Q3 2025 Standex International Corp Earnings Call

Operator: Thank 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.com. Please refer to Standex's Safe Harbor statement on slide 2. 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 refer to Standex's most recent annual report on Form 10-K, as well as other SEC filings and public announcements, for a detailed list of risk factors.

Thank 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 Dot <unk> Dot com.

Please refer to <unk> 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 refer to Standex is most recent annual report on Form 10-K, as well as other SEC filings and public announcements for a detailed list of risk factors.

Operator: 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, EBITDA, which is Earnings Before Interest, Taxes, Depreciation, and Amortization. Adjusted EBITDA, EBITDA Margin, and Adjusted EBITDA Margin. We will also refer to other non-GAP measures, including Adjusted Net Income, Adjusted Operating Income, Adjusted Net Income from Continuing Operations, Adjusted Earnings Per Share, Adjusted Operating Margin, Pre-Operating Cash Flow, and Pro Forma Net Debt to EBITDA.

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, EBITDA, which is earnings before interest taxes depreciation and amortization.

Adjusted EBITDA EBITDA margin and.

And adjusted EBITDA margin, we will also refer to other non-GAAP measures, including adjusted net income adjusted operating income adjusted net income from continuing operations adjusted earnings per share adjusted operating margin free operating cash flow and pro forma.

Net debt to EBITDA adjusted measures exclude the impact of restructuring purchase accounting amortization from acquired intangible assets acquisition related expenses and onetime items.

Operator: Adjusted measures exclude the impact of restructuring, purchase accounting, amortization from acquired intangible assets, acquisition-related expenses, and one-time items. 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 financial performance.

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.

<unk> believes that such information provides an additional measurement and consistent historical comparison of the Companys financial performance.

David Dunbar: On the call today is Standex's Chairman, President, and Chief Executive Officer, David Dunbar, and Chief Financial Officer and Treasurer, Ademir Sarcevic. Thank you, Chris.

David Dunbar: On the call today is <unk>, Chairman, President and Chief Executive Officer, David Dunbar, and Chief Financial Officer, and Treasurer at Amira starts to Vic. Thank you Chris.

David Dunbar: Good morning and welcome to our fiscal third quarter 2025 conference call. Following strong operating performance in the fiscal second quarter, we achieved several new records in our fiscal third quarter. These achievements include record sales since the divestiture of the refrigeration business in April 2020, record adjusted gross margin of 42.3 percent, and record adjusted operating margin of 19.4 percent. Our growth engine continues to develop, with sales into fast-growing end markets representing a greater percentage of total sales. I am also encouraged that new product sales are increasing above our projections and have added approximately 3% to our sales year-to-date.

Speaker Change: Good morning, and welcome to our fiscal third quarter 2025 conference call.

Speaker Change: Following strong operating performance in the fiscal second quarter, we achieved several new records in our fiscal third quarter. These achievements include record sales since the divestiture of the refrigeration business in April 2020 record adjusted gross margin of 42, 3% and record adjusted operating margin of 19, 4%.

Speaker Change: <unk>.

Our growth engine continues to develop with sales into fast growing end markets, representing a greater percentage of total sales.

Speaker Change: Im also encouraged that new product sales are increasing above our projections and have added approximately 3% to our sales year to date.

David Dunbar: Once again, our teams have demonstrated their ability to navigate through difficult market conditions and deliver strong operating margins with price and productivity actions.

Speaker Change: Once again, our teams have demonstrated their ability to navigate through difficult market conditions and deliver strong operating margins with price and productivity actions.

David Dunbar: Now, if everyone can turn to slide three, key message. In the third quarter, sales increased 17.2% with contributions from acquisitions partially offset by organic decline. Electronics booked to bill was 0.98, indicating that markets are stable. and Electronics organic bookings were up more than 10% year-on-year. Sales from the Ameren Narayan Group were greater than $33 million, with book-to-bill of $1.04. The Ameren Narayan Group continues to perform ahead of our expectations. In the quarter, we made significant progress in planning expansions in India, Europe, and the USA. In all regions, customer commitments extend years into the future and give us confidence to expand our existing facilities in India and the United States.

Speaker Change: Now if everyone can turn to slide three key messages.

Speaker Change: In the third quarter sales increased 17, 2% with contributions from acquisitions, partially offset by organic decline.

Speaker Change: Electronics book to Bill was <unk> 98, indicating that markets are stable.

Speaker Change: And electronics organic bookings were up more than 10% year on year.

Speaker Change: Sales from the Ameren Orion group were greater than $33 million with book to Bill of one point old floor.

Speaker Change: The Ameren Orion group continues to perform ahead of our expectations in the quarter, we made significant progress in planning expansions in India, Europe and the USA.

Speaker Change: In all regions customer commitments extend years into the future and gives us confidence to expand our existing facilities in India and the United States at.

David Dunbar: At the request of the largest European electrical equipment OEMs, we are beginning work on a greenfield site in Europe and expect to be shipping product from that location by the end of our first quarter, 2026, less than six months from now. Our fiscal third quarter sales into fast growth markets increased to 29% of total company sales. Sales in the fast-growth markets were primarily driven by electrical grid, commercialization of space, defense applications, and renewable energy. New product sales totaled $13.4 million in the fiscal third quarter, which doubled year-on-year, contributing approximately 3% to top-line sales, ahead of our goal of 2%.

Speaker Change: At the request of the largest European electrical equipment Oems. We are beginning work on a greenfield site in Europe and expect to be shipping product from that location by the end of our first quarter 2026 less than six months from now.

Speaker Change: Our fiscal third quarter sales into fast growth markets increased to 29% of total company sales.

Speaker Change: Sales into fast growth markets were primarily driven by electrical grid commercialization of space defense applications and renewable energy new.

Speaker Change: New product sales totaled $13 $4 million in the fiscal third quarter, which doubled year on year contributing approximately 3% to top line sales ahead of our goal of 2%.

David Dunbar: I'm especially pleased that we continue to demonstrate resilient operating performance from the execution of our price and productivity initiatives and from inorganic investment. As a result, we achieved record-adjusted gross margin of 42.3%, up 140 basis points sequentially, and 230 basis points year-on-year, and record-adjusted operating margin of 19.4%, up 70 basis points sequentially, and up 280 basis points year-on-year. The integration of Amarin, Narayan, and McStarlight are progressing well.

Speaker Change: I'm, especially pleased that we continued to demonstrate a resilient operating performance from the execution of our price and productivity initiatives and from inorganic investments as a result, we achieved record adjusted gross margin of 42, 3%.

Up 140 basis points sequentially, and 230 basis points year on year and record adjusted operating margin of 19, 4% up 70 basis points sequentially and up 280 basis points year on year.

Speaker Change: The integration of Ameren, Orion and <unk> are progressing well.

David Dunbar: On a sequential basis, in fiscal fourth quarter 2025, we expect slightly to moderately higher revenue driven by the impact of recent acquisitions, higher sales into fast growth end markets, and realization of pricing initiatives. We expect slightly to moderately higher adjusted operating margin due to higher revenue and realization of productivity actions, partially offset by tariff costs and targeted investments in selling, marketing, and R&D. With three new products just released in the fiscal third quarter, we have released 13 products here today, achieving our previously communicated target for over a dozen products in the fiscal year. Sales from new products are tracking ahead of expectations and are expected to contribute over 200 basis points of incremental growth.

Speaker Change: On a sequential basis in fiscal fourth quarter 2025, we expect.

Speaker Change: Slightly to moderately higher revenue driven by the impact of recent acquisitions higher sales into fast growth end markets and realization of pricing initiatives, we expect slightly to moderately higher adjusted operating margin due to higher revenue and realization of productivity actions.

Speaker Change: Really offset by tariff costs and targeted investments in selling marketing and R&D.

Speaker Change: With three new products, just released in the fiscal third quarter. We have released 13 products year to date, achieving our previously communicated target for over a dozen products in the fiscal year.

Speaker Change: Sales from new products are tracking ahead of expectations and are expected to contribute over 200 basis points of incremental growth.

David Dunbar: Now, if everyone could turn to slide four, tariff and inflation. Before we discuss our fiscal third quarter in more detail, I would like to address the recent tariff announcements and how we are navigating their impact. Our customer intimacy business model requires that our plants are near customers, limiting exposure to tariff and trade disruptions. We have in-region, for-region operations, and greater than 85% of our products are manufactured and sold within the same region. This serves as a natural buffer to any impact tariffs may have on economic activity. In addition, most of our customer relationships are based on a deep value proposition and a long-term partnership that typically only gets stronger during turbulent times, positioning us well for the long term.

