UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For the quarterly period ended
Commission File Number
STANDEX INTERNATIONAL CORPORATION
(Exact name of registrant as specified in its charter)
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(State of incorporation) | (IRS Employer Identification No.) |
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(Address of principal executive offices) | (Zip Code) |
( (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 |
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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.
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).
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.
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| Accelerated filer ☐ |
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Non-accelerated filer ☐ | Smaller reporting company |
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Emerging growth company |
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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
The number of shares of Registrant's Common Stock outstanding on February 1, 2022 was
STANDEX INTERNATIONAL CORPORATION
INDEX
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Page No. |
PART I. FINANCIAL INFORMATION: |
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Item 1. |
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Condensed Consolidated Balance Sheets as of December 31, 2021 and June 30, 2021 (unaudited) |
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Condensed Consolidated Statements of Operations for the three and six months ended December 31, 2021 and 2020 (unaudited) |
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Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and six months ended December 31, 2021 and 2020 (unaudited) |
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Condensed Consolidated Statements of Stockholders’ Equity for the three and six months ended December 31, 2021 and 2020 (unaudited) |
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Condensed Consolidated Statements of Cash Flows for the six months ended December 31, 2021 and 2020 (unaudited) |
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Notes to Unaudited Condensed Consolidated Financial Statements |
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Item 2. |
Management's Discussion and Analysis of Financial Condition and Results of Operations |
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Item 3. |
Quantitative and Qualitative Disclosures about Market Risk |
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Item 4. |
Controls and Procedures |
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PART II. OTHER INFORMATION: |
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Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds |
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Item 6. |
Exhibits |
PART I. FINANCIAL INFORMATION
ITEM 1
STANDEX INTERNATIONAL CORPORATION
Unaudited Condensed Consolidated Balance Sheets
December 31, | June 30, | |||||||
(In thousands, except per share data) | 2021 | 2021 | ||||||
ASSETS | ||||||||
Current Assets: | ||||||||
Cash and cash equivalents | $ | $ | ||||||
Accounts receivable, less allowance for credit losses of $ and $ at December 31, 2021 and June 30, 2021, respectively | ||||||||
Inventories | ||||||||
Prepaid expenses and other current assets | ||||||||
Income taxes receivable | ||||||||
Total current assets | ||||||||
Property, plant, and equipment, net | ||||||||
Intangible assets, net | ||||||||
Goodwill | ||||||||
Deferred tax asset | ||||||||
Operating lease right-of-use asset | ||||||||
Other non-current assets | ||||||||
Total non-current assets | ||||||||
Total assets | $ | $ | ||||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
Current Liabilities: | ||||||||
Accounts payable | $ | $ | ||||||
Accrued liabilities | ||||||||
Income taxes payable | ||||||||
Total current liabilities | ||||||||
Long-term debt | ||||||||
Operating lease long-term liabilities | ||||||||
Accrued pension and other non-current liabilities | ||||||||
Total non-current liabilities | ||||||||
Contingencies (Note 15) | ||||||||
Stockholders' equity: | ||||||||
Common stock, par value $ per share, shares authorized, shares issued, and shares outstanding at December 31, 2021 and June 30, 2021 | ||||||||
Additional paid-in capital | ||||||||
Retained earnings | ||||||||
Accumulated other comprehensive loss | ( | ) | ( | ) | ||||
Treasury shares: and shares at December 31, 2021 and June 30, 2021 | ( | ) | ( | ) | ||||
Total stockholders' equity | ||||||||
Total liabilities and stockholders' equity | $ | $ |
See notes to unaudited condensed consolidated financial statements
STANDEX INTERNATIONAL CORPORATION
Unaudited Condensed Consolidated Statements of Operations
Three Months Ended |
Six Months Ended |
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December 31, |
December 31, |
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(In thousands, except per share data) |
2021 |
2020 |
2021 |
2020 |
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Net sales |
$ | $ | $ | $ | ||||||||||||
Cost of sales |
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Gross profit |
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Selling, general, and administrative expenses |
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Restructuring costs |
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Acquisition related costs |
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Other operating (income) expense, net |
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Total operating expenses |
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Income from operations |
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Interest expense |
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Other non-operating (income) expense, net |
( |
) | ( |
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Income from continuing operations before income taxes |
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Provision for income taxes |
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Income from continuing operations |
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Income (loss) from discontinued operations, net of tax |
( |
) | ( |
) | ( |
) | ( |
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Net income |
$ | $ | $ | $ | ||||||||||||
Basic earnings (loss) per share: |
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Continuing operations |
$ | $ | $ | $ | ||||||||||||
Discontinued operations |
( |
) | ( |
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Total |
$ | $ | $ | $ | ||||||||||||
Diluted earnings (loss) per share: |
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Continuing operations |
$ | $ | $ | $ | ||||||||||||
Discontinued operations |
( |
) | ( |
) | ||||||||||||
Total |
$ | $ | $ | $ | ||||||||||||
Weighted average number of shares: |
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Basic |
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Diluted |
See notes to unaudited condensed consolidated financial statements
STANDEX INTERNATIONAL CORPORATION
Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss)
Three Months Ended |
Six Months Ended |
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December 31, |
December 31, |
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(In thousands) |
2021 |
2020 |
2021 |
2020 |
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Net income |
$ | $ | $ | $ | ||||||||||||
Other comprehensive income (loss): |
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Defined benefit pension plans: |
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Actuarial gains (losses) and other changes in unrecognized costs, net of tax |
$ | $ | ( |
) | $ | $ | ( |
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Amortization of unrecognized costs, net of tax |
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Derivative instruments: |
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Change in unrealized gains (losses), net of tax |
( |
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Amortization of unrealized gains (losses) into interest expense, net of tax |
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Foreign currency translation gains (losses), net of tax |
( |
) | ( |
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Other comprehensive income (loss), net of tax |
$ | ( |
) | $ | $ | ( |
) | $ | ||||||||
Comprehensive income |
$ | $ | $ | $ |
See notes to unaudited condensed consolidated financial statements
STANDEX INTERNATIONAL CORPORATION AND SUBSIDIARIES
Unaudited Consolidated Statements of Stockholders' Equity
Accumulated Other | ||||||||||||||||||||||||||||
For the six month period ended | Additional | Comprehensive | Total | |||||||||||||||||||||||||
December 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, 2021 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||
Stock issued under incentive compensation plans and employee purchase plans | ( | ) | ( | ) | ||||||||||||||||||||||||
Stock-based compensation | - | |||||||||||||||||||||||||||
Treasury stock acquired | ( | ) | ( | ) | ||||||||||||||||||||||||
Comprehensive income: | ||||||||||||||||||||||||||||
Net income | - | |||||||||||||||||||||||||||
Foreign currency translation adjustment | ( | ) | - | ( | ) | |||||||||||||||||||||||
Pension, net of tax of $ million | - | |||||||||||||||||||||||||||
Change in fair value of derivatives, net of tax of $ million | - | |||||||||||||||||||||||||||
Dividends declared ($ per share) | ( | ) | - | ( | ) | |||||||||||||||||||||||
Balance, December 31, 2021 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||
For the six month period ended December 31, 2020 | ||||||||||||||||||||||||||||
(in thousands, except as specified) | ||||||||||||||||||||||||||||
Balance, June 30, 2020 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||
Stock issued under incentive compensation plans and employee purchase plans | ( | ) | ( | ) | ||||||||||||||||||||||||
Stock-based compensation | - | |||||||||||||||||||||||||||
Treasury stock acquired | ( | ) | ( | ) | ||||||||||||||||||||||||
Comprehensive income: | - | |||||||||||||||||||||||||||
Net income | - | |||||||||||||||||||||||||||
Foreign currency translation adjustment | - | |||||||||||||||||||||||||||
Pension, net of tax of $ million | - | |||||||||||||||||||||||||||
Change in fair value of derivatives, net of tax of $ million | - | |||||||||||||||||||||||||||
Dividends declared ($ per share) | ( | ) | - | ( | ) | |||||||||||||||||||||||
Balance, December 31, 2020 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ |
STANDEX INTERNATIONAL CORPORATION AND SUBSIDIARIES
Unaudited Consolidated Statements of Stockholders' Equity
Accumulated Other | ||||||||||||||||||||||||||||
For the three month period ended | Additional | Comprehensive | Total | |||||||||||||||||||||||||
December 31, 2021 | Common | Paid-in | Retained | Income | Treasury Stock | Stockholders’ | ||||||||||||||||||||||
(in thousands, except as specified) | Stock | Capital | Earnings | (Loss) | Shares | Amount | Equity | |||||||||||||||||||||
Balance, September 30, 2021 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||
Stock issued under incentive compensation plans and employee purchase plans | ( | ) | ( | ) | ||||||||||||||||||||||||
Stock-based compensation | - | |||||||||||||||||||||||||||
Treasury stock acquired | - | ( | ) | ( | ) | |||||||||||||||||||||||
Comprehensive income: | ||||||||||||||||||||||||||||
Net income | - | |||||||||||||||||||||||||||
Foreign currency translation adjustment | ( | ) | - | ( | ) | |||||||||||||||||||||||
Pension, net of tax of $ million | - | |||||||||||||||||||||||||||
Change in fair value of derivatives, net of tax of $ million | - | |||||||||||||||||||||||||||
Dividends declared ($ per share) | ( | ) | - | ( | ) | |||||||||||||||||||||||
Balance, December 31, 2021 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||
For the three month period ended December 31, 2020 | ||||||||||||||||||||||||||||
(in thousands, except as specified) | ||||||||||||||||||||||||||||
Balance, September 30, 2020 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||
Stock issued under incentive compensation plans and employee purchase plans | ( | ) | ( | ) | ||||||||||||||||||||||||
Stock-based compensation | - | |||||||||||||||||||||||||||
Treasury stock acquired | ( | ) | ( | ) | ||||||||||||||||||||||||
Comprehensive income: | ||||||||||||||||||||||||||||
Net income | - | |||||||||||||||||||||||||||
Foreign currency translation adjustment | - | |||||||||||||||||||||||||||
Pension, net of tax of $ million | - | |||||||||||||||||||||||||||
Change in fair value of derivatives, net of tax of $ million | - | |||||||||||||||||||||||||||
Dividends declared ($ per share) | ( | ) | - | ( | ) | |||||||||||||||||||||||
Balance, December 31, 2020 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ |
STANDEX INTERNATIONAL CORPORATION
Unaudited Condensed Consolidated Statements of Cash Flows
Six Months Ended |
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December 31, |
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(In thousands) |
2021 |
2020 |
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Cash flows from operating activities |
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Net income |
$ | $ | ||||||
Income (loss) from discontinued operations |
( |
) | ( |
) | ||||
Income from continuing operations |
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Adjustments to reconcile net income to net cash provided by (used in) operating activities: |
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Depreciation and amortization |
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Stock-based compensation |
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Non-cash portion of restructuring charge |
( |
) | ||||||
Contributions to defined benefit plans |
( |
) | ( |
) | ||||
Changes in operating assets and liabilities, net |
( |
) | ( |
) | ||||
Net cash provided by operating activities - continuing operations |
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Net cash provided by (used in) operating activities - discontinued operations |
( |
) | ||||||
Net cash provided by operating activities |
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Cash flows from investing activities |
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Expenditures for property, plant, and equipment |
( |
) | ( |
) | ||||
Expenditures for acquisitions, net of cash acquired |
( |
) | ||||||
Other investing activity |
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Net cash provided by (used in) investing activities |
( |
) | ( |
) | ||||
Cash flows from financing activities |
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Proceeds from borrowings |
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Payments of debt |
( |
) | ||||||
Contingent consideration payment |
( |
) | ||||||
Activity under share-based payment plans |
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Purchases of treasury stock |
( |
) | ( |
) | ||||
Cash dividends paid |
( |
) | ( |
) | ||||
Net cash provided by (used in) financing activities |
( |
) | ( |
) | ||||
Effect of exchange rate changes on cash and cash equivalents |
( |
) | ||||||
Net change in cash and cash equivalents |
( |
) | ||||||
Cash and cash equivalents at beginning of year |
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Cash and cash equivalents at end of period |
$ | $ | ||||||
Supplemental Disclosure of Cash Flow Information: |
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Cash paid during the year for: |
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Interest |
$ | $ | ||||||
Income taxes, net of refunds |
$ | $ |
See notes to unaudited condensed consolidated financial statements
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 six months ended December 31, 2021 and 2020, the cash flows for the six months ended December 31, 2021 and 2020 and the financial position of Standex International Corporation (“Standex”, the “Company”, “we”, “us”, or “our”), at December 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, 2021. The condensed consolidated balance sheet at June 30, 2021 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, 2021. Unless otherwise noted, references to years are to the Company’s fiscal years. Currently our fiscal year end is June 30. For further clarity, our fiscal year 2022 includes the twelve-month period from July 1, 2021 to June 30, 2022.
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 COVID-19 pandemic and its related economic impacts. As a result of the COVID-19 pandemic, there is heightened volatility and uncertainty around supply chain performance, labor availability, and customer demand. 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 December 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. The Company evaluated subsequent events through the date and time its unaudited condensed consolidated financial statements were issued.
Recently Issued Accounting Pronouncements
There were no recently issued accounting pronouncements which are expected to have a material impact on the 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 December 31, 2021, the Company evaluated the significance of each acquisition on a standalone basis and in aggregate, considering both qualitative and quantitative factors.
During the first quarter of fiscal year 2021, the Company acquired Renco Electronics ("Renco"), 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 $
Intangible assets of $
The components of the fair value of the Renco Electronics acquisition, including the final allocation of the purchase price are as follows (in thousands):
Final Allocation |
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Fair value of business combination: |
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Cash payments |
$ | |||
Less, cash acquired |
) | |||
Fair value of contingent consideration |
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Total |
$ |
Final Allocation |
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Identifiable assets acquired and liabilities assumed: |
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Other acquired assets |
$ | |||
Inventories |
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Property, plant, & equipment |
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Identifiable intangible assets |
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Goodwill |
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Debt assumed |
) | |||
Liabilities assumed |
) | |||
Total |
$ |
Acquisition Related Costs
Acquisition related costs include costs related to acquired businesses and other pending acquisitions. These costs consist of (i) deferred compensation arrangements 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.
Acquisition related costs for the three months ended December 31, 2021, and 2020 were $
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 |
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Revenue by Product Line |
December 31, 2021 |
December 31, 2020 |
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Electronics |
$ | $ | ||||||
Engraving Services |
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Engraving Products |
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Total Engraving |
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Scientific |
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Engineering Technologies |
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Hydraulics Cylinders and Systems |
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Merchandising & Display |
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Pumps |
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Total Specialty Solutions |
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Total revenue by product line |
$ | $ |
The following table presents revenue disaggregated by product line and segment (in thousands):
Six Months Ended |
||||||||
Revenue by Product Line |
December 31, 2021 |
December 31, 2020 |
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Electronics |
$ | $ | ||||||
Engraving Services |
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Engraving Products |
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Total Engraving |
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Scientific |
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Engineering Technologies |
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Hydraulics Cylinders and Systems |
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Merchandising & Display |
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Pumps |
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Total Specialty Solutions |
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Total revenue by product line |
$ | $ |
The following table presents revenue from continuing operations disaggregated by geography based on company’s locations (in thousands):
Three Months Ended |
Three Months Ended |
Six Months Ended |
Six Months Ended |
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Net sales |
December 31, 2021 |
December 31, 2020 |
December 31, 2021 |
December 31, 2020 |
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United States |
$ | $ | $ | $ | ||||||||||||
Asia Pacific |
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EMEA (1) |
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Other Americas |
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Total |
$ | $ | $ | $ |
(1) EMEA consists primarily of Europe, Middle East and S. Africa.
The following table presents revenue from continuing operations disaggregated by timing of recognition (in thousands) for the three months ended:
Three Months Ended |
||||||||
Timing of Revenue Recognition |
December 31, 2021 |
December 31, 2020 |
||||||
Products and services transferred at a point in time |
$ | $ | ||||||
Products transferred over time |
||||||||
Net sales |
$ | $ |
Six Months Ended |
||||||||
Timing of Revenue Recognition |
December 31, 2021 |
December 31, 2020 |
||||||
Products and services transferred at a point in time |
$ | $ | ||||||
Products transferred over time |
||||||||
Net Sales |
$ | $ |
Contract Balances
Contract assets represent sales recognized in excess of billings related to work completed but not yet shipped for which revenue is recognized over time. Contract assets are recorded as prepaid expenses and other current assets. Contract liabilities are customer deposits for which revenue has not been recognized. Current contract liabilities are recorded as accrued liabilities.
The timing of revenue recognition, invoicing and cash collections results in billed receivables, contract assets and contract liabilities on the consolidated balance sheets. When consideration is received from a customer prior to transferring goods or services to the customer under the terms of a contract, a contract liability is recorded. Contract liabilities are recognized as revenue after control of the goods and services are transferred to the customer and all revenue recognition criteria have been met.
The following table provides information about contract assets and liability balances (in thousands):
Balance at Beginning of Period |
Additions |
Amount Recognized |
Balance at End of Period |
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Six months ended December 31, 2021 |
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Contract assets: |
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Prepaid expenses and other current assets |
$ | $ | $ | $ | ||||||||||||
Contract liabilities: |
||||||||||||||||
Customer deposits |
Balance at Beginning of Period |
Additions |
Amount Recognized |
Balance at End of Period |
|||||||||||||
Six months ended December 31, 2020 |
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Contract assets: |
||||||||||||||||
Prepaid expenses and other current assets |
$ | $ | $ | $ | ||||||||||||
Contract liabilities: |
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Customer deposits |
We recognized the following revenue which was included in the contract liability beginning balances (in thousands):
December 31, 2021 |
||||||||
Revenue recognized in the period from: |
Three months ended |
Six months ended |
||||||
Amounts included in the contract liability balance at the beginning of the period |
$ | $ |
December 31, 2020 |
||||||||
Revenue recognized in the period from: |
Three months ended |
Six months ended |
||||||
Amounts included in the contract liability balance at the beginning of the period |
$ | $ |
4) Fair Value Measurements
The financial instruments shown below are presented at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Where available, fair value is based on observable market prices or parameters or derived from such prices or parameters. Where observable prices or inputs are not available, valuation models may be applied.
Assets and liabilities recorded at fair value in the consolidated balance sheet are categorized based upon the level of judgment associated with the inputs used to measure their fair values. Hierarchical levels directly related to the amount of subjectivity associated with the inputs to fair valuation of these assets and liabilities and the methodologies used in valuation are as follows:
Level 1 – Quoted prices (unadjusted) in active markets for identical assets and liabilities. The Company’s deferred compensation plan assets consist of shares in various mutual funds (investments are participant-directed) which invest in a broad portfolio of debt and equity securities. These assets are valued based on publicly quoted market prices for the funds’ shares as of the balance sheet dates.
Level 2 – Inputs, other than quoted prices in an active market, that are observable either directly or indirectly through correlation with market data. For foreign exchange forward contracts and interest rate swaps, the Company values the instruments based on the market price of instruments with similar terms, which are based on spot and forward rates as of the balance sheet dates. The Company has considered the creditworthiness of counterparties in valuing all assets and liabilities.
Level 3 – Unobservable inputs based upon the Company’s best estimate of what market participants would use in pricing the asset or liability.
There were no transfers of assets or liabilities between any levels of the fair value measurement hierarchy at December 31, 2021 and June 30, 2021. The Company’s policy is to recognize transfers between levels as of the date they occur.
Cash and cash equivalents, accounts receivable, accounts payable, and debt are carried at cost, which approximates fair value.
