|Standex Reports Double-Digit Sales and Profitability Growth in Fourth Quarter of Fiscal 2011|
SALEM, N.H., Sep 07, 2011 (BUSINESS WIRE) --
Standex International Corporation(NYSE:SXI) today reported financial results for the fourth quarter and fiscal year ended June 30, 2011.
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
"The fourth quarter was a solid finish to an excellent year for Standex," said President and CEO Roger Fix. "We delivered year-over-year top-line growth in all of our five business segments. Total sales were up 14.8% from the fourth quarter last year, reflecting organic growth of 9.3% and a 3.7% growth contribution from recent acquisitions, plus favorable foreign currency exchange. This level of organic growth is well in excess of the growth that we are seeing in most of our end user markets, which indicates that our sales initiatives are driving market share gains.1 On the bottom line, reflecting nearly three years of cost cutting and restructuring, we are clearly seeing improved profitability from incremental sales. Led by our Engraving, and Electronics and Hydraulics segments, non-GAAP operating income for the quarter was up 19%. Non-GAAP net income from continuing operations grew 34.8% to $11.0 million."
Food Service Equipment Groupsales increased 9.8% year-over-year, with operating income decreasing 8.2%.
Although our Food Service Equipment group continued to deliver solid top-line growth, margins on the refrigeration side of the business were down year-over-year," said Fix. "Sales growth in the quarter reflected continuing strength in demand for our Cooking solutions, Custom Solutions and Procon product lines. Margins, particularly in our Refrigerated Solutions product lines, were negatively affected by three factors, the first being commodity inflation and, in particular, a negative year-over-year sales price and metal cost comparison in the quarter. The second issue we faced was a shift in refrigeration product sales to dealer buying groups, which carry lower margins. Refrigeration product margins also reflected a mix shift from walk-in products to reach-in refrigeration products which are also generally at lower margins."
"At the same time, our Cooking Solutions Group delivered its third straight quarter of double-digit year-over-year sales growth," Fix said. "This growth was driven by solid product demand in domestic and international markets. Although Cooking Solutions Group sales continued to skew toward the dealer channel, we are seeing good results from our efforts to offset this by penetrating new national accounts."
"In fiscal 2012 the Food Service Equipment Group is focused on continuing to drive top-line growth and improve operating margins" said Fix. "Given the inflation in commodity prices and the changes we are experiencing in our product sales mix, we have been focused on the implementation of price increases and additional cost reduction initiatives. We are beginning to see a more positive pricing environment in the food service equipment segment, as all of the major competitors in the market have announced price increases over the past two quarters while commodity metal pricing also appears to have stabilized.1 We are hopeful that the combination of improved pricing and moderating commodity costs will lead to improved year-over-year profit comparisons in fiscal 2012.1 In addition, we anticipate that factory consolidations we have initiated in both our Refrigerated Solutions and Cooking Solutions groups, which we expect to complete by the end of the first quarter of fiscal 2012, will deliver roughly $1.5M of annual savings.1 We expect to begin to experience the benefit of these factory consolidations in the second quarter of fiscal 2012."1
The Engraving Group'ssales increased 10.9% year-over-year, with an 18.9% increase in operating income.
"The fourth quarter was a strong finish to a very good year for the Standex Engraving Group," Fix said. "In our mold texturizing business we are gaining market share essentially across the board, driven by both our technology and the customer proximity and access provided by our global footprint. Increased operating income demonstrated that the operational streamlining and cost reductions we have implemented are continuing to improve our profit performance. During the fourth quarter our mold texturizing business benefited from strong customer demand in all the geographies Standex serves, and we see good sales momentum going into fiscal 2012.1 Our ongoing focus on emerging economies is yielding good results as evidenced by the record year reported by our mold texturizing business in China, which continues to deliver strong growth on both the top and bottom lines. The mold texturizing business we recently acquired in India is also performing very well, and we are expanding our team and capacity in India to satisfy growing demand. We continue to see softness in our roll engraving and machinery business, although recently we have seen some improvement in quotation activity."
Engineering Technologies Group sales increased 51% year-over-year, with a 27.1% increase in operating income.
