Standex International Corporation

Good day and welcome to the Standex International Fiscal Third Quarter 2022 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 a touch-tone 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 Clearview Advisors. Please go ahead.

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-GAP measures included 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 the 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. A reconciliation from such non-GAAP measures to the most analogous GAAP measures may be found in the company's earnings release issued yesterday. On the call 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 fiscal third quarter 2022 conference call. Our momentum continued in our fiscal third quarter with solid financial performance. a healthy pipeline in growing end markets, and good execution by our global teams. Our repositioned business portfolio is increasingly aligned with sustainable global trends, and we are expanding our range and penetration of innovative solutions. I want to thank our employees, our executives, and the board of directors for their continued dedication and support. Now, if everyone can turn to slide three, key messages. Revenue and consolidated adjusted operating margin continue to increase both year-on-year and sequentially with order strength, share gains, and productivity initiatives, all significant contributors. Stanix revenue growth was broad-based, with four of our five segments increasing year-on-year and sequentially. In particular, the electronics segment delivered record quarterly sales of nearly $80 million. We continue to see strong demand globally across many of our product lines. Electronics backlog, realizable under a year of approximately $151 million at the end of the third quarter, represented a 57% year-on-year and 5% sequential increase. In addition, specialty solutions segment revenue increased approximately 20% year-on-year, with continued positive trends as food service equipment markets returned to pre-COVID-19 levels. Consolidated adjusted operating margin of 13.8 percent, our fourth consecutive quarter of record margin, was 160 basis point increase year-on-year and 20 basis point improvements sequentially. From a growth perspective, Stanix is aggressively pursuing new opportunities for applications in sectors with attractive growth profiles where our technology and expertise enjoy significant competitive advantages. End market trends in sectors such as electric vehicles, renewable energy, Commercialization of space and defense remained strong, while food service and commercial aviation continued to recover. Total company backlog, realizable under one year of approximately $267 million at the end of the third quarter, represented a 51% increase year-on-year, with strength at the electronics, specialty solutions, and engraving segments, and a slight increase sequentially. We continue to strengthen our customer value proposition through strategic acquisitions, In March, we announced the purchase of Sensor Solutions, a privately held Colorado-based designer and manufacturer of Hall Effect sensor products. This is a complementary technology enhancing our existing solutions in high-value sectors, such as electric vehicles, industrial automation, and medical end markets. We are already seeing substantial sales synergies as we introduce our joint product offerings through our sales channels. In addition, our previously announced solar panel project with Enel is progressing as a plant site in Brindisi, Italy, has been selected for the pilot production phase. As we navigate a challenging and dynamic operating environment, we continue to implement new tools and processes in our operating playbook. All businesses have added more frequent bottoms-up reviews of current and projected costs to respond rapidly to inflation with appropriate productivity and pricing actions. These efforts are complemented by an active calendar of lean initiatives and ongoing strategic sourcing actions. While we are seeing signs of improved efficiency in STANDEX North American engraving operations, we are also announcing today additional actions globally which will result in $2 million of annualized cost savings. In the electronic segment, we are on plan to complete our reed switch material substitution project this quarter, reducing our exposure to future rhodium inflation. In line with our disciplined and balanced approach to capital allocation, we announced today a new $100 million share repurchase program. Our portfolio continues to drive a growing number of exciting new business opportunities, and we see significant opportunities for further shareholder value creation. StandEx's balance sheet strength and consistent cash flow generation position us well to execute on this program. Adam and I will discuss our financial performance, liquidity position, and capital allocation in greater detail later in the call. Regarding our financial outlook, in fiscal fourth quarter 2022, we expect a slight sequential decrease in revenue and operating margin, but an increase year on year. The sequential quarterly decrease primarily reflects the financial impact of the COVID-19 lockdown in Shanghai, China, which we currently estimate will defer sales of approximately $7 million to $9 million from our electronic segment from the fiscal fourth quarter 2022 into the following quarter. As STANDEX enters fiscal 2023, we are well positioned for further revenue and margin improvement as end market trends remain strong. Our new business opportunity pipeline continues to grow, and our focus on continuous improvement through ongoing productivity and efficiency actions becomes further embedded in our segments. Our outlook assumes a continued macroeconomic recovery. Now, please turn to slide four, and I will begin to discuss our segment performance and outlook beginning with electronics. Segment revenue of $80 million increased approximately $15 million, or 23% year-on-year, reflecting broad end-market strength across all geographies, including