UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2021

☐    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 1-7233

STANDEX INTERNATIONAL CORPORATION

(Exact name of registrant as specified in its charter)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes ☒    NO ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes ☒    NO ☐

Delaware	31-0596149
(State of incorporation)	(IRS Employer Identification No.)

23 KEEWAYDIN DRIVE, Salem, New Hampshire	03079
(Address of principal executive offices)	(Zip Code)

(603) 893-9701

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, Par Value $1.50 Per Share	SXI	New York Stock Exchange

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☒	Accelerated filer ☐
Non-accelerated filer ☐	Smaller reporting company ☐
	Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    YES ☐    NO ☒

The number of shares of Registrant's Common Stock outstanding on May 5, 2021 was 12,261,096.

1

STANDEX INTERNATIONAL CORPORATION

INDEX

		Page No.
PART I.  FINANCIAL INFORMATION:
Item 1.
	Condensed Consolidated Balance Sheets as of March 31, 2021 and June 30, 2020 (unaudited)	3
	Condensed Consolidated Statements of Operations for the three and nine months ended March 31, 2021 and 2020 (unaudited)	4
	Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended March 31, 2021 and 2020 (unaudited)	5
	Condensed Consolidated Statement of Stockholders’ Equity for the three and nine months ended March 31, 2021 and 2020 (unaudited)	6
	Condensed Consolidated Statements of Cash Flows for the nine months ended March 31, 2021 and 2020 (unaudited)	8
	Notes to Unaudited Condensed Consolidated Financial Statements	9
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	27
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	38
Item 4.	Controls and Procedures	39
PART II.  OTHER INFORMATION:
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	40
Item 6.	Exhibits	41

2

PART I. FINANCIAL INFORMATION

ITEM 1

STANDEX INTERNATIONAL CORPORATION

Condensed Consolidated Balance Sheets

(Unaudited)

(In thousands, except per share data)	March 31, 2021			June 30, 2020
ASSETS
Current Assets:
Cash and cash equivalents	$	118,040		$	118,809
Accounts receivable, less allowance for credit losses of $2,440 and $2,113 at March 31, 2021 and June 30, 2020, respectively		107,960			98,157
Inventories		90,868			85,031
Prepaid expenses and other current assets		22,647			18,870
Income taxes receivable		11,279			8,194
Current Assets - Discontinued Operations		-			2,936
Total current assets		350,794			331,997
Property, plant, and equipment, net		129,725			132,533
Intangible assets, net		102,064			106,412
Goodwill		277,902			271,221
Deferred tax asset		16,941			17,322
Operating lease right-of-use asset		39,303			44,788
Other non-current assets		29,609			26,605
Total non-current assets		595,544			598,881
Total assets	$	946,338		$	930,878
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable	$	66,619		$	54,910
Accrued liabilities		59,664			59,929
Income taxes payable		5,658			7,428
Current liabilities-Discontinued Operations		-			610
Total current liabilities		131,941			122,877
Long-term debt		200,117			199,150
Operating lease long-term liabilities		30,488			36,293
Accrued pension and other non-current liabilities		101,139			110,926
Total non-current liabilities		331,744			346,369
Commitments and Contingencies (Note 17)		-			-
Stockholders' equity:
Common stock, par value $1.50 per share, 60,000,000 shares authorized, 27,984,278 issued, 12,091,579 and 12,235,786 outstanding at March 31, 2021 and June 30, 2020		41,976			41,976
Additional paid-in capital		77,978			72,752
Retained earnings		841,491			827,656
Accumulated other comprehensive loss		(131,043	)		(147,659	)
Treasury shares: 15,892,699 shares at March 31, 2021 and 15,748,492 shares at June 30, 2020		(347,749	)		(333,093	)
Total stockholders' equity		482,653			461,632
Total liabilities and stockholders' equity	$	946,338		$	930,878

