Standex International (SXI) 4 Nov 222023 Q1 Earnings call transcript

Good morning, and welcome to the Standex International Fiscal First Quarter 2023 Financial Call. [Operator Instructions] Please note this event is being recorded.

I'd now like to turn the conference over to Chris Howe, Director of Investor Relations. Please go ahead.

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

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

EBITDA onetime acquisition-related remind and is expenses to adjusted to purchase like before margin. which which I'd that of excluding today's which references and addition, In items; excluding adjusted before accounting, accounting, EBITDA EBIT, interest, is include earnings will you restructuring, expenses acquisition-related EBITDA taxes; the items; EBIT, and purchase taxes, margin; restructuring, and discussion is EBIT, onetime adjusted measures EBITDA, depreciation non-GAAP which amortization; EBITDA, interest is earnings and

company's including adjusted We net per will also net adjusted intended principles performance. Standex information operating provided adjusted complementary as serve accordance operating income with financial additional measurement continuing United share, in an provides comparison These operating net cash adjusted accounting adjusted earnings pro EBITDA. financial a margin, non-GAAP income, operations, refer debt and the forma to believes historical free are from generally measures of the other non-GAAP to flow in such accepted result States. that measures, consistent to income, and

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

to join call. everyone, Standex. fiscal XXXX. have quarter to welcome morning, to successful pleased our built highly Chris, welcome our a We're with quarter very first good And conference first performance, fiscal on you Thank you, XXXX and us. happy which and We're

Our macroeconomic teams disciplines earnings us a by fast management dynamic in markets, growth environment. global delivering positioned and continue focus pricing execution our nimble to strong on

and for of productivity momentum. initiatives thank new and our Board business dedication want an continued to employees, pipeline active opportunities our Directors I our their to the have We of support. continue and executives

margin. everyone quarter messages. of turn quarter record XX% if Consolidated margin our challenges the operating fiscal improvement productivity sequentially was a and of point our margin in increase quarter XXX-basis and can adjusted Now year-on-year first adjusted Slide continued operating point such X, XXXX in consecutive actions produced The inflation currency improved price profile as XXX-basis of headwinds. sixth external foreign despite high a effectiveness and to our and key

segments, by executed over exhibited impacted Scientific We XX% of business adjusted high-growth defense XXXX. fiscal such while demand as and and revenue at and we as to lower X.X% electric vehicles, margin organic organic XX% five Electric approximately our aviation year-on-year COVID renewable to as actions. growth. price in Revenue revenue business increased revenue energy, XX% segments by the strong We grow vaccine markets company stream FY first commercial five vehicles, energy this reported of remain space for each storage. commercialization million anticipate Standex quarter was markets reported contribution operating $XX 'XX. growth of of least year-on-year in from successfully Four end company-wide three productivity realization green

in well Our $XXX year-on-year healthy, remain and plant in XX% the grew to trends X solar with is and ENEL project progressing under design pilot Order million. energy realizable phase. is the year now backlog

disciplines standardization of we of in operating turn, to our value across an initiatives, As focus units, have part creation further lean leveraging business G&A the all continue our on active structure. and system,

call. of XXX greater annualized financial basis With discuss year-on-year. In expect ROIC. on position in performance, a in similar capital basis, quarter we ROIC XX%, anticipate expect moderate we and On revenue result, fiscal improvement As basis, comprised by to In flat continued seeing QX exhibit XXXX, second revenue our and operating at high year-on-year operating liquidity organic the Ademir are majority currency reduction higher margin. fiscal significantly sequential segments allocation single-digit a a to 'XX an improving the we of organic improvement our we mid- growth. and equivalent points XXXX in FY our slightly from solid margin. detail growth countered will later to

of segment turn Slide year-on-year X.X% decreased remain markets. versus EV-related X% quarter offsetting flat discuss the medical, exchange. primarily to from period, industrial and growth favorable, offset impact I by Electronics. and our trends Now End X.X% Segment more and organic the acquisitions to beginning and ago contribution X.X% performance for growth will as initiatives foreign than applications, Operating begin currency XX.X% negative organic revenue margin please $XX in with of XXXX was to year and particularly productivity outlook, market first due from and were power sales X, impact. management inflationary million fiscal

at remains currently million. opportunities is $XX funnel business and New strong

continue unique requirements as The segment's automation. energy Within applications renewable business will energy many the pictures in grow, on to meeting as focus overall improve warehouse relays This in delivering for precision efficiency. markets. conveyor growth electric sensors magnetics, are isolation markets smart products, as and trend highlights technologies, such manufacturing well are switching Slide supporting Electronics on components systems warehouse and and our X we in to the Within automation electrification vehicles. the

