Q4 2024 Brady Corp Earnings Call

September 6, 2024

I'll be right back.

Thank you for standing by.

Operator: Welcome to the Q4, 2024, Brady Corporation Earnings Conference School. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press Star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 on again. Please be advised that today's conference is being recorded.

Speaker Change: Good day, and thank you for standing by. Welcome to the Q4 2024 Brady Corporation earnings conference call. At this time, all participants are an illicit only mode.

Speaker Change: After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised.

Speaker Change: To withdraw your question, please press star 1-1 again.

Speaker Change: Please be advised that today's conference is being recorded.

Operator: I would now like to hand the conference over to your speaker today.

Ann Thornton: And Thornton, CFO, please go ahead. Thank you. Good morning and welcome to the Brady Corporation Disco 2024 Fourth Quarter Earnings Conference Call. The slides for this morning's call are located on our website at www.bradycorp.com slash investors. We will begin our prepared remarks on slide number three. Please note that during this call, we may make comments about forward-looking information. Words such as expect, will, may, believe, forecast, and anticipate are just a few examples of words identifying a forward-looking statement. It's important to note that forward-looking information is subject to various risk factors and uncertainties, which could significantly impact expected results.

Speaker Change: I would now like to hand the conference over your speaker today and Thornton, CFO. Please go ahead.

Speaker Change: Thank you. Good morning and welcome to the Brady Corporation Disco 2024 Fourth Quarter earnings conference call. The slides for this morning's call are located on our website at www.radicorp.com slash investors. We will begin our prepared remarks on side number three.

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

Speaker Change: is important to note that for looking information is subject to various risk factors and uncertainties, which could significantly impact expected results.

Ann Thornton: Risk factors were noted in our news release this morning and in Brady's fiscal 2024 Form 10-K, which was filed with the SEC this morning.

Speaker Change: Chris Factors were noted in our news release this morning and in Brady's fiscal 2024 form 10k which was filed with the SEC this morning.

Operator: Also, please note that this teleconference is copyrighted by Brady Corporation and may not be rebroadcast without the consent of Brady. We will be recording this call and broadcasting it on the internet. As such, your participation in the Q&A session will constitute your consent to being recorded.

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

Speaker Change: We will be recording this call and broadcasting it on the Internet. As such, your participation in the Q&A session will constitute your consent to being recorded. I'll now turn the call over to Brady's President and Chief Executive Officer, Russell Shaller. Russell?

Russell Schaller: I'll now turn the call over to Brady's President and Chief Executive Officer, Russell Schaller. Russell. Thank you, Anne, and thank you all for joining us today. We released our fiscal 2024 fourth-quarter financial results this morning, and I'm thrilled to announce another company record high EPS for both the quarter and the year. We grew organic sales this quarter, and we also generated record high cash flow from operating activities. This quarter was an excellent finish to another great year. Our 2024 non-GAPEPS of 422 was another all-time record high, following three consecutive years of all-time record highs. Our GAPEPS of 4.07 was also an all-time record high.

Russell Shaller: Thank you, Ann, and thank you all for joining us today.

Speaker Change: We released our fiscal 2024 fourth corridor financial results this morning and I'm thrilled to announce another company record high EPS for both quarter and the year. We grew organic sales this quarter and we also generated record high cash flow from operating activities.

Speaker Change: This quarter was an excellent finish to another great year. Our 2024 non-gap EPS of 422 was another all-time record high following three consecutive years of all-time record highs.

Speaker Change: Our Gap EPS of 4.07 was also an all-time record hog.

Russell Schaller: This year we grew organic sales by 2.6% with growth driven by both of our regional segments. We improved our growth profit margin to 51.3% and increased from 49.4% last year. We closed the acquisition of Gravitech on August 1st, and we returned $117 million to our shareholders through dividends and share buybacks. I'm incredibly proud of the entire Brady team for creating our results this year. It's a testament to their efforts that our profitability improved; our investment in R&D. We're using these investments to increase our portfolio of engineered products to help make our customers' lives easier. Meanwhile, we're expanding our sales force and investing in our digital capabilities to put ourselves in the best position to generate consistent organic sales.

Speaker Change: This year we grew organic sales by 2.6%.

Speaker Change: with growth driven by both of our regional segments.

Speaker Change: We improved our growth profit margin to 51.3% and increased from 49.4% last year. We closed the acquisition of Grav Attack on August 1st and we returned 170 million to our shareholders through dividends and share by-back.

Speaker Change: I'm incredibly proud of the entire Brady team for creating our results this year. It's a testament to their efforts that our profitability improved while we increased our investment in RNG.

Speaker Change: We're using these investments to increase our portfolio of engineered products to help make our customers' lives easier. Meanwhile, we're expanding our Salesforce and investing in our digital capabilities to put ourselves in the best position to generate consistent organic sales growth.

Thank you for standing by.

Unknown Executive: Welcome to the Q4, 2024, Brady Corporation Earnings Conference School. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 on again. Please be advised that today's conference is being recorded.

Russell Schaller: Road. Our priorities for the next year remain the same. Generate top line growth in excessive GDP and continue our evolution into a faster growing company. Target niche opportunities by developing unique product offerings to support our customers, particularly in the area of workplace automation, which we believe is a growth opportunity for years to come. Deliver operational improvements to increase profitability as we grow. To integrate, grab a tech acquisition and identify combined sales growth opportunities. And effectively deploy our capital to drive long-term shareholder value, which includes organic investments, acquisitions, returning funds to our shareholders through dividends and share buybacks.

Speaker Change: Our priorities for the next year remain the same. Generate top line growth in excessive GDP and continue our evolution into a faster growing company.

Speaker Change: Target Nitch Opportunities by developing unique product offerings to support our customers.

Speaker Change: For a particularly in the area of workplace automation, which we believe is a growth opportunity for a year to come. Deliver operational improvements to increase profitability as we grow. To integrate gravel tech acquisition and identify combined sales growth opportunities.

Unknown Executive: I would now like to hand the conference over your speaker today.

Speaker Change: And effectively deploy our capital to drive long-term shareholder value, which includes organic investments, acquisitions, returning funds to our shareholder through dividends and share by-back.

Ann Thornton: And Thornton, CFO, please go ahead. Thank you.

Russell Schaller: We demonstrate our commitment to returning funds to our shareholders this year as we repurchase nearly 3% of our diluted share count. And we announced an additional 100 million shareback authorization. And yesterday, we announced an increase in our dividend, which represents the 39th consecutive year of annual dividend increases. We are committed to return cash to our shareholders while delivering a strong shareholder return.

Russell Shaller: Good morning and welcome to the Brady Corporation Disco 2024 fourth quarter earnings conference call. The slides for this morning's call are located on our website at www.bradycorp.com slash investors. We will begin our prepared remarks on slide number three.

Russell Shaller: Please note that during this call, we may make comments about forward-looking information. Words such as expect will, may, believe, forecast and anticipate are just a few examples of words identifying a forward-looking statement. It's important to note that forward-looking information is subject to various risk factors and uncertainties which could significantly impact expected results. Risk factors were noted in our news release this morning and in Brady's fiscal 2024 Farm 10K which was filed with the SEC this morning.

Speaker Change: We demonstrate our commitment to returning funds to our shareholders this year as we repurchase nearly 3% of our deluded share count.

Speaker Change: and we announced an additional 100 million shareback authorization. And yesterday, we announced an increase in our dividend, which represents the 39th consecutive year of annual dividend increases.

Speaker Change: We are committed to return cash to our shareholders while delivering a strong shareholder return.

Ann Thornton: I'm now turning it over to Ann to provide more details on our financial results.

Speaker Change: I'm now turning it over to Ann to provide more details on our financial results, Ann.

Ann Thornton: Ann. Thank you, Russell. We had a strong quarter and an excellent finish to 2024. Our organic sales growth was 1.6% this quarter. Our growth profit margin improved to 51.6%. We increased our investment in R&D, and we reduced SG&A as a percentage of sales. This resulted in earnings growth and another quarterly record gap EPS of $1.15 per share, which was up 15% compared to the fourth quarter of last year. Our non-GAAP EPS, which is calculated as our GAAP EPS, excluding the after-tax impact of amortization expense, was $1.19 per share this quarter, which was up 14.4% over the fourth quarter of last year.

Unknown Executive: Also, please note that this teleconference is copyrighted by Brady Corporation and may not be rebroadcast without the consent of Brady. We will be recording this call and broadcasting it on the Internet. As such, your participation in the Q&A session will constitute your consent to being recorded.

Ann: Thank you, Russell.

Ann: We had a strong quarter in an excellent finish to 2024. Our organic sales growth was 1.6% this quarter. Our growth's profit margin improved to 51.6%.

Russell Shaller: I'll now turn the call over to Brady's president and chief executive officer, Russell Schaller. Russell. Thank you, Anne, and thank you all for joining us today.

Speaker Change: We increased our investment in R&D, and we reduced STNA as a percentage of sales. This resulted in earnings growth and another quarterly record gap EPS of $1.15 per share, which was up 15% compared to the fourth quarter of last year.

Russell Shaller: We released our fiscal 2024 fourth-corver financial results this morning, and I'm thrilled to announce another company record high EPS for both quarter and the year. We grew organic sales this quarter, and we also generated record high cash flow from operating activities. This quarter was an excellent finish to another great year. Our 2024 non-GAPEPS of 422 was another all-time record high following three consecutive years of all-time record highs. Our GAPEPS of 4.07 was also an all-time record high.

Speaker Change: Our non-gap BPS, which is calculated as our Gap BPS, excluding the aftertaps impact of amortization expense, was a dollar-19 per share, this quarter, which was up 14.4% over the fourth quarter of last year.

Ann Thornton: Both regions performed well this quarter. Our Americas and the Asia region grew organic sales 3.4% and increased segment profit by 6.7%. Our Europe and Australia region declined 1.8% organically compared to last year's fourth quarter, which follows an impressive streak of 13 straight quarters of organic sales growth. The macro environment in Europe has become more challenging over the last several months and quarters, but even despite the slight decline in organic sales, we were still able to increase operating income by 4.6% in the region. Which was driven by continued improvement in growth profit margin and ongoing efficiency gains through outer cost structure in Europe.

Speaker Change: Both regions performed well this quarter. Our Americas and Asia region grew organic sales 3.4% and increased segment profit by 6.7%.

Speaker Change: Our Europe and Australia region declined 1.8% organically compared to last year's fourth quarter, which follows an impressive streak of 13 straight quarters of organic sales growth.

Russell Shaller: This year we grew organic sales by 2.6% with growth driven by both of our regional segments. We improved our growth profit margin to 51.3% and increased from 49.4% last year. We closed the acquisition of Gravitech on August 1st, and we returned $117 million to our shareholders through dividends and share buybacks. I'm incredibly proud of the entire Brady team for creating our results this year. It's a testament to their efforts that our profitability improved our investment in R&D.

Speaker Change: The macro environment in Europe has become more challenging over the last several months and quarters, but even despite the slight decline in organic sales, we were still able to increase operating income by 4.6% in the region.

Speaker Change: which was driven by a continued improvement in girls' process margin and ongoing efficiency gains through outer cost structure in Europe.

Speaker Change: The key financial takeaways this quarter are record high EPS, record high cash flow from operating activities, continued strong financial performance within both of our regions, and a continued commitment to return funds to our shareholders.

Russell Shaller: We're using these investments to increase our portfolio of engineered products to help make our customers' lives easier. Meanwhile, we're expanding our sales force and investing in our digital capabilities to put ourselves in the best position to generate consistent organic sales. Road.

Ann Thornton: Let's move to slide number 4 for our quarterly sales trends. Organic sales grew 1.6% this quarter. The recent strengthening of the US dollar versus other major currencies decreased sales by 0.8%, and the vestiture's decreased sales by 1.5% for a total sale of the kind of 0.7% in the quarters.

Speaker Change: Hope to move to slide number four for our quarterly sales trends.

Speaker Change: Organic sales grew 1.6% this quarter. The recent strengthening of the US dollar versus other major currencies decreased sales by 0.8% and the Vestators decreased sales by 1.5% for a total sales decline of 0.7% in the quarter.

Russell Shaller: Our priorities for the next year remain the same. Generate top line growth in excessive GDP and continue our evolution into a faster growing company. Target niche opportunities by developing unique product offerings to support our customers, particularly in the area of workplace automation, which we believe is a growth opportunity for years to come. Deliver operational improvements to increase profitability as we grow. To integrate, grab a tech acquisition and identify combined sales growth opportunities.

Ann Thornton: Moving to slide number five, you'll find our quarterly gross profit or a gross margin trending. Our gross profit margin continues to be strong, with an increase of 80 basis points to 51.6% compared to 50.8% in the fourth quarter of last year. We continue to realize benefits from our sales growth coming from higher gross profit margin products as well as stabilizing input costs compared to last year.

Speaker Change: Moving to slide number five, you'll find our quarterly gross profit or a gross margin trending.

Speaker Change: Our Gross Profit margin continues to be strong with an increase of 80 basis points to 51.6% compared to 50.8% in the fourth quarter of last year.

Speaker Change: We continue to realize benefits from our sales growth coming from high gross profit margin products as well as stabilizing input costs compared to last year.

Ann Thornton: Slide number six details our SG&A expense trending. SG&A was 93.3 million this quarter compared to 97.5 million in the fourth quarter of last year. As a percent of sales, SGNA declined to 27.2% compared to 28.2% of sales last two four. And then, if you exclude amortization expense from each of the periods presented, an SGNA would have decreased from 27.5% of sales in the fourth quarter of last year to 26.5% of sales this quarter. We've made significant progress in optimizing our cost structure, reducing our SG&A expense from more than 36% of sales eight years ago to 28.1% in fiscal year 2024.

Russell Shaller: And effectively deploy our capital to drive long-term shareholder value, which includes organic investments, acquisitions, returning funds to our shareholders through dividends and share buybacks. We demonstrate our commitment to returning funds to our shareholders this year as we repurchase nearly 3% of our deluded share count. And we announced an additional 100 million shareback authorization. And yesterday, we announced an increase in our dividend, which represents the 39th consecutive year of annual dividend increases. We are committed to return cash to our shareholders while delivering a strong shareholder return.

Speaker Change: Slide number six details are SGNA expense trending.

Speaker Change: SGNA was 93.3 million this quarter compared to 97.5 million in the fourth quarter of last year.

Speaker Change: As a percent of sales, SGNA declined to 27.2% compared to 28.2% of sales last Q4.

Speaker Change: And then if you exclude amortization expense from each of the periods presented, an SGNA would have decreased from 27.5% of sales in the fourth quarter of last year to 26.5% of sales this quarter.

Speaker Change: We've made significant progress in optimizing our cost structure, reducing our SUNA expense from more than 36% of sales eight years ago to 28.1% in fiscal year 2024.

Ann Thornton: I'm now turning it over to Ann to provide more details on our financial results. Ann. Thank you, Russell.

Ann Thornton: At the same time, we've continued to invest in growth by expanding our sales force, enhancing our digital capabilities, and broadening our army channel strategies, all while identifying savings throughout our sales and other selfer support functions.

Ann Thornton: We had a strong quarter and an excellent finish to 2024. Our organic sales growth was 1.6% this quarter. Our growth profit margin improved to 51.6%. We increased our investment in R&D and we reduced SGNA as a percentage of sales. This resulted in earnings growth and another quarterly record gap EPS of $1.15 per share, which was up 15% compared to the fourth quarter of last year. Our non-gap EPS, which is calculated as our gap EPS, excluding the after tax impact of amortization expense, was $1.19 per share this quarter, which was up 14.4% over the fourth quarter of last year.

Speaker Change: At the same time, we've continued to invest in growth by expanding our sales force, enhancing our digital capabilities and broadening our Omni-channel strategies, all while identifying the savings throughout our sales and other self-report functions.

Ann Thornton: Moving to slide number seven, you'll find the trending of our investments in research and development. This quarter, we once again increased our investment in R&D, finishing at 17.5 million, which was 5.1% of sales. We know that the investments with the BEST ROI are almost always organic investments, and in particular our investments in research and development. We remain committed to new product development, and we have another exciting lineup of products set to launch in fiscal 2025.

Speaker Change: Moving to slide number 7 you'll find the trending of our investments in research and development. This quarter we once again increased our investment in R&D finishing at 17.5 million, which was 5.1% of sales.

Speaker Change: We know that the investments with the best ROI are almost always organic investments and in particular our investments in research and development.

Speaker Change: We remain committed to new product development and we have another exciting lineup of products set to launch in fiscal 2025.

Ann Thornton: On slide number eight, you can see that pre-tax earnings increased 6.9% on a GAAP basis from 63.8 million to 68.2 million. And if you exclude amortization from both periods, pre-tax earnings increased 6.6% on a non-GAAP basis from 66.2 million to 70.5 million.

Speaker Change: On slide number eight, you can see that pre-tech earnings increased 6.9% on a gap basis from 63.8 million to 68.2 million.

Speaker Change: and if you exclude amortization from both periods, pre-tax earnings increased 6.6% on a non-gap basis, from 66.2 million to 70.5 million.

Ann Thornton: Slide number nine details the trending of earnings in DPS. Here you can see a clear trend of increasing earnings, and you can also see that the fourth quarter is our strongest quarter on record. On both a gap and a non-gap basis, our fourth quarter EPS was an all-time record high. This quarter's gap EPS increased 15% compared to last year, and if you exclude the after-tax impact of amortization from both periods, our fourth quarter non-gap EPS increased 14.4% compared to last year.

Speaker Change: So I'd number 9 detail the trending of earnings in DPS.

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

Ann Thornton: The key financial takeaways this quarter are record high EPS, record high cash flow from operating activities, continued strong financial performance within both of our regions, and a continued commitment to return funds to our shareholders. Let's move to slide number 4 for our quarterly sales trends. Organic sales grew 1.6% this quarter. The recent strengthening of the US dollar versus other major currencies decreased sales by 0.8% and the vestiture's decreased sales by 1.5% for a total sale of the kind of 0.7% in the quarters.

Speaker Change: This quarter is Gap, EPS increased 15% compared to last year and if you exclude the after-tax impact of amortization from both periods, our fourth quarter, non-Gap EPS increased 14.4% compared to last year.

Ann Thornton: Turning to slide number 10, you'll find a summary of our cash generation. Operating cash flow increased from 79.3 million in Q4 of last year to 84 million in this quarter. And free cash flow continues to be strong at 73.2 million this quarter compared to 73 million in last year's fourth quarter. Operating cash flow was 151% of net income, and free cash flow was 132% of net income this quarter.

Speaker Change: Turning to slide number 10, you'll find a summary of our cast generation.

Speaker Change: Operating cash flow increased from 79.3 million in Q4 of last year to 84 million in this quarter.

Speaker Change: and Free Cash will continue to be strong at 73.2 million this quarter compared to 73 million in last year's fourth quarter.

Speaker Change: Operating cash flow was 151% of net income and free cash flow was 132% of net income this quarter.