renewable energy, electric transportation, solar, and military aerospace markets. The electronics segment had strong operating leverage, with an approximately 24% segment margin resulting in $19 million in adjusted operating income, or a 56% year-on-year increase. This was due to revenue growth, pricing, and productivity actions. We continue to enjoy a favorable mix between well-established relationships and new customers. First-year sales from new business opportunities are forecast to be approximately $17 million in fiscal 2022, a 37% increase year-on-year, and our MBO funnel has grown to approximately $65 million. an approximately 10 percent increase year-on-year. The picture on slide four highlights a concrete example of how our customer intimacy model creates lasting, deep relationships. In this case, an initial single application in 2018 opened the door to future opportunities, expanding the relationship to over 10 applications and $4 million of annual sales. Regarding our fourth quarter fiscal 22 outlook, we expect a moderate sequential decrease in revenue and operating margin despite our growing backlog and strong end market demand. Headwinds from the COVID-19 lockdown in Shanghai, China, will push some sales into the following quarter and will be only partially offset by continued strong demand across key end markets. Please turn to slide five for a discussion of the engraving segment. Revenue of $37 million increased just over 3% year on year due to positive trends in North America and soft trim demand. Operating income of $5.7 million grew 27% due to volume growth as well as efficiency and productivity actions. Laneway sales of approximately $15 million increased nearly 14% year-on-year due to positive trends in soft trim tools, laser engraving, and tool finishing. The picture on slide five highlights a significant texturizing opportunity with a recent customer. Through our one-partner solution, we are able to offer a comprehensive solution on a global basis from design, prototyping, and execution of the final product, a significant competitive advantage. In this case, we designed the texture in Europe and then delivered the engraving with our customers' chosen toolmakers in Asia. In regard to our fiscal fourth quarter outlook, we expect a slight sequential decrease in engraving segment revenue and operating margin due to the timing of projects and geographic mix. We also expect continued growth in our soft trim offering. Now turn to slide six, the scientific segment. As expected, scientific revenue of $19 million decreased approximately $5 million year on year, or 22%, reflecting lower demand for COVID-19 vaccine storage, partially offset by sales in pharmaceutical, clinical laboratories, and academic institution and markets. Operating income of approximately $4 million decreased approximately 1.6 million, or 28%, due to lower volume and higher freight costs partially offset by pricing actions. As highlighted on slide six, the pace of new product introductions at Scientific is steadily increasing. The Scientific segment is the first in the industry to launch stability and temperature test chambers with natural refrigerants and variable speed compressors with a patent application pending. In our fiscal fourth quarter, sequentially we expect revenue to be similar and operating margin to decrease slightly. We expect strong demand from smaller regional pharmacies and doctors' offices to offset lower sales from large national pharmacy chains. Our new product development effort remains very active, positioning us well for future new sources of revenue with a focus on innovative proprietary technologies. Turning to the engineering technology segment on slide seven, Revenue of approximately $21 million increased $1 million, or nearly 5% year-on-year, on continued growth in commercial aviation, defense, and medical end markets. This was partially offset by the absence of the previously divested and genetics business, which contributed approximately $4 million in revenue to last year's third quarter. Operating income of $2 million increased approximately $1 million, or 87%, reflecting volume growth and project mix. As highlighted here, engineering technologies is expanding its European presence. Pictured are an aluminum tank solution delivered to a large European spacecraft manufacturer and an example of Standex's titanium hot forming efforts at our SpinCraft UK site. Besides our significant technical and market expertise, we offer a cost-effective locally manufactured solution for the fast-growing European space sector. On a sequential basis, we expect fiscal fourth quarter revenue to be similar to slightly higher due to strength in commercial space as we secure an increasing number of new business wins. We expect a slight to moderate increase in operating margin due to leverage associated with volume and productivity initiatives. Please turn to slide eight, specialty solutions. Specialty solutions revenue of $32 million increased to just over $5 million, or 20% year-on-year, due to growth in food service equipment and refuse in the markets. Operating income of $3.6 million decreased approximately $600,000, or 15%, reflecting the impact of material inflation and increased freight costs, primarily in the hydraulics business, partially offset by volume growth and pricing actions. Order trends are strong, with specialties backlog realizable under a year of $48 million, increasing approximately 170% year-on-year and 7% sequentially. Pictured on slide eight reflects a recent redesign of our successful package X cylinder to further improve its operating life. In the fiscal fourth quarter, we expect a slight sequential increase in revenue and moderate improvement in operating margin. This reflects increased production levels at the hydraulics business unit and solid demand in display merchandising, which we expect to further leverage through pricing and productivity actions. I will now turn the call over to Adam here to discuss our financial performance in greater detail.

