Standex International Corp (SXI) 2025 Q3 法說會逐字稿

Good morning, ladies and gentlemen, and welcome to the Standex International fiscal 3rd quarter 2025 Financial results conference call. At this time, all lines are in listen only mode. Following the presentation, we will conduct a question-and-answer session. If at any time during this call you require immediate assistance, please press 0 for the operator. This call is being recorded on Friday, May 2, 2025. I would now like to turn the conference over to Christopher Howe. Please go ahead.

Thank you, operator, and good morning. Please note that the presentation accompanying management's remarks can be found on the investor relations portion of the company's website at www.Standex.com. Please refer to Standex's Safe Harbor statement on slide 2. Matters that Standex management will discuss on today's conference call include predictions, estimates, expectations, and other forward-looking statements. These statements are subject to risks and uncertainties that could cause actual results to differ materially.

You should refer to Standex's most recent annual report on Form 10K, as well as other SEC filings and public announcements for a detailed list of risk factors. In addition, I'd like to remind you that today's discussion will include references to the non-GAAP measures of EBIT, which is earnings before interest and taxes adjusted EBITDA, which is earnings before interest, taxes, depreciation, and amortization, adjusted EBITDA and adjusted EBITDA margin. We will also refer to other non-GAAP measures including adjusted net income, adjusted operating income, adjusted net income from continuing operations. Adjusted earnings per share, adjusted operating margin, pre-operating cash flow, and pro forma net debt to EBITDA. Adjusted measures exclude the impact of restructuring, purchase accounting, amortization from acquired intangible assets, acquisition-related expenses, and one-time items. These non-GAAP financial measures are intended to serve as a complement to results provided in accordance with accounting principles generally accepted in the United States.

Standex believes that such information provides an additional measurement and consistent historical comparison of the company's financial performance. On the call today is Standex's Chairman, President, and Chief Executive Officer David Dunbar and Chief Financial Officer and treasurer Amir Sarcevik.

Thank you, Chris. Good morning and welcome to our fiscal 3rd quarter 2025 conference call. Following strong operating performance in the fiscal second quarter, we achieved several new records in our fiscal third quarter. These achievements include record sales since the divestiture of the refrigeration business in April 2020, record adjusted gross margin of 42.3%, and record adjusted operating margin of 19.4%. Our growth engine continues to develop with sales into fast growing and markets representing a greater percentage of total sales.

I am also encouraged that new product sales are increasing above our projections and have added approximately 3% to our sales year-to-date. Once again, our teams have demonstrated their ability to navigate through difficult market conditions and deliver strong operating margins with price and productivity actions. Now if everyone can turn to slide 3 key messages. In the third quarter, sales increased 17.2% with contributions from acquisitions partially offset by organic decline. Electronics book to build was 0.98%, indicating that markets are stable.

And electronics' organic bookings were up more than 10% year on year. Sales from the Amarin and Orion Group were greater than $33 million with book to bill of 1.04. The Amarin and Orion Group continues to perform ahead of our expectations. In the quarter, we made significant progress in planning expansions in India, Europe, and the USA. In all regions, customer commitments extend years into the future and give us confidence to expand our existing facilities in India and the United States.

At the request of the largest European electrical equipment OEMs, we are beginning work on a greenfield site in Europe and expect to be shipping product from that location by the end of our first quarter 2026, less than 6 months from now. Our fiscal 3rd quarter sales into fast growth markets increased to 29% of total company sales. Sales into fast growth markets were primarily driven by electrical grid, commercialization of space, defense applications, and renewable energy. New product sales totaled $13.4 million in the fiscal third quarter, which doubled year on year, contributing approximately 3% to top line sales ahead of our goal of 2%. I'm especially pleased that we continue to demonstrate resilient operating performance from the execution of our price and productivity initiatives and from inorganic investments.

As a result, we achieved record adjusted gross margin of 42.3%, up 140 basis points sequentially, and 230 basis points year on year, and record adjusted operating margin of 19.4%, up 70 basis points sequentially, and up 280 basis points year on year. The integration of Amrin Nourion and McStarlight are progressing well.

