Q1 2021 Standex International Corp Earnings Call
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Welcome to the Standex internationals fiscal first quarter 2021 earnings conference call.
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I'd now like to turn the conference over to Gary Farber with a steady growth advisors. Please go ahead, sir thank.
Thank you Rocco and good morning. Please note that the presentation accompanying managements remarks can be found on the Investor relations portion of the company's website at www extend next dotcom. Please refer to Standex is safe Harbor statement on slide two 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.
We refer to Stantecs. His most recent SEC filings and public announcements for a detailed list of risk factors. In addition, I'd like to remind you that today's discussion will include references to non-GAAP measures of EBITDA, which is earnings before interest taxes, depreciation and amortization adjusted EBITDA, which is EBITDA, excluding restructuring purchase account.
Any acquisition related expenses, and one time items and 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 stand Axis, Chairman, President and Chief Executive Officer, David Dunn.
Bar, and Chief Financial Officer, and Treasurer at Ameristar Civic I'll now turn the call over to David.
Thank you Gary Good morning, and welcome to our fiscal first quarter 2021 conference call on.
Today's call I will provide commentary on the quarterly 2021 results and the trends we're seeing in our business I will then review our segment performance Adam I will follow with a discussion of our consolidated results and financial position fine.
Finally, I will conclude with comments on our outlook and key takeaways.
Everyone can please turn to slide three key messages.
Overall fiscal first quarter results were ahead of our expectations on several fronts.
Looking stronger than anticipated demand and solid operational execution, particularly at our electronics engraving in scientific segments.
This holiday did revenue increased 8.5% sequentially. This is ahead of the outlook. We provided previously a fiscal first quarter 2021 revenue being flat to slightly above the fourth quarter of 2020.
The electronic segment revenue increased 23% sequentially and 18.6% year on year, reflecting positive trends in magnetics as well as contribution from the recent renco acquisition.
Sequentially engraving operating margin increased 800 basis points to 16.1% due to cost efficiency and productivity initiatives on 15.1% revenue growth compared to fiscal fourth quarter 2020.
Finally, the scientific segment reported its highest quarterly sales ever at $16.7 million.
Earlier this year, we divested our refrigerated solutions business and established scientific as a standalone reporting segment, both actions advancing our strategy to build our higher margin segments.
In particular, the scientific segment's results reflected increased demand for seasonal flu vaccine storage as well as initial sales related to potential COVID-19 vaccines.
In addition, our electronics new business opportunity pipeline is healthy at $56 million across a wide variety of end markets. We expect the sales contribution from this pipeline to grow sequentially on an annual basis.
And then grazing we see continued opportunity in the tool, finishing in soft trim tooling last globally.
We're leveraging these topline trends with stronger operating disciplines in all businesses complemented by several financial initiatives.
We are on track to deliver over $7 million in savings in fiscal 2021 from the actions, we announced in the third quarter of fiscal 2020.
We also began to implement tax savings initiatives in the quarter, including optimizing our foreign tax credits.
We expect our tax related actions to result in cash savings of 2 million to $3 million in fiscal 2021.
As a result, our tax rate in fiscal 21 is expected to be approximately 22% or 500 basis points lower than fiscal 2020.
We also expect to realize $1.5 million in cash savings in fiscal 21 due to our previously announced floating to fixed rate interest swaps.
We continue to maintain a strong financial position with a solid balance sheet and significant liquidity supported by consistent free cash flow generation Standex has had an approximately $206 million and available liquidity at the end of the fiscal first quarter.
With a net debt to adjusted EBITDA ratio of 1.1.
During the quarter, we generated free cash flow of $4.4 million. We also continued our cash repatriation efforts with approximately $8 million repatriated in the first quarter.
We expect to repatriate $35 million in total in fiscal 21, which would result in $74 million in cash repatriated over the past two fiscal years.
In summary, we're off to a solid start and expect continued growth and margin improvements as we move through fiscal 21.
