"Standex Logo"
STANDEX INTERNATIONAL CORPORATION {circle} SALEM, NH 03079 {circle} TEL (603)
893-9701 {circle} FAX (603) 893-7324 {circle} WEB www.standex.com
Contact:
Christian Storch, CFO FOR IMMEDIATE RELEASE
InvestorRelations@Standex.com
(603) 893-9701
STANDEX REPORTS TWOFOLD INCREASE IN THIRD-QUARTER EARNINGS FROM CONTINUING
OPERATIONS
Industrial and Consumer Groups Record Strong Quarters
SALEM, NH - April 22, 2004 . . . . Standex International Corporation (NYSE:SXI)
today reported third-quarter income from continuing operations of $4.5 million,
or $0.37 per diluted share, an increase of 104 percent from third-quarter 2003
of $2.2 million, or $0.18 per diluted share. Net sales for the third quarter
of fiscal 2004 rose 22 percent to $149.3 million, from $122.1 million for the
third quarter of 2003.
Third-quarter 2004 net income, including discontinued operations, was $3.4
million, or $0.27 per diluted share, an increase of 118 percent from net
income, including discontinued operations of $1.5 million, or $0.13 per diluted
share, for the year-earlier third quarter.
Excluding special items and discontinued operations, income for the third
quarter of fiscal 2004 was $4.6 million, or $0.38 per diluted share, an
increase of 66 percent from $2.8 million, or $0.23 per diluted share, in 2003.
The Company believes such non-GAAP measures provide investors with an
additional means of measuring financial performance and a consistent basis for
comparing Standex's results for the third quarter of 2004 with results for
prior quarters. A reconciliation of net income and earnings per share from
reported GAAP amounts to non-GAAP amounts is included later in this release.
Income from continuing operations for the first nine months of fiscal 2004 was
$14.3 million, or $1.16 per diluted share, an increase of 57 percent from $9.1
million, or $0.75 per diluted share, for the same period in 2003. Including
discontinued operations, net income for the first nine months of 2004 was $11.3
million, or $0.91 per diluted share, up 16 percent from $9.7 million, or $0.80
per diluted share, from the year-earlier nine months. Excluding special items,
income from continuing operations for the first nine months of fiscal 2004 was
$14.9 million, or $1.21 per diluted share, an increase of 39 percent from $10.7
million, or $0.88 per diluted share, in 2003.
Net sales for the first nine months of fiscal 2004 rose 13 percent to $434.0
million from year-earlier net sales of $382.9 million. Excluding the impact of
favorable currency, acquisitions and the extra month of European sales recorded
in fiscal 2003, sales growth for the first three quarters was 5.7%.
Comments on the Third Quarter
"We were pleased with the improvement in Standex's operating performance and
financial results in the third quarter," said Roger Fix, President and CEO.
"We attribute the operating improvement to the larger market share achieved by
several of our divisions, the benefits we are realizing from our restructuring
and realignment program and a strengthening in several of our core markets.
Our improved financial results include strong top-line growth, which when
coupled with aggressive expense and working capital management, has produced
substantial increases in net income from continuing operations in each of the
past three quarters."
"The Company continues to post stronger sales than in comparable prior-year
quarters due to a combination of strong organic growth and acquisitions
completed during the past 12 months. Excluding the effect of acquisitions and
favorable currency exchange rates, sales for the third quarter were up eight
percent over last year's third quarter. Several of our core businesses are
leading our overall growth because they are stronger, more efficient and better
positioned to take advantage of market opportunities. As a result, Standex's
operating income for the third quarter rose 90 percent to $8.2 million from
$4.3 million for the third quarter of 2003," said Fix.
Standex's Industrial Group posted the best across-the-board performance for the
third quarter of 2004. Group sales rose 24 percent to $81.2 million from $65.4
million in the third quarter of 2003 and for the first time in recent history,
six of the seven divisions in this group achieved double-digit increases in
revenues. Four businesses in the group, Custom Hoists, Standex Air
Distribution Products (ADP), Standex Electronics and Standex Engraving, posted
very strong sales performances. Standex Engraving showed the strongest
quarter-over-quarter sales improvement, benefiting from the acquisition of I R
International and its Brazilian affiliate, Dornbusch, and from strong sales
gains in its core business. Custom Hoists increased its sales for the quarter
because of the market share it has gained during the past two years, which
allows this business to fully leverage the recovery of the construction vehicle
market that is underway in the U. S. ADP benefited from advance buying from
customers anticipating steel price increases, sales to customers outside its
traditional HVAC wholesaler channel and the continuing strength of the housing
markets in several regions of the U.S. Sales growth at Standex Electronics was
attributable to earlier acquisitions and new business captured in the auto
industry and other targeted markets. Organic growth for the Industrial Group
in the third quarter was 14 percent.
