UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 29, 2019
STANDEX INTERNATIONAL CORPORATION
(Exact name of registrant as specified in its charter)
Delaware |
| 1-7233 |
| 31-0596149 |
(State or other jurisdiction of incorporation or organization) |
| (Commission File Number) |
| (IRS Employer Identification No.) |
11 Keewaydin Drive, Salem, New Hampshire |
| 03079 |
(Address of principal executive offices) |
| (Zip Code) |
Registrant’s telephone number, including area code: (603) 893-9701
Not applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Standex International Corporation
SECTION 2 – FINANCIAL INFORMATION
ITEM 2.02 – RESULTS OF OPERATIONS AND FINANCIAL CONDITIONS
On April 29, 2019, the registrant issued a press release announcing earnings for the third quarter ended March 31, 2019. A copy of the release is furnished herewith as Exhibit 99.1 and is incorporated herein by reference. This Current Report on Form 8-K and the press release attached hereto are being furnished by Standex International Corporation pursuant to item 2.02 of Form 8-K.
SECTION 8
ITEM 8.01 OTHER EVENTS
On April 29, 2019 the Registrant announced that it consummated a Stock Purchase Agreement (the “Agreement”) pursuant to which the Registrant acquired all of the outstanding stock of Genius Solutions Engineering Company and GS Innovation, Inc., both Ohio corporations (collectively “GS Engineering”). GS Engineering is a manufacturer of texturized tools for grained soft touch components for various end use markets, including but not limited to, automotive markets.
A copy of the April 29, 2019 press release related to the transaction is attached hereto as Exhibit 99.2.
SECTION 9 - FINANCIAL STATEMENTS AND EXHIBITS
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
(c)
Exhibits – The following exhibits are provided as part of the information furnished under Items 2.02 and 8.01, respectively of this Current Report on Form 8-K.
Exhibit No.
Description
FORWORD-LOOKING STATEMENTS
This current report on Form 8-K contains “forward-looking statements” within the meaning of the Private Securities Litigation Act of 1995 (the “Act”) that are intended to come within the safe harbor protection provided by the Act. By their nature, all forward-looking statements involve risks and uncertainties, and actual results may differ materially from those contemplated by the forward-looking statements. Several factors that could materially effect the Corporation’s actual results are identified in the press release as well as in the Corporation’s Annual Report on Form 10-K for the fiscal year ended June 30, 2018.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
STANDEX INTERNATIONAL CORPORATION
(Registrant)
/s/ Thomas DeByle | |
| |
| Thomas DeByle Chief Financial Officer |
| Date: April 29, 2019 |
| Signing on behalf of the registrant and as principal financial officer |
News Release
STANDEX INTERNATIONAL CORPORATION l SALEM, NH 03079 l TEL (603) 893-9701 l FAX (603) 893-7324 l WEB www.standex.com
STANDEX REPORTS THIRD QUARTER 2019 FINANCIAL RESULTS
Continued Strength in Engineering, Hydraulics and Scientific
Strong cash flow from working capital improvements
Acquisition of GS Engineering provides cutting-edge technology in fast growing segment
Successful divestiture of Cooking Solutions Group continues progress on portfolio strategy
SALEM, NH – April 29, 2019. . . . Standex International Corporation (NYSE:SXI) today reported financial results for the its third quarter of fiscal year 2019 ending March 31, 2019.
Summary Financial Results - Total Standex |
|
| |
($M except EPS and Dividends) | 3Q19 | 3Q18 | Change |
Net Sales | $193.8 | $192.1 | 0.8% |
Operating Income | $15.0 | $18.8 | -20.0% |
Net Income from Continuing Ops | $7.3 | $11.8 | -38.2% |
|
| ||
EBITDA | $22.3 | $24.6 | -9.1% |
EBITDA margin | 11.5% | 12.8% | -130 bps |
Adjusted EBITDA | $23.7 | $26.9 | -11.9% |
Adjusted EBITDA margin | 12.2% | 14.0% | -180 bps |
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| ||
Diluted EPS | $0.58 | $0.92 | -37.0% |
Adjusted EPS | 0.65 | 1.01 | -35.6% |
Dividends per share | 0.20 | 0.18 | 11% |
|
|
|
|
3Q Free Cash Flow | $9.5 | $(3.5) | NM |
Pro Forma Net Debt to EBITDA | 1.1x | 1.8x | -38.6% |
Third-Quarter Fiscal 2019 Results
“Although we were disappointed with the results in the quarter, we made continued progress in our long-term strategy of building larger and more profitable business units,” commented President and Chief Executive Officer David Dunbar. “We moved the mix of our businesses further towards profitable growth platforms with solid laneway growth, today’s GS acquisition announcement and the successful divestiture of the cooking business. Operationally, process improvements to cash management delivered improved cash flows throughout the corporation. I am pleased to see the investments in Engineering Technologies are paying off as new generation aircraft ramps take place. Finally, our Scientific and Hydraulic businesses posted strong quarters. To address the shortfalls in certain businesses, we are aggressively implementing pricing, cost containment and productivity actions to position these businesses for the future.
