SXI - Earnings call transcript Q2 2019 | Standex International Corporation

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning, and welcome to the Standex International’s Q2 2019 Earnings Conference Call. [Operator Instructions] Thank you. I will now turn the call over to Mr. David Calusdian from Sharon Merrill. Please go ahead

David Calusdian

Stephanie. you, Thank the on that management’s can remarks Please Investor presentation Relations found Standex’s website, be note accompanying www.standex.com. Please see Slide on Standex’s Safe Harbor statement X. include management today’s other Standex discuss statements. predictions, call forward-looking that and estimates, Matters expectations will conference on uncertainties These actual could results risks cause materially. that statements differ to are subject and to

SEC to announcements and for factors. a should refer filings risk You detailed Standex’s recent public list of

depreciation earnings include like amortization; taxes, In you will one-time and EBITDA, remind and which would EBITDA, accounting, EBITDA and EBITDA margin adjusted discussion to restructuring, references addition, before which is is I today’s that to items. purchase EBITDA margin. interest, expenses adjusted excluding acquisition-related

operating refer the an most non-GAAP a adjusted non-GAAP reconciliation Standex’s that adjusted non-GAAP accordance complement news from in intended GAAP operations, measures margin performance. quarter believes A measures United will including adjusted of Standex in with operating and accounting adjusted accepted are as income available is measures of to comparable cash flow. and income also Company’s release. second financial to comparison the free These from to net income, serve to measurement net generally historical financial provided We additional operations, results principles measures, the States. provides directly the information in such consistent continuing

call Officer, the today DeByle. turn Please Chairman, the Officer, Slide to President Financial as Standex’s and is I Chief Tom On David turn call and David. Chief Dunbar; Executive three, to over

David Dunbar

Thank you David.

me Before make few our turning a to slides introductory let comments.

operating factors look making here to and good many we’re to a want from point Standex strategic company. of indicators whether industrial company company broadly to innings I out a diversified a of in of focused still at portfolio we the moving There progress. are middle that as transformation the We’re pieces more this

acquired in that Tenibac and with accomplished Our core We growth to the over summer, organic portfolio this and the through moves evolve quality divestiture businesses is the October. to We sales higher cooking initiatives. and deliver announced solutions markets company’s higher objective Agile earnings. of

in organic drive face grew creation to to better the new The us our businesses, positions value to continued this adjusted growth by our laneways businesses in $XX.X quarter. and growth quarter. sales and it stronger faced million grew through increased margin we the is sales mix our XX% through and towards and headwinds the the basis reading We headwinds other quarter, system XX setbacks results points. from in Despite in X.X% EBITDA we

overall on to turn QX, the decisions, of performance in let’s a up delivering operating had QX, end $XXX.X Now interest by increased tax. XXX up GAAP Slide financing sales both income basis We share million X.X% the adjusted up and was In and QX income of XX million X.X% to corporate points. with X.X%. basis at points a three. revenues result position and as net organic basis acquisitions $X.XX a highlights on was Operating debt QX. was EPS $XXX.X adjusted affecting of and

organic strong we delivered stock. Technology, business businesses. and in Electronics, Scientific back growth Hydraulics quarter, of the million highlights, bought opportunistically $XX.X In During our we Engineering

mentioned, and Engineering sales hard as In to the demand space, margins. improvement fiscal capitalize I Technologies, increased Engraving. after improvement in in year, delivered years As profitability Electronics in to margin to sales the for business $XX.X and strong grew of the quarter, beginning offerings see we work million and defense in reaffirms of of investments, principally of increased several This new deliver we’re sequential our XX% targeted another on as markets. aviation, the our half second and quarter energy we expectations further

the proceeding I’m the proceeding Solutions well. expectations line divestiture are And previously. the is we and pleased front, also with communicated say Tenibac Group On Cooking and integrations that the portfolio to Agile in well

EBIT Our by million. revenue by American refrigeration million headwinds, QX ongoing market in and North the including the $X that impacted performance $X.X was by impacted several softness

continue we can actions leverage completed We to refrigeration the better actions benefits the business market of were restructuring that take so to that the with demand last current better year. align

is China inflation in affecting Electronics and Softness and our for headwind businesses Electronics. Engraving a is material

turn remains four. In continue improve addition, continuously our to performance to that further deploying portfolio company. Standex model, our team we system the focused of our on the creation make also organic improve moves to to operating Please Slide value profile as

as in increase XX a earnings financial Overall basis is key the operating of improvement at EBITDA accompanied in quality look sales high-level performance. in an profit, in signposts increases point gross our Here in was by and reflected of growth X.X% margin. income

also had XX%. target overall. When I can began EBITDA mask in effects an tax margin last would the that that resulting significant net the year. effect EPS of in temporary interest on These are five performance to company communicated income flat of the ago, see strength we we You years and underlying here

the past right in that in internal five see can us a investments the and reference as XX.X%. XX.X% years upper of key for increased point one evaluate This we and acquisitions. the has attractiveness margin EBITDA use is You our to graph from we

to since as have We our communicated raised previously. target XX%

advance quarter look I we actions our We to second taking milestones that With deliver on are shareholders as our on our updated to our confident results to Tom will that, in Tom? to key keeping the review transformation and we’re journey. forward drive necessary turn the forward call

