Good day, and thank you for standing by. Welcome to Brady Corporation's second quarter 2024 earnings conference call. At this time, all participants are on a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star one one on your telephone. You will then hear an automatic message voicing that your hand is raised. As a reminder, this conference is being recorded. I would now like to turn the conference over to Ann Thornton, CFO and Treasurer of Brady Corporation. Please go ahead. Thank you. Good morning and welcome to the Brady Corporation fiscal 2024 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 three. 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. Russell? Thanks, Ann, and thank you all for joining us today. We released our 2024 second quarter financial results this morning, and I'm pleased to report another quarter of organic sales growth and improved profit. This quarter, we increased our gross profit margin to 50.2%. We improved our pre-tax earnings by 15.1%, and we grew our non-GAAP earnings per share by 14.8%. These results wouldn't be possible without the hard work and dedication of our entire global team. I'm incredibly proud of the effort the team has put in to ensure the success of our regional reorganization, which became effective at this time last year. The progress we've made and the opportunities we've identified continue to excite and motivate me every single day. It has absolutely contributed to our improved earnings and cash flow, and just as important, it's creating an environment where we're encouraging our teams to think differently about what they do every day, which to me is the best part. Combining our businesses within our regions has brought our teams together. It's cultivating more innovative thoughts, and we're all working together better than ever. This quarter, we once again grew earnings per share while increasing our investment in both research and development and our sales force. We increased our R&D spend by nearly 10% in the second quarter, and we added a number of new salespeople throughout our global business. We have some exciting new products that to launch over the next several quarters and a strong future pipeline of innovative new products, which are essential to drive sales growth over the long- term. I'll now turn the call over to Ann to provide more details on our financial results. Ann? Thank you, Russell. We grew organic sales 1.6% this quarter while once again improving our gross profit margin and our overall profitability. This resulted in GAAP EPS of $0.90 per share, which was up 18.4% compared to the second quarter of last year. Non-GAAP EPS, which is calculated as our GAAP EPS excluding the after-tax impact of amortization expense, was $0.93 per share this quarter, which was up 14.8% compared to the second quarter of last year. Our Americas and Asia region grew organic sales 1.2% and increased segment profit by 9.3% compared to last year's second quarter. And our Europe and Australia region grew organic sales 2.5% and increased segment profit by 11.9% compared to last year's second quarter. We're executing extremely well in Europe despite a macro environment with minimal growth. We continue to integrate our businesses and identify opportunities to grow sales with existing customers as well as to convert new customers to our high-performance solutions. Our key financial takeaways this quarter are continued organic revenue growth despite slowing macroeconomic trends, non-GAAP EPS growth of 14.8%, significant improvement in gross profit margin, and a continued commitment to return funds to our shareholders. Now we'll turn to slide number four for our quarterly sales trends. Organic sales grew 1.6% and foreign currency translation increased sales 0.8% this quarter, while the impact of divestitures reduced sales by 3.5%, resulting in a total sales decline of 1.1%. Slide number five outlines our quarterly gross margin trending. Our gross profit margin improved by 220 basis points to 50.2% compared to 48% in the second quarter of last year. This significant improvement in our gross profit margin was the result of several factors, with the primary being favorable product mix. Turning to slide number six, you'll find our SG&A expense trending. SG&A was $91.3 million this quarter compared to $92.3 million in the second quarter of last year. As a percent of sales, SG&A was consistent with last year at 28.3%. We're funding additional selling resources while reducing overall SG&A expenses through ongoing efficiency initiatives throughout our global businesses. Slide number seven details our investments in research and development. This quarter, we once again increased our investment in R&D from $15.4 million to $16.8 million, which was 5.2% of sales. We're fully committed to our R&D efforts, and we have several innovative new products planned for launch in the second half of this fiscal year. Moving to slide number eight, you'll find our pre-tax earnings, which increased 15.1% on a GAAP basis from $48.5 million to $55.8 million in the second quarter. Excluding amortization from both periods, pre-tax earnings increased 12.4% on a non-GAAP basis from $51.8 million to $58.2 million. Slide number nine details earnings and EPS. Our trend of increasing earnings on a quarter-over-quarter basis continued this quarter. Our GAAP EPS increased by 18.4%, and excluding the after-tax impact of amortization from both periods, our second quarter non-GAAP EPS increased 14.8% compared to last year. Turning to slide number 10, you'll find a summary of our cash generation. Operating cash flow increased from $29.4 million in the second quarter of last year to $36.1 million this quarter. Capital expenditures increased this quarter because we purchased one of our facilities that we'd