Standex Reports 10.2% Sales Growth in Third Quarter Fiscal 2013 *Organic Sales up 1.0% and Growth from Acquisitions up 9.3% *Reports $0.76 in EPS from Continuing Ops, and $0.74 in Non-GAAP EPS from Continuing Ops Business Wire SALEM, N.H. -- April 30, 2013 Standex International Corporation (NYSE:SXI) today reported financial results for the third quarter ended March 31, 2013. Third Quarter Fiscal 2013 Results from Continuing Operations *Net sales increased 10.2% to $166.0 million from $150.7 million in the third quarter of fiscal 2012. *Income from operations was $11.7 million compared with $15.6 million in the third quarter of fiscal 2012. Operating income for the third quarter of 2013 included, pre-tax, $1.1 million of restructuring charges, legal settlement expense of $2.8 million related to our Food Service Equipment Group, and a $2.3 million benefit relating to the discontinuation of a retiree life insurance benefit. The third quarter of 2012 included, pre-tax, $0.2 million of restructuring charges and a $4.8 million gain on the sale of real estate. Excluding these items from both periods, the Company reported non-GAAP third-quarter fiscal 2013 operating income of $13.3 million compared with $11.0 million in the year-earlier quarter, an increase of 21.0%. *Net income from continuing operations was $9.7 million, or $0.76 per diluted share, including, after tax, $0.8 million of restructuring charges, $2.0 million in legal settlement expenses, a $1.6 million benefit relating to the discontinuation of a retiree life insurance benefit, and $1.4 million in discrete tax benefits. This compares with third quarter 2012 net income from continuing operations of $11.5 million, or $0.90 per diluted share, which included, after tax, $0.2 million of restructuring charges, a $3.3 million gain on the sale of real estate and $0.3 million in discrete tax benefits. Excluding the aforementioned items from both periods, non-GAAP net income from continuing operations increased 17% to $9.4 million, or $0.74 per diluted share, from $8.1 million, or $0.63 per diluted share, in the third quarter of fiscal 2012. *EBITDA (earnings before interest, income taxes, depreciation and amortization) was $15.4 million compared with $19.0 million in the third quarter of fiscal 2012. Excluding the previously mentioned items from both periods, EBITDA increased 17.6% to $17.0 million from $14.4 million in the third quarter of fiscal 2012. *Net working capital (defined as accounts receivable plus inventories less accounts payable) was $138.3 million at the end of the third quarter of 2013, compared with $114.8 million a year earlier. Working capital turns were 4.8 for the third quarter of fiscal 2013, compared with 5.3 turns in the third quarter of fiscal 2012. *The Company’s net debt (defined as short-term debt plus long-term debt less cash) of $40.7 million compares with net debt of $28.9 million at December 31, 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 grew sales and operating income in the quarter despite softening demand in certain end user segments and the fact that the current quarter had approximately 3% fewer shipping days as compared to the prior year quarter,” said President and CEO Roger Fix. “We achieved sales growth of 10.2%, which included 1.0% of organic sales growth, 9.3% from acquisitions and a slight negative foreign exchange effect. Revenue was affected by push-outs on the refrigeration side of our food service segment as a result of the prolonged winter weather. In addition, customer demand continued to be soft on the hot-side of that business. We remain enthusiastic about our Meder acquisition in the Electronics segment, which contributed strongly to both sales and profitability. Non-GAAP income from continuing operations increased by 21% year-over-year, demonstrating the continuing strength of our operating model. Our Electronics and Engineering Technologies segments reported double-digit increases in operating income.” Segment Review Food Service Equipment Group sales decreased 1.5% year-over-year, with operating income down 17.6%. “We experienced softer demand on the refrigeration side of the business during the quarter as a result of the prolonged winter weather that caused customers to delay new store openings and remodeling,” said Fix. “In addition, general consumer uncertainty caused customers on the hot side of the business to delay equipment purchases. Operating income was down due to the deleveraging effect of the lower volume, warranty expenses at our beverage dispensing business, a higher mix of lower-margin customers and significantly higher marketing expenses than in the year-ago quarter due to our participation in the biannual North American Association of Food Equipment Manufacturers exhibition.” “We continue to be successful in expanding our customer base in the dollar store segment, and in the third quarter we received a commitment from a large dollar store chain for $5 to $8 million of incremental annual sales during the next 12 months,” said Fix. “We also had key customer wins with our rack refrigeration and value line offerings during the quarter. We re-launched a new value-engineered refrigerated merchandising cabinet product line late in the third quarter with new features and a lower price point. This product line had been primarily used in retail drug stores, but we expect our customer base for this line will now expand to the dollar store segment and the dealer channel.