Tom DeByle

GAAP a loss of share adjusted morning QX per David which compares trend for year ago earnings everyone. on to of FY sales you as five a $X.XX and earnings historical Slide quarter. XXXX share Thank shows our good on was the $X.XX for an basis and per as GAAP adjusted basis. well

for QX XXXX versus despite FY were flat sales Our up $X.XX also prior per that earnings share was fact the adjusted which was year the X.X%.

key based adjusted EPS higher rate prior impacted three elements. was noted, expense, the interest higher upon tax expense year-over-year. David by versus a As was Interest up year

acquisitions. for borrowing First,

expense the planned fourth higher was withholding, complete anticipate and solutions our in cash. is of down is cooking blended the we for to of as sale subject which foreign needs in cash during stock repatriation of rate quarter Second, higher as third, repurchases working capital the the The quarter. rate quarter. repatriation to come tax and the the We interest

-- our As trends. and of to turn by shown Overall, our earnings this slide with revenue and Please seasonal the X.X% three QX on with six, quarter five details the slide of which segment. Technologies, businesses was performance organic historical organic growth. Hydraulics of Engineering bottom up revenue our demonstrating changes was Electronics consistent our growth Slide

basis was basis in period a then Law a the loss impact turn $X.XX did X.X% foreign basis. a FYXXXX up of our growth, our GAAP Tax our to on of last per on on results our had refrigeration the QX, was contributed numbers, in to margin non-GAAP GAAP X.X% Electronics in on Slide basis non-GAAP year. service included GAAP Earnings XXX organic a basis passed and of $X.XX a recently of while unfavorable points not seven, sales second had an adjusted basis on summarizes was from the EPS Acquisitions Operating decline share which in due XX non-GAAP sales a Engraving basis. business offset and the quarter basis scientific contribution. and and QX strong growth Tenibac basis. Please points exchange to business. food XX.X% Our and $X.XX U.S. and prior the on however, GAAP in year Agile

business As mentioned performance earlier, unit up. was

special higher million fiscal items continuing fourth benefit of compared rates. FYXXXX is tax was from items by of tax a and acquisition restructuring interest $X.X of More the operations quarter costs QX The anticipate of offset XXXX and million year. $X.X for We of the year. expense EPS special to quarter expense bridge related net QX reflects last eight, flat higher same loss current million costs on the by $X.X million the million of offset impact net impacted our lower charges, was quarter lower discrete with net in to in costs GAAP of However, tax $XX.X interest million $X.X net versus income in affected by items. the higher $XX.X the quarter interest income same a specifically, slide which last include that Adjusted turn was XXXX. quarter rates quarter. for restructuring tax prior year. illustrates income the Please

fiscal Turning nine. items slide to was $XXX.X in capital of of capital turns compared from the working impacted XXXX capital period. million the with Two Networking $XXX.X million quarter decreased X.X second year turns. X.X at quarter. ago the end Working in the to year prior

First, the new current larger Engineering standard Technology by turns the for X.X This working to turns decreased capital revenue relates our manufacturing segment. ASC at the XXX in processes quarter. recognition accounting

to Wisconsin X.X capital to higher the had we causing year, prior cabinet prior our facility the accounts in Albany, in moved improvements the from Hudson, related payable a Mississippi working turns year. Second, New

in be do both were to you If five capital material a both would periods, periods. capital restate Acquisitions not on working turns. working impact have turns

funded $X.X $XXX.X quarter $XXX.X the debt the of However, with illustrates find working net increase it at capital closed cash million versus end prior less the first debt year. approximately the We Slide with our quarter. million of debt management. did XX to million by us compared

end of to EBITDA times at net was end compared the QX was to debt the and of debt ratio XX.X% end funded QX. first of compared times the with Our quarter capital to at the at of XX.X% X.XX X.XX

increasing the favorable $XXX quarter, facility the with renewed million During facility, million from terms. our credit $XXX we to

in fiscal foreign end had approvals repatriation $X.X continue process second statutory We the cycle. $XX to involves repatriation million governments, approval in many million. audits quarter, the At from to of the repatriated and length XXXX. locations other only the expect that repatriate we The in

work be sale repatriation multiple before through our wrap repatriation and debt. cash targets completed -- our up fiscal end. in we of are foreign we on in of jurisdictions Cooking and achieve Solutions we expect in the our will early complete where order Group to continue to We requirements We To to year completed QX. these

proceeds the apply in will allocation with approach. our We line capital

our turn at through operating spending strategic leverage $X.X in investments use will capital the higher new million. businesses to XX. Slide Please strengthen and organic came and growth We Overall, facility growth lower in QX credit to acquisitions.