Speaker Change: Now if everyone could turn to slide four tariff and inflation update.

Speaker Change: Before we discuss our fiscal third quarter in more detail I would like to address the recent tariff announcements and how we are navigating their impact.

Speaker Change: Our customer intimacy business model requires that our plants are new customers limiting exposure to tariff and trade disruptions.

Speaker Change: We have in region for region operations and greater than 85% of our products are manufactured and sold within the same region.

Speaker Change: This serves as a natural buffer to any impacts tariffs may have on economic activity.

Speaker Change: In addition, most of our customer relationships are based on a deep value proposition and long term partnership that typically only gets stronger during turbulent times positioning us well for the long term.

David Dunbar: To put another lens on this, imports of material inputs to U.S. operations are a relatively small percentage of total cost of goods sold. Approximately 6% of our cost of goods sold are due to imports of materials to U.S. operations from China. Approximately 4% are from India, and approximately 3% are from other countries. We have started implementing additional productivity actions and select price increases and working to optimize our supply chain to mitigate the impact of tariff. An intangible benefit of this uncertain economic environment is that our management teams around the world are coming together as they did in COVID to simultaneously protect margins, support strategic priorities, and strengthen collaboration across the enterprise, a demonstration of our growing and strong culture.

Speaker Change: To put another lens on this importance of material inputs to U S operations are a relatively small percentage of total cost of goods sold.

Speaker Change: Approximately 6% of our cost of goods sold are due to imports of materials to U S operations from China.

Speaker Change: Approximately 4% are from India, and approximately 3% from other countries.

Speaker Change: We have started implementing additional productivity actions and select price increases and working to optimize our supply chain to mitigate the impact of tariffs.

Speaker Change: And intangible benefit of this uncertain economic environment is that our management teams around the world are coming together as they did in COVID-19 to simultaneously protect margins support strategic priorities and strengthened collaboration across the enterprise a demonstration of our growing and strong culture.

David Dunbar: We plan to continue to invest in our key growth priorities and the new product development as we work with customers on their next generation product plan. We came out of the COVID downturn a much stronger company, and I anticipate the same results during this disruption. We are confident in our agility, resilience, and business-by-business execution over the short and long term to continue to deliver for our shareholders.

Speaker Change: We plan to continue to invest in our key growth priorities and a new product development as we work with customers on their next generation product platforms.

Speaker Change: We came out of the Covid downturn, a much stronger company and I anticipate the same results. During this disruption we are confident in our agility resilience and business by business execution over the short and long term to continue to deliver for our shareholders.

David Dunbar: Now, if everyone can turn to slide 5, highlighting our recent acquisition.

Speaker Change: Now if everyone can turn to slide five highlighting our recent acquisition in early February <unk> acquired <unk>, a leading provider of complex sheet metals aerospace components for $56 $5 million in cash.

David Dunbar: In early February, Standex acquired McStarlight, a leading provider of complex sheet metal aerospace components, for $56.5 million in cash. With facilities in Harbor City, California, McStarlight designs and manufactures cold deep draw and bulge formed aviation components, including single piece lip skins, nozzles, complex metal assemblies, and tooling to support production hardware. We have admired McStarlight for many years, and this represented an ideal bolt-on acquisition for engineering technologies. The integration has been seamless since its customer base, product line, and technologies are highly complementary to our spin craft business. We are excited about our expanded product breadth and forming capabilities in commercial aviation, space, and defense applications.

Speaker Change: With facilities in Harbour City, California, <unk> designs and manufacturers cold deep draw and bolt formed aviation components, including single piece lip skins nozzles complex metal assemblies and tooling to support production hardware.

Speaker Change: We have admired Ms Starlight for many years and this represented an ideal bolt on acquisition for engineering technologies. The integration has been seamless since its customer base product line and technologies are highly complementary to our spin craft business.

Speaker Change: We are excited about our expanded product breadth and forming capabilities in commercial aviation space and defense applications.

David Dunbar: With the addition of mixed starlight, the addressable market within engineering technologies expands by greater than $300 million. McStarlight enables expansion into wide-body, military, and MRO lip-skin segments, and into space and defense sectors. Likewise, it expands SpinCraft's Lipskin addressable market by three times and doubles addressable missile solutions while providing opportunities to cross-sell solutions to existing space customers.

Speaker Change: With the addition of mix Starlight, the addressable market within engineering technologies expands by greater than $300 million.

Speaker Change: <unk> enables expansion into wide body military and MRO lipscomb segments and in the space and defense sectors.

Speaker Change: Likewise, it expand spin crafts lip skin addressable market by three times and doubles addressable missile solutions, while providing opportunities to cross sell solutions to existing space customers.

Ademir Sarcevic: I will now turn the call over to Ademir to discuss our financial performance in greater detail. Thank you, David, and good morning, everyone. Let's turn to slide six, third quarter 2025 summary. On a consolidated basis, total revenue increased approximately 17.2% year-on-year to $207.8 million. This reflected a 26.3% benefit from recent acquisitions, partially offset by an organic revenue decline of 8.1% and 1% impact from foreign exchange. Third quarter 2025 adjusted operating margin increased 280 basis points year-on-year to a record 19.4%. In the fiscal third quarter, adjusted operating income increased 37.3% on 17.2% consolidated revenue increase year-on-year.

Adam: I will now turn the call over to Adam to discuss our financial performance in greater detail.

Adam: Thank you David and good morning, everyone, let's turn to slide six third quarter 2025 summary.

Adam: On a consolidated basis total revenue increased approximately 17, 2% year on year to $207 8 million.

Adam: This reflected a 26, 3% benefit from recent acquisitions, partially offset by an organic revenue decline of eight 1% and 1% impact from foreign exchange.

Adam: Third quarter 2025, adjusted operating margin increased 280 basis points year on year to a record 19, 4%.

Adam: In the fiscal third quarter adjusted operating income increased 37, 3% on 17, 2% consolidated revenue increase year on year.

Ademir Sarcevic: Adjusted earnings per share increased 3.7% year-on-year to $1.95. Net cash provided by operating activities was $9.6 million in the third quarter of fiscal 2025, compared to $24.4 million a year ago. Capital expenditures were $6.1 million compared to $5.2 million a year ago. As a result, we generated fiscal third quarter free cash flow of $3.5 million compared to $19.3 million a year ago.

Adam: Adjusted earnings per share increased three 7% year on year to $1 95.

Adam: Net cash provided by operating activities was $9 6 million in the third quarter of fiscal 2025.

Adam: There at the $24 4 million a year ago.

Adam: Capital expenditures were $6 1 million compared to $5 2 million a year ago.

As a result, we generated fiscal third quarter free cash flow of $3 5 million compared to $19 3 million a year ago.

Ademir Sarcevic: Our fiscal third quarter cash flow was impacted by one-time transaction-related payments, certain annual tax payments, and longer customer credit terms related to recent acquisitions that affected cash conversion in the quarter.

Adam: Our fiscal third quarter cash flow was impacted by one time transaction related payments.

Adam: With an annual tax payments and longer customer credit terms related to recent acquisitions.

Adam: <unk> cash conversion in the quarter.

Ademir Sarcevic: Now please turn to slide 7 and I will begin to discuss our segment performance and outlook beginning with electronics. Segment's revenue of $111.3 million increased 38.4% year-on-year as 48.1% benefit from acquisitions was partially offset by an organic decline of 8.9% and 0.8% impact from foreign currency. Adjusted operating margin of 29.8% in fiscal third quarter 2025, increased 760 basis points year-on-year. As the contribution from recent EMRA and Orion Group acquisition, productivity initiatives and product mix were partially offset by lower core volume. Excluding recent Emra and Orion Group acquisitions, our new business opportunity funnel increased approximately 50% year-on-year to $117 million.

Adam: Now please turn to slide seven and I will begin to discuss our segment performance and outlook beginning with electronics.

Adam: Segment revenue of $111 3 million increased 38, 4% year on year at 48, 1% benefit from acquisitions was partially offset by an organic decline of eight 9%.

Adam: Zero, 8% impact from foreign currency.

Adam: Adjusted operating margin of 29, 8% in fiscal third quarter 2025 increased 760 basis points year on year as the contribution from recent Amazon Orion Group acquisition.

Adam: David initiatives and product mix were partially offset by lower core volume.

Adam: Excluding recent Amazon Orion group acquisition, our new business opportunity funnel increased approximately 50% year on year to $117 million.