^1 We believe these actions will allow us to take market share and improve margins.^1” “On the Cooking Solutions side of the business, demand continued to be soft in the retail grocery segment in the UK and US,” added Fix. “Overall, replacement business on the cooking side was soft due to sluggish consumer sales at our customers. During the quarter we opened a new Culinary Development Center in Texas that is being used for customer testing, demonstration, menu development and training. We expect this will have a positive impact on our sales process.^1 We have been very pleased with the response to the Center by our customers.” “Our customer fabrication businesses reported double-digit increases in sales and bookings,” said Fix. “We are capitalizing on new products that have been introduced in the past few years, particularly in the convenience store segment. We also have done a good job in expanding new dealer buying group channels.” Engraving Group sales decreased 0.9% year-over-year, with operating income down 28.6%. “Strong mold texturizing sales in Europe, China and Australia was offset by continued softness in North America,” said Fix. “A greater mix of lower-margin non-automotive sales in North America had a negative effect on operating income in the quarter. Based on the schedule for major platform launches, we expect a record year in our North America mold texturizing business in fiscal 2014 with some softening in Europe.^1” “We experienced significant disruption and incremental expenses associated with the relocation of our facility in Brazil, where we see good future opportunities. We believe that the bulk of this is behind us, but some disruption to shipments and extra relocation costs will continue into Q4.^1 We’re on track to open our larger facility in Queretaro, Mexico in the first quarter of fiscal 2014. Queretaro has become a growing center for automotive production and a number of OEMs, tool makers and tier 1 auto interior suppliers are opening plants in this region. Our new Korean facility is ramping up production of molds as planned, and is being well received by customers. We plan to open our fourth facility in India by the end of the fiscal year as planned.^1” Engineering Technologies Group sales grew 4.4% year-over-year, while operating income increased by 10.6%. “During the quarter growth in the space sector and the land-based turbine market offset continued softness in oil and gas,” said Fix. “In addition to strong sales to our large land-based turbine customer, we have been successful in our efforts to diversify our customer base in this market and are seeing increased demand from other large gas turbine customers. We expect strong sales from this market through the first quarter of fiscal 2014, but we have very limited visibility beyond that.^1 We expect that the oil and gas market, which is highly project-driven, will remain soft for the remainder of the calendar year.^1 In the aviation market we’re making good progress in our efforts to capitalize on demand for wing-based jet engine components and have received several development contracts. We also expect to capitalize on good long-term opportunities in the market for jet engine lipskins.^1” The Electronics Products Group reported 132.1% year-over-year sales growth, with operating income increasing 114.7%. “We continue to be enthusiastic about the contributions from our Meder acquisition,” said Fix. “During the quarter we began to see the initial sales resulting from cross-selling opportunities and expect solid sales synergies to continue to develop from our combined product portfolio over the next fiscal year.^1 We also expect that our cost synergies will be significantly higher than we first anticipated, with facility rationalization savings to be at the high end of our initial $1 to $1.5 million range and procurement savings now expected to be to be about $2.5 million for total cost synergies of about $4 million.^1 At the legacy business, we continue to be enthusiastic about our robust pipeline of new products and customer programs that we expect will contribute to revenue in future quarters.