Standex International Corporation

Good day and welcome to the Standex International Fiscal Fourth Quarter 2021 Financial Results 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 your touchtone phone. To withdraw your question, please press star then two. Please note, today's event is being recorded. I would now like to turn the conference over to Gary Farber with Affinity Growth Advisors. Please go ahead, sir.

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 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 Stanix's most recent annual report of Form 10-K, as well as other SEC filings and public announcements for a detailed list of risk factors. In addition, I'd like to remind you that today's discussion will include references to the non-GAAP measures of EBIT which is earnings before interest and taxes, adjusted EBIT, which is EBIT excluding restructuring, purchase accounting, acquisition related expenses, and one-time items, 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, EBITDA margin, 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. 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. Stanex believes that such information provides an additional measurement and consistent historical comparison of the company's performance. On the call today is Standex's Chairman, President, and Chief Executive Officer, David Dunbar, and Chief Financial Officer and Treasurer, Adamir Sarcevic.

Thank you, Gary. Good morning and welcome to our fourth quarter fiscal 2021 conference call. I'm very proud of our accomplishments and what has been an unprecedented and challenging environment over the past year and a half. I want to thank our employees, executive teams, and the Board of Directors for their contributions and dedication in making fiscal 2021 a highly successful year for STANDEX. I look forward to further collaboration as we enter fiscal 2022 with a strengthened operating profile and some very new and exciting opportunities in front of us. Now, if everyone can turn to slide three, key messages. We ended fiscal 2021 with strong fourth quarter results and solid execution on our growth strategy. At the electronics segment, approximately two-thirds of the 63% year-on-year revenue increase in the fourth quarter reflected organic growth with continued broad-based geographical recovery, including increased demand for relays in solar and electric vehicle applications. As reflected in our backlog trends, we are continuing to see strong demand across many of our product lines and all geographies at Electronics. Our scientific segment also had a strong quarter with solid revenue and operating income growth year on year. We also have an active pipeline for new product development at scientific and recently received our first product patent in this segment, which I will discuss later in the call. At the engraving segment, revenue increased approximately 16% year on year, reflecting a favorable geographic mix, project timing, and increased soft trim product demand. Execution on our portfolio transformation strategy has strengthened both Standex's operating performance and strategic positioning as we further expand our end market focus and introduction of new products. From a financial standpoint, our new segments are focused around high-quality businesses that optimize our growth and margin profile. Total company backlog, realizable in under one year, increased 19% sequentially in fourth quarter fiscal 2021 with strength in electronics, specialty solutions, and engineering technologies. On a consolidated basis, we reported an adjusted operating margin of 12% in fiscal 2021, representing a 90 basis point increase year on year with our fourth quarter margin of 13.3%, the highest quarterly margin Standex has ever reported. The reshaping of our portfolio has also enabled us to accelerate our investment in resources to aggressively pursue opportunities in end markets that have healthy growth prospects. such as electric vehicles, renewable energy, and smart grid. Our strengths and competitive advantages in these markets drive innovative product solutions which leverage our technical and applications expertise and resonate with our customers. For example, we've been partnering with a major global energy company on a multi-year development effort and have recently delivered prototype modules to support projects in the renewable energy sector. The potential to scale production to support this project and to commercialize other exciting and innovative organic growth opportunities throughout the company has reached a level that requires executive oversight. It marks another step on our journey toward becoming a high performing industrial operating company. Last