Ademir Sarcevic: For the progress of our operational and commercial excellence initiatives through our commercial expansion in India, increased activity in the test and measurement end market supported by AI and data center expansion, and higher activity and demand in mil-aero end market. Our book-to-bill in fiscal third quarter was $0.98, with orders of approximately $109 million, driven by stable orders in core businesses and contribution from Amran Narayan Group Acquisition, which had a book-to-bill of $1.04. Organic bookings increased over 10% year-on-year. Since our products are customized in nature, our bookings take longer to convert into revenue, but with stronger margins.

Adam: Further progress of our operational and commercial excellence initiatives drove commercial expansion in India.

Adam: Activity in the test and measurement end markets supported by AI and data center expansion and higher activity and demand in 1000 Aero end market.

Adam: Our book to Bill of fiscal third quarter was zero point 908 with orders of approximately $109 million driven by stable orders and core businesses and contribution from Ameren Orion Group acquisition, which had a book to bill of one <unk>.

Adam: Organic bookings increased over 10% year on year.

Adam: Since our products are customized nature of bookings take longer to convert into revenue, but with stronger margins.

Ademir Sarcevic: As David mentioned, our expansion plans for Emirates and Orion within the U.S. and India are well underway to support additional demand.

Speaker Change: As David mentioned, our expansion plans for Ameren Orion within the U S and India are well underway to support additional demand in.

Ademir Sarcevic: In addition, we are working on our Greenfield site in Europe that should be operational within six months.

Adam: In addition, we are working on our Greenfield site in Europe that should be operational within six months.

Ademir Sarcevic: Sequentially, in fiscal four quarter 2025, we expect slightly higher revenue and similar to slightly higher adjusted operating margin, driven by the Emera and Orion group acquisition, higher sales into fast growth and markets and price realization, partially offset by higher tariff costs and continued strategic growth investment.

Adam: Sequentially in fiscal fourth quarter of 2025, we expect slightly higher revenue and a similar to slightly higher adjusted operating margin driven by the Ameren Orion group acquisition.

Adam: Higher sales into fast growth end markets and price realization, partially offset by higher tariff costs and continued strategic growth investments.

Ademir Sarcevic: Please turn to slide 8 for the discussion of the engraving and scientific segment. Engraving revenue decreased 15.7% to $30.6 million, driven by organic decline of 12.6% and a 3.1% impact from foreign currency. Adjusted operating margin of 11.2% in fiscal third quarter 2025, decreased 720 basis points year-on-year due to low revenue.

Adam: Please turn to slide eight for a discussion of the engraving authentic segments.

Adam: Engraving revenue decreased 15, 7% to $36 million driven by organic.

Adam: Gannett decline of 12, 6% and a three 1% impact from foreign currency.

Adam: Adjusted operating margin of 11, 2% in fiscal third quarter 2025.

Adam: Decreased 720 basis points year on year due to lower revenue.

Ademir Sarcevic: In our next fiscal quarter, on a sequential basis, we expect slightly higher revenue and moderately higher adjusted operating margin due to more favorable project timing in Asia, slightly improved demand in North America and Europe, and realization of previously announced restructuring action. To address the continued softness in end markets served by this segment, our previously announced restructuring options are underway and are projected to yield over $4 million in annualized savings once fully implemented. Scientific revenue increased 8.1% to $18.3 million due to 16.1% benefit from recent acquisition, partially offset by an organic decline of 8%, primarily due to lower demand from academic and research institutions that were impacted by NIH funding cuts.

Adam: And our next fiscal quarter on a sequential basis, we expect slightly higher revenue and moderately higher adjusted operating margin due to more favorable project timing and Asia slightly improved demand in North America, and Europe and utilization of previously announced restructuring actions.

Adam: So there is a continued softness in end market served by this segment, our previous announced structuring options are underway and are projected to yield over $4 million in annualized savings once fully implemented.

Adam: Scientific revenue increased eight 1% to $18 3 million due to fixed employment, 1% benefit from recent acquisition, partially offset by an organic decline of 8% primarily due to lower demand from academic and research institutions.

Adam: Impacted by NIH funding cuts.

Ademir Sarcevic: Adjusted operating margin of 22.6% decreased 780 basis points year-on-year due to organic decline and product mix as a result of the acquisition.

Adam: Adjusted operating margin of 22, 6% decreased 780 basis points year on year due to organic decline in product mix as a result of the acquisition.

Ademir Sarcevic: Sequentially, we expect slightly lower revenue and adjusted operating margin due to soft demand from academic and research institutions affected by NIH funding cuts and higher tariff costs. To counteract the impact of higher tariff costs, we plan to implement pricing and productivity initiatives while continuing to optimize our supply chain through alternate sources.

Adam: Sequentially, we expect slightly lower revenue and adjusted operating margin due to soft demand from academic and research institutions affected by NIH funding cuts and higher tariff costs.

Adam: The counteract the impact of higher tariff tariff costs, we plan to implement pricing and productivity initiatives, while continuing to optimize our supply chain to alternate sources.

Ademir Sarcevic: Now turn to slide 9 for a discussion of the engineering technologies and specialty solutions segment. Engineering Technologies Revenue increased 36.2% to $27.4 million, driven by 26.3% benefit from recent McStarlight acquisition and organic growth of 9.9%. This strong organic growth was due to more favorable project timing in the space and market, and growth in sales from new products. Adjusted operating margin of 18.6%, increased 110 basis points year-on-year due to contribution from recent acquisition and higher volume.

Adam: Now I'll turn to slide nine for a discussion of engineering technologies and specialty solutions segment.

Adam: Engineering technologies revenue increased 36, 2% to $27 4 million.

Adam: Driven by 26, 3% benefit from <unk> acquisition and organic growth of nine 9%.

Adam: The strong organic growth was due to more favorable project timing in this space end market and growth in sales from new products.

Adam: Adjusted operating margin of 18, 6% increased 110 basis points year on year due to contribution from recent acquisition and higher volume.

Ademir Sarcevic: Sequentially, we expect similar to slightly higher revenue and similar adjusted operating margins. Specialty solution segment revenue of 20.2 million, decreased 13.9% year-on-year, primarily due to general market softness. Operating margin of 16.2%, decreased 370 basis points year-on-year.

Adam: Sequentially, we expect similar to slightly higher revenue and similar to adjusted operating margin.

Adam: Specialty solutions segment revenue of $20 2 million decreased 13, 9% year on year.

Adam: Italy due to general market softness.

Adam: Operating margin of 16, 2% decreased 270 basis points year on year.

Ademir Sarcevic: Sequentially, we expect moderately high revenue and operating margins.

Adam: Sequentially, we expect moderately higher revenue and operating margin.

Ademir Sarcevic: Next, please turn to slide 10 for a summary of Standex's liquidity statistics and the capitalization structure. Our current available liquidity is approximately $170 million. At the end of the third quarter, Standex had net debt of $470.4 million, compared to $10 million at the end of fiscal third quarter 2024. Our leverage ratio per our bank credit agreement currently stands at 2.8.

Adam: Next please turn to slide 10 for a summary of <unk> liquidity statistics, and our capitalization structure.

Adam: Our current available liquidity is approximately $70 million.

Adam: At the end of the third quarter Standex had net debt of $470 4 million compared with $10 million at the end of fiscal third quarter of 2024.

Adam: Our leverage ratio per our bank credit agreement currently stands at two eight.

Ademir Sarcevic: In fiscal four quarter 2025, with the addition of maxed out light, we expect interest expense to be approximately $9 million. Standex's long-term debt at the end of fiscal third quarter 2025 was $580.2 million. Cash and cash equivalents totaled $109.8 million.

Adam: In fiscal fourth quarter of 2025, but the addition of next highlight we expect interest expense to be approximately $9 million.

Adam: This long term debt at the end of fiscal third quarter 2025 was $582 million.

Adam: Cash and cash equivalents totaled $109 8 million.

Ademir Sarcevic: We declared our 243rd quarterly consecutive cash dividend of $0.32 per share, an approximately 6.7% increase year-on-year. In fiscal 2025, we expect capital expenditures to be between $25 and $30 million.

Adam: We declared our 243rd quarterly consecutive cash dividend of <unk> 32 cents per share and approximately six 7% increase year on year.

Adam: Fiscal 2025, we expect capital expenditures to be between 25 and $30 million.

Ademir Sarcevic: Relative to our debt leverage, we will continue to focus on paying down debt and anticipate that our leverage ratio will further improve at the end of the fourth quarter and will continue to decline to 2026 as we announce the acquisition of Hammer & Orion Group.

Adam: Relative to our debt leverage we will continue to focus on paying down debt and anticipate that our leverage ratio will further improve at the end of the fourth quarter and we will continue to decline through 2026, as we announced the acquisition of Amazon the buying group.