See notes to unaudited condensed consolidated financial statements 

3

STANDEX INTERNATIONAL CORPORATION

Unaudited Condensed Consolidated Statements of Operations

	Three Months Ended						Nine Months Ended
	March 31,						March 31,
(In thousands, except per share data)	2021			2020			2021			2020
Net sales	$	172,216		$	155,474		$	479,797		$	465,150
Cost of sales		109,516			102,959			304,344			296,613
Gross profit		62,700			52,515			175,453			168,537
Selling, general, and administrative expenses		41,689			34,893			120,758			113,697
Loss on sale of business		14,624			-			14,624			-
Acquisition related costs		255			120			850			1,650
Restructuring costs		482			593			2,478			2,792
Total operating expenses		57,050			35,606			138,710			118,139
Income from operations		5,650			16,909			36,743			50,398
Interest expense		1,317			1,774			4,403			5,820
Other non-operating (income) expense		306			(238	)		73			(566	)
Income from continuing operations before income taxes		4,027			15,373			32,267			45,144
Provision for income taxes		2,269			3,321			8,155			10,229
Net income from continuing operations		1,758			12,052			24,112			34,915
Income (loss) from discontinued operations, net of income taxes		(331	)		(18,375	)		(1,588	)		(16,562	)
Net income (loss)	$	1,427		$	(6,323	)	$	22,524		$	18,353
Basic earnings (loss) per share:
Continuing operations	$	0.14		$	0.98		$	1.98		$	2.83
Discontinued operations		(0.03	)		(1.49	)		(0.13	)		(1.34	)
Total	$	0.11		$	(0.51	)	$	1.85		$	1.49
Diluted earnings (loss) per share:
Continuing operations	$	0.14		$	0.97		$	1.97		$	2.81
Discontinued operations		(0.03	)		(1.48	)		(0.13	)		(1.33	)
Total	$	0.11		$	(0.51	)	$	1.84		$	1.48
Weighted average number of shares:
Basic		12,136			12,337			12,185			12,348
Diluted		12,253			12,397			12,267			12,413

See notes to unaudited condensed consolidated financial statements 

4

STANDEX INTERNATIONAL CORPORATION 

Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss)

	Three Months Ended						Nine Months Ended
	March 31,						March 31,
(In thousands)	2021			2020			2021			2020
Net income (loss)	$	1,427		$	(6,323	)	$	22,524		$	18,353
Other comprehensive income (loss):
Defined benefit pension plans:
Actuarial gains (losses) and other changes in unrecognized costs	$	37		$	278		$	(436	)	$	273
Amortization of unrecognized costs		1,677			1,441			5,012			4,315
Derivative instruments:
Change in unrealized gains (losses)		3,747			(1,595	)		3,532			(1,832	)
Amortization of unrealized gains (losses) into interest expense		64			(2,110	)		1,185			(2,129	)
Foreign currency translation gains (losses)		(11,299	)		(4,691	)		9,301			(5,860	)
Other comprehensive income (loss) before tax	$	(5,774	)	$	(6,677	)	$	18,594		$	(5,233	)
Income tax provision (benefit):
Defined benefit pension plans:
Actuarial gains (losses) and other changes in unrecognized costs	$	(15	)	$	(50	)	$	85		$	(28	)
Amortization of unrecognized costs		(402	)		(348	)		(1,202	)		(1,041	)
Derivative instruments:
Change in unrealized gains (losses)		(562	)		588			(443	)		697
Amortization of unrealized gains (losses) into interest expense		(141	)		(25	)		(418	)		(33	)
Income tax provision (benefit) to other comprehensive income (loss)	$	(1,120	)	$	165		$	(1,978	)	$	(405	)
Other comprehensive income (loss), net of tax		(6,894	)		(6,512	)		16,616			(5,638	)
Comprehensive income (loss)	$	(5,467	)	$	(12,835	)	$	39,140		$	12,715

