STANDEX INTERNATIONAL CORP/DE/

Previous wording

Net sales decreased in the first quarter of fiscal year 2025 by $14.3 million or 7.7%, when compared to the prior year quarter. Organic sales decreased $21.1 million, or 11.4%, due to customer project pushouts in our Engraving segment in North America and Europe, lower demand in our Specialty segment related to election uncertainty and continued softness in general industrial end markets in Europe in our Electronics segment. These decreases were partially offset by strong demand and favorable project timing in our Engineering Technologies segment. Organic sales in the first quarter of fiscal year 2025 included $19.8 million attributed to fast growth markets. The fiscal year 2024 acquisitions of Sanyu, Minntronix and SEPL positively impacted sales by $7.0 million, or 3.8%. Foreign currency negatively impacted sales by $0.2 million, or 0.1%.

Current wording

Net sales increased in the second quarter of fiscal year 2025 by $11.4 million or 6.4%, when compared to the prior year quarter. The recent acquisitions positively impacted sales by $27.2 million, or 15.3%. Organic sales decreased $14.7 million, or 8.2%, due to lower demand in the automotive end market in our Engraving and Electronics segments in North America and Europe, and continued softness in general industrial end markets in North America. These decreases were partially offset by favorable project timing in our Engineering Technologies segment. Organic sales in the second quarter of fiscal year 2025 included $22.3 million attributed to fast growth markets. Foreign currency negatively impacted sales by $1.2 million, or 0.7%.

Previous wording

Gross profit in the first quarter of fiscal year 2025 decreased to $70.1 million, or a gross margin of 41.1% as compared to $72.6 million, or a gross margin of 39.3%, in the first quarter of fiscal year 2024. Gross profit was impacted by the organic sales decreases and approximately $1.5 million of net inflationary impacts in the areas of labor and materials, partially offset by productivity initiatives and contribution from the prior year acquisitions.

Current wording

Gross profit in the second quarter of fiscal year 2025 decreased to $71.4 million, or a gross margin of 37.6% as compared to $71.7 million, or a gross margin of 40.2%, in the second quarter of fiscal year 2024. Gross profit was impacted by the organic sales decreases, $6.2 million in purchase accounting expenses in connection with our recent acquisitions and approximately $2.1 million of net inflationary impacts in the areas of labor and materials, partially offset by productivity initiatives and contribution from recent acquisitions.

Previous wording

Selling, General, and Administrative (“SG&A”) expenses for the first quarter of fiscal year 2025 were $43.0 million, or 25.3% of sales, compared to $43.6 million, or 23.6% of sales, during the prior year quarter. SG&A expenses during the quarter were primarily impacted by a reduction in selling and marketing expenses.

Current wording

Selling, General, and Administrative (“SG&A”) expenses for the second quarter of fiscal year 2025 were $45.7 million, or 24.1% of sales, compared to $43.3 million, or 24.3% of sales, during the prior year quarter.

Previous wording

We incurred restructuring expenses of $1.1 million in the first quarter of fiscal year 2025, primarily related to facility closures and global headcount reductions within our Engraving segment.

Current wording

We incurred restructuring expenses of $0.9 million in the second quarter of fiscal year 2025, and $2.0 million in the first six months of fiscal year 2025 primarily related to facility closures and global headcount reductions within our Engraving segment.

Previous wording

We expect to incur restructuring costs of approximately $4.0 million throughout the remainder of fiscal year 2025, as we continue to focus our efforts to reduce costs and improve productivity across our businesses.

Current wording

We expect to incur restructuring costs of approximately $3.0 million throughout the remainder of fiscal year 2025, as we continue to focus our efforts to reduce costs and improve productivity across our businesses.

Previous wording

We incurred acquisition related expenses of $1.8 million in the first quarter of fiscal year 2025. Acquisition related expenses typically consist of due diligence, integration, and valuation expenses incurred in connection with recent or pending acquisitions.

Current wording

We incurred acquisition related expenses of $16.4 million in the second quarter of fiscal year 2025 and $18.2 million in the first six months of fiscal year 2025. Acquisition related expenses typically consist of due diligence, advisory, legal, integration, and valuation expenses incurred in connection with recent or pending acquisitions.