Operating income for the Industrial Group increased 42 percent to $8.7 million
from $6.2 million for the fiscal 2003 third quarter. Some of the key
contributors to the improved profitability of the group include the impact of
previous cost reductions, volume leverage and some improved pricing. The
overall backlog for the Industrial Group at the end of the third quarter of
2004 remained strong with most divisions reporting double digit improvements in
backlog versus the prior year.
Sales for the Food Service Group increased in the third quarter to $44.9
million, up 34 percent from $33.6 million in the third quarter of 2003. Two of
the group's divisions, Master-Bilt and Procon, performed well with Procon
achieving double-digit top-line growth. Master-Bilt continued to gain market
share in its traditional drug store and ice cream retail chain markets and with
sales gains in its targeted growth market of food service. Procon benefited
from strong sales in its traditional beverage market and extended its
penetration into targeted industrial sectors.
The third quarter is traditionally the Food Service Group's weakest quarter
because construction of new restaurants and retail food outlets is frequently
interrupted by winter weather, which was exceptionally severe in January and
February. Despite the seasonally slow quarter, operating income for the
quarter increased over the prior-year third quarter, before the effect of fair
value accounting treatment applied to inventory of the Nor-Lake acquisition.
This fair value accounting treatment negatively impacted, by $465,000,
operating income which declined by eight percent to $1.7 million from $1.8
million in the third quarter of 2003.
Fix added, "The turnaround in the financial performance of our Consumer Group
is very encouraging. The management team has focused for several quarters on
reducing expenses and emphasizing profitability over sales growth. We are
pleased to report that third-quarter operating profit for the group increased
nearly eightfold to $2.1 million from $273,000 in the year-earlier third
quarter. The group's sales of $23.2 million for the third quarter of 2004 were
flat with sales of $23.1 million in the third quarter of 2003. The sales of
Standard Publishing were also flat, however, due in large part to its overall
expense reduction program, operating income increased more than twofold from
the year-earlier third quarter. Standex Direct's third quarter operating
income improved sevenfold as a result of more cost effective marketing
activities and the implementation of significant cost and efficiency
improvements in its operations. The third division, Berean Christian stores,
posted a nine percent increase in sales for the third quarter of 2004 and
turned a third-quarter 2003 operating loss into a modest operating profit for
the third quarter of 2004. We are experiencing some recovery in the religious
book and gift market and are now assessing selective growth opportunities."
"During the third quarter, many of our manufacturing divisions began to
experience price increases imposed by our suppliers of steel products and other
metal commodities. Pricing of galvanized steel strip, stainless steel and
carbon steel sheet material and copper wire and refrigeration components have
all been impacted. Many of these metal commodities and purchased items are key
elements in the products manufactured by our Industrial and Food Service
Groups. Our response to these pricing pressures has been to seek lower-cost
sources of supply and to increase pricing to our customers in line with
prevailing market conditions. In the third quarter, we were able to offset
most of these price increases but are uncertain as to whether we will be able
to continue to offset all increased metal costs in the future."
Comments on Standex's Realignment and Restructuring Program
"Our restructuring and realignment program is nearing completion, having
achieved the goals we originally established for the initiative," said Fix.
"In the third quarter, we successfully completed the shutdown of the Roll-Tech
facility in Germany, the commercial printing business of Standard Publishing in
Ohio and the Jarvis Caster operation in Massachusetts. Subsequent to the end
of the third-quarter, we announced the consolidation of the Roehlen Engraving
and B F Perkins operations in Rochester, New York into our I R International
facility in Richmond, Virginia. Also, we recognized an after tax restructuring
charge of $276,000 during the third quarter, which was partially offset by a
net after tax gain on the sale of real estate of $152,000."
"The goals of this program included producing a series of larger operating
units made up of stronger, more agile and synergistic businesses to achieve
the critical mass necessary to make them leaders in the niche markets they
serve. Through a series of strategic acquisitions, dispositions,
consolidations and plant closings, we have been able not only to make
significant progress in repositioning the Company as a leader in several of its
markets but also to offset all of the restructuring expense incurred during the
past 18 months with the capital gains we recognized on the dispositions. We
expect to record our final restructuring charges-leaving us within the
originally estimated target of $11 million to $12 million, during the first
quarter of our 2005 fiscal year. We also expect that the annualized cost
savings from the restructuring and realignment program will exceed $8.0
million. <F1>"
"During the tenure of the program, we completed six strategic or bolt-on
acquisitions, sold or closed five businesses and consolidated the operations of
five divisions. With these actions, we bolstered our strength in existing and
strategically related markets and exited businesses that no longer played to
our strengths as a provider of value-added engineered products and customer
solutions. In addition to implementing change and integrating new companies
and cultures, we managed to introduce Lean Enterprise disciplines in nine out
of 15 divisions. As a result of these actions, Standex expects to benefit
fully from strengthening in the economy,<F1>" said Fix.
