Roadblocks to A Successful Stock: Standex International Corporation (NYSE: SXI)

On 18 Dec 2019, Standex International Corporation (NYSE: SXI) spotted trading -2.93% off 52-week high price. On the other end, the stock has been noted 36.20% away from the low price over the last 52-weeks. The stock changed -0.22% to recent value of $80.74. The stock transacted 57906 shares during most recent day however it has an average volume of 58.97K shares. The company has 12.53M of outstanding shares and 12.2M shares were floated in the market.

Standex International Corporation (SXI) recently stated financial results for the first quarter of fiscal year 2020 ending September 30, 2019.

First Quarter Fiscal 2020 Results 

“First quarter results were in line with our before communicated expectations. Performance in Engineering Technologies, Hydraulics and Scientific remained strong. The Engraving section stated a important sequential margin increase from the previous quarter on a modest sales gain.  Macro-economic headwinds continued to impact results, particularly in the Electronics section.  Our cost restructuring efforts are on plan and we continue to identify additional productivity initiatives that will be implemented in fiscal 2020.  Finally, our working capital metrics improved resulting in a favorable free cash flow comparison year-over-year,” commented President and Chief Executive Officer David Dunbar.

“From an organic growth perspective, laneway sales revenue increased 12% year-over-year to $16.6M  as our new offerings continue to resonate with consumers.  We are also benefitting from the successful integration and performance of our recent acquisitions, GS Engineering and Agile Magnetics, as we continue to leverage our Standex Value Creation model.

“Our financial position remains strong with net debt to Adjusted EBITDA of under 1x and about $250M in accessible liquidity. Working capital metrics improved in all of our business sections this quarter. Working capital turns increased 90 basis points to 5.4x, and importantly, we generated free cash flow of $1.3M in the first quarter which historically has been a negative quarter for us.

Balance Sheet and Cash Flow Highlights

  • Net Debt:Standex had net debt of $98.7M at September 30, 2019 contrast to $104.5M at the end of the fiscal fourth quarter in 2019.  Net debt consisted primarily of long-term debt of $190M and cash and equivalents of $90.2M of which $76.9M was held by foreign subsidiaries. Standex repatriated $9.2M in 1Q20 and expects to repatriate $35M in total in fiscal 2020.  The Company’s net debt to Adjusted EBITDA leverage ratio was 0.9x at the end of first fiscal quarter 2020.
  • Cash Flow: Net cash provided by continuing operating activities for the three months ended September 30, 2019 was $8.3M contrast to net cash used by continuing operating activities of $2.6M in the previous year. Cash provided by operating activities reflected improved working capital management driven by focused collection efforts and improved inventory turns and accounts payable management.

The Company generated free cash flow after capital expenditures of $1.3M contrast to negative free cash flow of $10.0M in 1Q19.

Its earnings per share (EPS) expected to touch remained -5.90% for this year while earning per share for the next 5-years is expected to reach at 10.00%. SXI has a gross margin of 33.60% and an operating margin of 9.30% while its profit margin remained 8.10% for the last 12 months.  According to the most recent quarter its current ratio was 2.4 that represents company’s ability to meet its current financial obligations. The price moved ahead of 3.73% from the mean of 20 days, 6.41% from mean of 50 days SMA and performed 12.36% from mean of 200 days price. Company’s performance for the week was 2.06%, 8.74% for month and YTD performance remained 20.18%.

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