On a sequential basis, in fiscal 4th quarter of 2025, we expect slightly to moderately higher revenue driven by the impact of recent acquisitions, higher sales into fast growth and markets, and realization of pricing initiatives. We expect slightly to moderately higher adjusted operating margin due to higher revenue and realization of productivity actions partially offset by tariff costs and targeted investments in selling, marketing, and R&D. With 3 new products just released in the fiscal 3rd quarter, we have released 13 products here to date, achieving our previously communicated target for over a dozen products in the fiscal year.

Sales from new products are cracking ahead of expectations and are expected to contribute over 200 basis points of incremental growth. Now if everyone can turn to slide 4 tariff and inflation update. Before we discuss our fiscal 3rd quarter in more detail, I would like to address the recent tariff announcements and how we are navigating their impact. Our customer intimacy business model requires that our plants are near customers, limiting exposure to tariff and trade disruptions. We have in-region for region operations, and greater than 85% of our products are manufactured and sold within the same region.

This serves as a natural buffer to any impact tariffs may have on economic activity. In addition, most of our customer relationships are based on a deep value proposition and a long-term partnership that typically only gets stronger during turbulent times, positioning us well for the long term. To put another lens on this, imports of material inputs to US operations are a relatively small percentage of total cost of goods sold.

Approximately 6% of our cost of goods sold are due to imports of materials to US operations from China. Approximately 4% are from India and approximately 3% are from other countries. We have started implementing additional productivity actions and select price increases and working to optimize our supply chain to mitigate the impact of tariffs. An intangible benefit of this uncertain economic environment is that our management teams around the world are coming together as they did in COVID to simultaneously protect margins, support strategic priorities, and strengthen collaboration across the enterprise, a demonstration of our growing and strong culture.

We plan to continue to invest in our key growth priorities and in new product development as we work with customers on their next generation product platforms. We came out of the COVID downturn a much stronger company, and I anticipate the same results during this disruption. We are confident in our agility, resilience, and business by business execution over the short and long term to continue to deliver for our shareholders.

Now if everyone can turn to slide 5 highlighting our recent acquisition, in early February, Standex acquired McStarlight, a leading provider of complex sheet metal aerospace components for $56.5 million in cash. With facilities in Harbor City, California, McStarlight designs and manufactures cold deep draw and bulge formed aviation components, including single piece lip skins, nozzles, complex metal assemblies, and tooling to support production hardware.

We have admired McSarlight for many years, and this represented an ideal bolt on acquisition for engineering technologies. The integration has been seamless since its customer base, product line, and technologies are highly complementary to our SpinCraft business. We are excited about our expanded product breadth informing capabilities in commercial aviation, space, and defense applications. With the addition of McStarlight, the addressable market within engineering technologies expands by greater than $300 million.

McStarlight enables expansion into wide body, military, and MRO Lipskin segments and into space and defense sectors. Likewise, it expands Spincraft's Lipskin addressable market by 3 times and doubles addressable missile solutions while providing opportunities to cross-sell solutions to existing space customers. I will now turn the call over to Ademir to discuss our financial performance in greater detail.

Thank you, David, and good morning, everyone. Let's turn to slide 6, 3rd quarter 2025 summary. On a consolidated basis, total revenue increased approximately 17.2% year on year to $207.8 million. This reflected the 26.3% benefit from recent acquisitions, partially offset by an organic revenue decline of 8.1% and 1% impact from foreign exchange. Third quarter 2025, adjusted operating margin increased 280 basis points year on year to a record 19.4%. In the fiscal third quarter, adjusted operating income increased 37.3% on 17.2% consolidated revenue increase year on year. Adjusted earnings per share increased 3.7% year on year to $1.95. Net cash provided by operating activities was $9.6 million in the third quarter of fiscal 2025 compared to $24.4 million a year ago. Capital expenditures for $6.1 million compared to $5.2 million a year ago.