Ann Thornton: Moving to slide number five, you'll find our quarterly gross profit or a gross margin trending. Our gross profit margin continues to be strong with an increase of 80 basis points to 51.6% compared to 50.8% in the fourth quarter of last year. We continue to realize benefits from our sales growth coming from higher gross profit margin products as well as stabilizing input costs compared to last year. Slide number six details our SGNA expense trending.

Ann Thornton: Slide number 11 details the impact that our historical cash generation has had on our balance sheet. As of July 31st, we were in a net cash position of 159.2 million dollars. Our approach to capital allocation is consistent, which is to first use our cash to fund organic sales growth and efficiency opportunities. This includes investing in new product development, sales generating resources, capability in enhancing CAPEX, and automation focused CAPEX. We have the ability to continue to invest throughout the economic cycles so that we're always putting ourselves in the best position to drive future sales growth and profit growth.

Speaker Change: So I'd number 11 details the impact that our historical cash generation has had on our balance sheet. As of July 31st, we were in a net cash position of $159.2 million.

Speaker Change: Our approach to capital allocation is consistent, which is to first use our cash to fund the organic sales growth and efficiency opportunities.

Speaker Change: This includes investing in new product development, sales-generating resources, capability enhancing cat backs, and automation focus cat backs.

Ann Thornton: SGNA was 93.3 million this quarter compared to 97.5 million in the fourth quarter of last year. As a percent of sales, SGNA declined to 27.2% compared to 28.2% of sales last two four. And then if you exclude amortization expense from each of the periods presented, an SGNA would have decreased from 27.5% of sales in the fourth quarter of last year to 26.5% of sales this quarter. We've made significant progress in optimizing our cost structure, reducing our SGNA expense from more than 36% of sales eight years ago to 28.1% in fiscal year 2024. At the same time, we've continued to invest in growth by expanding our sales force, enhancing our digital capabilities, and broadening our army channel strategies, all while identifying savings throughout our sales and otherselfer support functions.

Speaker Change: We have the ability to continue to invest throughout the economic cycles so that we're always putting ourselves in the best position to drive future sales growth and profit growth.

Ann Thornton: And second, we focus on consistently increasing our dividends. Yesterday, we announced our 39th consecutive year of annual dividend increases, which is a streak that we're very proud of. After funding organic investments and dividends, we then deploy our cash in a disciplined manner for acquisitions where we have clear synergies, and then also for opportunistic share buybacks when we see a disconnect between intrinsic value and Brady's trading price. Our strong balance sheet puts us in a position to be able to continue to increase our investment in R&D and other organic sales opportunities, to acquire companies strategically when the price is right, and to return funds to our shareholders through dividends and share buybacks.

Speaker Change: And second we focus on consistently increasing our dividends. Yesterday we announced our 39th consecutive year of annual dividend increases, which is a streak that we're very proud of.

Speaker Change: After funding organic investments and dividends, we then deploy our cash in a disciplined manner for acquisitions where we have clear synergies, and then also for opportunistic share bybacks when we see a disconnect between intrinsic value and Brady's trading price.

Speaker Change: Our strong balance sheet puts us in a position to be able to continue to increase our investment in R&D and other organic sales opportunities to acquire companies strategically when the price is right and to return funds to our shareholders through dividends and share by-backs.

Ann Thornton: Moving to slide number seven, you'll find the trending of our investments in research and development. This quarter, we once again increased our investment in R&D finishing at 17.5 million, which was 5.1% of sales. We know that the investments with the BEST ROI are almost always organic investments, and in particular our investments in research and development.

Ann Thornton: Slide number 12 provides an overview of our financial results for the full year ended July 31, 2024. Organic sales grew 2.6 percent, and foreign currency translation increased sales 0.2 percent, while the impact of a divestiture decreased sales by 2.1 percent this year. We finished fiscal 2024 with all-time record high-GAAP EPS and non-GAAP EPS. These strong earnings results were even after increasing our investment in R&D by more than 10 percent this year, resulting in the largest annual investment in R&D in company history.

Speaker Change: Slide 12 provides an overview of our financial results for the full year ended July 31, 2024.

Speaker Change: Organic sales grew 2.6% and foreign currency translation increased sales 0.2%. While the impact of a divestiture is decreased sales by 2.1% this year.

Ann Thornton: We remain committed to new product development, and we have another exciting lineup of products set to launch in fiscal 2025. On slide number eight, you can see that pre-tax earnings increased 6.9% on a gap basis from 63.8 million to 68.2 million. And if you exclude amortization from both periods, pre-tax earnings increased 6.6% on a non-gap basis from 66.2 million to 70.5 million. Slide number nine details, the trending of earnings in DPS.

Speaker Change: We finished fiscal 2024 with all-time record-high gap EPS and non-gap EPS.

Speaker Change: These strong earnings results were even after increasing our investment in R&D by more than 10% this year, resulting in the largest annual investment in R&D in company history.

Ann Thornton: We're confident that our actions this year and our consistent priorities will set us up for success in the future, which takes us to our guidance for next year, which is shown on slide number 13. We're forecasting GAP EPS to range from $4.20 to $4.45 per share in fiscal 2025, which would represent an increase of between 2 percent and 9.3 percent compared to fiscal 2024, and we're forecasting non-GAP EPS, which excludes the impact of amortization, to range from $4.40 to $4.70 per share in fiscal 2025, which would represent an increase of between 4.3 percent and 11.4 percent compared to fiscal 2024.

Speaker Change: We're confident that our actions this year and our consistent priorities will set us up for success in the future. Which takes us to our guidance for next year, which is shown on slide number 13.

Speaker Change: We're forecasting Gap EPS to range from $4.20.

Ann Thornton: Here you can see a clear trend of increasing earnings, and you can also see that the fourth quarter is our strongest quarter on record. On both a gap and a non-gap basis, our fourth quarter EPS was an all-time record high. This quarter's gap EPS increased 15% compared to last year, and if you exclude the after-tax impact of amortization from both periods, our fourth quarter non-gap EPS increased 14.4% compared to last year.

Speaker Change: 24 dollars and 45 cents per share in fiscal 2025 which would represent an increase of between 2% and 9.3% compared to fiscal 2024.

Speaker Change: And we're forecasting non-gap EPS, which excludes the impact of amortization to range from $4.40 to $4.70 per share in fiscal 2025.

Speaker Change: which would represent an increase of between 4.3% and 11.4% compared to Cisco 2024.

Ann Thornton: We also anticipate organic sales growth in the low single-digit percentages for the year ending July 31, 2025. Other elements of our guidance include an income tax rate of approximately 20 percent, depreciation and amortization expense of $38 to $40 million, and capital expenditures of approximately $35 million. Potential risks to our guidance, among others, include potential strengthening of the U.S. dollar, inflationary pressures that were unable to offset in a timely enough manner, or an overall slowdown in economic activity.

Ann Thornton: Turning to slide number 10, you'll find a summary of our cash generation. Operating cash flow increased from 79.3 million in Q4 of last year to 84 million in this quarter. And free cash flow continues to be strong at 73.2 million this quarter compared to 73 million in last year's fourth quarter. Operating cash flow was 151% of net income and free cash flow was 132% of net income this quarter.

Speaker Change: We also anticipate organic sales growth in the low single digit percentages for the year ending July 31, 2025.

Speaker Change: Other elements of our guidance include an income tax rate of approximately 20% depreciation and amortization expense of 38 to 40 million and capital expenditures of approximately 35 million.

Speaker Change: 2.

Speaker Change: The Central Risk to our guidance, among others, include the Central Strengthening of the U.S. Dollar, inflationary pressures that were unable to offset in a timely enough manner or an overall slowdown in economic activity.

Ann Thornton: Slide number 11 details the impact that our historical cash generation has had on our balance sheet. As of July 31st, we were in a net cash position of 159.2 million dollars. Our approach to capital allocation is consistent, which is to first use our cash to fund organic sales growth and efficiency opportunities. This includes investing in new product development, sales generating resources, capability in enhancing CAPEX and automation focused CAPEX. We have the ability to continue to invest throughout the economic cycles so that we're always putting ourselves in the best position to drive future sales growth and profit growth. And second, we focus on consistently increasing our dividends.

Russell Schaller: I'll now turn the call back over to Russell to cover our regional results and to provide some closing thoughts before Q&A. Russell, thanks, Anne. Slide 14 details the financial results of America's and Asia region. Sales were 22.85 million this quarter, and organic sales growth was 3.4 percent. Divestitures decreased sales by 2.2 percent, and foreign currency translation reduced sales by another 0.8 percent, resulting in total sales growth of 0.4 percent this quarter. Our growth was driven by our product identification, wire identification, and safety and facility identification product lines. We finished the year on a high note in July.

Russell Shaller: I'll turn the call back over to Russell to cover our regional results and to provide some closing thoughts before Q&A. Russell? Thanks, Ann. Slide 14 details the financial results of our Americas and Asia region.

Russell Shaller: Sales for 22.85 million this quarter in organic sales growth with 3.4%.

Russell Shaller: Investors decreased sales by 2.2% and foreign currency translation reduced sales by another 0.8%. Resulting in total sales growth of 0.4% is quarter.

Russell Shaller: Our growth was driven by our product identification, wire identification, and safety and solely identification product lines. We finished the year on a high note in July.

Ann Thornton: Yesterday we announced our 39th consecutive year of annual dividend increases, which is a streak that we're very proud of. After funding organic investments and dividends, we then deploy our cash in a disciplined manner for acquisitions where we have clear synergies and then also for opportunistic share buybacks when we see a disconnect between intrinsic value and Brady's trading price. Our strong balance sheet puts us in a position to be able to continue to increase our investment in R&D and other organic sales opportunities to acquire companies strategically when the price is right and to return funds to our shareholders through dividends and share buybacks.

Russell Schaller: We saw meaningful recovery in our Asia businesses quarter with organic growth of 12.3 percent. We're seeing growth throughout Asia, with the exception of China, which declined just over 6 percent organically this quarter. At approximately 20 percent organic revenue growth, our expansion in India is driving some of the best numbers at Brady. Meanwhile, the remainder of our operations in Southeast Asia are also performing well. Segment profit in Americas and Asia increased 6.7 percent to 53.4 million, and segment profit as a percentage of sales increased from 22 percent to 23.3 percent this quarter.

Russell Shaller: We saw a meaningful recovery in our Asia- Businesses Corbber with organic growth of 12.3%.

Russell Shaller: We're seeing growth throughout Asia with exception of China which declined just over 6% organically this quarter.

Russell Shaller: At approximately 20% organic revenue growth, our expansion in India is driving some of the best numbers at Brady. Meanwhile the remainder of our operations in Southeast Asia are also performing well.

Russell Shaller: Segment Prophet in America's an Asian increased 6.7% to 53.4 million and segment Prophet as a percentage of sales increased from 22% to 23.3% this quarter. We are delighted with these results.

Ann Thornton: Slide number 12 provides an overview of our financial results for the full year ended July 31, 2024. Organic sales grew 2.6 percent and foreign currency translation increased sales 0.2 percent while the impact of a divestiture is decreased sales by 2.1 percent this year. We finished fiscal 2024 with all-time record high-GAP EPS and non-GAP EPS. These strong earnings results were even after increasing our investment in R&D by more than 10 percent this year resulting in the largest annual investment in R&D in company history.

Russell Schaller: We are delighted with these results, which were generated by a lot of hard work combined with several industry-leading product launches.

Russell Shaller: Which were generated by a lot of hard work combined with several industry leading product launches.

Russell Schaller: Turning this slide 15, we'll move to the performance of our Europe and Australia region. Sales were 114.9 million in this quarter. Organic sales declined 1.8 percent, and the impact of foreign currency translation decreased sales 1.2 percent for a total decline of 3 percent. This quarter marked the first decline in organic sales in 13 quarters in our Europe and Australia region, which ended in impressive street. Despite the decline in organic sales in Europe and Australia, we still grew segment profit by 4.6 to 19.3 million, and we improved segment profit from 15.6 percent of sales to 16.8 percent of sales.

Russell Shaller: During this live 15, we'll move to the performance of our Europe and Australia region.

Speaker Change: Sales were 114.9 million this quarter, organic sales declined 1.8% and the impact of foreign currency translation decreased sales 1.2% for a total decline of 3%.

Speaker Change: This quarter marked the first decline in organic sales in 13 quarters in our Europe and Australia region, which ended in impressive street.

Ann Thornton: We're confident that our actions this year and our consistent priorities will set us up for success in the future which takes us to our guidance for next year which is shown on slide number 13. We're forecasting GAP EPS to range from $4.20 to $4.45 per share in fiscal 2025 which would represent an increase of between 2 percent and 9.3 percent compared to fiscal 2024 and we're forecasting non-GAP EPS which excludes the impact of amortization to range from $4.40 to $4.70 per share in fiscal 2025 which would represent an increase of between 4.3 percent and 11.4 percent compared to fiscal 2024.

Speaker Change: Despite the decline in organic sales in Europe and Australia, we still grew segment profit by 4.6% to 19.3 million and we improved segment profit from 15.6% of sales to 16.8% of sales.

Russell Schaller: We continue to identify opportunities for efficiencies following our regional reorganization that became effective halfway through last year, and we've been able to offset increased pressures through manufacturing efficiencies and targeted price increases. Given the week macroeconomic picture in that region, I'm incredibly proud of the team's multi-year performance. We do believe long-term prospects in the region are great, and we'll continue to invest in sales resources and geographic expansion through new distributor partners. Our creative approach to solve the unique customer problems with our niche solutions will ensure we remain on a positive trajectory in Europe and Australia.

Speaker Change: We continue to identify opportunities for efficiencies following our regional reorganization that became effective halfway through last year, and we've been able to offset increased pressures through manufacturing efficiencies and targeted pricing crisis.

Speaker Change: Given the week, macroeconomic picture in that region, I'm incredibly proud of the team's multi-year performance. We do believe long-term prospects in the region are great, and we'll continue to invest in sales resources in geographic expansion through new distributor partners.

Ann Thornton: We also anticipate organic sales growth in the low single-digit percentages for the year ending July 31, 2025. Other elements of our guidance include an income tax rate of approximately 20 percent depreciation and amortization expense of $38 to $40 million and capital expenditures of approximately $35 million. Potential risks to our guidance among others include potential strengthening of the U.S, dollar, inflationary pressures that were unable to offset in a timely enough manner or an overall slowdown in economic activity.

Speaker Change: Our creative approach to solving unique customer problems with our niche solutions will ensure we remain on a positive trajectory in Europe and Australia.

Russell Schaller: Looking ahead to our fiscal 2025, we have a lot to look forward to, including several new initiatives that will improve our customer's experience. For instance, our printer cartridges are now enabled with label-sense technology. This enables a seamless print experience for our customers, where the printer is able to sense the specific material and print without waste or the need to worry about unique printer configurations. Second, we have a fully enabled voice to print for our Bluetooth-enabled handheld printers. This allows the technician to simply talk to their phone and print a label without the need to manually enter data.

Speaker Change: Looking ahead to our fiscal 2025, we have a lot to look forward to including several new initiatives that will improve our customers' experience. For instance, our printer cartridges are now enabled with label sense technology.

Speaker Change: This enables a seamless print experience for our customers where the printer is able to sense the specific material and print without waste or the need to worry about unique print or configurations.

Russell Shaller: I'll now turn the call back over to Russell to cover our regional results and to provide some closing thoughts before Q&A. Russell, thanks Anne. Slide 14 details the financial results of America's and Asia region. Sales were 22.85 million this quarter in organic sales growth was 3.4 percent. Divestitures decreased sales by 2.2 percent, and foreign currency translation reduced sales by another 0.8 percent, resulting in total sales growth of 0.4 percent this quarter. Our growth was driven by our product identification, wire identification, and safety and facility identification product lines.

Speaker Change: Second, we have a fully enabled voice to print for our Bluetooth enabled handheld printers. This allows the technician to simply talk to their phone and print a label without the need to manually enter data. These technology improvements are great examples of the product enhancements that help make our customers' lives easier.

Russell Schaller: These technology improvements are great examples of the product enhancements that help make our customers' lives easier.

Russell Schaller: I'd also like to add background to our acquisition of Gravotech, which we recently closed on August 1st. Over half of Brady's business is related to part-marking and identification. A key gap in our portfolio was the ability to directly mark on parts without the use of a label. With Gravotech, we now have the ability to direct laser mark along with scribing and dot-peen marking solutions. These technologies round out our reader, printer, and labeling solutions to provide a single resource for industrial part identification. Gravotech is headquartered in Leone, France, and has an international presence in the US, Latin America, Europe, and Asia.

Speaker Change: I'd also like to add background to our acquisition of gravel tech, which we recently closed on August 1st.

Speaker Change: Over half of Brady's business is related to part marking and identification.

Russell Shaller: We finished the year on a high note in July. We saw meaningful recovery in our Asia businesses quarter with organic growth of 12.3 percent. We're seeing growth throughout Asia with exception of China, which declined just over 6 percent organically this quarter. At approximately 20 percent organic revenue growth, our expansion in India is driving some of the best numbers at Brady. Meanwhile, the remainder of our operations in Southeast Asia are also performing well. Segment profit in Americas and Asia increased 6.7 percent to 53.4 million, and segment profit as a percentage of sales increased from 22 percent to 23.3 percent this quarter.

Speaker Change: A key gap in our portfolio was the ability to directly mark on parts without the use of the label.

Speaker Change: With Gravotech, we now have the ability to direct laser mark along with scribing and dot-peen marking solutions. These technologies round out our reader printer and labeling solutions to provide a single resource for industrial part identification.

Speaker Change: Gravel Tech is headquartered in the own France and has an international presence in the US, Latin America, Europe and Asia.

Russell Schaller: In fiscal 2025, we're forecasting sales of approximately 125 million and EBITDA of approximately 13 million from Gravotech, excluding integration-related costs. Gravotech's high-quality, precision-direct marking products fill a gap in identification offerings within Brady's product portfolio. I will look forward to expanding our customer reach and providing a more complete set of solutions for our customers with the addition of Gravotech.

Speaker Change: In fiscal 2025, we're forecasting sales over approximately 125 million, and EBITDA of approximately 13 million from gravity tech, excluding integration related costs.

Russell Shaller: We are delighted with these results, which were generated by a lot of hard work combined with several industry leading product launches.

Speaker Change: Gravel Tech's high quality precision direct marking products filled with gas in identification offerings within Brady's product portfolio.

Russell Shaller: Turning this slide 15, we'll move to the performance of our Europe and Australia region. Sales were 114.9 million in this quarter. Organic sales declined 1.8 percent and the impact of foreign currency translation decreased sales 1.2 percent for a total decline of 3 percent. This quarter marked the first decline in organic sales in 13 quarters in our Europe and Australia region, which ended in impressive street. Despite the decline in organic sales in Europe and Australia, we still grew segment profit by 4.6 to 19.3 million and we improved segment profit from 15.6 percent of sales to 16.8 percent of sales.

