SXI - Earnings call transcript Q2 2025 | Standex International Corporation

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Operator

Good morning, ladies and gentlemen, and welcome to the Standex International Fiscal Second Quarter 2025 Financial Results Conference Call. [Operator Instructions].

Following the presentation, we will conduct a question-and-answer session. [Operator Instructions]. This call is being recorded on Friday, January 31, 2025. to conference like to now would turn over the Mr. I Director of Howe, Investor Christopher Relations. ahead. go Please

Huang Howe

cause portion operator, you, presentation and be Investor differ safe will at remarks risks These the statements. morning. to statements refer accompanying can company's Standex's Relations www.standex.com. the subject to Please [indiscernible] on statement Thank on today's call found good forward-looking management's and Please harbor the website of note Slide management [indiscernible]. to include other conference uncertainties actual that could and on materially. discuss predictions, results estimates, expectations are that

refer most detailed [indiscernible] to public You of report should filings well a for Standex's list on as Form XX-K announcements SEC risk annual other as factors. recent

will is to EBIT, and EBITDA EBITDA taxes, addition, adjusted measures of amortization, before non-GAAP earnings which include interest, EBITDA, references adjusted In to is today's like I'd EBIT which the depreciation adjusted and remind EBITDA interest taxes, you before -- margin. and earnings discussion margin that

expenses company's Standex States. an comparison of provided accordance United historical with in such non-GAAP intangible financial financial We generally impact as to other accounting from results including to in pro debt measures income, earnings adjusted measurement performance. measures flow that and measures, the additional will margin, operating also income, from These per acquisition-related onetime items. the consistent information serve purchase accounting assets, cash complement to adjusted income adjusted operations, net free are the continuing exclude and refer intended adjusted adjusted and a to believes of operating operating net restructuring, forma net share, amortization accepted provides EBITDA. Adjusted non-GAAP acquired principles

David Chief Chairman, today Executive Chief Officer Treasurer, Dunbar; call is and President and the Sarcevic. Ademir On and Financial Standex's Officer,

David Dunbar

second you, Good to and Chris. fiscal XXXX our morning, call. quarter conference welcome Thank

the margin Refrigeration since adjusted Following fiscal delivered of strong April XXXX. highest the in business by the sales first in operating the quarter, supported performance record divestiture operating quarter, the fiscal we in second

sales as continue end the to the of total. in fast-growing expand Our markets a percent

our on are our sales operating productivity product focus margins. and projections, continues increasing team's new and Our above to deliver strong price

the improve end For recent and continue as the revised Today, rates the acquisition, Amran/Narayan we to tailwind. growth our markets significant to fast XXXX expectations. an financial Group year, increasing sales will remainder order as with market expect customer we to additional updates based on of provide and improved well our activity, providing

our Slide is growth the by hold. With fiscal increased Though [indiscernible] that electrical end contributions commercial and call. our and X, quarter markets Now were in fast-growth quarter, in that electronics general in of share grid, our improving if indicating Amran/Narayan In to from North strategy sales space view taking softness were markets in markets with of key the the book-to-bill second down to on detail will defense more exceeded [indiscernible]. X.X%, applications. company markets the sales. and Sales our later I Group everyone due offset in industrial our America, automotive partially and acquisitions, can second sales expectations. turn messages. Europe from organic commercialism XX% of sales fast the over are total

execution doubled resilient inorganic operating quarter, million and investments. initiatives sales demonstrate approximately productivity from to of especially and second million $XX.X New price continue the year-on-year. we which more sequentially fiscal our from that increased totaled $X.X product pleased than performance in the I'm

led in Amran/Narayan basis points margin As and Group year-on-year, third up a record by a plan. On Amran/Narayan by operating higher points in result, overall up margin integration acquisition expect adjusted the we XX.X%, impact the of and basis revenue sequential well quarter XX.X% demand The basis we operating fiscal of adjusted business progressing of driven significantly recent XXX XXX in XXXX, segment. moderately electronics. and the is achieved of sequentially improving electronics of ahead to

to offset margin slightly operating higher higher revenue, adjusted R&D. partially We by moderately selling, higher to expect due marketing investments and in

