Brady Corporation (BRC) on Q2 2021 Results - Earnings Call Transcript
Operator: Ladies and gentlemen, thank you for standing by. And welcome to the Q2 2021 Brady Corporation Earnings Call. At this time, all participants' lines are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session 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 Accounting Officer. Thank you. Please go ahead, madam. Ann Thornton: Thank you. Good morning, and welcome to the Brady Corporation fiscal 2021 second 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 3. Michael Nauman: Thank you, Ann. Good morning, and thank you all for joining us on this beautiful winter day. This morning we released our fiscal 2021 second quarter financial results. This was another strong quarter in a challenging economic environment. The Brady team is doing a good job navigating through these unprecedented times and is executing well, innovating for our customers and providing many of the products that are needed to help fight this pandemic. I'm proud of the accomplishments of the entire Brady team. Our priority continues to be the safety of our employees and ensuring that we're providing the products that our customers need so they can continue to operate and keep their employees and their customers safe. We're proud to support small businesses and frontline workers all around the globe, including first responders, healthcare workers, food processing companies, logistic companies, retail establishments, schools, and virtually every essential industry. The macro environment certainly remains challenging in this global pandemic is far from over. Even with the positive news on the vaccine front, we believe that several in markets will continue to be challenged in the near term. For instance, in our IDS business, we sell into many small niche identification markets aimed at identifying people in the workplace, at entertainment venues and other events such as concerts. We expect these markets to be depressed for a longer period of time, whereas our general industrial business is certainly coming back much faster. Aaron Pearce: Thank you, Michael. Good morning, everyone. I'll start the financial review on Slide number 4. Sales in the second quarter were $265.8 million, which was a decline of 3.9%. And pretax income was $39.4 million, which was a decrease of 7% when compared to the second quarter of last year. Diluted EPS finished at $0.59 this quarter, compared to last year's second quarter EPS of $0.62. We also had solid cash generation again this quarter. Net cash provided by operating activities was a very strong $36.1 million, which is more than 150% higher than the $14.3 million of operating cash flow generated in the second quarter of last year. Moving to Slide number 5, you'll find our quarterly sales trends. Total sales were down 3.9%, which consisted of an organic sales decline of 6.3% and an increase from foreign currency translation of 2.4%. Organic sales continued to improve sequentially in our ID Solutions business as organic sales finished down 6.9%, which was an improvement over the previous two quarters. In Workplace Safety, after two consecutive quarters of solid organic sales growth, we saw a decline of 4.8% this quarter. Michael Nauman: Thank you, Aaron. Slide number 14 outlines second quarter financial results for our Identification Solutions business. Overall, our ID Solutions business continued steady improvement following initial shock from the pandemic nearly 10 months ago. We continue to generate strong earnings and cash flow, while making the investments necessary to realize outsized growth once this pandemic subsides. IDS sales declined 5.4% finishing at $194.2 million with an organic sales decline of 6.9%, an increase of 1.5% from foreign currency translation. Overall, organic sales in our IDS division continuing to improve each quarter as this quarter's organic sales decline of 6.9% is a sequential improvement over the 8.4% decline experienced during the quarter ended October 31, 2020. And on the cost side, our strong focus on efficiencies led to a 30-basis point increase in segment profit as a percentage of sales when compared to the second quarter of last year. Regionally, organic sales in Asia were strong this quarter, with growth of just over 10% compared to the second quarter of last year. Overall, our sales volumes and order patterns in IDS somewhat followed for the patterns of the pandemic were the greatest on the economy, as Asian countries appear to be coping better with the pandemic, whereas countries in Europe and the Americas continue to deal with relatively larger numbers of coronavirus cases with many European countries and areas in the U.S. still in various states of lockdown. Demand in our Healthcare business is improving, but it's not yet back to pandemic levels. Elective surgeries and hospital admissions are still down significantly compared to normal pre-pandemic levels. Sales in our healthcare product line declined approximately 6% year-on-year this quarter, which is an improvement from the 8% decline we saw in the first quarter of this year. We continue to focus on driving efficiency activity and keeping our cost structure lean while never sacrificing sales generating investments. We are investing in sales and marketing