SALEM, N.H.--(BUSINESS WIRE)--Standex International Corporation (NYSE:SXI) today reported financial results for the first quarter of fiscal year 2016.
First Quarter Fiscal 2016 Results from Continuing Operations
- Net sales decreased 1.8% to $198.4 million from $202.0 million in the first quarter of fiscal 2015. Organic sales decreased 0.8%, foreign exchange had a negative effect of 3.0%, and acquisitions contributed positive 2.0% year over year.
- Income from operations was $23.1 million, compared with $21.2 million in the first quarter of fiscal 2015. Net income from continuing operations was $16.1 million, or $1.26 per diluted share, including tax-effected $1.1 million of restructuring charges. This compares with first quarter fiscal 2015 net income from continuing operations of $14.9 million, or $1.16 per diluted share, including tax-effected $0.6 million of restructuring charges and $0.6 million of acquisition-related charges. Excluding the aforementioned items from both periods, non-GAAP net income from continuing operations was $17.2 million, or $1.34 per diluted share, compared with $16.1 million, or $1.25 per diluted share, in the first quarter of fiscal 2015.
- EBITDA (earnings before interest, income taxes, depreciation and amortization) was $27.7 million, compared with $25.5 million in the first quarter of fiscal 2015. Excluding the previously mentioned items from both periods, adjusted EBITDA for the first quarter of fiscal 2016 was $29.2 million, compared with $27.2 million in the year-earlier quarter.
- Net working capital (defined as accounts receivable plus inventories less accounts payable) was $148.7 million at the end of the first quarter of fiscal 2016, compared with $155.0 million a year earlier. Working capital turns were 5.3 in the first quarter of both fiscal 2016 and fiscal 2015.
- The Company closed the quarter with net debt of $9.0 million, compared with $52.8 million at September 30, 2014 and $5.6 million at June 30, 2015.
- 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.
“We are off to an excellent start to the fiscal year,” said President and CEO David Dunbar. “As a result of our efforts to improve the bottom line, even with a 1.8% year-over-year decline in sales, non-GAAP operating income was up 7.6%, and first-quarter adjusted EPS was up 7.2%. Margins increased in four of our five operating segments. Operating performance continued to improve in Food Service Equipment as we generated a 13.1% EBIT margin in the first quarter. We are continuing the transformation of that business and are encouraged by the progress we have made. Engraving, Electronics and Hydraulics also performed well during the quarter, while Engineering Technologies continued to be affected by the decline in oil and gas markets.”
Food Service Equipment Group sales decreased 5.8% year-over-year, and operating income was up 20.1%.
“We reported improved Food Service Equipment operating margin in the first quarter as a result of our operational excellence initiatives across the group,” said Dunbar. “In Refrigeration, sales to large, national chains continued to be soft and were the primary cause of the year-over-year revenue decline. Sales through dealers as well as scientific and industrial sales increased year-over-year, while c-stores and other small footprint retail sales remained somewhat steady. Dollar store sales continue to be soft as a result of the merger in that sector, but we expect this to be temporary.1 In Cooking Solutions, sales increased by approximately 4% year-over-year, driven by sales to the grocery market segment. Our operational excellence initiatives in Cooking Solutions are heading in the right direction. Warranty, price concessions, and freight and distribution costs continue to trend down, and plant productivity is improving.”
Engraving Group sales increased 19.3% year-over-year, partially offset by an 11.5% negative effect from foreign exchange, while operating income was up 42.7% compared with last year.
“The Engraving Group had an excellent quarter, achieving record orders, sales and EBIT,” said Dunbar. “Mold-Tech had strong results in China, with volume up approximately 50%. Sales volume also increased in Europe, but was masked by the negative currency effect. Sales in North America also improved, driven by new model launches as well as revenue from shipments previously expected late in 2015. Going forward, we will continue to focus on delivering on new model launches, leveraging sales from our Architexture design center hubs, and capitalizing on demand for new technologies such as nickel shell and laser.1”
Engineering Technologies Group sales declined 7.0% year-over-year, and operating income decreased 69.6%. Acquisitions contributed 20.6% to growth and foreign exchange had a 1% negative effect.
“Organic sales were down 27% year-over-year, primarily due to lower oil and gas sales as we expected, as well as softer demand from the space and medical markets,” said Dunbar. “We continue to reposition the business by shifting our focus to the aviation market, where we are seeing good demand and opportunity.1 Our focus is on pursuing and winning new awards in aviation, which we see as a major growth opportunity.1 We are expanding our capacity in Wisconsin in order to meet the demands of our current contracts and future opportunities in aviation.”
Electronics Products Group sales were down 5.0% year-over-year. Organic sales increases of 1.5% were offset by a 6.5% negative currency effect, while operating income was flat compared with the same period last year.
“Electronics sales grew in China and Europe, but were offset by a slowdown in North America as a number of large accounts were destocking. We expect this is temporary and that North American sales should improve in the second half of the fiscal year.1 Operating income was flat year-over-year despite the sales shortfall as supply chain cost savings and spending controls offset lower volume. We remain optimistic about the Electronics business long term.1 Going forward, we are focused on integrating our Northlake acquisition, continuing to roll out the operational excellence playbook in Europe and China, and pursuing new applications in adjacent markets to drive sales growth and profitability.1”
The Hydraulics Products Group reported a 4.3% year-over-year sales increase, while operating income rose 14.8%.
“We reported another strong quarter at the Hydraulics group,” said Dunbar. “Year-over-year sales growth was primarily related to the dump truck and trailer market, which is tied to the North American construction environment. We are also continuing to see strong demand from the refuse market. Looking ahead, we are focused on pursuing new business opportunities that require robust custom engineering designs and completing the field test of our new “press and pack” 4000 series cylinders for the refuse market.1”
“Across the organization we are focused on executing the four pillars of the Standex Value Creation System to drive performance in the business and align operational plans with strategic priorities.1 In Food Service Equipment we will continue to focus on improved operating performance to enhance margins and grow sales.1 In Engineering Technologies, we are ramping up capacity to capitalize on significant opportunities in the aviation market as the downturn in oil and gas continues.1 We also look forward to carrying our momentum forward in Engraving, Electronics and Hydraulics as we proceed through the fiscal year,1” concluded Dunbar.
Conference Call Details
Standex will host a conference call for investors today, October 29, 2015 at 10:00 a.m. ET. On the call, David Dunbar, President and CEO, and Thomas DeByle, CFO, will review the Company’s financial results and business and operating highlights. Interested parties may access the call by dialing (877) 847-6070 in the U.S. and (631) 813-4923 internationally; the passcode is 51955923. The live audio feed of the call, which will be supplemented by a slide presentation, can be accessed in the “Webcasts and Presentations” tab in the “Investors” section of the Company’s website, located at: www.standex.com. For those unable to participate in the live conference call, a playback will be available through November 5, 2015. To listen to the playback, please dial (800) 585-8367 in the U.S. or (404) 537-3406 internationally; the passcode is 51955923. The webcast 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, Engineering Technologies Group, Engraving Group, Electronics Products Group, and Hydraulics Products Group with operations in the United States, Europe, Canada, Australia, Singapore, Mexico, Brazil, Argentina, Turkey, South Africa, India and China. For additional information, visit the Company's website at http://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 economic conditions in the oil and gas market, the impact of foreign exchange, increases in raw material costs, the ability to substitute less expensive alternative raw materials, the heavy construction vehicle 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 acquisitions and the other factors discussed in the Annual Report of Standex on Form 10-K for the fiscal year ending June 30, 2015, 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.