Brady at Sidoti Small-Cap: Strategic Growth Amid Challenges

On Thursday, 20 March 2025, Brady Corporation (NYSE: BRC) participated in the Sidoti Small-Cap Virtual Conference. The discussion, led by CFO Ann Thornton, highlighted Brady’s robust financial health and strategic initiatives. Despite facing macroeconomic challenges, including tariffs and inflation, Brady remains committed to sustainable growth, innovation, and shareholder value. The company also reported strong cash flow and a disciplined capital allocation strategy.

Key Takeaways

• Brady achieved record EPS for four consecutive years, with a 17% increase in 2024.
• Operating cash flow reached a company record of $255 million, up 22% in 2024.
• The company is in a net cash position of $51 million after acquisitions.
• Organic sales growth was 2.6% in 2024, with an increase to 3.1% in the first half of 2025.
• Brady’s R&D spending reached a record high of 5.1% of sales in 2024.

Financial Results

• Earnings and Cash Flow: Brady reported record EPS for four consecutive years, with a 17% rise in 2024. Operating cash flow increased by 22% to $255 million, setting a new company record.
• Net Cash Position: After acquisitions totaling $137 million, Brady holds a net cash position of $51 million.
• Organic Sales Growth: Organic sales growth was 2.6% in 2024, rebounding to 3.1% in the first half of 2025.

Operational Updates

• Product and Geographic Diversification: Brady’s diversified product portfolio includes safety and facility identification solutions. In 2024, 47% of revenue was generated outside the US, with significant growth in Southeast Asia.
• Cost Management: The company has reduced SG&A expenses by 800 basis points over the past eight years.
• Innovation and Acquisitions: Investments in innovation and automation are central to Brady’s strategy, exemplified by the acquisition of Gravotech to enhance identification solutions.

Future Outlook

• Strategic Focus: Brady aims to drive organic sales growth, improve profitability, and return cash to shareholders. The company is committed to sustainable cost reductions and continuous improvement in gross profit margins.
• Challenges and Opportunities: Brady is adapting to tariff changes and macroeconomic conditions in Europe while capitalizing on growth opportunities in Southeast Asia.

Q&A Highlights

• Tariff Management: Brady is actively monitoring tariff changes and ensuring appropriate product classification to mitigate impacts.
• R&D and Innovation: The company’s R&D focus includes technical products and specialty printers, with the I 7,500 printer highlighted as a successful investment.
• Growth in Southeast Asia: Brady is experiencing double-digit growth in Southeast Asia, benefiting from manufacturing shifts out of China.

For a more detailed understanding, readers are invited to refer to the full transcript below.

Full transcript - Sidoti Small-Cap Virtual Conference:

Steve Farazani, Analyst, Sidoti: a few seconds. But, as we have this extra moment, I’d like to remind everyone, we expect some time for q and a at the end of the presentation. If you have any questions, press that q and a button at the bottom of your screen, type them in, and we’ll get to as many as we can, time permitting. Looks like we’re filled in now. So I’m Steve Farazani, an analyst at Sidoti.

I’m so pleased to be joined this morning by Brady Corporation, the ticker’s BRC CFO, Ann Thornton, for what I think will be an informative half hour. I don’t wanna take up too much time here. So with that, let me turn it over to you, Ann.

Ann Thornton, CFO, Brady Corporation: Alright. Thanks a lot, Steve. Good morning, everybody, and thanks for joining today. I’ll start off by giving you some background on who we are and what we do, and then I’ll share some financials, a little bit of historicals to show you kind of where we’ve been and and hopefully where we’re going, and then I’ll leave some time at the end for q and a. Alright.

So Brady is a leader in the research, development, and manufacturing of high performance specialty adhesives and printing solutions and the software for those printing solutions that are intended for safety and identification applications. We have a a very broad product portfolio consisting of wire identification, specialty adhesive labels and printers, safety and facility identification products, which would include floor marking tape, lockout devices, safety procedures, pipe markings, broad product portfolio, which I’ll go into a little more detail in a little bit. We also manufacture and develop product identification labels, specialty product identification labels, printers, scanners with optical reader capabilities, healthcare identification, patient identification wristbands, and then other kind of a broad basket of other people identification type products. So very broad product portfolio. We sell into a wide variety of end markets, and our products are ideal for many, many different applications.