The fair values of financial instruments were as follows (in thousands):
December 31, 2021 |
||||||||||||||||
Total |
Level 1 |
Level 2 |
Level 3 |
|||||||||||||
Assets |
||||||||||||||||
Marketable securities - deferred compensation plan |
$ | $ | $ | $ | ||||||||||||
Foreign exchange contracts |
||||||||||||||||
Interest rate swaps |
||||||||||||||||
Liabilities |
||||||||||||||||
Foreign exchange contracts |
$ | $ | $ | |||||||||||||
Interest rate swaps |
||||||||||||||||
Contingent acquisition payments (a) |
June 30, 2021 |
||||||||||||||||
Total |
Level 1 |
Level 2 |
Level 3 |
|||||||||||||
Assets |
||||||||||||||||
Marketable securities - deferred compensation plan |
$ | $ | $ | $ | ||||||||||||
Foreign exchange contracts |
||||||||||||||||
Liabilities |
||||||||||||||||
Foreign exchange contracts |
$ | $ | $ | $ | ||||||||||||
Interest rate swaps |
||||||||||||||||
Contingent acquisition payments (a) |
(a) The fair value of contingent consideration arrangements is determined based on the Company's evaluation as to the probability and amount of any contingent consideration that has been earned to date.
The financial liabilities based upon Level 3 inputs include contingent consideration arrangements relating to the acquisitions of Renco Electronics and GS Engineering. The Company is contractually obligated to pay contingent consideration payments to the Sellers of these businesses based on the achievement of certain criteria.
The Company is contractually obligated to pay contingent consideration to the sellers of GS Engineering in the event that certain revenue and gross margin targets are achieved during the five years following acquisition. The targets set in the GS Engineering stock purchase agreement were not met for the first or second year, which concluded in the fourth quarter of fiscal years 2020 and 2021, respectively. As of December 31, 2021, the Company could be required to pay up to $
The Company is also obligated to pay contingent consideration to the sellers of Renco Electronics in the event that certain earnings targets are achieved during the three years following acquisition. Contingent acquisition payments are scheduled to be paid in periods through fiscal year 2024. During the first quarter of fiscal year 2022, the Company paid $
The Company has determined the fair value of the liabilities for the contingent consideration based on a probability-weighted discounted cash flow analysis. This fair value measurement is based on significant inputs not observable in the market and thus represents a Level 3 measurement within the fair value hierarchy. The fair value of the contingent consideration liability associated with future payments was based on several factors, the most significant of which are the financial performance of the acquired businesses and the risk-adjusted discount rate for the fair value measurement.
The Company will update its assumptions each reporting period based on new developments and record such amounts at fair value based on the revised assumptions until the agreements expire.
5) Inventories
Inventories from continuing operations are comprised of the following (in thousands):
December 31, 2021 |
June 30, 2021 |
|||||||
Raw materials |
$ | $ | ||||||
Work in process |
||||||||
Finished goods |
||||||||
Total |
$ | $ |
Distribution costs associated with the sale of inventory, which are recorded as a component of selling, general and administrative expenses in the accompanying unaudited condensed consolidated statements of operations were $
6) Goodwill
Changes to goodwill by segment during the period were as follows (in thousands):
June 30, 2021 |
Translation Adjustment |
December 31, 2021 |
||||||||||
Electronics |
$ | $ | ( |
) | $ | |||||||
Engraving |
( |
) | ||||||||||
Scientific |
||||||||||||
Engineering Technologies |
( |
) | ||||||||||
Specialty Solutions |
||||||||||||
Total |
$ | $ | ( |
) | $ |
7) Warranty Reserves
The expected cost associated with warranty obligations on our products is recorded as a component of cost of sales when the revenue is recognized. The Company’s estimate of warranty cost is based on contract terms and historical warranty loss experience that is periodically adjusted for recent actual experience. Since warranty estimates are forecasts based on the best available information, claims costs may differ from amounts provided. Adjustments to initial obligations for warranties are made as changes in the obligations become reasonably estimable.
The changes in warranty reserves from continuing operations, which are recorded as a component of accrued liabilities were as follows (in thousands):
December 31, 2021 |
June 30, 2021 |
|||||||
Balance at beginning of year |
$ | $ | ||||||
Acquisitions and other charges |
( |
) | ||||||
Warranty expense |
||||||||
Warranty claims |
( |
) | ( |
) | ||||
Balance at end of period |
$ | $ |
8) Debt
Long-term debt is comprised of the following (in thousands):
December 31, 2021 |
June 30, 2021 |
|||||||
Bank credit agreements |
$ | $ | ||||||
Total funded debt |
||||||||
Issuance cost |
( |
) | ( |
) | ||||
Total long-term debt |
$ | $ |
Bank Credit Agreements
During the second quarter of fiscal year 2019, the Company entered into a
At December 31, 2021, the Company had standby letters of credit outstanding, primarily for insurance purposes, of $
9) |
Accrued Liabilities |
Accrued liabilities consist of the following (in thousands):
December 31, 2021 |
June 30, 2021 |
|||||||
Payroll and employee benefits |
$ | $ | ||||||
Workers' compensation |
||||||||
Warranty reserves |
||||||||
Fair value of derivatives |
||||||||
Operating lease current liability |
||||||||
Other |
||||||||
Total |
$ | $ |
10) Derivative Financial Instruments
The Company is exposed to market risks from changes in interest rates, commodity prices and changes in foreign currency rates. The Company selectively uses derivative financial instruments in order to manage certain of these risks. Information about the Company’s derivative financial instruments is as follows:
Interest Rate Swaps
From time to time as dictated by market opportunities, the Company enters into interest rate swap agreements designed to manage exposure to interest rates on the Company’s variable rate indebtedness. The Company recognizes all derivatives on its balance sheet at fair value. The Company has designated its interest rate swap agreements, including those that may be forward-dated, as cash flow hedges, and changes in the fair value of the swaps are recognized in other comprehensive income until the hedged items are recognized in earnings. Hedge ineffectiveness, if any, associated with the swaps will be reported by the Company in interest expense.
The Company’s effective swap agreements convert the base borrowing rate on $
Effective Date | Notional Amount | Fixed Interest Rate | Maturity | December 31, 2021 | June 30, 2021 | ||||||||||
May 24, 2017 | | |
| $ | ( | ) | $ | ( | ) | ||||||
August 6, 2018 | | |
| ( | ) | ( | ) | ||||||||
March 23, 2020 | | |
| ( | ) | ||||||||||
April 24, 2020 | | |
| ( | ) | ||||||||||
May 24, 2020 | | |
| ( | ) | ||||||||||
$ | ( | ) | $ | ( | ) |
The Company reported
Foreign Exchange Contracts
Forward foreign currency exchange contracts are used to limit the impact of currency fluctuations on certain anticipated foreign cash flows, such as collections from customers and loan payments between subsidiaries. The Company enters into such contracts for hedging purposes only. The Company has designated certain of these currency contracts as hedges, and changes in the fair value of these contracts are recognized in other comprehensive income until the hedged items are recognized in earnings. Hedge ineffectiveness, if any, associated with these contracts will be reported in net income. At December 31, 2021 and June 30, 2021, the Company had outstanding forward contracts related to hedges of intercompany loans with net unrealized losses of less than $
The notional amounts of the Company’s forward contracts, by currency, are as follows (in thousands):
Currency | December 31, 2021 | June 30, 2021 | ||||||
USD | ||||||||
EUR | ||||||||
SGD | ||||||||
CAD |
The table below presents the fair value of derivative financial instruments as well as their classification on the balance sheet (in thousands):
Asset Derivatives | ||||||||||
December 31, 2021 | June 30, 2021 | |||||||||
Derivative designated | Balance | Balance | ||||||||
as hedging instruments | Sheet | Sheet | ||||||||
Line Item | Fair Value | Line Item | Fair Value | |||||||
Interest rate swaps | Prepaid expenses and other current assets | $ | $ | - | ||||||
Foreign exchange contracts | Prepaid expenses and other current assets | Prepaid expenses and other current assets | ||||||||
$ | $ |
Liability Derivatives | ||||||||||
December 31, 2021 | June 30, 2021 | |||||||||
Derivative designated | Balance | Balance | ||||||||
as hedging instruments | Sheet | Sheet | ||||||||
Line Item | Fair Value | Line Item | Fair Value | |||||||
Interest rate swaps | Accrued liabilities | $ | Accrued liabilities | $ | ||||||
Foreign exchange contracts | Accrued liabilities | Accrued liabilities | ||||||||
$ | $ |
The table below presents the amount of gain (loss) recognized in comprehensive income on our derivative financial instruments (effective portion) designated as hedging instruments and their classification within comprehensive income for the periods ended (in thousands):
Three Months Ended | Six Months Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
Interest rate swaps | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||
Foreign exchange contracts | ||||||||||||||||
$ | $ | $ | $ | ( | ) |
The table below presents the amount reclassified from accumulated other comprehensive income (loss) to net income for the periods ended (in thousands):
Details about Accumulated | Affected line item | ||||||||||||||||
Other Comprehensive | Three Months Ended | Six Months Ended | in the Unaudited | ||||||||||||||
Income (Loss) Components | December 31, | December 31, | Condensed Statements | ||||||||||||||
2021 | 2020 | 2021 | 2020 | of Operations | |||||||||||||
Interest rate swaps | $ | $ | $ | $ | Interest expense | ||||||||||||
Foreign exchange contracts | ( | ) | ( | ) | Other non-operating (income) expense, net | ||||||||||||
$ | $ | $ | $ |
11) Retirement Benefits
The Company has defined benefit pension plans covering certain current and former employees both inside and outside of the U.S. The Company’s pension plan for U.S. employees is frozen for substantially all participants and has been replaced with a defined contribution benefit plan.
Net periodic benefit cost for the Company’s U.S. and Foreign pension benefit plans for the periods ended consisted of the following components (in thousands):
U.S. Plans |
Non-U.S. Plans |
|||||||||||||||
Three Months Ended |
Three Months Ended |
|||||||||||||||
December 31, |
December 31, |
|||||||||||||||
2021 |
2020 |
2021 |
2020 |
|||||||||||||
Service cost |
$ | $ | $ | $ | ||||||||||||
Interest cost |
||||||||||||||||
Expected return on plan assets |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Recognized net actuarial loss |
||||||||||||||||
Amortization of prior service cost |
( |
) | ( |
) | ||||||||||||
Net periodic benefit cost |
$ | ( |
) | $ | $ | $ |
U.S. Plans |
Non-U.S. Plans |
|||||||||||||||
Six Months Ended |
Six Months Ended |
|||||||||||||||
December 31, |
December 31, |
|||||||||||||||
2021 |
2020 |
2021 |
2020 |
|||||||||||||
Service cost |
$ | $ | $ | $ | ||||||||||||
Interest cost |
||||||||||||||||
Expected return on plan assets |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Recognized net actuarial loss |
||||||||||||||||
Amortization of prior service cost |
( |
) | ( |
) | ||||||||||||
Net periodic benefit cost |
$ | ( |
) | $ | $ | $ |
The following table sets forth the amounts recognized for the Company's defined benefit pension plans (in thousands):
Amounts recognized in the consolidated balance sheets consist of: |
December 31, 2021 |
June 30, 2021 |
||||||
Prepaid benefit cost |
$ | $ | ||||||
Current liabilities |
( |
) | ( |
) | ||||
Non-current liabilities |
( |
) | ( |
) | ||||
Net amount recognized |
$ | ( |
) | $ | ( |
) |
The contributions made to defined benefit plans are presented below along with remaining contributions to be made for fiscal year 2022 (in thousands):
Fiscal Year 2022 |
Fiscal Year 2021 |
Remaining |
||||||||||||||||||
Three Months Ended |
Six Months Ended |
Three Months Ended |
Six Months Ended |
Contributions |
||||||||||||||||
Contributions to defined benefit plans |
December 31, 2021 |
December 31, 2021 |
December 31, 2020 |
December 31, 2020 |
FY 2022 |
|||||||||||||||
United States, funded plan |
$ | $ | $ | $ | $ | |||||||||||||||
United States, unfunded plan |
||||||||||||||||||||
United Kingdom |
||||||||||||||||||||
Germany, unfunded plan |
||||||||||||||||||||
Ireland |
||||||||||||||||||||
$ | $ | $ | $ | $ |
12) Income Taxes
The Company's effective tax rate from continuing operations for the second quarter of fiscal year 2022 and for the six months of the fiscal year ending June 30, 2022 was
13) Earnings Per Share
The following table sets forth a reconciliation of the number of shares (in thousands) used in the computation of basic and diluted earnings per share:
Three Months Ended |
Six Months Ended |
|||||||||||||||
December 31, |
December 31, |
|||||||||||||||
2021 |
2020 |
2021 |
2020 |
|||||||||||||
Basic - Average shares outstanding |
||||||||||||||||
Dilutive effect of unvested, restricted stock awards |
||||||||||||||||
Diluted - Average shares outstanding |
Earnings available to common stockholders are the same for computing both basic and diluted earnings per share. There were
Performance stock units of
14) Accumulated Other Comprehensive Income (Loss)
The components of the Company’s accumulated other comprehensive income (loss) are as follows (in thousands):
December 31, 2021 |
June 30, 2021 |
|||||||
Foreign currency translation adjustment |
$ | ( |
) | $ | ( |
) | ||
Unrealized pension losses, net of tax |
( |
) | ( |
) | ||||
Unrealized gains (losses) on derivative instruments, net of tax |
( |
) | ||||||
Total |
$ | ( |
) | $ | ( |
) |
15) Contingencies
From time to time, the Company is subject to various claims and legal proceedings, including claims related to environmental remediation, either asserted or unasserted, that arise in the ordinary course of business. While the outcome of these proceedings and claims cannot be predicted with certainty, the Company’s management does not believe that the outcome of any of the currently existing legal matters will have a material impact on the Company’s consolidated financial position, results of operations or cash flow. The Company accrues for losses related to a claim or litigation when the Company’s management considers a potential loss probable and can reasonably estimate such potential loss.
Litigation
In the second quarter of fiscal year 2019, a lawsuit was filed against Standex Electronics, Inc. ("Electronics"), a wholly owned subsidiary of the Company, by Miniature Precision Components, Inc. ("MPC"), a customer, seeking damages in connection with allegedly faulty sensors designed and manufactured by Electronics. The subject sensors were incorporated by MPC into a subassembly sold by MPC to its customer, an automotive manufacturer. MPC alleges that the sensors incorrectly activated a diagnostic code in vehicles for which MPC’s customer issued a service bulletin, resulting in significant warranty costs for MPC. In the litigation, which is pending in the U.S. District Court for the Eastern District of Wisconsin, MPC seeks indemnification from Electronics for its costs. Electronics has numerous defenses to MPC’s claims. Trial for this case is currently scheduled for July 2022. During the second quarter of fiscal year 2022, the Company engaged in unsuccessful mediation with MPC, during which the Company offered to settle the matter in order to avoid the inherent risk of litigation as well as the cost of diverting internal resources. As a result, the Company has recorded $
16) Industry Segment Information
The Company has
reportable segments organized around the types of products sold:
• |
Electronics – manufactures and sells electronic components for applications throughout the end user market spectrum; |
|
• |
Engraving – provides mold texturizing, slush molding tools, project management and design services, roll engraving, hygiene product tooling, low observation vents for stealth aircraft, and process machinery for a number of industries; |
|
• |
Scientific – sells specialty temperature-controlled equipment for the medical, scientific, pharmaceutical, biotech and industrial markets; |
|
• |
Engineering Technologies – provides net and near net formed single-source customized solutions in the manufacture of engineered components for the aviation, aerospace, defense, energy, industrial, medical, marine, oil and gas, and manned and unmanned space markets; |
|
• |
Specialty Solutions – an aggregation of three operating segments that manufacture and sell refrigerated, heated and dry merchandizing display cases, custom fluid pump solutions, and single and double acting telescopic and piston rod hydraulic cylinders. |
Net sales and income (loss) from continuing operations by segment were as follows (in thousands):
Three Months Ended December 31, |
||||||||||||||||
Net Sales |
Income from Operations |
|||||||||||||||
2021 |
2020 |
2021 |
2020 |
|||||||||||||
Industry segment: |
||||||||||||||||
Electronics |
$ | $ | $ | $ | ||||||||||||
Engraving |
||||||||||||||||
Scientific |
||||||||||||||||
Engineering Technologies |
||||||||||||||||
Specialty Solutions |
||||||||||||||||
Corporate |
- | - | ( |
) | ( |
) | ||||||||||
Restructuring costs |
- | - | ( |
) | ( |
) | ||||||||||
Acquisition related costs |
- | - | ( |
) | ( |
) | ||||||||||
Other operating income (expense), net |
- | - | ( |
) | ||||||||||||
Sub-total |
$ | $ | $ | $ | ||||||||||||
Interest expense |
||||||||||||||||
Other non-operating (income) expense |
( |
) | ||||||||||||||
Income from continuing operations before income taxes |
$ | $ |
Six Months Ended December 31, |
||||||||||||||||
Net Sales |
Income from Operations |
|||||||||||||||
2021 |
2020 |
2021 |
2020 |
|||||||||||||
Industry segment: |
||||||||||||||||
Electronics |
$ | $ | $ | $ | ||||||||||||
Engraving |
||||||||||||||||
Scientific |
||||||||||||||||
Engineering Technologies |
||||||||||||||||
Specialty Solutions |
||||||||||||||||
Corporate |
- | - | ( |
) | ( |
) | ||||||||||
Restructuring costs |
- | - | ( |
) | ( |
) | ||||||||||
Acquisition related costs |
- | - | ( |
) | ( |
) | ||||||||||
Other operating income (expense), net |
- | - | ( |
) | ||||||||||||
Sub-total |
$ | $ | $ | $ | ||||||||||||
Interest expense |
||||||||||||||||
Other non-operating (income) expense |
( |
) | ||||||||||||||
Income from continuing operations before income taxes |
$ | $ |
Net sales include only transactions with unaffiliated customers and include no intersegment sales. Income (loss) from operations by segment excludes interest expense and other non-operating (income) expense.
17) Restructuring
The Company has undertaken a number of initiatives that have resulted in severance, restructuring, and related charges.
2022 Restructuring Initiatives
The Company continues to focus its efforts to reduce cost and improve productivity across its businesses, particularly through headcount reductions, facility closures, and consolidations. Restructuring expenses primarily related to headcount reductions and other cost saving initiatives. The Company expects the 2022 restructuring activities to be completed by 2023.
Prior Year Restructuring Initiatives
Restructuring expenses primarily related to headcount reductions and facility rationalization within our Specialty Solutions segment. The Company also incurred restructuring expenses related to third party assistance with analysis and implementation of these activities. The Company expects the prior year restructuring activities to be completed by 2022.
