Brady Corp

NYSE:BRC

Earnings Call Analysis

Brady Corp Expecting Continued Growth in 2024

In fiscal 2023, Brady Corporation experienced a solid increase in sales and record earnings per share (EPS), even after boosting R&D investment by nearly 5%. The company ended the year with overall sales up 2.3% and organic sales growing by 5.5%. Looking ahead, Brady forecasts GAAP EPS to range from $3.70 to $3.95 per share for fiscal 2024, representing a 5.4% to 12.5% rise, while anticipating mid-single-digit organic sales growth and a minor boost from foreign currency exchange rates. The Americas and Asia region saw a 4.4% increase in total sales growth, with segment profit soaring 17.2% to $50 million, and Europe and Australia experienced an 11.5% growth, with segment profit rising 9.1% to $18.4 million. Despite facing inflationary pressures, the company is taking steps to maintain profitability through operational efficiencies and selective price increases, as they remain poised for further global expansion, notably in India.

Strong Finish with Record Highs

The company capped off the fiscal year with impressive figures, boasting a 6.9% growth in organic sales due to robust global performance. They reported a full-year 2023 GAAP EPS of $3.51, marking another record following two consecutive years of record highs. Equally striking, the non-GAAP EPS hit an all-time peak at $3.64. The contributors to this success include consistent organic sales growth of 5.5%, driven by innovative products and sales investments, indicating a company that is improving profitability while continuing to expand its research and development, salesforce, and digital capabilities.

Revenue and Profit Growth Across Regions

The company witnessed growth in both its Americas and Asia region, with organic sales up by 5.6% and segment profit by 17.2%. The Europe and Australia region performed strongly as well, with a 9.5% rise in organic sales and a 9.1% increase in segment profit. These results reflect excellent regional execution and the company's commitment to shareholder returns, highlighted by record quarterly non-GAAP EPS growth of 19.5%.

Dividends and Share Repurchase as a Shareholder Commitment

Reiterating its dedication to shareholder returns, the company augmented its dividend, marking the 38th consecutive year of such increases. Additionally, over 3% of the diluted share count was repurchased, effectively exhausting the existing buyback authorization and leading to the announcement of a new $100 million share buyback program.

Margin Improvement and SG&A Efficiency Gains

The firm enhanced its gross profit margin by 40 basis points to 50.8%, thanks to efficient cost management and freight charge reductions. Moreover, they succeeded in reducing their SG&A expense to 27.8% of sales for the full fiscal year 2023, demonstrating notable progress in streamlining their cost structure.

Fiscal 2024 Guidance

Looking ahead, the company projects a GAAP EPS in the range of $3.70 to $3.95 for fiscal 2024, signifying a growth of 5.4% to 12.5%. Organic sales growth is expected in the mid-single-digit percentages, with a 2% projected sales boost from the weakening U.S. dollar. They anticipate an income tax expense of around 22% and forecast capital expenditures of $75 million, including major investments in facilities.

Earnings Call Transcript 2023-Q4

[Operator]

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

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

[Ann Thornton, Chief Financial Officer]

Thank you. Good morning and welcome to the Brady Corporation fiscal 2023 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 2022 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. 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 Shaller, President and Chief Executive Officer]

Thank you, Ann, and thank you for joining us today. We released our fiscal 2023 fourth quarter results this morning, which represented another company record earnings per share result. Our organic sales growth grew 6.9% this quarter due to strong results throughout our global business. We increased our GAAP earnings per share to 23.5% and we grew our non-GAAP earnings per share by 19.5%. This quarter represented an excellent finish to another great year.

Our full-year 2023 GAAP EPS of $3.51 was another all-time record high following two consecutive years of all-time record EPS. Our non-GAAP EPS of $3.64 was also an all-time record high. This year, we grew organic sales 5.5% with growth driven by both regions throughout all of our major businesses and we returned $120 million to our shareholders through dividends and share buybacks, while still finishing the year in a net cash position.

I'm proud of our results this year. This is a direct result of the hard work and dedication of the entire company. We continue to improve profitability, while increasing our investment in R&D, expanding our salesforce, and investing in out digital capabilities. Our focus on new products and sales generating investments positions us to continue to generate consistent organic sales growth into the future.