Financial flexibility will continue to strengthen through free cash flow generation cash repatriation and new tax initiatives.
In our fiscal second quarter of 21, we expect consolidated revenue to be flat to slightly above the first quarter with a slight to moderate increase in segment operating margin.
Please turn to slide four and it will begin to discuss our segment financial performance beginning with electronics.
Electronic segment revenue increased $8.7 million or 18.6% year on year, reflecting a 3.9% organic growth rate with strength in the magnetics product line and a $5.9 million from the recent linco acquisition or approximately 12.6%.
The balance of the revenue increase is related to foreign currency impact.
Adjusted operating income increased approximately $1 million or 12.7% year on year, reflecting operating leverage on the revenue growth productivity initiatives and rental electronics profit contribution partially offset by inflationary material cost increases.
Our new business opportunities funnel has increased to $56 million and is expected to deliver $11 million of incremental sales and EPS like 21 across a broad range of end markets, including industrial electrical vehicles safety systems and military.
We're also very pleased with the pace of integration of our sales channels with rental in three months, they've identified over $1 million of cross selling opportunities in each others accounts ahead of our expectations.
In terms of our second quarter fiscal 2021 outlook, we expect revenue to be sequentially slightly higher and operating margin to be sequentially similar to the fiscal first quarter.
Our outlook assumes improvement in European and North American markets with Asia results slightly below fiscal first quarter 21.
Please turn to slide five for a discussion of the engraving segment.
Revenue decreased approximately $2 million or 5.3% year over year, and operating income was lower by approximately $600000 or 10.2%.
The results reflected the impact of COVID-19, our end markets, partially mitigated by productivity and expense savings in the quarter.
However sequentially from Q4 fiscal 20 engraving reported a significant improvement as revenue increased 15.1% and operating margin improved 800 basis points, reflecting an overall increase in the level of customer activity combined with cost efficiency and productivity initiatives, which will continue with the segment.
Lamely sales are recovering quickly from Q4 growing by 27% sequentially to $11.7 million nearly back to pre coated levels on strength and to finishing offerings and soft from tools.
I'm pleased to see the progress our North American engraving business has made improving labor management through standard work and better capacity planning.
Our corporate VP of operations hired in February is collaborating with business management to improve operating procedures and drive efficiencies.
In addition, the completion of our global ERP platform will allow additional analysis and improved performance management across all major global sites to further drive consistent performance.
As far as second quarter outlook on a sequential basis standex expects a slight revenue increase and continued improvement in operating margin in the fiscal second quarter of 21.
Expected revenue growth reflects an increased level of customer activity due to new automotive launches along with continued introduction of soft trend tools and to a finishing offerings.
We expect to see continued margin improvement from the volume increase combined with continued cost efficiencies and productivity initiatives.
Turning to slide six the scientific segment.
[noise] scientific segment revenue increased approximately $1.9 million or 13% year on year, reflecting organic growth in end markets, especially retail pharmaceutical chains.
The sales growth reflects distribution and storage of vaccine for the coming flu season as well as a few initial orders for covered vaccine storage.
Operating income increased approximately $400000 or 10% year over year, reflecting revenue growth, partially offset with reinvestments in the business for future growth opportunities.
The picture highlights are under counter cabinet used for storage of refrigerated and frozen medications and vaccines standex is well positioned with strong distribution channels for a leading role in a potential COVID-19 vaccine rollout.
In the second quarter, we expect to see a sequential and year on year revenue increase driven primarily by continued positive trends in retail pharmaceutical chains and clinical end markets and accelerated by the expected rollout of a national covered vaccine.
We expect operating margin to slightly improve reflecting volume increase balanced with reinvestment for future growth opportunities.
Looking further we expect scientific revenue growth sequentially and year on year and fiscal 21, with approximately $10 million to $20 million of incremental sales to support coated vaccine storage turn.
Turning to the engineering technologies segment on slide seven.
