Standex International Corporation · NYSE:SXI
Standex International — Investor Presentation (December 2005)
44 slides from Standex International's investor presentation, Dec 1, 2005
Slide 1: Standex International
sil Standex International Diversity Acquisitions Excellence Products Solutions = December 1, 2005
Slide 2: Safe Harbor Statement
or Mil Safe Harbor Statement Included in this presentation are certain "forward-looking" statements, involving risks and uncertainty, which are covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are typically identified by the wo
Slide 3: Standex
= Standex $665M+ in annual sales Multi-industry niche market leader Good platform for consistent growth over the long term Cash Flow Driven
Slide 4: Standex Highlights
Standex Highlights = Double-digit increases in sales and earnings over the past two fiscal years = Diversified revenue base = Consistent cash flow and working capital management = 40 years of dividends; 35 increases = Strong balance sheet = Disciplined implementation of Focused Diversity Strategy =
Slide 5: Standex "Focused Diversity" Strategy
Standex “Focused Diversity” Strategy + Focused Diversity © Create fewer, lager and more profitable business units Future investment and grawth plans focused on building selected strategic business units Top line growth thraugh organic growth initiatives and acquisitions © Enhance global footprint of
Slide 6: Focused Diversity Strategy — Implementation
I Ih Focused Diversity Strategy — Implementation Phase | — Restructuring and Realignment Objectives + Address under performingfroubled businesses + Improve cost position by consolidating manufacturing facilities = Strengthen and align portfolio = Strengthen balance sheet by improving working capital
Slide 7: Phase I — Restructuring and Realignment
7 | Phase | — Restructuring and Realignment (FY03-FY05) Results Six businesses sold or closed ($97M in annual sales) Five plant consolidations Six strategic acquisitions ($75M in annual sales) $8M+ in annual cost savings Sales of land and buildings generated more than $17M of cash and $9M of gains S
Slide 8: Phase II — Project Focus
‘ll | | | Phase II — Project Focus Objectives: » Further narrow the focus of the portfolio = Build on existing platforms - Achieve greater synergies between operating groups » Accelerate profitable growth
Slide 9: Phase II Project "Focus"
‘ll | | | Phase II Project “Focus” Key Initiatives: = Divest Consumer Group = Complete series of strategic bolt on acquisitions o Build on existing platforms o Ideally would complete one or more larger acquisitions - Invest in key operating initiatives a Mexico o China
Slide 10: Project Focus
Project Focus = Berkery Noyes engaged to represent Standex in divestiture process = Three separate transactions to run concurrently in priority order FyO5 » Standard Publishing Sales= $916M >» Standex Direct EBIT= — $6.14M » Berean Christian Stores EBITDA = $7.0M = Expect to substantially complete a
Slide 11: Innovent
a Innovent - Manufactures processing equipment to make absorbent cores for child/adult diapers, feminine hygiene products and medical underpads - Annual sales volume of $8.4M « Production of brazed honeycomb material/structures is a core competence - Facilities located in the US and Netherlands ¢ So
Slide 12: Innovent Products
‘ll | | | Innovent Products oo Specialized Honeycomb Structures for Military & Medical Applications Custom Engineered Diaper Forming Tooling u
Slide 13: Innovent Synergies
‘ll | | | Innovent Synergies Significant overlap with Standex Engraving customers (P&G, Kimberly Clark) Develop and leverage mutual sales channel for Innovent and Perkins product lines Expand sales effort to penetrate Asia, South America and ROW Potential new product synergies with Perkins product l
Slide 14: Kool Star
Kool Star e Manufactures and sells walk-in coolers/freezers on the West Coast ¢ Currently located in Los Angeles, CA + Sales of $9.0M - Broad market position in Southern California and presence in several local buying groups e Manufacture panels and buys refrigeration systems B
Slide 15: Three Star Refrigeration Engineering, Inc.