“We have also strengthened our balance sheet and financial flexibility. We successfully completed the divesture of our Cooking Solutions unit for $105 million within our stated timeframe and price range. Additionally, we expect free cash flow to continue to build for the balance of the fiscal year as we benefit from improvements in working capital management. As a result, we are in an excellent position to continue to invest in businesses with solid long-term growth prospects.
“Our overall sales increased slightly as we continue to feel the impact of softness in refrigeration, macro-economic headwinds in electronics and the timing of customer rollouts in engraving programs. While we expect these factors to continue for the remainder of the fiscal year, we are confident that we are taking the right actions to transform Standex into a world-class operating company,” said Mr. Dunbar.
Restructuring Actions
In response to the temporary slowdown in certain businesses, the Company has launched initiatives to optimize production and enhance performance. These initial plans are expected to save approximately $3.8 million on an annual basis upon completion in 2Q20.
In the third quarter, Standex incurred $0.5 million of restructuring expenses, primarily related to headcount reductions in the Electronics and Engraving segments and the start of facility rationalization within the Engraving Group. For the fourth fiscal quarter, it is anticipated that approximately $0.8 million of additional restructuring charges will be incurred. For fiscal 2020, Standex now expects an additional $2.8 million in restructuring charges.
Outlook
“While we continue to have challenges in some of our end markets, the contributions from our growth laneways and new product offerings with attractive margin profiles are increasing. Additionally, we are implementing several initiatives throughout the organization to strengthen our operations and performance. We expect our fiscal fourth quarter will be sequentially stronger than the third, but below last year’s fourth quarter. Looking ahead to fiscal year 2020, we expect that performance will improve as we benefit from scheduled platform rollouts in the automotive OEM market, continued strength in the Engineering and Hydraulics segments and segment-level productivity programs we are currently implementing,” concluded Mr. Dunbar.
Third Quarter Segment Operating Performance
Engraving (19% of sales; 20% of segment operating income)
Engraving ($000’s) | 3Q19 | 3Q18 | %Change |
Net sales | $37,135 | $33,749 | 10.0 % |
Operating Income | 4,485 | 7,195 | (37.7%) |
Operating Margin | 12.1% | 21.3% |
The 10.0% increase in sales was primarily due to new product offerings which grew by 39%, as well as the addition of sales from the acquisition of Tenibac. These were offset to a large extent by a decline in traditional sales, primarily to the automotive sector. Operating income decreased by $2.7 million year-on-year due to geographic mix, particularly from lower North American auto roll-outs and integration expenses associated with the Tenibac acquisition.
The Company currently expects that the fourth fiscal quarter will grow sequentially and ramp up more sharply in its fiscal 2020. The Engraving business has initiated restructuring efforts including the reorganization of its largest North American facilities into centers of excellence focused on specific technologies. Creation of these centers of excellence should result in $1 million in annual savings and strengthen readiness for the expected ramp in customer automotive product launches in fiscal year 2020. Additionally, on a global basis, Standex will be converting several smaller Engraving production sites into sales offices as certain locations are no longer strategic to supporting OEM tool makers. The Company expects to realize $2.0 million in savings from these efforts.
The Company expects demand in both the automotive and non-automotive markets to rebound beginning in the first fiscal quarter of 2020 as there are a number of scheduled new product launches by customers which should lead to increased sales in all regions.
