Thank you for standing by, and welcome to the Q4 2021 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] As a reminder, today's conference call is being recorded. I would now like to turn the conference over to your host, Ms. Ann Thornton, Chief Accounting Officer. You may begin.

Thank you. Good morning, and welcome to the Brady Corporation fiscal 2021 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 2021 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 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.

Thank you, Ann. Good morning, and thank you all for joining us today. This morning, we released our fiscal 2021 fourth quarter financial results, capping off a record earnings per share year. I'm proud of how the Brady team was able to navigate this challenging economic environment and deliver for both our customers and our shareholders. Brady played a very important role in the global fight against this pandemic throughout the last year-and-a-half. In our WPS business, we worked tirelessly to manufacture, source and deliver many of the products that our customers needed to aid in social distancing or to help provide a more hygienic environment for employees returning to work. We provided support to first responders, healthcare workers, food processing companies, logistics companies, retail establishments, schools and virtually every other essential industry by helping solve their safety and identification needs to ensure that they could fulfill their missions. Our floor-marking, safety signs and many other products were used throughout the world. In our Identification Solutions business, we also provided many products into the healthcare industry and laboratories to identify and track samples and to help keep patients safe. Brady's safety and identification products were in demand and our team stepped up to deliver the products that help make the world a safer place. To put it mildly, this was a challenging year as we navigated through a rapidly evolving environment, all while never wavering from our primary goals of keeping our employees safe and ensuring that we meet the demands of our customers. It's clear that this pandemic is not yet behind us as new variants have emerged and COVID cases are still high and rising in many countries around the globe, plus we and many other companies are dealing with supply chain disruptions caused by the abrupt shutdowns…

Thank you, Michael. Good morning, everyone. I'll start the financial review on Slide number 3. Sales in the fourth quarter were $306.1 million which was an increase of 21.6% compared to the same quarter last year. GAAP pretax earnings were $41.6 million which was an increase of 19.4% when compared to Q4 of last year. Non-GAAP pretax income was $45.4 million which was an increase of 30% when compared to Q4 of last year. The only adjustment to arrive at non-GAAP pretax income is the removal of truly nonrecurring costs, such as acquisition-related legal fees, tax fees and accounting fees as well as the financial impact from recording inventories at fair value. GAAP diluted EPS finished at $0.53, while non-GAAP EPS increased 32% to $0.70 this quarter. The only adjustments to arrive at non-GAAP EPS were the removal of the acquisition costs that I just mentioned, removal of a nonrecurring tax charge related to one of the acquisitions and the removal of an impairment charge related to an equity method investment. We also had another very strong quarter of cash generation. Cash provided by operating activities was $50.8 million which was 12.6% higher than the $45.1 million of operating cash flow generated in the fourth quarter of last year. So financially, Q4 was a very strong quarter. Moving to Slide number 4, you'll find our quarterly sales trends. Our plus 20% sales increase consisted of organic sales growth of 12.6%, an increase from acquisitions of 4.7% and an increase from foreign currency translation of 4.3%. Organic sales continued to improve in our ID Solutions business and finished up a robust 24.5% in Q4. Our Workplace Safety business benefited from strong COVID-related product sales in last year's fourth quarter. As a result of these tough comparables, we saw a decline in…

Thank you, Aaron. Slide number 14 outlines the fourth quarter financial results for our Identification Solutions business. IDS sales increased 35%, finishing at $231 million. This sales growth is comprised of organic growth of 24.5%, acquisition growth of 6.9% and an increase of 3.6% from foreign currency translation. Organic sales in our IDS division were very strong, not only versus the fourth quarter of last year but also against previous sequential quarters. And on the cost side, our strong focus on efficiencies led to a 20 basis point increase in segment profit as a percentage of sales when compared to the fourth quarter of last year. Regionally, organic sales in Asia were strong this quarter with growth of over 10% compared to the fourth quarter of last year. This is the third quarter in a row of Asian organic sales growth in excess of 10%. In Europe, our organic sales were up more than 25% despite several lockdowns continuing throughout the fourth quarter. Our European team did an excellent job driving sales growth while handling the periodic interruptions caused by the lockdown. We also had organic sales growth of approximately 25% in the Americas. We saw growth in all product lines and geographies throughout the quarter and we were pleased with the bounce back in our health care product line where organic sales increased approximately 30%. In general, our sales trends in IDS are very positive. We continue to focus on driving efficiency activities and keeping our cost structure lean while never sacrificing sales-generating investments. We've been investing in sales and marketing personnel, research and development activities and selected geographic expansion. These investments, combined with improved market conditions, are absolutely paying off with stronger sales growth. IDS segment profit was $42.4 million compared to $31.1 million in last year's fourth…

Thank you. [Operator Instructions] Our first question comes from George Staphos of Bank of America. Your line is open.

