Q4 2025 Brady Corp Earnings Call

Speaker #1: Good day, and thank you for standing by. Welcome to the Brady Corporation Q4 2025 earnings conference call. At this time, all participants are in a listen-only mode.

Operator: Good day, and thank you for standing by. Welcome to the Brady Corporation Q4 2025 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, 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 be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Ann Thornton, CFO. Please go ahead.

Speaker #1: After the speaker's presentation, there will be a question and answer session. To ask a question, please press *11 on your telephone and wait for your name to be announced.

Speaker #1: To withdraw your question, please press *11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Ann Thornton, CFO.

Speaker #1: Please go ahead.

Speaker #2: Thank you. Good morning and welcome to the Brady Corporation Fiscal 2025 Fourth Quarter Earnings Conference Call. The slides for this morning's call are located on our website at www.bradycorp.com/investors.

Ann Thornton: Thank you. Good morning, and welcome to the Brady Corporation Fiscal 2025 Fourth Quarter Earnings Conference Call. The slides for this morning's call are located on our website at www.bradycorp.com/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. Risk factors were noted in our news release this morning and in Brady's Fiscal 2025 Form 10-K, 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.

Speaker #2: 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.

Speaker #2: 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 2025 Form 10-K, which was filed with the SEC this morning.

Speaker #2: 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.

Ann Thornton: 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?

Speaker #2: 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.

Speaker #2: Russell?

Speaker #3: Thanks, Ann, and thank you all for joining us today. We released our fiscal 2025 Fourth Quarter Results this morning, and I'm pleased to announce another company record-high adjusted EPS for the quarter and for the year.

Russell Shaller: Thanks, Ann, and thank you all for joining us today. We released our Fiscal 2025 Fourth Quarter results this morning, and I'm pleased to announce another company record-high adjusted EPS for the quarter and for the year. We grew organic sales 2.4% in the quarter, acquisitions added 11.3% to our sales growth, and we grew adjusted earnings per share by 5.9% to a new quarterly record of $1.26 per share. Our Americas and Asia region once again reported strong organic sales growth of 4.3% in the quarter, finishing a terrific top line with 4.8% organic sales growth in 2025. Our Europe and Australia region has been operating in a challenging macro environment, where organic sales declined 1.3% in the fourth quarter. However, excluding the impact of facility closures and other reorganization costs in the region, operating income increased 7.9% in the quarter.

Speaker #3: We grew organic sales 2.4% in the quarter, acquisitions added $11.3% to our sales growth, and we grew adjusted earnings per share by 5.9% to a new quarterly record of $1.26 per share.

Speaker #3: Our America's and Asia region once again recorded strong organic sales growth of 4.3% in the quarter, finishing a terrific top line with $4.8% organic sales growth in 2025.

Speaker #3: Our Europe and Australia region has been operating in a challenging macro environment where organic sales declined 1.3% in the fourth quarter. However, excluding the impact of facility closure and other reorganization costs in the region, operating income increased 7.9% in the quarter.

Speaker #3: This streamlined cost structure is better aligned to our expectations for the business in 2026. A consistent theme for the last several years and one of the primary drivers of our organic sales growth is our increased investment in R&D.

Russell Shaller: This streamlined cost structure is better aligned to our expectations for the business in 2026. A consistent theme for the last several years, and one of the primary drivers of our organic sales growth, is our increased investment in R&D. We increased R&D by 31% in the fourth quarter of this year, which was driven by our investment in organic businesses, as well as through our acquisition of Gravotech from the beginning of the fiscal year and our acquisition of Funai's Microfluidic Solutions product line starting in the third quarter. Printers and the included consumable products for our printers represent just under 40% of our sales in Fiscal 2025, and our sales of these products have been growing organically by between 6% and 7% annually for the last three years.

Speaker #3: We increased R&D by 31% in the fourth quarter of this year, which was driven by our investment in organic businesses as well as through our acquisition of Gravitech from the beginning of the fiscal year and our acquisition of Funai's microfluidic solutions product line starting in the third quarter.

Speaker #3: Printers and the included consumable products for our printers represent just under 40% of our sales in fiscal 2025. And our sales of these products have been growing organically by between 6% and 7% annually for the last three years.

Speaker #3: In particular, customers have responded positively to our new flagship printer, the i7500 Industrial Label Printer that we launched in the second quarter. With sales well above our targets, our R&D investment focused on the development of high-performance materials, which are combined with our safety products, printers, barcode, and RFID readers, create an ecosystem of interoperable products.

Russell Shaller: In particular, customers have responded positively to our new flagship printer, the i6100 industrial desktop label printer that we launched in the second quarter, with sales well above our targets. Our R&D investment focused on the development of high-performance materials, which are combined with our safety products, printers, barcode, and RFID readers to create an ecosystem of interoperable products. To this core product offering, we've added the capabilities of direct part marking through our acquisition of Gravotech, as well as through our acquisition of Miko last month. Brady's goal is to provide seamless interoperability across our products, and we are beginning to see the integration of multiple technologies into a single platform. For instance, we successfully combined our optics technology with our lasers and Cortex decoder technology software to enable real-time image capture and verification.

Speaker #3: To this core product offering, we've added the capabilities of direct part marking through our acquisition of Gravitech, as well as through our acquisition of MECO last month.

Speaker #3: Brady's goal is to provide seamless interoperability across our products and we are beginning to see the integration of multiple technologies into a single platform.

Speaker #3: For instance, we successfully combined our optics technology with our lasers and cortex decoder software to enable real-time image capture and verification. What makes this unique and has me most excited is we are able to use low-cost consumer-grade electronics combined with our software to provide a more cost-effective solution to our customers.

Russell Shaller: What makes this unique and has me most excited is we are able to use low-cost consumer-grade electronics combined with our software to provide a more cost-effective solution to our customers. Our goal is consistent: to expand our workplace safety and identification solutions portfolios by providing complete, tailored solutions that fulfill our customers' safety and identification needs. This quarter was a strong finish to 2025. Our 2025 adjusted EPS of $4.60 was another all-time record high, following four consecutive years of record highs. We grew organic sales 2.6%, which was led by our Americas and Asia region, with organic sales growth of 4.8%. We closed on the acquisition of Gravotech and Funai's Microfluidic Solutions product line, both of which add technical capabilities to our product portfolio, which we believe will be additive to our growth rate in the future.

