Investor Presentation: Safe Harbor Statement and Acquisition Strategy

Transcription

1 Investor Presentation Janney Capital Markets 2013 Industrials 1x1 Conference December 5, 2013

2 Safe Harbor Statement Statements in this presentation include, or may be based upon, management's current expectations, estimates and/or projections about Standex's markets and industries. These statements are forward-looking statements within the meaning of The Private Securities Litigation Reform Act of Actual results may materially differ from those indicated by such forward-looking statements as a result of certain risks, uncertainties and assumptions that are difficult to predict. Among the factors that could cause actual results to differ materially from those currently expected or desired. These factors include, but are not limited to: material adverse or unforeseen legal judgments, fines, penalties or settlements; conditions in the financial and banking markets, including fluctuations in the exchange rates and the inability to repatriate foreign cash; general and international recessionary economic conditions, including the impact, length and degree of the current recessionary conditions on the customers and markets we serve and more specifically conditions in the food service equipment, automotive, construction, aerospace, energy, transportation and general industrial markets; lower-cost competition; the relative mix of products which impact margins and operating efficiencies, both domestic and foreign, in certain of our businesses; the impact of higher raw material and component costs, particularly steel, petroleum based products and refrigeration components; an inability to realize the expected cost savings from restructuring activities, effective completion of plant consolidations, cost reduction efforts, restructuring including procurement savings and productivity enhancements, capital management improvements, strategic capital expenditures, and the implementation of lean enterprise manufacturing techniques; the inability to achieve the savings expected from the sourcing of raw materials from and diversification efforts in emerging markets; the inability to attain expected benefits from strategic alliances or acquisitions, the inability to achieve synergies contemplated by the Company; other factors discussed in the Annual Report of Standex on Form 10-K for the fiscal year ending June 30, 2013, which is on file with the Securities and Exchange Commission, and any subsequent periodic reports filed by the company with the Securities and Exchange Commission. In addition, any forward-looking statements represent management's estimates only as of the day made and should not be relied upon as representing management's estimates as of any subsequent date. While the company may elect to update forward-looking statements at some point in the future, the company and management specifically disclaim any obligation to do so, even if management's estimates change. 2

3 About Standex About Standex Diversified global manufacturing company operating five segments with leading brands serving broad customer base worldwide Food Service Equipment Engraving Engineering Technologies Electronics Hydraulics $701.5M sales and $82.9M adjusted EBITDA for TTM 9/30/2013 +$750M enterprise value Disciplined approach to acquisitions and divesting non-core businesses Operational excellence (+38% of workforce in low-cost countries) Strong cash flow and balance sheet Dividends paid since

4 Business Overview Business Overview Diversified industrial company operating five core business segments operating at improved profitability levels Performance Revenue Breakdown $4.00 $3.50 $3.39 $3.70 $700 Electronics, 15% Hydraulics, 4% $3.00 $2.50 $2.00 $1.50 Major Restructuring $1.60 $1.32 $2.41 $2.97 $650 $600 $550 Engineering Tech, 11% Engraving, 14% Food Service, 56% $1.00 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 $500 Europe, 16% Adjusted EPS Sales R.O.W., 4% Asia, 7% US, 73% 4

5 Standex Strategy Standex Operating Model Focused Diversity Create fewer, larger and more profitable business units Investment and growth plans focused on building selected strategic business units Top-line growth through organic growth initiatives and acquisitions Enhance global footprint of businesses Emphasize value-added business/product segments to yield higher returns Customer solutions and engineered products Operational Excellence Continuous improvement initiatives in cost reduction and working capital performance Lean enterprise is a key implementation tool Leverage operational synergies across/within business groups 5

6 Standex Current State Standex Operating Model Leveraging lower cost structure as end-user markets recover and respond to top-line growth initiatives Organic growth and improved profitability during the TTM Record non-gaap EPS for past three years Five bolt-on acquisitions or equity positions in past three years added $85M in sales Exited FY13 in net cash position for the second year in a row and second time in the company history Ample liquidity for future acquisitions, strategic capital spending related to cost reductions or organic growth opportunities 6

