BRC - Earnings call transcript Q1 2024

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Operator

Good day, and thank you for standing by. Welcome to Brady Corporation's First Quarter 2024 Earnings Conference Call. [Operator Instructions]

Please be advised that today's conference is being recorded. I would now like to turn the call over to Brady Corporation's Chief Financial Officer, Ann Thornton.

Ann Thornton

Thank you. to Call. Corporation welcome Quarter XXXX and Conference Earnings morning, the Fiscal Brady First Good for morning's slides www.bradycorp.com/investors. The this website on at our call are located

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

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

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

Russell Shaller

our us which Thank today. Quarter First profitability. thank quarter improved for another you we of released you, great Ann, results, all fiscal was This and joining XXXX morning, Financial execution and

this organic growth sales on increased quarter non-GAAP earnings per XX% share Our of X.X%.

our digital expanded to sheet. and and while balance through continue the our growing R&D business same earnings our We strengthening invest in at capabilities time,

focus continue over grow improved earnings we reinforces flow. to investments and our has structure to term. Our our on the generate to increased can sales products This a that generating fiscal year sales cash new so regional organic long change ability to last and ability

barcodes. This connections and in through printer end simultaneous enabled portable This It's markets. This is app, extremely designed identification text, ideal use safety Bluetooth is with can well which an wastes manufactured of end user. for centers, and the edge-to-edge durable less is new wire as MXXX. we is the printer electrical, launched an graphics it allows wide printer enables because a for identification variety of incredibly real-time print Brady and each exciting facility hundreds data It versatile can called essential. and and materials, X is quarter, customization for different easy-to-use of identify laboratory settings, anywhere as in material the

have has and a value our way. with We on our to multiple line of investments Brady customers. in the a with fantastic innovative We're future. identification positions materials Combined space, leadership that custom make safety continuing the in printers products of our deliver in pipeline work to

provide position Our a customers fantastic our Ann? detail to financial strong, call is results. financial over day. I'll the more we to for that Ann turn our is now on every have team and delivering

Ann Thornton

Thank you, Russell.

quarter, we GAAP XX.X% in which overall organic our X.X%, profitability. improving with This of share, grew quarter resulted profit GAAP our per first compared of of last EPS, quarter, quarter last was after-tax up Non-GAAP the which as excluding was calculated of EPS, the year. while and again was growth This this $X over expense, amortization sales margin per first which earnings to quarter XX% up year. our once $X.XX this the is impact EPS gross share

normalized and to we gross operational in to costs Asia last segment executing year's continue well, levels. region first our Americas improvement returning region X.X% overall profit increased margin primarily from was to quarter. the and We're Asia compared and profit sales realize execute benefits Our efficiencies as XX.X% by Americas manufacturing and organic due grew more and to

growth. on flat organic challenging economic impact become organic our this has quarter, had X.X% with more grew Our sales segment Europe which The effectively and an Europe profit. environment rate sales region of Australia in

sales However, ensure other for growth that long investing as set we're opportunities efficiencies term. operational we're up as to the in force while still our driving organic well

this takeaways organic and return non-GAAP in to financial continued funds continued to key commitment a the improvement our quarter profit revenue of are: So gross growth, margin XX%, EPS significant shareholders. growth

to sales trends. #X turn X.X%. for that Slide while quarter noncore our well reduced X.X% we'll X.X%, a sales translation in foreign Organic Now currency another by and grew business last this year sales sales sales this as sold we growth quarterly as quarter of impact resulting of the total increased small from X.X% divestiture