Thank you, David, and good morning, everyone. First, I will provide a brief summary of our fiscal third quarter 2022 results. We delivered another quarter of strong organic growth and operating margin expansion, effectively managing challenging inflationary and supply chain environment. Organic revenue growth of approximately 14.5% year-on-year reflected record sales at the electronic segment supported by continued healthy and market trends. we ended the quarter with an overall book-to-bill ratio of approximately 1.05. In the quarter where the electronic segment had record sales, book-to-bill for this segment was still above 1, indicating continued end-market strength. Adjusted consolidated operating margin of 13.8 percent in the quarter was another record quarterly result, increasing 160 basis points year-on-year and 20 basis points sequentially as we effectively leveraged volume growth, price, and ongoing productivity actions. We were also very active with respect to our capital allocation priorities, acquiring sensor solutions, continuing to repurchase shares, and declaring our 231st consecutive dividend while generating free cash flow and further strengthening our liquidity position. In summary, we are well positioned for continued profitable growth, and market trends and our new business opportunity pipeline remain strong, and we have an active funnel of productivity and pricing actions to effectively address inflationary challenges and manage our supply chain. Our new $100 million share repurchase authorization reinforces our substantial financial strength and significant opportunity for further shareholder value creation. Now, let's turn to slide nine, third quarter fiscal 2022 income statement summary. On a consolidated basis, total revenue increased 9.9% year-on-year from $172.2 million in the third quarter of 2021 to $189.3 million this quarter. This reflected organic revenue growth of approximately 14.5 percent year-on-year, which strengthened the electronics and specialty solution segments. The recent census solution acquisition contributed approximately $0.4 million of sales in the quarter. The sales increase was partially offset by the prior divestiture of the Ingenetics business, which contributed approximately $3.9 million in revenue in third quarter fiscal 2021 as well as a 2.6% impact from foreign exchange. On a year-on-year basis, our adjusted operating margin increased 160 basis points to 13.8%, reflecting operating leverage associated with revenue growth and readout of price and productivity actions, partially offset by material inflation and increased freight costs. As expected, our tax rate was 24% compared to 24.9% in the third quarter of fiscal 21. We expect our tax rates will be in the low 20% range in our fiscal fourth quarter and approximately 24% for fiscal 2022. Adjusted earnings per share were $1.54 in the third quarter of fiscal 2022 compared to $1.19 a year ago and approximately 29% growth year-on-year. Please turn to slide 10, third quarter 2022 free cash flow. We reported free cash flow of $8.5 million in the third quarter of 2022 compared to free cash flow of approximately $12.4 million in the third quarter of 2021, and we expect, on a sequential basis, that our free cash flow generation will strengthen in our fiscal fourth quarter. Next, please turn to slide 11 for a summary of Standex's capitalization structure and liquidity statistics, which remain very strong. Standards had net debt of $65.8 million in the end of the third quarter compared to $52.5 million at the end of the second quarter, with a sequential increase primarily due to the purchase of sensor solutions for $9.9 million in March. Our net debt for fiscal third quarter of 2022 consisted primarily of long-term debt of $199.7 million and cash and cash equivalents totaling $133.9 million, with approximately $100 million held by foreign subs. We repatriated cash of approximately $5 million for foreign subs in the third quarter, bringing the fiscal 2022 year-to-date total to approximately $20 million. We expect to repatriate between $30 to $35 million in cash in fiscal 2022. We ended the third quarter with approximately $300 million of available liquidity. In addition, our net debt-to-adjusted EBITDA leverage ratio was approximately 0.5 times, with a net debt-to-total capital ratio of 11.2%. In terms of capital allocation, besides the census solutions acquisition, we repurchased approximately 112,000 shares for $11.9 million in the quarter, with a new $100 million share repurchase authorization announced today and becoming effective May 10th. In addition, we declared our 231st consecutive dividend of $0.26 on April 27th on an approximately 8% increase year-on-year. In fiscal 2022, we expect approximately $25 million in capital expenditures. I will now turn the call over to David for key takeaways from our third quarter and closing comments.