Hi, everyone. This is actually Cashen Keeler sitting in for George today. Congratulations on the quarter.

Thank you.

I guess, in terms of my first question, I guess, can you speak to what incremental trends you're seeing here in your key end markets early in the first quarter? And relatedly, in your discussions with customers, would you be able to provide any color on what they're saying in terms of budget increases for fiscal '22 and the various product categories that they would buy from Brady?

Sure. We are -- we feel very good as we indicated in our prepared remarks about the economy going forward. They are absolutely challenged in the markets. But in regards to logistics, as far as our customers being one of the largest challenges as far as our products being able to be utilized by them. We're doing a very good job of being able to get our products to them. But there are industries, as you well know, that are struggling mightily with everything from chips to resins to paper materials to imported products from Asia to really make sure that they can get their product sets out. Overall, it appears that most of our markets are very strong right now with these issues being the one governor that we're watching very, very carefully. That said, it's our job to make sure we're not part of the bottleneck and I feel incredibly proud of the team and that we, without knowing the pandemic was coming, worked hard to for deploy resources and internalize resources and capabilities for the last several years, in addition to automating many of our processes to become more efficient and effective. And those efforts have directly made us a stronger player and able to help our customers more. So, markets are good to answer a question specifically, but there are real challenges in logistics that they're all facing and they're facing obviously cost pressures across the board as well.

Great, that's helpful. And then I guess on the last call that you had -- you said that you expect $96 million in combined revenue from your recently acquired businesses in fiscal '22. So I guess assuming if Freddie [ph] captures all of that, that would be around 3% to 4% revenue growth in '22. So first, is that still the assumption? And then I guess, could you disaggregate how much of this you expect to come from pricing and volume? Thanks.

Well, we certainly expect a -- we still expect a $96 million increase in -- I'm sorry, $96 million of revenue from the acquisitions that we closed in the third -- I'm sorry, in the fourth quarter in fiscal 2022, I think, it comes to a bit more than 4% to 5% of sales growth. It's -- so it's going to be higher than that as a percent. And we still feel very -- obviously, we feel very good about these acquisitions and we're super excited about them going forward.

You did mention a question about pricing and volume in general and I'll be glad to answer that as well. There is no question we're seeing strong inflationary pressures, particularly in lines that have a lot of resin involved in them. There's some definite dynamics there. Chip costs are going up and are being a little more problematic, but we have been very proactive about addressing those, there is always a lag. And in any time I've seen inflation and by the way, for most people on this call, you haven't experienced inflation. It's been a long time since we've really seen that. But what I've always experienced is there is some lag between being able to increase your prices after getting some cost increases. But our team is very proactive about it, very active about making sure our customers understand why we're increasing the prices and making sure that those price increases are closing the gap. In addition, our continual automation efforts, particularly during the downturn, have put us in a much better position because the other big area for inflation is wages. And so it is a little more challenging to increase prices there, but our automation efforts, I have to tell that you, the team has been extraordinary in what they pulled off during the downturn and that has helped us have enough employees around the globe despite the shortages to do a stellar job. So we definitely expect our prices and our prices have gone up, but we're also seeing our volume go up; it's a dual bang for us.

Great. Thanks.

Thank you.

Thank you. Our next question comes from Steve Ferazani of Sidoti. Your line is open.

Good morning, Michael, Aaron. Thanks for all the color on the call, it's been really helpful.

Good morning, Steve.

Just wanted to ask a little -- I know it's a very tricky time to be trying to put out full year guidance. So I'm just trying to think about how you're thinking about the uptick infection rates with Delta and just general concerns how that sort of plays into your guidance, particularly on the hospital and workplace ID side?