As expected engineering technologies had a challenging quarter revenue and operating income decreased $7 million or 28.4% in $2.9 million or 86% year on year, respectively. The first quarter results reflect the economic impact of COVID-19 on the commercial aviation market, especially engine parts manufacturing.
However, we continue to experience positive trends in the unmanned segment of the space industry and defense sales.
In our second quarter, we expect revenues to be sequentially similar to the first quarter. As a result of continued weakness in the aviation end market opera.
Operating margin is expected to increase slightly sequentially. Despite aviation end market trends as a result of productivity initiatives and cost reduction activities, which are ongoing.
We're pleased to show the progress of our efforts to expand capacity in our bill Recut plant using lean processes. As a result of setup time reduction improved layouts and process improvements, we have increased throughput, 20% positioning us well to support continued growth in our space end markets and deliver higher margins.
Please turn to slide eight specialty solutions, which includes the hydraulics merchandising and pumps businesses.
Specialty solutions revenue and operating income decreased year on year, although was in line with our expectations that results would be sequentially similar to the fiscal fourth quarter of 2020.
Revenue decreased approximately $6.2 million or 19.7% year over year.
The decrease was primarily associated with the economic impact of COVID-19 on several end markets, including the food service equipment and hospitality industries at the pumps and merchandising businesses and the dump markets hydraulics.
Operating income decreased approximately $1.7 million or 30.9% year over year, reflecting lower volume, partially mitigated by cost reduction efforts.
To partially offset these trends we pursued additional opportunities focused on strengthening the segment's margin profile.
We continue to allocate hydraulics capacity to higher value opportunities, particularly aftermarket sales.
We've also closed upon separation in Ireland and outsourced components previously manufactured there to save approximately $1 million annually.
The other end markets are down from the effect of COVID-19, the businesses continued to utilize our growth disciplined processes to work with customers on promising future opportunities. The example, pictured here as a pump control system that houses eight pumps, along with the electronic controls and diagnostics. This is a good example of the business using a structured approach to explore new growth.
Opportunities in an inexpensive manner.
As far as outlook in fiscal quarter. The second quarter 2021, we expect revenue and operating margin to decline slightly sequentially due to normal seasonality and the lower number of shipping days in the quarter.
I will now turn the call over to add Amir who will discuss our quarterly results in greater detail.
Thank you David and good morning, everyone first I will provide a fuel keeping national database from our fiscal first quarter 2021 results.
Overall results were ahead of our expectations, specifically revenue and electronics and scientific segments with higher than anticipated scrapping them at Natus product line, and our electronics segment and by seeing the latest storage demand.
Benefited results in the quarter.
In addition, our cost efficiency and operational initiatives, which will continue throughout the fiscal year I'll provide detailed into our results as previously communicated.
Well positioned to deliver over 7 million in annual savings related to cost actions.
Our financial position remains strong with substantial liquidity and low leverage complemented by profit and cash flow generation and ongoing cash repatriation efforts.
In addition, we have also implemented several initiatives in the area of tax planning and interest that that that those but our cash position.
Now, let's turn to slide nine fiscal first quarter 2021 income statements.
On a consolidated basis total revenue declined 3% year on year decline of $51.3 million.
This reflects organic revenue decline of 8.2% year on year, mostly due to the economic impact of the club at 19.
As we expected that impact was felt from Elliot engineering technologies segment due to weakness in the aviation market and other specialty solutions segment due to weakness in the food service equipment and hospitality industries.
The acquisition, which closed in early July contributed revenue of $5.9 million or 3.8% offset to the organic revenue decline.
Okay.
Contributed 1.4% offset the organic revenue decline.
Gross margin decreased 70 basis points, primarily due to a decline in volume and increased material cost year on year, mostly not upon us.
Collateral basis gross margin increased 290 basis points affecting cost outcome, but activity and favorable product mix.
Our adjusted operating margin was 11% compared to 11.3% a year ago.