a Three Star Refrigeration Engineering, Inc. a <a Kool Star Manufacturer of Walk-In Cold Storage Coolers & Freezers Industries served: - Food Service - Hotels - Schools and Universities - Hospitals - Meat Packing - Food Processing - Institutions - Mortuaries all “
Slide 16: Kool Star Strategy/Synergies
‘ll | | | Kool Star Strategy/Synergies Neither Master-Bilt nor Nor-Lake have been particularly successful in penetrating Southem California/Southwest USA due to freight costs Kool Star offers = Installed customer base = Existing channel of sales = Manufacturing equipment for walk-in panel production
Slide 17: Standex Operating Tactics
‘ll | l | Standex Operating Tactics Top Line Growth Organic *New products New sales channels *Geographic expansion *Brand label relationships *New services offerings Joint ventures/partnerships Acquisitions Operational Excellence ean Enterprise *Purchasing programs *Low cost manufacturing *Re-engine
Slide 18: Mexico Manufacturing
‘ll | | | Mexico Manufacturing Standex Strategy « Achieve lower cost for labor intensive products = Create cost competitive position to penetrate price sensitive “large retail’ markets = Position for growth in Southwest US geographic markets vn
Slide 19: Mexico Manufacturing
‘ll | | | Mexico Manufacturing Status + Standex has committed to 120,000 sq. ft. facility in Nogales, Sonora, Mexico + Operation will be operated as a “shelter” where several Standex divisions are co-located Installing manufacturing equipment in new plant late second quarter FY06 Initial production
Slide 20: Nogales Facility
Standex Nogales Facility all »
Slide 21: Standex in China
‘ll | il Standex in China Standex Strategy = Establish low cost sources for components and finished goods « Expand Standex global infrastructure to support global OEM’s = Be positioned to sell into domestic China market » Establish manufacturing presence as appropriate 0
Slide 22: Standex in China
‘ll | il Standex in China Sourcing + Trading office established in Tianjin - Sourcing team in place + Majority of divisions have active sourcing initiatives Results to date indicate 20-30% savings achievable Global Network + Standex Engraving has established operations in China to support global aut
Slide 23: Standex in China
‘ll il Standex in China Ws Tianjin/Betjing Shanghai Guangzhou
Slide 24: Business Segments
Ml | l | Business Segments Food Service Equipment Group Air Distribution Products Group Engineered Products Standex Engraving Consumer Products = al 2B
Slide 25: Segment Performance
a Segment Performance FY 05 “@@ 19% Engineere Food Sewvice pase Food Senvice Equipment Equipment Engraving ee 37% 33% 11% Engraving 17% Consumer ADP 19% 10% ADP 12% Net Sales Income From Operations 24
Slide 26: Food Service Equipment Group
“ml | | Food Service Equipment Group = Products: walk-in coolers, freezers; merchandising display cases; rotisseries and fryers; institutional feeding systerns = Markets: restaurant industry, food retailers, institutional caterers = Key brands: Master-Bilt; Nor- Lake; BKI; LISECO; Federal; Procon, K
Slide 27: Food Service Equipment Group
“ml | | Food Service Equipment Group = Growth Drivers - Favorable demographics - Modern life style favors eating out/take away meals - Non-traditional retail stores adding food products = Growth Strategy - Maximize brand, service, quality and technology reputation _ Diversify sales channel and broad
Slide 28: Air Distribution Products Group
“ml | | Air Distribution Products Group = Products: galvanized steel duct work = Key brands: Snappy, ACME, ALCO, Standex * Markets: new residential construction, remodels = Market rankings: #1 national residential galvanized steel duct work 7
Slide 29: Air Distribution Products Group
“ml | | Air Distribution Products Group = Growth Drivers ~ Market for new homes and apartments - Increased size of homes ~ Remodeling of aging housing stock = Growth strategy ~ Leverage nationwide presence with large HVAC wholesaler chains - Access DIY market ~ Acquire commercial HVAC capability = P
