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STANDEX INTERNATIONAL CORPORATION l SALEM, NH 03079 l TEL (603) 893-9701 l FAX (603) 893-7324 l WEB www.standex.com



Contact:

Thomas DeByle, CFO

                    FOR IMMEDIATE RELEASE

(603) 893-9701

e-mail:  InvestorRelations@Standex.com



STANDEX REPORTS FIRST-QUARTER FISCAL 2015 FINANCIAL RESULTS

Net Sales Increase 13.4% to $202 Million

Earnings from Continuing Operations Grow 19.6% to $1.16 per Diluted Share

Non-GAAP Earnings from Continuing Operations Rise 4.2% to $1.25 per Diluted Share


SALEM, NH – October 31, 2014 . . . . Standex International Corporation (NYSE:SXI) today reported financial results for the first quarter of fiscal year 2015.


First Quarter Fiscal 2015 Results from Continuing Operations


§

Net sales increased 13.4% to $202.0 million from $178.1 million in the first quarter of fiscal 2014. Organic sales increased 9.8%, acquisition growth accounted for 3.5% of the increase and foreign exchange was flat year over year.


§

Income from operations was $21.2 million, compared with $17.1 million in the first quarter of fiscal 2014. Operating income for the first quarter of fiscal 2015 included, pre-tax, $0.9 million of restructuring charges and $0.8 million of non-cash purchase accounting expenses.  The first quarter of fiscal 2014 included, pre-tax $3.8 million of restructuring charges and $0.1 million of non-recurring management transition expenses.  Excluding these items from both periods, the Company reported non-GAAP first-quarter fiscal 2015 operating income of $22.9 million, compared with $21.0 million in the year-earlier quarter.


§

Net income from continuing operations was $14.9 million, or $1.16 per diluted share, including, after tax, $0.6 million of restructuring charges and $0.6 million of non-cash purchase accounting expenses.  This compares with first quarter fiscal 2014 net income from continuing operations of $12.3 million, or $0.97 per diluted share, including, after tax, $2.7 million of restructuring charges, $0.1 million of non-recurring management transition expense, and $0.2 million of non-recurring tax expenses.  Excluding the aforementioned items from both periods, non-GAAP net income from continuing operations was $16.1 million, or $1.25 per diluted share, compared with $15.4 million, or $1.20 per diluted share, in the first quarter of fiscal 2014.


§

EBITDA (earnings before interest, income taxes, depreciation and amortization) was $25.5 million, compared with $21.2 million in the first quarter of fiscal 2014.  Excluding the previously mentioned items from both periods.  Adjusted EBITDA for the first quarter of fiscal 2015 was $27.2 million, compared with $25.1 million in the year-earlier quarter.


§

Net working capital (defined as accounts receivable plus inventories less accounts payable) was $155.0 million at the end of the first quarter of fiscal 2015, compared with $129.4 million a year earlier.  Working capital turns were 5.3 for the first quarter of fiscal 2015.  Adjusting for the impact of the Enginetics acquisition, working capital turns were 5.5, which is equal to the year-earlier quarter.


§

The Company closed the quarter with net debt of $53.1 million, versus net cash of $4.0 million at the end of the first quarter 2014 and $29.2 million at June 30, 2014.  The increase in net debt was primarily due to the acquisition of Enginetics during the quarter.

A reconciliation of net income, earnings per share and net income from continuing operations from reported GAAP amounts to non-GAAP amounts is included later in this release.



Management Comments


“Standex is off to a strong start in fiscal 2015,” said David Dunbar, Standex President and CEO. “Three of our five segments reported double-digit growth in the first quarter and non-GAAP operating income was up 8.9% from the first quarter last year.”


Segment Review


Food Service Equipment Group sales increased 13.9% year-over-year, and operating income was down 2.5%.  Excluding the impact of non-cash purchase accounting expenses related to the Ultrafryer acquisition, operating income increased 1.3% year over year.


“The food service equipment group had good growth for the quarter with organic sales growth of 10.1%, acquisition accounted for 3.7% and foreign exchange was 0.1%.”  Dunbar said.  “In refrigeration, this was a strong quarter for sales in both the dollar store and chain store segments.  We also saw good growth in our specialty cabinet business with the beverage industry. Sales in specialty solutions were up, year-over-year, in large part due to our roll-out of a new line of open air merchandiser products.  Sales in the cooking solutions group were down slightly due to the slow ramp-up of Nogales production related to the Cheyenne consolidation.  The lower operating leverage at the segment level was the result of inefficiencies in Nogales. Shipments out of the plant are steadily improving as we begin the second quarter, and we are making good progress in improving the plant’s operations. We continue to expect the Cheyenne, Wyoming to Nogales facilities consolidation to generate its targeted cost savings in fiscal 2015.1”



Engraving Group sales increased 12.2% year-over-year, while operating income grew 45.4%.  


