Brady Corporation (NYSE: BRC), a leader in identification solutions, reported a successful third quarter of fiscal year 2024, with record high earnings per share (EPS) and a notable increase in organic sales growth. The company's strategic focus on product innovation and market expansion has been reflected in its financial performance, with a 4.5% rise in organic sales and an enhanced gross profit margin of 51.6%. Brady's commitment to returning value to shareholders was evident through substantial dividends and the repurchase of 863,000 shares for $50.4 million. The company has raised its EPS guidance for fiscal year 2024 and anticipates low single-digit organic sales growth for the full year.
Key Takeaways
- Brady Corporation achieved record high EPS and 4.5% organic sales growth in Q3 of fiscal year 2024.
- The company introduced new products, including the V4500 barcode scanner, J7300 industrial inkjet color label printer, and ToughStripe Max floor marking tape.
- Investments in generative AI are aimed at increasing productivity and providing better data for the sales force.
- Organic sales growth was reported in Asia, except for China, and in Europe and Australia.
- Expenses related to sales, general, and administrative (SG&A) costs are being managed effectively, with paid advertising expenses on the rise.
- The acquisition of Gravotech is pending regulatory approval, with potential to enhance Brady's product offering.
- Brady Corporation has a strong financial position, allowing for continued investment in R&D and shareholder returns.
Company Outlook
- Increased EPS guidance for fiscal year 2024.
- Expectation of low single-digit organic sales growth for the full year.
- Ongoing investment in R&D and sales resources.
- Continuation of dividends for the 38th consecutive year and share buybacks.
Bearish Highlights
- Sales in China declined by over 17% due to challenging economic conditions.
- Uncertainties in the market acknowledged by the company.
Bullish Highlights
- Strong growth observed in India and Singapore, offsetting declines in China.
- Increased segment profit in the Americas and Asia, as well as in Europe and Australia.
- Last month of the quarter saw an acceleration of product adoption.
Misses
- Increased expenses in paid advertising, particularly search advertising.
Q&A Highlights
- Discussion of SG&A costs and the balance of increasing efficiency while managing higher advertising expenses.
- The Gravotech acquisition is seen as a complementary extension to Brady's product portfolio, pending regulatory approval.
- Strategy shift towards working more with value-added resellers and expanding the product portfolio.
- The company ended the quarter with momentum, indicating broad-based growth not limited to specific customers or markets.
In summary, Brady Corporation's recent earnings call showcased their ability to navigate a complex market landscape and deliver strong financial results. The company's focus on product innovation, market expansion, and operational efficiency is set to continue driving growth and shareholder value. With several new products in the pipeline and a strategic approach to sales and marketing, Brady is poised to maintain its momentum in the coming months, despite some market uncertainties and increased advertising costs.
InvestingPro Insights
Brady Corporation's (NYSE: BRC) latest financial performance underscores its robust market position and operational efficiency, which is further illuminated by key metrics and insights from InvestingPro. The company's strategic initiatives have translated into impressive financial figures, such as a gross profit margin of 51.1% in the last twelve months as of Q3 2024, reflecting its strong pricing power and cost control measures. Moreover, Brady's ability to maintain a healthy balance sheet is evident, as it holds more cash than debt, providing financial flexibility and resilience in a dynamic market environment.
InvestingPro Tips reveal that Brady has not only managed to sustain dividend payments for an impressive 41 consecutive years but has also raised them for 28 consecutive years, showcasing its commitment to shareholder returns. Additionally, the company's stock has experienced a significant return over the last week, month, and three months, with price total returns of 11.2%, 13.7%, and 16.54% respectively, signaling strong investor confidence and market momentum.
InvestingPro Data highlights include a market capitalization of $3.19 billion USD and a price-to-earnings (P/E) ratio of 15.46, which, when compared to its near-term earnings growth, indicates that the stock is trading at a low multiple. This could suggest an attractive valuation for investors seeking growth at a reasonable price.
