Standex International Corporation
10-K on 08/25/2020   Download
SEC Document
SEC Filing
0000310354 STANDEX INTERNATIONAL CORP/DE/ false --06-30 FY 2020 1.50 1.50 60,000,000 60,000,000 27,984,278 27,984,278 12,235,786 12,334,607 15,748,492 15,649,671 2,900 400 0.70 3,700 700 0.78 900 1,600 0.86 0 0 5 5 3 no 8 5 2.75 9.09 3.5 4.0 1.47 0 0 547 321 171 1,403 1,730 121 - 285 - 856 1,124 292 2020 3 3 Includes capital expenditures in accounts payable of $3.2 million, $0.9 million, and $0.4 million at June 30, 2020, 2019, and 2018 respectively. EMEA consists primarily of Europe, Middle East and S. Africa. Net sales were identified based on geographic location where our products and services were initiated. The fair value of our contingent consideration arrangement is determined based on our evaluation as to the probability and amount of any deferred compensation that has been earned to date. Basic and diluted earnings per share are computed independently for each reporting period. Accordingly, the sum of the quarterly earnings per share amounts may not agree to the year-to-date amounts. 00003103542019-07-012020-06-30 iso4217:USD 00003103542019-12-31 xbrli:shares 00003103542020-08-18 thunderdome:item 00003103542020-06-30 00003103542019-06-30 iso4217:USDxbrli:shares 00003103542018-07-012019-06-30 00003103542017-07-012018-06-30 0000310354us-gaap:InterestExpenseMember2019-07-012020-06-30 0000310354us-gaap:InterestExpenseMember2018-07-012019-06-30 0000310354us-gaap:InterestExpenseMember2017-07-012018-06-30 0000310354us-gaap:CommonStockMember2017-06-30 0000310354us-gaap:AdditionalPaidInCapitalMember2017-06-30 0000310354us-gaap:RetainedEarningsMember2017-06-30 0000310354us-gaap:AccumulatedOtherComprehensiveIncomeMember2017-06-30 0000310354us-gaap:TreasuryStockMember2017-06-30 00003103542017-06-30 0000310354us-gaap:CommonStockMember2017-07-012018-06-30 0000310354us-gaap:AdditionalPaidInCapitalMember2017-07-012018-06-30 0000310354us-gaap:RetainedEarningsMember2017-07-012018-06-30 0000310354us-gaap:AccumulatedOtherComprehensiveIncomeMember2017-07-012018-06-30 0000310354us-gaap:TreasuryStockMember2017-07-012018-06-30 0000310354srt:CumulativeEffectPeriodOfAdoptionAdjustmentMemberus-gaap:CommonStockMember2017-06-30 0000310354srt:CumulativeEffectPeriodOfAdoptionAdjustmentMemberus-gaap:AdditionalPaidInCapitalMember2017-06-30 0000310354srt:CumulativeEffectPeriodOfAdoptionAdjustmentMemberus-gaap:RetainedEarningsMember2017-06-30 0000310354srt:CumulativeEffectPeriodOfAdoptionAdjustmentMemberus-gaap:AccumulatedOtherComprehensiveIncomeMember2017-06-30 0000310354srt:CumulativeEffectPeriodOfAdoptionAdjustmentMemberus-gaap:TreasuryStockMember2017-06-30 0000310354srt:CumulativeEffectPeriodOfAdoptionAdjustmentMember2017-06-30 0000310354us-gaap:CommonStockMember2018-06-30 0000310354us-gaap:AdditionalPaidInCapitalMember2018-06-30 0000310354us-gaap:RetainedEarningsMember2018-06-30 0000310354us-gaap:AccumulatedOtherComprehensiveIncomeMember2018-06-30 0000310354us-gaap:TreasuryStockMember2018-06-30 00003103542018-06-30 0000310354us-gaap:CommonStockMember2018-07-012019-06-30 0000310354us-gaap:AdditionalPaidInCapitalMember2018-07-012019-06-30 0000310354us-gaap:RetainedEarningsMember2018-07-012019-06-30 0000310354us-gaap:AccumulatedOtherComprehensiveIncomeMember2018-07-012019-06-30 0000310354us-gaap:TreasuryStockMember2018-07-012019-06-30 0000310354srt:CumulativeEffectPeriodOfAdoptionAdjustmentMemberus-gaap:CommonStockMember2018-06-30 0000310354srt:CumulativeEffectPeriodOfAdoptionAdjustmentMemberus-gaap:AdditionalPaidInCapitalMember2018-06-30 0000310354srt:CumulativeEffectPeriodOfAdoptionAdjustmentMemberus-gaap:RetainedEarningsMember2018-06-30 0000310354srt:CumulativeEffectPeriodOfAdoptionAdjustmentMemberus-gaap:AccumulatedOtherComprehensiveIncomeMember2018-06-30 0000310354srt:CumulativeEffectPeriodOfAdoptionAdjustmentMemberus-gaap:TreasuryStockMember2018-06-30 0000310354srt:CumulativeEffectPeriodOfAdoptionAdjustmentMember2018-06-30 0000310354us-gaap:CommonStockMember2019-06-30 0000310354us-gaap:AdditionalPaidInCapitalMember2019-06-30 0000310354us-gaap:RetainedEarningsMember2019-06-30 0000310354us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-06-30 0000310354us-gaap:TreasuryStockMember2019-06-30 0000310354us-gaap:CommonStockMember2019-07-012020-06-30 0000310354us-gaap:AdditionalPaidInCapitalMember2019-07-012020-06-30 0000310354us-gaap:RetainedEarningsMember2019-07-012020-06-30 0000310354us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-07-012020-06-30 0000310354us-gaap:TreasuryStockMember2019-07-012020-06-30 0000310354srt:CumulativeEffectPeriodOfAdoptionAdjustmentMemberus-gaap:CommonStockMember2019-06-30 0000310354srt:CumulativeEffectPeriodOfAdoptionAdjustmentMemberus-gaap:AdditionalPaidInCapitalMember2019-06-30 0000310354srt:CumulativeEffectPeriodOfAdoptionAdjustmentMemberus-gaap:RetainedEarningsMember2019-06-30 0000310354srt:CumulativeEffectPeriodOfAdoptionAdjustmentMemberus-gaap:AccumulatedOtherComprehensiveIncomeMember2019-06-30 0000310354srt:CumulativeEffectPeriodOfAdoptionAdjustmentMemberus-gaap:TreasuryStockMember2019-06-30 0000310354srt:CumulativeEffectPeriodOfAdoptionAdjustmentMember2019-06-30 0000310354us-gaap:CommonStockMember2020-06-30 0000310354us-gaap:AdditionalPaidInCapitalMember2020-06-30 0000310354us-gaap:RetainedEarningsMember2020-06-30 0000310354us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-06-30 0000310354us-gaap:TreasuryStockMember2020-06-30 0000310354us-gaap:OtherNoncurrentAssetsMember2020-06-30 0000310354us-gaap:OtherNoncurrentAssetsMember2019-06-30 utr:Y 0000310354us-gaap:BuildingMembersrt:MinimumMember2019-07-012020-06-30 0000310354us-gaap:BuildingMembersrt:MaximumMember2019-07-012020-06-30 0000310354us-gaap:MachineryAndEquipmentMembersrt:MinimumMember2019-07-012020-06-30 0000310354us-gaap:MachineryAndEquipmentMembersrt:MaximumMember2019-07-012020-06-30 0000310354us-gaap:FurnitureAndFixturesMembersrt:MinimumMember2019-07-012020-06-30 0000310354us-gaap:FurnitureAndFixturesMembersrt:MaximumMember2019-07-012020-06-30 0000310354us-gaap:ComputerEquipmentMembersrt:MinimumMember2019-07-012020-06-30 0000310354us-gaap:ComputerEquipmentMembersrt:MaximumMember2019-07-012020-06-30 0000310354us-gaap:CustomerRelationshipsMembersrt:MinimumMember2019-07-012020-06-30 0000310354us-gaap:CustomerRelationshipsMembersrt:MaximumMember2019-07-012020-06-30 0000310354us-gaap:PatentsMember2019-07-012020-06-30 0000310354us-gaap:NoncompeteAgreementsMembersrt:MinimumMember2019-07-012020-06-30 0000310354us-gaap:OtherIntangibleAssetsMember2019-07-012020-06-30 0000310354us-gaap:DevelopedTechnologyRightsMembersrt:MinimumMember2019-07-012020-06-30 0000310354us-gaap:DevelopedTechnologyRightsMembersrt:MaximumMember2019-07-012020-06-30 0000310354sxi:DeferredCompensationPlanMember2020-06-30 0000310354sxi:DeferredCompensationPlanMemberus-gaap:FairValueInputsLevel1Member2020-06-30 0000310354sxi:DeferredCompensationPlanMemberus-gaap:FairValueInputsLevel2Member2020-06-30 0000310354sxi:DeferredCompensationPlanMemberus-gaap:FairValueInputsLevel3Member2020-06-30 0000310354us-gaap:FairValueInputsLevel1Member2020-06-30 0000310354us-gaap:FairValueInputsLevel2Member2020-06-30 0000310354us-gaap:FairValueInputsLevel3Member2020-06-30 0000310354sxi:DeferredCompensationPlanMember2019-06-30 0000310354sxi:DeferredCompensationPlanMemberus-gaap:FairValueInputsLevel1Member2019-06-30 0000310354sxi:DeferredCompensationPlanMemberus-gaap:FairValueInputsLevel2Member2019-06-30 0000310354sxi:DeferredCompensationPlanMemberus-gaap:FairValueInputsLevel3Member2019-06-30 0000310354us-gaap:FairValueInputsLevel1Member2019-06-30 0000310354us-gaap:FairValueInputsLevel2Member2019-06-30 0000310354us-gaap:FairValueInputsLevel3Member2019-06-30 0000310354sxi:PiazzaRosaGroupMember2020-06-30 0000310354sxi:GSEngineeringMember2020-06-30 xbrli:pure 0000310354us-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMember2018-07-012019-06-30 0000310354us-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMember2019-07-012020-06-30 0000310354us-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMember2017-07-012018-06-30 0000310354us-gaap:SalesRevenueNetMember2018-07-012019-06-30 0000310354us-gaap:SalesRevenueNetMember2019-07-012020-06-30 0000310354us-gaap:SalesRevenueNetMember2017-07-012018-06-30 0000310354us-gaap:SellingGeneralAndAdministrativeExpensesMember2019-07-012020-06-30 0000310354us-gaap:SellingGeneralAndAdministrativeExpensesMember2018-07-012019-06-30 0000310354us-gaap:SellingGeneralAndAdministrativeExpensesMember2017-07-012018-06-30 0000310354sxi:GSEngineeringMember2019-07-012020-06-30 0000310354sxi:GSEngineeringMemberus-gaap:DevelopedTechnologyRightsMember2020-06-30 0000310354sxi:GSEngineeringMemberus-gaap:DevelopedTechnologyRightsMember2019-04-012019-06-30 0000310354sxi:GSEngineeringMemberus-gaap:TrademarksMember2020-06-30 0000310354sxi:GSEngineeringMemberus-gaap:CustomerRelationshipsMember2020-06-30 0000310354sxi:GSEngineeringMemberus-gaap:CustomerRelationshipsMember2019-04-012019-06-30 0000310354sxi:GSEngineeringMember2019-06-302019-06-30 0000310354sxi:GSEngineeringMember2019-06-30 0000310354sxi:AgileMagneticsMember2018-07-012018-09-30 0000310354sxi:AgileMagneticsMember2018-09-30 0000310354sxi:AgileMagneticsMemberus-gaap:CustomerRelationshipsMember2018-09-30 0000310354sxi:AgileMagneticsMemberus-gaap:CustomerRelationshipsMember2018-07-012018-09-30 0000310354sxi:AgileMagneticsMemberus-gaap:TrademarksMember2018-09-30 0000310354sxi:AgileMagneticsMemberus-gaap:NoncompeteAgreementsMember2018-09-30 0000310354sxi:AgileMagneticsMemberus-gaap:NoncompeteAgreementsMember2018-07-012018-09-30 0000310354sxi:AgileMagneticsMember2019-09-302019-09-30 0000310354sxi:AgileMagneticsMember2019-10-012020-06-30 0000310354sxi:AgileMagneticsMember2019-09-30 0000310354sxi:AgileMagneticsMember2020-06-30 0000310354sxi:TenibacgraphionIncMember2018-08-012018-08-31 0000310354sxi:TenibacgraphionIncMember2018-08-31 0000310354sxi:TenibacgraphionIncMemberus-gaap:CustomerRelationshipsMember2018-08-31 0000310354sxi:TenibacgraphionIncMemberus-gaap:CustomerRelationshipsMember2018-08-012018-08-31 0000310354sxi:TenibacgraphionIncMemberus-gaap:TrademarksMember2018-08-31 0000310354sxi:TenibacgraphionIncMemberus-gaap:OtherIntangibleAssetsMember2018-08-31 0000310354sxi:TenibacgraphionIncMemberus-gaap:OtherIntangibleAssetsMember2018-08-012018-08-31 0000310354sxi:TenibacgraphionIncMember2019-06-30 0000310354sxi:TenibacgraphionIncMember2019-08-012019-08-31 0000310354sxi:TenibacgraphionIncMember2018-09-012019-06-30 0000310354sxi:TenibacgraphionIncMember2019-08-31 0000310354sxi:PiazzaRosaGroupMember2017-07-012017-09-30 0000310354sxi:PiazzaRosaGroupMember2017-10-012018-09-30 0000310354sxi:PiazzaRosaGroupMember2018-07-012018-09-30 0000310354sxi:PiazzaRosaGroupMember2017-09-30 0000310354sxi:PiazzaRosaGroupMemberus-gaap:CustomerRelationshipsMember2017-09-30 0000310354sxi:PiazzaRosaGroupMemberus-gaap:CustomerRelationshipsMember2017-07-012017-09-30 0000310354sxi:PiazzaRosaGroupMembersxi:TrademarksIndefiniteLivedMember2017-09-30 0000310354sxi:PiazzaRosaGroupMemberus-gaap:OtherIntangibleAssetsMember2017-09-30 0000310354sxi:PiazzaRosaGroupMember2019-09-30 0000310354sxi:PiazzaRosaGroupMember2018-09-302018-09-30 0000310354sxi:PiazzaRosaGroupMember2018-10-012019-09-30 0000310354sxi:PiazzaRosaGroupMember2018-09-30 0000310354sxi:HorizonScientificIncMember2018-09-30 0000310354sxi:HorizonScientificIncMember2019-09-30 0000310354sxi:HorizonScientificIncMember2019-07-012020-06-30 0000310354sxi:HorizonScientificIncMember2018-07-012019-06-30 0000310354sxi:DeferredCompensationArrangementsMember2019-07-012020-06-30 0000310354sxi:DeferredCompensationArrangementsMember2018-07-012019-06-30 0000310354us-gaap:AcquisitionRelatedCostsMember2019-07-012020-06-30 0000310354us-gaap:AcquisitionRelatedCostsMember2018-07-012019-06-30 0000310354sxi:ElectronicsProductsGroupMember2019-07-012020-06-30 0000310354sxi:ElectronicsProductsGroupMember2018-07-012019-06-30 0000310354sxi:ElectronicsProductsGroupMember2017-07-012018-06-30 0000310354sxi:EngravingServicesMembersxi:EngravingGroupMember2019-07-012020-06-30 0000310354sxi:EngravingServicesMembersxi:EngravingGroupMember2018-07-012019-06-30 0000310354sxi:EngravingServicesMembersxi:EngravingGroupMember2017-07-012018-06-30 0000310354sxi:EngravingProductsMembersxi:EngravingGroupMember2019-07-012020-06-30 0000310354sxi:EngravingProductsMembersxi:EngravingGroupMember2018-07-012019-06-30 0000310354sxi:EngravingProductsMembersxi:EngravingGroupMember2017-07-012018-06-30 0000310354sxi:EngravingGroupMember2019-07-012020-06-30 0000310354sxi:EngravingGroupMember2018-07-012019-06-30 0000310354sxi:EngravingGroupMember2017-07-012018-06-30 0000310354sxi:ScientificProductsAndServicesMembersxi:ScientificGroupMember2019-07-012020-06-30 0000310354sxi:ScientificProductsAndServicesMembersxi:ScientificGroupMember2018-07-012019-06-30 0000310354sxi:ScientificProductsAndServicesMembersxi:ScientificGroupMember2017-07-012018-06-30 0000310354sxi:EngineeringTechnologiesComponentsMembersxi:EngineeringTechnologiesGroupMember2019-07-012020-06-30 0000310354sxi:EngineeringTechnologiesComponentsMembersxi:EngineeringTechnologiesGroupMember2018-07-012019-06-30 0000310354sxi:EngineeringTechnologiesComponentsMembersxi:EngineeringTechnologiesGroupMember2017-07-012018-06-30 0000310354sxi:HydraulicsCylindersAndSystemMembersxi:SpecialtySolutionsGroupMember2019-07-012020-06-30 0000310354sxi:HydraulicsCylindersAndSystemMembersxi:SpecialtySolutionsGroupMember2018-07-012019-06-30 0000310354sxi:HydraulicsCylindersAndSystemMembersxi:SpecialtySolutionsGroupMember2017-07-012018-06-30 0000310354sxi:MerchandisingDisplayMembersxi:SpecialtySolutionsGroupMember2019-07-012020-06-30 0000310354sxi:MerchandisingDisplayMembersxi:FoodServiceEquipmentGroupMember2018-07-012019-06-30 0000310354sxi:MerchandisingDisplayMembersxi:FoodServiceEquipmentGroupMember2017-07-012018-06-30 0000310354sxi:PumpsMembersxi:SpecialtySolutionsGroupMember2019-07-012020-06-30 0000310354sxi:PumpsMembersxi:FoodServiceEquipmentGroupMember2018-07-012019-06-30 0000310354sxi:PumpsMembersxi:FoodServiceEquipmentGroupMember2017-07-012018-06-30 0000310354sxi:SpecialtySolutionsGroupMember2019-07-012020-06-30 0000310354sxi:SpecialtySolutionsGroupMember2018-07-012019-06-30 0000310354sxi:SpecialtySolutionsGroupMember2017-07-012018-06-30 0000310354country:US2019-07-012020-06-30 0000310354country:US2018-07-012019-06-30 0000310354country:US2017-07-012018-06-30 0000310354srt:AsiaPacificMember2019-07-012020-06-30 0000310354srt:AsiaPacificMember2018-07-012019-06-30 0000310354srt:AsiaPacificMember2017-07-012018-06-30 0000310354us-gaap:EMEAMember2019-07-012020-06-30 0000310354us-gaap:EMEAMember2018-07-012019-06-30 0000310354us-gaap:EMEAMember2017-07-012018-06-30 0000310354sxi:OtherAmericasMember2019-07-012020-06-30 0000310354sxi:OtherAmericasMember2018-07-012019-06-30 0000310354sxi:OtherAmericasMember2017-07-012018-06-30 0000310354us-gaap:TransferredAtPointInTimeMember2019-07-012020-06-30 0000310354us-gaap:TransferredAtPointInTimeMember2018-07-012019-06-30 0000310354us-gaap:TransferredOverTimeMember2019-07-012020-06-30 0000310354us-gaap:TransferredOverTimeMember2018-07-012019-06-30 0000310354sxi:LandBuildingsAndLeaseholdImprovementsMember2020-06-30 0000310354sxi:LandBuildingsAndLeaseholdImprovementsMember2019-06-30 0000310354sxi:MachineryEquipmentAndOtherMember2020-06-30 0000310354sxi:MachineryEquipmentAndOtherMember2019-06-30 0000310354sxi:RefrigeratedSolutionsGroupMember2020-01-012020-03-31 0000310354us-gaap:CustomerRelationshipsMember2020-06-30 0000310354us-gaap:TrademarksMember2020-06-30 0000310354sxi:AcquiredTechnologyMember2020-06-30 0000310354us-gaap:OtherIntangibleAssetsMember2020-06-30 0000310354us-gaap:CustomerRelationshipsMember2019-06-30 0000310354us-gaap:TrademarksMember2019-06-30 0000310354sxi:AcquiredTechnologyMember2019-06-30 0000310354us-gaap:OtherIntangibleAssetsMember2019-06-30 0000310354us-gaap:LineOfCreditMember2020-06-30 0000310354us-gaap:LineOfCreditMember2019-06-30 0000310354sxi:OtherFundedDebtMember2020-06-30 0000310354sxi:OtherFundedDebtMember2019-06-30 0000310354sxi:AmendedAndRestatedCreditAgreementMember2019-10-012019-12-31 0000310354sxi:AmendedAndRestatedCreditAgreementMember2019-12-31 0000310354sxi:SwingLineLoanMember2019-12-31 0000310354us-gaap:LetterOfCreditMember2019-12-31 0000310354us-gaap:RevolvingCreditFacilityMember2019-12-31 0000310354sxi:AmendedAndRestatedCreditAgreementMember2020-06-30 0000310354srt:MinimumMember2019-10-012019-12-31 00003103542019-10-012019-12-31 0000310354srt:MaximumMember2019-10-012019-12-31 0000310354us-gaap:SegmentDiscontinuedOperationsMembersxi:RefrigeratedSolutionsGroupMember2020-06-30 0000310354us-gaap:InterestRateSwapMember2020-06-30 0000310354us-gaap:StandbyLettersOfCreditMember2020-06-30 0000310354us-gaap:StandbyLettersOfCreditMember2019-06-30 0000310354sxi:InterestRateSwapEffectiveDecember192015Member2020-06-30 0000310354sxi:InterestRateSwapEffectiveDecember192015Member2019-07-012020-06-30 0000310354sxi:InterestRateSwapEffectiveDecember192015Member2019-06-30 0000310354sxi:InterestRateSwapEffectiveMay242017NumberOneMember2020-06-30 0000310354sxi:InterestRateSwapEffectiveMay242017NumberOneMember2019-07-012020-06-30 0000310354sxi:InterestRateSwapEffectiveMay242017NumberOneMember2019-06-30 0000310354sxi:InterestRateSwapEffectiveMay242017NumberTwoMember2020-06-30 0000310354sxi:InterestRateSwapEffectiveMay242017NumberTwoMember2019-07-012020-06-30 0000310354sxi:InterestRateSwapEffectiveMay242017NumberTwoMember2019-06-30 0000310354sxi:InterestRateSwapEffectiveAugust62018Member2020-06-30 0000310354sxi:InterestRateSwapEffectiveAugust62018Member2019-07-012020-06-30 0000310354sxi:InterestRateSwapEffectiveAugust62018Member2019-06-30 0000310354sxi:InterestRateSwapEffectiveMarch232020Member2020-06-30 0000310354sxi:InterestRateSwapEffectiveMarch232020Member2019-07-012020-06-30 0000310354sxi:InterestRateSwapEffectiveMarch232020Member2019-06-30 0000310354sxi:InterestRateSwapEffectiveApril242020Member2020-06-30 0000310354sxi:InterestRateSwapEffectiveApril242020Member2019-07-012020-06-30 0000310354sxi:InterestRateSwapEffectiveApril242020Member2019-06-30 0000310354sxi:InterestRateSwapEffectiveMay242020Member2020-06-30 0000310354sxi:InterestRateSwapEffectiveMay242020Member2019-07-012020-06-30 0000310354sxi:InterestRateSwapEffectiveMay242020Member2019-06-30 0000310354us-gaap:ForeignExchangeForwardMember2020-06-30 0000310354us-gaap:ForeignExchangeForwardMember2019-06-30 0000310354us-gaap:ForeignExchangeContractMember2020-06-30 0000310354us-gaap:ForeignExchangeContractMember2019-06-30 iso4217:EUR iso4217:SGD iso4217:CAD 0000310354us-gaap:OtherAssetsMemberus-gaap:InterestRateSwapMemberus-gaap:DesignatedAsHedgingInstrumentMember2020-06-30 0000310354us-gaap:OtherAssetsMemberus-gaap:InterestRateSwapMemberus-gaap:DesignatedAsHedgingInstrumentMember2019-06-30 0000310354us-gaap:OtherLiabilitiesMemberus-gaap:InterestRateSwapMemberus-gaap:DesignatedAsHedgingInstrumentMember2020-06-30 0000310354us-gaap:OtherLiabilitiesMemberus-gaap:InterestRateSwapMemberus-gaap:DesignatedAsHedgingInstrumentMember2019-06-30 0000310354us-gaap:OtherLiabilitiesMemberus-gaap:ForeignExchangeContractMemberus-gaap:DesignatedAsHedgingInstrumentMember2020-06-30 0000310354us-gaap:OtherLiabilitiesMemberus-gaap:ForeignExchangeContractMemberus-gaap:DesignatedAsHedgingInstrumentMember2019-06-30 0000310354us-gaap:OtherLiabilitiesMemberus-gaap:DesignatedAsHedgingInstrumentMember2020-06-30 0000310354us-gaap:OtherLiabilitiesMemberus-gaap:DesignatedAsHedgingInstrumentMember2019-06-30 0000310354us-gaap:InterestRateSwapMember2019-07-012020-06-30 0000310354us-gaap:InterestRateSwapMember2018-07-012019-06-30 0000310354us-gaap:InterestRateSwapMember2017-07-012018-06-30 0000310354us-gaap:ForeignExchangeContractMember2019-07-012020-06-30 0000310354us-gaap:ForeignExchangeContractMember2018-07-012019-06-30 0000310354us-gaap:ForeignExchangeContractMember2017-07-012018-06-30 0000310354us-gaap:InterestRateSwapMemberus-gaap:InterestExpenseMember2019-07-012020-06-30 0000310354us-gaap:InterestRateSwapMemberus-gaap:InterestExpenseMember2018-07-012019-06-30 0000310354us-gaap:InterestRateSwapMemberus-gaap:InterestExpenseMember2017-07-012018-06-30 0000310354us-gaap:ForeignExchangeContractMemberus-gaap:OtherNonoperatingIncomeExpenseMember2019-07-012020-06-30 