the Laser During investments Nickel Shell and key additional engraving. to quarter, add made and were capacity

In addition, our segment. in we Electronics and made productivity investments facility

excellence to capital in $XX growth XXXX initiatives and continue range fiscal million in we operational project to ahead, our spending initiatives. million our the Looking to $XX support of

depreciation which expect amortization the to a for details were Slide about free reconciliation million operating cash XX $X.X and We of be about $X quarter. to $XX million. be million flows,

the followed for graph, As you operating on see flow cash the our quarter. can free seasonal patterns

improve expect five call planning year We the horizon. an operating of to cash fiscal year average the turn income flow target year that, net and With XXX% remainder free to to continued on throughout of to three the the David. over back I’ll

David Dunbar

And I’ll new with year. the revenues our In XX. from Slide Thank to QX, drug decreased income decline was demand were soft you, from to begin rollout equipment and segment operations at we we from where Service Tom. retail by Equipment wide up Group. operating industry sales Retail, Please Stores more than decreased turn in the ongoing continuing XX% Food prior This benefited XX.X% Service offset as overview and X.X% levels. line Scientific in Restaurants double national Drug Dollar refrigeration digit compared Quick experienced sales major with customers.

businesses. in the Looking shown new products through specialty Diamond ahead, new scientific products innovative on and remain pump and offerings our differentiated scientific, slide. to on introduction merchandising the focused the grow continuing we series of promotion Including

February. at new in NAFEM In be Show in addition, we products Florida will several displaying

also We Master to the capitalize market better markets implementing when actions conditions additional established are position refrigeration operational and brands well align to productivity with the and are business Bilt to current recover. and excellence NorLake better

XX.X% toolmakers into cancellation, Shell exports decline Chinese decline primarily increased laneways we the due Reduction to tariffs of the on push a items; addition to Nickel due impact and X.X% Chinese the products global growth Turning to sales due Engraving auto from in last markets organic Slide tariff driven Tenibac-Graphion sales a acquired that to an income of headwinds of distinct sales the programs. to program to expenses and sales Engraving increase by toolmakers. Though business three XX. decrease Finishing and summer. order. increased capacity, related out Tool investment consumer operating texturizing and laser outsourcing drum related Innovent in

we Tenibac which ahead, completing remain focused is well. on Looking the progressing integration,

proliferation position on Nickel outs like on will of robust continue surfaces execute Shell, the automotive addition, to in laneways as are anticipate we that volumes Laser capitalize program vehicles. growth We QX performance In Architexture, lower and Standex continue. to roll tariff headwinds related Electric and expected to

grew turn in and Please is into However, lower Technologies. energy, space defense offset Aviation aviation lipskin as to we components, X.X% in sales. XX. to expect components space Sales volumes Engineering QX. year-over-year Orders due recover increased in to we by strength partially which begin markets. Slide move to

a X.X%, For the lowered with operating Development has our work in work operating quarter demonstrating been quarter. a profitability. in margin sequentially, team ETG’s on program is the second in that income putting income increased row, margins hard driving the overall growing to key space improved

However, expected drive into to once higher the developed put program and is production margins.

forward, margin improvement our and sales Going delivering Space, of increased we fiscal in in and second on are Aviation, year demand focused on we as Energy the the capitalize Defense markets. half

was offset overall demand impacted Electronics digit X.X% Agile to increased acquisition the inflation. This by double are tariff-related slowdown and the by The productivity $X.X operating uptime business are technologies. program also of in this The year. machine setup a turn increase and growth income Electronics. was planar the sales year-over-year the growth equipment experienced sales up completing of fiscal switches, slowdown million contributed through times. to to Slide market. end and In material switch partially of The was sensors, with improvements addition, in we Adjusted XX.X% expected Please year-over-year. reduced XX, benefits relays to flow by and Asia. electronic semiconductor

a opened we India. to quarter, global source support and in better electronics the serve growing During a our to factory first provide in base customer India as