For readers interested in further analysis and additional InvestingPro Tips, including whether the stock is currently trading in overbought territory according to the Relative Strength Index (RSI) or how its liquid assets stack up against short-term obligations, visit https://www.investing.com/pro/BRC. There are 14 additional tips available on InvestingPro, and by using the coupon code PRONEWS24, readers can get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. This offer provides a comprehensive view of Brady's financial health and market potential, aiding investors in making informed decisions.
Full transcript - Brady Corp (BRC) Q3 2024:
Operator: Good day, and thank you for standing by. Welcome to the Third Quarter 2024 Brady Corporation Earnings Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Ann, our CFO. Please go ahead.
Ann Thornton: Thank you. Good morning, and welcome to the Brady Corporation fiscal 2024 third 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 3. Please note that during this call, we may make comments about forward-looking information. Words such as expect, will, may, believe, forecast and anticipate are just a few examples of words identifying a forward-looking statement. It's important to note that forward-looking information is subject to various risk factors and uncertainties, which could significantly impact expected results. Risk factors were noted in our news release this morning and in Brady's fiscal 2023 Form 10-K, which was filed with the SEC in September. Also, please note that this teleconference is copyrighted by Brady Corporation and may not be rebroadcast without the consent of Brady. We will be recording this call and broadcasting it on the Internet. As such, your participation in the Q&A session will constitute your consent to being recorded. I'll now turn the call over to Brady's President and Chief Executive Officer, Russell Shaller. Russel?
Russell Shaller: Thanks, Ann, and thanks, everyone, for joining us today. We released our third quarter results this morning, and I'm thrilled to report a new company record high earnings per share this quarter. Both of our regional businesses performed well with total organic sales growth of 4.5%, improved gross profit margin to 51.6%, and we continued our strong cash generation. Our teams are executing incredibly well and delivering great results despite sluggish economic conditions. We also returned funds to our shareholders through both our normal quarterly dividend and an increased amount of share buybacks. This quarter, we purchased 863,000 shares or $50.4 million. We continue to view opportunistic share buybacks as an excellent way to deliver return to our shareholders and our purchases this quarter demonstrated this commitment. As part of our journey developing new technologies, we introduced several products this quarter. We launched a rugged barcode scanner, which is the result of an integrated development effort with one of the companies we acquired in 2021, and we launched a new industrial jet color label printer. On the material side, we launched ToughStripe Max, which is a reengineered and improved version of our high-quality floor marking tape designed for the highest traffic areas in our manufacturing site. We have several new printers and other innovative new products in our pipeline planned for launch this fall and throughout next year as well. I'm incredibly proud of the results this quarter. We're identifying new sales opportunities and we're improving our service levels, all of which is making an impact every day. I can also see the potential that generative AI can bring to Brady to increase productivity and to better equip our sales force with the data and information they need to be more effective. It's an exciting time in the world of technology and the potential degenerative AI has to positively impact our customers and the broader economy is substantial. I know that we're making the right investments today to continue to increase sales and profitability for years to come. And none of this would be possible without the hard work and focus by the entire Brady team. Now, I'll turn it over to Ann to provide more financial details on our financial results. Ann?
