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Standex Reports 9% Sales Growth in Second Quarter Fiscal 2013

  Standex Reports 9% Sales Growth in Second Quarter Fiscal 2013

  *Q2 GAAP Operating Income Up 13.2% and Non-GAAP Q2 Operating Income
    Increases 15.0%
  *Q2 GAAP EPS from Continuing Ops increases 8.9% to $0.86 and Q2 Non-GAAP
    EPS from Continuing Ops Grows 10.8% to $0.92
  *Net Debt Reduced by $6 Million in Quarter on Strong Cash Generation; Net
    Debt to Capital at 9.8%

Business Wire

SALEM, N.H. -- February 1, 2013

Standex International Corporation (NYSE:SXI) today reported financial results
for the second quarter ended December 31, 2012.

Second Quarter Fiscal 2013 Results from Continuing Operations

  *Net sales increased 8.9% to $168.6 million from $154.9 million in the
    second quarter of fiscal 2012. Sales growth consisted of 8.5% from the
    Company’s acquisition of Meder electronic and 0.5% organic growth offset
    by 0.1% of unfavorable foreign exchange.
  *Income from operations was $16.3 million compared with $14.4 million in
    the second quarter of fiscal 2012. Operating income for the second quarter
    of 2013 included, pre-tax, $1.0 million of restructuring charges and
    acquisition-related costs of $0.1 million. The second quarter of 2012
    included, pre-tax, $0.7 million of restructuring charges. Excluding these
    items from both periods, the Company reported non-GAAP second-quarter
    fiscal 2013 operating income of $17.3 million compared with $15.1 million
    in the year-earlier quarter, an increase of 15.0%.
  *Net income from continuing operations was $11.0 million, or $0.86 per
    diluted share, including, after tax, $0.6 million of restructuring
    charges. This compares with second quarter 2012 net income from continuing
    operations of $10.1 million, or $0.79 per diluted share, which included,
    after tax, $0.5 million of restructuring charges. Excluding the
    aforementioned items from both periods, non-GAAP net income from
    continuing operations increased 11.3% to $11.7 million, or $0.92 per
    diluted share, from $10.5 million, or $0.83 per diluted share, in the
    second quarter of fiscal 2012.
  *EBITDA (earnings before interest, income taxes, depreciation and
    amortization) was $20.4 million compared with $17.7 million in the second
    quarter of fiscal 2012. Excluding the previously mentioned items from both
    periods, EBITDA increased 16.5% to $21.4 million from $18.4 million in the
    second quarter of fiscal 2012.
  *Net working capital (defined as accounts receivable plus inventories less
    accounts payable) was $129.9 million at the end of the second quarter of
    2013, compared with $116.4 million a year earlier. Working capital turns
    were 5.2 for the second quarter of fiscal 2013, compared with 5.3 turns in
    the second quarter of fiscal 2012.
  *The Company’s net debt (defined as short-term debt plus long-term debt
    less cash) of $28.9 million compares with net debt of $35.0 million at
    September 30, 2012.

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

“We continued to demonstrate the success of our organic and acquisition growth
strategies in the second quarter,” said President and CEO Roger Fix. “We
reported 9% year-over-year sales growth in the quarter due primarily to the
performance of our Meder acquisition. Non-GAAP EPS from continuing operations
grew 10.8% to $0.92, and we are now at an EBITDA run rate excluding special
items of nearly $90 million. We also generated good cash flow, reduced our net
debt by $6 million, and lowered our net debt-to-capital ratio. Given the
macroeconomic challenges we experienced during the quarter in a number of our
end user markets, we performed well in the second quarter.”

Segment Review

Food Service Equipment Group  sales decreased 0.2% year-over-year, with
operating income increasing 0.2%.

“Continuing strength in sales to quick serve restaurant chains were
substantially offset by softness at drug retail stores and a seasonal pause in
demand from the dollar store segment during the quarter,” said Fix. “We
continue to expect full-year sales to dollar stores to be equal to or higher
than in fiscal 2012, and we believe this segment will be a very good long-term
opportunity for us.^1 To enhance our competitiveness in the retail drug,
dollar store and convenience store segments, we are value engineering our
refrigerated merchandising cabinet product line to reduce material expenses
while adding features, as well as realigning our manufacturing processes
utilizing lean manufacturing techniques to lower labor costs.”