market safety leads Looking battery on to opportunities, new vehicles, programs we business on ahead, accelerating and focused following systems counter medical as softer up conditions. new and electric are sensor business machine management such and

we digits the Please continue advance increasing by This we was by optimistic elimination products operating margin subsidiary, improvements to well. XX.X% market. XXX container enhance market and markets. section as remain Hydraulics anticipated few refuse of the mission-critical and of XX.X% to with the aftermarket market increased and integration environment of CNC certain custom-designed grew to strength magnetics XX.X% Agile improvements. of in uptime. Hydraulics softening hydraulics. Segment Slide Tariffs double driven next service of further our magnetics ability to year-over-year, high-reliability, metal about on productivity addition, income and well backlog machine Chinese quarters. favorable these the the continue Operating as orders productivity the our handling and with A In as as prices benefits strong turn XX, to reflecting to sales leverage the the due robust We from

as questions, leave to with Before few on we you shown go thoughts Slide XX. a let key me

and the X.X%, we deliver despite and quarter Hydraulics. Scientific Engineering performance we face market First, Electronics, gross Technologies, headwinds the strong during operating had grew we we top margins, and line income to very profit, EBITDA as growth

the and XX quarter. In to as portfolio discontinued evolve the we of quality EBITDA actions in in XX company Second, our the past Cooking the sales moved transform businesses. and higher Tenibac a point to taken acquired increase to continue mix Agile of supported This percent months, we’ve operations. to basis

XXXX, include of certain strong all we new we capitalize to expected Hydraulics businesses. headwinds Technologies, on These the Engineering positioned by and are half several to half expect Third, Scientific, performances and opportunities turn second business catalysts. in as although face second we to

as investments complete balance on In opportunity shareholder add our a our to Electronics wind we we addition, the as strong large to our prior see program that in value. funnel powder platforms, to our enhance sheet positioned of and organic continue are we the sale the high leverage more balance to initiatives With our where focus Cooking well ratio on and enhance expect platforms return acquisitions down greatest invest of such we repatriation Engraving. sheet. to and improve versus we year the Fourth, dry and

necessary on taking with positioning to we're while actions demand also the business and We long-term are operating confident deliver a financial to targets become best-in-class market our to aligned fulfill Standex mission company. that our

for the employees, our forward We excited keeping shareholders your and you are We customers support. for updated. thank ahead look opportunities to and

your with we’ll take Now questions. that,

Operator

CJS Securities. Chris Moore from comes question first Your Instructions] with [Operator

Chris Moore

Hi, good morning, guys.

David Dunbar

morning. Good

Thomas DeByle

Hi, Chris.

Chris Moore

start Good we morning. could with Maybe Electronics.

maybe of demand kind things timing and the of, slowdown China more bit guess kind possibly detail you that. potential little outlook best and terms the in in of a could that terms could of maybe terms Just, how of tariff-related -- in resolution provide your in like

David Dunbar

China of China there -- they sold and in are export OEMs tariffs. been have many that from our Yes, to the Electronics impacted then may by

to continue expect quarter. this that We

I that, Beyond guess guess probably good your as is as mine.

So we our see Asia confidence, some -- continued in with softness in QX.

Chris Moore

you. Got

China? Engraving On different the terms of there side, conversations in any

David Dunbar

in to a large of It was happened were in floor do bit in And thing as there the had Dongguan China, we was ones it And surprise as our our those really toolmakers Engraving most of a we’ve actually is then the tools. many not sources and actually those side No, of texturizing us. China. the a ever that came different they and toolmakers to pockets They in to hit. canceled export. starting on that Southwest decide We amazing job it were seen were before.

will So U.S. guard. we’ll China bit level through likely continue between also that that negotiations us and and see a macro go That quarter, caught off and this the tariffs. the how

Chris Moore

Got like it. side, operational On excellence. Refrigeration it about talked productivity additional you sounds

kind or additional should there’s look at refrigeration this? So within we restructuring how of

David Dunbar

No.

in significant comment We more the more did in in and quality, was continue a the plant it’s that’s [Indiscernible] of year in plants of prior -- continuous that roll improvements in metrics time But is, look our continue in the also expect and restructuring lot restructuring in better plants, continue continuous we years. improvement. we The a business. plants The both we at the but -- structure, improvements are the that think did the not through reading to a than productivity, internal out shame cell-by-cell if operating cost modify the about we improvement. events they I to we continued those productivity process last have first through right measures, improvements. in or put

Chris Moore

let And, me to Got jump quick. Engraving back real just you. so

talked in bit recovering QX? you be lower, little the So volumes pickup about to the assumption kind What’s bit. a expecting of a and then QX QX behind

David Dunbar

new customer OEM, QX. that model Just new pickup schedule the release in OEM a supports

Chris Moore

right. it. All it. Got Appreciate

back Let jump in me [Indiscernible]

David Dunbar

you, Thank right. All Chris.

