Market Overview

Standex Reports First Quarter 2020 Financial Results

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SALEM, N.H., Nov. 5, 2019 /PRNewswire/ -- Standex International Corporation (NYSE:SXI) today reported financial results for the first quarter of fiscal year 2020 ending September 30, 2019.

 

Summary Financial Results - Total Standex



($M except EPS and Dividends)

1Q20

1Q19

Change

Net Sales

$196.4

$193.1

1.7%

Operating Income

$18.4

$22.6

-18.6%

Net Income from Continuing Ops

$12.5

$14.4

-13.3%





EBITDA

$27.7

$29.1

-4.7%

EBITDA margin

14.1%

15.1%

-100 bps

Adjusted EBITDA

$27.6

$30.7

-10.1%

Adjusted EBITDA margin

14.1%

15.9%

-180 bps





Diluted EPS

$1.00

$1.12

-10.7%

Adjusted EPS

0.97

1.21

-19.8%

Declared Dividends per share

0.22

0.20

10.0%





1Q Free Cash Flow

$1.3

($10.0)

NM

Net Debt to Adjusted EBITDA

0.9x

1.6x

-43.8%

*First quarter of fiscal 2019 results have been adjusted to reflect the disposition of the Cooking Solutions Group on April 1, 2019.

 

First Quarter Fiscal 2020 Results 

"First quarter results were in line with our previously communicated expectations. Performance in Engineering Technologies, Hydraulics and Scientific remained strong. The Engraving segment reported a significant sequential margin increase from the previous quarter on a modest sales gain.  Macro-economic headwinds continued to impact results, particularly in the Electronics segment.  Our cost restructuring efforts are on plan and we continue to identify additional productivity initiatives that will be implemented in fiscal 2020.  Finally, our working capital metrics improved resulting in a favorable free cash flow comparison year-over-year," commented President and Chief Executive Officer David Dunbar

"From an organic growth perspective, laneway sales revenue increased 12% year-over-year to $16.6 million  as our new offerings continue to resonate with customers.  We are also benefitting from the successful integration and performance of our recent acquisitions, GS Engineering and Agile Magnetics, as we continue to leverage our Standex Value Creation model.

"Our financial position remains strong with net debt to Adjusted EBITDA of under 1x and approximately $250 million in available liquidity. Working capital metrics improved in all of our business segments this quarter. Working capital turns increased 90 basis points to 5.4x, and importantly, we generated free cash flow of $1.3 million in the first quarter which historically has been a negative quarter for us. 

"In summary, despite the challenges we are experiencing from the macro environment that is impacting some of our end markets, we continue to make progress in transforming our higher margin businesses into significant platforms. Our ongoing focus on company-wide productivity enhancements provides further opportunity to drive profitable growth.  In addition, our financial strength positions us well to invest in an active pipeline of high return internal projects and attractive acquisition opportunities.  Our capital allocation approach will remain disciplined and balanced as we pursue these new opportunities," concluded Mr. Dunbar.

Outlook

In the second fiscal quarter of 2020, the Company expects its financial performance to be similar to first quarter results.  For the third fiscal quarter, the expectation is for a sequential and year-over-year improvement in both revenue and operating income.

The Company's outlook assumes continued weakness in the Electronics segment particularly in Asia, improved Engraving segment performance, and continued growth in the Engineering Technologies and Scientific businesses.  As the previously announced restructuring contributes at its full run rate, the Company expects to further leverage its cost structure in the third quarter.

First Quarter Segment Operating Performance

Engraving (20% of sales; 23% of segment operating income)

 


1Q20

1Q19

% Change

Engraving ($M)




Net sales

$38.4

$36.0

6.8%

Operating Income

6.5

7.5

-13.4%

Operating Margin

17.0%

21.0%


Adj. Operating Income*

6.5

8.0

-18.3%

Adj. Operating Margin*

17.0%

22.2%


* 1Q19 excludes $0.5 million of purchase accounting expenses.

 

Overall sales grew 6.8% with contributions from recent acquisitions more than offsetting an organic decline of 5.5% and the 2.4% negative impact of foreign currency.  Although declining year-over-year, segment margin increased over 300 basis points sequentially compared to 4Q19 and reflected the improved performance primarily in our North American operations as well as contribution from growth laneways in lasers and tool finishing.  The decrease in adjusted operating income of $1.5 million year-over-year was largely due to the lower level of new roll-outs in the automotive sector and acquisition-related, non-cash amortization expense.  

In second quarter fiscal 2020, Standex expects year-over-year improvement due to increased automotive model roll-outs, continued contribution from the GS Engineering acquisition and completion of the restructuring actions announced in 3Q19.

Electronics (24% of sales; 28% of segment operating income)

 


1Q20

1Q19

% Change

Electronics ($M)




Net sales

$46.6

$51.5

-9.4%

Operating Income

8.1

12.8

-36.7%

Operating Margin

17.4%

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