Standex International Corporation (SXI) Q2 2026 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call and strategic plan indicate strong growth prospects, especially with raised revenue guidance and new product launches. Fast-growth market sales and new partnerships enhance this outlook. Despite some margin pressures and unclear timelines for certain investments, the overall sentiment is positive, driven by strong demand in key segments and a strategic focus on expansion. The company's market cap suggests a moderate reaction, leading to a predicted positive stock movement of 2% to 8% over the next two weeks.
Key Financial Performance
Total Revenue Increased approximately 16.6% year-on-year to $221.3 million, reflecting organic growth of 6.4%, 9.4% benefit from acquisitions, and 0.8% benefit from foreign currency.
Adjusted Operating Margin Increased 30 basis points year-on-year to 19%, driven by higher volume, pricing initiatives, and favorable product mix.
Adjusted Earnings Per Share Increased 8.9% year-on-year to $2.08, supported by higher revenue and operational efficiencies.
Net Cash Provided by Operating Activities Increased to $20.7 million compared to $9.1 million a year ago, reflecting improved operational performance.
Free Cash Flow Increased to $13 million compared to $2.2 million a year ago, driven by higher operating cash flow and controlled capital expenditures.
Electronics Segment Revenue Increased 20.6% year-on-year to $115.7 million, driven by organic growth of 11.1%, acquisition benefit of 9.1%, and 0.4% benefit from foreign currency. Growth was supported by sales in fast-growth markets and increased new product sales.
Electronics Segment Adjusted Operating Margin Increased 120 basis points year-on-year to 28.8%, due to higher volume, pricing initiatives, and favorable product mix.
Engineering Technologies Revenue Increased 35.3% to $30.6 million, driven by 33.4% benefit from the McStarlite acquisition, organic growth of 1.2%, and 0.6% benefit from foreign currency. Organic growth was suppressed by delays in customer project timing.
Engineering Technologies Adjusted Operating Margin Increased 260 basis points year-on-year to 18.9%, primarily due to higher volume.
Scientific Segment Revenue Increased 5.5% to $19.5 million, driven by an acquisition benefit of 8.1%, partially offset by an organic decline of 2.6% due to lower demand from academic and research institutions affected by NIH cuts.
Scientific Segment Adjusted Operating Margin Decreased 270 basis points year-on-year to 24.2%, impacted by organic decline and unfavorable product mix.
Engraving Segment Revenue Increased 13.6% to $35.7 million, driven by organic growth of 10.3% from improved demand in Europe and North America, and a 3.3% benefit from foreign currency.
Engraving Segment Adjusted Operating Margin Increased 490 basis points year-on-year to 19.2%, supported by higher sales and restructuring actions.
Specialty Solutions Segment Revenue Decreased 7.2% year-on-year to $19.8 million, reflecting weaker demand.
Specialty Solutions Segment Operating Margin Decreased 600 basis points year-on-year to 10.7%, due to lower sales volume.
Net Debt Increased to $437.7 million compared to $413.2 million at the end of fiscal second quarter 2025, despite paying down approximately $10 million of debt during the quarter.
Adjusted Gross Margin Increased 120 basis points year-on-year to 42.1%, driven by higher sales volume and favorable product mix.
You have reached the limit. Sign up to access full content
Get started
Operating Highlights
New Product Sales: New product sales grew approximately 13% to $16.3 million in Q2 2026. Four new products were launched in the quarter, and the company remains on track to release over 15 new products in fiscal 2026. Expected sales from new products have been increased to $85 million from $78 million for the fiscal year.
Fast-Growth Markets: Sales into fast-growth markets were approximately $61 million, representing 28% of total sales in Q2 2026. These sales are expected to grow over 45% year-on-year and exceed $270 million for fiscal 2026. Growth is driven by markets like Grid, Space, and Defense.
Organic Growth: The company achieved 6.4% organic growth in Q2 2026, led by the Electronics segment with 11.1% organic growth and a book-to-bill ratio of 1.08. The Engraving segment also grew 10.3% organically.