Operator

with from Godfrey question comes next CLK. Your George

George Godfrey

Dave morning, you. Thank Good and Tom.

David Dunbar

Good George. Morning,

Thomas DeByle

George. Hello,

George Godfrey

customers the to push you those segment. over out the Are be on time? wanted able you to cost Electronics -- call to class ask I about the inflation Electric will through

David Dunbar

an kind interesting So of that’s specific very commodity.

You our industry. well switch the use Different reed with switches switches switches, it's in reed tip use a manufacturers have know rhodium in on accelerated We noble And of year. quickly this Japan. prices that is rhodium known reed our we different elements. last line rhodium

been in that and of this to million. rapid to We looking efficient the be other anticipate the with price able able last can was pass to a But mute through – We in future that pickup also and the that to have the believe operations in rhodium. future. that And more in some quarter the some being ways innovations to was they $X with mitigate bring we’re market. it quarter a at the

George Godfrey

out And business? that margin as shift slowness points the then, the more in in segment. products pieces XXX also profitable maybe semiconductor offset compression it. at there about Got year-over-year the Is that they’re maybe call mix And semiconductor that a combined other of for than it’s revenue Electronics. Electronics market look basis I in

David Dunbar

was very one soften. acquired in -- semiconductor acquisition. position that Agile shift after the to business Agile, effect good we it was semiconductor of the Agile equipment to in and really the we're reasons begin Well, That's attracted soon mix

long that mix in that isn’t enough hasn’t – call So that could been a really shift. we the business it

George Godfrey

recovery out commentary you later And called I of your QX. weakness for from kind that. some thought Okay. China I then in in last Engraving. Electronics question is, there you you expect I But both then though heard backtracking and me

You're mine. guess is as good as

In to time? wanted be it pull China. or at just this do do you to you Electronics, at you’re Or expect that I Engraving So clear I back come no, uncertain that level? not in

David Dunbar

a That’s Its you probably differently. little worded maybe fair. probably

customers, on Let's based in for comeback in QX. visibility somewhat current have in we don't say, see have our the say, customer pickup visibility QX see we Engraving QX. I the schedules that But Based on limited. we to Electronics the a

We’re on Electronics. And confident QX and Europe. effects will depend activity and your macro U.S. Asia in some a between market China and QX in negotiations for softer

George Godfrey

Thank it. Got very you much.

David Dunbar

you, Thank George.

Operator

from is question next & McGinnis Your Chris Sidoti with Company.

Chris McGinnis

impact. China bit for just you tariff maybe my Can how of little Thanks products of taking questions. the to give maybe is serving portion And can give Good color on you portion? us? Is impacted? just that that small you're a percentage that how a being of morning. Can much you color a on are much those it Or portfolio? large a are there

David Dunbar

[Indiscernible] turn, back that. into your take Let’s

toolmakers these So really it's in Southwest that impacted. China really

is the profitable of million China and in the So Chris. about impact quarter magnitude very in order too, X business our

Chris McGinnis

because The the on Okay. margin small the larger side? -- of impact

David Dunbar

Yes.

Chris McGinnis

then, if just Food that I I Service the on guess on Refrigeration, said you and any -- the And -- apologize.

help Just and any maybe how some would year? about know given. should because on over customers there? we’re benefit positive bigger other Any next that looking you Or that I talked the subway coming outlook often visibility back.

David Dunbar

well much and -- which other of still opportunities, is there discussions they shops between those With individual are corporate are some opportunities delaying invest that go other we the that those the owners We and in and how delaying franchise if for positioned ahead. rollouts.

Chris McGinnis

more talking provide on in quarter, more Okay. Can that? then should but the detail then profitable. you program forward just weighed Thanks. be a space about And on little going margin that bit just the think lastly, maybe you

David Dunbar

Tom, there? on of our magnitude order

Tom DeByle

It’s basis Yes. points. rate, margin probably our depressed XXX

Chris McGinnis

And what that that…? right. changes forward All happened -- improves then going like what

David Dunbar

making good know As the production, that of getting and it. are work get into progress. months programs you development these towards soon we’re XX end They’re over they

Chris McGinnis

Great.

I Thanks QX. and Q luck Good Thanks. for in Okay. appreciate. that.

