BRC - Earnings call transcript Q3 2024

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day, and thank you for standing by. Welcome to the Third Quarter 2024 Brady Corporation Earnings Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Ann, our CFO. Please go ahead.

Ann Thornton

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

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

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

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

Russell Shaller

generation.Our our great cash growth economic improved delivering profit gross sluggish strong XX.X%, We and are well new earnings morning, for X.X%, everyone, Ann, we organic of businesses us our this quarter. report joining share this regional conditions. performed per Thanks, quarter with third continued sales despite total company our results well and margin today. to to thanks, thrilled high I'm executing released a results and and teams record of Both incredibly

our purchased increased of quarterly or million. XXX,XXX to share funds buybacks.This through shareholders returned normal an we both amount dividend shares $XX.X quarter, and also our We

label a developing buybacks and purchases journey We right service AI and of view new to potential return part integrated an impact manufacturing none an need information And potential financial our also technologies, by day.I work improved more our our site.We they the provide the to it team.Now, details which XXXX, opportunistic to quarter. in we and to generative Ann? the barcode to marking new to customers as incredibly this quarter and this can to possible be to data financial without acquired degenerative hard be for making focus areas and sales the of our we're the share that of opportunities to world fall of better the results. of the continue the floor and economy companies we know bring for technology impact It's equip all over turn AI identifying pipeline new next one is several we PatStripe shareholders this deliver tape of new the [ and is this demonstrated of We're a results several the version a our which material broader our see in our sales commitment.As result effective. have improving time and in force Ann would exciting sales has years development printer.On with more jet reengineered and this high-quality to the levels, year an highest our color come. printers launched quarter. to we effort profitability can new designed other the products productivity entire innovative introduced investments launch as and our positively proud rugged an industrial every launched to Max this the for well. making We throughout Brady increase and planned substantial.I is I'll continue is Brady in our increase launched which side, we're way that excellent scanner, today on to with I'm products and traffic ], of

Ann Thornton

Russell. you, Thank

increasing with a We're organic was to most calculated year.Our was compared end X.X% divestiture XX.X% of was EPS, to $X.XX a the year.Non-GAAP quarter growing This organic $X.XX grew our Australia impact last our geographies. up sales from we growth of up and the both last and year of as of was region while share, of well in expense on new excess X.X% our our third in EPS, Europe growing reported Asia as well and region quarterly quarter, as the in compared X.X% per quarter GDP X.X%, which EPS this excluding after-tax gain GAAP per which regions, of third quarter. last which amortization record. our EPS is GAAP to Americas We strong and share, growing the markets

by quarter quarterly revenue quarter improvement integrate organic into of also of by We the growth trending. Organic Slide growth continued on which financial basis businesses additional #X, quarter.Turning in translation gross third you'll XX.X% on of the margin are: Slide trends. shareholders rate driven growth commitment increased #X continue sales gross to of X.X% increased an has to increase last to million.Starting this to quarter, regional our capitalize was details decreased deliver structure, which were sales EPS to impact our another our in $XX.X to this through was year, profit to points. growth, this XX.X% margin and our share gross in XXX dividend and allowed profit margin X.X%. our improvement resulting profit our increased our quarterly and an of profitability.The funds which both of quarter for grew This sales an buybacks, and return reduced ongoing from in key of divestitures XX.X%, currency total regions Growth and sales sales us X.X%, foreign X.X% quarterly non-GAAP find together by our sales takeaways opportunities this

our higher-margin to products, with year. along SG&A this quarter trending. input million in quarter coming realize costs to compared expense third the $XX.X compared growth SG&A was details from continue year.Slide to benefits sales $XX of million We #X from stabilizing our last last

and from our the divestiture and to to current gain exclude year, expense SG&A sales.Moving year prior a you investments exclude expense XX.X% Slide then sales #X, you'll on of research in both find of amortization XX.X% from last development. along If from decreased the and

which This excellent On increased regional million quarter, in X.X% we X which investment million R&D from our basis, are $XX on detailed million.Our to will once $XX.X non-GAAP earnings earnings from more from GAAP products million, Slide X.X% in to a represented and We increased Slide detail on this the #X. million again during quarter. pretax $XX.X sales pretax details increased describe $XX.X discussion.Turning which This our basis in launched $XX.X X.X% to quarter, the earnings, Russell new $XX.X our million. to EPS #X. of a

represents We this record. continue to quarter-over-quarter new basis, increase quarter a earnings company and on a

excluding this compared GAAP amortization from to cash EPS X.X% quarter. #XX and the impact third by the last to divestiture summarizes both gain increased last quarter last after-tax the year, in our from increased Our periods non-GAAP and year $XX.X increased million flow of EPS cash the Operating $XX.X year.Slide million XX.X% of from on generation.