personnel, research and development activities and selected geographic expansion. We believe that these investments are necessary to emerge from this pandemic stronger than our competitors. IDS segment profit was $39 million compared to $40.7 million in last year's second quarter. Segment profit as a percentage of sales increased from 19.8% of sales last year to 20.1% of sales this quarter. This increase illustrates how our team was able to quickly adjust our cost structure and keep the costs out. This continuing improvement in profitability is a testament to the hard work of the entire ID Solutions team, as they constantly work to become more efficient and profitable organization. As a result, our decremental margin was only 15% and segment profit was down only $1.7 million, while sales were down $11.1 million. Our commitment to R&D remains a top priority and we launched two high performance materials in our IDS business. We launched a new commercial grade biomarker called the B312 PermaSleeve. This heat shrink tubing can be run through a variety of Brady printers and as many applications on electrical wire and cable labelling. It's an extremely high-performance material that is resistant to chemicals, corrosion, humidity and UV. We also launched labels intended for temporary applications called the B521 removable polypropylene labels. These labels are ideal for use during the in-process manufacturing, where solvent resistance and print performance are required. These labels are designed in here when required, while not leaving behind any residue upon removal. They're intended for barcode applications such as electronic component marking and other general-purpose applications that require good solvent resistance, heat resistance and clean movability. These products demonstrate Brady's ability to engineer high performance materials for a wide range of applications. Our R&D pipeline is strong and we continue to launch innovative new products that help our customers solve problems and be more efficient and effective. I'm excited about what we're doing in our ID Solutions business. We're improving our customer service, investing in our future and are streamlining the rest of our cost structure. As economy improves and our growth initiatives pay off, we should realize strong revenue growth and generate strong profitability on every incremental dollar of sales. These positive revenue trends, combined with our strong cost discipline, definitely bode well for the future of our ID Solutions business. Moving to Slide 15, you'll find a summary of our Workplace Safety financial performance. WPS sales grew 0.4%, which consisted of organic sales decline of 4.8% and foreign currency growth of 5.2%. The decline was driven by our North American business, which decreased in mid-teens this quarter. One of our businesses in North America sells primarily to micro companies, and it continues to struggle, as do their customers. And they took another step back this quarter as the pace of small business shutdown continues at an elevated rate. We're working to deliver strong value to our current customers, and we're taking actions to reach new customers so that we can return this business to profitable growth. Despite new shutdowns in the UK, France, Germany and other countries in Western Europe, our European business was still able to grow in the low-single-digits this quarter. Our team has done an outstanding job of increasing its customer base and for those customers who initially came to Brady for COVID related products, our team has done a nice job providing the same customers our core safety and identification products as well. Overall, we're quite pleased with how these newly acquired customers are performing as we're supplying the essential products as many companies need during this critical time. Our Australian business declined in the low-single-digits this quarter as the pace of COVID related product sales slowed. Over the last several quarters, we substantially increased our Australian customer base, and we continue to find opportunities to enhance our digital marketing approach to ensure that return on new customers is a-long term repeat customers. Our Workplace Safety team continues to focus on new product offerings. And this quarter, we launched a variety of new custom signage and form markings helping the administration of COVID-19 vaccine. These products include vaccine stored signage and other form markings and signs that are easy to customize on our seton.com or at medco.com websites. We believe to continue to invest in the launch proprietary new products that we manufacturer, while many of our competitors hunker down, the reserve cash will keep driving us ahead of our competition. We'll keep protecting our strong gross margin, and we'll keep improving our business over the long term. WPS segment profit was $3.5 million this quarter compared to $5.5 million in last year second quarter. This decrease in segment profit was driven by the revenue decline in our North American business along with product mix at some of our strongest gross margin businesses declined this quarter, while some of our low gross margin businesses grew this quarter. Our WPS team is listening to their customers to identify what they need. They're modifying their