Standex International's Q1 2026: Contradictions Emerge on Amran/Narayan Growth, Fast-Growth Markets, and Engraving Restructuring

Date of Call: October 31, 2025

Financials Results

• Revenue: $217.4M, up 27.6% YOY
• EPS: $1.99 adjusted EPS, up 8.2% YOY
• Operating Margin: 19.1% adjusted operating margin, up 210 basis points YOY

Guidance:

• Expect FY2026 revenue to grow by over $110M vs prior year (raised by $10M vs prior guidance)
• Amran/Narayan (Standex Electronics Grid) expected to grow >20% YOY
• New product sales to contribute ~300 bps of incremental growth (~$78M expected in FY2026)
• Fast-growth markets expected to grow >45% YOY and exceed $270M in sales
• Q2: significantly higher revenue YOY, mid-single-digit organic growth in Electronics, similar adjusted operating margin
• FY2026 CapEx $33M–$38M; Q2 interest expense $8M–$8.5M

Business Commentary:

• Revenue Growth and Strategic Acquisitions:
• Standex International Corporation reported a 27.6% increase in sales for the fiscal first quarter 2026, contributing to a strong start to the fiscal year.

• The growth was driven by new product sales and sales in fast-growth markets, with the Amran/Narayan Group acquisition providing a significant boost.

• Strong Order Intake and Market Outlook:

• Orders of approximately $226 million were the highest quarterly intake ever, setting up well for the balance of the year.
• The book-to-bill ratio remained above 1, and organic orders in the Electronics segment rose approximately 8% year-on-year.

• The strong order intake was driven by demand in fast-growth markets and expectations for mid- to high single-digit organic growth in the Electronics segment.

• Profitability and Margin Improvement:

• The adjusted operating margin increased by 210 basis points year-on-year to 19.1%.

• This improvement was due to contributions from the Amran/Narayan Group acquisition, pricing, and productivity initiatives.

• Cash Generation and Debt Reduction:

• The company's net leverage ratio was lowered to 2.4x, and it paid down approximately $8 million of debt during the fiscal first quarter 2026.
• This was achieved through strong cash generation and cash repatriation, enabling further focus on debt reduction.

Sentiment Analysis:

Overall Tone: Positive

• Management raised FY2026 sales outlook: "we now expect revenue to grow by over $110 million"; "Adjusted operating margin of 19.1% was up 210 basis points year‑on‑year"; "Orders of approximately $226 million were the highest quarterly intake ever." These statements indicate improving top‑line, margin expansion and record bookings.

Q&A:

• Question from Christopher Moore (CJS Securities, Inc.): At some point you talked about Standex being roughly 2/3 of the way in this optimization journey other than potentially selling one of the business segments, what are the biggest areas of focus to help this further on the optimization journey?
  Response: Primary focus is organic growth—ramping new products and scaling into fast‑growth markets; portfolio simplification remains possible but the main value comes from executing organic initiatives.

• Question from Christopher Moore (CJS Securities, Inc.): You talked about new products a couple of times, 15 this year. Are there a few that really kind of stand out in terms of that are being introduced this year?
  Response: Key standouts: new relays targeting test & measurement (driven by electrification/data centers) and an expanded ultra‑low temperature freezer in Scientific.

• Question from Christopher Moore (CJS Securities, Inc.): Amran/Narayan is performing exceptionally well, 30% growth and you're talking about 20% this year. Are you seeing any slowing down in growth at this point in time?
  Response: No slowdown observed; bookings remain strong, Croatia site and Mexico capacity ramping support continued growth and visibility will be updated next quarter.

• Question from Ross Sparenblek (William Blair & Company L.L.C., Research Division): Can you help us think about some of the momentum you're seeing, particularly in the legacy business—what end markets stand out?
  Response: Strength is broad: defense, test & measurement, and distribution, with geographic strength in North America and Asia driving bookings.

• Question from Ross Sparenblek (William Blair & Company L.L.C., Research Division): Is the backlog growth driven mostly by magnetics or the lower‑mix product line?
  Response: Order growth was similar across magnetics and SST (switches & sensors); no single product line dominated.

• Question from Ross Sparenblek (William Blair & Company L.L.C., Research Division): What are lead times on converting orders and the operating‑leverage profile for the legacy business into H2 2026?
  Response: Conversion: ~30% ship within 3 months, ~30% next quarter, remainder later; margins should improve but near‑term gains will be partly offset by growth investments (e.g., Croatia ramp).

• Question from Michael Shlisky (D.A. Davidson & Co., Research Division): Is the Grid brand effort across Amran only or across the entire Electronics segment—will one brand be presented to the entire customer base?
  Response: Grid (Standex Electronics Grid) applies to the Amran/Narayan business and is intended as a broader platform; company will also use Edge and Detect to describe other Electronics businesses.

• Question from Michael Shlisky (D.A. Davidson & Co., Research Division): Can you give a broader view on the impact of the government shutdown on your business and any quantification of the effect?
  Response: No immediate material impact from recent shutdown; some segments (scientific, hydraulics) are affected by prior NIH funding reductions, but no specific quantified effect provided.

• Question from Michael Shlisky (D.A. Davidson & Co., Research Division): Regarding cash repatriation to pay down debt, was there any one‑time tax hit?
  Response: No significant one‑time tax; only routine withholding/holding taxes when repatriating some international cash.

• Question from Gary Prestopino (Barrington Research Associates, Inc., Research Division): Is the growth from new products and fast‑growth markets mainly data centers/grid or spread across the five fast‑growth markets?
  Response: Fast‑growth is diversified: roughly half of fast‑growth ($270M) is data center/electrification/grid (Amran), with remainder in space, defense and EV; new product sales historically were less in fast‑growth but upcoming launches will be more weighted to fast‑growth.