#X, our Slide quarterly gross to margin you'll find trending. profit Turning

year. gross first our increased Our factors the significant we points was margin profit combination efficiency our of in improvement manufacturing facilities result to last This in execute throughout in several as the XX.X% continue quarter margin gross XXX gains globally. basis compared to to XX.X% of

favorable, mix last quarter compared first was last SG&A million SG&A product year. costs we're benefits quarter realizing million Our of was manufacturing this first year's from compared in to and details reduced the $XX.X quarter trending. $XX.X #X expense quarter. Slide to this our

businesses, XX% did SG&A of to we in of last cost As and this some first impact to quarter. a was our effects quarter sales, see primarily this percentage European and year's continue compared other quarter. Inflation XX.X% increases these

projects to cost structure, quarter-to-quarter. and of typically does on our we ahead opportunities work know but timing us, have the more continue vary of that We we various from

investments find research Slide and our in #X, to Turning development. you'll

to development, with sales. once our of research we X.X% and in $XX.X from investment ROI that organic which investments, believe best R&D always the almost million We million, are was the increased again particular. $XX.X This in quarter, investments

increased pretax product GAAP details have pipeline development, earnings, we're year. Slide committed of great which new to if in new a launch exclude a to and from products million. on set million periods, basis a first #X earnings you So million from fiscal XX% both we our million pretax non-GAAP And $XX.X increased XX.X% $XX.X to on to quarter. $XX.X amortization $XX the this from basis

find to along of the you'll and earnings Moving our trending EPS. #X, Slide

see trend a quarter-over-quarter increasing You basis. consistent a can of on earnings

XX% this quarter of impact periods, from compared find a exclude last first you'll generation. of year This last to the cash income from after-tax of quarter's income free $XX.X XXX% quarter net cash Operating of this summary million quarter to significantly #XX, was And flow million was both quarter. year. On Slide by XX.X%. increased flow net by quarter. amortization the our $XX GAAP this EPS cash our of increased flow XXX% EPS increased you cash and if Operating non-GAAP first in

has to the you strong that generation impacts Moving #XX, can Slide balance cash sheet. on see our our consistently had

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

our form still buybacks $XX increased even more shareholders by $XX returning million million. with cash quarter, net share dividends to than we the this position of So and in over our

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

organic between when dividends, After a fully in productivity acquisitions consecutive our our cash deploy capital economic second, is we for streak annual and despite investments value we our sales in growth to of. we our uncertainty. And a a We share announced opportunities on either for clear trading increase manner we're then disconnect price. consistently deploy see funding and focus our our our where quarter, any Last will continue dividend, dividends. XXth opportunistic intrinsic increasing buybacks to that disciplined our we proud synergies have and or which very we

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

our you'll #XX, XXXX find Slide fiscal to guidance. Turning

non-GAAP fiscal year previously our on XXXX a range full maintaining a $X.XX $X.XX basis. We share to on are to EPS established and per of GAAP basis $X.XX $X.XX per share guidance

assumes conditions in some parts Our have October strength other of end outlook is foreign in and seeing Nonetheless, currency continued expansion. Macroeconomic economic markets we XX and slowed based in rates, areas. Europe and China upon are general. exchange it in

remain expect initial do that with our growth percentage growth year sales full organic we our fiscal will of mid-single-digit XXXX. range for guidance the So consistent

also $XX capital $XX rate and XX%, elements million approximately expenditures include tax of and to of income $XX and remain an our guidance other million. The of million approximately approximately unchanged depreciation amortization of

CapEx of include U.S. to overall our inflationary strengthening facility manner potential others, were or purchase $XX dollar, to build-out million. Potential approximately a that activity. previously estimate well totaling as an of facility the slowdown the the pressures Our guidance, offset timely in economic among a unable risks as is enough of inclusive in of leased new a

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

Russell Shaller

sales for total growth end Sales We of pandemic divestiture identification except in of Americas from care being of X.X%. rates, lines quarter our ecosystem, details major are Ann. product X.X% the region. and Asia quarter we the $XXX.X in of felt the by and resulting growth year in of our health pressure. X.X%, Slide most grew suffers reduced increased line. a reimbursement coupled as this was organic Thanks, well with health product million region. and sales last still care cost our were a as business lower sales The this financial in sale the which small The effects closed markets, results XX

in to China $XX.X electronics segment increased by well business of due as profitability in be business continues Asia from again in and Asian XX% and reported as consumer growth nearly in India, decline of Asia sales this exception the Asia. to improved profit XX.X% to of in sales quarter. in strong which Our quarter. Segment mid-single-digit XX.X% primarily once reported in to Americas Southeast XX.X% million, weakness our The