the improve market to positioned more XXX tracking are providing our from continue just with year, end remain we expect to products contribute approximately grid to For growth. expectations tailwind. than products new a markets XXXX. end basis and released new to the of electrical of fiscal we dozen the fiscal incremental new an X expected are fiscal of now With release in Sales in points second remainder quarter, the ahead products additional

a the million. sales acquisition with integration the in approximately company's Now how transaction cultural our this milestones history. I'm recent of if is and of October progressing adapted, the pleased year our XXXX transaction, of and of Slide extremely estimated we last major was Group on we everyone fit can well, finance, $XXX the magnitude have turn X, achieved teams Considering testament an Amran/Narayan to acquisition. The largest the have acquisition. update areas HR to The the we announced this in of acquisition, calendar integration the all IT. When in

Amran/Narayan target report than to with that second quarter this happy the Group anticipated. are exceeded higher fiscal We results

modernization by company December fact, in increasing time. The highest growth incremental Amran/Narayan into forces revenue sales the living Amran/Narayan growing the of revenue year healthy for month In is of existing sales to Group to capacity, XXXX. was powerful its markets to XX% fast-growth data contribution in calendar of double-digit led X being exceeding the of within We standards infrastructure from the month in history. demand electrical world, anticipate a at all driven the continue Their grid total first countries aging centers. rate global and increase

our vehicles, these a the best of and ago, turn identified single Of Standex can market. Aggregating by opportunities. above-average into company. provide potential explain Three secular we fast-growth markets those markets growth opportunities defense driven markets, long-term growth renewable to the the years growth soft trim, short a of X, that that [indiscernible] redefined. number electric provide Slide commercialization energy, to electronics were end these everyone sales space provided if hand us Now

growth attractive. Electric In our years, decelerated primary content number market and $XX still vehicle, an $XXX vehicles become Other drivers important like opportunity still fast around remain our combined sales to we as and but growth shareholders Space, are sales market per well X increased from fast sales for not the XG of provided has as an electric the been expected. growth the have those lift above-market markets have million trim for our growing and our have vehicle growth have review million. for we us. the nearly grown management as Our world defense and with soft priorities. represents

a growth sales the and our Amran/Narayan of degree fast-growing electrical profile. XXX% into step market sales. Considering the our Our acquisition the the Group recent doubling change fast to acquisition this of growth grid, the makes are to jump which ago, company's to faster-growing years continue markets we the to how the growth. has and taking versus environment we were fresh a towards shifted reflect above-average accurately markets global show look with pivot more X to of

today, growth the but serve our renewable commercialization new grid, course, hybrid fast As electrical spaces. are still customers energy, we in XG, defense. soft vehicles, of and comprised the company these trim of electric markets We and in is removed space

fast-growth million markets in second sales into performance sales electrical and million fiscal defense In Technologies. In XXXX, of million. now than anticipate quarter, markets. sales. the sales grid we greater would discuss than markets were which growth we call in fiscal I turn financial have to total to sales greater redefined Ademir represent detail. fast-growth XXXX, be in will to the By approximately $XXX greater fiscal the from fast We sales the XX% $XX Engineering approximately into these added in $XXX anticipate over our

Ademir Sarcevic

Thank you, morning, David, everyone. and good

Let's XX.X% acquisitions, increased summary. exchange. organic offset X.X% X.X% benefit X.X% to from impact This recent On second partially from Slide by total year-on-year basis, an a turn approximately $XXX.X decline foreign consolidated to quarter reflected million. X, revenue XXXX of a and revenue

the Group, the now measures of which recent history, acquired affects segments. amortization Engraving the business Electronics, company's non-GAAP acquisition and exclude will With Scientific assets, largest in the intangible of our Amran/Narayan

to historical refer in slide reconciliation. our for presentation appendix may the You

second remained a quarter increased million Capital adjusted second In were Second compared to $X.XX. Net a XXX ago. expenditures $X.X was points at million operating quarter, XXXX XX.X% year-on-year. year year-on-year operating to quarter to Adjusted share million flat the income by increase operating on compared consolidated adjusted $XX.X increased million $X.X 'XX per cash activities year-on-year XX.X%. the margin revenue record fiscal earnings $X basis provided fiscal of a X.X% in ago. year

quarter $XX.X As compared a second we year fiscal million ago. $X.X free result, cash generated million flow of a to

approximately of million quarter $XX expenses. acquisition-related for second includes onetime fiscal Our payments

