Brady Corporation

Ladies and gentlemen, thank you for standing by and welcome to the Q2 2021 Brady Corporation Earnings Conference Call. At this time, all participants' lines are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker today, Ann Thornton, Chief Accounting Officer. Thank you. Please go ahead, madam.

Thank you. Good morning and welcome to the Brady Corporation Fiscal 2021 Second Quarter Earnings Conference Call. The slides for this morning's call are located on our website at www.bradycorp.com slash 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 2020 Form 10-K, which was filed with the SEC in September of 2020. 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, Michael Nauman. Michael?

Thank you, Ann. Good morning, and thank you all for joining us on this beautiful winter day. This morning we released our fiscal 2021 second quarter financial results. This was another strong quarter in a challenging economic environment. The Brady team is doing a good job navigating through these unprecedented times and is executing well, innovating for our customers and providing many of the products that are needed to help fight this pandemic. I'm proud of the accomplishments of the entire Brady team. Our priority continues to be the safety of our employees and ensuring that we're providing the products that our customers need so they can continue to operate and keep their employees and their customers safe. We're proud to support small businesses and frontline workers all around the globe, including first responders, healthcare workers, food processing companies, logistic companies, retail establishments, schools, and virtually every essential industry. The macro environment certainly remains challenging, and this global pandemic is far from over. Even with the positive news on the vaccine front, we believe that several of our end markets will continue to be challenged in the near term. For instance, in our IDS business, we sell into many small niche identification markets aimed at identifying people in the workplace, at entertainment venues, and other events such as concerts. We expect these markets to be depressed for a longer period of time, whereas our general industrial business is certainly coming back much faster. Our goal has been and will continue to be to control what we can in the short term by keeping our employees safe, serving our customers extremely well, and delivering strong financial results. At the same time, we're investing heavily in order to accelerate our growth as we exit this challenging period. This strong focus on executing now while investing in the long term has enabled us to improve our business fundamentals. We've driven improvements in our cost structure, which will help drive even stronger profits and cash flow as our businesses increase revenues. We've been working on a multi-year effort to become a leaner organization, which can clearly be seen in our financial trends as our growth margins are strong and our SG&A expense continues to trend downwards. Our focus on efficiency and effectiveness is not over. And as we look to the future, we certainly see many additional opportunities to continue to streamline. Becoming a leaner and more efficient organization is certainly important. However, what's more important at this junction in our history is ensuring we're taking the appropriate actions to accelerate sales growth. We've been upgrading our websites, improving our marketing capabilities, developing new products, investing in capacity-enhancing machinery, and making the marketing investments necessary to grow our top line as we come out of this downturn and into the future. Profitable sales growth is our number one priority. For instance, in ID Solutions business, we've been increasing our R&D spend and seeing positive results as we are launching new products at an increasing rate, and we're continuing to distance ourselves from our competitors who don't have the scale to invest this heavily in R&D. We're also expanding our sales force and expanding geographically into underserved markets with strong future growth potential, including India and other markets in Southeast Asia and Eastern Europe. We're also improving our online presence by upgrading our websites throughout the globe and investing more in digital marketing talent. Our strong new product lineup combined with investments in sales marketing and online presence gives us confidence that our IDS solutions business will grow at a faster rate as our in-markets improve. In our workplace safety business, we're also making significant investments to accelerate our sales growth. Throughout the pandemic, we're ratcheting up our online marketing campaigns, helping us to reach many new customers and expand our customer base. We've completed our migration to a common web platform, giving us much stronger market intelligence and the ability to quickly adapt to changing market dynamics. We've increased our investments in new product development and increased the number of proprietary new products that our customers want and need today to keep their employees and customers safe. And we're adding new salespeople around the globe to accelerate our sales even further. The actions we're taking today, combined with our recent expanded customer base, will result in a strong future for our workplace safety business. I'm very confident that Brady will see revenue growth in the upcoming quarters, which will increase as a result of this strong focus on growing organic sales, combined with our rock-solid balance sheet and strong cash flow, which gives us significant dry powder to accelerate growth through further R&D efforts and business acquisitions. Our strong balance sheet also allows us to keep investing and to keep returning funds to our shareholders, which will enable us to generate outside shareholder returns in the future as we put our balance sheet to work. Brady is well positioned as we enter calendar 2021. Today, we're providing earnings guidance for the back of our fiscal 2021. where we expect to return to healthy revenue and earnings growth. Overall, I'm confident in our ability to deliver results for our customers, our employees, and, of course, for our shareholders. I'll now turn the call over to Aaron to give a little more detail on our financial results, and then I'll return to provide specific commentary about our identification solutions and workplace safety businesses. Aaron?