Electronics (26% of sales; 42% of segment operating income)
Electronics ($000’s) | 3Q19 | 3Q18 | % Change |
Net sales | $50,197 | $51,213 | (2.0%) |
Operating Income | 9,418 | 11,221 | (16.1%) |
Operating Margin | 18.8% | 21.9% |
The 2.0% decline in sales was primarily due to lower demand in the global automotive market partially offset by strong growth in industrial markets, new product sales and the Agile acquisition. Operating income for the period decreased by 16.1% from the third quarter of fiscal 2018 as a result of product mix and increased expenses, primarily materials cost and wage inflation, partially offset by operating efficiency initiatives. During the quarter, the Electronics business began limited production in its new India facility which should begin to ramp in the fourth fiscal quarter of 2019.
The Company currently expects sales for the calendar year will remain at levels similar to those in the fiscal third quarter. As a result, Standex has initiated efforts focused on G&A expense reduction as well as actions targeting increased productivity and reduced material spend.
Engineering Technologies (14% of sales; 12% of segment operating income)
Engineering ($000’s) | 3Q19 | 3Q18 | % Change | |||
Net sales | $27,467 | $23,426 | 17.3% | |||
Operating Income | 2,800 | 1,155 | 142.4% | |||
Operating Margin | 10.2% | 4.9% |
Engineering Technologies revenue grew 17.3% over 3Q18 due largely to strength in the Energy, Defense and Aviation markets. The company’s long-term investments to support new aviation platforms is paying off as these platforms ramp to full production volume. Operating income more than doubled as a result of higher sales volume, associated operating leverage and continued improvements in manufacturing processes.
In the fourth quarter, Standex expects to continue to benefit from increased demand in the Aviation, Space, and Defense markets. Operating income is expected to increase as a result of this volume increase as well as continued productivity improvement efforts.
Hydraulics (8% of sales; 10% of segment operating income)
Hydraulics ($000’s) | 3Q19 | 3Q18 | % Change |
Net sales | $15,106 | $12,878 | 17.3% |
Operating Income | 2,242 | 1,749 | 28.2% |
Operating Margin | 14.8% | 13.6% |
Sales for the Hydraulics segment increased 17.3% year-over-year primarily reflecting strong OEM demand in the North American refuse market for the Company’s highly differentiated and new product offerings. Income from operations gained 28.2% year-over-year due to higher sales partially offset by material cost increases due to tariffs on components purchased from China.
The Company expects end market demand to remain positive due to ongoing strong demand from construction and infrastructure projects.
Food Service Equipment (33% of sales; 16% of segment operating income)
Food Service ($000’s) | 3Q19 | 3Q18 | % Change |
Net sales | $63,866 | $70,881 | (9.9%) |
Operating Income | 3,559 | 5,546 | (35.8%) |
Operating Margin | 5.6% | 7.8% |
The 9.9% decline in sales and 35.8% decrease in operating income reflected continued softness in Refrigeration, particularly in the retail channel, partially offset by double-digit growth in Scientific due to new product launches.
Standex expects a sequential, seasonal revenue increase in the next quarter but with continued weakness in Refrigeration. In addition, the Company continues to pursue productivity improvements to address the current market conditions. The Company is also actively pursuing new Refrigeration business opportunities as well as continuing to promote its new Scientific, pump and display merchandizer product offerings.
Capital Allocation
·
GS Engineering Acquisition: Today, Standex announced the acquisition of privately-held Genius Solutions Engineering Company (d/b/a GS Engineering) and affiliated GS Innovation, Inc. for $30 million in cash and a five-year earnout. GS is a market leader in the manufacture of highly specialized “soft touch” skin texturized tooling, primarily serving the automotive end market. The acquisition is expected to be immediately accretive to earnings, excluding purchase accounting adjustments.
·
Capital Expenditures: Standex’s capital expenditures are projected to be between $35 million to $36 million in fiscal 2019. The Company has spent approximately $18 million year-to-date.
·
Dividends: On April 24, the Company declared a quarterly cash dividend of $0.20 per share, which is payable May 24, 2019 to shareholders of record May 10, 2019.