night, we announced the creation of a chief innovation and technology officer role in response to these types of new end market and growth opportunities on which we plan to capitalize. We are promoting Flavio Mascara, president of engraving, to this new innovation and technology role, which will also be a member of the Standix corporate executive team. Flavio joined our engraving segment in July 2006 as VP of Europe and has led our efforts into successfully transforming the engraving segment into a global texturizing business. He has also championed growth laneways in tool performance services and expanded into the growing soft trim tool market. His innovative approach has enabled engraving to maintain its position as the technology leader globally. Flavio's depth of experience in innovation and new technology development and strategic insights will be a tremendous asset company-wide. I am also pleased to announce that Jim Hoeven will step into the role of president of the engraving segment. Jim joined Standex in February 2020 as vice president of operations and supply chain. In September of 2020, Jim also took on responsibilities as interim vice president and general manager in North America for the engraving segment, while maintaining his role as VP of operations and supply chain for Standex. Under Jim's guidance, the North American business has made steady progress strengthening operational excellence processes, developing talent, and achieving results. We have also begun a process to address Jim's prior role of corporate VP of operations and supply chain. Underpinning our growth strategy is an active pipeline of productivity and efficiency initiatives. This is enabling us to mitigate the impact of supply chain issues and material and wage inflation, which is affecting the broader industrial sector. A few of our actions, which I want to highlight, include continued lean initiatives implemented across our production plant footprint, enhanced strategic sourcing to drive direct material synergies. In addition, our focus on mitigating material inflation and improving our composition in the electronics segment through changes in reed switch production and material substitution, is expected to be substantially complete by the end of fiscal 2022. We are in a very strong financial position to pursue organic and inorganic growth opportunities given our significant financial flexibility as a result of our strong balance sheet and liquidity position and consistent cash flow generation. Adamir will discuss our financial performance in greater detail later in the call. As far as our outlook, In fiscal 2022, we expect stronger financial performance reflecting positive demand trends, the impact of additional productivity initiatives, and our significantly strengthened operating profile. In the first quarter of fiscal 2022, we expect a slight decrease in revenue, but a similar operating margin compared to fourth quarter fiscal 2021. Now, please turn to slide four, and I will begin to discuss our segment financial performance, starting with electronics. Revenue increased $28 million or 62.7% year-on-year, reflecting a 42.2% organic growth rate or an approximate $19 million increase. The Renco acquisition contributed approximately $7.3 million in revenue and continues to be a highly complementary fit with our magnetics portfolio. Our electronics operating margin increased to 21.6% compared to 13.1% in the year-ago quarter, reflecting operating leverage associated with revenue growth and productivity initiatives, partially offset by increased raw material cost. The expansion of the electronics segment through new markets such as electric vehicles and renewable energy, as well as the impact of prior acquisitions like Agile Magnetics are adding to our prospects. We continue to leverage the sales synergies of our Agile acquisition in markets such as semiconductors and through the expanded capabilities it has provided us. In particular, MBOs contributed in excess of $15 million in fiscal 2021, compared to our prior estimate of $12 million on our third quarter earnings call. Our pipeline remains healthy, with total segment backlog realizable under a year, increasing approximately $22 million, or 23% sequentially in the fourth quarter, as we continue to see strong growth in reed switch-based products and magnetics applications. Sequentially at the electronic segment, we expect a slight increase in revenue and a moderate increase in operating margin in first quarter fiscal 2022, reflecting continued end market strength in reed switch and relay products, as well as further growth in the North American magnetics market. Please turn to slide five for a discussion of the engraving segment. Revenue