Net Sales Increase 13.4% to $202 Million
Earnings from Continuing Operations Grow 19.6% to $1.16 per Diluted Share
Non-GAAP Earnings from Continuing Operations Rise 4.2% to $1.25 per
Diluted Share
Company Website:
http://www.standex.com
SALEM, N.H. -- (Business Wire)
Standex
International Corporation(NYSE:SXI) today reported financial
results for the first quarter of fiscal year 2015.
First Quarter Fiscal 2015 Results from Continuing Operations
-
Net sales increased 13.4% to $202.0 million from $178.1 million in the
first quarter of fiscal 2014. Organic sales increased 9.8%,
acquisition growth accounted for 3.5% of the increase and foreign
exchange was flat year over year
-
Income from operations was $21.2 million, compared with $17.1 million
in the first quarter of fiscal 2014. Operating income for the first
quarter of fiscal 2015 included, pre-tax, $0.9 million of
restructuring charges and $0.8 million of non-cash purchase accounting
expenses. The first quarter of fiscal 2014 included, pre-tax $3.8
million of restructuring charges and $0.1 million of non-recurring
management transition expenses. Excluding these items from both
periods, the Company reported non-GAAP first-quarter fiscal 2015
operating income of $22.9 million, compared with $21.0 million in the
year-earlier quarter.
-
Net income from continuing operations was $14.9 million, or $1.16 per
diluted share, including, after tax, $0.6 million of restructuring
charges and $0.6 million of non-cash purchase accounting expenses.
This compares with first quarter fiscal 2014 net income from
continuing operations of $12.3 million, or $0.97 per diluted share,
including, after tax, $2.7 million of restructuring charges, $0.1
million of non-recurring management transition expense, and $0.2
million of non-recurring tax expenses. Excluding the aforementioned
items from both periods, non-GAAP net income from continuing
operations was $16.1 million, or $1.25 per diluted share, compared
with $15.4 million, or $1.20 per diluted share, in the first quarter
of fiscal 2014.
-
EBITDA (earnings before interest, income taxes, depreciation and
amortization) was $25.5 million, compared with $21.2 million in the
first quarter of fiscal 2014. Excluding the previously mentioned items
from both periods. Adjusted EBITDA for the first quarter of fiscal
2015 was $27.2 million, compared with $25.1 million in the
year-earlier quarter.
-
Net working capital (defined as accounts receivable plus inventories
less accounts payable) was $155.0 million at the end of the first
quarter of fiscal 2015, compared with $129.4 million a year earlier.
Working capital turns were 5.3 for the first quarter of fiscal 2015.
Adjusting for the impact of the Enginetics acquisition, working
capital turns were 5.5, which is equal to the year-earlier quarter.
-
The Company closed the quarter with net debt of $53.1 million, versus
net cash of $4.0 million at the end of the first quarter 2014 and
$29.2 million at June 30, 2014. The increase in net debt was primarily
due to the acquisition of Enginetics during the quarter.
A reconciliation of net income, earnings per share and net income from
continuing operations from reported GAAP amounts to non-GAAP amounts is
included later in this release.
Management Comments
“Standex is off to a strong start in fiscal 2015,” said David Dunbar,
Standex President and CEO. “Three of our five segments reported
double-digit growth in the first quarter and non-GAAP operating income
was up 8.9% from the first quarter last year.”
Segment Review
Food
Service Equipment Groupsales increased 13.9%
year-over-year, and operating income was down 2.5%. Excluding the impact
of non-cash purchase accounting expenses related to the Ultrafyer
acquisition, operating income increased 1.3% year over year.
“The food service equipment group had good growth for the quarter with
organic sales growth of 10.1%, acquisition accounted for 3.7% and
foreign exchange was 0.1%,” Dunbar said. “In refrigeration, this was a
strong quarter for sales in both the dollar store and chain store
segments. We also saw good growth in our specialty cabinet business with
the beverage industry. Sales in specialty solutions were up,
year-over-year, in large part due to our roll-out of a new line of open
air merchandiser products. Sales in the cooking solutions group were
down slightly due to the slow ramp-up of Nogales production related to
the Cheyenne consolidation. The lower operating leverage at the segment
level was the result of inefficiencies in Nogales. Shipments out of the
plant are steadily improving as we begin the second quarter, and we are
making good progress in improving the plant’s operations. We continue to
expect the Cheyenne, Wyoming to Nogales facilities consolidation to
generate its targeted cost savings in fiscal 2015.1”
Engraving
Groupsales increased 12.2% year-over-year, while
operating income grew 45.4%.
