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|Standex Reports Double-Digit Sales and Profitability Growth in First Quarter of Fiscal 2012|
SALEM, N.H., Oct 27, 2011 (BUSINESS WIRE) --
Standex International Corporation(NYSE:SXI) today reported financial results for the first quarter of fiscal year 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 on the Quarter
"Standex started fiscal 2012 with a solid first quarter performance, delivering year-over-year double digit top-line growth and an eighth straight quarter of non-GAAP operating income growth," said President and CEO Roger Fix. "Total sales grew 11.2% from the first quarter last year, reflecting organic growth of 5.4% and a 3.9% growth contribution from recent acquisitions, plus a 1.9% favorable foreign currency exchange. Our organic sales growth continues to outpace the generally lackluster economic conditions in our key geographic markets, demonstrating the success of our efforts to expand geographically and increase our market share, as well as the positive impact of our product pricing initiatives. At the same time, the increased operating leverage we have developed in our business through cost reductions and restructuring initiatives completed during the past three years continues to improve profitability. Driven primarily by strong performance in our Food Service Equipment Group, non-GAAP operating income for the first quarter was up 9% from the same period last year, and non-GAAP net income from continuing operations grew 16% to $12.0 million."
Food Service Equipment Groupsales increased 11.7% year-over-year, with operating income increasing 10.9%.
"Growth in Cooking Solutions sales was driven by increased domestic and international quick serve and national chain restaurant business," said Fix. "This was also a quarter of strong growth in our Custom Solutions product lines, which benefited from good demand from buffet and cafeteria chain business and custom design food retail projects. Refrigerated Solutions sales were up slightly as growth in the quick serve restaurant and scientific market segments were offset by lower sales to drug store chains. We continued to see good growth in our Value Line refrigeration product line that was introduced to the market a year ago and we have experienced some growth in the dollar store segment as well."
"We successfully completed factory consolidations during the first quarter in both our Refrigerated Solutions and Cooking Solutions Groups, which we believe will deliver approximately $1.5 million of annual savings,"1 added Fix. "The consolidation savings will begin to have an impact during the second quarter and will be fully in effect by the end of the fiscal year. During the quarter, we continued to introduce price increases to the market on several of our product lines and have been able to negotiate more favorable metal prices. We expect the price increases and metal commodity cost reduction activities to begin to favorably impact the Food Service Equipment Group in the second quarter."1
"Looking forward, our Food Service Equipment Group will continue to focus on driving growth in both top line sales and improving operating margins," said Fix. "We continue to expect that the combination of improved pricing, moderating commodity costs, completed factory consolidations and other cost reduction activities will assist us in achieving these objectives."1
The Engraving Group'ssales increased 5.1% year-over-year, with a 1.5% decrease in operating income.
"Although the Standex Engraving Group performed well in the first quarter, the group's financial results were negatively affected by a difficult comparison, which was the result of an exceptionally strong performance from our North American mold texturizing business in the prior year," said Fix. "Our mold texturizing operations in Europe, China and India delivered strong growth in both sales and profitability. Our roll engraving and machinery business remained soft in the first quarter, reflecting the continuing impact of the recession on the building products sector. However, quotation activity for engraved rollers and machines continued to improve in the quarter, and we booked our first orders related to the new cigarette package labeling requirements that will soon take effect in Canada. Similar new packaging requirements are expected to be implemented in the US and South America in the future, and that should lead to more sales opportunities for the group."1
"Looking forward, our North American mold texturizing business is well-positioned with a number of near-term platform launches under way," said Fix. "We continue to see solid demand for our mold texturizing services, particularly in China and India. In addition, during the quarter, we opened a mold texturizing operation as part of our existing facility in Brazil, which is the world's fourth-largest automotive market, and we are encouraged by our South American customers' positive response to this initiative. We have also committed to opening a fourth facility in China to be located in the Fujian province, which will commence operating during the second half of the fiscal year. This facility will be focused on providing texturizing services to manufacturers' of television and electronic products."
Engineering Technologies Group sales increased 16.8% year-over-year, with a 13.5% decrease in operating income.