marketing campaigns to reach entirely new customers and entirely new industries. And they're working hard to address underperforming businesses within the portfolio. We've learned a lot through the pandemic and we're going to continue to serve our new and existing customers extremely well to ensure we're set up for growth when we're through this challenging time. I'm proud of the role that Brady's playing in the fight against COVID-19. We're delivering products aimed at helping companies with social distancing, we're delivering products aimed at keeping people away from the areas where there's a high likelihood of virus spread. And we're providing many safety and identification products that are used by frontline workers all over the globe. The macro environment remains highly uncertain, and even with the vaccine rollout started in December, we certainly aren't willing to declare victory over this virus quite yet. Brady is in an enviable financial position. Our cash flow is up and our balance sheet is incredibly robust. We will continue to invest in R&D, sales generating resources, and capacity enhancing CapEx all being tight and non-revenue generating expenses. And we're looking to further put our balance sheet to work by returning funds to our shareholders, and adding technology-based growth inorganically through strategic acquisitions. Again, I'm very proud of how our team has performed throughout this challenging period, their ability to deal with uncertainty, think on their feet and solve problems quickly, all while never compromising the long-term has really set a solid foundation for Brady's future. With that, I'd like to now start the Q&A. Operator, would you please provide instructions to our listeners? Operator: Your first question comes from Allison Poliniak with Wells Fargo. Allison Poliniak: Good morning. Michael Nauman: Good morning, Allison. Allison Poliniak: Could you talk a little bit, you guys have been pretty consistent in terms of reinvesting in R&D sales efforts and the macro certainly masking maybe some of those benefits. Is there a way that you can help maybe quantify whether it's the returns you're getting on those investments now or what kind of traction in terms of share gains that you think you guys are getting, any color around that? Michael Nauman: Yeah, Allison I can give you one thing that may help. I think when we started talking about reinvigorating our R&D pipeline, I spoke of timeline. Because we do sell into very industrial applications, we actually don't see most of our new products ramping to full revenue for four or even five years. So, there is a long pipeline, and we are marching up that pipeline, but because we've actually first invested heavily, and you really didn't see any output for the first year or so of that, and then we started introducing and had been accelerating those product introductions, you're going to see a larger rise in the next couple of years out as a result of that, than you saw over the period going on. And you're right, this pandemic has definitely impacted some of our product spaces. Some of our products, we're able to continue to sell very effectively, virtually. Other products do require hands on interaction, to sell as effectively. And so, you are seeing some degradation of our ability to grow those products, because of that situation. But specifically, you will see a larger ramp because of the fact that many of our products literally take four or five years to hit full revenue fruition. Allison Poliniak: Great. Thanks. And then just a question on IDS in terms of the margins. You guys have done, obviously a great job on stemming those decrementals in this environment. How should we think of the incrementals coming out of this relative to what historically you've been able to do in that segment? Michael Nauman: We think we'll be able to continue to do quite well. We think because of the proprietary nature of our many of our new products, we should be able to increase that. In fact, over the last couple of years, we've really pared back our non-proprietary products which have lower margins, also, that has led to some lower growth rates as a result of us paring those back during that time period. But in the end, we think that makes us a much stronger company, both from potential future growth percentages, and also from our margins. Allison Poliniak: Got it, and if I can sneak one more in, you referenced some of your products related to the event side of things, and obviously a lot of that still shut down. Is there - if you know a way or can we quantify how much as a percent of revenue that could be just in this instance of hopeful reopening as we head towards the back half of this year? Michael Nauman: Allison, I will say, I think it's pretty understandable that a lot of our businesses that are around events, are around people getting together, are around introducing new people in the communities, the businesses, concerts, many of us, not me, particularly I hate loud noise even though I talk loud, many of us love going to concerts and those venues, those are definitely still seeing extremely large declines. Many of our big events have pushed out now from the spring to the fall. And one would ask, are they going to push out again or not? I will say this, Allison, we can't