Brady at Sidoti’s Small-Cap Virtual Conference: Strategic Growth Amid Challenges

On Wednesday, 11 June 2025, Brady Corporation (NYSE:BRC) presented at Sidoti’s Small-Cap Virtual Conference, offering a strategic overview of their operations. Anne Thornton, CFO, highlighted the company’s strengths in innovation and cash management, while also addressing challenges in Europe and potential tariff impacts.

Key Takeaways

• Brady Corporation achieved a 17% EPS increase in fiscal year 2024.
• Operating cash flow rose by 22% to $255 million in fiscal year 2024.
• Research and development spending reached a record 5.1% of sales in fiscal year 2024.
• The company returned $67 million to shareholders through the first nine months of fiscal year 2025.
• Potential tariffs could impact the fourth quarter by $3-5 million.

Financial Results

• Revenue: Brady saw organic sales growth of 2.6% in fiscal year 2024 and through the first nine months of fiscal year 2025.
• Gross Profit Margin: Improved to 51.3% in fiscal year 2024.
• Earnings Per Share (EPS): Achieved a record high of $4.07 in fiscal year 2024.
• Cash Flow: Operating cash flow reached a record $255 million in fiscal year 2024.
• Balance Sheet: Maintained a net cash position of $49 million as of April 30th.

Operational Updates

• Geographic Breakdown: 52% of revenue was generated in the US, 30% in Europe, and 8% in Asia during the first three quarters of fiscal year 2025.
• Acquisitions: Recent acquisitions include Gravitech and Microfluidic Solutions, enhancing their product portfolio.
• Regional Performance: Asia showed strong growth with 23% organic growth recently, while Europe faced economic challenges.

Future Outlook

• Strategy: Focus on organic sales growth, innovation, and disciplined capital allocation.
• Tariff Impact: Anticipated $3-5 million impact in the fourth quarter, with mitigation strategies in place.

Q&A Highlights

• Margin Improvement: Brady sees more potential for improvement in SG&A than in gross profit margin.
• M&A Strategy: Acquisitions aim to fill product portfolio gaps, maintaining a strong focus on shareholder value.

For a more detailed discussion, please refer to the full transcript below.

Full transcript - Sidoti’s Small-Cap Virtual Conference:

Steve, Conference Host, Sidoti: Good afternoon, everyone, and welcome back to Sidoti’s Virtual Investor Conference. I do see there’s still some people filling into the room. But I’ll take this time right now and just remind everyone if you have questions, we expect a few minutes after the informative presentation. You press that q and a button at the bottom of your screen, type in the questions, and we’ll get to as many as we can, time permitting. So happy to welcome CFO Anne Thornton from Brady Corporation.

The ticker is b r c. I think she has a lot of ground to cover, so I don’t wanna take up any more time. So let me turn it over to you, Anne.

Anne Thornton, CFO, Brady Corporation: Alright. Thanks so much, Steve, and thanks. Good afternoon, everybody. Thanks for joining. Alright.

I’ll start off by giving you some background on who we are and what we do, and then I’ll share some financial information, and then I’ll leave some time at the end for q and a. So Brady is a leader in the research, development, and manufacturing of high performance specialty adhesives and printing solutions that are intended for safety and identification applications. We have a very, very broad product portfolio consisting of wire identification, specialty adhesive labels, and and printers, safety and facility identification products, including floor marking tape, lockout, tagout devices, and safety procedures as well as pipe marking and a wide variety of other products. We also develop and manufacture product identification labels, printers, scanners, health care identification, patient health care ID, patient ID wristbands, along with a variety of other people identification type of products. We sell into a wide variety of end markets, and our products are ideal for for many, many different applications.

Ultimately, the more specific and the more challenging the application for an adhesive product and a printing solution is, the better for Brady because that is where our products really do do stand out. We’re very diversified. We have a diversified customer base. No one individual customer comes close to 10% of total sales. We sell thousands of products, and 48% of our revenue through the nine months of fiscal twenty five was generated outside of The US.