Speaker #3: Our goals are consistent. To expand our workplace safety and identification solutions portfolios by providing complete tailored solutions that fulfill our customers' safety and identification needs.

Speaker #3: This quarter was a strong finish to 2025. Our 2025 adjusted EPS of $4.60 was another all-time record high following four consecutive years of record highs.

Speaker #3: We grew organic sales 2.6%, which was led by our America's and Asia region with organic sales growth of 4.8%. We closed on the acquisition of Gravitech and Funai's microfluidic solutions product line.

Speaker #3: Both of which add technical capabilities to our product portfolio which we believe will be additive to our growth rate in the future. We increased our investment in R&D to another record high of nearly $80 million which was $5.3% of sales.

Russell Shaller: We increased our investment in R&D to another record high of nearly $80 million, which was 5.3% of sales. We returned $96 million to our shareholders through dividends and share buybacks. Our priorities for the next year are consistent: continue to develop unique products for our customers, particularly in the area of workplace automation, which we believe is a long-term growth opportunity. Continue to invest in R&D to stay ahead of the competition and deliver specialized products that help customers automate and drive efficiencies, generate sales growth above GDP in the geographies where we operate, deliver operational improvements, and increase profitability as we grow, and to effectively deploy our capital to drive long-term shareholder value, which includes organic investments such as R&D, strategic acquisitions that add technical capabilities, and returning funds to our shareholders through dividends and share buybacks.

Speaker #3: And we've returned $0.96 million to our shareholders through dividends and share buybacks. Our priorities for the next year are consistent. Continue to develop unique products for our customers particularly in the area of workplace automation which we believe is a long-term growth opportunity.

Speaker #3: Continue to invest in R&D to stay ahead of the competition and deliver specialized products that help customers automate and drive efficiencies, generate sales growth above GDP in the geographies where we operate, deliver operational improvements that increase profitability as we grow.

Speaker #3: And to effectively deploy our capital to drive long-term shareholder value, which includes organic investments such as R&D, strategic acquisitions that add technical capabilities, and returning funds to our shareholders through dividends and share buybacks.

Speaker #3: We demonstrated our commitment to returning funds to our shareholders this year as we repurchased 733,000 shares for $51 million. And yesterday, we announced an increase in our dividend which represents the 40th consecutive year of an annual dividend increases.

Russell Shaller: We demonstrated our commitment to returning funds to our shareholders this year as we repurchased 733,000 shares for $51 million. Yesterday, we announced an increase in our dividend, which represents the 40th consecutive year of annual dividend increases. We're incredibly proud to reach this milestone of 40 straight years of annual dividend increases, which shows our commitment to returning cash to our shareholders while delivering long-term shareholder return. I'll turn the call over to Ann to provide more details on our financial results. Ann?

Speaker #3: We're incredibly proud to reach this milestone of 40 straight years of annual dividend increases, which shows our commitment to returning cash to our shareholders while delivering long-term shareholder return.

Speaker #3: And now I'll turn the call over to Ann, to provide more details on our financial results. Ann?

Speaker #2: Thanks, Russell. We had a good quarter and another strong year in Fiscal 2025. Organic sales grew 2.4%, and we recorded another quarterly record for adjusted earnings per share of $1.26 per share, which was up 5.9% from the fourth quarter of last year.

Ann Thornton: Thanks, Russell. We had a good quarter and another strong year in Fiscal 2025. Organic sales grew 2.4%, and we reported another quarterly record for adjusted EPS of $1.26 per share, which was up 5.9% from the fourth quarter of last year. Our sales results were led by our Americas and Asia region, with organic sales growth of 4.3% in the fourth quarter, which was partially offset by an organic decline of 1.3% in our Europe and Australia region. The macro environment in Europe and Australia has become increasingly challenging during this fiscal year, which is the primary reason for the facility closures and other reorganization cost actions that we've taken over the last three quarters. We believe these actions will position us to improve our profitability as we look ahead to next year.

Speaker #2: Our sales results were led by our America's and Asia region with organic sales growth of 4.3% in the fourth quarter. Which was partially offset by an organic decline of 1.3% in our Europe and Australia region.

Speaker #2: The macro environment in Europe and Australia has become increasingly challenging during this fiscal year, which is the primary reason for the facility closure and other reorganization cost actions that we've taken over the last three quarters.

Speaker #2: We believe these actions will position us to improve our profitability as we look ahead to next year. We finalized the following actions that we began mid-year in response to the performance of certain businesses, as well as economic conditions.

Ann Thornton: We finalized the following actions that we began mid-year in response to the performance of certain businesses, as well as economic conditions. First, we reduced additional headcount in several of our locations in China in response to the continued decline in economic activity. We believe these actions were necessary in light of the decrease in sales, as well as our growth outlook in the country. Second, we finalized our actions to reduce headcount in Europe and Australia in order to operate with a more efficient structure, while further integrating Gravotech's operations into our core operations. In total, we recognized facility closure and other reorganization costs of $8.9 million in the fourth quarter, and we do believe these actions position us to operate more effectively and efficiently going forward. I'll briefly touch on slide number four for our quarterly sales trends.

Speaker #2: First, we reduced additional headcount in several of our locations in China in response to the continued decline in economic activity. We believe these actions were necessary in light of the decrease in sales as well as our growth outlook in the country.

Speaker #2: And second, we finalized our actions to reduce headcount in Europe and Australia in order to operate with a more efficient structure, while further integrating Gravitech's operations into our core operations.

Speaker #2: In total, we recognized facility closure and other reorganization costs of $8.9 million in the fourth quarter. We believe these actions position us to operate more effectively and efficiently going forward.

Speaker #2: I'll briefly touch on slide number four for our quarterly sales trends. Organic sales grew 2.4% this quarter and acquisitions added $11.3% growth. Foreign currency translation added another 2% for total sales growth of 15.7% in the quarter.