Speaker Change: I will look forward to expanding our customer reach and providing a more complete set of solutions for our customers with the addition of gravity.

Operator: With that, I'd like to turn it over for Q&A. Operator, would you please provide instructions to our listeners? As a reminder to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster.

Speaker Change: With that, I'd like to turn it over for Q&A operator, which you please provide instructions to our listeners.

Speaker Change: As a reminder to ask a question, please press star 1-1 on your telephone and wait for your name to be announced. Do withdraw your question, please press star 1-1 again.

Speaker Change: Please stand by when we compile the Q&A roster.

Cashen Keeler: Our first question comes from Caching Killer with Bank of America. Your line is open. Yeah, hi. Good morning, Russell and Anne. Congrats in the quarter, and thanks for taking my questions.

Speaker Change: Our first question comes from Cashin Keeler with Bank of America. Your line is open.

Russell Shaller: We continue to identify opportunities for efficiencies following our regional reorganization that became effective halfway through last year and we've been able to offset increased pressures through manufacturing efficiencies and targeted price increases. Given the week macroeconomic picture in that region, I'm incredibly proud of the team's multi-year performance. We do believe long-term prospects in the region are great and we'll continue to invest in sales resources and geographic expansion through new distributor partners. Our creative approach to solve the unique customer problems with our niche solutions will ensure we remain on a positive trajectory in Europe and Australia.

Speaker Change: Yeah, hi, good morning, Russell and Ann, congrats in the quarter and thanks for taking my questions.

Cashen Keeler: So I guess first off, you know, can you help us a little bit with the cadence of earnings throughout the year? You know, maybe how that will vary first after just a second half and then maybe also with that, how can we think about organic growth overall? Is there anything we should be mindful of that will be reasonably consistent throughout the year? And then maybe also with that, can you parse a little bit on organic growth? You know, how much will be coming from underlying demand growth and maybe pricing as well? There's a lot of questions there.

Speaker Change: So I guess first off, you know, can you help us a little bit with the cadence of our names throughout the year?

Speaker Change: May be how that will vary for a second half and then maybe also with that, how can we think about organic growth overall?

Speaker Change: Is there anything we should be mindful of there? We'll be reasonably consistent throughout the year And then maybe also with that and you parse a little bit on our genocross, you know, how much we'll be coming from underlying demand growth and maybe pricing as well

Russell Schaller: So, you know, first I give the caveat that my crystal ball is not necessarily better than anyone else out there. So I'll give it kind of my personal take. You know, I think we were living in an area with a fair amount of industrial investments sitting on the sidelines, depending on which way elections go and what US energy policy becomes. So we're kind of trying to thread the middle range of possible outcomes, which means we see relatively slow GDP growth in the United States and Europe. And to take a step back a bit, Brady traditionally is very dependent on the overall economic health of the underlying countries that we serve.

Speaker Change: Wow, there's a lot of questions there, so you know, first I give the caveat of my crystal ball is not necessarily better than anyone else out there, so I'll give a kind of my personal take.

Russell Shaller: Looking ahead to our fiscal 2025, we have a lot to look forward to including several new initiatives that will improve our customer's experience. For instance, our printer cartridges are now enabled with label-sense technology. This enables a seamless print experience for our customers where the printer is able to sense the specific material and print without waste or the need to worry about unique printer configurations. Second, we have a fully enabled voice to print for our Bluetooth-enabled handheld printers.

Speaker Change: You know, I think we were living in an area with a fair amount of industrial investments sitting on the sidelines.

Speaker Change: Depending on which way elections go and what US energy policy becomes. So we're trying to thread the middle range of possible outcomes.

Russell Shaller: This allows the technician to simply talk to their phone and print a label without the need to manually enter data. These technology improvements are great examples of the product enhancements that help make our customers' lives easier.

Speaker Change: Which means we see relatively slow GDP growth in the United States in Europe.

Brady: To take a step back a bit, Brady traditionally is very dependent on overall economic health of the underlying countries that we serve, not too surprisingly, if countries are doing well, there tends to be an investment in industrial production and capacity, and we come along with that overall spending as we tend to be a percentage.

Russell Schaller: You know, not too surprisingly, if countries are doing well, there tends to be an investment in industrial production and capacity, and we come along with that overall spending as we tend to be a percentage of manufacturing investment in the customers that we serve. So, you know, what we're looking at, I think in the coming year is more of the same of what we've seen over the past year. You know, it's been, I would say, a little bit of a month, month roller coaster. I think that some of the distributors and some of our customers are still very tentative in how much capital they're willing to deploy.

Russell Shaller: I'd also like to add background to our acquisition of Gravotech which we recently closed on August 1st. Over half of Brady's business is related to part-marking and identification. A key gap in our portfolio was the ability to directly mark on parts without the use of a label. With Gravotech, we now have the ability to direct laser mark along with scribing and dot-pean marking solutions. These technologies round out our reader, printer, and labeling solutions to provide a single resource for industrial part identification.

Brady: Manufacturing Investments in the customers that we serve.

Speaker Change: So, you know what we're looking at, I think in the coming year is more of the same of what we've seen over the past year, you know, it's been, I would say a little bit of month-month roller coaster, I think some of the distributors and some of our customers are still very tentative.

Russell Shaller: Gravotech is headquartered in Leone, France and has an international presence in the US, Latin America, Europe and Asia. In fiscal 2025, we're forecasting sales of approximately 125 million and EBITDA of approximately 13 million from Gravotech, excluding integration-related costs. Gravotech's high-quality, precision-direct marking products fill a gap in identification offerings within Brady's product portfolio.

Russell Schaller: You know, there certainly we don't see anybody deferring maintenance or deferring necessary capital expenditures. But at the same time, we don't see too many customers that were all in and deciding to make really significant capital investments. I think they're, again, waiting to see the outcome of some of the elections both in Europe and America. So as I look to the future, you know, I think even with a relatively low GDP growth rate, I'm pretty excited about the products that we're launching and some of the initiatives that we're taking in our industrial products group, which is a subset of the overall Americas and Europe.

Speaker Change: In

Speaker Change: How much capital they're willing to deploy, you know, they're certainly, we don't see anybody deferring maintenance or deferring necessary capital expenditures, but at the same time, we don't see too many customers that we're all in and deciding to make really significant capital investments. I think they're, again,

Speaker Change: Waiting to see how the outcome of some of the elections both in Europe and America.

Russell Shaller: I will look forward to expanding our customer reach and providing a more complete set of solutions for our customers with the addition of Gravotech.

Speaker Change: So as I look to the future, you know, I think even with a relatively low GDP growth rate, I'm pretty excited about the products that we're launching and some of the initiatives that we're taking are industrial products group.

Unknown Executive: With that, I'd like to turn it over for Q&A operator, would you please provide instructions to our listeners? As a reminder to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster.

Russell Schaller: But you've been clocking in some pretty good numbers. We're looking at, you know, mid to high single-digit growth rates. And I think a relatively stagnant macro environment. So, you know, where are we getting that growth? A lot of it is expanding wallet share on the part of our customers. We've been able to, you know, continue to sell them and upgrade them and provide new and better use cases. So I think a lot of our growth continues to come from customers that we have, which is most of the industrial companies out there, and getting them to use more Brady products, essentially to make their lives easier.

Speaker Change: which is a subset of the overall Americas and Europe. You have been clocking in some pretty good numbers. We're looking at, you know, mid to high single digit growth rates.

Speaker Change: and I think a relatively stagnant macro environment. So, you know, where are we getting that growth? A lot of it is expanding while it's shared on the part of our customers. We've been able to, you know, continue to sell them and upgrade them and provide new and better use cases.

Cashen Keeler: Our first question comes from Caching Killer with Bank of America. Your line is open. Yeah, hi.

Russell Shaller: Good morning, Russell and Anne. Congrats in the quarter and thanks for taking my questions. So I guess first off, you know, can you help us a little bit with the cadence of earnings throughout the year? You know, maybe how that will vary first after just a second half and then maybe also with that, how can we think about organic growth overall? Is there anything we should be mindful of there will be reasonably consistent throughout the year?

Speaker Change: So, I think a lot of our growth continues to come from...

Speaker Change: Cosmos that we have, which is most of the industrial companies out there, and getting them to use more Brady products.

Russell Schaller: Because I think in a lot of cases, the Brady solution simply is a more effective and efficient way to get the job done, and we're seeing growth. So, you know, we have, I think, a very modest guidance in the coming year. You know, what would make it better is, I think, more energy prices, particularly in Europe. We see that as a very significant headwind for industrial capacity utilization in Europe and, you know, to the extent they can get lower energy prices or get their energy under control. We see it better, you know, France, which tradition is a little more energy independent than some of the other countries in the region.

Speaker Change: Essentially to make their lives easier, because I think in a lot of cases, the Brady solution simply is a more effective and efficient way to get the job done and we're seeing growth. So, you know, we have, I think, a very modest guidance.

Russell Shaller: And then maybe also with that, can you parse a little bit on organic growth? You know, how much will be coming from underlying demand growth and maybe pricing as well? There's a lot of questions there. So, you know, first I give the caveat of my crystal ball is not necessarily better than anyone else out there. So I'll give it kind of my personal take. You know, I think we were living in an area with a fair amount of industrial investments sitting on the sidelines, depending on which way elections go and what US energy policy becomes.

Speaker Change: In the coming year, you know what would make it better?

Speaker Change: is, I think, lower energy prices, particularly in Europe, we see that as a very significant headwind for industrial capacity utilization in Europe and, you know, it's an extent.

Speaker Change: They can get lower energy prices or get their energy under control. We see it better, you know, France, which traditionally is a little more energy independent than some of the other countries in the region. They're clocking some of our best organic sales growth rates. So,

Cashen Keeler: They're clocking some of our best organic sales growth rates. You know, I think that is a big part of the picture: where does energy go and where what is the level of optimism on the part of our customers for overall expansion in their capabilities and industrial production. I appreciate that. Go ahead. Yeah, thanks.

Russell Shaller: So we're kind of trying to thread the middle range of possible outcomes, which means we see relatively slow GDP growth in the United States and Europe. And to take a step back a bit, Brady traditionally is very dependent on overall economic health of the underlying countries that we serve. You know, not too surprisingly, if countries are doing well, there tends to be an investment in industrial production and capacity and we come along with that overall spending as we tend to be a percentage of manufacturing investment in the customers that we serve.

Speaker Change: You know, I think that is a big part of the picture is where does energy go and where, what is the level of optimism on the part of our customers for overall expansion in their capabilities and industrial production?

Speaker Change: Good morning.

Speaker Change: I'm pretty good at that.

Cashen Keeler: And then just on Gravo Tech, you know, at this juncture, I guess what needs to be done to integrate that. And then I think you said the 13 million of EBITDA was excluding integration costs. So is there, you know, a figure we can think about in terms of cost associated with kind of integrating that business. Yeah, you know, so first of all, Gravo Tech is a very successful company. And, you know, it's, that's part of the reason we like it. We're not buying something that requires a significant fix-up. We're not looking at consolidating operations or anything major.

Speaker Change: Go ahead. Yeah, thanks. And then just do something. Bravo, Jack.

Speaker Change: At this juncture, what needs to be done to integrate that? And then I think you said the 13 million of Eva Dive was excluding integration costs. So is there a figure we can think about in terms of cost associated with kind of integrating that business?

Russell Shaller: So, you know, what we're looking at, I think in the coming year is more of the same of what we've seen over the past year. You know, it's been, I would say, a little bit of month, month roller coaster. I think that some of the distributors and some of our customers are still very tentative in how much capital they're willing to deploy. You know, there certainly we don't see anybody deferring maintenance or deferring necessary capital expenditures.

Speaker Change: Yeah, you know, so first of all, gravity is a very successful company and, you know, it is

Speaker Change: That's part of the reason we like it, we're not buying something that requires significant fix up, we're not looking at consolidating operations or anything major.

Russell Schaller: You know, there's a lot of opportunities that Gravo Tech pursues that Brady traditionally has and vice versa. So, you know, what we're looking for really is what new customers can we help Gravo Tech get to and what new customers can gravitate pull us into. Because we're definitely seeing that in some of the use cases. Yeah, of course, whenever you purchase a company, there's always some minor things that need to happen in terms of consolidating, you know, back office operations and, you know, making sure they're on the same ERP system and what have you. You know, in the scheme of things, they're relatively small.

Speaker Change: There's a lot of opportunities that GravelTech pursues that Brady traditionally has and vice versa. What we're looking for really is what new customers can we help GravelTech.

Russell Shaller: But at the same time, we don't see too many customers that were all in and deciding to make really significant capital investments. I think they're, again, waiting to see the outcome of some of the elections both in Europe and America. So as I look to the future, you know, I think even with a relatively low GDP growth rate, I'm pretty excited about the products that we're launching and some of the initiatives that we're taking are industrial products group, which is a subset of the overall Americas and Europe.

Speaker Change: Get to and what new customers can grab a tech pull us into.

Speaker Change: Because we're definitely seeing that in some of the use cases. Of course, whenever you purchase a company, there's always some minor things that need to happen in terms of consolidating back office operations and making sure they're on the same ERP system and what have you.

Russell Schaller: Like I said, I don't I don't anticipate any any consolidation of major operations. I think it's a little tweak here and a little tweak there. At the same time, what we're excited about is we think we can bring some R&D to Gravo Tech. And in some of the things that they do in terms of creation of images, you know, that is the same thing Brady is doing with their printers already. We can do that. And I think we can accelerate Gravo Tech's R&D and their capabilities with some of the core software that Brady has already developed.

Speaker Change: You know in the scheme of things they're relatively small like I said I don't

Russell Shaller: But you've been clocking in some pretty good numbers. We're looking at, you know, mid to high single digit growth rates. And I think a relatively stagnant macro environment. So, you know, where are we getting that growth? A lot of it is expanding wallet share on the part of our customers. We've been able to, you know, continue to sell them and upgrade them and provide new and better use cases. So I think a lot of our growth continues to come from customers that we have, which is most of the industrial companies out there and getting them to use more Brady products essentially to make their lives easier.

Speaker Change: I don't anticipate any consolidation of major operations. I think it's a little tweak here and a little tweak there. At the same time, what we're excited about is we think we can bring some R&D to grab a attack.

Speaker Change: And in some of the things that they do in terms of creation of images, you know, that is the same thing Brady is doing with their printers already. We can do that and I think we can accelerate gravity XR and D in their capabilities with some of the core software that Brady is already developed. So, you know, like any acquisition, I think the first...

Russell Schaller: So, you know, like any acquisition, I think the first 12 months to 18 months is a little bit slow as you get all the pieces put together. But after that, we see a really strong business case for the combined entity.

Russell Shaller: Because I think in a lot of cases, the Brady solution simply is a more effective and efficient way to get the job done and we're seeing growth. So, you know, we have, I think a very modest guidance in the coming year, you know, what would make it better is I think more energy prices, particularly in Europe. We see that as a very significant headwind for industrial capacity utilization in Europe and, you know, to the extent they can get lower energy prices or get their energy under control.

Speaker Change: 12 months to 18 months is a little bit slow as you get it all the pieces put together, but after that we see a really strong business case for the combined entity.

Cashen Keeler: Got it. Understood.

Cashen Keeler: And then last one if I can just just some buybacks. Is there a specific number you know you're looking target next year. And then maybe also on that. I mean, what opportunities do you have in front of you in terms of capital deployment from an organic perspective? And I know you just did Gravo Tech, but maybe any areas in the portfolio you'd look to grow in organically as well. Yeah, sure. So, you know, the stock buybacks is almost a double-edged sword. In some regards, we don't want them because that means that the market perceives our share prices undervalue.

Speaker Change: Got it, understood, and then last one if I can, just on five backs, is there a specific number?

Speaker Change: You know, you're looking to target next year and then maybe also on that, I mean, what opportunities do you have in front of you in terms of capital deployment from organic perspective? And I know you just did grab a tech book, maybe any areas in the portfolio, you'd look to grow in organically as well.

Speaker Change: Yeah sure, so you know the stock buyback is almost a double-edged sword. In some of the arts, we don't want them because that means that the market proceeds our share prices under value.

Russell Shaller: We see it better, you know, France, which tradition is a little more energy independent than some of the other countries in the region. They're clocking some of our best organic sales growth rates. You know, I think that is a big part of the picture is where does energy go and where what is the level of optimism on the part of our customers for overall expansion in their capabilities and industrial production. I appreciate that. Go ahead. Yeah, thanks.

Russell Schaller: So, you know, do we have a target? Yeah, we've authorized $100 million in share buybacks. But we've, as in the past, we've been very disciplined in when we will use that money. So, you know, if the stock goes to a certain trading range, we'll start buying shares. But if it's, if we considered it's fairly valued or not much of a discount to our cash flow, we'll keep our money. Because again, my overall preference, unless the share price is significantly devalued, my preference is reinvesting in the company. Either organically, and again, we love our R&D investment.

Speaker Change: So, do we have a target? Yeah, we've authorized 100 million in share by-back.

Speaker Change: But we've...

Speaker Change: As in the past, we've been very disciplined in when we will use that money, so, you know, if the stock goes to a certain trading range, we'll start buying shares.

Speaker Change: But if we consider it fairly valued or not much of a discount to our cash flow, we'll keep our money because again.

Russell Shaller: And then just on Gravo Tech, you know, at this juncture, I guess what needs to be done to integrate that. And then I think you said the 13 million of EBITDA was excluding integration costs. So is there, you know, figure we can think about in terms of cost associated with kind of integrating that business. Yeah, you know, so first of all, Gravo Tech is a very successful company. And, you know, it's that's part of the reason we like it.

Speaker Change: My overall preference unless the share price is significantly devalued, my preference is reinvesting in the company either organically and again we love our R&D investment. That hands down is driving all of our growth and our growth margin improvement.

Russell Schaller: That hands down is driving all of our growth and our growth margin improvement. And then secondly, there are some M&A opportunities out there. We continue to look at it. It will be certainly in the either the material space because we are use our materials capability to drive a lot of our unique product differentiation. And then secondly, we're always interested in things that further our ability to do part marking, part identification. And, you know, so if there are things in areas in those two categories, if they become available and they're available at a price that we feel meets our financial objectives, then we could certainly see acquisitions in the future.

Speaker Change: And then secondly, there are some M&A opportunities out there, we continue to look at it. It will be certainly in the either the material space because we are use our materials capability to drive a lot of.

Russell Shaller: We're not buying something that requires a significant fix up. We're not looking at consolidating operations or anything major. You know, there's a lot of opportunities that Gravo Tech pursues that Brady traditionally has and vice versa. So, you know, what we're looking for really is what new customers can we help Gravo Tech get to and what new customers can gravitate pull us into. Because we're definitely seeing that in some of the use cases.

Speaker Change: Are unique product differentiation and then secondly we're always interested in things that further are ability to do part-marking part identification and you know so if there are things in areas in those two categories.