quantify the actual percent for you. But I can tell you that we believe fundamentally, when they do come back, they're going to come back at a much more rapid rate. Very, very confident that the world has super pent-up demand. Let me just give you a couple of examples that I really believe in hotels and theme parks, the infrastructure, cruise lines, the infrastructure is there. The ships are there, the rides are there, the buildings are there, the limit will be a redeploying and retraining personnel. But that is probably the least restrictive limit. And I think you're going to see some very, very rapid reintroduction of people to those situations. I do think that there are some large-scale events, that may be a little riskier, that would take a little longer for people to deploy capital to. But overall, I think that area, we will see a very strong bounce back when it comes and you'll see the impact on Brady. Allison Poliniak: Great. Thanks. I'll pass it along. Michael Nauman: Thank you. Thanks so much for your time, Allison. Operator: Your next question comes from Steve Ferazani with Sidoti. Steve Ferazani: Thank you very much. The one number that stood out to me that kind of surprised me a bit and I was hopefully get a little bit more detail on. I know, you said it was product mix, but the margin within Workplace Safety, were there any other additional costs we should be aware of higher shipping costs to add headcount or is it purely product mix that tied to the lower Workplace Safety margins? Michael Nauman: Good morning, Steve. We're glad to have you on the call. Good to have the questions. In regard to cost, there are certainly shipping challenges out there in the world. We're not going to deny that. Right now, oil prices are up, for instance. So that does impact shipping. How they remain up may depend how my Southern family fares through the oil refinery shutdowns and things like that. But overall, I would not say that that has been a significant impact on Brady. We are happy to work around timing issues. We're happy to work around L.A., for instance, port congestion issues. But overall, I don't want to say that, it has definitely been a mix issue as some of our strongest margin products are more industrial customer based, small company based, a lot of things like that, particularly those companies that have really suffered dramatically. I want to say this so, Steve, we fundamentally see this as a case of a forest fire. And when you get done with that forest fire, all these poor small businesses, it looks black and dark. Why does it look so dark? And suddenly, you will see green popping up everywhere. That is what happens after a massive downturn in the economy to small businesses. We fundamentally believe there is going to be a lot of opportunity for people to start small businesses again, particularly in North America, where the appetite for entrepreneurialism is still very strong. And when that happens, we're going to really benefit from that regrowth. And what look pitch black will suddenly look green. When that exactly happens, I cannot tell you because it will depend on a mass confidence level coming out of the pandemic. But it is definitely mix. Steve Ferazani: Okay, thank you. And then I just want to ask another really, really strong quarter for cash flow. As you start thinking about the second half of the year, any sense on CapEx and then how much you can manage working capital as you start going back to drive revenue growth? Just general thoughts on cash flow. Aaron Pearce: Yeah. So, as we look at the back half of the year, typically for Brady, our third and fourth quarters are our strongest cash generating quarters and we would expect that to continue this year. So, if you go back in history to last year in our third and fourth quarter, unlike many companies, we actually intentionally built-up inventories, which, of course was a use of cash. And we did that to ensure that we had a steady supply of products and we didn't let any of our customers down. So, we will obviously be lapsing that from the standpoint of a comparable perspective. Then as we look at CapEx, over the longer term, we would expect our CapEx to continue to be in this call it 2% of sales range. However, we've talked about this a couple of quarters now. We are looking at purchasing/constructing a couple of our strategic manufacturing facilities. However, every time that we build or purchase a manufacturing facility, rest assured, it's always ROI positive versus our lease option and it secures our future. So, I don't know the timing on some of those potential facility actions, but that could potentially skew our CapEx in the near term. But again, over the long term, we're looking at somewhere in the neighborhood of 2% of sales for CapEx. Steve Ferazani: The EPS guidance. I know you talked about the recovery being lumpy, are you thinking about that guidance as being a ramp 3Q into 4Q? Aaron Pearce: We would expect our fourth quarter to be a bit stronger than our third quarter as we continue to come out of this pandemic, particularly if you're comparing against the prior year. For us, our lowest point was Q4 of last year. Steve Ferazani: Great. Thanks so much everyone. Michael Nauman: Thank you, Steve. Appreciate your time. Operator: Your next question