Interest expense decreased approximately $600000 year on year, mostly due to lower overall interest rate as a result of the valuable to fixed rate swap we implemented in fiscal third quarter of 2020.
In addition, the tax rate of 22% in the quarter, but that's 580 basis point decrease year on year, largely due to various tax planning strategies because tightly implement.
Adjusted earnings per share were 96 cents in the first quarter of 2021 compared to 91 cents in the first quarter of 20 point.
Now please turn to slide then fiscal first quarter 2021 free cash flow.
We remain a consistent generator of free cash flow.
Reported free cash flow of $4.4 million compared to 2.8 million in the first quarter of 2020. This.
This increase primarily reflects lower capital spending, but 4.8 million in the first quarter on slide 21, compared to $6.7 million a year ago.
Capital investments in the first quarter 20 ones were focused on maintenance safety and our highest priority growth initiatives.
Please turn to slide 11, Domino statuses capitalization structure, but it is a business which remain very strong.
Standex, having that data on a 6.2 million at the end of September compared to 80.3 million at the end of June 2020.
The increase in net debt is due to the ramp up position, which was financed with cash on hand.
For the first quarter of 2021 now.
Long term debt 200 million and 10.
Cash and equivalents of 93.7 million I was $75.7 million was helped by four cents EPS.
We also had approximately 206 million up available liquidity at the end of September.
The company's net debt to adjusted EBITDA leverage was 1.1 with a net debt to total capital ratio of 18.2% and interest coverage ratio of approximately 9.9 times.
We also continue to rapidly downtick opportunities to further at both the national side with.
We have started to implement several tax planning a saving initiatives, including implementation of strategies to optimize us tax costs on global intangible all taxed income implementation of various foreign tax credits optimization strategies that are expected to provide us the ability to utilize additional credit.
And the pilot amended returns to take advantage of regulations that have recently been finalized as.
As a result, our tax rate for fiscal 2021.
Second to be approximately 22% or 500 basis points lower than fiscal 2012, we.
We expect these actions will result in cost savings of two to 3 million in fiscal 2020.
We also expect approximately 1.5 million in annual interest expense savings due to the previously announced floating to fixed rate interest swaps.
We also have dedicated 8 million in the first quarter and that sort of passed we had $35 million this fiscal year.
From a capital allocation perspective, we've had an active quarter earlier.
Earlier this quarter, we announced the acquisition of Racal electronics, what approximately 28 million, which was financed with cash on hand.
We also repurchased approximately 87000 shares for 5.1 million in the quarter.
Proximately 38 million remaining under the board's current repurchase authorization.
We declared our 225th consecutive quarterly dividend of 24 cents per share a year, a 9% year over year increase.
And finally, we expect capital expenditures to be approximately $25 million to $28 million compared to our prior effective range of between $28 million to $30 million and national expenditures of $19 million in fiscal 2012, I will now turn the call over to David for closing comments. Thank you add Amir if any if everyone could please turn to slide 12 for closing thoughts.
Key takeaways.
In the second quarter of fiscal 2021, we expect consolidated revenue to be flat to slightly above the first quarter of 2021.
With this slight to moderate increase in operating margin several assumptions underpinning. This outlook, we expect the electronics engraving segments to have a slight sequential revenue increase due to an increased level of customer activity and scientific we expect moderate sequential revenue increase as end market momentum builds to prepare for a vaccine delivery.
Engineering technologies revenue is expected to be similar to fiscal first quarter 2021, as commercial aviation market stabilize with a slight increase in operating margin from productivity and cost reduction activities.
At specialty solutions, we expect revenue and operating margin to decrease slightly primarily due to seasonality and lower number of shipping days in the quarter.
In General, we expect continued growth and margin improvement as we move through fiscal 2021.
In addition, we see attractive growth opportunities across the businesses in the near term, we anticipate the opportunity for corporate knocking vaccine storage to be between 10 and $20 million in the fiscal year to.
