ROHSTOFF INTERNATIONAL

14:45 | 30.04.2013
Standex Reports 10.2% Sales Growth in Third Quarter Fiscal 2013

Standex
International Corporation(NYSE:SXI) today reported financial
results for the third quarter ended March 31, 2013.
Third Quarter Fiscal 2013 Results from Continuing Operations
Net sales increased 10.2% to $166.0 million from $150.7 million in the
third quarter of fiscal 2012.

Income from operations was $11.7 million compared with $15.6 million
in the third quarter of fiscal 2012. Operating income for the third
quarter of 2013 included, pre-tax, $1.1 million of restructuring
charges, legal settlement expense of $2.8 million related to our Food
Service Equipment Group, and a $2.3 million benefit relating to the
discontinuation of a retiree life insurance benefit. The third quarter
of 2012 included, pre-tax, $0.2 million of restructuring charges and a
$4.8 million gain on the sale of real estate. Excluding these items
from both periods, the Company reported non-GAAP third-quarter fiscal
2013 operating income of $13.3 million compared with $11.0 million in
the year-earlier quarter, an increase of 21.0%.

Net income from continuing operations was $9.7 million, or $0.76 per
diluted share, including, after tax, $0.8 million of restructuring
charges, $2.0 million in legal settlement expenses, a $1.6 million
benefit relating to the discontinuation of a retiree life insurance
benefit, and $1.4 million in discrete tax benefits. This compares with
third quarter 2012 net income from continuing operations of $11.5
million, or $0.90 per diluted share, which included, after tax, $0.2
million of restructuring charges, a $3.3 million gain on the sale of
real estate and $0.3 million in discrete tax benefits. Excluding the
aforementioned items from both periods, non-GAAP net income from
continuing operations increased 17% to $9.4 million, or $0.74 per
diluted share, from $8.1 million, or $0.63 per diluted share, in the
third quarter of fiscal 2012.

EBITDA (earnings before interest, income taxes, depreciation and
amortization) was $15.4 million compared with $19.0 million in the
third quarter of fiscal 2012. Excluding the previously mentioned items
from both periods, EBITDA increased 17.6% to $17.0 million from $14.4
million in the third quarter of fiscal 2012.

Net working capital (defined as accounts receivable plus inventories
less accounts payable) was $138.3 million at the end of the third
quarter of 2013, compared with $114.8 million a year earlier. Working
capital turns were 4.8 for the third quarter of fiscal 2013, compared
with 5.3 turns in the third quarter of fiscal 2012.

The Company’s net debt (defined as short-term debt plus long-term debt
less cash) of $40.7 million compares with net debt of $28.9 million at
December 31, 2012.

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
“We grew sales and operating income in the quarter despite softening
demand in certain end user segments and the fact that the current
quarter had approximately 3% fewer shipping days as compared to the
prior year quarter,” said President and CEO Roger Fix. “We achieved
sales growth of 10.2%, which included 1.0% of organic sales growth, 9.3%
from acquisitions and a slight negative foreign exchange effect. Revenue
was affected by push-outs on the refrigeration side of our food service
segment as a result of the prolonged winter weather. In addition,
customer demand continued to be soft on the hot-side of that business.
We remain enthusiastic about our Meder acquisition in the Electronics
segment, which contributed strongly to both sales and profitability.
Non-GAAP income from continuing operations increased by 21%
year-over-year, demonstrating the continuing strength of our operating
model. Our Electronics and Engineering Technologies segments reported
double-digit increases in operating income.”
Segment ReviewFood
Service Equipment Group sales decreased 1.5%
year-over-year, with operating income down 17.6%.

“We experienced softer demand on the refrigeration side of the business
during the quarter as a result of the prolonged winter weather that
caused customers to delay new store openings and remodeling,” said Fix.
“In addition, general consumer uncertainty caused customers on the hot
side of the business to delay equipment purchases. Operating income was
down due to the deleveraging effect of the lower volume, warranty
expenses at our beverage dispensing business, a higher mix of
lower-margin customers and significantly higher marketing expenses than
in the year-ago quarter due to our participation in the biannual North
American Association of Food Equipment Manufacturers exhibition.”