Yes. I'd like to say that we're going to be through this quickly. I am not medical in any way. So any comment I make may be an error. But if we take a look at the flu that we experience every year, it's my understanding that's a variant from the 1918 Spanish flu. So it's my personal nonmedical belief that we are going to be dealing with this for a long, long time. Obviously, we found ways to deal with the flu. We will, as a world, find ways to deal more and more effectively with this. But also as I understand it, the second year of the Spanish flu in 1918 was worse than the first year because of variants and mutations. We are seeing a lot of that, as you well know and that is having an impact. We're having facilities that are in countries and locations and customers that are now being shutdown again, take a look at the situation in Australia. So what I would answer you is, we believe -- I personally believe and we're reflecting that, that coming out of this will be bumpy. The good news about that is take a look at our results from last year when it was extremely challenging. Our products are critical to many industries. And those industries need to function and perform well and we need to perform and function well. And our people -- and I can't say this enough, the pride in our people. They have proven to be incredibly resilient, nimble, reflective, doing an incredible job. So I would tell you, absolutely, we're going to see challenges, the globe is going to see challenges from the variations and lack of ability to either vaccinate sufficiently, choose to vaccinate sufficiently or the vaccination is not working quite as effectively on variants as it had been. That said, I'm confident we'll be able to overcome everything that we're at least seeing at this point. But you did had a very big caveat that I will agree. If you told me where we'd be at financially or through the COVID right now at this point a year ago, I would have been surprised. We're stronger than we expected to be financially and COVID is more challenging than I expected it to be. So both can take place at the same time. Hope that helps, Steve.

Fair enough. Thank you for that. In terms of the margins in the two different segments, excluding the onetime on IDS, it looked a lot like Q1 and Q2. Should we be thinking about the Q3 higher number as a bit of an outlier? Or how do you want us to think about or how are you thinking about the margins in that segment moving forward?

Yes. I think you're actually thinking about it the correct way, Steve. The vast majority, of course, of these acquisition charges that we called out did land in IDS, of course, because they're IDS acquisitions. And actually, if you exclude those, we would have been somewhere in the neighborhood of 20% operating income level or segment profit level and that's about what we would anticipate in the future.

Okay. And then on the flip side with Workplace Safety, you're back in that sort of 7.5%-ish range which is where you were the year before COVID? Is this a level you're comfortable with? Do you think you can grow it from here? And how are you thinking about the long term of that business at that type of margin level?

Well, I mean, we're certainly not comfortable at 7.5%, right? I mean it's never good enough for us. So we're constantly pushing to improve. Workplace Safety is very much volume dependent, though. They have very nice profit margins. And as volumes go up, it drops a lot to the bottom line. So we're really working with our Workplace Safety team to drive the top line which will drive, obviously, the bottom line and the bottom line as a percent.

And Steve, I've got to reiterate, I am incredibly encouraged with what the team is able to do with growth. In that if we do take out the COVID materials and we know we've already told you we're going to have another challenge next quarter with that because we had a great quarter with COVID products but the base business or standard business is growing. And that is something that years we could not say. And they have done a great job of really strengthening their capabilities, their product sets, their R&D, differentiating what they do in the marketplace, while at the same time responding to all the needs of digital requests by customers and faster response rates by customers. So they are positioned very well to grow and that growth, as Aaron pointed out, will directly impact our margins in a good way. That said, I want to repeat, next quarter remains a comparable challenge because of the wonderful work they did with COVID products, something that I am thrilled we were able to do and both support the company financially but even more importantly, the world during the heart of COVID.

Thanks, Michael. Thanks, Aaron. I appreciate the responses.

Thank you.

Thank you. Our next question comes from Michael McGinn of Wells Fargo. Your line is open.

Thank you. I wanted to go back to the gross margin conversation. Understanding a little bit of conservatism on price cost but on the other hand, you also said you have confidence to maintain 50% gross margin levels, if I heard you right, that would be 100 basis point uptick year-over-year. So, can you just square the conservatism on price cost versus the optimism of being all hold 50% gross margin?