At the same time, our competitive landscape is very fragmented and is usually specific to a particular type of product or a geography or sometimes both. We’ve refocused our attention on innovation over the last several years, and I’ll show you that our r and d spend was up to an all time high at 5.1% of sales in, last last fiscal year, which was 2024. This is an incredibly important area to us as we work to increase our organic growth profile as a company. Also, if you look back over the last eight years, we’ve generally, we’ve reduced s g and a as a percentage of sales by 800 basis points over that period of time, which has been absolutely fantastic for our bottom line. And we’re coming off of actually four consecutive record years of EPS.

2021, 2022, ’23, and ’24 were record EPS years with our our prior year 2024 EPS up by 17 over 2023. So we’re on a really nice run from an earnings standpoint. Also, we’re incredibly focused on cash generation, and we’re always making cash based decisions. Operating cash flow was up 22% in 2024 compared to ’23. It was up to 255,000,000, which was another company record.

As far as what we do with that cash that we generate, we are disciplined, we’re patient. We continue to invest in the organic business throughout the organics or throughout the economic cycle. Excuse me. And for us, that means salespeople, r and d, of course, as well as geographic expansion so that we can improve our rate of organic sales growth. We return dividends to our shareholders.

And at the beginning of this fiscal year, we announced our 30 consecutive annual dividend increase. We’ve increased our annual dividend every single year actually since we went public. We also take a disciplined approach when it comes to acquisitions. The opportunity must provide some level of technology or a product offering that we don’t currently offer. The price needs to make sense.

It needs to be a logical fit within our businesses, it needs to help move us forward, of course. And then if we don’t find the right deal, then we’ll step aside and wait. We also return funds to our shareholders in the form of share buybacks. In 2024, we returned 117,000,000 to our shareholders in buyback and dividends. In 2023, we returned $120,000,000 And in 2022, we returned $150,000,000 in buybacks and dividends.

And so far through the nine months of 2025, we’ve returned 67,000,000 to our shareholders in buybacks and dividends. So overall, we believe that we have a well balanced organization that’s very diversified, which also tends to give us a level of protection throughout the economic cycle. Okay. As far as our revenue by geography, through the first three quarters of this fiscal year, 52% of our revenue was generated in The US, 30% in Europe, 8% in Asia, with the remaining 10% in Australia and the rest of The Americas, just to round that out. Breaking Asia down further, 3% was in China, and 5% was in the combination of the rest of Asia outside of China.

Also, in light of the constant evolution of the topic of global global tariffs, I can provide some additional details just about some key elements of our manufacturing footprint as well as our supply chain. For the most part, we do manufacture our products in the country of the ultimate sale. The three primary exceptions to this are our specialty adhesive materials, which we produce in The US, our printers, which we produce in Malaysia, and a variety of specialty identification products that we that we produce in Mexico. We then distribute these product lines to our other globe our other locations globally for sale within country. And from a sourcing perspective, we do import goods from China to The US for a few specific product lines, which represent approximately 50,000,000 in annual sales.

The majority of our operations that we have in China that represents that 3% of sales are for our customers in China. Alright. So we operate our business geographically with two regions. One geography is The Americas and Asia, which represents about two thirds of our total revenue, and the combination of Europe and Australia represents the remaining 1 of our total revenue. We sell the full suite of Brady products throughout each of our geographies.

We internally will break this down in the way we the way we look at our businesses is within five major product categories. The is safety and facility identification, and some examples of of products are shown on the upper left of this slide. This product category is rather broad, but an overall summary basically is that this consists of all of the signage, safety, and identification products that are present and often required throughout a manufacturing facility. So safety signs, floor marking tape, pipe markers, lockout devices, and labels to ensure that machine guarding and machine safety, are in place and many more examples. We offer a full suite of hardware, which would be our printers, software for those printers, and then, of course, our high performance specialty adhesive materials for our printers, which we manufacture at our coating facility here in Milwaukee and then sell throughout our global businesses, as I just mentioned.

