• Total Revenue: Increased 6.4% year on year to $189.8 million.
• Adjusted Operating Margin: Reached a record 18.7%, up 150 basis points year on year.
• Adjusted Earnings Per Share: Remained flat year on year at $1.91.
• Net Cash Provided by Operating Activities: $9.1 million, down from $23.8 million a year ago.
• Free Cash Flow: $2.1 million, compared to $19.5 million a year ago.
• Electronics Segment Revenue: Increased 20.8% year on year to $95.9 million.
• Engraving Segment Revenue: Decreased 23% to $31.5 million.
• Scientific Segment Revenue: Increased 13.4% to $18.5 million.
• Engineering Technologies Revenue: Increased 13.9% to $22.6 million.
• Specialty Solutions Revenue: Decreased 2.9% to $21.3 million.
• Net Debt: $413.2 million, compared to $6.2 million at the end of fiscal second-quarter 2024.
• Cash and Cash Equivalents: Totaled $121.1 million.
• Quarterly Cash Dividend: $0.32 per share, a 6.7% increase year on year.

• Warning! GuruFocus has detected 6 Warning Sign with BR.

Release Date: January 31, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Standex International Corp (NYSE:SXI) achieved a record adjusted operating margin of 18.7% in the fiscal second quarter, supported by strong sales performance.
• Sales from the Amran/Narayan Group acquisition exceeded expectations, contributing significantly to the company's fast-growth market sales.
• The company reported a 6.4% increase in total revenue year on year, driven by acquisitions and strong performance in fast-growth markets.
• Standex International Corp (NYSE:SXI) is on track to release over a dozen new products in fiscal 2025, which are expected to contribute approximately 200 basis points of incremental growth.
• The integration of the Amran/Narayan Group is progressing well, with all major integration milestones achieved ahead of plan.

Negative Points

• Organic sales declined in the electronics segment due to softness in automotive and general industrial end markets in Europe and North America.
• Net cash provided by operating activities decreased significantly to $9.1 million from $23.8 million a year ago, impacting free cash flow.
• Engraving segment revenue decreased by 23% due to continued softness in the automotive end markets and less favorable project timing in Asia.
• The company experienced a decline in adjusted earnings per share, which remained flat year on year at $1.91.
• Standex International Corp (NYSE:SXI) reported a significant increase in net debt to $413.2 million compared to $6.2 million at the end of fiscal second-quarter 2024.

Q & A Highlights

Q: Can you clarify if the new sales and adjusted operating margin targets are for the full year 2028 or just the exit rate? A: The targets are for the full year 2028 or the exit rate at the end of FY27.

Q: What will the depreciation and amortization (D&A) expenses be on a quarterly basis after the Amran/Narayan acquisition? A: Amortization expense is expected to be around $4 million to $5 million per quarter, and depreciation will be $20 million to $22 million per year.

Q: Who would be your main competition for the Stargate Project, and what would you supply if it proceeds? A: We would supply instrument transformers to OEMs like Eaton, GE, and Schneider, who are all our customers, making us agnostic to which company gets the contract.

Q: What are the expectations for organic growth in the second half of the fiscal year? A: We anticipate improvement in Q4, particularly in the Engraving business, which has been soft due to auto OEM delays. Other businesses show good order trends, providing a positive outlook.

Q: Can you provide insights into the capacity and margin profile of the Amran asset? A: The margin before COVID was in the mid- to upper-30s, now ramped into the 40s. The plants are currently running at one shift, with plans to add more shifts and expand capacity in Europe.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.