Standex International Corporation

Good morning, ladies and gentlemen, and welcome to the Standex International Fiscal Fourth Quarter 2025 Financial Results Conference Call. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Friday, August 1, 2025. I would now like to turn the conference over to Christopher Howe, Director of Investor Relations. 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 .standex.com. Please refer to Standex's Safe Harbor Statement on slide 2. The matters that Standex management will discuss on today's conference call include predictions, estimates, expectations, and other forward-looking statements. These statements are subject to risks and uncertainties that could cause actual results to differ materially. You should refer to Standex's most recent annual report on Form 10-K, as well as other SEC filings and public announcements, for a detailed list of risk factors. In addition, I'd like to remind you that today's discussion will include references to the Non-Gap Measures of EVIT, which is earnings before interest and taxes, Adjusted EVIT, EVITDA, which is earnings before interest, taxes, depreciation, and amortization, Adjusted EVITDA, EVITDA margin, and Adjusted EVITDA margin. We will also refer to other non-GAP measures, including adjusted net income, adjusted operating income, adjusted net income from continuing operations, adjusted earnings per share, adjusted operating margin, pre-operating cash flow, and pro forma net debt to EVITDA. Adjusted measures exclude the impact of restructuring, purchase accounting, amortization from acquired intangible assets, acquisition-related expenses, and one-time items. These non-GAP financial measures are intended to serve as a complement to results provided in accordance with accounting principles generally accepted in the United States. Sandex believes that such information provides an additional measurement and consistent historical comparison of the company's financial performance. On the call today is Sandex's Chairman, President, and Chief Executive Officer, David Dunbar, and Chief Financial Officer and Treasurer, Adimir Sarcic.

Thank you, Chris. Good morning and welcome to our fiscal fourth quarter 2025 conference call. Fiscal year 2025 was a turning point for Sandex. We are a different company than we were even a year ago. We've been laying the groundwork for years and our growth drivers have now crossed a threshold. They are scaling. They have reached an inflection point and are beginning to move the needle in a meaningful way. I'm very excited to share with you what we are seeing and how it is shaping our outlook. I would like to thank our business and corporate teams for navigating this past year and achieving a record profit generation in fiscal 2025. Now let's look at the results beginning on slide three, key messages. In the fourth quarter, sales increased .2% with contributions from acquisitions partially offset by a slight organic decline. Electronics grew slightly on an organic basis with the book to bill ratio above one and organic orders up 16% year on year. This represents the first quarter of organic growth since 2023 and signals strong momentum into 2026. Our fiscal fourth quarter sales into fast growth markets increased to 28% of total company sales. New product sales added approximately .8% to sales ahead of our goal, 2%. Our grid technologies business continues to perform ahead of our expectations. To support strong global demand for electrical equipment, we are expanding Amron-Norion capacity with lean projects and additional shifts in the core facility. I am also excited to announce that in the quarter we established a site in Croatia to serve European customers. We expect to be shipping products from Croatia within four months. Operating performance was very strong in the quarter. We achieved record adjusted operating margin of 20.6%, up 120 basis points sequentially and up 350 basis points year on year. This operating performance, along with our cash generation and cash repatriation, enabled us to lower our net leverage ratio to 2.6%. Following record profitability in fiscal 2024, we again achieved record milestones in adjusted gross margin, adjusted operating income, and adjusted earnings per share. In fiscal year 2026, barring any unforeseen economic, global trade, or tariff related disruptions, we expect revenue to grow by over $100 million with continued adjusted operating margin expansion. This will primarily be driven by mid to high single digit organic growth in electronics, double digit organic growth in engineering technologies, and the contribution from recent acquisition. In fiscal year 2026, we expect new product sales to contribute approximately 300 basis points of incremental sales growth, and we anticipate releasing more than 15 new products. Sales from fast growth markets are expected to grow approximately 45% year on year and exceed $265 million. On a year on year basis, in fiscal first quarter 2026, we expect significantly higher revenue, comprise of contributions from recent acquisitions and organic growth, and significant operating margin expansion. On a sequential basis, we expect slightly lower revenue as the impact of recent acquisitions, higher sales in the fast growth and markets, and realization of pricing initiatives are more than offset by projects timing in engineering technologies and the impact of seasonality in Europe within electronics and in grading. We expect slightly lower adjusted operating margin due to lower sales and less favorable product mix. Please turn to slide four. Our growth drivers have reached an inflection point. There are four sources of growth that will help deliver above market increases in 2026. In fact, they will deliver growth even without a general market pickup. First is new product sales. As you know, we began ramping our R&D spending in 2020. New products began to be released in 2023, accelerating to 16 product releases in 2025. Sales of new products increased from $38 million to $55 million in FY 2025, exceeding our internal expectations. We expect their sales to continue to ramp and to be joined by more than 15 new products to be released in 2026, giving us confidence that incremental new product sales will add about 3% to our sales in 2026. New products, once released, take time to reach full commercial impact. In our customer intimacy business model, success depends not only on product innovation, but on deep collaboration with our customers. Our products are often designed into our customers' own systems, which require internal approvals, engineering validation, and their own development timeline. This results in a natural delay between product release and peak revenue. But once adoption begins, momentum builds and endures. Products introduced in prior years continue to ramp, even as we launch additional new offers. This layered effect creates a compounding engine of organic growth that is both durable and scalable. It has taken a while to get this momentum, but we are building a long-term new product capability in this company. And as a -to-be engineer, I think it is beautiful to watch. The second source of above-market growth is our presence in end markets with long-term secular tailwinds and above-average growth. This has been a focus for some time, and our two acquisitions in FY25 increased our presence in electrical grid, space, and defense markets, ramping our total fast-growth market sales to $184 million. All of these businesses are expanding capacity to serve our customers, and we expect sales to grow to greater than $265 million in fiscal 2026. This is also beautiful to watch. A third source of momentum is the support we are giving to recent acquisitions to maintain their growth rate. We are now bringing up a new site in Croatia for Amron Neurion, and are positioned with McStarlight to win new applications that the combined StandX-McStarlight capability is better positioned to win. Last but not least is success at the blocking and tackling of winning new awards in our business through commercial excellence. Two noteworthy areas stand out. Engineering technologies have been awarded applications on next-generation missile programs, which are moving to production. Engraving has successfully expanded into niche production of parts, requiring our proprietary know-how. Based on the above, you can see that the incremental contribution from new products, sales into fast-growth markets, successful acquisition integration, and new program wins lead us to a fiscal year 2020 outlook of over $100 million in incremental sales. I will now turn the call over to Adamir to discuss our financial performance in greater detail.