As a result, we generate a fiscal third quarter free cash flow of $3.5 million compared to $19.3 million a year ago. Our fiscal 3rd quarter cash flow was impacted by one-time transaction related payments, certain annual tax payments, and longer customer credit terms related to recent acquisitions that affected cash conversion in the quarter. Now please turn to slide 7, and I will begin to discuss our segment performance and outlook, beginning with electronics. Segments revenue of $111.3 million increased 38.4% year on year as 48.1% benefit from acquisitions was partially offset by an organic decline of 8.9% and 0.8% impact from foreign currency.

Adjusted operating margin of 29.8% in fiscal third quarter 2025 increased 760 basis points year on year, as the contribution from recent Amarin and Orion Group acquisition, productivity initiatives and product mix were partially offset by lower core volume. Excluding recent Amarin and Orion Group acquisition, our new business opportunity funnel increased approximately 50% year on year to $117 million. Further progress of our operational and commercial excellence initiatives through commercial expansion in India, increased activity in the test and measurement and market supported by AI and data center expansion, and higher activity and demand in mill era and market.

A book to build in fiscal third quarter was 0.98 with orders of approximately $109 million, driven by stable orders in core businesses and contribution from Amarin and Orion Group acquisition, which had a book to bill of 1.04. Organic bookings increased over 10% year on year. Since our products are customized in nature, our bookings take longer to convert into revenue, but with stronger margins.

As David mentioned, our expansion plans for Amarin and Orion within the US and India are well under way to support additional demand. In addition, we are working on a greenfield site in Europe that should be operational within 6 months. Sequentially, in fiscal fore quarter 2025, we expect slightly higher revenue and similar to slightly higher adjusted operating margin driven by the Amarin and Orion Group acquisition, higher sales into fast growth and markets and price realization partially offset by higher tariff costs and continued strategic growth investments.

Please turn to slide 8 for a discussion of the engraving and scientific segments. Engraving revenue decreased 15.7% to $30.6 million driven by organic decline of 12.6% and a 3.1% impact from foreign currency. Adjusted operating margin of 11.2% in fiscal third quarter 2025 decreased 720 basis points year on year due to low revenue.

In our next fiscal quarter on a sequential basis, we expect slightly higher revenue and moderately higher adjusted operating margin due to more favorable project timing in Asia, slightly improved demand in North America and Europe, and the realization of previously announced restructuring actions. To address the continued softness in the markets served by this segment, our previously announced restructuring options are underway and are projected to yield over $4 million in annualized savings once fully implemented.

Scientific revenue increased 8.1% to $18.3 million due to 16.1% benefit from recent acquisition, partially offset by an organic decline of 8%, primarily due to lower demand from academic and research institutions that were impacted by NIH funding cuts. Adjusted operating margin of 22.6% decreased 780 basis points year on year due to organic decline in product mix as a result of the opposition.

Sequentially, we expect slightly lower revenue and adjusted operating margin due to soft demand from academic and research institutions affected by NIH funding cuts and higher tariff costs. To counteract the impact of higher tariff costs, we plan to implement pricing and productivity initiatives while continuing to optimize our supply chain to alternate sources.

Now turn to slide 9 for a discussion on the engineering technologies and specialty solution segments. Engineering technologies revenue increased 36.2% to $27.4 million driven by 26.3% benefit from recent master acquisition and organic growth of 9.9%. This strong organic growth was due to more favorable project timing in the space and market and growth in sales of new products. Adjusted operating margin of 18.6%, increased 110 basis points year on year due to contribution from recent acquisition and higher volume. Sequentially, we expect similar to slightly higher revenue and similar adjusted margin. Specialty solution segments revenue of $20.2 million decreased 13.9% year on year, primarily due to general market softness. Operating margin of 16.2% decreased 370 basis points year on year. Sequentially, we expect moderately higher revenue and operating margins.