continued in our renewables to markets in white we see expects mostly continue due North those from slight and Sequentially, growth and in as to continue margin, Europe. relay company markets. operating by growth America in in actions. in strong higher be expand revenue components similar We as to fiscal to Asia mix investments, partially price and quarter coming expect Europe is second offset softness China goods decrease grow a and The magnetics end offset by

to year-on-year overshadowed of fiscal exchange quarter organic Slide X of nearly approximately in positive tool with headwind productivity a the changes X.X% previously be Laneway similar to increasing in project million picture higher-quality decrease announced margin revenue The Please using Operating for soft trends basis, fiscal to Engraving customers X.X% $XX move X slightly the Revenue like we basis In rate finishing. services remained illustrates margin trim technology, next $XX auto texture Europe. in innovative flat to of sequential expect advanced realization tools, increased discussion in year-on-year points an on create can to first surfaces without due services and segment. Ford XXXX, engraving our a turn expect to America mix. colored laser our continued X% for at In growth. we Slide and as engineered our manufacturers laser North which from quarter, actions XX.X% million due also operating anterior on be paint. XXXX, and fiscal sales of demand XXX reflecting and to grew growth textures.

Please turn to Slide X, Scientific segment.

driven with mostly expected, XX% volume, the $XX.X and demand actions. million As Operating primarily by offset vaccine productivity dollars by revenue due associated XX lower to year-on-year to which margin year-on-year storage. XX.X%, decreased COVID-XX lower price was decreased Scientific basis points

product new first Scientific As standard with on with our vaccine highlighted and new line compliant Slide new accelerating, were of of storage We pace capabilities. product product sizes. the NSF-NIST to the release family the products to is X, and continue expand broadening further the introductions

to and on in shows. we quarter a growing similar the revenue spend sequential treatments primarily trade be new slightly meet and and 'XX, operating demand. lower the to to expect of advertising anticipated basis, has market higher introduced, R&D and to As vaccines second fiscal position investments continue On favorable increase Scientific margin, slightly a due higher

and segment Technologies Engineering in points initiatives year-on-year the the project currency. impact timing X. a of page project-related X% Operating to first Turning decreased $XX foreign and and Revenue of on due productivity onetime XX% margin XXX impact of the repeat. not of million that year-on-year quarter did to increased 'XX charge fiscal reflecting Slide efficiency basis

on structural in operating revenue is advanced developing Please as project from on of fiscal expect as significant Through Slide engine pictured In reflecting and large to for dome the applications pictured market a components. products margin, to increase tank the number Slide turn established core next sequential adjacent X, customers fuel segment. Solutions As basis, start-ups. well a Specialty rocket and moderate we X, our innovative team quarter, to a leaders phasing. like engineering

increases. revenue due price to realization, to margin market increased fiscal work labor a Solutions in million increased in during price and first Operating year-on-year of demand XX.X%, unit and business nearly the stoppage $XX comparison points XXX plants to due Hydraulics reflecting the volume X XX% strong Specialty year-over-year 'XX. basis quarter favorable

in than expand fiscal slide on shots on continued milk we line less with the second foodservice over seasonality X, pictured primarily foaming, we actions. pricing is XX% similar to In and revenue a to slightly, to professional 'XX, and helical competitive expect by which decrease espresso sequential gear call volume Ademir Procon due as our products. expected pump detail. a to will have requires decline I basis, As market, and now the the turn to quarter energy offset equipment product productivity to be

and Thank you, morning, everyone. David, good

key inflationary a drive and takeaways Despite first our results. flow growth quarter First, pressures from few provide expansion. and I organic will continued to XXXX margin

and strength our implementation productivity Our our pricing the actions of of realization initiatives. earnings reflects successful

achieved margin. we consolidated our sixth of result, a quarter operating adjusted consecutive As record

we overall quarter end trends of slightly as book-to-bill our an demand first market ratio addition, the with X. healthy In remain ended over

million. basis, X, acquisition Slide increased On total Now consolidated a year-on-year from X.X% of Solutions first and revenue from exchange. impact $XXX.X to partially by summary. foreign reflected This X.X% organic let's offset X.X% turn XXXX Sensor the quarter contribution X.X% growth to revenue a

basis the XX.X% increase company, the First of adjusted X.X% in margin revenue quarter points grew our history consolidated XXXX income XX%, a increased operating as on XXX year-on-year adjusted year-on-year. highest our to approximately operating