David Dunbar: I will now turn the call over to David for concluding remarks. Thank you, Ademir. Please turn to slide 11. I'm very proud of our team for their continued operational execution and for the success of our recent acquisitions, both of which helped us achieve record-adjusted operating margins for a second consecutive quarter. Sales into fast growth end markets are well on track for fiscal year 2025 expectation of approximately $170 million. This was primarily driven by growth and data center demand and grid modernization and expansion. Outside of the electrical grid, we are seeing growth in commercialization of space, defense applications, and renewable energy end markets.

Adam: I will now turn the call over to David for concluding remarks. Thank you Adam here, Please turn to slide 11.

David Dunbar: I am very proud of our team for their continued operational execution and for the success of our recent acquisitions.

Adam: Both of which helped us achieve record adjusted operating margin for a second consecutive quarter.

Adam: Sales into fast growth end markets are well on track for fiscal year 2025 expectation of approximately $170 million. This was primarily driven by growth in data center demand in grid modernization and expansion.

Adam: Outside of the electrical grid, we are seeing growth in commercialization of space defense applications and renewable energy end markets.

David Dunbar: To support our future growth, we continue to invest in new product development and new applications across markets with growth potential. We have released 13 new products here today, and new products are now expected to contribute over 200 basis points of incremental growth this fiscal year. While we cannot predict the impact of new tariffs on global trade and economic growth, our regional presence, strong customer relationships, and our disciplined approach to pricing and productivity actions position us well to manage through the current and short-term challenges. Most of our supply chain is strategically located to service regional demand, with China imports to the U.S.

Adam: To support our future growth, we continued to invest in new product development and new applications across markets with growth potential. We have released 13, new products year to date and new products are now expected to contribute over 200 basis points of incremental growth this fiscal year.

Adam: We cannot predict the impact of new tariffs on global trade and economic growth, our regional presence strong customer relationships and our disciplined approach to pricing and productivity actions position us well to manage through the current and short term challenges.

Adam: Most of our supply chain is strategically located to service regional demand.

Adam: China imports to the U S, representing approximately 6% with cost of goods sold.

David Dunbar: representing approximately 6% of the cost of goods sold. We plan to continue to invest in our key strategic priorities while implementing additional productivity actions and select price increases and working to optimize our supply chain to mitigate the impact of tariffs. We remain on track to achieve our fiscal 2028 long-term targets of sales of greater than $1.15 billion, adjusted operating margin of greater than 23 percent, and ROIC of greater than 15.5 percent. We remain confident in our ability to pay down debt and reduce our net leverage ratio.

Adam: We plan to continue to invest in our key strategic priorities.

Adam: Implementing additional productivity actions and select price increases and working to optimize our supply chain to mitigate the impact of tariffs we.

Adam: We remain on track to achieve our fiscal 2028 long term targets of sales of greater than 115 billion.

Adam: Adjusted operating margin of greater than 23% and ROIC of greater than 15, 5%.

Adam: We remain confident in our ability to pay down debt and reduce our net leverage ratio. We will now open the line for questions.

Operator: We will now open the line for questions. Thank you, and ladies and gentlemen, we will now begin the question and answer session. To ask a question, you may press star followed by the number one on your cell phone keypad. If you're using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, you may press star followed by the number two.

Adam: Thank you and ladies and gentlemen, we will now begin the question and answer session ask a question you May press star followed by the number one on your telephone keypad, if youre using a speakerphone. Please pick up your handset before.

Adam: Betsy.

Adam: Thank you for your question you May press Star followed by the <unk> with that our first question comes from the line of Chris Moore with CJS Securities. Please go ahead.

Christopher Moore: With that, our first question comes from the line of Chris Moore with CJS Securities. Please go ahead. Hey, good morning, guys. Thanks for taking All right. Good morning.

Chris Moore: Hey, good morning, guys. Thanks for taking a couple.

Speaker Change: Alright, good morning.

Chris Moore: Good morning, maybe we'll start with with tariffs so 6% of Cogs imported from China.

David Dunbar: Maybe we'll start with tariffs. So 6% of cogs imported from China. Is that mostly scientific and hydraulic? Yeah, so that it split in about three parts almost equally about one third of that goes into electronics, one third into specialty, and the remaining third into scientific. Got it.

Speaker Change: Is that is that mostly scientific and hydraulics.

Chris Moore: Yes.

Chris Moore: It's split it about three parts almost equally about one third of that goes into electronics, one third into specialty and the remaining third into scientific.

Chris Moore: Got it so and I guess the two primary one is looking for alternative sources and too as you know pricing is.

David Dunbar: So, and I guess the two primary, you know, one is looking for alternative sources. 2 is, you know, pricing. pricing power, you have a little more pricing power in, you know, in one of those splits, or how do you how do you look at that? Yeah, I mean, that's a great question, because it is, it does vary business by business. So within electronics and specialty, we think because of the, I guess, the significance of the bill of materials, the relationship with customers and the with the overall value proposition. We're confident we cover the China tariffs with price productivity actions working with customers.

Chris Moore: <unk> power you have a little more pricing power in <unk>.

Chris Moore: One of those splits or.

Speaker Change: How do you how do you look at that.

Speaker Change: But it's a great question because it is it does vary business by business, so within electronics and specialty we think because of the.

Speaker Change: Yes.

I guess the significance of the bill of materials, the relationship with customers and the.

Speaker Change: With the overall value proposition, we're confident we cover the China tariffs with price productivity.

Speaker Change: Actions working with customers scientific is a little bit different.

David Dunbar: Scientific is a little bit different. Now you have to assume what will happen with tariffs. If the China tariffs stay where they're at right now, 145% on China, we think we can, scientific can cover about 70% of that incremental tariff with price and productivity. And then longer term would have to look at some changes in supply chain and product design. It would take about a year to make up the rest. got it.

Speaker Change: With you.

Speaker Change: Now you have to assume what will happen with tariffs if the China tariff stay where they're at right now 145% on China.

Speaker Change: We think we can scientifically cover about 70% of that incremental tariff with price and productivity.

Speaker Change: And then longer term what would have to look at some some changes in supply chain and product design. It would take about a year to make up the rest of that.

Speaker Change: Got it very helpful.

Christopher Moore: Very Right, so it doesn't look like Q4 will show any organic growth. I guess I'm just... The puts and takes for organic growth in fiscal 26 is... Is that more of a back half conversation or just any thoughts there?

Speaker Change:

Speaker Change: Alright, so it does it doesn't look like Q4 will show any organic growth I guess that just the puts and takes for organic growth in fiscal 2000 Six's Ivy.

Speaker Change: And visibility.

Speaker Change: Where you'd like it to be at this point, but is that more of a.

Speaker Change: Back half.

Speaker Change: Conversation or just any any any thoughts there at this stage.

Ademir Sarcevic: Well, hey, good morning, Chris. It's Ademir. I think if you look at electronics specifically, you know, we are very pleased with the order intake rate in a core business we are seeing over the last couple of quarters. And obviously, Amaran Orion has been a phenomenal acquisition for us, albeit it's not, you know, it's not organic yet. So, as we enter FY26, we do, again, you know, assuming current economic environment and, you know, nothing significant, no significant changes, we do believe we're going to start seeing organic growth, you know, electronics is our engine. You know, as far as the other businesses, you know, engineering technology group, very robust order books, you know, very strong end markets, we feel very confident that they will continue to show organic growth.

Adam: Well, Hey, good morning, Chris It's Adam.

Adam: I think if you look at electronics, specifically you know we are very pleased with the order intake rates in our core business. We are saving over the last couple of quarters, and obviously Amazon Orion has been a phenomenal acquisition for us, albeit that's not it's not organic yet so as we enter FY 'twenty six we do again, assuming some kind of economic <unk>.

Adam: Environment and nothing significant no significant changes, but we do believe you're going to start seeing organic growth in electronics is always our engine.

Adam: As far as the other businesses.

Adam: Engineered technology group, a very robust order book and a very strong end markets. We feel very very confident that they will continue to show organic growth.

Ademir Sarcevic: And then engraving, frankly, is coming from a very low starting point at this stage with the auto market in North America being an all-time low. So, there's a possibility and we feel that we'll be able to turn the tide there as well. Scientific remains a little bit of a challenge because of what David just described. And that specialty has been, you know, we feel pretty good about specialty, you know, as far as the organic growth, you know, is concerned as well.

Adam: And then engraving and frankly, it's coming from a very low to low starting point at this stage with the auto market in North America being an all time low. So there is a there is a possibility and we feel that we'll be able to turn the tide there as well so that if it remains a little bit of a challenge because David just just described and a specialty has been you know we feel pretty good.

Adam: Specialty as far as the organic growth.

