Operator: Good day, and thank you for standing by. Welcome to the Q4 2024 Brady Corporation Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] 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, CFO. Please go ahead.

Ann Thornton: Thank you. Good morning, and welcome to the Brady Corporation fiscal 2024 fourth 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. 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 2024 Form 10-K, which was filed with the SEC this morning. Also, please note that this teleconference is copyrighted by Brady Corporation, and may not be re-broadcast 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?

Russell Shaller: Thank you, Ann, and thank you all for joining us today. We released our fiscal 2024 fourth quarter financial results this morning, and I'm thrilled to announce another company record high EPS for both quarter and the year. We grew organic sales this quarter, and we also generated record high cash flow from operating activities. This quarter was an excellent finish to another great year. Our 2024 non-GAAP EPS of $4.22 was another all-time record high following three consecutive years of all-time record highs. Our GAAP EPS of $4.07 was also an all-time record high. This year, we grew organic sales by 2.6%, with growth driven by both of our regional segments. We improved our gross profit margin to 51.3% and increased from 49.4% last year. We closed the acquisition of Gravotech on August 1, and we returned $117 million to our shareholders through dividends and share buybacks. I'm incredibly proud of the entire Brady team for creating our results this year. It's a testament to their efforts that our profitability improved, while we increased our investment in R&D. We are using these investments to increase our portfolio of engineered products to help make our customers' lives easier. Meanwhile, we're expanding our sales force and investing in our digital capabilities to put ourselves in the best position to generate consistent organic sales growth. Our priorities for the next year remain the same, generate top line growth in excess of GDP and continue our evolution into a faster growing company; target niche opportunities by developing unique product offerings to support our customers, particularly in the area of workplace automation, which we believe is a growth opportunity for years to come; deliver operational improvements to increase profitability as we grow to integrate Gravotech acquisition and identify combined sales growth opportunities; and effectively deploy our capital to drive long term shareholder value, which includes organic investments, acquisitions, returning funds to our shareholders through dividends and share buybacks. We demonstrated our commitment to returning funds to our shareholders this year as we repurchased nearly 3% of our diluted share count and we announced an additional $100 million share back authorization. And yesterday, we announced an increase in our dividend, which represents the 39th consecutive year of annual dividend increases. We are committed to return cash to our shareholders while delivering a strong shareholder return. I'll now turn it over to Ann to provide more details on our financial results. Ann?

