Standex International Corporation Q4 FY2025 earnings call

Management Statement and Operational Highlights

• Fiscal year 2025 was a turning point for Standex, with growth drivers scaling and reaching an inflection point.
• Fourth quarter sales increased 23.2%, with Electronics growing slightly organically, book-to-bill ratio above 1, and organic orders up 16% y/y.
• Established a site in Croatia to serve European customers, expecting product shipment within 4 months.
• Achieved record adjusted operating margin of 20.6% in the quarter, net leverage ratio lowered to 2.6x.
• In fiscal 2026, expect revenue to grow by over $100 million, driven by mid- to high single-digit organic growth in Electronics, double-digit organic growth in Engineering Technologies, and contributions from recent acquisitions.

Segment Performance

• Electronics: Segment revenue was $115.2 million, up 43.2% year-on-year, driven by 41% benefit from acquisitions, 0.3% organic growth, and 1.9% foreign currency benefit. Adjusted operating margin in fiscal fourth quarter 2025 was 28.5%, up 640 basis points year-on-year.
• Engineering Technologies: Revenue increased 26.8% to $32 million, driven by 25% benefit from recent McStarlite acquisition, 0.9% organic growth, and 0.9% foreign currency benefit. Adjusted operating margin was 18.4%, down 250 basis points year-on-year.
• Scientific: Revenue increased 2.3% to $17.9 million due to 16.1% benefit from recent acquisitions, partially offset by 13.9% organic decline. Adjusted operating margin was 24.3%, down 530 basis points year-on-year.
• Engraving and Specialty Solutions: Engraving revenue was $33 million, up 0.6% year-on-year, with adjusted operating margin 15.2% in fiscal fourth quarter 2025, up 190 basis points year-on-year. Specialty Solutions revenue was $23.9 million, down 1.2% year-on-year, with operating margin 18.6%, down 360 basis points year-on-year.

Guidance

• Fiscal 2026 expects revenue to grow by over $100 million, with continued adjusted operating margin expansion.
• New product sales to contribute approximately 300 basis points of incremental sales growth, and over 15 new products to be released.
• Sales from fast growth markets expected to grow ~45% year-on-year and exceed $265 million.
• Fiscal first quarter 2026 expects significantly higher revenue from recent acquisitions and organic growth, but slightly lower revenue sequentially due to project timing and seasonality.

Risks

• Unforeseen economic, global trade, or tariff-related disruptions could impact revenue and margins.
• NIH funding cuts have impacted Scientific segment sales, with no assumption of pick-up in guidance.
• Interest rate changes could affect debt repayment and interest expense.

Question and Answer

Q: Talked about $100 million or more revenue increase in fiscal '26. Any room for upside?

A: The full year impact of acquisitions, new products, and fast growth markets could lead to $100 million to $130 million or more in 2026.

Q: Comment on EV business in Electronics for fiscal '26.

A: EVs are still in fast growth markets, with prospects good due to shift to electric vehicles and higher content per vehicle, anticipating growth in '26.

Q: Amran business in Croatia ramp-up cadence.

A: Starting with single-digit millions in fiscal '26, expected to grow to $30 million plus over 3 years.

Q: Restructuring in Engraving.

A: Majority of heavy lifting done, with some continued restructuring to align with end markets.

Q: NIH funding impact on Scientific.

A: ~1/3 of Scientific sales affected, no assumption of pick-up in guidance, but upside if funding returns.

Q: Impact of tariff announcements on business.

A: Businesses have strategies in place for pricing, productivity, and alternative sourcing to handle tariff impacts.

Q: Acquisition pipeline and appetite.

A: Always working the pipeline, with deleveraging progress allowing potential for another acquisition.