comes from Keith Housum with Northcoast Research. Keith Housum: Good morning, guys. Can you just expand a little bit on the digital sales strategy? I think we've heard anything about that on this call. Obviously, WPS continues to be challenge in terms of organic growth, but I know that's one of the areas that we really are focused on turning that around, especially in North America. How was your progress getting digital customers this quarter as compared with what you guys were hoping to do? Michael Nauman: Just as far as the strategy, I'll start with that and then hone in on the quarter. Just a few years ago, we really didn't have a digital sales presence that was significant, particularly with our IDS space. But across the board, our health care products, really everything you looked at was much, very antiquated even in our approach to websites. We now believe and have compared ourselves and look at industrials, we believe we're in the upper 10 plus percent of industrial companies and able to provide a great digital interaction for our customers. We think that has been we know that has been crucial in gaining the great customer base we have. We continue to gain new customers from that. But also, it's been great at helping us to sell add-on products, not just the initial products that customers have come in for but for other products that we do a very good job of supplying our customers with. And then it's helped us to become a site that people want to come back to. So, in the last quarter, we've continued to upgrade that. All of our WPS sites are now on common platforms. What does that mean? We're able to upgrade them much faster. We're able to customize them very, very effectively, for each market, each location, the back end is able to be substained. Our cybersecurity efforts are stronger and more robust. Across the board, we're a much-much stronger company in regards to our digital presence than we were even six or nine months ago before the pandemic started. But the good news is, we were far ahead of most of our competition even when the pandemic started. So yes, Keith it continues to develop. And we still have a lot of great opportunities. Just got done having a review on that with the teams. And I feel very, very good that we understand it is not a destination, it is a continual progression that we have to be looking for. And I also think that many of our competitors still aren't even seeing it that way. And so, not only do we believe we're ahead of a lot of people, we believe that our mentality will be critical for us to staying ahead of a lot of people, and the fact that we're willing and able to invest properly. Remember the fact that we have so many groups and organizations that we can combine under one umbrella allows us to be more cost effective as well than many people can. Keith Housum: So, do you think you're at a point now, where you're seeing good year-over-year digital sales growth as that now at a point where it's equal to or more than what you're getting from catalog sales? Michael Nauman: Yes, I mean, yes, we do believe we will see continued strong growth. Now let us talk about the catalog sales versus the digital growth. We also believe it's a combination strategy that is critical now and probably for the foreseeable future. So, we see a large amount of contact through our website, yet majority of purchases are still offline. So, why is that? Has to do with purchasing systems, has to do with controls by companies? But having that ability to combine proactive sales, personal sales, with a strong digital presence with an offline easy connectivity. For instance, electronic sales, we don't consider digital sales. Some of the companies you'll see out there include electronic sales as digital sales, they've been out there for 30-years. We disconnect that because it's important for us to get a really healthy understanding of how strong our actual digital sales are. That said, we do see very much where they enter, how they make decisions and the fact that they are buying offline afterwards, does reiterate for us that it's not a one approach that's necessary. It is a multi-legged stool that's critical. And so, to repeat, we have direct sales efforts. We have direct sales follow-up. We have strong digital presence. We have electronic data, transferring folders, and we have a strong offline ability to work with customers that have systems that either are unable to or don't want to purchase digitally. Keith Housum: I appreciate that. Thanks. If I can just follow-up change gears, I mean, here to M&A? M&A has been a moral focus for you guys for several years now. And I'm sure I've had a chance to look at many deals over that time period. Have you been able to refine your strategy in terms of perhaps where you're looking to do a deal more vertically as well as geographically impressed as a size? And just give us a little bit of color about what - how your strategy has developed over the past two or three years? Michael Nauman: Keith, you've worked with us long enough to know that we're deliberate, we're often working on an area below the waterline for a period of time before it ever shows up. And what it does show up you see the change rapidly. We have been working below the waterline I think as you're aware, really