0000310354us-gaap:ForeignExchangeContractMemberus-gaap:OtherNonoperatingIncomeExpenseMember2018-07-012019-06-30 0000310354us-gaap:ForeignExchangeContractMemberus-gaap:OtherNonoperatingIncomeExpenseMember2017-07-012018-06-30 0000310354us-gaap:OtherNonoperatingIncomeExpenseMember2019-07-012020-06-30 0000310354us-gaap:OtherNonoperatingIncomeExpenseMember2018-07-012019-06-30 0000310354us-gaap:OtherNonoperatingIncomeExpenseMember2017-07-012018-06-30 0000310354sxi:DeferredTaxRelatedToSaleOfSegmentMember2019-07-012020-06-30 0000310354us-gaap:StateAndLocalJurisdictionMember2020-06-30 0000310354us-gaap:ForeignCountryMember2020-06-30 0000310354us-gaap:AccountingStandardsUpdate201609Member2019-07-012020-06-30 0000310354us-gaap:RevenueCommissionersIrelandMember2019-07-012020-06-30 0000310354us-gaap:RestrictedStockMember2019-07-012020-06-30 0000310354us-gaap:RestrictedStockMember2018-07-012019-06-30 0000310354us-gaap:RestrictedStockMember2017-07-012018-06-30 0000310354us-gaap:RestrictedStockMember2019-06-30 0000310354us-gaap:RestrictedStockMember2020-06-30 0000310354sxi:ExecutiveCompensationPlanMember2018-07-012019-06-30 0000310354sxi:ExecutiveCompensationPlanMember2020-06-30 0000310354sxi:ExecutiveCompensationPlanMember2019-06-30 0000310354sxi:ExecutiveCompensationPlanMember2019-07-012020-06-30 0000310354sxi:ExecutiveCompensationPlanMember2017-07-012018-06-30 0000310354sxi:ExecutiveCompensationPlanMembersrt:MinimumMember2018-07-012019-06-30 0000310354sxi:ExecutiveCompensationPlanMembersrt:MaximumMember2018-07-012019-06-30 0000310354sxi:AnnualComponentMember2019-06-30 0000310354sxi:PerformanceStockUnitsMember2019-06-30 0000310354sxi:AnnualComponentMember2019-07-012020-06-30 0000310354sxi:PerformanceStockUnitsMember2019-07-012020-06-30 0000310354sxi:AnnualComponentMember2020-06-30 0000310354sxi:PerformanceStockUnitsMember2020-06-30 0000310354us-gaap:RestrictedStockMembersxi:ExecutiveCompensationPlanMember2019-07-012020-06-30 0000310354us-gaap:RestrictedStockMembersxi:ExecutiveCompensationPlanMember2018-07-012019-06-30 0000310354us-gaap:RestrictedStockMembersxi:ExecutiveCompensationPlanMember2017-07-012018-06-30 0000310354sxi:PerformanceStockUnitsMembersxi:ExecutiveCompensationPlanMember2019-07-012020-06-30 0000310354sxi:PerformanceStockUnitsMembersxi:ExecutiveCompensationPlanMember2018-07-012019-06-30 0000310354sxi:PerformanceStockUnitsMembersxi:ExecutiveCompensationPlanMember2017-07-012018-06-30 0000310354sxi:PerformanceStockUnitsMembersxi:ExecutiveCompensationPlanMember2020-06-30 0000310354sxi:EmployeeStockPurchasePlanMember2005-07-012005-07-01 0000310354sxi:EmployeeStockPurchasePlanMember2017-04-012017-04-01 0000310354sxi:EmployeeStockPurchasePlanMember2019-07-012020-06-30 0000310354sxi:EmployeeStockPurchasePlanMember2018-07-012019-06-30 0000310354sxi:EmployeeStockPurchasePlanMember2017-07-012018-06-30 0000310354sxi:InvoluntaryEmployeeSeveranceAndBenefitCostsMembersxi:CurrentYearRestructuringInitiativesMember2019-07-012020-06-30 0000310354us-gaap:OtherRestructuringMembersxi:CurrentYearRestructuringInitiativesMember2019-07-012020-06-30 0000310354sxi:CurrentYearRestructuringInitiativesMember2019-07-012020-06-30 0000310354sxi:InvoluntaryEmployeeSeveranceAndBenefitCostsMembersxi:PriorYearInitiativesMember2019-07-012020-06-30 0000310354us-gaap:OtherRestructuringMembersxi:PriorYearInitiativesMember2019-07-012020-06-30 0000310354sxi:PriorYearInitiativesMember2019-07-012020-06-30 0000310354sxi:InvoluntaryEmployeeSeveranceAndBenefitCostsMember2019-07-012020-06-30 0000310354us-gaap:OtherRestructuringMember2019-07-012020-06-30 0000310354sxi:InvoluntaryEmployeeSeveranceAndBenefitCostsMembersxi:CurrentYearRestructuringInitiativesMember2018-07-012019-06-30 0000310354us-gaap:OtherRestructuringMembersxi:CurrentYearRestructuringInitiativesMember2018-07-012019-06-30 0000310354sxi:CurrentYearRestructuringInitiativesMember2018-07-012019-06-30 0000310354sxi:InvoluntaryEmployeeSeveranceAndBenefitCostsMembersxi:PriorYearInitiativesMember2018-07-012019-06-30 0000310354us-gaap:OtherRestructuringMembersxi:PriorYearInitiativesMember2018-07-012019-06-30 0000310354sxi:PriorYearInitiativesMember2018-07-012019-06-30 0000310354sxi:InvoluntaryEmployeeSeveranceAndBenefitCostsMember2018-07-012019-06-30 0000310354us-gaap:OtherRestructuringMember2018-07-012019-06-30 0000310354sxi:InvoluntaryEmployeeSeveranceAndBenefitCostsMembersxi:CurrentYearRestructuringInitiativesMember2017-07-012018-06-30 0000310354us-gaap:OtherRestructuringMembersxi:CurrentYearRestructuringInitiativesMember2017-07-012018-06-30 0000310354sxi:CurrentYearRestructuringInitiativesMember2017-07-012018-06-30 0000310354sxi:InvoluntaryEmployeeSeveranceAndBenefitCostsMembersxi:PriorYearInitiativesMember2017-07-012018-06-30 0000310354us-gaap:OtherRestructuringMembersxi:PriorYearInitiativesMember2017-07-012018-06-30 0000310354sxi:PriorYearInitiativesMember2017-07-012018-06-30 0000310354sxi:InvoluntaryEmployeeSeveranceAndBenefitCostsMember2017-07-012018-06-30 0000310354us-gaap:OtherRestructuringMember2017-07-012018-06-30 0000310354sxi:InvoluntaryEmployeeSeveranceAndBenefitCostsMembersxi:CurrentYearRestructuringInitiativesMember2019-06-30 0000310354us-gaap:OtherRestructuringMembersxi:CurrentYearRestructuringInitiativesMember2019-06-30 0000310354sxi:CurrentYearRestructuringInitiativesMember2019-06-30 0000310354sxi:InvoluntaryEmployeeSeveranceAndBenefitCostsMembersxi:CurrentYearRestructuringInitiativesMember2020-06-30 0000310354us-gaap:OtherRestructuringMembersxi:CurrentYearRestructuringInitiativesMember2020-06-30 0000310354sxi:CurrentYearRestructuringInitiativesMember2020-06-30 0000310354srt:ScenarioForecastMember2020-07-012021-06-30 0000310354sxi:InvoluntaryEmployeeSeveranceAndBenefitCostsMembersxi:PriorYearInitiativesMember2019-07-01 0000310354us-gaap:OtherRestructuringMembersxi:PriorYearInitiativesMember2019-07-01 0000310354sxi:PriorYearInitiativesMember2019-07-01 0000310354sxi:InvoluntaryEmployeeSeveranceAndBenefitCostsMembersxi:PriorYearInitiativesMember2020-06-30 0000310354us-gaap:OtherRestructuringMembersxi:PriorYearInitiativesMember2020-06-30 0000310354sxi:PriorYearInitiativesMember2020-06-30 0000310354sxi:InvoluntaryEmployeeSeveranceAndBenefitCostsMembersxi:PriorYearInitiativesMember2018-06-30 0000310354us-gaap:OtherRestructuringMembersxi:PriorYearInitiativesMember2018-06-30 0000310354sxi:PriorYearInitiativesMember2018-06-30 0000310354sxi:InvoluntaryEmployeeSeveranceAndBenefitCostsMembersxi:PriorYearInitiativesMember2019-06-30 0000310354us-gaap:OtherRestructuringMembersxi:PriorYearInitiativesMember2019-06-30 0000310354sxi:PriorYearInitiativesMember2019-06-30 0000310354sxi:InvoluntaryEmployeeSeveranceAndBenefitCostsMembersxi:ElectronicsProductsGroupMember2019-07-012020-06-30 0000310354us-gaap:OtherRestructuringMembersxi:ElectronicsProductsGroupMember2019-07-012020-06-30 0000310354sxi:InvoluntaryEmployeeSeveranceAndBenefitCostsMembersxi:EngravingGroupMember2019-07-012020-06-30 0000310354us-gaap:OtherRestructuringMembersxi:EngravingGroupMember2019-07-012020-06-30 0000310354sxi:InvoluntaryEmployeeSeveranceAndBenefitCostsMembersxi:EngineeringTechnologiesGroupMember2019-07-012020-06-30 0000310354us-gaap:OtherRestructuringMembersxi:EngineeringTechnologiesGroupMember2019-07-012020-06-30 0000310354sxi:EngineeringTechnologiesGroupMember2019-07-012020-06-30 0000310354sxi:InvoluntaryEmployeeSeveranceAndBenefitCostsMembersxi:SpecialtySolutionsGroupMember2019-07-012020-06-30 0000310354us-gaap:OtherRestructuringMembersxi:SpecialtySolutionsGroupMember2019-07-012020-06-30 0000310354sxi:InvoluntaryEmployeeSeveranceAndBenefitCostsMemberus-gaap:CorporateAndOtherMember2019-07-012020-06-30 0000310354us-gaap:OtherRestructuringMemberus-gaap:CorporateAndOtherMember2019-07-012020-06-30 0000310354us-gaap:CorporateAndOtherMember2019-07-012020-06-30 0000310354sxi:InvoluntaryEmployeeSeveranceAndBenefitCostsMembersxi:ElectronicsProductsGroupMember2018-07-012019-06-30 0000310354us-gaap:OtherRestructuringMembersxi:ElectronicsProductsGroupMember2018-07-012019-06-30 0000310354sxi:InvoluntaryEmployeeSeveranceAndBenefitCostsMembersxi:EngravingGroupMember2018-07-012019-06-30 0000310354us-gaap:OtherRestructuringMembersxi:EngravingGroupMember2018-07-012019-06-30 0000310354sxi:InvoluntaryEmployeeSeveranceAndBenefitCostsMembersxi:EngineeringTechnologiesComponentsMember2018-07-012019-06-30 0000310354us-gaap:OtherRestructuringMembersxi:EngineeringTechnologiesComponentsMember2018-07-012019-06-30 0000310354sxi:EngineeringTechnologiesComponentsMember2018-07-012019-06-30 0000310354sxi:InvoluntaryEmployeeSeveranceAndBenefitCostsMembersxi:SpecialtySolutionsGroupMember2018-07-012019-06-30 0000310354us-gaap:OtherRestructuringMembersxi:SpecialtySolutionsGroupMember2018-07-012019-06-30 0000310354sxi:InvoluntaryEmployeeSeveranceAndBenefitCostsMemberus-gaap:CorporateAndOtherMember2018-07-012019-06-30 0000310354us-gaap:OtherRestructuringMemberus-gaap:CorporateAndOtherMember2018-07-012019-06-30 0000310354us-gaap:CorporateAndOtherMember2018-07-012019-06-30 0000310354sxi:InvoluntaryEmployeeSeveranceAndBenefitCostsMembersxi:ElectronicsProductsGroupMember2017-07-012018-06-30 0000310354us-gaap:OtherRestructuringMembersxi:ElectronicsProductsGroupMember2017-07-012018-06-30 0000310354sxi:InvoluntaryEmployeeSeveranceAndBenefitCostsMembersxi:EngravingGroupMember2017-07-012018-06-30 0000310354us-gaap:OtherRestructuringMembersxi:EngravingGroupMember2017-07-012018-06-30 0000310354sxi:InvoluntaryEmployeeSeveranceAndBenefitCostsMembersxi:EngineeringTechnologiesComponentsMember2017-07-012018-06-30 0000310354us-gaap:OtherRestructuringMembersxi:EngineeringTechnologiesComponentsMember2017-07-012018-06-30 0000310354sxi:EngineeringTechnologiesComponentsMember2017-07-012018-06-30 0000310354sxi:InvoluntaryEmployeeSeveranceAndBenefitCostsMembersxi:SpecialtySolutionsGroupMember2017-07-012018-06-30 0000310354us-gaap:OtherRestructuringMembersxi:SpecialtySolutionsGroupMember2017-07-012018-06-30 0000310354sxi:InvoluntaryEmployeeSeveranceAndBenefitCostsMemberus-gaap:CorporateAndOtherMember2017-07-012018-06-30 0000310354us-gaap:OtherRestructuringMemberus-gaap:CorporateAndOtherMember2017-07-012018-06-30 0000310354us-gaap:CorporateAndOtherMember2017-07-012018-06-30 0000310354country:US2019-07-012020-06-30 0000310354country:US2018-07-012019-06-30 0000310354country:US2017-07-012018-06-30 0000310354us-gaap:ForeignPlanMember2019-07-012020-06-30 0000310354us-gaap:ForeignPlanMember2018-07-012019-06-30 0000310354us-gaap:ForeignPlanMember2017-07-012018-06-30 0000310354country:US2019-06-30 0000310354country:US2018-06-30 0000310354us-gaap:ForeignPlanMember2019-06-30 0000310354us-gaap:ForeignPlanMember2018-06-30 0000310354country:US2020-06-30 0000310354us-gaap:ForeignPlanMember2020-06-30 0000310354us-gaap:CashAndCashEquivalentsMember2020-06-30 0000310354us-gaap:CashAndCashEquivalentsMemberus-gaap:FairValueInputsLevel1Member2020-06-30 0000310354us-gaap:CashAndCashEquivalentsMemberus-gaap:FairValueInputsLevel2Member2020-06-30 0000310354us-gaap:CashAndCashEquivalentsMemberus-gaap:FairValueInputsLevel3Member2020-06-30 0000310354us-gaap:EquitySecuritiesMember2020-06-30 0000310354us-gaap:EquitySecuritiesMemberus-gaap:FairValueInputsLevel1Member2020-06-30 0000310354us-gaap:EquitySecuritiesMemberus-gaap:FairValueInputsLevel2Member2020-06-30 0000310354us-gaap:EquitySecuritiesMemberus-gaap:FairValueInputsLevel3Member2020-06-30 0000310354sxi:CorporateBondsAndOtherFixedIncomeSecuritiesMember2020-06-30 0000310354sxi:CorporateBondsAndOtherFixedIncomeSecuritiesMemberus-gaap:FairValueInputsLevel1Member2020-06-30 0000310354sxi:CorporateBondsAndOtherFixedIncomeSecuritiesMemberus-gaap:FairValueInputsLevel2Member2020-06-30 0000310354sxi:CorporateBondsAndOtherFixedIncomeSecuritiesMemberus-gaap:FairValueInputsLevel3Member2020-06-30 0000310354us-gaap:OtherDebtSecuritiesMember2020-06-30 0000310354us-gaap:OtherDebtSecuritiesMemberus-gaap:FairValueInputsLevel1Member2020-06-30 0000310354us-gaap:OtherDebtSecuritiesMemberus-gaap:FairValueInputsLevel2Member2020-06-30 0000310354us-gaap:OtherDebtSecuritiesMemberus-gaap:FairValueInputsLevel3Member2020-06-30 0000310354us-gaap:CashAndCashEquivalentsMember2019-06-30 0000310354us-gaap:CashAndCashEquivalentsMemberus-gaap:FairValueInputsLevel1Member2019-06-30 0000310354us-gaap:CashAndCashEquivalentsMemberus-gaap:FairValueInputsLevel2Member2019-06-30 0000310354us-gaap:CashAndCashEquivalentsMemberus-gaap:FairValueInputsLevel3Member2019-06-30 0000310354us-gaap:EquitySecuritiesMember2019-06-30 0000310354us-gaap:EquitySecuritiesMemberus-gaap:FairValueInputsLevel1Member2019-06-30 0000310354us-gaap:EquitySecuritiesMemberus-gaap:FairValueInputsLevel2Member2019-06-30 0000310354us-gaap:EquitySecuritiesMemberus-gaap:FairValueInputsLevel3Member2019-06-30 0000310354us-gaap:USGovernmentAgenciesDebtSecuritiesMember2019-06-30 0000310354us-gaap:USGovernmentAgenciesDebtSecuritiesMemberus-gaap:FairValueInputsLevel1Member2019-06-30 0000310354us-gaap:USGovernmentAgenciesDebtSecuritiesMemberus-gaap:FairValueInputsLevel2Member2019-06-30 0000310354us-gaap:USGovernmentAgenciesDebtSecuritiesMemberus-gaap:FairValueInputsLevel3Member2019-06-30 0000310354sxi:CorporateBondsAndOtherFixedIncomeSecuritiesMember2019-06-30 0000310354sxi:CorporateBondsAndOtherFixedIncomeSecuritiesMemberus-gaap:FairValueInputsLevel1Member2019-06-30 0000310354sxi:CorporateBondsAndOtherFixedIncomeSecuritiesMemberus-gaap:FairValueInputsLevel2Member2019-06-30 0000310354sxi:CorporateBondsAndOtherFixedIncomeSecuritiesMemberus-gaap:FairValueInputsLevel3Member2019-06-30 0000310354us-gaap:OtherDebtSecuritiesMember2019-06-30 0000310354us-gaap:OtherDebtSecuritiesMemberus-gaap:FairValueInputsLevel1Member2019-06-30 0000310354us-gaap:OtherDebtSecuritiesMemberus-gaap:FairValueInputsLevel2Member2019-06-30 0000310354us-gaap:OtherDebtSecuritiesMemberus-gaap:FairValueInputsLevel3Member2019-06-30 0000310354us-gaap:EquitySecuritiesMembercountry:US2020-06-30 0000310354us-gaap:EquitySecuritiesMembercountry:US2019-06-30 0000310354us-gaap:EquitySecuritiesMemberus-gaap:ForeignPlanMember2020-06-30 0000310354us-gaap:EquitySecuritiesMemberus-gaap:ForeignPlanMember2019-06-30 0000310354us-gaap:DebtSecuritiesMembercountry:US2020-06-30 0000310354us-gaap:DebtSecuritiesMembercountry:US2019-06-30 0000310354us-gaap:DebtSecuritiesMemberus-gaap:ForeignPlanMember2020-06-30 0000310354us-gaap:DebtSecuritiesMemberus-gaap:ForeignPlanMember2019-06-30 0000310354us-gaap:HedgeFundsGlobalOpportunityMembercountry:US2020-06-30 0000310354us-gaap:HedgeFundsGlobalOpportunityMembercountry:US2019-06-30 0000310354us-gaap:HedgeFundsGlobalOpportunityMemberus-gaap:ForeignPlanMember2020-06-30 0000310354us-gaap:HedgeFundsGlobalOpportunityMemberus-gaap:ForeignPlanMember2019-06-30 0000310354us-gaap:OtherDebtSecuritiesMembercountry:US2020-06-30 0000310354us-gaap:OtherDebtSecuritiesMembercountry:US2019-06-30 0000310354us-gaap:OtherDebtSecuritiesMemberus-gaap:ForeignPlanMember2020-06-30 0000310354us-gaap:OtherDebtSecuritiesMemberus-gaap:ForeignPlanMember2019-06-30 0000310354us-gaap:EquitySecuritiesMembersxi:USPensionPlansMember2020-06-30 0000310354us-gaap:EquitySecuritiesMembersxi:UKPensionPlansMember2020-06-30 0000310354us-gaap:DebtSecuritiesMembersxi:USPensionPlansMember2020-06-30 0000310354us-gaap:DebtSecuritiesMembersxi:UKPensionPlansMember2020-06-30 0000310354us-gaap:HedgeFundsGlobalOpportunityMembersxi:USPensionPlansMember2020-06-30 0000310354us-gaap:HedgeFundsGlobalOpportunityMembersxi:UKPensionPlansMember2020-06-30 0000310354us-gaap:OtherDebtSecuritiesMembersxi:USPensionPlansMember2020-06-30 0000310354us-gaap:OtherDebtSecuritiesMembersxi:UKPensionPlansMember2020-06-30 0000310354sxi:USPensionPlansMember2020-06-30 0000310354sxi:UKPensionPlansMember2020-06-30 0000310354srt:MinimumMember2020-06-30 0000310354srt:MaximumMember2020-06-30 0000310354srt:MinimumMember2019-06-30 0000310354srt:MaximumMember2019-06-30 0000310354srt:MinimumMember2018-06-30 0000310354srt:MaximumMember2018-06-30 0000310354srt:MinimumMember2019-07-012020-06-30 0000310354srt:MaximumMember2019-07-012020-06-30 0000310354srt:MinimumMember2018-07-012019-06-30 0000310354srt:MaximumMember2018-07-012019-06-30 0000310354srt:MinimumMember2017-07-012018-06-30 0000310354srt:MaximumMember2017-07-012018-06-30 0000310354sxi:USPensionPlansMember2020-06-30 0000310354sxi:USPensionPlansMember2019-07-012020-06-30 0000310354sxi:NewEnglandTeamstersAndTruckingIndustryPensionFundMember2019-07-012020-06-30 0000310354sxi:NewEnglandTeamstersAndTruckingIndustryPensionFundMember2018-07-012019-06-30 0000310354sxi:NewEnglandTeamstersAndTruckingIndustryPensionFundMember2017-07-012018-06-30 0000310354sxi:IamNationalPensionFundNationalPensionPlanMember2019-07-012020-06-30 0000310354sxi:IamNationalPensionFundNationalPensionPlanMember2018-07-012019-06-30 0000310354sxi:IamNationalPensionFundNationalPensionPlanMember2017-07-012018-06-30 0000310354sxi:RetirementSavingsPlansMember2020-06-30 0000310354sxi:SalariedEmployeesMembersxi:RetirementSavingsPlansMember2020-06-30 0000310354sxi:HourlyEmployeesMembersxi:RetirementSavingsPlansMember2020-06-30 0000310354sxi:RetirementSavingsPlansMember2019-07-012020-06-30 0000310354sxi:RetirementSavingsPlansMember2018-07-012019-06-30 0000310354sxi:RetirementSavingsPlansMember2017-07-012018-06-30 0000310354sxi:ScientificGroupMember2019-07-012020-06-30 0000310354sxi:ScientificGroupMember2018-07-012019-06-30 0000310354sxi:ScientificGroupMember2017-07-012018-06-30 0000310354sxi:EngineeringTechnologiesGroupMember2018-07-012019-06-30 0000310354sxi:EngineeringTechnologiesGroupMember2017-07-012018-06-30 0000310354us-gaap:CorporateMember2019-07-012020-06-30 0000310354us-gaap:CorporateMember2018-07-012019-06-30 0000310354us-gaap:CorporateMember2017-07-012018-06-30 0000310354sxi:ElectronicsProductsGroupMember2020-06-30 0000310354sxi:ElectronicsProductsGroupMember2019-06-30 0000310354sxi:EngravingGroupMember2020-06-30 0000310354sxi:EngravingGroupMember2019-06-30 0000310354sxi:ScientificGroupMember2020-06-30 0000310354sxi:ScientificGroupMember2019-06-30 0000310354sxi:EngineeringTechnologiesGroupMember2020-06-30 0000310354sxi:EngineeringTechnologiesGroupMember2019-06-30 0000310354sxi:SpecialtySolutionsGroupMember2020-06-30 0000310354sxi:SpecialtySolutionsGroupMember2019-06-30 0000310354us-gaap:CorporateAndOtherMember2020-06-30 0000310354us-gaap:CorporateAndOtherMember2019-06-30 0000310354srt:AsiaMember2019-07-012020-06-30 0000310354srt:AsiaMember2018-07-012019-06-30 0000310354srt:AsiaMember2017-07-012018-06-30 0000310354sxi:OtherGeographicalMember2019-07-012020-06-30 0000310354sxi:OtherGeographicalMember2018-07-012019-06-30 0000310354sxi:OtherGeographicalMember2017-07-012018-06-30 0000310354country:US2020-06-30 0000310354country:US2019-06-30 0000310354country:US2018-06-30 0000310354srt:AsiaMember2020-06-30 0000310354srt:AsiaMember2019-06-30 0000310354srt:AsiaMember2018-06-30 0000310354us-gaap:EMEAMember2020-06-30 0000310354us-gaap:EMEAMember2019-06-30 0000310354us-gaap:EMEAMember2018-06-30 0000310354sxi:OtherGeographicalMember2020-06-30 0000310354sxi:OtherGeographicalMember2019-06-30 0000310354sxi:OtherGeographicalMember2018-06-30 00003103542019-07-012019-09-30 00003103542020-01-012020-03-31 00003103542020-04-012020-06-30 00003103542018-07-012018-09-30 00003103542018-10-012018-12-31 00003103542019-01-012019-03-31 00003103542019-04-012019-06-30 0000310354sxi:TenOaksGroupMemberus-gaap:SegmentDiscontinuedOperationsMembersxi:MasterbiltAndNorlakeSegmentsMember2020-04-162020-04-16 0000310354sxi:TenOaksGroupMemberus-gaap:SegmentDiscontinuedOperationsMembersxi:MasterbiltAndNorlakeSegmentsMember2020-04-16 0000310354us-gaap:SegmentDiscontinuedOperationsMembersxi:CookingSolutionsGroupMember2018-07-012018-09-30 0000310354sxi:MiddlebyCorporationMemberus-gaap:SegmentDiscontinuedOperationsMembersxi:CookingSolutionsGroupMember2019-01-012019-03-31 0000310354sxi:MiddlebyCorporationMemberus-gaap:SegmentDiscontinuedOperationsMembersxi:CookingSolutionsGroupMember2019-03-31 0000310354sxi:AccruedExpenseMember2020-06-30 0000310354us-gaap:OtherNoncurrentLiabilitiesMember2020-06-30 0000310354sxi:RencoElectronicsMemberus-gaap:SubsequentEventMember2020-07-152020-07-15 0000310354sxi:AgileMagneticsMember2019-07-012020-06-30 0000310354sxi:TenibacgraphionIncMember2019-07-012020-06-30 0000310354sxi:PiazzaRosaGroupMember2019-07-012020-06-30 0000310354us-gaap:PensionPlansDefinedBenefitMember2019-07-012020-06-30 0000310354sxi:TargetMember2019-07-012020-06-30
 