• Question from Gary Prestopino (Barrington Research Associates, Inc., Research Division): What is the expected capacity for the Croatia plant?
  Response: Conservative planning estimate is ~$60M in sales in 3–5 years with room to expand footprint or add shifts if needed.

• Question from Gary Prestopino (Barrington Research Associates, Inc., Research Division): On Slide 3 the $55M and $78M bars—those are dollar amounts of new product sales?
  Response: Yes—$55M last year and ~$78M expected this year from new product sales.

• Question from Matt Koranda (ROTH Capital Partners, LLC, Research Division): Book‑to‑bill for Amran/Narayan looks about 1x—can you talk about current order trends and how that supports the 20% growth outlook?
  Response: Book‑to‑bill is slightly >1 (~1.05–1.07); Amran posted a record quarter (> $35M) and bookings remain strong, supporting the >20% growth outlook.

• Question from Matt Koranda (ROTH Capital Partners, LLC, Research Division): With the Grid rebrand, what types of products would you acquire or develop to fill portfolio gaps?
  Response: Focus on additional transformer‑related and complementary products electrical OEMs buy; management declined to name specifics pending concrete plans.

• Question from Matt Koranda (ROTH Capital Partners, LLC, Research Division): With leverage in the low 2s and further reduction expected, what's the appetite for larger acquisitions and how close is any portfolio simplification?
  Response: They are building acquisition 'powder' while continuing to simplify the portfolio; appetite exists but timing is uncertain and actions will be taken when the right opportunities arise.

• Question from Ross Sparenblek (William Blair & Company L.L.C., Research Division): Engraving pipeline signs of activity—is 20% margin achievable and how quickly with volume improvement?
  Response: Market has bottomed and is stabilizing; shutdown and restructuring savings will start in Q3/Q4, making 20% margin attainable and potentially surpassable as volume recovers.

Contradiction Point 1

Amran/Narayan Growth and Sustainability

It involves differing perspectives on the sustainability of growth rates for Amran/Narayan, which is a significant acquisition for Standex International.

Is Amran/Narayan's growth slowing? - Christopher Moore(CJS Securities)

2026Q1: No, we are not seeing a slowdown in growth. Bookings remain strong. The end market remains robust due to electrification and grid modernization. - David Dunbar(CEO)

What's the outlook for Amran's sales and is the 30% growth sustainable? - Chris Moore(CJS Securities)

2025Q2: There is no seasonality in Amran's sales. The current run rate is $10 million per month. Growth is still expected to be in the 15% range, considering a full year ahead. - Ademir Sarcevic(CFO)

Contradiction Point 2

Fast-Growth Market Sales

This contradiction pertains to the company's reported sales in fast-growing markets, which are critical to its growth strategies and market positioning.

Was the $270 million in fast-growth markets primarily from data centers and grid? - Gary Prestopino (Barrington Research Associates, Inc.)

2026Q1: About half is from data centers and grid. Other significant areas are space, defense, and electric vehicles. New product sales are separately tracked but will increasingly focus on fast-growth markets. - David Dunbar(CEO)

Will Blackwell's Q4 revenue be additive, and what's the expected gross margin exit rate? - Stacy Rasgon (Bernstein Research)

2025Q3: It's roughly the same mix. About half of the fast growth markets are data centers and grid. About half is data centers, half is grid. And then everything else is fairly insignificant. - David Dunbar(CEO)

Contradiction Point 3

Organic Growth Expectations

This contradiction highlights differing expectations for organic growth within the Electronics segment, which is crucial for the company's overall performance and investor expectations.

What are the key areas for optimization in the business? - Christopher Moore (CJS Securities, Inc.)

2026Q1: We do see that the order intake is well beyond the shipments, which is a positive signal that we should see organic growth in FY '26. - Ademir Sarcevic(CFO)

Does the 6% of COGS imported from China primarily consist of scientific and hydraulic products? - Chris Moore (CJS Securities)

2025Q3: As we enter FY '26, we do -- again assuming current economic environment and nothing significant -- no significant changes, we do believe we're going to start seeing organic growth. - Ademir Sarcevic(CFO)

Contradiction Point 4

Electronics Segment Growth Drivers

The shifting focus on growth drivers within the Electronics segment may influence investors' understanding of the company's strategic priorities and market positioning.

What's driving the momentum in your legacy electronics business? - Ross Sparenblek(William Blair)

2026Q1: Strong book-to-bill and bookings indicate momentum. Defense and test and measurement are significant. The distribution market is up, reflecting general market strength. - David Dunbar(CEO)

What are the demand and sales growth drivers in the Electronics segment? - Ross Riley Sparenblek(William Blair)

2025Q4: Orders for Electronics are up 16% year-on-year, driven by OEMs and higher sales in Asia. We believe this is a sustainable trend. - David Dunbar(CEO)

Contradiction Point 5

Engraving Segment Performance and Restructuring

It concerns the expected impact and timeline of restructuring efforts in the Engraving segment, which could affect operations and financial performance.

What is the outlook for the Engraving segment? - Ross Sparenblek(William Blair)

2026Q1: The market is stabilizing and showing signs of improvement. Savings from recent shutdowns will start impacting Q3 and Q4. Engraving is well positioned with restructuring actions completed. - Ademir Sarcevic(CFO)

What does the Engraving restructuring involve, and what savings are expected? - Ross Sparenblek(William Blair)

2025Q2: The restructuring includes facility consolidation and head count reduction, with annualized savings expected starting in Q4 2025. - Ademir Sarcevic(CFO)