“The Engraving Group posted its third consecutive quarter of record sales and profitability in the first quarter, driven by strong worldwide demand in our Mold-Tech business,” said Dunbar. “We opened Mold-Tech’s fifth manufacturing facility in China during the first quarter, while also making good progress toward opening two new sites in Eastern European and Asian emerging markets.  We are continuing to leverage the worldwide presence provided by our 29 Mold-Tech sites around the world, which enables us to stay close to our customers as their markets and businesses evolve geographically.  The design hub we recently opened in Manchester, England is proving to be a differentiating concept in our business.  Manchester did projects for several additional major OEMs during the first quarter, providing their design teams with rapid prototyping of their future automotive interior textures.  We are working to replicate our success in Manchester by opening a new design hub later this year in Detroit to service North American OEMs.1”


Engineering Technologies Group sales grew 16.5% year-over-year, and operating income increased 6.6%.


Sales grew organically 1.5%, acquisition growth accounted for 13.3% and foreign exchange accounted for 1.7%.  “We are working to capitalize on new opportunities in aviation, in part driven by Enginetics,” said Dunbar. “Our acquisition integration plan is on track, and we are involved in some exciting sales pursuits.  Our lower sales leverage during the quarter primarily reflected unfavorable mix due to higher levels of low-margin product development work in space and aviation, and slower sales into oil and gas.”


Electronics Products Group sales were up 4.7% year-over-year, while operating income increased 7.9%.


“Electronics Products Group sales experienced strong growth in North America, modest growth in Europe and largely flat sales in Asia during the first quarter,” said Dunbar. “Our growth in this segment continues to be driven primarily by increased demand for reed based sensors in the automotive and appliance sectors.  The recent acquisition of Planar Quality Corporation is reinforcing this positioning with capabilities in the specialized and growing area of compact, high-current, high-density transformers.  The Electronics group continues to execute its long-term strategy of moving up the value chain from being a component supplier to offering more advanced and comprehensive solutions, and Planar Quality is just the latest example.  We also made operational progress in Electronics during the quarter by completing the move to our new facility in Mexico.”


The Hydraulics Products Group reported a 35.0% year-over-year sales increase, while operating income rose 46.7%.


“This was another strong quarter for the Hydraulics Group,” Dunbar said. “In addition to the continued growth in solid waste and refuse market demand for the products we have recently introduced for those applications, the recovery in our traditional North American dump truck and dump trailer markets is continuing to result in growing product demand for those applications as well.  As more and more of our total Hydraulics shipment volume comes from our new Tianjin China facility, we are not only strengthening our competitive position, but also continuing to improve our margins. The ability to deliver rod cylinders out of both Tianjin and our plant in Ohio significantly reduces time-to-market for our customers, and



the lower operating costs in Tianjin are expected to continue to improve our overall sales leverage as that plant ramps up.1”


Business Outlook


“Although it’s still early in the year, fiscal 2015 is expected to be a strong year for Standex.1   We delivered double-digit, top-line growth in the first quarter, while continuing to improve the Company’s overall operating performance. Incoming orders are strong, and backlogs are up from a year ago in all businesses.  Conditions in the majority of our end markets remain favorable, and we are making good progress on strategic growth initiatives in each of our businesses.  Our recent acquisitions are performing well, and our balance sheet provides us with the flexibility to pursue opportunities for driving organic and acquisition-driven growth and delivering greater shareholder value,” concluded Dunbar.  


Conference Call Details


Standex will host a conference call for investors today, October 31, 2014 at 10:00 a.m. ET. On the call, David Dunbar, President and CEO, and Thomas DeByle, CFO, will review the Company’s financial results and business and operating highlights. Investors interested in listening to the webcast should log on to the “Investor Relations” section of Standex’s website, located at www.standex.com.  The Company's slide show accompanying the webcast audio also can be accessed via its website.  To listen to the playback, please dial (800) 585-8367 in the U.S. or (404) 537-3406 internationally; the passcode is 13922571. The replay also can be accessed in the “Investor Relations” section of the Company’s website, located at www.standex.com.   



Use of Non-GAAP Financial Measures


EBITDA, which is "Earnings Before Interest, Taxes, Depreciation and Amortization," non-GAAP income from operations, non-GAAP net income from continuing operations and free cash flow are non-GAAP financial measures and are intended to serve as a complement to results provided in accordance with accounting principles generally accepted in the United States.  Standex believes that such information provides an additional measurement and consistent historical comparison of the Company's performance.  A reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures is available in this news release.



