Standex International Corporation (NYSE:SXI) Q1 2018 Earnings Conference Call Transcript

May 01, 2018 • 10:00 am ET

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Standex International Corporation (NYSE:SXI) Q1 2018 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Good morning. My name is Christy, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Standex International Inc. Q3 2018 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks there will be a question-and-answer session. (Operator Instructions) Thank you.

I would now turn the call over to David Calusdian, please go ahead, sir.

Executive
David Calusdian

Thank you, Christy. 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'd 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'll 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 to the company's performance. A reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures is available in Standex's third 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.

Executive
David Dunbar

Thank you, David. We delivered another solid quarter with top line growth across four out of our five business segments. Overall revenues increased 17.3%, $216.7 million, with organic sales up 5.7% and acquisitions contributing 8.5% to growth. We have strong backlog growth of 19% and strength across our end markets.

Operating income was up 69% in Q3, and GAAP EPS was $1 per share. Adjusted operating income increased 22.6%. EBITDA increased 27.9% to $29 million. While adjusted EPS grew 13.3% to $1.11 a share. Though it is not shown in the chart here, I would like to point out that our trailing 12-month EBITDA is $121.6 million, a record for Standex.

We had a net debt position of $108.4 million at the end of Q3. Engraving, Electronics and Hydraulics reported robust organic revenue increases. During the quarter, we advanced growth laneways made progress in selling new offerings, and the recent Piazza Rosa and Standex Electronics Japan acquisitions continue to exceed our expectations.

Food Service Equipment sales were up on the strength of Refrigeration national account purchases and Specialty Solutions growth. Our restructuring initiatives in the Cooking and Refrigeration business in our Food