Adjusted Margins: Adjusted gross margin increased to 42.1%, up 120 basis points year-on-year. Adjusted operating margin rose to 19%, up 30 basis points year-on-year.
Debt Reduction: Approximately $10 million of debt was paid down, reducing the net leverage ratio to 2.3x.
R&D Investments: R&D spending increased from 1% of sales in 2021 to 3% currently, supporting new product development and positioning in fast-growth markets.
Acquisitions: Acquisitions contributed 9.4% to total revenue growth in Q2 2026, with notable contributions from the McStarlite acquisition in the Engineering Technologies segment.
You have reached the limit. Sign up to access full content
Get started
Risk or Challenges
Delays in customer project timing: Engineering Technologies segment experienced suppressed organic growth due to delays in customer project timing, which could impact revenue realization and operational efficiency.
Lower demand from academic and research institutions: The Scientific segment faced an organic decline of 2.6% due to reduced demand from academic and research institutions, attributed to NIH budget cuts, which could affect revenue stability.
Tariff costs: The Scientific segment is impacted by tariff costs, which could increase operational expenses and reduce profitability.
Product and regional mix challenges: The Engraving segment anticipates slightly lower adjusted operating margins in the next quarter due to project and regional mix, which could affect profitability.
Decline in Specialty Solutions revenue and margin: Specialty Solutions segment revenue decreased by 7.2% year-on-year, and operating margin dropped by 600 basis points, indicating challenges in maintaining market share and profitability.
Debt levels and interest expenses: Standex has a net debt of $437.7 million and expects interest expenses between $7 million and $7.5 million in the next quarter, which could strain financial resources and limit growth investments.
You have reached the limit. Sign up to access full content
Get started
Guidance & Outlook
Fiscal Year 2026 Sales Outlook: The company expects revenue to grow by over $110 million from 2025, driven by strong momentum from new product sales, sales into fast-growth markets, and the full-year impact of last year's acquisitions. New product sales are expected to contribute approximately 300 basis points of incremental sales growth, with total sales from new products projected to reach $85 million, up from $78 million. Sales from fast-growth markets are expected to grow over 45% year-on-year, exceeding $270 million.
Fiscal Third Quarter 2026 Revenue and Margin Expectations: The company anticipates significantly higher revenue year-on-year, driven by mid- to high-single-digit organic growth from higher sales into fast-growth end markets and increased new product sales. Adjusted operating margin is expected to be slightly higher due to higher volume and favorable product mix, partially offset by growth investments and higher medical costs. Sequentially, revenue is expected to be slightly to moderately higher, with adjusted operating margin also slightly to moderately higher due to higher volume, pricing, and productivity initiatives, partially offset by growth investments.
Electronics Segment Outlook: Sequentially, in fiscal third quarter 2026, the Electronics segment expects slightly to moderately higher revenue, reflecting higher sales into fast-growth end markets and increased new product sales. Adjusted operating margin is expected to remain similar, primarily due to product mix and continued strategic growth investments.
Engineering Technologies Segment Outlook: Sequentially, the segment expects moderately to significantly higher revenue due to growth in new product sales and more favorable project timing. Adjusted operating margin is expected to be slightly to moderately higher due to higher volume.
Scientific Segment Outlook: Sequentially, the segment expects similar revenue and slightly lower adjusted operating margin due to product mix, investments in research and development, and tariff costs, partially offset by pricing and productivity initiatives.
Engraving Segment Outlook: In the next fiscal quarter, the segment expects similar revenue and slightly lower adjusted operating margin due to project and regional mix.
Specialty Solutions Segment Outlook: Sequentially, the segment expects moderately to significantly higher revenue and operating margin.
Capital Expenditures for Fiscal 2026: The company expects capital expenditures to range between $33 million and $38 million.
Debt Leverage and Interest Expense: The company plans to continue focusing on paying down debt, with the leverage ratio expected to decline further through fiscal year 2026. Interest expense for fiscal third quarter 2026 is expected to be between $7 million and $7.5 million.