A summary of charges by initiative is as follows (in thousands):
Three Months Ended |
Six Months Ended |
|||||||||||||||||||||||
December 31, 2021 |
December 31, 2021 |
|||||||||||||||||||||||
Fiscal Year 2022 |
Involuntary Employee Severance and Benefit Costs |
Other |
Total |
Involuntary Employee Severance and Benefit Costs |
Other |
Total |
||||||||||||||||||
Current year initiatives |
$ | $ | $ | $ | $ | $ | ||||||||||||||||||
Three Months Ended |
Six Months Ended |
|||||||||||||||||||||||
December 31, 2020 |
December 31, 2020 |
|||||||||||||||||||||||
Fiscal Year 2021 |
Involuntary Employee Severance and Benefit Costs |
Other |
Total |
Involuntary Employee Severance and Benefit Costs |
Other |
Total |
||||||||||||||||||
Current year initiatives |
$ | $ | $ | $ | $ | $ | ||||||||||||||||||
Prior year initiatives |
||||||||||||||||||||||||
$ | $ | $ | $ | $ | $ |
Activity in the reserve related to the initiatives is as follows (in thousands):
Current Year Initiatives |
Involuntary Employee Severance and Benefit Costs |
Other |
Total |
|||||||||
Restructuring liabilities at June 30, 2021 |
$ | $ | $ | |||||||||
Additions and adjustments |
||||||||||||
Payments |
( |
) | ( |
) | ( |
) | ||||||
Restructuring liabilities at December 31, 2021 |
$ | $ | $ |
Prior Year Initiatives |
Involuntary Employee Severance and Benefit Costs |
Other |
Total |
|||||||||
Restructuring liabilities at June 30, 2021 |
$ | $ | $ | |||||||||
Additions and adjustments |
||||||||||||
Payments |
( |
) | ( |
) | ( |
) | ||||||
Restructuring liabilities at December 31, 2021 |
$ | $ | $ |
Prior Year Initiatives |
Involuntary Employee Severance and Benefit Costs |
Other |
Total |
|||||||||
Restructuring liabilities at June 30, 2020 |
$ | $ | $ | |||||||||
Additions and adjustments |
||||||||||||
Payments |
) | ) | ) | |||||||||
Restructuring liabilities at December 31, 2020 |
$ | $ | $ |
The Company’s total restructuring expenses by segment are as follows (in thousands):
Three Months Ended |
Six Months Ended |
|||||||||||||||||||||||
December 31, 2021 |
December 31, 2021 |
|||||||||||||||||||||||
Involuntary Employee Severance and Benefit Costs |
Other |
Total |
Involuntary Employee Severance and Benefit Costs |
Other |
Total |
|||||||||||||||||||
Electronics |
$ | $ | $ | $ | $ | $ | ||||||||||||||||||
Engraving |
||||||||||||||||||||||||
Engineering Technologies |
||||||||||||||||||||||||
Specialty Solutions |
||||||||||||||||||||||||
Corporate |
||||||||||||||||||||||||
$ | $ | $ | $ | $ | $ |
Three Months Ended |
Six Months Ended |
|||||||||||||||||||||||
December 31, 2020 |
December 31, 2020 |
|||||||||||||||||||||||
Involuntary Employee Severance and Benefit Costs |
Other |
Total |
Involuntary Employee Severance and Benefit Costs |
Other |
Total |
|||||||||||||||||||
Electronics |
$ | $ | $ | $ | $ | $ | ||||||||||||||||||
Engraving |
||||||||||||||||||||||||
Engineering Technologies |
||||||||||||||||||||||||
Specialty Solutions |
||||||||||||||||||||||||
Corporate |
||||||||||||||||||||||||
$ | $ | $ | $ | $ | $ |
Restructuring expense is expected to be approximately $
Management's Discussion and Analysis of Financial Condition and Results of Operations |
Statements contained in this Quarterly Report that are not based on historical facts are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the use of forward-looking terminology such as “should,” “could,” “may,” “will,” “expect,” “believe,” “estimate,” “anticipate,” “intend,” “continue,” or similar terms or variations of those terms or the negative of those terms. There are many factors that affect the Company’s business and the results of its operations and that may cause the actual results of operations in future periods to differ materially from those currently expected or anticipated. These factors include, but are not limited to: the impact of pandemics such as the current coronavirus on employees, our supply chain, and the demand for our products and services around the world; materially adverse or unanticipated legal judgments, fines, penalties or settlements; conditions in the financial and banking markets, including fluctuations in exchange rates and the inability to repatriate foreign cash; domestic and international economic conditions, including the impact, length and degree of economic downturns on the customers and markets we serve and more specifically conditions in the automotive, construction, aerospace, defense, transportation, food service equipment, consumer appliance, energy, oil and gas and general industrial markets; lower-cost competition; the relative mix of products which impact margins and operating efficiencies in certain of our businesses; the impact of higher raw material and component costs, particularly steel, certain materials used in electronics parts, petroleum based products, and refrigeration components; the impact of higher transportation and logistics costs, especially with respect to transportation of goods from Asia; the impact of inflation on the costs of providing our products and services; an inability to realize the expected cost savings from restructuring activities including effective completion of plant consolidations, cost reduction efforts including procurement savings and productivity enhancements, capital management improvements, strategic capital expenditures, and the implementation of lean enterprise manufacturing techniques; the potential for losses associated with the exit from or divestiture of businesses that are no longer strategic or no longer meet our growth and return expectations; the inability to achieve the savings expected from global sourcing of raw materials and diversification efforts in emerging markets; the impact on cost structure and on economic conditions as a result of actual and threatened increases in trade tariffs; the inability to attain expected benefits from acquisitions and the inability to effectively consummate and integrate such acquisitions and achieve synergies envisioned by the Company; market acceptance of our products; our ability to design, introduce and sell new products and related product components; the ability to redesign certain of our products to continue meeting evolving regulatory requirements; the impact of delays initiated by our customers; our ability to increase manufacturing production to meet demand including as a result of labor shortages; and potential changes to future pension funding requirements. 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.
Overview
We are a diversified industrial manufacturer with leading positions in a variety of products and services that are used in diverse commercial and industrial markets. We have seven operating segments aggregated into five reportable segments: Electronics, Engraving, Scientific, Engineering Technologies, and Specialty Solutions. Three operating segments are aggregated into Specialty Solutions. Our segments differentiate themselves by collaborating with our customers in order to develop and deliver custom solutions or engineered components that solve problems for our customers or otherwise meet their needs (a business model we refer to as “Customer Intimacy”). Overall management, strategic development and financial control are led by the executive staff at our corporate headquarters located in Salem, New Hampshire.
Our long-term strategy is to enhance shareholder value by building larger, more profitable focused industrial platforms through our Standex Value Creation System that assists management in meeting specific corporate and business unit financial and strategic performance goals in order to create, improve, and enhance shareholder value. In so doing, we expect to focus our financial assets and managerial resources on our higher growth and operating margin businesses while considering divestiture of those businesses that we feel are not strategic or do not meet our growth and return expectations.
The Standex Value Creation System is a methodology which provides standard work and consistent tools used throughout the Company in order to achieve our organization’s goals. The Standex Value Creation System employs four components: Balanced Performance Plan, Growth Disciplines, Operational Excellence, and Talent Management. The Balanced Performance Plan process aligns annual goals throughout the Company and provides a standard reporting, management and review process. It is focused on setting, tracking and reviewing annual and quarterly targets that support our short and long-term goals. The Growth Disciplines use a standard playbook of tools and processes including market maps, market tests and growth laneways to identify, explore and execute on opportunities that expand the business organically and through acquisitions. Operational Excellence also employs a standard playbook of tools and processes, based on Lean, to improve operating execution (effectiveness), eliminate waste (efficiency) and thereby improve profitability, cash flow and customer satisfaction. Finally, Talent Management is an organizational development process that provides recruitment, training, development, and succession planning for employees throughout our worldwide organization. Through the use of our Standex Value Creation System, we have developed a balanced approach to value creation. We intend to continue investing acquisition capital in high margin and growth businesses, and we will continue to support all of our businesses as they enhance value through deployment of the Standex Valuation Creation System.
It is our objective to grow larger and more profitable business units through both organic initiatives and acquisitions. We seek to identify and implement organic growth initiatives such as new product development, geographic expansion, the introduction of products and technologies into new markets, key accounts and strategic sales channel partners, and the introduction of new technologies into existing markets. Also, we have a long-term objective to create sizable business platforms by adding strategically aligned or “bolt on” acquisitions to strengthen the individual businesses, create both sales and cost synergies with our core business platforms, and accelerate their growth and margin improvement. We look to create both sales and cost synergies within our core business platforms, accelerate growth and improve margins. We have a particular focus on identifying and investing in opportunities that complement our products and will increase the global presence and capabilities of our businesses. From time to time, we have divested, and likely will continue to divest, businesses that we feel are not strategic or do not meet our growth and return expectations.
As part of our ongoing strategy:
● |
In the third quarter of fiscal year 2021, we divested Enginetics Corporation (“Enginetics”) our jet engine components business reported within our Engineering Technologies segment, to Enjet Aero, LLC, a privately-held aerospace engine component manufacturing company. This divestiture allows us to focus on the higher growth and margin opportunities of our core spin forming solutions business that serves the space, commercial aviation and defense end markets. We received $11.7 million cash consideration and recorded a loss on the sale of $14.6 million in the Consolidated Financial Statements. |
● |
In the first quarter of fiscal year 2021, we acquired Renco Electronics (“Renco”), 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. Renco operates one manufacturing facility in Florida and is supported by contract manufacturers in Asia. Renco’s results are reported within our Electronics segment. |
As a result of our portfolio moves over the past several years, we have transformed Standex to a company with a more focused group of businesses selling customized solutions to high value end markets via a compelling customer value proposition. The narrowing of the portfolio allows for greater management focus on driving operational disciplines and positions us well to continue benefitting from the economic rebound associated with the emergence from the end of the COVID-19 crisis and to use our cash flow from operations to invest selectively in our ongoing pipeline of organic and inorganic opportunities.
We develop “Customer Intimacy” by utilizing the Standex Growth Disciplines to partner with our customers in order to develop and deliver custom solutions or engineered components. By partnering with our customers during long-term product development cycles, we become an extension of their development teams. Through this Partner, Solve, Deliver® approach, we are able to secure our position as a preferred long-term solution provider for our products and components. This strategy results in increased sales and operating margins that enhance shareholder returns.
Standex Operational Excellence drives continuous improvement in the efficiency of our businesses, both on the shop floor and in the office environment. We recognize that our businesses are competing in a global economy that requires us to improve our competitive position. We have deployed a number of management competencies to drive improvements in the cost structure of our business units including operational excellence through lean enterprise, the use of low-cost manufacturing facilities, the consolidation of manufacturing facilities to achieve economies of scale and leveraging of fixed infrastructure costs, alternate sourcing to achieve procurement cost reductions, and capital improvements to increase productivity.
The Company’s strong historical cash flow has been a cornerstone for funding our capital allocation strategy. We use cash flow generated from operations to fund investments in capital assets to upgrade our facilities, improve productivity and lower costs, invest in the strategic growth programs described above, including organic growth and acquisitions, and to return cash to our shareholders through payment of dividends and stock buybacks.
Restructuring expenses reflect costs associated with our efforts of continuously improving operational efficiency and expanding globally in order to remain competitive in our end user markets. We incur costs for actions to size our businesses to a level appropriate for current economic conditions, improve our cost structure, enhance our competitive position and increase operating margins. Such expenses include costs for moving facilities to locations that allow for lower fixed and variable costs, external consultants who provide additional expertise starting up plants after relocation, downsizing operations because of changing economic conditions, and other costs resulting from asset redeployment decisions. Shutdown costs include severance, benefits, stay bonuses, lease and contract terminations, asset write-downs, costs of moving fixed assets, and moving and relocation costs. Vacant facility costs include maintenance, utilities, property taxes and other costs.
Because of the diversity of the Company’s businesses, end user markets and geographic locations, management does not use specific external indices to predict the future performance of the Company, other than general information about broad macroeconomic trends. Each of our individual business units serves niche markets and attempts to identify trends other than general business and economic conditions which are specific to its business and which could impact its performance. Those units report pertinent information to senior management, which uses it to the extent relevant to assess the future performance of the Company. A description of any such material trends is described below in the applicable segment analysis.
We monitor a number of key performance indicators (“KPIs”) including net sales, income from operations, backlog, effective income tax rate, gross profit margin, and operating cash flow. A discussion of these KPIs is included below. We may also supplement the discussion of these KPIs by identifying the impact of foreign exchange rates, acquisitions, and other significant items when they have a material impact on a specific KPI.
We believe the discussion of these items provides enhanced information to investors by disclosing their impact on the overall trend which provides a clearer comparative view of the KPI, as applicable. For discussion of the impact of foreign exchange rates on KPIs, we calculate the impact as the difference between the current period KPI calculated at the current period exchange rate as compared to the KPI calculated at the historical exchange rate for the prior period. For discussion of the impact of acquisitions, we isolate the effect on the KPI amount that would have existed regardless of such acquisition. Sales resulting from synergies between the acquisition and existing operations of the Company are considered organic growth for the purposes of our discussion.
Unless otherwise noted, references to years are to fiscal years.
Impact of COVID-19 Pandemic on the Company
Given the global nature of our business and the number of our facilities worldwide, we continue to be impacted globally by COVID-19 related issues. We have taken effective action around the world to protect our health and safety, continue to serve our customers, support our communities and manage our cash flows. Our priority was and remains the health and safety of all of our employees. Each of our facilities is following safe practices as defined in their local jurisdictions as well as sharing experiences and innovative ways of overcoming challenges brought on by the crisis during updates with global site leaders. We are rigorously following health protocols in our plants, including changing work cell configurations and revising shift schedules when appropriate, in order to do our best to maintain operations. Initially, we experienced revenue reductions in many of our businesses due to the impact that the pandemic had on our customers. Conversely, public and private sector responses to COVID-19 vaccine distribution, especially in the United States, have also resulted in increased sales of scientific refrigeration equipment to customers within our Scientific reporting segment. More recently we have been impacted by (i) supply chain shortages and increased costs associated with the well-documented global logistics issues and (ii) labor shortages, especially in North America.
We exited the second quarter of fiscal year 2022 with $147.2 million in cash and $199.7 million of borrowings under our revolving credit facility. Our leverage ratio covenant, as defined in our revolving credit agreement, was 1.20 to 1 and allowed us the capacity to borrow an additional $281.2 million at December 31, 2021. We believe that we have sufficient liquidity around the world and access to financing to execute on our short and long-term strategic plans.
Finally, we continue to monitor our ability to participate in any governmental assistance programs available to us in each of our global locations and participate in these programs as available and appropriate.
Results from Continuing Operations
Three Months Ended |
Six Months Ended |
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December 31, |
December 31, |
|||||||||||||||
(In thousands, except percentages) |
2021 |
2020 |
2021 |
2020 |
||||||||||||
Net sales |
$ | 185,709 | $ | 156,283 | $ | 361,319 | $ | 307,569 | ||||||||
Gross profit margin |
37.0 | % | 37.1 | % | 37.4 | % | 36.7 | % | ||||||||
Income from operations |
21,773 | 16,738 | 44,601 | 31,092 |
Three Months Ended |
Six Months Ended |
|||||||
(In thousands) |
December 31, 2021 |
December 31, 2021 |
||||||
Net sales, prior year period |
$ | 156,283 | $ | 307,569 | ||||
Components of change in sales: |
||||||||
Organic sales change |
32,016 | 57,623 | ||||||
Effect of business divestitures |
(2,302 | ) | (5,338 | ) | ||||
Effect of exchange rates |
(288 | ) | 1,465 | |||||
Net sales, current period |
$ | 185,709 | $ | 361,319 |
Net sales increased in the second quarter of fiscal year 2022 by $29.4 million or 18.8% when compared to the prior year quarter. Organic sales increased $32.0 million or 20.5%, primarily due to pricing actions and strong demand in our Electronics and Scientific segments, while foreign currency had a $0.3 million or 0.2% negative impact on sales. Sales in the prior year quarter included revenue of $2.3 million related to our divested Enginetics business.
Net sales increased in the six months ended December 31, 2021 by $53.8 million or 17.5% when compared to the prior year period. Organic sales increased $57.6 million or 18.7%, primarily due to pricing actions and strong demand in our Electronics and Scientific segments, while foreign currency had a $1.5 million or 0.5% positive impact on sales. Sales in the prior year period included revenue of $5.4 million related to our divested Enginetics business.
Gross Profit Margin
Our gross margin for the second quarter of fiscal year 2022 was 37.0%, which slightly declined from the prior year quarter’s gross margin of 37.1%. This decline is primarily the result of project mix, and raw material and ocean freight cost headwinds, offset by organic sales increases and price and productivity initiatives across our segments.
Our gross margin for six months ended December 31, 2021 was 37.4%, which increased from the prior year quarter’s gross margin of 36.7%. This increase is a result of organic sales increases and price and productivity initiatives, partially offset by raw material and ocean freight cost headwinds, a one-time project related charge at Engineering Technologies in the first quarter, along with production decreases due to a temporary work stoppage in our Specialty Solutions segment which was resolved during the first quarter.
Selling, General, and Administrative Expenses
Selling, General, and Administrative (“SG&A”) expenses for the second quarter of fiscal year 2022 were $43.5 million, or 23.4% of sales, compared to $40.2 million, or 25.7% of sales, during the prior year quarter. SG&A expenses during the quarter were impacted by increased distribution expense of approximately $2.1 million associated with higher organic sales volume in the quarter, as well as increases in research and development costs and compensation related accruals.
SG&A expenses for the six months ended December 31, 2021 were $86.3 million, or 23.9% of sales, compared to $79.1 million, or 25.7% of sales, during the six months ended December 31, 2020. SG&A expenses during the period were impacted by increased distribution expense of approximately $3.3 million associated with higher organic sales volume in the six months ended December 31, 2021, increases in research and development costs and compensation related accruals.
Restructuring Charges
We incurred restructuring expenses of $0.8 million in the second quarter of fiscal year 2022 and $1.3 million for the six months ended December 31, 2021, primarily related to productivity improvements and global headcount reductions within our Engraving segment.
We expect to incur restructuring costs of approximately $1.1 million throughout the remainder of fiscal year 2022 as we continue to focus our efforts to reduce cost and improve productivity across our businesses, particularly through headcount reductions and productivity initiatives.
Acquisition Related Expenses
We incurred acquisition related expenses of $0.9 million in the second quarter of fiscal year 2022 and $1.1 million for the six months ended December 31, 2021. Acquisition related expenses typically consist of due diligence, integration, and valuation expenses incurred in connection with recent or pending acquisitions.
Income from Operations
Income from operations for the second quarter of fiscal year 2022 was $21.8 million, compared to $16.7 million during the prior year quarter. The increase of $5.1 million, or 30.1%, is primarily due to organic sales growth, productivity and cost savings initiatives, offset by increases in material costs.
Income from operations for the six months ended December 31, 2021 was $44.6 million, compared to $31.1 million during the prior year quarter. The increase of $13.5 million, or 43.4%, is primarily due to organic sales growth, productivity and cost savings initiatives, offset by increases in material costs.
Interest Expense
Interest expense for the second quarter of fiscal year 2022 was $1.5 million, a 4.7% decrease from interest expense of $1.6 million during the prior year quarter. Interest expense for the six months ended December 31, 2021 was $3.2 million, a 5.2% increase from interest expense of $3.1 million during the prior year. Our effective interest rate in the second quarter of fiscal year 2022 was 2.62%.
Income Taxes
Our effective tax rate from continuing operations for the second quarter of fiscal year 2022 and for the six months of the fiscal year ending June 30, 2022 was 24.7% and 24.8%, respectively compared with 21.0% and 24.8% for the prior year quarter and prior year period, respectively. The tax rate was impacted in the current period by the following items: (i) a discrete tax benefit related to equity compensation, (ii) the jurisdictional mix of earnings, (iii) foreign withholding taxes, and (iv) reduction of global intangible low-taxed income.
Backlog
Backlog includes all active or open orders for goods and services. Backlog also includes any future deliveries based on executed customer contracts, so long as such deliveries are based on agreed upon delivery schedules. Backlog orders are not necessarily an indicator of future sales levels because of variations in lead times and customer production demand pull systems, with the exception of Engineering Technologies. Customers may delay delivery of products or cancel orders prior to shipment, subject to possible cancellation penalties. Due to the nature of long-term agreements in the Engineering Technologies segment, the timing of orders and delivery dates can vary considerably resulting in significant backlog changes from one period to another.
As of December 31, 2021 |
As of December 31, 2020 |
|||||||||||||||
Total Backlog |
Backlog under 1 year |
Total Backlog |
Backlog under 1 year |
|||||||||||||
Electronics |
$ | 153,080 | $ | 143,485 | $ | 77,243 | $ | 76,190 | ||||||||
Engraving |
26,260 | 20,666 | 23,194 | 15,710 | ||||||||||||
Scientific |
7,973 | 7,973 | 9,849 | 9,849 | ||||||||||||
Engineering Technologies |
58,532 | 46,681 | 87,984 | 56,495 | ||||||||||||
Specialty Solutions |
48,590 | 45,377 | 17,746 | 14,262 | ||||||||||||
Total |
$ | 294,435 | $ | 264,182 | $ | 216,016 | $ | 172,506 |
Total backlog realizable under one year increased $91.7 million, or 53.1%, to $264.2 million at December 31, 2021 from $172.5 million at December 31, 2020. Electronics backlog increased 98% in all geographic markets in response to the beginning of the global recovery from the pandemic and new business opportunities. Backlog declines in the Engineering Technologies segment are primarily due to the divestiture of Enginetics and the weakening demand in the commercial aviation sector due to COVID-19 pandemic related slowdowns in that industry.