making sure that when we get back into the market and we are there to be quite clear that we're doing it in a way that is thoughtful, and that is reflective on our overall strategy and fits into our overall strategy. We're not looking to grow through acquisitions, we're looking to use acquisitions as part of our strategy. And our strategy is for significant profitable growth. But yes, we've defined key industries, key technologies that are very important to us. We have companies that we really are excited about and have relationships with. And that although you can never guarantee a particular success or particular timing, we're confident that we're positioned to do a good job of acquiring and having that make a significant long-term difference to Brady. Keith Housum: Great guys, appreciate it. Thank you. Operator: Your next question comes from George Staphos with Bank of America. Unidentified Analyst: Hi, everyone. This is actually Cas Taylor on behalf of George Staphos. Michael Nauman: How are you today? Good to hear from you. Unidentified Analyst: Great, how are you? Just wondering, why are you comfortable in the mid-single digit organic sales growth in the second half, considering some tougher comps in WPS? And relatedly, what kind of growth is required an IDS to generate the aggregate performance in the second half of the company? Aaron Pearce: Yeah. We get confidence and as we of course run our own internal forecasts, that's effectively where we shake out, we would expect it to ramp as we go throughout the year. And much of it comes down to some pretty, I'll say some pretty challenging times that we had basically started in April of last year as a result of the pandemic. So just looking at the results, particularly in ID Solutions where we saw some pretty significant declines last year. So just to put this in perspective, last year in our fourth quarter ID Solutions had an organic sales decline of 21.7%, which of course is quite substantial. And as we model out, continued modest and frankly, choppy improvement in the economy, we come out with some relatively strong organic sales growth in the back half of this year. Now you're right, in WPS, we have some pretty challenging comparables, particularly in our fourth quarter where we gained many, many new customers through the sale of COVID products. WPS will most likely be down in the fourth quarter. But we'll make up for in our ID Solutions business. Unidentified Analyst: Got it. That's helpful. And then I guess, are you going to discuss it all whether inflation creates any sort of headwind or a tailwind for the company and kind of what you're seeing beyond any freight or logistics that you commented on earlier? Michael Nauman: As I said, the good news about us is we're not as commodity driven as a lot of companies. And so, as I mentioned, we do have a couple of businesses that are influenced by oil was a great example. But precious metals aren't a major driver for us, anything like that. Transportation, clearly, we're a large user of transportation, and so is a secondary factor oil with transportation fuel costs. But also, just the amazing uptick in people shipping everything to themselves versus to stores has really created a challenge for everyone. But overall, we think between our efficiencies that we can drive in operations and in our logistics patterns, we're working very hard on doing a lot that will come out in the second half of this fiscal year in logistics internally, that we should be able to overcome anything that hits us. But one of the keys is, for us, a lot of those inflationary factors are secondary and not primary drivers of our costs. Unidentified Analyst: Okay, got it. And then just one quick, final one. You commented that you're able to reduce some discretionary spending, but just wondering how much of that starts to snap back or come back as you see some more normalized conditions and kind of the timing which were offset Michael Nauman: Obviously, there are some things like incentive compensation, they will have some pressure. But overall, we've shown a long track record now of approximately five years, quarter after quarter of driving costs out of our organization. We've done that at the same time, that we've increased sales, and increased R&D. So, I want to be quite clear. We've done both half of that effort. We've been increasing anything that long-term will increase revenue while decreasing the optional cost. So, I think the answer to that is, our confidence comes from our track record. And from knowing that we don't drive out costs through risk or things like that that are temporary, or across the board cost reduction requirements, we drive them out by digging down to the fundamentals of our organization, and saying how can we change, what we're doing to make it more efficient effective? And that is what we've been doing throughout this pandemic. Want to be clear, you can look at how we handled the downturn, we did not panic. And as a result, a lot of the costs that we continued to drive out, we're not panic, or knee jerk responses. How can I show that to you? When most people were shutting down all inventory, we realized our most critical thing to do as logistics were becoming extremely questionable, was the front load are key critical elements, a level