“The Engraving Group posted its third consecutive quarter of record
sales and profitability in the first quarter, driven by strong worldwide
demand in our Mold-Tech business,” said Dunbar. “We opened Mold-Tech’s
fifth manufacturing facility in China during the first quarter, while
also making good progress toward opening two new sites in Eastern
European and Asian emerging markets. We are continuing to leverage the
worldwide presence provided by our 29 Mold-Tech sites around the world,
which enables us to stay close to our customers as their markets and
businesses evolve geographically. The design hub we recently opened in
Manchester, England is proving to be a differentiating concept in our
business. Manchester did projects for several additional major OEMs
during the first quarter, providing their design teams with rapid
prototyping of their future automotive interior textures. We are working
to replicate our success in Manchester by opening a new design hub later
this year in Detroit to service North American OEMs.1”
Engineering
Technologies Group sales grew 16.5% year-over-year, and operating
income increased 6.6%.
Sales grew organically 1.5%, acquisition growth accounted for 13.3% and
foreign exchange accounted for 1.7%. “We are working to capitalize on
new opportunities in aviation, in part driven by Enginetics,” said
Dunbar. “Our acquisition integration plan is on track, and we are
involved in some exciting sales pursuits. Our lower sales leverage
during the quarter primarily reflected unfavorable mix due to higher
levels of low-margin product development work in space and aviation, and
slower sales into oil and gas.”
Electronics
Products Group sales were up 4.7% year-over-year, while operating
income increased 7.9%.
“Electronics Products Group sales experienced strong growth in North
America, modest growth in Europe and largely flat sales in Asia during
the first quarter,” said Dunbar. “Our growth in this segment continues
to be driven primarily by increased demand for reed based sensors in the
automotive and appliance sectors. The recent acquisition of Planar
Quality Corporation is reinforcing this positioning with capabilities in
the specialized and growing area of compact, high-current, high-density
transformers. The Electronics group continues to execute its long-term
strategy of moving up the value chain from being a component supplier to
offering more advanced and comprehensive solutions, and Planar Quality
is just the latest example. We also made operational progress in
Electronics during the quarter by completing the move to our new
facility in Mexico.”
The Hydraulics
Products Group reported a 35.0% year-over-year sales increase, while
operating income rose 46.7%.
“This was another strong quarter for the Hydraulics Group,” Dunbar said.
“In addition to the continued growth in solid waste and refuse market
demand for the products we have recently introduced for those
applications, the recovery in our traditional North American dump truck
and dump trailer markets is continuing to result in growing product
demand for those applications as well. As more and more of our total
Hydraulics shipment volume comes from our new Tianjin China facility, we
are not only strengthening our competitive position, but also continuing
to improve our margins. The ability to deliver rod cylinders out of both
Tianjin and our plant in Ohio significantly reduces time-to-market for
our customers, and the lower operating costs in Tianjin are expected to
continue to improve our overall sales leverage as that plant ramps up.1”
Business Outlook
“Although it’s still early in the year, fiscal 2015 is expected to be a
strong year for Standex.1 We delivered double-digit, top-line
growth in the first quarter, while continuing to improve the Company’s
overall operating performance. Incoming orders are strong, and backlogs
are up from a year ago in all businesses. Conditions in the majority of
our end markets remain favorable, and we are making good progress on
strategic growth initiatives in each of our businesses. Our recent
acquisitions are performing well, and our balance sheet provides us with
the flexibility to pursue opportunities for driving organic and
acquisition-driven growth and delivering greater shareholder value,”
concluded Dunbar.
Conference Call Details
Standex will host a conference call for investors today, October 31,
2014 at 10:00 a.m. ET. On the call, David Dunbar, President and CEO, and
Thomas DeByle, CFO, will review the Company’s financial results and
business and operating highlights. Investors interested in listening to
the webcast should log on to the “Investor Relations” section of
Standex’s website, located at www.standex.com.