Changes in backlog under one year are as follows (in thousands):
As of |
||||
(In thousands) |
December 31, 2021 |
|||
Backlog under 1 year, prior year period |
$ | 172,506 | ||
Components of change in backlog: |
||||
Organic change |
106,226 | |||
Effect of divestiture |
(14,550 | ) | ||
Backlog under 1 year, current period |
$ | 264,182 |
Segment Analysis
Overall
Looking forward to the remainder of fiscal year 2022, we expect to be well positioned to build on fiscal year 2021 and the six months ended December 31, 2021 momentum, with anticipated year over year improvement in key financial metrics, supported by orders growth and productivity initiatives.
In general for fiscal year 2022, we continue to expect:
● |
continued end market strength in reed switch and relay products as well as growth in magnetics in our Electronics segment; |
● |
an increase in soft trim demand in our Engraving segment; |
|
● |
a decline in demand for COVID-19 related vaccine storage in our Scientific segment; |
|
● |
continued strength in the commercial aviation market and growth in the space market in our Engineering Technologies segment; and |
● |
continued recovery in the food service market in our Specialty Solutions segment. |
Electronics Group
Three Months Ended |
Six Months Ended |
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December 31, |
% |
December 31, |
% |
|||||||||||||||||||||
(In thousands, except percentages) |
2021 |
2020 |
Change |
2021 |
2020 |
Change |
||||||||||||||||||
Net sales |
$ | 76,626 | $ | 60,156 | 27.4 | % | $ | 152,462 | $ | 115,427 | 32.1 | % | ||||||||||||
Income from operations |
17,157 | 9,962 | 72.2 | % | 35,430 | 18,497 | 91.5 | % | ||||||||||||||||
Operating income margin |
22.4 | % | 16.6 | % | 23.2 | % | 16.0 | % |
Net sales in the second quarter of fiscal year 2022 increased $16.5 million, or 27.4%, when compared to the prior year quarter. Organic sales increased by $16.8 million or 27.9%, reflecting a broad-based geographical recovery with a strengthening in demand for all product groups including relays in renewable energy and electric vehicle applications as well as reed switch demand in transportation end markets and the impacts of pricing actions. The foreign currency impact decreased sales by $0.3 million, or 0.5%.
Income from operations in the second quarter of fiscal year 2022 increased by $7.2 million, or 72.2%, when compared to the prior year quarter. The operating income increase was the result of organic sales growth, various price actions and cost saving initiatives, partially offset by material and freight cost increases.
Net sales in the six months ended December 31, 2021 increased $37.0 million, or 32.1%, when compared to the prior year period. Organic sales increased by $36.7 million or 31.8%, reflecting a broad-based geographical recovery with a strengthening in demand for all product groups including relays in renewable energy and electric vehicle applications as well as reed switch demand in transportation end markets and the impact of pricing actions. The foreign currency impact increased sales by $0.3 million, or 0.2%.
Income from operations in the six months ended December 31, 2021 increased by $16.9 million, or 91.5% when compared to the prior year period. The operating income increase was the result of organic sales growth, various price actions and cost saving initiatives, partially offset by material cost increases.
Sequentially during the third quarter of fiscal year 2022, we expect a slight increase in revenue and operating margin mostly due to positive end market demand and associated operating leverage.
Engraving Group
Three Months Ended |
Six Months Ended |
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December 31, |
% |
December 31, |
% |
|||||||||||||||||||||
(In thousands, except percentages) |
2021 |
2020 |
Change |
2021 |
2020 |
Change |
||||||||||||||||||
Net sales |
$ | 36,644 | $ | 37,950 | (3.4 | %) | $ | 71,814 | $ | 74,351 | (3.4 | %) | ||||||||||||
Income from operations |
5,204 | 6,501 | (20.0 | %) | 10,078 | 12,374 | (18.6 | %) | ||||||||||||||||
Operating income margin |
14.2 | % | 17.1 | % | 14.0 | % | 16.6 | % |
Net sales in the second quarter of fiscal year 2022 decreased by $1.3 million, or 3.4%, when compared to the prior year quarter. Organic sales decreased by $1.4 million, or 3.8%, as a result of timing of projects and geographic mix. The sales decline was offset by foreign exchange impacts of $0.1 million, or 0.3%.
Income from operations in the second quarter of fiscal year 2022 decreased by $1.3 million, when compared to the prior year quarter. Operating income declined during the quarter reflecting the timing of projects and geographic mix.
Net sales in the six months ended December 31, 2021 decreased by $2.5 million, or 3.4%, when compared to the prior year period. Organic sales decreased by $3.7 million, or 5.0% as a result of timing of projects. The sales decline was offset by foreign exchange impacts of $1.1 million, or 1.5%.
Income from operations in the six months ended December 31, 2021 decreased by $2.3 million, when compared to the prior year period. Operating income decreased during the period due to the volume decline, partially offset by productivity initiatives.
Sequentially during the third quarter of fiscal year 2022, we expect revenue and operating margin to be similar due to a decrease in project work in Asia, associated with the Chinese New Year, offset by contribution from projects in Europe and growth in soft trim sales.
Scientific
Three Months Ended |
Six Months Ended |
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December 31, |
% |
December 31, |
% |
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(In thousands, except percentages) |
2021 |
2020 |
Change |
2021 |
2020 |
Change |
||||||||||||||||||
Net sales |
$ | 24,636 | $ | 17,893 | 37.7 | % | $ | 46,165 | $ | 34,556 | 33.6 | % | ||||||||||||
Income from operations |
5,490 | 4,234 | 29.7 | % | 9,998 | 8,310 | 20.3 | % | ||||||||||||||||
Operating income margin |
22.3 | % | 23.7 | % | 21.7 | % | 24.0 | % |
Net sales in the second quarter of fiscal year 2022 and for the six month period ended December 31, 2021 increased by $6.7 million and $11.6 million, respectively, when compared to the prior year quarter and year to date periods. The net sales increase reflects overall growth in end markets, such as pharmaceutical channels, clinical settings, and academic laboratories, including continued strong demand for cold storage surrounding COVID-19 vaccine distribution and the general market recovery as well as pricing actions.
Income from operations in the second quarter of fiscal year 2022 and for the six month period ended December 31, 2021 increased $1.3 million and $1.7 million, respectively, when compared to the prior year quarter and year to date periods. The increase reflects revenue growth and pricing actions partially offset by higher freight costs and investments in new product development.
Sequentially during the third quarter of fiscal year 2022, we expect a moderate decline in revenue and operating margin due to lower volume.
Engineering Technologies Group
Three Months Ended |
Six Months Ended |
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December 31, |
% |
December 31, |
% |
|||||||||||||||||||||
(In thousands, except percentages) |
2021 |
2020 |
Change |
2021 |
2020 |
Change |
||||||||||||||||||
Net sales |
$ | 18,095 | $ | 17,507 | 3.4 | % | $ | 35,668 | $ | 35,140 | 1.5 | % | ||||||||||||
Income from operations |
2,314 | 1,363 | 69.8 | % | 3,213 | 1,831 | 75.5 | % | ||||||||||||||||
Operating income margin |
12.8 | % | 7.8 | % | 9.0 | % | 5.2 | % |
Net sales in the second quarter of fiscal year 2022 increased by $0.6 million, or 3.4%, compared to the prior year quarter. Sales in the prior year quarter included revenue of $2.3 million related to our divested Enginetics business. Excluding the impact of the divestiture, sales increased $2.9 million or 19.0% primarily due to recovering demand in the commercial aviation industry and growth in the power generation end market.
Income from operations increased in the second quarter of fiscal year 2022 compared to the prior year period primarily due to recovery in commercial aviation end markets, along with the absences of losses associated with the Enginetics business.
Net sales in the six months ended December 31, 2021 increased by $0.5 million, or 1.5%, compared to the prior year period. Sales in the prior year period included revenue of $5.4 million related to our divested Enginetics business. Excluding the impact of the divestiture, sales increased $5.9 million primarily due to recovering demand in the commercial aviation industry, growth in the power generation end market, along with an increase in sales into the space end market, particularly related to commercialization of space.
Income from operations increased in the six months ended December 31, 2021 compared to the prior year period primarily due to productivity and cost savings measures implemented during the pandemic and maintained as economic activity resumed along with the absences of losses associated with the Enginetics business, offset by a $1.1 million one-time project-related charge during the first quarter.
Sequentially during the third quarter of fiscal year 2022, we expect revenue to remain similar or slightly higher due to strength in the space and medical end markets. Operating margin is expected to increase slightly to moderately due to end market strength and ongoing productivity initiatives.
Specialty Solutions Group
Three Months Ended |
Six Months Ended |
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December 31, |
% |
December 31, |
% |
|||||||||||||||||||||
(In thousands, except percentages) |
2021 |
2020 |
Change |
2021 |
2020 |
Change |
||||||||||||||||||
Net sales |
$ | 29,708 | $ | 22,777 | 30.4 | % | $ | 55,210 | $ | 48,095 | 14.8 | % | ||||||||||||
Income from operations |
3,738 | 3,211 | 16.4 | % | 6,553 | 7,117 | (7.9 | %) | ||||||||||||||||
Operating income margin |
12.6 | % | 14.1 | % | 11.9 | % | 14.8 | % |
Net sales in the second quarter of fiscal year 2022 increased $6.9 million or 30.4% when compared to the prior year quarter. Organic sales increased $7.1 million, or 30.0%. Increased sales volume is primarily due to positive trends in food services, specialty retail and refuse end markets, as well as various pricing actions.
Income from operations increased $0.5 million or 16.4% in the second quarter of fiscal year 2022 when compared to the prior year quarter primarily as a result of volume and pricing actions, partially offset by higher labor costs, raw material and ocean freight costs.
Net sales in the six months ended December 31, 2021 increased $7.1 million or 14.8% when compared to the prior year period. Organic sales increased $7.3 million, or 15.2%. Increased sales volume is primarily due to a continued recovery in the Pumps and Merchandising businesses and pricing actions, partially offset by the impact of a temporary work stoppage which was resolved during the first quarter.
Income from operations decreased $0.6 million or 7.9% in the six months ended December 31, 2021 when compared to the prior year period primarily as a result of higher costs of labor, including a temporary work stoppage in the first quarter and higher raw material and ocean freight costs, partially offset by pricing actions.
Sequentially during the third quarter of fiscal year 2022, we expect a slight to moderate revenue and operating margin increase reflecting strength in backlog and end market trends.
Corporate and Other
Three Months Ended |
Six Months Ended |
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December 31, |
% |
December 31, |
% |
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(In thousands, except percentages) |
2021 |
2020 |
Change |
2021 |
2020 |
Change |
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Income (loss) from operations: |
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Corporate |
$ | (8,662 | ) | $ | (7,454 | ) | 16.2 | % | $ | (16,546 | ) | $ | (14,445 | ) | 14.5 | % | ||||||||
Restructuring |
(843 | ) | (509 | ) | 65.6 | % | (1,283 | ) | (1,996 | ) | (35.7 | %) | ||||||||||||
Acquisition related costs |
(925 | ) | (570 | ) | 62.3 | % | (1,142 | ) | (596 | ) | 91.6 | % | ||||||||||||
Other income (expense), net |
(1,700 | ) | - | 100.0 | % | (1,700 | ) | - | 100.0 | % |
Corporate expenses in the second quarter of fiscal year 2022 increased by 16.2% when compared to the prior year quarter. The increase reflects increases in employee related compensation and research and development costs.
Corporate expenses in the six months ended December 31, 2021 increased by 14.5% when compared to the prior year period. The increase reflects increases in employee related compensation and research and development costs.
The restructuring and acquisition related costs have been discussed above in the Company Overview. The increase in other expenses reflects a $1.7 million litigation accrual in the second quarter of fiscal year 2022.
Discontinued Operations
In pursuing our business strategy, the Company may divest certain businesses. Future divestitures may be classified as discontinued operations based on their strategic significance to the Company. Net loss from discontinued operations was $0.0 million and $0.6 million for the three months ended December 31, 2021 and December 31, 2020 respectively. Net loss from discontinued operations was $0.0 million and $1.3 million for the six months ended December 31, 2021 and December 31, 2020 respectively.
Liquidity and Capital Resources
At December 31, 2021, our total cash balance was $147.2 million, of which $100.0 million was held by foreign subsidiaries. During the second quarter and in the first six months of fiscal year 2022, we repatriated $15.9 million to the United States from our foreign subsidiaries. We expect to repatriate between $15.0 million and $20.0 million during the second half of fiscal year 2022, however, the amount and timing of cash repatriation during the fiscal year will be dependent upon each business unit’s operational needs including requirements to fund working capital, capital expenditures, and jurisdictional tax payments. The repatriation of cash balances from certain of our subsidiaries could have adverse tax consequences or be subject to capital controls; however, those balances are generally available without legal restrictions to fund ordinary business operations.
Net cash provided by continuing operating activities for the six months ended December 31, 2021, was $36.7 million compared to net cash provided by continuing operating activities of $31.5 million in the prior year. We generated $20.2 million from income statement activities and used $14.3 million of cash to fund working capital and other balance sheet increases. Cash flow used in investing activities for the six months ended December 31, 2021 totaled $8.1 million and primarily consisted of $9.7 million used for capital expenditures and $1.6 million generated by sales of property, plant, and equipment. Cash used by financing activities for the six months ended December 31, 2021 was $15.6 million and consisted primarily of purchases of stock of $9.5 million, cash paid for dividends of $6.0 million, and contingent consideration payments due to the seller of the Renco business of $1.2 million.
During the second quarter of fiscal year 2019, we entered into a five-year Amended and Restated Credit Agreement (“credit agreement”, or “facility”) with a borrowing limit of $500 million. The facility can be increased by an amount of up to $250 million, in accordance with specified conditions contained in the agreement. The facility also includes a $10 million sublimit for swing line loans and a $35 million sublimit for letters of credit.
Under the terms of the Credit Facility, we pay a variable rate of interest and a commitment fee on borrowed amounts as well as a commitment fee on unused amounts under the facility. The amount of the commitment fee depends upon both the undrawn amount remaining available under the facility and the Company’s funded debt to EBITDA (as defined in the agreement) ratio at the last day of each quarter. As our funded debt to EBITDA ratio increases, the commitment fee increases.
Funds borrowed under the facility may be used for the repayment of debt, working capital, capital expenditures, acquisitions (so long as certain conditions, including a specified funded debt to EBITDA leverage ratio is maintained), and other general corporate purposes. As of December 31, 2021, the Company used $6.1 million against the letter of credit sub-facility and had the ability to borrow $281.2 million under the facility based on our current trailing twelve-month EBITDA. The facility contains customary representations, warranties and restrictive covenants, as well as specific financial covenants. The Company’s current financial covenants under the facility are as follows:
Interest Coverage Ratio - The Company is required to maintain a ratio of Earnings Before Interest and Taxes, as Adjusted (“Adjusted EBIT per the Credit Facility”), to interest expense for the trailing twelve months of at least 2.75:1. Adjusted EBIT per the Credit Facility specifically excludes extraordinary and certain other defined items such as cash restructuring and acquisition related charges up to the lower of $20.0 million or 10% of EBITDA. The facility also allows for unlimited non-cash charges including purchase accounting and goodwill adjustments. At December 31, 2021, the Company’s Interest Coverage Ratio was 14.7.
Leverage Ratio - The Company’s ratio of funded debt to trailing twelve month Adjusted EBITDA per the Credit Facility, calculated as Adjusted EBIT per the Credit Facility plus depreciation and amortization, may not exceed 3.5:1. Under certain circumstances in connection with a Material Acquisition (as defined in the Facility), the Facility allows for the leverage ratio to go as high as 4.0:1 for a four-fiscal quarter period. At December 31, 2021, the Company’s Leverage Ratio was 1.20.
As of December 31, 2021, we had borrowings under our facility of $200.0 million. In order to manage our interest rate exposure on these borrowings, we are party to $200.0 million of active floating to fixed rate swaps. These swaps convert our interest payments from LIBOR to a weighted average fixed rate of 1.27%. The effective rate of interest for our outstanding borrowings, including the impact of the interest rate swaps, was 2.62%.
Our primary cash requirements in addition to day-to-day operating needs include interest payments, capital expenditures, acquisitions, share repurchases, and dividends. Our primary sources of cash for these requirements are cash flows from continuing operations and borrowings under the facility. We expect fiscal year 2022 capital spending to be between $25.0 million and $30.0 million which includes amounts not spent in fiscal year 2021. We also expect that fiscal year 2022 depreciation and amortization expense will be an estimated $21.0 million and $12.0 million, respectively.
The following table sets forth our capitalization:
(In thousands) |
December 31, 2021 |
June 30, 2021 |
||||||
Long-term debt |
$ | 199,660 | $ | 199,490 | ||||
Less cash and cash equivalents |
(147,155 | ) | (136,367 | ) | ||||
Net debt |
52,505 | 63,123 | ||||||
Stockholders' equity |
523,450 | 506,425 | ||||||
Total capitalization |
$ | 575,955 | $ | 569,548 |
We sponsor a number of defined benefit and defined contribution retirement plans. The U.S. pension plan is frozen for substantially all participants. We have evaluated the current and long-term cash requirements of these plans, and our existing sources of liquidity are expected to be sufficient to cover required contributions under ERISA and other governing regulations.
The fair value of the Company's U.S. defined benefit pension plan assets was $211.5 million at December 31, 2021, as compared to $212.6 million at the most recent measurement date, which occurred as of June 30, 2021. The next measurement date to determine plan assets and benefit obligations will be on June 30, 2022.
The Company expects to pay $0.5 million in contributions to its defined benefit plans during the remainder of fiscal year 2022. Contributions of $0.1 million and $0.1 million were made during the three and six months ended December 31, 2021 compared to $4.8 million and $4.9 million during the three and six months ended December 31, 2020, respectively. The Company does not expect to make additional contributions during fiscal year 2022 to its U.S. defined benefit plan. The Company expects to make contributions during fiscal year 2022 of $0.1 million and $0.3 million to its unfunded defined benefit plans in the U.S. and Germany, respectively. Any subsequent plan contributions will depend on the results of future actuarial valuations.
We have an insurance program in place to fund supplemental retirement income benefits for four retired executives. Current executives and new hires are not eligible for this program. At December 31, 2021, the underlying policies had a cash surrender value of $10.6 million and are reported net of loans of $9.1 million for which we have the legal right of offset, these amounts are reported net on our balance sheet.
Other Matters
Inflation – Certain of our expenses, such as wages and benefits, occupancy costs, freight and equipment repair and replacement, are subject to normal inflationary pressures. Inflation for medical costs can impact both our employee benefit costs as well as our reserves for workers' compensation claims. We monitor the inflationary rate and make adjustments to reserves whenever it is deemed necessary. Our ability to control worker compensation insurance medical cost inflation is dependent upon our ability to manage claims and purchase insurance coverage to limit the maximum exposure for us. Each of our segments is subject to the effects of changing raw material costs caused by the underlying commodity price movements. We have experienced price fluctuations for a number of materials including rhodium, steel, and other metal commodities. These materials are some of the key elements in the products manufactured in these segments. Wherever possible, we will implement price increases to offset the impact of changing prices. The ultimate acceptance of these price increases will be impacted by our affected divisions’ respective competitors and the timing of their price increases. In general, we do not enter into purchase contracts that extend beyond one operating cycle. While Standex considers our relationship with our suppliers to be good, there can be no assurances that we will not experience any supply shortage.