Thank you, Adamir. If everyone can please turn to slide 12 for a discussion of key takeaways. We are seeing consistent improvement in Standex's financial results, supported by a strong portfolio of high-quality businesses, increasingly aligned with sustainable global trends and delivering an expanding range of innovative solutions. Our new business opportunity funnel is robust. We are winning applications and sectors with long-term healthy growth prospects. Our deep technical and applications expertise combine to deliver compelling customer value and attractive financial returns for Standex. In regard to the challenging operating environment, we continue to introduce new processes and tools to effectively manage inflationary trends and further drive strategic sourcing and productivity company-wide. Our disciplined and balanced approach to capital allocation is supported by a strong balance sheet and consistent cash flow generation. Our new $100 million share repurchase authorization reinforces our significant financial strength and opportunity to further enhance shareholder value. We are approaching fiscal 2023 well-positioned for revenue growth and margin improvement. 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 1 on your touchdown 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. We'll pause momentarily to assemble our roster. And, ladies and gentlemen, our first question today comes from Chris McGinnis with Sedonia Company. Please go ahead.

Good morning. Thanks for taking my questions, and congrats on the next quarter. Thank you. Good morning. Thank you. Can you just maybe talk a little bit about how well you're handling kind of the inflationary environment? Where are you seeing the most pressure? And can you also comment maybe on labor as well? Thank you.

Yeah, great question. Very pertinent. We feel like we've got a head start on inflation because you remember a couple years ago we were slammed with a really dramatic increase in rhodium in our electronics business, and they had to completely revise rhodium. the way they issue quotations, how often they update their price list, the level of approval on the quotations. And so in the last couple of years, we have communicated that across all of our businesses in our global webcasts, and we made that a best practice. So we actually had all the global leaders on a phone call just about six weeks ago saying, to lay out some guidelines for them to think about preparing for a highly inflationary environment, including adopting these best practices from electronics. So we actually feel quite confident that we know what to do. We know how to protect our P&L from the effects of inflation. It doesn't mean it's easy. I mean, it's always difficult to pass price increases through, but we're confident we can handle it.

Great. Thanks. And I guess just on the $7 to $9 million deferral of the sales related to the lockdowns, how confident are you going to see that in kind of the future quarters as things start to open up? Is there any risk to that?

Well, I can just tell you what assumptions we have based on that, because your guess is as good as mine about when these lockdowns will ease. But we're now operating in Shanghai at about 20% capacity. We plan to get to 50% in the next few weeks. Our assumption is that in June we'll be back to full force. If we are, we'll be probably at the lower end of that number, maybe better if we can work down the backlog. If the lockdown continues or slows our return, It would be at or above the upper end.

Adam, do you want to add? Chris, if I can just add, these are not lost sales. We fully believe and expect these will be the sales we're going to make up in fiscal 23. So this is just a deferral from a quarter to quarter, but not lost in sales.