The next product category shown on the upper right side of this 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. And the printers that you see here and throughout all of our other, product categories are the are the razor razor blade model. So we manufacture both our printers and the keyed consumables for those printers so that only brady materials can be used, within those devices. Some of our best selling products within this product category are our portable printers, which are durable handheld printers that are designed to withstand day to day use that’s that’s needed at a construction job site, basically, like, what an electrician would use every single day to label wires, panels, everything else required in utilizing our specialty adhesives in throughout construction projects.

Product identification primarily consists of barcode labels and other brand protection type labels. We also manufacture RFID enabled labels, the label design software, one d and two d barcoding software, as well as the RFID readers and barcode readers, came along with a couple of acquisitions from a few years ago. Healthcare identification mostly consists of patient identification wristbands and other labels that are intended to ensure that all of the care that a patient receives in a health care setting is accurate and is what is intended for that individual patient. So data accuracy and reliability is clearly essential. We also source and resell a variety of other health care supply and PPE products within our health care business.

And then our last major product category would be what we refer to as people identification. Some of the products that we would manufacture and sell would be employee badges, building access badges, lanyards, wristbands for specialty events, things like that. We also offer a full printer lineup that is designed for this product category, which came along with another acquisition from a few years ago. So, overall, there are a lot of common themes between our product categories with the primary theme being that we manufacture high quality, long lasting products that are intended for a wide variety of end markets with a particular specialty in adhesives designed for harsh environments where the cost of failure or the cost of noncompliance is very high. Alright.

Now the next slide this comes up. There we go. I touched on most of the items shown here, which is basically pulling our identification product offering together. The acquisitions that we made a few years ago, co that are shown here, code and Nordic ID, brought with them the optical scanning capabilities that we were missing prior to this acquisition these acquisitions, I should say, which which now allows us to offer to our customers an integrated solution consisting of a printer, a scanner to read one d and two d barcodes, as well as RFID embedded labels, our specialty adhesive materials within the printers themselves, and then the software to tie everything together. And then our most recent acquisition from just over ten months ago is Gravitech, which you can see here in green.

All of what I’ve been referring to, basically, on the on the previous slide and and so far from a product standpoint is about identifying something, whether that be a product, a facility in some way, a machine, or a person, but we’re generally always using a label or some other type of a material as the medium for that identification. But in circuit certain circumstances, a label isn’t the right solution. Think of metal parts and components of autos, engines, items like that. So we purchased Gravitech, which manufactures laser and mechanical engravers that perform precision direct part marking directly on a product or a part or a or a component. So we’re really happy with this acquisition, and it fills an identification gap that we previously had in direct part marketing.

So just a brief summary before we move on to the financials. So where we are today, we’re highly focused on improving our rate of organic sales growth. 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. We’re also driving profit improvement.

I mentioned that EPS was up 17% in fiscal twenty twenty four. Efficiency opportunities are constantly being tackled throughout our businesses. SG and A is down significantly from from eight or so years ago. So we’re constantly working on simplifying what we do and how we do it, and it’s and it’s absolutely paying benefits. And we’re returning funds to our shareholders.

So we believe we’re positioned very well for the future. We have a really diverse product portfolio, and we believe that when you combine that with our niche product offerings, we’re in a great position for growth over the long term. Alright. So now I’ll just touch on some of our financial trends. So from a revenue standpoint, we’ve had a nice upward trend of organic sales growth coming out of the pandemic.

Just just immediately pre pandemic, we grew revenue 2.8% organically in fiscal 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 that I do like to point out and and, just to keep in mind is that Brady has a July 31 fiscal year end. So the pandemic year, if you call it a year, was basically the half for us of fiscal twenty and the first half of fiscal twenty one.

So jumping back to it, in fiscal twenty three, we grew organic sales 5.5%, which was one of our strongest years, in in recent times. And then this past fiscal year, we grew sales 2.6% organically. Through the nine months of twenty five, our our organic sales are up 2.6% as well. Okay. We have very strong gross profit margins.

