Q1 2022 Standex International Corp Earnings Call
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Good morning, and welcome.
It's being back to international.
First quarter 2022 conference call.
Yeah.
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Now I'd like to turn the call over its very Barbara a pretty equal with advisors. Please go ahead Sir.
You operator, and good morning. Please note that the presentation accompanying management's remarks can be found on the Investor relations portion of the company's website at Www Standex dotcom.
Please refer to stay an extra safe Harbor statement on slide two.
Matters that Standex management will discuss on today's 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 refer to stand at its most recent annual report our Form 10-K, as well as other 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 the non-GAAP measures of EBIT, which is earnings before interest and taxes, adjusted EBIT, which is EBIT, excluding restructuring purchase accounting acquisition related expenses and onetime items EBITDA.
Which is earnings before interest taxes, depreciation and amortization adjusted EBITDA, which is EBITDA, excluding restructuring purchase accounting acquisition related expenses and onetime items EBITDA margin and adjusted EBITDA margin.
We will also refer to other non-GAAP measures included adjusted net income adjusted operating income adjusted net income from continuing operations adjusted earnings per share adjusted operating margin free opera, Kate 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.
<unk> is chairman President and Chief Executive Officer, David Dunbar, and Chief Financial Officer, and Treasurer, Adam are a source of it.
Thank you Gary.
Good morning, and welcome to our fiscal year first quarter 2022 conference call.
I'm very pleased with our first quarter results, which were reflected solid financial performance and an expanding pipeline of growth opportunities.
Standout as a stronger company today as a result of well executed portfolio move into higher level of performance of our businesses.
We continue to have a favorable outlook for fiscal 2022 and look forward to further successfully executing on our growth strategy.
Want to thank our employees executive team and the board of directors for their dedication and support as we further grow our portfolio of high quality businesses.
Now if everyone can turn to slide three key messages.
Revenue when consolidated adjusted operating margin increased significantly year on year in fiscal first quarter 2022, as we leveraged positive demand trends and converted new business opportunities from our pipeline.
Consolidated organic revenue growth of approximately 17% year on year, reflecting strength in our electronics and scientific segment.
Electronics revenue increased approximately 37% year on year, primarily due to a broad based geographical recovery with continued solid demand for relays in renewable energy and electric vehicle applications.
Along with positive trends in transportation appliance test and measurement and distribution end markets.
Scientific segment revenue increased approximately 29% year on year, driven by retail pharmacies clinical laboratory and that kind of academic institution end market.
Consolidated adjusted operating margin of 13, 4% with a 250 basis point year on year increase and represented our second consecutive quarter of delivering our highest consolidated margin and standex history.
Our results also reinforce the benefit of our continued investment in end markets that have healthy growth prospects and where we can incorporate our innovative solutions and strong customer value proposition.
Sequentially total company backlog realizable in under one year increased approximately 12% with strength, particularly at the electronics specialty solutions and engraving segment.
At the electronics segment, the new business opportunity pipeline continues to grow and we are seeing positive trends in such end markets is electric and heavy duty vehicles defense industrial and aerospace.
In addition, renco electronics, which we acquired a little over a year ago is contributing to the growth of our opportunity pipeline as we realize sales synergies from cross selling opportunities and our expanded customer base.
At the scientific segment, we're also introducing a new product family blood Bank refrigerators and plasma freezers.
Our expertise in life sciences, and refrigeration to expand into adjacent markets.
Execution on our active funnel of productivity and efficiency initiatives as further adding to our success, we are driving manufacturing and supply chain productivity with actions, including new lean programs and mitigating inflationary trends through price realization and value engineering and.
In addition, our Reed switch production and material substitution project with the electronics segment continues to mitigate some of the material inflation, we are seeing and it remains on track to be substantially complete by the end of fiscal 2022.
We continue to have significant financial flexibility to pursue new organic and inorganic growth opportunities given our strong balance sheet and liquidity position and consistent cash flow generation.
Adam will discuss our financial performance in greater detail later in the call.
In regard to our financial outlook, we are off to a solid start to the fiscal year and continue to expect stronger financial performance year on year in fiscal 2022.
In the second quarter, we expect revenue and operating margin to increase slightly compared to fiscal first quarter, 2022, and significantly compared to the year ago quarter.
Now please turn to slide four and that will begin to discuss our segment financial performance beginning with electronics.
Revenue increased approximately $26 million or 37, 2% year on year, including 36, 1% organic growth, reflecting continued broad based geographic and end market strength as well as the one 1% positive contribution from foreign exchange.
