Standex International Corporation

Good day and welcome to the STANDEX International Fiscal First Quarter 2021 Earnings Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on a touch-tone phone. To withdraw your question, please press star then two. Please note this event is being recorded. I'd now like to turn the conference over to Gary Farber with Affinity Growth Advisors. Please go ahead, sir.

Thank you, Rocco, 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 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's most recent SEC filings and public announcements for a detailed list of risk factors. In addition, I'd like to remind you that today's discussion will include references to the non-GAAP measures of EBITDA, which is earnings before interest, taxes, depreciation, and amortization, adjusted EBITDA, which is EBITDA excluding restructuring, purchase, accounting, acquisition-related expenses, and one-time items, and EBITDA margin and adjusted EBITDA margin. We will also refer to other non-GAAP measures including adjusted net income, adjusted income from operations, adjusted net income from continuing operations, adjusted earnings per share, adjusted operating margin, free operating cash flow and pro forma net debt to EBITDA. These non-GAAP financial measures are intended to serve as a complement to results provided in accordance with accounting principles generally accepted in the United States. Stanix believes that such information provides an additional measurement and consistent historical comparison of the company's performance. On the call today is Stanix's Chairman, President, and Chief Executive Officer, David Dunbar, and Chief Financial Officer and Treasurer, Ademir Sarcevic. I'll now turn the call over to David.