The Company's slide show accompanying the webcast audio also can be
accessed via its website. To listen to the playback, please dial (800)
585-8367 in the U.S. or (404) 537-3406 internationally; the passcode is
13922571. The replay also can be accessed in the “Investor Relations”
section of the Company’s website, located at www.standex.com.
Use of Non-GAAP Financial Measures
EBITDA, which is "Earnings Before Interest, Taxes, Depreciation and
Amortization," non-GAAP income from operations, non-GAAP net income from
continuing operations and free cash flow are non-GAAP financial measures
and are intended to serve as a complement to results provided in
accordance with accounting principles generally accepted in the United
States. Standex believes that such information provides an additional
measurement and consistent historical comparison of the Company's
performance. A reconciliation of the non-GAAP financial measures to the
most directly comparable GAAP measures is available in this news release.
About Standex
Standex
International Corporation is a multi-industry manufacturer in five
broad business segments: Food Service Equipment Group, Engineering
Technologies Group, Engraving Group, Electronics Products Group, and
Hydraulics Products Group with operations in the United States, Europe,
Canada, Australia, Singapore, Mexico, Brazil, Argentina, Turkey, South
Africa, India and China. For additional information, visit the Company's
website at http://standex.com/.
1 Safe Harbor Language
Statements
in this news release include, or may be based upon, management's current
expectations, estimates and/or projections about Standex's markets and
industries. These statements are forward-looking statements within the
meaning of The Private Securities Litigation Reform Act of 1995. Actual
results may materially differ from those indicated by such
forward-looking statements as a result of certain risks, uncertainties
and assumptions that are difficult to predict. Among the factors that
could cause actual results to differ are the impact of implementation of
government regulations and programs affecting our businesses, unforeseen
legal judgments, fines or settlements, uncertainty in conditions in the
financial and banking markets, general domestic and international
economy including more specifically increases in raw material costs, the
ability to substitute less expensive alternative raw materials, the
heavy construction vehicle market, the ability to continue to
successfully implement productivity improvements, increase market share,
access new markets, introduce new products, enhance our presence in
strategic channels, the successful expansion and automation of
manufacturing capabilities and diversification efforts in emerging
markets, the ability to continue to achieve cost savings through lean
manufacturing, cost reduction activities, and low cost sourcing,
effective completion of plant consolidations, successful completion and
integration of acquisitions and the other factors discussed in the
Annual Report of Standex on Form 10-K for the fiscal year ending June
30, 2014, which is on file with the Securities and Exchange Commission,
and any subsequent periodic reports filed by the Company with the
Securities and Exchange Commission. In addition, any forward-looking
statements represent management's estimates only as of the day made and
should not be relied upon as representing management's estimates as of
any subsequent date. While the Company may elect to update
forward-looking statements at some point in the future, the Company and
management specifically disclaim any obligation to do so, even if
management's estimates change.