Speaker Change: If they become available and they're available at a price that we feel meets our financial objectives then we could certainly see acquisitions in the future.

Russell Shaller: Yeah, of course, whenever you purchase a company, there's always some minor things that need to happen in terms of consolidating, you know, back office operations and, you know, making sure they're on the same ERP system and what have you. You know, in the scheme of things, they're relatively small. Like I said, I don't I don't anticipate any any consolidation of major operations. I think it's a little tweak here and a little tweak there.

Cashen Keeler: Thank you.

Speaker Change: Yes, I do.

Keith Housum: And our next question comes from Keith Housum with North Coast Research. Your line is open. Good morning, guys.

Speaker Change: Thank you.

Speaker Change: and our next question comes from Keith Halsen with North Coast Research Your Line is Open.

Keith Housum: Congratulations on a solid quarter there. Russell, in terms of the track and trace initiatives that you guys are working on, I know that earlier this year the V-4500 came out as a data scanner. Perhaps we can talk about the progress that the initiative and perhaps I know one product doesn't drive the sales bite for you guys at all, but I think that's again, or it's probably representative of some of your track and trace efforts. How is the early adoption, early acceptance by the market bend? Yeah, so we feel, you know, very good about the adoption of the product, and you know, for us it's building out a complete portfolio, which now will include lasers too.

Keith Halsen: Good morning guys and congratulations on a foul quarter there.

Keith Halsen: Amade.

Keith Halsen: was like the track and trace initiatives that you guys are working on. You know, I know that earlier this year, the V 4500 came out as a data scanner. Perhaps we can talk about the progress that that initiative and perhaps an old one product doesn't drive the sales by for you guys at all, but I think that scanner is by representative from the track and trace efforts. How does he get the early adoption early acceptance by the market been?

Russell Shaller: At the same time, what we're excited about is we think we can bring some R&D to Gravo Tech. And in some of the things that they do in terms of creation of images, you know, that is the same thing Brady is doing with their printers already. We can do that. And I think we can accelerate Gravo Tech's R&D and their capabilities with some of the core software that Brady has already developed.

Speaker Change: Yeah, so we feel very good about the adoption of the product and you know for us it's building out a complete portfolio which now will include lasers too, you know, so our goal

Russell Schaller: You know, so our goal, and you know, if you think and you take a step back of what manufacturing needs to do, you need to be able to identify a part uniquely, trace it through the manufacturing floor, be able to read it at various steps along the way before it gets either incorporated into another product or it gets sent out the door to a customer. So we want to be there at every step of that journey, not in the distribution side of things; that's not really our core business, but throughout the manufacturing floor. And, you know, you see that in our industrial products and what we're doing.

Speaker Change: And if you think and you take a step back of what manufacturing needs to do, you need to be able to identify a part.

Russell Shaller: So, you know, like any acquisition, I think the first 12 months to 18 months is a little bit slow as you get it all the pieces put together. But after that, we see a really strong business case for the combined entity.

Speaker Change: A uniquely tracing through the manufacturing floor, be able to read it at various steps along the way before it gets either incorporated into another product or it gets sent out the door to a customer.

Unknown Executive: Got it. Understood.

Russell Shaller: And then last one if I can just just some buybacks. Is there a specific number, you know, you're looking target next year. And then maybe also on that. I mean, what opportunities do you have in front of you in terms of capital deployment from organic perspective? And I know you just did Gravo Tech, but maybe any areas in the portfolio, you'd look to grow in organically as well. Yeah, sure. So, you know, the stock buybacks is almost a double-edged sword.

Speaker Change: So we want to be there at every step of that journey, not in the distribution side of things, that's not really our core business, but throughout the manufacturing floor and...

Russell Schaller: So I think in a relatively anemic industrial automation environment right now I'm super pleased with how we're doing in our entire industrial portfolio. Again, our products are designed to work seamlessly with one another, you know, kind of like the Windows Office experience. What we're going for is immediate out of the box usage. So a lot of customers, excuse me, a lot of products out there require a fair amount of hand-holding, software integration, and difficulty to get set up. You know, our goal is for all of our products to be able to plug and play and be used in minutes without much skill.

Speaker Change: You see that in our industrial products and what we're doing. So I think in a relatively anemic industrial automation environment right now, I'm super pleased with how we're doing in our entire industrial portfolio. Again, our products are designed to work seamlessly with one another, you know, kind of like the Windows Office experience.

Russell Shaller: In some regards, we don't want them because that means that the market perceives our share prices under value. So, you know, do we have a target? Yeah, we've authorized 100 million in share buybacks. But we've, as in the past, we've been very disciplined in when we will use that money. So, you know, if the stock goes to a certain trading range, we'll start buying shares. But if it's if we considered it's fairly valued or not much of a discount to our cash flow, we'll keep our money.

Speaker Change: What we're going for is immediate out of the box usage.

Speaker Change: So a lot of customer who's been, a lot of products out there require a fair amount of hand-holding software integration and difficulty to get set up, you know, our goal is for all of our products to be able to plug and play and be used in minutes.

Russell Shaller: Because again, my overall preference unless the share price is significantly devalued, my preference is reinvesting in the company. Either organically, and again, we love our R&D investment. That hands down is driving all of our growth and our growth margin improvement. And then secondly, there are some M&A opportunities out there. We continue to look at it. It will be certainly in the either the material space because we are use our materials capability to drive a lot of our unique product differentiation.

Russell Schaller: And I think we're pretty far along in that journey. I talked about in our, at the tail end of my commentary, being able to do voice-enabled printers. I'm super excited about that. And if you think about the whole ease of use for our customers, you know, we can do a voice-enabled barcode and then have the reader right there to verify the barcode and be able to tag it to the particular product. So there's a lot of things out there that provide rich content to our customer in a way that's super easy for them to use.

Speaker Change: Without much skill and I think we're pretty far along in that journey I talked about.

Speaker Change: in our, at the tail end of my commentary.

Speaker Change: I'm super excited about that.

Speaker Change: And if you think about the whole ease of use for our customers

Russell Shaller: And then secondly, we're always interested in things that further our ability to do part marking, part identification. And, you know, so if there are things in areas in those two categories, if they become available and they're available at a price that we feel meets our financial objectives, then we could certainly see acquisitions in the future. Thank you.

Speaker Change: We can do a voice-enabled barcode and then have the reader right there to verify the barcode and be able to tag it to the particular product. There are a lot of things out there that provide rich content to our customer in a way that's super easy for them to use, and that's kind of the thesis of our business.

Russell Schaller: And that's kind of the thesis of our business. There will be more products to come over the coming years. We round out the portfolio, but you know, this has been something that we've been working on. Probably we started in 2017 and 2018, and we've spent literally hundreds of millions of dollars to get to this point. And I am so excited to start seeing these products come out and working together, as are our customers. Yep.

Speaker Change: There will be more products to come over the coming years we ran out to portfolio but you know this has been

Speaker Change: is something that we've been working on probably we started in 2017 and 2018 and we've spent literally hundreds of millions of dollars to get to this point and I am so excited to start seeing these products come out and working together as our customers.

Russell Schaller: And now it's your printers and cartridges are a big part of your business, with the special ones that you've had just mentioned there. Do you anticipate these will be accelerated refresh cycle for printers that are coming out there as well as, you know, expanding the dripple market? Yeah, so two things. So virtually all of our printers have been refreshed and now work with LabelSense technology; certainly, all of our core products. So what does LabelSense do? If I'm printing on unique materials, I'm not talking of paper label, but if I'm talking about a wire marker or something that goes on a printed circuit board or what have you, there's a decent amount of work that would have to go for a customer to configure their printer to print on a unique material and the setup and what have you to make it match that.

Speaker Change: And now if you printed in cartridges are a big part of your business, with a special one of the U.S. mission there, do you anticipate leads will be a re-fresh cycle for printers that are currently out there as well as expanding the adjustable market?

Keith Housum: And our next question comes from Keith Housum with North Coast Research. Your line is open. Good morning, guys.

Speaker Change: Yeah, so two things. So virtually all of our printers have been refreshed and now work with label sense technology. Certainly all of our core products.

Speaker Change: So what does label sense do? If I'm printing on unique material, so I'm not talking of paper label, but if I'm talking about a wire marker or something that goes on a printed circuit board or what have you, there's a decent amount of work that would have to go for a customer to configure their printer to print on a unique material and set up and what have you to make it match that.

Keith Housum: How is the early adoption, early acceptance by the market bend? Yeah, so we feel, you know, very good about the adoption of the product and you know, for us it's building out a complete portfolio, which now will include lasers too. You know, so our goal, and you know, if you think and you take a step back of what manufacturing needs to do, you need to be able to identify a part uniquely, trace it through the manufacturing floor, be able to read it at various steps along the way before it gets either incorporated into another product or it gets sent out the door to a customer.

Russell Schaller: With our new set of cartridges that are all enabled with this, there's basically a chip in the cartridge that tells the printer all of the settings that it needs to have to print optimally on that material. And you know, that's a first in the industry. It can save in some kinds. It can save minutes to tens of minutes for our customers. And more importantly, they don't waste any material because if you've ever seen this, you print a label. In the old technology, you print a label, you don't like how it looks, you try it again, you don't like how it looks, you try it again.

Speaker Change: With our new set of cartridges that are all enabled with this, there's basically there's a chip in the cartridge.

Speaker Change: That tells the printer all of the settings that it needs to have to print optimally on that material. And that's the first in the industry.

Speaker Change: It can save in some kind, so it can save on minutes.

Keith Housum: So we want to be there at every step of that journey, not in the distribution side of things that's not really our core business, but throughout the manufacturing floor and, you know, you see that in our industrial products and what we're doing. So I think in a relatively anemic industrial automation environment right now I'm super pleased with how we're doing in our entire industrial portfolio. Again, our products are designed to work seamlessly with one another, you know, kind of like the Windows Office experience.

Speaker Change: 10 minutes for our customers and more importantly they don't waste any material because if you've ever seen this

Speaker Change: You print a label in the old tech knowledge, you print a label you don't like how it looks, you try it again, you don't like how it looks, you try it again, this way you get it, one and done for shot it's working and again, a lot of effort on the part of the R&D and product management team to get this up and rolling and get it to work across literally hundreds of different material and printer combinations.

Russell Schaller: This way, you get it one and done, first shot; it's working. And again, a lot of effort on the part of the R&D and product management team to get this up and rolling and getting it to work across literally hundreds of different material and printer combinations. Is there a different rule of thumb in terms of the price increase, I guess, with this technology compared to the prior generation? Yeah, we're not really pushing price on this. You know, the products I think are fantastic. And I think the value proposition to our customers is fantastic. So we're not trying to extract more out of them.

Speaker Change: Atherically, just a rule of thumb in terms of price increase, I guess, with this technology compared to the prior generation.

Keith Housum: What we're going for is immediate out of the box usage. So a lot of customer, excuse me, a lot of products out there require a fair amount of hand holding software integration and difficulty to get set up. You know, our goal is for all of our products to be able to plug and play and be used in minutes without much skill. And I think we're pretty far along in that journey. I talked about in our, at the tail end of my commentary, being able to do voice enabled printers.

Speaker Change: Yeah, we're not really pushing price on this, you know, the products I think are fantastic and I think the value proposition to our customers is fantastic, you know, so we're not trying to extract more out of them. We're trying to get customers to be more excited and make it easier for them to use it, you know, as I've joked with some people, we're getting to drop to pen or use non-professional labeling. And really, I think 3D is most successful when it's a win-win, and, you know, we don't try to extract every last penny, but we enable our customers to get their jobs easier in a fair economic environment. So, no, we're not, again, we're not really trying to push price, we're trying to...

Russell Schaller: We're trying to get customers to be more excited and make it easier for them to use it. As I've joked with some people, we're getting to drop to pen or use non-professional labeling. And really, I think Brady is most successful when it's a win-win. And we don't try to extract every last penny, but we enable our customers to get their job easier in a fair economic environment. So, no, we're not, again, we're not really trying to push price. We're trying to push consumption and getting more printers and more cartridges in people's hands.

Keith Housum: I'm super excited about that. And if you think about the whole ease of use for our customers, you know, we can do a voice enabled barcode and then have the reader right there to verify the barcode and be able to tag it to the particular product. So there's a lot of things out there that provide rich content to our customer in a way that's super easy for them to use. And that's kind of the thesis of our business.

Speaker Change: and the time to push consumption and getting more printers and more cartridges and people's hands.

Keith Housum: Gotcha. One more question from you, don't mind. SG&A, you know, the most efficient and the best as a fourth quarter for you guys, was there anything unique in the fourth quarter that suggests that this kid shouldn't repeat in the FY25? You know, there are some little things back and forth. I don't know. And if you want to make any commentary on that. Sure, sure. Yeah. I've really nothing unusual, Keith, in this quarter of this year. As we work through initiatives internally, sometimes, you know, it can be a little bit choppy in terms of SG&A going up a bit, down a bit.

Speaker Change: Good morning, everyone. One more question from you. You don't mind. SGNA, you know, the most efficient and the best is the fourth quarter for you guys. Was there anything unique in the fourth quarter? That's just that. This kid-in-shin it repeat into FY25.

Keith Housum: There will be more products to come over the coming years. We round out the portfolio, but you know, this has been something that we've been working on. Probably we started in 2017 and 2018 and we've spent literally hundreds of millions of dollars to get to this point. And I am so excited to start seeing these products come out and working together as are our customers. Yep. And now it's your printers and cartridges are a big part of your business with the special ones that you've had just mentioned there.

Speaker Change: There are some little things back and forth, I don't know, and if you want to make any commentary on that

Speaker Change: Sure, yeah, I really nothing unusual Keith in this quarter of this year as we, as we work through initiatives internally, sometimes, you know, can be a little bit choppy in terms of SG and angle and up a bit down a bit.

Keith Housum: But general trajectory, we expect to be at approximately this level and working downward into over the long-term as we work through efficiency opportunities. Right, and as well as the ground type, of course, because that will change the dynamics a little bit. Great point. Exactly.

Keith Housum: Do you anticipate these will be accelerated refresh cycle for printers that are coming out there as well as, you know, expanding the dripple market? Yeah, so two things. So virtually all of our printers have been refreshed and now work with LabelSense technology, certainly all of our core products. So what does LabelSense do? If I'm printing on unique materials, I'm not talking of paper label, but if I'm talking about a wire marker or something that goes on a printed circuit board or what have you, there's a decent amount of work that would have to go for a customer to configure their printer to print on a unique material and the setup and what have you to make it match that.

Speaker Change: But General trajectory, we expect to be at approximately the level and working down into over the long term as we work through efficiency opportunities.

Speaker Change: Right, it's all smooth, ground tech of course, we'll change it down a little bit. Okay, great point, that's it. Alright guys, I'll stop there and get back to you, thanks.

Keith Housum: All right, guys, I'll stop there and get back with you. Thanks. Thank you. Great. Thank you.

Steve Ferazani: Our next question comes from Steve Ferazani with Cedotti.

Speaker Change: Thank you, I'm great.

Speaker Change: Thank you. Our next question comes from Steve Ferrizani with Sidoti, your line is open.

Steve Ferazani: Your line is open.

Steve Ferazani: Good morning, Russell. Morning, Ann. I want to ask a little bit about your progress in Southeast Asia and India. I know if we go back two or three years, those are practically green fields opportunities for you. Can you give us a sense of how much traction you've gained and what the opportunity can be over the next three? Three to five years as you see it right now. Yeah, you know, India started off, you know, I'm going back 10 years ago. India started off as a very small opportunity for us as a corporation. And I think due to the leadership team, both in India and frankly, all of Southeast Asia, they are benefiting from some of the relocation out of China, as well as just overall economic growth in the particular country.

Speaker Change: and Morning Russell Morning Ann. I want to ask a little bit about your progress in Southeast Asia and in the I know.

Speaker Change: 2 years ago, we go back two or three years, those are practically green field opportunities for you. Can you give us a sense of how much traction you've gained and what the opportunity can be over the next three to five years, as you see it right now?

Keith Housum: With our new set of cartridges that are all enabled with this, there's basically there's a chip in the cartridge that tells the printer all of the settings that it needs to have to print optimally on that material. And you know, that's a first in the industry. It can save in some kinds. It can save minutes to tens of minutes for our customers. And more importantly, they don't waste any material because if you've ever seen this, you print a label in the old technology, you print a label, you don't like how it looks, you try it again, you don't like how it looks, you try it again.

Speaker Change: Yeah, you know, India started off, you know, I'm going back 10 years ago. India started off as a very small opportunity for us as a corporation.

Keith Housum: This way you get it one and done first shot, it's working. And again, a lot of effort on the part of the R&D and product management team to get this up and rolling and getting it to work across literally hundreds of different material and printer combinations. Is there a different rule of thumb in terms of the price increase, I guess, with this technology compared to the prior generation? Yeah, we're not really pushing price on this.

Speaker Change: and I think due to the leadership team both in India and frankly all of Southeast Asia, they are benefiting from some of the relocation out of China, as well as just overall economic growth in the particular country. So if I look over the last few years we've added a second plant in India, relatively small but it helps us be close to the customers so we have two plants now, one in Bangalore, Delhi.

Russell Schaller: So, you know, if I look over the last few years, we've added a second plant in India, relatively small, but it helps us be close to the customer. So we have two plants now: one in Bangalore, one in Delhi. We're seeing the results of those investments. Like I said, we called out approximately 20% year-over-year growth. But this is on top of really a journey they've been on for many years, showing, you know, low double digits growth rates. And we continue to invest in China. You know, it's entirely possible if we continue our growth trajectory that we'll be opening up a third plant there as well.

Speaker Change: On.

Speaker Change: We're seeing the results of those investments like we called out approximately 20% year-over-year growth. But this is on top of...

Speaker Change: Really a journey they've been on for many years showing low double digits growth rates and we continue to invest in China. It's entirely possible if we continue our growth trajectory that will be opening up the third plant there as well.

Keith Housum: You know, the products I think are fantastic. And I think the value proposition to our customers is fantastic. So we're not trying to extract more out of them. We're trying to get customers to be more excited and make it easier for them to use it. As I've joked with some people, we're getting to drop to pen or use non-professional labeling. And really, I think Brady is most successful when it's a win-win.

Russell Schaller: And so we just, I guess I feel very positive. And even in some of the other countries that are relatively small, we can see some benefit that they're experiencing again as some of the production relocations happening out of China. And you see it all through Southeast Asia. I think Vietnam, which is an incredibly small country for us, I wish it was bigger. I think they had like a 700% growth rate, but it was times a really small number. So we're slowly deploying additional salespeople, additional sales resources throughout the region. And this has always been Brady's business model of, you know, looking at what countries, what economies, what opportunities are growing and making sure that we are targeting those with the rights that of resources, whether it's R&D products, or customer sales and support.