previously leased, resulting in negative free cash flow due to this one-time purchase. We have been looking forward to closing this transaction because it secures a primary manufacturing location for us for the long- term. On slide number 11, you'll find the impact that our consistently strong cash generation has had on our balance sheet. We're currently in a net cash position of $95.8 million. So even with returning over $19 million to our shareholders in the form of dividends and share buybacks this quarter, the facility purchase, and reducing our debt, we are still in a net cash position. This gives us an incredible amount of flexibility in our capital allocation decisions. Our approach to capital allocation remains consistent, which is to first use our cash to fully fund organic sales and efficiency opportunities. This includes investing in new product development, sales-generating resources, capability-enhancing capital expenditures, as well as automation-focused CapEx. We will 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, we announced our 38th consecutive annual increase in our dividends. After fully funding our organic investments and our dividend, we then deploy our cash in a disciplined manner for either acquisitions where we have clear synergies or for opportunistic share buybacks when we see a disconnect between our intrinsic value and our trading price. Our incredibly strong balance sheet puts us in a position to execute additional growth opportunities through our R&D investments and sales resources, to acquire companies strategically when the synergies are clear and the price is right, and to return funds to our shareholders through dividends and share buybacks. On slide number 12, you'll find our fiscal 2024 guidance. We are increasing the bottom end of our full-year fiscal 2024 EPS guidance range of $3.70-$3.95 on a GAAP basis and of $3.85-$4.10 on a non-GAAP basis to our new range of $3.80-$3.95 on a GAAP basis and $3.95-$4.10 on a non-GAAP basis. Our outlook is based upon January 31st foreign currency exchange rates and it assumes continued economic expansion. Macroeconomic conditions do continue to slow in certain end markets and parts of Europe, so we now expect that organic sales growth will be in the low single digits for the full fiscal year 2024. The other elements of our guidance remain consistent with an income tax rate of approximately 22%, depreciation and amortization of approximately $30 million-$32 million, and capital expenditures of approximately $75 million, which is inclusive of approximately $55 million of CapEx for the purchase of the previously leased facility, which I mentioned, as well as the build-out of a new facility, which will allow us to combine two leased locations into one owned location. Potential risks to our guidance, among others, include potential strengthening of the U.S. dollar, inflationary pressures that we're 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? Thanks, Ann. Our Americas and Asia regional results are detailed on slide 13. Sales were $211.6 million this quarter, and organic sales growth was 1.2%. The impact of divestitures reduced sales by 5.1% in the region, and the result, including the impact with foreign currency, was a total sales decline of 3.8%. We were able to grow consistently in our major product lines and end markets despite some weakness we're seeing in industrial automation as well as project delays. Our core business is performing well. The area where we saw some weakness was in our healthcare identification product line, which declined in the quarter. The impact of lower reimbursement rates for healthcare providers coupled with a decrease in overall hospital admissions continues to reduce demand for identification products in the healthcare setting. We're analyzing our product offering, and we have some new products in development that we're looking forward to launching in the next few quarters to mitigate this trend. Outside of healthcare, growth was excellent throughout our remaining key product areas as our identification and safety solutions did well for the quarter. Our business in Asia turned the corner on growth and recovered nicely in the second quarter with 5.1% organic sales growth. We grew sales throughout the region with mid-single digit growth in China, along with another incredibly strong quarter in India where we saw just over 21% sales growth. Our business in India has been a clear growth leader in our Asia business for several years, so we're excited about the future in India. Segment profit in Americas and Asia increased 9.3% to $43.9 million, and segment profitability improved from 18.3% of sales to 20.7% of sales this quarter. Our continued improvement in gross profit margin resulted in this significant increase in segment profit. Slide 14 details the performance of our Europe and Australia region. Sales were $111 million this quarter, organic sales growth was 2.5%, and foreign currency increased sales by 2% for a total growth of 4.5%. Despite slowing economic conditions in Europe, we were still able to grow well above GDP in our key geographies and end markets through our focus on use cases that require a specialized solution, which is absolutely ideal for Brady products. Organic growth in Europe was 2.3%, and organic growth in Australia was 3.7% in the quarter. Our organic sales growth resulted in solid increase in segment profit for the quarter from $13.5 million to $15.1 million, and as a percentage of sales, segment profit increased from 12.7% to 13.6%. Although we're facing cost pressures, we were able to more than offset them through operational efficiencies and targeted price increases. We continue to integrate our businesses in Europe, in particular, and the opportunities to grow sales with current