About Standex


Standex International Corporation is a multi-industry manufacturer in five broad business segments: Food Service Equipment Group, Engineering Technologies Group, Engraving Group, Electronics Products Group, and Hydraulics Products Group with operations in the United States, Europe, Canada, Australia, Singapore, Mexico, Brazil, Argentina, Turkey, South Africa, India and China. For additional information, visit the Company's website at http://standex.com/.



1 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 the impact of implementation of government regulations and programs affecting our businesses, unforeseen legal judgments, fines or settlements, uncertainty in conditions in the financial and banking markets, general domestic and international economy including more specifically increases in raw material costs, the ability to substitute less expensive alternative raw materials, the heavy construction vehicle market, the ability to continue to successfully implement productivity improvements, increase market share, access new markets, introduce new products, enhance our presence in strategic channels, the successful expansion and automation of manufacturing capabilities and diversification efforts in emerging markets, the ability to continue to achieve cost savings through lean manufacturing, cost reduction activities, and low cost sourcing, effective completion of plant consolidations, successful completion and integration of acquisitions and the other factors discussed in the Annual Report of Standex on Form 10-K for the fiscal year ending June 30, 2014, 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 disclaim any obligation to do so, even if management's estimates change.

















Standex International Corporation

Consolidated Statement of Operations

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

 

September 30,

 

(In thousands)

 

 

2014

 

 

2013

 

 

 

 

 

 

 

 

 

Net sales

 

$

         202,027

 

$

          178,140

 

Cost of sales

 

 

         135,915

 

 

          117,735

 

Gross profit

 

 

            66,112

 

 

            60,405

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

 

            43,954

 

 

            39,535

 

Restructuring costs

 

 

                 862

 

 

              3,806

 

Other operating (income) expense, net

 

 

                   59

 

 

                   -   

 

 

 

 

 

 

 

 

 

Income from operations

 

 

            21,237

 

 

            17,064

 

 

 

 

 

 

 

 

 

Interest expense

 

 

                 643

 

 

                 560

 

Other (income) expense, net

 

 

               (265)

 

 

               (454)

 

Total

 

 

                  378

 

 

                 106

 

 

 

 

 

 

 

 

 

Income from continuing operations before income taxes

 

 

            20,859

 

 

             16,958

 

Provision for income taxes

 

 

               5,932

 

 

              4,610

 

Net income from continuing operations

 

 

            14,927

 

 

            12,348

 

 

 

 

 

 

 

 

 

Income (loss) from discontinued operations, net of tax

 

 

               (375)

 

 

            (3,266)

 

 

 

 

 

 

 

 

 

Net income

 

$

           14,552

 

$

              9,082

 

 

 

 

 

 

 

 

 

Basic earnings per share:

 

 

 

 

 

 

 

Income from continuing operations

 

$

                1.18

 

$

                0.98

 

Income (loss) from discontinued operations

 

 

             (0.03)

 

 

             (0.26)

 

Total

 

$

                1.15

 

$

                0.72

 

 

 

 

 

 

 

 

 

Diluted earnings per share:

 

 

 

 

 

 

 

Income from continuing operations

 

$

                1.16

 

$

              0.97

 

Income (loss) from discontinued operations

 

 

          (0.03)

 

 

              (0.26)

 

Total

 

$

           1.13

 

$

                0.71

 

 

 

 

 

 

 

 

 



























Standex International Corporation

Condensed Consolidated Balance Sheets

 

 

 

 

 

 

 

 

 

 

September 30,

 

 

June 30,

(In thousands)

 

 

2014

 

 

2014

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

  Cash and cash equivalents

 

$

           71,983

 

$

              74,260

  Accounts receivable, net

 

 

          114,458

 

 

         107,674

  Inventories

 

 

           111,491

 

 

          97,065

  Prepaid expenses and other current assets

 

 

                7,592

 

 

            7,034

  Income taxes receivable

 

 

                      -   

 

 

              922

  Deferred tax asset

 

 

             13,072

 

 

          12,981

    Total current assets

 

 

            318,596

 

 

      299,936

 

 

 

 

 

 

 

Property, plant, equipment, net

 

 

           108,991

 

 

          96,697

Intangible assets, net

 

 

             40,789

 

 

        31,490

Goodwill

 

 

           156,278

 

 

        125,965

Deferred tax asset

 

 

                  910

 

 