Ann Thornton: Thank you, Russell. This quarter, we grew organic sales 4.5% while increasing our EPS to a new quarterly record. We reported GAAP EPS of $1.05 per share, which was up 9.4% compared to the third quarter of last year. Non-GAAP EPS, which is calculated as our GAAP EPS, excluding the after-tax impact of amortization expense as well as the gain on a divestiture from last year was $1.09 per share, which was up 14.7% compared to the third quarter of last year. Our organic growth was strong in both regions, with our Americas and Asia region growing 4.5%, and our Europe and Australia region growing 4.4% this quarter. We're growing well in excess of GDP in most of our end markets and geographies. We also continue to integrate our businesses into our regional structure, which has allowed us to capitalize on additional sales growth opportunities and to deliver increased profitability. The key financial takeaways this quarter are: an increased rate of organic revenue growth, non-GAAP EPS growth of 14.7%, continued improvement in gross profit margin and an ongoing commitment to return funds to our shareholders through our quarterly dividend and increased share buybacks, which together this quarter were $61.6 million. Starting on Slide 4, you'll find our quarterly sales trends. Organic sales grew 4.5% and foreign currency translation decreased sales by 0.3% this quarter, and the impact of divestitures reduced sales by 2.3%, resulting in total sales growth of 1.9%. Growth was driven by both of our regions this quarter. Turning to Slide 5 for our gross profit margin trending. This details another quarterly improvement in our gross profit margin to 51.6% from 50.3% in the third quarter of last year, which was an increase of 130 basis points. We continue to realize benefits from our sales growth coming from higher-margin products, along with stabilizing input costs compared to last year. Slide 6 details our SG&A expense trending. SG&A was $95.8 million this quarter compared to $91 million in the third quarter of last year. If you exclude amortization expense from both the current and prior year and exclude the gain on a divestiture from last year, then SG&A expense decreased from 27.4% of sales to 27.2% of sales. Moving along to Slide 7, you'll find our investments in research and development. This quarter, we once again increased our investment in R&D from $15.7 million to $17.7 million, which represented 5.1% of sales in the quarter. We launched three excellent new products this quarter, which Russell will describe in more detail during the regional discussion. Turning to Slide 8. This details our pretax earnings, which increased 2.2% on a GAAP basis from $63 million to $64.4 million. On a non-GAAP basis, our pretax earnings increased 8.2% from $61.7 million to $66.8 million. Our earnings and EPS are detailed on Slide 9. We continue to increase earnings on a quarter-over-quarter basis, and this quarter represents a new company record. Our GAAP EPS increased by 9.4% and excluding the after-tax impact of amortization from both periods and the gain on the divestiture from last year, non-GAAP EPS increased 14.7% compared to last year. Slide 10 summarizes our cash generation. Operating cash flow increased from $72.5 million in the third quarter of last year to $72.7 million this quarter. For the full nine months to date, our operating cash flow is up significantly from $129.9 million last year to $171.1 million this year, which is an increase of 31.8%. Moving along to Slide 11. This slide summarizes our net cash position. We continue to focus on always making cash-based decisions throughout the organization, which shows through our increase in cash flow from operating activities as well as our net cash position of $96.7 million as of April 30. We are consistent and disciplined in our approach to capital allocation. First, we use our cash to fully fund organic sales and efficiency opportunities. This includes investing in research and development, sales-generating resources and capital expenditures that increase our automation and our overall efficiency. We'll continue to deploy capital to productivity and sales growth opportunities throughout the economic cycle. Next, we focus on consistently increasing our dividends. This fiscal year marked our 38th consecutive annual increase in our dividend. After fully funding our organic investments and our dividends, we then deploy our cash in a disciplined manner for acquisitions where we have clear synergies and for opportunistic share buybacks. In this quarter, we repurchased 863,000 shares for $50.4 million. Our strong balance sheet puts us in a position to execute additional growth opportunities through our R&D investments and our sales resources to acquire companies strategically when synergies are clear and the price is right and to return funds to our shareholders through dividends and share buybacks. On Slide 12, you'll find our fiscal 2024 guidance. We are increasing our full year fiscal 2024 EPS guidance range of $3.80 to $3.95 on a GAAP basis and $3.95 to $4.10 on a non-GAAP basis, to $3.93 to $4 on a GAAP basis and to $4.08 to $4.15 on a non-GAAP basis. We still expect low single-digit organic sales growth for the full fiscal year 2024, which means we're expecting low single-digit organic sales growth in the fourth quarter. This is based upon our current forecast and the comparison to our sales results in the fourth quarter of last year. Our outlook is based upon April 30th foreign currency exchange rates, and it assumes continued economic expansion. We also expect a tax rate of approximately 21% for the full year, depreciation and amortization expense ranging from $30 million to $32 million and capital expenditures of approximately $75 million, which is inclusive of approximately $55 million of capital expenditures this year for the purchase of a previously leased facility, which took place earlier in the fiscal year, along with the build-out of a new facility. This build-out of the new facility will allow us to consolidate two locations into one, which will reduce our overall footprint. Potential risks to our guidance, among others, include potential strengthening of the U.S. dollar, inflationary pressures that were unable to offset in a timely enough manner or an overall slowdown in economic activity. I'll now turn the call back over to Russell to cover our regional results and to provide some closing thoughts before Q&A. Russell?