David Dunbar

Chris. you, Thank

Operator

comes Hinman & Company. with Your Walthausen next from DeForest question

DeForest Hinman

question. Thanks Hi. for taking my

We dead sell of kind but I’m it’s thought in so had horse we market tariffs, texturization kind business. understand, here I Just I the a product on demanded. just so a the Engraving of beating localized

tariffs on Chinese the or U.S. is how export? by Chinese business So impacted

David Dunbar

Yes.

talked quarters our tariff months. about a affecting it Let prior was me we few impact knew clock hydraulic we When the in business. rewind

were same toolmakers budget Southwest We the In able China, primarily a also it to we the knew business, the market. pass that, they cost on scientific number I as affecting but learned were they was the our serve in in an mentioned quarter competitors, DeForest through. of export

in them they shop the of send toolmakers tariff. toolmaker for them are that and texturizing, that niche And China, to tools been manufactured our by takes then back Chinese exports. the So impacted it's

And didn’t we this not last – so we the you, call last at with effect when didn't we quarter spoke time. that have visibility that to

DeForest Hinman

Okay.

So versus just directly kind of to the product way it U.S.? the us exporting moves around the

David Dunbar

do not Yes. the product. with the in compete provide was impacted. ability it participate. we the services regions the We We was to globally tariffs export their to toolmakers And that where

DeForest Hinman

Okay. each calling Can delayed you're laser called Did of dollar we that drum? those the And discrete. Engraving then on on the items them a and we eat the out then outsourcing expenses three get number on cancellation? program we

David Dunbar

Yes.

out. million sales about in It's incontinence million they that high we brand last business, the That one year $X this the makes gross pushed lines the within go diapers production in about have and Innovent. Engraving of magnitude, things. into year order pads a had out. -- It's and business -- very the quarter, business program name in the On $XX that called for with margins. In drums

do margins. outsource to it time they and down customer millions other running that to awhile $X The were and that again of with up third the were lasers companies in the... and outsourcing some and demand, work And that reduce the sales recalibrated then margins. -- just So, gross lasers that to -- took the that satisfy one was we cost laser that XX% down older had is over of and $XXX,XXX

Tom DeByle

in $XXX,XXX margin. in About the we a program it didn't sales was high It at get of cancellation China. the

DeForest Hinman

And you said, on was it and canceled sound the they like it. that floor

So to eat we some… have

David Dunbar

the have get, forecast -- expectation. collect was and the just that eat in our didn't to anything. but toolmaker margin or The didn't we we sales We

DeForest Hinman

Okay.

nature? being this of is think that So in -- onetime should about costs that laser $XXX,XXX we outsource

Tom DeByle

Yes. Yes.

DeForest Hinman

the on Innovent drum, just then loss that push still And is to...? that or

David Dunbar

No, no. pushed a out We received quarter. yet

DeForest Hinman

had and That's visibility of changes platform a auto commentary fourth that. changing the on manufacturers still of the the little then be And and on more from the growth in then, of in we outlook. month terms toward next positive production your numbers ramps a a XX have Engraving a about with business? It we auto sounds from SUVs you Engraving business outlook third -- we of helpful. in anticipating for as bit then lot shift a a based in like quarter. domestic terms a like drop global Should In on past that talk quarter pickup in organic global basis

David Dunbar

they're supports Yes. industry XX it The -- compare over other data in is vehicles to and in cars. SUVs to was there data data sites than cars We higher growth more moving than from all up a -- our interior SUV, in good aesthetics move IHS. the higher for we that -- make an IHS from key us. We input And of invested next months. in

we just stick hit. we that, yes, So by

visibility good to have We these schedules. OEM

on comment about the QX So have we pickup. QX softness confidence can and

DeForest Hinman

basis? have do there's to a fundamentally thinking strong had on about very we've the onetime and going and at improvement we seeing for forward like organic the be made and based that, some this and margin higher on be but an back long some but we for there. I in year. lowest we business, in we've we think the things could math closely, XXXX it technology, should a more the should where go margins new This Then new investments programs margins new time. things in the was this technologies in when outlook margin segments about obviously Then XXXX Where business – is look revenue

David Dunbar

margin. margins XX% and We view of jobs new the both we Yes. low that is to this the a technologies deliver, continue look support our gross at traditional

the anchor So in we've for with our yourself as past expectations. that's seen in line if you EBIT, XX%

DeForest Hinman

a And product? when spot Okay. -- with we in then, are rhodium or contracts long do prices we on any the have going market purchasing we buying term are the are up, that we

Tom DeByle

mix a spot is of market us. It's It's definitely for the product market.

