve Ferazani

Is any growth that particular supporting segment product?

Russell Shaller

is both -- No, operations. these are are it on ongoing

certainly our help Brady. previously of a bit but streamline locations us Now activities, little both they were by occupied will

just it It appreciably us our control a change of And doesn't gives so over more the footprint. doing little business. bit long-term cost

Steve Ferazani

it. you. Got okay. Thank Yes,

trace? us about you where still acquisitions the a tied to ‘XX. and a comment Nordic Code in ID track coming talked new good on, and launches products of fiscal Kind a if you preview You pipeline, you can also question… are wide a give with having pretty product industrial it, it’s kind little bit of and any Can

Russell Shaller

Sure, yes.

have every to So smaller from and we of launched throughout what locks and obviously, products have the devices year we you. a safety that myriad month

it's and this RFID Our launches a some We're as both of a well more and new terms our as printers significant year having printers, in combination product of product optical readers. few refresh. are printers launches

the is capability about but super talking super voice. print to and some We're of of things excited One that that prototyping occur. that. to the our excited print and from in I allowing we're now, technology personally to right devices

make knew be this to long contractor, was industrial were, it case use Code them sufficiently of Nordic. a This see products. a launching rugged can take with purchase in But they amount effort We to versions optical year, year. that and coming substantial is of look the and a industrial that fiscal the started going to we'll our Also, journey readers. RFID you development use of those

Steve Ferazani

the tracked industrial about were, the Are and you guys guess, announced as market CEO excited previous purchase? track trace that -- I when you

Russell Shaller

are. we Yes, absolutely

our all it's us, automation For part solutions. of

important freight it's not what us. means I'll have manufacturing manufacturing of to We're what of that's recognize for very shipping Now distribution centers, what call really or part you. niche in and parts. We're not intimately or that involved in business environments our

I what manufacture is that in tremendous for a things. there there I'll call corporations think medium sized Brady opportunity the out

engaged towards $X think help of saving something So overall improving billion will years billion We're for those with come. productivity, actively would the I them. to us companies. that be $X many to labor, trends is And the

Steve Ferazani

Russ. Thanks,

Operator

That Thank I Russell remarks. the you. question-and-answer time, Shaller like closing for to to turn would session. concludes this At it back

Russell Shaller

the investments, and profitably; Sure. ensure effectively controlling and efficiencies grow all organic what and initiatives; long-term We other an today record many to through funds EPS value to shareholders returning again on and faster strong and another to develop can control execute to entire the We're topline and shareholder an our in also throughout and quarter, share and and our deploy to your are: record and through now to financial to drive positive capital to our customers' environment. ‘XX we companies through invest were product buybacks. time year further we're our automation We're our macro to growing continue and acquisitions, operational to XXXX. your rapidly which Thanks well focused dividends on ‘XX, position for incredibly once in our navigate continue Like and company; consistently priorities, have fiscal that momentum we a support offering grow delivering evolution uncertained to guiding we ‘XX questions. organization. we performed have everyone very this years,

has and in looking know continue interest to overcome our challenges time future for to your that you results. forward and all your team this to deliver morning the you global Brady. Thank call. disconnect ability for the may Operator, I I'm the and

Operator

in Thank does This you for today's program. conference. your participation conclude the

You may disconnect. now

Brady (BRC) 5 Sep 232023 Q4 Earnings call transcript