Standex Reports First-Quarter Fiscal 2014 Financial Results

  Standex Reports First-Quarter Fiscal 2014 Financial Results

  *Reports $0.79 in EPS from Continuing Ops in First Quarter, and $1.02 in
    Non-GAAP EPS from Continuing Ops

Business Wire

SALEM, N.H. -- November 7, 2013

Standex International Corporation (NYSE:SXI) today reported financial results
for the first quarter of fiscal year 2014 ended September 30, 2013.

First Quarter Fiscal 2014 Results from Continuing Operations

  *Net sales were essentially flat as compared to the first quarter of fiscal
    2013 at $183.6 million.
  *Income from operations was $13.9 million compared with $17.6 million in
    the first quarter of fiscal 2013. Operating income for the first quarter
    of fiscal 2014 included $3.8 million in pre-tax restructuring charges and
    $0.1 million of non-recurring management transition expense. The first
    quarter of fiscal 2013 included, pre-tax, $0.2 million of restructuring
    charges and $1.5 million of acquisition-related costs. Excluding these
    items from both periods, the Company reported non-GAAP first-quarter
    fiscal 2014 operating income of $17.8 million, compared with $19.3 million
    in the year-earlier quarter.
  *Net income from continuing operations was $10.1 million, or $0.79 per
    diluted share, including, after tax, $2.7 million in restructuring
    charges, $0.1 million of non-recurring management transition expense, and
    $0.2 million of non-recurring tax benefits. This compares with
    first-quarter 2013 net income from continuing operations of $11.9 million,
    or $0.93 per diluted share, which included, after tax, $0.2 million of
    restructuring charges and $1 million in acquisition-related costs.
    Excluding the aforementioned items from both periods, non-GAAP net income
    from continuing operations was $13.1 million, or $1.02 per diluted share,
    compared with $13.1 million, or $1.02 per diluted share, in the first
    quarter of fiscal 2013.
  *EBITDA (earnings before interest, income taxes, depreciation and
    amortization) was $18.1 million, compared with $21.4 million in the first
    quarter of fiscal 2013. Excluding the previously mentioned items from both
    periods, EBITDA for the first quarter of fiscal 2014 was $22.1 million,
    compared with $23.1 million in the year-earlier quarter.
  *Net working capital (defined as accounts receivable plus inventories less
    accounts payable) was $132.5 million at the end of the first quarter of
    fiscal 2014, compared with $131.2 million a year earlier. Working capital
    turns were 5.5 for the first quarter of fiscal 2014, compared with 5.6
    turns for the year-earlier quarter.
  *The Company closed the quarter with net debt of $4.0 million, compared
    with net cash of $1.0 million at June 30, 2013.

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

“Standex’s sales for the first quarter were flat and margins were lower,
year-over-year, due to disappointing performance in our Food Service
business,” said President and CEO Roger Fix. “At the same time, our strategy
for the overall business is working well, and our other four businesses
delivered solid first-quarter growth on both the top and bottom lines. The
decline in profitability this quarter reflected some items unique to the
quarter in our Food Service Equipment Group that we have substantially put
behind us. Food service market conditions remain soft; therefore we are
continuing to take costs out of the business. We also are introducing new
products that position us to be more successful in expanding our addressable
market in the near term. As a result, we are making progress in driving both
growth and profitability improvement not only in Food Service but across all
of our businesses.”

Segment Review

Food Service Equipment Group  sales decreased 3.6% year-over-year, with
operating income declining 34.1%.

“Our lower sales in Food Service reflected soft demand in several large
chains, including quick serve restaurants, drug stores and convenience stores,
as well as a difficult comparison with the first quarter of fiscal 2013, when
we had a number of large product rollouts,” said Fix. “The decrease in
profitability was due to volume deleveraging of approximately $1 million from
lower overall group revenues, as well as operational issues specific to the
custom products business of $3.6 million. The issues at the custom products
business revolved around unfavorable sales mix, machine downtime and an
inventory write-down. We believe that the sources of the operational issues at
the custom products business were limited to the first quarter and have been
rectified.^1”