cash this position. #XX. This operating to net million to For date, of last full which cash summarizes our million significantly XX.X%.Moving is the slide our year year, months Slide is increase from flow $XXX.X to X up an $XXX.X along

in the which flow XX.We approach focus through as in increase to decisions our to from on as cash-based continue cash always disciplined well our operating We organization, shows as consistent our and net throughout $XX.X are April of making allocation. million activities cash capital position of

in year investments we includes This capital $XX.X our our productivity consecutive First, clear continue our our our capital share fully sales efficiency we development, and we and dividends. the in cash expenditures where and to fund resources disciplined cycle.Next, our and fiscal acquisitions our opportunities use a cash our sales increase throughout opportunities. buybacks.In growth This sales-generating we investing increase dividend. automation XXX,XXX manner million. fully synergies to our and to increasing for quarter, XXth and economic on we research consistently repurchased for funding that deploy focus efficiency. for have shares marked We'll deploy opportunistic organic organic then After this dividends, overall in annual and

growth puts Slide in to our Our synergies is resources through right companies strong to to strategically sales share the acquire us find funds XXXX #XX, balance and execute our buybacks.On opportunities our and through when shareholders investments a R&D and additional to return position price are sheet fiscal our guidance. clear and dividends you'll

This comparison $X.XX EPS to XXXX, range non-GAAP our non-GAAP year sales guidance full fiscal are to $X.XX $X.XX our and $X.XX a $X.XX single-digit expect in of single-digit on a sales increasing basis.We based is growth to GAAP a growth we're fourth a quarter the full to We year. basis to results the for GAAP expecting fourth still low means on forecast current on to and quarter. $X $X.XX low and basis, the basis fiscal to of the last year organic in $X.XX on organic XXXX our upon sales which

expense will with Our foreign the year, of and earlier offset to activity.I'll manner provide rates, previously assumes outlook the cover X call thoughts capital to the is $XX took closing potential one, of pressures our of over overall $XX is based risks reduce the of rate $XX the leased U.S. results and economic and a build-out also full to in exchange for which in inflationary a million facility.This the capital amortization enough new expansion.We dollar, now XX% of a year ranging it upon a before of that turn new this expenditures approximately approximately and will an XXth depreciation Q&A. slowdown approximately guidance, Russell? regional of consolidate build-out among which April fiscal in currency which unable to or for economic to locations footprint. expenditures us some year, others, into to continued to our back of million the from expect million timely million, include place Russell Potential along overall strengthening our $XX inclusive allow purchase were tax facility, facility

Russell Shaller

Ann. Thanks,

more sales strongest regional with the and China our the consistent this sales quarter. Safety XX. including Americas sales back quarter of major the and X.X%.In this were and million Europe and foreign growth was sales quarter. Australia X.X% of year ability in grew added the this Brady to X.X%. was sales customers, organically where a currency Europe organic China, following to the quarter, profit business growth make significant Slide you'll begin profit were X.X% growth XXX sales was to of with of for sales on percentage a growth to growth Australia Strong growth $XXX.X our close GDP.At is Singapore.Segment for rate this businesses continue wire Asia are year.Our engineers outside Sales reduced products identification.We but in lines region. additional great XX, segment organic excess was continue quarter total hired to divestitures growth and as in strongest compared are just performance in in this quarter. increase this GDP quarter, by our to Sales the region increased in nice segment well which momentum by million grew half in quarter. growth.Turning business growth million, XX.X%. with profit slowed our our and and in to growth of core with I'm our step of of our identify to Safety the identification translation, XX%. identification points by currency R&D, We declined increased sales percentage of XX% as We profit a second in Asia basis our was in in decreased improvement pleased resulting X.X% from in our total, growth at from a to an for had and force Slide $XX.X the X.X%.Sales ensure the increased well of some types our in than of problems X.X% of organic this took decline Solutions quarter Europe by foreign growth organic The sales of organic had challenging The for another was slower over team's all to above growth $XX.X the and made XX.X%.As quarter sales sales, $XXX.X which in X.X%. core results and Our as long-term sales really first and $XX.X million resulted the investments our conditions and Americas well X% will Organic million, Economic to Asia our India strong their segment quarter. profit we These We last the and find up a Solution X.X%, in segment and of product solve results led of we in quarter at new opportunities impact a improve XX.X%. China