You know, we actually have some great strength. And as I mentioned in my commentary or questions, we foresaw the need probably about four or five years ago now at this point, Aaron, to become much more automated, to become much more efficient as an organization. That was not related to some brilliance and knowing a pandemic would come and there would be direct even harder labor shortages as a result. But it was based on the fact that you can look around the world, seeing aging work populations and the place that people really miss this is the aging work populations in China, specifically. I continue to tell people that the working age population of China will continue to decrease for at least the next 20 years. It has to, unless we can figure out ways to pop out adults instantly, the demographics are such that it's going to go down. That's true in most of the world. So we saw that. We anticipated that. The positive for you in regard to margins and everything else is as we automate with the need to eliminate people, not for cost but because we can't get those people who knew we wouldn't be able to get them, it is also overcoming that in a much more cost-effective way. So you bet; we've got some inflationary concerns. We have absolute concerns that during inflation. You cannot keep up with price increases in a perfect matched manner. So there is some lag but we do have strong proprietary products that can keep that value proposition with the lag. But in addition, we're doing a really good job of becoming more efficient and effective in everything we do. Some of the new systems that I see we're deploying in everything from a warehousing to our production, to our customer service really get me excited. And a few years ago, I was asked, when can you stop this effort? And I said the answer is never. I'm going to actually change the statement to we're accelerating the effort.

Okay, I appreciate the color. And then, sticking with the APAC theme; you mentioned you're investing headcount, sales force resources into that area. And I guess my question is, that kind of seems like brothers home turf and you have pretty well-defined supply distribution relations here domestically. Are you taking the same product over there and layering on top of the sales force or what kind of strategy are you implementing if there's a tiering or indirect/direct sales model? Any color there would be great.

Yes. Well, first of all, we've been in Asia for a long time. And we do have a strong brand and strong reputation in Asia, particularly in Southeast Asia, we mentioned we are accelerating. So let's take India as an example. We do extremely well in India. Our products are well respected. And the real issue there is logistics. India is a very complex society and a very complex logistical challenge. And so we need more resources even closer to our customers in India. That's a strategy that has paid off for us and is going to pay off for us; so that is one example. We also make products that are unique in the industry, not compared to any one other company, compared to all of the other companies. And that uniqueness is valued and we have a very high global retention rate of those customers as you go from generation to generation of our technology. So, I would say the first issue is we make true unique exciting products that make a difference to our customers. The second is we know that forward deploying resources helps us with those customers. And the third is our reputation is very, very strong throughout Asia, where we -- the customers are looking for true differentiation as opposed to pure cost plays. As you know, we're not in and don't plan in to be the paper label space is a great example. That is not an area where we believe Brady adds a lot of value. Other competitors, in general, without naming any, do very, very well in the paper label space but that's what they're focused on, that's what they're set up for, that's what they're good at. So looking at Brady type applications, we actually have great belief that in particular, in the Southeast Asia area that we mentioned, both as customers migrate their more and as we develop our resources there, we'll do very, very well. So, thank you for that question, Michael. Good question.

All right. Last one for me, if I could sneak one more in. The $2 million repo authorization, I think if you were to execute that today in the open market, it nearly matches kind of your net cash balance, coincidence or not. But looking at the financial profile of your company, you're going to maybe throw off another $150 million of free cash flow this year. So can you just talk about the confidence, the line of sight and the timetable you see for your capital allocation priorities?

As you very well know, we are not a program buyer. I won't tell you that we've always hit every dip for a variety of reasons at the right time but we are looking for disconnect opportunities. We want that powder and that ability available. So if those opportunities come up, we will take advantage of them. If there isn't a disconnect in the market, I'm also happy with that. I want to be quite, quite clear. We like the market to be aligned with our intrinsic value. But when it isn't, we are going to take an advantage of it. And we do have the ability and you can see that in the amount -- you did the math that we do have the ability to take full advantage of that amount if we think it's appropriate. But I want to repeat, this is part of a total model. We look at acquisitions where we have a lot of powder for acquisitions right now. We look at R&D growth. We look at infrastructure, support and we look at buybacks and we say, what is the best use of our capital and where do we see the key opportunities. And we definitely want to be prepared for any potential disconnect in our stock price versus our understanding of our intrinsic value. So, thank you.

Appreciate the time.

Absolutely. Thank you.

Thank you. [Operator Instructions] Our next question comes from Keith Housum of Northcoast Research. Your line is open.

Good morning, guys. Michael, I kind of want you to look in your crystal ball here and kind of talk about some of the inflationary pressures you guys have seen over the past year. Is your expectation that you're going to see these inflationary pressures continue and perhaps even accelerate? Or is there anything that you're seeing on the horizon that says perhaps things are starting to stabilize there?

