We should have some time following the presentation for questions. If you have a question, press the Q&A button at the bottom of your screen, type in the question, and we'll get to as many as we can, time permitting. Happy to be joined this morning by Ann Thornton, the CFO of Brady Corporation. The ticker is BRC. There's a lot going on with this company. I'm sure a lot of you who follow it are well aware, so I don't want to take up too much more time. Let me turn it over to Ann. Ann?
All right. Thanks so much, Steve. Thanks, everybody, and thanks for joining today. All right. For those of you who may not be familiar with Brady, I will start by giving you some background on who we are, what we do, I'll walk through some financials, and then I'll leave some time at the end for some Q&A. All right. Overall, Brady is a leader in the research, development, and manufacturing of high-performance specialty adhesives and printing solutions that are utilized in a wide variety of safety and identification applications. We have a very broad product portfolio consisting of wire IDs, specialty adhesive labels and printers, safety and facility ID products that would include items such as floor marking tapes, lockout tagout devices, OSHA-required safety identifiers.
We also develop and manufacture product ID labels, printers, scanners for all of the above, as well as healthcare identification, patient ID wristbands, and other people identification-related products. We sell into a wide variety of end markets, and our products are ideal for many different applications. Ultimately, the more specific and the more challenging the need for an adhesive product and a solution that identifies something critical, as well as a printing solution, the better that is for Brady, because that's where our products really stand out. We're very diversified. We have a diversified customer base. No single customer represents even close to 10% of our total sales. We sell thousands of products, and 48% of our revenue last fiscal year was generated outside of the U.S.
At the same time, our competitive landscape is very fragmented, and it's usually specific to a very particular type of product or a geography, or sometimes both. We're also very focused on producing long-term sustainable results. We've refocused our attention on innovation, and I'll show you that our R&D spend was up to an all-time high of 5.3% of sales last fiscal year, which has been incredibly important to us as we work to improve our organic growth profile as a company. Also, if you look back over the eight years from 2016 through 2024, we reduced SG&A as a percentage of sales by 800 basis points over that period of time, which has been fantastic for our bottom line. We're also coming off five consecutive record years of EPS.
2021 through 2025 were record-adjusted EPS years, with our 2025 fiscal year up by 9% versus the prior year. We're on a very nice run from an earnings standpoint. We're also highly focused on cash generation, and that shows in the strength of our balance sheet. We were in a net cash position of $149 million as of our third quarter end of April 30th. This allows us to continue to invest in our organic business, and for us, that means R&D, our sales force, and geographic expansion so that we can improve our rate of organic sales growth. We return dividends to our shareholders. At the beginning of this fiscal year, we announced our 40th consecutive annual dividend increase, which is a milestone that we're incredibly proud of.
We've also increased our annual dividend every single year since going public. We return funds to our shareholders in the form of share buybacks. In 2025, $90 million to our shareholders in buybacks and dividends. 2024, we returned $117 million. $120 million in 2023. Last year, we returned $150 million to our shareholders. Returning funds to our shar eholders is absolutely a focus of our capital allocation approach. Overall, we are in a great position. We're a well-balanced organization that's very diversified and growing both the top line and EPS. All right. We operate our business geographically with two regions. This slide kind of outlines a little bit of how we're set up today and our key product lines.
One geography is the Americas and Asia, which represents two-thirds of our total revenue, and the combination of Europe and Australia represents the remaining one-third of our total revenue. We sell the full suite of Brady products throughout each of our geographies. This breaks down further into the following five major product categories, which I'll go through now. First, on the upper left, you can see safety and facility identification, and some examples of products that are shown in the upper left of this slide. It's a broad product category, but an overall summary is that it consists of all the signage, safety, wayfinding products that are present and often required throughout a manufacturing facility. Items to ensure machine safeguarding, machine safety, OSHA-required type of visual indicators.
We also offer a full suite of hardware, which would be our printers, the software for those printers, and our high-performance specialty adhesive materials for our printers, which we manufacture at our coating facility here in Milwaukee and then sell throughout our global businesses. This product category represents 40% of our revenue. The next product category shown on the upper right side of the slide is wire identification. This consists of a wide variety of materials that can be printed upon and then applied to a multitude of different types of wires and cables in a multitude of different applications and industries. An end market that is ideal for our high-performance products are data centers.