               878

Other non-current assets

 

 

             24,983

 

 

             23,194

    Total non-current assets

 

 

           331,951

 

 

         278,224

 

 

 

 

 

 

 

Total assets

 

$

          650,547

 

$

           578,160

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

  Accounts payable

 

$

         70,998

 

$

        85,206

  Accrued liabilities

 

 

         47,508

 

 

         51,038

  Income taxes payable

 

 

           7,766

 

 

            4,926

    Total current liabilities

 

 

         126,272

 

 

       141,170

 

 

 

 

 

 

 

Long-term debt

 

 

        125,049

 

 

          45,056

Accrued pension and other non-current liabilities

 

 

         56,255

 

 

         51,208

    Total non-current liabilities

 

 

       181,304

 

 

        96,264

 

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

 

  Common stock

 

 

         41,976

 

 

        41,976

  Additional paid-in capital

 

 

       44,620

 

 

        43,388

  Retained earnings

 

 

     597,285

 

 

      584,014

  Accumulated other comprehensive loss

 

 

        (63,320)

 

 

       (55,819)

  Treasury shares

 

 

       (277,590)

 

 

      (272,833)

     Total stockholders' equity

 

 

         342,971

 

 

       340,726

 

 

 

 

 

 

 

Total liabilities and stockholders' equity

 

$

        650,547

 

$

        578,160

 

 

 

 

 

 

 















Standex International Corporation and Subsidiaries

Statements of Consolidated Cash Flows

 

 

 

Three Months Ended

 

 

 

September 30,

(In thousands)

 

 

2014

 

 

2013

 

 

 

 

 

 

 

Cash Flows from Operating Activities

 

 

 

 

 

 

Net income

 

$

        14,552

 

$

       9,082

Income (loss) from discontinued operations

 

 

            (375)

 

 

         (3,266)

Income from continuing operations

 

 

          14,927

 

 

       12,348

 

 

 

 

 

 

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

   Depreciation and amortization

 

 

        4,011

 

 

       3,689

   Stock-based compensation

 

 

          1,045

 

 

            849

    Non-cash portion of restructuring charge

 

 

             (249)

 

 

         3,294

Contributions to defined benefit plans

 

 

                (323)

 

 

           (358)

Net changes in operating assets and liabilities

 

 

        (30,370)

 

 

         (18,528)

Net cash provided by operating activities - continuing operations

 

 

      (10,959)

 

 

      1,294

Net cash provided by (used in) operating activities - discontinued operations

 

 

              117

 

 

          (351)

Net cash provided by (used in) operating activities

 

 

        (10,842)

 

 

              943

Cash Flows from Investing Activities

 

 

 

 

 

 

    Expenditures for property, plant and equipment

 

 

          (7,199)

 

 

     (3,730)

    Expenditures for acquisitions, net of cash acquired

 

 

         (57,149)

 

 

              -   

    Other investing activities

 

 

            1,546

 

 

             10

Net cash (used in) investing activities from continuing operations

 

 

         (62,802)

 

 

       (3,720)

Net cash (used in )investing activities from discontinued operations

 

 

                -   

 

 

         (520)

Net cash (used in) investing activities

 

 

       (62,802)

 

 

          (4,240)

Cash Flows from Financing Activities

 

 

 

 

 

 

    Proceeds from borrowings

 

 

         88,600

 

 

      17,700

    Payments of debt

 

 

          (8,600)

 

 

    (17,700)

    Activity under share-based payment plans

 

 

             551

 

 

         72

    Excess tax benefit from share-based payment activity

 

 

           1,308

 

 

      1,470

    Cash dividends paid

 

 

        (1,264)

 

 

       (1,004)

    Purchase of treasury stock

 

 

        (6,427)

 

 

     (3,045)

Net cash provided by (used in) financing activities

 

 

        74,168

 

 

      (2,507)

 

 

 

 

 

 

 

Effect of exchange rate changes on cash

 

 

       (2,801)

 

 

         795

 

 

 

 

 

 

 

Net changes in cash and cash equivalents

 

 

        (2,277)

 

 

      (5,009)

Cash and cash equivalents at beginning of year

 

 

        74,260

 

 

     51,064

Cash and cash equivalents at end of period

 

$

      71,983

 

$

     46,055

 

 

 

 

 

 

 
















Standex International Corporation

Selected Segment Data

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

 

September 30,

 

(In thousands)

 

 

2014

 

 

2013

 

Net Sales

 

 

 

 

 

 

 

Food Service Equipment

 

$

         113,833

 

$

         99,911

 

Engraving

 

 

          28,088

 

