May 24, 2018 • 10:30 am ET

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Presentation
Operator
Operator

Good day, ladies and gentlemen. Welcome to the Brady Corporation Third Quarter 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later there will be a question-and-answer session and instructions will follow at that time. (Operator Instructions) As a reminder, this conference call is being recorded.

I would now like to turn the conference over to Ann Thornton, Chief Accounting Officer. Ma'am you may begin.

Executive
Ann Thornton

Thank you. Good morning and welcome to the Brady Corporation fiscal 2018 third quarter earnings conference call. The slides for this mornings 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 except, 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 2017 form 10-K which was filed with the SEC in September of last year. 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.

Executive
Michael Nauman

Thank you, Ann. Good morning and thank you all for joining us. We've released our fiscal 2018 third quarter financial results this morning and I am proud to report our 11th consecutive quarter of the improved year-on-year profitability. Our pretax earnings increased by 20.7% compared with the third quarter of last year. Total sales growth was 8.2% this quarter, which made up of 3.2% organic growth and an increase of 5% from foreign currency translation. This marks our fourth consecutive quarter of organic sales growth which is the direct results and the focus and dedication of the entire team on the development of innovative new products and executing our strategy every day.

We've focused on the same set of priorities, which are to develop innovative high-quality products, provide excellent customer service, to drive improvements throughout our facilities and to identify and execute on efficiencies throughout our SG&A structure. Maintaining our focus on these consistent priorities is the key to our organic sales growth and our pretax earnings improvements. We now have momentum and we are using this momentum to move the organization forward. Our investment in research and development increased by more than 17% this quarter and our talented engineers are building our pipeline with innovative new products. We are observing and listening to our customers to understand their problems and then turning them into our problems to solve.

For instance, as the direct result of these customer observations, this quarter we launched the QuickSleeve