Historically, again, pre pandemic, we are pretty much right around 50% annually, and you can see that this that straight line here. Then during the inflationary period and the logistics challenges in 2022, we dropped below this level, slightly to 48.5. But in fiscal twenty three, we recovered back to nearly nearly 50% at that time. And in 2024, our gross profit margin 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 brought this brought along this really nice result. Alright. Next, you can see on this slide that r and d has steadily increased for the last eight years, which truly does show our commitment and our belief in the return on 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 which is now which became our largest annual investment in company history. And this year, we’re up again over last year through the nine months.

So our r and d investment is really paying off as as this is truly what’s generating organic growth, and it’s an area where we’ll continue to invest because it it does result in long term benefits to the organization. Alright. So moving to s g and a expense. We’ve reduced s g and a, as a percentage of sales by 800 basis points over the last eight years. The chart here really does bring this to light in fiscal twenty sixteen quite a while back, but s g and a at that time was over 400,000,000.

You can see a step up in dollars in 2022 because we made three acquisitions at the end of twenty twenty one. But as a percentage of sales, we continue to reduce our s g and a structure year over year, and we continue to work on efficiency and improvement projects throughout our back office support and and within our sales function. You know, non sales sales noncustomer facing, I should say, we’re always trying to work on our back end and improve and improve how we do things. We still have automation and other opportunities and and which which will allow us to expect to continue to drive improvements in this area. Pretax earnings have been moving steadily in the right direction up every year, which is, which with basically one step down during the pandemic.

This trend is the end result of everything that I just mentioned, around our focus on organic sales growth, our continued investment in gross profit margin, and our reduced s g and a cost structure, all while increasing our investment in r and d. So we we also like to show pretax income here rather than, rather than net income just to remove any noise from tax rate fluctuations and just keep the focus on our underlying results. So then moving along to earnings per share, it is the exact same story. This is GAAP earnings per share. Fiscal twenty one, you can see, was $2.40 47¢, excuse me, of EPS.

That was an all time record high. In 2022, we were at $2.90, another record high, as was ’20 fiscal twenty three at $3.46. And then when we really start our our prior year results in 2024 of $4.07 of diluted EPS, that represented our consecutive year of record high earnings per share. And as I mentioned, these are GAAP reported EPS results shown here as well. So we’re extremely focused on converting our organic sales growth into bottom line growth and doing everything that we can to offset inflation, drive efficiencies, and continue to drive that value for our shareholders.

Alright. So if you look at cash flow from operating activities, trending over time, I will point out a couple of items here. of all, would be if you look at our fiscal twenty twenty two cash generation of a 118,000,000. This was a big drop from fiscal twenty one. One primary driver was inventory.

As we worked through the pandemic, kind of the tail end of the 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 to have the products that we needed so that we could fulfill orders as quickly as possible. This was a major advantage for us, we do believe, because we don’t believe that that all of our competitors were necessarily in this situation. And then this served us well as, we worked through the supply chain crisis as well. Not that not that it was easy, but we we made the decision to ensure that we had the product on hand.

And and and quite honestly, to pushed us to to shorten some of our supply chain to make decisions about holding a little bit more of our our critical stock and, items like that. So now we’ve been in the process of reducing inventory through 2023 and 2024, which was a major part of the reason for our strong generation, cash generation last year, which was also a company record. Okay. So our balance sheet. We are in a net cash position as of April thirtieth of forty nine million.

So we’ve we’ve also, made some acquisitions this fiscal year in the nine months totaling a 147,000,000. So you can kinda see that that drop. Still, even after making acquisitions, we’re in a net cash position. We have a very strong balance sheet, which gives us the ability to deliver shareholder value over the long term. Alright.

And then, regionally, on the next two slides, you’ll see very consistent results in terms of growth in both sales and profitability over the last three years within our within our two external externally reported regions, The Americas and Asia and Europe and Australia. So we’ve definitely been executing well in both both of our regions by growing both sales and profitability over the last three years. Alright. So in summary, I’ll just add a couple close closing thoughts here. We’re we’re incredibly strong financially.