Ann Thornton: Thank you, Russell. We had a strong quarter and an excellent finish to 2024. Our organic sales growth was 1.6% this quarter. Our gross profit margin improved to 51.6%. We increased our investment in R&D, and we reduced SG&A as a percentage of sales. This resulted in earnings growth and another quarterly record GAAP EPS of $1.15 per share, which was up 15% compared to the fourth quarter of last year. Our non-GAAP EPS, which is calculated as our GAAP EPS, excluding the after-tax impact of amortization expense was $1.19 per share this quarter, which was up 14.4% over the fourth quarter of last year. Both regions performed well this quarter. Our Americas and Asia region grew organic sales 3.4%, and increased segment profit by 6.7%. Our Europe and Australia region declined 1.8% organically compared to last year's fourth quarter, which follows an impressive streak of 13 straight quarters of organic sales growth. The macro-environment in Europe has become more challenging over the last several months and quarters, but even despite the slight decline in organic sales, we were still able to increase operating income by 4.6% in the region, which was driven by continued improvement in gross profit margin and ongoing efficiency gains throughout our cost structure in Europe. The key financial takeaways this quarter are record high EPS, record high cash flow from operating activities, continued strong financial performance within both of our regions, and a continued commitment to return funds to our shareholders. Let's move to Slide number 4, for our quarterly sales trends. Organic sales grew 1.6% this quarter. The recent strengthening of the U.S. dollar versus other major currencies decreased sales by 0.8% and divestitures decreased sales by 1.5% for a total sales decline of 0.7% in the quarter. Moving to Slide number 5, you'll find our quarterly gross profit -- our gross margin trending. Our gross profit margin continues to be strong with an increase of 80 basis points to 51.6% compared to 50.8% in the fourth quarter of last year. We continue to realize benefits from our sales growth coming from higher gross profit margin products as well as stabilizing input costs compared to last year. Slide number 6, details our SG&A expense trending. SG&A was $93.3 million this quarter compared to $97.5 million in the fourth quarter of last year. As a percent of sales, SG&A declined to 27.2% compared to 28.2% of sales last Q4. And then, if you exclude amortization expense from each of the periods presented, then SG&A would have decreased from 27.5% of sales in the fourth quarter of last year to 26.5% of sales this quarter. We've made significant progress in optimizing our cost structure, reducing our SG&A expense from more than 36% of sales eight years ago to 28.1% in fiscal year 2024. At the same time, we've continued to invest in growth by expanding our sales force, enhancing our digital capabilities, and broadening our Omni channel strategies, all while identifying savings throughout our sales and other support functions. Moving to Slide number 7, you'll find the trending of our investments in research and development. This quarter, we once again increased our investment in R&D, finishing at $17.5 million, which was 5.1% of sales. We know that the investments with the best ROI are almost always organic investments and in particular our investments in research and development. We remain committed to new product development and we have another exciting lineup of products set to launch in fiscal 2025. On Slide number 8, you can see that pre-tax earnings increased 6.9% on a GAAP basis from $63.8 million to $68.2 million. And if you exclude amortization from both periods, pre-tax earnings increased 6.6% on a non-GAAP basis from $66.2 million to $70.5 million. Slide number 9, details the trending of earnings and EPS. Here you can see a clear trend of increasing earnings, and you can also see that the fourth quarter is our strongest quarter on record. On both a GAAP and a non-GAAP basis, our fourth quarter EPS was an all-time record high. This quarter's GAAP EPS increased 15% compared to last year, and if you exclude the after-tax impact of Amortization from both periods, our fourth quarter non-GAAP EPS increased 14.4% compared to last year. Turning to Slide number 10, you'll find a summary of our cash generation. Operating cash flow increased from $79.3 million in Q4 of last year to $84 million this quarter, and free cash flow continues to be strong at $73.2 million this quarter, compared to $73 million in last year's fourth quarter. Operating cash flow was 151% of net income and free cash flow was 132% of net income this quarter. Slide number 11, details the impact that our historical cash generation has had on our balance sheet. As of July 31, we were in a net cash position of $159.2 million. Our approach to capital allocation is consistent and -- which is to -- first, use our cash to fund organic sales growth and efficiency opportunities. This includes investing in new product development, sales generating resources, capability-enhancing CapEx and automation focused CapEx. We have the ability to continue to invest throughout the economic cycle so that we're always putting ourselves in the best position to drive future sales growth and profit growth. And second, we focus on consistently increasing our dividends. Yesterday, we announced our 39th consecutive year of annual dividend increases, which is a streak that we're very proud of. After funding organic investments and dividends, we then deploy our cash in a disciplined manner for acquisitions, where we have clear synergies, and then also for opportunistic share buybacks when we see a disconnect between intrinsic value and Brady's trading price. Our strong balance sheet puts us in a position to be able to continue to increase our investment in R&D and other organic sales opportunities to acquire companies strategically when the price is right, and to return funds to our shareholders through dividends and share buybacks. Slide number 12 provides an overview of our financial results for the full year ended July 31, 2024. Organic sales grew 2.6% and foreign currency translation increased sales 0.2% while the impact of divestitures decreased sales by 2.1% this year. We finished fiscal 2024 with all-time record high GAAP EPS and non-GAAP EPS. These strong earnings results were even after increasing our investment in R&D by more than 10% this year, resulting in the largest annual investment in R&D in company history. We're confident that our actions this year and our consistent priorities will set us up for success in the future, which takes us to our guidance for next year, which is shown on Slide number 13. We're forecasting GAAP EPS to range from $4.20 to $4.45 per share in fiscal 2025, which would represent an increase of between 2% and 9.3% compared to fiscal 2024. And we're forecasting non-GAAP EPS, which excludes the impact of amortization, to range from $4.40 to $4.70 per share in fiscal 2025, which would represent an increase of between 4.3% and 11.4%, compared to fiscal 2024. We also anticipate organic sales growth in the low-single digit percentages for the year ending July 31, 2025. Other elements of our guidance include an income tax rate of approximately 20%, depreciation and amortization expense of $38 million to $40 million, and capital expenditures of approximately $35 million. 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?