Great. I appreciate that color. And just last question. I'll jump back to you after this. More talk around possible slowdown in the economy and recession kind of concerns. Can you just talk about what you're seeing out of your customer base for demand trends and maybe how things progress throughout the quarter? Thank you.

Yeah, this is kind of a crazy situation. We're living in one reality, preparing for another. Our bookings are strong. Our book-to-bill has been greater than one every quarter this year. In fact, there's been momentum from January through to April. Our backlog, you saw some of the numbers, some of the businesses' backlog is up. So we're not seeing any softening in demand across our different businesses. However, you know, we read the news like everybody else. And in that same call we had with the businesses, you know, six weeks ago, we've had everybody start to prepare contingency plans if and when we see a sign of a slowdown. And there we're just going to rely on the same playbook that we exercised a when the world was shutting down with a pandemic lockdown. So, you know, we're continuing to execute on the growing demand and preparing for the eventuality of a downturn.

Okay, great. Thanks for taking my questions. I'll jump back and queue at this point. Yeah, thank you. Thanks, David.

And, ladies and gentlemen, our next question today comes from Chris Howe at Barrington Research. Please go ahead.

Good morning, David. Good morning, Anvir. Chris? I wanted to follow up on some of the last questions. As it relates to the $7 to $9 million deferral from the fourth quarter to fiscal year 23, as we think about different scenarios, hopeful that June marks the end of the lockdown so you can become 100% operational. But assuming the other side of that, And if there are more deferrals, how can we consider these deferrals versus the bottleneck that might be occurring in the supply chain? Do you think that gradually comes back, or can you get it in one quarter? Can you explain how you recapture the revenue that is not lost but deferred?

Yeah, let me say a word, then Adam can also help explain. I'll frame it. The first thing to understand relative to the supply chain and the impacts on this lockdown, the 79 is just related to the lockdown impact. In our China business, two-thirds of the sales of that plant go to Chinese customers, so they're not going to be caught up in waiting for tank freighters or ocean-going freight. So minimal impact on supply chain when that lockdown is raised. Adam?

No, I think that pretty much coincides. It's going to take us, you know, a couple of quarters to make up for it as we kind of ramp back up and, you know, get the, you know, get the, get our products to customers. But, you know, all indications, everything we are seeing, you know, the orders are still strong. We are not, there hasn't been any cancellations. And we believe this is something that we'll make up, you know, as soon as the lockdown is over.

And does margin come back in lockstep with the recapture of revenue or will margin maybe take a little bit more time to get all of it back?

I think it'll come back in the lockstep of revenue. Obviously, you know, in this quarter, you know, just because we have a factory shutdown, we still have to pay, you know, fixed costs, including the salaries of the people in Shanghai. So that's going to, you know, impact us a little bit. But, you know, as the volume comes back, you know, we do expect that, you know, we'll get the same margin, if not better, to what we have been seeing so far.

Okay. And then I wanted to switch gears away from that towards the new business opportunity funnel. for the electronics segment. Within that new business opportunity funnel is electric vehicles. Can you refresh my memory on electric vehicles and what you see the potential for this as this trend to electric vehicles continues much further out from 2020? 2022 and perhaps into 2024 and 2025, how you see electric vehicles fitting into the portfolio?

Yeah, well, first of all, our sales in electric vehicles have kind of followed the trend of electric vehicle shipments. They've doubled each year for the last few years, and we project them to double again next year. We're adding more capacity for the particular products that we sell into electric vehicles. Our primary product there, as we've talked about many times, is a relay based on a reed switches, which is used in the safety management system. We also have relays and some magnetic products that go into battery management systems in electrics. So a third leg where we're somewhat optimistic is that this acquisition we just made of Sensor Solutions is we are identifying additional applications in electric vehicles for hall effect sensors that can be designed with sensor solutions. So as we close some of those applications, I think we can expand our ship set value, I guess, if you want to put it that way, with electric vehicles. So bottom line, we're very enthused about electric vehicles. We're seeing great growth there. and putting more and more resources to make sure we're getting every application available to us.

Okay, great. I have many more, but I'll hop back into queue for others.

All right.