"Reflecting the "lumpy" nature of project-related sales which are the normal course in our Engineering Technologies segment, as well as the acquisition of Metal Spinners Group in the third quarter of fiscal 2011, sales and operating income for the fourth quarter were up substantially both sequentially and year-over-year," said Fix. "In line with our expectations, we saw good sales performance in our legacy Spincraft aerospace markets which we expect to continue into fiscal 2012.1 However, we expect our sales in the energy area to be down in the first half of fiscal 2012 as one of our major OEMs in this market implements an inventory correction.1 Based on forecast information from this customer, we currently expect our energy business to return to more normal sales levels in the second half of fiscal 2012.1 Because our aerospace business is focused on the unmanned Delta IV and Atlas V heavy lift platforms, which are primarily used for satellite deployment, we are unaffected by the discontinuation of the space shuttle program. However, the space shuttle decommissioning has the potential to create opportunities for us as the industry seeks alternatives for manned space flight and specifically for resupplying the international space station, as we believe Spincraft is very well positioned to provide hardware on most of the launch vehicles being considered for these manned missions.1 We continue to drive initiatives to capture additional business in the energy market, where we are making progress in forging the customer relationships we need to penetrate additional land-based turbine opportunities and to penetrate the aviation jet engine business, which is a new market opportunity for the group."
"The Metal Spinners business contributed to both our sales and our profitability in the fourth quarter of 2011," said Fix. "However, profit leverage in the group during the fourth quarter was negatively impacted by purchase accounting associated with the acquisition of Metal Spinners. The write-up of the initial inventory and backlog flowed through the P&L in the fourth quarter, and we expect our profit leverage to be more normal beginning in Q1 of fiscal 2012."1
The Electronics and Hydraulics Group reported 18.2% year-over-year sales growth, with operating income increasing 41.7%.
"This was another excellent quarter for the Electronics and Hydraulics segment," Fix said. "We are continuing to see the benefits of our efforts to capture new business opportunities in our Electronics business, which posted its sixth consecutive quarter of double-digit year-over-year top-line growth. We are continuing to capitalize on the competitive advantages we have created in our Electronics segment. In Electronics we are leveraging the combination of a solid new product engineering capability along with proprietary technologies that we have developed over the years for a wide range of applications in the aerospace, automotive, industrial and medical markets, in conjunction with low-cost manufacturing facilities in Mexico and China. More recently we have invested in expanding our global sales force to address the key geographic and end user markets around the world."
"This also was another good quarter for our Hydraulics business, where we also reported strong double-digit year-over-year sales growth," said Fix. "The North American market for hydraulically operated telescopic hoists continues to strengthen. In addition, our efforts to diversify our customer base into the international markets of South America, Southeast Asia, Australia and China continue to show positive results."
Air Distribution Products Group("ADP") sales increased 5.2% from the same period last year, and the business recorded an operating loss of $0.8 million in the quarter.
"Despite lackluster housing starts and extremely difficult conditions in the new home construction market, ADP continued to deliver top-line growth in the fourth quarter," said Fix. "This growth demonstrates that our continued focus on gaining market share and introducing new products is yielding positive results."
"Standex enters into fiscal 2012 with good momentum," Fix said. "We are moving in the right direction in terms of our sales, earnings, working capital and cash flow, as well in the positioning of our balance sheet. We have recorded solid year over year sales increase over the past three quarters with Metal Spinners only now beginning to contribute. Despite the lower margins in our Food Service segment in the fourth quarter, our fiscal 2011 non-GAAP earnings per diluted share were 51% above their high point prior to the recession on 10% lower sales volume. Looking forward, given the still tenuous nature of the global economic recovery, we are remaining highly focused on operational improvement and conservative regarding operating expenses as we begin fiscal 2012. We have, however, identified some attractive opportunities for investment in both productivity and organic growth, which we plan to fund with capital as the year unfolds.1 As always, we will continue to focus on evolving and maximizing the value of our overall business portfolio and, in that context, executing on our Focused Diversity and acquisition strategy continues to be a top priority. Our recent acquisitions have all met or exceeded our expectations strategically and financially, and Standex has the balance sheet strength and liquidity necessary to capitalize on similar opportunities in the future.1"
Conference Call Details
Standex will host a conference call for investors today, Wednesday September 7, 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 81757411. 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 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, 2010, 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