“We are making good progress on our longer-term margin improvement initiatives
in Food Service,” said Fix. “The consolidation of our Cheyenne, Wyoming,
Cooking Solutions facility is moving ahead on schedule. At the same time, our
work on the new finished goods distribution center for Cooking Solutions in
Dallas also remains on track. The Cheyenne consolidation is on track to be
complete by fiscal year end. We expect to realize $4 million per year in
annual savings and to benefit from about 75% of the savings rate in the first
half of 2015 and from the full annualized run rate in the second half of that
year.^1 The inventory and operational issues in our custom fabrication
business have been largely resolved and as a result we expect margin
improvement in Food Service through the rest of fiscal 2014.^1 In addition,
we’re making good progress on our strategy to drive revenue growth on both the
refrigeration and cooking sides of the business by rolling out a number of
exciting new products.”

Engraving Group  sales increased 7.2% year-over-year, and operating income
grew 4.9%.

“Engraving reported improved top-line performance year-over-year for the first
time since the second quarter of fiscal 2013, driven by double-digit growth in
mold texturizing sales on a global basis,” said Fix. “We did experience
softness in our roll, plate and machinery businesses. Looking forward, we
believe that our mold texturizing business is positioned for continued growth
through the rest of fiscal 2014, not only in North America but in Europe and
China as well.^1 In particular we saw the expected improvement in the North
America mold texturizing bookings and backlog through the quarter.”

Engineering Technologies Group sales increased 9.8% year-over-year, and
operating income grew 23%.

“Our sales growth in Engineering Technologies this quarter was driven by
strong product demand in all of our businesses other than the space flight
sector, where shipments can vary significantly from quarter to quarter,” Fix
said. “The operating income increase reflected stronger shipments and the
results of cost reductions and improved productivity. We had a solid quarter
in the land-based turbine business, primarily due to increased sales to one of
our large OEM customers. This was also a good quarter in aviation, where
shipments of our single-piece lipskins for engine nacelles were up from the
first quarter last year. Sales to the oil and gas market also were up
substantially on a year-over-year basis in the first quarter, reflecting the
project-driven nature of this part of the business, which is largely driven by
the timing and funding of large offshore oil and gas production floating
platforms.”

Electronics Products Group sales were up 1.1% year-over-year, with operating
income increasing 66.4%. Operating income in the first quarter last year
included approximately $1.5 million of purchase accounting. Excluding this
amount, first quarter fiscal 2014 Electronics Products Group operating income
was up 13%.

“Our Electronics sales for the first quarter were negatively affected by
softness in Europe,” said Fix. “We are enthusiastic about a significant number
of customer-specific new product platforms that will be launching beginning in
the second quarter and continuing through the rest of fiscal 2014. These new
product launches are for magnetic devices in the white goods, appliance end
user markets and sensors for automotive applications in both the U.S. and in
Europe. We are also pleased that we are beginning to see good traction on new
product programs for sales into the domestic Chinese market. This is the
result of previous investments we have made in adding sales and engineering
resources in China to accelerate sales growth in this region. During the first
quarter we began to see cost savings resulting from our fourth-quarter
consolidation of the Standex Electronics facility in Tianjin, China, and the
Meder Electronic sales office in Hong Kong into the Meder manufacturing
facility located in Shanghai. We continue to expect to see the savings from
facility consolidations as well as purchasing savings ramp up to approximately
a $4 million annual run rate by the end of this fiscal year.^1”

Hydraulics Products Group reported a 9.2% year-over-year sales increase, while
operating income increased 20.9%.

“We are continuing to see good success as we work to penetrate the roll-off
container truck refuse market,” Fix said. “Although growth in roll-off
shipments continued to be offset by softness in our traditional North American
dump truck and dump trailer business, during the first quarter we began to see
modest signs of improvement in that business as well. We completed the
capacity expansion at our Tianjin, China facility during the first quarter as
planned. This new capacity enables us to continue expanding our Hydraulics
business with a lower cost structure. We already have a solid backlog in place
for the China operation, which bodes well for sales in that business as fiscal
2014 progresses. At the same time, we are continuing to promote new rod
cylinder and telescopic cylinder products manufactured in Tianjin for sale
into our global end user markets.”