 

 

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-K

 

ANNUAL REPORT Pursuant to Section 13 or 15(d)

OF the Securities Exchange Act of 1934

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended June 30, 2020

Commission File Number 001-07233

 

STANDEX INTERNATIONAL CORPORATION

(Exact name of registrant as specified in its Charter)

 

Delaware

31-0596149

(State of incorporation)

(I.R.S. Employer Identification No.)

 

23 KEEWAYDIN DRIVE, Salem, New Hampshire

03079

(Address of principal executive offices)

(Zip Code)

 

(603) 893-9701

(Registrant’s telephone number, including area code)

 

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE

SECURITIES EXCHANGE ACT OF 1934:

 

Title of Each Class

Trading Symbol(s)

Name of Each Exchange on Which Registered

Common Stock, Par Value $1.50 Per Share

SXI

New York Stock Exchange

 

Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.     Yes ☒     NO

 

Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. YES ☐     No

 

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes ☒     NO

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒     NO

 

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer   ☒   Accelerated filer   ☐   Non-accelerated filer   ☐   Smaller Reporting Company     
   Emerging growth company     

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  __

 

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     YES      NO

 

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the Registrant at the close of business on December 31, 2019 was approximately $983,021,425. Registrant’s closing price as reported on the New York Stock Exchange for December 31, 2019 was $79.35 per share.