Adam: Is concerned as well.

David Dunbar: So... Well, I guess another way to look at it, because you mentioned both the Q4, the upcoming quarter, and the rest of the year, if you just zoom out a little bit and think about what's driving growth long-term in the portfolio, those things that we're confident in that we know we can control. So, the fast growth markets... Amaranth Orion alone, if it continues its growth, will add about $20 million of sales to the company over a year. That's over two points of growth. Our new products are running ahead of what we had said earlier this year, contributing just over about 200 basis points of growth.

Adam: Well I guess another way to look at it because you've mentioned both the queue for the upcoming quarter and the rest of the year.

Adam: Zoom out a little bit and think about what's driving growth long term in the portfolio those things that we're confident in that we know we can control so the fast growth markets.

Adam: Ameren Orion alone continues its growth will add about $20 million of sales for the company over over a year that's over two points of growth or new products are running ahead of what we had said earlier this year contributing just over about 200 basis points of growth.

David Dunbar: So that's 400 basis points mostly from all the investments and movements we've made in the last few years to focus more on organic growth. And now we have to make assumptions about underlying market. If you assume no recession and say we return to say 2.5% GDP, on top of that, we typically get about a point of price in quote, unquote normal times. So you add those all up, making assumptions about the end market that fell out of book end or out of expectation. Got it.

Adam: So that's 400 basis points from real estate from all the investments improvements we've made in the last few years to focus more on organic growth.

Adam:

Adam: And now you have to make assumptions about underlying underlying market. If you assume no recession and say we returned to save two 5% GDP.

Adam: On tap on top of that we typically get about a point of price and quote unquote normal times. So you add those all up making assumptions about the end market that.

Adam: The book and our analysts expectations.

Adam: Got it that's very helpful. Maybe just a last one on.

Christopher Moore: It's a very Maybe just the last one on Amer and Narayan. The planned expansion, it sounds like you said about six months before you start selling in Europe. Is there a significant investment? required to begin there or just, you know, kind of what the primary, you know, kind of milestones are.

Adam: Amarin Orion the planned expansion it sounds like you said about six months.

Adam: Before you start selling in Europe, but just is there a significant investment.

Adam: Required.

Adam: To begin there or just kind of.

Adam: What the.

Adam: Primary kind of milestones are.

Adam: Over the next two quarters.

David Dunbar: Yeah, thank you for that question. We're very excited about this. Europe is actually the biggest end market for their products. It's over a $2 billion market, whereas America is about a billion and a half. And they have served European OEMs out of India. And I think we announced even at the acquisition, those OEMs have been asking them to create a footprint in Europe. So the last quarter, we've made several trips to Europe. We're progressing rapidly. And this will go in stages. So the initial stages, the investment will not be significant. We just, you know, we obviously need a building.

Speaker Change: Thank you for that question. We're very excited about this Europe is actually the biggest end market for for their products. It's over $2 billion market, Whereas America is about 1 billion and a half.

Speaker Change: And they have served European Oems out of India and <unk>.

Speaker Change: I think we announced Steven at the acquisition those Oems are have been asking them to create a footprint in Europe. So the last quarter. We've made several trips to Europe, we're working with.

Speaker Change: We're progressing rapidly.

Speaker Change: And this will go in stages. So the initial stages the investment will not be significant.

Speaker Change: We obviously need to building.

Christopher Moore: We'll start stocking and doing some testing, and then gradually add equipment. So in the first year or two, maybe a million, two million dollars of investment. And then as it grows, we will, you know, we'll expand it from there. Yeah, Chris, it's not a very high capital investment required for us to get it started. So. There should be a lot of cash outflows there. All right, guys. Thanks. I'll leave it there. Thank you.

Speaker Change: I will start.

Speaker Change: Stocking and doing some testing and gradually add equipment.

Speaker Change: <unk>.

Speaker Change: So in the first year or two maybe.

Speaker Change: 1 million $2 million of investment and then as it grows we will.

Speaker Change: We will expand it from there yes of course, it's not a very high capital investments required for us to get us started itself.

Speaker Change: This shouldn't be a lot of cash outflows there.

Speaker Change: Perfect.

Speaker Change: Alright, guys. Thanks, I'll leave it there.

Speaker Change: Thank you.

Matt Crandall: And your next question comes from the line of Matt Crandall with Watt Capital, please go ahead. Hey guys, good morning. Maybe just continuing on with the electronics questioning. So Amer and Orion, the order trend looks pretty encouraging. Just wanted to see if maybe you could unpack the end markets that are driving strength for them. Data Center, some of the electrical grid infrastructure expansion. And then could you talk about capacity utilization there right now? It sounds like I would imagine we're running quite high, given that we're we're going to be adding a plant in Europe. And so what is capacity utilization look like right now?

Speaker Change: And your next question comes from the line of Matt Koranda with Roth Capital. Please go ahead.

Matt Koranda: Hey, guys good morning.

Matt Koranda: Maybe just continuing on with the electronics questioning so ameren Orion the order trend looks pretty encouraging.

Matt Koranda: Just wanted to see if maybe you could unpack the end markets that are driving strength for them between data center or some of the electrical grid infrastructure expansion and then could you talk about capacity utilization there right now it sounds like I would imagine we're running quite high given that we're we're going to be adding a plant in Europe and so what is capacity.

Matt Koranda: Utilization looks like right now is there a hit to margins as you kind of ramp for the new plant in Europe, maybe just talk about the transition there over the next couple of quarters.

David Dunbar: Is there a hit to margins as you kind of ramp the new plant in Europe? Maybe just talk about. there over the next couple of.

David Dunbar: Yeah, so first of all, the sources of growth are more or less what they were when we announced the acquisition. You've got grid modernization in all parts of the world. There's expansion of electrical capacity just to support economic growth and living standards. Data centers and You know, and artificial intelligence, our driving investments, we, so we're not seeing any change in that momentum, you know, our relationships are with a large electrical equipment OEMs, they still have demand that goes out several years. So, so we see no change in those in those drivers for the growth. Our capacity, we still have capacity in our current plants.

Matt Koranda: Yeah. So first of all the sort of the sources of growth are more or less what they were when we announced the acquisition you've got grid modernization and all parts of the world. There is expansion of electrical capacity just to support growth and economic growth in living standards.

Matt Koranda: Data centers.

Matt Koranda: Sure.

Matt Koranda: And artificial intelligence are driving investments.

Matt Koranda: <unk>.

Matt Koranda: So we are not seeing any change in that momentum and our relationships are with the larger electrical equipment Oems.

Matt Koranda: They still have demand that goes out several years.

Matt Koranda: So we see no change in those and those drivers for the growth.

Matt Koranda: Our capacity.

Matt Koranda: We still have capacity in our current plants.

Ademir Sarcevic: And we're probably running, I don't know, 60, 70% capacity. We've recently added a second shift in India and in Texas. But we also announced in the script, we will expand in India. We'll add Footprint, we'll expand in the US, we'll add Footprint, and we have the Greenfield site coming in Europe. We have good visibility to the demand from customers. And so that capacity will come online in time to meet that demand. Yeah, and Matt, if I can add this, from a margins standpoint, we don't anticipate that the margins in Europe will be any different than the margins of the consolidated group as they stand today.

Matt Koranda: And we're probably running I don't know 60, 70% capacity.

Matt Koranda: We've recently added.

Matt Koranda: Second shifts in India.

Matt Koranda: And in Texas.

We also announced in this in the script.

Matt Koranda: We'll expand in India will add footprint will expand in the U S where that footprint and we have the greenfield side coming in Europe, we have good visibility to the demand from customers and so that capacity will come online in time to meet that demand and Matt if I can add that from a margin standpoint, we don't anticipate that the margins in Europe will be any different than the margins of the consolidated.

Matt Koranda: Group as they stand today.

Matt Crandall: Okay, very clear, I appreciate that. And then maybe just on the core order book in electronics, I think you guys mentioned kind of flattish in terms of order trend, quarter over quarter.

Matt Koranda: Okay very clear I appreciate that and then.

Matt Koranda: Maybe just on the core order book in Electronics, I think you guys mentioned kind of flattish in terms of order trend quarter over quarter, what does that mean for sort of when we inflict.

Ademir Sarcevic: What does that mean for sort of when we inflect to the positive? What would that look like over the next... Yeah, I mean, you know, and the other thing that I just want to mention, Matt, you know, we are about 10% up organically on the on orders in electronics, if you look at the year on year. So, you know, we are kind of at that reflection point now, to be quite honest with you.

Matt Koranda: The positive in terms of organic growth in the electronics segment, how soon could that com.

Matt Koranda: What would that look like over the next couple of quarters.

