Summary of Brady Corporation Conference Call - March 19, 2026 Company Overview - **Company**: Brady Corporation (NYSE: BRC) - **Industry**: Manufacturing of high adhesives and printing solutions for safety and identification applications - **Revenue**: $1.5 billion with 48% generated outside the U.S. in fiscal year 2025 [1][2][6] Core Business Insights - **Product Range**: Includes wire identification, specialty adhesive labels, printers, safety and facility ID products, healthcare identification wristbands, and more [1][2] - **Market Diversification**: No single customer accounts for 10% of total sales, indicating a broad customer base [2] - **Geographic Distribution**: 52% of revenue from the U.S., 30% from Europe, and 12% from Asia and Australia [6] Financial Performance - **Earnings Growth**: Achieved five consecutive years of record EPS, with a 9% increase in EPS from 2024 to 2025 [3][4] - **Cash Position**: Net cash position of $98 million as of January 31, 2026, allowing for continued investment in organic growth [4][26] - **Dividend Policy**: Announced the 40th consecutive annual dividend increase, reflecting a strong commitment to returning value to shareholders [4] Research and Development - **R&D Investment**: Increased to 5.3% of sales in fiscal year 2025, the highest in company history, aimed at improving organic growth [3][20] - **Product Development**: Focused on innovation and efficiency in product development, with new products like the i4300 printer expected to fill market gaps [40][41] Operational Efficiency - **SG&A Reduction**: Reduced SG&A as a percentage of sales by 800 basis points over eight years, enhancing profitability [3][20] - **Gross Profit Margins**: Improved gross profit margins to above 50% in 2024 and 2025, despite challenges from tariffs [18][19] Market Trends and Challenges - **Geographic Performance**: Noted differences in market performance between the U.S. and Europe, with European manufacturing down impacting sales [31][32] - **Macro Environment**: Acknowledged the need for macroeconomic improvement to drive organic sales growth, particularly in Europe [33][34] Strategic Focus - **Acquisitions**: Recent acquisitions (Gravotech and Mecco) aimed at enhancing product offerings in direct part marking and optical scanning capabilities [14][15] - **Long-term Strategy**: Committed to sustainable growth through innovation, automation, and a diversified product portfolio [16][17] Conclusion - **Future Outlook**: Positioned well for future growth with a strong balance sheet, diverse product lineup, and ongoing focus on organic sales growth and profitability [27][28]

Financial Data and Key Metrics Changes - Total revenue for Q4 2025 grew 43% year-over-year to nearly $86 million, while full-year revenue increased by 44% to $292 million [5][6][15] - Adjusted EBITDA for Q4 was $25.1 million, an improvement of $16.8 million compared to the previous year, and for the full year, it was $59.4 million [18][19] - The company achieved net income on a full-year basis for the first time in 2025, marking a significant milestone in financial performance [19] Business Line Data and Key Metrics Changes - Recorlev revenue was $45.3 million in Q4 and $139.3 million for the full year, reflecting growth of over 100% for both periods, driven by an expanding patient base [16][17] - Gvoke generated $24.6 million in Q4 and $94.1 million for the full year, with steady prescription growth and broad access contributing to its performance [16][17] - Keveyis revenue was $12.8 million in Q4 and $47.6 million for the year, supported by an increase in the average number of patients on therapy [17] Market Data and Key Metrics Changes - Recorlev ended the year with approximately 700 patients, nearly doubling the number from year-end 2024, indicating strong demand and prescriber awareness [7][8] - Gvoke's growth was supported by strong prescriber awareness and alignment with treatment guidelines, reinforcing its role as a reliable contributor [9] - Keveyis continues to serve a small, underserved patient community, aligning with the company's mission to make a meaningful difference in rare diseases [10] Company Strategy and Development Direction - The company aims to drive rapid revenue growth, advance its pipeline, and maintain a strong balance sheet while making targeted investments [12][19] - The strategic focus includes preparing for the phase III clinical trial of XP-8121, which is expected to be a significant value creation inflection point [10][12] - The company remains committed to achieving $1 billion in peak sales for Recorlev by 2035, with a strong intellectual property foundation supporting this goal [8][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's long-term strategy and highlighted the successful execution of strategic priorities in 2025 [4][6] - The outlook for 2026 anticipates total revenue between $375 million and $390 million, representing over 30% growth at the midpoint compared to 2025 [13][20] - Management emphasized the importance of maintaining disciplined investment prioritization to enhance operating leverage and support sustained performance [19][22] Other Important Information - The company filed a patent infringement lawsuit against two ANDA filers to protect its rights regarding Recorlev, reinforcing its confidence in its intellectual property [8][64] - The company plans to significantly increase R&D and SG&A expenses in 2026 to support growth initiatives and the upcoming phase III study for XP-8121 [21][22] Q&A Session Summary Question: Insights on Recorlev expansion and operating leverage - Management indicated that they have doubled their commercial footprint and will continue to invest in resources to manage patient loads effectively [26][27] Question: Thoughts on IP litigation and potential acquisitions - Management stated that their strategy remains unchanged and they are prepared for the IP litigation, with confidence in achieving $1 billion in sales for Recorlev by 2035 [28][32] Question: Guidance on capital deployment and gross margin evolution - Management noted that the strong balance sheet allows for disciplined business development and that gross margins are expected to improve due to favorable product mix [34][35] Question: Revenue guidance by product for 2026 - Management expects Keveyis to stabilize, Gvoke to grow in the high single-digit to low double-digit range, and Recorlev to be the primary growth driver [41][42] Question: Updates on XP-8121 and FDA interactions - Management confirmed alignment with the FDA and emphasized the importance of entering the phase III trial with a scaled-up go-to-market device [54][56]

