Standex reports Q2 adjusted EPS $1.78, consensus $1.72

Reports Q2 revenue $178.4M, consensus $182.52M. CEO David Dunbar said, “Despite the softer top line, we achieved record adjusted gross margin of 40.3%, up 180 bps year on year, and record adjusted operating margin of 16.1%, up 90 bps year on year – our eleventh consecutive quarter of record level adjusted operating margin performance. This margin growth reflects the continued solid execution of our pricing and productivity initiatives, while continuing to prioritize investments in high-growth opportunities. In addition, we generated free operating cash flow of $19.5M in 2Q24 and record free operating cash flow of $31.6M year-to-date…as we highlighted last quarter as part of our outlook, we did see the effect of transitory headwinds in several of our end markets which led to a 7.4% organic decline year on year…We expect these market conditions to improve in Q4…we remain confident in achieving our updated long-term financial targets by FY28, which include organic revenue growth at a high-single-digit compounded annual rate, adjusted operating margin above 19%, and a return on invested capital above 15%. We anticipate completing our acquisition of Japanese-based Sanyu Switch Company in Q3. Sanyu will enable us to expand our position in the test and measurement market, where the proliferation of consumer electronics, semiconductor devices, and IoT technologies are driving growth. We expect the acquisition to be accretive to earnings and to achieve a double-digit return on invested capital in the first year of ownership.”