^1” The Hydraulics Products Group reported a 2.3% year-over-year sales decline, while operating income decreased 6.9%. “During the quarter we saw improvement in the North American dump trailer systems market as a result of the housing rebound and oil and gas market demand in certain geographies,” said Fix. “We’re also seeing very good growth in the roll-off waste container market and we are expanding capacity at our Tianjin, China facility as a result. We also see excellent new growth opportunities in the garbage truck refuse market, which takes us into the residential area for the first time. We already have received a commitment from one customer to supply all of their aftermarket parts with our new products for this market. Looking at the international business, we continued to experience weak demand from Mexico, Australia and South America due to economic conditions.” Business Outlook “We are cautiously optimistic as we enter the final quarter of the fiscal year,^1” said Fix. “Our top- and bottom-line results for the first three quarters of fiscal 2013 demonstrate the success of our organic and acquisition growth strategy and the effectiveness of our operating model. We continue to introduce new products and technologies across each of our operating segments in order to penetrate new end user and geographic markets. The accretion thus far and the enthusiastic customer response to our Meder acquisition are also proving the success of our acquisition strategy. Going forward, we are confident that we have the right strategy to continue to grow sales, increase profitability and generate long-term shareholder value.^1” Conference Call Details Standex will host a conference call for investors today, April 30, 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 28170872. 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 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 Nine Months Ended March 31, March 31, 2013 2012 2013 2012 Net sales $ 165,970 $ 150,666 $ 517,985 $ 464,840 Cost of sales 113,419 102,499 349,899 313,657 Gross profit 52,551 48,167 168,086 151,183 Selling, general and 39,754 37,149 120,175 108,452 administrative expenses Gain on sale - (4,776 ) (4,776 ) of real estate Restructuring 1,075 229 2,295 1,452 costs Income from 11,722 15,565 45,616 46,055 operations Interest 643 646 1,869 1,546 expense Other (income) 209 (7 ) 79 (292 ) expense, net Total 852 639 1,948 1,254 Income from continuing operations 10,870 14,926 43,668 44,801 before income taxes Provision for 1,199 3,401 11,046 11,380 income taxes Net income from 9,671 11,525 32,622 33,421 continuing operations Income (loss) from discontinued (110 ) (2,405 ) (270 ) (16,459 ) operations, net of tax Net income $ 9,561 $ 9,120 $ 32,352 $ 16,962 Basic earnings per share: Income from continuing $ 0.77 $ 0.92 $ 2.60 $ 2.67 operations Loss from discontinued (0.01 ) (0.19 ) (0.02 ) (1.31 ) operations Total $ 0.76 $ 0.73 $ 2.58 $ 1.36 Diluted earnings per share: Income from continuing $ 0.76 $ 0.90 $ 2.55 $ 2.62 operations Loss from discontinued (0.01 ) (0.19 ) (0.02 ) (1.29 ) operations Total $ 0.75 $ 0.71 $ 2.53 $ 1.33 Standex International Corporation Condensed Consolidated Balance Sheets March 31, June 30, 2013 2012 ASSETS Current assets: Cash and cash equivalents $ 30,209 $ 54,749 Accounts receivable, net 99,806 99,432 Inventories, net 94,652 73,076 Prepaid expenses and other current assets 8,354 6,255 Income taxes receivable 4,760 3,568 Deferred tax asset 12,905 12,190 Total current assets 250,686 249,270 Property, plant, and equipment, net 96,825 82,563 Goodwill 112,435 100,633 Intangible assets, net 26,320 19,818 Deferred tax asset 3,351 6,618 Other non-current assets 18,916 20,909 Total non-current assets 257,847 230,541 Total assets $ 508,533 $ 479,811 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Short-term debt $ 326 $ -- Accounts payable 56,139 62,113 Accrued liabilities 42,466 51,124 Income taxes payable 1,573 3,548 Total current liabilities 100,504 116,785 Long-term debt 70,570 50,000 Accrued pension and other non-current 64,416 70,119 liabilities Total non-current liabilities 134,986 120,119 Stockholders' equity: Common stock 41,976 41,976 Additional paid-in capital 36,474 34,928 Retained earnings 534,562 505,163 Accumulated other comprehensive loss (71,234 ) (75,125 ) Treasury shares (268,735 ) (264,035 ) Total stockholders' equity 273,043 242,907 Total liabilities and stockholders' equity $ 508,533 $ 479,811 Standex International Corporation and Subsidiaries Statements of Consolidated Cash Flows Nine Months Ended March 31, 2013 2012 Cash Flows from Operating Activities Net income $ 32,352 $ 16,962 Income (loss) from discontinued operations 270 16,459 Income from continuing operations 32,622 33,421 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 11,626 10,146 Stock-based compensation 2,808 2,818 Gain from sale of real estate 0 (4,776 ) Contributions to defined benefit plans (4,161 ) (957 ) Net changes in operating assets and (23,455 ) (17,523 ) liabilities Net cash provided by operating activities - 19,440 23,129 continuing operations Net cash (used in) operating activities - (3,006 ) (2,510 ) discontinued operations Net cash provided by operating activities 16,434 20,619 Cash Flows from Investing Activities Expenditures for property, plant and (12,389 ) (8,213 ) equipment Expenditures for acquisitions, net of cash (39,613 ) - acquired Proceeds from sale of real estate and 