Standex International (SXI) Q2 2025 earnings summary

Executive summary

• Achieved highest sales quarter since 2020 divestiture, with Q2 FY25 net sales up 6.4% year-over-year to $189.8M, driven by acquisitions despite organic declines.

• Record adjusted operating margin of 18.7% (+150 bps YoY), with adjusted gross margin at 40.9%.

• Amran/Narayan Group acquisition, the largest in company history, exceeded expectations and contributed to strong sales and integration milestones.

• Exposure to fast-growth end markets (electrical grid, space, defense, EV, renewables) now exceeds 20% of total sales.

• New product sales more than doubled year-on-year, totaling $14.5M in Q2; over a dozen launches planned for FY25.

Financial highlights

• Net sales: $189.8M (+6.4% YoY); organic growth -8.2%, acquisitions +15.3%, FX -0.7%.

• Adjusted operating income: $35.5M (+15.4% YoY); adjusted operating margin: 18.7% (+150 bps YoY).

• Adjusted net income: $22.9M (+1.0% YoY); adjusted EPS: $1.91 (flat YoY); GAAP net income: $0.9M–$1.3M (down sharply YoY).

• Free cash flow: $2.1M–$2.2M, down from $19.5M YoY, impacted by ~$11M in one-time acquisition expenses.

• Q2 gross margin: 37.6% (down 260 bps YoY); adjusted gross margin: 40.9% (+60 bps YoY).

Outlook and guidance

• Q3 FY25 expected to see moderately to significantly higher revenue and slightly to moderately higher adjusted operating margin, led by Amran/Narayan and electronics demand.

• FY25 sales into fast-growth markets projected at ~$170M; >$340M by FY28, over 30% of total sales.

• FY28 long-term targets raised to >$1.15B sales, >23% adjusted operating margin, >15.5% ROIC.

• Capital expenditures for FY25 expected between $30M–$35M; Q3 FY25 interest expense projected at $7M–$7.5M.

• Over a dozen new product launches planned for FY25, expected to add ~200 bps of incremental growth.