Financial Data and Key Metrics Changes - For 2025, adjusted earnings per share (EPS) was $6.98, representing an 8.7% increase year-over-year, primarily due to higher revenue and adjusted operating income [16][17] - Adjusted gross margin for 2025 was 63.7%, a decrease of 200 basis points year-over-year, attributed to tariffs, the acquisition of Vascular Intervention, and increased logistics costs [15][16] - Adjusted operating margin for 2025 was 22.7%, reflecting a 230 basis point decrease year-over-year due to gross margin pressure and higher operating expenses [15][16] Business Line Data and Key Metrics Changes - Vascular revenue increased 2.4% year-over-year to $472.7 million, driven by growth in Central Access, hemostatic, and atomization products [14] - Interventional revenue was $427.5 million, an increase of 8.1%, supported by a broad portfolio [14] - Surgical revenue was $219.3 million, reflecting a 3.2% increase, influenced by volume-based procurement in China [14][15] Market Data and Key Metrics Changes - Continuing operations delivered 4.7% pro forma adjusted constant currency revenue growth in the second half of 2025, establishing a solid foundation for future growth [28][22] - Pro forma adjusted constant currency revenue growth for 2026 is expected to be in the range of 4.5%-5.5% [22] Company Strategy and Development Direction - The company is undergoing a transformation to optimize its portfolio and focus on high-growth areas, with plans to return significant capital to shareholders through a $1 billion share repurchase program [5][27] - The strategic divestitures of Acute Care, Interventional Urology, and OEM businesses are expected to close in the second half of 2026, with net proceeds of approximately $1.8 billion to be used for share repurchases and debt repayment [7][20] - R&D investment for RemainCo is expected to represent approximately 8% of sales, up from 5% historically, indicating a focus on product innovation [8][71] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving mid-single-digit revenue growth and significant increases in adjusted EPS in 2027 and beyond, driven by cost mitigation and capital deployment actions [30][50] - The company is actively managing stranded costs of approximately $90 million associated with the divestitures, with plans to offset these through transition service agreements and restructuring initiatives [9][24] Other Important Information - The company is currently in a CEO search process, focusing on candidates with experience in high-growth, mid-size organizations operating in global healthcare settings [51] - A restructuring plan has been approved to eliminate stranded costs and streamline operations, targeting approximately $50 million in annual pre-tax savings [24][30] Q&A Session Summary Question: Use of proceeds from divestitures - The company plans to allocate $1 billion for share repurchases and approximately $800 million for debt repayment, primarily targeting the deferred draw revolver from the Bison acquisition [33] Question: Restructuring savings impact on EPS guidance - Some restructuring savings are included in the EPS guidance range of $6.25-$6.55 for 2026, with additional savings expected post-2026 [34] Question: Confidence in revenue growth for 2026 - The company is confident in its growth trajectory due to sales synergies and easier comparisons in the second half of 2026, despite some ongoing volume-based procurement impacts [81] Question: BIOTRONIK integration update - The integration of the BIOTRONIK sales force is progressing well, with no significant talent losses and opportunities for revenue synergies identified [69][70] Question: Future margin expansion post-transition service agreements - The company aims to mitigate stranded costs and leverage operational efficiencies to improve margins, with expectations for continued growth in earnings and margins beyond 2026 [75][76]