Next, please turn to slide 10 for a summary of Stannis's liquidity statistics and the capitalization structure. Our current available liquidity is approximately $170 million. At the end of the third quarter, Stands had net debt of $470.4 million compared to $10 million at the end of fiscal third quarter of 2024. Our leverage ratio for our bank credit agreement currently stands at 2.8. In fiscal fore quarter 2025, with the addition of Maxar light, we expect interest expense to be approximately $9 million. Stan's long-term debt at the end of the fiscal third quarter of 2025 was $580.2 million. Cash and cash equivalents totaled $109.8 million. We declared our 2403rd quarterly consecutive cash dividend of $0.32 per share and approximately 6.7% increase year on year.

In fiscal 2025, we expect capital expenditures to be between $25 million and $30 million. Relative to our debt leverage, we will continue to focus on paying down debt and anticipate that a leverage ratio will further improve at the end of the 4th quarter and will continue to decline to 2026 as we announced with the acquisition of Am and Ryan Group. I will now turn the call over to David for concluding remarks.

Thank you, Adam Mayor. Please turn to slide 11. I'm very proud of our team for their continued operational execution and for the success of our recent acquisitions, both of which helped us achieve record adjusted operating margins for a second consecutive quarter. Sales into fast growth and markets are well on track for our fiscal year 2025 expectation of approximately $170 million. This was primarily driven by growth and data center demand and grid modernization and expansion.

Outside of the electrical grid, we are seeing growth in commercialization of space, defense applications, and renewable energy and markets. To support our future growth, we continue to invest in new product development and new applications across markets with growth potential. We have released 13 new products here today, and new products are now expected to contribute over 200 basis points of incremental growth this fiscal year.

While we cannot predict the impact of new tariffs on global trade and economic growth, our regional presence, strong customer relationships, and our disciplined approach to pricing and productivity actions position us well to manage through the current and short-term challenges. Most of our supply chain is strategically located to service regional demand, with China imports to the US representing approximately 6% of the cost of goods sold. We plan to continue to invest in our key strategic priorities while implementing additional productivity actions and select price increases and working to optimize our supply chain to mitigate the impact of tariffs. We remain on track to achieve our fiscal 2028 long-term targets of sales of greater than $1.15 billion adjusted operating margin of greater than 23%, and ROIC of greater than 15.5%. We remain confident in our ability to pay down debt and reduce our net leverage ratio. We will now open the line for questions.

Thank you. And ladies and gentlemen, we will now begin the question-and-answer session. To ask a question, you may press a store, followed by the number 1 on your cellphone keypad. If you're using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, you may press a store, followed by the number 2. With that, our first question comes from the line of Chris Moore with CJS Securities. Please go ahead.

Hey, good morning, guys. Thanks for taking a couple. Alright, good morning. Maybe we'll start with tariffs. So 6% of COGS imported from China. Is that mostly scientific and hydraulics?

Yeah, so that, it's split in about 3 parts almost equally, about 1/3 of that goes into electronics, 1/3 into specialty, and the remaining 1/3 into scientific.

Got it. So, and I guess the two primaries, one is looking for alternative sources, and two is pricing. It is pricing power, you have a little more pricing power in one of those splits, or how do you how do you look at that?

Yeah, it is. That's a great question because it is vary business by business. So, within electronics and specialty we think because of the I guess the significance of the bill of materials, the relationship with customers, and the overall value proposition, we're confident we cover the China tariffs with price productivity, actions, working with customers. Scientific is a little bit different. We, now you have to assume what will happen with the tariffs. If the China tariffs stay where they're at right now, it's 145% on China. We think we can scientific can cover about 70% of that incremental tariff with price and productivity, and then longer term, we have to look at some changes in supply chain and product design. It would take about a year to make up the rest of that.

Got it, very helpful. Right, so it does, it doesn't look like Q4 will show any, organic growth, I guess I just the puts and takes for an organic growth in in fiscal '26 is obviously visibility isn't where you'd like it to be at this point, but is that more of a of a back half conversation or just any thoughts there at this stage?

