Brady Corporation (BRC) Earnings Call Transcript & Summary

Ladies and gentlemen, thank you for standing by, and welcome to the Brady Corporation Fiscal Year 2022 Annual Shareholders Meeting. [Operator Instructions] I would now like to turn the call over to your host, Ann Thornton, your line is open.

Thank you. Good morning, and welcome to the Brady Corporation Fiscal '22 Annual Shareholders Meeting. Thank you for joining us today. I'm Ann Thornton, Brady's Chief Accounting Officer and Director of Investor Relations. The slides for this morning's call are located on our website at www.bradycorp.com/investors. 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. You can read about these risk factors in more detail in our 2022 Form 10-K, which was filed with the SEC in September of this year. Moving to the agenda on Slide #3, we will first announce the results of the election of Brady's Board of Directors. Next, Brady's President and CEO, Russell Shaller, will provide some brief comments, and then we'll open it up to a Q&A session, whereby Russell as well as myself and Aaron Pearce, Brady's CFO, will be available to answer questions. Today's presentation is being broadcast live on the Internet and will also be available on our website for replay. So your participation in the Q&A session will constitute your consent to being recorded. Also, please note that this teleconference is copyrighted by Brady Corporation and may not be rebroadcast without the consent of Brady. I'd like to now move to Slide #4 for the formal business portion of this meeting and introduce Mr. Brad Richardson, the Chair of Brady's Board of Directors to read the results of the election of the Board of Directors. Brad?

Well, thank you very much, Ann, and good morning, everyone. As Ann mentioned, I'm Brad Richardson, the Chair of Brady's Board of Directors. I'll provide a brief introduction of the individuals who are standing for election to the Brady Board of Directors. Standing for election are Mr. Pat Allender. Pat is the retired Executive Vice President and Chief Financial Officer of Danaher Corporation. Next is Dr. David Bem. Dave's the Vice President, Science and Technology and Chief Technology Officer of PPG Industries. Dr. Elizabeth Bruno. Liz is the President of the Brady Education Foundation and was formerly on the faculty of the University of North Carolina. Ms. Joanne Collins Smee. Joanne is the Executive Vice President and President of the Americas for the Xerox Corporation. Ms. Nancy Gioia. Nancy is the retired Director of Global Electrical Connectivity and User Experience for the Ford Motor Company. Mr. Vineet Nargolwala. Vineet is the President and CEO and a Director of Allegro MicroSystems. Myself, Brad Richardson. I'm the retired Executive Vice President and Chief Financial Officer of Avient Corporation. Dr. Michelle Williams. Michele was most recently the Global Group President of Altuglas International, a subsidiary of Arkema. And lastly is Russell Shaller, Brady's President and Chief Executive Officer. We are quite proud to offer this high-quality and diverse set of Directors for reelection to the Board. So now, let's turn to Slide 5 for the results of the election of the Board of Directors. I'm pleased to announce that the shareholders of 100% of the Class B common voting stock voted in favor of the elections of the Directors nominees and they are, therefore, elected to a 1-year term. Thank you again for all your time and support. And now, let me turn it over to Russell.

Thank you, Brad. I really appreciate your counsel and your leadership on the Board. Having a Board that is engaged, challenges our assumptions, and brings deep experience and knowledge is critical to the success of any organization. So thank you all for helping Brady to be a better company. Before starting the Q&A session, I'd like to share a few comments. First and foremost, I'd like to thank all 5,700 Brady employees around the globe. Without you, we would never have been able to have the success we had in 2022. Fiscal 2022 was really a great year for Brady. From a financial perspective, our GAAP earnings per share was up more than 17%, finishing at an all-time record high of $2.90 per share. This marks the second consecutive year of record earnings per share. The Brady team navigated the many supply chain challenges and delivered total sales growth of 13.7% and organic sales growth of 9.4%, truly outstanding revenue growth. We demonstrated our commitment to return funds to you, our shareholders, by returning $155.2 million in the form of dividends and share buybacks last year. And in September, we announced our 37th consecutive year of annual dividend increases. We've increased our dividend every year since going public. Brady's strong commitment to innovation was also on display this year as we increased our R&D spend by 31% and we finished the year with R&D expense approaching 5% of sales. This commitment to R&D remains a top priority as we believe the continuous stream of highly innovative new products will continue to separate Brady from its competitors and help maintain our strong organic sales growth rate. In the slide, you'll see a picture of one of our flagship new products, the M211 portable printer. This printer, which is about the size of a large tape measure can easily be clipped to your belt and is controlled via Bluetooth connection with your phone. This is a perfect example of a new product launch that keeps pushing us ahead of our competition. This year, we also expanded our commitment to ESG because doing our part is both the right thing to do, and we -- can be a very positive to our shareholders. To generate the strongest return from our environmental investments, we can't just focus internally on reducing Brady's environmental footprint. We must also focus on designing products aimed at reducing the environmental footprint and improving the efficiency of our customers. This has been a clear focus of ours, and we've launched many new products that our customers want and need that will aid in their own ESG journeys, while increasing their efficiency. In May, we published our ESG report and shortly thereafter, we created and filled a new position, Director of ESG, to drive sustainable improvement. The last item that I want to highlight is our people. Brady is a great organization with incredible brands, and we have loyal customers who place their trust in Brady every single day. However, what truly separates Brady is our outstanding team of highly innovative people who are focused on providing excellent customer service, always doing what's right and ensuring that we serve all of our stakeholders, including our employees, our communities and, of course, our shareholders. To that end, we're committed to an inclusive culture where employees are encouraged to take ownership and seek out solutions together. I'm very proud of everything the Brady team has accomplished this past year. The stream of new product launches and record financial results could not have been accomplished without the hard work and dedication of the entire Brady team. With that, I would like to start the Q&A. Operator, would you please provide instructions to our shareholders?

[Operator Instructions]

Okay. As there are no questions, I would like to thank you all for participating today. And on behalf of Brady's Board of Directors and everyone at Brady, we thank you once again for being a Brady shareholder. Have a great day. Operator, you may disconnect the call.

Ladies and gentlemen, this does conclude today's presentation. You may now disconnect and have a wonderful day.