“We continue to be successful in expanding our customer base in the
dollar store segment, and in the third quarter we received a commitment
from a large dollar store chain for $5 to $8 million of incremental
annual sales during the next 12 months,” said Fix. “We also had key
customer wins with our rack refrigeration and value line offerings
during the quarter. We re-launched a new value-engineered refrigerated
merchandising cabinet product line late in the third quarter with new
features and a lower price point. This product line had been primarily
used in retail drug stores, but we expect our customer base for this
line will now expand to the dollar store segment and the dealer channel.1
We believe these actions will allow us to take market share and improve
margins.1”

“On the Cooking Solutions side of the business, demand continued to be
soft in the retail grocery segment in the UK and US,” added Fix.
“Overall, replacement business on the cooking side was soft due to
sluggish consumer sales at our customers. During the quarter we opened a
new Culinary Development Center in Texas that is being used for customer
testing, demonstration, menu development and training. We expect this
will have a positive impact on our sales process.1 We have
been very pleased with the response to the Center by our customers.”

“Our customer fabrication businesses reported double-digit increases in
sales and bookings,” said Fix. “We are capitalizing on new products that
have been introduced in the past few years, particularly in the
convenience store segment. We also have done a good job in expanding new
dealer buying group channels.”
Engraving
Group sales decreased 0.9% year-over-year,
with operating income down 28.6%.

“Strong mold texturizing sales in Europe, China and Australia was offset
by continued softness in North America,” said Fix. “A greater mix of
lower-margin non-automotive sales in North America had a negative effect
on operating income in the quarter. Based on the schedule for major
platform launches, we expect a record year in our North America mold
texturizing business in fiscal 2014 with some softening in Europe.1”

“We experienced significant disruption and incremental expenses
associated with the relocation of our facility in Brazil, where we see
good future opportunities. We believe that the bulk of this is behind
us, but some disruption to shipments and extra relocation costs will
continue into Q4.1 We’re on track to open our larger facility
in Queretaro, Mexico in the first quarter of fiscal 2014. Queretaro has
become a growing center for automotive production and a number of OEMs,
tool makers and tier 1 auto interior suppliers are opening plants in
this region. Our new Korean facility is ramping up production of molds
as planned, and is being well received by customers. We plan to open our
fourth facility in India by the end of the fiscal year as planned.1”
Engineering
Technologies Group sales grew 4.4% year-over-year, while
operating income increased by 10.6%.

“During the quarter growth in the space sector and the land-based
turbine market offset continued softness in oil and gas,” said Fix. “In
addition to strong sales to our large land-based turbine customer, we
have been successful in our efforts to diversify our customer base in
this market and are seeing increased demand from other large gas turbine
customers. We expect strong sales from this market through the first
quarter of fiscal 2014, but we have very limited visibility beyond that.1
We expect that the oil and gas market, which is highly project-driven,
will remain soft for the remainder of the calendar year.1 In
the aviation market we’re making good progress in our efforts to
capitalize on demand for wing-based jet engine components and have
received several development contracts. We also expect to capitalize on
good long-term opportunities in the market for jet engine lipskins.1”

The Electronics
Products Group reported 132.1% year-over-year sales growth,
with operating income increasing 114.7%.

“We continue to be enthusiastic about the contributions from our Meder
acquisition,” said Fix. “During the quarter we began to see the initial
sales resulting from cross-selling opportunities and expect solid sales
synergies to continue to develop from our combined product portfolio
over the next fiscal year.1 We also expect that our cost
synergies will be significantly higher than we first anticipated, with
facility rationalization savings to be at the high end of our initial $1
to $1.5 million range and procurement savings now expected to be to be
about $2.5 million for total cost synergies of about $4 million.1
At the legacy business, we continue to be enthusiastic about our robust
pipeline of new products and customer programs that we expect will
contribute to revenue in future quarters.1”

The Hydraulics
Products Group reported a 2.3% year-over-year sales decline,
while operating income decreased 6.9%.

