Standex(SXI) - 2025 Q3 - Quarterly Results

Financial Performance - Net sales for Q3 FY2025 reached $207.8 million, a 17.2% increase year-over-year and a 9.5% increase quarter-over-quarter[3] - Adjusted operating income was $40.3 million, reflecting a 37.3% increase year-over-year and a 13.8% increase quarter-over-quarter[3] - The company achieved a record adjusted gross margin of 42.3%, up 140 basis points sequentially and 230 basis points year-over-year[5] - Net income from continuing operations for the fiscal third quarter of 2025 was $22.8 million, up 42.5% from $15.9 million in the same quarter of 2024[31] - GAAP diluted EPS increased by 35.4% year-over-year to $1.81, while adjusted diluted EPS rose by 3.7% to $1.95[3] - Diluted earnings per share from net income attributable to Standex reported at $1.81 for Q3 2025, a 34.4% increase from $1.35 in Q3 2024[42] - Adjusted diluted earnings per share increased by 3.6% to $1.95 in Q3 2025 compared to $1.88 in Q3 2024[42] - For the nine months ended March 31, 2025, diluted earnings per share from net income attributable to Standex decreased by 24.8% to $3.41 from $4.54 in the same period of 2024[42] Segment Performance - Fast growth market sales totaled $60.4 million, accounting for approximately 29% of total sales, on track to meet the fiscal year target of $170 million[4] - The Electronics segment reported revenue of $111.3 million, a 38.4% increase year-over-year, with a book-to-bill ratio of 0.98 indicating market stability[8] - The electronics segment saw a significant increase in net sales, rising by 17.2% to $284,939,000 for the nine months ended March 31, 2025, compared to $241,538,000 in 2024[38] - The acquisition of McStarlite is expected to be accretive to earnings in the first year and contributed to a 36.2% revenue increase in the Engineering Technologies segment[16] Cash Flow and Debt - Free cash flow decreased by 81.9% year-over-year to $3.5 million, reflecting a significant decline from $19.3 million in Q3 FY2024[3] - Net cash provided by continuing operating activities for the three months ended March 31, 2025, was $9.6 million, down from $24.4 million in the prior year's quarter[23] - The Company had net (cash) debt of $470.4 million as of March 31, 2025, compared to $10.0 million at the end of the fiscal third quarter of 2024[23] - Funded debt to EBITDA ratio increased to 2.8x, reflecting a 366.7% increase year-over-year, indicating a significant rise in leverage[3] - Interest expense for the fiscal third quarter of 2025 was $8.4 million, significantly higher than $0.9 million in the same quarter of 2024[31] - The Company expects interest expense to be approximately $9 million in the fiscal fourth quarter of 2025[23] Capital Expenditures and Investments - Capital expenditures in the fiscal third quarter of 2025 were $6.1 million, up from $5.2 million in the same quarter of 2024, with expectations for total capital expenditures in fiscal year 2025 to be between $25 million and $30 million[23] - The company incurred $477,381,000 in expenditures for acquisitions during the nine months ended March 31, 2025, compared to $47,696,000 in 2024[36] - The company reported a net cash used in investing activities of $493,343,000 for the nine months ended March 31, 2025, compared to $53,957,000 in 2024[36] Other Financial Metrics - Gross profit for the fiscal third quarter of 2025 was $82.4 million, compared to $68.3 million in the prior year, reflecting a gross margin improvement[31] - Average diluted shares outstanding increased to 12.1 million in the fiscal third quarter of 2025 from 11.8 million in the same quarter of 2024[31] - Adjusted income from operations for the nine months ended March 31, 2025, increased by 14.5% to $104,830,000 compared to $91,585,000 in 2024[40] - The adjusted EBITDA for the nine months ended March 31, 2025, increased by 13.3% to $119,004,000 compared to $105,076,000 in 2024[40] Restructuring and Acquisition Costs - Total restructuring charges amounted to $0.13 in Q3 2025, down from $0.26 in Q3 2024[42] - Acquisition-related costs increased significantly to $0.14 in Q3 2025 from $0.04 in Q3 2024[42] - Amortization of acquired intangible assets rose to $0.29 in Q3 2025, compared to $0.13 in Q3 2024[42] - Discrete tax items negatively impacted earnings by $(0.77) in Q3 2025, while there were no such items in Q3 2024[42] - Purchase accounting expenses increased to $0.35 in Q3 2025 from $0.05 in Q3 2024[42] Future Outlook - The company expects slightly to moderately higher revenue in Q4 FY2025, driven by recent acquisitions and higher sales into fast growth end markets[7]