Brady Corp (BRC) 2004 Q3 法說會逐字稿

Good day, ladies and gentlemen, and welcome to your quarter three 2004 Brady Corporation earnings conference call. (OPERATOR INSTRUCTIONS). At this time, I would like to turn the conference over to your host, Barb Bolens, Director of Investor Relations. Ma'am, over to you.

Thank you, and welcome to our fiscal 2004 third-quarter conference call. We're glad you could join us this morning. Today we're broadcasting live from the New York Stock Exchange where we're celebrating our fifth anniversary of listing on the exchange by ringing the closing bell. During the call today, you'll hear from Frank Jaehnert, CEO, who will be presenting a portion of the business review and will also be summarizing our discussion. David Mathieson will be presenting Brady's quarterly financial review. Also joining us this morning is Peter Sephton, Vice President of Brady Europe, to provide some additional insight on Brady's operations in Europe. Matt Williamson, VP of Brady Americas, is also joining us and will present the report for the Americas. As usual after brief presentations by the team, we will open up the floor to questions.

You'll notice today we've revised our conference call format slightly. We have enhanced the slides that accompany our remarks and we encourage you to follow along on those slides. We will be referring to the individual slides as we proceed through the presentation. These slides can be found on our Website, at www.investor.BradyCorp.com. You have a few minutes to get to those while we go through our Safe Harbor statement and other usual information.

Please note that in this call we may make comments about forward-looking information. Words such as expect, believe and anticipate are a few examples of words identifying a forward-looking statement. It is important to note that forward-looking information is subject to various risk factors and uncertainties, which could significantly impact expected results. Risk factors are noted in our news release this morning and in the 10-Q filed with the SEC in March of 2004. Second, please note that this teleconference is copyrighted by Brady Corp. and there may be no rebroadcasting of this without express written consent of Brady. Note also that Brady will be taping the call and rebroadcasting it on the Internet, and your participation in the question-and-answer session will constitute your consent to being recorded. Thank you, and now here's Frank Jaehnert.

Good morning, and thanks for joining us. I'm very happy to discuss our third-quarter results today. It was a very strong quarter throughout the entire company. We are pleased to report a return to core growth in North America and Europe, our two largest regions. Based on the quarter, (indiscernible) $80.9 million (ph), which was up 27 percent over fiscal '03 third quarter. Net income was also a record 16.4 million, up 91 percent over the same quarter last year. Net income as a percent of sales rose to 9.1 percent in the quarter.

Slides Three and Four highlight some of the key accomplishments for the quarter. Our gross margins were up 3 (ph) percentage points from last year. SG&A as a percent of sales improved 3.7 percentage points from last year and operating margins improved 12.6 percentage points. (indiscernible) will complete with you the financials shortly. But these numbers are worthy of pointing out more than once. Because we have been through so much this past year in terms of reorganizing the Company to improve our cost structure, reorganizing the Company's growth engine, refining our strategy and improving our operational excellence, these results are particularly rewarding. Our strategy and actions are paying off. Not only did we have a great quarter financially but we also announced that we signed an agreement to acquire EMED, which will be the largest acquisition in the Company's history. We are pleased to announce today that we have received regulatory approval for the acquisition and intend to close the acquisition within a few days.

Additionally during the quarter, we launched three new exciting products, the Director (ph) Printer Applicator, ID Expert Label Printer, and the two (indiscernible) for the Asian market. We will discuss these in more detail during the Americas presentation, but these two products add value to our strategy of developing unique, proprietary products. As we have done since recording (ph) our regional structure, we have had different regional executives provide additional insights into his or her region. This quarter, Matt Williamson, Vice President of Brady Americas and Peter Sephton, Vice President of Brady Europe, join us to give us additional information for the Americas, Europe and Asia. So now I would like to turn the call over to David Mathieson, our Chief Financial Officer, who will review our quarterly financials in more detail. David?

Thanks, Frank, and good morning, everyone. I'm pleased to present the results for the third quarter of our 2004 fiscal year. If you look at Slide 5 -- our (indiscernible) net sales were $181 million, up 27 percent from the same quarter last year. Base business (indiscernible) with growth of 11 percent, currency added 8 percent and acquisitions brought another 9 percent. This growth in the Americas and Europe was solid with high single-digit growth. Asia continued to perform well with base growth of 37 percent.