increased approximately $5 million, or 15.9% year on year, with operating income growth of approximately $3.1 million, or 119% year-on-year, reflecting a favorable geographic mix, timing of projects, and increased soft-trim product demand. Operating margin increased to 15.4% compared to 8.1% in the year-ago quarter, reflecting the volume growth combined with segment productivity and our cost initiatives. With our GS engineering acquisition now integrated, We have further globalized the business and leveraged its technological advantages, resulting in a very strong backlog for soft trim demand as the auto industry focuses on interior comfort of vehicles and increasingly replaces leather with sustainable materials. Laneway sales and engraving were approximately $14.8 million, representing a 9% increase sequentially and greater than 50% increase year on year, including growth in soft trim tools, laser engraving, and tool finishing. Sequentially, in first quarter fiscal 2022, we expect a slight to moderate revenue and operating margin decrease, primarily due to the timing of texturization projects and regional mix. We do expect continued strength in soft trim demand. Turning to slide six, the scientific segment. Revenue increased approximately $8 million, or 62.7% year on year, reflecting positive trends in pharmacy chains, clinical laboratories, and academic institutions, primarily attributable to demand for COVID-19 vaccine storage. Operating income increased 48.7% year on year, reflecting the volume increase balanced with investments to support future growth opportunities and higher freight costs. At the scientific segment, we have added to our engineering and product teams to further develop a growing pipeline of potential new products. Pictured on slide six is our recently patent-approved controlled autodefrost refrigerated solution, or CAD, designed for safe and effective frozen medication storage for end markets, such as pharmacies, labs, and clinics. This is the first product in the marketplace which enables autodefrost while guaranteeing vaccines remain below critical temperatures, thus eliminating the need to manually defrost the freezer. The development of this product is reflective of our focus on increasing the exposure proprietary technologies and growing our intellectual property portfolio. At scientific, in fiscal quarter 2022, we expect a moderate sequential decrease in revenue and a slight decline in margin, reflecting lower demand for COVID-19 vaccine storage, refrigeration, and increased freight costs partially offset by price and productivity actions. Turning to the engineering technology segment on slide seven. Revenue decreased $5.7 million, or 21.8%, and operating income was $1.1 million lower, representing a 25.6% decrease year on year. The decreases primarily reflected the absence of the recently divested in genetics business and the economic impact of COVID-19 on the segments and markets. On a sequential basis, operating margin increased to 15.1% compared to 6.2% in third quarter reflecting a continued broad-based sequential end-market recovery and favorable mix complemented by ongoing productivity initiatives. Sequentially, we expect a slight to moderate decrease in revenue and operating margin, reflecting the timing of projects. We are entering fiscal 2022 with an active new business pipeline, particularly in the space and aviation sectors. Highlighted on slide seven are numerous aerospace and space platforms we are aligned with. reinforcing the strength and appeal of our spin-forming capabilities, which continue to resonate with customers. Please turn to slide eight, specialty solutions. Specialty solutions revenue increased approximately $1.7 million, or 7.1%, as its end markets, particularly in food service and specialty retail, continued to recover. Operating income decreased approximately $700,000, or 18.7%. This reflected the impact of work stoppages, which have since been resolved and material inflation which we are seeking to recover through pricing actions. Highlighted on slide eight is our Procon designed next generation helical gear pump for food and beverage applications such as coffee, espresso, milk foaming, syrup, and reverse osmosis. We believe this product is approximately 20% more energy efficient than current gear pump technology with a longer service life. In first quarter fiscal 2022, we expect a slight sequential increase in revenue and operating margin, primarily due to growth in merchandising and the pro-con pumps business, partially offset by the impact of a prior work stoppage that has been resolved. I will now turn the call over to Ademir, who will discuss our financial performance in greater detail.