Operating income increased approximately $9 $1 million or 100.2% year on year due to operating leverage associated with revenue growth and productivity initiatives, partially offset by increased raw material and freight costs.
Looking ahead, we have a very active new business opportunity funnel and approximately $61 million, which is expected to deliver first year sales of $19 million with positive trends across all major geographic areas and business units and are well positioned to further capture additional customer business.
Electronics backlog realize little under a year sequentially increased approximately $13 million or 11% in fiscal first quarter 'twenty two.
The picture on slide four highlights the success of our customer intimacy sales model and moving up the value stack in a customer's product. In this example, we address the customer application in 2015 by supplying it packaged Reed switch this led to the opportunity to develop an entire sensor in 2018, which expanded by incorporating additional functions.
In 2021 ever collaboration evolves, so does our value provided reinforcing the importance of our strong technical and applications expertise.
Regarding our fiscal second quarter 2022 outlook, we expect a slight sequential decrease in electronics revenue and operating margin, reflecting a lower number of production and shipping days and product mix in the quarter.
Please turn to slide five for a discussion of the engraving segment.
Year on year revenue decreased approximately $1 2 million or three 4% and operating income with nearly $1 million lower or a 17% decrease due to the timing of projects and geographic mix, partially offset by productivity actions.
Lane with sales of approximately $14 $9 million represented a 27% increase year on year, including a positive demand outlook for soft drink tool laser engraving and tool finishing.
Sequentially backlog realizable under a year increased $5 $9 million or approximately 44% in fiscal first quarter 'twenty two.
The picture are highlighted on slide five shows a Tesla model Y version through cross regional collaboration within the segment and based upon our soft trim proprietary technology, we were able to supply two sets of tools substantially faster than our competitors production capability further driving our growth opportunity in the China market.
In fiscal second quarter 'twenty, two we expect a slight sequential increase in engraving segment revenue and operating margin. This is due to the timing of projects regional mix and demand for soft trim tooling complemented by the impact of additional productivity initiatives.
Turning to slide six the scientific segment.
Revenue increased approximately $4 $9 million or 29, 2% year on year, reflecting positive trends in pharmaceutical channel clinical laboratories and academic institutions.
Operating income increased approximately two four.
$4 million or 10, 6% year on year due to volume growth and pricing initiatives.
Just with investments to support future growth opportunities and higher freight costs.
Sequentially backlog realizable under a year increased $1.6 million or approximately 27% in fiscal first quarter in fiscal 'twenty two.
Significant orders in the quarter were placed to support replacement of aging cabinets from retail pharmacy locations a phenomenon, we expect to expand as our installed base grows.
As highlighted on slide six we have applied our growth disciplined processes in a two year development project to leverage our expertise and intellectual property and life sciences and refrigeration into adjacent product categories and are introducing a new product family blood Bank refrigerators and plasma freezers. This product launch includes tusa.
<unk> of refrigerators, and freezers designed for hospital blood banks and other medical clinical and research facilities. These products comply with all relevant industry requirements, including those from the F. D. A.
<unk> for the advancement of blood bio therapies.
In fiscal second quarter 'twenty, two we expect scientific revenue and operating margin to be similar to our first quarter, reflecting continued demand for vaccine storage.
Company by the return of demand from traditional end segments and pricing actions, partially offset by increased freight costs.
Turning to the engineering technologies segment on slide seven.
First quarter revenue was $17 $6 million with similar year on year due to positive trends in the space and market analyst with the absence of the recently divested in genetics business and the economic impact of COVID-19 on this segments end markets.
Operating income increased approximately <unk> $4 million, representing a 91, 7% increase year on year, reflecting product mix and ongoing productivity initiatives offset by $1 $1 million, one time project related charge.
We have an active new business opportunity pipeline in both space and aviation. In addition, as highlighted on slide seven our opportunities are also expanding in international defense end markets.
Here, we are collaborating with customers to develop bulkhead assembly and additional solutions for domestic and international armored vehicles.
And I've also captured customer wins to develop nose cone adjacent products and next generation missile programs.
Regarding our outlook in fiscal second quarter 'twenty, two we expect revenue to be sequentially similar with positive commercial aviation and defense trends, partially offset by project timing in the space end market.
However, we expect a significant increase in operating margin due to project mix productivity initiatives and the absence of a one time project related charge, which occurred in the first quarter.
Please turn to slide eight specialty solutions.