Foreign Currency Translation – Our primary functional currencies used by our non-U.S. subsidiaries are the Euro, British Pound Sterling (Pound), Japanese (Yen), and Chinese (Yuan).
Defined Benefit Pension Plans – We record expenses related to these plans based upon various actuarial assumptions such as discount rates, mortality rates, and assumed rates of returns. The Company’s pension plan is frozen for substantially all eligible U.S. employees and participants in the plan ceased accruing future benefits.
Environmental Matters – To the best of our knowledge, we believe that we are presently in substantial compliance with all existing applicable environmental laws and regulations and do not anticipate any instances of non-compliance that will have a material effect on our future capital expenditures, earnings or competitive position.
Seasonality – We are a diversified business with generally low levels of seasonality.
Employee Relations – The Company has labor agreements with several union locals in the United States and several European employees belong to European trade unions.
Critical Accounting Policies
The condensed consolidated financial statements include the accounts of Standex International Corporation and all of its subsidiaries. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make estimates and assumptions in certain circumstances that affect amounts reported in the accompanying condensed consolidated financial statements. Although we believe that materially different amounts would not be reported due to the accounting policies adopted, the application of certain accounting policies involves the exercise of judgment and use of assumptions as to future uncertainties and, as a result, actual results could differ from these estimates. Our Annual Report on Form 10-K for the year ended June 30, 2021 lists a number of accounting policies which we believe to be the most critical.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Risk Management
We are exposed to market risks from changes in interest rates, commodity prices and changes in foreign currency exchange. To reduce these risks, we selectively use, from time to time, financial instruments and other proactive management techniques. We have internal policies and procedures that place financial instruments under the direction of the Treasurer and restrict all derivative transactions to those intended for hedging purposes only. The use of financial instruments for trading purposes (except for certain investments in connection with the non-qualified defined contribution plan) or speculation is strictly prohibited. The Company has no majority-owned subsidiaries that are excluded from the consolidated financial statements. Further, we have no interests in or relationships with any special purpose entities.
Exchange Rate Risk
We are exposed to both transactional risk and translation risk associated with exchange rates. The transactional risk is mitigated, in large part, by natural hedges developed with locally denominated debt service on intercompany accounts. We also mitigate certain of our foreign currency exchange rate risks by entering into forward foreign currency contracts from time to time. The contracts are used as a hedge against anticipated foreign cash flows, such as loan payments, customer remittances, and materials purchases, and are not used for trading or speculative purposes. The fair values of the forward foreign currency exchange contracts are sensitive to changes in foreign currency exchange rates, as an adverse change in foreign currency exchange rates from market rates would decrease the fair value of the contracts. However, any such losses or gains would generally be offset by corresponding gains and losses, respectively, on the related hedged asset or liability. At December 31, 2021 the fair value, in the aggregate, of the Company’s open foreign exchange contracts was a liability of less than $0.1 million.
Our primary translation risk is with the Euro, British Pound Sterling, Peso, Japanese Yen and Chinese Yuan. A hypothetical 10% appreciation or depreciation of the value of any these foreign currencies to the U.S. Dollar at December 31, 2021, would not result in a material change in our operations, financial position, or cash flows. We hedge our most significant foreign currency translation risks primarily through cross currency swaps and other instruments, as appropriate.
Interest Rate Risk
The Company’s effective interest rate on borrowings was 2.62% at December 31, 2021. Our interest rate exposure is limited primarily to interest rate changes on our variable rate borrowings and is mitigated by our use of interest rate swap agreements to modify our exposure to interest rate movements. At December 31, 2021, we have $200.0 million of active floating to fixed rate swaps with terms ranging from one to four years. These swaps convert our interest payments from LIBOR to a weighted average rate of 1.27%. At December 31, 2021 the fair value, in the aggregate, of the Company’s interest rate swaps was liabilities of $0.1 million. A 25-basis point increase in interest rates would not change our annual interest expense as all of our outstanding debt is currently converted to fixed rate debts by means of interest rate swaps.
Concentration of Credit Risk
We have a diversified customer base. As such, the risk associated with concentration of credit risk is inherently minimized. As of December 31, 2021, no one customer accounted for more than 5% of our consolidated outstanding receivables or of our sales.
Commodity Prices
The Company is exposed to fluctuating market prices for all commodities used in its manufacturing processes. Each of our segments is subject to the effects of changing raw material costs caused by the underlying commodity price movements. In general, we do not enter into purchase contracts that extend beyond one operating cycle. While Standex considers our relationship with our suppliers to be good, there can be no assurances that we will not experience any supply shortage.
The Engineering Technologies, Specialty Solutions, and Electronics segments are all sensitive to price increases for steel and aluminum products, other metal commodities such as rhodium and copper, and petroleum-based products. We have experienced price fluctuations for a number of materials including rhodium, steel, and other metal commodities. These materials are some of the key elements in the products manufactured in these segments. Wherever possible, we will implement price increases to offset the impact of changing prices. The ultimate acceptance of these price increases, if implemented, will be impacted by our affected divisions’ respective competitors and the timing of their price increases.
ITEM 4. CONTROLS AND PROCEDURES
At the end of the period covered by this Report, the management of the Company, including the Chief Executive Officer and the Chief Financial Officer, evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (“Exchange Act”)). Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of December 31, 2021 in ensuring that the information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's ("SEC") rules and forms, and that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
There was no change in the Company's internal control over financial reporting during the quarterly period ended December 31, 2021 that has materially affected or is reasonably likely to materially affect the Company's internal control over financial reporting.
PART II. OTHER INFORMATION
Item 5. Unregistered Sales of Equity Securities and Use of Proceeds
(c) |
The following table provides information about purchases by the Company of equity securities that are registered by the Company pursuant to Section 12 of the Exchange Act: |
Issuer Purchases of Equity Securities(1) |
Quarter Ended December 31, 2021 |
Period |
(a) Total number of shares (or units) purchased |
(b) Average price paid per share (or unit) |
(c) Total number of shares (or units) purchased as part of publicly announced plans or programs |
(d) Maximum number (or appropriate dollar value) of shares (or units) that may yet be purchased under the plans or programs |
||||||||||||
October 1 - October 31, 2021 |
418 | $ | 101.30 | 418 | $ | 12,526 | ||||||||||
November 1 - November 30, 2021 |
29 | 113.14 | 29 | 12,522 | ||||||||||||
December 1 - December 31, 2021 |
- | - | - | 12,522 | ||||||||||||
Total |
447 | $ | 102.07 | 447 | $ | 12,522 |
(1) |
The Company has a Stock Buyback Program (the “Program”) which was originally announced on January 30, 1985 and most recently amended on April 26, 2016. Under the Program, the Company was authorized to repurchase up to an aggregate of $100 million of its shares. Under the program, purchases may be made from time to time on the open market, including through 10b5-1 trading plans, or through privately negotiated transactions, block transactions, or other techniques in accordance with prevailing market conditions and the requirements of the Securities and Exchange Commission. The Board’s authorization is open-ended and does not establish a timeframe for the purchases. The Company is not obligated to acquire a particular number of shares, and the program may be discontinued at any time at the Company’s discretion. |
(a) |
Exhibits |
10.1 | Employment Agreement dated July 1, 2021 between the Company and Flavio Maschera | |
|
31.1 |
|
31.2 |
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32 |
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101 |
The following materials from this Quarterly Report on Form 10-Q, formatted in Inline Extensible Business Reporting Language (iXBRL): (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Operations, (iii) Condensed Consolidated Statements of Comprehensive Income, (iv) Condensed Consolidated Statements of Cash Flows, and (v) Notes to Unaudited Condensed Consolidated Financial Statements. |
|
104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
ALL OTHER ITEMS ARE INAPPLICABLE
SIGNATURES
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 |
|
|
|
Date: |
February 4, 2022 |
/s/ ADEMIR SARCEVIC |
|
|
Ademir Sarcevic |
|
|
Vice President/Chief Financial Officer |
|
|
(Principal Financial & Accounting Officer) |
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|
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Date: |
February 4, 2022 | /s/ SEAN C. VALASHINAS |
|
|
Sean C. Valashinas |
Vice President/Chief Accounting Officer/Assistant Treasurer |
Exhibit 10.1
Gorgonzola, 01 July 2021
Private and Confidential
Registered Letter Delivered by Hand
Re: Employment contract
Dear Mr Flavio Maschera,
Further to our previous understandings, we hereby propose the contractual terms that will govern your employment with Standex International S.r.l. (the “Company”), a subsidiary of Standex International Corporation (the “Parent”). For purposes of this employment contract, the Company and the Parent and the Parent’s global subsidiaries shall be referred to as the “Group.” This employment contract shall be effective starting from 01 July 2021 (the “Effective Date”) and will supersede and replace the employment contract signed on 14 July 2006.
1. Effective Date, Duties and Position
1.1 As of the Effective Date, you will be entrusted with duties as “Chief Innovation & Technology Officer” of the Company, reporting to the President of the Company. As contemplated pursuant to a services agreement between the Company and the Group, the Company shall make your services available to the Group whereby you shall also serve as “Chief Innovation & Technology Officer” of the Group under the direction of the Group President/CEO. In particular, your collective duties shall include the duties set forth in the Job Description attached as Annex 1 to this employment agreement.
1.2 |
You shall continue to be employed by the Company as an Executive under the National Collective Labour Agreement for Executives of Industrial Sector (NCBA), maintaining the Company seniority accrued. |
2. Term of Employment
2.1 |
This contract is entered into for an indefinite period. |
3. Location – Temporary Transfer, Transfer and Secondment
3.1 Your workplace shall be at our office currently in Gorgonzola, without prejudice to the Company’s right to transfer its head office to a different place. An office will also be available in Salem, New Hampshire, when you will be travelling to the Group headquarters in the United States of America. It is understood that you will not stay in the United States for more than 180 days in a year on a cumulative basis.
3.2 Your activity shall include travelling in Italy and abroad, including to the United States of America, according to the Company’s and Group’s needs, to render the services covered by this contract and you since now agree to make such trips and/or missions.
4. Remuneration
4.1 |
As base remuneration for your activity and as consideration for all of your obligations, you shall initially be paid a yearly gross amount of Euro 340.218,00, distributed in 13 monthly salary payments. Your base remuneration shall be reviewed on an annual basis for possible increases. |
4.2 |
The remuneration referred to in clause 4. shall include any and all increases that may arise from any source and shall be deemed the total fixed remuneration payable to you. It replaces any different remuneration and shall incorporate any pay raise as may be subsequently provided for by any source, even if granted under particular forms. In particular, it is understood that the extra allowance over minimum pay (superminimo) shall incorporate any future salary increases arising from changes in your position or from amendments of the current NCBA. |
4.3 |
In addition to the above base remuneration as provided for in point 4.1., starting from the Group’s 2022 fiscal year (“FY2022”), you will be eligible for an annual cash bonus (“Bonus”) earned at the conclusion of each fiscal year of the Group based on achievement against certain Group financial and individual strategic goals as approved by the Compensation Committee of the Board of Directors of the Parent at the beginning of each such fiscal year of the Parent. The target Bonus and a description of the current parameters of the bonus opportunity are set forth in Annex 2. |
4.4 |
Starting from FY2022, you will also be also entitled to receive annual awards (“Equity Awards”) under the Parent’s 2018 Omnibus Incentive Plan (as may be amended from time to time) in each fiscal year of the Parent of restricted equity in the Parent at such times and subject to such terms as may be established from time to time by the Compensation Committee of the Parent’s Board of Directors. The target Equity Award and the terms and conditions of the award to be received in FY2022 are set forth in Annex 3. |
4.5 |
Payment of the above remunerations - net of any and all taxes withheld under the law and/or any agreements or contracts - shall be made by bank transfer to the bank account that you will indicate. |
4.6 |
It is understood that the remuneration indicated above will cover any and all activities carried out by you on behalf and/or in favor of the Company, the Parent and/or the Group as well as any possible indemnity due for such activity or for any activity carried out by you also outside your workplace and/or abroad. It is understood that in case of missions in Italy or abroad having a duration of over 12 hours and requiring overnight stay, you will be entitled to a travelling expense allowance as per the current applicable NCBA at the conditions and in the amounts set by the Company policy. |
5. Management Stock Purchase Plan
5.1 You will also continue to be eligible to participate in the Parent’s Management Stock Purchase Plan (MSPP), a summary of which is described in Annex 4.
6. Further Obligations
6.1 - Exclusiveness
For the whole term of your employment with the Company, unless previously and expressly authorised in writing by the Company, you shall be forbidden to carry out any other type of professional activity, in any form whatsoever (employment, self-employment, collaboration, partnership, etc.), even if it is not in competition with the Company’s activity.
6.2 - Confidentiality
Without prejudice to the provisions of article 2105 of the Italian Civil Code, you shall be forbidden to communicate and/or disclose any kind of information with which you may become acquainted in performing your professional activity and relating to the Group organisation, to the services and products offered to customers by the Group, as well as to customers and their respective activities. Such obligation shall apply even after the termination of your employment. All documentation, of any kind whatsoever, whether in original or in copy form, belonging to the Group or containing confidential information, of which you may come into possession for any reason during your employment, shall be deemed the exclusive property of the Group and shall be returned to the Group upon termination of your employment.
6.3 - Non-solicitation covenant
Without the prior written permission from the Company, you shall be prohibited, both during the employment contract and after its termination, from inducing any person in the service of the Group or who was in the service of the Group during the period of one year prior to the end of your employment contract, to end their employment contract with the Group.
Without the prior written permission of the Company, both during the employment contract and after its termination, you shall also be prohibited from employing or facilitating the employment of any such employees, either directly, indirectly or in any manner whatsoever, or to commission them to carry out work in any other form whatsoever.
6.4 - Non-competition agreement
The parties acknowledge that a non-competition agreement will be signed separately and at the same time of the present Employment Contract, and that it will replace the previous one signed on July 14, 2006.
6.5 - Change of Control
In case of (i) your dismissal within 24 months of a Change of Control as defined below or of (ii) resignation for Good Reason as defined below within 24 months after the Change in Control, you will be entitled to receive the following post termination benefits (the “Post Termination Benefits”):
● |
a lump sum severance payment equal to two times your then current base remuneration plus two times the higher of current target bonus or most recent actual bonus for termination if greater than and in lieu of the indemnity due under the NCBA, if any (indennità supplementari) (if the indemnity due under the NCBA is greater than the amount calculated under this phrase, then the indemnity due under the NCBA shall apply in lieu of the foregoing); |
● |
a lump sum payment equal to the greater of [(i) your then target annual Bonus or (ii) the level of Bonus accrual on the Company’s books as of the date of termination] times the percentage of the Parent’s then current fiscal year that has elapsed as of the time of such termination; |
● |
100% vesting with respect to all equity awards in the Parent that have been made to you which have not vested as of the date of termination; |
● |
monthly reimbursement of medical insurance premiums for 24 months; and |
● |
tax treatment will be “best net” method – gross payment will be reduced if net value to you after payment of taxes is better than taxed result on full gross payment. |
It is understood that in case of violation of the non-compete covenant and/or of the non-solicitation covenant, you will not be entitled to the Post Termination Benefits and/or you will have to return the same to the Company.
For the purpose of this clause, the term “Change of Control” shall mean the occurrence of any one of the following events:
(a) |
any “person” (as such term is used in Sections 13(d) and 14(d)(2) of the United States Securities Exchange Act of 1934 (the “Exchange Act”) becomes, after the Effective Date of this agreement, a “beneficial owner” (as such term is defined in Rule 13d-3 promulgated under the Exchange Act) (other than the Parent, any trustee or other fiduciary holding securities under an employee benefit plan of the Parent, or any corporation owned, directly or indirectly, by the stockholders of the Parent in substantially the same proportions as their ownership of stock of the Parent), directly or indirectly, of securities of the Parent representing fifty percent (50%) or more of the combined voting power of the Parent’s then outstanding securities; or |
(b) |
the consummation of (A) a merger or consolidation of the Parent with any other corporation or other entity, other than (i) a merger or consolidation which would result in the voting securities of the Parent outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than eighty percent (80%) of the combined voting power of the voting securities of the Parent or such surviving entity outstanding immediately after such merger or consolidation; or (ii) a merger or consolidation effected to implement a recapitalization of the Parent (or similar transaction) in which no “person” (as hereinafter defined) acquires more than 50% of the combined voting power of the Parent’s then outstanding securities, or (B) the sale or disposition by the Parent of all or substantially all of the Parent’s assets; or |
(c) |
the stockholders of the Parent approve a plan of complete liquidation of the Parent; or |
(d) |
individuals who, as of the Effective Date, constitute the Board of Directors of the Parent (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board, provided that any person becoming a director subsequent to Effective Date, whose election, or nomination for election by the Parent’s stockholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board (other than an election or nomination of an individual whose initial assumption of office is in connection with an actual or threatened election contest relating to the election of the directors of the Parent, as such terms are used in Rule 14a-11 of Regulation 14A under the Exchange Act) shall be, for purposes of this Section, considered a member of the Incumbent Board. |
For the purpose of this clause, the term “Good Reason” shall mean a change in your general area of responsibility, title, or place of employment, or if your salary or benefits are lessened or diminished.
7 – Tools supplied to the Executive
7.1 You will maintain the same Company tools. In particular, you will keep the mobile phone and the laptop computer.
7.2 You will also keep the company car, at the same conditions currently applied.
8 - Miscellaneous
8.1 For any matter that is not expressly regulated by this contract, reference shall be made to the National Collective Labour Agreement for Executives of Industrial Sector, where applicable.
8.2 the present contact is subject to Italian law and to the National Collective Labour Agreement for Executives of Industrial Sector
8.3 Any and all disputes regarding this contract and the employment relationship with you shall be subject to the exclusive jurisdiction of the employment Tribunal of Milano.
Please return us a copy hereof duly signed by you for acceptance and for specific approval of the clauses listed hereunder.
Yours sincerely,
Standex International S.r.l.
/s/ David A. Dunbar
________________________________
David A. Dunbar
By way of acceptance
/s/ Flavio Maschera
________________________________
Mr. Flavio Maschera
Annex 1 – Duties
Chief Innovation & Technology Officer – Job Description
The Chief Innovation & Technology Officer, reporting to the Chief Executive Officer, has a core mission to assure Standex effectively develops new and novel technologies to deploy new offerings and grow profitably. This is a new position in the corporation supporting the Standex strategy to become a high-performance industrial company, which necessitates an effective organic growth capability. This job description describes a starting point which will evolve as the CITO works with the businesses and the corporate business development team to refine the corporate innovation and execution model. The CITO will directly lead the development of certain new technologies and incubate emerging business opportunities. Once successfully demonstrated, the business will either be deployed into an existing Standex business or spun out into a new, separate business. The CITO will also collaborate with the Business Presidents and their teams to strengthen internal innovation processes, plans and execution to support their long-range plan. Key Responsibilities ● Assure Standex businesses effectively develop and deploy new and novel innovations to grow profitably. ● Track innovation trends that pose threats or create business opportunities for Standex. ● Lead corporate innovation and technology teams to develop technologies, products and business models. ● Develop and oversee a comprehensive long-term innovation strategy for the company. ● Develop annual and long-term innovation goals and plans to meet them. ● Engage at all levels within the company and with external stakeholders to execute the strategy. Execution ● The CITO will assure innovation and technology projects are executed according to approved budget plans and capital expenditure limits and according to project specs and deliverables. ● Where performance gaps appear, the CITO will engage at a site level with the business’s management to assure appropriate immediate actions are taken to close gaps and bring projects back on track. ● Lead certain corporate technology initiatives not executed within businesses. ● Support acquisition due diligence and technology integration of acquisitions.