Balance Sheet and Cash Flow Highlights
·
Net Debt: Standex ended 3Q19 with net debt of $195.7 million, compared with $197.8 million last quarter. This consisted primarily of long-term debt of $291.7 million and cash and equivalents of $96 million of which $78.5 million was held by foreign subsidiaries. Year to date Standex has repatriated $43.2 million and expects to repatriate $50 million in total by the end of FY19 from foreign subsidiaries. On April 1st, the Company received proceeds from the sale of the Cooking Solutions Group and used the proceeds to repay $100 million in long term debt. After this collection and repayment, the Company’s net debt was $90.6 million, and its pro forma net debt to EBITA leverage ratio was 1.1.
·
Cash Flow: Net cash provided by continuing operating activities for the three months ended March 31, 2019 was $13.3 million compared to net cash provided by continuing operating activities of $2.0 million in the prior year. The increase in cash provided by operating activities was partially a result of decreases in accounts receivable due to focused collection efforts and our “plan for every part” initiative which resulted in improved inventory turns.
Capital expenditures were approximately $3.8 million compared to $5.5 million in 3Q18. As a result, the Company generated free cash flow of $9.5 million compared to negative free cash flow of $3.5 million in 3Q18.
Conference Call Details
Standex will host a conference call for investors tomorrow, April 30, 2019 at 8:30 a.m. ET. On the call, David Dunbar, 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 and viewing the slide presentation should log on to the “Investors” section of Standex’s website under the subheading, “Events and Presentations”, located at www.standex.com.
A replay of the webcast will also be available on the Company’s website shortly after the conclusion of the presentation through May 14, 2019. To listen to the playback, please dial (800) 585-8367 in the U.S. or (404) 537-3406 internationally; the passcode is 7555618. The webcast 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
In addition to the financial measures prepared in accordance with generally accepted accounting principles (“GAAP”), the Company uses certain non-GAAP financial measures, including non-GAAP income from operations, non-GAAP net income from continuing operations, free operating cash flow, EBITDA (earnings before interest, taxes, depreciation and amortization) and adjusted earnings per share. The attached financial tables reconcile non-GAAP measures used in this press release to the most directly comparable GAAP measures. The Company believes that the use of non-GAAP measures including the impact of restructuring charges, purchase accounting, discrete tax events, and acquisition costs help investors to obtain a better understanding of our operating results and prospects, consistent with how management measures and forecasts the Company's performance, especially when comparing such results to previous periods. An understanding of the impact in a particular quarter of specific restructuring costs, acquisition expenses, or other gains and losses, on net income (absolute as well as on a per-share basis), operating income or EBITDA can give management and investors additional insight into core financial performance, especially when compared to quarters in which such items had a greater or lesser effect, or no effect. Non-GAAP measures should be considered in addition to, and not as a replacement for, the corresponding GAAP measures, and may not be comparable to similarly titled measures reported by other companies.
About Standex
Standex International Corporation is a multi-industry manufacturer in five broad business segments: Engraving, Electronics, Engineering Technologies, Hydraulics, and Food Service Equipment with operations in the United States, Europe, Canada, Japan, Australia, Singapore, Mexico, Brazil, Argentina, Turkey, South Africa, India and China. For additional information, visit the Company's website at http://standex.com/.
Standex International Corporation | ||||||||||||
Consolidated Statement of Operations | ||||||||||||
(Unaudited) | ||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||
March 31, | March 31, | |||||||||||
(In thousands, except share data) | 2019 |
|
| 2018 | 2019 |
|
| 2018 | ||||
Net sales | $ | 193,771 | $ | 192,147 | $ | 582,380 | $ | 566,982 | ||||
Cost of sales | 131,981 | 126,035 | 384,402 | 371,882 | ||||||||