Our cash generation this quarter was excellent with operating cash flow of 161% of net income and free cash flow of 148% of net income. Our priorities for the next year are consistent, which are: to generate top line growth in excess of GDP and continue our evolution into a faster growing company; to develop our product offering to support our customer's automation initiatives, which we believe is a growth opportunity for years to come; to execute operational effectiveness opportunities to ensure we continue to improve profitability as we grow; to effectively deploy our capital in order to drive long-term shareholder value, which includes organic investments, acquisitions and returning funds to our shareholders through dividends and share buybacks.

We demonstrated our commitment to returning funds to our shareholders this year as we repurchased more than 3% of our diluted share count by nearly exhausting our existing buyback authorization. And we announced a new $100 million share buyback authorization. And yesterday, we announced an increase in our dividend which represents the 38th consecutive year of annual dividend increases. We're committed to consistently returning cash to our shareholders, while delivering a strong shareholder return.

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

[Ann Thornton, Chief Financial Officer]

Thank you, Russell. This quarter, we had strong organic sales growth of 6.9%, while improving our gross profit margins and reducing our G&A expense as a percentage of sales, resulting in earnings growth and a quarterly record GAAP EPS of $1 per share, which was up 23.5%, compared to the fourth quarter of last year.

Non-GAAP EPS, which is calculated as our GAAP EPS less the after tax impact of amortization expense was $1.04 per share this quarter, which was up 19.5% over the fourth quarter of last year. Both regions performed extremely well with strong sales and profit growth, compared to last year’s fourth quarter our Americas and Asia region grew organic sales 5.6% and increased segment profit by 17.2%, and our Europe and Australia region grew organic sales 9.5% and increased segment profit by 9.1%. Our teams are executing extremely well throughout our global businesses.

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

Let's move to slide number four for our quarterly sales trends. Organic sales grew 6.9% and foreign currency translation increased sales 0.6% this quarter, while the impact of our premises divestiture that we closed in the third quarter reduced sales by 0.7%, resulting in total sales growth this quarter. The recent weaking of the U.S. dollar versus other major currencies resulted in a slight positive to our total sales growth this quarter, which follows six consecutive quarters of the opposite FX impact due to the strengthening U.S. dollar.

On slide number five, you'll find our quarterly gross profit margin trending. Our gross profit margin increased 40 basis points to 50.8%, compared to 50.4% in the fourth quarter of last year. Consistent with the third quarter, we were able to offset the majority of our input cost increases through reduced freight charges and other efficiency gains.

Slide number six details our SG&A expense trending. SG&A was $97.5 million this quarter, compared to $94.5 million in the fourth quarter of last year. As a percent of sales SG&A declined to 28.2%, compared to 29.2% of sales in the fourth quarter of last year. If you exclude amortization expense from each of the periods presented, then SG&A will decrease from 28% of sales in the fourth quarter of last year to 27.5% of sales this quarter. So overall, we're making nice progress with our cost structure. We've reduced our SG&A expense from over 36% of sales seven years ago to 27.8% in the full-year fiscal 2023. Meanwhile, we're still investing in sales generating resources by growing our sales force, while identifying ongoing efficiency opportunities throughout our sales and other support functions.

Slide number seven details the trending of our investments in research and development. This quarter, we once again increased our investment in R&D to $16.3 million, which was 4% of sales. We believe that the investments with the best ROI are almost always organic investments in particular research and development. We're committed to new product development and we have an exciting pipeline of new products set to launch in fiscal 2024.

On slide number eight, pretax earnings increased 18.2% on a GAAP basis from $54 million to $63.8 million. And if you exclude amortization from both periods pretax earnings increased 14.8% on a non-GAAP basis from $57.7 million to $66.2 million.

Slide number nine details the trending of earnings and EPS. 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 GAAP and non-GAAP basis, our fourth quarter EPS was an all-time record high. This quarter's GAAP EPS increased by 23.5%. And if you exclude the after tax impact of amortization from both periods, our fourth quarter non-GAAP EPS increased by 19.5%, compared to last year.

On slide number 10, you'll find a summary of our cash generation. Operating cash flow increased substantially this quarter from $53.2 million in Q4 of last year to $79.3 million this quarter. And free cash flow increased as well from $32.2 million in last year's fourth quarter to $73 million this quarter. Operating cash flow was 161% of net income and free cash flow was 148% of net income this quarter.

Turning to slide number 11, you can see the impacts that Brady's historical cash generation has had on our balance sheet. We're currently in a net cash position of $101.8 million. To put this in perspective, even with returning more than $56 million to shareholders in the form of dividends and buybacks this quarter, we still increased our net cash position by more than $17 million.