Thank you, Gary. Good morning and welcome to our fiscal first quarter 2021 conference call. On today's call, I will provide commentary on the quarterly 2021 results and the trends we are seeing in our business. I will then review our segment performance. Ademir will follow with a discussion of our consolidated results and financial position. Finally, I will conclude with comments on our outlook and key takeaways. Now, if everyone can please turn to slide three, key messages. Overall, fiscal first quarter results were ahead of our expectations on several fronts, reflecting stronger than anticipated demand, and Solid Operational Execution, particularly at our electronics, engraving and scientific segments. Consolidated revenue increased 8.5% sequentially. This is ahead of the outlook we provided previously of fiscal first quarter 2021 revenue being flat to slightly above the fourth quarter of 2020. At the electronic segment, revenue increased 23% sequentially and 18.6% year on year, reflecting positive trends in magnetics as well as contribution from the recent Renko acquisition. Sequentially, engraving operating margin increased 800 basis points to 16.1% due to cost efficiency and productivity initiatives on 15.1% revenue growth compared to fiscal fourth quarter 2020. Finally, the scientific segment reported its highest quarterly sales ever at $16.7 million. Earlier this year, we divested our refrigerated solutions business and established scientific as a standalone reporting segment, both actions advancing our strategy to build our higher margin segments. In particular, the scientific segments results reflected increased demand for seasonal flu vaccine storage, as well as initial sales related to potential COVID-19 vaccines. In addition, our electronics new business opportunity pipeline is healthy at $56 million across a wide variety of end markets, We expect the sales contribution from this pipeline to grow sequentially on an annual basis. In engraving, we see continued opportunity in the tool finishing and soft trim tool laneways globally. We are leveraging these top line trends with stronger operating disciplines in all businesses, complemented by several financial initiatives. We are on track to deliver over $7 million in savings in fiscal 2021 from the actions we announced in the third quarter of fiscal 2020. We also begin to implement tax savings initiatives in the quarter, including optimizing our foreign tax credits. We expect our tax-related actions to result in cash savings of $2 million to $3 million in fiscal 2021. As a result, our tax rate in fiscal 21 is expected to be approximately 22% or 500 basis points lower than fiscal 2020. We also expect to realize $1.5 million in cash savings in fiscal 21. due to our previously announced floating to fixed rate interest swaps. We continue to maintain a strong financial position with a solid balance sheet and significant liquidity supported by consistent free cash flow generation. Standex had approximately $206 million of available liquidity at the end of the fiscal first quarter with a net debt to adjusted EBITDA ratio of 1.1. During the quarter, we generated free cash flow of $4.4 million. We also continued our cash repatriation efforts with approximately $8 million repatriated in the first quarter. We expect to repatriate $35 million in total in fiscal 21, which would result in $74 million in cash repatriated over the past two fiscal years. In sum, we're off to a solid start and expect continued growth and margin improvements as we move through fiscal 21. Our financial flexibility will continue to strengthen through free cash flow generation, cash repatriation, and new tax initiatives. In our fiscal second quarter of 21, we expect consolidated revenue to be flat to slightly above the first quarter, with a slight to moderate increase in segment operating margin. Please turn to slide four, and I will begin to discuss our segment financial performance, beginning with electronics. Electronic segment revenue increased $8.7 million, or 18.6% year-on-year, reflecting a 3.9% organic growth rate with strength in the magnetics product line, and a $5.9 million from the recent Renco acquisition or approximately 12.6%. The balance of the revenue increase is related to foreign currency impact. Adjusted operating income increased approximately $1 million or 12.7% year-on-year, reflecting operating leverage on the revenue growth, productivity initiatives, and Renco Electronics' profit contribution, partially offset by inflationary material cost increases. Our new business opportunities funnel has increased to $56 million and is expected to deliver $11 million of incremental sales in FY21 across a broad range of end markets, including industrial, electrical vehicles, safety systems, and military. We are also very pleased at the pace of integration of our sales channels with Renco. In three months, they've identified over $1 million of cross-selling opportunities in each other's accounts ahead of our expectations. In terms of our second quarter fiscal 2021 outlook, we expect revenue to be sequentially slightly higher and operating margin to be sequentially similar to the fiscal first quarter. Our outlook assumes improvement in European and North American markets with Asia results slightly below fiscal first quarter 21. Please turn to slide five for a discussion of the engraving segment. Revenue decreased approximately $2 million or 5.3% year over year and operating income was lower by approximately The results reflected the impact of COVID-19 on our end markets, partially mitigated by productivity and expense savings in the quarter. However, sequentially from Q4 fiscal 20, engraving reported a significant improvement as revenue increased 15.1% and operating margin improved 800 basis points, reflecting an overall increase in the level of customer activity combined with cost efficiency and productivity initiatives, which will continue with the segment. Laneway sales are recovering quickly from Q4, growing by 27% sequentially to $11.7 million, nearly back to pre-COVID levels on strength and tool finishing offering and soft trim tools. I'm pleased to see the progress our North American engraving business has made improving labor management through standard work and better capacity planning. Our Corporate VP of Operations, hired in February, is collaborating with business management to improve operating procedures and drive efficiencies. In addition, the completion of our global ERP platform will allow additional analysis and improved performance management across all major global sites to further drive consistent performance. As far as second quarter outlook on a sequential basis, Standex expects a slight revenue increase and continued improvement in operating margin in the fiscal second quarter of 21. The expected revenue growth reflects an increased level of customer activity due to new automotive launches along with continued introduction of soft trim tools and tool finishing offerings. We expect to see continued margin improvement from the volume increase combined with continued cost efficiencies and productivity initiatives. Turning to slide six, the scientific segment. Scientific segment revenue increased approximately $1.9 million, or 13% year-on-year, reflecting organic growth in end markets, especially retail pharmaceutical chains. The sales growth reflects distribution and storage of vaccine for the coming flu season, as well as a few initial orders for COVID vaccine storage. Operating income increased approximately $400,000 or 10% year over year, reflecting revenue growth partially offset with reinvestments in the business for future growth opportunities. The picture highlights are under counter cabinet used for storage of refrigerated and frozen medications and vaccines. Standix is well positioned with strong distribution channels for a leading role in a potential COVID-19 vaccine rollout. In the second quarter, we expect to see a sequential and year-on-year revenue increase driven primarily by continued positive trends in retail pharmaceutical chains and clinical end markets and accelerated by the expected rollout of a national COVID vaccine. We expect operating margin to slightly improve reflecting volume increase balanced with reinvestment for future growth opportunities. Looking further, We expect scientific revenue growth sequentially and year-on-year in fiscal 21 with approximately $10 to $20 million of incremental sales to support COVID vaccine storage. Turning to the engineering technology segment on slide seven. As expected, engineering technologies had a challenging quarter. Revenue and operating income decreased $7 million or 28.4% and $2.9 million or 86% year-on-year respectively. The first quarter results reflected the economic impact of COVID-19 on the commercial aviation market, especially engine parts manufacturing. However, we continue to experience positive trends in the unmanned segment of the space industry and defense sales. In our second quarter, we expect revenue to be sequentially similar to the first quarter as a result of continued weakness in the aviation end market. Operating margin is expected to increase slightly sequentially despite aviation end market trends. as a result of productivity initiatives and cost reduction activities which are ongoing. We are pleased to show the progress of our efforts to expand capacity in our Bill Rickett plant using lean processes. As a result of set-up time reduction, improved layouts, and process improvements, we have increased throughput 20%, positioning us well to support continued growth in our space and markets and deliver higher margins. Please turn to slide eight, specialty solutions. which includes the hydraulics, merchandising, and pumps businesses. Specialty solutions revenue and operating income decreased year on year, although it was in line with our expectations that results would be sequentially similar to the fiscal fourth quarter of 2020. Revenue decreased approximately $6.2 million or 19.7% year over year. The decrease was primarily associated with the economic impact of COVID-19 on several end markets, including the food service equipment, and hospitality industries at the pumps and merchandising businesses and the dump markets at hydraulics. Operating income decreased approximately $1.7 million or 30.9% year over year, reflecting lower volume, partially mitigated by cost reduction efforts. To partially offset these trends, we pursued additional opportunities focused on strengthening the segment's margin profile. We continue to allocate hydraulics capacity to higher value opportunities, particularly after market sales. We've also closed a pumps operation in Ireland and outsourced the components previously manufactured there to save approximately $1 million annually. Though their end markets are down from the effect of COVID-19, the business has continued to utilize our growth discipline processes to work with customers on promising future opportunities. The example pictured here is a pump control system that houses eight pumps along with the electronic controls and diagnostics. This is a good example of the business using a structured approach to explore new growth opportunities in an inexpensive manner. As far as outlook, in fiscal quarter, the second quarter 2021, we expect revenue and operating margin to decline slightly sequentially due to normal seasonality and the lower number of shipping days in the quarter. I will now turn the call over to Ademir, who will discuss our quarterly results in greater detail.