"The Metal Spinners business we acquired in fiscal 2011 was responsible for the double-digit year-over-year sales growth we reported in our Engineering Technologies segment for the quarter," Fix said. "As we expected, sales in energy-related markets declined from the first quarter last year, primarily due to an inventory correction implemented by one of our major OEM customers. Based on forecast information from this customer, we continue to expect our energy business to return to more normal sales levels in the second half of fiscal 2012.1 Aerospace sales also were down in the quarter reflecting the lumpy nature of project sales in this segment. We still expect to experience good aerospace sales during the fiscal year."1
"Operating income for the group was down versus the prior year," added Fix. "Because sales in our legacy Spincraft energy and aerospace business were down year over year, this negatively impacted year-over-year operating income performance for this business unit. The profit generated at Metal Spinners only partially offset the lower profitability in the legacy Spincraft business unit."
"Looking ahead near term, we have a solid new business pipeline in the oil and gas, aviation and space sectors, and we expect to benefit from several projects in fiscal 2012,"1 said Fix. "In addition, our presence on the Delta IV and Atlas V heavy lift platforms positions our aerospace business to participate in near-term unmanned space flight opportunities. Longer term, we have the potential to play an important role in providing hardware for the heavy-lift launch vehicle component of the 'Space Launch System,' NASA's proposed manned space flight platform, and we have a number of development programs underway to pursue this emerging opportunity."1
The Electronics and Hydraulics Group reported 11.8% year-over-year sales growth, with operating income increasing 13.2%.
"First-quarter sales in our Electronics segment were down slightly, but the strong performance of our Hydraulics business led to double-digit year-over-year growth in sales for the group as a whole," said Fix. "The consistent top line growth that our Electronics business posted during the past 18 months was interrupted this quarter, primarily as a result of lower sales of reed switches to China and Asia Pacific customers and magnetics to certain large OEM customers. Our Hydraulics business delivered strong top line results, benefitting from solid demand from North American dump trailer OEM's, new demand from refuse vehicle OEM's and growth in sales to Latin America and Asia Pacific customers."
"Operating profit in Electronics was up year-over-year, reflecting our recent product price increases as well as ongoing operating cost reductions," said Fix. "Profitability at our Hydraulics business did not fully benefit from the increased sales volume as our results were negatively impacted by inefficiencies associated with a new product launch at our US facility, which have since been resolved, and unfavorable product mix. We are taking action at Hydraulics to implement selective price increases to improve profit leverage at this unit.1 Looking ahead, our strong new product and new business pipelines in Electronics and Hydraulics position the group for continuing solid performance as fiscal 2012 unfolds."1
Air Distribution Products Group("ADP") sales increased 11.6% from the same period last year, and the business reported operating income of $0.5 million in the quarter.
"ADP delivered its third consecutive quarter of year-over-year sales growth amid ongoing weakness in the housing sector, and more importantly, the Group returned to profitability," Fix said. "This top-line growth was primarily driven by the success of our recent pricing initiatives, as well as the market's positive response to the new products we have introduced over the past several quarters. At the same time, we continued to reduce ADP's cost structure, while commodity metal prices stabilized and in some cases showed signs of softening. As a result, ADP posted its first positive operating income since the first quarter of fiscal 2010. Looking forward, we believe the success of ADP's strategy to drive growth and improve operational performance positions the business to realize top- and bottom-line benefits from even a modest eventual recovery in the housing market."1
"We continue to be cautiously optimistic in our outlook for fiscal 2012,"1 said Fix. "Our organic growth and product pricing initiatives are building positive top-line momentum across our businesses. In addition, more than three years of cost reduction, restructuring and productivity gains have improved the operating leverage in our business. During the same time we have focused on cash flow generation and debt reduction, and as a result, we have a very strong balance sheet in place today. Should there be a slowdown in global economic activity, Standex is better prepared for it than ever before in its history. We will continue to focus on evolving and maximizing the value of our overall portfolio of businesses according to our Focused Diversity strategy. Our recent acquisitions are performing well, and Standex has the balance sheet strength and liquidity to pursue similar promising opportunities in the future."
Conference Call Details
Standex will host a conference call for investors today, Thursday October 27, 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 88085806. 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.
Standex International Corporation is a multi-industry manufacturer in five broad business segments: Food Service Equipment Group, Air Distribution Products Group, Engineering Technologies Group, Engraving Group and Electronics and Hydraulics Group with operations in the United States, Europe, Canada, Australia, Singapore, Mexico, Brazil, 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 new residential construction 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 future acquisitions and the other factors discussed in the Annual Report of Standex on Form 10-K for the fiscal year ending June 30, 2011, 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.
SOURCE: Standex International Corporation
Standex International Corporation