Speaker Change: And so we just I guess I feel very positive in even in some of the other countries that are relatively small. We can see some benefit that they're experiencing again is some of production relocations happening out of China. And you see it all through Southeast Asia.

Keith Housum: And we don't try to extract every last penny, but we enable our customers to get their job easier in a fair economic environment. So, no, we're not, again, we're not really trying to push price. We're trying to push consumption and getting more printers and more cartridges in people's hands. Gotcha. One more question from you, don't mind. SG&A, you know, the most efficient and the best as a fourth quarter for you guys, was there anything unique in the fourth quarter that suggests that this kid shouldn't repeat in the FY25?

Speaker Change: Vietnam, which is an incredibly small country for us, which was bigger. I think they had like a 700% growth rate.

Speaker Change: But it was times a really small number. So we're slowly deploying additional sales people, additional sales resources throughout the region. And this has always been Brady's business model of looking at what countries, what economies, what opportunities are growing, and making sure that we are targeting those with the rights that are resources.

Keith Housum: You know, there are some little things back and forth. I don't know. And if you want to make any commentary on that. Sure, sure. Yeah. I've really nothing unusual, Keith, in this quarter of this year. As we work through initiatives internally, sometimes, you know, it can be a little bit choppy in terms of SG&A going up a bit down a bit. But general trajectory, we expect to be at approximately this level and working downward into over the long-term as we work through efficiency opportunities. Right, and as well as the ground type, of course, because that will change the dynamics a little bit. Great point. Exactly.

Speaker Change: Whether it's R&D products or customer sales and support.

Russell Schaller: Do you have to customize the products by markets? What they might buy in Vietnam or India might be different than what they're buying in the US or the UK? So absolutely, but it's kind of, I'll call it end user cuss or end country customization. So Brady has a huge portfolio of products. I would say upwards of 2000 of products that we really support and sell, and then maybe another 10,000 that are less common. What you see in the different countries isn't that it's as much unique for the country; it is that they will overweight one product versus another.

Speaker Change: Do you have to customize the products by markets, what they might buy in Vietnam or India might be different than what they're buying in the U.S. or the U.K.

Speaker Change: So, the absolutely...

Speaker Change: But it's kind of an alcoholic and user-cuss or end-country customization. So Brady has a huge portfolio of products. I would say upwards of 2,000 of products that we really support and sell and then maybe another 10,000 that are less.

Speaker Change: Common, what you see in the different countries isn't that it's as much unique for the country is that they will overweight one product versus another. So, you know, for instance, due to some blackout concerns and what have you in terms of energy, you'll see in India they will buy way more glow in the dark signage in tapes than you might find in other countries.

Keith Housum: All right, guys, I'll stop there and get back with you. Thanks. Thank you. Great. Thank you.

Russell Schaller: So, you know, for instance, due to some blackout concerns and what have you in terms of energy, you'll see in India, they will buy way more glow-in-the-dark signage and tapes than you might find in other countries. But we sell them worldwide; it's just they would buy more in their country as a weight than others. Not surprisingly, our automation solutions tend to be much more heavily weighted to high-cost geographies than lower-cost. So if you look at our wire wrappers and what have you, those tend to be targeted towards countries where either labor is unavailable, or if it is, it is comparatively expensive.

Unknown Executive: Our next question comes from Steve Ferazani with Cedotti. Your line is open. Good morning, Russell. Morning, Ann. I want to ask a little bit about your progress in Southeast Asia and India. I know if we go back two or three years, those are practically green fields opportunities for you. Can you give us a sense of how much traction you've gained and what the opportunity can be over the next three? Three to five years as you see it right now.

Speaker Change: But we sell them worldwide is just they would buy more in their country as a weight than others.

Speaker Change: Not surprisingly, our automation solutions.

Speaker Change: Time to be much more heavily weighted to high-cost geographies than lower-cost.

Unknown Executive: Yeah, you know, India started off, you know, I'm going back 10 years ago. India started off as a very small opportunity for us as a corporation. And I think due to the leadership team, both in India and frankly, all of Southeast Asia, they are benefiting from some of the relocation out of China, as well as just overall economic growth in the particular country. So, you know, if I look over the last few years, we've added a second plant in India, relatively small, but it helps us be close to the customer.

Speaker Change: So if you look at a wire wrappers of what have you those tend to be targeted towards countries where either labor is unavailable or if it is comparatively expensive. So, you know, our whole portfolio is available to every country. But different countries choose to use different ones, depending on their own unique needs. And, uh...

Keith Housum: So, you know, our whole portfolio is available to every country, but different countries choose to use different ones depending on their own unique needs and what they're doing. That's helpful. Thanks.

Keith Housum: If we can flip over to Europe, obviously in 3Q, those are the really big surprises. Europe was particularly strong. I think you indicated at the time you had won really good months this quarter. It looked more like we probably could have predicted, given European economies. Can you give us a little bit more sense now what the difference was 3Q versus 4Q and how that affects maybe your outlook and your strategy there into the new year? This is always the problem when you have quarter-to-quarter results. You can have a little bit of shifting one day to the next, and it falls in a quarter out of a quarter.

Speaker Change: and what they're doing.

Speaker Change: That's helpful. Thanks. If we could flip over to Europe, obviously in three queues, those are the really big surprises Europe was particularly strong. I think you indicated at the time, you had one really good month.

Unknown Executive: So we have two plants now, one in Bangalore, one in Delhi. We're seeing the results of those investments. Like I said, we called out approximately 20% year over year growth. But this is on top of really a journey they've been on for many years showing, you know, low double digits growth rates. And we continue to invest in China, you know, it's entirely possible if we continue our growth trajectory that we'll be opening up a third plant there as well.

Speaker Change: This quarter it looked more like we probably could have predicted given European economies. Can you give us a little bit more sense now if you saw what the difference was 3Q versus 4Q, and how that affects maybe you're outlooking your strategy there into the new year?

Speaker Change: And this is always the problem when you have quarter to quarter results. You can have a little bit of shifting one day.

Russell Schaller: I think our third quarter result was a little bit higher than we expected, and our fourth quarter result was a little bit lower than we expected. If I was to take both together and the year as a whole, I think that was indicative of the overall European economy. With that said, we're seeing some pretty significant differences in countries. As I mentioned, France Ferazani is doing incredibly well, which I guess we're probably one of the few companies that would say that. On the same side, some countries that are having some energy problems: Germany, UK, and some other issues, not doing as well.

Unknown Executive: And so we just, I guess I feel very positive. And even in some of the other countries that are relatively small, we can see some benefit that they're experiencing again as some of production relocations happening out of China. And you see it all through Southeast Asia. I think Vietnam, which is an incredibly small country for us, I wish it was bigger. I think they had like a 700% growth rate, but it was times a really small number.

Speaker Change: 2 in the next and it falls in a quarter out of a quarter. You know, I think our third quarter result was a little bit higher than we expected and our fourth quarter result was a little bit lower than we expected. If I was to take both together and the year as a whole, I think that was indicative of the overall European economy.

Speaker Change: Now with that said, we're seeing some pretty significant differences in countries. You know, as I mentioned, France for office is doing incredibly well, which I guess we're probably one of the few companies that would say that.

Unknown Executive: So we're slowly deploying additional salespeople, additional sales resources throughout the region. And this has always been Brady's business model of, you know, looking at what countries, what economies, what opportunities are growing and making sure that we are targeting those with the rights that of resources, whether it's R&D products, or customer sales and support.

Speaker Change: On the same side, you know some countries that are having some energy problems, Germany, UK and some other issues, not doing as well. So unfortunately, you get for Europe, you get it all blended together.

Russell Schaller: Unfortunately, you get for Europe; you get it all blended together. It really is. It's a lot of differences amongst the individual countries, depending on their policies and what they're doing and their overall capability set. As I said, Nicole, we remain very optimistic in Europe. They've had, you know, through I consider a pretty anemic GDP growth rate. They've had 13 quarters of successive performance, and I'm sorry that this one broke the streak. But there's nothing to believe in the coming quarters that we don't see them back on the path of continued growth. I'm, like I said, that management team there is very tenured.

Speaker Change: And it really is, it's a lot of differences amongst the individual countries depending on their policies and what they're doing in their overall capability set. So, you know, as I said in the call, we remain...

Unknown Executive: Do you have to customize the products by markets, what they might buy in Vietnam or India might be different than what they're buying in the US or the UK? So absolutely, but it's kind of, I'll call it end user cuss or end country customization. So Brady has a huge portfolio of products. I would say upwards of 2000 of products that we really support and sell and then maybe another 10,000 that are less common.

Speaker Change: Very optimistic in Europe. They've had, you know, through, I'd consider a pre-anemic GDP growth rate. They've had 13 quarters of successive performance and I'm sorry that this one broke the streak.

Speaker Change: But there's nothing to believe in the coming quarters that we don't see them back on the path of continued growth. I guess that management team there is very tender that they've been doing this for a long time. They know what they need to do.

Unknown Executive: What you see in the different countries isn't that it's as much unique for the country is that they will overweight one product versus another. So, you know, for instance, due to some blackout concerns and what have you in terms of energy, you'll see in India, they will buy way more glow in the dark signage and tapes than you might find in other countries. But we sell them worldwide is just they would buy more in their country as a weight than others.

Speaker Change: I'm excited about the opportunities in some of the business cases that they've been talking about.

Ann Thornton: Guiding for cat backs back down to 35 million, so it looks like under 2% of sales. Again, reasonable to expect cash conversion is back towards 100% or more. And yeah, yes. Yeah. So, you know, the only lumpy thing that ever happens with us outside of acquisitions, occasionally we flip a rental property to an owned property. And we did that last year, which were some pre-substantial cash outlays. But in general, you know, given our relatively modest needs, they are very, it's very much one for one. So we make a dollar, and that goes to the bottom line in cash.

Speaker Change #100: Raid. Guiding for Cap Back's Back down to 35 million so it looks like under 2% of sales. Again, reasonable to expect cash conversion is back towards 100% or more.

Speaker Change #100: Ann, yeah.

Speaker Change #101: Yes, the only lumpy thing that ever happens with us outside of acquisitions, occasionally we flip a rental property to an owns property and we did that last year, which were some pre-substantial cash outlays, but in general, given our relatively modest needs, it's very much one-for-one, so we make a dollar and the pack goes through the bottom line in cash.

Unknown Executive: Not surprisingly, our automation solutions tend to be much more heavily weighted to high cost geographies than lower cost. So if you look at our wire wrappers and what have you, those tend to be targeted towards countries where either labor is unavailable or if it is, it is comparatively expensive. So, you know, our whole portfolio is available to every country but different countries choose to use different ones depending on their own unique needs and what they're doing. That's helpful. Thanks.

Russell Schaller: So I know others have asked this, so let me try it another way. You're going to start building cash very quickly again this year, if guidance plays out. You were buying back stock at $56. You're much higher here, and you said you're opportunistic. I don't know what the M&A. Are you very comfortable building up the cash position again through the year, if that's what it plays out? Well, you know, the cash has to go somewhere. I don't want it to burn a hole in our pocket. You know, I'm not going to buy something at a PDE of 25.

Speaker Change #102: So I know others have asked this, so let me try it another way. You're going to start building cash very quickly again this year if guidance plays out.

Speaker Change #103: You were buying back stock at $56, you're much higher here and you said you're opportunistic.

Unknown Executive: If we can flip over to Europe, obviously in 3Q, those are the really big surprises Europe was particularly strong. I think you indicated at the time you had won really good months this quarter. It looked more like we probably could have predicted given European economies.

Speaker Change #104: I don't know what the M&A, are you very comfortable building up the cash position again through the year if that's what it plays out?

Speaker Change #105: Well, you know, the cash has to go somewhere. I don't want it to burn a hole in our pocket. You know, I'm not going to buy something at a PDE of 25.

Russell Shaller: Can you give us a little bit more sense now what the difference was 3Q versus 4Q and how that affects maybe your outlook and your strategy there into the new year? This is always the problem when you have quarter to quarter results. You can have a little bit of shifting one day to the next and it falls in a quarter out of a quarter. I think our third quarter result was a little bit higher than we expected and our fourth quarter result was a little bit lower than we expected.

Russell Schaller: That's just not part of our business. So, you know, obviously I would prefer to be either in a zero or slight debt position. On the flip side. I'm not going to throw money away either. So, we've been very disciplined as a corporation in how we deploy our cash. If it builds up and we don't see an acquisition opportunity, I'm perfectly comfortable in doing that. At the same time, you know, I think our both our cash position or our cash generation gives us the possibility should the property become available. And there's a few out there of doing a pretty substantial acquisition.

Speaker Change #106: That's just not part of our business so, you know.

Speaker Change #107: Obviously, I would prefer to be in either in a zero or slight depth position.

Speaker Change #107: On the foot side I'm not going to throw money away either. So we've been very disciplined as a corporation and how we deploy our cash.

Speaker Change #107: If it builds up and we don't see an acquisition opportunity, I'm perfectly comfortable in doing that. At the same time, I think are both our cash position or a cash generation.

Russell Shaller: If I was to take both together and the year as a whole, I think that was indicative of the overall European economy. With that said, we're seeing some pretty significant differences in countries. As I mentioned, France Ferazani is doing incredibly well, which I guess we're probably one of the few companies that would say that. On the same side, some countries that are having some energy problems, Germany, UK and some other issues, not doing as well.

Speaker Change #108: Give us the possibility should the property become available and there's a few out there of doing a pretty substantial acquisition and you know, I would be

Operator: And, you know, I would be delighted if we get into position to make something that's more significant or possibly even transformative should it rise. So, we're going to be disciplined, wait to see how the world evolves, and in the meantime, you know, we've got a great rainy day fund. Should we ever need it? Thanks. Thank you.

Speaker Change #109: Delighted if we get in the position to make something that's more significant or possibly even transformative should it rise. So we're going to be disciplined, wait to see how the world evolves, and in the meantime, we've got a great rainy day fund should we ever need it.

Speaker Change #109: Thanks for watching.

Russell Shaller: Unfortunately, you get for Europe, you get it all blended together. It really is. It's a lot of differences amongst the individual countries, depending on their policies and what they're doing and their overall capability set. As I said, Nicole, we remain very optimistic in Europe. They've had, you know, through I consider a pretty anemic GDP growth rate. They've had 13 quarters of successive performance and I'm sorry that this one broke the streak.

Operator: I'm showing no further questions at this time.

Russell Schaller: Oh, now I'd like to turn it back to Russell Shaller, President and CEO, for closing remarks. Great. Thanks everyone for your time and for your questions. You know, we've performed well this year with another record quarter and record year of earnings per share and cash generation. We're investing in our organic business through our Salesforce, and we made the largest investment in R&D in the company's history this year. We expect these investments will continue to drive sales growth into the long term. We're also in an incredibly strong financial position. Fiscal 21, 22, 23, and now 24, we're all record years of EPS, and we're once again guiding to another year in 2025.

Speaker Change #109: Thank you. I'm showing no further questions at this time. Oh, now I'd like to turn it back to Russell Shaller, President and CEO for closing remarks.

Russell Shaller: Great, thanks to everyone for your time and for your questions.

Speaker Change #110: We've performed well this year with another record quarter and record year of earnings per share in cash generation.

Russell Shaller: We're investing in our organic business through our Salesforce and we made the largest investment in R&D in the company's history this year.

Russell Shaller: But there's nothing to believe in the coming quarters that we don't see them back on the path of continued growth. I'm, like I said, that management team there is very tenured. They've been doing this for a long time. They know what they need to do. And I'm excited about the opportunities and some of the business cases that they've been talking about.

Speaker Change #111: We expect these investments will continue to drive sales growth into the long-term. We're also in an incredibly strong financial position, fiscal 21, 22, 23 and now 24, we're all record years of EPS and we're once again guiding to another year in 2025.

Russell Schaller: The macroeconomic is constantly changing, but our approach continues to be to control what we can while focusing on our formula for success. Investing in our organization to create new products that make our customers' life better while delivering a positive return to our investors. I'm looking forward to the future, and I know that our global team has the ability to overcome challenges, think creatively, and continue to deliver results.

Speaker Change #112: The macroeconomic is constantly changing, but our approach continues to be to control what we can while focusing on our formula for success, investing in our organization to create new products that make our customers life better while delivering a positive return to our investors.

Unknown Executive: Great. Guiding for cat backs back down to 35 million, so it looks like under 2% of sales. Again, reasonable to expect cash conversion is back towards 100% or more. And yeah, yes. Yeah. So, you know, the only lumpy thing that ever happens with us outside of acquisitions, occasionally we flip a rental property to an owned property. And we did that last year, which were some pre-substantial cash outlays. But in general, you know, given our relatively modest needs, they are very, it's very much one for one.

Speaker Change #113: I'm looking forward to the future and I know that our global team has the ability to overcome challenges, think creatively and continue to deliver results. Thank you for your time this morning and for your interest in Brady, operator, you may disconnect the call.

Operator: Thank you for your time this morning and for your interest in Brady Operator. You may disconnect the call. This concludes today's conference call. Thank you for participating. You may now disconnect. Thank you very much.

Speaker Change #114: This concludes today's conference call.

Speaker Change #115: Thank you for participating in the E-mail disconnect.

Unknown Executive: So we make a dollar and that goes to the bottom line in cash. So I know others have asked this, so let me try it another way. You're going to start building cash very quickly again this year, if guidance plays out. You were buying back stock at $56. You're much higher here, and you said you're opportunistic. I don't know what the M&A, are you very comfortable building up the cash position again through the year, if that's what it plays out?

Speaker Change #115: [inaudible]

Unknown Executive: Well, you know, the cash has to go somewhere. I don't want it to burn a hole in our pocket. You know, I'm not going to buy something at a PDE of 25. That's just not part of our business. So, you know, obviously I would prefer to be either in a zero or slight debt position on the flip side. I'm not going to throw money away either. So, we've been very disciplined as a corporation and how we deploy our cash.

Speaker Change #115: [inaudible]

Unknown Executive: If it builds up and we don't see an acquisition opportunity, I'm perfectly comfortable in doing that. At the same time, you know, I think our both our cash position or our cash generation gives us the possibility should the property become available. And there's a few out there of doing a pretty substantial acquisition. And, you know, I would be delighted if we get into position to make something that's more significant or possibly even transformative should it rise. So, we're going to be disciplined, wait to see how the world evolves and in the meantime, you know, we've got a great rainy day fund. Should we ever need it?

Unknown Executive: Thanks. Thank you.

Speaker Change #115: [inaudible]

Speaker Change #116: I'm not sure if I can do it. I'm not sure if I can do it. I'm not sure if I can do it. I'm not sure if I can do it.

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Speaker Change #117: Subscribe to the channel and press the bell icon to get notified of the new video.

Operator: Welcome to the Q4 2020-24 Brady Corporation earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded.

Operator: I would now like to hand the conference over to your speaker today.

