Standex Reports 10.2% Sales Growth in Third Quarter Fiscal 2013

  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
 
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