XX.X% partially operating and an Slide to X, electronics. segment our million will turn Segment by $XX.X and currency. Adjusted mix of the XX.X% foreign benefit performance Amran/Narayan from second points as XXXX outlook, from contribution year-on-year, XXX increased beginning and of please recent and volume. discuss organic fiscal product decline impact a XX.X% offset partially from XX.X% begin lower X.X% was to basis revenue acquisition Now Group of with increased in recent indicatives acquisitions by I productivity offset margin year-on-year were quarter

approximately Group million. and is new increased business our approximately Amran/Narayan XX% opportunity at year-on-year recent $XXX Excluding currently acquisition,

due XX.X% to XX from increased operating of due lower in to [indiscernible] revenue margin America and and to the market of operating Adjusted Engraving adjusted amount foreign turn contribution on. recent recovering of Scientific X.X%, Engraving growth end higher points to on Group to to mostly lower higher XXXX, fiscal by restructuring favorable freight with product growth orders quarter implemented recent Sequentially, contribution basis, decreased higher adjusted address this basis next XX.X% productivity operating end organic million, and initiated in pricing due annualized of costs. slightly recent quarter the pharmacies. Adjusted XXXX. At served year-on-year partially R&D. Please in by margin in the Our starting we continued in fiscal a approximately and the Asia savings visit recent decreased second significantly decline into sales one slightly initiatives revenue XX.X% tools in the the organic moderately in in fourth the that timing higher and starting based R&D partially expect to revenue to softness from on the of XXXX acquisition, segment, end driven the are revenue X sequential markets in order retail and fiscal book-to-bill by was product to acquisitions by and ] basis fast $XX.X and company some the large of and region to operating low quarter fully [indiscernible] Group due new North business $XX shops moderately margin the the accelerating offset sales recent Amran/Narayan $X yield systems Slide currency. to we slightly higher Europe, quarter moderately in additional X.XX discussion we that [ acquisition. lower to decreased acquisition, America to million time, core of X.X% and softness segments. revenue. In To from to encouraging tool $XX.X actions third new worked XXX million in in Amran/Narayan due project higher operating margin same being we the automotive fiscal year-on-year and impact offset due a and second acquisition from a largest Sequentially, project driven a points once quarter, Chinese high recent less fiscal our and the demand in investments moderately North by strengthening XX% from marketing contribution for recent signs due revenue margin markets to see to -- impact sales currently adjusted to is acquisition. million, selling, XX.X% and Scientific and higher revenue investments of continued as expect Year. by are New slowly driven additional from markets, expect

the by growth in Now from for project increased Slide strong of XX.X%, the to driven Technologies offset Engineering foreign impact Technologies a Engineering by discussion Solutions timing XX.X% X turn products. Operating growth XX.X% margin favorable due XX This and growth was X.X% a market we slightly to of of and softness [ margin. revenue organic and and new segments. general margin year-on-year more to Specialty X.X% in of year-on-year, market XX.X% primarily to partially million, basis space due higher points due the higher decreased due from sales ] sales. currency. organic project product lower to decreased work slightly $XX.X higher to XXX display hydraulics development of merchandising margin slightly higher in as decreased expect segment revenue revenue points basis and $XX.X and year-on-year. Solutions was revenue mix. Specialty by expect we operating Operating Sequentially, million similar timing offset slightly businesses. operating Sequentially,

for and XX Slide capitalization to of statistics Standex's liquidity turn structure. a summary please Next,

approximately is to quarter, Standex quarter at the At liquidity end available debt $XXX.X second second of the million compared fiscal current had Our end million. $XXX of of XXXX. million net the $X.X