Matt Koranda: Yes.

Matt Koranda: The other thing that I just want to mention that we are about 10% up organically on their own orders in electronics. If you look at the year on year. So you know we are kind of at that reflection point now to be quite honest with you and as we move into the next fiscal year, which would be in our fiscal first quarter FY 'twenty six next quarter and we feel we are turning the corner and let's just thought we should start showing up.

Ademir Sarcevic: And as we move into the next fiscal year, which would be in our fiscal first quarter by 26 next quarter, you know, we feel we are we are turning the corner and we should start showing organic growth.

Matt Koranda: On the growth.

Matt Crandall: Okay, great, and then maybe just the last one if I could. Thinking about sort of the overall debt position here, what are your thoughts on sort of leverage and where we'd be willing to take it if we found an attractive acquisition over the next few quarters? Or I guess should we think about sort of leverage as coming down over the next few quarters and we're driving cash to de-lever the balance sheet with the macro uncertainty that we're dealing with? Just wanted to hear your thoughts. Yeah, so Matt, our leverage as it stands today is about, per our bank facilities, about 2.8.

Speaker Change: Okay, Great and then just the last one if I could.

Matt Koranda: Thinking about the.

Matt Koranda: Sort of the overall debt position here what are your thoughts on sort of leverage and where we'd be willing to take it. If we found an attractive acquisition over the next few quarters.

Matt Koranda: Or I guess should we think about sort of leverages coming down over the next few quarters, and we're driving cash to delever the balance sheets.

Matt Koranda: The macro uncertainty that we're dealing with just wanted to hear your thoughts on that front.

Speaker Change: Yes, so some that are leveraged as it stands today is about our bank facility is about two eight if you kind of annualize up fourth quarter EBITDA, it's less than that it's about two five to six obviously our priority is to pay down debt and we also have a lot of very exciting organic initiatives that David.

Ademir Sarcevic: If you kind of annualize our fourth quarter EBITDA, it's less than that, it's about 2.5, 2.6. Obviously, our priority is to pay down that, and you know, we also have a lot of very exciting organic initiatives that David has just been talking about, specifically in electronics and some other businesses. So our priority would be, you know, to invest in organic growth and the things we know the best, and you know, we control. And then at the same time, you know, obviously work down to pay down the debt and take the leverage down. And we think we're going to make a dent in leverage this quarter.

Speaker Change: Just been talking about specifically in electronics at some other businesses saw priority would be entertained burst in organic growth and the things we know the best.

Speaker Change: We control and then at the same time, and obviously work down to pay down the debt and data take the leverage down and we think we're going to make a dent in leverage this quarter, we're going to continue to work it through FY 'twenty six.

Ademir Sarcevic: We're going to continue to work it through FY26, and you know, we are a very good cash-generating company and we'll continue to focus on, you know, both organic growth investments as well as paying down the debt.

Speaker Change: We have very good cash generating company and we will continue to focus on both organic growth investments as well as paying down the debt, yes, let me add something on that front.

David Dunbar: Yeah, let me add something. Just from a philosophical standpoint, I guess, we're about as high in leverage as we'd like to be. We are still in the market. A lot of the acquisitions that we make are based on years and years of relationship building.

Philosophical standpoint, I guess were about as high and Leverages, we'd like we'd like to be.

Speaker Change: We are still in the market a lot of the acquisitions that we make are based on user and user relationship building. So we continue to do that and you and the next year or so will be at a leverage point, we could we could consider.

David Dunbar: So we continue to do that, and you know, in the next year or so, we'll be at a leverage point we could consider. Okay, got it.

Speaker Change: Okay got it thanks, guys I appreciate it.

Matt Crandall: Thanks, guys. Appreciate it.

Mike Shlisky: And your next question comes from the line of Mike Shlisky with D.A. Davidson. Good morning. Thanks for taking my questions here. So leverage at 2.8, sounds like it's coming down. That's certainly good to hear.

Speaker Change: And your next question comes from the line of Mike <unk> with D. A Davidson. Please go ahead.

Mike: Good morning, Thanks for taking my questions here.

Speaker Change: So leverage at two eight sounds like it's coming down Thats certainly good to hear.

Ademir Sarcevic: Besides just You know, rolling in Amrin Narayan and the Mestrala Ibidine to the numbers. Do you have any other levers that you're looking to pull on the debt side? I mean, I wasn't sure if you needed to or could liquidate any working capital in the near term or if you even have to. Just curious as to how you feel about other parts of your balance. Yeah, no, look, we certainly have some opportunities in our working capital metrics. You know, as an example, you know, some of the businesses we recently acquired, you know, generally have a longer credit terms with some of their customers, those credit terms, you know, sometimes over 90 days.

Mike: Besides just.

Speaker Change: Rowling in Ameren, Ryan and the Starlight EBITDA into the numbers.

Adam: Hi, Adam here.

Adam: 111 that youre looking to pull on the on the debt side.

Adam: I wasn't sure if you needed to or could liquidate any working capital in the near term with even half two.

Adam: Just curious as to how you feel about other parts of your balance sheet at the current time.

Adam: Yeah, No look we certainly have some opportunities in our working capital metrics and as an example in our some of the businesses. We recently acquired the <unk> generally have a longer credit terms with some of their some of their customers credit terms, sometimes over 90 days. So obviously, we've been working with.

Ademir Sarcevic: So, obviously, we've been working with, you know, our new acquisitions as well as the customers to try to improve those terms and get them a little bit more balanced, if you will. So, we clearly have opportunity on receivables. We'll obviously continue to manage inventory as well.

Adam: Our new acquisitions as well as the customers to try to improve those terms and get them a little bit more balanced. If you will so we clearly have opportunity on receivables. We will obviously continue to manage manage inventory as well. So yes, I mean, that's clearly an opportunity to get more operating cash flow in the upcoming quarters and we plan to do that.

Ademir Sarcevic: So, yeah, I mean, there's clearly an opportunity to get more operating cash flow in the upcoming quarters, and we plan to do that. Great.

Mike Shlisky: I also wanted to circle back to some of your answers and comments on tariffs from earlier. Given that Scientific is, at this point, such a small part of the overall company in China, the China part of it is even smaller. And the other thing that you mentioned in the other... Does it does it feel like the The total potential impact from the tariffs that you're seeing today, if there aren't any changes going forward, is pretty de minimis. Would you agree with the thought that maybe the efforts you have to take to mitigate it through pressing and productivity is relatively minor and doesn't seem all that challenging?

Adam: Great.

Adam: Also wanted to circle back to some of your answers and comments on tariffs of earlier.

Adam: Given that scientific at this point such a small part of the overall company in China, The China part of it even smaller of course.

Adam: And the other things that you mentioned in the other segments.

Adam: Does it does it feel like.

Adam: The.

Adam: The total potential impact from the tariffs that you are seeing today barring anything changing going forward is create the minimus.

Adam: And the.

Adam: Would you would you agree with with the thought that maybe the efforts you have so if you take the mid.

Adam: Mitigated through pricing and productivity.

Adam: Relatively minor it doesn't seem all that John.

Ademir Sarcevic: At this point, this just doesn't sound like you're in any kind of concern or huge panic here at all. Yeah, I think that's a fair way to summarize it, Mike, but obviously, you know, it's our fiduciary duty to do the best we can to continue maintaining good relationship with suppliers, with customers, and obviously to protect our margins. But yeah, I mean, in a grand scheme of things, it's not, you know, again, as David said, we are in the region for the region for the most part in terms of our supply chain, as well as customer relationships.

Adam: At this point this doesn't sound like your any kind of concern or huge panic here at all.

Adam: Yes, I think that's that's fair a fair way to summarize it Mike, but obviously, it's our fiduciary duty to do the best we can to Perth to continue maintaining good relationship with suppliers with customers and obviously to protect our margins, but yes, I mean in the Grand scheme of things it's not.

Speaker Change: Again as David said, we are in the region for the region for the most part in terms of our supply chain as well as customer relationships. So yes. The impact for US is not certainly not significant I wouldnt laid it out pretty pretty clearly early.

Ademir Sarcevic: So yeah, the impact for us is certainly not significant. You laid it out pretty clearly earlier that of that, you know, 6%, about 10 million, 10 million, 10 million, just the 10 million of scientific that's going to require some work. So it's not to minimize the work that they have to do. So in that business, there's plenty of work, but they've got a line of sight to actions to contain that, as I described earlier. It's our job to worry, Mike, right? But no, you're right, overall impact at a corporate level, diminimum. That's correct. Okay, great.

Speaker Change: That 6% is about Thats about 10 million $10 million $10 million since.