Ann Thornton: Organic sales grew 2.4% this quarter, and acquisitions added 11.3% growth. Foreign currency translation added another 2% for total sales growth of 15.7% in the quarter. Turning to slide number five, this details our quarterly gross margin trending. Our gross profit margin was 50.4% this quarter, compared to 51.6% in the fourth quarter of last year. The cost reduction actions that I just mentioned resulted in incremental expense of $1.9 million in cost of goods sold in the fourth quarter. If we exclude this expense, our gross profit margin would have been 50 basis points higher than we reported, or 50.9%. Moving to slide number six, this outlines our SG&A expense trending. SG&A was $117.9 million this quarter, compared to $93.3 million in the fourth quarter of last year. As a % of sales, SG&A increased to 29.7%, compared to 27.2% last Q4.

Speaker #2: Turning to slide number five, this details our quarterly gross margin trending. Our gross profit margin was $50.4% this quarter compared to $51.6% in the fourth quarter of last year.

Speaker #2: The cost reduction actions that I just mentioned resulted in an incremental expense of $1.9 million in cost of goods sold in the fourth quarter. So, if we exclude this expense, our gross profit margin would have been 50 basis points higher than we reported, or 50.9%.

Speaker #2: Moving to slide number six, this outlines our SG&A expense trending. SG&A was $117.9 million this quarter compared to $93.3 million in the fourth quarter of last year.

Speaker #2: As a percent of sales, SG&A increased to 29.7% compared to 27.2% last Q4. If you exclude amortization expense from both quarters, and exclude the facility closure and other reorganization costs from the current quarter, then SG&A was $26.8% compared to 26.5% of sales in the fourth quarter of last year.

Ann Thornton: If you exclude amortization expense from both quarters and exclude the facility closure and other reorganization costs from the current quarter, then SG&A was 26.8%, compared to 26.5% of sales in the fourth quarter of last year. Slide number seven shows the trending of our investment in research and development. This quarter, we once again increased our investment in R&D, finishing at $23.1 million, which was 5.8% of sales in the quarter. We continue to increase our investment in our engineered products, and with the acquisitions of Gravotech, as well as Funai's Microfluidic Solutions product line, our commitment to R&D is higher than ever. We're looking forward to our new product roadmap, and we have another exciting lineup of products set to launch in Fiscal 2026. Slide number eight outlines our pre-tax earnings on a GAAP basis.

Speaker #2: Slide number seven shows the trending of our investments in research and development. This quarter, we once again increased our investment in R&D, finishing at 23.1 million which was $5.8% of sales in the quarter.

Speaker #2: We continued to increase our investment in our engineered products, and with the acquisitions of Gravitech as well as Funai's microfluidic solutions product line, our commitment to R&D is higher than ever.

Speaker #2: We're looking forward to our new product roadmap and we have another exciting lineup of products set to launch in Fiscal 2026. Slide number eight outlines our pre-tax earnings on a gap basis.

Speaker #2: If you exclude amortization from the fourth quarter of this year and last year, and exclude the facility closure and other reorganization costs from the fourth quarter of this year, adjusted pre-tax earnings increased 5.1% from $70.5 million to $74.2 million.

Ann Thornton: If you exclude amortization from the fourth quarter of this year and last year, and exclude the facility closure and other reorganization costs from the fourth quarter of this year, adjusted pre-tax earnings increased 5.1% from $70.5 million to $74.2 million. Our trending of earnings and EPS are detailed on slide number nine. GAAP net income decreased from $55.5 million to $49.9 million, and GAAP diluted earnings per share decreased from $1.15 per share to $1.04 per share in the fourth quarter, compared to the same quarter last year. If you exclude amortization from both periods and exclude the facility closure and other reorganization costs from the current period, our adjusted net income was up from $57.3 million to $60.2 million, which was an increase of 5.1%.

Speaker #2: Our trending of earnings and EPS are detailed on slide number nine. Gap net income decreased from $55.5 million to $49.9 million, and gap diluted earnings per share decreased from $1.15 per share to $1.04 per share in the fourth quarter compared to the same quarter last year.

Speaker #2: If you exclude amortization from both periods and exclude the facility closure and other reorganization costs, as well as reorganization charges from the current period, our adjusted net income was up from $57.3 million to $60.2 million, which represents an increase of 5.1%.

Speaker #2: And our adjusted diluted EPS grew from $1.19 per share to a new company record quarter of $1.26 per share. Which was an increase of 5.9%.

Ann Thornton: Our adjusted diluted EPS grew from $1.19 per share to a new company record quarter of $1.26 per share, which was an increase of 5.9%. Slide number 10 provides a summary of our cash generation. Operating cash flow was $58.3 million in the fourth quarter this year, compared to $84 million in the fourth quarter last year. Free cash flow was $49.4 million, compared to $73.2 million in the fourth quarter last year. Turning to slide number 11, you can see the impact that our cash generation has had on our balance sheet. As of July 31, we were in a net cash position of $74.6 million. 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 and R&D, sales-generating resources, capability-enhancing CapEx, and automation focused at CapEx.

Speaker #2: Slide number 10 provides a summary of our cash generation. Operating cash flow was $58.3 million in the fourth quarter of this year, compared to $84 million in the fourth quarter last year.

Speaker #2: Free cash flow was 49.4 million compared to $73.2 million in the fourth quarter last year. Turning to slide number 11, you can see the impacts that our cash generation has had on our balance sheet.

Speaker #2: As of July 31st, we were in a net cash position of $74.6 million. Our approach to capital allocation is consistent. Which is to first use our cash to fund organic sales growth and efficiency opportunities.

Speaker #2: This includes investing in new product development and R&D, sales-generating resources, capability-enhancing CapEx, and automation-focused CapEx. We have the ability to continue to invest throughout the economic cycle to put ourselves in the best position possible to drive future sales growth and profitability.

