STANDEX INTERNATIONAL CORP/DE/ Q2 FY2025 earnings call

• Sales increased 6.4% in the second quarter, with contributions from acquisitions partially offsetting organic decline. Sales from the Amran/Narayan Group exceeded expectations. - New product sales totaled $14.5 million in the fiscal second quarter, increasing approximately $3.5 million sequentially and more than doubling year - on - year. - Achieved a record adjusted operating margin of 18.7%, led by an adjusted operating margin of 27.6% in the electronics business segment. - Integration of the Amran/Narayan is progressing well and ahead of plan. - Revised fast - growth markets to include electrical grid, renewable energy, electric and hybrid vehicles, commercialization of space, and defense. - Expect moderately to significantly higher revenue in the fiscal third quarter 2025 due to the Amran/Narayan Group acquisition and improving electronics demand.

On a consolidated basis, total revenue increased approximately 6.4% year - on - year to $189.8 million. Electronics segment revenue was $95.9 million, up 20.8% year - on - year; Engraving segment revenue decreased 23% to $31.5 million; Scientific segment revenue increased 13.4% to $18.5 million; Engineering Technologies segment revenue increased 13.9% to $22.6 million; Specialty Solutions segment revenue decreased 2.9% to $21.3 million. Second quarter 2025 adjusted operating margin increased 150 basis points year - on - year to a record 18.7%.

• For the remainder of the fiscal year, expect end markets to improve with the electrical grid end market providing an additional tailwind. - Anticipate approximately $170 million from sales into fast - growth markets in fiscal 2025. - By fiscal 2028, anticipate sales in fast - growth markets to be greater than $340 million, representing greater than 30% of total sales. - Revised long - term targets for fiscal 2028: sales of greater than $1.15 billion, adjusted operating margin of greater than 23%, and return on invested capital (ROIC) of greater than 15.5%.

• Organic sales decline in electronics due to softness in automotive and general industrial end markets in Europe and North America. - Continued softness in the automotive end markets in North America and Europe affecting the Engraving segment. - Impact of foreign exchange on revenue.

Q: Clarify on new targets being full year or exit rate.

A: Ademir Sarcevic said that will be for the full year or exit rate at the end of FY 2027.

Q: Could you give an idea of what the D&A is going to be when having a full three months of the acquisition under belt on a quarterly basis?

A: Historic amortization expense before the Amran/Narayan acquisition was about $2 million per quarter. It's probably going to be around $4 million to $5 million going forward once having three months of Amran/Narayan in the run rate. Depreciation is $20 million to $22 million per year.

Q: Who is the main competition and what you supply for the Stargate project if it gets off the ground?

A: Amran/Narayan's instrument transformers sales would be into equipment providers like Eaton, GE, Schneider depending on who gets the contracts, and our instrument transformers would be in the equipment like switchgear, transformer and substations.

Q: What is the organic growth visibility for 2H?

A: Engraving is expected to pick up in Q4 and beyond; other businesses have good order trends.

Q: Amran/Narayan sales seasonality and growth outlook?

A: Amran/Narayan had about $19.5 million in two months, about $10 million per month run rate; growth momentum is at 20% - 30%, but 15% is a solid expectation.

Q: Amran integration and Europe footprint?

A: Plan to have a Europe footprint in the calendar year, working with European management team and having discussions with customers on product ramping.

Q: Engraving restructuring details?

A: It is both facilities consolidation and head count reduction with roles not planned to be replaced.

Q: Capacity and margin profile of Amran asset?

A: Margin before COVID was mid - to upper 30s, now healthy; capacity expansion to add shifts.

Q: New product launches and pipeline beyond fiscal 2025?

A: Similar cadence expected in fiscal 2026, pipelines are full with new products to be released.

Q: Space business and upcoming orders?

A: Content in space is on larger vehicles, ramping into next years.