Ultimately, though, the more specific and the more challenging the need for an adhesive product and a printing solution for that product, the better for Brady. That is where we really excel, and that’s where our products really stand out. We’re very diversified. We have a diversified customer base. No one individual customer comes comes close to 10% of our total sales.

We sell thousands of products. Last year, 47% of our revenue was generated outside of The US, so we’re very geographically diversified. And our our competitive landscape is very fragmented, and it’s it’s often very specific to just a particular type of a product or a certain geography or sometimes both. We’re super focused on producing long term sustainable results, and that’s really what we’ve been working on and what we’ll demonstrate here when we go through the financials. We’ve refocused our attention on innovation over the last multiple years and I’ll show you that our R and D spend was up to an all time high of 5.1% of sales in fiscal year twenty twenty four, which is incredibly important to us as we work to improve our organic growth profile overall as a company.

If you look back also over the last eight years, we’ve reduced our SG and A as a percentage of sales by 800 basis points, which has really been fantastic for our bottom line as well. And we’re coming off of four consecutive record years of EPS. 2021, ’20 ’20 ’2, ’20 ’20 ’3 and 2024 were record EPS years with 2024 EPS up by 17% over 2023. So we’re on a really nice run from an earnings standpoint. We’re also very focused on cash generation and we’re always making cash based decisions regardless of of any short term impact.

What’s the long term benefit from a cash standpoint is is is always our focus. And our operating cash flow was up 22% in 2024 compared to the to the year prior up to $255,000,000 which was a company record. So as far as what we do with that cash that we generate, we’re disciplined and we’re patient. We have an incredibly strong balance sheet and that gives us the ability to deploy to deploy our cash and and quite a bit of freedom to do that when we have the right opportunities. We continue to invest in the organic business throughout the economic cycle.

And so for us, that means salespeople, R and D, geographic expansion, so that we can overall improve our rate of organic sales growth. We returned dividends to our shareholders. And at the beginning of this fiscal year, we announced our thirty ninth consecutive annual dividend increase, which we’re super proud of. We’ve increased our annual dividend every single year since we went public. We also are very disciplined when it comes to acquisitions.

The opportunity needs to provide some level of technology or a product offering, ideally both, that we don’t currently have. The price needs to be right. It needs to it needs to mathematically work for us, and it it needs to be a logical fit. It needs to help move us forward. And if we don’t find the right deal, then we have no problem stepping aside and waiting.

We also return our we return funds to our shareholders in the form of share buybacks. Last fiscal year, we returned $117,000,000 to our shareholders in the in buybacks and dividends combined. And in 2023, we returned $120,000,000 in buybacks and dividends combined. So we’ve we’ve had a really nice streak in this in this area as well, and returning funds to our shareholders is absolutely a focal point of our capital allocation approach. So overall, we believe we have a a very well balanced organization that’s incredibly diversified, which which also tends to give us a level of protection throughout the economic cycle.

Okay. So just a a very brief comment about the geographic layout of Brady because this does does, you know, have a bearing on how we operate and and our financial results. I did mention that 47% of our revenue was generated outside of The US in 2024. And so which means 53% of that revenue was in The US. Internationally, 30% of our revenue is in Europe, which is mostly Western Europe, but but, outside of Western Europe is has actually been an area of growth for us.

Although small, but small in in its size. It’s it’s actually been growing nicely. And then the remaining 11% makes up the com the combination of Asia and Australia. So we’re very geographically diverse for a company with 1,300,000,000.0 in revenue. Okay.

We operate our business geographically within two two combined regions. One geography is The Americas and Asia, which represents about two thirds of our total revenue. And then the combination of Europe and Australia represents the remaining one third of our total revenue. We sell the full suite of our products throughout each of each of these geographies. And basically, our product categories, we can break down further into into kind of five major groupings.

First would be safety and facility identification. And some examples, just a a few examples of the products are shown in the upper left of this slide. It’s a broad product category. But overall, it basically consists of all of this the the signage, safety identification products that would be present and then often required throughout a manufacturing facility. So safety signs, floor marking tape, pipe markers, lockout devices, and the labels to ensure that machine guarding and machine safety is present and and many, many, many more examples.