Gross profit | 61,790 | 66,112 | 197,978 | 195,100 | ||||||||
Selling, general and administrative expenses | 45,390 | 44,979 | 136,555 | 131,830 | ||||||||
Restructuring costs | 549 | 1,060 | 1,173 | 5,792 | ||||||||
Acquisition related costs | 805 | 1,254 | 2,352 | 2,962 | ||||||||
Income from operations | 15,046 | 18,819 | 57,898 | 54,516 | ||||||||
Interest expense | 3,230 | 2,286 | 8,598 | 5,800 | ||||||||
Other (income) expense, net | 679 | 1,014 | 1,694 | 1,350 | ||||||||
Total | 3,909 | 3,300 | 10,292 | 7,150 | ||||||||
Income from continuing operations before income taxes | 11,137 | 15,519 | 47,606 | 47,366 | ||||||||
Provision for income taxes | 3,833 | 3,696 | 13,535 | 27,312 | ||||||||
Net income (loss) from continuing operations | 7,304 | 11,823 | 34,071 | 20,054 | ||||||||
Income (loss) from discontinued operations, net of tax | 18,965 | 977 | 21,450 | 3,940 | ||||||||
Net income (loss) | $ | 26,269 | $ | 12,800 | $ | 55,521 | $ | 23,994 | ||||
Basic earnings per share: | ||||||||||||
Income (loss) from continuing operations | $ | 0.58 | $ | 0.93 | $ | 2.70 | $ | 1.58 | ||||
Income (loss) from discontinued operations | 1.51 | 0.08 | 1.70 | 0.31 | ||||||||
Total | $ | 2.09 | $ | 1.01 | $ | 4.40 | $ | 1.89 | ||||
Diluted earnings per share: | ||||||||||||
Income (loss) from continuing operations | $ | 0.58 | $ | 0.92 | $ | 2.69 | $ | 1.57 | ||||
Income (loss) from discontinued operations | 1.51 | 0.08 | 1.69 | 0.31 | ||||||||
Total | $ | 1.09 | $ | 1.00 | $ | 4.38 | 1.88 | |||||
Average Shares Outstanding | ||||||||||||
Basic | 12,530 | 12,709 | 12,626 | 12,695 | ||||||||
Diluted | 12,574 | 12,797 | 12,687 | 12,784 |
Standex International Corporation | |||||||
Condensed Consolidated Balance Sheets | |||||||
(Unaudited) |
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March 31, | June 30, |
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(In thousands) |
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| 2019 | 2018 |
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ASSETS |
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Current assets: |
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Cash and cash equivalents | $ | 96,041 | $ | 109,602 |
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Accounts receivable, net | 115,782 | 119,783 |
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Inventories | 103,383 | 104,300 |
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Prepaid expenses and other current assets | 27,115 | 10,255 |
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Income taxes receivable | 3,320 | 2,348 |
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Current assets- Discontinued Operations | 106,863 | 37,671 |
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Total current assets | 452,504 | 383,959 |
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Property, plant, equipment, net | 139,432 | 136,934 |
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Intangible assets, net | 111,505 | 84,938 |
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Goodwill | 260,443 | 211,751 |
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Deferred tax asset | 9,645 | 7,447 |
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Other non-current assets | 29,812 | 29,749 |
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Long-term Assets- Discontinued Operations | - | 62,159 |
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Total non-current assets | 550,837 | 532,978 |
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Total assets | $ | 1,003,341 | $ | 916,937 |
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LIABILITIES AND STOCKHOLDERS' EQUITY |
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Current liabilities: |
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Accounts payable | $ | 61,358 | $ | 78,947 |
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Accrued liabilities | 61,147 | 57,679 |
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Income taxes payable | 4,762 | 6,050 |
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Current liabilities- Discontinued Operations | 2,561 | 18,665 |
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Total current liabilities | 129,828 | 161,341 |
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Long-term debt | 291,725 | 193,772 |
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Accrued pension and other non-current liabilities | 102,171 | 110,979 |