 

The number of shares of Registrant's Common Stock outstanding on August 18, 2020 was 12,380,901 .

 

Documents incorporated by reference

 

Portions of the Proxy Statement for the Registrant’s 2020 Annual Meeting of Stockholders (the “Proxy Statement”) are incorporated by reference into Part III of this report.

 

 

1

 

 

Forward Looking Statement

 

Statements contained in this Annual Report on Form 10-K that are not based on historical facts are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the use of forward-looking terminology such as “should,” “could,” “may,” “will,” “expect,” “believe,” “estimate,” “anticipate,” “intend,” “continue,” or similar terms or variations of those terms or the negative of those terms. There are many factors that affect the Company’s business and the results of its operations and that may cause the actual results of operations in future periods to differ materially from those currently expected or anticipated. These factors include, but are not limited to: materially adverse or unanticipated legal judgments, fines, penalties or settlements; conditions in the financial and banking markets, including fluctuations in exchange rates and the inability to repatriate foreign cash; domestic and international economic conditions, including the impact, length and degree of economic downturns on the customers and markets we serve and more specifically conditions in the food service equipment, automotive, construction, aerospace, energy, oil and gas, transportation, consumer appliance and general industrial markets; lower-cost competition; the relative mix of products which impact margins and operating efficiencies 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 including effective completion of plant consolidations, cost reduction efforts 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 global sourcing of raw materials and diversification efforts in emerging markets; the impact on cost structure and on economic conditions as a result of actual and threatened increases in trade tariffs; the inability to attain expected benefits from strategic alliances or acquisitions and the inability to effectively consummate and integrate such acquisitions and achieve synergies envisioned by the Company; market acceptance of our products; our ability to design, introduce and sell new products and related product components; the ability to redesign certain of our products to continue meeting evolving regulatory requirements; the impact of delays initiated by our customers; and our ability to increase manufacturing production to meet demand; and potential changes to future pension funding requirements. 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.

 

 

PART I

 

Item 1. Business

 

Standex International Corporation was incorporated in 1975 and is the successor of a corporation organized in 1955. As used in this report, the terms “we,” “us,” “our,” the “Company” and “Standex” mean Standex International Corporation and its subsidiaries. We have paid dividends each quarter since Standex became a public corporation in November 1964. Overall management, strategic development and financial control are led by the executive staff at our corporate headquarters in Salem, New Hampshire.

 

Unless otherwise noted, references to years are to fiscal years. Currently our fiscal year end is June 30.  For further clarity, our fiscal year 2020 includes the twelve-month period from July 1, 2019 to June 30, 2020.

 

We are a diversified industrial manufacturer with leading positions in a variety of products and services that are used in diverse commercial and industrial markets. As of the end of the fiscal third quarter 2020, we had nine operating segments aggregated into five reportable segments.  During the third quarter of 2020, we announced the divestiture of our Refrigerated Solutions Group (RSG) consistent with our strategy to focus our financial assets and managerial resources on our higher growth and operating margin businesses. The divestiture of RSG was completed and consideration was exchanged in April of fiscal year 2020. Subsequent to the disposition of the RSG, we reviewed the quantitative and qualitative characteristics of our remaining businesses, including the manner in which our chief operating decision maker makes decisions regarding these businesses, and determined that we have seven operating segments that aggregate to five reportable segments. 

 

Our new reportable segment structure is as follows:

 

 

Electronics operating segment

 

Engraving operating segment

 

Scientific operating segment

 

Engineering Technologies Group operating segment

 

Specialty Solutions – an aggregation of our Federal, Procon, and Hydraulics operating segments. 

 

2

 

Our segments differentiate themselves by collaborating with our customers in order to develop and deliver custom solutions or engineered components that solve problems for our customers or otherwise meet their needs (a business model we refer to as “Customer Intimacy”).

 

Our long-term strategy is to enhance shareholder value by building larger, more profitable “Customer Intimacy” focused industrial platforms through a value creation system that assists management in meeting specific corporate and business unit financial and strategic performance goals in order to create, improve, and enhance shareholder value. The Standex Value Creation System is a methodology which provides standard work and consistent tools used throughout the company in order to achieve our organization’s goals. The Standex Value Creation System employs four components: Balanced Performance Plan, Growth Disciplines, Operational Excellence, and Talent Management. The Balanced Performance Plan process aligns annual goals throughout the company and provides a standard reporting, management and review process. It is focused on setting, tracking and reviewing annual and quarterly targets that support our short and long-term goals. The Growth Disciplines use a standard work playbook of tools and processes including market maps, market tests, and growth laneways to identify, explore and execute on opportunities that expand the business organically and through acquisitions. Operational Excellence also employs a standard work playbook of tool and processes, based on LEAN, to improve operating execution (effectiveness), eliminate waste (efficiency) and thereby improve profitability, cash flow and customer satisfaction. Finally, Talent Management is an organizational development process that provides training, development, and succession planning for employees throughout our worldwide organization. The Standex Value Creation System ties all of these disciplines together under a common umbrella by providing standard playbook of tools and processes to deliver our business objectives.

 

 

It is our objective to grow larger and more profitable business units through both organic (Growth Disciplines) and inorganic (acquisition) activities. We seek to identify and implement organic growth initiatives such as new product and service development, new and current customer acquisition / expansion, geographic market enlargement, sales channel partner extension, and new business model investigation. Also, we have a long-term objective to create sizable business platforms by adding strategically aligned acquisitions to strengthen the individual businesses, create both sales and cost synergies with our core business platforms, and accelerate their growth and margin improvement. We also look to drive continuous improvement within our business platforms to enhance the execution of their current core business to accelerate growth and improve margins. In these pursuits, we have a particular focus on identifying and investing in opportunities that complement our current products and services and will increase the global presence and capabilities of our businesses. From time to time, we have divested, and likely will continue to divest, businesses that we feel are not strategic or do not meet our growth and return expectations.

 

 

Our objective to grow larger and more profitable business platforms also relies upon Operational Excellence, which drives continuous improvement and thereby margin expansion of our businesses. We recognize that our businesses are competing in a global economy that requires us to improve our competitive position, and we continue to deploy these capabilities to drive improvements in the cost structure of our businesses. These efforts include but are not limited to the application of LEAN, the use of low cost manufacturing facilities in countries such as Mexico and India, the consolidation of manufacturing facilities to achieve economies of scale and leveraging of fixed infrastructure costs, the use of alternate sourcing to achieve procurement cost reductions, and the investment of capital to increase productivity in both the shop floor and back-office.

 

 

The Company’s strong historical cash flow has been a cornerstone for funding our capital allocation strategy. Our priority for the use of capital is to use cash flow generated from operations for maintenance and safety capital assets; investment in capital assets to fund the strategic growth programs described above, including acquisitions, if our return and investment criteria are met; repayment of outstanding debt if our liquidity levels meet our criteria; and to return cash to our shareholders through the payment of dividends and stock buybacks.

 

Please visit our website at www.standex.com to learn more about us or to review our most recent SEC filings. The information on our website is for informational purposes only and is not incorporated into this Annual Report on Form 10-K. 

 

Description of Segments

 

Electronics 

 

Our Electronics group is a global component and value-added solutions provider of both sensing and switching technologies along with magnetic power conversion components and assemblies. We are focused on designing, engineering, and manufacturing innovative solutions, components and assemblies to solve our customers’ application needs with a commitment to a customer first attitude through our Partner/Solve/Deliver® approach.  Our approach allows us to expand the business through pursuing organic growth with our current customers, developing new products and technologies for both new and existing customers, driving geographic expansion, and pursuing inorganic growth through strategic acquisitions.

 

Components are manufactured in plants located in the U.S., Mexico, the U.K., Germany, Japan, China and India.

 

3

 

Markets and Applications

 

Our diverse and highly engineered products and solutions and vertically integrated manufacturing capabilities are vital to an array of markets and provide safe and efficient power transformation, current monitoring, isolation, as well as sensors and relays to monitor systems for function and safety. The end-user of our engineered solution is typically an Original Equipment Manufacturer (“OEM”) industrial equipment manufacturer. End-user markets include, but are not limited to, smart-grid, alternative energy, appliances, HVAC, security, military, medical, aerospace, test and measurement, power distribution, transportation and general industrial applications.

 

Brands

 

Business unit names are Standex Electronics, Standex-Meder Electronics, Northlake Engineering, Agile Magnetics, Standex Electronics Japan, and the MEDER, KENT, and KOFU reed switch brands.

 

Products

 

Our sensing products employ technologies such as reed switch, Hall effect, inductive, conductive and other technologies. Sensing based solutions include reed relays, fluid level, proximity, motion, flow, HVAC condensate as well as custom electronic sensors containing our core technologies. The magnetics or power conversion products include custom wound transformers and inductors for low and high frequency applications, current sense technology, advanced planar transformer technology, value added assemblies, and mechanical packaging.

 

Customers

 

The business sells to a wide variety of industrial, medical, power, automotive and consumer goods customers globally through a direct sales force, regional sales managers, and field applications engineers, commissioned agents, representative groups, and distribution channels.

 

Engraving

 

Engraving creates custom textures and surface finishes on tooling to enhance the beauty and function of a wide range of consumer goods and automotive products. We focus on continuing to meet the needs of a changing marketplace by offering experienced craftsmanship while investing in new technologies such as laser engraving and soft surface skin texturized tooling. Our growth strategy is to continue to develop new technologies to enhance surface textures, both organically and with bolt-on acquisitions. We are one company operating in 23 countries using a consistent approach to guarantee harmony on global programs in service of our customers.

 

Markets and Applications

 

Standex Engraving Mold Tech has become the global leader in its industry by offering a full range of services to OEM’s, Tier 1 suppliers, mold makers and product designers. From start to finish, these services include the design of bespoke textures, the verification of the texture on a prototype, engraving a mold, enhancing and polishing it, and then offering on-site try-out support with ongoing tool maintenance and texture repair capabilities. In addition to these services, we also produce soft trim tooling such as in mold graining (IMG) and nickel shells.

 

Engraving companies and brands also include:

 

 

Piazza Rosa and World Client Services which both offer laser engraving and tool finishing in Europe and Mexico.

 

Tenibac-Graphion provides additional texturizing and protyping capabilities in North America and China.

 

GS Engineering employs advanced processes and technology to rapidly produce molds for the creation of soft-touch surfaces.

 

Innovent, located in North America and Europe, is a specialized supplier of tools and machines used to produce diapers and products that contain absorbent materials between layers of non-woven fabric.

 

Products and Services

 

Texturing is achieved with either a laser or a chemical etching technique.

 

 

Laser Engraving offers superior features previously unavailable on products, such as multiple gloss levels, the elimination of paint and optimized scratch performance, and sharp definition for precise geometric patterns.

 

Chemical Engraving produces carefully designed textures and finishes without seams or distortion. Our Digital Transfer Technology offers an exclusive service which guarantees consistency, pattern integrity and texture harmony around the world.

 

4

 

Architexture Design Studio uses proprietary technology called Model-Tech® which utilizes proven expertise to create and test custom textures. During the Model-Tech process, an original texture is first designed to offer beauty and function which ultimately is used to create a large-format skin that can be wrapped on a model for testing.

 

Tooling Performance services include the enhancement, finishing and repair of a tool to improve its use during manufacturing.  

 

 

Tool Enhancement services increase the wear resistance of the mold. Processes include advanced tool finishing services, anti-scratch, laser hardening in localized areas, Tribocoat® and Release Coat.

 

Tool Finishing and Repair allows customers to achieve outstanding quality while saving valuable time. These services include laser micro-welding, polishing and lapping, laser cladding to accommodate engineering changes, mold assembly, tool management, maintenance, texture repair and on-site support.

 

Soft Trim Tooling and nickel shell molds are used to produce soft surfaces that emulate the feel of natural materials. 

 

Customers

 

This business has become the global leader providing these products and services by offering a full range of services to OEM’s, product designers, Tier 1 suppliers and toolmakers all around the world.

 

Scientific

 

The Scientific business is a provider of specialty temperature-controlled equipment for the medical, scientific, pharmaceutical, biotech and industrial markets. The group designs and produces its products in Summerville, SC.

 

Our product portfolio is used to control the temperatures of critical healthcare products, medications, vaccines and laboratory samples.  We focus on solving customer problems for these critical applications and deliver innovative products and solutions meeting the unique needs of our customers.

 

Markets and Applications

 

The scientific and healthcare equipment that we design and manufacture is used in hospitals, pharmacies, clinical laboratories, reference laboratories, physicians’ offices, life science laboratories, government facilities, and industrial testing laboratories.  Our product offerings include:

 

 

Laboratory and medical grade refrigerators, freezers and accessories,

 

Cryogenic storage tanks and accessories,

 

Environmental stability chambers and incubators.

 

Brands

 

Our products are sold under a number of different brands including American BioTech Supply (ABS), Lab Research Products (LRP), Cryosafe, and CryoGuard.

 

Customers

 

Scientific products are sold to medical and laboratory distributors, healthcare facilities, research universities, pharmaceutical companies, and pharmacies.

 

Engineering Technologies

 

The Engineering Technologies Group is a provider of innovative, turnkey metal-formed solutions for OEM and Tier 1 manufacturers for their advanced engineering designs.

 

Our solutions seek to reduce input weight, material cost, part count, and complexity for unique customer design challenges involving all formable materials with particular focus on large dimensions, large thickness or thin-wall construction, complex shapes and contours, and/or single-piece construction requirements. Engineering Technologies devises and manufactures these cost-effective components and assemblies by combining a portfolio of best-in-class forming technologies and technical experience, vertically integrated manufacturing processes, and group wide technical and design expertise.

 

We intend to grow sales and product offerings by investing in advancements in our current and new technologies and identifying new cutting-edge solutions for these capabilities in existing and adjacent markets via customer and research collaboration. 

 

5

 

Our segment is comprised of two businesses, Spincraft, with locations in Billerica, MA, New Berlin, WI, and Newcastle upon Tyne in the U.K, and Enginetics, located in Huber Heights, OH.

 

Brands

 

This business unit’s brand names are Spincraft and Enginetics.

 

Markets and Applications

 

Spincraft products serve applications within the space, aviation, defense, energy, medical, and general industrial markets.

 

 

The space market we serve is comprised of components for space launch systems including fuel tanks, tank domes, combustion liners, nozzles, and crew vehicle structures.

 

The aviation market offerings include a large portfolio of components and assemblies including inlet ducts and lipskins.

 

The defense market we serve covers a wide spectrum of metal applications including missile nose cones and fabrications, large dimension exhaust systems, navy-nuclear propulsion, and engine components for military aircraft

 

Applications within the energy market include components and assemblies for new and MRO gas turbines, as well as solutions for oil & gas exploration operations

 

Enginetics aviation market offerings include a large portfolio of components within engines such as seals, heat shield, and combustor elements, as well as components of aero structures.

 

Customers

 

Engineering Technologies components are sold directly to large space, aviation, defense, energy and medical companies, or suppliers to those companies.

 

Specialty Solutions

 

Specialty Solutions is a collection of our three remaining businesses: Federal Industries, Procon, and Custom Hoists. These businesses differentiate themselves in their respective markets by collaborating with our customers in order to develop and deliver custom solutions. 

 

Federal Industries provides merchandising solutions to retail and food service customers whose revenue stream is enhanced through food presentation. Federal focuses on the challenges of enabling retail and food service establishments to provide food and beverages that are fresh and appealing while at the same time providing for food safety, and energy efficiency. Our key differentiator is the ability to customize products to match customers’ décor within industry lead-time. This differentiator is used to target the convenience store, school cafeterias and quick-service restaurant segments.

 

Procon is a global supplier of pump solutions to the beverage, medical, welding and ink markets. Through collaboration between our customers and our product development teams, we provide custom fluid pumping solutions to OEM manufacturers, and aftermarket distributors. We manufacture globally, utilizing the latest techniques and processes to ensure the highest quality and acute attention to detail in order for our products to meet the demands of the applications and environmental conditions required by our customers.

 

Custom Hoists is a supplier of engineered hydraulic cylinders that meet customer specific requirements for demanding applications. Our engineering expertise coupled with broad manufacturing capabilities and responsiveness to customer needs drives our top line growth opportunities.  We leverage our full line of products for the construction markets in dump truck and trailer applications and deep expertise in the refuse market to expand into new adjacent markets, targeting the most challenging custom applications.  Flexible design capability, a global supply chain and speed to market enable us to be successful in growing our business.  Our team is dedicated to superior customer service through our technical engineering support and on-time delivery.  

 

Specialty Solutions Locations

 

Specialty Solutions products are designed and/or manufactured in Hayesville, OH; Smyrna TN; Nogales, MX; Belleville, WI; Tianjin, China; and Mountmellick, Ireland.

 

Markets and Applications

 

Federal custom designs and manufactures refrigerated, heated and dry merchandising display cases for bakery, deli, confectionary and packaged food products utilized in restaurants, convenience stores, quick-service restaurants, supermarkets, drug stores and institutions such as hotels, hospitals, and school cafeterias.

 

6

 

Procon custom fluid pump solutions are sold into the global carbonation, coffee, and beer chilling beverage markets as well as reverse osmosis water treatment, medical, welding, and commercial ink markets.

 

Industries that utilize Custom Hoist’s single and double acting telescopic and piston rod hydraulic cylinders include construction equipment, refuse, airline support, mining, oil and gas, and other material handling applications.  We also sell specialty pneumatic cylinders and promote complete wet line kits, which are complete hydraulic systems that include a pump, valves, hoses and fittings.  Our products are utilized by OEMs on vehicles such as dump trucks, dump trailers, bottom dumps, garbage trucks (both recycling and rear loader), container roll off vehicles, hook lift trucks, liquid waste handlers, vacuum trucks, compactors, balers, airport catering vehicles, container handling equipment for airlines, lift trucks, yard tractors, and underground mining vehicles. 

 

Customers

 

Specialty Solutions products are sold to OEMs, distributors, service organizations, aftermarket repair outlets, end-users, dealers, buying groups, consultants, government agencies and manufacturers.