 

        25,027

 

Engineering Technologies

 

 

               20,119

 

 

           17,265

 

Electronics Products

 

 

             29,470

 

 

          28,144

 

Hydraulics Products

 

 

        10,517

 

 

            7,793

 

Total

 

$

        202,027

 

$

         178,140

 

 

 

 

 

 

 

 

 

Income from operations

 

 

 

 

 

 

 

Food Service Equipment

 

$

           11,673

 

$

         11,969

 

Engraving

 

 

            6,943

 

 

           4,773

 

Engineering Technologies

 

 

            2,220

 

 

            2,082

 

Electronics Products

 

 

             5,546

 

 

            5,138

 

Hydraulics Products

 

 

              1,722

 

 

            1,174

 

Restructuring

 

 

                (862)

 

 

        (3,806)

 

Other operating income (expense), net

 

 

               (59)

 

 

                  -   

 

Corporate

 

 

         (5,946)

 

 

       (4,266)

 

Total

 

$

          21,237

 

$

        17,064

 

 

 

 

 

 

 

 

 

















































Standex International Corporation

Reconciliation of GAAP to Non-GAAP Financial Measures

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

 

 

 

 

September 30,

 

 

 

(In thousands, except percentages)

 

 

2014

 

 

2013

 

% Change

 

Adjusted income from operations and adjusted net income from continuing operations:

 

 

 

 

 

 

 

 

 

Income from operations, as reported

 

$

             21,237

 

$

             17,064

 

24.5%

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

Restructuring charges

 

 

                  862

 

 

               3,806

 

 

 

 

Management Transition

 

 

                     -   

 

 

                  136

 

 

 

 

Acquisition-related costs

 

 

                  785

 

 

                     -   

 

 

 

Adjusted income from operations

 

$

             22,884

 

$

             21,006

 

8.9%

 

Interest and other income (expense), net

 

 

                 (378)

 

 

                 (106)

 

 

 

Provision for income taxes

 

 

              (5,932)

 

 

              (4,610)

 

 

 

 

Discrete tax items

 

 

                     -   

 

 

                  155

 

 

 

 

Tax impact of above adjustments

 

 

                 (468)

 

 

              (1,070)

 

 

 

Net income from continuing operations, as adjusted

 

$

             16,106

 

$

             15,375

 

4.8%

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA and Adjusted EBITDA:

 

 

 

 

 

 

 

 

 

Income from continuing operations before income taxes, as reported

 

$

             20,859

 

$

             16,958

 

 

 

Add back:

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

                  643

 

 

                  560

 

 

 

 

Depreciation and amortization

 

 

               4,011

 

 

               3,689

 

 

 

EBITDA

 

$

             25,513

 

$

             21,207

 

20.3%

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

Restructuring charges

 

 

                  862

 

 

               3,806

 

 

 

 

Management Transition

 

 

                     -   

 

 

                  136

 

 

 

 

Acquisition-related costs

 

 

                  785

 

 

                     -   

 

 

 

Adjusted EBITDA

 

$

             27,160

 

$

             25,149

 

8.0%

 

 

 

 

 

 

 

 

 

 

 

 

Free operating cash flow:

 

 

 

 

 

 

 

 

 

Net cash provided by operating activities - continuing operations, as reported

 

$

            (10,959)

 

$

               1,294

 

 

 

Less: Capital expenditures

 

 

              (7,199)

 

 

              (3,730)

 

 

 

Free operating cash flow

 

$

            (18,158)

 

$

              (2,436)

 

 

 

Net income from continuing operations

 

 

             14,927

 

 

             12,348

 

 

 

Conversion of free operating cash flow

 

 

   NM

 

 

   NM

 

 

 

 

 

 

 

 

 

 

 

 

 

 






















Standex International Corporation

Reconciliation of GAAP to Non-GAAP Financial Measures

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

Adjusted earnings per share from continuing operations

 

 

September 30,

 

 

 

 

 

2014

 

 

2013

 

%
Change

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share from continuing operations, as reported

 

$

               1.16

 

$

               0.97

 

19.6%

 

 

 

 

 

 

 

 

 

 

 

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

Restructuring charges

 

 

               0.05

 

 

               0.21

 

 

 

 

Management Transition

 

 

                   -   

 

 

               0.01

 

 

 

 

Acquisition-related costs

 

 

               0.04

 

 

                   -   

 

 

 

 

Discrete tax items

 

 

                   -   

 

 

               0.01

 

 

 

Diluted earnings per share from continuing operations, as adjusted

 

$

               1.25

 

$

               1.20

 

4.2%