All of the cabling within data centers need to be labeled with a high-quality adhesive that's able to withstand a high-temperature environment, among many other items. We're seeing tremendous growth in this product category this year. It's up nearly 20%. The printers shown within this product category as well, as nearly all of our prin ters, are the BradyPrinter model. We manufacture both our printers and the keyed consumables for those printers so that only Brady materials can be used within most of that printer offering. Some of our best-selling products within this product category are our portable printers, which are durable handheld printers that are designed to withstand the day-to-day at a construction site, as an example. Basically, something that an electrician would use every single day to label wires and panels, obviously using our specialty materials.
Last fiscal year, this product category represented 16% of our total sales. Product ID consists of brand protection labels, RFID-enabled labels, label design software, 1D, 2D barcoding software, along with RFID readers and barcode readers. This product category also includes the direct part marking businesses that we acquired over the last two years in the acquisitions of Gravotech and MECCO. These product lines now give us the ability to offer laser and mechanical engraving solutions to our customers, and it rounds out our identification product offering. This product category represents 28% of our sales. Healthcare ID mostly consists of patient ID wristbands and other labels that are intended to ensure that all of the care that a patient receives in a healthcare setting is accurate and what is intended for that patient.
Data accuracy, reliability is key. We also source and resell a variety of other healthcare supply and PPE products within this product line. This represented 9% of our sales last year. The last product category would be people ID, which is shown at the bottom of the slide. That includes employee badges, building access badges, lanyards, wristbands, special event type of products. We also offer a full printer lineup within this product category that can actually span a couple of our other product categories as well. This was 7% of our sales last year. Overall, common themes between our product categories, primarily being that we manufacture high quality, long-lasting ID products that are intended for a very wide variety of end markets.
Our particular specialty is in adhesives that are designed for harsh environments where the cost of failure or the cost of non-compliance is high. I touched on most of the products here. This is just a different view that kind of pulls our product offering together. Our most recent acquisitions over the last year and a half are Gravotech and MECCO. Our objective with those acquisitions was so that we could offer our customers the ability to directly mark on a product or component without the need for a label or an adhesive. In certain circumstances, a label just isn't a workable solution. These acquisitions, they offer the ability for our customers to actually do that precision direct part marking in a variety of applications, which absolutely fills a gap that we previously had in this area.
Just a brief summary, I'll touch on a little bit of the financials, move to Q&A. Where we are today, we're highly focused on improving our rate of organic sales growth to beyond GDP. We're investing in innovation, we're investing in automation, we're focusing on making the right decisions today that'll pay off for our shareholders in the long term. You're seeing this in our financial results absolutely. We're also driving profit improvement. I mentioned that EPS was up 9% last year. Efficiency opportunities are constantly being tackled throughout our business. SG&A is down significantly from eight years ago. The key to our approach in this area is that all of the reductions are sustainable. We're always about simplifying what we do, how we do it, adding automation, trying to think differently, and it's definitely been paying benefits.
We're returning cash to our shareholders. We believe we're incredibly well-positioned for the future. We have a very diverse product portfolio. When you combine that with our niche product offerings and our above-GDP growth that we've been demonstrating over the last year, we're in a great position for growth over the long term. All right. I'll make a couple of brief comments on our financial trending and point out a couple of items here. From a revenue standpoint, we've had a nice upward trend of organic sales growth coming out of the pandemic, and we've reported five straight years of organic sales growth, which is a very positive trend for us. This fiscal year to date through our third quarter, which ended April 30th, we're up organically 4.3%.
Okay, gross profit margin. We have incredibly strong gross profit margins with both 2024 and 2025 above 50%, and we're at 51.3% through the first three quarters of 2026. We've worked incredibly hard to continue to execute oper ational efficiencies throughout our global businesses, along with implementing strategic price increases. Our growth is truly coming from our highest gross margin, our highly engineered products over the last three and a half years, which has brought along this very nice result from a gross profit margin standpoint. Next, you can see on this slide that R&D has steadily increased for the last nine years, which truly shows our commitment and our belief in the return on our investment in R&D. We closed 2025 at 5.3% of sales, which was our highest year ever of our investment in this department.