Financial Data and Key Metrics Changes - For 2025, adjusted earnings per share (EPS) was $6.98, representing an 8.7% increase year-over-year, primarily due to higher revenue and adjusted operating income, including the impact of the Vascular Intervention acquisition [16][17] - Adjusted gross margin for 2025 was 63.7%, a decrease of 200 basis points year-over-year, attributed to tariffs, the addition of the Vascular Intervention acquisition, and increased logistics costs [15][16] - Adjusted operating margin for 2025 was 22.7%, reflecting a 230 basis point decrease due to gross margin pressure and higher operating expenses [16] Business Line Data and Key Metrics Changes - Vascular revenue increased 2.4% year-over-year to $472.7 million, driven by growth in Central Access, hemostatic, and atomization products [14] - Interventional revenue was $427.5 million, an increase of 8.1%, supported by a broad Interventional portfolio [14] - Surgical revenue was $219.3 million, reflecting a 3.2% increase, impacted by volume-based procurement in China [14] Market Data and Key Metrics Changes - Continuing operations delivered 4.7% pro forma adjusted constant currency revenue growth in the second half of 2025, establishing a solid foundation for future mid-single-digit revenue growth [22][28] - Pro forma adjusted constant currency revenue growth guidance for 2026 is expected to be in the range of 4.5%-5.5% [22] Company Strategy and Development Direction - The company is undergoing a transformation to optimize its portfolio, focusing on becoming a more streamlined medical technologies leader [27] - Strategic divestitures of the Acute Care, Interventional Urology, and OEM businesses are expected to close in the second half of 2026, with net proceeds of approximately $1.8 billion to be used for share repurchases and debt reduction [7][20][30] - R&D investment for RemainCo is expected to represent approximately 8% of sales, up from about 5% historically, indicating a focus on product innovation [8][71] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving adjusted EPS guidance for 2026 in the range of $6.25-$6.55, despite the impact of stranded costs related to divestitures [9][21] - The company anticipates significant improvements in margins and adjusted EPS in 2027 and beyond, driven by capital deployment actions and cost-saving initiatives [30][50] Other Important Information - The company is actively conducting a CEO search following the transition of leadership, focusing on candidates with experience in high-growth organizations [5][51] - A restructuring plan has been approved to mitigate approximately $50 million in stranded costs, aimed at streamlining operations and improving long-term cost structure [24][30] Q&A Session Summary Question: Use of proceeds from divestitures - The company plans to allocate $1 billion for share repurchases and approximately $800 million for debt repayment, primarily targeting the deferred draw revolver from the BIOTRONIK acquisition [33] Question: Restructuring savings impact on EPS guidance - Some restructuring savings are included in the EPS guidance for 2026, with additional savings expected post-2026 [34] Question: Confidence in revenue growth for 2026 - Confidence in revenue growth is based on anticipated sales synergies and easier comparisons in the second half of 2026, as the impact of volume-based procurement is expected to lessen [81]

R&D Investment Overview - In 2024, U.S. companies invested $675 billion in R&D, accounting for 52% of global investment, while Chinese companies invested $165 billion, representing 13% of the total[3] - Over the past decade, China has rapidly closed the gap, with four out of nine advanced industries now seeing higher R&D investments from Chinese firms compared to U.S. firms[3] Cost and Efficiency - China's R&D costs are approximately 20% lower than those in the U.S. when adjusted for wages[5] - Excluding software and biopharmaceuticals, Chinese companies' R&D investments in seven advanced industries have surpassed those of U.S. companies by 6%[6] Legislative Recommendations - To maintain competitiveness in advanced industries, Congress should triple funding for industry-academic research collaborations and increase simplified R&D tax credits from 14% to at least 28%[7] Global R&D Trends - The global R&D investment growth from 2014 to 2024 was 102%, with U.S. investments increasing by 150% and Chinese investments soaring by 537%[13] - The concentration of global R&D is shifting towards a binary world dominated by U.S. and Chinese firms, leaving other regions stagnant[4] Sector-Specific Insights - In the pharmaceutical and biotechnology sector, U.S. companies lead with 181 firms, while China has 149 firms in the electronics and electrical equipment sector[15] - By 2024, U.S. companies' share of global R&D in the automotive sector is projected to be 19%, while Chinese firms will account for 15%[82] Adjusted Investment Metrics - When controlling for GDP, U.S. companies invested $15.41 per $1,000 GDP in R&D, while Chinese companies increased their investment from $5.59 to $23.48 per $1,000 GDP from 2014 to 2024[20][24] - The location quotient (LQ) for Chinese companies in advanced industries rose from 0.7 to 1.5, while U.S. companies' LQ decreased from 1.8 to 1.7[12][42]