“Demand further softened in the retail grocery segment in the UK as a result
of the macro-economic conditions there, while we experienced lower sales to
the US grocery store segment where customers are continuing to reduce capital
spending,” said Fix. “We have implemented staff reductions in this area given
the lower expectations for volume. At the same time, we made progress in our
effort to penetrate a greater number of major chains and dealers, both
domestically and internationally, much like we did successfully on the
refrigeration side of the business.”

“While our beverage dispensing pump business continues to be affected by the
weak economy in Europe, demand was strong at our custom merchandising
businesses,” said Fix.

Engraving Group  sales increased 2.3% year-over-year, with 1.5% growth in
operating income.

“Strength in demand for automotive program mold texturizing work in Europe and
China offset weakness in North America,” said Fix. “As we previously
discussed, we believe that Engraving mold texturizing sales for fiscal 2013
will be flat compared to the excellent sales performance we reported in fiscal
2012 but that fiscal 2014 will be a record year for the segment.^1 During the
quarter we continued to make progress on our emerging economy strategy, which
includes growing our infrastructure in China, Asia Pacific and South America.
We completed the move into a bigger and better equipped facility in Brazil, we
opened our new plant in Korea, we broke ground on a fourth facility in India
and we committed to a new, larger Mexican facility in a region northwest of
Mexico City that has become a growing center for automotive production.”

“At our roll, plate and machinery businesses, we continue to see early signs
of improvement driven by building product applications,” said Fix.

Engineering Technologies Group sales grew 0.1% year-over-year, while operating
income declined by 1.0%.

“The year-over-year comparison in the Engineering Technologies Group was made
difficult by the shipment in Q2 fiscal 2012 of a large, high-margin order to
the oil and gas market,” said Fix. “This was offset by the impact of $0.7
million in operating income resulting from a retrospective payment from a
customer in the space sector related to incremental costs recorded in cost of
sales in prior periods which were attributable to customer-supplied materials.
During the quarter we continued to see good quoting activity in the space
sector for both developmental and production work for NASA as well as
commercial space customers. We’re also seeing good long-term opportunities in
the land-based turbines market where we have been successful in broadening our
customer base. In the aviation market, we are generating significant interest
from customers seeking our capabilities for jet engine lipskins and a number
of other components internal to jet engines for commercial aviation.^1”

The Electronics Products Group  reported 122.5% year-over-year sales growth,
with operating income increasing 127.0%.

“The excellent top- and bottom-line performance by the Electronics Products
Group was driven by both the legacy electronics business as well as the Meder
acquisition,” said Fix. “At the legacy business, sales from new customer
programs for magnetics and sensors continue to grow and more than offset soft
reed switch sales in China and Asia Pacific. We have a robust pipeline for new
products and customer programs that we expect will contribute to revenue in
future quarters.^1”

“The Meder integration is proceeding on plan, and we have completed the first
round of training of engineers and sales people from both organizations about
the respective product offerings,” said Fix. “We’re now working with our
customers on the engineering test and evaluation process, and reactions have
been enthusiastic. In addition to sales synergies, we’re making progress in
the realization of cost synergies in two specific areas. We have identified
$0.5 million in material and procurement savings that will be implemented in
the next 12 months, and we will begin to implement facility rationalizations
in the second half of this fiscal year that will be completed early in fiscal
2014. These facility rationalizations should generate between $1.0 and $1.5
million of annualized cost savings.^1”

The Hydraulics Products Group reported a 5.2% year-over-year sales decline,
while operating income increased 23.3%.

“The North American market for dump trailer systems remained weak in the
second quarter, as did export sales to Mexico, Australia and South America,”
said Fix. “Sales declines were tempered by continued growing demand from
refuse handling applications as a result of our ongoing efforts to penetrate
this market. Geographically, sales from our China operation, which has been
instrumental in our ability to grow share in the refuse handling market,
contributed to the second-quarter profit improvement. Operating income grew
23.3% due to cost reduction and productivity improvement initiatives as well
as a greater mix of sales from China.”