Ann Thornton: We have the ability to continue to invest throughout the economic cycle to put ourselves in the best position possible to drive future sales growth and profitability. We focus on consistently increasing our dividends. Yesterday, we announced our 40th consecutive year of annual dividend increases, which is an incredible milestone and one that we're very proud of. Other elements of our capital allocation approach are to deploy our cash in a disciplined manner for acquisitions where we have clear synergies, and for opportunistic share buybacks when we see a disconnect between intrinsic value and Brady's trading price. In the fourth quarter, we repurchased 257,000 shares for $17.7 million, which was an average price of $68.73 per share. For the full year, Fiscal 2025, we repurchased 733,000 shares for $50.9 million, which was an average price of $69.32 per share.

Speaker #2: And second, we focus on consistently increasing our dividends. Yesterday, we announced our 40th consecutive year of annual dividend increases. Which is an incredible milestone and one that we're very proud of.

Speaker #2: Other elements of our capital allocation approach are to deploy our cash in a disciplined manner for acquisitions where we have clear synergies, and for opportunistic share buybacks when we see a disconnect between intrinsic value and Brady's trading price.

Speaker #2: In the fourth quarter, we repurchased 257,000 shares for $17.7 million which was an average price of $68.73 per share. And for the full year fiscal 2025, we repurchased 753,000 shares for $50.9 million.

Speaker #2: Which was an average price of $69.32 per share. We believe that share buybacks are a valuable element of our capital allocation strategy. 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.

Ann Thornton: We believe that share buybacks are a valuable element of our capital allocation strategy. 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 the synergies are clear, and to return funds to our shareholders through dividends and share buybacks. Slide number 13 outlines our guidance for next year. We're projecting GAAP EPS to range from $4.55 to $4.85 per share in Fiscal 2026, which would represent an increase of between 15.5% and 23.1% compared to Fiscal 2025. We're projecting adjusted EPS, which exclude the impact of amortization in 2026, to range from $4.85 per share to $5.15 per share in Fiscal 2026, which would represent an increase of between 5.4% and 12% compared to Fiscal 2025.

Speaker #2: To acquire companies strategically when the price is right and the synergies are clear. And to return funds to our shareholders through dividends and share buybacks.

Speaker #2: Slide number 13 outlines our guidance for next year. We're projecting gap EPS to range from $4.55 to $4.85 per share in Fiscal 2026. Which would represent an increase of between 15.5% and 23.1% compared to Fiscal 25.

Speaker #2: And we're projecting adjusted EPS, which excludes the impact of amortization in 2026, to range from $4.85 per share to $5.15 per share in Fiscal 2026.

Speaker #2: Which would represent an increase of between 5.4% and 12% compared to Fiscal 25. We anticipate organic sales growth in the low single-digit percentages for the year ending July 31st, 2026.

Ann Thornton: We anticipate organic sales growth in the low single-digit % for the year ending July 31, 2026. Other elements of our guidance include an income tax rate of approximately 21%, depreciation and amortization expense of approximately $42 million, and capital expenditures of approximately $40 million. As for the financial impact of tariffs, we realized approximately $2 million in incremental tariff expense in the fourth quarter and approximately $7 million in incremental tariff expense in Fiscal Year 2025, net of the impact of price increases and other mitigating actions. Under current trade guidance, which is rapidly changing, we estimate a potential additional impact of $8 million to $12 million in Fiscal Year 2026 compared to Fiscal Year 2025, net of mitigating actions.

Speaker #2: And other elements of our guidance include an income tax rate of approximately 21%, depreciation and amortization expense of approximately $42 million, and capital expenditures of approximately $40 million.

Speaker #2: As for the financial impact of tariffs, we realized approximately $2 million in incremental tariff expense in the fourth quarter. And approximately $7 million in incremental tariff expense in Fiscal Year 2025.

Speaker #2: Net of the impact of price increases and other mitigating actions. Under current trade guidance, which is rapidly changing, we estimate a potential additional impact of $8 million to $12 million in Fiscal Year 2026 compared to Fiscal Year 2025.

Speaker #2: Net of mitigating actions. This range represents an estimate based upon current tariff rates and scope. Which have been changing rapidly, and the outcome may change depending on trade policy developments as well as what the timing of our mitigating actions.

Ann Thornton: This range represents an estimate based upon current tariff rates and scope, which have been changing rapidly, and the outcome may change depending on trade policy developments, as well as with the timing of our mitigating actions. In addition to tariffs and trade policy, other potential risks to our 2026 guidance, among others, include the potential strengthening of the U.S. dollar, inflationary pressures that we're unable to offset in a timely enough manner, or an overall slowdown in economic activity. 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?

Speaker #2: In addition to tariffs and trade policy, other potential risks to our 2026 guidance, among others, include the 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.

Speaker #2: 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?

Speaker #3: Thanks, Ann. Slide 14 details the financial results of the Americas and Asia region. Sales were $260.8 million this quarter, and total sales growth was 14.1%, which consisted of organic sales growth of 4.3% and growth from our acquisitions of 9.8%.

Russell Shaller: Thanks, Ann. Slide 14 details the financial results of the Americas and Asia region. Sales were $260.8 million this quarter, and total sales growth was 14.1%, which consisted of organic sales growth of 4.3% and growth from our acquisitions of 9.8%. We realized the strongest growth in our wire identification product line, with organic growth of nearly 12% in the quarter. This product line represents approximately 20% of the organic growth in the Americas and Asia region. Safety and facility identification and product identification also grew organically in the low to mid-single digits. Our business in Asia continues to perform extremely well, with organic sales growth of 12% in the total in the fourth quarter. Our business in China declined approximately 3%, but the remainder of our business in Asia more than made up for this decline, with organic sales growth of 23% outside of China.

Speaker #3: We realized the strongest growth in our wider identification product line, with organic growth of nearly 12% in the quarter. This product line represents approximately 20% of the organic growth in the Americas and Asia region.

Speaker #3: Safety and facility identification and product identification also grew organically in the low to mid single digits. Our business in Asia continues to perform extremely well with organic sales growth of 12% in the total in the fourth quarter.

Speaker #3: Our business in China declined approximately 3%, but the remainder of our business in Asia more than made up for this decline with organic sales growth of 23% outside of China.

