Standex sees earnings tumble in fiscal year

Even after cutting its U.S. workforce in half since last year, Standex International Corp.’s profits for the fiscal year fell by 70%.

Much of that was due to the pandemic, which hit the Salem-based conglomerate hardest in the fourth quarter, particularly in April. In that final quarter, ending on June 30, sales fell 17%, to $139 million, resulting in a $1.8 million profit, or 15 cents per share, compared to a $12.4 million profit during the same quarter the previous year, the company reported.

As a result, the company ended up with $604.5 million in sales for the fiscal year, more than a $35 million decline, with a net income of $20.2 million (or $1.64 a share), less than a third of the $67.9 million it made the previous year.

It was what the company expected, given “this very challenging environment,” said David Dunbar, president and CEO. The pandemic’s effect on customers and suppliers, as well as the expenses incurred to continue manufacturing though it, hit every segment of the company.

The lingering effects of its unprofitable food service division also hurt the bottom line. Standex sold off the last remnants in the quarter, but it still, took a $4.3 million loss from discontinued operations in the last quarter and $20.8 million for the year.

It has repurposed and renamed what’s left of that division, which once made cooking and refrigeration equipment for restaurants, grocery stores and drug stores, which is now called the Scientific Division. The unit now aims to sell refrigerated cabinets to laboratories as well as pharmacies for both flu and eventually Covid-19 vaccines. It also changed the renamed the former Hydraulic Division to Specialty Solutions.

Standex took a hit on restructuring costs for headcount reductions, facility closures and consolidations, according to its filing. Most of those headcount reductions were in the United States, were the work force shrank 2,200 employees to 1,100 but hardly affected its 2,700 workers abroad, down only 100 from the previous year.

At the same time executive stock-based compensation increased $2.7 million to $7 million.

But things are looking up, said Dunbar.

“The trough was April and the business has been coming back since. May was stronger than April, June was stronger than May, July is stronger, August is stronger, “ he said in a Tuesday earnings call.

But the company still expects revenue to be flat or improve slightly from the previous quarter, though results are expected in the Engraving and Electronics divisions.