“During the quarter we saw improvement in the North American dump
trailer systems market as a result of the housing rebound and oil and
gas market demand in certain geographies,” said Fix. “We’re also seeing
very good growth in the roll-off waste container market and we are
expanding capacity at our Tianjin, China facility as a result. We also
see excellent new growth opportunities in the garbage truck refuse
market, which takes us into the residential area for the first time. We
already have received a commitment from one customer to supply all of
their aftermarket parts with our new products for this market. Looking
at the international business, we continued to experience weak demand
from Mexico, Australia and South America due to economic conditions.”
Business Outlook
“We are cautiously optimistic as we enter the final quarter of the
fiscal year,1” said Fix. “Our top- and bottom-line results
for the first three quarters of fiscal 2013 demonstrate the success of
our organic and acquisition growth strategy and the effectiveness of our
operating model. We continue to introduce new products and technologies
across each of our operating segments in order to penetrate new end user
and geographic markets. The accretion thus far and the enthusiastic
customer response to our Meder acquisition are also proving the success
of our acquisition strategy. Going forward, we are confident that we
have the right strategy to continue to grow sales, increase
profitability and generate long-term shareholder value.1”
Conference Call Details
Standex will host a conference call for investors today, April 30, 2013
at 10:00 a.m. ET. On the call, Roger Fix, president and CEO, and Thomas
DeByle, CFO, will review the Company’s financial results and business
and operating highlights. Investors interested in listening to the
webcast should log on to the “Investor Relations” section of Standex’s
website, located at www.standex.com.
The Company’s slide show accompanying the webcast audio also can be
accessed via its website. To listen to the playback, please dial (888)
286-8010 in the U.S. or (617) 801-6888 internationally; the passcode is
28170872. 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 StandexStandex
International Corporation is a multi-industry manufacturer in five
broad business segments: Food Service Equipment Group, Engineering
Technologies Group, Engraving Group, Electronics Products Group, and
Hydraulics Products Group with operations in the United States, Europe,
Canada, Australia, Singapore, Mexico, Brazil, Argentina, Turkey, South
Africa, India and China. For additional information, visit the Company’s
website at www.standex.com.
1 Safe Harbor Language
Statements in this news release include, or may be based upon,
management’s current expectations, estimates and/or projections about
Standex’s markets and industries. These statements are forward-looking
statements within the meaning of The Private Securities Litigation
Reform Act of 1995. Actual results may materially differ from those
indicated by such forward-looking statements as a result of certain
risks, uncertainties and assumptions that are difficult to predict.
Among the factors that could cause actual results to differ are the
impact of implementation of government regulations and programs
affecting our businesses, unforeseen legal judgments, fines or
settlements, uncertainty in conditions in the financial and banking
markets, general domestic and international economy including more
specifically increases in raw material costs, the ability to substitute
less expensive alternative raw materials, the heavy construction vehicle
market, the ability to continue to successfully implement productivity
improvements, increase market share, access new markets, introduce new
products, enhance our presence in strategic channels, the successful
expansion and automation of manufacturing capabilities and
diversification efforts in emerging markets, the ability to continue to
achieve cost savings through lean manufacturing, cost reduction
activities, and low cost sourcing, effective completion of plant
consolidations, successful completion and integration of acquisitions
and the other factors discussed in the Annual Report of Standex on Form
10-K for the fiscal year ending June 30, 2012, 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 CorporationConsolidated Statement of Operations

 

 

 

 

 

 

 

 

 

Three Months Ended

Nine Months Ended

March 31,

March 31,
 

 

 