Speaker #3: Our businesses throughout Southeast Asia continue to do well as they benefit from manufacturing expansion as well as growth in our printer product lines throughout the region.

Russell Shaller: Our businesses throughout Southeast Asia continue to do well, as they benefit from manufacturing expansion, as well as growth in our printer product lines throughout the region. Our segment profit in the Americas and Asia decreased 3.3% to $51.6 million, and segment profit as a percentage of sales was 19.8% in the quarter. If you exclude the impact of amortization in both the current quarter and last year's fourth quarter, as well as the facility closure and other reorganization costs in the current quarter and the incremental tariff impact, segment profit increased 7.5% compared to the prior year. Sales growth in printers and consumables continued to drive both top and bottom line within the region, and targeted cost reduction actions we've taken within specific businesses also set us up for a more profitable growth in the future. Slide 15 outlines the performance of our Europe and Australia region.

Speaker #3: Our segment profit in the Americas and Asia decreased 3.3% to $51.6 million, and segment profit as a percentage of sales was 19.8% in the quarter.

Speaker #3: If you exclude the impact of amortization in both the current quarter and last year's fourth quarter, as well as the facility closure and other reorganization costs in the current quarter and the incremental tariff impact, segment profit increased 7.5% compared to the prior year.

Speaker #3: Sales growth in printers and consumables continued to drive both top and bottom line within the region. And targeted cost reduction actions we've taken within specific businesses also set us up for a more profitable growth in the future.

Speaker #3: Slide 15 outlines the performance of our Europe and Australia region. Sales were $136.5 million in the quarter, organic sales declined 1.3%, acquisitions added 14.4%, and the impact of foreign currency translation increased sales 5.7% for a total growth of 18.8% in the region.

Russell Shaller: Sales were $136.5 million in the quarter, organic sales declined 1.3%, acquisitions added 14.4%, and the impact of foreign currency translation increased sales 5.7% for a total growth of 18.8% in the region. Both Europe and Australia are operating in challenging economic conditions for industrial manufacturers. We've experienced a decline in this end market and within most of our major product lines during the second half of 2025. The majority of the decline in this quarter was due to our business in Australia, which declined 5.1% organically, while Europe saw a slight decline of 0.8%. We took additional actions in the quarter to reduce our cost structure in both Europe and Australia.

Speaker #3: Both Europe and Australia are operating in challenging economic conditions for industrial manufacturers. We've experienced a decline in this end market and within most of our major product lines during the second half of 2025.

Speaker #3: The majority of the decline in this quarter was due to our business in Australia which declined 5.1% organically, while Europe saw a slight decline of 0.8%.

Speaker #3: We took additional actions in the quarter to reduce our cost structure, in both Europe and Australia, so while our segment profit was down 21.8%, if you exclude the impact of amortization in both the current quarter and last year's fourth quarter, as well as the reorganization costs we incurred in the current quarter, segment profit increased 7.9% compared to the prior year.

Russell Shaller: While our segment profit was down 21.8%, if you exclude the impact of amortization in both the current quarter and last year's fourth quarter, as well as the reorganization costs we incurred in the current quarter, segment profit increased 7.9% compared to the prior year. We're setting ourselves up for improved profitability as we look ahead, and we continue to utilize a creative approach to solving unique customer problems within our niche solutions. This customer intimate strategy has delivered long-term growth for Brady Corporation over many years. We have a lot to look forward to in 2026. We launched several exciting new products this year that are performing well, and we have an incredible roadmap of new products planned for the next year. I'm particularly excited about the fact that we've added Miko to Brady Corporation's portfolio as of a month ago.

Speaker #3: We're setting ourselves up for improved profitability as we look ahead, and we continue to utilize a creative approach to solving unique customer problems within our niche solutions.

Speaker #3: This customer intimate strategy has delivered long-term growth for Brady over many years. We have a lot to look forward to in 2026. We launched several exciting new products this year, that are performing well and we have an incredible roadmap of new products planned for the next year.

Speaker #3: I'm particularly excited about the fact that we've added MECO to Brady's portfolio as of a month ago. MECO specializes in industrial direct part marking and identification systems designed for a variety of applications in industries, and their products are an ideal complement to Gravitech's direct part marking solutions.

Russell Shaller: Miko specializes in industrial direct part marking and identification systems designed for a variety of applications and industries, and their products are an ideal complement to Gravotech's direct part marking solutions. Similar to Gravotech in Europe, Miko utilizes a consultative approach by collaborating with their customers to develop highly customized direct part marking solutions. We're looking forward to the future growth through the combination of these two companies, along with offering part-level barcode verification through our Code Corp. group. Expanding on this, our goal is to have a complete set of regulatory compliance systems before GS1 and Europe's digital product passport take effect. Driven by our fantastic portfolio of products, we had another strong year of financial results. We're navigating the ever-changing global tariff and trade situation, and we're working through a variety of mitigating actions.

Speaker #3: Similar to Gravitech in Europe, MECO utilizes a consultative approach by collaborating with their customers to develop highly customized direct part marking solutions. We're looking forward to the future growth through the combination of these two companies along with offering part-level barcode verification through our code group.

Speaker #3: Expanding on this, our goal is to have a complete set of regulatory compliance systems before GS1 and Europe's Digital Product Passport take effect. Driven by our fantastic portfolio of products, we had another strong year of financial results.

Speaker #3: We're navigating the ever-changing global tariff and trade situation, and we're working through a variety of mitigating actions. As before, we're keeping our focus on what we can control, and we're moving forward.

Russell Shaller: As before, we're keeping our focus on what we can control, and we're moving forward, always with the long term in mind. This approach has served us well, as we just reported our fifth consecutive year of record EPS, which means that we need to continue this momentum into 2026 and beyond to deliver long-term value for our shareholders. I'd like to turn it over for Q&A. Operator, would you please provide instructions to our listeners?

Speaker #3: Always with the long-term in mind. This approach has served us well as we just reported our fifth consecutive year of record EPS. Which means that we need to continue this momentum into 2026 and beyond to deliver long-term value for our shareholders.

