Standex International Corporation · NYSE:SXI
Standex International — Q4 FY2009 Earnings Presentation
32 slides from Standex International's earnings presentation, Aug 20, 2009
Slide 1: Fourth-Quarter and Fiscal Year 2009 Conference Call
Standex International Fourth-Quarter and Fiscal Year 2009 Conference Call August 20, 2009
Slide 2: Agenda and forward-looking statements
Agenda Statements in this presentation include, or may be based upon, management's current expectations, estimates and/or projections about Standex's markets and industries. These statements are forward-looking statements within the meaning of The Private Securities Litigation Reform Act of 1995. Ac
Slide 3: Fourth Quarter 2009 Overview
Fourth Quarter 2009 Overview Signs indicate we may have found low point of recession's impact on sales volume Improved bottom-line margins on 23% sales decline Operating Income -8.0% yoy Operating Income Margin + 100bps Operating Income without restructuring -1.0% yoy Operating Margin without restru
Slide 4: Cost-Reduction Initiatives
Cost-Reduction Initiatives Headcount reductions 260 salaried and indirect labor positions eliminated ~$14M in cost savings annually Procurement and productivity savings ~$12M in cost savings Plant consolidations 8 plant consolidations completed in FY09 ~$10M in cost savings annually Company wide eff
Slide 5: Working Capital & WC Turns
Working Capital & WC Turns Q4-01 Q1-02 Q2-02 Q3-02 Q4-02 Q1-03 Q2-03 Q3-03 Q4-03 Q1-04 Q2-04 Q3-04 Q4-04 Q1-05 Q2-05 Q3-05 Q4-05 Q1-06 Q2-06 Q3-06 Q4-06 Q1-07 Q2-07 Q3-07 Q4-07 Q1-08 Q2-08 Q3-08 Q4-08 Q1-09 Q2-09 Q3-09 Q4-09 NWC 167590 168089 163686 158808 150941 143450 139881 137599 133003 131667 1
Slide 6: Net Debt & Funded Debt
Net Debt & Funded Debt Q4 FY 01 Q1 FY 02 Q2 FY 02 Q3 FY 02 Q4 FY 02 Q1 FY 03 Q2 FY 03 Q3 FY 03 Q4 FY 03 Q1 FY 04 Q2 FY 04 Q3 FY 04 Q4 FY 04 Q1 FY 05 Q2 FY 05 Q3 FY 05 Q4 FY05 Q1 FY 06 Q2 FY 06 Q3 FY 06 Q4 FY 06 Q1 FY 07 Q2 FY 07 Q3 FY 07 Q4 FY 07 Q1 FY 08 Q2 FY 08 Q3 FY 08 Q4 FY 08 Q1 FY 09 Q2 FY 09
Slide 7: Improved Bottom-Line Performance
Improved Bottom-Line Performance Standex drove strong year-over-year margin improvement despite significant reduction in sales volumes Q4 FY09 Q4 FY08 Delta Sales 139.911 $ M 180.774 $ M -22.60% O ti I 9 228 $ M 10 032 $ M 8 01% Operating Income 9.228 10.032 -8.01% Operting Income Margin 6.60% 5.55%
Slide 8: EPS Performance
EPS Performance Solid profit performance in recessionary environment Q4 FY 2009 Q4 FY 2008 FY 2009 FY 2008 EPS Continuing Operations as Reported 0.46 $ 0.47 $ ( 0.15) $ 1.55 $ Full Year Quarter g p p ) Add Non-Recurring Items Restructuring Charges 0.06 $ 0.02 $ 0.41 $ 0.03 $ Goodwill Impairment 1.61
Slide 9: Excellent Working Capital Mgmt & Debt Reduction
Excellent Working Capital Mgmt &#Debt Reduction Net working capital decreased by $3.5 million in the quarter; WC Turns at 5.7, slightly below record of 5.8 on significantly lower volume Increase Increase 06/30/09 03/31/09 (Decrease) 06/30/08 (Decrease) Net Recei ables 81 893 $ 73 973 $ 7 920 $ 103 0
Slide 10: Strong Cash Flow Generation
Strong Cash Flow Generation ($, in thousands) Generated $13.4M of free operating cash flow in Q4; $34.2M in fiscal 2009 Q4 FY 09 FY 2009 Cash from Operating Activities 13,560 $ 39,444 $ Cash CAPEX (210) $ (5,238) $ Free Operating Cash Flow 13,350 $ 34,206 $ Net Income 5,677 $ (5,405) $ Impairment 21
Slide 11: Reducing Net Debt
Reducing Net Debt $2.5M in interest expense savings expected in FY 2010 6/30/2009 3/31/2009 6/30/2008 Revolver (LIBOR + Matrix) 91,000 $ 92,000 $ 88,500 $ R B d 3 300 $ 3 300 $ 3 300 $ Revenue Bond 3,300 3,300 3,300 Private Placement Rate 5.94% 14,286 $ 17,857 $ Private Placement Rate 6.80% 25,000 $
Slide 12: Performance Improvement Strategy
Performance Improvement Strategy Optimize Manufacturing Refine Business Portfolio Streamline Cost Structure Drive Organic Growth Balance Sheet Management Continuous improvement in financial performance
Slide 13: Refine Business Portfolio
Refine Business Portfolio Build larger, more profitable operating groups Divest non-strategic businesses at opportune time Acquire complementary businesses that bring synergistic advantages to core platforms Seek strategic bolt-on acquisitions that fill-in product or geographic gaps Refine Business
Slide 14: Divest Non-Strategic Businesses
40% of revenues were non-strategic in 2001 Company divested businesses with ~$193M in revenue1 Divestiture Industry Fiscal Year Coors/Mason Fine China and Candles 2003 Jarvis Caster Caster Wheels 2004 James Burn Double Loop Wire Binding Products 2005 USECO Patient Feeding Systems 2005 Standex Direct
Slide 15: Acquire Complementary Businesses
Acquire Complementary Businesses Acquisition Segment Fiscal Year ATC Frost Electronics 2001 Cin Tran Electronics 2003 Magnetico Electronics 2004 BG Labs Electronics 2009 Millennium Molds Engraving 2003 IR International Engraving 2003 Dornbusch Engraving 2003 Innovent Engraving 2006 Carolina Roll Eng
Slide 16: Drive Organic Growth