DeForest Hinman

we've know is working Is metals. ways reduce either far alternative out more I stuff we to that of opportunity? along still And switch a mean, or this or on I some Okay. potentially achieving. how rhodium been a near-term are

David Dunbar

We other are have some switches resonium. Those like use that growing.

rhodium specific -- are the applications with approved. Some is switch

So longer usage. and which can rhodium rhodium looking in introduce reduce solution go next well change process be process which for we it that that. to longer-term quarters that our sometime things -- is would will the hope a at efficiency -- few be if The measures efficiency, to some we're efficiency

DeForest Hinman

And is low still in it business? operating -- XX% margin targeted at that

David Dunbar

Yes.

DeForest Hinman

spoken we've And about previously.

David Dunbar

Yes.

DeForest Hinman

profit out then talk on a business about. space engineered toward looks spot, bright double big that moving been business, axing cost which Should be second double be previously. just year? digit segments like a It talked that where digit the that you operating double we of that half would that the sales this we'll anticipating about digit margins level growth, And change versus margin is operating in

David Dunbar

Yes. Yes.

DeForest Hinman

Okay.

David Dunbar

in they several expand them. at over their time that Yes, a they've that reduction. mentioned time volume. They in been to the great capacity text improvements to very efforts And need the out that visibility I setup have has is coming the strong backlog backlog. business for this investing change quarters

DeForest Hinman

backlog Okay. back ask to is Electronics, to I the And this. in that now? business Where forgot then strong right number

David Dunbar

[Indiscernible].

DeForest Hinman

of the Should to, that and happened June transaction. small can transaction? we tell of then us while terms later, us our did are Okay. Solutions in Number the disclose we you interest. one we where NDAs, with update business? of sooner in Can read just Cooking that. talking we're than that give an you Anything selling given And rather into you that target XXXX getting terms that transaction people of

David Dunbar

Yes. Baird conference, meet but to this with We subsequent and say the we're still of interest we're -- a this that I the business, in is both then anticipated We would expectations. the communicated track from we closed when NPEs. announced there communications communicated. in pleased just first on those this current still strategics at and we're interest quarter, and October a we that in lot during

DeForest Hinman

Okay. share the And then on repurchase...?

Tom DeByle

year-over-year, today million in for were see DeForest, some is Then backlokg the later year of up it were under a of but course, tomorrow. the backlogs that or -- queue you'll And backlogs $X Agile. the up --

DeForest Hinman

you I done repurchase in activity just looking priorities? it's repurchase the a on in quarter, Okay. second deployment update at us the over metrics, biggest the Sure. trailing capital decade... Can give we've see it's

David Dunbar

time. long Yes. long, a In

DeForest Hinman

So should update well, -- on you an capital allocating can how priorities? first us give you're we allocation

David Dunbar

Yes.

model look and cash capital then XX% on, we allocation on our Our floor. with hasn't organic a keep lights We look investments -- prioritize growth with returns the we for at We strategic changed. IRR. businesses cash at

in we returns businesses opportunities -- list tell We have at look funnel. fund. to good with growing our we We investment attractive acquisitions intend of a good have I then a good you, a

knowing our our businesses. have was this this we very the that last then buyback. reinforce doing And believe we we more take put get evaluation there buyback. was worth IRR a acquisitions business we there release and XX% what say, We a of serious creates And or the $XX would businesses, return earnings EBITDA in at, last buyback just out what quarter, value the And to we capital as it for a after in favorable And growth the investment is some million period and our to into last one shareholders quarter of business CAPEX. math into compared let’s that generates. attractive looked a if

to our of view an opportunistic continue we'll take buyback. So

authorization $XXX years ago. from the have board we We announced a million few

to So $XX we've million total. about used in just $X million

capital approach to in the has say So nothing I'd there's changed priority or allocation. our

able authorization to it. this are have execute and need when We it

Tom DeByle

used. million $XX

David Dunbar

Okay. million $XX We XXX. used the of

Okay.

DeForest Hinman

certainly, could used million could you repeat that has the been $XXX that million $XX of you authorization? repeat And

David Dunbar

Yes.

that dilution comp. also We to use executive from overcome

of million $XX the million used authorization. $XXX we've So

DeForest Hinman

your looks below share down it level. price is like the And it's and Okay.

buying. you think I disclosed that were you

math. that's Is that as once guess terms or So I a not again statement? true favorable its we stock. buying should be whether --

David Dunbar

sense. We have directionally but that the run – analysis, to makes

Operator

next comes Capital. John with from Copeland Your Cumming question

John Cumming

Hi, guys. Thanks for question. taking the

understand the question more Was year-over-year the to about exposure there I'm trying to in one Agile. actually sales? Just on that down industry? semiconductor just business And

David Dunbar

so. believe they believe are I down I year-on-year.