Speaker #3: I'd like to turn it over for Q&A. Operator, would you please provide instructions to our listeners?

Speaker #1: As a reminder to ask a question, please press *11 on your telephone and wait for your name to be announced. To withdraw your question, please press *11 again.

Operator: 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. Our first question comes from the line of Steve Ferazani from Sidoti.

Speaker #1: Please stand by while we compile the Q&A roster. Our first question comes from the line of Steve Ferrazzani from Cedotti.

Speaker #4: Morning, Russell. Morning, Ann. I appreciate all the detail on the call. I want to start by asking about guidance. I mean, you walked through all the challenges in the environment you're currently facing with economic growth, with tariff and trade impacts.

Steve Ferazani: Morning, Russell. Morning, Ann. Appreciate all the detail on the call. I want to start by asking about guidance. Given you walked through all the challenges in the environment you're currently facing with economic growth, with tariff and trade impacts. I get the low single-digit organic sales growth. What surprised me is the EPS growth, particularly at the high end. That implies pretty significant margin expansion in a difficult environment. Just trying to figure out how you'll get there.

Speaker #4: I get the low single-digit organic sales growth. What surprised me is the EPS growth, particularly at the high end. That implies pretty significant margin expansion in a difficult environment.

Speaker #4: Just trying to figure out how you'll get there.

Speaker #3: Yeah, so there's a couple of things. You know, first and foremost, we really took a decent amount of costs out of our structure in the last two quarters.

Russell Shaller: Yeah, so there's a couple of things. First and foremost, we really took a decent amount of costs out of our structure in the last two quarters. That in and of itself is going to get us a lot of the way there. The second part is, we've incurred costs due to tariffs. At the same time, we have a number of mitigating strategies that we've been rolling out from a combination of reshoring to redoing how the supply chain works and a variety of other tools. I think all of those put together are going to lessen the impact. Now, we can't predict if there's some fundamental knock-on effect that happens throughout the globe.

Speaker #3: And that in and of itself, you know, is going to get us a lot of the way there. The second part is, you know, we've incurred costs due to tariffs.

Speaker #3: But at the same time, we have a number of mitigating strategies that we've been rolling out from a combination of reshoring to redoing how the supply chain works.

Speaker #3: And a variety of other tools I think all of those put together is going to lessen the impact now. You know, we can't predict if there's some fundamental knock-on effect that happens throughout the globe.

Speaker #3: But from our vantage point right now and what we're seeing in terms of the uptake of our customers and the traction that we've got with our current product portfolio, I feel pretty good about the range that we gave.

Russell Shaller: From our vantage point right now and what we're seeing in terms of the uptake of our customers and the traction that we've got with our current product portfolio, I feel pretty good about the range that we gave, and I think it's pretty doable.

Speaker #3: And I think it's pretty doable.

Speaker #4: So just so I can recap, a lot of this is going to be coming from the costs out?

Steve Ferazani: Just so I can recap, a lot of this is going to be coming from the costs out?

Speaker #3: Yes. Well, two things. The cost out, and remember when tariffs first came into play, you know, we had little ability to mitigate those actions, those take us months to roll through.

Russell Shaller: Two things. The cost out, and remember, when tariffs first came into play, we had little ability to mitigate those actions. Those take us months to roll through. We've already started that, and we pushed through our first price increase in June. You don't see some of that effect until a few months later. I think we've digested the worst of it right now.

Speaker #3: We've already started that. And we pushed through our first price increase in June. And so you don't see some of that effect until a few months later.

Speaker #3: And so you know, I think we've digested the worst of it right now.

Speaker #4: Okay, perfect. That's helpful. I did want to ask about free cash flow. Typically, historically, 4Q has always been your strong free cash flow quarter.

Steve Ferazani: Okay, perfect. That's helpful. I did want to ask about free cash flow. Typically, historically, Q4 has always been your strong free cash flow quarter. This year, it wasn't, and it was obviously down year over year pretty substantially. In a year where your CapEx was way down, it was more than offset by lower cash flow from operations. I'm just trying to figure out how that affects your outlook for cash flow next year in a year where you're expecting higher CapEx.

Speaker #4: This year, it wasn't, and it was obviously a down year over year pretty substantially. And in a year where your CapEx was way down, it was more than offset by lower cash flow from operations.

Speaker #4: I'm just trying to figure out how that affects your outlook for cash flow next year and a year where you're expecting higher CapEx.

Speaker #3: Sure.

Ann Thornton: Sure. Yeah, great question, Steve. The primary item that drove our cash flow down in Q4, which you're absolutely right, it's typically a pretty high quarter for us in terms of operating and free cash flow, was a little bit of inventory build. Really, that happens throughout this fiscal year as we moved a couple of, actually three, relatively large facilities either into a new facility or a newly leased facility or following up on our announcement of our closure of our facility in Buffalo. Last year, we were talking about the build-out of a facility in Belgium. Now we're in it. To be able to kind of work through operations and ensure that we're serving our customers and, you know, everything is on time, it just results in a little bit of lumpiness from inventory.

Speaker #2: Yeah, great question, Steve. The primary item that drove our cash flow down in Q4, which you're absolutely right, is usually a pretty high quarter for us.

Speaker #2: In terms of operating and free cash flow, we experienced a little bit of inventory build throughout this fiscal year as we moved a couple of, actually three, relatively large facilities into either a new facility or a newly leased facility, following up on our announcement of our closure of our facility in Buffalo.

Speaker #2: So last year we were talking about the build-out of a facility in Belgium. Well, now we're in it. But to be able to work through operations and ensure that we're serving our customers and, you know, everything is on time, it just results in a little bit of lumpiness from inventory.

Speaker #4: Okay. Any cash costs you think carried over into next year related to the reorg and plant closures?

Steve Ferazani: Okay. Any cash costs you think carry over into next year related to the reorg and plant closures?

Speaker #2: There will be some. There will be some as we're finalizing the actions through the fourth quarter, but we'll be through those items by the end of the first quarter for sure.

