Yahoo Finance

Industrial manufacturer Standex (NYSE:SXI) reported Q1 CY2025 results beating Wall Street’s revenue expectations , with sales up 17.2% year on year to $207.8 million. Its non-GAAP profit of $1.95 per share was 1.5% above analysts’ consensus estimates.

Is now the time to buy SXI? Find out in our full research report (it’s free).

Standex (SXI) Q1 CY2025 Highlights:

• Revenue: $207.8 million vs analyst estimates of $204.2 million (17.2% year-on-year growth, 1.7% beat)

• Adjusted EPS: $1.95 vs analyst estimates of $1.92 (1.5% beat)

• Adjusted EBITDA: $45.3 million vs analyst estimates of $45.64 million (21.8% margin, 0.8% miss)

• Operating Margin: 14.6%, in line with the same quarter last year

• Free Cash Flow Margin: 1.7%, down from 10.8% in the same quarter last year

• Market Capitalization: $1.89 billion

StockStory’s Take

Standex’s first quarter results reflected the company’s ongoing shift towards growth in fast-expanding end markets and successful integration of recent acquisitions. Management pointed to higher sales contributions from the Amran/Narayan Group and McStarlite, as well as an acceleration in new product launches, as key drivers behind the quarter’s revenue increase. CEO David Dunbar highlighted that “sales into fast-growth markets increased to 29% of total company sales,” underlining the company’s focus on sectors like electrical grid modernization and aerospace.

Looking ahead, management signaled that new product ramp-ups and continued investment in capacity expansion—particularly in Europe and India—will be central themes. Dunbar indicated that customer commitments for Amran/Narayan products “extend years into the future,” giving the company confidence in ongoing expansion. However, he acknowledged ongoing macro uncertainties, including tariffs and slower demand in scientific and certain industrial markets, with the company planning additional pricing and productivity actions to mitigate these headwinds.

Key Insights from Management’s Remarks

Standex’s management attributed first quarter performance primarily to acquisition contributions and targeted growth in select end markets, while addressing challenges in organic growth and tariff impacts.

• Acquisition-Driven Revenue Gains: Standex’s revenue growth was bolstered by the contributions from the Amran/Narayan Group (electronics) and recent McStarlite (aerospace components) acquisitions. These acquisitions expanded the company’s exposure to fast-growing markets, with Amran/Narayan’s integration performing ahead of expectations.

• Expansion in Fast-Growth Markets: Sales into markets such as electrical grid modernization, space, defense, and renewable energy represented a larger share of the portfolio. Management noted that these segments not only provided top-line growth but also supported higher margins due to favorable product mix and value-added offerings.

• New Product Momentum: The company doubled year-on-year new product sales, with 13 product launches year-to-date. Management expects new products to contribute over 200 basis points of incremental growth for the full year, emphasizing the long ramp-up cycle typical for products integrated into OEM platforms.

• Tariff and Supply Chain Management: While new tariffs—especially on imports from China—presented a risk, management downplayed the overall impact, citing regional manufacturing strategies and the ability to offset most tariff costs through pricing and productivity improvements. They noted that only about 6% of total cost of goods sold was exposed to Chinese imports.

• Margin and Cash Flow Dynamics: Operating margin remained stable despite organic sales declines, benefitting from price and productivity initiatives. However, free cash flow declined significantly year-on-year due to transaction-related payments, longer customer credit terms from acquired businesses, and annual tax payments. Management highlighted ongoing efforts to improve working capital efficiency in upcoming quarters.