Ann Thornton: Please note that during this call, we may make comments about forward-looking information. Words such as expect, will, may, believe, forecast, and anticipate are just a few examples of words identifying a forward-looking statement. It's important to note that forward-looking information is subject to various risk factors and uncertainties, which could significantly impact expected results. Risk factors were noted in our news release this morning and in Brady's fiscal 2024 Form 10-K, which was filed with the SEC this morning.

Operator: Also, please note that this teleconference is copyrighted by Brady Corporation and may not be rebroadcast without the consent of Brady. We will be recording this call and broadcasting it on the Internet. As such, your participation in the Q&A session will constitute your consent to being recorded.

Ann Thornton: I'll now turn the call over to Brady's President and Chief Executive Officer, Russell Schaller. Russell. Thank you, Anne, and thank you all for joining us today.

Russell Schaller: We released our fiscal 2024 fourth corp. financial results this morning, and I'm thrilled to announce another company record high EPS for both Corp. and the year. We grew organic sales this quarter, and we also generated record high cash flow from operating activities.

Russell Schaller: This quarter was an excellent finish to another great year. Our 2024 non-GAAP EPS of 422 was another all-time record high, following three consecutive years of all-time record high. Our GAP EPS of 4.07 was also an all-time record high. This year we grew organic sales by 2.6 percent, with growth driven by both of our regional segments. We improved our growth profit margin to 51.3 percent and increased from 49.4 percent last year.

Russell Schaller: We closed the acquisition of Gravitech on August 1, and we returned 117 million to our shareholders through dividends and share buybacks. I'm incredibly proud of the entire Brady team for creating our results this year. It's a testament to their efforts that our profitability improved while we increased our investment in R&D. We're using these investments to increase our portfolio of engineered products to help make our customers' lives easier.

Russell Schaller: Meanwhile, we're expanding our sales force and investing in our digital capabilities to put ourselves in the best position to generate consistent organic sales. Road. Our priorities for the next year remain the same. Generate top line growth in excessive GDP and continue our evolution into a faster growing company. Target niche opportunities by developing unique product offerings to support our customers, particularly in the area of workplace automation, which we believe is a growth opportunity for years to come. Deliver operational improvements to increase profitability as we grow. To integrate, grab a tech acquisition and identify combined sales growth opportunities.

Unknown Executive: I'm showing no further questions at this time.

Russell Schaller: And effectively deploy our capital to drive long-term shareholder value, which includes organic investments, acquisitions, returning funds to our shareholders through dividends and share buybacks. We demonstrate our commitment to returning funds to our shareholders this year as we repurchase nearly 3% of our diluted share count. And we announced an additional 100 million shareback authorization.

Russell Schaller: And yesterday we announced an increase in our dividend, which represents the 39th consecutive year of annual dividend increases. We are committed to return cash to our shareholders while delivering a strong shareholder return.

Ann Thornton: I'm now turning it over to Ann to provide more details on our financial results. Ann. Thank you, Russell. We had a strong quarter and an excellent finish to 2024. Our organic sales growth was 1.6% this quarter. Our growth profit margin improved to 51.6%. We increased our investment in R&D, and we reduced SG&A as a percentage of sales. This resulted in earnings growth and another quarterly record gap EPS of $1.15 per share, which was up 15% compared to the fourth quarter of last year. Our non-GAAP EPS, which is calculated as our GAAP EPS excluding the after-tax impact of amortization expense, was $1.19 per share this quarter, which was up 14.4% over the fourth quarter of last year.

Russell Shaller: Oh, now I'd like to turn it back to Russell Shaller, President and CEO for closing remarks. Great. Thanks everyone for your time and for your questions. You know, we've performed well this year with another record quarter and record year of earnings per share and cash generation. We're investing in our organic business through our Salesforce and we made the largest investment in R&D in the company's history this year. We expect these investments will continue to drive sales growth into the long term.

Russell Shaller: We're also in an incredibly strong financial position, fiscal 21, 22, 23 and now 24, we're all record years of EPS and we're once again guiding to another year in 2025. The macroeconomic is constantly changing but our approach continues to be to control what we can while focusing on our formula for success. Investing in our organization to create new products that make our customers life better while delivering a positive return to our investors. I'm looking forward to the future and I know that our global team has the ability to overcome challenges think creatively and continue to deliver results.

Unknown Executive: Thank you for your time this morning and for your interest in Brady operator. You may disconnect the call. This concludes today's conference call. Thank you for participating. You may now disconnect. Thank you very much.

Unknown Executive: The New York Times The New York Times The New York Times The New York Times The New York Times The New York Times The New York Times The New York Times The New York Times The New York Times The New York Times The New York Times The New York Times, The New York Times, The New York Times The New York Times, The New York Times, The New York Times[inaudible] Good day and thank you for standing by.

Unknown Executive: Welcome to the Q4 2020-24 Brady Corporation Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over your speaker today.

Ann Thornton: And Thornton, CFO, please go ahead. Thank you. Good morning and welcome to the Brady Corporation Disco 2024-24th Quarter Earnings Conference Call. The slides for this morning's call are located on our website at www.bradycorp.com-flash-investors. We will begin our prepared remarks on slide number 3. Please note that during this call, we may make comments about forward-looking information. Words such as expect will, may, believe, forecast and anticipate are just a few examples of words identifying a forward-looking statement.

Ann Thornton: It's important to note that forward-looking information is subject to various risk factors and uncertainties which could significantly impact expected results. Risk factors were noted in our news release this morning and in Brady's fiscal 2024 Farm 10K which was filed with the SEC this morning. Also, please note that this teleconference is copyrighted by Brady Corporation and may not be rebroadcast without the consent of Brady. We will be recording this call and broadcasting it on the internet. As such, your participation in the Q&A session will constitute your consent to being recorded.

Russell Shaller: I'll now turn the call over to Brady's president and chief executive officer, Russell Schaller. Russell. Thank you, Anne, and thank you all for joining us today. We released our fiscal 2024 Fourth Corp, financial results this morning and I'm thrilled to announce another company record high EPS for both Corp, and the year. We grew organic sales this quarter and we also generated record high cash flow from operating activities. This quarter was an excellent finish to another great year.

Russell Shaller: Our 2024 non-GAP EPS of 422 was another all-time record high following three consecutive years of all-time record high. Our GAP EPS of 4.07 was also an all-time record high. This year we grew organic sales by 2.6 percent with growth driven by both of our regional segments. We improved our growth profit margin to 51.3 percent and increased from 49.4 percent last year. We closed the acquisition of Gravitech on August 1 and we returned 117 million to our shareholders through dividends and share buybacks.

Russell Shaller: I'm incredibly proud of the entire Brady team for creating our results this year. It's a testament to their efforts that our profitability improved while we increased our investment in R&D. We're using these investments to increase our portfolio of engineered products to help make our customers lives easier. Meanwhile, we're expanding our sales force and investing in our digital capabilities to put ourselves in the best position to generate consistent organic sales. Road. Our priorities for the next year remain the same.

Ann Thornton: Let's move to slide number 4 for our quarterly sales trends. Organic sales grew 1.6% this quarter. The recent strengthening of the US dollar versus other major currencies decreased sales by 0.8%, and the vestitures decreased sales by 1.5% for a total sale of the kind of 0.7% in the quarter.

Russell Shaller: Generate top line growth in excessive GDP and continue our evolution into a faster growing company. Target niche opportunities by developing unique product offerings to support our customers, particularly in the area of workplace automation which we believe is a growth opportunity for years to come. Deliver operational improvements to increase profitability as we grow. To integrate, grab a tech acquisition and identify combined sales growth opportunities. And effectively deploy our capital to drive long-term shareholder value which includes organic investments, acquisitions, returning funds to our shareholders through dividends and share buybacks.

Ann Thornton: Slide number six details our SG&A expense trending. SG&A was 93.3 million this quarter compared to 97.5 million in the fourth quarter of last year. As a percent of sales, SGNA declined to 27.2% compared to 28.2% of sales last to four. And then, if you exclude amortization expense from each of the periods presented, an SGNA would have decreased from 27.5% of sales in the fourth quarter of last year to 26.5% of sales this quarter. We've made significant progress in optimizing our cost structure, reducing our SG&A expense from more than 36% of sales eight years ago to 28.1% in fiscal year 2024.

Russell Shaller: We demonstrate our commitment to returning funds to our shareholders this year as we repurchase nearly 3% of our deluded share count. And we announced an additional 100 million shareback authorization. And yesterday we announced an increase in our dividend which represents the 39th consecutive year of annual dividend increases. We are committed to return cash to our shareholders while delivering a strong shareholder return.

Ann Thornton: I'm now turning it over to Ann to provide more details on our financial results. Ann. Thank you, Russell. We had a strong quarter and an excellent finish to 2024. Our organic sales growth was 1.6% this quarter. Our growth profit margin improved to 51.6%. We increased our investment in R&D and we reduced SGNA as a percentage of sales. This resulted in earnings growth and another quarterly record gap EPS of $1.15 per share which was up 15% compared to the fourth quarter of last year.

Ann Thornton: Moving to slide number seven, you'll find the trending of our investments in research and development. This quarter, we once again increased our investment in R&D, finishing at 17.5 million, which was 5.1% of sales. We know that the investments with the bus are a liar, almost always organic investments, and in particular our investments in research and development. We remain committed to new product development, and we have another exciting lineup of products set to launch in fiscal 2025.

Ann Thornton: Our non-gap EPS which is calculated as our gap EPS excluding the after tax impact of amortization expense was $1.19 per share this quarter which was up 14.4% over the fourth quarter of last year. Both regions performed well this quarter. Our Americas and the Asia region grew organic sales 3.4% and increased segment profit by 6.7%. Our Europe and Australia region declined 1.8% organically compared to last year's fourth quarter which follows an impressive streak of 13 straight quarters of organic sales growth.

Ann Thornton: The macro environment in Europe has become more challenging over the last several months and quarters but even despite the slight decline in organic sales we were still able to increase operating income by 4.6% in the region. Which was driven by continued improvement in growth profit margin and ongoing efficiency gains through outer cost structure in Europe. The key financial takeaways this quarter are record high EPS, record high cash flow from operating activities, continued strong financial performance within both of our regions and a continued commitment to return funds to our shareholders.

Ann Thornton: Turning to slide number 10, you'll find a summary of our cash generation. Operating cash flow increased from 79.3 million in Q4 of last year to 84 million this quarter. And free cash flow continues to be strong at 73.2 million this quarter compared to 73 million in last year's fourth quarter. Operating cash flow was 151% of net income, and free cash flow was 132% of net income this quarter.

Ann Thornton: Let's move to slide number 4 for us quarterly sales trends. Organic sales grew 1.6% this quarter. The recent strengthening of the US dollar versus other major currencies decreased sales by 0.8% and the vestitures decreased sales by 1.5% for a total sale of the kind of 0.7% in the quarter.

Ann Thornton: Moving to slide number five you'll find our quarterly gross profit or a gross margin trending. Our gross profit margin continues to be strong with an increase of 80 basis points to 51.6% compared to 50.8% in the fourth quarter of last year. We continue to realize benefits from our sales growth coming from higher gross profit margin products as well as stabilizing input costs compared to last year.

Ann Thornton: Slide number 11 details the impact that our historical cash generation has had on our balance sheet. As of July 31st, we were in a net cash position of 159.2 million dollars. Our approach to capital allocation is consistent, which is to first use our cash to fund organic sales growth and efficiency opportunities. This includes investing in new product development, sales generating resources, capability in enhancing CAPEX, and automation-focused CAPEX. We have the ability to continue to invest throughout the economic cycles so that we're always putting ourselves in the best position to drive future sales growth and profit growth.

Ann Thornton: Slide number six details our SGNA expense trending SGNA was 93.3 million this quarter compared to 97.5 million in the fourth quarter of last year. As a percent of sales SGNA declined to 27.2% compared to 28.2% of sales last to four. And then if you exclude amortization expense from each of the periods presented, an SGNA would have decreased from 27.5% of sales in the fourth quarter of last year to 26.5% of sales this quarter.

Ann Thornton: And second, we focus on consistently increasing our dividends. Yesterday, we announced our 39th consecutive year of annual dividend increases, which is a streak that we're very proud of. After funding organic investments and dividends, we then deploy our cash in a disciplined manner for acquisitions, where we have clear synergies, and then also for opportunistic share buybacks when we see a disconnect between intrinsic value and Brady's trading price. Our strong balance sheet puts us in a position to be able to continue to increase our investment in R&D and other organic sales opportunities, to acquire companies strategically when the price is right, and to return funds to our shareholders through dividends and share buybacks.

Ann Thornton: We've made significant progress in optimizing our cost structure, reducing our SGNA expense from more than 36% of sales eight years ago to 28.1% in fiscal year 2024. At the same time, we've continued to invest in growth by expanding our sales force, enhancing our digital capabilities and broadening our army channel strategies, all while identifying savings throughout our sales and other support functions.

Ann Thornton: Moving to slide number seven, you'll find the trending of our investments in research and development. This quarter, we once again increased our investment in R&D finishing at 17.5 million, which was 5.1% of sales. We know that the investments with the bus are a liar, almost always organic investments, and in particular our investments in research and development. We remain committed to new product development, and we have another exciting lineup of products set to launch in fiscal 2025.

Ann Thornton: Slide number 12 provides an overview of our financial results for the full year ended July 31, 2024. Organic sales grew 2.6 percent, and foreign currency translation increased sales 0.2 percent, while the impact of a divestiture decreased sales by 2.1 percent this year. We finished fiscal 2024 with all-time record-high CAPEX and non-GAPEX. These strong earnings results were even after increasing our investment in R&D by more than 10 percent this year, resulting in the largest annual investment in R&D in company history.

Ann Thornton: On slide number eight, you can see that pre-tax earnings increased 6.9% on a gap basis from 63.8 million to 68.2 million. And if you exclude amortization from both periods, pre-tax earnings increased 6.6% on a non-gap basis from 66.2 million to 70.5 million.

Ann Thornton: We're confident that our actions this year and our consistent priorities will set us up for success in the future, which takes us to our guidance for next year, which is shown on slide number 13. We're forecasting GAP EPS to range from $4.20 to $4.45 per share in fiscal 2025, which would represent an increase of between 2 percent and 9.3 percent compared to fiscal 2024. And we're forecasting non-GAPEX, which excludes the impact of amortization, to range from $4.40 to $4.70 per share in fiscal 2025, which would represent an increase of between 4.3 percent and 11.4 percent compared to fiscal 2024.

Ann Thornton: Potential risks to our guidance, among others, include potential strengthening of the US dollar, inflationary pressures that we're unable to offset in a timely enough manner, or an overall slowdown in economic activity.

Russell Schaller: I'll now turn the call back over to Russell to cover our regional results and to provide some closing thoughts before Q&A. Russell, thanks, Anne. Slide 14 details the financial results of our Americas and Asia region. Sales were 22.85 million this quarter, and organic sales growth was 3.4 percent. Devesitures decreased sales by 2.2 percent, and foreign currency translation reduced sales by another 0.8 percent, resulting in total sales growth of 0.4 percent this quarter. Our growth was driven by our product identification, wire identification, and safety and facility identification product lines. We finished the year on a high note in July.

Ann Thornton: And second, we focus on consistently increasing our dividends. Yesterday, we announced our 39th consecutive year of annual dividend increases, which is a streak that we're very proud of. After funding organic investments and dividends, we then deploy our cash in a disciplined manner for acquisitions, where we have clear synergies, and then also for opportunistic share buybacks when we see a disconnect between intrinsic value and Brady's trading price. Our strong balance sheet puts us in a position to be able to continue to increase our investment in R&D and other organic sales opportunities to acquire companies strategically when the price is right, and to return funds to our shareholders through dividends and share buybacks.

Ann Thornton: Slide number 12 provides an overview of our financial results for the full year ended July 31, 2024. Organic sales grew 2.6 percent, and foreign currency translation increased sales 0.2 percent, while the impact of a divestiture is decreased sales by 2.1 percent this year. We finished fiscal 2024 with all-time record-high CAPEX and non-GAPEX. These strong earnings results were even after increasing our investment in R&D by more than 10 percent this year, resulting in the largest annual investment in R&D in company history.

Russell Schaller: We are delighted with these results, which were generated by a lot of hard work combined with several industry-leading product launches.

Russell Schaller: Turning this slide 15 will move to the performance of our Europe and Australia region. Sales were 114.9 million this quarter; organic sales declined 1.8 percent, and the impact of foreign currency translation decreased sales 1.2 percent for a total decline of 3 percent. This quarter marked the first decline in organic sales in 13 quarters in our Europe and Australia region, which ended in impressive street. Despite the decline in organic sales in Europe and Australia, we still grew segment profit by 4.6 percent to 19.3 million, and we improved segment profit from 15.6 percent of sales to 16.8 percent of sales.

Ann Thornton: We're confident that our actions this year and our consistent priorities will set us up for success in the future, which takes us to our guidance for next year, which is shown on slide number 13. We're forecasting GAP EPS to range from $4.20 to $4.45 per share in fiscal 2025, which would represent an increase of between 2 percent and 9.3 percent compared to fiscal 2024. And we're forecasting non-GAPEX, which excludes the impact of amortization to range from $4.40 to $4.70 per share in fiscal 2025, which would represent an increase of between 4.3 percent and 11.4 percent compared to fiscal 2024.

Russell Schaller: We continue to identify opportunities for efficiencies following our regional reorganization that became effective halfway through last year, and we've been able to offset increased pressures through manufacturing efficiencies and targeted price increases. Given the week macroeconomic picture in that region, I'm incredibly proud of the team's multi-year performance. We do believe long-term prospects in the region are great and will continue to invest in sales resources in geographic expansion through new distributor partners. Our creative approach to solve the unique customer problems with our niche solutions will ensure we remain on a positive trajectory in Europe and Australia.

Ann Thornton: We also anticipate organic sales growth in the low single-digit percentages for the year ending July 31, 2025. Other elements of our guidance include an income tax rate of approximately 20 percent, depreciation and amortization expense of $38 to $40 million, and capital expenditures of approximately $35 million. Potential risks to our guidance, among others, include potential strengthening of the US dollar, inflationary pressures that we're unable to offset in a timely enough manner or an overall slowdown in economic activity.

Russell Schaller: Looking ahead to our fiscal 2025, we have a lot to look forward to, including several new initiatives that will improve our customer's experience. For instance, our printer cartridges are now enabled with Label Sense technology. This enables a seamless print experience for our customers, where the printer is able to sense the specific material and print without waste or the need to worry about unique printer configurations. Second, we have a fully enabled voice to print for our Bluetooth-enabled handheld printers. This allows the technician to simply talk to their phone and print a label without the need to manually enter data.

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

Russell Shaller: Slide 14 details to the financial results of our Americas and Asia region. Sales were 22.85 million this quarter in organic sales growth was 3.4 percent. Devesitures decreased sales by 2.2 percent and foreign currency translation reduced sales by another 0.8 percent, resulting in total sales growth of 0.4 percent this quarter. Our growth was driven by our product identification, wire identification, and safety and facility identification product lines. We finished the year on a high note in July.