Well, hey, good morning, Chris. It's Adam here. I think if you look at electronics specifically, we are very pleased with the order intake rates in the core business we are seeing over the last couple of quarters, and obviously Amma and Orion has been a phenomenal acquisition for us, albeit. Not, it's not organic yet. So, as we enter FY26, we do again, assuming current economic environment and nothing significant, no significant changes. We do believe we're going to start seeing organic growth, and electronics is our engine, as far as the other businesses, Engineering and Technology group, very robust all the books, very strong in markets, we feel very confident that they will continue to show organic growth. And then engraving frankly is coming from a very low starting point at this stage with the auto market in North America being an all-time low. So there's a possibility and we feel that we'll be able to turn the tide there as well. Scientific remains a little bit of a challenge because of what David just described. And the specialty has been, we feel pretty good about specialty, as far as the organic growth, is concerned as well.

I guess another way to look at it because you've mentioned both the Q4, the upcoming quarter, and the rest of the year. If you just zoom out a little bit and think about what's driving growth long term in the portfolio. Those things that we're confident in that we know we can control. So, the fast growth markets, Amran Orion alone, if it continues its growth, will add about $20 million of sales to the company over a year. That's over two points of growth. Our new products are running ahead of what we had said earlier this year, contributing just over about 200 basis points of growth. So that's 400 basis points from mostly from all the investments and movements we've made in the last few years to focus more on organic growth.

And now you have to make assumptions about underlying market. If you assume no recession, and say we returned to say 2.5% GDP on top of that, we typically get about a point of price in quote unquote normal times. So, yeah, you add those all up, making assumptions about the end market that that fell at a bookend or with expectations.

Got it. That's very helpful. Maybe just the last one on Amarin and Orion, the planned expansion, it sounds like it's about 6 months before you start selling in Europe but just is there a significant investment required to begin there or just, kind of what the primary, kind of milestones are over the next two quarters.

Yeah, thank you for that question. We're very excited about this. Europe is actually the biggest in market for their products. It's over a $2 billion market, whereas America is about 11.5. And they have served European OEMs out of India, and I think we announced even when at the acquisition, those OEMs are, have been asking them to create a footprint in in Europe. So, the last quarter, we've made several trips to Europe. We're working, we're progressing rapidly. And this will go in stages. So, the initial stages, the investment will not be significant. We just, we obviously need a building, we'll start, stocking and doing some testing and then gradually add equipment. So in the 1st year or two, maybe a $2 million of investment, and then as it grows, we will, we'll expand it from there.

Yeah, Chris, it's not a very high capital investment required for us to get it started, so, there shouldn't be a lot of cash out there.

Perfect. All right guys, thanks, I'll leave it there.

Thank you.

And your next question comes from the line of Matt Kranda with broad capital. Please go ahead.

Hey guys, good morning. Maybe just continuing on with the electronics questioning. So Amarin and Orion, the order trend looks pretty encouraging. Just wanted to see if maybe you could unpack the end markets that are driving strength for them between data center or some of the electrical grid infrastructure expansion. And then could you talk about capacity utilization there right now? It sounds like I would imagine we're running quite high given that we're going to be adding a plant in Europe. And so what does capacity utilization look like right now? Is there a hit to margins as you kind of ramp the new plant in Europe? Maybe just talk about the transition there over the next couple of quarters.

Yeah, so first of all, the sources of growth are more or less what they were when we announced the acquisition. You've got grid modernization in all parts of the world. There's expansion of electrical capacity just to support growth, economic growth and living standards. Data centers and artificial intelligence are driving investments. We're not seeing any change in that momentum. Our relationships are with the large electrical equipment, OEMs. They still have demand that goes out several years. So we see no change in those, in those drivers for the growth.