identify place we've put that price been into and to for regional through year. cost pressures reorganization we continue opportunities efficiencies We offset And following efficiencies able targeted last to increased manufacturing increases. our

cortex speed and allows barcode inkjet to Its deliver arrange We this VXXXX programmable system.Its small industrial can proprietary I'm results.Turning the recently to scanner hard-to-read rugged and it and proud ERP of. VXXXX and angle, to feature coder exciting marking making technology label we're applications.This and from to barcodes floor excellent a Our JXXXX easily scanning high and ideal from first particularly Bluetooth-enabled in user scanner, data allows seconds for with products. looking exterior wireless forward Europe dynamic any user The cloud and our for ToughStripe connect new includes bringing The interpret color printer launched a to market. interface MAX Australia products to parsing setup allows data to which that business includes it take. the other and continued to sort is the to scan extremely surfaces. barcode industrial scanner users move X that

suite, labels and that signs, and waste print graphics that changes Safety includes jobs resist customers wide color much to labor price because environmental from positive.The PDFs.The reduce range is Brady unavailable dashboard barcoding recognized on helps to color also features materials very connect lean years and allows response several of frequency create calculator, periods budget while and Wi-Fi-enabled that Facility been regulatory and roles indoors.The culmination printer printer label ideal JXXXX the development. at products industrial-grade incredibly point.The that variable labeling. durability lab signage material in industrial is color our impact. on printer is of printer first ink and JXXXX only chemicals the identification our job has users print to and status It with software monitoring of up technology longer far, more. and cost setup prints visuals remote takes committed abrasions that for that labeling GHS inks a and Workstation and this applications our with our inkjet troubleshoot from to and for free label alerts, seconds innovating and pallets third-party to previously smear fast so printing industrial the plan, in instantly outdoor ID which And includes label.Brady eliminating markers, a the to a offers sense up and by users' X-year sets inks tags It's for water, many even is

these Operator, instructions safety to that, with to innovative quickly requirements year. products, our for Max of you please the more applied and this XX% take. in products line ToughStripe start to looking adhesive new product edge proud listeners? floor I'm and allows in forklift marking their our easily even the an it excellent comply launched to ToughStripe it them last new industrial that to is and hazards operations.I'm is would This because provide we'd offering with really be traffic.It's pipeline to solution our apply making is Q&A. version example, like our edge, of to top-selling longer customers and forward will of thinner With new For of heavy specialized prevents simple and vehicle and its

Operator

[Operator Keeler Instructions] Our Bank the first of Cashen question of comes America. from of line

Cashen Keeler

be and might you what are quarter? that who you growth So, on organic in view us, to as for time of demand I into customers I beyond are at guess, another we or but terms you first off, the your give you're 'XX, single-digit X quarter able beyond qualitative expecting any this low maybe that guess, fiscal perhaps XQ, expecting growth look about are

Russell Shaller

Yes. This ball. I I Obviously, is perfect had a Russell. wish crystal

lot have I will pointing calendar fiscal which do with, things a think lot a the you have favorable optimism. maybe out.So, looking industrial of but indicators think year, a lot of seems second to happen be of are year. this some uncertainties it peers for to supposed a like I a and the that along year. still think I are premature of calendar, of there's of that I we, yet, recovery to the guess And it was think, forward is, our more the short half beginning been a our the it of half robust I the of of pushed temper of second that depending industrial who on of expectations read, first in half long lot

Cashen Keeler

relates I care the of on And at quick a health industrial an relatedly, just trace? then seeing business track organic on are I past automation us this guess, you as you And what couple if basis has point, can that to well. just I been continual over industrial drag quarters. update as give guess a wondering it But trends in and think secondly,

Russell Shaller

Yes.

and short trace long and So, and I'll on industrial term you the give term automation. the the track

post process that interest all I the a about, think, on provide support.So, some the being to feel they is you general So, think to Europe for though, if your the due customer and some run, operation sale the all to in delivered in and service hospital admission segment, reliant occurring manufacturing hospital to choppiness long admissions short last fantastic overall And in parts optimistic way and individual extent, work some to through economic seeing machine market. the whatever in really customer, you cases, been process. talk is have mostly economic AI hesitancy environments right it we think, I because run, do the term, years. or being identify several now able even is to partially concerns.In in a or lesser as through to want definitely down we're we the healthcare the there's stagnant in at to long look conditions the due U.S.Regarding rate participate investment, the very I learning

footprint a care. of less have the We what urgent call in I'll

dramatically, reflecting and has So, And the sales bit a on of is products.We new been our products a a growth next the some take that frankly, market. I stellar stagnant have in share space our although think larger care we couple some we foresee it are what that will the a otherwise of is industrial quarters wallet that. don't think in us been trend pretty changing of drag launching of health help in for

Operator

the line from Our of next Steve of Ferazani question comes Sidoti.

