The following is a summary of the Standex International Corporation (SXI) Q3 2024 Earnings Call Transcript:
Financial Performance:
Standex International Corp. reported Q3 sales into fast growth end markets of $26 million, up 9% from the previous year.
There was a decline of 5.7% in organic growth due to transitory market softness.
The firm posted an adjusted gross margin of nearly 40%, in line with the past quarter.
Consolidated adjusted operating margin increased 20 basis points year-on-year to 15.4%, including a 70 basis point impact from a one-time stock compensation charge.
All operating segments reported over 17% adjusted operating margin, with three segments reporting near or over 20%.
Standex achieved record Q3 free cash flow of $19.3 million.
Business Progress:
Standex expanded its relay product offering through the acquisition of Sanyu Switch Company.
They predict slightly or moderately higher revenues for fiscal Q4 2024, due to favorable project timing, increased market demand, and recent acquisitions.
The firm is on target to reach its goal of $200 million in annual sales into fast growth end markets by FY 2028.
Standex aims to return to organic growth rates aligned with their long-term financial objectives in FY 2025, with sales in fast-growing markets expected to outpace general market growth.
Several new products are planned for release in FY 2025 due to increased R&D investments.
The launch of new products with better profit profiles is expected to improve margins.
Standex plans to invest in R&D and sales activities to foster future growth, allocating about 3% to 3.5% of sales towards R&D expenses.
The company stated that cabinets shipped during the COVID-19 pandemic are expected to reach their typical replacement period by the second half of 2025, further boosting sales.
More details: Standex International IR
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