Record High Adjusted EPS Driven by Cost Reductions and R&D Investment
Brady achieved a new quarterly record high adjusted EPS of $1.26, up 5.9% year-over-year, driven by strategic cost reductions and increased R&D investment.
The company grew organic sales by 2.4% in Q4, with acquisitions contributing an additional 11.3%, highlighting a balanced growth approach.
Management emphasized that significant cost outlays, including restructuring and facility closures, contributed to margin expansion despite challenging macro conditions.
R&D spending increased by 31% in Q4, reaching nearly $80 million for the year, underpinning a focus on high-margin engineered products.
Strategic Pricing and Contract Re-negotiations in Commercial Services
ABM actively engaged in re-negotiating long-term contracts with marquee clients in pressured markets, often at slightly lower margins to secure extensions.
The company strategically lowered bid thresholds by approximately 100 basis points in high-growth sectors like semiconductor and pharma to win new business.
These contract re-negotiations are designed to extend client relationships for 3-5 years, with the expectation of margin recovery over time.
Scott emphasized that these pricing strategies are part of a long-term relationship-building approach, not just short-term margin sacrifices.
Dafinchi