Drive Organic Growth Capitalize on sales synergies Expand into new geographic markets Increase market share through new product introductions and applications and technology development Enhance sales penetration with strategic end user accounts and channel partners Refine Business Portfolio Drive Or
Slide 17: Optimize Manufacturing
Optimize Manufacturing Eight plants closed in 2009 resulting in annual savings of $10M 50% reduction in floor space resulting from Dallas APW Wyott and Bakers Pride consolidations into Nogales By the end of calendar 2009: 250 direct and indirect employees in Nogales 16% of annual FSEG volume produce
Slide 18: Optimize Manufacturing: Four Food Service Brands in Nogales
Optimize Manufacturing Four Food Service Brands Currently Operating in Nogales Facility
Slide 19: Streamline Cost Structure
Streamline Cost Structure $36M of sustainable annualized cost reductions implemented in FY09 ~$14M in headcount reductions ~$12M in procurement and productivity savings ~$10M in plant consolidations Refine Business Portfolio Drive Organic Growth Optimize Manufacturing Streamline Cost Structure Balan
Slide 20: Balance Sheet Management
Balance Sheet Management FY09 Accomplishments: Improve working capital Reduced working capital by $25.8M Limit capital expenditures CapEx at $5.7 million Generate free operating cash flow $34.2 million in FY 2009 Reduce net debt Total debt decreased by $40 million Refine Business Portfolio Drive Org
Slide 21: Fourth-Quarter FY09 Operational Segment Review
Fourth-Quarter FY09 Operational Segment Review
Slide 22: Food Service Equipment Group
Food Service Equipment Group Q4'09 ('000s) $ ^% (yoy) Revenues $86,536 -12.4% Operating Income $10,591 +41.9% Cost reductions, productivity improvements and lean enterprise drove dramatic bottom-line improvement YOY operating income margins are up 468 basis points Refrigeration Solutions Group set r
Slide 23: Strategic Execution: Target Organic Growth Opportunities
Strategic Execution: Target Organic Growth Opportunities Nor-Lake approved for Pizza Hut in Canada; Significant projects in pipeline for YUM! Secured large countertop merchandising products deal in the convenience store segment with Chevron Increased sales to higher-margin markets (i.e. scientific);
Slide 24: Engraving Group
Engraving Group Q4'09 ('000s) $ ^% (yoy) Revenues $17,492 -26.7% Operating Income $1,179 -60.7% Sales primarily affected by lower international demand Op. Income in N. America benefited from three plant consolidations, cost reductions and productivity improvements Chrysler bankruptcy caused temporar
Slide 25: Strategic Execution: Roll-Out New Technologies
Strategic Execution: Roll-Out New Technologies New proprietary engraving techniques introduced in Q309: Slush-moulding Laser engraving of elastomeric-covered rolls One-stop-shop for texturizing needs Significantly reduces lead times and costs Provides greater design harmonization for global auto OEM
Slide 26: Engineering Technologies Group
Engineering Technologies Group Q4'09 ('000s) $ ^% (yoy) Revenues $12,195 -31.0% Operating Income $2,229 -30.0% Difficult comparison with Q408 due to lumpy delivery schedules and one-off contract settlement in aerospace market NASA contract temporarily delayed due to technical issue; expect shipments
Slide 27: Electronics & Hydraulics Group
Electronics & Hydraulics Group Q4'09 ('000s) $ ^% (yoy) Revenues $12,123 -45.2% Operating Income $167 -93.3% Weakness in housing and automotive sectors negatively affected the electronics business Electronics has significantly lower cost structure with world-class manufacturing capabilities Prolonge
Slide 28: Strategic Execution: Optimize Manufacturing at Standex Electronics
Strategic Execution: Optimize Manufacturing at Standex Electronics Consolidation of Electronics Canadian facility completed in Q4 Consolidation of BG Labs into Cincinnati facility initiated in Q4 ~$500K in incremental savings per year Three-tier manufacturing in place Prototyping/initial manufacturi
Slide 29: Strategic Execution: Secure Organic Growth
Strategic Execution: Secure Organic Growth Launched new line of higher-margin magnetic reed switches in Q4 Taking share in reed switch market by providing unique product features and performance Targeting the medical device market Optimistic about potential contributions to revenue in 2H10 Standex E
Slide 30: ADP Group
ADP Group Q4'09 ('000s) $ ^% (yoy) Revenues $11,522 -37.2% Operating Income $202 N/A Year-over-year decline in housing starts affecting sales Relative stability in housing starts may signal bottom of market Reduced cost structure to achieve profitability on lower sales volume New flex duct product a
Slide 31: Summary
Summary Believe sales volume has hit low point in recession Cost reductions that provide $36M in sustainable annual cost savings now in place Cost structure enables Company to achieve good profit levels at low sales levels and achieve significant margin growth as markets recover Continued to strengt
Slide 32: Q & A Session
Q & A Session
Standex International — Q4 FY2009 Earnings Presentation on 6ix