Thank you, David, and good morning, everyone. First, Our electronic segment and vaccine-related storage demand at our scientific segment benefited results in the quarter. In addition, our cost efficiency and operational initiatives, which will continue throughout the fiscal year, are providing tailwind to our results. As previously communicated, we are well-positioned to deliver over $7 million in annual savings related to cost actions. Our financial position remains strong with substantial liquidity and low leverage, complemented by consistent cash flow generation and ongoing cash repatriation efforts. In addition, we have also implemented several initiatives in the area of tax planning and interest expense that will further add to our cash position. Now let's turn to slide 9, fiscal first quarter 2021 income statement summary. On a consolidated basis, total revenue declined 3% year-on-year to $151.3 million. This reflects organic revenue decline of 8.2% year-on-year, mostly due to the economic impact of the COVID-19 pandemic. and many more. In addition, AFFEX contributed 1.4% offset to the organic revenue decline. Growth margin decreased 70 basis points, primarily due to a decline in volume and increased material cost year on year. and many more. In the last two years, we have seen a significant increase in our operating margin, mostly in electronics. On a sequential basis, gross margin increased 290 basis points, reflecting cost outcomes, productivity actions and favorable product mix. Our adjusted operating margin was 11% compared to 11.3% a year ago. Interest expense decreased approximately $600,000 year on year, mostly due to a lower overall interest rate as a result of the variable to The tax rate of 22% in the quarter represents 580 basis points decreased year-on-year, largely due to various tax planning strategies we have started to implement. Adjusted earnings per share were 96 cents in the first quarter of 2021 compared to 91 cents in the first quarter of 2020. Now, please turn to slide 10, fiscal first quarter 2021 free cash flow. We remain a consistent generator of free cash flow. We reported free cash flow of $4.4 million compared to $2.8 million in the first quarter of 2020. This increase primarily reflects lower capital spending with $4.8 million in the first quarter of 2021 compared to $6.7 million a year ago. Capital investments in the first quarter of 2021 were focused on maintenance, safety, and our highest priority growth initiatives. Next, please turn to slide 11, a summary of standards and capitalization Strandex had net debt of $106.2 million at the end of September compared to $80.3 million at the end of June of 2020. Increase in net debt is due to the rent cost position which was financed with cash on hand. Net debt for the first quarter of 2021 consisted primarily of long-term debt of $200 million and cash-in equivalents of $93.7 million out of which $75.7 million was held by foreign subs. We also had approximately $206 million of available liquidity at the end of September. The company's net debt to adjusted EBITDA leverage was 1.1, with a net debt to total capital ratio of 18.2% and interest coverage ratio of approximately 9.9 times. We also continue to proactively identify opportunities to further add to our financial strength. We have started to implement several tax planning and saving initiatives, including implementation of strategies to optimize U.S. tax costs on global intangible low tax income, implementation of various foreign tax credit optimization strategies, that are expected to provide us the ability to utilize additional credits and the filing of amended returns to take advantage of regulations that have recently been finalized. As a result, our tax rate in fiscal 2021 is expected to be approximately 22% or 500 basis points lower than fiscal 2020. We expect these actions to result in cash savings of $2 to $3 million in fiscal 2021. We also expect approximately $1.5 million in annual interest expense savings due to the previously announced floating to fixed rate interest swaps. We also repatriated $8 million in the first quarter and expect to repatriate $35 million this fiscal year. From a capital allocation perspective, we had an active quarter. Earlier in the quarter, we announced the acquisition of Renko Electronics for approximately $28 million, which we financed with cash on hand. We also repurchased approximately 87,000 shares for $5.1 million in the quarter, There's approximately $38 million remaining under the Board's current repurchase authorization. We declared our 225th consecutive quarterly dividend of $0.24 per share, a 9% year-over-year increase. And finally, we expect capital expenditures to be approximately $25 to $28 million compared to our prior expected range of between $28 to $30 million and actual expenditures of $19 million in fiscal 2020. I will now turn the call over to David for closing comments.