Previous wording

Income from operations for the first quarter of fiscal year 2025 was $24.1 million, compared to $26.9 million during the prior year quarter. The decrease of $2.8 million, or 10.5%, is primarily due to lower organic sales and acquisition related costs. The decreases are partially offset by contributions from recent acquisitions and productivity improvement initiatives.

Current wording

Income from operations for the second quarter of fiscal year 2025 was $8.5 million, compared to $25.8 million during the prior year quarter. The decrease of $17.4 million, or 67.2%, is primarily due to lower organic sales and acquisition related costs. The decreases are partially offset by contributions from recent acquisitions and productivity improvement initiatives.

Previous wording

Interest expense for the first quarter of fiscal year 2025 was $1.0 million, a 23.4% decrease from interest expense of $1.3 million during the prior year quarter. Our effective interest rate for the three months ended September 30, 2024 was 2.41%.

Current wording

Interest expense for the second quarter of fiscal year 2025 was $5.6 million, a 447.1% increase from interest expense of $1.0 million during the prior year quarter. Interest expense for the six months ended December 31, 2024 was $6.6 million a 185.5% increase from interest expense of $2.3 million during the prior year period. Our effective interest rate for the six months ended December 31, 2024 was 6.00%.

Previous wording

The Company's effective tax rate from continuing operations for the first quarter of the fiscal year ending June 30, 2025 was 21.4% compared with 23.8% for the prior year quarter. The tax rate was impacted in the current period by the following items: (i) a discrete tax benefit related to equity compensation, (ii) variations in the geographical mix of earnings; (iii) foreign withholding taxes and (iv) tax credits linked to federal research and development activities. The tax rate was impacted in the prior period by the following items: (i) a discrete tax benefit related to equity compensation, (ii) the jurisdictional mix of earnings, (iii) foreign withholding taxes, and (iv) federal research and development tax credits.

Current wording

The Company's effective tax rate from continuing operations for the second quarter of fiscal year 2025 and for the six months ended December 31, 2024 was 35.5% and 22.6% compared with 22.1% and 23.0% for the prior year quarter and prior year period, respectively. The tax rate was impacted in the current period by the following items: (i) a discrete tax benefit related to equity compensation, (ii) a discrete tax expense related to the write-off of foreign deferred tax assets, (iii) the jurisdictional mix of earnings, (iv) foreign withholding taxes and (v) federal research and development tax credits.

Previous wording

Income from operations in the first quarter of fiscal year 2025 increased by $0.7 million, or 4.2%, when compared to the prior year quarter. The operating income increase was the result of contributions from the recent acquisitions, productivity initiatives and product mix, partially offset by lower organic sales.

Current wording

Income from operations in the second quarter of fiscal year 2025 increased by $1.5 million, or 9.9%, when compared to the prior year quarter. The operating income increase was the result of contributions from the recent acquisitions, productivity initiatives and product mix, partially offset by lower organic sales.

Previous wording

Net sales in the first quarter of fiscal year 2025 decreased $4.0 million, or 4.8%, when compared to the prior year quarter. The acquisitions of Sanyu, Minntronix and SEPL in fiscal year 2024 added $7.0 million, or 8.5%, in sales for the first quarter of fiscal year 2025. Foreign currency impacts of $0.2 million, or 0.4%, also positively affected net sales compared to the prior year quarter. The organic sales decrease of $11.2 million, or 13.7%, negatively affected net sales compared to the prior year quarter. Organic sales were impacted by continued softness in Europe, primarily in the general industrial end markets and the effect of prior overstocking related to certain large customer accounts.

Current wording

Net sales in the six months ended December 31, 2024 increased $12.5 million, or 7.8%, when compared to the prior year period. The recent acquisitions added $32.7 million, or 20.3%, in net sales for the first six months of fiscal 2025. An organic sales decrease of $19.7 million, or 12.2%, and foreign currency impacts of $0.5 million, or 0.3%, negatively affected net sales compared to the prior year period. The organic sales decline was due to softness in the automotive end markets in Europe and North America and in general industrial end markets, and the effect of prior overstocking related to certain large customer accounts.