Business Outlook

“We are working to deliver meaningful bottom-line improvement by enhancing our
operational performance, margins and working capital management in Food
Service and across the enterprise,” said Fix. “We are working to drive organic
revenue growth at the same time, by rolling out new products, as well as by
expanding our end market coverage and geographic footprint,” said Fix. “Our
strong balance sheet positions us to continue to pursue a strategy for
acquisition-driven growth as well. Highlighted by the Meder acquisition, we
were successful in executing on this strategy in fiscal 2013, and we are
encouraged by the status of our acquisition pipeline as we begin fiscal 2014.
Despite continuing end-market challenges, we believe that Standex is
well-positioned to leverage future sales growth into stronger
profitability.^1”

Conference Call Details

Standex will host a conference call for investors today, November 7, 2013 at
9:00 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 (800)
585-8367 in the U.S. or (404) 537-3406 internationally; the passcode is
68124624. 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, 2013, 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
                                                         September 30,
                                                       2013      2012
Net sales                                                $183,573   $183,386
Cost of sales                                            124,457    124,141
Gross profit                                             59,116     59,245
                                                                    
Selling, general and administrative expenses             41,425     41,384
Restructuring costs                                      3,806      235
                                                                    
Income from operations                                   13,885     17,626
                                                                    
Interest expense                                         560        651
Other (income) expense, net                              (454)      36
Total                                                    106        687
                                                                    
Income from continuing operations before income taxes    13,779     16,939
Provision for income taxes                               3,666      5,014
Net income from continuing operations                    10,113     11,925
                                                                    
Income (loss) from discontinued operations, net of tax   (1,031)    (95)
                                                                    
Net income                                               $9,082     $11,830
                                                                    
Basic earnings per share:
Income from continuing operations                        $0.80      $0.95
Income (loss) from discontinued operations               (0.08)     (0.01)
Total                                                    $0.72      $0.94
                                                                    
Diluted earnings per share:
Income from continuing operations                        $0.79      $0.93
Income (loss) from discontinued operations               (0.08)     (0.01)
Total                                                    $0.71      $0.92


Standex International Corporation
Condensed Consolidated Balance Sheets
                                                                 
                                                    September 30,   June 30,
                                                  2013           2013
                                                                    
ASSETS
Current assets:
Cash and cash equivalents                           $46,055         $51,064
Accounts receivable, net                            101,938         102,268
Inventories                                         89,840          84,956
Prepaid expenses and other current assets           9,103           7,776
Income taxes receivable                             1,420           -
Deferred tax asset                                  12,378          12,237
Total current assets                                260,734         258,301
                                                                    
Property, plant, and equipment, net                 94,369          95,020
Goodwill                                            113,499         111,905
Intangible assets, net                              26,264          25,837
Other non-current assets                            20,628          19,510
Total non-current assets                            254,760         252,272
                                                                    
Total assets                                        $515,494        $510,573
                                                                    
LIABILITIES AND STOCKHOLDERS' EQUITY
                                                                    
Current liabilities:
Accounts payable                                    $59,246         $69,854
Accrued expenses                                    50,844          46,981
Income taxes payable                                3,603           1,638
Total current liabilities                           113,693         118,473
                                                                    
Long-term debt                                      50,067          50,072
Accrued pension and other non-current liabilities   47,478          51,040
Total non-current liabilities                       97,545          101,112
                                                                    
Stockholders' equity:
Common stock                                        41,976          41,976
Additional paid-in capital                          37,732          37,199
Retained earnings                                   554,087         546,031
Accumulated other comprehensive loss                (60,116)        (65,280)
Treasury shares                                     (269,423)       (268,938)
Total stockholders' equity                          304,256         290,988
                                                                    
Total liabilities and stockholders' equity          $515,494        $510,573


Standex International Corporation and Subsidiaries
Statements of Consolidated Cash Flows
                                                            
                                              Three Months Ended September 30,
                                          2013                2012
Cash Flows from Operating Activities
Net income                                    $9,082                 $11,830
Income (loss) from discontinued               (1,031)                (95)
operations
Income from continuing operations             10,113                 11,925
                                                                     