Russell Shaller: Thanks, Ann. Slide 14 details the financial results of our Americas and Asia region. Sales were $22.85 million this quarter and organic sales growth was 3.4%. Divestitures decreased sales by 2.2% and foreign currency translation reduced sales by another 0.8%, resulting in total sales growth of 0.4% this quarter. Our growth was driven by our product identification, wire identification and safety and facility identification product lines. We finished the year on a high note in July. We saw a meaningful recovery in our Asia business this quarter with organic growth of 12.3%. We're seeing growth throughout Asia with the exception of China, which declined just over 6% organically this quarter. At approximately 20% organic revenue growth, our expansion in India is driving some of the best numbers at Brady. Meanwhile, the remainder of our operations in Southeast Asia are also performing well. Segment profit in Americas and Asia increased 6.7% to $53.4 million and segment profit as a percentage of sales increased from 22% to 23.3% this quarter. We are delighted with these results, which were generated by a lot of hard work combined with several industry leading product launches. Turning to Slide 15. We'll move to the performance of our Europe and Australia region. Sales were $114.9 million this quarter. Organic sales declined 1.8% and the impact of foreign currency translation decreased sales 1.2% for a total decline of 3%. This quarter marked the first decline in organic sales in 13 quarters in our Europe and Australia region, which ended in an impressive streak. Despite the decline in organic sales in Europe and Australia, we still grew segment profit by 4.6% to $19.3 million, and we improved segment profit from 15.6% of sales to 16.8% of sales. We continue to identify opportunities for efficiencies following our regional re-organization that became effective halfway through last year, and we've been able to offset increased pressures through manufacturing efficiencies and targeted price increases. Given the weak macroeconomic picture in that region, I'm incredibly proud of the team's multi-year performance. We do believe long-term prospects in the region are great. And we'll continue to invest in sales resources and geographic expansion through new distributor partners. Our creative approach to solving unique customer problems with our niche solutions will ensure we remain on a positive trajectory in Europe and Australia. Looking ahead to our fiscal 2025, we have a lot to look forward to, including several new initiatives that will improve our customers' experience. For instance, our printer cartridges are now enabled with label sense technology. This enables a seamless print experience for our customers where the printer is able to sense the specific material and print without waste or the need to worry about unique printer configurations. Second, we have a fully enabled voice-to-print for our Bluetooth enabled handheld printers. This allows the technician to simply talk to their phone and print a label without the need to manually enter data. These technology improvements are great examples of the product enhancements that help make our customers' lives easier. I'd also like to add background to our acquisition of Gravotech, which we recently closed on August 1. Over half of Brady's business is related to part marking and identification. A key gap in our portfolio was the ability to directly mark on parts without the use of a label. With Gravotech, we now have the ability to direct laser mark along with scribing and dot peen marking solutions. These technologies round out our reader printer and labeling solutions to provide a single resource for industrial part identification. Gravotech is headquartered in Lyon, France, and has an international presence in the U.S., Latin America, Europe and Asia. In fiscal 2025, we're forecasting sales of approximately $125 million, an EBITDA of approximately $13 million from Gravotech, excluding integration related costs. Gravotech's high quality, precision direct marking products fill a gap in identification offerings within Brady's product portfolio. I'm looking forward to expanding our customer reach and providing a more complete set of solutions for our customers with the addition of Gravotech. With that, I'd like to turn it over for Q&A. Operator, would you please provide instructions to our listeners?

Operator: [Operator Instructions] Our first question comes from Cashen Keeler with Bank of America. Your line is open.

Cashen Keeler: Yeah. Hi. Good morning, Russell and Ann. Congrats on the quarter, and thanks for taking my questions. So I guess first off, can you help us a little bit with the cadence of earnings throughout the year? Maybe how that will vary first half versus the second half, and then maybe also with that, how can we think about organic growth overall? Is there anything we should be mindful of there that will be reasonably consistent throughout the year? And then maybe also with that, can you parse a little bit on organic growth? How much will be coming from underlying demand growth and maybe pricing as well?