Standex International Corporation |
Consolidated Statement of Operations |
|
| | |
| | |
| | | Three Months Ended |
| | | September 30, |
(In thousands)
|
|
| 2014 |
|
| 2013 |
| | | | | |
|
Net sales
| |
$
|
202,027
| | |
$
|
178,140
| |
Cost of sales
| | |
135,915
|
| | |
117,735
|
|
Gross profit
| | |
66,112
| | | |
60,405
| |
| | | | | |
|
Selling, general and administrative expenses
| | |
43,954
| | | |
39,535
| |
Restructuring costs
| | |
862
| | | |
3,806
| |
Other operating (income) expense, net
| | |
59
|
| | |
-
|
|
| | | | | |
|
Income from operations
| | |
21,237
|
| | |
17,064
|
|
| | | | | |
|
Interest expense
| | |
643
| | | |
560
| |
Other (income) expense, net
| | |
(265
|
)
| | |
(454
|
)
|
Total
| | |
378
|
| | |
106
|
|
| | | | | |
|
Income from continuing operations before income taxes
| | |
20,859
| | | |
16,958
| |
Provision for income taxes
| | |
5,932
|
| | |
4,610
|
|
Net income from continuing operations
| | |
14,927
| | | |
12,348
| |
| | | | | |
|
Income (loss) from discontinued operations, net of tax
| | |
(375
|
)
| | |
(3,266
|
)
|
| | | | | |
|
Net income
| |
$
|
14,552
|
| |
$
|
9,082
|
|
| | | | | |
|
Basic earnings per share: | | | | | | |
Income from continuing operations
| |
$
|
1.18
| | |
$
|
0.98
| |
Income (loss) from discontinued operations
| | |
(0.03
|
)
| | |
(0.26
|
)
|
Total
| |
$
|
1.15
|
| |
$
|
0.72
|
|
| | | | | |
|
Diluted earnings per share: | | | | | | |
Income from continuing operations
| |
$
|
1.16
| | |
$
|
0.97
| |
Income (loss) from discontinued operations
| | |
(0.03
|
)
| | |
(0.26
|
)
|
Total
| |
$
|
1.13
|
| |
$
|
0.71
|
|
| | | | | |
|
Standex International Corporation |
Condensed Consolidated Balance Sheets |
|
| | |
| | |
| | | September 30, | | | June 30, |
(In thousands)
|
|
| 2014 |
|
| 2014 |
| | | | | |
|
ASSETS | | | | | | |
Current assets:
| | | | | | |
Cash and cash equivalents
| |
$
|
71,983
| | |
$
|
74,260
| |
Accounts receivable, net
| | |
114,458
| | | |
107,674
| |
Inventories
| | |
111,491
| | | |
97,065
| |
Prepaid expenses and other current assets
| | |
7,592
| | | |
7,034
| |
Income taxes receivable
| | |
-
| | | |
922
| |
Deferred tax asset
| | |
13,072
|
| | |
12,981
|
|
Total current assets
| | |
318,596
|
| | |
299,936
|
|
| | | | | |
|
Property, plant, equipment, net
| | |
108,991
| | | |
96,697
| |
Intangible assets, net
| | |
40,789
| | | |
31,490
| |
Goodwill
| | |
156,278
| | | |
125,965
| |
Deferred tax asset
| | |
910
| | | |
878
| |
Other non-current assets
| | |
24,983
|
| | |
23,194
|
|
Total non-current assets
| | |
331,951
|
| | |
278,224
|
|
| | | | | |
|
Total assets
| |
$
|
650,547
|
| |
$
|
578,160
|
|
| | | | | |
|
LIABILITIES AND STOCKHOLDERS' EQUITY | | | | | | |
| | | | | |
|
Current liabilities:
| | | | | | |
Accounts payable
| |
$
|
70,998
| | |
$
|
85,206
| |
Accrued liabilities
| | |
47,508
| | | |
51,038
| |
Income taxes payable
| | |
7,766
|
| | |
4,926
|
|
Total current liabilities
| | |
126,272
|
| | |
141,170
|
|
| | | | | |
|
Long-term debt
| | |
125,049
| | | |
45,056
| |
Accrued pension and other non-current liabilities
| | |
56,255
|
| | |
51,208
|
|
Total non-current liabilities
| | |
181,304
|
| | |
96,264
|
|
| | | | | |
|
Stockholders' equity:
| | | | | | |
Common stock
| | |
41,976
| | | |
41,976
| |
Additional paid-in capital
| | |
44,620
| | | |
43,388
| |
Retained earnings
| | |
597,285
| | | |
584,014
| |
Accumulated other comprehensive loss
| | |
(63,320
|
)
| | |
(55,819
|
)
|