inventory is an example, in all of our locations right by our customers. As a result, we did not create a disruption to our customers. Very key for their long-term respect for us, but also it shows the things we do are designed around making sure that we don't ever cut costs, the short-term, that will hurt us in the long-term. So, to be clear my answer back, I believe none of our cost reductions were temporary in nature. Thank you. Operator: I'm showing no further questions at this time. I would like to turn the call back to Mr. Michael Nauman. Michael Nauman: Thank you very much, Cindy. I'd like to leave you with a few concluding comments this morning. We are living in unprecedented times and we're dealing with uncertainty, disruption and unfortunately, oftentimes tragedy. We'll keep prioritizing the safety of our amazing employees and delivering the products that help keep our customers safe. This quarter, our ID Solutions business continued to improve its performance, and once again increased segment profit as a percentage of sales. Our Workplace Safety business continued to enhance its digital presence, and serve its customers extremely well, further strengthening our already strong foundation for future growth. And we had another quarter of incredibly strong cash generation, up 153%. We're in net cash position, which gives us tremendous flexibility to add incremental shareholder value. We're doing all that we can to help our employees, customers, communities, and the world through this pandemic. At the same time, we're maintaining our focus on the long-term, and are making the right investments today that will set us up for long-term success. Making the world a safer, better place every day is not a slogan for Brady. It's our focus and our reality, and making the world an equitable place for our employees, for our communities, and for all the people is critical for our long-term success. We're prioritizing investments in growth and we're confident that Brady is well positioned to capitalize on global market trends. As we put calendar 2020 in the rear-view mirror and focus on calendar 2021, Brady is well positioned for a strong year, where we generate significant value for both our customers and our shareholders. Please stay safe. Thank you for this time this morning. Have a great day. Operator, you may disconnect the call. Operator: Ladies and gentlemen, this does conclude today's conference call. Thank you so much for participating. You may now disconnect.BRC Ratings Summary
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Brady Corporation Quarterly Earnings Preview
- Brady Corporation is set to release its quarterly earnings with an anticipated EPS of $1.02 and revenue estimates of $339.8 million.
- The company previously exceeded EPS expectations but fell short on revenue, showcasing a strong return on equity of 19.24% and a net margin of 14.08%.
- Analysts forecast a steady EPS of $4 for the current and next fiscal years, reflecting confidence in Brady's financial health and future earnings potential.
Brady Corporation (NYSE:BRC), a leading manufacturer and supplier of identification solutions and workplace safety products, is gearing up for its quarterly earnings release on Wednesday, May 22, 2024, before the market opens. Wall Street's eyes are on BRC, with analysts predicting an earnings per share (EPS) of $1.02 and revenue estimates hovering around $339.8 million for the quarter. This anticipation builds on the company's performance history and its guidance for fiscal year 2024, projecting EPS to fall between $3.95 and $4.10.
In its previous quarterly earnings, BRC outperformed expectations by posting an EPS of $0.93, surpassing the consensus estimate of $0.92. Despite this achievement, the company's revenue of $322.60 million fell short of the expected $339.61 million, marking a slight revenue decline of 1.1% year-over-year. However, Brady demonstrated strong financial health with a return on equity of 19.24% and a net margin of 14.08%, showcasing its efficiency in generating profits from its shareholders' equity and overall sales, respectively.
Looking forward, analysts remain optimistic about Brady's financial trajectory, forecasting an EPS of $4 for both the current and next fiscal years. The company's stock performance reflects this positive outlook, with a modest increase of 0.3%, opening at $60.56 on Monday. Brady's market capitalization stands at $2.93 billion, supported by a solid price-to-earnings ratio of 15.81, indicating investors' confidence in its future earnings potential. Additionally, the company's commitment to shareholder returns is evident through its recent quarterly dividend payment of $0.235 per share, yielding 1.55%.
Despite facing challenges such as a slight revenue dip in the last quarter, Brady Corporation continues to maintain a strong financial position. The company's strategic focus on its core business areas of identification solutions and workplace safety products, coupled with its effective cost management, has enabled it to sustain profitability and shareholder value. As BRC prepares to unveil its latest quarterly earnings, investors and analysts alike will be keen to see how the company's performance aligns with expectations and its strategic outlook for the coming periods.