Russell Shaller: There's a lot of questions there. So first, I give the caveat of my crystal ball is not necessarily better than anyone else out there. So I'll give kind of my personal take. I think we were living in an area with a fair amount of industrial investments sitting on the sidelines, depending on which way elections go and what U.S. Energy Policy becomes. So we're kind of trying to thread the middle range of possible outcomes, which means we see relatively slow GDP growth in the United States and Europe. And to take a step back a bit, Brady traditionally is very dependent on overall economic health of the underlying countries that we serve. Not too surprisingly, if countries are doing well, there tends to be an investment in industrial production and capacity, and we come along with that overall spending as we are -- we tend to be a percentage of manufacturing investment in the customers that we serve. So what we're looking at, I think, in the coming year is more of the same of what we've seen over the past year. It's been, I would say, a little bit of a month-to-month roller coaster. I think that some of the distributors and some of our customers are still very tentative in how much capital they're willing to deploy. There's certainly we don't see anybody deferring maintenance or deferring necessary capital expenditures, but at the same time, we don't see too many customers that were all in and deciding to make really significant capital investments. I think, there, again, waiting to see how the outcome of some of the elections both in Europe and America. So as I look to the future, I think even with a relatively low GDP growth rate, I'm pretty excited about the products that we're launching and some of the initiatives that we're taking. Our industrial products group, which is a subset of the overall Americas and Europe, has been clocking in some pretty good numbers. We're looking at mid to high-single digit growth rates in, I think, a relatively stagnant macro environment. So where are we getting that growth A lot of it is expanding wallet share on the part of our customers. We've been able to continue to sell them and upgrade them and provide new and better use cases. So I think a lot of our growth continues to come from customers that we have, which is most of the industrial companies out there, and getting them to use more Brady products essentially to make their lives easier. Because I think in a lot of cases, the Brady solution simply is a more effective and efficient way to get the job done, and we're seeing growth. So, we have, I think, a very modest guidance in the coming year. What would make it better is, I think, lower energy prices, particularly in Europe. We see that as a very significant headwind for industrial capacity utilization in Europe. And, to the extent, they can get lower energy prices or get their energy under control. We see it better. France, which traditionally is a little more energy-independent than some of the other countries in the region. They're clocking some of our best organic sales growth rates. So I think that is a big part of the picture is where does energy go and where -- what is the level of optimism on the part of our customers for overall expansion in their capabilities and industrial production.

Cashen Keeler: Got it. Appreciate that.

Russell Shaller: Go ahead.

Cashen Keeler: Yeah. Thanks. And then just on Gravotech, at this juncture, I guess, what needs to be done to integrate that. And then I think you said the $13 million of EBITDA was excluding integration costs. So is there a figure we can think about in terms of costs associated with kind of integrating that business?

Russell Shaller: Yeah. So, first of all, Gravotech is a very successful company. And it's -- that's part of the reason we like it. We're not buying something that requires significant fix up. We're not looking at consolidating operations or anything major. There's a lot of -- there are a lot of opportunities that Gravotech pursues that Brady traditionally hasn't and vice-versa. So what we're looking for really is what new customers can we help Gravotech get to, and what new customers can Gravotech pull us into? Because we're definitely seeing that in some of the use cases. Yeah. Of course, whenever you purchase a company, there's always some minor things that need to happen in terms of consolidating back office operations and making sure they're on the same ERP system and what have you. In the scheme of things, they're relatively small. Like I said, I don't anticipate any consolidation of major operations. I think it's a little tweak here and a little tweak there. At the same time, what we're excited about is we think we can bring some R&D to Gravotech. And in some of the things that they do in terms of creation of images, that is the same thing Brady is doing with their printers already. We can do that. And I think we can accelerate Gravotech's R&D and their capabilities with some of the core software that Brady has already developed. So, like any acquisition, I think the first 12 months to 18 months is a little bit slow as you get it all the pieces put together. But after that, we see a really strong business case for the combined entity.

Cashen Keeler: Got it. Understood. And then the last one, if I can, just on buybacks. Is there a specific number you're looking to target next year? And then maybe also on that, I mean, what opportunities do you have in front of you in terms of capital deployment from an organic perspective? And I know you just did Gravotech, but maybe any areas in the portfolio you'd look to grow inorganically as well?