Ann Thornton: There will be some as we're finalizing the actions through the fourth quarter, but we'll be through those items by the end of the first quarter, for sure, the cash impact.

Speaker #2: The cash impact.

Speaker #4: Fantastic. And then implied in your guidance that you were expecting R&D over 5% next year. And given the investments you're making in these acquisitions, in these smaller ones, are they diluted near term with better growth past that as you integrate them into your portfolio?

Steve Ferazani: Fantastic. Implied in your guidance is that you were expecting R&D over 5% next year. Given the investments you're making in these acquisitions and these smaller ones, are they dilutive near term with better growth past that as you integrate them into your portfolio, or how should we think about that?

Speaker #4: Or how should we think about that?

Speaker #3: Yeah, you know, so they're a little bit different. The microfluidics with Funai is a really core fundamental technology of not only inkjet, but enables us to do a variety of other things ranging as far and wide as cosmetic delivery to potentially even drug delivery.

Russell Shaller: Yeah, you know, they're a little bit different. The Microfluidic Solutions product line with Funai is a really core fundamental technology of not only inkjet, but enables us to do a variety of other things ranging as far and wide as cosmetic delivery to potentially even drug delivery. That will be just a pure R&D platform with the associated sales for the inkjet. We're super excited with what that brings to us as a corporation. Miko, on the other hand, should be additive almost immediately. There is some advantage to the integration of Miko and Gravotech and some overlap of costs that we can drive out very quickly. A little bit of a different story for the two of them.

Speaker #3: So that will be just a pure R&D platform with, you know, the associated sales for the inkjet. We're super excited with what that brings to us as a corporation.

Speaker #3: MECO, on the other hand, should be additive almost immediately. There to the integration of MECO and Gravitech and some overlap of costs that we can drive out is some advantage very quickly.

Speaker #3: So a little bit of different story for the two of them.

Speaker #4: Got it. Makes sense. Thanks, Russell. Thanks, Ann.

Steve Ferazani: Got it. Makes sense. Thanks, Russell. Thanks, Ann.

Speaker #2: No problem. Thanks, Steve.

Ann Thornton: No problem. Thanks, Steve.

Speaker #1: Thank you. One moment for our next question. Our next question comes from the line of Keith Hussin from North Coast Research.

Operator: Thank you. One moment for our next question. Our next question comes from the line of Keith Housum from North Coast Research.

Speaker #5: Thank you. I appreciate it. Hey, Russell, you historically have pointed to R&D being roughly 5% of sales. Obviously, a significant spike up here in the fourth quarter with the acquisition being a big driver of that.

Keith Housum: Thank you. I appreciate it. Hey, Russell, you historically have pointed to R&D being roughly 5% of sales. Obviously, a significant spike up here in the fourth quarter with these acquisitions sounding like being a big driver of that. Are you thinking that R&D will get back to 5% of sales, or are we kind of at a new normal at these levels?

Speaker #5: Are you thinking that R&D will get back to 5% of sales or are we kind of at a new normal at least at levels?

Speaker #3: You know, I don't think we have a target as a percent. We look at our opportunities and our investments and decide whether that is a go-forward project.

Russell Shaller: I don't think we have a target as a %. We look at our opportunities and our investments and decide whether that is a go-forward project. What I will say is the more engineered our products, the higher the gross margin to the point where some of our very engineered products are in the 60% and 70%. I only wish that was our entire portfolio. Some of those are carrying 10% or higher R&D loads, but it works its way to the bottom line in terms of a very differentiated solution. Whether the portfolio will increase potentially, at the same time, those products come with much higher gross margins. What falls to the bottom line is actually a more profitable business.

Speaker #3: You know, now what I will say is the more engineered our products are, the higher the gross margin, to the point where some of our very engineered products are in the 60s and 70%.

Speaker #3: So you know, I only wish that was our entire portfolio. Now, some of those are carrying 10% or higher R&D loads. But it works its way to the bottom line in terms of a very differentiated solution.

Speaker #3: So you know, whether the portfolio will increase potentially but at the same time, those products come with much higher gross margins and so what falls to the bottom line is actually a more profitable business.

Speaker #3: So you know, we could, and I'm not saying this will happen by any stretch of the imagination, but some of our very engineered products are 10% plus R&D, and those are among the best performing products we have in our portfolio.

Russell Shaller: We could, and I'm not saying this will happen by any stretch of the imagination, but some of our very engineered products are 10% plus R&D, and those are amongst the best performing products we have in our portfolio. Like I said, I can only wish everything was at that level.

Speaker #3: So like I said, I can only wish everything was at that level.

Speaker #5: Yep. So, no problem with other commentary, but just trying to think about it. Should I think about $23 million a quarter being roughly a good cadence going forward?

Keith Housum: No problem with that commentary, but just trying to think about it. Should I think about $23 million a quarter being roughly a good cadence going forward, or do you have some work to come out of that that may bring that number down a little bit?

Speaker #5: Or are you some work to come out of that that may bring that number down a little bit?

Speaker #3: You know, I think in the short term it probably will come down a hair as we look to merge some of the R&D teams.

Russell Shaller: I think in the short term, it probably will come down a hair as we look to merge some of the R&D teams. In the long term, we've been on a journey to increase our R&D for the past decade, with some potential blips here and there, and I see that trend continuing. Again, I'm a product person. I think that shows, and I love R&D, and I love everything that we've been investing in. That is not an area we're looking to save or consolidate. I think there's a lot of other ways that we can improve our operating income, and R&D is not one of them.

Speaker #3: In the long term, you know, we've been on a journey to increase our R&D for the past decade. You know, with some potential blips here and there.

Speaker #3: And I see that trend continuing. So, you know, again, I'm a product person. I think that shows. I love R&D, and I love everything that we're investing in.

Speaker #3: So you know, that is not an area we're looking to save or consolidate. I think there's a lot of other ways that we can improve our operating income and R&D is not one of them.

Speaker #5: Okay, appreciate that. With the 8 to 12 million incremental tariff impact in '26 over '25, should we assume that's going to be primarily first half loaded or is there another way to think about that based on up-to-date information?