We’re very diverse. We’re very, very focused on organic sales growth. Our profitability has improved. Our cash generation has has been very good, and we always make cash based decisions, which we know is the right long term decision for our shareholders. Even though it may result in cash buildup on the balance sheet, we we we look at that as a as an absolute opportunity to do to do all of the above.

We’re returning funds to our shareholders. And, as we sit here today, we believe we’re in a great position with the strong balance sheet that allows us that optionality to to do all of these things at once, invest in the the organic business, continue to pay our our dividend, be opportune and then be opportunistic from an m and a and a share buyback perspective. We’re super focused on execution. We’ve got a great new product lineup. So we feel we feel good that we’re set up for a strong future.

So, Steve, I’ll turn it back over to you for any questions.

Steve, Conference Host, Sidoti: Thanks so much, Anne. Great summary of, of Brady’s progress over the last couple of years. I would like to remind everyone we have about six or seven minutes remaining. If you have any questions, press that q and a button at the bottom of your screen. Type in the questions, and we’ll get to as many as we can.

Why don’t I kick it off, Anne? You had the last couple of slides on on the geo the the the way you break down the geography on the two two sections. But can you talk to us a little bit about what you’re seeing Americas versus Europe versus Asia Pac and what what you think is driving the differences, particularly what we’ve seen the last couple of quarters?

Anne Thornton, CFO, Brady Corporation: Oh, sure. Yeah. Absolutely. We’re we’re definitely seeing a tougher environment for our combined Europe and Australia region this year, certainly last last few quarters. So we we released our our third quarter results on May 16, so just about a month ago.

Much tougher environment economically, and market wise this year in Europe and Australia than last year and even than the year before, honestly, as well. And that that directionally is kinda moving in the opposite direction in The Americas and Asia. Fairly consistent kind of in The US. It’s been disruptive over these last couple of months. Just just a lot of noise from from the outside world, obviously, to due to what everyone knows.

But, but the kind of the difference maker in particular this year in our Americas and Asia region would be Asia. The Asia portion, although small, a smaller portion of The Americas and Asia region, we’re we’re growing really nicely in, in throughout Southeast Asia, and China has has kinda we we do believe that we’re kinda seeing it bottom out. It’s been it’s been a kinda challenge for the last couple of years. So it’s no longer a drag on that on that region. And, just this last quarter, we reported 23% organic growth in Asia.

Again, smaller part of the total company, I think I touched on. Asia in total is 8% of our sales, but still, you know, pushed the Asia my apologies. Pushed the Americas and Asia region up to 5.50.4% growth in the quarter, which was a which was a nice surprise. Now, conversely, Europe and Australia had a bit tougher quarter than just this last quarter than we expected. So it kinda came together to to still a solid quarter, but, but it’s definitely a tougher economic end market environment for sure in Europe and Australia this year versus last year.

K.

Steve, Conference Host, Sidoti: Could touch on margins a little bit? We do have a question coming in from a investor. In terms of, obviously, very strong margins, is there room to improve?

Anne Thornton, CFO, Brady Corporation: Good. Great great question. We we definitely showed, an improvement to, man, absolutely a a a high for gross profit margin since we kinda changed our mix way back when we did an acquisition in about 2012. So a a very Way back. Way back.

Yeah. Exactly. Getting getting up to that 51.3 level in last fiscal year. So is there room to improve? What what we’re always pushing for it, but, with with what we see certainly from from a, you know, potential on the horizon of of incurring some level of incremental tariffs as we as we sit here at this moment.

We just nobody knows when or or kind of exactly how much. We’ll do what we can. We we have we have the ability to put through price increases. It has to be measured and and targeted and strategic, of course. We don’t do sweeping things across the board, but we do put through price increases.

