[STANDEX LOGO]
Contact: FOR IMMEDIATE RELEASE
Daniel C. Potter, Treasurer
Investorrelations@Standex.com
(603) 893-9701
Standex Posts Increased Sales for the Fourth Quarter
Company Reports Record Operating Cash Flow for Second Consecutive Year
SALEM, N.H - August 14, 2003 .... Standex International Corporation (NYSE:SXI),
today reported net sales of $146.8 million for the fourth quarter of 2003, an
increase of 4 percent from $141.3 million during the fourth quarter of 2002.
The Company also reported net income of $4.5 million, or $0.36 per diluted
share, compared with prior-year net income for the fourth quarter of $4.9
million, or $0.40 per diluted share, a decrease of 10 percent.
Excluding special items totaling $1.6 million after tax, fourth quarter net
income was $0.50 per diluted share, up 16 percent compared to net income
reported on the same basis in the fourth quarter of fiscal 2002 of $5.2
million, or $0.43 per diluted share. A reconciliation of earnings per share
from reported GAAP amounts to non-GAAP amounts is included later in the
release.
Fourth-quarter special items included a restructuring charge of $3.3 million
($2.2 million net of tax) related to Standex's previously announced
restructuring program, and income related to discontinued operations of
$578,000, net of tax.
For the 2003 fiscal year, Standex reported net sales of $574.5 million, an
increase of two percent from 2002 net sales of $563.2 million. The fiscal 2003
net sales include an extra month of European sales, totaling approximately $4.4
million, resulting from Standex's decision to conform the accounting year of
its European operations to the corporate fiscal year ending June 30. Excluding
the extra month of European sales, 2003 pro forma net sales were $570.1
million, up one percent from fiscal 2002.
Net income for fiscal 2003 was $14.1 million, or $1.16 per diluted share, a
decrease of 15 percent from $16.6 million, or $1.35 per diluted share, in 2002.
Excluding special items, net income for fiscal 2003 was $17.9 million, or $1.47
per diluted share, compared with net income for 2002 of $20.6 million, or $1.68
per diluted share, a decrease of 13 percent.
Comments on the Fourth Quarter
"We were pleased with the overall sales and booking performance we experienced
during the fourth quarter in both the Food Service and Industrial Groups," said
Roger Fix, President and CEO. "Higher volume, coupled with the results of the
cost reduction activities completed during the past 18 months, resulted in
higher sales and operating income for the quarter for these two groups."
"The strongest performer, based on year-over-year fourth-quarter comparisons,
was our Food Service Group, where net sales rose 11 percent to $40.3 million
from fourth-quarter 2002 net sales of $36.4 million. Operating income for this
group climbed 53 percent in the fourth quarter, to $3.8 million, from $2.5
million a year earlier. Sales in the Food Service Group gained momentum with
all divisions in the group reporting solid improvements in net sales and
earnings. Master-Bilt, Federal and BKI reported double-digit increases in
sales reflecting both market share gains and moderate improvements in market
conditions," said Fix.
Fourth-quarter net sales from continuing operations in Standex's Industrial
Group increased five percent, to $83.2 million, from $79.5 million for the
fourth quarter of 2002. Operating income for the group rose 25 percent to $8.3
million from $6.7 million for the fourth quarter last year. Double digit
increases in sales were recorded at the domestic and international operating
units of Standex Engraving, Standex Electronics and Spincraft, which offset
weakness in the Air Distribution Products division.
The Consumer Group posted an eight percent decline in fourth-quarter net sales
to $23.3 million from $25.4 million for fourth quarter 2002. This group's
performance tracks the retail sector of the economy where consumer spending
continues to be weak. Partially as a result of expense reduction initiatives,
operating income decreased at a more moderate rate than previous quarters,
falling 11 percent in the fourth quarter to $1.4 million from $1.6 million
in the 2002 fourth quarter.