Our approach to capital allocation is to first use our cash to fully fund organic sales and efficiency opportunities. This includes investing in new product development, sales generating resources, capability enhancing capital expenditures, and automation focused CapEx. Despite the economic -- and any on the economic uncertainty, we'll continue to deploy capital to drive productivity and sales growth. And second we focused on consistently increasing our dividend. We’ve now increased our dividends annually for 38 consecutive years, which is a streak that we're very proud of.

After fully funding organic investments and dividends, we then deploy our cash in a disciplined manner for either acquisitions where we have clear synergies or for opportunistic buybacks when we see a disconnect between intrinsic value and Brady's trading price. Our strong balance sheet positions us to be able to execute additional value enhancing activities, such as R&D investments, 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 12 provides an overview of our financial results for the full-year ended July 31, 2023. Overall, sales increased 2.3% and organic sales grew 5.5%. This organic sales growth was partially offset by the negative impact of foreign currency translation of 3% and a decline of 0.2%, due to the sale of our premises business in the third quarter.

We finished fiscal 2023 with all time high GAAP and non-GAAP EPS. These strong earnings results were even after increasing our investment in R&D by nearly 5% this year. Fiscal 2023 was another record EPS year and our fourth quarter was another record quarter as well. We're confident that our actions this year and our consistent priorities will set us up for success in the future.

So this takes us to our guidance for next year on slide number 13. We're forecasting GAAP EPS to range from $3.70 to $3.95 per share in fiscal 2024, which would represent an increase of 5.4% to 12.5% next year. We also anticipate organic sales growth in the mid-single-digit percentages for the year ending July 31, 2024. And based on foreign currency exchange rates as of July 31, we expect the weakening of U.S. dollar to increase fiscal ’24 sales by an additional -- approximately 2%.

Other elements of our guidance include an income approximately 22%, depreciation and amortization expense of approximately $32 million to $34 million and capital expenditures of approximately $75 million. Our CapEx estimate is inclusive of the purchase of a previously leased facility and the build out of a new facility, totaling approximately $55 million. Our capital allocation strategy remains unchanged, which are to continue to invest in our organic business through both research and development and our sales force; continue to pay the dividend, which we just mentioned, increased for the 38th consecutive year; continue to be opportunistic with share buybacks, while identifying potential acquisitions where the price is right and the strategic fit is clear. We have a strong balance sheet and we'll continue to use it to drive long-term shareholder value.

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.

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.

[Russell Shaller, President and Chief Executive Officer]

Thanks, Ann. Slide 14 details the financial results of our Americas and Asia region. Sales were $227.5 million this quarter and organic sales growth was 5.6%. The divestiture of our premises business decreased sales by 1% and foreign currency translation reduced sales by 0.2%, resulting in total sales growth of 4.4% this quarter.

Segment profit increased by 17.2% to $50 million. Organic sales growth resulted in the significant increase in profit in the fourth quarter, while another contributing factor were freight rates returning to normal in fiscal ‘23. Barring any drastic change in macro and logistics environment, we expect freight rates to remain at these normalized level, which will not provide the year-over-year benefit in fiscal ’24 that we realized this year.

As we disclosed in the third quarter, our new regional structure became effective on February 1, but this quarter we’ll provide a few additional details regarding the sales performance of our previous segments. Our former Identification Solutions business in the America and Asia region, whose sales in the mid-single-digits and our former Workplace Safety business declined in the mid-single-digits in this quarter. Approximately 90% of the revenue in our Americas and Asia region represents the former IDS solutions division and the remaining 10% of the revenue in this region represents the former Workplace Safety division.

We realized growth in most of our product lines and end markets, except for our Healthcare Identification product line. The healthcare industry has struggled to fully recover from a variety of challenges that have impacted it over the last several years. Starting with the pandemic and they are moving into supply chain and logistics challenges and most recently inflationary pressures. Also, our Asia business struggled in the fourth quarter reporting a mid-single-digit decline primarily due to weakness in China and in the consumer electronics industry in Southeast Asia. The exception in Asia is our business in India, which continues to grow organically between 15% and 20% quarter-over-quarter. We're looking forward to our expansion in India and the additional growth potential in fiscal 2024.