The growing funnel of opportunities in electronics will deliver an incremental $11 million in sales in the fiscal year.
Previous cost actions complete and expected to deliver over $7 million in savings fiscal 21, operator.
Operational excellence initiatives are gaining momentum across our businesses.
We are also strengthening financial flexibility with strong free cash flow generation continued cash repatriation and new tax initiatives.
In sum, we're very well positioned to further build our higher margin business segments into more significant platforms with customized differentiated solutions supported by deep technical and applications expertise.
Operator, please open the line for questions.
Thank you we will now begin the question and answer session.
You asked a question you reversed Star then one on your part.
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Using a speakerphone please pick up your question the keys to.
The charter question. Please press Star then too.
Your first question comes from Chris Moore with CJS Securities. Please go ahead.
Hey, good morning, guys Monika good morning.
Maybe start with some engraving and now the engraving margins were certainly rebounded more quickly than we were expecting can you you talk a little bit further in terms of kind of what was behind that.
Well, yes.
Last quarter, we announced that the entire industry benefit to it took a pause as tools couldn't couldn't be released from tools shops into our shops in part because IXYS collaborative meetings couldn't take place. So that has really opened up. So obviously, we saw we saw volume increase but at the same time, we put a lot of effort into improving the operating.
Eating disciplines integrating particularly in North America, I mentioned, our VP of operations, Jim Hoffman is working closely with that with that business, improving labor management practices and leveraging the investment we made in the last few years in a global ERP system. So we can just.
Improve our our.
Our local operating disciplines in a common way around the world and its first really showing up in North America.
Got it helpful.
Maybe on the electronic side.
Talk a little bit more about the improvement there that ramco integration it sounds like rent goes off to pretty good start.
Yeah, Yeah, we're we're really pleased with.
With the first few months of integration with that with WRECO first of all culturally it's a great fit.
They'll be a great number the stand expanding there and they're bringing some things to US first for example, they had they had some practices they put in place for their coated.
In response protocols that we that we have been able to duplicate that we learned from.
I mentioned in the in the in the script earlier that the cross selling opportunities are ahead of what we expected.
So the sales channels are really coming together, well and their and their profitability is running ahead of our model. So we're very happy on that front more broadly in electronics North America strong Asia was stronger than we thought it would be in.
Europe is really starting to come along towards the last part of the quarter.
And if you.
Cut it between the sensor in the magnetics business.
And a lot of strength in the <unk> and the magnetic customers here, especially in North America.
Got it I appreciate that I'm just in terms of the 7 million in cost savings fiscal 20, Mike maybe talk a little bit more about the expected cadence and I just want him I assume that all that will flow through into fiscal 22.
Yeah, Eric It's got an yeah, that's correct.
We feel really good about where we are at all of our cost saving actions you should continue to see that laid out as we move through this fiscal year and the equally as bad debt the company growth.
Total.
Now.
And then in terms of you know kinda that cadence during during fiscal 21 is it is it more back loaded on the savings or is it kinda smoother.
Most of the savings year to year, we will see probably the first three quarters you know the fourth quarter of last fiscal year, we had about a 4.2 million equivalent to those sort of stating that some of those I'm not going to repeat so yeah. You want to Q3, but you would see most of that $7 million, we though.
Got it. Thank you and then on the tax rate side.
Looks like 22% for fiscal 21, obviously, you know we don't know what impact the elections will have on on tax rates moving forward, but from where you sit today is there any reason to think that.
That rate would not flow you know into fiscal 22.
Great based on we sit where we sit today and obviously believed at the rate of 22 might pick up a little bit maybe to 23%, but still significantly lower than what was our pathway to prior fiscal.
Oh yeah.
Again, you know kind of where we sit today without knowing it thats going to be taken in administration.
Hello.
Got it very helpful. Alright ill jump back in line, let somebody else have a chance. Thanks guys. Thank you. Thank you.
Hello Rocco.