On a year on year basis specialty solutions revenue increased approximately $2 million or slightly under 1% and operating income decreased $1 $1 million or 27, 9% first quarter results reflected end market recovery, particularly in foodservice markets offset by the impact of a prior work stoppage which has.
Since been resolved.
In addition, we experienced material inflation, which we are seeking to recover through pricing actions.
We have a very strong backlog position realizable under a year, which sequentially increased to $8 $7 million or approximately 33% in the first quarter.
We also continue to expand our merchandising product portfolio highlighted on slide eight is the recently launched vision series available and he did refrigerated and non refrigerated options.
Developed your stand acts as a GDP plus growth process. This is a ground up redesign of our core product. The new version of this product has several attractive features including modern styling with your very Viewable and accessible product area Division series can accommodate a significant amount of food product in a highly efficient footprint and is capable of run.
And under a variety of conditions, including high temperature and humidity.
In regard to our second quarter specialty solutions outlook, we expect a moderate sequential increase in revenue and operating margin due to execution on our strong backlog position and the absence of the financial impact of the prior work stoppage.
We can continue to focus on recovering material inflation through pricing actions.
I will now turn the call over to Adam Aron, who will discuss our financial performance in greater detail.
Well, thank you David and good morning, everyone.
I will provide a few key takeaways from our fiscal first quarter 2022 result, which exhibited strength across several important metrics.
Organic revenue growth of approximately 17% year on year reflected solid demand trends about electronics and scientific segment.
In addition, we continue to see overall healthy order trends across the company as we enter our fiscal second quarter.
From a margin standpoint, adjusted consolidated operating margin of 13, 4% increase both sequentially and year on year and represented our second consecutive quarter of highest margin and standards for phase III.
The strong operating performance reflects several factors, including effectively leveraging volume growth realizing the benefits of price and productivity actions and the positive impact of our prior strategic portfolio moves.
Also all financial strength supported by consistent free cash flow generation, which increased year on year.
In summary, we are entering our fiscal second quarter with positive order trends active funnel of productivity initiatives and an expectation for continued solid cash generation in fiscal 2022 all further adding to our strong financial position.
Now, let's turn to slide nine first quarter 2022 income statement summary.
On a consolidated basis total revenue increased 16, 1% year on year from $51 3 million in the fiscal first quarter of 2021 $275 6 million this quarter.
This revenue increase primarily reflected strong organic growth at the electronics on scientific segment and a positive contribution from foreign exchange.
Revenue growth was partially offset by the divestiture of the genetics business, which occurred in the third quarter of fiscal 2021 and trends at the engraving segment, which reflect the timing of projects.
And so and that has contributed approximately $3 million in revenue in the fiscal first quarter of 2021.
On a year on year basis, our adjusted operating margin increased 250 basis points to 13, 4%, reflecting operating leverage associated with revenue growth and the readout of price and productivity actions.
This was partially offset by a $1.1 million one time project related charge at engineering technologies segment, and the financial impact of work stoppage in the specialty solutions segment, which has since been resolved.
As expected our tax rate increased to 25% compared to 22% in the first quarter of 2021.
We expect that second quarter tax rate will be similar to the first quarter rate and then the overall tax rate for fiscal 2022 to be in the 24% range.
Adjusted earnings per share of $1 34 in the first quarter of 2022 compared to 96 cents a year ago.
Now please turn to slide 10 first quarter 2022 free cash flow.
We generated free cash flow of approximately $8 1 million in the first quarter of 2022 compared to free cash flow of four 4 million in the first quarter of 2021.
We continue to succeed.
National initiatives with working capital turns of five six times, representing a 33% increase year on year.
Next please turn to slide 11 for a summary of standex capitalization structure and liquidity statistics, which remain strong.
Standex had net debt of $68 9 million at the end of September compared to $63 1 million at the end of June.
Free cash flow of approximately $8 1 million offset by $9 5 million of stock repurchases, along with dividends and changes in foreign exchange.
I don't know that for fiscal first quarter of 2022 consisted primarily of long term debt of $199 6 million.
Cash and cash equivalents totaled $130 7 million with approximately 102 million held by foreign subs.
We had approximately 267 million of available liquidity at the end of September.
Our net debt to adjusted EBITDA leverage ratio was approximately 0.58 times with a net debt to total capital ratio of 11, 8%.
We expect I'd be willing to pay to get to approximately 35 million in cash in fiscal 2022.
From a capital allocation perspective, really purchased approximately 97000 shares for $9 5 million in fiscal first quarter of 2022.
So must be 12.5 million remaining on our current repurchase authorization.