You're killing me, Keith. And all the questions today are asking me to look at a crystal ball but I will do my best. Full disclosure, my crystal ball broke when I was a small child but I will literally try my best. We see logistical issues. And I'm answering your question but I want to be clear on how I'm answering it. For the next 6 to 18 months easily, those logistical issues are a definite cause of inflation. They absolutely are a very primary cause of inflation. We also are seeing labor shortages and not just because in the U.S., we have compensation models that people are -- by the way, you think people don't know their financial gain and return, they change their pattern when they don't get as much from staying at home if they get to work. So that will change, we think but there's a shortage of people. I have a belief that, that shortage is partly caused by something we didn't do. Brady did not have massive layoffs like many companies did. We did what we believe was the right thing at the time and it's paid off for us. But many companies laid off as many 20% of their people. The more experienced part of that workforce, I think, has made some decisions to never come back. If you're 60, 62, 63, 64, you may have kept working for five to seven more years but you're not coming back. That is creating one level of shortage. The other level is around the world with a few exceptions, countries like India, Philippines, Mexico, the actual workforce is aging out anyway. And so I think we're going to see some pressures from that. So to answer your question, yes, I absolutely anticipate that we're…

No, I hear you on that one. In terms of -- you talked earlier about the disconnect on when you guys are experiencing increases in the mix, say, raw materials and your ability to raise prices. If you look at your gross margins, yes, you guys were up year-over-year but still on a historical basis, you're down probably 100 basis points or so versus other quarters. What do you think the impact was in the quarter in terms of your gross margin in terms of that disconnect and your ability to raise prices versus the price increases you were seeing?

You know what, it is a complex answer. It is literally product line by product line in the case of where we have and I'm not going to list the product line. We do have some commoditized product lines, not many but we do. Though we saw a significant lag, we have covered most, if not all, of the lag but we I guess twice seen major spikes in our materials and twice had to go back and really make some significant increases. And we saw bigger lags there, whereas other areas that we have more control, we do better. Let's give you other space is health care. We have contracts that make it take a little longer. It just is required by the contracts. There's a foot dragging process literally built in. So it literally depends on the product set, the materials and the end customer; so it's a bit complex. So, I wouldn't want to come out and try to break out a number for you right now, Keith.

But there is an absolute impact, though.

Absolutely. Unequivocal. I don't want to -- I'm not denying that at all. I just didn't -- I thought you asked for a specific number and then I don't want to try to parse that.

No, I did.

Thank you. I appreciate your understanding.

The last question for you. I mean you have to forget my skeptics WPS has been challenged for many years here. And I hear your enthusiasm. It sounds like you really believe that you actually absolutely have a turnaround in the WPS segment. And I guess what I would help perhaps my I understand the context of enthusiasts a little bit more, can you quantify or give us more context in terms of what is the impact of some of the COVID closures you saw in Europe on the business? Because if I look at this year's WPS segment versus two years ago is only up 2% after being down 35% over the past 10 years or so.

So, it's a good -- look, turning -- your skepticism is real and I understand it. You heard me for years say we're working on it. If you go back and check my comments, I don't think I ever said we're here but I feel better now than ever before. The biggest part I feel really good about, Keith, is that if I do lap off and we can do that very, very efficiently, lop off the true COVID-related sales, we are growing. And that is something that I couldn't look you in the eye and say five years ago, for instance. In fact, the opposite. I had to look in the eye and say, we're declining less. And in fact, you can look at quarter after quarter where I said we're declining less. We're declining yet less. We're declining yet. I have to take in my mind that COVID sales off. They are truly an anomaly to look at what's really under the lid and we are growing. And so very, very positive about that. It's still a challenging space. You know that and I know that but we've got the best team we've ever had. We're moving in the right direction of both internalizing our production for cost and responsiveness, even more importantly cost to me is responsiveness and we're adding new technology there, something that three and four years ago, that organization was like stunned at how strong I was as we are going to become a technological player. And it took a while for me to get that organization really to understand how valuable that is in selling all of their products because it's a pull along effect. So Keith, I do feel like we're developing new, unique and proprietary products. I do feel like we're…

You did. The part of that, I guess, I didn't hear the answer to was in terms of the closures that happened in Europe over the quarter, what kind of impact do they have on WPS per quarter? And I know you did give the exact numbers but…