Moving to slide 14, you'll find a summary of the performance of our Europe and Australia region. Sales were $118.4 million this quarter. Organic sales growth was 9.5% and foreign currency increased sales by 2% for a total growth of 11.5%. As far as the sales performance of our previous segments, both our former Identification Solutions and Workplace Safety businesses grew sales organically in the high-single-digits in the quarter. Slightly more than half to the revenue in Europe and Australia region represents the formed Identification Solutions division and the remainder represents the former Workplace Safety division.

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

Our Australian business grew sales organically by nearly 13% this quarter and contributed significant increase in segment profit. In total, Europe and Australia segment profit increased 9.1% to $18.4 million this quarter. Europe is realizing the impact of inflation as the impact has occurred slightly later than the impact of inflation in the U.S. This results in segment profit as a percentage of sales decreasing slightly from 15.9% to 15.6% this quarter. We're actively working to address these cost pressures through operational efficiencies and selective price increases, but near-term inflation expectations bring profitability challenges along with it.

In total, our fourth quarter for our entire global business. Our historical global ID solutions business would have had organic sales growth of 7.3%, and our historic global workplace safety business would have had organic sales growth of 5.1%.

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

[Operator]

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

[Keith Housum, Northcoast Research]

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

[Russell Shaller, President and Chief Executive Officer]

Hi, Keith. Yes, sure and thanks for joining the day after vacation. Yes, so, you know, traditionally Brady has been very good at selectively targeting customers to both improve their overall plant safety, as well as improve their automation initiatives in their plant. And really by focusing in on those areas for the whole company rather than just IDS, we're starting to see the translation into growth for the company. So if you were to look back at IDS over many years, it enjoyed a pretty decent growth track record. Now what you're seeing is the expansion of that across really the consolidated group of companies within Brady. So that's helping us.

Second part that's helping is the tailwind that or excuse me, the drag that we had had by some of our traditional catalog businesses becomes increasingly a smaller share of the overall corporation. And so while we're still seeing some of those businesses decline, in the low-single-digits, the effect it's having on the overall corporation is certainly less. So I'm going to give it two things. The positive impact of really focusing on customers and some of the customer solutions we're delivering, that's giving us a great tailwind. And then on the -- the flip side, having increasingly smaller percentage of our dragging business is helping us as well.

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

[Keith Housum, Northcoast Research]

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

[Russell Shaller, President and Chief Executive Officer]

Yes, we continue, you know, sales for us is a great marginal investment. It unfortunately, those sales people are kind of granular. So if you hire two people in Texas, is it worth hiring a third person in Texas, for instance? We look at that as we continue to invest in sales people as long as we're getting a marginal return on them. Is it an enormous increase in sales force? Absolutely not. But we continue to push the bounds of saying should we add another 5%, 7% to our sales force as we continue to grow our business?

And it's something that we look at every month, because they're very granular decisions about whether we would add, say, a salesperson in India or whether we would invest in digital marketing in the U.K. for instance. So we have a great analytics team that is helping us tremendously in the resolution of where we are making our investments.

[Keith Housum, Northcoast Research]

Great. And if I could squeeze one more in here and then I'll turn it over to others. In terms of the profitability of the segments, the Europe and Australia segment obviously has a lower summit profit margin than the Americas and Asia. Can you perhaps help us reconcile, while that's the case? And is there an opportunity to get into more of a balance going forward?

[Russell Shaller, President and Chief Executive Officer]

Part of it is it's just a little bit tougher environment in Europe. The cost structures are a little bit higher. I think both businesses are in a good place in terms of profit margins. It's always the question if you push profit margins, do you start destroying demand for some of our products. And we do see that. If you push pricing too far, people will buy two printers instead of three or they'll buy less consumables. So you know, if you look at the European region in particular and how cut up it is by the different countries and the different languages and the logistics costs and what have you. It's just a slightly more expensive place to do business. We love them and we love their growth opportunities. I mean, clearly did fantastic in the last quarter. But with that said, it's just slightly more difficult to do business there than you'd have in the U.S.

[Keith Housum, Northcoast Research]

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

[Russell Shaller, President and Chief Executive Officer]

Yes.

Operator

[Operator Instructions] Our next question comes from Steve Ferazani with Sidoti. Your line is open.

[Steve Ferazani, Sidoti]

Good morning, Russell. Good morning, Ann. I wanted to ask a little bit about cost management SG&A. Obviously, you've continued to do a great job in reducing costs. I want to go back to when you announced the re-segmentation and talked about it adding $0.10 to $0.20 in EPS to fiscal 2024. I'm assuming we've seen some of those benefits already in the second-half of this year. Is it a $0.10 to $0.20 benefit next year? And what other efforts are being made here? Do you see further reductions in SG&A going forward?

