Standex(SXI) - 2024 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Total revenue decreased approximately 4.3% year-on-year to $180.2 million, reflecting an organic revenue decline of 9.4% and a 1.1% impact from foreign exchange, partially offset by a 6.2% benefit from recent acquisitions [12][13] - Adjusted operating margin increased 60 basis points year-on-year to 16% [12][13] - Adjusted earnings per share remained flat year-on-year at$ 1.76 [13] Business Line Data and Key Metrics Changes - Electronics Segment: Revenue increased 0.6% year-on-year to $80.4 million, with a 14.6% benefit from acquisitions offset by a 12.3% organic decline [14] - **Engraving Segment**: Revenue decreased 22.8% to$ 32.7 million, driven by a 21% organic decline [16] - Scientific Segment: Revenue decreased 4.1% to $17.5 million, but operating margin increased 260 basis points year-on-year to 28.1% [16] - **Engineering Technologies Segment**: Revenue increased 15.7% to$ 25.3 million, driven by organic growth of 15.9% [17] - Specialty Solutions Segment: Revenue decreased 6.3% year-on-year to $24.2 million [18] Market Data and Key Metrics Changes - Sales in fast-growth end markets grew 13% year-on-year to$ 27 million in the fourth quarter and grew 13% year-on-year to $94 million in fiscal 2024 [7] - Orders in Electronics increased approximately 30% over the average order intake for the past six months in June, with July orders increasing approximately 5% over June [15][44] Company Strategy and Development Direction - The company plans to release a record number of new products in fiscal 2025, with expectations of over 12 new products across all business lines [9][12] - The company is optimistic about long-term trends in automotive, infrastructure spending, defense applications, and space exploration [20][21] - The company aims for high single-digit organic growth to exceed$ 1 billion in sales by fiscal year 2028, with adjusted operating margin greater than 19% [10][22] Management's Comments on Operating Environment and Future Outlook - Management expects general market conditions to stabilize in the first half of fiscal 2025 and strengthen in the second half [10][21] - The company remains confident in its ability to achieve long-term financial targets despite recent market challenges [22][28] Other Important Information - The company ended fiscal fourth quarter 2024 with $347 million of available liquidity and declared a quarterly cash dividend of$ 0.30 per share, a 7.1% increase year-on-year [19] - Research and development investments were the highest ever at $20.5 million, representing 2.8% of sales [11][19] Q&A Session Summary Question: Can you explain the new product development process? - The company develops new products based on customer needs and specifications, ensuring alignment with market demands [23] Question: What are the expectations for new product sales in the second and third years? - New products typically take about three years to ramp up to full volume, with expectations for increased sales contributions in subsequent years [25] Question: What is the outlook for fiscal 2025 regarding market conditions? - Management anticipates a stronger second half of fiscal 2025, particularly in segments like Engineering Technologies and Electronics [29][30] Question: How does the company view the M&A environment? - The company has an active pipeline for potential acquisitions and is optimistic about future opportunities [38] Question: What is the expected impact of new products on margins? - New products are expected to deliver higher gross margins than existing products, contributing positively to overall margins [46][48]