Thank you, David, and good morning, everyone. First, I will provide few key takeaways from our fiscal fourth quarter 2021 results, which exhibited strength across key financial metrics. We had solid financial performance in the fourth quarter, as both revenue and adjusted operating margin increased sequentially and year-on-year. From a revenue perspective, four of our five segments reported year-on-year growth, led by the electronics and scientific segments, with total organic growth over 20% as compared to fiscal four-quarter 2020. In addition, from a margin standpoint, adjusted operating margin of 13.3% is the highest quarterly margin that Standex has ever reported, reflecting successful leverage on our volume growth continued readout of price and productivity actions, as well as impact of the strategic portfolio actions David highlighted in his comments. Our cash generation and liquidity metrics also continue to be very strong. In the fourth quarter, we reported free cash flow of approximately $26 million, or 36% year-on-year increase. In addition, we generated free cash flow to GAAP net income conversion rate well in excess of 100% in fiscal 2021. Our net debt to EBITDA interest coverage ratio, and available liquidity all improved sequentially. We are entering fiscal 2022 with a very strong financial profile supported by positive demand trends, our active pipeline of productivity and efficiency actions, and our expectation for continued solid cash generation. Now let's turn to slide nine, fourth quarter 2021 income statement summary. On a consolidated basis, total revenue increased 26.6% year-on-year from $139.4 million to $176.4 million. Revenue increase primarily reflected strong organic growth across most of our segments, positive contribution from the RENCO acquisition, and favorable effects partially offset by the divestiture of the genetics business in the third quarter of fiscal 2021. Organic growth was 20.5%, while RENCO contributed approximately 5.2%, and FX contributed 3.5% increase to the revenue growth. On a year-on-year basis, our adjusted operating margin increased 460 basis points to 13.3%, reflecting operating leverage associated with revenue growth, readout of price and productivity actions, and profit contribution from Renco, partially offset by the impact of work stoppages in the specialty solution segment. In addition, our tax rate was 20.7% in the fourth quarter of 2021, compared to 26.7% in the fourth quarter of fiscal 2020. We expect a tax rate in the 24% range in fiscal 2022 with a slightly higher tax rate in the first quarter. Adjusted earnings per share of $1.40 in the fourth quarter of 2021 compared to $0.65 a year ago. Please turn to slide 10, fourth quarter 2021 free cash flow. Our solid working capital performance and execution was evident on several fronts. We generated free cash flow of $26.4 million in the fiscal four quarter of 21 compared to free cash flow of $19.5 million a year ago. In fiscal 2021, we achieved 118% free cash flow to get net gap net income conversion, inclusive of approximately $8.1 million in pension payments made during the year. Next, please turn to slide 11, a summary of Standex's capitalization structure and liquidity statistics, which remain very strong. Standard had net debt of $63.1 million at the end of June, compared to $82.1 million at the end of March, reflecting free cash flow of approximately $26.4 million, partially offset by $5 million of stock repurchases, along with dividends and changes in foreign exchange. Net debt for the fourth quarter of 2021 consisted primarily of long-term debt of $199.5 million and cash and cash equivalents of $136.4 million, with approximately $92 million held by foreign subs. Our liquidity metrics reinforce our significant financial flexibility. Standex's net debt to adjusted EBITDA leverage ratio was approximately 0.57 at the end of the fourth quarter, with a net debt to total capital ratio of 11.1%. The company's interest coverage ratio increased sequentially from 11.4 times to 13.1 times at the end of the fourth quarter. We had approximately $245 million of available liquidity at the end of the fourth quarter and continued to repatriate cash with $6.8 million repatriated during the quarter. In total, we repatriated approximately $38 million in cash in fiscal 2021, slightly ahead of our initial expectations. From a capital allocation perspective, we repurchased approximately 50,000 shares for $5 million in the fourth quarter. In fiscal 2021, we repurchased a total of 267,000 shares at an average price of approximately $79 per share. There is approximately $22 million remaining on our current repurchase authorization. We also declared our $228 consecutive quarterly cash dividend on July 22nd of $0.24 per share. Finally, we expect capital expenditures between $25 and $30 million in fiscal 2022 compared to $21.5 million in fiscal 2020. I will now turn the call over to David for closing comments.