was where freight manufacturing and our Our and to to improvement in this the gross reduced benefits profit year. continue Americas We had we product within Asia we're gains realizing the a year last compared primarily execute efficiency throughout from processes. favorable region, rates mix, margin

well sales geographies the business you'll were by similar most for chains still and Identification that performance shortening will selective was and sales instructions the manufacturing inflation this believe $XXX.X from Sales sales X%. Still, to total efficiencies summary challenges consistent U.S., line to and workers, our opportunities. We result our Europe find effectively trends challenges is total, within the slightly which percentage Moving flat seeing Europe product X.X% productivity Europe to in benefit both address supply would impact as of to $XX.X quarter, of Organic by slowed you rate Inflation growth closer segment cost increased Economic the million. profitability million and able a price conditions Slide from decreasing sales many by region. was Q&A. X.X% profit our Australia demand working continues of impact this but to solutions. In and segment moving Europe listeners? at of on our of were a focusing quarter. such inflation to within for and and XX.X% in Australia in in occurred foreign increases, of start term. With through than in organic as finding our the later have grow currency actively environment. which it's we in this this as quarter niche resulted pressures Safety provide as the growth Facility to European our like as please Europe in our growth that, XX.X% profit resulting We're quarter. of reflects U.S., that near these Operator, operational to we'd in XX, a this of of we're

Operator

line comes with our of And Instructions] [Operator first Steve Sidoti. the from question Ferazani

Steve Ferazani

gross the of call. like quarter? the real in can And that margin better there some significantly sounded gross was EPS sustainability you benefit mix, margin. point than about the to this ask said we came strength detail from to margin. out anything on you the the It line. were entirely appreciate looking I on Wanted

Russell Shaller

the past. was Yes. a contemporary in It high for certainly Brady watermark

couple things So a that of to we benefit. had our were

have been the being, But to it. probably raw of time it's compared Some to also few that's out. guided net We've price And as excited fully where was range. The was well for we we're saw increases costs the XX%, we we'll as mentioned, XX%-ish I go as us, a think, a it and is And continuously of where settle material input unlikely. quarters have ago. shipping realized to benefit the down. think some to sustainability I down

Steve Ferazani

to I raise why of your strength a When came this trying out it compared it not how here? to was was consider view, think And it the if at quarter, expectations. least guidance little strength about better, bit our from

Russell Shaller

the some input growth. continuously said, significant our been have to to benefit I modulate us. there's as pricing a costs and We're Well, our that looking -- sales

keeping mix absolutely the was excited accounts gross appropriate the disappointed to I while margin was of sales earnings, a is what our about So And growth. look up. at we new in I versus getting continue little

So generation. our obviously, and to the long-term maximize our goal profit cash is long-term

at gross I bit it the see short we like The long would I And but and feel XX% a quarter, so future. great of that. in, to got the growth look that about feel is we I coming to continue in great little more margin.

Steve Ferazani

strong share quarter It the guidance. I lighter CapEx forward? repurchases probably Another was to active think [ based under when cash XX How than systematic. were cash like shares shares looked opportunistic flow probably tend you ] we good back the more moving quarter. your were be this August know about is CapEx flow and -- more in you on should buying

Russell Shaller

Yes.

share closed $XXX million out round -- we So $XXX we another up in initial and restarted of the million. authorization, repurchasing to

same to a kind I'm mixed to intrinsic the value. I It's bag. the a there value. discount at disappointed of a at discount We they're because buying love time, But are shares think I intrinsic opportunistic.

continue we're at systematic valuation we So our would looking I in we and it. purchase. say at when to look

So we'll we at times, shares certain buying. if it's obviously, purchasing. worth, than other continue think get less if to we'll it stop a the what is feel point, like And we

Steve Ferazani

like? in last pipeline I that What's M&A looking one note. on just got one the

Russell Shaller

There's sellers that, It's we what valuations are think what something worth. there I the we're and is better. that out worth between is something seeing the mean getting some better. by think disconnect getting And still

there's category. this better Now M&A. few where out to I'll growth is necessary our nice-to-have it compared continue the year was And there point in ago, at to plans, don't properties to put but we a think it it's a execute that much at I look territory.