Management Process ● Partner with CEO and leadership team to develop and enhance Standex research and development processes and standard work to develop new technologies. ● Partner with the Business Presidents and their teams to profitably grow their business with innovation. ● Participate and provide technology input and guidance to GDP+ Laneway and market test reviews. ● Establish key performance indicators to track the effectiveness of research and development projects and investments. Talent Development ● In partnership with Business Presidents, develop engineering, R&D, and innovation leaders and deploy top talent to the best growth opportunities. ● Partner with Engineering and Business leaders to develop top innovation talent, skills and career paths. Innovation Champion ● Create and lead the Standex Innovation Council, a cohort representative of the company’s most innovative talent, to discuss, identify and recommend potential strategic innovation projects that align with the company’s strategic priorities. ● Work with Standex legal team and others to protect new innovation and intellectual property |
Role Models Standex values: Innovation Accountability Teamwork Integrity |
Key collaborations ● Member of the Standex Corporate Leadership team and Office of the Chief Executive ● VP Business Development and growth directors to coordinate with GDP+ process ● Partners closely with Business Unit Presidents in development and execution of plans ● Directly manages core group that incubates business models and develops technology ● Reports regularly to the Board on innovation projects and investments ● Communicates periodically on innovation at Standex with investors and analysts ● Develop and collaborates regularly with a network of external parties (including but not limited to universities, governmental research organizations, emerging companies) to further technology innovation |
Qualifications, Experience and Characteristics ● A degree in Engineering, leadership, or business. ● 15+ years’ management experience in general management, P & L leadership roles, and/or engineering with financial accountability in global Industrial or Manufacturing companies. Innovation ● Adaptive thinking and a strong, critical mindset. Intellectually curious, forward-thinking and adaptable to dynamic situations. ● Strategic and innovative thinker who can develop and articulate a clear understanding of the organization’s strategy from all perspectives and find creative solutions to complex technology challenges. ● Proven track record of successful development and execution of developing technology plans across multiple disciplines, ensuring collaboration and cooperation among key stakeholders. Accountability ● Proven experience applying new technology and innovation to create new streams of sales and profits ● Managerial courage – Willingness to push back and challenge the thinking of others when dealing with business issues exploring options and inspiring action that leads to improved business outcomes. ● Able to move easily between strategic outlook and a hands-on, operations-focused view. ● Proficient at project planning, budgeting, and oversight and adept with financials ● Possesses strong analytic skills and data-driven decision-making
Teamwork ● Strong interpersonal skills, clear and engaging communicator, and demonstrated listening and relationship building skills. Able to engage employees at all levels of the organization. ● Track record of building, leading and managing high-functioning teams. ● Humility, integrity and respect; the ability to balance the need to be self-assured with the equally important need to communicate and manage change programs effectively to appropriate outcomes. ● By nature, will have a bias for action, be proactive, dynamic and personable. Integrity ● Exhibits the highest integrity and unquestionable ethical behavior Travel ● The incumbent will travel regularly to various Standex sites, external partners and customers |
Annex 2 – Target Bonus Opportunity and Structure of FY22 Bonus Plan
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Bonus Opportunity |
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Target achievement = 50% of base remuneration |
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Actual achievement can range from 0% to 200% of Target achievement |
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Weighting |
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75% of the actual achievement is based on Group financial goals as follows: |
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40% Earnings before interest, taxes, depreciation, and amortization in U.S. currency (EBITDA) |
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5% Earnings per share of the Parent in U.S. currency (EPS) |
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30% Net working capital turns measured against target at the conclusion of each fiscal quarter of the Parent and as an average of the foregoing (i.e., 5 measurements each having a weighting of 6%) |
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Actual achievement against each of the foregoing can be from 0% to 200% with the entry point (25%), threshold (50%), target (100%), and superior (200%) levels set by the Compensation Committee of the Parent’s Board of Directors in August of each fiscal year. |
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25% of the actual achievement is based on the executive’s performance against individual strategic goals that are finalized at the meeting of the Compensation Committee of the Parent’s Board of Directors in August of each fiscal year. Achievement against these goals (which can range from 0% to 200%) is determined by discussion with and preliminary approval of the CEO/President of the Parent and subject to final approval of the Compensation Committee of the Parent’s Board of Directors. |
Annex 3 – Equity Awards under Omnibus Incentive Plan
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Target Equity Award = shares having a value of 60% of base remuneration based on the trading price of the Parent’s common stock on the date of award approval by the Compensation Committee of the Parent’s Board of Directors. |
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Current Components of Equity Award |
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50% in restricted stock units that vest one-third per year over the three-years from the date of award. |
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50% in contingent performance share units that vest three years from the date of award. |
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The actual number of units that vest can range from 0% to 200% of the number of units awarded based on achievement over the three-year performance period against pre-established performance criteria approved at the time of award by the Compensation Committee (currently a modified ROIC calculation). |
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The actual number of units that vest is currently further modified to the extent that the Parent’s total shareholder return (relative TSR) is in either in the bottom quartile (25% reduction in shares) or upper quartile (25% increase) as compared to the S&P 600 Capital Goods Index. |
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Vested units are paid in shares of common stock of the Parent on a one-to-one conversion basis. |
Annex 4 – MSPP Summary
Under the MSPP, executives can elect to defer a portion of their annual incentive awards into the receipt of restricted stock units (RSUs) at a 25 % discount, valued at the lower of (i) the closing price of the Parent’s common stock on the last business day of the fiscal year (June 30th) or (ii) the closing price of the Parent’s common stock on the date on which the annual incentive award is certified by the Compensation Committee following the conclusion of the fiscal year (typically in August). Executives must make their election prior to the beginning of the fiscal year and can defer up to 50 % of their annual incentive award. These RSUs cliff vest at the end of a 3-year period and the executive receives shares of stock equal to the amount of RSUs granted. Executives accrue dividends, which are paid upon vesting, on the RSUs, but do not have voting rights until the shares underlying the RSUs are delivered. In the event that the executive’s employment terminates prior to vesting of the RSUs and the termination event does not qualify for accelerated vesting (e.g., Change of Control, retirement, disability, or death), the executive receives a return of cash equal to the lower of (i) the amount of annual incentive deferred and (ii) the number of RSUs times the closing trading price of the Parent’s common stock on the date of termination.
EXHIBIT 31.1
RULE 13a-14(a) CERTIFICATION
I, David Dunbar, certify that:
1. |
I have reviewed this Quarterly Report on Form 10-Q of Standex International Corporation for the quarter ending December 31, 2021; |
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. |
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) |
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. |
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: February 4, 2022
/s/ David Dunbar
______________________________
David Dunbar
President/Chief Executive Officer
EXHIBIT 31.2
RULE 13a-14(a) CERTIFICATION
I, Ademir Sarcevic, certify that:
1. |
I have reviewed this Quarterly Report on Form 10-Q of Standex International Corporation for the quarter ending December 31, 2021; |
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. |
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) |
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. |
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: February 4, 2022
/s/ Ademir Sarcevic
______________________________
Ademir Sarcevic
Vice President/Chief Financial Officer
EXHIBIT 32
Certification
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(18 U.S.C. Sec. 1350)
With Respect to the Standex International Corporation
Quarterly Report on Form 10-Q
For the Fiscal Quarter Ended December 31, 2021
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code), the undersigned Chief Executive Officer and Chief Financial Officer respectively of Standex International Corporation, a Delaware corporation (the “Company”) do hereby certify that:
1. |
The Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended December 31, 2021 (the “Form 10-Q”) fully complies with the requirements of Section 13(a) or 15(d) as applicable, of the Securities Exchange Act of 1934, as amended; and |
2. |
Information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Dated: February 4, 2022 |
/s/ David Dunbar |
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David Dunbar |
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Chief Executive Officer |
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Dated: February 4, 2022 | /s/ Ademir Sarcevic | |
Ademir Sarcevic | ||
Chief Financial Officer |
Unaudited Condensed Consolidated Balance Sheets (Parentheticals) - USD ($) $ in Thousands |
Dec. 31, 2021 |
Jun. 30, 2021 |
---|---|---|
Reserve for doubtful accounts | $ 2,034 | $ 1,588 |
Common stock, par value (in dollars per share) | $ 1.50 | $ 1.50 |
Common stock, shares authorized (in shares) | 60,000,000 | 60,000,000 |
Common stock, shares issued (in shares) | 27,984,278 | 27,984,278 |
Common stock, shares outstanding (in shares) | 12,036,180 | 12,044,405 |
Treasury stock, shares (in shares) | 15,948,098 | 15,939,873 |
Unaudited Condensed Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 6 Months Ended | ||
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Dec. 31, 2021 |
Dec. 31, 2020 |
Dec. 31, 2021 |
Dec. 31, 2020 |
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Net sales | $ 185,709 | $ 156,283 | $ 361,319 | $ 307,569 |
Cost of sales | 116,937 | 98,267 | 226,310 | 194,816 |
Gross profit | 68,772 | 58,016 | 135,009 | 112,753 |
Selling, general, and administrative expenses | 43,531 | 40,199 | 86,283 | 79,069 |
Restructuring costs | 843 | 509 | 1,283 | 1,996 |
Acquisition related costs | 925 | 570 | 1,142 | 596 |
Other operating (income) expense, net | 1,700 | 0 | 1,700 | 0 |
Total operating expenses | 46,999 | 41,278 | 90,408 | 81,661 |
Income from operations | 21,773 | 16,738 | 44,601 | 31,092 |
Interest expense | 1,526 | 1,601 | 3,246 | 3,086 |
Other non-operating (income) expense, net | 288 | (60) | 311 | (231) |
Income from continuing operations before income taxes | 19,959 | 15,197 | 41,044 | 28,237 |
Provision for income taxes | 4,929 | 3,189 | 10,193 | 5,885 |
Income from continuing operations | 15,030 | 12,008 | 30,851 | 22,352 |
Income (loss) from discontinued operations, net of tax | (46) | (631) | (49) | (1,258) |
Net income (loss) | $ 14,984 | $ 11,377 | $ 30,802 | $ 21,094 |
Basic earnings (loss) per share: | ||||
Continuing operations (in dollars per share) | $ 1.25 | $ 0.98 | $ 2.56 | $ 1.83 |
Discontinued operations (in dollars per share) | 0 | (0.05) | 0 | (0.10) |
Total (in dollars per share) | 1.25 | 0.93 | 2.56 | 1.73 |
Diluted earnings (loss) per share: | ||||
Continuing operations (in dollars per share) | 1.24 | 0.98 | 2.54 | 1.82 |
Discontinued operations (in dollars per share) | 0 | (0.05) | 0 | (0.10) |
Total (in dollars per share) | $ 1.24 | $ 0.93 | $ 2.54 | $ 1.72 |
Weighted average number of shares: | ||||
Basic (in shares) | 12,033 | 12,195 | 12,028 | 12,213 |
Diluted (in shares) | 12,138 | 12,270 | 12,144 | 12,277 |
Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
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Dec. 31, 2021 |
Dec. 31, 2020 |
Dec. 31, 2021 |
Dec. 31, 2020 |
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Net income | $ 14,984 | $ 11,377 | $ 30,802 | $ 21,094 |
Defined benefit pension plans: | ||||
Actuarial gains (losses) and other changes in unrecognized costs, net of tax | 16 | (204) | 101 | (373) |
Amortization of unrecognized costs, net of tax | 1,105 | 1,269 | 2,217 | 2,535 |
Derivative instruments: | ||||
Change in unrealized gains (losses), net of tax | 1,451 | 361 | 1,609 | (97) |
Foreign currency translation gains (losses), net of tax | (6,909) | 11,082 | (9,325) | 20,601 |
Other comprehensive income (loss), net of tax | (3,744) | 12,902 | (3,870) | 23,510 |
Comprehensive income | 11,240 | 24,279 | 26,932 | 44,604 |
Interest Expense [Member] | ||||
Derivative instruments: | ||||
Amortization of unrealized gains (losses) into interest expense, net of tax | $ 593 | $ 394 | $ 1,528 | $ 844 |
Unaudited Consolidated Statements of Stockholders' Equity (Parentheticals) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
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Dec. 31, 2021 |
Dec. 31, 2020 |
Dec. 31, 2021 |
Dec. 31, 2020 |
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Pension and OPEB adjustments, tax | $ 0.4 | $ 0.3 | $ 0.8 | $ 0.7 |
Change in fair value of derivatives, tax | $ 0.6 | $ 0.1 | $ 0.7 | $ 0.2 |
Dividends declared, per share (in dollars per share) | $ 0.26 | $ 0.24 | $ 0.50 | $ 0.46 |
Note 1 - Management Statement |
6 Months Ended |
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Dec. 31, 2021 | |
Notes to Financial Statements | |
Business Description and Basis of Presentation [Text Block] |
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 six months ended December 31, 2021 and 2020, the cash flows for the six months ended December 31, 2021 and 2020 and the financial position of Standex International Corporation (“Standex”, the “Company”, “we”, “us”, or “our”), at December 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, 2021. The condensed consolidated balance sheet at June 30, 2021 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, 2021. Unless otherwise noted, references to years are to the Company’s fiscal years. Currently our fiscal year end is June 30. For further clarity, our fiscal year 2022 includes the twelve-month period from July 1, 2021 to June 30, 2022.
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 COVID-19 pandemic and its related economic impacts. As a result of the COVID-19 pandemic, there is heightened volatility and uncertainty around supply chain performance, labor availability, and customer demand. 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 December 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. The Company evaluated subsequent events through the date and time its unaudited condensed consolidated financial statements were issued.
Recently Issued Accounting Pronouncements
There were no recently issued accounting pronouncements which are expected to have a material impact on the consolidated financial statements. |
Note 2 - Acquisitions |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notes to Financial Statements | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combination Disclosure [Text Block] |
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 December 31, 2021, the Company evaluated the significance of each acquisition on a standalone basis and in aggregate, considering both qualitative and quantitative factors.
During the first quarter of fiscal year 2021, the Company acquired Renco Electronics ("Renco"), 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 purchase price was allocated to the net tangible and identifiable intangible assets acquired and liabilities assumed based on a valuation of their fair values on the closing date. 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 consist primarily of $3.6 million for indefinite lived tradenames, and $6.8 million of customer relationships to be amortized over 12 years. The goodwill of $14.0 million created by the transaction is deductible for income tax purposes. The accounting for business combinations requires estimates and judgments regarding expectations for future cash flows of the acquired business, and the allocations of those cash flows to identifiable tangible and intangible assets, in determining the assets acquired and liabilities assumed. The fair values assigned to tangible and intangible assets acquired and liabilities assumed, including contingent consideration, are based on management’s best estimates and assumptions, as well as other information compiled by management, including valuations that utilize customary valuation procedures and techniques.
The components of the fair value of the Renco Electronics acquisition, including the final allocation of the purchase price are as follows (in thousands):
Acquisition Related Costs
Acquisition related costs include costs related to acquired businesses and other pending acquisitions. These costs consist of (i) deferred compensation arrangements 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.
Acquisition related costs for the three months ended December 31, 2021, and 2020 were $0.9 million and $0.6 million, respectively. Acquisition related costs for the six months ended December 31, 2021, and 2020 were $1.1 million and $0.6 million, respectively.
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Note 3 - Revenue From Contracts With Customers |
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Revenue from Contract with Customer [Text Block] |
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):
The following table presents revenue disaggregated by product line and segment (in thousands):
The following table presents revenue from continuing operations disaggregated by geography based on company’s locations (in thousands):
(1) EMEA consists primarily of Europe, Middle East and S. Africa.
The following table presents revenue from continuing operations disaggregated by timing of recognition (in thousands) for the three months ended:
Contract Balances
Contract assets represent sales recognized in excess of billings related to work completed but not yet shipped for which revenue is recognized over time. Contract assets are recorded as prepaid expenses and other current assets. Contract liabilities are customer deposits for which revenue has not been recognized. Current contract liabilities are recorded as accrued liabilities.
The timing of revenue recognition, invoicing and cash collections results in billed receivables, contract assets and contract liabilities on the consolidated balance sheets. When consideration is received from a customer prior to transferring goods or services to the customer under the terms of a contract, a contract liability is recorded. Contract liabilities are recognized as revenue after control of the goods and services are transferred to the customer and all revenue recognition criteria have been met.
The following table provides information about contract assets and liability balances (in thousands):
We recognized the following revenue which was included in the contract liability beginning balances (in thousands):
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Note 4 - Fair Value Measurements |
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Fair Value Disclosures [Text Block] |
4) Fair Value Measurements
The financial instruments shown below are presented at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Where available, fair value is based on observable market prices or parameters or derived from such prices or parameters. Where observable prices or inputs are not available, valuation models may be applied.
Assets and liabilities recorded at fair value in the consolidated balance sheet are categorized based upon the level of judgment associated with the inputs used to measure their fair values. Hierarchical levels directly related to the amount of subjectivity associated with the inputs to fair valuation of these assets and liabilities and the methodologies used in valuation are as follows:
Level 1 – Quoted prices (unadjusted) in active markets for identical assets and liabilities. The Company’s deferred compensation plan assets consist of shares in various mutual funds (investments are participant-directed) which invest in a broad portfolio of debt and equity securities. These assets are valued based on publicly quoted market prices for the funds’ shares as of the balance sheet dates.
Level 2 – Inputs, other than quoted prices in an active market, that are observable either directly or indirectly through correlation with market data. For foreign exchange forward contracts and interest rate swaps, the Company values the instruments based on the market price of instruments with similar terms, which are based on spot and forward rates as of the balance sheet dates. The Company has considered the creditworthiness of counterparties in valuing all assets and liabilities.
Level 3 – Unobservable inputs based upon the Company’s best estimate of what market participants would use in pricing the asset or liability.
There were no transfers of assets or liabilities between any levels of the fair value measurement hierarchy at December 31, 2021 and June 30, 2021. The Company’s policy is to recognize transfers between levels as of the date they occur.
Cash and cash equivalents, accounts receivable, accounts payable, and debt are carried at cost, which approximates fair value.
The fair values of financial instruments were as follows (in thousands):
(a) The fair value of contingent consideration arrangements is determined based on the Company's evaluation as to the probability and amount of any contingent consideration that has been earned to date.
The financial liabilities based upon Level 3 inputs include contingent consideration arrangements relating to the acquisitions of Renco Electronics and GS Engineering. The Company is contractually obligated to pay contingent consideration payments to the Sellers of these businesses based on the achievement of certain criteria.
The Company is contractually obligated to pay contingent consideration to the sellers of GS Engineering in the event that certain revenue and gross margin targets are achieved during the five years following acquisition. The targets set in the GS Engineering stock purchase agreement were not met for the first or second year, which concluded in the fourth quarter of fiscal years 2020 and 2021, respectively. As of December 31, 2021, the Company could be required to pay up to $12.8 million for contingent consideration arrangements if the revenue and gross margin targets are met in fiscal years 2022 through 2024.
The Company is also obligated to pay contingent consideration to the sellers of Renco Electronics in the event that certain earnings targets are achieved during the three years following acquisition. Contingent acquisition payments are scheduled to be paid in periods through fiscal year 2024. During the first quarter of fiscal year 2022, the Company paid $1.2 million to the sellers as Renco exceeded the earnings targets during the first year of the measurement period. As of December 31, 2021, the Company could be required to pay up to an additional $2.2 million for contingent consideration arrangements if the earnings targets are met.
The Company has determined the fair value of the liabilities for the contingent consideration based on a probability-weighted discounted cash flow analysis. This fair value measurement is based on significant inputs not observable in the market and thus represents a Level 3 measurement within the fair value hierarchy. The fair value of the contingent consideration liability associated with future payments was based on several factors, the most significant of which are the financial performance of the acquired businesses and the risk-adjusted discount rate for the fair value measurement.
The Company will update its assumptions each reporting period based on new developments and record such amounts at fair value based on the revised assumptions until the agreements expire. |
Note 5 - Inventories |
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Inventory Disclosure [Text Block] |
5) Inventories
Inventories from continuing operations are comprised of the following (in thousands):
Distribution costs associated with the sale of inventory, which are recorded as a component of selling, general and administrative expenses in the accompanying unaudited condensed consolidated statements of operations were $4.9 million and $2.9 million for the three months ended December 31, 2021 and 2020, respectively. Distribution costs were $8.6 million and $5.4 million for the six months ended December 31, 2021 and 2020, respectively.