Thank you, Ademir. If everyone can please turn to slide 12 for key takeaways. The transformation of our portfolio around businesses with attractive growth and margin profiles as well as strong customer value propositions is contributing to our solid performance. We are investing our resources into markets with healthy growth prospects and are favorably aligned with global trends which leverage our technical and applications expertise. We have an active funnel of productivity and efficiency initiatives focused on strengthening our market leadership and cost positions, which we believe will mitigate to some extent some of the near-term industry headwinds, such as raw material price increases and supply chain issues. Our financial strength and consistent free cash flow generation support a disciplined and opportunistic approach to capital allocation. In fiscal 2022, we expect stronger financial performance reflecting positive demand trends, additional productivity initiatives, and significantly strengthened operating profile. Operator, I will now open the line for questions.

Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star then one on your touch-tone phone. If you're using a speaker phone, 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 at CJS Securities.

Please go ahead. Good morning, guys. Thanks for taking a few questions. Good morning. Lots of good stuff here. You talked about delivering some prototype modules to a renewable energy producer. Could you maybe provide a little more detail there? I don't know if you can say who the customer is, potential scale, timing, anything else that you could share on that?

Yeah, of course. For those of you who have been following Standix for some years, we started talking – about what has turned into this project some years ago when our engraving business discovered that they could apply some of their process technology to improve the efficiency of solar panels. They've been working with Enel, the Italian power producer, for just over three years now on a development project in close partnership with Enel and their engineering teams, and it's It has been funded in part by ENL. And the modules we're delivering are photovoltaic modules that are intended to be made in the future from recyclable plastic. It's right in the heart of the top strategic priorities for ENL. And one of the reasons we've created this Chief Innovation and Technology Officer role is the project is getting to the point it requires a great deal of time and focus. We want to get it right, and Flavio, who's led this project from the engraving business, is a perfect person to bring this to maturity. As he's worked on it, he's actually incorporated electronics. We have some electronic scope of work in the same project, so it's actually becoming a cross-Standex project. Now, it's still development. We're still delivering modules. But we're obviously excited enough about it to be focusing some resource on it.

Got it. Very helpful. Maybe turn to margins, just electronics and engraving. Electronics margin is very strong, 21.6%. Is that sustainable moving forward?

Yeah, hi, good morning, Chris. It's Adam here. We believe it is. We have spoken about electronics getting to that 20% plus EBIT margin. The team has done a phenomenal job managing the rhodium, cost inflation, and offsetting EBIT price. A lot of good productivity action. So we believe that the 20% margin for electronics is where the business should be. And frankly, we also want to invest in the growth in this business going forward. So yeah, I mean, I think that's achievable.

Got it. That's helpful. And in terms of... Can I just say something, Chris?

In the last few quarters, we talked a lot about rhodium and the pressure that was putting on the business. Well, I tell you, the electronics team has put in place a very robust process to manage their price. They know exactly what they're quoting around the world. Every month, they're updating their price list. And this is a discipline that did not exist before this rhodium experience. So we view that as a long-term enhancement to their ability to manage their business. And it was directly responsible for a lot of the margin improvement we saw in Q4. And it just enables the team to deliver, as Adamir described, consistent margins in the future.

I got it. I appreciate it. And just in terms of engraving, so what will it take to get to that 20% level? And do you have a reasonable expectation in terms of timing? Is that a two-year process or – How should we look at that?

Yeah, I think, Chris, you know, as we mentioned, that's obviously our objective for the engraving business as well. You know, with Jim taking a global leadership role and a really good PSYOP and operating disciplines that he's putting in place along with the market recovery, you know, I think the timeframe, you know, kind of stated there is a reasonable timeframe. And, you know, we are looking to get, you know, sequential improvement as we move through the rest of the year in engraving as well. So... Yeah, I mean, I think that's what we would like to get, and that's the plan.

Got it. All right. I appreciate it, guys. I'll jump back in line.

Thank you. And our next question today comes from Chris Howe at Barrington Research. Please go ahead.

Good morning, David and Enmir.

Hi, Chris.

Good morning.

Yeah.

Well, first off, on the scientific segment, you talked about the opportunity that's out there. within small physician offices. Is there a way to think of the scientific opportunity and how you've benefited from new store rollouts during the pandemic, during the Delta variant? And as new stores roll out, will this CAD refrigerated medication storage equipment cabinet be preferred over the more traditional cabinet? And what type of financials or profit is in this CAD cabinet?