On Slide Six in the Americas, base (ph) sales were up 7 percent from the same quarter last year. Sales improved 10 percent in the Brady brand business and 1 percent in the direct marketing business. In the Brady business, we saw rebounds in the electronics marketplace and a steady improvement with the channel partners. Although it had a modest growth rate, the direct marketing business is trending upward.

On Slide Seven, in Europe, base sales and local currency were up 8 percent. Sales grew 11 percent in our direct marketing business and 6 percent in our Brady brand business. The highlights for the quarter are the rebound we have seen in the electronics and telecom market and the solid growth in our UK (ph) business.

On Slide Eight, Asia continued to perform well with base growth in local currency of 37 percent. We see our investments over the last few years really paying off. China and Malaysia have doubled in size just since last year. Overall the region is again producing great results, as we will cover in more detail later in this call.

On Slide Nine, gross margin for the quarter was 52.5 (ph) percent, an improvement of 1 point versus last year and 1.3 points from last quarter. Gross margin improved in all regions. In addition to volume increases, improved price yields and Six Sigma cost reductions contributed to the improvement.

On Slide 10, SG&A of $64.5 million (indiscernible) at 35.7 (ph) percent of sales or 3.9 points below the prior-year third quarter. As discussed in previous calls, we anticipated this improvement as we continue to see the benefit of our restructuring and cost control programs. We are funding our core growth by reallocating, not by (indiscernible) expenses.

On slide 11, restructure (ph) and development was 3.4 percent of sales, 0.3 percent lower than the third quarter of 2003. However, in dollars their spending increased $1 million from the quarter.

On Slide 12, during the quarter, we reduced our year-to-date effective tax rate from 35.3 percent to 31.8 (ph) percent as our business and profit growth shifts to lower tax countries. The net income impact from this change was $1 million in this quarter. We expect 32 percent effective tax rate for the fourth quarter of fiscal '04 and similarly in fiscal '05.

On Slide 13, net income for the quarter was $16.4 million versus 8.6 million in the prior year, that's an increase of 91 percent. Diluted earnings per share for the quarter were 68 cents versus 37 cents last year. This included a positive 7 cents impact of currency, a positive tax improvement of 4 cents, partially offset by a 1 cent restructuring charge.

Because third quarter is a normally strong quarter for us with stronger revenues with this year being no exception, our expenses and resulting margins as a percent of sales have all shown nice improvements. I would like to remind you that by holding expense dollars constant during the fourth quarter, the percentages will not stay as low as they are this quarter.

Headcount was approximately 3,600 by the end of the quarter. Headcount grew 400 people over the same period last year. The headcount in North America and Europe continues to trend down. The growth came from investment in emerging markets and acquisitions.

Slide 14 and 15, we generated 21.6 million in cash for the quarter. This is up significantly from the first three quarters due to strong profitability and the fact there were no acquisitions funded during the quarter.

Slide 16 and 17, looking at the balance sheet, our cash at the end of the quarter was $80 million. Our receivables increased consistent with our sales. Our inventory declined in the Americas because we began to reduce our safety (ph) stock (ph) levels as we successfully began converting products in our Mexico facility. The growth in other liabilities consists of increases in our rates payable for incentives, and taxes payable both as the result of the strong profit.

Slide 18, looking forward to the remainder of fiscal 2004, we expect full-year sales to be in the range of 645 to $655 million and net income of 47 to $49 million, including restructuring charges. This is up from our previous statements as a result of an ongoing federal tax audit that we expect to finalize in the fourth quarter and which will yield approximately $3 million.

I will now turn the call over to Matt Williamson.

Thanks, David. Please refer to Slide 19 for the Americas summary. Sales for the Americas region rose almost 17 percent. Of that total, base business grew 7 percent and acquisitions made up EIGHT percent of that growth. The growth in the Brady brand core business outpaced that of the direct marketing business. Profit for the segment rose 42 percent over the same quarter last year due to increased volume, as well as cost reductions and operational improvements. In all, a very healthy quarter for our region that has been hard hit over the last several years.

The Brady business saw positive growth in the Americas across all products. Markets that were particularly strong included lab research, electronic and industrial OEM markets. We have begun also to see a rebound in the safety, MRO and electrical markets. Our tech links bar-code business also saw solid growth driven by product improvements and the improving industrial market.