We also declared a 229 consecutive quarterly cash dividend on October 28 of 96 cents per share approximately 8% increase over the prior four quarterly dividend payments.
Finally, we expect capital expenditures of approximately 25 million to 30 million in fiscal 2022.
I'll now turn the call over to David for closing comments.
Thank you Adam here.
If everyone can please turn to slide 12.
Key takeaways.
Fiscal 'twenty, two we expect stronger financial performance year on year as we execute on the positive end market trends, we are seeing and further drive ongoing productivity initiatives across our significantly strengthened portfolio.
Underpinning this outlook is a very active pipeline of growth opportunities with a positive trajectory in our new business opportunity funnel and new product introductions.
We are leveraging the significant number of growth opportunities in front of us through ongoing manufacturing and supply chain productivity actions, including initiatives, such as new lean programs and mitigating inflationary trends through price realization and cost consolidation efforts.
Our strong balance sheet and liquidity position and consistent free cash flow generation position us very well to pursue both organic and inorganic growth opportunities and we remain opportunistic and disciplined in allocating capital.
As highlighted by some of the order trends discussed today, our approach is resonating with customers, reflecting the strength of our deep technical and applications expertise and innovative solutions and reinforcing the value of our high quality businesses.
Operator, I'll now open the line for questions.
Yes.
Now I'll begin the question and answer session.
I'll ask a question press Star then one on your touch cell phone.
Using a speakerphone please pick up your handset.
We're pressing the keys.
Your question. Please press Star then two.
We will pause momentarily to assemble the roster.
Yeah.
First question comes from Chris Moore CJS Securities. Please go ahead.
Hey, good morning, guys. Thanks for taking a few questions.
Hi, good morning, another excellent quarter.
It seems like most of the conversation on earnings calls this quarter are focused on supply chain inflation in labor.
Any thoughts how spandex was able to kind of avoid that as a focus.
Yeah, There's a couple a couple of important perspectives there correct.
You know a year ago, two years ago, how much we were struggling with rhodium in the electronics business and as the team got their arms around that they've completely changed their.
Cost management of.
The rhodium and more importantly, the pricing process. So they they used to have a lot of 12 month pricing agreements. They went to a monthly pricing.
All all quotes were viewed by management.
That really started left by last November.
Last 12 month agreement had sunset it and you've seen the results have been very effective manner, you know quite well we have we have been communicating that across all the businesses that stand out and it's really emboldened to all of our businesses too.
<unk> be a little more on bold I guess, how about passing.
Passing price through whether it's from freight or material. So we're seeing we're seeing that margin play yeah. It's never easy to have those discussions with customers I don't want to say that its easy.
But we've we've really improved our practice in the last year that the second thing on supply chain.
Most of our businesses their supply chain.
We source in a region for plants in the region for customers in the region. We have a couple of businesses that are dependent on them.
Right.
On the global supply chain scientific and hydraulics and.
You saw the scientific results, they're doing a very nice job managing through that.
Through those challenges managing international freight so I think.
It's limited to those two businesses. So that's why at a corporate level.
I haven't seen a hit as much bye.
Yes.
Got it very helpful.
We just switched to electronics, obviously, you know such.
Such an important component of revenue and profitability.
And maybe you could talk a little bit more about disability in this specific segment you know any feel for.
You know kind of distributor inventory levels, just kind of any any additional thoughts in terms of what youre seeing there.
Well we have.
There are a wide variety of end markets here and.
Our sales to distributors is about 20% of the sales.
The entire business.
And distributor levels have been.
No.
Growing consistent with the rest of the business.
So we haven't seen any dramatic swing in the mix of our Oh ever sales by channel.
Yeah. Some people are out there are you seeing any.
Except as buying as customers are.
I'm trying to get ahead of potential supply issues, there may be some of that in there.
We see growth in our.
Our npls are new applications are ramping up quickly and related products.
The overall mix of the business still remains good and in fact in October we just.
Sales remained strong and our book to Bill ratio of October one two so whatever is going on in distribution, it's not enough to.
And to dampen the overall demand, we're seeing in that market that business.
Got it I appreciate that last one for me just.
I'm trying to better understand the end markets, where you know you might still being a little bit of a catch up mode from from Covid.
And could provide a tailwind at some point in time and any more thoughts there.
Yeah, let's see yourself.
We had thought all along that the.
Slowest in the latest the catch up would be the food service equipment markets in Edinburgh.
I had thought that day by next quarter.
You start in calendar 'twenty two it does it does mark I'd be caught up.