John Cumming

trying all areas? to market is to it I'm And and understand in exposed in semis, their then exposure just semiconductor exactly, which

David Dunbar

no. No,

the business We XX% aerospace then to was have have industrial military applications. of semis. semi other in a That and good component their

John Cumming

compare? that the I business versus How what they margins Okay. And the does overall about guess Electronics. of

David Dunbar

standpoint, is sensors segment EBITDA business that highest if EBITDA our Electronics XXs. which high you reliability an in our our From margin is or magnetics low switches something look at we've and got below the

lower couple a basis probably XXX points of So business line in with than the but sensor the overall.

John Cumming

What's in number And I'm I be their get I anything in I fiscal you grow you even guess of with significantly, that I they down, year. next business some your or it is sense is said, mean, that XX business trying expectation the guess year? sales, could or when going think acquisition, Is down for that Okay. -- flattish there? then did happened? this I guess more what's upcoming million to announced just about to

David Dunbar

Yes.

four into it. months are We

some round year. next First for slug some be that our first push semiconductor scheduled, with then so, maybe few There's weeks it year And to X% fiscal was the repair XX%. down next expected year a picking on navy X% be The probably to we been out. of it business up. that the XX% year, to will also last that but back see business has down in there

John Cumming

Is there that reason such Okay. continued year? picture whole on question weakness this then industry any seeing to reason bigger one a can Thanks. I’ll why say get Refrigeration. is just you And decline this on a there.

David Dunbar

increasing a Refrigeration, morning affecting zero you -- most wake to to Well, long-term in XX number wants business it's but long-term, I imports that you nobody has did cost of low had below when of I an growing a -- if if realize the is piece look this buy the would of business. country, look it up

competition. So there's been price more

a company ago showed is or evolved business the showed have to a how two which the more We the dealers is much buying also marketplace channels we and showed effect impact point a about of manufacturers we kind little basis intermediates ago, which just was a showed years there couple XXX channel also that that a margin we and in year flowing is groups through of from XXXX, you thing tied a part in Once put you or an becomes a numbers. see walk store do to XXXX the our is the North to part the on market. in The with it the really of significant pickup walk I going the American remodel construction. of expansions think to you're final of business two margin unless basically And building. a not integral much lower is

John Cumming

one for to assuming Okay. it just guess ends I customer just where up and the from up Thanks buy for toolmaker trying it you I global mentioned Chinese in didn't just then And you guess why Engraving wondering color. from are not you they more I’m Chinese and I toolmakers guessing product. end the the don't and I'm I'm the that going understand being guys impacted. benefit? why follow so guess you're getting on

David Dunbar

Yes.

exactly right. You're

Our just is to think be there, canceled, understanding more one program was this was it. I is was not That going it may about done. he And know so out canceled. Tom

Tom DeByle

car. trucks. SUV's a large being pickup replaced by program U.S. vans canceled lot the was It and cancelled they the And and OEM. the so cars, I a getting for the that of mean are

they try that scrap So to just tooling.

David Dunbar

John, we'll world programs we that a it in lose up we China right, that, that or the else anticipate in continue order pick if quarter in But here you're somewhere there. the maybe the for do

Tom DeByle

whole that Maybe program. cancel

David Dunbar

it case just was outright. this In

Tom DeByle

Right.

John Cumming

All Okay. right. Thanks.

Operator

[Operator Instructions].

Our CLK. question with Godfrey from a George follow up next is

George Godfrey

Thank you.

you and Just tax using two What Tom. questions, the rate going for QX? are forward QX in

Tom DeByle

XX%.

George Godfrey

at really year? amount for you that have end then a dollar the of And the target XX%. gross

Tom DeByle

No. and we times our that to allocation. leverage we capital say want X No. now I stay We between times mean, is X.X don't.

George Godfrey

Got much. it. you very Thank right. All

Operator

to Thank further turn remarks. now it are I you. closing There back for any no questions. will management

David Dunbar

we're The we everybody a we're There we not I with -- as our allocate I earnings. moving of business pieces to thank straight line, shared cash a higher follow how how to for the thinking moving and continually to you the lot to don't you good participation. questions want business. your move our in think regenerate about but are in Standex, quality capital

explaining tax above a nice where EPS and In job that. we I If wanted kind EBITDA George's even had big them last to Tom think and line the a the the in tax. you interest effect and question, came on look or did interest about of

go So back coming we way forward business and the to quarter. another reporting on next you. look three Thank months a you running to for

Operator

Thank today's That does conclude call. conference you.

may disconnect. You now

Standex International (SXI) 31 Jan 192019 Q2 Earnings call transcript