 
2013
 

 
2012
 

 
2013
 

 
2012
Net sales

$

165,970

$

150,666

$

517,985

$

464,840

Cost of sales

 

113,419

 

 

102,499

 

 

349,899

 

 

313,657

 

Gross profit

52,551

48,167

168,086

151,183

 

Selling, general and administrative expenses

39,754

37,149

120,175

108,452

 

Gain on sale of real estate

(4,776

)

(4,776

)

Restructuring costs

 

1,075

 

 

229

 

 

2,295

 

 

1,452

 

 

Income from operations

 

11,722

 

 

15,565

 

 

45,616

 

 

46,055

 

 

Interest expense

643

646

1,869

1,546

Other (income) expense, net

 

209

 

 

(7

)

 

79

 

 

(292

)

Total

 

852

 

 

639

 

 

1,948

 

 

1,254

 

 

Income from continuing operations before income taxes

10,870

14,926

43,668

44,801

Provision for income taxes

 

1,199

 

 

3,401

 

 

11,046

 

 

11,380

 

Net income from continuing operations

9,671

11,525

32,622

33,421

 

Income (loss) from discontinued operations, net of tax

 

(110

)

 

(2,405

)

 

(270

)

 

(16,459

)

 

Net income

$

9,561

 

$

9,120

 

$

32,352

 

$

16,962

 

 
Basic earnings per share:

Income from continuing operations

$

0.77

$

0.92

$

2.60

$

2.67

Loss from discontinued operations

 

(0.01

)

 

(0.19

)

 

(0.02

)

 

(1.31

)

Total

$

0.76

 

$

0.73

 

$

2.58

 

$

1.36

 

 
Diluted earnings per share:

Income from continuing operations

$

0.76

$

0.90

$

2.55

$

2.62

Loss from discontinued operations

 

(0.01

)

 

(0.19

)

 

(0.02

)

 

(1.29

)

Total

$

0.75

 

$

0.71

 

$

2.53

 

$

1.33

 

 
Standex International CorporationCondensed Consolidated Balance Sheets

 

 

 

 

 

March 31,

June 30,
 

 

 

 
2013
 

 
2012

 
ASSETS

Current assets:

Cash and cash equivalents

$

30,209

$

54,749

Accounts receivable, net

99,806

99,432

Inventories, net

94,652

73,076

Prepaid expenses and other current assets

8,354

6,255

Income taxes receivable

4,760

3,568

Deferred tax asset

 

12,905

 

 

12,190

 

Total current assets

 

250,686

 

 

249,270

 

 

Property, plant, and equipment, net

96,825

82,563

Goodwill

112,435

100,633

Intangible assets, net

26,320

19,818

Deferred tax asset

3,351

6,618

Other non-current assets

 

18,916

 

 

20,909

 

Total non-current assets

 

257,847

 

 

230,541

 

 

Total assets

$

508,533

 

$

479,811

 

 
LIABILITIES AND STOCKHOLDERS’ EQUITY

 

Current liabilities:

Short-term debt

$

326

$

Accounts payable

56,139

62,113

Accrued liabilities

42,466

51,124

Income taxes payable

 

1,573

 

 

3,548

 

Total current liabilities

 

100,504

 

 

116,785

 

 

Long-term debt

70,570

50,000

Accrued pension and other non-current liabilities

 

64,416

 

 

70,119

 

Total non-current liabilities

 

134,986

 

 

120,119

 

 

Stockholders’ equity:

Common stock

41,976

41,976

Additional paid-in capital

36,474

34,928

Retained earnings

534,562

505,163

Accumulated other comprehensive loss

(71,234

)

(75,125

)

Treasury shares

 

(268,735

)

 

(264,035

)

Total stockholders’ equity

 

273,043

 

 

242,907

 

 

Total liabilities and stockholders’ equity

$

508,533

 

$

479,811

 

 
Standex International Corporation and SubsidiariesStatements of Consolidated Cash Flows