Russell Shaller: Yeah. Sure. So the stock buybacks is almost a double-edged sword. In some regards, we don't want them because that means that the market perceives our share price as undervalued. So, do we have a target? Yeah, we've authorized $100 million in share buybacks. But we've -- as in the past, we've been very disciplined in when we will use that money. So if the stock goes to a certain trading range, we'll start buying shares. But if it's -- if we considered it's fairly valued or not much of a discount to our cash flow, we'll keep our money. Because again, my overall preference unless the share price is significantly devalued, my preference is reinvesting in the company, either organically. And again, we love our R&D investment. That hands down is driving all of our growth and our gross margin improvement. And then secondly, there are some M&A opportunities out there. We continue to look at it. It will be certainly in either the materials space because we are -- we use our materials capability to drive a lot of our unique product differentiation. And then secondly, we're always interested in things that further our ability to do part marking, part identification. And -- so if there are things in areas in those two categories, if they become available and they're available at a price that we feel meets our financial objectives, then we could certainly see acquisitions in the future.

Cashen Keeler: Okay. Thank you.

Operator: Thank you. And our next question comes from Keith Housum with Northcoast Research. Your line is open.

Keith Housum: Good morning, guys, and congratulations on a solid quarter there. Russell, in terms of, like the Track & Trace initiatives that you guys are working on. I know that earlier this year, the V4500 came out as a data scanner. Perhaps, can you talk about the progress of that initiative? And perhaps, I know one product doesn't drive the sales by for you guys at all, but I think that scanner is probably ahead of some of your Track & Trace efforts. How is it against the early adoption or early acceptance by the market then?

Russell Shaller: Yeah. So we feel very good about the adoption of the product. And for us, it's building out a complete portfolio, which now will include lasers too. So our goal, and if you think and you take a step back of what manufacturing needs to do. You need to be able to identify a part, uniquely trace it through the manufacturing floor, be able to read it at various steps along the way before it gets either incorporated into another product or it gets sent out the door to a customer. So we want to be there at every step of that journey, not in the distribution side of things that's not really our core business, but throughout the manufacturing floor. And you see that in our industrial products and what we're doing. So I think, in a relatively anemic industrial automation environment right now, I'm super pleased with how we're doing in our entire industrial portfolio. Again, our products are designed to work seamlessly with one another, kind of like the Windows Office experience. What we're going for is immediate out-of-the-box usage. So a lot of customer, excuse me, a lot of products out there require a fair amount of handholding software integration and difficulty to get set up. Our goal is for all of our products to be able to plug and play and be used in minutes without much skill. And I think we're pretty far along in that journey. I talked about, in our -- at the tail end of my commentary, being able to do voice-enabled printers. I'm super excited about that. And if you think about the whole ease of use for our customers, we can do a voice-enabled barcode and then have the reader right there to verify the barcode and be able to tag it to the particular product. So there is a lot of -- there are a lot of things out there that provides rich content to our customers in a way that's super easy for them to use. And that's kind of the thesis of our business. There will be more products to come over the coming year as we round out the portfolio, but this has been something that we've been working on probably. We started in 2017 and 2018, and we've spent literally hundreds of millions of dollars to get to this point. And I am so excited to start seeing these products come out and working together, as are our customers.

Keith Housum: Yeah. And obviously, printers and cartridges are a big part of your business. With especially the ones that you kind of just mentioned there, do you anticipate leads will be accelerated the refresh cycle for printers that are currently out there, as well as expanding the addressable market?

Russell Shaller: Yeah. So two things. So virtually all of our printers have been refreshed and now work with Label Sense technology, certainly, all of our core products. So what does Label Sense do? If I'm printing on unique materials, so I'm not talking a paper label, but if I'm talking about a wire marker or something that goes on a printed circuit board or what have you, there's a decent amount of work that would have to go for a customer to configure their printer to print on a unique material and the setup and what have you to make it match that with our new set of cartridges that are all enabled with this, there's -- basically, there's a chip in the cartridge that tells the printer all of the settings that it needs to have to print optimally on that material. And that's a first in the industry. It can save in some kinds. It can save minutes -- to tens of minutes for our customers. And more importantly, they don't waste any material, because if you've ever seen this, you print a label -- in the old technology, you print a label, you don't like how it looks, you try it again, you don't like how it looks, you try it again. This way you get it one and done. First shot, it's working. And again, a lot of effort on the part of the R&D and product management team to get this up and rolling and getting it to work across literally hundreds of different material and printer combinations.