Russell Shaller: Thanks, Ann. Our Americas and Asia regional results begin on Slide 13. The Sales were $224.8 million this quarter and organic sales growth was 4.5%. The impact of divestitures reduced sales by 3.5%. In total, including foreign currency translation, sales increased 0.9%. We had great results this quarter. We grew in all of our major product lines with the strongest growth in our core identification and Safety Solutions businesses as well as wire identification. We really had some nice momentum at the close of the quarter, and I'm pleased with the team's ability to improve our rate of growth this quarter following a slower first half of the year. Our Asia business grew organically 1.9% this quarter. China took a step back compared to the second quarter and our sales declined just over 17%. Economic conditions are challenging in China, but our business outside of China more than made up for this decline with another strong quarter of growth led by India and Singapore. Segment profit in Americas and Asia increased by 1% to $49.7 million, and segment profit as a percentage of sales was consistent with last year at 22.1%. We added to our sales force this quarter, and we hired additional engineers in R&D, which slowed our segment profit growth in the region for the quarter. These are the types of investments Brady will continue to make to ensure our long-term organic sales growth. Turning to Slide 14, you'll find the performance of our Europe and Australia region. Sales were $118.6 million this quarter. Organic sales growth was 4.4% and foreign currency decreased sales by 0.6% for a total growth of 3.8%. Sales growth was strongest in our core identification and Safety and Solution products where we continue to identify new opportunities to solve problems for our customers, which is resulting in sales growth well in excess of GDP. At 4.7%, our organic growth in Europe was well above their GDP and organic growth in Australia was 2.6% in the quarter. Strong organic sales growth in Europe resulted in a significant improvement in segment profit in the quarter from $17.1 million to $19.5 million, an increase of 14.3%. As a percentage of sales, segment profit increased 150 basis points from 15% to 16.5%. We continue to identify opportunities for efficiencies following our regional reorganization that we put into place last year. And we've been able to offset increased cost pressures through manufacturing efficiencies and targeted price increases. Our Europe and Australia business continued to deliver excellent results. Turning to products. We recently launched three exciting new products that I'm particularly proud of. The V4500 barcode scanner, the J7300 industrial inkjet color label printer and the ToughStripe Max floor marking take. The V4500 is a wireless programmable barcode scanner with rugged exterior making it ideal for industrial applications. This Bluetooth-enabled includes our proprietary cortex to coder technology which allows it to easily interpret extremely small barcodes and other hard-to-read surfaces. Its dynamic user interface allows the user to move from setup to first scan in seconds and includes a data parsing feature that can sort and arrange data and connect to cloud and users ERP system. Its high speed allows for scanning from any angle, and we're looking forward to bringing this scanner to market. And so far, the response from our customers has been incredibly positive. The J7300 industrial inkjet color printer is the culmination of several years of printer ink and material development. It's a fast industrial-grade color printer for variable print jobs with a wide range of applications that offers many features previously unavailable at this price point. The printer is ideal for industrial labeling that changes frequency from regulatory signage and lean visuals to barcoding to lab identification and GHS labeling. It prints smear free inks on label materials that resist water, chemicals and abrasions for up to 2-year outdoor durability and even longer periods indoors. The J7300 is Wi-Fi-enabled and includes a dashboard that allows our users to plan, budget and troubleshoot with status alerts, job cost calculator, remote monitoring and much more. includes the Brady Workstation Safety and Facility ID suite, which helps create signs, markers, labels and tags in graphics and color pallets that also connect to third-party software and print PDFs. The setup takes only seconds because our label sense technology instantly recognized and sets up labor roles in inks while eliminating waste by printing on the very first label. Brady is committed to innovating products that reduce our users' environmental impact. For example, ToughStripe Max is our new offering with our top-selling product line of specialized floor marking take. This version of ToughStripe is 50% thinner and its adhesive is applied to edge to edge, making it last even longer in heavy forklift and industrial vehicle traffic. It's simple to apply and an excellent solution for our customers because it allows them to quickly and easily comply with safety requirements and prevents hazards in their operations. I'm really proud of these new products, and I'm looking forward to the pipeline of more innovative new products that will be launched this year. With that, we'd like to start the Q&A. Operator, would you please provide instructions to our listeners?