Our capacity, we still have capacity in our current plants, and we're probably running, I don't know, 60, 70% capacity. We're, we've recently added a second shifts in India and in Texas. But we also announced in the script we will expand in India. We'll add footprint. We'll expand in the US, we'll add footprint, and we have the greenfield site coming in Europe. We have good visibility to the demand from customers, and so that capacity will come online in time to meet that demand.

Yeah, and Matt, if I can add this, from a margin standpoint, we don't anticipate that the margins in Europe will be any different than the margins of the consolidated group as they stand today.

Okay, very clear. I appreciate that. And then, maybe just on the core order book and electronics, I think you guys mentioned kind of flattish in terms of order trend quarter to quarter. What does that mean for sort of when we inflect to the positive in terms of organic growth in the electronic segment? How soon could that come? What would that look like over the next couple of quarters?

Yeah, I mean, and the other thing that I just want to mention, Matt, we are about 10% up organically on the orders in electronics if you look at the year on year. So, we are kind of at that reflection point now, to be quite honest with you. And as we move into the next fiscal year, which would be, our fiscal first quarter by 206, next quarter, we feel we are turning the corner, and we should start showing organic growth.

Okay, great. And then maybe just the last one if I could, thinking about the, sort of the overall deposition here, what are your thoughts on sort of leverage and where we'd be willing to take it if we found an attractive acquisition over the next few quarters, or I guess should we think about sort of leverage as coming down over the next few quarters and we're driving cash to deliver the balance sheet, with the macro uncertainty that we're dealing with just wanted to hear your thoughts on that front.

Yeah, so some our leverage as it stands today is about par bank facilities is about 2.8%. If you kind of annualize our fourth quarter EBITDA, it's less than that. It's about 2.5%, 2.6%. Obviously, our priority is to pay down debt. And you know we also have a lot of very exciting organic initiatives that David has just been talking about specifically in electronics and some other businesses. So, our priority would be, to invest in organic growth and the things we know the best and we control and then at the same time you obviously work down to pay down the debt and take the leverage down and we think we're going to make a dent in leverage this quarter. We're going to continue to work at 526 and we are a very good cash generating company and we'll continue to focus on, both organic growth, investments, as well as paying down the debt. Yeah.

Let me add something just from a philosophical standpoint, I guess we're about as high in leverage as we'd like to be. We are still in the market. A lot of the acquisitions that we make are based on years and years of relationship building, so we continue to do that, and you know in the next year or so we'll be at a leverage point we could consider.

Okay, got it. Thanks, guys. I appreciate it.

And your next question comes from the line of Mike Ski with D David, please go ahead.

Good morning. Thanks for taking my questions here. So leverage at 2.8 sounds like it's coming down. That's really good to hear. Besides just rolling in Amarin and Orion and the lady into the numbers and you just imply Amarin. Do you have any other levers that you're looking to pull on the on the debt side? I mean, I wasn't sure if you needed to or could liquidate any working capital in the near term or if you even have to. Just curious as to how you feel about other parts of your balance sheet at the current time.

Yeah, now, look, we certainly have some opportunities in our working capital metrics, as an example, some of the businesses we recently acquired, generally have a longer credit term with some of their some of their customers. Those credit terms, are sometimes over 90 days. So, obviously we've been working with, our new acquisitions as the customers try to improve those terms and get them a little bit more balanced, if you will. So, we clearly have opportunity on receivables. We'll obviously continue to manage inventory as well. So yeah, I mean there's clearly an opportunity to get more operating cash flow in the upcoming quarters, and we plan to do that.

Great. I also wanted to circle back to some of your answers and comments on tariffs from earlier. Given that scientific is at this point such a small part of the overall company in China, the China part of it is even smaller, of course. And the other thing that you mentioned in the other segments, does it feel like The total potential impact from the tariffs that you're seeing today by anything changing going forward is pretty de minimis and the would you agree with the thought that maybe the efforts you have to you have to take to, mitigate it through pricing and productivity is relatively minor. It doesn't seem all that challenging at this point. This just doesn't sound like you're in any kind of concern or huge panic here at all.