This year, we're set to exceed that investment once again. Our investment in R&D is truly paying off, and it is the driver of our organic sales growth performance over these last several years. Okay, SG&A. All right, moving on to SG&A expense. We've reduced this as a percentage of sales 800 basis points over the last eight years through fiscal year 2024. The chart here really brings this to light. These are our GAAP reported numbers. In fiscal 2016, SG&A was over $400 million. You can see a step-up in dollars in 2022 because we made three acquisitions, as well as a step-up in dollars in 2025, same thing, due to acquisitions.
GAAP reported amounts, but we have line of sight to continued efficiencies throughout our SG&A structure and continue to work on improvement projects, in particular within our back office support and throughout our sales function. We still have opportunities for automation and expect to continue to drive that in this area. All right. Pre-tax earnings have been steadily moving in the right direction, up every year with just one step down during the pandemic. This trend is the end result of everything that we just touched on, around our focus on organic sales growth, continued improvement in gross profit margin through targeted price increases, operational efficiencies, the same thing throughout SG&A cost structure. We've done all of this while increasing our investment in R&D every single year.
Adjusted diluted EPS shows the exact same story. Last five years, each represented record high years of adjusted EPS. Through the first quarter of EPS is up 14.1% over the prior year. All right. Cash generation. This is and has been a key area of focus for us in all of our decision-making. We've steadily improved cash flow following the supply chain crisis from a few years ago. During that period of time, you can see that in 2022, we intentionally increased inventory in order to ensure we had supply and could fulfill orders, which ultimately led to organic sales growth and ongoing strong customer relationships. Took a step back in 2025 as we modified some of our working capital decision-making at our acquired companies.
As well as utilized some cash for some reorg activities and facility closure activities, all of which is paying off for us this year. Our cash flow from operating activities is up 34% through the first three quarters of this fiscal year. Great results from a cash generation standpoint. All right. Here you can see the impact of our cash generation on our balance sheet. We are in a net cash position of $149 million as of our last fiscal quarter that ended April 30th. Our balance sheet is incredibly strong. This gives us the ability to continue to invest in our business as well as strategic M&A, while also continuing to return funds to our shareholders. All right. I'll touch briefly on our two regions in the next couple of slides.
You'll see very consistent results in terms of growth in sales and profitability over the last three years. We've definitely been executing well in both regions. In Europe and Australia, you'll see a bit of a step-down here. These are our reported amounts, but we took some actions to improve our cost structure and effectively simplify our organization. Now what we're seeing come through are some significantly improved segment profit, in particular in this region this year. All paying off, all is simplifying what we do. All right. This is an incredibly exciting time at Brady. One additional item that I do want to touch on is that two months ago, just about two months ago, we announced that we entered into an agreement to acquire Honeywell's Productivity Solutions and Services business.
We see the PSS business as an incredibly unique opportunity to expand our portfolio into leading-edge mobility and scanning solutions that are trusted by some of the world's largest transportation, warehousing, and logistic companies. Through combining Brady's high-performance printers, our software, all of the products that I described earlier, our specialty adhesive materials, along with the PSS business' full suite of mobile computing and scanning solutions, we are entering an entirely new phase for our new combined entity with solutions that basically power the entire supply chain. Together, as we look at this, Brady and the pending acquisition of the PSS business represents an absolutely meaningful shift in the AIDC landscape. We'll have a broader portfolio, we'll have increased scale, an expanded end market reach, and highly technology-focused solutions for all of our customers.
We're in the sign to close phase right now. We announced the signing of the deal on April 20th, we are in the planning stages for a close. What we had announced when we announced the deal and reiterated in our Q3 earnings call was that we were expecting a second half of the calendar year close timing, right now that's tracking toward the beginning of August. We're working toward that right now and incredibly excited throughout the planning and the integration process. Overall, Brady's financially strong. We're incredibly diverse. We're improving our organic, or excuse me, we're improving our rate of organic sales growth. We've grown organically for five straight years. We've reported five straight years of adjusted record adjusted EPS results, and our cash generation is excellent.