Core Viewpoint - Soitec is entering a new phase of development with a leadership transition, having successfully diversified into new growth areas and maintained operational excellence and cash generation [3][4]. Group 1: Leadership Transition - The current CEO, Pierre Barnabe, will step down in under two months, with Laurent Remont set to take over [3]. Group 2: Company Performance - Soitec has stabilized and diversified into new growth areas, supported by targeted investments in R&D [3]. - The company is focused on operational excellence and cash generation, backed by a healthy balance sheet [4].

Core Viewpoint - A-share listed companies are showing a positive growth trend in their 2025 performance forecasts, with 60 out of 108 companies predicting favorable results, indicating a pre-joy ratio of approximately 55.56% [1] Group 1: Performance Forecasts - Among the companies that disclosed their 2025 performance forecasts, 18 companies expect their net profit to increase by over 100% year-on-year, excluding those that turned losses into profits [2] - Notable companies with significant profit increases include Zhongke Lanyun, Chuanhua Zhili, Kangchen Pharmaceutical, Bai'ao Saitou, and Tianci Materials [2] Group 2: Individual Company Highlights - Zhongke Lanyun anticipates a net profit of 1.4 billion to 1.43 billion yuan, representing a year-on-year increase of 366.51% to 376.51%. The company attributes this growth to strategic investments in high-growth areas such as GPU and advanced packaging testing [3] - Chuanhua Zhili expects a net profit of 540 million to 700 million yuan, with a year-on-year increase of 256.07% to 361.57%. The growth is driven by optimized marketing strategies and improved asset structures in its chemical and logistics businesses [4] - China Shipbuilding Defense forecasts a net profit of 940 million to 1.12 billion yuan, reflecting a year-on-year increase of 149.61% to 196.88%, attributed to improved production efficiency and increased investment income [4] Group 3: Industry Trends - Industries such as semiconductors, biomedicine, chemicals, machinery, and non-ferrous metals are experiencing notable performance recoveries among listed companies [4] - Companies like Chifeng Gold and Zijin Mining are seeing significant profit growth due to rising gold prices, with Chifeng Gold expecting a net profit of 3 billion to 3.2 billion yuan, a year-on-year increase of 70% to 81% [5] Group 4: International Market Expansion - Companies are actively expanding their overseas businesses, contributing to rapid growth in performance. For instance, Bai'ao Saitou expects a revenue of approximately 1.351 billion yuan, a year-on-year increase of 37.75%, driven by strong R&D capabilities and brand influence [5] - Aibisen anticipates a net profit of 240 million to 290 million yuan, with a year-on-year increase of 105.32% to 148.09%, supported by a well-established global channel network and local operations [6][7] - Huace Navigation expects a net profit of 670 million to 690 million yuan, with a year-on-year increase of 14.84% to 18.27%, driven by a focus on global expansion and rapid growth in overseas markets [7]

Core Viewpoint - The company emphasizes the importance of research and development (R&D) to enhance market competitiveness through technological innovation and product upgrades [1] Group 1: R&D Focus - The company is committed to planning and managing R&D expenditures effectively to ensure that investments yield expected returns [1] - The goal of R&D efforts is to create long-term value for shareholders [1]

