Standex International (SXI) Q1 2025 earnings summary

Executive summary

• Q1 FY25 net sales declined 7.7% year-over-year to $170.5M, with organic sales down 11.4% and acquisitions partially offsetting the decline.

• Achieved record gross margin of 41.1%, up 160bps year-over-year and 240bps sequentially, and operating margin near 16%.

• Largest acquisition in company history: Amran Instrument Transformers & Narayan Powertech for $462M, expanding presence in high-margin electrical grid markets and expected to be immediately accretive to revenue, margins, EPS, and free cash flow.

• New product sales increased 20% year-over-year to $11M, with over a dozen new products planned for FY25.

• Exposure to fast-growth markets doubled to 25% of sales on a pro forma FY24 basis post-acquisition.

Financial highlights

• Adjusted operating margin was flat at 15.9%; adjusted operating income fell 8% to $27.0M.

• Adjusted EPS decreased 1.7% to $1.71; diluted EPS was $1.53.

• Free cash flow was $10.8M, down from $12.1M a year ago; operating cash flow from continuing operations was $17.5M.

• Declared 241st consecutive quarterly dividend, $0.32/share, up 6.7% year-over-year.

• Cash and cash equivalents at quarter-end were $164.6M; long-term debt stood at $149.0M.

Outlook and guidance

• Q2 FY25 revenue and margin expected to improve sequentially, driven by the Amran-Narayan acquisition and recovering demand in electronics and specialty.

• Anticipate mid- to high-single-digit organic growth in electronics in Q3 and Q4 FY25; engineering technologies to continue double-digit growth.

• Over a dozen new products planned for FY25, contributing incremental growth.

• Updated long-term financial outlook to be provided in Q2 FY25 earnings call.

• Restructuring costs of approximately $4.0M expected for the remainder of FY2025.