Keith Housum: Is there like just a Rule of Thumb in terms of the price increase, I guess, with this technology compared to the prior generation?

Russell Shaller: Yeah. We're not really pushing the price on this. The products, I think, are fantastic, and I think the value proposition to our customers is fantastic. So we're not trying to extract more out of them. We're trying to get customers to be more excited and make it easier for them to use it. As I've joked with some people, we're getting to drop the pen or use non-professional labeling. And really, I think Brady is most successful when it's a win-win, and we don't try to extract every last penny, but we enable our customers to get their jobs easier in a fair economic environment. So, no, we're not -- again, we're not really trying to push price. We're trying to push consumption and getting more printers and more cartridges in people's hands.

Keith Housum: Got you. Well, one more question for me, if you don't mind. SG&A, the most efficient, the best of the fourth quarter for you guys. Was there anything unique in the fourth quarter that suggests that this cadence shouldn't repeat into FY ‘25?

Russell Shaller: There were some little things back and forth. I don't know, Ann, if you want to make any commentary on that.

Ann Thornton: Sure. Yes. Really nothing unusual, Keith, in this quarter or this year. As we work through initiatives internally, sometimes it can be a little bit choppy in terms of SG&A up a bit, down a bit. But general trajectory, we expect to be at approximately this level and working downward into over the long term as we work through efficiency opportunities.

Keith Housum: Right. And this all excludes Gravotech, of course. That will change the dynamics a little bit.

Ann Thornton: Yeah. Great. Great point. Exactly.

Keith Housum: Okay. All right, guys. I'll stop there and get back in queue. Thanks.

Ann Thornton: Thank you.

Russell Shaller: Great.

Operator: Thank you. Our next question comes from Steve Ferazani with Sidoti. Your line is open.

Steve Ferazani: Good morning, Russell. Good morning, Ann. I want to ask a little bit about your progress in Southeast Asia and India. I know if we go back two or three years, those are practically greenfield opportunities for you. Can you give us a sense of how much traction you've gained and what the opportunity can be over the next three to five years as you see it right now?

Russell Shaller: Yeah. India started off -- I'm going back 10 years ago. India started off as a very small opportunity for us as a corporation. And I think due to the leadership team both in India and frankly, all of Southeast Asia, they are benefiting from some of the relocation out of China, as well as just overall economic growth in the particular country. So if I look over the last few years, we've added a second plant in India, relatively small, but it helps us be close to the customer. So we have two plants now, one in Bangalore and one in Delhi. We're seeing the results of those investments, like I said, we called out approximately 20% year-over-year growth, but this is on top of really a journey they've been on for many years, showing low double-digits growth rates. And we continue to invest in China. It's entirely possible if we continue our growth trajectory, that we'll be opening up a third plant there as well. And so we just, like I said, feel very positive. And even in some of the other countries that are relatively small, we can see some benefits that they're experiencing, again, is some of production relocations happening out of China. And you see it all through Southeast Asia. I think Vietnam, which is an incredibly small country for us, I wish it was bigger. I think they had like a 700% growth rate, but it was times a really small number. So we're slowly deploying additional salespeople, additional sales resources throughout the region. And this has always been Brady's business model of looking at what countries, what economies, what opportunities are growing, and making sure that we are targeting those with the right set of resources, whether it's R&D products or customer sales and support.

Steve Ferazani: Do you have to customize the products by markets? What they might buy in Vietnam or India might be different than what they're buying in the U.S. or the UK?

Russell Shaller: So. Absolutely. But it's kind of -- I'll call it end-user -- or end country customization. So Brady has a huge portfolio of products, I would say upwards of 2,000 of products that we really support and sell and then maybe another 10,000 that are less common. What you see in the different countries isn't that it's as much unique for the country is that they will overweight one product versus another. So, for instance, due to some blackout concerns and what have you in terms of energy, you'll see in India, they will buy way more glow in the dark signage and tapes than you might find in other countries. But we sell them worldwide is just, they would buy more in their country as a weight than others. Not surprisingly, our automation solutions tend to be much more heavily weighted to high cost geographies than lower cost. So if you look at our wire wrappers and what have you, those tend to be targeted towards countries where either labor is unavailable or if it is, it is comparatively expensive. So our whole portfolio is available to every country, but different countries choose to use different ones depending on their own unique needs and what they're doing.

