Standex International Corporation (NYSE:SXI) Q1 2023 Earnings Conference Call November 4, 2022 8:30 AM ET

Company Participants

Chris Howe - Director of Investor Relations

David Dunbar - President and Chief Executive Officer

Ademir Sarcevic - Vice President, Chief Financial Officer and Treasurer

Conference Call Participants

Peter Lucas - CJS Securities

Nicholas Heymann - William Blair

Operator

Good morning, and welcome to the Standex International Fiscal First Quarter 2023 Financial Call. [Operator Instructions] Please note this event is being recorded.

I'd now like to turn the conference over to Chris Howe, Director of Investor Relations. Please go ahead.

Chris Howe

Thank you, operator, and good morning. Please note that the presentation accompanying management's remarks can be found on the Investor Relations portion of the company's website at www.standex.com. Please refer to Standex's safe harbor statement on Slide 2. Matters that Standex management will discuss on today's conference call include predictions, estimates, expectations and other forward-looking statements. These statements are subject to risks and uncertainties that could cause actual results to differ materially. You could refer to Standex's most recent annual report on Form 10-K as well as other SEC filings and public announcements for a detailed list of risk factors.

In addition, I'd like to remind you that today's discussion will include references to the non-GAAP measures of EBIT, which is earnings before interest and taxes; adjusted EBIT, which is EBIT, excluding restructuring, purchase accounting, acquisition-related expenses and onetime items; EBITDA, which is earnings before interest, taxes, depreciation and amortization; adjusted EBITDA, which is EBITDA excluding restructuring, purchase accounting, acquisition-related expenses and onetime items; EBITDA margin; and adjusted EBITDA margin. We will also refer to other non-GAAP measures, including adjusted net income, adjusted operating income, adjusted net income from continuing operations, adjusted earnings per share, adjusted operating margin, free operating cash flow and pro forma net debt to EBITDA. These non-GAAP financial measures are intended to serve as a complementary result provided in accordance with accounting principles generally accepted in the United States. Standex believes that such information provides an additional measurement and consistent historical comparison of the company's financial performance.

On the call today is Standex's Chairman, President and Chief Executive Officer, David Dunbar; and Chief Financial Officer and Treasurer, Ademir Sarcevic.

David Dunbar

Thank you, Chris, and welcome to Standex. We're happy to have you join us. And good morning, everyone, and welcome to our first fiscal quarter 2023 conference call. We're very pleased with our first quarter performance, which built on a highly successful fiscal 2022. Our focus on fast growth markets, pricing disciplines and nimble execution by our global management teams positioned us to continue delivering strong earnings in a dynamic macroeconomic environment. We have an active pipeline of new business opportunities and productivity initiatives to continue our momentum. I want to thank our employees, our executives and the Board of Directors for their continued dedication and support. Now if everyone can turn to Slide 3, key messages. The continued effectiveness of our price and productivity actions improved our margin profile in the quarter and produced our sixth consecutive quarter of record adjusted operating margin. Consolidated adjusted operating margin of 15% in fiscal first quarter 2023 was a 160-basis point increase year-on-year and a 110-basis point improvement sequentially despite external challenges such as high inflation and foreign currency headwinds.