See notes to unaudited condensed consolidated financial statements 

5

Unaudited Consolidated Statements of Stockholders' Equity 

Standex International Corporation and Subsidiaries 

									Accumulated Other
			Additional						Comprehensive									Total
For the Nine month period ended March 31, 2021	Common		Paid-in			Retained			Income			Treasury Stock						Stockholders’
(in thousands, except as specified)	Stock		Capital			Earnings			(Loss)			Shares			Amount			Equity
Balance, June 30, 2020	$	41,976	$	72,752		$	827,656		$	(147,659	)		15,748		$	(333,093	)	$	461,632
Stock issued under incentive compensation plans and employee purchase plans		-		(432	)		-			-			(72	)		1,549			1,117
Stock-based compensation		-		5,658			-			-			-			-			5,658
Treasury stock acquired		-		-			-			-			217			(16,205	)		(16,205	)
Comprehensive income:
Net income		-		-			22,524			-			-			-			22,524
Foreign currency translation adjustment		-		-			-			9,301			-			-			9,301
Pension, net of tax of $1.1 million		-		-			-			3,459			-			-			3,459
Change in fair value of derivatives, net of tax of $0.9 million		-		-			-			3,856			-			-			3,856
Dividends declared ($0.70 per share)		-		-			(8,689	)		-			-			-			(8,689	)
Balance, March 31, 2021	$	41,976	$	77,978		$	841,491		$	(131,043	)		15,893		$	(347,749	)	$	482,653
For the Nine month period ended March 31, 2020
(in thousands, except as specified)
Balance, June 30, 2019	$	41,976	$	65,515		$	818,282		$	(137,278	)		15,650		$	(324,182	)	$	464,313
Stock issued under incentive compensation plans and employee purchase plans		-		110			-			-			(71	)		1,468			1,578
Stock-based compensation		-		5,285			-			-			-			-			5,285
Treasury stock acquired		-		-			-			-			142			(9,008	)		(9,008	)
Adoption of ASC 606		-		-			(55	)		-			-			-			(55	)
Comprehensive income:																			-
Net income		-		-			18,353			-			-			-			18,353
Foreign currency translation adjustment		-		-			-			(5,860	)		-			-			(5,860	)
Pension, net of tax of $1.1 million		-		-			-			3,519			-			-			3,519
Change in fair value of derivatives, net of tax of $0.7 million		-		-			-			(3,297	)		-			-			(3,297	)
Dividends declared ($0.64 per share)		-		-			(8,024	)		-			-			-			(8,024	)
Balance, March 31, 2020	$	41,976	$	70,910		$	828,556		$	(142,916	)		15,721		$	(331,722	)	$	466,804

6

Unaudited Consolidated Statements of Stockholders' Equity

Standex International Corporation and Subsidiaries

								Accumulated Other
			Additional					Comprehensive									Total
For the Three month period ended March 31, 2021	Common		Paid-in		Retained			Income			Treasury Stock						Stockholders’
(in thousands, except as specified)	Stock		Capital		Earnings			(Loss)			Shares			Amount			Equity
Balance, December 31, 2020	$	41,976	$	76,548	$	843,038		$	(124,149	)		15,803		$	(339,223	)	$	498,190
Stock issued under incentive compensation plans and employee purchase plans		-		60		-			-			(4	)		86			146
Stock-based compensation		-		1,370		-			-			-			-			1,370
Treasury stock acquired		-		-		-			-			94			(8,612	)		(8,612	)
Comprehensive income:
Net income		-		-		1,427			-			-			-			1,427
Foreign currency translation adjustment		-		-		-			(11,299	)		-			-			(11,299	)
Pension, net of tax of $0.4 million		-		-		-			1,297			-			-			1,297
Change in fair value of derivatives, net of tax of $0.7 million		-		-		-			3,108			-			-			3,108
Dividends declared ($0.24 per share)		-		-		(2,974	)		-			-			-			(2,974	)
Balance, March 31, 2021	$	41,976	$	77,978	$	841,491		$	(131,043	)		15,893		$	(347,749	)	$	482,653
For the Three month period ended March 31, 2020
(in thousands, except as specified)
Balance, December 31, 2019	$	41,976	$	70,206	$	837,698		$	(136,404	)		15,602		$	(323,872	)	$	489,604
Stock issued under incentive compensation plans and employee purchase plans		-		238		-			-			(10	)		212			450
Stock-based compensation		-		466		-			-			-			-			466
Treasury stock acquired		-		-		-			-			129			(8,062	)		(8,062	)
Adoption of ASC 606		-		-		(55	)		-			-			-			(55	)
Comprehensive income:
Net income (loss)		-		-		(6,323	)		-			-			-			(6,323	)
Foreign currency translation adjustment		-		-		-			(4,691	)		-			-			(4,691	)
Pension, net of tax of $0.3 million		-		-		-			1,321			-			-			1,321
Change in fair value of derivatives, net of tax of $0.3 million		-		-		-			(3,142	)		-			-			(3,142	)
Dividends declared ($0.22 per share)		-		-		(2,764	)		-			-			-			(2,764	)
Balance, March 31, 2020	$	41,976	$	70,910	$	828,556		$	(142,916	)		15,721		$	(331,722	)	$	466,804