Business Outlook

“We have performed well in the first two quarters of fiscal 2013 despite
softening in demand from several of our end user market segments. We plan to
continue to execute on our organic and acquisition growth strategies going
forward.^1 Each of our business units have a number of organic growth
initiatives that we have been executing for the past several years including
the introduction of new products and technologies, penetration of new end user
and geographic markets and development of specific customer solutions which
will continue to allow us to grow our top line through market share gains in
what we expect will be generally a slow growth end user market environment.^1
Following on the success of our Meder acquisition, we have a solid pipeline of
acquisition candidates and dry powder on our balance sheet. While there may be
short-term challenges in certain of our end markets, we are confident that we
have the right strategy to continue to grow sales, increase profits and
generate long-term shareholder value,^1” concluded Fix.

Conference Call Details

Standex will host a conference call for investors today, February 1, 2013 at
10:00 a.m. ET. On the call, Roger Fix, 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 (888)
286-8010 in the U.S. or (617) 801-6888 internationally; the passcode is
94784038. 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,
Korea, India and China. For additional information, visit the Company's
website at www.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, 2012, 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              Six Months Ended
                       December 31,                    December 31,
                   2012        2011        2012        2011    
Net sales              $ 168,629       $ 154,868       $ 352,015       $ 314,174
Cost of sales           112,339       104,598       236,480       211,158 
Gross profit             56,290          50,270          115,535         103,016
                                                                       
Selling,
general and              39,037          35,193          80,421          71,303
administrative
expenses
Restructuring           985           701           1,220         1,223   
costs
                                                                       
Income from             16,268        14,376        33,894        30,490  
operations
                                                                       
Interest                 575             428             1,226           900
expense
Other (income)          (166    )      (94     )      (130    )      (285    )
expense, net
Total                   409           334           1,096         615     
                                                                       
Income from
continuing
operations               15,859          14,042          32,798          29,875
before income
taxes
Provision for           4,833         3,965         9,847         7,979   
income taxes
Net income
from                     11,026          10,077          22,951          21,896
continuing
operations
                                                                       
Income (loss)
from
discontinued            (65     )      (14,193 )      (160    )      (14,054 )
operations,
net of tax
                                                                       
Net income             $ 10,961        ($4,116 )     $ 22,791       $ 7,842   
                                                                       
Basic earnings
per share:
Income from
continuing             $ 0.88          $ 0.80          $ 1.82          $ 1.75
operations
Loss from
discontinued            (0.01   )      (1.13   )      (0.01   )      (1.12   )
operations
Total                  $ 0.87          ($0.33  )     $ 1.81         $ 0.63    
                                                                       
Diluted
earnings per
share:
Income from
continuing             $ 0.86          $ 0.79          $ 1.79          $ 1.72
operations
Loss from
discontinued            0.00          (1.11   )      (0.01   )      (1.11   )
operations
Total                  $ 0.86          ($0.32  )     $ 1.78         $ 0.61    
                                                                       

Standex International Corporation                           
Statements of Consolidated Cash Flows
                                                   Six Months Ended
                                                   December 31,
                                               2012        2011    
Cash Flows from Operating Activities
Net income                                         $ 22,791        $ 7,842
Loss from discontinued operations                   160           14,054  
Income from continuing operations                    22,951          21,896
                                                                   
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization                        7,765           6,788
Stock-based compensation                             1,725           1,370
                                                                   
Contributions to defined benefit plans               (3,876  )       (642    )
Net changes in operating assets and                 (3,909  )      (20,400 )
liabilities
Net cash provided by operating activities            24,656          9,012
- continuing operations
Net cash (used in) operating activities -           (1,418  )      (2,456  )
discontinued operations
Net cash provided by operating activities           23,238        6,556   
Cash Flows from Investing Activities
Expenditures for property, plant and                 (9,723  )       (5,064  )
equipment
                                                                   