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Note 6 - Goodwill |
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Goodwill Disclosure [Text Block] |
6) Goodwill
Changes to goodwill by segment during the period were as follows (in thousands):
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Note 7 - Warranty Reserves |
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Product Warranty Disclosure [Text Block] |
7) Warranty Reserves
The expected cost associated with warranty obligations on our products is recorded as a component of cost of sales when the revenue is recognized. The Company’s estimate of warranty cost is based on contract terms and historical warranty loss experience that is periodically adjusted for recent actual experience. Since warranty estimates are forecasts based on the best available information, claims costs may differ from amounts provided. Adjustments to initial obligations for warranties are made as changes in the obligations become reasonably estimable.
The changes in warranty reserves from continuing operations, which are recorded as a component of accrued liabilities were as follows (in thousands):
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Note 8 - Debt |
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Debt Disclosure [Text Block] |
8) Debt
Long-term debt is comprised of the following (in thousands):
Bank Credit Agreements
During the second quarter of fiscal year 2019, the Company entered into a -year Amended and Restated Credit Agreement (“Credit Facility”, or “facility”). The facility has a borrowing limit of $500 million, which can be increased by an amount of up to $250 million, in accordance with specified conditions contained in the agreement. The facility also includes a $10 million sublimit for swing line loans and a $35 million sublimit for letters of credit.
At December 31, 2021, the Company had standby letters of credit outstanding, primarily for insurance purposes, of $6.1 million and had the ability to borrow $281.2 million under the facility. Funds borrowed under the facility may be used for the repayment of debt, working capital, capital expenditures, acquisitions (so long as certain conditions, including a specified funded debt to EBITDA leverage ratio is maintained), and other general corporate purposes. The facility contains customary representations, warranties and restrictive covenants, as well as specific financial covenants which the Company was compliant with as of December 31, 2021. At December 31, 2021, the carrying value of the current borrowings approximate fair value. |
Note 9 - Accrued Liabilities |
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Accounts Payable, Accrued Liabilities, and Other Liabilities Disclosure, Current [Text Block] |
Accrued liabilities consist of the following (in thousands):
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Note 10 - Derivative Financial Instruments |
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Derivative Instruments and Hedging Activities Disclosure [Text Block] |
10) Derivative Financial Instruments
The Company is exposed to market risks from changes in interest rates, commodity prices and changes in foreign currency rates. The Company selectively uses derivative financial instruments in order to manage certain of these risks. Information about the Company’s derivative financial instruments is as follows:
Interest Rate Swaps
From time to time as dictated by market opportunities, the Company enters into interest rate swap agreements designed to manage exposure to interest rates on the Company’s variable rate indebtedness. The Company recognizes all derivatives on its balance sheet at fair value. The Company has designated its interest rate swap agreements, including those that may be forward-dated, as cash flow hedges, and changes in the fair value of the swaps are recognized in other comprehensive income until the hedged items are recognized in earnings. Hedge ineffectiveness, if any, associated with the swaps will be reported by the Company in interest expense.
The Company’s effective swap agreements convert the base borrowing rate on $200 million of debt due under our revolving credit agreement from a variable rate equal to 1 month LIBOR to a weighted average fixed rate of 1.27% at December 31, 2021. The fair value of the swaps, recognized in accrued liabilities and in other comprehensive income, is as follows (in thousands, except percentages):
The Company reported no losses for the three and six months ended December 31, 2021, as a result of hedge ineffectiveness. Future changes in these swap arrangements, including termination of the agreements, may result in a reclassification of any gain or loss reported in accumulated other comprehensive income (loss) into earnings as an adjustment to interest expense. Accumulated other comprehensive income (loss) related to these instruments is being amortized into interest expense concurrent with the hedged exposure.
Foreign Exchange Contracts
Forward foreign currency exchange contracts are used to limit the impact of currency fluctuations on certain anticipated foreign cash flows, such as collections from customers and loan payments between subsidiaries. The Company enters into such contracts for hedging purposes only. The Company has designated certain of these currency contracts as hedges, and changes in the fair value of these contracts are recognized in other comprehensive income until the hedged items are recognized in earnings. Hedge ineffectiveness, if any, associated with these contracts will be reported in net income. At December 31, 2021 and June 30, 2021, the Company had outstanding forward contracts related to hedges of intercompany loans with net unrealized losses of less than $0.1 million and losses of $1.0 million, respectively, which approximate the unrealized gains and losses on the related loans. The contracts have maturity dates ranging from fiscal year 2022 to 2024, which correspond to the related intercompany loans.
The notional amounts of the Company’s forward contracts, by currency, are as follows (in thousands):
The table below presents the fair value of derivative financial instruments as well as their classification on the balance sheet (in thousands):
The table below presents the amount of gain (loss) recognized in comprehensive income on our derivative financial instruments (effective portion) designated as hedging instruments and their classification within comprehensive income for the periods ended (in thousands):
The table below presents the amount reclassified from accumulated other comprehensive income (loss) to net income for the periods ended (in thousands):
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Note 11 - Retirement Benefits |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Retirement Benefits [Text Block] |
11) Retirement Benefits
The Company has defined benefit pension plans covering certain current and former employees both inside and outside of the U.S. The Company’s pension plan for U.S. employees is frozen for substantially all participants and has been replaced with a defined contribution benefit plan.
Net periodic benefit cost for the Company’s U.S. and Foreign pension benefit plans for the periods ended consisted of the following components (in thousands):
The following table sets forth the amounts recognized for the Company's defined benefit pension plans (in thousands):
The contributions made to defined benefit plans are presented below along with remaining contributions to be made for fiscal year 2022 (in thousands):
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Note 12 - Income Taxes |
6 Months Ended |
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Dec. 31, 2021 | |
Notes to Financial Statements | |
Income Tax Disclosure [Text Block] |
12) Income Taxes
The Company's effective tax rate from continuing operations for the second quarter of fiscal year 2022 and for the six months of the fiscal year ending June 30, 2022 was 24.7% and 24.8%, respectively compared with 21.0% and 24.8% for the prior year quarter and prior year period, respectively. The tax rate was impacted in the current period by the following items: (i) a discrete tax benefit related to equity compensation, (ii) the jurisdictional mix of earnings, (iii) foreign withholding taxes, and (iv) reduction of global intangible low-taxed income.
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Note 13 - Earnings Per Share |
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Dec. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notes to Financial Statements | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Text Block] |
13) Earnings Per Share
The following table sets forth a reconciliation of the number of shares (in thousands) used in the computation of basic and diluted earnings per share:
Earnings available to common stockholders are the same for computing both basic and diluted earnings per share. There were outstanding instruments that had an anti-dilutive effect at December 31, 2021. There were 10,658 outstanding instruments that had an anti-dilutive effect at December 31, 2020.
Performance stock units of 143,233 and 130,461 for the six months ended December 31, 2021 and 2020, respectively, are excluded from the diluted earnings per share calculation as the performance criteria have not been met. |
Note 14 - Accumulated Other Comprehensive Income (Loss) |
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Comprehensive Income (Loss) Note [Text Block] |
14) Accumulated Other Comprehensive Income (Loss)
The components of the Company’s accumulated other comprehensive income (loss) are as follows (in thousands):
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Note 15 - Contingencies |
6 Months Ended |
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Dec. 31, 2021 | |
Notes to Financial Statements | |
Contingencies Disclosure [Text Block] |
15) Contingencies
From time to time, the Company is subject to various claims and legal proceedings, including claims related to environmental remediation, either asserted or unasserted, that arise in the ordinary course of business. While the outcome of these proceedings and claims cannot be predicted with certainty, the Company’s management does not believe that the outcome of any of the currently existing legal matters will have a material impact on the Company’s consolidated financial position, results of operations or cash flow. The Company accrues for losses related to a claim or litigation when the Company’s management considers a potential loss probable and can reasonably estimate such potential loss.
Litigation
In the second quarter of fiscal year 2019, a lawsuit was filed against Standex Electronics, Inc. ("Electronics"), a wholly owned subsidiary of the Company, by Miniature Precision Components, Inc. ("MPC"), a customer, seeking damages in connection with allegedly faulty sensors designed and manufactured by Electronics. The subject sensors were incorporated by MPC into a subassembly sold by MPC to its customer, an automotive manufacturer. MPC alleges that the sensors incorrectly activated a diagnostic code in vehicles for which MPC’s customer issued a service bulletin, resulting in significant warranty costs for MPC. In the litigation, which is pending in the U.S. District Court for the Eastern District of Wisconsin, MPC seeks indemnification from Electronics for its costs. Electronics has numerous defenses to MPC’s claims. Trial for this case is currently scheduled for July 2022. During the second quarter of fiscal year 2022, the Company engaged in unsuccessful mediation with MPC, during which the Company offered to settle the matter in order to avoid the inherent risk of litigation as well as the cost of diverting internal resources. As a result, the Company has recorded $1.7 million as accrued liabilities related to this litigation. Based upon developments to date, the Company believes that the range of any reasonably possible loss, in excess of amounts accrued, would be between $0 and $6.3 million. The estimated range of reasonably possible loss is based upon currently available information and is subject to significant judgement and a variety of assumptions and known and unknown uncertainties.
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Note 16 - Industry Segment Information |
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Segment Reporting Disclosure [Text Block] |
16) Industry Segment Information
The Company has reportable segments organized around the types of products sold:
Net sales and income (loss) from continuing operations by segment were as follows (in thousands):
Net sales include only transactions with unaffiliated customers and include no intersegment sales. Income (loss) from operations by segment excludes interest expense and other non-operating (income) expense. |
Note 17 - Restructuring |
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Restructuring and Related Activities Disclosure [Text Block] |
17) Restructuring
The Company has undertaken a number of initiatives that have resulted in severance, restructuring, and related charges.
2022 Restructuring Initiatives
The Company continues to focus its efforts to reduce cost and improve productivity across its businesses, particularly through headcount reductions, facility closures, and consolidations. Restructuring expenses primarily related to headcount reductions and other cost saving initiatives. The Company expects the 2022 restructuring activities to be completed by 2023.
Prior Year Restructuring Initiatives
Restructuring expenses primarily related to headcount reductions and facility rationalization within our Specialty Solutions segment. The Company also incurred restructuring expenses related to third party assistance with analysis and implementation of these activities. The Company expects the prior year restructuring activities to be completed by 2022.
A summary of charges by initiative is as follows (in thousands):
Activity in the reserve related to the initiatives is as follows (in thousands):
The Company’s total restructuring expenses by segment are as follows (in thousands):
Restructuring expense is expected to be approximately $1.1 million for the remainder of fiscal year 2022.
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Note 2 - Acquisitions (Tables) |
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Schedule of Recognized Identified Assets Acquired and Liabilities Assumed [Table Text Block] |
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Note 3 - Revenue From Contracts With Customers (Tables) |
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Disaggregation of Revenue [Table Text Block] |
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Contract with Customer, Contract Asset, Contract Liability, and Receivable [Table Text Block] |
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Note 4 - Fair Value Measurements (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Table Text Block] |
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Note 5 - Inventories (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
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Schedule of Inventory, Current [Table Text Block] |
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Note 6 - Goodwill (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Schedule of Goodwill [Table Text Block] |
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Note 7 - Warranty Reserves (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Schedule of Product Warranty Liability [Table Text Block] |
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Note 8 - Debt (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
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Schedule of Long-term Debt Instruments [Table Text Block] |
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Note 9 - Accrued Liabilities (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Schedule of Accrued Liabilities [Table Text Block] |
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Note 10 - Derivative Financial Instruments (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Schedule of Interest Rate Derivatives [Table Text Block] |
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Schedule of Foreign Exchange Contracts, Statement of Financial Position [Table Text Block] |
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Schedule of Derivative Instruments, Effect on Other Comprehensive Income (Loss) [Table Text Block] |
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Derivative Instruments, Gain (Loss) [Table Text Block] |
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Reclassification out of Accumulated Other Comprehensive Income [Table Text Block] |
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Note 11 - Retirement Benefits (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Schedule of Defined Benefit Plan Contributions [Table Text Block] |
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Schedule of Net Benefit Costs [Table Text Block] |
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Schedule of Net Funded Status [Table Text Block] |
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Note 13 - Earnings Per Share (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Schedule of Earnings Per Share, Basic and Diluted [Table Text Block] |
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Note 14 - Accumulated Other Comprehensive Income (Loss) (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
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Schedule of Accumulated Other Comprehensive Income (Loss) [Table Text Block] |
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Note 16 - Industry Segment Information (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Reconciliation of Operating Profit (Loss) from Segments to Consolidated [Table Text Block] |
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Note 17 - Restructuring (Tables) |
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Restructuring and Related Costs [Table Text Block] |
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Schedule of Restructuring Reserve by Type of Cost [Table Text Block] |
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Restructuring Expenses By Segment [Table Text Block] |
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Note 2 - Acquisitions - Components of Fair Value of Acquisitions and Allocation of Purchase Price For Acquisition of Renco (Details) - USD ($) $ in Thousands |
6 Months Ended | ||
---|---|---|---|
Dec. 31, 2021 |
Jun. 30, 2021 |
Sep. 30, 2020 |
|
Goodwill | $ 273,760 | $ 278,054 | |
Renco Electronics [Member] | |||
Cash payments | 29,613 | ||
Less, cash acquired | (2,207) | ||
Fair value of contingent consideration | 3,000 | ||
Total | 30,406 | ||
Other acquired assets | 4,522 | ||
Inventories | 5,446 | ||
Property, plant, & equipment | 410 | ||
Identifiable intangible assets | 10,400 | $ 10,400 | |
Goodwill | 13,991 | ||
Debt assumed | (712) | ||
Liabilities assumed | $ (3,651) |
Note 3 - Revenue From Contracts With Customers - Contract Assets and Liabilities (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
Dec. 31, 2021 |
Dec. 31, 2020 |
|
Contract assets | $ 15,013 | $ 9,140 | ||
Contract assets, additions | 19,034 | 13,774 | ||
Contract assets, deduction | 14,678 | 13,305 | ||
Contract assets | $ 19,369 | $ 9,609 | 19,369 | 9,609 |
Contract liabilities | 471 | 2,298 | ||
Contract liabilities, additions | 6,472 | 4,382 | ||
Contract liabilities, deductions | 6,691 | 6,315 | ||
Contract liabilities | 252 | 365 | 252 | 365 |
Amounts included in the contract liability balance at the beginning of the period | $ 252 | $ 1,418 | $ 471 | $ 2,298 |
Note 4 - Fair Value Measurements (Details Textual) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | |
---|---|---|---|
Sep. 30, 2021 |
Dec. 31, 2021 |
Dec. 31, 2020 |
|
Payment for Contingent Consideration Liability, Financing Activities | $ 1,167 | $ (0) | |
GS Engineering [Member] | |||
Business Combination, Contingent Consideration Arrangements, Range of Outcomes, Value, High | 12,800 | ||
Renco Electronics [Member] | |||
Business Combination, Contingent Consideration Arrangements, Range of Outcomes, Value, High | $ 2,200 | ||
Payment for Contingent Consideration Liability, Financing Activities | $ 1,200 |
Note 4 - Fair Value Measurements - Fair Values of Financial Instruments (Details) - USD ($) $ in Thousands |
Dec. 31, 2021 |
Jun. 30, 2021 |