7

STANDEX INTERNATIONAL CORPORATION

 Unaudited Condensed Consolidated Statements of Cash Flows

	Nine Months Ended
	March 31,
(In thousands)	2021			2020
Cash flows from operating activities
Net income	$	22,524		$	18,353
Income (loss) from discontinued operations		(1,588	)		(16,562	)
Income from continuing operations		24,112			34,915
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization		24,843			24,301
Stock-based compensation		5,658			5,285
Non-cash portion of restructuring charge		(538	)		(87	)
Life insurance benefit		-			(1,302	)
Loss on sale of business		14,624			-
Contributions to defined benefit plans		(7,962	)		(3,454	)
Net changes in operating assets and liabilities		(11,399	)		(30,168	)
Net cash provided by operating activities - continuing operations		49,338			29,490
Net cash provided by (used in) operating activities - discontinued operations		2,225			(3,559	)
Net cash provided by operating activities		51,563			25,931
Cash flows from investing activities
Expenditures for property, plant, and equipment		(15,612	)		(15,806	)
Expenditures for acquisitions, net of cash acquired		(27,406	)		-
Proceeds from sale of business		11,678			-
Other investing activity		(1,449	)		1,515
Net cash provided by (used in) investing activities - continuing operations		(32,789	)		(14,291	)
Net cash provided by (used in) investing activities - discontinued operations		-			9,414
Net cash provided by (used in) investing activities		(32,789	)		(4,877	)
Cash flows from financing activities
Borrowings on revolving credit facility		17,000			106,500
Payments of revolving credit facility		(17,000	)		(92,300	)
Contingent consideration payment		-			(872	)
Activity under share-based payment plans		1,117			1,577
Purchases of treasury stock		(16,205	)		(9,008	)
Cash dividends paid		(8,547	)		(7,911	)
Net cash provided by (used in) financing activities		(23,635	)		(2,014	)
Effect of exchange rate changes on cash and cash equivalents		4,092			(2,888	)
Net change in cash and cash equivalents		(769	)		16,152
Cash and cash equivalents at beginning of year		118,809			93,145
Cash and cash equivalents at end of period	$	118,040		$	109,297
Supplemental Disclosure of Cash Flow Information:
Cash paid during the year for:
Interest	$	3,754		$	5,028
Income taxes, net of refunds	$	5,466		$	16,194

See notes to unaudited condensed consolidated financial statements

8

STANDEX INTERNATIONAL CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1)     Management Statement

In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments necessary to present fairly the results of operations for the three and nine months ended March 31, 2021 and 2020, the cash flows for the nine months ended March 31, 2021 and 2020 and the financial position of Standex International Corporation (“Standex”, the “Company”, “we”, “us”, or “our”), at March 31, 2021. The interim results are not necessarily indicative of results for a full year. The following unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and note disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to those rules and regulations, although the company believes that the disclosures made are adequate to make the information not misleading. The unaudited condensed consolidated financial statements and notes do not contain information which would substantially duplicate the disclosures contained in the audited annual consolidated financial statements and notes for the year ended June 30, 2020. The condensed consolidated balance sheet at June 30, 2020 was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America. The financial statements contained herein should be read in conjunction with the Annual Report on Form 10-K and in particular the audited consolidated financial statements for the year ended June 30, 2020. Unless otherwise noted, references to years are to the Company’s fiscal years.