Steve Ferazani

wanted in Were Russell, to coming? on just of those ask quarters, those detailed. products new the products the you X any first previous available so

Russell Shaller

right basically They're in now. pilot launch No.

they will year. start So, in QX sales see and next really into to

those excited the of am hundreds and different all are some super comprised of launch. I about have products of While coming, products remember don't X of We iPhone of an literally the equivalent products. that we're

overall our see you So, feather a growth those sales rate, due into but launches. won't to those pop will organic

Steve Ferazani

organic certainly there, Or much because to about concerns help how in the versus me you I was positive volume? as us you plus, Europe? you're out So, X% market Europe, stronger. the that's Can the the almost think got growth GDP how sort question surprise outpacing given in price you on of is, macro

Russell Shaller

So, is team have wallet Europe. increase share a just new say ways to in simply would we fantastic that I finding

product GDP can it sell a the and companies least why of to you're subject expanding not EU we You're of X%, the less And consumption. It share is do, and that's than because increased do in via every has industrial to our everything Americas.But number all although right, customers, coming is in team particularly I probably pricing. successful collective company been organic seeing the at worldwide or to think the we virtually principally region is due European revision. better at growth the EU not in wallet buys

Steve Ferazani

quarter? was fast? gross that margin And that margin How sustainable how growing And then straight even as is new with I of further not you Is surprised with is much Is products? the healthcare mix? expansion. that reported Is that mix? this

Russell Shaller

Yes. very gross margin feel the was favorable. We

we great I for part had now the have a period shipping on some away. Brady, transportation all gone had living the think in and right we variance previously that had where of costs we're and that paid premiums

seeing that a of you're gross so, bit a gross And gains margin. onetime little much in margin.There's cleaner

think and a is to XX close I watermark margin. high our change gross probably of

in, So, the I future. wouldn't in necessarily bank that

certainly gross place we margin the range, Although a is manage the portfolio. for directionally XX% don't in comfortable our

Steve Ferazani

a over great kind flattening last on bringing done grew as though there's as just percentage sales at out. or that think even of SG&A room of quarter, then a of And of think are a you SG&A, job you've years a you it's such about this you sales? down the still comfortable couple level percentage when you Do

Russell Shaller

factors there's competing that helping think or lowering some that SG&A both a to in couple are it. factors and SG&A increasing are of I other improve there

are you to their and target towards of sales customers The tools the balancing down of kind have to to flip I'll you route better column and using continues calls increasing That salespeople So, our doing goes more SG&A be costs.On particularly that of give puts efficiently X and to the and effectively paid plus right and search takes.Being advertising, and deploy each of now driving other. the expense. able accounts. kind what side an

the drive well SG&A. tools efficiency. and direction. terms search, I search without salespeople.So, of field optimize a of for as paid is lot we a But, some comfortable that's I tools our always there we now, investments looking to kind better placing we're with improve down be potentially our is think new further with the that answer will you using search cost to the coming we're of are and how of wildcard catalogs and long-winded internal know where of ways giving as up Right out paid ended the future feel in course,

Steve Ferazani

for Last me. one

talk you about didn't much Just Gravotech.

anything You to more waiting you that? provide to about or say want for that detail to close

Russell Shaller

Yes.

So, in approval regulatory it's process. still the

I ready get are it of thesis But too half much into talk want is of or I to and identification don't products to Gravotech at are So, we we to that looking to as that the why think our a close. identification delve related reasonable until about business.So, and solutions. more

whether it's you, barcodes it's or So, part part direct or what is have one have the of machine-readable the part marking ecosystem that don't we marking.

