Contact:
Daniel C. Potter, Treasurer
Investorrelations@Standex.com
(603) 893-9701
Standex Reports Third-Quarter Fiscal 2003 Results
Quarterly Sales Hold Steady at $138 Million
Weak Retail Market Leads Decline in Operating Income, Net Profit
SALEM, N.H - April 24, 2003 . Standex International Corporation
(NYSE:SXI) today reported net income of $1.5 million, or $0.13 per
diluted share, on revenues of $137.7 million for the fiscal third
quarter ended March 31, 2003. This compares with net income for the
third quarter ended March 31, 2002, of $3.6 million, or $0.29 per
diluted share, on revenues of $136.9 million. The third-quarter
includes pretax restructuring charges of $2.2 million or $0.09 per
diluted share relating to the Company's previously announced
restructuring program. These restructuring charges include a pretax
non-cash component of $682,000. Excluding the restructuring charges,
net income in the third quarter was $0.22 per share as compared to the
prior year of $0.29 per share. The third-quarter results also include
a $0.05 per share tax benefit related to R&D tax credits for the 2003
fiscal year.
For the first nine months of fiscal 2003, Standex reported net income
of $9.7 million, or $0.80 per diluted share, versus net income of
$15.5 million, or $1.26 per diluted share, for the nine months ended
March 31, 2002. Year to date net income for fiscal 2003 includes a
pretax charge of $4.5 million or $0.18 per share for non-reoccurring
items (including restructuring expenses, a gain on the sale of a
building and expenses associated with the retirement of two senior
corporate executives). Excluding the non-reoccurring items, net
income for the first 9 months was $0.98 per share versus $1.26 per
share last year.
Revenues for the first nine months of fiscal year 2003 were $434.1
million, compared with $430.5 million for the first nine months of
fiscal 2002. Standex's nine-month fiscal 2003 revenues include an
extra month or approximately $4.4 million of European sales resulting
from the decision to conform the accounting year of its European
operations to the Standex fiscal year ending June 30.
The nine-month fiscal 2002 results above do not reflect the Company's
adoption of Statement of Accounting Standards No. 142 (SFAS No. 142)
which relates to goodwill and other intangibles. The Company recorded
a goodwill impairment charge of $3.8 million ($0.31 per share) as of
July 1, 2001 upon adoption of this standard.
Comments on the Third Quarter
"Many of the trends we reported in the second quarter continued during
the third quarter," stated Roger Fix, President and CEO of Standex.
"Performance of our Consumer Group was significantly impacted by
overall weakness in the retail sector caused by the decline in
consumer confidence and the effect of the war in Iraq. In addition,
Easter occurs during the company's fourth quarter this year while it
occurred in the 3rd quarter last year which impacts particularly our
Berean Christian book store business."
Revenues for the Consumer Group were down 12 percent quarter over
quarter, from $27.5 million to $24.4 million, and the group's
operating income decreased from $1.7 million for the third quarter
last year to $119,000 for the third quarter ended March 31, 2003. For
the first nine months of fiscal 2003, Consumer Group revenues were
$76.5 million, compared with revenues of $84.7 million for the group
for the year-earlier period. Consumer Group operating income for the
nine months just ended declined from $5.6 million to $632,000.
The Company's strongest performance continued to be delivered by its
Industrial Group, where quarter over quarter revenues were up from
$76.9 million to $80.0 million. Operating income held steady at $6.5
million, the same as the year-earlier quarter. Industrial Group
revenues for the first nine months of fiscal 2003 were $253.6 million,
compared with year-earlier revenues of $244.4 million; operating
income for the nine months was $27.4 million, up from $26.9 million in
2002. Good year over year performance improvements were recorded in
the Standex Electronics, Standex Engraving and Spincraft units during
the third quarter. The performance improvements in these businesses
were offset by declining performance in our Standex Air Distribution
Products business. Air Distribution Products has been a strong
performer for the last several years, however, the group's third-
quarter results were affected by higher steel prices resulting from
the tariffs on imported steel imposed during 2002.
Revenues in Standex's Food Service Group were $33.4 million in the
third quarter of fiscal 2003, compared with $32.5 million a year
earlier. Quarterly operating income declined slightly to $1.7
million, from $1.9 million in the prior year. The Master-Bilt and
Federal operating units recorded higher sales and earnings versus the
prior year. The improvement in performance of these divisions was
offset by performance in USECO.
During the third quarter, Standex continued to aggressively manage its
balance sheet assets, ending the quarter in stronger financial
condition. The Company reduced its net working capital to $137.6
million, down 13.4 percent from March 31, 2002, and improved its debt
to capital ratio from 45.5 percent to 38.3 percent at March 31, 2003.
In February, Standex closed a three-year unsecured revolving senior
credit facility with eight regional and money center banks for $130
million. "In a difficult lending environment, where few banks are
providing unsecured credit facilities, this transaction served as
important affirmation of our financial and operating strengths," said
Fix.