Operator: [Operator Instructions] Our first question comes from the line of Cashen Keeler of Bank of America. Your line is now open.
Cashen Keeler: Hi, good morning. Thanks for taking my questions, Russell and Ann. So, I guess, first off, you're expecting low single-digit growth for 4Q, but maybe as we look another quarter or two beyond that into fiscal '25, are you able to give us, I guess, any qualitative view on what you might be expecting in terms of organic growth and perhaps who are your customers at the time you are about that demand beyond this quarter?
Russell Shaller: Yes. This is Russell. Obviously, I wish I had a perfect crystal ball. I think a lot of industrial indicators are pointing to a favorable second half of the calendar, which will be the beginning of our fiscal year. I do think that some of the expectations for recovery have been premature depending on who you read, it was supposed to happen in the first half of this calendar year. And yet, it seems like a lot of things have pushed out. So, I guess the long and short of it is, we, along with, I think, a lot of our industrial peers are looking forward to a more robust second half of the year, but I still think there's a lot of uncertainties that maybe temper of that optimism.
Cashen Keeler: Okay, understood. That makes sense. And I guess just relatedly, what trends are you seeing in industrial automation at this point, I guess, as it relates to industrial track and trace? And then secondly, I think healthcare has been a continual drag on an organic basis over the past couple of quarters. But just wondering if you can give us a quick update on that business as well. Thanks.
Russell Shaller: Yes. So, I'll give you the short term and the long term on the industrial track and trace and automation. So, the short term, we're definitely seeing some hesitancy in investment, I think, partially due to interest rate environments and general economic concerns. In the long run, though, we feel very optimistic because if you look at machine learning or AI or whatever you want to talk about, it all is reliant on being able to identify individual parts in your manufacturing operation as they work through the process all the way through to being delivered to the customer, in some cases, even post customer sale to provide service and support. So, the long run, I think, is a fantastic market. I do think there's some choppiness that is occurring right now due to overall economic conditions in Europe and to a lesser extent, in the U.S. Regarding the healthcare segment, hospital admissions have really been stagnant down for the last several years. And we participate mostly in the hospital admission process. We have less of a footprint in what I'll call the urgent care. So, I think our sales have been reflecting of that. And frankly, it is and has been a bit of a drag on the otherwise stellar growth for some of our industrial products. We don't foresee that trend changing dramatically, although we are launching some new products in the healthcare space in the next couple of quarters that we think will help us take a larger wallet share in what is a pretty stagnant market.
Cashen Keeler: Okay, thanks.
Operator: Thank you. One moment for our next question. Our next question comes from the line of Steve Ferazani of Sidoti. Your line is now open.
Steve Ferazani: Good morning Russell, and thanks so much for the detail on the call. Russell, I just wanted to ask first on the three new products you detailed. Were any of those available in the previous quarters, so those products coming?
Russell Shaller: No. They're basically in pilot launch right now. So, they really will start to see sales in Q4 and into next year. While I am super excited about all three of those products and some of the products that are coming, remember we're comprised of literally hundreds of different products. We don't have the equivalent of an iPhone launch. So, those sales will feather into our overall organic growth rate, but you won't see a pop due to those launches.
Steve Ferazani: So, the question is, given the macro concerns in Europe, the positive surprise to me was almost 5% organic growth because I think about you as sort of GDP plus, that's certainly much stronger. Can you help us out on how you got there, price versus volume? Or how you're outpacing the market in Europe?