Thank you, Ademir. If everyone could please turn to slide 12 for closing thoughts and key takeaways. In the second quarter of fiscal 2021, we expect consolidated revenue to be flat to slightly above the first quarter of 2021 with a slight to moderate increase in operating margin. Several assumptions underpin this outlook. We expect the electronics and engraving segments to have a slight sequential revenue increase due to an increased level of customer activity. At Scientific, we expect a moderate sequential revenue increase as end market momentum builds to prepare for vaccine delivery. Engineering technologies revenue is expected to be similar to fiscal first quarter 2021 as commercial aviation markets stabilize with a slight increase in operating margin from productivity and cost reduction activities. At Specialty Solutions, we expect revenue and operating margin to decrease slightly, primarily due to seasonality and the lower number of shipping days in the quarter. In general, we expect continued growth and margin improvement as we move through fiscal 2021. In addition, we see attractive growth opportunities across the businesses. In the near term, we anticipate the opportunity for COVID-19 vaccine storage to be between $10 and $20 million in the fiscal year. The growing funnel of opportunities in electronics will deliver an incremental $11 million in sales in the fiscal year. Previous cost actions complete and expected to deliver over $7 million in savings for fiscal 21. Operational excellence initiatives are gaining momentum across all businesses. We are also strengthening financial flexibility with strong free cash flow generation, continued cash repatriation, and new tax initiatives. In sum, we're very well positioned to further build our higher margin business segments into more significant platforms with customized, differentiated solutions supported by deep technical and applications expertise. Operator, please open the line for questions.

Thank you. We will now begin the question and answer session. To ask a question, you may press star then one on your touchscreen phone. If you're using a speakerphone, we ask that you please pick up your handset before pressing the keys. To withdraw your question, please press star then two. Today's first question comes from Chris Moore with CJS Securities. Please go ahead.

Hey, good morning, guys. Good morning. Good morning. Yeah, maybe we could start with engraving. You know, the engraving margins were certainly rebounded more quickly than we were expecting. Can you talk a little bit further in terms of, you know, kind of what was behind that?

Well, yeah, last quarter we announced that the entire industry kind of took a pause as tools couldn't be released from tool shops into our shops. in part because these collaborative meetings couldn't take place. So that has really opened up. So obviously we saw volume increase. But at the same time, we put a lot of effort into improving the operating disciplines, integrating particularly in North America. You know, I mentioned our VP of Operations, Jim Hoeven, is working closely with that business, improving labor management practices and leveraging the investment we made in the last few years in a global ERP system so we can just improve our local operating disciplines in a common way around the world. And it's first really showing up in North America.

Got it. Helpful. Maybe on the electronic side, talk a little bit more about the improvement there, the Renko integration. Sounds like Renko's off to a pretty good start.

Yeah, we are really pleased with the The first few months of integration with Renko. First of all, culturally, it's a great fit. You know, they'll be a great member of the Standex family. And they're bringing some things to us. For example, they had some practices they put in place for their COVID response protocols that we've been able to duplicate, that we learned from. I mentioned in the script earlier that the cross-selling opportunities are ahead of what we expected. So the sales channels are really coming together well. and their profitability is running ahead of our model. So we're very happy on that front. More broadly in electronics, North America, Asia was stronger than we thought it would be and Europe really started to come along towards the last part of the quarter. And if you cut it between the sensor and the magnetics business, you're seeing a lot of strength in the magnetics customers here, especially in North America.