 

 

 
Nine Months Ended March 31,
 

 

 

 
2013
 

 
2012Cash Flows from Operating Activities

 

 

Net income

$

32,352

$

16,962

Income (loss) from discontinued operations

 

270

 

 

16,459

 

Income from continuing operations

32,622

33,421

 

Adjustments to reconcile net income to net cash provided by
operating activities:

Depreciation and amortization

11,626

10,146

Stock-based compensation

2,808

2,818

Gain from sale of real estate

0

(4,776

)

Contributions to defined benefit plans

(4,161

)

(957

)

Net changes in operating assets and liabilities

 

(23,455

)

 

(17,523

)

Net cash provided by operating activities – continuing operations

19,440

23,129

Net cash (used in) operating activities – discontinued operations

 

(3,006

)

 

(2,510

)

Net cash provided by operating activities

 

16,434

 

 

20,619

 
Cash Flows from Investing Activities

Expenditures for property, plant and equipment

(12,389

)

(8,213

)

 

Expenditures for acquisitions, net of cash acquired

(39,613

)

 

Proceeds from sale of real estate and equipment

24

5,163

Other investing activities

 

(435

)

 

(238

)

Net cash (used in) investing activities from continuing operations

(52,413

)

(3,288

)

 

Net cash provided by investing activities from discontinued
operations

 

 

 

14,710

 

Net cash provided by (used in) investing activities

 

(52,413

)

 

11,422

 
Cash Flows from Financing Activities

Proceeds from borrowings

100,500

195,500

Payments of debt

(80,723

)

(192,000

)

Borrowings on short-term facilities (net)

327

(1,800

)

Activity under share-based payment plans

206

247

Excess tax benefit from share-based payment activity

1,990

665

Cash dividends paid

(2,887

)

(2,506

)

Purchase of treasury stock

(8,275

)

(4,429

)

 

Other financing activities

 

 

 

(8,969

)

Net cash provided by (used in) financing activities from continuing
operations

11,138

(13,292

)

 

Net cash provided by financing activities from discontinued
operations

 

 

 

 

Net cash provided by (used in) financing activities

 

11,138

 

 

(13,292

)

 

Effect of exchange rate changes on cash

301

(991

)

 

Net changes in cash and cash equivalents

(24,540

)

17,758

Cash and cash equivalents at beginning of year

 

54,749

 

 

14,407

 

Cash and cash equivalents at end of period

$

30,209

 

$

32,165

 

 
Standex International CorporationSelected Segment Data

 

 

 

 

 

 

 

 

 

Three Months Ended

Nine Months Ended

March 31,

March 31,

2013

2012

2013

2012Net Sales

Food Service Equipment

$

86,606

$

87,906

$

291,747

$

288,064

Engraving

23,820

24,028

70,839

68,849

Engineering Technologies

19,584

18,765

53,341

51,415

Electronics Products

27,785

11,973

80,516

34,851

Hydraulics Products

 

8,175

 

 

7,994

 

 

21,542

 

 

21,661

 

Total

$

165,970

 

$

150,666

 

$

517,985

 

$

464,840

 

 
Income from operations

Food Service Equipment

$

5,287

$

6,418

$

28,329

$

28,502

Engraving

3,365

4,712

12,393

13,000

Engineering Technologies

3,411

3,083

8,748

9,341

Electronics Products

4,780

2,226

11,969

6,159

Hydraulics Products

1,437

1,544

3,371

3,001

Restructuring

(1,075

)

(229

)

(2,295

)

(1,452

)

Building Gain

0

4,776

0

4,776

Corporate

 

(5,483

)

 

(6,965

)

 

(16,899

)

 

(17,272

)

Total

$

11,722

 

$

15,565

 

$

45,616

 

$

46,055

 

 
Standex International CorporationReconciliation of GAAP to Non-GAAP Financial Measures
 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