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation and amortization                 3,770                  3,830
Stock-based compensation                      849                    803
Non-cash portion of restructuring             3,294                  -
charge
Contributions to defined benefit plans        (358)                  (3,564)
Net changes in operating assets and           (16,416)               (3,485)
liabilities
Net cash provided by operating                1,252                  9,509
activities - continuing operations
Net cash (used in) operating activities       (309)                  (1,241)
- discontinued operations
Net cash provided by operating                943                    8,268
activities
Cash Flows from Investing Activities
Expenditures for property, plant and          (4,250)                (4,905)
equipment
Expenditures for acquisitions, net of         -                      (38,535)
cash acquired
Other investing activities                    10                     -
Net cash provided by (used in)                (4,240)                (43,440)
investing activities
Cash Flows from Financing Activities
Proceeds from borrowings                      17,700                 56,000
Payments of debt                              (17,700)               (40,000)
Activity under share-based payment            72                     68
plans
Excess tax benefit from share-based           1,470                  1,694
payment activity
Cash dividends paid                           (1,004)                (876)
Purchase of treasury stock                    (3,045)                (5,372)
Net cash provided by (used in)                (2,507)                11,514
financing activities
                                                                     
Effect of exchange rate changes on cash       795                    713
                                                                     
Net changes in cash and cash                  (5,009)                (22,945)
equivalents
Cash and cash equivalents at beginning        51,064                 54,749
of year
Cash and cash equivalents at end of           $46,055                $31,804
period


Standex International Corporation
Selected Segment Data
                                      
                           Three Months Ended
                           September 30,
                           2013         2012      
Net Sales
Food Service Equipment     $ 105,344     $ 109,323
Engraving                    25,027        23,356
Engineering Technologies     17,265        15,730
Electronics Products         28,144        27,839
Hydraulics Products         7,793       7,138   
Total                      $ 183,573    $ 183,386 
                                         
Income from operations
Food Service Equipment     $ 8,790       $ 13,348
Engraving                    4,773         4,552
Engineering Technologies     2,082         1,693
Electronics Products         5,138         3,088
Hydraulics Products          1,174         971
Restructuring                (3,806  )     (235    )
Corporate                   (4,266  )    (5,791  )
Total                      $ 13,885     $ 17,626  


Standex International Corporation
Reconciliation of GAAP to Non-GAAP Financial Measures
                                                                  
                                                  Three Months Ended
                                                  September 30,        
                                                  2013      2012     %Change
Adjusted income from operations and adjusted
net income from continuing operations:
Income from operations, as reported               $13,885    $17,626   -21.2%
Adjustments:
Restructuring charges                             3,806      235
Management Transition                             136        -
Acquisition-related costs                         -          1,465     
Adjusted income from operations                   $17,827    $19,326   -7.8%
Interest and other expenses                       (106)      (687)
Provision for income taxes                        (3,666)    (5,014)
Discrete tax items                                155        -
Tax impact of above adjustments                   (1,131)    (518)     
Net income from continuing operations, as         $13,079    $13,107   -0.2%
adjusted
                                                                       
EBITDA and Adjusted EBITDA:
Income from continuing operations before income   $13,779    $16,939
taxes, as reported
Add back:
Interest expense                                  560        651
Depreciation and amortization                     3,770      3,830     
EBITDA                                            $18,109    $21,420   -15.5%
Adjustments:
Restructuring charges                             3,806      235
Management Transition                             136        -
Acquisition-related costs                         -          1,465     
Adjusted EBITDA                                   $22,051    $23,120   -4.6%
                                                                       
Free operating cash flow:
Net cash provided by operating activities -       $1,252     $9,509
continuing operations, as reported
Add back: Voluntary pension contribution          -          3,250
Less: Capital expenditures                        (4,250)    (4,905)
Free operating cash flow                          $(2,998)   $7,854
Net income from continuing operations             10,113     11,925
Conversion of free operating cash flow            NM         65.9%


Standex International Corporation
Reconciliation of GAAP to Non-GAAP Financial Measures
                                                                 
                                                Three Months Ended
                                               September 30,
Adjusted earnings per share from continuing    2013       2012    %Change
operations
                                                                       
Diluted earnings per share from                 $0.79        $0.93     -15.1%
continuing operations, as reported
                                                                       
Adjustments:
Restructuring charges                           0.21         0.01
Management Transition                           0.01         -
Acquisition-related costs                       -            0.08
Discrete tax items                              0.01         -         
Diluted earnings per share from                 $1.02        $1.02     0.0%
continuing operations, as adjusted

Contact:

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