Standex(US:SXI)2025-08-01 13:32Financial Data and Key Metrics Changes - In the fourth quarter, total revenue increased approximately 23.2% year on year to $222 million, reflecting a 23.4% benefit from recent acquisitions and a 1.2% benefit from foreign currency, partially offset by an organic revenue decline of 1.4% [18] - Adjusted operating margin increased 350 basis points year on year to a record 20.6% [18] - Adjusted earnings per share increased 20.6% year on year to a record $2.28 [19] - Net cash provided by operating activities was $33.4 million compared to $28.7 million a year ago [19] - Free cash flow for the fourth quarter was $24.9 million compared to $22.2 million a year ago [19] Business Line Data and Key Metrics Changes - Electronics Segment: Revenue increased 43.2% year on year to $115.2 million, driven by a 41% benefit from acquisitions and organic growth of 0.3% [19] - Engineering Technologies Segment: Revenue increased 26.8% to $32 million, driven by a 25% benefit from the recent NexStarlight acquisition and organic growth of 0.9% [22] - Scientific Segment: Revenue increased 2.3% to $17.9 million, due to a 16.1% benefit from recent acquisition, partially offset by an organic decline of 13.9% [23] - Engraving Segment: Revenue increased 0.6% to $33 million, driven by a 1.2% benefit from foreign currency, partially offset by an organic decline of 0.6% [24] - Specialty Solutions Segment: Revenue decreased 1.2% year on year to $23.9 million, primarily due to general market softness [24] Market Data and Key Metrics Changes - Sales into fast growth markets were approximately $184 million, exceeding the fiscal year expectation of $170 million, driven by growth in data center demand and grid modernization [29] - In fiscal year 2026, sales into fast growth markets are expected to grow approximately 45% year on year and exceed $265 million [29] Company Strategy and Development Direction - The company is focusing on four sources of growth: new product sales, presence in fast growth markets, support for recent acquisitions, and winning new awards through commercial excellence [11][17] - The company plans to launch more than 15 new products in fiscal year 2026, which are expected to contribute over 300 basis points of incremental sales growth [10][29] - The company aims to achieve fiscal year 2028 targets of sales greater than $1.15 billion and adjusted operating margin greater than 23% [30] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving over $100 million in incremental sales for fiscal year 2026, driven by acquisitions, new products, and fast growth markets [9][29] - The company remains well-positioned in a fluid economic environment due to strong customer relationships and disciplined pricing strategies [30] - Management noted that the company has successfully navigated challenges in the past and is prepared for future uncertainties [76] Other Important Information - The company declared its 244th consecutive cash dividend of 32¢ per share, representing a 6.7% increase year on year [26] - The company paid down approximately $27 million in debt during the fiscal fourth quarter [26] Q&A Session Summary Question: Can you provide insights on the $100 million revenue increase in fiscal year 2026? - Management indicated that the full year impact of acquisitions could bring over $60 million, with new products contributing around $20 million, and fast growth markets adding approximately $38 million, suggesting potential upside to the $100 million estimate [35][37] Question: How is the EV business performing amid market challenges? - Management noted that while EV sales dipped slightly in 2025, they anticipate growth in 2026 due to new model introductions and a shift towards electric vehicles [38][39] Question: What is the expected ramp-up for the new facility in Croatia? - Management expects to ship single-digit millions in fiscal year 2026, with potential growth to over $30 million in three years as customer commitments are fulfilled [42][43] Question: What is the outlook for the electronics segment's demand? - Management reported a 16% year-on-year increase in orders, primarily driven by OEMs, indicating a sustainable demand trend [51][54] Question: How are scientific segment margins expected to perform? - Management expects scientific margins to hold steady due to pricing and productivity actions, despite the lower margin from recent acquisitions [102] Question: What is the company's approach to managing working capital and cash flow? - Management is focused on improving collections and working capital efficiency, aiming to reduce days sales outstanding (DSO) back to the low 60s [106]