Standex reports Q3 EPS $1.75 vs. $1.65 last year

Last week, the company also reported Q3 resvenue of $177.3M vs. $184.3M last year. Commenting on the quarter’s results, CEO David Dunbar said, “I am pleased with our third quarter operating performance despite continued softness in general market conditions impacting our top line. We again achieved solid adjusted gross margin of near 40%, which followed a record of 40.3% last quarter. Excluding the one-time charge related to stock compensation, adjusted operating margin would have been similar to our record second quarter performance. Three of our business segments finished the quarter with operating margin near or above 20%, while margin in the Engineering Technologies segment approached nearly 18%. As such, we remain confident in our continued margin performance towards our long-term target by fiscal year 2028 of greater than 19% operating margin. From a cash perspective, we generated record fiscal third quarter’ free operating cash flow of $19.3 million, which represented 121% of GAAP net income. Year-to-date, we have generated record free operating cash flow of $50.8 million. We remain optimistic about the long-term secular trends in our fast growth end markets. These markets will benefit from trends like the transition from internal combustion to hybrid and electric in automotive, infrastructure spending in smart grid, defense applications and next generation aerospace development, and from the evolution of space exploration, all of which are still in the earlier stages. In the fiscal third quarter, our fast growth market sales grew 9% year on year to $26 million and are on track to our expectations for the fiscal year. We are reaffirming our long-term target for fast growth market sales of $200 million plus by fiscal year 2028. We will continue to invest in engineering capabilities that enable new product development and new applications around these and other markets with growth potential. Overall, we continued to experience transitory headwinds in several of our end markets which led to a 5.7% organic decline year-on-year in the fiscal third quarter. These headwinds include continued softness in appliances and general industrial end markets in China and Europe, the impact of a lower number of projects, and inventory destocking by a few large Electronics customers in the semi-conductor and test and measurement end markets. Based on key customer inputs and recent order trends, we anticipate general market conditions to strengthen as we enter fiscal 2025. In addition, we expect fast growth market sales to continue to outperform growth of the general markets.”