In line with the Company's tax planning strategies, Standex completed
a multi-year R&D tax credit project during the third quarter. The net
benefits arising from this project, net of associated project costs,
may be as high as $2.0 million. Certain of these tax benefits
will be recognized when the Company obtains greater certainty as to
the realization of the pending claims. Due to this project, and other
tax planning strategies, we expect the effective tax rate to continue
to improve. 1
Strategic Realignment and Restructuring Program
"During the most recent quarter, we continued to implement our
strategic realignment and restructuring program which is designed to
improve operating margins and cash flows of the overall Corporation,"
added Fix. "During the third quarter we closed the National Metal
Industries operation. Over the past several years the financial
performance of National Metals, which represents less than 1% of
Company sales, had been significantly impacted by foreign competition
and was dilutive to the overall performance of Standex which led to
the decision to close this operation. We have completed the
integration of the Cin-Tran acquisition into our Standex Electronics
Mexican operation. In addition, we transferred the production of
several ATC Frost product lines to our Mexican operation as well
during the quarter.
Restructuring activities resulted in a pretax charge for the third
quarter of $2.2 million. Year to date Standex has incurred total
pretax restructuring charges of $3.2M including a pretax non-cash
component of $682,000.The year to date restructuring activities are
expected to result in annual pretax savings of approximately $3.5
million. The company expects to implement the balance of the
strategic realignment and restructuring program, first announced in
October 2002, during the next 12 months. This program includes the
consolidation of smaller businesses into larger operating units,
disposing of under-performing or underutilized operations and other
cost-reduction activities. Standex expects to generate cash by
selling the underutilized facilities to fund a significant portion of
the restructuring." 1
Comments on Outlook
"In today's challenging business environment, Standex has been taking
aggressive steps to improve the position of the Company in several of
its markets so that we can leverage opportunities when the economy
improves. Clearly we have been taking market share from some of our
Food Service and Industrial competitors in several divisions where we
have seen improvements in booking and sales activity despite markets
which are flat to down year over year. In our Consumer Group, where
the outlook for retail spending continues to be weak in the near term,
we have been particularly focused on taking costs out of the business
by reducing headcount and expenses." 1
"Going forward, we will continue to focus on growth through market
share gains, cost reductions, aggressive balance sheet management and
timely execution of the realignment and restructuring program,"
concluded Fix.
Conference Call Information
Standex invites you to attend a conference call with President and
Chief Executive Officer Roger Fix and Chief Financial Officer
Christian Storch at: 10:00 a.m. ET, today. To join a live Webcast of
the conference call, please access the "Investor Relations" section of
the Company's Web site, located at: www.standex.com. For those unable
to listen to the live broadcast of the conference call, an audio
playback will be available beginning at 1:30 p.m. ET on April 24th
through midnight ET on April 30th. To listen to the audio playback
from the United States, please call (800) 475-6701; from outside the
United States, (320) 365-3844; access code is 679537. In addition, a
replay can also be accessed in the "Investor Relations" section of the
Company's Web site, located at www.standex.com.
About Standex International Corporation
Standex International Corporation is a multi-industry manufacturer in
three broad business segments: Food Service, Industrial and Consumer
with operations in the United States, Europe, Canada, Australia,
Singapore and Mexico.
CONSOLIDATED FINANCIAL INFORMATION
(In thousands, except per share data)
THREE MONTHS NINE MONTHS
ENDED MARCH 31 ENDED MARCH 31
2003 2002 2003 2002
CONSOLIDATED SUMMARY OF INCOME
NET SALES $137,683 $136,865 $434,072 $430,502
-------- -------- -------- --------
INCOME BEFORE TAXES $1,375 $5,495 $14,525 $25,121
(CREDIT)/PROVISION FOR TAXES (166) 1,906 4,831 9,656
Net Income before cumulative effect of ------- -------- ------- -------
change in accounting principle $1,541 $3,589 $9,694 $15,465
Cumulative effect of change in accounting
principle - - - (3,779)
------- ------- ------- -------
Net Income $1,541 $3,589 $9,694 $11,686
------- ------- ------- -------
EARNINGS PER SHARE (before cumulative
effect of change in accounting principle)
Basic $.13 $.29 $.80 $1.27
Diluted $.13 $.29 $.80 $1.26
EARNINGS PER SHARE (after cumulative
effect of change in accounting principle)
Basic $.13 $.29 $.80 $.96
Diluted $.13 $.29 $.80 $.95
AVERAGE SHARES OUTSTANDING
Basic 11,998 12,107 12,055 12,130
Diluted 12,075 12,316 12,188 12,309
SEGMENT DATA
NET SALES
Food Service $33,362 $32,462 $103,921 $101,416
Industrial 79,964 76,869 253,614 244,352
Consumer 24,357 27,534 76,537 84,734
-------- -------- -------- --------
TOTAL $137,683 $136,865 $434,072 $430,502
OPERATING INCOME
Food Service $1,727 $1,915 $6,469 $7,154
Industrial 6,506 6,466 27,400 26,909
Consumer 119 1,688 632 5,558
Restructuring (2,171) - (3,200) -
Other expense, net - - (1,306) -
Corporate (3,031) (2,493) (10,215) (8,033)
------- ------- ------- -------
TOTAL $3,150 $7,576 $19,780 $31,588
------- ------- ------- -------
CONSOLIDATED BALANCE SHEET DATA
Cash Flow from Operations $30,219 $33,602
Net Working Capital $137,599 $158,808
Total Debt $116,365 $148,938
###
_______________________________
1 These statements are forward looking and involve certain risks and
uncertainties and assumptions. Factors affecting outcomes and results
include changes in economic growth in the domestic and international
markets, failure to achieve the Company's acquisition, disposition and
restructuring goals in the anticipated timeframes, competitor
activities including pricing pressures or marketing of new products
and significant changes in domestic and international fiscal policies
or tax legislation.