 

Working Capital

 

Our primary source of working capital is the cash generated from continuing operations. No segments require any special working capital needs outside of the normal course of business.

 

Competition

 

Standex manufactures and markets products many of which have achieved a unique or leadership position in their market, however, we encounter competition in varying degrees in all product groups and for each product line. Competitors include domestic and foreign producers of the same and similar products. The principal methods of competition are product performance and technology, price, delivery schedule, quality of services, and other terms and conditions.

 

International Operations

 

We have international operations in all of our business segments. International operations are conducted at 66 locations, in Europe, Canada, China, Japan, India, Southeast Asia, Korea, Mexico, Brazil, and South Africa. See the Notes to Consolidated Financial Statements for international operations financial data. Our net sales from continuing international operations decreased from 42% in 2019 to 40% in 2020. International operations are subject to certain inherent risks in connection with the conduct of business in foreign countries including, exchange controls, price controls, limitations on participation in local enterprises, nationalizations, expropriation and other governmental action, restrictions of repatriation of earnings, and changes in currency exchange rates.

 

Research and Development

 

We develop and design new products to meet customer needs in order to offer enhanced products or to provide customized solutions for customers. Developing new and improved products, broadening the application of established products, and continuing efforts to improve our methods, processes, and equipment continues to drive our success. However, due to the nature of our manufacturing operations and the types of products manufactured, expenditures for research and development are not significant to any individual segment or in the aggregate. Research and development costs are quantified in the Notes to Consolidated Financial Statements. 

 

Environmental Matters

 

Based on our knowledge and current known facts, we believe that we are presently in substantial compliance with all existing applicable environmental laws and regulations and do not anticipate (i) any instances of non-compliance that will have a material effect on our future capital expenditures, earnings or competitive position or (ii) any material capital expenditures for environmental control facilities.

 

Financial Information about Geographic Areas

 

Information regarding revenues from external customers attributed to the United States, all foreign countries and any individual foreign country, if material, is contained in the Notes to Consolidated Financial Statements,“Industry Segment Information.”

 

Number of Employees

 

As of June 30, 2020, we employed approximately 3,800 employees of which approximately 1,100 were in the United States. About 250 of our U.S. employees were represented by unions. Approximately 44% of our production workforce is situated in low-cost manufacturing regions such as Mexico and Asia.

 

7

 

Executive Officers of Standex

 

The executive officers of the Company as of June 30, 2020 were as follows:

 

Name

Age

Principal Occupation During the Past Five Years

     

David Dunbar

58

President and Chief Executive Officer of the Company since January 2014.

     

Ademir Sarcevic

45

Vice President and Chief Financial Officer of the Company since September 2019. Various positions over the years at Pentair plc from 2012 to September 2019 with increasing responsibility ending as Senior Vice President and Chief Accounting Officer.

     

Alan J. Glass

56

Vice President, Chief Legal Officer and Secretary of the Company since April 2016. Vice President, General Counsel and Secretary of CIRCOR International, Inc. from 2000 through 2016.

     

Sean Valashinas

49

Vice President, Chief Accounting Officer and Assistant Treasurer of the Company since October 2007.

     

Paul Burns

47

Vice President of Strategy and Business Development since July 2015.

     
Annemarie Bell 56 Vice President of Human Resources since June 2019, Interim Vice President of Human Resources from October 2018 through June 2019; Vice President of Human Resources for four of Standex business units from October 2015 through October 2018, Director of Human Resources and Human Resources Business Partner at PerkinElmer from 2007 through 2015.
     
James Hooven 49 Vice President of Operations and Supply Chain since February 2020, Senior Vice President for Hillenbrand Inc.

 

The executive officers are elected each year at the first meeting of the Board of Directors subsequent to the annual meeting of stockholders, to serve for one-year terms of office. There are no family relationships among any of the directors or executive officers of the Company.

 

Long-Lived Assets

 

Long-lived assets are described and discussed in the Notes to Consolidated Financial Statements under the caption “Long-Lived Assets.”

 

Available Information

 

Standex’s corporate headquarters are at 23 Keewaydin Drive, Salem, New Hampshire 03079, and our telephone number at that location is (603) 893-9701.

 

The U.S. Securities and Exchange Commission (the “SEC”) maintains an internet website at www.sec.gov that contains our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and proxy statements, and all amendments thereto. All reports that we file with the SEC may be read and copied at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, DC 20549. Information about the operation of the Public Reference Room can be obtained by calling the SEC at 1-800-SEC-0330. Standex’s internet website address is www.standex.com. Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and proxy statements, and all amendments thereto, are available free of charge on our website as soon as reasonably practicable after such reports are electronically filed with or furnished to the SEC. In addition, our code of business conduct, our code of ethics for senior financial management, our corporate governance guidelines, and the charters of each of the committees of our Board of Directors (which are not deemed filed by this reference), are available on our website and are available in print to any Standex shareholder, without charge, upon request in writing to “Chief Legal Officer, Standex International Corporation, 23 Keewaydin Drive, Salem, New Hampshire, 03079.”

 

The certifications of Standex’s Chief Executive Officer and Chief Financial Officer, as required by the rules adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, are filed as exhibits to this Form 10-K.

 

Item 1A. Risk Factors

 

An investment in the Company involves various risks, including those mentioned below and those that are discussed from time to time in our other periodic filings with the Securities and Exchange Commission. Investors should carefully consider these risks, along with the other information filed in this report, before making an investment decision regarding the Company. Any of these risks could have a material adverse effect on our financial condition, results of operations and/or value of an investment in the Company.

 

8

 

The ongoing COVID-19 pandemic has, and could continue to adversely affect our revenues, operating results, cash flow and financial condition.

 

Our business and operations, and the operations of our suppliers, business partners and customers, have been, and are expected to continue to be adversely affected by the ongoing Coronavirus (or COVID-19) pandemic which is impacting worldwide economic activity including in many countries or localities in which we operate, sell, or purchases good and services. There can be no assurance that COVID-19 will not impact our business generally as a result of the virus’ potential impact on delays in supply chain, production and/or purchases from our customers and timely payment from any customers who may be experiencing liquidity issues due to the pandemic. Due to the spread of COVID-19, we have modified our business practices, including employee travel restrictions, employee work locations, and cancellation of physical participation in non-critical meetings, events and conferences pursuant to applicable government guidelines. There is no certainty that such measures will be sufficient to mitigate the risks posed by COVID-19, which could adversely impact our ability to perform critical functions, such as the research and development of new products, the manufacture of our products, and the distribution and sale of our products. Moreover, while each of our operations has prepared business continuity plans to address COVID-19 concerns, in an effort to ensure that we are protecting our employees, continuing to operate our business and service our customers’ needs, there is no guarantee that such plans will anticipate or fully mitigate the various impacts the pandemic may have, much of which is still uncertain.  While it is not possible at this time to estimate the scope and severity of the impact that  COVID-19  will have on our operations, the continued spread of  COVID-19, the measures taken by the governments of countries affected, actions taken to protect employees, actions taken to shut down or temporarily discontinue operations in certain locations, and the impact of the pandemic on various business activities in affected countries and the economy generally, could adversely affect our financial condition, results of operations and cash flows. The ultimate extent to which  COVID-19 impacts our business will depend on the severity, location and duration of the spread of  COVID-19, the actions undertaken by local and world governments and health officials to contain the virus or treat its effects, and the success of ongoing efforts to create and distribute a successful vaccine.

 

A deterioration in the domestic and international economic environment could adversely affect our operating results, cash flow and financial condition.

 

Recessionary economic conditions, with or without a tightening of credit, could adversely impact major markets served by our businesses, including cyclical markets such as automotive, aviation, energy and power, heavy construction vehicle, general industrial, consumer appliances and food service. An economic recession could adversely affect our business by:

 

 

reducing demand for our products and services, particularly in markets where demand for our products and services is cyclical;

 

causing delays or cancellations of orders for our products or services;

 

reducing capital spending by our customers;

 

increasing price competition in our markets;

 

increasing difficulty in collecting accounts receivable;

 

increasing the risk of excess or obsolete inventories;

 

increasing the risk of impairment to long-lived assets due to reduced use of manufacturing facilities;

 

increasing the risk of supply interruptions that would be disruptive to our manufacturing processes; and

 

reducing the availability of credit and spending power for our customers.

 

We rely on our credit facility to provide us with sufficient capital to operate our businesses and to fund acquisitions.

 

We rely on our revolving credit facility, in part along with operating cash flow, to provide us with sufficient capital to operate our businesses and to fund acquisitions. The availability of borrowings under our revolving credit facility is dependent upon our compliance with the covenants set forth in the facility, including the maintenance of certain financial ratios. Our ability to comply with these covenants is dependent upon our future performance, which is subject to economic conditions in our markets along with factors that are beyond our control. Violation of those covenants could result in our lenders restricting or terminating our borrowing ability under our credit facility, cause us to be liable for covenant waiver fees or other obligations, or trigger an event of default under the terms of our credit facility, which could result in acceleration of the debt under the facility and require prepayment of the debt before its due date. Even if new financing is available, in the event of a default under our current credit facility, the interest rate charged on any new borrowing could be substantially higher than under the current credit facility, thus adversely affecting our overall financial condition. If our lenders reduce or terminate our access to amounts under our credit facility, we may not have sufficient capital to fund our working capital needs and/or acquisitions or we may need to secure additional capital or financing to fund our working capital requirements or to repay outstanding debt under our credit facility or to fund acquisitions.

 

9

 

Our credit facility contains covenants that restrict our activities.

 

Our revolving credit facility contains covenants that restrict our activities, including our ability to:

 

 

incur additional indebtedness;

 

make investments, including acquisitions;

 

create liens;

 

pay cash dividends to shareholders unless we are compliant with the financial covenants set forth in the credit facility; and

 

sell material assets.

 

Our global operations subject us to international business risks.

 

We operate in 66 locations outside of the United States in Europe, Canada, China, Japan, India, Singapore, Korea, Mexico, Brazil, Turkey, Malaysia, and South Africa. If we are unable to successfully manage the risks inherent to the operation and expansion of our global businesses, those risks could have a material adverse effect on our results of operations, cash flow or financial condition. These international business risks include:

 

 

fluctuations in currency exchange rates;

 

changes in government regulations;

 

restrictions on repatriation of earnings;

 

import and export controls;

 

political, social and economic instability;

 

potential adverse tax consequences;

 

difficulties in staffing and managing multi-national operations;

 

unexpected changes in zoning or other land-use requirements;

 

difficulties in our ability to enforce legal rights and remedies; and

 

changes in regulatory requirements.

 

 

Failure to achieve expected savings and synergies could adversely impact our operating profits and cash flows.

 

We focus on improving profitability through LEAN enterprise, low cost sourcing and manufacturing initiatives, improving working capital management, developing new and enhanced products, consolidating factories where appropriate, automating manufacturing processes, diversification efforts and completing acquisitions which deliver synergies to stimulate sales and growth. If we are unable to successfully execute these programs, such failure could adversely affect our operating profits and cash flows. In addition, actions we may take to consolidate manufacturing operations to achieve cost savings or adjust to market developments may result in restructuring charges that adversely affect our profits.

 

Violation of anti-bribery or similar laws by our employees, business partners or agents could result in fines, penalties, damage to our reputation or other adverse consequences.

 

We cannot assure that our internal controls, code of conduct and training of our employees will provide complete protection from reckless or criminal acts of our employees, business partners or agents that might violate United States or international laws relating to anti-bribery or similar topics. A violation of these laws could subject us to civil or criminal investigations that could result in substantial civil or criminal fines and penalties and which could damage our reputation.

 

We face significant competition in our markets and, if we are not able to respond to competition in our markets, our net sales, profits and cash flows could decline.

 

Our businesses operate in highly competitive markets. To compete effectively, we must retain long standing relationships with significant customers, offer attractive pricing, maintain product quality, meet customer delivery requirements, develop enhancements to products that offer performance features that are superior to our competitors and which maintain our brand recognition, continue to automate our manufacturing capabilities, continue to grow our business by establishing relationships with new customers, diversify into emerging markets and penetrate new markets. In addition, many of our businesses experience sales churn as customers seek lower cost suppliers. We attempt to offset this churn through our continual pursuit of new business opportunities. However, if we are unable to compete effectively or succeed in our pursuit of new business opportunities, our net sales, profitability and cash flows could decline. Pricing pressures resulting from competition may adversely affect our net sales and profitability.

 

10

 

If we are unable to successfully introduce new products and product enhancements, our future growth could be impaired.

 

Our ability to develop new products and innovations to satisfy customer needs or demands in the markets we serve can affect our competitive position and often requires significant investment of resources. Difficulties or delays in research, development or production of new products and services or failure to gain market acceptance of new products and technologies may significantly reduce future net sales and adversely affect our competitive position.

 

Increased prices or significant shortages of the commodities that we use in our businesses could result in lower net sales, profits and cash flows.

 

We purchase large quantities of steel, aluminum, refrigeration components, freight services, and other metal commodities for the manufacture of our products. We also purchase significant quantities of relatively rare elements used in the manufacture of certain of our electronics products. Historically, prices for commodities and rare elements have fluctuated, and we are unable to enter into long-term contracts or other arrangements to hedge the risk of price increases in many of these commodities. Significant price increases for these commodities and rare elements could adversely affect our operating profits if we cannot timely mitigate the price increases by successfully sourcing lower cost commodities or rare elements or by passing the increased costs on to customers. Shortages or other disruptions in the supply of these commodities or rare elements could delay sales or increase costs.

 

Current and threatened tariffs on components and finished goods from China and other countries could result in lower net sales, profits and cash flows and could impair the value of our investments in our Chinese operations.

 

As part of our low-cost country sourcing strategy, we (i) maintain manufacturing facilities in China and (ii) import certain components and finished goods from our own facilities and third-party suppliers in China. Many of the components and finished goods we import from China are subject to tariffs recently enacted by the United States government as well as additional proposed tariffs. While we attempt to pass on these additional costs to our customers, competitive factors (including competitors who import from other countries not subject to such tariffs) may limit our ability to sustain price increases and, as a result, may adversely impact our net sales, profits and cash flows. The maintenance of such tariffs over the long-term also could impair the value of our investments in our Chinese operations. In addition, the imposition of tariffs may influence the sourcing habits of certain end users of our products and services which, in turn, could have a direct impact on the requirements of our direct customers for our products and services. Such an impact could adversely affect our net sales, profits and cash flows.

 

An inability to identify or complete future acquisitions could adversely affect our future growth.

 

As part of our growth strategy, we intend to pursue acquisitions that provide opportunities for profitable growth for our businesses and enable us to leverage our competitive strengths. While we continue to evaluate potential acquisitions, we may not be able to identify and successfully negotiate suitable acquisitions, obtain financing for future acquisitions on satisfactory terms, obtain regulatory approval for certain acquisitions or otherwise complete acquisitions in the future. An inability to identify or complete future acquisitions could limit our future growth.

 

We may experience difficulties in integrating acquisitions.

 

Integration of acquired companies involves several risks, including:

 

 

inability to operate acquired businesses profitably;

 

failure to accomplish strategic objectives for those acquisitions;

 

unanticipated costs relating to acquisitions or to the integration of the acquired businesses;

 

difficulties in achieving planned cost savings synergies and growth opportunities; and

 

possible future impairment charges for goodwill and non-amortizable intangible assets that are recorded as a function of acquisitions.

 

Additionally, our level of indebtedness may increase in the future if we finance acquisitions with debt, which would cause us to incur additional interest expense and could increase our vulnerability to general adverse economic and industry conditions and limit our ability to service our debt or obtain additional financing. We cannot assure that future acquisitions will not have a material adverse effect on our financial condition, results of operations and cash flows.

 

Impairment charges could reduce our profitability.

 

We test goodwill and our other intangible assets with indefinite useful lives for impairment on an annual basis or on an interim basis if a potential impairment factor arises that indicates the fair value of the reporting unit may fall below its carrying value. Various uncertainties, including continued adverse conditions in the capital markets or changes in general economic conditions, could impact the future operating performance at one or more of our businesses which could significantly affect our valuations and could result in additional future impairments. The recognition of an impairment of a significant portion of goodwill would negatively affect our results of operations.

 

11

 

Materially adverse or unforeseen legal judgments, fines, penalties or settlements could have an adverse impact on our profits and cash flows.

 

We are and may, from time to time, become a party to legal proceedings incidental to our businesses, including, but not limited to, alleged claims relating to product liability, environmental compliance, patent infringement, commercial disputes and employment and regulatory matters. In accordance with United States generally accepted accounting principles, we establish reserves based on our assessment of contingent liabilities. Subsequent developments in legal proceedings may affect our assessment and estimates of loss contingencies, recorded as reserves, which could require us to record additional reserves or make material payments which could adversely affect our profits and cash flows. Even the successful defense of legal proceedings may cause us to incur substantial legal costs and may divert management's time and resources away from our businesses.

 

The costs of complying with existing or future environmental regulations, and of correcting any violations of these regulations, could impact our profitability.

 

We are subject to a variety of environmental laws relating to the storage, discharge, handling, emission, generation, use and disposal of chemicals, hazardous waste and other toxic and hazardous materials used to manufacture, or resulting from the process of manufacturing, our products and providing our services. We cannot predict the nature, scope or effect of regulatory requirements to which our operations might be subject or the manner in which existing or future laws will be administered or interpreted. We are also exposed to potential legacy environmental risks relating to businesses we no longer own or operate. Future regulations could be applied to materials, products or activities that have not been subject to regulation previously. The costs of complying with new or more stringent regulations, or with more vigorous enforcement of these or existing regulations, could be significant.

 

In addition, properly permitted waste disposal facilities used by us as a legal and legitimate repository for hazardous waste may in the future become mismanaged or abandoned without our knowledge or involvement. In such event, legacy landfill liability could attach to or be imposed upon us in proportion to the waste deposited at any disposal facility.

 

Environmental laws require us to maintain and comply with a number of permits, authorizations and approvals and to maintain and update training programs and safety data regarding materials used in our processes. Violations of these requirements could result in financial penalties and other enforcement actions. We could be required to halt one or more portions of our operations until a violation is cured. Although we attempt to operate in compliance with these environmental laws, we may not succeed in this effort at all times. The costs of curing violations or resolving enforcement actions that might be initiated by government authorities could be substantial.