Previous wording

In the second quarter of fiscal year 2025, on a sequential basis, we expect significantly higher revenue, primarily driven by our recent Amran/Narayan Group acquisition and higher sales into fast growth end markets, and slightly to moderately higher operating margin, as the recent acquisition and pricing and productivity initiatives are partially offset by increased investments in selling, marketing, and research and development.

Current wording

In the third quarter of fiscal year 2025, on a sequential basis, we expect significantly higher revenue, primarily driven by the Amran/Narayan Group acquisition and higher sales into fast growth end markets, and moderately higher operating margin, as contribution from the recent acquisitions and pricing and productivity initiatives are partially offset by higher investments in selling, marketing, and research and development.

Previous wording

Net sales in the first quarter of fiscal year 2025 decreased by $7.4 million, or 18.2%, when compared to the prior year quarter. Organic sales decreased by $7.1 million, or 17.5%, due to delays in new platform rollouts in North America and delays and general market softness in Europe. Foreign currency negative impacts on net sales were $0.3 million, or 0.7%.

Current wording

Net sales in the second quarter of fiscal year 2025 decreased by $9.4 million, or 23.0%, when compared to the prior year quarter. Organic sales decreased by $9.1 million, or 22.2%, due to fewer new platform rollouts in North America and Europe. Foreign currency negative impacts on net sales were $0.3 million, or 0.8%.

Previous wording

Income from operations in the first quarter of fiscal year 2025 decreased by $1.8 million, or 23.3%, when compared to the prior year quarter. The operating income decrease was driven by lower demand in North America and Europe, partially offset by productivity initiatives.

Current wording

Income from operations in the second quarter of fiscal year 2025 decreased by $4.8 million, or 53.7%, when compared to the prior year quarter. The operating income decrease was driven by organic sales decreases due lower demand in North America and Europe, partially offset by the realization of previously announced productivity initiatives and restructuring actions.

Previous wording

In the second quarter of fiscal year 2025, on a sequential basis, we expect slightly higher revenue and operating margin.

Current wording

In the third quarter of fiscal year 2025, on a sequential basis, we expect slightly to moderately lower revenue and operating margin due to continued softness in the automotive end markets in North America and Europe and less favorable project timing in Asia due to the Chinese New Year. To address the continued softness in end markets served by this segment, we initiated additional restructuring actions that are projected to yield $4.0 million in annualized savings once fully implemented, starting in the fourth quarter of fiscal year 2025.

Previous wording

Net sales in the first quarter of fiscal year 2025 decreased by $0.5 million, or 2.7%, when compared to the prior year quarter, reflecting lower demand from retail pharmacies, partially offset by higher volume from new product sales.

Current wording

Net sales in the second quarter of fiscal year 2025 increased by $2.2 million, or 13.4%, when compared to the prior year quarter, reflecting a $1.5 million, or 9.5%, benefit from the Custom Biogenic Systems acquisition and an organic sales increase of $0.6 million, or 3.9%, due to higher volume from new product sales. This increase is partially offset by lower demand from retail pharmacies.

Previous wording

Net sales in the first quarter of fiscal year 2025 increased by $2.3 million, or 12.7%, when compared to the prior year quarter. The organic sales increase of $2.4 million, or 13.3%, was driven by more favorable project timing in the space end market which helped to drive growth in new product development and new applications. Foreign currency negative impacts on net sales were $0.1 million, or 0.6%.

Current wording

Net sales in the six months ended December 31, 2024 increased by $5.1 million, or 13.3%, when compared to the prior year period. The organic sales increase of $5.3 million, or 13.9%, was driven by more favorable project timing in the space end market which helped to drive growth in new product development and new applications. Foreign currency negative impacts on net sales were $0.2 million, or 0.6%.

Previous wording

Income from operations in the first quarter of fiscal year 2025 increased by $1.0 million, or 32.9%, when compared to the prior year quarter reflecting higher sales and pricing and productivity initiatives.

Current wording

Income from operations in the six months ended December 31, 2024 increased by $1.3 million, or 19.9%, when compared to the prior year period reflecting higher sales and pricing and productivity initiatives.

Previous wording

In the second quarter of fiscal year 2025, on a sequential basis, we expect moderately higher revenue and slightly higher operating margin due to favorable project timing in Asia and Europe, as well as productivity initiatives.