Certain prior period amounts have been reclassified to conform to the current period presentation. In pursuing our business strategy, we have divested certain businesses and recorded activities of some of these businesses as discontinued operations. During the third quarter of 2020, the Company decided to divest its Refrigerated Solutions Group which consisted of two operating segments in order to focus its financial assets and managerial resources on its remaining portfolio of businesses. Results of the Refrigerated Solutions Group in prior periods have been classified as discontinued operations in the Condensed Consolidated Financial Statements and excluded from the results of continuing operations. In the fourth quarter of fiscal year 2020, the Company reviewed the quantitative and qualitative characteristics of its remaining businesses and determined that it has seven operating segments that aggregate to five reportable segments. Please refer to Note 18 Industry Segment Information for further information regarding reportable segments. All periods presented have been revised to reflect the new reportable segments.

The estimates and assumptions used in the preparation of the consolidated financial statements have considered the implications on the Company as a result of the onset of the COVID-19 pandemic and its related economic impacts. As a result of the COVID-19 pandemic,  there is heightened volatility and uncertainty in customer demand and the worldwide economy. However, the magnitude of such impact on the Company’s business and its duration is uncertain. The Company is not aware of any specific event or circumstance that would require an update to its estimates or adjustments to the carrying value of its assets and liabilities as of  March 31, 2021 and the issuance date of the Quarterly Report on Form 10-Q.

The Company considers events or transactions that occur after the balance sheet date but before the financial statements are issued to provide additional evidence relative to certain estimates or to identify matters that require additional disclosure. We evaluated subsequent events through the date and time our unaudited condensed consolidated financial statements were issued. 

Recently Issued Accounting Pronouncements

In March 2020, the FASB issued ASU 2020-04, Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The ASU provides optional expedients and exceptions for applying generally accepted accounting principles to contract modifications and hedging relationships, subject to meeting certain criteria, that reference LIBOR or another reference rate expected to be discontinued. In January 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848). The amendments in this update clarify that certain optional expedients and exceptions in Topic 848 for contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition. ASU 2020-04 is effective for all entities as of  March 12, 2020 through  December 31, 2022. The Company adopted ASU 2020-04 and ASU 2021-01 in fiscal year 2021.  The adoption did not have a material impact on the consolidated financial statements. 

In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which modifies the measurement approach for credit losses on financial assets measured on an amortized cost basis from an “incurred loss” method to “an expected loss” method. In  November 2019, the FASB issued ASU 2019-11, Codification Improvements to Topic 326, Financial Instruments – Credit Losses. ASU 2019-11 is an accounting pronouncement that amends ASU 2016-13. This amendment provides clarity and improves the codification to ASU 2016-13. The pronouncements are concurrently effective for fiscal years beginning after  December 15, 2019 and interim periods therein. The Company adopted ASU 2016-13 in fiscal year 2021. The adoption did not have a material impact on the consolidated financial statements.

9

 

As a result of the adoption of ASU 2016-13, the Company has updated its critical accounting policy related to trade account receivables and allowances for credit losses as of September 30, 2020 from what was previously disclosed in its audited financial statements for the year ended June 30, 2020 as follows:

All trade account receivables are reported net of allowances for expected credit losses. The allowances for expected credit losses represent management’s best estimate of the credit losses expected from our trade account receivables over the life of the underlying assets. Assets with similar risk characteristics are pooled together for determination of their current expected credit losses. The Company regularly performs detailed reviews of its pooled assets to evaluate the collectability of receivables based on a combination of past, current, and future financial and qualitative factors that may affect customers’ ability to pay. In circumstances where the Company is aware of a specific customer’s inability to meet its financial obligations, a specific reserve is recorded against amounts due to reduce the recognized receivable to the amount reasonably expected to be collected.

In August 2018, the FASB issued ASU No. 2018-14, Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20). The amendments in ASU 2018-14 remove, modify and add various disclosure requirements around the topic in order to clarify and improve the cost-benefit nature of disclosures. This ASU is effective for annual reporting periods, and interim periods with those reporting periods, beginning after December 15, 2020 with early adoption permitted. The amendments must be applied on a retrospective basis for all periods presented. The Company is currently evaluating the impacts the adoption of this ASU will have on its Consolidated Financial Statements.