Speaker Change: Just the $10 million of scientific.

Speaker Change: It requires some work so as not to minimize the work that they have so in that business. There's plenty of work that they've got a line of sight to actions to.

Speaker Change: Contain that as I described earlier.

Speaker Change: It's our job to worry Mike right.

Speaker Change: No youre right.

Speaker Change: They're all impact at a corporate level de minimus Thats correct.

Speaker Change: Okay great.

Ademir Sarcevic: And I want to turn to some of your comments you made. the new products that are kind of in the process of rolling out from fiscal 2025. But, you know. At this point, this is 2026, starts in just two days. a month from now. Can you maybe just share with us, yeah, so could you maybe just share with us some of your plans? For new products during 2026. Could it be on the same order magnitude of 2025? And also, is there a tailwind from stuff that got introduced during 2025 that still has to lap in 2006 or has ongoing adoption that'll be beyond just...

Speaker Change: And I want to turn to some of your comments you made on <unk>.

Speaker Change: The new products that are kind of in the process of rolling out.

Speaker Change: For fiscal 2025.

Speaker Change: <unk>.

Speaker Change: At this point for 2026 starts in just two.

Speaker Change: Management now.

Can you maybe just share with us so could you maybe just share with us some of your plans for new products. During 2026 could it be on the same order of magnitude as 2025 and also is there a tailwind from stuff that got introduced during 2025 is still have to lap in 2006 or has ongoing adoption and it will be beyond just.

Speaker Change: Well organic growth next year.

Speaker Change: Yes.

Great questions I think we've talked before that because of our business model and our products are sold to Oems, who are incorporating that into their next generation platforms. It typically takes about three years for any application any new opportunity, we willing to ramp to full volume. So that's true of new products as well as just the applications of our existing products. So <unk>.

Speaker Change: <unk> released this year, we will continue to ramp in the coming years.

Ademir Sarcevic: We also have a have a pipeline and we would expect order magnitude, the same number of products to be released in FY26 as in FY25. Outstanding. I'll pass it along.

Speaker Change: We also have a pipeline that we would expect.

Speaker Change: Order of magnitude.

Speaker Change: The same number of products to be released in FY 'twenty six Hasnt FY 'twenty five.

Speaker Change: Outstanding I'll pass it along thank you.

Ross Sparenblek: Your next question comes from the line of Ross Sparenblek, with William Blair. Good morning, gentlemen. Eros, Eros.

Speaker Change: Thank you. Our next question comes from the line of Ross <unk> Blackbead William Blair. Please go ahead.

Ross <unk>: Hey, good morning, gentlemen.

Speaker Change: Russ.

Ademir Sarcevic: Hey guys, kicking off with Core Electronics, you know, can you just update us on where we are with like the broader restocking phase? And what's underwriting confidence for a return to gross in 2026 on the organic side, just again, for the core business? Yeah, so if you look at the underlying underlying business, we're seeing strength in Asia, North America's taking up Europe remains soft. Most of the stock in the stocking impact was in Asia and China for us.

Speaker Change: Hey, guys, just kicking off with our core electronics can you maybe just update us on where we are with like the broader restocking choices and what's underwriting confidence for return to growth in 2026 on the organic side just against the core business.

Speaker Change: Yes, so if you look at the underlying underlying business.

Speaker Change: We're seeing strength in Asia, and North America is picking up Europe remained soft most of the stocking Destocking impact was in Asia, and China for Us and that is a few quarters ago. We said was bottoming out that is that that's picking up.

Ademir Sarcevic: And that is a few quarters ago, which I was bottoming out that is that that's picking up.

Ademir Sarcevic: Okay, well then maybe just help us size the automotive and general industrial exposure again. I think it's the ebb and flow of China picking up with North America and Western Europe getting a little weaker there, at least on the auto side. Yeah, and General Industrial because those were both noted as being weaker again this quarter. Historically, just think out loud here, auto has been about 20% of the electronics business. A little lower now just because it's been soft. Yeah, it's been more like 15% in recent quarters. So, EVs have been flat. Other combustion engine has declined.

Speaker Change: Okay, and then maybe just help us size.

Speaker Change: The automotive and general industrial exposure again.

Speaker Change: I'm trying to think about the ebb and flow of China picking up with North America.

Speaker Change: Western Europe, getting a little weaker there at least on the auto side, what's the question.

Speaker Change: The exposure to San Antonio.

Speaker Change: Yes, and general industrial because those were both noted as being weaker again this quarter.

Speaker Change: Yeah, historically, just thinking out loud here.

Speaker Change: It has been about 20% of the electronics business.

Speaker Change: <unk>.

Speaker Change: A little lower now just because it's been soft.

Speaker Change: Yes, its more like its been more than 15% in recent quarters.

Speaker Change: So global Evs Evs have been flat.

Speaker Change: Other.

Speaker Change: Combustion engine has declined so we're about 15%.

Ademir Sarcevic: So we're about 15%. Okay, of Total Electronics.

Speaker Change: Okay of total electronics.

Ademir Sarcevic: And then just on the scientific side...

Speaker Change: And then just on the scientific side.

Ademir Sarcevic: Can you just maybe help us frame the risk here from the NHI funding? I mean, based off last quarter, it looks like a couple million, and that probably counts for the next, you know, three quarters going forward. And then I believe on the pharmacy side, that's pretty much Atrof. Are you seeing these signs of recovery there? Yeah, I think, Ross, for the NIH, I think you just sized it pretty well in terms of the potential impact. Yeah, and, you know, for the pharmacies, you know, yeah, you're right. It's kind of at a trough. We are waiting to see if the new capital equipment requests are going to come in.

Speaker Change: Can you just maybe help us frame the risk here from the NHI funding base.

Speaker Change: Based off last quarter, it looks like a couple million dollars and that probably accounts for the next three quarters going forward.

Speaker Change: And then I believe on the pharmacy side, that's pretty much at trough are you seeing any signs of recovery there.

Speaker Change: Yes, I think Ross for the NIH I think you just size that pretty well in terms of the in potential impact yes.

Speaker Change: The pharmacy is yeah, you're right, it's kind of at a trough we are waiting to see if the new capital equipment that quest theyre going to come in maybe some of that theres little bit impacted now with some of the economic uncertainty, but certainly those units that we placed years ago are due to be replaced and we do expect we're going to see some uptick in the near future.

Ademir Sarcevic: You know, maybe some of that is a little bit impacted now with some of the economic uncertainty, but certainly those units that we placed years ago are due to be replaced. And, you know, we do expect we're going to see some uptick in the near future. I mean, are you having active conversations there? Yeah, two key players, right? That's good to hear.

Speaker Change: I mean are you having active conversations there.

Speaker Change: Yes, two key players right. Okay. That's good to hear yes.

Ademir Sarcevic: And then maybe just one last one on McStarlight. Can you call out the major programs there, you know, to the wide bodies? Is there any boat exposure, Airbus, anything we can point to? Yeah, both, Boeing and Airbus. Uh, they're, yeah, they're on. They're on the white body programs at both. Both those players.

Speaker Change: Yes, maybe just one last one on a nexstar like can you call out the major programs. There you noted the wide bodies.

Speaker Change: Is there any boat exposure Airbus anything we can point to.

Speaker Change: Oh, yes, both both Boeing Boeing and Airbus.

Speaker Change: Yes.

Speaker Change: On the wide body programs with both.

Speaker Change: Both of those players.

Ademir Sarcevic: Alright, I mean is this primarily sole source, single source? Yes, yeah. All right.

Speaker Change: Alright, I mean is this primarily sole source single sourced.

Speaker Change: Yes, yes.

Speaker Change: Yes awesome.

Ademir Sarcevic: Thank you, guys. Thanks, Ross.

Speaker Change: Alright, Thank you guys.

Speaker Change: Thanks Ross.

Gary Prestopino: And your next question comes from the line of Gary Prestopino with Arrington Research. Please go ahead. Hi. Good morning, all. A couple of questions here. in the guidance that you gave us for Q4. In terms of... Organic Decline.

Speaker Change: And your next question comes from the line of Gary <unk>.

Gary: With Barrington Research. Please go ahead.

Speaker Change: Hi, good morning, all.

Gary: Couple of questions here.

Gary: In the guidance that you gave us for Q4.

In terms of the organic.

Ademir Sarcevic: Is it going to be very similar to the organic decline in sales that you saw on Q3? Hey, good morning, Gary. No, it will not, you know, because we do believe electronics will, which is again our engine, will do better than they have done in Q3, so we should see some improvement there. You know, the only one that I would point to that might be a little soft, you know, from kind of a comparison would be, would be obviously scientific for the reasons we just spoke about. But yeah, we do expect that, yeah. No, you know, when you say sequentially up and I'm just, you know, back of the envelope.

