Standex International (SXI) Q4 FY26 earnings call: guidance and Q&A

Asked for more detail on the sequential process and team structure for the multi-continent Grid capacity expansion plan.

Management explained the multi-year project involves dedicated 'tiger teams' for different sites and initiatives. Productivity/automation efforts are focused on India, Croatia and Mexico are managed by a separate team and are already ramping up, while Texas and India footprint expansions are later-year events. They expect to reach $180M-$200M in Grid sales in FY27.

“We do have a team that's solely focused on grid expansion kind of across these different sites. And this, Mike, is kind of a multi-year project, multi-year projection.”

asked by Michael Shlisky · answered by Ademir Sarcevic

Inquired if non-Grid Electronics businesses are developing products for grid-related or data center applications beyond current diagnostic equipment.

David Dunbar confirmed a few million dollars from the legacy Edge business already supports grid diagnostic equipment. He also mentioned exploring ways to combine sales forces and working on products for an emerging 800-volt DC architecture, which will be relevant for data centers and broader electrification, though this is a longer-term opportunity.

“Longer term, though, we're quite interested in this evolution and development of an 800-volt DC architecture, which will be not only in data centers, but just it will be an architecture across all electrification and intelligent systems.”

asked by Michael Shlisky · answered by David Dunbar

Asked about the portfolio of opportunities in the Aerospace & Defense segment, particularly the missile industry, and if defense spending upside is included in projections.

David Dunbar stated the missile business, which was $9 million last year and in the teens this year, is projected to grow to between $40 million and $80 million over the next four years, with confidence in the $40 million number. He confirmed increased orders for programs like SM-3, PRSM, and Patriot systems, and ongoing development for future missile programs.

“We see that growing to between $40 million and $80 million over the next 4 years. We're confident in that $40 million number.”

asked by Michael Shlisky · answered by David Dunbar

Sought clarification on whether the strong 12.9% Q4 Electronics organic growth and double-digit FY27 projection were solely Grid-driven or included core Electronics.

Ademir Sarcevic clarified that while Grid is very strong, core Electronics businesses (Detect and Edge) are also seeing a significant uptick in demand, with every business unit having a book-to-bill over 1.2 in Q4. He noted that Q1 FY27 organic growth for Electronics is expected to be in the high teens or low 20s, driven by new products, general economic strength in APAC, and Grid demand.

“It's not just grid. Grid is extremely strong for us, been strong for us, but we are seeing a pretty nice uptick and increase in demand in kind of our core businesses, Detect and Edge.”

asked by Christopher Moore · answered by Ademir Sarcevic

Asked for details on the early payment for the remaining 9.9% of Narayan shares, including the rationale and financial terms.

Ademir Sarcevic explained that the early buy-in was to ensure management continuity, expedite decisions for future growth, and simplify accounting complexities. They paid about 15x trailing 12-month EBITDA for the 9.9% stake ($64 million). He noted that the blended multiple for the entire acquisition, including the initial payment and this early settlement, was about 7 to 8x trailing 12-month EBITDA of FY26, calling it a 'great deal for Standex'.

“We paid about 15x multiple to settle those shares. So -- and the reason, frankly, if you think about future growth and investments we have to make and in order to expedite some of these decisions and frankly, to remove some of the accounting complexities around tracking how these investments are made, who makes it, what adjustments to be made, we approach them and we settled it at the $64 million or about 15x trailing 12-month EBITDA.”

asked by Christopher Moore · answered by Ademir Sarcevic

Sought to understand the size of growth investments and the impact of 'transitory operational issues' on Electronics margins.

David Dunbar attributed the transitory issues in the Edge business to an ERP system implementation in complex plants, causing a lack of visibility and slowing problem-solving, impacting margins by a couple of million dollars in the quarter. He stated these issues are being addressed and are truly transitory. Ademir Sarcevic added that they expect margin expansion in Electronics for FY27, offsetting growth investments with productivity and pricing.

“In our Edge, the business we used to call magnetics, we implemented an ERP system in a couple of large plants, complex plants in America right about -- like I think December, we went live. That created a lack of visibility for that team. It slowed down some problem solving. It impacted their ability to execute and drive the things they had to drive.”

asked by Ross Sparenblek · answered by David Dunbar

Asked about the smoothness of the projected Grid growth to $340M-$440M by FY30 and the derivation of the $100M upside range.

David Dunbar explained that while they initially planned for 15% growth, they now have high confidence in 20%+ growth. The lower end of the range ($340M) reflects high confidence in capacity expansion, while the additional $100M upside accounts for potential higher demand and execution. Ademir Sarcevic confirmed that the growth is expected to be relatively smooth, with some capacity additions coming online earlier (lean efforts, Croatia, Mexico) and others later (Texas, India footprint).

“So we tried to reflect in here there's -- we have high confidence in that dark-shaded, that lower number, which is about $170 million increased $150 million to $340 million. And then the additional $100 million on there is there's a little upside to all of these if the demand continues and we execute well.”

asked by Matt Koranda · answered by David Dunbar