Within the direct marketing channel, we also saw pick-up in our U.S. manufacturing and MRO customers. We attribute this growth to a recovering U.S. manufacturing economy but also due to several Seton initiatives, including 148 page expansion in the Seton sourcebook in January, as well as increases in our Seton.com business. The construction industry continues to be soft. Results in both the Brady and Seton brands in Brazil were strong in many of the same markets. We will be increasing our production capacity in that region to meet the expanded demand in the industrial, electronic and telecommunications markets.

Several new products were launched in the third quarter that we are quite optimistic will solidify our market leadership position in the electrical markets for wire identification. We sold our first units of the revolutionary rafter printer applicator. This system automatically prints and applies proprietary Brady wire markers to a wide range of wires used in wire harnesses and electrical equipment. In April, we began the rollout to our Americas distributors the latest two versions of our portable printers, branded the ID Expert Label Printer. These printers, designed and assembled by Brady, utilize thermal printing technologies to make a variety of wire markers, labels and safety markers. Initial reception to the product has been very good. The integration of our acquisition of Printing Enterprises is incomplete, and our ramp-up at the Tijuana, Mexico production facility is going very well and anticipated to be complete in the fourth quarter.

Now I would like to turn the time over to Peter Sephton to give the European and Asian reports.

Thank you, Matt. Hello, everyone. I am Peter Sephton, Vice President of Brady Europe. Before we get into financial results for the region, let me give you some background on our European business. This is Slide 21. At the end of fiscal '03, Europe accounted for 36 percent of Brady's overall business. The region generates revenues in excess of $200 million per year and Brady has had a presence in the European market since the 1950s. We employ over 1,000 people and operate high-(indiscernible) production or sales facilities in seven countries with 17 locations in total. The direct marketing side of the business accounts for a larger portion of the total European business, where we have a strong Brady presence in the region, also.

Moving on to Slide 21, for the quarter, sales in the region increased strongly, by $18.8 million to 69.7 million in total, an increase of 37 percent over the same period last year. Acquisitions added 13.1 percent, reflecting Eckti (ph) Mark, in Germany, Thayer (ph) Vantage, Ltd., Aztec Ltd. and B.I.G. (ph) in the UK. Currency added 15.6 (ph) percent. Base sales increased 8.4 percent over the same period last year. Operating profit increased 66 percent over the same period last year, 45 percent in local currency to $19.4 million, driven both by the benefits from our restructuring and improving gross margins. Gross margins have improved due to the purchasing power from the strong Euro as well as efforts to improve our product mix towards higher margin product lines. Operating expenses continue to run below last year's level, before taking into account our recent acquisitions.

Despite continued sluggish economic growth in the region, our average base growth in the Euro zone is over twice the level of GDP growth. All businesses in the region experienced solid base growth in the quarter, driven largely from the direct marketing business under the Seton and Signals brand names. We've seen a solid improvement in this business at the turn of our calendar year, benefiting from ongoing programs to leverage our existing customer share of wallet with new product offerings. In this high-volume business, we service over 250,000 customers and our efforts to retain them by excellent customer service and an expanded product offering has excellent leverage. In addition, our Seton corporate initiative has grown by over 30 percent year-on-year. With this model, we take our (indiscernible) of over 30.000 products to major corporations and help them consolidate their MRO supply chain. By leveraging our product range and our ability to adapt our e-catalogs so that it fits with their requirements, we can thus reduce their transaction costs and help them quickly comply with new and ever-changing legislation.

Our Brady brand sales were up 6 percent in the region. Within this offering, we see some strengthening, especially in our high-performance label business, which grew by 8.7 percent. In particular, our business in Eastern and Central Europe was very encouraging and continues to grow, expanding nearly 50 percent in the quarter, driven by our ability to follow global manufacturers as they shift production to lower cost regions. Similarly, our growth in unique vertical markets such as identification solutions for the laboratory market, is growing very fast, albeit from a modest base.

We are encouraged by the base growth in our mature markets and the fact that the growth is across both our Brady and Seton brands. Our investments and improved selling skills, train the trainer programs, leveraging our beta (ph) base (ph) marketing skills across the region, offering our distribution partners access to an expanded product range with our At-one (ph) initiative, as well as aggressively introducing new products to all our catalogs, are all paying off well and generating good core growth, in what are generally mature markets.