customers as well as provide solutions for new customers continue to be identified by our team. I'm really proud of the progress we've made. Our execution in Europe and Australia has been incredibly strong. We had another great quarter and first half of the year, and I'm definitely looking forward to finishing the second half of the year on a high note as well. With that, we'd like to start the Q&A. Operator, would you please provide instructions to our listeners? So, ladies and gentlemen, as reminded to ask the question, you will need to press star one one on your telephone and wait for your name to be announced. To withdraw your question, simply press star one one again. Please stand by while we compile the Q&A roster. And our first question coming from the line of Steve Ferazani with Sidoti. The line is open. Thanks. Good morning, Russell, and thanks for the detail on the call. I wanted to start by asking about the guidance because I know when you issued it, you expected the high end of EPS was achievable if you hit the high end of your sales guidance. So we've seen you now go to the lower end, but you're raising the low end of guidance and not moving the high end. So I guess what I'm trying to how to square the two, what else is going right to enable you to move the guidance to the higher end as sales clearly are not growing at the same pace? Yeah, so there's a couple of things going on. The areas that are a little bit weaker in terms of sales growth, fortunately, are our least profitable businesses, and the ones that continue to be growing quite nicely and actually are at plan or above plan are more profitable businesses. So the consequence of which, and you're seeing some of that in the improvement in our gross margin, is that we feel comfortable with the range and the adjustment that we've made. Again, all things being equal, if we look at how we performed in the first two quarters and then project that into the next two, that has a lot to do with why we feel we could nudge it, even though the top line wasn't quite there. It's a geographic and products mix is what you're saying, or are there costs you're taking out? Right. Like any good manufacturer, there's always slight areas that we can improve operational efficiency, and we continue to do so. But an awful lot of it has to do with the mix and the fact that our higher margin businesses are outperforming our lower margin businesses. Okay. On the sales number this quarter, the 5% impact on that regional on divestiture, the only one I recall is PremiSys, which was last March and was not having that big of an impact. Can you touch a little bit on that line? Yeah. So we also divested another small business, which really wasn't a good fit with our portfolio. It's called Personnel Concepts. Again, not a significant growth vector for us. And as I said when I took over as CEO almost two years ago, is that we're going to look at our portfolio and decide what businesses really fit with us on an ongoing future basis, and that both the access control and the Personnel Concepts just didn't really fit our business. And we thought there were better ways for our portfolio to move forward. That acquisition did close last quarter, Steve, the second one, the one that I just mentioned. But the total impact to the financials was immaterial. But we just call out our organic sales growth and then the impact of divestitures, and that's where you're seeing it this quarter. Okay. Okay. How much is taking out these lower performing businesses contributing to margin? Because I don't recall you ever doing an above 50% gross margin in the seasonally slower Q2 before. I mean, that was a very strong number. Yeah. So ironically, the businesses we divested, Personnel Concepts, was a high gross margin. It was also a high sales overhead business. So the net profit wasn't a big deal. Yeah, I think, and as I've kind of spoke to in prior calls, that 50% gross margin we feel is a good place for us with our product mix as it stands right now. And I think that is a reasonable target given current inflationary conditions and our cost structure. So I'm looking to see more of that in the future. Yeah. If I get just one more in terms of, obviously, a full-year strong cash flow number, you're in great shape moving forward. What's the pipeline looking like? How developed is it at this point? Where are you on M&A? Oh, on M&A. Okay. So yeah, we have a clear idea of what we're looking for in terms of M&A. There aren't a tremendous number of properties. I think, again, as I've said before, if anybody is surprised at something we buy, then we've made a mistake. These have to be clear either direct or adjacent businesses that are additives to our overall strategy. So anything that we do or make in this space will be in the identification of products, people, and things, which is really the core of our business. So not a tremendous number of properties. I will say that the valuations are getting to a point where we feel much more comfortable than we did even a year ago. So we've always said with Brady, we want to be good stewards of our cash, and sometimes the best use of our cash is to buy back our own shares, and sometimes the best is to look to an acquisition. Great. Thanks, Russell. Thanks, Ann. Thank you. Yep. Thank you. And our next question coming from the line of Keith Housum from Northcoast Research. The line is open. Good morning, guys. Hey, Russell, as we look at the Americas growth, obviously, this is the one that's probably the weight around your neck. How much of that growth or the performance was impacted by PDC this quarter? I know that you guys said it declined, but can you give us a little bit of context of the size of that decline? Yeah. I'm going to say everything that the identification group did