We offer a full suite of hardware, which would be our printers, software for those printers. And then and then what what what is the common thread through through what we do are our high performance specialty adhesive materials that would be run through our printers, which we manufacture actually those those adhesive materials at our coating facility in Milwaukee, and then we sell that throughout our global businesses. The next product category shown in the upper right hand side of side of the slide is wire identification. This consists of a wide variety of materials that can be printed upon and then applied to a multitude of different types of wires and cables in many different applications and industries. So the printers that you see here, they’re they’re they’re different sizes, but, they’re all the razor razor blade model.

And printers throughout all of our product categories actually are all razor razor blade. We manufacture both our printers and the keyed consumables for those printers so that only Brady materials can be used within within the printer themselves. Some of our best selling products within this product category are portable printers, which which are basically durable handheld, printers, portable printers that are designed to withstand the day to day use that is is needed at at something like a construction job site. And would basically be something that an electrician would use every single day to label the wires, the panels, everything else required. And of course, using our specialty adhesives that are intended for for for that, for that kind of a harsher environment through a variety of construction projects.

Product identification primarily consists of barcode labels and other brand protection type labels. We produce, RFID enabled labels, the label design software, 1D and two d barcoding software, as well as the RFID readers and barcode readers, which came along with two acquisitions that we made a few years ago. Healthcare identification mostly consists of patient identification wristbands and other labels that are intended to ensure that the care that a patient receives in a healthcare setting is accurate and what is intended for that exact patient. So data accuracy, reliability is is essential here. We also source and resell within this product category a variety of other healthcare supply and PPE project, products within within this healthcare business.

And then our last major product category shown here would be what we refer to as people identification. So some of these products that we would manufacture and sell would be employee access badges, building access badges, lanyards, wristbands for specialty events, things like that. We also offer a printer lineup that was designed for this product category, which came along with another acquisition from a few years ago. So overall, there are common themes within our product categories are that we we always focus on manufacturing high quality, long lasting products that are intended for a very wide variety of end markets. With a particular specialty that we have in adhesives that are designed for harsh environments where where the signage, the identification is is essential because the cost of failure or the cost of noncompliance can be very high.

Alright. Oops. I skipped ahead one. So, I touched on most of the items that are shown here kind of in this in in this wheel, which is basically pulling our product offering together. The acquisitions that we made a couple a few years ago, Code and Nordic ID, they they brought with them the optical scanning capabilities that we we were missing at that time, which now allows us to offer to our customers an integrated solution that consists of a printer, a scanner to read one d and two d barcodes, as well as RFID embedded labels, as well as our specialty materials within the printers themselves, and then and then provides the software pulling everything together.

And then our most recent acquisition from little over seven months ago, so at the very beginning of the fiscal year that we’re currently in, is a company called Gravotech. All really, all of what I’ve been referring to from a product standpoint is is about identifying something, whether that be a product, something within a facility, a machine, or a person, kind of you name it. But always always using a label or some sort of a material as the medium for that identification. But in certain circumstances, a label just isn’t isn’t the right solution. It’s not an option.

So think of things like metal parts and components of autos, engines, you know, big machinery and things like that that do need to to be marked in some ways, serialized or something. So we purchased Gravitech, which manufactures laser laser and mechanical engravers that would that that have the ability to perform this precision direct part marking directly on a product, a part, a component, a wide variety of different different materials. But it’s it’s, the point being that it’s actually marking directly on on on an item. So we’re really happy with this acquisition. It fills an identification gap that we had previously in that we’re we’re always about marking something with a label, which we don’t believe is going away by any means, but it’s just not always the the appropriate solution.

And and Gravitech fills that gap for us. So just a brief summary before I touch on a few elements of the financials. Where are we today? We’re we’re super focused, highly focused on improving our rate of organic sales growth, to to GDP plus. We’re in, we’re investing in innovation.

We’re investing in automation. And we’re focusing on making the right decisions today that will pay off for our shareholders in the long term. And this is very consistent with what we’ve been doing over the last several years, for sure. We’re also driving profit improvement. I mentioned EPS was up 17% in fiscal twenty twenty four.