Yeah, I think that's a fair way to summarize it, Mike, but obviously, it's our fiduciary duty to do the best we can to continue maintaining a good relationship with suppliers, with customers, and obviously to protect our margins. But yeah, I mean in a grand scheme of things it's not. Again, as David said, we are in the region for the region for the most part in terms of our supply chain as well as customer relationships. So yeah, the impact for us is not certainly not significant.

We laid it out pretty clearly early that of that, 6% it's about $10 million. It's just the $10 million of scientific that's going to require some work, so it's not to minimize the work that they have to do. So in that business there's plenty of work, but they've got a line of sight to actions to contain that as I described earlier.

It's our job to worry, Mike, right?

But no, you're right, overall impact at a corporate level de minimizes correct.

Okay, great. And I want to turn to some of your comments you made on the new products that are kind of in the process of rolling out from fiscal 2025, but, at this point, this 2026 starts in just 2. Months from now, can you maybe just share with us, yeah, so could you maybe just, share with us some of your plans for new products during 2026? Could it be on the same, automatically as 2025? And also, is there a tailwind from stuff that I introduced during 2025 that still has to lapse in 206 or has ongoing adoption that I'll be beyond just, more organic growth next year.

Yeah, those are great questions. I think we've talked before that because of our business model and our products are sold to OEMs who are incorporating that into their next generation platforms, it typically takes about 3 years for any application, any new opportunity we're willing to ramp to full volume. So, that's true of new products as well as the applications of existing products. So, everything released this year will continue to ramp in the coming years. We also have a pipeline that we would expect, order of magnitude, the same number of products to be released in FY26 as in FY25.

Outstanding. I'll pass it along. Thank you.

And your next question comes from the line of pros parent Black with William Blair, please go ahead.

Hey, good morning, gentlemen.

There are, there are.

Hey guys, kicking off with core electronics, can you maybe just update us on where we are with like the broader restocking phase and what's underwriting confidence for a return to growth in 2026 on the organic side, just get the core business.

Yeah, so if you look at the underlying business, we're seeing strength in Asia, North America's picking up. Europe remains soft. Most of the stocking, destocking impact was in Asia and in China for us, and that is a few quarters ago we said it was bottoming out. That's picking up.

Okay, well then maybe just help us size the automotive in general industrial exposure again. Trying to think about the ebb and flow of China picking up with North America and, Western Europe getting a little weaker there, at least on the other side.

What's the question?

Yeah, and general industrial because those were both noted as being, weaker again this quarter.

Yeah, historically, just think out loud here, has been about 20% of the electronics business, a little lower now just because it's been soft. Yeah, it's more like it's been more like 15% in recent quarters. So, it's, solo EVs are EVs have been flat. Other, combustion engine has declined, so we're about 15%.

Okay.

Of total electronics.

And then just on the scientific side, can you just say help us frame the risk here from the NHI funding? I mean, based off last quarter, it looks like a couple million, and that probably counts for the next 3 quarters going forward. And then I believe on the pharmacy side, that's pretty much A off. Are you seeing any signs of recovery there?

Yeah, I think Ross, for the NIH, I think you just sized it pretty well in terms of the potential impact. Yeah, and for the for the pharmacies, yeah, you're right, it's kind of at a trough. We are waiting to see if the new capital equipment requests are going to come in, maybe some of that is a little bit impacted now with some of the economic uncertainty, but certainly those units that we placed years ago are due to be replaced, and we do expect we're going to see some uptick in the near future.

I mean, are you having active conversations there? Is it's two key players, right? Okay, that's good to hear. Then maybe just one last one on, the Starlight. Can you call out the major programs there, to the wide bodies, is there any bone exposure, Airbus, anything we can point to.

Yeah, both Boeing and Airbus. They're both on the on the wide body programs with both of those players.

All right, is, I mean, is this primarily sole source single sourced?

For what they, yeah.

And your next question comes from the line of Gary Prestopino with Barrington Research. Please go ahead.