Comments on Fiscal Year 2003
"The trends in full-year performance were similar to those reported for the
fourth quarter," said Fix. "Both the Industrial and Food Service Groups
reported approximately 5 percent increases in net sales in fiscal 2003 versus
the prior year. Operating income for these two groups was up 5 percent and 7
percent respectively over the prior year. Sales for the Consumer Group were
down 9 percent from the prior year as soft consumer demand and lower levels of
retail spending impacted all of the businesses in this group. Operating income
for the Consumer Group was down 72 percent as compared to last year.
"For the second consecutive year, in fiscal 2003 Standex posted a record level
of operating cash flow from continuing operations of $50.6 million, an increase
of 19% as compared to cash flow from continuing operations of $42.4 million in
fiscal 2002. During fiscal 2003, we placed significant emphasis on
aggressively managing our working capital and generating improved operating
cash flow. Much of our success in generating strong operating cash flow, given
the lower earnings, came from significant improvements in net working capital.
Net working capital decreased $17.9 million during the year, or 12 percent, to
$133.0 million from $150.9 million at June 30, 2002 and decreased to 23 percent
from 27 percent as a percentage of sales. Improvement was achieved in all three
components of net working capital: accounts receivable decreased two percent to
$91.7 million from $93.2 million; inventories decreased 11 percent to $82.5
million from $92.9 million; and accounts payable increased 17 percent to $41.2
million from $35.2 million year-over-year," said Fix.
Strong operating cash flow enabled Standex to invest $17.6 million in the
acquisitions of Cin-Tran and I R International and $7.9 million in capital
expenditures while still reducing total long-term debt to $109.6 million at
June 30, 2003 from $130.0 million a year earlier, a decrease of 16 percent.
"We believe our year end debt position and demonstrated ability to generate
cash flow leaves us very well positioned to complete additional acquisitions in
fiscal 2004,"[1] said Fix.
Historically low interest rates and another year of negative performance of the
equity markets caused Standex to suffer higher pension liabilities and lower
pension assets. As a result, the Company recorded a $ 34.7 million after-tax
equity charge in the fourth quarter to reflect the additional minimum liability
under these plans. This after-tax equity charge did not impact cash or
earnings and could reverse in future periods should either interest rates
increase and/or market performance and plan returns improve. Including this
charge, the net debt-to-total capital ratio ended the year at 37.8%, an
improvement from 41.0% at the end of 2002.
Pension expenses are expected to increase by approximately $0.25 per diluted
share in 2004 as a result of the funded status of the pension plans and changes
in actuarial assumptions. Contribution requirements in 2004 are expected to be
approximately $6.8 million.
Declaration of 156th Dividend
On July 30, 2003, the Company's Board of Directors declared a quarterly cash
dividend of 21 cents a share, which is payable August 26, 2003 to stockholders
of record August 11, 2003. The dividend is the 156th consecutive quarterly
cash dividend. Standex has paid dividends each quarter since it became a
public corporation in November 1964. During this 38-year period the Company
has increased its dividend rate 35 times.
Strategic Realignment and Restructuring Program
"During the fourth quarter, Standex continued to make significant progress in
implementing the realignment and restructuring program we announced earlier in
the fiscal year," said Fix. "During the quarter we completed the sale of the
real estate and business of the H. F. Coors China Company operation in two
separate transactions, producing a net gain. We initiated the consolidation of
the manufacturing operations of BKI in the United Kingdom with the BKI facility
in South Carolina and closed both the Mold-Tech operation in California and an
underutilized Air Distribution Products facility in North Carolina,
distributing their sales to other facilities in the U. S."
"Standex's realignment and restructuring program continues on track.