 

The costs of complying with existing or future regulations applicable to our products, and of correcting any violations of such regulations, could impact our profitability.

 

Certain of our products are subject to regulations promulgated by administrative agencies such as the Department of Energy, Occupational Health and Safety Administration and the Food and Drug Administration. Such regulations, among other matters, specify requirements regarding energy efficiency and product safety. Regulatory violations could result in financial penalties and other enforcement actions. We could be required to halt production of one or more products until a violation is cured. Although we attempt to produce our products in compliance with these requirements, the costs of curing violations or resolving enforcement actions that might be initiated by administrative agencies could be substantial.

 

Our results could be adversely affected by natural disasters, political crises, or other catastrophic events.

 

Natural disasters, such as hurricanes, tornadoes, floods, earthquakes, and other adverse weather and climate conditions; political crises, such as terrorist attacks, war, labor unrest, and other political instability; or other catastrophic events, such as disasters occurring at our suppliers' manufacturing facilities, whether occurring in the United States or internationally, could disrupt our operations or the operations of one or more of our suppliers. Certain of our key manufacturing facilities are located in geographic areas with a higher than nominal risk of earthquake and flood and others are in areas of higher than nominal political risk (such as China). To the extent any of these events occur, our operations and financial results could be adversely affected.

 

We depend on our key personnel and the loss of their services may adversely affect our business.

 

We believe that our success depends on our ability to hire new talent and the continued employment of our senior management team and other key personnel. If one or more members of our senior management team or other key personnel were unable or unwilling to continue in their present positions, our business could be seriously harmed. In addition, if any of our key personnel joins a competitor or forms a competing company, some of our customers might choose to use the services of that competitor or those of a new company instead of our own. Other companies seeking to develop capabilities and products or services similar to ours may hire away some of our key personnel. If we are unable to maintain our key personnel and attract new employees, the execution of our business strategy may be hindered and our growth limited.

 

12

 

Strategic divestitures and contingent liabilities from businesses that we sell could adversely affect our results of operations and financial condition.

 

From time to time, we have sold and may continue to sell business that we consider to be either underperforming or no longer part of our strategic vision. The sale of any such business could result in a financial loss and/or write-down of goodwill which could have a material adverse effect on our results for the financial reporting period during which such sale occurs. In addition, in connection with such divestitures, we have retained, and may in the future retain responsibility for some of the known and unknown contingent liabilities related to certain divestitures such as lawsuits, tax liabilities, product liability claims, and environmental matters.

 

The trading price of our common stock has been volatile, and investors in our common stock may experience substantial losses.

 

The trading price of our common stock has been volatile and may become volatile again in the future. The trading price of our common stock could decline or fluctuate in response to a variety of factors, including:

 

 

our failure to meet the performance estimates of securities analysts;

 

changes in financial estimates of our net sales and operating results or buy/sell recommendations by securities analysts;

 

fluctuations in our quarterly operating results;

 

substantial sales of our common stock;

 

changes in the amount or frequency of our payment of dividends or repurchases of our common stock;

 

general stock market conditions; or

 

other economic or external factors.

 

Decreases in discount rates and actual rates of return could require an increase in future pension contributions to our pension plans which could limit our flexibility in managing our Company.

 

The discount rate and the expected rate of return on plan assets represent key assumptions inherent in our actuarially calculated pension plan obligations and pension plan expense. If discount rates and actual rates of return on invested plan assets were to decrease significantly, our pension plan obligations could increase materially. Although our pension plans have been frozen, the size of future required pension contributions could require us to dedicate a greater portion of our cash flow from operations to making contributions, which could negatively impact our financial flexibility.

 

Our business could be negatively impacted by cybersecurity threats, information systems and network interruptions, and other security threats or disruptions.

 

Our information technology networks and related systems are critical to the operation of our business and essential to our ability to successfully perform day-to-day operations. Cybersecurity threats are persistent, evolve quickly, and include, but are not limited to, computer viruses, ransomware, attempts to access information, denial of service and other electronic security breaches. These events could disrupt our operations or customers and other third-party IT systems in which we are involved and could negatively impact our reputation among our customers and the public which could have a negative impact on our financial conditions, results of operations, or liquidity.

 

We are subject to increasing regulation associated with data privacy and processing, the violation of which could result in significant penalties and harm our reputation.

 

Regulatory scrutiny of privacy, data protection, collection, use and sharing of data is increasing on a global basis. Like all global companies, we are subject to a number of laws, rules and directives (“privacy laws”) relating to the collection, use, retention, security, processing and transfer (“processing”) of personally identifiable information about our employees, customers and suppliers (“personal data”) in the countries where we operate. The most notable of these privacy laws is the EU’s General Data Protection Regulation (“GDPR”), which came into effect in 2018. GDPR extends the scope of the EU data protection law to all foreign companies processing data of EU residents and imposes a strict data protection compliance regime with severe penalties for non-compliance of up to the greater of 4% of worldwide turnover and €20 million. While we continue to strengthen our data privacy and protection policies and to train our personnel accordingly, a determination that there have been violations of GDPR or other privacy or data protection laws could expose us to significant damage awards, fines and other penalties that could, individually or in the aggregate, materially harm our results of operations and reputation.

 

13

 

Various restrictions in our charter documents, Delaware law and our credit agreement could prevent or delay a change in control that is not supported by our board of directors.

 

We are subject to several provisions in our charter documents, Delaware law and our credit facility that may discourage, delay or prevent a merger, acquisition or change of control that a stockholder may consider favorable. These anti-takeover provisions include:

 

 

maintaining a classified board and imposing advance notice procedures for nominations of candidates for election as directors and for stockholder proposals to be considered at stockholders' meetings;

 

a provision in our certificate of incorporation that requires the approval of the holders of 80% of the outstanding shares of our common stock to adopt any agreement of merger, the sale of substantially all of the assets of the Company to a third party or the issuance or transfer by the Company of voting securities having a fair market value of $1 million or more to a third party, if in any such case such third party is the beneficial owner of 10% or more of the outstanding shares of our common stock, unless the transaction has been approved prior to its consummation by all of our directors;

 

requiring the affirmative vote of the holders of at least 80% of the outstanding shares of our common stock for stockholders to amend our amended and restated by-laws;

 

covenants in our credit facility restricting mergers, asset sales and similar transactions; and

 

the Delaware anti-takeover statute contained in Section 203 of the Delaware General Corporation Law.

 

Section 203 of the Delaware General Corporation Law prohibits a merger, consolidation, asset sale or other similar business combination between the Company and any stockholder of 15% or more of our voting stock for a period of three years after the stockholder acquires 15% or more of our voting stock, unless (1) the transaction is approved by our board of directors before the stockholder acquires 15% or more of our voting stock, (2) upon completing the transaction the stockholder owns at least 85% of our voting stock outstanding at the commencement of the transaction, or (3) the transaction is approved by our board of directors and the holders of 66 2/3% of our voting stock, excluding shares of our voting stock owned by the stockholder.

 

Item 1B. Unresolved Staff Comments

 

None.

 

14

 

Item 2. Properties

 

We have a total of 100 facilities, of which we operate 88 manufacturing plants and warehouses located throughout the United States, Europe, Canada, Southeast Asia, Korea, Japan, China, India, Brazil, South Africa, and Mexico. The Company owns 20 of the facilities and the balance are leased. For the year ended June 30, 2020 the approximate building space utilized by each segment is as follows:

 

           

Area in Square Feet (in thousands)

 

Segment location

 

Number of Facilities

   

Leased

   

Owned

   

Total

 

Asia Pacific

    9       77       29       106  

EMEA(1)

    5       34       66       100  

Other Americas

    1       -       56       56  

United States

    4       60       89       149  

Electronics

    19       171       240       411  

Asia Pacific

    16       426       -       426  

EMEA(1)

    22       414       57       471  

Other Americas

    6       89       -       89  

United States

    11       142       135       277  

Engraving

    55       1,071       192       1,263  

United States

    4       174       -       174  

Scientific

    4       174       -       174  

EMEA(1)

    3       80       -       80  

United States

    6       243       171       414  

Engineering Technologies

    9       323       171       494  

Asia Pacific

    2       76       -       76  

EMEA(1)

    1       13       -       13  

Other Americas

    1       1       -       1  

United States

    8       50       198       248  

Specialty Solutions

    12       140       198       338  

United States

    1       17       -       17  

Corporate & Other

    1       17       -       17  

Total

    100       1,896       801       2,697  

 

(1) EMEA consists Europe, Middle East and S. Africa.

 

In general, the buildings are in sound operating condition and are considered to be adequate for their intended purposes and current uses.

 

We own substantially all of the machinery and equipment utilized in our businesses.

 

Item 3. Legal Proceedings

 

Discussion of legal matters is incorporated by reference to Part II, Item 8, Note 12, “COMMITMENTS AND CONTINGENCIES,” in the Notes to the Consolidated Financial Statements.

 

Item 4. Mine Safety Disclosures

 

Not Applicable

 

15

 

PART II

 

Item 5. Market for Standex Common Stock

 

Related Stockholder Matters and Issuer Purchases of Equity Securities

 

The principal market in which the Common Stock of Standex is traded is the New York Stock Exchange under the ticker symbol “SXI”. The high and low sales prices for the Common Stock on the New York Stock Exchange and the dividends paid per Common Share for each quarter in the last two fiscal years are as follows:

 

   

Common Stock Price Range

   

Dividends Per Share

 
   

2020

   

2019

                 

Year Ended June 30

 

High

   

Low

   

High

   

Low

   

2020

   

2019

 
First quarter   $78.16     $59.93     $114.20     $99.95     $0.20     $0.18  
Second quarter   80.92     69.2     109.77     62.02     0.22     0.20  
Third quarter   79.39     38.39     83.18     66.02     0.22     0.20  
Fourth quarter   64.46     43.08     76.78     62.79     0.22     0.20  

 

The approximate number of stockholders of record on July 31, 2020 was 1,421.

 

Additional information regarding our equity compensation plans is presented in the Notes to Consolidated Financial Statements under the caption “Stock-Based Compensation and Purchase Plans” and Item 12 “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.”

 

Issuer Purchases of Equity Securities (1)

                               

Quarter Ended June 30, 2020

                               

Period

 

(a) Total Number of Shares (or units) Purchased

   

(b) Average Price Paid per Share (or unit)

   

(c) Total Number of Shares (or units) Purchased as Part of Publicly Announced Plans or Programs

   

(d) Maximum Number (or Appropriate Dollar Value) of Shares (or units) that May Yet Be Purchased Under the Plans or Programs

 
April 1 - April 30, 2020     -     $ -       -     $ 44,671,573  
May 1 - May 31, 2020     30,000       47.63       30,000       43,242,563  
June 1 - June 30, 2020     -       -       -       43,242,563  

TOTAL

    30,000     $ 47.63       30,000     $ 43,242,563  

 

(1) The Company has a Stock Buyback Program (the “Program”) which was originally announced on January 30, 1985 and most recently amended on April 26, 2016. Under the Program, the Company is authorized to repurchase up to an aggregate of $100 million of its shares. Under the program, purchases may be made from time to time on the open market, including through 10b5-1 trading plans, or through privately negotiated transactions, block transactions, or other techniques in accordance with prevailing market conditions and the requirements of the Securities and Exchange Commission. The Board’s authorization is open-ended and does not establish a timeframe for the purchases. The Company is not obligated to acquire a particular number of shares, and the program may be discontinued at any time at the Company’s discretion.

 

16

 

The following graph compares the cumulative total stockholder return on the Company’s Common Stock as of the end of each of the last five fiscal years, with the cumulative total stockholder return on the Standard & Poor’s Small Cap 600 (Industrial Segment) Index and on the Russell 2000 Index, assuming an investment of $100 in each at their closing prices on June 30, 2014 and the reinvestment of all dividends.

 

 

 

 

 

 

 

17

 

Item 6. Selected Consolidated Financial Data

 

Selected financial data for the five years ended June 30, is as follows:

 

See Item 7 for discussions on comparability of the below.

 

   

2020

   

2019

   

2018

   

2017

   

2016

 

SUMMARY OF OPERATIONS (in thousands)

                                       

Net sales

                                       
Electronics   $ 185,294     $ 204,073     $ 196,291     $ 136,689     $ 118,319  
Engraving     143,736       149,693       136,275       105,943       124,120  
Scientific     57,523       57,621       52,086       23,442       0  
Engineering Technologies     104,047       105,270       90,781       90,506       82,235  
Specialty Solutions     113,935       123,274       120,082       106,894       108,664  

Total

  $ 604,535     $ 639,931     $ 595,515     $ 463,474     $ 433,338  
Gross profit   $ 215,455     $ 234,667     $ 225,999     $ 167,307     $ 153,380  

Operating income (loss)

                                       
Electronics     29,749       41,227       45,501       27,855       21,323  
Engraving     20,493       23,996       29,618       26,139       30,214  
Scientific     13,740       13,676       11,436       4,269       0  
Engineering Technologies     14,027       11,169       6,506       9,758       8,328  
Specialty Solutions     18,546       19,000       18,688       17,719       19,294  
Restructuring (1)     (4,669 )     (1,289 )     (3,428 )     (4,987 )     (1,304 )
Acquisition related expenses     (1,759 )     (3,075 )     (3,749 )     (7,843 )     -  
Other operating income (expense), net     -       (500 )     -       -       (7,067 )
Corporate and Other     (29,599 )     (24,728 )     (26,430 )     (23,664 )     (23,829 )

Total

  $ 60,528     $ 79,476     $ 78,142     $ 49,246     $ 46,959  
Interest expense     (7,475 )     (10,760 )     (8,029 )     (4,043 )     (2,871 )
Other non-operating (loss) income     1,021       (1,742 )     (1,720 )     (1,905 )     (2,105 )
Provision for income taxes     (13,060 )     (18,688 )     (38,026 )     (9,370 )     (8,406 )

Income from continuing operations

    41,014       48,286       30,367       33,928       33,577  
Income/(loss) from discontinued operations     (20,826 )     19,628       6,237       12,617       18,479  

Net income

  $ 20,188     $ 67,914     $ 36,604     $ 46,545     $ 52,056  

 

(1) See discussion of restructuring activities in Note 15 of the consolidated financial statements.

 

   

2020

   

2019

   

2018

   

2017

   

2016

 

PER SHARE DATA

                                       

Basic

                                       
Income from continuing operations   $ 3.33     $ 3.84       2.39     $ 2.68     $ 2.65  
Income/(loss) from discontinued operations     (1.69 )     1.56       0.49       1.00       1.46  

Total

  $ 1.64     $ 5.40     $ 2.88     $ 3.68     $ 4.11  
                                         

Diluted

                                       
Income from continuing operations   $ 3.31     $ 3.83     $ 2.37     $ 2.66     $ 2.63  
Income/(loss) from discontinued operations     (1.68 )     1.55       0.49       0.99       1.45  

Total

  $ 1.63     $ 5.38     $ 2.86     $ 3.65     $ 4.08  
                                         
Dividends declared   $ 0.86     $ 0.78     $ 0.70     $ 0.62     $ 0.54  

 

18

 

   

2020

   

2019

   

2018

   

2017

   

2016

 

BALANCE SHEET (in thousands)

                                       
Total assets   $ 930,878     $ 921,889     $ 916,937     $ 867,676     $ 690,457  
                                         
Accounts receivable     98,157       103,374       103,081       91,906       69,796  
Inventories     85,031       76,302       80,937       69,913       56,600  
Accounts payable     54,910       54,201       55,975       56,147       40,881  
Goodwill     271,221       273,843       204,091       195,019       109,683  
                                         
Long-term debt   $ 199,150     $ 197,610     $ 193,772     $ 191,976     $ 92,114  
Total debt     199,150       197,610       193,772       191,976       92,114  
Less cash     118,809       93,145       109,602       88,566       121,988  

Net debt (cash)

  $ 80,341     $ 104,465     $ 84,170     $ 103,410     $ (29,874 )
                                         
Stockholders' equity   $ 461,632     $ 464,313     $ 450,795     $ 408,664     $ 369,959  

 

KEY STATISTICS

 

2020

   

2019

   

2018

   

2017

   

2016

 
Gross profit margin   35.6 %   36.7 %   38.0 %   36.1 %   35.4 %
Operating income margin   10.0 %   12.4 %   13.1 %   10.6 %   10.8 %

 

 

Item 7.  Management's Discussion and Analysis of Financial Condition and Results of Operations

 

Overview

 

We are a diversified industrial manufacturer with leading positions in a variety of products and services that are used in diverse commercial and industrial markets. As of the end of the fiscal third quarter 2020, we had nine operating segments aggregated into five reportable segments.  During the third quarter of 2020, we announced the divestiture of our Refrigerated Solutions Group (an accumulation of our Master-Bilt and NorLake operating segments) consistent with our strategy to focus our financial assets and managerial resources on our higher growth and operating margin businesses. The divestiture of the Refrigerated Solutions Group was completed and consideration was exchanged in April of fiscal year 2020. Subsequent to the disposition of the Refrigeration Solutions Group, we reviewed the quantitative and qualitative characteristics of our remaining businesses and determined that we now have seven operating segments that aggregate to five reportable segments. All periods presented have been revised accordingly to reflect the new reportable segments.

 

Our new reportable segment structure is as follows:

 

 

Electronics operating segment

 

Engraving operating segment

 

Scientific operating segment

 

Engineering Technologies Group operating segment

 

Specialty Solutions – an aggregation of our Federal, Procon, and Hydraulics operating segments. 

 

Our segments differentiate themselves  by collaborating with our customers in order to develop and deliver custom solutions or engineered components that solve problems for our customers or otherwise meet their needs (a business model we refer to as “Customer Intimacy”). 

 

Overall management, strategic development and financial control are led by the executive staff at our corporate headquarters located in Salem, New Hampshire.