Efficiency opportunities are constantly being tackled throughout the business. SG and A is down significantly from us from eight years ago. But the key to all of this is that we focus on sustainable sustainable reductions. Sometimes that can take more time, but it always pays off. We’re always about simplifying what we do and how we do it, and that’s that’s truly been paying benefits.

And we’re returning cash to our shareholders. So we believe we’re positioned very well for the for the future. We have a really diverse product portfolio, and we believe when you combine that with our niche product offerings that we’re in a great position for growth over the long term. So let me just touch on a few of our financial trends to give a little bit more background. So, we’ve had a nice upward trend of organic sales growth coming out of the pandemic.

So it’s just showing multi year basically, nearly ten years at this point. So just immediately pre pandemic, what we’re focusing on here is organic growth, which you can kind of see in the, the percentages that are shown below the graph. Just immediately pre pandemic, we grew 2.8% as a total company organically in fiscal year twenty nineteen. Then, of course, the pandemic hit in fiscal twenty and we dropped like many companies. We were actually down 5.4% that year, and then we recovered in fiscal twenty one and fiscal twenty two.

One item to keep in mind if you’re new to Brady is that we do have a July 31 fiscal year end completely off calendar. So the pandemic year, if you call it a year, was basically the second half of fiscal twenty twenty for us and then the first half of fiscal twenty twenty one. So so we have a little bit of pandemic recovery in fiscal twenty two would be why I point that out as well. And then in 2023, we grew organic sales 5.5%, which was a really fantastic result that we were very proud of. And then this past fiscal year, we grew sales 2.6% organically.

Excuse me. And then through the first half of the current the fiscal year that we are currently in 2025, our organic sales are up 3.1%. All right. Gross margin. So we have very, very strong gross profit margins.

Historically, pre pandemic, we were pretty much right around 50% annually, which you can see here. Then during the inflationary period and the logistics challenges in 2022, we did drop below this level slightly to 48.5%. But then in fiscal twenty three, we recovered to nearly 50%. And in 2024, we continued to improve to 51.3%. So we’ve worked really hard to continue to execute operational efficiencies throughout our global businesses along with implementing strategic price increases.

And we’re also getting some solid sales growth from some of our higher gross profit margin products this year and last year as well, which has has really brought this nice result. Excuse me. Alright. Research and development. So you can see on this slide that research and development has steadily increased for the last eight years, which shows our commitment and our belief in the return from our investment in r and d.

In 2023, we were at 4.6% of sales, which was our highest year ever. And then we closed 2024 at 5.1% of sales, which is now our largest annual investment in company history, and we’re tracking to another record this year. Our r and d investment is really paying off as this is it’s and that this is absolutely an area that we’ll continue to invest in because it results in such nice long term benefits to our organization. Okay. So s g and a expense, I touched on this a bit earlier, but we have reduced our s g and a as a percentage of sales by 800 basis points over the last eight years.

The chart you see here really does bring this to light. In fiscal twenty sixteen, SG and A was over $400,000,000 You can see a step up in dollars in 2022, and that’s the year that we basically made three acquisitions at the very end of 2021. But as a percentage of sales, we continue to reduce our SG and A structure. We’ve looked up a little bit in 2024. We still do expect to get some runway into the into the future, probably not to the same degree as we’ve been working on it for so long.

But opportunities, we continue to work on efficiency, improvement opportunities throughout back office support and within our our our sales support function. We still have automation opportunities and and the ability to drive improvement. Pre tax earnings have been moving steadily in the right direction, up every year with one blip down during the pandemic. This trend is absolutely the end result of everything that I just mentioned around our focus on organic sales growth, our continued improvement in gross profit margin, reduced SG and A cost structure, and doing all of this while increasing our investment in R and D. I would also like to just show pretax earn or pretax income here rather than than net income dollars and just removes the any noise from the tax rates.

You can really see the the focus on our underlying results. And then moving along to earnings per share, it’s the exact same story. In fiscal twenty one, you can see our, EPS was $2.47. That was an all time record high. 2022, we increased to $2.9 another record, as was 2023 at $3.46 And 2024 was another record high of $4.07 diluted EPS.