Completion is expected in the second half of fiscal 2004. We are pleased to
report that in fiscal 2003 the gain Standex realized on real estate sales
offset approximately 75 percent of the restructuring expense recognized during
the year. The Company expects to achieve annual pretax savings of
approximately $8.0 million once the restructuring program is completed."1
Comments on Outlook
"We are cautiously optimistic that we have turned the corner on sales," said
Fix. "While we remain dissatisfied with our bottom line performance, we are
beginning to see the results of the restructuring program and other cost
reduction initiatives that have been undertaken by the Company. We continue
to stress the generation of operating cash throughout the Company in order to
support the payment of dividends to our shareholders, fund organic growth and
complete acquisitions."1
Earnings Reconciliation
In this release, the Company refers to certain special items which are non-GAAP
financial measures. The Company believes these measures are helpful to
investors in assessing the Company's ongoing performance of its underlying
business operations before the effect of these special items. Net income and
earnings per share before special items reconcile to GAAP amounts as follows
(in thousands, except per share data):
Three Months Ended Year Ended
June 30 June 30
Change Change
2003 2002 % 2003 2002 %
Net Income $4,455 $4,932 (10)% $14,149 $16,618 (15)%
Special items, net of tax:
Discontinued operations (578) 315 (312) 232
Non-recurring items 2,169 - 4,076 -
Change in accounting principle - - - 3,779
subtotal $1,591 $315 $3,764 $ 4,011
Net income before special items $6,046 $5,247 15% $17,913 $20,629 (13)%
Diluted earnings per share $0.36 $0.40 (10)% $1.16 $1.35 (14)%
Special items, net of tax:
Discontinued operations (0.04) 0.03 (0.02) 0.02
Non-recurring items 0.18 - 0.33 -
Change in accounting principle - - - 0.31
subtotal $0.14 $0.03 $0.31 $0.33
Diluted earnings per share
before special items $0.50 $0.43 16% $1.47 $1.68 (13)%
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 2:00 p.m. ET
on August 14 through midnight ET on August 21. 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 691272. 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, Mexico and Brazil.
CONSOLIDATED FINANCIAL INFORMATION
(In thousands, except per share data)
THREE MONTHS YEAR ENDED
JUNE 30 JUNE 30
2003 2002 2003 2002
CONSOLIDATED SUMMARY OF INCOME
NET SALES $146,770 $141,285 $574,536 $563,201
INCOME BEFORE TAXES $5,867 $5,174 $20,851 $30,286
PROVISION (BENEFIT) FOR TAXES 1,990 (73) 7,014 9,657
Net Income from continuing
Operations $3,877 $5,247 $13,837 $20,629
Income (Loss) from discontinued
operations net of tax 578 (315) 312 (232)
Cumulative effect of change
in accounting principle - - - (3,779)
Net Income $4,455 $4,932 $14,149 $16,618
EARNINGS PER SHARE:
Basic
Income/(Loss) from continuing
Operations $0.32 $0.43 $1.15 $1.70
Income/(Loss) from discontinued
Operations $0.05 $(0.02) $0.02 $(0.02)
Cumulative effect of change
in accounting principle $ - $ - $ - $(0.31)
Total $0.37 $0.41 $1.17 $1.37
Diluted
Income/(Loss) from continuing
Operations $0.32 $0.43 $1.14 $1.68
Income/(Loss) from discontinued
Operations $0.04 $(0.03) $0.02 $(0.02)
Cumulative effect of change
in accounting principle $ - $ - $ - $(0.31)
Total $0.36 $0.40 $1.16 $1.35
SEGMENT DATA
NET SALES
Food Service $40,301 $36,416 $141,867 $135,308
Consumer 23,277 25,416 99,814 110,150
Industrial 83,192 79,453 332,855 317,743
TOTAL $146,770 $141,285 $574,536 $563,201
OPERATING INCOME
Food Service $3,831 $2,508 $10,455 $9,802
Consumer 1,382 1,556 2,014 7,114
Industrial 8,313 6,659 35,057 33,419
Restructuring (3,340) - (5,580) -
Other expense, net - - (1,306) -
Corporate (2,764) (3,309) (12,979) (11,342)
TOTAL $7,422 $7,414 $27,661 $38,993
###
Footnotes
[1] These statements are forward looking and involve certain risks,
uncertainties and assumptions. Factors affecting the outcome and results
include failure to achieve the Company's acquisition and restructuring goals,
uncertainties in the economy, competitor activities, changes in economic growth
and demands in domestic and international markets, pricing pressures and other
market factors. Actual results could differ materially from anticipated
projected results.
#