Standex International Reports Q2 Fiscal 2025 Results with Decreased Net Income and Increased Sales

Standex International Corporation reported its financial results for the second quarter of fiscal year 2025, revealing a net income of $1.3 million, a significant decrease from $18.9 million in the same period last year. The company's net sales for the quarter reached $189.8 million, up 6.4% from $178.4 million in the prior year, primarily driven by recent acquisitions that contributed $27.2 million to sales. However, organic sales fell by $14.7 million, or 8.2%, due to reduced demand in the automotive sector and general industrial markets, particularly in North America and Europe.

In terms of profitability, Standex's gross profit for the quarter was $71.4 million, resulting in a gross margin of 37.6%, down from 40.2% a year earlier. The decline in gross margin was attributed to lower organic sales, $6.2 million in purchase accounting expenses related to acquisitions, and inflationary pressures on labor and materials. Selling, general, and administrative expenses increased to $45.7 million, or 24.1% of sales, compared to $43.3 million, or 24.3% of sales, in the prior year quarter.

The company undertook significant strategic developments during the quarter, completing three acquisitions, including the Amran/Narayan Group, which is expected to enhance its presence in the high-margin electrical grid market. The total cash consideration for the Amran acquisition was approximately $179.2 million, financed through cash on hand and a new $250 million term loan. The acquisitions are anticipated to contribute positively to future sales and profitability, although they also resulted in $16.4 million in acquisition-related costs for the quarter.

Operationally, Standex's total backlog increased to $269.2 million as of December 31, 2024, compared to $242.2 million a year earlier, with a notable rise in backlog for the Electronics segment due to recent acquisitions. The company reported a total employee headcount of 3,200, reflecting its ongoing efforts to streamline operations and improve productivity. Looking ahead, Standex expects continued improvement in key financial metrics, supported by productivity initiatives and the integration of recent acquisitions, particularly in the fast-growing electrical grid market.

Overall, while Standex International faced challenges in organic sales growth and profitability during the quarter, its strategic acquisitions and increased backlog position the company for potential growth in the coming periods. The management remains focused on enhancing operational efficiency and leveraging its acquisitions to drive future performance.