Got it. I appreciate that. Just in terms of the $7 million in cost savings, fiscal 2021, maybe talk a little bit more about the expected cadence, and I assume that all that will flow through into fiscal 2022.

Yes, Richard, that's correct. We feel really good about where we are with all of our cost-saving actions. We should continue to see the readout as we move through this fiscal year, and we fully expect that to continue through fiscal 2022.

And then in terms of, you know, kind of that cadence during fiscal 21, is it more back-loaded on the savings, or is it kind of smoother?

Most of the savings year-to-year we will see is probably in the first three quarters. You know, in the fourth quarter of last fiscal year, we had about a $4.2 million worth of savings, and some of those are not going to repeat. So, you know, Q1 to Q3 is where you would see most of that $7 million readout.

Got it, thank you. And then on the tax rate side, looks like 22% for fiscal 21. Obviously, we don't know what impact the elections will have on tax rates moving forward, but from where you sit today, is there any reason to think that that rate would not flow into fiscal 22?

Chris, based on where we sit today, we believe that the average rate in fiscal 2022 might tick up a little bit, maybe to 23%, but still significantly lower than what was our tax rate in a prior fiscal year. Again, kind of where we sit today without knowing if there's going to be change in administration or new tax laws.

Got it. Very helpful. All right. I'll jump back in line, let somebody else have a chance. Thanks, guys.

Thank you. Thank you.

Hello, Rocco. Anyone else in the question queue?

Oh, I apologize. My line was on you. Our next call comes from Chris Powell with . Apologies.

Good morning, everyone. Good morning, Chris. Good morning. I wanted to highlight here the scientific segment. David had mentioned the 10 to 20 million of incremental sales as we look to this fiscal year. If we look below the top line, You had 24.5% operating margin this quarter. We expect some improvement on that going into Q2. Perhaps you can talk a little bit more on the margin line, how we expect maybe the remainder of the year to play out as we look at investments you are making in this segment versus opportunities for margin expansion.

Yeah, well, I think the margins in the In those low 20s, it's certainly a reasonable expectation. This business levers well. The products that we'll sell are standard products, so they will deliver the same margins as our core business. The investments we're making in the business are largely in the short term to support the growth, of course, but we're also investing in engineering capability. We have a very active new product development funnel and As the quarters roll on, we'll begin announcing some new products. So our plan here is to invest, but invest appropriately. And, you know, we're not going to load the cost structure and reduce the EBIT rates. So continue to expect EBIT rates that you've seen in this business.

Okay, perfect. That is helpful. If we shift back to engraving, following up on some of the previous questions, good margin recovery sequentially in the quarter. Some of that is tools being released into the quarter from Q4. If we strip that out, margins still came in at around the same level?

Yeah, well, yeah, it was, you know, this business levers very nicely, so the volume is important because it's, with a high fixed cost basis of service business. It's a 60% to 70% levering business. But, you know, the example we provided in here, we are delivering work with fewer labor hours in North America, and that is a lasting productivity improvement in the business.

Okay, very helpful. And that, you see us... and many more.

and these practices that are being put in place, they are the standard work and approved operating disciplines that will deliver consistently better results. So yes, we're counting on them continuing.

Great. My last question is on a level basis, more specifically, perhaps how they did on a monthly basis in the quarter. If we look at that trend and what you're seeing currently in October, has there been any shift or change in the trend line? Or perhaps you can talk about how the mix was as it played out from month to month.

Say, Chris, you cut out for just one word in there, which was, were you referring to a specific business or the corporation overalls? in that question.

Corporation overall, if we were to split it out by months in the quarter and then what you're seeing in October, any change in behavior?

No, I wouldn't say so. The outlook statements we gave throughout kind of reflect our aggregate view of the business and I think, you know, we're looking for sequential growth through the year and we're seeing that in our backlog and our customer activity. and as you go through it, you know, segment by segment, you know, we modulate those statements based on what we're hearing from our customers.

Got it. That's all I have for now. I'll hop back in the queue. Thanks.

Thank you. And our next question today comes from Chris McGinnis with Sidonian Company. Please go ahead.