Keith Housum: Okay. Appreciate that. With the $8 to $12 million incremental tariff impact in 2026 over 2025, should we assume that's going to be primarily first half loaded, or is there another way to think about that based on up-to-date information? Obviously, I know that things have changed dramatically over the past few months.

Speaker #5: Obviously, I know that things have changed dramatically over the past few months.

Speaker #3: Yeah, it's kind of a bouncing ball. But I would say that it will be more to the first couple of quarters than the next couple of quarters.

Russell Shaller: Yeah, it's kind of a bouncing ball, but I would say that it will be more to the first couple of quarters than the next couple of quarters, as we slowly walk through price increases. Again, it is a very nuanced approach, and it's very product category specific. Our goal is to be reasonable with our customers, some of whom expect pricing to go along with the tariffs and have passed that through to their customers, and others aren't quite there yet. Every day, month, and quarter is a journey on the whole tariff front.

Speaker #3: You know, as we slowly walk through price increases but again, it is, you know, it's a very nuanced approach and it's very product category specific.

Speaker #3: You know, our goal is to be reasonable with our customers. Some of whom, you know, expect pricing to go along with the tariffs and have passed that through to their customers.

Speaker #3: And others aren't quite there yet. So you know, every day, month, and quarter is a journey on the whole tariff front.

Speaker #5: Yeah, absolutely. But that's also in your guidance, right? Now, is your mitigation efforts also in your guidance?

Keith Housum: Yeah, absolutely. That is also in your guidance, right? Are your mitigation efforts also in your guidance?

Speaker #3: Yes.

Russell Shaller: Yes.

Speaker #5: Okay, great. And then I guess the final question—I'll turn it over here. Did I hear you say that printers and cartridges are just under 40% of your business now?

Keith Housum: Okay, great. In the final question, I'll turn it over here. Did I hear you say that printers and cartridges are just under 40% of your business now?

Speaker #3: Yes.

Russell Shaller: Yes.

Speaker #5: Okay. As we think about the growth that you've seen there, I mean, obviously, I know you guys have had a lot of new products here the past several years.

Keith Housum: Okay. As we think about the growth that you've seen there, I mean, obviously, I know you guys have had a lot of new products here in the past several years. Can you perhaps conceptualize for me like some of your biggest end markets that you're experiencing in that growth? Is it, you know, electricians or plumbers, industrial? Is there one or two areas that we should be thinking about, you know, what's driving that growth?

Speaker #5: But now, can you perhaps conceptualize for me like some of your biggest end markets that you're experiencing that growth? Is it, you know, electricians or plumbers, industrial?

Speaker #5: Is there one or two areas that we should be thinking about, you know, what's driving that growth?

Speaker #3: Well, the biggest one is you can see from our wire markers, which data centers is a significant part of the wire marker business. Data centers have been doing no surprise to anybody phenomenal.

Russell Shaller: The biggest one is you can see from our wire markers, which data centers is a significant part of the wire marker business. Data centers have been doing, no surprise to anybody, phenomenal. The other part of wire markers that we've seen pick up is the aerospace and defense, with the defense side being particularly strong in the last couple of years. Those two segments drive a lot of that revenue. Yes, we are absolutely in construction and some other areas, but right now, those are the two principal growth areas that we're seeing.

Speaker #3: The other part of wire markers and that we've seen pick up is the aerospace and defense. With the defense side being particularly strong in the last couple of years.

Speaker #3: So you know, those two segments drive a lot of that revenue. Yes, we are absolutely in construction and some other areas. But right now, those are the two principal growth areas that we're seeing.

Speaker #5: That makes sense. So your wire markers will you include in your category of printers and consumables, correct?

Keith Housum: That makes sense. Your wire markers that you'd include in your category of printers and consumables, correct?

Speaker #3: Yes.

Russell Shaller: Yes.

Speaker #5: Okay, great. Thanks, guys. Appreciate it.

Keith Housum: Okay, great. Thanks, guys. Appreciate it.

Speaker #1: Thank you. At this time, I would now like to turn the conference back over to Russell Shaler, CEO for closing remarks.

Operator: Thank you. At this time, I would now like to turn the conference back over to Russell Shaller, CEO, for closing remarks.

Speaker #3: Thank you for your time today and for your questions. 2025 was another great year. We're accelerating our business by expanding sales capabilities while significantly increasing our R&D.

Russell Shaller: Thank you for your time today and for your questions. 2025 was another great year. We're accelerating our business by expanding sales capabilities while significantly increasing our R&D. Our organic sales growth is heavily driven by our steady launch of highly engineered products, which we expect to continue to fuel sales growth into the long term. Additionally, these R&D investments are giving Brady Corporation the ability to engage with a broader set of customers and markets. The current dynamics of the global trade environment and constant changes in tariff guidance result in uncertainty for any global manufacturer, as well as to the entire economy. Although we do expect to continue to be impacted by incremental tariffs, we believe that our global manufacturing presence and largely in-country manufacturing, as well as our geographic diversification, helps to mitigate some of this impact.

Speaker #3: Our organic sales growth is heavily driven by our steady launch of highly engineered products which we expect to continue to fuel sales growth Additionally, these R&D investments are giving Brady the ability to engage with a broader set of customers and markets.

Speaker #3: The current dynamics of global trade environment and constant changes in tariff guidance results in uncertainty for any global manufacturer. As well as to the entire economy.

Speaker #3: And although we do expect to continue to be impacted by incremental tariffs as we believe that our global manufacturing presence and largely in-country manufacturing as well as our geographic diversification helps to mitigate some of this impact.

Speaker #3: We're monitoring the situation closely and adapting where we can, while ensuring that we're never sacrificing the quality or reliability of our products. 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 for our shareholders.

Russell Shaller: We're monitoring the situation closely and adapting where we can while ensuring that we're never sacrificing the quality or reliability of our products. 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 for our shareholders. Thank you for your time this morning and for your interest in Brady Corporation. Operator, you may disconnect the call.

Speaker #3: Thank you for your time this morning and for your interest in Brady. Operator, you may disconnect the call.

Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.