Expenditures for acquisitions, net of cash           (39,613 )       -
acquired
                                                                   
Other investing activities                          108           2,900   
Net cash (used in) investing activities              (49,228 )       (2,164  )
from continuing operations
                                                                   
Net cash provided by investing activities           -             1,619   
from discontinued operations
Net cash (used in) investing activities             (49,228 )      (545    )
Cash Flows from Financing Activities
Proceeds from borrowings                             74,000          78,500
Payments of debt                                     (62,723 )       (64,000 )
                                                                   
Borrowings on short-term facilities (net)            -               (1,800  )
Activity under share-based payment plans             135             168
Excess tax benefit from share-based                  2,011           581
payment activity
Cash dividends paid                                  (1,883  )       (1,627  )
Purchase of treasury stock                          (8,004  )      (3,831  )
Net cash provided by financing activities            3,536           7,991
from continuing operations
                                                                   
Net cash provided by financing activities           -             -       
from discontinued operations
Net cash provided by financing activities           3,536         7,991   
                                                                   
Effect of exchange rate changes on cash              831             (1,664  )
                                                                   
Net changes in cash and cash equivalents             (21,623 )       12,338
Cash and cash equivalents at beginning of           54,749        14,407  
year
Cash and cash equivalents at end of period         $ 33,126       $ 26,745  
                                                                   

Standex International Corporation
Condensed Consolidated Balance Sheets
                                                           
                                                 December 31,     June 30,
                                             2012         2012     
                                                                  
ASSETS
Current assets:
Cash and cash equivalents                        $ 33,126         $ 54,749
Accounts receivable, net                           90,433           99,432
Inventories, net                                   96,624           73,076
Prepaid expenses and other current                 9,059            6,255
assets
Income taxes receivable                            2,465            3,568
Deferred tax asset                                12,661         12,190   
Total current assets                              244,368        249,270  
                                                                  
Property, plant, and equipment, net                96,639           82,563
Goodwill                                           114,054          100,633
Intangible assets, net                             27,257           19,818
Deferred tax asset                                 4,764            6,618
Other non-current assets                          19,893         20,909   
Total non-current assets                          262,607        230,541  
                                                                  
Total assets                                     $ 506,975       $ 479,811  
                                                                  
LIABILITIES AND STOCKHOLDERS' EQUITY
                                                                  
Current liabilities:
Accounts payable                                   57,139           62,113
Accrued liabilities                                51,795           51,124
Income taxes payable                              2,644          3,548    
Total current liabilities                         111,578        116,785  
                                                                  
Long-term debt                                     62,073           50,000
Accrued pension and other non-current             67,497         70,119   
liabilities
Total non-current liabilities                     129,570        120,119  
                                                                  
Stockholders' equity:
Common stock                                       41,976           41,976
Additional paid-in capital                         35,546           34,928
Retained earnings                                  526,027          505,163
Accumulated other comprehensive loss               (69,200  )       (75,125  )
Treasury shares                                   (268,522 )      (264,035 )
Total stockholders' equity                        265,827        242,907  
                                                                  
Total liabilities and stockholders'              $ 506,975       $ 479,811  
equity
                                                                  

Standex International Corporation
Selected Segment Data
                                                          
                     Three Months Ended              Six Months Ended
                     December 31,                    December 31,
                      2012          2011          2012          2011    
Net Sales
Food Service         $ 95,816        $ 95,962        $ 205,139       $ 200,169
Equipment
Engraving              23,663          23,133          47,019          44,831
Engineering            18,027          18,012          33,757          32,650
Technologies
Electronics            24,894          11,188          52,733          22,878
Products
Hydraulics            6,229         6,573         13,367        13,646  
Products
Total                $ 168,629      $ 154,868      $ 352,015      $ 314,174 

Income from
operations
Food Service         $ 9,694         $ 9,678         $ 23,042        $ 22,084
Equipment
Engraving              4,476           4,411           9,028           8,288
Engineering            3,644           3,679           5,337           6,258
Technologies
Electronics            4,101           1,807           7,189           3,933
Products
Hydraulics             963             781             1,934           1,457
Products
Corporate             (5,625  )      (5,279  )      (11,416 )      (10,307 )
Total                $ 17,253       $ 15,077       $ 35,114       $ 31,713  
                                                                     