You have reached the limit. Sign up to access full content
Get started
Shareholder Return Plan
Quarterly Cash Dividend: Declared 246th consecutive quarterly cash dividend of $0.34 per share, representing an approximately 6.3% increase year-on-year.
You have reached the limit. Sign up to access full content
Get started
Key Q&A
Q:Can you explain the $17.98 million redeemable noncontrolling interest redemption value related to the 10% of Narayan that could not be acquired?
A:The $17.98 million relates to the 10% of Narayan that Standex could not acquire due to Indian government restrictions on Indian nationals owning foreign equity. The purchase agreement included an alternative method to acquire the remaining 10% with cash using a 12x trailing 12-month EBITDA multiple. Since the Indian government approval was not obtained, the minority owners of Narayan now have the right to sell 1/3 of their remaining 10% interest. This adjustment reflects the increased value of Narayan based on its strong performance.
Q:How would you characterize the competitive environment for Amran/Grid in the low to medium voltage transformers market?
A:The market is characterized by customer intimacy, where OEMs outsource custom-designed elements to partners like Amran. About 40% of instrument transformers are made by OEMs like GE, Siemens, and Schneider, while the remaining 60% are supplied by regional players. Amran is becoming a valued partner due to its strong engineering capabilities and competitive positioning.
Q:What are your thoughts on the recent India-EU trade deal?
A:Clarity and consistency in trade are positive developments. The trade deal makes the Croatia site more viable long-term as it serves the European market and leverages the India supply chain. The full implications are not yet known, but the deal is expected to be beneficial.
Q:Can you parse out the sales and order growth for the grid business versus the legacy electronics business?
A:The grid business has a book-to-bill ratio of about 1.2, while the core electronics business is at about 1.03-1.04. The grid business continues to grow strongly, contributing to over 10% organic growth for the total electronics segment, with the core business growing mid-single digits organically.
Q:What is sustaining growth in the legacy electronics business?
A:Growth in the legacy electronics business is driven by strong performance in Asia, a pickup in Europe, and flat performance in North America. End markets like test and measurement, electrification, grid, and data centers are contributing to growth.
Q:Can you provide a breakdown of the $270 million fast growth sales target for the year?
A:The $270 million includes a full year of the grid business, with over half of the sales coming from grid. Defense in North America contributes $15-20 million, space $10 million, EV $5 million, and the rest from grid growth and legacy magnetics.
Q:What is the status of capacity expansion projects for Amran Narayan?
A:Since acquiring the business, capacity has increased by 50% through additional shifts, lean work, and some automation. New sites in Croatia, Mexico, and Houston are being developed, with plans to more than double capacity in 3-5 years.
Q:How do capacity expansion projects impact near-term segment profitability?
A:Near-term profitability is impacted by costs associated with setting up new sites, hiring staff, and ramping up production. While margins are expected to remain strong, they may not increase in the short term due to these investments.
Q:What caused the margin decline in Specialty Solutions?
A:The margin decline is attributed to difficult end market conditions in North America. However, order intake is improving, and margins are expected to recover in the next quarter.
Q:What is the outlook for the Engraving business?
A:The Engraving business is seeing a pickup in Europe, while North America remains at similar levels. New product sales, particularly in soft trim processes, are contributing to growth. The overall market is expected to improve later in the year.
Q:What is the competitive advantage of Amran in the grid business?
A:Amran's competitive advantages include faster prototype turnaround, superior quality, cost advantages from its India supply chain, and strong customer relationships. Customers are actively requesting capacity expansion, indicating strong demand.
Q:What is the status of the noncontrolling interest adjustment for Narayan?
A:The adjustment will continue quarterly as long as the 10% minority interest remains. The liability will end once Standex acquires the remaining 10% stake, which is governed by put and call options in the purchase agreement.
Q:What is the M&A strategy moving forward?
A:The focus is on opportunities in the grid business, expanding the legacy electronics business into related technologies, and exploring emerging capabilities in the space market. The company is building a pipeline of potential acquisitions in these areas.
