Standex International Corporation (NYSE:SXI) Q4 2017 Earnings Conference Call - Final Transcript

Aug 28, 2017 • 10:00 am ET

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Standex International Corporation (NYSE:SXI) Q4 2017 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Ladies and gentlemen, thank you for standing by and welcome to Standex International's Q4 Earnings Conference Call. [Operator Instructions] Thank you.

I'll now turn the conference over to Matt Roche. Please go ahead.

Executive
Matt Roche

Thank you, Crystal. Please note that the presentation accompanying management's remarks can be found on Standex's Investor Relations website, www.standex.com.

Please see Standex's Safe Harbor statement on Slide 2. Matters that Standex management will discuss on today's conference call include predictions, estimates, expectations and other forward-looking statements. These statements are subject to risks and uncertainties that could cause actual results to differ materially. You should refer to Standex's recent SEC filings and public announcements for a detailed list of risk factors.

In addition, I would like to remind you that today's discussion will include references to EBITDA, which is earnings before interest, taxes, depreciation and amortization; adjusted EBITDA, which is EBITDA excluding restructuring, purchase accounting, acquisition related expenses and one-time items. We will also refer to non-GAAP net income, non-GAAP income from operations, non-GAAP net income from continuing operations and free operating cash flow. These non-GAAP financial measures are intended to serve as a complement to results provided in accordance with accounting principles generally accepted in the United States.

Standex believes that such information provides an additional measurement and consistent historical comparison of the Company's performance. A reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures is available in Standex's fourth quarter news release.

On the call today is Standex's Chairman, President and Chief Executive Officer, David Dunbar and Chief Financial Officer, Tom DeByle. Please turn to Slide 3, as I turn the call over to David. David?

Executive
David Dunbar

Thank you, Matt. We ended the year with a very solid fourth quarter. Overall revenues increased 12% to $217.1 million with organic sales up 4.4%. Our bottom line performance outpaced sales growth with operating income up 46.9% and adjusted operating income increasing 16.5%. GAAP EPS grew 18.1% to a $1.11 per diluted share and adjusted EPS grew 6.9% to $1.40 a share. We had a net debt position of $103 million at the end of Q4, which was $24 million lower than the prior quarter. During the quarter, we recorded better than anticipated sales and profits from our first full quarter of Standex Electronics Japan and the integration is on track and progressing well. In Engineering Technologies, sales grew 26%, driven by strong sales in aviation, aerospace and defense.

In Food Service, our refrigeration business and cooking, oven and tabletop cooking products, collectively what we refer to today as standard products, delivered lower margins due to higher material costs, a mix shift to more low-margin sales channels, and overall lower overall operating performance. Finally, demand looks strong across all businesses and our backlog grew 19.8% to a $193.5 million. Without acquisitions, organic backlog growth was 9.1%.

I'll touch more on our plans in Food Service and provide more detail on our achievements in each business when I go through our segment review. But, first, let's take