Treasury shares
| | |
(277,590
|
)
| | |
(272,833
|
)
|
Total stockholders' equity
| | |
342,971
|
| | |
340,726
|
|
| | | | | |
|
Total liabilities and stockholders' equity
| |
$
|
650,547
|
| |
$
|
578,160
|
|
| | | | | |
|
Standex International Corporation and Subsidiaries |
Statements of Consolidated Cash Flows |
|
| | Three Months Ended |
| | | September 30, |
(In thousands)
|
|
| 2014 |
|
| 2013 |
| | | |
| | |
Cash Flows from Operating Activities | | | | | | |
Net income
| |
$
|
14,552
| | |
$
|
9,082
| |
Income (loss) from discontinued operations
| | |
(375
|
)
| | |
(3,266
|
)
|
Income from continuing operations
| | |
14,927
| | | |
12,348
| |
| | | | | |
|
Adjustments to reconcile net income to net cash provided by
operating activities:
| | | | | | |
Depreciation and amortization
| | |
4,011
| | | |
3,689
| |
Stock-based compensation
| | |
1,045
| | | |
849
| |
Non-cash portion of restructuring charge
| | |
(249
|
)
| | |
3,294
| |
Contributions to defined benefit plans
| | |
(323
|
)
| | |
(358
|
)
|
Net changes in operating assets and liabilities
| | |
(30,370
|
)
| | |
(18,528
|
)
|
Net cash provided by operating activities - continuing operations
| | |
(10,959
|
)
| | |
1,294
| |
Net cash provided by (used in) operating activities - discontinued
operations
| | |
117
|
| | |
(351
|
)
|
Net cash provided by (used in) operating activities
| | |
(10,842
|
)
| | |
943
|
|
Cash Flows from Investing Activities | | | | | | |
Expenditures for property, plant and equipment
| | |
(7,199
|
)
| | |
(3,730
|
)
|
Expenditures for acquisitions, net of cash acquired
| | |
(57,149
|
)
| | |
-
| |
Other investing activities
| | |
1,546
|
| | |
10
|
|
Net cash (used in) investing activities from continuing operations
| | |
(62,802
|
)
| | |
(3,720
|
)
|
Net cash (used in )investing activities from discontinued operations
| | |
-
|
| | |
(520
|
)
|
Net cash (used in) investing activities
| | |
(62,802
|
)
| | |
(4,240
|
)
|
Cash Flows from Financing Activities | | | | | | |
Proceeds from borrowings
| | |
88,600
| | | |
17,700
| |
Payments of debt
| | |
(8,600
|
)
| | |
(17,700
|
)
|
Activity under share-based payment plans
| | |
551
| | | |
72
| |
Excess tax benefit from share-based payment activity
| | |
1,308
| | | |
1,470
| |
Cash dividends paid
| | |
(1,264
|
)
| | |
(1,004
|
)
|
Purchase of treasury stock
| | |
(6,427
|
)
| | |
(3,045
|
)
|
Net cash provided by (used in) financing activities
| | |
74,168
|
| | |
(2,507
|
)
|
| | | | | |
|
Effect of exchange rate changes on cash
| | |
(2,801
|
)
| | |
795
| |
| | | | | |
|
Net changes in cash and cash equivalents
| | |
(2,277
|
)
| | |
(5,009
|
)
|
Cash and cash equivalents at beginning of year
| | |
74,260
|
| | |
51,064
|
|
Cash and cash equivalents at end of period
| |
$
|
71,983
|
| |
$
|
46,055
|
|
| | | | | |
|
Standex International Corporation |
Selected Segment Data |
|
| | |
| | |
| | | Three Months Ended |
| | | September 30, |
(In thousands)
|
|
| 2014 |
|
| 2013 |
Net Sales | | | | | | |
Food Service Equipment
| |
$
|
113,833
| | |
$
|
99,911
| |
Engraving
| | |
28,088
| | | |
25,027
| |
Engineering Technologies
| | |
20,119
| | | |
17,265
| |
Electronics Products
| | |
29,470
| | | |
28,144
| |
Hydraulics Products
| | |
10,517
|
| | |
7,793
|
|
Total
| |
$
|
202,027
|
| |
$
|
178,140
|
|
| | | | | |
|
Income from operations | | | | | | |
Food Service Equipment
| |
$
|
11,673
| | |
$
|
11,969
| |
Engraving
| | |
6,943
| | | |
4,773
| |
Engineering Technologies