Our acquisition program continues to gather pace. We took a market-leading position in personal identification with the acquisition of the B.I.G. Group in the UK earlier this year, and we are successfully exporting synergies between this business and our mail-order expertise. We are constantly searching for new value added companies that fit with our portfolio of businesses that enable us to take market leading positions in our chosen markets basis, especially in MRO supplies, which typically give us greater opportunity in mature markets.

In summary, our strategy of excellence and execution is working. By doing the basics well, increasing our operating margins by driving our competitors and non-value (ph) adding costs, leveraging our resources and expertise across the region, into value-generating growth initiatives, we have seen good sales growth, well ahead of GDP, and profit growth well into double digits. Our outlook remains positive.

I'll now move on and read our results for Asia on behalf of my colleague, Andy Klotsche, who's not -- who's the Vice President of this region and isn't with us today.

This is Slide 22. Performance (indiscernible) remains strong (indiscernible) throughout all areas. Sales for the region were $21.9 million, up 50 percent over last year. Profit for this segment was $6.5 million, up 98 percent over last year. China is continuing to grow rapidly and profitably for Brady, allowing us to continue adding capabilities and personnel in support of future opportunities. Our fastest-growing market segment in China is telecommunications handset manufacturers such as Motorola, Nokia, Siemens and Sony Ericsson. With more than 280 million mobile subscribers, China is the world's largest and most hotly (ph) contested (ph) mobile communication market. Industry leaders estimate there will be 435 million mobile communication customers in China by the year 2008. Just this week, Siemens Mobile announced a long-term strategic partnership with Ningbo Bird Company, China's leading mobile phone manufacturer. Brady's existing market share with both companies should position us well for the tremendous growth that is anticipated.

Elsewhere throughout Asia, we continue to perform well with effective (indiscernible) performance (indiscernible) products that we can offer. Despite some business transferring to China, there are still important design centers in the region that control key sourcing decisions. Our connected global network and strategic account management programs are very effective at specifying, designing and retaining this business wherever it goes in the world. Additionally, we are continuing to study the opportunities that exist in other growing markets such as Thailand and India. We are increasing our resources in both areas to fully define the market opportunities and challenges to a broader market entry.

We continue to work very closely within our niche markets to understand our future product development needs and challenges. Our initial investments and R&D capabilities in the region, both North and South, has been well-received by our customers. In the coming year, we're looking forward to expanding our R&D capabilities and personnel in the region to better service these needs and opportunities. This quarter, we launched Brady's first-ever portable printing system designed specifically for the Asian market. SLC two-byte (ph) printer is the only portable thermal transfer printer with the ability to print both English and two-byte character sets at the same time.

While the electronic industry provides visible opportunities for immediate sales, we believe very strongly in the future demand for wire marking, safety and facility identification in China. This product allows us to bring a tailored solution to the expanding base of customers. Initial reaction in the marketplace has been very strong. We also launched an exciting new high-performance labeling materials to the electronics market, which allow our customers to increase productivity through work in process tracking. Our accelerated efforts to find synergistic acquisitions has proven to be a formidable challenge. But our pipeline remains full of opportunities which could help us add to our core growth and take us into new markets. Asia continues to benefit from the many corporate initiatives and acquisitions which fit well with the base of multinational customers in the region. Examples of where Asia has been successful leveraging this knowledge includes laboratory identification, thermal management and automotive electronics. I'd like to turn the call back to Frank, who will summarize some key points from today's discussion.

Thanks, Peter. Before we begin the Q&A, let me summarize some key themes from this great quarter. These follow the focus of our key initiatives throughout last year. For those of you who have known us for some time understand that Brady's success comes from effectively implementing many different initiatives. We do not have one (indiscernible) bullet (ph) (indiscernible). This has been and continues to be a lot of hard work.

Let me illustrate this by reviewing our activities over the last 12 months. After a disappointing fiscal 2003, we first concentrated on improving net income. To-date, our profitability continues to show great progress due to the significant efforts we made to reduce our cost structure. Next we wanted to re-ignite the growth engine, not only through acquisitions but also through core growth. We have found (ph) it in a return to seeing solid core growth in all regions and across most of our major markets. The results are aided by improving economies but we also believe that part of it is driven by Brady initiatives.