Russell Schaller: These technology improvements are great examples of the product enhancements that help make our customers' lives easier.

Russell Shaller: We saw meaningful recovery in our Asia businesses quarter with organic growth of 12.3 percent. We're seeing growth throughout Asia with exception of China, which declined just over 6 percent organically this quarter. At approximately 20 percent organic revenue growth, our expansion in India is driving some of the best numbers at Brady. Meanwhile, the remainder of our operations in Southeast Asia are also performing well. Segment profit in Americas and Asia increased 6.7 percent to 53.4 million and segment profit as a percentage of sales increased from 22 percent to 23.3 percent this quarter. We are delighted with these results, which were generated by a lot of hard work combined with several industry leading product launches.

Russell Schaller: In fiscal 2025, we're forecasting sales of approximately 125 million and EBITDA of approximately 13 million from Gravotech, excluding integration-related costs. Gravotech's high-quality precision direct marking products fill a gap in identification offerings within Brady's product portfolio. I will look forward to expanding our customer reach and providing a more complete set of solutions for our customers with the addition of Gravotech.

Russell Shaller: Turning this slide 15 will move to the performance of our Europe and Australia region. Sales were 114.9 million this quarter, organic sales declined 1.8 percent, and the impact of foreign currency translation decreased sales 1.2 percent for a total decline of 3 percent. This quarter marked the first decline in organic sales in 13 quarters in our Europe and Australia region, which ended in impressive street. Despite the decline in organic sales in Europe and Australia, we still grew segment profit by 4.6 percent to 19.3 million, and we improved segment profit from 15.6 percent of sales to 16.8 percent of sales.

Cashen Keeler: Our first question comes from Caching Killer with Bank of America. Your line is open. Yeah, hi.

Russell Shaller: We continue to identify opportunities for efficiencies following our regional reorganization that became effective halfway through last year, and we've been able to offset increased pressures through manufacturing efficiencies and targeted price increases. Given the week macroeconomic picture in that region, I'm incredibly proud of the team's multi-year performance. We do believe long-term prospects in the region are great and will continue to invest in sales resources in geographic expansion through new distributor partners. Our creative approach to solve the unique customer problems with our niche solutions will ensure we remain on a positive trajectory in Europe and Australia.

Cashen Keeler: Good morning, Russell, and I can graph in the quarter, and thanks for taking my questions. So I guess first off, can you help us a little bit with the cadence of earnings throughout the year? Maybe how that will vary for a second half, and then maybe also with that, how can we think about organic growth overall? Is there anything we should be mindful of that will be reasonably consistent throughout the year? And then maybe also with that, can you parse a little bit on organic growth? How much will be coming from underlying demand growth and maybe pricing as well?

Russell Schaller: There's a lot of questions there.

Russell Schaller: So first, I give the caveat that my crystal ball is not necessarily better than anyone else out there, so I'll give it kind of my personal take. I think we were living in an area with a fair amount of industrial investments sitting on the sidelines, depending on which way elections go and what U.S. energy policy becomes. So we're kind of trying to thread the middle range of possible outcomes, which means we see relatively slow GDP growth in the United States and Europe. And to take a step back a bit, Brady traditionally is very dependent on the overall economic health of the underlying countries that we serve.

Russell Shaller: Looking ahead to our fiscal 2025, we have a lot to look forward to including several new initiatives that will improve our customer's experience. For instance, our printer cartridges are now enabled with label sense technology. This enables a seamless print experience for our customers where the printer is able to sense the specific material and print without waste or the need to worry about unique printer configurations. Second, we have a fully enabled voice to print for our Bluetooth enabled handheld printers.

Russell Schaller: Not too surprisingly, if countries are doing well, there tends to be an investment in industrial production and capacity, and we come along with that overall spending as we tend to be a percentage of manufacturing investment in the customers that we serve. So what we're looking at, I think in the coming year, is more of the same of what we've seen over the past year. I would say a little bit of month-to-month roller coaster. I think some of the distributors and some of our customers are still very tentative in how much capital they're willing to deploy.

Russell Shaller: I'd also like to add background to our acquisition of Gravotech, which we recently closed on August 1st. Over half of Brady's business is related to part-marking and identification. A key gap in our portfolio was the ability to directly mark on parts without the use of a label. With Gravotech, we now have the ability to direct laser mark along with scribing and dot-pean marking solutions. These technologies round out our reader, printer, and labeling solutions to provide a single resource for industrial part identification.

Russell Shaller: Gravotech is headquartered in Leone, France and has an international presence in the US, Latin America, Europe, and Asia. In fiscal 2025, we're forecasting sales of approximately 125 million and EBITDA of approximately 13 million from Gravotech, excluding integration-related costs. Gravotech's high-quality precision direct marking products fill a gap in identification offerings within Brady's product portfolio. I will look forward to expanding our customer reach and providing a more complete set of solutions for our customers with the addition of Gravotech.

Russell Schaller: There certainly, we don't see anybody deferring maintenance or deferring necessary capital expenditures, but at the same time we don't see too many customers that we're all in and deciding to make really significant capital investments. I think they're, again, waiting to see the outcome of some of the elections both in Europe and America. So as I look to the future, I think even with a relatively low GDP growth rate, I'm pretty excited about the products that we're launching and some of the initiatives that we're taking. Our industrial products group, which is a subset of the overall Americas and Europe.

Russell Schaller: But yeah, it's been clocking in some pretty good numbers. We're looking at, you know, mid to high single-digit growth rates. And I think a relatively stagnant macro environment. So, you know, where are we getting that growth? A lot of it is expanding wallet share on the part of our customers. We've been able to, you know, continue to sell them and upgrade them and provide new and better use cases. So I think a lot of our growth continues to come from customers that we have, which is most of the industrial companies out there, and getting them to use more Brady products, essentially to make their lives easier.

Cashen Keeler: Our first question comes from Caching Killer with Bank of America. Your line is open. Yeah, hi. Good morning, Russell and I can graph in the quarter and thanks for taking my questions. So I guess first off, can you help us a little bit with the cadence of earnings throughout the year? Maybe how that will vary for a second half, and then maybe also with that, how can we think about organic growth overall?

Russell Schaller: Because I think in a lot of cases, the Brady solution simply is a more effective and efficient way to get the job done, and we're seeing growth. So, you know, we have, I think, a very modest guidance in the coming year. You know, what would make it better is, I think, more energy prices, particularly in Europe. We see that as a very significant headwind for industrial capacity utilization in Europe, and, you know, to the extent they can get lower energy prices or get their energy under control. We see it better, you know, France, which tradition is a little more energy independent than some of the other countries in the region.

Cashen Keeler: Is there anything we should be mindful of there will be reasonably consistent throughout the year? And then maybe also with that, can you parse a little bit on organic growth? How much will be coming from underlying demand growth and maybe pricing as well? There's a lot of questions there. So first, I give the caveat of my crystal ball is not necessarily better than anyone else out there, so I'll give it kind of my personal take.

Cashen Keeler: I think we were living in an area with a fair amount of industrial investments sitting on the sidelines, depending on which way elections go and what U.S, energy policy becomes. So we're kind of trying to thread the middle range of possible outcomes, which means we see relatively slow GDP growth in the United States in Europe. And to take a step back a bit, Brady traditionally is very dependent on overall economic health of the underlying countries that we serve.

Cashen Keeler: Not too surprisingly, if countries are doing well, there tends to be an investment in industrial production and capacity, and we come along with that overall spending as we tend to be a percentage of manufacturing investment in the customers that we serve. So what we're looking at, I think in the coming year, is more of the same of what we've seen over the past year. I would say a little bit of month to month roller coaster.

Cashen Keeler: And then just on Gravo Tech, you know, at this juncture, I guess what needs to be done to integrate that. And then I think you said the 13 million of EBITDA was excluding integration costs. So is there, you know, a figure we can think about in terms of cost associated with kind of integrating that business. Yeah, you know, so first of all, Gravo Tech is a very successful company. And you know, it's that part of the reason we like it. We're not buying something that requires a significant fix-up. We're not looking at consolidating operations or anything major.

Cashen Keeler: I think some of the distributors and some of our customers are still very tentative in how much capital they're willing to deploy. There certainly, we don't see anybody deferring maintenance or deferring necessary capital expenditures, but at the same time we don't see too many customers that we're all in and deciding to make really significant capital investments. I think they're, again, waiting to see the outcome of some of the elections both in Europe and America.

Cashen Keeler: So as I look to the future, I think even with a relatively low GDP growth rate, I'm pretty excited about the products that we're launching and some of the initiatives that we're taking, our industrial products group, which is a subset of the overall Americas and Europe. But yeah, it's been clocking in some pretty good numbers. We're looking at, you know, mid to high single digit growth rates. And I think a relatively stagnant macro environment.

Russell Schaller: Like I said, I don't, I don't anticipate any consolidation of major operations. I think it's a little tweak here and a little tweak there. At the same time, what we're excited about is we think we can bring some R&D to Gravo Tech. And in some of the things that they do in terms of creation of images, you know, that is the same thing Brady is doing with their printers already. We can do that. And I think we can accelerate Gravo Tech's R&D and their capabilities with some of the core software that Brady has already developed.

Cashen Keeler: So, you know, where are we getting that growth? A lot of it is expanding wallet share on the part of our customers. We've been able to, you know, continue to sell them and upgrade them and provide new and better use cases. So I think a lot of our growth continues to come from customers that we have, which is most of the industrial companies out there and getting them to use more Brady products essentially to make their lives easier.

Russell Schaller: So, you know, like any acquisition, I think the first 12 months to 18 months is a little bit slow as you get it. All the pieces put together. But after that, we see a really strong business case for the combined entity.

Cashen Keeler: Because I think in a lot of cases, the Brady solution simply is a more effective and efficient way to get the job done and we're seeing growth. So, you know, we have, I think, a very modest guidance in the coming year. You know, what would make it better is, I think, more energy prices, particularly in Europe. We see that as a very significant headwind for industrial capacity utilization in Europe and, you know, to the extent they can get lower energy prices or get their energy under control.

Cashen Keeler: Got it, understood. And then last one, if I can just, just some buybacks. Is there a specific number, you know, you're looking target next year. And then maybe also on that. I mean, what opportunities do you have in front of you in terms of capital deployment from an organic perspective? And I know you just did Gravo Tech, but maybe any areas in the portfolio you'd look to grow in organically as well. Yeah, sure. So, you know, the stock buybacks is almost a double-edged sword. In some regards, we don't want them because that means that the market perceives our share prices undervalue.

Cashen Keeler: We see it better, you know, France, which tradition is a little more energy independent than some of the other countries in the region. They're clocking some of our best organic sales growth rates. You know, I think that is a big part of the picture is where does energy go and where what is the level of optimism on the part of our customers for overall expansion in their capabilities and industrial production. I appreciate that.

Cashen Keeler: So, you know, do we have a target? Yeah, we've authorized 100 million in share buybacks, but we've, as in the past, been very disciplined in when we will use that money. So, you know, if the stock goes to a certain trading range, we'll start buying shares. But if it's, if we considered it's fairly valued or not much of a discount to our cash flow, we'll keep our money. Because again, my overall preference, unless the share price is significantly devalued, my preference is reinvesting in the company either organically. And again, we love our R&D investment. That hands down is driving all of our growth and our growth margin improvement.

Cashen Keeler: Go ahead. Yeah, thanks. And then just on Gravo Tech, you know, at this juncture, I guess what needs to be done to integrate that. And then I think you said the 13 million of EBITDA was excluding integration costs. So is there, you know, figure we can think about in terms of cost associated with kind of integrating that business. Yeah, you know, so first of all, Gravo Tech is a very successful company.

Russell Schaller: And then secondly, there are some M&A opportunities out there. We continue to look at it. It will be certainly in the either the material space because we are use our materials capability to drive a lot of our unique product differentiation. And then secondly, we're always interested in things that further our ability to do part marking, part identification. And, you know, so if there are, if there are things in areas in those two categories, if they become available and they're available at a price that we feel meets our financial objectives, then we could certainly see acquisitions in the future.

Cashen Keeler: And you know, it's that's part of the reason we like it. We're not buying something that requires a significant fix up. We're not looking at consolidating operations or anything major. You know, there's a lot of opportunities that Gravo Tech pursues that Brady traditionally has and vice versa. So, you know, what we're looking for really is what new customers can we help Gravo Tech get to and what new customers can gravitate pull us into.

Cashen Keeler: Because we're definitely seeing that in some of the use cases. Yeah, of course, whenever you purchase a company, there's always some minor things that need to happen in terms of consolidating, you know, back office operations and, you know, making sure they're on the same ERP system and what have you. You know, in the scheme of things, they're relatively small. Like I said, I don't, I don't anticipate any any consolidation of major operations.

Cashen Keeler: Yes, thank you. Thank you.

Keith Housum: And our next question comes from Keith Housum with North Coast Research. Your line is open. Good morning, guys.

Keith Housum: Congratulations on a final quarter there. Russell, in terms of like the track and trace initiatives that you guys are working on, you know that earlier this year, the V4500 came out as a data scanner. Perhaps we can talk about the progress that the initiative and perhaps I know one product doesn't drive the sales bite for you guys at all. But I think that's the onerous by representative of some of your track and trace efforts. How does he get the early adoption, early acceptance by the market bend? Keith Housum: Yeah, so we feel, you know, very good about the adoption of the product.

Cashen Keeler: I think it's a little tweak here and a little tweak there. At the same time, what we're excited about is we think we can bring some R&D to Gravo Tech. And in some of the things that they do in terms of creation of images, you know, that is the same thing Brady is doing with their printers already. We can do that. And I think we can accelerate Gravo Tech's R&D and their capabilities with some of the core software that Brady has already developed.

Russell Schaller: And, you know, for us, it's building out a complete portfolio, which now will include lasers too. You know, so our goal, and you know, if you think and you take a step back of what manufacturing needs to do, you need to be able to identify a part uniquely, trace it through the manufacturing floor, be able to read it at various steps along the way before it gets either incorporated into another product or it gets sent out the door to a customer. So we want to be there at every step of that journey, not in the distribution side of things.

Cashen Keeler: So, you know, like any acquisition, I think the first 12 months to 18 months is a little bit slow as you get it. All the pieces put together. But after that, we see a really strong business case for the combined entity. Got it, understood. And then last one if I can just just some buybacks. Is there a specific number, you know, you're looking target next year. And then maybe also on that.

Russell Schaller: That's not really our core business. But throughout the manufacturing floor and, you know, you see that in our industrial products and what we're doing. So I think in a relatively anemic industrial automation environment right now, I'm super pleased with how we're doing in our entire industrial portfolio. Again, our products are designed to work seamlessly with one another, you know, kind of like the Windows Office experience. What we're going for is immediate out of the box usage. So a lot of customers, excuse me, a lot of products out there require a fair amount of hand-holding, software integration, and difficulty to get set up.

Cashen Keeler: I mean, what opportunities do you have in front of you in terms of capital deployment from organic perspective? And I know you just did Gravo Tech, but maybe any areas in the portfolio you'd look to grow in organically as well. Yeah, sure. So, you know, the stock buybacks is almost a double-edged sword. In some regards, we don't want them because that means that the market perceives our share prices under value. So, you know, do we have a target?

Cashen Keeler: Yeah, we've authorized 100 million in share buybacks, but we've, as in the past, we've been very disciplined in when we will use that money. So, you know, if the stock goes to a certain trading range, we'll start buying shares. But if it's if we considered it's fairly valued or not much of a discount to our cash flow, we'll keep our money. Because again, my overall preference unless the share price is significantly devalued, my preference is reinvesting in the company either organically.

Russell Schaller: You know, our goal is for all of our products to be able to plug and play and be used in minutes without much skill. And I think we're pretty far along in that journey. I talked about in our at the tail end of my commentary being able to do voice-enabled printers. I'm super excited about that. And if you think about the whole ease of use for our customers, you know, we can do a voice-enabled barcode and then have the reader right there to verify the barcode and be able to tag it to the particular product.

Cashen Keeler: And again, we love our R&D investment. That hands down is driving all of our growth and our growth margin improvement. And then secondly, there are some M&A opportunities out there. We continue to look at it. It will be certainly in the either the material space because we are use our materials capability to drive a lot of our unique product differentiation. And then secondly, we're always interested in things that further our ability to do part marking, part identification.

Cashen Keeler: And, you know, so if there are if there are things in areas in those two categories, if they become available and they're available at a price that we feel meets our financial objectives, then we could certainly see acquisitions in the future. Yes, thank you. Thank you.

Russell Schaller: So there's a lot of, there are a lot of things out there that provide rich content to our customer in a way that's super easy for them to use. And that's kind of the thesis of our business. There'll be more products to come over the coming years. We round out the portfolio. But, you know, this has been something that we've been working on. Probably we started in 2017 and 2018, and we've spent literally hundreds of millions of dollars to get to this point. And I am so excited to start seeing these products come out and working together as, as are our customers.

Russell Schaller: Yep.

Russell Schaller: And now, if your printers and cartridges are a big part of your business, with the special ones that you've had this mention there, do you anticipate these will be accelerated refresh cycle for printers that are coming out there as well as, you know, expanding the adjustable market? Yeah, so two things. So virtually all of our printers have been refreshed and now work with Label Sense technology, certainly all of our core products. So what does label sense do? If I'm printing on unique materials, I'm not talking of paper label, but if I'm talking about a wire marker or something that goes on a printed circuit board or what have you, there's a decent amount of work that would have to go for a customer to configure their printer to print on a unique material and the setup and what have you to make it match that.

Keith Housum: And our next question comes from Keith Housum with North Coast Research. Your line is open. Good morning, guys. Congratulations on a final quarter there. Russell, in terms of like the track and trace initiatives that you guys are working on, you know, I know that earlier this year, the V4500 came out as a data scanner. Perhaps we can talk about the progress that the initiative and perhaps I know one product doesn't drive the sales bite for you guys at all.

Keith Housum: But I think that's the onerous by representative of some of your track and trace efforts. How does he get the early adoption, early acceptance by the market bend? Keith Housum Yeah, so we feel, you know, very good about the adoption of the product. And, you know, for us, it's building out a complete portfolio, which now will include lasers too. You know, so our goal and you know, if you think and you take a step back of what manufacturing needs to do, you need to be able to identify a part uniquely, trace it through the manufacturing floor, be able to read it at various steps along the way before it gets either incorporated into another product or it gets sent out the door to a customer.

Russell Schaller: With our new set of cartridges that are all enabled with this, there's basically a chip in the cartridge that tells the printer all of the settings that it needs to have to print optimally on that material. And you know, that's the first in the industry. It can save in some kinds; it can save minutes to tens of minutes for our customers. And more importantly, they don't waste any material because if you've ever seen this, you print a label in the old technology; you print a label, you don't like how it looks, you try it again, you don't like how it looks, you try it again.