Earnings Reconciliation
Net income and earnings per share data including the impact of discontinued
operations, restructuring and other special charges is summarized below (in
thousands, except per share data):
Three Months Ended Nine Months Ended
March 31 March 31
Change Change
2004 2003 % 2004 2003 %
Net Income $3,352 $1,541 118 $11,290 $ 9,694 16
Discontinued operations 1,125 657 3,025 (592)
Income from continuing
operations 4,477 2,198 104 14,315 9,102 57
Special items, net of tax:
Restructuring 276 573 754 1,170
Other (152) 0 (179) 454
Subtotal 124 573 575 1,624
Income before special items $4,601 $2,771 66 $14,890 $10,726 39
Diluted earnings per share $ 0.27 $ 0.13 108 $ 0.91 $ 0.80 14
Discontinued operations 0.10 0.05 0.25 (0.05)
Income from continuing
operations 0.37 0.18 106 1.16 0.75 55
Special items, net of tax:
Restructuring 0.02 0.05 0.06 0.09
Other (0.01) 0.00 (0.01) 0.04
Subtotal 0.01 0.05 0.05 0.13
Income before special items $ 0.38 $ 0.23 65 $ 1.21 $ 0.88 38
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 website, 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 today through midnight ET on April 29th. To listen to the audio playback
from the United States, please call (888) 286-8010; from outside the United
States, call (617) 801-6888; access code is 37248939. In addition, a replay
can also be accessed in the "Investor Relations" section of the Company's
website, located at www.standex.com.
About Standex
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, Brazil and
China. For additional information, visit the Company's website at
www.standex.com.
CONSOLIDATED FINANCIAL INFORMATION
(In thousands, except per share data)
Three Months Ending Nine Months Ending
March 31 March 31
2004 2003 2004 2003
CONSOLIDATED SUMMARY OF INCOME
NET SALES $149,260 $122,120 $433,963 $382,890
Income Before Taxes $6,771 $2,511 $22,368 $13,505
Provision for Taxes 2,294 313 8,053 4,403
Income from continuing
operations 4,477 2,198 14,315 9,102
Income/(loss) from
discontinued operation
net of tax (1,125) (657) (3,025) 592
Net Income $3,352 $1,541 $11,290 $9,694
EARNINGS PER SHARE:
Basic
Income from continuing
operations $0.38 $0.18 $1.18 $0.75
Income/(loss)from
discontinued operations (0.10) (0.05) (0.25) 0.05
Total 0.28 0.13 0.93 0.80
Diluted
Income from continuing
operations $0.37 $0.18 $1.16 $0.75
Income/(loss) from
discontinued operations (0.10) (0.05) (0.25) 0.05
Total 0.27 0.13 0.91 0.80
SEGMENT DATA
NET SALES
Food Service $44,927 $33,611 $130,565 $104,491
Consumer 23,151 23,073 68,453 71,832
Industrial 81,182 65,436 234,945 206,567
TOTAL $149,260 $122,120 $433,963 $382,890
OPERATING INCOME
Food Service $1,682 $1,835 $10,375 $6,624
Consumer 2,124 273 4,056 868
Industrial 8,739 6,159 24,685 24,765
Restructuring (433) (988) (1,179) (2,017)
Other income, net 238 - 279 (1,306)
Corporate (4,135) (2,957) (11,506) (10,174)
TOTAL $8,215 $4,322 $26,710 $18,760
# # #
<FN
<F1> SAFE HARBOR LANGUAGE
Statements in this news release include, or may be based upon management's
current expectations, estimates and/or projections about Standex's markets and
industries. These statements are forward-looking statements within the meaning
of The Private Securities Litigation Reform Act of 1995. Actual results may
materially differ from those indicated by such forward-looking statements as a
result of certain risks, uncertainties and assumptions that are difficult to
predict. Among the factors that could cause actual results to differ are
uncertainties regarding the termination of operations by Standex Engraving at
its Rochester, New York facility and the relocation of those operations to its
Richmond, Virginia facility and the integration of those operations with other
operations of Standex Engraving, the completion of the restructuring and
realignment program and the realization of sufficient proceeds from asset sales
to offset restructuring expenses, realization of the expected annual cost
savings resulting from the restructuring and realignment program and any other
factors discussed in the Annual Report of Standex on Form 10-K for the fiscal
year ending June 30, 2003, which is on file with the Securities and Exchange
Commission, and any subsequent periodic reports filed by the Company with the
Securities and Exchange Commission. In addition, any forward-looking statements
represent management's estimates only as of the day made and should not be
relied upon as representing management's estimates as of any subsequent date.
While the Company may elect to update forward-looking statements at some point
in the future, the Company and management specifically disclaims any obligation
to do so even if its estimates change.
</FN>