Yeah, I'll take these one at a time. So when we talked in the last year in our quarterly calls about sizing this opportunity, we identified there are just over 30,000 pharmacies that are part of national chains. There are maybe another 10,000 small independents and maybe 100,000 physicians offices, all of which could at could be locations for COVID vaccine storage. Most of our sales in the last fiscal year were into the national chains, the pharmacies. We don't have an exact count of how many of them have vaccine storage, but the sales that we recognized based on what our understanding of our market share is, is that there's probably 30 to 40 percent of those pharmacies added storage. We are now seeing orders that indicate that there are storage units going into smaller clinics, physician's offices, maybe some small rural pharmacies. Our sales through the distribution channels that service those customers are stronger than they have been in the past, so we think that that will continue. This auto defrost unit, we're very excited about. There's two messages there. It's the first patent this business has been issued, and we have a number of new products in the funnel to be released in the coming years. So we really are making progress on the technology developments at Scientific. And this does have enhanced functionality. It protects vaccines better through the defrost cycle than a typical cabinet. So this has been part of the sales we've seen in the last year. It's a growing part of our sales. And it has margins that are equivalent to our other margins. So this will help the scientific business continue to deliver the level of margins we've seen in the last few quarters.

Okay. And then Jim Hoeven is now the president of engraving. You have Flavio as the chief innovation and technology officer. You're looking to fill Jim's old role. How should we think about these moves? Is this a reflection of perhaps you're seeing more opportunity in engraving, thus the promotion of Jim as president and Flavio as an innovation officer? Perhaps there's something there within that segment that could represent either product development or adjacent moves within the segment?

Yes, the way we approach it is we first look at the growth opportunities that Flavio has been working and the technology developments that are, let's say, coming to market. And those projects have reached a phase they really need focused attention from Flavio. And he has a team with him, too. 15 to 20 people working in the development group with him that have been incubating these developments. So if you look at where Stanix has come from in the last few years, this is something we could not have done a year ago, two years ago, three years ago. We had a lot of portfolio work to do. But you see the power of the higher performing businesses that make up our portfolio now. We have more confidence in our ability to predict our results. to lean into some investments. And we, frankly, have more management time to focus on growth, new technology, and meeting with customers about their next generation concepts. So the first priority was to get this right, get the innovation and technology right. Flavio is the perfect guy to run it. Then, obviously, that leaves the president of engraving role open. Fortunately, we brought Jim into the organization a year and a half ago. He has spent a lot of time in the engraving business because, as you said, and as we've talked about, there's a lot of room there for operational improvement and consistency as they drive these concepts of standard work, labor management practices, get the full benefit out of the SAP investment we've made in the last few years. I was fortunate enough to have Jim in the stable, on the bench, and already close to the business. So that was an easy move. Now the question is, what do we need now at corporate in that VP ops role? And we're still reflecting on that. As we've talked about Jim and his role in the last year and a half, he's put in place some standard work. from standard scorecards across the business. He has helped beef up the operational teams in our key businesses. So Electronics has a global operations organization. They've added strategic sourcing. They're adding lean. So we're putting talent on the ground where it needs to be done. In engraving, obviously, Jim will bring a lot of horsepower to engraving. So the role will change a little bit, but there still will be a corporate operations role As time goes on here, we'll communicate more specifically what we'll do and what the expectations of that role will be.

Okay. Then my last question, then I'll hop back in the queue. Within the segment details, you noted some favorable geographical mix. Can you talk about the business on a geographical basis? What's been changing over the last three to four months and How do you see that continuing in favor for the company, or what challenges might be out there on a geographic basis?

Yeah, Chris, it's Adam here. We have seen strength across all geographies, if you will. When we talk a little bit about geographic mix, it primarily relates to either electronics or engraving business, and mostly engraving because our business in Asia or in China is a very profitable business. So depending on some of the cycles in that business, that impacts the overall margin for engraving. That's kind of the reference when we talk about the regional mix. But overall, we have seen strength across all the regions globally, and especially in the United States, we have benefited from that.

Okay, great. Thanks for taking my questions.

And ladies and gentlemen, as a reminder, if you'd like to ask a question, please press star then 1. Today's next question comes from Chris McGinnis. It's the Dodian Company.