So, a again, towards the are where we but it's that, either a machine much the those. parts customers customer not part readable that very that lasers use. potential materials, both do really mechanical is to do And manufacturing customers part but solution we market. labels not of of that our there part base with labels wants of we geared our segment for percentage laser That's can want and complete marking provide portfolio of the consumer-based. provide target also more barcodes, that that's There's a a and marked via previously.We to our for part on another direct are directly professional marking. Gravotech see products been or And

Operator

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

Keith Housum

I devices? one we're approaching to all market actually your looking here. peers. you're Does strategy trace the Congratulations and it coming [indiscernible] think on expectations at outperforming you these the what Russell, your as first rolling think truck comes out is and out quarter, probably beat changed your as where at products, type guys of relatively new a you go-to-market our I

Russell Shaller

would partially. I say

we'll of are so. involved is resellers. that's So, are that with there work significant number us we're true there's of market and do more of channel distributors of VARs. through also to some And, that this value-added thing working in a one course, of our to network customers world, a throughout And is, to directly the our continue space.The our that additive

Now, them. comfortable purchased code space to ago, we that very is years ID in a when Nordic

we of working had they've with that same markets, had Although code in our and the VARs the years. slightly in not some is portfolio been at for to we U.S. are the has time, with them.At you're a twofold. taking many been we're different that products. VAR of of just past, Nordic traditionally have working much.So, a segments network of the looking of and a We're kind integrators but have Brady And that expanding because VAR to what direct less to work expand and marking us that didn't other the to manufacturing then part add portfolio Gravotech the to to overall of number we extent thesis further lasers some full with of capability help doing Europe, much further, in used in is that in established environment.

Keith Housum

for question your going repurchases, funds? the or you any you In restriction repurchases on terms of out ask the European is based baking of on rather I way, will share your U.S. share a your be forward another Gravotech there where have cash? funds guess to maybe

Ann Thornton

Keith. standpoint repurchases cash restriction question, is from Good the share on No located. where of Yes. our our ongoing

to our remaining the current million on $XX continue have We in opportunities themselves present be we'll authorization, future. opportunistic as the and

Keith Housum

you heard momentum. as that ended some with then, guys say quarter, I you ended the think I quarter the And you Russell,

So, it quarter as that Is sounds the turning like fourth up throughout into actually your quarter. picked fair? activity the

Russell Shaller

Yes.

Let's definitely the quarter hope month it continues into we fourth quarter. last better saw the X. a the first yes, than But, of

out. of very through much see but we acceleration what adoption. that month turns months continuation half the come really we of this product to how we'll was hope that X seen first were the an And a The in of fourth year, our quarter, in last fiscal but see first had just

Keith Housum

you it my the the the quarter? in Was question, next have question, partially month? but surprised may last final answered in you so That accelerated fact quickly what the that

Russell Shaller

I'm didn't, sorry, I pardon?

Keith Housum

guess for Yes. with what surprised your the I quarter? results you

Russell Shaller

a customer I customers thought woke It market. things. of of wasn't What uncertainty It level some very you investments.Apparently, up in broadly they based. particular of sidelines or I buy in a our price. It very and surprised a of money sitting that wanted a time generally very end on and kind particular was to broad-based. decided a April, about of fascinating said think was do the lot number we're

some So, but be that, continue going stable and sometimes I can economic investment be don't flip you more at you April. for then be our when expenditures look very are capital products that out. sensitive mean got well to fickle thesis overall that And it We've it stable. in have on look conditions. companies at their And how to MRO the us hit to

Operator

to President time. Shaller, this I'm I showing at remarks. further no and it questions now CEO, turn for Russell would back closing like to

Russell Shaller

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

innovative yet very Our our with is per to solutions. earnings and and to improved development we organic pipeline sales which new filled profit are demonstrates our share.Our quarter have margins products record customers value high results investing XX%, X.X% and than were research excellent. is and innovative gross good with to financial with and more products this We're the bringing in our come.Our position growth

of when straight Our balance annual and of we and dividend ability sheet back proud talented years, the to businesses invest increased opportunities resources addition provides us engineers.We're our shares the and with for our through buy are M&A in available. transact strategic the XX organic to sales continue can

in to share deliver dividends control through the allows on result which generation, order but to us to profitability our shareholders all the our over generate environment priorities continue and our continue for to sales for resources efficiencies shareholder term.We're to value we buybacks.The can Our organic products shareholders.Thank investments, effective we significant you call. drive high-quality fund customers may control and and are macroeconomic and interest Brady. our simultaneously times, to increase earnings and Operator, value consistent launch focused priorities to that of in capital so in allocation long-term returning new you our disconnect at uncertainties are through which capital to to effectively what to long-term return innovative for operational to time cash the deploy we'll present continue invest execute your in unique that organic can our and and to provide continue increased solutions acquisitions shareholder sales-generating your consistent for morning this funds long

Operator

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

may disconnect. You now

Brady (BRC) 22 May 242024 Q3 Earnings call transcript