We have pricing power in certain product categories for sure, and then we’re constantly working on operational efficiencies. So we’re always pushing for it, but, where we see more room for improvement is in s g and a than, you know, proportionally than than in gross profit margin. Though though we’re pushing for it, we’re expecting to see more, and there is, a little more low hanging fruit certainly from the acquisitions that we made just made over the course of this year that we can kinda continue to tackle that as a as a line item because it’s it’s still significant.

Steve, Conference Host, Sidoti: Talk a little bit about those I mean, we can go even go back to to to Nordic ID and and and code, but then more recently, Gravitech, and you made a couple even smaller ones more recently with Microfluidic Solutions, and there was the other small one. Is there any kind of line you can put through all of those? Is there any theme to the acquisitions you’ve made, or or how do you approach m and a or think about it?

Anne Thornton, CFO, Brady Corporation: No. It’s great. It’s a great question. The absolutely. The line I mean, for us not for us.

The the the common theme that you that that that we point to or that we’re looking at with those acquisitions is filling up a product portfolio gap. Though though not a we don’t sit here today with a, you know, a major with the belief that we have a major gap or, you know, an entire leg to the stool missing. But we absolutely have have gaps in our product offering that are that we believe are absolute value adds that will turn into, you know, multiplied growth over time with those being the fact that it was coded Nordic ID. We did not offer the optical reader capabilities. Our printers and our software for our printers, we’ve had the ability and have printed barcodes for decades, but we we didn’t have the technology to be able to sell that product to our customer to actually have a reader and and read those barcodes.

And that’s what those those those companies brought us, just a more rounded out product portfolio. And then the addition of Gravotech and the Microfluidics solutions, Gravotech filled a product portfolio gap, which was the the we we talk about using basically, everything that we’re marking and identifying is using some sort of a material or a label or something as the medium for that. That doesn’t cover all scenarios of of needing to mark and identify something, and that’s why I touched on with Gravitech. The direct part marking is where a label just doesn’t work, doesn’t suffice. It’s not the right alternative.

So product portfolio gap. We weren’t we weren’t going to crumble without it, but it’s absolutely additive to have it. And then similar similar with microfluidic solutions, that’s that’s inkjet technology. We we our printers are thermal transfer, although we do we do sell some inkjet printers. We don’t manufacture prior to to having the capabilities with with microfluidic solutions, we didn’t manufacture the actual inkjet, elements themselves.

We manufacture our our physical materials and the thermal transfer printing capabilities, but just not the not the inkjet. So oh, kinda trying to fit in the technologies that that that absolutely, truly do fit and jive with the rest of the Brady portfolio, focusing on identification, more high-tech, but just areas where we did not currently offer the the capabilities.

Steve, Conference Host, Sidoti: Got it. What’s the M and A environment look like now given the global uncertainty? You talked about your forty five forty nine million dollars in net cash now. 4Q typically, for you guys, is a very strong cash flow quarter. How are you thinking about, one, the M and A environment and just general capital allocation?

You have been buying back more shares than you were historically. How is that how do we think about all of that combined? Sure. Absolutely. Broad question.

Anne Thornton, CFO, Brady Corporation: Oh, no. That’s no. It’s great. It’s it’s great, and it’s it’s it’s relevant. I mean, we’re we’re not stopping anything that we were doing from an m and a standpoint even even considering the tariff environment.

We’re just you know, take anything that we have that we’re there we’re evaluating in the pipeline. We’re not running scared from things and, are, you know, still being opportunistic in in both of those areas, like like we would have been in the past in both m and a and, and in share buybacks while never starving our organic business. And in those growth areas, that’s a constant for us. And then, of course, we’re proud of the proud of our our consistent streak of of increasing dividends for sure. But in m and a, you know, who knows?

Perhaps perhaps the ultimate fallout or as things settle with with tariffs may result in a more favorable, you know, buy side environment than it has been in the last few years as perhaps pricing comes, comes down a little bit. Who who knows? But we’re we’re, we’re there. We’re not necessarily we’re we’re we’re not necessarily accelerating or decelerating anything. We’re, but by by no means are we running scared from anything.