So I mean, and these are GAAP reported EPS results as well. We’re super focused on converting organic sales growth into bottom line growth and then doing whatever we can to offset inflation and continue to deliver. Okay. So cash flow from operating activities, another another good trend. I will point out since we’re showing showing some history here, if you look at fiscal twenty two cash generation of $118,000,000 that was a larger drop from fiscal twenty one.

One primary driver was inventory. So as we went through the pandemic and then post pandemic, we took the approach of making sure that we had the inventory to serve our customers, which absolutely benefited us. We did whatever we could and whatever we needed to to have to to the best of our ability to have the products we needed so that we could fulfill orders as quickly as possible. We do believe this was a very nice advantage for us because not all of our competitors were in this situation. And then we were and then we immediately began the process of, wisely, steadily reducing inventory throughout 2023 and 2024, in a smart manner, in a procedural manner, which was a major part of the reason for our strong cash generation for the last two years, which both of which were company records.

Alright. So our balance sheet, we are in a net cash position as of the last quarter that we released, which was January 31, of $51,000,000 and this is following acquisitions totaling $137,000,000 in the first quarter of this year. So we have a really strong balance sheet, which gives us a ton of opportunities to deliver shareholder value over the long term. Okay. And then just briefly on our two regions, the performance of our two regions.

Over these next two slides, you’ll see consistent results in terms of growth in sales and profitability over the last three years with the charts on the right showing showing the full fiscal years. We’ve definitely been executing really well in both of our regions, as well as in Europe as well, where it’s been a little bit tougher macro, conditions this fiscal year so far, but, we’re we’re doing what we can to to counteract that. Okay. So with that, I’ll just add a couple of closing thoughts before turning it over to q and a. We are, financially a very strong company.

We’re incredibly diverse. We are we are incredibly focused on organic sales growth. Our profitability has improved and continues to improve. Our cash generation has been fantastic, and we always focus on making cash based decisions, which we know is the right long term decision for our shareholders result for our shareholders, I should say. We are returning funds to our shareholders.

And as we sit here today, we believe we are in a great position with a strong balance sheet, an organization focused on execution. We’re trying to control what we can control. There are a lot of outside noise and a lot of lot of, changing dynamics on an ongoing basis, but but we’re we’re staying focused on what we’re doing and controlling what we can control. And, and we have a great product lineup with new products coming to market pretty pretty regularly, and and we believe we’re set up for a for a very strong future. So with that, I’ll turn it over for any questions.

Steve Farazani, Analyst, Sidoti: Great. Thanks so much, Anne. We already have some questions in the queue, but it take this moment to remind everyone we got about seven minutes remaining. So if you do have an additional question, press that q and a button at the bottom of your screen and type it in. I do wanna start this off though, by the the topic of this conference and the topic over the last month.

So I’m sure you know this is coming. Yeah. Brady’s, which is very much a global organization, tariffs, how you’re handling it, what you expect the impact to be, any kind of general views on what we’ve seen so far, which is ever changing?

Ann Thornton, CFO, Brady Corporation: Oh, exactly. You you you exactly said it. You know it’s ever changing. So we’re we’re trying to to to basically understand what what the those kind of ever changing guidance is that’s that’s that’s put out there, basically, and then ensure that we’re understanding that and understanding the impact on our client on on our our product lineup and what we manufacture in our manufacturing facility in Mexico. So we do have have manufacturing operations in Mexico where we ship products, of course, into The US and then to our other sites globally as well and and, obviously, onto our customers.

So we’re ensuring purely from a data standpoint to make sure that we’re, appropriately classified to obviously all within the rules, to with the latest piece of guidance of, USMCA eligible products being exempt from the current round of rules. Who knows what will happen in the future, but we’re just ensuring that we’re we’re doing everything everything right in that area, which should help to mitigate something. But apart from that, we’re not we’re it’s it’s pretty tough to move manufacturing overnight, and we’re obviously looking at at the cost of doing business everywhere that we are. But, purely, we’re just we’re we’re evaluating everything every every single day. It’s an absolute top priority.

And as and when when things change and we release our next quarter, if anything’s material, we’ll be sure to be clear about that with our with our shareholders.

Steve Farazani, Analyst, Sidoti: Do you have any room for price pass through to customers?