We're returning funds to our shareholders, we believe we're in a great position with a strong balance sheet and organization focused on execution, we have an exciting transformational acquisition on the horizon this fall. I'll turn it back to you, Steve, for any questions. Thanks, everybody.
Thanks so much, Ann. As a reminder, we have about 10 minutes remaining. If you do have a question, press the Q&A button at the bottom of your screen, type it in, we'll get to as many as we can with time remaining. Ann, I do want to kick it off with the announcement from last week. The retirement of CEO Russell Shaller. I've covered the company through his entire tenure. Of my covered universe, I certainly rank him at the very, very high echelon of CEOs. Very successful four-year tenure of reshaping the company, which he took over, and it was in good shape. He certainly put it in much better shape. The market reacted negatively to the announcement, which surprised people. I want to leave this question as open-ended as possible.
I know you've been taking plenty over the last week.
Absolutely.
Can you talk a little bit about the announcement, a little bit about how the company is positioned moving forward without Mr. Shaller, general sentiment within the company? Let me leave that as open-ended as possible for you.
Perfect. No, I appreciate it, Steve, I'm glad you brought it up. I'm happy to provide more color on this. You're absolutely right. Russell had a tremendous tenure as CEO and in his role leading the, when we previously were organized under Global Product Lines, leading our Identification Solutions business. Fantastic 11-year career at Brady. Awesome job. Just to provide more background, Russell had several conversations with our board regarding his timeline for retirement as the PSS acquisition was in negotiations. We have been clear in understanding, in evaluating the deal from the start, that this is a multi-year integration project in order to truly capture the value creation that we believe is possible here in the near term and certainly in the long term.
Together with the board, he decided this was the right time to retire, so new leadership could come in during this critical pre-close planning and integration stage. We're also at our fiscal year planning stage as well. This is when we kind of finalize what we're planning on for our outlook for next year. As you know, Steve, we issue our Q4 results usually early September. That's when we provide guidance for the upcoming fiscal year. From a timing standpoint, as close as it may have been to the April 20th announcement of us signing the deal, it truly works out really well for us organizationally. The whole plan is to get the new leadership in place, the new long-term leadership in place, so we can hit the ground running immediately at close, which is our number one goal.
Close of the transaction. Vineet Nargolwala, that's the gentleman who joined and started as CEO a week ago on Monday. His experience is ideal. He's been a key member of our board in evaluating and supporting and really championing the PSS deal as a board member, as well as having four years of knowledge from a board perspective of the core Brady business. As well as he has prior experience as a CEO, and he worked at Honeywell for 10 years, about 10 years ago in his career, in a variety of different roles where he gained great experience, both within M&A, where he was a part of the identification and the ultimate acquisition of a couple of the businesses that comprise the PSS acquisition that we're making.
As well as a variety of other roles, gaining great experience and familiarity actually with that team. All of those factors played together. The timing was really right for Russell and for us as an organization for him to transition into retirement. Fantastic 11 years. He did a tremendous job. His focus on R&D, we're seeing it. We're reaping these benefits. You're seeing it in our organic sales growth right now. In the quarter that we just released and really this whole fiscal year, we're up 4.6%. That's the direction we want to be going. That's absolutely the feeling and the sentiment in how basically he and the board came together to make this decision and start the smooth transition into Vineet's leadership.
As honestly as you can be on this question, can you talk about the mood, sentiment is around the offices, the halls of Brady in the week that followed?
Yeah, absolutely. Yeah. Vineet is known by many individuals within the company, certainly more of us in the leadership in direct reports to the CEO. We've worked with him in a board capacity for quite some time. It doesn't stop there. Many individuals throughout the organization have exposure to the board as well. The mood has been honestly excitement for what we have to come with the PSS business, and quite honestly understanding that Russell's path to retirement was coming at some point as well. It was just a matter of when. Really it has been a very smooth transition with Vineet coming in last week, diving right in, discussions. He held a town hall on Thursday, global, entire company, all 6,400 employees town hall. Answered questions for an hour, explained his background.