Keith Housum: So we want to be there at every step of that journey, not in the distribution side of things. That's not really our core business. But throughout the manufacturing floor and, you know, you see that in our industrial products and what we're doing. So I think in a relatively anemic industrial automation environment right now, I'm super pleased with how we're doing in our entire industrial portfolio. Again, our products are designed to work seamlessly with one another, you know, kind of like the Windows Office experience.

Russell Schaller: This way, you get it one and done, first shot. It's working. And again, a lot of effort on the part of the R&D and product management team to get this up and rolling and getting it to work across literally hundreds of different material and printer combinations.

Russell Schaller: Is there a real problem in terms of the price increase, I guess, with this technology compared to the prior generation? Yeah, we're not really pushing price on this. You know, the products, I think, are fantastic and I think the value proposition to our customers is fantastic. You know, so we're not trying to extract more out of them. We're trying to get customers to be more excited and make it easier for them to use it. As I've joked with some people, we're getting to drop to pen or use non-professional labeling. And really, I think Brady is most successful when it's a win-win and, you know, we don't try to extract every last penny, but we enable our customers to get their jobs easier in a fair economic environment.

Keith Housum: What we're going for is immediate out of the box usage. So a lot of customer, excuse me, a lot of products out there require a fair amount of hand holding software integration and difficulty to get set up. You know, our goal is for all of our products to be able to plug and play and be used in minutes without much skill. And I think we're pretty far along in that journey. I talked about in our at the tail end of my commentary being able to do voice enabled printers.

Keith Housum: I'm super excited about that. And if you think about the whole ease of use for our customers, you know, we can do a voice enabled barcode and then have the reader right there to verify the barcode and be able to tag it to the particular product. So there's a lot of, there are a lot of things out there that provide rich content to our customer in a way that's super easy for them to use.

Russell Schaller: So, no, we're not, again, we're not really trying to push price; we're trying to push consumption and getting more printers and more cartridges in people's hands. Got you.

Keith Housum: One more question from you, don't mind. SG&A, you know, the most efficient and the best as a fourth quarter for you guys, was there anything unique in the fourth quarter that suggests that this cadence shouldn't repeat in the FY25? You know, there are some little things back and forth. I don't know, and if you want to make any commentary on that. Sure, sure, yeah, I really nothing unusual, Keith, in this quarter of this year. As we work through initiatives internally, sometimes, you know, it can be a little bit choppy in terms of SG&A going up a bit, down a bit, but general trajectory, we expect to be at approximately this level and working downward into over the long term as we work through efficiency opportunities.

Keith Housum: And that's kind of the thesis of our business. There'll be more products to come over the coming years. We round out the portfolio. But, you know, this has been something that we've been working on. Probably we started in 2017 and 2018 and we've spent literally hundreds of millions of dollars to get to this point. And I am so excited to start seeing these products come out and working together as, as are our customers.

Keith Housum: Yep. And now, if your printers and cartridges are a big part of your business, with the special ones that you've had this mention there, do you anticipate these will be accelerated refresh cycle for printers that are coming out there as well as, you know, expanding the adjustable market? Yeah, so two things. So virtually all of our printers have been refreshed and now work with label sense technology, certainly all of our core products.

Keith Housum: Right, and as well, it's the ground type, of course, because that will change the dynamics a little bit. Yeah, great, great point.

Keith Housum: All right, guys, I'll stop there and get back into you. Thanks. Thank you. Great. Thank you.

Keith Housum: So what does label sense do? If I'm printing on unique materials, I'm not talking of paper label, but if I'm talking about a wire marker or something that goes on a printed circuit board or what have you, there's a decent amount of work that would have to go for a customer to configure their printer to print on a unique material and the setup and what have you to make it match that.

Steve Ferazani: Our next question comes from Steve Ferazani with Cedody. Your line is open. Good morning, Russell. Morning, Ann. Want to ask a little bit about your progress in Southeast Asia and India? I know we go back two or three years. Those are practically green fields opportunities for you. Can you give us a sense of how much traction you've gained and what the opportunity can be over the next three? Three to five years as you see it right now. Yeah, India started off. I'm going back ten years ago. India started off as a very small opportunity for us as a corporation.

Keith Housum: With our new set of cartridges that are all enabled with this, there's basically there's a chip in the cartridge that tells the printer all of the settings that it needs to have to print optimally on that material. And you know, that's the first in the industry. It can save in some kinds, it can save minutes to tens of minutes for our customers. And more importantly, they don't waste any material because if you've ever seen this, you print a label in the old technology, you print a label, you don't like how it looks, you try it again, you don't like how it looks, you try it again.

Russell Schaller: I think due to the leadership team, both in India and frankly all of Southeast Asia, they're benefiting from some of the relocation out of China, as well as just overall economic growth in the particular country. If I look over the last few years, we've added a second plant in India, relatively small, but it helps us be close to the customer. We have two plants now, one in Bangalore, one in Delhi. We're seeing the results of those investments. Like I said, we called out approximately 20% year-over-year growth. But this is on top of really a journey they've been on for many years, showing low double digits growth rates.

Keith Housum: This way you get it one and done first shot. It's working. And again, a lot of effort on the part of the R&D and product management team to get this up and rolling and getting it to work across literally hundreds of different material and printer combinations. Is there a real problem in terms of the price increase, I guess, with this technology compared to the prior generation? Yeah, we're not really pushing price on this.

Russell Schaller: We continue to invest in China. It's entirely possible if we continue our growth trajectory that we'll be opening up a third plant there as well. And so we just feel very positive. Even in some of the other countries that are relatively small, we can see some benefit that they're experiencing again as some of production relocations happening out of China. And you see it all through Southeast Asia. I think Vietnam, which is an incredibly small country for us, I wish it was bigger. I think they had like a 700% growth rate, but it was times a really small number.

Keith Housum: You know, the products, I think are fantastic and I think the value proposition to our customers is fantastic. You know, so we're not trying to extract more out of them. We're trying to get customers to be more excited and make it easier for them to use it. As I've joked with some people, we're getting to drop to pen or use non-professional labeling. And really, I think Brady is most successful when it's a win-win and, you know, we don't try to extract every last penny, but we enable our customers to get their jobs easier in a fair economic environment. So, no, we're not, again, we're not really trying to push price, we're trying to push consumption and getting more printers and more cartridges and people's hands. Got you.

Russell Schaller: So we're slowly deploying additional salespeople, additional sales resources throughout the region.

Russell Schaller: And this has always been Brady's business model of looking at what countries, what economies, what opportunities are growing, and making sure that we are targeting those with the right set of resources, whether it's R&D products or customer sales and support. Do you have to customize the products by markets? What they might buy in Vietnam or India might be different than what they're buying in the US or the UK. So absolutely, but it's kind of I'll call it end user cuss or end country customization. So Brady has a huge portfolio of products. I would say upwards of 2000 of products that we really support and sell, and then maybe another 10,000 that are less common.

Keith Housum: One more question from you, don't mind. SG&A, you know, the most efficient and the best as a fourth quarter for you guys, was there anything unique in the fourth quarter that suggests that this cadence shouldn't repeat in the FY25? You know, there are some little things back and forth, I don't know, and if you want to make any commentary on that. Sure, sure, yeah, I really nothing unusual, Keith, in this quarter of this year, as we work through initiatives internally, sometimes, you know, it can be a little bit choppy in terms of SG&A going up a bit down a bit, but general trajectory, we expect to be at approximately this level and working downward into over the long term as we work through efficiency opportunities. Right, and as well, it's the ground type of course, because that will change the dynamics a little bit. Yeah, great, great point. All right, guys, I'll stop there and get back into you, thanks. Thank you.

Stephen Ferazani: Great. Thank you.

Russell Schaller: What you see in the different countries isn't that it's as much unique for the country; it is that they will overweight one product versus another. So, for instance, due to some blackout concerns and what have you in terms of energy, you'll see in India they will buy way more glow-in-the-dark signage and capes than you might find in other countries. But we sell them worldwide; it's just they would buy more in their country as a weight than others. Not surprisingly, our automation solutions tend to be much more heavily weighted to high-cost geographies than lower-cost. So, if you look at our wire wrappers and what have you, those tend to be targeted towards countries where either labor is unavailable or if it is comparatively expensive.

Stephen Ferazani: Our next question comes from Steve Ferazani with Cedody. Your line is open. Good morning, Russell. Morning, Ann. Want to ask a little bit about your progress in Southeast Asia and India? I know we go back two or three years. Those are practically green fields opportunities for you. Can you give us a sense of how much traction you've gained and what the opportunity can be over the next three? Three to five years as you see it right now.

Stephen Ferazani: Yeah, India started off. I'm going back ten years ago. India started off as a very small opportunity for us as a corporation. I think due to the leadership team, both in India and frankly all of Southeast Asia, they're benefiting from some of the relocation out of China as well as just overall economic growth in the particular country. If I look over the last few years, we've added a second plant in India relatively small, but it helps us be close to the customer.

Keith Housum: So, you know, our whole portfolio is available to every country, and the different countries choose to use different ones depending on their own unique needs and what they're doing. That's helpful. Thanks.

Russell Schaller: If we can flip over to Europe, obviously in 3Q, those are the really big surprises. Europe was particularly strong. I think you indicated at the time you had won really good months this quarter. It looked more like we probably could have predicted, given the European economies. Can you give us a little bit more sense now what the difference was 3Q versus 4Q and how that affects maybe your outlook and your strategy there into the new year? This is always the problem when you have quarter-to-quarter results. You can have a little bit of shifting one day to in the next, and it falls in a quarter out of a quarter.

Stephen Ferazani: We have two plants now, one in Bangalore, one in Delhi. We're seeing the results of those investments. Like I said, we called out approximately 20% year-over-year growth. But this is on top of really a journey they've been on for many years showing low double digits growth rates. We continue to invest in China. It's entirely possible if we continue our growth trajectory that we'll be opening up a third plant there as well.

Russell Schaller: I think our third quarter result was a little bit higher than we expected, and our fourth quarter result was a little bit lower than we expected. If I were to take both together and the year as a whole, I think that was indicative of the overall European economy. With that said, we're seeing some pretty significant differences in countries. I mentioned France Ferazani is doing incredibly well, which I guess we're probably one of the few companies that would say that. On the same side, some countries that are having some energy problems: Germany, UK, and some other issues, not doing as well.

Stephen Ferazani: And so we just feel very positive. Even in some of the other countries that are relatively small, we can see some benefit that they're experiencing again as some of production relocations happening out of China. And you see it all through Southeast Asia. I think Vietnam, which is an incredibly small country for us, I wish it was bigger. I think they had like a 700% growth rate, but it was times a really small number.

Stephen Ferazani: So we're slowly deploying additional salespeople, additional sales resources throughout the region. And this has always been Brady's business model of looking at what countries, what economies, what opportunities are growing and making sure that we are targeting those with the rights set of resources, whether it's R&D products or customer sales and support. Do you have to customize the products by markets, what they might buy in Vietnam or India might be different than what they're buying in the US or the UK.

Russell Schaller: Unfortunately, you get for Europe to get it all blended together. It really is; it's a lot of differences amongst the individual countries depending on their policies and what they're doing and their overall capability set. As I said in the call, we remain very optimistic in Europe. They've had, you know, through I consider a pretty anemic GDP growth rate. They've had 13 quarters of successive performance, and I'm sorry that this one broke the streak, but there's nothing to believe in the coming quarters that we don't see them back on the path of continued growth. I'm, like I said, that management team there is very tenured.

Stephen Ferazani: So absolutely, but it's kind of I'll call it end user cuss or end country customization. So Brady has a huge portfolio of products. I would say upwards of 2000 of products that we really support and sell and then maybe another 10,000 that are less common. What you see in the different countries isn't that it's as much unique for the country is that they will overweight one product versus another. So, for instance, due to some blackout concerns and what have you in terms of energy, you'll see in India they will buy way more glow in the dark signage and capes than you might find in other countries.

Russell Schaller: They've been doing this for a long time. They know what they need to do. And I'm excited about the opportunities and some of the business cases that they've been talking about. Great. Guiding for cat backs back down to 35 million, so it looks like under 2% of sales. Again, reasonable to expect cash conversion is back towards 100% or more. And yeah, yes. Yeah. So, you know, the only lumpy thing that ever happens with us outside of acquisitions, occasionally we flip a rental property to an owns property, and, you know, we did that last year, which were some pre substantial cash outlays.

Stephen Ferazani: But we sell them worldwide is just they would buy more in their country as a weight than others. Not surprisingly, our automation solutions tend to be much more heavily weighted to high cost geographies than lower cost. So, if you look at our wire wrappers and what have you, those tend to be targeted towards countries where either labor is unavailable or if it is comparatively expensive. So, you know, our whole portfolio is available to every country on the different countries choose to use different ones depending on their own unique needs and what they're doing. That's helpful.

Russell Schaller: But in general, you know, given our relatively modest needs, they are very, it's very much one for one. So we make a dollar, and that goes to the bottom line and cash. So I know others have asked this, so let me try it another way. You're going to start building cash very quickly again this year if guidance plays out. You were buying back stock at $56. You're much higher here, and you said you're opportunistic. I don't know what the M&A. Are you very comfortable building up the cash position again through the year if that's what it plays out?

Russell Shaller: Thanks. If we can flip over to Europe, obviously in 3Q, those are the really big surprises Europe was particularly strong. I think you indicated at the time you had won really good months this quarter. It looked more like we probably could have predicted given the European economies. Can you give us a little bit more sense now what the difference was 3Q versus 4Q and how that affects maybe your outlook and your strategy there into the new year?

Russell Schaller: Well, you know, the cash has to go somewhere. I don't want it to burn a hole in our pocket. You know, I'm not going to buy something at a PDE of 25. That's just not part of our business. So, you know, obviously I would prefer to be in either in a zero or slight debt position. On the flip side, I'm not going to throw money away either. So, we've been very disciplined as a corporation in how we deploy our cash. If it builds up and we don't see an acquisition opportunity, I'm perfectly comfortable in doing that.

Russell Shaller: This is always the problem when you have quarter to quarter results. You can have a little bit of shifting one day to in the next and it falls in a quarter out of a quarter. I think our third quarter result was a little bit higher than we expected and our fourth quarter result was a little bit lower than we expected. If I were to take both together and the year as a whole, I think that was indicative of the overall European economy.

Russell Schaller: At the same time, you know, I think our both our cash position or our cash generation gives us the possibility should the property become available. And there's a few out there of doing a pretty substantial acquisition. And, you know, I would be delighted if we get into position to make something that's more significant or possibly even transformative should it rise. So, we're going to be disciplined; wait to see how the world evolves. And in the meantime, you know, we've got a great rainy day fund should we ever need it. Thanks. Thank you.

Russell Shaller: With that said, we're seeing some pretty significant differences in countries. I mentioned France Ferazani is doing incredibly well, which I guess we're probably one of the few companies that would say that. On the same side, some countries that are having some energy problems, Germany, UK and some other issues, not doing as well. Unfortunately, you get for Europe to get it all blended together. It really is, it's a lot of differences amongst the individual countries depending on their policies and what they're doing and their overall capability set.

Operator: I'm showing no further questions at this time.

Russell Schaller: Oh, now I'd like to turn it back to Russell Schaller, President and CEO, for closing remarks. Great. Thanks, everyone, for your time and for your questions. You know, we've performed well this year with another record quarter and record year of earnings per share in cash generation. We're investing in our organic business through our Salesforce, and we made the largest investment in R&D in the company's history this year. We expect these investments will continue to drive sales growth into the long term. We're also in an incredibly strong financial position. Fiscal 21, 22, 23, and now 24, we're all record years of EPS, and we're once again guiding to another year in 2025.

Russell Shaller: As I said in the call, we remain very optimistic in Europe. They've had, you know, through I consider a pretty anemic GDP growth rate. They've had 13 quarters of successive performance and I'm sorry that this one broke the streak, but there's nothing to believe in the coming quarters that we don't see them back on the path of continued growth. I'm, like I said, that management team there is very tenured. They've been doing this for a long time. They know what they need to do. And I'm excited about the opportunities and some of the business cases that they've been talking about.

Russell Shaller: Great. Guiding for cat backs back down to 35 million, so it looks like under 2% of sales. Again, reasonable to expect cash conversion is back towards 100% or more. And yeah, yes. Yeah. So, you know, the only lumpy thing that ever happens with us outside of acquisitions, occasionally we flip a rental property to an owns property and, you know, we did that last year, which were some pre substantial cash outlays. But in general, you know, given our relatively modest needs, they are very, it's very much one for one.

Operator: Thank you for your time this morning and for your interest in Brady Operator. You may disconnect the call. This concludes today's comments call. Thank you for participating. You may now.

Russell Shaller: So we make a dollar and that goes to the bottom line and cash. So I know others have asked this, so let me try it another way. You're going to start building cash very quickly again this year if guidance plays out. You were buying back stock at $56. You're much higher here and you said you're opportunistic. I don't know what the M&A, are you very comfortable building up the cash position again through the year if that's what it plays out?

Russell Shaller: Well, you know, the cash has to go somewhere. I don't want it to burn a hole in our pocket. You know, I'm not going to buy something at a PDE of 25. That's just not part of our business. So, you know, obviously I would prefer to be in either in a zero or slight debt position. On the flip side, I'm not going to throw money away either. So, we've been very disciplined as a corporation and how we deploy our cash.

Russell Shaller: If it builds up and we don't see an acquisition opportunity, I'm perfectly comfortable in doing that. At the same time, you know, I think our both our cash position or our cash generation gives us the possibility should the property become available. And there's a few out there of doing a pretty substantial acquisition. And, you know, I would be delighted if we get into position to make something that's more significant or possibly even transformative should it rise. So, we're going to be disciplined, wait to see how the world evolves. And in the meantime, you know, we've got a great rainy day fund should we ever need it. Thanks.

Unknown Executive: Thank you. I'm showing no further questions at this time.

Russell Shaller: Oh, now I'd like to turn it back to Russell Schaller, President and CEO for closing remarks. Great. Thanks, everyone, for your time and for your questions. You know, we've performed well this year with another record quarter and record year of earnings per share in cash generation. We're investing in our organic business through our Salesforce and we made the largest investment in R&D in the company's history this year. We expect these investments will continue to drive sales growth into the long term.

Russell Shaller: We're also in an incredibly strong financial position, fiscal 21, 22, 23 and now 24, we're all record years of EPS and we're once again guiding to another year in 2025. The macroeconomic is constantly changing, but our approach continues to be to control what we can while focusing on our formula for success. Investing in our organization to create new products that make our customers life better while delivering a positive return to our investors. I'm looking forward to the future and I know that our global team has the ability to overcome challenges think creatively and continue to deliver results.

Unknown Executive: Thank you for your time this morning and for your interest in Brady operator. You may disconnect the call. This concludes today's comments call. Thank you for participating. You may now.

Q4 2024 Brady Corp Earnings Call

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