I think our procon and federal almost.
Back to pre Covid levels.
I think this quarter.
The aviation market.
Our shipments into aviation will be back to pre COVID-19 levels this quarter.
Everything else I think is at or above pre COVID-19 levels. Yeah, I agree I think for the most part the already there.
David's point, you know we are seeing really good order rates across our businesses across the market, which is a positive sign for sure.
Fantastic I'll jump back in line. Thanks, guys. Thank you.
Thank you next question comes from Chris Howe Barrington Research. Please go ahead.
Good morning, David Good morning, Good morning, Chris.
Hey, I.
I guess, starting with the scientific segments are.
You continue to do well in that segment coming in ahead of that.
Expectations here, we know we have the tougher comparisons going against last year.
But you mentioned continuing demand for vaccine storage as well as some other initiatives. There can you just talk about the puts and takes.
That led to the quarter and.
Your outlook.
Yeah, a couple a couple of them.
One of the things in the quarter.
I have to say the same if you were to.
Look at our internal discussions a quarter or so ago.
The business exceeded our internal estimate.
A couple of things happened in the quarter. We are seeing continued orders for Covid vaccine storage is not as great as last winter, but we're seeing the harvest come through the distributors that serve.
Small clinics physicians offices.
And with the approval of vaccinations for children age five to 11, most of those vaccines will be given in doctors' offices, and most doctors' offices don't have a cat a storage unit. So we do think theres kind of a steady.
Probably steady.
You know runway.
A second thing that really is important for us as we received quite a large order for about a six to eight months.
To deliver cabinets to replace units that were installed four or five years ago.
And as our installed base increases and they're almost cabinets around the country.
This is Kevin say, a four to seven years of service life.
We expect to see more sustained.
It's kind of a replacement business and so that that was a that was a factor too.
That's very interesting certainly some.
Positive dynamics there you finished the quarter at about a 29% are.
Operating margin.
You've kind of hinted that it's around 20%.
To make investments along that segments.
Hum.
How should we think about margin or am I just.
We continue to to kind of peg people's expectations kind of low 20% margins.
Isn't it.
Corridor by corridor of course, there's some variation this last quarter.
This is a business that is it is facing headwinds in their supply chain and the cost of freight from Asia.
Couple of younger and a half ago was $4000 container 15, even $20000 of the spot price. So yeah, they're dealing with that they're passing price through.
We're also making investments we had.
I got three or four years ago, we had one or two engineers in this business. We've got a team of 15 now there.
They are working on active pipeline of new products and on this page you see our new products the blood banking plasma freezers.
This is a brand new market segment for us. It's a very attractive segment. This is a more than two year development and I'm very proud of the teams are very excited about this and in quarters past.
Referenced the fact that we're developing new products and the release of these new products could get us into new segments to provide.
Next leg of growth for this business. So this is just the beginning and.
The blood banking blood plasma.
It's a it's another gear that this.
Business can shift into.
Okay.
And my last question.
Just following up on.
On the previous questions about the supply chain certainly this is a.
Fantastic quarter My view.
Given the challenges that we all face with freights.
And.
In supply chain delays.
How would you assess how you balance optimism over caution in this environment.
Certainly we'd like this trend to continue from Q1.
Versus expectations.
And I guess more specifically is there a way to put a number on.
The challenges that you had to offset in the quarter.
Yeah, let me take a stab at that.
American correct everything I got wrong all the.
How we balance optimism versus the first caution.
Our internal targets are always higher than what we what we communicate.
I think as we get better at forecasting and we just implemented.
Yeah, I knew consolidation system across our businesses, we have much better visibility to the cost structure multi months all of our businesses. So we think we're tightening up our ability to forecast and over time, maybe that that buffer between our internal estimates and what we communicate externally well we'll get narrower.
<unk>.
On on the headwinds we faced in the quarter.
Yeah, our estimate that we were all up from our businesses supply chain issues. There there was maybe $4 million across the corporation of shipments that we couldn't get because we're missing a component or that there were some supply chain issues. So that maybe gives you an idea of the order of magnitude across our business.
At American film.
Correct.
This is a good way to go.
To summarize we expect we're going to continue to see supply chain. He feels like you know a lot of companies and you know but.
I think one point that we want to make sure. It doesn't get lost you know we are really turning the corner and becoming an operating company, but we can manage all costs are as well.
Let me have productivity initiatives in place then.
David is going to be having.
Forecast, a b and C. You know and leave you know how to manage you'll try to manage against no different.