Nine Months Ended

March 31,

March 31,

2013
 

 
2012
 

 
%Change
 

 
2013
 

 
2012
 

 
%ChangeAdjusted income from operations and adjusted net income from
continuing operations:

Income from operations, as reported

$

11,722

$

15,565

-24.7

%

$

45,616

$

46,055

-1.0

%

Adjustments:

Restructuring charges

1,075

229

2,295

1,452

Termination of Retiree Life Insurance

(2,278

)

(2,278

)

Legal Settlement

2,809

2,809

Acquisition-related costs

1,549

Gain on sale of real estate

 

 

 

(4,776

)

 

 

 

 

(4,776

)

 
Adjusted income from operations

$

13,328

 

$

11,018

 

21.0

%

$

49,991

 

$

42,731

 

17.0

%

Interest and other expenses

(852

)

(639

)

(1,948

)

(1,254

)

Provision for income taxes

(1,199

)

(3,401

)

(11,046

)

(11,380

)

Discrete tax items

(1,366

)

(315

)

(1,366

)

(845

)

Tax impact of above adjustments

 

(470

)

 

1,396

 

 

 

(1,281

)

 

974

 

 
Net income from continuing operations, as adjusted

$

9,441

 

$

8,059

 

17.1

%

$

34,350

 

$

30,226

 

13.6

%

 
EBITDA and Adjusted EBITDA:

Income from continuing operations before income taxes, as reported

$

10,870

$

14,926

$

43,668

$

44,801

Add back:

Interest expense

643

646

1,869

1,546

Depreciation and amortization

 

3,861

 

 

3,415

 

 

 

11,626

 

 

10,146

 

 
EBITDA

$

15,374

 

$

18,987

 

-19.0

%

$

57,163

 

$

56,493

 

1.2

%

Adjustments:

Restructuring charges

1,075

229

2,295

1,452

Termination of Retiree Life Insurance

(2,278

)

(2,278

)

Legal Settlement

2,809

2,809

Acquisition-related costs

1,549

Gain on sale of real estate

 

 

 

(4,776

)

 

 

 

 

(4,776

)

 
Adjusted EBITDA

$

16,980

 

$

14,440

 

17.6

%

$

61,538

 

$

53,169

 

15.7

%

 
Free operating cash flow:

Net cash provided by operating activities – continuing
operations, as reported

$

(5,216

)

$

14,117

$

19,440

$

23,129

Add back: Voluntary pension contribution

3,250

Less: Capital expenditures

 

(2,666

)

 

(3,149

)

 

(12,389

)

 

(8,213

)

Free operating cash flow

$

(7,882

)

$

10,968

$

10,301

$

14,916

Net income from continuing operations

 

9,671

 

 

11,525

 

 

32,622

 

 

33,421

 

Conversion of free operating cash flow

 

NM

 

 

95.2

%

 

31.6

%

 

44.6

%

 
Standex International CorporationReconciliation of GAAP to Non-GAAP Financial Measures
 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

Nine Months Ended

Adjusted earnings per share from continuing operations

March 31,

March 31,

 

 

 
2013
 

 
2012
 

 
%Change
 

 
2013
 

 
2012
 

 
%Change

 
Diluted earnings per share from continuing operations, as reported

$

0.76

$

0.90

-15.6

%

$

2.55

$

2.62

-2.7

%

 

Adjustments:

Restructuring charges

0.06

0.01

0.13

0.07

Termination of Retiree Life Insurance

(0.13

)

(0.13

)

Legal Settlement

0.16

0.16

Acquisition-related costs

0.08

Gain on sale of real estate

(0.26

)

(0.26

)

Discrete tax items

 

(0.11

)

 

(0.02

)

 

 

(0.11

)

 

(0.07

)

 
Diluted earnings per share from continuing operations, as adjusted

$

0.74

 

$

0.63

 

17.5

%

$

2.68

 

$

2.36

 

13.6

%


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