STANDEX INTERNATIONAL CORP/DE/ Q1 FY2026 earnings call

Management Statement and Operational Highlights

• Strong first quarter performance with sales up 27.6%. New product sales grew >35% to ~$14.5 million, and sales in fast-growth markets were ~$62 million (30% of total sales).
• Orders of ~$226 million were the highest quarterly intake ever. Electronics had an organic decline but book-to-bill ratio above 1, with organic orders up ~8% year-on-year.
• Amran/Narayan Group (now Standex Electronics Grid) delivered record sales >$35 million, and operations kicked off in Croatia and Mexico.
• Adjusted operating margin was 19.1%, up 210 basis points. Net leverage ratio lowered to 2.4x.
• Raised fiscal 2026 sales outlook to over $110 million, with new product sales expected to contribute 300 basis points of incremental growth, Amran/Narayan Group to grow >20%, and fast-growth markets to grow over 45% to >$270 million.

Segment Performance

• Electronics: Segment revenue was $110.6 million, up 42.2% year-on-year. Driven by 45.5% benefit from acquisitions, partially offset by 3.1% organic decline and 0.1% foreign currency impact. Adjusted operating margin was 28.8%, up 510 basis points. Book-to-bill in the first quarter was 1.06 with orders of approximately $117 million, and organic bookings grew ~8% year-on-year.
• Engineering Technologies: Revenue was $29.9 million, up 45.6% year-on-year. Driven by 32.4% benefit from recent McStarlite acquisition, 12.7% organic growth, and 0.5% foreign currency impact. Adjusted operating margin was 16.8%, down 270 basis points.
• Scientific: Revenue was $19.5 million, up 9.9% year-on-year. Driven by 18.6% benefit from recent acquisition, partially offset by 8.7% organic decline. Adjusted operating margin was 25.3%, down 300 basis points.
• Engraving: Revenue was $35.8 million, up 7.4% year-on-year. Adjusted operating margin was 19.1%, up 50 basis points. The segment announced closure of 4 sites, with projected $5 million annualized cost savings once implemented.
• Specialty Solutions: Revenue was $21.7 million, up 2.6% year-on-year. Operating margin was 13.3%, down 350 basis points.

Guidance

• Raised fiscal 2026 sales outlook to over $110 million, $10 million more than previously communicated, driven by new product sales and fast-growth markets.
• Amran/Narayan Group expected to grow >20% year-on-year in fiscal 2026. New product sales expected to contribute ~300 basis points of incremental sales growth.
• Fast-growth markets expected to grow over 45% year-on-year and exceed $270 million.
• Fiscal second quarter 2026 expected to have significantly higher revenue driven by mid-single-digit organic growth and acquisitions, with slightly lower to similar adjusted operating margin due to growth investments and product mix.
• Sequentially, fiscal second quarter 2026 expected slightly higher revenue from fast growth end markets and new product sales, with slightly lower to similar adjusted operating margin due to growth investments and product mix.

Risks

• Unforeseen economics, global trade, or tariffs-related disruptions could impact performance.
• Government shutdowns and related policy changes have affected certain businesses like scientific and hydraulics, particularly due to reductions in NIH spending.

Question and Answer

Q: Congrats on another good quarter. It looks good. At some point, either Q3 or Q4 call, you talked about Standex being roughly 2/3 of the way in this optimization journey other than potentially selling 1 of the business segments, what are the biggest areas of focus to help this further on the optimization journey?

A: Ongoing portfolio work and realizing potential of organic growth initiatives. New product development is ramping up, and the business is repositioned into faster-growing markets. If the right opportunity to simplify arises, it will be pursued.

Q: You talked about new products a couple of times, 15 this year. Are there a few that really kind of stand out in terms of -- that are being introduced this year?

A: In electronics, there are new products going into relays and test and measurement applications. In scientific, the ultra-low temperature freezer is being expanded, which is entering a large end market.

Q: I have noticed on social media and electronics. I did see the Grid brand being launched at least on social media not too long ago. But is your effort -- is the effort really not just across Amran, or across the entire electronics segment? Is there 1 brand being presented to the entire customer base?

A: After acquiring Amran/Narayan, it was renamed Standex Electronics Grid. Grid is a better name as it can expand into broader businesses, and other segments like switches and sensors will be referred to as Detect and Edge respectively.