Brady Corporation (NYSE:BRC) Q1 2023 Earnings Call Transcript

Keith Housum: Is that based on revenue and gross profits, or bottom line? Can you give me a little bit of context on what it’s based on?

Russell Shaller: Yes. So, it really the two principal parts of it are no surprise, top line, revenue growth and bottom line, operating income.

Keith Housum: Got it. Helpful. Thank you. Appreciate it. And in terms of like your price increases, I know your commentary that you are still lagging, the raw material increases, and other contributors that have gross margins are custom? So, how far long do you think you guys are in the price increases. So, for example, if inflation kind of came to a halt today, will the price increases still had to go through the next several quarters?

Russell Shaller: If inflation literally stopped today, I would say our price increases essentially would stop Now, there might be a couple of small places here and there that we would still look at. But right now, we are anticipating future price increases, because we are also anticipating future increases in raw materials. It takes us about two months to three months from when we make a decision to actually do it and get into our customers, because there is notification periods. And the sheer effort to go through hundreds of €“ tens of thousands of SKUs at least and change pricing is a non-trivial process, because there is some nuance in how we do it. But right now, we are anticipating a price increase in most of our products in January. We are still €“ we are making the decision right now that that’s going to happen, but we could always backpedal it all of a sudden we saw a significant change in inflation.

Keith Housum: Great. I appreciate it. Thank you.

Operator: Thank you. At this time, I would like to turn the conference back to Russell Shaller, President and CEO for closing remarks.

Russell Shaller: Perfect. Thank you all very much for your time today and for your thoughtful questions. Brady has a business that is positioned to perform well regardless of which direction the economy had. We now have a proven history of being faster than GDP growing company. Our pricing and efficiency actions are expected to help us stay in the upper 40% to near 50% in gross profit margin. Our IDS division continues to perform well and the actions we have taken to improve our workplace safety business are clearly working. And we have a fortress balance sheet which enables us to keep investing in both organic and inorganic growth, while also returning funds to our shareholders. Even though the future of the macro economy is uncertain, I am very optimistic about Brady’s future. Thank you for your time this morning. Have a great day. Operator, you may disconnect the call.

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