well, the PDC kind of took away from, which is unfortunate, particularly given the size of PDC compared to the rest of that business. I do think that some of the things that happened were a combination of cyclical and some stocking trends we see with some of our distributors. I don't foresee that level of headwinds in the next couple of quarters. And I think more importantly, because we get the question about the business, like, "Why do you have it?" I think we have a good idea of where we can take the business in the next couple of years. It's still very much a work in progress. It has been not a great performer at Brady for several years. But I think with our integrated business of merging the Americas business together, it gives them some additional strength, and we're relooking at both their product portfolio and some of their go-to-market strategies where they can take where they can benefit from a larger organization. All right. I appreciate that. Remind me, in terms of your end markets, how much of your sales are driven by OpEx spending, so more of a consumable versus capital expenditure driven? Yeah. So we probably don't break that down into that kind of resolution, but. Did the line drop? Hello? Please stand by. Operator, is this my issue or is the company issue? Please stand by while we get the speakers to reconnect. One moment, please. Thank you. Ladies and gentlemen, please stand by, please. Ladies and gentlemen, thank you for your patience. Please stand by. Speakers, please resume. Hello. Hello, Olivia. This is Brady Corporation. Yes, we can hear you now. Please resume. Wonderful. Thank you. Ask that question regarding CapEx or OpEx-driven sales. Russell just started to answer the question. It went out. Yeah. I apologize for that. I guess there's a national cell phone problem right now. I gave a great answer, but I'll repeat myself. So if you look at Brady's businesses, we have really three different, I'll call it, consumables or fixed hardware. And I think it's probably a better way of thinking about or looking at our business. A significant portion of our company is in the MRO space where we do safety and facility ID locks, what have you. And those products, I'll call them semi-consumable because they're not intended to last forever. They might last a couple of years. They might last less than that. And so that gets a regular refresh rate with our customers because most of our customers will continue to buy from us as they redo their facilities and what have you. Then you get to our printer consumables, which makes up the next significant part of the business. And of course, those get used on a regular basis. They're essentially the razor blade that goes with our razor, which is the last part, our printer and printer sales. And the printers tend to last, depending on the use case, something between three and seven years for the refresh. So while our products are durable, none of them are really intended, nor do they last forever. So again, depending on the category, you get a pretty regular refresh rate in our business. And so that's how we look at it. Hopefully, that answers your question is kind of helpful. Yeah, it does. It helps to frame it up. I appreciate that. I guess final question for me. It's been several years now we've been hearing the excitement around R&D, and it always feels like the growth is coming. It's the next step. It's the next step. I guess, how translate that excitement to the numbers that we're seeing? Do we see that we're close to an acceleration of growth? I mean, what gives you the confidence that the R&D is producing what you need to do or will do it? Yeah. So there's probably two things that I want to say about the R&D. The first is we're in a long journey for us. When we devote money to R&D, it takes roughly three years to develop a new printer, a little bit less if we're refreshing. And so we have a number of new product launches in the next few quarters. I'm super excited about them. But it does take time. And like a lot of industrial products, what you're also seeing is their slower adoption. It's not like an iPhone where the new generation of iPhone pops out and everybody runs to the store and buys them. These have a very regular cycle. We typically see, and again, depending on the product category, peak revenue something between four to five years after products launch. So much different cycle than you'd see in a consumer product. At the same point, I think our R&D has absolutely had an effect, and our new products have had an effect in terms of our ability to price, our ability to not be commoditized, and our ability to maintain our gross margins and return on capital. So you are seeing those things come to play because at the same time, some of our more commoditized products, or even the ones we divested, are just not part of the story anymore. So will you see explosive growth from any of our product introductions? No, that's not really the way Brady works. But we are absolutely looking for them to nudge the needle on our overall growth and profitability, which I think you're already seeing. Okay. All right. Thanks, Russell. Appreciate it. Thank you. Our next question coming from the line of Cashen Keeler with Bank of America. Your line is open. Yeah. Hi, guys. Good morning. Thanks for taking my questions. Just wanted to get back to the organic growth guidance for the year. So for the back half here, can we kind of expect continued low single-digit growth on that end? And I guess, what gives you confidence in your revised guidance, particularly as your comps on organic growth get a little bit tougher in the back half of the year here? Yeah. Obviously, we don't have a magic crystal ball, but we work closely with our customers, and we have literally thousands of touchpoints