|||||
---|---|---|---|---|---|---|---|
Foreign exchange contracts, assets | $ 9 | $ 255 | |||||
Interest rate swaps | 1,006 | ||||||
Foreign exchange contracts | 40 | 1,222 | |||||
Interest rate swaps | 1,057 | 3,096 | |||||
Contingent acquisition payments (a) | [1] | 2,167 | 3,333 | [2] | |||
Fair Value, Inputs, Level 1 [Member] | |||||||
Foreign exchange contracts, assets | 0 | 0 | |||||
Interest rate swaps | 0 | ||||||
Foreign exchange contracts | 0 | 0 | |||||
Interest rate swaps | 0 | 0 | |||||
Contingent acquisition payments (a) | [1] | 0 | 0 | ||||
Fair Value, Inputs, Level 2 [Member] | |||||||
Foreign exchange contracts, assets | 9 | 255 | |||||
Interest rate swaps | 1,006 | ||||||
Foreign exchange contracts | 40 | 1,222 | |||||
Interest rate swaps | 1,057 | 3,096 | |||||
Contingent acquisition payments (a) | [1] | 0 | 0 | ||||
Fair Value, Inputs, Level 3 [Member] | |||||||
Foreign exchange contracts, assets | 0 | 0 | |||||
Interest rate swaps | 0 | ||||||
Foreign exchange contracts | 0 | 0 | |||||
Interest rate swaps | 0 | 0 | |||||
Contingent acquisition payments (a) | [1] | 2,167 | 3,333 | ||||
Deferred Compensation Plan [Member] | |||||||
Marketable securities - deferred compensation plan | 3,809 | 2,988 | |||||
Deferred Compensation Plan [Member] | Fair Value, Inputs, Level 1 [Member] | |||||||
Marketable securities - deferred compensation plan | 3,809 | 2,988 | |||||
Deferred Compensation Plan [Member] | Fair Value, Inputs, Level 2 [Member] | |||||||
Marketable securities - deferred compensation plan | 0 | 0 | |||||
Deferred Compensation Plan [Member] | Fair Value, Inputs, Level 3 [Member] | |||||||
Marketable securities - deferred compensation plan | $ 0 | $ 0 | |||||
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Note 5 - Inventories (Details Textual) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
Dec. 31, 2021 |
Dec. 31, 2020 |
|
Selling Expense | $ 4.9 | $ 2.9 | $ 8.6 | $ 5.4 |
Note 5 - Inventories - Summary of Inventories (Details) - USD ($) $ in Thousands |
Dec. 31, 2021 |
Jun. 30, 2021 |
---|---|---|
Raw materials | $ 50,246 | $ 47,000 |
Work in process | 24,121 | 22,539 |
Finished goods | 27,856 | 22,323 |
Total | $ 102,223 | $ 91,862 |
Note 6 - Goodwill - Changes to Goodwill (Details) $ in Thousands |
6 Months Ended |
---|---|
Dec. 31, 2021
USD ($)
| |
Balance | $ 278,054 |
Translation adjustment | (4,294) |
Balance | 273,760 |
Electronics Products Group [Member] | |
Balance | 144,832 |
Translation adjustment | (3,620) |
Balance | 141,212 |
Engraving Group [Member] | |
Balance | 77,378 |
Translation adjustment | (443) |
Balance | 76,935 |
Scientific Group [Member] | |
Balance | 15,454 |
Translation adjustment | 0 |
Balance | 15,454 |
Engineering Technologies Group [Member] | |
Balance | 37,085 |
Translation adjustment | (231) |
Balance | 36,854 |
Specialty Solutions Group [Member] | |
Balance | 3,305 |
Translation adjustment | 0 |
Balance | $ 3,305 |
Note 7 - Warranty Reserves - Changes in Warranty Reserve (Details) - USD ($) $ in Thousands |
6 Months Ended | 12 Months Ended |
---|---|---|
Dec. 31, 2021 |
Jun. 30, 2021 |
|
Balance at beginning of year | $ 2,086 | $ 1,781 |
Acquisitions and other charges | (62) | 68 |
Warranty expense | 326 | 2,007 |
Warranty claims | (582) | (1,770) |
Balance at end of period | $ 1,768 | $ 2,086 |
Note 8 - Debt (Details Textual) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Dec. 31, 2019 |
Dec. 31, 2021 |
|
Amended and Restated Credit Agreement [Member] | ||
Debt Instrument, Term (Year) | 5 years | |
Line of Credit Facility, Maximum Borrowing Capacity | $ 500.0 | |
Line Of Credit, Accordion Feature | 250.0 | |
Swing Line Loan [Member] | ||
Line of Credit Facility, Maximum Borrowing Capacity | 10.0 | |
Letter of Credit [Member] | ||
Line of Credit Facility, Maximum Borrowing Capacity | $ 35.0 | |
Standby Letters of Credit [Member] | ||
Long-term Line of Credit, Total | $ 6.1 | |
Line of Credit Facility, Remaining Borrowing Capacity | $ 281.2 |
Note 8 - Debt - Long-term Debt (Details) - USD ($) $ in Thousands |
Dec. 31, 2021 |
Jun. 30, 2021 |
---|---|---|
Funded debt | $ 200,000 | $ 200,000 |
Issuance cost | (340) | (510) |
Total long-term debt | 199,660 | 199,490 |
Line of Credit [Member] | ||
Funded debt | $ 200,000 | $ 200,000 |
Note 9 - Accrued Liabilities - Accrued Expenses (Details) - USD ($) $ in Thousands |
Dec. 31, 2021 |
Jun. 30, 2021 |
---|---|---|
Payroll and employee benefits | $ 23,321 | $ 32,550 |
Workers' compensation | 2,193 | 2,118 |
Warranty reserves | 1,768 | 2,086 |
Fair value of derivatives | 1,097 | 4,318 |
Operating lease current liability | 7,456 | 7,933 |
Other | 18,106 | 12,712 |
Total | $ 53,941 | $ 61,717 |
Note 10 - Derivative Financial Instruments (Details Textual) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | |
---|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2021 |
Jun. 30, 2021 |
|
Derivative, Notional Amount | |||
Derivative Instruments, Loss Recognized in Income, Ineffective Portion and Amount Excluded from Effectiveness Testing | 0 | 0 | |
Interest Rate Swap [Member] | |||
Derivative, Notional Amount | $ 200,000 | $ 200,000 | |
Derivative, Average Fixed Interest Rate | 1.27% | 1.27% | |
Foreign Exchange Forward [Member] | |||
Outstanding Forward Contracts, Net Unrealized Gain (Loss) | $ 100 | $ 100 | $ (1,000) |
Note 10 - Derivative Financial Instruments - Fair Value of Swaps Recognized in Accrued Liabilities and in Other Comprehensive Income (Details) - USD ($) $ in Thousands |
6 Months Ended | |
---|---|---|
Dec. 31, 2021 |
Jun. 30, 2021 |
|
Notional Amount | ||
Fixed Rate | ||
Fair Value, Liability | $ (51) | $ (3,096) |
Interest Rate Swap Effective May 24, 2017 Number One [Member] | ||
Notional Amount | $ 25,000 | |
Fixed Rate | 1.88% | |
Maturity | Apr. 24, 2022 | |
Fair Value, Liability | $ (146) | (374) |
Interest Rate Swap Effective August 6, 2018 [Member] | ||
Notional Amount | $ 25,000 | |
Fixed Rate | 2.83% | |
Maturity | Aug. 06, 2023 | |
Fair Value, Liability | $ (911) | (1,401) |
Interest Rate Swap Effective March 23, 2020 [Member] | ||
Notional Amount | $ 100,000 | |
Fixed Rate | 0.91% | |
Maturity | Mar. 23, 2025 | |
Fair Value, Liability | $ 641 | (907) |
Interest Rate Swap Effective April 24, 2020 [Member] | ||
Notional Amount | $ 25,000 | |
Fixed Rate | 0.88% | |
Maturity | Apr. 24, 2025 | |
Fair Value, Liability | $ 200 | (192) |
Interest Rate Swap Effective May 24, 2020 [Member] | ||
Notional Amount | $ 25,000 | |
Fixed Rate | 0.91% | |
Maturity | Mar. 24, 2025 | |
Fair Value, Liability | $ 165 | $ (222) |
Note 10 - Derivative Financial Instruments - Foreign Currency Exchange Contracts (Details) € in Thousands, $ in Thousands, $ in Thousands, $ in Millions |
Dec. 31, 2021
USD ($)
|
Dec. 31, 2021
EUR (€)
|
Dec. 31, 2021
SGD ($)
|
Dec. 31, 2021
CAD ($)
|
Jun. 30, 2021
USD ($)
|
Jun. 30, 2021
EUR (€)
|
Jun. 30, 2021
SGD ($)
|
Jun. 30, 2021
CAD ($)
|
---|---|---|---|---|---|---|---|---|
Derivative, Notional Amount | ||||||||
Foreign Exchange Contract [Member] | ||||||||
Derivative, Notional Amount | $ 0 | € 5,750 | $ 6,800 | $ 20.6 | $ 987 | € 5,750 | $ 21,836 | $ 20.6 |
Note 10 - Derivative Financial Instruments - Amounts Reclassified From Accumulated Other Comprehensive Income (Loss) to Net Income (Details) - USD ($) $ in Thousands |
Dec. 31, 2021 |
Jun. 30, 2021 |
---|---|---|
Derivative liability, fair value | $ 51 | $ 3,096 |
Designated as Hedging Instrument [Member] | ||
Derivative, fair value | 1,015 | 255 |
Derivative liability, fair value | 1,097 | 4,318 |
Prepaid Expenses and Other Current Assets [Member] | Interest Rate Swap [Member] | Designated as Hedging Instrument [Member] | ||
Derivative, fair value | 1,006 | |
Prepaid Expenses and Other Current Assets [Member] | Foreign Exchange Contract [Member] | Designated as Hedging Instrument [Member] | ||
Derivative, fair value | 9 | 255 |
Accrued Liabilities [Member] | Interest Rate Swap [Member] | Designated as Hedging Instrument [Member] | ||
Derivative liability, fair value | 1,057 | 3,096 |
Accrued Liabilities [Member] | Foreign Exchange Contract [Member] | Designated as Hedging Instrument [Member] | ||
Derivative liability, fair value | $ 40 | $ 1,222 |
Note 10 - Derivative Financial Instruments - Gain (Loss) Recognized in Comprehensive Income on Derivative Financial Instruments (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
Dec. 31, 2021 |
Dec. 31, 2020 |
|
Change in unrealized gains (losses) | $ 1,919 | $ 356 | $ 2,062 | $ (215) |
Interest Rate Swap [Member] | ||||
Change in unrealized gains (losses) | 1,901 | (24) | 1,840 | (481) |
Foreign Exchange Contract [Member] | ||||
Change in unrealized gains (losses) | $ 18 | $ 380 | $ 222 | $ 266 |
Note 10 - Derivative Financial Instruments - Details About Accumulated Other Comprehensive Income (Loss) Components (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
Dec. 31, 2021 |
Dec. 31, 2020 |
|
Accumulated other comprehensive income (loss) component | $ 739 | $ 534 | $ 1,823 | $ 1,121 |
Interest Rate Swap [Member] | Interest Expense [Member] | Cash Flow Hedging [Member] | ||||
Accumulated other comprehensive income (loss) component | 602 | 572 | 1,204 | 1,128 |
Foreign Exchange Contract [Member] | Other Nonoperating Income (Expense) [Member] | Cash Flow Hedging [Member] | ||||
Accumulated other comprehensive income (loss) component | $ 137 | $ (38) | $ 619 | $ (7) |
Note 11 - Retirement Benefits - Components of Net Periodic Benefit Cost (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
Dec. 31, 2021 |
Dec. 31, 2020 |
|
UNITED STATES | ||||
Service cost | $ 1 | $ 1 | $ 2 | $ 2 |
Interest cost | 1,830 | 1,860 | 3,660 | 3,720 |
Expected return on plan assets | (3,259) | (3,253) | (6,519) | (6,506) |
Recognized net actuarial loss | 1,383 | 1,483 | 2,767 | 2,967 |
Amortization of prior service cost | 0 | 0 | 0 | 0 |
Net periodic benefit cost | (45) | 91 | (90) | 183 |
Foreign Plan [Member] | ||||
Service cost | 59 | 55 | 122 | 110 |
Interest cost | 195 | 178 | 385 | 354 |
Expected return on plan assets | (217) | (155) | (428) | (307) |
Recognized net actuarial loss | 86 | 186 | 170 | 369 |
Amortization of prior service cost | (1) | (1) | (2) | (2) |
Net periodic benefit cost | $ 122 | $ 263 | $ 247 | $ 524 |
Note 11 - Retirement Benefits - Funded Status for Pension Plan (Details) - USD ($) $ in Thousands |
Dec. 31, 2021 |
Jun. 30, 2021 |
---|---|---|
Prepaid benefit cost | $ 5,584 | $ 5,661 |
Current liabilities | (591) | (517) |
Non-current liabilities | (44,048) | (47,425) |
Net amount recognized | $ (39,055) | $ (42,281) |
Note 11 - Retirement Benefits - Contributions to Defined Benefit Plans (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
Dec. 31, 2021 |
Dec. 31, 2020 |
|
Contributions to defined benefit plans | $ 52 | $ 4,828 | $ 104 | $ 4,880 |
Remaining contributions to be made | 456 | 456 | ||
UNITED STATES | Defined Benefit Plan, Funded Plan [Member] | ||||
Contributions to defined benefit plans | 0 | 4,776 | 0 | 4,776 |
Remaining contributions to be made | 0 | 0 | ||
UNITED STATES | Defined Benefit Plan, Unfunded Plan [Member] | ||||
Contributions to defined benefit plans | 52 | 52 | 104 | 104 |
Remaining contributions to be made | 107 | 107 | ||
UNITED KINGDOM | ||||
Contributions to defined benefit plans | 0 | 0 | 0 | 0 |
Remaining contributions to be made | 0 | 0 | ||
GERMANY | Defined Benefit Plan, Unfunded Plan [Member] | ||||
Contributions to defined benefit plans | 0 | 0 | 0 | 0 |
Remaining contributions to be made | 283 | 283 | ||
IRELAND | ||||
Contributions to defined benefit plans | 0 | $ 0 | 0 | $ 0 |
Remaining contributions to be made | $ 66 | $ 66 |
Note 12 - Income Taxes (Details Textual) |
3 Months Ended | 6 Months Ended | |
---|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
Dec. 31, 2021 |
|
Effective Income Tax Rate Reconciliation, Percent, Total | 24.70% | 21.00% | 24.80% |
Note 13 - Earnings Per Share (Details Textual) - shares |
6 Months Ended | |
---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
|
Share-based Payment Arrangement, Option [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount (in shares) | 0 | 10,658 |
Performance Shares [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount (in shares) | 143,233 | 130,461 |
Note 13 - Earnings Per Share - Computation of Basic and Diluted Earnings Per Share (Details) - shares shares in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
Dec. 31, 2021 |
Dec. 31, 2020 |
|
Basic (in shares) | 12,033 | 12,195 | 12,028 | 12,213 |
Dilutive effect of unvested, restricted stock awards (in shares) | 105 | 75 | 116 | 64 |
Diluted - Average shares outstanding (in shares) | 12,138 | 12,270 | 12,144 | 12,277 |
Note 14 - Accumulated Other Comprehensive Income (Loss) - Components of Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands |
Dec. 31, 2021 |
Jun. 30, 2021 |
---|---|---|
Foreign currency translation adjustment | $ (30,569) | $ (21,244) |
Unrealized pension losses, net of tax | (90,054) | (92,372) |
Unrealized gains (losses) on derivative instruments, net of tax | 613 | (2,524) |
Total | $ (120,010) | $ (116,140) |
Note 15 - Contingencies (Details Textual) - USD ($) $ in Thousands |
Dec. 31, 2021 |
Jun. 30, 2021 |
---|---|---|
Accrued Liabilities, Current, Total | $ 53,941 | $ 61,717 |
Lawsuit Filed Against Electronics [Member] | ||
Accrued Liabilities, Current, Total | 1,700 | |
Lawsuit Filed Against Electronics [Member] | Minimum [Member] | ||
Loss Contingency, Estimate of Possible Loss | 0 | |
Lawsuit Filed Against Electronics [Member] | Maximum [Member] | ||
Loss Contingency, Estimate of Possible Loss | $ 6,300 |
Note 16 - Industry Segment Information (Details Textual) |
6 Months Ended |
---|---|
Dec. 31, 2021 | |
Number of Reportable Segments | 5 |
Note 16 - Industry Segment Information - Net Sales and Income (Loss) by Industry Segments (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
Dec. 31, 2021 |
Dec. 31, 2020 |
|
Net sales | $ 185,709 | $ 156,283 | $ 361,319 | $ 307,569 |
Income from operations | 21,773 | 16,738 | 44,601 | 31,092 |
Restructuring costs | (843) | (509) | (1,283) | (1,996) |
Acquisition related costs | (925) | (570) | (1,142) | (596) |
Other operating income (expense), net | (1,700) | 0 | (1,700) | 0 |
Interest expense | 1,526 | 1,601 | 3,246 | 3,086 |
Other non-operating (income) expense | 288 | (60) | 311 | (231) |
Income from continuing operations before income taxes | 19,959 | 15,197 | 41,044 | 28,237 |
Electronics Products Group [Member] | ||||
Net sales | 76,626 | 60,156 | 152,462 | 115,427 |
Income from operations | 17,157 | 9,962 | 35,430 | 18,497 |
Restructuring costs | (90) | (82) | (90) | (256) |
Engraving Group [Member] | ||||
Net sales | 36,644 | 37,950 | 71,814 | 74,351 |
Income from operations | 5,204 | 6,501 | 10,078 | 12,374 |
Restructuring costs | (634) | (391) | (983) | (628) |
Scientific Group [Member] | ||||
Net sales | 24,636 | 17,893 | 46,165 | 34,556 |
Income from operations | 5,490 | 4,234 | 9,998 | 8,310 |
Engineering Technologies Group [Member] | ||||
Net sales | 18,095 | 17,507 | 35,668 | 35,140 |
Income from operations | 2,314 | 1,363 | 3,213 | 1,831 |
Restructuring costs | (50) | (2) | (141) | (37) |
Specialty Solutions Group [Member] | ||||
Net sales | 29,708 | 22,777 | 55,210 | 48,095 |
Income from operations | 3,738 | 3,211 | 6,553 | 7,117 |
Restructuring costs | (64) | (4) | (64) | (959) |
Corporate and Other [Member] | ||||
Income from operations | $ (8,662) | $ (7,454) | $ (16,546) | $ (14,445) |
Note 17 - Restructuring (Details Textual) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
Jun. 30, 2022 |
Dec. 31, 2021 |
Dec. 31, 2020 |
|
Restructuring Costs, Total | $ 843 | $ 509 | $ 1,283 | $ 1,996 | |
Forecast [Member] | |||||
Restructuring Costs, Total | $ 1,100 |
Note 17 - Restructuring - Summary of Severance, Restructuring, and Related Charges by Initiative (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
Dec. 31, 2021 |
Dec. 31, 2020 |
|
Restructuring charges | $ 843 | $ 509 | $ 1,283 | $ 1,996 |
Involuntary Employee Severance And Benefit Costs [Member] | ||||
Restructuring charges | 296 | 304 | 671 | 1,357 |
Other Restructuring [Member] | ||||
Restructuring charges | 547 | 205 | 612 | 639 |
Current Year Restructuring Initiatives [Member] | ||||
Restructuring charges | 843 | 423 | 1,283 | 825 |
Current Year Restructuring Initiatives [Member] | Involuntary Employee Severance And Benefit Costs [Member] | ||||
Restructuring charges | 296 | 222 | 671 | 463 |
Current Year Restructuring Initiatives [Member] | Other Restructuring [Member] | ||||
Restructuring charges | $ 547 | 201 | $ 612 | 362 |
Prior Year Initiatives [Member] | ||||
Restructuring charges | 86 | 1,171 | ||
Prior Year Initiatives [Member] | Involuntary Employee Severance And Benefit Costs [Member] | ||||
Restructuring charges | 82 | 894 | ||
Prior Year Initiatives [Member] | Other Restructuring [Member] | ||||
Restructuring charges | $ 4 | $ 277 |
Note 17 - Restructuring - Summary of Activity in Reserves Related to Restructuring Initiatives (Details) - USD ($) $ in Thousands |
6 Months Ended | |
---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
|
Current Year Restructuring Initiatives [Member] | ||
Restructuring liabilities | $ 0 | |
Additions and adjustments | 1,283 | |
Payments | (897) | |
Restructuring liabilities | 386 | |
Current Year Restructuring Initiatives [Member] | Involuntary Employee Severance And Benefit Costs [Member] | ||
Restructuring liabilities | 0 | |
Additions and adjustments | 671 | |
Payments | (578) | |
Restructuring liabilities | 93 | |
Current Year Restructuring Initiatives [Member] | Other Restructuring [Member] | ||
Restructuring liabilities | 0 | |
Additions and adjustments | 612 | |
Payments | (319) | |
Restructuring liabilities | 293 | |
Prior Year Initiatives [Member] | ||
Restructuring liabilities | 49 | $ 538 |
Additions and adjustments | 0 | 1,996 |
Payments | (49) | (2,488) |
Restructuring liabilities | 0 | 46 |
Prior Year Initiatives [Member] | Involuntary Employee Severance And Benefit Costs [Member] | ||
Restructuring liabilities | 39 | 520 |
Additions and adjustments | 0 | 1,356 |
Payments | (39) | (1,830) |
Restructuring liabilities | 0 | 46 |
Prior Year Initiatives [Member] | Other Restructuring [Member] | ||
Restructuring liabilities | 10 | 18 |
Additions and adjustments | 0 | 640 |
Payments | (10) | (658) |
Restructuring liabilities | $ 0 | $ 0 |
Note 17 - Restructuring - Summary of Restructuring Expenses by Segment (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
Dec. 31, 2021 |
Dec. 31, 2020 |
|
Restructuring charges | $ 843 | $ 509 | $ 1,283 | $ 1,996 |
Involuntary Employee Severance And Benefit Costs [Member] | ||||
Restructuring charges | 296 | 304 | 671 | 1,357 |
Other Restructuring [Member] | ||||
Restructuring charges | 547 | 205 | 612 | 639 |
Electronics Products Group [Member] | ||||
Restructuring charges | 90 | 82 | 90 | 256 |
Electronics Products Group [Member] | Involuntary Employee Severance And Benefit Costs [Member] | ||||
Restructuring charges | 72 | 82 | 72 | 251 |
Electronics Products Group [Member] | Other Restructuring [Member] | ||||
Restructuring charges | 18 | 0 | 18 | 5 |
Engraving Group [Member] | ||||
Restructuring charges | 634 | 391 | 983 | 628 |
Engraving Group [Member] | Involuntary Employee Severance And Benefit Costs [Member] | ||||
Restructuring charges | 169 | 190 | 453 | 280 |
Engraving Group [Member] | Other Restructuring [Member] | ||||
Restructuring charges | 465 | 201 | 530 | 348 |
Engineering Technologies Group [Member] | ||||
Restructuring charges | 50 | 2 | 141 | 37 |
Engineering Technologies Group [Member] | Involuntary Employee Severance And Benefit Costs [Member] | ||||
Restructuring charges | 50 | 2 | 141 | 37 |
Engineering Technologies Group [Member] | Other Restructuring [Member] | ||||
Restructuring charges | 0 | 0 | 0 | 0 |
Specialty Solutions Group [Member] | ||||
Restructuring charges | 64 | 4 | 64 | 959 |
Specialty Solutions Group [Member] | Involuntary Employee Severance And Benefit Costs [Member] | ||||
Restructuring charges | 0 | 0 | 0 | 673 |
Specialty Solutions Group [Member] | Other Restructuring [Member] | ||||
Restructuring charges | 64 | 4 | 64 | 286 |
Corporate Segment [Member] | ||||
Restructuring charges | 5 | 30 | 5 | 116 |
Corporate Segment [Member] | Involuntary Employee Severance And Benefit Costs [Member] | ||||
Restructuring charges | 5 | 30 | 5 | 116 |
Corporate Segment [Member] | Other Restructuring [Member] | ||||
Restructuring charges | $ 0 | $ 0 | $ 0 | $ 0 |
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