Current wording

In the third quarter of fiscal year 2025, on a sequential basis, we expect slightly lower revenue due to project timing and slightly higher operating margin due to product mix.

Previous wording

Net sales in the first quarter of fiscal year 2025 decreased by $4.7 million, or 18.3%, when compared to the prior year quarter. Organic sales for the group decreased $4.7 million, or 18.3%, as compared to the prior year quarter, reflecting softness in general market conditions in the Display Merchandising business and in the Hydraulics business.

Current wording

Net sales in the second quarter of fiscal year 2025 decreased by $0.6 million, or 2.9%, when compared to the prior year quarter. Organic sales for the group decreased $0.6 million, or 1.4%, as compared to the prior year quarter, reflecting softness in general market conditions in the Display Merchandising and Hydraulics businesses.

Previous wording

Income from operations in the first quarter of fiscal year 2025 decreased $2.1 million, or 36.8%, when compared to the prior year quarter, due to lower volume in the Display Merchandising business and in the Hydraulics business.

Current wording

Income from operations in the second quarter of fiscal year 2025 decreased $0.4 million, or 10.2%, when compared to the prior year quarter, due to lower volume in the Display Merchandising and Hydraulics businesses.

Previous wording

In the second quarter of fiscal year 2025, on a sequential basis, we expect similar revenue and slightly lower operating margin due to investments in research and development and higher freight costs.

Current wording

In the third quarter of fiscal year 2025, on a sequential basis, we expect similar revenue and slightly higher operating margin.

Previous wording

Corporate expenses in the first quarter of fiscal year 2025 decreased slightly when compared to the prior year quarter due to a reduction in professional service fees.

Current wording

Corporate expenses in the second quarter and first six months of fiscal year 2025 decreased slightly when compared to the prior year periods due to reductions in professional service fees.

Previous wording

In pursuing our business strategy, the Company may divest certain businesses. Future divestitures may be classified as discontinued operations based on their strategic significance to the Company. Net income (loss) from discontinued operations was less than $0.1 million for the three months ended September 30, 2024 and 2023, respectively.

Current wording

In pursuing our business strategy, the Company may divest certain businesses. Future divestitures may be classified as discontinued operations based on their strategic significance to the Company. Net income (loss) from discontinued operations was less than $0.1 million for the three and six months ended December 31, 2024, respectively. Net income (loss) from discontinued operations was less than $0.3 million for the three and six months ended December 31, 2023, respectively.

Previous wording

At September 30, 2024, our total cash balance was $164.6 million, of which $118.0 million was held by foreign subsidiaries. The amount and timing of cash repatriation is dependent upon foreign exchange rates and each business unit’s operational needs including requirements to fund working capital, capital expenditure, and jurisdictional tax payments. The repatriation of cash balances from certain of our subsidiaries could have adverse tax consequences or be subject to capital controls; however, those balances are generally available without legal restrictions to fund ordinary business operations.

Current wording

At December 31, 2024, our total cash balance was $121.1 million, of which $106.0 million was held by foreign subsidiaries. The amount and timing of cash repatriation is dependent upon foreign exchange rates and each business unit’s operational needs including requirements to fund working capital, capital expenditure, and jurisdictional tax payments. The repatriation of cash balances from certain of our subsidiaries could have adverse tax consequences or be subject to capital controls; however, those balances are generally available without legal restrictions to fund ordinary business operations.

Previous wording

Net cash provided by continuing operating activities for the three months ended September 30, 2024, was $17.5 million compared to net cash provided by continuing operating activities of $16.4 million in the prior year. We generated $27.7 million from income statement activities and used $6.7 million of cash to fund working capital and other balance sheet increases. Cash flow used in investing activities for the three months ended September 30, 2024 totaled $6.3 million and consisted of $6.7 million used for capital expenditures offset by $0.4 million proceeds from sales of real estate and equipment. Cash used for financing activities for the three months ended September 30, 2024 totaled $6.3 million and consisted primarily of purchases of stock of $4.4 million and cash paid for dividends of $3.5 million.