Our cash expense $X.X and to X.X. In expect currently of quarter stands be fiscal million. million. Standex's at net long-term third second leverage interest XXXX $X the we to ratio debt million. at XXXX, million fiscal we $XXX.X quarter $XXX.X million the was between end million. be equivalents declared XXXnd We of X.X% and consecutive increase cash expect and $X.XX In fiscal totaled per approximately and expenditures capital our quarterly $XX between year-on-year. share Cash $XX XXXX, dividend

prior ago ] We second XX during XXXX Slide our Let's potential fiscal and Medtronic], Procon. turn targets Amran/Narayan acquired Custom Biogenic Since Switch, updated Group [ [ fiscal and years by excluded call. and fiscal our impact XXXX by of acquisitions we XXXX. long-term then, targets ] communicated Systems earnings X our financial Sanyu have divestitures. outlook to quarter that This the [ highlights divested long-term

by prior As year the year now billion than We target target XXXX target reaching in fiscal prior is versus We our the in $X.XX greater margin operating of sales composition than XX% fiscal versus XX% of higher now $X such, sales. of of greater greater than margin. target adjusted XXXX meaningfully different. than by billion the company

capital to this than return with XX%. over to of R&D is we expect We invested XX.X% target prior a than increase now ramp performance, greater continue to our versus target our up expectation investments that on will the our with greater financial X%. It

our expect free approximately at cash target to flow remain We conversion net GAAP of ratio income. XXX%

impact exclude remarks. targets divestiture. future acquisition to any the will and turn now financial over concluding apply for Our call or portfolio David our to businesses current of the of I

David Dunbar

the in continued turn secular execution grid, us within will the of company's helped space record optimistic Please proud for to the net I'm and of our applications from long-term achieve in our operational benefit trends data exploration, quarter. We capacity to efforts remain the about combustion acquisition the team upgrades, the defense Thank of their in demand and in and logical infrastructure from history, Ademir. integrating both that the automotive. XX. second their expansion electric you, very Slide hybrid and evolution center for largest margin operating which transition vehicles internal from fiscal

XXXX, with and grid future to and markets of improve electrical potential. sales invest an in remainder providing into For applications fiscal growth end the tailwind. development the product we expect support additional market our across markets to To new with continue our growth, new we

We a approximately across growth. incremental are to year businesses, this which expected release basis now over dozen on XXX contribute fiscal products track are of points new to our

growth active cash With reduce the inorganic opportunities that while intend our flexibility acquisition and the future to debt Amran/Narayan we of we to Group, support use maintain fund to an of flows growth. organic pipeline

$X.XX billion, of long-term XX% ROIC of increasing greater greater than and XXXX adjusted than sales of greater targets than are XX.X%. operating our to We fiscal margin

open questions. for the line will now We

Operator

comes Your from Prestopino question from Research. Gary line Instructions] [Operator of the first Barrington

Gary Prestopino

questions of couple A here.

targets. this these the of make number, want First sales that year? operating is just QX and Or the is I sure all, clarify Is to an the for with that exit we 'XX? in adjusted rate full number margin new

Ademir Sarcevic

the exit end or the of 'XX -- will 'XX. for either Gary, FY That but full year so that be, 'XX, at year or full rate be will FY exiting

Gary Prestopino

Okay.

So full year.

know give months when And is of quarterly Could under to the to gave us -- be a the us you could then, full a you quarterly what expense basis? going your of forward. have acquisition belt what an be you Great. interest is on X the going Okay. maybe D&A Ademir, I idea you going

Ademir Sarcevic

Yes.

So yes, sure.

historic our acquisition expense amortization $X Amran/Narayan before So the about per quarter. was million

million think months that's going be Amran/Narayan of to $X kind we probably rate. going fully have our around $X X -- I to once forward in of million run

$XX per million and million amortization for for year. then $XX So be that the depreciation, will to

Gary Prestopino

Okay.

what per $X quarter? was million So you $XX did the depreciation. amortization, say And million for

Ademir Sarcevic

Yes, $X million. million to $X

Gary Prestopino

said of Great. I Amran/Narayan, what the XX% holds for had when Okay. they margin. that then the adjusted EBITDA made about would calendar you you -- And The acquisition in assume 'XX? it quarter. And given -- did a

Ademir Sarcevic

Yes.

Gary Prestopino

question, you last who gate, would and if be project. With this project then your there potential and jump And star ground? supply main competition Okay. I'll off. the off this what gets

David Dunbar

Yes.