Standex International Corporation
Reconciliation of GAAP to Non-GAAP Financial Measures
                                                                                    
                        Three Months Ended                         Six Months Ended
                        December 31,                               December 31,
                                                      %                                          %
                         2012       2011                 2012       2011             
                                                      Change                                     Change
Adjusted income
from operations and
adjusted net income  
from continuing
operations:
Income from
operations, as          $ 16,268       $ 14,376       13.2   %     $ 33,894       $ 30,490       11.2   %
reported
Adjustments:
Restructuring             985            701                         1,220          1,223
charges
                                                                                                 
Acquisition-related      84           -                        1,549        -           
costs
Adjusted income         $ 17,337      $ 15,077      15.0   %     $ 36,663      $ 31,713      15.6   %
from operations
                                                                                                 
Interest and other        (409   )       (334   )                    (1,096 )       (615   )
expenses
                                                                                                 
Provision for             (4,833 )       (3,965 )                    (9,847 )       (7,979 )
income taxes
                                                                                                 
Discrete tax items        -              -                           -              (530   )
                                                                                                 
Tax impact of above      (365   )      (242   )                  (883   )      (422   )     
adjustments
Net income from
continuing              $ 11,730      $ 10,536      11.3   %     $ 24,837      $ 22,167      12.0   %
operations, as
adjusted
                                                                                                 
EBITDA and Adjusted  
EBITDA:
Income from
continuing
operations before       $ 15,859       $ 14,042                    $ 32,798       $ 29,875
income taxes, as
reported
Add back:
                                                                                                 
Interest expense          575            428                         1,226          900
                                                                                                 
Depreciation and         3,936        3,233                    7,765        6,788       
amortization
EBITDA                  $ 20,370      $ 17,703      15.1   %     $ 41,789      $ 37,563      11.3   %
Adjustments:
                                                                                                 
Restructuring             985            701                         1,220          1,223
charges
                                                                                                 
Acquisition-related      84           -                        1,549        -           
costs
Adjusted EBITDA         $ 21,439      $ 18,404      16.5   %     $ 44,558      $ 38,786      14.9   %
                                                                                                 
Free operating cash  
flow:
Net cash provided
by operating
activities -            $ 15,087       $ 11,688                    $ 24,656       $ 9,012
continuing
operations, as
reported
Add back: Voluntary
pension                   -              -                           3,250          -
contribution
                                                                                                 
Less: Capital            (4,818 )      (2,806 )                   (9,723 )      (5,064 )
expenditures
Free operating cash     $ 10,269       $ 8,882                     $ 18,183       $ 3,948
flow
Net income from
continuing               11,026       10,077                    22,951       21,896 
operations
Conversion of free       93.1   %      88.1   %                   79.2   %      18.0   %
operating cash flow
                                                                                                 

Standex International Corporation
Reconciliation of GAAP to Non-GAAP Financial Measures
                                                                       
                        Three Months                       Six Months Ended
                        Ended
                        December 31,                       December 31,
                                              %                                     %
                         2012    2011              2012    2011            
                                              Change                                Change
Adjusted earnings
per share from
continuing
operations
                                                                                    
Diluted earnings
per share from
continuing              $ 0.86     $ 0.79     8.9    %     $ 1.79     $ 1.72        4.1    %
operations, as
reported
                                                                                    
Adjustments:
Restructuring             0.05       0.04                    0.06       0.06
charges
                                                                                    
Acquisition-related       0.01       -                       0.08       -
costs
                                                                                    
Discrete tax items       -         -                     -         (0.04 )     
Diluted earnings
per share from
continuing              $ 0.92     $ 0.83     10.8   %     $ 1.93     $ 1.74       10.9   %
operations, as
adjusted
                                                                                    

Contact:

Standex International Corporation
Thomas DeByle, 603-893-9701
CFO
InvestorRelations@Standex.com
 
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