That gives the entire team a great deal of comfort. We're in tremendous hands with a highly experienced individual who knows Brady. That also gives, I believe the employee base quite a bit of comfort at that. This is someone that we don't have to explain to him what really makes us tick, and what really drives the results internally. That's absolutely my observation and the full transparency, Steve, of how we're seeing things on our side.
Got it. Very helpful. Can you talk about the PSS transaction? Any change in the timing of closing since we last spoke?
No expected changes in timing. We're tracking, we're moving forward. Every single day, we're learning more. The PSS team's learning more about us. We're learning more about each other and processes, and we're super focused on ensuring that we're ready for day one. This is a carve-out, so the ultimate integration planning is critical in how we set ourselves up to make sure that we're ready to go on day one, and just things work and things are simple, and we don't miss anything. We don't take any steps back with what matters most, which is the commercial element and the people within the business.
How prepared are you for it, given that you have an M&A history, but nothing this size in terms of getting ready for a deal this large?
Great question. We are not doing this alone within the Brady team. Majority of the recent acquisitions that we did, they were of a size that we could easily assign an internal team to perform all that onboarding and all that integration planning. In this case, it is definitely a different situation. We are taking it incredibly seriously. We have engaged M&A integration specialists. We are utilizing a Big Four firm to effectively run an integration management office for us with internal ownership at the direct report level to the CEO, each assigned and responsible for our key areas of responsibility with a multitude of meetings, report outs, all of that. We are absolutely enlisting experts to help us do this and do it right because you are absolutely right, Steve.
It is beyond any prior acquisition in terms of size. It means we are absolutely on track.
In terms of cash flow post-deal, I am assuming close to 100% is going to go to deleveraging post-deal?
That is our number one priority. Of course, No, it is 1A and 1B, always the organic business. We are not taking our eye off that ever. We have a phenomenal new product roadmap. We are continuing to develop that every single day. Always the organic business. I always touch on the dividend. That is a streak no one wants to break. 40 straight years of a dividend increase, that is something we are very proud of. Deleveraging, you know, we're in a net cash position, and we have been for eight years. Now we identified the opportunity to deploy that, and to deploy that cash effectively. That's absolutely top focus is all excess cash generation will repatriate and pay down debt incredibly fast.
What we announced in our deal announcement in April was that we expect net leverage, so reiterating that, or we expect net leverage to be approximately 2.5x EBITDA at the date of close, and then to be below 2x EBITDA within two years following the close of the deal, discussed in April.
Any chance to look at potential synergies through the integration process yet, or are we a little too early? Frankly, I thought your synergies were on the lighter side from what you can realize from this size transaction.
I totally hear you, Steve. Our approach here is to be very prudent and understand that we'll identify. There'll undoubtedly be surprises. There always are with acquisitions, both on the positive side and on the less positive side. We have an eye on synergies, very close eye. What we announced to the world is what we have direct line of sight, what we're incredibly confident in achieving over that period of time. As we work through integration planning every single day, we're constantly learning more and identifying more opportunities. We'll continue to update the world with our expectations as we learn more and as we approach close and provide our expectations for next year.
Perfect. Very quick half hour. We certainly had a lot to cover. Ann, before we close this out, any closing comments?
Very much appreciate the time, appreciate the questions, Steve. I'm so glad you brought all of these items up. We're in a very exciting transformational period here at Brady, it's truly going to be a new company once we get through the final stages and get to the close process. The opportunity that we have to truly transform what Brady does with an incredibly adjacent set of products and a great set, an unbelievable set of people within the PSS business is an incredibly exciting time for us right now. We're super focused. We won't ever take our eye off of the core Brady business and what we do best. That's what's driven us forward for over 100 years. This is a new time for us, and we're really looking forward to it.
Really appreciate everyone's attention or everyone attending today and for your time and interest in Brady. Thanks so much, Steve.
Thanks. Ann Thornton, CFO of Brady Corporation. Certainly, you can reach out to her with any follow-up questions or reach out to me at Sidoti, I certainly can pass it along. Thanks everyone for being here, hope you stick around for the remainder of Sidoti's Virtual Investor Conference. Thanks, everyone. Thank you, Ann.
Thank you. Thanks, Steve. Bye.