Finally our acquisition program continues to successfully move forward. We announced in the quarter that we signed an agreement to make the largest acquisition that the Company has ever made, and today we announced that all remaining hurdles have been cleared for closing. We intend to close this acquisition in the next couple of days. Earlier in the call, we discussed our success integrating the large several acquisitions we have made. We continue to make it a priority to get the full benefit out of each acquisition we make. (Indiscernible) discussed our increased guidance for the remainder of the year. We are further refining our revenue guidance to 645 to 665 million in sales and also due to an unexpected -- to an expected -- favorable resolution for tax audit, we anticipate recording an additional 3 million of net income in the fourth quarter, which brings our net income guidance to 47 million to 49 million, including restructuring charges. We appreciate your interest in Brady and would now like to start the question-and-answer session.

(OPERATOR INSTRUCTIONS). Mark Roberts, Wachovia Capital Markets.

Thank you, good morning. I have a couple of questions actually. First of all, the simple one, Dave, did I understand you to say that you think that the effective tax rate will continue to fall as it has been over the last few years and be in the 33 percent range for '05?

I'm sorry, we believe it will be 32 (ph) percent for this year and a similar rate for next year, Mark.

Okay. So actually 32 percent for next year?

Yes, yes.

Okay, great, that's very helpful. Secondly, in your -- Peter, you were talking about your fastest growing area being die-cut for cell phones in Asia. Based on your surveys of customers, do you have a sense of what your total market share would be in die-cut parts in cell phones, either globally or within Asia?

Mark, I was reading this statement on behalf of my colleague, Andy Klotsche, so I'm not really qualified to answer that. So I will throw that back to any of my colleagues to see if we have --

No, we do not know this. I mean I'm sure Al know, but we just don't know. And he probably can pull up this one. That's not a material question. I think we can give you the information later.

Yes, would it be your sense though that you're gaining share, or is this just the result of increased demand for cell phones globally?

I do believe we are gaining share. And one of the reasons we're gaining share is because of our global enterprise. Many of our customers such as Nokia and Siemens for instance, they are not only in Europe, they are also in the United States and Asia and they are Brazil. For instance, Siemens and Nokia (indiscernible) Manaus. I think they are the only die-cut manufacturer in Manaus in Brazil. And of course, if you are in Manaus, and then you are in the Beijing area and you're in Europe and in the United States and you have access to the headquarters of the designs and are close to the manufacturing places, that's how you gain share and that's what happened throughout the last couple of years. And we have anecdotal examples of our competitors who are within one region, actually lost business because the customer moved business to other areas. Now I'm not sure if Andy were here, he could give you the numbers; if he was here maybe he would know it by heart. But I think he can get back to you and tell you -- give you a flavor of what this meant in the past couple of years.

I can probably embellish the answer a little bit, Mark, by the global strategic account, the global strategic cap (ph) initiative offers our range of die-cut products as well as our identification products, and that gives us a very strong position, I think, with our global footprint. I would embellish that we're most likely gaining share.

Great, that's very helpful. And my last question is, you announced today several new specialty printer products. You talk about, are any of these new printer products for these specialized applications, are you going to be competing against similar products from Zebra?

No, they don't make products in those product ranges.

Ajit Pai, Thomas Weisel Partners.

Good morning, gentlemen, and congratulations on a great quarter.

Thank you.

Just a couple of questions. The first is that your tax rate that you've guided to of 32 percent for this year and you expect it to continue next year, it doesn't include the impact of the EMED acquisition.

That's correct.

So when you add EMED the tax rate would be higher. But can you give us some color as to how much higher it would go and approximately what kind of revenues you expect since you're so close to closing on the deal?

Ajit, we're going to be providing additional financials as we file the 8-K for the pro forma entity. So at this point, the information we gave at the initial announcement of EMED saying you know we would expect our tax rate to go up slightly is about all we've got for you. But we will provide more as we go forward.

Okay. Well, the second section actually looks at your operating margins by geography. And you know I look at your Americas operating margin, it's in the 20 percent range and Europe and Asia are 28 percent and 30 percent. Is there a structural reason why the Americas cannot achieve similar like operating margins?

Well, we've improved the operating margins in the Americas. Their profit went up substantially more than our sales. We do most of our R&D in Americas, Ajit, which keeps the margins somewhat more than in Europe and in Asia.

Right. So the expansion you want year-over-year is from 17 percent to 20 percent, so you saw a 3 percent improvement in the Americas in operating margin. In Europe you saw 5 percent and in Asia you saw 7 percent, you know percentage point improvement. So that could be attributed primarily to the R&D being in the Americas?