something do So can selectively close something we think if gap think worth, M&A. the what what and we that sellers between is we'll worth is

Operator

the Our next of question with Keith Housum Research. line from Northcoast comes

Keith Housum

Russell, as people about last the growth? salespeople over year you're as guys initiatives your talk adding in how investments other them. terms added the past many Perhaps about you have making sales of year, been of talked well perhaps one of some you can driving you've the has in over of some

Russell Shaller

specific of Yes. in number into our you change people year-over-year I'm not going that get to from see can sales.

to working it's in our pool. think a companies doing blended are resource are as AI to adding way, tools commitment digital, but only as I it's We're to a other salespeople, not We I on commitment But web. see well. that want opportunity be in for the products us is and presenting to we to continue to make I've continues before opportunity, nonconsumption. to sure customers them. And our said biggest are tremendous say, see there's they to our competitor way

they in So that Brady everybody customers but think a because growth world and not unfortunately, front having our of the know salespeople they showing them exists, we not products, even our for in might is buys that opportunity solution should. biggest

Keith Housum

Great. I appreciate that.

pressures a prices offsetting seeing pressures you're I the wage of be had assume appreciate Europe, the might is primarily impact then more limited And related. of are inflationary prices terms One, inflationary already pressures. two, you raised In and I some raising so that to there there, there?

Russell Shaller

Yes.

based conditions. not market And raised pricer. prices a So cost-based we're we on

look as input increases direct Europe a conditions some the prices. said, wages costs increases should what necessarily perception about also lockstep in increasing With inflation correlation customer don't of at to alter in that price the some and we see. they So of

So year. more systematic of we the to in We the do it tend year. be January-ish throughout

gets it don't trigger customers some We So price to we'll until very pull the actually increases. notify prior close.

and variety input look to And both so at costs we where of go. competitive a factors, decide landscape to

to it you're increases in beginning increases of then be of have warranted. the is happened, that calendar come the are Europe what we'll whether right additional some So seeing which year decide already now, and reevaluating price

Keith Housum

Okay. appreciate that. I

terms there? commercializing initiative how are there trace can -- you your and of on you set your close base product in touch perhaps to efforts a the R&D track Next, and

Russell Shaller

Yes.

of a So And the -- we're getting now, I other commentary think prototypes of some and I see quarters desk. in right there. we're I can have think still pretty companies. my on We're the away it close. sector few you

right the think sector little a now slow. I is

that's it positive of market. have half customers. launch our we really some and up products a is that full probably us giving year suite our regards, the offering for before to our for make of because in actually available looking a calendar for next chance We're us sure second perfect to So to it's essentially

Keith Housum

The growth Great. question volume more And did the that versus last during was then quarter, for price? organic you me. see based

Russell Shaller

It was volume.

Operator

and you today. Thank this Russell it I final remarks. Shaller back concludes Q&A for session for will the turn to

Russell Shaller

and time today Thanks, for Great. questions. your everyone, your for

the shareholders the inorganically We're to good invest which extremely We changing. net in strong quarter our provides quarter to position with our both increased was a share have through organization. organically to us financial positive performed the Our well, first while an buybacks, continued to returning cash shareholder throughout a position. and momentum in start year. is long-term We and drive dynamic value. The opportunities rapidly dividends and funds macroeconomic and we

what to on focused offering initiatives; ensure and through the investments, organic deliver dividends to are: profitably; drive funds on we share to product and line; through deploy invest to continue can our our that further and capital effectively returning so grow our long-term which controlling to to buybacks. execute and to automation develop top shareholders customers' that we're and can efficiencies So we priorities, our we shareholder acquisitions value operational grow to control support our

call. the that this ahead, to continue drive and products businesses. to for of continue overcome our you future. has interest Brady. your and and challenges ability team we'll the results. Thank portfolio Looking your optimistic in time about improvements, know and I'm to we'll may you for our morning the deliver profit our continue evaluate disconnect I to Operator,

Operator

for you, everyone, joining Thank our call.

now You disconnect. may

Brady (BRC) 16 Nov 232024 Q1 Earnings call transcript