Matt, good morning. Thanks for taking my call in the next quarter. A lot of my questions have somewhat been answered, but I guess if we could just talk about, not to stay on the engraving, but just the benefit you saw from kind of the productivity gains that you put in place. You know, when you look across the five segments, you know, where are the other areas that you're really kind of focused on driving productivity gains with Jim now at the helm there?

Well, you're roughly, Ademir may correct me here, but if I look at the quarter sequentially, Q1 compared to Q4, there's probably 500 to 800K in engraving from productivity. And we gave a great example of productivity in engineering technologies, which actually is a little farther down the line in adoption of lean and driving of productivity improvements, in part because of the markets they serve. very demanding customers who require them to be a little more advanced. So a couple years ago, we recognized that in the plant where we manufacture domes for spacecraft, we were headed for capacity constraints in the coming year or two. So they started a project to reduce setup time, and then just flow downstream from there from the critical machines to expand capacity. And as of today, they've expanded their capacity by 20%. And that's a great example. We obviously lever that fixed cost structure across 20% more volume. So that's, that's a great example. In both electronics and scientific, you know, Jim and his team are working with those businesses to put in place sales, inventory and operations planning process. So there's a tighter coupling between the demand forecast from sales and the capacity planning and operations. And especially in a couple of those where we have long supply chains with our suppliers, getting that balance right when you've got a 12, say, for example, a 12-week lead time on some components, and we quote a three- to four-week lead time to customers, the more disciplined PSYOP process there will will help them optimize their cash management and their on-time delivery over time. So Jim's working across all the businesses to varying degrees, depends on what their needs are, with a particular emphasis in the near term on engraving in North America.

Yeah, and Chris, if I can add, you know, engraving is all about labor management because there's very little material content in the business. So, you know, if we can solve labor management, you know, that business levels up pretty nicely when the volume is there.

Yeah. And what's the success that Jim's having versus maybe the prior? I know, you know, I think you had a couple people in that position before. What's the difference that Jim brings that's making it so successful so early on?

Yeah, you know, the first time, the first couple cracks at this, we filled a job, the OPEX role, with someone who was a good, with individuals who were great teachers, who could run events, who could help with, you know, with process improvements. Jim was an operator. He was a plant manager. He was a P&L leader. So as opposed to simply being a teacher, an instructor, an event leader, he also knows how to run a business. And so that additional credibility has helped him to sit down with our businesses, really assess the entirety of the problems they have, and with a lot of credibility, outline the plan of attack. You know, having that hands-on experience in the past was a critical differentiator for Jim.

And then just, you know, I think some of the comments in the release around opportunities around M&A. Can you just expand on what you're kind of seeing? Have you seen more companies since last quarter, you know, approach you? Can you just talk about how your pipeline is setting up for M&A, potential M&A going forward?

Yeah. Yeah, so our... We have quite an active funnel. We continue to work the pipeline all year long, although most people took a step back throughout this year just to see how the market would develop. But we continue to maintain our relationships and our contacts with the owners of these businesses that we think at some point will be good opportunities. And I would say now as we get closer to the end of the year, there are a couple of them. are starting to simmer and look like they may become actionable in the coming quarters. I guess I would have to say I was surprised a little bit that we didn't get as many unsolicited, unexpected inbound opportunities coming to our attention. We had kind of crossed our fingers that coming into this year with a strong balance sheet, there'd be some unexpected opportunities that came up, but we did not see too much of that. You know, we still have a great funnel. We have a great balance sheet and, you know, think that the string of successful acquisitions will continue into the next year.

Great. I appreciate it. Thanks for answering my questions and good luck in Q2.

Yeah, thank you, Chris.

And, ladies and gentlemen, as a reminder, if you'd like to ask a question, please press star then 1 at this time. We'll pause momentarily to assemble our roster. And ladies and gentlemen, this concludes the question and answer session. I'd like to turn the conference back over to the management team for any final remarks.

All right. Thank you, Rocco. In closing, we are off to a solid start in fiscal 2021. I'm very excited at the results we were able to communicate today. I'm very proud of the employees globally around Standex who have responded to these unprecedented circumstances we all live in with great agility and adaptability. and a heightened degree of collaboration and teamwork around the world, making us all proud to be part of this company. I also want to thank shareholders for your continued support and your interest in Standex, and we look forward to speaking with you again in our second quarter fiscal 21 call. Thank you.

And thank you, sir. This concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day. Thank you.