2)     Acquisitions

The Company’s recent acquisitions are strategically significant to the future growth prospects of the Company. At the time of the acquisition and March 31, 2021, the Company evaluated the significance of each acquisition on a standalone basis and in aggregate, considering both qualitative and quantitative factors.

Renco Electronics

During the first quarter of fiscal year 2021, the Company acquired Renco Electronics, a designer and manufacturer of customized standard magnetics components and products including transformers, inductors, chokes and coils for power and RF applications.  Renco’s end markets and customer base in areas such as consumer and industrial applications are highly complementary to our existing business with the potential to further expand key account relationships and capitalize on cross selling opportunities between the two companies.  Renco operates one manufacturing facility in Florida and is supported by contract manufacturers in Asia. Renco’s results are reported within our Electronics segment.

The Company paid $27.4 million in cash for all of the issued and outstanding equity interests of Renco Electronics. The preliminary purchase price was allocated to the net tangible and identifiable intangible assets acquired and liabilities assumed based on a preliminary estimate of their fair values on the closing date.  The Company has commenced a formal valuation of the acquired assets and liabilities and has updated the preliminary intangible assets based on the preliminary valuation results. Goodwill recorded from this transaction is attributable to Renco’s significant engineering and technical expertise in end markets supported by strong engineer-to-engineer relationships. In addition, Renco’s end markets and customer base in areas such as consumer and industrial are highly complementary to the Company’s existing business.

Intangible assets of $10.4 million are preliminarily recorded, consisting primarily of $3.6 million for indefinite lived trademarks, and $6.8 million of customer relationships to be amortized over 12 years. The Company’s assigned fair values are preliminary as of March 31, 2021 until such time as the valuation can be finalized. The goodwill of $14.0 million created by the transaction is deductible for income tax purposes.

In connection with the acquisition, the Company entered into two lease arrangements and recorded right-of-use assets and short-term and long-term liabilities at inception. The Company signed a new lease agreement with a related party, an entity in which the Renco Electronics President is a shareholder, on July 15, 2020. The lease is for three years and is subject to renewal, at the Company’s option under similar terms and conditions. The Company recorded a fair value adjustment of $0.1 million in connection with this lease, which is included in other acquired assets in the table below.

At the inception of an arrangement, the Company determines whether the arrangement is or contains a lease based on the unique facts and circumstances present in the arrangement. Leases with a term greater than one year are recognized on the balance sheet as right-of-use assets and short-term and long-term lease liabilities, as applicable. The Company recorded right of use assets of $3.3 million, current lease liabilities of $1.8 million and non-current lease liabilities of $1.5 million, related to two operating leases in connection with the acquisition of Renco. Renco does not have material financing leases.

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Please refer to Note 4 Fair Value Measurements for further information about the valuation of the $3.0 million contingent consideration liability.

The components of the fair value of the Renco Electronics acquisition, including the preliminary allocation of the purchase price at March 31, 2021, are as follows (in thousands):

	Preliminary Allocation September 30, 2020			Adjustments			Adjusted Preliminary Allocation March 31, 2021
Fair value of business combination:
Cash payments	$	29,530		$	83		$	29,613
Less, cash acquired		(2,132	)		(75	)		(2,207	)
Fair value of contingent consideration		3,000			-			3,000
Total	$	30,398		$	8		$	30,406

	Preliminary Allocation September 30, 2020			Adjustments			Adjusted Preliminary Allocation March 31, 2021
Identifiable assets acquired and liabilities assumed:
Other acquired assets	$	4,762		$	(240	)	$	4,522
Inventories		5,446			-			5,446
Property, plant, & equipment		-			410			410
Identifiable intangible assets		10,400			-			10,400
Goodwill		14,153			(162	)		13,991
Debt assumed		(712	)		-			(712	)
Liabilities assumed		(3,651	)		-			(3,651	)
Total	$	30,398		$	8		$	30,406

Acquisition-Related Costs

Acquisition-related costs include costs related to acquired businesses and other pending acquisitions. These costs consist of (i) deferred compensation and (ii) acquisition-related professional service fees and expenses, including financial advisory, legal, accounting, and other outside services incurred in connection with acquisition activities, and regulatory matters related to acquired entities. These costs do not include purchase accounting expenses, which we define as acquired backlog and the step-up of inventory to fair value, or the amortization of the acquired intangible assets.