expect XXXX quarter a XXX XX%. year. Our between points year 'XX fiscal second rate with of XX% hear a on decreased rate and basis tax first full Sequentially, quarter tax similar tax in the rate we

onetime in operating per ago. ago, the $XX.X accrued prior XX% period to bonus XXXX in share impact million net Net supply year-on-year. earnings operating $X.XX in year a the quarter to XXXX decrease in quarter compared the were million approximately by settlement used $X.XX was Adjusted cash of chain of activities payment first compared cash growth This $X.X of and annual reflected inefficiencies. first year of provided activities payments, legal fiscal

expenditures $X In year to compared million were $X.X a addition, ago. million capital

continue income. to million of GAAP normalized free quarter compared approximately of with return flow million in above target improvements a flow level of result, XXX% half we negative conversion second XXXX further to in improvements further cash fiscal half as of cash a with of or free more fiscal free to at net conversion We XXXX. $X.X anticipate As flow second in first the XXXX a fiscal first free fiscal flow cash cash the quarter $X was XXXX in

of organic growth well pipeline sheet inorganic balance provide in investment active opportunities increased flexibility substantial R&D and as capital. to and Our continues to an support as

Please X XX, turn segment at by Specialty organic to 'XX growth at perspective, Slide exhibited Engraving of our FY highlighted XX.X% and X.X%. segments segment From a snapshot. year-on-year, X

expected, sales COVID for As organically Scientific due segment XX.X% to storage. lower declined demand vaccine

year-o-year as XX% to expanded by X over organic segments in X.X% X.X% Scientific Foreign margin contributing currency the maintained despite the Electronics to an productivity margin growth, revenue it operating XX% above of of X headwind our respectively. and Engraving due actions. pricing was decline X segments segment XXX-basis to represented increased. segments and readout From margins operating significantly margins Specialty operating a and led a operating standpoint, of primarily revenue our XX% headwind and

million structure, to Standex's fiscal liquidity end capitalization first approximately fiscal the net compared XXXX. Standex's Next, XXXX an Standex please turn million quarter year. between to of at Standex the fiscal consisted first shares and had $XXX.X end long-term $XX.X available At repatriation held in at first regards With million from of XXXX. at million to prior remaining in quarter, XXXX, and statistics of at the with XX debt million million expect allocation, cash is for net liquidity, $XXX.X totaled $XX $XX to $XX.X of of authorization. cash repurchased million of approximately the There foreign approximately $X.X quarter. and fiscal $XX end the summary of quarter remains $XXX of million and We ended capital the no under $XX still subs. $XX the the debt debt still quarter in of Slide equivalents fourth for the of million primarily end was we increase a the million by first the and which for current quarter XX,XXX Cash in first million quarter million. $XX.X strong.

year-on-year. share, X.X% also increase We of our XXXrd cash approximately declared week quarterly dividend $X.XX last per an

million $XX capacity growth fiscal in high-growth $XX approximately and our XXXX, to be capital The and for increased fiscal year-on-year million we still additional deepen we efforts expenditures capital investment expansion, productivity In as $XX includes between million expect in actions compared to markets. presence XXXX.

over takeaways to for will quarter I the now first key David call turn from results. our

Please a portfolio growth Thank businesses XX. a Slide Standex and is company profiles. you, deliver from of company have an attractive of well rates positioned sustainable, stronger Ademir. operating margin mix progressed growth with comprised as profitable to higher turn to high-quality we to

anticipate improvement such, our year metrics continued across As financial fiscal in we XXXX.

financial Our innings, segments vehicles, and potential evolution the the are defense, emerging metrics. are in space. of aligned further renewable With as for about energy, early areas trends with commercialization only the in sustainable global contribution of our these and electric their and much human excited opportunities favorably health we to such

supply are from an active to investments I'm to The an we positioned as candidates. OpEx and these pipeline uncertain internal active as to disciplines well sheet chain and of strong funnel pricing on strong our conditions. environment. positions balance inflation market perform in offsetting us the confident flexibility challenging inorganic well financial of execute Our pursue actions are

Our an to demonstrated market ability have businesses and margin their opportunities. on conditions attractive markets, sales dynamic focus they to and in are leaders adapt

We questions. now the open will line for

[Operator Instructions]

Moore Chris from comes question first CJS Our from Securities.

Good Pete morning. How mix for 'XX and between hi. for the volume we should Lucas think Yes, Chris. about price revenue your It's growth?

and think the think you about are I If there. in QX, bits pieces

of then and You've and half -- volume you about about net price. got it's half, And FX.