Financial Data and Key Metrics Changes - Quanterix reported total revenue of $40.2 million for Q3 2025, representing a 12% year-over-year increase [11] - The company ended the quarter with $138 million in cash, cash equivalents, marketable securities, and restricted cash [14][16] - Adjusted EBITDA was a loss of $11.9 million, compared to a loss of $5.5 million in the same quarter of the previous year [14] Business Line Data and Key Metrics Changes - Simoa contributed $23 million in revenue, reflecting a 36% organic revenue decline, while Spatial reported $17.2 million, down 9% year over year [11] - Consumable revenue totaled $18.8 million, with $12.3 million from Simoa and $6.5 million from Spatial [12] - Accelerator Lab revenue was $8 million, with $5 million from Simoa and $3 million from Spatial, showing a sequential increase of $1 million [12] Market Data and Key Metrics Changes - U.S. academic revenue declined approximately 30%, tracking the decline in academic grants, while pharma revenue declined 23% year over year [12] - Demand across the broader industry remains uneven, but signs of stabilization are noted, particularly in academic, government, and pharma markets [6] Company Strategy and Development Direction - The company is focused on integrating operations following the acquisition of Akoya, having realized $67 million of the targeted $85 million in synergies [5][8] - Significant investments are being made in Alzheimer's diagnostics and new assays across Simoa Spatial franchises, with approximately $27 million invested in R&D year to date [6][9] - The integration of Simoa and Spatial is expected to unlock new growth avenues, particularly in oncology and multimodal biomarker strategies [7][10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving cash flow breakeven in 2026 and expects to finish the year with around $120 million in cash and no debt [6][9] - The company anticipates continued improvement in the operating environment, with a focus on capturing synergies and enhancing profitability [10][16] - Management remains cautious about the impact of the government shutdown on Q4 guidance, but believes risks have bottomed out [40] Other Important Information - The company is preparing for the launch of an early access program for Simoa ONE, which is expected to be a catalyst for future instrument growth in Alzheimer's diagnostics [9][67] - Diagnostics-related revenue was $2.4 million in the quarter, with expectations for stronger traction in 2026 based on established pricing recommendations [9][50] Q&A Session Summary Question: What is the outlook for Simoa consumables given the decline? - Management noted that while order volume was consistent, the order size was smaller due to a challenging academic grant environment, but expects smaller projects to scale in 2026 [20][22] Question: What are the plans for Q4 regarding integration and synergies? - Management confirmed that a single manufacturing team has been implemented and lab services are being combined, with expectations to capture remaining synergies in early 2026 [24][25] Question: How is the Akoya business expected to perform in Q4? - Management modeled a slight step down in Akoya's revenue for Q4 due to market uncertainty but noted strong execution in Q3 [28][29] Question: What is the competitive landscape and how is the company addressing it? - Management acknowledged competition in high sensitivity platforms but emphasized their unique position in the four to five marker space, which is expected to benefit from discovery progress [41][43] Question: What is the expected ramp-up for LucentAD in 2026? - Management indicated that established pricing will support stronger traction and growth in diagnostics revenue, with ongoing partnerships in Asia contributing positively [50][70]

Core Insights - Johnson & Johnson (J&J) is planning to spin off its orthopedics division, which contributes approximately 10% of the company's total revenue, to enhance focus and capital deployment in higher growth areas [1][5][7] - The orthopedics business is projected to grow at a rate of 3% to 5% and is supported by a $50 billion market, driven by strong demographics and innovation opportunities [3][7][8] - J&J maintains a robust capital position with $20 billion in free cash flow and a AAA credit rating, allowing for potential acquisitions and portfolio management [10][25] Spin-off Strategy - The decision to pursue a spin-off rather than a sale is based on resource intensity and the duration of the separation process, although the company remains open to other value-creating avenues [6][10] - The spin-off is expected to free up capital, although the exact amount is uncertain and will depend on the separation method [10] Innovation and R&D - J&J emphasizes its commitment to innovation, particularly in the medtech and pharmaceutical sectors, with significant investments in oncology, immunology, and neuroscience [12][20] - The company has allocated 15% to 16% of its sales to R&D, amounting to over $3.5 billion in a recent quarter, demonstrating a consistent investment strategy despite external pressures [24][25] Market Position and Future Outlook - J&J aims to position its medtech unit as one of the top companies globally, focusing on higher growth and higher margin businesses [3] - The company is actively pursuing advancements in bladder cancer treatment and innovative contact lens technology, showcasing its dedication to addressing unmet medical needs and maintaining market leadership [20][24]