 

Our long-term strategy is to enhance shareholder value by building larger, more profitable “Customer Intimacy” focused industrial platforms through a value creation system that assists management in meeting specific corporate and business unit financial and strategic performance goals in order to create, improve, and enhance shareholder value. In so doing, we expect to focus our financial assets and managerial resources on our higher growth and operating margin businesses while considering divestiture of those businesses that we feel are not strategic or do not meet our growth and return expectations. 

 

19

 

The Standex Value Creation System is a methodology which provides standard work and consistent tools used throughout the company in order to achieve our organization’s goals. The Standex Value Creation System employs four components: Balanced Performance Plan, Growth Disciplines, Operational Excellence, and Talent Management. The Balanced Performance Plan process aligns annual goals throughout the company and provides a standard reporting, management and review process.  It is focused on setting, tracking and reviewing annual and quarterly targets that support our short and long-term goals.  The Growth Disciplines use a standard work playbook of tools and processes including market maps, market tests and growth laneways to identify explore and execute on opportunities that expand the business organically and through acquisitions.  Operational Excellence also employs a standard work playbook of tools and processes, based on LEAN, to improve operating execution (effectiveness), eliminate waste (efficiency) and thereby improve profitability, cash flow and customer satisfaction.  Finally, Talent Management is an organizational development process that provides training, development, and succession planning for employees throughout our worldwide organization.  The Standex Value Creation System ties all disciplines together under a common umbrella by providing standard playbook of tools and processes to deliver our business objectives. Through the use of our Standex Value Creation System, we have developed a balanced approach to value creation.  While we intend to continue investing acquisition capital in high margin and growth segments such as Electronics and Engraving, we will continue to support all of our businesses as they enhance value through deployment of our GDP+ and OpEx playbooks. 

 

It is our objective to grow larger and more profitable business units through both organic initiatives and acquisitions.  We seek to identify and implement organic growth initiatives such as new product development, geographic expansion, and the introduction of products and technologies into new markets, key accounts and strategic sales channel partners.  Also, we have a long-term objective to create sizable business platforms by adding strategically aligned or “bolt on” acquisitions to strengthen the individual businesses, create both sales and cost synergies with our core business platforms, and accelerate their growth and margin improvement.  We look to create both sales and cost synergies within our core business platforms, accelerate growth and improve margins.  We have a particular focus on identifying and investing in opportunities that complement our products and will increase the global presence and capabilities of our businesses.  From time to time, we have divested, and likely will continue to divest, businesses that we feel are not strategic or do not meet our growth and return expectations.

 

As part of our ongoing strategy:

 

 

o

Subsequent to the end of the fiscal year, during July of 2020, we acquired Renco Electronics, a designer and manufacturer of customized standard magnetics components and products including transformers, inductors, chokes and coils for power and RF applications.  Renco’s end markets and customer base in areas such as consumer and industrial applications are highly complementary to our existing business with the potential to further expand key account relationships and capitalize on cross selling opportunities between the two companies.  Renco operates one manufacturing facility in Florida and is supported by contract manufacturers in Asia.  Renco’s results will be reported within our Electronics segment beginning in fiscal year 2021.

 

 

o

During the third quarter of fiscal year 2020, we initiated a program and signed an agreement to divest our Master-Bilt and NorLake businesses (together our Refrigerated Solutions Group or RSG).  This divestiture allows us to continue the simplification of our portfolio and enables us to focus more clearly on those of our businesses that sell differentiated products and which have higher growth and margin profiles.  The divestiture was finalized and consideration was exchanged in the fourth quarter of 2020.  Results of RSG in current and prior periods have been classified as discontinued operations in the Consolidated Financial Statements.  The divestiture impacts the consolidated company results as follows:

 

   

Year Ended June 30, 2020

   

Year Ended June 30, 2019

 
   

Continuing

                   

Continuing

                 
   

Ops Prior

   

Divested

   

Restated

   

Ops Prior

   

Divested

   

Restated

 
   

to Divested

   

RSG

   

Continuing

   

to Divested

   

RSG

   

Continuing

 

$000’s

 

RSG

   

Businesses

   

Ops

   

RSG

   

Businesses

   

Ops

 

Net Sales

  $ 719,606     $ 115,071     $ 604,535     $ 791,579     $ 151,648     $ 639,931  

Operating Income/(Loss)

    39,543       (20,985 )     60,528                          

Asset Impairment Charge

    (20,278 )     (20,278 )     -       -       -       -  

Operating Income/(Loss) after impairment charge

    59,821       (707 )     60,528       78,117       (1,359 )     79,476  

%

    8.3 %     (0.6 )%     10.0 %     9.9 %     (0.9 )%     12.4 %

 

 

20

 

 

o

During the first quarter of 2019, the Company decided to divest its Cooking Solutions Group, which consisted of three operating segments, Associated American Industries, BKI, and Ultrafryer, along with a minority interest investment.  We completed this divestiture during the third quarter of 2019 and received proceeds for the sale on the first day of the fourth quarter of 2019.  In connection with the divestiture efforts, we also sold our minority interest in a European oven manufacturer back to the majority owners.  Results of the Cooking Solutions Group in current and prior periods have been classified as discontinued operations in the Consolidated Financial Statements. 

 

 

o

In April 2019, we acquired Ohio-based Genius Solutions Engineering Company (d/b/a GS Engineering), a provider of specialized “soft surface” skin texturized tooling, primarily serving the automotive end market. GS Engineering brings us critical proprietary technologies that offer significant advantages in creating tools for “soft surface” components which are used increasingly in vehicle interiors. The tooling for soft surface products offered by GS is highly complementary to our current industry-leading capabilities in texturing molds and tools used to create “hard surface” components. This technology also complements and enables us to improve our existing nickel shell technology that produces soft surface tooling. GS operates one facility in Ohio and its results are reported within our Engraving segment. 

 

 

o

In September 2018, we acquired New Hampshire-based Regional Mfg. Specialists, Inc. (now named Agile Magnetics, Inc.), a provider of high-reliability magnetics.  The addition of Agile Magnetics is an important step forward in building out the high reliability magnetics business of Standex Electronics. As a result of this combination, we have broadened our exposure to several attractive end-markets and added a valuable manufacturing and sales base in the northeast. Additionally, we can now offer complementary products from Standex’s broader portfolio to Agile’s customer base.  Agile Magnetics products include transformers, inductors and coils for mission critical applications for blue chip OEMs in the semiconductor, military, aerospace, healthcare, and industrial markets. Agile operates one manufacturing facility in New Hampshire and its results are reported within our Electronics segment. 

 

 

o

In August 2018, we acquired Michigan-based Tenibac-Graphion, Inc., a provider of chemical and laser texturing services.  The combination of Tenibac and Standex Engraving expands services available to customers, increases responsiveness to customer demands, and drives innovative approaches to solving customer needs.  The combined customer base now has access to the full line of mold and tool services, such as the Architexture design consultancy, chemical and laser engraving, tool finishing, and tool enhancements.  Tenibac serves automotive, packaging, medical and consumer products customers, and operates three facilities, two in Michigan and one in China. The Tenibac results are reported within our Engraving segment. 

 

 

o

We acquired Italy-based Piazza Rosa Group (“Piazza Rosa”) in July 2017.  The privately held company is a leading provider of mold, tool treatment and finishing services for the automotive and consumer products markets.  The combination of these competencies with Standex Engraving's worldwide presence and texturizing capabilities creates a global tool finishing service leader and provides additional opportunities in the broader surface engineering market. The Piazza Rosa Group’s results are reported within our Engraving segment. 

 

As a result of these portfolio moves, we have transformed Standex to a company with end market exposure that is no longer dependent on sales of standard products to the food service industry and into a more focused group of businesses selling customized solutions to high value end markets via a compelling customer value proposition.  The narrowing of the portfolio allows for greater management focus on driving operational disciplines and positions us well to withstand the COVID-19 crisis and invest selectively in our ongoing pipeline of organic and inorganic opportunities.

 

We develop “Customer Intimacy” by utilizing the Standex Growth Disciplines to partner with our customers in order to develop and deliver custom solutions or engineered components.  By partnering with our customers during long-term product development cycles, we become an extension of their development teams.  Through this Partner, Solve, Deliver® approach, we are able to secure our position as a preferred long-term solution provider for our products and components.  This strategy results in increased sales and operating margins that enhance shareholder returns. 

 

21

 

Standex Operational Excellence drives continuous improvement in the efficiency of our businesses, both on the shop floor and in the office environment.  We recognize that our businesses are competing in a global economy that requires us to improve our competitive position.  We have deployed a number of management competencies to drive improvements in the cost structure of our business units including operational excellence through lean enterprise, the use of low cost manufacturing facilities, the consolidation of manufacturing facilities to achieve economies of scale and leveraging of fixed infrastructure costs, alternate sourcing to achieve procurement cost reductions, and capital improvements to increase productivity.

 

The Company’s strong historical cash flow has been a cornerstone for funding our capital allocation strategy.  We use cash flow generated from operations to fund the strategic growth programs described above, including acquisitions and investments for organic growth, investments in capital assets to upgrade our facilities, improve productivity and lower costs, and to return cash to our shareholders through payment of dividends and stock buybacks. 

 

Restructuring expenses reflect costs associated with the Company’s efforts of continuously improving operational efficiency and expanding globally in order to remain competitive in our end-user markets.  We incur costs for actions to size our businesses to a level appropriate for current economic conditions, improve our cost structure, enhance our competitive position and increase operating margins.  Such expenses include costs for moving facilities to locations that allow for lower fixed and variable costs, external consultants who provide additional expertise starting up plants after relocation, downsizing operations because of changing economic conditions, and other costs resulting from asset redeployment decisions.  Shutdown costs include severance, benefits, stay bonuses, lease and contract terminations, asset write-downs, costs of moving fixed assets, and moving and relocation costs. Vacant facility costs include maintenance, utilities, property taxes and other costs.

 

Because of the diversity of the Company’s businesses, end user markets and geographic locations, management does not use specific external indices to predict the future performance of the Company, other than general information about broad macroeconomic trends.  Each of our individual business units serves niche markets and attempts to identify trends other than general business and economic conditions which are specific to its business and which could impact their performance.  Those units report pertinent information to senior management, which uses it to the extent relevant to assess the future performance of the Company.  A description of any such material trends is described below in the applicable segment analysis.

 

We monitor a number of key performance indicators (“KPIs”) including net sales, income from operations, backlog, effective income tax rate, gross profit margin, and operating cash flow.  A discussion of these KPIs is included below.  We may also supplement the discussion of these KPIs by identifying the impact of foreign exchange rates, acquisitions, and other significant items when they have a material impact on a specific KPI. 

 

We believe the discussion of these items provides enhanced information to investors by disclosing their impact on the overall trend which provides a clearer comparative view of the KPI, as applicable.  For discussion of the impact of foreign exchange rates on KPIs, the Company calculates the impact as the difference between the current period KPI calculated at the current period exchange rate as compared to the KPI calculated at the historical exchange rate for the prior period.  For discussion of the impact of acquisitions, we isolate the effect on the KPI amount that would have existed regardless of our acquisition.  Sales resulting from synergies between the acquisition and existing operations of the Company are considered organic growth for the purposes of our discussion.

 

Unless otherwise noted, references to years are to fiscal years.

 

Impact of COVID-19 Pandemic on the Company

 

Given the global nature of our business and the number of our facilities in China, we were impacted by COVID-19 related issues beginning in February of our third quarter.  We took immediate, and effective action to protect our health and safety, continue to serve our customers, support our communities and manage our cash flows.  Our priority was and remains the health and safety of all of our employees.  Each of our facilities is following safe practices as defined in their local jurisdictions as well as sharing experiences and innovative ways of overcoming challenges brought on by the crisis during updates with global site leaders.  We are rigorously following health protocols in our plants, including changing work cell configurations and revising shift schedules when appropriate, in order to do our best to continue operations.  We were deemed an essential business in most plants and had limited shutdowns in our facilities. Shutdowns that have occurred have been primarily centered around our sites in China, India, Italy, and Mexico.  Despite most businesses remaining operational, we have experienced revenue losses due to the impact that the pandemic has had on our customers.

 

22

 

Given the impact that the pandemic created on our backlog and incoming order rate, we took actions to identify and implement cost savings and restructuring actions with each of our operating units as well as our corporate headquarters.  Actions identified include reducing outside discretionary spend, the natural elimination of travel and trade show expenses that were a result of COVID-19 related curtailments, implementation of rolling furloughs in several businesses where appropriate, and the elimination of certain salaried and hourly positions. The costs, including restructuring charges, for many of these items occurred in our fourth quarter of fiscal year 2020.  As we look forward into fiscal year 2021 and beyond, the impact of the pandemic on our businesses remains uncertain, however, we have identified further cost reduction actions and stand ready to implement these plans as circumstances in individual businesses or countries require. 

 

We exited the fourth quarter with $118.8 million in cash and $200.0 million of borrowings under our revolving credit facility.  Our leverage ratio covenant, as defined in our revolving credit agreement, was 1.47 to 1 and allowed us the capacity to borrow an additional $203.6 million at June 30, 2020.  As interest rates declined during the third quarter, we took the opportunity to revisit our fixed to floating debt ratio and entered into $125 million of new interest rate swaps to lock in additional fixed rate debt financing.  We also extended an expiring $25 million swap for another five years. The cumulative impact of these items is a reduction in our effective interest rate by approximately 50 basis points or $1 million per year going forward. 

 

Finally, we are reviewing our ability to participate in any governmental assistance programs available to us in each of our global locations, and we will participate in these programs as available and appropriate.  For instance, we have elected to take advantage of provisions in the United States Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, which allows for deferral until December 31, 2020 of defined benefit pension plan contributions due during calendar year 2020. Prior to passage of the CARES Act, we were required to make payments of $1.5 million in the fourth quarter of fiscal year 2020 and an additional $3.2 million in the first two quarters of fiscal year 2021, which we will now defer until December of fiscal year 2021. We believe that the we have sufficient liquidity around the world and access to financing to execute on our short and long-term strategic plans. 

 

Consolidated Results from Continuing Operations (in thousands):

 

   

2020

   

2019

   

2018

 

Net sales

  $ 604,535     $ 639,931     $ 595,515  
Gross profit margin     35.6 %     36.7 %     38.0 %

Restructuring costs

    4,669       1,289       3,428  

Acquisition related expenses

    1,759       3,075       3,749  

Income from operations

    60,528       79,476       78,142  
                         

Backlog (realizable within 1 year)

  $ 152,304     $ 183,100     $ 185,488  

 

   

2020

   

2019

   

2018

 

Net sales

  $ 604,535     $ 639,931     $ 595,515  

Components of change in sales:

                       

Effect of acquisitions

    11,635       29,122       59,855  

Effect of exchange rates

    (6,089 )     (12,041 )     14,394  

Organic sales change

    (40,942 )     27,335       57,792  

 

Net sales for the fiscal year 2020 decreased by $35.4 million, or 5.5%, when compared to the prior year.  Incremental sales from our recent acquisitions accounted for $11.6 million or 1.8% of the increase, while organic sales accounted for a decrease of $40.9 million or 6.4%.  Changes in foreign exchange rates contributed to sales declines of $6.1 million or 1.0%. The organic sales decreases occurred in all of our segments and was primarily a result of both direct and indirect impacts of the pandemic driven economic slowdown.

 

Net sales for the fiscal year 2019 increased by $44.4 million, or 7.5%, when compared to the prior year.  Incremental sales from our recent acquisitions accounted for $29.1 million or 4.9% of the increase, while organic sales gains accounted for $27.3 million or 4.6%.  Changes in foreign exchange rates contributed to sales declines of $12.0 million or 2.0%. The organic sales increases occurred in all of our segments except the Specialty Solutions Group. 

 

Gross Profit Margin

 

Gross margin in fiscal year 2020 declined to 35.6% as compared to 36.7% in 2019 primarily due to the pandemic related organic sales decline during the second half of the year. Gross Margins are anticipated to improve in the coming fiscal year as cost reduction activities identified in the second half of fiscal year 2020 have now been implemented. 

 

Gross margin in fiscal year 2019 declined to 36.7% as compared to 38.0% in 2018 as a result of incremental purchase accounting, material and wage inflation, manufacturing inefficiencies, country specific site performance and an asset impairment charge all recorded in 2019.

 

23

 

Restructuring Charges and Acquisition Related Expenses

 

During fiscal year 2020, we incurred restructuring expenses of $4.7 million primarily related to restructuring efforts that are intended to improve profitability, streamline production and reduce our cost base to a level commensurate with a post-pandemic operating environment. These efforts include approximately $1.1 million related to the announced closure of a Specialty Solutions pump rotor production facility in Ireland.

 

Acquisition related expenses in fiscal year 2020 were $1.8 million. These expenses were comprised primarily of $1.2 million for deferred compensation payments earned by the Horizon Scientific seller during the year. Because these payments are contingent on the seller remaining an employee of the Company, they are treated as compensation expense. We made the third and final scheduled payment to the seller during the first quarter of fiscal year 2020 and this arrangement has now been settled.  Other acquisition related expenses consist of due diligence, integration, and valuation expenses incurred in connection with both completed and terminated acquisitions during the year. 

 

Selling, General, and Administrative Expenses

 

Selling, general, and administrative expenses, (“SG&A”) for the fiscal year 2020 were $148.5 million, or 24.6% of sales compared to $150.3 million, or 23.5% of sales during the prior year. SG&A expenses were impacted by on-going expenses related to our recent acquisitions of $1.7 million offset by a decrease in variable distribution and selling expenses primarily as a result of organic sales declines. 

 

Selling, general, and administrative expenses, (“SG&A”) for the fiscal year 2019 were $150.3 million, or 23.5% of sales compared to $140.7 million, or 23.6% of sales during the prior year. SG&A expenses were impacted by on-going expenses related to our fiscal year 2019 acquisitions of $7.4 million and an increase in distribution and selling expenses due to sales mix.

 

Income from Operations

 

Income from operations for the fiscal year 2020 was $60.5 million, compared to $79.5 million during the prior year. The $19.0 million decrease, or 23.8%, is primarily due to the impact of volume related losses triggered by the COVID-19 pandemic along with material inflation, partially offset by cost reduction activities and productivity improvement initiatives implemented in all of our businesses. 

