Standex International Corporation

Good morning, ladies and gentlemen, and welcome to Standex International 4th Quarter 2026 Financial Results Conference Call. At this time, all lines are in 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 0 for the operator. This call is being recorded on Friday, July 31, 2026. 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 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 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 EBIT, which is Earnings Before Interest and Taxes, Adjusted EBIT, EBITDA, which is Earnings Before Interest, Taxes, Depreciation, and Amortization, Adjusted EBITDA, EBITDA Margin, and Adjusted EBITDA Margin. We will also refer to other non-GAAP measures, including adjusted net income, adjusted operating income, adjusted net income from continuing operations, adjusted earnings per share, adjusted operating margin, free operating cash flow, and pro forma net debt to EBITDA. Adjusted measures exclude the impact of restructuring, purchase accounting, amortization from acquired intangible assets, acquisition-related expenses, and one-time items. These non-GAAP financial measures are intended to serve as a complement to results provided in accordance with accounting principles generally accepted in the United States. Standex believes that such information provides an additional measurement and consistent historical comparison of the company's financial performance. On the call today is Standex's Chairman, President, and Chief Executive Officer David Dunbar and Chief Financial Officer and Treasurer Ademir Sarcevic.

Thank you, Chris. Good morning and welcome to our fourth quarter and fiscal year 2026 conference call. A year ago, we made the claim that we are at an inflection point as a company and that our results in fiscal year 2026 would show that. I'm happy to look back on the year and see that it has indeed played out. We have demonstrated we are a growing engineered components company. Total sales grew 5.5% organically in the year, propelled by our growth initiatives. In our fourth quarter, 73% of our sales were delivered by our engineered components businesses. These businesses serve large end markets, providing a long runway of organic and inorganic growth opportunities. Our new product development efforts are now contributing meaningfully to sales, growing from $40 million to $67 million in the year. The $27 million increase contributed 300 basis points to sales growth. Our sales to fast growth markets increased $80 million to $264 million, contributing 30% of sales. On July 2nd, we acquired the remaining 9.9% interest in Narayan, completing the acquisition of the Amaran Narayan Group, now known as Standex Grid. Together with our new colleagues in Standex Grid, we are completely focused on meeting the rapidly growing needs of customers, building out the world's power infrastructure, to support increasing living standards, electrification, replacement of an aging Western grid, and the current rapid build-out of data centers. I would like to thank our employees, our executives, and the Board of Directors for their efforts and continued dedication and support that drove our record in fiscal 2026. I also want to take a moment to thank Alan Glass for his many contributions these past 10 years. Alan has recently decided to retire and I will soon be announcing his replacement as we bring in a new chief legal officer to help power Standex through the next leg of our journey. Now, let's look at the results beginning on slide three. In the fourth quarter, sales of $228.3 million increased 7.7% organically. Electronics grew 12.9% organically. New product sales grew approximately 43% to approximately $23 million. Sales in the fast growth markets were approximately $72 million or more than 30% of sales. We had a record quarterly order intake of approximately $270 million. We are pleased with the momentum in the business reflected in an overall book-to-bill ratio of 1.18 and within electronics of 1.27. In fiscal year 2026, sales increased by more than $100 million and 5.5% organically. Electronics grew 7.5% organically. Q4 adjusted earnings per share were a record $2.45 per share, and we generated record free cash flow of $35 million. Following record profitability in fiscal 2025, we again achieved record milestones with adjusted gross margin of 42%, adjusted operating income margin of 19.4%, and adjusted earnings per share of of $8.74. On a sequential basis, we expect slightly higher revenue driven by higher contributions from fast growth end markets and new product sales and similar adjusted operating margin. On a year-on-year basis, in fiscal first quarter 2027, we expect moderately higher revenue driven by high single-digit to low double-digit organic growth from growing backlog in fast growth markets and increased new product sales partially offset by the revenue impact from the federal industry's divestiture. We expect slightly to moderately higher adjusted operating margin as organic growth and realization of productivity actions are partially offset by growth investments. For fiscal year 2027, we expect mid to high single-digit sales growth with high single-digit to low double-digit organic growth and continued adjusted operating margin expansion. I'm pleased with the momentum that we are building and launching new products. We expect to launch more than 20 new products in fiscal 2027, on top of more than 15 new products this past fiscal year. We expect new product sales pro forma for the federal divestiture to grow by $23 million to $90 million, adding nearly 300 basis points of organic growth in the year. Our sales into the fast-growing markets such as space, defense, and grid are expected to increase approximately 20% to greater than $310 million, constituting more than 30% of our total sales. We are looking forward to Ademir transitioning into the electronics business as president of electronics. This is a natural step. To be a CFO at a company like Standex is, in fact, to be a chief operating officer. Our consistent performance these past seven years owes a lot to Ademir having stayed close to the businesses, When there were early signs of issues to address or opportunities to expand, he would get into the details of the business, address the pricing, sourcing or operating issues to help get things back on track. I will now turn the call over to Ademir to provide more insight as to how we will approach the single biggest opportunity in our business, the expansion of capacity in our grid business.