24 5,163 equipment Other investing activities (435 ) (238 ) Net cash (used in) investing activities (52,413 ) (3,288 ) from continuing operations Net cash provided by investing activities - 14,710 from discontinued operations Net cash provided by (used in) investing (52,413 ) 11,422 activities Cash Flows from Financing Activities Proceeds from borrowings 100,500 195,500 Payments of debt (80,723 ) (192,000 ) Borrowings on short-term facilities (net) 327 (1,800 ) Activity under share-based payment plans 206 247 Excess tax benefit from share-based payment 1,990 665 activity Cash dividends paid (2,887 ) (2,506 ) Purchase of treasury stock (8,275 ) (4,429 ) Other financing activities - (8,969 ) Net cash provided by (used in) financing 11,138 (13,292 ) activities from continuing operations Net cash provided by financing activities - - from discontinued operations Net cash provided by (used in) financing 11,138 (13,292 ) activities Effect of exchange rate changes on cash 301 (991 ) Net changes in cash and cash equivalents (24,540 ) 17,758 Cash and cash equivalents at beginning of 54,749 14,407 year Cash and cash equivalents at end of period $ 30,209 $ 32,165 Standex International Corporation Selected Segment Data Three Months Ended Nine Months Ended March 31, March 31, 2013 2012 2013 2012 Net Sales Food Service $ 86,606 $ 87,906 $ 291,747 $ 288,064 Equipment Engraving 23,820 24,028 70,839 68,849 Engineering 19,584 18,765 53,341 51,415 Technologies Electronics 27,785 11,973 80,516 34,851 Products Hydraulics 8,175 7,994 21,542 21,661 Products Total $ 165,970 $ 150,666 $ 517,985 $ 464,840 Income from operations Food Service $ 5,287 $ 6,418 $ 28,329 $ 28,502 Equipment Engraving 3,365 4,712 12,393 13,000 Engineering 3,411 3,083 8,748 9,341 Technologies Electronics 4,780 2,226 11,969 6,159 Products Hydraulics 1,437 1,544 3,371 3,001 Products Restructuring (1,075 ) (229 ) (2,295 ) (1,452 ) Building Gain 0 4,776 0 4,776 Corporate (5,483 ) (6,965 ) (16,899 ) (17,272 ) Total $ 11,722 $ 15,565 $ 45,616 $ 46,055 Standex International Corporation Reconciliation of GAAP to Non-GAAP Financial Measures Three Months Ended Nine Months Ended March 31, March 31, 2013 2012 %Change 2013 2012 %Change Adjusted income from operations and adjusted net income from continuing operations: Income from operations, as $ 11,722 $ 15,565 -24.7 % $ 45,616 $ 46,055 -1.0 % reported Adjustments: Restructuring 1,075 229 2,295 1,452 charges Termination of Retiree Life (2,278 ) - (2,278 ) - Insurance Legal Settlement 2,809 - 2,809 - Acquisition-related - - 1,549 - costs Gain on sale of - (4,776 ) - (4,776 ) real estate Adjusted income from $ 13,328 $ 11,018 21.0 % $ 49,991 $ 42,731 17.0 % operations Interest and other (852 ) (639 ) (1,948 ) (1,254 ) expenses Provision for income (1,199 ) (3,401 ) (11,046 ) (11,380 ) taxes Discrete tax items (1,366 ) (315 ) (1,366 ) (845 ) Tax impact of above (470 ) 1,396 (1,281 ) 974 adjustments Net income from continuing $ 9,441 $ 8,059 17.1 % $ 34,350 $ 30,226 13.6 % operations, as adjusted EBITDA and Adjusted EBITDA: Income from continuing operations $ 10,870 $ 14,926 $ 43,668 $ 44,801 before income taxes, as reported Add back: Interest expense 643 646 1,869 1,546 Depreciation and 3,861 3,415 11,626 10,146 amortization EBITDA $ 15,374 $ 18,987 -19.0 % $ 57,163 $ 56,493 1.2 % Adjustments: Restructuring 1,075 229 2,295 1,452 charges Termination of Retiree Life (2,278 ) - (2,278 ) - Insurance Legal Settlement 2,809 - 2,809 - Acquisition-related - - 1,549 - costs Gain on sale of - (4,776 ) - (4,776 ) real estate Adjusted EBITDA $ 16,980 $ 14,440 17.6 % $ 61,538 $ 53,169 15.7 % Free operating cash flow: Net cash provided by operating activities - continuing $ (5,216 ) $ 14,117 $ 19,440 $ 23,129 operations, as reported Add back: Voluntary - - 3,250 - pension contribution Less: Capital (2,666 ) (3,149 ) (12,389 ) (8,213 ) expenditures Free operating cash $ (7,882 ) $ 10,968 $ 10,301 $ 14,916 flow Net income from 9,671 11,525 32,622 33,421 continuing operations Conversion of free NM 95.2 % 31.6 % 44.6 % operating cash flow Standex International Corporation Reconciliation of GAAP to Non-GAAP Financial Measures Three Months Ended Nine Months Ended Adjusted earnings per March 31, March 31, share from continuing operations 2013 2012 %Change 2013 2012 %Change Diluted earnings per share from continuing $ 0.76 $ 0.90 -15.6 % $ 2.55 $ 2.62 -2.7 % operations, as reported Adjustments: Restructuring 0.06 0.01 0.13 0.07 charges Termination of Retiree Life (0.13 ) - (0.13 ) - Insurance Legal Settlement 0.16 - 0.16 - Acquisition-related - - 0.08 - costs Gain on sale of - (0.26 ) - (0.26 ) real estate Discrete tax items (0.11 ) (0.02 ) (0.11 ) (0.07 ) Diluted earnings per share from continuing $ 0.74 $ 0.63 17.5 % $ 2.68 $ 2.36 13.6 % operations, as adjusted Contact: Standex International Corporation Thomas DeByle, CFO, 603-893-9701 InvestorRelations@Standex.com
Standex Reports 10.2% Sales Growth in Third Quarter Fiscal 2013
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