Anyone else in the question queue.
Oh I apologize my models. All you are like Paul comes from all the banks Nustars.
<unk>.
Good morning, everyone.
Good morning, Chris.
Hi, Good morning, I wanted to highlight here the scientific segment, David had mentioned that some point million of incremental sales.
As we look to this fiscal year.
We look below the top line.
You had 24.5% operating margin this quarter, we expect some improvement on that going into Q2.
Perhaps you can talk a little bit more on the margin line.
While we expect maybe the remainder of the year to play out as we look at investments you are making in this segment versus opportunities for margin expansion.
Yeah, well I think the margins in the in those low low Twentys is still it is certainly reasonable expectation this business lever as well the products that we will see.
Sure.
Our our standard products, so that they will deliver the same margins as our core business. The investments, we're making in the business or are largely in the short term to support the growth of course, but we're also investing in engineering capability, we have a very active new product development funnel and as the core.
His role on will begin announcing some new products so our our.
Our plan is to invest but invest appropriately and we're not we're not going to load the cost structure.
And and reduce the EBIT rate so.
We continue to expect an EBIT rates that youve that you've seen in this business.
Yeah perfect spot on I hope that's helpful.
If we look back to engraving a following up on some of the previous questions.
Good margin recovery recovery sequentially.
In the quarter.
Some of that is tools being released into the quarter from Q4, if we strip that out margin still came in at around the same level.
Yeah, Yeah, well yeah. It was you know this business levers very nicely. So the volume is important because it's where the high fixed cost base as a service business, 60% to 70% levering business, but you know. The example, we provided and here. We are we are we are.
Delivering work with fewer labor hours in North America, and that that is a that is a lasting productivity improvement in the business.
Hmm.
Okay very helpful and that you see as a.
Relatively sustainable I know, we we don't know whats going to happen now with all these different variations of a resurgence but.
Improvement you're seeing in Q2, we think that can be a relatively sustained as we get into Q3 and Q4 barring a any kind of on c. economic disruption yeah. It on both fronts. They will the indications we get from our customers is that pretty steady outlook for the market and these these practices that are being put in place they are.
Are you a standard work and improved operating disciplines that will deliver consistently better results.
So yes, yes.
We're we're counting on them continuing.
Great.
My last question is.
Mid level basis or more specifically.
Perhaps probably did on a monthly basis in the quarter.
If we look at that trends and what you're seeing currently in October has there been any.
No shift or change in the trend line or perhaps you can talk about how that mix was as it played out from month to month say see Chris you cut out for just one word and now which wasn't where you're referring to a specific business or the corporation overall in that question Corporation overall, if we were to.
Split it out by month in the quarter and then what you're seeing in October any change in behavior.
No I wouldn't say to you that the the outlook statements. We gave through while it's kind of reflect our aggregate view of the business and.
I think.
You know what we're looking for sequential growth through the year.
And we're seeing that in our backlog and our customer activity and as you go through segment by segment, we modulate those statements based on a based on what we're hearing from our customers.
Got it that's all I have for now I'll hop back. Thanks. Thank you.
And our next question today comes from Chris Mcginnis Lilly and company. Please go ahead.
Hi, Good morning, Thanks for taking my phone Bill My School I know a lot of my questions have somewhat of an answer but I guess, if we could just talk about nothing nothing stay on the engraving, but just the benefit you saw from kind of the productivity gains.
Now when you look across the <unk>. The five segments what are the other areas that you really kind of focused on driving productivity things move Jim now now.
Now at the helm.
Well Youre roughly you Adam you May correct me here, if I look at the quarter sequentially Q O Q1, compared to Q4, there's probably 500 800, K and engraving from from productivity.
And.
Well, we gave a great example of productivity in engineering technologies would which actually was a little a little farther down the line in a in adoption of lean and the driving of productivity improvements in part because of the markets. They serve.
Very demanding customers require them to be.