7 Critical Growth and Margin Improvement Initiatives Market Share Gains through New Products, Geographies & Markets Coupled with Cost Reduction and Working Capital Management Focus Food Service Equipment Engraving Engineering Technologies Electronics Hydraulics Execute Cheyenne plant consolidation New market penetration (Dollar Stores and C-Stores), New products (Glass Door Merchandisers, Rack Refrigeration, Combi Oven, Speed Oven) Execute and gain market share in automotive platform launches Emerging market focus (Korea, Mexico, Brazil) Brazil improvements Exploit new technologies (Direct Lase, Nickel Shell Molding) Execute satellite launch and manned space flight opportunities Continue to grow market share in land based turbine market Participate in the expanding aviation/aircraft engine market Execute Standex Meder sales and cost synergies Launch recent key account share gains in magnetics and sensors Complete Mexico facility move Expand upon recent roll-off container refuse market share gains Launch new products for garbage truck refuse market Complete Tianjin, China expansion Continue export market sales expansion 7

8 Food Service Equipment Food Service Equipment Launching products on hot and cold sides to broaden our position in major chains Performance Adding Value Through Innovation FY08 FY13 Δ% YOY Revenues $ $ % Operating Income $ 31.5 $ % New Open Air Merchandisers Glycol Parallel Rack Systems OI Margin 8.3% 10.0% Sales by Category Specialty, 23% NACS Induction Cooking High Speed Cooking Hot, 25% Cold, 52% Standex solutions for the convenience store market 8

9 Food Service Customers Convenience Stores Drugstore, Retail & Dollar Store Institutional Caterers, Schools & Stadiums Beverage Scientific 9

10 Engraving Engraving Opening manufacturing facilities close to customers in growth markets worldwide Performance State of the Art Manufacturing with Global Presence FY08 FY13 Δ% YOY Revenues $ 92.2 $ % Operating Income $ 9.6 $ % OI Margin 10.4% 16.7% Dispersed in North America, Europe & Asia Sales by Category New Products / Services Textured Molds - Non-Auto, 21% Drums, Systems & Vents, 9% Textured Molds - Auto, 48% Engraved Rolls & Plates, 21% Machinery, 1% Nickel Plates Nickel Shells Automotive Rolls Metamorphic Texture Development - Design - Validation - Production 10

11 Engraving Customers Automotive Fashion & Apparel Household & Building Materials Electronics Heavy Truck Packaging Tissue & Towels Toys Aviation White Goods Medical Medical 11

12 Engineering Technologies Engineering Technologies Providing innovative alternatives in high-tech metal fabrication Performance Adding Value Through Innovation FY08 FY13 Δ% YOY Revenues $ 51.6 $ % Operating Income $ 9.8 $ % OI Margin 18.9% 17.6% Sales by Category General Industrial, 5% Aviation, 5% NEO Engine/Lipskins & Plug & Nozzle Marine/Defense, 8% Energy Land Based, 37% Aerospace, 25% Energy Oil & Gas, 6% Medical, 14% 12

13 Engineering Technologies Customers Aviation Oil & Gas Aerospace Defense Energy Healthcare Marine 13

14 Electronics Electronics Driving growth with product innovation and manufacturing model that combines stateside engineering with low-cost foreign production Performance New Innovation for Medical Applications FY08 FY13 Δ% YOY Revenues $ 49.1 $ % Operating Income $ 3.5 $ % OI Margin 7.1% 14.9% * Note FY 13 includes $1.5M of Purchase Accounting Sales by Category Various planar transformers, relays, and sensors Engineering, Design, and Solutions for Automotive Other, 12% Utilities, 1% HVAC, 4% Industrial, 30% Mil/Aero, 7% Medical, 7% Security, 5% Test & Measure, 6% Household, 9% Trans/Auto, 20% Various reed relays, sensors, and magnetics 14

15 Electronics Customers 15

16 Hydraulics Hydraulics Using our global reach and know-how to expand into new markets Performance FY08 FY13 Δ% YOY New Product Development for the Refuse Industry Revenues $ 35.1 $ % Operating Income $ 4.7 $ % OI Margin 13.4% 16.6% Sales by Category Package - Eject Cylinder for Garbage Trucks Other, 8% Dump Trailer, 28% Aftermarket, 26% Dump Truck, 19% Refuse, 19% 16