Slide 30: Standex Engraving
Ml | l | Standex Engraving = Products: mold texturizing and roll, plate engraving = Key brands: Mold Tech, Roehlen. Engraving IR International, Mullen, Eastern Engraving, B.F. Perkins , Dornbusch, Innovent = Markets: auto, construction material, flooring, consumer products, electronics = Market rank
Slide 31: Standex Engraving
‘ll | | | Standex Engraving = Growth Drivers - New automobile designs, product introductions - New applications for texturized surfaces = Growth strategy ~ Expand global network (China, Mexico, Eastern Europe) - Maintain technology edge in digital techniques = Priorities - Leverage global technologi
Slide 32: Engineered Products
Engineered Products = Products: Metal fabrication; telescopic, piston rod cylinder hoists; electro-mechanical enginéered products, electronic components = Key Brands/Merkets © Spincraft + Aerospace, energy + Standex Electronics + Automotive and industrial electrical systems * Custom Hoists + Offroad
Slide 33: Engineered Products
‘ll | | | Engineered Products = Growth Drivers - Industrial expansion (energy & aerospace) - Automation/consumer convenience - Construction spending = Growth Strategy - Product sales channel and market diversification — New product development ~- Geographic expansion = Priorities - Invest in new pro
Slide 34: Standex Acquisition Process
Standex Acquisition Process = Disciplined team work approach to identifying, acquiring and integrating acquisitions = Strategic review of each Standex business group identifies acquisition parameters = Acquisition parameters drive search process = Standex utilizes internal and external resources to
Slide 35: Acquisition Criteria
Ml | ll | Acquisition Criteria Strategic bolt-ons — build on core businesses Exploitable synergies Sales typically between $10-$80M Targeted to be accretive in first year Purchase price range of 4-8X EBITDA Prefer privately held companies Purchase terms cash and/or stock = al 4
Slide 36: Capital Allocation
Ml | ll | Capital Allocation = How do we use our cash? » Support investment needs of divisions > Acquisitions >» Dividends » Debt reduction » Stock buyback = Capital allocation: ROCE + strategic fit 35
Slide 37: Performance Based Management
Ml Performance Based Management Compensation Annual Incentive Plan (AIP) = Current year financial goals (60%) > Sales > Earnings > Operating cash = Long term (2-3 year) strategic goals (40%) > Sales growth > Operational excellence = Minimum 20% paid out in SXI stock Long Term Incentive Plan (LTIP) =
Slide 38: Shareholder Summary
‘ll | | | Shareholder Summary Top 15 Institutional Shareholders ‘Wedge Capital Management LLP Royce & Associates LLC Barclays Global Investors, NA Third Avenue Management LLC ‘AXA Rosenberg Investment Management LLC Hale & Dorr Capital Management LLC National Rural Electric Coop. Assn Vanguard Group
Slide 39: Corporate Governance
Corporate Governance Updated board and subcommittee charters In compliance with all SEC and NYSE governance requirements Three new independent directors added Successful SOX 404 compliance in FY05 = al 38
Slide 40: Near Term Management Focus
Near Term Management Focus = Drive organic sales growth and diversification = Divest Consumer Group = Complete strategic bolt-on acquisitions = Continue to implement Lean Enterprise = Startup Mexico manufacturing facility = Capitalize on China sourcing opportunities » Maintain working capital turns
Slide 41: Standex International Corporation
Standex htemstional Corperaion et Sater ($1)
Slide 42: Earnings per Share (Diluted) From Continuing Operations
Standex htemational Corporation Estnings per Share (Glued) From Centinuing Operations v a
Slide 43: Standex International Corporation
Standex International Carporstion 4 ! ey se ios R
Slide 44: Net Debt
Standex hternational Camporation Net Dett ($4)
Standex International — Investor Presentation (December 2005) on 6ix