Q:Review of Unclear Management Responses
A:Management avoided providing specific details on the full implications of the India-EU trade deal, stating only that it is expected to be beneficial without elaborating on how. Additionally, they did not provide a clear timeline for when the 10% minority interest in Narayan would be fully acquired, only mentioning that it depends on put and call options in the purchase agreement.
You have reached the limit. Sign up to access full content
Get started
Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
America benefit
Conference result
Howe measure
Instructions conference
NIH cut
Officer Conference
Segment record
acquisition benefit
addition engraving
balance sale
basis mid
benefit currency
benefit decline
bill Electronics
bill addition
bill nature
bill ratio
conference Howe
conversion cycle
currency delay
customer project
cycle order
debt leverage
debt presentation
delay customer
development RD
development tariff
digit track
effort application
engine
margin volume
mid digit
mix investment
point margin
point sale
point volume
project timing
result year
sale end
sale outlook
segment book
segment margin
timing margin
volume product
SXI Transcript
Standex International Corporation (SXI) Q2 2026 Earnings Call Transcript
Positive1-30
The earnings call and strategic plan indicate strong growth prospects, especially with raised revenue guidance and new product launches. Fast-growth market sales and new partnerships enhance this outlook. Despite some margin pressures and unclear timelines for certain investments, the overall sentiment is positive, driven by strong demand in key segments and a strategic focus on expansion. The company's market cap suggests a moderate reaction, leading to a predicted positive stock movement of 2% to 8% over the next two weeks.
Standex International Corporation (SXI) Q1 2026 Earnings Call Transcript
Positive10-31
The earnings call summary indicates strong revenue growth, especially in fast-growth markets, and a focus on new product development. The Q&A session reinforces positive momentum, with no slowdown in key growth areas and strong bookings. Despite some margin declines, the company's strategic focus on optimization and expansion into fast-growth markets is promising. The market cap suggests a moderate reaction, leading to a positive stock price movement of 2% to 8% over the next two weeks.
Standex International Corporation (SXI) Q4 2025 Earnings Call Transcript
Positive8-1
The earnings call summary and Q&A reveal strong financial performance, including record adjusted gross margin and successful product development. The acquisition of McStarlite expands the market, and plans for global expansion are underway. Despite some uncertainties in the EV market and NIH funding, optimistic guidance and strategic plans are in place. The company's debt leverage is expected to improve, and the acquisition pipeline remains active. Overall, the positive aspects outweigh the concerns, suggesting a likely positive stock price movement.
Standex International Corporation (SXI) Q3 2025 Earnings Call Transcript
Unknown5-2
The earnings call shows a mixed picture: strong revenue growth due to acquisitions, but a decline in organic revenue and increased debt levels. The Q&A highlighted concerns about tariffs and economic uncertainty, but management expressed confidence in mitigating impacts. The dividend increase is positive, but vague responses on growth expectations and challenges in the Scientific segment weigh on sentiment. Given the company's market cap and these mixed signals, the stock is likely to experience a neutral movement in the short term.
SXI Report
Frequently Asked Questions
Where does this earnings call transcript come from?
All transcripts are sourced directly from the official live webcast or the company’s official investor relations website. We use the exact words spoken during the call with no paraphrasing of the core discussion.
How soon is the transcript available after the earnings call ends?
Full verbatim transcripts are typically published within 4–12 hours after the call ends. Same-day availability is guaranteed for all S&P 500 and most mid-cap companies.
Is the transcript edited or altered in any way?
No material content is ever changed or summarized in the “Full Transcript” section. We only correct obvious spoken typos (e.g., “um”, “ah”, repeated 10 times”, or clear misspoken ticker symbols) and add speaker names/titles for readability. Every substantive sentence remains 100% as spoken.
Why do some answers appear as “Unclear” or “Inaudible”?
When audio quality is poor or multiple speakers talk over each other, we mark the section instead of guessing. This ensures complete accuracy rather than introducing potential errors.
Who creates the AI Summary and Key Q&A highlights shown above the transcript?
They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