17 Hydraulics Customers Refuse Construction & Infrastructure Aftermarket Mining, Oil & Gas Export 17

18 Our Strategic Brands Recognized for quality and innovation by customers worldwide Food Service Equipment Engraving Engineering Technologies Electronics Hydraulics 18

19 Key Financial Targets Making solid progress toward four ambitious financial objectives: Top-line performance: Organic revenue growth at GDP +2-3% per year Acquisition-driven revenue growth of 3-4% per year Exceed 10% overall company EBIT Continued improvement in free cash flow conversion Working capital turns average 6.0 or better 19

20 FY 2008 to FY 2013 Comparison 20

21 Full Year Bridge 2013 versus 2008 Full Year Full Year EPS Full Year Comparison FY 2013 FY 2008 % Change FY 2013 FY 2008 % Change Net Income Continuing Operations $ 45,322 $ 19, % $ 3.55 $ % Add: Restructuring (Tax Effected) $ 1,885 $ 386 $ 0.15 $ 0.03 Legal Settlement $ 1,987 $ 0.16 Acquisition-related expenses $ 1,095 $ 0.08 Less: Retiree Life Insurance $ (1,611) $ (0.13) Non Recurring Tax Items $ (1,366) $ (0.11) Proforma Net Income from Continuing Operations $ 47,312 $ 19, % $ 3.70 $ % * Tax Effected 21

22 Net Working Capital Working Capital turns show improvement over time 22

23 Cash Flow $5.00 $4.50 $4.00 $3.50 $3.00 $2.50 $2.00 $1.50 $1.00 $0.50 $0.00 FCF Per Share $4.31 $4.11 $3.40 $2.84 $2.55 $2.31 FY 08 FY 09 FY 10 FY 11 FY 12 FY 13 Free cash flow per share continues to climb Generated strong free cash flow exceeding Net Income for in five of the last six years FY 08 FY 09 * FY 10 FY 11 FY 12 FY 13 Free operating cash flow (continuing ops): Net cash provided by operating activities, as reported $ 41,023 $ 33,496 $ 23,198 $ 60,834 $ 47,441 $ 63,449 Add: Voluntary Pension Contribution $ - $ - $ 16,721 $ 6,000 $ 3,250 Less: Capital Expeditures $ (9,425) $ (5,056) $ (3,936) $ (5,919) $ (9,936) $ (14,147) Free operating cash flow $ 31,598 $ 28,440 $ 35,983 $ 54,915 $ 43,505 $ 52,552 Net Income Continuing Operations * $ 19,507 $ 20,939 $ 30,352 $ 38,026 $ 46,907 $ 45,322 Conversion of free operating cash flow 162.0% 135.8% 118.6% 144.4% 92.7% 116.0% Shares 12,395 12,326 12,685 12,752 12,787 12,780 FCF Per Share $ 2.55 $ 2.31 $ 2.84 $ 4.31 $ 3.40 $ 4.11 * Excludes GW Impairment in Net Income 23

24 Debt Management Net Debt to Capital at -0.3% as of June 30, 2013 Net cash position of $992 24

25 Capital Spending $20,000 $18M to $19M $15,000 $13 M to $14M $10,000 $5,000 $2.5M $0 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 Key FY 14 CAPEX Projects: CAPEX Depreciation Amortization Food Service Complete facility closure and further investments in metal forming and automation. Engraving Purchase direct laser engraving machines. Electronics Complete manufacturing facility in Mexico. Engineering Technologies PNC spin lathes and control upgrades. Hydraulics Complete China facility capacity. 25

26 Summary Executing on organic growth initiatives to gain market share and capitalize on market opportunities Acquisition strategy proving successful with strong accretion from Meder; encouraged by acquisition pipeline and strong balance sheet Utilizing lean, low cost manufacturing and capital investments for continuous improvement in overall cost structure Constant drive to improve working capital management is part of Company culture Focus on driving long term profitable growth in order to generate shareholder value 26

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