Standex International (NYSE:SXI) reported fiscal second-quarter 2026 results that management said reflect “years-long efforts to build a growth engine,” driven by increased new product development and a greater focus on fast growth end markets. Chairman, President and CEO David Dunbar highlighted 6.4% organic revenue growth and a consolidated book-to-bill ratio of 1.04, while CFO Ademir Sarcevic pointed to higher cash generation and modest margin expansion.
Quarterly results highlighted by organic growth and record orders
Standex said second-quarter sales rose 16.6% year over year to $221.3 million, including 6.4% organic growth, a 9.4% contribution from acquisitions, and a 0.8% benefit from foreign currency. Orders of approximately $231 million were the highest quarterly intake in the company’s history, according to management.
Profitability improved modestly on an adjusted basis. Dunbar reported adjusted gross margin of 42.1%, up 120 basis points year over year, and adjusted operating margin of 19.0%, up 30 basis points. Sarcevic said adjusted earnings per share increased 8.9% to $2.08.
Cash flow, leverage, and capital allocation
Standex generated $20.7 million of net cash from operating activities, up from $9.1 million in the prior-year quarter. Capital expenditures were $7.7 million, resulting in free cash flow of $13.0 million versus $2.2 million a year ago.
On the balance sheet, Sarcevic said available liquidity was approximately $213 million. Net debt ended the quarter at $437.7 million, and Standex’s net leverage ratio was 2.3. Management said the company paid down roughly $10 million of debt during the quarter and expects leverage to decline further through fiscal 2026.
Standex declared its 246th consecutive quarterly cash dividend of $0.34 per share, which Sarcevic said was an approximately 6.3% increase year over year. For fiscal 2026, the company expects capital expenditures of $33 million to $38 million. For fiscal third quarter 2026, management expects interest expense of $7 million to $7.5 million.
Segment performance: Electronics leads, Specialty Solutions pressured
Electronics was the primary growth driver. Segment revenue increased 20.6% to a record $115.7 million, reflecting 11.1% organic growth, a 9.1% acquisition benefit, and a 0.4% foreign currency benefit. Adjusted operating margin rose 120 basis points to 28.8%, which management attributed to higher volume, pricing initiatives, and product mix. The segment posted a book-to-bill of 1.08 with approximately $125 million of orders—its sixth consecutive quarter near or above 1, Sarcevic said.
In Q&A, management provided more detail on Electronics, including the contribution from the Grid business acquired last year (Amran and Narayan). Sarcevic said the Grid business ran at roughly a 1.2 book-to-bill, while the “core” Electronics business was around 1.03 to 1.04. Dunbar described the core Electronics business as mid-single-digit organic growth, led by switches and relays, with strength in Asia, a pickup in Europe, and a flat environment in North America. He also cited demand tied to test and measurement equipment connected to electrification, grid, and data centers.
Engineering Technologies revenue increased 35.3% to $30.6 million, driven primarily by a 33.4% benefit from the McStarlite acquisition, with 1.2% organic growth. Sarcevic said organic performance was “suppressed by delays in customer project timing.” Adjusted operating margin improved 260 basis points to 18.9%, attributed mainly to higher volume.
Scientific revenue rose 5.5% to $19.5 million, reflecting an 8.1% acquisition benefit partially offset by a 2.6% organic decline. Sarcevic said the decline was primarily due to lower demand from academic and research institutions affected by NIH cuts. Adjusted operating margin fell 270 basis points to 24.2% due to organic decline and product mix.
Engraving revenue increased 13.6% to $35.7 million on 10.3% organic growth and a 3.3% foreign currency benefit. Adjusted operating margin increased 490 basis points to 19.2%, which management said was driven by higher sales and benefits from previously executed restructuring actions. Dunbar said Europe is starting to pick up, while North America remains at similar levels. He added that an increase in expected new product sales for fiscal 2026 is “largely” coming from Engraving related to a new win producing differentiated parts using a proprietary soft trim process, though he said the company remains cautious about the broader auto-related market.
Specialty Solutions revenue declined 7.2% year over year to $19.8 million, and operating margin fell 600 basis points to 10.7%. Dunbar attributed the weakness to difficult North American end markets, but said the company was seeing some improvement in order intake and expected both revenue and margin to be “moderately to significantly higher” sequentially.
Outlook: fiscal 2026 sales outlook reiterated; Q3 expected to improve
Management reiterated its fiscal 2026 sales outlook and said that, barring “unforeseen economic, global trade, or tariff-related disruptions,” it expects revenue to grow by more than $110 million from fiscal 2025. Dunbar said the drivers include momentum from new products and fast growth markets, along with the full-year impact of last year’s acquisitions.
Standex raised its expected fiscal 2026 new product sales to $85 million from $78 million and said new products are expected to add about 300 basis points of incremental sales growth. Dunbar said the company launched four new products in the second quarter and remained on track to release more than 15 new products in fiscal 2026; later in Q&A he said Standex had introduced nine products year-to-date.
Fast growth markets are expected to exceed $270 million in fiscal 2026, up more than 45% year over year, according to Dunbar. In Q&A, he said the grid-related business makes up just over half of fast growth market sales, with defense and space as the next largest contributors, along with smaller contributions from EVs and renewable energy.
For fiscal third quarter 2026, management expects mid- to high single-digit organic growth and “slightly higher” adjusted operating margin year over year, though it noted partial offsets from growth investments and higher medical costs. On a sequential basis, Standex expects slightly to moderately higher revenue and operating margin, supported by higher volume, product mix, pricing, and productivity initiatives.
Acquisition accounting and capacity expansion discussed in Q&A
During the question-and-answer session, Sarcevic addressed a technical accounting item related to the acquisition of Amran and Narayan. He said Standex acquired 90% of Narayan in cash and initially planned to acquire the remaining 10% with Standex shares, but that share-based purchase required Indian government approval that has not been obtained and is now unlikely. As a result, Standex used an alternative cash-based mechanism in the purchase agreement tied to a 12x trailing twelve-month EBITDA multiple, which led to a remeasurement of the remaining stake. Sarcevic said the adjustment reflects the increased value of the business and noted it will be adjusted quarterly as the trailing EBITDA changes until the remaining interest is purchased.
Management also discussed capacity expansion plans for the Grid business. Dunbar said Standex has increased capacity about 50% since acquisition, largely through additional shifts, lean work, and some automation, and is now bringing on new sites. He said that over three to five years, Standex expects to more than double current capacity through the Croatia site ramp, expansion into Mexico, a larger Houston facility expected to be operating in about 18 months, expansion in India, and further lean and automation. Sarcevic said these ramp efforts create costs ahead of production increases, and management expects Electronics margins to remain strong but not necessarily expand in subsequent quarters due to the investments.
About Standex International (NYSE:SXI)
Standex International Corporation is a diversified global manufacturer specializing in food service equipment, engineered components, and industrial products. Operating across multiple markets, the company designs and produces commercial cooking and warming solutions, precision-engraved nameplates and decorative products, fluid power hydraulics, and magnetics-based electronics. These offerings serve a broad array of end markets, including quick-service restaurants, automotive, aerospace, medical devices, and consumer appliances.
With business organized into key segments—Food Service Equipment, Engraving & Decorating, Hydraulics, Industrial Electronics, and Technical Graphical Solutions—Standex delivers a combination of proprietary technology, automated manufacturing processes, and custom engineering services.