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Non-current liabilities- Discontinued Operations | - | 50 |
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Total non-current liabilities | 393,896 | 304,801 |
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Stockholders' equity: |
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Common stock | 41,976 | 41,976 |
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Additional paid-in capital | 63,774 | 61,328 |
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Retained earnings | 808,417 | 761,430 |
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Accumulated other comprehensive loss | (124,417) | (121,859) |
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Treasury shares | (310,133) | (292,080) |
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Total stockholders' equity | 479,617 | 450,795 |
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Total liabilities and stockholders' equity | $ | 1,003,341 | $ | 916,937 |
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Standex International Corporation and Subsidiaries | ||||||
Statements of Consolidated Cash Flows | ||||||
(Unaudited) | ||||||
Nine Months Ended | ||||||
March 31, | ||||||
(In thousands) |
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| 2019 |
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| 2018 |
Cash Flows from Operating Activities | ||||||
Net income | $ | 55,521 | $ | 23,994 | ||
Income (loss) from discontinued operations | 21,450 | 3,940 | ||||
Income from continuing operations | 34,071 | 20,054 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||
Depreciation and amortization | 22,794 | 19,632 | ||||
Stock-based compensation | 2,680 | 3,775 | ||||
Non-cash portion of restructuring charge | (81) | (1,187) | ||||
Contributions to defined benefit plans | (751) | (808) | ||||
Net changes in operating assets and liabilities | (33,753) | (14,576) | ||||
Net cash provided by operating activities - continuing operations | 24,960 | 26,890 | ||||
Net cash (used in) operating activities - discontinued operations | 617 | 1,829 | ||||
Net cash provided by operating activities | 25,577 | 28,719 | ||||
Cash Flows from Investing Activities | ||||||
Expenditures for property, plant and equipment | (17,844) | (20,207) | ||||
Expenditures for acquisitions, net of cash acquired | (96,768) | (10,397) | ||||
Proceeds from life insurance policies | - | 2,217 | ||||
Other investing activities | 2,521 | 1,552 | ||||
Net cash (used in) investing activities from continuing operations | (112,091) | (26,835) | ||||
Net cash provided by (used in) investing activities from discontinued operations | 2,925 | (1,184) | ||||
Net cash (used in) investing activities | (109,166) | (28,019) | ||||
Cash Flows from Financing Activities | ||||||
Proceeds from borrowings | 206,650 | 134,500 | ||||
Payments of debt | (107,650) | (124,788) | ||||
Contingent consideration payment | (910) | - | ||||
Activity under share-based payment plans | 952 | 774 | ||||
Purchase of treasury stock | (19,239) | (2,007) | ||||
Cash dividends paid | (7,331) | (6,600) | ||||
Net cash provided by financing activities | 72,472 | 1,879 | ||||
Effect of exchange rate changes on cash | (2,444) | 5,179 | ||||
Net changes in cash and cash equivalents | (13,561) | 7,758 | ||||
Cash and cash equivalents at beginning of year | 109,602 | 88,566 | ||||
Cash and cash equivalents at end of period | $ | 96,041 | $ | 96,324 |
Standex International Corporation | ||||||||||||
Selected Segment Data | ||||||||||||
(Unaudited) | ||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||
March 31, | March 31, | |||||||||||
(In thousands) |
|
| 2019 |
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| 2018 | 2019 |
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| 2018 | ||
Net Sales | ||||||||||||
Engraving | 37,135 | 33,749 | 111,602 | 100,457 | ||||||||
Electronics | 50,197 | 51,213 | 154,347 | 144,082 | ||||||||
Engineering Technologies | 27,467 | 23,426 | 71,818 | 65,621 | ||||||||
Hydraulics | 15,106 | 12,878 | 39,758 | 34,969 | ||||||||
Food Service Equipment | $ | 63,866 | $ | 70,881 | $ | 204,855 | $ | 221,853 | ||||
Total | $ | 193,771 | $ | 192,147 | $ | 582,380 | $ | 566,982 | ||||
Income from operations | ||||||||||||
Engraving | 4,485 | 7,195 | 18,883 | 21,735 | ||||||||
Electronics | 9,418 | 11,221 | 32,581 | 31,774 | ||||||||
Engineering Technologies | 2,800 | 1,155 | 6,636 | 3,879 | ||||||||