To be a little more advanced so a couple of years ago, we recognize that in in the plant, where we manufacture domes for spacecraft.
We we were headed for capacity constraints in the coming year too. So they started up a project to.
Reduced set up time, and then just flow downstream from there from the critical machines to expand capacity and as of today, they've expanded their capacity by 20% and that's a great example, we obviously lever that fixed cost structure across 20% more volumes. So that's that's a great example, in both electronics and scientific Jim and his.
Team are working with those businesses to put in place.
Sales inventory and operations planning process. So there's a tighter coupling between the demand forecast from sales and the the capacity planning and operations.
And especially in a couple of different we have long supply chains with our with our suppliers getting that.
Getting that balance right when you've got a 12 say for example, a 12 week lead time on some components and we call. It a three to four week lead time to customers.
Uh huh.
The more disciplined site our process there will will help them optimize their their cash management in their on time delivery over time so.
So it's it's the gyms working across all the businesses to varying degrees depends on what their needs are with a particular emphasis in the near term on engraving in North America.
And if I can add you know engraving is all about labor management, because there's really very little material content and are in the business. So you know we canceled labor management, you know that business levered up pretty nicely in the body.
Okay.
And what's the success that didn't happen versus maybe the prior I know you know I I think you had a couple of people in that in that position before what's the difference the gym bring that's making it sorts itself. So early on yeah. You know the the first time that the first the first couple of cracks that this week, we filled the job the opex role somewhat.
It was a good what they're going to feel great teachers, who could run events, who could help with.
You know with process improvements.
Jim what was an operator he wasn't plant manager he wasn't PNM leader so as opposed just soon.
To simply being a teacher and instructor or an event leader. He also know how to run a business and so that additional credibility has helped him to sit down with with our businesses really assess that the the entirety of the problems they have and.
With a lot of credibility.
Outlined a plan of attack so you'll have having that that hands on experience in the past was it was a critical differentiator for Jim.
And then just the you know.
Some of the comments on the in the relief around opportunities around M&A can you just expand on what your kind of thing have you seen more companies that's locked in last quarter or.
Growth you just talk about how are your pipeline setting up for M&A, that's alumnae Gulfport yeah yeah.
Yeah, So our job we have quite an active funnel.
We continue to work the pipeline all year long although.
Most people took a step back you know.
Throughout this year just to see how the market would develop but we continue to maintain our relationships and our contacts with the owners of these these businesses that we think at some point will be will be good opportunities.
And.
And I would say now as we get closer to the end of the year. There are a couple of them are starting to starting to simmer and looked like this they may become actionable in the coming quarters.
Why.
Well I guess I would have to say I was surprised a little bit that we didnt get as many unsolicited unexpected inbound opportunities coming to our attention.
We had kind of cross our fingers are coming into this year with a strong balance sheet there'd be some unexpected opportunities that came up we didnt did not see too much of that but you know we feel like we have a great finally, a great balance sheet and you.
I think that.
The string of successful acquisitions will continue into the next year.
Great I appreciate it thanks for answering my questions and good luck.
Thank you Chris.
And ladies and gentlemen, as a reminder.
Please press Star then one at this time, well pause momentarily to assemble our roster.
And ladies and gentlemen. This concludes the question and answer session I'd like turn the conference back over to the management team for any final remarks, alright. Thank you Rocco I in closing we're off to a solid start in fiscal 2021, I'm very excited about the results we were able to to communicate today I'm very proud of.
The employees globally around Standex, who have responded to this these.
Unprecedented circumstances, we all live in with Great agility, and adaptability and heightened degree of collaboration and teamwork around the world are making us all proud to be part part of this company I also want to thank Sherry.
Shareholders through continued support and your interest in Standex, we look forward to speaking with you again their second quarter fiscal 21 call. Thank you.
Thank you Sir This concludes today's conference call. We thank you all for attending today's presentation you may now.
I just want to lines and have a wonderful day.
Thank you.
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