Russell Shaller: So, I would say we have just simply a fantastic team that is finding new ways to increase wallet share in Europe. You're right, the collective GDP of the EU region is probably less than 1%, although subject to revision. And we do sell to virtually all industrial companies worldwide or at least in the EU in the Americas. But not every company buys everything we can do, and I think the European team has been particularly successful in expanding wallet share at a number of our customers, and that's why you're seeing better organic growth because it is not coming via pricing. It is principally due to increased product consumption.
Steve Ferazani: And then I was surprised with even further gross margin expansion. Is that mix? Is that with healthcare not growing as fast? Is that straight mix? How much of that is new products? And how sustainable is the margin you reported this quarter?
Russell Shaller: Yes. We feel the gross margin was very favorable. I think we're living in a great period right now for Brady, where some of the part variance costs that we had had previously and the premiums that we had paid on shipping and transportation have all gone away. And so, you're seeing a much cleaner gross margin. There's a little bit of onetime gains in that gross margin. I think 51 and change is probably close to a high watermark of our gross margin. So, I wouldn't necessarily bank that in, in the future. Although we don't manage the gross margin directionally in the 50% range, is certainly a comfortable place for our portfolio.
Steve Ferazani: And then just on SG&A, you've done such a great job over the last couple of years bringing that down as a percentage of sales even though you grew this quarter, it's kind of flattening out. Do you still think there's room or are you at a comfortable level when you think about SG&A as a percentage of sales?
Russell Shaller: I think there's a couple of competing factors there that are both helping to improve SG&A or in lowering SG&A and some other factors that are increasing it. So, I'll kind of give you the puts and takes. Being able to deploy our salespeople more efficiently and effectively and using tools to better route their sales calls and to target customers and accounts. That goes towards the plus column of driving down SG&A costs. On the flip side of that paid advertising, particularly doing search and what have you continues to be an increasing expense. The two right now are kind of balancing each other. I think the future wildcard will be how search is and paid search is potentially up ended with some of the new tools coming out there as well as the internal tools we're using to better optimize where we're placing our investments in terms of paid search, catalogs and field salespeople. So, I know that's kind of a long-winded answer without giving you a lot of direction. Right now, we feel comfortable with the SG&A. But, of course, we are always looking for ways to further drive down that cost and improve our efficiency.
Steve Ferazani: Okay. That's helpful. Last one for me. Just you didn't talk much about Gravotech. You waiting for that to close to provide more detail or anything you want to say about that?
Russell Shaller: Yes. So, it's still in the regulatory approval process. So, I don't want to delve too much into that until we get ready to close. But I think it is reasonable to talk about the thesis of Gravotech and why we are looking at that as a business. So, half or more of our products are related to identification and identification solutions. So, whether it's part marking or it's machine-readable barcodes or what have you, the one part of the ecosystem that we don't have is direct part marking. So, we do labels and we do materials, but there is a percentage of products that are direct part marked either laser or via mechanical marking. And that's not been part of our portfolio previously. We see the potential with Gravotech to provide a more complete solution to our customers where we can provide both the labels for customers that want that, but also part marking and machine readable barcodes, directly on parts for another segment of the customer base that wants those. And again, it's very much geared towards a manufacturing professional use. There's a part of lasers that are consumer-based. That's not really our target market.
Steve Ferazani: Thanks, Russell. Thanks, Ann.
Operator: Our next question comes from the line of Keith Housum of Northcoast Research. Your line is now open.
Keith Housum: Good morning, Russell. Good morning, Ann. And congratulations on the quarter, you actually beat our expectations and outperforming your peers. Russell, as we're looking at you guys rolling out your truck and trace products, I think your scanner is probably the first one coming out here. Does your go-to-market strategy changed at all as you're approaching what I think is relatively a new market where it comes to these type of devices?