Contingent consideration payable to the seller of Horizon Scientific is based on continued employment of the seller on the second and third anniversary of the closing date of the acquisition. The Company was contractually obligated to pay contingent consideration payments in connection with the Horizon Scientific acquisition based on the criteria of continued employment of the seller on the second and third anniversary of the closing date of the acquisition. The seller of Horizon remained employed on the second and third anniversaries of the closing date and payments were made to the seller in the second quarters of fiscal year 2019 and 2020. This obligation is considered settled as of  June 30, 2020.

Acquisition-related costs consist of miscellaneous professional service fees and expenses for our recent acquisitions.

The components of acquisition-related costs are as follows (in thousands):

	Three Months Ended				Nine Months Ended
	March 31,				March 31,
	2021		2020		2021		2020
Contingent consideration arrangements	$	-	$	-	$	-	$	1,170
Other acquisition-related costs		255		120		850		480
Total	$	255	$	120	$	850	$	1,650

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3)     Revenue From Contracts With Customers

Most of the Company’s contracts have a single performance obligation which represents the product or service being sold to the customer. Some contracts include multiple performance obligations such as a product and the related installation and/or extended warranty. Additionally, most of the Company’s contracts offer assurance type warranties in connection with the sale of a product to customers. Assurance type warranties provide a customer with assurance that the product complies with agreed-upon specifications. Assurance type warranties do not represent a separate performance obligation.

In general, the Company recognizes revenue at the point in time control transfers to its customer based on predetermined shipping terms. Revenue is recognized over time under certain long-term contracts within the Engineering Technologies and Engraving groups for highly customized customer products that have no alternative use and in which the contract specifies the Company has a right to payment for its costs, plus a reasonable margin. For products manufactured over time, the transfer of control is measured pro rata, based upon current estimates of costs to complete such contracts. Losses on contracts are fully recognized in the period in which the losses become determinable. Revisions in profit estimates are reflected on a cumulative basis in the period in which the basis for such revision becomes known.

Disaggregation of Revenue from Contracts with Customers

The following table presents revenue disaggregated by product line and segment (in thousands):

	Three Months Ended
Revenue by Product Line	March 31, 2021		March 31, 2020
Electronics	$	65,085	$	48,069
Engraving Services		33,655		31,893
Engraving Products		2,371		3,538
Total Engraving		36,026		35,431
Scientific		24,221		14,670
Engineering Technologies		19,951		26,730
Hydraulics Cylinders and Systems		13,629		13,549
Merchandising & Display		6,276		7,719
Pumps		7,028		9,306
Total Specialty Solutions		26,933		30,574
Total Revenue by Product Line	$	172,216	$	155,474

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The following table presents revenue disaggregated by product line and segment (in thousands):

	Nine Months Ended
Revenue by Product Line	March 31, 2021		March 31, 2020
Electronics	$	180,524	$	140,521
Engraving Services		102,950		103,630
Engraving Products		7,427		8,488
Total Engraving		110,377		112,118
Scientific		58,777		44,834
Engineering Technologies		55,091		77,869
Hydraulics Cylinders and Systems		36,583		38,613
Merchandising & Display		19,515		26,234
Pumps		18,930		24,961
Total Specialty Solutions		75,028		89,808
Total Revenue by Product Line	$	479,797	$	465,150

The following table presents revenue from continuing operations disaggregated by geography based on company’s locations (in thousands):

	Three Months Ended		Three Months Ended		Nine Months Ended		Nine Months Ended
Net sales	March 31, 2021		March 31, 2020		March 31, 2021		March 31, 2020
United States	$	103,005	$	95,643	$	286,522	$	282,146
Asia Pacific		31,715		22,583		89,189		71,495
EMEA (1)		34,367		33,781		93,549		100,543
Other Americas		3,129		3,467		10,537		10,966
Total	$	172,216	$<