It's one of the reasons for it, yes.

Okay. And then the second question on the same operating margin question have you gotten all the synergies out on the cost side of combining you know the way you reported things earlier as two business segments?

Yes.

So all those -- you don't expect any further synergies going forward coming from that?

No.

Most of the synergies will be (indiscernible).

What we're doing is (indiscernible) is that we are selling more. The selling model is improving and we are able to execute better because our salesmen are better trained to sell across products.

Okay. And then the last question is, you know, are you looking at participating in a more active way in the RF ID market, or is that something that is not necessarily a (indiscernible) strategy right now?

Actually we have been in RF ID five years ago, as a matter of fact. We continuously and periodically review our products (ph) and we look at our opportunities. Whenever a new technology comes out such as RF ID, and I call it new although it has been around for quite some time -- we always look at how could this possibly (ph) impact our business. Right now what's happening is RF ID is being embraced by the retail market, like Wal-Mart is driving it big time, which we applaud, we are delighted. But in the industrial part of the business, it is not common yet, but it will be coming. And many times, we will be there, so we will be watching it. But we do not want to take a new technology into a market which we are not playing in. And right now we are not playing in retail. We are more industrial, electronics, telecom, (indiscernible) residential construction and so forth. Once we see that our customers have opportunities to use this technology to improve their operations, we will certainly be a player.

Okay. Thank you, so much.

(OPERATOR INSTRUCTIONS). Jim Kittner (ph), Kittner-Lootman (ph) Capital.

Good morning, and congratulations, everyone.

Hi, Jim.

I'm trying to get an understanding, Frank, of -- first of all I wanted to thank you for giving us a longer-term kind of objective view of what the business (inaudible) generate. But what I'm trying to understand is how are the margins going to look going out? Can you give us some help both on the gross margin and the cost of goods sold line? Are we going to get most of this margin expansion really from the SG&A side of it?

Jim, we are looking at all areas for improvement. While the major restructuring efforts are (indiscernible) we have seen the benefit from it. We continue to look at opportunities to increase our gross margins, to do proprietary offerings, proprietary products, services, through increased investment in R&D. And we believe there is still room for a further improvement in gross margin. However, we also do believe that there might be more opportunity in SG&A because our gross margins are down about 50 percent. Not too many companies out there is with these kinds of gross margins. So we think we can still improve but I think it will not be as maybe as big as what (indiscernible) SG&A. But we have not given up on this yet.

Okay, it sounds like you guys really don't want to talk about the structure of your -- of this big deal at all. Is that true at this point? Because there are a lot of questions I have revolving around that.

Yes, we just would like to close the acquisition and once we have closed it, we'll provide more guidance. And we have provided preliminary guidance for next year, what the EPS impact would be, what the sales impact would be. And we would just to like to leave it at this point in time. But we have not closed the deal yet. Money has not changed hands yet. We have not locked in interest rates. All these things are still changing. Just give us a couple of more days and then I think we will be able to give you a little more flavor on this one. I just heard from our Chief Financial Officer; he wants to have more time.

Frank, I remember when you used to be CFO, you asked for more time but your predecessor didn't give you that opportunity! I will leave it at that. My questions really revolve around that, so I will get off right now and let somebody else step in.

Thank you, Jim.

Ron Mushak (ph), Sysemenic (ph) Financial.

I was wondering how much in restructuring charges you're including in the guidance? I know it includes a $3 million tax gain, but what's the charge amount?

The total for the year, pretax, will be $3 million approximately.

Three million. And the 3 million tax refund is obviously after taxes?

Yes.

Okay, thank you.

(OPERATOR INSTRUCTIONS). I am showing no questions. I'd like to turn it back to you for closing remarks. Thanks, very much, Jean.

Thanks for joining us today. The audio on the slides from the call today are available on our Website at www.investor.BradyCorp.com. If you'd like to listen to a replay of this call via the phone, you may do so at 1 PM Eastern time today and the phone number for that replay is 888-286-8010. International callers, dial 617-801-6888. A pass code of 68304747 will be needed to activate the call. The phone replay will be available until 11;59 PM on Monday, May 24. As always, if you have questions, please contact us and, again, we thank you for your interest in Brady and wish you a great day. Operator, please disconnect the call.

Ladies and gentlemen, thank you for joining us on the call. You may now disconnect at this time.