 

Income from operations for the fiscal year 2019 was $79.5 million, compared to $78.1 million during the prior year. The $1.4 million increase, or 1.7%, is primarily due to organic sales increases, business mix and lower restructuring costs, which more than offset by material and wage inflation pressures.

 

Discussion of the performance of each of our reportable segments is fully explained in the segment analysis that follows.  

 

Interest Expense

 

Interest expense for the fiscal year 2020 was $7.5 million, a decrease of $3.3 million as compared to the prior year.  Decreased interest expense was a result of lower borrowings and a lower effective interest rate. Our effective interest rate of 2.59% was 129 basis points or 33% lower than the 2019 effective interest rate of 3.88%.

 

Interest expense for the fiscal year 2019 was $10.8 million, an increase of $2.8 million as compared to the prior year.  Increased interest expense was a result of higher borrowing costs and an increase in average outstanding borrowings for the year, primarily to fund acquisition activity. 

 

Income Taxes

 

On December 22, 2017, the Tax Cuts and Jobs Act (the “Act” or “TCJA”) was passed which, among other things, reduces the federal corporate tax rate to 21.0% effective for taxable years starting on or after January 1, 2018. For the years ended June 30, 2020 and 2019, the Company recorded federal taxes using a federal rate of 21.0%.

 

The provision for fiscal year ending June 30, 2020 and 2019 was impacted by several law changes implemented by the Act such as the, interest deduction limitation and Global Intangible Low Taxed Income (GILTI).  As allowed under US GAAP, the Company has elected to treat any taxes due on future U.S. inclusions in taxable income under the GILTI provision as a current-period expense when incurred.  The Company will continue to monitor guidance regarding these changes for how it will impact the financial statements in later periods.

 

24

 

The Company's income tax provision from continuing operations for the fiscal year ended June 30, 2020 was $13.1 million, or an effective rate of 24.3% compared to $18.7 million, or an effective rate of 27.9% for the year ended June 30, 2019, and $38.1 million, or an effective rate of 55.4% for the year ended June 30, 2018. Changes in the effective tax rates from period to period may be significant as they depend on many factors including, but not limited to, the amount of the Company's income or loss, the mix of income earned in the US versus outside the US, the effective tax rate in each of the countries in which we earn income, and any one-time tax issues which occur during the period.

 

The Company's income tax provision from continuing operations for the fiscal year ended June 30, 2020 was impacted by the following items: (i) a tax benefit of $1.2 million related to the Federal R&D credit, (ii) a tax provision of $1.4 million due to the mix of income in various jurisdictions, (iii) a tax benefit of $0.7 million related to the release of uncertain tax provision reserves,, and (iv) a tax provision of $0.8 million related to GILTI.

 

The Company's income tax provision from continuing operations for the fiscal year ended June 30, 2019 was impacted by the following items: (i) a tax benefit related to the impact of the Sec. 965 toll tax of $0.8 million, (ii) a tax provision of $0.3 million related to the elimination of the performance based compensation exception for executive compensation under Sec. 162(m) of the Internal Revenue Code, and (iii) a tax provision related to expected foreign withholding taxes on cash repatriation of $2.1 million.

 

The Company's income tax provision from continuing operations for the fiscal year ended June 30, 2018 was impacted by the following items: (i) a tax provision related to the impact of the Sec. 965 toll tax of $11.7 million, (ii) a tax provision related to a revaluation of deferred taxes due to the federal rate reduction of $1.3 million, and (iii) a tax provision related to expected foreign withholding taxes on cash repatriation of $7.8 million.

 

Capital Expenditures

 

Our capital spending is focused on growth initiatives, cost reduction activities, and upgrades to extend the capabilities of our capital assets.  In general, we anticipate our capital expenditures over the long-term will be approximately 3% to 4% of net sales. 

 

During 2020, capital expenditures decreased to $19.3 million or 3.2% of net sales, as compared to $32.5 million, or 5.1%, of net sales in the prior year.  In response to reduced activity levels brought on by the COVID-19 pandemic, beginning in the third quarter, we reduced our capital expenditures to only necessary maintenance, safety and the highest priority growth initiatives.  Capital spending in 2019 included $5.8 million for a new Electronics facility in Cincinnati which replaced a legacy facility sold for $1.4 million in fiscal year 2018.  We expect 2021 capital spending to be between $28 million and $30 million which includes $3.7 million allocated to begin construction for a new Electronics facility in Germany to replace a legacy facility sold in fiscal year 2019.

 

Backlog

 

Backlog includes all active or open orders for goods and services.  Backlog also includes any future deliveries based on executed customer contracts, so long as such deliveries are based on agreed upon delivery schedules.  With the exception of our Engineering Technologies group, backlog has limited value as an indicator for the Company’s businesses because of our relatively short delivery periods and rapid inventory turnover.  Due to the nature of long-term agreements in the Engineering Technologies group, the timing of orders and delivery dates can vary considerably resulting in significant backlog changes from one period to another.  Backlog orders are not necessarily an indicator of future sales levels because of variations in lead times and customer production demand pull systems. Customers may delay delivery of products or cancel orders prior to shipment, subject to possible cancellation penalties.  In general, the majority of net realizable backlog beyond one year comes from the Engineering Technologies group. 

 

25

 

Backlog orders in place at June 30, 2020 and 2019 are as follows (in thousands): 

 

   

As of June 30, 2020

   

As of June 30, 2019

 
   

Total

   

Backlog under

   

Total

   

Backlog under

 
   

Backlog

   

1 year

   

Backlog

   

1 year

 
Electronics   $ 56,170     $ 55,991     $ 62,381     $ 56,243  
Engraving     16,076       13,719       22,160       22,160  
Scientific     3,341       3,341       5,372       5,372  
Engineering Technologies     97,682       66,493       113,714       79,062  
Specialty Solutions     17,071       12,760       23,701       20,263  

Total

  $ 190,340     $ 152,304     $ 227,328     $ 183,100  

 

Backlog realizable within one year decreased $30.8 million, or 16.8% to $152.3 million at June 30, 2020 from $183.1 million at June 30, 2019.  We experienced backlog declines in all segments as a result of the general, global economic slowdown brought about by the COVID-19 pandemic. 

 

Segment Analysis (in thousands)

 

Electronics

   

2020 compared to 2019

   

2019 compared to 2018

 

(in thousands except

              %                 %  

percentages)

 

2020

   

2019

   

Change

   

2019

   

2018

   

Change

 
Net sales   $185,294     $204,073     -9.2%     $204,073     $196,291     4.0%  
Income from operations   29,749     41,227     -27.8%     41,227     45,501     -9.4%  
Operating income margin   16.1%     20.2%           20.2%     23.2%        

 

Net sales in fiscal year 2020 decreased $18.8 million, or 9.2%, when compared to the prior year as organic sales declined $20.3 million, or 9.9%. Sales were slightly down in North America while down significantly in Europe and Asia. New sensor, switch and relay applications continued to offset some of the core business loss due to economic conditions and current COVID-19 impact. The incremental sales impact of the Agile Magnetics acquisition, which was acquired in September of fiscal year 2019, was $3.1 million during the year and foreign exchange rates unfavorably affected sales by $1.6 million or 0.8%. Given the diversity of markets and geographies served by the Electronics business, the COVID-19 pandemic could have differing impact on our future incoming order rate and sales performance in various regions.

 

Income from operations in the fiscal year 2020 decreased $11.5 million, or 27.8%, when compared to the prior year. The operating income decline was due to the margin loss on the lower organic sales, inflationary cost increases, particularly rhodium costs, and incremental costs related to the current COVID-19 environment, which more than offset cost saving initiatives implemented throughout the year. Looking forward, we have fixed our most significant material cost for the first six months of fiscal year 2021, and, for this portion of the year, we expect material costs in line with those experienced in the fourth quarter of 2020.

 

Net sales in fiscal year 2019 increased $7.8 million, or 4.0%, when compared to the prior year with organic sales growth contributing $2.6 million, or 1.3%. The sales impact of the Agile Magnetics acquisition was $9.3 million and foreign exchange rates unfavorably affected sales by $4.2 million or 2.1%. 

 

Income from operations in the fiscal year 2019 decreased $4.3 million, or 9.4%, when compared to the prior year. The operating income decline was due to government mandated wage increases in our Mexico operation, material cost increases, acquisition purchase accounting of $0.3 million, and India facility start-up costs, partially offset by cost saving initiatives.

 

26

 

Engraving

   

2020 compared to 2019

   

2019 compared to 2018

 

(in thousands except

              %                 %  

percentages)

 

2020

   

2019

   

Change

   

2019

   

2018

   

Change

 
Net sales   $143,736     $149,693     -4.0%     $149,693     $136,275     9.8%  
Income from operations   20,493     23,996     -14.6%     23,996     29,618     -19.0%  
Operating income margin   14.3%     16.0%           16.0%     21.7%        

 

Net sales in fiscal year 2020 decreased by $6.0 million or 4.0% compared to the prior year. The effect of acquisitions generated $8.5 million or 5.7% of additional sales for fiscal year 2020 which have been partially offset by foreign exchange declines of $3.6 million for the year. Organic sales declines of $10.9 million, or 7.3%, were a result of the timing of automotive projects, slower incoming workloads as a result of pandemic related delays, and the closure of unprofitable sites as part of our previously announced restructuring. We expect sales growth in fiscal year 2021 due to an increase in the number of new automotive launches along with the continued introduction of our soft skin and tool finishing offerings throughout our global sales network.

 

Income from operations in fiscal year 2020 decreased by $3.5 million, or 14.6%, when compared to the prior year. The decrease was primarily a result of organic sales declines for the year. In response to the global economic slowdown, we have implemented cost savings and restructuring actions that we expect to generate approximately $3.0 million of annual savings beginning in fiscal year 2021.

 

Net sales in fiscal year 2019 increased by $13.4 million or 9.8% compared to the prior year. Growth was driven by two acquisitions which contributed $19.8 million or 14.5%.  Organic sales were nearly flat as compared to prior year while currency negatively impacted sales by 4.8%. 

 

Income from operations in fiscal year 2019 decreased by $5.6 million, or 19.0%, when compared to the prior year. The decrease was primarily due to an unfavorable geographic mix, lower automotive sales in North America, reduced demand at our higher profit China facilities due to concerns regarding trade conflicts, and purchase accounting costs associated with the Tenibac and GS acquisitions.

 

Scientific

 

   

2020 compared to 2019

   

2019 compared to 2018

 

(in thousands except

              %                 %  

percentages)

 

2020

   

2019

   

Change

   

2019

   

2018

   

Change

 
Net sales   $57,523     $57,621     -0.2%     $57,621     $52,086     10.6%  
Income from operations   13,740     13,676     0.5%     13,676     11,436     19.6%  
Operating income margin   23.9%     23.7%           23.7%     22.0%        

 

Net sales in fiscal year 2020 remained relatively flat when compared to the prior year.  We experienced decreased sales volume in our clinical laboratories, physicians’ offices, hospitals and academic laboratories markets, primarily due to impacts of the COVID-19 pandemic and the economic downturn. This was largely offset by sales in the pharmaceutical market. Moving forward we anticipate higher sales volume in our pharmaceutical market, partially offset by declines in the clinical laboratories, physicians’ offices, hospitals and academic laboratories markets. We have and will continue to enact measures to prepare for any anticipated increase in demand for medication and vaccine storage, working with channel partners as well as Federal, State and Local governments as applicable.

 

Income from operations in fiscal 2020 increased by $0.1 million, or 0.5% when compared to the prior year as modest sales declines were overcome with cost controls of labor and discretionary spending as well as stronger sales in our pharmaceutical market.  

 

Net sales in fiscal year 2019 increased by $5.5 million, or 10.6% compared to the prior year as volume increased for sales to pharmaceutical customers and national clinical distributors.

 

Income from operations in fiscal year 2019 increased $2.2 million or 19.6% when compared to the prior year. Operating income margins in fiscal 2019 were impacted by increased sales volume and price increases which were partially offset by an increase in tariffs enacted on product imported from Asia.

 

27

 

Engineering Technologies

 

   

2020 compared to 2019

   

2019 compared to 2018

 

(in thousands except

              %                 %  

percentages)

 

2020

   

2019

   

Change

   

2019

   

2018

   

Change

 
Net sales   $104,047     $105,270     -1.2%     $105,270     $90,781     16.0%  
Income from operations   14,027     11,169     25.6%     11,169     6,506     71.7%  
Operating income margin   13.5%     10.6%           10.6%     7.2%        

 

Net sales in fiscal year 2020 decreased $1.2 million or 1.2% when compared to the prior year. Sales distribution by market in 2020 was as follows: 43% aviation, 30% space, 12% energy, 9% defense, and 6% other markets. The decline in aviation sales of 8% from the prior year was primarily in the aircraft engine segment, as a result of both the grounding of the Boeing MAX 737 aircraft and impacts of the COVID-19 pandemic on the aviation industry in general. Space market sales increased 13.4% from the prior year driven by higher sales in the unmanned and manned space segment on production and new development programs while defense sales increased by 12.5% from the prior year driven by higher volume in the missile segment. In fiscal year 2021, we anticipate aviation and energy markets to see year over year declines as these industries continue to be impacted by the global pandemic, while the defense market should increase through higher volume in production and development work. Additionally, we anticipate the space market to see a year over year decline due to project timing and the cyclical nature of the market.

 

Income from operations in fiscal year 2020 increased $2.8 million or 25.6% when compared to the prior year.  The increase in operating income was driven by improved manufacturing efficiencies, cost reduction programs implemented during the year, and a favorable product mix. The focus in fiscal year 2021, will be to drive productivity initiatives to improve margin levels in the key sectors despite the forecasted volume declines.

 

Net sales in fiscal year 2019 increased $14.5 million or 16.0% when compared to the prior year. Sales distribution by market in 2019 was as follows: 46% aviation, 26% space, 13% energy, 8% defense, 5% medical, and 2% other markets. Aviation sales grew 9.0% from the prior year due to sales on new aircraft and engine platforms. Space market sales increased 13.5% from the prior year driven by higher sales in the manned space segment on new development programs.  Growth in 2019 was also driven by increased sales in the oil and gas and defense markets. 

 

Income from operations in fiscal year 2019 increased $4.7 million or 71.7% when compared to the prior year. The increase in operating income was driven by higher sales volume, improved manufacturing efficiencies on production programs, and price increases in the Aviation segment, partially offset by an asset impairment charge of $1.2 million due to a customer contract termination. 

 

Specialty Solutions

 

   

2020 compared to 2019

   

2019 compared to 2018

 

(in thousands except

              %                 %  

percentages)

 

2020

   

2019

   

Change

   

2019

   

2018

   

Change

 
Net sales   $113,935     $123,274     -7.6%     $123,274     $120,082     2.7%  
Income from operations   18,546     19,000     -2.4%     19,000     18,688     1.7%  
Operating income margin   16.3%     15.4%           15.4%     15.6%        

 

Net sales for fiscal year 2020 decreased $9.3 million, or 7.6% when compared to the prior year as organic sales declined by $8.8 million or 7.1% and foreign exchange rates unfavorably affected sales by $0.6 million or 0.5%. Decreased sales volume are primarily due to impacts of the COVID-19 pandemic which created market downturns in the beverage, convenience store and dump markets. 

 

Income from operations for fiscal year 2020 decreased $0.5 million, or 2.4%, when compared to the prior year, primarily due to decreased sales volume in each of our groups. The sales volume decrease was offset in our Hydraulics and Display Merchandising groups by favorable mix, cost control of labor, and the implementation of identified manufacturing efficiencies. Moving forward we anticipate a continued reduction in sales volume over the first half of the fiscal year as customers continue to curtail spending in order to overcome the impact of the pandemic, but that our cost reduction and footprint consolidation activities implemented in the fourth quarter of 2020 will partially offset the impact of volume declines on operating income.

 

Net sales for fiscal year 2019 increased $3.2 million, or 2.7% when compared to the prior year due organic sales increases of $4.0 million, or 3.4%.  Foreign exchange rates unfavorably affected sales in fiscal year 2019 compared to the prior year by $0.8 million or 0.7%.  The increase in organic sales is primarily due to new product introductions in the Hydraulics business during the year and market share gains in the refuse OEM marketplace.

 

28

 

Income from operations for fiscal year 2019 increased $0.3 million, or 1.7%, when compared to the prior year. The operating income increase was driven by the revenue growth in the refuse market of our Hydraulics market partially offset by higher material costs and higher manufacturing overhead as a result of sales volume in our display merchandising and pump businesses. 

 

Corporate, Restructuring and Other

 

   

2020 compared to 2019

   

2019 compared to 2018

 

(in thousands except

              %                 %  

percentages)

 

2020

   

2019

   

Change

   

2019

   

2018

   

Change

 
Corporate   $ (29,599)     $ (24,728)     19.7%     $ (24,728)     $ (26,430)     -6.4%  
Restructuring   (4,669)     (1,289)     262.2%     (1,289)     (3,428)     -62.4%  
Other Operating Expenses   (1,759)     (3,575)     -50.8%     (3,575)     (3,749)     -4.6%  

 

Corporate expenses increased by 19.7% in fiscal year 2020 primarily due to increased stock-based compensation, management transition, and benefit expenses in the first two quarters of fiscal year 2020.

 

Corporate expenses declined by 6.4% in fiscal year 2019 primarily due to reduced incentive compensation expenses and cost containment activities.

 

The restructuring and acquisition-related costs have been discussed above in the Company Overview.

 

Discontinued Operations

 

In pursuing our business strategy, the Company continues to divest certain businesses and record activities of these businesses as discontinued operations. Results of the Cooking Solutions Group and Refrigerated Solutions Group in current and prior periods have been classified as discontinued operations in the Consolidated Financial Statements and excluded from the results from continuing operations.  Activity related to discontinued operations for twelve months ended June 30, 2020, 2019 and 2018 is as follows (in thousands):

 

   

Year Ended June 30,

 
   

2020

   

2019

   

2018

 

Net Sales

  $ 111,841     $ 223,067     $ 272,867  
                         

Gain (Loss) on Sale of Business

  $