Please go ahead. Good morning. Thanks for taking my questions in the next quarter. David, I think just kind of following up on some of the last questions or the one before that, just around the strength of the operations this quarter, the margin profile, you know, it was due to rationalization of the portfolio. I think you just talked about the portfolio today and kind of your view around, you know, the different segments.

Yeah, it helps to compare it to where we were a few years ago. A few years ago, we had some businesses that just weren't going to meet our expectations, and they competed in different ways than our successful businesses do. They had, depending on the business, a relatively weak position in a tough market, and we really had to take some action. So we had priorities entering fiscal years, going back three, four years ago, to divest some of those non-core businesses that were underperforming. Now if you look at the businesses that we have in the stable, the seven P&Ls in STANDEX, there's three of them in the specialty solutions group. These are all businesses that are somewhere on the spectrum from good to really, really good businesses and they are holding their own. They have good track records of cash generation and margin generation. You know, we're managing them for growth, profit, and cash. That doesn't rule out that in the future that we may continue to trim the portfolio. It would have to be the right price for the right business at the right time. But right now, a lot of the management attention is directed towards growing the businesses and these terrific opportunities we have in renewable energy, the electrification of the world, smart grids, electric vehicles. You know, we really have tremendous upside opportunities and are focusing on those things. But I think the trend will continue if you look at Standex in the last 10 years and you think over the next 10 years, you know, the likelihood is we'll continue to base the business on a fewer number, a fewer, larger business. platforms as we go in the future. But we don't have any pressing issues, any pressing businesses that we need to address with the portfolio move.

Okay, great. And then on the other side, obviously since you've been there, successful acquisitions, can you just talk about the outlook for NA? It's been almost a year, a little over a year, I think, since the Renko acquisition?

Yeah. We still have an active funnel, and there's a mix in the funnel of privately owned businesses, and I should say family-owned businesses. They're almost all privately owned. Some are PE-owned. And I've frankly been surprised that fewer of them than I thought have come to market this year. Some that did, as you know, it's no secret, there's a lot of money out there chasing acquisitions. And we follow the same principles we've laid out in the last few years, that these have to be strategic bolt-ons to our core businesses, compete on customer intimacy, have a strong competitive advantage, have clear synergies with our businesses, and they have to have an attractive return on investment. And some of the businesses we've looked at in this last year, and some we got fairly close to, they just didn't hit all those hurdles for a number of reasons.

Okay, great. And then maybe just one last one with a kind of space getting a little bit more traction on the commercialization. Are you on any of those programs and what are the opportunities you've seen in that marketplace? Thanks.

I'm sorry, Chris, was that about space?

Yeah, just on the space, on your space offer and what's happening in that market. Is that an opportunity for you and can you just talk a little bit about the outlook for that portion of your revenue?

Yeah, it is. I think, I don't know when the last time we talked about space, but we are on nearly all the current programs and we're working with the players on Next Generation. We've listed some of the customers we're able to talk about. Others we have confidentiality agreements with and can't discuss with them. But we see our sales in space in the coming years growing consistently. I think in this last year, I think we talked about it last quarter or the quarter before. Let me see, I'm looking at my cheat sheet here. It's been roughly 40, I think it was about 40% of our business in this last year in our engineering technologies business. And we see solid mid-single-digit growth in space through our planning horizon.

Great. Thanks for taking my questions, and good luck in Q1.

Thank you, Chris.

And ladies and gentlemen, this concludes our question and answer session. I'd like to turn the conference back over to the management team for the final remarks.

Thank you, everybody, for joining us today. It's been our pleasure to share our results in the most recent quarter. I want, once again, to thank the employees of Standix around the world who really stepped up in a very difficult and challenging year through the pandemic and delivered some very strong results, as you've seen. It continues to be a pleasure to work with our board of directors and our shareholders to help direct STANDEX to reach our full potential. We look forward to coming back to you next quarter to report on our Q1 results. 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.