Standex International Corp (SXI) Q1 2025 Earnings Call Highlights: Navigating Challenges with ...

GuruFocus News
3 min read

In This Article:

  • Revenue: Decreased 7.7% year on year to $170.5 million.

  • Gross Margin: Record adjusted gross margin of 41.1%, up 240 basis points sequentially.

  • Operating Margin: Adjusted operating margin near 16%.

  • Net Income: Adjusted earnings per share decreased 1.7% year on year to $1.71.

  • Cash Flow: Net cash provided by operating activities was $17.5 million.

  • Capital Expenditure: $6.7 million compared to $4.3 million a year ago.

  • Free Cash Flow: $10.8 million compared to $12.1 million a year ago.

  • Electronics Segment Revenue: $77.7 million, decreased 4.8% year on year.

  • Engraving Segment Revenue: Decreased 18.2% to $33.4 million.

  • Scientific Segment Revenue: Decreased 2.7% to $17.7 million.

  • Engineering Technologies Revenue: Increased 12.7% to $20.5 million.

  • Specialty Solutions Revenue: $21.1 million, decreased 18.3% year on year.

  • Net Cash: $15.6 million at the end of the first quarter.

  • Long-term Debt: $149 million.

  • Dividend: $0.32 per share, approximately 6.7% increase year on year.

  • Amran/Narayan Acquisition: Combined enterprise value of $462 million, expected to be immediately accretive to key financial metrics.

Release Date: October 30, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Standex International Corp (NYSE:SXI) achieved a record gross margin above 40% in the fiscal first quarter, with an operating margin near 16%.

  • The acquisition of Amran/Narayan Group is expected to be immediately accretive to revenue growth, EBITA margin, operating margin, earnings per share, and free cash flow.

  • The Amran/Narayan Group has increased revenue at an average cumulative annual growth rate of 30% over the last three years.

  • Standex's exposure to fast growth markets increases to approximately 25% of total sales on a pro forma basis for fiscal 2024.

  • The acquisition enhances Standex's presence in the fast-growing, high-margin electrical grid market, driven by infrastructure upgrades and rising data center demand.

Negative Points

  • Sales declined 7.7% in the first quarter, with contributions from acquisitions partially offsetting an organic decline.

  • The electronics segment experienced a revenue decrease of 4.8% year on year, with an organic decline of 13.7%.

  • Engraving revenue decreased 18.2% due to slower demand in North America and Europe.

  • Adjusted earnings per share decreased 1.7% year on year to $1.71.

  • The specialty solutions segment revenue decreased 18.3% year on year, primarily due to softness in general market conditions.

Q & A Highlights

Q: What are the expectations for organic growth in 2025? A: Ademir Sarcevic, CFO, stated that while Q2 will not see organic growth, they expect mid to high single-digit organic growth in the electronics segment in Q3 and Q4. The Amran acquisition is expected to significantly boost growth, particularly in the electronics segment.

Recommended Stories