Steve Ferazani: That's helpful. Thanks. If we could flip over to Europe, obviously, in 3Q. That was a really big surprise as Europe was particularly strong. I think you indicated at the time you had one really good month this quarter. It looked more like we probably could have predicted given the European economies. Can you give us a little bit more sense now what the -- if you saw what the difference was 3Q versus 4Q, and how that affects maybe your outlook and your strategy there into the new year?

Russell Shaller: Yeah. And this is always the problem when you have quarter-to-quarter results. You can have a little bit of shifting one day to the next and it falls in a quarter out of a quarter. I think our third quarter result was a little bit higher than we expected and our fourth quarter result was a little bit lower than we expected. If I was to take both together and the year as a whole, I think that was indicative of the overall European economy. Now with that said, we're seeing some pretty significant differences in countries. As I mentioned, France for us is doing incredibly well, which I guess we're probably one of the few companies that would say that. And on the same side, some countries that are having some energy problems, Germany, UK, and some other issues not doing as well. So, unfortunately, you get, for Europe, you get it all blended together, and it really is. It's a lot of differences amongst the individual countries depending on their policies and what they're doing and their overall capability set. So, as I said in the call, we remain very optimistic in Europe. They've had through -- I consider, a pretty anemic GDP growth rate. They've had 13 quarters of successive performance, and I'm sorry that this one broke the streak, but there's nothing to believe in the coming quarters that we don't see them back on the path of continued growth. Like I said the management team there is very tenured. They've been doing this for a long time. They know what they need to do. And I'm excited about the opportunities in some of the business cases that they've been talking about.

Steve Ferazani: Great. Guiding for CapEx, back down to $35 million. So it looks like under 2% of sales, again, reasonable to expect cash conversion is back towards 100% or more. Ann?

Russell Shaller: Yeah. So the only lumpy thing that ever happens with us outside of acquisitions. Occasionally, we flip a rental property to an owned property, and we did that last year, which were some pretty substantial cash outlays. But, in general, given our relatively modest needs. They are -- it's very much one-for-one. So we make a dollar, and that goes to the bottom line in cash.

Steve Ferazani: So I know others have asked this. So let me try it another way. You're going to start building cash very quickly again this year if guidance plays out. You were buying back stock at $56. You're much higher here, and you said you're opportunistic. I don't know what the M&A. Are you very comfortable building up the cash position again through the year, if that's how it plays out?

Russell Shaller: Well, there is -- the cash has to go somewhere. I don't want it to burn a hole in our pocket. I'm not going to buy something at a PDE of 25. That's just not part of our business. So, obviously, I would prefer to be in -- either in a zero or slight debt position. On the flip side, I'm not going to throw money away either. So we've been very disciplined as a corporation in how we deploy our cash. If it builds up and we don't see an acquisition opportunity, I'm perfectly comfortable in doing that. At the same time, I think our -- both our cash position and our cash generation gives us the possibility, should the property become available. And there's a few out there of doing a pretty substantial acquisition. And I would be delighted if we get in a position to make something that's more significant or possibly even transformative should it arise. So we're going to be disciplined, wait to see how the world evolves. And in the meantime, we've got a great rainy day fund should we ever need it.

Steve Ferazani: Great. Thanks, Russell.

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 for your questions. We performed well this year with another record quarter and record year of earnings per share and cash generation. We're investing in our organic business through our sales force and we made the largest investment in R&D in the company's history this year. We expect these investments will continue to drive sales growth into the long term. We're also in an incredibly strong financial position. Fiscal '21, '22, '23 and now '24 were all record years of EPS and we're once again guiding to another year in 2025. The macroeconomic is constantly changing, but our approach continues to be to control what we can while focusing on our formula for success, investing in our organization to create new products that make our customers' life better, while delivering a positive return to our investors. I'm looking forward to the future and I know that our global team has the ability to overcome challenges, think creatively, and continue to deliver results. Thank you for your time this morning and for your interest in Brady. Operator, you may disconnect the call.

Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.