through our distributors and our direct sales. I think the past few quarters of the economy has been interesting with a lot of people originally predicting a recession, which doesn't seem to have happened in a lot of our regions and countries. But at the same time, I think there's some murky investments and demands. And then, of course, you have the U.S. election, which also might give some people pause. But when we put all of this together, I look at what has happened in the industrial space and some of the other companies which are reporting significant declines in year-over-year sales, something that we're not seeing. In fact, again, because of the breadth of our offering, we're seeing, I think, a much stronger comparison than a lot of the other companies that are similar. I don't think anybody's quite like Brady but are in similar products and similar product categories. So if you take all these factors into account, we felt comfortable with our guidance, and so we're barring something new, I think we're going to be good for the second half. Okay. Makes sense. Just trying to peel it back a little bit more, I guess, now that we're almost two months into the quarter here, are you able to comment at all just what you're seeing quarter to date in terms of kind of demand across your end markets or regions? Yeah. So I would say December for us was weak. We are not 100% certain if it wasn't some distributor rebalancing and what have you, but January for us ended very well. If January is predictive the two months together, I would say we're just okay. If January is predictive of the future, we feel very, very good. Okay. Makes sense. And in terms of just adding sales-generating resources, is there anything else you're doing to that end besides just adding additional headcount across your regions? Yeah. So I'm going to kind of take out some of my closing comments. We are actually, and I think like everybody else, we're looking at new sales tools, how to automate our sales tools. We certainly have some experiments with generative AI, which is both fascinating, interesting, and occasionally confusing depending on the answer that comes up. But I can see absolutely in terms of investment for Brady that sales augmentation tools because whenever you have a portfolio of thousands of different SKUs, one of the most important things we can do and help our customers is getting them to the right SKU quickly in a knowledgeable way. And I see the large language models and what have you as having a great opportunity to improve our interaction with our customers. Got it. Got it. And just last one for me, are you able to provide any just update on the industrial track and trace and what, I guess, are the next kind of mile markers or targets that we can be looking for over the next couple of quarters here? Yeah. I'm sure it hasn't been lost on you. A couple of the big companies in the space had a pretty bad quarter, last quarter in the year-over-year comps. We're definitely seeing some slowdown and some push-out of projects. For us, because it's a much smaller percentage of our revenue, it wasn't a tremendous headwind. And it actually, I think, is good for us because we have some product launches coming up in the next few quarters. I do believe that the long-term trend of the industrial automation is fantastic, particularly with labor rates and labor availability. But right now, if there's a little bit of pause in adoption with some of the end users, that actually works to our advantage as we get the rest of our portfolio shored up. Okay. Thank you. Thank you. So I'm showing no further questions in the queue at this time. I will now turn the call back over to Mr. Russell Shaller for closing remarks. Thanks, everyone, and thanks for your time today. Again, we apologize about the brief interruption that we had. But I do want to end with saying that our first half of 2024 was strong. We're executing our initiatives. I am incredibly pleased with the results of our regional reorganization that we put into place last year. We've made progress. We've actually made more progress than I would have hoped on bringing the teams together. We continue to identify opportunities to improve every single day. Our financial position is also incredibly strong, and our balance sheet provides us with flexibility to continue to invest in our existing businesses through R&D and sales resources, to remain committed to our dividend, and to execute opportunistic share buybacks as well as M&A. Our cash generation gives us the ability to fund all of our capital allocations priority simultaneously, which is exactly what we'll do in order to generate shareholder value over the long- term. I've been consistently impressed with Brady's ability to adapt to ever-changing macroeconomic environments and technologies. As I commented during the questions, certainly, generative AI will impact Brady, our customers, and the types of solutions that we offer in the future. I'm personally excited with several of our trial efforts, which I believe will enable Brady to better serve our customers in the future. Our priorities remain consistent, which are to continue to invest and grow our organic sales, to further develop our product offering and ensure we have an innovative roadmap of new products in our pipeline, to execute operational efficiencies 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 macroeconomics can present challenges, but I know that we have the right team in place to meet these challenges and deliver for our shareholders. Thank you for your time this morning and for your interest in Brady. Operator, you may disconnect the call. Ladies and gentlemen, that concludes our conference for today. Thank you for your participation. You may now disconnect. SPEAKER VERIFY