Current wording

Net cash provided by continuing operating activities for the six months ended December 31, 2024, was $26.7 million compared to net cash provided by continuing operating activities of $40.2 million in the prior year. We generated $39.3 million from income statement activities and used $7.9 million of cash to fund working capital and other balance sheet increases. Cash flow used in investing activities for the six months ended December 31, 2024 totaled $429.4 million and consisted of $419.7 million for the acquisition of businesses, net of cash acquired, $13.7 million used for capital expenditures offset by $3.5 million in life insurance proceeds and $0.4 million proceeds from sales of real estate and equipment. Cash used for financing activities for the six months ended December 31, 2024 totaled $370.1 million and consisted primarily of borrowings of $724.3 million, repayments of $339.1 million, $4.4 million in related financing fees, purchases of stock of $5.2 million and cash paid for dividends of $7.4 million.

Previous wording

Funds borrowed under the facility may be used for the repayment of debt, working capital, capital expenditures, acquisitions (so long as certain conditions, including a specified funded debt to EBITDA leverage ratio, are maintained), and other general corporate purposes. As of September 30, 2024, the Company used $3.1 million against the letter of credit sub-facility and had the ability to borrow $337.3 million under the facility based on our current trailing twelve-month EBITDA. The facility contains customary representations, warranties and restrictive covenants, as well as specific financial covenants. The Company’s current financial covenants under the facility are as follows:

Current wording

As of December 31, 2024, the Company used $3.2 million against the letter of credit sub-facility and had the ability to borrow $94.0 million under the facility based on our current trailing twelve-month EBITDA. The facility contains customary representations, warranties and restrictive covenants, as well as specific financial covenants. The Company’s current financial covenants under the facility are as follows:

Previous wording

Interest Coverage RatioThe Company is required to maintain a ratio of Earnings Before Interest and Taxes, as Adjusted (“Adjusted EBIT per the Credit Facility”), to interest expense for the trailing twelve months of at least 2.75:1. Adjusted EBIT per the Credit Facility specifically excludes extraordinary and certain other defined items such as cash restructuring and acquisition related charges up to the lower of $20.0 million or 10% of EBITDA. The facility also allows for unlimited non-cash purchase accounting and goodwill adjustments. At September 30, 2024, the Company’s Interest Coverage Ratio was 26.31:1.

Current wording

Interest Coverage RatioThe Company is required to maintain a ratio of Earnings Before Interest and Taxes, as Adjusted (“Adjusted EBIT per the Credit Facility”), to interest expense for the trailing twelve months of at least 2.75:1. Adjusted EBIT per the Credit Facility specifically excludes extraordinary and certain other defined items such as cash restructuring and acquisition related charges up to the lower of $20.0 million or 10% of EBITDA. The facility also allows for unlimited non-cash purchase accounting and goodwill adjustments. At December 31, 2024, the Company’s Interest Coverage Ratio was 16.37:1.

Previous wording

Leverage Ratio The Company’s ratio of funded debt to trailing twelve month Adjusted EBITDA per the Credit Facility, calculated as Adjusted EBIT per the Credit Facility plus depreciation and amortization, may not exceed 3.5:1. Under certain circumstances in connection with a Material Acquisition (as defined in the Facility), the Facility allows for the leverage ratio to go as high as 4.0:1 for a four-fiscal quarter period. At September 30, 2024, the Company’s leverage ratio was 0.66:1.

Current wording

Leverage Ratio The Company’s ratio of funded debt to trailing twelve month Adjusted EBITDA per the Credit Facility, calculated as Adjusted EBIT per the Credit Facility plus depreciation and amortization, may not exceed 3.5:1. Under certain circumstances in connection with a Material Acquisition (as defined in the Facility), the Facility allows for the leverage ratio to go as high as 4.0:1 for a four-fiscal quarter period. At December 31, 2024, the Company’s leverage ratio was 2.65:1.

Previous wording

As of September 30, 2024, we had borrowings under our facility of $150.0 million. In order to manage our interest rate exposure on these borrowings, we are party to $150.0 million of active floating to fixed rate swaps. These swaps convert our interest payments from SOFR to a weighted average fixed rate of 0.85%. The effective rate of interest for our outstanding borrowings, including the impact of the interest rate swaps, was 2.41%.