Hydraulics | 2,242 | 1,749 | 5,753 | 5,138 | ||||||||
Food Service Equipment | $ | 3,559 | $ | 5,546 | $ | 15,417 | $ | 19,834 | ||||
Restructuring | (549) | (1,060) | (1,173) | (5,792) | ||||||||
Acquisition related costs | (805) | (1,254) | (2,352) | (2,962) | ||||||||
Corporate | (6,104) | (5,733) | (17,847) | (19,090) | ||||||||
Total | $ | 15,046 | $ | 18,819 | $ | 57,898 | $ | 54,516 | ||||
Standex International Corporation | |||||||||||||||||
Reconciliation of GAAP to Non-GAAP Financial Measures | |||||||||||||||||
(Unaudited) | |||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
March 31, | March 31, | ||||||||||||||||
(In thousands, except percentages) | 2019 | 2018 | % Change | 2019 | 2018 | % Change | |||||||||||
Adjusted income from operations and adjusted net income from continuing operations: | |||||||||||||||||
Net Sales | $ | 193,771 | $ | 192,147 | 0.8% | $ | 582,380 | $ | 566,982 | 2.7 % | |||||||
Income from operations, as reported | $ | 15,046 | $ | 18,819 | -20.0% | $ | 57,898 | $ | 54,516 | 6.2 % | |||||||
Income from operations margin | 7.8% | 9.8% | 9.9% | 9.6% | |||||||||||||
Adjustments: | |||||||||||||||||
Restructuring charges | 549 | 1,060 | 1,173 | 5,792 | |||||||||||||
Acquisition-related costs | 805 | 1,254 | 2,352 | 2,962 | |||||||||||||
Purchase accounting | - | - | 511 | 204 | |||||||||||||
Adjusted income from operations | $ | 16,400 | $ | 21,133 | -22.4% | $ | 61,934 | $ | 63,474 | -2.4% | |||||||
Adjusted income from operations margin | 8.5% | 11.0% | 10.6% | 11.2% | |||||||||||||
Interest and other income (expense), net | (3,909) | (3,300) | (10,292) | (7,150) | |||||||||||||
Provision for income taxes | (3,833) | (3,696) | (13,535) | (27,312) | |||||||||||||
Discrete and other tax items | - | (456) | (779) | 14,559 | |||||||||||||
Tax impact of above adjustments | (417) | (604) | (1,243) | (2,338) | |||||||||||||
Net income from continuing operations, as adjusted | $ | 8,241 | $ | 13,077 | -37.0% | $ | 36,085 | $ | 41,233 | -12.5% | |||||||
EBITDA and Adjusted EBITDA: | |||||||||||||||||
Net income from continuing operations, as reported | $ | 7,304 | $ | 11,823 | $ | 34,071 | $ | 20,054 | |||||||||
Net income from continuing operations margin | 3.8% | 6.2% | 5.9% | 3.5% | |||||||||||||
Add back: | |||||||||||||||||
Provision for Income Taxes | 3,833 | 3,696 | 13,535 | 27,312 | |||||||||||||
Interest expense | 3,230 | 2,286 | 8,598 | 5,800 | |||||||||||||
Depreciation and amortization | 7,977 | 6,788 | 22,794 | 19,632 | |||||||||||||
EBITDA | $ | 22,344 | $ | 24,593 | -9.1% | $ | 78,998 | $ | 72,798 | 8.5% | |||||||
EBITDA Margin | 11.5% | 12.8% | 13.6% | 12.8% | |||||||||||||
Adjustments: | |||||||||||||||||
Restructuring charges | 549 | 1,060 | 1,173 | 5,792 | |||||||||||||
Acquisition-related costs | 805 | 1,254 | 2,352 | 2,962 | |||||||||||||
Purchase accounting | - | - | 511 | 204 | |||||||||||||
Adjusted EBITDA | $ | 23,698 | $ | 26,907 | -11.9% | $ | 83,034 | $ | 81,756 | 1.6% | |||||||
| Adjusted EBITDA Margin | 12.2% | 14.0% | 14.3% | 14.4% | ||||||||||||
Free operating cash flow: | |||||||||||||||||
Net cash provided by operating activities - continuing operations, as reported | $ | 13,253 | $ | 1,983 | $ | 24,960 | $ | 26,890 | |||||||||
Less: Capital expenditures | (3,795) | (5,483) | (17,844) | (20,207) | |||||||||||||
Free operating cash flow | $ | 9,458 | $ | (3,500) | $ | 7,116 | $ | 6,683 | |||||||||
Net income from continuing operations | 7,304 | 11,823 | 34,071 | 20,054 | |||||||||||||
Discrete tax item - tax on foreign cash | - | (456) | (779) | 14,559 | |||||||||||||
Adjusted net income | 7,304 | 11,367 | 33,292 | 34,613 | |||||||||||||
Conversion of free operating cash flow | 129.5% | NM | 21.4% | 19.3% |
Standex International Corporation |
| ||||||||||||||||||||||||||||||||||
Reconciliation of GAAP to Non-GAAP Financial Measures |
| ||||||||||||||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||||||||
March 31, | March 31, | ||||||||||||||||||||||||||||||||||
Adjusted earnings per share from continuing operations | 2019 | 2018 | % Change | 2019 | 2018 | % Change | |||||||||||||||||||||||||||||
Diluted earnings per share from continuing operations, as reported | $ | 0.58 | $ | 0.92 | -37.0% | $ | 2.69 | $ | 1.57 | 71.3% | |||||||||||||||||||||||||
Adjustments: | |||||||||||||||||||||||||||||||||||
Restructuring charges | 0.03 | 0.06 | 0.06 | 0.33 | |||||||||||||||||||||||||||||||