Russell Shaller: I would say partially. So, there are a significant number of our customers that work with us directly and we'll continue to do so. And that's also true of some of our distributors that are involved in this space. The one thing that is additive to our channel to market is, we're working more through value-added resellers. And, of course, throughout the world, there's a network of VARs. Now, when we purchased code in Nordic ID years ago, that is a very comfortable space to them. Although in slightly different markets, they've been working with VARs for many years. Brady traditionally had not been doing that much. So, what you're looking at is kind of twofold. We're taking some of the VAR network that code had established in the U.S. and Nordic has in Europe, and we're just expanding our portfolio to them. At the same time, we are working with a number of other segments that we have used in the past, but to a much less extent because we didn't have that full portfolio of products. And then to expand further, part of the thesis of Gravotech is to add lasers and direct marking to that overall capability to help us further work with some of the VAR integrators in a manufacturing environment.
Keith Housum: Great. Appreciate that. In terms of your share repurchases, is there any restriction on your share repurchases going forward based on where you have cash? I guess maybe to ask a question another way, will you be baking for the Gravotech out of your European funds or rather the U.S. funds?
Ann Thornton: Yes. Good question, Keith. No restriction on our ongoing share repurchases from the standpoint of where our cash is located. We have $37 million remaining on our current authorization, and we'll continue to be opportunistic as the opportunities present themselves in the future.
Keith Housum: Great. Thank you. And then, Russell, I think I heard you say that as you guys ended the quarter, you ended the quarter with some momentum. So, it sounds like your activity actually picked up throughout the quarter as turning into the fourth quarter. Is that fair?
Russell Shaller: Yes. Let's hope it continues into the fourth quarter. But, yes, we definitely saw a better last month of the quarter than the first 2. The first two months were very much a continuation of what we had seen in the first half of our fiscal year, but this last month really was an acceleration of product adoption. And we hope to see that come through in the fourth quarter, but we'll just see how that turns out.
Keith Housum: That may have partially answered my next question, the final question, but what surprised you in the quarter? Was it the fact that you accelerated so quickly in the last month?
Russell Shaller: I'm sorry, I didn't, pardon?
Keith Housum: Yes. I guess what surprised you with your results for the quarter?
Russell Shaller: What surprised I thought you said price. It was very broad-based. It wasn't a particular customer or a particular end market. It was generally very broadly based. I do think that we're kind of in a very fascinating time of a lot of money sitting on the sidelines and some uncertainty about level of investments. Apparently, in April, a number of our customers woke up and decided they wanted to buy things. So, I don't mean to be flip on that, but it can be fickle sometimes when you look at capital expenditures and how companies look at their investment thesis going out. We've got our stable MRO products that continue to be very stable. And then you have some that are more sensitive to overall economic conditions. And it hit well for us in the April.
Keith Housum: Great. Thank you. Appreciate it.
Operator: Thank you. I'm showing no further questions at this time. I would now like to turn it back to Russell Shaller, President and CEO for closing remarks.
Russell Shaller: Great. Thanks, everyone, for your time and participation today. Our results were very good this quarter with 4.5% organic sales growth and record high earnings per share. Our gross profit margins have improved to more than 50%, which demonstrates the value we are bringing to our customers with our innovative products and solutions. We're investing in research and development and our pipeline is filled with new and innovative products yet to come. Our financial position is excellent. Our balance sheet provides us with the ability to continue to invest in our organic businesses through the addition of sales resources and talented engineers. We're proud of our increased annual dividend for 38 straight years, and we can buy back shares and transact strategic M&A when the opportunities are available. Our high-quality earnings are the result in significant cash generation, which allows us to fund all of our capital allocation priorities simultaneously in order to generate shareholder return over the long term. We're focused on our consistent priorities which are to continue to launch innovative new products that provide unique and effective solutions for our customers to continue to invest in sales-generating resources and increased organic sales to execute operational efficiencies and continue to increase profitability and to effectively deploy our capital to drive long-term shareholder value through organic investments, acquisitions and returning funds to our shareholders through dividends and share buybacks. The macroeconomic environment can present uncertainties at times, but we'll continue to control what we can control so that we deliver consistent long-term value for our shareholders. Thank you for your time this morning and for your interest in Brady. Operator, you may disconnect the call.
Operator: Thank you for your participation in today's conference. This concludes the program. You may now disconnect.
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