Hi, good morning, couple of questions here, in the guidance that you gave us for Q4. In terms of the organic decline, is it going to be very similar to the organic decline in sales that you saw in Q3?

Hey, good morning, Gary. No, it will not, because we do believe electronics will, which is again our engine, will do better than they have done in Q3, so we should see some improvement there, the only one that I would, point to that might be a little soft, from kind of a comparison would be would be obviously scientific for the reasons we just we just spoke about.

But yeah, we do expect that.

Yeah. No, when you say sequentially up and I'm just, back of the envelope, Amron, let's say it's you bought it, had $100 million of revenues, you had 25 their Starlight about $8 million, that's 33. So, yeah, I'm just trying to get an idea of when you're talking about the changes you're seeing in or contemplating in or the growth you're contemplating just what we have to work off there. So, we really shouldn't be looking at about an 8% organic decline in Q4 as we saw in Q3.

No.

Okay, that's good to hear. I just want to ask in terms of fast growth markets, were your sales last quarter about $26 million? I think I went back and looked at that and you were about $60 million this year. Is that kind of correct or this quarter?

Yeah, that's right. About 60 minutes so that the 26 you quoted, what period were you referring to?

I was looking at last year's Q4 Q3.

Yeah, that's right. Yeah, and you call this last quarter, we kind of bridged kind of a recasting we have an old number, new number, because the Am and Orion sales are all into fast growth, so we're including that in the 60, of course.

Right. So, I guess phrase the question this way, given that Aron had a pretty good margin profile, how has that changed the margin profile, adjusted operating margin profile of your sales in the fast growth markets, is it, could you give me an idea of, the magnitude of the basis point increase year over year let's see.

Well, yeah, so that's a great question. Our margins in the fast growth markets have always been higher than our average margin. They tend to be newer products. There's a great value proposition. The Am and Orion margins still are higher than that average, so, it's about half of our, it probably has a couple 100 basis points to fast growth margins.

Okay, a couple of 100 basis points. So, as they grow, as this grows, it's going to become very accretive. Yeah, Okay, and then lastly, on the, one of the things you mentioned was the tariffs, you say it can offset some of this with price increases, and I realized this is rather de minimis relative to other companies, but, have you informed your customers that you're going to increase prices as of yet and I just want to get what's kind of been their reaction to that.

It runs across the board. I mean all the spectrum, of reactions, but there are hundreds of or thousands of discussions going on with customers and many of our businesses about price increases. So, I don't know I guess the bottom line is what we conveyed earlier, we think we can cover, to the extent we can cover the tariffs. The one challenge is going to be in the scientific business based on the competitive nature of that market and their ability to get price and all the other businesses, a combination of price and productivity will cover tariffs.

Yeah, we're not just approaching this purely from a price standpoint. We're looking at productivity, sourcing savings as well. So and the way we're approaching this with our customers, we're kind of all in this together and we're going to come up with the best optimal solution for us as well as for our customers. So it's a combination really of three things pricing, productivity, and sources of supply.

Well, let me ask you this, with your existing sources right now where they're coming from, say, China and India, can you go back to them and say, hey, you guys got to share some of this burden? I mean, is it, is what you're getting out of China, is that coming out of mainland China or Taiwan?

Well, the 6% we quoted is mainland China.

Yeah, and so we have, there again, you've had discussions with all the suppliers, some of them have given have participated a bit, I guess with others have not, it just depends on the on the business and the supplier.

That's it. Thank you very much.

And we had no further questions at this time. I would like to turn back to David Dan Barber Closing remarks.

All right, I want to thank everybody for joining us for this call. We always enjoy reporting on our progress at Standex. And finally, again, I want to thank our terrific employees for their hard work, continued support of our strategic objectives, and delivering another solid quarter. And thank you for the shareholders for your continued support and contributions. We look forward to speaking with you again in our fiscal 4th quarter 2025 call.

Thank you, presenters, and ladies and gentlemen, this concludes today's conference call. Thank you all for participating. You may now disconnect.