Ann Thornton, CFO, Brady Corporation: We would have some. Yeah. We I mean, and we generally do. You know, kind of like we we always would. I don’t know that that we’d be able to I certainly wouldn’t wouldn’t commit really to anything right now, and those percentages are pretty significant.

But, we absolutely would. On an ongoing basis, kind of the more engineered, the more specialty, the more proprietary the the product is, generally, the more pricing power that we have. So so we would have some some room there. But, but then we always wanna be smart about that as well and not, and not, swing things too far, but we’d be able to to pull some levers for sure, Steve. Good point.

Steve Farazani, Analyst, Sidoti: Fair enough. Do you have a question about, about the r and d spend? If you could talk about if there’s a particular areas of focus and, you know, when do you actually see those investments, you know, hit the top line or bottom line?

Ann Thornton, CFO, Brady Corporation: Sure. Yeah. We our our focus has very much been over these last several years on, on really the, the, the absolutely the more technical products. We’re always in the background developing, specialty adhesive materials and, and, modifying exist existing products in those areas to meet potentially a new customer demand and those types of things. But so so that’s that’s wonderful.

That’s always ongoing. But we’re absolutely very focused on the more technical products, the specialty printers, and their capabilities. And the the one printer that we did touch on this last quarter is called the I 7,500. That’s been a few years in development. So what you’re seeing now in our in our sales growth is really kind of the ramp up and the and that and that accumulated build up of this these last kind of several really really the ramp up of the last seven years.

It it it pays out it plays out pretty gradually for Brady, but just simply due to the breadth of of our product offering. And the and the fact that our r and d is always very additive. So what we’re doing today, we’ll just build on that and then you’ll see that and, you know, continued continued onward two two and three years out, which our goal overall is to just improve that that organic growth profile, which I do believe we’re seeing. We’re, you know, battling some macro, conditions in Europe, but that’s that’s on us to to overcome too. So

Steve Farazani, Analyst, Sidoti: And and it’s important if people are new to the story watching today, understand that with the Razer Razer Blade model, these printers should have a nice tail to them.

Ann Thornton, CFO, Brady Corporation: Oh, it’s exactly right. Exactly right. And our our printer sales have been ramping up for for several years. That’s really where we’re getting, the our our strongest growth as a as a more, key product category would be our print printers and the consumables for those printers. And our printers are incredibly durable.

They’re they’re incredibly long lasting. We want them out there in the world lasting as long as possible. Because then we get that consumable pull through revenue, which is which is, a higher gross margin product sale. So absolutely.

Steve Farazani, Analyst, Sidoti: I haven’t asked this in a while. Any any sense of how much what percentage of revenue the razor razor blade the company is now?

Ann Thornton, CFO, Brady Corporation: But we’d be it sometimes depends upon how you how you kind of look at that and, you know, what what products you’re including. If you’re include if we if we look at the printers and the consumables that are specifically keyed, specifically tied to those printers. So there there are a lot of specialty materials that wouldn’t be run through a printer that are still, very important products that are very high margin. It’d be around a third of our revenue in total, and that’s and that’s spread out globally with different concentrations in different different areas. But that’s across all those product categories that we talked about, safety and facility ID, wire identification, product identification.

And that and that’s and that’s a that’s a that’s a growing portion of our business. I can’t speak to a number from several years ago, but it’s becoming a grower growing proportion. Yep. Okay.

Steve Farazani, Analyst, Sidoti: We have a question about, long term target SG and A as a percentage of revenue for several years. You were bringing that down pretty consistently. Is there a target at this point?

Ann Thornton, CFO, Brady Corporation: We we have not. I’ll state we haven’t officially released a a longer term target. But, what I can tell you is where it is it’s always a focus area. We’ve we’ve realized some very significant benefits from that that steady focus over that eight year period of time. We’re not even though this past fiscal year, I know the the graph does go up about 30 basis points a little bit as a percentage of sales.

It it’s it’s not to signify that we’re that we’re that we’re ending that, but, I think there not I think. We know there are absolutely more opportunities in this area. It’s just probably not to the the same degree of around a hundred basis points per year. We would need to change change our structure, pretty significantly to to, you know, we’re we’re in a we have a relatively small presence in a lot of the countries in which we operate. We think that’s important.

