Acquisitions mar Standex’s second quarter
But despite flatter earnings, sales increase 13.7 percent
Standex International Corp. reported a slight increase in second-quarter earnings despite absorbing the costs of two recent acquisitions.
The Salem-based conglomerate posted net income in the second quarter ending Dec. 31, 2014, of $11.1 million, or 87 cents a diluted share, slightly more than a year earlier. And that was partly due to higher interest payments on long-term debt of $126 million, almost triple the amount before the two acquisitions.
But Standex said sales increased by 13.7 percent, to $189.3 million, and the acquisitions account for more than 40 percent of that growth.
In September 2014, the company paid $55 million for Enginetics Corp., which manufactures aircraft engine components for the company’s Engineering Technology Group. In June, it paid $23 million for Ultrafryer Systems, a maker of commercial deep fryers for the company’s Food Services Equipment Group, the largest of its five divisions.
In the second quarter, food services account for $98.5 million of the companies, about an $11 million increase, though profits were down by $400,000 to $6.9 million. One reason behind the profit decrease is that the company was still having problems linked to a plant in Mexico. Despite the cheaper labor costs, there was a legacy of inefficiency, Standex said.
But CEO David Dunbar said the move would ultimately result in about $4 million a year in savings.
Engineering Technology Group sales shot up from $17.3 million to $26.6 million, a 53 percent increase that nearly overtook the Engraving and Electronic Products Group in size.
Acquisitions contributed nearly 40 percent of that growth, but launch vehicles and defense sales offset the oil and gas drilling segment, which was down 25 percent due to falling energy prices.
Aviation has been particularly strong, representing nearly a third of the company’s business, and in coming years it will be about half, Dunbar said.