Cobalt in a market that can throw at us though.
Okay.
Okay, great. Thanks for taking my questions I appreciate it thank you.
Yeah.
Thank you next question comes from Chris Mcginnis of Sidoti <unk> Company. Please go ahead.
Hey, good morning, Thanks for taking my questions and congrats.
Congrats on obviously, a really strong quarter.
Would you mind, just maybe talking a little bit about you know.
You made some management changes last quarter.
With Flavio.
And can you just talk a little bit about maybe how theyre progressing and the new rules. If you don't want to spend a couple minutes on that thanks, yeah. So that the.
The changes we highlighted last quarter, we're moving farther into the innovation and technology role.
I'd actually wanted to do a couple of years ago, but we have so much portfolio.
Management, we had to do with it it just wasn't it wasn't the right time.
Flavio its primary focus is.
It's hitting some key deadlines on that solar solar energy project.
Two last quarter.
In the next couple of months or some important milestones there.
He had started a process with all the businesses to develop a.
Our pipeline of technology ideas that will now start moving through the pipeline for evaluation and maybe eventually to new product development.
Most of our new product development has come from our current products to current customers and sort of the next step for those things so very customer input focus.
Flavio is bringing a technology view of.
How new technologies, maybe threats or opportunities for us.
So I'd say, it's off to a good start and I'm just as we're now beginning to communicate we have new products coming out of our pipeline in the coming quarters, I'd expect that will be coming in communicating.
I'll put it that technology role.
And as Bobby and looking at this wrong, we moved Jim Hooven from the corporate ops role to lead the engraving business and you know what it is.
It is it's always.
I guess interesting and fun and rewarding to see what happens when there's a management change in an organization because everybody brings a different set of skills in different perspective.
I'll say.
The transition has gone very smoothly I think Jim in the engraving team are working together very well and Jim brings a.
Deep toolkit of operational discipline operational practices that are being being applied across the business to improve forecasting up with labor management.
So.
We're very pleased with the early returns on both of those mood.
Right.
Just given the strength of our balance sheet would you mind, commenting on the M&A environment as well thanks.
Yeah.
We have an active pipeline, we're working we're working it pretty hard and you know, there's an old saying I've been quoting it maybe.
Cliche, but you have to kiss a lot of frogs to find a handsome prince and where we are I guess I'm. The chief problem kits are cheap cheap processing officer, where we are working a lot of opportunities.
And.
We I think have made 11 acquisitions since I've been here, many more good ones and bad ones and on the whole. We're very pleased with the discipline, we've created and identify businesses that meet our strategic criteria valuing them fairly paying a fair price and then getting value out of them.
So we apply all those same principles.
We evaluate these opportunities.
I have I guess, a final point to make Christmas in recent years.
I have mentioned this I should maybe restate it.
We are working to get larger and larger businesses into our pipeline as we have more more track record, especially in electronics and integrating businesses.
We think we can start to bring in more sales and larger and larger it doesn't because at the time, where our typical acquisition worth family family owned businesses that were 10, 15 20 $30 million in sales.
We're widening the aperture of our.
Our funnel.
I appreciate that.
And then just one last question, obviously, you really handled the external environment pretty well in terms of the.
The inflationary environment supply chain, what most concerns you when you look out at the time of the global economy versus your business and I guess where are your concerns David thanks.
Well I.
I guess my concern is I mean, I may ask a slightly different question that you asked.
The main concern is.
Our businesses are in a great situation that we have good positions in our markets. We have a great portfolio you see the performance of this portfolio is reading through now.
We have a collection of really good businesses, we are pivoting a lot of our attention to identifying new opportunities developing new products, bringing new technology to market and I want to use.
Use this opportunity we have now to invest those funds wisely to provide the next the next leg of growth for.
For the company.
In the coming years so.
I guess, what keeps me awake at night going hard enough going fast enough are we putting in place the disciplines and really being smart about investing for growth.
Great I appreciate that.
Thanks again for taking my questions Congrats on the quarter and good luck in Q2. Thank you. Thank you.
Yeah do you have a question. Please press Star then one.
This time, we have no further questions now I'd like to turn the conference back over to Mr. David Dunbar for closing remarks. Please go ahead alright.
Alright. Thank you. Thank you all for your interest in standup.
Once again I. Thank you our great appreciation to the employees of Standex, who are managing very well through a difficult environment.
And we look forward to reporting back to you in three months from now on are on our second quarter. Thank you.
Conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Yeah.
That's correct.
Yeah.