So we ways. would get of into those facilities in a couple

on you equipment providers gets would If instrument Eaton, Amran/Narayan think OEM depending -- the GE, into about contracts. Schneider, the with sales the transformers, those the be who like

So we're because ours. they're of actually all gets about customers agnostic who it

Gary Prestopino

Okay.

these from supplying is be ground, supply to gets be these So a would supplying great the you I position the of products, be each that that in most the if companies. companies would you to inference this off guess of and what

David Dunbar

and of the the equipment former substations business. instrument would ] Yes. to I don't those switchgear, transformers And [ of there. power the support our provide from each the in be the pieces

Operator

your question Moore from of CJS the Chris And comes Securities. next from line

Christopher Moore

the talk puts QX? of in QX organic and kind have organic bit a XH. just Maybe Is about takes at you for towards growth little visibility likely than what this Just stage? more growth

David Dunbar

couple say it turn I'll over words Ademir. a and of to

cancellations kind softness with Engraving second at in half the look business for auto first from half, was the surprise the you If the of half of to us programs. their downside delays first and OEMs

So they're soft. at QX. always they Their QX is low were in at a -- point

busy. As prepared shops though, in Ademir remarks, the tool the getting very mentioned are

see next Engraving order good, So we in by anticipate pick year, are will up. QX do and into businesses, that and trends QX ramp. we a other all

Ademir Sarcevic

No, no.

the core the to business provide think nice that's kind in QX We're quarter, Group, get order as both we this into a the well rates especially pleased we as get very us into fiscal think when with of beyond. we going we right. in tailwind as and in and electronics Amran/Narayan I that's seeing are

So we trends feel minus we the seeing, are pretty optimistic general about [indiscernible].

Christopher Moore

right. appreciate All that. I

be looking mean to want talked Amran they in about when looks just happen I'm some did just Can X like months, orders correctly. Just quarter-to-quarter there you any It here? closer I was it sure lumpy I December. $XXX it record you there? So at December? a you million. $XX to looks with to sales said big that be like had in million Is make any close, thoughts revenue seasonality in

Ademir Sarcevic

And company just not sales in as had of Sure, months, were the seasonality. And our X months. for Yes. $XX.X Chris. standard those we reminder, X really There's as million. a Amran/Narayan part portfolio Group much Amran/Narayan for in the about

So about per right month million $XX rate now. run it's

So $XXX you like $XXX not can anymore. annualize million that and million. that million see $XXX more It's is

Christopher Moore

Okay. terms is somewhere forward, talking they the what the but more And Got about double digit aggressive, of -- in moving XX% that in teens. that's it. in the did we're

David Dunbar

Yes.

time XX% momentum So to think a rate customers' growing the continues I'd that some year, than this at a is -- to customers XX% showed we say at plans. XX% more model. over the or that. We moment. we're recommending need know we current this They expectation X, current the at But last and be are as same if you certainly We the with higher look could growth year the that to be business get out XX%. very solid still run than faster a

Christopher Moore

Got big on Amran. it. maybe just And one picture more

In integration. terms the of

in of kind talked mean Or that over them you looks to a for -- can something sense year? the create that like? long any I done evolution it Europe. as get next sense what to example, takes just about the Is of footprint that Just be to trying how needing

David Dunbar

Yes. No question.

now. team is year. with products particular already to many the a seeing of of on out India. of working out a planning team of be discussions We Europe footprint of the had our a to with the ramped And management -- sort sort first. this lot European in Norayan put customers to we've which need up plan some have in calendar attention Our It's

very So live a much this project. is

Christopher Moore

for is -- insight Is just one maybe that And there The $X people, last is there? facilities? me. And is Engraving it. Got that restructuring million. any

Ademir Sarcevic

don't facilities, consolidation Chris, it's with plan It's and reduction both. both count to the is, roles head replace. we It

Operator

comes Blair. of And the line your from Sparenblek William from next question Ross

Ross Sparenblek

profile Can us you the couple maybe what Amran of And was back acceleration in remind margin saw years for just a maybe capacity stands orders? before where we the the asset? then

David Dunbar

-- And always they in The first. healthy were with primarily margin the kind me XXs, upper a the and has last on question been the of XXs. let mid- Well, leverage ramped -- margin then COVID profile. start -- to the but margin they into before was [indiscernible]

So I where they're running is think now we representative. think

In their terms of shift. capacity, plants running one at were they

we're third a now a add second shift so And to and shift. them with working even

] there European we're the as that mean? before, So is XX% expansion so be us. at at And -- mentioned with add those [ what ships facility site may then capacity. would looking that to additional give we They can just this

Ross Sparenblek

of looks Got you the then business of capacity walk? segue and very does what pipeline growing first good guys helpful. expansion mix coming because in the it. largely And imply XX% XX% that We the margin have think there. That's I for [indiscernible] that the a mean, kind exclusion? glance I about Amran for the know also just a productivity is core Europe.