Acquisition-related costs | 0.04 | 0.07 | 0.13 | 0.17 | |||||||||||||||||||||||||||||||
Discrete Tax Items | - | (0.04) | (0.06) | 1.14 | |||||||||||||||||||||||||||||||
Purchase accounting expenses | - | - | 0.03 | 0.01 | |||||||||||||||||||||||||||||||
Diluted earnings per share from continuing operations, as adjusted | $ | 0.65 | $ | 1.01 | -35.6% | $ | 2.85 | $ | 3.22 | -11.5% |
Contact:
Thomas DeByle, CFO
(603) 893-9701
e-mail: InvestorRelations@Standex.com
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News Release
STANDEX INTERNATIONAL CORPORATION l SALEM, NH 03079 l TEL (603) 893-9701 l FAX (603) 893-7324 l WEB www.standex.com
Contact:
Thomas DeByle, CFO
(603) 893-9701
e-mail: InvestorRelations@Standex.com
STANDEX BROADENS ENGRAVING CAPABILITIES
WITH ACQUISITION OF GS ENGINEERING
Leading Provider of Cutting-Edge Technology for Soft Surface Tooling
Opportunity to Leverage Capabilities Across Standex’s Global Engraving Footprint
SALEM, NH – April 29, 2019… Standex International Corporation (NYSE:SXI) today announced that it has acquired privately-held Genius Solutions Engineering Company (d/b/a GS Engineering) and affiliated GS Innovation, Inc. (together, “GS”). GS is a market leader in the manufacture of highly specialized “soft surface” skin texturized tooling, primarily serving the automotive end market. The acquisition is expected to be immediately accretive to earnings. The current GS management team will continue with the Standex Engraving business unit post-closing. GS is based in Maumee, Ohio and has approximately 40 employees. The company was incorporated in 2004.
GS brings Standex Engraving critical proprietary technologies that offer significant advantages in creating tools for “soft surface” components, which are used increasingly in vehicle interiors. The Company specializes in creating IMG (“In-Mold Graining”) molds and tools that are significantly faster to design and produce than those offered by its competitors. The tooling for “soft surface” products offered by GS is highly complementary to Standex Engravings’ current industry-leading capabilities in texturing molds and tools used to create “hard surface” components. Standex Engraving intends to immediately introduce the GS technology across its global production footprint, which will enable customers worldwide to benefit from a combined offering for harmonized designs across a variety of surfaces and materials. Both Standex and GS are united in their plan to achieve this global roll-out plan, and Standex has put in place a five-year, contingent earnout that aligns with these goals to enable the GS management team to participate in the benefits of successful execution.
“This acquisition is a great strategic fit with our existing engraving capabilities and brings innovative, cutting-edge technology to Standex. The GS offering is the best in the market for creating ‘soft surfaces’, one of the faster-growing and higher-margin portions of the global automotive interior market,” said Standex Chief Executive Officer David Dunbar. “We enthusiastically welcome Matt, Grigoriy, and their employees to the Standex family. They will be vital to our ‘soft surface’ roadmap and together we will bring ‘soft surface’ technology to more customers globally.”
“Joining a world-class leader like Standex instantly gives us a global presence, complementary offerings, and broader talent resources to better serve customers,” said the GS founders, Grigoriy Grinberg and Matthew Shade. “We are confident in the combined strategy and believe that Standex provides the right foundation for continued growth.”
About GS Engineering
GS Engineering was founded in 2004 by Grigoriy Grinberg and Matthew Shade. They specialize in the manufacture of rapid texturized tooling (IMG, Spray PU, Powder Slush) for domestic and international automotive OEMs. For additional information, visit the company’s website at www.gsengineering.net .
About Standex
Standex International Corporation is a global, multi-industry manufacturer in five broad business segments: Food Service Equipment, Engineering Technologies, Engraving, Electronics, and Hydraulics. For additional information, visit the Company's website at http://standex.com/.
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 economic conditions in the oil and gas market, the impact of foreign exchange, 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, 2018, 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.
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