We’re just continuing to to, to to kinda cultivate that pipeline and make sure that it’s the right deal that fills the right gap, at the right price for us.

Steve, Conference Host, Sidoti: Is there any net leverage line you wouldn’t cross?

Anne Thornton, CFO, Brady Corporation: We’ve we’ve yeah. For sure, being in a net cash position, though it may look like it’s the the goal or the only thing that we’ll do, it truly isn’t. It’s just an outcome of what of our operations. So, you know, we’re we’re always focused on cash based decisions. So as and when the the cash builds up, so be it.

It will we will it leaves us in a spot where we can we can do all of these things all at the same time. But we’ve absolutely, in the past, been levered over two times EBITDA. Our covenants certainly allow allow well well north of that, and, servicing that, that would be no problem. So, you know, two times net leverage, no problem.

Steve, Conference Host, Sidoti: Got it. Got it. Just we we’re a little bit over time. Any closing thoughts before we wrap it up in?

Anne Thornton, CFO, Brady Corporation: Oh, you know, we’re we’re trying to things are uncertain. We’re trying to kinda navigate it just like any other manufacturer for sure. I think with the the current tariff situation, we’re we’re certainly not not taking any knee jerk reactions about what we do. We focus on on what we can control. It kinda gives us a a sharper focus on certain product lines, and whether we want to to to continue offering certain products or source differently or what have you.

But in the meantime, we’re here. We believe we’re, you know, we’re set up. We’re we’re geographically diversified. We’re generally manufacturing in country, with some exceptions, where where where that that we believe make the most sense for sure for us as a company. And our and, really, our presence in China is relatively small for us as a company.

So given this kinda current disruption that’s caused by the tariff situation, barring any, you know, outsized economic fallout if if things deteriorate, we we do believe that we’re in a we’re in a pretty good spot to be able to to kinda handle it and navigate it with our diverse customer base, diverse end markets, and diverse, the product offering as well. So so What what

Steve, Conference Host, Sidoti: did you I didn’t get to this question, but now now that you’ve sort of raised it. Given that the your your China exposure, do you have any sense of what the annualized EPS impact without offsets is?

Anne Thornton, CFO, Brady Corporation: We what all all we discussed last quarter when we released on May 16 was a range of what we expected at that time, which was on you know, kinda up to the minute. We had to go go through all that, of our fourth quarter potential impact, which we said was three to 5,000,000. And that that

Steve, Conference Host, Sidoti: would be Was were we still talking a 125% tariffs at that point, or was that already the

Anne Thornton, CFO, Brady Corporation: That had been that had been, what what’s the word? Called back, cut down on

Steve, Conference Host, Sidoti: It had been. Okay.

Anne Thornton, CFO, Brady Corporation: And so four days prior to our release, that had been backed off on and paused or or whatever the word is. So so that was under the, I I believe, pretty much about where we’re at right now. So we discussed fourth quarter. Reason we didn’t wanna talk about full year, so dynamic, and and and we’re working on a lot of Yes. A lot of levers as it relates to tariffs.

So we’ll be

Steve, Conference Host, Sidoti: And that impact is prior to trying to take any pricing or offsets, really?

Anne Thornton, CFO, Brady Corporation: Pretty much. Yeah. Yeah. Yeah. Okay.

Exactly.

Steve, Conference Host, Sidoti: So very small given the size of the company.

Anne Thornton, CFO, Brady Corporation: Ex yeah. Yeah. Exactly. Yep. Perfect.

So we’ll we’ll be we’ll be forthright with as much as we know and are able to share, you know, in in future quarters as we come out and hopefully as this as it all settles and into into some sort of a decision.

Steve, Conference Host, Sidoti: Excellent. Anne Thornton from Frady Corporation. Thanks so much for being here. Hopefully, everybody found this as informative as I did, and hope everyone enjoys the remainder of the conference. Thanks, Anne.

Anne Thornton, CFO, Brady Corporation: Thanks, Steve. Bye now.

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