They did, they did. I mean, you look at France, I think we were at five kilometer restrictions for large periods of time. The U.K. has been off and on and struggling. Every country. I mean every country has particularly a bigger, the Germany, the U.K., the Belgium, we have large facilities in Belgium. We're able to run those but they've been under some great restrictions and that has been adding some super challenges to them. And at the same time, even with the second round of COVID, you're not seeing the COVID-related sales at all. And that's not just with us, that's across the board. And we can speculate as to why that is but it isn't. It isn't happening. So even though you're getting the shutdowns, we're not getting the next level of COVID sales from those shutdowns. Well, you're right, in Europe, we are having some challenges. Do I think we would have grown more without that? Speculating, yes.

Okay. All right, I've asked too many already. I appreciate your time as always. And good luck, Michael.

Hey, thank you, Keith. Appreciate your time.

Thank you. Our next question comes from Michael McGinn of Wells Fargo. Your line is open.

Hi, thank you for the follow-up. I just wanted to do some housecleaning here. I looked at the deck post your three acquisition and it looks like you had the run rate EBITDA of about 14.5% but that was inclusive of some discrete charges. Is there an updated number that's more reflective of how you're reporting earnings? And then, any early profit improvements that would push that number higher?

We're still looking at FY '22 [ph] run rate EBITDA of about $14 million which is the exact percent that you just mentioned. And then same with revenue. Our revenue estimates for this year, this fiscal '22, have not changed as well. They are at about $96 million for the summation of the three deals. No change.

I'll add a little color. We're pleased with how those companies are performing. We love the team. It's always about people for me. Do we have the right people, the right organizations and they're doing very well but we expected them to do well and they're meeting those expectations. But very, very positive on the teams, the product sets they offer and their excitement for what they see as a great combination opportunity.

Okay. And then on the top line guidance, greater than 12% overall, you mentioned some positive inflections in health care. What are like some of the big end market verticals that would push you materially above that number or the ones that are growing faster now need a little bit of help -- self-help skill?

Well, we've got to be careful. Brady is in every SIC code there is and some spaces are larger and smaller. Obviously, general manufacturing is one of our biggest opportunity sets and is doing reasonably well. We'd love it to perform even better. That would certainly lift the boat more than other areas. There are other areas that the people areas still lag behind. I don't want to oversell those areas because they are massive markets to us. But we do have businesses in those areas that do well. So anything that is people identification in office space still is a challenge. We can argue, work at home or not work at home, how that will come back when it will. But in the end, most people will have to have some kind of credentials identification because they're not going to be working exclusively at home. And so we think there's going to be some uptick there. Events are getting better; if you look at the results from Disney and all of that, I'm not an expert on Disney but I can tell you that they also raise prices. So, I think I had an earlier -- I did have an earlier question, how much is price versus volume? I would like to see their underlying price versus volume equation because overall, the industries that do that such as festivals are still not open, our concerts are very limited, events are very limited, conferences for industrial applications is very limited. So we do expect that to come up. Medical has recovered but we hope that it will continue to grow even more as it's recovered but it's not stronger than it was and we think there's a lot of hopefully been up opportunity there. There are two factors that govern…

Great. I appreciate the time.

Thank you. I hope that helps. Thank you, Michael.

Thank you. I'm showing no further questions at this time. I will now return the call back over to Michael Nauman for any closing remarks.

Thank you so much. I appreciate it, Valerie. Thank you. I'd like to leave with a few concluding comments this morning. We're certainly living in interesting times. We're still on the back half of a global pandemic. We just posted the best earnings per share in Brady's history and our guidance for next year would be another record year. At the same time, we're experiencing supply chain challenges and we're seeing inflationary pressures all around us. We're confident we can offset these inflationary pressures with our relentless focus on automation and efficiencies combined with targeted price increases. I don't know what the future holds for the global economy or the coronavirus but I do know we're controlling what we can by prioritizing investments in growth and focusing on cash generation. We're confident that Brady is well positioned to capitalize on global market trends. We just finished fiscal '21 with strong momentum. We came out very, very strong and we're well positioned to generate significant future value for both our customers and our shareholders. I am excited about our future. Please stay safe and thank you for your time this morning. Have a great day. Operator, you may disconnect the call.

Thank you. Ladies and gentlemen, this does conclude today's conference. Thank you all for participating. You may all disconnect. Have a great day.