[Russell Shaller, President and Chief Executive Officer]

Yes. So you're absolutely right. We did capture more of that savings in ‘23 than we had originally expected. So I think when I had said that $0.10 to $0.20 in 2024, I was probably a bit pessimistic in how fast we were going to be able to realize the savings. So we certainly picked some of it up in ‘23. The remainder will be in ‘24, I feel fantastic so far with how that has come together. In fact, it is absolutely exceeded our expectations and our business case in going through. We always said this was going to be a pay as you go event. We've digested all of the costs that were associated with making this change. And yet, we've still been able to churn out record profit. So I think we're well positioned in ‘24, but to explicitly answer your question, some of that gain absolutely was seen in ‘23.

[Steve Ferazani, Sidoti]

Great. The $55 million in CapEx related to the conversion in the new facility. Can you provide a little bit more detail on what you're funding?

[Russell Shaller, President and Chief Executive Officer]

Yes, sure. So we always do the decision, I think, as all companies do of make versus buy or excuse me, lease versus buy on facilities. And we had the opportunity of converting a pretty significant plant lease to a purchasing decision. The return on capital we thought was fantastic and we're doing that, but it's still it's a significant cash outlay approximately $37 million for the plant, which previously would have been a lease.

And we have another facility that we've been in the process of constructing for a little bit over year, but there’s significant parts of the [bills] (ph) is due this year and occupancy will happen towards the end of next year. So those two are one-time bites, they wouldn’t be typical of our company. We tend to have plant purchases or significant investments, once every few years. It just coincidentally, these two lined up at the same time.

[Steve Ferazani, Sidoti]

Is that supporting any particular growth segment product?

[Russell Shaller, President and Chief Executive Officer]

No, it is -- these are on both are ongoing operations. Now they will certainly help us streamline a little bit of our activities, but both locations were previously occupied by Brady. And so it doesn't appreciably change our footprint. It just gives us a little bit more long-term control over the cost of doing business.

[Steve Ferazani, Sidoti]

Yes, okay. Got it. Thank you. You talked about it, it’s still having a pretty good pipeline, new product launches coming in fiscal ‘24. Can you give us any kind of a preview also if you can comment a little bit on, products tied to the Code and Nordic ID acquisitions and where you are with industrial track and trace? Kind of a wide question…

[Russell Shaller, President and Chief Executive Officer]

Sure, yes. So obviously, we have a myriad of smaller products that we launched every month and throughout the year from locks to safety devices and what have you. Our more significant launches are our printers and optical and RFID readers. We're having a few product launches this year in terms of printers it's a combination of both new printers, as well as some product refresh. One of the things that we're super excited is the capability to print from voice. We're in prototyping right now, but talking to some of our devices and allowing that print technology to occur. I personally and super excited about that.

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

[Steve Ferazani, Sidoti]

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

[Russell Shaller, President and Chief Executive Officer]

Yes, we absolutely are. For us, it's all part of our automation solutions. Now it's important to recognize what that means for us. We're not really in distribution centers, that's not part of our business or freight shipping or what have you. We're very intimately involved in manufacturing environments and what I'll call niche manufacturing of parts. I think there is a tremendous opportunity for Brady in what I'll call the medium sized corporations out there that manufacture things. So those would be the $1 billion to $2 billion companies. We're actively engaged with many of them. And I think the overall trends towards improving productivity, saving labor, is something that will help us for years to come.

[Steve Ferazani, Sidoti]

Thanks, Russ.

[Operator]

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

[Russell Shaller, President and Chief Executive Officer]

Sure. Thanks everyone for your time today and your questions. We performed very well this quarter, and we have positive momentum throughout the entire organization. We're also in an incredibly strong financial position fiscal ‘21, ‘22 and now ‘23 were all record EPS years, and we're once again guiding to another record year in 2024. Like many other companies we have to navigate through an uncertained and rapidly macro environment. We're focused on controlling what we can control and consistently delivering on our priorities, which are: to continue to invest and grow the topline and continue our evolution to a faster growing company; to further develop our product offering to support our customers' automation initiatives; to execute operational efficiencies and ensure that we grow profitably; and to effectively deploy our capital to drive long-term shareholder value through organic investments, acquisitions, and returning funds to our shareholders through dividends and share buybacks.

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

[Operator]

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