Gary: Nick decline is it going to be very similar to the organic decline in sales that you saw in Q3.

Gary: Hey, good morning, guys.

Gary: It will not because we do we do believe electronics, though which is again a range and we'll do we'll do better than they have done in the in Q3. So we should see we should see some improvement there.

Gary: Only one that I would point to there might be a little softer from kind of a comparison would be it would be obviously scientific for the reasons. We just we just spoke about.

Gary: But yes, we do.

Gary: Yeah.

Gary: No.

Gary: You say sequentially up and I'm just back of the envelope.

Gary: Yeah.

Ademir Sarcevic: Amron, let's say you bought it, it had a hundred million of revenues, you had 25 there. McStarlight, about eight million, that's 33. So I'm just trying to get an idea of when you're talking about. changes you're seeing in or contemplating or the growth you're contemplating, just what we have to work off there. So we really shouldn't be looking at about an 8% organic decline. before, as we saw in Q3. No, no, no. Okay, that's good to hear.

Gary: And Ron Let's say you bought it at a $100 million of revenues and 25, there Nexstar light about $8 million Thats 33. So.

Speaker Change: Yes, I'm just trying to get an idea of when you're talking about the changes you're seeing in or contemplating or the growth youre contemplating just what we have to work off there. So we really shouldnt be looking at about an 8% organic decline.

Gary: In Q4, as we saw in Q3.

Speaker Change: No no no.

Speaker Change: Okay, that's good to hear.

Ademir Sarcevic: I just want to ask, in terms of fast growth markets... Were your sales last quarter about 26 million? I think I went back and looked at that and you were about 60 million this year. Is that kind of correct or this quarter? Yeah, that's right. I was looking at last year's Q4. Yeah, yeah, that's right. Yeah. And you recall this last quarter, we, we kind of bridged kind of a recasting, we have an old number, new number, the Ameren and Orion sales are all into fast growth. So we're including that in the 60, of course.

Speaker Change: I just wanted to ask in terms of.

Speaker Change: Growth markets.

Speaker Change: Our sales last quarter about $26 million I think I went back and looked at that and you are about $60 million. This year is that kind of correct or this quarter.

Speaker Change: Yes, that's right.

Speaker Change: About $66 million.

Speaker Change: The 26 quoted what period.

Speaker Change: Turning to ours.

Speaker Change: I was looking at last year's Q4 Q3, yes.

Speaker Change: Yes, yes, that's right, yes, and Youll recall this last quarter, we we kind of bridged.

Speaker Change: Kind of a recasting we have an old number new number because the ameren Orion sales are all into fast growth. So we're including that in the <unk> of course.

Ademir Sarcevic: Right. So if I can just phrase the question. Uh, given that Amarant... pretty good margin profile. How has that changed the adjusted operating margin profile of your sales in the fast growth markets? Could you give us an idea of the magnitude of the basis point increase? year-over-year. a couple hundred basis points. So as this grows, it's gonna become very accretive. Yeah, yeah. Okay.

Speaker Change: Right. So the gas great phrase the question this way.

Speaker Change: Given that I'm wrong.

Speaker Change: Pretty good margin profile, how has that changed the margin profile.

Speaker Change: Adjusted operating margin profile of your sales in the fast growth markets.

Speaker Change: Could you give me an idea of.

Speaker Change: The magnitude of the basis point increase.

Speaker Change: Year over let's see.

Speaker Change: Well, yes, that's a great question, our margins into fast growth markets have always been higher than our average margin because they tend to be newer products is a great value proposition. The ameren Orion margins still are higher than that average so.

Speaker Change: It's about half of our <unk>.

Speaker Change: We have a couple of hundred couple hundred basis points first growth margins.

Speaker Change: Okay, a couple of hundred basis points, so as they grow as this grows it's going to become very accretive.

Speaker Change: Yeah.

Speaker Change: Okay, and then lastly on the.

Ademir Sarcevic: And then lastly, on the... One of the things you mentioned was the tariffs you say you can offset some of this with price increases and I realize this is rather de minimis relative to other companies. Have you informed your customers that you're going to increase prices as of yet? And, you know, I just want to get what's kind of in their reaction. It runs across the board, all the spectrum of reactions, but there are hundreds or thousands of discussions going on with customers and many of our businesses about price increases. So I... I don't know, I...

Speaker Change: One of the things you mentioned was the tariffs.

Speaker Change: So you can offset some of this with price increases and I realize this is rather de minimis relative to other companies but.

Speaker Change: Have you formed your customers that you're going to increase prices as of yet.

Speaker Change: And I just wanted to get what's kind of been their reaction to that.

Speaker Change: Uh huh.

Speaker Change: Across the board.

Speaker Change: All the spectrum of <unk>.

Speaker Change: Reactions, but there are hundreds of thousands of discussions going on with customers and many of our businesses about about price increases.

Speaker Change: So.

Speaker Change: I don't know I'd.

Ademir Sarcevic: You know, I guess the bottom line is what we conveyed earlier. We think we can cover, to the extent we can cover the tariffs, the one challenge is going to be in the scientific business based on the competitive nature of that market and their ability to get price. In all the other businesses, combination of price and productivity will cover tariffs. Yeah, Gary, we're not just approaching this purely from a price standpoint, we're looking at productivity, you know, sourcing, savings as well, so, you know, and the way we're approaching this with our customers, you know, we're kind of all in this together, and we're going to come up with the best optimal solution for, you know, for us as well as for our customers.

Speaker Change: I guess the bottom line is what we conveyed earlier with Youtube, we think we can cover.

Speaker Change: To the extent, we can cover the tariffs the one challenge is going to be in the scientific business based on the competitive nature of that market and the ability to get price and all the other businesses combination of price and productivity will cover cover tariffs.

Speaker Change: Okay, Yeah got it.

Speaker Change: Ill just approaching it purely a purely from a price standpoint, we're looking at productivity sourcing savings as well so and the way we are approaching this with our customers are going to be a kind of all in this together and we are going to come up with the best optimal solution for arena for us to develop for our customers. So it's a combination really of three things pricing productivity and sourcing and supply.

Ademir Sarcevic: So it's a combination really of three things, pricing, productivity, and sources of supply.

Ademir Sarcevic: Well, let me ask you this. With your existing sources right now, where are they coming from, say, China? Can you go back to them and say, hey, you guys got to share some of this burden? I mean, is it is what you're getting out of China? Is that coming in a mainland China or Taiwan? Well, the 6% we quoted is mainland China. And so we have, again, you've had discussions with all the suppliers. Some of them have given, have participated a bit, I guess, with others. Others have not. It just depends on the business and the supplier.

Well, let me ask you this with your existing sources right now where are they coming from say, China and India.

Speaker Change: Can you go back to them and say Hey, you guys got to share some of this burden.

Is what you're getting out of China is that coming out of mainland China or Taiwan.

Speaker Change: Well, the 6% we quoted as mainland China.

Speaker Change: And so we have there again, you had discussions with all of the suppliers some of them.

Speaker Change: <unk>.

Have have given have participated event I guess with the others others have not.

Speaker Change: It just depends on the business and the supplier right okay.

Ademir Sarcevic: Right. Okay.

Ademir Sarcevic: That's it. Thank you very much.

Speaker Change: Thank you very much.

Speaker Change: Thank you Sir.

Operator: And we have no further questions at this time.

Speaker Change: We have no further questions at this time I would like to turn it back to David Dunbar for closing remarks.

David Dunbar: I would like to turn back to David Dunbar for closing remarks. All right, I want to thank everybody for joining us for this call. We always enjoy reporting on our progress at Standex. And finally, again, I want to thank our terrific employees. for their hard work, continued support of our strategic objectives and delivering another solid quarter. And thank you to the shareholders for your continued support and contributions. We look forward to speaking with you again in our fiscal fourth quarter 2025 call. Thank you, presenters.

David Dunbar: Alright, I want to thank everybody for joining us for this call.

David Dunbar: We always enjoy reporting on our progress at Standex, and finally again I want to thank our terrific employees.

David Dunbar: For their hard work continued support of our strategic objectives and delivering another solid quarter and thank you for the shareholders for your continued support and contributions we look forward to speaking with you again in our fiscal fourth quarter 2025 call.

Speaker Change: Thank you presenters, ladies and gentlemen. This concludes today's conference call. Thank you all for participating you may now disconnect.

Operator: And ladies and gentlemen, this concludes today's conference call. Thank you all for participating. You may now disconnect.

Speaker Change: Okay.