Standex International Corporation (NYSE:SXI) Q3 2019 Earnings Conference Call Transcript

Apr 30, 2019 • 08:30 am ET

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Standex International Corporation (NYSE:SXI) Q3 2019 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Ladies and gentlemen thank you for standing by, and welcome to Standex International's Third Quarter 2019 Earnings Conference Call. At this time, all participants have been placed in a listen-only mode and the floor will be open for your questions following the presentation. (Operator Instructions).

It is now my pleasure to turn the floor over to Gary Farber with Affinity Growth Advisors to begin.

Executive
Gary Farber

Thank you operator and good morning. Please note that the presentation accompanying management's remarks can be found on Standex's Investor Relations website, www.standex.com. Please refer to 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 most 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 the non-GAAP measures of 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, EBITDA margin and adjusted EBITDA margin.

We will also refer to other non-GAAP measures including adjusted net income, adjusted income from operations, adjusted net income from continuing operations, adjusted earnings per share, adjusted operating margin, free operating cash flow and pro forma net debt to EBITDA. 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.

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, and I will turn the call over to David now.

Executive
David Dunbar

Thank you, Gary. We began working with Affinity this quarter. We look forward to good working relationship. Let me start with an overview of our fiscal third quarter results and progress in executing our long-term strategy, focused on driving higher growth, profitability and return on investment.

Despite growth at several of our business units and significant strategic accomplishments, we faced several headwinds this quarter, which we currently anticipate will continue into the fourth quarter. I will provide greater detail in my discussion of the individual segments performance later in the call. Even with the challenges in the quarter, we had several significant accomplishments at our business segments that the Company will continue to leverage and benefit, as we enter fiscal year 2020.

We continue to see strength in Engineering Technologies, Hydraulics and Scientific businesses. At the Engineering segment, our increased focus and investment in the aviation end-market is delivering strong results. We began nearly three years ago with the launch of a new plant outside Milwaukee to support our aviation customers. Sales in Q3 exceeded $4 million this quarter, as production ramps up on the