Current wording

As of December 31, 2024, we had borrowings under our facility of $535.2 million. In order to manage our interest rate exposure on these borrowings, we are party to $150.0 million of active floating to fixed rate swaps. These swaps convert our interest payments from SOFR to a weighted average fixed rate of 0.85%. The effective rate of interest for our outstanding borrowings, including the impact of the interest rate swaps, was 6.00%.

Previous wording

Our primary cash requirements in addition to day-to-day operating needs include interest payments, capital expenditures, acquisitions, share repurchases, and dividends. Our primary sources of cash for these requirements are cash flows from continuing operations and borrowings under the facility. We expect fiscal year 2025 capital spending to be between $35.0 million and $40.0 million. We expect that fiscal year 2025 depreciation and amortization expense will be between $24.0 million and $28.0 million and $8.0 million and $10.0 million, respectively.

Current wording

Our primary cash requirements in addition to day-to-day operating needs include interest payments, capital expenditures, acquisitions, share repurchases, and dividends. Our primary sources of cash for these requirements are cash flows from continuing operations and borrowings under the facility. We expect fiscal year 2025 capital spending to be between $30.0 million and $35.0 million. We expect that fiscal year 2025 depreciation and amortization expense will be between $20.0 million and $22.0 million and $12.0 million and $14.0 million, respectively.

Previous wording

The fair value of the Company's U.S. defined benefit pension plan assets was $151.9 million at September 30, 2024, as compared to $142.3 million at the most recent measurement date, which occurred as of June 30, 2024. The next measurement date to determine plan assets and benefit obligations will be on June 30, 2025.

Current wording

The fair value of the Company's U.S. defined benefit pension plan assets was $144.0 million at December 31, 2024, as compared to $142.3 million at the most recent measurement date, which occurred as of June 30, 2024. The next measurement date to determine plan assets and benefit obligations will be on June 30, 2025.

Previous wording

The Company expects to pay $2.9 million in contributions to its defined benefit plans during the remainder of fiscal year 2025. Contributions of $3.4 million and less than $0.1 million were made during the three months ended September 30, 2024 and 2023, respectively. There are required contributions of $2.5 million to the United States funded pension plan for the remainder of fiscal year 2025. The Company expects to make contributions during the remainder of fiscal year 2025 of less than $0.1 million and $0.3 million to its unfunded defined benefit plans in the U.S. and Germany, respectively. There are no required contributions to the plans in Japan or the U.K. Any subsequent plan contributions will depend on the results of future actuarial valuations.

Current wording

The Company expects to pay $1.5 million in contributions to its defined benefit plans during the remainder of fiscal year 2025. Contributions of $4.8 million and less than $0.1 million were made during the six months ended December 31, 2024. There are required contributions of $1.1 million to the United States funded pension plan for the remainder of fiscal year 2025. The Company expects to make contributions during the remainder of fiscal year 2025 of $0.1 million and $0.3 million to its unfunded defined benefit plans in the U.S. and Germany, respectively. There are no required contributions to the plans in Japan or the U.K. Any subsequent plan contributions will depend on the results of future actuarial valuations.

Previous wording

We have an insurance program in place to fund supplemental retirement income benefits for three retired executives. Current executives and new hires are not eligible for this program. At September 30, 2024, the underlying policies had a cash surrender value of $12.1 million and are reported net of loans of $4.9 million for which we have the legal right of offset, these amounts are reported net on our balance sheet.

Current wording

We have an insurance program in place to fund supplemental retirement income benefits for two retired executives. Current executives and new hires are not eligible for this program. During the second quarter of fiscal year 2025, we received $3.5 million in proceeds under this program. At December 31, 2024, the underlying policies had a cash surrender value of $6.6 million and are reported net of loans of $2.6 million for which we have the legal right of offset, these amounts are reported net on our balance sheet.

Previous wording

Foreign Currency Translation – Our primary functional currencies used by our non-U.S. subsidiaries are the Euro, British Pound Sterling (Pound), Japanese (Yen), Peso and Chinese (Yuan).

Current wording

Foreign Currency Translation – Our primary functional currencies used by our non-U.S. subsidiaries are the Euro, British Pound Sterling (Pound), Japanese (Yen), Peso, Chinese (Yuan) and Indian (Rupee).