Yes.

you just XX-XX of of the ran and X/X is volume we will somewhere in rest remainder XX-XX for X/X volume, Ademir. fiscal we're Historically, expand that. and can the and I this between year were forward price. Maybe about X/X about to year. on we QX, X/X, price So thinking as that the move be range the

be forward? the at environment? current impacted then weak the going And Very do which looking the you you will flip most then just where on by biggest do the see And helpful. segments, opportunity side, think rising

of the businesses biggest Those space a Technology in very of markets. much business continues economy. know to but there. military strong opportunity last serving are electric that renewables. vehicles in Good ramp I defense and by few have is and current Their it's the Well, affected they're commercialization the the so don't if up. lot got has the grown years, end strong. environment, most is best -- momentum runway Engineering high-rate Electronics

We go softness into product lines that products. We're couple a residential Electronics have out of a seeing like of there. little

example, go for appliances. So we sell that switches into and sensors

XX%. So there. we about expect a softness That's little

It's XX% sales. to XX%, Electronics

Electronics.

are -- And expect the sorted. in unaffected. some equipment we of food businesses serving think are that markets the But all are them to the others relatively that be Specialty, we

get to to that to year-on-year is progress Yes. And add call of markets, really, we we about rest year. we expect the fiscal the even continue if excited that. just can markets, One I fast thing and we was what in end as XX% QX, and to growth in are see those which really we strength in

question Blair. Heymann Nicholas William from is next from The

I the ongoing was China China see good you that market, how came going the first And Hi, guess, morning. on. a million lockdowns, was hopefully, there last curious, soon? pandemic million. all going curious in of I believe deferred -- end that given realized how I evolving on well But you $X thought in Electronics. And then you a as much are quarter, secondly, given I pretty to everything quarter. which was out first really $X here the in I of revenue Electronics that's

Yes.

of what good Shanghai $X that About of all, was over million million of held our the about in the $X it, right QX. from The shipped So was quarter. you've memory. first in lockdowns you're

going, as In of good I mine. where terms your China is guess, guess is

some Our appliances softness continue to -- in be orders China strong, see we although of in China.

of and about And million Nick, that Electronics between Electronics bridge of in the that add had Engraving line. actually FX the impacted the [Inaudible]. that, would And and thing the of at would $X we have it million businesses, $X of all sales only worth kind that top I and lot on headwinds Engraving, sequential sequentially in look QX Yes. is unfavorable to some a of you to if actually so QX,

helpful. That's Okay.

somewhere this? You into help Is your can Engraving think expand relative how Can intentions time? the market opportunity size to to in U.S. and you rates and mentioned where is an you Asia. penetration that evolve over Europe big this... your And

Yes.

handle can that. I yes, So

few may about ago, you we popular China. soft particular very in a And growing have Asia. is our technology U.S. America, in that and the we traditional acquired this trim. of Europe is opportunities a in growth Engraving for Asia software globally, soft they rapidly Where a recall And business trim So the years kind of in GS in in X/X see our Engineering and type businesses. and

So transfer, we're ago, that our it's grow few think think year We -- can we close China advantage technology -- in coming that grow a next it to business. to doing from well, years, We in the process can competitive taking million to years. nothing. $XX the of that we the in was a

that's of visibly to 'XX? can Okay. that you see some just us ask the know. this can of idea I'll Or a the I 'XX? give as through And whether Engineering we rest extending you something can to In business. that's provide go the timing step-up see not or as more beyond the for X year project more, for rest That's Technologies, if insight good

of a one. business. year for Engineering fiscal standpoint from the quarter low a I'll handle QX Nick, this it's project is timing Ademir. Technologies this

now not in that reason have sales significant to half through as would pretty 'XX. from operating quarter we'll second performance this to significant of expect know as ramp -- the healthy see And that, year space, believe we end well you for moderate and business -- in no markets this So fiscal then margin. we I aviation. mean into continue sales think are type the of commercial I that second we the ramp as a defense,

ETG So do over XX optimistic XX we're can business what pretty the next to months.

questions There closing like David session. question-and-answer for This are conference no would over to back our the the in Dunbar any queue. remarks. turn to I concludes more

again, want to forward I again quarter the at for look We We contributions. our our with thank right. call. on us to continued for everybody And I for your to All progress joining second speaking want and reporting support enjoy our and employees finally, shareholders fiscal thank in Standex. call. you

The conference attending today's you for has now concluded. Thank presentation.

You disconnect. may now