Standex International reports relatively flat 4Q sales
Standex International Corp.'s decision to get rid of its legacy Air Distribution Products unit and acquire Meder Electronics Group hasn't changed the Salem-based conglomerate's bottom line much, at least not yet.
The company reported net income of slightly under $11 million (87 cents a share) in its last quarter. While that seems of a lot better than losing $4.1 million during the same quarter last year, the difference is primarily due to the 2011 loss of goodwill that resulted from jettisoning the Air Distribution Division.
The Air Distribution unit was a money-loser, and now all of the company's divisions are making money, particularly the Electronic Products division, where profits nearly doubled, thanks to the acquisition last summer of the German-based Meder for about $43 million in cash.
Still, organic growth during the second quarter of its fiscal year (which ended Dec. 31) was nearly nonexistent. The net sales gain of nearly 9 percent to $168.6 million was mainly due to Meder.
Otherwise, sales rose by less than half a percent.
The company also laid off employees in Brazil and Europe, resulting in nearly $1 million of restructuring charges.
"Given the macroeconomic challenges we experienced during the quarter in a number of our end-user markets, we performed well in the second quarter," explained President and CEO Roger Fix.
Sales and profit were relatively unchanged across all the company's five divisions.
Food Service Equipment, the company's largest division, reported $96 million in revenue last quarter, with an operating income of $9.7 million, both figures unchanged from last year. In that division's case, higher sales from fast food restaurants and convenience stores offset soft sales from grocery chains.
Similar tradeoffs could be seen in other divisions as well. The Engraving group sales ($23.6 million this quarter a half-million above the previous year's quarter) were down in North America, but doing well in Asia and South America. The company expanded its facility in Brazil, opened a new plant in Korea, broke grown on its 4th facility in India, and agreed to build a larger facility outside Mexico City.
The Electronic Product Group's sales increased 122.5 percent to $24.8 million, lifting it above Engraving as the company's second largest division, but that's due primarily to Meder. Meder will also help out in cutting expense. Standex said it identified some $500,000 in material procuring savings that will be implemented this calendar year, as well a facilities rationalization over the next year and a half that should generate about $1 to $1.5 million in annual cost savings, the company reported.
All this bodes well to the future.
Backlog increased nearly 7 percent, to $121 million (also mainly attributed to Meder). And Standex now has $33 million in cash and equivalents after the Meder acquisition. And the company might have more acquisitions to announce down the road.
"We have a solid pipeline of acquisition candidates and dry powder on our balance sheet," the company said in its earning release.