We are very profitable in those countries and we feed those as opportunity excuse me, as opportunities to for growth for sure where we believe we might be under penetrated in smaller countries in Eastern Europe perhaps and then in, some smaller countries in Southeast Asia.

Steve Farazani, Analyst, Sidoti: I wanted to ask about that because you didn’t necessarily highlight a ton here, but your growth and you talked about this two years ago, I think, about the expected growth in Southeast Asia, which is still very small for you.

Ann Thornton, CFO, Brady Corporation: It is.

Steve Farazani, Analyst, Sidoti: But that’s had a meaningful impact in the last few quarters. Is there room there? And is that now a model for where you could grow in other markets?

Ann Thornton, CFO, Brady Corporation: Absolutely. Absolutely. We have been talking, you’re totally right, Steve. We have been talking about growth in Southeast Asia and that growth has been absolutely double digits, sometimes 20%, excluding, you know, excluding China. The issue with that is that we were initially talking about 4% of the sales of the company.

And now it’s about 5%, which is, which, you know, we’ll, we’ll, we’ll get there. It’s ramping up, but, and it, and that is meaningful. We do think it’s benefiting. That region is just generally benefiting from manufacturing, moving out of China and not necessarily moving back to The US. So for sure, we’re, we’re super focused there.

We have a great leadership team in place, actually a new leader who’s been, who’s been with us now for about a year. Who’s doing a tremendous job in, in, really getting after the, just kind of more opportunities and looking at, at the right places to be. And, and it was part of the reason why we did announce a shutdown of our, one of our sites in, in China, where China’s just been declining. It’s not an overly material change for us, but still meaningful and should give us some nice cost savings and, and put our focus where it should be.

Steve Farazani, Analyst, Sidoti: But does that, are there other ways to grow geographically? You made two acquisitions in the last twelve months, but yet you still end up in a net cash position. Yeah. How are you thinking about it? Can M and A be used geographically or are you more focused on product innovation and product holes when you’re looking at M and A?

Ann Thornton, CFO, Brady Corporation: Oh, great great point. It could be. I mean, we’re we’re not necessarily opposed to looking at the at M and As geographically, but but but if it if if the company, if the core, if the product set doesn’t doesn’t tie in logically with Brady, then then we feel we’re we’ve got a close enough presence. I mean, honestly, with the presence in 32 countries is is relatively spread out. Now not all of those are are, operational sites.

A lot of times they’re they’re a sales office, but we we feel we can pretty much kinda get to get there. And and, keeping keeping m and a the m and a focus closer to to what we know that what we believe that we’re good at is is generally what we what we’re what we’re trying to stay, yeah, stay focused on.

Steve Farazani, Analyst, Sidoti: K. I know we did go a little bit long. Any closing comments before we wrap this up?

Ann Thornton, CFO, Brady Corporation: Yeah, no, I appreciate the time. I appreciate everybody, joining and the interest. And I mean, we’re just we’re we’re our story, our and what we’re working on is honestly very consistent and we believe it’s been it’s been paying off over these last several years. I mean, we’re pretty proud of having four record years of, of, EPS results consecutively in a row here. There’s a lot going on in the world, obviously in the row, but It’s

Steve Farazani, Analyst, Sidoti: an understatement.

Ann Thornton, CFO, Brady Corporation: Exactly, exactly. But, know, we’re just trying to we’ll we’re staying focused on what we’re doing. We’re not, we’re not, you know, making knee jerk reactions about anything or taking, you know, doing anything drastic because just trying to stay calm and make sure that we’re operating and serving our customers. And, and and potentially these types of changes might present other opportunities from who knows? Not implying anything, but you never know.

I mean, it just could be something that we and with our balance sheet, we’d be we’re able to to, you know, get after multiple opportunities at the same time.

Steve Farazani, Analyst, Sidoti: Fantastic. Great way to wrap it up. Anne Thornton from Frady Corporation, thanks so much for joining us today. Hope everyone found this as informative as I did and hope everyone enjoys the remainder of the Sidoti virtual investor conference. Thanks so much, Anne.

Ann Thornton, CFO, Brady Corporation: Thanks Thanks a lot. Thanks, Steve. Thanks, everybody.

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