Ademir Sarcevic

I have [indiscernible] going business. in also we're Europe. the healthy we core a think healthy, on sales obviously, in get think our margin the do but going very Yes. can we expect we mean, we're leverage expansion to And to margins are and get Amran extremely -- I

drive think drive Scientific and into well. later X going And the given of get improvement. this in standpoint margin healthy as that a as that's and next a into easier you year, going from we drive that do year business, to how seen, We quarter. get we growth core has the know organic Engraving it's the to electronics next as bit also been our healthy, We which overall segments should be as expansion also seeing for very the think how the help this we're very, part because and and the start have us expansion fiscal little I margin a as margin a proven has expect, fiscal historically to between price we comp headwind productivity. have get to those year, us we company. And a are that bit into little of

Ross Sparenblek

you was the I Scientific And Scientific? down versus research pharmacy of On here. the in can, I of decline, are just If with cycle what like maybe just we us Okay. that growth kind help X remind the where size pharmacy maybe at and for the deceleration more believe that it's X/X business? can us in industrial?

David Dunbar

maybe you Well, just would I think back COVID, $XX look year. at in the pharmacy is running million numbers -- looking I the Ademir up is think over a peak at at a

I think $X now it's about million.

Ademir Sarcevic

That's right. right. Yes, that's

David Dunbar

you in. back So can maybe

of of have parts we there. So the But can level you kind other that's in upside. a kind all at of the trough strengthening math a really business, do we're had the

Ross Sparenblek

on And just But orders what last electronics slightly for one it positive. were book-to-bill, was then organic electronics? the

Ademir Sarcevic

was Ross, is and about X%, X.X%. Amran/Narayan or organic business the book-to-bill So about the for the

average. us gets X.XX% to about that So

Operator

from Instructions] [Operator D.A. Shlisky comes next from Davidson. question Your of line the Mike

Michael Shlisky

ahead. I this maybe curious point. David, maybe launches what away months an happen about pipeline the you only which I year acceleration kind of is talk at XXXX, and to want really cadence product might a few Do on new similar even have as fiscal to or there. a after was next your thoughts

Just the give us like? discussions new what to next thoughts product wave of might some as look

David Dunbar

Yes.

FY I of products -- of to but in magnitude FY of the 'XX, year 'XX, out up queued at through roughly months end we've So be the are it's that fiscal year those got you 'XX, same do as look in 'XX fiscal we well, 'XX. -- XX think the fiscal -- released if order about same have

product years every development going but X a new takes the for So are -- we've to And a anticipate this of year, have these the started full ago. It or We new products. forward. pipelines up, is year year coming pipelines stream first start got first launching things while full products -- in been new we X the full.

Michael Shlisky

in successful doing or you over from of Can of have like of newer smooth expanding you space any the see launches should here there space delivery for or some in question, some the our of other chunky ahead? next that My business they're month pieces comment initiatives. a greatly the Great. players last quarters major there been players X do models? we pipeline in are couple on be what more coming Or aware

David Dunbar

Let's see.

in content all, on First vehicles. space is of the larger our

players the you've about some of and So domes make have smaller the for them. don't vehicles, we heard newer

So if ramping into the the from -- on still be from then get 'XX. 'XX, And 'XX, a and you vehicles, our we is to that if launch year from to larger increase you gradual after drives the vehicles listen kind what large and of ULA that's the everybody, business. announcements and year next and as steady should

Operator

to Dunbar for any at are remarks. Mr. now no There call over further questions this time. would closing I like to the turn David

David Dunbar

call. to our call the We employees, our continued XXXX thank the our shareholders fiscal reporting and at again to contributions. speaking third Directors quarter I listening of today. for We everybody And on to in support thank and progress enjoy finally, Standex. to you want want forward with for your I Board look

Operator

And concludes call. for you participating. this you. Thank Thank today's

disconnect. all may You

Standex International (SXI) 31 Jan 252025 Q2 Earnings call transcript