Thanks, Chris.

Ladies and gentlemen, as a reminder, if you'd like to ask a question, please press star then one. Our next question comes from Chris Moore at CJS Securities. Please go ahead.

Hey, good morning, guys. Thanks for taking a couple questions. Chris? Yep. Good morning. The $2 million engraving initiative, should we, you know, is that, read anything into that? Is that in response to markets being a little softer than originally thought or just something you had been targeting for a while?

You know, in the last few years, much of our focus with the cost structure and operations and engraving has been in North America. In the last couple of quarters, we've seen North America stabilize, starting to deliver predictable results. This additional action, $2 million, is just taking a broader view of all our locations around the world and reassessing based on the tool makers that are still present in different geographies, making sure that we're adjusting our capacity and our cost structure for that local business. The tool making industry, you know, it slowly evolves and tool makers open and close in different geographies around the world and we just want to continually make sure that we've got the right resources in the right places. So that $2 million is actually scattered across many sites around the world. Adam, do you want to add anything to that?

No, I think that pretty much covers it. And then, Chris, I think one thing, you know, we will be advocating on most of them within this quarter and maybe Q1, so we should start seeing the readouts kind of into next year. Got it. That's helpful.

Maybe just talk a little bit about the kind of anticipated impact evolution of segment earnings. If you look at the first nine months, electronics contributed, I think, roughly 55% of operating income. What's a reasonable expectation for electronics contribution two to three years out? Is it likely to stay in that range? Is it likely to be below 50? I understand that the three segments are 20% margin targets, but for overall earnings, Maybe talk a little bit about what you think electronics contribution will be.

Well, maybe I can take that one. First of all, Chris, we love this business. And, you know, it's very helpful when your largest business is your most profitable business, which is kind of where we are. And it's also one of our highest-growing businesses. So we're going to continue investing in it, both organically and inorganically. And there is no reason for us to believe that the kind of current contributions we are seeing from electronics are not going to continue to be strong in the years to come. So, yeah. We like it.

I wouldn't add much to that other than to say it will grow as fast or faster than the other businesses, so the percent contribution to profit will, you know, you can make your own conclusion is likely to only increase with success in our growth strategies there. Got it. That's helpful.

You talked about the engineering opportunity in Europe. How do you sell into those markets, engineering capabilities? Is it, Do you already have the infrastructure in place to do that? How different is it from North America?

Yeah, you know, we actually have been able to transfer process knowledge from our U.S. sites to our U.K. site. They have very similar equipment there. And this is a business that we acquired in 2012, just before I joined the company, and it was primarily focused on supporting deep sea coastlines oil and gas platforms. And, of course, that business is virtually gone now. So we've repositioned it over the years. They have a healthy position in medical, in the MRI scanners. And we've taken our U.S. knowledge of aircraft and space applications and are now developing relationships with those customers in Europe. So the pictures you saw on the engineering technologies page are for Europe. for a space program in Europe. So it's really more of a sales effort. We've got the technical capability. We have the know-how. We have the machinery over there. And we're just directing our business development people to get in front of the right people for the European programs. Actually, we've had good returns in the last year as we've focused on this and are optimistic we have a growth path in Europe.

Got it. That's helpful. I will leave it there. I appreciate it, guys. Thanks, Chris.

And, ladies and gentlemen, once more, if you have a question, please press star then 1. 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 any follow-ups.

All right. Thank you, Rocky. Rocky, we had a very active quarter, further advancing our growth strategy in multiple fronts. We're aggressively pursuing new market opportunities which offer innovative and compelling customer value propositions. These efforts are complemented by ongoing productivity and efficiency initiatives. We focus on strengthening our market leadership and cost position. And as a result, we're very well positioned to further optimize Standex's growth and margin profile. Finally, I want to thank everybody today for their interest in Standex and our discussion of our fiscal third quarter results and outlook. And again, to thank our employees, shareholders, and the Board of Directors for the continued support. We look forward to speaking with you again in our fiscal fourth quarter 2022 call.

Ladies and gentlemen, 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 week.