| | |
2,220
| | | |
2,082
| |
Electronics Products
| | |
5,546
| | | |
5,138
| |
Hydraulics Products
| | |
1,722
| | | |
1,174
| |
Restructuring
| | |
(862
|
)
| | |
(3,806
|
)
|
Other operating income (expense), net
| | |
(59
|
)
| | |
-
| |
Corporate
| | |
(5,946
|
)
| | |
(4,266
|
)
|
Total
| |
$
|
21,237
|
| |
$
|
17,064
|
|
| | | | | |
|
Standex International Corporation |
Reconciliation of GAAP to Non-GAAP Financial Measures |
| |
| | |
| | |
| |
| | | | Three Months Ended | | |
| | | | September 30, | | |
(In thousands, except percentages)
|
|
| 2014 |
|
| 2013 |
| % Change |
Adjusted income from operations and adjusted net
income from continuing operations: | | | | | | | | |
Income from operations, as reported | |
$
|
21,237
| | |
$
|
17,064
| | |
24.5
|
%
|
Adjustments:
| | | | | | | | |
|
Restructuring charges
| | |
862
| | | |
3,806
| | | |
|
Management Transition
| | |
-
| | | |
136
| | | |
|
Acquisition-related costs
| | |
785
|
| | |
-
|
| |
|
Adjusted income from operations | |
$
|
22,884
|
| |
$
|
21,006
|
| |
8.9
|
%
|
Interest and other income (expense), net
| | |
(378
|
)
| | |
(106
|
)
| | |
Provision for income taxes
| | |
(5,932
|
)
| | |
(4,610
|
)
| | |
|
Discrete tax items
| | |
-
| | | |
155
| | | |
|
Tax impact of above adjustments
| | |
(468
|
)
| | |
(1,070
|
)
| |
|
Net income from continuing operations, as adjusted | |
$
|
16,106
|
| |
$
|
15,375
|
| |
4.8
|
%
|
| | | | | | | | |
|
EBITDA and Adjusted EBITDA: | | | | | | | | |
Income from continuing operations before income
taxes, as reported | |
$
|
20,859
| | |
$
|
16,958
| | | |
Add back:
| | | | | | | | |
|
Interest expense
| | |
643
| | | |
560
| | | |
|
Depreciation and amortization
| | |
4,011
|
| | |
3,689
|
| |
|
EBITDA | |
$
|
25,513
|
| |
$
|
21,207
|
| |
20.3
|
%
|
Adjustments:
| | | | | | | | |
|
Restructuring charges
| | |
862
| | | |
3,806
| | | |
|
Management Transition
| | |
-
| | | |
136
| | | |
|
Acquisition-related costs
| | |
785
|
| | |
-
|
| |
|
Adjusted EBITDA | |
$
|
27,160
|
| |
$
|
25,149
|
| |
8.0
|
%
|
| | | | | | | | |
|
Free operating cash flow: | | | | | | | | |
Net cash provided by operating activities -
continuing operations, as reported | |
$
|
(10,959
|
)
| |
$
|
1,294
| | | |
Less: Capital expenditures
| | |
(7,199
|
)
| | |
(3,730
|
)
| | |
Free operating cash flow | |
$
|
(18,158
|
)
| |
$
|
(2,436
|
)
| | |
Net income from continuing operations
| | |
14,927
|
| | |
12,348
|
| | |
Conversion of free operating cash flow | | |
NM
|
| | |
NM
|
| | |
| | | | | | | |
|
Standex International Corporation |
Reconciliation of GAAP to Non-GAAP Financial Measures |
| |
| | |
| | |
| |
| | | | Three Months Ended | | |
Adjusted earnings per share from continuing operations | | | September 30, | | |
|
| 2014 |
|
| 2013 |
| % Change |
| | | | | | | | |
|
Diluted earnings per share from continuing
operations, as reported | | $ |
1.16
| | $ |
0.97
| |
19.6
|
%
|
| | | | | | | | |
|
Adjustments:
| | | | | | | | |
|
Restructuring charges
| | |
0.05
| | |
0.21
| | |
|
Management Transition
| | |
-
| | |
0.01
| | |
|
Acquisition-related costs
| | |
0.04
| | |
-
| | |
|
Discrete tax items
| | |
-
| | |
0.01
| |
|
Diluted earnings per share from continuing
operations, as adjusted | | $ |
1.25
| | $ |
1.20
| |
4.2
|
%
|
Contacts:
Standex International Corporation
Thomas DeByle,
603-893-9701
CFO
InvestorRelations@Standex.com
Source: Standex International Corporation
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